STATEMENT OF CASH FLOWS

ACCOUNTING POLICY

The Statement of Cash Flows has been prepared by using ‘The Direct Method’, whereby gross cash receipts and gross cash payments of operating, investing and financing activities have been recognized. For the purpose of the preparation of the Statement of Cash Flows, cash and cash equivalents include cash and cash equivalents, balances with the Central Bank of Sri Lanka and placements with banks net of unfavourable nostro account balances, as presented in the Statement of Financial Position.


	BANK		GROUP

For the year ended 31 December	2017	2016	2017	2016

	LKR ’000	LKR ’000	LKR ’000	LKR ’000

Cash flows from operating activities
Interest received	37,419,186	26,492,391	37,731,389	26,770,059
Fee and commission income received	2,520,532	2,253,226	3,260,952	3,273,243
Dividend income received	1,098,879	481,457	119,119	81,208
Other operating income received	1,606,826	1,370,942	1,626,502	1,377,172
Interest paid	(24,292,670)	(19,700,090)	(24,300,757)	(19,705,603)
Personnel costs paid	(3,519,150)	(3,387,278)	(3,747,676)	(3,488,904)
Other expenses paid	(3,193,194)	(2,574,442)	(3,603,669)	(3,121,736)
Operating profit before changes in operating assets and liabilities (a)	11,640,409	4,936,206	11,085,860	5,185,439
Net increase in loans and receivables to other customers	(47,719,008)	(17,564,396)	(47,727,740)	(17,568,625)
Net increase due to other customers	66,892,475	18,271,867	66,892,475	18,271,867
Net (increase)/decrease in other operating assets	(328,380)	130,036	(364,477)	174,537
Net increase/(decrease) in other operating liabilities	(16,578,994)	3,360,318	(16,575,923)	3,338,970
Net cash inflow/(outflow) from operating activities before taxation	13,906,502	9,134,031	13,310,195	9,402,188
Tax on financial services paid	(1,631,150)	(985,188)	(1,631,150)	(985,188)
Income taxes paid	(821,084)	(643,843)	(994,077)	(732,167)
Net cash provided by/(used in) operating activities	11,454,268	7,505,000	10,684,968	7,684,833

Cash flows from investing activities
Net changes in financial investments	545,200	(6,741,637)	1,509,406	(6,740,814)
Expenditure on property, plant & equipment	(588,010)	(612,468)	(736,476)	(654,471)
Proceeds from sale of property, plant & equipment	21,027	10,556	22,224	11,759
Net cash provided by/(used in) investing activities	(21,783)	(7,343,549)	795,154	(7,383,526)

Cash flows from financing activities
Issue of shares	-	2,958	-	2,958
Repayment of subordinated debts	(326,700)	(326,700)	(326,700)	(326,700)
Interest paid on subordinated debts	(2,061,507)	(2,092,505)	(2,061,507)	(2,092,505)
Repayment of other borrowings	(26,459,112)	(4,800,670)	(26,459,112)	(4,800,670)
Proceeds from other borrowings	19,413,133	7,892,343	19,413,133	7,892,343
Dividends paid to non-controlling interests	-	-	(99,740)	(45,977)
Dividends paid to shareholders of the Bank	(649,206)	(664,029)	(649,206)	(664,029)
Net cash provided by/(used in) financing activities	(10,083,392)	11,397	(10,183,132)	(34,580)
Net increase in cash and cash equivalents	1,349,093	172,848	1,296,990	266,727
Cash and cash equivalents at the beginning of the year	20,130,977	19,958,129	20,251,928	19,985,201
Cash and cash equivalents at the end of the year	21,480,070	20,130,977	21,548,918	20,251,928


	BANK		GROUP

For the year ended 31 December	2017	2016	2017	2016

	LKR ’000	LKR ’000	LKR ’000	LKR ’000

Reconciliation of cash and cash equivalents
Cash and cash equivalents	5,274,466	5,018,438	5,343,314	5,139,389
Balances with the Central Bank of Sri Lanka	15,364,920	11,815,277	15,364,920	11,815,277
Placements with banks	840,684	3,297,262	840,684	3,297,262
	21,480,070	20,130,977	21,548,918	20,251,928

The balances with the Central Bank of Sri Lanka represent the reserve maintained for the rupee deposit liabilities of the Bank and it is not available to finance the Bank's day-to-day operations.

(a) Reconciliation of Operating Profit before Changes in Operating Assets and Liabilities

	BANK		GROUP
For the year ended 31 December	2017	2016	2017	2016

	LKR ’000	LKR ’000	LKR ’000	LKR ’000

Operating profit before tax on financial services	7,547,420	5,335,004	7,191,740	5,093,546
Gains on sale of property, plant & equipment	(19,810)	(9,109)	(22,502)	(11,883)
Accrual for interest / other income	300,486	(2,125,855)	110,442	(2,206,395)
Accrual for interest expenses	2,075,915	430,845	2,093,915	436,358
Accrual for general expenses	214,693	35,406	225,941	45,555
Contribution to the pension fund	9,592	16,927	9,592	16,927
Depreciation of property, plant & equipment	326,169	329,327	373,203	364,909
Amortization of intangible assets	97,079	105,464	104,496	126,077
Gains on disposal of investments	(172,416)	(260)	(172,416)	(228)
Impairment for loans and receivables and other losses	1,258,554	1,366,953	1,290,297	1,424,573
Accrued dividend income	16,568	(548,496)	-	-
Fair value adjustments on investment property	-	-	(118,848)	(104,000)
Share based payments	(13,841)	-	-	-
Operating profit before changes in operating assets and liabilities	11,640,409	4,936,206	11,085,860	5,185,439

(b) Changes in Liabilities Arising from Financing Activities

		Cash Flows
	1-Jan-17	Net of Proceeds and Repayments	Foreign Exchange Movement	Other	31-Dec-17

	LKR ’000	LKR ’000	LKR ’000	LKR ’000	LKR ’000

Bank
Current interest bearing loans and borrowings	26,949,293	(7,359,666)	(368,117)	-	19,221,510
Non-current interest-bearing loans and borrowings	32,421,972	(1,706,403)	-	-	30,715,569
Dividends payable	49,933	(649,206)	-	671,476	72,203
Total liabilities from financing activities	59,421,198	(9,715,275)	(368,117)	671,476	50,009,282

Group
Current interest bearing loans and borrowings	26,949,293	(7,359,666)	(368,117)	-	19,221,510
Non-current interest-bearing loans and borrowings	32,421,972	(1,706,403)	-	-	30,715,569
Dividends payable	49,933	(649,206)	-	671,476	72,203
Dividend paid to non-controlling Interests	-	(99,740)	-	-	(99,740)
Total liabilities from financing activities	59,421,198	(9,815,015)	(368,117)	671,476	49,909,542