bmic_annual_report_2019

Social and Responsibility Capital

Field Officers to raise clients’ awareness on BMIC products, Also, we conducted another study via a telephone survey
services available for starting new businesses and for existing about dropout clients to identify the reasons for their
businesses as well as household assets building. dropping out based on which we introduced the new
individual loan product.
Customer feedback
Customer benefits
Being realized that customers are the key to our success, we
always concern about their feedback and willing to receive BMIC clients are provided with special benefits via
their perceptions, suggestions and complaints regarding our Suwasahana Scheme in the event of funeral in the family
products and services to improve them in accordance with amounting to LKR 6,000 per funeral or hospitalization cash
clients’ preferences and needs. amounting LKR 300 per day for 10 days. When the clients
are faced with natural disasters such as droughts and
We obtain clients’ feedback through several mechanisms landslides, they are provided with a grace period for their
including cluster meeting discussions at field level, feedback loan repayment due to the difficulties associated with loan
obtained at the cluster leader programme at branch level and repayment.
research conducted to assess the impact of BMIC products
and services on clients. The information obtained from During the year under review, LKR 9.95 million were paid
those mechanisms plays an important role in identifying the as benefits among 3,571 clients under the Suwasahana
measures to improve BMIC products and services further. Scheme. Among them, LKR 4.52 million were given to 2,630
clients for hospitalization while 941 clients were given LKR
A telephone survey was conducted to find out the impact of 5.43 million for funeral expenses.
EDS training programmes on the clients using a sample of
230 clients participated for selected 62 training programmes Bright Student Scholarship Programme is another benefit
from 16 branches located in 4 regions. Out of those clients, provided by BMIC for its clients with children pursuing GCE
72% (165 clients) mentioned that they were benefited A/L through which the students in Arts and Commerce
from the EDS training programmes in different ways which streams are provided LKR 1,000 and students in Science
supported them to expand their business ventures. stream are provided LKR 1,500 in each month for a period of
two years. In the year 2019, there were 1244 students were
Table 1- Percentage of clients benefited from EDS training benefitted and amount paid is LKR 11.89 Million.
programmes
Customer centric products
Type of EDS Impact on the business Percentage
training of clients We always focus on developing customer centric products
programme Start new business/ in order to foster demand driven nature of our work and
Technical cultivation 24% to ensure enhanced client relationship. A key development
trainings Improve existing 6% in this perspective is the income generation loan of LKR
business/ cultivation 250,000 which was introduced in the third quarter of the
Entrepreneurship Used for household 13% year with the purpose of facilitating the clients with an
Development purposes 18% existing business to expand their business. This loan is given
training Increase profit of the for the clients in the 5th loan cycle under Business Expansion
Exposure Visit business 15% Loan Type. The loan amount ranges from LKR 150,000 to
9% LKR 250,000.
Life Skills Introduce new
Development technology of planting 15% Customer complaints
training Increase knowledge
Soft Skills about financial 100% The complaint handling system linked to the corporate
Development management management at the Head Office level has been established
training Increase self- with the intention of permitting clients to voice their
Total confidence in business complaints and grievances directly via a dedicated telephone
management hot line. Those complaints are brought to the attention of
top management where appropriate solutions are provided
to solve the issues and problems.

During the year under review, different types of complaints
were received including dishonesty of the cluster leaders,
unacceptable behavior of Branch Managers and Field
Officers, delay in issuing loans, issues with group members

50 Berendina Micro Investments Company Limited | Annual Report-2019

Social and Responsibility Capital

due to inability of paying the loan installment on time etc. Figure 2 depicts the BMIC poverty outreach with respect to
Those complaints were communicated to the relevant different poverty outreach lines in 2019. We used $1.25/day
authorized personnel of BMIC in the senior management 2005 PPP line to measure the poverty outreach of the clients.
and solved as soon as possible. The all- Sri Lanka $1.25/day 2005 PPP line is the person-
weighted average of the district $1.25/day lines and for
Customer privacy 2012/13, this is LKR 108 per person per day. The other 2005
PPP lines are the multiples of the $1.25/day line. Another
As a policy, we refrain from disclosing any information poverty line used by us to measure the poverty outreach was
relating to our customers to any third party unless law of the $1.90/day 2011 PPP line which was the person- weighted
country required so. average of the district $1.90/day lines and for 2012/13, this
is LKR 91 per person per day. The $3.10/day 2011 PPP line is
BMIC poverty outreach a multiple of the $1.90/day line.

With the intention of creating a society where poverty The analysis reflects that BMIC catered 0.6% of the clients
does not exist, we assist our clients to reach out of poverty with $1.90/day 2011 PPP international poverty line and
through credit plus approach. Instead of leaving the clients 2.2% of the clients with $1.25/day 2005 PPP international
alone after providing the credit plus services,we continuously poverty line. The graph depicts that BMIC also reached 3.4%
track the reach out of poverty by our clients to assess the of the sample population with the national poverty line
impact of the services provided. We use the Progress out of and 17.8% with the 150% national poverty line. The graph
Poverty Index (PPI), an internationally recognized poverty also illustrates that BMIC catered 31.8% of the clients with
measurement tool for this purpose. $2.50/day 2005 PPP international poverty line and 79.6% of
the clients with $5.00/day 2005 PPP international poverty
PPI assesses the percentage of people at different levels line.
of poverty among the clients. It provides an assessment of
progression of people out of poverty from one loan cycle Poverty Outreach of Clients in 2019
to the next. The data were collected from the 28 branches
located in the 6 BMIC regions. Outreach (%)
80
79.6%

The figure 1 shows the overall poverty outreach (the 70
proportion of clients live below the poverty line) of our
clients over the years at 200% national poverty line. The 60
poverty outreach in 2019 was 38.6% which was lower than
the value in 2018 of 46.4%. There are few reasons for this 50
decrement. The percentage of clients in the 1st loan cycle
decreased compared to the previous year from 947 to 862 40 38.6%
because 2 new branches opened in 2019 enrolled clients
to the end of the year. Also, the clients who were at high 31.8%
poverty levels at the first loan cycle moved out from that
level as a result of the impact of the first loan. 30

20 16.5% 17.8%

9.2%

10 2.2% 3.4%
0.6% NPL

0 $3.10/DAY $2.00/DAY 150% $2.50/DAY 200% $5.00/DAY
2011 PPP 2005 PPP NPL 2005 PPP NPL 2005 PPP
$1.90/DAY $1.25/DAY
2011 PPP 2005 PPP

Poverty outreach line in 2019

Figure 1- Poverty Rate with Time Under 200% NPL Line BMIC clients reflect a positive trend of reducing their poverty
levels with moving from one loan cycle to the next loan cycle.
60 This positive trend indicates that those clients improved the
57.8 overall wellbeing of their families by using our credit plus
approach in terms of establishing micro enterprises and
56 acquisition of assets. The figure 3 illustrates the reduction of
poverty levels among BMIC clients in moving from one loan
52 50.9 51.4 cycle to the next with reference to different poverty lines.
48
48.6

46.4

44

40 38.6

36 2015 2016 2017 2018 2019
2014

Berendina Micro Investments Company Limited | Annual Report-2019 51

Social and Responsibility Capital

Poverty Outreach Comparison with Loan Cycles 81.1% 80.0% 77.7%

%
100

80

60

40 33.4% 32.6% 29.4% 40.3% 39.3%
36.0%

20 17.5% 17.1% 14.9% 18.8% 18.4%
16.1%

9.8% 9.6% 8.1%

0.7% 0.7% 0.5% 2.3% 2.3% 2.8% 3.6% 3.6% 2.9%

0

$1.90/DAY $1.25/DAY NPL $3.10/DAY $2.00/DAY 150% NPL $2.50/DAY 200% NPL $5.00/DAY
2011 PPP 2005 PPP 2011 PPP 2005 PPP 2005 PPP 2005 PPP

Loan cycle 3 Poverty outreach lines in 2019

Loan cycle 1 Loan cycle 2

Business relations Awareness programme on Alcohol and Drugs prevention at
Bulathkohupitiya
BMIC carried out an array of community projects with the
prime objective of addressing the community needs and BMIC also ensures periodical communication with its
uplifting their living standards utilizing both BMIC funds and relevant stakeholders. Accordingly, depending on the
funds given by shareholder BDS . Activities such as donating stakeholder’s requirements, BMIC reports them in an
a water tank to the Kahatagasdigiliya Police Station, orderly manner which varies from monthly, quarterly, bi
donating water storage barrels for schools, providing annually to annual reporting. Also, information is provided
dry food rations and clothes to poor families, organizing to Lanka Microfinance Practitioners’ Association and to the
Shramadana Campaigns, conducting Elders Programmes mix market. Further, we comply with statutory payment
etc. were executed with the financial assistance from BMIC. obligations such as taxes and provident fund for staff align
Activities such as supplying electricity for community with Sri Lankan laws and regulations.
buildings, supplying water for preschools, constructing
community toilets, repairing temples and community
buildings, providing stationaries to the schools, conducting
alcohol and drug prevention awareness programs etc. were
executed with the financial assistance of BDS.

Aryampathy BMIC Branch organized a Blood Donation
Campaign and Free Medical Campaign with the collaboration
of Batticaloa Lions Club, Batticaloa Teaching Hospital and
Kiruan Kulam Rural Development Association. Also, they
successfully conducted a Diabetes Awareness Training
Programme partnered with Batticaloa Lions Club.

52 Berendina Micro Investments Company Limited | Annual Report-2019

Human Capital

Value Creation Activities in 2019 Outcome Challenges

• Continuous staff training and • Staff Trainings were conducted for • Staff retention
development 882 participants • Recruitment of capable and skilled

• Staff compensation and benefits • Profit share among staff staff
• Unbiased recruitment process • Promotions and Increments under • Negative image on Microfinance
• Retention strategies
• Performance evaluation staff grading system industry
• Increase allowances and other

financial benefits

Human capital reflects the economic value of abilities, skills Staff Distribution by Gender
and qualities of employees to perform as an organization 33%
to accomplish its goals and objectives. A capable workforce
representing a diverse human capital base enriched with 67%
knowledge, competencies, capabilities and experience plays
a vital role in ensuring the healthy growth and sustainability
of the Company. BMIC in comprehending this critical
perspective, remains dedicated to build a workforce that
not only possess the relevant skills and knowledge, but also
maintain a sense of passion and the profound feeling of
connection towards achieving this goal. In this regard, BMIC
remains committed to acquire, cultivate and retain human
capital that would ultimately drive the company towards its
set objectives.

BMIC remains dedicated to ensure that its employees are Male Female
not discriminated on the ground of race, gender, age and
any other socioeconomic factor in the recruitment process, Staff Category Female Male Total
training and promotion. We continue to recruit staff based Branch Staff
on their merit to fit into vacant positions that are become Field Officers 17 151 168
available or newly created in our organization. Branch Accounts & Admin 62 4 66
Staff
We also continue to maintain a culture which encourages Branch Managers / 1 36 37
open door policy, participatory decision making, team work, Assistant BMs
learning and employee engagement in order to assure Area Managers 167
employee enthusiasm and satisfaction. Enterprise Development 6 21 27
Officers
BMIC’s human capital base grew by 4.2% during 2019. By Office Assistants 23 7 30
the end of 2019, the total staff strength was 396 out of Head Office Staff
which 162 were permanent. The increment in human capital Senior Management 178
base was due to the operations in newly opened branches Senior Executives 7 11 18
(Welimada and Nuwara Eliya) and expansion of activities Executives 17 13 30
in the Head Office. During this period, a total of 148 new Non-Executives 145
employees were recruited to BMIC. Total 136 260 396

The overall gender distribution of the company remained
at 67:33 (male to female). Category wise distribution of the
staff is as follows.

Berendina Micro Investments Company Limited | Annual Report-2019 53

Human Capital

EMPLOYEE PROFILE Staff Turn Over in Categories 19%
07% 22%
All staff members are initially recruited on contract basis
for a period of one year. However, the contractual period 14%
can be varied since all contract expiry dates are aligned to
one particular date of 31st March each year. After the first 09%
contract, it is extended for another period of one year. Staff
members who complete two years of service are considered
as eligible for the permanent staff cadre which is a decision
made by the management based on their performance.
Nevertheless, both staff categories remain equally eligible
for the compensation and benefits.

RECRUITMENT PROCESS 11%

We thrive to ensure a transparent, unbiased recruitment 18%
and selection process that results in the appointment of
the best candidate based solely on merit and best fit for the Field Officer Branch Manager
organizational values and goals. In this process, the primary Head Office Staff
step is the communication of vacancies to the Company’s Account & Admin Office Assistants
Human Resource Department by the respective Heads of Officer (AAO)
the Departments where an advertisement is developed Assistant AAO
stating the job profile including educational and professional
qualifications required. This would be circulated amongst Enterprise Development
the internal staff in addition to advertise in newspapers and Officer
employment websites.
EMPLOYEE RETENTION
Upon shortlisting the applications at preliminary and
secondary levels, an initial interview will be conducted and Effective employee retention strategies are critical in making
the final selection will be done following another interview employees feel valued and appreciated which would in turn
process which may include written tests such as (IQ test) and motivate them to remain with the Company. Several steps
a scenario analysis tests. Once the approval is received from were taken during the year to improve staff retention.
the respective authorities, the letter of employment will be Increase staff allowances, increase insurance benefits,
issued to the respective applicant ensuring the consent for provide staff study scholarships, provide promotional
employment terms. Upon a request made by an employee, opportunities to the staff and salary increments under
an offer letter is provided prior to the letter of employment staff grading system were some of such efforts. The profit
when the employee wishes to know about the salary and share benefit was also provided for the staff in the second
other terms and conditions applied to the job. consecutive year. Additionally, a special incentive plan for the
field staff was introduced to compensate the reduction of
EMPLOYEE TURNOVER incentives earned by the field staff during 2018 due to the
reduction in portfolio quality owed to the issues faced by the
During the year under review, the turnover ratio of the staff entire microfinance industry in the country.
who served for the Company more than three months was
16.53% which could be considered as average compared to Further, staff motor cycle loan amount was increased
the industry turnover ratio. There was a reduction in staff considerably with a special grant without passing the
turnover ratio in 2019 compared to 2018 which was marked financial burden to the staff in loan capital repayments and
as 19.61%.The staff turnover (voluntary staff over 3 month’s relaxed some of limitations enabling to gain more benefits.
service) in category wise is as follows.

54 Berendina Micro Investments Company Limited | Annual Report-2019

Human Capital

COMPENSATION AND BENEFITS PERFORMANCE MANAGEMENTSYSTEM

BMIC continues to provide a range of other financial and non- Regular performance appraisals are vital for human resource
financial benefits to the staff. One of the key compensations management. Critical evaluation of employee role, objectives,
for all contract and permanent staff is the EPF (25%) and benefits and purpose within an organization is critical to
ETF (3%) contributions in addition to being entitled for understand the future career direction. Hence, we conduct
gratuity after five years of service. BMIC contributes 15% to staff appraisals in every year in order to assess and evaluate
EPF for the benefit of the employees although the standard the performance of all staff members. The job specific tasks
minimum rate is 12%. The employee contribution is 10%. are evaluated against Key Performance Indicators (KPIs)
The employees are also provided with the opportunity to while considering factors such as achievement of targets,
encash all the unutilized casual leave by the end of the year. managerial skills, behavioural disciplines, training and
All staff members who complete over one year of service development needs of the staff. The annual increments and
are given a cost of living allowance in addition to the fixed promotions in line with the staff grading system are decided
allowances such as accommodation allowance, phone based on the marks received for appraisals.
allowance on need basis. Further, field staff members at
branch level are also given incentives such as field visit BMIC utilizes a standard appraisal format to evaluate all staff
allowances (subsistence), motor cycle mileage payment, categories where they first have to fill an appraisal form by
motorcycle revenue and emission test cost reimbursement. themselves as a self-assessment. Afterwards, an interview is
The field staff members are also given helmets for Motor conducted among each and every staff member by a panel
Cycle riding, rain coats, boots and bags for field usage free of the supervisory level staff. Based on the outcome of the
of charge. interview, final appraisal marks are decided by the appraisal
team and the staff member together through a discussion. If
Staff members are provided with financial assistance to there are disagreements occur, the matter is scaled up to the
pursue professional qualifications (up to postgraduate level) next level in the reporting structure for a decision.
in subject streams related to microfinance and enterprise
development. They are given up to 100% course fee Moreover, BMIC practices an open door policy which
(depending on relevance to the field of work, service period facilitates all employees to have easy and direct access to
and amount of the course fee etc). Out of the total amount, management at all levels including the MD and Chairman.
50% is given at the beginning while the balance is given at
the end of the course after submission of the certificate.

