Annual Report 2023/24

Dedicated Microsite for the Annual Report

https://www.dimolanka. com/2023-2024-dimo-annual-report/

Since inception, DIMO has been an inherently agile entity, built to withstand the harshest conditions. Our robust structures and systems have empowered us to evolve and respond to changing dynamics - arming us with the ability to unerringly manoeuvre through change, and steadily advance into the future. Our natural responsiveness and dexterity have served as core strengths, enabling us to maintain our momentum in the face of adversity, and achieve exceptional results year on year.

This report outlines a vibrant, yet constantly evolving journey of value creation that is designed to stand the test of time, and enable us to reach new heights of excellence.

We invite you to read on, and discover just what makes us agile by nature.

Dragonflies are the masters of flight, exhibiting remarkable endurance, speed, agility, and vision. With a history dating back millions of years, they possess the ability to fly in every direction, and are equipped with all the necessary systems and frameworks to handle a variety of obstacles and adjust to shifting conditions. Because of their wings' inherent strength and flexibility, dragonflies are able to hover through even the strongest headwinds, and withstand adversity.

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The dragonfly metaphor

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DIMO at a Glance

Our internal structures have positioned us to remain agile and responsive, and pursue progress.

1. DIMO in a Nutshell
2. Group Structure
3. Chairman's Message

1. Group MD & CEO's message

1. Board of Directors
2. Group Management Committee

16 Integrated Annual Report of Board of Directors

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Welcome to DIMO's Integrated

Annual Report

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Management Commentary

DIMO relies on the strength of its people and partners to achieve superior power and dynamism that enables success.

18 Value Creation Model

1. Strategy and Resource Allocation

1. Overview of the Operating Context

1. Business Reports

1. Capital Reports

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Financial and ESG Highlights

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Enterprise Governance

A farsighted vision and the right controls help us mitigate threats and maintain focus on the things that matter the most.

1. Corporate Governance

1. Investor Relations

1. Stakeholder Engagement

1. Risk Management

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Sustainability

By maintaining the right controls, we can achieve a balanced performance and manoeuvre through changing conditions with ease.

124 DIMO Sustainability Agenda 2030

1. Consolidated Statement of ESG Performance
2. Notes to the Consolidated ESG Statement

149 GRI, ESG and SASB Assurance

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Financial Statements

We use every strategy and resource at our disposal to move onwards, deliver progressive performance and achieve success.

155 Annual Report of the Board of Directors

160 Directors' Interests in Contracts with the Company

1. Statement of Directors' Responsibility for Financial Statements
2. Board of Directors' Statement on Internal Controls
3. Statement of Responsibility of the Chairman, Group Managing Director/Chief
   Executive Officer and Chief Financial Officer
4. Independent Auditors' report

1. Section 1 - Financial Statements

1. Section 2 - Corporate Information

1. Section 3 - Basis of Accounting

184 Section 4 - Specific Accounting Policies and Notes

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Annexures

We're a truly one of a kind entity that is designed to adapt to a range of environments. We're built to safeguard the well-being of our stakeholders, capture opportunities, and deliver value in the years ahead.

1. GRI Content Index

1. SASB Indicators

1. SLFRS S1 & S2 Index - Early Adoption

1. Independent Report Assurance
2. Ten Year Summary
3. Corporate Information

1. Notice of Meeting
2. Form of Proxy

Agile by Nature:

The Dragonfly Metaphor

Dragonfly Metaphor &

Our Annual Report

https://www.dimolanka. com/2023-2024-dimo-annual-report/url.php?id=1

1. Diversification:

• We constantly diversify our portfolio to seek out new horizons, embrace change and innovation and explore diverse ecosystems, just the way a dragonfly travels across oceans to seek out optimum conditions. We diversify dreams, and invest in ventures that others might overlook, nurturing them until they take flight.

2. Differentiation:

• The distinctive patterns and structures of each dragonfly embody our spirit of differentiation. We ensure our services and products are unique, with an unmatched value proposition that stands out in the market. We don't settle for mediocrity; we strive for excellence.

