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Singer Sri Lanka PLC

Debenture 2012

Introductory Document

2

Bank of Ceylon First Capital Asset Management Limited

Trustee Managers

SSIINNGGEERR ((SSRRII LLAANNKKAA)) PPLLCC

Introductory Document

Listing of 6,440,000 Fully paid, Unsecured, Redeemable, Senior,‘A’

RatedThree year (2012/2015)Debentures

of LKR 100/= each

Singer (Sri Lanka) PLCDebenture 2012-2015

TABLE OF CONTENTS

1.0 DETAILS OF THE ENTITY 05

2.0 CORPORATE INFORMATION – SINGER (SRI LANKA) PLC 08

3.0 CAPITAL STRUCTURE 14

4.0 PROFILE OF THE COMPANY 15

5.0 MANAGEMENT 19

6.0 FINANCIAL INFORMATION 25

7.0 CORPORATE GOVERNANCE PRACTICES 26

8.0 LISTING DEBT –TRUSTEE /DIRECTORS 27

9.0 FITCH RATING REPORT 28

10.0 OTHER REQUIRMENTS 30

11.0 ABBREVIATIONS 30

12.0 DECLARATION BY THE DIRECTORS 31

ANNEXURES

I Interim Financial Statements as of 30th September 2012

II Annual Report for the financial years ending;- 31st December 2011- 31st December 2010- 31st December 2009

III Member Firms of Colombo Stock Exchange

IV Trust deed

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Introductory Document – Singer (Sri Lanka) PLC



This Introductory Document is dated 12th November 2012

This Introductory Document has been prepared by Singer (Sri Lanka) PLC. The Directors of theCompany, collectively and individually, having made all reasonable enquiries, confirm that to thebest of their knowledge and belief, the information contained herein is true and correct in all materialrespect and that there are no other material facts, the omission of which, would make any statementherein misleading. While Singer (Sri Lanka) PLC has taken reasonable care to ensure full and fairdisclosure, it does not assume any responsibility for any investment decisions made by the investorsbased on information contained herein. In making an investment decision, prospective investorsmust rely on their own examination and assessments of the Company including the risks involved.

No person is authorized to give any information or make any representation in connection with theDebentures other than the information and representations contained in this Document and if givenor made, any such information or representation must not be relied upon as having been authorizedby the Company.

The delivery of this Introductory Document shall not under any circumstanceconstitute a representation or create any implication or suggestion that there has beenno material change in the affairs of Singer (Sri Lanka) PLC since the date of theIntroductory Document.

‘The Colombo Stock Exchange (CSE) has taken reasonable care to ensure full andfair disclosure of information in this Introductory Document. However, the CSEassumes no responsibility for the accuracy of any of the statements made, opinionsexpressed or reports included in this introductory document.’

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01. DETAILS OF THE ENTITY

Company Name Singer (Sri Lanka) PLC

Head Office & Registered Office No. 80, Nawam Mawatha,Colombo 2, Sri LankaTelephone: 94-11-2316316 (13 lines)Facsimile: 94-11- 2423544E-mail: [email protected]: www.singersl.com

Date of incorporation and place Public company with limited liabilityIncorporated as a public company in Sri Lankaon 30th December 1974 under the CompaniesOrdinance and re-registered under theCompanies Act No. 07 of 2007 on 13th June2008.

Company Registration Number PQ 160

Secretary to the Company A.C.M. Irzan FCMA (UK)

Auditors/Reporting Accountants KPMG Ford, Rhodes, Thornton & Co.Chartered AccountantsNo. 32A, Sir Mohamed Macan MarkarMawatha,P.O. Box 186,Colombo 3

Managers First Capital Asset Management LimitedNo.75, Arnold Ratnayake MawathaColombo 10

Tel: 94-11-263984094-11-2639898

Fax: 94-11-2639819

Registrars Business Intelligence LtdNo. 8, Tickell RoadColombo 8Tel: 94-11-5519900Fax: 94-11-5579950

Trustee Bank of CeylonInvestment Banking Division23rd Floor, Head OfficeNo. 4, Bank of Ceylon MawathaColombo 1

Tel: 94-11-2448348, 94-11-2542167Fax:94-11-2346842

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Singer(SriLanka)PLC

Debenture2012-2015

Introductory Document– Singer (Sri Lanka) PLC6

1.1 SALIENT FEATURESAT A GLANCEInstrument type Senior, Rated, redeemable, unsecured and fully paid three year (2012-2015)

Debentures carrying fixed rate and interest payable quarterly, until the expiry ofthree years respectively from the date of allotment.

Number of Debentures issued 6,444,000 (Six Million Four Hundred Forty Four Thousand) Debentures.

Number of Debentures allottedand to be listed

6,440,000 (Six Million Hundred Forty Thousand) Debentures.

Face value of a Debenture Rs100/-

Tenure of Debentures 3 years(2012/2015)

Debenture Rating Credit Rated ‘A’(Stable outlook) by Fitch Rating Lanka Ltd

Listing The Company will be seeking a listing on the Main Board of the Colombo StockExchange by way of an Introduction

Coupon Interest rate Interest is payable quarterly,(Nominal Interest Rate)Fixed Coupon Interest rate of 17.00%p.a.(18.11%p.a.AER)

Number of Debentures issued Type of Debenture Number

Type– A 6,440,000

Type– B None

Method of allotment Privateplacementofferedonaprospectusandallottedon25 thOctober2012.Prospectus was dated 28thSeptember2012.

Date of allotment 25thOctober2012

No. of debentures allotted Type A- 6,440,000(Six Million Four Hundred Forty Thousand), Type B- None

Redemption of principlemoney/ Maturity Date

On completion of 3years from the date of Allotment. (i.a. payable on30th

September2015.

Mode of payment at maturity Repayment of the capital will be made by crossed account payee only cheques orBy RTGS transfer up on instructions by the registered Debenture Holder.

Interest Payment Dates Year Interest paymentdate

2012 First Interest Payment Date 31st December2012

2013 31stMarch2013

30thJune2013

30thSeptember2013

31stDecember2013

2014 31stMarch2014

30thJune2014

30thSeptember2014

31stDecember2014

2015 31stMarch2015

30thJune2015

30thSeptember2015

In order to accommodate the Debenture interest cycles in the Debt TradingSystem(DEX)the payment of interest should not include debenture holdersholding debentures in the DEX as at the last day of the payment cycle(quarterly),but one day prior to the payment date(entitlement date).If the entitlement date is aholiday, interest should be calculated including the entitlement date.” Theinterest calculation shall be based up on the “Actual /Actual” number of days ineach interest payment period.



1.2 PRINCIPAL FEATURES OF THE DEBENTURE

1.2.1 Instrument type

Senior, unsecured, redeemable, rated and listed three year (2012/2015) Debentures carrying afixed interest payable quarterly, until the expiry of three years respectively from the date ofallotment. These debentures will be listed on the main board of the Debt System of the ColomboStock Exchange by way of an Introduction.

1.2.2 Objectives of the issues.

The main objective of the issue is to raise long term funds to settle the short term obligationsand re-structure the balance sheet of the Company.

The Funds raised through the debenture will be utilized to retire the company’s short-termobligations further strengthening the balance sheet of the company.

1.2.3 Interest

The debentures consist of one interest option for the investors. The interest for all debentureswill be payable quarterly and the interest payment dates for the fixed option would be 31st

March, 30th June, 30th September and 31st December each year until maturity.

The first interest period will commence from the date of Allotment until 31st December2012.For the fixed option, the last interest period will be from the last interest payment date(30th September 2015) until the date of redemption of the Debentures.

The interest and all other charges shall accrue from day to day and interest shall be computed onthe basis of actual number of days in an Interest Period. i.e. on an actual / actual basis.

1.2.4 WHO MAY INVEST?

a) Citizens of Sri Lanka who are resident in Sri Lanka and above 18 years of age.

b) Corporate bodies and societies registered/incorporated/established in Sri Lanka andauthorized to invest in Debentures.

c) Approved provident funds, trust funds and contributory pension schemes registered/incorporated/established in Sri Lanka and authorized to invest in Debentures.

d) Foreign institutional investors, corporate bodies, incorporated out side Sri Lanka andindividual residents out side Sri Lanka.

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2.0 CORPORATE INFORMATION – SINGER SRI LANKA PLC

2.1 THE BOARD OF DIRECTORSName & Designation DescriptionHemaka AmarasuriyaChairman, NonExecutive Director

Address:No. 30/15 Park Road,Colombo. 05

Mr. Amarasuriya joined the Board of Singer (Sri Lanka) PLC on 1stApril, 1979. Appointed Deputy Managing Director on 24th August 1983,Country Manager Singer Singapore 2004, Managing Director on 1stJanuary 1985, Chairman on 1st November 1986. Appointed as the Non-Executive Chairman on 1st July 2010.

He is the Chairman and former Managing Director of Singer Industries(Ceylon) PLC, Regnis (Lanka) PLC, Regnis Appliances (Pvt) Ltd., SingerFinance (Lanka) PLC, Reality Lanka Ltd, and Chairman of NationalDevelopment Bank PLC.

He holds Directorships in NDB Capital Ltd., Bangladesh, Bata ShoeCompany of Ceylon Ltd., Bata Exports (Pvt) Ltd., Equity InvestmentsLanka Ltd., TNL Radio Network (Pvt) Ltd., ACL Cables PLC, TarmacQuarry Products (Private) Ltd., C.W. Mackie PLC, Micro Cars (Pvt) Ltd.,Lanka Aluminium PLC, and ACME Printing & Packaging PLC. He is aVice-President of Retail Holdings Ltd., USA and former Senior Vice-President of Singer Asia Ltd.

Mr. Amarasuriya is a founder President of the Industrial Association ofSri Lanka. Currently, Chairman of Regional Industrial Service Committee(RISC), Southern Province. Former Chairman of Employers’ Federationof Ceylon. Served on the Presidential Task Force on Science &Technology, and on the Securities and Exchange Commission &Advisory Committee on Company Law at different times.

He is a Fellow of The Institute of Chartered Accountants of Sri Lanka,Fellow of the Chartered Institute of Management Accountants - UK,Fellow of the Chartered Institute of Marketing UK and holds a Diplomain Marketing Management & Strategy from New York University, USA.

Asoka PierisDirector & Group ChiefExecutive Officer ,Executive Director

Address:No.56/17 KumaragewatteRoad, Battaramulla.

Mr. Pieris joined the Board of Singer (Sri Lanka) PLC on 1st August2004. Appointed as Managing Director and Group Chief ExecutiveOfficer on 1st July 2010.

He is the Director and Group Chief Executive Officer of Singer Industries(Ceylon) PLC, Regnis (Lanka) PLC, Singer Finance (Lanka) PLC,Reality Lanka Ltd. and Regnis Appliances (Pvt) Ltd. Director of BtindiaLtd., Brand Trading (India) Private Ltd., Vice-President of Singer AsiaLtd. and Retail Holdings N.V.

Mr. Pieris is an Associate Member of The Institute of CharteredAccountants of Sri Lanka. Fellow Member of the Chartered Institute ofManagement Accountants, UK.

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Dr.GaminiC.B.WijeyesingheIndependent Non-Executive Director

Dr. Wijeyesinghe joined the Board of Singer (Sri Lanka) PLC, on 13thFebruary 1995. He is a Director of Singer (Sri Lanka) PLC., SingerIndustries (Ceylon) PLC., Regnis (Lanka) PLC, NDB VentureInvestments (Pvt) Ltd., Ayojana Fund (Pvt) Ltd., Fintravels Ltd. andCeylon Trading Co. Ltd.

Dr. Wijeyesinghe is a Fulbright Scholar - attended Ohio State University,USA, and Graduate School of Management. A past president of TheInstitute of Chartered Accountants of Sri Lanka and the Organisation ofProfessional Association of Sri Lanka.

He is a former Council Member of the Commonwealth Association ofCorporate Governance, Member of the External Audit Committee of theInternational Monetary Fund, Member of the External Audit Committeeof the Central Bank of Sri Lanka and precedent partner KPMG Ford,Rhodes, Thornton & Co. and member of the KPMG, Asia Pacific Boardand FAPA (UK) (retired).

Dr. Wijeyesinghe is a Fellow of The Institute of Chartered Accountantsof Sri Lanka and a Fellow of the Institute of Certified ManagementAccountants of Sri Lanka.He has been conferred a Doctorate (HonorisCausa) by the Postgraduate Institute of Management affiliated to theUniversity of Sri Jayewardenepura.

Dr. Saman KelegamaIndependent, Non-Executive Director

Dr. Kelegama joined the Board of Singer (Sri Lanka) PLC as Director on1st June 2006. He is a Director of Singer Finance (Lanka) PLC, Regnis(Lanka) PLC, S C Securities and Colombo Stock Exchange.

Dr. Kelegama is an Executive Director of Institute of Policy Studies of SriLanka, Fellow, National Academy of Sciences in Sri Lanka, formerPresident of Sri Lanka Economic Association and author of severalpublications on the economy of Sri Lanka. He holds D.Phil (Economics)from Oxford University, UK.

Deshabandu AjitJayaratne,Independent Non-Executive Director

Deshabandu Ajit Jayaratne joined the Board of Singer (Sri Lanka) PLC asDirector on 1st June 2006.

He is a Director of Singer Industries (Ceylon) PLC, ACL Cables PLC,Overseas Realty (Ceylon) Ltd., C.W. Mackie PLC, Colombo Fort Land &Building Company PLC, Colombo Fort Investment PLC, ColomboInvestment Trust PLC, Colonial Motors PLC, York Arcade Holdings PLCand Mireka Capital Lanka Ltd.

He is a Former Chairman of Colombo Stock Exchange and CeylonChamber of Commerce and Former High Commissioner of Sri Lanka toSingapore.

Mr. Jayaratne holds a B.Sc. (Economics) from University ofSouthampton, and a Fellow of The Institute of Chartered Accountants ofSri Lanka, Fellow of the Institute of Chartered Accountants of England &Wales.

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Peter O’Donnell,Non-Executive Director

Mr. O’Donnell joined the Board of Singer (Sri Lanka) PLC on 1stOctober 2003. He is a Managing Director of UCL Asia Ltd, (HongKong), Director, Singer Asia Ltd, Singer Pakistan Ltd, Observer, SingerThailand Public Company Ltd.

Mr. O’Donnell is an alumnus of both Harvard College and HarvardBusiness School.

John J. Hyun,Non-Executive Director

Mr. Hyun joined the Board of Singer (Sri Lanka) PLC on 10th June2011.Mr. Hyun is a Managing Director of UCL Asia, one of HongKong’s larger direct investment groups in terms of liquid capital.

Mr. Hyun began his career in finance more than 17 years ago as part ofBankers Trust’s Asia Private Equity investment team based in HongKong before relocating to Seoul to help establish its Mergers,Acquisitions & Advisory group.

He returned to Hong Kong in 1999 with Investor Asia, the Asianoperations of Investor AB, the Swedish industrial holding groupcontrolled by the Wallenberg family. Mr. Hyun joined UCL in 2003.

He is a Director of Direct Asia Insurance (Holdings) Pvt Ltd., KCS Ltd.,Singer Finance (Lanka) PLC and several Non-Profit Organizations activein Asia. He is an alumnus of the University of Chicago.

Gavin J. Walker,Non-Executive Director

Mr. Walker joined the Board of Singer (Sri Lanka) PLC, as Director on1st November 2005.Mr. Walker is the President and Chief ExecutiveOfficer of Singer Asia Ltd. and was appointed to this position in August2005.

Prior to joining the Company, Mr. Walker held offices as ManagingDirector and Chief Executive Officer of public quoted and privatecompanies in the United Kingdom and South Africa.

Mr. Walker served as Chief Executive Officer of a multi-brand retailer ofelectrical appliances and furniture with operations in 16 African countriesand Australia. Mr. Walker serves on the Board of a number of Singer AsiaSubsidiaries.

V.G.K. Vidyaratne,(Alternate) ExecutiveDirector

Mr. Vidyaratne joined the Board of Singer (Sri Lanka) PLC on 1st August2004.Director of Regnis (Lanka) PLC, and Regnis Appliances (Pvt) Ltd.,Reality Lanka Ltd.

Mr. Vidyaratne is a Alternate Director of Singer Industries (Ceylon) PLCand General Manager of Factories of the Singer Group, Sri Lanka and aCommittee Member of the Industrial Association of Sri Lanka.

He holds following qualifications; B.Sc. (Hons.) Degree inProduction/Mechanical Engineering, University of Peradeniya. MBAfrom the University of Southern Queensland, Australia. He is aChartered Engineer and a Member of the Institute of Engineers, Sri

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Lanka.Mahesh Wijewardene,(Alternate) ExecutiveDirector

Mr. Wijewardene joined the Board of Singer (Sri Lanka) PLC on 1st June2006. He is the Commercial Director of Singer (Sri Lanka) PLC andMember of the Singer Asia Sourcing Committee. He is also the Chairmanof Ceylon Chamber of Commerce - Import Section.

Mr. Wijewardene is a former Chairman of the Sri Lanka-China BusinessCouncil. Serves in the Committee of the Ceylon Chamber of Commerce.Mr. Wijewardene holds Masters in Business Administration from theUniversity of Southern Queensland and Diploma in General Management.

Priyath Salgado,(Alternate) ExecutiveDirector

Mr. Salgado is an Alternate Director of the Group and he joined the Boardof Singer (Sri Lanka) PLC on 15th May 2008. He is the Finance Directorof Singer (Sri Lanka) PLC and Director of Singer Finance (Lanka) PLC.

Nasser Majeed,(Alternate) ExecutiveDirector

Mr. Majeed joined the Board of Singer (Sri Lanka) PLC on 14th February2011. He is the Director Marketing of Singer (Sri Lanka) PLC and aDirector of Regnis Appliances (Pvt) Ltd

Kumar Samarasinghe,(Alternate) ExecutiveDirector

Mr. Samarasinghe joined the Board of Singer (Sri Lanka) PLC on 14thFebruary 2011. He is the Director of Sales and Sewing Marketing ofSinger (Sri Lanka) PLC.

Mr. Samarasinghe holds a Diploma in Business Administration andDiploma in Marketing and MBA from University of London.

A.C.M. Irzan,(Alternate) ExecutiveDirector

Mr.Irzan acts as the Secretary to the Board since 15th May 2008. He is anAlternate Director of Singer Industries (Ceylon) PLC, Group FactoryController and Chief Financial Officer of Regnis (Lanka) PLC andRegnis Appliances (Pvt) Ltd. He is fellow member of Chartered Instituteof Management Accountants. He also holds an MBA in Marketing fromthe University of Colombo.

2.1 DIRECTORSHIPS OF THE DIRECTORS OF THE COMPANY IN OTHERINSTITUTIONS AS AT 30TH OCTOBER 2012

Mr. Hemaka Amarasuriya1. Singer Industries (Ceylon) PLC2. Regnis (Lanka) PLC3. Regnis Appliance (Pvt) Ltd4. Singer Finance (Lanka) PLC5. Reality Lanka Ltd6. Retail Holdings Ltd - USA7. National Development Bank PLC8. NDB Capital Ltd, Bangladesh9. Bata Shoe Company of Ceylon Ltd10. Bata Exports (Pvt) Ltd11. Equity Investments Lanka Ltd12. TNL Radio Network (Pvt) Ltd

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13. ACL Cables PLC14. C.W. Mackie PLC

15. Micro Cars (Pvt) Ltd16. Lanka Aluminium PLC17. ACME Printing & Packaging PLC

Mr. Asoka Pieris1. Singer Industries (Ceylon) PLC2. Regnis (Lanka) PLC3. Singer Finance (Lanka) PLC4. Reality Lanka Ltd5. Regnis Appliances (Pvt) Ltd6. Singer Asia Ltd7. Singer Corporation Ltd

Mr. Dr.Gamini C.B.Wijeyesinghe1. Singer Industries (Ceylon)2. Regnis (Lanka) PLC3. NDB Venture Investments (Pvt) Ltd4. Ayojana Fund (Pvt) Ltd5. Fintravels Ltd6. Ceylon Trading Co. Ltd

Dr. Saman Kelegama1. Singer Finance (Lanka) PLC2. Regnis (Lanka) PLC3. S C Securities4. Colombo Stock Exchange5. Institute of Policy Studies of Sri Lanka

Deshabandu Ajit Jayaratne1. Singer Industries (Ceylon) PLC2. ACL Cables PLC3. Overseas Realty (Ceylon) Ltd4. C.W. Mackie PLC5. Colombo Fort Land & Building Company PLC6. Colombo Fort Investment PLC7. Colombo Investment Trust PLC8. Colonial Motors PLC9. York Arcade Holdings PLC10. Mireka Capital Lanka Ltd

Mr. Peter O’Donnell1. UCL Asia Ltd2. Singer Asia Ltd3. Singer Pakistan Ltd4. Singer Thailand Public Company Ltd

Mr. John J. Hyun1. UCL Asia2. Direct Asia Insurance (Holdings) Pvt Ltd

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3. KCS Ltd4. Singer Finance (Lanka) PLC5. Several Non-Profit Organizations active in Asia

Mr. Gavin J. Walker1. Mr. Walker serves on the Board of a number of Singer Asia Subsidiaries.

Mr. V.G.K. Vidyaratne1. Regnis (Lanka) PLC,2. Regnis Appliances (Pvt) Ltd.3. Reality Lanka Ltd.4. Singer Industries (Ceylon) PLC – Alternate Director

Mr. Mahesh WijewardeneNone

Mr.Priyath Salgado1. Singer Finance (Lanka) PLC.

Mr. Nasser Majeed1. Regnis Appliances (Pvt) Ltd.

Mr. Kumar SamarasingheNone

Mr. A.C.M. Irzan – Secretary to the Board1. Singer Industries (Ceylon) PLC – Alternate Director

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3.0 CAPITAL STRUCTURE

3.1 STATED CAPITAL

STATED CAPITAL AS AT 30TH SEPTEMBER 2012

No. of shares Rs.125,209,610 Ordinary Shares 626,048,050

FIVE YEARS SHARE CAPITAL SUMMARY AS AT 31ST DECEMBER 2011

Description 2007 2008 2009 2010 2011

No of Shares 62,604,805 62,604,805 62,604,805 62,604,805 125,209,610

Stated Capital(Rs.) 626,048,050 626,048,050 626,048,050 626,048,050 626,048,050

At the Extraordinary General Meeting held on 31st March 2011, the shareholders approved a subdivisionof shares on the basis of one into one. As such 62,604,805 Ordinary Shares were issued. Post subdivisionOrdinary Sahres increased to 125,209,610. This has not altered the stated capital of the company whichremains the same at Rs. 626,048,050/-

3.1.1 Capital Structure Disclosures

- There are no shares redeemed, re-purchased in terms of Sections 63, 64, 66, 67,68, 69, 93 and100 of the Companies Act and of any reduction of stated capital in terms of Section 59 of theCompanies Act immediately preceding two years of the date of the Introductory Document.

- There are no Securities of the same or another class subscribed or sold privately, in conjunctionwith the Introduction of debentures.

The company’s capital structure does not include non-voting, preference or any other class of shares.Also the company does not have any outstanding convertible debt securities.

3.2 There is no statutory restriction on the free transferability of securities.

3.3 PARTICULARS OF DEBT AND LOAN CAPITAL AS AT 30TH SEPTEMBER 2012 – COMPANY

Description Amounts LKR‘000’1) Overdraft 1,110,482,000.002) Bank Loans 4,708,516,989.143) Long Term Bank Loans 452,957,660.904) Debentures 1,199,000,000.00

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3.4 LITIGATION DISPUTES AND CONTINGENT LIABILITIES AS AT30TH SEPTEMBER 2012

Guarantees given to banks and other lending institutions on behalf of Singer Industries (Ceylon)PLC amounts to Rs.75 million and RS.455 million respectively.

Case number : CA (WRIT) NOP 67/2008- The company has provided bank guaranteesamounting to Rs.130.2 million to the Director General of Customs to clear imports during theyear under review pending completion of legal proceedings in the Court of Appeal and the caseis still being heard in the Courts.

The bank guarantees related to alleged additional duty payable on imports, is being contestedbythe Company in Courts. The company lawyers are of the opinion that there is no basis that theCompany is liable for the additional duty hence, no provision is made in the FinancialStatements.

There are no penalties imposed by Regulatory and State authorities on the company.

4.0 PROFILE OF THE COMPANY

4.1 OVERVIEW OF THE COMPANY

Singer (Sri Lanka) PLC / (Singer) is a public quoted company with limited liability, based inColombo and has been in Sri Lanka since 1877 (As a branch of Singer Sewing MachineCompany, USA).

It was incorporated as a public company in Sri Lanka on 30th December 1974 under thecompanies Ordinance and re-registered under the Companies Act No. 07 of 2007 on 13th June2008. The shares of the company are listed on the Colombo Stock Exchange. The company has amarket capitalization of Rs. 16 billion (as at 15th August 2012).

The company is a consumer durable retailer/ wholesaler, and operates with the largestdistribution coverage in Sri Lanka through its 351 sales stores. From 1963 to 1995, SingerIndustries (Ceylon) Limited , Regnis Lanka and Singer (Sri Lanka) factory were established ,from whence flowed an impressive line of locally manufactured items - Sewing Machines,Televisions, Refrigerators, Washing Machines, Two wheeled Tractors and domestic/agro WaterPumps and Sprayers. The company also turned out agro implements and furniture.

Singer Sri Lanka also ventured into a range of financial services, in partnership with theCommercial Bank of Ceylon Ltd. Singer floated Equity Investments Lanka Ltd., CommercialLeasing Co. Ltd., formally known as Commercial Capital Ltd, to offer equipment leasing,venture capital, fund management and merchant banking. Singer (Sri Lanka) PLC holds 75% ofits subsidiary, Singer Finance (Lanka) PLC, which is a registered Financial company with astable outlook (Fitch Rating ‘BBB+lka).The Company also invested in Telshan Network (Pvt)Ltd., which owns TNL TV and Radio stations.

Singer (Sri Lanka) PLC’s core business is white goods, consumer electronics and sewingmachines, whilst it operates in nine different segments and owns three brands, namely Singer,Sisil and Unic.

Fitch Rating has affirmed the company a rating of “A” (lka) with a stable outlook. The agencyhas simultaneously affirmed Singer (Sri Lanka) PLC’s outstanding LKR 500m – 1,000m senior

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redeemable debenture at “A” (lka).

The Board of Directors comprises of 12 members and it is lead by the Chairman HemakaAmarasuriya who was appointed as Chairman of the Board on 1st November 1986 and as theNon-Executive Chairman on 1st July 2010.VISION

To be the foremost appliance retailer in Asia Pacific.

MISSION

To improve quality of life by providing comforts and conveniences at fair prices

4.1.1 PRINCIPAL ACTIVITIES OF THE COMPANY

Main OperatingSegments Products and Services Under each segment

Sewing-Related ProductsDomestic, IndustrialSewing Machines

GeneralMerchandise

Consumer Electronics TelevisionsAudios(Portable/Hi-Fi) VCD DVD

Other ElectronicProducts

White Goods Refrigerators Washing Machines Deep Freezers Bottle CoolersAir-Conditioners Fans

Kitchen-Related Products Table TopsGas Burners &Ovens Rice Cookers

MicrowaveOvens Electric Ovens Grinders Blenders

Communications Computers Laptops CDMA Cellular PhonesDialog-SatelliteDishes

FurnitureWood, LayeredFurniture Sofa Sets Steel Furniture

Transportation Motor Bikes Bicycles

Agro Water Pumps Paddy Threshers Tractors

4.2 TOP 10 SHAREHOLDING AS AT 30TH NOVEMBER 2012

Name No ofShares

%

1 Singer (Sri Lanka) Bv 107,812,850 86.11%2 Bank Of Ceylon A/C Ceybank Unit Trust 4,116,423 3.29%

3 Bank Of Ceylon A/C Ceybank Century Growth Fund 593,042 0.47%

4 Miss - Ranjani Eileen Weeraratne Jayasuriya 592,516 0.47%

5 Mrs. - Mihiri Virani Fernando 470,000 0.38%

6 Mrs. - Zohra Taher Jafferjee 330,890 0.26%

7 Mrs. - Anoma Kamalika Amarasuriya 178,970 0.14%

8 Sri Lanka Insurance Corporation Ltd-General Fund 177,500 0.14%

9 Dr. - Nimal Ebenezer Herat Sanderatne 175,626 0.14%

10 Sampath Bank Plc/Capital Trust Holdings Private Limited 148,206 0.12%

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4.3 DEGREE OF DEPENDENCE ON CUSTOMER AND SUPPLIERS.

Singer is not significantly dependent on any key suppliers and/ or customers. Singer is not over

exposed to any particular customer or a supplier. The nature of the business is such; it is the normal

course of business for the company to have a wide base of customers and suppliers.

4.4 DETAILS OF THE GROUP STRUCTURE

Singer (Sri Lanka) BV holds 86.11% of Singer (Sri Lanka) PLC, Corporate information of Singer(Sri Lanka) BV is as follows;

Singer (Sri Lanka) BV is incorporated in Netherlands on 12th July 1991 Board of Directors of Singer Sri Lanka BV as at 30th November 2012 – Trust International

Management (T.I.M) BV Top ten Shareholders of Singer (Sri Lanka) BV as at 30th November 2012- 100% owned by

Singer Asia Holdings BV

Singer Finance (Lanka) PLC is a 80.40% owned subsidiary of Singer (Sri Lanka) PLC and registeredas a finance company with the Central Bank of Sri Lanka.

The principal business activities of SFLL are the acceptance of deposits from the general public andfinancing of Leasing and Hire Purchase facilities to the SME and other sectors in the country.

Reality Lanka is an associate company of Singer (Sri Lanka) PLC and it holds 40% of Reality LankaLtd’s shares.

GROUP STRUCTURE

UCL Asia Partners LP Retails Holdings NV Mr. Gavin Walker

54.1%41.1% 4.8%

Singer Asia Holdings BV

100%

Singer (Sri Lanka) BV

86.11%

Singer (Sri Lanka) PLC

80.4% 40%

Singer Finance (Lanka) PLC Reality Lanka Ltd

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Retail Holdings N.V is a Curacao (formally the Netherlands Antilles) public company that is thesuccessor company to the Singer Company N.V and is predecessor companies. The company,formally know as Singer N.V., changed its name to Retail Holdings N.V. following the sale of theSinger Worldwide sawing business and trademark in 2004. Retail Holdings NV has no operatingactivities other than those carried out through Singer Asia.

4.5 EMPLOYEES

The permanent employee’s details as at 30th September 2012 are as follows;

Total no of Employees 1,395Total no of Senior Managers 37

Singer has entered into two agreements with the labor unions with respect to wages for aperiod of two years and the agreement is renewable thereafter.

Name of the Labor Union Agreement DateCeylon Intercompany Workers Union 15.12.2010Intercompany Union 01.04.2012

4.6 FUTURE PLANS

In future, towards the latter part of 2012 the company is intending to complete opening 30Singer Mega shops in year 2012 including 2 new Mega stores. Also Singer is venturing into anew business, Insurance Brokerage which is a new industry to Singer altogether. Singer isalso looking forward to increase its internal production capacity by expanding manufacturingfacility of washing machines, sofas (Furniture) and to recommence SKD assembly ofrefrigerators internally. Currently the company is operating at full capacity expansion ofexisting level of production.

Hence it’s vital for the company to increase its operation capacity to match the demand that ispredicted to grow in the future by the company as the Government of Sri Lanka has aimed toimprove the per capita income to USD $4,000 which is expected to increase the publicpurchasing power.

The company will finance the operational capacity expansions and business network expansionsthrough debt finance, preferably by obtaining bank loans.

However, there are risks pertaining to the above expansion plans such as the expected demandincrease not materializing, risk of inflation rate increasing which will not leave sufficientdisposable income to be spent on non-essential goods, luxury goods as well as for investmentssuch as obtaining insurance policies, which is the industry that Singer is looking forward to getinto.

Also interest rate risk might restrict the company’s borrowing capacity to finance theexpansions. Foreign Exchange rates increasing might risk Singer’s ability to sell goods at a fairprice as price increase will lead to increased raw material prices for the electronic appliances andfurniture produce by Singer.

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4.7 CONTROL ENVIRONMENT

Risk is an integral part of any business. It is a matter of identifying the sources of risk, theirlikelihood of occurrence and impact, and then developing comprehensive framework to addressthem. Over the years Singer has developed a set of clear risk management objectives and a well-established strategy to deliver them, through core risk management processes.

At a strategic level, the company’s risk management objectives are:

To identify the Company’s significant risks. To formulate the Company’s Risk Appetite and ensure that business profile and plans are

consistent with it. To optimize risk/return decisions by taking them as closely as possible to the business, while

establishing strong and independent review and challenge structure. To ensure that business growth plans are properly supported by effective risk infrastructure To manage risk profile to ensure that specific financial deliverables remain possible under a

range of adverse business conditions. To help executives improve the control and co-ordination of risk taking across the business.

5.0 MANAGEMENT

5.1 CEO & SENIOR MANAGEMENT

Asoka PierisExecutive Director/CEONo. 56/7 Kumaragewatte RoadBattaramulla

Mr. Pieris joined the Board of Singer (Sri Lanka) PLC on 1st August 2004. He was appointed asManaging Director and Group Chief Executive Officer on 1st July 2010.

He holds Directorship in the following companies. Director and Group Chief Executive Officerof Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, Singer Finance (Lanka) PLC, RealityLanka Ltd. and Regnis Appliances (Pvt) Ltd. Director of Btindia Ltd., Brand Trading (India)Private Ltd., Vice-President of Singer Asia Ltd. and Retail Holdings N.V.

He is an Associate Member of The Institute of Chartered Accountants of Sri Lanka and FellowMember of the Chartered Institute of Management Accountants, UK.

Chief Executive is/was NOT involved in the following events:

A petition under bankruptcy laws filed against such a person or any partnership in which hewas a partner or any corporation of which he was as an executive officer.

A conviction of fraud, misappropriation or breach of trust or any other similar offence whichthe CSE considers a disqualification.

The subject of an order, judgment or ruling of any court or competent jurisdiction temporaryenjoining him from acting as an investment advisor, dealer in securities, director or employee ofa financial institution or engaging in any type of business practice or activity.

19



SENIOR MANAGEMENT OF THE ENTITYName Designation Work ExperienceR.S.Wijeweera Chief Executive Officer

– Singer Finance LankaPLC

Mr. Wijeweera joined Singer Group in 2004 as theCEO of Singer Finance Lanka Ltd, and admitted to theBoard as a Director in 2008.

He possesses 25 years of exposure in holding SeniorManagement Positions in Finance & LeasingCompanies in Sri Lanka.

Shyam Ramanathan Director Logistics Mr. Ramanathan joined Singer Group on 1st September1980. He was appointed as the Director Logistics ofSinger (Sri Lanka) Ltd on 1st Jan.2005.

Later he was appointed as an Alternate Director ofSinger Finance [Lanka] Plc from 13th November 2008

Chitral Perera Director – HumanResources

Mr. Perera joined Singer Group as Manager HumanResources on 17th November 1997. He was appointedasDirector Human Resources of Singer (Sri Lanka) Ltdon 2nd January 2002.

Mr. Perera severed in Sri Lanka Navy as acommissioned officer from 15th December 1975 to16th November 1997 and retired in the rank ofCommander.

Ajith Paranavitane Director IT Mr. Paranavitane posses Twenty Nine Years ofexperience in the IT industry.

He commenced his career in 1983 as a SoftwareEngineer working for a Software vendor DataManagement Systems Ltd.

Mr. Paranavitane subsequently was promoted as theSoftware Manger and in 1987 left Data ManagementSystem in order to join Singer.

