Annual Report 10/11 - ACL Cables PLC

ACL Cables PLC Annual Report 2010/11Group Financial Highlights2011 2010Rs. MnRs. MnOperationsTurnover 9,569.8 7,242.9Gross Profit 1,289.0 1,144.7Finance Cost 226.8 270.1Profit Before Tax 449.7 196.3Profit After Tax 286.7 55.1Total Equity 4,517.1 4,168.8Key Financial IndicatorsGross Profit Margin 13.5% 15.8%Net Profit Margin Before Tax 4.7% 2.7%Interest Cover (Times) 2.98 1.70Return on Equity 6.3% 1.3%Current Ratio (Times) 1.7 1.8Rs. Mn.10,000Revenuefor the year ended 31st MarchRs. Mn.1,600Net Profit before Taxfor the year ended 31st March8,0006,0004,0002,0001,200800400007 08 09 10 11007 08 09 10 11Rs.160Market Value per Shareas at 31st MarchRs.80Net Assets per Shareas at 31st March1206080404020007 08 09 10 11007 08 09 10 113

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ACL Cables PLC Annual Report 2010/11Chairman's ReviewAgainst this vibrant economic backdrop, the turnoverof the Group increased to Rs. 9.6 Bn from Rs. 7.2 Bn inthe previous year, an increase of 32%.On behalf of the Board of Directors I am happy to welcome you to the Forty-Ninth Annual GeneralMeeting of ACL Cables PLC and to present the annual report and audited financial statements forthe year ended 31st March 2011.Bright Prospects for Local EconomyThe Sri Lankan economy recorded a growth of 8% as per the Central Bank of Sri Lanka (CBSL)’s2010 annual report. This is the second highest growth rate recorded since Sri Lanka gainedindependence in 1948. The year 2010 was the first full year of peace for the country after a 30-year protracted war.Undoubtedly, greater economic activity is visible island-wide. Post-war growth and developmentactivities in the form of new highways, repairs to existing roads, port expansions, improvementof the power sector and expansion of transmission and distribution of power, will serve tostrengthen the country’s infrastructure, which has been neglected over the past few decades.Commendable Group PerformanceAgainst this vibrant economic backdrop, the turnover of the Group increased to Rs. 9.6 Bn fromRs. 7.2 Bn in the previous year, an increase of 32%. The Profit before Tax of the Group increased toRs. 450 Mn from Rs. 196 Mn in the previous year, marking an increase of 129%.Meanwhile, the finance costs of the Group declined slightly in the year under review to Rs. 226million from Rs. 270 million in 2009/10, largely due to reduced borrowing costs. I am happy toreport that all our subsidiary companies contributed substantially to this exceptional financialperformance.The Group has been successful in maintaining its dominant position in the industry despite stiffcompetition. In a positive development, our new head office building at No. 60 Rodney Street,Colombo 08 was completed after the year under review and has been occupied by our staff tocommence operations in June 2011. However, since the head office was occupied after the balancesheet date, it has not been capitalised as yet in the financial statements.Furthermore, the Company purchased land in extent approximately 2 and 2/3 Acres adjoining thePiliyandala factory for a sum of Rs. 55 Mn in July 2010. This land has been earmarked for futureexpansions of the Group.5

ACL Cables PLC Annual Report 2010/11Chairman's ReviewChallenges Facing the IndustryThe industry is at the cross-roads today as it is unable to derive much benefit from the rapidinfrastructure reconstruction in the country. Currently, all infrastructure projects, whether fundedby foreign grants or on a loan basis, have been negotiated in such a manner that no local materialor local labour is used at any stage of construction. This is a tremendous blow to the developmentof the local manufacturing industry and will only serve to stunt the growth of the industry.Even in the case of a local manufacturer selected as a supplier to an infrastructure project, theprocedure that the selected manufacturer has to undergo to obtain facilities is equivalent to thoseof a foreign supplier.For most Ceylon Electricity Board (CEB) projects, the qualification criteria calls for overseasexperience in excess of 15 years for the supply of cables and conductors. This, we believe, is animportant parameter when evaluating an unknown overseas supplier, especially from countriesthat are notorious for poor quality material.However, we are hopeful that in the near future the CEB will relax this requirement for reputedlocal suppliers who can provide adequate proof of their expertise and know-how.ACL has already supplied many projects with high tension conductors and has completed morethan 11 projects in Australia. But the contractors bidding for CEB tenders are hesitant to includeACL conductors, fearing that a local company would not be acceptable to the CEB. Given a chanceon a level playing field, local companies can make an immense contribution to the national GDP.AppointmentsI am delighted to inform you that Mr. Hemaka Amarasuriya has accepted our invitation to jointhe Board of ACL Cables PLC as a Non-Executive Director with effect from 2nd August 2010.Considered one of the leading lights of the private sector, we look forward to a prosperous futurein consultation with his erudite opinions in steering the Company ahead.Unfortunately, we have to bid goodbye to Mr. Hemantha Perera, who resigned from the Board witheffect from 31st March 2011, and we wish to thank him for his valuable contribution during histenure of service.The Profit before Tax of the Group increased toRs. 434 Mn from Rs. 196 Mn in the previous year,marking an increase of 121%.6

ACL Cables PLC Annual Report 2010/11In AppreciationI wish to take this opportunity to thank all our foreign and local customers for their support.My gratitude also goes to our entire staff for their dedication and to our shareholders for theconfidence they continue to place in us. The ACL Group is also extremely grateful to the CEB fortheir continued patronage and we hope our bonds would strengthen further over the years.ACL Cables PLC looks forward to deriving maximum benefit from the evolving economic climateand is confident that all Group companies will consolidate their financial and operationalperformance in the upcoming financial year.Mr. U. G. MadanayakeChairman25th August 20117

ACL Cables PLC Annual Report 2010/118ACACACACACACACACACACACACACACACACACACACACACACACACACACACACACACACACACACACACL CaCaCaCaCaCaCaCaCaCaCaCaCaCaCaCaCaCaCaCaCaCaCaCaCablblblblblblblblblblblblblblblblblblblblblblblblbleseseseseseseseseseseseseseseseseseseseseseses PLCL Annual Report 2010/118

ACL Cables PLC Annual Report 2010/11Managing Director's ReviewACL Cables PLC performed exceedingly well torecord a turnover of Rs. 5.18 Bn in 2011 as comparedto Rs. 3.49 Bn in 2010. The Company's Profits beforeTax recorded Rs. 33.9 Mn in 2011 after registering aloss of Rs. 146.8 Mn in the previous year.I am pleased to report that ACL Cables PLC performed exceedingly well to record a turnover ofRs. 5.18 Bn in 2010/11 as compared to Rs. 3.49 Bn in 2009/10. The Company’s Profits before taxrecorded Rs. 33.9 Mn in 2010/11 after registering a loss of Rs. 146.9 Mn in the previous year.Meanwhile, ACL Cables PLC Group’s Profits before tax moved significantly upwards from Rs. 196Mn previously to Rs. 449.7 Mn in the period under review.As a result of this commendable performance by the Group companies, the ACL Group marketshare increased significantly. This performance was achieved despite a sharp increase in the costof raw materials in our manufacturing process, particularly, copper and aluminum. Prices forcopper averaged USD 8,140 per Tonne in the year under review in contrast to an average price ofUSD 6,101 per Tonne in 2009/10.Factors Supporting Our GrowthOne of the most favourable developments during the year to have directly contributed to ourperformance has been the expansion of rural electrification efforts by the Ceylon Electricity Board(CEB). As one of our main clients, this increase constituted an upsurge in demand for our products,thereby contributing to our improved turnover. Accelerated infrastructural and economicdevelopment in the north and east will boost the economy further and in turn benefit ACL. Most ofthese newly developed regions will witness enhanced CEB activity and have a trickle-down effecton our Company’s operations in the future. As a result of this flurry of development, we expecthouseholds and institutions in the north and east to become our retail clients over time.The stellar performance by the ACL Group has been meticulously mapped out and some of thesalient reasons for this performance are a focus on production efficiency, which leveraged onimproved debtor control, inventory control and advanced production best practices. Furthermore,the decrease in interest rates in the market had a far reaching impact on our Group performance.The year 2010/11 was memorable for the Company as we were successful in achieving ourobjective to increase ACL brand presence in the market whilst also positioning it as a preferredbrand. As a result of these strategic sales and marketing efforts, the brand increased its marketshare during the year, consequently strengthening its dominant status in the industry. The ACL9

ACL Cables PLC Annual Report 2010/11Managing Director's ReviewGroup was able to establish a distinct identity for its portfolio of brands as a direct result of beingone of two companies to offer fire rated cables for all building wires, thereby offering unmatchedsafety and protection.ACL continued its pursuit of new markets throughout the year under review, which contributedto our enhanced business volumes. The favourable economic climate prevalent in the countrypresently is stimulating greater construction activity, which will have beneficial consequences inthe form of enhanced sales of our products.Product InnovationThe Company invested in launching new products and applied innovation throughout 2010/11,and implemented technology improvements along with the installation of new equipment in aconcerted effort in the year under review.ACL Cables PLC has always maintained strong ties with its consumers and pre-empted evolvingcustomer demands. In keeping with our customer-centric philosophy, customized products to suitindividual customer needs were introduced during the year, which further heightened the visibilityof ACL cables in the market.Industry ChallengesWhile we are optimistic about future prospects for the economy, there are certain macro economicchallenges that could impact the industry adversely. The future course of government policies,taxes, legislation, etc., could impact the business in the months and years ahead. The governmentpolicy regarding the granting of duty-free facilities to the CEB for import of cables for foreigncontractors has the potential to become a serious threat to the local industry, as this deters ourcompetitiveness as foreign contractors offer lower prices. This policy is skewing the level playingfield unfavourably and we sincerely hope that authorities take note of this status quo.The government should instead support the local industry in terms of including local materials andlabour on contract projects. In this manner, even if contracts are awarded to foreign contractors,ACL Cables PLC has always maintained strong tieswith its consumers and pre-empted evolving customerdemands. In keeping with our customer centricphilosophy, customized products to suit individualcustomer needs were introduced during the year.10

ACL Cables PLC Annual Report 2010/11conditions should be such that a certain percentage of material and labour should be sourcedfrom within the local industry.Future OutlookThe copper rod manufacturing plant becoming operational during the 2011/12 financial yearheightens the possibility of improved future operational margins. This backward integration willensure that quality is controlled along the supply chain at ACL.Further, the reduction in corporate tax rates by 7% to 28% is a positive move by the governmentand will serve to enhance our growth potential in the near future.Looking ahead, we plan to drive down costs and place an emphasis on deriving cost efficienciesin our operations. Our endeavor will be to improve production efficiencies through innovativemethodology. We are upbeat about the future as any improvement in the contribution margin willdirectly increase profits for the Group.Moreover, we have our sights trained on new export markets, with plans to penetrate marketsin which we already have a presence, which are Australia, New Zealand and East Africa.The government’s renewed commitment to infrastructure development will have positiverepercussions for our business, as we possess the capacity to supply large volumes of wiring forroad lighting, etc. The thriving tourism industry and the slew of upcoming hotel projects will fuelour business growth further.AcknowledgementsI would like to express my appreciation to the Board of Directors for their sound guidance andencouragement. Further, our employees have contributed significantly to the Group’s exceptionalperformance during the year. In conclusion, I would also like to thank the CEB and our other loyalcustomers for their continued patronage.The future prospects for the ACL Cables PLC Group are bright and we plan to leverage on all thestrategic initiatives undertaken during this financial year to achieve an even more prosperous2011/12.Mr. Suren MadanayakeManaging Director25th August 201111

ACL Cables PLC Annual Report 2010/11Board of DirectorsMr. U. G. MadanayakeChairmanMr. U.G. Madanayake had his early education atAnanda College, Colombo. He graduated fromthe University of Cambridge - England in 1958,and had his M.A. (Cantab) conferred on him in1962. He is a Barrister at-law (Lincoln’s Inn) and anAttorney-at-law of the Supreme Court of Sri Lanka.He started his working life managing family-ownedplantations until most of the lands were taken overby the State under the Land Reform Law of 1972.He still continues to have an active interest inagriculture.He joined the Board of Associated Motorways Ltd,and subsequently became the Deputy Chairman ofthe Company. He became a Director of ACL Cables PLC (then Associated Cables Ltd.) in January1963, its Managing Director in July 1978 and Chairman cum Managing Director in May 1990.He relinquished his duties as Managing Director in September 2005 after appointing Mr. SurenMadanayake as Managing Director. With the acquisition of Kelani Cables PLC. by the ACL Group inOctober 1999, he was appointed Chairman of Kelani Cables PLC.Mr. Madanayake is also the Chairman of Fab Foods (Pvt.) Ltd., Ceylon Tapioca Ltd, ACL PlasticsPLC., ACL Metals & Alloys (Pvt.) Ltd., ACL Polymers (Pvt.) Ltd. and ACL-Kelani Magnet Wire (Pvt.)Ltd. He is a Director of Ceylon Bulbs & Electricals Limited. He has over 40 years experience in thecable Industry.Mr. Suren MadanayakeManaging DirectorMr. Suren Madanayake had his education at RoyalCollege, Colombo and qualified as a MechanicalEngineer from the University of Texas at Austin,USA. He was appointed to the Board of ACL CablesPLC., in June 1991 and appointed as ManagingDirector in September 2005. When Kelani CablesPLC was acquired in October 1999, he wasappointed as Managing Director of KCL and LankaOlex Cables (Private) Ltd. which is the holdingCompany of KCL. In 2003 he was appointed asDeputy Chairman of KCL.He also serves as the Managing Director of CeylonBulbs and Electricals Ltd., ACL Plastics PLC andDirector of ACL Metals & Alloys (Pvt.) Ltd., ACL Polymers (Pvt.) Ltd., ACL-Kelani Magnet Wire(Pvt.) Ltd., Fab Foods (Pvt.) Ltd. and Ceylon Tapioca Limited. He also serves as Chairman of CCCFoundation of Sri Lanka, which is an approved charity.12

ACL Cables PLC Annual Report 2010/11Dr. S. K. MadanayakeDirectorDr. S. K. Madanayake had his early education at Trinity College, Kandy and Royal College,Colombo. He qualified himself as a Doctor of Medicine at Liverpool University in the U.K., afterwhich he practiced as a physician in Sri Lanka and in England. He was appointed to the Board ofDirectors of ACL Cables PLC (then Associated Cables Ltd.) in May 1980, Lanka Olex Cables (Pvt.)Ltd. in October 1999 and was a Director of ACL Plastics PLC., from its inception in 1991. Dr.Madanayake retired from practicing medicine and lives in Sri Lanka permanently.Mrs. N. C. MadanayakeDirectorMrs. N.C. Madanayake was appointed to the Boardof ACL Cables PLC in July 1980.She is also a Director of Kelani Cables PLC, ACLPlastics PLC, Ceylon Bulbs and Electricals Ltd. andCeylon Tapioca Limited. Mrs. Madanayake is apioneering Director of Fab Foods (Pvt.) Ltd. andnow serves as Managing Director of the Company.Mr. Hemantha PereraDirectorMr. Hemantha Perera had his education at RoyalCollege, Colombo and began his career in 1984working for John Keells Holdings Limited, as aTrainee Executive in the Tea Department. He latermoved to Keells Aquariams, where he went on tobecome Director, Sales and Marketing. Mr. Pererawas appointed to the Board of Directors of ACLCables PLC. and ACL-Kelani Magnet Wire (Private)Limited in 2001 and was appointed as ManagingDirector of Kelani Cables PLC. in 2003. Mr. Pereraholds a Masters Degree in Business Administrationand is a member of the Sri Lanka Institute ofDirectors.13

ACL Cables PLC Annual Report 2010/11Board of DirectorsMr. Ajit JayaratneDirectorMr. Ajit M. de S. Jayaratne had his educationat Royal College, Colombo. He holds a B.Sc.(Economics) Degree from Southampton Universityand is a fellow member of the Institute ofChartered Accountants, England & Wales and alsoa fellow member of the Institute of CharteredAccountants, Sri Lanka. Mr. Jayaratne was theChairman of Forbes & Walker Limited, TheColombo Stock Exchange, The Ceylon Chamberof Commerce and The Finance Commission. Mr.Jayaratne also served as the High Commissioner ofSri Lanka in Singapore sometime ago. He is now aDirector of Singer Sri Lanka Ltd, Singer IndustriesLtd., Colombo Fort Land & Building Co. Ltd.,Colonial Motors Ltd., Overseas Realty (Ceylon) Ltd. and C.W. Mackie & Co. Ltd. Mr. Jayaratne wasappointed to the Board of Directors of ACL Cables PLC in November 2005.Mr. Hemaka AmarasuriyaDirectorMr. Hemaka Amarasuriya is currently the Chairmanof the Singer Group of Companies in Sri Lankaand a Senior Vice President of Retail Holdings Ltd.,U.S.A., Singer’s parent company. He is a fellowmember of the Institute of Chartered Accountantsof Sri Lanka and of the Chartered Institute ofManagement Accountants, U.K. He also holds aHonorary Fellowship from the Chartered Instituteof Marketing, U.K. and a Diploma in MarketingStrategy from the University of New York.He is on the Directorate of other listed companiessuch as NDB Bank PLC, C.W. Mackie PLC and nonlistedcompanies such as Bata Shoe Co. Ceylon,Equill Ltd, TNL Radio Network (Pvt) Limited, Amariya Resorts (Pvt) Ltd., Micro Cars (Pvt) Ltd. &NDB Capital Bangladesh. Since holding the Chair of the Singer Group in Sri Lanka, he built thisinstitution to regularly be among LMD’s top 20 Corporates in Sri Lanka for an unbroken sequenceof 12 years, while earning the status for Singer as the “Most Powerful Brand in Sri Lanka” and thevote as the “Most Popular Brand” for 5 consecutive years by Peoples Choice.He was recognized by the Asia Retails Congress 2007 with the “Retail Leadership Award” for hiscontribution to retailing in Asia and by the Chartered Institute of Marketing U.K. as a “VisionaryBusiness Leader” for his invaluable contribution to the Marketing Profession in initiatingrevolutionary changes in the Consumer Market.14

