Annual Report 2012-2013 PDF

1
ANNUAL REPORT OF THE BOARD OF DIRECTORS

Sierra Cables PLC Annual Report 2012/13
Contents
02-28
Group Financial Highlights 02 Board of Directors - Profile 03 Chairmans Message 05 Managing Directors 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
29-67
MANAGEMENT REPORTS
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
69-76
FINANCIAL STATEMENTS
SUPPLEMENTARY INFORMATION
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
Earnings Per Share Rs.
0.25 0.20 0.15 0.10 0.05 0.00 -0.05 -0.10 2009 2010 2011 2012 2013
MANAGEMENT REPORTS
For the year ended 31st March
2013 Rs.
2012 Rs.
Results for the Year Revenue Profit/(Loss) Before Tax Profit/(Loss) After Tax 2,141,353,995 (18,091,728) (23,181,433) 2,476,058,520 143,083,774 120,333,888
Position at the Year End Shareholders Funds Total Assets

Net Assets Per Share
1,674,149,444 3,372,666,564 0.9 7% 1.56 : 1 537,512,430
1,374,170,334 2,790,722,681 1.9 20% 1.44 : 1 537,512,430
Rs. 3.5
3.0 2.5 2.0 1.5 1.0 0.5 0.0 2009 2010 2011 2012 2013
Interest Cover (No. of Times) ROCE [%] Current Ratio Issued & Fully Paid No. of Shares
Information per Share (Rs.) Earnings Net Assets Market Value (0.02) 3.08 2.2 0.22 2.50 3.3
Net Assets Rs.(Mn.) 1800

1600 1400 1200 1000 800 600 400 200 0 2009 2010 2011 2012 2013
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BOARD OF DIRECTORS - PROFILE W.A.P. Perera
Chairman
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.
MANAGEMENT REPORTS
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. 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.
Dr. D.G.K.E. Weerapperuma D.S. Panditha

Managing 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.
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.
MANAGEMENT REPORTS
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4
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.
MANAGEMENT REPORTS
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.
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CHAIRMANS MESSAGE
MANAGEMENT REPORTS
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
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 economys 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
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 sectors 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 largescale 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.
MANAGEMENT REPORTS
n 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.
in policy interest rates, point to Central Banks intention of fostering credit growth.
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6
CHAIRMANS MESSAGE
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 Directors 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 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
MANAGEMENT REPORTS
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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MANAGING DIRECTORS REVIEW OF THE OPERATIONS
MANAGEMENT REPORTS
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.
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,
Net Assets Per Share (Company) Rs. 3.5
3.0 2.5 2.0 1.5 1.0 0.5 0.0 2009 2010 2011 2012 2013
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
MANAGEMENT REPORTS
he 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.
a notable value addition to shareholders. Moreover, we achieved several internal goals in terms of cost reduction and operational efficiency.
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 nations 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 Companys 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.
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8
MANAGING DIRECTORS REVIEW OF THE OPERATIONS
Wastage Comparison %
1.5
MANAGEMENT REPORTS
1.0
0.5
0.0
2009 2010 2011 2012
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 Groups 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 nations 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.
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 Companys 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,
D. Shamendra Panditha Managing Director Colombo 10th July, 2013
MANAGEMENT REPORTS
REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY
The operations of the Company for the year ended 31st March 2013 are reviewed in the Chairmans 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.
(40,793,935) (40,793,935) 79,539,953 120,882,208 (548,320) 120,333,888 80,088,273 (548,320) 79,539,953 0.22
(9,853,492) 430,075,011 (97,136,079) 323,085,440 339,612,299 16,526,859 16,526,859 339,612,299 339,612,299 0.03
(40,793,935) (40,793,935) 87,942,150 128,736,085 128,736,085 87,942,150 87,942,150 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.
MANAGEMENT REPORTS
Review of Performance for the year ended 31st March 2013
Revenue 2,141,353,995 Cost of Sales (1,836,300,771) Gross Profit 305,053,224 Other Income 6,137,840 Selling and Distribution Expenses (103,030,304) Administrative Expenses (65,358,044) Other Operating Expenses (2,515,236) Profit from Operations 140,287,480 Net Finance Costs (158,354,069) Profit/(Loss) Before Associate Companies Share of Loss (18,066,589) Share of Loss of Associate Companies (25,139) Profit/(Loss) Before Taxation (18,091,728) Income Tax Expense (5,089,705) Profit/(Loss) for the Year (23,181,433) Other Comprehensive Income Net Change in Fair Value of Available-for-Sale Investments (9,853,492) Revaluation Surplus on Property, Plant and Equipment 430,075,011 Deferred Tax Impact on Revaluation Surplus on Property, Plant and Equipment (97,136,079) Other Comprehensive Income for the Year, Net of Income Tax 323,085,440 Total Comprehensive Income for the Year 299,904,007 Profit Attributable to : Owners of the Company (11,313,227) Non-Controlling Interests (11,868,206) (23,181,433) Total Comprehensive Income Attributable to: Owners of the Company 311,772,213 Non-Controlling Interests (11,868,206) 299,904,007 Basic Earnings/(Loss) Per Share (Rs.) (0.02)
Restated 2,476,058,520 2,055,318,338 2,462,318,846 (2,010,583,298) (1,756,473,539) (2,000,713,159) 465,475,222 298,844,799 461,605,687 24,999,838 6,137,840 33,217,995 (104,159,628) (88,436,991) (104,168,971) (68,356,157) (62,297,207) (67,515,722) (18,458,772) (2,515,236) (20,000,000) 299,500,503 151,733,205 303,138,989 (154,135,289) (132,932,082) (153,004,731) 145,365,214 18,801,123 150,134,258 (2,281,440) 143,083,774 18,801,123 150,134,258 (22,749,886) (2,274,264) (21,398,173) 120,333,888 16,526,859 128,736,085
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he 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.
Financial Results For the year ended 31st March Group 2013 Rs. 2012 Rs. Company 2013 2012 Rs. Rs.
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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 Dr. D.G.K.E. Weerapperuma Mr. D.S.K. Amarasekera (Resigned with effect from 31st January 2013) Ms. G.S.M. Irugalbandara Eng. B.W.N. Rupasinghe Prof. A.K.W. Jayawardane 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. From To Directors Interest in Shares of the Company Names of Director Mr. W.A.P. Perera Mr. D.S. Panditha Mr. E.A.D.T.B. Perera Ms. G.S.M. Irugalbandara Mr. D.N.N. Lokuge Mr. J.H.P. Ratnayeke Dr. D.G.K.E. Weerapperuma Mr. P.R. Saldin Prof. A.K.W. Jayawardane Mr. F.A.W. Irugalbandara (Alternate Director) Ms. K.A. Suraweera (Alternate Director) Eng. B.W.N. Rupasinghe Shareholders
MANAGEMENT REPORTS
As at 31-03-2013 3,920,510 17,022,950 10 1,709,800 10 Nil Nil Nil Nil 200,010 Nil Nil
As at 31-03-2012 3,920,510 17,022,950 10 1,709,800 10 Nil Nil
10 Nil
The distribution and analysis of shareholdings as at 31st March 2013: Resident (98.51%) No. of Shareholders 15,292 7,654 1,143 165 No. of Shares 14,292,176 18,784,172 35,938,809 41,482,575 % Non-Resident (1.49%) No. of Shareholders 9 22 14 5 2 52 No. of Shares 6,400 120,300 572,654 2,650,000 4,670,355 8,019,709 %
1 - 1,000 1,001 - 10,000 10,001 - 100,000 100,001 - 1,000,000 over Total 1,000,000
2.66 3.49 6.69 7.72
0.00 0.02 0.11 0.49 0.87 1.49
23 418,994,989 77.95 24,277 529,492,721 98.51
Analysis of Shareholders Resident Non-Resident Total Analysis of Shareholders Individual Institutional Total
No. of Shareholders 24,277 52 24,329 No. of Shareholders 23,982 347 24,329
No. of Shares 529,492,721 8,019,709 537,512,430 No. of Shares 141,106,046 396,406,384 537,512,430
% 98.51 1.49 100.00 % 26.25 73.75 100.00
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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20 Largest Holders of Equity Name of Shareholder No. of % of Shares Issued 31-03-13 Capital 312,335,490 32,210,943 17,022,950 8,113,032 7,585,000 5,061,400 5,000,000 3,920,510 3,500,000 3,488,000 2,841,000 2,211,300 2,050,000 2,035,700 2,000,000 1,804,600 1,800,000 1,746,364 1,709,800 1,423,600 58.11 5.99 3.17 1.51 1.41 0.94 0.93 0.73 0.65 0.65 0.53 0.41 0.38 0.38 0.37 0.34 0.33 0.32 0.32 0,26 No. of % of Shares Issued 31-03-12 Capital 312,335,490 32,202,953 17,022,950 8,061,080 7,949,900 5,061,400 5,000,000 3,920,510 3,500,000 3,488,000 2,841,000 2,050,000 2,035,700 2,000,000 1,965,500 1,804,600 1,800,000 1,746,364 1,737,300 1,709,800 58.11 5.99 3.17 1.50 1.48 0.94 0.93 0.73 0.65 0.65 0.53 0.38 0.38 0.37 0.37 0.34 0.33 0.32
MANAGEMENT REPORTS
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; Dr. D.G.K.E. Weerapperuma Eng. B.W.N. Rupasinghe Prof. A.K.W. Jayawardane Mr. P.R. Saldin Audit Committee for the year under review comprised of; Dr. D.G.K.E. Weerapperuma (Chairman) Prof. A.K.W. Jayawardane Mr. P.R. Saldin Eng. B.W.N. Rupasinghe Remuneration Committee for the year under review comprised of; Dr. D.G.K.E. Weerapperuma (Chairman) Prof. A.K.W. Jayawardane Eng. B.W.N. Rupasinghe
1. Sierra Holdings (Private) Limited 2. Browns Investments PLC. 3. Mr. Daya Shamendra Panditha 4. Employees Provident Fund 5. Seylan Bank PLC - A/C No. 3 6. Mr. Shanker Varadananda Somasunderam 7. Mr. Abeyratna Banda Sarath Herath 8. Mr. Wahalathanthrige Anil Priyantha Perera 9. Mr. Tranz Dominion, L.L.C. 10. Mr. Wickramasinghe Arachchige Kassapa Dewamitta Saparamadu 11. Nuwara Eliya Property Developers (Private) Limited 12. Seylan Bank Limited/ Govindasamy Ramanan 13. Mr. Munidasa Ilamperuma 14. Seylan Bank PLC./ R.T. Devasurendra 15. Nexus Nubart Holdings (Private) Limited 16. Commercial Bank of Ceylon PLC./ Nine Capital (Private) Limited 17. Mr. Bathiya Chandana Ranaweera 18. Mr. Yonmerenne Simon Hewage Indrakumara Silva 19. Ms. Genevive Sujivie Madhuni Irugalbandara 20. Mr. Rajinda Goonewardene Seneviratne TOTAL
Secretaries 0.32 0.32 P.R. SECRETARIAL SERVICES (PRIVATE) LIMITED Colombo
417,859,689
77.74
418,232,547
77.81
Priyantha Perera Director 10th July, 2013
D.S. Panditha Director
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12
REPORT OF THE AUDIT COMMITTEE
MANAGEMENT REPORTS
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 Auditors independence and performance. The performance review of the internal audit function to ensure that the Companys 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 Companys 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 groups 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 organizations 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 decisionmaking 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 and outdated policies. It organization to grow at a rate due to less fraud inefficiency all of which organizations growth. Financial Statements
inefficiency allows the reasonable errors and retard the
The Audit Committee has reviewed the Groups 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.
Dr. D.G.K.E. Weerapperuma Chairman - Audit Committee 10th July, 2013
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REPORT OF THE REMUNERATION COMMITTEE
MANAGEMENT REPORTS
Dr. D.G.K.E. Weerapperuma Chairman - Remuneration Committee 10th July, 2013
The Sierra Cables PLCs Remuneration Committee consists of three Non-Executive Independent Directors as follows; Dr. D.G.K.E. Weerapperuma (Chairman) Prof. A.K.W. Jayawardane Eng. B.W.N. Rupasinghe Scope A Remuneration Committee was established by Sierra Cables PLCs 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.
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.
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he 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 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.
Professional Advice The Committee has the authority to seek external professional advice on matters within its purview and act in a best professional manner.
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PRODUCT PORTFOLIO Armoured Cables LSHF (Low Smoke Halogen Free) Unarmoured Power Cables
MANAGEMENT REPORTS
LSHF (Low Smoke Halogen Free) Armourd Power Cables
Control 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.
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.
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.
Flexible Cables
Earth Cables
Aluminium Conductors (AAC & ACSR)
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.
Unarmoured Cables (Multi-Core)
PVC insulated and sheathed flexible cables with a voltage rating of 300/300v and 300/500v, used as generalpurpose cables. Manufactured to BS 6500 and SLS 1143 standards.
Aerial Bundle Conductors
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.
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.
Co-axial Cables
Auto Cables
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.
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.
Annealed copper conductors with polyethylene insulated and copper braided co-axial cables, used as television antenna wires. Manufactured to JIS standards.
All Aluminium Conductors PVC insulated single-core auto cables, used in motor vehicles and also for general wiring.
Single & Multi-Core Unarmoured Cables
Telecommunication Cables
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.
PVC insulated, self-supporting one-pair dropwire and polyethylene insulated copper conductors used as telecommunication distribution cables. Manufactured to BS 3573 and SLT standards.
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.
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OUR VALUES
s 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.
MANAGEMENT REPORTS
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.
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QUALITY MANAGEMENT
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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
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 in business operations with a more motivated workforce Easier to obtain operational permits and authorizations Assists in developing and transferring technology within the company Helps reduce pollution Fewer operating costs Savings from conditions safer workplace
S afety I mprovement E fficiency R eliability R esourcefulness A ssured Product

