Annual Report 2023/24

NAME

The Autodrome PLC

Company Registration No.

PQ-84

Registered logo

Legal Form

A Limited Liability Company incorporated in Ceylon on 23.07.1953 Public Co. 1957, reregistered under Companies Act of no 7 of 2007.

Stock Exchange Listing

The issued ordinary shares of the Company are listed since 1975 under Retail Sector on the Main Board of the Colombo Stock Exchange of Sri Lanka.

Head office/registered office

304 Union Place, Colombo 2. Sri Lanka

Tel: +(94) 112326181, 0117847443 (3 Hunting lines)

Fax: +(94) 112338611

Web: www.autodrome.lk

Board of Directors

Ms. Bernadette J. Aloysius B.A.

Chairperson

Mr. Jeremy D. Aloysius MBA (USA)

Joint Managing Director / CEO

Mr. Rajeev A.J. Aloysius FCMA (UK), FCMA

(SL), MBA (SriJ.)

Joint Managing Director / CFO

Ms. J. Joanne B. Aloysius Rajiyah

B.Sc. (Lond.), MBA (SriJ.)

Marketing Director

Ms. Julie A. Aloysius BA (USA)

Executive Director

Mr. M. Raviraj Ratnasabapathy

FCMA(UK), MBA (SriJ.)

Prof. John A. Aloysius B.Sc (Col.), PhD (USA) Mr. Brihadhisvara Ponnambalam Mr. Ranil de Silva

Ms. Asha Peiris Nishantha

Manager - Sales

Mr. Thilanga Sampath

Field Service Manager

Mr. Romesh Jayathilaka

Manager- Business Development

Mr. Chathura M. Samaranayaka

Administration Manager

Ms. Deepani Swarnapali

Senior Assistant Accountant

Ms. Renuka Nilmini

Manager - Stores

Mr. Ranjith Dharmasena

Manager - Warehouse

Mr. Rajiv Perera

Manager - Workshop

Nature of Business

Official, Authorised Distributors in Sri Lanka for: BRIDGESTONE Tyres, Tubes , Flaps

Rent of Office Space and parking Website Design & Management

Subsidiary

Tourama (Pvt) Ltd

Level 3- The Autodrome Building,

No 304, Union Place Colombo 02.

Travel Agency and Destination

Management Company

THE AUTODROME PLC

Reg. No. PQ-84

NOTICE IS HEREBY GIVEN that the Seventy second Annual General Meeting of The Autodrome PLC will be held at the Registered Office of the Company as a virtual meeting on Wednesday, 18th September 2024 at 11.30 a.m. and the business to be brought before the meeting will be:

01. To receive and consider the Annual Report of the Directors and the Audited Financial Statements for the year ended 31st March 2024 together with the Report of the Auditors thereon

02. To re-elect Mr B Ponnambalam who retires by rotation in terms of Article 84 and 85 of the Articles of Association, as a Director.

1. To re-appoint Mrs/ Bernadette Jayaleela Aloysius who is over the age of 70 years, as a Director by passing the following Resolution as an Ordinary Resolution:
   "IT IS HEREBY RESOLVED that the age limit stipulated in Section 210 of the Companies Act No. 7 of 2007 shall not apply to Mrs Bernadette Jayaleela Aloysius who is 83 years of age and that she be re-appointed a Director of the Company."
2. To re-appoint Mr B Ponnambalam who is over the age of 70 years, as a Director by passing the following Resolution as an Ordinary Resolution:
   "IT IS HEREBY RESOLVED that the age limit stipulated in Section 210 of the Companies Act No. 7 of 2007 shall not apply to Mr B Ponnambalam who is 77 years of age and that he be re-appointed a Director of the Company."
3. To re-appoint M/s Ernst & Young as Auditors and authorize the Directors to determine their remuneration.

06. To authorize the directors to determine contributions to charity.

07. To consider and if thought fit, to pass the following Special Resolutions to amend the existing articles in the Articles of Association

of the Company

Special Resolution (1)

That the existing Article 54 be deleted and substituted with the following Article as follows;

"Article 54 - No business shall be transacted at any General Meetings unless a quorum is present when the meeting proceeds to business.

1. three (03) shareholders present in person or through audiovisual communication, by themselves or by proxy or attorney or (in the case of a corporation) by an authorized representative, being assembled together at the place, date and time appointed for the meeting; or
2. by means of audio or audio and visual communication by which all shareholders participating and constituting a quorum, can simultaneously hear each other throughout the meeting."

