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Union Bank of Colombo Limited
INCOME STATEMENTYear ended 31 December 2010
2010 2009
Note Rs. Rs.
INCOME 3 2,078,120,074 2,052,704,053
Interest Income 4 1,771,976,557 1,855,783,799
Less: Interest Expenses 5 997,841,287 1,392,872,704
NET INTEREST INCOME 774,135,270 462,911,095
Other Income 6 306,143,517 196,920,254
1,080,278,787 659,831,349
LESS : NON INTEREST EXPENSES
Operating Expenses 7 247,798,769 134,844,474
Personnel Costs 252,531,371 199,986,538
Premises, Equipment and Establishment Expenses 130,253,941 108,885,465
Loan Loss Provision 30,191,221 31,754,174
Provision for fall in value of Dealing Securities - (757,794)
Expenses on Defined Benefit Plan 23 6,661,756 4,666,709
667,437,058 479,379,566
PROFIT BEFORE TAXATION 412,841,729 180,451,783
Less : Value Added Tax on Financial Services 104,850,021 46,468,715
Provision for Taxation 8 158,194,702 71,842,056
PROFIT AFTER TAXATION 149,797,006 62,141,012
Earnings Per Share 9 0.64 0.44
The Accounting Policies and notes on pages 6 through 28 form an integral part of the Financial Statements.
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Union Bank of Colombo Limited
BALANCE SHEETAs at 31 December 2010
2010 2009
ASSETS Note Rs. Rs.
Cash & Short Term Funds 10 1,285,529,573 630,505,193
Balances with Central Bank of Sri Lanka 11 749,885,174 763,844,165
Treasury Bills and Other Bills Eligible for
Re discounting with Central Bank 12 4,253,338,543 2,741,134,344Commercial Papers 22,901,759
Dealing Securities 13 161,205,900 -
Investment Securities 14 2,220,464,027 2,031,784,626
Bills of Exchange 15 354,488,715 330,734,648
Loans and Advances 16 8,939,389,295 6,807,179,358
Lease Receivables 17 268,551,461 382,410,177
Deferred Taxation 18 - 39,182,113
Other Assets 19 195,385,883 161,242,886
Property & Equipment 20 227,849,316 201,581,378
Total Assets 18,656,087,887 14,112,500,647
. .
LIABILITIES
Deposits 21 13,193,558,524 11,963,995,607
Borrowings 22 401,126,524 92,396,759
Deferred Taxation 18 13,789,728
Other Liabilities 23 507,420,714 457,334,003
Total Liabilities 14,115,895,490 12,513,726,369
SHAREHOLDERS' FUNDS
Stated Capital 24 4,573,820,996 1,813,170,000
Pending Allotement 30,970,117
Statutory Reserve Fund 25 22,231,977 14,742,127
Accumulated Losses (86,830,693) (229,137,849)
4,540,192,397 1,598,774,278
TOTAL LIABILITIES & SHAREHOLDERS' FUNDS 18,656,087,887 14,112,500,647
Commitments and Contingencies 26 7,643,167,479 6,905,792,133
Signd ....... Signd .. Signd. .
Ajita de Zoysa Anil Amarasuriya Nirosha Kannangara
Chairman Director/CEO Secretary
The Accounting Policies and notes on pages 6 through 28 form an integral part of the Financial Statements.
25 March 2011.
Colombo,
These Financial Statements are in compliance with the Companies Act No 07 of 2007.
Signd........................................................ Signd-----------------------------------
Kusal Perera Malinda Samaratunga
Assistant Vice President ( Finance) Chief Financial Officer
The Board of Directors is responsible for the preparation and presentation of these Financial Statements.
Approved and signed for and on behalf of the Board.
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Union Bank of Colombo Limited
STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2010
Statutory Retained Profits
Stated Pending Reserve (Accumulated
Capital Allotment Fund Losses) Total
Rs. Rs. Rs. Rs.
Balance as at 1st January 2009 1,682,500,000 75,000,000 11,635,076 (288,171,810) 1,480,963,266
Shares issued for cash 55,670,000 - - - 55,670,000
Allotments during the Period 75,000,000 (75,000,000) - - -
Net Profit for the Period - - - 62,141,012 62,141,012
Transfers during the Period - - 3,107,051 (3,107,051) -
Balance as at 1st January 2010 1,813,170,000 - 14,742,127 (229,137,849) 1,598,774,278
Shares issued for cash 2,760,650,996 30,970,117 - - 2,791,621,113
Net Profit for the Period - - - 149,797,006 149,797,006
Transfers during the Period - - 7,489,850 (7,489,850) -
Balance as at 31st December 2010 4,573,820,996 30,970,117 22,231,977 (86,830,693) 4,540,192,397
The Accounting Policies and notes on pages 6 through 28 form an integral part of the Financial Statements.
