Annual Report 2010/2011 - Colombo Stock Exchange

Transcription

UNITED MOTORS LANKA PLC
T H E
T O T A L
TRANSPORTER
www.unitedmotors.lk
Annual Report 2010/11
Corporate Information
Name of Company
United Motors Lanka PLC
Legal Form
A Public Limited Liability Company
Incorporated in Sri Lanka on 9 May 1989
Listed with the Colombo Stock Exchange on 5 December 1989
Company Registration Number
PQ -74
Registered Office
100, Hyde Park Corner, Colombo 02
Head Office
P.O. Box 697
Tel : 4797200, 2448112
Fax : 2448113
www.unitedmotors.lk
Auditors
Chairman
R. M. S. Fernando
Chief Executive Officer/Executive Director
C. Yatawara
Directors
T. M. R. B. Tennekoon
A. W. Atukorala
A. C. M. Lafir
M. Yokoi
R. H. Yaseen
S. Nagendra
Secretary
Mrs. R. M. Hisham
Audit Committee
Chairman
R. M. S. Fernando
KPMG Ford Rhodes Thornton & Co.
32A, Sir Mohammed Macan Markar Mawatha
Colombo 3
A.W. Atukorala
Registrars
Chairman
R. M. S. Fernando
Secretaries and Registrars Limited
KPMG Building, First Floor
32A, Sir Mohamed Macan Markar Mawatha
Colombo 3
Tele : 2325761, 5426113
Bankers
Board of Directors
Bank of Ceylon
Commercial Bank of Ceylon PLC
Hatton National Bank PLC
National Development Bank PLC
People’s Bank
Sampath Bank PLC
Standard Chartered Bank Ltd
The Hongkong & Shanghai Banking Corporation Ltd.
Nations Trust Bank PLC
Pan Asia Bank PLC
Remuneration Committee
A.W. Atukorala
Nomination Committee
Chairman
Mr. T. M. R. B. Tennekoon
Mr. C. Yatawara
Mr. A.W. Atukorala
Mr. S. Nagendra
The Total Transporter
From top-end luxury vehicles to cost effective
three-wheelers and motorbikes; from car parts to lubricants,
we have consistently developed our portfolio of vehicle
related products to serve the widest possible market base
across Sri Lanka. Our customers range from corporate to
rural, giving us the solid foundation and market share that
have led to our high ranking in the industry today.
We are pleased to see significant growth and development
in all our sectors - the commitment and hard work of the
UML team has enabled the good results the Group has
posted this year. Driven by foresight and strategic planning,
our perseverance throughout hard times past has now paid
dividends, as we continue to strengthen our position as
the nation’s Total Transporter.
Contents
Vision, Mission and Values
Operational Highlights
Financial Highlights
Group Structure
Milestones
Chairman’s Statement
CEO’s Review
Board of Directors
CEOs & Heads of Subsidiaries
Senior Management Team
Our Partners
Calendar of Events 2010/11
Distributor Network
Management Review
Enterprise Risk Management
Sustainability Report
Our People
Annual Report of the Board of Directors
Corporate Governance Remuneration Committee Report
Nomination Committee Report 3
6
7
8
10
14
18
24
28
29
31
34
38
40
53
58
60
64
70
79
80
Chief Executive Officer’s and
Chief Financial Officer’s
Responsibility Statement
Statement of Directors’ Responsibilities
Audit Committee Report Independent Auditors’ Report
Income Statements
Balance Sheets
Statements of Changes in Equity
Cash Flow Statements
Notes to the Financial Statements
Share Information
Investor Information
Statement of Value Added
Ten Year Summary - Group
Glossary of Financial Terms
Notice of Meeting
Notes
Proxy Form
81
82
87
89
90
91
92
93
95
130
135
136
137
138
140
141
143
Company history
The Company was incorporated in 1945 as a Private Limited Liability Company. It was vested with the Government on
8 March 1972 and carried on operations as the Government Owned Business Undertaking (GOBU) of United Motors. In
1985, the Company entered into a distributor agreement with Mitsubishi Motors Corporation, Japan and has since then
been the sole distributor for brand new Mitsubishi vehicles in Sri Lanka. In 1989 the Company was selected as the first
Government venture for ‘Peoplisation’ with the intention of broadening its ownership amongst the public. Accordingly, on
9 May 1989, the Company was renamed as United Motors Lanka Limited and incorporated as a Public Limited Liability
Company. On 30 August 2007, the Company was re-registered under the new Companies Act No. 7 of 2007 as United
Motors Lanka PLC. Since becoming a Public Limited Liability Company, United Motors has achieved remarkable results
and is a leading blue-chip company in Sri Lanka today.
Vision
TO BE THE BEST COMPANY IN SRI LANKA THROUGH DIVERSIFICATION WHILST
MAINTAINING LEADERSHIP POSITION IN THE TRANSPORT INDUSTRY.
Mission
TO DELIGHT AND MAKE LIFELONG RELATIONSHIPS WITH OUR CUSTOMERS BY
PROVIDING HIGH QUALITY PRODUCTS, SERVICES AND TRANSPORT SOLUTIONS USING
STATE-OF-THE-ART TECHNOLOGY AND DEVELOPING A TEAM OF PEOPLE WHO ARE
COMMITTED TO EXCELLENCE WITH THE HIGHEST LEVEL OF INTEGRITY THROUGH A
CORPORATE CULTURE THAT ENCOURAGES PARTICIPATIVE MANAGEMENT TO CREATE
A SOCIALLY RESPONSIBLE CORPORATE ENTITY, WHILST ENSURING OPTIMUM RETURNS
TO SHAREHOLDERS.
Values
OUR CUSTOMERS AND OUR BUSINESS: WE BELIEVE IN
BEING CUSTOMER ORIENTED AND POSSESS A POLICY
OF PROVIDING FIRST PLACE TO THE CUSTOMER.
CUSTOMER-NEEDS DRIVE OUR CHOICE OF PRODUCTS
AND SERVICES AND THE WAY WE DELIVER THEM.
IMPROVEMENT, OPENNESS TO CHANGE, SEARCH FOR
BETTER WAYS, SPEED OF ACTION, HARD WORK AND
AN AGGRESSIVE DETERMINATION TO GET THINGS
DONE WHICH WILL CHARACTERIZE OUR ATTITUDE
TOWARDS EVERY ASPECT OF OUR WORK.
OUR PEOPLE ARE OUR MOST VALUABLE ASSET: WE WILL
RETAIN AND DEVELOP QUALITY PEOPLE COMMITTED
TO WORKING AS A TEAM TO FULFILL OUR CORPORATE
MISSION. WE WILL PROVIDE OUR STAFF WITH THE
OPPORTUNITY TO REALIZE THEIR FULL POTENTIAL AND
CULTIVATE THEIR ABILITIES TO THE UTMOST. WHILST
INDIVIDUAL INITIATIVE AND PERFORMANCE ARE
RECOGNIZED,ALL ARE IDENTIFIED WITH THE SUCCESS
OF THE COMPANY AND A WINNING ATTITUDE PREVAILS.
OUR PRINCIPALS / SUPPLIERS ARE ESSENTIAL TO
OUR BUSINESS: WE WILL PURSUE A CONFIDENT AND
MUTUALLY BENEFICIAL RELATIONSHIP. WE WILL DEAL
FAIRLY AND IMPARTIALLY AND PROVIDE PRINCIPALS,
SUPPLIERS AND THEIR ACCREDITED AGENTS WITH
TIMELY ADVICE OF FUTURE REQUIREMENTS AND
QUALITY EXPECTATIONS.
OUR STYLE OF MANAGEMENT WILL ENCOURAGE
EMPLOYEE INVOLVEMENT AND A POSITIVE WORK
ATTITUDE: WE WILL UTILIZE OUR RESOURCES
EFFECTIVELY TO MAINTAIN A SUPERIOR QUALITY OF
SERVICE BY FOLLOWING A POLICY OF CONTINUOUS
OUR COMPANY IS A RESPONSIBLE MEMBER OF OUR
COMMUNITY: WE BELIEVE THAT OUR SUCCESS AND
GROWTH WILL CONTRIBUTE TO THE QUALITY
OF LIFE OF OUR PEOPLE AND TOWARDS THIS END
WE WILL WORK IN HARMONY WITH NATURE
AND WOULD SEEK TO ELIMINATE ALL FORMS OF
POLLUTION.
Value Conscious
Executive Reviews
0
6 6
Company
Group
0
Company
Group
2010/11
0
Company
39
61
60
47
Company
32
40
47
Group
2010/11
2009/10
2008/09
-9
171
269
0
2010/11
30
532
652
Group
Average Collection Period
80
(Days)
70
50
10
1,607
1,683
1,575
1500
35
Group
2007/08
No of Employees
2009/10
20
564
859
783
852
798
759
(Rs. 000’s)
2008/09
5000
37
(Rs. 000’s)
33
Value Added per Employee
(Times)
-500
2007/08
Inventory Turnover
1,368
500
2006/07
400
437
1000
28
2010/11
2009/10
364
353
600
23
2,139
2,311
1,794
2008/09
2007/08
327
1,000
2006/07
2,754
2,389
Company
2009/10
1000
1,605
2000
296
800
2008/09
Group
2,917
3000
2006/07
12,730
11,230
12,033
17,322
Turnover per Employee
2007/08
1
4000
4,047
5
0
3,682
200
2,404
2010/11
7,444
8,262
8,546
10,767
13,918
20,000
2006/07
5.3
2009/10
2008/09
2007/08
5,000
2010/11
4.1
4.1
Company
1.9
3.2
3
2009/10
1.9
2
2.4
8,887
15,000
2008/09
2007/08
0
2006/07
10,000
4.4
4.2
4.2
4
2006/07
Operational Highlights
PBT per Employee
2000
(Rs. 000’s)
Financial Highlights
Company
2009/10
Rs.000’s
2010/11
Rs.000’s
Group
2009/10
Rs.000’s
%
Change
63 10,935,116 5,829,410
286 1,380,959
134,041
328
907,781
146,290
2,475
7.3
1.2
137
12.6
2.3
278
22.7
4.6
20.0
4.1
2.4
88
930
521
508
448
393
71
%
Change
2010/11
Rs.000’s
Profitability
Turnover
Profit Before Tax
Profit After Tax and Non Controlling Interests
Interest Cover ( Times )
Profit Before Tax to Revenue ( % )
Return on Capital Employed ( % )
Dividend Cover ( times )
4,907,368 3,006,757
735,350
190,471
518,814
121,235
61.8
2.4
14.9
6.3
14.0
3.7
2.4
2.0
Balance Sheet
Investment in Property, Plant & Equipment
Non-Current Assets
Current Assets
Current Liabilities
Non-Current Liabilities
Share Capital & Reserves
Borrowings to Equity ( % )
Current Ratio
Quick Asset Ratio
26,569
25,160
2,283,942 2,433,224
1,959,919 1,776,882
442,782
873,764
80,991
74,528
3,720,088 3,261,814
0.9
21.6
4.42:1
2.03:1
2.21:1
1.10:1
6
(6)
10
(49)
9
14
(96)
-
-
123,454
2,170,308
4,041,103
2,105,844
111,070
3,984,202
12.0
1.92:1
1.03:1
7.71
1.80
3.25
1.80
2.13
2.00
55.30
48.49
152.20
90.00
19.74
50.00
10,238,050 3,027,019
275.00
94.00
328
81
6
14
69
(60)
238
192
13.43
3.25
8.80
59.38
-
-
-
-
Group Turnover
Profit After Tax
(Rs. Mn.)
(Rs. Mn.)
(Rs. Mn.)
Company
Group
6,287
6,211
4,210
4,244
2010/11
7,260
7,701
2009/10
2010/11
2009/10
2008/09
0
Company
4,298
2,855
-82
2,000
2007/08
121
4,000
146
49
2007/08
-200
6,000
2008/09
519
520
515
428
0
2006/07
4,907
200
2010/11
2009/10 3,007
4,248
5,829
400
Group
8,000
600
405
10,935
7,281
Company
2008/09
5,665 2,731
2007/08
0
2006/07
5,000
4,120 2,625
10,000
10,000
6,757
908
800
15,000
522
81
266
26
-
12,000
1,000
2,854
20,000
2.16
1.80
2.4
47.25
-
-
-
-
Group Assets
2006/07
Share Performance
Earnings per Share (Rs)
Dividend per Share ( Proposed Dividend ) (Rs)
Dividend Yield ( % )
Net Assets Value per Share (Rs)
Market Value per Share as at 31st March ( Rs.)
Price Earning Ratio
Market Capitalization (Rs)
Highest Recorded Share Price ( Rs.)
57,212
116
2,467,206
(12)
3,820,047
6
2,674,371
(21)
434,640
(74)
3,169,917
26
74.6
(84)
1.43:1
0.96:1
Group
7
Group Structure
Name of Company
Subsidiaries
Subsidiaries
Jointly Controlled Entity
Reg: No
Chairman
9 May 1989
PQ-74
R.M.S.Fernando
Unimo Enterprises Ltd.
100%
17 March 1994
PB 218
R. M. S. Fernando
Orient Motor Company Ltd.
100%
27 March 1992
PB 117
R. M. S. Fernando
UML Property Developments Ltd.
100%
08 October 1993
PB 253
R. M. S. Fernando
UML Agencies & Distributors (Pvt) Ltd.
100%
12 November 2001
PV 1514
R. M. S. Fernando
TVS Lanks (Pvt) Ltd.
50%
21 November 1995
PV 9382
Venu Sirinivasan
TVS Auto Parts (Pvt) Ltd.
65%
Effective 32.5%
3 June 2003
PV 6030
R. Dinesh
TVS Automotives (Pvt) Ltd.
100%
Effective 50%
27 March 2008
PV 63607
R. M. S. Fernando
(Parent Company)
8 8
Incorporated on
Directors
C. Yatawara (Chief Executive Officer/Executive Director)
T.M.R.B.Tennekoon
A.W.Atukorala
A.C.M.Lafir (Executive Director - Finance)
M.Yokoi
R.H.Yaseen (Executive Director-Parts & Accessories)
S. Nagendra
Secretaries
Mrs. R. M. Hisham
Auditors
KPMG Ford, Rhodes
Thornton & Co.
Activities
Import & Distribution of Brand New Mitsubishi
vehicles, Genuine Mitsubishi Spare parts &
provision of workshop facilities for repairs
and lubrication services of vehicles.
Distribution of Valvoline Lubricants & Eagle
One Car Care products.
C. Yatawara
R. H. Yaseen
Mrs. R. M. Hisham
KPMG Ford, Rhodes
Thornton & Co.
Import & Distribution of Perodua Cars, Zotye
Nomad SUVs, JMC Cabs and Yokohama Tyres.
Assembly of Zotye Extreme SUVs
C. Yatawara
Mrs. R. M. Hisham
KPMG Ford, Rhodes
Thornton & Co.
Hire of motor vehicles
Import & Distribution DFSK Trucks
C. Yatawara
Mrs. R. M. Hisham
KPMG Ford, Rhodes
Thornton & Co.
Construction of warehouse complexes for hiring
purpose. Development of Company owned
properties
C. Yatawara
Mrs. R. M. Hisham
KPMG Ford, Rhodes
Thornton & Co.
No commercial operations during the
year
R. Dinesh
R. Haresh
R. M. S. Fernando
C. Yatawara
R & R Secretarial
Services (Pvt) Ltd.
KPMG Ford, Rhodes
Thornton & Co.
Import & Distribution of TVS Motor Cycles,
Three Wheelers & Spare Parts and operation of
central workshop
R. M. S. Fernando
C. Yatawara
A. D. Motha
M. A. Perumal
R. Subramanian
R & R Secretarial
Services (Pvt) Ltd.
Rajan & Renganathan
Import & Distribution of Motor Vehicle Spare
Parts
R. Dinesh
C. Yatawara
N. Krishnamoorthy
R & R Secretarial
Services (Pvt) Ltd.
KPMG Ford, Rhodes
Thornton & Co.
Import & Distribution of BPCL - MAK
Lubricants, JK, TVS Tyres & Rubber King Tubes
9
Milestones
1945
Incorporation of United Motors Limited as a Private Limited
Liability Company.
1972
Vested in the Government on March 8. Began operating as the
Government Owned Business Undertaking of United Motors.
1985
Entered into a distributor agreement with Mitsubishi Motors
Corporation (MMC).
1988
Employees’ Share Trust Scheme – an incentive scheme linked to
employee share participation was inaugurated. Capital increased
by Rs. 10 Mn, to allocate shares to employees.
1994
Bonus share issue of one for every five. Incorporation of
a subsidiary – UML Property Developments Ltd., for the
construction of a warehouse complex on a five acre block at
Orugodawatte. Strategic Alliance formed with Associated
Motorways Ltd. and this resulted in the formation of a new
Company – Associated United Motors Ltd. to engage in import
and distribution activities in Sri Lanka.
Emerged as market leader for Japanese vehicle imports to
Sri Lanka.
1995
1989
Celebrated 50 years of excellence.
Selected as the first Government venture for peoplisation with the
intention of encouraging a widespread share ownership among
the people.
May
Birth of United Motors Lanka Limited. Incorporated as a Public
Limited Liability Company with an authorised share capital of
Rs. 100,000,000/-.
June
September
1996
March
Three new Mitsubishi vehicles - Lancer, L400 & Space Wagon
were launched on the same day.
September
The new showroom was opened at the Hyde Park Corner Head
Office premises.
MMC agrees to purchase 500,000 shares at par, prior to the sale
of shares to the public.
1997
June
AUML Autogas Ltd., a joint venture with Associated Motorways
Ltd. was launched for the conversion of petrol driven vehicles to
LP gas.
Announcement of the Public Share Issue. Out of 10,000,000
shares offered, 500,000 (5%) shares were reserved for
employees.
1990
October
Distribution of shares to employees.
01 10
1993
June
November
Kancil cars - made in Malaysia by Perodua were introduced.
December
Work began on the ultra modern workshop at Orugodawatte.
1998
2002
January
January
Montero, the ‘King of the Road’ is launched.
Opening of UNIMO Auto World.
April
August
Opening of the spare parts outlet at Panchikawatte.
Opening of a branch at Kurunegala.
1999
September
July
The Orugodawatte Complex was opened.
December
Branch office opens in Kurunegala.
2000
August
The Montero 2001 was launched.
October
Launch of website: http://www.unitedmotors.lk
November
Branch offices were opened in Kollupitiya & Ratnapura.
2001
March
Opening of a gas filling station at Orugodawatte.
November
Opening of a new showroom at Lipton Circus, Colombo 2.
November
Launch of the luxury Lancer, Montero Sport and Montero 2003.
2003
April
UML acquired 50% interest in TVS Lanka (Pvt) Ltd.
April
Incorporation of Orient Financial Services Corporation Ltd.
June
Incorporation of TVS Autoparts (Pvt) Ltd. (a subsidiary of TVS
Lanka (Pvt) Ltd.)
Launch of the new company logo, and company song with the
theme “Proud to be a part of a Driving Team”.
2004
April
The Yokohama launch.
Launch of flagship brands – Magna & Verada.
July
Lancer Evolution VII and all new Lancer launched.
September
September
March
Launch of Farmtrac Tractors.
March
New generation of Fuso and Canter Trucks launched.
The Orient Motor Company showroom opened.
11
Milestones contd.
2005
Opened a branch for spare part sales in Kandy.
The Mitsubishi Lancer Evolution IX - heir to a winning tradition
was launched in Sri Lanka.
October
December
Unimo Enterprises Ltd., added the Apollo Tyre to its product
range.
The Company added the Mitsubishi Colt to its portfolio - a
compact car with advanced features.
November
2006
January
Unimo Enterprises Ltd. launches a range of Chinese vehicles.
November
The Company added the Mitsubishi L200 single cab to its
portfolio.
December
Unimo Enterprises Ltd. added Zotye Nomad to its vehicle
portfolio.
Launch of the new Mitsubishi Sportero.
2008
December
February
TVS Lanka (Pvt) Ltd. opened its 1st Regional Centre in Matara.
December
Launch of ‘Adyapana Athwela’ scholarship scheme for children of
UMLL staff.
2007
January
Mitsubishi Lancer Evolution X – the heir to a winning tradition
was introduced in Sri Lanka.
March
Incorporation of TVS Automotives (Pvt) Ltd. as a fully owned
subsidiary of TVS Lanka (Pvt) Ltd.
May
Introduced ‘Kenari’ to the Perodua range.
First Branch with comprehensive facilities under one roof was
opened in Anuradhapura.
February
August
Launch of the 2007 Mitsubishi Montero.
March
Unimo Enterprises Ltd added the Perodua Viva to its product
portfolio.
TVS Lanka (Pvt) Ltd. signed a distributor agreement with Bharat
Petroleum Corporation of India.
2009
June
Branch with sales and workshop facilities opened in Kandy.
Unimo Enterprises Ltd. added the JMC cab to its vehicle
portfolio.
August
The Company was re-registered as United Motors Lanka PLC.
21 12
September
May
January
February
Apollo truck and bus tyre range introduced to the Sri Lankan
market.
March 2011: The Company opens its dedicated showroom for permit holders
2009
June
UML’s employee Ms. Zeeniya Rasheed, General Manager
(Marketing) elected Chairperson of the Ceylon Motor Traders
Association.
November
TVS Lanka (Pvt) Ltd., launched the TVS King three wheeler in
Sri Lanka.
December
Branch with comprehensive facilities under one roof opened in
Matara. Unimo Enterprises Ltd opened a local assembly facility
within the Orugodawatte Workshop Complex to assemble the
Zotye Nomad SUV.
2010/2011
May 2010
The Company added Mitsubishi Outlander with the
new face lift to its portfolio
December 2010
The Company increased the number of Share Capital
by way of a Share Split on the basis of two Ordinary
Shares for every existing issued Ordinary Share
January 2011
The Company added the new Mitsubishi Montero
Sport to its portfolio
February 2011
UEL added the DFSK Mini truck brand to its portfolio
March 2011
The Company added the Mitsubishi Delica D5 to its
portfolio
The Company added the new Mitsubishi Canter 14 ft
(4WD), 10 ft and the 22 ft FM truck to their range of
trucks
The new Mitsubishi Delica D5
The Company and the Group achieved its highest ever
profit in this financial year
13
Driven.
Chairman’s Statement
The global economy displayed definitive,
though sluggish signs of recovery during
the year under review. The economies
of most developing countries which in
the first place were comparatively less
affected by the global meltdown, rebound
more positively to these early signs of a
global recovery. The Sri Lankan economy
too turned around strongly, recording
a growth rate of 8% for the year, the
highest since the 8.2% recorded in 1978,
the year immediately following the
liberalisation of the economy. The rate of
8% is in striking contrast to the rate of
3.5% achieved during the previous year.
The high overall rate of growth recorded was the result of
impressive performances in all of the key sectors of the economy.
Agriculture, Industry and the Services sectors grew by 7%, 8.4%
and 8% respectively during the year compared to 3.2%, 4.2%
and 3.3% respectively recorded during the previous year. Among
the factors that contributed to the improved sector performance
were the increased demand from the North and the East, low
inflation, low interest rates and a more optimistic outlook by the
business community.
A welcome feature in the maintenance of a macro economic
environment favorable for business, was the active and
interventionist role played by the Central Bank in shaping
monetary policy and the added emphasis placed during the
year on maintaining strict fiscal discipline. These measures no
doubt helped keep inflation in check and bank interest rates
at modest levels. The business community also welcomed
the implementation of the recommendations of the taxation
commission, resulting in a simplification of the tax system and a
reduced rate of corporate tax.
The growth in exports by 17.3% was another welcome feature
of the performance of the country’s economy during 2010. If the
negative growth in exports registered during the previous year is
factored in, the growth for the period is a modest 3%, compared
to the value of exports achieved in the year 2009. Nevertheless,
the turnaround is commendable since it has been achieved despite
the withdrawal of the GSP concession and the appreciation of the
local currency.
The motor vehicle industry particularly welcomed the reduction
of taxes and levies on vehicle imports, introduced during the
year. The measure whilst helping to meet the pent up demand,
is also bound to result in higher revenues to government with
the increased numbers being imported more than offsetting
the reduction in the duty rates. The industry and road users are
also pleased to note the significant improvement to the road
system during the past two years. These improvements and the
widespread adoption of a uni flow system of traffic in the city,
has eased congestion to a large extent. However the introduction
of an exit policy for vehicles ought to receive the attention of the
government. In 2010 around 350,000 vehicles were registered by
the Department of Motor Traffic. The cumulative effect of such
registrations are bound to create severe traffic congestion in the
years ahead, unless an exit policy for older vehicles is introduced
as in most other countries.
The year 2010, was an exceptionally good year for the
Company and the Group. The significant increase in vehicle
imports consequent to the reduction in duties, coupled with a
remarkable turnaround of the previously loss making associates
and Subsidiaries has resulted in your Company and the Group
recording our best ever results since commencement of business.
Whilst favorable macro economic factors, significant savings
in finance costs etc have all contributed to the swelling of the
bottom line, none of that should cloud the sustained team
effort and commitment made by the Senior team and staff
at all levels to the achievement of the year’s results. Taking a
more than proportionate share of overall market growth in any
industry requires the collective effort of a management team that
understands its mission.
Shareholders will recall that your Board of Directors two years back
set very clear guidelines to management, that it will not
Chairman’s Statement contd.
indefinitely entertain and condone a situation where losses incurred
by certain product lines marketed by an Subsidiary Company
Jointly Controlled Entitiy erode the profits made by other
Companies within the group. It is heartening to note that except
for two product lines all of the other businesses have been turned
around and are now poised to increase their market share and
returns very significantly in years ahead. The continued focus of
the Board will be on the two loss making product lines and a firm
decision on them will be made during the current financial year.
The Company divested the ownership of its fully owned
Subsidiary, Orient Financial Services Corporation Limited
(OFSCL) during the year under review. OFSCL was established
as a leasing Company in 2003 based on the belief that it would
help increase vehicle sales, particularly two and three wheeler
vehicle sales, by extending leasing facilities to potential buyers
of vehicles. However such objectives did not materialise for a
number of reasons despite much effort being initiated to achieve
them. As the management effort to continue operations was
found to be disproportionate to the expected returns from the
operations, it was decided to sell the company as a going concern.
In order to improve the liquidity of the share in the stock market,
the Company during the year under review, split the share in the
proportion of two shares in place of one held in the company.
This resulted in the number of shares in issue doubling to
67,267,084 at the end of the exercise. The highest price for the
share after the split was Rs. 205/- recorded in 21 January 2011,
while the lowest price recorded was Rs. 99/- in 8 December 2010.
Almost all of our businesses are collaborative efforts with
a reputed overseas company, either in an agent/principal
relationship or in addition as joint owners. The success of our
local operations are very closely tied up with the quality of the
products and services supplied by them and their commitment
to serve the specific demands of the local market. In that context,
the close relationships built up with our partners at every level
have been invaluable, and a critical determinant of our success. It
is my pleasant duty to record our appreciation of the contribution
made by each one of them.
Another factor that has contributed significantly towards your
Company continuing to perform well year after year, has been
the professional but cordial relationship that exists between
the Board, the senior management and the staff. When you,
the Shareholders are added to that equation, the relationship
inter se, the checks and balances they impose on each other, the
appreciation of the roles played by each party is what is generally
referred to as Governance. Your Board with the fullest
co-operation of management has made a special effort to
introduce some of the best practices in the establishment and
maintenance of a good governance regime within the group
during the past few years. I firmly believe that the success
achieved in that respect has contributed to the exceptional
Earnings per Share
Group Shareholders’ Funds
(Rs. Mn.)
(Rs.)
7.71
3,170
Group
2,222
2010/11
2009/10
2008/09
2007/08
500
2010/11
2009/10
2,441
1,000
0
Group
2,023
1,500
2006/07
1.8 2.16
2,000
1.46
Company
61 16
13.43
2.32
2007/08
2006/07
0
3,000
2,500
15.32
5
-5
3,500
2008/09 -2.49
10
12.05
15
0.77
20
3,984
4,000
25
The year 2010, was an exceptionally good year
for the Company and the Group. The significant
increase in vehicle imports consequent to the
reduction in duties, coupled with a remarkable
turnaround of the previously loss making
associates and Subsidiaries has resulted in
your Company and the Group recording its best
ever results since commencement of business.
performance of the company, in no small measure.
Many are the challenges that the Company will face during
the new financial year. I have already referred to the two loss
making product lines which have to be decisively dealt with.
Several of the Group Companies that turned around during the
year need not only to consolidate their new status, but also gain
significant market share. The turning around of these companies
signifies the resolution of many operational and product issues
experienced during the past years. Having resolved those issues
these companies are well poised to significantly improve market
share. The leadership in these companies are fully committed
to becoming significant players in the relevant industry sector,
during the current year.
Several products introduced into the market during the year
under review could not reach their full potential due to varied
teething problems. These products have to be aggressively
marketed during the current year. The strong demand for our two
and three wheeler products experienced during 2010, has surfaced
the need to increase our vehicle assembly capacity. The setting
up of state of the art facilities in premises already owned by the
owning Company will be undertaken later this year.
Your Company will continue to explore options for diversifying
its business lines during the current year. Experience during the
past years has demonstrated the vulnerability of the automobile
industry to factors beyond the control of the Company. Thus
from a strategic point of view, it will be desirable for the Group
to diversify into other unrelated lines of business. Several options
have been examined in this context without success. This effort
will be pursued further during the current year.
My colleagues on the Board have displayed a degree of
commitment far in excess of what is legally expected of them, to the
affairs and demands of the Company and Group. They have been
a great source of support and guidance to me in all deliberations
at the Board. I am certain that all Shareholders will join me and
the Board in commending the senior management team led by the
CEO Mr. Chanaka Yatawara, the CEOs of the subsidiaries and
Jointly Controlled Entities and all staff for the excellent results they
have achieved during the year under review. They are well aware
that the search for excellence never ends. The quest for greater
achievements in the year ahead has already begun.
I appreciate and acknowledge the continued patronage of
our dear customers and wish to assure them of our continued
commitment to improve our service standards during the current
year. My special thanks to you, our Shareholders who have
continued to support us and place your confidence in us.
R. M. S. Fernando
Chairman
27 May 2011
17
Determined.
CEO’s Review
It gives me great pleasure to present the
financial, operational and strategic review
of United Motors Lanka PLC for the
financial year 2010/2011.
The period under review was a definitive year, both for your
Company, as well as the industry at large. As the market context
changed in June 2010, due in large to changes in the import
taxation structure, Sri Lanka’s automotive industry witnessed
rapid progression driven by enhanced demand. This was in stark
contrast to a long period of sluggish market activity precipitated
by a scenario of an untenable taxation structure, which
was further compounded by high interest rates. As such in
2010/2011, the market volumes grew exponentially recording an
import growth of 215% from 2009 totaling to Rs. 117 billion.
Performance Review - United Motors
Lanka PLC
I am pleased to note that United Motors Lanka PLC and its
subsidiaries and Jointly Controlled Entities, in 2010/2011
performed exceptionally. The year under review was by far
one of the best financial years in terms of operational and
financial performance. From a cohesive Group perspective, the
commendable performance was the cumulative outcome of many
factors; namely enhanced market demand which pushed volumes
upwards, introduction of new products, increased branch and
dealer network, a scenario of improved margin management
whilst maintaining a more efficient operational cost base. The
prevailing single digit interest rates aided towards decreasing costs
of capital. 2010/2011 was a year in which 5 of the 6 subsidiaries
recorded performance enhancements from that of the previous
financial year whilst also superceding the budgetary forecasts for
the year.
In 2010/2011, United Motors Lanka PLC posted a turnover
of Rs. 4.9 billion, reflective of a 63 percent increase from that
of the previous financial year. Profit Before Taxation stood at a
commendable Rs. 735 million, exhibiting a year-on-year (YOY)
growth of 286 percent, while Profit After Taxation grew by 328
percent from that of 2009/2010 to Rs. 519 million.
The main driver of profitability during the year was enhanced
sales – revision of the duty structure prompted an average 35
percent reduction in cost of passenger vehicles. The propensity of
sales was further augmented by the sharp decline in finance costs
for buyers who opted for loans and leases as payment options.
Thus, a decline in duty in tandem with declining interest rates
propelled growth during the year under review.
From a portfolio perspective, the passenger vehicle component
of the business was the main contributor to revenue growth.
Profitability of the sector increased by as much as 930 percent
compared to the previous financial year. Spare part sales remained
a critical contributor to the years’ financial performance. In
2010/2011, strategies deployed in the previous financial year
towards the growth of spare parts revenue were largely realised
with contribution from the sector increasing by as much as 41
percent during the year, thereby successfully impacting and
containing the secondary market for spare parts. Similarly,
workshop repair revenue witnessed a growth of 19 percent,
whilst profitability from the business grew by a commendable
18 percent, an evident outcome of the greater accessibility
of our workshop network across the country. Valvoline, our
mainstay lubricant brand performed exceptionally during the
year, demonstrating a 63 percent bottom line growth as a result
of sound performance by dealer network and direct accounts.
Contribution from commercial vehicles in 2010/2011 witnessed a
significant growth with the bottom line expanding by 260 percent
YOY. However, the segment failed to meet the expectations
outlined at the start of the financial year.
From a management practice point of view, UML continued a
persistent strategy towards internal restructuring. In the financial
year 2010/2011, strategies deployed in previous years towards
new products, efficiency improvement, process re-engineering
and developing our human asset base continued to be focal in
our journey towards future growth. We continued to pursue
challenging budgets, consistently deployed low-cost strategies
and strived to provide the right tools to empower our employees.
In strategizing for the long-term sustainability of the business,
an internal analysis of the business outlined a shortfall in human
resource needs. Through a pervasive human resource development
strategy, we adopted a 3600 appraisal programme during the year,
to achieve the optimal competencies required to meet the future
CEO’s Review contd.
In 2010/2011, United Motors Lanka PLC
posted a turnover of Rs. 4.9 billion, a
63 percent increase from that of the
previous financial year. PBT stood at a
commendable Rs. 735 million, exhibiting a
year-on-year (YOY) growth of 286 percent,
while PAT grew by 328 percent from that of
2009/2010 to Rs. 519 million.
targets of the Company. Moreover, practices of good governance,
risk management and a strong focus on performance management
have, I believe, placed UML on the road to a sound future growth.
Performance Review – Subsidiaries & Jointly
Controlled Entities
Unimo Enterprises Limited (UEL)
Unimo Enterprises is the agents for Perodua cars from Malaysia,
the Zotye SUV, JMC commercial vehicles from China and
Yokohama Tyres.
In the previous financial year 2009/2010, UEL posted a loss of
Rs. 76 million. In 2010/2011, the Company rebounded strongly
to post a profit after taxation of Rs. 202 million, a direct outcome
of exiting unprofitable components of the business (Tractors and
Apollo Tyres). In addition, the assembling of the Nomad SUV
contributed towards greater financial returns. Benefiting from the
low excise duties, increased product portfolios in combination
with increased volumes as a result of the reduced taxation created
a strong foundation for the performance turnaround.
Demand for the smaller passenger cars in the year 2010/2011
increased considerably as a result of the affordability factor.
Orient Motor Company Limited (OMCL)
The Company was originally formed to hire vehicles to the
corporate and public sectors as well as to the security forces.
02 20
However, over the past three financial years, this component of
the business was scaled down and the fleet of vehicles disposed of.
However, in 2010/2011, the Company’s commercial focus was
re-invented. By identifying a market gap, the Company looked
towards the importation and retailing of small commercial
vehicles. Currently, the market volumes for small commercial
vehicles stands at approximately 1,000 units a month. However
demand is expected to increase as a result of infrastructure
development across the country. During the year, OMCL
introduced a range of small commercial vehicles that have
demonstrated the early signs of positive market acceptance.
The Company also recommenced the hire of vehicles to a niche
category of clientele.
Orient Financial Services Corporation Limited
(OFSCL)
OFSCL, a subsidiary that offered leasing and factoring services,
was divested during the financial year. The Company, though
a profitable business, failed to contribute significantly to UML’s
bottom line. In addition, the initial assumption that most vehicles
sold through UML would seek finance through OFSCL failed
to materialise. The highly competitive financial services sector
constrained the growth of the Company largely as a result of the
inability of banking institutions to provide low cost capital.
OFSCL was sold to the People’s Venture Investments (Pvt)
Ltd. and a conscious effort was made to ensure that all of the
Turnover of Group
Profit Before Tax
(Rs. Mn.)
(Rs. Mn.)
Company
Group
5,829
2010/11
2009/10
2008/09
4,907
7,281
Company
3,007
6,745
5,665
2007/08
0
2006/07
2010/11
2009/10
2008/09
2007/08
2006/07
-8
4,120
735
190
95
2,000
0
-300
6,000
4,000
134
520
515
428
405
600
8,395
8,000
900
300
10,000
4,248
1,381
1,200
10,935
12,000
1,500
Group
employees of the Company were assured of their employment
despite the change in management.
to the launch. As such the market expanded from 50,000 units in
2009 to approximately 70,000 units in 2010.
