Diesel & Motor Engineering PLC | Annual Report 2007/08 Home - PDF Downloads
Overview Management Report Sustainability Report Governance Reports Financial Reports Other Information  
   
Financial Reports
Annual Report of the Board of Directors
Annexure to the Annual Report of the Board of Directors
Statement of Directors’ Responsibilities for Financial Statements
Independent Auditor’s Report
Income Statements
Balance Sheets
Statements of Changes in Equity
Cash Flow Statements
Significant Accounting Policies
Notes to the Financial Statements
   
Notes to the Financial Statements
 

1.

segment information
  The Group comprises the following main business segments:
Segment   Products & Services

Vehicles

 - Sale of brand new Passenger Vehicles, 4WD Vehicles, Commercial Vehicles, Special Purpose Vehicles and Pre-owned Passenger Vehicles.

Vehicle Parts & Services

 - Repair of Passenger & Commercial Vehicles, Sale of Vehicle Spare Parts, Accessories, Components and Tyres.

Lighting & Power Tools

   Sale of Power Tools & Accessories, Lamps, Lighting Fittings and Lighting Accessories.

Construction & Material Handling Machinery

 - Sale & Service of Earth Moving Machinery, Road Construction Machinery, Fork-Lifts, Racking Systems, Tractors Pumps and Dock Levellers.

Diversified Activities

 - Sale & Service of Telecommunication Equipment, Medical Equipment, Generating Sets, Turbines, UPS Equipment, Diesel Engines for Marine Propulsion, Rail Traction, Building Technologies, Industrial Refrigeration, Power Generation & Transmission and the Business of Travel Agents.
     
Vehicles Vehicle Parts &
Services		 Lighting &
Power Tools		 Construction & Material
Handling Machinery		 Diversified
Activities		 Total
As at 31st March 2008
Rs. ’000 		2007
Rs. ’000 		2008
Rs. ’000 		2007
Rs. ’000 		2008
Rs. ’000 		2007
Rs. ’000 		2008
Rs. ’000 		2007
Rs. ’000 		2008
Rs. ’000 		2007
Rs. ’000 		2008
Rs. ’000 		2007
Rs. ’000
Business Segment Turnover & Results
Total segment revenue 8,838,398 9,041,292 2,430,439 2,104,363 421,211 355,125 1,069,614 1,258,905 532,577 573,845 13,292,239 13,333,530
Inter-segment revenue 434,402 214,446 64,757 32,808 458 948 51,906 57,173 53,427 38,239 604,950 343,614
Total external revenue 8,403,996 8,826,846 2,365,682 2,071,555 420,753 354,177 1,017,708 1,201,732 479,150 535,606 12,687,289 12,989,916
                         
Segment results 602,847 594,895 368,775 368,938 61,805 51,727 91,869 109,693 73,119 69,872 1,198,415 1,195,125
Unallocated income – – – – – – – – – – 37,900 28,380
Unallocated expenses – – – – – – – – – – (377,010) (251,168)
Finance cost - net – – – – – – – – – (518,143) (462,177)
Income from equity
accounted investee		 – – – – – – – – – – 3,282 2,658
Income tax expense – – – – – – – – – – (139,351) (211,041)
Profit for the year – – – – – – – – – – 205,093 301,777
 
Business Segment Assets & Liabilities
Segment assets 2,411,710 2,331,953 975,269 959,235 158,403 134,528 612,617 522,338 269,308 372,262 4,427,307 4,320,316
Investment in equity
accounted investee		 – – – – – – – – – – 25,011 21,729
Unallocated assets – – – – – – – – – – 1,378,840 856,587
Total assets 2,411,710 2,331,953 975,269 959,235 158,403 134,528 612,617 522,338 269,308 372,262 5,831,158 5,198,632
                         
Segment liabilities 2,061,305 2,015,164 661,636 479,536 399 2,470 26,277 168,377 290,722 122,288 3,040,339 2,787,835
Unallocated liabilities – – – – – – – – – – 1,133,668 904,289
Total liabilities 2,061,305 2,015,164 661,636 479,536 399 2,470 26,277 168,377 290,722 122,288 4,174,007 3,692,124
 
Other Business Segment Information
Capital expenditure 227,342 20,513 219,638 94,357 335 818 1,960 12,194 55,326 19,072 504,601 146,954
Depreciation 12,231 8,364 32,936 22,921 603 373 7,799 6,953 5,340 3,777 58,909 42,388
Non-cash expenses
    other than depreciation		 3,909 5,532 17,067 9,220 1,808 (2,937) 9,704 4,432 5,716 1,161 38,204 17,408
   