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Union Bank of Colombo Limited
CASH FLOW STATEMENTYear ended 31 December 2010
2010 2009
Rs. Rs.
Cash Flow from Operating Activities
Interest Received 1,623,590,272 1,812,413,616
Fees and Commission Receipts 133,942,154 88,590,483
Interest Paid (1,079,607,435) (1,402,526,488)
Net Foreign Exchange gain 48,204,897 39,728,046
Receipts from Other Operating Activities 107,518,745 67,448,521
Payments on Other Operating Activities (685,820,753) (454,370,073)
Operating Profit before changes in Operating Assets & Liabilities 147,827,880 151,284,105
(Increase)/Decrease in Operating Assets:
Funds Advanced to Customers (2,022,616,302) 68,023,093
Bills of Exchange (23,754,067) (209,460,273)
Others (33,441,546) (8,027,365)
(2,079,811,915) (149,464,545)
Increase /(Decrease) in Operating Liabilities:
Deposits from Customers 1,252,117,559 1,048,056,872
Negotiable Certificates of Deposit (22,554,642) 423,861,877
Securities Sold Under Repo Agreement 62,218,432 16,141,009
Others 86,592,621 27,762,706
1,378,373,970 1,515,822,464
Net Cash from Operating Activities before Income Tax (553,610,065) 1,517,642,024
Retiring Gratuity paid (1,501,213) (2,268,495)
Income Tax (Paid) / Refunds (24,443,886) (26,331,379)
Net Cash from Operating Activities (579,555,164) 1,489,042,150
Cash Flow from Investing Activities
Dividends Received 1,960,116 305,200
Purchase of Non Dealing Securities 262,052,884 (442,729,079)
Purchase of Property & Equipment (76,114,725) (74,726,241)
Purchase of Dealing Securities (123,786,537) 2,297,790
Proceeds from Sale of Property & Equipment 102,668 1,209,320
Net Cash from Investing Activities 64,214,406 (513,643,010)
Cash Flow from Financing Activities
Proceeds from shares 2,791,621,113 55,670,000
Increase / (Decrease) in Other Borrowings 29,167,352 48,861,458
2,820,788,465 104,531,458
Net Increase/(Decrease) in Cash and Cash Equivalents 2,305,447,707 1,079,930,598
Cash and Cash Equivalents at Beginning of the year 3,298,677,897 2,218,747,299
Cash and Cash Equivalents at end of the year 5,604,125,604 3,298,677,897
Reconciliation of Cash and Cash Equivalents
Cash and Short Term Funds 1,285,529,573 630,505,193
Balances with Central Bank 749,885,174 763,844,165
Government of Sri Lanka Treasury Bills & Reverse Repurchase 3,806,388,166 1,924,661,867
Borrowings from Banks (237,677,309) (20,333,328)
5,604,125,604 3,298,677,897
The Accounting Policies and notes on pages 6 through 28 form an integral part of the Financial Statements.
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
3. INCOME 2010 2009
Rs. Rs.
Interest Income (Note No 4) 1,771,976,557 1,855,783,799
Other Income (Note No 6) 306,143,517 196,920,254
2,078,120,074 2,052,704,053
4. INTEREST INCOME
Loans and Advances 1,329,224,020 1,474,821,795
Treasury Bills & Placement with Other Banks 346,435,910 287,179,561
Deep Discounted Bond 90,898,924 88,976,974
Other Interest Income 5,417,703 4,805,469
1,771,976,557 1,855,783,799
Notional Tax Credit on Secondary Market Transactions
5. INTEREST EXPENSE
Deposits 987,398,106 1,374,390,659
Short term borrowings and refinance 4,312,999 8,955,995
Treasury bills repurchased 5,231,643 7,073,023
Other interest expenses 898,539 2,453,027
997,841,287 1,392,872,704
6. OTHER INCOME
Net Foreign Exchange Gain 48,204,897 39,728,046
Dividend Income from Securities 1,960,116 305,200
Fee and Commission Income 133,942,154 88,590,483
Gain from Investment Securities 18,652,476 25,843,504
Gains from Dealing Securities 51,924,232 -
Other 51,459,642 42,453,021
306,143,517 196,920,254
7. OPERATING EXPENSES
Operating Expenses includes the following :
Depreciation 48,488,741 35,815,119
Donations 127,100 40,805
Expenses on litigation 7,646,099 3,494,895
EPF & ETF 23,776,973 19,071,797
Audit fees & Expenses 2,010,000 1,479,615
Net Interest Income of the Bank from Treasury Bills & Treasury Bonds ( Interest Income accrued or received on an outright or
reverse purchase transaction on such security, Bill or Bond, less interest expenses on repurchase transaction with Securities,
Treasury Bills or Treasury Bonds for which such interest income was earned) for the period 1st January 2010 to 31st December
2010 has been grossed up by Rs. 31.74 Mn (2009 Rs. 26 Mn) for Notional Tax Credit , Consequent to the incomeon the above
instrument being subjected to withholding tax.
