As a responsible corporate citizen, we take a sustainable approach to leveraging the funds entrusted to us through the creation of credit which in turn is essential for the growth and development of people and the economy. While the services we provide are essential to society, we endeavour to earn the trust of customers for the efficient functioning of enterprise, resulting in the attraction of customers to our fold. This prudent and customer-centric approach to growth has strengthened our brand and today we rank as one of the largest non-bank financial institutions in Sri Lanka with respect to the Company’s asset base.

The pursuit of sustainable growth is a journey that requires constant attention to the development of current businesses to secure profitable growth, the broadening of the range of activities, and diversifying of revenue streams. In this regard People’s Leasing has developed new products to cater to emerging market conditions and strengthened risk management processes to improve the quality of its loan book.

Our impact on stakeholders

Contribution towards Sustainable Development Goals

Strengthen capacity to encourage and expand access to banking, insurance, and financial services for all

 

Increasing business volumes by focusing on untapped markets

Our asset base has been growing over the years as shown in the table below and as a consequence, it has increased by over 54% over the last five years. We now have the second largest asset base in the NBFI sector with a market share of 12.05%.

One of the main strategies employed in growing the asset base and the volume of business has been to set disbursement targets for branches, as well as individual marketers, and continuously monitor the performance. The achievement of those targets is embedded into the performance management system of the branches and their personnel.

Outlining aspects such as roles and responsibilities, statutory regulations, credit evaluation, approval, and monitoring, the credit policy of the Company guides the entire credit process. To ensure the facilities are granted to the right customers, we focused on enhancing our employees’ knowledge on credit appraisal and credit quality.

The Company has an island-wide branch network of 103 fully-fledged branches and 101 service centres. (Refer page 96 under “Increasing presence through island-wide network” for more details.)

The amounts disbursed on each of the product categories is shown in the table below which also reflects the growth achieved year on year.

Products	March 2019	March 2018	Variance YOY
	Rs. million	Rs. million	Rs. million	(%)
Finance leases	41,943.48	44,625.94	(2,682.46)	(6.01)
Motor loans	18,721.89	10,820.65	7,901.24	73.02
Other loans	28,270.09	27,088.90	1,181.19	4.36
Islamic (IJ/MR/TM)	6,347.14	5,316.64	1,030.50	19.38
Total	95,282.60	87,852.13	7,430.47	8.46

We recognise that the strategy for sustainable growth must focus on the development of new products to cater to changing market needs and the need to improve profitability. People’s Leasing has introduced six new products during the financial year and enhanced features of existing products to meet varying customer requirements as well as to overcome the competition in the market.

• Gold loans – By using gold as collateral, we have reduced our risk exposure and also attracted new customers who face urgent fund requirements. The take up of this product has shown rapid progress and the intention is to roll it out to 40 branches in the ensuing year.
• Variable rate leases and loans – People’s Leasing has been the first of the NBFIs to introduce variable rate leases to the market and this has found favour with the customers. In this instance as well, we have reduced our exposure to the risk of a mismatch in rates and have also given the customer the opportunity to participate in any potential rate reductions that the Company may be able to pass on.

Operations

During the year under review, we reduced the number of centralised operations to two zones from five, improving the integrity of the operational process and enhancing our quality of service.

Loan-to-Value Ratio (LTV) rules adversely affected our asset-based lending, increasing the competition with banks who are now entering the leasing arena. Restrictions on the opening of LCs (letters of credit) for vehicle importation were also imposed. Rupee depreciation and new taxes on vehicles increased vehicle prices, thereby negatively impacting demand.

Intensifying recovery steps with strong monitoring of customer portfolio

The control of risk is fundamental to the Company’s sustainable growth plans. It has been our position that proper management of risk is instrumental in producing successful outcomes. In this regard, in 2017, we restructured the Recoveries Division along with three other key units, to position the Company for further growth. It is believed that the new measures in place will help us strengthen our position in the market and secure our asset quality, profitability, and stability.

By all accounts these changes are expected to have a positive impact on our portfolio. Improving credit quality is not an overnight solution. Instead it is a gradual process for which the foundation has been laid.

Strengthening the frontline

Our first step in the reorganisation involved empowering the Recovery Officers at the branches. To ensure, they are able to focus all their time and resources towards meeting customer needs, we recruited these officers locally. Their local knowledge, closer relationships with the customers, and deeper understanding of their businesses are proving to be beneficial in providing a personalised and value-added service to our customers.

A dedicated department has been established under Deputy General Manager – Recoveries to strengthen the collection efforts of the Company.

In addition to assigning our own employees, we have employed several external agencies to undertake recoveries of debts that are in arrears in excess of 24 months. The restructure has now also enabled the Special Recoveries Unit (SRU) and the Legal Division to work conjointly to resolve long outstanding debt issues and improve the Company’s non-performing portfolio.

The Head of Recoveries who takes responsibility for the recoveries portfolio of the entire branch to ensure that no accounts are overlooked, also coordinates with the SRU and Legal Division located at our Head Office.

During the year under review, our non-performing portfolio at the end of March 2019 was calculated at 3.91% which was well below the industry average of 7.7%.

Firming up processes

Our recovery officers are trained to offer customers concessions and settlements, in contrast to the previous more aggressive approach to recoveries. We also intend appointing in-house lawyers to monitor and evaluate progress, while continuing to engage external lawyers for court representation.

We have instituted a much faster automated system which allows the SRU to monitor details such as the officer responsible for following up on the debt and the stage of the recovery process.

The support of our Disposal Loss Recovery Unit is another important addition to the Recoveries Division. They focus on disposal of assets after repossession (e.g. of a vehicle), improving the process and securing the maximum proceeds for the Company.

Looking ahead, we believe that the call centre will play an important role in further improving the progress made in recoveries to date. A pilot project will soon be launched in one region to explore its feasibility and effectiveness.

Internal processes concentrate on establishing the strength of the receiver of the loan, prior to granting the loan. The emphasis of this practice is on preventing a potential bad debt instead of focussing on collecting debts from weak applicants.

In the interest of promoting business, the process of approvals has been decentralised and performance management measures have been put in place to prevent a deterioration of the loan book.

The entire recovery process is however tempered with empathy for the customers’ personal circumstances which are given serious consideration in arriving at a decision.

Optimising Group synergies

The overarching ingredient for our success lies with the synergies that exist within the Group. Our relationship with the parent, People’s Bank, continues to provide a solid platform that reinforces our position in the marketplace. This relationship also facilitates the spread of best practice through collaboration at Board and Management levels.

The association with People’s Bank opens up the prospects of being an associate service provider, offering convenience to customers through the bundling and cross-selling of products, hence differentiating People’s Leasing in a competitive environment.

Parent and Group synergies

With a 75% stake in ownership, People’s Bank, stands as our anchor and offers great support through the strength of their brand, solid reputation, position in the marketplace, and their expertise. In addition, we are able to take advantage of this relationship by operating 92 window offices across the People’s Bank branch network.

Subsidiaries

We are fully-committed strategically to enable our subsidiaries to reach their full potential. Our brand, branch network, and shared services lend confidence to the market and support the subsidiaries in strengthening their market base and achieving solid operating results.

People’s Leasing Group’s subsidiaries and commonly shared facilities

People’s Insurance

People’s Insurance PLC (PI) is a fully-fledged non-life insurer, registered under the Regulation of the Insurance Industry Act and listed on the Main Board of the Colombo Stock Exchange.

PI offers products and services through window offices across the People’s Leasing branch network and through representatives at the regional offices of People’s Bank, in addition to their operations at the corporate office and six regional offices.

PI continues to strengthen ties and work closely with parent entities to capitalise on their vast client base and grow their business through customer referrals. They also seek synergies and collaborate with other companies within the Group to secure their insurance business. PI relies predominantly on captive business through collaboration within the Group network, particularly, business generated through parent entities. This accounts for 77% of their top-line business.

Working together with parent entities, PI designs comprehensive financial solutions as part of the product-bundling and cross-selling process.

Similar to other subsidiaries, it avails itself of the Group network’s commonly shared services and others including:

–Having a presence across 99 People’s Leasing branches

–Attracting Rs. 116 million bancassurance business in 2018

–Within financial year 2018, PI secured Rs. 368 million through Group Insurance Business

–Cross-selling products and services

–Generating gross written premium (GWP) of Rs. 4,292 million in 2018.

People’s Leasing Fleet Management Limited

As a leader in sustainable vehicle fleet management in Sri Lanka, People’s Leasing Fleet Management Limited (PLFML) while building business, creates value for the shareholders, customers, employees, and society. It is well placed within the Group to reap significant synergistic benefits in fleet service and motor valuations, supporting both our leasing operations as well as the claims Management process of People’s Insurance.

PLFML also offers services by locating their representatives at People’s Leasing branches.

	2018/19	2017/18
Valuation reports obtained from PLFML (No.)	26,146	23,664
PLFML valuations as a % of total valuations of People’s Leasing (No.)	51.56	56.29
Hiring income
Hiring income from People’s Leasing (Rs. million)	46.69	40.67
Hiring income from PI (Rs. million)	3.52	3.70
Service Sales – Repairs to People’s Leasing Group (Rs. million)	4.05	4.38
Number of vehicles permanently allocated to People’s Leasing	13	10

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People’s Micro-commerce Ltd.

Our venture into microfinance complements our inclusive approach to value creation and our commitment to financial inclusion. We see a growing level of activity amongst the grassroots communities which presents us with an opportunity to gain a stronger customer base and also make them known to the parent at the right time.

The target audience consists primarily of women, who have the power to bring social and economic change to their families, thereby securing benefits through the ripple on effect.

As at 31 March	2019	2018
Customer base	26,850	26,773
Portfolio (Rs. million)	2,438.82	1,951.08

The Company also caters to the market for small vehicles, such as three wheelers and motor bikes, for SME clients to facilitate their transportation requirements and enhance the quality of their lifestyle.

People’s Micro-commerce Ltd. (PML) grants significant business value to People’s Insurance on asset backed facilities, and provides island-wide services through the People’s Leasing branch network.

Similar to other subsidiaries, PML enjoys parent support and Group synergies for a range of shared services, which in addition include:

–33 PML branches operating across the People’s Leasing branch network

–Business tie-ups.

People’s Leasing Property Development Limited

The principal activities of the Company are concentrated on property development and the renting of properties. The Company mainly engages in the implementation of projects and the monitoring of construction of branches for People’s Bank and People’s Leasing. They also provide consultancy services to the other entities in the Group when they are involved in the purchase or renting of properties.

People’s Leasing Havelock Properties Limited

The Company’s principal line of business is in constructing and operating office complexes. They provide sophisticated working premises for the Group companies at a reasonable price.

Positioning and building corporate brand image

Our brand position remained strong throughout the year under review, as illustrated below. Fitch Ratings Lanka assigned the Company a credit rating of AA- (lka) making it one of the highest rated finance companies in Sri Lanka. People’s Leasing also has an international rating from Fitch Rating International (B-), which is one notch below the Sovereign rating. Since the Company is not utilising foreign borrowings at the moment, we decided to discontinue the rating which is obtained from Standard & Poor’s during the financial year.

Ratings

	2018/19	2017/18	2016/17	2015/16	2014/15
Fitch Ratings Lanka	AA-(lka)	AA-(lka)	AA-(lka)	AA-(lka)	AA-(lka)
Fitch Ratings International	B-	B	B	B+	B+
Standard & Poor’s	Discontinued	B+/B	B+/B	B+/B	B+/B

The fundamentals of People’s Leasing have been strong and its brand value has been derived from financial stability, customer friendliness, reliability and trustworthiness.

Other factors have supplemented our brand as follows:

• Consistently maintaining higher ratings as shown in the Table above.
• Awarded the coveted No. 1 Rank in the Non-Banking Financial Services Brand by Brand Finance PLC 2018
• Brand value stands at Rs. 8.72 billion in the Financial Services (Leasing) category in 2019 compared to Rs. 6.49 billion
  in 2018.
• Included in the S&P Sri Lanka 20 index since December 2014.

Improving brand strength

Established over two decades ago in 1995, People’s Leasing is a wholly-owned subsidiary of People’s Bank, one of the largest state banks in Sri Lanka. Formerly known as PLC, the Company changed its branding to reflect the name People’s Leasing, capitalising on the connection with its parent company.

These are some of the elements that contribute to People’s Leasing occupying a leadership position in an environment where competition is fierce.

Yet, resting on our laurels has never been the ethos of the Company. Complacency is extremely dangerous in an industry where stiff competition in the market from traditional and non-traditional players, places constant pressure on us to keep ahead of the others.

In order to better anticipate and neutralise threats as far as possible and to capitalise on market opportunities, we will soon have a dedicated Research and Development Division. Through the establishment of this unit, we will begin launching programmes such as “mystery shoppers” to better understand market sentiment and requirements. Backed by such research, we will be able to develop products and services, enhance our reach in the marketplace, streamline internal processes and enhance service standards, which will result in keeping the Company abreast of changing customer expectations and shaping our business to suit market needs.

Taking the brand to new markets is another avenue we are exploring. Having already moved beyond the geographical boundaries to commence operations in Bangladesh in 2017, we are already generating a profit and introducing new products to the market, such as, “Gold Loans”, and “Musharakah”.

Achievements 2018/19

At People’s Leasing we are clear about the strong connection between customer service and business success. To us, customer service means not just knowing our customers and being where they are, but providing them with the perfect, holistic solutions for all their financial needs. We strive to make them feel that each and every interaction with us is worthwhile and beyond their expectations.

Our impact on stakeholders

Contribution towards Sustainable Development Goals

	Ensure that all men and women have equal rights to economic resources and access to financial services
	Empower and promote the social and economic inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status

GRI 102-10

Increasing presence through island-wide network

In an environment where competition is high, ensuring that our customers have easy access to our products and services is and always has been a top priority at People’s Leasing. In this respect, we have expanded our presence to 103 fully-fledged branches and 101 service centres that span the island. We have also collaborated with our parent company, People’s Bank to widen our reach.

Service centres to be converted to fully-fledged branches in 2019/20

Subject to CBSL approval

As part of this drive we will continue to increase accessibility by taking measures that include converting high-performing service centres into branches. In addition our latest branch will be opened in Puthukuduiyiruppu.

Our focus has also moved beyond a brick-and-mortar presence across the country. We are now concentrating on expansion through social media platforms such as Facebook, Viber, and WhatsApp, and the revamp of our website so that it is more interactive and customer-friendly – ideal touchpoints for our constantly on-the-go clients.

Through our collaboration with People’s Bank we are also expanding our remit through an extensive cash deposit machine (CDM) network, the online Sri Lanka Interbank Payment System (SLIP), and the Common Electronic Fund Transfer Switch (CEFTS).