Special Resolution (2)

That the existing Article 63 be amended by adding the following paragraph

"In the case of a meeting of shareholders held under Article 54 (b), unless a poll is demanded, voting at the meeting shall be by shareholders signifying individually their assent or dissent by voice or by any electronic means."

Special Resolution (3)

That the existing Article 103 (i) be deleted and substituted with the following Article;

"103(i) Alternate directors shall only be appointed in exceptional circumstances as determined by the Board. Any director who wishes to appoint one of his co-directors or any other person as an alternate director to act in his place shall obtain the prior approval of the Board and appoint such alternate director by notice in Writing left at the Office.

The provisions contained in the following sub- Articles shall apply to any such alternate director"

Articles 103 (ii),(iii),(iv) to be deleted in its entirety and be substituted with the following new Articles;

"103 (ii) An alternate director shall be appointed for a maximum period of one (01) year unless provided otherwise in the Listing Rules of the Colombo Stock Exchange, but he shall ipso facto cease to be an alternate director in any one of the following events prior to completion of his term:-

• The following sub-articles will be introduced immediately after Article 103 (ii); "103 (iii)", "103 (iv)"; "103 (v)"; "103 (vi); "103 (vii)"

103 (iii) If an alternate director is appointed for a Non-Executive Director such alternate should not be an executive of the Company.

103 (iv) If an alternate director is appointed by an Independent Director, the person so appointed should meet the criteria for independence specified in any applicable rules of the Company including the Listing Rules of the Colombo Stock Exchange and shall satisfy the requirements relating to the minimum number of Independent Directors specified therein. The Nominations and Governance Committee shall review and determine that the person nominated as the alternate would qualify as an Independent Director before such appointment is made.

103 (v) The Company shall make an immediate Market Announcement regarding the appointment of an alternate director. Such Market Announcement shall include the following:- a) the exceptional circumstances leading to such appointment; b) the information on the capacity in which such alternate director is appointed, i.e. whether as an Executive Director, Non- Executive Director or Independent Director; c) the time period for which he is appointed, which shall not exceed one (01) year from the date of appointment; and d) a statement by the Company indicating whether such appointment has been reviewed by the Nominations and Governance Committee of the Company.

103 (vi) The attendance of any alternate director at any meeting, including a board committee meeting shall be counted for the purpose of quorum.

103 (vii) The words "Executive Director", "Independent Director", "Non-Executive Director", "Market Announcement" and "Nominations and Governance Committee" shall have the meanings and definitions applicable to them in the Listing Rules of the Colombo Stock Exchange

By Order of the Board of The Autodrome PLC

DELOITTE CORPORATE SERVICES (PVT) LTD Secretaries

14th August 2024

Colombo

"Recovering with Market

Penetration

and New Partnerships"

Welcome to the Seventy-Second Annual General Meeting of the Company

The Year in Review

The year 2023/2024, was a transition year for the Company, going from the tribulations of the post-COVID era, and rebuilding our finance facilities. With the request of our international bank partners to close our relationship with them due to derisking of their import-driven portfolios, we renewed and strengthened our banking relationship with Hatton National Bank PLC.

With the situation in the country changing we were obliged to change our method of payment from telegraphic transfers in small amounts, to letters of credit for larger imports.

Exchange loss for the year reached Rs. 0.6 million (2023 - Rs. 35.4 million). The Sri Lanka rupee appreciated by 7.6% against US Doller as at financial year end. (2023 - depreciated by 13.0%). Our inventory levels dropped to low levels not seen since the mid-1980s. We recorded a turnover value of Rs. 168.6 million (2023- Rs. 229 million) for the period.

The After-tax profit for the Group was Rs. 5.1 million (2023 - Rs. 31 million). During this period of survival mode while shipments were curtailed due to a short term punitive import duty surcharge, your Company managed to secure an average gross margin of 28.17% (2023

• 36.7%). Rent income was Rs. 30.1 million (2023
  - Rs. 28 Million). We further grew our short term investments in Unit Trusts, to Rs. 390 million (2023- Rs. 320.2 million), while gaining a total interest income of Rs. 73.6 million (2023 - Rs. 72.9 million). A one-off deferred tax charge of Rs. 14.2m (2023 - Rs. 38 m release) further impacted profitability for the year under review.

The net asset per share is Rs. 163.31 (2023 - Rs. 158.31).