  Vehicles Vehicle Parts & Service Lighting & Power Tools Construction & Material Handling Machinery Diversified Activities Consolidated
As at 31st March 2008
Rs. ’000 		2007
Rs. ’000 		2008
Rs. ’000 		2007
Rs. ’000 		2008
Rs. ’000 		2007
Rs. ’000 		2008
Rs. ’000 		2007
Rs. ’000 		2008
Rs. ’000 		2007
Rs. ’000 		2008
Rs. ’000 		2007
Rs. ’000
Business Segment Cash Flow
Operating activities 520,340 785,497 477,815 83,345 135,600 15,173 106,374 (14,357) (12,527) (44,359) 1,227,602 825,299
Investing activities (227,342) (20,513) (219,638) (88,918) (335) (818) (1,960) (12,194) (55,326) (12,655) (504,601) (135,098)
 
Unallocated Cash Flows
Common expenses (517,620) (309,381)
Income taxes paid (201,849) (155,186)
Proceeds from disposal of property, plant &
equipment		 25,424 9,403
Investment in joint venture – (6,000)
Dividends received 1,913 1,934
Interest received 637 383
Acquisition of construction of property, plant & equipment (49,410) (155,716)
Proceeds from issue of shares 55,000
Proceeds from long-term loan 400,000 117,670
Repayment of long-term loan (146,863) (135,905)
Dividends paid (54,450) (66,363)
Net increase/(decrease) in cash & cash equivalents 180,783 46,040

Figures in brackets indicate outflows.

Segment information is presented in respect of the Group’s business segments. The primary format, business segment, is based on the Group’s management and internal reporting structure. Segment results, assets and liabilities include those items directly attributable to a segment as well as those that can be allocated to the segment on a reasonable basis. Considering activities of the operations, segment information based on geographical segments does not arise.

The presentation of segmentation is based on the nature of product line in the context of its domain.

2.

Other income
 
Consolidated Company
2007/08
Rs. ’000		 2006/07
Rs. ’000 		2007/08
Rs. ’000		 2006/07
Rs. ’000
Gain on disposal of property, plant & equipment 10,685 6,293 10,709 6,256
Sundry income 27,215 13,575 25,095 14,453
Reversal of provision for slow moving inventories – 8,197 – 8,443
37,900 28,065 35,804 29,152
       
   

3.

NET FINANCE COST
 
Consolidated Company
2007/08
Rs. ’000		 2006/07
Rs. ’000		 2007/08
Rs. ’000		 2006/07
Rs. ’000
Finance Income
Dividend income 1,913 1,934 1,913 1,934
Interest income 637 383 354 303
2,550 2,317 2,267 2,237
Finance Costs
Interest on long-term borrowings (67,915) (58,925) (67,915) (58,925)
Interest on short-term borrowings (446,835) (389,613) (392,938) (357,385)
Interest on finance lease (3,073) (2,388) (3,073) (2,388)
Net loss on translation of foreign currency (2,870) (13,568) (8,240) (16,407)
(520,693) (464,494) (472,166) (435,105)
Net finance cost (518,143) (462,177) (469,899) (432,868)
         
   

4.

SHARE OF PROFIT OF EQUITY ACCOUNTED INVESTEE - NET OF TAX
 
Consolidated
2007/08
Rs. ’000 		2006/07
Rs. ’000
Browns Dimo Industrial Products (Pvt) Ltd.
Net profit before tax 3,682 2,735
Less: Taxation (400) (77)
Share of Profit - Net of Tax 3,282 2,658
     
   

5.

profit before taxation
 
Consolidated Company
2007/08
Rs. ’000 		2006/07
Rs. ’000 		2007/08
Rs. ’000 		2006/07
Rs. ’000

5.1

Profit before tax is stated after charging/(crediting) all expenses/income including the following:

        
Directors’ emoluments 39,123 31,926 36,611 30,403
Auditor’s Remuneration
    - Audit fee 1,180 950 950 780
    - Audit related services 145 – 145 –
    - Non-Audit service 766 146 537 101
Depreciation on property, plant & equipment 84,244 62,957 77,029 58,619
Amortisation of leasehold property & intangible assets
 139 80 139 80
Amortisation of deferred income (1,996) (2,284) (1,996) (2,284)
Legal fees 13,251 16,659 12,625 12,874
Provision/(reversal) of bad & doubtful debts 6,194 1,630 2,466 1,897
Provision/(reversal) of slow moving inventories 9,548 (8,197) 7,365 (8,443)
Donations 628 674 628 674
Staff expenses (Note 5.2) 573,195 432,159 512,136 385,090
       