ACL Cables PLC Annual Report 2010/11His association with local industry goes back to 1992 from which time he has chaired the RegionalIndustry Service Committee – Southern Province of the Ministry of Industrial Development,responsible for developing Industrial Estates in the Southern Province outside of the Board ofInvestment, Sri Lanka.He is a former Chairman of the Employer’s Federation of Ceylon and was previously responsiblefor the Human Resource Development Function of Singer Asia and for the procurement functionof Singer Global and also chaired the Singer Worldwide Business Council which is the policyimplementation body of one of the oldest multinationals.Mr. Daya WahalatantiriDirectorMr. Daya Wahalatantiri had his early education atHoly Cross College, Kalutara and Royal College,Colombo. In 1990, he obtained his Masters inBusiness Administration from the University of SriJayawardenapura. He is a Graduate in Chemistry(Special) from the University of Ceylon, Peradeniya.Having gained sufficient exposure in marketingof industrial products to institutional customers,he joined ACL Cables PLC as its first MarketingManager in 1982. He was appointed to the Board ofDirectors of ACL Cables PLC in November 2005.Mr. Rajiv Casie ChittyDirectorMr. Rajiv Casie Chitty had his education at RoyalCollege, Colombo. He became a fellow of theAssociation of Chartered Certified Accountants(ACCA), UK and Associate Member of the CharteredInstitute of Management Accountants (CIMA),UK and a Chartered Financial Analyst, USA. Heobtained his Masters in Economics from theUniversity of Colombo and won the JanashakthiGold at the 2006 CIMA Pinnacle Awards. Mr. CasieChitty was appointed a Director of ACL Cables PLCin November 2005. He is currently an ExecutiveDirector of Ceylon Ceramics PLC, ManagingDirector / CEO of CT Plantations Limited & HoranaPlantations PLC and also the Managing Director ofUni Dil Packaging Limited.15

ACL Cables PLC Annual Report 2010/11Senior Management TeamLeft to RightManohara De Zoysa - Group Logistics Manager, A. G. U. K. Abeynayake - Electrical Engineer,D. C. Weerasinghe - Production Manager-Copper Cable Factory, Chrishanthi Weerawarna- Deputy General Manager (HR & Technical Services), G. B. Karunaratne - Assistant ProductionManager - Dealer Range FactoryLeft to RightIndunil Perera - Security Manager, Quintus Seimon - General Manager Operations,Padmana Wijesundara - Quality Assurance Manager, Helen De Fonseka - Systems Manager,Chamara Liyanage - Assistant Logistics Manager16

ACL Cables PLC Annual Report 2010/11Left to RightLalith Ranatunga - Marketing Manager Institutional, Champika Coomasaru - Group FinancialController, Lakshman Bandaranayake - Marketing Manager Distribution, Senila Rupasinghe -Import/Export Manager, Bandula Warnakulasooriya - General Manager AdministrationLeft to RightRoshitha Amarasekera - Deputy General Manager (Production), R. Nandakumara - MechanicalEngineer, Christie Gunathilake - Resident Manager, N. K. W. Gallage - Production Manager- Rod Mill, Sarath Weerasinghe - Assistant Production Manager - Aluminum Cable Factory,Shyamalee De Silva - Credit Control Manager17

ACL Cables PLC Annual Report 2010/11Group StructureGroup Structure ACL Cables PLC ACL Plastics PLC Ceylon Bulbs &Electricals LtdRegistration Number PQ 102 PQ 87 PBS 352Date of Incorporation 10.03.1962 17.07.1991 16.10.1957Corporate Status Public Limited Company Public Limited Company Limited CompanyACL Cables PLC’s EffectiveShareholding in the CompanyDirectorsParent Company 65.20% 95.30%U. G. Madanayake- ChairmanU.G.Madanayake- ChairmanU.G.Madanayake- DirectorSuren Madanayake- Managing DirectorMrs. N. C. Madanayake- DirectorDr. S. K. Madanayake- DirectorHemantha Perera- DirectorAjit Jayaratne- DirectorHemaka Amarasuriya- DirectorDaya Wahalatantiri- DirectorSuren Madanayake- Managing DirectorMrs. N. C. Madanayake- DirectorDr. S. K. Madanayake- DirectorSuren Madanayake- DirectorMrs. N. C. Madanayake- DirectorS. E. C. Gardiner- DirectorPrincipal ActivityTotal Number of Employeesas at 31st March 2011Rajiv Casie Chitty- DirectorManufacturers andSelling of PowerCables & Conductors,Armoured Cables, AerialBundled Cables, ControlCables, TelephoneCables & Auto Cables.Manufacturing Cablegrade PVC Compound.Trading600 44 None18

ACL Cables PLC Annual Report 2010/11Lanka Olex Cables(Pvt) LtdKelani Cables PLCACL Kelani MagnetWire (Pvt) LtdACL Polymers (Pvt)LtdACL Metals & Alloys(Pvt) LtdN (PVS) 10596 PQ 117 N (PVS) 26361 N (PVS) 43085 N (PVS) 4308422.02.1993 18.12.1972 29.06.2000 06.09.2005 05.09.2005Private LimitedCompanyPublic LimitedCompanyPrivate LimitedCompanyPrivate LimitedCompany100% 79.30% 93.79% 65.20% 100%Private LimitedCompanyU. G. Madanayake- ChairmanU. G. Madanayake- ChairmanU. G. Madanayake- ChairmanU. G. Madanayake- ChairmanU. G. Madanayake- DirectorSuren Madanayake- Managing DirectorSuren Madanayake- Deputy ChairmanSuren Madanayake- Managing DirectorSuren Madanayake- Managing DirectorSuren Madanayake- DirectorMrs. N. C. Madanayake- DirectorHemantha Perera- Managing DirectorHemantha Perera- DirectorDr. S. K. Madanayake- DirectorMrs. N. C. Madanayake- DirectorMrs. Maya Weerapura- DirectorDr. C. T. S. B. Perera- DirectorDr. L. J. R. Cabral- DirectorInvesting CompanyManufacturingand selling ofPower Cables,TelecommunicationCables & EnamelledWinding WiresManufacturing andexport of EnamelledWinding WiresManufacturing of PVCcompoundsManufacturing andSelling Aluminiumrods, Alloys ofAluminium and OtherMetalsNone 407 59 14 2519

ACL Cables PLC Annual Report 2010/11Risk ManagementACL Cables PLC has given due consideration to its risk management process in order to progresstowards achievement of its goals and objectives. Risk management under the two forms of risks,namely Financial and Business, are regularly reviewed to ensure the related risks are minimizedwhere the complete elimination is not possible.Risk Exposure Company Objectives Company InitiativesFinancial Risk Management1. Liquidity & CashManagement position.2. Interest Rate Risk effects of interest ratevolatility.3. Currency Risk to fluctuations inforeign currency ratesof foreign currencyreceipts and payments.Business Risk Management1. Credit Risk associated with debtorsdefaults. of trade debts, planning productionand utilization of short termborrowing facilities. offer as collateral for future fundingrequirements. to adequately manage liquidposition through several financialinstitutions. mitigate the high cost and to avoidadverse fluctuations in local interestrates. payments wherever possible. credit and advance TT remittancesas much as possible. from local distributors. in local market and monitor theexposure levels of distributorsregularly. the exposure. to ensure credit worthiness ofcustomers. comprehensive policy to adequatelyreview and provide for doubtfuldebts.20

ACL Cables PLC Annual Report 2010/11Risk Exposure Company Objectives Company Initiatives2. Asset Risk caused by machinebreakdown anddamages from fire ortheft.3. Internal Controls system of internalcontrols to safeguardcompany assets.4. Human Resources turnover. of operations withoutinterruptions. through training andadopting best practices.5. Technological andQuality related risk6. InventoryManagement Risk current technologicaldevelopments andquality standards toavoid obsolescence. of stocks that do notmeet the standards. situations. accumulation of slowmoving stocks. on obsolete stocks. standard material beingreceived. days. covers for plant and machinery. maintenance programs. by an independent firm. scheme to reward them. relationship with employees at alllevels through joint consultativecommittees. through the Welfare Committee. wherever necessary. replace existing machines withtechnologically advanced machines. authorities and ensure productscomply with most of the local andinternational standards. test the quality of products are inplace. on budgets and sales forecasts atproduction planning meetings heldmonthly. reduce slow moving stocks. different stages to verify the qualityand ensure this until the product isdelivered. are separated and disposed as scrap. systems to identify non-movingstocks. 21

ACL Cables PLC Annual Report 2010/11Risk ManagementRisk Exposure Company Objectives Company Initiatives7. Risk of Competition market share fromimported low qualityproducts.8. Investment in Capital loss in present andfuture investments.9. Information Systems risks associatedwith data security,hardware, softwareand communicationsystems.10. EnvironmentalIssues11. Legal and RegulatoryIssues impact of operations tothe environment. losses arising fromnon-compliancewith statutoryand regulatoryrequirements. counter measures toreduce the impactarising from changes toregulatory issues. are met. various advertising and promotionalcampaigns. various parts of the country. planned and made on timely basis. possible. and stored in outside locations. data. services and maintenance. firewalls and software. the relevant authorities and ensurethe compliance. statutory and regulatory bodies. Federation when necessary.22

ACL Cables PLC Annual Report 2010/11Corporate GovernanceACL Cables PLC is committed to best practices in the area of Corporate Governance. CorporateGovernance is an internal system encompassing policies, processes and people, which serves theneeds of shareholders and other stakeholders. Good governance facilitates effective managementand control of the business, while maintaining a high level of business ethics and optimizingthe value for all stakeholders. Sound Corporate Governance is reliant on external market placecommitment and legislation plus a healthy Board culture which safeguards policies and processes.Further, an important element of Corporate Governance is to ensure the accountability of certainindividuals in an organization through mechanisms that try to reduce or eliminate the dilemma ofprincipal-agent.The Corporate Governance Report, together with the Audit Committee Report & the DirectorsRemuneration Report, provides a description of the manner and extent to which ACL CablesPLC complies with the code of Best Practice in Corporate Governance issued by the Institute ofChartered Accountants of Sri Lanka and the Listing Rules of the Colombo Stock Exchange.The Board of DirectorsThe Board is collectively responsible for the success of the Company. Its role is to provideentrepreneurial leadership to the Company within a framework of prudent and effective controlswhich enables risk to be assessed and managed. The Board sets the Company’s strategic aims,ensures that the necessary financial and human resources are in place for the Company to meetits objectives, and reviews management performance. It also sets the Company’s values andstandards and ensures that its obligations to its shareholders and others are understood and met.Specific responsibilities reserved to the Board include: The Board comprises of nine Directors out of whom six are Non-Executive Directors. The namesand profiles of the Directors are given on pages 12 to 15 of this report. The Board recognizes theneed for a clear division of responsibilities in running the Board and Executive responsibilities ofrunning the Company business. Accordingly, the positions of Chairman and Managing Directorhave been separated.23

ACL Cables PLC Annual Report 2010/11Corporate GovernanceThe Board BalanceThe composition of the Executive and Non-Executive Directors satisfies the requirements laiddown in the Listing Rules of the Colombo Stock Exchange. The Board consists of six Non-ExecutiveDirectors and three of them are Independent Non-Executive Directors. The Board has determinedthat the three independent Non-Executive Directors satisfy the criteria for “Independence” set outin the Listing Rules.Directors’ attendance recordThe attendance of Directors at relevant meetings of the Board and of the Audit & RemunerationCommittees held during 2010/2011 was as follows.Name of DirectorBoard(12 Meetings)AuditCommittee(4 meetings )RemunerationCommittee(1 meeting)Executive DirectorsMr. U. G Madanayake – ChairmanMr. Suren Madanayake – Managing DirectorMr. Daya Wahalatantiri – Director Export111211Non-Executive DirectorsDr. S. K MadanayakeMrs. N. C MadanayakeMr. Hemantha Perera*Nil0912Independent Non-Executive DirectorsMr. Ajit JayaratneMr. H. Amarasuriya **Mr. Rajiv Casie Chitty127/81004040101* Mr. Hemantha Perera resigned as a director with effect from 31/03/2011.** Mr. H. Amarasuriya was appointed as a Director in August 2010.Dedication of Adequate Time & EffortEvery Director should dedicate adequate time and effort to matters of the Board and the Company.Adequate time is devoted at every meeting to ensure that the Board’s responsibilities aredischarged satisfactorily.In addition, the Executive Directors of the Board have regular meetings with the Managementwhen required.Training for the DirectorsEvery Director should receive appropriate training on the first occasion that he or she is appointedto the Board of a listed Company and subsequently as necessary. The policy on Directors trainingis, to provide adequate opportunities for continuous development subject to requirements andrelevance for each Director.24

ACL Cables PLC Annual Report 2010/11Re- Election of DirectorsAll directors should be required to submit themselves for re-election at regular intervals and atleast every three years. According to the Articles of Association, Directors Mrs. N.C. Madanayakeand Mr. Daya Wahalatantiri retire by rotation and are required to stand for re-election byshareholders at the Annual General Meeting.Availability of a Nomination CommitteeA Nomination Committee should be established to make recommendations to the Board on allnew Board appointments. In the absence of a Nomination Committee, the Board as a whole shouldannually assess Board composition to ascertain whether the combined knowledge and experienceof the Board matches the strategic demands facing the Company.The Company has not formed a specified Nomination Committee. However, performance of theBoard and its composition are being evaluated annually.Accountability and AuditThe Board should present a balanced and understandable assessment of the Company’s positionand prospectus.The Quarterly and Annual Financial statements, prepared and presented in conformity with SriLanka Accounting Standards, comply with the requirements of the Companies Act No. 07 of 2007.The Report of the Directors is provided on pages 38 to 40 of this report. The Statements ofDirectors’ Responsibility for financial reporting and report of the Auditors are stated on pages 41and 45 respectively. The Going Concern Declaration by the Board of Directors in this regard ispresented in the report of Directors on page 38 of this Annual Report.Internal ControlThe Board acknowledges its overall responsibility for maintaining a sound system of internalcontrols to safeguard shareholders’ investments and the Company’s assets. The Board’s policyis to have systems in place which optimize the Group’s ability to manage risk in an effectiveand appropriate manner. The Board has delegated to the Audit Committee responsibility foridentifying, evaluating and monitoring the risks facing the Group and for deciding how these areto be managed. In addition to a quarterly internal audit carried out by an external professionalbody, members of the Audit Committee are expected to report to the Board as necessary theoccurrence of any material control issues, serious accidents or events that have had a majorcommercial impact, or any significant new risks which have been identified.25

ACL Cables PLC Annual Report 2010/11Corporate GovernanceA summary of those risks which could have a material impact on the performance of the Group isgiven within the Risk Management section in the Annual Report. The objective of the Group’s riskmanagement process is to ensure the sustainable development of ACL Cables PLC through theconduct of its business in a way which: The Group’s systems and procedures are designed to identify, manage and where practicable,reduce and mitigate effects of the risk of failure to achieve business objectives. They are notdesigned to eliminate such risk, recognizing that any system can only provide reasonable and notabsolute assurance against material misstatement or loss.Remuneration CommitteeThe Remuneration Committee should consist exclusively of Non-Executive Directors who areIndependent of Management. The members of the Remuneration Committee should be listedeach year in the Board’s remuneration report to the shareholders. The Remuneration Committeecomprises of the following two Independent Non-Executive Directors. Further details of the Remuneration Committee are given in their report on page 44.Audit CommitteeThe Audit Committee shall comprise of a minimum of two Independent Non-Executive Directorsor of Non-Executive Directors, a majority of whom shall be independent, whichever is higher.One Non-Executive Director shall be appointed as Chairman of the committee by the Board ofDirectors.The Audit Committee comprises of the following two Independent Non-Executive Directors. Further details of the Audit Committee are given in their report on page 42 & 43.26

ACL Cables PLC Annual Report 2010/11Code of Business Conduct and EthicsThe Company has adopted a Code of Business Conduct and Ethics for the Directors and membersof the senior management.The table below indicates the manner and extent to which ACL Cables PLC complies with the Codeof Best Practice in Corporate Governance issued by the Institute of Chartered Accountants of SriLanka and the Listing Rules of the Colombo Stock Exchange.Corporate Governance Check ListCSE RuleNo.7.10.1(a)SubjectNon-ExecutiveDirectors(NED)Applicable requirementStatus2 or at least 1/3 of thetotal number of Directorsshould be NEDs.7.10.2 (a) Independent 2 or 1/3 of NEDs,whichever is higher,should be independent.7.10.2 (b) Independent Each NED shouldsubmit a declaration ofindependence.7.10.3 (a) Disclosurerelating7.10.3 (b) Disclosurerelating7.10.3 (c) Disclosurerelatingto Directors7.10.3 (d) Disclosurerelating toDirectors7.10.4 (a-h) DeterminationofIndependence annually determinethe Independence orotherwise of the NEDs. disclosed in the AnnualReport (AR).The basis for the Board’sdetermination of ID,if criteria specified forindependence is not metA brief résumé ofeach Director shouldbe included in the ARincluding the Director’sareas of expertise.Provide a brief résumé ofnew Directors appointedto the Board with detailsspecified in 7.10.3(a), (b)and (c) to the CSE.Requirements for meetingcriteria.ComplianceApplicable sectionin the Annual ReportCorporate GovernanceCorporate GovernanceCorporate GovernanceCorporate GovernanceCorporate GovernanceBoard of Directors(profile) section in theAnnual ReportCorporate GovernanceCorporate Governance27