He joined Singer in July 1987 as the Manager IT andwas responsible for setting up the IT division of SingerSri Lanka

He left Singer in late 1998 and worked in for a periodof one year in 1999 as a Senior AS400 Consultant to aconsulting firm based in New Jersey and rejoinedSinger as Deputy Director IT in Year 2000. He wassubsequently promoted as the Director IT.

20



Mr. Premalal DeSilva

Director Operations Mr. Silva joined Singer Group in 1980 as DistrictManager.

Later he was promoted as Area Manager – MiddleManagement Grade in 1982, as Senior Management asSales Manager – Wholesale in 1986, got promoted asDeputy Director Sales in 2004, as Key Management asSales Director in 2006 also got Re-designated asDirector Operations to be responsible for all SalesChannels excluding Singer Plus Channel in 2009.

Mr. Silva holds a Diploma in Sales Management fromNational Institute of Business Management.

B.T.L.Mendis SeniorManagerCommercial

Mr. Mendis joined Singer Group in Nov 1998.Appointed as Senior Manager Commercial of Singer(Sri Lanka) Ltd. in 2007.

K.K.L.P. Yatiwella Group Finance Manger Mr. Yatiwella joined Singer Group in March 2003. Hewas appointed as the Finance Manager - SeniorManagement Grade of Singer (Sri Lanka) PLC in 2006.

H.A.P.S.Perera Factory Manager Mr. Perera joined Singer (Sri Lanka) PLC in 1994 asInternal Auditor.He was appointed as Assistant Accountant (SSLFactory) in 1997, and then promoted to the followingdesignations: Cost Accountant (SSL Factory) in 1999,Factory Controller (SSL Factory) in 2005 and Manager(SSL Factory) in 2011.

R.C.M.De La Motte. Sales Manager –Wholesale

Mr. Motte joined as a Trainee District Manager January1981And was confirmed as District Manager in January1982.

Later he was promoted as Area Manager in 1987 andwas confirmed as Area Manager in 1988 and thenpromoted to Senior Management in 1996 as SalesManager – Wholesale.

He served as the Senior Manager Retail during 1997-2005. And served as Senior Manager –MH & SeniorManager /Wholesale – 2005/2006.

Kapila Perera Group Manager –InformationTechnology

Mr.Perera joined Singer Group in 1994.He was appointed as the Group Manager – IT of Singer(Sri Lanka) PLC in 2000.

DhammikaWijesundera

Marketing Manager –White Goods

Mr.Wijesurendra joined Singer Group in 1988. He wasappointed as a Trainee District Manager in 1988.

He held the following positions in the organizations:Manager Special Taskforce – 1991, Area ManagerWholesale 1992 -1997 (Middle Management Position)Area Manager – Retail Channel (Middle ManagementPosition)1997-2000 Sales manager for Sisil Wholesalechannel in 2001& looked after the Sisil brand (Senior

21



Management Position), Sales manager for singer retail /Sisil wholesale / Brand manager – 2003 (SeniorManagement Position), Sales manager Sisil Worldchannel & Sisil wholesale channel 2007 (SeniorManagement Position), Brand Group Manager –Refrigerators in 2010 (Senior Management Position),Marketing Manager – White Goods since 2012.

C.A.Samarasinghe Business DevelopmentManager

Mr. Samarasinghe joined Singer in 1992. He wasappointed as Sales Manager Retail in 2004,subsequently got promoted as Business DevelopmentManager in 2010.

He worked as the Officer In charge of Credit Divisionat Commercial Credit Ltd, Kandy.

G A K Weerasuriya Senior Manager -Inventory

Mr. Weerasuriya joined Singer in 1994 as Accountant -Management. He was appointed as Senior Manager –Inventory of Singer (Sri Lanka) Ltd in 2005.

Ananda PereraManoratne.

Senior Manager –Distribution.

Mr. Manoratne joined Singer Group in 3rd March1997. He was appointed as the Senior Manager -Distribution of Singer (Sri Lanka) Ltd. in 2005.

NemindaKarunaratne

Group HumanResourcesDevelopment Manager

Karunaratne joined Singer Group in 1991, he wasappointed as Group Human Resources DevelopmentManager of Singer (Sri Lanka) Ltd in 2006.

M H M Fairoz Marketing Manager –

Furniture andElectronics

Mr. Fairoz joined Singer Group in 2001 as BrandManager,and got promoted as Senior Product managerin 2006, s Brand Group manager in 2007, and asMarketing Manager - in 2012.

He worked at Richard Pieris & Co as Asst. Sales/Product Manager – 1997, Marketing Executive – 1994,Marketing Assistant - 1991, Marketing representative –1989.

AsanthaUluwitageKarunaratne

Senior ManagerMerchandising &Promotions

Mr. Karunaratne joined Singer as Senior ManagerMerchandising & Promotions in 2006 December.

He has previous experience in Shop Interior Designing,Space Planning, Advertising, Graphic Designing, ShopWindow display, Qualified in AutoCAD Drawing.

Mr. Karunaratne worked at Almarai a Dairy Companyoperating in KSA & Gulf worked as the TradeMarketing Coordinator for KSA & Gulf. 1999 – 2006,worked at Singer as Assistant Manager Merchandising1996 – 1999, worked as Merchandising Supervisor andpromoted to store modernizer at Bata Shoe CompanyLtd 1989 – 1996. And he was also employed at CargillsCeylon Ltd and KVG’s Book store.

T.G.S Perera Senior Manager-Recoveries

Mr. Perera joined Singer Group in.1983.He wasappointed as Senior Manager-Audit of Singer (Sri

22



Lanka) Ltd in 2007 and as Senior Manager-Recoveriesin 2010.

B.T.L.Mendis Senior ManagerCommercial

Mr. Mendis joined Singer Group in Nov 1998.Appointed as Senior Manager Commercial of Singer(Sri Lanka) Ltd. in 2007.

Aruna Kolambage Commercial Manager Mr.Kolambage joined Singer in 1997 He was appointedas the Commercial Manager of Singer (Sri Lanka) Ltd.in 2007.

Mr. Kolambage worked for 10 years for CeylonTobacco Company Ltd as Import/Export executive.

C L T P Rupasinghe Senior ManagerTreasury

Mr. Rupasinghe joined Singer in 1994. He wasappointed as the Assistant Manager Budget in 1999,then got promoted as Manager Budget in2001,Manager Treasury in 2003 and as Senior ManagerTreasury in 2008.

M.M.C. Priyanjith Head of RiskManagement

Mr. Priyanjith joined Singer Group in 2004. He wasappointed as a Manager Financial Reporting of Singer(Sri Lanka) Ltd in 2007.

He was initially appointed as the Head of RiskManagement of Singer (Sri Lanka) Ltd. in 2009.

Mr. Priyanjith worked as an Accountant of CIC paints(Pvt) Ltd from 2002 to 2004. He possesses auditingexperience from Ernst & Young from 1999 to 2002.

Dhammika N.Guruge

Sales Manager –Modern Trade

Mr.Guruge joined Singer Group in September 2009 asthe Sales Manager - Mega Channel.

He was appointed as the Sales Manager – ModernTrade of Singer (Sri Lanka) Ltd in March 2010.

Ruwan SanjeewaSinghabahu

Sales Manager-Institutional Sales

Mr. Singhabahu joined Singer Group in 2004. He wasappointed as Sales Manager-Institutional Sales ofSinger (Sri Lanka) Ltd. in 2010.

He worked at Hayley’s Group from 1988 to 2004 asAssistant Manager-Institutional Sales.

M.Mahesharatnam Senior RegionalManager

Mr. Mahesharatnam joined Singer Group in 1981.He was appointed as Senior Regional Manager ofSinger (Sri Lanka) Ltd. in 2011.

Vajira Tennakoon Marketing ManagerDigital Media

Mr. Tennakoon joined Singer Group in 1997/11/20. Hewas appointed as the Marketing Manager of Singer (SriLanka) Ltd. in 2011.

Harindra VireshGomes

Senior Manager–Financial Services

Mr. Gomes joined Singer Group in 2006. Firstappointment was Manager – Financial Services.Promoted to Senior Management in 2011.

23



Oscar DiasAmaratunga

Senior Manager -Service

Mr. Amaratunga joined Singer Group in 1992. He wasappointed as Service Assistant of Singer (Sri Lanka)Ltd. in 2002.

He worked as Service Manager at RowlandsLtd.(Manufactures of USHA/GLACIO Refrigerators,Gas Cookers and the marketer for ACMA A/c’s).

Indika Gunathilake Business DevelopmentManager – RetailChannel

Mr.Gunathilake joined Singer Group in 1993 as aJunior Clerk.

He held following positions in the organizations:Accounts Supervisor in 1996, District Manager in1999, Area Manager in 2006, and BusinessDevelopment Manager Retail Channel in January 2012.

Ransiri Perera Group AdministrationManager

Mr. Perera joined Singer Group in 1991 as a clerk.Appointed as Asst Administration Manager of Singer(Sri Lanka) Ltd. in 1999 and subsequently promoted asAdministration Manager in 2001, SeniorAdministration in 2006 and Group AdministrationManager in 2012 .

NandanaWijesundara

Sales Manager Mr. Wijesundara joined Singer in 1991 and wasappointed as Sales Manager of Singer (Sri Lanka) Ltd.in 2012

24



OPERATING RESULTS (Rs.Millions) 2011 20102009

(Restated) 2008 2007RevenuePBITInterest CostsNet Profit Before TaxNet Profit After Tax

20,9312,2925601,7321,163

15,1771,411588823423

11,3411,136916220121

13,3641,6641,134530447

13,5441,510983527311

Attributable to:Equity holders of the Co.Minority Interest

1,163 423 121 447 311

ASSETS (Rs.Millions)Cash and cash equivalentAmounts due from Related parties -Non -TradeAmounts due from Related parties - TradeTrade and other Receivables - Short termIncome Tax ReceivableLoans due from Related partiesInventoriesDeffered Tax AssetsTrade and Other Receivables -Long termOther Long - term InvestmentsInvestements in Equity Accounted InvesteesInvestements in SubsidiaryIntangible AssetsProperty, Plant & EquipmentTotal Assets

364235694,327

-5403,4141261,25917484001411,660

200309543,219

-6112,1491141,03517244001561,536

3625

9402,671

-2411,9851431,02418244001581,261

254186

4,421541642,93996

1,28218242001741,419

335202-

4,837-23

2,45469

1,286181112001341,181

12,888 10,446 9,232 11,070 10,848LIABILITIES (Rs.Millions)Long-term Interest-Bearing BorrowingRetirement Benefit ObligationsDeffered Tax LiabilitiesSecurity DepositsTrade and Other PayablesDeffered RevenueIncome Tax payableDividend PayableAmounts due to Related parties -TradeAmounts due to Related parties - Non-TradeInterest Bearing Borrowings

754198964872,1261181716

17173

4,321

1,266177994041,218661233

26953

3,160

738155-

36089050133

2331393,666

1,384146-

3351,00773--

2341784,810

2,221126-

3021,37990277

28942

3,728Total Liabilities 8,521 6,838 6,246 8,166 8,210Stated CapitalCapital ReservesReatined EarningsRevenue ReservesTotal Equity attributable to Equity Holders of the CompanyMinority InterestTotal Equity

626655-

3,086

626665-

2,317

626404-

1,956

626404-

1,874

626-

5031509

4,367 3,608 2,986 2,904 2638- - -

4,367 3,608 2,986 2,904 2,638Total Liabilities & Equity 12,888 10,446 9,232 11,070 10,848

6.0 FINANCIAL INFORMATION

6.1 FIVE YEAR SUMMARY OF FINANCIAL STATEMENTS OF THE COMPANY

Five - year financial summary (for the Year Ended 31st December)

6.2 Interim Financial Statements as of 30th September 2012: Please refer Annexure: I6.3 Annual Report for the financial years ending 31st December 2011, 31st December 2010, and 31st

December 2009 is enclosed herewith. Please refer Annexure: II

25



7. 0 CORPORATE GOVERNANCE PRACTICES

a) DIRECTORS

The Board is responsible for the strategic planning process of the company. This includes theresponsibility for the formulation of the strategic vision and mission of the company, setting theoverall corporate policy and strategy, monitoring performance and reviewing risks and majorinvestments.

The Board also takes on the added responsibility of directing company performance towardsachieving the best results possible and increasing shareholder value. The Board sets the broadparameters of the company’s business. The company’s business units are then tasked with theirapplication, in achieving specific targets and objectives.

b) REMUNERATION COMMITTEE

The Remuneration Committee consists of the 3 Non-Executive Directors, Chairman and GroupChief Executive Officer. The Finance Director acts as the Secretary to the Committee. TheCommittee is chaired by a Non- Executive Director.

Members of the committee

Deshabandu Ajit Jayaratne - Independent Non-Executive Dr. Saman Kelegama - Independent Non-Executive Mr.Hemaka Amarasuriya - Non Executive Director

Mr.Asoka Pieris - Group CEO, Executive Director Mr.Priyath Salgado- Finance Director, Executive Director

The Finance Director acts as the Secretary to the Committee. The Group Chief ExecutiveOfficer attends by invitation to assist the Committee by providing the relevant informationand participating in its analysis and deliberations.

The scope of the committee;

To look into fees, remuneration and perquisites of Chairman, Group Chief ExecutiveOfficer, Independent Directors and the Executive Directors of the Company includingAlternate Directors

Approve recommendations made by the Group Chief Executive Officer and the CorporateOffice of Singer Asia Limited.

Review the policies pertaining to the remuneration and perquisites of the Executives of theCompany.

26



In performing this role, the Committee ensures that,

Shareholders and employees interests are aligned

The company is able to attract, motivate and retain employees, particularly atmanagement level.

The integrity of the company’s compensation and reward program is maintained.Aggregated remuneration paid to the Executive Director’s amounts to Rs. 63.539 Mn andNon- Executive Director’s fee amounts to 7.704 Mn as at 31st December 2011.

c) AUDIT COMMITTEE

The Audit Committee is empowered to review and monitor the financial reporting process ofSinger Group so as to provide additional assurance on the reliability of the Financial Statementsthrough a process of Singer Group through a process of independent and objective review.

The Audit Committee acts as an effective forum in assisting the Board of Directors in dischargingtheir responsibilities on ensuring the quality financial reporting and related communication to theshareholders and the public.

The Audit Committee currently comprises of three Independent Non-Executive Directors of theBoard namely;

Dr. G.C.B. Wijesinghe - Independent Non-Executive Deshabandu A.M de S. Jayaratne - Independent Non-Executive Dr.S.Kelegama - Independent Non-Executive

The Head of Risk Management, functions as the Secretary to the Committee. The FinanceDirector / Compliance Officer, Audit Staff, Representatives of External Auditors and whenNecessary, the Chairman/the Group Chief Executive Officer and relevant Operation Directorsand Managers attend the meetings by invitations.

8.0 LISTING DEBT –TRUSTEE /DIRECTORS

TRUSTEES

Bank of Ceylon has agreed in writing to act as the Trustee to the debenture holders and has issued aconsent letter to this effect. The Company has entered into an agreement with the Trustee(hereinafter called the ‘Trust Deed’). Debenture holders in their application for subscription haveirrevocably authorized the Trustee, subject to overriding clauses in the Trust Deed, to act as theiragent in entering into such deeds, writings, and instruments with the Company and to act as agentsand Trustees for the debenture holders in order to facilitate the protection of the debenture holdersinvestment and return. There is no conflict of interest between the Trustee/its directors and theCompany.DIRECTORS

The Directors of Singer (Sri Lanka) PLC hold no interest in acquiring, disposing, or leasing of anyasset of the Company during the past two years preceding the issue and have not proposed toacquire, dispose or lease any asset of the Company, during the two years succeeding the issueincluding the consideration of thereon.

27



9.0 FITCH RATING REPORT

28


Introductory Document – Singer (Sri Lanka) PLC29



10.0 OTHER REQUIRMENTS

The Introductory Document and the Articles of Association of the entity will be hosted in thecompany’s Website: http://www.singersl.com and/or Colombo Stock Exchange’s web sitehttp://www.cse.lk for a period of not less than fourteen (14) days

11.0 ABBREVIATIONS

CDS - Central Depository Systems (Pvt) Limited

CSE - Colombo Stock Exchange

DEX - Debt Securities Trading System of the Colombo StockExchange

FRLL - Fitch Rating Lanka Limited

MN or Mn - Million

AER - Annual Equivalent Rate

SEC - Securities & Exchange Commission of Sri Lanka

LKR, SLR, or Rs. - Sri Lankan Rupees

GTB - Gross Treasury Bill

RTGS - Real Time Gross Settlement

30



12.0 DECLARATION BY THE DIRECTORS

This Introductory Document has been seen and approved by the directors of the Entity and theycollectively and individually accept full responsibility for the accuracy of the information given andconfirm that after making all reasonable enquiries and to the best of their knowledge and belief,there are no other facts the omission of which would make any statement herein misleading orinaccurate.

Signature of all the Directors of the company

31

Name of Director Signature

Mr. H.D.S. Amarasuriya Sgd

Dr. G.C.B. Wijesinghe Sgd

Dr. S. Kelegama Sgd

Deshabandu A.M. De S. Jayaratne (Alternate Mr. A.N. Majeed) Sgd

Mr. H.A. Pieris (Alternate Mr. L.N.S.K. Samarasinghe) Sgd

Mr. V.G.K. Vidyaratne Sgd

Mr. M.H. Wijewardene Sgd

Mr. M.P.A. Salgado Sgd

Mr. A.N. Majeed Sgd

Mr. L.N.S.K. Samarasinghe Sgd

Mr. P.J. O’Donnell (Alternate Mr. M.P.A. Salgado) Sgd

Mr. G.J. Walker (Alternate Mr. M.H. Wijewardene) Sgd

Mr. J. J. Hyun (Alternate Mr. V.G.K. Vidyaratne) Sgd

Annexure : I Interim Financial Statements as of 30th September 2012

INTERIM FINANCIAL STATEMENTS FOR THENINE MONTHS ENDED 30TH SEPTEMBER 2012

S I N G E R ( S R I L A N K A ) P L C

2 SINGER (SRI LANKA) PLC

Interim Financial Statements for the nine months ended 30th September 2012

Group Chief Executive Officer’s Review

At the end of the first nine months, Singer Group had growth in the top line and bottom line even though the bottom line growth was minimal. This growth is on top of its growth achieved in 2010 and 2011.

At the end of the first nine months the Group revenue was Rs. 18.7 Billion, while the Company revenue was Rs. 17.5 Billion. Revenue grew by Rs. 3.2 Billion and in percentage terms by 21%. For the same period, Group net profit for the period was Rs. 887 Million, which was a marginal 2% growth over prior year while the Company net profit for the period was Rs. 761 Million, a marginal decline of 2%.

The results were despite the fact that the economy and consumer sentiments were affected by the sharp devaluation and sharp increase in interest rates, electricity and fuel costs. These adversely impacted the consumer sentiments and the buying power of the consumers. In addition, the drought destroyed part of the harvest and resulted in power cuts and shortages of water for consumers in some districts and further affected the consumers in the third quarter.

Revenue growth for the third quarter was 16% for the Group and 15% for the Company. The profit for third quarter declined by 34% for the Group and by 44% for the Company due to challenging market conditions.

The sharp rise of interest rates is a major concern to all in the business sector and was the major factor affecting profit. The net finance cost for the first nine months was an increase of 82% for the Company and 105% for the Group. The reduction of tax rates, helped to lower the impact of the adverse effects of interest.

In major product categories, Refrigerators had a growth of 17% above the prior year first nine months, while Domestic and Artisan Sewing Machines had a growth of 9%. Television volumes reduced by 17% since television volumes in the prior year were driven by the cricket world cup.

Other product lines which had a significant growth over prior year first nine months were Fans (40%), Microwaves (171%), Air Conditioners (33%), Kitchen Appliances (41%), Irons (82%) and Rice Cookers (54%). Other Product lines which had a significant volume reduction were Audios (28%) and Computers (12%). The Company had growth from new categories introduced such as Cameras, Mobile Phones, Water Purifiers, Sprayers, Induction Cookers, Gas Cylinders, Air Coolers and Blu Ray Players.

The Company’s subsidiary Singer Finance (Lanka) PLC., increased revenue by 46% and net profit by 51% in the first nine months.

I wish to place on record my appreciation of all our staff for their contribution and commitment without which it would have not been possible to achieve these results in challenging market conditions.

I also thank the Chairman and Board of Directors of the Company, and the Chairman and Chief Executive Officer of Singer Asia for their valuable support and guidance.

I also thank all our shareholders for their continued trust in the Board of Directors and the Management of the Company.

Sincerely,

Asoka PierisGroup Chief Executive Officer

Colombo31st October 2012

SINGER (SRI LANKA) PLC 3


Statement of Comprehensive Income

Group Company Variance VarianceFor the quarter ended 30th September 2012 2011 2012 2011 Group % Company %

Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Revenue 6,060,849 5,206,530 5,664,230 4,930,567 854,319 +16 733,663 +15

Cost of Sales (3,841,459) (3,254,242) (3,841,458) (3,254,241) (587,217) +18 (587,217) +18

Gross Profit 2,219,391 1,952,288 1,822,772 1,676,325 267,102 +14 146,445 +9

Other Operating Income 51,112 25,573 42,979 40,826 25,539 +100 2,153 +5

Selling and Administration Expenses (1,512,707) (1,250,400) (1,369,174) (1,140,248) (262,307) +21 (228,927) +20

Other Operating Expenses (63,062) (50,430) (59,781) (48,135) (12,632) +25 (11,645) +24

Finance Cost (432,967) (204,903) (283,364) (132,294) (228,064) +111 (151,070) +114

Finance Income 15,460 19,533 36,655 20,119 4,073 -21 16,536 +82

Net Finance Cost (417,507) (185,370) (246,709) (112,175) (232,138) +125 (134,533) +120

Share of Profit/(Loss) of Equity Accounted Investees (Net of Income Tax) 337 (13) – – 350 +2,693 – –

Value Added Tax on Financial Services (10,114) (14,940) (5,251) (9,000) (4,826) -32 (3,749) -42

Profit before Tax 267,448 476,708 184,836 407,593 209,260 -44 222,757 -55

Income Tax Expense (60,880) (163,593) (36,416) (140,426) (102,713) -63 (104,010) -74

Profit for the Quarter 206,569 313,115 148,419 267,167 106,546 -34 (118,746) -44

Other Comprehensive Income

Net Gain/(Loss) on Available for Sale Financial Assets (1,121) 957 (1,121) 957

Income Tax on Other Comprehensive Income – – – –

Other Comprehensive Income for the Period - Net of Tax (1.121) 957 (1.121) 957

Total Comprehensive Income for the Period 205,448 314,072 147,299 268,124

Profit Attributable to:

Equity Holders of the Company 194,175 301,624 148,419 267,167

Non-Controlling Interest 12,394 11,490 – –

Profit for the Period 206,569 313,115 148,419 267,167

Total Comprehensive Income Attributable to:



Total Comprehensive Income 205,448 314,072 147,299 268,124

Earnings per Share - Basic (Rs.) 1.65 2.41 1.19 2.13

Above figures are provisional and subject to audit.

3rd Quarter 2012 3rd Quarter 2011Share Prices Rs. Rs. ’000

Highest 132.50 138.50

Lowest 90.00 105.00

Last Traded Price 112.50 130.20



Statement of Comprehensive Income

Group Company Variance VarianceFor the period ended 30th September 2012 2011 2012 2011 Group % Company %

Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Revenue 18,654,043 15,464,505 17,544,848 14,696,662 3,189,538 +21 2,848,187 +19

Cost of Sales (11,842,455) (9,598,709) (11,842,456) (9,598,709) (2,243,747) +23 (2,243,746) +23

Gross Profit 6,811,587 5,865,796 5,702,393 5,097,952 945,791 +16 604,440 +12

Other Operating Income 140,838 62,921 185,048 127,451 77,918 +124 57,596 +45

Selling & Administration Expenses (4,411,674) (3,770,158) (4,024,051) (3,468,245) (641,517) +17 (555,806) +16

Other Operating Expenses (164,708) (156,572) (155,713) (149,847) (8,136) +5 (5,865) +4

Finance Cost (1,126,402) (601,112) (730,335) (414,877) (525,289) +87 (315,457) +76

Finance Income 42,369 73,139 122,157 80,836 30,771 -42 41,321 +51

Net Finance Cost (1,084,033) (527,974) (608,177) (334,041) (556,059) +105 (274,136) +82

Share of Loss of Equity Accounted Investees (Net of Income Tax) 1,111 (606) – – 1,718 +283 – –

Value Added Tax on Financial Services (36,593) (48,297) (21,752) (27,000) (11,704) -24 (5,248) -19

Profit before Tax 1,256,529 1,425,111 1,077,748 1,246,269 168,583 -12 168,521 -14

Income Tax Expense (369,348) (556,531) (316,246) (469,774) (187,182) -34 (153,528) -33

Profit for the Period 887,180 868,579 761,502 776,494 18,601 +2 14,992 -2

Other Comprehensive Income

Net Gain/(Loss) on Available for Sale Financial Assets (1,121) 957 (1,121) 957

Income Tax on Other Comprehensive Income – – – –

Other Comprehensive Income for the Period - Net of Tax – – – –

Total Comprehensive Income for the Period 886,059 869,537 760,381 777,451

Profit Attributable to:



Profit for the Period 887,180 868,579 761,502 776,494

Total Comprehensive Income Attributable to:



Total Comprehensive Income 886,059 868,579 760,381 777,451

Earnings per Share - Basic (Rs.) 6.73 6.70 6.08 6.20


Nine Months 2012 Nine Months 2011Share Prices Rs. Rs. ’000

Highest 132.50 138.50

Lowest 78.00 105.00

Last Traded Price 112.50 130.20



Company Statement of Financial Position

As at 30.09.2012 30.09.2011 31.12.2011 01.01.2011 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

ASSETSNon-Current AssetsProperty, Plant & Equipment 1,866,028 1,493,121 1,659,601 1,536,053 Intangible Assets 130,656 145,592 141,266 155,619 Investments in Subsidiaries 982,242 400,000 400,000 400,000 Investments in Equity Accounted Investees 48,000 48,000 48,000 24,000 Other Investments 16,490 19,612 17,611 18,655Trade and Other Receivables 1,278,938 1,184,952 1,139,462 959,367 Deferred Tax Assets 125,502 113,664 125,502 114,353

4,447,856 3,404,941 3,531,442 3,208,047

Current Assets Inventories 4,392,518 3,334,414 3,413,956 2,149,041 Loans due from Related Parties 865,600 505,439 539,506 611,410 Trade and Other Receivables 4,971,836 3,688,274 4,345,642 3,229,488 Amounts due from Related Parties - Trade 204,206 708,856 569,973 953,850 Amounts due from Related Parties - Non-Trade 24,297 101,718 23,540 29,556 Cash and Cash Equivalents 577,829 359,927 364,736 200,403

11,036,286 8,698,628 9,257,353 7,173,748 Total Assets 15,484,142 12,103,569 12,788,795 10,381,795 EQUITY AND LIABILITIES Equity Stated Capital 626,048 626,048 626,048 626,048 Capital Reserves 648,638 658,466 655,454 664,542 Statutory Reserve – – – – Revenue Reserves 3,104,708 2,688,908 3,086,118 2,309,949 Total Equity 4,379,394 3,973,422 4,367,620 3,600,539

Non-Current Liabilities Interest-Bearing Loans and Borrowings 401,958 1,434,749 754,125 1,265,833 Retirement Benefit Obligations 252,211 235,267 197,833 176,663 Deferred Taxation Liability 93,154 96,977 95,805 99,339 Security Deposits 555,716 463,378 487,449 403,894 Deposits from Customers – – – –

1,303,039 2,230,371 1,535,212 1,945,729

Current Liabilities

Trade and Other Payables 2,431,505 1,976,027 2,126,108 1,218,205 Deferred Revenue 24,846 22,806 17,654 13,125 Income Tax Payable 47,849 171,652 170,547 118,434 Dividends Payable 11,181 9,814 5,825 3,205 Amounts due to Related Parties - Trade 152,111 233,626 171,272 268,648 Amounts due to Related Parties - Non-Trade 65,217 171,803 73,441 53,272 Deposits from Customers – – – – Interest-Bearing Loans and Borrowings 7,068,999 3,314,048 4,321,117 3,160,639

9,801,708 5,899,776 6,885,963 4,835,527 Total Equity and Liabilities 15,484,142 12,103,569 12,788,795 10,381,795 Net Assets per Share 24.80 21.48 24.65 18.45

I certify that the above Financial Statements have been prepared in accordance with the requirements of the Companies Act No. 07 of 2007.

(Sgd.) Priyath Salgado

Finance Director


The Board of Directors is responsible for the preparation and presentation of these Financial Statements.

Signed for and on behalf of the Board by,

(Sgd.) Hemaka Amarasuriya (Sgd.) Asoka Pieris

Director Director/Group Chief Executive Officer

Colombo

31st October 2012



Consolidated Statement of Financial Position

As at 30.09.2012 30.09.2011 31.12.2011 01.01.2011 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

ASSETSNon-Current AssetsProperty, Plant & Equipment 1,904,353 1,519,106 1,691,107 1,564,240 Intangible Assets 146,498 158,593 153,933 165,190 Investments in Subsidiaries – – – – Investments in Equity Accounted Investees 47,996 46,918 46,886 23,525 Other Investments 16,531 19,653 17,652 18,696Trade and Other Receivables 4,862,837 3,607,986 4,141,725 2,470,118 Deferred Tax Assets 137,758 113,664 147,577 114,353

7,115,973 5,465,920 6,198,879 4,356,122

Current Assets Inventories 4,392,518 3,349,790 3,430,827 2,149,041 Loans due from Related Parties 153,857 174,172 173,635 202,218 Trade and Other Receivables 8,339,225 6,386,514 6,978,871 5,485,394 Amounts due from Related Parties - Trade 9,211 2,544 7,986 6,724 Amounts due from Related Parties - Non-Trade 24,297 101,718 23,540 29,556 Deposits with Banks 50,945 – – –Marketable Securities 296,806 272,199 290,313 410,552 Cash and Cash Equivalents 586,146 374,213 372,303 250,574

13,853,005 10,661,150 11,277,474 8,534,059 Total Assets 20,968,978 16,127,070 17,476,353 12,890,181 EQUITY AND LIABILITIES Equity Stated Capital 626,048 626,048 626,048 626,048 Capital Reserves 648,638 674,816 655,454 664,542 Statutory Reserve 73,978 22,573 44,408 10,748 Revenue Reserves 3,477,504 2,985,580 3,415,958 2,573,884Total Equity Attributable for Equity Holders of the Company 4,826,168 4,309,017 4,741,277 3,875,222Non-Controlling Interest 348,539 245,559 258,455 225,053 Total Equity 5,174,707 4,554,576 5,000,323 4,100,275

Non-Current Liabilities Interest-Bearing Loans and Borrowings 664,474 1,509,753 1,110,385 1,287,291 Retirement Benefit Obligations 260,110 241,575 204,787 181,876 Deferred Taxation Liability 93,154 131,384 99,932 103,467 Security Deposits 555,716 463,378 487,449 403,894 Deposits from Customers 411,667 461,275 503,142 195,995

1,985,121 2,807,365 2,405,695 2,172,523

Current Liabilities

Trade and Other Payables 2,902,233 2,357,791 2,571,464 1,497,947 Deferred Revenue 131,511 41,634 38,362 25,553 Income Tax Payable 76,724 161,367 197,322 151,283 Dividends Payable 11,181 9,814 5,825 3,205 Amounts due to Related Parties - Trade 152,111 233,626 171,272 268,648 Amounts due to Related Parties - Non-Trade 65,217 171,803 73,441 53,272 Deposits from Customers 2,613,228 2,118,188 2,159,857 1,451,991 Interest-Bearing Loans and Borrowings 7,856,944 3,670,906 4,852,792 3,165,484

13,809,150 8,765,129 10,070,335 6,617,383 Total Equity and Liabilities 20,968,978 16,127,070 17,476,353 12,890,181Net Assets per Share 38.54 34.41 37.87 30.95

I certify that the above Financial Statements have been prepared in accordance with the requirements of the Companies Act No. 07 of 2007.

