Contents...Contents Contents Independent Auditors’ Report 31 Consolidated Statement of Comprehensive Income 32 Consolidated Statement of Financial Position 33 Statement of Changes

Sierra Cables PLC Annual Report 2012/13ANNUAL REPORT OF THE BOARD OF DIRECTORS1

ContentsContents

Independent Auditors’ Report 31

Consolidated Statement of Comprehensive Income 32

Consolidated Statement of Financial Position 33

Statement of Changes in Equity 34

Cash Flow Statement 35

Notes to the Financial Statements 37

Share Information 69

Ten Year Summary 70

Our Projects 72

Awards and Accolades 74

Dealer Network 75

Notice of Meeting 76

Form of Proxy Enclosed

Corporate Information Inner Back Cover

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Group Financial Highlights 02

Board of Directors - Profile 03

Chairman’s Message 05

Managing Director’s Review of the Operations 07

Report of the Board of Directors on the Affairs of the Company 09

Report of the Audit Committee 12

Report of the Remuneration Committee 13

Product Portfolio 14

Our Values 15

Quality Management 16

Human Resources 18

Corporate Social Responsibility 20

New Initiatives 21

Sustainability Report 22

Risk Management 23

Corporate Governance 25

Statement of Directors’ Responsibilities 28

Sierra Cables PLC Annual Report 2012/13MANAGEMENT REPORTS2

GROUP FINANCIAL HIGHLIGHTSGROUP FINANCIAL HIGHLIGHTS

For the year ended 31st March 2013Rs.

2012Rs.

Results for the Year

Revenue 2,141,353,995 2,476,058,520

Profit/(Loss) Before Tax (18,091,728) 143,083,774

Profit/(Loss) After Tax (23,181,433) 120,333,888

Position at the Year End

Shareholders’ Funds 1,674,149,444 1,374,170,334

Total Assets 3,372,666,564 2,790,722,681

Interest Cover (No. of Times) 0.9 1.9

ROCE [%] 7% 20%

Current Ratio 1.56 : 1 1.44 : 1

Issued & Fully Paid No. of Shares 537,512,430 537,512,430

Information per Share (Rs.)

Earnings (0.02) 0.22

Net Assets 3.08 2.50

Market Value 2.2 3.3

Rs.

Earnings Per Share

2013

2012

2011

2010

2009

-0.10

-0.05

0.00

0.05

0.10

0.15

0.20

0.25

Rs.

Net Assets Per Share

2013

2012

2011

2010

2009

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1.0

1.5

2.0

2.5

3.0

3.5

Rs.(Mn.)

Net Assets

2013

2012

2011

2010

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200

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600

800

1000

1200

1400

1600

1800

Sierra Cables PLC Annual Report 2012/13MANAGEMENT REPORTS

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3BOARD OF DIRECTORS - PROFILE

W.A.P. PereraChairman

Mr. W.A.P. Perera is a founder Director of Sierra Construction (Private) Limited and serves as the Chairman of Sierra Cables PLC. He has over 33 years experience in the construction industry.

D.S. PandithaManaging Director/CEO

Mr. D.S. Panditha is the Managing Director and Chief Executive Officer of Sierra Cables PLC. He is a member of both the Institute of Incorporated Engineers and the Institute of Marketing (SL). He has over 36 years of experience in the cable and plastic industry.

G.S.M. Irugalbandara Ms. G.S.M. Irugalbandara was the Director of Alucop Cables for last five years. She has an MBA from the University of South Queensland. She has been attached to KPMG as a Tax Manager prior to joining Alucop Cables. She now serves as an Executive Director at Sierra Cables PLC.

D.N.N. Lokuge Mr. D.N.N. Lokuge is a founder Director of Sierra Construction (Private) Limited with 33 years experience in the construction industry.

J.H.P. Ratnayeke Mr. J.H.P. Ratnayeke is a Senior Corporate Lawyer who is also the precedent partner of Paul Ratnayeke Associates, a leading firm in Sri Lanka which he founded in 1987 handling all areas of law and International Legal Consultancy work. Mr. Ratnayeke is a Solicitor of England and Wales and an Attorney-at-Law of the Supreme Court of Sri Lanka. He has been awarded a Masters Degree in Law by the University of London. Currently, Mr. Ratnayeke holds directorships in 62 Companies of which 08 are Public Quoted Companies. He has also been elected/appointed as Chairman/Deputy Chairman to several of these companies. He is also Chairman of P.R. Secretarial Services (Pvt) Ltd.

E.A.D.T.B. Perera Mr. E.A.D.T.B. Perera is a founder Director of Sierra Construction (Private) Limited with 33 years experience in the construction industry.

Dr. D.G.K.E. Weerapperuma

Dr. Kamal Weerapperuma is currently the Managing Director of PE Consultancy Services Ltd. and serves as Independent Director of ACL Plastics, Plastishells Limited, Arpico Plastics Limited, Arpico Flexifoam (Pvt) Limited and RPC Polymers (Pvt) Limited. He held positions of CEO/ Director of Delmege Forsyth Group, Kelani Cables Ltd., Central Industries Ltd., Executive Director, Haycarb Ltd. and Research Fellow in Chemical Engineering, Imperial College, University of London.

Dr. Weerapperuma served as consultant to several Industries and Banks. Further, he served on the Prime Ministers advisory Committee on Power and Energy, and on several public sector committees including those in the Ministries of Science and Technology, and in the Ministry of Industry. He currently serves as an examiner/scrutineer for Chartered Engineer (UK) and Fellowship reviews of the Institute of Materials, Mining, and Minerals (UK). In addition, he serves on the Ethics review committee of the Sri Lanka Medical Association.

He holds a B.Sc. Degree from University of Ceylon, M.Sc. and Ph.D. Degrees from the UK. He is a Chartered Engineer (UK), a Fellow of the Institute of Materials, Mining, and Minerals (UK), and an Alumnus of “Insead”, France.

Prof. A.K.W. Jayawardane

Prof. Jayawardane is the Vice-Chancellor and Professor in Civil Engineering, University of Moratuwa. He is an academic, a researcher and consultant with experience and expertise in teaching, research and consultancy in the broad areas of construction management, project management and technology management. He is having a BSc. Eng. in Civil Engineering with first class honours, University of Moratuwa and MSc. in Construction, University of Technology, United Kingdom. He is also a fellow member of the Institution of Engineers and founder member of the Society of Structural Engineers and Institute of Project Managers in Sri Lanka.

BOARD OF DIRECTORS - PROFILE


B.W.N. Rupasinghe Mr. B.W.N. Rupasinghe holds a B.Sc. Degree in Electrical & Electronics from University of Peradeniya. Further has a M.Sc. Degree in Electrical Power Transmission and Distribution from Manchester Institute of Science and Technology, UK with a MA. Degree in Economics. He was the former General Manager of Central Engineering and Consultancy Bureau.

P.R. Saldin Mr. Rimoe Saldin is a Fellow of the Institute of Chartered Accountants of Sri Lanka. He is also a Fellow of the Chartered Institute of Management Accountants in the United Kingdom and a Certified Management Accountant, Australia. He is an Alumni of the Asian Institute of Management, Manila.

He has over 20 years of experience at top management level in the areas of Finance, Human Resource Development, General Management and Operations.

Presently, Mr. Saldin serves as the Group Chief Operating Officer of the Browns Group of Companies and Director/Chief Executive Officer of Browns Investments PLC. He also serves on the Board of Directors of a number of listed and unlisted Companies.

He was previously, the Country Controller for Royal Dutch Shell in Sri Lanka and Finance Director of Shell Gas Lanka Ltd. and Shell Terminal Lanka Ltd. Mr. Saldin, also served as Group Finance Director and Commercial Director of CIC Holdings PLC. He also served on the Board of Directors of number of listed and unlisted Companies in the CIC Group.

BOARD OF DIRECTORS - PROFILEBOARD OF DIRECTORS - PROFILE


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5CHAIRMAN’S MESSAGECHAIRMAN’S MESSAGE

On behalf of the Board of Directors, I am pleased to welcome you to the tenth Annual General Meeting of

Sierra Cables PLC and present to you the Annual Report of the Company and its Subsidiaries for the year ended 31st March 2013.

This has been a year in which much of the challenges alluded to in my message to you last year were manifested, necessitating us to grapple with challenges from many fronts. A depreciating currency, inflationary pressure, illiquid financial markets and rising interest rates combined to exert pressure on margins and served to dampen the results we report this year.

A Slowed Economy

For the first time since the liberalization of the country, economic growth slowed to 6.4% in 2012, compared to robust, over 8% growth recorded in the previous two years. Adverse weather patterns, ranging from floods to drought conditions, coupled with sluggish external demand stemming from listless global recovery hindered the economy’s growth trajectory. Both exports and imports moderated during the year with exports declining by 7.4% as a result of weakened global demand and reduced prices, while imports contracted by 5.8% mainly due to higher tariffs, tightened credit growth and currency depreciation. Annual average inflation rose from 6.7% a year ago to 7.6% this year, attributed primarily to the depreciation of the local currency and the rise in electricity and fuel prices. Reflecting the monetary stance that prevailed over the better part of the year, the AWPLR that stood at 12.8% at the beginning of the year rose to 14.4% by December 2012 - January 2013.

On a positive note, the balance of payments position strengthened from the deficit of US$ 1 billion incurred in 2011 to a surplus of US$ 151 million this year. Furthermore, the tightened monetary policy stance aimed at countering external and internal imbalances was relaxed, with the ceiling imposed on bank credit growth withdrawn in December 2012. The subsequent cut

in policy interest rates, point to Central Bank’s intention of fostering credit growth.

The Construction Subsector emerged as the key driver in Industry Sector growth that underpinned economic growth during the year. Fuelled by large-scale infrastructure development projects such as power, road, port and airport development projects and, to a lesser extent, by hotel and housing development projects, the subsector recorded its highest growth rate in a decade, expanding by 21.6% during 2012 compared to 14.2% a year ago.

As a result the construction sector’s share in overall GDP rose significantly, from 7.1% in 2011 to 8.1% in 2012. Nonetheless, many large-scale infrastructure development projects such as roads and water supply did not offer scope for our products, as we cater primarily for electrification and telecommunication projects. Meanwhile, opportunities associated with other large-scale infrastructure development flowed mainly to foreign contractors and their allied suppliers of essential materials, rather than to local contractors and cable manufactures.

Financial Performance

The challenging macroeconomic environment resulted in a two-fold impact on our business. Top line growth was curtailed, as the reduction in consumer purchasing power led to deferment of house construction and private sector construction activities, our key market segments, while tariff hikes and the weaker currency led to a spike in direct operating costs. Moreover, average prices of the primary raw material of our industry, copper, rose by about 5% on the London Metal Exchange (LME) in 2012, primarily due to increased global infrastructure activities on the one hand and the deficit in the global copper market on the other hand. As per a report from the International Copper Study Group the deficit in global copper reflected 5.13 lakh tonnes between January and November 2012, compared with a lower deficit of 2.6 lakh tonnes in the corresponding period in 2011.

‘‘We have been the proud recipients

of the ISO 14001 Environmental

Management Certificate that portray

our Eco-friendly Manufacturing Processes

and Commitment, to be a Responsible Corporate Leader’’


CHAIRMAN’S MESSAGECHAIRMAN’S MESSAGE

operating costs. These include measures to improve our collections and reduce the risk of debtor default, as well as cost reduction measures. These strategies are expected to yield results in the ensuing year.

Our valued shareholders will recall the renewed business model we initiated in previous years, centered on a paradigm shift from a single product offering to diversified investments, thus creating long-term value for our shareholders. This year we increased our holding in Sierra Power (Pvt) Limited to approximately 88%, which thereby becomes a subsidiary of the Company. Sierra Power (Pvt) Limited is engaged in mini-hydro project activities, with commercial operations expected to commence in 2013. Our other major investment in Sierra Industries (Pvt) Limited, a company set up for the manufacture of PVC Pipes, primarily for distribution of portable water, is expected to commence business shortly. We are confident that with the commissioning of these projects our shareholders would derive considerable value on these investments.

Our associate company T & G Lanka (Pvt.) Limited, engaged in the import, assemble and re-export of patch cables, experienced a good year, with a reported two-fold increase in capacity. We intend to intensify our presence in the manufacture of related components in the local market in the ensuing year.

The year ahead, though likely to present fresh challenges, offers considerable hope. The effect of the recent electricity hike would be borne to light next year and uncertainties associated with raw material prices as well as the stability of the local currency are likely challenges.

While we are mindful of these difficulties and our plans for the year ahead will necessarily be formulated in this

As a corollary, post-tax profits of the Company were badly hurt, plummeting from Rs.128.73 million a year ago to Rs.16.52 million this year, a drop of 87.2.%, while Group post-tax profits plunged from Rs.120.33 million in 2012 to reflect a loss of Rs.23.18 million this year, a steep drop of 119.2%. Nonetheless, shareholder worth measured in terms of Group net assets per share steadily appreciated from Rs.2.45 in 2010/11 to Rs.2.50 last year and now to Rs.3.08 this year, reflecting the long-term enhancement in value created by the Company for its esteemed shareholders. An insight into the performance of the business is given in the Managing Director’s Report.

Awards and Accolades Continue

Strengthening our brand value and adding to the several awards and accolades we received last year, I am happy to report that this year we have been the proud recipients of the ISO 14001 Environmental Management Certificate that portray our eco-friendly manufacturing processes and commitment to be a responsible corporate leader. Through this certification we not only reap environmental benefits, but also operational, marketing and financial benefits through costs reductions, elimination of waste and improved marketing efficiency.

In addition, we were once again awarded the “CNCI Achiever of Industrial Excellence Merit Award” for excellence in the industrial sector and for enhanced quality standards, productivity, employee benefits, labour relations and adherence to statutory requirements thus contributing considerably to the development of the local economy.

Strategy and Prospects

We have this year implemented several measures as part of our sustained efforts to improve operational efficiency and reduce

context, we are buoyed by recent measures implemented to stimulate economic growth, that include a downward adjustment of policy interest rates. The encouraging environment aimed at promoting the issue of corporate debt securities listed on the Colombo Stock Exchange and the opportunity afforded for corporate entities to borrow up to US$ 10 million per annum over 3 years from overseas sources sans exchange control approval are other favourable indications. On our part, we will continue to harness synergies associated with the impeccable Sierra brand name whilst continuing to operate prudently and as a responsible corporate entity.

Appreciations

I wish to express my sincere gratitude to my Colleagues on the Board for their invaluable counsel and guidance throughout our journey. I also wish to express my appreciation of the commendable work done by our dedicated Managing Director, who ably led our team in this difficult year. A special word of thanks to our bankers, customers and business partners for their unstinted support and in conclusion, may I state my heartfelt appreciation to our invaluable shareholders for the strong support and trust placed in our Company. I assure you of our untiring quest to achieve lasting value for all stakeholders.

Priyantha Perera

Chairman

Colombo

10th July, 2013


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7MANAGING DIRECTOR’S REVIEW OF THE OPERATIONS

The operating environment was clouded in the wake of Central Bank imposing tough measures to curb excessive credit growth as well as high imports and thereby control the nation’s skewed balance of payments. Financial market conditions were constrained during the better part of the year, burdened by the ceiling placed on bank credit growth, depleted market liquidity, high policy interest rates and a steadily rising prime lending rate (AWPLR). Notwithstanding the above, our efficient funding strategies served to minimize interest cost escalations, as evidenced by the Company’s net finance costs, after adjusting for interest income and exchange gains, that rose marginally to represent a mere 6.5% of turnover in 2013 compared to 6.2% in 2012.

The introduction of low priced, substandard products by new entrants to the market, meantime, intensified market competition. These substandard products manufactured using re-cycled copper instead of virgin copper, lack SLSI standardization and pose a severe threat to the industry. The levy of Cess on the import of steel wires and Aluminium rods has placed our company at a further disadvantage, considering that a similar tariff was not imposed on ingots, the core raw material imported by our competitors. This has tilted the level playing field, a fact we have brought to the attention of the authorities. Meanwhile the increase in cement prices not only posed major obstacles to the construction industry, but also hindered the growth of the overall cable manufacturing industry, an integral value chain player of the construction industry.

Timely internal measures that include cost control and inventory control measures, served to somewhat alleviate the above drawbacks. The introduction of a meter marked machine, in particular, served to increase efficiency of heavy cables inventory management.

Nonetheless, despite the Company continuing to report a profit this year, pre-tax profits declined from Rs.150.1 million a year ago to Rs.18.8 million

MANAGING DIRECTOR’S REVIEW OF THE OPERATIONS

The construction industry gathered momentum this year, with massive infrastructure projects underway across the country, primarily

in the areas of road development, port, power, airport and rural infrastructure development, alongside several large scale hotels, shopping mall and condominium projects. However, the anticipated gain to local cable manufacturers, regrettably, failed to materialize. Infrastructure projects were in the main awarded to foreign contractors, particularly China, who were clearly inclined to import core construction material such as wires and cables from their own country, leaving local manufacturers out of the fray. Moreover, the lackluster macroeconomic conditions hampered the growth of our key market segments such as housing, while on-going construction projects were mainly focused on road development and water supply.

Tough monetary and fiscal measures adopted by the Central Bank of Sri Lanka in the preceding year, while paying dividends, led to a deceleration of economic growth during 2012. Our own performance this year mirrors the trend associated with the above uninspiring conditions, as we end the year on a somewhat subdued, less than anticipated note.

Performance Amidst External Challenges

This has been a year of mixed results. It was a year in which the Company Net Assets per Share appreciated by 25% from Rs.2.51 last year to Rs.3.14 this year,

Rs.

Net Assets Per Share (Company)

2013

2012

2011

2010

2009

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

a notable value addition to shareholders. Moreover, we achieved several internal goals in terms of cost reduction and operational efficiency.

Nevertheless, the volatility in the global environment coupled with a challenging domestic operating environment thwarted our growth plans, triggering an adverse impact on bottom line performance. As a result, Gross Profit of the Company dipped by 35.3% from Rs.461.6 million a year ago to Rs.298.8 million this year. Gross Profit of the Group echoed this trend, declining by 34.5%, from Rs.465.4 million last year to Rs.305.0 million this year.

Top line growth was weakened as anticipated business especially in the housing market segment failed to take-off. The drop in export sales arising from the completion of a large export order in the early part of the year also affected top line performance, as did our strategy to restrain local sales in the dealer market. Sales through local dealer market were strategically reduced this year due to the persistent setback in collection associated with credit sales that affected our cash flows and operational efficiency. The dealer market is heavily reliant on debt collections from state institutions and delays in such collections preclude them from timely discharge of their obligations towards us.

Operating margins were further oppressed due to rising raw material prices, attributed primarily to the depreciation of the local currency. With Central Bank limiting intervention in the foreign exchange market, the local currency depreciated in the early part of the year, to as much as Rs.132 to the US dollar and overall by 10.4% for the year ended 2012. Fierce market competition prevents us from compensating the rise in raw material costs through price adjustments. In contrast to international markets that adopt a pricing formula capturing fluctuations in both raw material prices and the exchange rate, the domestic market resorts to a fixed pricing formula, leaving little room to cushion cost related shocks.


this year, a reduction of 87.5%, while post tax profits dropped by 87.2% from Rs.128.7 million in 2011/12 to Rs.16.5 million in 2012/13.

The Group, meanwhile, reported a pre-tax loss of Rs.18.1 million for the year, down from a profit of Rs.143.1 million a year ago. Post tax, the Group reported a loss of Rs.23.18 million this year compared to a profit of Rs.120.33 million in 2011/12. Net Profit margins of the Group were pressurized due to operating costs, in particular finance costs, incurred on the Company’s longer-term investments in subsidiaries and associate companies. Our investment in Sierra Power (Pvt) Limited is to construct a hydro-power plant, while Sierra Industries (Pvt) Limited,

MANAGING DIRECTOR’S REVIEW OF THE OPERATIONSMANAGING DIRECTOR’S REVIEW OF THE OPERATIONS

%

Wastage Comparison

2012

2011

2010

2009

0.0

0.5

1.0

1.5

is established for the manufacture of UPVC pipes for water supply and drainage projects, telecommunication projects as well as for industries and buildings. Sierra Industries (Pvt) Limited plans to venture into the manufacture of fittings shortly. It is pertinent to note that these investments would diversify and broad-base the Group’s revenue base, which we deem a prudent strategy in the context of the intense competition and thinning margins associated with our existing product portfolio. However, the gestation period involved is likely to hinder performance in the shorter term.

Focus in the Year Ahead

I am happy to note that our top line growth strategy is likely to be boosted with the revival of a key export segment in the ensuing year, thus providing us with a platform for growth. Our continuous quest for cost control will be a key strategy to be pursued. The construction industry remains optimistic that the boom in infrastructure development will soon cascade to other critical areas such as housing, commercial and civil construction, the benefits of which could be reaped by our company. We remain hopeful that the nation’s present tie-ups with overseas contractors for major construction projects would be reviewed considering the long-term benefits to local contractors. Measures introduced to stimulate the domestic economy

including the low interest rate outlook in the ensuing year, stand us in good stead as such measures will spur activity in our core business segments such as housing and commercial construction.

Nonetheless we are confident that our fundamental strategy to diversify into alternate key economic subsectors would undoubtedly mitigate narrowing margins on our existing portfolio and broad-base cash flow sources.

A Word of Thanks

I would like to state my appreciation to the Chairman and Co-Directors for their unwavering support and guidance. My gratitude is due to our team for their hard work in trying circumstances. In conclusion, I wish to pay tribute to our suppliers, customers, banks and business partners who are an integral part of our growth and share in our success over the medium to longer-term.

D. Shamendra Panditha

Managing Director

Colombo

10th July, 2013


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9REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANYREPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

The Directors of Sierra Cables PLC., have pleasure in submitting their report together with the Audited Financial Statements of the

Company for the year ended 31st March 2013 and the Auditors’ Report thereon.

Review of Performance for the year ended 31st March 2013

The operations of the Company for the year ended 31st March 2013 are reviewed in the Chairman’s Report.

Principal Activities

Principal activities of the Company are:-

1. To carry on the business of manufacturers of all kinds of cables, wires and conductors from aluminium, copper, steel or any other metal or material including insulated, sheathed and armoured cables, wires and conductors for transmitting electricity and other types of power and telecommunications and for any other purpose.

2. To carry on the business of manufacturers of insulators, sheaths, conduits and tubes from any natural chemical or synthetic substance or any metal for the purpose of housing and protecting such cables, wires and conductors.

3. To carry on the business of electricians, electrical engineers and manufacturers of all kinds of machinery, equipment and apparatus including accumulators, lamps, meters, engines, dynamos, motors, switches, plugs, adapters, regulators, fuse boxes and batteries and telecommunication apparatus and equipment of every kind.

4. To carry on the business of importers, exporters, wholesale & retail dealers, stockists of all kinds of raw materials, wires, cables, machinery, apparatus goods and materials of all kinds.

5. To carry on the business relating to the rolling, mining, casting, smelting and working of minerals, the production and working of metals and the production, manufacture and preparation of any other items which may be conveniently combined with the business of the Company.

Financial Results

For the year ended

31st March

Group Company2013

Rs.2012

Rs.2013

Rs.2012

Rs.