Quality
Our products has received the following standard certificates:
SLS 1143:2008 Specification for PVC Insulation Flexible Cords. (1983) SLS 733:2005 PVC 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 750 Specification for Aluminum Conductors for Overhead Power Transmission. (1983) SLS 1186 Stranded Copper Conductors, Steel Wire Armour, XLPE Insulated and PVC Sheathed 4 Core Armoured Electric Cables. ISO 9001:2008 Manufacture of Electric Cables, Conductors, Aerial Bundle Conductors, Electric Winding Wires, Telecommunication Cables for interior use, Drop Wire and RF Cables as per pre-determined specification. (2001)
Compost Site Environmental Benefits Minimizes hazardous non-hazardous waste and
Conserves natural resources electricity, gas, space and water with resultant cost savings Prevents wastage pollution and reduces
Reduction of costs associated with emissions, discharges, waste handling, transport & disposal Improvements in the product as a result of process changes Safer products
Planting Hundred Teak Plants Marketing Benefits Demonstrates to customers that the firm has met environmental expectations Meets potential national and international government purchasing requirements Delivers profits green products from marketing
Provides a competitive marketing tool Vegetable Garden Improves international competitiveness
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QUALITY MANAGEMENT
Financial Benefits Improves the organizations relationship with insurance companies Elimination of costs associated with conformance to conflicting national standards Process cost savings by reduction of material and energy input Satisfying criteria investor / shareholder Gas Cylinder
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CFL Disposal Box
Helps reduce liability and risk Improved access to capital
Spill Out Oil Tray
Copper (Cu) Recycling Machine
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HUMAN RESOURCES
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Age Analysis of Employees
5% 11% 10% 35%
t 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
39%
18-25 Years 26-35 Years 36-40 Years 41-50 Years Above 50 Years
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. Its a strategy where worker get a greater autonomy to perform his task under close supervision.
Service Period Analysis
% 4.00 3.50
Labour Turnover
Average Training Man Hours Per Person Hrs. 10.00
11% 22%
15%
8.00
23%
3.00
6.00
29%
2.50
4.00
Below 1 Year 1-2 Years 3-5 Years 6-10 Years Above 10 Years
2.00 1.50 0.00

1-May 1-Jun 1-Sep 1-Nov 1-Dec 1-Feb 1-Oct 1-Jan 1-Jul
2.00
0.00
1-Jun 1-Feb 1-Jan 1-May
Staff Composition
6% 3% 4% 11%
Series 1
3%
1-Mar
Series 1
10% 11%
1-Apr 1-May 1-Jun

21%
1-Jul 1-Aug 1-Sep 1.48 1.79 1.56
1-Apr 1-May 1-Jun 1.11 0.12 1.05
1-Jul 1-Aug 1-Sep 1.95 3.00 3.67
1.27
29%
3.87
1.70
1-Oct 1-Nov 1-Dec 1-Jan 1-Feb 1-Mar

Directors Managers Executives Staff Operaters Trainee Operaters Maintenance Staff Drivers Helpers
1-Oct 1-Nov 1-Dec 1-Jan 1-Feb 1-Mar 4.28 4.97 5.65 6.12 7.06 8.11
1.40
1.38
1.27
1.18
1.15
1.09
1-Mar
1-Jul
1-Aug
1-Aug
1-Nov
1-Apr
1-Apr
1-Dec
1-Sep
1-Oct
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HUMAN RESOURCES
MANAGEMENT REPORTS
Annual Get-together Like previous times, this time too we celebrated our Annual gettogether in Polonnaruwa, where we experienced the legacy of ancient kings who lived thousand years ago.
Listening to the Guide Explanation of the Buddha Stupa
Watching the Polonnaruwa Architectural Glory
Families Relaxing at Parakrama Samudraya
Rabbit Race of Kids below 5 Years
Arangrathram Dance by a Kid at the Party
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CORPORATE SOCIAL RESPONSIBILITY
MANAGEMENT REPORTS
t 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.
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.
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.
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NEW INITIATIVES
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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;
UPVC Pipes for Drainage and Irrigation purposes. Electrical Conduits.
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.
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Water pipes for working pressures of 2.5, 4, 6, and 10 bar.
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SUSTAINABILITY REPORT
MANAGEMENT REPORTS
n 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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RISK MANAGEMENT
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Risk Management Framework
IDENTIFYING RISKS
ANALYSING & PRIORITIES THE RISKS
PLANNING
IMPLEMENTING
CONTROLLING & MONITORING
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 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.
MANAGEMENT REPORTS
he 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.
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RISK MANAGEMENT
We have identified the below as key risks faced by the company. Financial Risk Liquidity. Interest rates. Exchange rates. Credit collection. Impact Main impact is on the working capital and profitability where as the sustainability of the company is affected.
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Mitigation Process 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 Market Risk.
Impact Price changes can directly impact on the profit.
Mitigation Process When setting prices it is possible to match with raw material prices Setting sales targets considering companys potential. Having a thorough idea on the trends in the market.
Operational Risk Health & safety of employees. Changes in environmental, international quality standards & regulatory environment.
Impact Impact on employees personal and work life. Future existence of the business.
Mitigation Process Employee performance evaluation scheme. Good relationships with employees through the activities of the employee welfare society. Providing safety. Obtaining standard. training the on ISO industrial 9001:2000
Obtaining the ISO 14001 standard. Product Risk Customer satisfaction. Cost effectiveness. Impact Decline in market share. Mitigation Process Maintaining SLS standard. Bidding with competitive prices. Proper testing to identify quality defects. Production basis. Information Risk Timely & accurate information for decision making. Systems operation & application. Impact Lack of accurate and timely decision making. planning on monthly
Mitigation Process 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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CORPORATE GOVERNANCE
MANAGEMENT REPORTS
Corporate Governance Framework
Shareholders
Appoint
Appoint
Auditors
Board of Directors
Appoint
Appoint
Board Committees (Audit & Remuneration)
Managing Director/CEO
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.
Report
Chairman and Managing Chief Executive Officer
Director/
Top Management
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.
The Board is lead by the Chairman who is also an Executive Director. The Chairmans 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.
MANAGEMENT REPORTS
ierra 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.
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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, Dr. D.G.K.E. Weerapperuma (Chairman) Prof. A.K.W. Jayawardane Mr. P.R. Saldin Eng. B.W.N. Rupasinghe 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 management auditors. relationship and the between external
MANAGEMENT REPORTS
The Sierra Cables PLCs Remuneration Committee consists of three Non-Executive Independent Directors as follows; Dr. D.G.K.E. Weerapperuma (Chairman) Prof. A.K.W. Jayawardane Eng. B.W.N. Rupasinghe The main responsibilities Remuneration Committee is, of the
6. Review and assess the independency of the external auditor. Accounting Monitor and review the adequacy of the companys 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 companys 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 companys risk management controls, both internally and externally. Evaluate the effectiveness of the companys business continuity plans. Evaluate the adequacy of the companys 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.
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 companys performance.
27
MANAGEMENT REPORTS
Levels of Compliance with the CSEs Listing Rules - Section 7.10, Rules on Corporate Governance Rule 7.10.1(a) to (c) 7.10.2(a) 7.10.2(b) 7.10.3(a) Board of Directors Correct number of Non-Executive Directors. Correct number of Independent Non-Executive Directors. Specified whether the Non-Executive Directors submitted a declaration annually of his/her Independence or Non-Independence to the Board of Directors. 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. 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. Published a small resume in the annual report, of each Director of the Board, which includes information on the nature of his/her expertise. Remuneration & Rumination Committee The correct number of Independent Non-Executive Directors in the Rumination Committee. Specified whether a separate Remuneration Committee was formed or whether listed parents Remuneration Committee used. Specified the names of the Directors comprising the Remuneration Committee (where the parent companys Remuneration Committee, qualifies to function as the listed companys Remuneration Committee, a statement in the annual report to this effect and disclosed the names of the Directors). Disclosed the functions of the Remuneration Committee. Specified whether the Chairman of the Committee is a Non-Executive Director. 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). Contents under the Audit Committee Report The correct number of Independent Non-Executive Directors in the Remuneration Committee. Specified whether a separate Audit Committee was formed or whether listed parents Audit Committee was used. Specified whether the names of the Directors comprising the Audit Committee (where the parent companys Audit Committee qualifies to functions as the listed companys Audit Committee, a statement to this effect and disclose the names of the Directors). Confirmed the functions of the Audit Committee. Specified whether the Chairman of the Committee is a Non-Executive Director. Specified whether the Chairman or 1 member of the Audit Committee is a member of a recognized Professional Accounting Body. Specified whether the MD/CEO & CFO attend Audit Committee meeting, unless otherwise determined by the Audit Committee. Specified the basis for determining External Auditors as being Independent. Status Complied Complied Complied Complied
7.10.3(b)
Complied
7.10.3(c)
Complied
Rule 7.10.5(a) 7.10.5(a) 7.10.5(c)
Status Complied Complied Complied
7.10.5(b) 7.10.5(a) 7.10.5(c)
Complied Complied Complied
Rule 7.10.6(a) 7.10.6(a) & (c) 7.10.6(c)
Status Complied Complied Complied
7.10.6(b) 7.10.6(a) & (c) 7.10.6(a) & (c) 7.10.6(a) & (c) 7.10.6(c)
Complied Complied Complied Complied Complied
MANAGEMENT REPORTS
02-28
28
STATEMENT OF DIRECTORS RESPONSIBILITIES
MANAGEMENT REPORTS
he 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
Note 1. Reporting Entity 2. Basis of Preparation 3. Significant Accounting Policies 4. Effect of Accounting Standards Issued But Not Yet Effective 5. Revenue 6. Other Income 7. Profit from Operations 8. Net Finance Costs 9. Income Tax Expense 10. Basic Earning/(Loss) per Share 11. Property, Plant & Equipment 12. Intangible Assets - Computer Software 13. Investment Property 14. Investments in Subsidiaries 15. Investments in Associates 16. Available-for-Sale Financial Assets 17. Inventories 18. Trade & Other Receivables 19. Asset Held for Sale 20. Amounts Due from Related Companies 21. Cash and Cash Equivalents 22. Stated Capital 23. Retirement Benefit Obligations 24. Deferred Tax Liability 25. Long-Term Loans 26. Lease Liability 27. Trade & Other Payables 28. Amounts Due to Related Companies 29. Import Demand Loan 30. Contingent Liabilities 31. Commitments 32. Events Occurring After the Reporting Period 33. Related Party Disclosure 34. Explanation of Transition to SLFRSs 35. Financial Risk Management
Page 37 37 37 44 45 45 45 45 46 46 47 49 49 49 50 51 51 51 52 53 53 53 54 54 55 55 55 55 56 56 56 57 59 64 52
31-67
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
31
INDEPENDENT AUDITORS REPORT
KPMG Tel : (Chartered Accountants) Fax : 32A, Sir Mohamed Macan Markar Mawatha, P. O. Box 186, Colombo 00300, Sri Lanka. Internet :
+94 - 11 542 6426 +94 - 11 244 5872 +94 - 11 244 6058 +94 - 11 254 1249 +94 - 11 230 7345 www.lk.kpmg.com
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. Managements Responsibility Financial Statements for the
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.
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.
Chartered Accountants 10th July 2013 Colombo
KPMG, a Sri Lanka Partnership and a member firm of the KPMG network of independent member firms affilliated with KPMG International cooperative (KPMG International), a Swiss entity.
M.R. Mihular FCA T.J.S. Rajakarier FCA Ms. S.M.B. Jayasekara ACA G.A.U. Karunaratne ACA
P.Y.S. Perera FCA W.W.J.C. Perera FCA W.K.D.C Abeyrathne ACA R.M.D.B. Rajapakse ACA
C.P. Jayatilake FCA Ms. S. Joseph ACA S.T.D.L. Perera ACA Ms. B.K.D.T.N. Rodrigo ACA
Principals - S.R.I. Perera ACMA, LLB, Attorney-at-law, H.S. Goonewardene ACA
31-67
32
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Group
Sierra Cables PLC
FINANCIAL STATEMENTS Annual Report 2012/13
Company 2012 Rs. 2,476,058,520 (2,010,583,298) 465,475,222 24,999,838 (104,159,628) (68,356,157) (18,458,772) 299,500,503 (154,135,289) 145,365,214 (2,281,440) 143,083,774 (22,749,886) 120,333,888 2013 Rs. 2,055,318,338 (1,756,473,539) 298,844,799 6,137,840 (88,436,991) (62,297,207) (2,515,236) 151,733,205 (132,932,082) 18,801,123 18,801,123 (2,274,264) 16,526,859 2012 Rs. 2,462,318,846 (2,000,713,159) 461,605,687 33,217,995 (104,168,971) (67,515,722) (20,000,000) 303,138,989 (153,004,731) 150,134,258 150,134,258 (21,398,173) 128,736,085

