Oferentes en el mercado

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DIVIDENDS

The Dividend payable has not been accounted for until the same is ratified at the Annual General Meeting. Subject to the approval of the shareholders at the Annual General Meeting, a final withholding tax-free dividend of Rs. 0.55 (55 cents) per share is recommended by the Directors for the year ended 31 December 2006.

The details of the Dividends paid during the year are set out in Note 10 to the Financial Statements.

CORPORATE GOVERNANCE

The Directors place great emphasis on instituting and maintaining leading edge Corporate Governance practices with respect to the operations of the Group to develop and nurture long-term relationships with our key stakeholders. A detailed account of the corporate governance framework and its adoption is set out on pages 96 to 103 of this Report.

SYSTEM OF INTERNAL CONTROLS

The Directors are responsible for the Company’s system of internal controls covering financial operations and risk management activities, and for reviewing its effectiveness in accordance with the provisions of the Corporate Governance framework. The Directors consider that the system is appropriately designed to manage the risk environment facing the Company and to provide reasonable assurance against material misstatement or loss. The Board further confirms that there is an ongoing process allowing for the identification, evaluation and management of significant business risks. A detailed account of the system of internal controls is set out on page 108.

HUMAN RESOURCES

The Group continued to implement apt Human Resource Management policies and practices to develop its employees and ensure their optimum contribution towards the achievement of corporate goals. Employees are regarded as the key to being able to translate policies and strategies into commercial success and the employment policy of the Group embodies the principal of equal opportunity. Employee ownership in the Company is facilitated through the Employee Share Option scheme.

The number of persons employed by the Group as at 31 December 2006 was 2,774 (2005 – 1,864).

EQUITABLE TREATMENT TO SHAREHOLDERS

The Group endeavours at all times to ensure equitable treatment to all shareholders.

DONATIONS

The total amount of donations made by the Group during the year amounted to Rs. 13.1 Mn. (2005 – Rs. 14 Mn.).

PROPERTY, PLANT AND EQUIPMENT

The book value of Property, Plant and Equipment as at the Balance Sheet date amounted to Rs. 28,029 Mn. (2005 – Rs. 19,599 Mn.) and Rs. 30,032 Mn. (2005 – Rs. 20,802 Mn.) for the Company and Group, respectively.

Capital expenditure for the Company and Group amounted to Rs. 12,140 Mn. (2005 – Rs. 8,688 Mn.) and Rs. 12,740 Mn. (2005 – Rs. 8,688 Mn.), respectively.

The movements in Property, Plant and Equipment during the year are set out in Note 11 to the Financial Statements.

MARKET VALUE OF PROPERTIES

During the year, the buildings of the Company were revalued by a professional independent valuer. The valuations were made on the basis of the market value for existing use. The book value of the properties was adjusted to the revalued amount and the surplus of Rs. 16.25 Mn. was credited to revaluation reserve in Shareholders’ equity.

SHARE CAPITA L

The Authorised Share Capital of the Company is Rs. 10,000,000,000/– divided into 10,000,000,000 shares of Rs. 1/– each. The Issued Share Capital of the Company stood at Rs. 7,403,434,913/– divided into 7,403,434,913 shares of Rs. 1/– each. The details are contained in Note 17 to the Financials Statements.

EMPLOYEE SHARE OPTION SCHEME (ESOS)

In an effort to align the interest of the employees of the Company with those of the shareholders, the Company introduced an ESOS scheme in 2005. The details of the options granted, options exercised, the exercise price and the options outstanding as at the year end are disclosed in Note 17 to the Financial Statements.

The Company has granted a loan to the ESOS Trust to subscribe for the ESOS shares.

RESERV E S

Total Reserves as at 31 December 2006 for the Company and Group amounted to Rs. 19,434.36 Mn. (2005 – Rs. 12,182.76 Mn.) and Rs. 19,504.59 Mn. (2005 – Rs. 12,182.76 Mn.) respectively.

The movement in the Reserves is shown in the Statement of Changes in Equity on pages 124 and 125.

CONTINGENT LIABILITIES AND CAPITAL COMMITMENT

Contingent liabilities and commitments made on capital expenditure as at 31 December 2006 are given in Note 25 and 26 to the Financial Statements.

SHARE INFORMATION

The details relating to Earnings, Net Assets, Market Value per share and information on Share Trading are given on pages 88 and 91 of the Report.

SUBSTANTIAL SHAREHOLDINGS

The parent company, TM International (L) Limited holds 87.68 percent of the Issued Share Capital of the Company. The twenty largest Shareholders of the Company and the percentages held by each of them are disclosed on page 95. As at 31 December 2006 the public holds 10.20 percent of the Issued Share Capital of the Company.

