Interim Financial Statements as at 30th June 2025

30 June 2025

30 June 2024

Change %

(Unaudited)

(Unaudited)

3,048,048

2,579,269

18.17%

(1,527,071)

(1,303,439)

17.16%

1,520,977

1,275,830

19.21%

20,258

16,665

21.56%

20,258

16,665

21.56%

187,165

49,765

276.10%

1,728,400

1,342,260

28.77%

(64,466)

(31,975)

101.61%

1,663,934

1,310,285

26.99%

(584,374)

(484,786)

20.54%

(76,626)

(52,557)

45.80%

(554,821)

(439,193)

26.33%

448,113

333,749

34.27%

(162,870)

(136,384)

19.42%

285,243

197,365

44.53%

31,602

31,205

1.27%

316,845

228,570

38.62%

(114,612)

(93,094)

23.11%

202,233

135,476

49.28%

263,281

148,975

76.73%

12,526

5,193

141.21%

275,807

154,168

78.90%

478,040

289,644

65.04%

67.28

45.07

49.27%

-

-

-

Mercantile Investments and Finance PLC

Statement of Financial Position

(All amounts in Sri Lankan Rupees thousands)

30 June 2025

31 March 2025

(Unaudited)

(Audited)

Assets

Cash and cash equivalents

3,858,665

2,720,258

Placement with banks at amortized cost

184,108

41,040

Financial assets measured at Fair Value through Other Comprehensive Income (FVOCI) - quoted

6,891,580

7,199,933

Financial assets measured at Fair Value through Profit or Loss (FVTPL)

338,551

344,772

Financial assets at amortized cost - Loans and advances

35,960,965

27,931,006

Financial assets at amortized cost - Finance lease receivables

25,153,624

25,060,964

Financial assets at amortized cost - Hire purchase receivables

56,897

80,718

Financial assets measured at Fair Value through Other Comprehensive Income (FVOCI) - unquoted

70,427

70,427

Other financial assets

333,931

284,228

Inventories

64,646

73,839

Other assets

303,654

222,487

Investment in associates

1,760,710

1,716,582

Investment property

257,974

258,390

Property, plant and equipment

4,584,882

4,512,331

Right-of-use assets

332,017

327,439

Leasehold property

38,280

38,397

Intangible assets

70,266

51,167

Total assets

80,261,177

70,933,978

Liabilities

Bank overdraft

1,205,944

687,242

Financial liabilities at amortised cost - Deposits due to customers

45,710,550

42,775,086

Financial liabilities at amortised cost - Debt instruments issued and other borrowings

17,039,751

11,418,919

Other financial liabilities

207,183

350,288

Current tax liabilities

118,426

194,269

Deferred tax liabilities

675,812

685,588

Other liabilities

105,520

94,975

Retirement benefit obligations

507,895

489,083

Lease liability

375,523

401,997

Total liabilities

65,946,604

57,097,447

Shareholders' funds

Stated capital

36,000

36,000

Revaluation reserve

3,010,066

2,997,540

Statutory reserve fund

941,400

941,400

General reserves

4,086,430

4,086,430

Retained earnings

5,356,276

4,829,865

Regulatory loss allowance reserve

50,200

336,894

Fair Value through OCI reserve

834,201

608,402

Total shareholders' funds

14,314,573

13,836,531

Total liabilities and shareholders' funds

80,261,177

70,933,978

Net Assets Per Share (Rs.)

4,762

4,603

I certify that these financial statements have been prepared and presented in compliance with the requirements of the Companies Act , No. 07 of 2007.

(Sgd.)

Deva Anthony

Chief Financial Officer/Director (Non- Board)

The Board of Directors is responsible for the preparation and the presentation of these Financial Statements. Approved and signed for and on behalf of the Board of Directors by;

(Sgd.)

(Sgd.)

Gerard G. Ondaatjie

Shermal H. Jayasuriya

Managing Director

Director - Finance

July 29, 2025

Colombo

The notes on pages 5 to 8 form an integral part of these financial statements.