RestatedRevenue 2,141,353,995 2,476,058,520 2,055,318,338 2,462,318,846 Cost of Sales (1,836,300,771) (2,010,583,298) (1,756,473,539) (2,000,713,159)Gross Profit 305,053,224 465,475,222 298,844,799 461,605,687 Other Income 6,137,840 24,999,838 6,137,840 33,217,995 Selling and Distribution Expenses (103,030,304) (104,159,628) (88,436,991) (104,168,971)Administrative Expenses (65,358,044) (68,356,157) (62,297,207) (67,515,722)Other Operating Expenses (2,515,236) (18,458,772) (2,515,236) (20,000,000)Profit from Operations 140,287,480 299,500,503 151,733,205 303,138,989 Net Finance Costs (158,354,069) (154,135,289) (132,932,082) (153,004,731)Profit/(Loss) Before Associate Companies’ Share of Loss (18,066,589) 145,365,214 18,801,123 150,134,258 Share of Loss of Associate Companies (25,139) (2,281,440) - -Profit/(Loss) Before Taxation (18,091,728) 143,083,774 18,801,123 150,134,258 Income Tax Expense (5,089,705) (22,749,886) (2,274,264) (21,398,173)Profit/(Loss) for the Year (23,181,433) 120,333,888 16,526,859 128,736,085 Other Comprehensive IncomeNet Change in Fair Value of Available-for-Sale Investments (9,853,492) (40,793,935) (9,853,492) (40,793,935)Revaluation Surplus on Property, Plant and Equipment 430,075,011 - 430,075,011 -Deferred Tax Impact on Revaluation Surplus on Property, Plant and Equipment (97,136,079) - (97,136,079) -

Other Comprehensive Income for the Year, Net of Income Tax 323,085,440 (40,793,935) 323,085,440 (40,793,935)Total Comprehensive Income for the Year 299,904,007 79,539,953 339,612,299 87,942,150 Profit Attributable to :Owners of the Company (11,313,227) 120,882,208 16,526,859 128,736,085 Non-Controlling Interests (11,868,206) (548,320) - -

(23,181,433) 120,333,888 16,526,859 128,736,085 Total Comprehensive Income Attributable to:Owners of the Company 311,772,213 80,088,273 339,612,299 87,942,150 Non-Controlling Interests (11,868,206) (548,320) - -

299,904,007 79,539,953 339,612,299 87,942,150 Basic Earnings/(Loss) Per Share (Rs.) (0.02) 0.22 0.03 0.24

Financial Statements

The Financial Statements of the Company are given in pages 31 to 67.

Auditors’ Report

The Independent Auditors’ Report on the Financial Statements is given in page 31.

Accounting Policies

The Accounting Policies adopted in the preparation of Financial Statements are given on pages 37 to 44. There were no material changes in the Accounting Policies adopted.

Interest Register

The Company maintains an Interest Register as required by the Companies Act

No.07 of 2007. The information pertaining to Directors interest in contracts and their share ownership are disclosed in the Interest Register.

Directors’ Remuneration and Other Benefits

Directors’ Remuneration in respect of the Company for the financial year ended 31st March 2013 is given in Note 7 to the Financial Statements.

Property, Plant and Equipment

Any analysis of the Property, Plant and Equipment of the Company is set out in Note 11 to the Financial Statements on page 47.


REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

Directors’ Interest in Shares of the Company

Names of Director As at31-03-2013

As at31-03-2012

Mr. W.A.P. Perera 3,920,510 3,920,510

Mr. D.S. Panditha 17,022,950 17,022,950

Mr. E.A.D.T.B. Perera 10 10

Ms. G.S.M. Irugalbandara 1,709,800 1,709,800

Mr. D.N.N. Lokuge 10 10

Mr. J.H.P. Ratnayeke Nil Nil

Dr. D.G.K.E. Weerapperuma Nil Nil

Mr. P.R. Saldin Nil

Prof. A.K.W. Jayawardane Nil

Mr. F.A.W. Irugalbandara (Alternate Director) 200,010 10

Ms. K.A. Suraweera (Alternate Director) Nil Nil

Eng. B.W.N. Rupasinghe Nil


Investments

Details of Investments held by the Company are disclosed in Note 14, 15, 16 to the Financial Statements on page 49, 50, 51.

Directors

The Directors of the Company for the year under review were as follows:

Mr. W.A.P. Perera (Chairman)

Mr. D.N.N. Lokuge (Director and Alternate Director to D.S. Panditha)

Mr. E.A.D.T.B. Perera

Mr. D.S. Panditha

Mr. J.H.P. Ratnayeke


Mr. D.S.K. Amarasekera (Resigned with effect from 31st January 2013)

Ms. G.S.M. Irugalbandara

Eng. B.W.N. Rupasinghe


Mr. P.R. Saldin

Mr. F.A.W. Irugalbandara (Alternate Director to W.A.P. Perera)

Ms. K.A. Suraweera (Alternate Director to E.A.D.T.B. Perera)

Retirement by Rotation

Mr. E.A.T.D.B. Perera and Mr. D.S. Panditha retire by rotation in terms of Article 91 of the Articles of Association of the Company and being eligible, offer themselves for re-election.

Eng. B.W.N. Rupasinghe, Prof. A.K.W. Jayawardane and Mr. P.R. Saldin retire by rotation in terms of Article 97 of the Articles of Association of the Company and being eligible, offer themselves for re-election.

Donations

There were no donations made by the Company during the period under review.

Auditors

The accounts for the year ended 31st March 2013 have been audited by Messrs KPMG, Chartered Accountants, who offer themselves for re-appointment. In accordance with the Companies Act No.07 of 2007 a resolution relating to their re-appointment and authorizing the Directors to determine their remuneration will be proposed at the forthcoming Annual General Meeting.

Shareholders

The distribution and analysis of shareholdings as at 31st March 2013:

Resident (98.51%) Non-Resident (1.49%)

From ToNo. of

ShareholdersNo. of

Shares % No. of

ShareholdersNo. of

Shares %

1 - 1,000 15,292 14,292,176 2.66 9 6,400 0.00

1,001 - 10,000 7,654 18,784,172 3.49 22 120,300 0.02

10,001 - 100,000 1,143 35,938,809 6.69 14 572,654 0.11

100,001 - 1,000,000 165 41,482,575 7.72 5 2,650,000 0.49

over 1,000,000 23 418,994,989 77.95 2 4,670,355 0.87

Total 24,277 529,492,721 98.51 52 8,019,709 1.49

Analysis of Shareholders No. of Shareholders No. of Shares %

Resident 24,277 529,492,721 98.51

Non-Resident 52 8,019,709 1.49

Total 24,329 537,512,430 100.00

Analysis of Shareholders No. of Shareholders No. of Shares %

Individual 23,982 141,106,046 26.25

Institutional 347 396,406,384 73.75

Total 24,329 537,512,430 100.00

The Auditors Messrs KPMG, Chartered Accountants were paid Rs.684,000/-(2011/2012 - Rs.634,000/-) as audit fees by the Group Companies. In addition, they were paid Rs.383,853/- (2011/2012 - Rs.51,000/-) by the Group Companies for non-audit related work.

As far as the Directors are aware the Auditors do not have any relationship (other than that of an Auditor) with the Company other than those disclosed above. The Auditors also do not have any interest in the Company.


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11REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

20 Largest Holders of Equity

Name of Shareholder No. of Shares

31-03-13

% ofIssued

Capital

No. of Shares

31-03-12

% ofIssued

Capital

1. Sierra Holdings (Private) Limited

312,335,490 58.11 312,335,490 58.11

2. Browns Investments PLC. 32,210,943 5.99 32,202,953 5.99

3. Mr. Daya Shamendra Panditha 17,022,950 3.17 17,022,950 3.17

4. Employees’ Provident Fund 8,113,032 1.51 8,061,080 1.50

5. Seylan Bank PLC - A/C No. 3 7,585,000 1.41 7,949,900 1.48

6. Mr. Shanker Varadananda Somasunderam

5,061,400 0.94 5,061,400 0.94

7. Mr. Abeyratna Banda Sarath Herath

5,000,000 0.93 5,000,000 0.93

8. Mr. Wahalathanthrige Anil Priyantha Perera

3,920,510 0.73 3,920,510 0.73

9. Mr. Tranz Dominion, L.L.C. 3,500,000 0.65 3,500,000 0.65

10. Mr. Wickramasinghe Arachchige Kassapa Dewamitta Saparamadu

3,488,000 0.65 3,488,000 0.65

11. Nuwara Eliya Property Developers (Private) Limited

2,841,000 0.53 2,841,000 0.53

12. Seylan Bank Limited/Govindasamy Ramanan

2,211,300 0.41 2,050,000 0.38

13. Mr. Munidasa Ilamperuma 2,050,000 0.38 2,035,700 0.38

14. Seylan Bank PLC./ R.T. Devasurendra

2,035,700 0.38 2,000,000 0.37

15. Nexus Nubart Holdings (Private) Limited

2,000,000 0.37 1,965,500 0.37

16. Commercial Bank of Ceylon PLC./Nine Capital (Private) Limited

1,804,600 0.34 1,804,600 0.34

17. Mr. Bathiya Chandana Ranaweera 1,800,000 0.33 1,800,000 0.33

18. Mr. Yonmerenne Simon Hewage Indrakumara Silva

1,746,364 0.32 1,746,364 0.32

19. Ms. Genevive Sujivie Madhuni Irugalbandara

1,709,800 0.32 1,737,300 0.32

20. Mr. Rajinda Goonewardene Seneviratne

1,423,600 0,26 1,709,800 0.32

TOTAL 417,859,689 77.74 418,232,547 77.81

Capital Commitments

No material financial commitments were outstanding as at 31st March 2013.

Contingent Liabilities

There were no material contingent liabilities outstanding as at 31st March 2013.

Events Occurring After the Reporting Date

No circumstances have arisen since the reporting date, which require adjustments to or disclosure in the accounts.

Corporate Governance

Non-Executive Independent Directors of the Company for the year under review were;




Mr. P.R. Saldin

Audit Committee for the year under review comprised of;

Dr. D.G.K.E. Weerapperuma (Chairman)


Mr. P.R. Saldin


Remuneration Committee for the year under review comprised of;




Secretaries

P.R. SECRETARIAL SERVICES (PRIVATE) LIMITED

Colombo

Priyantha Perera D.S. Panditha

Director Director

10th July, 2013



REPORT OF THE AUDIT COMMITTEEREPORT OF THE AUDIT COMMITTEE

The Role of the Audit Committee of Sierra Cables PLC

1. Assist the Board of Directors in fulfilling its overall responsibilities for the financial reporting process. Namely;

� The integrity of financial statements in accordance with Sri Lanka Financial Reporting Standards (SLFRS/LKAS)

� The compliance with legal and regulatory requirements of Companies Act and other relevant financial reporting related Regulations and requirements

� The External Auditor’s independence and performance.

� The performance review of the internal audit function to ensure that the Company’s internal controls and risk management systems are adequate.

2. Review the system of internal control and risk management

3. Monitor the effectiveness of the internal audit function

4. Review the Company’s process for monitoring compliance with laws and regulations.

5. Review the independence and performance of the external auditors

6. To make recommendations to the board on the appointment of external auditors and recommend their remuneration and terms of engagement

Audit Committee Composition

The audit committee mainly looks at legal and financial compliance of the company. Both these areas will cover the accounting practices, financial control, risk management, etc. In order to look into these matters responsibly the board has appointed four Non-Executive Independent Directors. They are

� Dr. D.G.K.E. Weerapperuma (Chairman)

� Prof. A.K.W. Jayawardane

� Mr. P.R. Saldin

� Eng. B.W.N. Rupasinghe

Meetings

The Committee has met four times during the year. The meetings are attended by Executive Director, Chief Financial Officer by invitation and other Directors and Executives when required. The Chairman of the Committee comes with a vast experience. He is a fellow member of Charted Institute of Bankers, London and of the Charted Institute of Management Accountants.

Risks and Controls

During the last financial year, the Committee assessed the major business risks such as operational risks, market risks, and financial risks prevalent in the Company and advised the management on Sierra Cables PLC about the actions need to be taken to handle those risks in a more proactive manner.

Internal Controls

During its Audit Committee meetings, the Audit Committee reviewed the effectiveness and the accuracy of the internal control systems and the group’s approach to its exposure to the business and financial risks. Audit Committee will ensure the following benefits been achieved through the internal controlling system.

� Safeguard to the organization’s assets, growth use of proper authorization, routine checks, segregation of custody and recording duties and arithmetic and accounting controls.

� Boosts the efficiency in an organization and ensures orderly running of business through supervision of duties competent and reliable personnel define powers and managerial review and supervision. Organization will have up to date data to be used in managerial decision-making process.

� Facilitates efficient statutory audits by external auditors as it will act as a basis on which the auditors will perform his/her work, and as such this will reduce his/her tests and amount of time in the organization and thus less audit fees.

� Facilitate identification of inefficiency and outdated policies. It allows the organization to grow at a reasonable rate due to less fraud errors and inefficiency all of which retard the organization’s growth.

Financial Statements

The Audit Committee has reviewed the Group’s Quarterly Financial Statements, the Annual Report and Accounts for reliability, consistency and compliance with the Sri Lanka Accounting Standards and other statutory requirements, including the Companies Act, No.07 of 2007 prior to publishing.

External Auditors

The Audit Committee has reviewed and analyzed the other services provided by the External Auditors to the group to ensure their independence as Auditors has not been compromised.

The Committee reviewed the Management Letters issued by the External Auditors and the Management response thereto.

The Audit Committee has recommended to the Board of Directors that KPMG, Chartered Accountants be re-appointed as Auditors for the financial year ending 31st March, 2014 subject to the approval of the shareholders at the next Annual General Meeting.

Conclusion

The Audit Committee is satisfied that the control environment prevailing in the organization provides reasonable, but not absolute assurance that the financial position of the Group is satisfactory and that systems are in place to minimize the impact of identifiable risks and that the Listing Rules of the Colombo Stock Exchange have been met.


Chairman - Audit Committee

10th July, 2013


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13REPORT OF THE REMUNERATION COMMITTEEREPORT OF THE REMUNERATION COMMITTEE

The Remuneration Committee looks forward to attract and retain directors, executives and employees for the company. Also

through the decisions of Remuneration Committee it is expected to obtain the highest level of contribution for the achievement of goals and objectives of the company. There by it expects to create a good value for the shareholders.

The Sierra Cables PLC’s Remuneration Committee consists of three Non-Executive Independent Directors as follows;




Scope

A Remuneration Committee was established by Sierra Cables PLC’s Board of Directors to ensure that remuneration arrangements support the strategic aims of a business and enable the recruitment, motivation and retention of senior executives while also complying with the requirements of regulation.

The Remuneration Committee should have delegated responsibility for setting remuneration for all Executive Directors and the Chairman, including pension rights and any compensation payments. The Committee should also recommend and monitor the level and structure of remuneration for senior management. The definition of senior management for this purpose should be determined by the board but should normally include the first layer of management below board level.

Meetings

The Committee met twice during the financial year under review. The decisions approved and recommended are presented in a report and it has been approved by the Board of Directors.

Professional Advice

The Committee has the authority to seek external professional advice on matters within its purview and act in a best professional manner.


Chairman - Remuneration Committee

10th July, 2013


LSHF(Low Smoke Halogen Free)

Unarmoured Power Cables

LV cables with LSFZH, thermosetting insulation which under exposure of to fire generate slow emission of smoke, fumes and toxic gasses and zero halogens. The unarmoured cables often lay in places where there are higher threats of fire.

LSHF (Low Smoke Halogen Free)

Armourd Power Cables

LV cables with LSFZH, thermosetting insulation which under exposure of to fire generate low emission of smoke, fumes and toxic gasses and zero halogens. Commonly use in places where there are lot of environmental hazard including fire.

PRODUCT PORTFOLIO

Armoured Cables

Copper conductors insulated with PVC or XLPE, steel wire armoured and PVC sheathed, with a voltage rating of 600/1000v. Utilised for the distribution of electricity within factories and buildings, manufactured to BS 6346 and BS 5467 standards.

Aerial Bundle Conductors

Aerial Bundle Conductors are self-supporting insulated cables used for low-voltage electricity distribution. Comprise of three phase conductors (aluminium) and a neutral conductor (alloy aluminium) bundled together with or without street lamp wires. The neutral conductor also acts as a messenger or a load bearer. Manufactured to National French standard NFC 33:209.

Unarmoured Cables (Multi-Core)

Copper conductors insulated with PVC or XLPE and PVC sheathed, with a voltage rating of 600/1000v. Utilised for the distribution of electricity within factories and buildings, manufactured to BS 6346 and BS 5467 standards.

Single & Multi-Core Unarmoured Cables

Solid or stranded copper conductors with PVC insulation and sheathing, with a voltage rating of 300/500v, 450/750v. Utilised for in-house wiring distribution of electricity within buildings and factories. Manufactured to BS 6004 and SLS 733 standards.

Earth Cables

Solid, stranded or flexible copper conductors with PVC insulation, non sheathed with a voltage rating of 450/750v. Single-core Earth conductors used as general-purpose cables manufactured to BS 6004 and SLS 733 standards.

Auto Cables

All Aluminium Conductors PVC insulated single-core auto cables, used in motor vehicles and also for general wiring.

Flexible Cables

PVC insulated and sheathed flexible cables with a voltage rating of 300/300v and 300/500v, used as general-purpose cables. Manufactured to BS 6500 and SLS 1143 standards.

Control Cables

Control Cables with copper conductors, with PVC insulation and sheathing or with PVC insulation and sheathing and added steel wire armouring. Manufactured according to BS 6346 specifications with a voltage rating of 600/1000v, utilized for transmissions to control units in industry, railways, traffic signals, thermal power and hydro power systems.

Telecommunication Cables

PVC insulated, self-supporting one-pair dropwire and polyethylene insulated copper conductors used as telecommunication distribution cables. Manufactured to BS 3573 and SLT standards.

Co-axial Cables

Annealed copper conductors with polyethylene insulated and copper braided co-axial cables, used as television antenna wires. Manufactured to JIS standards.

Aluminium / PVC Cables

PVC insulated aluminum service main-wire with a voltage rating of 300/500v. Single-core, twin and flat-twin cables manufactured to BS 6004 and CEB specifications.

Aluminium Conductors (AAC & ACSR)

All Aluminium Conductors (AAC) and Aluminium Conductors Steel Reinforced (ACSR), used for low, medium and high-voltage electricity transmission and distribution. Manufactured to SLS 750, BS 215 (Parts I & II) and ASTM standards.

PRODUCT PORTFOLIO


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15

As a responsible and ethical corporate citizen, Sierra Cables PLC. carries out its business based on set of values, where

each member of Sierra Cables family is committed to follow.

Quality

We are committed to produce highest quality products for our customers.

Service

We always strive for excellence in serving our customers and making sure that they are beyond the satisfactory level.

Productivity

As a manufacturer, we always try to take the maximum output of resources without exploiting them.

Integrity

We believe in truth, justice and fair play together with professionalism above everything.

Passion

We will embrace challenges with passion and aggressively pursue our goals to reach the pinnacle.

OUR VALUESOUR VALUES


QUALITY MANAGEMENT

Our Quality Policy

We Sierra Cables drive all our businesses, to assure higher satisfactory level of our customers with their needs and expectations, which abide with the modern standards and regulatory requirements. This will be attained through strict discipline of the production process which conducts by our quality management system executed at Sierra Cables.

Our Quality Objectives

QUALITY MANAGEMENT

S

A

afety

I mprovement

E fficiency

R eliability

R esourcefulness

ssured ProductQuality

ISO 14001 Certification

ISO 14001 certification is all about Environmental Management. It offers practical tools for companies and organizations looking to identify and control their environmental impact and constantly improve their environmental performance. Below examples show the improvements of the process which was gained through acquiring ISO 14001 Certification;

Operational Benefits

• Greater employee involvement inbusiness operations with a more motivated workforce

• Easier to obtain operational permitsand authorizations

• Assists indevelopingandtransferringtechnology within the company

• Helpsreducepollution

• Feweroperatingcosts

• Savings from safer workplaceconditions

• Reduction of costs associated withemissions, discharges, waste handling, transport & disposal

• Improvementsintheproductasaresultof process changes

• Saferproducts

Our products has received the following standard certificates:

Vegetable Garden

Environmental Benefits

• Minimizes hazardous and non-hazardous waste

• Conserves natural resources -electricity, gas, space and water with resultant cost savings

• Prevents pollution and reduceswastage

Marketing Benefits

• Demonstratestocustomersthatthefirmhas met environmental expectations

• Meets potential national andinternational government purchasing requirements

• Delivers profits from marketing “green” products

• Providesacompetitivemarketingtool

• Improvesinternationalcompetitiveness

Planting Hundred Teak Plants

Compost Site

SLS 1143:2008Specification for

PVC Insulation Flexible Cords. (1983)

SLS 733:2005PVC Insulated, Non-Armoured Cables

with Copper Conductors for voltages up to and including 450/750V.

Normally for Electric Power,Lighting and Internal Wiring. (1983)

SLS 750Specification for

Aluminum Conductors forOverhead Power Transmission. (1983)

SLS 1186Stranded Copper Conductors,

Steel Wire Armour,XLPE Insulated and PVC Sheathed4 Core Armoured Electric Cables.

ISO 9001:2008Manufacture of Electric Cables,

Conductors, Aerial Bundle Conductors,Electric Winding Wires,

Telecommunication Cablesfor interior use, Drop Wire

and RF Cables as perpre-determined specification. (2001)


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17QUALITY MANAGEMENT

Financial Benefits

• Improves the organization’srelationship with insurance companies

• Elimination of costs associated withconformance to conflicting national standards

• Process cost savings by reduction ofmaterial and energy input

• Satisfying investor / shareholdercriteria

• Helpsreduceliabilityandrisk

• Improvedaccesstocapital

Gas Cylinder

Spill Out Oil Tray

CFL Disposal Box

Copper (Cu) Recycling Machine

QUALITY MANAGEMENT


HUMAN RESOURCES

At Sierra Cables, we could not build a good team of working professionals without good Human Resources. The key functions of the Human Resources Management (HRM) team of Sierra Cables include recruiting people, training them, performance appraisals, motivating employees as well as workplace

communication, workplace safety, and much more.

As a socially responsible corporate citizen we believe that accountability begins ‘at home’. Thus, we continue to create a work environment that focuses on strengthening our human capital and assisting our employees to better themselves both academically and professionally.

Labour Turnover

Throughout the last year, we manage to reduce our labour turnover percentage to a greater extent through our properly planned Human Resource Strategy. Most of the time we empower our work force to do their tasks on their own. It’s a strategy where worker get a greater autonomy to perform his task under close supervision.

HUMAN RESOURCES

1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep

1.27 3.87 1.70 1.48 1.79 1.56

1-Oct 1-Nov 1-Dec 1-Jan 1-Feb 1-Mar

1.40 1.38 1.27 1.18 1.15 1.09

1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep

1.11 0.12 1.05 1.95 3.00 3.67

1-Oct 1-Nov 1-Dec 1-Jan 1-Feb 1-Mar

4.28 4.97 5.65 6.12 7.06 8.11

35%

5%

39%

10%

11%

Age Analysis of Employees

18-25 Years26-35 Years36-40 Years41-50 YearsAbove 50 Years

Service Period Analysis

Below 1 Year1-2 Years3-5 Years6-10 YearsAbove 10 Years

23%

15%

29%

22%

11%

21%

11%

4%3%3%

29%

11%

10%

6%

Staff Composition

DirectorsManagersExecutivesStaffOperaters

Trainee OperatersMaintenance StaffDriversHelpers

0.00

1.50

2.00

2.50

3.00

3.50

4.00

1-Ap

r

1-M

ay

1-Ju

n

1-Ju

l

1-Au

g

1-Se

p

1-Oc

t

1-No

v

1-De

c

1-Ja

n

1-Fe

b

1-M

ar

Labour Turnover%

Series 1

1-Ap

r

1-M

ay

1-Ju

n

1-Ju

l

1-Au

g

1-Se

p

1-Oc

t

1-No

v

1-De

c

1-Ja

n

1-Fe

b

1-M

ar

Average Training Man Hours Per PersonHrs.