As we navigate this business environment to improved performance despite these challenges, we limited the increase in administrative expense to a mere 11.73% (2023- 11.9%), in spite of continued inflationary pressures. The Fuel expense decrease was significant during the year up to Rs. 3.6 million (2023- Rs. 4.8 million), due to lower requirement for the use of our own power generation. Non-recurring repair and maintenance expenses to the main building stood to Rs. 4.1 million (2023- Rs. 3.4 million)

Bridgestone's new two-hemisphere global strategic business unit structure (2024),

has moved us under their regional office at Digital Reporting Bridgestone India, though we do not import any

product from them. Our multiple plants in Japan, Indonesia and Thailand continue to supply us; while there is a possibility of future imports from much newer plants such as Taiwan and Vietnam.

Business Environment

with the IMF facility materializing in March 2023, with bilateral and multilateral assistance during the year, the prospects look better for the ensuing year.

As the outlook for banks and how they deal with their clients, have seen an improvement, now that the unknown factor of the Domestic Debt Restructuring (DDR) were made known in July 2023. The Company is now in a better position to further consolidate its bank facilities, made essential by the current, far higher US dollar exchange rate, and the departure of several competitors from the market, mitigated by the aggressive growth of two local manufacturers.

We have taken short-term, curated cost-cutting measures to minimise losses, to keep the business running, keeping our staff supported, while being ready for the future growth that is clearly forthcoming. The quick recovery of annual profitability, while growing investments, bodes well for the future.

We welcome two innovative and brightly hued tenants, Tea Avenue, Aari Ceylon and, more recently yet another IT company, Konnect BPO, from August 2024.

Dividend and Share

The price of the share fluctuated during the period from Rs. 76.70 to Rs. 142.75 and was Rs. 90.20 as at 31 March.

The Board of Directors of the Company has not recommended a dividend for the year ended 31 March 2024.

Future Prospects

Austerity continues to hamper growth, though with an encouraging, stable currency and now single digit prime borrowing rates. Headline Inflation has fallen to low single digits at the time of writing. Tax rates are at a perennial high, with an 18% value added tax, a top bracket of 36% on personal income, and a corporate rate of 30%. In addition, more taxes are anticipated in 2025. Only vehicles, our key enabling import, is now limited, but a four-stageway-forward has been indicated by the incumbent government. The upcoming Presidential Election on 21 September, and the General Election that follows, will reveal how the government policy will help our small economy to grow.

Operating results

In the financial year of 2024, The Autodrome PLC secured a profit of Rs. 5.1 million (2023- Rs. 31.0 million), despite the extenuating circumstances it faced including supplier-chain issues. Major contributors for this bottom line were the Gross Margin from its main business of Rs. 51.62 million (2023 - Rs. 86.8 million). During the year the company sold 4,821 units (2023 - 6,935) of

Bridgestone brand tyres, and provided workshop services to 1,779 (2023- 205) clients.

Company reported other income and gains of Rs. 30.3 million (2023 - Rs. 28.0 million) for the financial year. Other income mainly represents rent income. The company rents six office premises to third parties. Company long term lease with MARKFED to operate a fuel station at the front of the building was ended in December 2023.

This year group finance income was Rs. 90.6 million (2023 - Rs. 93.5 million). Total other financial investments as at 31st March 2024 saw a substantial improvement of 12.7% to Rs. 506.3 million (2023 - Rs. 448.9 million). The liquidation of stocks and debtors, while facing access to facilities, and a need to wait for the easing of a punitive import duty surcharge tariff (or risk very uncompetitive, unmovable stock), was the main reason for this.

Land and Building

The Company owned land valued at Rs. 1,758 million (2023-Rs. 1,770 million) and buildings valued at Rs. 338.3 million (2023-Rs. 263.8million). The revaluation of Property was done in 2024 by the same valuers who did the valuation in the 2023 financial year. Building value changes are mainly due to depreciation.

Inventory

Company faced supplier chain issues during the year 2023/24 and as a result Inventories as of

Trade payables

Trade and other payables consist of payable to Itochu Middle East FZE for tyre imports. As of year-end, the balance stood at Rs. 68.1 million (2023 - Rs. 34.8). This increase is due to setting up of trade facilities with Hatton National Bank. This arrangement will transition to direct business with Bridgestone India, the SBU assigned to distributors in the region, who in turn work with the Bridgestone Asia Pacific India & China units in Singapore and Japan.

Administrative Expenses

Due to strict internal controls and cost management, the company managed to control its Administrative Expenses for the year in the face of rampant inflation, at Rs. 136.2 million (2023 - Rs. 127.9 million). The major contributor for this is employee salaries, EPF & ETF of Rs. 66.2 million (2023 - Rs. 70.1 million). The company staff strength is 39 employees out of which, five are working directors of the company.