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
8. TAX ON PROFITS ON ORDINARY ACTIVITIES 2010 2009
Rs. Rs.
Income Tax on Current Year Profit 103,560,806 44,593,620
(Over)/ under provision in respect of previous year 108,643 (825)
Deferred Tax charge/(credit)( Note No 18) 52,971,841 26,580,357Social Responsibility Levy 1,553,412 668,904
158,194,702 71,842,056
8.1 Reconciliation of the Accounting Profit to Income Tax Expense
Profit Before Tax 307,991,708 133,983,068
Add: Disallowable Expenses 235,723,337 261,959,120
Less: Tax Deductible Expenses (100,746,255) (190,049,011)
Statutory Income 442,968,790 205,893,177
: Tax profit on leases 12,243,546 (6,420,221)
: Tax Losses claimed (159,324,318) (72,062,612)
Taxable Income 295,888,018 127,410,344
Income Tax on Current Year Profit @35% 103,560,806 44,593,620
Social Responsibility Levy 1,553,412 668,904
(Over)/ under provision in respect of previous year 108,643 (825)
Deferred Tax charge/(credit) 52,971,841 26,580,357
Income Tax Expense 158,194,702 71,842,056
Effective Tax Rate (%) 51% 54%
9. EARNINGS PER SHARE
2010 2009
Rs. Rs.
Net Profit attributable to Ordinary Shareholders (Rs.) 149,797,006 62,141,012
Weighted average Ordinary Shares in issue applicable to Basic Earnings
per Share computation. 232,279,642 141,703,368
As at As at
10 CASH AND SHORT TERM FUNDS 31/12/2010 31/12/2009
Rs. Rs.
Cash and Deposits with Banks 421,298,375 486,226,838
Money at Call and Short Notice 864,231,198 144,278,355
1,285,529,573 630,505,193
11 BALANCES WITH CENTRAL BANK
Income Tax on Profit has been computed at the rate of 35% on the Taxable Income arising from the Domestic Banking Unit
(DBU) and Foreign Currency Banking Unit (FCBU).
Basic Earnings Per Share (EPS) is calculated by dividing the Net Profit for the year /period attributable to Ordinary
Shareholders by the weighted average number of Ordinary Shares in issue during the period. The following reflects the
Income and Share data used in the Basic Earnings Per Share computation.
This represents the minimum cash reserve requirement of 7% of the deposit liabilities as required by the provision of Section
93 of the Monetary Law Act.Further there is no reserve requirement for deposit liabilities of the Foreign Currency Banking
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
12. TREASURY BILLS AND OTHER BILLS ELIGIBLE FOR 2010 2009
REDISCOUNTING WITH CENTRAL BANK Rs. Rs.