Stated Capital

Revaluation Reserves - Land &

Buildings

Associate Company

Reserve

Statutory Reserves

General Reserves

Fair Value through OCI

Reserve

Regulatory Loss Allowance Reserve

Retained Earnings

Total

Balance as at 1 April 2024

36,000

2,279,152

605,297

887,400

4,086,430

80,812

1,067,522

3,122,457

12,165,068

Total Comprehensive Income For the Year

Profit for the period

-

-

-

-

-

-

-

1,074,666

1,074,666

Other comprehensive income

-

-

113,091

-

-

622,395

(63,539)

671,947

Total comprehensive income

-

113,091

622,395

1,011,127

1,746,613

Dividends paid to ordinary shareholders

-

-

-

-

-

-

(75,150)

(75,150)

Transfer to retained profits

-

-

-

-

-

(94,802)

-

94,802

-

Transfer from regulatory loss allowance reserve

-

-

-

-

-

-

(730,628)

730,628

-

Transfer to Statutory Reserve

-

-

-

54,000

-

-

-

(54,000)

-

Balance as at 31 March 2025

36,000

2,279,152

718,388

941,400

4,086,430

608,405

336,894

4,829,864

13,836,531

Balance as at 1 April 2025

36,000

2,279,152

718,388

941,400

4,086,430

608,405

336,894

4,829,864

13,836,531

Total Comprehensive Income For the Year

Profit for the period

-

-

-

-

-

-

-

202,233

202,233

Other comprehensive income

-

-

12,526

-

-

263,281

-

-

275,807

Total comprehensive income

-

-

12,526

-

-

263,281

202,233

478,040

Transfer to retained profits

-

-

-

-

-

(37,485)

-

37,485

-

Transfer from regulatory loss allowance reserve

-

-

-

-

-

-

(286,694)

286,694

-

Balance as at 30 June 2025

36,000

2,279,152

730,914

941,400

4,086,430

834,201

50,200

5,356,276

14,314,573

Stated Capital

Revaluation

Reserves - Land & Buildings

Associate

Company Reserve

Statutory Reserves

General Reserves

Fair Value

through OCI Reserve

Regulatory Loss Allowance Reserve

Retained Earnings

Total

Balance as at 1 April 2024

36,000

2,279,152

605,297

887,400

4,086,430

80,812

1,067,522

3,122,457

12,165,068

Total Comprehensive Income For the Year

Profit for the period

-

-

-

-

-

-

-

135,476

135,476

Other comprehensive income

-

-

5,193

-

-

148,975

-

-

154,168

Total comprehensive income

-

-

5,193

-

-

148,975

-

135,476

289,644

Transfer to retained profits

-

-

-

-

-

80,023

-

(80,023)

-

Transfer from regulatory loss allowance reserve

-

-

-

-

-

-

(2,274)

2,274

-

Balance as at 30 June 2024

36,000

2,279,152

610,490

887,400

4,086,430

309,810

1,065,248

3,180,184

12,454,712

Mercantile Investments and Finance PLC

Statement of Cash Flows

(All amounts in Sri Lankan Rupees thousands)

For 03 months ended 30 June

2025

2024

(Unaudited)

(Unaudited)

Cash flow from operating activities

Profit before income tax

316,845

228,570

Adjustments for:

Unrealized loss/ (gain) from investments of FVTPL

2,350

(9,337)

Dividend from investing securities

(6,373)

(16,115)

Share of (profit)/loss of associate investments

(31,602)

(31,205)

(Profit)/loss on sale of Property, Plant and Equipment

-

(167)

Depreciation of Property, Plant and Equipment and ROU assets

63,541

47,680

Amortization of leasehold property

117

117

Amortization of intangible assets

6,621

4,760

Provision for impairment of loans and receivables

64,466

31,975

Provision for retirement benefit obligations

24,774

25,248

Retirement benefit paid

(5,962)

(12,840)

Operating profit before changes in operating assets and liabilities

434,777

268,686

(Increase) / decrease in operating assets

Deposits held for regulatory purposes

281,206

534,353

Funds advanced to customers

(8,163,264)

