Annual Report of the Board of Directors

Preamble

The Board of Directors of Commercial Bank of Ceylon PLC (the Bank) is pleased to present to the shareholders the 54th Annual Report of the Bank comprising an integrated report, the Audited Financial Statements of the Group and the Bank for the year ended December 31, 2022, and the Independent Auditors’ Report on the Financial Statements conforming to all applicable statutory requirements.

Integrated Reporting and strategic thinking

This Integrated Report, where applicable, is presented in accordance with the Guiding Principles and Content Elements as stipulated by the International <IR> Framework of the IFRS Foundation.

The Bank has obtained independent assurance on integrated reporting and non-financial information on sustainability reporting from Messrs Ernst & Young and assurance on non-financial reporting from Messrs DNV Business Assurance Lanka (Pvt) Ltd., who represents DNV and the above independent assurance reports are appearing on annex6

This Report effectively communicates the Bank’s efforts to create value for all its stakeholders across the short, medium and long term through its business model, and identifies the emerging developments and trends that are likely to impact its business model and value creation process.

These trends have been categorised into risks and opportunities based on their importance to the Bank and its stakeholders, together with the stakeholders that are likely to be affected most. Through its annual strategic planning exercise, the Bank has developed a Sustainability Framework and identified strategic imperatives and continued to execute the required strategies to mitigate risks and capitalise on opportunities.

A detailed account of the three pillars of the Sustainability Framework, the strategic imperatives and strategies are given in the Management Discussion and Analysis contained in this Report. The underlying governance structure and the risk management framework are detailed on risk governance and management.

Board’s responsibility

According to sections 150 (1), 151, 152 and 153 (1) & (2) of the Companies Act No. 07 of 2007 and amendments thereto, the Bank’s Board of Directors is responsible for the preparation of the Financial Statements of the Group and the Bank, which reflect a true and fair view of the financial position and performance of the Group and the Bank. In this respect, the Board of Directors wishes to confirm that the Financial Statements, namely, Income Statement, Statement of Profit or Loss and Other Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows, and Significant Accounting Policies and Notes thereto appearing on Income Statement have been prepared and presented in conformity with the requirements of the Sri Lanka Accounting Standards as mandated by the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995 and the Companies Act No. 07 of 2007 and amendments thereto.

This Report also provides the information and disclosures as required by the Companies Act No. 07 of 2007 and amendments thereto, Banking Act No. 30 of 1988 and amendments thereto, the Directions issued thereunder including the Banking Act Direction No. 11 of 2007 and subsequent amendments thereto, the Listing Rules of the Colombo Stock Exchange (CSE) including the Rules pertaining to Related Party Transactions as required by Section 9.3.2 thereof and the Code of Best Practice on Corporate Governance 2017 issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka).

The Board of Directors has approved and authorised the issue of the Financial Statements of the Group and the Bank for the year ended December 31, 2022, including comparatives for 2021, in accordance with the resolution of the Directors on February 24, 2023. Within the statutory time limits, the appropriate number of copies of the Annual Report will be submitted to the CSE and to the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) and soft copies of same will be hosted on the website of the Bank, www.combank.lk.

The opinion expressed by the Bank’s External Auditors, Messrs Ernst & Young, who were appointed in accordance with a resolution passed at the 53rd Annual General Meeting held on March 30, 2022, is given on Independent Auditors' Report of this Annual Report. The details on the remuneration of External Auditors are given in Note 21 on the Financial Statements. As far as the Directors are aware, the Auditors do not have any other relationship with the Bank, or any of its subsidiaries and the associate. The External Auditors do not have any interest in contracts with the Bank, or any of its subsidiaries and the associate.

The Board, to the best of its knowledge and belief, is satisfied with the timely disbursement of all statutory payments to the Government, other regulatory institutions, and to employees.

Having reviewed the business plans of the Bank and its subsidiaries and the associate, the Board of Directors is satisfied that the Bank and its subsidiaries and the associate have adequate resources to continue their operations in the foreseeable future. Accordingly, the Financial Statements of the Group and the Bank are prepared based on a going concern assumption.

The Board having carefully considered the matters material to the Bank and its stakeholders, acknowledges that reasonable care has been exercised in the preparation and presentation of this Integrated Report and Financial Statements while preserving its integrity.

Extent of compliance with applicable statutes, directions and codes on governance

The extent of compliance with the requirements of Section 168 of the Companies Act No. 7 of 2007 and amendments thereto and other relevant statutes are disclosed in detail on Statement of Compliance while a comprehensive disclosure on the extent of compliance with the requirements of the following Directions and Code on good governance is given in detail in Annex 1.

• The Banking Act Direction No. 11 of 2007 and subsequent amendments thereto on Corporate Governance for Licensed Commercial Banks in Sri Lanka issued by the Central Bank of Sri Lanka (CBSL) (Annex 1.1)
• The Code of Best Practice on Corporate Governance 2017 issued by CA Sri Lanka (Annex 1.2)
• Disclosure requirements under the prescribed format issued by the CBSL for preparation, presentation and publication of Annual Audited Financial Statements of Licensed Commercial Banks (Annex 1.3)

Fifty fourth (54th) Annual General Meeting

Shareholders are kindly requested to attend the fifty fourth Annual General Meeting of the Bank to be held at the Galadari Hotel, “Grand Ballroom”, No. 64, Lotus Road, Colombo 01, on Thursday, March 30, 2023, at 2.30pm as stated in the Notice of Meeting of this Annual Report which is signed in accordance with a resolution adopted by the Directors.

Having carefully considered the matters material to the Bank and its stakeholders, the Board of Directors acknowledges that reasonable care has been exercised in the preparation and presentation of this Integrated Report and Financial Statements while preserving its integrity.

As required in terms of Section 168 (1) (k) of the Companies Act No. 7 of 2007, the Board of Directors does hereby acknowledge the contents of this Annual Report.

Signed in accordance with a resolution of the Board of Directors.