TVS Lanka (Private) Limited (TVSL)
The Company’s sales infrastructure was strengthened during
2010/2011 through the establishment of a strong dealer
network across the country. From an operational perspective, the
Company successfully shed inefficiencies through streamlining
of processes thereby optimising its operations. During the year,
efforts were made towards the consolidation of operations into
one owned property as opposed to operating from many rented
properties. This initiative is expected to be fully implemented in
the forthcoming financial year and will lead towards achieving
greater operational efficiencies and synergies.
TVSL is UML’s joint venture with T. V. Sundram Iyengar & Sons
Limited of India. This venture primarily markets two-wheelers,
three-wheelers and provides after sales services.
The financial year 2010/2011 was an exceptional year for the
Company with profitability increasing by an outstanding 1,880
percent to Rs. 396 million from Rs. 20 million in the year
2009/2010. The growth in profitability was principally driven by
an increase in volume of the 2 wheelers, the launch of a threewheeler under the flagship of the TVS brand and the many cost
reduction exercises which pushed break-even points downward.
The TVS motorbikes have grown in popularity in the Sri Lankan
market over the past ten years, garnering significant brand affinity
amongst consumers and enjoy a market share of 10 percent. In
2010/2011, a clutch-less motorbike-the JIVE was launched with
a view to enhance the rider convenience. Notably, this innovation
is thought to be one of the first of such vehicles in the world.
The introduction of the TVS three-wheeler catalysed exponential
demand, demonstrating the strength of the TVS brand in Sri
Lanka. The launch of the TVS three-wheeler was opportune as is
evidenced by the expansion of annual market volumes subsequent
TVS Auto Parts (Private) Limited (TVSAP)
TVS Auto Parts imports OEM parts for Indian commercial
vehicles. The Company performed commendably in the year
under review with turnover increasing by 45 percent from that
of 2009/2010 to Rs. 310.7 million. The Company’s bottom line
grew by 265 percent to Rs. 27 million.
The Company enhanced its operations during the year,
achieving greater efficiencies through improved working capital
management, better supply chain management and through the
adoption of a more proactive management approach. In addition
to the current lines previously marketed, the Company added
21
CEO’s Review contd.
new product lines from Japan and Thailand during the year, and
hope to continue to foster greater growth by marketing these
additional product lines.
TVS Automotives (Private) Limited (TVSAM)
TVS Automotives is a subsidiary of TVS Lanka (Private) Limited.
The Company markets two product ranges - the MAK range of
lubricants from Bharath Petroleum and tyres from JK India and
TVS Sri Chakra India.
The Company in 2010/2011 continued to demonstrate poor
profitability, as in previous years, due to a scenario of poor
margins, network limitations, high finance costs and low
capitalisation despite the high market potential. A concerted
decision was made during the current financial year to recapitalize the company in order to increase import facilities and
reduce financial costs. As such, a strong revitalisation plan will be
adopted in the upcoming financial year.
Corporte Social Responsibility
Our CSR efforts in 2010/2011 centred on children from
the communities within which we operate, in particular
Orugodawatte, where our workshop is situated. The focus
of the sustainability efforts remained consistent to that of
Demand for the smaller passenger cars in the year 2010/2011 increased
considerably as a result of the affordability factor.
22 22
the previous years, where we endeavoured to assist towards
enhancing the educational infrastructure that is available to these
children. Cross-functional teams from our Parent and Subsidiary
companies engaged and interacted with the relevant Stakeholders
to continue to repair and maintain a pre-identified school from
the community. We also continued our CSR project that assists
children of our staff to reach for higher educational goals. Our
scholarship programme in 2010/2011 benefited 17 children.
Human Resources
Our staff continues to be our greatest asset. They proved once
again that they have the capacity to transform themselves and
that through continuous and consistent development they can
better their skills and capabilities. I am indeed proud of their
achievements. But I am more proud of how they have loyally
stood with UML demonstrating their commitment, and of
their belief in what we can do as a team even during the most
challenging of situations and times.
Future outlook
In the year under review, we have reaped the benefits of the
strategies that we implemented in the last two years. Our all
encompassing approach towards the consistent pursuance of
success for your Company has been long and hard, but I believe
Long services awards being presented by Mr. Chanaka Yatawara CEO/ED
that by being tenacious, we are creating not only the foundation
for future growth but also creating a performance culture that will
serve to ensure the continuity and sustainability of that growth.
In looking to the year ahead:
•
•
•
•
•
•
•
we remain encouraged by the fact that the Government of
Sri Lanka has decided to issue duty free permits. We will
ready our product portfolio accordingly to offer the best
value to permit holders.
we are confident that the Government of Sri Lanka will
continue to pursue economic and fiscal strategies that are in
pursuant of commercial vitalisation
we are hopeful of the market potential for the two new
products launched by our partners Mitsubishi and the
opportunities available to other brands that we represent.
the expectations for the performance of the small
commercial vehicles are high and we will look to make
incremental profit from this segment.
the targets for the sale of the new clutch-less motorbikes
under the TVS flagship are expected to be met successfully.
we will be looking to garner a greater allocation of
production of the Perodua brand, and thus will be looking
to meet the excess demand in the market.
HR budgets will be doubled with an expectation to reward
performance based on the achievement and realisation of
Corporate Goals.
Growth expectations for the upcoming financial year will no
doubt be dependent upon the stability and the continuity of
the present duty structure, interest rate scenario and economic
momentum. Currency fluctuations may present a challenge
especially in the context of volatility in the global currency
markets. The hybrid component of the market will continue
to pose a great challenge due to our inability to meet the
competition with a similar hybrid vehicle in the next financial
year. Yet, it is envisioned that in 2011/2012, UML’s strategic
and operational objectives will be met as a continuum of the
momentum of operations over the past year.
Growth expectations for the upcoming
financial year will no doubt be
dependent upon the stability and the
continuity of the present duty structure,
interest rate scenario and economic
momentum. Currency fluctuations may
present a challenge especially in the
global currency markets.
personally affected by the devastation of the tsunami and the
subsequent events in its aftermath.
I would like to take this opportunity to thank our shareholders
for their support towards United Motors Lanka PLC,
throughout its journey as a commercial enterprise. UML’s market
capitalisation in 2010/2011 increased considerably as a result of
the significant rise in the share value. We hope to continue to
offer consistent value and returns in the future.
Appreciation is also due to the Chairman and the Board of
Directors for their able direction, advice and confidence in the
capability of the UML team and of course thanks are due to our
staff who have diligently worked towards the realisation of many
diffcult Corporate Goals.
C. Yatawara
Chief Executive Officer/ Executive Director
27 May 2011
Acknowledgements
Our thoughts are with our business partners in Japan, as they
experience possibly one of the most difficult times for their
nation. We are thankful that none of our associates were
23
Board of Directors
4
1
2
3
6
5
8
1. Mr. S. Nagendra - Non Excutive Director
2. Mr. T. M. R. B. Tennekoon - Non Excutive Director
3. Mr. R. M. S. Fernando - Chairman
4. Mr. A. W. Atukorala - Non Excutive Director
7
5. Mr. C. Yatawara - Chief Executive Officer/Executive Director
6. Mr. A. C. M. Lafir - Executive Director - Finance
7. Mr. R. H. Yaseen - Executive Director (Parts & Accessories)
8. Ms. R. M. Hisham - Company Secretary
Mr. M. Yokoi - Non Executive Director (Not Pictured)
Board of Directors
*Mr. R. M. S. Fernando
*Mr. S. Nagendra
Chairman - Non Executive Director (Independent)
Mr. R.M.S. Fernando was a former Secretary of the Ministry of
Enterprise Development, Industrial Promotion, Industrial Policy
and Constitutional Affairs and a former CEO/Director of the
National Development Bank in Sri Lanka.
Non Executive Director (Independent)
Mr. Nagendra was a former Senior Director of Carson
Cumberbatch & Co. PLC. and several of its Subsidiaries and
Associate Companies.
FCMA (UK), LLB(Hons), Attorney at Law, Companion-CIM (UK), FCIB(UK)
He is the Chairman of Unimo Enterprises Ltd., Orient Motor
Company Ltd., TVS Automotives (Pvt) Ltd., UML Property
Developments Ltd., UML Agencies & Distributors (Pvt) Ltd.,
and Latex Green Ltd.
Mr. Fernando is also a Director of TVS Lanka (Pvt) Ltd.,
TVS Autoparts (Pvt) Ltd., Kelani Tyres PLC., Sierra Cables
PLC, Piramal Glass Ceylon PLC, ICICI International (Pvt)
Ltd., Mauritius, Seguwanthivu Wind Power (Pvt) Ltd., Prasac
Microfinance, Cambodia.
*Mr. T. M. R. B. Tennekoon
B.Sc Econ. (London)
Mr.Tennekoon is a Fellow of the Economic Development
Institute, Washington, former Chairman of the Clothing Industry
Training Institute, Sri Lanka and of the Textile Training &
Services Centre, Sri Lanka. He was a former Additional Secretary,
Ministry of Industrial Development and the Director General of
the Textile Quota Board.
FCMI(UK), MBA(UK), FCPM(SL)
Senior Director and Financial Consultant of CML – MTD
Construction Ltd.
Executive Chairman – Travelserv Ltd. and Travelon Ltd.
Director and Chairman of several Public Listed and Private
Companies.
Former Committee Member on Transport, Highways and
Aviation of the Monitoring & Progress Division of the Ministry
of Policy Development and Implementation. Immediate Past
President, Skal International Colombo (International Association
of Travel and Tourism Professionals). Past Secretary of Skal
International Asian Area Region. Past President Pacific Asia Travel
Association, Sri Lanka Chapter.
Chairman of the Sri Lanka Benelux Business Council, Vice
Chairman – Sri Lanka Pakistan Business Council.
Past Executive Committee Member of the Ceylon Chamber of
Commerce and former Chairman of the Import Section of the
Ceylon Chamber of Commerce. Past President of Chartered
Management Institute–UK, Sri Lanka Chapter.
*Mr. A. W. Atukorala
B.Sc (Leeds)UK,
MTT (North Carolina) USA, MBA
Mr. Atukorala is a Director of Union Bank of Colombo PLC,
Arni Holdings & Investments (Pvt) Ltd., Platinum Realty
Investments (Pvt) Ltd., Orient Financial Services Corporation
Ltd., Pragnya Tech Parks Lanka (Pvt) Ltd., Saphron Solutions
(Pvt) Ltd. and Mega Containers Ltd.
He was also a former Deputy GM, ANZ Grindlays Bank, former
Country Manager, Mashreq Bank PSC and former Advisor of the
Ministry of Policy Development & Implementation.
62 26
Mr. C. Yatawara
B.A. Econ., Lewis & Clark College, Oregon, (USA)
Mr. Yatawara is a Director of Orient Motor Company Ltd., UML
Property Developments Ltd., Unimo Enterprises Ltd., UML
Agencies & Distributors (Pvt) Ltd., Orient Financial Services
Corporation Ltd., TVS Lanka (Pvt) Ltd., TVS Autoparts (Pvt)
Ltd. and TVS Automotives (Pvt) Ltd.
Mr. A. C. M. Lafir
FCMA, ACA, MBA
Executive Director – Finance
Mr. Lafir is a Fellow of the Chartered Institute of Management
Accountants (CIMA)-UK and an Associate Member of the
Institute of Chartered Accountants of Sri Lanka (ICASL)
He also holds a Masters Degree in Business Administration from
the Post Graduate Institute of Management of the University of
Sri Jayawardenapura and has over 25 years of senior management
experience in diverse business activities.
Mr. Lafir is a Director of Skills International (Pvt) Ltd.
Mr. R. H.Yaseen
Executive Director –(Parts & Accessories)
Mr.Yaseen is a Director of Unimo Enterprises Limited. He was a
former Director of Readywear Industries Limited.
Ms. R. M. Hisham
ACIS (UK), MBA
Company Secretary
*Mr. M. Yokoi
General Manager - Mitsubishi Motors Corporation
(Not pictured)
* All Non Executive Directors are Independent
27
CEOs & Heads of Subsidiaries
From left to right
Mr. B. Vithana Pathirana
Assistant General Manager
Mr. B. Morris
Chief Executive Officer
TVS Auto Parts (Pvt) Ltd.
TVS Automotives (Pvt) Ltd.
Mr. S. Agalawatte
Chief Executive Officer
TVS Lanka (Pvt) Ltd.
Mr. M. Gunatilleke
General Manager
Senior Management Team
Mr. P. Wanniarachchi
General Manager
Technical
Mr. G. Pilapitiya
General Manager
New Vehicle Sales
Mr. B. Singhage
General Manager
Parts & Accessories
Mr. R. Siriwardene
General Manager
HR & Administration
Ms. P. Meegoda
Deputy General Manager
Internal Audit & Monitoring
Mr. P. Ellepola
Deputy General Manager
Lubricants & Car Care
Mr. S.M. Gnanarathne
Technical
Mr. S. Withana
Information Technology
29
Senior Management Team contd.
03 30
Mr. Tudor Madugala
Public Sector Sales
Mr. C. P. M. Nanayakkara
Sales Support Services
Mr. M. Dissanayake
New Vehicle Sales
Mr. W.P.S. Kumara
Technical
Mr. S. de Silva
Marketing Services
Mr. A. Cooray
Trucks & Buses
Our Partners
Mitsubishi Motors
Corporation, Japan
(MMC)
The history of Mitsubishi
Motors Corporation dates
back to 1870, the year
that the Tsukumo Shokai
shipping company was
founded. Mitsubishi HeavyIndustries can trace its origins
to Tsukumo Shokai, which
launched the “Mitsubishi
Model-A” project in 1917.
Mitsubishi Motors became
an independent Company in
1970 when the automobile
division was spun off from
Mitsubishi Heavy- Industries.
In 2003 the Company was
reborn as the new Mitsubishi
Motors, a manufacturer that
specialised in passenger cars.
MMC has production
facilities in 19 countries,
and its vehicles are sold and
serviced in more than 170
countries world wide.
Mitsubishi Fuso
Truck & Bus
Corporation, Japan
(MFTBC)
Mitsubishi Fuso’s history dates
back to 1932 and the FUSO
B46 Bus. MFTBC is a fully
consolidated business unit of
Daimler Chrysler, the world’s
largest commercial vehicle
manufacturer. As a member of
the Company’s Truck Group,
Mitsubishi FUSO takes its
place alongside Mercedes-Benz
and Freightliner, two of the
worlds leading truck brands.
Mitsubishi FUSO plays a
crucial role as the group’s
Asian pillar and centre for
light-duty trucks and hybrid
technology, enabling a global
leadership position in these
areas. Mitsubishi FUSO’s
technology development
is focused on three interrelated areas - fuel efficiency,
environmental sustainability
and safety.
Sojitz Corporation,
Japan
Our trading partner in the
supply of Mitsubishi &
Mitsubishi FUSO vehicles
is a part of the Sojitz Group
that produces new sources
of wealth by connecting the
world’s economies, cultures
and people in a spirit of
integrity. Sojitz has several
divisions, namely, “Machinery
& Aerospace”, “Energy
& Mineral Resources”,
“Chemicals & Plastics”,
“Real Estate Development &
Forest Products”, “Consumer
Lifestyle Business”, “IT
Business”, etc. It has 409
subsidiaries and 216 affiliates
all over the world.
Valvoline, USA
Valvoline, a division of
Ashland Inc., which started
its lubricant operation in
1866, serves more than
140 countries worldwide
and is a leading marketer,
distributor and producer of
quality branded automotive
and industrial products and
services. Products include
automotive lubricants,
transmission fluids, gear
oils, hydraulic lubricants,
automotive chemicals,
specialty products, greases and
cooling system products. It
became an active member of
the Fortune 500 Company
listing by achieving operating
revenue of US $ 8 billion.
Presently they operate 30 fully
owned blending plants in
various parts of the world.
Valvoline also offers Eagle
One car care products for
automotive cleaning and
maintenance and operates
Valvoline Instant Oil Change,
the second largest quick-lube
chain in the US.
31
Our Partners contd.
TVS Motor
Company Ltd., India
(TVS)
TV Sunderam Iyengar & Sons
Limited one of the largest
conglomerates in India with
a history of nearly 100 years
in the automobile trade and is
the holding Company of TVS
Motor Company Ltd. The
Company is the third largest
two-wheeler manufacturer
in India and ranks amongst
the top ten globally. It is the
only automotive manufacturer
to have been honoured with
the world’s most prestigious
Demming Prize for Total
Quality Management. TVS
currently manufactures a wide
range of two-wheelers from
mopeds to racing inspired
motorcycles, the popular
models being the TVS Flame,
TVS Apache, TVS Scooty,
TVS Metro and TVS Streak.
It also introduced TVS King a
three wheeler to its Indian and
Sri Lankan markets recently.
23 32
Perodua Sales Sdn
Bhd, Malaysia
This Company is a wholly
owned subsidiary of
Perusahaan Otomobil Kedua
Sdn Bhd (PERODUA) which
was established in 1993.
The Company’s operations
commenced in early 1994 and
the first vehicle, the ever so
popular, Perodua Kancil was
introduced to the Malaysian
market in August 1994.
To date, a range of vehicles
such as the Perodua Rusa,
Kembara, Kenari, Kelisa,
Myvi, Viva and Nautica have
rolled out of the Perodua
plant. The plant currently
has a production capacity of
250,000 units per annum and
has over 10,000 employees.
Yokohama Rubber
Company Limited,
Japan - (Yokohama)
Yokohama manufacturers of
world renowned Yokohama
tyres was established in 1917.
Yokohama has acquired the
ISO 9001 accreditation
for its quality assurance
system as well as the ISO
14001 accreditation for its
environment management
systems. Yokohama tyres are
proven to meet very high
quality standards and therefore
has been selected by almost all
vehicle manufacturers in Japan
as an original tyre for brand
new vehicles.
Jiangxi Jiangling
Motors Import and
Export Co. Ltd.,
China
The JMC single cab is
manufactured by Jiangling
ISUZU Motors Co. Ltd.
and marketed by Jiangling
Motors Co. Ltd., ranked
25th amongst the top 500
industrial companies in
China. Jiangling Motors
Co. Ltd., is a Public Limited
Liability Company, having
Jiangling Holding Group
and Ford Motor Company of
USA as its major shareholders.
Jiangling ISUZU Motors Co.
Ltd., which is a subsidiary of
Jiangling Motors Co. Ltd.,
and the manufacturer of
quality JMC vehicles, is a joint
venture between Jiangling
Motors Co. Ltd. And ISUZU
Motors Ltd., of Japan,
catering to the top end of the
commercial vehicle segment in
the massive Chinese market.
The strongest product line of
JMC is its light truck range.
Zotye Automobile
Co. Ltd., China
The Nomad compact
SUV is a product of Zotye
Automobile Co. Ltd., of
Yongkang Industrial City,
south of Shanghai. Zotye
Automobile Co. Ltd., is a
Public Limited Liability
Company, listed on the
Hongkong Stock Exchange
and is the 5th largest
manufacturer of SUVs in
China. Zotye Automobile has
now successfully developed
the all new 4x4 auto
transmission model of the
NOMAD.
JK Tyre and
Industries Ltd., India
JK Tyre is manufactured by
JK Tyre and Industries Ltd
of India. JK has been one
of the largest manufacturers
of four wheeler tyres and
also the largest truck and
bus tyre producer. JK tyres
are currently used by the
automobile giants in India
such as TATA, Mahindra,
Maruti and Ashok Leyland as
the original fitting. JK offers
a wide range of tyres for a
large area of operation. Its
superior performing products
are well accepted and have
proved its performance in
a continuously growing
consumer base throughout
the world. Its global market
network is spread over 75
countries including USA,
Latin America, Africa, Middle
East, South East Asia and
Australia. JK Tyre has been
recognised as one of the global
market leaders for tyres.
Bharat Petroleum
Corporation Ltd.,
India
Bharat Petroleum Corporation
Ltd., (BPCL), is a Fortune
500 company and is amongst
the largest petroleum
companies in India and
can boast of success in
the petroleum industry in
activities including lubricants
and is also in the LPG
business. BPCL is a household
name in India, known not
only for their performance
in business but also because
of what they have given back
to society under their social
responsibility programmes.
Even though it is a state
owned Company, BPCL has
been growing at a phenomenal
rate. Their aggressive approach
has now taken them overseas
to the Middle East, Africa &
other parts of South East Asia,
making them a fast
growing international brand.
Chongqing Yuan
Group Imp. & Exp.
Co. Ltd.
DFSK Brand of Mini Vehicles
Chongqing Yuan group is a
subsidiary of the renowned
Dongfeng group of China.
Dongfeng group is the 2nd
largest vehicle manufacturer
in China and is considered
as one of the first companies
in China to commence mass
scale vehicle production
way back in 1930. Today
Dongfeng group has strategic
ventures with world renowned
automobile manufacturers
such as KIA of Korea, Honda,
Nissan of Japan and Peugeot
of France.
Today DFSK is one of China’s
most sought after mini trucks.
33
Calendar of Events 2010/11
June
•
April
9 June 2010: Perodua wins Bronze Award at
the Sri Lanka - Malaysia Business Awards 2010
Unimo Enterprises Ltd won the Bronze Award in the
Importers/Distributors/Retailers of Finished Products and
Semi Finished Products Category at the 6th Annual Sri
Lanka Malaysia Business Award Ceremony held at the
Cinnamon Grand Hotel Colombo.
•
17 - 19 April 2010: UML and UEL
participates at Kadella Motor Show, Jaffna
The Company displayed vehicles at prominent locations at
the exhibition which was conducted over a three day period
with a view to create awareness to the huge crowds that
visited the exhibition.
•
25 April 2010: Unimo Enterprises sponsor
Mahagastota Hill Climb
Yokohama and Perodua for the first time sponsored the
Mahagastota Hill climb. The latest addition to the Perodua
range, the Perodua Viva Elite was the course car for the
day, while Yokohama sponsored the SLGT class trophy and
branded all competing cars.
Collection of bronze medal at the Sri Lanka Malaysia Business Awards 2010
Exchange of agreements with Nation Trust Bank.
May
•
43 34
31 May 2010: Unimo signs MOU with NTB
UEL teamed up with NTB and signed an MOU to jointly
promote the Perodua Viva Elite by offering a special leasing
package to suit customer requirements.
•
17 June 2010: Mitsubishi Customer Night
This event saw over 150 key customers in attendance while
the company provided entertainment by well known Latin
American dancers and skits from well known actor Wilson
Gunaratne.
The Mitsubishi Spare Part division held its annual customer
night in Matara. This event was organised mainly to inform
customers of UML’s facilities offered at the newly relocated
showroom in Matara and also inform customers of its
subsidiary products and services.
•
11 August 2010: UML signs MOU with
Commercial Bank Leasing
UML teamed up with Commercial Bank Leasing and
signed a MOU to jointly promote the entire range of
Mitsubishi vehicles by offering a special leasing package to
suit customer requirements.
This tie-up was the first ever partners with Commercial
Bank.
September
Mitsubishi Customer Night
•
9 September 2010: Valvoline product display
at Bajaj service campaign in Mawanella
The Valvoline Division displayed its range of 2 wheeler
products at a special service campaign organized by Bajaj in
Mawanella. This service campaign saw over 300 motor cycle
users take part.
August
•
8 August 2010: UML & UEL Sponsor
Rotherham Katukurunda Races
While UML sponsored the two course cars Lancer and
L200 Sportero for this event Yokohama sponsored the
SLGT class trophy while also branding competitor cars.
October
•
21 - 25 October 2010: Colombo Motor Show
The company participated in the Colombo Motor Show
organized by Asia Exhibition held at BMICH. The
Mitsubishi, Fuso, Perodua, JMC and Zotye range of
vehicles were on display.
Conclusion of agreement between UML and Commercial Bank
Truck on display at the BMICH
35
Calendar of Events 2010/11 contd.
January
•
18 January 2011: The New Montero Sport
launched
UML launched the all new Diesel Montero Sport at Hotel
Galadari in front of large gathering from the media.
Our vechicles on display at BMICH
November
12 - 14 November 2010: CMTA Motor Show
•
63 36
The company participated in the Ceylon Motor Show
organized by the Ceylon Motor Traders Association and the
Classic Car Club held at BMICH. The Mitsubishi, Fuso,
Perodua, JMC and Zotye range of vehicles were on display.
Launch of the new Montero Sport
•
12 - 16 November 2010: UML conducts week
long service campaign for Mitsubishi Fuso
•
UML conducted four service campaigns consecutively
for Fuso trucks and buses in Colombo, Kurunegala,
Anuradapura and Kandy with expert inspection by Mr.
Akiyo Sasaki from Japan which attracted many Mitsubishi
truck and bus users.
24 January 2011: Unimo signs MOU with
HNB
UEL teamed up with HNB and signed an MOU to jointly
promote the Perodua Viva Elite by offering a special leasing
package to suit customer requirements.
•
24 January 2011: Launch of TVS JIVE
•
27 November 2010: First Anniversary of the
TVS King
TVS Lanka celebrated its first anniversary of the TVS King
three wheeler at Cinnamon Lakeside Hotel Colombo.
The company took this opportunity to recognize financial
institutions and other business partners.
TVS Lanka (Pvt) Ltd., launched the TVS JIVE 110cc. The
bike was launched at the TVS Annual dealer conference
with a gathering of TVS Dealers, Media and distinguished
invitees.
February
•
05 February 2011: UML renewed its
sponsorship with brand ambassador Dinesh
Deheregoda
United Motors Lanka PLC once again renewed its
sponsorship with brand ambassador Mr. Dinesh
Deheragoda who currently competes in a Mitsubishi
Lancer Evolution X RS. Dinesh who has been UML’s
brand ambassador for over eight years was the national rally
champion in 2004, 2005 & 2008.
UML brands sponsoring Dinesh are, Mitsubishi, Yokohama
Tyres and Valvoline Motor Oils.
Agreement finalised with Nations Leasing
•
13 February 2011: United Motors signs MOU
with NTB
UML teamed up with NTB and signed a MOU to jointly
promote the range of Mitsubishi vehicles by offering a
special leasing package to suit customer requirements.
Mr. Chanaka Yatawara CEO/ED of UML handing over the sponsorship
agreement to Mr. Dinesh Deheragoda
•
12 February 2011: UML and UEL sponsor
Pannala Races
UML and UEL for the first time sponsored the Pannala
races which saw over 100 competitors take part in front of a
large gathering in the newly revamped Pannala Race track.
37
Distributor Network
Ampara District
Ampara
Akkaraipattu
Dehiattakandiya
Hingurana
Inginiyagala
Gonagolla
Uhana
Padiyatalawa
Mahaoya
Kalmunai
Potuwil
Samanturai
Nawamedagama
Anuradhapura District
Anuradhapura
Kekirawa
Horowpothana
Eppawela
Nochchiyagama
Thambuttegama
Kebithigollewa
Galenbidunuwewa
Thirapane
Saliyawewa
Vilachchiya
Madawachchiya
Rambewa
Galnewa
Kalaoya
Thalawa
Mihintale
Palugaswewa
Padaviya
Padikaramaduwa
Pubbogama
Siripura
Maho
Hiripitiya
Rajanganaya
Bulnewa
Seppukulama
Kahatagasdigidiya
Badulla District
Badulla
Welimada
Bandarawela
Mahiyanganaya
Siripura
Keppitipola
Meegahakiula
Lunugala
Diyatalawa
Passara
Haldumulla
Sadunpura
Aralaganwila
Ettampitiya
Hindagoda
Badalkumbura
Batticaloa District
Batticaloa
Oddamavadi
Kalawanchikudi
Ariyampathi
83 38
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Colombo District
Colombo
Homagama
Avissawella
Malabe
Moratuwa
Padukka
Hanwella
Ratmalana
Piliyandala
Pannipitiya
Battaramulla
Borella
Athurugiriya
Maharagama
Nawala
Kaduwela
Thalangama North
Dehiwela
Meegoda
Boralesgamuwa
Polgasovita
Peliyagoda
Rajagiriya
Kottawa
Narahenpita
Kadawatha
Galle District
Aluthgama
Galle
Bentota
Batapola
Udugama
Ambalangoda
Uragasmanhandiya
Ahangama
Pitigala
Hikkaduwa
Yakkalamulla
Gonapinuwala
Elpitiya
Pitigala
Neluwa
Thalgaswila
Udugama
Imaduwa
Kottawagama
Induruwa
Gampaha District
Wattla
Gampaha
Mirigama
Pasyala
Kiridiwela
Delgoda
Kelaniya
Kandawatha
Yakkala
Weliweriya
Negombo
Ganemulla
Welisara
Nittambuwa
Ragama
Seeduwa
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Minuwangoda
Divulapitiya
Pugoda
Baduragoda
Kotugoda
Kotadeniyawa
Dankotuwa
Kadawatha
Weveldeniya
Kandana
Katana
Ja-Ela
Mudungoda
Katunayake
Dunagaha
Kalagedihena
Hambantota District
Hambantota
Tangalle
Middeniya
Beliatta
Weeraketiya
Angunukolapelessa
Tissamaharama
Ambalantota
Suriyawewa
Katharagama
Ranna
Katuwana
Ambilipitiya
Jaffna District
Jaffna
Mannippai
Rambewa
Point Pedro
Kalutara District
Kalutara
Agalawatte
Horana
Panadura
Beruwala
Matugama
Wadduwa
Bandaragama
Bulathsinghala
Ingiriya
Walallawita
Welagedera
Kandy District
Kandy
Mulgampola
Gampola
Pilimatalawa
Teldeniya
Katugastota
Kiribathkumbura
Kengalle
Werellagama
Pujapitiya
Kegalle District
Kegalle
Rambukkana
Warakapola
Yatiyantota
Mawanella
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Kurunegala District
Kurunegala
Wariyapola
Maho
Hettipola
Ambanpola
Polgahawela
Giriulla
Nikaweratiya
Narammala
Kuliyapitiya
Reedegama
Yakwila
Wellawa
Hiripitiya
Galagamuwa
Meegalwewa
Melsiripura
Bingiriya
Polpithigama
Matale District
Matale
Galawela
Dambulla
Wilgamuwa
Matara District
Matara
Weligama
Dickwella
Akuressa
Kamburupitiya
Hakmana
Morawaka
Monaragala District
Monaragala
Buttala
Bibile
Wellawaya
Nuwara Eliya
Nuwara Eliya
Dickoya
Hewaeliya
Hatton
Nawalapitiya
Talawakele
Nanuoya
Polonnaruwa District
Polonnaruwa
Bakamuna
Hingurakgoda
Medirigiriya
Welikanda
Jayanthipura
Aralaganwila
Menneriya
Sevanapitiya
Kaduruwela
Narampitiya
Puttlam District
Puttlam
Mahawewa
Kalpitiya
Marawila
Anamaduwa
Wennappuwa
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Chilaw
Madurankuliya
Dankotuwa
Udappuwa
Andigama
Madampe
Nattandiya
Nochchiyagama
Mawathagama
Mahawela
Ratnapura District
Ratnapura
Balangoda
Pelmadulla
Embilipitiya
Kalawana
Opanayake
Nivithigala
Pallebedda
Padalangala
Eheliyagoda
Godakawela
Kuruwita
Trincomalee District
Trincomalee
Kinniya
Muttur
Kanthale
Kinniya-2
Vavuniya District
Vavuniya
Kilinochchi District
Kilinochchi
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Mullaittivu
Vavuniya
Mannar
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Trincomalee
Anuradhapura
Puttalam
Batticoloa
Kurunegala
Matale
∆ Tractors
■
Tyres
Kandy
Gampaha
Valvoline
Kegalla
Nuwara Eliya
Ampara
Badulla
Colombo
Monaragala
Kalutara
Ratnapura
● Spare Parts
▲ Certified Service Points
○ TVS Sales Dealers
◄ Spare Parts Dealers
Hambantota
Galle
Matara
39
Management Review
1. Group Review
From a small private firm, which commenced business in 1945,
United Motors Lanka PLC has since grown into one of Sri
Lanka’s leading public quoted companies.
The positive economic scenario was the outcome of gradual
improvement in the global economy, a better macro economic
environment, improved investor confidence and a much more
peaceful domestic environment.
The defining change occurred when the Company was vested
with the Government in 1972, and subsequently became a
Government Owned Business Undertaking (GOBU). The year
1989 was a year of significance for United Motors. In 1989
the Company was appointed the sole distributor of brand new
Mitsubishi vehicles in Sri Lanka by the Mitsubishi Motors
Corporation of Japan and the Company was thereafter selected as
the first Government venture to be privatised and converted to a
Public Liability Company under the privatisation program of the
Government of that time. The Company continues as a public
quoted Company.
Inflation and the outlook for inflation ensured that the Central
Bank of Sri Lanka was able to further lower the rates of interest.
As a leading player in the automobile industry in Sri Lanka,
United Motors Lanka PLC (UML) continues to be the sole
distributor of Mitsubishi motor vehicles in Sri Lanka. In recent
years the Company has sought to diversify its business interests
while retaining and developing its core business of selling brand
new Mitsubishi vehicles whilst providing an efficient after
sales service to its customers. Currently the UML Group of
Companies includes four Subsidiaries and a Jointly Controlled
Entities TVS Lanka (Pvt) Ltd and its two Subsidiaries TVS Auto
Parts (Pvt) Ltd & TVS Automotives (Pvt) Ltd. During the year
under review, UML divested all of its holdings in its 100% owned
Subsidiary Orient Financial Services Corporation Ltd. OFSCL
was established as a leasing Company on the expectation that it
would help increase vehicle sales by extended leasing facilities
to potential buyers, this did not happen for various reasons,
additionlly the divesture was based on a strategic initiative to
consolidate the Group’s business within the purview of the motor
industry, thereby focusing the management resources on our
core business and whilst continuing to invest resources into areas
yielding future growth.
2010 was the full first year of economic activity subsequent to the
ending of the conflict in 2009. The 8 percent real growth in the
economy in 2010, therefore is considered an indicator of future
GDP expansion and the economy is expected in the medium
term to grow by between 8-9 per cent per annum for the next 4
years.
2. The economic environment
Sri Lanka’s economy expanded by 8 per cent in 2010,
demonstrating an impressive growth momentum especially in
light of the state of the economy in the challenging yet defining
04 40
year of 2009. Majority of the key sectors of the economy recorded
positive growth performance during the year.
Imports and Exports both recovered while increases in tourism
earnings and higher inward remittances off-set the widening trade
deficit. The balance of payments recorded a surplus in 2010.
Inflation remained low at single digit levels. This enabled the
Central Bank to ease its monetary policy stance significantly. Low
demand and improved domestic supply facilitated the reduction
of import duties on motor vehicles.
Given the gradual improvement in the world economy, the better
quality of our exports and improved productivity in the local
industries are expected to accelerate the growth of exports in the
medium term, thus validating the assumption of GDP growth in
the future.
The opportunities created by the elimination of terrorism in the
country have yet to be fully exploited. In addition, a scenario of
low rates of interest coupled with low inflation will enable the
economy to grow at a faster pace, we hope that this will continue.
All sectors grew by over 6.5 to 7 per cent with the industrial
sector growing by 8.4 percent. Transport sector expanded as
a result of the enhanced economic activity with the sector
contributing 11.5 percent to the total GDP, with an increase of
11.4 percent in GDP over the previous year.
Table 1 below indicates the rates of inflation over the past five
years.
A continued downward movement of the rates of interest was
evident during the year and this made a significant contribution
towards profitability, overhead management and also made the
finance of motor vehicles more affordable for consumers.
Table 1
Year
Ended
Rate of Inflation (%)
Year on Year
CCPI(N)
Annual Average
CCPI(N)
2006
13.5
10.0
2007
18.8
15.8
2008
14.4
22.6
2009
4.8
3.4
2010
6.9
5.9
The Sri Lankan rupee appreciated by 2.99 percent against the US
Dollar in 2010 whilst it weakened by 8.86 percent against the
Japanese Yen.
Table 2 below indicates the year-end values of the Sri Lankan
Rupee (SLR) against the US Dollar (USD) and the Japanese Yen
in the past 5 years.
Table 2
Year Ended
Exchange Rates SL Rs.
US D
Table 3
Year
Treasury Bill Yield
Rate 91 Days
A WPLR
2006
15.19
12.47
2007
17.98
21.30
2008
18.50
17.33
2009
10.91
07.73
2010
9.29
07.24
Source – Central Bank Annual Report - 2011
Improved performance of many listed companies and the
maintenance of a low interest rate regime contributed towards the
appreciation of share prices of quoted public companies.
Table 4 below indicates the year end indices over the last 5 years.
J¥
2006
107.71
0.9050
2007
108.72
0.9713
2008
113.14
1.2524
2009
114.38
1.2413
2010
110.95
1.3611
Rates of Interest.