Series 1

0.00

2.00

4.00

6.00

8.00

10.00


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19HUMAN RESOURCESHUMAN RESOURCES

Annual Get-together

Like previous times, this time too we celebrated our Annual get-together in Polonnaruwa, where we experienced the legacy of ancient kings who lived thousand years ago.

Wa

tchi

ng t

he P

olon

naru

wa

Arc

hite

ctur

al G

lory

Listening to the Guide Explanationof the Buddha Stupa

Rabbit Race of Kids below 5 Years

Families Relaxing at Parakrama Samudraya

Arangethram Dance by a Kid at the Party


CORPORATE SOCIAL RESPONSIBILITYCORPORATE SOCIAL RESPONSIBILITY

It is said that every business organization maintains an unseen contract with the society in which it runs. The contract specifies the terms

for the organization, for anything that is taken from the society; the organization has to pay back. Therefore, the company is bound by the society to give something useful in return for the raw materials, natural resources, capital and human resources obtained. This cycle will ensure the social balance that is prevalent so that the occupants of the society are happy and healthy. We strongly believe the Corporate Social Reponsibility (CSR) would help us.

Corporate Social Responsibility has now become part of our organization life. Mostly companies commit themselves for community development. However, our focus has pointed much towards school education. Because we believe a sound education can support for a better future and high level of community development.

We have provided stationery, uniforms and other school needs to the school children in the locality. This task is annually carried out by the human resource department. Further, we have provided schools with tables and chairs, and sponsored sports events in these schools.

Our core intention is to provide the children in the community a better way of life, by uplifting the education and help prevent the drop-outs. It was joyful to see the blooming smiles of the little ones convey a big thank you for us.


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21NEW INITIATIVES

PVC Plant

As we have promised we have started the battle of capturing the market. Though there is a high competition in the market, the strong Sierra brand name assures the customers a quality product at the market place.

The related diversification in the business will give us the advantages such as

� Economies of scale

� Ability of using existing knowledge base and technical know-how of pioneers in the PVC Pipes industry

� Ability of utilizing already developed distribution chain

� Ability of sharing overheads within two plants

� Ability of using existing brand name and the company image to market the Pipes

Product Portfolio of UPVC Pipes

As a blooming subsidiary company of sierra cables, Sierra industries manufactures a Full range of UPVC pipes ranging from 20mm to 280mm with associated fabricated and moulded fittings. At a glance our product range can be presented as below;

� Water pipes for working pressures of 2.5, 4, 6, and 10 bar.

� UPVC Pipes for Drainage and Irrigation purposes.

� Electrical Conduits.

NEW INITIATIVES

Karapalagama Mini Hydro Project

With the development of the country, the power necessity for industries as well as for households were also grown rapidly. The National power supply is battling to overcome with the massive demand for power requirement and as a corporate citizen and as a company looking forward for diversification we took the challenge of supplying electricity to the national grid.

We are happy to say that we have completed the approval stages of the project and started the construction.


SUSTAINABILITY REPORTSUSTAINABILITY REPORT

In 1987, the United Nations appointed the Brundtland Commission to discuss a topic that was relatively new, unappreciated. It was the first time the world came to know about sustainable development of natural resources. The

term” Sustainable Development” enlightened the world with the idea of development that meets the needs of the present without compromising the ability of future generations to meet their own needs. This rocked the world with rising awareness for the preservation of environmental resources and reduction of pollution.

In 1996, creating another milestone in history International Standards Organizations developed ISO 14001 Environmental Management System Standard to clearly specify companies on how to become environmentally friendly in their manufacturing and service provisioning. This was a marvelous opportunity for the companies as now they knew exactly what has to be done for the company to be part of the cause. At the same time the accreditation of the standard became a strong marketing tool and customers always recognized environmentally friendly producers.

Later on, the topic evolved to address not only the natural

environment, but the social needs as well. Thereby for a business organization, the idea spans towards the human capital of the company other than the natural capital and financial capital.

Being a Sri Lankan company we live by the rules of the environment anyway. Thus our concern for the environment will be more specific, accurate and optimum. As we promised in the last year we have obtained ISO 14001 certification for our company.

So far we have appointed cross functional teams specially in the production and maintenance departments to follow the duties. We have got the consultation of reputed specialists in the field. Their regular visits to the factory have given us with the proper guidance required. Our commitment for the cause have resulted us with the development of an environmental policy, action plan, segregation of duties for various teams along with training and educating the workforce regarding the new concept and its importance.

Apart from the new initiative we are continuing our strategies to increase energy efficiency, waste management, etc.


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23RISK MANAGEMENTRISK MANAGEMENT

The corporate world is inevitably comprised with many risks. They are the possibilities of failure that can make or break

an organization. The extent to which we are exposed to risk determines the extent of the return we get compensated. High exposure to risk gives high return for the company and vice versa. However, this is only a general rule and that is where the vitality of a competent management is arisen for the purpose of managing the risk at exceptional times.

Risk management is about identifying risks, developing solutions to overcome them and implementing strategies to reduce the impact. It gives special consideration for the experience possessed by the persons involved since the relative importance of a risk can be elaborated by highly experienced persons.

The risk management of the company is based on the level of risk appetite. At Sierra Cables our appetite is neither low nor high but moderate or more often above the moderate level. This has enabled us to accept the right level of risk suitable for the company avoiding unnecessary risk that could hinder the future of the company. Therefore risk management is a smooth process implemented by the company.

Sierra Cables Risk Management Process

It is required to identify possible risks in the environment and in the company from time to time. This will form a proactive mindset in the company amongst its members at any level. Thus the identification will involve the contributions from all employees. The top management that plays a main role in the risk management will commence its activities from this point onwards looking at issues with a broader perspective.

The next step is to analyze the risks and prioritize them accordingly. This is vital when we operate in a highly volatile environment as our resources need to be ready at any given time for the purpose. Mostly it is the top management that takes the initiative at this point clearing the path of the company for future objectives and goals. However, in the planning stage the middle level managers who are experts in various fields take part to form

a better plan. Their ideas together with experience will support to develop an action plan on how to face the future risks and take the action suitably.

The action taken for risks can be threefold. They are acceptance, avoidance and mitigation. The finalized action plan will now be implemented concentrating on taking any of the three actions specified above. It is not easy to implement if the planning has not been done well. Similarly the implementation demonstrates the quality of the previous stages of the risk management process.

The final step is crucial if we are to reap the benefits of risk management because it guarantees the implementation taking place according to the planned manner. At the same time controlling and monitoring stage also considers environmental changes to ensure the actions taken are complied according to the timely needs.

Risk

Man

agem

ent F

ram

ewor

k IDENTIFYING RISKS

ANALYSING & PRIORITIESTHE RISKS

PLANNING

IMPLEMENTING

CONTROLLING & MONITORING


RISK MANAGEMENTRISK MANAGEMENT

We have identified the below as key risks faced by the company.

Financial Risk Impact Mitigation Process

� Liquidity.

� Interest rates.

� Exchange rates.

� Credit collection.

� Main impact is on the working capital and profitability where as the sustainability of the company is affected.

� Monthly meetings with Sales Representatives to review on debt collection. Positive relationships with financial institutions in order to obtain lucrative rates.

� A separate method to assess the potential of customers in terms of their credit worthiness.

� Agreeing for call options.

� Looking for supplier credit to mitigate costly fluctuations in local interest rates.

Business Risk Impact Mitigation Process

� Market Risk. � Price changes can directly impact on the profit.

� When setting prices it is possible to match with raw material prices

� Setting sales targets considering company’s potential.

� Having a thorough idea on the trends in the market.

Operational Risk Impact Mitigation Process

� Health & safety of employees.

� Changes in environmental, international quality standards & regulatory environment.

� Impact on employees personal and work life.

� Future existence of the business.

� Employee performance evaluation scheme.

� Good relationships with employees through the activities of the employee welfare society.

� Providing training on industrial safety.

� Obtaining the ISO 9001:2000 standard.

� Obtaining the ISO 14001 standard.

Product Risk Impact Mitigation Process

� Customer satisfaction.

� Cost effectiveness.

� Decline in market share. � Maintaining SLS standard.

� Bidding with competitive prices.

� Proper testing to identify quality defects.

� Production planning on monthly basis.

Information Risk Impact Mitigation Process

� Timely & accurate information for decision making.

� Systems operation & application.

� Lack of accurate and timely decision making.

� Use of an ERP system for timely decision making.

� Data back-up procedure.

� Agreements with IT vendors for support and maintenance.

� Regular upgrading of the systems.


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25CORPORATE GOVERNANCECORPORATE GOVERNANCE

Sierra Cables is a company which is highly concentrated on the corporate governance aspect. Company is highly appreciates

and believes responsibilities and activities of a good corporate citizen. Company maintains a higher transparency in each and every activity it undertakes with the government and with the rest of the public. From the day it was listed, the Board of Directors understanding the importance of governance took steps to adhere to various guidelines. Specifically this includes the guidelines issued by regulatory bodies and legislation of the country such as institute of Chartered Accountants of Sri Lanka, Securities & Exchange Commission and the Companies Act of 2007.

The acts of the board are transparent and they are bounded by the directives issued by the CSE, regarding governance of companies. The board is appointed annually by the shareholders and the board seeks to achieve the objectives of the company on behalf of them. Lack of communication between the parties can lead to problems. Such that this concept was developed to ensure a good relationship between the shareholders, board of directors, the management and other stakeholders. Also at all times the board is obliged to act in the best interest of the company and there by enhance the shareholders’ wealth.

When the management takes part in governance in a responsible way it will provide a fundamental background for sound decision making and performance of the company. With this in mind the board always strikes a balance on the two dimensions, conformance and performance. Otherwise lack of concentration on either can yield a wrong doing from both aspects. Therefore, we believe that we have maintained the right level of governance while achieving the highest possible profit. Sierra Cables corporate governance framework can be demonstrated as follows.

Shareholders

Board of Directors

Managing Director/CEO

Appoint

Appoint

Appoint

Appoint

Report

Corp

orat

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erna

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ewor

kAuditors

Top Management

Board Committees(Audit & Remuneration)

The Board Balance

The responsibility of the Board of Directors is to operate the company by acting in a manner that reflects the best interest of the company. Ten Directors were appointed as the Board of Directors. Out of the ten, seven are Non-Executive Directors. Four out of the seven Non-Executive Directors are Independent Directors. All directors are veterans in their fields such as engineering, law, construction, marketing, finance and public administration. Their years of experiences are the reason for the continual success of the company.

Despite the varying levels of shareholding possessed by the directors, equality is a major fact that is prevalent at all times in the board. It is not compromised with the dominance of one or group of directors when decision making comes.

Chairman and Managing Director/ Chief Executive Officer

The Board is lead by the Chairman who is also an Executive Director. The Chairman’s leadership will take the company to unattainable heights with high strands of efficiency, effectiveness and professionalism. In an ever changing environment such a leadership is the core on directing and controlling the organization for better performance. The MD/CEO on the other hand handles a totally different set of duties and responsibilities. The MD/CEO will contemplate on improving the shareholder value by formulating strategy, evaluating its viability and implementing them to reach for the desired purposes.

Board Meetings

Board meetings are scheduled to be held every two months. In these meetings the board considers the performance of the company from many angles. The monthly financial performance, selling and distribution, key projects, investment opportunities, key risks faced, appointments, etc. are some of the areas thoroughly considered. This is also one of the main controlling techniques of the board.


CORPORATE GOVERNANCE

Responsibilities of the Board

The Board is responsible for

1. Enhancing shareholder wealth.

2. Planning and guiding the business towards meeting the set objectives.

3. Ensuring the interests of all stakeholders is considered in corporate decisions.

4. Formulating, communicating, and monitoring business policies, overall strategies and corporate goals to ensure sustained growth.

5. Assessing and approving the implementation of management and internal control systems.

6. Ensuring the compliance with all statutory and other obligations being met.

Audit Committee

The Audit Committee mainly looks at legal and financial compliance of the company. Both these areas will cover the accounting practices, financial control, risk management, etc. In order to look into these matters responsibly the board has appointed four Non-Executive Independent Directors.

They are,



Mr. P.R. Saldin


The Committee has met four times during the year. The meetings are attended by Executive Director, Chief Financial Officer by invitation and other Directors and Executives when required.

Duties and Responsibilities

Audit

1. Recommend the Board of the appointment and removal of external auditors and review their terms of engagement.

2. Determine with the external auditors, the audit plan and scope and their authority and responsibilities.

3. Oversee and appraise the quality of audits conducted and monitor their effectiveness.

4. Review external audit reports and recommendations and ensure appropriate management response to recommendations.

5. Monitor the relationship between management and the external auditors.

6. Review and assess the independency of the external auditor.

Accounting

� Monitor and review the adequacy of the company’s accounting system and internal control environment.

� Review the annual and semi-annual financial statements of the company, and make recommendations to the board.

� Determine company - specific accounting policies within the ambit of the accounting standards.

� Review significant transactions which are not a normal part of the company’s business.

Risk Management

� Identify and assess areas of risks which might impact on the company and research appropriate mitigations.

� Monitor, review and evaluates the adequacy and effectiveness of the company’s risk management controls, both internally and externally.

� Evaluate the effectiveness of the company’s business continuity plans.

� Evaluate the adequacy of the company’s insurance covers at least annually.

The Audit Committee has recommended to the Board of Directors that Messers. KPMG, Chartered Accountants to appointed as Auditors for the year ending 31st March, 2014 subject to the approval of the shareholders at the next annual general meeting.

Remuneration Committee

The Remuneration Committee looks forward to attract and retain directors, executives and employees for the company. Also through the decisions of Remuneration Committee it is expected to obtain the highest level of contribution for the achievement of goals and objectives of the company. There by it expects to create a good value for the shareholders.

The Sierra Cables PLCs Remuneration Committee consists of three Non-Executive Independent Directors as follows;




The main responsibilities of the Remuneration Committee is,

1. To review and approve Remuneration policy of the Company.

2. To advice on structuring Remuneration packages that enable the Company to attract, retain and motivate high calibre individuals with the requisite skills.

3. To recommend to the Board of Directors the Remuneration to be paid to the Executive Directors, Non-Executive Directors, their pre-requisites and allowances.

Internal Control

The Internal Control system encompasses the financial, operational, risk management, regulatory compliances of the company. Maintaining effective control is vital as it is the responsibility of the Board. All the sectors have different controls developed uniquely for themselves. Their discipline, commitment will ensure correct processes are maintained within the company. The effectiveness of these controls is reviewed regularly through the Management Review Meeting and Board Meetings. One of the main items heavily discussed in every Management Review Meeting is the Key Performance Indicators (KPI). It summarizes the performance of every department of the company on a monthly basis.

Even though all these controls are in place we cannot reject the fact that exceptions can appear in an unexpected manner. Therefore, either through preventive or corrective actions such situations should be managed. However, the ultimate expectations thus will be to develop and maintain accurate processes, information and customer satisfaction. Simply this will ensure maximization of shareholder wealth and the quality of company’s performance.



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27CORPORATE GOVERNANCE

Levels of Compliance with the CSE’s Listing Rules - Section 7.10, Rules on Corporate Governance

Rule Board of Directors Status

7.10.1(a) to (c) Correct number of Non-Executive Directors. Complied

7.10.2(a) Correct number of Independent Non-Executive Directors. Complied

7.10.2(b) Specified whether the Non-Executive Directors submitted a declaration annually of his/her Independence or Non-Independence to the Board of Directors.

Complied

7.10.3(a) Confirmed that the Board of Directors made an annual determination as to the Independence or Non-Independence of each Non-Executive Director base on the declaration mentioned above and other information available to the Board and states the names of Non-Executive Directors determined to the Independent.

Complied

7.10.3(b) If the Directors does not qualify as Independent, the Board taking in to account all the circumstances if of the opinion that the Non-Executive Director is Independent, the Board has specified, in annual report, the qualification not met under CSE listing rules and the basis for determining the Director to be Independent.

Complied

7.10.3(c) Published a small resume in the annual report, of each Director of the Board, which includes information on the nature of his/her expertise.

Complied

Rule Remuneration & Rumination Committee Status

7.10.5(a) The correct number of Independent Non-Executive Directors in the Rumination Committee. Complied

7.10.5(a) Specified whether a separate Remuneration Committee was formed or whether listed parents Remuneration Committee used.

Complied

7.10.5(c) Specified the names of the Directors comprising the Remuneration Committee (where the parent company’s Remuneration Committee, qualifies to function as the listed company’s Remuneration Committee, a statement in the annual report to this effect and disclosed the names of the Directors).

Complied

7.10.5(b) Disclosed the functions of the Remuneration Committee. Complied

7.10.5(a) Specified whether the Chairman of the Committee is a Non-Executive Director. Complied

7.10.5(c) Specified the aggregate remuneration paid to Executive and Non-Executive Directors in the annual report (Remuneration should include cash and all non-cash benefits paid in consideration of employment with the listed Entity).

Complied

Rule Contents under the Audit Committee Report Status

7.10.6(a) The correct number of Independent Non-Executive Directors in the Remuneration Committee. Complied

7.10.6(a) & (c) Specified whether a separate Audit Committee was formed or whether listed parent’s Audit Committee was used.

Complied

7.10.6(c) Specified whether the names of the Directors comprising the Audit Committee (where the parent company’s Audit Committee qualifies to functions as the listed company’s Audit Committee, a statement to this effect and disclose the names of the Directors).

Complied

7.10.6(b) Confirmed the functions of the Audit Committee. Complied

7.10.6(a) & (c) Specified whether the Chairman of the Committee is a Non-Executive Director. Complied

7.10.6(a) & (c) Specified whether the Chairman or 1 member of the Audit Committee is a member of a recognized Professional Accounting Body.

Complied

7.10.6(a) & (c) Specified whether the MD/CEO & CFO attend Audit Committee meeting, unless otherwise determined by the Audit Committee.

Complied

7.10.6(c) Specified the basis for determining External Auditors as being Independent. Complied



STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The responsibility of Directors in relation to the Financial Statements is set out in the following statement. The responsibility of

the auditors, in relation to the Financial Statements prepared in accordance with the provisions of the Companies Act No. 7 of 2007 and other statutes which are applicable to the preparation of Financial Statements are set out in the Independent Auditors’ Reports.

The Financial Statements comprise of:

� A Balance Sheet, which presents a true and fair view of the state of affairs of the Company and its subsidiaries as at the end of the financial year; and

� An Income Statement, which presents a true and fair view of the profit and loss of the Company and its subsidiaries for the financial year, which comply with the requirements of the Act.

The Directors are required to ensure that, in preparing these Financial Statements:

� The appropriate Accounting Policies have been selected and applied in consistent manner and material departures, if any, have been disclosed and explained;

� Requirements in the Sri Lanka Accounting Standards, Companies Act No.07 of 2007 and listing rules of the Colombo Stock Exchange, have been followed;

� Judgements and estimates have been made which are reasonable and prudent.

The Directors are also required to ensure that the Company has adequate resources to continue in operation to justify applying the going concern basis in preparing the Financial Statements.

Further, the Directors have a responsibility to ensure that the Company maintains sufficient accounting records to disclose, with reasonable accuracy, the financial position of the Company and of the Group, and to ensure that the Financial Statements presented comply with the requirements of the Act.

The Directors are also responsible for taking reasonable steps to safeguard the assets of the Company and of the Group and in this regard to give proper consideration to the establishment of appropriate internal control systems with a view to preventing and detecting fraud and other irregularities.

The Directors are required to prepare the Financial Statements and to provide the auditors with every opportunity to take whatever steps and undertake whatever inspections they may consider to be appropriate to enable them to give their independent audit opinion.

The Directors are of the view that they have discharged their responsibilities as set out in this statement.

By Order of the Board

P.R. Secretarial Services (Private) Limited

Secretaries

10th July, 2013

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

Note Page

1. Reporting Entity 37

2. Basis of Preparation 37

3. Significant Accounting Policies 37

4. Effect of Accounting Standards Issued But Not Yet Effective 44

5. Revenue 45

6. Other Income 45

7. Profit from Operations 45

8. Net Finance Costs 45

9. Income Tax Expense 46

10. Basic Earning/(Loss) per Share 46

11. Property, Plant & Equipment 47

12. Intangible Assets - Computer Software 49

13. Investment Property 49

14. Investments in Subsidiaries 49

15. Investments in Associates 50

16. Available-for-Sale Financial Assets 51

17. Inventories 51

18. Trade & Other Receivables 51

19. Asset Held for Sale 52

20. Amounts Due from Related Companies 52

21. Cash and Cash Equivalents 53

22. Stated Capital 53

23. Retirement Benefit Obligations 53

24. Deferred Tax Liability 54

25. Long-Term Loans 54

26. Lease Liability 55

27. Trade & Other Payables 55

28. Amounts Due to Related Companies 55

29. Import Demand Loan 55

30. Contingent Liabilities 56

31. Commitments 56

32. Events Occurring After the Reporting Period 56

33. Related Party Disclosure 57

34. Explanation of Transition to SLFRSs 59

35. Financial Risk Management 64

Independent Auditors’ Report 31

Consolidated Statement of Comprehensive Income 32

Consolidated Statement of Financial Position 33

Statement of Changes in Equity 34

Cash Flow Statement 35

Notes to the Financial Statements 37

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Sierra Cables PLC Annual Report 2012/13FINANCIAL STATEMENTS

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31

TO THE SHAREHOLDERS OF SIERRA CABLES PLC

Report on the Financial Statements

We have audited the accompanying financial statements of Sierra Cables PLC (“the Company”) and the consolidated financial statements of the Company and its subsidiaries (“the Group”), which comprise the statements of financial position as at 31st March 2013, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information set out on pages 32 to 67 of the annual report.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Scope of Audit and Basis of Opinion

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.

Opinion - Company

In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31st March 2013 and the financial

statements give a true and fair view of the financial position of the Company as at 31st March 2013, and of its financial performance and its cash flow for the year then ended in accordance with Sri Lanka Accounting Standards.

Opinion - Group

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Company and its subsidiaries dealt with thereby as at 31st March 2013, and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory Requirements

These financial statements also comply with the requirements of Sections 153(2) to 153(7) of the Companies Act No. 07 of 2007.

Chartered Accountants

10th July 2013

Colombo

KPMG, a Sri Lanka Partnership and a member firmof the KPMG network of independent member firmsaffilliated with KPMG International cooperative(“KPMG International”), a Swiss entity.