Dealing Securities
Treasury Bills and Bonds 3,806,388,166 1,924,661
Investment Securities
Treasury Bills and Bonds ( Note No 12.1) 446,950,377 816,472
4,253,338,543 2,741,134
12.1 Treasury Bills and Bonds
Cost Market Value Cost Market Va
As at As at As at As at
31/12/2010 31/12/2010 31/12/2009 31/12/200
Treasury Bills 396,073,274 396,479,545 222,479,270 222,309
Treasury Bonds 50,877,103 49,261,475 593,993,207 593,429
446,950,377 445,741,020 816,472,477 815,739
13. DEALING SECURITIES No. of Cost Market Value Cost Market Va
Shares As at As at No. of. As at As at
31/12/2010 31/12/2010 Shares 31/12/2009 31/12/200Quoted
Vanik Incorporation Limited 51,375 1,755,277 - 51,375 1,755,277
Central Finance PLC 16,700 9,553,461 13,036,020
Asian Hotels & Properties PLC 36,400 4,999,996 6,916,000
Dialog Axiata PLC 1,177,000 12,891,472 13,888,600
HNB Assurance PLC 76,500 5,633,394 5,913,450
Hatton National Bank PLC (NV) 51,200 10,224,537 10,880,000
John Keels Hotel PLC 445,600 9,491,312 8,778,320
Royal Ceramics PLC 55,500 10,674,176 16,650,000
Hotel Services (Ceylon) PLC 1,000,000 27,117,874 25,600,000
Seylan Bank PLC - (NV) 440,100 19,935,834 21,388,860
Richard Pieris & Company PLC 126,200 1,001,197 1,325,100
National Development Bank PLC 26,300 9,725,013 9,165,550
Singer Finance (Lanka) Ltd 77,600 1,164,000 1,164,000
Sampath Bank PLC 36,000 9,764,138 9,684,000Tokyo Cement Company ( Lanka ) PLC(NV) 420,400 11,001,336 16,816,000
144,933,017 161,205,900 1,755,277
(Provision)/Appreciation on Mark to market 16,272,883 - (1,755,277)
161,205,900 161,205,900
14. INVESTMENT SECURITIES 2010 2009
Rs. Rs.
Unquoted (Note No 14.1) 2,112,994,811 2,031,784
Leased Backed Trust Certificates 107,469,216
2,220,464,027 2,031,784
14.1 Unquoted
Deep Discounted Bond Issued By Serendib Capital (Private) Limited 2,111,464,811 2,030,254
Lanka Financial Service Bureau Limited 1,000,000 1,000
Lanka Clear (Private) Limited 500,000 500
Vanik Debentures 500,000 500
Credit Information Bureau 30,000 30
2,113,494,811 2,032,284
Less : Provision for fall in value other than temporary (500,000) (500
2,112,994,811 2,031,784
The unquoted Investments are carried at Directors Valuation. The Directors valuation is at cost which is consistent with that of the preceding year.
The Bank purchased a Deep Discounted Bond from Serendib Capital (Pvt) Ltd on 1st August 2003 guaranteed by a Commercial Bank. The purchase cos
1,578 mn was settled by transferringpart of the Bank 's portfolio at its book value of Rs 978 Mn and balance in cash. The face value of the Bond amount
3,458 Mnand will mature on1 st August 2023. The Bankintends to hold thisbond till its maturity and is recorded at cost plusa porpotion of the discount ov
period to maturity based on its implicit rate of return of 4%.
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
15. BILLS OF EXCHANGE 2010 2009
Rs. Rs.
Export Bills 286,715,711 263,441,184
Import Bills 46,743,806 56,271,276
Cheques Purchased 21,029,198 11,022,188
354,488,715 330,734,648
16. LOANS AND ADVANCES
Overdrafts 3,656,993,651 2,623,524,088
Import and Export Loans 1,879,793,727 1,438,740,997
Staff Loans 156,765,330 117,273,014
Term Loans 2,726,226,315 2,221,901,600
Pawning 682,217,078 455,899,330
Other Advances 120,935,129 180,897,213
Interest Receivable 176,881,251 150,955,112
9,399,812,481 7,189,191,354
Less: Loan Loss Provision (Specific)( Note No 16.1) (181,196,029) (173,827,936)
Loan Loss Provision (General) (68,167,578) (57,264,656)
Interest in Suspense ( Note No 16.1) (211,059,579) (150,919,404)
8,939,389,295 6,807,179,358
16.1 Movement in the Provisions for Loan Loss and Interest in Suspense. Provision
Against specific Suspended
Advances Interest
Rs. Rs.
As at 01.01.2010 173,827,936 150,919,404
Provision for the year 16,249,397 87,548,295
Provision Reversal (3,066,480) (23,405,659)
Write-offs (1,825,770) (3,187,470)
Translation Difference on FCBU Conversion (3,989,054) (814,991)
As at 31.12.2010 181,196,029 211,059,579
16.2
2010 2009
Rs. Rs.
Loans and Advances 1,012,247,390 959,171,158
Less: Loan Loss Provision (181,196,029) (173,827,936)
Interest in Suspense (211,059,579) (150,919,404)
Net Exposure 619,991,782 634,423,818
16.3 Concentration of Credit Risk
2010 2009Rs. Rs.