Table 3 below shows the movement of rates of interest over the
last 05 years and is in respect of the Commercial Banks, Average
Weighted Price Leading Rate (AWPLR).
Import duties and levies on the importation of motor vehicles
were reduced significantly in mid 2010. This contributed to a
surge in the number of motor vehicles registered in 2010, as lower
selling prices coupled with lower rates of interst made vehicle
purchases via leasing more affordable.
Year
CSE
ASP1
CSE Motor
Sector
Market
Capitalization
Rs. Bn
2006
2,722
3,307
835
2007
2,541
2,736
821
2008
1,503
3,127
489
2009
3,386
7,214
1,092
2010
6,636
24,514
2,211
Source – Central Bank Annual Report - 2011
ASPI- (All Share Price Index 1985=100)
41
Management Review contd.
3. The automobile market
In 2010; 67,158 four wheel vehicles were registered, an increase
of 49,706 vehicles over the 17, 452 vehicles registered last year,
this is an increase of 285 percent.
An analysis of the registered brand new vehicles by vehicle type in
the last 3 years is given in Table 5 below.
Brand new vehicles registered amounted to 36,402 compared
to 11,112 vehicles registered last year, this is an increase of 228
percent.
Table 5
Description
No of Units
2008/2009
2009/2010
Cars
8,457
2,441
13,055
435
SUV’s
2,453
825
1,347
63
Dual Purpose
2,226
1,463
3,731
155
Trucks
5,937
5,589
15,465
177
Buses
1.038
794
2,804
253
Total
20,111
11,112
36,402
228
It is important to note that the composition of vehicles of Indian,
Chinese and Korean origin have increased significantly over the
last few years.
Motorcar and other vehicle imports increased from Rs. 18 billion
in 2009 to Rs. 61 billion in 2010 demonstrating an increase of
239 percent.
4.
Operations Review
4.1 United Motors Lanka PLC
(Parent Company)
The Company benefited significantly from the reduction of rates
of interest during the year, particularly as both stockholding and
other working capital costs contracted and financing of vehicle
purchases by our customers became more affordable. It is hoped
that this low interest regime will continue into the medium
term. Our business volumes also benefited immensely from
the reduction of duties and other fiscal levies imposed by the
government. This stimulated the automobile industry and from
June 2010 onwards an appreciable increase in motor vehicle sales
volumes was evident.
24 42
Increase
Over 2009/10 (%)
2010/2011
Banks and Finance Companies also aggressively pursued lending
for motor vehicle purchases spurred by the fall in monthly
instalments both due to the reduction in vehicle prices - an
outcome of reduced import duties and other fiscal levies - and
rates on interest which made the monthly repayments more
affordable.
The results of all subsidiaries in the group also benefited due to
prevalence of the same variables.
(a) Mitsubishi Vehicle Sales
Mitsubishi’s share of the total brand new vehicle registrations
in 2010/11 is shown in Table 6 below and indicates that UML’s
share of the total brand new vehicle registered in 2010/11 is 2
percent. Mitsubishi’s share in each of the segments is indicated
below. The drop from 6 to 2 percent is due to the sharp increase
in non Japanese vehicle imports such as imports from India,
China & Korea.
Table 6
Composition of Mitsubishi Share (%)
2009/10
2010/11
Cars
3
1
SUV
8
8
12
9
Dual Purpose
Trucks
6
2
Buses
0
0
Total
6
2
Recent imports of brand new Japanese vehicles (based on Japanese
export statistics)
Mitsubishi’s shares of these imports are given below in Table 7.
Table 7
Year
Brand new
Japanese units
Imported (Nos)
Mitsubishi Share
%
2005
2,752
30%
2006
3,587
27%
2007
6,631
30%
2008
7,533
25%
2009
613
36%
2010
2,406
24%
In 2011 Mitsubishi enjoyed the second highest market share of
the brand new Japanese vehicle imports.
The demand for motor vehicles increased during the period under
review. This upturn in demand is due largely to the improvement
in the economy. Reduction in rates of interest and import duties
and other fiscal levies was a prime reason for the increase in
demand and sales. However, the sale of commercial vehicles has
yet to reach the highs of former years. This could be an indication
that the economy is yet to achieve its full potential.
The increase in demand for vehicles is also due to the fact that
banks, financial institutions and leasing companies have of recent
instituted policy changes, loosening their very tight and restrictive
lending policies evident in past years. The contraction of the
number of down payments, the reduction in the size of the loan
instalment and the longer repayment periods offered, have all
assisted towards stimulating motor vehicle sales.
With the fall in selling prices, demand for lower end vehicles
witnessed a commendable appreciation with the segment
indicating positive growth as motor vehicles became more
affordable. Moreover, affordability was enhanced as a result of
declining effective leasing rates which contracted to 15-18 per
cent compared to the 20- 28 per cent of previous years.
In this scenario, a perceptible change in customer preferences was
also evident with consumers shifting their purchase decision to
cheaper Indian, Chinese & Malaysian lower-end vehicles.
No permits were issued in the year under review, however a new
permit scheme was introduced in late 2010 and sales of permit
vehicles will only be realised in the latter part of 2011. These sales
however are expected to be moderate.
Purchases of vehicles for stock follow strict guidelines. In assessing
demand, stock in hand and stock on order is considered and
followed meticulously with stock norms being adhered to.
Efficient working capital management has ensured that interest
has been reduced from Rs. 130 million in 2009/10 to Rs 4
million in 2010/11 a reduction of Rs. 126 million or 97 percent.
Capital Expenditure in the year under review amounted to
Rs. 26.5 million up from Rs. 25.1 million in the previous year.
(b) Mitsubishi Spares.
The Mitsubishi spare parts divisions business at UML and its
contribution to the Company exceeded budgetary expectations
for the year in terms of both top line and bottom line targets.
The parts business contributed Rs 913 million to the companies
net turnover (This includes sales of spares through all branches
and other company outlets including workshop spare sales) which
is an increase of Rs. 137 million over that of the previous year.
43
The Management’s close and pragmatic monitoring of the
performance of each sales unit and their active guidance and
support assisted towards the achievement of targets set for the
year under review.
This year too, we continued to focus on reward schemes as an
incentive for greater performance growth and it served towards
the overall sound performance of the Company. The best teams
were rewarded with overseas tours to Malaysia and India and cash
awards. However, as the sales function became more challenging
due to competitive forces, the Company resorted to the offer of
a variety of attractive reward schemes with a view to precipitate
peak performance.
Country wide branches were originally set up to sell spare parts;
however a new business model was developed after the setting
up of workshop units in Kandy, Anuradhapura and Matara
which complemented the sale of spare parts. Our branches in
Kurunegala and Ratnapura have been upgraded recently with
workshop facilities. This should contribute to enhanced spare part
sales in these regions.
Our proposed branch in Jaffna is to be opened shortly and will
also feature workshop facilities. We expect the fleet owners and
Government institutions in the northern region to use this facility
extensively.
Our principals (MMC & MFTBC) are constantly made aware
of the changing market conditions in Sri Lanka through the
provision of detailed market presentations and dialogue. The
constant appreciation of the Japanese Yen against the SLR resulted
in the continous upward movement of selling prices. MMC &
MFTBC are appreciative of the planned activities of the division.
(c) Repairs and Services
During the period under review a decision was made to open
work shops across the branch network. As a result workshop
facilities were commissioned at the Kurunegala and Ratnapura
branches. The Company invested Rs. 7.6 million in Capital
Machinery for the establishment of these workshops. The
equipment procured this year delivered value to the workshop
jobs through quality enhancements and will result in scenario of
enhanced efficiency, productivity and turnaround time.
44 44
“The technician of the month” competition continues to
motivate our technicians to achieve a high level of performance.
Performance tracking and a full feedback process serves to create
a culture of competitiveness and desire for achievement amongst
participants. Quality assurance enjoys a prominent place in our
internal processes and is a vital cause for reduced the incidences of
efficiency loss. Workshop overheads were kept within the budget
despite rising costs. Our waste water purifying and recycling
plants continued to operate within the standards set down by
the regulatory authorities such as the Central Environmental
Authority and Municipal Council of Kolonnawa.
Our expansion in to the provinces was on track during the year,
led by the proposed commissioning of facilities to be opened in
the North and Eastern provinces of Sri Lanka. Continuing our
value added services, we conducted service campaigns in several
cities around the country during the year under review.
Our training unit continued a “M-Step” program in line with
Mitsubishi Motors training program and all our technicians were
trained to achieve “M-Step” Level II. In addition to our in-house
training 10 technicians and service advisors were trained in Japan
at Mitsubishi Training Centre at Okazaki. The training division
continues to conduct training programs for fleet owners.
(d) Valvoline Lubricants and Eagle One Car Care
Products
Valvoline is a subsidiary of Ashland Inc. in USA. The brand is
established in 140 countries and has been in business for more
than 130 years. Valvoline operates 40 blending plants all over the
world. Valvoline has marketed in Sri Lanka since 2002.
The division recorded sales of Rs. 192 million up from Rs. 151
million in the previous year. An increase of Rs. 41 million or
27 percent, higher gross profit margins was also recorded. Net
contribution to company profit also increased by 63 percent over
that of the previous year.
The financial year 2010/2011 was a challenging year for the
Lubricant division due to the intense competitive rivalry
demonstrated by all players in the Lubricant market. In 2010
Valvoline Sri Lanka won an award for the highest volume of
motorcycle oil sold and also won an award for the best business
initiative in the South East Asian Region. Moreover, during the
financial year the Lubricant Industry in Sri Lanka saw more
competition due to the entry of new players. Despite these
drawbacks the division posted a contribution in excess of its
contribution to company profitability in the previous year.
The division also sells Eagle One Car Care Products. The division
expects to introduce engine coolant to its product offerings
during the later part of this year.
(e) Information and Technology
Our IT system continues to play a leading role in supporting the
company operations and its new initiatives. However its prime
role is that it overlooks and maintains all IT systems group wide.
Our ERP system which was commissioned last year continues to
play a leading role in the control and maintenance of company
wide commercial and other processes.
The new system is now fully operational, and the Post
Implementation Review system was presented to the Board of
Directors during the year under review.
4.2 Subsidiary Company Operations
(a) UNIMO Enterprises Ltd. (UEL)
The year under review was a milestone for the Company as it
recorded its highest in terms of Revenue and Net Profit. Revenue
recorded for the year was Rs. 2,756 million an increase of
Rs. 1,848 million or 204 percent. Profit after tax is Rs. 202
million or and increase of Rs. 279 million over that previous year.
Budget set for the year under review was also exceeded by the
current years performance.
The profits posted this year are very significant as in previous
years losses had been made by the company. The reduction in
interest rates was a significant factor contributor to this high level
of profitability. Interest expenses fell by 38 percent against that
of the previous year, where are interest cost amounted to a high
of Rs. 92 million. In addition to low interest efficient working
capital management contributed to the fall in interest expense.
The Company’s mainstream product and oldest agency, Perodua
with the Viva Elite recorded its highest sales performance and
the highest growth in the year under review. 1,716 vehicles were
sold verses budget of 961. Many factors contributed to this surge
in demand, reduction in import duties and low rates of interest
accessibility to bank finance by our customers were some of the
reasons. Continuous marketing activities and the strength of the
brand resulted that in Perodua increasing market share from 11
percent to 14 percent.
Supply constraints continue to hamper the ability of the Perodua
division to perform to its full potential, negotiations are under
way with Perodua to resolve this issue.
We intend launching the new model Perodua Myvi in the new
financial year. Baring any changes to a current import duty
structure or rates of interest our expectations are that the percent
momentum in demand will continue into the new financial year.
The Chinese division with comprise of the JMC and Zotye
brands recorded profits for the first time. We have supply issues
with the JMC product also. These issues are also being resolved
and we expect on time deliveries in the new financial year. During
the year under review three new trucks were launched and were
well accepted by the market. We also plan to launch the latest
edition of the JMC double cab later this year.
The Zotye division continues to import the Nomad SUV as
a Complete Built Unit (CBU) and also in its Semi Knocked
Down form (SKD). The assembly plant which was commercially
operational during the year under review, released its 1st batch
of locally assembled SUVs in June 2011. The assembly operation
experienced many delays due to procedural constraints and could
not meet market demand. The market for the assembled vehicle
shows tremendous potential but due to these delays we have not
been able to satisfy the market. We are confident that we will be
able to solve these issues in the new financial year.
The Tyre division of the Company which markets the Yokohama
and Apollo brands posted losses for the year under review. High
Debtor and Inventory holding costs were the main reason for
these losses. The operations of this division resulted in large
provisions being made for debt and obsolete inventory. Dealer
management is very critical in ensuring profitability of this
business. Curtailing credit results in stock pile ups and finally
obsolete inventory and is not a path to be taken. The business
model of the tyre operation is been reviewed and a new model is
being developed. We have also decided not to continue with the
45
Apollo brand and currently effort have been made to dispose of
existing stocks and collect outstanding debts. We intend to largely
complete closure of the Apollo operation by end of this year.
The Company is confident that the current momentum of
the motor industry and its direction will result in a better
performance being reported next year.
(b) Orient Motor Company Limited (OMCL)
The Company’s principle business during the year under review
is the long term hire of vehicles to the corporate and state sector.
The business model in place did not generate adequate profits
and with the escalation of vehicle maintenance and finance costs
in previous years, a decision was taken to phase out the vehicle
hiring business. As such, during the year under review most
vehicles of the fleet were sold. The few that were retained are for
internal hire.
As detailed previously in this review the scenario of low interest
rates, low Import duties and fiscal levies served to change the
business model of the long term hire business activity. As such the
company has again embarked on the business of continuing with
long term vehicle hire.
Despite the drop in hire income in 2010/11 the company recorded
a profit of Rs. 63 million through the sale of its vehicles held under
the vehicle hire scheme. The Company for the first time in recent
history paid dividend of Rs. 30 million. The Company obtained
the distribution rights for a light commercial vehicle of Chinese
origin from the Dongfeng Sokon Motor (Group) IMP & EXP
Co., Ltd. Initial indicators are that this vehicle is well accepted
by the local consumer and we expect the demand for this vehicle
to be high. Currently the Company’s main challenge is restricted
quantities supplied. This too has be corrected and a more even
supply flow is expected from July 2011 on wards.
(c) Orient Financial Services Corporation Limited.
UML’s 100% owned subsidiary Orient Financial Services
Corporation Limited was entirely sold to People’s Venture
Investment Company (Pvt) Ltd in February 2011. The corporate
guarantees given by UML on behalf of OFSCL will continue and
will be liquidated or replaced by the purchaser before May 2011
in respect of overdrafts and August 2011 in respect of short term
loans.
64 46
Details of the disposal are described in Note 30.1 to these
Consolidated Financial Statements.
4.3 Jointly Controlled Entities
(a) TVS Lanka (Pvt) Limited. (TVSL)
The year under review was one in which the hope generated
by the end of the conflict in the North and East could be
transformed into a more concerted exploration of the market in
areas hitherto left alone. It was also a year in which the global
economy, after the setbacks and shocks of the previous year,
showed signs of gradual recovery. These conditions enabled the
company to build on the positives achieved in the final quarter of
the previous year and record spectacular results.
The return to profitability achieved through restructuring the
business model, streamlining operations and various mechanisms
of controlling costs provided a solid platform in carrying out the
business during the year under review.
TVS King three wheeler introduced in the last financial year to
the market continued to demonstrate strong market performance.
The TVS Metro in the 100cc category and TVS Streak, a 90cc
motorcycle in the scooty segment continued to perform well. The
Company sold more than 25,000 motorcycles during this year, a
significant improvement over the 17,000 sold the previous year.
These market gains have enabled the Company consolidate its
position in the marketplace.
Plans are underway to continue to strengthen the TVS service
dealer network and at the end of the year, the network consisted
of 250 service dealers island wide. The central workshop in
Colombo 14 provided services to 8,000 customers during this
year. Most importantly, the Company evaluated and streamlined
its network of dealers, thus enabling a better and more efficient
service to the customer.
TVSL recorded a turnover of Rs. 5.2 billion in 2010/11,
approximately Rs. 3 billion more than what was achieved the
previous year. The net profit after tax stood at Rs. 396 million,
a vast improvement over the previous year’s figure of Rs. 19.6
million. What is most significant is that the Company achieved
200 percent more than the net profit budgeted.
These achievements are the results of measures implemented by
the Company to consolidate its business by rationalising cost and
implementing strategies to increase its sales and presence in the
market.
Stations were not available to us due to restrictions from the
Ceylon Petroleum Corporation.
(b) TVS Auto Parts (Pvt) Ltd (TVSAP)
The Tyre business achieved a revenue growth of 57 percent
compared to the last financial year. Its core brand, JK Tyres
currently occupies the 5th position among imported Truck and
Bus Tyre market segment. A noteworthy achievement in the
JK Tyre brand has been its ability to record the highest market
growth. In the imported segment for motor cycle tyres, TVS Tyres
currently occupies the number two position, with a market sales
growth of 166 per cent.
A subsidiary of TVS Lanka, the Company is involved in the
business of importing and distributing motor spares to the after
markets of Indian commercial vehicles. The company has once
again performed creditably achieving the highest ever profit and
turnover. In terms of profitability, it achieved a remarkable growth
of 123 percent and a turnover growth of 45 percent compared to
the previous year. The company has consistently maintained good
margins and made a Return on Capital of 128 percent.
During the year, the Company entered the lucrative after market
for Japanese & Indian passenger car and light commercial
vehicles. The Company also shifted its sole dependence on spare
parts distribution through the dealer network to direct sales to
fleet owners and corporate entities. During the year an investment
on a custom made management information system was made,
which will further increase the Company’s productivity and
profitability in the ensuing years.
Besides increased margins, a key success factor of the company
has been its controls of overhead expenditure. Despite an intense
price war and liberalized credit in the market the company has
managed to successfully achieve its objectives and secure a sizeable
share of the commercial vehicle spare parts after market.
(c) TVS Automotives (Pvt) Ltd (TVSAM)
A subsidiary of TVS Lanka (Pvt) Ltd., the Company is involved
in the business of importing and distributing Lubricants and
related products from Bharat Petroleum Corporation, India and
Tyres and Tubes marketed under renowned brand names JK Tyres
& TVS Tyres the company recorded a loss of Rs. 28 million verses
a loss of Rs. 22 million in the previous year. The increase in the
loss incurred is 27 percent.
The Lubricant business gained a 32 percent growth in Turnover
and occupied the 6th position among 12 other competitors. The
rapid growth in the last two years has enabled the company to
achieve a market share of 4 percent, in a market which was once
an oligopoly. Despite the sales growth, overall turnover is well
below the budget and is not sufficient to make profits for the
Company. The sales channel to Fuel Filling Stations and Service
Investment in inventory and trade debts is very high for both
divisions and this translates in to high finance costs which the
current business model of the Lubricants and Tyre divisions
cannot absorb.
Cost of borrowing was very high, resulting in an overall increase
of 70 percent. This prompted the share holders to inject
additional capital of Rs. 100 million during the year.
4.4 Future outlook
In the year under review a considerable improvement on the
economic front is visible. In this respect with all infrastructures
in the country in place, investors should be able to exploit the
tremendous opportunity available in Sri Lanka.
The change in economic dynamics will require that UML and
its Group of companies adopt sound strategies of diversification
and expansion to capitalise on the development plans of the
Government. These new strategies will focus on exploiting the
new opportunities that will arise with the upturn of business in
Sri Lanka. The ‘Wonder of Asia’ vision will indeed create many
opportunities for companies such as yours to add to its portfolio
of products and services.
Much more economic activity is possible with the opening up of
the North and East. However to date that high level is yet to be
seen. It will take more time as people rebuild their shattered lives.
We are cautiously optimistic that North and East will return to its
former self rather than later.
To support this vision, the Company intends to open a branch
in Jaffna in the fourth quarter of 2011. This branch will provide
47
UNIMO Enterprises Ltd a 100 percent owned Subsidiary has a
license to assemble a jeep of Chinese origin. We have assembled
and sold over 40 of these vehicles and at present demand for this
vehicle is very encouraging.
All operating divisions in the company showed significant
improvement with the Workshop, Spare Parts, New Vehicle Sales,
Truck and Bus and Valvoline divisions exceeding budgets. Our
Kandy Branch exceeded budgeted performance while Kurunegala
and Anuradhapura branches were just below the budget. All
branches recorded profit for the year under review. Above budget
performances were recorded by the Spare Parts Division.
UML will continue to invest in building the Mitsubishi brand in
Sri Lanka upgrading all facilities including Workshop facilities,
Spare parts availability, product availability, developing our
human skills and upgrading and maintaining our group wide
infrastructure system.
The sale of New Vehicle Sales excluding Truck & Bus improved
from a low 367 vehicles in the previous year to 679 vehicles
during the year under review. The improvement in sales value was
from Rs. 1,282 million to Rs. 2,834 million an improvement of
Rs. 1,552 million or 65 percent improvement is seen.
5. Financial Review
It is apparent there is a shift in demand from high value vehicles
to lower value ones. Sales have been improved due to the higher
volume of low end vehicles compared to high value vehicles.
a range of services which would include vehicle sales, work shop
facilities and spare part sales counters.
The period immediately post conflict was a period of great
uncertainty with both presidential and parliamentary elections
held during the first quarter of 2010. Since then economic and
government stability has proven to be a major cause for the return
to growth rates of 8 percent of GDP being recorded for 2010.
The Central Bank in its 2010 Annual Report draws our attention
to above average performance levels of all sectors and sub sectors
during the economic year 2010.
The world wide economic recovery and slow return to normalcy
of the western economies means that the recovery in Sri Lanka also
was going to be relatively slow. The depreciation of the Sri Lankan
Rupee against the Japanese Yen has continued from 2008 to date.
The consequence of this is that gains or price reductions made
due to the reduction in duties and fiscal levies has to a large extent
been offset by the depreciation of the Sri Lankan Rupee Vs the
Japanese Yen.
The increase in demand for our products and services and the
reduction in rates of interest together with improved working
capital management helped UML and its subsidiaries to show
improved results in year under review.
5.1 Turnover
Parent Company (UML)
UML recorded a turnover of Rs. 4, 907 Mn and this is an increase
of 57 percent over the previous year. Reasons for this increase
have been discussed previously in this Management review.
84 48
Subsidiary Companies and Jointly Controlled Entities
During the year under review all of the subsidiaries were able to
demonstrate sales performances that exceeded the performance
in the previous fiscal year. Subsidiary companies contributed
Rs.6,026 million in turnover, an increase of Rs. 3,203 million
over that of the previous year.
This growth of 113 percent was a remarkable achievement. All
Subsidiaries and Jointly Controlled Entities and their operating
divisions demonstrated improved revenues including operations
of the Tyre and Tractor division of UNIMO Enterprises Ltd and
the Tyre and Lubricants divisions of TVS Automotives (Pvt)
Ltd. Joint Ventures selling motor vehicles also benefited from the
lowering of duties, stable US $ and lower rates of interest.
During the year under review the Company sold its entire
holding in Orient Financial Services Corporation Ltd (OFSCL).
Analysis of turnover by major product category in comparison
with the previous year is shown in Table 8 on other page.
Table 8
Company
Activity
2010/11
Rs. Mn
Motor Vehicles
Group
2009/10
%
Rs. Mn
2010/11
%
2009/10
Rs. Mn
%
Rs. Mn
%
3,650.80
74.40
1,951.30
64.90
7,074.20
64.69
2,404.80
41.25
Motor Cycles
-
-
-
-
1,435.60
13.13
1,034.36
17.74
Tractor & Accessories
-
-
-
-
22.30
0.20
130.72
2.24
Spare Parts
385.60
7.86
341.90
11.37
643.00
5.88
521.44
8.94
Repairs & Services
709.20
14.45
585.40
19.47
700.50
6.41
570.20
9.78
Lubricants
157.30
3.21
123.40
4.10
354.80
3.24
274.00
4.70
-
-
-
-
406.40
3.72
402.59
6.91
Tyres
Financial Services
Others
Total
-
-
-
-
275.90
2.52
456.98
7.84
4.40
0.09
4.70
0.16
22.30
0.20
34.40
0.59
4,907.30
100.00
3,006.70
100.00
10,935.00
100.00
5,829.49
100.00
5.2 Profits Before Tax (PBT)
United Motors Lanka PLC’s profit before tax grew by more
than 286 percent to record a PBT of Rs. 735 million, this is the
highest ever profit before tax achieved by UML. Gross profits also
showed a healthy growth of almost 50 percent over that of the
previous year to record Rs. 1,242 million in Gross Profits.
Strict cost controls continue to be implemented through out
the company, Despite this a 38 percent increase in overheads
amounting to Rs. 179 million was evident during the year, this
was mainly due to increased expenses incurred in maintaining our
outstation branches and the upgrading of all facilities at branch
level.
Subsidiary Companies
Our continuous vigilance on overheads ensures that overhead
increases are kept minimal. The initiatives made in the previous
year to reduce the cost of fuel, utility costs and other maintenance
expenditure continued into the current year and these efficiency
measures have now been intrinsically woven into the operational
model of the Company. Investment in Capital assets followed
a very strict evaluation process and all of the capital investment
initiatives continue to be on a fit for purpose basis.
Other than TVS Automotives all subsidiaries recorded profit
before tax with only the tyre, tractor, and lubricants divisions of
UNIMO Enterprises & TVS Automotive recording losses. We
are currently working on strategies that include the review and
reconfiguration of loss making product lines including the re
engineering of current business models for product lines that have
the potential of delivering acceptable bottom line results in the
short to medium term.
Finance overheads showed significant reductions over that of
the previous year, this was due to both the strict working capital
management systems in place, the low interest rates and also due
to the large booking advances collected from customers. Finance
costs were reduced by Rs. 125 million.
5.3 Finance Cost
As previously mentioned, finance costs of UML decreased further
to Rs. 4.2 million in the year under review. This is an all time low.
In 2009/10 Rs. 131 million was spent on finance expenses. The
low finance cost recorded in 2010/11 is due to the low rates of
interest, efficient supply chain and working capital management.
49
Rates of interest which were around 20% to 29% in 2008/09
dropped significantly in 2009/10 to around 10% - 12%, rates
have further dropped to between 8% to 10% in 2010/11. Bank
borrowings which were Rs. 674 million at the beginning of the
financial year dropped to Rs. 32.6 million by the end of the
financial year.
Subsidiary Companies.
Our group finance cost was Rs. 187 Mn in the year under review
down from last years Rs. 629 Mn.
Subsidiary Companies contribute Rs. 183 Mn towards group
finance cost or 97 percent up from 79 percent in the previous
year. Decreases in overall borrowings was seen across TVS
The quarterly published results are shown in Table 9.
Table 9
Company
1st Qtr
Group
2nd Qtr
3rd Qtr
4th Qtr
Total
1st Qtr
2nd Qtr
3rd Qtr
Turnover (Rs. Mn)
666.7
1,062.4
1,384.0
1,794.2
4,907.3
1,522.6
2,086.3
3,425.0
GP (Rs. Mn)
192.4
240.2
328.0
481.4
1,242.0
390.5
486.2
773.5
951.7
2,601.9
28.9%
22.6%
23.7%
26.8%
25.3%
25.6%
23.3%
22.6%
24.4%
23.8%
GP to Turnover
4th Qtr
Total
3,901.1 10,935.0
PBT (Rs. Mn)
46.7
95.2
209.7
383.7
735.3
101.8
207.1
533.6
538.4
1,380.9
PAT (Rs. Mn)
25.7
61.0
129.5
302.6
518.8
61.4
133.4
364.4
348.6
907.8
3.85%
5.74%
9.36%
16.87%
10.57%
4.03%
6.39%
10.64%
8.94%
8.30%
PAT to Turnover
Lanka, UNIMO Enterprises, TVS Auto Parts and Orient Motor
Company Ltd. Borrowings in these companies reduced with the
improvement of operational and financial performance.
5.4 Taxation
In presenting the 2011 Budget in parliament on 22nd November
2010 the President His Excellency Mahinda Rajapakse
emphasised that the way forward in terms of the developmental
approach adopted by the Government in this context,
•
The need to fulfil the people’s aspirations of a decent living,
better life for their children and clean environment.
•
Empowerment of villages with better roads and highways,
access to electricity, water and telecommunication facilities
etc.
Table 10 below shows financial costs and borrowings.
Table 10
Company
Year
05 50
Borrowings
Finance cost
Rs. Mn
Rs. Mn
Group
Interest cover
Borrowings
Finance cost
Rs. Mn
Rs. Mn
Interest cover
2008/09
1,726.1
304.6
1.3
4,198.1
940.3
1
2009/10
674.4
130.9
2.4
2,014.6
633.5
1.2
2010/11
32.6
11.9
61.8
480. 8
214.8
7.3
•
•
Reduce poverty levels to 5%.
•
Sound revenue generation and management and major shift
in tax structure towards a value added economy.
Village/Rural based economic development to be completed
within the next six years.
With these objectives in mind the Government reduced Corporate
Tax rate to 28% from previous rate of 35%. Other significant
changes were the reduction of VAT from 20% to 12%, on luxury
goods and services, reductions were also made in NBT from
3% - 2%, allowances on personal tax were also increased thereby
reducing the tax burden on employees. Many other benefits were
afforded to the corporate sector on taxes.
5.5 Working Capital & Liquidity
Most subsidiaries which showed high gearing and used to borrow
continuously to finance working capital requirements have now
improved gearing and all borrowings are now within acceptable
norms of good financial management.
Capital infusion which was planned for was infused in to TVS
Automotives. Bank & other borrowings by group companies was
Rs. 480 million down from Rs. 2,303 million in the previous
year. Inter Company borrowings are at the lowest ever.
The profits made by both TVSL & UEL and the quicker
turnaround of inventories and debtors has contributed towards
the further improvement in group liquidity and profitability.
The disposal of UML’s investment in OFSCL has caused the
reduction non current assets category in the parent company.
Generally bank borrowings are used by UML to finance inventory,
debtors, inter Company lendings and other current assets.
Current assets of the parent company also showed an increase
over that of the previous year by Rs. 183 million while inter
company borrowings were reduced by Rs. 263 million cash in
hand showed an increase of Rs. 274 million.
Trade receivables remained largely static over the previous year,
even though sales volumes were much larger in quantum this year.
Inventories increased by 22% on account of the high demand for
vehicles and this pushed up inventory levels.
The change in the value of assets over that of the previous year is
indicated in Table 12 on page 52.
Towards the end of the financial year United Motors experienced a
high level of cash in-flows and this resulted in high liquidity within
the Company with minimal overdraft and import loans. In fact
currently our investment in call deposits etc. amounts to Rs. 350
million.
There is an increase in liquid assets over that of the previous year
as shown in Table 11 below.
Table 11
5.6 Shareholders’ Funds
While there was no increase in the stated capital of the company,
during the year under review a sub division of the existing
33,633,542 shares on the basis of two shares for every one share
held was approved on 30 November 2010 at an Extra Ordinary
General Meeting. As such the total number of ordinary shares at
present is 67,267,084.
Shareholder funds increased by 14% over that of the previous
year. There were no revaluations of any land owned by the
company.
Company
Group
31Mar-11
31Mar-10
31Mar-11
31Mar-10
Current Ratio
4.43:1
2.03:1
1.92:1
1.44:1
Quick Asset Ratio
2.21:1
1.11:1
1.03:1
0.96:1
0.9%
21.60%
12%
72.7%
Debt/Equity %
51
Table 12
Company
Intangible Assets
31-Mar-11
31-Mar-10
Incr/(Decr)
31-Mar-11
31-Mar-10
Incr/(Decr)
Rs. Mn
Rs. Mn
%
Rs. Mn
Rs. Mn
%
5.5
6.9
(20.3)
21.0
24.4
(13.9)
Property, Plant & Equipment
1,836.5
1,832.7
0.2
2,049.5
1,991.9
2.9
Net Lease Rentals Receivable
-
-
-
-
253.7
(100.0)
Investments
346.9
513.8
(32.5)
-
-
-
Defined Benefit Obligation Plan Asset
74.8
74.2
0.8
74.8
74.2
0.8
Deferred Tax Asset
20.2
5.5
267.2
25.0
122.9
(79.7)
Inventories
982.0
807.1
21.7
1,866.6
1,249.3
49.4
Trade & Other Receivables
563.6
567.1
(0.6)
1,642.1
2,425.9
(32.3)
Amounts due from Related
Parties
84.3
347.0
(75.7)
18.6
57.1
(67.4)
330.0
55.7
492.5
513.8
87.8
485.2
4,243.8
4,210.1
0.8
6,211.4
6,287.2
(1.2)
Cash and Bank Balances
Total Assets
5.7 Financial Reporting
The Financial Statements contained in this report
are prepared keeping in line with the Sri Lanka
Accounting Standards, Compnies Act No. 7 of
2007 and the requirements of the Colombo Stock
Exchange. Over the years, United Motors Lanka
PLC has been committed to maintaining the best
practices in financial and corporate reporting. In the
past several years the Company has won awards at the
annual competition for the best Corporate Report
and Accounts conducted by the Institute of Chartered
accountants of Sri Lanka in the automobile Sector.
25 52
Group
Enterprise Risk Management
At United Motors our approach to Risk Management is one
that embodies a cohesive and all encompassing consideration
of risk across the organisation and its environments, fusing the
risk management process through the business planning and
operational models .
UML has adopted enterprise risk management through the
development of a risk management framework that is effective in
providing assurance over strategy delivery, implementation of plans
and change management initiatives. This approach allows us to pull
together all of the elements required to integrate the consideration
and management of risk within the everyday management of
the business. Whilst the Board reviews the approach taken for
risk management and business continuity, accountability for risk
management rests with the Chief Executive Officer.
Through the adoption of Enterprise Risk Management (ERM)
the Company embraces the methods and processes involved in
planning, organising, leading, monitoring and controlling its
activities in order to mitigate the ill effects of risk on its capital
and earnings.
We consider ERM to be fundamental to the security of the
enterprise. Its role in safeguarding the value propositions of
Stakeholders- namely, the Shareholders, Employees, Customers,
regulators and the Community - establishes the importance of
ERM to the overall viability and sustainability of the business. We
also appreciate the need for Stakeholders to understand the broad
spectrum of risks facing the Company and to see them being
appropriately managed.
We define Business Risk as ‘any event, situation or circumstance
which, if it occurred would adversely impact the achievement of
objectives, including the failure to capitalise on opportunities’.
Risk management is a process which seeks to reduce the chance
and severity of losses by proactive identification and application
of mitigating controls to prevent and manage the adverse impact
on the business and its assets.
United Motors Lanka PLC , its subsidiaries and Jointly
Controlled Entities recognise that balancing reward and risk is
important and that without risk, reward is elusive. The early
identification of potential risks and our ability to formulate
strategies and take corrective action to prevent or reduce the
impact of these risks, has had a significant impact on our
commercial operations.
Some of the measures taken by us to identify and mitigate such
risks are discussed below.
Operational risk
Operational risk has been described as the risk of loss resulting
from inadequate or failed internal processes, people and systems
or from external events. It is a risk often arising from the
breakdown of internal controls, corporate governance and key
processes such as IT systems, and Inventory Control Systems.
Fraud, human error and the misuse of Company resources could
result from the breakdown of such controls and processes.
UML adopts a series of internal controls that are in place to
ensure the minimisation of internal risk and subsequent outcomes
of same.
The Company’s internal audit division plays a vital role in
ensuring compliance with the Company’s policies and procedures.
All breakdowns in internal controls are monitored by means of
an exception report where immediate action is taken to mitigate
such risks and to ensure that they do not recur. All such events are
reported to our audit committee for review and rectification.
The internal audit division continuously monitors internal
controls and ensures that such controls are efficient and effective
and that they comprehensively cover all of the Company’s
operations. Accurate financial reporting and compliance with laws
and regulations are also monitored and strictly adhered to by the
internal audit division.
The Audit Committee meets once a quarter or whenever
deemed necessary and at such meetings, internal audit reports
highlighting the effectiveness or weaknesses of the designed
internal controls. These reports are mainly of an operational
nature where weaknesses are identified along with recommended
corrective action. Prompt action is taken to rectify deficiencies
and the continuous improvement of our internal control systems,
ensure the mitigation of this risk.
In the financial year 2010/2011 over 10 such reports were
considered by the audit committee, in addition to the reports on
53
Enterprise Risk Management contd.
statutory compliance and loss reports which are reported monthly
to the Board of Directors.
As in previous years all tangible assets have been insured against
identified risks. All insurance policies of the Group companies
are reviewed annually and adjustments made where required. The
Company has adopted several measures to ensure that the risk of
loss due to pilferage, bad store-keeping practices and inventory
obsolescence is minimised. Our inventories are subject to a system
of perpetual stock verification and as indicated above, are insured
against all known losses.
Information risk
Information security is an integral part of the normal
responsibility of management and all employees. The essence
of information security are covered by the Code of Conduct of
employees. Information risk includes communication, storage
(both physical and electronic), records management principles,
and destruction of documents, procedures adopted for staff
joining and leaving the organisation.
