Annual Report 2018 | 2019 CHAN E Weathering storms and braving changes brought on by a volatile economy, United Motors has set its course on the highway to sustainability, and to discovering innovative solutions. Driving sustainable initiatives and streamlining operations while embracing evolving technology, we have reinforced ourselves by rewiring our DNA and expanding our horizons. 02 UNITED MOTORS LANKA PLC Annual Report 2018 | 2019 UNITED MOTORS LANKA PLC Annual Report 2018 | 2019 03 Contents Vision and Mission 06 Our Beginnings 07 06-43 Our Journey Thus Far 08 Review of the Business Operational and Financial Highlights 11 Events of the Year 13 Group Structure 20 Chairman’s Message 22 Group CEO Review of Operations 26 Board of Directors 30 Senior Management Team 34 Management Discussion and Analysis 46 Business Review 55 46-89 Financial Capital 58 Manufactured Capital 60 Management Review Social & Relationship Capital 61 Human Capital 77 Natural Capital 87 Intellectual Capital 89 How We Govern 92 Audit Committee Report 107 92-127 Remuneration Committee Report 110 Governance Nomination Committee Report 112 Related Party Transactions Review Committee Report 113 Enterprise Risk Management 115 Directors’ Statement on Internal Controls 121 Annual Report of the Board of Directors 122 04 UNITED MOTORS LANKA PLC Annual Report 2018 | 2019 Financial Calendar 131 Statement of Directors’ Responsibility 132 131-204 CEO and CFO’s Responsibility Statement 134 Financial Information Independent Auditor’s Report 135 Statement of Profit or Loss and Other Comprehensive Income 140 Statement of Financial Position 141 Statement of Changes in Equity 142 Statement of Cash Flows 144 Notes to the Financial Statements 145 Share Information 205 Ten year summary - group 209 204-215 Investor Information 210 Supplementary Information Glossary of Financial Terms 211 Notice of Meeting 213 Notes 214 Proxy Form 215 Corporate Information Inner Back Cover UNITED MOTORS LANKA PLC Annual Report 2018 | 2019 05 Vision To be the best company in Sri Lanka through diversification whilst maintaining the leadership position in the transport industry. Mission To delight and make lifelong relationships with our customers by providing high quality products, services and transport solutions using state-of-the-art technology and developing a team of people who are committed to excellence with the highest level of integrity through a corporate culture that encourages participative management to create a socially responsible corporate entity,whilst ensuring optimum returns to shareholders. 06 UNITED MOTORS LANKA PLC Annual Report 2018 | 2019 REVIEW OF THE BUSINESS Our Beginnings The Company was incorporated in 1945 as a Private Limited Liability Company. It was vested with the Government on 8 March 1972 and carried on operations as the Government Owned Business Undertaking (GOBU) of United Motors. In 1985, the Company entered into a distributor agreement with Mitsubishi Motors Corporation, Japan and has since then been the sole distributor for brand new Mitsubishi vehicles in Sri Lanka. In 1989 the Company was selected as the first Government venture for ‘Peoplisation’ with the intention of broadening its ownership amongst the public. Accordingly, on 9 May 1989, the Company was renamed as United Motors Lanka Limited and incorporated as a Public Limited Liability Company. On 30 August 2007, the Company was reregistered under the new Companies Act No. 07 of 2007 as United Motors Lanka PLC. Since becoming a Public Limited Liability Company, United Motors has achieved remarkable results and is a leading blue-chip company in Sri Lanka today. UNITED MOTORS LANKA PLC Annual Report 2018 | 2019 07 Our Journey Thus Far 1945 1997 2008 Incorporation of United Motors Limited as November March a Private Limited Liability Company. Perodua brand from Malaysia was Incorporation of TVS Automotives (Pvt) launched by UEL. Ltd as a fully owned subsidiary of TVS 1972 Lanka (Pvt) Ltd. Vested in the Government on 8 March, 1999 commenced as a Government Owned July 2009 Business Undertaking. The Orugodawatte Workshop Complex December was opened. UEL opened a local assembly facility 1985 within the Orugodawatte Workshop Entered into a distributor agreement with 2002 Complex to assemble the Zotye Nomad Mitsubishi Motors Corporation (MMC), March SUV. Japan. The Valvoline brand from USA was launched by UML. 2010 1989 December May 2003 The Company increased the number of United Motors Lanka Limited was April shares by way of a share split on the basis incorporated as a Public Limited Liability UML acquired 50% interest in TVS Lanka of two new ordinary shares for every Company with an authorised share capital (Pvt) Ltd. existing issued ordinary share. (now referred to as stated capital) of Rs. 100,000,000 2004 2011 September February 1992 The Yokohama brand from Japan was OMCL added the DFSK Mini truck brand Incorporation of a subsidiary - Orient launched by UEL. to its product portfolio. Motor Company Limited (OMCL) to import, distribute, hire vehicles