During the year electricity and water expenses amounted to Rs. 7.4 million (2023 - Rs. 2.9 million). The total electricity consumed by both offices was 191,543 units (2023 - 131,184 units) for the year, and water 2,496 units (2023 - 2,796 units).

The company owns 11 vehicles and a backup generator, and key executives continued to receive perks to claim their fuel expenses from the company. The total fuel cost, for the company, was Rs. 3.6 million (2023 - Rs. 4.8 million). The decrease was mainly due to less power cuts, resulting in

Business Environment

During the year under review, imports of tyres and related products slowed due to the need to arrange trade facilities, due to import derisking by Standard Chartered Bank. Hatton National Bank PLC stepped forward to provide us with an adequate trade facility to begin growth once again, from January 2024.

Internal Controls and Adequacy

Company applies a sound internal control system, reviewed by the Audit Committee, where all issues and any payment or discharge have to be approved by the management. Management periodically monitors and reviews the adequacy of internal controls.

Rajeev Aloysius

Joint Managing Director

14th August 2024 Colombo

Jeremy Aloysius

Joint Managing Director

Purpose of the Committee

The Board appointed the Audit Committee to be in line with the Code of the Best Practice on Corporate Governance and the requirement of the Securities and Exchange Commission for Public Listed Companies. The Audit committee functions, authority and duties have been clearly identified in the Audit Committee Charter.

The Committee was established to assist the Board in fulfilling its oversight responsibility for the Companies financial reporting system, compliance with legal and regulatory requirements, internal controls and risk management process including the systems established to identify assess manage and monitor risk.

Role of the Audit Committee

Purpose of the committee

The purpose of the Related Party Transactions Review is to conduct an appropriate review of the Company's related party transactions and to ensure that the Company complies with LKAS 24, the Listing Rules of the Colombo Stock Exchange and with the Code of Best Practices on Related Party Transactions issued by the Securities and Exchange Commission.

Policies and procedures

The members of the Board of Directors of the Company have been identified as Key Management Personnel. In accordance with the Related Party Transaction Policy, the declarations are obtained from each Key Management Person of the Company for the purpose of identifying parties related to them. Based on the information furnished in these declarations, the Company retrieves data on related party transactions from the database of the Company.

COMPOSITION OF THE RELATED PARTY TRANSACTIONS REVIEW COMMITTEE

AS AT 31 MARCH 2024

Statements.

Composition and Meetings of the Committee

The Committee consists of three independent non-executive directors. The Secretary to the Committee is Ms. J. J. B. Aloysius Rajiyah, who is an Executive Director of the company. The Committee held four meetings during the year 28.04.2023, 27.07.2023, 23.10.2023 and 02.02.2024. The names and records of meetings attended by the members are given in the table.

Terms of reference

The Terms of Reference of the Related Party Transactions Review Committee describes its duties and responsibilities. The terms of reference covers aspects relating to matters prescribed in the Listing Rules of the Colombo Stock Exchange and include the following:

-To ensure that the Company complies with the Rules.

-To review in advance all proposed related party transactions to ensure compliance with the Rules.

-To update the Board of Directors on the related party transactions of the Company on a quarterly basis.

-Define and establish the threshold values in setting a benchmark for related party transactions which have to be pre-approved by the Board, which require to be reviewed in advance and annually and similar issues relating to listed Companies.

-To make immediate market disclosures on applicable related party transactions as required by the Rules.

-To include appropriate disclosures on related party transactions in the annual report as required by the Rules.

• To ensure that Policies and procedures regarding related party transactions are being reviewed and updated on an ongoing basis.
• To ensure that necessary steps have been taken by the management to avoid any conflicts of interests that may arise in transacting with related parties.

Related party transactions during the year

There were no non- recurrent or recurrent related party transactions that exceeded the respective thresholds mentioned in the Listing Rules requiring disclosure. Details of other related party transactions entered into by the Company during the year is disclosed in Note 21 to the Financial

Declaration

A declaration is given by the Board in the Annual Report of the Board of Directors on pages 29, Note 17 as a negative statement to the effect that no related party transaction falling within the ambit of the rule 9.3.2 of Listing Rules of the Colombo Stock Exchange was entered in to by the Company during the year.

On behalf of the Related Party Transaction Review Committee.

Ranil de Silva

Chairman

Related Party Transactions Review

Committee

14th August 2024

Colombo