Information Technology risk
UML endeavours to ensure that access to the IT systems, both
internal and external, is protected in a consistent manner and IT
operations, both business and technical are effectively managed.
The IT security policy comprehensively addresses risks associated
with the Company’s information systems. The effectiveness of
information security procedures, access controls and safeguards
adopted by the Company against threats from the external
environment and corruption or loss of information are part
of the audit programme of the Company’s external auditors.
Recommendations made by the auditors are discussed by the
audit committee and progress on corrective action is regularly
reviewed. Adequate power and data backup systems ensure
uninterrupted data transfer between the head office and all
branches and workshops.
The implementation of the ERP system which experienced some
delay mainly due to new developments in the business, is running
live.
A post implementation review of the system was conducted and
reported to the Board of Directors during the financial year.
45 54
Governance risk
Monthly reporting to the Board of Directors on Statutory
Compliance and the level of compliance ensures that the
governance or reputation risk is minimised. This proactive
management of risk arising from non-compliance of regulatory
requirements ensures that all our statutory dues are current.
We also take all possible steps to safeguard and enhance
our reputation as a leading business organisation which is
professionally administered based on an ethical corporate culture
that is transparent and socially responsible.
Business Environment risk
2010/2011 was a year in which UML witnessed a dramatic
change in the business environment due to changes on economic
and political fronts. With greater political stability evident
through a stable Government, Sri Lanka’s economy started to
demonstrate commendable growth. During the financial period
under review, the reconsideration of import duties and taxation
and the contraction of interest rates fostered an unprecedented
demand for the motor vehicle industry. This scenario of sound
economic and commercial viability have had a significant impact
on cash flows, profitability and lowered risk of bad debts and
ageing inventories.
The Company is however cognisant of the possibility of changing
demand patterns due to cost implications from a reversal of
import duty concessions and taxation revisions and rising fuel
prices and adopts prudent approaches to product and growth
planning. United Motors Lanka PLC recognises this risk as being
important and pays special attention to changes in competitor
activity, changes in our own and our competitors’ products and
services and also our relationships with our principals.
Major shifts in our customers’ purchasing patterns will require
the Company to respond swiftly in order to minimise the risk
from cheaper and more efficient products and services offered
by the competition. This is reviewed at the monthly meetings of
our General Managers. This is also reviewed at meetings of the
purchasing committee chaired by our Chief Executive Officer
which meets twice a month. At this forum, orders and patterns of
purchases are confirmed. Our stock holding policy based on risk/
return trade off seeks to minimise losses from both over stocking
and stock outs. Daily monitoring of interest and exchange rates
has ensured that we have maintained our gross profit margins.
limits based on the Company’s credit policy helps to minimise the
risk of default.
Financial risk
All trade debts are monitored at bi-monthly meetings with
operating divisions. At these meetings corrective action to be
taken on overdue debts are discussed and thereafter regularly
followed up. For the purpose of financial prudence the Company
has adopted a stringent provisioning policy for doubtful debts and
aging inventory.
Financial risks include those attributable to the movement in
interest and exchange rates and other risks such as investment
risks, liquidity and asset management risks.
The movement of interest and exchange rates of currencies
such as the Japanese Yen and the US Dollar are monitored on a
daily basis and the movement of these rates are tracked. Where
required, corrective action is taken to ensure that the Company
benefits from the changing value of exchange. However in view
of the volatility of exchange rates, foreign currency exposure has
been kept to a minimum.
Board approval is obtained for investments after a detailed process
of investment appraisal. Long term investments are matched with
long term borrowings which are secured at the most favourable
terms. Frequent reviews are made of prime lending rates and the
most competitive bank selected. The Company’s good reputation,
strong financial standing and excellent relationships that we have
with our bankers ensure that we borrow at the most competitive
rates.
In order to minimise the adverse impact of fluctuating interest
rates, our cash balances, fund requirements and due dates of
import loans are planned on a weekly basis, and monitored daily.
This has ensured that the most expensive loans are repaid first
and that the cost of finance is well managed. All our overnight
balances are automatically transferred to an interest earning call
deposit account.
The monthly report to the Board of Directors includes an age
analysis of debtors, inventory and the liquidity status of the
Company.
Market / Portfolio risk
The vehicles and vehicle parts/service segments form the Group’s
core business and accounts for 75% of its turnover. Although
the Company has taken steps to diversify its product portfolio
in recent years it is still heavily dependant on the automobile
industry. The Groups’ future strategy will be directed towards
reducing the imbalance in the product portfolio. The Group
is developing its competencies in the areas of marketing and
distribution, real estate etc.
United Motors will continue to improve its risk mitigation
practices to ensure that a controlled framework exists across the
Group.
Average Movement of JPY
1.23
1.05
0.89
2010/11
0.94
2009/10
0.60
2008/09
The Company has taken several measures to mitigate losses due
to the failure of customer to meet his or her debts obligation.
Prior to approving credit, a customer is subjected to a process of
evaluation to establish credit worthiness. Careful setting of credit
0.90
2007/08
Credit risks
1.20
2006/07
The Company’s borrowings are always maintained within the
borrowing powers granted by our Articles of Association and this
is reported to the Board of Directors, monthly.
1.36
1.50
In order to mitigate risks from over trading, monthly cash
requirements are prepared to plan for the availability of funds to
meet our trading requirements.
55
Future Aware
At United Motors, our sustainability efforts are focused primarily
on education. We recognise the value of education in fostering
an enhanced life situation for not only those who directly benefit
from our efforts but also their families. By empowering today’s
youth through assistance towards their education, we believe
that we are creating a foundation for sustainable livelihood
development.
In 2010/2011, we continued to leverage our mainstay
sustainability initiative “Adhyapana Athwela”; an educational
support scheme for the children of our staff. The scheme directly
supports those who have excelled at the Grade 5 scholarship
(Tikiri), GCE Ordinary Level(Nawum) and GCE Advanced Level
(Yovun) examinations. Outstanding performance is recognised
and assistance is extended with the intention to create a conducive
environment where monetary barriers to education are resolved.
High achievers who qualify for the scheme based on their ability
to meet the specific selection criteria receive certificates of
recognition and monetary rewards amounting to Rs. 10,000, Rs.
15,000 and Rs. 20,000 respectively. The programme also serves
to instill a sense of value to educational accomplishments, thereby
perceptually driving both the children and their parents towards
achievement.
The awards offered under the “Adhyapana Athwela” programme
during the year were as follows:
•
“UML Tikiri” was awarded to 01 outstanding student at the
Grade 5 Scholarship examinations in August 2010.
•
“ UML Nawum” was awarded to 05 students who excelled
at the GCE Ordinary Level examination in December
2009.
•
“ UML Yovun” was awarded to 11 excellent performers at the
GCE Advanced Level examination in August 2009 and 2010.
In extending the theme of education and educational support,
UML in 2010/2011 reached out and continued to assist Wijeyaba
Vidyalaya, a school at Colombo 14, located in close proximity
to our workshop premises. This project has been an ongoing
initiative aimed towards the creation of greater interaction and
engagement with the communities within which we operate.
During the year, the focus of the project was to provide better
furniture. In adopting a sustainable practice, the teams involved
were determined to repair and reuse instead of resorting to the
unsustainable practice of replacing the items. Thus we assisted the
school to refurbish the existing furniture, thereby optimisng the
use of their existing resources.
In taking the educational focus further, in 2010/2011,
we continued to provide industrial placement
opportunities to students from a range of Technical
Colleges. Apprentices from the Certificate program at
the NAITA, AETI, Diploma students of the Institute of
Engineering Technology and undergraduates from the
University of Moratuwa and Peradeniya were actively
engaged in, in-plant training at our workshop
In taking the educational focus further, in 2010/2011, we
continued to provide industrial placement opportunities to
students from a range of Technical Colleges. Apprentices
from the Certificate program at the National Apprentice and
Industrial Training Authority (NAITA), Automobile Engineering
Training Institute (AETI), Diploma students of the Institute
of Engineering Technology and undergraduates from the
University of Moratuwa and University of Peradeniya were
actively engaged in on-the-job and in-plant training at our
Wijayaba Vidhyalaya, a school assisted by UML
workshop at Orugodawatte and outstation branches. In total 75
students completed the training and provided the opportunity
to garner real-life experience in an industrial context whilst some
of them were given employment within the Company. We are
pleased to be a catalyst in the lives of these students, many of
who achieve great success in their future careers through the
technical capabilities developed at UML which enables to market
themselves better.
Recipients of awards for educational achivements
59
Our People
Our overriding belief that upgrading human resources is a
prerequisite in providing high quality service to customers, and
in making fundamental changes as to how we do business has
created a culture of continuous human resource development. As
an equal opportunity employer, United Motors currently employs
387 permanent employees, 162 trainees and 50 other trainees and
employees on fixed term contracts.
Change management through HR
development
Changes in the market context, the corporate environment and
customer expectations have necessitated the incorporation of new
and more innovative management approaches. There is a growing
need for enhanced skill levels with each employee optimising his
productive capacity. United Motors recognises that a constantly
changing external environment together with a shifting market
situation requires us to be equipped to tackle more potent
challenges and that the future growth of the Company is dependent
on its ability to effectively identify and groom future leaders.
Training and skills development is viewed with greater focus
than in previous financial years. During the year under review, in
an effort to successfully meet these future needs; the Company
conducted an organisation-wide talent assessment initiative
aimed at matching individual capabilities to expected business
requirements in the long term. Conducting a rigorous training
needs audit during the year and taking into consideration training
gaps we encountered in previous years, an intensive training plan
was developed and implemented over the period under review.
The competency matrix comprised of a cohesive HR needs
identification process whereby required competencies for each
job role were identified and matched against existing levels of
competency. Through this intensive process HR competency gaps
were identified.
The implementation of the systematic training and development
programme during the year effectively focused on supervision
development, sales competency development, technical
competency development and customer care. An outbound
training session was included in the programme during the year
with the intention of motivating, changing existing attitudes and
boosting morale and this component of the overall programme
contributed towards inter-departmental cohesion and teambuilding. The overall training and development programme
delivered accelerated returns in 2010/2011 with the Company’s
culture and work ethic evolving to encapsulate greater dynamism.
Training and skills development is viewed with
greater focus than in previous financial years. During
the year under review, in an effort to successfully
meet these future needs; the Company conducted
an organisation-wide talent assessment initiative
aimed at matching individual capabilities to expected
business requirements in the long term.
In addition to the elements in the overall training and
development programme, the Company engaged in the
development of workshop staff through the internal training
division. Technical training was conducted to educate Mechanics
under the proprietary “M Step” programme developed by the
Company’s principals Mitsubishi Motors Corporation, Japan with
workers engaging in the M Step 1, 2 and 3 programmes.
Our employees were also exposed to international training at a
range of technical training centres around the world with a total
of approximately 9 employees being trained at Mitsubishi Motor
Corporation, Japan, Hindustan Motor Company India, and
Mitsubishi Fuso Truck and Bus Corporation Training Centre in
Dubai.
The Company continued to provide technical training and on the
job training for approximately 162 apprentices from Technical
Training Institutes and Universities across Sri Lanka. We believe
that through this mutually beneficial programme, we have played
a key role in enhancing the technical capabilities and resources
available to the Sri Lankan and international automobile industry.
The induction process was formalised during the year through
the development of a comprehensive employee handbook. The
document discusses in detail workplace practices, the code of ethics,
and policies and practices that employees are expected to practice
and adhere to. As part of the familiarising program all new recruits
are trained on our ERP system and IT related basics.
Performance oriented culture
In 2010/2011 the Company continued to practice performance
appraisal as an organisation-wide management approach in
recognition of the fact that performance remains key to meeting
employee and company goals. Performance appraisal has proven
to be a critical element of not only the HR function, but in
determining a range of critical variables impinging on the
operations of the Company, reward structures, promotions and
mapping out of career paths, training, business improvement and
competitiveness.
The best performance reviews let managers and employees
communicate - share ideas, opinions, and information. The
performance appraisal system adopted by the Company has
created a very positive mindset among employees, persuading
them to work towards set objectives with evaluation of
performance carried out accordingly.
Employee relations and welfare
Employee relations and welfare activities play an important role in
maintaining industrial harmony. Towards this end, the Company
undertook numerous initiatives to further improve employee
relations during the year.
61
Our People contd.
Service Analysis
No. of Employees
Less Than 5 Yrs - 236
05 - 10 Yrs
- 31
10 - 15 Yrs
- 11
15 - 20 Yrs
- 16
Over 20 Yrs
- 143
Less Than 30 Yrs
30 - 40 Yrs
40 - 50 Yrs
50 - 60 Yrs
Over 60 Yrs
In recognition of the Company’s duty to protect and provide
for its employees, the company enhanced the existing insurance
policy by introducing a critical illness cover providing financial
security to employees when they require assistance with critical
medical care.
2626 62
No. of Employees
No. of Employees
A long service awards ceremony held during the year
commemorated and appreciated the services of 12 employees who
completed twenty-five years of service, with the bestowing of a
gold coin.
Long service awards to employees
Employee Category Analysis
Age Analysis
- 150
- 81
- 74
- 129
-3
Executives
- 174
Supervisory
-6
Clerical
- 77
Labour & Manipulative - 180
To enhance team spirit between employees sports and recreational
activities were undertaken during the year including a six-aSide Cricket Tournament held in December 2010. The annual
staff trip was held with great success with the participation of
over 260 employees. The refurbishment of lunchrooms at the
Orugodawatte main workshop and Head Office premises during
the financial year has further benefited the staff.
The outbound training - The spirit shown
The Welfare societies showed commitment towards the
organisation of key activities to integrate their members and to
enhance community relations.
In collaboration with the Buddhist society the Company
conducted a Bana ceremony in May 2010 to mark the Vesak
festival. Further a Pirith ceremony and a blood donation
campaign were conducted in September and December
respectively.
Succession planning
Succession planning has taken precedence at United Motors,
in recognition of the need to foster future leaders and create an
inspirational work place with the objective of delivering future
business excellence. Through the establishment of cross functional
teams dedicated to the achievement of specific business objectives,
participants are driven to optimize capacities and use innovation
in overcoming challenges. Our challenge is to grow our people
and impart knowledge and skills on diverse areas of the business.
Cross – functional aptitude is key in understanding the big
picture, in visualizing the future direction of the business.
63
Annual Report of the Board
of Directors
The details set out herein provide the information required by
the Companies Act No. 7 of 2007, Listing Rules of the Colombo
Stock Exchange and are guided by the recommended best
accounting practices.
General
Principal Activities
There were no significant changes in the nature of principal
activities of the Company and the Group during the financial
year under review execept as stated below.
Disposal of Subsidiary
The Board of Directors of United Motors Lanka PLC have
pleasure in presenting to its members their Report together with
the Audited Financial Statements for the year ended 31 March
2011. United Motors Lanka PLC, is a Public Limited Liability
Company incorporated in Sri Lanka on 09 May 1989 under the
Companies Act No. 17 of 1982, quoted in the Colombo Stock
Exchange in 1989. The Company was re-registered as per the
Companies Act No. 7 of 2007 on 30 August 2007.
On 21 February 2011 United Motors Lanka PLC disposed of
its entire shareholding in Orient Financial Services Corporation
Limited, a fully owned subsidiary of UML PLC to People’s
Venture Investment (Pvt) Limited for a consideration of
Rs.230,000,000/=.
United Motors Lanka PLC continued as the distributor for brand new Mitsubishi Vehicles,
genuine Mitsubishi spares and after sales services to Mitsubishi vehicle owners at its workshops
at Orugodawatte and Hyde Park Corner, Colombo 2 and at its branches in
Kandy, Kurunegala, Anuradhapura and Matara.
The Company continued to market Valvoline Lubricants and Eagle One Car Care Products
from USA
Subsidiary Companies
Unimo Enterprises Limited
UML Agencies & Distributors (Pvt)
Limited
Orient Motor Company Limited
UML Property Developments
Limited
Orient Financial Services
Corporation Limited
The Company is engaged in the import and distribution of Perodua vehicles from Malaysia,
Zotye Sports Utility and Commercial Vehicles, JMC Cabs from China and Yokohama Tyres
from Japan,
The Company is also engaged in the assembly and marketing of Zotye Extreme Sports Utility
Vehicles from China.
The objective of this Company is the distribution of motor vehicle accessories, machinery
and energy saving equipment, electronic products, etc. During the period under review, this
Company did not have any commercial transactions.
This Company is engaged in the hiring of motor vehicles and distribution of DFSK Trucks
from China.
This company has constructed a warehouse and has leased it to United Motors Lanka PLC.
This Company is engaged in the business of finance leasing, hire purchase and debt factoring.
United Motors Lanka PLC divested the ownership of Orient Financial Services Corporation
Limited of 21 February 2011.
46 64
Jointly Controlled Entities
TVS Lanka (Pvt) Limited
TVS Auto Parts (Pvt) Limited
TVS Automotives (Pvt) Limited
This Company is a joint venture between United Motors Lanka PLC and TVS Group in India
and is engaged in the import and distribution of TVS Motor Cycles, TVS Three Wheelers,
Spare Parts and after sales services to its customers.
This is a subsidiary of TVS Lanka (Pvt) Ltd., with a holding interest of 65% of the stated
capital whilst the balance 35% is held externally. This Company is engaged in the distribution
of motor vehicle parts.
TVS Automotives (Pvt) Ltd. is a fully owned subsidiary of TVS Lanka (Pvt) Ltd. The
company is engaged in the sales and marketing of MAK Lubricants, JK & TVS Tyres and
Rubber King Tubes.
Vision, Mission and Corporate Conduct
The Company’s Vision and Mission are given on page 3 of the
Annual Report. The business activities of the Company are
conducted maintaining the highest level of ethical standards at all
times.
Board of Directors
The Board of Directors of the Company consists of eight
Directors with wide knowledge and experience. Names of the
Directors who held office throughout the financial year are given
below:
Name of the director
(Chairman)
Mr. R. M. S. Fernando Mr. C. Yatawara
(CEO)
Mr. A.W.Atukorala
Mr. A.C. M. Lafir
Mr. K. Yokoi
Mr. R. H. Yaseen
Mr. S. Nagendra
IND-Independent Director
NED-Non Executive Director
ED-Executive Director
Status
IND/NED
ED
IND/NED
IND/NED
ED
IND/NED
ED
IND/NED
Resignations and new appointments
There were no resignations or new appointments to the Board
during the year ended 31 March 2011.
Recommended, re-appointment and
re-election of Directors
In terms of the Companies Act No. 7 of 2007 and the Articles
of Association, details of Directors who retire and seek reappointment and re-election at the Annual General Meeting have
been disclosed in the Notice of Meeting on page 140 and the
Proxy Form.
Directors’ Responsibility for Financial
Reporting
The Directors are of the view that the Income Statement, Balance
Sheet, Statement of Changes in Equity, Cash Flow Statement,
Significant Accounting Policies and Notes thereto appearing
on pages 90 to 129 have been prepared in conformity with
the Sri Lanka Accounting Standards and the requirements of
the Companies Act No. 7 of 2007 and the Listing Rules of the
Colombo Stock Exchange.
Interests Register
The Company, in compliance with the Companies Act No.7 of
2007, maintains an Interest Register.
65
Annual Report of the Board of Directors contd.
Directors Interest in Contracts with the
Company
Directors’ interests in contracts or proposed contracts with the
Company, both direct and indirect are disclosed in the Related
Party Transactions under Note 31 to the Financial Statements.
These interests have been declared at the Directors’ Meetings.
Directors have no direct or indirect interest in any other contract
or proposed contract with the Company other than those
disclosed. As a practice, Directors have refrained from voting on
matters in which they were materially interested.
Directors’ Interest in Shares of the Company
Disclosure in respect of movement of shares held by the Directors
of the Company during the year and their shareholding as at
31 March 2011 have been disclosed under section 9 of Share
Information on page 130.
Directors’ Remuneration
Members
Mr. R.M.S. Fernando (Chairman)
Mr. T.M.R.B.Tennekoon
Mr. A.W.Atukorala
The Report of the Remuneration Committee is given on page 79
which forms part of the Annual Report.
Members
Mr. T.M.R.B.Tennekoon(Chairman)
Mr.C.Yatawara (CEO/ED)
Mr. A.W.Atukorala
Mr. S. Nagendra
Details of the remuneration and fees paid to the Directors are set
out under Note 7 to the Financial Statements. These payments
have been duly approved by the Board of Directors of the
Company.
The Report of the Nomination Committee is given on page 80
which forms part of the Annual Report
Directors’ Meetings
The Report of the Independent Auditors on the Financial
Statements is given on page 89 of the Annual Report.
The Directors meetings which comprise Board Meetings
and Board Sub-Committee Meetings of Audit Committee,
Remuneration Committee and the Nomination Committee and
the attendance of Directors at these meetings are given on page
78 of the Annual Report
Auditors
The Auditors, M/s KPMG Ford Rhodes Thornton & Co. were
paid Rs. 2,200,000/- fees for audit related services. In addition
they were paid Rs. 967,000/- by the Company for permitted nonaudit related services and Tax Compliance Consultancy.
Board Committees
Based on the declaration provided by M/s. KPMG Ford, Rhodes,
Thornton & Company and as far as the Directors are aware,
the auditors do not have any relationship or interest with the
Company or in any of the Subsidiaries and Joint Ventures that
may have a bearing on their independence, within the meaning
of the Code of Professional Conduct and Ethics issued by the
Institute of Chartered Accountants of Sri Lanka.
Audit Committee
The retiring auditors M/s KPMG Ford Rhodes Thornton & Co.
have expressed their willingness to continue in office. A resolution
to re-appoint them as auditors and authorise Directors to fix their
remuneration will be proposed at the Annual General Meeting.
The Board while assuming the overall responsibility and
accountability in the management of the Company has also
appointed Board Committees to ensure oversight and control
over certain affairs of the Company, conforming to corporate
governance code and adopting the best practices. Accordingly, the
following Committees have been constituted by the Board:
Members
Mr. R. M. S. Fernando (Chairman)
Mr. A. W.Atukorala
66 66
The Report of the Audit Committee is given on page 87 which
forms part of the Annual Report.
Review of business
The Chairman’s Statement on pages 14 to 17 and the Chief
Executive Officer’s Review on pages 18 to 23 which form an
integral part of this report provides an overall assessment on the
financial performance and financial position of the Company
and describes in detail its affairs and important events for the
year. A detailed analysis of the operations and financial results is
contained in the Management Review on pages 40 to 52 in this
report.
Future developments
An overview of the future developments of the Company is given
in the Chairman’s Statement, the Chief Executive Officer’s review
and the Management review.
Financial Statements
The Financial Statements of the Company and of the Group and
Significant Accounting Policies adopted in the preparation of
Financial Statements are given on pages 90 to 129 of the Annual
Report.
Provision for Taxation
Provision for taxation has been computed at the prescribed rates
and detals are given in note 9 to the Financial Statements
Dividends
A Final Dividend of Rs. 3.25 per share has been recommended
by the Board of Directors for payment on 8 July 2011, subject to
approval by the shareholders.
For the year ended 31 March
Profit for the year
before taxation
Income Tax Expenses Profit for the year
after taxation
Unappropriated profit
brought forward from
previous year
Profit available for appropriation
Appropriations
Dividend paid
(09/10 Rs. 1.80 per share,
08/09 - Rs.1.00 per share)
Unappropriated profit
to be carried forward. 2011
Rs. 000
2010
Rs. 000
735,350
(216,536)
190,471
(69,236)
518,814
121,235
180,001
698,815
92,400
213,635
(60,540)
(33,634)
638,275
180,001
Risk Management
The Directors periodically review and evaluate the risks that are
faced by the Company. Specific steps taken by the Company
in managing the risks are detailed under Enterprise Risk
Management on pages 53 to 55 of the Annual Report.
System of internal controls
As required by the Companies Act No. 7 of 2007, your Company
has submitted a declaration of solvency from the Directors and
has obtained a certificate of solvency from the auditors of the
Company in respect of this dividend declared for 2010/2011.
The Board of Directors has taken steps to ensure and
have obtained reasonable assurance that an effective and
comprehensive system of internal controls is in place covering
financial, operational and compliance controls required to carry
on the business in an orderly manner, safeguard the company’s
assets and to secure as far as possible the accuracy and reliability
of the financial records.
Profits and Appropriations
Stated Capital
The details of the profits relating to the Company and the
appropriations are given in the table.
The Stated Capital of the Company as at 31 March 2011 was
Rs. 336,633,542 /- comprising of 67,267,084 ordinary shares.
67
Annual Report of the Board of Directors contd.
Sub Division of Shares
At an Extra Ordinary General Meeting (EGM) held on 30th
November 2010 the shareholders approved the subdivision of
ordinary shares of the Company, on the basis of two ordinary
shares for every existing ordinary share without effecting any
increase to the stated capital of the Company.Accordingly, the
number of shares in issue as at 31 March 2011 is 67,267,084.
There was no change in the stated capital during the year.
Outstanding litigation
In the opinion of the Directors and the Company’s Lawyers,
pending litigation against the Company will not have a material
impact on the financial results of the Company or on its future
operations.
Corporate Governance
The Company maintains and practices high principles of good
Corporate Governance. During the year under review, the
Company complied with the Listing Rules of the Colombo
Stock Exchange on Corporate Governance. A separate report on
Corporate Governance is given on pages 70 to 78 in the Annual
Report.
Human Resources
As at 31 March 2011 the Company had in its employment
387 permanent employees 162 NAITA trainees and 50 other
trainees and employees on fixed term contracts. The Company
continued to invest in Human Resource Development and
implement effective practices to develop and build an efficient
and effective workforce to ensure optimum contribution toward
the achievement of its corporate goals. Specific measures taken in
this regard are detailed on pages 60 to 63 respectively.
Corporate donations
During the year under review the Company donated a sum of
Rs. 29,000/- to Government approved charities.
Investments in capital expenditure on Property, Plant and capital
Equipment amount to Rs. 26.5 million Details of additions and
disposals to Property, Plant and capital Equipment made during
86 68
the year and the depreciation charge for the year are shown in
note 12 to the Financial Statements.
Revenue
The Company achieved a revenue of Rs. 4.96 billion during
the year ended 31 March 2011. The details of the revenue are
indicated under note 4 to Financial Statements.
Revenue Reserves
The total Revenue Reserves of the Company as at 31 March 2011
stood at Rs. 2,198.8 million. Details of the Reserves are shown in
the Statement of Changes in Equity on page 92.
Capital Reserves
Capital Reserves of the Company as at 31 March 2011 stood
at Rs. 1,184.9 million. Details of the Reserves are shown in the
Statement of Changes in Equity on page 92.
Share information
Information relating to earnings, dividends, net assets and market
value per share is stated in pages 130 to 134 of this report.
Information on share trading and the share price movement is
stated in page 130 to 134 of this report.
Employee Share Ownership Scheme
The Company has in place an Employee Share Ownership
Scheme established with the objective of providing additional
benefit to employees on retirement/resignation in terms of the
trust deed.
The scheme was formulated to pass certain benefits such as
dividends, bonus shares on the ordinary shares of the Company
to the staff without transferring the ownership. On cessation of
employment, shares are transferred to employees according to a
formula approved by the Board.
Substantial shareholdings
As at the Balance Sheet date there were 3,406 registered
Shareholders. The distribution of the Shareholding and the 20
largest Shareholders of the Company as at 31 March 2011 are
given on page 130 to 134 of this report.
Statutory payments
The Directors to the best of their knowledge and belief are
satisfied that all statutory payments due to the Government, other
regulatory institutions and related to the employees have been
made or provided for during the period under review.
Post Balance Sheet Events
In the opinion of the Directors, no item, transaction or any other
material event of an unusual nature has arisen during the period
between the end of the financial year and the date of this report,
other than those indicated in note 33 to Financial Statements.
Notice of Meeting
Notice of Meeting relating to the Twenty Second Annual General
Meeting is given on page 140.
C. Yatawara
Environmental protection
The Company has made its best endeavours to comply with the
relevant environment laws and regulations. The Company has
not engaged in any activity that is harmful or hazardous to the
environment and has taken all possible steps that are necessary to
safeguard the environment from any pollution that could arise in
the course of carrying out its sales and service operations.
Going Concern
The Board of Directors is satisfied that the Company has
adequate resources to continue its operations in the foreseeable
future. Accordingly, the Financial Statements are prepared based
on the going concern concept.
A. C. M. Lafir
Executive Director-Finance
Mrs. R. M. Hisham
Company Secretary
27 May 2011
69
Corporate Governance
•
Principles of Corporate Governance ensure that organisations
are directed, controlled and managed in the best interest of all
its stakeholders. The primary responsibility for good corporate
governance rests with the Board of Directors and the senior
managers to ensure measures and procedures are in place, through
which the corporate governance framework of the company
is well maintained and preserved. UML PLC has made every
endeavour to integrate and adopt the best practices of corporate
governance as part of its business practice which are driven
by a strong set of corporate values that promote transparency,
accountability, integrity and fairness in all its activities.
Other aspects of Corporate Governance stipulated as
best practice under the ICASL code on Best Practice on
Corporate Governance which has been adopted on a
voluntary basis. The level of conformity to this code is
outlined under separate paragraph headings.
Compliance with Corporate Governance Rules
as per section 7.10 of the Listing Rules of the
Colombo Stock Exchange
The Company has complied with all the mandatory rules under
the above section. Disclosures in table below reflect details of the
level of conformity to the above code.
This report outlines the corporate governance principles adopted
by the company with particular reference to the following.
•
The Rules of the Colombo Stock Exchange on Corporate
Governance for Listed companies with which the Company
is mandatorily required to comply.
Requirement
Compliance
Status
Details of Compliance
Non Executive Directors
Rule 7.10.1
07 70
a) The Board of Directors shall include
Compliant
at least two non Executive directors or
such number of non Executive directors
equivalent to one third of the total
number of Directors, which ever is higher.
The Board comprises of eight Directors of whom five (5)
including the Chairman hold office in a non Executive capacity.
The names of the present Directors of the company and their
status as Executive or non Executive have been disclosed in the
Directors’ Report on page 64.
b)
The total number of Directors to be
calculated based on the number as at the
conclusion of the immediately preceding
AGM.
At the conclusion of the last AGM, the total number of Directors
on the Board was eight. The company has five non Executive
directors which is more than the minimum requirement of one
third of total number of Directors. All the present Directors have
been Directors of the company throughout the financial year and
there have not been any new appointments or resignations during
the year.
Compliant
Requirement
Compliance
Status
c) Not Applicable
No change occurred to this ratio during the year.
Two or one third of non Executive
Directors (whichever is higher) shall be
‘independent’.
Compliant.
All non Executive Directors are independent.
b) Each non Executive Director shall
submit annually a signed and dated
declaration of his/her independence or
non independence against the specified
criteria.
Compliant.
All non Executive Directors submitted their individual
declarations for the March 2011 Board meeting.
Compliant.
The Board has determined the independence or non
independence of all non Executive Directors based on their
declaration and other information available to the Board. The
declarations submitted by individual non Executive Directors
was discussed at the Board Meeting held in March 2011 and
the status of independence recorded in the minutes of meeting.
Accordingly, Mr. R. M. S. Fernando, Mr. A. W. Atukorala,
Mr. S. Nagendra and Mr. M. Yokoi are independent as per the
criteria specified in the Listing Rules. Further, based on other
information as specified below, the board has determined that
Mr. T. M. R. B. Tennekoon is also independent. Hence all five
non Executive Directors are independent.
Compliant.
Mr. T. M. R. B. Tennekoon, Non Executive Director has served
the Board for a period exceeding nine years from the date of his
appointment and hence does not qualify as independent as per
the specified criteria. However, the Directors decided that
Mr. Tennekoon be considered as an Independent Director based
on the following.
•
His contribution towards the deliberations of the Board has always been based on objective outcome without bias and
in the best interest of the Company.
•
That he does not have any interest in the Company and
therefore his independence is not compromised.
Any change to this ratio shall be rectified
within 90 days from the date of change.
Independent Directors
Rule 7.10.2
a)
Disclosures Relating to Directors
Rule 7.10.3
a) The Board shall make a determination
annually as to the independence or non
independence of each non Executive
director based on above declaration and
other information available to the board
and shall set out the names of Directors
determined to be independent in the
Annual Report.
b) In the event a Director does not qualify as
independent as per the specified criteria,
nevertheless the board determines as
independent, shall specify the criteria not
met and the basis of such determination
71
Corporate Governance contd.
Requirement
Compliance
Status
Compliant.
A brief resume of each Director is given on page 26 and 27
in this Annual Report.
Not
applicable
No new appointments to the Board during the year.
Compliant.
The declarations filed by the individual non Executive Directors
are based on these criteria and in the format stipulated in the
CSE Rules.
Disclosures Relating to Directors
Rule 7.10.3
c) The Board shall publish in the Annual
report, a brief resume of each Director
which includes information on the nature
of his/her expertise in relevant functional
areas.
d) Upon appointment of a new Director,
the company shall provide to CSE a brief
resume of such Director for dissemination
to the public, including the information
on a), b) and c) above.
Criteria for defining Independence
Rule 7.10.4
Declaration to be submitted by each Director
based on the criteria specified under this section
Rule 7.10.5
a) Shall have a Remuneration Committee
comprising of a minimum of two
independent non Executive Directors
(where the entity has only 2 Directors) or
of non Executive Directors a majority of
whom shall be independent, which ever is
higher.
Compliant.
The company has a Remuneration Committee comprising of 3
independent non Executive Directors.
One non Executive Director shall be
appointed as Chairman of the committee
by the Board of Directors
Compliant.
Board Chairman who is a non Executive Director is the
Chairman of the Remuneration Committee.
Compliant.
The Committee recommends to the Board the remuneration
payable to the CEO and the Executive Directors, based on a
annual performance appraisal.
b) The Remuneration Committee shall
recommend the remuneration payable
to the Executive Directors and CEO
to the Board which will make the final
determination upon consideration of such
recommendations.
27 72
Requirement
c) The Annual Report should set out the
following;
•
The names of Directors that comprise the
A statement of the remuneration policy
and
The aggregate remuneration paid to
Executive and non Executive Directors
•
•
Compliance
Status
Compliant.
Refer table on page 79
Refer the Remuneration Committee Report on 79
Compliant.
Refer page 104
Compliant.
All three members of the Audit Committee are independent non
executive directors.
Compliant.
Committee chairman is a non Executive Director
Compliant.
CEO and the Executive Director, Finance attended all Audit
Committee Meetings by invitation.
Compliant.
Committee Chairman is a member of a recognized professional
accounting body.
Compliant.
The Committee oparates within a clearly defined Terms of
Reference (TOR). The Audit Committee TOR covers all the
functions as set out in this section.
Audit Committee
Rule 7.10.6
a) Shall have an Audit Committee
comprising of a minimum of two
independent non Executive Directors
(where the entity has only 2 Directors) or
of non Executive Directors, a majority of
whom shall be independent, which ever
is higher
One Non Executive Director shall be
appointed as Chairman of the committee
by the Board of Directors
Unless otherwise determined by the
committee, The CEO and the CFO shall
attend Audit Committee Meetings.
Chairman of the committee or one
member of the committee should be a
member of a recognized professional
accounting body
b) The Audit Committee shall have
functions as set out in this section
73
Requirement
Compliance
Status
Compliant.
Refer page 87
Compliant
Refer page 87
Compliant
Refer the Audit Committee Report on page 87
Audit Committee
Rule 7.10.6
c) •
•
The Annual Report should set out;
The names of Directors that comprise the
Audit Committee
The committee shall make a
determination of the independence of the
auditors and shall disclose the basis for
such determination
A report by the Audit Committee setting
out the manner of compliance by the
entity in relation to the above
In addition to the mandatory requirements specified above, the
company maintains a high level of governance practices. Several
steps have been initiated by the company to comply with the
updated Code of Best Practice on Corporate Governance issued
jointly by the ICASL and the SEC. Those practices adopted by
the Company during this financial year are disclosed below.
Board Meetings
Monthly Board meetings are held by the Company, at which the
company’s performance and the business strategies are reviewed
and monitored. Additional meetings are convened when necessary
and at times when deemed appropriate, decisions are approved by
circular resolutions as well. Further, the Parent Company Board
review the financial performance and business strategies of all the
subsidiaries and the joint venture company at each quarter end
wherein the heads of those companies make presentations. A
formal agenda is prepared for all Board Meetings by the Company
Secretary in consultation with the CEO and the Chairman.
During the year under review, 14 Board meetings were held and
the attendance at each meeting is disclosed in the table given in
this report on page 78.
47 74
Obtaining independent professional advice
The Board members are permitted to obtain independent
professional advice from third parties whenever deemed necessary,
at the company’s expense.