Composition of our customer base

Apart from cross-selling, two-thirds of our customer base consists of depositors while the rest are borrowing customers. Our deposit customers mostly invest in savings deposits which are of a relatively lower cost to us and are stable funds. Leasing is the main product lending customers were interested in, thus it represented the majority of our total lending customers.

GRI 102-6

Number of customers segmented according to main products

Note: Due to cross-selling total number of customers is lower than the summation of each product

Diversifying product portfolio across customer segments

In a market where competition is fierce our future lies in diversifying our products and services. Currently our product portfolio spans leasing, loans, deposits, Islamic financing products, margin trading and factoring (refer online for entire product portfolio). Our products also consist of unique features in the market. For instance, we offer our customers unique savings schemes and investment plans that are guaranteed and unaffected by market fluctuations – the first time an NBFI received this type of approval from the Central Bank of Sri Lanka (CBSL).

In addition to this range though, our products and services stand out thanks to our unique blend of experience, customer centricity, and our exposure to technological advancements. We help the customers make targeted savings plans for life goals. The steady growth of our customer base is testament to the strength and relevance of our products.

During the year, we used our in-depth knowledge of customer needs to redesign existing products offering greater flexibility and novel features. We also introduced a number of new products across our portfolio, products with unique features designed to cater to customer needs.

Geographical presence

We are present in every province and able to serve the less developed and the less affluent sections of our society. 63.14% of our lending customers live and work in provinces other than the Western Province and 57.22% of disbursements during the year were made to these customers.

Apart from meeting and exceeding customer needs through our product portfolio we hope to also make a positive impact on the economy. Our products and services span key economic sectors and the facilities we extend for commercial purposes support revenue generation, not just for our customers but also, for the respective sectors.

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Geographical segregation of customers

Cross selling has not been considered

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Sector contribution (gross portfolio as at 31 March 2019 in Rs. million)

Financial services 4,361		Agriculture, forestry and fishing 23,499		Manufacturing 8,172		Tourism 3,728		Transport and storage 31,529
Construction and infrastructure development 12,009		Wholesale and retail trade 18,755		Healthcare, social services and support services 33,836		Consumption 9,085		Others 11,679

GRI 206-1

Our offering

Our products are developed with acknowledgement of the customer’s confidence in the People’s Leasing brand and our understanding of the customers’ needs in light of overarching market trends. Our product policy is primarily focused on satisfying customer needs. Its ultimate goal, however, is to expand our reach to the wider population while continuing to improve existing service standards, develop new and relevant products, and build strong relationships with all our customer segments.

We do not engage in anti-competitive, anti-trust and monopoly practices. Our products are priced in line with market trends and the country’s monetary policy. We did not incur any fines or penalties during the reporting year.

Service standards

The service delivery model we subscribe to encompasses the Company’s aims and customer expectations. The factors that can materially affect the level of service we provide are outlined below:

Leasing

While our main product, lease continues to do well with a gross portfolio of Rs. 87,421.57 million and 92,508 customers, we recently supplemented our suite of leasing products and services with the introduction of the Variable Interest Lease for motor vehicles for individuals and business enterprises providing greater flexibility to customers in terms of rate and the period. During this short period of time the product is showing promise with a gross portfolio of Rs. 548.49 million. The total NPA ratio for our entire leasing products portfolio is 2.07% while the collection ratio for same is 95.10%.

Loans

We expanded our loan portfolio with the introduction of three new products – the Shakthi Business Loan, the Shasthra Educational Loan and the Sanasum Piyasa Home Loan. These new products cover three of the key lifestyle stages of our customers and their families. We also launched Gold Loans during the previous year and this recent product too is showing promise with portfolio reaching Rs. 240.12 million and customer numbers growing to 795. Gold loans offer customers a speedy solution to urgent financial requirements. By providing customers holding several gold loan facilities with us the option to redeem individual articles we also provide flexibility and convenience. We will be rolling this product out to 40 branches in 2019/20.

The total NPA ratio for our loan products during the year was 6.66% while the collection ratio for same was 91.02%. Our loan products continue to grow in popularity with customer numbers increasing. The total disbursements for our loan products for the year was Rs. 46,991.98 million, up from Rs. 37,909.55 million the previous year.

Margin Trading and Factoring

Margin trading and factoring have long been staples in our product and services portfolio. The former provides investors of equity and debt markets with the chance to obtain a facility against their investment, to build their portfolio further, and to trade in additional securities. The latter offers capital solutions, transfer of risk, and sales ledger management, providing customers with a dedicated team to manage receivables. Margin trading comprises a portfolio of Rs. 2,058.46 million with interest income of Rs. 338.81 million, and we have seen the customer numbers for this segment increase from 141 to 154. For factoring, our gross portfolio reached Rs. 2,755.55 million, and disbursements of Rs. 895.98 million while customer numbers increased by 80.95% to 152 year on year.

Deposits

Our deposits portfolio was further strengthened with the addition of two new Children’s Savings Accounts. Senehasa Yaalu offers higher interest rates for children’s savings while Senehasa Future allows a fixed amount to be set aside every month on behalf of a child to achieve a target amount in two to five years – especially useful for planning educational and other milestones in a child’s life. Another product, Super Investment Plan is designed to aid customers who wish to achieve a set target over a period ranging from two to five years, while Crest Saver is useful for customers wanting to ensure that a set portion of their salaries is saved each month.

GRI 102-2

Product portfolio

Lending

Consisting mainly of finance leases, our leasing portfolio provides easy payment schemes and fast and friendly service through our island-wide branch network Gross portfolio Rs. 106,363.83 million Collection ratio 94.94% Disbursement Rs. 41,943.48 million Number of customers 92,508 NPA ratio 2.31%		A revolving loan facility, similar to an overdraft, granted for short-term financing, especially working capital requirements Gross portfolio Rs. 13,835.20 million Collection ratio 90.69% Disbursement Rs. 18,886.73 million Number of customers 8,192 NPA ratio 5.96%		Provided at fixed interest rates upon customer request, similar to fixed property mortgage loans, that are secured against collateral Gross portfolio Rs. 16,858.21million Collection ratio 89.31% Disbursement Rs. 8,716.06 million Number of customers 9,739 NPA ratio 9.36%		Auto loan product offering a range of features to customers who intend to purchase domestic motor vehicles with an affordable monthly rental and extended repayment up to seven years Gross portfolio Rs. 25,684.94 million Collection ratio 96.89% Disbursement Rs. 18,724.34 million Number of customers 17,979 NPA ratio 0.52%		Allows customers to individually or jointly (based on ownership) pledge their fixed deposit/s and obtain loans as needed using one-time registration Gross portfolio Rs. 2,545.97 million Number of customers 2,784
Similar to personal loans – mainly for customers who are permanently employed and in need of a quick and painless financial solution Gross portfolio Rs. 169.60 million Collection ratio 92.12% Disbursement Rs. 62.47 million Number of customers 685 NPA ratio 11.17%		Granted against the collateral of gold – our latest product launched during the previous year Gross portfolio Rs. 240.12 million Disbursement Rs. 500.27 million Number of customers 795		This recently launched product caters to the business community, allowing customers to fulfil their short-and long-term financial requirements Gross portfolio Rs. 599.51 million Collection ratio 93.68% Disbursement Rs. 591.39 million		This recently launched product helps customers fulfil their local or overseas educational expenses		This recently introduced non-traditional flexible loan includes features such as substitution of borrower, asset replacement, and flexible repayment system including grace period up to five years Gross portfolio Rs. 13.25 million Collection ratio 100.00% Disbursement Rs. 13.45 million Number of customers - 4 NPA ratio - %
Allows the lease of an item for a specified benefit in the form of a usufruct for a set period in return for a specified consideration with ownership of the item remaining with the Company throughout the facility period, while the customer maintains right of use Gross portfolio Rs. 8,632.65 million Collection ratio 93.47% Disbursement Rs. 3,909.65 million Number of customers 5,427 NPA ratio 2.34%		Shari’ah compliant product which provides short and medium-term financing for the purchase of commodities/assets, such as the sale of a vehicle/commodity while disclosing the cost and defining and agreeing on a profit Gross portfolio Rs. 1,447.56 million Collection ratio 87.51% Disbursement Rs. 1,303.35 million Number of customers - 965 NPA ratio – 16.90%		A recent product which is a profit and loss sharing contract based on a partnership in which parties contribute to the financing and management of a Shari’ah compliant project Gross portfolio Rs. 1,038.60 million Disbursement Rs. 1,134.12 million Number of customers 298 NPA ratio 0.44%

Deposits

For fixed periods ranging from one month to five years at fixed interest rates with interest payable monthly or at maturity, for Sri Lankan citizens and resident visa holders over 18 years of age Total deposit base Rs. 83,033.47 million Number of customers 21,044		Contractual agreement with an entrepreneur for the purpose of a business venture through which both parties agree on a profit-sharing arrangement		A regular savings account with a higher rate of interest that provides the deposit holder with an international Visa debit card Gross portfolio Rs. 5,335.19 million Number of customers 237,732		Deposit holders above the age of 55 are eligible and receive higher interest rates		A new children‘s savings products where a fixed amount can be set aside every month on behalf of a child to achieve target amount in two to five years
Children’s savings product with a higher rate of interest. Any citizen of Sri Lanka, who is below the age of 18 years, is eligible. Minimum deposit amount is Rs. 250. To inculcate savings habit in the minds of children		A unique Islamic savings account for children that offers reasonable returns with the profit calculated monthly and credited to the account		A new product for customers who wish to set aside a fixed amount of savings every month to achieve a target amount at the end of an agreed period ranging from two to five years		A recently launched savings account for salaried permanent employees of reputed organisations between 18 to 55 years with minimum monthly savings salary remittance of Rs. 1,000.00		Children savings product with gift scheme. This account can be opened by a parent or a legal guardian on behalf of a child below 18 years

Other products

Licensed under the Securities and Exchange Commission of Sri Lanka, these facilities focus on small and medium investors within retail sector and high net worth individuals and institutions Gross portfolio Rs. 2,058.46 million Interest income Rs. 338.81 million Number of customers 154

Providing capital solutions, transfer of risk, and sales ledger management, with a dedicated team to manage the receivables, we offer factoring, bill, cheque, and invoice discounting, and discounting for corporate, semi-corporate and SME customers Gross portfolio Rs. 2,755.55 million Interest income Rs. 579.74 million Number of customers 152

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Product portfolio screening

A detailed precautionary mechanism continues to be in place to address the environmental and social impacts of the structuring and delivery of products. We follow an extensive screening process to factor in the environmental and social consequences of our operations with customers.

Our credit policy clearly defines business and customer types that we can lend to. Policy is periodically reviewed by a team specialised in risk and control under the supervision of the Deputy General Manager – Risk and Control.

Approved credit files are randomly scrutinised on a monthly basis, reasons for discrepancies analysed and corrective actions taken. With every new product we promote paperless processes where possible to reduce our environmental footprint.

Socially and environmentally responsible products

We also undertake a number of specific procedures to mitigate and offset the impact of vehicle emissions on the environment.

We promote green products such as Eco Lease and E-friends to customers to champion the Leasing of green vehicles and the operation of greener businesses respectively.

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Improving customer relationships and satisfaction levels

In a market where similar products with easily imitable features are proliferating, our efforts to strengthen the bond we share with our customers have never been more important. To do so we have invested in creating an environment where customers feel that they have indeed been heard and their needs attended to. Understanding the customer is the key to building long-lasting and mutually rewarding relationships.

Cybersecurity is a top priority in today’s ultra-digitised world where identity theft and data hacking happen all too frequently. Protecting our data, particularly with regards to the customer information that we request for and store, is of paramount importance to the Company. We understand full well the consequences of a breach in data security and customer privacy. While such a violation of trust would be devastating for the customer it would also hugely impact stakeholder confidence in our competence. Further, during 2018/19 no substantiated complaints reported concerning breaches of customer privacy or losses of customer data. Our Information Security Management System is ISO 27001 certified which gives our customers confidence in the quality of our operating systems.

Following ICT policy, we ensure that employees are aware of the importance of protecting information, with our Heads of Departments and Branch Managers taking responsibility for data security and applying industry best practices. We use robust threat and vulnerability assessments and incident tracking against breaches of customer privacy. Data security is also overseen by the Board and the CEO/GM. The DGM – ICT conducts regular evaluations to ensure the security and responsible storage of personal data, recommending system modifications, and enhancements to mitigate technology and information-security risks as needed.

Responding to the customer

While our deep understanding of the customer allows us to provide them with practical products and services such as Gold Loans which cater to their unexpected financing needs, we are also keen to be there for the major milestones of our customers’ lives. Doing so means taking every action to thoroughly understand our customers and their requirements – knowledge that has been institutionalised over the years.

Our latest products, from the Shakthi Business Loan, the Shasthra Educational Loan, and the Sanasum Piyasa Home Loan to the two new Children’s Savings Accounts – Senehasa Yaalu and Senehasa Future,and Super Investment Plan for adults, do just that. Currently being rolled out to the branches, these new products and services are a result of the deep understanding we have of our customers, their lifestyles and financing needs, and the solutions they require to secure a brighter future for themselves and their families.

Depending on institutional knowledge alone places us in danger of complacency – a risk we refuse to take. To ensure a quick and efficient method of attending to customer complaints we have initiated the development of a customer care and complaint handling policy. Its goal is to ensure that all customer grievances receive the care and attention they deserve within ten minutes of reaching the Company.

Customer complaints reported

CBSL	7
Financial Ombudsman	28

As part of the ground work for the development of this policy we also streamlined internal processes to reduce errors and delays, eliminate routine work, and allow our employees optimal time to spend on customer service. We also decentralised authority allowing greater autonomy at branch level to allow the provision of more sophisticated customer service.

Rewarding loyalty

About half of our business originates from our existing customer base, attesting to the confidence customers place in the Company’s products and services and the trust they place in the integrity of our operations. In an environment where the greater demand is for products and services from the financial services sector, customer loyalty is of even greater value to People’s Leasing.

To show our appreciation, we partnered with 22 merchants to introduce the “Gratitude” Loyalty Card to long-standing customers, initially presenting it to over 30,000 from a cross-section of our customer base. The programme consists of three distinct cards – Gold, Platinum, and Silver loyalty cards – to better serve each customer segment. The “Gratitude” Loyalty Card allows our loyal customers the chance to obtain special discounts when making transactions relating to vehicles, clothing, furniture, travel, vision care, gold jewellery, vehicle services, vehicle spare parts, and hospitals.

Our employees too, play an important role in generating customer loyalty. Ensuring that our people are driven by the Company’s values is another vital factor that differentiates People’s Leasing from the competition. This is why we pay the greatest attention to our recruitment process, our training, development, and capacity building programmes and our career development and succession plans. (Please refer pages 112 to 123 to learn more about our employees’ role in our business success.) It is our employees’ engagement and dedication that drives the loyalty of our customers.