A range of insurance policies are offered to all BMIC staff TRAINING AND DEVELOPMENT
members including a health insurance policy which covers
all medical expenses including OPD and hospitalization for Training and development opportunities play a vital role in
employee and family members as well as a personal accident enhancing human capacities in an organization. The BMIC
policy and life insurance policy which provide death benefits annual training plan is formulated through the feedback
up to LKR 2 Million and also a WCI policy and a motor cycle from staff, and management in line with strategic and other
insurance. development plans of the organization encompassing a
variety of technical and soft-skill programs as well as focused
As for the staff loan schemes, they are provided with on skilling opportunities in the market. Employees are also
personal loans up to LKR 200,000 and facilitate bank loans able to take advantage of individually targeted training,
up to LKR 500,000 in addition to motorcycle loans, distress workshops and coaching opportunities.
loans, laptop loans and festival advance.
Special client care training for all field staff is given with
More benefits for the staff include marriage allowance of use of expert trainers in both Sinhala and Tamil medium to
LKR 10,000 and funeral allowance of LKR 15,000 that is even improve their skills in handling clients effectively ensuring a
applicable in the event of demise of the employee’s close greater satisfaction.
family member. Further, the company provides allowances
for staff annual get together and annual trip. Benefits During the year under review, 43 training programs were
provided for the permanent and casual staff are as follows conducted for 882 staff participants investing LKR 2.47
Million. Out of this, 33 staff members participated for
Employment Distress Loan 13 seminars and workshops. Staff members were also
Type Personnel Loan given educational support to enhance their educational/
Permanent Motor cycle Loan professional qualifications via provisioning of scholarships
Casual Festival Advance and contributing to the course fees. In 2019, 7 participants
Study attended for Diploma and Certificate study programs which
Scholarships were directly related to their job roles.
Insurance
Benefits
Casual Leave
Encashment

√√√√ √ √ √
√×√√ √ √ √

Berendina Micro Investments Company Limited | Annual Report-2019 55

Human Capital

STAFF TRAININGS Number of 24 Workshop on SLFRS - 9 for Banks 11
Programs and Financial Institutions 13
No. Training Type No of
Participants 25 Leadership & Supervisory skills 16
Technical Trainings development workshop 11
1 Credit appraisal- Micro loans 2 37
Study Programs (Certificate & Diploma) 19
2 Credit appraisal – Small loans 3 89 26 Diploma in Micro Finance (IBSL) 43 882
3 Gender and Anti Harassment 4 120 27 Certificate course in Store Keeping
Foreign Exposure Visit
policies 28 Best Staff foreign exposure visit
4 Induction Program TOTAL
5 Induction & Manual
6 Credit Operation - Experience 1 36 The selected best performed staff members were provided

Sharing 2 56 a foreign exposure visit to Nepal to study and gather
7 PPI 1 28 knowledge on microfinance industry in Nepal.
8 Coaching Sessions for TSS system
3 58 HR DEVELOPMENTS
users
Soft Skill Training 4 122 Two assignments are being continuing, focusing on key
9 Motivational & positive attitudes HR policy areas of updating staff Job Descriptions and
10 Client Relationship Improvements
TOT developing Head Office staff grading system under two
11 FL – TOT
12 Success In Money Management external HR consultants. Hopefully, both assignments are to
1 99 be completed in 2020.
(SIM) 3 96
Seminars & Workshops
13 Induction program for Trainees – FUTURE PLANS

Non-Public Practice Sector – 2019 1 21 Going forward, BMIC plans to develop policies for staff
14 Photoshop with Facebook
2 71 training and development with the intention of providing
Marketing opportunities to improve job related skills, knowledge and
15 Microfinance Principles
16 Misconducts Committed in attitudes.

Workplaces & Disciplinary Inquiry 14
Procedure Also, it is expected to work on upgrading the staff evaluation
17 IIA Lanka Chapter 8th National
Conference on Internal Audit 1 1 system with the intention of recognizing true performance
18 Workshop on E-Filing of VAT FS and achievements to reward them in a rational basis to
Returns
19 International Workshop on ensure the effective use of existing human resources and
Responsible Financial Inclusion 1 2 attract the people with required knowledge, skills and
20 Harassment free workplace 1 2 capacity.
21 Induction programme for Trainees –
Non-Public Practice Sector - 2019 Steps are taken to establish a Whistleblowing mechanism
22 Workshop on Research Proposal 1 1 for employees to report their issues and grievances through
Development
23 Public Training Program on a third-party organization which operates in professional
Achieving Excellence in Customer
Service International Training 1 1 ground ensuring the highest confidentiality.

1 9 Also, Human Resource division conducts regular branch
visits for one -on-one engagement with employees in order

1 1 to identify and understand HR related issues faced by the
1 3 employees.

11

14

56 Berendina Micro Investments Company Limited | Annual Report-2019

Human Capital

ORGANIZATION STRUCTURE

Chairman Audit Commitee
Board of Directors
Managing Director/ CEO

Deputy Managing Director

Head of HR & Admin Head of Finance

Manager - Operation Manager Compliance Manager Enterprise Finance Manager Internal Audit
Communications & Media Manager & Corporate Relationship Development Services Manager - HO

Manager Manager - Manager IT
Administration Credit Quality

Assistant Manager Area Managers Enterprise Environmental Senior Accounts Senior IT
HR Development Coordinator Executive Executive

Executive

Manager -Field HR Executive Branch Managers MIS Executive Research Officer Marketing Accounts Procurement IT Executive Internal Auditors
Staff Training & Executive Executives Executive
Development

Field Officers Accounts & Enterprise Accounts Assistants
Admin Officer Development

Officer

Assistant 57
Accounts &
Admin Officer

Berendina Micro Investments Company Limited | Annual Report-2019

Natural Capital

Value Creation Activities in 2019 Outcome Challenges

• Environmental impacts assessment • 47 harmful enterprises were • Clients’ ignorance on negative
of enterprises identified externalities for the environment

• Promoting environmental conscious • Environmental awareness programs • Significant investments requirement
behavior • Constructing 30 biogas units & 7 for environmental protection
activities
• Continuing environmental waste water treatment tanks
protection measures • Conducting environmental

• Grants for environmental protection community projects
• Reducing greenhouse gas emission

by 710 kg of carbon equivalent

Natural capital is the stock of renewable and non-renewable Coordinator from Head Office to adhere the policy on
resources provide benefits to the people and economy. controlling harmful environmental practices of the
It consists of assets including water, forests, clean air and enterprises supported by the BMIC. Identification of
ecosystem services which support people in everywhere in harmful enterprises is done by the branches and reported
terms of healthy lives and underpinning economic activity. to the Head Office to assess the magnitude of their negative
During the past decades, natural resources have been externalities to control pollution and take appropriate
depleted as a result of anthropogenic and natural factors measures to continue the enterprise in a sustainable manner.
posing threats on environmental sustainability. Hence, BMIC provides technical and financial assistance to the
involving in environmental conservation is more important enterprises to implement mitigation plans for the respective
in this decade to restore the environmental balance. Thus, environmental pollution.
companies have to pay attention on reducing the adverse
environmental impacts and implement strategies to During the year under review, 101 enterprises were identified
preserve natural environment from negative externalities by the Field Officers from 28 branches and 47 harmful
generated by their processes with the aim of achieving long enterprises were identified to provide with appropriate
term sustainability. As a responsible organization with an environmental protection measures.
environmental focus, BMIC involves actively in environmental
protection. PROTECTION MEASURES TO REDUCE
NEGATIVE ENVIRONMENTAL IMPACTS
BMIC APPROACH OF ENTERPRISES

BMIC follows triple bottom line approach consists of people, Prior to the implementation of environmental conservation
planet and profit with the intention of poverty alleviation strategy for any type of enterprise, BMIC evaluates four
through eliminating the causes of poverty such as depletion criteria including significance of environmental impacts,
of natural resources, creating adverse environmental impacts enterprise stability, land ownership and client’s willingness to
from the business processes and use of products accelerating invest in the project. If all the criteria are met, the identified
environmental pollution.Thus,BMIC adopts series of activities projects are commenced with the contribution of BMIC. In
to safeguard the environment including identification of 2019, part of the construction costs of biogas digesters were
enterprises generating adverse environmental impacts and fulfilled by the grants received from Nationally Appropriate
implement protection measures to minimize those adverse Mitigations Actions (NAMA) – United Nations Development
impacts, identification of potential greener businesses, Programme (UNDP) while part of the construction costs of
implementation of mechanisms to convert waste into wastewater treatment systems for vehicle service stations
economically valuable products, creating awareness were fulfilled by the funds received from Stromme Micro
among BMIC clients and general public on environmental Credit Guarantee Limited (SMCGL). The balance costs of
conservation, conduct environmental protection activities constructions were borne by BMIC and its clients. BMIC
together with BMIC clients, implementing environmental Environmental Coordinator and Enterprise Development
conservation projects in collaboration with government, Officers assure the completion of construction in required
private and non-government organizations. quality standards.

ASSESSMENT OF ENTERPRISES TO
IDENTIFY THE ENVIRONMENTAL
IMPACTS

BMIC has a dedicated Environmental Unit under Enterprise

Development Services which is led by an Environmental

58 Berendina Micro Investments Company Limited | Annual Report-2019

Natural Capital

BIOGAS DIGESTERS TO TRANSFORM Table 1- Financial contribution for the construction of biogas
WASTE IN THE DAIRY PROJECTS INTO digesters
RENEWABLE ENERGY
Region
Though dairy management is one of the main livelihoods No of installed
among rural people, majority of them are lacking with biogas digesters
sufficient knowledge on how to use waste from a dairy farm BMIC 30%
in a useful manner. BMIC realized generating bio gas as a contribution
source of energy using the waste from cattle sheds as an (LKR)
environmentally and economically friendly alternative for UNDP 40%
the prevailing issue. contribution
(LKR)
The United Nations Development Programme supported Client 30%
to diversify the energy supply in Sri Lanka to promote Contribution
renewable energy resources through Global Environment (LKR)
Facility (GEF) Fund to implement “Nationally Appropriate Total
Mitigation Actions (NAMA)” in energy generation and end-
use sectors in Sri Lanka. BMIC partnered in this project to (LKR) 15 524,250 699,000 524,250 1,747,500
promote renewable energy usage by constructing biogas Nuwara
units in 2019. Eliya 9 314,550 419,400 314,550 1,048,500
Trincomalee 6 209,700 279,600 209,700 699,000
The project was implemented with the objectives of adopting Batticaloa 30 1,048,500 1,398,000 1,048,500 3,495,000
renewable energy technology to combat global warming Total
and increase profitability of families by reducing household
fuel and electricity costs. In addition, output generated from Project of constructing bio gas digesters was implemented in
biogas digesters was a good soil conditioner which could two phases where 15 digesters were constructed during the
be used for home gardening and vegetable cultivation. The first phase from 30th April to 30th June while 15 digesters
project facilitated such market transformation of renewable were constructed during the second phase from 30th
energy technologies and other co-benefits through October to 12th December. The contribution for the project
introducing bio gas digesters to the clients in Central and from BMIC, UNDP and clients were 30%, 40% and 30%
Eastern provinces. respectively. At the commencement, clients were provided
with 70% out of the total cost (contribution from BMIC and
UNDP) where they had to complete the construction of
biogas digesters together with their contribution.

BMIC constructed 30 domestic scale biogas digesters (8 A Bio Gas Unit-Kotmale
m3) in the branches of Gampola, Kothmale, Ginigathhena,
Thambalagamuwa, Serunuwara, Arayampathy, Valachchenai The biogas units have advantages in economic and
and Kaluwanchikudy. A biogas digester unit generate bio gas environmental aspects. The advantages predicted for 10
equals to 1kg Liquefied Petroleum Gas (LPG) per day with years are mentioned below.
the input of 20 – 25kg cow dung while an unit generate
biogas equal to 30kg LPG per month which saves nearly LKR Table 2- Advantages from the biogas units predicted for10
4,300. This reduces the cost of LPG and firewood of the dairy years.
farmers and cost of construction per unit (LKR 116,500) can
be recovered within 28 months. In this activity, 30% of the Year
construction cost was provided by the client and 70% was No of Installed
provided by both UNDP and BMIC.Thus,the cost contributed biogas digesters
by the client can be recovered within 8 months. Financial Saving of LP gas
contribution for the construction of biogas digesters is as (MT)
follows. Saving of firewood
(MT)
Saving of GHG (MT)
Liquid Fertilizer
Average (Litre x 103)

2018 2 7 6 106 720
2019 30 110 163 1,488 10,800

Berendina Micro Investments Company Limited | Annual Report-2019 59

Natural Capital

WASTEWATER TREATMENT SYSTEM • Destruction of 12 fully grown trees
FOR ECO-FRIENDLY SERVICE STATIONS • Use of 1,246 liter of oil
• Use of 2,840 kwh of electricity
Constructing a wastewater treatment unit is the proven • Use of 22,564 liters of water
technology to control pollution related to vehicle service • Degradation of 2 cubic meters of Landfill
stations which directly release waste water to water streams • GHG emission by 710 Kg of carbon equivalent
and soil. Having Environmental Protection License (EPL) is
an essential legal requirement for vehicle service stations to ENVIRONMENTAL COMMUNITY
apply for business registration and continue the business in a PROJECT FOR BETTER FUTURE
legally accepted manner. However, both technical knowledge
and financial strength are required to construct wastewater BMIC expanded environmental services not only to its clients,
treatment units where BMIC clients involve in vehicle service but also to the general public since last two years. Various
stations are lacking in both aspects. community groups such as school children, Government
Officers, Private Companies, Estates Workers were engaged
BMIC identified those challenges and supported to mitigate in environmental community projects with BMIC during
environmental pollution by constructing wastewater 2019. Following environmental community projects were
treatment units with the provision of partial financial and conducted during the year under review.
technical assistance. But, some clients faced with financial
difficulties in constructing waste water treatment units. Branch Project Name
Therefore, BMIC partnered with Stromme Micro Credit
(Gte) Ltd (SMCGL) and constructed seven wastewater 1 Gampola Tree planting and school
treatment units for seven vehicle service stations located awareness – Jinaraja Boys School
in Kuchchaweli, Ipalogama, Dikoya, Dehiowita, Gampola and Kuruduwatta and Royal
and Mawanella. SMCGL provided LKR 682,465 for the Collage in Gampola
seven projects while BMIC provided the technical support,
monitoring and operational cost. 2 Kahatagasdigiliya “Kubuk” tree planting
programme with Women’s
A wastewater treatment unit - Dehiowita Farmer Society near “Welan
Wewa” reservation area
WASTE PAPER RECYCLING PROGRAM
TO REDUCE ECOLOGICAL FOOT PRINT 3 Trincomalee Placing awareness boards near
ON PAPER USAGE the beach and Inner Harbour
Road, Trincomalee together with
In each and every company, paper usage is a very common Trincomalee Municipal Council
practice creating adverse impacts if it is not managed in a and Marine Environmental
proper manner. Being realizing this fact, we promoted “Paper Protection Authority
to Paper” concept instead of “Tree to Paper” concept by
launching a wastepaper recycling program at Head Office 4 Manupa Placing dustbins in Mihinthale
level in collaboration with Neptune Recyclers (Pvt) Limited & Udamaluwa area with the
(a local recycling company) to reduce the ecological foot support of community and
print of paper usage. In 2019, nearly 710 Kg of paper was Police
recycled generating several environmental benefits. If this
strategy was not adopted, following environmental issues 5 Welimada Shramadana & tree planting
would have been occurred. programme in Keppatipola area