Company Secretary
The Company Secretary possesses the required qualifications
as set out in the Companies Act. She attends Board Meetings,
liaises with the Directors on all matters pertaining to the Board
and ensures that Minutes are kept of all proceedings at the Board
meetings. The Company Secretary also advises the Board and
ensure that matters concerning the Companies Act and other
applicable rules and regulations are followed. The services and
advice of the Company Secretary are available to Directors as and
when necessary.
Independent judgment
The Non- Executive Directors do not have any business interests
with the Company that could interfere with the exercise of their
independent judgment. At all times, Directors bring independent
judgment to bear on issues discussed at Board Meetings.
Dedication of adequate time and effort for the
Matters of the Board
The Board members devote adequate time and attention to the
affairs of the Company by attending the regular Board Meetings
and Board Sub Committee Meetings. Whenever necessary,
matters are also referred to them by circulation. Additionally, the
Board members have meetings and discussions with management
when required. They are also available for consultation during the
period between meetings.
Training for new Directors
There is no formal process for providing training to new
Directors. However, presently all the Directors are well
experienced in corporate matters, more particularly on the duties
of a Director. Adequate knowledge-sharing opportunities are
provided at Board Meetings. The directors are also regularly
updated by the CEO with relevant information pertaining to the
company, its business and market environment.
Division of responsibilities between Chairman
and CEO
The function of the Chairman and the CEO are clearly
segregated. The Chairman holds office in a non executive capacity
with a clear division of responsibility at the senior most level of
the Company. The Chairman is responsible for leading and the
effective functioning of the Board.
Information is presented to the Board via Board Papers and the
Chairman satisfies himself that such information is sufficient to
facilitate the Directors to contribute at the deliberations and make
informed assessments of the Company’s affairs.
Financial acumen
There are two senior Chartered/ Chartered Management
Accountants in the Board who possess the necessary knowledge
and competence to offer guidance and advice on matters relating
to finance.
Availability of quality management
information
The Directors are provided with a comprehensive package of
information for the regular Board Meetings which is circulated
in advance of scheduled meetings. These include an executive
summary with a detail analysis of financial and non financial
information. Any requests for further information are coordinated by the Company Secretary.
The Chairman ensures that all Directors are properly briefed on
issues arising at Board Meetings. Members of Senior management
are invited to the Board Meetings whenever necessary, to provide
clarification, thereby ensuring that the Directors are properly
briefed on matters deliberated at Board Meetings.
Appointments to the Board
The CEO is responsible for managing the business, monitoring
its progress and implementing the strategies of the Company
within the policy framework formulated by the Board. This
ensures balance of power and authority in strategic and
operational decisions.
During the year under review, the Board appointed a Nomination
Committee who will recommend to the Board any new
appointments. The Nominations Committee comprises of three
independent non Executive Directors and the CEO. There were
no new appointments to the Board during the year.
Chairman’s role in the Board
Re-election of Directors
The Chairman ensures the efficient conduct of Board Meetings
by encouraging and ensuring the effective contribution of all the
Directors in discussions and decision making. Their individual
contributions and concerns are objectively assessed prior to
making key decisions. He also holds informal meetings with the
non Executive Directors as and when necessary.
The Company’s Articles of Association states that all Non
Executive Directors who are appointed by the Board shall be
subject to re election by the shareholders at the first opportunity
after their appointment. The Section 82 of the Company’s
Articles of Association further states that at every AGM one
third of the non Executive Directors excluding the Chairman
(out of the Directors who have been longest in office since their
75
last election or appointment) shall retire from office each year.
However keeping in line with the Code of Best Practice on
Corporate Governance, the Chairman of the Company who
is a non Executive Director also seek re-election on rotation.
Accordingly, the Directors who shall seek re election at this year’s
AGM have been indicated in the Annual Report of the Board of
Directors on pages 64 to 69.
Appraisal of Board Performance
Relationship with shareholders
The Annual Report and the Annual General Meeting form
the principal means of communication with the Shareholders.
Quarterly Financial Statements have been uploaded to the CSE
web site within the specified time periods.
There is a formal process for appraisal of Board performance.
The appraisals were carried out at the end of the year through
a structured questionnaire which were in three separate parts
addressing the following:
•
Overall collective performance of the Board
•
Evaluation of the performance of the Chairman
•
Self evaluation by each Director
Constructive use of the AGM
Appraisal of the CEO
Making available the Notice of AGM
An annual evaluation of the performance of the CEO was
introduced during the year and was carried out by the non
Executive Directors of the Board. Data presented to the Board at
monthly meetings through the executive summary also assists to
assess the performance and effectiveness of the CEO.
Directors’ remuneration
The Board appointed Remuneration Committee recommends
the policy and criteria for setting the salaries and other perquisites
of the CEO, Executive Directors and executive staff. The
Board makes the final determination after considering such
recommendations. No director is involved in deciding his own
remuneration.
Level and make-up of remuneration for
Executive and Non Executive Directors
The remuneration scheme for Executive Directors is structured
to align rewards to their individual and corporate performance.
The company does not have share option schemes for directors.
At present, other than the Directors’ fees, no other remuneration
is paid to non Executive Directors. The fees paid to non Executive
Directors are on the basis of current market rates for the services
they provide. A full report of the Remuneration Committee is
given on page 79 of the Annual Report.
67 76
The total of Directors’ fees and remuneration is disclosed on page
104 of the Annual Report.
The Board of Directors encourages the Shareholders to attend and
actively participate at the AGM. The Company proposes separate
resolutions for each item of business including the adoption
of the Directors’ Report and accounts, thereby providing an
opportunity for the shareholders to vote on each substantially
different issue.
In terms of the provisions of the Companies Act, Notice of
Meeting is circulated fifteen working days prior to the AGM. A
copy of the Annual Report is dispatched together with the Notice
of Meeting. A summary of the procedures governing voting is
indicated separately in the Notice of Meeting and the Proxy
Form.
Disclosure of major transactions
All major transactions that require special disclosure are
disclosed in the Annual Report.
In terms of the requirements pertaining to immediate disclosures,
the Company has at all times notified the Colombo Stock
Exchange about the relevant transactions as soon as they
are approved by the Board of Directors in order to ensure
dissemination to the public.
Financial reporting
The principal tool for communication of the financial position
and operating results to shareholders is through the Quarterly
and Annual Financial Statements, which are published within the
period stipulated by the Colombo Stock Exchange.
The Financial Statements are prepared in accordance with the
requirements of the Sri Lanka Accounting Standards and the
Companies Act. Additional disclosures with comprehensive details
are made in the Annual Report enabling Shareholders to make
timely and fair assessment of the Company’s performance and
prospects. The Directors review the Interim and Annual Financial
Statements in order to satisfy themselves that a true and a fair view
of the Company’s affairs is reported to the Shareholders.
Internal control
The Board has overall responsibility for the company’s system
of internal controls and the review of the effectiveness of such
controls. Adherence by the Company to all statutory, legal and
regulatory obligations are monitored through a statement of
statutory compliance submitted to the Board on a monthly basis.
Inclusion of a Directors’ Report in the Annual
Report
The company’s prevailing internal control systems are reviewed
by the internal audit function and also by the external auditors
and periodic reports are submitted to the Audit Committee.
The minutes of the audit committee meetings are provided to
the Board to ensure that they are fully informed of all audit and
compliance related issues.
Directors’ Responsibilities for the Financial
Statements
Maintaining appropriate relationships with the
external Auditors to ensure their objectivity
and independence.
The report of the Directors’ has been given on pages 64 to 69 of
the Annual Report.
The Directors take responsibility for the preparation of the
financial statements in accordance with the Sri Lanka Accounting
Standards. A detailed report on the Responsibilities of Directors’
in relation to the financial statements have been outlined on page
82 of this report.
Presenting a Management Report in the
Annual Report
The report given on pages 40 to 52 presents a detailed
management review including the following.
•
Group Overview, The Economic Environment and the
Automobile Market
•
Operations Review
•
Financial Review
Declaration by the Board as to whether the
business is a Going Concern
This declaration is made in the Director’s Report on page 69.
Calling of an EGM to notify if the Net Assets
of the Company fall below one half of the
Shareholders’ Funds
The company maintains appropriate relationship with the
external auditors. The audit and non audit engagements are
assigned under separate scopes and clearly outlined under the
respective engagement letters. The audit committee evaluate the
performance of external auditors and ensures the right balance
between the audit and non audit services provided by them. The
Annual external audit plan is presented and reviewed by the audit
committee and additional meetings are held with the external
auditors to provide opportunity for them to discuss any concerns
and issues arising from audit.
Disclosure of the extent of adherence to the
principles and Best Practices of Corporate
Governance.
At the end of the year, the audit committee reviewed the level
of compliance of the company with the provisions of the Rules
for Corporate Governance for listed Companies as set out
under Listing Rules of the Colombo Stock exchange and have
determined that the company is in full compliance with the said
rules.
This is a very remote risk to the Company.
77
Details of Board Meetings and attendance
The number of meetings of the Board and Board sub committees
and individual attendance by members are shown below.
Board Meetings
Name of Director
Capacity
Remuneration
Committee Meetings
Nomination
Committee Meeting
No of
Meetings
held
No of
Meetings
Attended
No of
Meetings
held
No of
Meetings
Attended
No of
Meetings
held
No of
Meetings
Attended
No of
Meetings
held
No of
Meetings
Attended
Status of
Independence
of Non
Executive
Director
Mr. R M S Fernando
Non Executive
Director
14
14
8
8
2
2
-
-
Independent
Mr C Yatawara
CEO/ Executive
Director
14
14
-
-
-
-
1
1
Not Applicable
Mr. T M R B Tennekoon
Non Executive
Director
14
13
8
8
2
2
1
1
Independent
Mr. A W Atukorala
Non Executive
Director
14
12
8
8
2
2
1
1
Independent
Mr. A C M Lafir
Executive
DirectorFinance
14
14
-
-
-
-
-
-
Not Applicable
Mr M Yokoi
Non Executive
Director
14
-
-
-
-
-
-
-
Independent
Mr R H Yaseen
Executive
Director-
14
09
-
-
-
-
-
-
Not Applicable
Mr. S Nagendra
Non Executive
Director
14
13
-
-
-
-
1
1
Independent
Chairman of Board/Board Sub Committee
87 78
Audit Committee
Meetings
Mr. R. M. S. Fernando
Mr. T. M. R. B.
Tennekoon
Report
Composition
The Remuneration Committee appointed by and responsible to
the Board of Directors comprises of three Independent, NonExecutive Directors. The Committee is headed by the Chairman,
Mr. R. M. S. Fernando. The other members of the Committee are
Mr. T. M. R. B. Tennekoon and Mr. A. W. Atukorala.
The Chief Excutive Officer attends the meetings by invitation
and participates in the deliberations except when his own
performance and compensation package is discussed.
The Company Secretary acts as the as Secretary of Remuneration
Committee.
Policy
The remuneration policy of UML PLC is designed to attract,
motivate and retain staff with the appropriate professional,
managerial and operational expertise to achieve the objectives of
the Company.
Scope
The principal responsibility of the Remuneration Committee
is to recommend to the Board a competitive remuneration and
reward structure for the organisation which includes performance
based incentives. The committee will specifically focus on the
packages held out to senior staff including the CEO and the
Executive Directors. Such a system is based upon every member
of the staff being informed of the key result areas on which he/
she will be judged together with an objective performance
evaluation system. The committee will also, for the purpose of
maintaining a competetive remuneration package vis-a-vis other
employees in the trade, conduct a survey of the remuneration
packages in selected firms every three to four years.
Meetings
During the financial year under review, the Committee held
two meetings which were attended by all the members of
the Remuneration Committee. At these meetings, the staff
performance appraisal system and its procedures, the performance
bonus and its quantum, remuneration and other benefits of Senior
Management and Executive Directors were discussed and their
recommendations were submitted for the approval of the Board.
Remuneration and fees Paid to the Directors
Remuneration for Directors is recommended by the
Remuneration Committee to the Board. The remuneration
for non-Executive Directors reflect the time, commitment and
responsibilities of their role and is based on industry and market
surveys. They do not receive any performance or incentive
payments.
Neither the Chief Excutive Officer nor any other Directors
are involved in Remuneration Committee Meetings when
determinations are made in respect of their own compensation
package and fees.
The aggregate remuneration paid to the Executive Directors
and the fees paid to the non Executive Directors for the Board
Meetings and for serving on Sub Committees Meetings are
disclosed in page 104 of the Annual Report.
R. M. S. Fernando
Chairman – Remuneration Committee.
27 May 2011
The Committee has the authority to seek external independent
professional advice on matters within the purview of the
Committee and to invite professional advisors with relevant
experience to assist in various duties.
79
Report
Meetings
The Nomination Committee was established during the financial
year. The Committee met once during the year under review, to
discuss the Terms of Reference.
Composition
The Nomination Committee appointed by the Board of Directors
comprises of three Independent non Executive Directors and
the Chief Excutive Officer. The Committee is headed by
Mr. T. M. R. B. Tennekoon. The other members of the
Committee are Mr. A. W. Atukorala, Mr. S. Nagendra and
Mr. C.Yatawara.
The Company Secretary acts as the Secretary of the Committee.
Scope
The Nomination Committee is established for the purpose
of advising the Board in relation to nominations, retirement,
succession and training of the Board Members.
The primary responsibilities of the Nomination Committee:
08 80
1.
To identify and recommend suitable Directors for
appointment to the Board.
2.
To consider and recommend (or not recommend) the
re-election/re-appointment of current Directors, taking
into account the performance and contribution made
by the Director concerned and to provide advice and
recommendations to the Board on any such appointment.
3.
Regularly review the structure, size, composition and
competencies (including the skills, knowledge and the
experience) of the Board and to make recommendations to
the Board with regard to any changes.
4.
To look into and make recommendations on any other
matters referred to it by the Board of Directors.
Chairman - Nomination Committee.
27 May 2011
Chief Executive Officer’s
and Chief Financial Officer’s
Responsibility Statement
limitations that should be recognized in weighing the assurances
provided by any system of internal controls and accounting.
The Financial Statements of United Motors Lanka PLC and the
Group are prepared in compliance with the Sri Lanka Accounting
Standards issued by the Institute of Chartered Accountants of Sri
Lanka, the requirements of the Companies Act No. 7 of 2007,
the Sri Lanka Accounting and Auditing Standards Act No 15 of
1995 and the listing rules of the Colombo Stock Exchange, to the
extent applicable to the Company. We confirm, that to the best
of our knowledge, the financial statements and other financial
information included in this Annual Report, fairly present in
all material respects, the financial position, results of operations
and cash flows of the Company and the Group as of and for the
periods presented in this Annual Report. There are no departures
from the prescribed accounting standards in their adoption.
The accounting policies used in the preparation of the Financial
Statements are appropriate and are consistently applied, except
where otherwise stated in the Notes accompanying the Financial
Statements.
The Audit Committee of your Company meets periodically
with the Internal Auditors and the Independent Auditors to
review the manner in which these auditors are performing their
responsibilities, and to discuss auditing, internal control and
financial reporting issues. To ensure complete independence,
the independent auditors and the internal auditors have full and
free access to the members of the audit committee to discuss any
matter of substance.
The Board of Directors and the management of your Company
accepts responsibility for the integrity and objectivity of these
Financial Statements. The estimates and judgments relating to
the Financial Statements were made on a prudent and reasonable
basis, in order that the financial statements reflect in a true
and fair manner, the form and substance of transactions, and
reasonably present the Company’s state of affairs.
To ensure this, we have taken proper and sufficient care in
evaluating the effectiveness of the system of internal controls
and procedures of the Group and are satisfied that they have
been effective as of the end of the period covered by this Annual
Report. We are also satisfied that proper accounting records
are maintained for safeguarding assets and for preventing and
detecting fraud as well as other irregularities. Our internal
auditors have conducted periodic audits to provide reasonable
assurance that the established policies and procedures of the
Company were consistently followed. However, there are inherent
The Financial Statements were audited by Messrs KPMG
Ford Rhodes Thornton & Co. Chartered Accountants, the
Independent Auditors.
It is also declared and confirmed that the Company has complied
with and ensured compliance by the auditor with the guidelines
for the audit of Listed Companies where mandatory compliance
is required. It is further confirmed that all the other guidelines
have been complied with and that there are no known material
litigations and claims against the Company other than those
arising out of the normal course of business.
C. Yatawara
Chief Executive Officer/ Executive Director
A. C. M. Lafir
Executive Director – Finance
27 May 2011
81
Statement of Directors’
Responsibilities
The following statement explains the Directors’ responsibilities
in relation to the Financial Statements of the Company and the
Group. The statement should be read in conjunction with the
report of the Auditors’ appearing on page 89 which sets out their
responsibilities so that shareholders can distinguish between the
respective responsibilities of the Directors and of the Auditors, in
relation to the Financial Statements.
Under Section 150 of the Company’s Act No. 7 of 2007, the
Directors of the Company are responsible for ensuring that
proper books of account are maintained to record all transactions
of the Company and its Subsidiaries and that Financial
Statements are prepared for each financial year that give a true
and fair view of the state of affairs of the Company and the
Group as at the end of the financial year and of the profit or loss
for the year. Unless inappropriate, the Directors are required to
prepare these Financial Statements on a going concern basis. In
keeping with this requirement, the Directors have caused the
Company to maintain proper books of account and review the
financial reporting system at regular intervals.
Following a review of the Company’s budget for the financial
year 2011/12 and related information including cash flows and
borrowing facilities, the Directors are satisfied that the Company
and its Subsidiaries have adequate resources to continue in
business for the foreseeable future. Accordingly, the Financial
Statements have been prepared on the basis of a Going Concern
and the Board accepts responsibility for the integrity and
objectivity of the Financial Statements presented.
The Directors also confirm that in preparing the Financial
Statements, appropriate Accounting Policies have been selected
and consistently applied, subject to any material departures
being disclosed and explained and they have been supported
by reasonable and prudent judgments. The Directors are also
satisfied that proper accounting records have been maintained
by the companies within the Group and the financial statements
prepared and presented in this report are in conformity with the
requirements of the Companies Act No. 7 of 2007, the Sri Lanka
28 82
Accounting and Auditing Standards Act No. 15 of 1995 and the
Listing Rules of the Colombo Stock Exchange.
The Directors are aware of their responsibility to take whatever
steps that are reasonable to safeguard the assets of the Company
and that of the Group and in that context to have proper regard
to the establishment of appropriate internal control systems to
prevent and detect fraud and other irregularities. The Directors
have accordingly instituted comprehensive internal control
mechanisms to ensure that as far as it is practically possible, the
Company’s business is carried out in an orderly manner, that its
assets are safeguarded and that the records of the Company are
accurate and reliable. The application of such internal controls are
regularly monitored through internal reporting systems including
those on the internal audits conducted.
The Directors have provided the Company’s Auditors, KPMG
Ford, Rhodes, Thornton & Co. with every opportunity to take
whatever steps that are necessary and inspections they consider
to be appropriate for the purpose of enabling them to express
their opinion which appears as reported by them on page 89 of
this Report. Accordingly KPMG Ford, Rhodes, Thornton & Co.
has examined the Financial Statements made available by the
Board of Directors together with all the financial records, related
information, Minutes of Board Meetings etc. in order to express
their opinion which appears on page 89 of this report.
The Directors confirm that to the best of their knowledge and
belief, all taxes and other statutory dues payable by the Company
and all contributions,taxes and levies payable by the companies
within the Group on behalf of and in respect of its employees,
as at the Balance Sheet date, have been paid or provided for in
arriving at the financial results for the year under review.
By Order of the Board.
Mrs. R.M.Hisham
Company Secretary
27 May 2011
Development Driven
Financial Report
Financial Calendar
Financial Statements 2010/2011
First quarter released on Second quarter released on Third quarter released on Fourth quarter released on - 10 August 2010
- 10 November 2010
- 14 January 2011
- 12 May 2011
Annual Report & Accounts
2009/2010 mailed on 18 June 2010
Meetings
Twenty First Annual General Meeting Twenty Second Annual General Meeting - 08 July 2010
- 29 June 2011
Dividends
Final Dividend 2008/2009 Final Dividend 2009/2010 Final Dividend 2010/2011 Financial Information
Audit Committee Report Independent Auditors’ Report
Income Statements
Balance Sheets
- 05 November 2009
- 19 July 2010
- 08 July 2011
87
89
90
91
92
93
95
Audit Committee Report
Composition
The Board appointed Audit Committee of United Motors Lanka
PLC comprises of three members, Mr R M S Fernando, Mr
A W Atukorala and Mr T M R B Tennekoon all of whom are
independent non Executive Directors. Mr R M S Fernando who
is the Chairman of the committee is a Fellow of the Chartered
Institute of Management Accountants, U.K and a Fellow of the
Chartered Institute of Bankers, U.K. The Company Secretary
functions as Secretary to the Audit Committee.
this context, the Committee received, discussed and reviewed
with the management and the internal and external audit the
Quarterly Interim Financial Statements and the Annual Report
and Accounts prior to their issuance. The committee focuses
on the reasonability of the key judgements and estimates in
the preparation of Financial Statements, appropriateness of
significant accounting policies adopted in preparation of Financial
Statements and the extent of compliance with the Sri Lanka
Accounting Standards and applicable disclosure requirements.
Role of the Committee
Statutory and regulatory compliance
The committee operates within the ‘Terms of Reference’
formally approved by the Board which defines its objectives
and responsibilities. The role and functions of the committee
are further regulated by ‘Rules on Corporate Governance’ of
the Listing rules of the Colombo Stock Exchange. The key
objective of the committee is to assist the Board of Directors in
discharging its responsibilities towards all Stakeholders and to
ensure that sound Corporate Governance practices are upheld
within the Company. The Committee is empowered among
other things to examine any matters relating to the financial
affairs of the Company, review any activity within the Company,
its Subsidiaries and Jointly Controlled Entities, review the
adequacy of internal control environment, adherence to statutory
and regulatory requirements, ensuring the objectivity and the
independence of external and internal auditors, business risk
assessment and adherence to accounting policies.
A procedure has been laid down for reporting on the statutory
compliance of the Company and its Subsidiaries. This report is
certified by the internal audit on a monthly basis. Instances of
non compliance if any are reported in a specific format to the
Board on a monthly basis. Such reported exceptions are followed
up to ensure appropriate corrective action. Due compliance with
all requirements is monitored through this process.
Meetings
Good governance
During the Financial Year ended 31 March 2011, the Committee
held eight meetings. The attendance of the members at these
meetings is stated in the table on page 78 of the Annual Report.
The Chief Executive Officer, Executive Director- Finance and the
Head of Internal Audit attended all audit committee meetings by
invitation. When required, other senior officers of the Company
and its Subsidiaries were invited to attend these meetings. The
engagement partner of the Company’s external auditors attend
meetings when matters pertaining to their functions come up
for consideration. The proceedings of the Audit Committee are
regularly reported to the Board of Directors.
Financial reporting
Management has the primary responsibility for the Financial
Statements and the reporting process. The Audit Committee
oversees the Company’s financial reporting process to ensure the
reliability of the information provided to the Stakeholders. In
Internal Audit
The Audit Committee exercises oversight over the internal
audit function. The Committee approved the annual internal
audit programme and reviewed the reports by internal auditors
concerning operational issues and effectiveness of internal control
systems. These reviews examined the management responses
for the issues raised as well as the implementation of agreed
recommendations.
The committee also reviewed the level of compliance with
Corporate Governance Rules as per Sec 7.10 of the Listing Rules of
the Colombo Stock Exchange and is satisfied that the Company has
complied with all mandatory requirements of this code.
The Company’s whistle blowing policy is intended to serve
as a channel of managing corporate fraud risk. Through this
mechanism, staff are encouraged to raise their concerns on
existing or potential wrong doings by other employees.
External audit
The external auditors were given adequate access by the
committee to ensure they had no cause to compromise their
independence and objectivity. Prior to commencement of the
annual audit, the Committee discussed with the external auditors
their audit plan, audit approach and procedures and matters
relating to the scope of audit. The fees of the external auditors
87
Audit Committee Report contd.
were also approved by the Committee. The audit results were
discussed at the conclusion of the audit, where the Committee
reviewed and approved the annual Consolidated Financial
Statements.
The Audit Committee also reviewed the external auditor’s
management letter of the previous year together with the
management’s responses thereto. The Committee also reviewed
the non audit services provided by the external auditors with
the aim of safeguarding and supporting the independence and
objectivity of the external auditor. Having reviewed these, the
committee is satisfied that the non audit services provided by
the external auditor’s are compatible with their independence.
The Committee has also received a declaration from the external
auditors as required by the Companies Act No 7 of 2007,
confirming that they do not have any relationship or interest in
the Company which may have a bearing on their independence.
The Audit Committee has recommended to the Board that
KPMG Ford Rhodes Thornton and Company be re- appointed
as statutory auditors for the financial year ending 31 March 2012
subject to the approval by the Shareholders at the forthcoming
Annual General Meeting.
Conclusion
Based on the review of reports submitted by the external and
internal auditors and the information received during the
deliberations, the committee is satisfied that the internal controls
and procedures in place are adequately designed and have been
operating effectively to provide reasonable assurance that the
Company’s assets are safeguarded and that steps are being taken
to continuously improve the control environment maintained
within the Company. The Committee is also satisfied that the
financial position of the Company is regularly monitored and that
the Company has adopted appropriate Accounting Policies and
that the Financial Statements of the Company are reliable.
Chairman- Audit Committee
27 May 2011
88 88
Independent Auditors’ Report
TO THE SHAREHOLDERS OF UNITED
MOTORS LANKA PLC
Report on the Financial Statements
We have audited the accompanying financial statements of
United Motors Lanka PLC (the “Company”), the consolidated
financial statements of the Company and its subsidiaries as at
March 31, 2011, which comprise the balance sheet as at March
31, 2011, and the income statement, statement of changes in
equity and cash flow statement for the year then ended, and a
summary of significant accounting policies and other explanatory
notes exhibited in pages 95 to 129.
Management’s Responsibility for the Financial
Statements
Management is responsible for the preparation and fair
presentation of these financial statements in accordance with
Sri Lanka Accounting Standards. This responsibility includes:
designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due
to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in
the circumstances.
also includes assessing the accounting policies used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.
We have obtained all the information and explanations which
to the best of our knowledge and belief were necessary for
the purposes of our audit. We therefore believe that our audit
provides a reasonable basis for our opinion.
Opinion
In our opinion, so far as appears from our examination, the
Company maintained proper accounting records for the year
ended March 31, 2011 and the financial statements give a true
and fair view of the Company’s state of affairs as at March 31,
2011 and its profit and cash flows for the year then ended in
accordance with Sri Lanka Accounting Standards.
In our opinion, the consolidated financial statements give a true
and fair view of the state of affairs as at March 31, 2011 and
the profit and cash flows for the year then ended, in accordance
with Sri Lanka Accounting Standards, of the Company and its
subsidiaries dealt with thereby, so far as concerns the shareholders
of the Company.
Scope of Audit and Basis of Opinion
Report on Other Legal and Regulatory
Requirements
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
CHARTERED ACCOUNTANTS
27 May 2011
Colombo
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with Sri Lanka Auditing Standards. Those standards
require that we plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from material
misstatement.
These financial statements also comply with the requirements of
Sections 153(2) to 153(7) of the Companies Act No. 07 of 2007.
89
Income Statements
Note
2011
Rs. ‘000s
2010
Rs. ‘000s
Revenue
4
Cost of Sales
Gross Profit
Other Income
5
4,907,368
(3,665,329)
1,242,039
150,570
3,006,757
(2,271,727)
735,030
58,815
10,935,116
(8,333,193)
2,601,923
111,677
5,829,410
(4,248,970)
1,580,440
110,983
Distribution Expenses
Administrative Expenses
Other Expenses
6
Profit From Operating Activities
7
Finance Income
8
Finance Expense 8
Profit before Income Tax Expense
Income Tax Expense
9
Profit for the year
(54,939)
(551,035)
(47,076)
739,559
7,754
(11,963)
735,350
(216,536)
518,814
(31,327)
(441,262)
(1,145)
320,111
1,317
(130,957)
190,471
(69,236)
121,235
(171,148)
(858,451)
(116,019)
1,567,982
27,857
(214,880)
1,380,959
(473,178)
907,781
(126,425)
(709,188)
(92,871)
762,939
4,656
(633,554)
134,041
12,249
146,290
Profit attributable to:
Owners of the Company Non Controlling Interests
Profit for the year
518,814
-
518,814
121,235
-
121,235
903,273
4,508
907,781
144,982
1,308
146,290
1.80
1.80
13.43
3.25
2.16
1.80
Basic Earnings per Share (Rs.)
Dividend per Share (Rs.)
10
11
Company
7.71
3.25
Figures in brackets indicate deductions.
Notes from pages No. 95 to 129 form an integral part of these Consolidated Financial Statements.
Independent Auditors’ Report is given under page No. 89.
09 90
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
Balance Sheets
As at 31 March
Note
2011
Rs. ‘000s
Non-Current Assets
12
Intangible Assets
13
Net Lease Rentals Receivables
14
Investments
15
Defined Benefit Obligations - Plan Assets
24.1
Deferred Tax Asset
25.1
Total Non Current Assets
1,836,437
5,535
-
346,945
74,827
20,198
2,283,942
1,832,711
6,935
-
513,820
74,232
5,526
2,433,224
2,049,552
20,970
-
-
74,827
24,959
2,170,308
1,991,921
24,391
253,745
31
74,232
122,886
2,467,206
Current Assets
Inventories
16
Trade & Other Receivables
17
Amounts due from Related Parties 18
Cash and Cash Equivalents
19
Total Current Assets
Total Assets
982,037
563,629
84,316
329,937
1,959,919
4,243,861
807,113
567,088
346,953
55,728
1,776,882
4,210,106
1,866,661
1,642,083
18,563
513,796
4,041,103
6,211,411
1,249,252
2,425,920
57,089
87,786
3,820,047
6,287,253
Equity and Liabilities
Capital & Reserves
Stated Capital
20
Capital Reserves
21
General Reserves
Retained Earnings
Equity Attributable to the Owners of the Company
Non Controlling Interests
Total Equity
336,335
1,184,928
1,560,550
638,275
3,720,088
-
3,720,088
336,335
1,184,928
1,560,550
180,001
3,261,814
-
3,261,814
336,335
1,218,974
1,560,550
868,343
3,984,202
10,295
3,994,497
336,335
1,244,755
1,561,960
26,867
3,169,917
8,325
3,178,242
-
-
80,991
-
80,991
-
-
74,528
-
74,528
1,729
-
94,756
14,585
111,070
262,504
69,514
90,096
12,526
434,640
Current Liabilities
Interest Bearing Borrowings - Current 23
26
Trade and Other Payables
Amounts due to Related Parties
27
Curent Tax Liabilities
28
19
Bank Overdraft
Total Current Liabilities
Total Liabilities
Total Equity and Liabilities
-
191,059
66,825
152,226
32,672
442,782
523,773
4,243,861
674,414
110,685
35,083
22,047
31,535
873,764
948,292
4,210,106
295,985
1,264,701
-
361,994
183,164
2,105,844
2,216,914
6,211,411
1,752,125
590,791
43,060
288,395
2,674,371
3,109,011
6,287,253
Net Assets per Share (Rs.)
55.30
48.49
59.38
47.25
Interest Bearing Borrowings - Non current
23
Non-Interest Bearing Security Margin
Defined Benefit Obligations
24
Deferred Tax Liabilities
25.2
Total Non-Current Liabilities
Company
2010
Rs. ‘000s
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
Notes from pages No. 95 to 129 form an integral part of these Consolidated Financial Statements.
These Financial Statements comply with the requirements of Companies Act No. 07 of 2007.
A. C. M. Lafir
Executive Director - Finance
The Board of Directors is responsible for the preparation and presentation of these Consolidated Financial Statements.
Approved and signed for and on behalf of the Board of Directors of United Motors Lanka PLC
R.M.S.Fernando
Chairman
Colombo
27 May 2011
C. Yatawara
CEO / Executive Director
91
Stated Capital Development
Property,
General
Retained Shareholders’
Non
Total
Capital
Reserve on
Reserve
Plant & Reserves
Earnings
Funds Controlling
Equity
Revaluation Equipment
Interests
of Property, Replacement
Plant & Reserve
Equipment
For the Year Ended 31 March 2011
Rs. ‘000s
Rs. ‘000s
Rs. ‘000s
Rs. ‘000s
Rs. ‘000s
Rs. ‘000s
Rs. ‘000s
Rs. ‘000s
Rs. ‘000s
Company
Balance as at 01.04.2009
Profit for the year
Surplus on revaluation of Land
Final Dividend Paid - 2008 / 09
336,335
-
-
-
336,335
357,045
-
827,883
-
1,184,928
785,400
-
-
-
785,400
308,900
-
-
-
308,900
466,250
-
-
-
466,250
92,400
121,235
-
(33,634)
180,001
2,346,330
121,235
827,883
(33,634)
3,261,814
-
-
-
-
-
2,346,330
121,235
827,883
(33,634)
3,261,814
Profit for the year
Dividend Paid - 2009 / 10
-
-
336,335
-
-
1,184,928
-
-
785,400
-
-
308,900
-
-
466,250
518,814
(60,540)
638,275
518,814
(60,540)
3,720,088
-
-
-
518,814
(60,540)
3,720,088
336,335
-
-
-
408,908
-
835,847
-
785,400
-
-
-
308,900
-
-
-
467,660
-
-
-
(84,481)
144,982
-
(33,634)
2,222,722
144,982
835,847
(33,634)
7,367
1,308
-
-
2,230,089
146,290
835,847
(33,634)
-
336,335
-
1,244,755
-
785,400
-
308,900
-
467,660
-
26,867
-
3,169,917
(350)
8,325
(350)
3,178,242
-
336,335
-
-
-
1,244,755
-
-
-
785,400
-
-
-
308,900
-
-
-
467,660
-
-
(64)
26,803
903,273
(60,540)
(64)
3,169,853
903,273
(60,540)
-
8,325
4,508
-
(64)
3,178,178
907,781
(60,540)
-
(25,781)
-
-
(1,410)
(1,193)
(28,384)
-
(28,384)
-
336,335
-
1,218,974
-
785,400
-
308,900
-
466,250
-
868,343
-
3,984,202
(2,538)
10,295
(2,538)
3,994,497
Consolidated
Profit for the year
Surplus of revaluation of Land
Dividend paid - 2008 / 09
Joint Venture dividend paid to
Minoroty Shareholders
Accounting for defined benefit
obligations 2009/10
Restated balance as at 01.4.2010
Profit for the year
Final Dividend Paid - 2009 / 10
Adjustment due to disposal of Non
Current Investment
Joint Venture dividend paid to
In accordance with SLAS 12 (Revised) “Event after the Balance Sheet date” Proposed dividend is not recognised as a separate item under equity and such dividend has been disclosed as
notes to this Financial Statement-Note 33.
Capital Reserve on Revaluation of Property, Plant & Equipment represents the unutilised revaluation surplus arising out of the revaluation of land of United Motors Lanka PLC and
TVS Lanka (Pvt)Ltd, a Joint Venture of the Group.
The Company’s Development Reserve, Property, Plant & Equipment Replacement Reserve and the General Reserve represents the Revenue Reserves.
Property Plant & Equipment Replacement Reserve represents profits reserved by the Company for the replacement of capital assets that have either completed their economic life or
whose technologies are outdated and thus require replacement.
Development Reserve represents profits that have been held in reserve to fund future development projects of the Company.
General Reserves are profits held in the reserve to fund future needs of the business which have not been specified.
Figures in the brackets indicate deductions.
Accounting policies & Notes on pages 95 to 129 form an integral part of these Consolidated Financial Statements.
