Commercial Bank of Ceylon PLC

Annual Report 2018

Annex 1: Investor Relations

As providers of equity and debt capital, our investors expect optimal returns through the Bank's sustained and prudent growth. Presenting them with a timely, relevant, and balanced view of the Bank’s fundamentals in terms of operational results, financial position, and cash flows is of paramount importance to us. Helping investors to comprehend the Bank’s underlying strengths helps to bolsters confidence and loyalty, bringing together a group of investors with a long-term view in investment.

Besides ensuring the rights conferred on the investors by various statutes, the Bank strives to maintain effective two-way communication between investors and the investees contributing towards building mutual trust and confidence. The Bank is keen to ensure that all its investors are sufficiently informed so that they are able to make informed decisions.

The Bank has a strong reputation for actively engaging with its investors in a consistent, comprehensive and accurate manner, often going beyond the minimum regulatory requirements. In addition to our Annual Report, which is the Bank’s main investor communications tool, the Annual General Meeting is a valued opportunity for the Bank to engage in dialogue with the investor community. These engagements will certainly help our investors to gain insight into the Bank’s performance, strategic direction, approach to governance, risk management strategies adopted and future business strategies. During the year, we also invited shareholders to provide us with their views on the future direction of our Annual Reports, which feedback was taken into account in structuring and developing content of the Annual Report 2018. We also enclose a stakeholder feedback form in this Annual Report. Our stakeholders’ comments and opinions are of great value to us. Many are taken on board and incorporated into our strategies for long-term value creation. The investor relations section of our website is another popular channel for stakeholders and the Bank continues to ensure that its pages are updated in a timely fashion along with the rest of the site.


Effective communication and active engagement with this important stakeholder group have made the Bank’s shares a creditable investment proposition. As a result of a challenging economic environment, the stock market too witnessed a decline, with the ASPI and S&P SL20 dropping by 5% and 15%, respectively. This contributed to the decline in the Bank’s share price which traded at a discount of 0.98 to book value at the end of December 2018. However, it still remained the highest among peers in the Banking, Finance and Insurance sector, and is a testament to our policy of sharing relevant information about our future prospects in addition to our current performance.

The Bank’s public holding (free float) is 99.77% in voting shares and 84.41% in non-voting shares against the regulatory minimum of 10%. With its shares actively traded in the CSE, investors are provided with a convenient “enter and exit” mechanism.

Compliance report on the contents of Annual Report in terms of the Listing Rules of the CSE

The Bank has fully complied with all applicable requirements of Section 7.6 of the Listing Rules of the CSE on the contents of the Annual Report and Accounts of a listed entity. Please refer Table 38 on page 355 for references to the relevant sections of this Annual Report where specific information is disclosed together with the relevant page numbers.

Compliance with requirements of the Section 7.6 of the Listing Rules of the CSE Table – 38

Rule No. Disclosure requirement Section/reference
7.6 (i) Names of persons who during the financial year were Directors of the Bank Corporate Governance Report
7.6 (ii) Principal activities of the Bank and its subsidiaries during the year and any changes therein Note 1.3 of the Accounting Policies Group Structure
7.6 (iii) The names and the number of shares held by the
20 largest holders of voting and non-voting shares and the percentage of such shares held
Item 5.3 of the “Investor Relations”
7.6 (iv) The float adjusted market capitalisation

Public holding percentage (%), number of public shareholders and under which option the listed entity complies with the minimum public holding requirement
Not applicable since the Bank has complied with the minimum Public Holding requirement Item 5.3 of the “Investor Relations”
7.6 (v) A statement of each Directors’ holding and Chief Executive Officer’s holding in shares of the entity at the beginning and end of each financial year Item 5.4 of the “Investor Relations”
7.6 (vi) Information pertaining to material foreseeable risk factors of the Bank Item 7 of the “Investor Relations”
7.6 (vii) Details of material issues pertaining to employees and industrial relations of the Bank Item 8 of the “Investor Relations”
7.6 (viii) Extents, locations, valuations and the number of buildings of the entity’s land holdings and investment properties Note 40.5 (a) and (b) to the Financial Statements on “Property, Plant and Equipment”
7.6 (ix) Number of shares representing the Bank’s stated capital Note 53 to the Financial Statements on “Stated Capital” Item 3 of the “Investor Relations”
7.6 (x) A distribution schedule of the number of holders in each class of equity securities, and the percentage of their total holdings as at the end of the year Item 5.2 of the “Investor Relations”
7.6 (xi) Ratios and market price information:

Equity – Dividend per share, dividend payout ratio, net asset value per share, market value per share

Debt – Interest rate of comparable Government Securities, debt/equity ratio, interest cover and quick asset ratio, market prices and yield during the year

Any changes in credit rating
Items 2, 4 and 10.2 of the “Investor Relations” Items 10.1 and 10.2 of the “Investor Relations” Items 10.3 and 10.4 of the “Investor Relations”
7.6 (xii) Significant changes in the Bank’s or its subsidiaries’ fixed assets and the market value of land, if the value differs substantially from the book value Note 40.5 (b) to the Financial Statements on “Property, plant and equipment”
7.6 (xiii) Details of funds raised through Public Issues, Rights Issues, and Private Placements during the year Note 53 to the Financial Statements on “Stated Capital” Not applicable since the Bank did not raise funds through a share issue during the year
7.6 (xiv) a. Information in respect of Employee Share Option Schemes

The number of options granted to each category of employees during the financial year.

Total number of options vested but not exercised by each category of employees during the financial year.

Total number of options exercised by each category of employees and the total number of shares arising therefrom during the financial year.

Options cancelled during the financial year and the reasons for such cancellation.

The exercise price.

A declaration by the directors of the entity confirming that the Entity or any of its subsidiaries has not, directly or indirectly, provided funds for the ESOS.
Note 53.2 and 54 to the Financial Statements on “Employee Share Option Plans”
b. Information in respect of Employee Share Purchase Schemes

The total number of shares issued under the ESPS during the financial year

The number of shares issued to each category of employees during the financial year

The price at which the shares were issued to the employees

A declaration by the Directors of the entity confirming that the entity or any of its subsidiaries has not, directly or indirectly, provided funds for the ESPS
Not applicable as the Bank does not have Employee
share purchase schemes
7.6 (xv) Disclosures pertaining to Corporate Governance practices in terms of Rules 7.10.3, 7.10.5 (c) and 7.10.6 (c) of Section 7 of the Rules. Not applicable since the Bank received an exemption in terms of Section 7.10 (c) of the Listing Rules
7.6 (xvi) Related party transactions exceeding 10% of the equity or 5% of the total assets of the entity as per Audited Financial Statements, whichever is lower The Bank did not have any related party transactions exceeding this threshold as at end 2018
Details of investments in a related party and/or amounts due from a related party to be set out separately The details shall include, as a minimum:
  1. The date of the transaction;
  2. The name of the related party;
  3. The relationship between the entity and the related party;
  4. The amount of the transaction and terms of the transaction;
  5. The rationale for entering into the transaction
Item 20.3 of Annual Report of Board of Directors

The pages that follow contain information on the performance of the Bank's listed securities.