Agriculture, Agro Business and Fisheries 1,158,693,420 860,464,412
Manufacturing 2,114,289,294 1,106,383,302
Tourism 55,666,950 23,122,691
Transport 138,337,778 98,878,119
Construction 890,112,028 552,302,485
Traders 1,823,907,558 2,477,829,638
New Economy 328,597,011 204,380,251
Financial & Business Services 337,085,113 272,462,283
Infrastructure 365,169,900 157,642,440
Other Services 732,757,065 441,833,109
Other Customers Including Pawning 1,915,850,243 1,564,734,247
9,860,466,360 7,760,032,979
Non Performing Assets included in the Loans and Advances on which interest is not recognised are as follows :
Sector wise analysis of bank's credit portfolio given below reflects the bank's exposure to credit r isk in the various sectors
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
17. LEASE RECEIVABLES 2010 2009
Rs. Rs.
Total Lease Rentals Receivable 343,002,726 487,589,033
Less: Rentals Received in advance 7,893,914 8,492,269
Lease Rentals Receivable after one year but before five years
from balance sheet date ( Note No 17.2) 142,995,645 236,078,401
17.1 Lease Rentals Receivable within one year
from balance sheet date 192,113,167 243,018,363
Unearned Lease Income (33,677,956) (56,997,118)
Interest in Suspense (4,675,210) (4,789,184)
Loan Loss Provision (Specific) (7,579,521) -
General Provision (1,211,747) (1,812,320)
144,968,733 179,419,741
17.2 Lease Rentals Receivable after one year but before five years
from balance sheet date 142,995,645 236,078,401
Unearned lease income (18,384,442) (31,037,557)
General provision (1,028,475) (2,050,408)
123,582,728 202,990,436
Total Receivable on leases 268,551,461 382,410,177
There are no Lease Rentals receivable after 5 years
from balance sheet date
18. DEFERRED TAXATION 2010 2009
Rs. Rs.
Balance as at beginning of the year 39,182,113 65,762,470
(Charge) /Reversal made during the Year ( Note No 8) (52,971,841) (26,580,357)
Balance as at the year end (13,789,728) 39,182,113
Deferred Tax Assets
Carry Forward Losses 13,179,645 72,295,702
Defined Benefit Plan Liability 6,450,280 6,256,659
19,629,925 78,552,361
Deferred Tax liability
Accelerated Depreciation allowance for tax purposes ( Property and Equipment) (19,067,265) (21,235,197)
Accelerated Depreciation allowance for tax purposes ( Lease Rental Receivable) (14,352,388) (18,135,051)
(33,419,653) (39,370,248)
(13,789,728) 39,182,113
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
19. OTHER ASSETS 2010 2009
Rs. Rs.
Deposits & Prepayments 85,570,913 63,217,812
Interest Receivable 35,270,871 26,729,537
Tax Receivable - 8,938,200
Others 164,157,898 151,971,136 Less: Provision for Bad & Doubtful Debts (89,613,799) (89,613,799)
195,385,883 161,242,886
20. PROPERTY & EQUIPMENT As at Additions Disposals / As at
31/12/2009 During the year Written off 31/12/2010
Rs. Rs. Rs. Rs.
Cost
Leasehold Properties & Improvements 59,419,052 16,505,084 - 75,924,136
Computers & Equipments 339,793,390 38,853,427 (20,168,144) 358,478,673
Furniture & Fittings 86,031,680 11,476,141 (200,000) 97,307,821
Motor Vehicles 20,738,903 6,055,357 - 26,794,260
Total 505,983,025 72,890,009 (20,368,144) 558,504,890
Accumulated Depreciation As at Charge Disposals / As at
31/12/2009 For the Year Written off 31/12/2010
Leasehold Properties & Improvements 30,535,048 10,792,554 - 41,327,602
Computers & Equipments 207,285,070 27,123,562 (18,810,098) 215,598,534
Furniture & Fittings 56,237,672 5,996,150 (200,000) 62,033,822
Motor Vehicles 10,343,857 4,576,475 - 14,920,332
Total 304,401,647 48,488,741 (19,010,098) 333,880,290
Net Book Value 201,581,378 224,624,600
20.1 Capital work in progress Balance Incurred During Reclassified/ Balanceas at the Year Transferred as at
01.01.2010 31.12.2010
Rs. Rs.
Capital work in progress - 3,224,716 3,224,716
227,849,316
21. DEPOSITS 2010 2009
Rs. Rs.