29 92
Note
Company
2011
Rs. ‘000s
2010
Rs. ‘000s
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
CASH FLOW FROM OPERATING ACTIVITIES
735,350
190,471
1,380,959
Adjustments for;
Provision for Depreciation and Amortisation
24,243
37,266
36,235
Profit on disposal of Property, Plant & Equipment
(3,483)
(8,613)
(81,391)
11,963
130,957
214,880
Interest Expense
Interest Income
(3,909)
(703)
(6,865)
Dividend Income
(108,846)
(36,000)
-
Provision for Doubtful Receivables
39,404
359
47,024
Provision for Defined Benefit Obligations 12,172
11,809
16,592
3,204
(7,374)
2,904
Acturial Loss on Defined Benefit Obligations
Provision for Slow Moving / Obsolete Inventories
5,559
(7,966)
15,471
Profit on Disposal of a Non Current Investment
(13,125)
-
-
Operating Profit before Working Capital Changes
702,532
310,206
1,625,809
Change in Inventories
(180,484)
855,290
(632,880)
Change in Trade & Other Receivables
(35,945)
69,775
(352,598)
Change in amounts due from Related Party Receivables
262,638
(10,363)
38,526
Change in Lease Rental Receivable
-
-
-
31,741
4,701
-
Change in amounts due to Related Party Payables
Change in Trade and Other Payables
80,376
(15,663)
830,649
Cash Generated from Operations
860,858
1,213,946
1,509,506
Interest Paid (11,963)
(130,957)
(214,880)
(101,029)
(15,144)
(164,455)
Income Tax Paid
Defined benefits (paid) / net of recoveries
357
(1,485)
(369)
Net Cash from Operating Activities
748,223
1,066,360
1,129,802
CASH FLOWS FROM INVESTING ACTIVITIES
(50,000)
-
-
Investment in Jointly Controlled Entity
Proceeds on disposal of a Non Current Investment (a)
230,000
-
375,085
Acquisitions of Property, Plant & Equipment
(26,569)
(25,160)
(123,454)
3,482
9,427
82,673
Proceeds from disposal of Property, Plant & Equipment
Investment in Other Long Term Assets - Defined benefits (9,865)
(9,514)
(9,865)
Interest Received
3,909
703
6,865
Dividend received
108,846
36,000
-
Net Cash from Investing Activities
259,803
11,456
331,304
134,041
73,578
(85,203)
633,554
(861)
71,352
15,191
(7,374)
(7,283)
826,995
960,957
(198,369)
(30,178)
1,131,668
(15,469)
2,675,604
(633,554)
(51,233)
(1,485)
1,989,332
(57,212)
90,650
(9,514)
861
24,785
93
Cash Flow Statement contd.
Note
2011
Rs. ‘000s
Company
2010
Rs. ‘000s
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend Paid
(60,540)
(33,634)
Dividend Paid to Minority Shareholders (Non Controlling)
-
-
(414)
(1,534)
Lease Rentals Paid
Short Term Loans Paid
(674,000)
(730,554)
-
(57,500)
Long Term Loans Paid
Non-Interest Bearing Security Margin
-
-
(734,954)
(823,222)
Net Cash used in Financing Activities
Net Increase in Cash & Cash Equivalents
273,072
254,594
Cash & Cash Equivalents at beginning of Year
24,193
(230,401)
Cash & Cash Equivalents at end of Year
297,265
24,193
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
(60,540)
(2,538)
(4,150)
(857,229)
(5,408)
-
(929,865)
531,241
(33,984)
(8,856)
(864,741)
(683,814)
(62,706)
(1,654,101)
360,016
(200,609)
(560,625)
330,632
(200,609)
Analysis of the Balance Cash and Cash Equivalents at the end of year .
Company
2010/2011
2009/2010
Rs. ‘000
Rs. ‘000
Bank & Cash Balances
Short Term Deposits
Bank Overdraft
Cash & Cash Equivalents
211,421
118,516
(32,672)
297,265
48,173
7,555
(31,535)
24,193
Consolidated
Change
in the Year
2010/2011
2009/2010
Rs. ‘000
Rs. ‘000
Rs. ‘000
163,248
110,961
(1,137)
273,072
385,123
128,673
(183,164)
330,632
Change
in the Year
Rs. ‘000
80,231
7,555
(288,395)
(200,609)
On 21 February 2011, the Company disposed of its wholly owned subsidiary, Orient Financial Services Corporation Ltd. for a
consideration of 230 million. The value of assets disposed is as follows: (Refer Notes 3.1.1, 6.1 and 15.1)
(a) Disposal of a Non Current Investment
In Rs. ‘000
Property, Plant and Equipment
Deferred Tax Assets
Other Non-Current Assets
Trade and Other Receivables
Defined Benefit Liabilities
Trade and Other Payables
Cash and Cash Equivalents
Total Net Assets
Unamortised Goodwill
Loss on disposal of a Non Current Investment
Cash Consideration Received on Disposal of a Non Current Investment
Cash and Cash Equivalents Disposed
Net Cash Inflow on Disposal of Non Current Investment
Figures in brackets indicate deductions.
Notes from page No 95 to 129 form an integral part of these Consolidated Financial Statements.
Independent Auditors’ Report is given in page No 89.
49 94
18,544
115,348
375,034
705,380
(7,268)
(758,250)
(145,085)
303,703
2,021
(75,724)
230,000
145,085
375,085
304,892
121,118
105,231
531,241
1. Reporting entity
United Motors Lanka PLC (the “Company”), is a Public Quoted
Company incorporated on 9 May 1989 and domiciled in Sri
Lanka. The registered office and the principal place of business of
the Company is located at No. 100, Hyde Park Corner,
Colombo 02.
The Consolidated Financial Statements of the Company as at and
for the year ended 31 March 2011 comprise the Company and its
subsidiaries (together referred to as the “Group” and individually
as “Group Entities”) and the Group’s interests in jointly
controlled entities. All the Group entities and joint ventures are
limited liability companies, incorporated and domiciled in Sri
Lanka.
The Group is primarily involved in distribution of brand new
Mitsubishi and other vehicles, motor bikes, spare parts and
related activities.
2. Basis of preparation
the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimates are revised and in any future
period affected.
In particular, information about significant areas of estimates,
uncertainty and critical judgments in applying accounting policies
that have the most significant effects on the amounts recognised
in these Consolidated Financial Statements are included in the
following notes.
Note 12
Note 16
Note 17
Note 24
Note 25
-
Provision for depreciation
Provision for slow moving /obsolete inventories
Provision for bad and doubtful receivables
Defined benefit obligations
Deferred tax liabilities/assets
2.1 Statement of compliance
3. Significant accounting Policies
The financial statements were approved by the Board of Directors
on 27 May 2011.
Previous year figures and phrases have been rearranged &
reclassified wherever necessary to conform to the current year’s
presentation.
2.2 Basis of measurement
3.1 Basis of consolidation
The Consolidated Financial Statements have been prepared in
accordance with the Sri Lanka Accounting Standards (SLAS) laid
down by the Institute of Chartered Accountants of Sri Lanka
(ICASL) and the requirements of the Companies Act No. 07 of
2007.
The Consolidated Financial Statements have been prepared on
historical cost basis except, certain Property, Plant and Equipment
which are stated at revalued amount as disclosed in Note No. 12
to the financial statements. Assets and liabilities are grouped by
nature and listed in an order that reflects their relative liquidity.
2.3 Functional & presentation currency
The financial statements of the Company and the Group
are presented in Sri Lankan Rupees, which is the Company’s
functional currency. All financial information presented in Sri
Lankan Rupees has been rounded to the nearest thousand.
2.4 Use of estimates & judgments
The preparation of financial statements in conformity with
SLAS requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and
The Accounting Policies set out below have been applied
consistently to all periods presented in these Consolidated
Financial Statements and have been applied consistently by
Group entities.
The Consolidated Financial Statements include the Financial
Statements of the Company, its Subsidiaries and other
Companies over which it has control. The Group’s Financial
Statements comprise of the Consolidated Financial Statements
of the Company and the Group which have been prepared in
compliance with the Group’s Accounting Policies. All intra Group
balances, income and expenses and profits and losses resulting
from Intra Group transactions are eliminated in full.
3.1.1 Acquisitions and divestments
Acquisitions of Subsidiaries are accounted for using the purchase
method of accounting. The results of Subsidiaries, Joint Ventures
and Associates acquired or incorporated during the year have been
included from the date of acquisition, or incorporation while
results of Subsidiaries, Joint Ventures and Associates disposed
have been included up to the date of disposal. Interests in Orient
Financial Services Corporation Ltd. has been consolidated up to
95
Notes to the Financial Statements contd.
the date of disposal. (Morefully described in Note No. 15.1 to these
Consolidated Financial Statements.)
incurs and its share of the income that it earns from the joint
operation.
Subsidiaries
a.
Subsidiaries are those entities controlled by the Group. Control
exists when the Group has the power directly or indirectly to
govern the financial and operating policies of an entity so as to
obtain benefits from its activities. In assessing control, potential
voting rights that are currently exercisable or convertible are
taken into account. The Financial Statements of subsidiaries are
included in the Consolidated Financial Statements from the date
that control commences until the date that control ceases.
Loss of control
e.
upon the loss of control, the Group derecognises the assets and
liabilities of the susidiary. Any surplus or deficit arising on the loss
of control is recognised in the Consolidated Income Statement.
These Consolidated Financial Statements are prepared to a
common financial year end of 31 March.
The Accounting Policies of Subsidiaries have been changed when
necessary to align them with the policies adopted by the Group.
All the assets and liabilities of the Company and the subsidiaries
are included in the Consolidated Balance Sheet.
b.
Non controlling interests
The proportionate interest of Minority Shareholders in the net
assets employed by the Group is disclosed separately within the
equity in the Consolidated Balance Sheet on “Non Controlling
Interests”. The total profits and losses for the year of the
Company and its Subsidiaries are disclosed in the Consolidated
Income Statement and the allocation of profit and loss for the
period attributable to minority and equity holders are disclosed
separately.
Goodwill
c.
Goodwill arising on an acquisition represents the excess of the
cost of acquisition over the fair value of the net assets acquired.
Goodwill is measured at cost less accumulated impairment losses.
In respect of equity accounted investees, the carrying amount of
goodwill is included in the carrying amount of the investment.
Negative goodwill arising on an acquisition represents the
excess of the fair value of the net assets acquired over the cost of
acquisition. Negative goodwill is recognised immediately in profit
or loss.
Jointly controlled entities
d.
Jointly controlled operation is a joint venture carried on by each
venture using its own assets in pursuit of the joint operations.
These Consolidated Financial Statements include the assets that
the Group controls and the liabilities that it incurs in the course
of pursuing the joint operation and the expenses that the Group
69 96
f.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
in preparing the Consolidated Financial Statements. Unrealised
gains arising from transactions with equity accounted investees
are eliminated against the investment to the extent of the Group’s
interest in the investee. Unrealised losses are eliminated in the
same way as unrealised gains but only to the extent that there is
no evidence of impairment.
3.2 Foreign currency transactions
Transactions in foreign currencies are translated to Sri Lanka
Rupees at the foreign exchange rate prevailing at the date of
the transaction. Monetary assets and liabilities denominated
in foreign currencies are translated to Sri Lanka Rupees at the
foreign exchange rate ruling as at the Balance Sheet date.
Non-monetary assets and liabilities which are stated at historical
cost denominated in foreign currencies are translated to Sri Lanka
Rupees at the exchange rate ruling at the dates of the transactions.
Non monetary assets & liabilities that are stated at fair value
denominated in foreign currencies are translated to Sri Lanka
Rupees at the exchange rate ruling at the dates that the value were
determined. Foreign exchange differences arising on translation
are recognised in the Income Statement.
3.3 Segment reporting
A segment is a distinguishable component of the Group that
is engaged either in providing products or services (business
segment), or in providing products or services within a particular
economic environment (geographical segment), which is subject
to risks and rewards that are different from those of other
segments. Segment information is presented in respect of the
Group’s business and geographical segments.
Segmentation has been determined based on the Group’s
management and internal reporting structure. Segment
information is based on the primary format representing the
industry segments of the Company.
Based on the nature of the Company, segment information
has not been provided on a secondary format representing the
geographical area. Inter-segment pricing is determined on an
arm’s length basis.
Expenditure on repairs or maintenance of Property, Plant and
Equipment made to restore or maintain future economic benefits
expected from the assets has been recognised as an expense when
incurred.
Segment results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated
on a reasonable basis. Unallocated items comprise mainly
investments (Other than investment property) & related revenue,
loans & borrowings, related expenses, corporate and head office
expenses and income tax assets & liabilities.
Leased assets
b.
Leases in terms of which the Group assumes substantially all the
risks and rewards of ownership are classified as finance leases.
Upon initial recognition, the asset under finance
leases are measured at an amount equal to the lower of its fair
value and the present value of the minimum lease payments at the
inception less accumulated depreciation and the resulting lease
obligations are included in the creditors less finance charges. Lease
payments consist of capital and interest elements and the interest is
charged to the Income Statement. Assets held under finance leases
are amortised over the estimated useful lives unless ownership is
not transferred at the end of the lease period. In such cases the
assets are amortised over the shorter of lease terms and their useful
lives. Subsequent to initial recognition, the asset is accounted for in
accordance with the accounting policy applicable to that asset.
3.4 Assets & basis of their valuation
Assets classified as current assets in the Balance Sheet are Cash
and Bank balances and those which are expected to be realised in
cash during the normal operating cycle, or within one year from
the Balance Sheet date, which ever is shorter.
3.4.1 Property, plant & equipment
a. Recognition and measurement
Items of property, plant and equipment are stated at cost or
valuation less accumulated depreciation (See Accounting Policy
3.4.1 - e) and accumulated impairment losses (See Accounting
Policy 3.4.8).
Cost includes expenditures that are directly attributable to
the acquisition of the asset. The cost of self constructed assets
includes the cost of materials and direct labour, any other cost
directly attributable to bringing the asset to a working condition
for its intended use, and the cost of dismantling and removing the
items and restoring the site on which they are located.
Purchased software that is integrated to the functionality of
the related equipment is capitalised as part of that equipment.
Borrowing cost related to the acquisition or construction or
production of qualifying assets are recognised in profit or loss as
incurred.
Gains and losses on disposal of an item of property, plant
& equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant &
equipment and are recognised net within “Other Income” in
Income Statement. When revalued assets are sold, the amounts
included in the revaluation reserve are transferred to retained
earnings.
c.
Revaluation
The Company’s and its Group freehold land is revalued when there
is a substantial distinction between the fair value and the carrying
value of the asset or in every 5 years. As a result of revaluation if
the carrying amount is increased, the increased amount is credited
to equity under the heading of capital reserve on revaluation of
Property, Plant and Equipment. When an asset’s carrying amount
is decreased as a result of a revaluation, the decrease is recognised as
an expense unless it reverses a previous increment relating to that
asset, in which case it is charged against any related revaluation
surplus in respect of that same asset. Any balance remaining in the
revaluation surplus in respect of an asset is transferred directly to
accumulated profits on retirement or disposal of the asset.
Subsequent expenditure
d.
Expenditure incurred to replace a component of an item of
Property, Plant and Equipment that is accounted for separately,
including major inspection and overhaul expenditure, is
capitalised. The cost of replacing part of an item of Property,
Plant & Equipment is recognised in the carrying amount of the
item if it is probable that the future economic benefits embodied
within the part will flow to the Group and its cost can be
measured reliably. The carrying amount of the replaced part is
derecognised. The cost of the day-to-day servicing of Property,
Plant and Equipment are recognised in Profit or Loss as incurred.
When parts of an item of Property, Plant & Equipment have
different useful lives, they are accounted for as separate items
(major components) of Property, Plant & Equipment.
97
e.
Depreciation
Depreciation is recognised in Profit or Loss on a straight-line
basis over the estimated useful lives of each part of an item of
Property, Plant and Equipment. Leased assets are depreciated
over the shorter of the lease terms and other useful lives unless it
is reasonably certain that the Group will obtain ownership by the
end of the lease period. Freehold land is not depreciated.
The estimated useful lives for the current and comparative periods
are as follows.
Buildings
Furniture & fittings
Office equipment
Electrical fixtures and fittings
Machinery & tools
Motor vehicles
Reference books
Computers
10 years
5 years
4 years
4 years
4 - 10 years
4 years
10 years
5 years
Depreciation methods, useful lives and residual values are
reviewed at each reporting date.
Depreciation of an asset begins when it is available for use, i.e.
when it is in the location and condition necessary for it to be
capable of operating in the manner intended by management.
Depreciation of an asset ceases at the earlier of the date that the
asset is classified as held for sale (or included in a disposal group
that is classified as held for sale) and the date that the asset is
derecognised.
Capital work-in-progress
f.
Capital expenses incurred during the year which are not
completed as at the Balance Sheet date are shown as Capital
Work-in-Progress, whilst the capital assets which have been
completed during the year and put to use have been transferred to
Property, Plant & Equipment.
Investment properties
g.
Classification
The building held by UML Property Development Limited, to
earn rental income and for capital appreciation is classified as
investment properties in the subsidiary Financial Statements and
it is occupied by its parent. Hence, the property does not qualify
as Investment Property in the Consolidated Financial Statements.
Valuation
Investment properties are stated at ‘Historical Cost’ accounting
which describes value or amount for which Investment Properties
89 98
had been purchased from a knowledgeable, willing party at an
arm length transaction.
Initial recognition
Investment Properties are recorded at cost less accumulated
depreciation, which is provided for on the bases, specified below.
Buildings
The cost of Investment Property is the cost of purchase or
construction together with any expenses incurred in bringing the
asset to its working condition for its intended use.
h.
Net contract receivable on assets
Assets leased or hire purchase to customers which transfer
substantially all the risks and rewards associated with ownership
other than legal title have been accounted as finance leases or hire
purchases.
Amount receivable under finance leases or hire purchases net of
unearned interest income and provision for rentals doubtful of
recoveries are classified as net contract receivable on assets in these
3.4.2. Intangible assets
Intangible assets that are acquired by the Group and have finite
useful lives are measured at cost less accumulated amortisation
and accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the
future economic benefits embodied in the specific asset to which
it relates. All other expenditure is recognised in profit or loss as
incurred.
Amortisation
Amortisation is calculated over the cost of the asset, or other
amount substituted for cost, less its residual value. Group’s
intangible assets are amortised over a period of 5 years.
Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
3.4.3 Investments
Investments in Subsidiaries and the Jointly Controlled Entities are
treated as long-term investments and are valued at cost less any
impairment losses in the Parent Company’s Financial Statements
in accordance with the Sri Lanka Accounting Standard No. 26,
Consolidated and Separate Financial Statements and Sri Lanka
Accounting Standard No. 31 Interest in Joint Venture.
3.4.4 Inventories
Inventories are stated at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and the
estimated costs necessary to make the sale.
The cost of inventories includes expenditure incurred in acquiring
the inventories and other costs incurred in bringing them to
their existing location and condition. Accordingly, the costs of
inventories are accounted as follows:
Motor vehicles
Goods-in-transit
Work-in-progress
Other stocks
-
at actual cost
at actual cost
at cost of spares
at purchase cost on a first in first out basis
On monthly basis, a provision is made for all non-moving and
obsolete items on inventory.
3.4.5 Trade and other receivables
Trade and other receivables are stated at their cost less impairment
losses. (See Accounting Policy 3.4.8) Contract receivable on
leased assets, rental receivable on leased assets are accounted for
as finance leases and reflected on the Balance Sheet at cost after
eliminating Unearned Income, Prepaid Rentals, Suspense Income
and Provision for Bad and Doubtful Receivables.
3.4.6 Cash and cash equivalents
Cash & Cash Equivalents are defined as cash in hand, demand
deposits and short-term highly liquid investments readily
convertible to known amounts of cash and subject to insignificant
risks of change in value. For the purpose of cash flow statement,
Cash and Cash Equivalents comprise of cash in hand and deposits
at banks net of outstanding Bank Overdrafts.
3.4.7 Impairment
Recognition
a.
The carrying value of the Company’s assets other than inventories
(refer accounting policy 3.4.4), are reviewed at each Balance Sheet
date to determine whether there is any indication of impairment.
If any such indication exists, the asset’s recoverable amount is
estimated (see below). An impairment loss is recognised whenever
the carrying amount of asset or its cash-generating unit exceeds
its recoverable amount. Impairment losses are recognised in the
Income Statement.
Calculation of recoverable amount
b.
The recoverable amount is the greater of their net selling value
and value in use. In assessing value in use, the estimated future
Cash Flows are discounted to their present value using discount
rate that reflects the current market assessment of their time value
of money and the risk specific to the asset. For an asset that does
not generate largely independent cash inflows, the recoverable
amount is determined for the cash-generating unit to which the
asset belongs.
c.
Reversal of impairment
An Impairment loss is reversed if there has been a change in
the estimates used to determine the recoverable amount. An
Impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would
have been determined net of depreciation or amortisation, if no
Impairment loss had been recognised.
3.5 Liabilities and provisions
3.5.1 Provisions
A provision is recognised in the Balance Sheet when the
Company has a legal or constructive obligation as a result of a
past event and it is probable that an outflow of economic benefits
will be required to settle the obligation.
3.5.2 Borrowing cost
Borrowing costs are recognised as an expense in the year in which
they are incurred, except to the extent where borrowing costs are
directly attributable to the acquisition, construction or production
of a qualifying asset that take a substantial period of time to get
ready for its intended use or sale, is capitalised as part ofthat asset.
3.5.3 Employee benefits
a.
Defined contribution plans
A defined contribution plan is a post employment plan under
which an entity pays fixed contribution into a separate entity
and will have no legal or constructive obligation to pay a further
amount. Obligations for contributions to defined contribution
plans are recognised as an employee benifit expense in the Income
Statement in the periods during which services are rendered by
employees.
Employees provident fund
The Company and employees contribute 12% & 10%
respectively of the salary of each employee to the approved
Provident Fund.
For the assets that have a indefinite useful life and intangible
assets that are not yet available for use, the recoverable amount is
estimated at each Balance Sheet date.
99
Employees trust fund
The Company contributes 3% of the salary of each employee
to the Employees’ Trust Fund. Contributions to defined
contribution plans are recognised as an expense in the income
statement as incurred.
apply for leasing companies, within the guidelines of Central
Banks under the Leasing Act No. 56 of 2000.
b.
Defined benefit plans - retiring gratuity
A defined benefit plan is a post employment benefit plan other
than a defined contribution plan.
•
•
•
The retirement benefit plan adopted is as required under the
Payment of Gratuity Act No.12 of 1983. Provision for gratuity
on the employees of the Group is based on actuarial valuation as
recommended by Sri Lanka Accounting Standard No.16 ‘Employee
Benefits’. The actuarial valuation was carried out by professionally
qualified firm of actuaries, as at 31 March 2011. The valuation
method used by the actuary is “Projected Unit Credit Method”.
In respect of any gains and losses arising from actuarial valuation
that arise in calculating the Group’s obligation in respect of
employee benefits, is recognised in the income statement
immediately.
Subisiaries and Jointly Controlled Entities
Upto 31 March 2010, Provision for gratuities of Subsidiaries and
Jointly Controlled Entities have been made based on Gratuity
Formula Method. From 01 April 2010, all the Subsidiaries &
Jointly Controlled entities have adopted Actuarial Valuation
method in line with Group Accounting Policies. The resultant
transitional liability has been adjusted in the Equity, as against the
Retained Earnings.
The key assumptions used by the actuary include the following.
Annual rate of increase in salaries
10%
Discount rate
11%
The Gratuity Liabilities of the Subsidiaries and the Jointly
Controlled Entities are not externally funded.
The Company’s liability arising on retirement benefits of
employees joined prior to 1992/93 is partly externally funded and
this has been invested in Aviva NDB Mutual Fund.
Gratuity liabilities arising on the Retirement Benefit of employees
joined after 1992/93 is funded and has been invested in Aviva
NDB Insurance PLC (formally known as Eagle Insurance PLC).
3.5.4 Provision for lease and hire purchase contract
Specific Provision
The provision takes into account in compliance with guidelines
issued to commercial banks by the Central Bank, anticipated to
001100
Specific provision for doubtful debts on capital outstanding is
made in the Financial Statements on the following basis.
06-12 months
20% (capital at risk)
(after the due date)
12-18 months
50% (capital at risk)
More than 18 months 100% (capital at risk)
Additionally, a judgmental provision will be made by the
management based on the performance of the lease rentals
receivable.
3.5.5 Trade & other payables
Trade & other payables are stated at cost.
3.5.6 Capital commitments & contingencies
Contingent liabilities are possible obligations whose existence
will be confirmed only by uncertain future events or present
obligations where the transfer of economic benefits is not
probable or cannot be reliably measured.
Capital commitment and contingent liabilities of the Group are
disclosed in the respective notes to the Financial Statements.
3.5.7 Events after the balance sheet date
The materiality of the events after the Balance Sheet date has been
considered and appropriate adjustments and provisions have been
made in the Financial Statements wherever necessary.
3.6 Income statement
3.6.1 Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefit will flow to the Group and the associated costs
incurred or to be incurred can be reliably measured.
Revenue is measured at the fair value of the consideration received
or receivable, net of trade discounts and revenue related taxes and
after eliminating sales within the Group. The following specific
criteria are used for the purpose of recognition of revenue.
3.6.2 Goods sold
Revenue from the sale of goods is recognised in the Income
Statement when significant risks and rewards of ownership have
been transferred to the buyer.
3.6.3 Services rendered
Revenue for services rendered is recognised in the Income
Statement after completion of the service.
3.6.4 Agency commission
Agency Commission is recognised in the Income Statement at the
point of invoicing to the supplier.
3.6.5 Income from leases
The accounting for lease and hire purchase income is done on the
basis of the financing method. The excess of aggregate contract
receivable over the cost of assets constitutes the total unearned
income at the commencement of a contract.
For finance leases the unearned income is recognised as income over
the term of the contract commencing from the month in which
the lease or hire purchase is executed in proportion to the declining
receivable balance so as to produce a constant periodic rate of
return on the lessor’s net investment outstanding in the contract.
However, no interest income is recognised when the customer is
in arrears for more than 3 months and those are classified as non
-performing and credited to the ‘Income in suspense account’.
Thereafter such income is recognised on cash basis.
Income on operating lease
The net rental is recognised as an income on an accrual basis.
Interest on over due rentals
Overdue interest is charged on leases which are not paid on due
date and accounted for on the cash received basis.
3.6.6 Profit on disposal of property, plant & equipment
Profits or losses resulting from disposal of property, plant &
equipment have been accounted on cash basis in the Income
Statement.
3.6.7 Rental income
Rental Income is recognised on an accrual basis.
3.6.8 Dividend income
Dividend income is recognised in Profit or Loss on the date that
the Group’s right to receive payment is established.
3.6.9 Commission
When the Group acts in the capacity of an agent rather than
another principal in a transaction, the revenue recognised is the
net amount of commission made by the Group.
3.6.10 Expenditure
All expenditure incurred in running of the business and in
maintaining the Property, Plant & Equipment in a state of
efficiency has been charged to revenue in arriving at the profit for
the year. For the purpose of presentation of Income Statement,
the Directors are of the opinion that function of expense method
present fairly the elements of the enterprise’s performance, hence
such presentation method is adopted.
Expenditure incurred for the purpose of acquiring, expanding
or improving assets of a permanent nature by means of which to
carry on the business or for the purpose of increasing the earning
capacity of the business has been treated as capital expenditure.
Repairs and renewals are charged to the Income Statement in the
year in which the expenditure is incurred.
Minimum lease payments made under finance leases are
apportioned between the finance expense and the reduction
of the outstanding liability. The finance expense is allocated to
each period during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability.
Contingent lease payments are accounted for by revising the
minimum lease payments over the remaining term of the lease
when the lease adjustment is confirmed.
The profit earned by the Company before income tax expense
shown in the Income Statement is after making provision for all
known liabilities and for the depreciation of Property, Plant &
Equipment.
3.6.11 Warranties
Costs incurred by the Company under the terms of the
warranty agreement between Mitsubishi Motors Corporation
are reimbursed to the Company. Any amounts that are not
reimbursed under the warranty agreement are charged to the
Income Statement.
3.6.12 Finance expense/income
Finance expense comprises interest payable on Term loans,
Overdrafts and Finance Leases borrowings. Finance income
comprises interest received on funds invested and foreign
exchange gain.
Foreign currency gains and losses are reported on a net basis.
The interest component of finance lease payment is recognised in
the Financial Statements using effective rate method.
101
3.6.13 Income tax expense
Income tax on the profit for the year comprises current and
deferred tax. Income tax is recognised directly in the Income
Statement except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
a.
Current tax
Current tax is the expected tax payable on the taxable income for
the year, using tax rates enacted at the Balance Sheet date, and
any adjustment made to tax payable in respect of previous years.
Deferred tax
b.
Deferred tax is provided using the Balance Sheet liability method,
providing for the tax effect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary
differences: the initial recognition of goodwill, the initial
recognition of assets or liabilities in a transaction that is not
a business combination and that affects neither accounting
nor taxable profit, and differences relating to investments in
subsidiaries and jointly controlled entities to the extent that they
probably will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be
applied to the temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted by the
Balance Sheet date.
A deferred tax asset is recognised to the extent that it is probable
that future taxable profits will be available against which the
temporary differences can be utilised. Deferred tax assets are
reviewed at each Balance Sheet date and are reduced to the extent
that it is no longer probable that the related tax benefit will be
realized.
3.7 New standards and interpretations not
adopted
SLAS 44 - Financial instruments : presentation & SLAS 45 Financial instruments : Recognition & measurements
SLAS 44 and 45 was issued in 2008 and will be effective financial
years beginning on or after 1 January 2012. Accordingly, the
Financial Statements for the year ending 31 March 2014 will be
required to adopt SLAS 44 & 45.
These two standards together provide comprehensive guidance
on identification, classification, measurement & presentation of
financial instruments including derivative into financial assets,
financial liabilities & equity instruments. Accordingly, when
201102
a financial asset or liability is recognised initially, the Group
will measure such financial asset or liability at its fair value plus
transaction costs that are directly attributable to the acquisition
or issue of the financial asset, financial liability and subsequently
measured either at fair value or amortised cost depending on the
categorisation of financial assets & financial liabilities.
In order to comply with the requirements of these standards,
the Group/Company is in the process of setting up an
implementation plan and assessing the impact of adoption of the
aforesaid two standards. Due to the complex nature of the effects
of these standards, the impact of adoption cannot be estimated as
at the date of publication of these Financial Statements.
3.8 Basic Earnings Per Share (EPS)
The financial statements present basic earnings per share (EPS)
data for its ordinary shareholders.
The basic EPS is calculated by dividing the Profit or Loss
attributable to ordinary shareholders of the Company by the
weighted averaged number of ordinary shares outstanding during
the period.
3.9 Related party transactions
Disclosure has been made in respect of the transactions in
which one party has the ability to control or exercise significant
influence over the financial and operating policies/decisions of the
other, irrespective of whether a price being charged.
3.10 Cash flow statement
The Cash Flow Statements has been prepared using the “indirect
method”. Interest paid are classified as operating cash flows,
interest and dividend received are classified as investing cash flows
while dividend paid are classified as financing cash flows for the
purpose of presenting a Cash Flow Statement.
3.11 Comparative information
The comparative information is re-classified wherever necessary to
conform with the current year’s presentation in order to provide a
better presentation.
4
Revenue
Company
2011
Rs. ‘000s
2010
Rs. ‘000s
Brand New Vehicles
Spare Parts, Repairs & Services
Lubricants & Car Care Products
Valuation Fees & Foreign Commissions
Local Charges on New Vehicles
Hiring Income
Tractors & Accessories
Motor Cycles
Tyres
Income from Leasing Activities
3,568,594
1,094,777
157,303
45,049
37,205
4,440
-
-
-
-
4,907,368
1,904,820
927,293
123,426
22,035
24,494
4,689
-
-
-
-
3,006,757
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
6,992,005
1,343,441
354,822
45,049
37,206
22,309
22,344
1,435,600
406,418
275,922
10,935,116
2,350,513
1,091,690
274,038
29,603
24,494
34,401
130,723
1,034,363
402,600
456,985
5,829,410
The detailed segmental review is given under Note 36 to these Consolidated Financial Statements.
5
Other Income
Company
2011
Rs. ‘000s
2010
Rs. ‘000s
Dividend Income (Note 5.1)
Profit on Disposal of a Non Current Investment (Note 5.2)
Rent Income
Profit on Disposal of Property, Plant & Equipment
Staff Loan Interest
Commission on Insurance
Documentation Charges
Management Fees
Sundry Income (Note 5.3)
120,875
13,125
10,807
3,483
718
687
-
-
875
150,570
36,000
-
9,826
8,613
785
1,065
-
-
2,526
58,815
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
-
-
1,000
81,391
718
9,969
8,469
146
9,984
111,677
911
85,203
785
8,683
2,543
12,858
110,983
5.1 Dividend Income represents the income from investments in Subsidiaries and Jointly Controlled Entities. The details are given
under Note 11.1 to these Consolidated Financial Statements.
5.2 On February 2011, United Motors Lanka PLC sold its 100% owned Subsidiary Orient Financial Services Corporation Ltd,
(OFSCL) for a total consideration of Rs. 230 million and the resultant profit from such sale has been accounted under profit on
disposal of a Non Current Investment. During the year and up to the date of disposal, OFSCL contributed Rs. 279 million and
Rs. 45.8 million to the consolidated revenue and profit before tax respectivly.
103
5.3 Sundry Income
Company
2011
Rs. ‘000s
2010
Rs. ‘000s
Scrap Sales
Miscellaneous
-
875
875
-
2,526
2,526
6
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
4,846
5,138
9,984
12,858
12,858
Other Expenses
Company
Losses on Warranty Claims
Provision for / (Reversal of) Slow Moving and Obsolete Inventories
Provision for Bad & Doubtful Receivables
Loss on Disposal of a Non Current Investment (Note 6.1)
2011
Rs. ‘000s
2,113
5,559
39,404
-
47,076
2010
Rs. ‘000s
2,984
(7,966)
6,127
-
1,145
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
6,184
15,471
47,024
47,340
116,019
6,764
(4,528)
90,635
92,871
6.1 Loss on disposal of a Non Current Investment
On 21 February 2011, the Company disposed its entire Shareholding in Orient Financial Services Corporation Limited which is a fully
owned Subsidiary for a consideration of Rs. 230 million. As a result the difference between the consideration and the net assets as at the
date of the disposal has been recongised as loss in these Consolidated Financial Statements.
7
Results From Operating Activities
7.1 Results from operating activities is stated after charging all expenses including the following:
Company
401104
2011
Rs. ‘000s
2010
Rs. ‘000s
Depreciation on Property, Plant & Equipment
Amortision of Intangible Assetes
Audit fee - Parent Auditor
Other Auditor
Audit Related Services - Parent Auditor
Other Auditor
Tax Compliance and Consultancy
Non Audit Services
Directors’ Fees and Emoluments - Cash
Directors’ Fees and Emoluments - Non Cash
Personnel Expenses (Note 7.2)
Donations
Legal Expenses
22,843
1,400
2,150
-
50
-
208
760
31,930
540
293,379
29
1,721
37,201
65
1,900
-
50
-
181
256
27,121
540
220,200
48
591
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
34,835
1,400
4,730
125
50
-
726
802
41,578
1,134
453,718
36
2,381
73,513
65
4,165
128
120
631
838
34,799
762
345,280
48
591
7.2 Personnel Expenses
Company
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
2011
Rs. ‘000s
2010
Rs. ‘000s
Salaries & Wages
Contribution to EPF & ETF
Overtime Expenses
Bonus
Medical Insurance
Contribution to Defined Benefit Plans (Gratuity)
164,929
23,809
3,860
72,585
12,684
15,512
293,379
148,325
21,409
3,460
34,106
10,088
2,812
220,200
291,978
33,291
4,616
88,297
16,246
19,290
453,718
254,030
29,572
4,306
38,108
13,651
5,613
345,280
The Number of Employees as at 31 March
437
364
859
783
8
Finance Income and Expenses
Company
2011
Rs. ‘000s
2010
Rs. ‘000s
Finance Income
Interest on Call Deposit
Interest on Amounts due from Related Parties
Foreign Exchange Gain
Total Finance Income
1,266
1,925
4,563
7,754
703
-
614
1,317
Finance Expense
Interest on Finance Leases
Interest on Bank Borrowings
Interest on Overdraft
Total Finance Expense
Net Finance Expense
(9)
(9,944)
(2,010)
(11,963)
(4,209)
(158)
(126,975)
(3,824)
(130,957)
(129,640)
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
5,885
262
21,710
27,857
(94)
(173,746)
(41,040)
(214,880)
(187,023)
861
3,795
4,656
(158)
(563,983)
(69,413)
(633,554)
(628,898)
105
9
Income Tax Expense
Company
Income Tax recognised in profit or loss
Current Tax Expense (Note 9.1)
Adjustments for Prior Periods
Deferred Tax Expense / (Income)
Reversal of Temporary Differences (Note 25.1)
2011
Rs. ‘000s
2010
Rs. ‘000s
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
245,464
(14,256)
231,208
70,544
-
70,544
503,395
(14,855)
488,540
107,618
(2,133)
105,485
(14,672)
216,536
(1,308)
69,236
(15,362)
473,178
(117,734)
(12,249)
9.1 Reconciliation between Accounting Profit and Taxable Income is as follows
For the year ended
Company
2010/2011
2009/2010
Rs.’000s
Rs.’000s
Disallowable Expenses
Exempt Dividends & Other Non Business Income
Allowable Expenses
Statutory Income from business
Other Income
Total statutory Income / Assessable Income
Donations
Taxable Income
Tax Rate
735,350
178,833
(157,151)
(69,947)
687,085
3,906
690,991
(29)
690,962
35%
190,471
100,297
(38,164)
(54,813)
197,791
785
198,576
198,576
35%
Income Tax for the Year
Social Responsibility Levy at 1.5%
Total Tax fot the Year
241,837
3,627
245,464
69,502
1,042
70,544
Effective Tax Rate
33%
37%
9.2 Taxation on Company
Current Tax
United Motors Lanka PLC is liable for Income Tax at the rate of 35 % under the terms of Inland Revenue Act No. 10 of 2006 and
amendments there to, in relation to taxable income from business activity.