(Sgd.) Priyath SalgadoFinance Director

Above figures are provisional and subject to audit.The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by,

(Sgd.) Hemaka Amarasuriya (Sgd.) Asoka PierisDirector Director/Group Chief Executive OfficerColombo31st October 2012



Statement of Changes in Equity

For the nine months ended 30th September 2012

Attributable to Equity Holders of the CompanyStatutory Reserve

Group Stated Reserve Investment Revaluation General Retained Total Non- TotalCapital Fund Fund Reserves Reserves Earnings Controlling Equity

InterestRs. ’000 Rs. ’000 Rs.’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Balance as at 1st January 2011 626,048 10,748 – 664,542 2,000,000 573,884 3,875,222 225,053 4,100,275 Realisation on Revaluation Surplus – – – (8,439) – 8,439 – – –Deferred Tax Effect on Transfer of Revaluation Surplus – – – 2,363 – – 2,363 – 2,363 Transfer to/(from) during the Period – 5,602 22,573 – – (28,175) – – –Net Profit for the Period – – – – – 839,149 839,149 29,430 868,579 Total Other Comprehensive Income for the Period – – – – – 957 957 – 957Total Comprehensive Income for the Period – – – – – 840,106 840,106 29,430 869,536Final Dividend - 2010 – – – – – (219,117) (219,117) (10,667) (229,784)Interim Dividend - 2011 – – – – – (187,814) (187,814) – (187,814)Balance as at 30th September 2011 626,048 16,350 22,573 658,466 2,000,000 987,323 4,310,760 243,816 4,554,575

Balance as at 1st January 2012 626,048 16,350 28,058 655,454 2,200,000 1,215,958 4,741,868 258,455 5,000,322Realisation on Revaluation Surplus – – – (9,467) – 9,467 – – –Deferred Tax Effect on Transfer of Revaluation Surplus – – – 2,651 – – 2,651 – 2,651 Transfer to/(from) during the Period – 11,278 18,292 – – (29,570) – – –Change in Holding Percentage – – – – – (8,069) (8,069) 66,334 58,265 Net profit for the Period – – – – – 842,097 842,097 45,083 887,180 Total Other Comprehensive Income for the Period – – – – – (1,121) (1,121) – (1,121)Total Comprehensive Income for the Period – – – – – 840,976 840,976 45,083 886,059 Final Dividend - 2011 – – – – – (751,258) (751,258) (21,333) (772,591)Balance as at 30th September 2012 626,048 27,628 46,350 648,638 2,200,000 1,277,504 4,826,168 348,539 5,174,706

Company Stated Revaluation General Retained TotalCapital Reserves Reserves Earnings

Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Balance as at 1st January 2011 626,048 664,542 2,000,000 309,949 3,600,539

Realisation on Revaluation Surplus – (8,439) – 8,439 –

Deferred Tax Effect on Transfer of Revaluation Surplus – 2,363 – – 2,363 Net Profit for the Period – – – 776,494 776,494 Other Comprehensive Income for the Period – – – 957 957Total Comprehensive Income for the Period – – – 777,451 777,451Final Dividend - 2010 – – – (219,117) (219,117)Interim Dividend - 2011 – – – (187,814) (187,814)Balance as at 30th September 2011 626,048 658,466 2,000,000 688,907 3,973,422

Balance as at 1st January 2012 626,048 655,454 2,200,000 886,118 4,367,619 Realisation on Revaluation Surplus – (9,467) – 9,467 –Deferred Tax Effect on Transfer of Revaluation Surplus – 2,651 – – 2,651 Net Profit for the Period – – – 761,502 761,502 Other Comprehensive Income for the Period – – – (1,121) (1,121)Total Comprehensive Income for the Period – – – 760,381 760,381 Final Dividend - 2011 – – – (751,258) (751,258)Balance as at 30th September 2012 626,048 648,638 2,200,000 904,708 4,379,393



Cash Flow Statement

Group CompanyFor the nine months ended 30th September 2012 2011 2012 2011

Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Cash Flows from Operating ActivitiesNet Profit before Income Tax Expense 1,256,529 1,434,384 1,077,748 1,255,951

Adjustments for:Depreciation on Property, Plant & Equipment 151,107 145,151 143,639 139,561 Share of (Profit)/Loss from Equity Accounted Investees (1,111) 606 – –Amortisation of Intangible Assets 13,600 11,421 12,075 10,286 (Gain) on Disposal of Property, Plant & Equipment (2,371) (8,426) (2,371) (8,426)Gain on Disposal of Equity Accounted Investees – – – –Interest Expense 1,126,402 601,369 730,335 414,877 Interest Income (42,369) (55,502) (109,101) (67,780)Deferred Profit on Hire Debtors (9,245) 176,154 (9,245) 176,154 Provision for Obsolete Inventory 47,587 10,572 47,587 10,572 Provision for Bad and Doubtful Receivables 102,936 66,454 70,310 59,628 Deferred Revenue (7,557) 55,866 (11,839) 49,136 Dividend Income (1,996) (5) (59,596) (28,805)Provision for Retiring Gratuity 55,952 59,919 54,377 58,824 Operating Profit before Working Capital Changes 2,689,467 2,497,963 1,943,919 2,069,978

(Increase)/Decrease in Inventories (1,009,279) (1,211,320) (1,026,150) (1,195,944)(Increase)/Decrease in Debtors Falling due after one Year (601,737) (1,076,174) (34,084) (163,711)(Increase)/Decrease in Debtors Falling due within one Year (1,472,788) (1,254,738) (773,618) (805,578)(Increase)/Decrease in Trade dues from Related Parties (1,982) (67,982) 365,010 172,833 Increase/(Decrease) in Trade dues to Related Parties (27,385) 83,508 (27,385) 83,508 Increase in Employee Security Deposits 68,267 59,484 68,267 59,484 Increase/(Decrease) in Customer Deposit Liabilities 361,896 931,478 – –Increase/(Decrease) in Trade and Other Payables (330,768) 860,101 305,398 757,822 Cash Generated from Operations 337,304 822,321 821,357 978,392

Finance Costs Paid (1,126,402) (601,369) (730,335) (414,877)Retiring Gratuity Paid (630) (220) – (220)Income Tax Paid (484,254) (515,477) (438,944) (415,867)

Net Cash Flows from Operating Activities (1,277,127) (294,746) (347,921) 147,427

Cash Flows from Investing ActivitiesAcquisition of Property, Plant & Equipment and Intangible Assets (380,933) (113,206) (359,366) (105,253)Proceeds from Disposal of Property, Plant & Equipment 12,784 16,790 10,207 16,790 Acquisition of Other Investments – – – –Investment in Bank Deposits (50,945) – – – Investment in Subsidiary Company – – (582,242) – Investment in Associate Companies – (24,000) – (24,000)Acquisition of Marketable Securities (6,493) 138,353 – – Net Cash Flows from Loans Given to Related Companies 19,778 28,045 (326,095) 105,971 Interest Received 42,369 55,502 109,101 67,780 Dividend Received 1,996 5 59,596 28,805

Net Cash Flows from Investing Activities (361,444) 101,489 (1,088,798) 90,092

Proceeds from Interest-Bearing Loans and Borrowings 2,046,769 427,667 1,831,944 269,995 Proceeds from Rights Issue Purchased by Minority Shareholders 58,265 – – – Net Payment to Minority Shareholders (21,333) (10,667) – – Dividend Paid (745,902) (400,322) (745,902) (400,322)Net Cash Flow from Financing Activities 1,337,799 16,678 1,086,043 (130,326)

Net Increase/(Decrease) in Cash and Cash Equivalents (297,627) (176,579) (350,676) 107,194 Cash and Cash Equivalents at the beginning of the Period (302,562) (207,198) (181,976) (257,369)Cash and Cash Equivalents at the end of the Period (600,189) (383,777) (532,652) (150,176)



Notes to the Financial Statements

1. Corporate Information1.1 Reporting Entity

1.1.1 General

Singer (Sri Lanka) PLC is a limited liability company incorporated and domiciled in Sri Lanka. The Registered Office of the Company is located at No. 80, Nawam Mawatha, Colombo 2, and the principal place of business is situated at the above address.

In the Report of the Directors and in the Financial Statements, ‘the Company’ refers to Singer (Sri Lanka) PLC as the Holding Company and ‘the Group’ refers to the Consolidated Financial Statements of Singer (Sri Lanka) PLC and its Subsidiary, Singer Finance (Lanka) Ltd.

1.1.2 Date of Authorisation of Issue

The Financial Statements for the year ended 30th September 2012 were authorised for issue in accordance with a resolution of the Board of Directors on 31st October 2012.

2. Basis of Preparation2.1 Statement of Compliance

The interim condensed Financial Statements have been prepared in compliance with Sri Lanka Accounting Standard (SLAS) LKAS 34 - Interim Financial Reporting. These interim condensed Financial Statements should be read in conjunction with the annual Financial Statements for the year ended 31st December 2011, and changes to the accounting policies as given in Note 6 to these Financial Statements.

For all periods up to and including the year ended 31st December 2011, the Group prepared its Financial Statements in accordance with SLAS which were effective up to 31st December 2011. The Financial Statements for the period ended 30th September 2012 are the first Financial Statements prepared and presented in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) immediately effective from

1st January 2012 and SLFRS 1, First Time Adoption of SLFRS has been applied. These SLFRS/LKASs have materially converged with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The effect of the transition to SLFRS/LKAS on previously reported financial positions, financial performances and cash flows of the Group and the Company is given in Note No. 6 to the Financial Statements.

2.2 Basis of Measurement

The Financial Statements have been prepared on the historical cost basis except for certain investments and items of Property, Plant & Equipment, which are measured at fair value and Defined Benefit Plans which are measured at the present value of the Retirement Benefit Obligations as explained in the respective Notes to the Financial Statements.

2.3 Functional and Presentation Currency

The Financial Statements are presented in Sri Lankan Rupees which is the functional currency of the Company and its Subsidiary.

3. Significant Accounting PoliciesThe changes to accounting policies are set out below have been applied consistently to all periods presented in these condensed Financial Statements and in preparing the opening SLFRS/LKAS statement of financial position as at 1st January 2011 for the purpose of the transition to SLFRS/LKAS, unless otherwise indicated.

Financial Statements for the nine months ending 30th September 2011 are prepared as per the SLFRS/LKAS.

3.1 Basis of Consolidation

The interim condensed Consolidated Financial Statements comprise the Financial Statements of the Company and its subsidiaries as at each reporting date.




3.2 Business Combinations

Business combinations are accounted using acquisition methods. The Group measures goodwill at the acquisition date, as the fair value of the consideration transferred including the recognised amount of any non-controlling interests in the acquire, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed measured as of the acquisition date. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The Group elects on a transaction-by-transaction basis whether to measure non-controlling interests at fair value, or at their proportionate share of the recognised amount of the identifiable net assets, at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

3.3 Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so cause the non-controlling interests to have a deficit balance.

3.4 Loss of Control

Upon loss of control, the Group derecognises the assets and liabilities of the subsidiary, anyone-controlling interests and the other components of equity related to the Subsidiary. Any surplus or deficit arising on the loss of control is recognised

in the Income Statement. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value as at the date. It is then accounted for an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

A change in ownership in the interest of a subsidiary without a loss of control is accounted as an equity transaction.

3.5 Associates (Equity Accounted Investees)

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% to 50% of the voting power of another entity. Investments in associates are accounted for using the equity method (Equity Accounted Investees) and are recognised initially at cost. The Consolidated Financial Statements includes the Group’s share of the income and expenses and equity movements of Equity Accounted Investees, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of losses exceeds its interest in an Equity Accounted Investee, the carrying amount of that interest is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

3.6 Financial Instruments

The Group recognises a financial assets or a financial liabilities in its statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of a financial asset or a liability (other than financial assets and financial liabilities at fair value through profit or loss) are added or deducted from the fair value of the financial asset or liability, as appropriate, on




initial recognition. Transaction costs that are directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit or loss are recognised immediately in the Income Statement.

Financial assets and liabilities are offset and the net amount is presented when, and only when the Group has a legal right to offset the amount and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

3.6.1 Financial Assets

Financial assets are categorised as fair value through profit or loss if it is acquired for the purpose of being sold in the short term and designated as much upon initial recognition or if it is a derivative instrument.

Financial assets include cash and cash equivalents, short-term deposits, receivables, quoted and unquoted financial instruments and derivative financial instruments.

3.6.1.1 Held-to-Maturity Financial Assets

A non-derivative financial asset with fixed or determinable payments with fixed maturity where Group intends to hold to maturity is classified under this category.

Subsequent to initial recognition held-to-maturity financial assets are measured at amortised cost using the effective interest method, less any impairment losses.

Held-to-maturity comprise of T Bills and T Bonds.

3.6.1.2 Loans and Receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market.

Subsequent to initial recognition held-to-maturity financial assets are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise of HP and Lease receivable, related party loans and staff loans.

3.6.1.3 Available-for-Sale Financial Assets

Available-for-sale financial assets are non-derivative financial assets that are recognised as available for sale or not classified in any of the previous categories. The Group’s investments in equity securities and certain debt securities are classified as available-for-sale financial assets.

Subsequent to initial recognition, they are measured at fair value and changes therein, are recognised in the other comprehensive income and presented in the available-for-sale reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is derecognised from the available-for-sale reserve and recognised in the Income Statement.

Available-for-sale comprise of equity investments.

3.6.1 Derecognition of Financial Assets

Financial assets are derecognised when the contractual rights to the cash flows from the asset has expires, or when the Group has transferred the financial asset and subsequently all the risks and rewards of ownership to another entity.

On derecognition of financial asset, the difference between the carrying amount of the asset and the sum of the consideration received and receivable, and the cumulative gain or loss that had been recognised in other comprehensive income or accumulated in equity is recognised in the Income Statement.

3.6.2 Financial Liabilities

Initial Recognition and MeasurementFinancial liabilities within the scope of LKAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings and determine the classification of its financial liabilities at initial recognition.




All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.

3.6.2.1 Financial Liabilities at Fair Value Through Profit or Loss

Financial liabilities are classified as fair value through profit or loss if it is defined as held for trading and is designated at such upon initial recognition.

Gain or losses on liabilities held for trading are recognised in the Income Statement.

3.6.2.2 Other Financial Liabilities

These are all financial liabilities other than financial liabilities at fair value through profit or loss.

The financial liabilities include trade and other payables, bank overdrafts, loans and borrowings and financial guarantee.

3.6.2.3 Derecognition of Financial Liability

Financial liabilities are derecognised when and only when they are extinguished, that is when the obligation is discharged, cancelled or expired.

3.6.3 Amortised Cost Measurement

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

3.6.4 Fair Value Measurement

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

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

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

3.6.5 Impairment

3.6.5.1 Impairment of Financial Assets

Financial assets other than those measured at fair value are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that as a result of one or more event that occurred after the initial recognition of the financial assets, the estimated future cash from the asset have been affected.

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

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

Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the asset’s original effective interest rate.




Impairment losses are recognised in profit or loss and reflected in an allowance account against loans and advances. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

(b) Impairment Losses on Available-for-Sale Financial Assets

Impairment losses on available-for-sale investment securities are recognised by transferring the cumulative loss that has been recognised in other comprehensive income to profit or loss as a reclassification adjustment. The cumulative loss that is reclassified from other comprehensive income to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss previously recognised in profit or loss. Changes in impairment provisions attributable to time value are reflected as a component of interest income.

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

4. First Time Adoption of SLFRSs/LKASThe interim condensed Financial Statements, for the period ended 30th September 2012, are the first Financial Statements prepared in accordance with SLFRS/LKAS. Previously for period up to 31st December 2011, the Group and Company prepared its Financial Statements in accordance with Sri Lanka Accounting Standards which were effective up to 31st December 2011.

The Significant Accounting Policies set out in Note No. 3 have been applied in preparing the interim Financial Statements for the nine months ended 30th September 2012 and the 3rd quarter ended 30th September 2012 and comparative information for all the periods presented and in the preparation of the opening SLFRS financial position as at 1st January 2011.

4.1 Exemption Offered in the SLFRS - 1 First Time Adoption of Sri Lanka Accounting Standards (SLFRS)

Group has taken the advantage of the following optional exemptions offered in the SLFRS - 1 First Time Adoption of Sri Lanka Accounting Standards (SLFRSs).

4.1.1 Exemption from Business Combinations

The Group elected not to apply IFRS 3, retrospectively to past business combinations that occurred before 1st January 2011.

4.1.2 Exemption from Other SLFRs

Investments in Subsidiaries and AssociatesThe Group elected to account for its Investments in Subsidiaries and Associates at cost in its separate Financial Statements as recognised previously as per the previous Sri Lanka Accounting Standards.

4.1.3 The Group has Applied the following Mandatory Exceptions

Significant Accounting Judgment, Estimates and AssumptionsSignificant accounting judgment, estimates and assumptions at 1st January 2011 and at 31st December 2011 are consistent with those made for the same dates in accordance with SLAS effective up to 31st December 2011 (after adjustment to reflect any difference in accounting policies).




The estimates used by the Group to present these amounts in accordance with SLFRS/LKAS effective from 1st January 2012 reflect conditions at 1st January 2011, the date of transition to SLFRS/LKAS and as of 31st December 2011.

4.2 Explanations for Transition to SLFRS/LKASs

In preparing SLFRS/LKAS statement of financial position for previously reported financial periods, required adjustments have been made, in accordance with the respective SLFRS/LKASs. The effect of the transition from SLASs to SLFRS/LKASs has been presented in the Note No. 6 to the Financial Statements.

5. New Accounting Standards Issued but not yet EffectiveThe Institute of Chartered Accountants of Sri Lanka has issued the following standards which become effective for annual periods beginning after the current financial year. Accordingly these standards have not been applied in preparing these Financial Statements. The Group expects that these standards when applied will have substantial impact to the financial performance, financial position and disclosures. The Group will be adopting these standards when they become effective.

SLFRS 9 - Financial InstrumentsSLFRS 10 - Consolidated Financial StatementsSLFRS 11 - Joint ArrangementsSLFRS 12 - Disclosure of Interest in other entitiesSLFRS 13 - Fair Value Measurement

6. Explanations for Transition to SLFRS/LKAS

In preparing SLFRS/LKAS statement of financial position for previously reported financial period, required adjustments have been made in accordance with the respective SLFRS/LKASs. The effect of the transition from SLASs to SLFRS/LKASs, has been presented in the reconciliation statements and accompanying notes to the material reconciliation items.



Reconciliation of Income Statement

For the nine months ended 30th September 2011

Group Company

As per SLAS

Effect of Transition to

SLFRSAs per

SLFRS/LKAS As per SLAS


SLFRSAs per

SLFRS/LKASNote Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Revenue 6.1 15,474,035 (9,530) 15,464,505 14,706,343 (9,681) 14,696,662

Cost of Sales (9,598,709) – (9,598,709) (9,598,709) – (9,598,709)

Gross Profit 5,875,326 (9,530) 5,865,796 5,107,634 (9,681) 5,097,952

Other Operating Income 62,921 – 62,921 127,451 – 127,451

Selling and Administration Expenses 6.1 (3,752,520) (17,638) (3,770,158) (3,455,190) (13,056) (3,468,245)

Other Operating Expenses (156,572) – (156,572) (149,847) – (149,847)

Finance Cost (601,369) 257 (601,112) (414,877) – (414,877)

Finance Income 55,502 17,638 73,139 67,780 13,056 80,836

Net Finance Cost (545,867) 17,894 (527,973) (347,097) 13,056 (334,041)

Share of Loss of Equity Accounted Investees (Net of Income Tax) (606) – (606) – – –

Value Added Tax on Financial Services (48,297) – (48,297) (27,000) – (27,000)

Profit before Tax 1,434,385 (9,274) 1,425,111 1,255,951 (9,681) 1,246,269

Income Tax Expense 6.1 (559,242) 2,711 (556,531) (472,485) 2,711 (469,774)

Profit for the Period 875,143 (6,563) 868,580 783,466 (6,971) 776,494

Attributable to:

Equity Holders of the Company 844,073 (4,922) 839,150 783,466 (6,971) 776,495

Non-Controlling Interest 31,071 (1,641) 29,430 – – –

Profit for the Period 875,143 (6,563) 868,580 783,466 (6,971) 776,495



Reconciliation - Company Statement of Financial Position

Equity as at 30th September 2011

As per SLAS


SLFRSAs per

SLFRS/LKASNote Rs. ’000 Rs. ’000 Rs. ’000

ASSETSNon-Current AssetsProperty, Plant & Equipment 1,493,121 – 1,493,121 Intangible Assets 145,592 – 145,592 Investments in Subsidiaries 400,000 – 400,000 Investments in Equity Accounted Investees 6.2 48,000 – 48,000 Other Investments 6.2 17,020 2,592 19,612 Trade and Other Receivables 1,199,011 (14,059) 1,184,952 Deferred Tax Assets 113,664 – 113,664

3,416,407 (11,467) 3,404,941

Current Assets Inventories 3,334,414 – 3,334,414 Loans due from Related Parties 505,439 – 505,439 Trade and Other Receivables 6.2 3,789,635 (101,361) 3,688,274 Amounts due from Related Parties - Trade 708,856 – 708,856 Amounts due from Related Parties - Non-Trade 101,718 – 101,718 Deposits with Banks – – –Marketable Securities – – –Cash and Cash Equivalents 359,927 – 359,927

8,799,989 (101,361) 8,698,628 Total Assets 12,216,396 (112,828) 12,103,569EQUITY AND LIABILITIES Equity Stated Capital 626,048 – 626,048 Capital Reserves 658,466 – 658,466 Revenue Reserves 6.3 2,701,818 (12,910) 2,688,908 Total Equity Attributable for Equity Holders of the Company 3,986,332 (12,910) 3,973,422 Non-Controlling Interest – – –Total Equity 3,986,332 (12,910) 3,973,422

Non-Current Liabilities Interest-Bearing Loans and Borrowings 1,434,749 – 1,434,749 Retirement Benefit Obligations 235,267 – 235,267 Deferred Taxation Liability 96,977 – 96,977 Security Deposits 463,378 – 463,378 Deposits from Customers – – –

2,230,371 – 2,230,371

Current Liabilities

Trade and Other Payables 1,976,027 – 1,976,027 Deferred Revenue 115,420 (92,614) 22,806Income Tax Payable 178,956 (7,304) 171,652 Dividends Payable 9,814 – 9,814 Amounts due to Related Parties - Trade 233,626 – 233,626 Amounts due to Related Parties - Non-Trade 171,803 – 171,803 Deposits from Customers – – –Interest-Bearing Loans and Borrowings 3,314,048 – 3,314,048

5,999,693 (99,918) 5,899,776 Total Equity and Liabilities 12,216,396 (112,828) 12,103,569



Reconciliation - Company Statement of Financial Position

Equity as at 31st December 2011Equity as at 1st January 2011

(Date of Transition to SLFRS/LKAS)

As per SLAS


SLFRSAs per



SLFRSAs per


ASSETS Non-Current Assets Property, Plant & Equipment 1,659,601 – 1,659,601 1,536,053 – 1,536,053 Intangible Assets 141,266 – 141,266 155,619 – 155,619 Investment in Subsidiaries 400,000 – 400,000 400,000 – 400,000 Investments in Equity Accounted Investees 48,000 – 48,000 24,000 – 24,000 Other Investments 6.2 17,020 591 17,611 17,020 1,635 18,655Trade and Other Receivables 6.2 1,258,913 (119,451) 1,139,462 1,035,300 (75,933) 959,367 Deferred Tax Assets 125,502 – 125,502 114,353 – 114,353

3,650,302 (118,860) 3,531,442 3,282,345 (74,298) 3,208,047 Current Assets Inventories 3,413,956 – 3,413,956 2,149,041 – 2,149,041 Loans due from Related Parties 539,506 – 539,506 611,410 – 611,410 Trade and Other Receivables 6.2 4,326,897 18,745 4,345,642 3,219,839 9,649 3,229,488 Amounts due from Related Parties - Trade 569,973 – 569,973 953,850 – 953,850 Amounts due from Related Parties - Non-Trade 23,540 – 23,540 29,556 – 29,556 Deposits with Banks – – – – – –Marketable Securities – – – – – –Cash & Cash Equivalents 364,736 – 364,736 200,403 – 200,403

9,238,608 18,745 9,257,353 7,164,100 9,649 7,173,748 Total Assets 12,888,910 (100,115) 12,788,795 10,446,445 (64,649) 10,381,795EQUITY AND LIABILITIES Equity Stated Capital 626,048 – 626,048 626,048 – 626,048 Capital Reserves 655,454 – 655,454 664,542 – 664,542 Statutory Reserve – – – – – –Revenue Reserves 6.3 3,085,527 591 3,086,118 2,316,845 (6,896) 2,309,949 Total Equity Attributable for Equity Holders of the Company 4,367,029 591 4,367,620 3,607,435 (6,896) 3,600,539 Non-Controlling Interest – – – – – –Total Equity 4,367,029 591 4,367,620 3,607,435 (6,896) 3,600,539

Non-Current Liabilities Interest-Bearing Loans & Borrowings 754,125 – 754,125 1,265,833 – 1,265,833 Retirement Benefit Obligations 197,833 – 197,833 176,663 – 176,663 Deferred Taxation Liability 95,805 – 95,805 99,339 – 99,339 Security Deposits 487,449 – 487,449 403,894 – 403,894 Deposits from Customers – – – – – –

1,535,212 – 1,535,212 1,945,729 – 1,945,729 Current Liabilities Trade and Other Payables 2,126,108 – 2,126,108 1,218,205 – 1,218,205 Deferred Revenue 6.2 118,359 (100,705) 17,654 66,284 (53,159) 13,125 Income Tax Payable 170,547 – 170,547 123,028 (4,594) 118,434 Dividends Payable 5,825 – 5,825 3,205 – 3,205 Amounts due to Related Parties - Trade 171,272 – 171,272 268,648 – 268,648 Amounts due to Related Parties - Non-Trade 73,441 – 73,441 53,272 – 53,272 Deposits from Customers – – – – – –Interest-Bearing Loans and Borrowings 4,321,117 – 4,321,117 3,160,639 – 3,160,639

6,986,669 (100,705) 6,885,963 4,893,281 (57,753) 4,835,527 Total Equity and Liabilities 12,888,910 (100,115) 12,788,795 10,446,446 (64,649) 10,381,795



Reconciliation - Consolidated Statement of Financial Position

Equity as at 30th September 2011

As per SLAS


SLFRSAs per

SLFRS/LKASNote Rs. ’000 Rs. ’000 Rs. ’000

ASSETSNon-Current AssetsProperty, Plant & Equipment 1,519,106 – 1,519,106 Intangible Assets 158,593 – 158,593 Investment in Subsidiaries – – –Investments in Equity Accounted Investees 46,918 – 46,918 Other Investments 6.2 17,061 2,592 19,653 Trade and Other Receivables 6.2 3,621,916 (13,930) 3,607,986 Deferred Tax Assets 113,664 – 113,664

5,477,258 (11,338) 5,465,920

Current Assets Inventories 3,349,790 – 3,349,790 Loans due from Related Parties 174,172 – 174,172 Trade and Other Receivables 6.2 6,487,875 (101,361) 6,386,514 Amounts due from Related Parties - Trade 2,544 – 2,544 Amounts due from Related Parties - Non-Trade 101,718 – 101,718 Deposits with Banks – – –Marketable Securities 272,199 – 272,199 Cash and Cash Equivalents 374,213 – 374,213

10,762,510 (101,361) 10,661,150 Total Assets 16,239,768 (112,699) 16,127,070EQUITY AND LIABILITIES Equity Stated Capital 626,048 – 626,048 Capital Reserves 674,816 – 674,816 Statutory Reserve 22,573 – 22,573 Revenue Reserves 6.3 2,995,728 (10,148) 2,985,580 Total Equity Attributable for Equity Holders of the Company 4,319,165 (10,148) 4,309,017 Non-Controlling Interest 244,638 920 245,559 Total Equity 4,563,803 (9,228) 4,554,576

Non-Current Liabilities Interest-Bearing Loans and Borrowings 1,509,753 – 1,509,753 Retirement Benefit Obligations 241,575 – 241,575 Deferred Taxation Liability 131,384 – 131,384 Security Deposits 463,378 – 463,378 Deposits from Customers 461,275 – 461,275

2,807,365 – 2,807,365

Current Liabilities

Trade and Other Payables 2,360,417 (2,626) 2,357,791 Deferred Revenue 6.2 135,175 (93,541) 41,634Income Tax Payable 168,672 (7,304) 161,367Dividends Payable 9,814 – 9,814 Amounts due to Related Parties - Trade 233,626 – 233,626 Amounts due to Related Parties - Non-Trade 171,803 – 171,803 Deposits from Customers 2,118,188 – 2,118,188 Interest-Bearing Loans and Borrowings 3,670,906 – 3,670,906

8,868,600 (103,471) 8,765,129Total Equity and Liabilities 16,239,768 (112,699) 16,127,070



Reconciliation - Consolidated Statement of Financial Position

Equity as at 31st December 2011Equity as at 1st January 2011

(Date of Transition to SLFRS/LKAS)

As per SLAS


SLFRSAs per



SLFRSAs per


ASSETS Non-Current Assets Property, Plant & Equipment 1,691,107 – 1,691,107 1,564,240 – 1,564,240 Intangible Assets 153,933 – 153,933 165,190 – 165,190 Investment in Subsidiaries – – – – – –Investments in Equity Accounted Investees 46,886 – 46,886 23,525 – 23,525 Other Investments 6.2 17,061 591 17,652 17,061 1,635 18,696 Trade and Other Receivables 6.2 4,261,101 (119,376) 4,141,725 2,545,742 (75,624) 2,470,118 Deferred Tax Assets 147,577 – 147,577 114,353 – 114,353

6,317,664 (118,785) 6,198,879 4,430,110 (73,990) 4,356,122 Current Assets Inventories 3,430,827 – 3,430,827 2,149,041 – 2,149,041 Loans due from Related Parties 173,635 – 173,635 202,218 – 202,218 Trade and Other Receivables 6.2 6,960,125 18,745 6,978,871 5,475,745 9,649 5,485,394 Amounts due from Related Parties - Trade 7,986 – 7,986 6,724 – 6,724 Amounts due from Related Parties - Non-Trade 23,540 – 23,540 29,556 – 29,556 Deposits with Banks – – – – – –Marketable Securities 290,313 – 290,313 410,552 – 410,552 Cash & Cash Equivalents 372,303 – 372,303 250,574 – 250,574

11,258,728 18,745 11,277,474 8,524,410 9,649 8,534,059 Total Assets 17,576,392 (100,040) 17,476,353 12,954,520 (64,340) 12,890,181 EQUITY AND LIABILITIES Equity Stated Capital 626,048 – 626,048 626,048 – 626,048 Capital Reserves 655,454 – 655,454 664,542 – 664,542 Statutory Reserve 44,408 – 44,408 10,748 – 10,748 Revenue Reserves 6.3 3,413,011 2,947 3,415,958 2,578,325 (4,441) 2,573,844Total Equity Attributable for Equity Holders of the Company 4,738,921 2,947 4,741,868 3,879,663 (4,441) 3,875,222 Non-Controlling Interest 257,669 786 258,455 224,234 819 225,053 Total Equity 4,996,590 3,733 5,000,323 4,103,897 (3,622) 4,100,275

Non-Current Liabilities Interest-Bearing Loans & Borrowings 1,110,385 – 1,110,385 1,287,291 – 1,287,291 Retirement Benefit Obligations 204,787 – 204,787 181,876 – 181,876 Deferred Taxation Liability 99,932 – 99,932 103,467 – 103,467 Security Deposits 487,449 – 487,449 403,894 – 403,894 Deposits from Customers 503,142 – 503,142 195,995 – 195,995

2,405,695 – 2,405,695 2,172,521 – 2,172,523 Current Liabilities Trade and Other Payables 2,574,219 (2,755) 2,571,464 1,500,316 (2,369) 1,497,947 Deferred Revenue 6.2 139,379 (101,017) 38,362 79,309 (53,756) 25,553 Income Tax Payable 197,322 – 197,322 155,877 (4,594) 151,283 Dividends Payable 5,825 – 5,825 3,205 – 3,205 Amounts due to Related Parties - Trade 171,272 – 171,272 268,648 – 268,648 Amounts due to Related Parties - Non-Trade 73,441 – 73,441 53,272 – 53,272 Deposits from Customers 2,159,857 – 2,159,857 1,451,991 – 1,451,991 Interest-Bearing Loans and Borrowings 4,852,792 – 4,852,792 3,165,484 – 3,165,484

10,174,107 (103,772) 10,070,335 6,678,100 (60,718) 6,617,383 Total Equity and Liabilities 17,576,392 (100,040) 17,476,353 12,954,520 (64,340) 12,890,181




6.1 Income Statement

30th September 2011

Group Company

Rs. '000 Rs. '000

RevenueDeferred Revenue (9,681) (9,681)Service Revenue 151 –

(9,530) (9,681)

Selling and AdministrationEmployee Benefit on Employee Loans (17,638) (13,056)

(17,638) (13,056)

Net Finance CostFinance Income on Employee Loans 17,638 13,056Finance Cost 257 –

17,894 13,056

Income TaxTax Adjustment on Deferred Revenue 2,711 2,711

2,711 2,711

6.2 Financial Position

Group Company31st Dec.

20111st Jan.

201130th Sep.

201131st Dec.

20111st Jan.

201130th Sep.

2011Rs. '000 Rs. '000 Rs. '000 Rs. '000

Trade and Other Receivables

Employee Loans - Reclassification to Prepaid 18,820 9,958 14,188 18,745 9,649 14,059

Deferred Revenue

Netting off with Instalment Receivables 101,017 66,880 116,347 100,705 66,284 115,420

Deferred Revenue Recognition in Income Statement – (13,125) (9,681) – (13,125) (9,681)

101,017 53,756 106,666 100,705 53,159 105,739

Available-for-Sale Financial Assets

Fair Value of Unquoted Investment as per SLFRS/LKAS 17,611 18,655 19,612 17,611 18,655 19,612

Carrying Amount of Unquoted Investment as per SLAS 17,020 17,020 17,020 17,020 17,020 17,020

Gain/(Loss) on Available-for-Sale Financial Assets 591 1,635 2,592 591 1,635 2,592



6.3 Retained Earnings

The following is a summery of transition adjustments to the Group and Company retained earnings from SLAS to SLFRS/LKAS:

Group Company31st Dec.

20111st Jan.

201130th Sep.

201131st Dec.

20111st Jan.

201130th Sep.

2011Rs. '000 Rs. '000 Rs. '000 Rs. '000

Retained Earnings Reported as SLAS 4,996,590 4,103,897 4,563,803 4,367,029 3,607,435 3,986,332

SLFRS/LKAS Adjustments

Deferred Revenue – (13,125) (9,681) – (13,125) (9,681)

Service Revenue 386 905 1,056 – – –

Finance Cost 2,755 2,369 2,626 – – –

Tax Adjustment on Deferred Revenue – 4,594 2,711 – 4,594 2,711

Fair Value Adjustment - Investment 591 1,635 2,592 591 1,635 2,592

Retained Earnings as per SLFRS/LKAS 5,000,323 4,100,275 4,554,576 4,367,620 3,600,539 3,973,422

6.4 Segmental Analysis of Company Net Turnover is as follows:

Quarter ending Quarter ending 9 months ending 9 months ending 30th September 2012 30th September 2011 30th September 2012 30th September 2011

Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Sewing-Related Products 640,017 550,972 1,998,156 1,624,083 Consumer Electronics 1,362,861 1,334,816 4,283,300 4,279,244 White Goods 2,174,958 1,796,087 6,888,754 5,241,770 Kitchen-Related Products 421,411 357,560 1,293,636 1,038,148 Communications 338,454 344,768 946,437 897,036 Furniture 319,517 237,359 979,373 741,724 Transport 158,741 107,616 435,886 348,259 Agro 248,271 201,389 719,306 526,398

5,664,230 4,930,567 17,544,848 14,696,662





6.5 Segmental Analysis of Company Profits before Tax is as follows:


Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Sewing-Related Products 19,608 43,465 118,397 131,962 Consumer Electronics 48,541 162,058 298,452 451,573 White Goods 68,938 127,218 379,764 384,146Kitchen-Related Products 16,764 30,979 92,206 121,905 Communications 4,589 15,255 39,822 48,065 Furniture 14,826 15,850 58,055 56,777 Transport 2,135 10,734 10,280 11,203 Agro 12,689 11,035 42,929 35,639 Dividend Income – – 59,596 32,000 Value Added Tax on Financial Services (5,251) (9,000) (21,752) (27,000)

182,836 407,593 1,077,748 1,246,269

6.6 Segmental Analysis of Group Net Turnover is as follows:


Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Sewing-Related Products 640,017 550,972 1,998,156 1,624,083 Consumer Electronics 1,362,861 1,334,816 4,283,300 4,279,244 White Goods 2,174,958 1,796,087 6,888,754 5,241,770Kitchen-Related Products 421,411 357,560 1,293,636 1,038,148 Communications 338,454 344,768 946,437 897,036 Furniture 319,517 237,359 979,373 741,724 Transport 158,741 107,616 435,886 348,259 Agro 248,271 201,389 719,306 526,398 Singer Finance (Lanka) PLC 396,619 275,963 1,109,195 767,843

6,060,849 5,206,530 18,654,043 15,464,505



6.7 Segmental Analysis of Group Profits before Tax is as follows:


Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Sewing-Related Products 19,608 43,465 118,397 131,962 Consumer Electronics 48,541 162,058 298,452 451,573 White Goods 70,938 127,218 379,764 384,146 Kitchen-Related Products 16,764 30,979 92,206 121,905 Communications 4,589 15,255 39,822 48,065 Furniture 14,826 15,850 58,055 56,777 Transport 2,135 10,734 10,280 11,203 Agro 12,689 11,035 42,929 35,639 Singer Finance (Lanka) PLC 87,136 75,067 250,111 232,744 Dividend – – 1,996 –Share of Profit on Equity Accounted Investees 337 (13) 1,111 (606)Value Added Tax on Financial Services (10,115) (14,940) (36,593) (48,297)

267,448 476,708 1,256,529 1,425,111

7. Related Party Transactions7.1 Identity of Related Parties

The Company has a related party relationship with its Parent Company, its Associate Companies, Affiliate Companies and with its Directors.

7.2 Transactions with Parent Companies

(a) During the year, Company had Following Transactions with its Parent Companies:

Singer Asia Ltd. - (Intermediate Parent)

2012Rs. Million

2011Rs. Million

Royalty Expenses 194.7 163.4Royalty Payable Balance as at Period end 65.2 171.9

Singer Asia Holdings BV - (Intermediate Parent)

Royalty Paid to Singer Asia Ltd. through Singer Asia Holding BV

Singer (Sri Lanka) BV - (Intermediate Parent)

2012Rs. Million

2011Rs. Million

Dividend Paid 646.9 188.7




(b) Following companies are also Parent Companies of Singer (Sri Lanka) PLC and Singer Finance (Lanka) PLC with whom no transactions were entered into during the period:

Company Relationship

Singer (Sri Lanka) BV Intermediate ParentSinger Asia Holdings NV Intermediate ParentRetail Holdings NV Ultimate Parent

7.3 Transactions with Subsidiary Companies2012

Rs. Million 2011

Rs. Million

Singer Finance (Lanka) PLCSales Financed through SFLL 1,057.6 1,624.2Payments to Singer (Sri Lanka) PLC on behalf of Customers 909.8 1,522.8Short-Term Loan Given 963.0 –Short-Term Loan Settled 400.0Interest Income 94.9 55.7Dividend Received (Gross) 64.0 32.0Rental Collection through Singer (Sri Lanka) PLC 2,087.2 2,292.3Expenses Paid 117.2 68.0Administrative Fee Charged 61.2 55.9Collecting Commission Paid through Singer (Sri Lanka) PLC 11.9 7.1Purchase of Assets 0.3 –Rent Reimbursed 10.5 8.1Royalty Paid through Singer (Sri Lanka) PLC 12.4 8.5Balance Receivable - Trade 343.7 706.3Balance Receivable - Loans 563.0 331.8

7.4 Transactions with Associate Companies

(a) During the year the Company had following transactions with its Associate Comapnies:

2012Rs. Million

2011Rs. Million

Reality (Lanka) Ltd.Rent Charged by Reality Lanka Ltd. 4.1 1.8Interest Income Charged by Singer (Sri Lanka) PLC – 4.3Investment Made – 24.0Interest Receivable – 22.2Loan Receivable 73.6 45.1

(b) Following company is an Associate Company of Singer (Sri Lanka) PLC, with whom Singer (Sri Lanka) PLC or Singer Finance (Lanka) PLC had no transactions taken place other than through Advertising Agencies during the year:

Telshan Network (Pvt) Ltd.