M.R. Mihular FCAT.J.S. Rajakarier FCAMs. S.M.B. Jayasekara ACAG.A.U. Karunaratne ACA

Principals - S.R.I. Perera ACMA, LLB, Attorney-at-law, H.S. Goonewardene ACA

P.Y.S. Perera FCAW.W.J.C. Perera FCAW.K.D.C Abeyrathne ACAR.M.D.B. Rajapakse ACA

C.P. Jayatilake FCAMs. S. Joseph ACAS.T.D.L. Perera ACAMs. B.K.D.T.N. Rodrigo ACA

KPMG Tel : +94 - 11 542 6426(Chartered Accountants) Fax : +94 - 11 244 587232A, Sir Mohamed Macan Markar Mawatha, +94 - 11 244 6058P. O. Box 186, +94 - 11 254 1249 Colombo 00300, +94 - 11 230 7345Sri Lanka. Internet : www.lk.kpmg.com

INDEPENDENT AUDITORS’ REPORTINDEPENDENT AUDITORS’ REPORT

Sierra Cables PLC Annual Report 2012/13FINANCIAL STATEMENTS32

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMECONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Group Company

2013 2012 2013 2012For the year ended 31st March Note Rs. Rs. Rs. Rs.

Revenue 5 2,141,353,995 2,476,058,520 2,055,318,338 2,462,318,846

Cost of Sales (1,836,300,771) (2,010,583,298) (1,756,473,539) (2,000,713,159)

Gross Profit 305,053,224 465,475,222 298,844,799 461,605,687

Other Income 6 6,137,840 24,999,838 6,137,840 33,217,995

Selling and Distribution Expenses (103,030,304) (104,159,628) (88,436,991) (104,168,971)

Administrative Expenses (65,358,044) (68,356,157) (62,297,207) (67,515,722)

Other Operating Expenses (2,515,236) (18,458,772) (2,515,236) (20,000,000)

Profit from Operations 7 140,287,480 299,500,503 151,733,205 303,138,989

Net Finance Costs 8 (158,354,069) (154,135,289) (132,932,082) (153,004,731)

Profit/(Loss) Before Associate Companies’ Share of Loss (18,066,589) 145,365,214 18,801,123 150,134,258

Share of Loss of Associate Companies (25,139) (2,281,440) - -

Profit/(Loss) Before Taxation (18,091,728) 143,083,774 18,801,123 150,134,258

Income Tax Expense 9 (5,089,705) (22,749,886) (2,274,264) (21,398,173)

Profit/(Loss) for the Year (23,181,433) 120,333,888 16,526,859 128,736,085

Other Comprehensive Income

Net Change in Fair Value of Available-for-Sale Investments (9,853,492) (40,793,935) (9,853,492) (40,793,935)

Revaluation Surplus on Property, Plant and Equipment 430,075,011 - 430,075,011 -

Deferred Tax Impact on Revaluation Surplus on Property, Plant and Equipment (97,136,079) - (97,136,079) -

Other Comprehensive Income for the Year, Net of Income Tax 323,085,440 (40,793,935) 323,085,440 (40,793,935)

Total Comprehensive Income for the Year 299,904,007 79,539,953 339,612,299 87,942,150

Profit/Loss Attributable to :

Equity Holders of the Company (11,313,227) 120,882,208 16,526,859 128,736,085

Non-Controlling Interest (11,868,206) (548,320) - -

(23,181,433) 120,333,888 16,526,859 128,736,085

Total Comprehensive Income Attributable to :

Equity Holders of the Company 311,772,213 80,088,273 339,612,299 87,942,150

Non-Controlling Interest (11,868,206) (548,320) - -

299,904,007 79,539,953 339,612,299 87,942,150

Basic Earnings/(Loss) Per Share (Rs.) 10 (0.02) 0.22 0.03 0.24

Figures in brackets indicate deductions.

The Financial Statements are to be read in conjunction with the related notes, which form a part of these Financial Statements set out on pages 37 to 67.


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33CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Group Company

As at Note31-03-2013

Rs.31-03-2012

Rs.01-04-2011

Rs.31-03-2013

Rs.31-03-2012

Rs.01-04-2011

Rs.

ASSETS

Non-Current AssetsProperty, Plant and Equipment 11 1,179,081,707 764,713,420 514,746,996 954,108,269 632,026,030 513,339,803 Intangible Assets 12 4,050,560 5,641,000 5,578,708 4,050,560 5,641,000 5,578,708 Investment Property 13 31,211,300 32,854,000 - 31,211,300 32,854,000 - Investments in Subsidiaries 14 - - - 70,880,020 70,000,010 100,030 Investments in Associates 15 2,785,545 2,810,694 1,792,134 5,800,000 5,800,010 2,500,010 Investments Available for Sale 16 121,765,158 134,557,255 215,659,145 121,765,158 134,557,255 215,659,145 Goodwill on Acquisition 14.3 329,300 - - - - -

1,339,223,570 940,576,369 737,776,983 1,187,815,307 880,878,305 737,177,696

Current AssetsInventories 17 1,026,894,046 943,592,668 978,392,989 992,280,321 943,592,669 978,392,989 Trade & Other Receivables 18 828,212,157 761,821,868 592,775,509 753,092,072 754,477,519 590,594,208 Income Tax Receivable 15,811,592 7,279,730 11,518,792 15,811,592 7,279,750 11,518,792 Asset Held for Sale 19 21,000,000 - - 21,000,000 - - Amounts Due from Related Companies 20 72,310,131 82,301,012 103,800,647 89,045,367 72,301,002 131,016,328 Available for Sale Financial Assets 16.2 53,134,656 38,713,072 47,924,439 53,134,656 38,713,072 43,669,642 Cash in Hand and at Bank 21 16,080,412 16,437,962 33,321,020 15,776,180 16,342,731 25,980,238

2,033,442,994 1,850,146,312 1,767,733,396 1,940,140,188 1,832,706,743 1,781,172,197 TOTAL ASSETS 3,372,666,564 2,790,722,681 2,505,510,379 3,127,955,495 2,713,585,048 2,518,349,893

EQUITY AND LIABILITIESEquityStated Capital 22 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 Available for Sale Reserve 95,085,403 104,938,895 145,732,830 95,085,403 104,938,895 145,732,830 Revaluation Reserve 332,938,932 - - 332,938,932 - - Retained Earnings 333,900,623 345,213,851 278,082,886 366,009,435 349,482,576 293,781,807Total Equity Attributable to Equity Holders of the Company 1,656,490,856 1,344,718,644 1,318,381,614 1,688,599,668 1,348,987,369 1,334,080,535 Non-Controlling Interests 17,658,588 29,451,690 - - - - Total Equity 1,674,149,444 1,374,170,334 1,318,381,614 1,688,599,668 1,348,987,369 1,334,080,535

Non-Current LiabilitiesRetirement Benefit Obligations 23 14,874,524 13,836,096 6,825,754 14,874,524 13,836,105 5,989,908 Deferred Tax Liability 24 155,529,230 53,303,446 53,384,247 152,713,789 53,303,446 53,384,247 Long-Term Loans 25 217,485,541 55,204,921 29,860,940 113,440,531 15,315,460 29,860,940 Long-Term Lease Liability 26 6,234,846 9,684,933 10,500,967 6,234,846 9,684,906 10,500,967

394,124,141 132,029,396 100,571,908 287,263,690 92,139,917 99,736,062

Current LiabilitiesTrade & Other Payables 27 327,330,992 520,675,231 360,644,478 296,591,495 510,352,594 358,987,414 Amounts Due to Related Companies 28 - - 176,671 - 38,512,594 - Current Portion of Long-Term Loans 25 54,158,846 33,434,512 26,768,494 37,758,056 33,434,512 26,768,494 Current Portion of Lease Liability 26 5,859,816 4,581,086 4,424,171 5,859,816 4,581,086 4,424,171 Import Demand Loans 29 843,276,728 647,131,258 658,946,542 796,596,321 645,866,663 658,946,526 Income Tax Payable - - 189,810 - - - Bank Overdraft 21 73,766,597 78,700,864 35,406,691 15,286,449 39,710,313 35,406,691 Total Current Liabilities 1,304,392,979 1,284,522,911 1,086,556,857 1,152,092,137 1,272,457,762 1,084,533,296 Total Liabilities 1,698,517,120 1,416,552,347 1,187,128,765 1,439,355,827 1,364,597,679 1,184,269,358 TOTAL EQUITY AND LIABILITIES 3,372,666,564 2,790,722,681 2,505,510,379 3,127,955,495 2,713,585,048 2,518,349,893

Net Assets Per Share 3.08 2.50 2.45 3.14 2.51 2.48


It is certified that the Financial Statements have been prepared in compliance with the requirements of the Companies Act No.07 of 2007.

Lalanthi De SilvaChief Financial Officer

The Board of Directors is responsible for the preparation and presentation of these Financial Statements.Approved and signed for and on behalf of the Board of Directors.

Priyantha Perera D.S. PandithaChairman Director

10th July, 2013Colombo


STATEMENT OF CHANGES IN EQUITYSTATEMENT OF CHANGES IN EQUITY

For the year ended 31st March Stated Capital

Rs.

RevaluationReserve

Rs.

Available for Sale Reserve

Rs.

RetainedEarnings

Rs.

Non-Controlling Interest

Rs.

Total

Rs.Group

Restated Balance as at 1st April 2011 894,565,898 - - 405,735,183 - 1,300,301,081

Adjustment Due to First Time Adoption of SLFRSs/LKASs - - 145,732,830 (127,652,297) - 18,080,533

Restated Balance as at 1st April 2011 894,565,898 - 145,732,830 278,082,886 - 1,318,381,614

Profit/(Loss) for the Year - - - 120,882,208 (548,320) 120,333,888


Net Change in Fair Value of Available for Sale Investments - - (40,793,935) - - (40,793,935)

Total Comprehensive Income for the Year - - (40,793,935) 120,882,208 (548,320) 79,539,953

Transactions with Owners of the Company, Recognized Directly in Equity

Acquisition of Subsidiary during the Year - - - - 30,000,010 30,000,010

Dividend Paid - - - (53,751,243) - (53,751,243)

Total Transactions with Owners of the Company - - - (53,751,243) 30,000,010 (23,751,233)

Balance as at 31st March 2012 894,565,898 - 104,938,895 345,213,851 29,451,690 1,374,170,334

Loss for the Year - - - (11,313,227) (11,868,206) (223,181,433)


Net Change in fair Value of Available for Sale Investments - - (9,853,492) - - (9,853,492)

Revaluation Surplus on Property, Plant and Equipment - 430,075,011 - - - 430,075,011

Deferred Tax on Revaluation Surplus on Property, Plant and Equipment - (97,136,079) - - - (97,136,079)

Total Comprehensive Income for the Year - 332,938,932 (9,853,492) (11,313,227) (11,868,206) 299,904,007

Adjustment due to changes in effective holdings - - - - 75,103 75,103

Balance as at 31st March 2013 894,565,898 332,938,932 95,085,403 333,900,624 17,658,587 1,674,149,444

For the year ended 31st March Stated Capital

Rs.

RevaluationReserve

Rs.

Available for Sale Reserve

Rs.

RetainedEarnings

Rs.

Total

Rs.Company

Balance as at 1st April 2011 894,565,898 - - 346,680,506 1,241,246,404

Adjustments due to first time adoption of SLFRSs/LKASs - - 145,732,830 (52,898,699) 92,834,131

Restated Balance as at 1st April 2011 894,565,898 - 145,732,830 293,781,807 1,334,080,535

Profit for the Year - - - 128,736,085 128,736,085


Net Change in fair value of Available for Sale Investments - - (40,793,935) - (40,793,935)

Total Comprehensive Income for the Year - - (40,793,935) 128,736,085 87,942,150

Transactions with Owners of the Company, Recognized Directly in Equity

Reserves Acquired on Amalgamation of Alucop Marketing (Pvt) Ltd. - - - (19,284,073) (19,284,073)

Dividend Paid - - - (53,751,243) (53,751,243)

Total Transactions with Owners of the Company - - - (73,035,316) (73,035,316)

Balance as at 31st March 2012 894,565,898 - 104,938,895 349,482,576 1,348,987,369

Profit for the Year - - - 16,526,859 16,526,859


Net Change in fair value of Available for Sale Investments - - (9,853,492) - (9,853,492)

Revaluation surplus on Property, Plant and Equipment - 430,075,011 - - 430,075,011

Deferred Tax on Revaluation Surplus of Property, Plant and Equipment - (97,136,079) - - (97,136,079)

Total Comprehensive Income for the Year - 332,938,932 (9,853,492) 16,526,859 339,612,299

Balance as at 31st March 2013 894,565,898 332,938,932 95,085,403 366,009,435 1,688,599,668




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35CASH FLOW STATEMENTCASH FLOW STATEMENT

Group Company

For the year ended 31st March 2013 2012 2013 2012Rs. Rs. Rs. Rs.

Cash Flow from Operating Activities

Profit/(Loss) Before Share of Loss of Associate (18,066,589) 145,365,214 18,801,123 150,134,258

Adjustments for

Depreciation and Amortization 83,530,734 62,660,507 76,532,066 62,659,200

Impairment of Assets Held for Sale 2,515,236 - 2,515,236 -

Provision for Impairment of Debts (2,028,726) 18,296,373 (2,028,726) 18,296,373

Provision for Obsolete Inventories - (6,387,866) - -

Profit on Sale of Property, Plant and Equipment - (2,559,474) - (2,559,474)

Profit on Disposal of Subsidiary - - - (170,034)

Profit on Disposal of Investment Available for Sale (1,607,966) (17,343,611) (1,607,966) (26,205,895)

Provision for Retirement Benefit Obligations 1,539,944 7,647,217 1,539,944 8,483,063

Interest Expenses 187,760,457 102,081,287 161,984,579 100,729,793

Interest Income (6,657,304) (4,975,385) (6,657,304) (4,754,442)

Dividend Income (4,529,871) (4,282,591) (4,529,871) (4,282,591)

Operating Profit Before Working Capital Changes 242,455,915 300,501,670 246,549,081 302,330,251

(Increase)/Decrease in Inventories (83,301,378) 41,188,187 (48,687,652) 34,800,320

(Increase)/Decrease in Trade and Other Receivables (63,596,646) (188,760,193) 3,414,173 (182,831,789)

(Increase)/Decrease in Dues from Related Parties 9,990,881 (11,354,365) (10,639,959) 25,861,326

Increase/(Decrease) in Trade and Other Payables 4,087,203 146,950,852 (63,031,440) 138,007,673

Increase/(Decrease) in Dues to Related Parties - (176,671) - 16,620,681

Cash Generated from Operations 109,635,975 288,349,480 127,604,203 334,788,462

Interest Paid (187,760,457) (99,144,252) (161,984,579) (97,792,751)

Income Tax/ESC Paid (8,531,862) (18,780,416) (8,531,837) (17,239,932)

Payment of Retirement Benefit Obligations (501,525) (636,875) (501,525) (636,875)

Net Cash Flows Generated from/(Used) in Operating Activities (87,157,869) 169,787,937 (43,413,736) 219,118,904

Cash Flows from Investing Activities

Interest Income 6,657,304 4,937,013 6,657,304 4,716,070

Dividend Received 4,529,871 4,282,591 4,529,871 4,282,591

Acquisition of Property, Plant and Equipment (72,818,240) (307,305,975) (34,292,909) (174,618,581)

Acquisition of Intangible Assets (480,000) (377,335) (480,000) (377,335)

Proceeds from Disposal of Property, Plant and Equipment 1,334,519 3,200,000 1,334,519 3,200,000

(Investment in)/ Sales Proceeds from Treasury Bills - 9,274,369 (14,308,278) 5,622,037

Proceeds from Disposal of Available of Sale Investments 5,089,355 57,626,937 5,089,355 66,489,223

Investment in Subsidiary Net Cash Acquired 2,817,124 29,999,990 (880,000) (70,000,010)

Proceeds from Disposal of Subsidiary - - - 270,064

Investment in Treasury Bills (14,308,278) - - -

Investment in Fixed Deposit - (3,300,000) - (3,300,000)

Investment in Available for Sale Investment (656,097) - (656,097) -

Net Cash Used in Investing Activities (67,834,442) (201,662,410) (33,006,235) (163,715,941)


CASH FLOW STATEMENTCASH FLOW STATEMENT

Group Company

For the year ended 31st March 2013 2012 2013 2012Rs. Rs. Rs. Rs.

Cash Flows from Financing Activities

Borrowings during the Year 214,458,663 61,154,080 153,865,319 20,000,000

Repayment of Loans during the Year (48,735,694) (27,879,474) (47,434,094) (27,879,462)

Repayment of Lease during the Year (6,153,940) (7,826,121) (6,153,940) (7,826,121)

Dividend Paid - (53,751,243) - (53,751,243)

Net Cash Flows Generated From/(Used) in Financing Activities 159,569,029 (28,302,758) 100,277,285 (69,456,826)

Net Increase/(Decrease) in Cash and Cash Equivalents 4,576,718 (60,177,231) 23,857,312 (14,053,863)

Cash and Cash Equivalents at the Beginning of the Year (62,262,903) (2,085,672) (23,367,581) (9,426,453)

Cash and Cash Equivalents - - - 112,734

Cash and Cash Equivalents at the End of the Year (57,686,185) (62,262,903) 489,731 (23,367,581)

Analysis of Cash and Cash Equivalents at the End of the Year;

Cash in Hand and at Bank 16,080,412 16,437,961 15,776,180 16,342,732

Bank Overdraft (73,766,597) (78,700,864) (15,286,449) (39,710,313)

(57,686,185) (62,262,903) 489,731 (23,367,581)




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37NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

1. REPORTING ENTITY

Sierra Cables PLC is a public limited liability company incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange. The Company’s registered office is situated in No.112, Havelock Road, Colombo 05 and principal place of business is located at No.39/1A, Galwarusawa Road, Korathota, Kaduwela.

The consolidated financial statements of the Company as at and for the year ended 31st March 2013 comprise the Company and its Subsidiaries (together referred as the “Group” individually as Group entities) and the group interest in associates.

Sierra Cables being a part of a large conglomerate is also a Group on its own. The two subsidiaries, Sierra Power (Private) Ltd. and Sierra Industries (Private) Ltd. are engaged in the power generation to the National Grid and manufacture of UPVC pipes & fittings respectively. The two associate companies T & G Lanka (Private) Ltd. and Tea Leaf Resort (Private) Ltd. are diversified to manufacturing of Patch Cables and to leisure sector.

2. BASIS OF PREPARATION

2.1. Statement of Compliance

The Financial Statements have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRSs/LKASs) promulgated by the Institute of Chartered Accountants of Sri Lanka (ICASL) and comply with the requirement of Companies Act No.07 of 2007.

These are the Group’s first Consolidated Financial Statements prepared in accordance with SLFRSs and SLFRS ”First Time adoption of Sri Lanka Accounting Standards” has been applied.

An explanation of how the transition to SLFRSs has affected the reported financial position, financial performance and cash flows of the Group and the company is provided in Note 34 to the financial statements.

2.2 Basis of Measurement

The Financial Statements have been prepared on the historical cost basis except for the following material items in the statement of financial position.

� Available-for-sale financial assets are measured at fair value;

� Liability for defined benefit obligations is carried at the present value of the defined benefit obligations.

� Land, Buildings and Plant and Machinery are measured at cost at the time of acquisition and subsequently at revalued amounts, which are the fair values at the date of revaluation.

The Directors have made an assessment of the Group’s ability to continue as a going concern in the foreseeable future and they do not foresee a need for liquidation or cessation of trading.

2.3 Functional and Presentation Currency

The Financial Statements are presented in Sri Lankan Rupees which is the Group’s functional currency. All financial information presented in Sri Lankan Rupees has been rounded to the nearest rupee, unless stated otherwise.

2.4 Use of Estimates and Judgments

The preparation of Financial Statements in conformity with Sri Lanka Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the Groups’ Financial Statements is included in the respective notes

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these financial statements and in preparing the opening SLFRS statement of financial position at 1st April 2011, for the purpose of transition to SLFRSs, unless otherwise stated.

The accounting policies have been applied consistently by Group entities.

3.1 Basis of Consolidation

(i) Business Combinations

Acquisitions on or after 1st January 2012

Business combinations are accounted for using the acquisition method as at the acquisition date which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.

The Group measures goodwill at the acquisition date as:

� The fair value of the consideration transferred; plus

� The recognised amount of any non-controlling interests in the acquire; plus

� If the business combination is achieved in stages, the fair value of the pre-existing equity interest In the acquire; less

� The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities Assumed.

� When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.


NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

Acquisitions prior to 1st January 2012

As part of its transition to SLFRSs, the Group elected not to restate those business combinations that occurred prior to 1st January 2012. In respect of acquisitions prior to 1st January 2012, goodwill represents the amount recognized under the previous Sri Lanka Accounting Standards.

(ii) Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

(iii) Loss of Control

On the loss of control, the Group derecognizes the assets and liabilities of the subsidiary, any non controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity~accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(iv) Investments in Associates

Associates are those entities in which the Group has significant influence but not control, over the financial and operating policies, Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Investments in associates are accounted for using the equity method and are recognised initially at cost. The cost of the investment includes transaction costs.

The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity accounted investees, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

(v) Transactions Eliminated on Consolidation

Intra group balances and transactions, and any unrealised income and expenses arising from intra group transactions, are eliminated in preparing the consolidated financial statements, Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.

3.2 Foreign Currency Transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are re-translated to the functional currency at the exchange rate at that date.

Non monetary assets and liabilities denominated in foreign currencies that are measured at fair value are re-translated to the functional currency at the exchange rate at the date that the fair value was determined. Non monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on re-translation are recognised in comprehensive income.

3.3 Assets and bases of their Valuation

3.3.1 Property, Plant & Equipment

3.3.1.1 Recognition and Measurement

Land, Buildings and Plant and Machinery are stated at revaluation. Other Assets are stated at cost less accumulated depreciation and accumulated impairment losses.

The cost of an item of property, plant and equipment comprise its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. The cost of self-constructed assets includes the cost of materials, direct labour, any other costs directly attributable to bringing the asset to the working condition for its intended use and capitalised borrowing costs. This also includes cost of dismantling and removing the items and restoring in the site on which they are located.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.

3.3.1.2 Subsequent Costs

The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized.


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The costs of the day to day servicing of property, plant and equipment are recognized in profit or loss as incurred.

3.3.1.3 Derecognition

The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Gains or losses on derecognition are recognized within other income in profit or loss.

3.3.1.4 Depreciation

Items of property, plant and equipment are depreciated on a straight-line basis in profit or loss over the estimated useful lives of each component. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use.

The estimated useful lives are as follows:

Asset Category Useful Life (Years) Depreciation Rate(%)

Buildings 20-25 5% Plant & Machinery 10-20 5%-10%Factory Equipment 5 20%Furniture Fittings 5 20%Motor Vehicles 5 20%Office & Computer Equipment

5 20%

Depreciation of an asset begins when it is available for use where as depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognized.

3.3.1.5 Revaluation Policy

The Company’s land, buildings, plant and machinery, factory equipment are revalued with sufficient regularity once in five years.

The revaluation surplus, is accounted in the revaluation reserve.

3.3.2 Intangible Assets

An Intangible Asset is recognized if it is probable that economic benefits are attributable to the assets will flow to the Group and cost of the assets can be measured reliably and carried at cost less accumulated amortization and accumulated impairment losses.

3.3.2.1 Computer Software

All computer software cost incurred, which are not integral part of the related hardware, which can be clearly identified, reliably measured and its probable that they will lead to future economic benefits, are included in the Statement of Financial Position under the category of intangible assets.

