COLONIAL MOTORS PLC · · 2016-09-11BANKERS People’s Bank Hatton National Bank PLC ... ANNUAL...

C O L O N I A L M O T O R S P L C297, UNION PLACE, COLOMBO 02, SRI LANKA.

TEL : +94 (O) 11 2323342 - 43 - 44FAX : +94 (O) 11 2438424

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C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S 1

Corporate Information

Notice of Meeting

Chairman’s Review

Board of Directors

Annual Report of the Board of Directors

Corporate Governance

Audit Committee Report

Report of the Independent Auditors

Balance Sheet

Income Statement

Statement of Changes in Equity

Cash Flow Statement

Notes to the Financial Statements

Share Information

Proxy Form

2

3 - 4

5

6 - 7

8 - 12

13 - 16

17 - 18

19 - 20

21

22

23 - 24

25

26 - 61

62 - 63

CONTENTS

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C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S2

CORPORATE INFORMATION

BOARD OF DIRECTORS Chairman A.Rajaratnam FCA

Managing Director R.M.M.J. Ratnayake MBA, FCMA (UK), CGMA, FSCMA

Directors S.D.R. Arudpragasam FCMA (UK)

J.M. Swaminathan LLB., LLM, M. Phil., Attorney-at-Law

A.M.de S. Jayaratne B.Sc.(Econ.), FCA

S. Rajaratnam B.Sc. CA

SECRETARIES Corporate Managers & Secretaries (Private) Limited

REGISTERED OFFICE 297, Union Place, Colombo 02.

LEGAL FORM Public Quoted Company with Limited Liability Domiciled in Sri Lanka

DATE OF INCORPORATION 09 July 1909

COMPANY NUMBER PQ 169

STOCK EXCHANGE LISTING The Ordinary Shares of the Company are Listed with the Colombo Stock Exchange of Sri Lanka.

BANKERS People’s Bank Hatton National Bank PLC Bank of Ceylon

LAWYERS Messrs Julius & Creasy

AUDITORS PricewaterhouseCoopers

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NOTICE OF MEETING

Notice is hereby given that the One Hundredth Annual General Meeting of Colonial Motors PLC will be held at the Grand Oriental Hotel, No. 2, York Street, Colombo 1, on Friday 27 July 2012 at 10.00 a.m. for the following purposes:

To receive and consider the Annual Report of the Board of Directors and the Statement of Accounts for the year ended 31 March, 2012 with the Report of the Auditors thereon.

To declare a First and Final Dividend of Rs.4/- per share for the year ended 31March 2012 as recommended by the Directors.

To re-elect as a Director, Mr. S.D.R. Arudpragasam who retires in accordance with Articles 88 and 89 of the Articles of Association.

To reappoint Mr. A.M. de S. Jayaratne who is over seventy years of age as a Director. Special Notice has been received from a shareholder of the intention to pass a Resolution which is set out in the Notes in relation to his reappointment (see Note No.4 on page 4).

To reappoint Mr. J.M. Swaminathan who is over seventy years of age as a Director. Special Notice has been received from a shareholder of the intention to pass a Resolution which is set out in the Notes in relation to his reappointment (see Note No.5 on page 4).

To reappoint Mr. A. Rajaratnam who is over seventy years of age as a Director. Special Notice has been received from a shareholder of the intention to pass a

Resolution which is set out in the Notes in relation to his reappointment ( see Note No.6 on page 4).

To authorize the Directors to determine contributions to charities.

To reappoint as Independent Auditors, Messrs PricewaterhouseCoopers and to authorize the Directors to determine their remuneration.

By Order of the BoardCorporate Managers & Secretaries (Private) Limited Secretaries

Colombo19 June 2012

Note:

1. A member of the Company who is entitled to attend and vote at this meeting may appoint a proxy to attend and vote instead of him or her. A proxy need not be a member of the Company.

2. A Form of Proxy is enclosed in this Report.

3. The instrument appointing a proxy must reach the Registered Office of the Company’s Secretaries, Corporate Managers & Secretaries (Private) Limited, No. 8-5/2, Leyden Bastian Road, York Arcade Building, Colombo 01, not less than forty eight (48) hours before the time fixed for the meeting.

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4. Special Notice has been received by the Company from a shareholder giving notice of the intention to move the following Resolution as an Ordinary Resolution at the Annual General Meeting :

Resolved-

“That Mr. A.M. de S. Jayaratne who is seventy two years of age be and is hereby reappointed a Director of the Company and it is further specially declared that the age limit of seventy years referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to the said Director, Mr. A.M. de S. Jayaratne.”

5. Special Notice has been received by the Company from a shareholder giving notice of the intention to move the following Resolution as an Ordinary Resolution at the Annual General Meeting:

Resolved –

“That Mr. J.M. Swaminathan who is seventy one years of age be and is hereby reappointed a Director of the Company and it is further specially declared that the age limit of seventy years referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to the said Director, Mr. J.M. Swaminathan.”

6. Special Notice has been received by the Company from a shareholder giving notice of the intention to move the following Resolution as an Ordinary Resolution at the Annual General Meeting :

Resolved –

“That Mr. A. Rajaratnam who is seventy one years of age be and is hereby reappointed a Director of the Company and it is further specially declared that the age limit of seventy years referred to in Section 210 of the Companies Act No. 7 of 2007 shall not apply to the said Director, Mr. A. Rajaratnam.”

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CHAIRMAN’S REVIEW

On behalf of the Board of Directors I extend you a warm welcome to the 100th Annual General Meeting of Colonial Motors PLC, and present the Annual Report together with the Audited Financial Statements for the year ended 31 March 2012.

The Company achieved a turnover of Rs. 402 Million, a 45% increase from the turnover recorded for the previous year. Main contribution to the increase in turnover came from the sale of TATA, Leyland and Land Rover spare parts. These sales were effected through new dealers appointed during the last financial year. Your Company continues to be one of the leading ex-stock suppliers of TATA, Leyland and Land Rover spares in Sri Lanka.

The Company recorded a net profit of Rs. 337 Million which includes a capital gain of Rs. 267 Million made on the sale of shares.

The reduction in statutory dues and other Government levies for motor vehicles during the financial year contributed to the increase in sales of our subsidiary KIA Motors (Lanka) Limited. The Agency Agreement for KIA Motors (Lanka) Limited vehicles which was a Tripartite Agreement ended in November 2011. The Company has been successful in renegotiating a new Agreement between KIA Motors Corporation Korea and KIA Motors (Lanka) Limited., which is a subsidiary of Colonial Motors PLC. KIA Motors (Lanka) Limited recorded a turnover of Rs. 3.5 Billion and a net profit before tax of Rs. 1.1 Billion.

The Directors, based on the performance of the Company, have recommended a First and Final dividend of Rs. 4/= per share for the financial year under review.

Share portfolio of the Company and its wholly owned subsidiary Union Investments (Pvt) Limited has been affected due to the continued bear market. As at 31 March the aggregate market values of the listed shares of both portfolios have decreased to Rs. 1,321 Million from Rs. 2,106 Million in the previous year.

The increase in statutory dues and other Government levies imposed by the Government on motor vehicle imports and sales during the current financial year together with high interest rates that are now prevailing will have a significant impact on the Group’s performance in the coming years.

The Company is negotiating the purchase of a land and building in Battaramulla which will help us to move the garage from the Union Place premises. Our subsidiary, KIA Motors (Lanka) Limited has also purchased a land to build a modern workshop. Once both garages move out of the Company’s existing premises, the Board of Directors of the Company will consider developing the existing premises.

I am pleased to inform you that the fully owned subsidiary of your Company namely Colonial Motors (Ceylon) Ltd., has been appointed authorized importers and distributors of Mazda vehicles in Sri Lanka. The new Agency should enhance the profitability of the Group.

Finally, on behalf of the Board of Directors, I wish to thank our stakeholders for their continued support and all employees of the Company for their continued unstinted support.

A. RajaratnamChairman

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BOARD OF DIRECTORS

A. Rajaratnam - Chairman FCA

Mr. A. Rajaratnam joined the Board in 1998 and was appointed Chairman in the year 2004. He serves as Chairman of The Colombo Fort Land & Building Company PLC (CFLB) and several listed and unlisted companies within the CFLB Group in addition to holding other Directorships within the Group.

R.M.M.J. Ratnayake – Managing DirectorMBA, FCMA (UK), CGMA, FSCMA

Mr. R.M.M.J. Ratnayake holds an MBA in Finance and is a Fellow Member of the Institute of Chartered Management Accountants U.K. and is also a Fellow Member of the Society of Certified Management Accountants. He has expertise in the fields of Tea Exports, Tea Plantations, Telecommunications and Motor Industry. Mr. Ratnayake joined Colonial Motors PLC as Chief Executive Officer on 1 July 2008, was appointed to the Board as Director/Chief Executive Officer on 1 April 2010, and as Managing Director on 1 May 2010.

S.D.R. Arudpragasam - Director FCMA (UK)

Mr. S.D.R. Arudpragasam is a Chartered Management Accountant. He was appointed to the Board in 1999. He holds the position of Deputy Chairman on the Boards of The Colombo Fort Land & Building Company PLC (CFLB) and Lankem Ceylon PLC. Mr. Arudpragasam also functions as Managing Director of E.B. Creasy & Company PLC in addition to serving on the Boards of other Companies within the CFLB Group.

J.M. Swaminathan – DirectorAttorney-at –Law, LLB (Ceylon), LLMM.Phil. (Colombo)

Mr. J.M. Swaminathan was appointed to the Board in the year 2003. He holds LLB (Ceylon), LLM, M.Phil (Colombo) degrees and is an Attorney-at-Law. He has been in the legal profession for over 40 years.

He is the precedent partner of Messrs Julius & Creasy and a Member of the Council for Legal

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Education and the Law Commission of Sri Lanka. He is also a Member of the Company Law Advisory Commission and Intellectual Property Law Advisory Commission. He is a Member of the Board of the Faculty of Law of the University of Colombo. He is also a Visiting Lecturer and an Examiner at the Faculty of Law, University of Colombo and a Lecturer at the Advanced Legal studies Unit at the Sri Lanka Law College. He is also a Director of several public and private companies.

Mr. A.M. de S. Jayaratne – DirectorB.Sc. (Econ), FCA

Mr. A.M.de S. Jayaratne having joined the Board of Colonial Motors PLC in 1981 was appointed Chairman in 1998. He resigned in the year 2003 and rejoined the Board in 2005. He is a former Chairman of Forbes & Walker Ltd., Colombo Stock Exchange, Ceylon Chamber of Commerce and The Finance Commission. He also served as Sri Lanka’s High Commissioner in Singapore. Mr. Jayaratne is a Director of several listed and unlisted companies.

Mr. S. Rajaratnam - DirectorB.Sc., CA

Mr. Sanjeev Rajaratnam was appointed to the Board in the year 2007. He holds a Bachelor of Science Degree in Business Administration from Boston College, U.S.A. and is a member of the Institute of Chartered Accountants in Australia. He has been associated with overseas companies in the field of Finance. He also holds the position of Deputy Managing Director of E.B. Creasy & Company PLC in addition to serving on several Boards of The Colombo Fort Land & Building Group.

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ANNUAL REPORT OF THE BOARD OF DIRECTORS

The Board of Directors of Colonial Motors PLC present their Report on the affairs of the Company together with the Audited Financial Statements for the year ended 31 March, 2012.

The details set out herein provide the pertinent information required by the Companies Act No. 7 of 2007, and the Colombo Stock Exchange Listing Rules and are guided by recommended best practices.

General

The Company was re-registered on 1 July, 2008 as required under the Companies Act No. 7 of 2007.

Principal Activities /Business Review

The principal activities of the Company together with those of its subsidiary companies are given in Note 1 to the financial statements on page 26. A review of the Company’s business and its performance during the year with comments on financial results is contained in the Chairman’s Review which together with the financial statements reflect the state of affairs of the Company.

The Directors to the best of their knowledge and belief confirm that the Company has not engaged in any activities that contravene laws and regulations.

Financial Statements

The Financial Statements of the Company and the Group are given on pages 21 to 61.

Independent Auditors’ Report

The Independent Auditors’ Report on the Financial Statements is given on pages 19 and 20.

Accounting Policies

The Accounting Policies adopted in the preparation of the Financial Statements are given on pages 26 to 31. There were no changes in the Accounting Policies adopted.

Interest RegisterDirectors’ Interest in transactions

The Directors have made general disclosures as provided for in Section 192(2) of the Companies Act No. 7 of 2007. Arising from this, details of contracts in which they have an interest are disclosed in Note 31 to the Financial Statements on pages 57 to 59.

Directors’ Interest in Shares

The Directors of the Company who have an interest in the shares of the Company have disclosed their shareholdings and any acquisitions / disposals to the Board in compliance with Section 200 of the Companies Act.

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Directors’ Remuneration

Directors remuneration in respect of the Company and the Group for the financial year 2011/2012 is given in Note 21 to the financial statements on page 53.

Corporate Donations

Donations made by the Company amounted to Rs. 328,500 (2010/2011 - Rs. 30,500).

Directorate

The names of the Directors who held office during the financial year are given below and their brief profiles appear on pages 6 and 7.

Mr. A. Rajaratnam - ChairmanMr. R.M.M.J. Ratnayake - Managing DirectorMr. S.D.R. Arudpragasam - DirectorMr. J.M. Swaminathan - Director Mr. A.M. de S. Jayaratne - DirectorMr. S. Rajaratnam - Director

In terms of Article Nos. 88 and 89 of the Articles of Association, Mr. S.D.R. Arudpragasam retires by rotation and being eligible offers himself for re-election.

Mr. A.M.de.S. Jayaratne, Director, being over seventy years of age retires and offers himself for reappointment under and by virtue of the Special Notice received from a shareholder of the Company which is referred to in the Notice of Meeting.

Mr. J.M. Swaminathan, Director, being over seventy years of age retires and offers himself for reappointment under and by virtue of the Special Notice received from a shareholder of the Company which is referred to in the Notice of Meeting.

Mr. A. Rajaratnam, Director, being over seventy years of age retires and offers himself for reappointment under and by virtue of the Special Notice received from a shareholder of the Company which is referred to in the Notice of Meeting.

Independent Auditors

The Financial Statements of the Company for the year have been audited by Messrs PricewaterhouseCoopers who were reappointed as Independent Auditors at the Annual General Meeting held on 23 September 2011.

Name of Director No. of No. of Shares Shares As at As at 31.03.2012 31.03.2011

Mr. A. Rajaratnam 749 349Mr. S.D.R. Arudpragasam 300 300Mr. J.M. Swaminathan 337 337Mr. A.M. de S. Jayaratne 281 281Mr. S. Rajaratnam 500 500Mr. R.M.M.J. Ratnayake 112 112

Details pertaining to Directors direct and indirect shareholdings are set out below:

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The remuneration payable by the Company and the Group to the Independent Auditors is given in Note 21 to the Consolidated Financial Statements on page 53.

The Directors are satisfied that based on written representations made by the Independent Auditors to the Board, the Auditors do not have any relationship or any interest with the Company and its subsidiaries that would impair their independence.

Revenue

The Revenue of the Group for the year was Rs.3,968 Mn. (2010/2011- Rs.1,507 Mn.)

Results

The Group made a profit before tax of Rs.1,506 Mn against a profit of Rs. 323 Mn in the previous year. The detailed results are given in the Income Statement on page 22.

