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Report of the month

August 2010

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DIMO Colombo, Sri Lanka Report Facts Company name: DIESEL & MOTOR ENGINEERING PLC. Fiscal year end: March 31, 2010 Report title: Vying With Self. Chairman and Chief Executive Officer: A.R. Pandithage Number of books: 1 Report length: 190 pages Auditors: KPMG Ford, Rhodes, Thornton & Co Design and production: Smart Media Website: www.dimolanka.com	Report Rating 3.5/5 (Rating scale below) Profile-Mission Our pioneering drive throughout 70 years of enterprise has built a unique Sri Lankan brand, one that today represents over 50 of the world’s best known brands. Business segments are: Vehicles; Vehicle Parts and Services; Lighting and Power Tools; Construction, Agricultural and Material Handling Machinery; Electro-Mechanical and Bio Medical Engineering. (Excerpts, as from the report. Italics are own company’s words) Key Figures Turnover: (Rs ‘000) 10,530,587 Profit (continuing): (Rs ‘000) 278,253 Net profit: (Rs ‘000) 248,297 Net earnings per share: (Rs) 28.53 Dividends per share: (Rs) 7.00 Return on equity: 11.30% Debt/equity: 89.35% Current ratio: (times) 1.28 Price/earnings: (times) 14.89 (Source: figures sourced from the annual report)

Triple A > A superbly shot cover that conveys a strong message, which builds up a theme and makes up the thread inside. > Detailed table of contents, index, glossary, note about the country where the company is headquartered. > Highly readable book, using modern typography. > Outstanding use of charts -many giving the long-term perspective- and diagrams.

Double A > Informative review of segment business performance.. > Though a bit to short, the Financial Review is clearly structured, very intelligible, and effectively backed with charts (many medium-term) and highlights (see Selected Page). It is also reinforced by a section on Economic Performance – A Vital Aspect of Sustainable Value Creation, which include two statements of value and economic value added. > Transparency and good degree of disclosure of governance policies and practices. > Substantial Sustainability Report, not lacking in measures. > Ten-year summary includes a batch of ratios.

Simple A > Share information is OK and charted, but could be more accessible and more elaborate (e.g. on ratios). > Risk management is put in clear terms, not least through the use of diagrams, yet lacks sufficient details, as such and in the economic, business and geographic context.

B Sides > Such a diversified group should show an earlier and clearer profile, as well as a snapshot of segments and their contribution. > Almost 200 pages long.

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Selected Page (p 51 of DIMO Annual Report 2009/10)	Rating Scale 5 First-Rate 4.5 Excellent 4 Very good 3.5 Sound 3 Average 2.5 Uneven 2 Common 1.5 Substandard 1 Poor 0.5 Uncompetitive The rating is based on ReportWatch internal desk research and does not take into account the independent Rating Panel’s judgment.