3.3.2.2 Subsequent Expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.

3.3.2.3 Amortization

Intangible assets are amortized on a straight-line basis in profit or loss over their estimated useful lives from the date that they are available for use. The estimated useful lives for the current and comparative years are as follows:

Asset Category Useful Life (Years)

Depreciation Rate (%)

Computer Software 5 20%

3.3.3 Leased Assets

Leases in terms of which the Group assumes substantially all of the risks and rewards of ownership are classified as finance leases On initial recognition, the leased asset are measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

3.3.4 Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sales.



The costs incurred in bringing inventories to its present location and condition, are accounted for as follows:

Raw Materials

- On actual cost on first-in-first-out basis

Finished Goods and Work-in-Progress

- At actual cost, on first-in-first-out basis

3.3.5 Impairment of Non-Financial Assets

The carrying amounts of the group’s non financial assets, other than inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an assets or cash generating unit (CGU) exceeds its recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to CGU (if any) and then to reduce the carrying amounts of other assets in the CGU (group of CGUs) on pro rata basis. An impairment loss in respect of goodwill is not reversed. For other assets , an impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined , net of depreciation or amortisation, if no impairment loss had been recognised.

3.3.6 Financial Instruments

3.3.6.1 Non-Derivative Financial Assets

The Group initially recognizes loans and receivables on the date that they are originated. All other financial assets are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

A financial asset is measured initially at fair value plus, in the case of assets not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire; it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to set off the amounts and it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group classifies non derivative financial assets into the following categories;

(a) Loans and Receivables

(b) Available for Sale Financial Assets

(a) Loans and Receivables

The subsequent measurement of financial assets depends on their classification as follows:

Loans and receivables are financial assets with fixed or determinable payment that are not quoted in an active market. Such assets are recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loan and receivables comprise of trade receivables, other receivables, and cash & cash equivalents.

Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value and are used by the Group in the management of its short-term commitments.

(b) Available for Sale Financial Assets

Available-for-sale financial assets are financial assets that are designated as available for sale and are not classified in any other categories. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses on available for sale equity instruments are recognised in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in other comprehensive income transferred to profit or loss.


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Available for sales financial assets comprise of investment in equity shares and government securities.

3.3.6.2 Non-Derivative Financial Liabilities

The Group recognizes financial liabilities initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group classifies financial liabilities into other financial liabilities category. Such finance liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

The Group derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.

Other financial payables comprise trade payables, other liabilities and bank borrowings.

3.3.6.3 Stated Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

3.3.6.4 Amortized Cost Measurement

The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments and any impairment and plus/minus the cumulative amortization using the effective interest method of any difference between the initial amount recognised and the maturity amount.

3.3.6.5 Fair Value Measurement

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction on the measurement date.

The fair value of financial instruments that are traded in an active market at each reporting date is determined by reference to quoted market prices or dealer price quotations, without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models.

3.3.6.6 Impairment

The Group assesses at each reporting date whether there is any objective evidence that financial assets or group of financial assets is impaired. A financial asset or a Group of financial assets is deemed to be impaired if, and only if there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset that can be estimated reliably.

Objective evidence that a financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the company on terms that the company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security.

(a) Impairment Losses on Financial Assets Carried at Amortized Cost

The Group considers evidence of impairment for financial assets measured at amortised cost at collective level. Assets that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics. In assessing collective impairment the company uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

(b) Impairment Losses on Available for Sale Financial Assets

Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss. Changes in cumulative impairment losses attributable to application of the effective interest method are reflected as a component of interest income.



If, in a subsequent period,the fair value of an impaired available-far-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-far-sale equity security is recognised in other comprehensive income

3.3.7 Post Employment Benefits

3.3.7.1 Defined Benefit Plan

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value.

The retirement benefit obligation of the group is based on the actuarial valuation using Projected Unit Credit (PUC) methods as recommended by Sri Lanka Accounting Standard (LKAS 19) Employee Benefits. The calculation is performed by independent actuary using the projected unit credit method. The assumptions based on which the results of the actuarial valuation was determined, are included in Note 23 to the Financial Statements.

The Group recognizes all actuarial gains and losses arising from the defined benefits plans immediately in the income statements. The liability is disclosed under Non-current liabilities in the Balance Sheet and not externally funded.

However, as per the Payment of Gratuity Act No. 12 of 1983 the liability to an employee arises only on completion of 5 years of continued service.

3.3.7.2 Defined Contribution Plans – Employees’ Provident Fund and Employee Trust Fund

All employees who are eligible for Employees’ Provident Fund Contributions and Employees’ Trust Fund Contributions are covered by relevant contributions funds in line with the relevant statutes. Employer’s contributions to the defined contribution plans are recognized as an expense in profit or loss when incurred.

3.3.8 Provisions

A provision is recognized if, as a result of a past event the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefit will be required to settle the obligation.

3.4 Statement of Comprehensive Income

3.4.1 Revenue

3.4.1 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue and the associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and sales taxes.

3.4.1.1 Sale of Goods

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably.

3.4.1.2 Dividend Income

Dividend income recognized when the right to receive the dividend is established.

3.4.1.3 Interest Income

Interest income is recognized as it accrues in profit or loss, using the effective Interest Method.

3.4.1.4 Gains and Losses

Net gains and losses of a revenue nature arising from the disposal of property, plant and equipment and other non-current assets, including investments, are accounted for in the Statement of Comprehensive Income, after deducting from the proceeds on disposal, the carrying amount of such assets and the related selling expenses.

3.4.1.5 Other Income

Other income is recognized on an accrual basis.

3.4.2 Expenditure Recognition

3.4.2.1 Operating Expenses

All expenses incurred in day to day operations of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to the statement of comprehensive income in arriving at the profit for the year. Provision has also been made for impairment of


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financial assets, slow moving stocks, all known liabilities and depreciation on property, plant and equipment.

3.4.2.2 Borrowing Costs

Borrowing costs directly attributable to acquisition, construction or production of assets that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that Group incurs in connection with the borrowing of funds.

3.4.3 Net Finance Income / (Expenses)

Finance income comprises interest income on funds invested. Interest income is recognized as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings that are not directly attributable to the acquisition, construction or productions of a qualifying asset recognised using the effective interest method.

3.4.4 Income Tax Expenses

3.4.4.1 Current Taxes

Current Income tax liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Commissioner General of Inland Revenue. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

The provision for income tax is based on the elements of income and expenditures reported in the Financial Statements and computed in accordance with the provisions of the Inland Revenue Act.

3.4.4.2 Deferred Taxation

Deferred taxation is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences and carry forward of unused tax losses / credits can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted as at the reporting date.

Deferred tax assets and deferred tax liabilities are offset if legally enforceable right exists to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxable entity and the same taxation authority.

3.5 Related Party Transactions

Disclosure has been made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating policies/decisions of the other, irrespective of whether a price is being charged or not.

The relevant details are disclosed in the respective notes to the Financial Statements.

3.6 Cash Flow Statement

Interest received and dividends received are classified as investing cash flows, while dividend paid and interest paid, is classified as financing cash flows for the purpose of presentation of Statement of Cash Flows which has been prepared using the ‘Indirect Method’.

3.7 Earnings Per Share

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the number of shares outstanding at the reporting date.

3.8 Events Occurring After the Reporting Period

Events after the reporting period are those events favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue.

The materiality of the events occurring after the reporting period is considered and appropriate adjustments to or disclosures are made in the Financial Statements, where necessary.

3.9 Investment Property

Investment property is held either to earn rental or for capital appreciation or for both but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment Property is measured at cost on initial recognition and subsequently at cost less accumulated depreciation and accumulated impairment losses.

Provision for depreciation is calculated by using a straight-line method on the cost of the Property in order to write-off such amounts over the estimated useful economic life of 20 years.



Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other cost directly attributable to bringing the investment property to a working condition for their intended use and capitalized borrowing costs.

3.10 Assets Held for Sale

Non-current assets that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale the assets are re measured in accordance with the Group’s accounting policies. Thereafter the assets are measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification and subsequent gains and losses on remeasurement are recognized in profit or loss. Gains are not recognized in excess of any cumulative impairment loss.

Once classified as held for sale property plant and equipment are no longer amortized or depreciated.

4. EFFECT OF ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

New Accounting Standards Issued but not Effective as at Balance Sheet Date

The Institute of Chartered Accountants of Sri Lanka has issued the following new Sri Lanka Accounting Standards which will become applicable for financial periods beginning on or after 1st January 2014/ 2015.

Accordingly, these Standards have not been applied in preparing these financial statements.

� Sri Lanka Accounting Standards - SLFRS 10 “Consolidated financial statements”

The objective of this SLFRS is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.

An investor is expected to control an investee if and only if the investor has all the following:

(a) Power over the investee;

(b) Exposure, or rights, to variable returns from its involvement with the investee; and

(c) The ability to use its power over the investee to affect the amount of the investor’s returns

This Standard will require the Company to review the group structure in the context of the new Standard and its requirements. Accordingly adoption of this standard is expected to have an impact on the Group structure, and consolidated reporting.

SLFRS 10 will become effective from 1 April 2014 for the Group with early adoption permitted. This SLFRS will supersede the requirements relating to consolidated financial statements in LKAS 27”Consoliadated and Separate Financial Statements.

� Sri Lanka Accounting Standards - SLFRS 11 “Joint Arrangements”

The objective of this SLFRS is to establish principles for financial reporting by entities that have an interest in arrangements that are controlled jointly (ie joint arrangements).

� Sri Lanka Accounting Standard - SLFRS 13, “Fair Value Measurement”

This SLFRS defines fair value, sets out in a single SLFRS a framework for measuring fair value; and requires disclosures about fair value measurements.

This SLFRS will become effective for the Group from 1 April 2014. Earlier application is permitted.

This SLFRS shall be applied prospectively as of the beginning of the annual period in which it is initially applied. The disclosure requirements of this SLFRS need not be applied in comparative information provided for periods before initial application of this SLFRS.

� Sri Lanka Accounting Standard – SLFRS 9 “Financial Instruments”

The objective of this SLFRS is to establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows.

An entity shall apply this SLFRS to all items within the scope of LKAS 39 Financial Instruments: Recognition and Measurement.

This SLFRS will become effective for the group from 1 April 2015. Earlier application is permitted for the financial period beginning on or after 01 January, 2013.


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Group Company

2013 2012 2013 2012For the year ended 31st March Rs. Rs. Rs. Rs.

5. Revenue

Local Sales 2,134,739,158 2,450,222,143 2,048,703,501 2,436,482,469

Export Sales 6,614,837 25,836,377 6,614,837 25,836,377

2,141,353,995 2,476,058,520 2,055,318,338 2,462,318,846

6. Other Income

Profit on disposal of Available for Sale Investments 1,607,969 17,343,611 1,607,969 26,375,930

Profit on disposal of Property, Plant and Equipment - 2,559,474 - 2,559,474

Dividend Income 4,529,871 4,282,591 4,529,871 4,282,591

Sundry Income - 814,162 - -

6,137,840 24,999,838 6,137,840 33,217,995

7. Profit from Operations

Profit from Operations is stated after charging all the expenses including followings:

Directors' Emoluments 4,950,000 5,250,000 4,250,000 5,250,000

Auditors' Remuneration - Audit 684,000 634,000 630,000 560,000

- Audit Related Service 383,853 51,000 383,853 51,000

Depreciation and Amortization 81,888,034 62,660,507 74,889,366 62,659,200

Provision for Impairment Loss - 20,000,000 - 20,000,000

Bad Debt Written-off 6,601,488 408,966 6,601,488 408,966

Personnel Costs

Salaries, Wages and Related Cost 96,363,267 66,982,994 90,025,816 66,982,994

Defined Contribution Plans 10,786,800 9,682,344 10,319,431 9,682,344

Defined Benefit Obligations (Note 23) 1,539,944 7,647,217 1,539,944 8,483,063

8. Net Finance Costs

8.1 Finance Income

Interest Income 6,657,304 4,975,385 6,657,304 4,754,443

Exchange Gain 22,749,084 - 22,395,193 -

29,406,388 4,975,385 29,052,497 4,754,443

8.2 Finance Costs

Interest on - Overdraft 15,493,496 6,237,101 6,371,973 4,885,600

- Lease 2,541,272 2,937,044 2,541,272 2,937,044

- Import Demand Loans 141,777,564 82,715,535 136,760,055 82,715,536

- Bank Loans 27,948,125 6,475,254 16,311,279 6,475,255

- Commercial Papers - 3,716,361 - 3,716,361

Exchange Loss - 57,029,379 - 57,029,378

187,760,457 159,110,674 161,984,579 157,759,174

158,354,069 154,135,289 132,932,082 153,004,731



Group Company

2013 2012 2013 2012For the year ended 31st March Rs. Rs. Rs. Rs.

9. Income Tax Expense

Income Tax for the Year (Note 9.1) - 22,830,687 - 21,478,974

Deferred Tax Charge/(Reversal) for the Year (Note 24) 5,089,705 (80,801) 2,274,264 (80,801)

5,089,705 22,749,886 2,274,264 21,398,173

9.1 Reconciliation between the Accounting Profit and Tax Expense

Profit/(Loss) before Tax (18,091,728) 143,083,774 18,801,123 150,134,258

Aggregate disallowable Income (10,502,736) (33,463,486) (10,502,736) (33,217,995)

(28,569,325) 111,901,728 8,298,387 116,916,263

Aggregate disallowable Expenses 98,566,866 99,484,783 91,330,174 99,333,405

Aggregate allowable Expenses (166,451,766) (73,794,730) (133,152,770) (73,794,730)

Taxable Profit/(Loss) (96,454,225) 137,591,781 (33,524,209) 142,454,938

Income from Other Sources 7,155,130 15,363,802 7,155,130 5,779,883

Total Statutory Income 7,155,130 152,955,583 7,155,130 148,234,821

Tax Loss Claimed (2,504,296) (33,841,581) (2,504,296) (33,841,581)

Qualifying Payments (4,650,835) (20,956,967) (4,650,835) (20,956,967)

Taxable Income/(Loss) - 98,157,035 - 93,436,273

Tax on Exports @ 12% ( 2012 - 15%) - 160,277 - 160,277

Tax on balance income @ 28% - 22,670,410 - 21,318,697

- 22,830,687 - 21,478,974

9.2 Accumulated Tax Losses

Balance as at 1st April - 33,841,581 - 33,841,581

Business Loss for the Year 30,451,107 - 30,451,107 -

Loss set off during the Year (2,504,296) (33,841,581) (2,504,296) (33,841,581)

27,946,811 - 27,946,811 -

9.3 In terms of Section 52 of Inland Revenue Act No. 10 of 2006, the profit from exports of Sierra Cables PLC is taxable at the rate of 12% and other profits are taxable at the rate of 28%. The Subsidiary Company is liable for tax at the rate of 28% on the Taxable Income.

10. Basic Earnings/(Loss) per Share Basic earnings/(loss) per share is calculated based on the profit/(loss) after taxation attributable to the ordinary shareholders divided by the weighted average number of ordinary shares outstanding during the year.

Group CompanyFor the year ended 31st March 2013 2012 2013 2012

Profits/(Loss) Attributable to Ordinary Shareholders (Rs.) (11,313,227) 120,882,208 16,526,859 128,736,085

Weighted Average Number of Ordinary Shares 537,512,430 537,512,430 537,512,430 537,512,430

Basic Earnings/(Loss) per Share (Rs.) (0.02) 0.22 0.03 0.24


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67

47NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS11

.Pr

oper

ty, P

lant

and E

quip

men

t

Lan

d B

uild

ings

Pla

nt &

M

achi

nery

Moto

r V

ehicl

es L

ease

dM

otor

Vehi

cles

Fur

nitu

re

& F

ittin

gs F

actor

y E

quip

men

t O

ffice

&

Com

puter

E

quip

men

t

Cap

ital

Wor

k in

P

rogr

ess

Tota

l

As at

31st

Mar

chRs

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.

11.1

Grou

p

Cost

As at

1 Ap

ril 20

11

12,51

3,802

16

5,843

,267

527,6

03,85

6 32

,256,0

19

16,10

1,350

2,

439,1

38

20,60

9,027

13

,582,3

46

70,67

5,528

86

1,624

,333

Addi

tions

durin

g the

Yea

r -

- 12

,511,2

30

1,02

6,786

-

1,10

7,153

5,

716,8

68

3,70

4,044

28

7,469

,890

311,5

35,97

1 Di

spos

als d

urin

g the

Yea

r -

- -

(1,70

8,333

) (2

,167,8

12)

- -

- -

(3,87

6,145

)Tr

ansfe

rs du

ring t

he ye

ar

44,77

0,255

7,

317,5

29

52,99

6,846

-

4,31

2,000

-

- -

(109

,396,6

30)

- As

at 31

st M

arch

2012

57

,284,0

57

173,1

60,79

6 59

3,111

,932

31,57

4,472

18

,245,5

38

3,54

6,291

26

,325,8

95

17,28

6,390

24

8,748

,788

1,16

9,284

,159

As at

1st A

pril

2012

57,28

4,057

17

3,160

,796

593,1

11,93

2 31

,574,4

72

18,24

5,538

3,

546,2

91

26,32

5,895

17

,286,3

90

248,7

48,78

8 1,

169,2

84,15

9 Ad

ditio

ns du

ring t

he Y

ear

44,61

7,000

17

9,999

96

0,478

1,

457,0

02

- 52

4,579

3,

612,5

28

1,75

0,643

58

,484,9

29

111,5

87,15

8 Ad

ditio

ns du

e to A

cqui

sition

of S

ubsid

iary

--

--

--

- 57

,350

21,94

0,090

21

,997,4

40

Tran

sfers

durin

g the

year

4,

850,2

98

12,66

8,281

22

4,734

,052

58,46

2 3,

534,0

65

- 2,

575,6

13

- (2

48,42

0,771

) -

Disp

osal

s dur

ing t

he Y

ear

- -

(1,95

0,583

) -

- -

- (2

23,62

5) -

(2,17

4,208

)Tr

ansfe

rs to

subs

idia

ry

(44,6

17,00

0) -

- -

- -

- -

- (4

4,617

,000)

Offse

t of D

epre

ciatio

n on

Rev

alue

d Ass

ets

- (7

4,675

,918)

(227

,067,2

92)

- -

- -

- -

(301

,743,2

10)

Recla

ssifi

catio

n to

Asse

t Held

for S

ale

- -

(93,7

95,81

0) -

- -

- -

- (9

3,795

,810)

Reva

luat

ion du

ring t

he Y

ear

83,16

0,444

20

0,479

,697

146,4

34,87

0 -

- -

- -

- 43

0,075

,011

As at

31 M

arch

2013

14

5,294

,799

311,8

12,85

5 64

2,427

,647

33,08

9,936

21

,779,6

03

4,07

0,870

32

,514,0

36

18,86

6,608

80

,757,1

86

1,29

0,613

,540

Depr

ecia

tion

As at

1st A

pril

2011

-

61,72

5,979

23

0,315

,837

19,53

9,492

10

,526,0

82

1,74

8,486

14

,081,1

25

8,94

0,336

-

346,8

77,33

7 Ch

arge

for t

he Y

ear

- 8,

597,0

60

39,91

5,729

5,

142,1

01

1,98

5,271

35

1,516

3,

123,7

11

1,81

3,606

-

60,92

8,994

On

Disp

osal

-

- -

(1,53

7,500

) (1

,698,1

19)

- -

- -

(3,23

5,619

)As

at 31

st M

arch

2012

- 70

,323,0

39

270,2

31,56

6 23

,144,0

93

10,81

3,234

2,

100,0

02

17,20

4,836

10

,753,9

42

- 40

4,570

,712

As at

1st A

pril

2012

-

70,32

3,039

27

0,231

,566

23,14

4,093

10

,813,2

34

2,10

0,002

17

,204,8

36

10,75

3,942

-

404,5

70,71

2 Ad

ditio

n du

e to A

cqui

sition

of S

ubsid

iary

-

--

--

--

11,33

2 -

11,33

2Ch

arge

for t

he Y

ear

- 12

,005,6

88

52,83

4,975

4,

855,1

59

2,32

7,422

45

8,635

5,

268,4

45

2,05

5,938

-

79,80

6,262

On

Disp

osal

-

- (7

60,33

0) -

- -

- (7

2,359

) -

(832

,689)

Recla

ssifi

catio

n to

Asse

t Held

for S

ale

- -

(70,2

80,57

4) -

- -

- -

- (7

0,280

,574)

Offse

t of D

epre

ciatio

n on

Rev

alue

d Ass

ets

- (7

4,675

,918)

(227

,067,2

92)

- -

- -

- -

(301

,743,2

10)

As at

31st

Mar

ch 20

13 -

7,65

2,809

24

,958,3

45

27,99

9,252

13

,140,6

56

2,55

8,637

22

,473,2

81

12,74

8,853

-

111,5

31,83

3

As at

1st A

pril

2011

12,51

3,802

10

4,117

,288

297,2

88,01

9 12

,716,5

27

5,57

5,268

69

0,652

6,

527,9

02

4,64

2,010

70

,675,5

28

514,7

46,99

6 As

at 31

st M

arch

2012

57,28

4,057

10

2,837

,757

322,8

80,36

6 8,

430,3

79

7,43

2,304

1,

446,2

89

9,12

1,059

6,

532,4

48

248,7

48,78

8 76

4,713

,447

As at

31st

Mar

ch 20

13 14

5,294

,799

304,1

60,04

6 61

7,469

,302

5,09

0,683

8,

638,9

47

1,51

2,233

10

,040,7

55

6,11

7,755

80

,757,1

86

1,17

9,081

,707


11.

Prop

erty

, Pla

nt an

d Equ

ipm

ent (

Cont

inue

d)

Lan

d B

uild

ings

Pla

nt &

M

achi

nery

Moto

r V

ehicl

es L

ease

dM

otor

Vehi

cles

Fur

nitu

re

& F

ittin

gs F

actor

y E

quip

men

t O

ffice

&

Com

puter

E

quip

men

t

Cap

ital

Wor

k in

P

rogr

ess

Tota

l

As at

31st

Mar

chRS

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.