ACL Cables PLC Annual Report 2010/11Corporate GovernanceCSE RuleNo.SubjectApplicable requirementStatusComplianceApplicable sectionin the Annual Report7.10.5 RemunerationCommittee(RC)A listed company shallhave a RC.Corporate Governance7.10.5 (a) CompositionofRemunerationCommitteeShall comprise of NEDs, amajority of whom will beindependent.Corporate Governance7.10.5 (b) Functions ofRemunerationCommitteeThe RC shall recommendthe remuneration of theManaging Director (MD)and EDs.Corporate Governance7.10.5 (a) Disclosure inthe AnnualReportrelating toRemunerationCommitteeNames of Directorscomprising the RC. Remuneration Policyremuneration paid toEDs and NEDs.Corporate Governanceand the BoardCommittee Reports7.10.6 AuditCommittee(AC)The Company shall havean AC.Corporate Governance7.10.6 (a) CompositionofAuditCommitteeShall Comprise of NEDsa majority of whom willbe independent. appointed as theChairman of theCommittee. Controller(GFC) shouldattend AC meetings. or one member shouldbe a member of aprofessional accountingbody.Corporate Governanceand the BoardCommittee Reports7.10.6(b)AuditCommitteeFunctionsOverseeing of the – Preparation,presentationand adequacy ofdisclosures in thefinancial statementsin accordance withSri Lanka AccountingStandards.Corporate Governanceand the BoardCommittee Reports28

ACL Cables PLC Annual Report 2010/11CSE RuleNo.Subject7.10.6 (c) Disclosurein AnnualReport relatingto AuditCommitteeApplicable requirementStatus financial reportingrequirements,informationrequirements ofthe Companies Actand other relevantfinancial reportingrelated regulations andrequirements. that the internalcontrols and riskmanagement areadequate to meet therequirements of theSri Lanka AuditingStandards. independence andperformance of theexternal auditors. to the Board pertainingto appointment,re-appointment andremoval of externalauditors, and approvethe remuneration andterms of engagement ofthe external auditor. comprising the AC. determination of theindependence of theAuditors and disclosethe basis for suchdetermination. Report of the AC settingout the manner ofcompliance with theirfunctions.ComplianceApplicable sectionin the Annual ReportBoard CommitteeReports29

ACL Cables PLC Annual Report 2010/11Corporate Social ResponsibilityACL has been the pioneer in the Sri Lankan cable manufacturing sector since its humblebeginnings in 1962. Over the past few decades, it has grown to become the leading manufacturerof cables in the country, with significant market share as a Company and a commanding marketshare as a Group. During the past year, ACL has taken giant strides in gaining market share toachieve and consolidate the dominant position held in the market today.We take great pride in being a good corporate citizen of Sri Lanka, where all our business activitiesaffect various stakeholders in many different ways. As such, we constantly strive to take initiativesto nurture and add value to the community around us, so that as they develop, it would in turnbenefit the country as well as our Company. These ideologies are ingrained in the ACL Vision,Mission and Values, which have guided ACL to become a stalwart in the cable manufacturingindustry.Our CustomersACL aims to enhance customer satisfaction through the provision of high quality and safe cables.This is done through constant dialogue with our customers via many communication channels,so that we can identify their needs and innovate to meet their requirements. Thus, we are able promotional activities during year. Further, we assess and verify our activities by monitoringreaction from customers as well as through self-assessment of customer satisfaction relatedmatters, and by utilizing and applying the feedback we derive from the membership of an The ‘ACL Power Pack Electrician’s Club’ is the leading electrician’s club in Sri Lanka, which wasfounded with the objectives of providing skills, knowledge and other required guidance andimproving living conditions of key stakeholders of the industry. We endeavour to serve the needsof all electricians, but especially those of our members, by implementing and practicing the ‘EightBetterments’ concepts which encompass many aspects of our business activities.Divimaga Balaya – Members are given information regarding the latest technologicaldevelopments in the electrical industry and training on the safe usage of electrical wiring andequipment. Training programs were conducted in locations such as Polonnaruwa, Bibila, Ampara,etc.Seminar conducted for electricians.30

ACL Cables PLC Annual Report 2010/11Divimaga Sariya – Visits and educational tours are organized providing an opportunity formembers to visit the ACL Cables factory. In August 2010, the children of ACL employees too, weregiven the opportunity to observe cable manufacturing.Divimaga Danuma – An educational magazine is published bi-monthly containing articles on thesafe use of cables, energy conversion, unique features of ACL cables, and more.Divimaga Rekuma – Members of the club are covered by a comprehensive insurance policyto the value of Rs. 625,000/- for life and accident cover, the premium of which is borne by theCompany. A Life insurance payment was made during the year consequent to the unfortunatedemise of one of our members due to a work-related accident. His dependents had a safety netdue to our initiative.Insurance payment being handed over to the late electrician’s widow.Divimaga Surakuma – For the first time in Sri Lanka, a Pension Scheme has been introduced forelectricians by the ACL Power Pack Electrician’s Club.Divimaga Thorathuru – A dedicated Hotline Mobile Service operates 24 hours for electricians tocommunicate with the Company.Divimaga Lakunu – A Gift Scheme available for members whose active participation earns thempoints which in turn entitles them to valuable gifts.Divimaga Dakuma – Recognizing that good eyesight is a critical asset for an electrician, theCompany has reimbursed the costs of clinic visits and spectacles for our members, with a view tohelping our electricians function efficiently and effectively.Our PeopleAt ACL, we consistently focus on continuous development of our human resources and thecreation of an environment which is conducive for employees to develop and better themselves.Our success has been built on the collective skills, knowledge and quality of our human capital. year on year. As part of the human resource development initiative, a consultant has been31

ACL Cables PLC Annual Report 2010/11Corporate Social Responsibilityappointed to better develop and train our staff. Additionally, English classes are held for variousemployee categories so that they are groomed and geared to be our driving force in the futuretoo.During the year under review, the Company continued to offer opportunities for employees’career development, and the improvement of their skills and attitudes. There are numerouspotential benefits to be gained by modern businesses and individuals from systematic, wellplannedtraining and development programs. As such, Interactive Workshops and Seminars havebeen conducted during the year. Furthermore, the Company accepts and acknowledges theresponsibility for continuous professional development of staff members, and in this light, offersits employees opportunities to participate in special training programs and conferences conductedby professional organizations.We also recognize that it is essential for various social activities to be encouraged and organizedin order to create an atmosphere of togetherness amongst members of the ACL family, as statedin our value statement. With that in mind we have integrated a number of social activities into ouryearly schedule, which includes an annual trip, the ACL Night, and New Year festival activities.ACL Factory staff participating in traditional ‘Kotta pora’ and ‘Tug of War’ events at the New Yearfestivities.An annual awards ceremony is held for ACL Sales Promotion officers as a means of recognizingand rewarding the employees who have contributed most to the continued success of ACL.Sales promotion team with award winnersand their awards in the foreground.32

ACL Cables PLC Annual Report 2010/11In order to improve the benefits offered to employees, medical facilities provided to the staff werestreamlined and enhanced. In addition, to recognize their loyalty and dedication, employees whohad served the Company for 25 years were presented with Gold Coins at the New Year celebrationon 1st January 2011.ACL takes justifiable pride in caring for our employees and their dependents. Thus we have aninitiative named “ACL Nena Thilina,” which is a program where we grant scholarships to childrenof employees who excel at the examinations. The top three children passing the A/Ls, O/Ls andGrade 5 Scholarship exams are given monetary prizes by ACL at an award ceremony so that thesechildren are recognized for their achievements and are encouraged to develop further. Employeestake great pride in their children being recognized for their academic achievements.An Art Competition was held in connection with the annual Poson Bakthi Geetha program, wherechildren of the employees took part, and prizes were awarded to the winners in each category.Further, a pack of stationery is given to every employee’s child who is currently attending school.This distribution is done at the beginning of every year.Our CommunityACL strives to understand and respect the cultural values and laws wherever we operate. We activelysupport important initiatives in those communities where our employees live and work. Thiscommitment is evident from our contributions of equipment and financial and volunteer support.ACL supports various community charity causes, such as donating funds to the Cancer Hospital atMaharagama. ACL also continuously provides financial support for the betterment of society andthe surrounding communities, which improves the socio-economic background so that societybenefits from it.ACL conducts annual cultural events such as New Year festivals, Poson Bakthi Geetha, and the AlokaPoojawa at Ridi Viharaya. These are conducted to enrich the lives of those in the neighbouringcommunities. This also creates a platform from which ACL employees can interact with thesurrounding communities and engage themselves in activities other than just their routine work.The Chairman switching on the lights for theAloka Pooja at Ridi Viharaya.The Managing Director switching on the lightsfor the Aloka Pooja at Ridi Viharaya.33

ACL Cables PLC Annual Report 2010/11Corporate Social ResponsibilityEnvironmental ResponsibilityEnvironmental sustainability at ACL begins with our pledge to provide innovative and high qualitycables which are manufactured under guidance of best practices and in an energy efficientmanner. ACL employees are encouraged to be committed towards creating and maintaining acleaner and safer working environment within the factory premises so that all employees are ableto work in more habitable surroundings.We continuously follow the strategy of training employees across the office and factory premisesof the Company on the Japanese 5S concept, promoting it as a basic and compulsory productivityimprovement standard to be implemented throughout the Company. Further, 5S audits werecarried out during the year to ensure the effectiveness of the program.The Company also falls in line with the environmental laws of the country through compliancelicensing in our other operational areas.The Company invests in new technology which is more energy efficient and less harmful to initiatives which have enabled ACL to become a shining example in the Cables manufacturingsector in Sri Lanka.Our environmental initiative was the compelling reason for ACL to come forward as the PrincipalSponsor of the “Earth Hour” in Sri Lanka. ACL donated a sum of Rs. 600,000/- towards the event,and management personnel participated in the organizing of the event in order to make it theoverwhelming success that it was. The ceremony included many spectacular cultural pageantssuch as ‘Gini Sisila,’ ‘Pandam Paliya,’ ‘Dekona Wilakkuwa’ and traditional Drum-beating events.Interesting speeches and lectures were also held, but the core event during the ceremony wasthe switching off of non-essential lights of the area from 8.30 to 9.30 pm. During this hour thepremises was lit with copra lamps, which is a non-fossil fuel.‘Earth Hour’ sponsorship funds being handedover.Children singing the National Anthem at the‘Earth Hour’ ceremony.34

ACL Cables PLC Annual Report 2010/11AwardsCrystal Award 2009Award for the Winner of the GoldAwards over three Consecutive Yearsby the Ceylon National Chamber ofIndustries.Asia Pacific Quality Award 2008Won the highest award, beatingparticipants from 46 countries, andACL recognized as a world-classcompany.“Provincial Productivity Awards -1 st Place” 2007organized by the National ProductivitySecretariat.National Quality Award Winner200735

ACL Cables PLC Annual Report 2010/11Financial Information36

ACL Cables PLC Annual Report 2010/1138 Report of the Directors41 g42 Audit Committee Report44 Remuneration Committee Report45 t46 Income Statement47 Balance Sheet48 Statement of Changes in Equity49 Cash Flow Statement50 Notes to the Financial Statements37

ACL Cables PLC Annual Report 2010/11Report of the DirectorsThe Directors have pleasure in presenting their 49th Annual Report together with the AuditedBalance Sheet, Income Statement and Consolidated Financial Statements of the Group for the yearended 31st March 2011.Review of the YearThe Chairman’s Statement and Managing Director’s Review set out the state of affairs andperformance of the Company during the year.Principal Activities of the GroupDescription of the nature of the operations and principal activities of the Company and itssubsidiaries are given on pages 18 to 19.Independent Auditor’s ReportThe Independent Auditors’ Report on the Financial Statements is given on page 45 in this Report.Financial StatementsThe Financial Statements prepared in compliance with the requirements of Section 151 of theCompanies Act No. 7 of 2007 are given on pages 46 to 81 in this Annual Report.Accounting PoliciesThe Accounting Policies adopted in preparation of the Financial Statements are given on pages 50to 57. There were no changes in the Accounting Policies adopted by the Company during the year.Directors’ Responsibilities for Financial StatementsThe Statement of the Directors’ Responsibilities for Financial Statements is given on page 41.Going ConcernThe Board is satisfied that the Company will continue its operations in the foreseeable future. Forthis reason, the Company continues to adopt the going concern basis in preparing the FinancialStatements.Stated CapitalThe Stated Capital of the Company on 31st March 2011 was Rs.299, 488,400/= and wasunchanged during the year.Events Occuring After The Balance Sheet DateNo circumstance have arisen since the Balance Sheet date which would require adjustments toor disclosure in the Financial Statements other than those disclosed in Note 37 to the FinancialStatements.38

ACL Cables PLC Annual Report 2010/11Statutory PaymentsAll known statutory payments have been made or provided for by the Company.DirectorsDirectors of the Company are listed on pages 12 to 15 and their respective shareholdings aregiven below.No ofSharesAs at31.03.2011% HoldingAs at31.03.2011No ofSharesAs at31.03.2010% HoldingAs at31.03.2010U. G. Madanayake - Chairman 22,642,116 37.80% 22,642,116 37.80%Suren Madanayake - Managing Director 13,302,396 22.21% 13,302,396 22.21%Dr. S. K. Madanayake 165,072 0.28% 165,072 0.28%Mrs. N. C. Madanayake 1,032,100 1.72% 1,032,100 1.72%Hemantha Perera * - - - -A. M. S. De S. Jayaratne - - - -Hemaka Amarasuriya ** - - - -D. D. Wahalatantiri - - - -P. S. R. Casie Chitty - - - -* - Resigned with effect from 31.03.2011** - Appointed with effect from 02.08.2010Interest RegisterThe Interest Register is maintained by the Company, as per the Companies Act No. 7 of 2007. AllDirectors have made declarations in accordance with the aforesaid Act. The Interest Register isavailable for inspection as required by the Companies Act.Directors’ Interest in ContractsDirectors’ interests in contracts of the Company are disclosed in Note 35 to the FinancialStatements and no Director of the Company is directly or indirectly interested in any othercontracts with the Company. The Directors retiring by rotation in terms of Article 85 will be Mrs.N. C. Madanayake & Mr. Daya Wahalatantiri, who being eligible are recommended for re-election.Directors’ RemunerationRemuneration received by the Directors is set out in Note 35 to the Financial Statements.Directors MeetingsThe details of Directors’ meetings are set out on pages 23 to 25 under the Corporate Governanceof the Annual Report.39

ACL Cables PLC Annual Report 2010/11Report of the DirectorsDividendsThe Board of Directors have decided not to declare a dividend for the year 2010/2011.DonationsDonations amounting to Rs. 1,450,445 (Group Amount) were made during the year under review.Appointment of Auditors1) Messrs. PricewaterhouseCoopers, have expressed their willingness to continue in office asAuditors of the Company for the year ending 31st March 2012. A resolution pertaining to theirreappointment and authorizing the Directors to determine their remuneration will be proposedat the Annual General Meeting.By Order of the Board(Sgd.)Corporate Affairs (Private) LimitedSecretaries25th August 201140

ACL Cables PLC Annual Report 2010/11Directors' Responsibility for Financial ReportingThe Board accepts responsibility for the preparation and fair presentation of Financial Statementsin accordance with Sri Lanka Accounting Standards. This responsibility includes: designing,implementing and maintaining internal controls relevant to the preparation and fair presentationof 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 arereasonable in the circumstances.In discharging this responsibility, the Directors have instituted a system of internal financialcontrols and a system for monitoring its effectiveness. The system of controls provide reasonableand not absolute assurance of safeguarding of Company’s assets, maintenance of properaccounting records and the reliability of financial information.The Financial Statements reflect a true and fair view of the state of affairs of the Company and theGroup as at 31st March 2011 and provide the information required by the Companies Act No. 7of 2007. The Financial Statements have been prepared on the going concern basis as the Board issatisfied that the Company will continue its operations in the foreseeable future.Approval of Financial StatementsThe Directors’ Report and the Financial Statements of the Company and of the Group wereapproved by the Board of Directors on 25th August 2011By Order of the Board(Sgd.)Corporate Affairs (Private) LimitedSecretaries25th August 201141