7.5 Transactions with Other Related Parties

Transactions with the following parties have been disclosed in Note 3.6:


Regnis (Lanka) PLC Affiliate CompanySinger Industries (Ceylon) PLC Affiliate CompanySinger Asia Sourcing Ltd. Affiliate Company

7.6 Transactions with Key Management Personnel and Directors (a) Loans to Directors No Loans have been given to the Directors of the Company.

(b) A number of Key Management Personnel or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of these entities. These transactions are given below:

Name of the Company and Relationship

Name of Director

Nature of Transaction

2012 Rs. Million

2011 Rs. Million

Singer Industries (Ceylon) PLC

Mr. H.D.S. Amarasuriya (Chairman) Purchases 634.0 657.0

(Affiliate Company) Mr. H.A. Pieris Net Finance (Charges)/Income 0.3 1.3 Dr. G.C.B. Wijeyesinghe Corporate Guarantee Given 75.0 75.0 Mr. G. J. Walker Lease Rental Paid 3.5 1.9 Deshabandu A.M. de S. Jayaratne Dividend Paid – 2.8 Mr. V.G.K. Vidyaratne Purchase of Raw Material 5.2 0.14

Trade Credit Settled 608.8 738.0 Loans Receivable – –Balance Payable 78.5 58.6

Regnis (Lanka) PLC (Affiliate Company)

Mr. H.D.S. Amarasuriya (Chairman) Purchases 1,589.0 1,368.1Dr. G.C.B. Wijeyesinghe Corporate Guarantees Given 455.5 455.5Mr. H.A. Pieris Interest Income 8.4 5.1Mr. V.G.K. Vidyaratne Non-Trade Settlement 20.0 37.0Mr. G.J. Walker Trade Credit Settled 1,803.9 1,579.6Dr. S. Kelegama Sales Taxes 227.0 –

Expenses Paid 33.5 30.5Loan Settled – 70.0Loan Payable 60.0 –Balance Payable 77.5 51.3




Name of the Company and Relationship

Name of Director

Nature of Transaction

2012 Rs. Million

2011 Rs. Million

Singer Finance (Lanka) PLC

Mr. H.D.S. Amarasuriya (Chairman)

Sales Financed through Singer Finance (Lanka) Ltd. 1,057.6 1624.2

(Subsidiary Company) Dr. G.C.B. Wijeyesinghe (Resigned w.e.f 30.12.2011)

Payments to Singer (Sri Lanka) PLC on behalf of Customers 909.8 1,522.8

Mr. H.A. Pieris Short-Term Loan Given 963.0 –Dr. S. Kelegama Short-Term Loan Settled 400.0Mr. M.P.A. Salgado Interest Income 94.9 55.7Mr. G.J. Walker Dividend Received (Gross) 64.0 32.0Mr. J.J. Hyun (Appointed w.e.f. 28.2.2011)

Rental Collection through Singer (Sri Lanka) PLC 2,087.2 2,292.3Expenses Paid 117.2 68.0Administrative Fee Charged 61.2 55.9Collecting Commission Paid through Singer (Sri Lanka) PLC 11.9 7.1Purchase of Assets 0.3 –Rent Reimbursed 10.5 8.1Royalty Paid through Singer (Sri Lanka) PLC 12.4 8.5Balance Receivable - Trade 343.7 706.3Balance Receivable - Loans 563.0 331.8

National Development Bank PLC Mr. H.D.S. Amarasuriya Borrowed Money 290.0 201.0

Interest Paid 21.8 14.0Issue of Debentures 150.0 270.0Debenture Interest – 14.7

Singer Asia Sourcing Ltd. Mr. G.J. Walker Purchases – 32.9(Affiliate Company) Settlements – 26.9

Balance (Receivable)/Payables 7.5 2.0

Singer Asia Ltd. (Intermediate Parent Company)

Mr. P.J. O'Donnell Royalty Expenses 194.7 163.4

Mr. T. Brown (Resigned w.e.f. 10.06.2011)

Royalty Payable 65.2 171.9

Mr. G.J. WalkerMr. H.A. Pieris

Sampath Bank PLC Dr. S. Kelegama Borrowed Money – 246.3 (Resigned w.e.f. 30.12.2011) Interest Paid 28.8 11.1

Reality Lanka Ltd. Mr. H.D.S. Amarasuriya Rent Charged 4.1 1.8(Associate Company) Mr. H.A. Pieris Interest Income – 4.3

Mr. V.G.K. Vidyarathne Investment Made – 24.0Mr. G.J. Walker Interest Receivable – 22.2

Loan Receivable 73.6 45.1

Regnis Appliances (Pvt) Ltd. Mr. H.D.S. Amarasuriya Purchases 664.7 356.4Mr. H.A. Pieris Settlements 804.6 388.4Mr. V.G.K. Vidyaratne Expenses Paid 1.2 –Mr. A.N. Majeed Finance Charges 6.0 0.6Mr. G.J. Walker Loan Settled 80.0 –

Non-Trade Settlements 6.7 –Balance Payable - Trade – –Balance Payable - Loan 20.0 100.0

Fintravels Ltd. Dr. G.C.B. Wijeyesinghe Business Transactions 6.2 4.6




(c) Key Management Personnel includes members of the Board of Directors of the Company, its Subsidiary and Parent. Transaction with Key Management Personnel, their close family members and parties/entities in which such Key Management Personnel or their close family members have control, joint control or significant influence can be shown as follows:

(i) Transactions with Key Management Personnel or their close family members

2012 Rs. Million

2011 Rs. Million

Deposits kept by Key Management Personnel or their close family members of Singer Finance (Lanka) PLC 86.2 39.2

8. Stated Capital

8.1 30th September 2012 30th September 2011

Value - Ordinary Shares Rs. 626,048,050/- Rs. 626,048,050/- No. of Shares - Ordinary Shares 125,209,610 125,209,610Voting Rights One Vote per Ordinary Share One Vote per Ordinary Share

9. Contingencies(a) Guarantees given to banks and other lending institutions on behalf of Singer Industries (Ceylon) PLC

and Regnis (Lanka) PLC amounts to Rs. 75 Million and Rs. 455.5 Million respectively.

(b) The Company has provided Bank Guarantees amounting to Rs. 130.2 Million to the Director General of Customs to clear imports during the year under review pending completion of legal proceedings in the Court of Appeal.

The Bank Guarantee related to alleged additional duty payable on imports, is being contested by the Company in Courts.

The Company lawyers are of the opinion that there is no basis that the Company is liable for the additional duty and hence, no provision is made in the Financial Statements.

10. Events Occurring after the Balance Sheet Date There have been no material events occurring after the Balance Sheet date that require disclosure in

the Financial Statements, except -

(i) The Company has issued 6,440,000 of senior rated unsecured redeemable listed Debentures of the par value of Rs. 100/- each on 25th October 2012, for the value of Rs. 644,000,000/- under the following terms:

Coupon Method Coupon Payment Coupon Rate

Interest Payment - Option 1 Fixed Quarterly 16.75% - 17.75%

Option 2 Floating Quarterly 2 months grossTB rate +2.25%

Tenure - 3 years

Capital Payment - On maturity




11. Listed Debentures Details regarding the listed debentures are as follows: 1. 19.75% debentures unsecured redeemable on 29th February 2013. 2. 6 months TB +1.65 debentures unsecured redeemable on 29th September 2012.

Interest rate of comparable Government Securities as at date of issue, 30th September 2008 was 19.75%. Interest rate of comparable Government Securities as at 30th September 2012 was 13.96%.

The listed debentures were not traded during the period 30th September 2008 to 30th September 2012. Therefore, highest traded price, lowest traded price, last traded price as at 30th September 2012, interest yield and yield to maturity of trade were not available.

30th September 2012 30th September 2011

Debt Equity Ratio 0.09 0.36Interest Cover 2.73 4.62Quick Assets Ratio 0.68 0.91

12. Top 20 Shareholders as at 30th September 2012Name No. of Shares %

1. Singer (Sri Lanka) BV 107,812,850 86.11 2. Bank of Ceylon A/c Ceybank Unit Trust 4,115,723 3.29 3. Bank of Ceylon A/c Ceybank Century Growth Fund 592,842 0.47 4. Miss Ranjani Eileen Weeraratne Jayasuriya 592,516 0.47 5. Mrs. Mihiri Virani Fernando 470,000 0.38 6. Mrs. Zohra Taher Jafferjee 330,890 0.26 7. Mrs. Anoma Kamalika Amarasuriya 178,970 0.14 8. Sri Lanka Insurance Corporation Ltd. - General Fund 177,500 0.14 9. Dr. Nimal Ebenezer Herat Sanderatne 174,664 0.14 10. Sampath Bank PLC/Capital Trust Holdings Private Ltd. 153,006 0.12 11. Mas Capital (Private) Ltd. 135,400 0.11 12. Mrs. Kalutaravedage Jinangali Manel De Silva 131,248 0.10 13. Mr. Nalin Amita De Silva 126,326 0.10 14. Jafferjee Brothers (Exports) Ltd. 125,200 0.10 15. Miss Nai Kaluge Ruvani Hemamala De Silva 118,246 0.09 16. Mrs. Enoka Kamali Wickramasinghe 112,644 0.09 17. Mr. Hemaka Devapriya Senarath Amarasuriya 89,482 0.07 18. Merchant Bank of Sri Lanka Ltd./Union Investments Ltd. 88,894 0.07 19. Mr. Abeysiri Hemapala Munasinghe 83,986 0.07 20. Mrs. Malini Wijenaike 82,006 0.07

115,692,393 92.39 Others 9,517,217 7.61 Total 125,209,610 100.00



13. Directors and CEO's Shareholding as at 30th September 2012Name of the Director Shareholding Shareholding

30th September 2012 31st December 2011No. of Shares No. of Shares

Mr. H.D.S. Amarasuriya 89,482 89,482Mr. H.A. Pieris - CEO 2,000 500Dr. G.C.B. Wijeyesinghe – –Dr. Saman Kelegama – –Deshabandu Ajit Jayaratne – –Mr. P.J. O'Donnell – –Mr. John J. Hyun – –Mr. G.J. Walker – –Mr. V.G.K. Vidyaratne 23,831 21,236Mr. M.H. Wijewardene – –Mr. N. Majeed 5,000 1,000Mr. K. Samarasinghe 4,124 3,124Mr. M.P.A Salgado 4,000 –

14. Public Holding Public holding as at 30th September 2012 is 13.65% (As at 30th September 2011 - 12.22%).

Annexure : II Annual Report for the financial years ending 31st December 2011

Annual Report 2011 Singer (Sri Lanka) PLC 143

TO THE SHAREHOLDERS OF SINGER (SRI LANKA) PLC

Report on the Financial StatementsWe have audited the accompanying financial statements of

Singer (Sri Lanka) PLC, the consolidated financial statements of the

Company and its subsidiary as at that date which comprise the

balance sheet as at December 31, 2011, and the income statement,

statement of changes in equity and cash flow statement for the

year then ended, and a summary of significant accounting policies

and other explanatory notes as set out on pages 144 to 186 of the

Annual Report.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation

of these financial statements in accordance with Sri Lanka Accounting

Standards. This responsibility includes: designing, implementing

and maintaining internal control relevant to the preparation and

fair presentation of financial statements that are free from material

misstatement, whether due to fraud or error; selecting and applying

appropriate accounting policies; and making accounting estimates

that are reasonable in the circumstances.

Scope of Audit and Basis of Opinion

Our responsibility is to express an opinion on these financial

statements based on our audit. We conducted our audit in

accordance with Sri Lanka Auditing Standards. Those standards

require that we plan and perform the audit to obtain reasonable

assurance whether the financial statements are free from

material misstatement.

An audit includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements. An audit

also includes assessing the accounting policies used and significant

estimates made by management, as well as evaluating the overall

financial statement presentation.

We have obtained all the information and explanations which to the

best of our knowledge and belief were necessary for the purposes of

our audit. We therefore believe that our audit provides a reasonable

basis for our opinion.

Opinion

In our opinion, so far as appears from our examination, the Company

maintained proper accounting records for the year ended December

31, 2011 and the financial statements give a true and fair view of

the Company’s state of affairs as at December 31, 2011 and its profit

and cash flows for the year then ended in accordance with Sri Lanka

Accounting Standards.

In our opinion, the consolidated financial statements give a true and

fair view of the state of affairs as at December 31, 2011 and the

profit and cash flows for the year then ended, in accordance with

Sri Lanka Accounting Standards, of the Company and its Subsidiary

dealt with thereby, so far as concerns the members of the Company.

Report on Other Legal and Regulatory Requirements

These financial statements also comply with the requirements of

Section 153 (2) to 153 (7) of the Companies Act No. 07 of 2007.

Chartered Accountants,

Colombo

28th February 2012

16 Independent Auditors’ Report

144 Singer (Sri Lanka) PLC Annual Report 2011

Consolidated Company

Year ended 31st December 2011 2010 2011 2010Note Rs. Rs. Rs. Rs.

Revenue 3 22,010,767,109 16,028,533,802 20,931,312,025 15,177,484,870

Cost of Sales (13,655,527,677) (10,233,156,320) (13,655,527,677) (10,233,156,320)

Gross Profit 8,355,239,432 5,795,377,482 7,275,784,348 4,944,328,550

Other Income 5 134,709,962 267,467,070 167,244,869 155,127,078

Selling and Administrative Expenses (5,449,103,540) (3,884,069,598) (5,019,725,936) (3,546,500,255)

Other Expenses 6 (195,965,537) (174,471,508) (186,559,996) (167,136,767)

Finance Cost 7.1 (839,683,862) (819,353,491) (559,650,375) (587,671,758)

Finance Income 7.2 38,212,108 45,128,240 83,832,844 51,452,221

Net Finance Cost (801,471,754) (774,225,251) (475,817,531) (536,219,537)

Share of Profit/(Loss) of Equity Accounted Investees (Net of Income Tax) 8 (638,975) (1,016,683) – –

Value Added Tax on Financial Services (56,507,301) (61,200,000) (29,000,000) (26,500,000)

Profit before Tax 9 1,986,262,287 1,167,861,512 1,731,925,754 823,099,069

Income Tax Expense 10 (679,505,974) (499,042,148) (568,935,468) (399,737,255)

Profit for the Year 1,306,756,313 668,819,364 1,162,990,286 423,361,814

Attributable to:

Equity Holders of the Company 1,262,654,702 668,011,242 1,162,990,286 423,361,814

Non-Controlling Interest 44,101,611 808,122 – –


Earnings per Share - Basic - (Rs.)* 11.2 10.08 5.34 9.29 3.38

Earnings per Share Excluding the Gain on Dilution of equity holding of Singer Finance (Lanka) PLC - (Rs.)* 11.3 10.08 3.92 9.29 3.38

Dividends per Share (Including Proposed Final Dividend) - (Rs.) 33 7.50 4.50

* Information for the previous year has been restated to reflect the subdivision of shares in March 2011.

The Notes on pages 148 through 186 form an integral part of these Financial Statements.

Colombo

28th February 2012

17 Income Statement



As at 31st December 2011 2010 2011 2010Note Rs. Rs. Rs. Rs.

ASSETSNon-Current AssetsProperty, Plant & Equipment 12 1,691,106,605 1,564,239,939 1,659,601,041 1,536,053,077 Intangible Assets 13 153,933,369 165,189,703 141,266,387 155,618,778 Investment in Subsidiary 14 – – 400,000,000 400,000,000 Investments in Equity Accounted Investees 15 46,885,646 23,524,621 48,000,000 24,000,000 Other long-term Investments 16 17,061,300 17,061,300 17,020,000 17,020,000 Trade and Other Receivables 19.1 4,261,100,668 2,545,741,689 1,258,913,230 1,035,299,957 Deferred Tax Assets 28 147,576,857 114,353,256 125,501,850 114,353,256

6,317,664,445 4,430,110,508 3,650,302,508 3,282,345,068

Current AssetsInventories 17 3,430,827,040 2,149,041,418 3,413,955,560 2,149,041,418 Loans due from Related Parties 18 173,634,631 202,217,767 539,505,864 611,410,191 Trade and Other Receivables 19.2 6,960,125,253 5,475,744,793 4,326,897,165 3,219,839,055 Amounts due from Related Parties - Trade 20.1 7,986,289 6,723,621 569,973,103 953,850,294 Amounts due from Related Parties - Non-Trade 20.2 23,539,522 29,556,243 23,539,522 29,556,243 Marketable Securities 21 290,312,617 410,551,810 – –Cash and Cash Equivalents 22 372,302,709 250,573,958 364,735,727 200,402,845

11,258,728,062 8,524,409,610 9,238,606,941 7,164,100,046 Total Assets 17,576,392,507 12,954,520,118 12,888,909,449 10,446,445,114

EquityStated Capital 23 626,048,050 626,048,050 626,048,050 626,048,050 Capital Reserves 24 655,453,887 664,542,029 655,453,887 664,542,029 Statutory Reserve 25 44,407,823 10,748,118 – –Revenue Reserves 26 3,413,010,861 2,578,324,678 3,085,526,518 2,316,845,046 Total Equity Attributable to Equity Holders of the Company 4,738,920,621 3,879,662,875 4,367,028,455 3,607,435,125 Non-Controlling Interest 257,669,325 224,234,379 – –Total Equity 4,996,589,946 4,103,897,254 4,367,028,455 3,607,435,125

Non-Current LiabilitiesInterest-Bearing Loans and Borrowings 27 1,110,385,067 1,287,290,697 754,125,067 1,265,832,925 Retirement Benefit Obligations 29 204,787,190 181,875,758 197,833,421 176,663,436 Deferred Tax Liabilities 28 99,932,484 103,466,761 95,805,177 99,339,454 Security Deposits 487,448,522 403,893,567 487,448,522 403,893,567 Deposits from Customers 35 503,142,064 195,994,681 – –

2,405,695,327 2,172,521,464 1,535,212,187 1,945,729,382

Current LiabilitiesTrade and Other Payables 30 2,574,219,012 1,500,315,840 2,126,108,140 1,218,205,378 Deferred Revenue 31 139,379,298 79,308,834 118,358,968 66,283,640 Income Tax Payable 197,321,544 155,877,053 170,547,218 123,027,740 Dividend Payable 32 5,824,553 3,204,691 5,824,553 3,204,691 Amounts due to Related Parties - Trade 34.1 171,271,866 268,647,603 171,271,866 268,647,603 Amounts due to Related Parties - Non-Trade 34.2 73,441,026 53,272,425 73,441,026 53,272,425 Deposits from Customers 35 2,159,857,465 1,451,990,703 – –Interest-Bearing Loans and Borrowings 27 4,852,792,470 3,165,484,251 4,321,117,036 3,160,639,130

10,174,107,234 6,678,101,400 6,986,668,807 4,893,280,607

Total Equity and Liabilities 17,576,392,507 12,954,520,118 12,888,909,449 10,446,445,114

The Notes on pages 148 through 186 form an integral part of these Financial Statements.I certify that the above Financial Statements have been prepared in accordance with the requirements of the Companies Act No. 07 of 2007.

Priyath Salgado Finance Director

The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by,

Hemaka Amarasuriya H.A. PierisDirector Director/Group Chief Executive Officer

Colombo 28th February 2012

18 Balance Sheet


Attributable to the Equity Holders of the Company

Statutory Reserve

Consolidated Stated Reserve Investment Revaluation General Retained Total Non-Controlling Total Capital Fund Fund* Reserve Reserve Earnings Interest Equity

Note Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Balance as at 1st January 2010 626,048,050 8,042,189 – 404,084,717 1,600,000,000 375,624,170 3,013,799,126 – 3,013,799,126

Share Issue – – – – – – – 400,000,005 400,000,005

Surplus on Revaluation for the Year 12 – – – 359,796,766 – – 359,796,766 – 359,796,766

Deferred Tax Effect on Revaluation 28.2 – – – (99,339,454) – – (99,339,454) – (99,339,454)

Transferred to/(from) during the Year 25.1/26.1 – 2,705,929 – – 400,000,000 (402,705,929) – – –

Adjustment in Respect of Change in Group Holding 5.1 – – – – – – – (176,573,748) (176,573,748)

Profit for the Year – – – – – 668,011,242 668,011,242 808,122 668,819,364

Interim Dividend - 2010 33 – – – – – (62,604,805) (62,604,805) – (62,604,805)

Balance as at 31st December 2010 626,048,050 10,748,118 – 664,542,029 2,000,000,000 578,324,678 3,879,662,875 224,234,379 4,103,897,254

Realisation on Revaluation Surplus 24.1 – – – (12,622,419) – 12,622,419 – – –

Deferred Tax effect on Transfer of Revaluation Surplus 28.2 – – – 3,534,277 – – 3,534,277 – 3,534,277

Transferred to/(from) during the Year

25.1/25.2/26.1 – 5,602,000 28,057,705 – 200,000,000 (233,659,705) – – –

Profit for the Year – – – – – 1,262,654,702 1,262,654,702 44,101,611 1,306,756,313

Final Dividend - 2010 33 – – – – – (219,116,818) (219,116,818) – (219,116,818)

Interim Dividend - 2011 33 – – – – – (187,814,415) (187,814,415) (10,666,665) (198,481,080)

Balance as at 31st December 2011 626,048,050 16,350,118 28,057,705 655,453,887 2,200,000,000 1,213,010,861 4,738,920,621 257,669,325 4,996,589,946

Company StatedCapital

RevaluationReserve

General Reserve

RetainedEarnings

Total

Note Rs. Rs. Rs. Rs. Rs.

Balance as at 1st January 2010 626,048,050 404,084,717 1,600,000,000 356,088,037 2,986,220,804

Surplus on Revaluation for the period 12 – 359,796,766 – – 359,796,766

Deferred Tax Effect on revaluation 28.2 – (99,339,454) – – (99,339,454)

Transferred to/(from) during the Year 26.1 – – 400,000,000 (400,000,000) –

Net Profit for the Year – – – 423,361,814 423,361,814

Interim Dividend - 2010 33 – – – (62,604,805) (62,604,805)

Balance as at 31st December 2010 626,048,050 664,542,029 2,000,000,000 316,845,046 3,607,435,125

Realisation on Revaluation Surplus 24.1 – (12,622,419) – 12,622,419 –

Deferred Tax effect on Transfer of Revaluation Surplus 28.2 – 3,534,277 – – 3,534,277

Transferred to/(from) during the Year 26.1 – – 200,000,000 (200,000,000) –

Final Dividend - 2010 33 – – – (219,116,818) (219,116,818)

Interim Dividend - 2011 33 – – – (187,814,415) (187,814,415)

Net Profit for the Year – – – 1,162,990,286 1,162,990,286


*Investment FundInvestment Fund Account consists of 8% of the profits calculated for the payment of Value Added Tax on Financial Services and 5% of the Profit before Tax calculated for payment of Income Tax purposes during the year.


Colombo 28th February 2012

19 Statement of Changes in Equity



Year ended 31st December 2011 2010 2011 2010Note Rs. Rs. Rs. Rs.

Cash Flows from Operating Activities

Profit before Income Tax Expense 1,986,262,287 1,167,861,512 1,731,925,754 823,099,069

Adjustments for:Depreciation on Property, Plant & Equipment 12 207,120,389 175,809,093 199,295,874 169,657,299

Share of Loss from Equity Accounted Investee 8 638,975 1,016,683 – –

Amortisation of Intangible Assets 13 15,933,417 14,151,652 14,352,391 12,968,704

(Gain) on Disposal of Property, Plant & Equipment (9,561,662) (1,365,846) (9,561,662) (1,365,846)

(Gain) on Disposal of Other Long-Term Investments – (3,638,919) – (3,638,919)

(Gain) on Dilution of Holding in Subsidiary – (176,573,748) – –

Interest Expense 839,683,862 819,353,490 559,650,375 587,671,758

Interest Income (38,212,108) (45,128,240) (83,832,844) (51,452,221)

Deferred Profit on Hire Debtors 889,099,456 49,203,579 269,865,399 (73,096,533)

Provision for Obsolete Inventory 50,096,184 76,047,999 50,096,184 76,047,999

Bad Debts Written-off (227,677,071) (186,160,327) (203,353,653) (168,884,152)

Provision for Bad and Doubtful Receivables 137,689,500 132,410,289 119,318,202 108,096,385

Deferred Revenue 31 60,070,464 22,297,250 52,075,328 16,751,490

Dividend Income (18,225) (952,770) (28,804,721) (20,948,270)

Provision for Retiring Gratuity 29 36,562,706 33,812,561 34,686,259 31,981,517

Operating Profit before Working Capital Changes 3,947,688,174 2,079,797,867 2,705,712,886 1,510,541,888

(Increase)/Decrease in Inventories (1,331,881,806) (240,170,134) (1,315,010,327) (240,170,134)

(Increase)/Decrease in Debtors falling due after One Year (2,123,971,906) (615,490,859) (248,631,054) (23,580,832)

(Increase)/Decrease in Debtors falling due within One Year (1,892,716,534) (969,219,679) (1,285,707,393) (402,520,245)

(Increase)/Decrease in dues from Related Parties 4,754,053 (23,964,370) 389,893,911 (38,272,506)

Increase/(Decrease) in dues to Related Parties (77,207,136) 51,330,986 (77,207,137) (50,465,369)

Increase in Employee Security Deposits 83,554,954 44,378,004 83,554,953 44,378,003

Increase in Customer Deposit Liabilities 1,015,014,144 184,363,644 – –

Increase in Trade and Other Payables 1,054,553,263 465,252,520 912,939,993 340,162,306

Cash Generated from Operations 679,787,206 976,277,979 1,165,545,832 1,140,073,111

Finance Costs Paid (820,333,953) (834,404,431) (564,687,607) (599,511,969)

Retiring Gratuity Paid 29 (13,651,274) (10,482,222) (13,516,274) (10,482,222)

Income Tax Paid (671,285,084) (330,220,218) (532,564,583) (262,740,970)

Net Cash from Operating Activities (825,483,105) (198,828,892) 54,777,368 267,337,950

Cash Flows from Investing ActivitiesAcquisition of Property, Plant & Equipment and Intangible Assets 12/13 (349,166,590) (110,291,661) (333,346,287) (97,409,426)

Proceeds from Disposal of Property, Plant & Equipment 20,064,114 3,532,513 20,064,114 3,532,513

Proceeds from Sale of Other Long-Term Investments – 5,067,392 – 5,067,392

(Acquisition)/Disposal of Marketable Securities 120,239,193 (250,077,877) – –

Investment in Equity Accounted Investee (24,000,000) – (24,000,000) –

Net Cash Flows from Loans Given to Related Companies 28,583,136 38,297,654 71,904,327 (370,894,770)

Interest Received 56,049,226 43,474,632 101,669,962 49,798,613

Dividend Received 18,225 952,770 28,804,721 20,948,270

Net Cash Flows from Investing Activities (148,212,696) (269,044,577) (134,903,163) (388,957,408)

Cash Flows from Financing Activities Proceeds from Interest-Bearing Loans and Borrowings 5,908,054,000 4,086,605,327 5,133,054,000 4,086,605,327

Repayment of Interest-Bearing Loans and Borrowings (4,614,744,236) (4,388,652,638) (4,573,224,290) (4,361,396,454)

Proceeds from Issuance of Shares – 400,000,005 – –

Net payment to Minority Shareholders (10,666,665) – – –

Dividends Paid (404,311,371) (62,378,282) (404,311,371) (62,378,282)

Net Cash Flows from Financing Activities 878,331,728 35,574,412 155,518,339 (337,169,409)

Net Increase/(Decrease) in Cash and Cash Equivalents (95,364,073) (432,299,058) 75,392,544 (458,788,867)

Cash and Cash Equivalents at the beginning of the Year 22 (207,197,556) 225,101,502 (257,368,668) 201,420,200

Cash and Cash Equivalents at the end of the Year 22 (302,561,629) (207,197,556) (181,976,124) (257,368,668)


20 Cash Flow Statement


1. Corporate Information 1.1 Reporting Entity 1.1.1 General

Singer (Sri Lanka) PLC is a limited liability company incorporated and domiciled in Sri Lanka. The Registered Office of the Company is located at No. 80, Nawam Mawatha, Colombo 2, and the principal place of business is situated at the above address.

In the Report of the Directors and in the Financial Statements, ‘the Company’ refers to Singer (Sri Lanka) PLC as the Holding Company and ‘the Group’ refers to the Consolidated Financial Statements of Singer (Sri Lanka) PLC and its Subsidiary, Singer Finance (Lanka) PLC.

1.1.2 Companies in the Group Subsidiary A subsidiary, Singer Finance (Lanka) PLC, was incorporated on

19th April 2004 under the Companies Act No. 17 of 1982 and its commercial operations commenced on 8th July 2004.

Singer Finance (Lanka) PLC issued 25% of its equity holding through Initial Public Offering and allotted shares on 22nd December 2010. Shares of Singer Finance (Lanka) PLC was first traded on 17th January 2011 at the Colombo Stock Exchange. Pursuant to the Special Resolution passed by the shareholders on 21st December 2010, the name of the Subsidiary Company was changed from Singer Finance (Lanka) Ltd. to Singer Finance (Lanka) PLC. The name change was gazetted on 18th February 2011.

Associates (Equity Accounted Investees) Associate Companies of the Group, whose results have been

included in the Consolidated Financial Statements are:

Telshan Network (Pvt) Ltd. Reality Lanka Ltd.

All of the above companies are incorporated in Sri Lanka.

Financial Statements of all the companies in the Group are prepared for a common financial year, which ends on 31st December, except Singer Finance (Lanka) PLC, which ends on 31st March.

1.1.3 Principal Activities and Nature of Operations Company During the year, the principal activities of the Company were

marketing domestic and industrial sewing machines, consumer electronics, home appliances, furniture, agricultural equipment and personal computers and manufacturing furniture and agricultural equipment.

Subsidiary Principal activities of Singer Finance (Lanka) PLC. are financing

of the sale or purchase of any goods, articles, vehicles or other items either by letting on hire, hire purchase, leasing and other methods of financing. In addition, Singer Finance (Lanka) PLC accepts deposits.

Note 1 Corporate Information page 148

Note 2 Significant Accounting Policies page 149

Note 3 Revenue page 155

Note 4 Segment Information page 155

Note 5 Other Income page 156

Note 6 Other Expenses page 157

Note 7 Net Finance Cost page 157

Note 8 Share of Profits/(Losses) of Equity Accounted Investee - (Net of Income Tax) page 157

Note 9 Profit before Tax page 157

Note 10 Income Tax Expense page 158

Note 11 Earnings per Share page 159

Note 12 Property, Plant & Equipment page 160

Note 13 Intangible Assets page 164

Note 14 Investment in Subsidiary - Company page 166

Note 15 Investments in Equity Accounted Investees page 166

Note 16 Other Long-Term Investments page 168

Note 17 Inventories page 168

Note 18 Loans Due from Related Parties page 169

Note 19 Trade and other Receivables page 169

Note 20 Amounts due from Related Parties page 170

Note 21 Marketable Securities page 171

Note 22 Cash and Cash Equivalents page 171

Note 23 Stated Capital page 171

Note 24 Capital Reserves page 172

Note 25 Statutory Reserves page 172

Note 26 Revenue Reserves page 172

Note 27 Interest-Bearing Loans & Borrowings page 173

Note 28 Deferred Tax Assets/(Liabilities) page 177

Note 29 Retirement Benefit Obligations page 178

Note 30 Trade and Other Payables page 179

Note 31 Deferred Revenue page 179

Note 32 Dividend Payable page 179

Note 33 Dividends page 180

Note 34 Amounts due to Related Parties page 180

Note 35 Deposits from Customers page 180

Note 36 Commitments and Contingencies - Group/Company page 180

Note 37 Events Occurring after the Balance Sheet Date page 181

Note 38 Related Party Transactions page 182

Note 39 Transactions with Key Management Personnel page 186

21 Notes to the Financial Statements


1.1.4 Parent Enterprise and Ultimate Parent Enterprise

The Company's parent undertaking is Singer (Sri Lanka) BV. The Company's ultimate parent undertaking and controlling party is Retail Holdings NV, which is incorporated in the Netherlands, Antilles.

1.1.5 Number of Employees

The number of employees of the Group at the end of the year was 1,228 (2010 - 1,147), Company - 1,095 (2010 - 1,049).


The Financial Statements for the year ended 31st December 2011 were authorised for issue in accordance with a resolution of the Board of Directors on 28th February 2012.

1.2 Basis of Preparation 1.2.1 Statement of Compliance

The Financial Statements have been prepared in accordance with Sri Lanka Accounting Standards (SLAS), issued by The Institute of Chartered Accountants of Sri Lanka (ICASL) and the requirements of the Companies Act No. 07 of 2007 and Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995.

1.2.2 Basis of Measurement

The Financial Statements have been prepared on the historical cost basis, except for certain investments and items of Property, Plant & Equipment, which are measured at fair value and Defined Benefit Plans which are measured at the present value of the Retirement Benefit Obligations as explained in the respective Notes to the Financial Statements.

1.2.3 Functional and Presentation Currency


1.2.4 Use of Estimates and Judgements

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

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the Financial Statements is included in the following Notes:

• Note13-Measurementofintangibleassets• Note29-Measurementofretirementbenefitobligations• Note36-CommitmentsandContingencies

1.2.5 Changes in Accounting Policies Property, Plant & Equipment The Group resolved to measure buildings at fair value with

effect from 31st December 2010. Accordingly henceforth, buildings would be stated at valuation, less accumulated depreciation and accumulated impairment losses. Buildings were measured at cost in the previous periods. Thereby, buildings were stated at cost, less accumulated depreciation and accumulated impairment losses in the previous periods.

1.2.6 Foreign Currency Translation

Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are re-translated at the functional currency rate of exchange ruling at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are re-translated using the exchange rates as at the dates of the initial transactions. Foreign exchange differences arising on translation are recognised in profit and loss.

2. Significant Accounting Policies The accounting policies set out below have been consistently

applied by the Group, and are consistent with those used in the previous year, except as explained in Note 1.2.5, which addresses changes in accounting policies. Certain comparative amounts have been reclassified to conform to the current year’s presentation.

The Directors have made an assessment of the Group’s ability to continue as a going concern in the foreseeable future, and they do not intend either to liquidate or cease trading.

2.1 Basis of Consolidation 2.1.1 Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The Financial Statements of Subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases.

2.1.2 Associates (Equity Accounted Investees)

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% to 50% of the voting power of another entity. Investments in associates are accounted for using the equity method (equity accounted investees) and are recognised initially at cost. The Consolidated Financial Statements includes the Group’s share of the income and expenses and equity movements of equity accounted investees, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of losses exceeds its interest in an equity accounted investee, the carrying amount



of that interest is reduced to nil and the recognition of further losses is discontinued, except to the extent that the Group has an obligation or has made payments on behalf of the investee.