Revenue Cost of Sales Gross Profit Other Income Selling and Distribution Expenses Administrative Expenses Other Operating Expenses Profit from Operations Net Finance Costs Profit/(Loss) Before Associate Companies Share of Loss Share of Loss of Associate Companies Profit/(Loss) Before Taxation Income Tax Expense Profit/(Loss) for the Year Other Comprehensive Income Net Change in Fair Value of Available-for-Sale Investments Revaluation Surplus on Property, Plant and Equipment Deferred Tax Impact on Revaluation Surplus on Property, Plant and Equipment Other Comprehensive Income for the Year, Net of Income Tax Total Comprehensive Income for the Year Profit/Loss Attributable to : Equity Holders of the Company Non-Controlling Interest
Note 5
2013 Rs. 2,141,353,995 (1,836,300,771) 305,053,224
6,137,840 (103,030,304) (65,358,044) (2,515,236)
7 8
140,287,480 (158,354,069) (18,066,589) (25,139) (18,091,728)
(5,089,705) (23,181,433)
(9,853,492) 430,075,011 (97,136,079) 323,085,440 299,904,007
(40,793,935) (40,793,935) 79,539,953
(9,853,492) 430,075,011 (97,136,079) 323,085,440 339,612,299
(40,793,935) (40,793,935) 87,942,150
(11,313,227) (11,868,206) (23,181,433)
120,882,208 (548,320) 120,333,888
16,526,859 16,526,859
128,736,085 128,736,085
Total Comprehensive Income Attributable to : Equity Holders of the Company Non-Controlling Interest 311,772,213 (11,868,206) 299,904,007 Basic Earnings/(Loss) Per Share (Rs.) 10 (0.02) 80,088,273 (548,320) 79,539,953 0.22 339,612,299 339,612,299 0.03 87,942,150 87,942,150 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.
33
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Group
Company 01-04-2011 Rs. 31-03-2013 Rs. 31-03-2012 Rs. 01-04-2011 Rs.
As at
ASSETS Non-Current Assets Property, Plant and Equipment Intangible Assets Investment Property Investments in Subsidiaries Investments in Associates Investments Available for Sale Goodwill on Acquisition Current Assets Inventories Trade & Other Receivables Income Tax Receivable Asset Held for Sale Amounts Due from Related Companies Available for Sale Financial Assets Cash in Hand and at Bank TOTAL ASSETS EQUITY AND LIABILITIES Equity Stated Capital Available for Sale Reserve Revaluation Reserve Retained Earnings Total Equity Attributable to Equity Holders of the Company Non-Controlling Interests Total Equity Non-Current Liabilities Retirement Benefit Obligations Deferred Tax Liability Long-Term Loans Long-Term Lease Liability Current Liabilities Trade & Other Payables Amounts Due to Related Companies Current Portion of Long-Term Loans Current Portion of Lease Liability Import Demand Loans Income Tax Payable Bank Overdraft Total Current Liabilities Total Liabilities TOTAL EQUITY AND LIABILITIES Net Assets Per Share
Note
31-03-2013 Rs.
31-03-2012 Rs.
11 12 13 14 15 16 14.3
1,179,081,707 4,050,560 31,211,300 2,785,545 121,765,158 329,300 1,339,223,570 1,026,894,046 828,212,157 15,811,592 21,000,000 72,310,131 53,134,656 16,080,412 2,033,442,994 3,372,666,564
764,713,420 5,641,000 32,854,000 2,810,694 134,557,255 940,576,369 943,592,668 761,821,868 7,279,730 82,301,012 38,713,072 16,437,962 1,850,146,312 2,790,722,681
514,746,996 5,578,708 1,792,134 215,659,145 737,776,983 978,392,989 592,775,509 11,518,792 103,800,647 47,924,439 33,321,020 1,767,733,396 2,505,510,379
954,108,269 4,050,560 31,211,300 70,880,020 5,800,000 121,765,158 1,187,815,307 992,280,321 753,092,072 15,811,592 21,000,000 89,045,367 53,134,656 15,776,180 1,940,140,188 3,127,955,495
632,026,030 5,641,000 32,854,000 70,000,010 5,800,010 134,557,255 880,878,305 943,592,669 754,477,519 7,279,750 72,301,002 38,713,072 16,342,731 1,832,706,743 2,713,585,048
513,339,803 5,578,708 100,030 2,500,010 215,659,145 737,177,696 978,392,989 590,594,208 11,518,792 131,016,328 43,669,642 25,980,238 1,781,172,197 2,518,349,893
17 18 19 20 16.2 21
22
27 28 25 26 29 21
327,330,992 54,158,846 5,859,816 843,276,728 73,766,597 1,304,392,979 1,698,517,120 3,372,666,564 3.08
520,675,231 33,434,512 4,581,086 647,131,258 78,700,864 1,284,522,911 1,416,552,347 2,790,722,681 2.50
360,644,478 176,671 26,768,494 4,424,171 658,946,542 189,810 35,406,691 1,086,556,857 1,187,128,765 2,505,510,379 2.45
296,591,495 37,758,056 5,859,816 796,596,321 15,286,449 1,152,092,137 1,439,355,827 3,127,955,495 3.14
510,352,594 38,512,594 33,434,512 4,581,086 645,866,663 39,710,313 1,272,457,762 1,364,597,679 2,713,585,048 2.51
358,987,414 26,768,494 4,424,171 658,946,526 35,406,691 1,084,533,296 1,184,269,358 2,518,349,893 2.48
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. 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 Silva Chief 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. Panditha Chairman Director 10th July, 2013 Colombo
23 24 25 26
14,874,524 155,529,230 217,485,541 6,234,846 394,124,141
13,836,096 53,303,446 55,204,921 9,684,933 132,029,396
6,825,754 53,384,247 29,860,940 10,500,967 100,571,908
14,874,524 152,713,789 113,440,531 6,234,846 287,263,690
13,836,105 53,303,446 15,315,460 9,684,906 92,139,917
5,989,908 53,384,247 29,860,940 10,500,967 99,736,062
31-67
894,565,898 95,085,403 332,938,932 333,900,623 1,656,490,856 17,658,588 1,674,149,444
894,565,898 104,938,895 345,213,851 1,344,718,644 29,451,690 1,374,170,334
894,565,898 145,732,830 278,082,886 1,318,381,614 1,318,381,614
894,565,898 95,085,403 332,938,932 366,009,435 1,688,599,668 1,688,599,668
894,565,898 104,938,895 349,482,576 1,348,987,369 1,348,987,369
894,565,898 145,732,830 293,781,807 1,334,080,535 1,334,080,535
34
STATEMENT OF CHANGES IN EQUITY
Group Restated Balance as at 1st April 2011 Adjustment Due to First Time Adoption of SLFRSs/LKASs Restated Balance as at 1st April 2011 Profit/(Loss) for the Year Other Comprehensive Income Net Change in Fair Value of Available for Sale Investments Total Comprehensive Income for the Year Transactions with Owners of the Company, Recognized Directly in Equity Acquisition of Subsidiary during the Year Dividend Paid Total Transactions with Owners of the Company Balance as at 31st March 2012 Loss for the Year Other Comprehensive Income Net Change in fair Value of Available for Sale Investments Revaluation Surplus on Property, Plant and Equipment Deferred Tax on Revaluation Surplus on Property, Plant and Equipment Total Comprehensive Income for the Year Adjustment due to changes in effective holdings Balance as at 31st March 2013 894,565,898 430,075,011 (97,136,079) 332,938,932 332,938,932 894,565,898 Stated Capital Rs. 894,565,898 894,565,898 Revaluation Reserve Rs. -
Sierra Cables PLC
Available for Sale Reserve Rs. 145,732,830 145,732,830 (40,793,935) (40,793,935) 104,938,895 (9,853,492) (9,853,492) 95,085,403
Retained Earnings Rs. 405,735,183 (127,652,297) 278,082,886 120,882,208 120,882,208 (53,751,243) (53,751,243) 345,213,851 (11,313,227) (11,313,227) 333,900,624
Non-Controlling Interest Rs. (548,320) (548,320) 30,000,010 30,000,010 29,451,690 (11,868,206) (11,868,206) 75,103 17,658,587
Total Rs. 1,300,301,081 18,080,533 1,318,381,614 120,333,888 (40,793,935) 79,539,953 30,000,010 (53,751,243) (23,751,233) 1,374,170,334 (223,181,433) (9,853,492) 430,075,011 (97,136,079) 299,904,007 75,103 1,674,149,444

Company Balance as at 1st April 2011 Adjustments due to first time adoption of SLFRSs/LKASs Restated Balance as at 1st April 2011 Profit for the Year Other Comprehensive Income Net Change in fair value of Available for Sale Investments Total Comprehensive Income for the Year Transactions with Owners of the Company, Recognized Directly in Equity Reserves Acquired on Amalgamation of Alucop Marketing (Pvt) Ltd. Dividend Paid Total Transactions with Owners of the Company Balance as at 31st March 2012 Profit for the Year Other Comprehensive Income Net Change in fair value of Available for Sale Investments Revaluation surplus on Property, Plant and Equipment Deferred Tax on Revaluation Surplus of Property, Plant and Equipment Total Comprehensive Income for the Year Balance as at 31st March 2013
Stated Capital Rs. 894,565,898 894,565,898 894,565,898 894,565,898
Revaluation Reserve Rs. 430,075,011 (97,136,079) 332,938,932 332,938,932
Available for Sale Reserve Rs. 145,732,830 145,732,830 (40,793,935) (40,793,935) 104,938,895 (9,853,492) (9,853,492) 95,085,403
Retained Earnings Rs. 346,680,506 (52,898,699) 293,781,807 128,736,085 128,736,085 (19,284,073) (53,751,243) (73,035,316) 349,482,576 16,526,859 16,526,859 366,009,435
Total Rs. 1,241,246,404 92,834,131 1,334,080,535 128,736,085 (40,793,935) 87,942,150 (19,284,073) (53,751,243) (73,035,316) 1,348,987,369 16,526,859 (9,853,492) 430,075,011 (97,136,079) 339,612,299 1,688,599,668

35
CASH FLOW STATEMENT
Group
Company 2012 Rs. 2013 Rs. 2012 Rs.

Cash Flow from Operating Activities Profit/(Loss) Before Share of Loss of Associate
2013 Rs.
(18,066,589)
145,365,214
18,801,123
150,134,258
Adjustments for
Depreciation and Amortization Impairment of Assets Held for Sale Provision for Impairment of Debts Provision for Obsolete Inventories Profit on Sale of Property, Plant and Equipment Profit on Disposal of Subsidiary Profit on Disposal of Investment Available for Sale Provision for Retirement Benefit Obligations Interest Expenses Interest Income Dividend Income Operating Profit Before Working Capital Changes (Increase)/Decrease in Inventories (Increase)/Decrease in Trade and Other Receivables (Increase)/Decrease in Dues from Related Parties Increase/(Decrease) in Trade and Other Payables Increase/(Decrease) in Dues to Related Parties Cash Generated from Operations Interest Paid Income Tax/ESC Paid Payment of Retirement Benefit Obligations Net Cash Flows Generated from/(Used) in Operating Activities Cash Flows from Investing Activities Interest Income Dividend Received Acquisition of Property, Plant and Equipment Acquisition of Intangible Assets Proceeds from Disposal of Property, Plant and Equipment (Investment in)/ Sales Proceeds from Treasury Bills Proceeds from Disposal of Available of Sale Investments Investment in Subsidiary Net Cash Acquired Proceeds from Disposal of Subsidiary Investment in Treasury Bills Investment in Fixed Deposit Investment in Available for Sale Investment Net Cash Used in Investing Activities 6,657,304 4,529,871 (72,818,240) (480,000) 1,334,519 5,089,355 2,817,124 (14,308,278) (656,097) (67,834,442) 4,937,013 4,282,591 (307,305,975) (377,335) 3,200,000 9,274,369 57,626,937 29,999,990 (3,300,000) (201,662,410) 6,657,304 4,529,871 (34,292,909) (480,000) 1,334,519 (14,308,278) 5,089,355 (880,000) (656,097) (33,006,235) 4,716,070 4,282,591 (174,618,581) (377,335) 3,200,000 5,622,037 66,489,223 (70,000,010) 270,064 (3,300,000) (163,715,941) 83,530,734 2,515,236 (2,028,726) (1,607,966) 1,539,944 187,760,457 (6,657,304) (4,529,871) 242,455,915 (83,301,378) (63,596,646) 9,990,881 4,087,203 109,635,975 (187,760,457) (8,531,862) (501,525) (87,157,869) 62,660,507 18,296,373 (6,387,866) (2,559,474) (17,343,611) 7,647,217 102,081,287 (4,975,385) (4,282,591) 300,501,670 41,188,187 (188,760,193) (11,354,365) 146,950,852 (176,671) 288,349,480 (99,144,252) (18,780,416) (636,875) 169,787,937 76,532,066 2,515,236 (2,028,726) (1,607,966) 1,539,944 161,984,579 (6,657,304) (4,529,871) 246,549,081 (48,687,652) 3,414,173 (10,639,959) (63,031,440) 127,604,203 (161,984,579) (8,531,837) (501,525) (43,413,736) 62,659,200 18,296,373 (2,559,474) (170,034) (26,205,895) 8,483,063 100,729,793 (4,754,442) (4,282,591) 302,330,251 34,800,320 (182,831,789) 25,861,326 138,007,673 334,788,462 (97,792,751) (17,239,932) (636,875) 219,118,904 16,620,681
31-67
36
CASH FLOW STATEMENT
Group
Sierra Cables PLC
Company 2012 Rs. 2013 Rs. 2012 Rs.