Economic Service Charge
In accordance with the Finance Act No . 13 of 2006, during the year the company has paid Economic Service Charge (ESC) at the rate
of 0.5 % on trading and 1% on non-trading “Liable Turnover” amounting to Rs. 27,984,783/- (2009/10 - Rs. 25,770,803/-).
601106
Deferred Tax
Reversal has been made in respect of Deferred Tax Liabilities amounting to Rs. 14,672,058/- (2009/10 - Rs. 1,308,000/-) under the
liability method in respect of temporary differences arising between the carring amount of assets and liabilities for the financial reporting
purpose and the amount used for tax purpose.
9.3 Taxation on Subsidiaries & Jointly Controlled Entities
Current Tax
The Company is liable for Income Tax at the rate of 35% and provision for Income Tax for the year amounted to Rs. 17,042,247/(2009/10 - Rs. 17,073,195/-) has been made in the Consolidated Financial Statements.
The Company is liable for Economic Service Charge at the rate of 1% on its “Liable Turnover”. Accordingly, Rs. 269,991/(2009/10 Rs. 360,666/-) has been paid during the year as Economic Service Charge.
Deferred Tax
The deferred tax asset amounting to Rs. 51,224,097/- (2009/10 - Rs. 62,766,616/-) as at 31st March 2011 has not been recognised in the
Consolidated Financial Statements due to the recent history of tax losses of Orient Motor Company Ltd.
UML Agencies & Distributors (Pvt) Limited
Current Tax
The Company is liable for Income Tax at the rate of 35%. However no provision has been made in these Consolidated Financial
Statements on account of Income Taxes as there were no commercial operations during the period under review.
The Company is not liable for Economic Service Charge since there were no business transactions during the period under review.
Deferred Tax
There were no provision made for Deferred Tax in view of tax losses available as at 31st March 2011. Deferred Tax Assets arising from tax
losses has not been recognised in the Consolidated Financial Statements, in view of there being no commercial operations.
Current Tax
The Company is liable for income tax at the rate of 35% and provision for income tax for the year Rs.104,883,777/- (2009/10 - nil) has
been made in the Consolidated Financial Statements.
The Company is liable for Economic Service Charge at the rate of 1 % on its “Liable Turnover”. Accordingly , an amount of
Rs. 26,331,702/- (2009/10 - Rs. 13,848,446/-) has been paid during the year.
Deferred Tax
The Deferred Tax Liability arising from temporary differences of Rs. 364,047/- (2009/10 - Rs. 225,833/-) has been recognised in these
UML Property Development Limited
Current Tax
UML Property Development Limited is Liable for tax at the rate of 2% on its net turnover and this rate will remain until year 2022,in
accordance with an agreement concluded with the Board of Investment of Sri Lanka under section 17 of the BOI Act No. 4 of 1978.
Accordingly, tax provision of Rs. 971,832/- (2009/10 - Rs. 824,529/-) has been made in the Consolidated Financial Statements .
107
The Company is liable for Economic Service Charge at the rate of 0.5% on its “Liable Turnover”. Accordingly, an amount of
Rs. 226,462/- (2009/10 - Rs. 206,132/-) has been paid during the year.
Deferred Tax
Provision has been made for Deferred Taxation amounting to Rs.1,252,608/- for the year ended 31st March 2011 under the liability
method in respect of temporary differences arising between the carring amount of assets and liabilities for the financial reporting purpose
and the amount used for tax purpose.
Orient Financial Services Corporation Limited
Current Tax
The Company is liable for Income Tax at the rate of 35%. Accordingly, tax provision of Rs. 522,355/- has been made on the profits
recognised in these Consolidated Financial Statements up to the date of its disposal.
TVS Lanka Private Limited
Current Tax
The Company is liable for Income Tax at the rate of 35%. Accordingly, Income Tax provision of Rs.250,841,339/(2009/10 - Rs. 13,456,934/-) has been made in these Consolidated Financial Statements.
The Company is liable for Economic Service Charge (ESC) at the rate of 0.5% and 1% on its “Liable Turnover” amounting to
Rs. 51,947,197/- (2009/10 - Rs. 16,427,933/-) has been paid during the year.
Deferred Tax
Reversal has been made in respect of Deferred Tax Liabilities amounting to Rs. 5,032,859/- (2009/10 - Rs. 3,665,259/-) under the
liability method in respect of temporary differences arising between the carring amount of assets and liabilities for the financial reporting
purpose and the amount used for tax purpose.
10 Basic Earnings Per Share (EPS)
The calculation of basic earnings per share is based on the net profit attributable to ordinary shareholders for the year divided by the
weighted average number of ordinary shares outstanding during the year end and calculated as follows.
Company
2011
Rs. ‘000s
Amount used as the Numerator
Profit attributable to Ordinary Shareholders
518,814
Amount used as the Denominator
Weighted average number of Ordinary Shares
67,267
Basic Earnings Per Share (Rs.)
7.71
Consolidated
2010
2011
2010
Rs. ‘000s
Rs. ‘000s
Rs. ‘000s
(Restated)
(Restated)
121,235
903,273
144,982
67,267
67,267
67,267
1.80
13.43
2.16
On 30 November 2010, the Company increased the number of issued Shares by way of a sub division of shares on the basis of two
Ordinary Shares for every existing issued Ordinary Share. Accordingly the number of shares in issue as at date is 67,267,084. (31 March
2010 - 33,633,542). There was no effect or increase to the Stated Capital of the Company. Accordingly, the EPS for the year has been
computed based on the new number of shares. The EPS for all the prior years presented herein also has been computed based on this new
number of shares.
801108
In accordance with Sri Lanka Accounting Standards No. 34 “Earnings per Share”, the computations for the comparative year presented
herein also has been based on this new number of shares.
11 Dividends
11.1Proposed Dividend
The Directors have recomended the payment of a Rs. 3.25 per share for the year ended 31st March 2011 which is to be approved at the
Annual General Meeting to be held on 29 June 2011.
The dividend of Rs. 3.25 per share (2009/2010 - Rs. 1.80 per share) distributed to Shareholders includes a re - distribution of dividend received
from Subsidiaries and Jointly Control Entities amounting to of Rs. 108,846,000 /- (net of WHT on dividend). The details are as follows:
2010/11
WHT
Rs.000
Net Dividend
Rs.000
2009/10
Net Dividend
Rs.000
3,900
3,000
5,000
129
12,029
35,100
27,000
45,000
1,746
108,846
32,400
32,400
Description Amount
Rs.000
WHT
Rs.000
Dividend distributed out of profits
Re distribution of dividend received from TVS Auto Parts (Pvt) Ltd.
Total
1,290
585
1,875
129
-
129
Subsidiary/ Jointly Controlled Entity
Amount
Rs.000
UML Property Development Ltd
Orient Motor Co. Ltd
TVS Lanka (Pvt) Ltd (Note 11.1.1)
Total
39,000
30,000
50,000
1,875
120,875
11.1.1 The details of dividend received from TVS Lanka (Pvt) Ltd. are as follows:
Net Dividend
Rs.000
1,161
585
1,746
In accordance with Sri Lanka Accounting Standard No. 12 (revised 2005) “Events after the Blance Sheet Date” this proposed final
dividend has not been recognised as a liability in these Consolidated Financial Statements for the year ended 31 March 2011.
However, for the purpose of computing dividend per share, the final dividend to be approved has been taken into consideration.
11.2Dividend Per Share
2010/2011
Rs. ‘000s
Company
2009/2010
Rs. ‘000s
Dividend Proposed-(2010 /2011)
Number of Ordinary Shares
Dividend Per Share (Rs.)
218,618
67,267
3.25
60,540
33,634
1.80
Consolidated
2010/2011
2009/2010
Rs. ‘000s
Rs. ‘000s
218,618
67,267
3.25
60,540
33,634
1.80
109
12 Property, Plant & Equipment
(a) Company
Land Building Furniture Office Electrical Machinary
Motor
Motor Reference Computers
Fixture
& Fittings Equipment
& Tools
Vehicles
Vehicles
Books
& Fittings Free hold Lease hold
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000 Total
Rs. ‘000
Cost / Valuation
As at 01 April 2009
Reclassification of Intangible assets
Additions
Revaluation (Note 12.1)
Disposals
As At 31 March 2010
931,902
-
215
827,883
-
1,760,000
44,157
-
1,749
-
-
45,906
11,279
-
1,702
-
(44)
12,937
13,022
-
267
-
(477)
12,812
20,366
-
4,347
-
(753)
23,960
44,886
-
5,112
-
(185)
49,813
109,270
-
356
-
(8,913)
100,713
6,999
-
-
-
-
6,999
107
-
-
-
-
107
66,062 1,248,050
(7,000)
(7,000)
2,445
16,193
- 827,883
(1,151) (11,523)
60,356 2,073,603
As at 01 April 2010
Additions
Disposals
As at 31 March 2011
1,760,000
-
-
1,760,000
45,906
10,266
-
56,172
12,937
321
-
13,258
12,812
1,083
-
13,895
23,960
2,215
-
26,175
49,813
7,607
-
57,420
100,713
2,180
(3,885)
99,008
6,999
-
(1,532)
5,467
107
-
-
107
60,356 2,073,603
8,816
32,488
-
(5,417)
69,172 2,100,674
Accumulated Depreciation
As at 01 April 2009
Charge for the Year
On Disposals
As At 31 March 2010
-
-
-
-
-
43,048
-
190
-
43,238
9,111
-
847
(44)
9,914
10,396
-
1,089
(469)
11,016
17,423
-
1,845
(752)
18,516
35,005
-
2,700
(185)
37,520
67,597
-
21,084
(8,118)
80,563
5,249
-
1,750
-
6,999
73
-
22
-
95
35,464
(65)
7,740
(1,141)
41,998
223,366
(65)
37,267
(10,709)
249,859
As at 01 April 2010
Charge for the Year
On Disposals
As at 31 March 2011
-
-
-
-
43,238
1,312
-
44,550
9,914
884
-
10,798
11,016
1,154
-
12,170
18,516
2,302
-
20,818
37,520
2,403
-
39,923
80,563
7,317
(3,885)
83,995
6,999
-
(1,532)
5,467
95
11
-
106
41,998
7,460
-
49,458
249,859
22,843
(5,417)
267,285
Net Book Value
1,760,000
11,622
2,460
1,725
5,357
17,497
15,013
-
1
19,714 1,833,389
Capital Work in Progress (Note No. 12.4)
As at 31 March 2011
3,048
8,967
As at 31 March 2010
Carrying Value as at 31
March 2011 1,836,437
Carrying Value
as at 31 March 2010
1,760,000
2,668
3,023
1,796
5,444
12,293
20,150
-
12
18,358 1,832,711
Details of the land owned by the Company are as follows:
Location / Address
Buliding
Extent
Cost On previous Revaluation Total Value
Sq / Ft
Acre
Rood
Perch Revaluations 2009 / 10
Rs.’000
Rs.’000
Rs.’000
Rs.’000
100, & 100A, Hyde Park
Corner, Colombo 02
80,322
143,& 145, Majeed Place,
Orugodawatta
15,864
Vauxhall Street, Colombo 02.
-
Total
011110
1
3
0.54
76,791
391,610
593,099
1,061,500
7
0
8
1
1
5
9.13
10.35
20.02
63,940
161,325
302,056
202,460
35,991
630,061
218,100
16,684
827,883
484,500
214,000
1,760,000
(b) Consolidated
Land Building Furniture Office Electrical Machinary
Motor
Motor Reference Computers
Fixture
& Fittings Equipment
& Tools
Vehicles
Vehicles
Books
& Fittings Free hold Lease hold
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000 Cost / Valuation
As at 01 April 2009
Additions
Revaluation (Note 12.1)
Disposals
As At 31 March 2010
Total
Rs. ‘000
983,902
-
215
835,847
-
1,819,964
134,406
-
1,749
-
-
136,155
15,595
-
1,844
-
(44)
17,395
34,501
-
2,212
-
(7,393)
29,320
21,519
-
3,264
-
(753)
24,030
50,273 281,319
-
-
8,532
18,822
-
-
(299) (139,505)
58,506 160,636
60,514
-
598
-
(90)
61,022
107
-
-
-
-
107
115,572 1,697,708
(7,000)
(7,000)
5,959
43,195
- 835,847
(5,964) (154,048)
108,567 2,415,702
As at 01 April 2010
Additions
Disposals
Adjustment due to sale of
non - current investment
As at 31 March 2011
1,819,964
-
-
136,155
10,266
-
17,395
365
-
29,320
1,307
-
24,030
2,215
-
58,506
8,707
-
160,636
80,167
(92,194)
61,022
15,260
(1,532)
107
-
-
108,567 2,415,702
17,399 135,686
-
(93,726)
-
1,819,964
-
146,421
(3,673)
14,087
(5,282)
25,345
-
26,245
-
67,213
(23,984)
124,625
(28,558)
46,192
-
107
(35,784) (97,281)
90,182 2,360,381
Accumulated Depreciation
As at 01 April 2009
Reclassfication of Intangible Assets
Charge for the period
On Disposals
As At 31 March 2010
-
-
-
-
-
63,507
-
2,463
-
65,970
11,993
-
1,479
(44)
13,428
27,528
-
2,817
(7,113)
23,232
18,112
-
1,157
(752)
18,517
39,548 257,681
-
-
4,651
35,579
(244) (139,216)
43,955 154,044
29,399
-
14,011
(90)
43,320
73
-
22
-
95
69,435 517,276
(65)
(65)
11,399
73,578
(1,141) (148,600)
79,628 442,189
As at 01 April 2010
Charge for the period
On Disposals
Adjustment due to sale of
non - current investment
As at 31 March 2011
-
-
-
65,970
3,586
-
13,428
1,034
-
23,232
2,925
-
18,517
2,372
-
43,955
3,272
-
154,044
7,014
(90,912)
43,320
3,355
(1,532)
95
11
-
79,628
11,266
-
442,189
34,835
(92,444)
-
-
-
69,556
(3,002)
11,460
(4,425)
21,732
-
20,889
-
47,227
(18,643)
51,503
(16,179)
28,964
-
106
(25,326)
65,568
(67,575)
317,005
Net Book Value
1,819,964
76,865
2,627
3,613
5,356
19,986
73,122
17,228
1
24,614 2,043,376
Capital Work in
Progress - (Note No. 12.4)
As at 31 March 2011
6,176
As at 31 March 2010
18,408
Carring Value
as at 31 March 2011
-
-
-
-
-
-
-
-
-
- 2,049,552
Carring Value
as at 31 March 2010
1,819,964
70,185
3,967
6,088
5,513
14,551
6,592
17,702
12
28,939 1,991,921
12.1 Revaluation
Company:
(i) In March 1993, the company’s land costing Rs.93,335,951/- was revalued by an Indipendent Chartered Valuer. The surplus arrising
out of such revaluation amounting Rs.49,000,000/- was fully utilised for issue of Bonus Shares.
(ii) In December 1999, another revaluation has been carried out by an Independent Chartered Valuer to reflect the market value. The
total surplus arrising out of this revaluation amounting to Rs. 141,853,649/- has been fully utilised for the issue of Bonus Shares
during 2002/2003.
(iii) In March 2005, a third revaluation was carried out by an independent Chartered valuer. The total surplus arising out of such
revaluation amounting to Rs. 398,820,000/- has been credited to the Capital Reserve on Revaluation of Land.
(iv) In March 2010, a further revaluation was carried out by J M Senanayake Bandara, a Qualified Independent Valuer on the 31
March 2010. The resultant surplus of Rs 827.8 million has been credited to the capital reserve on revaluation of land.
111
Consolidated:
(v) TVS Lanka (Pvt) Ltd
The land situated at Lot 1B, part of Bandarawatta, Kaduwela Road, Biyagama owned by the Company was revalued by Mr.
J.M.S.Bandara,Independant qualified Valuer on 26th May 2005. The resultant surplus of Rs. 52,163,216/- was accounted for in
Revaluation Reserve and further, the same was revalued by Mr.J.M.J Fernando, Independant qualified Valuer on 24th January
2010 and the resultant surplus of Rs. 15,927,805 was accounted for as revaluation reserve during the year 2009/10.
12.2 There are no tax implications or tax liabilities pertaining to revaluation of land stated in Note 12 above.
12.3 There has been no impairments in the value of Property, Plant and Equipment which require a provision in these Consolidated
Financial Statements.
12.4Capital work in progress
Company
As at 31 March
Balance as at 01 April
Additions during the year
Transferred to Propety, Plant and Equipment
Adjustment due to Disposal of a Non Current Investment
Balance as at 31 March
2011
Rs. ‘000s
2010
Rs. ‘000s
8,967
3,048
(8,967)
-
3,048
-
8,967
-
-
8,967
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
18,408
3,048
(8,967)
(6,313)
6,176
4,390
14,018
18,408
13 Intangible Assets
Company
As at 31 March
2011
Rs. ‘000s
2010
Rs. ‘000s
Goodwill (Note 13.1)
Computer Software (Note 13.2)
-
5,535
5,535
-
6,935
6,935
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
15,435
5,535
20,970
17,456
6,935
24,391
13.1Goodwill
Company
As at 31 March
211112
2011
Rs. ‘000s
2010
Rs. ‘000s
Adjustment due to disposal of a Non - Current Investment
Impairement (Note 13.1 a)
Balance as at 31 March -
-
-
-
-
-
-
-
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
17,456
(2,021)
-
15,435
17,456
17,456
13.1 (a) Impairement
Goodwill represents the difference between the purchase consideration and the fair value of assets acquired as a result of the acquisition
of balance 50% shares in Unimo Enterprise Ltd (Formaly known as Associated United Motors Limited) which was effetive from 3rd
October 2002, and the acquisition of 50% shares in the Jointly Controlled Entity, TVS Lanka (Pvt) Limited effective from 01 August
2003. Goodwill has not been amortised following the requirements of the SLAS 25 as there is no impairment as at 31 March 2011.
13.2Computer Software
As at 31 March
Amortisation during the year
Company
2011
Rs. ‘000s
6,935
(1,400)
5,535
2010
Rs. ‘000s
7,000
(65)
6,935
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
6,935
(1,400)
5,535
7,000
(65)
6,935
The Computer Software represents the contract value which amounted to Rs. 7 million of the Enterprise Resource Planning System
(ERP). This system has been fully developed and implemented in the year 2009/10. Computer Software is amortised over a period of 5
years. The amount shown above represents the net value after charging the amortisation as at the Balance Sheet date.
14 Net Lease Rental Receivable - Non Current Portion
As at 31 March
Contracts Receivable on Assets
Rental Receivable 1 > 5 years
Less : Unearned Income
Provision for Doubtful Debts (Note 14.1)
Net Contract Receivable on Assets
Consolidated
2011
2010
Rs. ‘000
Rs. ‘000
-
-
-
-
543,769
(93,093)
(196,931)
253,745
Net Lease rental receivable represents the receivables of Orient Financial Services Corporation Ltd. from the leasing operations. Since
the company ceased to be a Subsidiary as at the Balance Sheet date, no balances pertaining to lease rental receivables appear in these
14.1Movement in Provision for Doubtful Debts
As at 31 March
Movement in provision for Doubtful Debts-Non Current
Charge for the year
Consolidated
2011
2010
Rs. ‘000
Rs. ‘000
-
-
-
177,129
19,802
196,931
113
15 Investments
As at 31st March
%
Holding
Investments In Subsidiaries
100
UML Property Development Ltd.
100
UML Agencies & Distributors (Pvt) Ltd.
100
Orient Financial Services Corporation Ltd. (Note 15.1) 100
100
Investments in Joint Venture
TVS Lanka (Pvt) Ltd.
50
Other Investment
Credit Information Bureau of Sri Lanka
Total
Company
Consolidated
2011
2010
2011
2010
50,000
75,000
1,000
-
47,400
173,400
50,000
75,000
1,000
216,875
47,400
390,275
-
-
-
-
-
-
-
173,545
123,545
-
-
-
346,945
-
513,820
-
-
31
31
15.1On 21 February 2011, the Company disposed of its wholly owned Subsidiary Orient Financial Services Corporation Limited for a
consideration of Rs. 230 Million.
15.2All the Subsidiaries and the Jointly Controlled Entities are incorporated and operating in Sri Lanka.
15.3Summary of financial information of joint venture
The aggregate amounts (100%) of the Assets, Liabilities, Income, Expenses and Profits related to the interest in Jointly Controlled
Entities are as follows:
411114
As at 31 March
2011
Rs. ‘000
2010
Rs. ‘000
Assets
Liabilities
Equity
2,408,331
1,635,408
772,923
20,591
1,418,448
1,119,791
298,656
16,649
Revenue
Expenses
Income Tax Expenses
Profit for the year
6,226,407
483,850
263,899
384,941
2,926,310
377,165
18,074
4,046
16 Inventories
As at 31 March
2011
Rs. ‘000s
Company
Spare parts
Vehicles
Others
Less: Provision for Slow Moving / Obsolete Invetories
Work-In-Progress
Goods in Transit (Note 16.1)
245,182
691,986
79,968
1,017,136
(72,710)
944,426
20,725
16,886
982,037
2010
Rs. ‘000s
202,176
559,498
50,827
812,501
(67,151)
745,350
21,919
39,844
807,113
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
635,734
959,192
309,667
1,904,593
(96,017)
1,808,576
20,725
37,360
1,866,661
216,871
816,390
229,788
1,263,049
(79,168)
1,183,881
19,280
46,091
1,249,252
16.1Goods In Transit
As at 31 March
2011
Rs. ‘000s
Company
2010
Rs. ‘000s
Vehicles
Spare parts
14,075
2,811
16,886
17,022
22,822
39,844
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
29,970
7,390
37,360
17,207
28,884
46,091
17 Trade and Other Receivables
As at 31 March
Trade Receivables
Provision for Bad and Doubtful Receivables
Net Lease Rentals Receivable - Current (Note. 17.1)
Loans to Employees
Deposits & Pre-Payments
ESC Recoverable
Other Receivables
Company
2011
Rs. ‘000s
498,876
(12,545)
486,331
-
5,050
27,923
-
44,325
563,629
2010
Rs. ‘000s
370,475
(10,027)
360,448
-
6,715
24,595
66,703
108,627
567,088
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
1,351,352
(66,007)
1,285,345
-
5,065
52,024
84,104
215,545
1,642,083
1,012,689
(60,248)
952,441
831,378
6,888
42,660
157,405
435,148
2,425,920
115
17.1Net Lease Rental Receivable - Current
As at 31 March
Consolidated
2010/2011
2009/2010
Rs. ‘000
Rs. ‘000
Contracts Receivable on Assets
Less : Unearned Income
Provision for Doubtful Receivables (Note 17.1.1)
Net Contract Receivables on Assets
-
-
-
-
757,531
(181,764)
(174,022)
401,745
Overdue Finance Lease Rentals
Overdue Operating Lease Rentals
Overdue Hire Purchase Rentals
Less : Lease Income Suspended
Net Overdue Lease Rentals Receivables
Grand Total
-
-
-
-
-
-
-
8,620
41,835
430,669
481,124
(51,491)
429,633
831,378
Net Lease rental receivable represents the receivables of Orient Financial Services Corporation Ltd. from the leasing operations. Since
the company ceased to be a Subsidiary as at the Balance Sheet date, no balances pertaining to lease rental receivables appear in these
17.1.1 Movement in provision for Bad and Doubtful Reciverbles
As at 31 March
Charge for the year
Consolidated
2010/2011
2009/2010
Rs. ‘000
Rs. ‘000
-
-
-
131,671
42,351
174,022
17.2Loans to Employees
Movement of Loans disbursed to employees which has exceeded Rs. 20,000/- are disclosed as follows
Company
Consolidated
Non Executives
Executives Non Executives
Executives
2010/2011
2010/2011
2010/2011
2010/2011
Rs. ‘000
Rs. ‘000
Rs. ‘000
Rs. ‘000
(No of Employees - 143)
Loans disbursed during the year
Recovered during the year
(No of Employees - 210)
No Loans have been granted to the Directors of the Company.
611116
5,465
4,151
(4,898)
-
-
-
5,465
4,151
(4,898)
-
4,718
-
4,718
-
18 Amounts due from Related Parties As at 31 March
Relationship
Company
Orient Motor Company Ltd
Subsidiary
Subsidiary
Unimo Enterprises Ltd
Corporation Ltd
-
TVS Lanka (Pvt) Ltd
Jointly Controlled Entity
Affiliate TVS Auto Parts (Pvt) Ltd
TVS Automotives (Pvt) Ltd
Affiliate
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
2011
Rs. ‘000s
2010
Rs. ‘000s
43,355
3,884
452
231,827
-
-
-
-
36,057
84
936
84,316
497
57,227
274
56,676
346,953
-
18,053
42
468
18,563
28,613
137
28,339
57,089
19 Cash & Cash Equivalents
As at 31 March
2011
Rs. ‘000s
Company
2010
Rs. ‘000s
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
Favourable Balances
Call Deposits
Investment in Treasury Bills
Cash at Bank
Cash in Hand
118,516
-
172,427
38,994
329,937
7,555
-
40,884
7,289
55,728
120,469
10,157
340,511
42,659
513,796
7,555
58,142
22,089
87,786
Unfavourable Balances
Bank Overdraft
Cash & Cash Equivalent for the Purpose of Cash Fow Statements
(32,672)
297,265
(31,535)
24,193
(183,164)
330,632
(288,395)
(200,609)
Overdraft facilities of the Company are unsecured. See Note 30 for details of securities given in favour of the related Companies.
20 Stated Capital
As at 31 March
Company
2011
Rs. ‘000s
2010
Rs. ‘000s
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
Sub division of shares (Note 20.1)
33,633,542
33,633,542
336,335
-
336,335
-
336,335
-
336,335
-
67,267,084
336,335
336,335
336,335
336,335
117
20.1On 13 October 2010, the Board of Directors proposed to increase the number of issued shares of the Company by way of a sub
division of shares, the basis of two Ordinary Shares for every existing Ordinary Share without affecting any increase to the Stated
Capital of the Company. This transaction was approved by the Shareholders at an Extra Ordinary General Meeting (EGM) held on
30 November 2010.
21 Capital Reserves
As at 31 March
2011
Rs. ‘000s
Company
2010
Rs. ‘000s
Surplus on Revaluation of Property, Plant & Equipment
Surplus during the year
1,184,928
-
-
1,184,928
357,045
827,883
-
1,184,928
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
1,244,755
-
(25,781)
1,218,974
408,908
835,847
1,244,755
22 Analysis of Consolidated Profit after Income Tax Expense
As at 31 March
Parent Company
Subsidiaries
Jointly Controlled Entities (On the proportionate consolidation basis)
Inter - Company Eliminations Consolidated Profit after Income Tax Expense
811118
Consolidated
2011
2010
Rs. ‘000
Rs. ‘000
518,814
348,155
192,470
1,059,439
(151,658)
907,781
121,235
50,584
2,027
173,846
(27,556)
146,290
23 Interest Bearing Borrowings
As at 31 March
2011
Rs. ‘000s
Company
2010
Rs. ‘000s
Opening Balance as at 1st April
Adjustment due to disposal of a non - current investment
Obtained During the year
Payments made during the year
Unamotised Finance Charges
Closing Balance as at 31st March
674,423
-
901,000
1,575,423
(1,575,423)
-
-
-
1,464,169
-
1,372,641
2,836,810
(2,162,387)
674,423
(9)
674,414
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
2,023,243
(850,130)
5,316,936
6,490,049
(6,191,768)
298,281
(567)
297,714
3,584,892
3,846,311
7,431,203
(5,407,961)
2,023,242
(8,613)
2,014,629
23.1The break-up of Interest bearing Borrowings is as follows:
As at 31 March
Company
Payable within Payable after
Total
one year
one year 31/03/2011
Long Term Borrowings (Note 23.2)
Finance Lease
Obligations (Note 23.3)
Short Term Borrowings
Last Year
Total
31/03/2010
Consolidated
Last Year
Payable within Payable after
Total
Total
one year
one year 31/03/2011 31/03/2010
-
-
-
-
-
-
-
836,353
-
-
-
-
-
-
-
-
-
414
674,000
674,414
1,025
294,960
295,985
1,729
-
1,729
2,754
294,960
297,714
24,188
1,154,088
2,014,629
23.2Non current portion of Long Term Loans is scheduled to be repaid as follows:
As at 31 March
2011
Rs. ‘000s
Company
2010
Rs. ‘000s
1 to 2 Years
2 to 3 Years
3 to 4 Years
-
-
-
-
-
-
-
-
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
-
-
-
-
180,815
40,000
26,667
247,482
The total long term borrowings have been guaranteed through Corporate Guarantees issued by the parent Company, United Motors
Lanka PLC, in favour its Subsidiaries and a related Company morefully discribed in Note 30 to these Consolidated Financial Statements.
Long term loan repayments represents the repayments of Orient Financial Services Corporation Ltd. Since the company ceased to be a
subsidiary as at the Balance Sheet date, no balances pertaining to loan repayments appear in these Consolidated Financial Statements.
119
23.3Finance Lease Obligations
As at 31 March
As at 01 April
Adjustment due to sale of non - current investment
Obtained During the year
Repayments during the year
Gross Finance Lease Liabilities as at 31March Finance Charges Unamortised
Net Lease Obligations
Out of which:
Payable more than one year & less than five years
Payable within one year
Company
2011
Rs. ‘000s
2010
Rs. ‘000s
414
-
-
414
(414)
-
-
-
2,115
-
-
2,115
(1,692)
423
(9)
414
-
-
-
-
414
414
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
32,801
(26,130)
710
7,381
(4,060)
3,321
(567)
2,754
45,895
5,285
51,180
(18,379)
32,801
(8,613)
24,188
1,729
1,025
2,754
15,022
9,166
24,188
24 Defined Benefits Obligations
24.1Other Long Term Assets - Defined Benefits
As at 31 March
Employees Joined before 1992 / 93
Eagle Mutual Fund (Refer 24.3)
Employees Joined after 1992 / 93
Plan Assets (Refer 24.4)
Company
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
2011
Rs. ‘000s
2010
Rs. ‘000s
1,471
1,054
1,471
1,054
73,356
74,827
73,178
74,232
73,356
74,827
73,178
74,232
24.2Defined Benefit Obligations
021120
As at 31 March
2011
Rs. ‘000s
2010
Rs. ‘000s
Employees Joined before 1992 / 93
Funded Obligations (Refer 24.3)
Unfunded Obligations (Refer 24.3)
1,471
2,077
1,054
2,517
1,471
15,842
1,054
18,085
Employees Joined after 1992 / 93
Present value of funded obligations
77,443
80,991
70,957
74,528
77,443
94,756
70,957
90,096
Company
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
24.3Retiring gratuity is a defined benefit plan - covering employees of the Company. The Compay’s liability arising on retirement
benefits of employees joined prior to 1992/93 is partly externally funded & this has been invested in Aviva NDB Mutual Funds and
the value of this fund as at 31 March 2011 is Rs. 1,471,062/- (2009/10 - Rs. 1,053,525/-). The unfunded liability as at 31 March
2011 is Rs. 2,076,961/- (2009/10 - 2,518,098/-) and has been provided for in the Consolidated Financial Statements. The gratuity
liability of the employees joined after 1992, is externally funded and a policy agreement has been entered in to with Aviva NDB
Insurance PLC and covers 402 employees attached to the Company as at 31 March 2011.
24.4An Acturial valuation has been carried out as at 31 March 2011 by Mr. M. Poopalanathan attached to the Acturial and
Management Consultants (Pvt) Limited.The valuation method used by the actuary is the “Projected Uinit Credit Method”, the
method recommended by Sri Lanka Accounting Standards16 ‘Employee Benefits’ (SLAS 16). The Premium for the current year is
Rs. 9,865,234/- (2009/10 - Rs. 9,513,700/-).
Results of the actuarial valuation indicate the following, which have been accounted for:
As at 31 March
Fair Value of the Plan Assets (Refer 24.6)
Present Value of Defined Benefit Obligations (Refer 24.7)
Present Value of Net Obligation
Company
2011
Rs. ‘000s
2010
Rs. ‘000s
73,356
(77,443)
(4,087)
73,178
(70,957)
2,221
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
73,356
(91,208)
(17,852)
73,178
(86,525)
(13,347)
24.5The above net obligation of Rs. 4,086,996/- and Rs. 17,351,000/- for Company and Group respectively (2009/10 Rs. 2,221,557/-) has been provided for in the Consolidated Financial Statements.
24.6Movement in Fair Value of Plan Assets
As at 31 March
Contribution Paid to the Plan
Benefits Paid by the Plan
Actuarial Gains / (Losses) on Plan Assets
Fair Value of the Plan Assets as at 31 March
Company
2011
Rs. ‘000s
73,178
9,865
(9,352)
(335)
73,356
2010
Rs. ‘000s
61,574
9,514
(5,357)
7,447
73,178
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
73,178
9,865
(9,352)
(335)
73,356
61,574
9,514
(5,357)
7,447
73,178
The above amount is invested in AVIVA NDB Insurance PLC.
121
24.7Movement in the Present Value of the Defined Benefit Obligations
As at 31 March
Balance as at 1st April
Adjustment in respect of Subsidiary Companies (Note 3.5.3 b)
Restated balance as at 01 April Current Service Cost
Interest Cost
Benefit Paid During the Year
Actuarial Losses
Adjustment due to disposal of a Non Current Investment Defined Benefit Obligation as at 31 March
Company
2011
Rs. ‘000s
2010
Rs. ‘000s
70,957
-
70,957
4,808
7,805
(8,995)
2,868
-
77,443
65,709
-
65,709
4,788
7,228
(6,842)
74
-
70,957
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
86,525
64
86,589
7,989
8,956
(9,721)
2,569
(5,174)
91,208
65,710
15,568
81,278
4,788
7,228
(6,842)
73
86,525
24.8Actuarial Assumptions
Principle actuarial assumptions as at the Balance Sheet date are,
2010/2011
Company
2009/2010
Rate of Discount as at 31 March
Future Salary Increases
11%
10%
11%
10%
Consolidated
2010/2011
2009/2010
11%
10%
11%
10%
Assumptions regarding future mortality are based on A67 / 70 Mortality Table, issued by the institute of Actuaries, London, United
Kingdom.
25
Deferred Tax Assets and Liabilities
Provision has been made for deferred taxation under the Balance Sheet Liability Method in providing for the tax effect of temporary
differences between the carring amount of assets and liabilities.
25.1Deferred Tax Assets
221122
As at 31 March
2011
Rs. ‘000s
2010
Rs. ‘000s
As at 01 April
Reversal of Temporary Differences (Note 9)
As at 31 March
5,526
-
14,672
20,198
4,218
-
1,308
5,526
Company
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
122,886
(115,348)
17,421
24,959
4,217
118,669
122,886
25.2Deferred Tax Liabilities
As at 31 March
2011
Rs. ‘000s
Company
2010
Rs. ‘000s
As at 01 April
Temporary Differences
As at 31 March
-
-
-
-
-
-
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
(12,526)
(2,059)
(14,585)
(11,591)
(935)
(12,526)
26 Trade and Other Payables
As at 31 March
2011
Rs. ‘000s
Company
2010
Rs. ‘000s
Trade Payables
Taxes Payable
Dividend Payable
Advance Received from Customers
Other Payables (Note 26.1)
8,133
18,737
4,781
47,750
111,658
191,059
7,024
26,056
7,048
15,635
54,922
110,685
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
419,890
10,451
4,781
268,446
561,133
1,264,701
250,386
118,604
7,048
33,418
181,335
590,791
26.1Other Payables
As at 31 March
2011
Rs. ‘000s
Company
2010
Rs. ‘000s
Accrued Charges
Cost of Equipment Payable
Provident Fund Payable
Others
100,108
-
-
11,550
111,658
39,744
-
1,767
13,411
54,922
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
547,077
-
61
13,995
561,133
135,097
1,438
1,834
42,966
181,335
27 Amounts due to Related Parties
As at 31 March
Relationship
Orient Motor Company Ltd
Subsidiary
Subsidiary
UML Property Development Ltd
Subsidiary
Company
2011
Rs. ‘000s
2010
Rs. ‘000s
1,384
3,113
62,328
66,825
-
14,867
20,216
35,083
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
-
-
-
-
-
123
28 Current Tax Liabilities
As at 31 March
2011
Rs. ‘000s
Company
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
As at 01 April
Income Tax for the year (Note 09)
22,047
245,464
267,511
(33,353)
70,544
37,191
43,060
503,395
546,455
(11,192)
107,618
96,426
Adjustments in respect of prior Periods (Note 9)
Adjustment due to sale of a non - current investment
Income Tax Paid As at 31 March
(14,256)
-
(101,029)
152,226
-
-
(15,144)
22,047
(14,856)
(5,150)
(164,455)
361,994
(2,133)
(51,233)
43,060
2010
Rs. ‘000s
29 Capital Commitments
There are no material capital commitments as at the Balance Sheet date.