5.2

Staff Expenses

    
Consolidated Company
2007/08
Rs. ’000		 2006/07
Rs. ’000 		2007/08
Rs. ’000		 2006/07
Rs. ’000
  Defined contribution plan costs (EPF & ETF) 53,222 43,453 46,769 38,614
  Defined benefit plan costs (Retiring gratuity) 27,996 20,008 27,168 19,349
  Other staff costs 491,977 368,698 438,199 327,127
573,195 432,159 512,136 385,090
  Average number of employees for the year 865 820 761 728
           
  The average number of employees is calculated by averaging the number of employees as at the year end, in the current and in the previous year.
   

6.

income tax expense
 
Consolidated Company
2007/08
Rs. ’000 		2006/07
Rs. ’000 		2007/08
Rs. ’000 		2006/07
Rs. ’000
Current Tax Expense
Current year
- Company 123,646 189,780 123,646 189,780
- Subsidiaries 5,427 16,530 – –
129,073 206,310 123,646 189,780
Under provision in respect of previous year – 8,706 – 7,115
129,073 215,016 123,646 196,895

Deferred Tax Expense
Origination/(Reversal) of temporary difference 10,278 (3,975) 9,663 (3,289)
Income tax expense in Income Statement 139,351 211,041 133,309 193,606
         

6.1

Reconciliation of Accounting Profit to Income Tax Expense
Consolidated Company
2007/08
Rs. ’000 		2006/07
Rs. ’000		 2007/08
Rs. ’000 		2006/07
Rs. ’000
Profit before taxation 344,444 512,818 327,978 475,634
Share of profit of equity accounted investee (3,282) (2,658) – –
Tax loss for the year 3,476 5,911 – –
Disallowable expenses 149,277 159,871 142,251 148,534
Capital allowances (112,431) (68,288) (104,175) (60,685)
Allowable expenses (8,989) (17,619) (8,909) (15,346)
Income not liable to tax (3,908) (2,825) (3,908) (2,745)
Statutory Income 368,587 587,210 353,237 545,392
Tax losses utilised during the period – – – –
Taxable profit 368,587 587,210 353,237 545,392
Statutory tax rate
    Tax at 15% 908 830 908 830
    Tax at 35% 126,887 203,417 121,514 187,052
    Social Responsibility Levy (SRL) 1,278 2,063 1,224 1,898
Current tax expense 129,073 206,310 123,646 189,780
Tax Losses
At the beginning of the year 5,967 56 – –
For the year 3,476 5,911 – –
Utilised during the year – – – –
At the end of the year 9,443 5,967 – –
         
The income tax has been computed in accordance with the Inland Revenue Act No. 10 of 2006.
The Companies within the Group are liable to income tax at 35%. The tax on export profit is 15%.
Social responsibility levy is 1% of the income tax charge for the year.
   

7.

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

Consolidated Company
2007/08 2006/07 2007/08 2006/07
Profit attributable to ordinary shareholders (Rs. ‘000) 205,093 301,777 194,669 282,028
Weighted average number of ordinary shares (i) 12,100,000 11,715,000 12,100,000 11,715,000
Basic earnings per ordinary share (Rs.) 16.95 25.76 16.09 24.07
Diluted earnings per ordinary share (Rs.) 16.95 25.76 16.09 24.07
           
(i) Qualifying ordinary shares at the beginning of the year 12,100,000 10,000,000 12,100,000 10,000,000
  Effect of shares issued during the year
      Scrip issue – 1,000,000 – 1,000,000
      Rights issue – 715,000 – 715,000
  Weighted average number of ordinary shares at the year end 12,100,000 11,715,000 12,100,000 11,715,000
           
There were no potentially dilutive ordinary shares outstanding at any time during the year/previous year.
   

8.

Dividends
 
Company
2007/08
Rs. ’000 		2006/07
Rs. ’000
Interim - Rs. 1.50/- per share (2006/2007 - Rs. 3/-) 18,150 33,300
Final - Rs. 2.50/- per share (2006/2007 - Rs. 3/-) 30,250 36,300
48,400 69,600
Dividends per share (Rs.) 4.00 6.00
     
Directors have approved the payment of a final dividend of Rs. 2.50/- per share for the year ended 31st March 2008, (2006/2007 - Rs. 3/- per share), at a meeting of the Board of Directors held on 9th May 2008. The Articles of the Company does not require that shareholders approve payment of the final dividend. In accordance with the SLAS 12 (Revised 2005), on Events after the Balance Sheet date, the approved dividend is not recognised as a liability in the Financial Statements as at the reporting date.
   