Introducing new facilities through channel migration

From selection to decision-making and purchase, the digitisation of the customer journey has made it so much easier for people to receive customised solutions that suit their needs exactly. Creating an environment where we can make truly personal connections that clearly convey our brand’s value is what will differentiate our offering from that of the competition.

Going digital

With the pace of technological developments racing ahead at breakneck speed, People’s Leasing is making every effort to stay one step ahead. Our competition in this field does not just come from other players in the market. In this digital era, our customers are also the customers of global giants such as Amazon, eBay and AirBnB. From our point of view, our customer service must not lag. To us this means keeping abreast of the latest technological developments in the business arena.

Advanced analytics is a key differentiator for organisation, allowing better segmentation by client type for targeted marketing campaigns utilising the most appropriate medium. It also allows the strategic employment of marketing and advertising based on new insights into the return on investment.

We are currently in the process of adopting a digitised system to speed up the facility approval process and a digital platform that will securely manage our customer database and provide our employees with customer information at their fingertips. Being aware of the full picture at every touchpoint allows us to better understand our customers, offer solutions that are a perfect match to their needs and also cross-sell other products and services to them. This digital solution promises to greatly improve our customer service and net promoter scores. We are also exploring the possibilities of adopting Artificial Intelligence to assist employees in serving the customer better.

In addition to investing in new technology, we are also investing in new skill sets to compete with the rise of digital and data specialists in our market space. Our in-house experts will soon be responsible for the development of new product innovations and product extensions to meet rising demand and customer expectations. They will also look at ways in which to energise and optimise our business model.

Increasing customer awareness through effective communication

Over the years People’s Leasing has relied more on word of mouth publicity rather than advertising, but with rising competition this is no longer an option. Mass media plays a vital role in increasing business and we are focused on targeted, cost-effective marketing communications that ensure that relevant messages get through to key stakeholders.

Increasing digital presence

Demand for broadband data services in Sri Lanka is increasing, driven by 4G adoption and increased smartphone penetration. This combination along with the fact that the market is now moving towards 5G mobile services is expected to drive reasonably strong growth in the local market over the next few years.

While Sri Lanka’s Internet and smartphone use has grown significantly in recent years, e-commerce users are still small in numbers and penetration levels unsatisfactory. The international business community, Geneva’s International Trade Centre for instance, is calling for an expansion of the country’s e-commerce payment facilities beyond the current few by large financial institutions so that more Sri Lankans can get online to transact.

Given these trends, during the year, we invested in the revamp of our website – the central location for a fast-expanding segment of tech-savvy customers and potential customers. We also focused on digital marketing to ensure that our online presence was significant enough to impact our target market. Enhancing our presence on social media we are now active on platforms such as Facebook, YouTube and LinkedIn. With our customers increasingly online, we need to be where they are when they want us.

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Communicating within a regulated environment

In the field of marketing we need to work cautiously within the framework of Central Bank (CBSL) rules and regulations on advertising and other public announcements. We ensure that all our marketing communications remain within regulations. During the reporting year, no incidents of non-compliance were reported with regards to any of our marketing communications or products and service information labelling. Further we ensure that we disclose relevant information in terms of product and services in three languages (English, Sinhala and Tamil) for our customers to make informed decisions.

Being one call away

During the year, we also executed a pilot project for implementing a People’s Leasing call centre. Through its eventual implementation we hope to improve call quality during peak hours and decrease call abandonment, significantly strengthening our customer service proposition by being one call away at all times.

Despite our increasing presence online the value of a call centre remains clear. It will allow our customers the ability to reach us any time of the day, any day of the week, and 365 days of the year. While work is being done on the necessary infrastructure, we have also begun looking at the necessary cadre to man the call centre and are putting in place a curriculum to ensure that they will be ready to engage as soon as it is launched.

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Anti-corruption

People’s Leasing subscribes to a Business Code of Ethics which is designed to guide the employees in desisting from unethical business practices. Under the preview of qualified chartered accountants, entire People’s Leasing operational units are audited via online records against anti-corruption. Further, Branches are physically audited engaging well trained and experienced field audit staff members against any fraudulent activity. Branches are prioritised according to their grade, feedback reports provided by the respective Zonal Heads and the internal risk assessment independently performed by the Internal Audit team. Internal Audit Department also ensures that Head Office Departments and Branch network is covered at a frequency of two years or less against anti-corruption. To add rigor to these guidelines, we have instituted sound internal controls to prevent improper activities taking place.

In addition, there are mechanisms in place and entire operational units of the Company are audited via line records against anti-corruption to investigate and take corrective action where necessary, if there are complaints or allegations of inappropriate or corrupt practices. Internal Audit Department also ensures that Head Office Departments and Branch Network are covered at a frequency of two years or less against anti-corruption. A formal mechanism to facilitate the sharing of information through the “whistle blower” process, without reprisals to the giver of information, is also in place. There are no training programmes conducted specifically for corruption. However, People’s Leasing ensures that the new staff and the existing staff receives comprehensive awareness on policies and procedures related to corruption during other training programmes. Our Internal Auditors, Integrated Risk Management Committee and the Compliance Officer have been given the responsibility of monitoring corrupt practices. Three incidents related to corrupt practices were reported during the year and disciplinary action was taken against the respective individuals.

Looking ahead

As a result of increasing competition in the market, customer loyalty will become increasingly hard to win with customers spoilt for choice. Our current focus on consolidation, with a view to diversifying and differentiating ourselves from the competition, will result in our ability to offer products to match the business and lifestyle needs of our customers, improving systems and processes, keeping abreast of the latest trends and innovations in the market, and focusing on employee distribution, will in turn positively impact customer service. In addition, we will also be launching a new Research and Development Unit under the centralised Marketing Division whose priority will be to explore new products and innovations in customer service.

For the first time in the market we have introduced a new investment scheme, which has already been approved by the Central Bank, and which holds much promise for the future. It allows customers the option to reach a target savings amount by a set date and offers interest that is higher than a savings account.

Given the fact that our customers are becoming increasingly tech-savvy and able to sample the type of customer service that the giants of the consumer world provide means that they expect no less from us. Not only do our products and services have to anticipate, meet, and exceed the needs of our customers, but we also need to be where the customer is, when they need us. When so much is required of us, we must rise to the occasion or sink into oblivion among a sea of competitors.

Already, People’s Leasing has taken great strides, leading the market with a strong and dependable brand. Maintaining this leadership position, however, means ensuring that our systems and processes are lean, that our vacancies are filled with the best-suited talent, and that our people are motivated and equipped with all they need to shine in pursuit of our common goals.

Our impact on stakeholders

Contribution towards Sustainable Development Goals

	Ensuring women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic, and public life
	Creating conditions that allow people to have quality jobs that stimulate the economy while not harming the environment
	Operating on sustainable supply chains, involving everyone from producer to final consumer

Improving operational processes

Investing in operational efficiency enhancements

During the year under review, we invested in several essential areas to improve the overall operational efficiency of the Company.

We also invested in a collation of regional performance reviews to encourage and facilitate greater collaboration. Through interdepartmental collaboration we are able to harness the power of multiple teams working seamlessly together to create products or services that customers really want. Through our collaborative culture, we are also able to bring products to the market faster, and as a result the entire Company’s ability to create value accelerates.

The training and development of our people was another focus for investment during the year. This helped us to ensure that our employees are able to exceed customer expectations and stay abreast of the changing operating environment, having the necessary tools, skills, and experience to capitalise on the opportunities and help mitigate the risks that arise from the overarching trends. (Refer pages 121 to 123 under Building a competent, engaged and motivated team for more details.)

We also invested in a new internal application to collect and maintain customer data. This database will help us send more focused and targeted customer communications, and enable the respective branch managers and Head Office supervisory bodies to better serve the customer with information at their fingertips and improve the Company’s overall ability to cross-sell relevant products and services to the customer. Branch managers can also track the progress of marketing officers in the meeting of their targets too. In addition, if a marketing officer resigns their customer database remains with the Company.

In the pipeline is our goal to minimise the time incurred for the facility approval process. We plan to achieve this goal by digitalising the entire process from general investigation to facility approving stage.

Utilising information and communications technology (ICT)

During the year under review, the role of ICT as a business partner was amplified. In partnership with business lines our ICT Division worked on simplifying customer on-boarding, enhancing productivity and operational efficiency, and standardising service quality. In helping to convert business strategies into reality, this Division also contributed to Company performance helping to develop new products, new modules, and additional features in collaboration with the business lines. Some examples include –

• Shakthi Business Loan
• Education Loan
• Housing Loan
• Co-System – new credit evaluation and credit flow
• Online fund transfer module (CEFTS)

This contribution helped enhance overall business volumes, expand the customer portfolio, and improve profitability.

In addition, the ICT Division supported the Company’s IT infrastructure, enabling business users to carry out their roles effectively, productively and securely. One of the key innovations that contributed towards this was the introduction of new modules to the core financial application to enhance the business process and to increase efficiency. Some examples include –

• New WHT tax process implementation
• Floating rate loans and leases
• Document tracking for payments
• SLIPS for supplier payments and factoring payments
• Savings gift scheme
• Recovery dash board
• Risk rating process
• Debt collection process

People’s Leasing is committed to contributing towards the UN Sustainable Development Goals including efforts to curb climate change (refer page 134). While the Company’s business does not significantly impact the environment as much as the manufacturing sector might, it is keen to reduce its environmental footprint. Towards this end the ICT Division developed a new eMemo system to promote a cost-effective, paperless environment.

The revamping of our corporate website in all three languages (Sinhala, Tamil and English) takes us even closer to our target audience. This is what today’s customer expects of all its service providers but People’s Leasing has been one of the early adopters, ensuring that its customers are able to go online and find the information they require in the language they are most familiar with. The new website is more interactive and its information architecture more intuitive to users.

The database servers of our datacentre were upgraded to the latest IBM power systems servers and storage infrastructure. As a result, our data centre is now able to cater to the exponentially expanding business requirements. At the same time, we also upgraded the software version of our existing database and the platform operating system to the latest versions. Both now provide greater scalability, reliability, security, and efficiency to the entire database infrastructure. For greater security, we also relocated our secondary datacentre to a Tier 3 world standard – with redundant and dual-powered servers, storage, network links, and other IT components.

Another ICT solution introduced during the year was the new voice solution which comprises some of the following features:

• Extension mobility
• Paperless fax solution
• Advanced automated interactive voice response (IVR) solutions
• PC-based advanced operator console for better customer service
• Advanced reporting solution for improved productivity

The new voice solution laid the foundation for interconnecting all the major branches as a single entity for fast, independent, and reliable communication. It helps us improve customer service, conduct audio-conferencing, upgrade the backup call centre according to our latest business requirements and reduce down time.

In addition, the following was also a source of intense focus for our ICT
Division during the year:

• Research on other fin-tech solutions to improve business operations
• Introduction of new ePay Slip for employees
• Increasing presence on social media platforms

We are also fortified against cyber risks, investing in fire walls and upgrades as necessary. In addition, a well-structured internal control system was implemented among users to limit human error that might lead to data breaches and other cyber risks.

Information security policy

Safeguarding the Company against the unauthorised use of information, especially electronic data, is of paramount importance to us.

One of the key measures taken to achieve this is the implementation of our information security policy, which is designed to protect the confidentiality, integrity, and availability of computer system data from those with malicious intentions.

Our incident management process allows employees to lodge reports to the Chief Information Security Officer about any potential or actual breaches of security.

The Disaster Recovery Plan covers all areas of the Company, including aspects relating to data security with both on-site and off-site backups in secure environments.

The Business Continuity Plan is tested once a year or more in collaboration with the information security team, to ensure data is securely backed up and provisions are adequate for the recovery of operations from any unforeseen adversity.

People’s Leasing conducts regular internal security audits. External audits are conducted by Messrs DNV GL of Business Assurance India. We also engage KPMG and PwC to test our computer systems, network and web applications for security vulnerabilities that a hacker could exploit. The Company is ISO 27001 certified.

Putting efficient systems in place

Maintaining the trust and loyalty of our customers and the public in general is of vital importance to us. Their belief in the security and reliability of our systems and processes is a trust that we do not take lightly. Examples of our initiatives in this area include –

• Automating all manual processes in a timely manner
• Implementing a document management system
• Implementing an eMemo system
• Implementing a sophisticated intranet for employees which includes training material, manuals, and policies
• Launching “IntApp” mobile app for marketing employees
• Maintaining a video conferencing facility to enable communication between branch staff and Management and to conduct staff training
• Developing ICT infrastructure such as hands-on training facilities and a virtualised server environment for disaster recovery sites
• Introducing more mobile apps for customers as well as the general public
• Being fully active on social media

Looking ahead

Our new ICT strategy for 2019/20 includes adopting Artificial Intelligence (AI) in to the business process, and enhancing the quality of the client on-boarding process, service in a credit facility, and the recovery process. Using AI to help them, our employees will be able to access customer information at the counter and be prompted on cross-sell and follow up processes. AI systems will check customer algorithms and alert staff to contact customers appropriately and suggest relevant solutions.

In addition, we will explore our options for standardising the credit evaluation process in order to reduce dependency on experienced staff, freeing them to focus on the customer instead. The Company keeps itself abreast of IT developments and where appropriate, subscribes to modifications to existing software.

We will also be looking at new technologies that can be embedded into the system for fraud mitigation and to help us move closer to a paperless environment. Some of our focus areas over the next few years will include –

• Digitalising of manual forms
• Using digital signatures to mitigate frauds
• Capturing customer photos at frontline
• Enhancing the Leads Management Solution through new dashboards
• WIFI zones and WIFI-based voice solution for branches
• Establishing research and development unit at ICT Department to continuously implement the technological innovations

To provide a speedier service for customers, we are also looking at digitalising security documentation. For branches in the region this will mean negating the need to send a customer file to Colombo for approval, greatly reducing processing time.

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Procuring responsibly and sustainably

We issued our Procurement Manual during the preceding financial year. Available on the employee intranet, this manual is designed to guide the decision-making process relating to purchases. The accompanying General Procurement Guidelines address methods of procurement which are subject to authorisation limits as specified in the approval matrix.

Our Decision-Making Unit (DMU) is responsible for and authorised to approve the procurement of goods and services in line with our approval matrix. The objectives of the procedure, in summary, are to ensure that goods and services that are purchased are –

• Of the quality required
• Received in a timely manner
• Comply with laws and regulations
• The result of a transparent procurement process

It is compulsory for all those participating in the purchasing procedure (as specified in the Manual) to be accountable and to adhere to the principles of confidentiality, desist from corrupt practices, declare any conflicts of interest, and discharge their duties honourably.