30 Contingent Liabilities
30.1Corporate Guarantees Issued to Orient Financial Services Corporation Ltd.
As per the Sales and Purchase agreement dated on 21 Feburary 2011, between United Motors Lanka PLC and the purchaser the
Corporate Guarantees issued by United Motors Lanka PLC on behalf of Orient Financial Services Corporation Limited (OFSCL)
totaling to Rs. 647.8 million of which Overdraft amounting to Rs. 250 million and term loan facilities amounting to Rs. 397.8 million
obtained by OFSCL are to be substituted within 3 months and 6 months respectively from the date of the agreement.
Futher, the Company offerred a warrent that agreed to settle and/ or mitigate any liability that may arise on the Company with regard to
NDB Bank PLC claim over Equipment taken on hire purchase agreement by the lesee of OFSCL.
The details are as follows:
Name of Company
Corporation Ltd
Name of Bank
NDB Bank PLC
Sampath Bank PLC
Standard Chartered Bank
People’s Bank
Total
421124
Facilities
Term Loan
Overdraft
Term Loan
Overdraft
Overdraft
Term Loan
Overdraft
Term Loan
Overdraft
Term Loan
Overdraft
Limit
Rs. ‘000
100,000
25,000
200,000
50,000
25,000
125,000
25,000
50,000
50,000
150,000
75,000
1,100,000
Outstanding
as at 31/03/2011
Rs. ‘000
90,000
25,000
169,057
50,000
25,000
88,800
25,000
50,000
50,000
75,000
647,857
Outstanding
as at 31/03/2010
Rs. ‘000
100,000
12,751
114,473
34,780
3,586
17,240
23,000
45,618
46,645
398,093
30.2Corporate Guarantees Issued to Subsidiaries
Name of Company
Name of Bank
Facilities
Limit
Rs. ‘000
Outstanding
as at 31/03/2011
Rs. ‘000
Outstanding
as at 31/03/2010
Rs. ‘000
Overdraft
15,000
289
-
Sampath Bank PLC
Overdraft
25,000
-
1,523
Sampath Bank PLC
Overdraft
Term Loan
Overdraft
Overdraft
325,000
100,000
30,000
110,000
96,966
29,907
109,300
13,800
4,810
3,865
22,433
TVS Automotives
(Pvt) Ltd
Term Loan
Overdraft
50,000
10,000
25,125
8,178
53,752
4,396
Standard Chartered Bank
30.3 There are no other contingent liabilities which have a material effect on the financial position of the Company, nor any other
liabilities of a material nature which has not been provided for in these Consolidated Financial Statements, other than the disclosed.
31 Related Parties
There are no material related party transactions other than those disclosed below and in Notes 15, 18 and 27 to these Consolidated
Related Party Transactions
Company Name of Common
Director Position UML Property
Development Ltd
(UMPDL) Mr. R. M. S. Fernando Chairman
Mr. C. Yatawara
Director
Orient Motor Company
Ltd (OMCL)
Mr. C. Yatawara
Orient Financial
Services Corporation
Ltd.
(Disposed on
21 February 2011)
Mr. C. Yatawara
Mr. A. M. Atukorala
Chairman
Director
Director
Director
Nature of Transaction Value of
Transaction
Rs.’000 Balance as at
31st March
2011
Rs.’000 The company paid rent for the occupation of the stores
complex owned by UMPDL
Company received dividends (Gross)
52,272
39,000
62,328
The company has hired vehicles during the year for which
rental were paid.
Repairs & services for the vehicles owned by OMCL
2,648
The company received rent for the premises occupied by
OMCL
Reimbursement of expenses
2,946
891
443
During the year the Company sold vehicles to OMCL
43,130
Company received dividends
30,000
Received interest on short term loans
Received commission on insurance
Granted short term loans
523
91
43,355 50,000
463
The Company carried out repairs & services
440
Received rent for the premises occupied by OFSCL
400
-
125
Company Unimo Enterprises Ltd
TVS Lanka (Pvt) Ltd
TVS Automotives (Pvt)
Ltd
Name of Common
Director Position Mr. R. M. S. Fernando Chairman
Mr. C.Yatawara
Director
Mr. C. Yatawara
Mr. C.Yatawara
Chairman
Director
Chairman
Director
Nature of Transaction Purchased Spare Parts
24,123
Received rent for the premises occupied by Unimo
Enterprises Ltd
Received hire income on vehicles.
Received loan
Reimbursement of Expenses
Carried out repairs & services
10,077
Loan granted during the year
93,000
Dividend received (Gross)
50,000
Leased office and show room premises for which rentals were
received
1,522
1,773
Received interest on short term loan
1,008
During the year the Company sold vehicles to TVS Lanka
(Pvt) Ltd
Received rent for the premises occupied by TVS Automotives
(Pvt) Ltd
Received loan interest
1,996
30
87
Mr. S. Nagendra
The Company sold Motor Vehicles
Director
1,279
851
CML - MTD
Construction Ltd
Commercial Bank of
Ceylon PLC
Union Bank of
Colombo PLC
The Company had entered in to banking transactions in the
normal course of the business
The Company had entered in to banking transactions in the
normal course of the business
31.2Transaction with Key Management Personnel
772 36,055 32,812
Received loan interest
Balance as at
31st March
2011
Rs.’000 405
Received hire income on vehicles
Mr. A. W. Atukorala
397
1,875
Mr. R. M. S. Fernando Chairman
Mr. C.Yatawara
Director
Mr. R. M. S. Fernando Director
2,976
15,278
11,440
5,524
Dividend received (Gross)
TVS Auto Parts (Pvt)
Ltd
Director
Value of
Transaction
Rs.’000 274
937
84
9,732
9,732
-
-
-
-
Key Management personnel compensation
Key Management personnel comprise of Directors, CEO’s and General Managers of subsidiaries. In addition to their salaries, the
Group also provides non cash benefits to key management personnel and also contributes to a Post Employment Defind Benefit Plan on
their behalf. In accordance with the terms of the plan when executive Directors and General Mnagers who retire are entitled to receive
retirement benefits.
621126
Key Management personnel compensation comprised
2011
Rs. ‘000s
Salaries & Fees
Non - Cash Benefits
31,930
540
32,470
Company
2010
Rs. ‘000s
27,121
540
27,661
Consolidated
2011
2010
Rs. ‘000s
Rs. ‘000s
63,576
1,258
64,834
51,816
1,171
52,987
Other transaction with key management personnel
Directors of the Company control 1% percent of the voting shares of the Company as indicated on page 116.The terms and conditions
of the transaction with key management personnel and their related parties were no more favourable than those available, or which might
resonably be expected to be available, on similer transaction to non key management personnel related entities on an arms length basis.
32 Consolidation
The Consolidated Financial Statements shown is that of the company’s and its Subsidiaries where shareholding at 31st March 2011 are in
the proportions indicated below.
Name of Subsidiary
Ownership Interest
2010/2011
2009/2010
UML Property Development Ltd.
UML Agencies & Distributors (Pvt) Ltd
Orient Financial Services Corporation Ltd
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
Jointly Controlled Entities
TVS Lanka (Pvt) Ltd and it’s Subsidiaries
50%
50%
The 100% holding of the subsidiary Orient Financial Servises Corporation Ltd. has been disposed in February 2011. The transactions
and balances up to the date of disposal has been accounted in these Consolidated Financial Statements.
33 Events Occuring after the Balance Sheet date
No circumstances have arisen since the Balance Sheet date which require adjustment to or disclosure in these Consolidated Financial
Statements, other than the dividend proposed by the Board of Directors, the details of which are given in Note 11 to the Consolidated
34 Comparative Information
The comparative figures have been rearranged and reclassified, wherever necessary to conform to the current year’s presentation.
35 Directors Responsibility
The Board of Directors’ are responsible for the preparation and presentation of these Consolidated Financial Statements.
127
36 Segment Reporting
Spare Parts
Vehicles
Repairs & Services
As at 31 March
2010/2011
2009/2010
2010/2011
2009/2010
2010/2011
2009/2010
In Rs. ‘000
In Rs. ‘000
In Rs. ‘000
In Rs. ‘000
In Rs. ‘000
In Rs. ‘000
Revenue
External - Sales
642,962
521,439
8,461,552
3,515,599
-
-
- Services/Commission
-
7,568
67,572
46,529
700,479
570,251
Total Revenue from External Customers
642,962
529,007
8,529,124
3,562,128
700,479
570,251
Inter-Segment Revenue
566,242
452,482
1,872
-
114,896
116,906
Total Revenue
1,209,204
981,489
8,530,996
3,562,128
815,375
687,157
Segment Results
325,650
261,846
1,191,416
201,674
115,774
95,487
Unallocated Income
Unallocated Expenses
Profit from Operations before Financing Cost
Net Financing Cost
Profit from operations
Income Tax Expenses
Profit from Ordinary Activities
Net Profit attributable to Ordinary Shareholders
Segment Assets
655,084
257,744
1,578,483
1,578,975
39,656
42,031
Unallocated Assets
-
-
-
-
-
-
Total assets
655,084
257,744
1,578,483
1,578,975
39,656
42,031
Segment Liabilities
Unallocated Liabilities
Total Liabilities
821128
10,488
-
10,488
8,936
-
8,936
273,435
-
273,435
1,047,749
-
1,047,749
1,052
-
1,052
606
-
606
Segment Capital Expenditure - Allocated
1,599
1,486
4,815
8,023
8,266
2,714
Depreciation - Allocated
1,273
1,235
1,622
1,842
702
4,766
Non cash Expenses/(Income)
Other than Depreciation
7,959
2,943
3,919
3,082
(412)
292
Tyres
Finance Leasing
2010/2011 2009/2010 2010/2011 2009/2010
In Rs. ‘000 In Rs. ‘000 In Rs. ‘000 In Rs. ‘000
Hiring &
Other Services
2010/2011 2009/2010
In Rs. ‘000 In Rs. ‘000
Elimination
2010/2011 2009/2010
In Rs. ‘000 In Rs. ‘000
Consolidated
2010/2011 2009/2010
In Rs. ‘000 In Rs. ‘000
406,418
402,600
-
-
357,902
274,037
-
-
-
-
275,922
456,985
22,309
34,402
-
-
406,418
402,600
275,922
456,985
380,211
308,439
-
-
3,783
2,845
-
-
57,493
57,461
(744,286)
(629,694)
410,201
405,445
275,922
456,985
437,704
365,900
(744,286)
(629,694)
63,460
77,420
45,884
40,743
289,137
474,757
-
-
9,868,834
1,066,282
10,935,116
-
10,935,116
2,031,321
111,677
(575,016)
1,567,982
(187,023)
1,380,959
4,713,675
1,115,735
5,829,410
5,829,410
1,151,927
110,983
(499,971)
762,939
(628,898)
134,041
319,903
366,419
-
1,503,785
174,025
568,913
-
-
-
-
-
-
-
-
-
-
319,903
366,419
-
1,503,785
174,025
568,913
-
-
(473,178)
907,781
(4,508)
903,273
2,767,151
3,444,260
6,211,411
12,249
146,290
(1,308)
144,982
4,317,867
1,969,386
6,287,253
-
-
-
-
-
-
-
-
-
487,305
-
487,305
42,495
-
42,495
274,487
-
274,487
-
-
-
-
-
-
327,470
1,889,444
2,216,914
1,819,083
1,289,928
3,109,011
237
-
-
5,423
62,178
5,972
-
-
77,095
23,618
522
725
12,276
33,587
1,176
12,254
-
-
17,571
54,409
7,443
8,331
(7,416)
62,153
32,346
10,394
-
-
43,839
87,195
129
Share Information
1.
Stock Exchange Listing
The issued ordinary shares of United Motors Lanka PLC, are listed with the Colombo Stock Exchange on 05 December 1989. The
audited Income Statement for the year ended 31 March 2011 and the audited Balance Sheet of the company as at that date have been
submitted to the Colombo Stock Exchange within three months of the Balance Sheet date.
The Stock Exchange code for United Motors Lanka PLC is “UML”. Details of trading activities are published in most daily newspapers,
generally under the above abbreviation.
2. Sub Division of Shares
On the 13 October 2010, the directors proposed to increase the number of issued shares of the Company by way of a sub division of
shares, to be effective on the basis of two ordinary shares for every existing ordinary share without effecting any increase to the Stated
Capital of the Company. This has been approved by the shareholders at an Extra Ordinary General Meeting (EGM) held on 30
November 2010. Accordingly, the number of shares in issue as at 31 March 2011 is 67,267,084.
31.03.2011
31.03.2010
Number of Shares 67,267,084 33,633,542
3.
Analysis of Shareholders
a) Resident /Non Resident as at 31 March 2011
Non -Resident Resident Range of
Shareholdings
(Shares)
Up to 1,000 shares
No of
Share
Holders
No of
shares
% of
total
Holding
No of
Share
Holders
No of
shares
Total
% of
total
Holdings No of
Share
Holders
% of
Total
Holding
2,319
783,823
1.64
22
10,562
0.05
2,341
794,385
1.18
1,001- 10,000
929
2,814,362
5.89
23
75,744
0.39
952
2,890,106
4.30
10,001 - 100,000
94
2,593,739
5.42
02
49,800
0.26
96
2,643,539
3.93
100,001 - 1,000,000
11
3,491,586
7.30
-
-
-
11
3,491,586
5.19
1,000,001 &over 04
38,134,784
79.75
02 19,312,684
99.30
06
57,447,468
85.40
3,357 47,818,294
100.00
49 19,448,790
100.00
3,406
67,267,084
100.00
Total (There were 2,966 resident shareholders and 38 non resident shareholders as at 31 March 2010)
031130
No of
shares UNITED MOTORS LANKA PLC
2011 % of Total Holding
Up to 1,000 shares
1,001- 10,000
10,001 - 100,000
100,001 - 1,000,000
1,000,001 & Over
2010 % of Total Holding
- 1.18%
- 4.30%
- 3.93%
- 5.19%
- 85.40%
Up to 1,000 shares
1,001- 10,000
10,001 - 100,000
100,001 - 1,000,000
1,000,001 & Over
- 1.91%
- 4.49%
- 2.72%
- 4.83%
- 86.05%
b) Individuals/Institutions
31 March 2011
No. of
Shareholders
Individual
Total Holdings
31 March 2010
% of Total
Holdings
No. of
Shareholders
Total Holdings
% of Total
Holdings
3,268
41,264,938
61.34
2,909
17,365,992
51.63
Institutions
138
26,002,146
38.66
95
16,267,550
48.37
Grand Total
3,406
67,267,084
100.00
3,004
33,633,542
100.00
c) Public Shareholding
31.03.2011
Public Shareholding
Percentage
31.03.2010
31.03.2009
20,107,862
11,806,201
11,768,131
29.89
35.10
34.98
131
Share Information contd.
4.
Share Trading
2010/2011
2009/2010
2008/2009
Market
Number of transactions
4,138,549
1,708,822
681,318
Number of shares traded
22,471,729,657
6,711,384,253
2,990,047,410
Value of shares traded (Rs. Mn)
664,291
214,133
106,961
Market days
Company
Number of transactions
Number of shares traded
Value of shares traded (Rs. Mn)
Market days
239
240
239
6,507
7,340,000
1,258
227
3,517
2,241,900
155
222
3937
3,453,700
236
206
5. Market Capitalisation and Market Prices
a) Market Capitalisation
Year
2010/2011
2009/2010
2008/2009
Ordinary shares
in Issue
(Mn)
67.26
33.63
33.63
UML Market
Captalisation
Rs.(Mn)
10,238.05
3,027.19
1,126,.72
CSE Market
As a % of CSE
capitalization
Market
Rs.(Bn)
2,425.0
0.04
1,210.8
0.25
533.7
0.21
Market
Captalisation
Rank
49
73
83
b) Market Prices 2010/2011
Highest (Rs)
Lowest (Rs)
Year End
6.
2009/2010
275.00
(01.09.2010)
85.00
(03.05.2010)
152.20
94.00
(31.12.2008)
33.00
(06.03.2009)
33.50
Dividends
2010/2011
Rs.
First & Final dividend paid
First & Final dividend recommended
Total
231132
2008/2009
94.00
(22.03.2010)
33.00
(01.04.2009)
90.00
2009/2010
Rs.
3.25
3.25
2008/2009
Rs.
1.80
1.80
4.00
4.00
7. Value creation for Shareholders
2010/2011
Net asset value per share (Rs.)
Earning per share (Rs.)
Market price per share (year end)
Price earning ratio (Times)
Return on equity(%)-After Tax
2010/2009
55.30
7.71
152.20
19.74
13.90
Change%
48.49
1.80
90.00
50.00
3.72
14.04
328.30
69.11
(60.52)
273.60
8. Twenty largest Shareholders
SHAREHOLDER
31 March 2011
No. of Shares
Readywear Industries Limited
19,897,588
Ms. R.R. Yaseen
10,576,140
Mr. M A Yaseen
Mrs. S M Chrysostom
Mitsubishi Motors Corporation
Mrs. L.E.M. Yaseen
Jacey Trust Services (Pvt) Limited
Mr. C. Yatawara
Mrs. S.T. Xavier
Union Assurance PLC/No-01A/C
16,021,256
4,630,314
3,291,428
3,030,742
926,732
661,942
335,784
312,500
31 March 2010
% of Total
Shareholding
No. of Shares
23.82
8,010,628
29.58
7,984,594
15.72
5,500,000
6.88
4.89
4.50
1.38
0.98
0.50
0.46
2,315,157
1,645,714
1,771,771
477,078
330,971
177,142
-
% of Total
Shareholding
23.74
23.81
16.35
6.88
4.89
5.27
1.42
0.98
0.53
-
Mr. K.N.J. Balendra
276,300
0.42
150,400
0.45
NDB Aviva Wealth Management Ltd.
S/A Hatton National Bank PLC
213,600
0.32
-
-
Commercial Bank of Ceylon PLC/
A.L. Devasurendra
146,500
0.22
-
-
Deutsche Bank AGComtrust Equity Fund
134,600
0.20
-
-
119,000
0.18
-
-
104,000
0.15
52,000
0.15
100,000
0.15
104,800
0.31
Mrs. J.D. De Silva Sugathapala
Bank of Ceylon No. 1 Account
Mr. P. Rathnayake
Waldock Mackenzie Ltd.
Hi-Line Trading (Pvt) Ltd
Mercantile Investments Ltd.
Mr. P.G. Kumaradasa
*Others (shareholders under twenty largest shareholders as at
31 March 2010)
Total
260,628
100,000
0.39
130,314
0.39
98,024
0.14
0.15
-
-
-
-
-
2,165,705
6.45
61,237,078
91.00
30,816,274
91.62
*Comparative shareholding as at 31 March 2010 of the twenty largest shareholders as at 31 March 2011.Please refer 8.1 for details
133
Share Information contd.
8.1 Shareholders included in the twenty largest shareholding as at 31 March 2010
Shareholding as at 31 March 2010
No. of Shares
Mr. S B Hewage
Hatton National Bank A/C No. 3
J.B. Cocoshell (Pvt) Ltd
Mr. R.S. Captain
Waldock Mackenzie Ltd, Mr. L.P. Hapangama
Master M.A Yaseen
Master V.A. Yaseen
Total
% of Total Shareholding
1,714,285
146,500
107,900
76,800
40,601
39,810
39,809
2,165,705
5.10
0.44
0.32
0.23
0.12
0.12
0.12
6.45
9. Director’s Shareholding
Name of Director
No.of Shares
as at
1 April 2010
548
Less than 0.01%
330,971
-
Mr. C. Yatawara
Mr. A. W. Atukorala
Mr. A.C. M. Lafir
Mr. M. Yokoi
Mr. R. H. Yaseen
Mr. S. Nagendra
% of Total
holdings
-
No.of Shares
as at 31 March
2011
1,096
Less than 0.01%
0.98%
-
661,942
0.98%
-
-
-
-
600
Less than 0.01%
-
1,200
Less than 0.01%
-
-
-
-
-
Movement
during the year
Market Price per Share
% of Total
holdings
Market Capitalisation
Rs.
Rs. Mn.
152.00
150
10,238
12,000
200
10,000
8,000
Company
431134
3,027
2009/10
2010/11
1,127
1,808
Company
2008/09
2006/07
2010/11
0
2007/08
90.00
4,000
2,000
2009/10
33.50
2008/09
80.00
53.75
2007/08
0
2006/07
50
2,691
6,000
100
Investor Information
Information on Share Issue since formation
Shares
at the beginning
Year
1990/91
10,000,000
1991/92
10,000,000
1992/93
1993/94
Issued during
the year
Stated Capital
(Rs)
-
Issued through Share
Trust Scheme to
Employees
10,000,000
91,266
Trust Scheme to
Employees
10,091,266
90,230
Bonus issue 1:5
Market Value Per
Share (Rs)
100,000,000
23.75
100,000,000
53.00
100,912,660
35.00
2,036,300
122,177.960
60.00
1994/95
12,217,796
-
122,177,960
27.50
1995/96
12,217,796
-
122,177,960
31.50
147,146,750
32.00
1996/97
Trust Scheme to
Employees
12,217,796
53,319
Bonus issue 1:5
2,443,560
1997/98
14 ,714,675
147,146,750
41.50
1998/99
14, 714,675
147,146,750
32.50
1999/2000
14, 714,675
147,146,750
31.25
2000/2001
14, 714,675
147,146,750
28.00
2001/2002
14, 714,675
147,146,750
32.00
294,293,500
31.00
2003/2004
2002/2003
Bonus issue 1:1
29,429,350
294,293,500
28.00
2004/2005
29,429,350
294,293,500
51.75
2005/2006
2006/2007
14, 714,675
14,714,675
29,429,350
Bonus issue 1:7
29,429,350
4,204,192
294,293,500
80.00
336,335,420
80.00
2007/2008
33,633,540
336,335,420
53.75
2008/2009
33,633,540
336,335,420
33.50
33,633,540
336,335,420
90.00
336,335,420
152.20
2009/2010
2010/2011
Sub division of shares - two shares for
every existing ordinary share
33,633,540
33,633,540
135
Statement of Value Added
2010/2011
Rs. ‘000s
Company
2009/2010
Rs. ‘000s
Consolidated
2010/2011
2009/2010
Rs. ‘000s
Rs. ‘000s
Sales
Other Income
4,907,368
150,570
5,057,938
3,006,757
58,815
3,065,572
10,935,116
111,677
11,046,793
5,829,410
110,983
5,940,393
Less: Cost of Goods & Services brought in
Value added
4,047,984
1,009,954
2,481,518
584,054
9,209,277
1,837,516
4,540,510
1,399,883
To Employees as Remuneration &
Premature Retirement Payments
293,379
220,200
453,718
345,280
To the Government as Taxes
101,029
40,915
164,455
167,705
To the Providers of Capital
- Dividends
- Interest on Loans
60,540
11,955
33,633
130,799
60,540
214,787
33,633
633,397
Retained within the business
466,903
425,547
893,500
1,180,015
-Depreciation
-Reserves
Value added
24,237
518,814
543,051
1,009,954
37,272
121,235
158,507
584,054
36,235
907,781
944,016
1,837,516
73,578
146,290
219,868
1,399,883
Distributed as follows:
2010
Retained
27%
Lenders
22%
Government 7%
Employees 38%
Shareholders 6%
631136
2011
Retained
Lenders
Government
Employees
Shareholders
59%
1%
4%
32%
4%
Ten Year Summary - Group
Year Ended 31 March
(in Rs.’000s)
Turnover
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
10,935,116 5,829,410 7,280,837 8,395,149 6,745,137 4,716,833 3,439,587 3,353,134 2,364,306 1,259,984
Profit before Taxation
Income Tax
Profit fot the Year
1,380,959
(473,178)
907,781
217,136
(68,295)
148,841
65,342
(42,041)
23,301
141,100
(48,634)
92,466
100,516
(56,624)
43,892
Shareholders’ Funds
Paid-up Capital
Capital Reserve
Revenue Reserves
Shareholders Fund
336,335
336,335
336,335
336,335
336,335
294,294
294,294
1,218,974 1,244,755
408,908
408,908
408,908
450,950
399,087
2,428,893 1,588,827 1,477,478 1,695,326 1,278,075
952,070
706,927
3,984,202 3,169,917 2,222,721 2,440,569 2,023,318 1,697,314 1,400,308
294,294
267
610,491
905,052
294,294
267
661,020
955,581
147,147
147,414
605,341
899,902
10,295
8,325
7,367
96,797
105,142
94,869
4,662
3,994,497 3,178,242 2,230,088 2,537,366 2,128,460 1,792,183 1,404,970
3,758
908,810
-
955,581
899,902
Assets Employed
Current Assets
Current Liabilities
Working Capital
4,041,103 3,820,047 4,619,698 4,432,527 3,450,938 2,457,803 1,956,791 1,577,244 1,231,411
2,105,844 2,674,371 4,041,418 4,012,950 3,117,485 2,282,246 1,942,912 1,796,498
884,793
1,935,259 1,145,676
578,280
419,577
333,453
175,557
13,879 (219,254)
346,618
869,759
547,117
322,642
Intangible Assets
Net Lease Rental Receivable
Investments
Defined benefits - plan assets
Deferred tax assets
Net Assets
2,049,552
20,970
-
-
74,827
24,959
2,170,308
(111,070)
3,994,497
1,991,921
24,391
253,745
31
74,232
122,886
2,467,206
(434,640)
3,178,242
667,945
1,825
669,770
(92,510)
899,902
13.43
2.16
(2.48)
15.70
12.44
8.59
5.03
0.78
3.14
1.49
59.38
47.25
66.31
74.44
63.28
53.29
47.58
30.75
32.47
61.16
0.25
0.05
(3.17)
22.53
21.87
18.28
10.60
2.60
2.50
4.90
218,618
3.25
60,540
1.80
33,633
1.00
134,534
4.00
134,534
4.00
58,859
2.00
73,573
2.50
44,144
1.50
51,501
1.75
36,787
2.50
4.13
2.40
-
3.92
3.19
4.90
1.70
1.55
2.56
2.05
152.2
11.33
87.59
90.00
41.66
(19.93)
33.50
(13.51)
(13.27)
53.75
3.42
24.46
80.00
6.43
43.00
80.00
9.31
37.13
51.75
10.29
2.58
28.00
35.90
41.82
31.00
9.87
87.65
32.00
21.48
8.03
1.92
1.43
1.14
1.10
1.11
1.08
1.01
0.89
1.39
1.59
Profitability
Earnings per Share (Rs.)
Net assets per Share
at year end (Rs.)
Return on average
Net Assets (%)
Dividends
Dividends (Rs.’000s)
Dividend Rate per Share
Dividend Cover (Times Covered)
Other
Market Price per Share (Rs)
Price Earnings Ratio
Annual sales growth(%)
Current Ratio times
134,041
12,249
146,290
(7,726)
848,507
700,652
433,089
(74,706) (328,824) (271,882) (140,758)
(82,432)
519,683
428,770
292,331
1,184,823 1,238,067 1,306,542 1,326,327 1,470,805 1,282,453
884,380
17,456
15,435
15,435
15,435
15,435
21,062
5,780
1,371,104 2,032,917 1,984,233 1,540,876
970,301
365,984
-
31
31
31
31
31
31
-
62,628
51,911
-
-
-
-
-
-
-
-
-
-
-
-
2,636,042 3,338,361 3,306,241 2,882,669 2,456,572 1,669,530
890,160
(984,234) (1,220,572) (1,511,234) (1,266,043) (1,065,481) (541,466) (281,197)
2,230,088 2,537,366 2,128,460 1,792,183 1,404,970
908,810
955,581
137
Glossary of Financial Terms
Annual sales growth
Precentage change over previous gross turnover.
Average net assets
Mean of two consecutive years net assets.
Deferred taxation
Sum set aside for tax in the Financial Statements that will become
payable in a financial year other than the current financial year.
Earnings per share
Profit after tax divided by the number of ordinary shares in issue.
Average collection period
Trade debtors divided by average daily sales.
Effective dividend rate
The rate at which the dividends are being declared.
Borrowings to equity
Bank borrowings divided by shareholders funds.
Capital employed
Total assets less interest free liabilities, deferred income and
provisions.
Capital reserve
Reserves identified for specific purposes and considered not
available for distribution.
Effective rate of tax
Provision for taxation excluding deferred tax divided by the profit
before tax.
Interest cover
Profit before tax and interest charge divided by interest charge.
(Measure of an entity’s debt servicing ability).
Inventory turnover
Cost of sales divided by average inventory holding.
Contingent liabilities
Conditions or situations at the Balance Sheet date, the financial
effects of which are to be determined by future events which may
or may not occur.
Liquid assets
Current ratio
Liabilities to equity
Current assets divided by current liabilities, a measurement of
liquidity.
Debt/equity ratio
Total liabilities divided by shareholder’s funds.
Market capitalisation
Precentage of interest bearing capital to equity capital.
Number of ordinary shares in issue multiplied by market value
per share at the year end.
Dividend cover
Net assets per share
Profit attributable to ordinary shareholders divided by gross
dividend. (This ratio measures the number of times the dividend
is covered by the current year’s distributable profits).
Dividend yield
Dividend per share divided by market value per share (Indicated
as a percentage)
831138
Assets that are held in cash or in a form that can be converted to
cash readily.
Net assets divided by no. of shares.
Net assets
Total assets minius liabilities.
Net working capital
Current assets minus current liabilities.
Net financing cost
Interest expenses minus interest income.
Price earnings ratio (P/E ratio)
Market price per ordinary share divided by earnings per share.
Profit before tax on turnover
Profit before tax as a percentage of turnover.
Profit per employee
Profit before tax divided by number of employees.
Quick assets ratio
Current assets minus inventories divided by current liabilities.
Return on average net assets – (RONA)
Profit after tax divided by the average net assets.
Return on capital employed – (ROCE)
Profit after tax divided by capital employed.
Revenue reserves
Reserves set aside for future distribution and investments.
Solvency margin
Total assets minus total liabilities and stated capital.
Solvency ratio
Profit after tax plus depreciation divided by short and long term
liabilities.
Shareholders’ funds
Shareholders’ funds consist of issued and fully paid ordinary share
capital plus capital and revenue reserves.
Total assets
Current assets plus fixed assets.
139
Notice of Meeting
Notice is hereby given that the Twenty Second Annual General
Meeting of United Motors Lanka PLC will be held on 29 June
2011 at 10.30 a.m. at the Jasmine Room, Hotel Renuka, No.
328, Galle Road, Colombo 3, for the following purposes;
1. To receive and consider the Annual Report of the Board
of Directors, the Audited Balance Sheet and Accounts of
the Company for the year ended 31 March 2011 and the
Report of the Auditors thereon.
2
(i) To re-elect Mr. M. Yokoi, as a Director, in accordance
with Section 82 of the Articles of Association of the
Company.
(ii) To re-appoint Mr. T.M.R.B. Tennekoon, Director
who retires in terms of Section 210 of the Companies
Act No. 7 of 2007 as a Director of the Company and
to adopt the following resolution:
“THAT Mr. T.M.R.B. Tennekoon, who attained the
age of 79 years on 25 March 2011 be and is hereby
re-appointed as a Director of the Company and it is
hereby declared that the age limit of 70 years referred
to in Section 210 of the Companies Act No. 7 of 2007
shall not apply to the said Mr. T.M.R.B. Tennekoon”
(iii) To re-appoint Mr. S. Nagendra, Director who retires
in terms of Section 210 of the Companies Act No. 7 of
2007, as a Director of the Company and to adopt the
following resolution:
“THAT Mr. S. Nagendra, who attained the age of 72 years
on 26 June 2011 be and is hereby re-appointed as a Director
of the Company and it is hereby declared that the age limit
of 70 years referred to in Section 210 of the Companies Act
No. 7 of 2007 shall not apply to the said Mr. S. Nagendra.”
3. To approve a dividend as recommended by the Directors.
4.
041140
To re-appoint M/s. KPMG Ford, Rhodes, Thornton &
Co., Chartered Accountants as Auditors and to authorise
Directors to fix their remuneration.
5.
To authorize the Board of Directors to determine donations
for 2011/2012.
6.
To consider any other business of which due notice has been
given.
By Order of the Board
Mrs. Rinoza Hisham
Company Secretary
Colombo
27 May 2011
Notes
141
241142
Proxy Form
I/We ....................................................................................................................................................................................................of
………………………………………………………………………………/being a member/members of United Motors Lanka PLC,
hereby appoint,
1) Ranjit Michael Samuel Fernando
2) Chanaka Yatawara
3) Tennekoon Mudiyanselage Ran Banda Tennekoon
4) Ananda Wijetilake Atukorala
5) Aashiq Carder Mohamed Lafir
6) Ramesh Hiran Yaseen
7) Segarajasingham Nagendra
of Colombo or failing him
………………….………...................................................................of…………........................................………………………… as
my/our proxy* to represent me/us on my/ our behalf at the Twenty Second Annual General Meeting of the Company to be held on 29
June 2011 at 10.30 a.m. at the Jasmine Room, Hotel Renuka, No. 328, Galle Road, Colombo 3, and at any adjournment thereof and at
every poll which may be taken in consequence of the above said meeting.
For
Against
1. To receive and consider the Annual Report of the Board of Directors, the Audited Balance Sheet
and Accounts of the Company for the year ended 31 March 2011 and Report of the Auditors
thereon.
2. (i) To re-elect Mr. M. Yokoi, as a Director of the Company
3.
(ii) To re-appoint Mr. T.M.R.B. Tennekoon, as a Director of the Company.
4.
To re-appoint Auditors for the ensuing year and to authorize the Directors to determine their
remuneration
5.
To authorize the Directors to determine donation for 2011/2012
(iii) To re-appoint Mr. S. Nagendra, as a Director of the Company
To approve a dividend as recommended by the Directors
*The proxy may vote as he thinks fit on any other resolution brought before the meeting.
Signed on this ....................................... day of ....................................................Two Thousand and Eleven.
........................................
Signature/s
Note:
1) Please delete the inappropriate words.
2) Instructions as to completion appears overleaf.
143
Proxy Form contd.
Instructions as to completion
441144
1.
Kindly perfect the form of proxy, after filling in legibly your full
name and address, and sign in the space provided. Please fill in the
date of signature.
2.
If you wish to appoint any person other than Directors as your
proxy, please insert the relevant details in the space provided
overleaf.
3.
In terms of Article 66 of the Articles of Association of the
Company,
(i) in the case of an individual shall be signed by the Appointer
or his Attorney; and
(ii) in the case of a company or a corporate body shall be either
under its common seal or signed by its Attorneys or by an
Officer on behalf of such Corporation.
4.
In terms of Article 61 of the Articles of Association of the
Company, in the case of joint-holders of a share the senior who
tenders the vote, whether in person or by proxy shall be accepted
to the exclusion of the votes of the other joint-holders and for this
purpose seniority shall be determined by the order in which the
names stand in the Register of Members in respect of the joint
holding.
5.
To be valid the completed form of proxy shall be deposited at the
Registered Office of the Company situated at No. 100, Hyde Park
Corner, Colombo 2 not less than forty eight (48) hours before the
appointed hour of the meeting.
Corporate Information
Name of Company
Legal Form
A Public Limited Liability Company
Incorporated in Sri Lanka on 9 May 1989
Listed with the Colombo Stock Exchange on 5 December 1989
Company Registration Number
PQ -74
Registered Office
Head Office
P.O. Box 697
Tel : 4797200, 2448112
Fax : 2448113
www.unitedmotors.lk
Auditors
Chairman
R. M. S. Fernando
C. Yatawara
Directors
A. W. Atukorala
A. C. M. Lafir
M. Yokoi
R. H. Yaseen
S. Nagendra
Secretary
Mrs. R. M. Hisham
Audit Committee
Chairman
R. M. S. Fernando
KPMG Ford Rhodes Thornton & Co.
32A, Sir Mohammed Macan Markar Mawatha
Colombo 3
A.W. Atukorala
Registrars
Chairman
R. M. S. Fernando
Secretaries and Registrars Limited
KPMG Building, First Floor
32A, Sir Mohamed Macan Markar Mawatha
Colombo 3
Tele : 2325761, 5426113
Bankers
Board of Directors
Bank of Ceylon
National Development Bank PLC
People’s Bank
Sampath Bank PLC
Standard Chartered Bank Ltd
The Hongkong & Shanghai Banking Corporation Ltd.
Nations Trust Bank PLC
Pan Asia Bank PLC
A.W. Atukorala
Chairman
Mr. C. Yatawara
Mr. A.W. Atukorala
Mr. S. Nagendra
T H E
T O T A L
TRANSPORTER
www.unitedmotors.lk

Annual Report 2010/2011 - Colombo Stock Exchange

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