9.

property, plant & equipment

 
Freehold
Land		 Buildings & Premises Plant & Machinery Tools & Implements Freehold Motor Vehicles Leased Motor Vehicles Computer Hardware & Software Electrical Fixtures, Fittings,
& Office Equipment		 Total 31.03.08 Total 31.03.07
Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ‘000 Rs. ’000 Rs. ’000
a) CONSOLIDATED
Cost or Valuation
Balance at the beginning 460,241 232,508 152,812 91,918 159,294 – 92,901 122,365 1,312,039 1,080,039
Additions 89,958 340,628 25,215 24,340 38,393 6,825 7,825 21,299 554,483 305,542
Disposals – – (2,069) (73) (28,861) – (2,654) (1,832) (35,489) (73,542)
Balance at year end 550,199 573,136 175,958 116,185 168,826 6,825 98,072 141,832 1,831,033 1,312,039
 
Depreciation
Balance at the beginning – 41,889 59,092 71,454 71,957 – 59,159 72,116 375,667 370,894
Charge for the year – 9,413 11,922 10,388 30,294 2,116 12,830 7,281 84,244 62,957
On disposals – – (1,473) (26) (16,074) – (2,384) (793) (20,750) (58,184)
Balance at year end – 51,302 69,541 81,816 86,177 2,116 69,605 78,604 439,161 375,667
                     
Carrying amount at year end 550,199 521,834 106,417 34,369 82,649 4,709 28,467 63,228 1,391,872 936,372
Capital work-in-progress – – – – – – – – 238 3,518
Carrying amount – – – – – – – – 1,392,110 939,890
   
b) COMPANY
Cost or Valuation
Balance at the beginning 460,241 210,886 133,397 84,490 155,087 – 84,226 113,825 1,242,152 1,051,240
Additions 89,958 335,524 18,067 19,859 38,327 6,825 6,468 16,670 531,698 263,672
Disposals – – (2,069) (73) (28,795) – (2,654) (283) (33,874) (72,760)
Balance at year end 550,199 546,410 149,395 104,276 164,619 6,825 88,040 130,212 1,739,976 1,242,152
 
Depreciation
Balance at the beginning – 40,116 56,248 65,994 69,147 – 54,172 67,829 353,506 352,589
Charge for the year – 8,762 10,259 8,546 29,838 2,116 10,987 6,521 77,029 58,619
On disposals – – (1,473) (26) (16,008) – (2,384) (181) (20,072) (57,702)
Balance at year end – 48,878 65,034 74,514 82,977 2,116 62,775 74,169 410,463 353,506
                     
Carrying amount at year end 550,199 497,532 84,361 29,762 81,642 4,709 25,265 56,043 1,329,513 888,646
Capital work-in-progress – – – – – – – – 238 3,518
Carrying amount – – – – – – – – 1,329,751 892,164
                     
Notes
i. The value of the land owned by Diesel & Motor Engineering PLC at No. 65, Jetawana Road, Colombo 14, was assessed by a qualified valuer as at 20th August 2004. The valuation of land has been written up to correspond with the market value on the respective date. The purchase cost of the land stated as Rs. 346,432,000/- is Rs. 34,910,616/-.
ii. There are no tax implications or tax liabilities pertaining to revaluation of land stated in Note i above.
iii. The property acquired at Kirindiwela Road , Weliweriya for Rs. 400 mn was financed through a long-term loan and was pledged as security for same.
iv. Group property, plant & equipment with cost of Rs. 241 mn (2006/07- Rs. 227 mn) have been fully depreciated and continue to be use by the Group. The cost of fully depreciated assets of the Company amounts to Rs. 227 mn (2006/07 Rs. 215 mn).
v. There has been no permanent fall in the value of property, plant & equipment which require a provision.
   

10.

LEASEHOLD PROPERTY
 
Consolidated Company
2007/08 2006/07 2007/08 2006/07
Cost
Balance at the beginning 2,400 2,400 2,400 2,400
Additions – – – –
Balance at year end 2,400 2,400 2,400 2,400
 
Amortisation
Balance at the beginning 800 720 800 720
Amortisation for the year 80 80 80 80
Balance at year end 880 800 880 800
         
Carrying amount at year end 1,520 1,600 1,520 1,600
         
The leasehold land situated at Anuradhapura is on a 30 year lease and expires in 2026.