Cash Flows from Financing Activities Borrowings during the Year Repayment of Loans during the Year Repayment of Lease during the Year Dividend Paid Net Cash Flows Generated From/(Used) in Financing Activities Net Increase/(Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at the Beginning of the Year Cash and Cash Equivalents Cash and Cash Equivalents at the End of the Year Analysis of Cash and Cash Equivalents at the End of the Year; Cash in Hand and at Bank Bank Overdraft
2013 Rs.
214,458,663 (48,735,694) (6,153,940) 159,569,029 4,576,718 (62,262,903) (57,686,185)
61,154,080 (27,879,474) (7,826,121) (53,751,243) (28,302,758) (60,177,231) (2,085,672) (62,262,903)
153,865,319 (47,434,094) (6,153,940) 100,277,285 23,857,312 (23,367,581) 489,731
20,000,000 (27,879,462) (7,826,121) (53,751,243) (69,456,826) (14,053,863) (9,426,453) 112,734 (23,367,581)
16,080,412 (73,766,597) (57,686,185)
16,437,961 (78,700,864) (62,262,903)
15,776,180 (15,286,449) 489,731
16,342,732 (39,710,313) (23,367,581)

37
NOTES 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 Companys 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 Groups 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 Groups 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 Groups 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.
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38
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 Groups 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 Groups 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
Sierra Cables PLC
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.
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 Groups 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.
39
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 Buildings Plant & Machinery Factory Equipment Furniture Fittings Motor Vehicles Office & Computer Equipment Useful Life (Years) 20-25 10-20 5 5` 5 5 Depreciation Rate (%) 5% 5%-10% 20% 20% 20% 20%
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 Computer Software 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. Useful Life (Years) 05 Depreciation Rate (%) 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 Companys 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.
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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 groups 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 assets 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.
Sierra Cables PLC
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.
41
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 arms 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 arms 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 managements 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.
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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 Groups 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. Employers 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.
Sierra Cables PLC
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
43
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 straightline method on the cost of the Property in order to write-off such amounts over the estimated useful economic life of 20 years.
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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 Groups 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 The ability to use its power over the investee to affect the amount of the investors returns
Sierra Cables PLC
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 27Consoliadated 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 entitys 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.
(c)
45
Group
Company 2012 Rs. 2013 Rs. 2012 Rs.

5. Revenue Local Sales Export Sales
2013 Rs.
2,134,739,158 6,614,837 2,141,353,995
2,450,222,143 25,836,377 2,476,058,520
2,048,703,501 6,614,837 2,055,318,338
2,436,482,469 25,836,377 2,462,318,846
6.
Other Income Profit on disposal of Available for Sale Investments Profit on disposal of Property, Plant and Equipment Dividend Income Sundry Income 1,607,969 4,529,871 6,137,840 17,343,611 2,559,474 4,282,591 814,162 24,999,838 1,607,969 4,529,871 6,137,840 26,375,930 2,559,474 4,282,591 33,217,995
7.
Profit from Operations Profit from Operations is stated after charging all the expenses including followings: Directors' Emoluments Auditors' Remuneration - Audit - Audit Related Service Depreciation and Amortization Provision for Impairment Loss Bad Debt Written-off Personnel Costs Salaries, Wages and Related Cost Defined Contribution Plans Defined Benefit Obligations (Note 23) 96,363,267 10,786,800 1,539,944 66,982,994 9,682,344 7,647,217 90,025,816 10,319,431 1,539,944 66,982,994 9,682,344 8,483,063 4,950,000 684,000 383,853 81,888,034 6,601,488 5,250,000 634,000 51,000 62,660,507 20,000,000 408,966 4,250,000 630,000 383,853 74,889,366 6,601,488 5,250,000 560,000 51,000 62,659,200 20,000,000 408,966
8. 8.1
Net Finance Costs Finance Income Interest Income Exchange Gain 6,657,304 22,749,084 29,406,388 4,975,385 4,975,385 6,657,304 22,395,193 29,052,497 4,754,443 4,754,443
8.2
Finance Costs Interest on - Overdraft - Lease - Import Demand Loans - Bank Loans - Commercial Papers Exchange Loss 15,493,496 2,541,272 141,777,564 27,948,125 187,760,457 158,354,069 6,237,101 2,937,044 82,715,535 6,475,254 3,716,361 57,029,379 159,110,674 154,135,289 6,371,973 2,541,272 136,760,055 16,311,279 161,984,579 132,932,082 4,885,600 2,937,044 82,715,536 6,475,255 3,716,361 57,029,378 157,759,174 153,004,731
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Group
Sierra Cables PLC
Company 2012 Rs. 2013 Rs. 2012 Rs.

9. Income Tax Expense Income Tax for the Year (Note 9.1) Deferred Tax Charge/(Reversal) for the Year (Note 24)
2013 Rs.
5,089,705 5,089,705
22,830,687 (80,801) 22,749,886
2,274,264 2,274,264
21,478,974 (80,801) 21,398,173
9.1
Reconciliation between the Accounting Profit and Tax Expense Profit/(Loss) before Tax Aggregate disallowable Income Aggregate disallowable Expenses Aggregate allowable Expenses Taxable Profit/(Loss) Income from Other Sources Total Statutory Income Tax Loss Claimed Qualifying Payments Taxable Income/(Loss) Tax on Exports @ 12% ( 2012 - 15%) Tax on balance income @ 28% (18,091,728) (10,502,736) (28,569,325) 98,566,866 (166,451,766) (96,454,225) 7,155,130 7,155,130 (2,504,296) (4,650,835) 143,083,774 (33,463,486) 111,901,728 99,484,783 (73,794,730) 137,591,781 15,363,802 152,955,583 (33,841,581) (20,956,967) 98,157,035 160,277 22,670,410 22,830,687 18,801,123 (10,502,736) 8,298,387 91,330,174 (133,152,770) (33,524,209) 7,155,130 7,155,130 (2,504,296) (4,650,835) 150,134,258 (33,217,995) 116,916,263 99,333,405 (73,794,730) 142,454,938 5,779,883 148,234,821 (33,841,581) (20,956,967) 93,436,273 160,277 21,318,697 21,478,974
9.2
Accumulated Tax Losses Balance as at 1st April Business Loss for the Year Loss set off during the Year 30,451,107 (2,504,296) 27,946,811 33,841,581 (33,841,581) 30,451,107 (2,504,296) 27,946,811 33,841,581 (33,841,581) -
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. 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.
10.
Group
Company 2012 120,882,208 537,512,430 0.22 2013 16,526,859 537,512,430 0.03 2012 128,736,085 537,512,430 0.24