3. Collaboration:

• The dragonfly's wings work in harmony, propelling it in every direction. Similarly, our teams collaborate seamlessly, combining their strengths to move onward to achieve greatness. Together, we create a symphony of aspirations - a chorus that echoes across industries.

Annual Report 2023/24

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This report serves as our primary communication to shareholders and a key resource for all stakeholders. We've designed it to provide a balanced, transparent, and comprehensive overview of DIMO's performance throughout the 12 months from 01 April 2023 to 31 March 2024.

Our Integrated Annual Report strengthens our standing, offers clarity to our long-term investors, improves stakeholder relationships, and will ultimately contribute to long-term business success.

We've also introduced an AI-powered dialogue feature, transforming the way you interact with our report. Ask questions, dive deeper into data, and explore topics that matter to you. This innovative tool empowers every user to tailor their experience and gain the insights most relevant to their needs.

Context

Purpose

Holistic View of Performance

Our Integrated Annual Report goes beyond traditional financial reporting. It tells DIMO's whole story, showing how it creates, preserves, or erodes value over time across all dimensions of its business including the financial, social, environmental and governance dimensions.

Demonstrates Integrated Thinking

It reflects how DIMO incorporates broader considerations into its strategy and decision-making. The report discusses DIMO's strategic priorities in the short, medium and long-term, and how we strive to create value for our stakeholders in the journey towards achieving the same. It also demonstrates how we interconnect our operations, resources, and impacts to achieve our strategic priorities.

Enhanced Transparency and Accountability

By providing a comprehensive picture, our Integrated Annual Report fosters trust and helps stakeholders make informed decisions. We ensure the disclosure of all material aspects discussed at the Group Management Committee sessions, issues identified through stakeholder engagement, and results of the Group Risk Management process.

Benefits for Stakeholders

Shareholders: Better assessment of long-term sustainability and risk management practices. Make more informed investment decisions based on a holistic understanding of the company.

Employees: Increased understanding of the company's values, and strategic direction. Stronger sense of purpose and motivation.

Customers: Understand the company's commitment to ethical practices, and social responsibility. Increased trust leading to increased brand loyalty.

Suppliers: Learn of the company's long-term vision and goals for shared value creation. Align their own practices and collaborate more effectively.

Communities: Learn the company's impact on the local environment and society. Evaluate the company's value as a corporate citizen.

Regulators and Governments: Ensure companies are operating responsibly and in compliance with regulations. Promotes good corporate governance and sustainable practices.

A Powerful Vision

Dragonflies have the largest compound eyes of any insect; each containing up to 30,000 facets. They also possess 360-degree vision, which allows them to witness and process life from different perspectives, thereby enabling unmatched responsiveness and agility.

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Diesel & Motor Engineering PLC

Credibility

Laws, Regulatory Frameworks, Standards, Guidelines and Protocols Followed;

• The Companies Act No. 07 of 2007
• The Listing Rules of the Colombo Stock Exchange (CSE)
• Sri Lanka Financial Reporting Standards
• Sri Lanka Accounting Standards (LKASs/ SLFRSs)
• International Integrated Reporting Framework (International Framework) 2021, of which the Company is a business network member
• Guidelines for the Presentation of Annual Reports issued by CA Sri Lanka
• GRI Standards issued by the Global Sustainability Standards Board (GSSB). (This report has been prepared in accordance with the GRI Standards: comprehensive option)
• The industry standards published by the Sustainability Accounting Standards Board (SASB)
  | Multiline & Specialty Retailers & Distributors
  | Agricultural Products
  | Engineering & Construction Services
• United Nations Sustainability Development goals (SDGs)
• Ten principles of the United Nations Global Compact (UNGC)
• A preparer's Guide to Integrated Corporate Reporting, published by CA Sri Lanka
• The Greenhouse Gas Protocol Corporate Standard published by World Resource Institute (WRI) and World Business Council for Sustainable Development (WBCSD) (used to measure and report on the Group's carbon footprint)
• Code of Best Practice on Corporate Governance jointly issued by The Institute of Chartered Accountant of Sri Lanka and Securities and Exchange Commission of Sri Lanka.
• Early adoption of Qualitative Disclosures for SLFRS S1 and S2