11.2

Com

pany

Cost

As at

1st A

pril

2011

11

,108,2

80

165,8

43,26

7 52

7,603

,856

26,93

6,644

16

,101,3

50

2,09

7,335

20

,609,0

27

11,66

8,493

70

,675,5

28

852,6

43,78

0 Ad

ditio

ns du

e to M

erge

r 1,

405,5

22

- -

- -

- -

6,97

3 -

1,41

2,495

Ad

ditio

ns du

ring t

he Y

ear

- -

5,24

5,798

1,

026,7

86

- 1,

063,8

63

5,71

6,868

3,

652,0

44

162,1

43,22

2 17

8,848

,581

Disp

osal

s dur

ing t

he Y

ear

- -

- (1

,708,3

33)

(2,16

7,812

) -

- -

- (3

,876,1

45)

Tran

sferr

ed du

ring t

he ye

ar

44,77

0,255

7,

317,5

29

52,99

6,846

-

4,31

2,000

-

- -

(109

,396,6

30)

- As

at 31

st M

arch

2012

57,28

4,057

17

3,160

,796

585,8

46,50

0 26

,255,0

97

18,24

5,538

3,

161,1

98

26,32

5,895

15

,327,5

10

123,4

22,12

0 1,

029,0

28,71

1

As at

1st A

pril

2012

57,28

4,057

17

3,160

,796

585,8

46,50

0 26

,255,0

97

18,24

5,538

3,

161,1

98

26,32

5,895

15

,327,5

10

123,4

22,12

0 1,

029,0

28,71

1 Ad

ditio

ns

- 17

9,999

96

0,478

47

8,181

-

366,6

41

3,38

5,088

1,

409,5

75

27,51

2,947

34

,292,9

09

Tran

sfers

durin

g the

year

3,

150,0

00

11,88

3,825

13

1,797

,371

58,46

2 3,

534,0

65

- -

- (1

50,42

3,723

) -

Disp

osal

s -

- (1

,943,5

83)

- -

- -

(223

,625)

- (2

,167,2

08)

Tran

sfers

to su

bsid

iary

(4

4,617

,000)

- -

- -

- -

- -

(44,6

17,00

0)Of

fset o

f Dep

recia

tion

on R

eval

ued A

ssets

-

(74,6

75,91

8) (2

27,06

7,292

) -

- -

- -

- (3

01,74

3,210

)Re

class

ifica

tion

to As

set H

eld fo

r Sal

e -

- (9

3,795

,810)

- -

- -

- -

(93,7

95,81

0)Re

valu

ation

durin

g the

Yea

r 83

,160,4

44

200,4

79,69

7 14

6,434

,870

- -

- -

- -

430,0

75,01

1 As

at 31

st M

arch

2013

98,97

7,501

31

1,028

,399

542,2

32,53

4 26

,791,7

40

21,77

9,603

3,

527,8

39

29,71

0,983

16

,513,4

60

511,3

44

1,05

1,073

,403

Depr

ecia

tion

As at

1st A

pril

2011

-

61,72

5,979

23

0,315

,843

14,22

0,121

10

,526,0

92

1,40

6,689

14

,081,1

37

7,02

8,116

-

339,3

03,97

7 Ad

ditio

ns du

e to M

erge

r -

- -

- -

- -

6,62

5 -

6,62

5 Ch

arge

for t

he Y

ear

- 8,

597,0

60

39,91

5,729

5,

142,1

01

1,98

5,271

35

1,516

3,

123,7

11

1,81

2,310

-

60,92

7,698

On

Disp

osal

-

- -

(1,53

7,500

) (1

,698,1

19)

- -

- -

(3,23

5,619

)As

at 31

st M

arch

2012

- 70

,323,0

39

270,2

31,57

2 17

,824,7

22

10,81

3,244

1,

758,2

05

17,20

4,848

8,

847,0

51

- 39

7,002

,681

As at

1st A

pril

2012

-

70,32

3,039

27

0,231

,572

17,82

4,722

10

,813,2

44

1,75

8,205

17

,204,8

48

8,84

7,051

-

397,0

02,68

1 Ch

arge

for t

he Y

ear

- 11

,995,8

82

47,67

5,948

4,

766,4

40

2,32

7,422

43

2,092

3,

620,1

99

2,00

0,943

-

72,81

8,926

On

Disp

osal

-

- (7

60,33

0) -

- -

- (7

2,359

) -

(832

,689)

Recla

ssifi

catio

n to

Asse

t Held

for S

ale

- -

(70,2

80,57

4) -

- -

- -

- (7

0,280

,574)

Offse

t of D

epre

ciatio

n on

Rev

alue

d Ass

ets

- (7

4,675

,918)

(227

,067,2

92)

- -

- -

- -

(301

,743,2

10)

As at

31st

Mar

ch 20

13 -

7,64

3,003

19

,799,3

24

22,59

1,162

13

,140,6

66

2,19

0,297

20

,825,0

47

10,77

5,635

-

96,96

5,134

As at

1st A

pril

2011

11,10

8,280

10

4,117

,288

297,2

88,01

3 12

,716,5

23

5,57

5,258

69

0,646

6,

527,8

90

4,64

0,377

70

,675,5

28

513,3

39,80

3 As

at 31

st M

arch

2012

57,28

4,057

10

2,837

,757

315,6

14,92

8 8,

430,3

75

7,43

2,294

1,

402,9

93

9,12

1,047

6,

480,4

59

123,4

22,12

0 63

2,026

,030

As at

31st

Mar

ch 20

13 98

,977,5

01

303,3

85,39

6 52

2,433

,210

4,20

0,578

8,

638,9

37

1,33

7,542

8,

885,9

36

5,73

7,825

51

1,344

95

4,108

,269



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Group Company

As at 31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

12. Intangible Assets - Computer Software

Cost

As at 1st April 10,018,876 8,225,082 6,335,754 10,018,876 8,225,082 -

Additions due to Merger - - - - - 6,335,754

Additions during the Year 480,000 1,793,794 1,889,328 480,000 1,793,794 1,889,328

As at 31st March 10,498,876 10,018,876 8,225,082 10,498,876 10,018,876 8,225,082

Amortization

As at 1st April 4,377,876 2,646,374 1,267,151 4,377,876 2,646,374 -

Addition due to Merger - - - - - 1,900,726

Charge for the Year 2,070,440 1,731,502 1,379,223 2,070,440 1,731,502 745,648

As at 31st March 6,448,316 4,377,876 2,646,374 6,448,316 4,377,876 2,646,374

Written Down Value as at 4,050,560 5,641,000 5,578,708 4,050,560 5,641,000 5,578,708

13. Investment Property

As at 1st April 32,854,000 - - 32,854,000 - -

Additions during the year - 32,854,000 - - 32,854,000 -

As at 31st March 32,854,000 32,854,000 - 32,854,000 32,854,000 -

Depreciation

As at 1st April - - - - - -

Charge for the Year 1,642,700 - - 1,642,700 - -

As at 31st March 1,642,700 - - 1,642,700 - -

Carrying Value as at 31st March 2013 31,211,300 32,854,000 - 31,211,300 32,854,000 -

The Investment Property consists of two apartments in Fairfield Residencies a Condominium Property situated in Colombo 08 having a floor area of 1,720 sq.ft. with vehicle parking area. The Fair Value of the property as at 31st March 2013 is Rs.33,000,000/-.

14. Investments in Subsidiaries

Sierra Engineering & Construction (Private) Limited 99% - - - - - 100,030

Alucop Marketing (Private) Limited 100% - - - - - 7,044,375

Sierra Power (Private) Limited (Note 14.1) 88% - - - 880,010 -

Sierra Industries (Private) Limited 70% - - - 70,000,010 70,000,010 -

- - - 70,880,020 70,000,010 7,144,405

Less : Provision for Impairment - - - - - (7,044,375)

- - - 70,880,020 70,000,010 100,030

14.1 Sierra Power (Private ) Limited

During the year 2011/2012, Sierra Power (Private) Limited was an associate of the Group having an interest of 33.33% in the equity shares. During the year 2012/2013, Sierra Cables PLC invested an additional Rs.880,000/- in equity shares of Sierra Power (Private) Limited resulting an holding of 88%., Therefore the investment was classified as investment in subsidiary during the current year.



14.2 Net Assets Acquired and Liability undertaken due to Acquisition of Sierra Power (Private) Limited

Assets Rs.

Property, Plant and Equipment 16,142,385

Trade and Other Receivables 764,917

Cash in Hand and at Bank 2,742,023

Total Assets 19,649,325

Liabilities

Interest Bearing Borrowings 20,000,000

Trade & Other Payables 23,600

Total Liabilities 20,023,600

Net Identifiable Assets (374,275)

Group Company

As at 31st March 31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

14.3 Goodwill

Balance as at 1st April - - - - - -

On Acquisition of Subsidiary 329,300 - - - - -

Balance as at 31st March 329,300 - - - - -

The Company acquired 88% shareholding in Sierra Power (Private) Limited on 1st April 2012 at a cost of Rs.880,000 resulting in a goodwill of Rs.329,300 being the difference between the acquisition cost and the fair value of the Assets and Liabilities acquired as at that date. The management is of the view that a provision for impairment of goodwill on acquisition of Sierra Power (Private) Limited of Rs.329,300 is not required as at the end of the reporting period.

Group Company

As at PercentageHolding

31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

15. Investments in Associates

Sierra Power (Private) Limited 0% - 10 10 - 10 10

Tea Leaf Resort Holdings (Private) Limited (Note 15.1) 50% 198,190 223,689 1,792,124 2,500,000 2,500,000 2,500,000

T & G Lanka (Private) Limited (Note 15.2) 28% 2,587,355 2,586,995 - 3,300,000 3,300,000 -

2,785,545 2,810,694 1,792,134 5,800,000 5,800,010 2,500,010

15.1 Tea Leaf Resort Holdings (Private) Limited

Cost of Investment 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000

Share of Loss for the Year (Net of Income Tax) (25,499) (1,568,435) (707,876) - - -

Accumulated Share of Loss (2,301,810) (2,276,311) -

Net Asset Value of Associate as at 31 March 198,190 223,689 1,792,124 2,500,000 2,500,000 2,500,000

15.2 T & G Lanka (Private) Limited

Cost of Investment 3,300,000 3,300,000 - 3,300,000 3,300,000 -

Share of Profit/(Loss) (Net of Income Tax) for the Year 360 (713,005) - - - -

Accumulated Share of Loss (712,645) -

Net Asset Value of Associate as at 31 March 2,587,355 2,586,995 - 3,300,000 3,300,000 -


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Group Company

As at No ofShares/Units

31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

16. Available-for-Sale Financial Assets

16.1 Investment in Equity Securities

National Development Bank PLC 20,250 3,341,250 1,243,350 3,446,550 3,341,250 1,243,350 3,446,550

Richard Pieris Exports PLC 10,359 68,369 277,898 290,052 68,369 277,898 290,052

ACL Cables PLC 200 13,100 6,260 18,800 13,100 6,260 18,800

Central Industries PLC 1,584,538 99,033,625 110,218,710 151,314,543 99,033,625 110,218,710 151,314,543

DFCC Bank PLC 10,000 1,311,000 3,378,000 5,154,000 1,311,000 3,378,000 5,154,000

Seylan Bank PLC - - 3,411,900 3,835,200 - 3,411,900 3,835,200

Chevron Lubricants PLC 10,000 2,170,000 1,819,000 1,600,000 2,170,000 1,819,000 1,600,000

NDB Aviva Growth Fund Investment in Units 219,984 15,827,814 14,202,137 50,000,000 15,827,814 14,202,137 50,000,000

121,765,158 134,557,255 215,659,145 121,765,158 134,557,255 215,659,145

16.2 Investment in Treasury Bills

Treasury Bills 53,134,656 38,713,071 47,924,439 53,134,656 38,713,072 43,669,642

53,134,656 38,713,071 47,924,439 53,134,656 38,713,072 43,669,642

17. Inventories

Raw Materials 95,191,445 53,277,762 72,828,071 84,778,234 53,277,762 72,828,071

Work in Progress 299,962,829 224,050,436 161,285,718 299,962,829 224,050,436 161,285,718

Finished Goods 595,893,623 635,882,084 718,715,344 571,693,109 635,882,084 712,327,478

Packing Material 7,273,759 5,606,922 7,959,878 7,273,759 5,606,922 7,959,878

Stationeries 2,170,657 1,755,591 6,385,665 2,170,657 1,755,591 6,385,665

Engineering Items 25,996,607 22,315,665 17,935,172 25,996,607 22,315,665 17,935,172

Tool Boxes 2,405,126 2,704,208 1,671,007 2,405,126 2,704,209 1,671,007

1,028,894,046 945,592,668 986,780,855 994,280,321 945,592,669 980,392,989

Less: Provision for Obsolete Inventories (Note 17.1) (2,000,000) (2,000,000) (8,387,866) (2,000,000) (2,000,000) (2,000,000)

1,026,894,046 943,592,668 978,392,989 992,280,321 943,592,669 978,392,989

17.1 Provision for Obsolete Inventories

As at 1st April 2,000,000 8,387,866 5,526,430 2,000,000 2,000,000 2,000,000

Provision/(Reversal) During the Year - (6,387,866) 2,861,436 - - -

2,000,000 2,000,000 8,387,866 2,000,000 2,000,000 2,000,000

18. Trade & Other Receivables

Trade Receivables 768,532,119 658,242,787 497,991,605 720,675,007 658,242,787 486,937,148

Provision for Impairment (Note 18.1) (68,765,886) (70,794,613) (81,905,928) (68,765,886) (70,794,613) (72,498,240)

699,766,233 587,448,174 416,085,677 651,909,121 587,448,174 414,438,908

Other Debtors 11,014,231 - 645,144 - - -

VAT Receivables 122,694,083 177,480,848 166,647,249 111,953,589 172,787,382 166,847,861

Deposits, Prepayments & Advances 16,737,610 18,892,846 11,397,439 11,229,362 16,241,963 11,307,439

850,212,157 783,821,868 594,775,509 775,092,072 776,477,519 592,594,208

Provision for Impairment (22,000,000) (22,000,000) (2,000,000) (22,000,000) (22,000,000) (2,000,000)

828,212,157 761,821,868 592,775,509 753,092,072 754,477,519 590,594,208



Group Company

As at 31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

18.1 Provision for Impairment of Trade Receivables

Opening Balance 70,794,613 83,905,928 30,630,357 70,794,613 72,498,240 19,222,669

Impairment for the Year (2,028,727) (13,111,315) 53,275,571 (2,028,727) (1,703,627) 53,275,571

Closing Balance 68,765,886 70,794,613 83,905,928 68,765,886 70,794,613 72,498,240

19. Asset Held for Sale

Opening Balance - - - - - -

Transferred during the Year 23,515,236 - - 23,515,236 - -

Impairment Loss (2,515,236) - - (2,515,236) - -

Closing Balance 21,000,000 - - 21,000,000 - -

The Company has classified part of its Plant and Machinery as Non Current Asset Held for Sale, following the decision by Board of Directors to dispose the same. Effort to sell the Plant and Machinery has commenced and Directors expect to sell such Plant and Machinery within the next Financial Year. An impairment loss of Rs.2,515,236 has been recognized on the remeasurement of Plant and Machinery to the lower of its carrying amount and its fair value less cost to sell.

20. Amounts Due from Related Companies

Non-Trading

Sierra Engineering & Construction (Private) Limited - - - - - 5,385,281

Alucop Marketing (Private) Limited - - - - - 21,830,400

Sierra Civil Engineering & Construction (Private) Limited 3,985,000 4,885,000 4,885,000 3,985,000 4,885,000 4,885,000

Sierra Property Development (Private) Limited - - 32,854,000 - - 32,854,000

Sierra Power (Private) Limited - - 5,551,155 4,752,730 - 5,551,155

Sierra Industries (Private) Limited - - - 11,982,506 - -

Sierra Holding (Private) Limited - 10,270,064 - - 270,054 -

3,985,000 15,155,064 43,290,155 20,720,236 5,155,054 70,505,836

Trading

Sierra Electrical Engineering (Private) Limited 616,785 616,785 616,785 616,785 616,785 616,785

Sierra Information Technologies (Private) Limited - 42,328 74,464 - 42,328 74,464

Sierra Global Network (Private) Limited 2,393,056 2,564,219 1,980,426 2,393,056 2,564,219 1,980,426

Sierra Road Engineering (Private) Limited - 42,538 1,600,040 - 42,538 1,600,040

Sierra Readymix (Private) Limited 107,203 11,029 474,138 107,203 11,029 474,138

Sierra Water Works (Private) Limited 19,688 522,224 522,224 19,688 522,224 522,224

Sierra Construction (Private) Limited 64,794,757 62,187,415 54,820,380 64,794,757 62,187,415 54,820,380

Sierra Civil Engineering & Construction (Private) Limited 345,572 511,410 422,035 345,572 511,410 422,035

Sierra Property Development (Private) Limited 48,070 - - 48,070 - -

Sierra Piling (Private) Limited - 648,000 - - 648,000 -

68,325,131 67,145,948 60,510,492 68,325,131 67,145,948 60,510,492

Total 72,310,131 82,301,012 103,800,647 89,045,367 72,301,002 131,016,328


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Group Company

As at 31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

21. Cash and Cash Equivalents

Favourable Balances

Cash in Hand and at Bank 16,080,412 16,437,962 33,321,020 15,776,180 16,342,731 25,980,238

16,080,412 16,437,962 33,321,020 15,776,180 16,342,731 25,980,238

Unfavourable Balances

Bank Overdraft (73,766,597) (78,700,864) (35,406,691) (15,286,449) (39,710,313) (35,406,691)

Cash and Cash Equivalents for Cash Flow Purposes (57,686,185) (62,262,902) (2,085,671) 489,731 (23,367,582) (9,426,453)

22. Stated Capital

537,512,430 Ordinary Shares 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898

894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898

23. Retirement Benefit Obligations

Balance as at 1st April 13,836,096 6,825,754 9,724,153 13,836,105 5,989,908 -

Adjustments due to Merger - - - - - 5,558,825

Changes in Accounting Estimate - (4,345,636) - - -

Current Service Cost 1,931,893 1,850,615 934,032 1,931,884 1,850,615 467,017

Interest Charge for the Year 1,521,970 648,447 599,692 1,521,970 648,447 299,846

Actuarial (Gain)/Loss (1,913,910) 5,148,155 835,849 (1,913,910) 5,984,010 -

Payments during the Year (501,525) (636,875) (922,336) (501,525) (636,875) (335,780)

Balance as at 31st March 14,874,524 13,836,096 6,825,754 14,874,524 13,836,105 5,989,908

23.1 The total amount charged to Statement of Comprehensive Income in respect of Retirement Benefit Obligations made up as follows;

Current Service Cost 1,931,893 1,850,615 934,032 1,931,884 1,850,615 467,017

Interest Cost 1,521,970 648,447 599,692 1,521,970 648,447 299,846

Actuarial (Gain)/Loss (1,913,910) 5,148,155 835,849 (1,913,910) 5,984,010 -

1,539,943 7,647,217 2,369,573 1,539,944 8,483,072 766,863

An Actuarial Valuation of the Retirement Benefit Obligations of the Company and the Group was carried out as at 31st March 2013, by Messers M. Poopalanathan of Actuarial and Management Consultants (Private) Limited, a firm of Professional Actuaries. The valuation was carried out as per the “Projected Unit Credit” (PUC) method.

The following assumptions were used in valuing the Retirement Benefit Obligations using “Projected Unit Credit.

31-03-2013Rs.

31-03-2012Rs.

Expected Annual Average Salary Increment 10% 10%

Discount Rate 12% 11%

Retirement Age 55 Years 55 Years



Group Company

As at 31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

24. Deferred Tax Liability

Balance as at 1st April 53,303,446 53,384,247 43,717,376 53,303,446 53,384,247 (4,192,140)

Addition due to Merger - - - - - 43,938,293

Provision/(Reversal) for the Year (Note 24.2) 102,225,784 (80,801) 9,666,871 99,410,343 (80,801) 13,638,094


As at 2013 2012 2011

Temporary Difference

Rs.

Tax Effect

Rs.


Rs.

Tax Effect

Rs.


Rs.

Tax Effect

Rs.

24.1 The Deferred Tax Liability is attributable to the followings

Group

On Property, Plant and Equipment 251,734,018 70,361,074 205,354,070 57,177,553 220,672,224 61,457,214

On Retirement Benefit Obligations (14,874,524) (4,157,207) (13,836,096) (3,874,107) (6,825,754) (1,668,189)

On Accumulated Tax Losses (27,946,811) (7,810,716) - - (22,997,408) (6,404,778)

On Revaluation Reserve 346,914,567 97,136,079 - - - -

555,827,250 155,529,230 191,517,974 53,303,446 190,849,062 53,384,247

Company

On Property, Plant and Equipment 241,678,872 67,545,633 205,354,070 57,177,553 220,672,226 61,457,214

On Retirement Benefit Obligations (14,874,524) (4,157,207) (13,836,105) (3,874,107) (5,989,908) (1,668,189)

On Accumulated Tax Loss (27,946,811) (7,810,716) - - (22,997,408) (6,404,778)

On Revaluation Reserve 346,914,567 97,136,079 - - - -

545,772,104 152,713,789 191,517,965 53,303,446 191,684,910 53,384,247

Group Company

As at 31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

24.2 Provision/(Reversal) for the Year

Recognized in Statement of Comprehensive Income 5,089,705 (80,801) 9,666,871 2,274,264 (80,801) 13,638,094

Recognized in Other Comprehensive Income 97,136,079 - 97,136,079 - -

102,225,784 (80,801) 9,666,871 99,410,343 (80,801) 13,638,094

25. Long-Term Loans

Balance as at 1st April 88,639,433 56,629,434 82,734,364 48,749,972 56,629,434 70,013,693

On Acquisition of Subsidiary 20,000,000 - - - - -

Loans Obtained during the Year 211,740,650 59,889,475 - 149,882,711 20,000,000 -

Repayments during the Year (48,735,696) (27,879,476) (26,104,930) (47,434,096) (27,879,462) (13,384,259)


Amount Payable within One Year 54,158,846 33,434,512 26,768,494 37,758,056 33,434,512 26,768,494

Amount Payable After One Year 217,485,541 55,204,921 29,860,940 113,440,531 15,315,460 29,860,940


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Group Company

As at 31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

31-03-2013Rs.

31-03-2012Rs.

01-04-2011Rs.

26. Lease Liability


Lease obtained during the year 3,982,610 4,997,149 3,105,960 3,982,610 4,997,149 -

21,857,330 25,700,874 30,083,793 21,857,330 25,700,874 25,445,525

Rentals Paid during the Year (7,537,608) (7,826,154) (9,380,068) (7,537,608) (7,826,154) (4,741,800)

Gross Lease Liability 14,319,722 17,874,720 20,703,725 14,319,722 17,874,720 20,703,725

Less: Interest in Suspense (2,225,060) (3,608,701) (5,778,587) (2,225,060) (3,608,728) (5,778,587)


Current Liability

Lease Liability Payable within One Year 5,859,816 4,581,086 4,424,171 5,859,816 4,581,086 4,424,171

Non Current Liability

Lease Liability Payable After One Year 6,234,846 9,684,933 10,500,967 6,234,846 9,684,906 10,500,967

27. Trade & Other Payables

Trade Creditors & Other Payables 305,366,388 506,398,382 353,266,811 288,416,370 496,222,566 352,141,765

Accrued Expenses 21,964,604 14,276,849 7,377,667 8,175,125 14,130,028 6,845,649

327,330,992 520,675,231 360,644,478 296,591,495 510,352,594 358,987,414

28. Amounts Due to Related Companies

Sierra Engineering & Construction (Private) Limited - - 176,671 - - -

Sierra Industries (Private) Limited - - - - 38,512,594 -

- - 176,671 - 38,512,594 -

29. Import Demand Loan


Loans Obtained during the Year 1,713,988,482 1,853,209,609 1,398,746,361 166,857,670 1,851,945,014 1,398,746,361

Repayments during the Year (1,517,843,012) (1,865,024,877) (1,033,131,065) (1,517,843,012) (1,865,024,877) (1,033,131,065)




29.1 Assets Pledged as Security and Repayment TermsThe following assets have been pledged as securities against the long term and short term borrowings that have been disclosed under the notes 25 and 29 respectively.

Name of the Bank Assets Pledged Facility Obtained Interest Rate Repayment Terms

Commercial Bank of Ceylon PLC.

Land & Buildings, Plant, Machinery, and equipment of the Company and Concurrent Mortgage over stocks in trade together with assignment over book debts.

Over Draft of Rs.40 Mn AWPLR+2% p a -

Letter of Credit Facility Rs.400 Mn Combined Facility for the Import Demand Loan and release of Document against Acceptance Rs.1 Billion.