Investments

Investments made by the Company and the Group are given in Note 7,8 and 9 on pages 37 to 46.

Property, Plant & Equipment

During 2011/2012 the Group invested Rs. 29 M in Property, Plant & Equipment (2010/2011- Rs. 89 M). Further, your Directors are of the opinion that the net amounts at which Land

and other Property, Plant & Equipment appear in the Balance Sheets are not greater than their market value as at 31 March, 2012.

Stated Capital

The Stated Capital of the Company as at 31 March, 2012 was Rs. 91,348,225/- and is represented by 9,124,318 issued and fully paid Ordinary Shares.

There was no change in the stated capital during the year.

Reserves

The total reserves and their composition are set out in Note 15 on page 49 to the consolidated financial statements.

The movements are shown in the Statement of Changes in Equity in the Financial Statements.

Taxation

The Group’s liability to taxation has been computed in accordance with the provisions of the Inland Revenue Act No. 10 of 2006 and subsequent amendments thereto.

Income Tax and other taxes paid and liable by the Group are disclosed in Note 10 and 24 on pages 47,54 and 55.

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Share Information

Information relating to earnings, dividend, net assets, market value per share and share trading is given on pages 21, 22 and 63.

Events Occurring after the Balance Sheet Date

Events occurring after the Balance Sheet date that would require adjustments to or disclosures are disclosed in Note 34 on page 61.

Capital Commitments and Contingent Liabilities

Capital commitments and contingent liabilities as at the Balance Sheet date are disclosed in Notes 28 and 29 on page 56.

Employment Policy

The Company’s recruitment and employment policy is non-discriminatory. The occupational, health and safety standards receive substantial attention. Appraisal of individual employees are carried out in order to evaluate their performance and realize their potential. This process benefits the Company and the employees.

Shareholders

It is the Company’s policy to endeavour to ensure equitable treatment to its shareholders.

Statutory Payments

The Directors to the best of their knowledge and belief are satisfied that all statutory payments of the Company due in relation to employees and the Government have been made .

Environmental Protection

The Company’s business activities can have direct and indirect effects on the environment. It is the Company’s policy to minimize any adverse effect its activities have on the environment and to promote co-operation and compliance with the relevant authorities and regulations. The Directors confirm that the Company has not undertaken any activities which have caused or are likely to cause detriment to the environment.

Internal Control

The Board of Directors takes overall responsibility for the Company’s internal control system. A separate Internal Audit section is to be set-up to review the effectiveness of the Company’s internal controls in order to ensure reasonable assurance that assets are safeguarded and all transactions are properly authorized and recorded. The Board reviews the recommendations of External Independent Auditors and takes appropriate action to maintain an adequate internal control system.

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Going Concern

The Board of Directors after making necessary inquiries and reviews including reviews of the Company’s budget for the subsequent year, capital expenditure requirements future prospects and risks, cash flows and borrowing facilities have a reasonable expectation that the Company has adequate resources to continue its operations in the foreseeable future. Therefore, the Going Concern basis has been adopted in the preparation of the financial statements.

For and on behalf of the Board

(Sgd) R.M.M.J. Ratnayake (Sgd) S.D.R. Arudpragasam Director Director

By Order of the Board

(Sgd) Corporate Managers & Secretaries (Private) Limited Secretaries

22 May 2012.

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CORPORATE GOVERNANCE

The business and affairs of the Company and its subsidiaries are managed and directed with the objective of balancing the attainment of corporate objectives with the alignment of corporate behaviour within the legal and good governance framework of the industry and the country and also the accountability to shareholders and responsibility to other stakeholders.

Board

Composition of the Board

The Directors are from varied business and professional backgrounds. Their expertise enables them to exercise independent judgement and their views carry substantial weight in decision making. The Board comprises of one Executive Director and five Non-Executive Directors of whom two are Independent. These Directors are listed below:

The Non-Executive Directors have submitted their declarations of their Independence or Non Independence to the Board of Directors.

Although Mr. J.M. Swaminathan has served on the Board for a period of 9 years, is a Director on the Boards of the subsidiaries of Colonial Motors PLC and though a majority of the Directors of the Company are on the Boards of the subsidiary companies and other listed entities, the Board after taking into consideration all other circumstances listed in the Rules pertaining to the Criteria for Defining Independence, is of the opinion that Mr. J.M. Swaminathan is nevertheless Independent.

Although Mr. A.M. de S. Jayaratne is a Director on the Boards of the subsidiaries of Colonial Motors PLC, is also a member of the Board of its parent company, and a majority of the Directors of the Company being on the Boards of the subsidiary companies and other listed entities, the Board after taking into consideration all other circumstances listed in the Rules pertaining to the Criteria for Defining Independence, is of the opinion that Mr. A.M. de S. Jayaratne is nevertheless Independent.

Mr. A. Rajaratnam - Chairman Non-Executive

Mr. R.M.M.J. Ratnayake - Managing Director-Executive

Mr. S.D.R. Arudpragasam - Non- Executive

Mr. J.M. Swaminathan - Independent Non-Executive

Mr. A.M. de S. Jayaratne - Independent Non-Executive

Mr. S. Rajaratnam - Non- Executive

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Decision Making of the Board

The Board has met three times during the year under review. In addition to Board Meetings, matters are referred to the Board and decided by Resolutions in writing.

The Board is responsible for:

Determining the strategic direction of the Company and also setting the corporate values.

Implementation and monitoring of business strategy of the Company.

Ensuring of an effective internal control system and a proactive risk management system.

Ensuring compliance with ethical, legal, health, environment and safety standards.

Approval of Interim and Annual Financial Statements.

Approval of budgets, corporate plans, major capital investments, divestments and acquisitions.

Company Secretaries and Independent Professional Advice

The Company and all the Directors may seek advice from Corporate Managers & Secretaries (Private) Limited who are qualified to act as Secretaries as per the provisions of the Companies Act No. 07 of 2007. Advice is also sought from independent external professionals whenever the Board deems it necessary.

Independent Judgement

The Board is committed to exhibit high standards of integrity and independence of judgement. Each Director dedicates the time and effort necessary to carry out his responsibilities.

Financial Acumen

The Board includes five Finance Professionals who possess the knowledge and competence to offer the Board necessary guidance on matters of Finance.

Supply of Information

Directors are furnished with monthly reports on Performance comprising of Financial Statements and other product related information.

Appointments to the Board

The Board as a whole decides on the appointments of Directors in accordance with the Articles of Association of the Company and in compliance with the rules on Governance. All appointments are approved by the Board of the parent company The Colombo Fort Land & Building Co. PLC.

The details of new appointments to the Board are made available to the shareholders by making announcements to the Colombo Stock Exchange.

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Re-election of Directors

In terms of the Articles of Association any Director appointed by the Board holds office until the next Annual General Meeting at which he seeks re-election by the Shareholders.

The Articles of Association require one third or a number nearest to one third of the Directors in office to retire at each Annual General Meeting. The Directors to retire in each year are those who have been longest in office since their last election or appointment. Retiring Directors are eligible for re-election by the Shareholders.

A Director appointed to the office of Chairman, Managing or Joint Managing Director shall not whilst holding that office be subject to retirement by rotation.

Directors Remuneration

Remuneration CommitteeThe Remuneration Committee of the Parent Company, The Colombo Fort Land & Building Company PLC functions as the Company’s Remuneration Committee.

DisclosuresAggregate remuneration paid to Directors is disclosed in Note 21 in the Financial Statements on page 53.

Relations with Shareholders

Constructive use of AGM / General Meetings

The Board considers the Annual General Meeting/ General Meetings an opportunity to communicate with shareholders and

encourages their participation. Questions raised by the Shareholders are answered and an appropriate dialogue is maintained with them.

Others

The Company’s principal communicator with all its stakeholders are its Annual Report and Quarterly Financial Statements.

Accountability and Audit

Financial Reporting

The Board places emphasis on complete disclosure of financial and non-financial information within the bounds of commercial reality. This enables both existing and prospective shareholders to make fair assessment on the Company’s performance and future prospects. The Financial Statements are prepared in accordance with the Sri Lanka Accounting Standards.

Disclosures

The Annual Report of the Board of Directors is given on pages 8 to 12 in this Report. The Auditor’s Report on the Financial Statements is given on pages 19 and 20.

Going Concern

The Directors are of the belief that the Company is capable of operating in the foreseeable future after adequate assessment of the Company’s financial position and resources. Therefore the Going Concern principle has been adopted in the preparation of these Financial Statements.

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Internal Control

The Board of Directors is responsible for the Company’s system of internal controls and for reviewing its effectiveness. The system is designed to safeguard assets against unauthorized use or disposal and to ensure that proper records are maintained . It includes all controls including financial, operational and compliance controls and risk management.

However any system can ensure only reasonable and not absolute assurance that errors and irregularities are prevented or detected within a reasonable timeframe.

Audit Committee

The Audit Committee of the Parent Company, The Colombo Fort Land & Building Company PLC functioned as the Company’s Audit Committee until such time the Company formed its own Audit Committee in October 2011.

The Audit Committee Report is set out on pages 17 and 18 of this Report.

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AUDIT COMMITTEE REPORT

The Audit Committee Report focuses on the activities of the Company for the year under review, which the Audit Committee has reviewed and monitored so as to provide an additional assurance on the reliability of the Financial Statements.

Composition

The Audit Committee of the parent company, The Colombo Fort Land & Building Company PLC (CFLB) functioned as the Company’s audit committee until October 2011 and comprised of the following members:

Mr. R. Seevaratnam - Chairman Independent Non-Executive Director CFLB

Mr. A. M. de S. Jayaratne - Member Independent Non-Executive Director CFLBMr. R. Senathirajah (Resigned on 12.09.2011) - Member Non-Executive Director CFLB

The Company’s own Audit Committee was constituted on 25 October 2011 and comprise of the following members :

Mr. A. M. de S. Jayaratne - Chairman Independent Non-Executive Director

Mr. J.M. Swaminathan - Member Independent Non-Executive DirectorMr. S.D.R. Arudpragasam - Member Non-Executive Director

The Committee has a blend of experience in the commercial sector, audit exposure, corporate law and business acumen to carry out their role efficiently and effectively.

Role of the Audit Committee

The Audit Committee acts as the advisory to the Board and its main objective is to assist the Board of Directors by giving recommendations to ensure that the Company follows best practices in line with best Corporate Governance practices. The Committee is responsible to ensure a sound financial reporting system adhering to relevant accounting standards and principles, adequacy of internal controls and risk control measures, efficient management reporting systems and adherence to other statutory requirements. In fulfilling this role, the Audit Committee is empowered to examine the financial records of the Company and other communications as necessary in order to ensure that the Company adheres to accepted norms of ethical guidelines, rules and regulations. The Audit Committee recommends the appointment of external auditors ensuring independence and maintains a close professional relationship with them. The Committee also recommends the fees payable to them in the execution of these services.

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Meetings and Attendance

The Audit Committee of the parent company mentioned above met in respect of Colonial Motors PLC on two occasions during the period April to October 2011 and the attendance was as follows:

Mr. R. Seevaratnam - Chairman - 2/2Mr. A.M. de S. Jayaratne - 2/2Mr. R. Senathirajah (Resigned on 12.09.2011) - 1/2

The present Audit Committee has met on two occasions since being constituted in October 2011 upto the year ended 31 March 2012 and the attendance was as follows:

Mr. A.M. de S. Jayaratne - Chairman - 2/2 Mr. J.M. Swaminathan - 2/2 Mr. S.D.R. Arudpragasam - 2/2

The Company’s Secretaries, Corporate Managers and Secretaries (Private) Limited functions as the Secretaries to the Audit Committee.

Senior Management personnel of the Company are invited to the meetings as and when required. The proceedings of the Audit Committee are regularly reported to the Board.

External Audit

The Company has appointed PricewaterhouseCoopers as its external auditor and the services provided by them are segregated between audit / assurance services and other advisory services such as tax consultancy. PricewaterhouseCoopers has also issued a declaration as required by

the Companies Act No. 7 of 2007 that they do not have any relationship or interest in any of the companies in the Group, which may have a bearing on the independence of their role as auditors.

(Sgd.) A.M. de S. JayaratneChairmanAudit Committee

22 May 2012.

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To the shareholders of Colonial Motors PLC

Report on the Financial Statements

1. We have audited the accompanying financial statements of Colonial Motors PLC (“the Company”), the consolidated financial statements of the Company and its subsidiaries, which comprise the balance sheet as at 31 March 2012, 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 as set out on pages 21 to 61.

Management’s Responsibility for the Financial Statements

2. 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.

Scope of Audit and Basis of Opinion

3. Our responsibility is to express an opinion on these financial statements based on our

INDEPENDENT AUDITORS’ REPORT

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.

4. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

5. 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

6. In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31 March 2012 and the financial statements give a true and fair view of the Company’s state of affairs as at 31 March 2012 and of its profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

PricewaterhouseCoopers, P. O. Box 918, 100 Braybrooke Place, Colombo 2, Sri Lanka T: +94 (11) 771 9838, 471 9838, F: +94 (11) 230 3197, www.pwc.com/lk

Partners Y. Kanagasabai FCA, D.T.S.H. Mudalige FCA, C.S. Manoharan ACA, N.R. Gunasekera FCA, S. Gajendran FCA, Ms. S. Hadgie FCA, Ms. S. Perera ACA

PricewaterhouseCoopers is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

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Independent Auditors’ Reportto the shareholders of Colonial Motors PLC (Contd)

7. In our opinion, the consolidated financial statements give a true and fair view of the state of affairs as at 31 March 2012 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.

Report on Other Legal and Regulatory Requirements

8. These financial statements also comply with the requirements of sections 151 (2) and 153 (2) to 153 (7) of the Companies Act No. 07 of 2007.

(Sgd) PricewaterhouseCoopers

CHARTERED ACCOUNTANTS

19 June 2012.

COLOMBO

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C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S 21BALANCE SHEET

(all amounts in Sri Lanka Rupees)

Note Group31 March

Company31 March

2012 2011Restated 2012 2011

ASSETS Non-current assets Property, plant and equipment 5 924,531,894 914,104,362 814,964,374 821,226,578 Intangible assets 6 4,883,636 5,212,113 Nil Nil Investment in subsidiaries 7 Nil Nil 34,175,370 34,175,370 Investment in relatedCompanies 8 475,388,700 88,550,000 375,388,700 88,550,000 Deferred income tax assets 10 Nil 2,708,824 Nil 2,708,824 Trade and other receivables 12 Nil Nil 59,157,833 41,000,000

1,404,804,230 1,010,575,299 1,283,686,277 987,660,772 Current assetsInventories 11 325,655,384 432,675,204 152,273,582 130,978,658 Trade and other receivables 12 272,077,968 111,497,987 83,170,961 61,309,634 Investments 9 224,436,895 223,923,985 56,638,650 73,067,809 Income tax receivables 3,024,897 Nil Nil Nil Cash and cash equivalents 13 994,056,261 239,019,807 2,848,650 7,348,602

1,819,251,405 1,007,116,983 294,931,843 272,704,703 Total assets 3,224,055,635 2,017,692,282 1,578,618,120 1,260,365,475 EQUITYStated capital 14 91,348,225 91,348,225 91,348,225 91,348,225 Reserves 15 2,414,349,782 1,272,110,576 1,228,851,324 919,065,249

2,505,698,007 1,363,458,801 1,320,199,549 1,010,413,474 Non-controlling interest 1,674,237 956,317 Nil Nil Total equity 2,507,372,244 1,364,415,118 1,320,199,549 1,010,413,474

LIABILITIESNon-current liabilitiesBorrowings 17 55,520,870 63,537,871 25,520,870 32,116,450 Deferred income tax liabilities 10 2,478,416 Nil 2,478,416 Nil Retirement benefit obligations 18 21,174,481 21,939,509 13,498,176 14,527,449

79,173,767 85,477,380 41,497,462 46,643,899 Current liabilitiesTrade and other payables 16 214,038,459 231,433,412 43,925,118 63,218,452 Current income tax liabilities 251,222,851 95,578,732 1,949,263 653,527 Borrowings 17 172,248,314 240,787,640 171,046,728 139,436,123

637,509,624 567,799,784 216,921,109 203,308,102 Total liabilities 716,683,391 653,277,164 258,418,571 249,952,001 Total equity and liabilities 3,224,055,635 2,017,692,282 1,578,618,120 1,260,365,475 Net assets per share 33 275 149 145 111

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

(Sgd) H Nitkunananthan Finance ManagerDate : 22 May 2012

The Board of Directors is responsible for the preparation and presentation of these financial statements. Approved and signed for and on behalf of the Board of Directors:

(Sgd) R M M J Ratnayake (Sgd) S D R ArudpragasamDirector DirectorDate : 22 May 2012 Date : 22 May 2012

The notes on pages 26 to 61 form an integral part of these financial statements.