2.1.3 Transactions Eliminated on Consolidation

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

2.2 Assets and Bases of their Valuation Assets classified as current assets on the Balance Sheet are cash

and bank balances and those which are expected to be realised in cash during the normal operating cycle or within one year from the reporting date whichever is shorter.

2.2.1 Property, Plant & Equipment

Items of Property, Plant & Equipment are measured at cost or valuation, less accumulated depreciation and accumulated impairment losses.

(a) Cost and Valuation Cost includes expenditure directly attributable to the acquisition

of the asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of Property, Plant & Equipment have different useful lives, they are accounted for as separate items of Property, Plant & Equipment.

All items of Property, Plant & Equipment are initially recognised at cost. A revaluation is carried out when there is a substantial difference between the fair value and the carrying amount of the Property, and is undertaken by professionally qualified valuers. When items of Property, Plant & Equipment are subsequently revalued, the entire class of such assets are revalued.

Increases in the carrying amount on revaluation are credited to the revaluation reserve in shareholders' equity, unless it reverses a previous revaluation decrease relating to the same asset, which was previously recognised as an expense. In these circumstances the increase is recognised as income to the extent of the previous write down.

The revaluation surplus is transferred to retained earnings over the useful period of the respective assets that have been revalued.

Decreases in the carrying amount on revaluation that offset previous increases of the same individual asset is charged against revaluation reserve directly in equity. All other decreases are recognised in profit and loss.

(b) Subsequent Costs The cost of replacing part of an item of Property, Plant &

Equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within that part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of Property, Plant & Equipment are recognised in profit and loss as incurred.

(c) Depreciation Depreciation is recognised in profit and loss on a straight-line

basis over the estimated useful lives of each part of an item of Property, Plant & Equipment. Freehold land is not depreciated.

The estimated useful lives are as follows:

Freehold Buildings Over 37.5 to 50 years

Motor Vehicles Over 05 years

Furniture, Fittings and Equipment Over 10 years

Plant and Machinery Over 10 years

EDP Equipment Over 05 years

Improvement on Leasehold Premises Over 04 to 10 years

Shop Furniture and Equipment Over 05 years

Depreciation of an asset commences when the asset is available for use and ceases at the earlier of the date the asset is classified as held for sale and the date that the asset is derecognised.

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

(d) Derecognition An item of Property, Plant & Equipment is derecognised

upon disposal of or when no future economic benefits are expected from its use or disposal. Gains and losses arising on derecognition of the asset are determined by comparing the proceeds from disposal with the carrying amount of Property, Plant & Equipment and are recognised net within ‘Other Income’ in profit and loss.

2.2.2 Intangible Assets

An intangible asset is recognised if it is probable that future

economic benefits will flow to the entity and the cost of the

asset can be measured reliably in accordance with SLAS 37

on Intangible Assets. Intangible Assets with finite useful lives

are measured at cost, less accumulated amortisation and

accumulated impairment losses.

The useful lives of Intangible Assets are assessed to be either finite or indefinite.

Intangible Assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the Intangible Asset may be impaired. The amortisation period and the amortisation method for



an Intangible Asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. Amortisation expense on Intangible Assets with finite lives is recognised in profit and loss on a straight-line basis over the estimated useful lives, from the date they are available for use.

The estimated useful lives of Intangible Assets with finite lives are as follows:

The Class of Intangible Assets Useful Life

Computer Software 10 years

Other Intangible Assets Externally Acquired 5 years

Intangible Assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such intangibles are not amortised.

Gains or losses arising from derecognition of an Intangible Asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit and loss when the asset is derecognised.

Intangible Assets with indefinite useful lives represent Trade Marks purchased through the effect of a business combination and were recorded initially at cost. Following the initial recognition of Trade Marks at cost, the carrying amount was recognised after accumulated amortisation annually up to 31st December 2005. However, due to the effect of SLAS 41 - Impairment of Assets, the said Trade Marks were deemed indefinite lived Intangible Assets and accordingly, the carrying amount of the Trade Marks is determined after testing for impairment annually. This change is applied prospectively.

2.2.3 Trade and Other Receivables

Trade receivables are stated at the amounts they are estimated to realise net of provisions for bad and doubtful debts.

Other receivables and dues from related parties are recognised at cost, less provision for bad and doubtful receivables.

Assets sold to customers under fixed rate hire agreements which transfer all the risks and rewards as well as the legal title at the end of such contractual period are classified as hire purchase receivables. Hire purchase receivable in the Balance Sheet represents the total hire value net of unearned finance income charges and provision for doubtful recoveries.

Assets leased to customers under agreements, which transfer substantially all the risks and rewards associated with ownership other than legal title, are classified as finance leases. Lease rentals receivable in the Balance Sheet represent total minimum lease payments due, net of unearned income and provision for doubtful recoveries.

The allowances for bad and doubtful debts are based on the collectibles of the receivables and a provision is made for these amounts, based on the period of arrears as follows:

Hire Purchase Receivables

Arrears of 3 and 4 months 50% of debtors, net of unearned carrying charges.

Arrears of 5 months and over 100% of debtors, net of unearned carrying charges.


Hire purchase receivables/lease receivables for motor vehicles.



Trade Receivables

Arrears within 150-180 days 20%



Arrears of 241 days and over 100%

2.2.4 Investments 2.2.4.1 Non-Current Investments Non-current investments are measured initially at cost. Provision

for diminution in value of investments is made when in the opinion of the Directors there has been a decline, other than temporary in the carrying amount of the investment.

2.2.4.2 Current Investments Marketable Securities

Current investments are stated at lower of cost and market value determined on an aggregate portfolio basis.

An impairment loss will be recognised when the subsequent write down of the asset to fair value less, cost to sell is lower than the value previously recognised. A gain will be recognised for any subsequent increase in fair value, less cost to sell off an asset, not exceeding the cumulative impairment loss that has been recognised.

2.2.5 Inventories

Inventories are measured at the lower of cost and net realisable

value, after making due allowances for obsolete and slow moving

items. Net realisable value is the estimated selling price in the

ordinary course of business, less the estimated cost of completion

and selling expenses.



The cost of each category of inventory is determined on the

following basis:

Raw Materials - At actual cost on first-in first-out basis.

Finished Goods (excluding factory) - Weighted average cost.

Finished Goods and Work-in-Progress at Piliyandala Factory

-

At the cost of direct materials, direct labour and an appropriate proportion of fixed production overheads, based on normal operating capacity.

Goods-in-Transit - At actual cost.

Supplies and Parts

-

Purchase cost, less issues for the period valued at a standard percentage of selling price (requires revision).

Repossessed Goods - Half of its weighted average cost. Provisions for Inventory Specific provisions are made giving consideration to the

condition of inventory held by the Company.

2.2.6 Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, demand deposits and short-term highly liquid investments, readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand and deposits in banks, net of outstanding bank overdrafts.

2.2.7 Impairment of Assets

The carrying amount of the Company’s non-financial assets other than inventories and deferred tax assets is reviewed at each reporting date to determine whether there is an indication of impairment. If any such indication exists, or when annual impairment testing for an asset is required, then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value, less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value, less costs to sell, an appropriate valuation model is used.

An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit and loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2.3 Liabilities and Provisions Liabilities classified as current liabilities in the Balance Sheet are

those which fall due for payment on demand or within one

year from the reporting date. Non-current liabilities are those balances that fall due for payment later than one year from the reporting date.

All known liabilities have been accounted for in preparing the Financial Statements.

2.3.1 Provisions

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

2.3.1.1 Provisions for Warranties A provision for warranties is recognised when the underlying

products or services are sold. The provision is based on historical warranty data and a weighing of all possible outcomes against their associated probabilities.

Trade and Other Payables

Trade and other payables are stated at their cost.

Capital Commitments and Contingencies

Capital commitments and contingent liabilities of the Group are disclosed in the respective Notes to the Financial Statements.

2.3.2 Employee Benefits 2.3.2.1 Defined Benefit Plan A defined benefit plan is post-employement benefit plan other

than a defined contribution plan. The liability recognised in the Financial Statements in respect of defined benefit plans is the present value of the defined benefit obligation as at the reporting date. The defined benefit obligation is calculated by a Qualified Actuary as at the reporting date using the Projected Unit Credit (PUC) method as recommended by SLAS 16.

The actuarial valuation involves making assumptions about discount rates, salary increment rate, mortality rate and retirement age. Due to the long-term nature of his plans such estimates are subject to significant uncertainty.

The liability is not externally funded.

2.3.2.2 Defined Contribution Plans - Employees' Provident Fund /Mercantile Services Provident Society and Employees' Trust Fund A defined contribution plan is a post-employement benefit plan

under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Employees are eligible for contributions to Employees' Provident Fund/Mercantile Services Provident Society and Employees' Trust Fund in line with the respective Statutes and Regulations. The Company contributes 12%, 12% and 3% of gross emoluments of employees to the Employees' Provident Fund, Mercantile Services Provident Society and the Employees' Trust Fund, respectively and is recognised as an expense in profit and loss in the periods during which services are rendered by employees.



2.3.2.3 Short-Term Benefits Short-term employee benefit obligations are measured on an

undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past services provided by the employee and the obligation can be measured reliably.

2.3.3 Discontinued Operations

A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired with a view to resale. Classification as discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative Income Statement is restated as if the operation had been discontinued from the start of the comparative period.

2.4 Income Statement 2.4.1 Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company 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 returns and allowances, trade discounts and turnover taxes. The following specific criteria are used for the purpose of recognition of revenue:

(a) Sale of Goods (Normal Trading Transactions) Revenue from the sale of goods is recognised when the

significant risks and rewards of ownership of the goods have passed to buyers, the recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably.

(b) Sale of Goods (Hire Purchase Transactions) At the time of effecting hire sales, the cash sales value is

recognised as sales.

The unearned income is recognised as income over the term of hire purchase contract commencing from the month in which first rental is due, in proportion to the declining receivable balance, so as to produce a constant periodic rate of return on the hirer’s net investment outstanding on the hire purchase.

(c) Interest - Other Interest income is recognised in profit and loss as it accrues

(taking into account the effective yield on the asset).

(d) Dividends Dividend income is recognised in profit and loss when the right

to receive dividends is established.

(e) Service Fee Income on Hire Purchase Service fee income is recognised over the length of hire purchase

agreement on sum of digit method. In the event of early termination of the Hire Purchase Contract or cash conversion remaining deferred, service income is recognised when such contract is recognised or converted.

(f) Income on Suraksha and Extended Warranty Scheme Income is recognised over the period of contract. Unrecognised

income is accounted for as Deferred Revenue.

(g) Others Other income is recognised on an accrual basis.

Net gains and losses of a revenue nature on the disposal of Property, Plant & Equipment and other non-current assets including investments have been accounted for in profit and loss, having deducted from proceeds on disposal, the carrying amount of the assets and related selling expenses.

2.4.2 Revenue Recognition Policy of Singer Finance (Lanka) PLC (a) Hire Purchase The excess of aggregated contract receivables over the cost

of the hired assets constitutes the total unearned income at the commencement of a contract. The unearned income is recognised as income over the term of the hire purchase contract commencing from the month in which the first rental is due, in proportion to the declining receivable balance, so as to produce a constant periodic rate of return on the hirer’s net investment outstanding on the hire purchase.

(b) Lease The excess of aggregated contract receivables over the cost

of the leased assets constitutes the total unearned income at the commencement of a contract. The unearned income is recognised as income over the term of lease contract commencing from the month in which the first rental is due, in proportion to the declining receivable balance, so as to produce a constant periodic rate of return on the lessor’s net investment outstanding on the lease outstanding.

(c) Interest on Government Securities Interest is accrued in profit and loss, based on a receivable

pattern reflecting a constant periodic rate of return.

(d) Commissions, Service Charges and Others Commissions, service charges and others are recognised on an

accrual basis.

2.4.3 Expenditure Recognition

(a) Expenses are recognised in profit and loss on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the Property, Plant & Equipment in a state of efficiency has been charged to income in arriving at the profit for the year.



(b) For the purpose of presentation of the Income Statement, the Directors are of the opinion that ‘function of expenses method’ presents fairly the elements of the Company's performance and hence such presentation method is adopted.

Net Finance Cost Finance income comprises interest income on funds invested,

and gains on translation of foreign currency.

Finance cost comprises interest payable on borrowings and losses on translation of foreign currency.

2.4.4 Taxation

Income tax expense comprises both current and deferred tax. Income tax expense is recognised in profit and loss, except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

(a) Current Taxes The current tax is the expected tax payable on the taxable

income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

(b) Deferred Taxation Deferred tax is recognised in respect of temporary differences

between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except for -

• temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither the accounting profit nor taxable profit or loss;

• temporary differences related to investments in Subsidiaries to the extent that it is probable that the temporary differences will not reverse in the foreseeable future; and

• taxable temporary differences arising on the initial

recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on tax laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised for unused tax losses and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and is reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Tax withheld on dividend income from subsidiaries and associates is recognised as an expense in the Consolidated Income Statement at the same time as the liability to pay the related dividend is recognised.

2.4.5 Borrowing Costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

2.4.6 Events Occurring after the Balance Sheet Date

All material events occurring after the Balance Sheet date have been considered and where necessary adjustments made in these Financial Statements.

2.4.7 Earnings Per Share

The Group presents basic Earnings Per Share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted number of ordinary shares outstanding during the period.

2.4.8 Segment Reporting

A segment is a distinguishable component of the Group that is engaged in either providing related products or services (Business Segments) or in providing products or services within a particular economic environment (Geographical Segment) which is subject to risk and returns that are different from those of other segments. Segmental information is presented in respect of the Group’s Business or Geographical Segments. The Group's primary format for segment reporting is based on business segments and is based on the Group's management and internal reporting structure.

Segment results assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Segment Capital expenditure is the total cost incurred during the period to acquire Property, Plant & Equipment and Intangible Assets other than goodwill.

Segment information is presented in the respective Notes to the Financial Statements.

2.4.9 Cash Flow Statement

The cash flow statement has been prepared using the

indirect method.

2.4.10 New Accounting Standards Issued but not Effective at the Reporting Date

The Institute of Chartered Accountants of Sri Lanka issued a new volume of Sri Lanka Accounting Standards which will become applicable for annual periods beginning on or after 1st January 2012. Accordingly, these Standards have not been applied in preparing these Financial Statements as they were not effective for the year ended 31st December 2011.

The Company is currently in the process of evaluating the potential effect of these Standards on its Financial Statements and the impact on the adoption of these Standards has not

been quantified as at the reporting date.



3. RevenueConsolidated Company

Year ended 31st December 2011 2010 2011 2010Rs. Rs. Rs. Rs.

3.1 SummaryGross Turnover 22,010,767,109 16,136,677,105 20,931,312,025 15,285,628,173

Less: Sales Taxes:

Turnover Tax – (108,143,303) – (108,143,303)

22,010,767,109 16,028,533,802 20,931,312,025 15,177,484,870

3.2 RevenueSale of Goods 19,338,972,033 14,028,853,847 19,338,972,033 14,028,853,847

Rendering of Services 2,671,795,076 1,999,679,955 1,592,339,992 1,148,631,023

22,010,767,109 16,028,533,802 20,931,312,025 15,177,484,870

4. Segment Information

4.1 Segment Products and Services

Sewing-Related Products Domestic and Industrial Sewing Machines and General Merchandise.

Consumer Electronics Televisions, Audios, VCD, DVD and Other Electronic Products.

White Goods Refrigerators, Washing Machines, Deep Freezers, Bottle Coolers, Air-Conditioners and Fans.

Kitchen-Related Products Table Tops, Gas Ovens, Rice Cookers, Microwave Ovens, Electric Ovens, Grinders and Blenders.

Communications Computers, Laptops, CDMA and Celluar Phones and Dialog Satellite Dishes.

Furniture Wood and Layered Furniture, Sofa Sets and Steel Furniture.

Transportation Motor Bikes and Bicycles.

Agro Water Pumps, Paddy Threshers, Tractors

Singer Finance (Lanka) PLC Leasing, Hire Purchase and Loans 4.2 Segmental Analysis of Revenue is as Follows:


2011 2010 2011 2010Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Sewing-Related Products 2,403,858 1,932,881 2,403,858 1,932,881

Consumer Electronics 6,068,647 3,601,210 6,068,647 3,601,210

White Goods 7,399,427 5,386,396 7,399,427 5,386,396

Kitchen-Related Products 1,481,274 1,049,177 1,481,274 1,049,177

Communications 1,333,349 974,595 1,333,349 974,595

Furniture 1,041,997 814,385 1,041,997 814,385

Transportation 448,145 764,342 448,145 764,342

Agro 754,615 654,499 754,615 654,499

Singer Finance (Lanka) PLC 1,079,455 851,049 – –

22,010,767 16,028,534 20,931,312 15,177,485



4.3 Segmental Analysis of Profit before Tax is as Follows:Consolidated Company

2011 2010 2011 2010Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Sewing-Related Products 188,133 92,801 188,133 92,801

Consumer Electronics 591,230 246,501 591,230 246,501

White Goods 575,451 261,601 575,451 261,601

Kitchen-Related Products 149,642 68,552 149,642 68,552

Communications 70,320 42,011 70,320 42,011

Furniture 71,074 40,192 71,074 40,192

Transportation 11,344 18,826 11,344 18,826

Agro 45,927 30,028 45,927 30,028

Singer Finance (Lanka) PLC 283,762 187,201 – –

Segment Result 1,986,883 987,713 1,703,121 800,512

Gain on Disposal of Other Investment (Note 16.3) – 3,639 – 3,639

Dividend from Associates/Subsidiary 18 953 28,805 18,948

Gain on Dilution of Shares in Singer Finance (Lanka) PLC (Note 5.1) – 176,574 – –

Share of Loss on Equity Accounted Investees (639) (1,017) – –

1,986,262 1,167,862 1,731,926 823,099

4.4 There are no separately distinguishable assets and liabilities for the above segments.

5. Other IncomeConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Dividend Income - Quoted 18,225 120,270 28,804,721 18,115,770

- Unquoted – 832,500 – 832,500

Gain on Disposal of Property, Plant & Equipment 9,561,662 1,365,846 9,561,662 1,365,846

Overdue Charges 41,549,697 31,381,760 – –

Miscellaneous Income 38,360,755 11,175,760 17,716,163 14,982,221

Service Fee Income - Singer Finance (Lanka) PLC – – 65,942,700 73,813,555

Income from Financial Services 45,219,623 42,378,267 45,219,623 42,378,267

Gain on Dilution of Holding in Singer Finance (Lanka) PLC (Note 5.1) – 176,573,748 – –

Gain on Disposal of Other Investments (Note 16.3) – 3,638,919 – 3,638,919

134,709,962 267,467,070 167,244,869 155,127,078

5.1 Subsidiary Company Singer Finance (Lanka) PLC issued 26,666,667 ordinary shares at Rs. 15/- per share increasing stated capital

by Rs. 400 million. IPO shares were allotted on 22nd December 2010. Due to this allotment of shares, Group holding percentage on

Singer Finance (Lanka) PLC decreased to 75% from 100% with effect from 22nd December 2010. Gain on Dilution resulting from decrease

in Group holding percentage from 100% to 75% in Singer Finance (Lanka) PLC was accounted in the Consolidated Financial Statements.

The Gain on Dilution of Holding in Singer Finance (Lanka) PLC is calculated as below:

Rs.

Stated Capital of Singer Finance (Lanka) PLC 800,000,005

Investment of Singer (Sri Lanka) PLC 400,000,000

Net Asset Value of Singer Finance (Lanka) PLC on the date of allotment, 22nd December 2010 226,426,257

Gain on Dilution 176,573,748



6. Other ExpensesConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Depreciation on Property, Plant & Equipment (Notes 12.9 & 12.18) 180,032,120 160,319,856 172,207,605 154,168,063

Amortisation of Intangible Assets with

Finite Useful Lives (Note 13.8) 15,933,417 14,151,652 14,352,391 12,968,704

195,965,537 174,471,508 186,559,996 167,136,767

7. Net Finance Cost

7.1 Finance CostInterest on Overdrafts and Loans 529,434,258 545,848,228 507,795,702 542,161,113

Interest on Security Deposits 54,446,848 39,319,918 50,596,591 34,202,876

Interest on Customer Deposits 254,544,674 222,877,576 – –

Interest on Related Party Payables 1,258,082 11,307,769 1,258,082 11,307,769

839,683,862 819,353,491 559,650,375 587,671,758

7.2 Finance IncomeInterest Income - Related Parties 17,595,396 36,122,289 83,442,814 88,847,850

- Others 20,604,847 7,352,343 378,165 (39,049,237)

Gain on Translation of Foreign Currency 11,865 1,653,608 11,865 1,653,608

38,212,108 45,128,240 83,832,844 51,452,221

Net Finance Cost 801,471,754 774,225,251 475,817,531 536,219,537

8. Share of Profit/(Loss) of Equity Accounted Investee - (Net of Income Tax)Consolidated

2011 2010Rs. Rs. Rs. Rs.

Share of Profit/(Loss) Share of Tax Net Profit/(Loss) Net Profit/(Loss)

Reality Lanka Ltd. (824,975) 186,000 (638,975) (1,016,683)

(824,975) 186,000 (638,975) (1,016,683)

9. Profit before TaxConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Stated after Charging all Expenses including the Following:

Executive Directors’ Emoluments 63,539,518 27,388,160 54,871,469 22,270,866

Non-Executive Directors’ Fees 7,704,299 5,310,000 6,579,299 4,185,000

Auditors' Remuneration - Statutory Audit 1,850,000 1,550,000 1,300,000 1,080,000

- Audit-Related Services 925,000 773,500 765,000 468,500

- Non-Audit Services – 1,300,000 – 1,300,000



Personnel Costs (Note 9.1) 2,534,018,054 1,853,225,295 2,424,414,608 1,782,072,888

Operating Lease Rentals 415,896,718 311,930,856 400,038,242 303,681,713

Donations 284,000 355,126 284,000 355,126



9.1 Personnel CostsConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Staff Cost 2,298,678,924 1,668,937,935 2,198,216,933 1,604,772,284

Voluntary Retirement Scheme 2,170,919 6,853,947 2,170,919 6,853,947

Defined Benefit Plan Costs - Retiring Gratuity 36,562,706 33,812,560 34,686,259 31,981,517

Defined Contribution Plan Costs - EPF, ETF and MSPS 196,605,505 143,620,853 189,340,497 138,465,140

2,534,018,054 1,853,225,295 2,424,414,608 1,782,072,888

10. Income Tax ExpenseConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Current Income Tax Expense

Current Tax Expense on Ordinary Activities for the Year - Singer (Sri Lanka) PLC (Note 10.1) 708,443,910 443,567,628 578,971,099 365,307,497

(Over)/Under Provision in Respect of Previous Year 1,085,665 35,396,548 1,112,963 5,729,691

Tax on Dividend Income

WHT on Dividend Received from Singer Finance (Lanka) PLC 3,200,000 2,000,000 – –

712,729,575 480,964,176 580,084,062 371,037,188

Deferred Tax

Expense/(Income) (Note 10.2) (33,223,601) 18,077,973 (11,148,594) 28,700,067

679,505,974 499,042,149 568,935,468 399,737,255

10.1 Reconciliation Between Current Tax Expense and the Product of Accounting ProfitConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Profit before Tax including Intra-Group Adjustment 2,015,062,282 1,364,435,260 1,731,925,754 823,099,069

Intra-Group Adjustment (28,799,996) (196,573,748) – –

Profit before Tax 1,986,262,286 1,167,861,512 1,731,925,754 823,099,069

Share of Loss of Associates 638,975 1,016,683 – –

Aggregate Accounting Profit 1,986,901,261 1,168,878,195 1,731,925,754 823,099,069

Aggregate Disallowable Expenses 1,299,729,658 586,503,028 583,891,356 541,205,741

Aggregate Tax Deductible Expenses (897,278,913) (305,608,813) (365,990,268) (313,406,581)

Income Not Liable for Tax (28,818,221) (201,165,437) (28,804,721) (22,587,189)

2,360,533,785 1,248,606,973 1,921,022,121 1,028,311,040

Taxable Profit 2,360,533,785 1,248,606,973 1,921,022,121 1,028,311,040

Taxable Profit tax @ 35% - (01.01.2011 - 31.03.2011) 545,978,803 1,248,606,973 545,978,803 1,028,311,040

Taxable Profit tax @ 33 1/3% - (01.01.2011 - 31.03.2011) 109,877,916 – – –

Taxable Profit tax @ 28% - (01.04.2011 - 31.12.2011) 1,704,677,066 – 1,375,043,318 –

2,360,533,785 1,248,606,973 1,921,022,121 1,028,311,040

Income Tax at 35% 191,092,581 437,012,441 191,092,581 359,908,864

Income Tax at 33 1/3% 36,625,972 – – –

Income Tax at 28% 477,309,579 – 385,012,129 –

Social Responsibility Levy 3,415,778 6,555,187 2,866,389 5,398,633

Current Income Tax Expense 708,443,910 443,567,628 578,971,099 365,307,497



The Group tax expense is based on the taxable profit of each Company in the Group. Singer (Sri Lanka) PLC is liable to Income Tax at 28% on taxable

profit with effect from 1st April 2011 and an additional 1.5% Social Responsibility Levy on Tax was abolished with effect from 1st April 2011.

10.2 Deferred Tax Expense/(Income)Consolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Deferred Tax Charge/(Credit) arising due to Origination and Reversal of Temporary Differences (Note 28.1/28.2) (33,223,601) (10,532,694) (11,148,594) 89,400

Adjustment due to Change in Tax Rate (Note 28.1) – 28,610,667 – 28,610,667

(33,223,601) 18,077,973 (11,148,594) 28,700,067

10.3 Deferred Tax has been computed using the enacted tax rate of 28%.

11. Earnings Per Share 11.1 Basic earnings per share is calculated by dividing the profit for the year attributable to the ordinary shareholders by the weighted

average number of ordinary shares outstanding during the year. Number of ordinary shares for the year 2010 has been adjusted to reflect

the increase in number of shares consequent to the subdivision on 31st March 2011. Accordingly, earnings per share has been adjusted

retrospectively as per SLAS 34 - Earnings Per Share - (Revised 2005).

11.2 The following reflects the income and share data used in the basic earnings per share computations:


2011 2010 2011 2010Rs. Rs. Rs. Rs.

Amounts used as the Numerator


Profit Attributable to Ordinary Shareholders for Basic Earnings per Share 1,262,654,702 668,011,242 1,162,990,287 423,361,814

Number of Ordinary Shares Used as Denominator

Weighted Average Number of Ordinary Shares in Issue Applicable to Basic Earnings per Share 125,209,610 125,209,610 125,209,610 125,209,610

Basic Earnings per Share (Rs.) 10.08 5.34 9.29 3.38

11.3 The following reflects the income and share data used in the earnings per share excluding the gain on dilution of equity holding in

Singer Finance (Lanka) PLC.


2011 2010 2011 2010Rs. Rs. Rs. Rs.


Profit for the Year Excluding the Gain on Dilution of Equity Holding in Singer Finance (Lanka) PLC 1,306,756,313 492,245,616 1,162,990,287 423,361,814

Profit Attributable to Ordinary Shareholders for Earnings per Share Excluding the Gain on Dilution of Equity Holding in Singer Finance (Lanka) PLC 1,262,654,702 491,437,494 1,162,990,287 423,361,814

Number of Ordinary Shares Used as Denominators


Earnings per Share Excluding the Gain on Dilution of Shares of Singer Finance (Lanka) PLC (Rs.) 10.08 3.92 9.29 3.38



12. Property, Plant & Equipment 12.1 Gross Carrying Amounts - Consolidated

Balance Additions/ Disposals/ Balanceas at Transfers Transfers as at

01.01.2011 31.12.2011Rs. Rs. Rs. Rs.

At Cost

Motor Vehicles 182,745,633 110,139,619 33,081,294 259,803,958

Furniture & Equipment 179,927,626 58,049,477 48,048,353 189,928,750

Plant & Machinery 169,154,722 10,590,462 1,925,850 177,819,334

Culinary School Equipment 75,814 – – 75,814

E.D.P. Equipment 267,040,150 46,294,252 – 313,334,402

Shop Furniture 98,492,050 35,189,357 18,624,013 115,057,394

Shop Equipment 196,774,560 27,559,095 36,299,373 188,034,282

Improvements on Leasehold Premises 402,438,438 56,163,945 144,908,358 313,694,025

1,496,648,993 343,986,207 282,887,241 1,557,747,959

At Valuation

Freehold Land 512,436,500 – – 512,436,500

Freehold Building 547,859,318 503,300 38,254 548,400,872

1,060,295,818 503,300 38,254 1,060,837,372

Total Gross Carrying Amount 2,556,944,811 344,489,507 282,848,987 2,618,585,331

12.2 Depreciation and Impairment Losses

Balance Charge for Disposals/ Balanceas at the Year/ Transfers as at

01.01.2011 Transfers 31.12.2011Rs. Rs. Rs. Rs.

Freehold Building – 18,116,948 38,254 18,155,202

Motor Vehicles 98,993,996 23,183,272 22,578,941 99,598,327


Plant & Machinery 99,149,920 16,212,262 1,925,850 113,436,332


E.D.P. Equipment 202,511,114 27,737,408 – 230,248,522

Shop Furniture 65,524,412 13,890,499 18,624,013 60,790,898

Shop Equipment 137,258,089 24,899,473 36,299,373 125,858,189


Total Depreciation and Impairment Loss 992,704,872 207,120,389 272,346,535 927,478,726

12.3 Carrying AmountsGroup

2011 2010Rs. Rs.

At Cost 630,269,233 503,944,121

At Valuation 1,060,837,372 1,060,295,818

Total Carrying Amount of Property, Plant & Equipment 1,691,106,605 1,564,239,939

12.4 During the financial year, the Group acquired property, plant & equipment to the aggregate value of Rs. 344,489,507/-

(2010 - Rs. 96,691,246/-) on cash basis.

12.5 Property, plant & equipment includes fully-depreciated assets having a gross carrying amount of Rs. 223,093,320/-

(2010 - Rs. 458,201,081/-).



12.6 Lands & buildings were revalued during the financial year 2010 by Messrs Chulananda Wellappili, an Independent Valuer.

The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st December 2010.

Such assets were valued on an open market value for existing use basis. The surplus arising from the revaluation was transferred to a

revaluation reserve.

12.7 Cost of the revalued land as at 31st December 2011 is Rs. 103,338,782/- (2010 - Rs. 103,338,782/-).

12.8 Cost of the revalued buildings as at 31st December 2011 is at Rs. 255,159,491/- (2010 - Rs. 273,314,693/-).

12.9 Depreciation charge for the year is included in the following line items in the Income Statement.

2011 2010Rs. Rs.

Cost of Sales 27,088,269 15,489,237

Other Expenses Excluding Amortisation of Software and Externally Acquired Intangible Assets 180,032,120 160,319,856

207,120,389 175,809,093

12.10 Gross Carrying Amounts - Company

Balance Additions/ Disposals/ Balanceas at Transfers/ Transfers as at

01.01.2011 31.12.2011Rs. Rs. Rs. Rs.

At Cost

Freehold Building – – – –

Motor Vehicles 178,944,606 110,139,619 33,081,294 256,002,931


Plant & Machinery 169,154,722 10,590,462 1,925,850 177,819,334


E.D.P. Equipment 256,841,611 43,787,434 – 300,629,045

Shop Furniture 98,492,050 35,189,357 18,624,013 115,057,394

Shop Equipment 196,774,560 27,559,095 36,299,373 188,034,282


1,446,199,436 332,842,988 282,887,241 1,496,155,183

At Valuation

Freehold Land 512,436,500 – – 512,436,500

Freehold Building 547,859,318 503,300 38,254 548,400,872

1,060,295,818 503,300 38,254 1,060,837,372

Total Gross Carrying Amount 2,506,495,254 333,346,288 282,848,987 2,556,992,555






Freehold Building – 18,116,948 38,254 18,155,202

Motor Vehicles 98,213,551 22,823,067 22,578,941 98,457,677


Plant & Machinery 99,149,919 16,212,262 1,925,850 113,436,331


E.D.P. Equipment 196,393,572 26,074,357 – 222,467,929

Shop Furniture 65,524,412 13,890,499 18,624,013 60,790,898

Shop Equipment 137,258,090 24,899,473 36,299,373 125,858,190

Total Depreciation and Impairment Losses 970,442,175 199,295,874 272,346,535 897,391,514

12.12 Carrying Amounts

2011 2010Rs. Rs.

At Cost 598,763,669 475,757,259

At Valuation 1,060,837,372 1,060,295,818


12.13 During the financial year, the Company acquired Property, plant & equipment to the aggregate value of Rs. 333,346,288/-

(2010 - Rs. 86,440,992/-) on cash basis.

12.14 Property, plant & equipment include fully-depreciated assets having a gross carrying amount of Rs. 216,764,418/-

(2010 - Rs. 446,831,598/-).

12.15 Lands and Buildings were revalued during the financial year 2010 by Messrs Chulananda Wellappili, an Independent Valuer. The results

of such revaluation were incorporated in these Financial Statements from its effective date which is 31st December 2010. Such assets were

valued on an open market value for existing use basis. The surplus arising from the revaluation was transferred to a revaluation reserve.

12.16 Cost of revalued land as at 31st December 2011 is Rs. 103,338,782/- (2010 - Rs. 103,338,782/-).

12.17 Carrying amount of the revalued buildings as at 31st December 2011 is Rs. 255,159,491/- (2010 - Rs. 273,314,693/-).


2011 2010Rs. Rs.