AWPLR+2% p a Repayable over 180 days

Letters of Guarantee Facility Rs.250 Mn Shipping Guarantee Facility Rs.100 Mn

Mortgage over the Machinery ImportedMortgage over the Machinery Imported

Term Loan (1)f Rs.20 MnTerm Loan (2)f Rs.35 Mn Term Loan (3)f Rs.114 Mn

AWPLR+2% p aAWPLR+2% p aAWPLR+2% p a

35 equal monthly Instalments59 equal monthly Instalments60 equal monthly Instalments

Bank of Ceylon PLC. Relative Bills of Exchange, Shipping documents and the underlying goods under the Bank’s constructive control.

Letter of Credit Facility of Rs.200 Mn - -

Hypothecation over Stocks Hypothecation Loan of Rs.200 Mn AWPLR+1.5% p a Repayable over 180 days

Amana Investments Limited Machinery Imported under the Facility (Drum Twister Machine)

Diminishing Musharakah of Rs. 70 Mn AER of 13.5% 44 monthly repayments

Two Motor cars purchased under the Facility

Diminishing Musharakah of Rs.26.57 Mn AER of 14% 60 monthly repayments.

30. Contingent Liabilities

There were no material contingent Liabilities as at the reporting date which require adjustments to or disclosure in the Financial Statements.

31. Commitments

There were no material capital commitments as at the reporting Date.

32. Events Occurring After the Reporting Period

There were no material events occurring after the reporting period that require adjustments to or disclosure in the Financial Statements.


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57NOTES TO THE FINANCIAL STATEMENTS33

.Re

lated

Par

ty D

isclos

ure

33.1

Tran

sacti

ons w

ith R

elated

Par

ties

Tran

sacti

on V

alue

Year

End

ed 31

st M

arch

Bala

nce d

ue fr

om/(t

o)As

at 31

st M

arch

Nam

e of t

he C

ompa

nyNa

ture

of th

e Tra

nsac

tions

2013

2012

2013

2012

Tran

sacti

ons w

ith P

aren

t Com

pany

Sier

ra H

oldin

g (Pr

ivat

e) Li

mite

dPr

ocee

d fro

m sa

les of

Bus

ines

s - S

ierra

Eng

inee

ring &

Con

struc

tion

(Priv

ate)

Lim

ited

- 27

0,054

-

270,0

54

Tran

sacti

ons w

ith S

ubsid

iary

Com

pani

es

Sier

ra P

ower

(Priv

ate)

Lim

ited

Tota

l am

ount

paid

for t

he C

apita

l Exp

ense

s 3,

872,7

30

5,55

1,155

4,

752,7

30

-

Inve

stmen

t in

shar

es 88

0,000

-

--

Sier

ra In

dustr

ies (P

rivat

e) Li

mite

dIn

vestm

ent i

n sh

ares

- 70

,000,0

10

11,98

2,506

(3

8,512

,594)

Tota

l of f

unds

/loan

s pai

d -

Tota

l am

ount

paid

for t

he ex

pens

e 5,

877,6

98

Land

tran

sfer a

gain

st th

e Inv

estm

ent

44,61

7,000

Aluc

op M

arke

ting (

Priv

ate)

Lim

ited

Sett

off by

mer

ger

- 21

,847,5

43

- -

Tota

l of f

unds

/loan

s obt

aine

d -

Tota

l of f

unds

/loan

s pai

d 37

2,316

Tota

l am

ount

paid

from

the e

xpen

se

(389

,459)

Sier

ra E

ngin

eerin

g & C

onstr

uctio

ns (P

rivat

e) Li

mite

dTo

tal a

mou

nt pa

id fo

r the

expe

nse

- 45

,760

- -

Tota

l of f

unds

/loan

s obt

aine

d (2

,800,0

00)

Tota

l of f

unds

/loan

s pai

d (2

,631,0

41)

NOTES TO THE FINANCIAL STATEMENTS



33.1

Tran

sacti

ons w

ith R

elated

Par

ties (

Cont

inue

d)

Tran

sacti

on V

alue

Year

End

ed 31

st M

arch

Bala

nce d

ue fr

om/(t

o)As

at 31

st M

arch

Nam

e of t

he C

ompa

nyNa

ture

of th

e Tra

nsac

tions

2013

2012

2013

2012

Tran

sacti

ons w

ith O

ther

Rela

ted C

ompa

nies

Sier

ra P

rope

rty &

Dev

elopm

ent (

Priv

ate)

Lim

ited

Purc

hase

of In

vestm

ent P

rope

rty -

(32,8

54,00

0) (4

8,070

) 32

,854,0

00

Sale

of Go

ods

48,07

0-

--

Sier

ra C

onstr

uctio

n (P

rivat

e) Li

mite

dSa

le of

Good

s11

1,412

,852

7,36

7,034

(64,7

94,75

7) 62

,187,4

15

Settl

emen

t of I

nvoic

es (1

08,80

5,510

)-

- (1

76,67

1)

Sier

ra C

ivil

Engi

neer

ing (

Priv

ate)

Lim

ited

Loan

Sett

lemen

t (9

00,00

0) -

3,98

5,000

4,

885,0

00

Sale

of Go

ods

564,5

57

- (3

45,57

2)

422,0

35

Settl

emen

t of I

nvoic

es (6

41,02

0)

Sier

ra E

lectri

cal E

ngin

eerin

g (Pr

ivat

e) Li

mite

dSa

le of

Good

s -

- (6

16,78

5)

616,7

85

Sier

ra G

lobal

Netw

orks

(Priv

ate)

Lim

ited

Sale

of Go

ods

741,2

49

583,7

93

(2,39

3,056

) 2,

564,2

19

Settl

emen

t of I

nvoic

es (9

12,41

2)

Sier

ra In

form

ation

Tec

hnolo

gies

(Priv

ate)

Lim

ited

Settl

emen

t of I

nvoic

es (4

2,328

) (3

2,136

) -

42,32

8

Sier

ra R

oad E

ngin

eerin

g (Pr

ivat

e) Li

mite

dSa

le of

Good

s -

- -

42,32

8

Settl

emen

t of I

nvoic

es (4

2,538

) (1

,557,5

02)

Sier

ra W

ater

Wor

ks (P

rivat

e) Li

mite

dSa

le of

Good

s 49

1,817

-

(19,6

88)

522,2

24

Settl

emen

t of I

nvoic

e (9

94,35

3)

Sier

ra R

edim

ix (P

rivat

e) Li

mite

dSa

le of

Good

s60

2,517

11,02

9 (1

07,20

3)

11,02

9

(495

,314)

--

-

Sier

ra P

iling

(Priv

ate)

Lim

ited

Sale

of Go

ods

277,2

00

648,0

00

- 64

8,000

Settl

emen

t of I

nvoic

e (9

25,20

0) -



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59NOTES TO THE FINANCIAL STATEMENTS

33.2 Transactions with Key Management Personnel

According to Sri Lanka Accounting Standards 30 (revised 2005) - “Related Party Disclosures”, Key Management personal are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly the directors of the company (including Executive and non executive directors )have been classified as Key Management personal of the company group.

Group Company

2013 2012 2013 2012

As at 31st March 31st March

Rs.31st March

Rs. 31st March

Rs.31st March

Rs.

Compensation to Key Management Personnel

Short Term Employment Benefits 4,250,000 5,250,000 4,250,000 5,250,000

Post Employment Benefits - - - -

34. Explanation of Transition to SLFRSs

As stated in Note 2.1 to the Financial Statements, these are the Group’s first Financial Statements prepared in accordance with SLFRS. The Significant Accounting Policies set out in Note 3 to the Financial Statements have been applied in preparing the Financial Statements for the period ended 31 March 2013, the comparative information presented in these Financial Statements for the year ended 31 March 2012 and in the preparation of an opening SLFRS Statement of Financial Position as at 1st April 2011 (the Group’s date of transition). In preparing its opening SLFRS in the Statement of Financial Position, the Group has adjusted amounts reported previously in Financial Statements prepared in accordance with Sri Lanka Accounting Standards (SLAS). An explanation of how the transition from SLAS to SLFRS has affected the Group’s financial position, financial performance and cash flows is set out in the following tables and the Notes that accompany the tables:

34.(i)a Reconciliation of Group Comprehensive Income for the year ended 31st March 2012

SLASs Effect of Transition to

SLFRSs

SLFRSs

Note Rs. Rs. Rs.

Revenue 2,476,058,520 - 2,476,058,520

Cost of Sales (2,010,583,298) - (2,010,583,298)

Gross Profit 465,475,222 - 465,475,222

Other Income 24,999,838 - 24,999,838

Selling & Distribution Expenses 34(ii)b(3) (117,544,961) 13,385,332 (104,159,628)

Administration Expenses (68,356,157) - (68,356,157)

Other Operating Expenses (18,458,772) - (18,458,772)

Profit from Operations 286,115,170 13,385,332 299,500,503

Finance Income 34(ii)b(2) 4,937,013 38,372 4,975,385

Finance Cost 34(ii)b(4) (159,101,413) (9,261) (159,110,674)

Net Finance Costs (154,164,400) 29,111 (154,135,289)

Profit Before Associate Companies' Share of Loss 131,950,770 13,414,443 145,365,214

Share of Loss of Associate Companies (2,281,440) - (2,281,440)

Profit Before Taxation 129,669,330 13,414,443 143,083,774

Income Tax Expense (22,749,886) - (22,749,886)

Profit for the Year 106,919,444 13,414,443 120,333,888

Other Comprehensive Income - (40,793,935) (40,793,935)

Total Comprehensive Income for the Year 106,919,444 (27,379,492) 79,539,953




34.(i)b Reconciliation of Company Comprehensive Income for the year ended 31st March 2012

SLASs Effect of Transition to

SLFRSs

SLFRSs

Note Rs. Rs. Rs.

Revenue 2,462,318,846 - 2,462,318,846

Cost of Sales (2,000,713,159) - (2,000,713,159)

Gross Profit 461,605,687 - 461,605,687

Other Income 33,217,995 - 33,217,995

Distribution Expenses 34(ii)b(3) (117,554,303) 13,385,332 (104,168,971)

Administration Expenses (67,515,722) - (67,515,722)

Other Operating Expenses (20,000,000) - (20,000,000)

Operating Profit before Finance Costs 289,753,657 13,385,332 303,138,989

Finance Income 34(ii)b(2) 4,716,071 38,372 4,754,443

Finance Cost 34(ii)b(4) (157,749,913) (9,261) (157,759,174)

Net Finance Costs (153,033,842) 29,111 (153,004,731)

Profit Before Income tax 136,719,815 13,414,443 150,134,258

Income Tax Expense (21,398,173) - (21,398,173)

Profit for the Year 115,321,642 13,414,443 128,736,085

Other Comprehensive Income 34(ii)b(1) - (40,793,934) (40,793,934)

Total Comprehensive Income for the year 115,321,642 (27,379,491) 87,942,150

34.(ii)a Reconciliation of Group Statement of Financial Position

As at 31st March 2012 As at 1st April 2011 SLASs Effect of

Transition to SLFRSs

SLFRSs SLASs Effect of Transition to

SLFRSs

SLFRSs

Note Rs. Rs. Rs. Rs. Rs. Rs.

ASSETS

Non Current Assets

Property, Plant and Equipment 764,713,420 - 764,713,420 514,746,996 - 514,746,996

Intangible Assets 5,641,000 - 5,641,000 5,578,708 - 5,578,708

Investment Property 32,854,000 - 32,854,000 - - -

Investments in Subsidiaries - - - - - -

Investments in Associates 2,810,694 - 2,810,694 1,792,134 - 1,792,134

Financial Investments - Available for Sale 34(ii)b(1) 104,080,955 30,476,300 134,557,255 144,364,282 71,294,863 215,659,145

910,100,069 105,229,898 940,576,369 666,482,120 71,294,863 737,776,983

Current Assets

Inventories 943,592,668 - 943,592,668 978,392,989 - 978,392,989

Trade and Other Receivable 34(ii)b(3) 801,712,080 (39,890,212) 761,821,868 646,051,080 (53,275,571) 592,775,509

Income Tax Receivable 7,279,730 - 7,279,730 11,518,792 - 11,518,792

Asset Held for Sale - - - - - -

Amounts due from Related Companies 82,301,012 - 82,301,012 103,800,647 - 103,800,647

Investments Available for Sale 34(ii)b(2) 38,650,070 63,002 38,713,072 47,924,423 - 47,924,423

Cash in Hand and at Bank 16,437,962 - 16,437,962 33,321,020 - 33,321,020

1,889,973,522 (39,827,210) 1,850,146,312 1,821,008,951 (53,275,571) 1,767,733,380

TOTAL ASSETS 2,800,073,591 (9,350,910) 2,790,722,681 2,487,491,071 18,019,292 2,505,510,363



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34.(ii)a Reconciliation of Group Statement of Financial Position (Continued)




SLFRSs

SLFRSs


EQUITY AND LIABILITIES

Equity

Stated Capital 894,565,898 - 894,565,898 894,565,898 - 894,565,898

Retained Earnings 459,451,703 (114,237,852) 345,213,851 405,735,183 (127,652,297) 278,082,886

Available for Sale Reserve 34(ii)b(1) - 104,938,895 104,938,895 - 145,732,830 145,732,830

Total Equity Attributable to Equity Holders of the Company 1,354,017,601 (9,298,957) 1,344,718,644 1,300,301,081 18,080,533 1,318,381,614

Minority Interest 29,451,690 - 29,451,690 - -

Total Equity 1,383,469,291 (9,298,957) 1,374,170,334 1,300,301,081 18,080,533 1,318,381,614

Non Current Liabilities

Retirement Benefit Obligations 13,836,096 - 13,836,096 6,825,754 - 6,825,754

Deferred Taxation 53,303,446 - 53,303,446 53,384,247 - 53,384,247

Long-Term Loans 55,204,921 - 55,204,921 29,860,940 - 29,860,940

Long-Term Lease Liability 34(ii)b(4) 9,712,729 (27,796) 9,684,933 10,544,926 (43,959) 10,500,967

132,057,192 (27,796) 132,029,396 100,615,867 (43,959) 100,571,908

Current Liabilities

Trade & Other Payables 520,675,231 - 520,675,231 360,644,478 - 360,644,478

Amounts due to Related Companies - - - 176,671 - 176,671

Current Portion of Long -Term Loans 33,434,512 - 33,434,512 26,768,494 - 26,768,494

Current Portion of Lease Liability 34(ii)b(4) 4,605,243 (24,156) 4,581,087 4,441,453 (17,282) 4,424,171

Import Demand Loan 647,131,258 - 647,131,258 658,946,526 - 658,946,526

Income Tax Payable - - - 189,810 - 189,810

Bank Overdraft 78,700,864 - 78,700,864 35,406,691 - 35,406,691

1,284,547,108 (24,156) 1,284,522,952 1,086,574,123 (17,282) 1,086,556,841

TOTAL LIABILITIES 2,800,073,591 (9,350,910) 2,790,722,681 2,487,491,071 18,019,292 2,505,510,363




34.(ii)b Reconciliation of the Company Statement of Financial Position




SLFRSs

SLFRSs


ASSETS

Non Current Assets

Property, Plant and Equipment 632,026,030 - 632,026,030 513,339,803 - 513,339,803

Intangible Assets 5,641,000 - 5,641,000 5,578,708 - 5,578,708

Investment Property 32,854,000 - 32,854,000 - - -

Investments in Subsidiaries 70,000,010 - 70,000,010 100,030 - 100,030

Investments in Associates 5,800,010 - 5,800,010 2,500,010 - 2,500,010

Investments Available for Sale 34(ii)b(1) 29,327,357 105,229,898 134,557,255 69,610,684 146,048,461 215,659,145

775,648,407 105,229,898 880,878,305 591,129,235 146,048,461 737,177,696

Current Assets

Inventories 943,592,669 - 943,592,669 978,392,989 - 978,392,989

Trade & Other Receivable 34(ii)b(3) 794,367,759 (39,890,240) 754,477,519 643,869,779 (53,275,571) 590,594,208

Income Tax Receivable 7,279,750 - 7,279,750 11,518,792 - 11,518,792

Asset Held for Sale - - - - - -

Amounts due from Related Companies 72,301,002 - 72,301,002 131,016,328 - 131,016,328

Available-for-sale Investment 34(ii)b(2) 38,650,071 63,001 38,713,072 43,669,642 - 43,669,642

Cash in Hand and at Bank 16,342,731 - 16,342,732 25,980,238 - 25,980,238

1,872,533,982 (39,827,239) 1,832,706,744 1,834,447,768 (53,275,571) 1,781,172,197

TOTAL ASSETS 2,648,182,389 65,402,659 2,713,585,048 2,425,577,003 92,772,890 2,518,349,893

EQUITY AND LIABILITIES

Share Capital & Reserves

Stated Capital 894,565,898 - 894,565,898 894,565,898 - 894,565,898

Retained Earnings 388,966,832 (39,484,256) 349,482,576 346,680,506 (52,898,699) 293,781,807

Available for Sale Reserve - 104,938,896 104,938,895 - 145,732,830 145,732,830

Total Equity Attributable to Equity Holders of the Company 1,283,532,730 65,454,640 1,348,987,369 1,241,246,404 92,834,131 1,334,080,535

Total Equity 1,283,532,730 65,454,640 1,348,987,369 1,241,246,404 92,834,131 1,334,080,535

Non Current Liabilities

Retirement Benefit Obligations 13,836,105 - 13,836,105 5,989,908 - 5,989,908

Deferred Taxation 53,303,446 - 53,303,446 53,384,247 - 53,384,247

Long-Term Loans 15,315,460 - 15,315,460 29,860,940 - 29,860,940

Long-Term Lease Liability 34(ii)b(4) 9,712,729 (27,823) 9,684,906 10,544,926 (43,959) 10,500,967

92,167,740 (27,823) 92,139,917 99,780,021 (43,959) 99,736,062

Current Liabilities

Trade & Other Payables 510,352,594 - 510,352,594 358,987,414 - 358,987,414

Amounts due to Related Companies 38,512,594 - 38,512,594 - - -

Current Portion of Long -Term Loans 33,434,512 - 33,434,512 26,768,494 - 26,768,494

Current Portion of Lease Liability 34(ii)b(4) 4,605,243 (24,157) 4,581,086 4,441,453 (17,282) 4,424,171

Import Demand Loan 645,866,663 - 645,866,663 658,946,526 - 658,946,526

Bank Overdraft 39,710,313 39,710,313 35,406,691 35,406,691

1,272,481,919 (24,157) 1,272,457,762 1,084,550,578 (17,282) 1,084,533,296

TOTAL EQUITY AND LIABILITIES 2,648,182,389 65,402,659 2,713,585,048 2,425,577,003 92,772,890 2,518,349,893



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34.(ii)b(1) Reclassification of Available for Sale Investments - Quoted Investments

The Company under previous SLASs, recognized Long Term Investment at cost. With the transition to SLFRs, the company has classified such investment as available for sale investments and valued at fair value as at the reporting date.

The impact arising from the change is summarized as follows:

31-03-2012 01-04-2011

GroupRs.

CompanyRs.

GroupRs.

CompanyRs.

Statement of Financial PositionAvailable for Sale Investments at Fair Value 134,557,255 134,557,255 215,659,145 215,659,145

Investments at Cost (29,327,357) (29,327,357) (69,610,684) (69,610,684)

Effect of Change in Disposal of Associate - - (74,753,598) -

Adjustment to Fair Value Reserve 33,935,035 (40,818,563) 71,294,863 146,048,461

34.(ii)b(2) Reclassification of Available for Sale Investments - Treasury Bills

The Company under previous SLASs, recognized Investment in Treasury Bills at simple interest. With the of transition to SLFRs, the company has classified such investment as available for sale investment. The interest is recognized using effective interest rate method and such investments are shown in the statement of financial position at fair value.

31-03-2012 01-04-2011

GroupRs.

CompanyRs.

GroupRs.

CompanyRs.

Statement of Comprehensive Income Finance Income 38,372 38,372 - -Adjustment before Income Tax 38,372 38,372 - -Statement of Financial PositionFinance Income 38,372 38,372 - -Statement of Financial PositionAdjustment to Fair Value Reserve 24,629 24,629 - -Total 63,001 63,001 - -

34.(ii)b(3) Impairment of Trade Receivables

Under SLFRSs, the Company test the impairment for Trade Receivables at both a specific asset and collective level. Under SLASs, the Company calculated the provision based on the aging of the receivables.

The impact arising from the change is summarized as follows:

31-03-2012 01-04-2011

GroupRs.

CompanyRs.

GroupRs.

CompanyRs.

Statement of Comprehensive IncomeDistribution Expenses 13,385,332 13,385,332 53,275,571 53,275,571

Adjustment before Income Tax 13,385,332 13,385,332 53,275,571 53,275,571

Statement of Financial PositionTrade Receivables (39,890,239) (39,890,239) (53,275,571) (53,275,571)Adjustment to Retained Earnings (39,890,239) (39,890,239) (53,275,571) (53,275,571)

34.(ii)b(4) Change in Accounting Policies - Leases

Under previous SLAS, the Company recognized interest expense on lease using sum of digit method with respect to certain lease agreements. With the transition to SLFRS, the interest has been recomputed using Effective Interest Rate method.

31-03-2012 01-04-2011

GroupRs.

CompanyRs.

GroupRs.

CompanyRs.

Statement of Comprehensive IncomeFinance Cost 9,261 9,261 (61,241) (61,241)Adjustment before Income Tax 9,261 9,261 (61,241) (61,241)Statement of Financial PositionLease Interest in Suspense 51,980 51,980 61,241 61,241 Adjustment to Retained Earnings 51,980 51,980 61,241 61,241




35. Financial Risk Management

(i) Overview

The Group has exposure to the following risks from its use of financial instruments:

• Credit Risk • Liquidity Risk • Market Risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risks, and the Group’s management of capital.

(ii) Risk management framework

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

(iii) Credit Risk

Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations, and this principally arises from the Group’s receivables from customers.

Exposure to Credit Risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows;

Group Company

201331st March

Rs.

201331st March

Rs.

Trade Receivables 699,766,233 651,909,121

Amounts due from Related Companies 72,310,131 89,045,367

Balances with Banks 13,637,748 13,637,749

785,714,112 754,592,237

Trade Receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The management has established a credit policy under which each new customer is analysed individually for credit worthiness before the group standard payment and delivery terms offered.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of Trade Receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

The aging of Group Trade Receivables at the reporting date were as follows;

As at 31/03/2013 As at 31/03/2012 As at 01/04/2011

Gross Balance Rs.

Impairment Rs.

Gross Balance Rs.

Impairment Rs.

Gross Balance Rs

Impairment Rs.

Past due 0-90 days 533,222,401 344,296 444,663,049 628,014 299,904,056 678,133

Past due 91-360 days 145,872,847 2,811,484 134,210,137 3,824,087 105,336,600 4,226,989

More than 360 days 89,436,871 65,610,106 79,369,601 66,342,512 92,750,949 77,000,806

768,532,119 68,765,886 658,242,787 70,794,613 497,991,605 81,905,928

Cash and Cash Equivalents

The Group held cash and cash equivalents of Rs.16,080,412 at 31st March 2013 (Rs. 16,437,962 as at 31st March 2012) which represent its maximum credit exposure on these assets.

(iv) Liquidity Risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or risking damage to the Group’s reputation.