Demand Deposits 1,709,819,982 1,179,436,049
Savings Deposits 3,012,140,830 1,683,488,040
Time Deposits 6,596,084,718 7,203,003,883
Certificate of Deposits 1,875,512,994 1,898,067,635
13,193,558,524 11,963,995,607
21.1 Analysis of Deposits
Deposits from Non Bank Customers 13,190,905,411 11,731,529,101
Deposits from Banks - 135,104,511
Deposits from Finance Companies 2,653,113 97,361,995
13,193,558,524 11,963,995,607
During the year the Bank acquired Property, Plant & Equipment to the aggregate value of Rs.76.1 Mn (2009 Rs. 74.7 Mn).
Cash payments amounting to Rs 76.1 Mn (2009 Rs. 74.7Mn) was made during the year for the purchase of Property, Plant
& Equipment.
Property, Plant and Equipment includes fully depreciated assets having a gross carrying amounts of Rs 211.5 Mn.
(2009 Rs 218 Mn)
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
22. BORROWINGS 2010 2009
Rs. Rs.
Borrowings under Repurchase Agreement 81,759,441 19,541,009
Borrowing from Central Bank under Refinance Schemes 28,488,095 32,011,905
Borrowings from Banks 237,677,309 20,333,328Other Borrowings 53,201,679 20,510,517
401,126,524 92,396,759
23. OTHER LIABILITIES
Provision for Gratuity (Note No 23.1) 23,036,713 17,876,170
Accrued Interest & other expenses 444,761,998 439,457,833
Tax payable 39,622,003 -
507,420,714 457,334,003
23.1 Provision for Gratuity
Balance at the beginning of the Year 17,876,170 15,477,956
Expenses on Defined Benefit Plan For the Year (23.2) 6,661,756 4,666,709
Payments made during the Year (1,501,213) (2,268,495)
Balance at the end of the Year 23,036,713 17,876,170
23.2 Expenses on Defined Benefit Plan
Current Service Cost 4,162,683 2,843,847
Interest Cost 2,499,073 1,822,862
6,661,756 4,666,709
24 STATED CAPITALNumber Rs. Number Rs.
Fully Paid Ordinary Shares (Note No 24.2) 333,345,763 4,573,820,996 148,703,600 1,813,170,000
Fully Paid Ordinary Shares (Class 'A')( Note No 24.1) - - - -
Fully Paid Ordinary Shares 333,345,763 4,573,820,996 148,703,600 1,813,170,000
24.1 Fully Paid Ordinary Shares (Class 'A') Number Rs. Number Rs.
Balance at the beginning of the year - - 118,750,000 1,322,500,000
Issue of Class 'A' Shares for cash - - 7,500,000 75,000,000
Conversion of Shares (1 Class 'A' Share issued for 2
Ordinary Shares) - - 18,000,000 360,000,000
Less - Reclassified to Ordinary Shares (144,250,000) (1,757,500,000)
Balance at the end of the year - - - -
24.2 Fully Paid Ordinary Shares
Number Rs. Number Rs.
Balance at the beginning of the year 148,703,600 1,813,170,000 36,000,000 360,000,000
Conversion of Shares to Class 'A' Shares (2 Ordinary
Shares converted to 1 Class 'A' Share) - - (36,000,000) (360,000,000)
Add - Reclassified from Class 'A' Shares - - 144,250,000 1,757,500,000
Issue of Shares for cash 184,642,163 2,760,650,996 4,453,600 55,670,000
Balance at the end of the year 333,345,763 4,573,820,996 148,703,600 1,813,170,000
2010 2009
2010 2009
2010 2009
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
25. RESERVE FUND 2010 2009
Rs. Rs.
Balance at the beginning of the year 14,742,127 11,635,07
Add: Transfers during the year 7,489,850 3,107,05
Balance as at end of the year 22,231,977 14,742,12
26. COMMITMENTS AND CONTINGENCIES
26.1
2010 2009
Commitments Rs. Rs.
Commitments for Building Contract 8,862,819 -
Commitments for Unutilised Facilities 2,008,639,349 1,279,871,99
Sub Total 2,017,502,168 1,279,871,99
Contingent LiabilitiesAcceptances 603,885,721 481,021,55
Guarantees 2,540,197,217 3,552,649,73
Documentary Credit 1,155,874,452 458,399,21
Bills for Collection 19,384,813 57,712,96
Others 252,495,780 267,722,68
Sub Total 4,571,837,983 4,817,506,15
Currency SWAP Agreements
Spot Purchase 220,989,239 35,440,07
Spot Sold - 12,574,99
Sub Total 220,989,239 48,015,07
Forward Exchange Contracts
Forward Contracts Bought 417,229,788 369,040,72Forward Contracts Sold 415,608,301 391,358,18
Sub Total 832,838,089 760,398,91
Total Commitments and Contingent Liability 7,643,167,479 6,905,792,13
26.2 Litigation Against the Bank
a) One LT application is submitted before the labour Tribunal aginst the ceased of the Employment.