6 Ragala Motivational training on waste
management in Senarathpura

7 Ipalogama Environmental program to
distribute 78 tree plants to the
community

Tree Planting – Jinaraja Boys School – Kuruduwatta

60 Berendina Micro Investments Company Limited | Annual Report-2019

Natural Capital

COMPLIANCE WITH “ROADMAP FOR The environmental strategies adopted by BMIC are complied
with the key actions mentioned in some of the pillars
Awareness Board - Trincomalee belonged to the roadmap. In line with the pillar of capacity
building, BMIC conducted environmental awareness
“SUSTAINABLE FINANCE IN SRI LANKA” programmes at local level to inform our clients about the
IMPLEMENTED BY CENTRAL BANK OF negative externalities generated on the environment by
SRI LANKA their enterprises, day-to-day life activities and the possible
measures of overcoming those negative impacts. With the
The objective of the roadmap is to set out plans to develop intention of environmental conservation, BMIC involved in
sustainable finance in Sri Lanka through the provision of several community projects such as tree planting campaigns,
guidance and support to financial institutions to effectively school awareness program, display awareness boards near
manage environmental, social and governance (ESG) public places and conducting “Sharamdana activity” to
risks associated with the projects financed by them and conserve environment for future with clientele.
promote the environmentally friendly and socially inclusive
businesses. This road map consists of six pillars as financing EDS Division in Head Office with Environmental Coordinator
vision 2030, ESG integration into financial market, financial as well as the Enterprise Development Officers in branch level
inclusion, capacity building, international cooperation and involve in continuous monitoring and evaluation mechanism
measurement & reporting. where the supported enterprises are visited to identify the
real need and affordability of those clients for environmental
protections. In addition, after finishing the project, it is visited
by the Officers to clarify whether the people are reaping
actual benefits from it. BMIC also focuses its attention on
the pillar of international cooperation via making efforts to
create links with the international donor agencies to obtain
financial support for environmental services.

Berendina Micro Investments Company Limited | Annual Report-2019 61

Bio Gas Project - Thambalagamuwa

Gamage Shamalee (Age 37), to make string hoppers and Patties (snack) by using bio gas
stove and sell them to nearby boutiques and schools. I had
Shamalee is a mother of two children, lives with her husband big burden on searching firewood, especially in rainy period.
in Agbopura, Kanthale. She and her husband Tikiri Banda Now, we are free from that burden and we put that time on
have been involved in dairy farming since 1998. They started our business and children’s work. In future, I have an idea to
with two cows and now they have increased to 9 cows and start yogurt or curd production in my home. For that, I can
3 calves with proper cow shed. She got livestock farmer use biogas as a fuel in the production process. Really, biogas
registration from Kanthale veterinary office in 2017 with gas unit is a great source of energy and motivated our lives”.
the support of Berendina. She started milk collection as She applies slurry released from digester to Sogam and
an agent for Nestle in the end of the 2019. Her husband C3 grass cultivation and for the garden. Also, neighbors
is working in civil defense force and supports Shamalee to and villagers start to buy slurry from them for cultivation
continue the dairy farming. purposes.

Shamalee joined with Berendina Micro Investments Shamalee was able to manage her dairy business well. She
Company Limited (BMIC) by obtaining LKR 30,000 in 2016 has participated for the training that linked by Berendina to
as first loan. Now, she is in the third loan cycle and obtained Department of Animal production and health. She was a milk
LKR 150,000 for investing in a sprinkler irrigation system collector having highest milk collection and therefore Milco
for C3 grass cultivation and for the construction of a poultry company granted subsidy to purchase grass cutter machine.
shed to diversify her livestock business. Also, Shamalee was the branch level award winner under
animal husbandry category of Berendina Best Entrepreneur
She said “We had to face many difficulties due to increase Award 2019.
of farm waste with the increase of cattle. My residence was
badly exposed to bad odor and flies. My husband and I were She earns LKR 35,000 to 45,000 as monthly income from the
aware about the benefit of having a biogas unit. However, dairy business and LKR 7,500 to 8,000 from milk collection
we couldn’t construct it due to lack of technical knowledge service.
and funding. Luckily, we heard from Berendina officers about
their support to construct the bio gas unit in 2019. It was Shamalee thanked Berendina for the guidance and support
a very good opportunity for us to construct the domestic given “I have a dream to become success in my business.
scale bio gas unit with 70% of funding support of Berendina I hope to start layer poultry farm, buy a vehicle, start
and UNDP – NAMA. Berendina officers gave us full technical making milk based products and provide few employement
support to construct the unit”. opportunities to the villagers. Then I can be happy by seeing
success of other families too”.

Shamalee was one of the 30 dairy farmers who got support
from Berendina to construct the domestic scale bio gas
units. UNDP – NAMA project provided 40% funding support.
Berendina provided 30% of cost as donation and balance 30%
of the cost was bared by the farmers. Cost of construction
excluding technical support was LKR 116,500. Berendina
provided technical and monitoring support including hiring
a skilled mason to construct bio-gas pits.

Shamalee stated “After the construction of bio gas units we
benefitted with many ways such as no cost for fuel, firewood
and LP gas for cooking need of home. We save LKR 1,500
per month and time for searching firewood. I have started

62 Berendina Micro Investments Company Limited | Annual Report-2019

“I joined with Berendina in 2015 and started a bakery
from my first loan. I gradually improved the bakery
together with my husband’s support and now, it has
been registered as “Ragav Bakery”. Earlier, we had
three three-wheelers to distribute our bakery food
items, but now we have five three-wheelers. There
are twelve full-time employees in our bakery who are
paid on a daily basis. I also participated the Financial
Literacy and Success in Money Management training
programmes organized by the Berendina from which I
gained knowledge to manage our business successfully.
Thanks to Berendina, now I am earning a monthly
profit of LKR 650,000 and living happily with better
standards. I expect to expand the existing building and
purchase few more three-wheelers in the future to
develop my business.”

Thanusiya, Kaluwanchikudi

COOPERATE
STEWARDSHIP

Berendina Micro Investments Company Limited | Annual Report-2019 63

Profiles of Board of Directors

.

Skills & Experience

Mr. Jagath holds a B.Sc. in Agriculture (Special) Sri Lanka and a
Postgraduate Diploma in Business Management from the National
Institute of Business Management (Sri Lanka). He is working as an
Independent Consultant for local and international organizations in
enterprise development. He has more than 26 years of experience in
microfinance, enterprise development and related activities.

G Jagath Chandana Current Appointments
Chairman Director – Berendina Development Services (Guarantee) Limited
Director – Berendina Employment Center (Guarantee) Limited
Director – Berendina Microcredit Institute (Guarantee) Limited

Appointed to the Board
On 1st June 2017 and appointed as the

Chairman on 26th October 2017

Athapaththuge Anura Skills & Experience
Managing Director/ CEO Mr. Anura holds a Master’s of Business Administration from the University
of Lincoln, UK, a Postgraduate Diploma in Economic Development,
Appointed to the Board Certificate in Agriculture Extension and Rural Development from the
On 20th November 2014 and appointed University of Reading, UK and a B.Sc. in Agriculture (Special), Sri Lanka. He
has over 31 years of extensive management and consultancy experience
as the Managing Director on 26th in microfinance and enterprise development services, for local and
October 2017. international organizations including World Bank, Asian Development
Bank, United Nations Development Programme, Women’s World Banking
and Mix Market.

Current Appointments
Chairman – Berendina Development Services (Guarantee) Limited
Chairman – Berendina Employment Center (Guarantee) Limited
Chairman – Berendina Microcredit Institute (Guarantee) Limited
President – Lanka Microfinance Practitioners’ Association

T D Charith Fernando Skills & Experience
Deputy Managing Director Mr. Charith holds a Master’s of Business Administration from Cardiff
Metropolitan University, UK and a B.Sc. Public Management (Special)
Appointed to the Board Degree from the University of Sri Jayewardenepura. He is also a Certified
On 20th November 2014 and appointed Microfinance Management Professional at the Boulder Institute of
as the Deputy Managing Director on 26th Microfinance, US. Further, he is at the final stage of Chartered
Accountancy at the Institute of Chartered Accountants of Sri Lanka
October 2017. (ICASL). Apart from being a Founding Director of BMIC, he also served as
the General Manager of Berendina Microcredit Institute (Guarantee)
Limited, and the General Manager - Finance & Administration for
Berendina Group, before assuming his present position. He had been a
Board Member and the Treasurer of the “Lanka Microfinance Practitioners’
Association” for 2014/2015 and 2015/2016 years. He has experience in
the field of Auditing, Accounting & Finance and Microfinance in the
private and ‘NGO’ sector establishments over 19 years and has attended
many international microfinance conferences and events.

64 Berendina Micro Investments Company Limited | Annual Report-2019

.

J G Vinodini Shankar Skills & Experience
Ms. Vinodini is an Associate Member of Chartered Institute of
Independent Management Accountants, UK (ACMA-UK) and an Associate Member of
Non-Executive Director the Institute of Certified Management Accountants of Sri Lanka (ACMA).
She also holds a Certificate in Taxation from the Institute of Chartered
Accountants of Sri Lanka. Prior to assuming her duties as a Director of
BMIC, she was the General Manager – Finance, Admin and HR for
Berendina Group. She also serves as a part time consultant. Ms. Vinodini
has more than 16 years of experience in finance, procurement, compliance
monitoring and in successfully rolling out an integrated business ERP
system.

Appointed to the Board
On 16th June 2015

Sarath C Fernando Skills & Experience
Independent Mr. Sarath has 37 years of experience in the banking sector including HNB,
NTB, PAB and RDB and has covered almost all areas in banking operations.
Non-Executive Director He is a fellow member of IBSL, SLIM and Australian Sales and Marketing
Institute. He holds MBA from the Postgraduate Institute of Management
(PIM). He also has a Postgraduate Diploma in Marketing, Diploma in
Banking and Diploma in Bank Management. He was a former President of
Sri Lanka Institute of Marketing (SLIM), the Secretary General of Asia
Pacific Marketing Federation in 2006, a committee member of World
Marketing Federation in 2006 and 2007 and the chief examiner of
Institute of Bankers' Sri Lanka (IBSL) for Marketing from 1999 to 2009. Mr.
Sarath is also a lecturer and a presenter for banking, marketing and
management subjects in Sri Lanka and abroad.

Appointed to the Board
On 9th May 2019

Skills & Experience
Ms. Harshini was a former consultant to BMIC from March 2016 until May
2019. She has more than 25 years of professional experience in the
Banking & Financial services industry and has headed the Finance function
of several Licensed Commercial Banks (local & Branches of foreign banks)
and a Licensed Primary dealer and Asset management company. She is an
ACMA-UK and holds MBA from PIM. She also holds a B. Com Special (Hons)
degree from University of Sri Jayewardenepura.

P Harshini Andradi 65
Independent

Non-Executive Director

Appointed to the Board
On 9th May 2019

Berendina Micro Investments Company Limited | Annual Report-2019

Corporate Management Team

C Nirmal Priyankara
Head of Finance

P W Indika Darshana
Internal Audit Manager-Head Office

M D J Saman Manathunga
Finance Manager

Rajany Yoganathan
Manager - Operations
N M C D Nawarathna
Manager - Credit Quality Managment

R Rajesh Kanna
Manager - Enterprise
Development Services
S M Kapila R Subasinghe

Head of HR &
Administration

C H M Dakshina Tharanga
Chandrasekara
Manager - IT

M A Madushika I Perera
Research Officer

W K T Lakmal Premasiri
Senior IT Executive

J A Anuradha M Perera
Senior Accounts Executive

A A Madushan Samaranayake
Assistant Manager - HR

Charith Damayantha
Kahawearachchi
Procurement Executive

66 Berendina Micro Investments Company Limited | Annual Report-2019

K P S Dhammika
Manager - Field Staff Training
& Development

W R K Wijesinghe
Enterprise Development
Executive

P G Kaushalya H Dharmadasa
Manager - Corporate
Relationship & Development

L H P K Gunawardana
Senior Accounts Executive

N Kamal M D Jayathilake
Manager - Administration

H M Kasun Prasad Dissanayake
Environmental Coordinator

J A S Anam
Manager - Communications & Media

P H M Kalishka
Internal Auditor

R P Tharindu
Nuwan Gunarathne

Internal Auditor

Sarbdeen Viswaj
Internal Auditor

K Sanjeewa U Jayawardhana
Internal Auditor

P H Shanika Thilakarathna
Market Development
Executive

C Raguwaran
Internal Auditor

J Prabodhana Ekanayaka
Internal Auditor

Berendina Micro Investments Company Limited | Annual Report-2019 67

Regional Management Team

ANURADHAPURA P S M Dissanayaka

Asst. Branch Manager - Ipalogama
T M A P Jayathilaka
Asst. Branch Manager - Manupa

L A S P Wijesundara

Senior Area Manager
N S A Hettiarachchi
Asst. Branch Manager - Kahatagasdigiliya

A A E L D Amarasinghe

Senior Branch Manager - Thirappane
Y A M S Jayasinghe
Asst. Branch Manager - Horowpothana

KEGALLE W M U I B Weerasuriya

Senior Branch Manager - Bulathkohupitiya
T G E Sarathchandra
Asst. Branch Manager - Mawanella

B M P Rathnayake

Senior Area Manager
J A P R Kumara
Asst. Branch Manager - Warakapola

W A P D K Wanigasundara

Senior Branch Manager - Dehiowita
J P Y R Jayasinghe
Senior Branch Manager - Galigamuwa

NUWARA ELIYA R M A Kumara

Asst. Branch Manager - Welimada
U D G D Nanayakkara
Branch Manager - Ginigathhena

G D Liyanagama

Branch Manager - Kothmale
D G S Jayalath
Asst. Branch Manager - Ragala
E N D Jayarathna
Senior Area Manager

M P D D K Wijesignhe

Asst. Branch Manager - Gampola
S T Prasanna
Senior Branch Manager - Dickoya
P A S Swarnathilake
Asst. Area Manager
W H Prasad
Asst. Branch Manager - Nuwara Eliya

68 Berendina Micro Investments Company Limited | Annual Report-2019

TRINCOMALEE G Gajarooban
BATTICALOA
NORTHERN Asst. Branch Manager - Valachchenai

N Nithiyananthan

Senior Branch Manager - Trincomalee
P Vathanan
Branch Manager - Kuchchaveli

E Thiruchelvam

Senior Area Manager
S Nirushan
Asst. Branch Manager - Thampalakamam
S Ravichandran
Senior Branch Manager - Serunuwara

P A Ajithsiri

Area Manager
B Thileepan
Asst. Branch Manager - Akkaraipaththu

B Vithurshana

Branch Manager - Aryampathy
S Senthuran
Asst. Branch Manager - Chenkalady
G Niraj
Asst. Branch Manager - Kalmunai
D Niranjan
Branch Manager - Kalawanchikudy