ACL Cables PLC Annual Report 2010/11Audit Committee ReportThe Audit Committee consists of following two Independent Non-Executive Directors, biographicaldetails of whom are set out within ’Profiles of the Directors’ section. The above members have significant recent and relevant financial experience as required by theCode of Best Practice in Corporate Governance, issued by the Institute of Chartered Accountants ofSri Lanka and the Listing Rules of the Colombo Stock Exchange.RoleThe primary role of the Audit Committee, which reports its findings to the Board of Directors,is to ensure the integrity of the financial reporting and audit processes and the maintenance ofsound internal controls and risk management system. The Committees` responsibilities includemonitoring and reviewing the following: contained in them. independence, fees and provision of non-audit services. Directors on the appointment of the external auditors.In the performance of its duties, the Committee has independent access to the services of InternalAudit and to the External Auditors, and may obtain outside professional advice as necessary.Comprehensive briefing papers are circulated to Committee members in advance of each meetingand made available to other Directors.Meetings & attendanceThe Committee met on four occasions in 2010/2011 timed to coincide with the financial andreporting cycles of the Company. Members’ attendance at these meetings is set out in theCorporate Governance Report. The Chairman, Managing Director & Group Financial Controller areinvited to attend meetings whenever required.Financial ReportingThe Audit Committee considered a wide range of financial reporting and related matters in respectof the 2010/2011 published Financial Statements. For quarterly statements, the Committeereviewed any significant areas of judgment that materially impacted reported results, key points ofdisclosure and presentation to ensure adequacy, clarity and completeness of the Interim FinancialStatements.42

ACL Cables PLC Annual Report 2010/11External AuditorsThe Audit Committee is responsible for the development, implementation and monitoring ofthe Company’s policies on external audit. The policies, designed to maintain the objectivity andindependence of the external auditors, regulate the appointment of former employees of theexternal audit firm to positions in the Group and set out the approach to be taken when using theexternal auditors for non-audit work.As a general principle, the external auditors are excluded from consultancy work and cannotbe engaged by ACL Cables PLC for other non-audit work unless there are compelling reasons todo so. Any proposal to use the external auditors for non-audit work must be submitted to theManaging Director, via the Group Financial Controller, for approval prior to appointment.The Audit Committee, having evaluated the performance of the external auditors,decided to recommend to the Board of ACL Cables PLC, the re-appointment of Messrs.PricewaterhouseCoopers as auditors of the Company, subject to the approval of the shareholdersat the Annual General Meeting. Details of the fees payable to external auditors for 2010/2011 canbe found in Note 5 to the financial statements.Internal Control SystemIn 2010/2011 the Committee reviewed the results of the audits undertaken by Internal Auditors,Messrs. Ernst & Young Advisory Services (Pvt) Ltd., and considered the adequacy of management’sresponse to the matters raised, including the implementation of any recommendations made.On behalf of the Committee(Sgd.)Mr. Ajit JayaratneChairman of the Audit Committee25th August 201143

ACL Cables PLC Annual Report 2010/11Remuneration Committee ReportThe Remuneration Committee comprises of the two Non-Executive Directors, namely The members of the Committee and the chairman of the Committee shall be appointed from timeto time by a resolution of the Board, from amongst the Non-Executive Directors. The RemunerationCommittee formally met once in the last financial year.RoleThe Remuneration Committee formulates the Group’s policy for the remuneration of the ExecutiveDirectors of ACL Cables PLC. It reviews the policy annually and recommends any changes to theBoard for formal approval. The Group policy on remuneration packages is to attract and retain thebest professional and managerial talent to the Group and also to motivate and encourage them toperform at the highest possible level. The Group has a structured and professional methodology inevaluating the performance of employees.The Remuneration Committee determines the Company’s Remuneration Policy of ExecutiveDirectors, with regard to performance standard and existing industry practice. No ExecutiveDirector is involved in deciding his own remuneration package.ActivitiesThe Committee considered a range of issues including, Members’ attendance at meetings of the Remuneration Committee in 2010/2011 is set out in thetable in the Corporate Governance Report.Executive DirectorsACL’s remuneration policy for executive directors is designed to attract, retain and motivateexecutives of the high caliber required to ensure that the Group is managed successfully to thebenefit of shareholders. To achieve this, a competitive package of incentives and rewards linkedto performance is provided.In setting remuneration levels, the Committee takes into consideration the remuneration practicesfound in other leading companies and also ensures that the remuneration arrangements forexecutive directors are compatible with those for executives throughout the Group.In conclusion, my sincere thanks to Mr. Rajiv Casie Chitty, member of the committee for hisvaluable contribution to the work of the Committee.On behalf of the Committee(Sgd.)Mr. Ajit JayaratneChairman of the Remuneration Committee25th August 201144

ACL Cables PLC Annual Report 2010/11Independent Auditor's ReportTo the Members of ACL Cables PLCReport on the financial statements1. We have audited the accompanying financial statements of ACL Cables PLC (the Company), the consolidatedfinancial statements of ACL Cables PLC and its subsidiaries (the Group) which comprise the balance sheets as at31 March 2011, and the income statements, statements of changes in equity and cash flow statements for theyear then ended, and a summary of significant accounting policies and other explanatory notes, as set out onpages 46 to 81.Management’s Responsibility for the Financial Statements2. Management is responsible for the preparation and fair presentation of these financial statements in accordancewith Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaininginternal control relevant to the preparation and fair presentation of financial statements that are free frommaterial misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies;and making accounting estimates that are reasonable in the circumstances.Scope of Audit and Basis of Opinion3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted ouraudit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform theaudit 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 financialstatements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, 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 werenecessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for ouropinion.Opinion4. In our opinion, so far as appears from our examination, the Company maintained proper accounting records forthe year ended 31 March 2011 and the financial statements give a true and fair view of the Company’s state ofaffairs as at 31 March 2011 and of its profit and cash flows for the year then ended in accordance with Sri LankaAccounting Standards.5. In our opinion, the consolidated financial statements give a true and fair view of the state of affairs as at 31March 2011 and of the consolidated profit and cash flows for the year then ended in accordance with Sri LankaAccounting Standards, of the Group dealt with thereby, so far as concerns the shareholders of the Company.Report on Other Legal and Regulatory Requirements6. These financial statements also comply with the requirements of Section 153 (2) to 153 (7) of the CompaniesAct, No. 07 of 2007.CHARTERED ACCOUNTANTSColombo26th August 201145

ACL Cables PLC Annual Report 2010/11Income Statement(All amounts in Sri Lanka Rupees)GroupCompanyYear EndedYear Ended31 March 31 MarchNotes 2011 2010 2011 2010Revenue 3 9,569,771,115 7,242,947,358 5,181,843,384 3,495,236,520Cost of sales (8,280,809,137) (6,098,280,574) (4,744,692,707) (3,172,153,423)Gross profit 1,288,961,978 1,144,666,784 437,150,676 323,083,098Other income 4 50,413,970 13,096,703 45,812,335 40,666,873Distribution cost (403,216,624) (425,496,678) (180,312,634) (183,931,252)Administration cost (259,704,013) (265,836,132) (96,552,545) (122,570,818)Operating profit 5 676,455,312 466,430,677 206,097,832 57,247,901Net finance cost 7 (226,755,191) (270,145,662) (172,203,829) (204,101,165)Profit/ (loss) before tax 449,700,121 196,285,015 33,894,003 (146,853,263)Income tax 8 (162,959,908) (141,203,109) (25,322,096) 36,980,638Profit/ (loss) for the year 286,740,213 55,081,906 8,571,907 (109,872,625)Share of (profit)/ lossattributable to minority (54,193,370) (59,870,523) - -Net profit/ (loss) attributable toequity holders of the Company 232,546,843 (4,788,617) 8,571,907 (109,872,625)Earning/ (loss) per share 9 3.88 (0.08) 0.14 (1.83)Dividend per share 10 - - - -The notes on pages 50 to 81 form an integral part of these financial statements.46

ACL Cables PLC Annual Report 2010/11Balance Sheet(All amounts in Sri Lanka Rupees)GroupCompanyAs at 31 MarchAs at 31 MarchNotes 2011 2010 2011 2010ASSETSNon current assetsProperty, plant and equipment 11 1,943,594,120 1,854,664,461 815,995,717 795,182,706Work in progress 12 133,225,619 102,233,873 106,399,394 41,081,510Investment property 13 125,000,000 120,000,000 - -Intangible assets 14 5,993,702 5,993,702 - -Leasehold properties 15 1,798,444 1,820,647 - -Investment in subsidiaries 16 - - 538,247,906 538,247,906Investment in other companies 17 25,816,147 23,398,646 20,246,349 8,010,8722,235,428,032 2,108,111,329 1,480,889,366 1,382,522,992Current assetsInventories 18 3,414,661,009 2,781,361,513 1,988,601,341 1,504,369,218Receivables and prepayments 19 2,913,902,476 2,261,421,544 1,924,712,841 1,306,009,247Leasehold properties 15 22,203 21,935 - -Cash and cash equivalents 20 382,091,877 884,882,123 233,369,068 559,183,5946,710,677,565 5,927,687,115 4,146,683,250 3,369,562,060Total assets 8,946,105,597 8,035,798,444 5,627,572,616 4,752,085,051EQUITY AND LIABILITIESCapital and reservesStated capital 30 299,488,400 299,488,400 299,488,400 299,488,400Capital reserve 31 863,319,519 799,786,664 330,855,735 330,855,735General reserve 32 1,123,825,080 1,123,825,080 680,265,800 680,265,800Retained earnings 1,723,107,434 1,490,573,407 895,876,906 887,304,997Total equity attributable to equityholders of the Company 4,009,740,433 3,713,673,551 2,206,486,840 2,197,914,932Minority interest 507,317,610 455,172,627 - -Total equity 4,517,058,043 4,168,846,178 2,206,486,840 2,197,914,932Non current liabilitiesProvision for payment in lieu ofemployee share issue scheme 25 2,775,329 2,920,369 - -Defined benefit obligations 26 144,798,835 124,859,610 99,735,854 86,970,681Deferred tax liability 27 53,493,462 52,482,993 7,748,410 3,110,592Borrowings 22 300,000,000 400,000,000 300,000,000 400,000,000Finance lease obligation 23 540,061 980,695 540,061 980,695501,607,686 581,243,667 408,024,325 491,061,968Current liabilitiesTrade and other payables 21 1,204,204,402 525,001,723 1,375,542,569 459,860,446Income tax payable 24 137,819,611 240,785,758 72,514,020 51,829,742Finance lease obligation 23 776,110 489,095 776,110 489,095Dividend payable 4,746,426 4,698,207 - -Borrowings 22 2,579,893,318 2,514,733,816 1,564,228,751 1,550,928,8683,927,439,867 3,285,708,599 3,013,061,451 2,063,108,151Total liabilities 4,429,047,554 3,866,952,266 3,421,085,775 2,554,170,119Total equity and liabilities 8,946,105,597 8,035,798,444 5,627,572,616 4,752,085,051It is certified that these financial statements have been prepared in compliance with the requirements of the Companies Act, No. 7 of 2007.Champika CoomasaruGroup Financial ControllerThe Board of Directors is responsible for the preparation and presentation of these financial statements. These financial statements wereauthorised for issue by the Board of Directors on 25th August 2011.U. G. Madanayake Suren MadanayakeChairmanManaging DirectorThe notes on pages 50 to 81 form an integral part of these financial statements.47

ACL Cables PLC Annual Report 2010/11Statement of Changes in Equity(All amounts in Sri Lanka Rupees)GroupStated Capital General Retained MinorityNotes capital reserve reserve earnings interest TotalBalance at 1 April 2009 299,488,400 441,223,100 1,123,825,080 1,501,308,728 426,976,320 3,792,821,628Net (loss)/ profit - - - (4,788,618) 59,870,523 55,081,906Rights issues acquired byminority interest - - - - 354,700 354,700Revaluation surplus 31 - 367,340,918 - - - 367,340,918Deferred tax on revaluation surplus - (8,191,605) - - - (8,191,605)Transfer from revaluation reserve 31 - (908,490) - 908,490 - -Deferred tax on transfer 31 - 322,741 - - - 322,741Acquisition of shares by parent - - - - (21,670,983) (21,670,983)Dividend paid - - - - (9,904,040) (9,904,040)Balance at 31 March 2010- Previously stated 299,488,400 799,786,664 1,123,825,080 1,497,428,600 455,626,521 4,176,155,265Deferred income tax charge inrelation to prior year 36 - - - (6,855,193) (453,894) (7,309,087)Balance at 31 March 2010- As restated 299,488,400 799,786,664 1,123,825,080 1,490,573,407 455,172,627 4,168,846,178Balance at 1 April 2010 299,488,400 799,786,664 1,123,825,080 1,490,573,407 455,172,627 4,168,846,178Net profit - - - 232,546,843 54,193,370 286,740,213Purchase of own shares bysubsidiaries - - - (921,306) (82,094) (1,003,400)Revaluation surplus 31 - 67,305,675 - - 4,456,426 71,762,101Deferred tax on revaluation 31 - (3,030,183) - - 540,257 (2,489,926)Transfer from revaluation reserve 31 (908,490) - 908,490 - -Deferred tax on transfer 31 - 165,854 - - 88,523 254,377Dividend paid - - - - (7,051,500) (7,051,500)Balance at 31 March 2011 299,488,400 863,319,519 1,123,825,080 1,723,107,434 507,317,610 4,517,058,043CompanyStated Capital General Retainedcapital reserve reserve earnings TotalBalance at 1 April 2009 299,488,400 330,855,735 680,265,800 997,177,623 2,307,787,558Net loss - - - (109,872,625) (109,872,625)Balance at 31 March 2010 299,488,400 330,855,735 680,265,800 887,304,997 2,197,914,932Balance at 1 April 2010 299,488,400 330,855,735 680,265,800 887,304,997 2,197,914,932Net profit - - - 8,571,907 8,571,907Balance at 31 March 2011 299,488,400 330,855,735 680,265,800 895,876,906 2,206,486,840The notes on pages 50 to 81 form an integral part of these financial statements.48

ACL Cables PLC Annual Report 2010/11Cash Flow Statement(All amounts in Sri Lanka Rupees)GroupYear ended 31st MarchCompanyYear ended 31st MarchNotes 2011 2010 2011 2010Operating activitiesCash generated from/ (used in)operations 33 178,674,533 (94,722,781) 35,686,945 138,588,095Interest paid 7 (243,348,683) (281,051,647) (180,037,797) (207,827,579)Gratuity paid 26 (8,777,182) (5,221,054) (3,950,896) (3,514,540)Payment in lieu of employeeshare issue scheme 25 (145,040) (178,511) - -Income tax paid less refund received 24 (263,354,901) (111,436,077) - (65,328,732)WHT on dividend paid by subsidiary 8 (3,796,234) (4,835,536) - -Net cash used inoperating activities (340,747,507) (497,445,606) (148,301,749) (138,082,756)Investing activitiesInterest received 7 16,593,492 11,244,423 8,127,299 3,726,414Purchase and constructionof property, plant andequipment 11 & 12 (165,756,725) (83,628,687) (131,843,685) (45,516,614)Dividend received 4 944,772 1,971,295 30,578,782 39,923,684Investment in other companies (17,726,179) (15,619,635) (17,641,509) (74,160)Investments in subsidiary companies - - - (15,405,885)Proceeds on disposal of investments 45,665,048 - 19,846,232 -Proceeds on disposal of property,plant and equipment 1,285,871 35,715 413,550 -Net cash used in investing activities (118,993,722) (85,996,889) (90,519,331) (17,346,561)Financing activitiesLease installment paid (153,619) (293,330) (293,330) (293,330)Proceeds from share issue of subsidiary - 354,700 - -Purchase of own shares by subsidiaries (1,003,400) - - -Short term borrowings net of payments 183,741,958 437,049,658 56,920,015 (105,303,213)Long term borrowings net of payments (100,000,000) 378,728,523 (100,000,000) 389,208,335Dividend paid by subsidiary to minorities (7,051,500) (9,904,040) - -Net cash generated from/ (used in)financing activities 75,533,439 805,935,511 (43,373,315) 283,611,792(Decrease) / increase in cash andcash equivalents (384,207,789) 222,493,016 (282,194,394) 128,182,475Movement in cash and cash equivalentsAt the beginning of the year 99,857,658 (122,635,358) 170,182,511 42,000,036(Decrease) / increase (384,207,789) 222,493,016 (282,194,394) 128,182,475At the end of the year 20 (284,350,131) 99,857,658 (112,011,883) 170,182,511The notes on pages 50 to 81 form an integral part of these financial statements.49

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements(In the notes all amounts are shown in Sri Lanka Rupees unless otherwise stated)1. General InformationACL Cables PLC was incorporated on 1 March 1962 under the Companies Ordinance No. 51 of1938 as Associated Cables Ltd and on 8 January 1991 the name was changed to ACL CablesLimited and the Company was re-registered under the Companies Act No. 7 of 2007. At present,ACL Cables PLC is a Public Limited Liability Company listed on the Colombo Stock Exchange anddomiciled in Sri Lanka. The registered office and the principal place of business of the Company islocated at No. 60, Rodney Street, Colombo 08.The principal activities of ACL Cables PLC are manufacturing cables and conductors.2. Summary of Significant Accounting Policies2.1 Basis of PreparationThe consolidated financial statements are prepared in accordance with and comply with Sri LankaAccounting Standards. The consolidated financial statements are prepared under the historicalcost convention except that land, buildings and investment property is carried at fair value.2.2 ConsolidationSubsidiary undertakings, which are those companies in which the Group, directly or indirectly,has an interest of more than one half of the voting rights or otherwise has power to exercisecontrol over the operations, have been consolidated. Subsidiaries are consolidated from the dateon which effective control is transferred to the Group and are no longer consolidated from thedate of disposal. All inter company transactions, balances and unrealised surplus and deficitson transactions between Group companies have been eliminated in the preparation of financialstatements.2.3 New Accounting Standards Issued but not Effective as at the Balance Sheet DateThe Institute of Chartered Accountants of Sri Lanka (ICASL) has issued the new AccountingStandards given below, which become effective for annual periods beginning on or after 1 January2012. These standards have not been applied in preparing these financial statements as they werenot effective for the year ended 31 March 2011. LKAS 32 - Financial Instruments : Presentation LKAS 39 - Financial Instruments : Recognition and Measurement SLFRS 1 - First-time Adoption of Sri Lanka Accounting Standards SLFRS 7 - Financial Instruments : DisclosureDisclosure requirements under SLAS 10.30 (b) and 10.31 have been exempted by the ICASL andtherefore all differences and impacts arising from the new Accounting Standards are not presentedin these financial statements.50