Our new suppliers of 14,564 were screened during the year. With respect to environmental and social concerns in the supply chain no negative indications were identified in 2018/19.

Our Property Acquisition and Disposal Policy sets out principles and rules by which the Company will acquire and dispose of property to all interested parties, institutes, and regulatory bodies. It contains the principal elements governing the Company’s approach to the management, acquisition, and disposal of land and buildings and its legal interest.

Our Logistics Department located, at the Head Office takes responsibility for major procurements such as vehicles, equipment, ICT Hardware, and Software. Minor procurements are undertaken by each branch.

While our Technical Evaluation Committee selects suppliers, this selection is validated by a tender panel, chaired by the Senior Deputy General Manager – Operations and represented by members of the Management Committee.

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Selecting suppliers

The supplier selection criterion is based on the following features associated with suppliers and their prior performance:

• Quality standards
• Cost-competitiveness
• On-time delivery
• Reliability
• Adaptability
• Prior industry experience
• Supplier capacity
• Compliance to applicable laws and regulations
• Compliance to relevant licenses, certifications, and standards
• Sustainable practices of sourcing raw materials
• Adherence to environmental and social specifications
• Fair labour management practices

We utilise a three-quotation method for general procurement. Large-scale and specialised procurement is subject to requests for competitive proposals in line with accepted tender procedures. No known violations to the established policy were reported during the reporting year.

Procurement process of business continuity services

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Monitoring procurement

We monitor the procurement process, in line with good management practices, to ensure efficiency and effectiveness. Supplier performance is measured against previously agreed indicators as stated in each procurement contract. We also evaluate their financial position and make periodic site visits to avoid unpleasant surprises and have early warning of any potential impediments to a supplier’s capacity to meet their obligations.

While our business partner contracts and other investment agreements do not include a clause on human rights, through a formal screening, we ensure that suppliers who do not comply are rejected.

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Sourcing locally

When sourcing goods and services, we give priority to suppliers who are based locally and nationally, with nearly 99% of our procurement costs relating to purchases from local suppliers. This benefits the local economy and also reduces our environmental footprint. We only engage overseas suppliers if local suppliers are unable to meet our procurement specifications. During the year under review, less than 1% of procurement costs were incurred from foreign suppliers for the purchase of computer hardware and software.

We deal with a diverse supplier base ranging from micro level entities to international corporations. During the year we dealt with suppliers numbering 29,320. Cumulative payments to suppliers during the year amounted to Rs. 68,475.02 million, compared to Rs. 54,372.35 million over the previous year. Payments for local suppliers are funded through a budget managed at Head Office. Other than the registration of 14,564 new suppliers, no significant change took place in terms of supply chain in 2018/19.

Sourcing internationally

With local suppliers unable to meet our requirements for printing consumables, we entered the “Most Valuable Customer” (MVC) programme with HP (Hewlett-Packard), receiving special privileges and immediate benefits such as discounted prices, loyalty payments, price protection, and enrolment in the HP Planet Partners Programme which aims to provide greater efficiency in recycling print cartridges responsibly. This partnership also provides us with priority access to products when stocks are limited.

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Engaging and assessing

We regularly engage with our suppliers to ensure they remain encouraged and freely respond to our self-assessment questionnaires on the sustainability of their business practices.

While maintaining these strict guidelines and processes, we also recognise the importance of strengthening our relationships with suppliers. This has been identified as an urgent need and is one that we will be working on cultivating over the next year and beyond.

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Partnering for excellence

With our main product relating to the leasing of motor vehicles, vehicle dealers and suppliers form a major component of our suppliers.

We also value our relationships with financial service providers, correspondent banks, and local and international financial institutions. Our reputation is built upon the trust these organisations have in us through our rigorous adherence to all industry regulations, our commitment to transparency and ethical business practices, and the discharging of our debt obligations in a timely manner.

	2018/19	2017/18	Change (%)
Active business partners (Nos.)	29,320	27,431	6.89
Vehicle suppliers (Nos.)	28,661	26,785	7.00
Procurement expenditure (Rs. million)	68,475.02	54,372.35	25.94
Local procurement expenditure (Rs. million)	68,370.36	54,267.93	25.74
Foreign procurement expenditure (Rs. million)	104.66	104.42	0.23

Joining memberships and associations

We further strengthen our relationships with the business community and our partners by securing memberships in relevant business associations and contributing constructively to the knowledge pool from our own experience garnered over two decades in the field.

These relationships facilitate industry unity and networking, enhance industry standards, and provide opportunities for employees to benefit from activities offered by these organisations.

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We maintain the following memberships:

• The Leasing Association of Sri Lanka
• The Finance House Association of
  Sri Lanka
• The Financial Ombudsman Sri Lanka
• Credit Information Bureau of Sri Lanka
• The Association of Margin Providers
• Biodiversity Sri Lanka (Patron Member)

Partnering with vehicle suppliers

Our direct partnerships with vehicle suppliers are an assurance to our customers that we offer them optimum financial solutions in the market.

As at 31 March 2019, our vehicle suppliers numbered 28,661 entities, with our payments to them amounting to
Rs. 68,800.57 million in the year under review, compared to Rs. 52,841.34 million over the previous year. This represents 97.55% of our total payments to our suppliers. Of the total suppliers, 755 are corporate suppliers.

To secure mutual benefits, we entered into several strategic partnerships with vehicle dealers and importers. In collaboration with all our branches we conducted promotional activities to secure a solid customer base for the products we offer.

Benefits for our customers through this partnership include –

• Free vehicle registration
• Free revenue license
• Full services for vehicles
• Full tank of fuel for vehicles
• Partial capital settlement
• Discounts on the original price
  of vehicles
• Promotional items

Major strategic tie-ups

Business partner	Nature of partnership	Key benefits to customer
Associated Motorways Private Limited (AMW)	Re-launch business tie up to promote Datsun RediGo cars to strengthen our position in domestic vehicle sector and expand customer base	Price discount Free registration Full tank of fuel per vehicle
	A new strategic business tie-up to promote Suzuki car range	Price discount Considerable warranty period Free vehicle registration Free vehicle insurance Extended repayment period Partial capital settlement
Indra Traders (Pvt) Ltd.	Further opportunities to deepen focus on Kandy region through existing relationship	Special interest rate Free registration Special insurance package from PI
Diesel and Motor Engineering PLC (DIMO)	Strategic business tie-up to promote TATA tipper range	Three labour free services Considerable warranty period Partial capital settlement
Hayleys Agriculture Holdings Ltd., DIMO and AMW	Strategically enhanced business relationship to promote tractors-based finance facilities	Free registration Free insurance Labour free services Warranties Price discounts
Browns Agricultural – Browns & Company PLC	Business tie-up during “Yala” harvesting season to promote TAFE & Massey Ferguson tractors	Free insurance Free tractor registration Three labour free services Considerable Warranty Period Free Water pump or Mist Sprayer Free Rotavator or Trailer Free nine tine tiller
Nawaloka Agri Pvt Ltd.	Business tie-up during “Maha” harvesting season to promote Sonalika tractors	Free insurance Free registration Warranty of two years
David Peiris Motor Company (Pvt) Ltd.	Two-day Wheel Clinic to increase overall volume of business on registered and unregistered three wheelers at 28 island-wide service centres	Technical and maintenance-related assistance other than general promotional activities

Strengthening relationships with other service providers

Prompt payments, cordial relations, regular contact, and recognition for services rendered are at the heart of our relationship building efforts with service providers.

Partnering with financial service providers

Our monitoring mechanism was implemented to ensure that the Company adheres to all agreements with our business partners and meets all obligations. To us this is the root to maintaining sound relationships with our local and international financial service providers over the long term.

A complete list of correspondent banks the Company engages with is found on inner back cover of this Report.

Partnering with business continuity service providers

We pay special attention to those service providers categorised as essential to our ability to conduct operations without risk of interruption. We make certain that payments to them are on time, regular contact is maintained, and all issues relating to sustainability of operations are addressed promptly and satisfactorily.

Partnering with outsourced service providers

Non-core operations, such as security, janitorial, logistics, courier, waste management, tax consultancy, sustainability assurance, and specialised financial advisory services have been outsourced to specialist companies that are able to provide us with cost-effective solutions. A large number of these service providers are local. Preferring to continue long-term relationships with these service providers, we engage with them regularly and provide recognition for their contribution.

During the year, we introduced a policy on Outsourcing of Business Operations. Its purpose is to ensure that the Company enters into cost-effective outsourcing arrangements with service providers who meet our stringent needs. The risks emanating from such arrangements are effectively managed in a timely manner, remaining in line with regulatory and other directions applicable to the NBFI Industry.

Partnering with utility service providers

To strengthen relationships with our utility service providers (of electricity, water, telephone and internet services) and ensure uninterrupted service, we ensure they are paid promptly.

Partnering with other on-going service providers

We also enjoy mutually beneficial relationships with business partners in diverse fields ranging from property and equipment maintenance to systems development, computer hardware and software solutions, fuel, and advertising and promotions.

Looking ahead

Our goals for the near future are to strengthen our existing relationships with our suppliers and secure mutual benefits. We will continue to seek further strategic partnerships in the future.

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Attracting and retaining the best-suited talent

We operate in a highly competitive market, where the younger generation has aspirations of working in the corner office. Yet in our industry the majority of our business is conducted in the field. This immediately creates an HR conundrum for us. How do we attract and retain the best? A key attraction for employees is the culture of their employer.

All senior managers are locally hired Sri Lankans.

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Maintaining an inclusive culture

Attracting the best suited talent is no easy task given the current operating environment. The NBFI sector in the country is highly competitive with traditional and new players jostling for market share and customer attention. Yet, to maintain our lead in this environment we need to diversify our products and services and seek out new customer segments. In terms of personnel, such diversification requires the recruitment of experts in new fields we hope to explore.

At People’s Leasing, we focus on three aspects of culture –

• Corporate culture – open, transparent, and conducive to collaboration
• Knowledge culture – two decade’s worth of learning institutionalised
• Innovation culture – nurturing unorthodox thinking and its application

Our HR strategy is aligned with the Company’s corporate strategy and reflects the overarching trends of the operating environment – such as generational differences within the workforce and the growing use of technology. Company policy and the Employee Code of Conduct highlight our emphasis on a culture that treats all our diverse employees with respect.

Any dispute in relation to operations or individual behaviour that is inconsistent with stipulated standards, policies, procedures, and practices is handled formally and transparently in line with the Disciplinary Code.

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The following graphs illustrate the diversity of our cadre:

Employee category	Gender	2018/19						2017/18
		Age analysis (Years)					Total gender analysis Number	Age analysis (Years)					Total gender analysis Number
		> 60	50-59	40-49	30-39	<= 29		> 60	50-59	40-49	30-39	<= 29
Senior Management	Male	2	11	19	2	–	34	2	9	20	2	–	33
	Female	–	1	1	–	–	2	–	1	1	–	–	2
Line Managers	Male	1	7	86	57	–	151	–	7	69	48	–	124
	Female	–	–	13	12	–	25	–	–	10	8	–	18
Executives	Male	1	7	60	275	29	372	1	6	62	228	22	319
	Female	–	1	36	52	4	93	–	–	33	44	6	83
Non-executives	Male	1	1	26	349	754	1,131	1	1	19	301	718	1,040
	Female	1	1	4	118	296	420	–	–	6	110	264	380
Support staff	Male	–	6	20	35	38	99	–	5	18	29	32	84
	Female	–	1	1	–	–	2	–	1	1	–	–	2
Total		6	36	266	900	1,121	2,329	4	30	239	770	1,042	2,085

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We do not recruit employees on a temporary or part time basis.

All recruits are subject to a period of probation, with those who successfully complete this period being absorbed into the permanent cadre. 85% of all employees are engaged on a permanent basis. 15% of cadre are employed on contract basis.

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Employee numbers by region

	2018/19			2017/18
Region	Number of branches/units	Male	Female	Number of branches/units	Male	Female
Western Province	73	804	334	69	732	308
Central Province	12	164	44	12	144	34
Eastern Province	9	108	12	9	94	11
Northern Province	7	73	8	7	64	8
Southern Province	16	225	50	16	210	37
Sabaragamuwa Province	9	105	25	9	84	26
North Central Province	7	81	18	7	70	16
North Western Province	11	124	35	11	107	29
Uva Province	6	103	16	6	95	16
Total		1,787	542		1,600	485

Employee concentration – Five-year summary

	Number of Employees
Region	2018/19		2017/18		2016/17		2015/16		2014/15
	Total	New recruits	Total	New recruits	Total	New recruits	Total	New recruits	Total	New recruits
Central Province	208	46	178	14	181	35	158	24	148	25
Northern Province	81	22	72	7	73	19	62	10	57	158
North Central Province	99	25	86	13	84	27	65	11	60	7
North Western Province	159	39	136	15	137	35	110	22	103	16
Sabaragamuwa Province	130	28	110	24	109	29	90	21	76	9
Uva Province	119	24	111	11	110	20	104	24	91	11
Western Province (Branches)	678	136	609	62	641	124	557	84	527	82
Western Province (Head Office)	460	64	431	47	424	34	416	77	356	45
Eastern Province	120	42	105	24	97	25	91	18	87	13
Southern Province	275	66	247	23	229	62	181	31	161	35
Total	2,329	492	2,085	240	2,085	410	1,834	322	1,666	258

Our employees are as diverse as our customer segments, hailing from across the island.

While our presence spans the entire country, 48.86% of all employees are based in the Western Region. This is representative of the number of branches, customer segmentation and business volumes generated in the region, with
the higher numbers in the Western Province representing the concentration of employees at the Head Office, a trend that has been consistent over the past several years.

We ensure that communication channels between the Head Office and the branch network remains open and effective so that all our employees can remain well-connected with each other no matter what their geographic location may be. While we communicate notices regarding operational changes to all employees, the notice period of the operational changes may vary depending on the nature of the change required.

Regular methods of employee communication include –

• Intranet
• Staff circulars
• Internal memos
• Emails
• Policies
• Staff meetings

Traditionally the composition of our employees in terms of gender has always been more heavily weighted towards males as females have preferred not to work in the field.

Average Training Hours per Employee

GRI 102-41 GRI 406-1 GRI 408-1 GRI 409-1 GRI 410-1 GRI 412-1 GRI 412-2

Providing equal opportunity and safeguarding human rights

In line with our recruitment policy we ensure that the distribution of employees is representative of the geopolitical and socio-economic strata of the population. All recruitments, transfers, and promotions are based on assessed individual merit. Maintaining our status as an equal opportunity employer, we do not discriminate on grounds of gender, age, race, cultural differences or any other such factors. No incidents of discrimination were reported during the year under review, so no corrective action was required.