R Sureshkumar

Branch Manager - Vavuniya
B Prathileepan
Area Manager

K Niranjan

Asst. Branch Manager - Mullaitivu
R Rajeswaran
Branch Manager - Kilinochchi

Berendina Micro Investments Company Limited | Annual Report-2019 69

Corporate Governance

THE GOVERNANCE ENVIRONMENT OF THE COMPANY

Companies Act No. 7 of 2007
Microfinance Act No. 6 of 2016
Inland Revenue Act No. 10 of 2006

• Rules & Directions issued by the • Articles of Association of the • Termination of Employment
Monetary Board of the Central Company Act No. 45 of 1971
Bank of Sri Lanka
• Organizational Structure • Gratuity Act No. 12 of 1983
• EPF Act No. 15 of 1958 • Terms of References of Board • Code of Best Practice on
• ETF Act No. 46 of 1980
• Shop and Office Employees Sub-Committees CG issued jointly by CA Sri Lanka
• Risk Management Framework and SEC – 2017
Act No. 19 of 1954 • Operations and Finance Manuals • Code of Conduct issued by
• Sri Lanka Accounting and • Board Approved Policies LMFPA
• Internal Audit Charter
Auditing Standards (LKASs) • Circulars and Memos
• Sri Lanka Financial Reporting

Standards (SLFRSs)

INTERNAL GOVERNANCE STRUCTURE 2. The Board of Directors
3. Board appointed Sub-Committees
Internal governance structure of BMIC is embedded 4. Management Committees
within the organization and as a result, has an impact on 5. Employee Empowerment
the execution and monitoring of all governance related
initiatives, systems and processes. The Internal Governance As represented in the governance framework, the above
components are strengthened and complemented by
Structure encompasses; internal policies, processes and procedures.
1. Shareholders

External Audit Shareholders

Board of Directors

Management Committees Board Sub Committees

Management Audit Assets and Liabilities Finance Credit Operations IT Steering HR
Committee Committee Committee Review Committee Committee Committee

Business Activities

SHAREHOLDERS • Adopting the Annual Report and the Audited Financial
Statements
BMIC’s highest governing body is the shareholders. • Appointing the External Auditors
BMIC’s sole shareholder; Berendina Development Services • Appointing the Directors and fixing Directors’ Fees and
(Guarantee) Limited exercises the influence through Annual Remunerations
General Meeting (AGM) and through resolutions. The AGM
resolves;

70 Berendina Micro Investments Company Limited | Annual Report-2019

Corporate Governance

THE BOARD OF DIRECTORS Consider all stakeholder interest in corporate
decisions
Second governing body of BMIC is its Board of Directors.
In carrying out its responsibilities, the Board promotes a The Board of Directors ensures minimum or no negative
culture of openness and constructive dissent. aspects towards stakeholders in the corporate decision
making process.

Board Responsibilities Adoption of appropriate accounting policies
and fostering compliance with financial
Formulating, implementing and monitoring regulations
of business strategies
The Company’s Accounting Policies are prepared based on
Developing and implementing annual business plan, annual the Sri Lanka Accounting Standards (SLFRSs and LKASs) and
budgets and managing day-to-day operations are fulfilled industry best practices. Further, such policies are reviewed
by the corporate management team under the supervision annually and updated accordingly to reflect the true and fair
of the Board of Directors. The Board is responsible for financial position of the Company. Financial statements of
formulation, implementation and monitoring of business the company are prepared and presented in compliance with
strategies with the participation of Corporate Management the Sri Lanka Accounting Standards (SLFRSs and LKASs) and
Team, with Area Managers and Branch Managers. The also comply with the requirements of the Companies Act
decisions are taken in a participatory manner. The annual No. 7 of 2007 and the directions issued there under. The
business plan is designed in line with the overall business Independent Auditor’s Report is given on pages 87 and 88
strategy for the year based on the 5-year business plan. The of this Report.
annual business plan and financial budget are approved by
the Board of Directors. The progress of the programmes Access to advice and services of the Company
and monthly financial statements is evaluated against the Secretary
approved plan each year.
All the Directors have access to the advice and service of
Monitoring and evaluating internal control the Company Secretary. The Secretary ensures that Board
procedures are followed and are complied with the provisions
The Board of Directors is responsible for ensuring the of the Companies Act No. 7 of 2007 and other applicable
adequacy and integrity of the organization’s internal policies, rules and regulations. The Secretary possesses the required
procedures and controls. Board members regularly review qualifications as per the Companies Act No. 7 of 2007 and
the progress of the operations and they monitor whether only the Board has the authority to change the Secretary.
the internal controls, integrity of information and risk
management policies are in place. The internal audit team Board Composition
is directly reporting to the Management Audit Committee
while the external auditors are directly reporting to both local As at 31st December 2019, the Board of Directors comprised
and foreign members of the shareholder BDS. In addition, of two Executive Directors and one Non-Executive Non-
external consultants are regularly engaged to advise upon Independent Director and three Non-Executive Independent
and present a balanced view on the organization’s key Directors.
processes and activities to the Board of Directors.
Name of the Date of Initial Status
Compliance with laws, regulations and Director Appointment
ethical standards 01st June 2017 Non-Executive Non-
1. Mr. G.J. Independent Director
The company has been following ethical standards in Chandana 20th November Executive Director
carrying out operations while taking relevant measures to 2014
comply with all applicable laws and regulations. The board 2. Mr. H.A. 20th November Executive Director
of directors on a monthly basis reviews all the compliances Anura 2014
towards stakeholders in line with applicable laws, regulations 16th June 2015 Non-Executive
and directions issued by the Monetary Board of the Central 3. Mr. T.D.C Independent Director
Bank of Sri Lanka. The Company has appointed a tax Fernando 9th May 2019 Non-Executive
consultancy firm to advise the company on implications of Independent Director
tax regulations and ensure the company meets the required 4. Ms. J.G.V. Non-Executive
tax compliances. Shankar Independent Director

5. Mr. S.C.
Fernando

6. Ms. P.H. 9th May 2019
Andradi

Berendina Micro Investments Company Limited | Annual Report-2019 71

Corporate Governance

Changes of the Board Attendance at Board Meetings

During the year, after receiving the licence to carry on G.J. Chandana
microfinance business under Microfinance Act No 6 of 2016 H.A. Anura
from the Monetary Board of the Central Bank of Sri Lanka, T.D.C. Fernando
Mr. Sarath Chandra Fernando and P Harshini Andradi were J.G.V. Shankar
newly appointed as independent non-executive directors on S.C. Fernando
9th May 2019 in order to comply with the Microfinance Act P.H. Andradi
Rule No. 01 of 2016.
Executive √√
Mr. Sarath Chandra Fernando has 37 years of experience in Non-Executive √ √√√
the banking sector including HNB, NTB, PAB and RDB and has Independent
covered almost all areas in banking operations. He holds an Non-Independent √√√
MBA from the Postgraduate Institute of Management (PIM). √√√
He also has a Postgraduate Diploma in Marketing, Diploma in
Banking, Diploma in Bank Management and a Postgraduate 31.01.2019 √√√√
Certificate in Modern Commercial Banking. 03.05.2019 √√√√
29.05.2019 √√√√√√
P Harshini Andradi has more than 25 years of professional 27.06.2019 √√√√√√
experience in the Banking & Financial services industry 25.07.2019 √√√√√√
and has headed the Finance function of several Licensed 27.08.2019 √√√√√√
Commercial Banks (local & branches of foreign banks) and 25.09.2019 √√√√√√
a Licensed Primary dealer and Asset management company. 31.10.2019 √√√√√√
She is an ACMA-UK and holds an MBA from PIM. She also 27.11.2019 √√√√√√
holds a B. Com Special (Hons) degree from University of Sri 31.12.2019 √√√√√√
Jayewardenepura. √-Present

All the directors will be reappointed in the Annual General MANAGEMENT COMMITTEES
Meeting to be held on 19th June 2020 as per the Notice of Management Audit Committee (MAC)
the Meeting on page 128 of this report.
The Board of Directors initiated the establishment of an
Separate Roles of the Chairman and the Audit Committee in 2015 and in 2016 the Chairman and
Chief Executive Officer members were formally appointed as per the approved
Terms of Reference of the MAC. The role of the MAC is to
The roles of the Chairman and the Chief Executive Officer assist the Board in fulfilling its oversight responsibilities for
are held by two separate persons to ensure the balance of ensuring that there is a framework for accountability; for
power and authority of the positions while enhancing the examining and reviewing all systems and methods of control
independence of the board decision making. both financial and otherwise, including risk analysis and risk
management; and for ensuring the company complies with
Board Skills all aspects of the law, relevant regulations and good practice.

The Board is experienced in microfinance, banking, small BOARD APPOINTED SUB-COMMITTEES
enterprise development, social and livelihood development, Assets and Liabilities Management
NGO management, financial management, marketing and Committee (ALCO)
other related fields, coupled with passion and commitment
towards poverty alleviation. The ALCO was formed by the Board of Directors in 2019
for the purpose of assisting the Board of Directors with
Access to Independent Professional discharging its oversight responsibilities by overseeing
Advice all matters specified in the Terms of Reference which was
approved at the Board Meeting held on 25th July 2019.
In order to preserve the independence of the Board The Chairman and members were appointed as per the
and to strengthen the decision making, the Board seeks approved Terms of Reference. ALCO has no direct authority
independent professional advice for finance, tax, legal, HR unless specifically given by the Board of Directors. The prime
and IT when deemed necessary. purpose of the ALCO is to oversee the assets & liability
position, interest rate risk, liquidity, funds management and
investment portfolio functions of the company.

72 Berendina Micro Investments Company Limited | Annual Report-2019

Corporate Governance

Finance Committee Attendance at Sub Committee Meetings
Date
Finance Committee was appointed by the board in G.J. Chandana
November for the purpose of reviewing financial statements H.A. Anura
and related financial matters. One executive director and T.D.C. Fernando
two independent non-executive directors are committee J.G.V. Shankar
members. S.C. Fernando
P.H. Andradi

Credit Operations Review Committee Management 29.01.2019 √√ √
√√ √
The committee was appointed by the board at the board Audit Committee 21.02.2019 √√ √
meeting held in November with the intension of closely √√ √
monitor credit operational matters and take appropriate 27.05.2019 √√ √
actions when and where necessary without any delay. The √√
committee members include two executive directors and 21.10.2019 √ √√
one independent non-executive director. √ √√
26.12.2019 √ √√
IT Steering Committee √ √√
Assets and 10.06.2019 √ √√
Based on the recommendation of external auditors Messrs. Liabilities 17.07.2019 √ √√
KPMG, The Chartered Accountants, IT Steering Committee Committee 22.08.2019 √
was established in 2019 by the Board of Directors with the √
objective of overseeing the ICT needs and strategies of 24.09.2019 √
the Company while benchmarking the best practices. The √
committee is responsible for implementing sound IT Policies 22.10.2019 √
and ensure periodic review of IT controls. √√
20.11.2019 √√
HR Committee √√
18.12.2019 √√
The HR Committee of BMIC develops remuneration √√
policies and submit for the approval of board of directors. IT Steering 20.08.2019 √√
In addition, the committee develops policies including staff Committee 20.09.2019
loans, training and development and recruitment apart from
monitoring HR related legal and statutory compliances. 25.10.2019

Critical HR decisions are taken by the HR Committee, a 23.11.2019
team that includes two Directors, Head of HR and Head
of Finance. This includes special increments if any, staff 26.12.2019
promotions/designation changes and issues related to
employment which are raised by respective employees. HR Committee 14.01.2019
In addition, the committee discuss and take decisions on
calculating of Cost of Living Allowances, developing new HR 25.04.2019
policies and updating any outdated circulars and procedures,
staff scholarship circulars and the staff grading system. The 10.07.2019
HR Committee strives for continuous improvement of HR
processes and systems in the most effective and efficient 17.10.2019
manner in line with best practices in HR.
05.12.2019

√-Present

Employee Empowerment

Given the importance, the BMIC places on its employees
for the growth of the organization, policies, processes
and systems are in place to ensure effective recruitment,
development and retention of this vital stakeholder.
The bedrock of these policies is the BMIC’s competency
framework.

Top management and other senior staff are mandated to
get involved in formulating goals, strategies and plans, while
all levels of staff are encouraged to participate in decision
making as appropriate for each level, in order to instill a
sense of ownership, reduce bureaucracy and speed-up the
decision making process.

Berendina Micro Investments Company Limited | Annual Report-2019 73

Corporate Governance

BMIC creates an environment for employees to express Financial Reporting
independent opinions at decision making forums and
initiates discussions by obtaining operation level feedback The Board of Directors is responsible for preparation and fair
for critical aspects of new developments. Use of the inputs of presentation of the Financial Statements in accordance with
field level staff in all operational decision making processes Sri Lanka Financial Reporting Standards (LKASs/SLFRSs).
give them a high sense of value for their constructive inputs
in the decision making process. Auditor’s Report

BMIC strongly believes that constructive disagreement The Auditor’s Report on the Financial Statements of the
is essential for optimal decision making. Moreover, BMIC BMIC is given on pages 87 and 88 of this report.
provides a safe, secure and conducive environment for its
employees, allows freedom of association and collective Related Party Transactions
bargaining, prohibits child labour, forced or compulsory
labour and any discrimination based on gender, race or BMIC considers its Board of Directors as the key management
religion and promotes workplaces which are free from personnel. Details of related party transactions are described
physical, verbal or sexual harassment. BMIC also has a gender on Financial Statements of BMIC under the Note 26 on pages
and sexual harassment policy within the company to ensure 113 to 114 of this report.
all the staff members are treated equally with respect.
Internal Control

“The Directors statement on internal control” acknowledges
their responsibility for a sound system of internal control.

INTEGRATED GOVERNANCE Going Concern

Human Resource Governance The going concern has been adopted in the preparation of
the financial statements after making necessary inquiries
BMIC human resource governance is designed in a manner and reviews. The management is confident that BMIC has
that enables accessibility by any employee to every level of adequate resources to continue its operational existence for
management. BMIC provides equal opportunity to staff at all the foreseeable future.
levels of the organization’s hierarchy and constant dialogue is
facilitated to address work related issues as well as concerns REGULATORY AND ACCOUNTING
pertaining to general interest that could affect employees. BENCHMARKS
BMIC follows an open-door policy for its employees and this
is promoted at all levels of the organization. The Board and the members of the corporate management
strive to ensure that the company complies with the laws
Performance Management and regulations of the country.

The Performance Management System is at the heart of The Board of Directors also took all reasonable steps in
many supporting human resource management processes ensuring that all financial statements were prepared in
such as learning and development, career development, accordance with the Sri Lanka Accounting Standards (SLFRSs/
succession planning, talent management, rewards/ LKASs) issued by the Institute of Chartered Accountants
recognition and compensation/benefits. of Sri Lanka (CA Sri Lanka). Information in the financial
statements of the Annual Report are supplemented by a
BMIC conducted local and foreign exposure visits and special detailed management discussion and analysis which explains
seminar sessions for employees to uplift their soft and hard to stakeholders the strategic, operational, investment,
skills. BMIC has a policy to prioritize internal staff members sustainability and risk related aspects of the company that
for job openings. have translated into the reported financial performance and
are likely to influence future results. BMIC has fully complied
Channels to Reach All Stakeholders of with all the mandatory rules and regulations stipulated by
the Company the Microfinance Act No. 6 of 2016 and the directions issued
by CBSL under the act and the Companies Act No. 7 of 2007.
Principal Activities
BMIC has also given due consideration to the Best Practice
The principal activities of the company include providing on Corporate Governance Reporting guidelines jointly set
micro loan facilities for Business start-up, Business out by CA Sri Lanka and the SEC (Securities & Exchange
development, Asset Building, Agriculture etc., together with Commission) and embraced such practices voluntarily where
Enterprise Development Services such as providing training relevant and value adding.
and advice for micro and small entrepreneurs. The aim of
Berendina Micro Investments Company Limited (BMIC) is to
increase income and living standards of poor and low income
communities in Sri Lanka.