and to 2006 December provide related services. The Company was awarded a citation for January order intake development from Mitsubishi UEL launched Mudan range of Chinese 1993 Fuso Truck and Bus Corporation, Japan for vehicles. the Fuso brand. Incorporation of a subsidiary - UML Property Developments Ltd., for the 2007 2012 construction of a warehouse complex on March a five acre land at Orugodawatte. March TVS Lanka (Pvt) Ltd. signed a distributor The Group achieved its highest ever profit agreement with Bharat Petroleum in the financial year. 1994 Corporation of India. Incorporation of a subsidiary - Unimo 2013 Enterprises Limited (UEL) to import June and sell vehicles and to provide related JMC brand from China was launched by October services. UEL. UML was ranked amongst the top 100 Corporates in Sri Lanka across all 1995 August industries in 2012/13 by LMD. September The Company was re-registered as United Motors Lanka PLC (UML). September United Motors Lanka Limited (UMLL) The Fuso Heavy Duty Trucks was launched celebrated 50 years of excellence. December by UML. Zotye brand from China was launched by UEL. November UML was ranked among the top 25 companies in Sri Lanka across all industries by Business Today, in 2012/13. 08 UNITED MOTORS LANKA PLC Annual Report 2018 | 2019 REVIEW OF THE BUSINESS 2014 2016 2017 March June February UEL opened its assembly plant in Ranala. UML added the Mitsubishi PHEV (Plug-In UEL added Perodua Axia to its product Hybrid Electric Vehicle) to its product portfolio. The legendary brand MG was launched portfolio. by UEL. UEL added DFSK Glory Petrol to its July product portfolio. November UML added the Fuso FJ Concrete Mixer to UML was ranked among the top 25 its product portfolio. June companies in Sri Lanka across all UEL added the Perodua Bezza to its industries by Business Today, in 2013/14. Valvoline was awarded for its Outstanding product portfolio. Sales Performance for the third Valvoline was awarded for its Outstanding consecutive year in South East Asia at the July Sales Performance in South East Asia at Valvoline South East Asia Conference in UEL added JMC N800 Truck to its product the Valvoline South East Asia Conference Thailand. portfolio. in Mumbai. September UML Heavy Equipment Ltd, a subsidiary 2015 UML won the special achievement award of UML was incorporated to carry out the February “Significant sales volume increase for business of importing and distribution The Simoniz brand from United Kingdom excellent Marketing Campaign” for the of earth moving equipment and power (UK) was launched by UML. Fuso brand at the “Daimler Trucks Asia generators. Distributor Awards 2016”. May August The Brilliance brand from China was October A dedicated sales showroom for Fuso launched by UEL. UEL added Zotye Z100 to its product Truck and Bus was opened in Nuwara portfolio. Eliya. September UEL added DFSK Glory Diesel to its November A dedicated workshop for Mitsubishi product portfolio. OMCL added DFSK Crew Cab to its passenger vehicles and Fuso Truck and product portfolio. Bus was opened in Matara. October UML was ranked amongst the top December UEL added Yokohama GO15 Tyre to its 100 corporates in Sri Lanka across all A dedicated workshop for Mitsubishi and product portfolio. industries in 2014/15 by LMD. Perodua passenger vehicles and Fuso Truck and Bus was opened at Ratmalana. September Valvoline was awarded for its Outstanding UML Heavy Equipment Ltd added JCB Sales Performance for the second earth moving equipment and power consecutive year in South East Asia at the generators to its product portfolio. Valvoline South East Asia Conference in Hong Kong. November UML added LiuGong which is into Concrete Mixing Equipment to its product portfolio. UNITED MOTORS LANKA PLC Annual Report 2018 | 2019 09 Our Journey Thus Far 2018 September January A dedicated showroom for 3D Printing Valvoline was awarded for its outstanding was opened in Colombo 02 which offers sales performance for the fourth year the sale of machines, 3D printing services, in South East Asia at the Distributor after sales services and 3D printing Conference in Malaysia. educational courses. Valvoline was awarded the Momentum October Award in South East Asia at the Valvoline UML was ranked amongst the top Asia Distributor Conference in Malaysia. 100 corporates in Sri Lanka across all industries in 2017/18. Valvoline was awarded the Manchester City Distributor Incentive Programme 2019 Award in South East Asia at the Valvoline January Asia Distributor Conference in Malaysia. A dedicated sales showroom for UEL range of vehicles was opened in Matara. UML added 3D Printing Equipments to its product portfolio. March Perodua was awarded for its Outstanding March Sales Performance for the year ended UML added Valvoline 4Tech Ultimate 2018/2019. Fully Synthetic Motor Oil to its product portfolio. UML was recognized for the contribution towards Mitsubishi sales volume growth UML divested its investment in joint in South Asia for 2018/2019. venture, TVS Lanka (Pvt) Ltd on 28 March 2018.