Chairman's Statement
"With an end to the three decades of war, and the vision of the Central Bank of Sri Lanka to make the country a regional financial hub, we anticipate a boom in business.”
I am pleased to present the seventh Annual Report and
Audited Accounts of LankaClear (Pvt) Ltd for the year
ended March 31, 2009.
LankaClear performed exceptionally well during the year under review and made great strides in the Payment Industry in Sri Lanka by making significant improvements in 'People, Processes and Technology'.
"The Company was able to achieve a net revenue of Rs. 422 Mn for the 2008/09 financial year and recorded an after tax profit of Rs. 111 Mn."
LankaClear Achievements
During the year of 2008/09 LankaClear focused on enhancing the clearing processes, human capital utilization and technology. The clearing processes have been improved on and are audited on a weekly basis with corrective action taken immediately. This resulted in maintenance of a very low error rate, in comparison to previous years. Enhanced HR systems have been put in place to accelerate the growth of employees with high potential in order to foster innovation and accountability. In terms of technology a key accomplishment was achieved by launching
LANKASIGN, Sri Lanka's first Digital Certificate Authority to the Financial Sector. The information security on all clearing systems has been strengthened in our effort towards achieving the ISO 27001 certification and enhancing system performance. Two Disaster Recovery Drill Operations were also conducted for a total of 13 days for all clearing activities.
The above resulted in LankaClear maintaining a System Up-Time of 99.23%, and meeting the cutoff times around 95% on the CIT System.
These high standards were achieved during the implementation of two national scale projects. I am pleased to announce that the execution of the Common Payment Switch (CPS) was initiated in November 2008 and now is nearing project completion. The first phase of LANKASIGN was launched and it will provide Digital Certificates for clearing applications. The second phase of LANKASIGN will provide digital certificates for all financial sector needs and this is scheduled to be completed by December 2009. The above achievements culminated in LankaClear attaining strong financial results for the year 2008/09.
We have a vision that in the future, payment systems and financial services are accessible from any location, at anytime and through multiple modes (e.g. ATMs, mobile phones, Internet, POS systems, etc.). This will be in contrast to the current situation where a customer would need to visit the financial institution and the transaction could take several days to realize.
LankaClear - A Catalyst for the Payments Industry
LankaClear is the first company in the region to implement T+1 clearing through the Cheque Imaging and Truncation (CIT) System nationally. LankaClear additionally automated the Dollar and SLIPS clearing through advanced IT systems. This paved the way for Sri Lanka to achieve regional leadership in the payments industry.
When fully implemented, the Common Payment Switch will enable real-time realization of payments on a 24x7 basis, via numerous access points such as Internet banking, ATMs, mobile phones, POS systems and customary bank counters etc. The highest level of security is incorporated into the CPS system through digital signing and encryption. This Inter Bank, Account to Account online payment system will revolutionize the payment industry in Sri Lanka as well as the region.
With the launch of LANKASIGN Phase 2, all financial institutions in Sri Lanka will be able to procure digital certificates at a competitive cost in comparison to what is currently being spent on foreign vendors. This will increase the utilization of digital signing by which customers and banks can have greater confidence in electronic transactions, which will further create a boom in electronic payment systems.
With these new mechanisms and the CIT System in place, LankaClear is well positioned to meet the future demands of the payments industry, to partner in the vision of Sri Lanka evolving into a financial services hub in the region, and in realizing the SAARC Payment Initiatives.
Company Performance
The Company was able to achieve a net revenue of Rs. 422 Mn for the 2008/09 financial year and recorded an after tax profit of Rs. 111 Mn. Despite increasing operational costs, the Company was able to achieve a 26% net profit margin and a debt: equity ratio of 16:84 as at 31st March 2009. The Company has also maintained a healthy current ratio of 5.4, and recorded an impressive return on an equity ratio of 21.07% based on stated capital for the 2008/09 financial year.
The principal activity of the Company which is the Rupee Cheque Clearing recorded a marginal decrease in volume. However, there was a marginal increase in value during the year under review, reflecting a 5.32% decrease in volume and a 5.13% increase in value. Sri Lanka draft clearing reflected a decrease of 29.28% compared with the previous year. The US$ clearing items also demonstrated a decrease of 14.61% with an increase of 9.28% value wise. The Sri Lanka Interbank Payment System continued its positive trend this year, as well as by registering increases in both volume and value by 28.35% and 29.62% respectively.
The Chief Executive Officer will give a detailed account of the Company's operational performance in his review.
Future Trends
Irrespective of their demographics customers are seeking feasible ways to access financial services, and this is particularly evident in the area of payments. The cost of a transaction is an additional concern, as ICT, infrastructure and business development penetrates the villages. With an end to the three decades of war, and the vision of the Central Bank of Sri Lanka to make the country a regional financial hub, we anticipate a boom in business. This, together with the ICT penetration of villages will raise the need for real-time realization of payments on a 24x7 basis, at a low transaction cost within a high secure system. This need is already being addressed by several of the mobile payment systems and mobile bill payments via Point-Of-Sales systems.
In Appreciation
We have been fortunate to have a dedicated and a competent team of people, and without their support our growth would not have been possible. I take this opportunity to commend our Management Team and Staff whose collective efforts were outstanding.
We also extend our gratitude the Central Bank of Sri Lanka, including the Governor Mr. Ajith Nivard Cabraal, Deputy Governors Dr. (Mrs.) Ranee Jayamaha, Mr. W. A. Wijewardena, Dr. Uthum Herat and the Assistant Governor, Mr. Priyantha D. J. Fernando who provided visionary leadership and guidance. Sri Lanka Banks' Association represented by its Secretary General, Mr. Upali de Silva was a tower of strength.
To my colleagues on the Board for their unwavering support, confidence and continued guidance and also to our shareholders for their ongoing trust.
Mr. A. Sarath de Silva
Chairman
|