Cost of Sales 27,088,269 15,489,236

Other Expenses Excluding Amortisation of Software and Externally Acquired Intangible Assets 172,207,605 154,168,063

199,295,874 169,657,299



12.19 Information on the Freehold Land & Building of the Company

LocationExtent

(Perches)Buildings

(Square Feet)

Cost or Revaluation of

Land Rs. ’000


BuildingsRs. ’000

Total ValueRs. ’000

Accumulated Depreciation

Rs. ’000 Net Book Value

Rs. ’000

Net BookValue as a

% of Revalued Amount

Ambalantota No. 46, Main Street, Ambalantota 6.6 1,885 5,610,000 4,147,000 9,757,000 666,198 9,090,802 93

Balangoda No. 60, Ratnapura Road, Balangoda 6.2 2,080 9,300,000 5,616,000 14,916,000 1,409,521 13,506,479 91

Bandarawela No. 120, Main Street, Bandarawela 3.69 1,535 4,428,000 4,840,250 9,268,250 955,709 8,312,541 90

Borella No. 33, D.S. Senanayaka Mawatha, Borella 4.64 1,700 23,200,000 5,661,000 28,861,000 3,447,589 25,413,411 88

Chilaw No. 04, Bazaar Street, Chilaw 13.05 4,120 15,660,000 11,865,600 27,525,600 2,537,074 24,988,526 91

ColpettyNo. 143, Galle Road, Colombo 03 3.35 1,560 15,075,000 5,040,000 20,115,000 306,980 19,808,020 98

EheliyagodaNo. 159, Ratnapura Road, Eheliyagoda 5.73 1,660 4,870,500 4,357,500 9,228,000 1,450,002 7,777,998 84

GalleNo. 176, Main Street, Galle 2.84 2,250 7,100,000 9,000,000 16,100,000 732,608 15,367,392 95

Gampaha No. 103, Colombo Road, Gampaha 19.45 7,870 32,166,000 24,790,500 56,956,500 4,764,579 52,191,921 92

Hikkaduwa No. 263, Galle Road, Hikkaduwa 8.74 2,400 8,740,000 6,120,000 14,860,000 1,338,650 13,521,350 91

Hingurakgoda Main Road, Hingurakgoda 15.25 2,145 12,200,000 6,435,000 18,635,000 2,075,936 16,559,064 89

Kadawatha Kandy Road, Kadawatha 3.8 1,150 4,400,000 3,018,750 7,418,750 728,412 6,690,338 90

Kandy - Mega No. 215, Sirimavo Bandaranaike Mawatha, Kandy 9.55 12,840 20,980,000 40,568,800 61,548,800 8,941,416 52,607,384 85

Katugastota No. 07, Madawala Road, Katugastota 4.875 535 5,512,500 – 5,512,500 – 5,512,500 100

Kirindiwella No. 83, Rakwana Road, Kirindiwella 8.1 2,940 8,100,000 7,497,000 15,597,000 1,393,013 14,203,987 91

Kurunegala No. 28A, Bodhiraja Mawatha, Kurunegala 7.66 2,230 13,788,000 4,961,250 18,749,250 1,075,846 17,673,404 94

Maharagama No. 71/A, High Level Road, Maharagama 6.2 2,700 15,500,000 8,505,000 24,005,000 1,150,328 22,854,672 95

Matara Anagarika Dharmapala Mawatha, Matara 10 3,520 16,800,000 11,880,000 28,680,000 1,990,068 26,689,932 93

Middeniya Katuwana Road, Middeniya 8.25 2,670 6,600,000 6,174,375 12,774,375 1,306,303 11,468,072 90

Mount Lavinia Galle Road, Mount Lavinia 7.5 1,900 22,500,000 5,985,000 28,485,000 1,043,065 27,441,935 96

Mount Lavinia - Mega Galle Road, Mount Lavinia 20 15,840 55,410,000 58,756,047 114,166,047 10,985,655 103,180,392 90

Nawalapitiya Kotmale Road, Nawalapitiya 5.25 2,760 7,050,000 6,210,000 13,260,000 1,604,099 11,655,901 88

Negombo Greens Road, Negombo 6 2,040 14,400,000 5,049,000 19,449,000 1,182,267 18,266,733 94

Nuwara Eliya No. 80, Kandy Street, Nuwara Eliya 4.65 1,700 9,300,000 4,768,500 14,068,500 992,425 13,076,075 93



LocationExtent

(Perches)Buildings

(Square Feet)


Land Rs. ’000


BuildingsRs. ’000

Total ValueRs. ’000

Accumulated Depreciation

Rs. ’000 Net Book Value

Rs. ’000

Net BookValue as a

% of Revalued Amount

Panadura No. 348, Galle Road, Panadura 6.15 2,940 9,225,000 8,121,750 17,346,750 1,583,519 15,763,231 91

Pettah No. 1801/79, People's Park, Bodhiraja Mawatha, Colombo 11 81.2 872 8,000,000 8,000,000 1,091,552 6,908,448 86

PiliyandalaGonamaditta Road, Piliyandala 1,151.95 116,410 114,435,000 254,707,625 369,142,625 31,858,510 337,284,115 91

PussellawaNo. 515B, Nuwara Eliya Road, Pussellawa 12.43 3,295 9,322,500 8,451,675 17,774,175 2,119,419 15,654,756 88

RathnapuraNo. 122, Colombo Road, Ratnapura 5.8 2,735 8,700,000 7,384,500 16,084,500 1,675,212 14,409,288 90

TangalleNo. 99, Matara Road, Tangalle 4.6 1,285 6,900,000 1,606,250 8,506,250 36,960 8,469,290 100

TrincomaleeNorth Coast Road, Trincomalee 12.12 2,184 4,464,000 2,200,000 6,664,000 221,397 6,442,603 97

Wellawatta No. 579, Galle Road, Wellawatta, Colombo 06 4.6 2,700 20,700,000 6,682,500 27,382,500 1,935,192 25,447,308 93

512,436,500 548,400,872 1,060,837,372 92,599,505 968,237,867

13. Intangible AssetsConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

13.1 Trade MarkSummary

Cost

As at the beginning of the Year 79,762,500 79,762,500 79,762,500 79,762,500

As at the end of the Year 79,762,500 79,762,500 79,762,500 79,762,500

Less: Accumulated Impairment Loss – – – –

Net Carrying Amount 79,762,500 79,762,500 79,762,500 79,762,500

13.2 Software

Summary

Cost


Acquired/Incurred during the Year (Note 13.7) 4,677,083 13,600,416 – 10,968,434


Amortisation


Amortisation Charge for the Year 9,533,421 7,751,659 7,952,395 6,568,711


Carrying Amount





13.3 Other Intangible Assets Externally AcquiredConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Cost


Acquired/Incurred during the Year – – – –

Capitalised during the Year – – – –


Amortisation




Carrying Amount



Total Net Carrying Amount 153,933,369 165,189,703 141,266,387 155,618,778

13.4 Sisil Trademark

The Company had acquired the ‘SISIL’ trademark in December 2000, amounting to Rs. 55 million. The carrying amount as at

31st December 2011 is Rs. 41,250,000/-. The Company had initially recorded the ‘SISIL’ trademark at cost and amortised over the

determined useful life. The management is of the opinion that the aforementioned trademark has an indefinite useful life as their associated

brand awareness and recognition has existed over 30 years and the Company intends to utilise the said trademark for the foreseeable future.

There are no legal, regulatory, contractual, competitive, economic or other factors that may limit its useful life and accordingly, the carrying

amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for any impairment

as at 31st December 2011.

Annual Sales Growth for the Next Five Years 12%

Gross Margin 27%

Discount Rate 12%

Indefinite Growth Rate after Year 2015 3%

13.5 UNIC Trademark

The Company had acquired the ‘UNIC’ trademark in 2006, amounting to Rs. 38,512,500/-. This asset is now carried at cost subject to

annual impairment test and carrying amount as at 31st December 2011 is Rs. 38,512,500/-. This trademark is also considered to have an

indefinite useful life due to the factors mentioned in the preceding paragraph and accordingly, the carrying amount of this trademark is

determined after testing for impairment annually. Following assumptions are made to test for impairment as at 31st December 2011.

Annual Sales Growth for the Next Five Years

Year 2012 to 2016 10%

Gross Margin 33%

Discount Rate 12%


13.6 The Company took over the showrooms, retail operation of the Hayleys Electronic Retail Ltd. from 2nd January 2008 and agencies of

Phillips and Kenwood from Hayleys Electronic Retail Ltd. for Rs. 32 million. The entire purchase consideration is treated as Goodwill, and is

amortised over the determined useful life of 5 years commencing from the period beginning 1st January 2009.



13.7 The subsidiary had acquired the software which is categorised as Intangible Assets, amounting to Rs. 4,677,083/-. It is amortised over

5 years, commencing from the date of effective use.


2011 2010 2011 2010Rs. Rs. Rs. Rs.

13.8 Ammortisation Charge for the YearAmmortisation of Software 9,533,421 7,751,659 7,952,395 6,568,711

Ammortisation of Other Intangible Assets Externally Acquired 6,899,996 6,399,993 6,399,996 6,399,993

15,933,417 14,151,652 14,352,391 12,968,704

14. Investment in Subsidiary - Company

CarryingValue

MarketValue

CarryingValue

Market Value/Director's

ValuationCountry of No of Shares 2011 2011 2010 2010

Incorporation 2011 2010 Rs. Rs Rs. Rs.

Singer Finance (Lanka) PLC Sri Lanka 80,000,000 80,000,000

Investment on 1st January 400,000,000 2,160,000,000 400,000,000 897,000,000

Investments made during the Year – – – –

Carrying amount as at 31st December 400,000,000 2,160,000,000 400,000,000 897,000,000

14.1 Singer Finance (Lanka) PLC started trading its shares on 17th January 2011 at Colombo Stock Exchange after allotting on 22nd December

2010. In the absence of active market trading as at 31st December 2010, market value of Singer Finance (Lanka) PLC is not available. Hence,

Directors valued Singer Finance (Lanka) PLC at its Net Assets Value as at 31st December 2010 of Rs. 897 million.

15. Investments in Equity Accounted Investees 15.1 Investment in Equity Accounted Investees - Consolidated

Share ofConsolidated Profit/(Loss) Consolidated

Carrying Net of Dividends Carrying Holding Amount Received for Amount % 2011 the Year 2010

2011 2010 Rs. Rs. Rs.

Non-Quoted

Reality Lanka Ltd. (Note 15.2) 40 40 46,885,646 (638,975) 23,524,621

(Directors' Valuation as at 31.12.2011 Rs. 48.0 million 2010 - 24.0 million)

Telshan Network (Pvt) Ltd. 23.56 23.56 – – –

(Directors' Valuation as at 31.12.2011 Rs. 10 million 2010 - Rs. 10 million) (Note 15.6)

Total Non-Quoted Investments in Equity Accounted Investees 46,885,646 23,524,621

Net Carrying Amount of Investments in Equity Accounted Investees 46,885,646 23,524,621



Consolidated Consolidated Balance as at Balance as at

31.12.2011 31.12.2010Rs. Rs.

15.2 Share of Equity Accounted Investees Retained ProfitReality Lanka Ltd.

Balance Brought Forward (475,379) 541,304

Current Year Share of Profit/(Loss) (638,975) (1,016,683)

Current Year's Retained Profit/(Loss) (638,975) (1,016,683)

(1,114,354) (475,379)

Total Share of Equity Accounted Investees Retained Profits (1,114,354) (475,379)

Cost of Equity Accounted Investees (Note 15.5) 48,000,000 24,000,000

Total Carrying Amount of Investment in Equity Accounted Investees 46,885,646 23,524,621

15.3 Movement of Investment - Cost

Consolidated Increase/ ConsolidatedBalance as at (Decrease) Balance as at01.01.2011 in Investments 31.12.2011

Rs. Rs. Rs.

Reality Lanka Ltd. 24,000,000 24,000,000 48,000,000

Telshan Network (Pvt) Ltd. (Note 15.6) – – –

24,000,000 24,000,000 48,000,000

15.4 Summarised Financial Information of Equity Accounted Investees

In Thousands of Rs. OwnershipCurrent Assets

Non-Current Assets

Total Assets

Current Liabilities

Non-CurrentLiabilities

2010

Reality Lanka Ltd. (Associate) 40% 9,106 178,785 187,891 129,080 –

2011

Reality Lanka Ltd. (Associate) 40% 1,257 190,169 191,426 74,212 –

15.5 Investment in Equity Accounted Investees - Company

Carrying Market Value/ Carrying Market Value/Value Directors’ Value Directors’

No. of Shares 2011 Valuation 2010 Valuation 2011 2010 Rs. Rs. Rs. Rs.

Non-Quoted

Telshan Network (Pvt) Ltd. (Note 15.6) 2,000,000 2,000,000 – – – –

Reality Lanka Ltd. 4,800,000 2,400,000 48,000,000 48,000,000 24,000,000 24,000,000

Total Investments in Non-Quoted Associate Equity Securities 48,000,000 48,000,000 24,000,000 24,000,000

Net Carrying Amount of Investment in Equity Accounted Investees 48,000,000 48,000,000 24,000,000 24,000,000

15.6 Investment in Telshan Network (Pvt) Ltd. amounting to Rs. 20,000,000/- had been written off since it carries negative net assets position.



16. Other Long-Term Investments 16.1 Consolidated

Carrying Market Value/ Carrying Market Value/ Value Directors’ Value Directors’


(a) Non-Quoted

Equity Investment Lanka Ltd. 1,665,000 1,665,000 17,020,000 18,683,790 17,020,000 18,683,790

Credit Information Bureau of Sri Lanka 100 100 41,300 41,300 41,300 41,300

Total Investments in Non-Quoted Equity Securities 17,061,300 18,725,090 17,061,300 18,725,090

Total Net Carrying Amount of Other Investments - Non-Current 17,061,300 18,725,090 17,061,300 20,565,275

16.2 Company Investments in Equity Securities - Non-Current

Carrying Market Value/ Carrying Market Value/ Amount Directors’ Amount Directors’


(a) Non-Quoted




16.3 Singer (Sri Lanka) PLC sold entire 42,795 shares of Regnis (Lanka) PLC for Rs. 5,067,392/-. The purchase consideration of such sold

shares was Rs. 1,428,473/-. The resulting gain on disposal of other long-term Investments amounting to Rs. 3,638,919/- is recognised to

the Consolidated and Company Income Statements under other income.

17. InventoriesConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Raw Materials 144,251,095 104,156,594 144,251,095 104,156,594

Work-in-Progress 32,295,354 23,315,632 32,295,354 23,315,632

Finished Goods 3,033,957,740 1,824,856,499 3,017,086,260 1,824,856,499

Supplies and Parts 237,179,190 224,440,896 237,179,190 224,440,896

Goods-in-Transit 203,636,831 133,305,325 203,636,831 133,305,325

3,651,320,210 2,310,074,946 3,634,448,730 2,310,074,946

Less: Provision for Inventory (198,753,108) (148,656,924) (198,753,108) (148,656,924)

Consignment Inventory (21,740,062) (12,376,604) (21,740,062) (12,376,604)

Total Inventories 3,430,827,040 2,149,041,418 3,413,955,560 2,149,041,418



18. Loans Due from Related PartiesConsolidated Company

2011 2010 2011 2010Relationship Rs. Rs. Rs. Rs.

Regnis (Lanka) PLC Affiliate Company – 70,000,000 – 70,000,000

Reality Lanka Ltd. Associate Company 73,634,631 102,217,767 73,634,631 102,217,767

Singer Industries (Ceylon) PLC Affiliate Company – 30,000,000 – 30,000,000

Regnis Appliances (Pvt) Ltd. Affiliate Company 100,000,000 – 100,000,000 –

Singer Finance (Lanka) PLC Subsidiary – – 365,871,233 409,192,424

173,634,631 202,217,767 539,505,864 611,410,191

18.1 The Management intends to recover the above loans within one year from the Balance Sheet date. Interest is charged at the rate 1%

above the Company’s effective rate. The aforesaid loans are not secured.

19. Trade and Other Receivables 19.1 Non-Current


2011 2010 2011 2010Rs. Rs. Rs. Rs.

Hire Debtors 2,570,571,457 1,909,741,950 898,024,896 686,833,953

Less: Deferred Profit on Hire Sales (463,477,667) (353,520,847) (158,950,407) (133,932,621)

2,107,093,790 1,556,221,103 739,074,489 552,901,332

Lease Rental ReceivablesGross Instalment in Lease 1,696,342,529 404,145,149 – –

Rental Received in Advance (806,322) (1,429,770) – –

1,695,536,207 402,715,379 – –

Unearned Income (348,027,794) (75,136,106) – –

1,347,508,413 327,579,273 – –

Loan DebtorsConsumer and Personal Loans 308,581,917 178,055,108 – –

Rental Received in Advance (10,705) (138,270) – –

Less: Unearned Loan Interest Income (46,542,948) (20,778,524) – –

262,028,264 157,138,314 – –

Other Receivables 322,655,334 344,221,130 322,655,334 344,221,130

Loans to Employees (Note 19.3) 221,814,867 160,581,869 197,183,407 138,177,495

544,470,201 504,802,999 519,838,741 482,398,625

4,261,100,668 2,545,741,689 1,258,913,230 1,035,299,957


2011 2010 2011 2010Rs. Rs. Rs. Rs.

19.2 CurrentHire Debtors 4,355,456,307 3,273,885,461 3,255,593,499 2,373,187,515

Rental Received in Advance (230,500) (440,561) – –


Provision for Doubtful Debts (48,133,225) (34,127,964) (43,792,581) (26,448,014)

3,323,729,948 2,557,984,225 2,574,379,509 1,954,165,705

Lease Rental ReceivablesGross Instalment in Lease 905,609,460 335,953,903 – –

Unearned Income (337,116,117) (103,526,578) – –

Provision for Doubtful Debts (2,595,288) (7,285,731) – –

565,898,055 225,141,594 – –




2011 2010 2011 2010Rs. Rs. Rs. Rs.

Loan DebtorsConsumer and Personal Loans 1,298,346,605 1,567,955,974 – –


FD Loans 50,760,571 45,548,790 – –

Net Receivable 1,149,089,683 1,358,354,335 – –

Less: Provision for Bad & Doubtful Debts (20,318,047) (18,020,195) – –

1,128,771,636 1,340,334,140 – –

Other DebtorsTrade Receivables 1,142,264,500 718,285,506 1,142,264,500 718,285,506


Advance and Other Receivables 762,776,079 517,278,646 589,878,626 425,063,016


Shipping Guarantees – 4,359,274 – 4,359,274

Prepayments 188,994,052 338,478,313 163,429,585 331,257,829

Interest Receivable from Reality Lanka Ltd. – 17,837,118 – 17,837,118


1,941,725,614 1,352,284,835 1,752,517,656 1,265,673,350

6,960,125,253 5,475,744,793 4,326,897,165 3,219,839,055

19.3 Loans to Company Employees Consolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Movement

Balance as at the beginning of the Year 219,198,565 198,763,363 192,915,195 189,054,059

Loans Granted during the Year 136,424,500 98,514,045 120,664,500 69,961,000

Less: Repayments (85,146,739) (78,078,843) (74,964,268) (66,099,864)

Balance as at the end of the Year 270,476,326 219,198,565 238,615,427 192,915,195

Due within One Year 48,661,459 58,616,695 41,432,020 54,737,700

Due after One Year 221,814,867 160,581,870 197,183,407 138,177,495

20. Amounts Due from Related Parties Consolidated Company


20.1 TradeSinger Finance (Lanka) PLC Subsidiary – – 561,986,814 947,126,673


Singer Asia Sourcing Ltd. Affiliate Company 6,845,359 6,723,621 6,845,359 6,723,621

7,986,289 6,723,621 569,973,103 953,850,294

20.2 Non-TradeSinger Industries (Ceylon) PLC Affiliate Company 17,375,371 21,987,873 17,375,371 21,987,873

Regnis (Lanka) PLC Affiliate Company 6,164,151 7,568,370 6,164,151 7,568,370

23,539,522 29,556,243 23,539,522 29,556,243



21. Marketable SecuritiesConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Investment in Repurchase Agreement 290,312,617 410,551,810 – –

290,312,617 410,551,810 – –

22. Cash and Cash EquivalentsComponents of Cash and Cash Equivalents

22.1 Favourable Cash and Cash Equivalent BalancesCash and Bank Balances 372,302,709 250,573,958 364,735,727 200,402,845

22.2 Unfavourable Cash and Cash Equivalent BalancesBank Overdrafts (Notes 27.1 and 27.6) (674,864,338) (457,771,513) (546,711,851) (457,771,513)

Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement (302,561,629) (207,197,556) (181,976,124) (257,368,668)

23. Stated Capital 23.1 Issued and Fully Paid

At the Issued for Issued for At the beginning Cash during Non-Cash end of

of the Year the Year Consideration the Year 01.01.2011 31.12.2011

Number Number Number Number

Number of Shares - Ordinary Shares 62,604,805 – 62,604,805 125,209,610

62,604,805 – 62,604,805 125,209,610

Rs. Rs. Rs. Rs.

Rupees - Ordinary Shares 626,048,050 – – 626,048,050

626,048,050 – – 626,048,050

23.2 At the Extraordinary General Meeting held on 31st March 2011, the shareholders approved a subdivision of shares on the basis of one into one. Its issued shares were 62,604,805 and post subdivision it has increased to 125,209,610. This has not altered the Stated Capital of the Company which remains at Rs. 626,048,050/-.

23.3 Rights, Preference and Restrictions of Classes of Capital The holders of ordinary shares are entitled to receive dividend as declared from time to time and are entitled to one vote per share at a

meeting of the Company.

23.4 Shares held by Group Companies The shares of the Company held by the Group Companies are as follows:

2011 2010Number Number

Singer (Sri Lanka) B.V. (Note 23.2) 107,812,850 53,906,425

Singer Industries (Ceylon) PLC – 1,050,700



24. Capital ReservesConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

(a) Revaluation Reserve

Revaluation Reserve (Note 24.1) 655,453,887 664,542,029 655,453,887 664,542,029

655,453,887 664,542,029 655,453,887 664,542,029

24.1 Revaluation ReserveBalance as at the beginning of the Year 664,542,029 404,084,717 664,542,029 404,084,717

Revaluation during the Year – 359,796,766 – 359,796,766

Deferred Tax on Revaluation – (99,339,454) – (99,339,454)

Realisation on Revaluation Surplus (12,622,419) – (12,622,419) –

Deferred Tax effect on transfer of Revaluation Surplus 3,534,277 – 3,534,277 –


25. Statutory ReservesConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

(a) Reserve Fund

Reserve Fund (Note 25.1) 16,350,118 10,748,118 – –

16,350,118 10,748,118 – –

(b) Investment Fund

Investment Fund (Note 25.2) 28,057,705 – – –

28,057,705 – – –

44,407,823 10,748,118 – –

25.1 Reserve Fund

Balance as at the beginning of the year 10,748,118 8,042,189 – –

Transfer of surplus during the year 5,602,000 2,705,929 – –

Balance as at the end of the year 16,350,118 10,748,118 – –

25.2 Investment Fund

Balance as at the beginning of the year – – – –

Transfers during the year 28,057,705 – – –

Balance as at the end of the year 28,057,705 – – –

26. Revenue Reserves Consolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Summary

(a) General Reserve (Note 26.1) 2,200,000,000 2,000,000,000 2,200,000,000 2,000,000,000

2,200,000,000 2,000,000,000 2,200,000,000 2,000,000,000

(b) Retained Earnings (Note 26.2) 1,213,010,861 578,324,678 885,526,518 316,845,046

1,213,010,861 578,324,678 885,526,518 316,845,046

3,413,010,861 2,578,324,678 3,085,526,518 2,316,845,046



26.1 General Reserve The general reserve which is a revenue reserve represents the amounts set aside by the Directors for general application.

The movement of general reserve is as follows:


2011 2010 2011 2010Rs. Rs. Rs. Rs.

At the beginning of the Year 2,000,000,000 1,600,000,000 2,000,000,000 1,600,000,000

Transferred from Retained Earnings 200,000,000 400,000,000 200,000,000 400,000,000

At the end of the Year 2,200,000,000 2,000,000,000 2,200,000,000 2,000,000,000


Singer (Sri Lanka) PLC 885,526,518 316,845,046 885,526,518 316,845,046

Equity Accounted Investees (Note 15.2) (1,114,354) (475,379) – –

Subsidiary Company 186,267,999 86,189,385 – –

Gain on Dilution of Equity Holding in

Singer Finance (Lanka) PLC (Note 5.1) 176,573,748 176,573,748 – –

Retained Earnings Attributable to

Minority Shareholders (Note 26.3) (34,243,068) (808,122) – –

1,213,010,861 578,324,678 885,526,518 316,845,046

26.3 Retained Earnings Attributable to Minority Shareholders

2011 2010 2011 2010Rs. Rs. Rs. Rs.

At the beginning of the year 808,122 – – –

Profit Attributable to Minority Shareholders - for the year 44,101,611 808,122 – –

Dividend for Minority Shareholders - for the year (10,666,665) – – –

At the end of the year 34,243,068 808,122 – –

27. Interest-Bearing Loans & Borrowings

27.1 Interest-Bearing Loans & Borrowings - Consolidated

2011 2011 2011 2010 2010 2010Amount Amount Total Amount Amount Total

Repayable Repayable Repayable RepayableWithin 1 Year After 1 Year Within 1 Year After 1 Year

Rs. Rs. Rs. Rs. Rs. Rs.

Debentures (Note 27.2) 520,000,000 500,000,000 1,020,000,000 300,000,000 1,060,000,000 1,360,000,000

Bank Loans (Note 27.3) 3,657,928,132 360,385,067 4,018,313,199 2,157,712,738 227,290,697 2,385,003,435

Bank Overdrafts (Note 22.2) 674,864,338 – 674,864,338 457,771,513 – 457,771,513

Commercial Papers (Note 27.4) – 250,000,000 250,000,000 250,000,000 – 250,000,000

4,852,792,470 1,110,385,067 5,963,177,537 3,165,484,251 1,287,290,697 4,452,774,948



27.2 Debentures - Consolidated

6 months TB+ 1.75% Debentures Redeemable on 05.06.12 Balance as at New Redemption As at 01.01.2011 Issues 31.12.2011

Rs. Rs. Rs. Rs.

6 Month TB + 1.75% Debentures Unsecured Redeemable on 05.06.2012 30,000,000 – 15,000,000 15,000,000

AWPLR+3.00 Debentures Unsecured Redeemable on 05.06.2011/12 90,000,000 – 45,000,000 45,000,000

19.75% Debentures Unsecured Redeemable on 29.02.2012/13 272,000,000 – – 272,000,000

6 Months TB+1.65 Debentures Unsecured Redeemable on 29.09.2011/12 28,000,000 – – 28,000,000

AWPLR+1.25 Debentures Unsecured Redeemable on 31.12.2012 270,000,000 – 120,000,000 150,000,000



1,360,000,000 – 340,000,000 1,020,000,000

27.3 Bank Loans - Consolidated

Balance as at Loans Repayment As at 01.01.2011 Obtained 31.12.2011

Rs. Rs. Rs. Rs.

(a) Movement of Bank Loans

Bank Loans 2,385,003,435 5,708,054,000 4,074,744,236 4,018,313,199

2,385,003,435 5,708,054,000 4,074,744,236 4,018,313,199

(b) Bank Loan Repayable after One Year

Company Lender/Rate Repayment Security 31.12.2011 31.12.2010of Interest (p.a.) Rs. Rs.

Singer (Sri Lanka) PLC E-Friends Loan @6.5% At Maturity No Assets Pledged 4,125,067 5,832,925

National Savings Bank AWPLR+1.25%

Rs. 200 million to be paid in May 2012 No Assets Pledged – 200,000,000

4,125,067 205,832,925

Singer Finance (Lanka) PLC BoC AWPLR+2.5% Rate (Floor Rate 23%)Rate Reviewed Monthly Monthly Payment Lease Debtors – 1,570,316

Loan on Securitisation Fixed Rate 25.75% Monthly Repayment Hire Purchase Receivable

– 19,887,456

Sampath BankAWPLR+2%(Floor Rate 22%)Rate Reviewed Quarterly Monthly Payment Hire Purchase Receivable 137,510,000 –

Commercial BankAWPLR+1% Monthly Payment

Hire Purchase/Lease Receivable 218,750,000 –

356,260,000 21,457,772

360,385,067 227,290,697



27.4 Commercial Papers - Consolidated

Balance as at New Redemption As at 01.01.2011 Issues 31.12.2011

Rs. Rs. Rs. Rs.

Commercial Papers 250,000,000 200,000,000 200,000,000 250,000,000

250,000,000 200,000,000 200,000,000 250,000,000

27.5 Bank Facilities - Consolidated

2011 2010Utilised Total Facility Utilised Total Facility

Rs. Rs. Rs. Rs.

Overdraft 674,864,338 1,497,000,000 457,771,513 1,045,000,000

Term Loans 454,125,635 450,000,000 312,597,484 1,410,000,000

Short-Term Loans 3,814,187,564 5,336,060,635 2,322,405,951 3,655,800,000

Debentures 1,020,000,000 1,020,000,000 1,360,000,000 1,360,000,000

Total Debt Facility 5,963,177,537 8,303,060,635 4,452,774,948 7,470,800,000

Public Deposits 2,662,999,529 – 1,647,985,384 –

Guarantees – 350,000,000 254,359,274 350,000,000

Letter of Credit 1,493,256,782 1,685,000,000 1,408,218,372 1,685,000,000

Total Debt and Other Facilities 10,119,433,848 10,338,060,635 7,763,337,980 9,505,800,000

27.6 Interest-Bearing Loans & Borrowings - Company




Debentures (Note 27.7) 520,000,000 500,000,000 1,020,000,000 300,000,000 1,060,000,000 1,360,000,000

Bank Loans (Note 27.8) 3,254,405,185 4,125,067 3,258,530,252 2,152,867,617 205,832,925 2,358,700,542


Commercial Papers (Note 27.9) – 250,000,000 250,000,000 250,000,000 – 250,000,000

4,321,117,036 754,125,067 5,075,242,103 3,160,639,130 1,265,832,925 4,426,472,055

27.7 Debentures - Company

As at New Redemption As at 01.01.2011 Issues 31.12.2011

Rs. Rs. Rs. Rs.

6 Months TB+1.75 Debentures unsecured redeemable on 05.06.2012 30,000,000 – 15,000,000 15,000,000


19.75% Debentures Unsecured Redeemable on 29.02.2012/13 272,000,000 – – 272,000,000

6 Months TB+1.65 Debentures Unsecured Redeemable on 29.09.2012 28,000,000 – – 28,000,000




1,360,000,000 – 340,000,000 1,020,000,000



27.8 Bank Loans - Company

As at Loans Repayments As at 01.01.2011 Obtained 31.12.2011

Rs. Rs. Rs. Rs.


Bank Loans 2,358,700,542 4,933,054,000 4,033,224,290 3,258,530,252

2,338,491,542 4,933,054,000 4,033,224,290 3,258,530,252


Lender/Rate Repayment Security 31.12.2011 31.12.2010of Interest (p.a.) Rs. Rs.

E-Friends Loan @ 6.5% At Maturity No Assets Pledged 4,125,067 5,832,925

National Savings Bank -

AWPLR+1.25%

Rs. 200 million to be

paid in May 2012

No Assets Pledged – 200,000,000

4,125,067 205,832,925

27.9 Promissory Notes - Company


Rs. Rs. Rs. Rs.

Commercial Papers 250,000,000 200,000,000 200,000,000 250,000,000

250,000,000 200,000,000 200,000,000 250,000,000

27.10 Bank Facilities


Rs. Rs. Rs. Rs.

Overdraft 546,711,851 1,247,000,000 457,771,513 1,020,000,000

Term Loans 454,125,635 450,000,000 286,294,591 1,310,000,000

Short-Term Loans 3,054,404,617 4,459,100,000 2,322,405,951 3,655,800,000

Debentures 1,020,000,000 1,020,000,000 1,360,000,000 1,360,000,000


Guarantees – 350,000,000 254,359,274 350,000,000

Letter of Credit 1,493,256,782 1,685,000,000 1,408,218,372 1,685,000,000




28. Deferred Tax Assets/(Liabilities)Consolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

28.1 Deferred Tax AssetsBalance as at the beginning of the Year 114,353,256 143,053,325 114,353,256 143,053,325

Adjustment due to Change in Tax Rate - Recognised in Income Statement (Note 10.2) – (28,610,667) – (28,610,667)

Origination and Reversal of Timing Differences - Recognised in Income Statement (Note 10.2) 33,223,601 (89,402) 11,148,594 (89,402)


28.2 Deferred Tax Liabilities Deferred Tax Liability/(Asset) balance as at the beginning of the Year 103,466,761 14,749,401 99,339,454 –

Origination of Deferred Tax Liability due to Revaluation of Building - Recognised in Equity (3,534,277) 99,339,454 (3,534,277) 99,339,454

Origination and Reversal of Timing Differences - Recognised in Income Statement (Note 10.2) – (10,622,094) – –

Deferred Tax Liability/(Asset) balance as at the end of the Year 99,932,484 103,466,761 95,805,177 99,339,454

28.3 Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against tax liabilities

and when the deferred tax relate to the same fiscal authority.

The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the

same tax jurisdiction, is as follows:

28.3.1 Consolidated

2011 2010Assets Liabilities Assets Liabilities

Rs. Rs. Rs. Rs.

(a) Composition of Deferred Tax Assets

Property, Plant & Equipment – 64,684,674 – 68,301,370

Intangible Assets – 4,678,100 – 4,495,750

Lease Rentals 20,639,251 – – –

Inventories 55,650,870 – 41,623,938 –

Provision on Assets 83,820,396 – 96,060,676 –

Deferred Benefit Obligations 56,829,114 – 49,465,762 –

216,939,631 69,362,774 187,150,376 72,797,120

Net Deferred Tax 147,576,857 – 114,353,256 –

(b) Composition of Deferred Tax Liabilities


Intangible Assets – 3,546,755 – –

Provision on Assets – – 281,998 –

Deferred Benefit Obligations 510,893 – 1,462,238 –

510,893 100,443,377 1,744,236 105,210,997

Net Deferred Tax – 99,932,484 – 103,466,761



28.3.2 Company


Rs. Rs. Rs. Rs.




Inventories 55,650,870 – 41,623,938 –



194,864,624 69,362,774 187,150,376 72,797,120

Net Deferred Tax 125,501,850 – 114,353,256 –



– 95,805,177 – 99,339,454

Net Deferred Tax – 95,805,177 – 99,339,454

29. Retirement Benefit ObligationsConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Present Value of Unfunded Gratuity 204,787,190 181,875,758 197,833,421 176,663,436

Total Present Value of the Obligation 204,787,190 181,875,758 197,833,421 176,663,436

Provision for Retiring Gratuity

At the beginning of the Year 181,875,758 158,545,420 176,663,436 155,164,141

Actuarial Gain/(Loss) on Obligation (124,970) 220,509 (183,884) (247,944)

Current Service Cost 17,499,411 16,018,237 16,230,217 15,028,682

Interest on Obligation 19,188,265 17,573,814 18,639,926 17,200,779

218,438,464 192,357,980 211,349,695 187,145,658

Benefits Paid (13,651,274) (10,482,222) (13,516,274) (10,482,222)

At the end of the Year 204,787,190 181,875,758 197,833,421 176,663,436

The Company maintains a non-contributory defined benefit plan providing for gratuity benefits payable to employees expressed in terms of

final monthly salary and service.

As at 31st December 2011, the gratuity liability was actuarialy valued under the Projected Unit Credit (PUC) method by a professionally

qualified actuary firm Messrs Actuarial & Management Consultants (Private) Ltd.

The required accounting provision of the Company as at 31st December 2011, has been determined based on the recommendation

on this Report.

Following key assumptions were made in arriving at the above figures:

(a) Rate of Discount - 10.5% p.a. (net of tax)

(b) Salary Increment Rate

Year 1 - 10%

Year 2+ - 9%



(c) Retirement Age

Other than Factory General Staff Factory General Staff

Males 60 years 55 years

Females 60 years 55 years

(d) Assumptions regarding future mortality are based on A67/70 Mortality Table, issued by the Institute of Actuaries, London.

The demographic assumptions underlying the valuation are with respect to retirement age, early withdrawal from service and

retirement on medical grounds.

The expense so recognised is included in Selling and Administrative expenses in the Income Statement.

The Group's and Company's retirement benefit obligation would have been Rs. 246.5 million and Rs. 237.5 million respectively as at the

Balance Sheet date, had their retirement benefit obligation been calculated as per the requirements of Payment of Gratuity Act No. 12 of 1983.

30. Trade and Other PayablesConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Trade Payables 1,038,405,126 551,474,918 858,046,445 458,339,232

Interest Payable 132,167,222 112,817,313 42,076,284 47,113,516

Value Added Tax Payable 77,879,367 53,949,856 74,205,036 51,439,712

MSPS Payable 21,169,011 13,839,778 21,169,011 13,839,778

ETF Payable 4,877,182 3,701,930 4,877,182 3,701,930

Advances Received from Customers 132,537,264 109,605,148 132,537,264 109,605,148

Accrued Expenses 762,682,118 404,122,470 729,811,324 392,252,500

Turnover Tax Payable – 31,802,374 – 31,802,374

Other Payables 333,422,821 188,243,317 192,306,693 79,352,452

Warranty Provisions 71,078,901 30,758,736 71,078,901 30,758,736

2,574,219,012 1,500,315,840 2,126,108,140 1,218,205,378

30.1 Warranty provisions have been recognised for expected warranty claims on products sold by the Company.

31. Deferred RevenueConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.


Amounts Collected during the Year 346,943,361 192,535,962 318,309,875 174,783,463

Amounts Recognised as Revenue during the Year (286,872,897) (170,238,712) (266,234,547) (158,031,973)


31.1 Deferred revenue includes deferred service fee and amount deferred on extended warranty income as at 31st December 2011.