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C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S22INCOME STATEMENT


Note Group Year ended 31 March

CompanyYear ended 31 March

2012 2011 2012 2011

Revenue 4 & 19 3,968,049,331 1,507,826,596 402,219,660 278,274,450

Cost of sales (2,952,892,405) (1,076,362,509) (297,026,835) (182,367,100)

Gross profit 1,015,156,926 431,464,087 105,192,825 95,907,350

Other income 20 801,705,434 122,236,599 326,268,837 31,017,062

Administrative expenses (211,621,041) (97,750,276) (63,969,324) (65,490,045)

Distribution costs (96,993,094) (111,776,346) (14,706,829) (13,069,441)

Operating profit 21 1,508,248,225 344,174,064 352,785,509 48,364,926

Finance costs -net 23 (1,898,931) (20,682,919) (15,749,650) (19,376,128)

Profit before tax 1,506,349,294 323,491,145 337,035,859 28,988,798

Tax (charge) / release 24 (343,784,353) (91,515,210) (7,816,968) 5,497,691

Net profit 1,162,564,941 231,975,935 329,218,891 34,486,489

Attributable to :

Equity holders of the Company 1,161,847,022 231,694,896 329,218,891 34,486,489

Minority interest 717,919 281,039 Nil Nil 1,162,564,941 231,975,935 329,218,891 34,486,489

Earnings per share for profit attributable to equity holders of the Company

basic 25 127.34 26.11 36.08 3.89

Dividends per share 26 4 1.50 4 1.50


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(a) Group

NoteStatedcapital

Retainedearnings

Revalua-tion&

other reserves

Totalreserves

Non con-trollinginterestrestated

Totalequity

Balance at 1 April 2010 40,657,575 242,064,781 815,456,244 1,057,521,025 Nil 1,098,178,600

Rights issue 50,690,650 Nil Nil Nil Nil 50,690,650

Deferred tax attributable to revaluation surplus Nil Nil (7,981,027) (7,981,027) Nil (7,981,027)

Depreciation attributable to revaluation surplus Nil 2,192,590 (2,192,590) Nil Nil Nil

Net profit Nil 231,694,896 Nil 231,694,896 1,146,360 232,841,256

Dividends (2009/2010) Nil (9,124,318) Nil (9,124,318) Nil (9,124,318)

As previously reported 91,348,225 466,827,949 805,282,627 1,272,110,576 1,146,360 1,364,605,161

Adjustment for Dispute in rental expenses 32 (b) Nil Nil Nil Nil (190,042) (190,042)As restated at 31 March 2011 91,348,225 466,827,949 805,282,627 1,272,110,576 956,318 1,364,415,119

Deferred tax attributable Nil Nil (5,746,339) (5,746,339) Nil (5,746,339)to revaluation surplus

Depreciation attributable to revaluation surplus

Nil 2,192,590 (2,192,590) Nil Nil Nil

Net profit Nil 1,161,847,022 Nil 1,161,847,022 717,919 1,162,564,941

Dividends (2010/2011) Nil (13,861,477) Nil (13,861,477) Nil (13,861,477)

Balance at 31 March 2012 91,348,225 1,617,006,084 797,343,698 2,414,349,782 1,674,237 2,507,372,244


STATEMENT OF CHANGES IN EQUITY

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(b) Company

NoteStatedcapital

Retainedearnings

Revaluation &

other reserves

Totalreserves

Totalequity

Balance at 1 April 2010 40,657,575 134,227,861 767,456,244 901,684,105 942,341,680

Rights issue 50,690,650 Nil Nil Nil 50,690,650

Deferred tax attributable to revaluation surplus Nil Nil (7,981,027) (7,981,027) (7,981,027)

Depreciation attributable torevaluation surplus Nil 2,192,590 (2,192,590) Nil Nil

Net Profit Nil 34,486,489 Nil 34,486,489 34,486,489

Dividends (2009 / 2010) Nil (9,124,318) Nil (9,124,318) (9,124,318)

Balance at 31 March 2011 91,348,225 161,782,622 757,282,627 919,065,249 1,010,413,474

Balance at 1 April 2011 91,348,225 161,782,622 757,282,627 919,065,249 1,010,413,474

Deferred tax attributable to revaluation surplus Nil Nil (5,746,339) (5,746,339) (5,746,339)

Depreciation attributable torevaluation surplus Nil 2,192,590 (2,192,590) Nil Nil

Net Profit Nil 329,218,891 Nil 329,218,891 329,218,891

Dividends (2010 / 2011) Nil (13,686,477) Nil (13,686,477) (13,686,477)

Balance at 31 March 2012 91,348,225 479,507,626 749,343,698 1,228,851,324 1,320,199,549


STATEMENT OF CHANGES IN EQUITY

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C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S 25CASH FLOW STATEMENT


Note Group Year ended 31 March

CompanyYear ended 31 March

2012 2011 2012 2011Cash flows from operating activities

Cash generated from/(used in) operations 27 1,129,239,483 145,673,435 (1,090,170) (18,172,921)Interest paid (25,796,611) (30,533,124) (15,750,884) (19,818,731)Interest received 23 23,897,680 10,118,745 1,234 442,603 Retirement benefit obligations paid 18 (2,643,008) (148,223) (2,532,060) Nil Income tax paid (190,201,209) (18,282,715) (7,080,330) (4,080,295)

Net cash generated from / (used in) operating activities 934,496,335 106,828,118 (26,452,210) (41,629,344)

Cash flows from investing activities

Purchase of property, plantand equipment (26,813,001) (89,097,749) (2,686,468) (1,622,117)Proceeds from sale of property, plant and equipment 6,294,643 153,310 6,294,643 153,310 Purchase of intangible assets 6 Nil (247,200) Nil Nil Cash inflow on acquisition 32(e) Nil 2,586,882 Nil Nil Purchase of investments (103,335,663) (32,254,972) (3,291,101) (1,067,344)Proceeds from sale of investments Nil 43,496,061 Nil 8,926,477 Dividends received 19,385,599 12,132,032 1,815,877 1,702,797

Net cash (used in) / generated from investing activities (104,468,422) (63,231,636) 2,132,951 8,093,123

Cash flows from financing activities

Proceeds from short / long term loans 56,407,530 241,778,700 42,507,530 73,723,592 Proceeds from a rights issue Nil 50,690,650 Nil 50,690,650 Repayment of loans (151,671,023) (67,871,114) (51,553,085) (1,878,888)Dividends paid (13,861,477) (9,124,318) (13,686,477) (9,124,318)Advance on investments Nil Nil Nil (41,000,000)Finance lease principal payment (3,921,713) (3,944,907) (184,730) Nil

Net cash generated (used in) / fromfinancing activities (113,046,683) 211,529,011 (22,916,762) 72,411,036

Increase / (decrease) in cash and cash equivalents 716,981,230 255,125,493 (47,236,021) 38,874,815

Movement in cash andcash equivalents

At 1 April 168,886,613 (86,238,880) (58,103,747) (96,978,562)Increase / (decrease) 716,981,230 255,125,493 (47,236,021) 38,874,815 At 31 March 13 885,867,843 168,886,613 (105,339,768) (58,103,747)


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C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S26NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(all amounts are shown in Sri Lanka Rupees unless otherwise stated)

1. General information

Colonial Motors PLC is a limited liability company domiciled in Sri Lanka and incorporated on 9 July 1909 under the Companies Ordinance. The registered office of the Company is located at No. 297, Union Place, Colombo 2. The Company was re-registered under the Companies Act No. 7 of 2007 on 1 July 2008. The principal activity of the Company is the sale of motor vehicles and spare parts and providing vehicle maintenance services.

Carplan Limited, a wholly owned subsidiary of Colonial Motors PLC is a limited liability company domiciled in Sri Lanka and incorporated on 16 October 1987 under the Companies Act No. 17 of 1982. The Company was re-registered under the Companies Act No. 7 of 2007 on 19 November 2009. The registered office of the Company is located at No. 297, Union Place, Colombo 2. The principal activity of the company is repairs and servicing of vehicles.

Union Investments (Private) Limited, a wholly owned subsidiary of Colonial Motors PLC is a limited liability company incorporated and domiciled in Sri Lanka. The registered office of the company and the principal place of business is located at No. 51/1B, Dharmapala Mawatha, Colombo 03. The company was incorporated on 16 February 1978 and re - registered under the Companies Act No. 7 of 2007 on 29 July 2008. The principal activity of the company is carrying on the business of an investment company.

KIA Motors (Lanka) Limited, a subsidiary of Colonial Motors PLC is a limited liability company domiciled in Sri Lanka and was incorporated on 14 August 2007 under the Companies Act No. 7 of 2007.The registered office of the company is located at No. 297, Union Place, Colombo 02. The principal activity of the company is import and sale of motor vehicles.

Guardian Asset Management Limited, a subsidiary of Colonial Motors PLC is a limited liability company in Sri Lanka and was incorporated on 8 March 1995 under the Companies Act No. 17 of 1982. The company was re-registered on 1 August 2008. The

registered office of the company is located at No. 51/1B, Dharmapala Mawatha, Colombo 3. The principal activities of the company are asset management, funds and portfolio management and the management of all types of trusts.

Guardian Trustee Limited is a wholly owned subsidiary of Guardian Asset Management Limited. It is a limited liability company domiciled in Sri Lanka and incorporated on 26 May 1995 under the Companies Act No. 17 of 1982. The registered office of the company is located at No. 51/1B Dharmapala Mawatha, Colombo 3. The principal activities of the company are asset management, fund and portfolio management and the management of all types of trusts.

2. Summary of significant accounting policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The consolidated financial statements are prepared in accordance with and comply with the Sri Lanka Accounting Standards [“SLAS” or “Standard(s)”]. The consolidated financial statements are prepared under the historical cost convention.

The preparation of financial statements in conformity with SLASs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

The convergence of Sri Lanka Accounting Standards with International Financial Reporting Standards with effective from 01 January 2012 have not been adopted by the Group in preparing the consolidated financial statements as they are not effective for the year ended 31 March 2012.

Notes to the consolidated financial statements

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2.2 Consolidation

Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to exercise control over the operations, have been consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are no longer consolidated from the date of disposal. All inter company transactions, balances and unrealised surpluses and deficits on transactions between group companies have been eliminated. Where necessary accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group. Separate disclosure is made of non controlling interests.

2.3 Non controlling Interest

Non controlling interest is that the portion of the profit or loss and net asset of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent.

The Group applies a policy of treating transactions with non controlling interests as transactions with parties external to the Group. Disposals to non controlling interests result in gains and losses for the Group that are recorded in the income statement. Purchases from non controlling interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary.

2.4 Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and

returns that are different from those of segments operating in other economic environments.

2.5 Foreign currencies

Foreign currency transactions in Group companies are accounted for at the exchange rates prevailing at the date of transaction: gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the income statement. Monetary assets and liabilities are translated at the year-end exchange rates.

2.6 Investments

Marketable securities are carried at lower of cost and market value, on an aggregate portfolio basis. Market value is calculated by reference to Stock Exchange quoted selling prices at the close of the business on the balance sheet date.

Fixed asset investments excluding marketable securities are shown at cost and provision is only made where, in the opinion of the Directors, there is a permanent diminution in value. Where there has been a permanent diminution in the value of an investment, it is recognised as an expense in the period in which the diminution is identified.

Where the Group’s interest in equity capital is less than 20% and / or in companies where the Group does not exercise significant influence and / or control over the financial and operating policies, investments are valued at cost, with provisions being made for any permanent impairment in their value. Income from these investments is recognised only to the extent of dividend received.

On disposal of an investment, the difference between the net proceeds on disposal and carrying amount is charged or credited to the consolidated income statement.

Notes to the consolidated financial statements (Contd)

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2.7 Property, plant and equipment

Land and buildings are shown at fair value, based on valuations by external independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Land is not depreciated as it is deemed to have an indefinite life.

Increases in the carrying amount arising on revaluation of land and buildings are credited to revaluation reserve under shareholders’ equity. Decreases that offset previous increases of the same asset are charged against revaluation reserve. All other decreases are charged to the income statement. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to the income statement and depreciation based on the asset’s original cost is transferred from revaluation reserve to retained earnings.

Depreciation of assets begins when it is available for use. Depreciation on assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:

%Buildings 5Plant, machineries and other equipment 25Motor vehicles 25

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with

the carrying amount and are recognized in the income statement.

When revalued assets are sold, the amounts included in revaluation reserve are transferred to retained earnings / accumulated losses.

2.8 Intangible assets

a) Computer software

Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. However, costs that are directly associated with identifiable and unique software products controlled by the Company and have probable economic benefit exceeding the cost beyond one year are recognised as intangible assets.

Computer software costs recognised as assets are amortised over their estimated useful lives which does not exceed 3 years.

b) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill acquired in a business combination is tested annually for impairment, or more frequently if events or changes in circumstance indicate that it might be impaired and carried at costs less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

2.9 Accounting for leases

- where a group company is a lessorLeases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. When assets are leased out under an operating lease, the asset is included in the balance sheet based on the nature of the asset. Lease income is recognised over the term of the lease on a straight-line basis.


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- where a group company is a lessee

Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the estimated present value of the underlying lease payment. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance charge is charged to the income statement over the lease period. The property, plant and equipment acquired under finance leasing contracts is depreciated over the useful life of the asset.

2.10 Inventories

Inventories are stated at the lower of cost and net realisable value. In general, cost is determined on a average basis and includes transport and handling charges. In the case of work-in-progress, cost includes contractor’s fees, material and labour. Net realisable value is the price at which the stocks can be sold in the normal course of business after allowing for all costs of realisation and, where appropriate, the cost of conversion from their existing state to a finished condition.

Provision is made, where necessary, for obsolete, slow moving and defective stocks.

2.11 Trade receivables

Trade receivables are carried at anticipated realisable value. An estimate is made for doubtful receivables based on a review of all outstanding amounts at the year end. Bad debts are written off during the year in which they are identified.