74 Berendina Micro Investments Company Limited | Annual Report-2019

Risk Management Review

RISK IDENTIFICATION RISK TREATMENT

BMIC is exposed to a number of risks which comes with the The history, culture, ethics, policies, ongoing compliance
potential to impact the organizational ability to achieve and employee intent are some factors that are taken into
strategic goals including financial performance. Identifying consideration while assessing the likelihood and impact of
the different types of risks and their attendant consequences the risks. Categorizing the probability of a risk occurrence is
is vital for a smooth run of an organization. Having a risk made using the scale minor, moderate or severe. Such rating
management framework helps to maintain the balance has allowed BMIC to protect its reputation aptitude and
between risk and reward, reduce possible unwelcome demeanor from any impediment.
surprises, allow strategic planning and timely response
permitting BMIC to make use of the scarce resources in an RISK MONITORING AND REVIEW
effective manner.
BMIC has segregated duties regarding oversight of assets,
RISK ANALYSIS reporting and payments to have sufficient verification and
balances to protect against fraud or misuse of assets. BMIC
Risk assessment framework includes discussions with pays effective consideration to controls over payments and
employees at all levels and departments of BMIC. The having an appropriate reconciliation process by keeping track
employees are requested to recognize what they perceive of inventory, reimbursement of expenses and similar matters.
as key risks within their areas while gathering ideas of ways Whilst some risks can be managed by the organization,
to effectively address or mitigate them. Further, information there are other macroeconomic risks and macro prudential
is gathered by Board of Directors and Senior Management regulatory and legal risks that need to be monitored in order
from various sources to assess the industry level risk. Special to assess their impact.
attention is paid to those risks that can have a significant
likelihood of occurrence. Mapping the risks based on their A periodic risk assessment of the BMIC has identified the
likelihood of occurrence and the potential impact if they following as potential risks and steps to mitigate them.
occur is a key part of risk analysis.

Identified Risk Describe Identified Risk Mitigation Activities
Credit Risk
Credit risk is simply defined as the potential that • Strict evaluation of clients’ credit worthiness

a borrower or counter party will fail to meet their with emphasis on payment capacity.

obligations in accordance with agreed terms. This • Obtaining of client self-declaration on available

comprises of counter party risk, concentration loan facilities before issuing new loan. This has

risk and settlement risk. Management of credit helped to avoid over indebtedness.

risk is critical to BMIC and our approach is to • Special attention given to the “Credit
enhance value through credit risk management
Assessment” criteria in staff training
beyond mere regulatory compliance. It is
curriculum, especially for Field Officers.
managed through the credit risk management • A comprehensive MIS which supports a
framework approved by the Board.
wide area of credit, EDS and other critical

information analysis.

• Consistent follow-up and strong recovery
system that ensures and maintains a lower
NPL.

• Follow a strong delinquency management
system.

• Conducting monthly progress review
meetings.

• Prioritizing build up Financial Literacy of
clients.

Berendina Micro Investments Company Limited | Annual Report-2019 75

Risk Management Review

Identified Risk Describe Identified Risk Mitigation Activities
Market Risk
Market risk is the potential of an adverse impact • The Board regularly monitors financial,
Strategic Risk
Reputation Risk on the earnings or capital due to changes in economic and industry indicators to keep

Liquidity Risk interest rates,foreign exchange rates, commodity abreast of interest rate volatilities in order

prices or equity and debt prices. BMIC is more to minimize the impact on operational

exposed to interest rate risk due to loans and performance.

receivables and borrowings. • Maintain balance between fixed and floating

interest rate in borrowing portfolio.

• ALCO is monitoring and advising the
management on how to mitigate market risks.

Strategic risks are typically external and affect • Four times per year, the Board of Directors

the most Senior Management decisions. As such, gathered and discussed particular matters
they are often missed from many risk registers. that impact the organization and its decisions.
The Board has a responsibility to make sure all The Board members are involved in key
these types of risks are included in their key operational decisions also on day-to-day basis.
strategic discussions.

Reputation risk is a risk of loss resulting from • Monitoring and evaluating the compliance of

damages to a firm’s reputation, in lost revenue, statutory and legal requirement by Board of

increased operating, capital or regulatory costs Director and Senior Managers.

or destruction of shareholder value, consequent • Maintain and monitor the compliance with

to an adverse or potentially criminal event even if Code of Conduct applicable to MF industry

the Company is not found guilty. Adverse events issued by LMFPA.

typically associated with reputation risk include • A separate communication department
ethics, safety, security, sustainability, quality and
to handle organization’s corporate
innovation. Reputational risk can be a matter
communication under the direct supervision
of corporate trust and this type of risk can be
of the Managing Director.
informational in nature that may be difficult to • Maintain a comprehensive clients complaint
realize financially.
handling process overseen by Credit Quality

Manager at the Head Office.

Liquidity risk is the inability to meet contractual • Cash flows and projections are monitored on

and contingent financial obligations as they fall weekly, monthly and annual basis.

due without incurring unacceptable losses which • Weekly analyze the variance in liquidity

result in asset and liability mismatches.Therefore, position.

assess the need for funds to meet obligations and • Built up good relationship with funding
to ensure the availability of adequate funding to
partners.
fulfil those needs at the appropriate time, both • Vigilant deposit and borrowing monitoring
under normal and stressed conditions.
and managing process.

76 Berendina Micro Investments Company Limited | Annual Report-2019

Risk Management Review

Identified Risk Describe Identified Risk Mitigation Activities
Operational Risk
BMIC is exposed to operational risk as it is inherent • A comprehensive operational manual in

in all products and processes. Operational risk place to maintain operational processes and

is defined as the risk of losses stemming from procedures systematically.

inadequate or failed internal processes, people • Internal control procedures, policy documents

and systems or from external events such as and guidelines are circulated and maintained

natural disasters, social or political events as well at all branches.

as legal risk. • Annually review all policies and procedures by

management team with consultation of BOD

and made amendments if necessary.

• Internal control processes are audited by
internal audit team to mainly cover the scope
of their liability of financial information, verify
customers’ outstanding balances, safeguard
assets, loan disbursement, recovery and
documentation process.

• Obtain daily and monthly data backup and
regular system audits carried out by internal
audit team. New system implementation
process is ongoing to mitigate identified
current system weaknesses.

• A financial and non-financial incentive system
properly designed based on performance and
loyalty and made attractive provident fund
contribution.

• Enabling a learning environment which
employees can identify their personal
potential and achieve them successfully by
sponsoring technical and soft skills trainings.

• Proper grievance handling procedures and
exit interviews to mitigate staff turnover.

• The BOD and senior management
continuously monitor the changes of statutory
and regulatory requirements and ensure BMIC
meets such requirements on time.

Berendina Micro Investments Company Limited | Annual Report-2019 77

Internal Audit Committee Report

The members of the Management Audit Committee (MAC) The Audit Committee meets once a quarter and the minutes
consist of the Chairman and three members appointed by of the Committee meetings are tabled at the Board Meeting
the Board of Directors. The Board annually reviews the Terms following the Audit Committee Meeting. In 2019, MAC met
of Reference and composition of the members of MAC, and during the months of February, May, October and December.
make necessary changes if required. The present MAC is
composed of the Chairperson (Independent Non-Executive During the year, the Internal Audit Department carried out
Director), Managing Director, Deputy Managing Director, 148 Branch Audits averaging to approximately 5 audits per
Head of Finance and the Manager Internal Audit who acts as branch. In addition, client balance confirmation audits were
the Secretary of the Audit Committee. carried out for each branch and 2 Head Office audits were
completed. During the year the Internal Audit department
In 2019, Manager Internal Audit headed the internal audit conducted several investigations and special audits when it
department of the company. He was responsible to ensure was necessary and as per the management requirement.
periodic audits are carried out in Branches and Head Office
as well as co-ordinate special audits when required, and to P Harshini Andradi
advise the Board of Directors on any control weaknesses Chairperson
detected. Management Audit Committee

During the year 2019, the MAC focused mainly on the 19th June 2020
following. Colombo
• Review of internal and external audit reports and

escalation of any critical issues to the Board of
Directors.
• Review frauds and malpractices reported by the
auditors & recommending preventive measures.
• Updating guideline on fraud control procedures and
detection methods, taking into consideration new
findings in Audit reports.
• Commencement of comprehensive auditing of Head
Office departments.
• Review and approve the internal audit scope.

78 Berendina Micro Investments Company Limited | Annual Report-2019

HR Committee Report

The HR Committee met 5 times in 2019 and headed by the All HR related critical matters which needs to get approval
Managing Director. from the Board, should refer to the committee first and
discuss before submit to the Board.
COMPOSITION OF THE COMMITTEE
The committee has involved to review regular HR activities
The committee appointed by the Board of Directors ensuring the compliance with HR standards and company
comprises the following members. policy in addition to provide the guidance and directions
for resolving HR related issues. Further, the committee
Mr. H.A Anura – Managing Director contributed to identify the lacking areas of HR processes
Mr. T.D. Charith Fernando – Deputy Managing Director and to improve or develop policies and implementation.
Mr. C. Nirmal Priyankara – Head of Finance During 2019, two such assignments have been carried out
Mr. S.M.K.R. Subasinghe – Head of HR & Administration as developing a staff grading system for head office staff
Mr. A.A.Madushan Samaranayake – Assistant Manager, HR and update staff job descriptions under two external HR
consultants. Therefore, the involvement of HR committee
COMMITTEE MEETINGS was to monitor and review the progress of the HR related
consultancy works.
The committee meets as often as necessary and before
the Board meetings to make recommendations for Another significant involvement was to finalize the policy
matters pertaining to staff remuneration & compensation, framework and guidelines for the payment of profit share
increments & staff promotions and all other policy level HR for the second consecutive year in order to motivate the
matters & issues. Also, the certain specific matters that the staff. This was benefitted to all staff financially who had
Board refers for review by the committee is taken up to make completed one-year service in the company.
recommendations and provide guidance.
H. Athapaththuge Anura
COMMITTEE FUNCTIONS AND Chairperson
RESPONSIBILITIES Human Resource Committee

The functions of the committee include review of HR
policies, remuneration, staff development capacity building,
addressing of all HR related issues, and on specific matters
referred to the committee by the Board of Directors.

Berendina Micro Investments Company Limited | Annual Report-2019 79

Financial
Statements

Financial Calendar

Obtained a term loan of LKR 20 Million from SMCGL 10-Jan-2018
Received LKR 78,654,894 as the 1st tranche of WPF Grant for Welimada Branch 21-Feb-2019
Held the 3rd Annual General Meeting of the Company 23-Mar-2019
Authorization of issue of Audited Financial Statements for 2018 23-Mar-2019
Obtained a prime loan of LKR 93 Million from BDS 29-Mar-2019
Obtained a prime loan of LKR 60 Million from BDS 29-Jul-2019
Obtained a term loan of LKR 50 Million from HNB 25-Sep-2019
Obtained a term loan of LKR 30 Million from SLSB 26-Sep-2019
Obtained a prime loan of LKR 30 Million from BDS
Obtained a prime loan of LKR 5 Million from BDS 3-Sep-2019
Obtained a prime loan of LKR 99 Million from BDS 16-Sep-2019
Obtained a prime loan of LKR 25 Million from BDS 23-Sep-2019
Obtained a prime loan of LKR 30 Million from BDS 27-Sep-2019
Obtained a prime loan of LKR 13 Million from BEC 18-Oct-2019
Obtained a term loan of LKR 29.996 Million from SLSB 21-Oct-2019
Obtained a prime loan of LKR 10 Million from BDS 1-Nov-2019
Obtained a prime loan of LKR 10 Million from BEC 4-Nov-2019
Obtained a term loan of LKR 20 Million from SLSB 4-Nov-2019
Obtained a term loan of LKR 30 Million from SLSB 5-Nov-2019
Obtained a term loan of LKR 30 Million from SLSB 13-Nov-2019
Obtained a prime loan of LKR 107 Million from BDS 19-Nov-2019
31-Dec-2019

Berendina Micro Investments Company Limited | Annual Report-2019 81

Statement of Directors’ Responsibilities for
Financial Reporting

The responsibilities of the Directors in relation to the Financial Accounting Standards (SLFRSs), Companies Act No. 7 of
Statements of the Company prepared in accordance with 2007, Sri Lanka Accounting and Auditing Standard Act No.
the provisions of the Companies Act No. 7 of 2007 are set 15 of 1995 and amendments thereto, the Code of Best
out in the following statement. The responsibilities of the Practice on Corporate Governance issued jointly by the
External Auditor in relation to the Financial Statements are Institute of Chartered Accountants of Sri Lanka (ICASL) and
set out in the Report of the Auditors given in pages 86 and the Securities Exchange Commission of Sri Lanka (SEC).
87 of the Annual Report.
The Directors have also instituted effective and
As per the provisions of the sections 150 (1), 151, 166 (1), comprehensive systems of Internal Control for identifying,
167 (1) and 168 of the Companies Act No. 7 of 2007, the recording, evaluating and managing the significant risks
Directors are required to prepare Financial Statements that faced by the Company throughout the year and it is
give a true and fair view of the financial position for each being under regular review of the Board of Directors. This
financial year and place them before the Annual General comprises internal reviews, internal audit and the whole
Meeting. The Financial Statements comprise the Statement system of financial and other controls required to carry
of Financial Position as at end of the financial year, the on the business in an orderly manner, safeguard its assets,
Statement of Comprehensive Income, Statement of Changes prevent and detect frauds and other irregularities and
in Equity and Statement of Cash Flows for the year ended secure as far as practicable the accuracy and reliability of
and notes thereto. the records. The results of such reviews carried out during
the year ended 31st December 2019 are given in page 83 of
The Financial Statements are prepared by Finance Manager the Annual Report,“Directors’ Statement on Internal Control
under the supervision of Head of Finance. The Directors Over Financial Reporting”.
confirm that the Financial Statements of the Company
give a true and fair view of: Directors are required to prepare the Financial Statements
and to provide the Company’s External Auditor, Messrs
1. The state of affairs of the Company as at 31st December KPMG, Chartered Accountants with every opportunity to
2019; and carry out whatever reviews and sample checks they may
consider appropriate and necessary for expressing their
2. The financial performance of the Company for the independent audit opinion on the financials.
financial year ended 31st December 2019.

The Board of Directors accepts the responsibility of the The Directors to the best of their knowledge and belief, are
integrity and objectivity of the Financial Statements satisfied that all statutory payments in relation to all relevant
presented in this Annual Report. The Directors confirm that regulatory and statutory authorities which were due and
in preparing these Financial Statements; payable by the Company as at the Statement of Financial
Position date have been paid or where relevant provided for.
1. The appropriate accounting policies have been selected The Directors are of the view that they have discharged their
responsibilities as set out in this statement.
and applied in a consistent manner and material
By order of the Board
departures, if any, have been disclosed and explained;

2. Judgments and estimates have been made which are

reasonable and prudent; and

3. All applicable Accounting Standards, as relevant, have

been complied with.

The Directors are also required to ensure that the Company Company Secretary
has adequate resources to continue in operation to justify Corporate Services (Private) Limited
applying the going concern basis in preparing these Financial
Statements. Further, the Directors have a responsibility 19th June 2020
to ensure that the Company has maintained sufficient Colombo
accounting records to disclose with reasonable accuracy in
the financial position of the Company.