11.

intangible assets
 
Consolidated Company
2007/08 2006/07 2007/08 2006/07
Cost
Balance at the beginning – – – –
Additions 2,808 – 2,808 –
Disposals – – – –
Balance at the year end 2,808 – 2,808 –
 
Amortisation
Balance at the beginning – – – –
Amortisation for the year 59 – 59 –
On disposals – – – –
Balance at the year end 59 – 59 –
         
Carrying amount at year end 2,749 – 2,749 –
         
   

12.

Investments in subsidiaries
 
  Company
Group Interest 2007/08 2006/07
% Rs. ’000 Rs. ’000
Unquoted
Dimo (Pvt) Ltd. - 25,000 ordinary shares 100 250 250
Dimo Industries (Pvt) Ltd. - 500 ordinary shares 100 50 50
Dimo Travels (Pvt) Ltd. - 500 ordinary shares 100 50 50
350 350
   
In the opinion of the Directors, the net realisable value of the unquoted investments are higher than their cost. The principal activities of the subsidiaries.
   

13.

Investments in joint venture
 
Group
Interest		 Company
2007/08 2006/07
% Rs. ’000 Rs. ’000
DIMO-KLN Industries (Pvt) Ltd. 50 6,000 6,000
6,000 6,000
   
The Company formed a joint venture in collaboration with KLN Engineering Products (Pvt ) Ltd. to manufacture filters for automobiles. The Company commenced its commercial operation in August 2007.

14.

INVESTMENT IN Equity Accounted Investee
 
Group Consolidated Company
Interest 2007/08 2006/07 2007/08 2006/07
% Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000
Unquoted
Browns Dimo Industrial Products (Pvt) Ltd.
675,000 ordinary shares 45 6,750 6,750 6,750 6,750
Group share of net assets 18,261 14,979 – –
Group investment in associate (equity basis) 25,011 21,729 6,750 6,750
         
The principal activity of the Company.

Summarised financial information of equity accounted investee and jointly controlled entity is as follows:
Equity Accounted Investee Jointly Controlled Entity
2007/08
Rs. ’000		 2006/07
Rs. ’000		 2007/08
Rs. ’000		 2006/07
Rs. ’000
Revenue 78,666 65,156 1,882 –
Profit before tax 8,182 6,078 (5,616) (3,322)
Profit after tax 7,293 5,907 (5,616) (3,322)
         
Non-current assetsm 7,601 7,705 6,035 3,157
Current assets 70,704 49,756 5,666 3,733
78,305 57,461 11,701 6,890
Equity 55,580 48,287 3,061 6,291
Non-current liabilities 13,661 1,464 – –
Current liabilities 9,064 7,710 8,640 599
78,305 57,461 11,701 6,890
       

15.

other long-term investments
 
Consolidated Company
2007/08
Rs. ’000		 2006/07
Rs. ’000 		2007/08
Rs. ’000 		2006/07
Rs. ’000
Quoted
Hunas Falls Hotels PLC - 900
  ordinary shares (31.03.07 - 900)
    (Market value as at 31.03.08 - Rs. 24,750/-)		 14 14 7 7
Hatton National Bank PLC - 10,000
   non-voting ordinary shares (31.03.07 - 10,000)
     (Market value as at 31.03.08 - Rs. 512,500/-)		 700 700 700 700
Hayleys PLC - Rs. 539,599
ordinary shares (31.03.07 - 539,599)
     (Market value as at 31.03.08 - Rs. 52,745,802/-)		 40,964 40,964 40,964 40,964
41,678 41,678 41,671 41,671
       
   

16.

INVENTORIES
 
Consolidated Company
2007/08
Rs. ’000 		2006/07
Rs. ’000 		2007/08
Rs. ’000 		2006/07
Rs. ’000
Stock in trade & work-in-progress 1,772,770 2,126,870 1,699,851 2,038,586
Provision for slow moving inventories (49,998) (40,450) (43,437) (36,072)
1,722,772 2,086,420 1,656,414 2,002,514
Goods-in-transit 467,034 10,708 467,034 3,168
2,189,806 2,097,128 2,123,448 2,005,682
       
   

17.