(2,540,714)

Other receivables

(152,668)

(1,253,862)

Increase / (decrease) in operating liabilities

Deposits from customers

2,935,464

699,005

Other payables

(132,560)

(94,653)

(4,797,045)

(2,387,185)

Income taxes paid

(169,238)

(146,609)

Net cash used in operating activities

(4,966,283)

(2,533,794)

Cash flows from investing activities

Dividends received

6,373

16,115

Proceeds from sale of equity securities

151,231

83,784

Purchase of Property, Plant and Equipment

(106,156)

(46,084)

Proceeds from sale of Property, Plant and Equipment

-

214

Acquisition of intangible assets

(25,720)

(10,062)

Net cash (used in)/ from investing activities

25,728

43,967

Cash flows from financing activities

Borrowings obtained during the year

7,800,000

1,250,000

Borrowings repaid during the year

(2,239,740)

(300,885)

Net Cash from financing activities

5,560,260

949,115

Net increase /(decrease) in cash and cash equivalents

619,705

(1,540,712)

Cash and cash equivalents at the beginning of the period

2,033,016

2,174,935

Cash and cash equivalents at the end of the period (Note A)

2,652,721

634,223

Note A

Cash and cash equivalents at the end of the period

Cash and cash equivalents

3,858,665

862,276

Bank overdrafts

(1,205,944)

(228,053)

2,652,721

634,223

Operational Cash flow from Interest

Interest received

2,623,439

2,606,697

Interest payments

(1,690,916)

(1,796,014)

The notes on pages 5 to 8 form an integral part of these financial statements.

Mercantile Investments and Finance PLC

Segments Information

(All amounts in Sri Lankan Rupees thousands)

Finance Lease

Hire Purchase

Loans & Advances

Investments

Others

Total

For 03 months ended 30 June 2025

2024

2025

2024

2025

2024

2025

2024

2025

2024

2025

2024

External operating income

Interest income

1,467,349

1,402,233

526

(65)

1,417,329

1,009,708

162,844

167,393

-

3,048,048

2,579,269

Dividends from FVPL and FVOCI Investments

-

-

-

-

6,373

16,115

-

6,373

16,115

Others

-

-

-

-

-

201,051

50,315

201,051

50,315

Total Income from external operations

1,467,349

1,402,233

526

(65)

1,417,329

1,009,708

169,217

183,508

201,051

50,315

3,255,471

2,645,699

Profit before Taxes on Financial Services

448,113

333,749

Share of Associates company profit/(loss)

31,602

31,205

Tax , VAT & SSCL on Financial Services

(277,482)

(229,478)

Profit After Tax

202,233

135,476

Other Information

Segment Assets

25,153,624

21,205,995

56,897

96,948

35,960,966

18,201,498

9,227,118

9,107,451

9,862,571

6,331,759

80,261,177

54,943,651

Segment Liabilities

20,671,203

16,398,987

46,758

74,972

29,552,656

14,075,554

7,582,829

7,042,960

8,093,158

4,896,466

65,946,604

42,488,939

Net Assets

4,482,422

4,807,008

10,139

21,976

6,408,309

4,125,944

1,644,289

2,064,491

1,769,413

1,435,293

14,314,573

12,454,712

Information on cash Flows

For the period ended 31st March

2025

2024

Cash flows from operating activities

(4,966,283)

(2,533,794)

Cash flows from investing activities

157,604

100,113

Cash flows from financing activities

5,560,260

949,115

Capital expenditure

(131,876)

(56,146)

Net cash flow

619,705

(1,540,712)

Mercantile Investments and Finance PLC

Selected Performance Indicators

Indicator

June 30, 2025

March 31, 2025

Liquidity Rs.('000)

Required minimum amount of liquid assets

4,617,934

4,323,445

Available liquid assets

8,898,774

8,546,627

Required minimum amount of Government securities

2,977,712

2,519,039

Available amount of Government securities

5,310,462

5,734,012

Capital Adequacy (%)

Core capital to risk weighted assets ratio (Minimum 8.5%)

13.36%

15.60%

Total capital to risk weighted assets ratio (Minimum 12.5%)

14.79%

17.27%

Capital funds to total deposits liability ratio (Minimum 10%)

26.37%

28.34%

Profitability

Return on assets (%), after tax*

1.07%

2.59%

Return on equity (%)*

5.75%

8.27%

*Annualized figures

Mercantile Investments and Finance PLC

Notes to the condensed interim financial statements

1.