ACL Cables PLC Annual Report 2010/112.4 Foreign Currency TransactionsForeign currency transactions are accounted for at the exchange rates prevailing at the date ofthe transactions. Gains and losses resulting from the settlement of such transactions and from thetranslation of monetary assets and liabilities denominated in foreign currencies, are recognised inthe income statement. Such balances are translated at exchange rates prevailing at balance sheetdate unless hedged by forward foreign exchange contracts, in which case the rates specified insuch forward contracts are used.2.5 Taxation2.5.1 Provision for income tax is based on the elements of income and expenditure as reportedin the financial statements and is computed in accordance with the provisions of the relevant taxstatutes.2.5.2 Deferred income tax is provided in full, using the balance sheet liability method, for allthe temporary differences arising between the tax bases of assets and liabilities and their carryingamounts in financial statements. The principal temporary differences arise from depreciation onproperty, plant and equipment, provisions for retirement benefit obligations and tax losses carriedforward.Tax rates enacted or substantively enacted by the balance sheet date are used to determinedeferred income tax.2.5.3 Deferred tax assets relating to the carry forward of unused tax losses are recognised tothe extent that it is probable that future taxable profit will be available against which the unusedtax losses can be utilised.2.6 Valuation of Assets and their Bases of Measurement2.6.1 Property, plant and equipment is stated at cost or fair value less accumulated depreciationand any impairment in value.All items of property, plant and equipment are initially recorded at cost. Where items of property,plant and equipment are subsequently revalued, the entire class of such assets are revalued at fairvalue.When an asset is revalued, any increase in the carrying amount is credited directly to a revaluationreserve, except that it is credited to the income statement to the extent that it reverses a previousdeficit recognised as an expense. Any revaluation deficit that offsets previous surplus in the sameasset is directly offset against the surplus in the revaluation reserve and any excess recognisedas an expense. Upon disposal, any revaluation reserve relating to the asset sold is transferred toretained earnings. The difference between depreciation based on the asset’s original cost and thedepreciation based on the revalued amount is transferred from revaluation reserve to retainedearnings.51

ACL Cables PLC Annual Report 2010/11Notes to the Financial StatementsProvision for depreciation is calculated by using a straight-line method on the cost or valuationof all property, plant and equipment, other than freehold land, in order to write off such amountsover the estimated useful economic life of such assets.The estimated useful lives of the assets are as follows;AssetYearsFactory buildings 25 - 40Plant, machinery and accessories 8 - 10Factory equipment 8 - 10Electrical fittings 8 - 10Furniture, fixtures and fittings 4 - 10Office equipment 4 - 10Motor vehicles 4 - 5Tools and implements 4 - 10The Group’s policy up to 31.03.2006 was not to provide depreciation on property, plant andequipment purchased during the year while the full year’s depreciation was charged in the year ofdisposal.Commencing from 1st April 2006, depreciation is provided on all property, plant and equipmentfrom the month the assets are available for use up to the month of disposal.The useful life and residual value of assets are reviewed and adjusted if required, at the end ofeach financial year.2.6.2 Leases where the Company assumes substantially all the benefits and risks of ownershipare classified as finance leases. Finance leases are capitalised at the estimated present value ofthe underlying lease payments. Each lease payment is allocated between the liability and financecharges so as to achieve a constant rate on the finance balance outstanding. The correspondingrental obligations, net of finance charges are included in other long term payables. The interestelement of the finance charge is charged to the income statement over the lease period. Theproperty, plant and equipment acquired under finance leasing contracts is depreciated over theuseful life of the asset.Leases of assets under which all the risks and benefits of ownership are effectively retained by thelessor are classified as operating leases. Payments made under operating leases are charged to theincome statement on a straight line basis over the period of the lease.52

ACL Cables PLC Annual Report 2010/112.6.3 Properties held to earn rental income or properties held for capital appreciation or bothand is not occupied substantially for the supply of goods or services or in administration, andis not intended for sale in the ordinary course of business have been classified as investmentproperty. Investment properties are initially recognized at cost. Subsequent to initial recognitionthe investment properties are stated at fair value, which reflects market conditions as at balancesheet date.Gains or losses arising from changes in fair value are included in the income statement in the yearin which they arise.Investment properties are de-recognized when disposed, or permanently withdrawn from usebecause no future economic benefits are expected. Any gains or losses on retirement or disposalare recognized in the income statement in the year of retirement or disposal.Where the Company occupies a significant portion of the investment property, such investmentproperties are treated as property, plant and equipment in the financial statements and accountedfor as per SLAS - 18 (Revised 2005), Property, Plant and Equipment.2.6.4 Goodwill represents the excess or the cost of an acquisition over the fair value of the Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill acquired in abusiness combination is tested annually or more frequently if events or changes in circumstancesindicate that the carrying value may be impaired and carried at cost less accumulated impairmentlosses.Negative goodwill arising on an acquisition represents the excess of the fair value of the netassets acquired over the cost of acquisition. Negative goodwill is recognized immediately in theincome statement.2.6.5 All quoted and un-quoted securities, which are held as non-current investments, arevalued at cost less impairment losses. The cost of investment is the cost of acquisition inclusive ofbrokerage and costs of transaction. The carrying amounts of long term investments are reducedto recognise a decline which is considered other than temporary, in the value of investments,determined on an individual investment basis.In the Company’s financial statements, investments in subsidiaries have been accounted for atcost, net of any impairment losses which are charged to the income statement. Income from theseinvestments is recognized only to the extent of dividends received.53

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements2.6.6 The Group assesses at each reporting date whether there is an indication that an assetmay be impaired. If any such indication exists, or when annual impairment testing for an asset isrequired, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverableamount is the higher of an asset’s or cash generating unit’s fair value less costs to sell and itsvalue in use and is determined for an individual asset, unless the asset does not generate cashinflows that are largely independent of those from other assets or groups of assets. Where thecarrying amount of an asset exceeds its recoverable amount, the asset is considered impairedand is written down to its recoverable amount. In assessing value in use, the estimated futurecash flows are discounted to their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to the asset. Impairmentlosses recognized in prior periods are assessed at each reporting date for any indications that theloss has decreased or no longer exists. An impairment loss is reversed if there has been a changein the estimates used to determine the recoverable amount. An impairment loss is reversed only tothe extent that the asset’s carrying amount does not exceed the carrying amount that would havebeen determined, net of depreciation or amortization, if no impairment loss had been recognized.An assessment is made at each reporting date as to whether there is any indication that previouslyrecognized impairment losses may no longer exist or may have decreased. Previously recognizedimpairment losses, are reversed only if there has been an increase in the recoverable amount ofthe asset. Such increase is recognized to the extent of the carrying amount had no impairmentlosses been recognized previously.For goodwill, recoverable amount is estimated at each balance sheet date or as and when anindication of impairment is identified.Impairment losses are recognized in respect of subsidiaries acquired, are allocated first to reducethe carrying amount of any goodwill allocated to the entity and then to reduce the carryingamount of the other assets in the entity on a pro-rata basis.Impairment losses are recognized in the income statement.2.6.7 Inventories are stated at the lower of cost and net realisable value. Cost is determined bythe weighted average method. The cost of the inventory comprises purchase price, taxes (otherthan those subsequently recoverable by the Company from the tax authorities), and transport,handling and other costs directly attributable to the acquisition of finished goods. It excludes theborrowing costs. Trade discounts, rebates and other similar items are deducted in determining thecosts of purchase. Net realisable value is the estimate of the selling price in the ordinary course ofbusiness, less the costs of completion and selling expenses.2.6.8 Trade and other receivables are stated at the amounts estimated to realize, net ofprovision for bad and doubtful debts.Amounts due from related Companies are stated at cost.54

ACL Cables PLC Annual Report 2010/112.6.9 Cash and cash equivalents comprise cash and bank balances. Bank overdrafts that arerepayable on demand and form an integral part of the Group’s cash management are included as acomponent of cash and cash equivalents for the purpose of the statement of cash flows.2.7 Liabilities and ProvisionsLiabilities are recognized in the balance sheet when there is a present obligation arising from apast event, the settlement of which is expected to result in an outflow of resources embodyingeconomic benefits. Obligations payable at the demand of the creditor or within one year of thebalance sheet date are treated as current liabilities in the balance sheet. Liabilities payable afterone year from the balance sheet date are treated as non-current liabilities in the balance sheet.2.7.1 Defined Benefit Plan – GratuityProvision has been made in the financial statements for retiring gratuities. This has been based onan actuarial valuation carried out on a Projected Unit Credit (PUC) method as recommended by SriLanka Accounting Standard No. 16 “Employee Benefits“. The actuarial valuation was carried out bya professionally qualified firm of actuaries as at 31 March 2011. The Group expects to carry outactuarial valuation once a year.The actuarial valuation involves making assumptions about discount rate, salary incrementrate and balance service period of employees. Due to the long – term nature of the plan such,estimates are subject to significant uncertainty.However, according to the Payment of Gratuity Act No. 12 of 1983, the liability for payment to anemployee arises only after the completion of 5 years continued service.Based on the revised Sri Lanka Accounting Standard 16 (SLAS16) which became effective fromthe financial year commencing after July 01, 2007, the Group has adopted the actuarial valuationmethod from April 01, 2008.The liability is not externally funded.2.7.2 Defined Contribution PlansAll employees are eligible for Employees’ Provident Fund Contributions and Employees’ TrustFund Contributions in line with respective statutes and regulations. The Company and Groupcontributes 12% of gross emoluments of employees to an approved Employees’ Provident Fundand 3% of gross emoluments of employees to the Employees’ Trust Fund which are externallyfunded.55

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements2.7.3 Provisions, Contingent Assets and Contingent LiabilitiesProvisions are made for all obligations existing as at the Balance Sheet date when it is probablethat such an obligation will result in an outflow of resources and reliable estimate can be made ofthe quantum of the outflow.All contingent liabilities are disclosed as a note to the financial statements unless the outflow ofresources is remote.All contingent assets are disclosed where inflow of economic benefits is probable.2.8 Revenue RecognitionRevenue is recognized to the extent that it is probable that the economic benefits will flow to theGroup and the revenue and 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 valueadded taxes. The following specific criteria are used for recognition of revenue.Revenue from the sale of goods is recognized when the significant risks and rewards of ownershipof the goods have passed to the buyer with the Group retaining neither a continuing managerialinvolvement to the degree usually associated with ownership, nor an effective control over thegoods sold.Interest income is recognized on an accrual basis. Net gains and losses of a revenue nature arising from the disposal of property, plant andequipment and other non-current assets, including investments, are accounted for in the incomestatement, after deducting from the proceeds on disposal, the carrying amount of such assetsand the related selling expenses. Gains and losses arising from activities incidental to the mainrevenue generating activities and those arising from a group of similar transactions which are notmaterial are aggregated, reported and presented on a net basis.Other income is recognized on an accrual basis.2.9 Borrowing CostsBorrowing costs are recognized as an expense in the period in which they are incurred, exceptto the extent that they are directly attributable to the acquisition, construction or production of aqualifying asset, in which case it is capitalized as part of the cost of the asset.56

ACL Cables PLC Annual Report 2010/112.10 ComparativesWhere necessary, comparative figures have been adjusted to conform with changes inpresentation in the current year.2.11 Segment ReportingA segment is a distinguishable component of Group that is engaged either in providing productsor services (business / industry segment), or in providing products or services within a particulareconomic environment (geographical segment), which is subject to risks and rewards that aredifferent from those of other segments.The segment information has been prepared in accordance with the accounting policies adoptedfor preparing and presenting the financial statements.2.12 Earnings Per ShareThe Group presents basic earnings per share (EPS) for its ordinary shares. Basic EPS is calculatedby dividing the profit attributable to ordinary shareholders of the Group by the weighted averagenumber of ordinary shares outstanding during the year.57

ACL Cables PLC Annual Report 2010/11Notes to the Financial StatementsGroupYear ended 31 MarchCompanyYear ended 31 March2011 2010 2011 20103. RevenueGross revenue 9,572,182,649 7,245,829,606 5,183,839,346 3,497,576,080Turnover Tax (411,900) (1,618,235) - (1,075,547)Nation Building Tax (1,999,634) (1,264,012) (1,995,963) (1,264,012)Net revenue 9,569,771,115 7,242,947,358 5,181,843,384 3,495,236,5203. (i) Geographical segment turnoverLocal 7,827,392,968 6,312,037,722 4,627,000,271 3,106,677,560Export 1,744,789,681 933,791,884 556,839,075 390,898,5209,572,182,649 7,245,829,606 5,183,839,346 3,497,576,0804. Other incomeDividend income 944,772 1,971,295 30,578,782 39,923,684Profit on disposal of property,plant and equipment 1,285,871 35,714 413,550 -Profit on sale of shares 30,356,369 - 14,440,202 -Change in fair value of investmentproperty (Note 13) 5,000,000 - - -Sundry income 12,826,958 4,824,596 379,800 743,189Negative goodwill (Note 14) - 6,265,098 - -50,413,970 13,096,703 45,812,335 40,666,87358

ACL Cables PLC Annual Report 2010/115. Operating profitThe following items have been charged/ (credited) in arriving at operating profit:GroupYear ended 31 MarchCompanyYear ended 31 March2011 2010 2011 2010Directors’ emoluments 26,063,333 20,557,667 16,900,000 13,440,000Auditors’ remuneration- audit 1,812,595 1,735,280 550,000 500,000- non-audit 65,000 152,859 - -Legal fees 649,715 1,937,479 649,715 1,937,479Depreciation on property, plantand equipment (Note 11) 117,597,500 121,110,337 45,712,789 50,964,385Donations 1,450,445 994,710 1,450,445 492,970Net foreign exchange (gain)/ loss (6,862,785) 4,492,895 (6,862,785) 3,332,660Amortization of leasehold properties (Note 15) 21,935 21,935 - -Bad debts written off 347,002 8,613,696 - -Staff cost (Note 6) 630,919,226 538,423,557 360,037,760 302,316,598Change in fair value of investmentproperty (Note 13) (5,000,000) - - -6. Staff costSalaries, wages and related cost 556,069,620 468,137,628 317,095,923 257,412,850Defined contribution plan 46,133,199 41,108,057 26,225,767 23,428,136Defined benefit plan (Note 26) 28,716,407 29,177,872 16,716,070 21,475,613630,919,226 538,423,557 360,037,760 302,316,598Average number of employees during the year 1,149 1,075 600 5817. Net finance costInterest income (16,593,492) (11,244,423) (8,127,299) (3,726,414)Interest expense 243,348,683 281,051,647 180,331,128 207,827,579Lease interest - 338,438 - -226,755,191 270,145,662 172,203,829 204,101,1658. Income taxCurrent tax 156,193,922 175,014,780 20,684,278 -Under/ (over) provision in respectof prior years 4,194,832 (359,961) - -Deferred tax (release)/ charge (Note 27) (1,225,080) (38,287,246) 4,637,818 (36,980,638)WHT on dividend paid by subsidiaries 3,796,234 4,835,536 - -162,959,908 141,203,109 25,322,096 (36,980,638)59

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements8. Income tax (Contd.) arise using the effective tax rate applicable to profits of the Company and Group as follows:GroupYear ended 31 MarchCompanyYear ended 31 March2011 2010 2011 2010Profit/ (loss) before tax 449,700,121 196,285,015 33,894,003 (146,853,263)Tax calculated at effective tax rate of 35.525% 159,755,968 69,730,252 12,040,845 (52,169,622)Tax effect of income liable atconcessionary rate (12,137,339) (6,777,645) (2,156,984) -Tax effect of income not subject to tax (69,836,597) (29,269,544) (16,589,290) (15,770,715)Tax effect of expenses not deductible 76,195,039 54,268,779 44,326,666 7,962,169Utilisation of previously unrecognized tax losses (11,822,153) 24,995,491 (12,299,141) 22,997,530Adjustments in respect of prior years 4,194,832 (359,961) - -WHT on dividends paid by subsidiaries 3,796,234 4,835,535 - -Tax effect of adjustments on consolidation 12,813,924 23,780,202 - -Tax charge 162,959,908 141,203,109 25,322,096 (36,980,638)9. Earning/ (loss) per shareBasic earnings per share is calculated by dividing the net profit/ (loss) attributable to shareholders by the weightedaverage number of ordinary shares in issue during the year.GroupYear ended 31 MarchCompanyYear ended 31 March2011 2010 2011 2010Net profit/ (loss) attributableto shareholders 232,546,843 (4,788,617) 8,571,907 (109,872,625)Weighted average number of ordinaryshares in issue 59,893,680 59,893,680 59,893,680 59,893,680Basic earning/ (loss) per share 3.88 (0.08) 0.14 (1.83)10. Dividend per shareDividend paid - - - -Weighted average number of ordinaryshares in issue 59,893,680 59,893,680 59,893,680 59,893,680Dividend per share - - - -60