Trade and other receivables
 
Consolidated Company
2007/08
Rs. ’000 		2006/07
Rs. ’000 		2007/08
Rs. ’000 		2006/07
Rs. ’000
Trade receivables 2,114,613 1,668,726 1,888,605 1,388,775
Provision for bad debts (82,051) (75,857) (53,419) (50,953)
2,032,562 1,592,869 1,835,186 1,337,822
Deposits against imports 667 215,750 667 214,260
Deposits and pre-payments 51,129 72,322 33,598 59,870
National Security Levy recoverable 11,930 11,930 11,294 11,294
Other-trade receivables 17,100 24,279 14,690 16,233
Loans to employees 3,927 2,594 3,720 2,344
2,117,315 1,919,744 1,899,155 1,641,823
       
   

18.

cash & cash equivalents
 
Consolidated Company
2007/08
Rs. ’000 		2006/07
Rs. ’000		 2007/08
Rs. ’000 		2006/07
Rs. ’000
Bank balances 45,808 171,331 44,215 170,512
Cash in hand 5,414 5,059 5,239 5,009
Cash & cash equivalents 51,222 176,390 49,454 175,521
         
   

19.

Stated Capital
  In accordance with Section 58 of the Companies Act No. 07 of 2007, which became effective from 3rd May 2007 share capital and share premium have been re-classified as stated capital.

Consolidated/Company
2007/08 2006/07
Voting Ordinary Shares No. of Shares Rs. ’000 No. of Shares Rs. ’000

Issued and fully paid ordinary shares
Balance at the beginning of the year 12,100,000 121,000 10,000,000 100,000
Bonus Issue during the year – – 1,000,000 10,000
Right Issue during the year – – 1,100,000 11,000
Balance at the end of the year 12,100,000 121,000 12,100,000 121,000
         
Consolidated/Company
Share Premium 2007/08
Rs. ’000		 2006/07
Rs. ’000
Balance at the beginning of the year 61,500 27,500
Utilised for bonus issue during the year – (10,000)
Increase due to right issue during the year – 44,000
Balance at the end of the year 61,500 61,500
       
Stated Capital at the end of the year 12,100,000 182,500 –
       
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at Annual General Meetings of the Company.

Consolidated Company
2007/08
Rs. ’000		 2006/07
Rs. ’000		 2007/08
Rs. ’000		 2006/07
Rs. ’000

19.1

Revaluation Reserve

Reserve on revaluation of land		 311,522 311,522 311,522 311,522
This represents the increase in fair value of the property situated at 65, Jetawana Road, Colombo - 14. This property was last revalued in August 2004.
           

19.2

General Reserves

 1,163,129 1,012,486 1,021,007 880,788
           
The General Reserves represents reserves available for distribution.
   

20.

long-term INTEREST-BEARING LOANS AND BORROWINGS
  Non-current portion of the interest bearing loans and borrowings:

Consolidated Company
2007/08
Rs. ’000 		2006/07
Rs. ’000 		2007/08
Rs. ’000 		2006/07
Rs. ’000
Term Loan (20.1) 547,210 334,032 547,210 334,032
Finance lease obligations (20.2) 6,966 11,514 6,966 11,514
554,176 345,546 554,176 345,546
 
Current portion of the interest bearing loans and borrowings:
Term Loan (20.1) 183,492 143,533 183,492 143,533
Finance lease obligations (20.2) 10,047 14,999 10,047 14,999
193,539 158,532 193,539 158,532
       
20.1 Term Loan    
Consolidated Company
2007/08 2006/07 2007/08 2006/07
Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000
  Non-Current
  At the beginning of the year 477,565 495,800 477,565 495,800
  Loans obtained
      Unsecured – 117,670 – 117,670
      Secured 400,000 – 400,000 –
877,565 613,470 877,565 613,470
  Repayments during the year (146,863) (135,905) (146,863) (135,905)
  At the end of the year 730,702 477,565 730,702 477,565
  Transferred to current liabilities
    (repayable within one year)		 183,492 143,533 183,492 143,533
  Long-term portion of long-term loan 547,210 334,032 547,210 334,032
           

Analysis of loans is as follows:
Interest
Rate		 Amount granted
Rs. ’000		 Within 1 year
Rs. ’000		 2-5 years
Rs. ’000		 Over 5 years
Rs. ’000		 31.03.08
Rs. ’000 		31.03.07
Rs. ’000
 

LENDER
  Sampath Bank PLC AWPLR 150,000 30,000 15,000 – 45,000 75,000
  Commercial Bank PLC AWPLR
AWPLR+2%		 350,000
400,000		 69,600
39,960		 89,000
160,030		 –
196,680		 158,600
396,670		 228,200
–
  Hatton National Bank PLC AWPLR 217,670 43,932 86,500 – 130,432 174,365
1,117,670 183,492 350,530 196,680 730,702 477,565
           