The Financial Statements prepared and presented in this

Report are consistent with the underlying books of account

and are in conformity with the requirements of Sri Lanka

82 Berendina Micro Investments Company Limited | Annual Report-2019

Directors’ Statement on Internal Control
Over Financial Reporting

REQUIREMENT CONFIRMATION STATEMENT

The ‘Code of Best Practice on Corporate Governance 2017’ The Board of Directors of Berendina Micro Investments
(The Code) issued jointly by the Securities and Exchange Company Limited confirm that the financial reporting
Commission and The Institute of Chartered Accountants system has been designed to provide reasonable assurance
of Sri Lanka recommends Board to present a Statement on regarding the reliability of financial reporting and that the
Internal Controls. preparation of financial statements for external purposes
has been done in accordance with Sri Lanka Accounting
RESPONSIBILITY Standards (SLFRSs/LKASs) and Companies Act No. 7 of 2007.

Maintaining a sound system of internal controls to safeguard
stakeholders’ investment and the Company’s assets is
the responsibility of the Board of Directors. The Board Chairman
identifies significant risks on an ongoing basis and ensures
the implementation of appropriate systems to evaluate and
manage identified risks.

KEY FEATURES OF PROCESS ADOPTED Managing Director/CEO
IN APPLYING AND REVIEWING THE
DESIGN AND EFFECTIVENESS OF THE Chairperson
INTERNAL CONTROL SYSTEM ON Management Audit Committee
FINANCIAL REPORTING 19th June 2020
Colombo
The Board continuously assess the adequacy of the
internal controls by analyzing fraud occurrences, errors and
procedure violations reported by the Internal Audit Team,
the External Auditors, Regulatory Authorities, Management
and staff.

During the financial year the Company migrated to a new
Centralized ERP system which took care of a number of weak
controls that existed in the former system. Simultaneously
a number of new procedures were introduced in line with
the new system processes to improve internal controls.
In addition, the Company is continuously assessing the
adequacy of the new system controls and working with the
ERP service provider to improve any lapses. Also, to ensure
that action is taken to mitigate control weaknesses identified,
new procedures and changes to existing procedures and
control mechanisms are being introduced.

In order to ensure that the changes to the procedures
and controls are adhered to, the verification of same is
incorporated into the quarterly audit scope determined at
the Audit Committee. The frequency and scope of audits of
branches and Head Office is determined by the level of risks
assessed.

Berendina Micro Investments Company Limited | Annual Report-2019 83

Annual Report of the Board of Directors on
the Affairs of the Company

The Board of Directors of Berendina Micro Investments Statements is provided in pages 87 and 88.
Company Limited have the pleasure in submitting their
report as required by Section 168 of the Companies Act No. ACCOUNTING POLICIES AND CHANGES
07 of 2007 to the shareholders together with the Audited DURING THE YEAR
Financial Statements of the Company for the year ended
31st December 2019. This report was approved by the Board The accounting policies adopted in preparation of Financial
of Directors on 15th May 2020. Statements are provided in pages 96 to 102 and the changes
in accounting policies in the preparation of the financial
Berendina Micro Investments Company Limited was statements are given in the Note 2.5.2 on page 94.
incorporated as a Public Limited Liability Company, under
the Companies Act No. 7 of 2007 on 20th November 2014. FINANCIAL RESULTS
It is a Licensed Microfinance Company approved to carry on
microfinance business, by the Monitory Board of the Central 2019 2018
Bank of Sri Lanka under the Microfinance Act, No 06 of LKR LKR
2016. The registered office of the Company is located at No. 914,737,460
44/3,3rd Floor, Narahenpita Road, Nawala, Sri Lanka. Gross Income 838,174,865 604,121,999

The Vision, Mission, Strategic Goals and objectives of the Net Interest Income 583,166,777 171,178,055
company are provided on page 03 of this report. 43,607,544
Profit Before Taxes (IT,
PRINCIPLE BUSINESS ACTIVITIES 2,828,756,345
FVAT & NBT) 57,681,608 3,232,167,748
The principle activities of the Company include providing
micro loan facilities for business start-up, business Profit After Tax and OCI (7,370,298) 906,393,354
development, asset building and agriculture etc. combined
with Enterprise Development Services and initiating savings Loans and Receivables 2,759,790,705
products for clients. The aim of Berendina Micro Investments
Company Limited (BMIC) is to increase income and living Total Assets 3,148,307,895
standards of poor and low-income communities in Sri Lanka
Total Equity 977,677,951
The Chairman’s Message on pages 18 to 21 of the Annual
Report provides an overall assessment of the operational TAXATION
and financial performance of the Company, whilst a detailed
analysis of the operational and financial results provided in The Income Tax rate applicable to the Company’s operations
Financial Capital Section on pages 39 to 42 of the Annual is 24% for the financial year ended 31 December 2019. The
Report. company is also liable for value added tax at 15% and nation
building tax at 2%on financial services.
FINANCIAL STATEMENTS
RESERVES
The financial statements of the Company have been prepared
and presented in accordance with Sri Lanka Accounting The reserves of the Company with the movements during
Standards comprising SLFRS and LKAS (hereafter “SLFRS”) the year are given in Note 20 to the financial statements on
laid down by The Institute of Chartered Accountants of pages 111 of this report.
Sri Lanka and in compliance with the requirements of the
Companies Act No. 7 of 2007 inclusive of specific disclosures. DIVIDENDS
The financial statements duly signed by the Head of Finance
and three Directors of the Company on behalf of the Board Company has not declared dividends during the year ended
are given on pages 87 to 120. 31st December 2019 and for the year ended 31st December
2018.
AUDITOR’S REPORT
CAPITAL EXPENDITURE
The Auditors of the Company are Messrs KPMG, Chartered
Accountants. Messrs KPMG carried out the audit on the The total capital expenditure on Property Plant and
financial statements of the company for the year ended Equipment of the company amounted to 7.5 Mn for the year
31st December 2019. The Auditor’s Report on the Financial ended 31st December 2019.

SHAREHOLDING & SHARE
INFORMATION

Berendina Development Services is the sole shareholder of
the company amounting to 76,346,175 of ordinary shares of
the company as at 31st December 2019. Information relating
to earnings per share is given in the financial highlights on
page 6 of this report. Information on shareholder changing
of BMIC as per the agreement made on 11th November 2019
are given in the Note 23 on pages 111-112 of this report.

84 Berendina Micro Investments Company Limited | Annual Report-2019

Annual Report of the Board of Directors on
the Affairs of the Company

DIRECTORATE meetings are given at the corporate governance report on
pages 72-73.
The names of the Directors who held office as at the end
of the accounting period are given below and their brief OUTSTANDING LITIGATION
profiles appear on pages 64 and 65.
In the opinion of the Directors there were no pending
Mr. G J Chandana – Chairman litigations of the company except under the normal course
Mr. H A Anura – Managing Director/CEO of business as at 31st December 2019 and no significant
Mr. T D Charith Fernando – Deputy Managing Director commitments existed as at 31st December 2019.
Ms. J G V Shankar – Non-Executive Independent Director
Mr. S C Fernando – Non-Executive Independent Director GOING CONCERN
Ms. P Harshini Andradi – Non-Executive Independent Director
The Board of Directors has reviewed the Company’s business
RESIGNATIONS AND APPOINTMENTS plans and is satisfied that the company has adequate
OF THE BOARD OF DIRECTORS resources to continue its operations in the foreseeable
future. Financial statements of the company are prepared
There were no resignations during the year. based on the assumption that the entity is a going concern
and will continue in operation for the foreseeable future.
Mr. S C Fernando and Ms. P Harshini Andradi were appointed
to the Board as Non-Executive Independent Directors on 9th RELATED PARTY’S TRANSACTIONS
May 2019. WITH THE COMPANY

DIRECTORS REMUNERATION Transactions of related parties with the Company are set out
in Note 26 to the Financial Statements on pages 113 to 114.
Directors remuneration paid by the company are given under
the Note 26 .1.1 to the Financial Statements on page 113. DONATIONS

INTERESTS REGISTER/ DIRECTORS’ No donations were made during the financial year ended
INTEREST IN TRANSACTIONS 31st December 2019.

In compliance with the Companies Act No. 07 of 2007, the AUDITORS RELATIONSHIP OR
Company secretary maintains an interests register on behalf INTEREST WITH THE COMPANY
of the company, which is available for inspection.
Messrs. KPMG, Chartered Accountants served as the
DIRECTORS’ RESPONSIBILITY OF Auditors during the year under review. As far as the Directors
FINANCIAL REPORTING are aware, the Auditors do not have any other relationship or
interest in contracts with the Company.
In terms of Sections 150 (1), 151,152 (1), and 153 (1) and (2)
of the Companies Act No. 07 of 2007, the Board of Directors AUDITOR’S REMUNERATION
of the Company is responsible for the preparation of the
Financial Statement of the Company which reflect a true The auditors of the Company, Messrs. KPMG, Chartered
and fair view of the financial position and performance of Accountants, and a total amount of LKR 1,408,347 is
the Company. payable by the company to Auditors for the year ended 31st
December 2019 as audit fees and expenses. Comparative
REGISTER OF DIRECTORS AND figures are disclosed on page 104 of the noted to the
SECRETARIES. financial statements.

Company secretary of BMIC maintains the register of PROPERTY, PLANT & EQUIPMENT
directors and secretaries which contains the present name
and surname, former name or surname (If any), usual Details and movements of Property, Plant & Equipment
residential address and business occupation of each director. owned by the Company are given in Note 13 to the Financial
Statements on pages 106 and 107.

DIRECTORS MEETINGS 85

The details of the Board meetings and Board subcommittee
meetings including the attendance of the directors at these

Berendina Micro Investments Company Limited | Annual Report-2019

Annual Report of the Board of Directors on
the Affairs of the Company

INVESTMENT CORPORATE GOVERNANCE

Details of investments made by the Company as at 31st The Company’s Corporate Governance Report which states
December 2019 are given in Note 11 to the Financial the compliances and the best practices adopted is on pages
Statements on page 105. 70 to 74 of this report.

PROVISIONS ANNUAL GENERAL MEETING

The basis adopted for the provisioning is disclosed in Note The Annual General meeting will be held on 19th June 2020
2.6.7 on page 99 of the Financial Statements. at No. 44/3, 3rd Floor, Narahenpita Road, Nawala, Sri Lanka
at 2.00 p.m. The Notice of the Annual General Meeting
INTERNAL CONTROL AND RISK appears on page 128 of the Annual Report. This Report is
MANAGEMENT signed by two Directors and Secretary of the Company as an
acknowledgment of content.
The Board has taken necessary steps to ensure
implementation and monitoring of an effective and Chairman
comprehensive internal control system covering financial,
operational and compliance controls. The Internal Auditors Managing Director/CEO
are responsible to review and report on the efficiency of
the internal control system and other regulations and the Company Secretary
Company’s accounting and operational policies and send a Corporate Services (Private) Limited
report directly to the Board. 19th June 2020
Colombo
A proper risk management process is in place to identify and
manage the risks that are associated with the business and
the operation of the Company. The directors are time to time
reviewing this process through Internal Auditors. The Risk
Management Report on pages 75 to 77 sets out the current
management approach adopted by the Company to identify
and manage the risks.

COMMITMENT AND CONTINGENCIES

To the best of knowledge and information available to
the Board, there were no material contingencies and
commitments as at the reporting date.

STATUTORY PAYMENTS

The Directors, to the best of their knowledge and belief, are
satisfied that all statutory dues have been paid up to date
or where relevant provided for in the Financial Statements.

EVENTS OCCURRING AFTER THE
REPORTING DATE

Except for the matters disclosed in Note 23 to the Financial
Statements on pages 111-112 there are no material events as
at the date of the Auditor’s Report which require adjustment
to or disclosure in the Financial Statements.

86 Berendina Micro Investments Company Limited | Annual Report-2019

Independent Auditor’s Report

KPMG Tel : +94 - 11 542 6426
(Chartered Accountants) Fax : +94 - 11 244 5872
32A, Sir Mohamed Macan Markar Mawatha, +94 - 11 244 6058
P. 0. Box 186, Internet : www.kpmg.com/lk
Colombo 00300, Sri Lanka.

TO THE SHAREHOLDERS OF believe that the audit evidence we have obtained is sufficient
BERENDINA MICRO INVESTMENTS and appropriate to provide a basis for our opinion.
COMPANY LIMITED
Other Information
Report on the Audit of the Financial
Statements Management is responsible for the other information. These
financial statements do not comprise other information.
Opinion
Our opinion on the financial statements does not cover
We have audited the financial statements of Berendina the other information and we do not express any form of
Micro Investments Company Limited (“the Company”), assurance conclusion thereon.
which comprise the statements of financial position as at
3l December 2019, and the statements of comprehensive Responsibilities of Management and
income, statement of changes in equity and statement of Those Charged with Governance for the
cash flows for the year then ended, a summary of significant Financial Statements
accounting policies and other explanatory information.
Management is responsible for the preparation of financial
In our opinion, the accompanying financial statements give statements that give a true and fair view in accordance
a true and fair view of the financial position of the Company with SLFRS, and for such internal control as management
as at 3l December 2019, and of its financial performance and determines is necessary to enable the preparation of financial
its cash flows for the year then ended in accordance with Sri statements that are free from material misstatement,
Lanka Accounting Standards (SLFRSs). whether due to fraud or error.

Basis for Opinion In preparing the financial statements, management is
responsible for assessing the Company’s ability to continue
We conducted our audit in accordance with Sri Lanka as a going concern, disclosing, as applicable, matters related
Auditing Standards (SLAuSs). Our responsibilities under to going concern and using the going concern basis of
those standards are further described in the Auditor’s accounting unless Management either intends to liquidate
Responsibilities for the Audit of the Financial Statements the Company or to cease operations, or has no realistic
section of our report. We are independent of the Company alternative but to do so.
in accordance with the Code of Ethics issued by CA Sri Lanka
(Code of Ethics) and we have fulfilled our other ethical Those charged with governance are responsible for
responsibilities in accordance with the Code of Ethics. We overseeing the Company’s financial reporting process.

Berendina Micro Investments Company Limited | Annual Report-2019 87

Auditor’s Responsibilities for the Audit Report on Other Legal and Regulatory
of the Financial Statements Requirements

Our objectives are to obtain reasonable assurance about As required by section 163 (2) of the Companies Act No. 07 of
whether the financial statements as a whole are free from 2007, we have obtained all the information and explanations
material misstatement, whether due to fraud or error, that were required for the audit and, as far as appears from
and to issue an auditor’s report that includes our opinion. our examination, proper accounting records have been kept
Reasonable assurance is a high level of assurance, but is not by the Company.
a guarantee that an audit conducted in accordance with
SLAuSs will always detect a material misstatement when it CHARTERED ACCOUNTANTS
exists. Misstatements can arise from fraud or error and are Colombo, Sri Lanka
considered material if, individually or in the aggregate, they 15 May 2020
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.

A further description of the auditor’s responsibilities for
the audit of the financial statements is located at Sri Lanka
Accounting and Auditing Standards website at: http://slaasc.
com/auditing/auditorsresponsibility.php. This description
forms part of our auditor’s report.

88 Berendina Micro Investments Company Limited | Annual Report-2019

Statement of Comprehensive Income

For the year ended 31 December Notes 2019 2018
3 LKR LKR
Gross income 4 838,174,865 914,737,460
Interest income 5
Less: Interest and similar expenses 786,084,413 863,038,231
Net interest income 6
202,917,636 258,916,232
Fee, commission and other income 12.2
Total operating income 583,166,777 604,121,999

Less: Impairment charges for loans and receivables 52,090,452 51,699,229
Net operating income 635,257,229 655,821,228

Less: 120,549,824 77,091,290
Personnel expenses 514,707,405 578,729,938
Depreciation of property, plant and equipment and right of use assets
Amortization of intangible assets 7 277,127,011 249,180,113
Other operating expenses
Operating profit before value added tax and nation building tax on 13 20,713,744 10,083,097
financial services
Less: 14 1,757,346 1,421,338
Value added tax and nation building tax on financial services
Nation building tax on other services 8 157,427,696 146,867,335
Profit for the year before income tax
57,681,608 171,178,055
Less: Income tax expense
(Loss)/profit for the year 43,576,731 56,172,766

Other comprehensive income 810,392 700,180
Items that will not be reclassified to profit or loss
Actuarial gain/(loss)on defined benefit plan 13,294,485 114,305,109
Deferred tax (charge)/reversal on other comprehensive income
Total other comprehensive income for the year 9 24,868,761 67,951,154

Total comprehensive income for the year (11,574,276) 46,353,955

18 5,531,550 (3,814,460)

15 (1,327,572) 1,068,049

4,203,978 (2,746,411)

(7,370,298) 43,607,544

The financial statements to be read in conjunction with the related notes, which form an integral part of these financial
statements of the Company.