2.12 Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, deposits held at call with banks, and investments in money market instruments, net of bank overdrafts. In the balance sheet, bank overdrafts are included in borrowings in current liabilities.

2.13 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of obligation can be made.

2.14 Defined contribution plans

All executive and clerical staff of the Company are members of the Company’s private provident fund and all other employees of the Group are members of the Employees’ Provident Fund. All employees are members of the Employees’ Trust Fund. The Company contributes 15 % to the Provident Fund (subsidiary companies 12 %) and 3% to the Trust Fund, of such employees’ basic wage or salary.

2.15 Defined benefit plan

The liability recognized in the balance sheet in respect of defined benefit plan is the present value of the defined benefit obligation at the balance sheet date together with adjustments for unrecognized past-service costs. The defined benefit obligation is calculated by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of long term Government Bonds or high quality corporate bonds.

Past-service costs are recognized immediately in income, unless the changes to the defined benefit plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortized on a straight-line basis over the vesting period.

The assumptions based on which the results of the actuarial valuation was determined, are included in Note 18 to the financial statements.


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2.16 Current taxes

The provision for income tax is based on the elements of income and expenditure as reported in the financial statements and computed in accordance with the provision of the Inland Revenue Act.

2.17 Deferred income taxes

Deferred income tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used to determine deferred income tax.

The principal temporary differences arise from depreciation on property, plant and equipment, provision for retirement benefits and tax losses carried forward. Deferred tax assets relating to the carry forward of unused tax losses are recognised to the extent that it is probable that future taxable profits will be available against which the unused tax losses can be utilised.

2.18 Impairment of assets

The carrying value of assets is reviewed for impairment either annually or when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount the assets are written down to their recoverable amount. Impairment losses are recognised in the consolidated income statement unless it reverses a previous revaluation surplus for the same asset.

2.19 Dividend distribution

Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders.

2.20 Revenue recognition

Sales are recognised upon delivery of products and customer acceptance, if any or performance of services, net of sales taxes and discounts.

Deferred revenue - any advance payments received from customers for services yet to be rendered is deferred and is recognised when the service is completed.

Other revenues earned by the Group are recognised on the following bases: Interest income - as it accrues unless collectability is in doubt

Dividend income - when the shareholder’s right to receive payment is established

2.21 Comparatives

Where necessary, comparative figures have been adjusted to confirm with changes in presentation in the current year.

3. Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below:

(a) Provision for bad and doubtful debts

The Group assesses at each balance sheet date whether there is objective evidence that trade receivables have been impaired. Provision for doubtful debts is calculated based on a review of the current status of existing receivables and historical collections experience. Such provisions are adjusted periodically to reflect the actual and anticipated impairment.


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(b) Defined benefit plan - Gratuity

The present value of the defined benefit plan depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for defined benefit plan include the discount rate. Any changes in these assumptions will impact the carrying amount of defined benefit plan. The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the defined benefit plan. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related defined benefit plan. Other key assumptions for defined benefit plan are based in part on current market conditions. Additional information is disclosed in note 18.

(c) Provisions

The Group recognizes provisions when it has a present legal or constructive obligation arising as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. The recording of provisions requires the application of judgments about the ultimate resolution of these obligations. As a result, provisions are reviewed at each balance sheet date and adjusted to reflect the Group’s current best estimate.

(d) Contingent liabilities

Determination of the treatment of contingent liabilities in the financial statements is based on the management’s view of the expected outcome of the applicable contingency. The Group consults with legal counsel on matters related to litigation and other experts both within and outside the Group with respect to matters in the ordinary course of business.


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4. Segment Information

(a) Primary reporting format - business segments

At 31 March 2012 the Group is organised into two main business segments :

� Providing motor vehicle repair and maintenance services including sale of spare parts

� Sale of motor vehicles

Inter segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties.

Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, trade and other receivables, and cash and cash equivalents.

Segment liabilities comprise operating liabilities.

Capital expenditure comprises additions to property, plant and equipment (Note 5) and intangible assets (Note 6).

(b) Secondary reporting format - geographical segments

The Group’s two business segments operate in one main geographical area, hence they do not qualify for secondary reporting.

The segment results for the year ended 31 March 2012 are as follows:

Repair &maintenance

servicesVehiclesales Group

Total segmental revenue 311,635,310 3,656,414,021 3,968,049,331Less: Turnover Tax Nil Nil NilRevenue from external customers 311,635,310 3,656,414,021 3,968,049,331

Operating profit / segment resultsFinance income 23,897,680Finance costs (25,796,611)Finance costs - net (Note 23) (1,898,931)Profit before income tax 1,506,349,294Income tax expense (Note 24) (343,784,353)Net profit 1,162,564,941

Other segment items included in the income statement are as follows:

Repair &maintenance


Depreciation (Note 5) 16,203,375 Nil 16,203,375Amortization (Note 6) 328,477 Nil 328,477

The segment assets and liabilities at 31 March 2012 and capital expenditure for the year then ended are as follows:

Repair &maintenance


Assets 3,144,559,035 79,496,600 3,224,055,635Liabilities 549,271,112 167,412,279 716,683,391Capital expenditure 29,089,786 Nil 29,089,786


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4. Segment Information (Contd)

(a) Primary reporting format - business segments

At 31 March 2011 the Group is organised into two main business segments :

� Providing motor vehicle repair and maintenance services including sale of spare parts

� Sale of motor vehicles

Inter segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties.Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, trade and other receivables, and cash and cash equivalents.Segment liabilities comprise operating liabilities.Capital expenditure comprises additions to property, plant and equipment (Note 5) and intangible assets (Note 6).(b) Secondary reporting format - geographical segmentsThe Group’s two business segments operate in one main geographical area, hence they do not qualify for secondary reporting.

The segment results for the year ended 31 March 2011 are as follows:

Repair &maintenance


Total segmental revenue 250,811,826 1,258,672,579 1,509,484,405 Less: Turnover Tax (753,661) (904,148) (1,657,809)Revenue from external customers 250,058,165 1,257,768,431 1,507,826,596

Operating profit / segment resultsFinance income 10,118,745 Finance costs (30,801,664)Finance costs - net (Note 23) (20,682,919)Profit before income tax 323,491,145 Income tax expense (Note 24) (91,515,210)Profit for the year 231,975,935

Other segment items included in the income statement are as follows:

Repair &maintenance


Depreciation (Note 5) 14,559,583 Nil 14,559,583 Amortization (Note 6) 450,363 Nil 450,363

The segment assets and liabilities at 31 March 2011 and capital expenditure for the year then ended are as follows:

Repair &maintenance


Assets 1,938,385,724 79,496,600 2,017,882,324 Liabilities 451,113,272 172,163,892 623,277,164 Capital expenditure 9,601,149 79,496,600 89,097,749


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5. Property, plant and equipment

(a) Group

Freeholdland Buildings

Plant, machinery

& otherequipment

Motorvehicles

Capital work

in progress Total

Year ended 31 March 2011

Opening net book amount 716,500,000 101,450,004 8,589,145 12,541,526 Nil 839,080,675

Acquisition on subsidiary Nil Nil 638,832 Nil Nil 638,832

Additions 79,496,600 Nil 3,947,147 5,654,002 Nil 89,097,749

Disposals Nil Nil (158,000) Nil Nil (158,000)

Depreciation charge (Note 21) Nil (5,437,032) (4,722,478) (4,400,073) Nil (14,559,583)

Depreciation on disposal Nil Nil 4,689 Nil Nil 4,689

Closing net book amount 795,996,600 96,012,972 8,299,335 13,795,455 Nil 914,104,362

At 31 March 2011

Cost/valuation 795,996,600 101,450,004 33,974,925 34,923,303 Nil 966,344,832

Accumulated depreciation Nil (5,437,032) (25,675,590) (21,127,848) Nil (52,240,470)

Net book amount 795,996,600 96,012,972 8,299,335 13,795,455 Nil 914,104,362


Opening net book amount 795,996,600 96,012,972 8,299,335 13,795,455 Nil 914,104,362

Additions Nil 1,000,000 4,884,880 22,638,612 566,293 29,089,785

Disposals Nil Nil (575) (5,859,666) Nil (5,860,241)

Depreciation charge (Note 21) Nil (4,472,500) (3,639,743) (8,091,132) Nil (16,203,375)

Depreciation on disposal Nil Nil Nil 3,401,363 Nil 3,401,363

Closing net book amount 795,996,600 92,540,472 9,543,897 25,884,632 566,293 924,531,894

At 31 March 2012

Cost/valuation 795,996,600 102,450,004 38,859,230 51,702,249 566,293 989,574,376

Accumulated depreciation Nil (9,909,532) (29,315,333) (25,817,617) Nil (65,042,482)

Net book amount 795,996,600 92,540,472 9,543,897 25,884,632 566,293 924,531,894


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5. Property, plant and equipment (Contd)

(b) Company

Freeholdland Buildings

Plant, machinery

& otherequipment

Motorvehicles Total


Opening net book amount 716,500,000 101,450,004 2,017,410 8,376,970 828,344,384

Additions Nil Nil 1,508,760 113,357 1,622,117

Disposals Nil Nil (158,000) Nil (158,000)

Depreciation charge (Note 21) Nil (5,437,032) (1,297,924) (1,851,657) (8,586,613)

Depreciation on disposal Nil Nil 4,690 Nil 4,690

Closing net book amount 716,500,000 96,012,972 2,074,936 6,638,670 821,226,578

At 31 March 2011

Cost/valuation 716,500,000 101,450,004 12,089,106 16,168,379 846,207,489

Accumulated depreciation Nil (5,437,032) (10,014,170) (9,529,709) (24,980,911)

Net book amount 716,500,000 96,012,972 2,074,936 6,638,670 821,226,578


Opening net book amount 716,500,000 96,012,972 2,074,936 6,638,670 821,226,578

Additions Nil 1,000,000 1,342,414 2,620,838 4,963,252

Disposals Nil Nil (575) (5,791,666) (5,792,241)

Depreciation charge (Note 21) Nil (4,472,500) (1,479,925) (2,824,540) (8,776,965)

Depreciation on disposal Nil Nil Nil 3,343,750 3,343,750

Closing net book amount 716,500,000 92,540,472 1,936,850 3,987,052 814,964,374

At 31 March 2012

Cost/valuation 716,500,000 102,450,004 13,430,945 12,997,551 845,378,500

Accumulated depreciation Nil (9,909,532) (11,494,095) (9,010,499) (30,414,126)

Net book amount 716,500,000 92,540,472 1,936,850 3,987,052 814,964,374


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5. Property, plant and equipment (Contd)

(i) Assets held under finance leases included in property, plant and equipment of the Group are as follows:

2012 2011Plant and machineryCapitalised cost 2,690,803 2,690,803Accumulated depreciation (2,333,101) (1,929,481)Net book amount at 31 March 357,702 761,322

Motor vehicleCapitalised cost 8,675,627 6,398,842Accumulated depreciation (5,682,462) (4,700,547)Net book amount at 31 March 2,993,165 1,698,295

Office equipmentCapitalised cost 1,145,339 1,145,339Accumulated depreciation (830,371) (658,570)Net book amount at 31 March 314,968 486,769

Tools & equipmentCapitalised cost 4,093,700 4,093,700Accumulated depreciation (4,093,700) (4,093,700)Net book amount at 31 March Nil NilTotal net book amount of leased assets at 31 March 3,665,835 2,946,386

(ii) The category of buildings include buildings leased out by the Company to Carplan Ltd - a fully owned subsidiary, and Lankem Ceylon PLC - a related party of the Group, under cancellable operating lease agreements. The lease income credited to the income statement during the year has been disclosed in Note 20 to the financial statements within rent income.

(iii) Property, plant and equipment in use by the Company and the Group include fully depreciated assets, the cost of which amounted to Rs. 27,675,064 (2011 - Rs. 26,648,920) and Rs. 50,554,941 (2011 - Rs. 49,528,797) respectively at the balance sheet date.

(iv) The freehold land and buildings which were revalued on 23 April 2010 by an independent professional valuer. Valuations were made on the basis of the market value for existing use were considered as the value of freehold land and buildings as at the balance sheet date.

If land and buildings of the Company and the Group were stated on the historical cost basis, the relevant amounts would be as follows:

Group Company2012 2011 2012 2011

Cost 3,877,596 2,877,596 3,877,596 2,877,596Accumulated dep (1,889,935) (1,696,055) (1,889,935) (1,696,055)Net book amount 1,987,661 1,181,541 1,987,661 1,181,541


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


6. Intangible assets

8. Investment in related companies

7. Investments in subsidiaries

Group Company2012 2011

Restated2012 2011

SoftwareBalance at 31 March 2011Net book amount as at 01 April 2010 544,452 719,795 Nil Nil

Additions 247,200 174,304 Nil Nil Amortisation charge for the year (450,363) (349,647) Nil Nil Balance at 31 March 2011 341,289 544,452 Nil Nil

Net book amount as at 01 April 2011 341,289 544,452 Nil Nil Additions Nil 247,200 Nil Nil Amortisation charge for the year (328,477) (450,363) Nil Nil Balance at 31 March 2012 12,812 341,289 Nil Nil

GoodwillBalance at 01 April 2011 [Note 32(a)] 4,870,824 4,870,824 Nil Nil Balance at 31 March 2012 4,870,824 4,870,824 Nil Nil

Cost 6,783,021 6,783,021 Nil Nil Accumulated amortisation (1,899,385) (1,570,908) Nil Nil Balance at 31 March 2012 4,883,636 5,212,113 Nil Nil

Group Company2012 2011 2012 2011

Colombo Fort Hotels Limited 475,358,700 Nil 375,358,700 Nil Beruwala Resorts Limited 30,000 88,550,000 30,000 88,550,000

475,388,700 88,550,000 375,388,700 88,550,000

Percentage Group CompanyHolding 2012 2011 2012 2011

Investments at cost

Carplan Limited 99.99% Nil Nil 3,446,004 3,446,004

Union Investments (Private) Limited 99.99% Nil Nil 2,000,000 2,000,000 KIA Motors (Lanka) Limited 99.99% Nil Nil 20,175,370 20,175,370 Guardian Asset Management Limited 93.75% Nil Nil 12,000,000 12,000,000

Nil Nil 37,621,374 37,621,374 Impairment of investments

Carplan Limited Nil Nil (3,446,004) 3,446,004) Nil Nil (3,446,004) (3,446,004)

Net investments Nil Nil 34,175,370 34,175,370


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9. Investments

Group Company2012 2011 2012 2011

Investments in listed shares (a)At 1 April 220,447,365 190,988,815 70,616,739 72,664,982

Additions 26,083,259 41,241,147 3,291,101 1,067,345 Acquisition on subsidiary Nil 568,458 Nil Nil Disposals (25,757,287) (12,351,055) (19,720,260) (3,115,588)

220,773,337 220,447,365 54,187,580 70,616,739

Other investmentsUnquoted shares (b) 707,094 12,000 12,000 12,000 Unit trust (c) 2,859,070 2,859,070 2,439,070 2,439,070 Share applications (d) 97,394 605,550 Nil Nil

3,663,558 3,476,620 2,451,070 2,451,070 Total investment -current 224,436,895 223,923,985 56,638,650 73,067,809


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9. Investment (Contd)(a) Listed shares Group