ACL Cables PLC Annual Report 2010/1111. Property, plant and equipment(a) GroupFurniture, fittingsLand and Plant, machinery Equipment, tools and office Motorbuildings and accessories and implements equipment vehicles TotalAt 31 March 2009Cost / valuation 1,090,542,294 1,271,215,207 95,244,558 88,374,906 71,311,513 2,616,688,478Accumulated depreciation (58,021,050) (876,467,255) (56,539,262) (58,631,310) (47,205,365) (1,096,864,242)Net book amount 1,032,521,244 394,747,952 38,705,296 29,743,596 24,106,148 1,519,824,236Year ended 31 March 2010Opening net book amount 1,032,521,244 394,747,952 38,705,296 29,743,596 24,106,148 1,519,824,236Additions 986,243 49,281,626 4,486,069 2,934,283 3,796,339 61,484,560Revaluation surplus 367,340,918 - - - - 367,340,918Disposal - cost - - (156,522) - - (156,522)- depreciation - - 156,522 - - 156,522Transfer from WIP (Note 12) 790,748 26,334,336 - - - 27,125,084Depreciation charge (Note 5) (23,695,119) (73,247,908) (5,348,095) (10,042,879) (8,776,336) (121,110,337)Closing net book amount 1,377,944,034 397,116,006 37,843,270 22,635,000 19,126,151 1,854,664,461At 31 March 2010Cost / valuation 1,459,660,203 1,346,831,169 99,574,105 91,309,189 75,107,852 3,072,482,518Accumulated depreciation (81,716,169) (949,715,163) (61,730,835) (68,674,189) (55,981,701) (1,217,818,057)Net book amount 1,377,944,034 397,116,006 37,843,270 22,635,000 19,126,151 1,854,664,461Year ended 31 March 2011Opening net book amount 1,377,944,034 397,116,006 37,843,270 22,635,000 19,126,151 1,854,664,461Additions 61,727,985 34,148,962 3,621,057 9,434,259 424,106 109,356,369Revaluation surplus 71,762,099 - - - - 71,762,099Transfer from WIP (Note 12) - 25,408,611 - - - 25,408,611Disposal - cost - - - - (2,010,678) (2,010,678)- depreciation - - - - 2,010,678 2,010,678Depreciation charge (note 05) (25,269,586) (72,587,543) (2,570,607) (8,544,401) (8,625,282) (117,597,420)Closing net book amount 1,486,164,532 384,086,035 38,893,721 23,524,858 10,924,975 1,943,594,120At 31 March 2011Cost / valuation 1,593,150,287 1,406,388,742 103,195,162 100,743,448 73,521,280 3,276,998,919Accumulated depreciation (106,985,755) (1,022,302,706) (64,301,442) (77,218,590) (62,596,305) (1,333,404,799)Net book amount 1,486,164,532 384,086,035 38,893,721 23,524,858 10,924,975 1,943,594,12061

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements11. Property, plant and equipment (Contd.)(b) CompanyFurniture, fittingsLand and Plant, machinery Equipment, tools and office Motorbuildings and accessories and implements equipment vehicles TotalAt 31 March 2009Cost / valuation 630,294,000 669,103,402 9,732,481 52,187,403 38,768,486 1,400,085,772Accumulated depreciation (17,668,584) (499,661,737) (7,866,713) (34,157,416) (23,854,152) (583,208,602)Net book amount 612,625,416 169,441,665 1,865,768 18,029,987 14,914,334 816,877,170Year ended 31 March 2010Opening net book amount 612,625,416 169,441,665 1,865,768 18,029,987 14,914,334 816,877,170Additions - 26,995,268 - 1,842,653 432,000 29,269,921Depreciation charge (note 05) (11,345,306) (25,884,703) (266,430) (8,503,348) (4,964,598) (50,964,385)Closing net book amount 601,280,110 170,552,230 1,599,338 11,369,292 10,381,736 795,182,706At 31 March 2010Cost / valuation 630,294,000 696,098,670 9,732,481 54,030,056 39,200,486 1,429,355,693Accumulated depreciation (29,013,890) (525,546,440) (8,133,143) (42,660,764) (28,818,750) (634,172,987)Net book amount 601,280,110 170,552,230 1,599,338 11,369,292 10,381,736 795,182,706Year ended 31 March 2011Opening net book amount 601,280,110 170,552,230 1,599,338 11,369,292 10,381,736 795,182,706Additions 57,719,000 5,363,115 136,362 3,208,218 99,106 66,525,801Disposals - cost - - - - (715,000) (715,000)- depreciation - - - - 715,000 715,000Depreciation charge (note 05) (11,345,306) (25,196,880) (207,357) (3,957,728) (5,005,518) (45,712,789)Closing net book amount 647,653,804 150,718,465 1,528,343 10,619,781 5,475,324 815,995,717At 31 March 2011Cost / valuation 688,013,000 701,461,785 9,868,843 57,238,274 38,584,592 1,495,166,494Accumulated depreciation (40,359,196) (550,743,320) (8,340,500) (46,618,492) (33,109,268) (679,170,776)Net book amount 647,653,804 150,718,465 1,528,343 10,619,781 5,475,324 815,995,71762

ACL Cables PLC Annual Report 2010/1111. Property, plant and equipment (Contd.)(c) Property, plant and equipment include assets at valuation as follows.CompanyAssets Valued on Name of the valuer Valued amountLand 1 September 2007 Mr. J. M. Senanayaka Bandara 236,962,350Buildings 1 September 2007 Mr. J. M. Senanayaka Bandara 271,087,650Plant and equipment 30 June 1977 1,542,100GroupAssets Valued on Name of the valuer Valued amountLandACL Cables PLC 1 September 2007 Mr. J. M. Senanayaka Bandara 236,962,350Kelani Cables PLC 31 March 2007 Mr. H. W. Wimalasena 76,900,000ACL Plastics PLC 20 March 2009 Mr. J. M. Senanayaka Bandara 44,975,000Ceylon Bulbs and Electricals Limited 25 July 1988 Mr. B. G. Jayathilake 13,674,500Ceylon Bulbs and Electricals Limited 6 September 2009 Mr. J. M. Senanayaka Bandara 338,125,000Kelani Cables PLC 31 March 2010 Mr. H. W. Wimalasena 114,500,000ACL Kelani Magnet Wire (Pvt) Ltd 01 June 2011 Mr. J. M. Senanayaka Bandara 63,562,500BuildingsACL Cables PLC 1 September 2007 Mr. J. M. Senanayaka Bandara 271,087,650Kelani Cables PLC 31 March 2007 Mr. H. W. Wimalasena 75,100,000ACL Plastics PLC 20 March 2009 Mr. J. M. Senanayaka Bandara 58,025,000Kelani Cables PLC 31 March 2010 Mr. H. W. Wimalasena 88,500,000ACL Kelani Magnet Wire (Pvt) Ltd 01 June 2011 Mr. J. M. Senanayaka Bandara 103,944,881Plant and MachineryACL Cables PLC 30 June 1977 1,542,100(d) If revalued assets were stated on the historical cost basis, the amounts would be as follows:CompanyCostat 31 March 2011Accumulated depreciationat 31 March 2011Net book valueat 31 March 2011AssetLand 33,367,145 - 33,367,145Buildings 85,322,918 48,847,576 36,475,34263

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements11. Property, plant and equipment (Contd.)GroupCostAs at 31 March2011Accumulated depreciationAs at 31 March 2011Net book valueAs at 31 March2011LandACL Cables PLC 33,367,145 - 33,367,145Kelani Cables PLC 8,530,505 - 8,530,505ACL Plastics PLC 3,478,925 - 3,478,925Ceylon Bulbs and Electricals Limited 13,970,450 - 13,970,450Kelani Cables PLC 63,298,505 - 63,298,505ACL Kelani Magnet Wire (Pvt) Ltd 38,227,530 - 38,227,530BuildingsACL Cables PLC 85,322,918 48,847,576 36,475,342Kelani Cables PLC 28,397,188 14,026,461 14,370,727ACL Plastics PLC 35,312,748 17,493,989 17,818,759Kelani Cables PLC 33,594,356 14,288,919 19,305,437ACL Kelani Magnet Wire (Pvt) Ltd 57,517,751 11,440,913 46,076,838(e) The initial costs of fully depreciated property, plant and equipment which are still in use at thebalance sheet date are as follows;As at 31 March 2011 As at 31 March 2010ACL Cables PLC 476,876,145 452,489,518ACL Plastics PLC 57,351,806 54,092,407Kelani Cables PLC 257,625,814 233,911,659Ceylon Bulbs & Electricals Limited 14,064,546 14,064,546ACL Kelani Magnet Wire (Pvt) Limited 537,818 397,420(f) Group motor vehicles include the following amounts where the Group is a lessee under a finance lease.As at 31 March 2011 As at 31 March 2010Cost - Capitalized finance lease 2,000,000 2,000,000Accumulated depreciation (1,100,000) (700,000)Net book amount 900,000 1,300,00064

ACL Cables PLC Annual Report 2010/1112. Work in progressGroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 2010Balance at 1 April 102,233,873 107,214,830 41,081,510 24,834,814Cost incurred during the year 56,400,357 22,144,127 65,317,884 16,246,696Amount transferred to property,plant and equipment (Note 11) (25,408,611) (27,125,084) - -Balance at 31 March 133,225,619 102,233,873 106,399,394 41,081,51013. Investment propertyGroupAs at 31 March2011 2010Balance at 1 April 120,000,000 120,000,000Change in fair value of investment property (Note 5) 5,000,000 -Balance at 31 March 125,000,000 120,000,000Investment property represents the land owned by the Group and situated in Ekala. The value was determined on fairvalue basis using market evidence.A valuation was carried out by an independent professional valuer, Mr H. W. Wimalasena, an Associate Member ofValuers of Sri Lanka, as at 31 March 2011. The change in fair value of investment property of Rs. 5,000,000 wascredited to income statement. The fair value of investment property as at 31 March 2011 is Rs. 125,000,000.14. Intangible assetsGroupAs at 31 March2011 2010Balance at 1 April 38,945,423 38,945,423Balance at 31 March 38,945,423 38,945,423Accumulated amortizationBalance at 1 April 32,951,721 32,951,721Balance at 31 March 32,951,721 32,951,721Net book amount 5,993,702 5,993,70265

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements14. Intangible assets (Contd.)Goodwill arising on consolidation of subsidiaries is as follows;Year Subsidiary Company Goodwill on consolidation1994/95 ACL Plastics PLC 6,090,4951995/96 Lanka Olex Cables (Private) Limited and Kelani Cables PLC 26,035,0491997/98 Ceylon Bulbs and Electricals Limited 459,4552004/05 ACL Kelani Magnet Wire (Private) Limited 916,8052006/07 Ceylon Bulbs and Electricals Limited 5,441,5332007/08 Ceylon Bulbs and Electricals Limited 2,086Goodwill arising from business combinations after 1 June 2005, is no longer amortized but tested for impairmentannually as per SLAS 25 (Revised 2005).Negative goodwill arising on consolidation of subsidiaries is as follows;Year Subsidiary Company Negative goodwill onconsolidation1998/99 ACL Plastics PLC 5,127,5921999/00 Lanka Olex Cables (Private) Limited and Kelani Cables PLC 17,502,0191999/00 Ceylon Bulbs and Electricals Limited 1,7382009/10 Ceylon Bulbs and Electricals Limited 6,265,098Negative goodwill arising from business combinations after 1 June 2005, is no longer amortized but credited toIncome Statement fully in the year of acquisition.15. Leasehold propertiesGroupAs at 31 March2011 2010Balance at 1 April 1,842,582 1,864,517Amortisation during the year (Note 5) (21,935) (21,935)Balance at 31 March 1,820,647 1,842,582Amount to be amortised within one year 22,203 21,935Amount to be amortised after one year 1,798,444 1,820,6471,820,647 1,842,582Property on operating lease : Victoria Golf Course and Country Resort in KandyLand extent: R 01 - P9Lease period : 92 years from 24 January 2002Lease rentalsfrom 2002 to 2011 : Rs 21,935 per annumfrom 2012 to 2094 : Rs 22,203 per annum66

ACL Cables PLC Annual Report 2010/1116. Investment in subsidiariesCompanyNumber ofSharesAs at 31 March 2011 As at 31 March 2010CostMarketValueNumber ofSharesCostMarketValueQuotedACL Plastics PLC 2,746,969 33,300,217 447,755,947 2,746,969 33,300,217 323,455,600Kelani Cables PLC 933,756 10,752,498 88,986,947 933,756 10,752,498 106,915,062Total investment in quotedcompanies 44,052,715 536,742,894 44,052,715 430,370,662UnquotedCeylon Bulbs and ElectricalsLimited1,051,345 58,514,700 1,051,345 58,514,700Lanka Olex Cables (Private)Limited9999“A” Class ordinary shares3,065,610 291,180,4913,065,610 291,180,491“B” Class ordinary sharesPreference shares161,818161,818ACL Kelani Magnet Wire(Private) Limited 11,950,000 119,500,000 11,950,000 119,500,000ACL Metals and Alloys(Private) Limited 2,500,000 25,000,000 2,500,000 25,000,000Total investment in unquotedcompanies 494,195,191 494,195,191Total cost of investments insubsidiaries 538,247,906 538,247,906ACL Cables PLC acquired the controlling interest in Lanka Olex Cables (Private) Limited in October 1999. Kelani CablesPLC and Kelani Electrical Accessories (Private) Limited are subsidiaries of Lanka Olex Cables (Private) Limited.The percentages of ownership held by the Company in each quoted and un-quoted subsidiary as at balance sheet dateare as follows;As at 31 March2011As at 31 March2010QuotedACL Plastics PLC 65.20% 65.20%Kelani Cables PLC 79.30% 79.30%UnquotedCeylon Bulbs and Electricals Limited 95.30% 94.87%Lanka Olex Cables (Private) Limited“A” Class ordinary shares 99% 99%“B” Class ordinary shares 100% 100%Preference shares 100% 100%ACL Kelani Magnet Wire (Private) Limited 93.79% 93.79%ACL Metals and Alloys (Private) Limited 100% 100%67

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements17. Investment in other companiesCompanyNumberof sharesAs at 31 March 2011 As at 31 March 2010CostMarketValueNumber ofsharesCostMarketValueBanking finance andinsuranceMerchant Bank of Sri Lanka PLC 18,379 1,546,083 849,110 18,379 1,546,083 358,391Nations Trust Bank PLC 4,653 450,173 1,406,362 18,613 221,215 642,149-Share warrants - 2010 - - - 4,653 46,530 37,224-Share warrants - 2011 - - - 2,326 23,260 18,608Chemicals andpharmaceuticalsChemical Industries- - - 432 2,976 29,376(Colombo) PLCLand and propertiesKelsey Development PLC - - - 1,687 29,163 21,931Colombo Fort Land andBuilding Co. PLC - - - 14 252 924Beverage, food andtobaccoCeylon Tobacco Co. PLC - - - 1,862 39,585 465,966Footwear and textilesAsian Cotton Mills PLC - - - 67 1,938 2,546ManufacturingChevron Lubricants Lanka PLC - - - 55,200 5,236,144 9,273,600TelecommunicationDialog Telekom PLC 390,000 4,142,633 4,095,000 - - -Diversified holdingsJohn Keells Holdings PLC 11,819 857,542 3,375,506 11,819 857,542 2,174,696Walker and Greig PLC 130,700 13,249,918 10,103,110 - - -TradingSinger (Sri Lanka) PLC - - - 332 6,185 6,284MotorsUnited Motors (Lanka) PLC 71 - 10,806 71 - 6,284Total cost of investments bythe Company 20,246,349 18,990,784 8,010,872 13,037,97968

ACL Cables PLC Annual Report 2010/1117. Investment in other companies (Contd.)Investments by subsidiary companiesNumberof sharesAs at 31 March 2011 As at 31 March 2010CostMarketValueNumber ofof sharesCostMarketValueBanking, finance andinsuranceNDB Bank PLC - - - 22,500 4,005,229 4,725,000Asia Capital PLC - - - 20,000 294,112 260,000Nations Trust Bank PLC 25,592 512,005 1,952,670 23,266 407,335 814,310- Share warrants - 2011 - - - 2,326 23,260 81,410DFCC Bank PLC 13 2,300 2,233 13 2,000 2,346PlantationMaskeliya Plantations PLC 8,200 374,258 230,420 8,200 374,258 243,950Watawala Plantations PLC 20,000 1,252,041 500,000 20,000 1,252,041 3,520,000Hapugastenna Plantations PLC - - - 5,000 233,275 190,000Kegalle Plantations PLC - - - 20,000 1,014,000 940,000Kotagala Plantations PLC 10,000 476,580 1,680,000 10,000 476,580 447,500Diversified holdingsHayleys PLC 38,907 2,952,614 14,866,365 96,268 7,305,684 21,660,300Total cost of investments bysubsidiaries 5,569,798 19,231,688 15,387,774 32,884,816Total cost of investmentby Group 25,816,147 38,222,473 23,398,646 45,922,79318. InventoriesGroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 2010Raw materials 1,130,219,311 734,693,742 783,833,295 500,269,937Work-in-progress 685,720,660 519,956,056 431,191,229 256,232,439Finished goods 1,325,414,628 1,279,377,259 724,879,432 717,963,243Goods in transit 176,768,141 174,917,236 157,483 -Other stocks 163,653,465 134,798,868 78,539,902 59,903,6003,481,776,206 2,843,743,161 2,018,601,341 1,534,369,218Provision for obsolete stock [18.(i)] (67,115,197) (62,381,648) (30,000,000) (30,000,000)Net book amount 3,414,661,009 2,781,361,513 1,988,601,341 1,504,369,21818. (i) Provision for obsolete stockBalance at 1 April 62,381,648 56,810,372 30,000,000 30,000,000Provision during the year 4,733,549 5,571,276 - -Balance at 31st March 67,115,197 62,381,648 30,000,000 30,000,00069