General Information

Mercantile Investment and Finance PLC ('the Company') is a public limited liability company, listed on the Colombo Stock Exchange, incorporated on 15th June 1964, and domiciled in Sri Lanka. It is a licensed finance company regulated under the Finance Business Act No. 42 of 2011. The Company was re-registered under the Companies Act No. 07 of 2007. The registered office of the Company is located at No. 236, Galle Road, Colombo 03.

2.

Basis of preparation

The condensed interim financial statements for the quarter ended June 30, 2025 of the Company have been prepared in accordance with Sri Lanka Accounting Standard - LKAS 34, 'Interim Financial Reporting'. These information should be read in conjunction with the audited financial statements for the year ended March 31, 2025.

3.

Accounting policies and estimates

The accounting policies are in line with the policies published in the audited financial statements for the year ended March 31, 2025.

In preparing the condensed interim financial statements, the significant judgements made by the management in applying the Company's accounting policies and the sources of uncertainty in estimates are consistent with the audited financial statements for the year ended March 31, 2025.

4.

Stated Capital

The number of shares representing the stated capital is 3,006,000 ordinary shares as of June 30, 2025.

5.

Dividends

A dividend of Rs. 16.60 per share on ordinary shares was approved as the second interim dividend for the financial year ended 31st March 2025 and this was paid on 14th July 2025.

6.

Contingent liabilities

There has not been a significant change in the nature of contingent liabilities, which we were disclosed in the audited financial statements for the year ended March 31, 2025.

7.

Significant unusual events or transactions affecting assets, liabilities, equity, net income or cash flows

There were no other unusual events or transactions affecting assets, liabilities, equity, net income or cash flows due to their nature, size or incident for the quarter ended 30 June 2025. All the known expenses have been provided for.

8.

Events after the reporting period

No circumstances have arisen since the statement of financial position date that require adjustments to or disclosure in the financial statements, except for Note 5 to the finacial statements.

Corporate Information

Name of the Company

Mercantile Investments and Finance PLC

Legal Form

Public Limited Liability Company incorporated in Sri Lanka under the Companies Ordinance No. 51 of 1938 and re-registered under the Companies Act No. 07 of 2007. A licensed finance company under the Finance Business Act No. 42 of 2011.

Company Registration Number

PB 76 PQ

Tax Payer Identification Number

104021794

VAT Registration Number

104021794 7000

Registered Office

No. 236, Galle Road, Colombo 3

Head Office

No. 236 Galle Road, Colombo 3

Telephone: 2343720 - 7

Fax: 2434524

Email:

mercantile@mi.com.lk

Website:

https://www.mi.com.lk

Board of Directors

Pandithasundara Dinuka Dilhan Perera - Chairman

Gerard George Ondaatjie - Managing Director

Shermal Hemaka Jayasuriya - Finance Director

Angeline Myrese Ondaatjie

Travice John Ondaatjie

Anil Lasantha Naomal Dias

Eranjalie Deepthie Wickramasuriya

Malwattage Kanchana Sujeewa Pieris

Brandon Philip Morris

Sugeeth Saranga Jasenthu Patabendige

Graham Anthony Fedrick Marshall

Egoda Wiyannala Vajira Arjuna Wijesinghe

Company Secretary

Sonali Pethiyagoda

External Auditors

Messrs. Ernst & Young, Chartered Accountants

Rotunda Towers, No. 109, Galle Road

Colombo 03

Credit Rating

Long-term institution rating at BBB-(lka) (stable outlook) by Fitch Ratings