31 March 2012

Holdingnumber of

shares

31 March 2012

Market value

31 March 2012Cost

31 March 2011Cost

Bank, finance and insuranceAlliance Finance Company PLC 6,000 3,780,600 354,290 354,290Amana Takaful PLC 504,000 957,600 666,565 288,565Arpico Finance Company PLC 200 18,600 4,461 4,461Asian Alliance PLC 10,100 909,000 854,481 854,481Asia Capital PLC 100 3,800 466 466Aviva NDB Ltd. (formerly known as Eagle Insurance) 285,760 68,957,140 9,525,942 9,525,942Central Finance Company PLC 18,605 3,246,573 710,186 710,186Ceylinco Insurance Company PLC 22 18,700 451 451Commercial Bank of Ceylon PLC 805,421 81,399,935 11,048,608 6,435,811Commercial Bank of Ceylon PLC (non voting) 90,000 7,245,000 2,005,588 2,005,588Capital Development and Investment Company PLC 15 2,625 781 781Ceylon Guardian Investments Trust PLC 12,750 4,704,750 344,920 344,920Development Finance Corporation of Ceylon PLC 5,820 68,194 7,480,368 8,915,168First Capital PLC 3,600 39,600 10,707 10,707Hatton National Bank PLC 244,769 37,572,042 2,977,254 3,238,754Hatton National Bank PLC (Non-voting) 49,050 4,635,225 1,268,032 1,757,917Housing Development Financial Corporation of Sri Lanka PLC 10 700 3,650 3,650HNB Assurance PLC 100,200 4,709,400 1,310,645 527,833Janashakthi Insurance PLC 3,000 35,400 28,497 28,497Lanka Orix Finance Company PLC 79,400 373,180 544,193Lanka Orix Leasing Company PLC 27,800 1,529,000 939,804 939,804Lanka Ventures PLC 339,800 10,873,600 11,405,350 7,366,717LB Finance PLC 578 78,088 3,196 3,196Merchant Bank of Sri Lanka PLC 124,946 3,748,380 8,171,515 8,170,872Nations Trust Bank PLC 112,574 6,450,491 1,982,158 1,982,158National Development Bank PLC 19,530 2,402,190 623,427 623,427Nation Lanka Finance PLC 11,950 124,280 72,141 1,891Pan Asia Bank PLC 313,400 7,396,240 2,533,064 2,533,064People’s Merchant Bank PLC 1,770 23,187 30,522 28,722Seylan Bank PLC 6 405 270 195Seylan Bank PLC (non voting) 261,133 7,598,970 3,938,838 1,872,683Seylan Merchant Bank PLC 6,080 9,386 4,322 1,591Sampath Bank PLC 65,647 11,957,036 2,429,110 2,432,594The Finance Company PLC 20 744 336 336Vanik Incorporation PLC 100 80 165 165Vanik Incorporation PLC (Non-voting) 10 8 25 25Union Bank of Colombo PLC 200 3,560 5,000 5,000Watapota Investment PLC 2,000 145,800 445,990 Nil

3,506,366 271,019,509 71,725,318 60,970,908Beverages, food and tobaccoBairaha Farms PLC 100 13,000 717 717Ceylon Breweries PLC 50 17,495 5,217 5,217Cargills (Ceylon) PLC 128,100 23,570,400 4,394,706 2,152,097Ceylon Cold Stores PLC 9,384 882,096 178,600 139,300Ceylon Tobacco Company PLC 3,507 1,823,640 140,243 140,243Ceylon Tea Services PLC 1,538 980,200 89,342 89,342Convenience Foods Lanka PLC 90 36,000 646 646Coco Lanka PLC 11,895 622,109 294,834 294,834Coco Lanka PLC (non voting) 957 32,538 23,925 23,925Distilleries Company of Sri Lanka PLC 100 14,590 892 892Ferntea PLC 50 175 366 366Kotmale Holdings PLC 100 5,200 266 266Keells Food Products PLC 1,263 126,300 33,769 33,769Lanka Milk Foods (CWE) PLC 266 26,014 6,882 6,882Nestle Lanka PLC 4,740 4,318,140 408,416 408,416Renuka Agri Food PLC 65,400 398,940 202,001 202,001Tea Smallholders PLC 142 6,958 3,023 3,023Three Acre Farms PLC 25,019 1,326,007 215,829 215,829

252,701 34,199,802 5,999,674 3,717,765Balance carried forward 3,759,067 305,219,311 77,724,992 64,688,673


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C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S409. Investment (Contd)

(a) Listed shares (Contd) Group31 March

2012Holding

number of shares

31 March 2012

Market value

31 March 2012Cost

31 March 2011Cost

Balance brought forward 3,759,067 305,219,311 77,724,992 64,688,673Chemicals and pharmaceuticalsChemanex Ceylon PLC 17,877 2,055,855 1,559,956 562,508Chemical Industries Colombo PLC 27 4,185 366 366Industrial Asphalts Ceylon PLC 10 3,950 907 907J L Morison Son & Jones Ceylon PLC 700 54,000 9,060 9,060J L Morison Son & Jones Ceylon PLC (Non-Voting) 400 29,600 16,791 NilLankem Ceylon PLC 107,855 19,450,890 4,540,243 4,540,243Laxapana Batteries PLC 300 2,250 2,241 2,241Union Chemicals PLC 100 69,400 1,000 1,000Haycarb PLC 372 59,520 10,954 10,954Lanka IOC PLC 15,800 309,680 665,931 665,931Singalanka Standard Chemical PLC 60 7,920 Nil 291

143,501 22,047,250 6,807,449 5,793,501Construction, engineering and hospitalsAsiri Hospitals PLC 355,660 2,703,016 900,770 900,770Asiri Surgical PLC 1,499 11,842 3,646 3,646Asiri Medical PLC 112,500 888,750 277,419 277,419Durdans Hospital PLC 13,330 863,825 300,145 300,145Durdans Hospital PLC (Non-Voting) 130 7,202 2,270 2,270Colombo Dockyard PLC 16,395 3,770,850 927,245 927,245Nawaloka Hospitals PLC 26,666 85,331 26,666 20,000Lankem Developments PLC 142 1,491 1,610 1,610Lanka Hospitals PLC 30,100 990,290 443,925 1,500The Lanka Hospital Coporation PLC 36,000 98,700 46,506 488,931

592,422 9,421,297 2,930,202 2,923,536Diversified holdingsAitken Spence & Company PLC 555 62,715 9,852 9,852Carson Cumberbatch & Company PLC 855 397,575 91,105 10,125The Colombo Fort Land & Building Company PLC 5,089,930 177,638,557 9,173,007 9,173,007CT Holdings PLC ( Formerly Known as Ceylon Theatres PLC) 203 30,552 6,291 6,291Hayleys PLC 100,025 36,009,000 2,378,025 2,848,990Hemas Holdings PLC 19,375 519,250 217,227 218,522John Keells Holdings PLC 42,255 8,873,850 3,736,954 3,736,954Richard Pieris Exports PLC 40,600 901,320 1,066,400 1,068,942Sunshine Holdings PLC 700 14,000 23,086 23,086Vallibel One PLC 104,000 2,028,000 2,600,000 2,600,000Browns Investment PLC 353,000 1,200,200 1,491,688 Nil

5,751,498 227,675,019 20,793,635 19,695,769Footwear and textilesCeylon Leather Products PLC 200 18,560 1,791 1,791Kuruwita Textile Mills PLC 29,866 767,556 1,208,400 1,208,400Hayleys Mgt Knitting Mills PLC 2,200 26,620 139,032 139,032ODEL PLC 1,600 32,000 24,000 24,000

33,866 844,736 1,373,223 1,373,223Hotels and TravelsAitken Spence Hotel Holdings PLC 100,765 7,053,550 1,857,440 1,857,440Amaya Leisure PLC 248 30,702 1,217 1,217Asian Hotels Corporation PLC 72,000 5,616,000 4,333,228 988,895Asian Hotels Properties PLC 200 15,600 616 616Browns Beach Hotels PLC 150 2,190 341 341Connaisance de Ceylon PLC 60,248 4,880,088 1,858,707 1,857,490Ceylon Hotels Corporation PLC 10,510 246,985 255,834 255,834Eden Hotel Lanka PLC 350,200 11,206,400 7,007,510 7,007,510Fortress Resorts PLC 550 9,515 5,750 5,750Galadari Hotel PLC 7,100 142,000 60,316 60,316

601,971 29,203,030 15,380,959 12,035,409

Balance carried forward 10,882,325 594,410,643 125,010,460 106,510,111


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C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S 419. Investment (Contd)(a) Listed shares (Contd) Group

31 March 2012

Holdingnumber of

shares

31 March 2012

Market value

31 March 2012Cost

31 March 2011Cost

Balance brought forward 10,882,325 594,410,643 125,010,460 106,510,111Hotels and travels (Contd)Hotel Developers PLC 4 379 296 296Hotel Service Ceylon PLC 500 8,750 1,272 1,272Hunas Falls Hotel PLC 50 3,000 303 303Keells Hotels PLC 531,922 6,755,409 8,912,716 8,912,716Light House Hotel PLC 114,900 5,745,000 1,948,433 2,505,605Mahaweli Reach Hotel PLC 100 2,600 867 867Marawila Resorts PLC 673,320 4,713,336 4,445,196 24,164,816Miramar Beach Hotels PLC 100 15,000 616 616Nuwara Eliya Hotels PLC 11 13,749 3,553 3,553Pegasus Hotels PLC 20,760 828,324 426,221 426,221Reefcomber Hotel PLC 168,767 5,063,010 4,030,018 1,968,598Renuka City Hotel PLC 12,740 2,802,800 896,879 896,879Riverina Hotels PLC 7,609 706,875 85,549 85,549Royal Palms Beach Hotel PLC 15,800 869,000 629,630 629,630Serandib Hotels PLC (NV) 31,250 506,250 296,268 182,205Dolphin Hotels PLC (Formerly known as Stafford Hotels PLC) 20,125 1,038,450 275,848 275,848Taj Lanka Hotels PLC 19,600 605,640 182,413 182,413Tangerine Beach Hotel PLC 11,400 1,003,200 348,343 348,343

1,628,958 30,680,772 22,484,421 40,585,730Information TechnologyE-Channeling PLC 1,162 7,204 2,186 2,186PC House PLC 1,000 8,400 11,000 11,000

2,162 15,604 13,186 13,186Investment trustsAsian Cotton Mills PLC 60 12,000 210 210Ceylon Guardian Investment Trust PLC 137,234 31,838,288 875,136 948,436Ceylon Investment Company PLC 590,691 47,845,971 2,324,163 2,324,163Colombo Fort Investments PLC 63 11,025 373 373Colombo Investment Trust PLC 120 57,600 586 586Equity Two PLC 25,300 629,970 217,733 217,733Dunamis Capital PLC (Formerly known as Kshatriya Holdings PLC) 60,875 614,838 419,447 420,889"Watapota Investments PLC Lanka Ventures PLC"

"84,700 Nil"

"24,613,820 Nil"

"3,211,945 Nil"

"3,211,945 Nil"

Renuka Holdings PLC 590 22,715 4,866 4,866Renuka Holdings PLC (Non-voting) 82 2,132 240 240Browns Investment PLC 3,000 10,200 15,000 Nil

902,715 105,658,559 7,069,699 7,129,441Land and propertyCity Housing PLC 180 2,628 968 968Colombo Land & Development Company PLC 523,860 20,587,698 4,784,943 4,784,943East West Property PLC 49,200 649,440 344,063 164,063Kelsey Development PLC 337 4,887 4,156 4,156Onally Holdings PLC 31 1,863 241 241Overseas Realty Ceylon PLC 300 4,050 2,156 2,156Property Development PLC 8,000 416,000 132,712 132,712York Arcade Holdings PLC 22,140 371,952 31,301 31,301C T Land Development PLC 2,100 56,490 14,507 14,507Touchwood PLC 401,600 6,425,600 10,603,337 10,603,337Serandib Land PLC 30 72,000 2,134 2,134Seylan Development PLC 204 1,673 1,437 315

1,007,982 28,594,281 15,921,955 15,740,833ManufacturingAbans Electricals PLC 200 31,800 10,341 10,341ACL Cables PLC 36,288 2,304,288 1,486,954 1,486,954ACL Plastics PLC 100 9,500 3,174 3,174ACME Print & Packaging PLC 150 2,985 1,316 1,316Alufab PLC 90 2,331 2,551 271Blue Diamond Jewellery World Wide PLC 22 139 76 76Bogala Graphite (Lanka) PLC 5,700 156,750 38,137 38,137Chevron Lubricants PLC 10,200 1,854,600 395,648 8,395Ceylon Grain Elevators PLC 30,010 1,857,619 302,136 302,136Dipped Products PLC 35,110 3,546,110 1,563,357 2,314,302

117,870 9,766,122 3,803,690 4,165,102Balance carried forward 14,542,012 769,125,981 174,303,411 174,144,403


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C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S429. Investment (Contd)(a) Listed shares (Contd) Group

31 March 2012Holding number

of shares

31 March 2012Market value

31 March 2012Cost

31 March 2011Cost

Balance brought forward 14,542,012 769,125,981 174,303,411 174,144,403Manufacturing (Contd)Dankotuwa Porcelain PLC 40,166 674,789 317,055 317,055E B Creasy & Company PLC 100,000 250,000,000 19,194,750 19,194,750Kelani Cables PLC 400 26,800 6,557 6,557Kelani Tyres PLC 520 13,740 2,471 2,471Kuruwita Textiles Mills PLC 13,100 336,670 537,020 537,020Lanka Aluminium Industries PLC 10 252 118 118Lanka Cement PLC 5,100 56,100 39,394 39,394Lanka Ceramic PLC 31 2,248 528 528Lanka Lubricants PLC (Caltex) 10,000 1,590,000 387,253 387,253Lanka Floortiles PLC 25,052 1,630,898 630,819 630,819Lanka Walltile PLC 100,000 7,000,000 3,946,907 3,946,907Parquet Ceylon PLC 100 1,500 366 366Pelwatta Sugar Industries PLC 5,100 115,770 96,258 96,258Piramal Glass Company PLC 3,428 20,911 5,552 5,552Regnis (Lanka) PLC 59,093 16,840,980 1,105,829 1,105,829Royal Ceramics PLC 6 690 62 62Richard Pieris & Company PLC 4,740 36,972 12,156 13,152Samson International PLC 46 4,140 562 562Sierra Cables PLC 825,200 2,723,160 1,518,937 1,518,937Singer Industries (Ceylon) PLC 31,833 6,487,565 845,311 845,311Tokyo Cement Company (Lanka) PLC 66,104 2,512,582 160,553 160,553Tokyo Cement Company (Lanka) PLC (NV) 337,500 9,348,750 3,379,162 3,379,162Textured Jersey Lanka PLC 10,000 73,000 150,000 Nil

1,637,529 299,497,517 32,337,620 32,188,616MotorsAutodrome PLC 10 8,490 2,337 2,337Colonial Motors PLC 112 37,520 2,680 2,680Lanka Ashok Leyland PLC 90 195,300 827 827Sathosa Motors PLC 66 16,493 2,142 2,142DIMO PLC 6 6,000 195 195