(b) Four customers have filed actions against the Bank in the Commercial High Court to prevent the bank from enforcing the
mortgages to recover it dues.
In the normal course of business, the Bank makes various commitments and incurs certain contingent liabilities with leg
recourse to its customers. No material losses are anticipated as a result of these transactions.
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
(b) A customers have filed an action against the Bank in the District Court to prevent the Bank from enforcing
the mortgages to recover it dues.
27. RELATED PARTY TRANSACTIONS
27.1 Transactions with Key Management Personnel
27.1.1
27.1.2
27.1.3
27.1.4
27.1.5 Fees and amount reimbursed to Key Management Personnel during the period relating to share issue was Rs 10.7 Mn
27.2
Name of Related Relationship Nature of Outstanding Outstanding
Party Transaction As at As at
31/12/2010 31/12/2009
Rs. Rs.
Penguine Group Director Packing Credit Loans 27,014,951 -
LC / Acceptance - 27,362,265Current Account (93,254)
Platinum Reality Investments Director Term Loan 112,499,999 79,181,291
Current Account 9,901,689
27.3 During the year bank has paid to Just in time Holding (Pvt) Ltd of Rs 3,882,327 for purchase of Computers.(2009 Nil)
(c) Third party has filed these actions against the Bank claiming the title of the the property mortgaged to the Bank by
customer
Transactions with Entities controlled by Key Management Personnel and their close family members.
The Bank carries out transactions in the ordinary course of its business with related parties. These related parties, their
relationship and the nature of transactions entered into as at 31 st December are listed below :-
Key Management Personnel includes Board of Directors of the Bank and senior managerial staff directly reporting to the
CEO of the Bank.
Outstanding balance of Loans and Advances granted to Key Management Personnel and their close family members as
31/12/2010 amounts to Rs. 6.36 Mn (2009 1.08 Mn).
Short term employment benefits to Key Management Personnel amounts to Rs 22.597 Mn for the year ended 31/12/2010.
(2009 Rs 22.2 Mn).
Post employment benefits to Key Management Personnel amounts to Rs 3.66 Mn for the year ended 31/12/2010 (2009 Rs
2.4 Mn)
Deposits and Investments held by Key Management Personnel as at 31/12/2010 amounts to Rs 35 Mn (2009 Rs 82 Mn)
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
28. MATURITY ANALYSIS
follows:
Maturity Period Up to 3 3 to 12 1 to 3 3 to 5 More than Total
Months Months Years Years 5 Years(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
Interest Bearing Assets
Money at call & Short notice 943,618,957 - - - - 943,618,
Treasury Bills, Bonds and Reverse Repo's 3,691,804,560 94,189,581 467,344,402 - - 4,253,338,
Invesment Securities - 107,469,216 - - 2,111,464,811 2,218,934,
Loans & Advances 6,400,565,023 1,666,285,224 716,820,765 337,899,157 86,370,587 9,207,940,
Bills of Exchange 354,488,715 - - - - 354,488,
Sub Total 11,390,477,255 1,867,944,021 1,184,165,167 337,899,157 2,197,835,398 16,978,320,
Non Interest Bearing Assets
Cash and Deposits with banks 341,910,616 - - - - 341,910,
Balances with Central Bank 494,346,838 226,064,210 7,938,298 20,108,327 1,427,501 749,885,
Dealing Securities 71,654,008 89,551,892 - - - 161,205, Deferred Taxation - - - -
Invesment Securities 1,530,000 1,530,
Other Assets 85,142,959 68,061,496 15,749,418 25,557,910 874,100 195,385,
Fixed Assets - - - - 227,849,316 227,849,
Sub Total 993,054,421 383,677,598 23,687,716 45,666,237 231,680,917 1,677,766,
Total Assets 12,383,531,676 2,251,621,619 1,207,852,883 383,565,394 2,429,516,315 18,656,087,
Interest Bearing Liabilities
Deposits 7,088,572,323 3,918,557,675 129,554,489 324,049,597 23,004,513 11,483,738,
Borrowings 309,229,526 16,731,026 12,523,818 9,440,475 - 347,924,
Sub Total 7,397,801,849 3,935,288,701 142,078,307 333,490,072 23,004,513 11,831,663,
Non Interest Bearing LiabilitiesDeposits 1,709,819,926 - - - - 1,709,819,
Deferred Taxation - - - 13,789,728 13,789,
Balances with Banks- Nostro 53,201,679 53,201,
Other Liabilities 194,689,604 159,295,913 85,347,643 50,955,927 17,131,627 507,420,
Sub Total 1,957,711,209 159,295,913 85,347,643 50,955,927 30,921,355 2,284,232,
Total Liabilities 9,355,513,058 4,094,584,614 227,425,950 384,445,999 53,925,868 14,115,895,
Shareholder's Funds - - - - 4,540,192,397 4,540,192,
Total Liabilities & Shareholder's Funds 9,355,513,058 4,094,584,614 227,425,950 384,445,999 4,594,118,265 18,656,087,
29 ASSETS PLEDGED AS SECURITY
The following assets have been pledged as securities for liabilities
29.1 Nature of assets Nature of 2010 2009
Liability Rs. Rs.