Profits/(Loss) Attributable to Ordinary Shareholders (Rs.) Weighted Average Number of Ordinary Shares Basic Earnings/(Loss) per Share (Rs.)
2013 (11,313,227) 537,512,430 (0.02)
11. Land Buildings Plant & Machinery Rs. Rs. Rs. Rs. Rs. Motor Vehicles Furniture & Fittings Factory Equipment Total
Property, Plant and Equipment
47
As at 31st March
Rs.
Rs.
Leased Motor Vehicles Rs.
Office & Computer Equipment Rs.
Capital Work in Progress Rs.
11.1 12,513,802 44,770,255 57,284,057 57,284,057 44,617,000 4,850,298 (44,617,000) 83,160,444 145,294,799 173,160,796 179,999 12,668,281 (74,675,918) 200,479,697 311,812,855 593,111,932 960,478 224,734,052 (1,950,583) (227,067,292) (93,795,810) 146,434,870 642,427,647 31,574,472 1,457,002 58,462 33,089,936 18,245,538 3,534,065 21,779,603 3,546,291 524,579 4,070,870 26,325,895 3,612,528 2,575,613 32,514,036 17,286,390 1,750,643 57,350 (223,625) 18,866,608 248,748,788 58,484,929 21,940,090 (248,420,771) 80,757,186 165,843,267 7,317,529 173,160,796 527,603,856 12,511,230 52,996,846 593,111,932 32,256,019 1,026,786 (1,708,333) 31,574,472 16,101,350 (2,167,812) 4,312,000 18,245,538 2,439,138 1,107,153 3,546,291 20,609,027 5,716,868 26,325,895 13,582,346 3,704,044 17,286,390 70,675,528 287,469,890 (109,396,630) 248,748,788
Group 861,624,333 311,535,971 (3,876,145) 1,169,284,159 1,169,284,159 111,587,158 21,997,440 (2,174,208) (44,617,000) (301,743,210) (93,795,810) 430,075,011 1,290,613,540
Cost As at 1 April 2011 Additions during the Year Disposals during the Year Transfers during the year As at 31st March 2012
As at 1st April 2012 Additions during the Year Additions due to Acquisition of Subsidiary Transfers during the year Disposals during the Year Transfers to subsidiary Offset of Depreciation on Revalued Assets Reclassification to Asset Held for Sale Revaluation during the Year As at 31 March 2013
Depreciation As at 1st April 2011 Charge for the Year On Disposal As at 31st March 2012 12,513,802 57,284,057 145,294,799 104,117,288 102,837,757 304,160,046 297,288,019 322,880,366 617,469,302 12,716,527 8,430,379 5,090,683 70,323,039 12,005,688 (74,675,918) 7,652,809 270,231,566 52,834,975 (760,330) (70,280,574) (227,067,292) 24,958,345 23,144,093 4,855,159 27,999,252 10,813,234 2,327,422 13,140,656 5,575,268 7,432,304 8,638,947 61,725,979 8,597,060 70,323,039 230,315,837 39,915,729 270,231,566 19,539,492 5,142,101 (1,537,500) 23,144,093 10,526,082 1,985,271 (1,698,119) 10,813,234
1,748,486 351,516 2,100,002 2,100,002 458,635 2,558,637 690,652 1,446,289 1,512,233
14,081,125 3,123,711 17,204,836 17,204,836 5,268,445 22,473,281 6,527,902 9,121,059 10,040,755
8,940,336 1,813,606 10,753,942 10,753,942 11,332 2,055,938 (72,359) 12,748,853 4,642,010 6,532,448 6,117,755
70,675,528 248,748,788 80,757,186
346,877,337 60,928,994 (3,235,619) 404,570,712 Sierra Cables PLC 404,570,712 11,332 79,806,262 (832,689) (70,280,574) (301,743,210) 111,531,833 514,746,996 764,713,447 1,179,081,707
As at 1st April 2012 Addition due to Acquisition of Subsidiary Charge for the Year On Disposal Reclassification to Asset Held for Sale Offset of Depreciation on Revalued Assets As at 31st March 2013
Annual Report 2012/13
As at 1st April 2011 As at 31st March 2012 As at 31st March 2013
31-67
11. Land Buildings Plant & Machinery Rs. Rs. Rs. Rs. Rs. Motor Vehicles Furniture & Fittings Factory Equipment Total
Property, Plant and Equipment (Continued)
48
As at 31st March
RS.
Rs.
Leased Motor Vehicles Rs.
Office & Computer Equipment Rs.
Capital Work in Progress Rs.
11.2 11,108,280 1,405,522 44,770,255 57,284,057 57,284,057 3,150,000 (44,617,000) 83,160,444 98,977,501 173,160,796 179,999 11,883,825 (74,675,918) 200,479,697 311,028,399 585,846,500 960,478 131,797,371 (1,943,583) (227,067,292) (93,795,810) 146,434,870 542,232,534 26,255,097 478,181 58,462 26,791,740 18,245,538 3,534,065 21,779,603 3,161,198 366,641 3,527,839 26,325,895 3,385,088 29,710,983 15,327,510 1,409,575 (223,625) 16,513,460 123,422,120 27,512,947 (150,423,723) 511,344 165,843,267 7,317,529 173,160,796 527,603,856 5,245,798 52,996,846 585,846,500 26,936,644 1,026,786 (1,708,333) 26,255,097 16,101,350 (2,167,812) 4,312,000 18,245,538 2,097,335 1,063,863 3,161,198 20,609,027 5,716,868 26,325,895 11,668,493 6,973 3,652,044 15,327,510 70,675,528 162,143,222 (109,396,630) 123,422,120
Company 852,643,780 1,412,495 178,848,581 (3,876,145) 1,029,028,711 1,029,028,711 34,292,909 (2,167,208) (44,617,000) (301,743,210) (93,795,810) 430,075,011 1,051,073,403
Cost As at 1st April 2011 Additions due to Merger Additions during the Year Disposals during the Year Transferred during the year As at 31st March 2012
As at 1st April 2012 Additions Transfers during the year Disposals Transfers to subsidiary Offset of Depreciation on Revalued Assets Reclassification to Asset Held for Sale Revaluation during the Year As at 31st March 2013
Depreciation As at 1st April 2011 Additions due to Merger Charge for the Year On Disposal As at 31st March 2012 11,108,280 57,284,057 98,977,501 104,117,288 102,837,757 303,385,396 297,288,013 315,614,928 522,433,210 12,716,523 8,430,375 4,200,578 70,323,039 11,995,882 (74,675,918) 7,643,003 270,231,572 47,675,948 (760,330) (70,280,574) (227,067,292) 19,799,324 17,824,722 4,766,440 22,591,162 10,813,244 2,327,422 13,140,666 5,575,258 7,432,294 8,638,937 61,725,979 8,597,060 70,323,039 230,315,843 39,915,729 270,231,572 14,220,121 5,142,101 (1,537,500) 17,824,722 10,526,092 1,985,271 (1,698,119) 10,813,244
1,406,689 351,516 1,758,205 1,758,205 432,092 2,190,297 690,646 1,402,993 1,337,542
14,081,137 3,123,711 17,204,848 17,204,848 3,620,199 20,825,047 6,527,890 9,121,047 8,885,936
7,028,116 6,625 1,812,310 8,847,051 8,847,051 2,000,943 (72,359) 10,775,635 4,640,377 6,480,459 5,737,825
70,675,528 123,422,120 511,344
339,303,977 6,625 60,927,698 (3,235,619) 397,002,681 397,002,681 72,818,926 (832,689) (70,280,574) (301,743,210) 96,965,134 513,339,803 632,026,030 954,108,269
Sierra Cables PLC
As at 1st April 2012 Charge for the Year On Disposal Reclassification to Asset Held for Sale Offset of Depreciation on Revalued Assets As at 31st March 2013
As at 1st April 2011 As at 31st March 2012 As at 31st March 2013
49
Group
As at
31-03-2013 Rs.
31-03-2012 Rs.
12.
Intangible Assets - Computer Software Cost As at 1st April Additions due to Merger Additions during the Year As at 31st March Amortization As at 1st April Addition due to Merger Charge for the Year As at 31st March Written Down Value as at 4,377,876 2,070,440 6,448,316 4,050,560 2,646,374 1,731,502 4,377,876 5,641,000 1,267,151 1,379,223 2,646,374 5,578,708 4,377,876 2,070,440 6,448,316 4,050,560 2,646,374 1,731,502 4,377,876 5,641,000 1,900,726 745,648 2,646,374 5,578,708 10,018,876 480,000 10,498,876 8,225,082 1,793,794 10,018,876 6,335,754 1,889,328 8,225,082 10,018,876 480,000 10,498,876 8,225,082 1,793,794 10,018,876 6,335,754 1,889,328 8,225,082
13.
Investment Property As at 1st April Additions during the year As at 31st March Depreciation As at 1st April Charge for the Year As at 31st March Carrying Value as at 31st March 2013 1,642,700 1,642,700 31,211,300 32,854,000 1,642,700 1,642,700 31,211,300 32,854,000 32,854,000 32,854,000 32,854,000 32,854,000 32,854,000 32,854,000 32,854,000 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% Alucop Marketing (Private) Limited Sierra Power (Private) Limited (Note 14.1) Sierra Industries (Private) Limited Less : Provision for Impairment 100% 88% 70% 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. 880,010 70,000,010 70,880,020 70,880,020 70,000,010 70,000,010 70,000,010 7,144,405 (7,044,375) 100,030 100,030 7,044,375
31-67
50
14.2 Net Assets Acquired and Liability undertaken due to Acquisition of Sierra Power (Private) Limited Assets Property, Plant and Equipment Trade and Other Receivables Cash in Hand and at Bank Total Assets Liabilities Interest Bearing Borrowings Trade & Other Payables Total Liabilities Net Identifiable Assets
Sierra Cables PLC
Rs. 16,142,385 764,917 2,742,023 19,649,325
20,000,000 23,600 20,023,600 (374,275)
Group
As at 31st March
31-03-2013 Rs.
31-03-2012 Rs.
14.3
Goodwill Balance as at 1st April On Acquisition of Subsidiary Balance as at 31st March 329,300 329,300 -
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
As at
Percentage Holding
31-03-2013 Rs.
31-03-2012 Rs.
15.
Investments in Associates Sierra Power (Private) Limited Tea Leaf Resort Holdings (Private) Limited (Note 15.1) T & G Lanka (Private) Limited (Note 15.2) 0% 50% 28% 198,190 2,587,355 2,785,545 10 223,689 2,586,995 2,810,694 10 1,792,124 1,792,134 2,500,000 3,300,000 5,800,000 10 2,500,000 3,300,000 5,800,010 10 2,500,000 2,500,010
15.1
Tea Leaf Resort Holdings (Private) Limited Cost of Investment Share of Loss for the Year (Net of Income Tax) Accumulated Share of Loss Net Asset Value of Associate as at 31 March 2,500,000 (25,499) (2,301,810) 198,190 2,500,000 (1,568,435) (2,276,311) 223,689 2,500,000 (707,876) 1,792,124 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 -
15.2
T & G Lanka (Private) Limited Cost of Investment Share of Profit/(Loss) (Net of Income Tax) for the Year Accumulated Share of Loss Net Asset Value of Associate as at 31 March 3,300,000 360 (712,645) 2,587,355 3,300,000 (713,005) 2,586,995 3,300,000 3,300,000 3,300,000 3,300,000 -
51
Group
As at
No of Shares/Units
31-03-2013 Rs.
31-03-2012 Rs.
16. 16.1
Available-for-Sale Financial Assets Investment in Equity Securities National Development Bank PLC Richard Pieris Exports PLC ACL Cables PLC Central Industries PLC DFCC Bank PLC Seylan Bank PLC Chevron Lubricants PLC NDB Aviva Growth Fund Investment in Units 20,250 10,359 200 1,584,538 10,000 10,000 219,984 3,341,250 68,369 13,100 99,033,625 1,311,000 2,170,000 15,827,814 121,765,158 1,243,350 277,898 6,260 110,218,710 3,378,000 3,411,900 1,819,000 14,202,137 134,557,255 3,446,550 290,052 18,800 151,314,543 5,154,000 3,835,200 1,600,000 50,000,000 215,659,145 3,341,250 68,369 13,100 99,033,625 1,311,000 2,170,000 15,827,814 121,765,158 1,243,350 277,898 6,260 110,218,710 3,378,000 3,411,900 1,819,000 14,202,137 134,557,255 3,446,550 290,052 18,800 151,314,543 5,154,000 3,835,200 1,600,000 50,000,000 215,659,145
16.2
Investment in Treasury Bills Treasury Bills 53,134,656 53,134,656 38,713,071 38,713,071 47,924,439 47,924,439 53,134,656 53,134,656 38,713,072 38,713,072 43,669,642 43,669,642
17.
Inventories Raw Materials Work in Progress Finished Goods Packing Material Stationeries Engineering Items Tool Boxes Less: Provision for Obsolete Inventories (Note 17.1) 95,191,445 299,962,829 595,893,623 7,273,759 2,170,657 25,996,607 2,405,126 1,028,894,046 (2,000,000) 1,026,894,046 53,277,762 224,050,436 635,882,084 5,606,922 1,755,591 22,315,665 2,704,208 945,592,668 (2,000,000) 943,592,668 72,828,071 161,285,718 718,715,344 7,959,878 6,385,665 17,935,172 1,671,007 986,780,855 (8,387,866) 978,392,989 84,778,234 299,962,829 571,693,109 7,273,759 2,170,657 25,996,607 2,405,126 994,280,321 (2,000,000) 992,280,321 53,277,762 224,050,436 635,882,084 5,606,922 1,755,591 22,315,665 2,704,209 945,592,669 (2,000,000) 943,592,669 72,828,071 161,285,718 7,959,878 6,385,665 17,935,172 1,671,007 980,392,989 (2,000,000) 978,392,989 712,327,478
17.1
Provision for Obsolete Inventories As at 1st April Provision/(Reversal) During the Year 2,000,000 2,000,000 8,387,866 (6,387,866) 2,000,000 5,526,430 2,861,436 8,387,866 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000
18.
Trade & Other Receivables Trade Receivables Provision for Impairment (Note 18.1) Other Debtors VAT Receivables Deposits, Prepayments & Advances Provision for Impairment 768,532,119 (68,765,886) 699,766,233 11,014,231 122,694,083 16,737,610 850,212,157 (22,000,000) 828,212,157 658,242,787 (70,794,613) 587,448,174 177,480,848 18,892,846 783,821,868 (22,000,000) 761,821,868 497,991,605 (81,905,928) 416,085,677 645,144 166,647,249 11,397,439 594,775,509 (2,000,000) 592,775,509 720,675,007 (68,765,886) 651,909,121 111,953,589 11,229,362 775,092,072 (22,000,000) 753,092,072 658,242,787 (70,794,613) 587,448,174 172,787,382 16,241,963 776,477,519 (22,000,000) 754,477,519 486,937,148 (72,498,240) 414,438,908 166,847,861 11,307,439 592,594,208 (2,000,000) 590,594,208
31-67
52
Group
Sierra Cables PLC
As at
31-03-2013 Rs.
31-03-2012 Rs.
18.1
Provision for Impairment of Trade Receivables Opening Balance Impairment for the Year Closing Balance 70,794,613 (2,028,727) 68,765,886 83,905,928 (13,111,315) 70,794,613 30,630,357 53,275,571 83,905,928 70,794,613 (2,028,727) 68,765,886 72,498,240 (1,703,627) 70,794,613 19,222,669 53,275,571 72,498,240
19.
Asset Held for Sale Opening Balance Transferred during the Year Impairment Loss Closing Balance 23,515,236 (2,515,236) 21,000,000 23,515,236 (2,515,236) 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 Alucop Marketing (Private) Limited Sierra Civil Engineering & Construction (Private) Limited Sierra Property Development (Private) Limited Sierra Power (Private) Limited Sierra Industries (Private) Limited Sierra Holding (Private) Limited 3,985,000 3,985,000 Trading Sierra Electrical Engineering (Private) Limited Sierra Information Technologies (Private) Limited Sierra Global Network (Private) Limited Sierra Road Engineering (Private) Limited Sierra Readymix (Private) Limited Sierra Water Works (Private) Limited Sierra Construction (Private) Limited Sierra Civil Engineering & Construction (Private) Limited Sierra Property Development (Private) Limited Sierra Piling (Private) Limited 616,785 2,393,056 107,203 19,688 64,794,757 345,572 48,070 68,325,131 Total 72,310,131 616,785 42,328 2,564,219 42,538 11,029 522,224 62,187,415 511,410 648,000 67,145,948 82,301,012 616,785 74,464 1,980,426 1,600,040 474,138 522,224 54,820,380 422,035 60,510,492 103,800,647 616,785 2,393,056 107,203 19,688 64,794,757 345,572 48,070 68,325,131 89,045,367 616,785 42,328 2,564,219 42,538 11,029 522,224 62,187,415 511,410 648,000 67,145,948 72,301,002 616,785 74,464 1,980,426 1,600,040 474,138 522,224 54,820,380 422,035 60,510,492 131,016,328 4,885,000 10,270,064 15,155,064 4,885,000 32,854,000 5,551,155 43,290,155 3,985,000 4,752,730 11,982,506 20,720,236 4,885,000 270,054 5,155,054 5,385,281 21,830,400 4,885,000 32,854,000 5,551,155 70,505,836
53
Group
As at
31-03-2013 Rs.
31-03-2012 Rs.
21.
Cash and Cash Equivalents Favourable Balances Cash in Hand and at Bank 16,080,412 16,080,412 Unfavourable Balances Bank Overdraft Cash and Cash Equivalents for Cash Flow Purposes (73,766,597) (57,686,185) (78,700,864) (62,262,902) (35,406,691) (2,085,671) (15,286,449) 489,731 (39,710,313) (23,367,582) (35,406,691) (9,426,453) 16,437,962 16,437,962 33,321,020 33,321,020 15,776,180 15,776,180 16,342,731 16,342,731 25,980,238 25,980,238
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 Adjustments due to Merger Changes in Accounting Estimate Current Service Cost Interest Charge for the Year Actuarial (Gain)/Loss Payments during the Year Balance as at 31st March 1,931,893 1,521,970 (1,913,910) (501,525) 14,874,524 13,836,096 6,825,754 1,850,615 648,447 5,148,155 (636,875) 13,836,096 9,724,153 (4,345,636) 934,032 599,692 835,849 (922,336) 6,825,754 13,836,105 1,931,884 1,521,970 (1,913,910) (501,525) 14,874,524 5,989,908 1,850,615 648,447 5,984,010 (636,875) 13,836,105 5,558,825 467,017 299,846 (335,780) 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 Interest Cost Actuarial (Gain)/Loss 1,931,893 1,521,970 (1,913,910) 1,539,943 1,850,615 648,447 5,148,155 7,647,217 934,032 599,692 835,849 2,369,573 1,931,884 1,521,970 (1,913,910) 1,539,944 1,850,615 648,447 5,984,010 8,483,072 467,017 299,846 766,863
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. 31-03-2013 Rs. Expected Annual Average Salary Increment Discount Rate Retirement Age 10% 12% 55 Years 31-03-2012 Rs. 10% 11% 55 Years
31-67
54
Group
Sierra Cables PLC
As at
24. Deferred Tax Liability Balance as at 1st April Addition due to Merger Provision/(Reversal) for the year (Note 24.2) Balance as at 31st March
31-03-2013 Rs.
31-03-2012 Rs.
53,303,446 102,225,784 155,529,230
53,384,247 (80,801) 53,303,446
43,717,376 9,666,871 53,384,247
53,303,446 99,410,343 152,713,789
53,384,247 (80,801) 53,303,446
(4,192,140) 43,938,293 13,638,094 53,384,247
As at
2013 Temporary Difference Rs. Tax Effect Rs.
24.1