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements19. Receivables and pre-paymentsGroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 2010Trade receivables 2,325,033,941 1,759,754,057 1,310,789,146 857,267,049Provision for doubtful debts [Note 19 (i)] (130,219,913) (118,325,227) (79,994,761) (70,000,000)2,194,814,028 1,641,428,830 1,230,794,385 787,267,049Receivable from relatedcompanies [Note 35.9 (b)] - - 139,832,144 64,527,999Loan given to relatedcompanies [Note 35.9 (c)] - - 32,075,221 63,259,924Advance and pre-payments 33,384,949 26,129,250 19,075,072 18,834,652Other receivables 685,703,499 593,863,464 502,936,019 372,119,6232,913,902,476 2,261,421,544 1,924,712,841 1,306,009,247Value of book debts of ACL Cables PLC and Kelani Cables PLC have been pledged as security for bank facilities obtained.GroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 201019. (i) Provision for doubtful debtsBalance at 1 April 118,325,227 66,003,054 70,000,000 40,000,000Provision for the year 13,622,914 52,322,173 9,994,761 30,000,000Debts written-off (1,728,228) - - -Balance at 31 March 130,219,913 118,325,227 79,994,761 70,000,00020. Cash and cash equivalentsCash at bank and in hand 304,862,658 340,753,935 26,460,900 22,022,707Short term deposits 77,229,219 544,128,188 206,908,168 537,160,888382,091,877 884,882,123 233,369,068 559,183,594For the purposes of the cash flow statement, the year end cash and cash equivalents comprise the following:GroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 2010Cash and cash equivalents 382,091,877 884,882,123 233,369,068 559,183,594Bank overdraft (Note 22) (666,442,008) (785,024,465) (345,380,951) (389,001,083)(284,350,131) 99,857,658 (112,011,883) 170,182,51170

ACL Cables PLC Annual Report 2010/1121. Trade and other payablesGroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 2010Trade payables 987,799,650 357,814,248 563,151,521 13,990,991Payables to related parties [Note 35.9 (a)] - - 577,837,162 223,584,975Loans from related parties [Note 35.9 (d)] - - 123,193,100 123,193,100Accrued expenses and other payable 216,404,752 167,187,475 111,360,786 99,091,3801,204,204,402 525,001,723 1,375,542,569 459,860,44622. BorrowingsLong term borrowingsInterest bearing loans 300,000,000 400,000,000 300,000,000 400,000,000300,000,000 400,000,000 300,000,000 400,000,000Short term borrowingsBank borrowings 366,666,667 457,590,152 366,666,667 222,884,147Short term loans 1,546,784,643 1,272,119,199 852,181,134 939,043,638Bank overdraft (Note 20) 666,442,008 785,024,465 345,380,951 389,001,0832,579,893,318 2,514,733,816 1,564,228,751 1,550,928,868Group long term borrowings are secured by a fixed deposit amounting to USD 260,000.23. Finance lease obligationLease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default.GroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 2010Gross finance lease liabilities 1,947,935 1,947,935 1,947,935 1,947,935Future finance charge on finance lease (631,764) (478,145) (631,764) (478,145)Present value of finance lease liabilities 1,316,171 1,469,790 1,316,171 1,469,790Present value of finance lease liabilitiesNo later than 1 year 776,110 489,095 776,110 489,095Later than 1 year 540,061 980,695 540,061 980,6951,316,171 1,469,790 1,316,171 1,469,79071

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements24. Income tax payableGroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 2010Balance at 1 April 240,785,758 177,567,016 51,829,742 117,158,474Provision for the current year (Note 8) 156,193,922 175,014,780 20,684,278 -Under/ (over) provision in respectof previous years (Note 8) 4,194,832 (359,961) - -401,174,512 352,221,835 72,514,020 117,158,474Payments made during the year (263,354,901) (111,436,077) - (65,328,732)Balance at 31 March 137,819,611 240,785,758 72,514,020 51,829,74225. Provision for payment in lieu of employee share issue schemeGroupAs at 31 March2011 2010Balance at 1 April 2,920,369 3,098,880Payments made during the year (145,040) (178,511)Balance at 31 March 2,775,329 2,920,369In view of the transfer of ownership from Pacific Dunlop Cables Group to ACL Group, the employees were allocated afixed sum as compensation for the share ownership scheme which was proposed earlier. The employees who were inemployment as at 11 September 1999 are eligible for the payment which will be made at the time of resignation orretirement.72

ACL Cables PLC Annual Report 2010/1126. Defined benefit obligationsThe amounts recognized in the balance sheet are determined as follows:GroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 2010Balance at 1 April 124,859,610 100,902,792 86,970,681 69,009,608Current service cost/(reversal ofexcess provision) (Note 6) 28,716,407 29,177,872 16,716,070 21,475,613153,576,017 130,080,664 103,686,751 90,485,221Payments made during the year (8,777,182) (5,221,054) (3,950,896) (3,514,540)Balance at 31 March 144,798,835 124,859,610 99,735,854 86,970,681The Company maintains a non-contributory defined benefit plan providing for gratuity benefits payable to employeesexpressed in term of final monthly salary and service.As at 31 March 2011, the gratuity liability was actuarially valued under the Projected Unit Credit (PUC) method by aprofessionally qualified actuary firm, Actuarial & Management Consultants (Private) Limited.The key assumptions used by the actuary include the following :Group/ CompanyAs at 31 March2011 2010Rate of discount 11% 12%Salary increment rate 10% 10%Retirement age 55 years 55 years27. Deferred income taxDeferred income taxes are calculated on temporary differences under the liability method using a principal tax rate of28% (2010 - 35%).GroupCompanyAs at 31 MarchAs at 31 March2011 2010 2011 2010Deferred tax liabilityBalance at 1 April 52,482,993 82,901,375 3,110,592 40,091,230Charge /(reversal) during the year (Note 8) (1,225,080) (38,287,246) 4,637,818 (36,980,638)Tax effect on surplus on revaluation reserve 2,489,926 8,191,605 - -Deferred tax on transfer fromretained earnings (254,377) (322,741) - -Balance on 31 March 53,493,462 52,482,993 7,748,410 3,110,59273

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements28. Contingent LiabilitiesCompanyThe Company has guaranteed a credit facility of Rs 24 Mn obtained by Ceylon Bulbs and Electricals Limited fromHatton National Bank PLC.The Company has guaranteed a credit facility of USD 2 Mn obtained by ACL Kelani Magnet Wire (Pvt) Ltd fromStandard Chartered Bank.The Company has guaranteed a credit facility of Rs 375 Mn obtained by ACL Metal and Alloys (Private) Limited fromStandard Chartered Bank.GroupKelani Cables PLC has given guarantees to third parties amounting to Rs. 106.5 Mn.29. CommitmentsFinancial commitmentsThere were no material financial commitments outstanding at the balance sheet date.Capital commitmentsThere were no material capital commitments outstanding at the balance sheet date.30. Stated capitalGroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 2010Number of ordinary shares issuedand fully paidBalance at 31 March 59,893,680 59,893,680 59,893,680 59,893,680Stated capitalBalance at 1 April 299,488,400 299,488,400 299,488,400 299,488,400Balance at 31 March 299,488,400 299,488,400 299,488,400 299,488,40074

ACL Cables PLC Annual Report 2010/1131. Capital reserveCapital reserve comprises profit on sale of property, plant, equipment and investments, Capital Redemption ReserveFund (CRRF) created consequent to redemption of shares and revaluation surplus arising from net surplus onrevaluation of property, plant and equipment.GroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 2010Balance at 1 April 2010 799,786,664 441,223,100 330,855,735 330,855,735Revaluations during the year 67,305,675 367,340,918 - -Deferred tax on revaluation (3,030,183) (8,191,605) - -Transfer to retained earnings fromrevaluation reserve (908,490) (908,490) - -Deferred tax on transfer 165,854 322,741 - -Balance on 31 March 2011 863,319,519 799,786,664 330,855,735 330,855,735Group capital reserve as at balance sheet date consists of the following;GroupAs at 31 March2011 2010Capital redemption reserve fund 2,625,000 2,625,000Surplus on revaluation of property, plantand equipment 858,883,999 795,351,146Profit on sale of property, plant,equipment and investments 1,810,518 1,810,518863,319,517 799,786,66432. General reserveGeneral reserve consists of such amounts that have been from time to time transferred from retained earnings asresolved at General Meetings of the Company/ Group for general applications.GroupAs at 31 MarchCompanyAs at 31 March2011 2010 2011 2010Balance at 1 April 1,123,825,080 1,123,825,080 680,265,800 680,265,800Transferred from retained earnings - - - -Balance at 31 March 1,123,825,080 1,123,825,080 680,265,800 680,265,80075

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements33. Cash generated from/ (used in) operationsReconciliation of profit/ (loss) before tax to cash generated from/ (used in) operations:GroupYear ended 31 MarchCompanyYear ended 31 March2011 2010 2011 2010Profit/ (loss) before tax 449,700,121 196,285,015 33,894,003 (146,853,263)Adjustments for:Depreciation of property, plantand equipment (Note 11) 117,597,420 121,110,337 45,712,789 50,964,385Dividend income (Note 4) (944,772) (1,971,295) (30,578,782) (39,923,684)Interest expense 243,348,683 281,051,647 180,331,128 207,827,579Interest income (Note 7) (16,593,492) (11,244,423) (8,127,299) (3,726,414)Negative goodwill on acquisition ofminority shares (Note 4) - (6,265,098) - -Change in fair value of investmentproperty (Note 13) (5,000,000) - - -Profit on disposal of property, plantand equipment (Note 4) (1,285,871) (35,714) (413,550) -Profit on disposal of investment (Note 4) (30,356,369) - (14,440,202) -Amortization of leaseholdproperties (Note 15) 21,935 21,935 - -Changes in working capital:Inventories (633,299,496) (700,142,380) (484,232,122) (271,108,093)Receivables and pre-payments (652,480,931) 145,493,342 (618,703,594) 284,518,235Trade and other payables 679,202,679 (148,204,018) 915,528,504 35,413,739Dividend payable 48,220 - - -Defined benefit obligations (Note 26) 28,716,407 29,177,872 16,716,070 21,475,613Cash generated from/ (used in)operations 178,674,533 (94,722,781) 35,686,945 138,588,09576

ACL Cables PLC Annual Report 2010/1134. Segment information34. (a) Business segment informationManufacturing Manufacturing Manufacturing Total TotalCables PVC CompoundsRods2011 2011 2011 2011 2010RevenueTotal revenue 9,611,650,110 843,079,352 249,118,306 10,703,847,768 8,573,755,218Inter-segment sales (131,203,263) (753,755,084) (249,118,306) (1,134,076,653) (1,330,807,860)External sales 9,480,446,847 89,324,268 - 9,569,771,115 7,242,947,358ResultsProfit before other income and finance cost 413,892,077 105,516,463 106,632,802 626,041,342 436,199,346Other income 33,725,627 16,688,343 - 50,413,970 19,262,615Finance cost (219,684,644) 362,542 (7,433,089) (226,755,191) (263,773,049)Taxation (111,825,229) (47,257,584) (3,877,095) (162,959,908) (136,607,006)Profit after taxation 286,740,213 55,081,906AssetsSegment assets 8,174,818,328 290,824,822 116,264,075 8,581,907,225 7,699,558,274Un-allocated corporate assets 364,198,372 336,240,170Total assets 8,946,105,597 8,035,798,444LiabilitiesSegment liabilities 4,057,424,153 281,076,383 83,046,039 4,421,546,575 3,496,608,692Un-allocated corporate liabilities 7,500,981 370,343,574Total liabilities 4,429,047,556 3,866,952,266Capital expenditureSegment capital expenditure 157,510,496 1,827,636 6,418,594 165,756,725 230,947,485Total capital expenditure 165,756,725 230,947,485Depreciation and amortizationSegment depreciation 102,228,292 8,811,496 6,557,632 117,597,420 121,110,337Total depreciation and amortization 117,597,420 121,110,33734. (b) Geographical segment informationGeographical segment turnover is given in note 3.(i).77

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements35. Directors’ interests in contracts and related party transactions35.1 Mr. U. G. Madanayake, Mr. Suren Madanayake, Dr. S. K. Madanayake and Mrs. N. C. Madanayake who areDirectors of the Company, are also Directors of ACL Plastics PLC which is a 65.2% owned subsidiary of ACLCables PLC.35.2 Mr. U. G. Madanayake, Mr. Suren Madanayake, Dr. S. K. Madanayake and Mrs. N. C. Madanayake who areDirectors of the Company are also the Directors of Lanka Olex Cables (Private) Limited which is a 100% ownedsubsidiary of ACL Cables PLC.35.3 Mr. U. G. Madanayake, Mr. Suren Madanayake, Dr. S. K.Madanayake, Mrs. N. C. Madanayake and Mr. HemanthaPerera who are Directors of the Company are also the Directors of Kelani Cables PLC which is a 79.2% ownedsubsidiary of ACL Cables PLC.35.4 Mr. U. G. Madanayake, Mr. Suren Madanayake and Mr. Hemantha Perera who are Directors of the Companyare also the Directors of ACL Kelani Magnet Wire (Private) Limited which is a 93.79% owned subsidiary of ACLCables PLC.35.5 Mr. U. G. Madanayake and Mr. Suren Madanayake who are Directors of the Company are also the Directors ofACL Metals and Alloys (Private) Limited which is a 100% owned subsidiary of ACL Cables PLC.35.6 Mr. U. G. Madanayake and Mr. Suren Madanayake who are Directors of the Company are also the Directors ofACL Polymers (Private) Limited which is a 65.2% owned subsidiary of ACL Cables PLC.35.7 Mr U. G. Madanayake, Mr. Suren Madanayake and Mrs. N. C. Madanayake who are Directors of the Companyare also the directors of Ceylon Bulbs and Electricals Limited which is a 95.3% owned subsidiary of ACL CablesPLC.78

ACL Cables PLC Annual Report 2010/1135.8 The Company had the following business transactions in the ordinary course of business during the year:CompanyYear Ended 31 March2011 2010(a) Sales of goodsKelani Cables PLC 93,777,845 62,695,342ACL Metal and Alloys (Private) Limited 10,257,088 15,430,641ACL Plastics PLC 41,476 -104,076,409 78,125,983(b) Purchase of goods & servicesACL Plastics PLC 503,577,684 325,028,498Kelani Cables PLC 47,345,863 20,002,400Ceylon Bulbs and Electricals Limited 1,371,429 1,498,844ACL Metal and Alloys (Private) Limited 249,118,306 551,693,323801,413,282 898,223,065(c) Loans to / (settlement by) related partyACL Metal and Alloys (Private) Limited (31,184,703) -(31,184,703) -(d) Loans from related partyACL Plastics PLC - 16,000,000- 16,000,000(e) Interest on loans from related partyACL Plastics PLC 4,304,912 3,939,425Kelani Cables PLC 3,232,170 4,541,154ACL Polymers (Private) Limited 1,930,625 1,863,3609,467,707 10,343,939(f) Key management compensationGroupYear ended 31 MarchCompanyYear ended 31 March2011 2010 2011 2010Short term benefits 26,063,333 20,557,667 16,900,000 13,440,00026,063,333 20,557,667 16,900,000 13,440,00079

ACL Cables PLC Annual Report 2010/11Notes to the Financial Statements35.9 Balances arising from the above related party transactions as at the balance sheet date are as follows;CompanyAs at 31 March2011 2010(a) Payable to related partiesKelani Cables PLC 33,685,621 5,336,508ACL Metal and Alloys (Private) Limited 252,098,010 150,542,580ACL Polymers (Private) Limited 452,500 503,757ACL Plastics PLC 291,601,031 66,822,870Ceylon Bulbs and Electricals Limited - 379,260577,837,162 223,584,975(b) Receivable from related partiesKelani Cables PLC 63,758,412 27,266,288ACL Kelani Magnet Wire (Private) Limited 62,872,974 21,394,522Ceylon Bulbs and Electricals Limited 7,283,066 7,253,730ACL Plastics PLC 3,521,481 2,662,161ACL Metal and Alloys (Private) Limited 2,396,210 5,951,298139,832,144 64,527,999(c) Receivable on loansACL Metal and Alloys (Private) Limited - 31,184,703ACL Kelani Magnet Wire (Private) Limited 32,075,221 32,075,22132,075,221 63,259,924(d) Payable on loansKelani Cables PLC 41,854,000 41,854,000ACL Plastics PLC 55,745,056 55,745,056ACL Polymers (Private) Limited 25,000,000 25,000,000Lanka Olex Cables (Private) Limited 594,044 594,044123,193,100 123,193,100There were no other related parties or related party transactions during the year ended 31 March 2011 other thanthose disclosed above.80