Berendina Micro Investments Company Limited | Annual Report-2019 89

Statement of Financial Position

As at 31 December Notes 2019 2018
LKR LKR
ASSETS
Cash and cash equivalents 10 115,621,925 180,045,317
Balances with banks and financial institutions
Loans and receivables 11 56,090,146 48,579,048
Property, plant and equipment
Right-of-use assets 12 2,759,790,705 2,835,656,223
Intangible assets
Deferred tax assets 13.1 21,784,049 23,843,093
Other assets
Total assets 13.3 33,534,369 -
EQUITY AND LIABILITIES
LIABILITIES 14 4,412,213 3,337,615
Interest bearing borrowings
Post employment benefit obligation 15 3,460,992 5,191,935
Other liabilities 16 153,613,496 135,514,517
Saving deposits from customers
3,148,307,895 3,232,167,748
EQUITY
Funds and reserves 17 1,574,799,190 1,771,624,851
Stated capital
Retained earnings 18 22,465,526 22,480,242

Total equity and liabilities 19 573,010,917 531,669,301

354,311 -

2,170,629,944 2,325,774,394

20 150,214,445 71,559,550

21 763,461,750 763,461,750

64,001,756 71,372,054

977,677,951 906,393,354

3,148,307,895 3,232,167,748

The financial statements to be read in conjunction with the related notes, which form an integral part of these financial

statements of the Company.

The Head of Finance certifies that the Financial Statements have been prepared in compliance with the requirements of

the Companies Act No, 7 of 2007.







………………………………..

Head of Finance



The Board of Directors is responsible for the preparation and presentation of these financial statements in accordance with

Sri Lanka Accounting Standards (SLFRSs).

Approved and signed for and on behalf of the Board of Directors;









……………………………….. ………………………………… …………………………………

Chief Executive Officer Director Director

15 May 2020 Berendina Micro Investments Company Limited | Annual Report-2019
Colombo

90

Statement of Changes In Equity

Unrestricted Restricted Assets and Stated Retained Total equity
funds funds liabilities capital earnings LKR
LKR LKR transfer
reserve LKR LKR
865,800 70,693,750 account

LKR

Restated balance as at 01 January 15,433,540 748,028,210 27,764,510 862,785,810
2018

Profit for the year - - - - 46,353,955 46,353,955
Issues of shares from transfer - - (15,433,540) 15,433,540 - -

Other comprehensive income (Net - - - - (2,746,411) (2,746,411)
of tax)

Balance as at 31 December 2018 865,800 70,693,750 - 763,461,750 71,372,054 906,393,354

Loss for the year - - - - (11,574,276) (11,574,276)
Other comprehensive income (Net - - - - 4,203,978 4,203,978
of tax)

Received during the year - 78,654,895 -- - 78,654,895

Balance as at 31 December 2019 865,800 149,348,645 - 763,461,750 64,001,756 977,677,951

The financial statements to be read in conjunction with the related notes, which form an integral part of these financial
statements of the Company.

Berendina Micro Investments Company Limited | Annual Report-2019 91

Statement of Cash Flows

For the year ended 31 December Notes 2019 2018
LKR LKR
Cash flows from operating activities
Profit before tax 13,294,485 114,305,109
Adjustments for:
13 20,713,744 10,083,097
Depreciation of property, plant and equipment and right-of-use assets
Amortization of intangible assets 14 1,757,346 1,421,338

Impairment charges for loans and receivables 12.2 120,549,824 77,091,290
Interest expense
Interest expenses on right-of-use assets 17.1 193,591,660 253,337,970

Net foreign exchange 5,391,279 -
Gain on fixed assets disposal
Charges for defined benefit liability (43,008) 703,894
VAT and NBT on financial service charges
Operating cash flows before working capital changes (2,703) (9,975,000)

Changes in operating assets 18 6,557,779 6,053,185
Changes in operating liabilities
44,387,123 56,872,946
VAT and NBT payment
Gratuity payments 406,197,529 509,893,829

Interest paid (66,868,640) 201,013,138
Income tax payment
Net cash flows generated from operating activities 67,255,761 45,724,607
Cash flows from investing activities
Purchase of property, plant and equipment (45,345,612) (59,699,496)
Purchase of intangible assets
Sale proceeds on fixed assets disposal (1,040,945) (928,990)
Net investment made in fixed deposits
Net cash flows used in investing activities (186,230,329) (247,815,195)
Cash flows from financing activities
Net proceeds from borrowings (80,183,781) (30,500,196)
Lease Payments
Proceeds from customers deposits 93,783,983 417,687,697
Proceeds from funds
Net cash flows used in financing activities 13.1 (7,548,222) (6,001,482)
Net (decrease) / increase in cash and cash equivalents during the year 14 (2,831,944) -
Cash and cash equivalents at the beginning of the year 7,291
Cash and cash equivalents at the end of the year (7,511,098) 9,975,000
(17,883,973) (6,510,592)
(2,537,074)

(204,143,984) (343,446,950)

(15,188,624) -

354,311 -

20 78,654,895 -

(140,323,402) (343,446,950)

(64,423,392) 71,703,673

180,045,317 108,341,644

10 115,621,925 180,045,317

The financial statements to be read in conjunction with the related notes, which form an integral part of these financial
statements of the Company.

92 Berendina Micro Investments Company Limited | Annual Report-2019

Notes to the Financial Statements

1. REPORTING ENTITY 2. BASIS OF PREPARATION

1.1. General Information 2.1. Statement of Compliance

Berendina Micro Investments Company Limited (BMIC) The financial statements of the Company comprise the
is a public limited liability company incorporated in and statement of financial position, statement of comprehensive
domiciled in Sri Lanka under Companies Act No 07 of 2007. income, statement of changes in equity, statement of
It is a licensed microfinance Company approved to carry on cash flows and notes to the financial statements have
microfinance business, by the Monitory Board of the Central been prepared and presented in accordance with Sri
Bank of Sri Lanka under the Microfinance Act, No 06 of 2016. Lanka Accounting Standards comprising SLFRS and LKAS
(hereafter “SLFRS”) laid down by The Institute of Chartered
The registered office of the Company is located at No. 44/3, Accountants of Sri Lanka (CA Sri Lanka) and in compliance
3rd Floor, Narahenpita Road, Nawala, Sri Lanka. with the requirements of the Companies Act No. 7 of 2007.

1.2. Principal Activities and Nature of 2.1.1. Comparative Information
Operation
The accounting policies have been consistently applied by
The principal activities of the Company are providing micro the Company and are consistent with those used in the
loan facilities for business start-up, business development, previous period.
asset building and agriculture etc together with Enterprise
Development Services such as training and advice for 2.2. Responsibility for Financial
micro and small entrepreneurs. The aim of Berendina Micro Statements
Investments Company Limited (BMIC) is to increase income
and living standards of poor and low-income communities The Management is responsible for the preparation and
in Sri Lanka. presentation of the financial statements in accordance
with Sri Lanka Accounting Standards and as per the
The board of directors and members of Berendina provisions of the Companies Act No. 07 of 2007. This
Microfinance Institute (Guarantee) Limited (BMI), by the responsibility includes; designing, implementing and
resolutions passed on 18 September 2017, approved the maintaining internal controls relevant to the preparation
sale, transfer and assignment of all assets and liabilities of and fair presentation of financial statements that are free
the Company to BMIC with effect from 30 September 2017. from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies; and
The board of directors and shareholders of BMIC, by the making accounting estimates that are reasonable in the
resolutions passed on 22 September 2017, approved the circumstances.
Company taking over the entire business undertaking of
BMI effective from 30 September 2017. The transfer of 2.3. Approval of Financial Statements by
assets and liabilities was duly affected by BMI and BMIC in the Board of Directors
accordance with the Asset Sale and Purchase agreement
signed on 29 September 2017. BMIC is currently carrying on The financial statements of the Company as at and for the
the micro finance business previously conducted by BMI. year ended 31 December 2019 were authorized for issue by
the board of directors in accordance with the resolution of
the directors on 15 May 2020.

The micro finance license has been received from the 2.4. Basis of Measurement
Monetary Board of Central Bank of Sri Lanka on 5 April 2019
to carry on micro finance business as required by the Micro The Financial Statements of the Company have been
Finance Act No 06 of 2016.
prepared on the historical cost basis, except for the following
1.3. Parent Entity
material items in the Statement of Financial Position
The company’s parent undertaking Berendina Development
Services (Guarantee) Limited is a company limited by Items Basis of Measurement
guarantee incorporated in and domiciled in Sri Lanka.
Defined benefit Recognized at the present value of
obligations the defined benefit obligation

2.5. Significant Accounting Judgments,
Estimates and Assumptions

The preparation of financial statements of the Company in
conformity with Sri Lanka Accounting Standards requires
the Management to make judgments, estimates and

Berendina Micro Investments Company Limited | Annual Report-2019 93

Notes to the Financial Statements

assumptions that affect the application of accounting the practical expedient to grandfather the assessment of
policies and the reported amounts of assets, liabilities, which transactions are leases. The Company applied SLFRS
income and expenses. Actual results may differ from these 16 only to contracts that were previously identified as leases.
estimates. Contracts that were not identified as leases under LKAS 17
and IFRIC 4 were not reassessed for whether there is a lease
Estimates and underlying assumptions are reviewed on under SLFRS 16. Therefore, the definition of a lease under
an ongoing basis. Revisions to accounting estimates are SLFRS 16 was applied only to contracts entered or changed
recognized in the period in which the estimate is revised and on or after 1 January 2019.
in any future periods affected.
2.5.2.3. As a lessee
The most significant areas of estimation, uncertainty and As a lessee, the Company leases assets such as right-of-
critical judgments in applying accounting policies that have use of buildings. The Company previously classified leases
most significant effect on the amounts recognized in the as operating or finance leases based on its assessment of
financial statements of the Company are as follows. whether the lease transferred significantly all the risks and
rewards incidental to ownership of the underlying asset to
2.5.1. Going Concern Basis of Accounting the Company. Under SLFRS 16, the Company recognizes
right-of-use assets and lease liabilities - i.e. these leases are
The directors have made an assessment of the Company’s on-balance sheet in the previous year.
ability to continue as a going concern and are satisfied that it
has the resources to continue in business for the foreseeable At commencement or on modification of a contract that
future. Furthermore, board is not aware of any material contains a lease component, the Company allocates the
uncertainties that may cast significant doubt upon the consideration in the contract to each lease component on
Company’s ability to continue as a going concern and they the basis of its relative stand-alone price.
do not intend either to liquidate or to cease operations of
the Company. Therefore, the financial statements continue 2.5.2.3.1. Leases classified as operating leases under LKAS
to be prepared on the going concern basis. 17
Previously, the Company classified property leases as
2.5.2. Changes in accounting policies and operating leases under LKAS 17. On transition, for these
disclosures leases, lease liabilities were measured at the present value of
the remaining lease payments discounted at the Company’s
2.5.2.1. New and amended standards and interpretations incremental borrowing rate as at 1 January 2019. Right-of-
The Company initially applied SLFRS 16 Leases from 1 use assets are measured at an amount equal to the lease
January 2019. A number of other new standards are also liability, adjusted by the amount of any prepaid or accrued
effective from 1 January 2019, but they do not have a lease payments. The Company applied this approach to all
material effect on the Company’s financial statements. other leases.

The Company applied SLFRS 16 using the modified The Company has tested its right-of-use assets for
retrospective approach,(option B),underwhich no cumulative impairment on the date of transition and has concluded
effect of initial recognition is recognized in retained earnings that there is no indication that the right-of-use assets are
at 1 January 2019. Accordingly, the comparative information impaired.
presented for 2018 is not restated, as previously reported,
under LKAS 17 and related interpretations. The details of The Company used a number of practical expedients when
the changes in accounting policies are disclosed below. applying SLFRS 16 to leases previously classified as operating
Additionally, the disclosure requirements in SLFRS 16 have leases under LKAS 17. In particular. the Company:
not generally been applied to comparative information. - Did not recognize right-of-use assets and liabilities for
leases for which the lease term ends within 12 months of
2.5.2.2. Definition of a lease the date of initial application;
Previously, the Company determined at contract inception - Did not recognize right-of-use assets and liabilities for
whether an arrangement was or contained a lease under leases of low value assets;
IFRIC 4 determining whether an arrangement contains - Excluded initial direct costs from the measurement of the
a lease. The Company now assesses whether a contract is right-of-use asset at the date of initial application; and
or contains a lease based on the definition of a lease, as - Used hindsight when determining the lease term.
explained in Note 2.6.4.

On transition to SLFRS 16, the Company elected to apply

94 Berendina Micro Investments Company Limited | Annual Report-2019

Notes to the Financial Statements

2.5.2.4. Impact on financial statements the instrument is less than 12 months).
2.5.2.4.1. Impact on transition
On transition to SLFRS 16, the Company recognized The maximum period considered when estimating ECLs is
additional right-of-use assets and additional lease liabilities. the maximum contractual period over which the Company
The impact on transition is summarized below. is exposed to credit risk.

Right-of use-assets of building LKR 44,645,433 Measurement of ECLs
Lease liabilities LKR 40,560,080
ECLs are a probability-weighted estimate of credit losses.
When measuring lease liabilities for leases that were Credit losses are measured as the present value of all cash
classified as operating leases, the Company discounted lease shortfalls (i.e. the difference between the cash flows due
payments using its incremental borrowing rate at 1 January to the entity in accordance with the contract and the cash
2019. The weighted average rate applied is 15%. flows that the Company expects to receive).

Operating lease commitments as at LKR. 54,405,217 ECLs are discounted at the effective interest rate of the
31 December 2018 as disclosed under financial asset.
LKAS 17 in the Company’s financial
statements. Credit-Impaired Financial Assets

Discounted using the incremental LKR. 40,560,080 At each reporting date, the Company assesses whether
borrowing rate as at 1 January 2019 financial assets carried at amortized cost and debt securities
at FVOCI are credit-impaired. A financial asset is ‘credit-
Lease liabilities recognized at 1 January LKR. 40,560,080 impaired’ when one or more events that have a detrimental
2019 impact on the estimated future cash flows of the financial
asset have occurred.
2.5.3. Impairment Losses on Loans and
Receivables Evidence that a financial asset is credit-impaired includes the
following observable data:
Loss allowances for trade receivables is always measured at
an amount equal to lifetime ECLs. • Significant financial difficulty of the borrower or issuer;
• A breach of contract such as a default or being more than
When determining whether the credit risk of a financial 90 days past due;
asset has increased significantly since initial recognition • The restructuring of a loan or advance by the Company
and when estimating ECLs, the Company considers
reasonable and supportable information that is relevant and on terms that the Company would not consider otherwise;
available without undue cost or effort. This includes both • It is probable that the borrower will enter bankruptcy or
quantitative and qualitative information and analysis, based
on the Company’s historical experience and informed credit other financial reorganization; or
assessment and including forward-looking information. • The disappearance of an active market for a security

because of financial difficulties.