Government Treasury Bills and Bonds Secured against the
Repo instruments 81,759,441 19,541,
81,759,441 19,541
An analysis of the interest-bearing assets and liabilities based on the remaining period at the Balance sheet date to the respective contractual maturity dates is
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
30. SEGMENTAL ANALYSIS
Business Segments Business Leasing Pawning Total
2010 2009 2010 2009 2010 2009 2010 2009
Revenue from external customers :
Interest 1,622,842,880 1,632,492,491 61,666,957 87,440,647 87,466,720 63,818,969 1,771,976,557 1,783,752,1Exchange 48,204,897 39,728,046 48,204,897 39,728,0
Commission 133,942,154 88,590,483 133,942,154 88,590,4
Other 121,742,881 67,816,973 216,964 119,390 61,849 665,362 122,021,694 68,601,7
Total Revenue from external customers 1,926,732,812 1,828,627,993 61,883,921 87,560,037 87,528,569 64,484,331 2,076,145,302 1,980,672,3
Segment Results
Unallocated Expenses 1,651,138,515 1,766,528,610 62,747,367 77,108,562 54,267,712 75,083,813 1,768,153,594 1,918,720,9
Profit from Operations 275,594,297 62,099,383 (863,446) 10,451,475 33,260,857 61,432,210 307,991,708 107,131,2
Income Tax expenses 143,551,596 42,976,257 2,827,187 7,042,006 11,815,919 21,823,793 158,194,702 71,842,0
Profit for the equity holders of the bank 132,042,701 19,123,126 (3,690,633) 3,409,469 21,444,938 39,608,417 149,797,006 62,141,0
Segment Assets 174,756,965,260 13,072,609,762 268,351,461 382,410,177 682,217,078 455,899,330 175,707,533,799 13,910,919,2
Unallocated Assets - - 224,796,670 201,581,3
Segment Liabilities 13,165,326,951 11,675,416,862 268,351,461 382,410,177 682,217,078 455,899,330 14,115,895,490 12,513,726,36
Unallocated Liabilities
Cash Flow from Operating activities (620,219,174) 931,926,463 175,942,637 222,788,393 (138,789,180) 334,327,294 (583,065,717) 1,489,042,15
Cash Flow from Investing activities 67,724,959 (513,643,010) 67,724,959 (513,643,01
Cash Flow from Financing activities 2,820,788,465 104,531,458 2,820,788,465 104,531,45
Capital Expenditure 72,890,009 74,726,241 72,890,009 74,726,24
Depreciation 48,488,741 35,815,119 48,488,741 35,815,11
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Union Bank of Colombo Limited
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
31. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
a)
b)
Category Number of Shares Percentage of
to be Issued Issue (%)
Category A-Employees of UBC 1,500,000 10%
Category B-Customers of UBC 2,250,000 15%(who have been maintaining accounts
with UBC for a minimum period of
six(06) months as at January 31, 2011)
Category C-Other Investors 11,250,000 75%
15,000,000 100%
The Bank acquired 51% of the ownership of the Namal Asset Management Limited (NAMAL) for Rs.331,500,00/- duringFebruary 2011. NAMAL is a public company incorporated in Sri Lanka in 1991 and licensed by the Securities and Exchange
Commission of Sri Lanka to manage Unit Trusts.
There have been no material events occurring after the Balance Sheet date that require adjustments to or disclosure in the
Financial Statements except for the followings.
An invitation made to the public to purchase Fifteen Million (15,000,000) new Ordinary Voting Shares of the Bank at the Share
Issue in the following manner:
The share issue was opened to the Public on the 24 th February 2011 and closed on the same day.