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35. Financial Risk Management (Continued)

(iv) Liquidity Risk (Continued)

The Group maintains the following lines of credit,

•Rs.100 Mn Overdraft facility that is secured by pledge over the Group’s unencumbered assets. Interest would be payable at the rate of overnight AWPLR plus2% on average.

The following are the contractual maturities of financial liabilities.

As at 31st March 2013

CarryingAmount

Rs.

0-6Months

Rs.

6-12Months

Rs.

More than 12 Months

Rs.

Non Derivative Financial Liabilities

Trade &Other Payables 327,330,992 327,330,992 - -

Interest bearing Borrowings 1,127,015,750 873,286,032 30,009,331 223,720,387

Bank overdraft 73,766,597 73,766,597 - -

1,528,113,339 1,274,383,621 30,009,331 223,720,387

As at 31st March 2012

CarryingAmount

Rs.

0-6Months

Rs.

6-12Months

Rs.

More than 12 Months

Rs.

Non Derivative Financial Liabilities

Trade &Other Payables 520,675,229 520,675,229 - -

Interest bearing Borrowings 750,036,710 665,506,740 19,640,077 64,889,893

Bank overdraft 78,700,864 78,700,864 -

Total 1,349,412,803 1,264,882,833 19,640,077 64,889,893

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

(v) Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

(a) Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than Sri Lankan Rupees (LKR). The foreign currencies in which these transactions primarily denominated are United Stated Dollars (USD) and Euro.

The Group uses when necessary , forward exchange contracts to hedge its currency risk on USD, most with a maturity of less than 6 months from the reporting date.

Exposure to Currency Risk

The Group exposure to foreign currency risk was as follows based on notional amount.

As at 31st March31-03-2013

USD31-03-2012

USD

Trade Payables - Foreign Creditors 2,315,414 3,391,242

Gross Statement of Financial Position Exposure 2,315,414 3,391,242

The following significant exchange rates were applicable during the year

Average Rate Reporting Date Spot Rate

2013Rs.

2012Rs.

2013Rs.

2012Rs.

USD 129.87 113.33 126.85 128.19



(v) Market Risk (Continued)

(a) Currency Risk (Continued)

Sensitivity Analysis

A strengthening of the LKR, as indicated below, against the USD at 31st March 2013 would have increased/(decreased) the equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant.

As at 31st March

StrengtheningProfit or Loss

Rs.

WeakeningProfit or Loss

Rs.

31st March 2013

USD (10% movement) (29,371,675) 29,371,675

31st March 2012

USD (10% movement) (43,471,585) 43,471,585

(b) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument fluctuate because of changes in market interest rates. The group exposure to the risk of changes in market interest rates relates primarily to the Groups long term debt obligation . The Group utilises various financial instruments to manage exposures to interest rate risks.

At the reporting date, the Group’s interest-bearing financial instruments were as follows:

Carrying Amount

31-03-2013Rs.

3-31-2012 Rs.

Fixed Rate Instruments

Financial Assets

Treasury Bills 53,134,656 38,713,072

Financial Liabilities - -

Long-Term Loans (271,644,387) (88,639,433)

Leases (14,319,722) (17,874,747)

Import Demand Loans (843,276,728) (647,131,258)

(1,076,106,181) (714,932,367)

Variable Rate Instruments

Financial Assets - -

Financial Liabilities - -

Bank Overdrafts (73,766,597) (78,700,864)

Fair Value Sensitivity Analysis for Fixed Rate Instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through Profit or Loss. Therefore a change in interest rate at the reporting date would not affect Profit or Loss.

A change of 100 basis points in interest rates would have decreased or increased profit by Rs. 10,761,061 respectively.



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(v) Market Risk (Continued)

(b) Interest Rate Risk (Continued)

Cash flow sensitivity analysis for variable rate instruments

The Group is exposed to changes in market interest rates through Bank Borrowings at variable interest rates.

At the reporting date, the Group’s interest-bearing financial instruments were as follows:

Profit or Loss

100 bp increase Rs.

100 bp decrease Rs.

31st March 2013

Variable Rate Instruments (97,443,369) 97,443,369

Cash Flow Sensitivity (Net) (97,443,369) 97,443,369

31st March 2012

Variable Rate Instruments (43,585,611) 43,585,611



(vi) Capital Management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as result from operating activities divided by total shareholders’ equity, excluding no controlling interests. The Board of Directors also monitors the level of dividends to ordinary shareholders.

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. Accordingly, major part of the borrowings comprise short term money market loans and bank overdrafts with variable interest rates being used only to manage the working

capital requirements of the day today operations of the Group.

The Group’s debt to adjusted capital ratio at the end of the reporting period was as follows:

Group Company

201331st March

Rs.

201231st March

Rs.

201331st March

Rs.

201231st March

Rs.

Total Liabilities 1,698,517,120 1,416,552,347 1,439,355,827 1,364,597,679

Less: Cash and Cash Equivalents (16,080,412) (16,437,962) (15,776,180) (16,342,731)

Net Debt 1,682,436,708 1,400,114,385 1,423,579,647 1,348,254,948

Total Equity 1,674,149,444 1,374,170,334 1,688,599,668 1,348,987,369

Net Debt to Equity Ratio 100% 102% 84% 100%

There were no changes in the Group’s approach to capital management during the year and the Group is not subject to externally imposed capital requirements.


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Sierra Cables PLC Annual Report 2012/13SUPPLEMENTARY INFORMATION69

SHARE INFORMATION

For the year ended 31st MarchCompany

2013Rs.

Company2012

Rs.

Earnings

Earnings Per Share Basic 0.03 0.24

Book Value - Sierra Cables PLC.

Net Assets Per Share on 31st March 3.14 2.51

Price Indices

CSE All Share Price Index 5,735.68 5,420.20

Milanka Price Index - 4,891.58

Share Prices

Lowest - Rs. 2.0 2.9

Highest - Rs. 3.7 6.1

Last Transaction 2.2 3.3

Market Capitalisation

Value 1,182,527,346 1,773,791,019

No. of Market Days 239 240

No. of Days Trades 239 240

Public Holding 37.64% 37.68%

SHARE INFORMATION


TEN YEAR SUMMARYTEN YEAR SUMMARY

For the year ended 31st March2004

Rs.2005

Rs.2006

Rs.2007

Rs.2008

Rs.2009

Rs.2010

Rs.2011

Rs.2012

Rs.2013

Rs.

Restated RestatedOperating Results

Turnover 590,091,842 752,941,879 1,038,076,867 1,395,462,767 1,489,325,624 1,515,318,233 1,037,425,535 1,488,980,103 2,476,058,520 2,141,353,995

Gross Profit 116,828,493 144,705,928 230,940,997 272,433,383 332,724,286 230,718,971 220,372,206 256,397,820 465,475,222 305,053,224

Profit From Operations 59,706,563 84,502,944 176,436 199,432,274 277,533,324 160,014,485 176,323,484 90,731,337 299,500,503 140,287,480

Profit Before Associate Company's Share of Profit

11,587,740 35,142,872 139,337,547 151,152,240 174,694,115 25,781,080 108,286,675 47,552,975 145,365,214 -18,066,589

Profit After Tax 26,315,771 64,391,915 100,747,296 101,695,199 129,237,627 26,342,486 108,148,358 16,116,633 120,333,888 -23,181,433

As at 31st March

Assets

Property, Plant & Equipment 379,449,179 366,987,871 363,130,752 427,095,874 433,763,317 485,387,038 494,452,431 514,746,996 764,713,420 1,179,081,707

Other Non-Current Asset 105,858,368 129,106,975 156,613,840 176,276,677 190,025,284 203,629,248 113,020,866 223,029,987 175,862,949 160,141,863

Current Assets 466,404,829 412,238,792 1,139,457,086 1,105,979,883 1,210,165,531 1,210,263,060 1,471,852,628 1,767,733,396 1,850,146,311 2,033,442,994

Total Asset 951,712,376 908,333,638 1,659,201,678 1,709,352,434 1,833,954,132 1,899,279,346 2,079,325,925 2,505,510,379 2,790,722,680 3,372,666,564

Liabilities

Long-Term Debt 121,663,994 80,819,180 77,027,087 43,326,142 21,564,397 80,174,171 69,435,262 40,361,907 64,889,854 223,720,387

Other Non-Current Liabilities 1,852,137 2,187,544 16,432,279 29,204,037 49,578,917 55,604,003 57,954,752 60,210,001 67,139,542 170,403,754

Short-Term Debt 43,236,842 29,753,362 22,842,754 19,987,553 35,317,723 15,743,986 45,152,092 35,406,691 78,700,864 73,766,597

Other Current Liabilities 419,853,049 367,838,934 465,272,684 470,516,694 451,937,460 472,355,366 523,233,642 1,051,150,166 1,205,822,048 1,230,626,382

Shareholders' Funds

Share Capital 337,512,430 337,512,430 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898

Reserves 28,753,854 90,222,188 183,060,976 251,752,110 380,989,737 380,835,922 488,984,280 423,815,716 450,152,746 761,924,958

Non-Controlling Interest - - - - - - - 29,451,690 17,658,588

Ratios

Total Assets/Equity 2.60 2.12 1.54 1.49 1.44 1.49 1.50 1.90 2.03 2.01

Turnover/Assets 0.62 0.83 0.63 0.82 0.81 0.80 0.5 0.59 0.89 0.63

Net Margin (%) 4.46 8.55 9.70 7.30 8.70 1.70 10.40 1.08 4.86 (1.08)

Return on Equity (%) 3.16 8.22 12.90 13.20 13.70 2.00 7.80 3.61 10.58 (1.08)

Return on Assets (%) 1.22 3.87 8.40 8.84 9.53 1.36 5.21 1.90 5.21 (0.54)

Share Information

Earnings Per Share (Rs.) 0.05 0.12 0.19 0.19 0.24 0.05 0.2 0.03 0.22 (0.02)

Price Earnings Ratio - 19.20 10.67 10.57 7.49 22.45 10.93 180.10 14.67 (104.53)

Net Assets Per Share 1.08 1.27 2.00 2.13 2.37 2.37 2.57 2.45 2.50 3.08

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TEN YEAR SUMMARYTEN YEAR SUMMARY

Revenue

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

0

500

1000

1500

2000

2500

Rs.(Mn.)

Rs.(Mn.)

Net Profit After Tax

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

-30

0

30

60

90

120

150

Rs.(Mn.)

Net Profit Before Tax

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

-50

0

50

100

150

200

Gross Profit

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

0

100

200

300

400

500

Rs.(Mn.)

Long-Term Borrowings

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

0

50

100

150

200

250

Rs.(Mn.)

Exports

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

0

50

100

150

200

250

300

Rs.(Mn.)

%

Return on Equity

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

-5

0

5

10

15

20

25

%

Return on Assets

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

-2

0

2

4

6

8

10


OUR PROJECTSOUR PROJECTS

Sethsiripaya Stage II

South Asian Institute of Technology & Medicine

- Malabe

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OUR PROJECTSOUR PROJECTS

Iconic Tower - RajagiriyaUrban Regeneration Project

Colombo 14

Samudra Beach ResortHead Office Building

for Census & StatisticsFree Lanka Tower

Havelock City Luxury Apartments

International Convention Centre - Hambantota

On Three 20 Luxury Apartments

Sancity Hotel


CNCI Achiever of Industrial Excellence Merit Award

Sierra Cables was a recognized by Institute of Engineers of Sri Lanka awarding “Excellence in Engineering” in 2011 for

the manufacturing section. This is a remarkable event that proven excellence in the manufacturing sector of cable over three decades in Sri Lanka cable industry.

UDC Best Cable Manufacturer of the year

Quality Crown Award

Sierra Cables was a Merit Award Winner in CNCI Achiever of Industrial Excellence for three consecutive years from 2010 to

2012 in the Industrial Sector. The Award is for enhancing quality standards, productivity, employee benefits, labour relations and adherence to statutory requirements.

IESL Engineering Excellence Award

The UDC Business Awards 2011 was an international awards program which recognized the success, innovation of all business

leaders and organizations across all industry sectors. UDC Business Awards honors business industry leaders through the acknowledgment of innovative business processes, product development, sustainability and overall business success. We were quite honored to receive it in 2011 and become the best cable manufacturer of the year.

AWARDS AND ACCOLADESAWARDS AND ACCOLADES

Globalization connects every nation. We are not just citizens, but global citizens in today’s context. Thus being recognized

locally as well as internationally counts a great deal for the reputation of an organization. In the same way, when consider the fierce competition in the global business scenario; it is exigent to be distinct as well as to be awarded. Sierra Cables is proud to pronounce that, “we won the challenge”.

Beyond local boundaries we have been able to excel the class of international quality standards. We have proven our world classiness by winning the prestigious BID International Quality Crown Award in 2010. This award is based on QC100 TQM model, developed by Business Initiative Directions in collaboration with a highly qualified team of professionals regarding the total quality management system of an organization. This is a big milestone for us in our history of industrial excellence.

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DEALER NETWORKDEALER NETWORK

An effective and dynamic distribution linkage is vital to grow a successful business approach. It basically

guarantees that multiple objectives such as maximum customer satisfaction, enhance market share, escalation in revenue, higher stock turnover etc. been met. Yet cost is another crucial component that varies with the size of the network that has to be dealt

strategically. A costly expansion can delay the margins regardless the stock turnover levels in the company. Therefore, the company should make equilibrium in the distribution procedure.

We have elevated our distribution to ensure our products are sold all over the country. During the previous year company has expanded its coverage to many new areas. We feel that

the concept of sub stores is well worked with the process of distribution of the company. Therefore, we have managed to supply our products in a productive manner all over the island. Accordingly, we have developed sub stores, a low cost, effective storage facility in 18 areas of the country. Apart from that we have expand our coverage even more by appointing one distributes in Jaffna and Kurunegala regions.

Puttlam DistrictChilaw

Matale DistrictMatale

Kurunegala DistrictKurunegala

Matara DistrictMatara

Kandy DistrictKandy

Jaffna

Batticaloa

Badulla

Hambantota

Matara

Galle

KalutaraRatnapura

Colombo

Gampaha

Puttlam

Kandy

Kegalle

Polonnaruwa

Anuradhapura

MataleKurunegala

Galle DistrictGalle

Hambantota DistrictHambantota

Colombo DistrictColombo NorthColombo EastColombo SouthColombo WestColombo CentralColombo MetroPepiliyana

Anuradhapura DistrictAnuradhapura

Gampaha DistrictGampaha 01Gampaha 02Nittambuwa

Kalutara DistrictKalutara

Rathnapura DistrictRathnapura

Kegalle DistrictKegalle

Badulla DistrictDiyathalawaMahiyanganaya

Jaffna DistrictJaffna

Batticaloa DistrictBatticaloa

Polonnaruwa DistrictPolonnaruwa

Distribution Units


NOTICE OF MEETINGNOTICE OF MEETING

NOTICE IS HEREBY GIVEN that the 10th Annual General Meeting of SIERRA CABLES PLC. will be held on 30th August, 2013 at 10.00 a.m. at the ‘Park Premier Banquet Hall’ - Excel World, 338, T.B. Jayah Mawatha, Colombo 10.

AGENDA

1. To read the notice convening the meeting.

2. To receive and consider the Report of the Directors and the Statement of Audited Accounts for the year ended 31st March, 2013 and the Report of the Auditors thereon.

3. To re-elect Mr. E.A.T.D.B. Perera who retires by rotation in terms of Article 91 of the Articles of Association of the Company as a Director of the Company.

4. To re-elect Mr. D.S. Panditha who retires in terms of Article 91 of the Articles of Association of the Company as a Director of the Company.

5. To re-elect Eng. B.W.N. Rupasinghe who retires by rotation in terms of Article 97 of the Articles of Association of the Company as a Director of the Company.

6. To re-elect Prof. A.K.W. Jayawardena who retires by rotation in terms of Article 97 of the Articles of Association of the Company as a Director of the Company.

7. To re-elect Mr. P.R. Saldin who retires by rotation in terms of Article 97 of the Articles of Association of the Company as a Director of the Company.

8. To re-appoint Messrs, KPMG, Chartered Accountants, as Auditors of the Company for the ensuing year and to authorize the Directors to determine their remuneration.

9. To transact any other business of which due notice has been given.

By Order of the Board

(Sgd.)

P.R. Secretarial Services (Private) Limited

Secretaries

Colombo.

10th July, 2013.

Note:

� A member entitled to attend and vote at the meeting, is entitled to appoint a Proxy to attend and vote instead of him/her; a Form of Proxy is enclosed for this purpose.

� A Proxy need not be a member of the Company.

� The completed Form of Proxy must be deposited at the Messrs SSP Corporate Services (Pvt) Ltd., No.101, Inner Flower Road, Colombo 03 not less than forty eight (48) hours before the time fixed for the meeting.

� Any member or Proxy holder attending the meeting is kindly requested to bring this report.

� For security reasons, Members/Proxy holders are kindly advised to bring along with them their National Identity Card or a similar form of acceptable identity when attending the meeting.

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Sierra Cables PLC Annual Report 2012/13SUPPLEMENTARY INFORMATION

FORM OF PROXYFORM OF PROXY

I/We --------------------------------------------------------------------------------------------------------------------------- (N.I.C. No./Co. Reg. No. -------------------------------------------------------------------------------------)

of-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

being a Member/Members of the above named Company, hereby appoint:

(1) ---------------------------------------------------------------------------------------------------------------------------------------------------------- (N.I.C. No. ---------------------------------------------------------------------------------)

of -------------------------------------------------------------------------------------------------------------------------------------------------- failing him/her

(2) Wahalathanthirige Anil Priyantha Perera, or failing him

(3) Don Nimal Nayana Lokuge, or failing him

(4) Egodagoda Arachchige Don Tissa Benjamin Perera, or failing him

(5) Daya Shamendra Panditha, or failing him

(6) James Henry Paul Ratnayeke, or failing him

(7) Dangedera Gamage Kamal Edger Weerapperuma, or failing him

(8) Genevieve Sujivie Madhuni Irugalbandara, or failing her

(9) Brandi Wattage Nimal Rupasinghe, or failing him

(10) Ananda Kithsiri Wijenayaka Jayawardane, or failing him

(11) Prawira Rimoe Saldin

as my/our Proxy to represent me/us and to speak and to vote on my/our behalf at the 10th Annual General Meeting of the Company to be held on 30th August, 2013 at 10.00 a.m. at the ‘Park Premier Banquet Hall’ - Excel World, 338, T.B. Jayah Mawatha, Colombo 10. and at every poll which may be taken in consequence of the aforesaid meeting and at any adjournment thereof.

I/WE INDICATE MY/OUR VOTE ON THE RESOLUTIONS BELOW AS FOLLOWS:

FOR AGAINST

(1) To receive and consider the Report of the Directors and the Statement of Audited Accounts for the year ended 31st March, 2013 and the Report of the Auditors thereon.

(2) To re-elect Mr. E.A.T.D.B. Perera who retires by rotation in terms of Article 91 of the Articles of Association of the Company as a Director of the Company.

(3) To re-elect Mr. D.S. Panditha who retires in terms of Article 91 of the Articles of Association of the Company as a Director of the Company.

(4) To re-elect Eng. B.W.N. Rupasinghe who retires by rotation in terms of Article 97 of the Articles of Association of the Company as a Director of the Company.

(5) To re-elect Prof. A.K.W. Jayawardena who retires in terms of Article 97 of the Articles of Association of the Company as a Director of the Company.

(6) To re-elect Mr. P.R. Saldin who retires by rotation in terms of Article 97 of the Articles of Association of the Company as a Director of the Company.

(7) To re-appoint Messrs KPMG, Chartered Accountants as Auditors of the Company for the ensuing year and to authorize the Directors to determine their remuneration.

Signed this ------------------- day of ---------------------------------------, 2013.

------------------------------------------------------------ N.I.C. No. ------------------------------------------------------- Signature of Shareholder/s

Note: (i) A Proxy need not be a member of the Company.

(ii) Instructions as to completion appear overleaf.

Please furnish details requested for on the reverse of the Form of Proxy.

Sierra Cables PLC Annual Report 2012/13SUPPLEMENTARY INFORMATION

INSTRUCTIONS FOR THE COMPLETION OF PROXY

1. To be valid, this Form of Proxy must be deposited at the Messrs SSP Corporate Services (Pvt) Ltd., No.101, Inner Flower Road, Colombo 03 by 10.00 a.m. on 28th August, 2013.

2. In perfecting the Form of Proxy please ensure that all details are legible.

3. If you wish to appoint a person other than the Chairman (or failing him, one of the Directors) as your Proxy, please insert the relevant details at (1) overleaf and initial against this entry.

4. Please indicate with an “X” in the space provided how your Proxy is to vote on each resolution. If no indication is given, the Proxy in his discretion will vote, as he thinks fit. If you do not wish your Proxy to vote as he thinks fit on any other resolution brought before the meeting, please mark the box provided appropriately and initial.

5. In the case of a Company/Corporation, the Proxy must be under its Common Seal, which should be affixed and attested in the manner prescribed by its Articles of Association/Act of Incorporation.

6. In the case of a Proxy signed by an Attorney, the Power of Attorney must be deposited at the Registered Office for registration, if such Power of Attorney has not already been registered with the Company.

FORM OF PROXYFORM OF PROXY

Please provide the following details to update our records:

Full Name of Shareholder/s: -----------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

Address : -------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

N.I.C. No.: -----------------------------------------------------------------------------------------------

Signature: ----------------------------------------------------------------------------------------------

Name of the Company

Sierra Cables PLC

Company Re-Registration No.

PQ 166 (under the Companies Act No.07 of 2007)

Registered Office

112, Havelock Road, Colombo 05.

Company Secretaries

P.R. Secretarial Services (Pvt) Ltd. 59, Gregory’s Road, Colombo 07. Tel: 2671439, 2671441 E-mail: [email protected]

Auditors

KPMG 32 A, Sir Mohamed Macan Markar Mawatha, Colombo 03. Tel: 5426426 Fax: 2445872 Internet: www.lk.kpmg.com

Legal Advisors

Paul Ratnayeke Associates 59, Gregory’s Road, Colombo 07. Tel: 2697893, 2697894 E-mail [email protected]

Bankers

Commercial Bank of Ceylon PLC Sampath Bank PLC Bank of Ceylon

Subsidiary Companies

Sierra Industries (Pvt) Ltd.

Sierra Power (Pvt) Ltd.

Domicile and Legal Form

Sierra Cables PLC is a limited liability company incorporated and domiciled in Sri Lanka.

The Registered Office of the company is at 112, Havelock Road, Colombo 05 and the Principal Place of business is located at 39/1A, Galwarusa Road, Korathota, Kaduwela.

Tel: 4412000 - 4 Fax: 2770291, 4412573 E-mail: [email protected]

Issued ordinary shares of the company is stated as listed on the Colombo Exchange since 22nd November 2005.

Principal Activities and Nature of Operations

The principal activity of the company is manufacture and sales of wires and cables.

Parent Enterprises and Ultimate Parent Enterprise

In the Directors opinion, the company’s ultimate parent undertaking and controlling party is Sierra Holdings (Pvt) Ltd., which is incorporated in Sri Lanka.

Number of Employees

The number of employees of the Group at the end of the year was 307 (2011/12 - 287).

Cover Designed by Sierra Cables / Produced & Printed by Printel (Pvt) Limited

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Contents...Contents Contents Independent Auditors’ Report 31 Consolidated Statement of Comprehensive Income 32 Consolidated Statement of Financial Position 33 Statement of Changes

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