32. Dividend PayableConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Unclaimed Dividends 5,824,553 3,204,691 5,824,553 3,204,691

5,824,553 3,204,691 5,824,553 3,204,691



33. DividendsConsolidated Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

Ordinary Shares

Interim Dividend 2011 - Rs. 1.50 (2010 - Rs. 1.00) 187,814,415 62,604,805 187,814,415 62,604,805

Proposed Final Dividend 2011 - Rs. 6.00 (2010 - Rs. 3.50) 751,257,660 219,116,818 751,257,660 219,116,818

939,072,075 281,721,623 939,072,075 281,721,623

34. Amounts due to Related PartiesConsolidated Company


34.1 Trade

Singer Industries (Ceylon) PLC Affiliate Company 72,983,434 160,845,568 72,983,434 160,845,568


Regnis Appliances (Pvt) Ltd. Affiliate Company 33,948,923 54,399,165 33,948,923 54,399,165

171,271,866 268,647,603 171,271,866 268,647,603

34.2 Non-TradeSinger Asia Ltd. Affiliate Company 73,441,026 53,272,425 73,441,026 53,272,425

73,441,026 53,272,425 73,441,026 53,272,425

35. Deposits from CustomersBalance as at the beginning of the Year 1,647,985,384 1,463,621,740 – –

New Deposits 1,501,498,312 716,990,498 – –

Capitalisation of Interest 87,142,811 87,998,515 – –

3,236,626,507 2,268,610,753 – –

Repaid Deposits (573,626,978) (620,625,369) – –

Balance as at the end of the Year 2,662,999,529 1,647,985,384 – –

Payable within One Year 2,159,857,465 1,451,990,703 – –

Payable after One Year 503,142,064 195,994,681 – –

36. Commitments and Contingencies - Group/Company 36.1 Financial Commitments

Documentary Credits effected for foreign purchases amounted to Rs. 1,493,256,782/- (2010 - Rs. 1,408,218,372/-).

36.2 Capital Commitments

There were no significant capital commitments, which have been approved or contracted for by the Company/Subsidiary as at the Balance

Sheet date except for the following:

Operating Lease commitment as at 31st December 2011 is as follows:

Within One Year - Rs. 339.6 million

Between One to Five Years - Rs. 1,361.5 million

Over Five Years - Rs. 450.2 million



36.3 Assets Pledged

Company has given a negative pledge over the Company's total assets, except immovable assets, for the following banks over the Loans and

Overdrafts having a carrying value of Rs. 2.0 billion as at the year end:

• Hongkong & Shanghai Banking Corporation Ltd.

• Commercial Bank of Ceylon PLC

• Seylan Bank PLC

• Sampath Bank PLC

• Nations Trust Bank PLC

• Deutsche Bank AG

• National Development Bank PLC

• Muslim Commercial Bank Ltd.

• DFCC Vardhana Bank PLC

• People's Bank

Lease debtors and hire purchase receivable portfolio with a carrying value of Rs. 848 million had been pledged by the Subsidiary Singer

Finance (Lanka) PLC against loans obtained to the value of Rs. 820 million from Bank of Ceylon, Sampath Bank PLC, Deutsche Bank and

Commercial Bank.

36.4 Contingencies

(a) Guarantees given to banks and other lending institutions on behalf of Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC amounts to

Rs. 75 million and Rs. 455.5 million respectively.

(b) The Company has provided bank guarantees amounting to Rs. 134.2 million to the Director General of Customs to clear imports during

the year under review pending completion of legal proceedings in the Court of Appeal.

The bank guarantees related to alleged additional duty payable on imports, is being contested by the Company in Courts.


(c) Singer Finance (Lanka) PLC has provided guaranties to its Fixed Deposit Holders amounting to Rs. 6,050,000/-, holding deposit holder's

Fixed Deposits amounting to Rs. 6,898,939/90 as Security.

37. Events Occurring after the Balance Sheet Date There have been no material events occurring after the Balance Sheet date that require disclosure in the Financial Statements, except

(i) On the 28th February 2012, Board of Directors approved a final dividend of Rs. 6.00 per share amounting to Rs. 751.3 million for the

year ended 31st December 2011. The dividend will be paid on 20th March 2012.



38. Related Party Transactions 38.1 Identity of Related Parties

The Company has a related party relationship with its Parent Company, its Associate Companies, its Affiliate Companies and with its Directors.


(a) During the year, the Company had following transactions with its Parent Companies:


2011 2010Rs. million Rs. million

Royalty Expense 232.8 178.3

Royalty Payable Balance as at the Year End 73.4 53.3

Singer Asia Holdings B.V. (Intermediate Parent) Royalty paid to Singer Asia Ltd. through Singer Asia Holdings B.V.

(b) Following companies are also Parent Companies of Singer (Sri Lanka) PLC and Singer Finance (Lanka) PLC, with whom no transactions

were entered into during the year:


Singer (Sri Lanka) B.V. Intermediate Parent

Singer Asia Holdings N.V. Intermediate Parent

Retail Holdings N.V. Ultimate Parent

38.3 Transactions with Subsidiary Companies



Sales Financed through Singer Finance (Lanka) PLC 2,049.9 2,096.8

Payments to Singer (Sri Lanka) PLC on behalf of Customers 1,835.4 1,383.3

Interest Income 65.8 52.7

Dividend Received - Gross 32.0 20.0

Cash Collections by Singer (Sri Lanka) PLC 2,937.3 618.4

Expenses Paid 94.5 92.0

Administrative Fee Charged 73.2 88.1

Collecting Commission Paid through Singer (Sri Lanka) PLC 10.4 177.4

Purchase of Assets – 0.4

Rent Reimbursed 11.0 9.6

Royalty Paid through Singer (Sri Lanka) PLC 12.0 9.6

Balance Receivable - Trade 562.0 947.1

Balance Receivable - Loan 365.9 409.2




(a) During the year, the Company had following transactions with its Associate Companies:


Reality Lanka Ltd.

Loans Receivable 73.6 102.2


Interest Receivable – 17.8

Invested in Shares 24.0 –

Rent Expense 4.2 3.6

(b) Following company is an Associate Company of Singer (Sri Lanka) PLC, with whom Singer (Sri Lanka) PLC or Singer Finance (Lanka) PLC

had no transactions other than through Advertising Agencies during the year.



Transactions with the following parties have been disclosed in Note 38.6:

Relationship

Regnis (Lanka) PLC Affiliate Company

Singer Industries (Ceylon) PLC Affiliate Company

Singer Asia Sourcing Ltd. Affiliate Company



38.6 Transactions with Key Management Personnel

A number of Key Management Personnel or their related parties, hold positions in other entities that result in them having control or

significant influence over the financial or operating policies of these entities. These transactions are given below:

Name of the Company Name of Nature of 2011 2010and Relationship Director Transaction Rs. million Rs. million

Singer Industries (Ceylon) PLC Mr. H.D.S. Amarasuriya (Chairman) Purchases 884.0 1,159.0

(Affiliate Company) Dr. G.C.B. Wijeyesinghe Corporate Guarantee given 75.0 75.0

Mr. H.A. Pieris Lease Rental paid 2.7 2.5

Mr. V.G.K. Vidyaratne Net Finance Income 2.3 0.8

Mr. G.J. Walker Trade Credit Settled 987.0 1,070.0

Deshabandu A.M. de S. Jayaratne Dividend paid 2.9 –

Purchase of Fixed Assets 1.2 –

Loans Granted – 30.0

Loans Recovered 30.0 –

Loans Receivable – 30.0

Balance Payable 55.6 139.0

Regnis (Lanka) PLC Mr. H.D.S. Amarasuriya (Chairman) Purchases 2,099.7 2,380.5


Mr. H.A. Pieris Interest Income 5.9 16.2

Mr. V.G.K. Vidyaratne Non-Trade Settlement 47.0 44.0

Mr. G.J. Walker Trade Credit Settled 2,088.0 2,490.2

Dr. S. Kelegama Loans Recovered 70.00 60.0

Loans Receivable – 70.0

Expenses Incurred 40.4 28.2


Singer Finance (Lanka) PLC (Subsidiary Company)

Mr. H.D.S. Amarasuriya (Chairman) Sales Financed through Singer Finance (Lanka) PLC 2,049.9 2,096.8

Dr. G.C.B. Wijeyesinghe(Resigned w.e.f. 30.12.2011)



Dr. S. Kelegama Dividend Received (Gross) 32.0 20.0

Mr. M.P.A. Salgado Cash Collection by Singer (Sri Lanka) PLC 2,937.3 618.4

Mr. G.J. Walker Expenses Paid 94.5 92.0

Mr. J.J. Hyun (Appointed w.e.f. 28.02.2011) Administrative Fee Charged 73.2 88.1


Purchase of Assets – 0.4



Balance Receivable - Trade 562.0 947.1

Balance Receivable - Loans 365.9 409.2




National Development Bank PLC Mr. H.D.S. Amarasuriya Borrowed Funds 22.8 255.1

Interest Expense 1.9 26.5

Issue of Debentures 150 270.0

Debenture Interest 28.9 21.1

Singer Asia Sourcing Ltd. (Affiliate Company)

Mr. H.D.S. Amarasuriya(Resigned w.e.f. 30.06.2010) Purchases 0.1 29.4

Mr. G.J. Walker Settlement – 29.8

Balance Receivable/(Payable) 6.8 6.7


Mr. H.D.S. Amarasuriya(Resigned w.e.f. 30.06.2010) Royalty Expense 232.8 178.3

Mr P.J. O' Donnell Royalty Payable 73.4 53.3

Mr. T. Brown

Mr. G.J. Walker

Mr H.A. Pieris

Sampath Bank PLC Dr. S. Kelegama Borrowed Funds 281.9 210.5

(Resigned w.e.f. 30.12.2011) Interest Expense 16.6 4.8

DFCC Bank PLC Deshabandu A.M. de S. Jayaratne Investment in Debenture – 400.0

(Resigned w.e.f. 30.04.2010) Debenture Repayment 40.0 75.0

Debenture Interest Repayment 39.3 16.9

Reality Lanka Ltd. (Associate Company) Mr. H.D.S. Amarasuriya Loan Receivable 73.6 102.2


Mr. V.G.K. Vidyaratne Interest Receivable – 17.8

Mr. G.J. Walker Investment in Shares 24.0 –

Rent Charge 4.2 3.6

Regnis Appliances (Pvt) Ltd. Mr. H.D.S. Amarasuriya Purchases 485.0 142.6

Mr. H.A. Pieris Settlements 618.0 88.2

Mr. V.G.K. Vidyaratne Expenses Paid 1.0 –

Mr. A.N. Majeed Finance Charges 3.0 –

Loan Granted 100.0 –

Loan Receivable 100.0 –





39. Transactions with Key Management Personnel (a) Key Management Personnel includes members of the Board of Directors of the Company, its Subsidiary and Parent. Transaction with

Key Management Personnel, their close family members and parties/entities in which such Key Management Personnel or their close family

members have control, joint control or significant influence can be shown as follows:


(i) Transactions with Key Management Personnel or Close Family Members

Deposit Kept by Key Management Personnel or their close family members at Singer Finance (Lanka) PLC. 60.3 45.8

Group Company

2011 2010 2011 2010Rs. Rs. Rs. Rs.

(ii) Compensation of Key Management Personnel

Short-Term Employee Benefits 63,539,518 27,388,160 54,871,469 22,270,866

Post-Employment Benefits Paid – 7,030,000 – 7,030,000

In addition to their salaries the Company provides non-cash benefits to the Key Management Personnel and contributes to a post

employment defined benefit plan on their behalf. Directors' emoluments are disclosed in Note 9 to the Financial Statements.

(iii) No transactions had taken place during the year with the parties/entities in which Key Management Personnel or their close family

members have control, joint control or significant influence.

(b) The amounts receivable from or payable by above related parties as at 31st December 2011, are disclosed in Notes 18, 19.2, 20 and

34 respectively.


97Singer (Sri Lanka) PLC Annual Report 2010

Independent Auditors’ Report


Report on the Financial StatementsWe have audited the accompanying financial statements of Singer (Sri Lanka) PLC, the consolidated financial statements of the Company and its subsidiary as at that date which comprise the balance sheet as at December 31, 2010, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 98 to 140 of the Annual Report.


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

Scope of Audit and Basis of Opinion

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

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

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

Opinion

In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended December 31, 2010 and the financial statements give a true and fair view of the Company’s state of affairs as at December 31, 2010 and its profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

In our opinion, the consolidated financial statements give a true and fair view of the state of affairs as at December 31, 2010 and the profit and cash flows for the year then ended, in accordance with Sri Lanka Accounting Standards, of the Company and its subsidiary dealt with thereby, so far as concerns the members of the Company.


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

Chartered Accountants,

Colombo28th February 2011



Year ended 31st December 2010 2009 2010 2009(Restated) (Restated)

Note Rs. Rs. Rs. Rs.

Revenue 3 16,028,533,802 11,913,503,311 15,177,484,870 11,341,538,283

Cost of Sales (10,233,156,320) (7,281,813,332) (10,233,156,320) (7,281,813,333)

Gross Profit 5,795,377,482 4,631,689,979 4,944,328,550 4,059,724,950

Other Income 5 267,467,070 96,752,099 155,127,078 99,610,250

Selling and Administrative Expenses (3,884,069,598) (3,119,744,609) (3,546,500,255) (2,914,255,811)

Other Expenses 6 (174,471,508) (209,456,100) (167,136,767) (200,336,559)

Finance Cost 7.1 (819,353,491) (1,193,592,345) (587,671,758) (916,267,818)

Finance Income 7.2 45,128,240 85,320,937 51,452,221 113,349,832

Net Finance Cost (774,225,251) (1,108,271,408) (536,219,537) (802,917,986)

Share of Profit/(Loss) of Equity Accounted Investee (Net of Income Tax) 8 (1,016,683) (891,318) – –

Value Added Tax on Financial Services (61,200,000) (42,350,000) (26,500,000) (21,100,000)

Profit before Tax 9 1,167,861,512 247,728,643 823,099,069 220,724,846

Income Tax Expense 10 (499,042,148) (114,830,101) (399,737,255) (99,648,790)

Profit for the Year 668,819,364 132,898,542 423,361,814 121,076,056

Attributable to:

Equity Holders of the Company 668,011,242 132,898,542 423,361,814 121,076,056

Non-Controlling Interest 808,122 – – –


Earnings per Share - Basic - (Rs.) 11.2 10.67 2.12 6.76 1.93

Earnings per Share Excluding the Gain on dilution of holding in Singer Finance (Lanka) Ltd. - (Rs.) 11.3 7.85 2.12 6.76 1.93

Dividend per Share (Including Proposed Final Dividend) - (Rs.) 32 4.50 – 4.50 –

The Accounting Policies and Notes on pages 102 through 140 form an integral part of these Financial Statements.

Colombo

28th February 2011

Income Statement



As at 31st December 2010 2009 2010 2009(Restated) (Restated)

Note Rs. Rs. Rs. Rs.

ASSETSNon-Current AssetsProperty, Plant & Equipment 12 1,564,239,939 1,285,727,688 1,536,053,077 1,261,639,286Intangible Assets 13 165,189,703 165,740,939 155,618,778 157,619,048Investment in Subsidiaries 14 – – 400,000,000 400,000,000Investments in Equity Accounted Investees 15 23,524,621 24,541,304 24,000,000 24,000,000Other long-term Investments 16 17,061,300 18,489,773 17,020,000 18,448,473Trade and Other Receivables 19.1 2,545,741,689 2,039,522,072 1,035,299,957 1,024,443,307Deferred Tax Assets 27 114,353,256 143,053,325 114,353,256 143,053,325

4,430,110,508 3,677,075,101 3,282,345,068 3,029,203,439

Current AssetsInventories 17 2,149,041,418 1,984,919,283 2,149,041,418 1,984,919,283Loans due from Related Parties 18 202,217,767 240,515,421 611,410,191 240,515,421Trade and Other Receivables 19.2 5,475,744,793 4,392,707,413 3,219,839,055 2,670,710,325Amounts due from Related Parties - Trade 20.1 6,723,621 7,074,245 953,850,294 939,892,782Amounts due from Related Parties - Non-Trade 20.2 29,556,243 5,241,249 29,556,243 5,241,249Marketable Securities 21 410,551,810 160,473,932 – –Cash and Cash Equivalents 22 250,573,958 385,446,050 200,402,845 361,764,748

8,524,409,610 7,176,377,593 7,164,100,046 6,203,043,808Total Assets 12,954,520,118 10,853,452,694 10,446,445,114 9,232,247,247

EquityStated Capital 23 626,048,050 626,048,050 626,048,050 626,048,050Capital Reserves 24 675,290,147 412,126,906 664,542,029 404,084,718Revenue Reserves 25 2,578,324,678 1,975,624,170 2,316,845,046 1,956,088,037Total Equity attributable to Equity Holders of the Company 3,879,662,875 3,013,799,126 3,607,435,125 2,986,220,805Non-Controlling Interest 224,234,379 – – –Total Equity 4,103,897,254 3,013,799,126 3,607,435,125 2,986,220,805

Non-Current LiabilitiesInterest Bearing Loans and Borrowings 26 1,287,290,697 763,935,865 1,265,832,925 737,632,975Retirement Benefit Obligations 28 181,875,758 158,555,375 176,663,436 155,164,141Deferred Tax Liabilities 27 103,466,761 14,749,401 99,339,454 –Security Deposits 403,893,567 359,515,564 403,893,567 359,515,564Deposits from Customers 34 195,994,681 150,001,086 – –

2,172,521,464 1,446,757,291 1,945,729,382 1,252,312,680

Current Liabilities

Trade and Other Payables 29 1,500,315,840 1,050,114,260 1,218,205,378 889,883,283Deferred Revenue 30 79,308,834 57,011,584 66,283,640 49,532,150Income Tax Payable 155,877,053 5,133,096 123,027,740 12,731,522Dividend Payable 31 3,204,691 2,978,168 3,204,691 2,978,168Amounts due to Related Parties - Trade 33.1 268,647,603 233,475,033 268,647,603 233,475,033Amounts due to Related Parties - Non-Trade 33.2 53,272,425 37,104,053 53,272,425 138,910,364Deposits from Customers 34 1,451,990,703 1,313,620,654 – –Interest Bearing Loans and Borrowings 26 3,165,484,251 3,693,459,429 3,160,639,130 3,666,203,242

6,678,101,400 6,392,896,276 4,893,260,607 4,993,713,762

Total Equity and Liabilities 12,954,520,118 10,853,452,694 10,446,445,114 9,232,247,247

The Accounting Policies and Notes on pages 102 through 140 form an integral part of these Financial Statements.I certify that the Financial Statements of the Company comply with the requirements of the Companies Act No. 07 of 2007.

Priyath SalgadoFinance Director

The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by,

Hemaka Amarasuriya H.A. PierisDirector Director/Group Chief Executive Officer Colombo28th February 2011

Balance Sheet


Statement of Changes in EquityConsolidated

Stated Reserve Revaluation General Retained Non-Controling TotalCapital Fund Reserve Reserve Earnings Interest

Note Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Balance as at 31st December 2008 as previously stated 626,048,050 3,012,962 404,084,717 1,500,000,000 420,453,045 – 2,953,598,774

Effect due to change in accounting policy on adoption of SLAS 33 (Note 39) – – – – (72,698,190) – (72,698,190)

Adjusted balance as at 31st December 2008 626,048,050 3,012,962 404,084,717 1,500,000,000 347,754,855 – 2,880,900,584

Transferred to/(from) during the year – 5,029,227 – 100,000,000 (105,029,227) – –

Profit for the Year – – – – 132,898,542 – 132,898,542

Balance as at 31st December 2009 626,048,050 8,042,189 404,084,717 1,600,000,000 375,624,170 – 3,013,799,126

Share Issue – – – – – 400,000,005 400,000,005

Surplus on Revaluation for the Year 12/24.2 – – 359,796,766 – – – 359,796,766

Deferred Tax effect on Revaluation 27 – – (99,339,454) – – – (99,339,454)

Transferred to/(from) during the Year – 2,705,929 – 400,000,000 (402,705,929) – –

Adjustment in Respect of Change in Group Holding – – – – – (176,573,748) (176,573,748)

Profit for the Year – – – – 668,011,242 808,122 668,819,364

Interim Dividend - 2010 – – – – (62,604,805) – (62,604,805)

Balance as at 31st December 2010 626,048,050 10,748,118 664,542,029 2,000,000,000 578,324,678 224,234,379 4,103,897,254

Company

StatedCapital

RevaluationReserve

GeneralReserve

RetainedEarnings Total

Note Rs. Rs. Rs. Rs. Rs.

Balance as at 31st December 2008 as previously stated 626,048,050 404,084,717 1,500,000,000 373,951,178 2,904,083,945

Effect due to change in accounting policy on adoption of SLAS 33 (Note 39) – – – (38,939,197) (38,939,197)

Adjusted balance as at 31st December 2008 626,048,050 404,084,717 1,500,000,000 335,011,981 2,865,144,748

Transferred to/(from) during the Year – – 100,000,000 (100,000,000) –



Surplus on Revaluation for the Year 12/24.2 – 359,796,766 – – 359,796,766

Deferred Tax effect on Revaluation 27 – (99,339,454) – – (99,339,454)

Transferred to/(from) during the Year – – 400,000,000 (400,000,000) –


Interim Dividend - 2010 – – – (62,604,805) (62,604,805)



Colombo

28th February 2011


Cash Flow StatementConsolidated Company

Year ended 31st December 2010 2009 2010 2009

(Restated) (Restated)Note Rs. Rs. Rs. Rs.

Cash Flows from Operating ActivitiesProfit before Income Tax Expense 1,167,861,512 247,728,643 825,099,069 221,724,846

Adjustments for:Depreciation on Property, Plant & Equipment 12 175,809,093 201,259,195 169,657,299 195,570,681

Share of (Profit)/Loss from Equity Accounted Investee 8 1,016,683 891,318 – –

Amortisation of Intangible Assets 13 14,151,652 23,829,976 12,968,704 20,398,948

(Gain)/Loss on Disposal of Property, Plant & Equipment (1,365,846) 398,977 (1,365,846) 398,977

Gain on Disposal of Other Long-Term Investments (3,638,919) – (3,638,919) –

Gain on Dilution of Holding in Subsidiary (176,573,748) – – –

Interest Expense 819,353,490 1,193,593,345 587,671,758 916,267,818

Interest Income (45,128,240) (85,320,937) (51,452,221) (113,349,832)

Deferred Profit on Hire Debtors 49,203,579 (232,261,629) (73,096,533) (359,051,575)


Provision/(Reversal of Provision) for Bad and Doubtful Receivables (53,750,038) 75,946,242 (60,787,767) 85,045,073

Deferred Revenue 30 22,297,250 (22,049,408) 16,751,490 (23,519,484)

Dividend Income (952,770) (528,019) (20,948,270) (10,513,619)

Provision for Retiring Gratuity 28 33,812,561 33,134,160 31,981,517 32,286,418

Operating Profit before Working Capital Changes 2,079,797,867 1,438,552,091 1,510,541,888 967,189,479

(Increase)/Decrease in Inventories (240,170,134) 951,024,865 240,170,134 951,024,865

(Increase)/Decrease in Debtors falling due after one Year (615,490,859) 374,960,878 (23,580,832) 355,038,469

(Increase)/Decrease in Debtors falling due within one Year (969,219,679) 583,185,794 (402,520,245) 1,885,151,550

(Increase)/Decrease in dues from Related Parties (23,964,370) 120,407,940 (38,272,506) (812,410,597)

Increase/(Decrease) in dues to Related Parties 51,330,986 (120,711,533) (50,465,369) (40,165,040)

Increase in Employee Security Deposits 44,378,004 24,678,257 44,378,003 24,678,257

Increase in Customer Deposit Liabilities 184,363,644 333,974,625 – –

Increase/(Decrease) in Trade and Other Payables 465,252,520 (83,202,661) 340,162,306 (105,669,023)

Cash Generated from/(Used in) Operations 976,277,979 3,622,870,255 1,140,073,111 3,224,837,960

Finance Costs Paid (834,404,431) (1,214,427,785) (599,511,969) (923,945,555)

Retiring Gratuity Paid 28 (10,482,222) (22,997,598) (10,482,222) (22,997,598)

Income Tax Paid (330,220,218) (78,364,951) (262,740,970) (66,806,789)

Net Cash from Operating Activities (198,828,892) 2,307,079,921 (267,337,950) 2,211,088,016

Cash Flows from Investing ActivitiesAcquisition of Property, Plant & Equipment and

Intangible Assets 12/13 (110,291,661) (53,068,841) (97,409,426) (46,181,235)

Proceeds from Disposal of Property, Plant & Equipment 3,532,513 3,938,210 3,532,513 3,938,210

Proceeds from Sale of Other Long-Term Investments 5,067,392 – 5,067,392 –

(Acquisition)/Disposal of Marketable Securities (250,077,877) 15,410,586 – –

Investment in Subsidiary – – – (200,000,000)

Net Cash Flows from Loans Given to Related Companies 38,297,654 (240,515,421) (370,894,770) (184,515,421)

Interest Received 43,474,632 74,872,439 49,798,613 102,901,334

Dividend Received 952,770 528,019 20,948,270 10,513,619

Net Cash Flows from Investing Activities (269,044,577) (198,835,008) (388,957,408) (313,343,493)

Cash Flows from Financing Activities Proceeds from Interest Bearing Loans and Borrowings 4,086,605,327 2,359,729,000 4,086,605,327 2,359,729,000

Repayment of Interest Bearing Loans and Borrowings (4,388,652,638) (3,799,708,214) (4,361,396,454) (3,623,954,536)

Proceeds from Issuance of Shares 400,000,005 – – –

Dividends Paid (62,378,282) – (62,378,282) –

Net Cash Flows from Financing Activities 35,574,412 (1,439,979,214) (337,169,409) (1,264,225,536)

Net Increase/(Decrease) in Cash and Cash Equivalents (432,299,058) 668,265,699 (458,788,867) 633,518,987

Cash and Cash Equivalents at the beginning of the Year 22 225,101,502 (443,164,197) 201,420,200 (432,098,787)

Cash and Cash Equivalents at the end of the Year 22 (207,197,556) 225,101,502 (257,368,668) 201,420,200



Notes to the Financial Statements1. Corporate Information

1.1 Reporting Entity1.1.1 General

Singer (Sri Lanka) PLC is a limited liability company incorporated and domiciled in Sri Lanka. The Registered Office of the Company is located at No. 320, Dr. Colvin R. De Silva Mawatha (Union Place), Colombo 2, and the principal place of business is situated at the above address.

In the Report of the Directors and in the Financial Statements, ‘the Company’ refers to Singer (Sri Lanka) PLC as the Holding Company and ‘the Group’ refers to the Consolidated Financial Statements of Singer (Sri Lanka) PLC and its Subsidiary, Singer Finance (Lanka) Ltd.

1.1.2 Companies in the GroupSubsidiaryA fully-owned subsidiary, Singer Finance (Lanka) Ltd., was incorporated on 19th April 2004 under the Companies Act No. 17 of 1982 and its commercial operations commenced on 8th July 2004.

Singer Finance (Lanka) Ltd. issued 25% of its equity holding through Initial Public Offering and allotted shares on 22nd December 2010. Shares of Singer Finance (Lanka) Ltd. was first traded on 17th January 2011 at the Colombo Stock Exchange. Pursuant to the Special Resolution passed by the shareholders on 21st December 2010, name of the Subsidiary Company was changed from Singer Finance (Lanka) Ltd. to Singer Finance (Lanka) PLC. The name change was gazetted on 18th February 2011.

Associates (Equity Accounted Investees)Associate Companies of the Group, whose results have been included in the Consolidated Financial Statements are:

Telshan Network (Pvt) Ltd. Reality (Lanka) Ltd.

All of the above companies are incorporated in Sri Lanka.

Financial Statements of all the companies in the Group are prepared for a common financial year, which ends on 31st December.

1.1.3 Principal Activities and Nature of OperationsCompanyDuring the year, the principal activities of the Company were marketing domestic and industrial sewing machines, consumer electronics, home appliances, furniture, agricultural equipment and personal computers and manufacturing furniture and agricultural equipment.

SubsidiaryPrincipal activities of Singer Finance (Lanka) Ltd. are financing of the sale or purchase of any goods, articles, vehicles or other items either by letting on hire, hire purchase, leasing and other methods of financing. In addition, Singer Finance (Lanka) Ltd. accepts deposits.

Note 1 Corporate Information page 102

Note 2 Significant Accounting Policies page 103

Note 3 Revenue page 109

Note 4 Segment Information page 109

Note 5 Other Income page 110

Note 6 Other Expenses page 111

Note 7 Finance Cost page 111

Note 8 Share of Profits/(Losses) of Equity Accounted Investee - (Net of Income Tax) page 111

Note 9 Profit before Tax page 111

Note 10 Income Tax Expense page 112

Note 11 Earnings per Share page 113

Note 12 Property, Plant & Equipment page 114

Note 13 Intangible Assets page 117

Note 14 Investment in Subsidiary - Company page 119

Note 15 Investments in Equity Accounted Investees page 119

Note 16 Other Long-Term Investments page 121

Note 17 Inventories page 122

Note 18 Loans Due from Related Parties page 122

Note 19 Trade and other Receivables page 122

Note 20 Amounts due from Related Parties page 124

Note 21 Marketable Securities page 124

Note 22 Cash and Cash Equivalents page 124

Note 23 Stated Capital page 124

Note 24 Capital Reserves page 125

Note 25 Revenue Reserves page 125

Note 26 Interest Bearing Loans & Borrowings page 126

Note 27 Deferred Tax Assets/(Liabilities) page 130

Note 28 Retirement Benefit Obligations page 132

Note 29 Trade and Other Payables page 133

Note 30 Deferred Revenue page 133

Note 31 Dividend Payable page 133

Note 32 Dividends page 133

Note 33 Amounts due to Related Parties page 134

Note 34 Deposits from Customers page 134

Note 35 Commitments and Contingencies - Group/Company page 134

Note 36 Events Occurring after the Balance Sheet Date page 135

Note 37 Related Party Transactions page 136

Note 38 Transactions with Key Management Personnel page 139

Note 39 Related Financial Statements page 139



The Company's parent undertaking is Singer (Sri Lanka) BV. The Company's ultimate parent undertaking and controlling party is Retail Holdings NV, which is incorporated in the Netherlands, Antilles.


The number of employees of the Group at the end of the year was 1,147 (2009 - 1,116), Company - 1,049 (2009 - 1,045).


The Financial Statements for the year ended 31st December 2010 were authorised for issue in accordance with a resolution of the Board of Directors on 28th February 2011.

1.2 Basis of Preparation1.2.1 Statement of Compliance

The Financial Statements have been prepared in accordance with Sri Lanka Accounting Standards (SLAS), issued by The Institute of Chartered Accountants of Sri Lanka (ICASL) and the requirements of the Companies Act No. 07 of 2007 and Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995.

1.2.2 Basis of Measurement

The Financial Statements have been prepared on the historical cost basis except for certain investments and items of Property, Plant & Equipment, which are measured at fair value and Defined Benefit Plans which are measured at the present value of the Retirement Benefit Obligations as explained in the respective Notes to the Financial Statements.




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

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the Financial Statements is included in the following Notes:

1.2.5 Changes in Accounting PoliciesProperty, Plant & EquipmentThe Group resolved to measure buildings at fair value with effect from 31st December 2010. Accordingly henceforth, buildings would be stated at valuation less accumulated depreciation and accumulated impairment losses. Buildings were measured at cost in the previous periods. Thereby, buildings were stated at cost less accumulated depreciation and accumulated impairment losses in the previous periods.

Revenue Recognition - Hire Purchase/Lease and LoansThe Group changed its method of recognising interest income on Hire purchase, Lease and Loans from sum of digit method to constant periodic rate of return method keeping in line with SLAS 33.

Therefore, unearned income arising from Hire purchase, Lease and Loans have been recognised as income over the term of the contract, commencing from the month in which the first rental was due, in proportion to the declining receivable balance, so as to produce a constant periodic rate of return on the net investment outstanding.

Interest income recognised based on sum of digit method for the year ending 31st December 2009 have been restated in both Company and Group Financial Statements.


Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated at the functional currency rate of exchange ruling at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are re-translated using the exchange rates as at the dates of the initial transactions. Foreign exchange differences arising on translation are recognised in profit and loss.

2. Significant Accounting PoliciesThe accounting policies set out below have been consistently applied by the Group, and are consistent with those used in the previous year, except as explained in Note 1.2.5, which addresses changes in accounting policies. Certain comparative amounts have been reclassified to conform to the current year’s presentation.

The Directors have made an assessment of the Group’s ability to continue as a going concern in the foreseeable future, and they do not intend either to liquidate or cease trading.

2.1 Basis of Consolidation2.1.1 Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases.




Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% to 50% of the voting power of another entity. Investments in associates are accounted for using the equity method (equity accounted investees) and are recognised initially at cost. The Consolidated Financial Statements includes the Group’s share of the income and expenses and equity movements of equity accounted investees, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.


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

2.2 Assets and Bases of their ValuationAssets classified as current assets on the Balance Sheet are cash and bank balances and those which are expected to be realised in cash during the normal operating cycle or within one year from the reporting date whichever is shorter.


Items of Property, Plant & Equipment are measured at cost or valuation less accumulated depreciation and accumulated impairment losses.

(a) Cost and ValuationCost includes expenditure directly attributable to the acquisition of the asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of Property, Plant & Equipment have different useful lives, they are accounted for as separate items of Property, Plant & Equipment.

All items of Property, Plant & Equipment are initially recognised at cost. A revaluation is carried out when there is a substantial difference between the fair value and the carrying amount of the property, and is undertaken by professionally qualified valuers. When items of Property, Plant & Equipment are subsequently revalued, the entire class of such assets are revalued.

Increases in the carrying amount on revaluation are credited to the revaluation reserve in shareholders' equity unless it reverses a previous revaluation decrease relating to the same asset, which

was previously recognised as an expense. In these circumstances the increase is recognised as income to the extent of the previous write down.

Decreases in the carrying amount on revaluation that offset previous increases of the same individual asset is charged against revaluation reserve directly in equity. All other decreases are recognised in profit and loss.

(b) Subsequent Costs The cost of replacing part of an item of Property, Plant & Equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within that part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of Property, Plant & Equipment are recognised in profit and loss as incurred.

(c) DepreciationDepreciation is recognised in profit and loss on a straight-line basis over the estimated useful lives of each part of an item of Property, Plant & Equipment. Freehold land is not depreciated.

The estimated useful lives are as follows:

Freehold Buildings Over 37.5 to 50 years

Motor Vehicles Over 05 years

Furniture, Fittings and Equipment Over 10 years

Plant and Machinery Over 10 years

EDP Equipment Over 05 years

Improvement on Leasehold Premises Over 04 to 10 years

Shop Furniture and Equipment Over 05 years

Depreciation of an asset commences when the asset is available for use and ceases at the earlier of the date the asset is classified as held for sale and the date that the asset is derecognised.

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

(d) Derecognition An item of Property, Plant & Equipment is derecognised upon disposal of or when no future economic benefits are expected from its use or disposal. Gains and losses arising on derecognition of the asset are determined by comparing the proceeds from disposal with the carrying amount of Property, Plant & Equipment and are recognised net within ‘Other Income’ in profit and loss.


An intangible asset is recognised if it is probable that future economic benefits will flow to the entity and the cost of the asset can be measured reliably in accordance with SLAS 37 on Intangible Assets. Intangible assets with finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.



The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. Amortisation expense on intangible assets with finite lives is recognised in profit and loss on a straight-line basis over the estimated useful lives, from the date they are available for use.