The property at Weliweriya was pledged against the loan of Rs. 400 mn obtained during the year.  
20.2 Finance Lease Obligations    
Consolidated Company
2007/08
Rs. ’000		 2006/07
Rs. ’000		 2007/08
Rs. ’000		 2006/07
Rs. ’000
  Gross liability - at the beginning of the year 31,414 – 31,414 –
  Obtained during the year 10,052 51,274 10,052 51,274
  Repayments during the year (19,398) (19,860) (19,398) (19,860)
  Gross liability - at the end of the year 22,068 31,414 22,068 31,414
  Finance charges unamortised (5,055) (4,901) (5,055) (4,901)
  Net liability - at the end of the year 17,013 26,513 17,013 26,513
  Transferred to current liabilities
(repayable within one year)		 10,047 14,999 10,047 14,999
  Non-current portion of finance lease obligations 6,966 11,514 6,966 11,514
           
  Analysis of finance lease obligations are as follows:
Leased Amount
Rs. ’000		 Within 1 year
Rs. ’000		 1-2 years
Rs. ’000		 2-5 years
Rs. ’000		 31.03.08
Rs. ’000 		31.03.07
Rs. ’000
 

LESSOR
  Central Finance Company PLC 1,523 381 317 – 698 –
  Hatton National Bank PLC 8,493 1,699 1,699 3,291 6,689 –
  People’s Leasing Company Ltd. 16,271 3,438 2,025 – 5,463 17,499
  Sampath Bank PLC 15,373 5,124 4,094 – 9,218 13,915
  Total 41,660 10,642 8,135 3,291 22,068 31,414
               
   

21.

deferred tax Assets & Liabilities
 
21.1 Deferred Tax Liabilities
Consolidated Company
2007/08
Rs. ’000		 2006/07
Rs. ’000 		2007/08
Rs. ’000		 2006/07
Rs. ’000
Balance at the beginning of the year 31,327 34,616 31,327 34,616
Origination/(reversal) of deferred tax 9,805 (3,289) 9,663 (3,289)
Balance at the end of the year 41,132 31,327 40,990 31,327
         
21.2 Deferred Tax Assets
Consolidated
2007/08
Rs. ’000		 2006/07
Rs. ’000
Balance at the beginning of the year 473 (213)
Origination/reversal of deferred tax (615) 686
Transfer to deferred tax liabilities 142 –
Balance at the end of the year – 473
     
Unrecognised deferred tax asset resulting from tax losses carried forward amount to Rs. 3,305,147.

Deferred tax assets have not been recognised in respect of these items since it is not probable that future taxable profit will be available against which the Group can utilise the benefit therefrom.
   

22.

deferred income
 
Consolidated Company
2007/08
Rs. ’000		 2006/07
Rs. ’000 		2007/08
Rs. ’000		 2006/07
Rs. ’000
At the beginning of the year 3,218 932 3,218 932
Income deferred during the year – 4,570 – 4,570
Amortised during the year (1,996) (2,284) (1,996) (2,284)
Balance at the end of the year 1,222 3,218 1,222 3,218
         
   

23.

retirement benefit obligations
 
Consolidated Company
Provision for Retiring Gratuity 2007/08
Rs. ’000		 2006/07
Rs. ’000 		2007/08
Rs. ’000 		2006/07
Rs. ’000
Balance at the beginning of the year 93,753 76,981 86,703 70,445
Charge for the year 27,996 20,008 27,168 19,349
Payments during the year (5,986) (3,236) (5,741) (3,091)
Balance at end of the year 115,763 93,753 108,130 86,703
         
   

24.

Trade and OTHER PAYABLES
 
Consolidated Company
2007/08
Rs. ’000		 2006/07
Rs. ’000		 2007/08
Rs. ’000		 2006/07
Rs. ’000
Trade payables 726,024 380,725 714,430 364,006
Advances received 85,375 33,258 85,375 33,258
Interest payable 8,738 1,070 8,738 1,070
Unclaimed dividend 1,980 2,284 1,980 2,284
VAT/Turnover tax payable 121,849 67,704 119,169 64,269
Other payables and accrued expenses 219,578 101,096 179,087 87,398
1,163,544 586,137 1,108,779 552,285
       
   

25.

INCOME TAX PAYABLE
 
Consolidated Company
2007/08
Rs. ’000 		2006/07
Rs. ’000 		2007/08
Rs. ’000 		2006/07
Rs. ’000
At the beginning of the year 113,001 53,171 111,144 52,218
Current tax expense for the year - Note 6 129,073 215,016 123,646 196,895
242,074 268,187 234,790 249,113
Tax paid during the year
    Economic Service Charge 62,987 46,202 60,000 44,609
    Income Tax & SRL 138,862 108,984 124,818 93,360
201,849 155,186 184,818 137,969
Income tax recoverable 9,747 – – –
Balance at end of the year 49,972 113,001 49,972 111,144
         
   

26.