The Deferred Tax Liability is attributable to the followings Group On Property, Plant and Equipment On Retirement Benefit Obligations On Accumulated Tax Losses On Revaluation Reserve 251,734,018 (14,874,524) (27,946,811) 346,914,567 555,827,250 Company On Property, Plant and Equipment On Retirement Benefit Obligations On Accumulated Tax Loss On Revaluation Reserve 241,678,872 (14,874,524) (27,946,811) 346,914,567 545,772,104 67,545,633 (4,157,207) (7,810,716) 97,136,079 152,713,789 Group 205,354,070 (13,836,105) 191,517,965 57,177,553 (3,874,107) 53,303,446 220,672,226 (5,989,908) (22,997,408) 191,684,910 Company 01-04-2011 Rs. 31-03-2013 Rs. 31-03-2012 Rs. 01-04-2011 Rs. 61,457,214 (1,668,189) (6,404,778) 53,384,247 70,361,074 (4,157,207) (7,810,716) 97,136,079 155,529,230 205,354,070 (13,836,096) 191,517,974 57,177,553 (3,874,107) 53,303,446 220,672,224 (6,825,754) (22,997,408) 190,849,062 61,457,214 (1,668,189) (6,404,778) 53,384,247
As at
31-03-2013 Rs.
31-03-2012 Rs.
24.2
Provision/(Reversal) for the Year Recognized in Statement of Comprehensive Income Recognized in Other Comprehensive Income 5,089,705 97,136,079 102,225,784 (80,801) (80,801) 9,666,871 9,666,871 2,274,264 97,136,079 99,410,343 (80,801) (80,801) 13,638,094 13,638,094
25.
Long-Term Loans Balance as at 1st April On Acquisition of Subsidiary Loans Obtained during the year Repayments during the year Balance as at 31st March Amount payable within one year Amount payable after one year 88,639,433 20,000,000 211,740,650 (48,735,696) 271,644,387 54,158,846 217,485,541 56,629,434 59,889,475 (27,879,476) 88,639,433 33,434,512 55,204,921 82,734,364 (26,104,930) 56,629,434 26,768,494 29,860,940 48,749,972 149,882,711 (47,434,096) 151,198,587 37,758,056 113,440,531 56,629,434 20,000,000 (27,879,462) 48,749,972 33,434,512 15,315,460 70,013,693 (13,384,259) 56,629,434 26,768,494 29,860,940
55
Group
As at
31-03-2013 Rs.
31-03-2012 Rs.
26.
Lease Liability Balance as at 1st April Lease obtained during the year Rentals Paid during the Year Gross Lease Liability Less: Interest in Suspense Balance as at 31st March Current Liability Lease Liability Payable within One Year 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 5,859,816 4,581,086 4,424,171 5,859,816 4,581,086 4,424,171 17,874,720 3,982,610 21,857,330 (7,537,608) 14,319,722 (2,225,060) 12,094,662 20,703,725 4,997,149 25,700,874 (7,826,154) 17,874,720 (3,608,701) 14,266,019 26,977,833 3,105,960 30,083,793 (9,380,068) 20,703,725 (5,778,587) 14,925,138 17,874,720 3,982,610 21,857,330 (7,537,608) 14,319,722 (2,225,060) 12,094,662 20,703,725 4,997,149 25,700,874 (7,826,154) 17,874,720 (3,608,728) 14,265,992 25,445,525 25,445,525 (4,741,800) 20,703,725 (5,778,587) 14,925,138
27.
Trade & Other Payables Trade Creditors & Other Payables Accrued Expenses 305,366,388 21,964,604 327,330,992 506,398,382 14,276,849 520,675,231 353,266,811 7,377,667 360,644,478 288,416,370 8,175,125 296,591,495 496,222,566 14,130,028 510,352,594 352,141,765 6,845,649 358,987,414
28.
Amounts Due to Related Companies Sierra Engineering & Construction (Private) Limited Sierra Industries (Private) Limited 176,671 176,671 38,512,594 38,512,594 -
29.
Import Demand Loan Balance as at 1st April Loans Obtained during the Year Repayments during the Year Balance as at 31st March 647,131,258 1,713,988,482 843,276,728 658,946,526 1,853,209,609 647,131,258 293,331,230 1,398,746,361 658,946,526 645,866,663 166,857,670 796,596,321 658,946,526 1,851,945,014 645,866,663 293,331,230 1,398,746,361 658,946,526
(1,517,843,012) (1,865,024,877) (1,033,131,065)
(1,517,843,012) (1,865,024,877) (1,033,131,065)
31-67
56
29.1
Sierra Cables PLC
Assets Pledged as Security and Repayment Terms The 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 Commercial Bank of Ceylon PLC. Assets Pledged Land & Buildings, Plant, Machinery, and equipment of the Company and Concurrent Mortgage over stocks in trade together with assignment over book debts. Facility Obtained Over Draft of Rs.40 Mn Interest Rate AWPLR+2% p a Repayment Terms
Letter of Credit Facility Rs.400 Mn Combined Facility for the Import Demand Loan and release of Document against Acceptance Rs.1 Billion. Letters of Guarantee Facility Rs.250 Mn Shipping Guarantee Facility Rs.100 Mn Mortgage over the Machinery Imported Mortgage over the Machinery Imported Term Loan (1)f Rs.20 Mn Term Loan (2)f Rs.35 Mn Term Loan (3)f Rs.114 Mn
AWPLR+2% p a
Repayable over 180 days
AWPLR+2% p a AWPLR+2% p a AWPLR+2% p a
35 equal monthly Instalments 59 equal monthly Instalments 60 equal monthly Instalments
Bank of Ceylon PLC.
Relative Bills of Exchange, Shipping documents and the underlying goods under the Banks constructive control. Hypothecation over Stocks
Letter of Credit Facility of Rs.200 Mn
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) Two Motor cars purchased under the Facility
Diminishing Musharakah of Rs. 70 Mn Diminishing Musharakah of Rs.26.57 Mn
AER of 13.5% AER of 14%
44 monthly repayments 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.
33.
Related Party Disclosure
57
33.1 Transaction Value Year Ended 31st March Nature of the Transactions 2012 2013 2013 2012 Balance due from/(to) As at 31st March
Transactions with Related Parties
Name of the Company
Transactions with Parent Company Proceed from sales of Business - Sierra Engineering & Construction (Private) Limited 270,054 270,054
Sierra Holding (Private) Limited
Transactions with Subsidiary Companies Total amount paid for the Capital Expenses Investment in shares Investment in shares Total of funds/loanspaid Total amount paid for the expense Land transfer against the Investment Sett off by merger Total of funds/loans obtained Total of funds/loanspaid Total amount paid from the expense Total amount paid for the expense Total of funds/loans obtained Total of funds/loanspaid 5,877,698 44,617,000 21,847,543 372,316 (389,459) 45,760 (2,800,000) (2,631,041) 880,000 70,000,010 3,872,730 5,551,155 4,752,730 11,982,506 (38,512,594)
Sierra Power (Private) Limited
Sierra Industries (Private) Limited
Alucop Marketing (Private) Limited
Sierra Engineering & Constructions (Private) Limited
31-67
33.1 Transaction Value Year Ended 31st March Nature of the Transactions 2012 2012 2013 2013 Balance due from/(to) As at 31st March
Transactions with Related Parties (Continued)
58
Name of the Company
Transactions with Other Related Companies Purchase of Investment Property Sale of Goods Sale of Goods Settlement of Invoices Loan Settlement Sale of Goods Settlement of Invoices Sale of Goods Sale of Goods Settlement of Invoices Settlement of Invoices Sale of Goods Settlement of Invoices Sale of Goods Settlement of Invoice Sale of Goods Sale of Goods Settlement of Invoice (912,412) (42,328) (42,538) 491,817 (994,353) 602,517 (495,314) 277,200 (925,200) 11,029 648,000 (107,203) 11,029 648,000 (32,136) (1,557,502) (19,688) 522,224 42,328 42,328 741,249 (641,020) 583,793 (616,785) (2,393,056) 616,785 2,564,219 564,557 (900,000) (108,805,510) 111,412,852 7,367,034 (64,794,757) 3,985,000 (345,572) 48,070 (32,854,000) (48,070) 32,854,000 62,187,415 (176,671) 4,885,000 422,035
Sierra Property & Development (Private) Limited
Sierra Construction (Private) Limited
Sierra Civil Engineering (Private) Limited
Sierra Electrical Engineering (Private) Limited
Sierra Global Networks (Private) Limited
Sierra Information Technologies (Private) Limited
Sierra Road Engineering (Private) Limited
Sierra Water Works (Private) Limited
Sierra Redimix (Private) Limited
Sierra Piling (Private) Limited
Sierra Cables PLC FINANCIAL STATEMENTS Annual Report 2012/13
59
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 2013 31st March Rs. 2012 31st March Rs.
Company 2013 31st March Rs. 2012 31st March Rs.
As at 31st March
Compensation to Key Management Personnel Short Term Employment Benefits Post Employment Benefits 34. Explanation of Transition to SLFRSs
4,250,000 -
5,250,000 -
4,250,000 -
5,250,000 -
As stated in Note 2.1 to the Financial Statements, these are the Groups 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 Groups 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 Groups 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 Rs. 13,385,332 13,385,332 38,372 (9,261) 29,111 13,414,443 13,414,443 13,414,443 (40,793,935) (27,379,492) SLFRSs
Note Revenue Cost of Sales Gross Profit Other Income Selling & Distribution Expenses Administration Expenses Other Operating Expenses Profit from Operations Finance Income Finance Cost Net Finance Costs Profit Before Associate Companies' Share of Loss Share of Loss of Associate Companies Profit Before Taxation Income Tax Expense Profit for the Year Other Comprehensive Income Total Comprehensive Income for the Year 34(ii)b(2) 34(ii)b(4) 34(ii)b(3)
Rs. 2,476,058,520 (2,010,583,298) 465,475,222 24,999,838 (117,544,961) (68,356,157) (18,458,772) 286,115,170 4,937,013 (159,101,413) (154,164,400) 131,950,770 (2,281,440) 129,669,330 (22,749,886) 106,919,444 106,919,444
Rs. 2,476,058,520 465,475,222 24,999,838 (104,159,628) (68,356,157) (18,458,772) 299,500,503 4,975,385 (159,110,674) (154,135,289) 145,365,214 (2,281,440) 143,083,774 (22,749,886) 120,333,888 (40,793,935) 79,539,953
- (2,010,583,298)
31-67
60
34.(i)b Reconciliation of Company Comprehensive Income for the year ended 31st March 2012 SLASs Effect of Transition to SLFRSs Rs. 13,385,332 13,385,332 38,372 (9,261) 29,111 13,414,443 13,414,443 (40,793,934) (27,379,491)
Sierra Cables PLC
SLFRSs
Note Revenue Cost of Sales Gross Profit Other Income Distribution Expenses Administration Expenses Other Operating Expenses Operating Profit before Finance Costs Finance Income Finance Cost Net Finance Costs Profit Before Income tax Income Tax Expense Profit for the Year Other Comprehensive Income Total Comprehensive Income for the year 34.(ii)a Reconciliation of Group Statement of Financial Position 34(ii)b(1) 34(ii)b(2) 34(ii)b(4) 34(ii)b(3)
Rs. 2,462,318,846 (2,000,713,159) 461,605,687 33,217,995 (117,554,303) (67,515,722) (20,000,000) 289,753,657 4,716,071 (157,749,913) (153,033,842) 136,719,815 (21,398,173) 115,321,642 115,321,642
Rs. 2,462,318,846 461,605,687 33,217,995 (104,168,971) (67,515,722) (20,000,000) 303,138,989 4,754,443 (157,759,174) (153,004,731) 150,134,258 (21,398,173) 128,736,085 (40,793,934) 87,942,150
- (2,000,713,159)
SLASs
As at 31st March 2012 Effect of SLFRSs Transition to SLFRSs Rs. Rs.
SLASs
As at 1st April 2011 Effect of SLFRSs Transition to SLFRSs Rs. Rs.
Note ASSETS Non Current Assets Property, Plant and Equipment Intangible Assets Investment Property Investments in Subsidiaries Investments in Associates Financial Investments - Available for Sale 34(ii)b(1)
Rs.
Rs.
764,713,420 5,641,000 32,854,000 2,810,694 104,080,955 910,100,069
30,476,300 105,229,898
764,713,420 5,641,000 32,854,000 2,810,694 134,557,255 940,576,369
514,746,996 5,578,708 1,792,134 144,364,282 666,482,120
71,294,863 71,294,863
514,746,996 5,578,708 1,792,134 215,659,145 737,776,983
Current Assets Inventories Trade and Other Receivable Income Tax Receivable Asset Held for Sale Amounts due from Related Companies Investments Available for Sale Cash in Hand and at Bank TOTAL ASSETS 34(ii)b(2) 34(ii)b(3) 943,592,668 801,712,080 7,279,730 82,301,012 38,650,070 16,437,962 1,889,973,522 2,800,073,591 (39,890,212) 63,002 (39,827,210) (9,350,910) 943,592,668 761,821,868 7,279,730 82,301,012 38,713,072 16,437,962 1,850,146,312 2,790,722,681 978,392,989 646,051,080 11,518,792 103,800,647 47,924,423 33,321,020 1,821,008,951 2,487,491,071 (53,275,571) (53,275,571) 18,019,292 978,392,989 592,775,509 11,518,792 103,800,647 47,924,423 33,321,020 1,767,733,380 2,505,510,363
61
34.(ii)a Reconciliation of Group Statement of Financial Position (Continued) SLASs
SLASs
Note EQUITY AND LIABILITIES Equity Stated Capital Retained Earnings Available for Sale Reserve Total Equity Attributable to Equity Holders of the Company Minority Interest Total Equity Non Current Liabilities Retirement Benefit Obligations Deferred Taxation Long-Term Loans Long-Term Lease Liability 34(ii)b(4) 34(ii)b(1)
Rs.
Rs.
894,565,898 459,451,703 1,354,017,601 29,451,690 1,383,469,291
(114,237,852) 104,938,895 (9,298,957) (9,298,957)
894,565,898 345,213,851 104,938,895 1,344,718,644 29,451,690 1,374,170,334
894,565,898 405,735,183 1,300,301,081 1,300,301,081
(127,652,297) 145,732,830 18,080,533 18,080,533
894,565,898 278,082,886 145,732,830 1,318,381,614 1,318,381,614
13,836,096 53,303,446 55,204,921 9,712,729 132,057,192
(27,796) (27,796)
13,836,096 53,303,446 55,204,921 9,684,933 132,029,396
6,825,754 53,384,247 29,860,940 10,544,926 100,615,867
(43,959) (43,959)
6,825,754 53,384,247 29,860,940 10,500,967 100,571,908
Current Liabilities Amounts due to Related Companies Current Portion of Long -Term Loans Current Portion of Lease Liability Import Demand Loan Income Tax Payable Bank Overdraft TOTAL LIABILITIES 34(ii)b(4) 33,434,512 4,605,243 647,131,258 78,700,864 1,284,547,108 2,800,073,591 (24,156) (24,156) (9,350,910) 33,434,512 4,581,087 647,131,258 78,700,864 1,284,522,952 2,790,722,681 176,671 26,768,494 4,441,453 658,946,526 189,810 35,406,691 1,086,574,123 2,487,491,071 (17,282) (17,282) 18,019,292 176,671 26,768,494 4,424,171 658,946,526 189,810 35,406,691 1,086,556,841 2,505,510,363
31-67
Trade & Other Payables
520,675,231
520,675,231
360,644,478
360,644,478
62
34.(ii)b Reconciliation of the Company Statement of Financial Position SLASs
Sierra Cables PLC
SLASs
Note ASSETS Non Current Assets Property, Plant and Equipment Intangible Assets Investment Property Investments in Subsidiaries Investments in Associates Investments Available for Sale 34(ii)b(1)
Rs.
Rs.
632,026,030 5,641,000 32,854,000 70,000,010 5,800,010 29,327,357 775,648,407
105,229,898 105,229,898
632,026,030 5,641,000 32,854,000 70,000,010 5,800,010 134,557,255 880,878,305
513,339,803 5,578,708 100,030 2,500,010 69,610,684 591,129,235
146,048,461 146,048,461
513,339,803 5,578,708 100,030 2,500,010 215,659,145 737,177,696
Current Assets Inventories Trade & Other Receivable Income Tax Receivable Asset Held for Sale Amounts due from Related Companies Available-for-sale Investment Cash in Hand and at Bank TOTAL ASSETS EQUITY AND LIABILITIES Share Capital & Reserves Stated Capital Retained Earnings Available for Sale Reserve Total Equity Attributable to Equity Holders of the Company Total Equity Non Current Liabilities Retirement Benefit Obligations Deferred Taxation Long-Term Loans Long-Term Lease Liability 34(ii)b(4) 13,836,105 53,303,446 15,315,460 9,712,729 92,167,740 Current Liabilities Trade & Other Payables Amounts due to Related Companies Current Portion of Long -Term Loans Current Portion of Lease Liability Import Demand Loan Bank Overdraft TOTAL EQUITY AND LIABILITIES 34(ii)b(4) 510,352,594 38,512,594 33,434,512 4,605,243 645,866,663 39,710,313 1,272,481,919 2,648,182,389 (24,157) 65,402,659 (24,157) 510,352,594 38,512,594 33,434,512 4,581,086 645,866,663 39,710,313 1,272,457,762 2,713,585,048 358,987,414 26,768,494 4,441,453 658,946,526 35,406,691 1,084,550,578 2,425,577,003 (17,282) 92,772,890 (17,282) 358,987,414 26,768,494 4,424,171 658,946,526 35,406,691 1,084,533,296 2,518,349,893 (27,823) (27,823) 13,836,105 53,303,446 15,315,460 9,684,906 92,139,917 5,989,908 53,384,247 29,860,940 10,544,926 99,780,021 (43,959) (43,959) 5,989,908 53,384,247 29,860,940 10,500,967 99,736,062 894,565,898 388,966,832 1,283,532,730 1,283,532,730 (39,484,256) 104,938,896 65,454,640 65,454,640 894,565,898 349,482,576 104,938,895 1,348,987,369 1,348,987,369 894,565,898 346,680,506 1,241,246,404 1,241,246,404 (52,898,699) 145,732,830 92,834,131 92,834,131 894,565,898 293,781,807 145,732,830 1,334,080,535 1,334,080,535 34(ii)b(2) 34(ii)b(3) 943,592,669 794,367,759 7,279,750 72,301,002 38,650,071 16,342,731 1,872,533,982 2,648,182,389 (39,890,240) 63,001 (39,827,239) 65,402,659 943,592,669 754,477,519 7,279,750 72,301,002 38,713,072 16,342,732 1,832,706,744 2,713,585,048 978,392,989 643,869,779 11,518,792 131,016,328 43,669,642 25,980,238 1,834,447,768 2,425,577,003 (53,275,571) (53,275,571) 92,772,890 978,392,989 590,594,208 11,518,792 131,016,328 43,669,642 25,980,238 1,781,172,197 2,518,349,893
63
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 Group Rs. Statement of Financial Position Available for Sale Investments at Fair Value Investments at Cost Effect of Change in Disposal of Associate Adjustment to Fair Value Reserve 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 Group Rs. Statement of Comprehensive Income Finance Income Adjustment before Income Tax Statement of Financial Position Finance Income Statement of Financial Position Adjustment to Fair Value Reserve Total 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:
01-04-2011 Group Rs. 215,659,145 (69,610,684) (74,753,598) 71,294,863 Company Rs.