Not being a unionised company, People’s Leasing is not subject to the terms of collective agreements with its employees. Even so we have proactively built robust employee relationships across the Company.

We ensure that all our people have the freedom of association and expression. The Company is unaware of any instance of this right being denied or being at risk of violation.

During 2018/19, no substantiated complaints were reported in our operations or our supply chain to have a risk of child labour or forced labour.

We did not provide employees with formal training that specifically focused on human rights during the year. Also no formal training on human rights has been provided to our outsourced security personnel but instead, we ensure such training is provided to them by their employer.

We work hard to create an environment where two-way communication is the norm with employees engaged and involved in the decision-making process.

While we do not conduct a formal impact assessment on human rights, our policies and guidelines guard us against violation of human rights in any form.

Employee composition by ethnicity

Ethnicity	2018/19
	Male	Female	Total	%
Sinhalese	1,565	511	2,076	89
Tamil	135	21	156	7
Muslim	87	10	97	4
Total	1,787	542	2,329	100

GRI 202-1

Ratio of basic

salary to gender

With no minimum wage specifications from the Department of Labour, we adopted pay scales that are in line with the minimum wages standard set by National Minimum Wage of Workers Act No. 03 of 2016 and minimum budgetary allowance set by Budgetary Relief Allowance Act No. 04 of 2016.

GRI 405-2

People’s Leasing focuses on achieving a good balance in remuneration in terms of gender. During the reporting year, the male-female average basic salary ratio for employees was [1.00: 0.97] across categories.

Ratio of basic salary to gender

	2018/19	2017/18	2016/17	2015/16	2014/15
Senior Management
Male	1.00	1.00	1.00	1.00	1.00
Female	0.71	0.70	0.68	0.61	0.90
Line managers
Male	1.00	1.00	1.00	1.00	1.00
Female	0.97	0.93	0.93	0.88	0.91
Executives
Male	1.00	1.00	1.00	1.00	1.00
Female	1.14	1.12	1.14	1.12	1.10
Non-Executives
Male	1.00	1.00	1.00	1.00	1.00
Female	1.01	1.01	1.03	1.00	1.10
Support staff
Male	1.00	1.00	1.00	1.00	1.00
Female	1.11	1.05	1.04	1.00	1.00
Average salary ratio
Male	1.00	1.00	1.00	1.00	1.00
Female	0.97	0.81	0.79	0.75	1.00

Creating a preferred place to work

Creating demand for our employee vacancies, compared to others in the market, means creating a place where people want to return to, one they believe in, and are fully committed to. While we have a large portion of employees with less than three years’ experience with us we do have a sizeable population with over 3 to 10 years’ experience under their belts. Larger numbers of Senior Managers and line managers too have long years of experience working at People’s Leasing.

GRI 201-3 GRI 401-2 GRI 401-3 GRI 404-3

Rewards and recognition

People’s Leasing offers performance based rewards and all employees receive regular performance and career development reviews.

Our rewards scheme plays an important role in retaining talent and comprises both the salary component and the non-monetary component. Monetary benefits consist of salary, bonuses, and allowances. We ensure that all employee EPF, ETF, and gratuity payments are made on time and are in line with relevant laws and regulations. People’s Leasing contributes 12% to EPF, 3% to ETF while employees contribute 8% to EPF.

Employees with five or more years of service under their belts are paid a gratuity, on their retirement or resignation, equivalent to half a month’s salary for each completed year of service.

Branch competitions are arranged through which qualifying branch employees are rewarded.

All female employees are offered maternity leave in line with the provisions in the Shop and Office Employees Act.

We also provide a range of insurance benefits for permanent employees. Additional benefits made available through our welfare scheme include –

• A concessionary loan scheme for the purchase of vehicles for relevant categories
• A concessionary housing loan scheme
• Reimbursements on the cost of mobile phones
• Death benefits to employees and their immediate family including spouse’s family
• Reimbursement of exam fees
• Concessionary rates for a holiday bungalows in Maradana, Maharagama and Bandarawela

The Company advocates a healthy lifestyle, providing the following benefits:

• Medical, accident, and life insurance
• Critical illness fund for illnesses not covered by medical insurance
• Fully-equipped gymnasium at the Head Office
• Awareness programmes and training on health, nutrition, and preventive care of serious diseases

We conduct regular salary surveys to ensure administrative employees enjoy an allowance scheme. We also conduct an annual survey on enhancements to the salary scale of operational staff to ensure remuneration is in line with the inflation rate.

Defined benefit plan obligations:

Benefit	2018/19 Rs. million	2017/18 Rs. million
Salaries and bonus	2,209.74	2,003.96
EPF	163.15	146.74
ETF	40.78	36.69
Overtime	41.99	36.99
Leave encashment	51.43	48.04
Allowances and incentives	690.61	487.79
Casual wages	4.00	3.59
Medical insurance	145.88	126.74
Gratuity	90.59	83.71
Total	3,438.17	2,974.25

GRI 403-1 GRI 403-2 GRI 403-3 GRI 403-4

Health and safety

The health and safety of our employees are of paramount importance to us. While the Company recorded two road accidents during work hours, lost days due to these accidents totalled 29, down from 94 in the previous year.

Occupational injuries and health issues

For the year ended	2018/19	2017/18
Road accidents during work hours	2	1
Other injuries if any	–	–
Lost days recorded due to these accidents	29	94

Due to the nature of our business operations their is no high incidence or high risk of disease related to their occupation and furthermore we do not have a formal Health and Safety Committee in action but we do have the following measures in force:

• Building maintenance system with fire safety options
• Fire safety equipment
• Fire drills
• Extensive training for designated fire wardens
• First aid and training for volunteers
• Well-maintained fleet of vehicles

GRI 401-1

Employee turnover

Pitted against the demands of a competitive employee market, our culture and ethos have stood strong, helping to attract the best suited talent. As at 31 March 2019, our employee strength stood at 2,329, an increase of 11.7% over the previous year, reflecting the impact of the restructuring process initiated during the previous year.

Employee turnover by reason

	2018/19		2017/18
Province	Male	Female	Male	Female
Resignations	180	64	192	45
Retirement	–	–	1	–
Deceased	–	–	–	–
Terminations	1	1	2	–

Employee turnover by grade – Five-year summary

	Number of employees
Grade	2018/19	2017/18	2016/17	2015/16	2014/15
Senior Management	–	2	2	1	1
Line managers	3	5	2	–	4
Executives	19	19	9	15	23
Non-executives	218	206	139	127	136
Supporting staff	6	8	3	7	2
Total	246	240	155	150	166

Employee turnover by age grade – Five-year summary

	2018/19		2017/18	2016/17	2015/16	2014/15
Age	Nos.	%	Nos.	Nos.	Nos.	Nos.
<29	193	78.46	185	118	129	118
30-39	45	18.29	50	32	18	44
40-49	3	1.22	3	1	1	3
50-59	2	0.81	–	1	2	1
>60	3	1.22	2	3	–	–
Total	246	100	240	155	150	166

Employee turnover by province and gender

	2018/19			2017/18
Region	Male	Female	Total	Male	Female	Total
Western Province	80	46	126	82	36	118
Central Province	16	2	18	15	2	17
Eastern Province	21	4	25	16	–	16
Northern Province	9	3	12	8	–	8
Southern Province	17	3	20	14	1	15
Sabaragamuwa Province	7	2	9	24	–	24
North Central Province	4	2	6	10	3	13
North Western Province	16	2	18	15	2	17
Uva Province	11	1	12	11	1	12
Total	181	65	246	195	45	240

Total resignations stood at 246 versus 240 the previous year, while the turnover ratio remained largely similar at 11.15%, from 11.51% the previous year.

We continued to see a relatively low turnover rate for back office employees, with a higher rate for those in other areas reflecting the value of our training and development in the market. Employees with greater experience and exposure to our professional development programmes are in higher demand and more likely to be approached with tempting offers. Among the younger generation, where speedier career progression is expected, turnover is higher as competitors entice our non-executives with attractive promotions and better prospects.

Key reasons given by employees for resignations during the year include –

• New employment opportunities
• Higher studies
• Migration

GRI 401-3

Employee retention following maternity leave

Female employees returning to work after maternity leave increased from 76.09% to 78.72% during the year under review, reflecting its status as a preferred place to work within the industry.

Retention after maternity leave – Five-year summary

	Number of employees
Description	2018/19	2017/18	2016/17	2015/16	2014/15
Entitled for maternity leave	542	485	475	422	354
On maternity leave	47	46	28	24	33
Returned to work after maternity leave	37	35	18	18	26
Employed for the last 12 months after the returning from maternity leave	23	20	18	24	28
Retention rate after maternity leave (%)	50.00	71.40	75.00	72.73	96.55

Engineering the best-suited corporate structure

Our on-going corporate restructure is designed to lessen the impact of hierarchies within the Company and instead encourage collaboration and constructive dialogue as we march swiftly forward into the future. With our new, flatter organisational structure we are able to maintain a culture where collaboration and open communication is the norm rather than the exception, and people feel valued, listened to and engaged. Such a progressive outlook is another attractive feature of the Company for potential new recruits.

At People’s Leasing, our corporate structure continues to promote a performance-driven culture with our people driving innovation and development within the Company. Employee suggestions for improvements are encouraged, valued and have already been acted upon in the form of the Strategic Plan. The knowledge culture that has been built up over the last two decades feeds our employee cadre even as they gain experience, sharpen skills and develop professionally in their chosen fields. It is this ethos that provides us with a unique competitive advantage in the industry.

Our employee retention rate of 88.85% clearly illustrates our ability to retain experienced and knowledgeable people who are more than capable of delivering outstanding service to customers.

GRI 401-1

Recruiting where necessary

For promotions and vacancies within the Company we always give priority to internal candidates. However, where new knowledge and expertise is required, as we diversify our products and services and explore new customer segments, the Company’s culture remains open and inclusive enough to recruit the best-suited talent.

Our new corporate structure provides us with a clear vision for the roles we require to ensure that we maintain our leadership position within the market. Attracting the necessary talent requires the perfect balance between good judgement of the necessary skills and qualifications as well as the personalities that would be the perfect fit for our culture.

Employee recruitment by province and gender

	2018/19			2017/18
Region	Male	Female	Total	Male	Female	Total
Western Province	151	49	200	77	32	109
Central Province	38	8	46	12	2	14
Eastern Province	37	5	42	20	4	24
Northern Province	19	3	22	6	1	7
Southern Province	45	21	66	17	6	23
Sabaragamuwa Province	24	4	28	20	4	24
North Central Province	19	6	25	11	2	13
North Western Province	33	6	39	14	1	15
Uva Province	22	2	24	8	3	11
Total	388	104	492	185	55	240

Recruitment numbers increased by 105% year on year as a result of the Company’s new corporate structure and the clear vision it provides of the required cadre.

GRI 102-16 GRI 102-17

Introducing new recruits to our culture

It is compulsory for all new recruits follow a detailed induction programme which is designed to familiarise them with the Company’s operational processes, systems, practices, culture, values and ethics. Our “Employee Handbook” provides additional guidance.

On completion of induction, new recruits are expected to have a sound understanding of –

• The Company profile
• Organisational structure
• HR policy
• Their individual roles and responsibilities
• IT systems
• The policies and practices of the Company
• A brief overview of subsidiary operations

Through an effective induction programme, coaching, and mentoring we ensure that the Company’s institutional knowledge is passed on to newer recruits at all levels so that People's Leasing is always fit for the future.

Building a competent, engaged and motivated team

Professional development and career progression provide strong impetus for employee engagement. While employee development is vital to achieve organisational goals and objectives, we also consider it a long-term investment. During the year under review we allocated a budget of Rs. 27.09 million for employee development. As we explore new customer segments and diversify our products and services, capacity building becomes vitally important.

Training requirements are identified by line managers during the annual performance evaluations and sometimes on a needs basis. Employees nominated for professional development are sent for the relevant in-house or external training programmes. The responsibility for developing a multi-skilled workforce is shared among immediate supervisors, heads of departments and branch managers. The process also involves job rotation, and on the job and off the job training.

At the end of each training programme an evaluation is conducted to evaluate outcomes relating to the improvement of skills and competencies, and to gauge return on investment.

Employees are also nominated by Management to attend selected professional institutions to acquire the necessary knowledge and confidence, address skills and performance gaps, and gain the necessary experience to meet future challenges. They are also reimbursed for completing higher studies in relevant fields with the Company investing more than Rs. 1.4 million for continuous professional development during the year under review.

GRI 404-1 GRI 404-2

Training hours and investment

Creating a more business-focused motivated team through training and development is one of the key goals of the HR Division. During the year under review, training hours for employees remained roughly the same while the Company’s investment was to Rs. 12.93 million compared to Rs. 17.21 million the previous year as a result of Company’s focus on internal training hours. The goal during the year was to provide more tailored training opportunities for employees.

Average training hours per employee – by position

Category	Gender	Training programmes (Number)				Total staff trained (Number)	Training hours	Average (Hours)
		Internal	External	Overseas	Total
Senior Management	Male	12	1	1	14	17	366.00	10.76
	Female	1	–	–	1	1	6.00	3.00
Line management	Male	37	9	3	49	155	3,616.00	23.95
	Female	19	5	–	24	25	441.00	17.64
Executives	Male	56	7	3	66	321	5,226.50	14.05
	Female	29	6	–	35	76	994.50	10.69
Non-executives	Male	76	5	2	83	1,119	24,106.00	21.31
	Female	44	7	–	51	371	6,256.50	14.90
Minor staff	Male	16	–	–	16	23	665.00	6.72
	Female	–	–	–	–	–	–	–
Total	Male	197	22	9	228	1,635	33,979.50	19.01
	Female	93	18	–	111	473	7,698.00	14.20
Grand total	Male + Female	290	40	9	339	2,108	41,677.50	17.90

During the year, a total of 2,108 employees participated in training programmes up from 1,727 the previous year.

Employee training and development covers a range of subjects including –

• Product knowledge
• Systems and processes
• Operations
• Finance
• ICT and documentation skills
• Marketing investigation and analysis
• Problem solving and decision-making
• Credit and customer evaluation
• Proposal preparation
• Office management and staff-handling
• Leadership skills and decision-making
• Presentation and communication skills
• Customer service

In addition, employees are reimbursed their costs when they obtain professional accreditation and certification from recognised institutes.

GRI 102-17

Handling grievances

We have in place a comprehensive mechanism to address any employee grievances. Staff can do so anonymously or through our open-door policy to any member of the Management. They are provided with guidance and advice or prompt action as the situation demands. Ethical or unlawful behaviour from anyone, including their immediate supervisor is not tolerated and reported directly to the Head of HR or to a member of the Corporate Management Team including the CEO/GM.