284 263,803 8,181 8,181PlantationsAgalawatte Plantations PLC 100 3,900 717 717Balangoda Plantations PLC 110 2,805 2,225 2,225Bogawantalawa Plantations PLC 46 501 331 331Hapugastenne Plantations PLC 200 8,180 2,892 2,892Horana Plantations PLC 20 520 155 155Kahawatte Plantations PLC 266 7,794 3,631 3,631Kegalle Plantations PLC 100 10,450 817 817Kelani Valley Plantations PLC 100 9,200 993 993Kotagala Plantations PLC 50 3,500 403 403Malwatte Valley Plantations PLC 100 4,700 1,221 1,221Metropolitan Residencies Holdings Company PLC 22 471 1,243 1,243Namunukula Plantations PLC 100 6,100 717 717Talawakelle Plantations PLC 600 14,400 12,000 12,000Udapussellawa Plantations PLC 100 2,720 892 892Madulsima Plantations PLC 100 1,300 2,500 2,500Maskeliya Plantations PLC 700 11,970 21,000 21,000Watawala Plantations PLC 437,000 4,370,000 540,842 540,842

439,714 4,458,511 592,579 592,579ServicesDialog Axiata PLC 15,100 108,720 226,789 226,789John Keells PLC 20,336 1,362,512 384,282 384,282Vallibel Power Erathna PLC 42,017 289,917 93,634 17,150Paragon Ceylon PLC 10 16,500 1,017 1,017Sri Lanka Telecom PLC 200 9,260 3,377 3,377

77,663 1,786,909 709,099 632,615Stores and suppliesE B Creasy & Company PLC 167,772 201,326,400 927,278 927,278Gestetner of Ceylon PLC 197 58,588 4,424 4,424Hunter & Company PLC 24 8,400 755 755

167,993 201,393,388 932,457 932,457Oil palmsBukit Darah Company PLC 558 479,880 124,511 3,032Indo Malay Establishment PLC 5 7,105 892 892Selinsing PLC 43 47,300 10,883 213,333

606 534,285 136,286 217,257Balance carried forward 16,865,801 1,277,060,394 209,019,633 208,716,108


A N N U A L R E P O R T 2 0 11 / 2 0 1 2

C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S 439. Investment (Contd)

(a) Listed shares (Contd) Group31 March 2012

Holdingnumber of

shares


31 March 2012Cost

31 March 2011Cost

Balance brought forward 16,865,801 1,277,060,394 209,019,633 208,716,108

Trading

Brown and Company PLC 29,000 4,524,000 2,846,659 2,747,728Ceylon & Foreign Trades PLC 10,000 68,000 4,559 4,559C W Mackie & Company PLC 100 7,490 391 391Environmental Resources Investments PLC Nil Nil Nil NilHayleys Exports PLC 594 17,226 22,852 22,852Singer Sri Lanka PLC 164,504 16,631,354 683,231 683,231United Motors PLC 23,254 2,557,940 334,361 334,361Tess Agro PLC 1,540 4,158 1,517 1,517

228,992 23,810,168 3,893,570 3,794,639Power and energy

Hemas Power 111,000 2,497,500 2,117,535 2,117,535Lanka IOC PLC 159,600 3,128,160 4,773,475 4,773,475Muller & Phipps (Ceylon) PLC 500 1,000 515 515Vallibel Power Erathna PLC Nil Nil Nil 76,484Vidu Lanka PLC 352,374 2,114,244 878,009 878,009Panasian Power PLC 30,200 78,520 90,600 90,600

653,674 7,819,424 7,860,134 7,936,618Total value of listed shares 17,748,467 1,308,689,986 220,773,337 220,447,365

(b) Unquoted shares

Colombo Brick Company Limited 1,200 Nil 12,000 12,000Hikkaduwa Beach Resort 33,742 674,840 674,840 NilEagle Growth and Income Fund 10,620 293,329 20,254 Nil

45,562 968, 169 707,094 12,000(c) Investment in units

National Equity Fund 12,000 291,960 120,000 120,000Pyramid Unit Trust 10,000 292,300 100,000 100,000Bartleet Transcapital 10,000 200,000 200,000 200,000Ceybank Unit Trust 213,018 9,070,306 2,439,070 2,439,070

245,018 9,854,566 2,859,070 2,859,070Share applications

Investment Nil Nil 23,445 5,550East West Properties PLC Nil Nil Nil 180,000Amana Takaful PLC Nil Nil Nil 375,000Ceylinco Securities Nil Nil Nil 45,000Pegasus Hotels 2,026 80,837 73,949 Nil

2,026 80,837 97,394 605,550Warrants

Reefcomber WAR 18 68,714 357,313 Nil NilReefcomber WAR 19 137,428 1,071,938 Nil NilNation Lanka 1,350 4,455 Nil Nil

207,492 1,433,706 Nil Nil

Total current investments 18,248,565 1,321,027,264 224,436,895 223,923,985


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


9. Investment (Contd)

(a) Listed shares Company31 March 2012

Holdingnumber of

shares


31 March 2012Cost

31 March 2011Cost

Bank, finance and insurance

Ceylon Guardian Investments Trust PLC 12,750 4,704,750 344,920 344,920Commercial Bank of Ceylon PLC 11,210 1,121,000 225,505 157,750Development Finance Corporation of Ceylon PLC 5,802 661,428 306,202 306,202

Aviva NDB PLC 90,750 19,420,500 2,691,702 2,691,702Hatton National Bank PLC 44,760 6,870,660 884,758 884,758Hatton National Bank PLC (Non-voting) 19,050 1,800,225 377,319 377,319Lanka Orix Leasing Company PLC 27,000 1,485,000 138,639 138,639Merchant Bank of Sri Lanka PLC 124,879 3,746,370 8,170,229 8,170,229National Development Bank PLC 4,050 498,150 153,608 153,608Sampath Bank PLC 3,525 650,832 56,782 56,782Seylan Bank PLC(Non Voting) 25,000 727,500 302,953 302,953Pan Asia Bank PLC 6,000 141,600 53,298 53,298Lanka Ventures 60,000 1,920,000 2,777,356 NilWatapota Investment PLC 2,000 145,800 445,990 Nil

436,776 43,893,815 16,929,261 13,638,160

Beverage, food and tobacco

Ceylon Cold Stores PLC 3,600 338,400 52,280 52,280Ceylon Tobacco Company PLC 2,000 1,040,000 80,027 80,027Ceylon Tea Services PLC 1,428 928,200 86,093 86,093

7,028 2,306,600 218,400 218,400

Chemicals and pharmaceuticals

Haycarb PLC 345 55,200 10,097 10,097J L Morison Son & Jones Ceylon PLC 500 5,000 5,000 5,000Lanka IOC PLC 15,800 309,680 665,931 665,931Lankem Ceylon PLC 100,457 18,082,260 4,419,581 4,419,581

117,102 18,452,140 5,100,609 5,100,609

Hotels and travels

Asian Hotels Corporation PLC 20,000 1,560,000 277,228 277,228Eden Hotel PLC 100,000 3,200,000 1,960,300 1,960,300Keells Hotels PLC 76,030 965,581 456,180 456,180Light House Hotel PLC 24,800 1,240,000 259,543 259,543Ceylon Hotel Corporation PLC 10,000 235,000 253,714 253,714Marawila Resorts PLC 673,000 4,711,000 4,442,760 24,163,020Pegasus Hotels of Ceylon PLC 2,400 95,760 49,144 49,144Riverina Hotels PLC 7,581 704,274 85,033 85,033

913,811 12,711,615 7,783,902 27,504,162



A N N U A L R E P O R T 2 0 11 / 2 0 1 2



(a) Listed shares (Contd) Company31 March 2012

Holdingnumber of

shares


31 March 2012Cost

31 March 2011Cost

Balance brought forward 1,474,717 77,364,170 30,032,172 46,461,331

Land and property

York Arcade Holdings PLC 10,000 168,000 30,000 30,000

C T Land Development PLC 2,000 53,800 13,740 13,740

East West Properties PLC 24,000 316,800 117,778 117,778

36,000 538,600 161,518 161,518

Manufacturing

ACL Cables PLC 10,000 635,000 419,059 419,059

Dankotuwa Porcelain PLC 10,000 168,000 116,679 116,679

Dipped Products PLC 5,000 505,000 405,750 405,750

E B Creasy & Company PLC 100,000 250,000,000 19,194,750 19,194,750

Kelani Tyres PLC 160 4,240 877 877

Kuruwita Textiles Mills PLC 13,100 336,670 537,020 537,020

Regnis (Lanka) PLC 5,680 2,953,600 90,972 90,972

Richard Peiris & Company PLC 195 1,521 485 485

Sierra Cables PLC 2,500 8,250 6,177 6,177

Tokyo Cement Company (Lanka) PLC 1,192 45,926 4,450 4,450

147,827 254,658,207 20,776,219 20,776,219

Plantations

Watawala Plantations PLC 170,000 1,700,000 209,040 209,040

170,000 1,700,000 209,040 209,040

Service

Dialog Axiata PLC 15,000 108,000 224,452 224,452

John Keells PLC 8,000 536,000 192,783 192,783

Vallibel Power Erathna PLC 7,610 52,509 17,150 17,150

30,610 696,509 434,385 434,385

Diversified holdings

Hayleys PLC 16 5,760 2,525 2,525

Hemas Holding PLC 625 16,750 5,000 5,000

The Colombo Fort Land & Building Co. PLC 1,000,000 34,900,000 1,898,917 1,898,917

1,000,641 34,922,510 1,906,442 1,906,442



A N N U A L R E P O R T 2 0 11 / 2 0 1 2



(a) Listed shares (Contd) Company31 March

2012Holding

number of shares

31 March 2012

Market value

31 March 2012Cost

31 March 2011Cost

Balance brought forward 2,859,795 369,879,996 53,519,776 69,948,935

Trading

Singer Sri Lanka PLC 44,194 4,468,013 231,876 231,876

44,194 4,468,013 231,876 231,876

Investment trusts

Ceylon Investments PLC 38,076 3,084,156 249,912 249,912

38,076 3,084,156 249,912 249,912

Healthcare

The Lanka Hospital Corporation PLC 3,000 98,700 46,506 46,506

Ceylon Hospitals PLC or formally known as Durdans 6,000 332,400 139,510 139,510

9,000 431,100 186,016 186,016

Total quoted shares 2,951,065 377,863,265 54,187,580 70,616,739

Unquoted shares

Colombo Brick Company Limited 1,200 Nil 12,000 12,000

1,200 Nil 12,000 12,000

Unit trust

Ceybank Unit Trust 213,018 9,070,306 2,439,070 2,439,070

213,018 9,070,306 2,439,070 2,439,070

Total current investments 3,165,283 386,933,571 56,638,650 73,067,809


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


10. Deferred income tax (liabilities) / assets

11. Inventories

The amounts attributable to the different categories are as follows:

12. Trade and other receivables

Group Company2012 2011 2012 2011

At 1 April 2,708,824 (1,705,328) 2,708,824 1,705,328)Income statement charge (Note 24) 559,099 12,395,179 559,099 2,395,179 Deferred tax attributable to revaluation surplus (5,746,339) (7,981,027) (5,746,339) (7,981,027)

At 31 March (2,478,416) 2,708,824 (2,478,416) 2,708,824

Group Company2012 2011 2012 2011

Spares and consumables 171,519,106 114,087,399 101,987,012 79,138,404 Motor vehicles 95,171,451 251,989,005 30,634,775 31,714,317 Repair job-in-progress 8,809,112 18,580,844 8,809,112 18,580,844 Goods-in-transit 50,155,715 50,481,452 10,842,683 4,008,589

325,655,384 435,138,700 152,273,582 133,442,154 Provision for obsolete stocks Nil (2,463,496) Nil (2,463,496)

325,655,384 432,675,204 152,273,582 130,978,658

Group Company2012 2011

Restated2012 2011

Trade receivables 75,626,266 54,762,585 63,745,699 45,952,910 Provision for bad and doubtful debts (11,811,140) (8,154,996) (7,856,198) (5,324,906)Trade receivables - net 63,815,126 46,607,589 55,889,501 40,628,004

Amounts due from related companiesAs perviously reported 170,087,886 45,323,152 14,370,876 14,476,364 Adjustment [Note 32 (b)] Nil (3,040,668) Nil NilAs restated 170,087,886 42,282,484 14,370,876 14,476,364 Provision for doubtful related party receivables (440,517) (540,407) Nil Nil

169,647,369 41,742,077 14,370,876 14,476,364

Advance on investments [Note 31(d) (iii)] Nil Nil 59,157,833 41,000,000 Prepayments and deposits 3,516,302 3,526,511 1,280,873 612,092 Other receivables 35,099,171 19,621,810 11,629,711 5,593,174

272,077,968 111,497,987 142,328,794 102,309,634 Less: Non-current portion Nil Nil (59,157,833) (41,000,000)Current Portion 272,077,968 111,497,987 83,170,961 61,309,634

(i) The cost of inventories recognised as an expense and included in “cost of sales” in the Group and Company amounted to Rs. 2,824,213,960 (2010 / 2011 - 958,690,110) and Rs. 182,297,940 (2010 / 2011 - Rs. 110,200,156) respectively.

(ii) The short term loan of Rs 55,372,261 from Hatton National Bank received as trust receipt loan has been secured by land and buildings situated at No. 297, Union Place, Colombo 02.


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


13. Cash and cash equivalents

Cash and cash equivalents wholly consist of cash held in local banks and cash in hand.

14. Stated capital

Group Company2012 2011 2012 2011

Cash in hand 5,838,841 3,066,892 211,498 181,750 Cash at bank 988,217,420 235,952,915 2,637,152 7,166,852

994,056,261 239,019,807 2,848,650 7,348,602

For the purposes of the cash flow statement, the year-end cash and cash equivalents comprise the following:

Group Company2012 2011 2012 2011

Cash and bank balances 994,056,261 239,019,807 2,848,650 7,348,602 Bank overdraft (Note 17) (108,188,418) (70,133,194) (108,188,418) (65,452,349)

885,867,843 168,886,613 (105,339,768) (58,103,747)

Number of shares

Stated capital

At 1 April 2010 8,110,505 40,657,575

Right issue 1,013,813 50,690,650

At 31 March 2011 9,124,318 91,348,225

At 1 April 2011 9,124,318 91,348,225

At 31 March 2012 9,124,318 91,348,225

All issued shares are fully paid.


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


15. Reserves

16. Trade and other payables

Group Company2012 2011 2012 2011

Revaluation reserve

At beginning of year 707,475,217 715,456,244 707,475,217 715,456,244 Revaluation tax (5,746,339) (7,981,027) (5,746,339) (7,981,027)At end of year 701,728,878 707,475,217 701,728,878 707,475,217

Capital Reserve

At beginning / end of year 48,000,000 48,000,000 Nil Nil

Revenue reserve

At beginning / end of year 52,000,000 52,000,000 52,000,000 52,000,000 Total revenue and other reserves 801,728,878 807,475,217 753,728,878 759,475,217

Retained earnings

At beginning of year 464,635,359 242,064,781 159,590,032 134,227,861 Net profit 1,161,847,022 231,694,896 329,218,891 34,486,489 Dividends (13,861,477) (9,124,318) (13,686,477) (9,124,318)At end of year 1,612,620,904 464,635,359 475,122,446 159,590,032 Total reserves 2,414,349,782 1,272,110,576 1,228,851,324 919,065,249

Group Company2012 2011 2012 2011

Trade payables 2,087,070 1,167,521 Nil Nil Amount due to related companies[Note 31 (d) (ii)] 26,390,391 18,620,751 29,834,716 32,766,875 Other payables 165,469,334 185,293,711 9,750,755 26,834,497 Accrued expenses and provisions 20,091,664 26,351,429 4,339,647 3,617,080

214,038,459 231,433,412 43,925,118 63,218,452

Other payables mainly consist of VAT payable amounting to Rs. 108,438,590 for the Group, advances received from customers amounting to Rs. 2,048,073 and Rs. 24,324,684 for the company and Group respectively.