The Company assumes that the credit risk on a financial Presentation of Allowance for ECL in the
asset has increased significantly if it is more than 30 days Statement of Financial Position
past due.
Loss allowances for financial assets measured at amortized
The Company considers a financial asset to be in default cost are deducted from the gross carrying amount of the
when: assets.
• The borrower is unlikely to pay its credit obligations to the
For debt securities at FVOCI, the loss allowance is charged to
Company in full, without recourse by the Company to profit or loss and is recognized in OCI.
actions such as realizing security (if any is held); or
• The financial asset is more than 90 days past due. Write-Off

Lifetime ECLs are the ECLs that result from all possible default The gross carrying amount of a financial asset is written
events over the expected life of a financial instrument. off when the Company has no reasonable expectations
of recovering a financial asset in its entirety or a portion
12-month ECLs are the portion of ECLs that result from thereof. For individual customers, the Company has a policy
default events that are possible within the 12 months after of writing off the gross carrying amount when the financial
the reporting date (or a shorter period if the expected life of asset is 540 days past due based on historical experience of
recoveries of similar assets. However, financial assets that are

Berendina Micro Investments Company Limited | Annual Report-2019 95

Notes to the Financial Statements

written off could still be subject to enforcement activities in 2.6. Significant Accounting Policies
order to comply with the Company’s procedures to recovery
of amounts due. 2.6.1. Taxation

The Company reviews its individually significant loans As per Sri Lanka Accounting Standard - LKAS 12 (Income
and advances at each reporting date to assess whether Taxes), tax expense is the aggregate amount included in
an impairment loss should be recorded in the Statement determination of profit or loss for the period in respect
of Comprehensive Income. In particular, management’s of current and deferred taxation. Income tax expense is
judgment is required in the estimation of the amount recognized in the Statement of Comprehensive Income,
and timing of future cash flows when determining the except to the extent it relates to items recognized directly
impairment loss. These estimates are based on assumptions in equity or other comprehensive income in which case it is
about a number of factors and actual results may differ, recognized in equity or in other comprehensive income.
resulting in future changes to the impairment allowance
made. a) Current Taxes
Current tax assets and liabilities consist of amounts expected
Loans and advances that have been assessed individually and to be recovered from or paid to the Commissioner General of
found to be not impaired and all individually insignificant Inland Revenue in respect of the current year, using the tax
loans and advances are then assessed collectively, by rates and tax laws enacted or substantively enacted on the
categorizing them into groups of assets with similar risk reporting date and any adjustment to tax payable in respect
characteristics, to determine whether a provision should be of prior years.
made due to incurred loss events for which there is objective
evidence, but the effects of which are not yet evident. The Accordingly, provision for taxation is based on the profit for
collective assessment takes account of data from the loan the year adjusted for taxation purposes in accordance with
portfolio such as credit quality, portfolio size, concentration the provisions of the Inland Revenue Act No. 10 of 2006 and
etc. as well as judgments based on current economic Inland Revenue Act No. 24 of 2017 and the amendments
conditions. thereto at the rates specified in Note 9.2 to the Financial
Statements.
2.5.4. Post Employment Benefit Obligation
b) Deferred Taxation
The Post employment benefit obligation and the related Deferred tax is provided on temporary differences at the
charge for the year are determined using projected unit reporting date between the tax bases of assets and liabilities
credit method. The method valuations involves making and their carrying amounts for financial reporting purposes.
assumptions on discount rates, future salary increases,
mortality rates etc. Due to the long term nature of such Deferred tax is measured at the tax rates that are expected
obligations these estimates are subject to significant to be applied to temporary differences when they reverse,
uncertainty. All assumptions are reviewed at each reporting based on the laws that have been enacted or substantively
period. enacted by the reporting date.

2.5.5. Useful –Lives of Property Plant & Deferred tax assets and liabilities are offset if there is a
Equipment legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same
The Company reviews the residual values, useful lives and tax authority on the same taxable entity, or on different tax
methods of depreciation of assets as at each reporting date. entities, but they intend to settle current tax liabilities and
Judgment by the management is exercised in the estimation assets on a net basis or their tax assets and liabilities will be
of these values, rates, methods and hence they are subject realized simultaneously.
to uncertainty.
A deferred tax asset is recognized for unused tax losses, tax
2.5.6. Useful –Lives of Intangible Assets credits and deductible temporary differences, to the extent
that it is probable that future taxable profits will be available
The Company reviews the residual values, useful lives and against which they can be utilized. Deferred tax assets are
methods of amortization of assets as at each reporting date. reviewed at each reporting date and are reduced to the
Judgment by the management is exercised in the estimation extent that it is no longer probable that the related tax
of these values, rates, methods and hence they are subject benefits will be realized.
to uncertainty.

96 Berendina Micro Investments Company Limited | Annual Report-2019

Notes to the Financial Statements

The net increase in the carrying amount of deferred tax The cost of the right of use asset is comprised that the
liability net of deferred tax asset is recognized as deferred amount of the initial measurement of the lease liability, any
tax expense and conversely any net decrease is recognized lease payments made at or before the commencement of
as reversal to deferred tax expense, in the Statement of the date less incentive received from contract and any initial
Comprehensive Income. direct cost incurred by the lease ad estimate cost to be
incurred by the lease in dismantling, removing or restoring
c) Value Added Tax on Financial Services (VAT on FS) the underlying assets.
VAT on Financial Services is calculated in accordance with
the amended VAT Act No. 7 of 2003 and subsequent The right to use asset is measured at cost less any
amendments thereto. The base for the computation of VAT accumulated depreciation, any accumulated impairment and
on Financial Services is the accounting profit before income less adjusted for re-measurement of the lease liability.
tax adjusted for the economic depreciation and emoluments
of employees. VAT on financial services is computed on the Depreciation
prescribed rate at 15%.
Depreciation is charged to Statement of Comprehensive
d) Nation Building Tax (NBT) on Financial Services
NBT on financial services is calculated in accordance with Income so as to write off the cost of assets (other than
Nation Building Tax (NBT) Act No 09 of 2009 and subsequent
amendment thereto with effect from 1 January 2014. NBT freehold land) less their residual values over their useful
on financial services is calculated at 2% of the value addition
used for the purpose of VAT on financial services. lives, using the straight-line method. The estimated useful

2.6.2. Cash and Cash Equivalents lives, residual values and depreciation method are reviewed
at each year-end, with the effect of any change in estimate
Cash and cash equivalents are, cash in hand , demand deposits accounted for on a prospective basis. The estimated useful
and short-term highly liquid investments readily convertible lives of property, plant and equipment are as follows;
to known amounts of cash and subject to insignificant risk
of changes in value. The Class of Tangible Assets Useful Life

Furniture & Fittings 5 Years

Office Equipment 8 Years

Computers Equipment 4 Years

Motor Vehicle 4 Years

For the purpose of cash flows statement, cash and cash The right to use asset is depreciated over the period of the
equivalents consist of cash in hand and deposits in banks net lease term of the underlying assets unless otherwise transfer
of outstanding bank overdrafts. Financial instruments with of ownership of the underlying assets to the Company by
short maturities i.e. three months or less from the date of the end of the lease term under the purchase option. Such
acquisition are also treated as cash equivalents. circumstances, the right to use asset is depreciated from the
commencement date to end of the useful life underlying
2.6.3. Property, Plant and Equipment assets.

Cost De-recognition

Property, plant and equipment are stated at cost less any Items of property, plant and equipment are de-recognized
subsequent accumulated depreciation and any subsequent upon disposal or when no future economic benefits are
accumulated impairment losses. All items of property, plant expected from its use. Gain or loss arising on de-recognition
and equipment are initially recorded at cost. of an item of property, plant and equipment is determined as
the difference between the sales proceed and the carrying
The cost of property, plant and equipment is the cost of amount of the asset and is recognized in the Statement of
acquisition or construction together with any expenses Comprehensive Income.
incurred in bringing the asset to its condition for its intended
use. All other repair and maintenance costs are recognized in 2.6.4. Lease
the profit or loss as incurred.
The Company has applied SLFRS 16 using the modified
The Company assesses the lease contract is or contains a retrospective approach (option B),under which no cumulative
lease at the inception of the contract and whether the effect of initial recognition is recognized in retained earnings
lease contract conveys the right to control the use of the at 1 January 2019 and therefore the comparative information
identified underlying assets for a period of time in exchange has not been restated and continues to be reported under
for consideration. LKAS 17 and IFRIC 4. The details of accounting policies under
LKAS 17 and IFRIC 4 are disclosed separately.

Berendina Micro Investments Company Limited | Annual Report-2019 97

Notes to the Financial Statements

Policy applicable from 1 January 2019 of the lease and type of the asset leased.

At inception of a contract, the Company assesses whether Lease payments included in the measurement of the lease
a contract is, or contains, a lease. A contract is, or contains, liability comprise the following:
a lease if the contract conveys the right to control the use - Fixed payments, including in-substance fixed payments;
of an identified asset for a period of time in exchange for - Variable lease payments that depend on an index or a
consideration. To assess whether a contract conveys the
right to control the use of an identified asset, the Company rate, initially measured using the index or rate as at the
uses the definition of a lease in SLFRS 16. commencement date;
- Amounts expected to be payable under a residual value
This policy is applied to contracts entered into, on or after 1 guarantee; and
January 2019. - The exercise price under a purchase option that the
Company is reasonably certain to exercise, lease
2.6.4.1. As a Lessee payments in an optional renewal period if the Company
At commencement or on modification of a contract that is reasonably certain to exercise an extension option,
contains a lease component, the Company allocates the and penalties for early termination of a lease unless the
consideration in the contract to each lease component on Company is reasonably certain not to terminate early.
the basis of its relative stand-alone prices. However, for the
leases of property the Company has elected not to separate The lease liability is measured at amortized cost using the
non-lease components and account for the lease and non- effective interest method. It is remeasured when there is a
lease components as a single lease component. change in future lease payments arising from a change in an
index or rate, if there is a change in the Company’s estimate
The Company recognizes a right-of-use asset and a lease of the amount expected to be payable under a residual value
liability at the lease commencement date. The right-of- guarantee,if the Company changes its assessment of whether
use asset is initially measured at cost, which comprises the it will exercise a purchase, extension or termination option
initial amount of the lease liability adjusted for any lease or if there is a revised in-substance fixed lease payment.
payments made at or before the commencement date, plus
any initial direct costs incurred and an estimate of costs to When the lease liability is remeasured in this way, a
dismantle and remove the underlying asset or to restore the corresponding adjustment is made to the carrying amount
underlying asset or the site on which it is located, less any of the right-of-use asset or is recorded in statement of other
lease incentives received. comprehensive income if the carrying amount of the right;
of-use asset has been reduced to zero.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the Policy applicable before 1 January 2019
end of the lease term, unless the lease transfers ownership
of the underlying asset to the Company by the end of the For contracts entered into before 1 January 2019, the
lease term or the cost of the right-of-use asset reflects that Company determined whether the arrangement was or
the Company will exercise a purchase option . In that case contained a lease based on the assessment of whether:
the right-of-use asset will be depreciated over the useful life - Fulfillment of the arrangement was dependent on the
of the underlying asset, which is determined on the same
basis as those of property and equipment. In addition, the use of a specific asset or assets; and
right-of-use asset is periodically reduced by impairment - The arrangement had conveyed a right to use the asset.
losses, if any, and adjusted for certain remeasurements of
the lease liability. An arrangement conveyed the right to use the asset if
one of the following was met:
The lease liability is initially measured at the present value of i. The purchaser had the ability or right to operate the
the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease asset while obtaining or controlling more than an
or, if that rate cannot be readily determined, the Company’s insignificant amount of the output;
incremental borrowing rate. Generally, the Company uses its ii. The purchaser had the ability or right to control
incremental borrowing rate as the discount rate. physical access to the asset while obtaining or
controlling more than an insignificant amount of the
The Company determines its incremental borrowing rate output; or
by obtaining interest rates from various external financing iii. Facts and circumstances indicated that it was
sources and makes certain adjustments to reflect the terms remote that other parties would take more than an
insignificant amount of the output, and the price per
unit was neither fixed per unit of output nor equal to
the current market price per unit of output.

98 Berendina Micro Investments Company Limited | Annual Report-2019

Notes to the Financial Statements

As a lessee measured as difference between the net disposal proceeds
and the carrying amount of the asset.
In the comparative period, as a lessee the Company classified
leases that transferred substantially all of the risks and Amortization
rewards of ownership as finance leases. When this was the
case, the leased assets were measured initially at an amount The useful lives of intangible assets are assessed to be
equal to the lower of their fair value and the present value either finite or indefinite. Intangible assets with finite lives
of the minimum lease payments. Minimum lease payments are amortized over the useful economic life and assessed
were the payments over the lease term that the lessee for impairment whenever there is an indication that the
was required to make, excluding any contingent rent. intangible asset may be impaired. The amortization period
Subsequent to initial recognition, the assets were account and the amortization method for an intangible asset with a
ed for in accordance with the accounting policy applicable finite useful life are reviewed at least at each financial year
to that asset. end. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
Assets held under other leases were classified as operating embodied in the asset is accounted for by changing the
leases and were not recognized in the Company’s statement amortization period or method, as appropriate, and treated
of financial position. Payments made under operating leases as changes in accounting estimates. The amortization
were recognized in profit or loss on a straight- line basis expenses on intangible assets with finite lives are recognized
over the term of the lease. Lease incentives received were in the Statement of Comprehensive Income.
recognized as an integral part of the total lease expense,
over the term of the lease. The useful lives and the amortization methods of intangible

2.6.5. Intangible Assets assets with finite lives are as follows:

Basis of Recognition The class of intangible assets : Computer software

An Intangible Asset is recognized if it is probable that future Useful life : 4 years
economic benefits that are attributable to the assets will
flow to the entity and the cost of the assets can be measured Amortization Method : Straight line method
reliably.
2.6.6. Post-employment benefit obligations
Basis of Measurement
a) Defined benefit plan- Gratuity
Intangible assets acquired separately are measured as initial Gratuity is a defined benefit plan. The Company annually
recognition at cost. Following initial recognition intangible measures the present value of the promised retirement
assets are carried at cost less any accumulated amortization benefits for gratuity. The cost of providing benefits under
and any accumulated impairment losses. The useful life of the defined benefit plans is determined using the projected
intangible assets is assessed to be either finite or indefinite. unit credit method.
Intangible assets with finite useful life are amortized over
the useful life and assessed for impairment whenever there The rate of interest, salary incremental rate, staff turnover
is an indication that the intangible asset may be impaired. and retirement age have been adjusted in the gratuity
The amortization period and the method for an intangible computation. Actuarial gains and losses for defined benefit
asset with a finite useful life is reviewed at least at each plans are recognized in full in the period in which they occur
financial year end. Intangible assets with indefinite useful in other comprehensive income.
lives are tested for impairment annually either individually or
at the cash generating unit level. The gratuity liability is not externally funded.

Subsequent Expenditure b) Defined contribution plans - Employees’ Provident Fund
& Employees’ Trust Fund
Subsequent expenditure on intangible assets is capitalized Employees are eligible for Employees’ Provident Fund
only when it increases the future economic benefits contributions and Employees’ Trust Fund contributions in
embodied in such assets. All other expenditure is expensed line with respective statutes and regulations.
when incurred.
2.6.7. Provisions
De-recognition
Provisions are recognized when the company has a present
Intangible assets are de-recognized on disposal or when no obligation (legal or constructive) as a result of a past event,
future economic benefits are expected from its use. The gain where it is probable that an outflow of resources embodying
or loss arising from de-recognition of intangible assets are economic benefits will be required to settle the obligation

Berendina Micro Investments Company Limited | Annual Report-2019 99