Our whistle-blower policy is managed by internal audit and is structured to enable employees to anonymously report misdeeds, violations and/or any related concerns.

Engaging employees

During the year, we focused on the following initiatives in order to further motivate our people:

• Introduction of target-based incentives and allowances
• Adjustments to some allowances of managerial-level employees in branches
• Amendments to vehicle loan limits
• Introduction of vehicle maintenance allowance
• Introduction of telephone allowance based on grade
• Amendment to the existing insurance benefits

Going forward, our strategic priorities will include sourcing, providing business-related training and development, and the individual development of employees. Our key focus will continue to be the creation of a performance-based culture across the Company. Our HR Division will also provide Senior Management with analytics to support strategic business decisions and facilitate a Management Development Programme that focuses on succession planning for business-critical roles.

Other employee engagement initiatives implemented during the year include:

• Dress-down Friday to encourage employees to express their individuality
• Compulsory annual leave to ensure work-life balance
• Extended insurance benefits for extended family members
• Comprehensive induction programme for each new hire
• Holiday bungalows and annual departmental trips for work-life balance
• Gym memberships for health and well-being

Looking ahead

Going forward, we will need to continue focusing on sourcing the right talent for the Company. Our current policy is to recruit people with the right attitude and train them to fill the necessary roles within the Company. We will then make every effort to retain such staff – no easy task in the current competitive environment. The nature of our industry is such that we require a large number of employees to be in the field in marketing and sales roles – which are increasingly unattractive to the younger generation who prefer office jobs.

The efficient and effective use of a finance company’s resources, entails the disbursement of borrowed funds and the acceptance of collateral as security to protect the integrity of its lendings. The funds available for disbursement, cost the Company more than they would for a bank which avails itself primarily of customer deposits. It is therefore essential that the funds disbursed, not only attract a fair return to the shareholders but are also lent to high quality customers.

This becomes a skilled balancing act, as the typical customer who approaches a finance company is unable or unwilling to approach a bank where they can obtain funds at a more affordable rate.

The performance of People’s Leasing under these circumstances may be considered creditable given the volume of business it generates, supported by its capacity to make use of inter-company resources, customers, and avenues to improve the quality of its loan book.

Our impact on stakeholders

Contribution towards Sustainable Development Goals

Increased commitment to trade and banking to help increase productivity and reduce unemployment levels

Utilising funds in an effective manner to optimise return versus risk

Utilising the funds mobilised through deposits and other borrowings as well as the free capital, the Company grants loans resulting in a loans and receivables portfolio which accounted for 87.92% of total assets as at 31 March 2019 (87.23% last year) and generated 96.76% (96.41% last year) of the total interest income. With its attendant credit risk, the quality of the loans and receivables portfolio is the most important determinant of the overall asset quality of the Company and has a direct bearing on the profitability of the Company through net interest income and the impairment charge. Hence, the need to manage the lending activity in an effective manner to optimise return versus risk.

Our approach to risk-return trade off

Historically, People’s Leasing concentrated on building its business with an emphasis on volume rather than interest rates and margins. However, consequent to the imposition of the Loan to Value Ratios and other macro-prudential decisions of the Government, the Company changed its focus towards improving interest margins and thereby producing increasing returns. In addition, the product mix too changed from a predominantly leasing business to other forms of lending.

The imperative for this change in concentration arose from the need to maintain the Company’s position in the market as a top-tier non-bank financial institution. It was felt important that the Company places a greater emphasis on the management of risk to prevent the dilution of its value creation process while holding this position.

In this regard, the Company introduced several short-term products such as fast track, gold loans, and variable rate leases and loans. Introducing variable rate leases and loans as against the previous practice of offering fixed rates on all of our lending products enabled us to mitigate the exposure to interest rate risk.

A conservative risk profile and a moderate risk appetite

The Board of Directors of People’s Leasing is responsible for setting the risk appetite of the Company and the responsibility for its implementation is vested in the Integrated Risk Management Committee (IRMC). Under delegated authority of the Board, the IRMC is also responsible for establishing an effective risk appetite framework within the Company.

IRMC is a Board Subcommittee. The Integrated Risk Management Operating Committee (IRMOC) was re-established as a management level committee to further strengthen the risk governance structure. This Committee is accountable to the IRMC.

The risk tolerance levels of the Organisation are constantly measured against a set of key performance indicators for each major risk category with operational performance being closely monitored.

Monitoring the composition of assets and liabilities

Interest earning assets accounted for 94.75% of total assets of the Company as at 31 March 2019 (93.09% last year), which consisted mainly of loans and receivables. On the other hand, interest bearing liabilities dominated by customer deposits accounted for 53.39% of total funding (45.75% last year). It is important to observe that the proportion of deposits from customers in the total funding base has increased in the recent past, while dependence on bank borrowings has declined, providing the operations with access to relatively less expensive funds.

The composition of assets and liabilities of the Company in terms of interest earning and non-interest earning assets and interest bearing and non-interest-bearing liabilities over the past five years is given below. We have been able to maintain the interest earning assets around 94% over the period.

Composition of assets and liabilities – Five-year summary

Assets	2018/19 %	2017/18 %	2016/17 %	2015/16 %	2014/15 %
Interest earning	94.75	93.09	94.13	93.13	94.62
Non-interest earning	5.25	6.91	5.87	6.87	5.38
Total	100.00	100.00	100.00	100.00	100.00
Liabilities
Interest bearing	95.12	93.87	94.61	93.20	92.05
Non-interest bearing	4.88	6.13	5.39	6.80	7.95
Total	100.00	100.00	100.00	100.00	100.00

At the same time, as a result of mobilising Rs. 18.6 billion in fixed and savings deposits during the year, the Company has been able to increase the proportion of deposits in the interest-bearing liabilities from 55.60% in 2017/18 to 64.54% as at
31 March 2019.

The Company is not planning to make new investments in subsidiaries or significant investments in non-interest earning assets such as property, plant and equipment and intangibles etc.

Improving the composition of risk weighted assets to total assets

People’s Leasing’s focus on low risk product innovations such as newly introduced Housing Loans and expansion of Gold Loans has impacted favourably on the risk weighting of assets portfolio.

Loans against fixed deposits held by the Company with their lower risk element too has had a positive impact on improving the risk weighted assets and the return on risk weighted assets. The following table shows the growth in loans against fixed deposits over the past five years.

Further, when investing its surplus funds, the Company focuses on directing such investments to institutions with higher credit ratings so that such investments attract lower risk weightages for capital adequacy purposes.

Summary of important risk management decisions

The following are some of the important decisions made by the Company during the year with regard to the management of risk:

• Interest rate movements were regularly monitored to ensure that the net interest margin is maintained at an optimum level
• Liquidity of assets was maintained above the regulatory requirements
• Raised long-term funding through a debenture issue which was used to liquidate short-term facilities and to augment the Company’s working capital requirements
• Stringent recovery strategies employed to limit the Company’s exposure to selected product/asset categories
• Established a separate credit division to evaluate and monitor the granting of credit facilities
• Introduced an internal rating system to enhance the ability of Branch Managers to assess credit applications

Diversifying funding sources while managing liquidity

Profitable and prudent financial intermediation and maturity transformation as well as maintaining liquidity at an optimal level require diversified and stable sources of funding, secured at the least possible cost. Funding sources of the Company broadly comprised customer deposits (53.39%), other borrowings (29.33%) and shareholders’ equity (17.28%) as at 31 March 2019. Funding cost which is interest expense accounted for 50.74% of the total interest income for the year (54.30% last year). With its attendant interest rate and liquidity risks and maturity mismatches in a market where long-term funding sources are rare, securing funding too has a direct bearing on the profitability of the Company through net interest income. Hence, the need to manage the funding activity in an effective manner.

Importance of securing stable funding

The Company recognises the need for diversity in funding and mitigation of liquidity risk and therefore, maintains a portfolio of diversified funding sources.

Deposits form the main funding source of the Company today, relegating short-term bank borrowings to the second place in recent years. The Company encourages savings accounts for minors which is a long-term funding source at lower rates. The Company has a focused drive to attracting customer deposits, shifting from short-term borrowings at variable rates and it has helped the Company to avoid the negative impacts of frequent interest rate fluctuations. Further, reliance on long-term bank borrowings has been reduced since the banks became competitors to People’s Leasing with the introduction of Loan to Value ratios for lending. Banks now actively promote leasing and consequently the Company no longer enjoys competitive rates on its borrowings from banks. It is therefore important that the Company has been able to significantly grow its deposit base over the past two years.

To address maturity mismatches as well as funding gaps, the Company periodically issues Debentures which by their nature, are medium to long-term funds and more closely match the tenures of the Company’s loan portfolio.

Funding and liquidity management objectives

The principal objectives of the Company in funding and liquidity management include:

• Compliance with the regulatory requirements
• Honouring withdrawal of customer deposits
• Facilitating uninhibited and smooth operations by meeting other cash commitments efficiently
• Maintaining internal funding and liquidity targets which are more stringent than the regulatory requirements
• Maintaining liquidity at optimum
  levels to maximise profitability
• Funding future business expansion at an optimum cost
• Supporting credit ratings

Maintaining liquidity at an optimum level

People’s Leasing is committed to maintaining adequate levels of liquidity having regard to its objectives and the various developments that may affect market liquidity. The responsibility for liquidity risk management rests with the Asset and Liability Committee (ALCO). The Treasury Department is tasked with day-to-day liquidity management within the parameters set by the ALCO.

Role of ALCO in securing funding and managing liquidity

The objective of ALCO is to formulate the most appropriate strategy for the Company, in terms of the appropriate mix of assets and liabilities taking into account the following:

Expectations of the future and potential consequences of:

• Portfolio mix
• Liquidity management
• Maturity gap between assets and liabilities
• Interest rate sensitivity on profitability
• Foreign exchange exposure
• Pricing of lending and deposits products, and
• Off-balance sheet activities

The Company maintains adequate levels of unutilised facilities to ensure availability of funding for business expansion as well as meeting day-to-day operational cash flow commitments. In addition, the Company has contingency funding arrangements with several financial institutions.

The unutilised funding lines as at 31 March 2019 were as follows:

Funding type	Unutilised amount Rs. million
Money market loans	5,000
Short-term loans	9,885
Overdraft facilities	2,500
Long-term loans	2,000

In addition, ALCO monitors transfer pricing or interest cost allocation to branches and other major business units of the Company. Annual Effective Rate (AER) prescribed by ALCO is applied to the branch current account balance. The branches in turn are expected to compare those rates with the AER rates of fixed deposits and work towards attracting more deposits in line with the
Company strategy.

Reducing mismatch in maturities of assets portfolio and the funding base

The Company’s main business activities of lending the funds mobilised through deposits from customers or other forms of borrowings involve maturity transformation. However, given the lack of medium and long-term funding in the market, managing maturity of its assets and liabilities and the consequent interest rate risk poses significant challenges to the Company.

In order to address this risk and manage maturity mismatches the Company has taken certain initiatives on both the funding as well as the lending sides. Introduction of short-term lending products such as, “Gold Loans” and “Fast Track Loans” in the recent past while promoting longer term savings accounts such as savings accounts for minors and issuing debentures are some of the examples.

A maturity (current/non-current) analysis of the Company’s assets and liabilities as at 31 March 2019 is given in Note 55 to the Financial Statements on page 336 of this Report.

Managing capital for growth and profitability

Central Bank of Sri Lanka has promulgated rules and regulations that require financial institutions to maintain adequate levels of capital in terms of a minimum absolute level as well as capital adequacy ratios having regard to the underlying risks of their on-balance sheet and off-balance sheet assets.

Capital management objectives

The principal objectives of the Company in capital management include:

• Compliance with the regulatory requirements
• Efficient allocation of capital for maximising profitability thereby meeting the expectations of investors
• Maintaining internal capital targets which are more stringent than the regulatory requirements
• Supporting future business expansion
• Supporting credit ratings
• Satisfying Basel III capital requirements while bearing the impact of new accounting standards

Capital adequacy of the Company

The capital adequacy levels were revised as set out in the Finance Business Act Directions No. 3 of 2018 which became effective from 1 July 2018. Nevertheless, based on internal capital targets, the Company has been consistently maintaining comfortably higher levels of capital in the past as shown in the table below:

As at	Tier 1 Ratio		Total Capital Ratio
	Company %	Requirement %	Company %	Requirement %
31 March 2019	14.36	6.0	15.20	10.0
31 March 2018	18.38	5.0	16.46	10.0
31 March 2017	17.56	5.0	16.37	10.0
31 March 2016	19.56	5.0	20.22	10.0
31 March 2015	18.14	5.0	19.04	10.0

Basel III determinations and the requirements of Sri Lanka Financial Reporting Standard 9 made it necessary that financial institutions have higher levels of regulatory capital. In keeping with the reporting requirements emanating from these industry-wide norms, People’s Leasing is happy to inform its stakeholders that these ratios remained well above the sector core capital and total risk weighted capital adequacy ratios of 9.9% and 11.2% respectively.

Dividend policy

The Company has been maintaining a consistent dividend policy over the past years. However, given the growing needs for funds to support the future growth plans, the Company made an important change to its dividend policy this year. Consequently, the Company is planning to pay the forthcoming final dividend for 2018/19 in the form of a scrip dividend instead of a cash pay-out as in the past, thereby augmenting the capital funds.

People’s Leasing has been in the business of providing responsible, inclusive financial services for 22 years. We continue our commitment to transform the lives of our stakeholders and society at large. Keenly believing in the importance of responsible stewardship of our planet and people, People’s Leasing perseveres to influence its stakeholders – including customers, business partners, employees and local community for good. Our focus is on minimising our impact on the environment while influencing the entire value chain to do the same. Our efforts also include the promotion of greener products in pursuit of environmental protection.

Our impact on stakeholders

Contribution towards Sustainable Development Goals

	Supporting economic growth through the inclusive provision of sustainable jobs and the promotion of upward mobility		Increasing the agricultural productivity and incomes of small-scale food producers, including through the provision of inclusive financial services		Providing more efficient funding of health systems, improved sanitation and hygiene, and increased access to physicians
	Investing in educational scholarships, teacher-training workshops, school building and improvement of water and electricity access to schools		Directing people towards renewable energy and other measures that will reduce emissions and increase adaptation efforts		Mobilising and sharing knowledge, expertise, technology and financial resources, to support the achievement of the sustainable development goals

 

Maintaining ethical, open, and transparent business environment

To ensure the sustainability of our business we follow not just the letter of the law but also the spirit of it. In other words, we rely on our Sustainability Mission, Core Values, Policies, Sustainability Strategy, and Regulations that are clearly communicated to our employees and other stakeholders. We rely on the dedication and commitment of our staff, building on their competencies to be innovative and welcome challenges to sustainability as opportunities to create a sustainable business taking into account future generations and the well-being of the planet.