ACL Cables PLC Annual Report 2010/1136. Comparative informationComparative information in financial statements have been restated as follows.(a) Recognition of previously unrecognized deferred tax liability amounting to Rs. 7,309,087 of ACL Kelani MagnetWire (Private) Limited. Liability was allocated as follows:- Retained earnings (Rs) 6,855,193- Minority interest (Rs) 453,89437. Post balance sheet eventsNo circumstances have arisen since the balance sheet date, which would require adjustments to, or disclosure in thefinancial statements.81

ACL Cables PLC Annual Report 2010/11Information to Shareholders(a) Distribution of shareholders as at 31st March 2011.Number of Number of % ofShare range shareholders ordinary shares holding01 to 1,000 1,655 575,871 0.96%1,001 to 5,000 555 1,440,385 2.41%5,001 to 10,000 130 1,031,232 1.72%10,001 to 50,000 121 2,665,897 4.45%50,001 to 100,000 27 2,008,029 3.35%100,001 to 500,000 27 5,445,222 9.09%500,001 to 1,000,000 3 2,059,420 3.44%Over 1,000,000 8 44,667,624 74.58%Total 2,526 59,893,680 100.00%(b) Analysis report of shareholders as at 31st March 2011.Number of shares% of holdingInstitutional 13,859,356 23.14%Individuals 46,034,324 76.86%Total 59,893,680 100.00%(c) Market and other information.31 March 2011 31 March 2010Companya) Earnings per share (Rs.) 0.14 (1.83)b) Dividends per share (Rs.) - -c) Net assets value per share (Rs.) 36.97 36.83d) Market value per share- Highest value (Rs.) 97.00 86.25- Lowest value (Rs.) 85.50 75.00- Value as at the end of financial year (Rs.) 94.00 75.00e) Number of trades 1,866 4,445f) Total number of shares traded 3,375,700 6,019,300g) Total turnover (Rs.) 308,833,870 485,738,050h) Percentage of shares held by the public 36.70% 36.70%i) Number of foreign shareholders 41 51Consolidateda) Earnings per share (Rs.) 3.88 (0.08)b) Net assets value per share (Rs.) 75.68 69.8582

ACL Cables PLC Annual Report 2010/11(d) Twenty largest share holders list as at 31 March 2011.Share Holder Name As at 31/03/2011 As at 31/03/2010No. Shares % No. Shares %1. Madanayake U. G. 22,642,116 37.80 22,642,116 37.802. Madanayake H. A. S. 13,302,396 22.21 13,302,396 22.213. Employees Provident Fund 2,769,612 4.62 3,228,712 5.394. Sri Lanka InsuranceCorporation Ltd-Life Fund 2,423,800 4.05 2,188,900 3.655. National Savings Bank 1,276,200 2.13 495,300 2.286. Employees Trust Fund Board 1,221,400 2.04 1,366,000 1.727. Madanayake N. C. 1,032,100 1.72 1,032,100 1.288. Fab Foods (Private) Limited 767,520 1.28 767,520 1.289. Deutsche Bank AGNational Equity Fund 750,000 1.25 325,000 0.5410. Bank of Ceylon - No2 A/C 541,900 0.90 364,000 0.7411. Deutsche Bank AG asTrustee for Namal Acuity 500,000 0.83 500,000 0.8312. David Peiris Motor Company Ltd. 353,000 0.59 - -13. Perera R. D. M. 350,932 0.59 350,932 0.5914. Sir Cyril De Zoysa Trust 341,036 0.57 341,036 0.5415. Commercial Bank of Ceylon PLC/Mr. G. Ramanan 303,300 0.51 - 0.0016. Seylan Bank Ltd/ G. Ramanan 286,000 0.48 - 0.0017. Waldock Mackenzie Ltd -Line Trading (Pvt) Ltd #2037 247,600 0.41 - 0.0018. AVIVA NDB Insurance A/c No 7 228,100 0.38 - 0.0019. Waldock Mackenzie Ltd-Hi Line Towers 209,500 0.35 - 0.0020. AVIVA NDB Insurance A/c No 3 200,600 0.33 192,600 0.3283

ACL Cables PLC Annual Report 2010/11Five Year Summary - GroupTrading ResultsYear Ended 31st March 31st March 31st March 31st March 31st March2011 2010 2009 2008 2007Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000Turnover 9,569,771 7,242,947 7,838,591 8,773,581 7,820,083Profit before tax 449,700 196,285 161,408 524,295 1,368,196Taxation (162,960) (141,203) (3,348) (200,293) (484,293)Profit after tax 286,740 55,082 158,060 324,002 883,903Balance SheetAs At 31st March 31st March 31st March 31st March 31st March2011 2010 2009 2008 2007Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000Stated capital 299,488 299,488 299,488 299,488 299,488Capital reserve 863,320 799,787 441,223 404,712 151,048Revenue reserve 2,846,933 2,621,254 2,625,133 2,524,758 2,336,0434,009,741 3,720,529 3,365,844 3,228,958 2,786,579Minority interest 507,317 455,626 426,976 386,796 374,917Non-current liabilities 501,608 573,934 202,317 327,748 350,6495,018,666 4,750,089 3,995,137 3,943,502 3,512,145Property, plant &equipment 1,943,594 1,854,665 1,519,824 1,359,273 918,058Leasehold properties- pre-payments 1,798 1,820 1,842 1,864 1,886Capital work in progress 133,226 102,235 107,215 65,842 152,147Intangible assets 5,993 5,993 5,993 5,993 5,993Investment property 125,000 120,000 120,000 104,000 104,000Investments 25,816 23,398 23,185 23,732 23,499Current assets 6,710,678 5,927,687 5,096,844 6,356,635 5,214,013Current liabilities (3,927,440) (3,285,709) (2,879,766) (3,973,837) (2,907,450)Capital employed 5,018,666 4,750,089 3,995,137 3,943,502 3,512,14584

ACL Cables PLC Annual Report 2010/11Glossary of Financial TermsAccounting PoliciesThe specific principles, bases, conventions,rules and practices adopted by an enterprisein preparing and presenting FinancialStatements.AmortizationThe systematic allocation of the depreciableamount of an intangible asset over its usefullife.Basic Earnings Per ShareProfits attributable to ordinary shareholdersdivided by the weighted average number ofordinary shares in issue during the year.Corporate GovernanceThe process by which corporate entitiesare governed. It is concerned with theway in which power is exercised over themanagement and direction of the entity,the supervision of executive action andaccountability to owners and others.Current RatioCurrent assets divided by current liabilities. Ameasure of liquidity.Debt /EquityDebt as a percentage of total equity lessminority interest if any.BorrowingsAll interest bearing liabilities.Capital EmployedTotal equity, minority interest and interestbearing borrowings.Capital ReservesReserves identified for specific purposes andconsidered not available for distribution.Deferred TaxationThe tax effect of temporary differencesdeferred to/from another period, whichwould only qualify for inclusion on a taxreturn at a future date.Earnings Per Ordinary Share (EPS)Profits attributable to ordinary shareholdersdivided by the weighted average number ofordinary shares in issue during the year.Cash EquivalentsLiquid investments with original maturityperiod of three months or less.Effective Tax RateIncome tax expenses divided by profit fromordinary activities before tax.Contingent LiabilityA possible obligation that arises from pastevents and whose existence will be confirmedonly by the occurrence or non-occurrenceof one or more uncertain future events notwholly within control of the enterprise.EquityShareholders’ funds.DividendsDistribution of profits to holders of equityinvestment.Credit RatingAn evaluation of a corporate’s ability torepair its obligations or the likelihood of notdefaulting, carried out by an independentrating agency.Dividend CoverProfit attributable to ordinary shareholdersdivided by dividend. Measures the numberof times dividend is covered by distributableprofit.85

ACL Cables PLC Annual Report 2010/11Glossary of Financial TermsDividend YieldDividend per share as a percentage ofthe market price. A measure of return oninvestmentRelated PartiesParties who could control or significantlyinfluence the financial and operating policiesof the business.GearingProportion of total interest bearingborrowings to capital employed.Return on EquityProfit before tax divided by total equity lessminority interest if any.Interest CoverProfit before tax plus net finance cost dividedby net finance cost. Measure of an entity’sdebt service ability.Return on Total AssetsProfit before tax plus finance cost divided bytotal average assets.Market CapitalizationNumber of shares in issue multiplied by themarket value of a share at the report date.Revenue ReservesReserves considered as being available fordistribution and investments.Net Assets Per ShareShareholders’ funds divided by the weightedaverage number of ordinary shares in issue. Abasis of share valuation.Net WorthTotal equity less minority interest if any.Operating ProfitProfit before tax, share of profit of associatesand net finance cost.Price Earnings RatioMarket price of a share divided by earningsper share as reported at that date.SegmentsConstituent business units grouped in termsof similarity of operations.Stated CapitalThe total amount received by the Company ordue and payable to the Company in respectof issue and calls of shares are referred to asstated capital.Value AdditionThe quantum of wealth generated by theactivities of the Group measured as thedifference between turnover and the cost ofmaterial and services bought in.PrudenceInclusion of a degree of caution in theexercise of judgment needed in makingthe estimates required under conditions ofuncertainty, such that assets or income arenot overstated and liabilities or expenses arenot understated.Working CapitalCapital required to finance day-to-dayoperations computed as the excess of currentassets over current liabilities.86

ACL Cables PLC Annual Report 2010/11Milestones1962In March 1962, Associated Motorways Ltd (AMW) incorporated Associated Cables Ltd as aSubsidiary for the manufacture of electric cables.1963Within a period of one year, manufacture of electric cables commenced in Sri Lanka for the firsttime with Japanese technical assistance within the AMW Industrial complex at Kalutara.1976The Company became a public quoted company under the rules of Colombo Brokers Association.1978Facilities for drawing of Copper wires were added.1980The Company moved out of AMW Group.Aluminum Conductor plant was set up for the manufacture of AAC and ACSR.1981Joint Venture with Aluminum Industries Ltd, India for the manufacture of 1400 M/Ts of Aluminiumconductors.1982Establishment of own distribution network island wide.1986Production of Armoured cable commenced at Piliyandala Factory.1988Company entered into a technical collaboration agreement with Nokia Cables Finland, formanufacturing of Aerial Bundled Cables and XLPE Insulated Cables.1990The name of the Company was changed from Associated Cables Ltd. to ACL Cables Ltd, in order toestablish an independent identity for the Company.87

ACL Cables PLC Annual Report 2010/11Milestones1991ACL Plastics Limited was incorporated for the manufacture of PVC compound.1993Second technical collaboration agreement with NOKIA Cables of Finland for drawing and ageingAluminum Alloy conductors.Commenced manufacturing of PVC compound at ACL Plastics Ltd, Ekala.1995Export of Cables commenced to Bangladesh and Maldives.Acquisition of Ceylon Bulbs & Electricals Ltd.1999Acquisition of Kelani Cables Ltd.Introduction of Power - X and Flexi cables.2006Incorporation of ACL Metals & Alloys (Private) Ltd and ACL Polymers (Private) Ltd.Introduction of Fireguard and other fire rated range of Products.2007Winning the Achievers Gold Award for Performance Excellence awarded by the Ceylon NationalChamber of Industries, Sri Lanka, National Quality Award and Taiki Akimoto Award on 5S.2008ACL Cables PLC awarded the highest award of Asia Pacific Quality Organization beatingparticipants from 46 countries. Recognized as a world-class company.Awarded Super Brand status for the ACL brand.88

ACL Cables PLC Annual Report 2010/11Notice of MeetingNOTICE IS HEREBY GIVEN that the Forty Ninth Annual General Meeting of ACL Cables PLC will beheld at the Auditorium of ACL Cables PLC, No. 60, Rodney Street, Colombo - 08, on Wednesday the28th September 2011, at 10.00am for the following purposes.01. To receive and adopt the Report of the Directors and the Statement of Accounts for the yearended 31st March 2011 with the report of the Auditors thereon.02. To re–elect as Directors Mrs. N. C. Madanayake and Mr. Daya Wahalatantiri who retire byrotation in terms of article No. 85 of the Articles of Association of the Company.03. To re–appoint Messrs. PricewaterhouseCoopers, as Auditors of the Company and authorizethe Directors to determine their remuneration.04. To consider and if thought fit to pass the following Ordinary Resolution, of which specialnotice has been given by a Shareholder of the Company.(a) “ that Mr. U. G. Madanayake, who has passed the age of 70 years in May 2006, be and ishereby appointed a Director of the Company and that the age limit of 70 years referredto in Section 210 of Companies Act No. 07 of 2007 shall not apply to him”(b)(c)“ that Dr. S. K. Madanayake, who has passed the age of 70 years in February 1999, beand is hereby appointed a Director of the Company and that the age limit of 70 yearsreferred to in Section 210 of Companies Act No. 07 of 2007 shall not apply to him”“that Mr. Ajit Jayaratne, who has passed the age of 70 years in April 2010, be and ishereby appointed a Director of the Company and that the age limit of 70 years referredto in Section 210 of Companies Act No. 07 of 2007 shall not apply to him”05. To authorize the Directors to determine donations to charities.BY ORDER OF THE BOARD(Sgd.)Corporate Affairs (Private) LimitedSecretaries25th August 2011Note:(a) A shareholder is entitled to appoint a Proxy to attend and vote in his stead and a Form ofProxy is attached to this Report for that purpose. A Proxy need not be a Shareholder of theCompany.(b) Shareholders are kindly requested to bring the duly perfected and signed Attendance Slipalong with them when attending the Meeting and hand over same for registration.89

ACL Cables PLC Annual Report 2010/11Notes.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................90

ACL Cables PLC Annual Report 2010/11Form of ProxyACL CABLES PLCI/We .................................................................................................... of ……………………………………………………………........being a Shareholder/ Shareholders of the above Company hereby appoint …………………….........……....……..............………….or failing him/ her ………………………………………………….............… of………………………………….………………………...………as my/ our Proxy to vote for me/ us on my/ our behalf at the Annual General Meeting of the Company to be held on 28th ofSeptember 2011 at 10.00 a.m. and at any adjournment thereof.INNOT INFAVOUR FAVOUR01. To receive and adopt the Report of the Directors and theStatement of Accounts for the year ended 31st March 2011with the report of the Auditors thereon.02. (a) To re–elect as Director Mr. Daya Wahalatantiri who retires by rotation(b) To re–elect as Director Mrs. N. C. Madanayake who retires by rotation03. To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Companyand authorize the Directors to determine their remuneration.04. (a) Ordinary Resolution (a) relating to the appointment of Mr. U. G. Madanayake(b) Ordinary Resolution (b) relating to the appointment of Dr. S. K. Madanayake(c) Ordinary Resolution (c) relating to the appointment of Mr. Ajit Jayaratne05. To authorized the Directors to determine donations to charities.Signed this ………………………………… day of ……………………………………….........….2011………………………….SignatureACL CABLES PLC – ATTENDANCE AT ANNUAL GENERAL MEETINGI/We hereby record my/our presence at the Forty Ninth Annual General meeting of ACL CABLES PLC01. Name of Share Holder : .....................................................................................................................Name of Proxy (If Applicable) : .....................................................................................................................02. Shareholder’s NIC Number : .....................................................................................................................Proxy’s NIC Number (If Applicable) : .....................................................................................................................03. Signature of Shareholder : .....................................................................................................................Signature of Proxy (If Applicable) : .....................................................................................................................Shareholders are Kindly Requested to Bring this Attendance Slip with Them When Attending The Meeting and Hand Over same for Registration.91

ACL Cables PLC Annual Report 2010/11INSTRUCTIONS FOR COMPLETION1. The instrument appointing a Proxy shall inthe case of an individual be signed by theappointer or by his Attorney and in the case ofa Corporation be either under its Common Sealor signed by its Attorney or by an Officer onbehalf of the Corporation.2. A Proxy need not be a Shareholder of theCompany.3. The full name and address of the Proxy and theShareholder appointing the Proxy should beentered legibly in the Form of Proxy.4. The completed Form of Proxy should bedeposited at No.60, Rodney Street, Colombo08, not less than 48 hours before the scheduledstarting time of the Meeting.92

Corporate InformationCOMPANY NAMEACL Cables PLCREGISTRATION NUMBERPQ 102BOARD OF DIRECTORSU. G. Madanayake - ChairmanSuren Madanayake - Managing DirectorDr. S. K. MadanayakeMrs. N. C. MadanayakeHemantha PereraA. M. S. De S. JayaratneHemaka AmarasuriyaD. D. WahalatantiriP. S. R. Casie ChittyAUDITORSMessrs. PricewaterhouseCoopersChartered Accountants100, Braybrooke Place, Colombo 02.BANKERSCiti BankCommercial Bank of Ceylon PLCDeutsche BankHatton National Bank PLCHongkong & Shanghai Banking CorporationNational Development Bank PLCNations Trust Bank PLCPeople’s BankSampath Bank PLCStandard Chartered BankSECRETARIESMessrs. Corporate Affairs (Private) LimitedNo. 68/1, Dawson Street, Colombo 02GROUP FINANCIAL CONTROLLERChampika CoomasaruREGISTERED OFFICE60, Rodney Street, Colombo 08. (1/6/2011 onwards)Contact DetailsTel: +94 11 2697652Fax: +94 11 2699503E-mail: info@acl.lkWebsite: www.acl.lkProduced by Copyline (Pvt) Ltd Printed by Gunaratne Offset Ltd

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