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


17. Borrowings

Group Company2012 2011 2012 2011

Current

Bank overdrafts (Note 13) 108,188,418 70,133,194 108,188,418 65,452,349 Bank borrowings 63,572,461 168,338,883 62,370,875 73,983,774 Lease liabilities 487,435 2,315,563 487,435 Nil

172,248,314 240,787,640 171,046,728 139,436,123

Non-current

Bank borrowings 23,916,250 32,116,450 23,916,250 32,116,450 Lease liabilities 1,604,620 1,421,421 1,604,620 Nil Advance received by KIA Motors (Lanka) Ltd. 30,000,000 30,000,000 Nil Nil

55,520,870 63,537,871 25,520,870 32,116,450 Total borrowings 227,769,184 304,325,511 196,567,598 171,552,573

Finance lease liabilities

Not later than 1 year 738,000 2,767,023 738,000 Nil Later than 1 year not later than 5 years 1,906,500 1,512,716 1,906,500 Nil

2,644,500 4,279,739 2,644,500 Nil Future finance charges on finance leases (552,445) (542,755) (552,445) Nil Present value of finance lease liabilities 2,092,055 3,736,984 2,092,055 Nil

The present value of finance lease liabilities is as follows:

Group Company2012 2011 2012 2011

Not later than 1 year 487,435 2,315,563 487,435 Nil Later than 1 year and not later than 5 years 1,604,620 1,421,421 1,604,620 Nil

2,092,055 3,736,984 2,092,055 Nil

Weighted average effective interest rates.

Group Company2012 2011 2012 2011

Bank overdraft 13.00% 10.25% 13.00% 10.25%Term loans 13.00% 10.25% 13.00% 10.25%Short term bank facilities 13.00% 10.25% 13.00% 10.25%


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


18. Retirement benefit obligations

The amount recognised in the balance sheet has been valued according to the following methods:

Group Company2012 2011 2012 2011

As per Actuarial valuation 19,248,606 20,485,134 13,498,176 14,527,449 As per the payment of Gratuity Act, No 12 of 1983 1,925,875 1,454,375 Nil Nil

21,174,481 21,939,509 13,498,176 14,527,449

Group Company2012 2011 2012 2011

Balance sheet obligations for:

Pension benefits (gratuity) 21,174,481 21,939,509 13,498,176 14,527,449

Income statement charge (Note 22)

Pension benefits (gratuity) 1,877,980 4,017,604 1,502,787 2,455,639

Amounts recognised in the balance sheet are determined as follows:

Group Company2012 2011 2012 2011

At 1 April 21,939,509 16,837,003 14,527,449 12,071,810 Acquisition on subsidiary Nil 1,233,125 Nil Nil Interest cost 2,253,364 1,327,899 1,598,019 1,327,899 Current service cost 2,304,401 1,980,793 1,173,356 1,205,112 Benefits paid (2,643,008) (148,223) (2,532,060) Nil Actuarial (gains) / losses (2,679,785) 708,912 (1,268,588) (77,372)

21,174,481 21,939,509 13,498,176 14,527,449

Amounts recognised in the income statement are as follows:

Group Company2012 2011 2012 2011

Interest cost 2,253,364 1,327,899 1,598,019 1,327,899 Current service cost 2,304,401 1,980,793 1,173,356 1,205,112 Actuarial (gains) / losses (2,679,785) 708,912 (1,268,588) (77,372)

1,877,980 4,017,604 1,502,787 2,455,639

The pension benefit (gratuity) obligation is not externally funded.

The gratuity liability of the Company as at 31 March 2012 is based on the actuarial valuation carried out by Messrs Actuarial And Management Consultants (Private) Limited on 02 April 2012. The principal actuarial valuation assumptions used were as follows:


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


1. Discount rate : 10% 2. Future salary increase : Executives - 10% per annum with the next increment due on 01 April 2012 Staff - 8% per annum with the next increment due on 01 September 2012 Workmen - 6% per annum with the next increment due on 01 December 2012

In addition to the above, demographic assumptions such as mortality, withdrawal disability and retirement age were considered for the actuarial valuation. A 67/70 Mortality table issued by the Institute of Actuaries London was taken as the base for the valuation.

The subsidiaries determine the cost of providing retirement benefits for its employees (under the defined benefit plans) by applying the formula on gratuity given in Appendix E to LKAS 19 Employee Benefits.

The principal valuation assumptions used in applying the formula on gratuity were as follows:

1. Discount rate 11%2. Future salary increase rate 8%

19. Sales

Sales wholly consists of proceeds from the sale of spare parts and income earned from repairing and servicing motor vehicles, and sale of motor vehicles, made up as follows:

20. Other income

Group Company2012 2011 2012 2011

Sale of spares and repair work 311,635,310 250,811,826 275,608,954 152,671,550 Sale of motor vehicles 3,656,414,021 1,258,672,579 126,610,706 127,260,709

3,968,049,331 1,509,484,405 402,219,660 279,932,259 Less: Turnover Tax Nil (1,657,809) Nil (1,657,809)

3,968,049,331 1,507,826,596 402,219,660 278,274,450

Value Added Tax of Rs 547,700,594 (2010/2011 - Rs 300,525,854) for the Group and for the Company Rs 47,819,255 (2010/2011 - Rs 36,473,229) have been deducted in arriving at the above revenue.

Group Company2012 2011 2012 2011

Dividends received 19,385,599 12,132,032 33,271,971 1,702,797 Profit on sale of investments 296,374,368 40,380,473 267,118,440 5,810,889 Sale of rights Issue Nil 1,435,687 Nil 1,435,687 Commission income received onimported vehicles 468,102,011 42,676,961 Nil Nil Rent income 13,995,900 14,031,889 22,031,700 22,067,689 Sundry income 830 11,579,557 Nil Nil Profit on sale of property, plant and equipment 3,846,726 Nil 3,846,726 Nil

801,705,434 122,236,599 326,268,837 31,017,062

Commission income received on imported vehicles consists of income received for the services rendered to the customers who have imported their vehicles via Carplan Limited and KIA Motors (Lanka) Ltd. under the permit scheme of the Government.

Profit on sale of investments mainly consists of the transfer of Beruwala Resorts Ltd. shares to Colombo Fort Hotels Ltd. on 20 March 2012.


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


21. Operating profit

Operating profit is stated after charging following items:

22. Staff costs

Group Company2012 2011 2012 2011

Directors' emoluments 12,089,500 7,537,676 4,307,500 3,108,000

Auditor's remuneration

- Audit fees 1,549,913 1,381,880 489,699 450,000

- Non-audit fee 93,360 82,000 93,360 57,000

Fees for other professional services 1,630,759 21,967,782 1,536,433 1,472,193

Depreciation (Note 5) 16,203,375 14,559,583 8,776,965 8,586,613

Amortisation of intangible assets (Note 6) 328,477 450,363 Nil Nil

Staff costs (Note 22) 42,502,192 44,634,659 25,330,622 22,080,833

Management fees Nil Nil 2,323,410 2,363,921

Repairs and maintenance expenditure 5,201,944 6,523,726 2,784,543 4,483,021

Obsolete stock written off 468,577 2,709,580 468,577 2,709,580

Bad debts written off Nil 528,150 Nil 528,150

Provision for bad and doubtful debts 3,656,144 981,855 2,531,292 981,855

Group Company2012 2011 2012 2011

Wages and salaries 34,491,556

35,050,785

20,232,011

16,723,349

Defined contribution plans 6,132,656 5,566,270 3,595,824 2,901,845 Defined benefit plans (Note 18) 1,877,980 4,017,604 1,502,787 2,455,639

42,502,192 44,634,659 25,330,622 22,080,833

Average monthly number of personsemployed during the year: 125 85 55 42


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


23. Finance (costs) / income

24. Taxation

Group Company2012 2011 2012 2011

Interest income from related parties 8,382,809 8,276,080 1,234 151,556

(Note 31)

Other interest income 15,514,871 1,842,665 Nil 291,047

23,897,680 10,118,745 1,234 442,603

Interest expenses:

- Overdraft (8,813,759) (10,009,998) (8,531,810) (9,837,681)

- Trust receipt loans (1,994,277) (227,872) (1,994,277) (227,872)

- Other loans (1,226,234) (3,309,045) (1,226,234) (3,309,045)

- Other interest expenses (9,791,211) (9,113,595) (3,875,793) (618,277)

- Interest expense to related parties Nil (6,332,279) Nil (5,825,856)

- Finance leases (729,864) (1,808,875) (122,770) Nil

- Exchange loss (3,241,266) Nil Nil Nil

(25,796,611) (30,801,664) (15,750,884) (19,818,731)

(1,898,931) (20,682,919) (15,749,650) (19,376,128)

Group Company2012 2011 2012 2011

Current income tax 337,767,275 103,643,296 7,554,585 6,705,442

Deferred tax charge (Note 10) (559,099) (12,395,179) (559,099) (12,395,179)

Under provision in previous years 981,090 267,093 821,482 192,046

Withholding tax on dividend paid 3,595,087 Nil Nil Nil

343,784,353 91,515,210 7,816,968 (5,497,691)


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


24. Taxation (Contd)

The tax on the profit / (loss) before tax differs from the theoretical amount that would arise using the basic tax rate applicable to the Group and Company as follows:

25. Earnings per share

Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year.

26. Dividends

The Board of Directors of Colonial Motors PLC, resolved on 19 June 2012 to propose a cash dividend of Rs 4/- (2010 / 2011 - Rs 1.50) per share amounting to Rs 36,497,272 (2010 / 2011 - Rs 13,686,477) for the year ended 31 March 2012. The dividend pay out ratio of the Company is 11.09% for the year ended 31 March 2012. (2010/2011 - 39.69%)

Group Company2012 2011 2012 2011


Tax calculated at a tax rate of 28% (2010 / 2011 - 35%) 421,051,246 113,221,901 94,370,040 10,146,079

Income not subject to tax (106,925,048) (20,994,851) (85,186,398) (3,132,280)Expenses not deductible for tax purposes 29,623,259 15,598,309 2,438,796 3,302,266 Utilisation of previously unrecognised tax losses (5,433,290) (6,620,985) (4,067,853) (3,610,623)Consolidation adjustments Nil (694,822) Nil Nil With-holding tax on dividend paid 3,595,087 Nil Nil Nil Temporary differences not resultingin a deferred tax assets / liability (315,195) (11,483,390) (559,099) (12,395,179)Deemed dividend tax Nil 801,224 Nil Nil Social Responsibility Leavy at 1.5% Nil 1,420,731 Nil Nil

Under provision in the previous year 2,188,294 267,093 821,482 192,046

343,784,353 91,515,210 7,816,968 (5,497,691)

Group Company2012 2011 2012 2011

Net profit attributable to shareholders 1,161,847,022 231,694,896 329,218,891 34,486,489

Weighted average number of ordinary shares in issue 9,124,318 8,875,292 9,124,318 8,875,292

Basic earnings per share (Rs) 127.34 26.11 36.08 3.89


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


27. Cash generated from operations

Reconciliation of profit before tax to cash generated from operations.

Group Company2012 2011 2012 2011


Adjustment for:

Depreciation (Note 5) 16,203,375 14,559,583 8,776,965 8,586,613 Amortisation of intangible assets (Note 6) 328,477 450,363 Nil Nil

Dividend income (Note 20) (19,385,599) (12,132,032) (33,271,971) (1,702,797)Interest expenses - net (Note 23) 1,898,931 20,682,919 15,749,650 19,376,128 Profit on sale of investments (296,374,368) (40,380,473) (267,118,440) (5,810,889)Profit on sale of property, plant and equipment (Note 20) (3,846,726) Nil (3,846,726) Nil

Provision for bad and doubtfuldebts (Note 21) 3,656,144 981,855 2,531,292 981,855 Retirement benefit obligations (Note 18) 1,877,980 4,017,604 1,502,787 2,455,639

Changes in working capital

- trade and other receivables (160,579,982) 20,125,644 (21,861,327) (12,331,456)- inventories 107,019,820 (324,070,684) (21,294,924) (54,655,040)- trade and other payables (27,907,863) 137,947,511 (19,293,335) (4,061,772)

Cash generated from / (used in) operations 1,129,239,483 145,673,435 (1,090,170) (18,172,921)

28. Contingencies

Contingent liabilities

There were no material financial contingent liabilities outstanding at the balance sheet date.

29. Commitments

Financial commitments

Union Investment Limited is committed to pay the following to Guardian Assets Management Limited (GAML).

o Management fees at 1.5% per annum calculated on the value of the portfolio on a daily basis. o Custodian fees on the basis of the agreement entered with Deutsche Bank.

There were no other material financial commitments outstanding at the balance sheet date.

Capital commitments

There were no material capital commitments outstanding at the balance sheet date.


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


30. Principal subsidiary undertakings

Details of those companies in which the Company held more than 50% interest are set out below:

31. Related party transactions

(a) The Directors of the Company are also Directors of the following companies with which the Company had business transactions in the ordinary course of business:

Name of company Issued share capital (Rs)

Effective holding %

Union Investments (Private) Limited 50,000,000 99.99

Carplan Limited 13,760,100 99.99

KIA Motors (Lanka) Limited 20,175,420 99.99

Guardian Asset Management Limited and its subsidiary 16,000,000 93.75

Mr A Mr S Mr S D R Mr J M Mr A M de S Mr. R.M.M.J. Rajaratnam Rajaratnam Arudpragasam Swaminathan Jayaratne Ratnayake Agarapatana Plantations Limited x - x - - - Beruwala Resorts Limited x x x - - - Carplan Limited x - x x x x The Colombo Fort Land & Building Company PLC x - x - x - Creasy Foods Limited x x x - - - Darley Butler & Company Limited x x x - - - E B Creasy & Company PLC x x x - - - Laxapana Batteries PLC x x x - - - KIA Motors (Lanka) Limited x - x x x x Kotagala Plantations PLC x - x - - - Marawila Resorts PLC x x x - - - Sigiriya Village Hotels PLC x x x - - -

“X” denotes the companies of which each of the persons mentioned above was a director.


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


31. Related party transactions (Contd)

Mr A Mr S Mr S D R Mr J M Mr A M de S Mr. R.M.M.J. Rajaratnam Rajaratnam Arudpragasam Swaminathan Jayaratne Ratnayake

Union Investments (Private) Limited x x x x x x York Hotel Management Services Limited x x - - - - Lankem Ceylon PLC x - x - - - Julius and Creasy - - - x - -

Mr. R. M. M. J. Ratnayake resigned from the Boards of Carplan Limited and KIA Motors (Lanka) Ltd. with effect from 30.03.2012.Mr. A. Rajaratnam retired from the Board of Laxapana Batteries PLC on 27.09.2011. “X” denotes the companies of which each of the persons mentioned above was a director.