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Our core values

While we trust each of our employees to do their part in ensuring that People’s Leasing is operated as a responsible business, we have identified six core values that resonate with our employees.

Our sustainability mission

To improve the people’s quality of life through quality credit and to be the most admired and trusted, inclusive financial services provider.

Maintaining sound corporate governance practices

Increasingly tighter regulations, deepening public distrust of authority, the intricacy and vitality of our operations, and varied or conflicting stakeholder demands make it essential that enterprises adopt sound, transparent governance practices and issue clear public disclosures. Applying good corporate governance is even more important for a financial services institution. It is for this reason that financial institutions are possibly the world’s most highly regulated institutions. Increasingly, stakeholders are beginning to appreciate the impact of good corporate governance in ensuring that People’s Leasing is run efficiently and transparently as we strive to meet strategic goals and create value for them.

Our Board of Directors, Senior Management teams and each and every employee play a vital stewardship role based on a corporate governance framework that includes governance structures, processes, systems, and policy frameworks and is centred on the following overarching principles of good governance:

(a)Compliance with the law and commercial legitimacy

(b)Fair treatment of employees and business partners

(c)Responsibility to the environment and the community in which we operate

(d)Probity, integrity, and business ethics in the operational practices

Please refer Corporate Governance on page 38 for more details on the internally and externally driven factors that play a vital role in maintaining a robust governance structure within the Company.

Embedding sustainability across our business operations

The following key leverage factors enable People’s Leasing to embed sustainability across our business operations and operate as a sustainable business.

Sustainability Approach

Sustainability is embedded in our corporate strategy and we measure our impact beyond financial performance. We measure our carbon footprint with efficiency improvement in mind and implement initiatives that positively impact and empower our local communities and the environment which assures us of the social license to operate.

We understand that sustainability could be further integrated across all business processes, building on our competitive advantage. We anticipate that the ongoing implementation of an Environmental Social Management System (ESMS) and the setting of KPIs will lead to better tracking of KPIs on Environment Social Governance (ESG). These initiatives will contribute towards effective and holistic implementation, monitoring, and evaluation of the sustainable performance of People’s Leasing.

Our approach to sustainability is framed through year-round engagement with our prioritised stakeholders. We build strong relationships with each of our stakeholders and respond to their concerns to operate as a responsible corporate citizen.

• Strong customer relations – Providing customised, value added, sustainable finance coupled with digital convenience
• Strong business partner relations – Maintaining strong relationships with business partners to offer best value to our customers
• Strong employee relations – Creating a safe, decent, and progressive workplace
• Strong community relations – Empowering local communities through outreach CSR (corporate social responsibility)
• Strong environmental concern – Minimising our carbon footprint and mitigating climate change through responsible lending

 

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Integrating sustainability across stakeholder groups

We are in the business of securing and enhancing the financial well-being of people, businesses and communities. So, for People’s Leasing, sustainability extends beyond mere compliance and is in fact aligned and integrated with our corporate purpose.

During 2018/19, no incidents were reported on non-compliance with laws and regulations in social and economic areas.

Our customers		We provide responsible, inclusive and sustainable financial solutions for every personal and business milestone in a customer’s life, helping to improve livelihoods and enhance quality of life. Our people are empathetic, genuinely looking to advise and help our customers manage their finances and expand their businesses within stipulated regulations. We continue to look for new ways to expand our presence and provide greater accessibility. We advocate for prudent financial management especially in relation to our SME and corporate customers.
Our business partners		We respect the law of the country, industry rules and regulations and business ethics, conducting our operations in accordance with the principles of good corporate governance. We source responsibly and forge mutually beneficial business relations with like-minded individuals and institutions towards the fulfilment of our goals for sustainable growth.
Our employees		We offer a safe, decent and inclusive work-place. Ours is an ethics-led corporate culture which inspires our people to deliver their best and empowers them by safe guarding their human rights, providing healthy work-life balance, and investing in their continuous training and development and career progression. We also provide employment opportunities through local sourcing ensuring that the diversity of our cadre matches the wide range of our customer portfolio.
Our local communities		We understand our operational impact on society and are committed to minimise any negative impact on local communities. We mobilise our resources, expertise, and volunteer spirit to empower local communities by partnering with like-minded institutions. We strive to be a trusted and admired corporate citizen by fulfilling our responsibilities to the communities within which we operate.
Our environment		The nature of our operations does not pose a significant or direct negative impact on society or the environment. Even so, we ensure that our indirect impact is minimal by lending responsibly and promoting sustainable finance. We also mobilise our resources, expertise, and the volunteer spirit of our people for continuous improvement in developing a sustainable business. We focus on reducing our carbon footprint, driving green operations, promoting sustainable finance, and partnering with green-conscious institutions to conserve the environment.

Remaining committed to the United Nations’ Sustainable Development Goals (SDGs)

In support of the 17 Sustainable Development Goals (SDGs) declared by the United Nations, we have reviewed the relevance of SDGs to our sustainability strategy and aligned them with our sustainability framework. Accordingly, our employees are educated on the goals and key performance indicators are set, measured, and reported.

Addressing national and local societal priorities to create a sustainable shared value

From declining resources and global warming to unemployment, growing populations matched by increasing levels of consumption have resulted in a range of economic, social and environmental challenges globally and locally. As our contribution to the Nation, People’s Leasing is committed to reducing income inequality by offering financial inclusivity. In doing so, we contribute towards the advancement of the following SDGs.

Our major contribution towards the United Nations Sustainable Development Goals

Core (Direct)		We support financial inclusion and reach out to micro entrepreneurs and SMEs to provide financial assistance to support livelihoods and thereby help improve their living standards.
		We provide a decent work environment for our employees, investing in their professional and personal well-being and providing fair remuneration and other benefits. We also invest to create a future ready employee base. We support regional development by creating job opportunities through local sourcing of our staff.

Non-core (Direct)		We educate our customers about the importance of financial planning and saving instruments, and promote financial literacy. We also support early childhood development, school education and vocational education by upgrading learning infrastructure, improving the quality of education service providers and offering scholarships for the deserving.
		We strategically partner with the governmental institutions, non-governmental institutions, corporates, community-based organisations, and other institutions in providing inclusive finance and in reaching communities through our outreach CSR initiatives.

Core (Indirect)		By reaching out to micro entrepreneurs and SMEs and making finance accessible, mainly to improve their livelihoods, we improve their quality of living.
		We continue to enhance our operational footprint island-wide being more accessible through the branch network and digital platforms supporting financial inclusion and increasing financial literacy through advocacy when servicing our customers and targeted programmes.
		We offer green products to provide our customers with climate-friendly options. These include Eco Lease – a product that promotes green vehicles, and E-Friends 2 – a concessionary funding line for SMEs to promote more eco-friendly businesses. Our commitment towards a lower carbon footprint and long-term tree planting initiatives contribute towards reducing GHG emissions and thereby global warming.
		We continue to invest in green technology and digital financial services towards less energy and paper use. We also eliminated unproductive paper-based processes and dispose of regular waste and electronic waste in a responsible manner.

Our strategy for outreach CSR

Guided by our sustainability policy, People’s Leasing is dedicated to touching the lives of local communities beyond inclusive finance through our outreach CSR. We align our business goals with social and environmental considerations through outreach CSR to achieve business success whilst creating value. Overseen by DGM – Marketing, we strategically implement both strategic CSR and charity initiatives in a manner that is effective and makes a real impact and measurable contribution to the local community and the environment.

Our Sustainability Governance Steering Committee, which includes the Chief Executive Officer/General Manager and respective functional and operational heads, spearheads and reviews sustainability performance. Appointed by the Board of Directors, they have been entrusted with the responsibility of ensuring that People’s Leasing meets its short- and medium-term objectives and targets set in relation to outreach CSR.

Institutionalising CSR

Overseen by the DGM – Marketing, the CSR function is centrally institutionalised as CSR Department, consisting of four full-time staff members. Regionally these initiatives are spearheaded by the Heads of our branch network. People’s Leasing has secured effective internal systems and processes to ensure that CSR/sustainability initiatives are implemented company-wide effectively and impactfully.

Organisation structure of CSR function

Monitoring and evaluation take place both at branch level, centrally, and through independent impact assessments by third parties. Crucial to the success of these initiatives is the creativity, skills, and active volunteering of employees across the branch network. We also build institutional partnerships to scale-up these initiatives and ensure effective implementation across the island.

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Investment on outreach CSR

As a responsible financial services provider we understand our prime responsibility to promote sustainable finance and our role to make a positive impact when meeting the needs of the community in a manner that is sustainable and fit for the future.

In the same way, we bring our professional administrative skills and resources to bear on our outreach CSR initiatives via our branch network and the CSR Department at Head Office. The Department also monitors the impact of flagship programmes and reports on the progress of related initiatives to the Board.

Since 2014/15, we have been allocating 2.5% of net profit towards CSR initiatives. During the year under review, we invested a total of Rs. 122.23 million in local communities and environment up from Rs. 101.53 million the previous year. As a percentage of profit after tax this amounted to 2.76%. We conducted 155 community-based initiatives for approximately 62,370 beneficiaries from 167 for 161,991 beneficiaries in the previous year. Our employees contributed a total of 6,693 hours volunteer hours, up from 5,800 hours the previous year. We did not provide any financial contribution to any political party. There were no operations with significant actual and potential negative impacts on local communities.

	2018/19	2017/18
Overall
Investment on local communities (Rs. million)	120.29	99.33
Beneficiaries (Nos.)	Approx. 62,370 reported	161,991
Enterprise development and financial literacy building
Initiatives on enterprise development (Nos.)	22	4
Entrepreneurs trained/educated (Nos.)	1,710	207
Total investment on entrepreneurship development (Rs. million)	8.15	10.31
Promote road safety and improve post-accident care
Initiatives on road safety (Nos.)	21	5
Stakeholders educated on road safety (Nos.)	5,500	1,636
Total investment on road safety (Rs. million)	3.83	11.95
Uplift education and invest in early childhood development and care
Initiatives on early childhood development (Nos.)	118	98
Investment on Early Childhood Development Centre upgrading (Rs. million)	8.73	6.34
Initiatives on school education upliftment (Nos.)	8	19
Investment on school education upliftment (Rs. million)	8.71	Not specifically tracked
Investment on scholarships (Rs. million)	17.99	7.55
Individuals benefited through scholarships (Nos.)	1,077	851
Total investment on education and early childhood development (Rs. million)	11.94	36.24
Empower local community
Initiatives on empowerment of local communities (Nos.)	43	41
Investment on healthcare (Rs. million)	27.14	15.82
Investment on differently-abled (Rs. million)	13.82	1.45
Investment on positive community engagement at religious and cultural events (Rs. million)	13.49	17.34

Process for implementation of CSR initiatives

• Identify concerns and limitations of local community based on publicly available statistics, published research and baseline studies.
• Ensure that stakeholders are identified effectively in consultation with the related government/non-governmental/other institutions and continue dialogue with religious leaders, representatives of Community-Based Organisations (CBOs), customer referrals or members of local communities from planning and implementation to monitoring. During 2018/19, out of our total investment, 78% was implemented with local community engagement to assess their expectations and needs.
• Assess impact of our operations on local community and environment and how best we could make a positive difference in the society as a responsible inclusive finance provider and invest our financial strength and staff strength to address the concerns and limitations of local community.
• Explore how best we could pool resources and up-scale our initiatives through strategic partnerships .
• Implement the pilot project in an easily manageable area with active participation of our branch staff and community representatives.
• Scale up the initiative upon further customisation as needed and implement with employee volunteerism.
• Assess the impact on local community with feedback from beneficiaries, partners, and independent reviewers. Grievances of the local community are centrally collected by the CSR Department through the branch network and duly considered in developing new initiatives.
• Continue to manage the initiative with periodic follow up or ensure a sustainable exit.

 

Salient infrastructure investments, community engagements and services supported during 2018/19

	Name of Initiative	Duration	Expenditure in 2018/19 Rs. million
Improve patient care, health and well-being at Government hospitals, and related institutions towards a healthier population	Completed presentation of critically required orthopaedic surgical equipment based on the need assessment by the Sri Lanka Orthopaedic Surgeons Association to 15 island-wide accident wards of Government hospitals	One year	12.15
	Continued to refurbish the Accident Service of the Colombo National Hospital	Since 2016	1.51
	Presented a state-of-the-art digital X-ray solution to the Castle Hospital, Colombo to improve patient treatment and care for neonates and expectant mothers	5 months	5.56
	Provided financial assistance for the landscaping of the recreation area for teenagers with mental health problems who undergo residential treatment. Completed the roof foiling of the Rehabilitation Centre of the National Institute of Mental Health, Mulleriyawa	4 months	1.76
	Presented artificial mobility limbs for 111 differently-abled people	2 months	3.32
	Presented critically required medical equipment for the District General Hospital, Negombo	8 months	1.43
	Provided financial assistance to AYATHI Trust Sri Lanka for the establishment of the first National Centre of Excellence to provide total care for differently-abled children	1 week	10.00
Improve community infrastructure and access to quality water to control prevalence of CKDu	Installed community-based water plants in CKD prone areas including Nawagaththegama, Mahiyanganaya and Madawachchiya to provide access to quality water for drinking to the community	Nawagaththegama – one month Mahiyanganaya and Madawachchiya – Work in progress	3.91
Welfare for poverty-stricken areas	Donated a “Janaza” vehicle for community funerals in Muttur West	Work-in-progress	2.67
Welfare for disaster-affected areas	Provided dry rations and clothing for 1,400 needy households in underprivileged areas during Ramadaan	One month	13.49
	Provided financial assistance for the victims of adverse weather	One month	3.0
Well-being of the community	Improved sanitary facilities for 40 disadvantaged families at Kattankudy and Kandakuliya areas with permanent lavatories benefitting 40 households	Kattankudy 8 months Kandakuliya 5 months	3.42
Enhanced job creation	Supported livelihood empowerment initiative for 16 unemployed females in needy fisher families for the production of batik wear for tourists	24 days	0.45
	Presented 128 standard sewing machines and 30 juki machines to economically disadvantaged women island-wide	One month	4.54
Early childhood development	Up-graded 122 deserving early childhood development centres (preschools) enabling a more child-friendly early learning experience	One year	8.73
Upliftment of education	Presented scholarships to 853 economically disadvantaged school children	Full term – 53 Limited – 800	12.2
	Study packs for 15,000 deserving students in collaboration with a charity institute	One month	6.0
	Auditorium chairs for the newly built auditorium of the Fath Academy	One month	2.63
	20 school traffic warden awareness programmes on road safety benefitting over 5,500 traffic warden students in 434 schools	One year	3.00

Sharpening our focus

While the needs of the local communities within which we operate are many and diverse, we continued to focus on five priority areas that are of strategic relevance to our business operations:

Entrepreneurship development

Despite being the backbone of the Sri Lankan economy, SMEs face many impediments that stunt their long-term growth. To support them, and in turn the economy, we continue to implement a range of initiatives. These include –

• General workshops on entrepreneurship and financial literacy for school leavers, customers, and low income households/SMEs from local communities
• Scholarships and financial assistance for students of vocational education and for business start-ups
• Specialised workshops on business planning, accounting and taxation, business expansion, and new business development
• Region-specific programmes to provide industry specific skills training

Education and early childhood development

Education

While higher education in Sri Lanka is free, there are many limitations at schools.