DIRECTORS

The Directors of the Company as at 31 December 2006 were: Tan Sri Dato’ Ir. Muhammad Radzi bin Haji Mansor

Dr. Shridhir Sariputta Hansa Wijayasuriya Ir. Prabahar s/o Nagalingam Kirupalasingam Mr. Moksevi Rasingh Prelis

Mr. Yusof Annuar bin Yaacob

Dato’ Sri Mohammed Shazalli bin Ramly Mr. Mohamed Vazir Muhsin

The biographical details of the Directors are given on pages 15 to 17. In accordance with the Company's Articles of Association Tan Sri Dato’ Ir. Muhammad Radzi bin Haji Mansor shall retire by rotation and be eligible for re-election. Mr. Moksevi Rasingh Prelis who attained the age of 70 years on 2 July 2006 retires in terms of Section 181 of the Companies Act No. 17 of 1982. Special notice has been given by a member to the Company in terms of Section 182 of the intention to propose a resolution that the age limit stipulated in Section 181 of the said Companies Act shall not be applicable to Mr. Moksevi Rasingh Prelis.

Mr. Mohamed Vazir Muhsin was appointed as a Director of the Company with effect from 14 June 2006. In accordance with the Articles of Association of the Company, Mr. Mohamed Vazir Muhsin will submit himself for retirement and re- election at the Annual General Meeting.

The remaining Directors held office throughout the year ended 31 December 2006.

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DIRECTORS’ INTERESTS IN CONTRACTS AND PROPOSED CONTRACTS

Except as stated in Note 28 to these Financial Statements, during and at the end of the 2006 financial year, none of the Directors were directly or indirectly interested in contracts or proposed contracts connected with the Company’s business.

DIRECTORS' SHAREHOLDINGS

The details of shares held by the Directors and their spouses as at the end of the year are as follows:

2006 2005

Tan Sri Dato’ Ir. Muhammad Radzi bin Haji Mansor – 10

Ir. Prabahar s/o Nagalingam Kirupalasingam – 10

Dr. Shridhir Sariputta Hansa Wijayasuriya 38,700 38,710

Mr. Moksevi Rasingh Prelis 16,800 16,810

Mr. Mohamed Vazir Muhsin 16,400 8,400

None of the Directors other than those disclosed above hold any shares in the Company.

DIRECTORS' RESPONSIBILITY FOR FINANCIAL REPORTING

The Directors are responsible for the preparation of Financial Statements of the Company and its Subsidiaries to reflect a true and fair view of the state of its affairs. The Directors are of the view that these Financial Statements have been prepared in conformity with the requirements of the Sri Lanka Accounting Standards, Companies Act No. 17 of 1982 and the Listing Rules of the Colombo Stock Exchange.

BOARD COMMITTEES

The composition of the Board Audit Committee and Nominating and Remuneration Committee is as follows:

Audit Committee

Mr. Moksevi Rasingh Prelis (Chairman) Ir. Prabahar s/o Nagalingam Kirupalasingam Mr. Yusof Annuar bin Yaacob

Dato’ Lim Kheng Guan

Mr. Mohamed Vazir Muhsin (appointed w.e.f. 5 January 2007)

Nominating & Remuneration Committee

Tan Sri Dato’ Ir. Muhammad Radzi bin Haji Mansor (Chairman) Mr. Moksevi Rasingh Prelis

Ir. Prabahar s/o Nagalingam Kirupalasingam

Directors’ Report

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ENVIRONMENTAL PROTECTION

The Group is sensitive to the needs of the environment and makes every endeavor to comply with the relevant environmental laws, regulations and best practices applicable in the country.

Specific measures taken to protect the environment are given in the CSR Review on pages 62 to 75 of this Report.

COMPLIANCE REPORT

The Directors confirm that to the best of their knowledge all relevant taxes, duties, levies and all statutory payments by the Company and its subsidiaries and all contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and its Subsidiaries as at the Balance Sheet date have been paid, or where relevant provided for.

EVENTS AFTER BALANCE SHEET DATE

No material events that require adjustments to the Financial Statements have taken place, subsequent to the date of the Balance Sheet other than those disclosed, if any, in Note 31 to the Financial Statements.

GOING CONCERN

The Directors confirm that the Company and its Subsidiaries have adequate resources to continue as a going concern for the foreseeable future. As such the Financial Statements have been prepared on that basis.

AUDITORS

A resolution to re-appoint Messrs PricewaterhouseCoopers, Chartered Accountants, as Auditors of the Company will be proposed at the forthcoming Annual General Meeting.

The Audit Committee reviews the appointment of the Auditor, its effectiveness and its relationship with the Group, including the level of audit and non-audit fees paid to the Auditor.

The report of the Audit Committee is given on pages 104 to 107 of this Report.

ANNUAL REPORT

The Board of Directors approved the Consolidated Financial Statements on 15 February 2007. The appropriate number of copies of this report will be submitted to the Colombo Stock Exchange and to the Sri Lanka Accounting and Auditing Standards Monitoring Board.

ANNUAL GENERAL MEETING

In compliance with good governance practices, The Annual General Meeting is held as soon as possible after the end of the financial year and completion of the audit. The Annual General Meeting will be held on Monday, 21 May 2007 at the Grand Ballroom, Waters Edge, Battaramulla.

The Notice of Meeting relating to the 10th Annual General Meeting is given on page 160.

By Order of the Board,

Mrs Anoja Obeyesekere Company Secretary

15 February 2007

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