215,659,145 (69,610,684) 146,048,461
Company Rs. 134,557,255 (29,327,357) (40,818,563)
134,557,255 (29,327,357) 33,935,035
01-04-2011 Group Rs. Company Rs. -
Company Rs. 38,372 38,372 38,372 24,629 63,001
38,372 38,372 38,372 24,629 63,001
31-03-2012 Group Rs. Statement of Comprehensive Income Distribution Expenses Adjustment before Income Tax Statement of Financial Position Trade Receivables Adjustment to Retained Earnings 34.(ii)b(4) Change in Accounting Policies - Leases 13,385,332 13,385,332 (39,890,239) (39,890,239) Company Rs. 13,385,332 13,385,332 (39,890,239) (39,890,239) Group Rs.
01-04-2011 Company Rs.

53,275,571 53,275,571
53,275,571 53,275,571
(53,275,571) (53,275,571)
(53,275,571) (53,275,571)
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 Group Rs. Statement of Comprehensive Income Finance Cost Adjustment before Income Tax Statement of Financial Position Lease Interest in Suspense Adjustment to Retained Earnings 9,261 9,261 51,980 51,980 Company Rs. 9,261 9,261 51,980 51,980 Group Rs. (61,241) (61,241) 61,241 61,241 01-04-2011 Company Rs. (61,241) (61,241) 61,241 61,241
31-67
64
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
Sierra Cables PLC
This note presents information about the Groups exposure to each of the above risks, the Groups objectives, policies and processes for measuring and managing risks, and the Groups management of capital. (ii) Risk management framework The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework. The Groups 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 Groups 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 2013 31st March Rs. Trade Receivables Amounts due from Related Companies Balances with Banks 699,766,233 72,310,131 13,637,748 785,714,112 Trade Receivables The Groups 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;
Company 2013 31st March Rs. 651,909,121 89,045,367 13,637,749 754,592,237
As at 31/03/2013 Gross Balance Rs. Past due 0-90 days Past due 91-360 days More than 360 days 533,222,401 145,872,847 89,436,871 768,532,119 Impairment Rs. 344,296 2,811,484 65,610,106 68,765,886
As at 31/03/2012 Gross Balance Rs. 444,663,049 134,210,137 79,369,601 658,242,787 Impairment Rs. 628,014 3,824,087 66,342,512 70,794,613
As at 01/04/2011 Gross Balance Rs 299,904,056 105,336,600 92,750,949 497,991,605 Impairment Rs. 678,133 4,226,989 77,000,806 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 Groups 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 Groups reputation.
65
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 Groups 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

Non Derivative Financial Liabilities Trade &Other Payables Interest bearing Borrowings Bank overdraft
Carrying Amount Rs.
0-6 Months Rs.
6-12 Months Rs.
More than 12 Months Rs.
327,330,992 1,127,015,750 73,766,597 1,528,113,339 Carrying Amount Rs.
327,330,992 873,286,032 73,766,597 1,274,383,621 0-6 Months Rs.
30,009,331 30,009,331 6-12 Months Rs.
223,720,387 223,720,387 More than 12 Months Rs.
As at 31st March 2012