Reporting Boundaries of Integrated Annual Report

Non financial reporting boundary

Includes material risks, opportunities, and outcomes attributable to or associated with DIMO Group's

• Strategy & corporate governance
• Value creation models & capitals
• Business reports
• Overview of the operating context
• Risk management
• Sustainability Agenda 2030
• ESG performance statement

Financial reporting boundary

Aligns with our financial statements reporting boundary and includes:

• Diesel & Motor Engineering PLC referred to as DIMO (Parent)
• Subsidiaries
• Joint ventures

Independent Assurances

Assurance from the independent auditors on the statement on ESG performance, GRI standards, SASB disclosure as per Sri Lanka standard on Assurance Engagements 3000 (revised).

Refer Page 149 - 152

Assurance from the independent auditors on the consolidated financial statements as per Sri Lanka Auditing standards.

Refer Page 165 - 167

Assurance from the independent auditors on the integrated report as per Sri Lanka standard on Assurance engagements 3,000 (revised).

Refer Page 255 - 256

Web Disclosures

The sections below form part of this report and are available on the corporate website. Independent Assurances have been obtained for both our financial and non-financial information from Messrs. KPMG on the Financial Statements, Integrated Reporting practices, ESG Performance Statement indicators, and indicators from GRI Standards and relevant SASB Standards.

Navigating Our 2023/24 Annual Report

Dedicated Dynamic Microsite

Our commitment to transparency takes a leap forward. This year's DIMO Annual Report is reimagined on a dedicated microsite, designed to elevate the stakeholder experience. Interactive data visualizations, multilingual financial statements, and accessibility features for the visually and hearing impaired provide an unparalleled level of transparency and engagement.

Immersive Experience

For an even more immersive experience, we've incorporated Augmented Reality (AR) technology into our Annual Report. Simply use your smartphone or tablet to scan designated pages and witness our Chairman and Group CEO come to life, delivering their insights and perspectives on the financial year.

Customize Information Through AI

By integrating AI-powered dialogue capabilities, we've created an engaging platform for two-way communication. Now, you can not only read our report, but also ask questions, seek clarification, and initiate discussions about DIMO. This represents a new era of transparent and collaborative reporting.

Inclusivity to Next Level

DIMO is committed to ensuring our reporting is accessible to all stakeholders. As a step towards greater inclusivity and also as a part of our commitment to innovation and social responsibility, we are proud to introduce a first-of-its-kind feature in our annual report: a concise summary in Braille. This initiative demonstrates our dedication to breaking down barriers to information and ensuring that all stakeholders, regardless of their abilities, can fully engage with our company's story.

Annual Report 2023/24

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Financial and ESG

Highlights

Customizable Charts &

Report Generator

https://www.dimolanka. com/2023-2024-dimo-annual- report/url.php?id=3

GOVERNANCE

Anti-harassment Policy and

Helpline

17 reported & resolved

(2022/23 - 6 Reported & resolved)

Payment of taxes and other tariffs

Rs. 5,782 million

(2022/23 - Rs. 2,696 million)

No major non compliances in Environmental & Quality Management System and Occupational Health & Safety.

No whistle-blower cases reported during the year.

(2022/23 - 3 Reported and resolved)

Non-renewable energy consumption to generate one million turnover

1.18 GJ

(2022/23 - 1.21 GJ)

SOCIAL

DIMO Academy for Technical Skills (DATS) was able to produce.

51 graduates

(2022/23 - 41 graduates)

Voluntary investments in social progress

Rs. 31 million

(2022/23 - Rs. 17 million)

Employee benefits distributed

Rs. 5,571 million

(2022/23 - Rs. 4,471 million)

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Diesel & Motor Engineering PLC