(b) The following transactions were carried out by the Company and Group with related parties during the year:

(i) Company

Name of related party Nature of transactions 31 March2012 2011

Beruwala Resort Limited Interest income 12,421 149,046Transfer of share investment to Colombo Fort Hotels Ltd 354,080,000 Nil

Carplan Limited Rental and workshop repairs 9,111,232 8,112,195The Colombo Fort Land & Building Company PLC (Restated note 32 b) Dividend set - off 200,000 100,000

Dividend paid by CML 7,873,938 4,404,006Lankem Ceylon PLC Rental income received 13,995,900 13,995,900Union Investments Limited Dividend received 10, 000, 000Guardian Asset Management Limited (GAML) Dividend received 2,047,500

Management Fees 2,323,410 2,363,921

Marawilla Resorts PLC Transfer of share investment to Colombo Fort Hotels Ltd 21,278,700 Nil

Colombo Fort Hotels Ltd Share transfer of Beruwala Resorts Ltd and Marawila Resorts PLC 375,358,700 Nil

KIA Motors (Lanka) Limited Dividend received 18,157, 833 Nil

(ii) Group

Name of related party Nature of transactions 31 March

2012 2011

Agarapatana Plantations Limited Supply of services from workshop 610,738 379,63'5The Colombo Fort Land & Building Company PLC Management fee charges 79,213 Nil

Interest income 8,687,443 NilCreasy Foods Limited Supply of services from workshop Nil 378,537Darley Butler & Company Limited Supply of services from workshop 15,183 NilE B Creasy & Company PLC Supply of services from workshop 215,738 578,998

Interest income 393,750 NilKotagala Plantations PLC Supply of services from workshop 1,372,675 2,307,283Sigiriya Village Hotels PLC Supply of services from workshop 160,060 426,4511Lankem Ceylon PLC Purchase of vehicle paints 3,048,513 675,0411


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


31. Related party transactions (Contd)

(c ) Key management compensation

Key management personnel (KMP) include members of the Group senior management of Colonial Motors PLC and its subsidiaries.

Group Company2012 2011 2012 2011

Salaries and short-term employee benefits 14,436,600 13,019,876 6,744,600 6,250,200 Post employment benefits 2,643,008 Nil 2,532,060 Nil

(d) Outstanding balances arising from related party transactions are as follows:

Group Company2012 2011 2012 2011

(i) Amount due from related parties

Agarapatana Plantations Limited 132,375 106,611 Nil Nil Beruwala Resorts Limited 2,212,020 2,268,940 2,164,640 2,164,640 Carplan Limited - loan account Nil Nil 9,706,236 9,811,724 The Colombo Fort Land & Building Company PLC (Restated) [Note 32 (b)] 164,163,395 33,207,152 Nil Nil Creasy Foods Limited Nil 51,180 Nil Nil Darley Butler & Company Limited 76,380 71,810 Nil Nil E B Creasy & Company PLC 14,708 2,482,722 Nil Nil Kotagala Plantations PLC 317,077 509,009 Nil Nil Laxapana Batteries PLC 1,337 39,431 Nil Nil Sigiriya Village Hotels PLC Nil 213,588 Nil Nil York Hotel Management Services Limited 79,438 79,438 Nil Nil Lankem Ceylon PLC Nil 298,546 Nil Nil Lankem Developments PLC 402,609 265,511 Nil Nil York Tours Limited 2,500,000 2,500,000 2,500,000 2,500,000 York Hotels (Kandy) Limited 188,547 188,546 Nil Nil

170,087,886 42,282,484 14,370,876 14,476,364

(ii) Amount due to related parties

The Colombo Fort Land & Building Company PLC 26,149,377 18,475,439 26,149,377 18,475,439

Guardian Asset Management Limited Nil Nil 3,685,339 14,291,436 Lankem Ceylon PLC 75,037 Nil Nil Nil Marawila Resorts PLC 145,314 145,312 Nil Nil Sigiriya Village Hotels PLC 20,663 Nil Nil Nil

26,390,391 18,620,751 29,834,716 32,766,875

(iii) Advance on investments

KIA Motors (Lanka) Limited Nil Nil 59,157,833 41,000,000 Nil Nil 59,157,833 41,000,000


A N N U A L R E P O R T 2 0 11 / 2 0 1 2


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A N N U A L R E P O R T 2 0 11 / 2 0 1 2


33. Net assets value per share

34. Events after the balance sheet date

The Board of Directors of Colonial Motors PLC, have proposed a first and final dividend of Rs. 4/- per share for the year ended 31 March 2012. The dividend so proposed is subject to the approval of the shareholders at the Annual General Meeting (AGM) of Colonial Motors PLC, and has not been recognized as a liability in the Financial Statements as at 31 March 2012.

The Board of Directors of Union Investments (Pvt) Limited, has proposed a first and final dividend of Rs.1.10 per share for the year ended 31 March 2012. The dividend so proposed is subject to the approval of the shareholders at the Annual General Meeting (AGM) of Union Investments (Pvt) Limited and has not been recognized as a liability in the Financial Statements as at 31 March 2012.

The stated capital of KIA Motors (Lanka) Limited was increased from Rs. 20,175,420 represented by 2,017,542 shares to Rs. 99,298,320 represented by 3,600,000 shares consequent to an allotment of shares made on 3 May 2012, as a result of which the percentage holding of Colonial Motors PLC in KIA Motors (Lanka) Limited stands at 70%.

Except as disclosed above, no other circumstances have arisen since the balance sheet date which require adjustments to, or disclosure in the financial statements.

Group Company2012 2011 2012 2011

Stated capital 91,348,225 91,348,225 91,348,225 91,348,225 Reserves 2,414,349,782 1,272,110,576 1,228,851,324 919,065,249 Net assets 2,505,698,007 1,363,458,801 1,320,199,549 1,010,413,474 Number of shares 9,124,318 9,124,318 9,124,318 9,124,318 Net assets per share 275 149 145 111


A N N U A L R E P O R T 2 0 11 / 2 0 1 2

C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S62SHARE INFORMATION

Distribution of SharesNo. of Shares Held As as 31 March 2012 As as 31 March 2011 No. of Total % of Total No. of Total % of Total Shareholders Holdings Holdings Shareholders Holdings Holdings 1 - 1,000 560 124,099 1.35 490 92,456 1.01 1,001 - 10,000 166 604,866 6.98 134 532,077 5.83 10,001 - 100,000 55 1,743,350 19.14 60 1,745,812 19.13 100,001 - 1,000,000 3 862,785 9.41 1 262,485 2.88 Over 1,000,000 1 5,789,218 63.12 2 6,491,488 71.15

785 9,124,318 100.00 687 9,124,318 100.00

Categories of Shareholders

As as 31 March 2012 As as 31 March 2011 No of Total % of Total No of Total % of Total Shareholders Holdings Holdings Shareholders Holdings Holdings

Individuals 694 1,910,796 20.94 601 3,409,363 37.37

Institutions 91 7,213,522 79.06 86 5,714,955 62.63

785 9,124,318 100.00 687 9,124,318 100.00

A N N U A L R E P O R T 2 0 11 / 2 0 1 2

C O L O N I A L M O T O R S P L C A N D I T S S U B S I D I A R I E S 63SHARE INFORMATION

Public Holding

The percentage of shares held by the public as at 31 March 2012 was 31.97 % (31 March 2011 26.74%). Market Value

The Market value per share as at 31.03.2012 Rs.319.80 (31.03.2011 Rs.300.00) Highest value per share during the year Rs.530/- Lowest value per share during the year Rs.265.20 Twenty Major Shareholders

31.03.2012 31.03.2011

Name No.of.Shares % No.of.Shares % 1 The Colombo Fort Land & Building Co. PLC 5,789,218 63.45 4,753,018 52.09

2 Sri Lanka Insurance Corporation Ltd. -Life Fund 400,000 4.38 - -

3 Mrs. Agnes .E De Vos (Decd) 262,485 2.88 262,485 2.88

4 Pan Asia Banking Corporation PLC/Lankem

Ceylon PLC 200,300 2.20 - -

5 Mr. Amorik Singh 91,600 1.00 - -

6 National Development Bank PLC/ T.Senthilverl 89,700 0.98 - -

7 Trust Holdings & Investments (Pvt) Limited 74,000 0.81 74,000 0.81

8 Mr.Harsha Nilantha De Silva 70,000 0.77 - -

9 Glenford Investments (Private) Limited 68,000 0.75 68,000 0.75

10 Mr. Ginige Cyril Walter De Silva 67,205 0.74 67,205 0.74

11 Mr.Sidath Vivendra Kodikara 63,330 0.69 - -

12 Mr. Jawaharlal Vijaya Srikumaradas Corea 61,830 0.68 54,000 0.59

13 Colombo Fort Investments PLC 60,774 0.67 60,774 0.67

14 Mr.Mushtaq Mohamed Fuad 60,300 0.66 18,400 0.20

15 Mr.David Kotthoff 60,267 0.66 - -

16 Island Consumer Supplies (Pvt) Ltd 57,384 0.63 57,384 0.63

17 Dr. Joseph Marius Ranjan Goonewardene 46,665 0.51 46,665 0.51

18 Waldock Mackenzie Ltd/Mrs. G. Soysa 45,797 0.50 48,797 0.53

19 York Arcade Holdings PLC 43,025 0.47 43,025 0.47

20 Mr. Weerahennedige Sohan Raminal Fernando 42,860 0.47 20,346 0.22

Total 7,654,740 83.90 5,574,099 61.09

A N N U A L R E P O R T 2 0 11 / 2 0 1 2


2012 2011 2010 2009 2008

ASSETS EMPLOYEDProperty, plant andequipment 924,531,894 914,104,362 839,080,675 247,360,093 213,500,754

Intangible assets 4,883,636 5,212,113 544,452 719,795 754,083

Investment in related companies 475,388,700 88,550,000 91,550,000 91,550,000 91,550,000

Deferred income tax assets - 2,708,824 - 10,716,641 3,763,516

Trade and other receivables - - 10,000,000 10,000,000 10,000,000

Current assets 1,819,251,405 1,007,116,983 441,611,039 401,628,217 374,678,520

Liabilities net of debt (488,914,207) (348,951,652) (120,921,878) (131,046,290) (104,592,553)

2,735,141,428 1,668,740,630 1,261,864,288 630,928,456 589,654,320

CAPITAL EMPLOYEDStated capital 91,348,225 91,348,225 40,657,575 40,657,575 40,657,575

Reserves 2,414,349,782 1,272,110,576 1,057,521,025 435,172,569 440,634,062

2,505,698,007 1,363,458,801 1,098,178,600 475,830,144 481,291,637

Non controlling interest 1,674,237 956,318 - - -

Total equity 2,507,372,244 1,364,415,119 1,098,178,600 475,830,144 481,291,637

Total debt 227,769,184 304,325,511 163,685,688 155,098,312 108,362,683

2,735,141,428 1,668,740,630 1,261,864,288 630,928,456 589,654,320

OPERATING RESULTSRevenue 3,968,049,331 1,507,826,596 290,104,328 216,068,545 257,063,740

EBIT 1,508,248,225 344,174,064 69,433,954 20,621,180 57,604,462

Finance expenses (1,898,931) (20,682,919) (29,328,739) (19,744,364) (15,632,301)

Profit before tax 1,506,349,294 323,491,145 40,105,215 876,816 41,972,161

Tax (expense) / release (343,784,353) (91,515,210) 294,823 (3,000,966) (7,034,599)

Profit after tax 1,162,564,941 231,975,935 40,400,038 (2,124,150) 34,937,562

CASH FLOWNet cash generated /(used) from operating activites 934,496,335 106,828,118 (14,857,352) (1,576,132) 21,251,629

Net cash (used)/ generated from Investing activites (104,468,422) (63,231,636) 19,357,780 (36,538,532) 17,794,193

Net cash (used)/generated from Financing activites (113,046,683) 211,529,011 (13,428,805) (3,929,444) (36,842,053)

Increase / (Decrease) in cash and cash equivalents 716,981,230 255,125,493 (8,928,377) (42,044,108) 2,203,769

KEY INDICATORSBasic earnings per share (Rs) 127.34 26.11 4.68 (0.26) 4.31

Dividend per share (Rs) 4.00 1.50 1.00 0.50 0.50

Net assets per share 275 149 135 58.67 59.34

Debt- Equity ratio 0.09 0.22 0.15 0.33 0.23

Current ratio (times covered) 2.85 1.77 2 2 2.09

FIVE YEAR SUMMARY OF BALANCE SHEET-GROUP

I/We the undersigned ……………………………………………….........……….............……………………… of ....................................................................................................................................................... being a member/members of Colonial Motors PLC hereby appoint ……………......................................................................................................................................................................................................................of ……………………….................................................................................................... or failing him.

1. Alagarajah Rajaratnam of Colombo or failing him2. Ratnayake Mudiyanselage Mohan of Colombo or failing him Joseph Ratnayake3. Sri Dhaman Rajendram Arudpragasam of Colombo or failing him4. Jayanta Mootatamby Swaminathan of Colombo or failing him5. Ajit Mahendra de Silva Jayaratne of Colombo or failing him6. Sanjeev Rajaratnam of Colombo

as my/our proxy to represent me/us to speak and to vote on my/our behalf at the Annual General Meeting of the Company to be held on 27 July 2012, at 10.00 a.m. and at any adjournment thereof and at every poll which may be taken in consequence thereof.

COLONIAL MOTORS PLCFORM OF PROXY

1 To receive the Annual Report of the Board of Directors and the Statement of Accounts for the year ended 31 March 2012 with the Report of the Auditors thereon.

2 To declare a first and final dividend of Rs. 4/- per share for the year ended 31.03.2012 as recommended by the Directors.

3. To re-elect Mr. S.D.R. Arudpragasam as a Director.

4. To reappoint Mr. A.M. de S. Jayaratne as a Director.

5. To reappoint Mr. J.M.Swaminathan as a Director.

6. To reappoint Mr. A. Rajaratnam as a Director.

7. To authorize the Directors to determine contributions to charities.

8. To reappoint as Auditors Messrs PricewaterhouseCoopers and to authorize the Directors to determine their remuneration.

For Against

As witness my/our hand(s) this ................................. day of ...................... 2012.

………………………………… Signature of Shareholder

Note:A proxy need not be a member of the Company. If no words are deleted or there is in the view of the proxy doubt (by reason of the manner in which the instructions contained in the Form of Proxy have been completed) as to the way in which the proxy should vote, the proxy may vote as he/she thinks fit.

Instructions as to completion are noted on the reverse hereof.

Instructions as to Completion

1. Perfect the Form of Proxy, after filling in legibly your full name, address and by signing in the space provided and filling in the date of signature.

2. In the case of corporate members the Form of Proxy must be under the Common Seal of the Company or under the hand of an Authorized Officer or Attorney.

3. Where the Form of Proxy is signed under a Power of Attorney (POA) which has not been registered with the Company, the original POA together with a photocopy of the same, or a copy certified by a Notary Public must be lodged with the Company’s Secretaries, Corporate Managers & Secretaries (Private) Limited along with the Form of Proxy.

4. The completed Form of Proxy should be deposited at the Registered Office of the Company’s Secretaries, Corporate Managers & Secretaries (Pvt) Ltd., 8-5/2, Leyden Bastian Road, York Arcade Building, Colombo 1, not less than 48 hours before the time appointed for the meeting.

C O L O N I A L M O T O R S P L C297, UNION PLACE, COLOMBO 02, SRI LANKA.

TEL : +94 (O) 11 2323342 - 43 - 44FAX : +94 (O) 11 2438424

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