We focused on providing a quality learning experience through the following:

• School infrastructure development including the refurbishment of school buildings, access to clean water and better sanitation, and the provision of sports equipment, musical instruments and learning tools
• Awareness sessions for children including leadership communication skills
• Awareness sessions for parents covering effective parenting, cyber awareness, and nutrition

Early childhood development

Ensuring a better future for our country begins with investment in early childhood development. Many of our pre-schools lack basic necessities such as good sanitation and clean water, in addition to basic learning equipment. We focused on initiatives that provide safety and support for pre-schoolers, their parents and teachers. These include –

• Educating pre-school teachers on activity-based lesson planning, aesthetic skills, and child psychology
• Educating parents of pre-school children on effective parenting
• Developing pre-schoolers through art therapy and story-telling sessions
• Refurbishing early childhood development centres (pre-schools) to provide a quality early learning experience

Road safety and post-accident care

There has been an alarming increase in the number of road accidents and People’s Leasing continued to invest in promoting responsible road use and improving the quality of post-accident treatment and care.

Promoting road safety awareness among schools traffic wardens

Since 2016, we have been implementing awareness programmes for school road safety wardens. The goal of these programmes is to minimise the occurrence of school-based road accidents and equip school children with knowledge on first aid as a life skill. Awareness sessions were followed by a presentation of road safety gear to strengthen school traffic control units. Twenty programmes were completed benefitting 5,500 traffic wardens from 434 schools.

Investment in uplifting post-accident treatment and care

People’s Leasing has been committed to improving post-accident care at hospitals since 2016. The financial year 2018/19 saw the completion of a presentation programme where critically required orthopaedic surgery equipment was donated to improve post-accident care. People’s Leasing also continued to invest in improving the sanitary facilities and minor staff rest rooms of the Accident Service of the Colombo National Hospital. We also undertook the refurbishment of the accident service unit of the Lady Ridgeway Hospital for Children during the year.

Empowerment of local communities

Be it healthcare, other public infrastructure or service development, there is much that can be done to support our customers and community who are in need of these services. Our humanitarian efforts also encompass helping members of the public in times of adverse weather. Our initiatives under this pillar cover –

• Refurbishment for Government hospitals and the supply of essentially required medical equipment and medicine
• Mobile medical camps for customers and community (covering NCDs, HIV/AIDS, chronic kidney disease – CKDu)
• Disaster relief and the provision of essential items and dry rations for the disadvantaged
• Upliftment of sanitary facilities at Government hospitals and public places

Environmental protection

While we support the UN Sustainable Development Goals and make every effort to contribute towards a greener world through our own operations, we also focus on changing hearts and minds in the community.

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Our environmental strategy

Our four-pillar approach towards environmental responsibility is as follows:

Strategic priorities on environmental conservation

For the financial year	2018/19	2017/18
Overall
Environment related initiatives (Nos.)	31	8
Environment related investment (Rs. million)	1.94	2.19
Beneficiaries (Nos.)	2,150	3,467
Employee volunteerism (Hours)	1,075 approx. reported	268
Pillar 1: Promoting green Consciousness across our value chain
Green training programmes (Nos.)	30	21
Employees trained (Nos.)	297 approx.	41
New recruits trained (Nos.)	492	264
Pillar 2: Managing and optimising our direct positive impact on the environment
Paper recycled (Kg)	6970	5,004
Energy usage (kWh)	4,555,556	5,729,386
Carbon footprint (Tonnes of CO2 equivalent)	5,694.89	7,011.01
Pillar 3: Optimising the green impact of products and services offered by People’s Leasing
Green financing facilities (Nos.)	2,185	904
Green financing disbursements (Rs. billion)	5.48	2.38
Pillar 4: Conserving the environment
Trees planted/maintained (Nos.)	14,625	6,637
Stakeholders educated on sustainable living (Nos.)	1,105	721

Managing and optimising our direct impact on the environment

Our direct environmental impacts are limited to paper, energy, and water consumption and the effective management of waste. To minimise our negative impact on the planet we make an effort to embed green practices within our business and across our networks.

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Managing energy

Our operations are not energy intensive, but we continuously seek ways to reduce consumption. Our main consumption source is electricity, while transportation through our fleet and business-related travel also accounts for a significant portion of our energy consumption.

Due to our commitment to reduce, during the year under review, People’s Leasing incurred a decrease in the energy consumption by 0.46 x 1013. In 2018/19, energy management within and outside People’s Leasing is as follows:

Within People’s Leasing

		Consumption level (Joules)
Energy source	Energy type	2018/19	2017/18
Renewable	Electricity	1.64 x 1013	2.06 x 1013
Non-renewable	Fuel	0.11 x 1013	0.15 x 1013
Total		1.75 x 1013	2.21 x 1013
Energy intensity (per employee)		6.82 x 109	2.21 x 109

Outside People’s Leasing

			Consumption level (Joules)
Energy source	Energy type		2018/19		2017/18
Non-renewable	Fuel		1.7 x 1013		8.59 x 1013
		1.7 x 1013		8.59 x 1013
Energy intensity (per employee)			6.64 x 109		10.60 x 109

Conversion factor

1 kWh electricity = 3.60 x 106 in Joules

1 liter of fuel (Petrol) = 34.46 x 106 in Joules

1 liter of fuel (Diesel) = 38.31 x 106 in Joules

**Since some of the vehicle details are in km basis, 1 km in petrol consumed vehicle was assumed as 0.1 liters and 1 km in diesel consumed vehicle was assumed as 0.17 liters.

We track our carbon footprint according to the globally accepted emissions accounting standard.

Managing water

Water is not a material topic for a financial service provider. In spite of this, as it is a scarce resource and the fact that access to quality drinking is increasingly problematic in Sri Lanka, People’s Leasing promotes water conservation across employee, supplier, and customer segments. We cause no harm to natural water bodies or related habitats.

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Managing fuel and emissions

Fuel consumption in transportation for our fleet and business related travels has been accounted for under energy consumption. To reduce the fuel usage we always use effective route planning, green vehicles and bulk transportation of materials
and where practical plan travel during off-peak hours thus to reduce GHGs avoiding road traffic.

We have 2,185 hybrid and electric vehicles in our portfolio to reduce our indirect impact – transporting material in bulk, and using off peak delivery and route planning to reduce mileage where possible. These strategies also aim to limit fuel consumption and the emission of greenhouse gasses.

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Environmental compliance

During the year under review, no fines or non-monetary sanctions were reported for non-compliance with environmental laws and regulations.

Waste management

We understand the severity of irresponsible disposal of solid waste and its circumstances on the biodiversity and human health. We practice segregation of waste generated since 2011 with the support of our employees, the respective municipal/urban councils and Central Environmental Authority endorsed third party recycling service providers. Our operations do not release any significant effluents or spills to the environment. Wastewater generated is discharged in line with the guidelines of the National Water Supply and Drainage Board. We have identified ICT based e-waste as a key hazardous waste that is generated during our operations and we responsibly dispose them through periodic e-waste collection campaigns.

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Paperless financing

Being a promoter of digital finance through mobile-based and internet-based financing, we have been familiarising our customers with online transactions through “PLC Online” since 2017.

Actual paper consumption at Head Office for the financial year 2018/19 was tracked as 5,228.5kg. We do not significantly use recycled material or do not reclaim our products due to the nature of our operations.

Group-wide carbon footprint assessment

Contributing to positive climate action People’s Leasing has identified organisational carbon footprint as a key performance indicator. GHG emissions were tracked from the most material onsite and offsite activities according to the globally accepted emissions accounting standard ISO 14064-1: 2006. In addition to generating carbon removals through long term reforestation/ planting initiatives and recycling efforts (our paper recycling saved 118 fully grown trees and reduced GHG emissions by 6,970 kg of carbon equivalents) , the Company created awareness on the significance of calculating the carbon footprint among the focal officers including the department heads / branch managers and the carbon footprint tracking officers of respective branches and departments to further educate them on the significance of this annual calculation and generate localized GHG management plans to further reduce our carbon footprint in the ensuing years. As for the financial year 2018/19, carbon inventory was prepared for each branch and subsidiary of People’s Leasing to understand the GHG emissions generated from our branch network. This initiative is expected to further motivate our employees to be more conscious of their own workstation related emissions and ultimately contribute to the reduction of the whole organisational carbon footprint.

Reporting scope	Emission source	Emission component	General composition of emission scope	Total emissions (tCO2e) 2018/19	Total emissions (tCO2e) 2017/18
Scope 1 – Direct emissions	Stationary combustion	Generator fuel	Following gases were considered as applicable; Carbon dioxide (CO2), Nitrous oxide (N2O), Methane (CH4)	80.69	62.94
	Mobile combustion	Owned and controlled vehicle fuel consumption		514.22	251.21
	Fugitive emissions	A/C refrigerants		289.96	220.69
		CO2 fire extinguisher leakages		0.04	0.07
	Scope – 1 total emissions			884.91	534.91
Scope 2 – Indirect emissions	Purchased electricity	Electricity consumption	Following gases were considered as applicable; Carbon dioxide(CO2)	2,911.62	3,557.23
	Scope – 2 total emissions			2,911.62	3,557.23
Scope – 3 emissions	Employee business travel	Air travel	Following gases were considered as applicable; Carbon dioxide(CO2), Nitrous oxide(N2O), Methane(CH4)	108.73	39.07
	Land travel	Rented vehicles for third party		245.73
	Waste Generated during operations	Waste disposal		37.78
	Water usage	Water		18.32
	Employee Commuting	Employee commuting to and from work		1,487,.80	13.54
Scope – 3 total emissions				1,898.36	2,463.09
Total carbon footprint				5,694.89	7,011.01
GHG emission intensity per employee				2.03	2.64

Promoting responsible finance and green finance

At People’s Leasing we educate new recruits and branch teams on the ethics of responsible lending, not only concerning the capacity to recover but also the social and environmental impact of lending. Both these aspects are assessed before a lending decision is made.

The Central Marketing Unit has launched green products such as Eco Lease – a product that promotes green vehicles, and E-Friends 2 – a concessionary funding line for SMEs to promote more eco-friendly businesses.

Investing in reforestation and planting initiatives

Reforestation and re-planting offer a great opportunity to off-set emissions and mitigate climate change. With the increase of forest cover being a national priority, People’s Leasing continued to collaborate with the District Forest Offices in Kanneliya, Udawatta and the Gal Oya Reserve. People’s Leasing also implemented localised planting campaigns with the related institutions and stakeholder groups.

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Bio diversity

Biodiversity being a key component of business sustainability. People’s Leasing is also a Patron member of the Biodiversity Sri Lanka since 2013. Our business operations does not have a significant direct impact on biodiversity or endangered or vulnerable species including IUCN red list species or national conservation list species. Further, through our long term reforestation/planting initiatives we are committed to restore/protect habitats.

Coastal biodiversity conservation

Beach vegetation has proven to be effective against many extreme weather-related phenomena such as tidal waves and tsunamis. In conjunction with the Bio Conservation Society People’s Leasing hosted a beach re-plantation programme. Thanks to the active engagement of volunteers from 10 People’s Leasing branches, 4,500 Pandanus tectorius (Screw Pine or Watakeiya) saplings were planted on the beach at nine sites. Further, 1,000 mangrove plants (Rhizophora) were also planted at Erukkalampiddy, Mannar in March. The programme was conducted with the guidance and supervision of the Coast Conservation Department. Additionally, ten awareness workshops were conducted to educate approximately 800 members of the local communities and other stakeholders on the importance of coastal biodiversity conservation including the protection of sea turtles.

We are also a partner for the multi-stakeholder involved long-term ecological restoration project spearheaded by Biodiversity Sri Lanka with the technical assistance from International Union for Conservation of Nature (IUCN) which aims to restore a section of a degraded lowland rain forest in Opatha.

Further, in 2018/19, we did not operate any businesses in or in the vicinity of protected areas of high biodiversity value.

However, we understand that a lending institution could have a negative impact on biodiversity and we educate all levels of our staff on how their individual lending related decisions or activities could negatively impact on biodiversity. We are conscious of the main indirect negative impact caused by us by financing motor vehicles. We strive to be part of the solution by minimising our carbon footprint, innovating and effectively contributing towards conservation. During the year under review, our environmental stewardship was demonstrated through an investment of Rs. 1.94 million through 31 initiatives.

GRI 201-2

Further, although there is no material risk or opportunity associated with the climate change we understand that the impacts of climate change will be intensified gradually. Hence, we promote environmental social governance (ESG) consideration in procurement and lending.

Recognition for sustainability

While our sustainability and corporate social responsibility is the result of our strategy, our work in these areas has not gone unnoticed. During the financial year 2018/19, People’s Leasing was recognised as follows:

• “Best Corporate Citizen Award.”
  – Recognised as one of the “Ten Best Corporate Citizens” in the country, we were presented with this award by the Ceylon Chamber of Commerce
• “Best Annual Report Awards – 2018.” – Reflecting our adherence to integrity, transparency, and good governance, we were presented with this award by The Institute of Chartered Accountants of Sri Lanka (CA): Bronze Winner for Corporate Social Responsibility Reporting.
• CMA Excellence in Integrated Reporting Awards 2018. – Presented by Certified Management Accountants of Sri Lanka – Special Merit Award for Integrated Thinking
• “Islamic Finance Forum of South Asia (IFFSA) Awards 2018.” We received the Gold Award for “CSR Project of the Year”
• “Sri Lanka Islamic Banking and Finance Institutions (SLIBFI) Awards 2018.” – We were presented with the Gold Award in the Social Upliftment category by UTO Edu Consult in conjunction with KPMG

Future outlook

We remain committed to combatting the ill-effects of climate change in order to secure a future that is sustainable for our business and our stakeholders. Increasing sustainability – literacy, conveying relevance, and inspiring all levels of employees are three of our key goals in this area.

We also have plans to integrate sustainability beyond physical impact measurement. We plan to develop sustainability strategies that are cost effective, reduce risk using sustainability metrics-based management systems, and develop proactive strategies for process and product redesign.