Short-term Interest Bearing Borrowings
 
Consolidated Company
2007/08
Rs. ’000		 2006/07
Rs. ’000		 2007/08
Rs. ’000		 2006/07
Rs. ’000
Short-term bank loans 1,854,733 2,218,243 1,815,101 2,145,342
Bank overdrafts 199,926 142,367 187,394 130,391
2,054,659 2,360,610 2,002,495 2,275,733
       
Unutilised bank facilities as at 31st March 2008 amounted to Rs. 3,321,103,197/- (2006/07 - Rs. 1,692,888,545/-).

Inventories & book debts amounting to Rs. 95,000,000/- are pledged as securities for short-term interest-bearing loans and borrowings.

27.

COMMITMENTS & CONTINGENCIES
 

27.1

Capital Expenditure Commitments
  Capital expenditure commitments as at 31st March 2008 amounted to Rs. 176,915/-.

27.2

Contingent Liabilities
  Legal Claims
The claims for lawsuits filed against the Company as at 31st March 2008 amounts to Rs. 36.4 mn. Although there can be no assurance, the Directors believe, based on the information currently available, that the ultimate resolution of such legal procedures would not likely to have a material adverse effect on the results of operations, financial positions or liquidity. Accordingly, no provision for any liability has been made in these Financial Statements.

Guarantees
The contingent liability as at 31st March 2008 on guarantees given by Diesel & Motor Engineering PLC, in respect of bid bonds and performance bonds amounted to Rs. 320,522,967/- (2006/07 - Rs. 278,232,395/-).
   

28.

RELATED PARTY DISCLOSURES
 

Identity of the Related Parties

The Company has related party relationship with its subsidiaries, associates, joint venture, key management personnel and Hayleys PLC who hold 28% of the Company voting shares.

Transaction with related parties were made on the basis of the price in force with the non related parties.

The Company does not have any parent on its own.

28.1 Transactions with Subsidiaries, Associates & Joint Ventures
Nature of Relationship % of Share Holding Nature of
Transactions		 Value of the Transactions Balance as at 31st March
Rs. ’000 2008
Rs. ’000		 2007
Rs. ’000
  Dimo (Pvt) Ltd. Subsidiary 100% Sales 1,059 62,259 127,903
        Purchases 17,682    
        Recovery of xpenses 16,673    
  Dimo Industries (Pvt) Ltd. Subsidiary 100% Recovery of expenses 2,508 47,738 39,714
  Dimo-KLN Industries (Pvt) Ltd. Joint Venture 50% Recovery of expenses 1,021 3,879 587
  Receivables from subsidiaries and Joint Ventures 113,876 168,204
  Dimo Travels (Pvt) Ltd. Subsidiary 100% Recovery of expenses 76 392 467
  Amount payable to subsidiaries 392 467
       
  Outstanding balances with Related Parties at balance sheet date are not secured .

The guarantees & letter of credit taken on behalf of Dimo (Pvt) Ltd. amounted to Rs. 72,249,201/-.

No provisions were made for bad and doubtful debts or write-off against any related parties.

28.2 Transactions with Key Management Personnel
  Key management personnel comprise the members of the Board of Directors of the Company.
   
(a)
The compensation of Key Management Personnel are as follows:
 
For the year ending 31.03.2008 31.03.2007
Executive
Directors
Rs. 000		 Non-Executive
Directors
Rs. ‘000		 Executive
Directors
Rs. ‘000		 Non-Executive
Directors
Rs. ‘000
Short-term Employment benefit 36,573 2,550 30,164 1,762
Post Employment Benefit -
provision for retiring gratuity		 4,313 – 3,067 –
         
There are no long-term employment benefit, terminal benefit or share based payments made to the Directors during the year.

Executive directors are entitled for a structured incentive scheme which is linked to performance.
(b)
Loans to Key Management Personnel
  No loans were given to key management personnel during the year.

(c)
Key Management Personnel Share holding of the Company
  The shareholding of the key management personnel together with their close family members are disclosed on page 97 - Annual Report of the Board of Directors.

28.3 Transactions with Close Family Members
  There were no transactions with the Close Family Members during the year.

29.

events occurring after balance sheet date
  No events have arisen since the Balance Sheet date which would require adjustment to or disclosure in the
Financial Statements.
   
 
© Diesel & Motor Engineering PLC. All rights reserved. Web Solution by Affno