Non Derivative Financial Liabilities Trade &Other Payables Interest bearing Borrowings Bank overdraft Total
520,675,229 750,036,710 78,700,864 1,349,412,803
520,675,229 665,506,740 78,700,864 1,264,882,833
19,640,077 19,640,077
64,889,893 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 Groups 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. 31-03-2013 USD 2,315,414 2,315,414 31-03-2012 USD 3,391,242 3,391,242
As at 31st March
Trade Payables - Foreign Creditors Gross Statement of Financial Position Exposure The following significant exchange rates were applicable during the year
Average Rate 2013 Rs. USD 129.87 2012 Rs. 113.33
Reporting Date Spot Rate 2013 Rs. 126.85 2012 Rs. 128.19
31-67
66
35. Financial Risk Management (Continued) (v) Market Risk (Continued) (a) Currency Risk (Continued) Sensitivity Analysis
Sierra Cables PLC
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. Strengthening Profit or Loss Rs. Weakening Profit or Loss Rs.
As at 31st March
31st March 2013 USD (10% movement) 31st March 2012 USD (10% movement) (b) Interest Rate Risk
(29,371,675) (43,471,585)
29,371,675 43,471,585
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 Groups interest-bearing financial instruments were as follows: Carrying Amount 31-03-2013 Rs. Fixed Rate Instruments Financial Assets Treasury Bills Financial Liabilities Long-Term Loans Leases Import Demand Loans 53,134,656 (271,644,387) (14,319,722) (843,276,728) (1,076,106,181) Variable Rate Instruments Financial Assets Financial Liabilities Bank Overdrafts (73,766,597) (78,700,864) 38,713,072 (88,639,433) (17,874,747) (647,131,258) (714,932,367) 3-31-2012 Rs.
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.
67
35. Financial Risk Management (Continued) (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 Groups interest-bearing financial instruments were as follows:
Profit or Loss 100 bp increase Rs. 31st March 2013 Variable Rate Instruments Cash Flow Sensitivity (Net) 31st March 2012 Variable Rate Instruments Cash Flow Sensitivity (Net) Cash Flow Sensitivity (Net) (vi) Capital Management The Boards 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 (43,585,611) (43,585,611) (43,585,611) 43,585,611 43,585,611 43,585,611 (97,443,369) (97,443,369) 97,443,369 97,443,369 100 bp decrease Rs.
The Groups debt to adjusted capital ratio at the end of the reporting period was as follows: Group 2013 31st March Rs. Total Liabilities Less: Cash and Cash Equivalents Net Debt Total Equity Net Debt to Equity Ratio 1,698,517,120 (16,080,412) 1,682,436,708 1,674,149,444 100% 2012 31st March Rs. 1,416,552,347 (16,437,962) 1,400,114,385 1,374,170,334 102% Company 2013 31st March Rs. 1,439,355,827 (15,776,180) 1,423,579,647 1,688,599,668 84% 2012 31st March Rs. 1,364,597,679 (16,342,731) 1,348,254,948 1,348,987,369 100%
There were no changes in the Groups approach to capital management during the year and the Group is not subject to externally imposed capital requirements.
31-67
capital requirements of the day today operations of the Group.
69
SHARE INFORMATION
Company 2013 Rs. Company 2012 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 Milanka Price Index 5,735.68 5,420.20 4,891.58
Share Prices Lowest - Rs. Highest - Rs. Last Transaction 2.0 3.7 2.2 2.9 6.1 3.3
Market Capitalisation Value No. of Market Days No. of Days Trades Public Holding 1,182,527,346 239 239 37.64% 1,773,791,019 240 240 37.68%
69-76
70
TEN YEAR SUMMARY
2004 Rs. 2005 Rs. 2006 Rs. 2007 Rs. 2008 Rs. 2009 Rs.
2010 Rs.
2011 Rs. Restated
2012 Rs. Restated
2013 Rs.
Operating Results Turnover Gross Profit Profit From Operations Profit Before Associate Company's Share of Profit Profit After Tax 590,091,842 116,828,493 59,706,563 11,587,740 26,315,771 752,941,879 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 2,141,353,995 144,705,928 84,502,944 35,142,872 64,391,915 230,940,997 176,436 139,337,547 100,747,296 272,433,383 199,432,274 151,152,240 101,695,199 332,724,286 277,533,324 174,694,115 129,237,627 230,718,971 160,014,485 25,781,080 26,342,486 220,372,206 176,323,484 108,286,675 108,148,358 256,397,820 90,731,337 47,552,975 16,116,633 465,475,222 299,500,503 145,365,214 120,333,888 305,053,224 140,287,480 -18,066,589 -23,181,433
As at 31st March
Assets Property, Plant & Equipment Other Non-Current Asset Current Assets Total Asset Liabilities Long-Term Debt Other Non-Current Liabilities Short-Term Debt Other Current Liabilities Shareholders' Funds Share Capital Reserves Non-Controlling Interest Ratios Total Assets/Equity Turnover/Assets Net Margin (%) Return on Equity (%) Return on Assets (%) Share Information Earnings Per Share (Rs.) Price Earnings Ratio Net Assets Per Share 0.05 1.08 0.12 19.20 1.27 0.19 10.67 2.00 0.19 10.57 2.13 0.24 7.49 2.37 0.05 22.45 2.37 0.2 10.93 2.57 0.03 180.10 2.45 0.22 14.67 2.50 (0.02) (104.53) 3.08 2.60 0.62 4.46 3.16 1.22 2.12 0.83 8.55 8.22 3.87 1.54 0.63 9.70 12.90 8.40 1.49 0.82 7.30 13.20 8.84 1.44 0.81 8.70 13.70 9.53 1.49 0.80 1.70 2.00 1.36 1.50 0.5 10.40 7.80 5.21 1.90 0.59 1.08 3.61 1.90 2.03 0.89 4.86 10.58 5.21 2.01 0.63 (1.08) (1.08) (0.54) 337,512,430 28,753,854 337,512,430 90,222,188 894,565,898 183,060,976 894,565,898 251,752,110 894,565,898 380,989,737 894,565,898 380,835,922 894,565,898 488,984,280 894,565,898 423,815,716 894,565,898 450,152,746 29,451,690 894,565,898 761,924,958 17,658,588 121,663,994 1,852,137 43,236,842 419,853,049 80,819,180 2,187,544 29,753,362 367,838,934 77,027,087 16,432,279 22,842,754 465,272,684 43,326,142 29,204,037 19,987,553 470,516,694 21,564,397 49,578,917 35,317,723 451,937,460 80,174,171 55,604,003 15,743,986 472,355,366 69,435,262 57,954,752 45,152,092 40,361,907 60,210,001 35,406,691 64,889,854 67,139,542 78,700,864 223,720,387 170,403,754 73,766,597 379,449,179 105,858,368 466,404,829 951,712,376 366,987,871 129,106,975 363,130,752 156,613,840 427,095,874 176,276,677 433,763,317 190,025,284 485,387,038 203,629,248 494,452,431 113,020,866 514,746,996 223,029,987 764,713,420 1,179,081,707 175,862,949 160,141,863
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 2,033,442,994 908,333,638 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
523,233,642 1,051,150,166 1,205,822,048 1,230,626,382
71
TEN YEAR SUMMARY
Revenue Rs.(Mn.)
2500 2000 1500 1000 500 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Gross Profit Rs.(Mn.)

500 400 300 200 100 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Net Profit Before Tax Rs.(Mn.)

200 150 100 50 0 -50
2004 2005 2006 2007 2008 2009 2010 2011 2011 2012 2012 2013 2013
Net Profit After Tax Rs.(Mn.) 150

120 90 150 60 30 0 -30
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Long-Term Borrowings Rs.(Mn.)

250 200
Exports Rs.(Mn.)
300 250 200 150
100 50 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
100 50 0
2004 2005 2006 2007 2008 2009 2010
Return on Equity %
25 20 15 10 5 0 -5
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Return on Assets %
10 8 6 4 2 0 -2
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
69-76
72
OUR PROJECTS
Sethsiripaya Stage II
South Asian Institute of Technology & Medicine - Malabe
73
OUR PROJECTS International Convention Centre - Hambantota
Free Lanka Tower
Samudra Beach Resort
Head Office Building for Census & Statistics
Havelock City Luxury Apartments
Iconic Tower - Rajagiriya
Urban Regeneration Project Colombo 14
On Three 20 Luxury Apartments
Sancity Hotel
69-76
74
AWARDS AND ACCOLADES
Quality Crown Award
G S
lobalization connects every nation. We are not just citizens, but global citizens in todays 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.
ierra 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.
CNCI Achiever of Industrial Excellence Merit Award
IESL Engineering Excellence Award
ierra 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.
he 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.
UDC Best Cable Manufacturer of the year
75
DEALER NETWORK
n 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.
Distribution Units
Jaffna
Anuradhapura District Anuradhapura
Jaffna District Jaffna
Puttlam District Chilaw
Polonnaruwa District Polonnaruwa
Kurunegala District Kurunegala

Anuradhapura
Batticaloa District Batticaloa
Gampaha District Gampaha 01 Gampaha 02 Nittambuwa
Puttlam
Polonnaruwa
Matale District Matale Colombo District Colombo North Colombo East Colombo South Colombo West Colombo Central Colombo Metro Pepiliyana
Kurunegala Matale Kandy Badulla Batticaloa
Badulla District Diyathalawa Mahiyanganaya
Kegalle
Colombo
Kalutara
Ratnapura
Kalutara District Kalutara
Galle Matara
Hambantota
Kegalle District Kegalle
Galle District Galle
Matara District Matara
Hambantota District Hambantota
Rathnapura District Rathnapura
Kandy District Kandy
69-76
Gampaha
76
NOTICE 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.
FORM 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 (1) (2) (3) (4) (5) (6) (7) 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. 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. 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. 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. 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. 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. 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. AGAINST
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.
FORM OF PROXY
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.
Please provide our records:
the
following
details
to
update
Full Name of Shareholder/s: -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Address : ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
N.I.C. No.: ----------------------------------------------------------------------------------------------Signature: ----------------------------------------------------------------------------------------------
CORPORATE INFORMATION
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, Gregorys Road, Colombo 07. Tel: 2671439, 2671441 E-mail: info@prsslk.com 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, Gregorys Road, Colombo 07. Tel: 2697893, 2697894 E-mail info@prlaw.lk
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: info@sierracables.com 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 companys 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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1

ANNUAL REPORT OF THE BOARD OF DIRECTORS

For the year ended 31st March

Position at the Year End Shareholders Funds Total Assets

1,674,149,444 3,372,666,564 0.9 7% 1.56 : 1 537,512,430

1,374,170,334 2,790,722,681 1.9 20% 1.44 : 1 537,512,430

Net Assets Rs.(Mn.) 1800

Dr. D.G.K.E. Weerapperuma D.S. Panditha

Prof. A.K.W. Jayawardane

Priyantha Perera Chairman Colombo 10th July, 2013

D. Shamendra Panditha Managing Director Colombo 10th July, 2013

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

(40,793,935) (40,793,935) 87,942,150 128,736,085 128,736,085 87,942,150 87,942,150 0.24

Review of Performance for the year ended 31st March 2013

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

As at 31-03-2012 3,920,510 17,022,950 10 1,709,800 10 Nil Nil

2.66 3.49 6.69 7.72

0.00 0.02 0.11 0.49 0.87 1.49

23 418,994,989 77.95 24,277 529,492,721 98.51

No. of Shareholders 24,277 52 24,329 No. of Shareholders 23,982 347 24,329

% 98.51 1.49 100.00 % 26.25 73.75 100.00

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

Secretaries 0.32 0.32 P.R. SECRETARIAL SERVICES (PRIVATE) LIMITED Colombo

Priyantha Perera Director 10th July, 2013

D.S. Panditha Director

inefficiency allows the reasonable errors and retard the

Dr. D.G.K.E. Weerapperuma Chairman - Audit Committee 10th July, 2013

Dr. D.G.K.E. Weerapperuma Chairman - Remuneration Committee 10th July, 2013

LSHF (Low Smoke Halogen Free) Armourd Power Cables

Aluminium Conductors (AAC & ACSR)

Unarmoured Cables (Multi-Core)

Aerial Bundle Conductors

Single & Multi-Core Unarmoured Cables

Aluminium / PVC Cables

S afety I mprovement E fficiency R eliability R esourcefulness A ssured Product

Compost Site Environmental Benefits Minimizes hazardous non-hazardous waste and

Provides a competitive marketing tool Vegetable Garden Improves international competitiveness

CFL Disposal Box

Helps reduce liability and risk Improved access to capital

Spill Out Oil Tray

Copper (Cu) Recycling Machine

Age Analysis of Employees

5% 11% 10% 35%

Service Period Analysis

Average Training Man Hours Per Person Hrs. 10.00

2.00 1.50 0.00

1-Apr 1-May 1-Jun

1-Jul 1-Aug 1-Sep 1.48 1.79 1.56

1-Apr 1-May 1-Jun 1.11 0.12 1.05

1-Jul 1-Aug 1-Sep 1.95 3.00 3.67

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

Listening to the Guide Explanation of the Buddha Stupa

Watching the Polonnaruwa Architectural Glory

Families Relaxing at Parakrama Samudraya

Rabbit Race of Kids below 5 Years

Arangrathram Dance by a Kid at the Party

 UPVC Pipes for Drainage and Irrigation purposes.  Electrical Conduits.

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

Risk Management Framework

ANALYSING & PRIORITIES THE RISKS

CONTROLLING & MONITORING

Business Risk  Market Risk.

Impact  Price changes can directly impact on the profit.

UPVC Pipes for Drainage and Irrigation purposes. Electrical Conduits.

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

Business Risk Market Risk.

Impact Price changes can directly impact on the profit.