The estimated useful lives of intangible assets with finite lives are as follows:

The Class of Intangible Assets Useful Life

Computer Software 10 years

Other Intangible Assets Externally Acquired 5 years

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit and loss when the asset is derecognised.

Intangible assets with indefinite useful lives represent Trade Marks purchased through the effect of a business combination and were recorded initially at cost. Following the initial recognition of Trade Marks at cost, the carrying amount was recognised after accumulated amortisation annually up to 31st December 2005. However, due to the effect of SLAS 41 - Impairment of Assets, the said Trade Marks were deemed indefinite lived intangible assets and accordingly, the carrying amount of the Trade Marks is determined after testing for impairment annually. This change is applied prospectively.


Trade receivables are stated at the amounts they are estimated to realise net of provisions for bad and doubtful debts.

Other receivables and dues from related parties are recognised at cost, less provision for bad and doubtful receivables.

Assets sold to customers under fixed rate hire agreements which transfer all the risks and rewards as well as the legal title at the end of such contractual period are classified as hire purchase receivables. Hire purchase receivable in the Balance Sheet represents the total hire value net of unearned finance income charges and provision for doubtful recoveries.

Assets leased to customers under agreements, which transfer substantially all the risks and rewards associated with ownership

other than legal title, are classified as finance leases. Lease rentals receivable in the Balance Sheet represent total minimum lease payments due net of unearned income and provision for doubtful recoveries.

The allowances for bad and doubtful debts are based on the collectibles of the receivables and a provision is made for these amounts based on the period of arrears as follows:


Arrears of 3 and 4 months 50% of debtors net of unearned carrying charges.

Arrears of 5 months and over 100% of debtors net of unearned carrying charges.

Singer Finance (Lanka) Ltd.

Hire purchase receivable/lease receivables for motor vehicles.

Arrears of 4 months and over 50% of debtors net of unearned carrying charges.

Arrears of 6 months and over100% of debtors net of unearned carrying charges.

Trade Receivables




Arrears of 241 days and over 100%

2.2.4 Investments2.2.4.1 Non-Current Investments Non-current investments are measured initially at cost. Provision for diminution in value of investments is made when in the opinion of the Directors there has been a decline other than temporary in the carrying amount of the investment.

2.2.4.2 Current InvestmentsMarketable Securities

Current investments are stated at lower of cost and market value determined on an aggregate portfolio basis.

An impairment loss will be recognised when the subsequent write down of the asset to fair value less cost to sell is lower than the value previously recognised. A gain will be recognised for any subsequent increase in fair value less cost to sell of an asset, not exceeding the cumulative impairment loss that has been recognised.

2.2.5 Inventories

Inventories are measured at the lower of cost and net realisable value, after making due allowances for obsolete and slow moving items. Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses.



The cost of each category of inventory is determined on the following basis:

Raw Materials - At actual cost on first-in first-out basis.

Finished Goods (excluding factory) - Weighted average cost.

Finished Goods and Work-in-Progress at Piliyandala Factory

-

At the cost of direct materials, direct labour and an appropriate proportion of fixed production overheads based on normal operating capacity.

Goods-in-Transit - At actual cost.

Supplies and Parts

-

Purchase cost less issues for the period valued at a standard percentage of selling price (requires revision).

Repossessed Goods - Half of its weighted average cost.

Provisions for InventorySpecific provisions are made giving consideration to the condition of inventory held by the Company.


Cash and cash equivalents comprise cash in hand, demand deposits and short-term highly liquid investments, readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand and deposits in banks net of outstanding bank overdrafts.


The carrying amount of the Company’s non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is an indication of impairment. If any such indication exists, or when annual impairment testing for an asset is required, then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value, less costs to sell, an appropriate valuation model is used.

An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit and loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2.3 Liabilities and ProvisionsLiabilities classified as current liabilities in the Balance Sheet are those which fall due for payment on demand or within one

year from the reporting date. Non-current liabilities are those balances that fall due for payment later than one year from the reporting date.

All known liabilities have been accounted for in preparing the Financial Statements.

2.3.1 Provisions

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

2.3.1.1 Provisions for WarrantiesA provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighing of all possible outcomes against their associated probabilities.


Trade and other payables are stated at their cost.


Capital commitments and contingent liabilities of the Group are disclosed in the respective Notes to the Financial Statements.

2.3.2 Employee Benefits2.3.2.1 Defined Benefit PlanA defined benefit plan is post-employement benefit plan other than a defined contribution plan. The liability recognised in the Financial Statements in respect of defined benefit plans is the present value of the defined benefit obligation as at the reporting date. The defined benefit obligation is calculated by a Qualified Actuary as at the reporting date using the Projected Unit Credit (PUC) method as recommended by SLAS 16.

The actuarial valuation involves making assumptions about discount rates, salary increment rate, mortality rate and retirement age. Due to the long-term nature of his plans such estimates are subject to significant uncertainty.

The liability is not externally funded.

2.3.2.2 Defined Contribution Plans - Employees' Provident Fund /Mercantile Services Provident Society andEmployees' Trust FundA defined contribution plan is a post-employement benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Employees are eligible for contributions to Employees' Provident Fund/Mercantile Services Provident Society and Employees' Trust Fund in line with respective Statutes and Regulations. The Company contributes 12%, 12% and 3% of gross emoluments of employees to the Employees' Provident Fund, Mercantile Services Provident Society and the Employees' Trust Fund respectively and is recognised as an expense in profit and loss in the periods during which services are rendered by employees.



2.3.2.3 Short-Term BenefitsShort-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be measured reliably.


A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired with a view to resale. Classification as discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative Income Statement is restated as if the operation had been discontinued from the start of the comparative period.

2.4 Income Statement2.4.1 Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company 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 returns and allowances, trade discounts and turnover taxes. The following specific criteria are used for the purpose of recognition of revenue:

(a) Sale of Goods (Normal Trading Transactions)Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to buyers, the recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably.

(b) Sale of Goods (Hire Purchase Transactions)At the time of effecting hire sales, the cash sales value is recognised as sales.

The unearned income is recognised as income over the term of hire purchase contract commencing from the month in which first rental is due, in proportion to the declining receivable balance, so as to produce a constant periodic rate of return on the hirer’s net investment outstanding on the hire purchase.

(c) Interest - OtherInterest income is recognised in profit and loss as it accrues (taking into account the effective yield on the asset).

(d) DividendsDividend income is recognised in profit and loss when the right to receive dividends is established.

(e) Service Fee Income on Hire PurchaseService fee income is recognised over the length of hire purchase agreement on sum of digit method. In the event of early termination of the Hire Purchase Contract or cash conversion remaining deferred, service income is recognised when such contract is recognised or converted.

(f) Income on Suraksha and Extended Warranty SchemeIncome is recognised over the period of contract. Unrecognised income is accounted as Deferred Revenue.

(g) OthersOther income is recognised on an accrual basis.

Net gains and losses of a revenue nature on the disposal of Property, Plant & Equipment and other non-current assets including investments have been accounted for in profit and loss, having deducted from proceeds on disposal, the carrying amount of the assets and related selling expenses.

2.4.2 Revenue Recognition Policy of Singer Finance (Lanka) Ltd.(a) Hire PurchaseThe excess of aggregated contract receivables over the cost of the hired assets constitutes the total unearned income at the commencement of a contract. The unearned income is recognised as income over the term of hire purchase contract commencing from the month in which first rental is due, in proportion to the declining receivable balance, so as to produce a constant periodic rate of return on the hirer’s net investment outstanding on the hire purchase.

(b) LeaseThe excess of aggregated contract receivables over the cost of the leased assets constitutes the total unearned income at the commencement of a contract. The unearned income is recognised as income over the term of lease contract commencing from the month in which first rental is due, in proportion to the declining receivable balance, so as to produce a constant periodic rate of return on the lessor’s net investment outstanding on the lease outstanding.

(c) Interest on Government SecuritiesInterest is accrued in profit and loss based on a receivable pattern reflecting a constant periodic rate of return.

(d) Commissions, Service Charges and OthersCommissions, service charges and others are recognised on an accrual basis.


(a) Expenses are recognised in profit and loss on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the Property, Plant & Equipment in a state of efficiency has been charged to income in arriving at the profit for the year.



(b) For the purpose of presentation of the Income Statement, the Directors are of the opinion that ‘function of expenses method’ presents fairly the elements of the Company's performance and hence such presentation method is adopted.

Net Finance CostFinance income comprises interest income on funds invested, and gains on translation of foreign currency.

Finance cost comprises interest payable on borrowings and losses on translation of foreign currency.

2.4.4 Taxation

Income tax expense comprises both current and deferred tax. Income tax expense is recognised in profit and loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

(a) Current TaxesThe current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

(b) Deferred TaxationDeferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax liabilities are recognised for all taxable temporary differences except for -

temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither the accounting profit nor taxable profit or loss;

temporary differences related to investments in subsidiaries to the extent that it is probable that the temporary differences will not reverse in the foreseeable future; and

taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on tax laws that have been enacted or substantive enacted by the reporting date.

A deferred tax asset is recognised for unused tax losses and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and is reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Tax withheld on dividend income from subsidiaries and associates is recognised as an expense in the Consolidated Income Statement at the same time as the liability to pay the related dividend is recognised.

2.4.5 Borrowing Costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

2.4.6 Events Occurring after the Balance Sheet Date

All material events occurring after the Balance Sheet date have been considered and where necessary adjustments made in these Financial Statements.

2.4.7 Earnings Per Share

The Group presents basic Earnings Per Share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted number of ordinary shares outstanding during the period.


A segment is a distinguishable component of the Group that is engaged in either providing related products or services (Business Segments) or in providing products or services within a particular economic environment (Geographical Segment) which is subject to risk and returns that are different from those of other segments. Segmental information is presented in respect of the Group’s Business or Geographical Segments. The Group's primary format for segment reporting is based on business segments and is based on the Group's management and internal reporting structure.

Segment results assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Segment Capital expenditure is the total cost incurred during the period to acquire Property, Plant & Equipment and Intangible Assets other than goodwill.

Segment information is presented in the respective Notes to the Financial Statements.


The cash flow statement has been prepared using the indirect method.

2.4.10 New Accounting Standards Issued but not Effective at the Reporting Date

The Institute of Chartered Accountants of Sri Lanka issued a new volume of Sri Lanka Accounting Standards which will become applicable for annual periods beginning on or after 1st January 2012. Accordingly, these Standards have not been applied in preparing these Financial Statements as they were not effective for the year ended 31st December 2010.

The Company is currently in the process of evaluating the potential effect of these Standards on its Financial Statements and the impact on the adoption of these Standards have not been quantified as at the reporting date.




For the Year Ended 2010 2009 2010 2009Rs. Rs. Rs. Rs.

3.1 Summary

Gross Turnover 16,136,677,105 11,986,421,788 15,285,628,173 11,414,456,760

Less: Sales Taxes:

Turnover Tax (108,143,303) (72,918,477) (108,143,303) (72,918,477)

16,028,533,802 11,913,503,311 15,177,484,870 11,341,538,283

3.2 Revenue

Sale of Goods 14,028,853,847 9,955,202,993 14,028,853,847 9,955,202,993

Rendering of Services 1,999,679,955 1,958,300,318 1,148,631,023 1,386,335,290

16,028,533,802 11,913,503,311 15,177,484,870 11,341,538,283



Sewing-Related Products Domestic and Industrial Sewing Machines and General Merchandise.

Consumer Electronics Televisions, Audios, VCD, DVD and Other Electronic Products.

White Goods Refrigerators, Washing Machines, Deep Freezers, Bottle Coolers, Air-Conditioners and Fans.

Kitchen-Related Products Table Tops, Gas Ovens, Rice Cookers, Microwave Ovens, Electric Ovens, Grinders and Blenders.

Communications Computers, CDMA and Celluar Phones, Dialog Satellite Dishes.

Furniture Wood and Layered Furniture, Sofa Sets and Steel Furniture.

Transportation Motor Bikes and Bicycles.

Agro Water Pumps, Paddy Threshers, Tractors

Singer Finance (Lanka) Ltd. Leasing, Hire Purchase and Loans granted.

4.2 Segmental Analysis of Revenue is as Follows:Consolidated Company

2010 2009 2010 2009Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Sewing-Related Products 1,932,881 1,578,894 1,932,881 1,578,894

Consumer Electronics 3,601,210 2,747,551 3,601,210 2,747,551

White Goods 5,386,396 3,915,828 5,386,396 3,915,828

Kitchen-Related Products 1,049,177 716,048 1,049,177 716,048

Communications 974,595 683,785 974,595 683,785

Furniture 814,385 527,388 814,385 527,388

Transportation 764,342 760,531 764,342 760,531

Agro 654,499 411,513 654,499 411,513

Singer Finance (Lanka) Ltd. 851,049 571,965 – –

16,028,534 11,913,503 15,177,485 11,341,538



4.3 Segmental Analysis of Profit before Tax is as Follows:Consolidated Company

2010 2009 2010 2009Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Sewing-Related Products 92,801 31,061 92,801 31,061

Consumer Electronics 246,501 62,084 246,501 62,084

White Goods 261,601 71,230 261,601 71,230

Kitchen-Related Products 68,552 12,808 68,552 12,808

Communications 42,011 11,017 42,011 11,017

Furniture 40,192 8,529 40,192 8,529

Transportation 18,826 5,840 18,826 5,840

Agro 30,028 8,642 30,028 8,642

Singer Finance (Lanka) Ltd. 187,201 36,881 – –

Segment Result 987,713 248,092 800,512 211,211

Gain on Disposal of Other Investment 3,639 – 3,639 –

Dividend from Associates/Subsidiary 953 528 18,948 9,514

Gain on Dilution of Shares in Singer Finance (Lanka) Ltd. 176,574 – – –

Share of Profit on Equity Accounted Investees (1,017) (891) – –

Profit before Tax 1,167,862 247,729 823,099 220,725

4.4 There are no separately distinguishable assets and liabilities for the above segments.


2010 2009 2010 2009Rs. Rs. Rs. Rs.

Dividend Income - Quoted 120,270 528,019 115,770 513,619

- Unquoted 832,500 – 18,832,500 9,000,000

Gain/(Loss) on Disposal of Property, Plant & Equipment 1,365,846 (398,977) 1,365,846 (398,977)

Miscellaneous Income 42,557,520 62,178,197 14,982,221 17,928,510

Service Fee Income - Singer Finance (Lanka) Ltd. – – 73,813,555 38,122,238

Income from Financial Services 42,378,267 34,444,860 42,378,267 34,444,860

Gain on Dilution of Holding in Singer Finance (Lanka) Ltd. (Note 5.1) 176,573,748 – – –

Gain on Disposal of Other Investments (Note 16.3) 3,638,919 – 3,638,919 –

267,467,070 96,752,099 155,127,078 99,610,250

5.1 Subsidiary Company Singer Finance (Lanka) Ltd. issued 26,666,667 ordinary shares at Rs. 15/- per share increasing stated capitalby Rs. 400 million. IPO shares were allotted on 22nd December 2010. Due to this allotment of shares, Group holding percentage onSinger Finance (Lanka) Ltd. decreased to 75% from 100% with effect from 22nd December 2010. Gain on Dilution resulting from decrease in Group holding percentage from 100% to 75% in Singer Finance (Lanka) Ltd. was accounted in the Consolidated FinancialStatements. The Gain on Dilution of Holding in Singer Finance (Lanka) Ltd. is calculated as below:

Rs.

Stated Capital of Singer Finance (Lanka) Ltd. 800,000,005

Investment of Singer (Sri Lanka) PLC 400,000,000

Net Asset Value of Singer Finance (Lanka) Ltd. on the date of allotment, 22nd December 2010 226,426,257

Gain on Dilution 176,573,748



6. Other ExpensesConsolidated Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

Depreciation on Property, Plant & Equipment (Note 12.9) 160,319,856 185,626,124 154,168,063 179,937,611

Amortisation of Intangible Assets with Finite Useful Lives 14,151,652 23,829,976 12,968,704 20,398,948

174,471,508 209,456,100 167,136,767 200,336,559

7. Net Finance Cost

7.1 Finance Cost

Interest on Overdrafts and Loans 545,848,228 893,762,997 542,161,113 875,180,976

Interest on Security Deposits 39,319,918 46,566,856 34,202,876 35,347,269

Interest on Customer Deposits 222,877,576 247,522,919 – –

Interest on Related Party Payables 11,307,769 5,084,918 11,307,769 5,084,918

Loss on Translation of Foreign Currency – 654,655 – 654,655

819,353,491 1,193,592,345 587,671,758 916,267,818

7.2 Finance Income

Interest Income - Related Parties 36,122,289 27,052,723 88,847,850 76,634,009

- Others 7,352,343 58,268,214 (39,049,237) 36,715,823

Gain on Translation of Foreign Currency 1,653,608 – 1,653,608 –

45,128,240 85,320,937 51,452,221 113,349,832

Net Finance Cost 774,225,251 1,108,271,408 536,219,537 802,917,986

8. Share of Profit/(Loss) of Equity Accounted Investee - (Net of Income Tax)Consolidated

2010 2009Rs. Rs.

Share of Profit/(Loss) Share of Tax Net Profit/(Loss) Net Profit/(Loss)

Reality (Lanka) Ltd. (420,245) (596,438) (1,016,683) (891,318)

(420,245) (596,438) (1,016,683) (891,318)

9. Profit before TaxConsolidated Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

Stated after Charging all Expenses including the following:

Executive Directors’ Emoluments 27,388,160 21,815,139 22,270,866 17,524,089

Non-Executive Directors’ Fees 5,310,000 3,810,000 4,185,000 2,685,000

Auditors' Remuneration - Statutory Audit 1,550,000 1,373,924 1,080,000 975,000

- Audit-Related Services 773,500 586,200 468,500 425,000

- Non-Audit Services 1,300,000 – 1,300,000 –


Bad Debts Written off 179,560,645 47,197,423 168,884,152 7,345,514

Provision/(Reversal of Provision) for Obsolete Inventory 76,047,999 2,585,883 76,047,999 2,585,883

Personnel Cost (Note 9.1) 1,853,225,295 1,577,755,377 1,782,072,888 1,470,621,608

Operating Lease Rentals 311,930,856 287,444,159 303,681,713 282,784,559

Donations 355,126 210,744 355,126 210,744



9.1 Personnel CostConsolidated Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

Staff Cost 1,668,937,935 1,391,604,825 1,604,772,284 1,289,338,359

Voluntary Retirement Scheme 6,853,947 24,673,044 6,853,947 24,673,044

Defined Benefit Plan Costs - Retiring Gratuity 33,812,560 33,134,160 31,981,517 32,286,418

Defined Contribution Plan Costs - EPF, ETF and MSPS 143,620,853 128,343,348 138,465,140 124,323,787

1,853,225,295 1,577,755,377 1,782,072,888 1,470,621,608


2010 2009 2010 2009Rs. Rs. Rs. Rs.

Current Income Tax Expense

Current Tax Expense on Ordinary Activities for the Year - Singer (Sri Lanka) PLC (Note 10.1) 443,567,628 163,764,743 365,307,497 149,003,715

(Over)/Under Provision in respect of Previous Year 35,396,548 5,174,202 5,729,691 (2,782,363)

Tax on Dividend Income

WHT on Dividend Received from Singer Finance (Lanka) Ltd. 2,000,000 1,000,000 – –

480,964,176 169,938,945 371,037,188 146,221,352

Deferred Tax

Expense/(Income) (Note 10.2) 18,077,973 (55,108,845) 28,700,067 (46,572,562)

499,042,148 114,830,101 399,737,255 99,648,790

10.1 Reconciliation between Current Tax Expense and the Product of Accounting ProfitConsolidated Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

Profit before Tax 1,167,861,512 247,728,642 823,099,069 220,724,846

Share of (Profit)/Loss of Associates 1,016,683 891,318 – –

Intra Group Adjustment 196,573,748 10,000,000 – –

Aggregate Accounting Profit 1,168,878,195 248,619,960 823,099,069 220,724,846

Aggregate Disallowable Expenses 586,503,028 652,875,976 541,205,741 398,658,576

Aggregate Tax Deductible Expenses (305,608,813) (429,276,075) (313,406,581) (190,337,929)

Income not Liable for Tax (201,165,437) (10,000,000) (22,587,189) (9,000,000)

1,248,606,973 462,219,861 1,028,311,040 420,045,493

Add: Tax Loss of Subsidiary – – – –

Taxable Profit 1,248,606,973 462,219,861 1,028,311,040 420,045,493

Income Tax at 35% (2009 - 35%) 437,012,441 161,776,951 359,908,864 147,015,923

Social Responsibility Levy 6,555,187 1,987,792 5,398,633 1,987,792

Current Income Tax Expense 443,567,628 163,764,743 365,307,497 149,003,715

The Group tax expense is based on the taxable profit of each Company in the Group. Singer (Sri Lanka) PLC is liable to Income Tax at 35% on taxable profit with effect from 1st April 2006 and an additional 1.5% Social Responsibility Levy on Tax is payable with effect from 1st April 2008. (From 1st April 2006 to 31st March 2008 was 1% as tax payable.)



10.2 Deferred Tax Expense/(Income)Consolidated Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

Deferred Tax Charge/(Credit) arising due to Origination and Reversal of Temporary Differences (10,532,694) (55,108,845) 89,400 (46,572,562)

Adjustment due to Change in Tax Rate 28,610,667 – 28,610,667 –

18,077,973 (55,108,845) 28,700,067 (46,572,562)

10.3 Deferred Tax has been computed using the enacted tax rate of 28%.

11. Earnings Per Share11.1 Basic Earnings per Share is calculated by dividing the profit for the year attributable to the ordinary shareholders by the weightedaverage number of ordinary shares outstanding during the year.

11.2 The following reflects the income and share data used in the Basic Earnings per Share computations:


2010 2009 2010 2009Rs. Rs. Rs. Rs.



Profit Attributable to Ordinary Shareholders for Basic Earnings per Share 668,011,242 132,898,542 423,361,814 121,076,056



Basic Earnings per Share (Rs.) 10.67 2.12 6.76 1.93

11.3 The following reflects the Income and Share data used in the Earnings per Share excluding the Gain on Dilution of Equity holdingin Singer Finance (Lanka) Ltd.


2010 2009 2010 2009Rs. Rs. Rs. Rs.


Profit for the Year Excluding the Gain on Dilution of Equity Holding in Singer Finance (Lanka) Ltd. 492,245,616 132,898,542 423,361,814 121,076,056

Profit Attributable to Ordinary Shareholders for Earnings per Share Excluding the Gain on Dilution of Equity Holding in Singer Finance (Lanka) Ltd. 491,437,494 132,898,542 423,361,814 121,076,056

Number of Ordinary Shares Used as Denominators


Earnings per Share excluding the Gain on Dilution of Shares in Singer Finance (Lanka) Ltd. (Rs.) 7.85 2.12 6.76 1.93




Balance Additions/ Increase/(Decrease) Disposals/ Balanceas at Transfers in Revaluation Transfers as at

01.01.2010 31.12.2010Rs. Rs. Rs. Rs. Rs.

At Cost

Freehold Building 271,063,314 2,251,379 – 273,314,693 –

Motor Vehicles 169,825,467 16,113,500 – 3,193,334 182,745,633

Furniture and Equipment 175,929,014 3,998,612 – – 179,927,626

Plant and Machinery 154,526,061 14,628,661 – – 169,154,722

Culinary School Equipment 75,814 – – – 75,814

E.D.P. Equipment 255,983,550 11,796,850 – 740,250 267,040,150

Shop Furniture 91,647,056 6,844,994 – – 98,492,050

Shop Equipment 187,231,967 9,542,593 – – 196,774,560

Improvements on Leasehold Premises 370,923,781 31,514,657 – – 402,438,438

1,677,206,024 96,691,246 – 277,248,277 1,496,648,993

At Valuation

Freehold Land 507,423,500 – 5,013,000 – 512,436,500

Freehold Building 193,075,552 354,783,766 – 547,859,318

507,423,500 193,075,552 359,796,766 – 1,060,295,818

Total Gross Carrying Amount 2,184,629,523 289,766,798 359,796,766 277,248,277 2,556,944,811




Freehold Building 74,668,421 5,570,720 80,239,141 –

Motor Vehicles 88,886,945 11,157,051 1,050,000 98,993,996

Furniture and Equipment 99,252,206 12,787,863 – 112,040,069

Plant and Machinery 89,156,211 9,993,709 – 99,149,920


E.D.P. Equipment 173,767,979 29,460,051 716,917 202,511,114

Shop Furniture 50,080,962 15,443,450 – 65,524,412

Shop Equipment 105,591,801 31,666,288 – 137,258,089

Improvements on Leasehold Premises 217,421,497 59,729,960 – 277,151,458

Total Depreciation and Impairment Losses 898,901,836 175,809,093 82,006,058 992,704,872


2010 2009Rs. Rs.

At Cost 503,944,121 778,304,188

At Valuation 1,060,295,818 507,423,500




12.4 During the financial year, the Group acquired Property, Plant & Equipment to the aggregate value of Rs. 96,691,246/- (2009 - Rs. 46,246,122/-) on cash basis.

12.5 Property, Plant & Equipment includes fully-depreciated assets having a gross carrying amount of Rs. 458,201,081/- (2009 - Rs. 337,591,579/-).

12.6 Lands & buildings were revalued during the financial year 2010 by Messrs Chulananda Wellappili, an Independent Valuer. The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st December 2010.Such assets were valued on an open market value for existing use basis. The surplus arising from the revaluation was transferred to a revaluation reserve.

12.7 Cost of the revalued land as at 31st December 2010 is Rs. 103,338,782/- (2009 - Rs. 103,338,782/-).

12.8 Carrying amount of the revalued buildings as at 31st December 2010 is estimated at Rs. 273,314,693/- (2009 - Rs. 271,063,314/-).


2010 2009Rs. Rs.

Cost of Sales 15,489,237 15,633,071

Other Expenses Excluding Amortisation of Software Including Externally Accrued Intangible Assets 160,319,856 185,626,124

175,809,093 201,259,195

12.10 Gross Carrying Amounts - Company

Balance Additions/ Increase/(Decrease) Disposals/ Balanceas at Transfers/ in Revaluation Transfers as at

01.01.2010 31.12.2010Rs. Rs. Rs. Rs. Rs.

At Cost


Motor Vehicles 166,024,440 16,113,500 – 3,193,334 178,944,606




E.D.P. Equipment 247,103,388 10,478,473 – 740,250 256,841,611

Shop Furniture 91,647,056 6,844,994 – – 98,492,050

Shop Equipment 187,231,967 9,542,593 – – 196,774,560


1,637,006,721 86,440,992 – 277,248,277 1,446,199,436

At Valuation

Freehold Land 507,423,500 – 5,013,000 – 512,436,500

Freehold Building – 193,075,552 354,783,766 – 547,859,318

507,423,500 193,075,552 359,796,766 – 1,060,295,818

Total Gross Carrying Amount 2,144,430,221 284,529,544 359,796,766 277,248,277 2,506,495,254




Balance Charge for Increase/ Disposals/ Balanceas at the Year/ (Decrease) Transfers as at

01.01.2010 Transfers in Revaluation 31.12.2010Rs. Rs. Rs. Rs. Rs.


Motor Vehicles 88,466,705 10,796,846 – 1,050,000 98,213,551




E.D.P. Equipment 169,005,426 28,105,063 – 716,917 196,393,572

Shop Furniture 50,080,962 15,443,450 – – 65,524,412

Shop Equipment 105,591,802 31,666,288 – – 137,258,090


Total Depreciation and Impairment Losses 882,790,935 169,657,299 – 82,006,058 970,442,177


2010 2009Rs. Rs.

At Cost 475,757,259 754,215,786

At Valuation 1,060,295,818 507,423,500


12.13 During the financial year, the Company acquired Property, Plant & Equipment to the aggregate value of Rs. 86,440,992/- (2009 - Rs. 42,536,009/-) on cash basis.

12.14 Property, Plant & Equipment include fully-depreciated assets having a gross carrying amount of Rs. 446,831,598/- (2009 - Rs. 332,387,916/-).

12.15 Lands and Buildings were revalued during the financial year 2010 by Messrs Chulananda Wellappili, an Independent Valuer. The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st December 2010. Such assets were valued on an open market value for existing use basis. The surplus arising from the revaluation was transferred to a revaluation reserve.

12.16 Cost of revalued land as at 31st December 2010 is Rs. 103,338,782/- (2009 - Rs. 103,338,782/-).

12.17 Carrying amount of the revalued buildings as at 31st December 2010 is Rs. 273,314,693/- (2009 - Rs. 271,063,314/-).


2010 2009Rs. Rs.

Cost of Sales 15,489,236 15,633,071

Other Expenses Excluding Amortisation of Software and

Externally Accrued Intangible Assets 154,168,063 179,937,611

169,657,299 195,570,682




2010 2009 2010 2009Rs. Rs. Rs. Rs.

13.1 Trade Marks

Summary

Cost



Less: Accumulated Impairment Loss – – – –

Net Carrying Amount 79,762,500 79,762,500 79,762,500 79,762,500

13.2 Software

Summary

Cost


Acquired/Incurred during the Year (Notes 13.8 and 13.9) 13,600,416 15,915,919 10,968,434 12,738,425


Amortisation




Carrying Amount

As at the beginning of the Year


66,227,196 60,378,439 56,656,271 52,256,548

13.3 Software Underdevelopment

Cost

As at the beginning of the Year

Acquired/Incurred during the Year – 9,093,200 – 9,093,200


As at the end of the Year – (9,093,200) – (9,093,200)

– – – –



13.4 Other Intangible Assets Externally Acquired Consolidated Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

Cost


Acquired/Incurred during the Year – – – –



Amortisation

As at the beginning of the Year 6,400,000 – 6,400,000 –



Carrying Amount



Total Net Carrying Amount 165,189,703 165,740,939 155,618,778 157,619,048

13.5 SISIL Trademark

The Company had acquired the ‘SISIL’ trademark in December 2000, amounting to Rs. 55 million. The carrying amount as at 31st December 2010 is Rs. 41,250,000/-. The Company had initially recorded the ‘SISIL’ trademark at cost and amortised over the determined useful life. The management is of the opinion that the aforementioned trademark has an indefinite useful life as theirassociated brand awareness and recognition has existed over 30 years and the Company intends to utilise the said trademark for theforeseeable future. There are no legal, regulatory, contractual, competitive, economic or other factors that may limit its useful life and accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for any impairment as at 31st December 2010.

Annual Sales Growth for the Next Five Years 12%

Gross Margin 25%

Discount Rate 12%


13.6 UNIC Trademark

The Company had acquired the ‘UNIC’ trademark in 2006, amounting to Rs. 38,512,500/-. This assets are now carried at cost subject to annual impairment test and carrying amount as at 31st December 2010 is Rs. 38,512,500/-. This trademark is also considered to have an indefinite useful life due to the factors mentioned in the preceding paragraph and accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for impairment as at 31st December 2010.

Annual Sales Growth for the Next Five Years

Sales Gross Margin

Year 2011 20% 28%

Year 2012 20% 28%

Year 2013 and 2014 18% 26%

Year 2015 - 15% 25%

Gross Margin 28% –

Discount Rate 12% –

Indefinite Growth Rate after Year 2014 2% –



13.7 The Company took over the showrooms, retail operation of the Hayleys Electronic Retail Ltd. from 2nd January 2008 andAgencies of Phillips and Kenwood from Hayleys Electronic Retail Ltd. for Rs. 32 million. The entire purchase consideration is treated as Goodwill, and is amortised over the determined useful life of 5 years commencing from the period beginning 1st January 2009.

13.8 The subsidiary had acquired the software which is categorised as Intangible Assets, amounting to Rs. 2,631,982/-. It is amortised over 5 years, commencing from the date of effective use.

13.9 The Company on 12th February 2004, signed an agreement with IFS R&D Ltd. to implement a Software Solution System at a cost of US$ 850,000 (Rs. 84 million approximately) and is in a process of implementation. During the year, Rs. 10,968,434/- (2009 - Rs. 9,093,200/-) has been capitalised.

14. Investment in Subsidiary - CompanyCarrying

ValueDirector'sValuation

CarryingValue

Director's Valuation

2010 2010 2009 2009Country of No of Shares (Restated)

Incorporation 2010 2009 Rs. Rs Rs. Rs.

Singer Finance (Lanka) Ltd. Sri Lanka 80,000,000 80,000,000

Investment on 1st January 400,000,000 – 200,000,000 –

Investments made during the Year – – 200,000,000 –

Carrying amount as at 31st December 400,000,000 897,000,000 400,000,000 480,000,000

14.1 Singer Finance (Lanka) Ltd. started trading its shares on 17th January 2011 at Colombo Stock Exchange after allotting on 22nd December 2010. In the absence of active market trading as at 31st December 2010, market value of Singer Finance (Lanka) Ltd. is not available. Hence, Directors valued Singer Finance (Lanka) Ltd. at its Net Assets Value as at 31st December 2010 of Rs. 897 million.

15. Investments in Equity Accounted Investees15.1 Investment in Equity Accounted Investees - Consolidated

Share ofProfit/(Loss)

Consolidated Net of ConsolidatedCarrying Dividends Carrying

Holding Amount Received for Amount% 2010 the Year 2009

2010 2009 Rs. Rs. Rs.

Non-Quoted

Reality (Lanka) Ltd. (Note 15.2) 40 40 23,524,621 (1,016,683) 24,541,304

(Directors' Valuation as at 31.12.2010 Rs. 23.5 million 2009 - 24.5 million)

Telshan Network (Pvt) Ltd. 23.56 23.56 – – –

(Directors' Valuation as at 31.12.2010 Rs. 10 million 2009 - Rs. 10 million) (Note 15.6)

Total Non-Quoted Investments in Equity Accounted Investees 23,524,621 24,541,304

Net Carrying Amount of Investments in Equity Accounted Investees 23,524,621 24,541,304



Consolidated ConsolidatedBalance Balance

as at as at31.12.2010 31.12.2009

Rs. Rs.

15.2 Share of Equity Accounted Investee Retained Profit

Reality (Lanka) Ltd.

Balance Brought Forward 541,304 1,432,622

Current Year Share of Profit/(Loss) (1,016,683) (891,318)

Deduct: Dividends Received during the Year-Gross – –

Current Year's Retained Profit/(Loss) (1,016,683) (891,318)

(475,379) 541,304

Total Share of Equity Accounted Investee Retained Profits (475,379) 541,304

Total Share of Equity Accounted Investee Revaluation Surplus – –

Cost of Equity Accounted Investee (Note 15.3) 24,000,000 24,000,000

Total Carrying Amount of Investment in Equity Accounted Investee 23,524,621 24,541,304

15.3 Movement of Investment - Cost

Consolidated Increase/ ConsolidatedBalance as at (Decrease) Balance as at01.01.2010 in Investments 31.12.2010

Rs. Rs. Rs.

Reality (Lanka) Ltd. 24,000,000 – 24,000,000

Telshan Network (Pvt) Ltd. (Note 15.6) – – –

24,000,000 – 24,000,000

15.4 Summarised Financial Information of Equity Accounted Investee

In thousands of Rs. OwnershipCurrent Assets

Non-CurrentAssets

Total Assets

Current Liabilities

Non-Current

LiabilitiesTotal

Liabilities Revenues ExpensesProfit/(Loss)

2009

Reality (Lanka) Ltd. (Associate) 40% 5,472 177,457 182,930 121,576 – 121,576 3,600 (5,828) (2,228)

2010

Reality (Lanka) Ltd. (Associate) 40% 9,106 178,785 187,891 129,080 – 129,080 3,600 (6,142) (2,542)


Carrying Market Value/ Carrying Market Value/Amount Directors’ Amount Directors’


Non-Quoted

Telshan Network (Pvt) Ltd. (Note 15.6) 2,000,000 2,000,000 – – – –

Reality (Lanka) Ltd. 2,400,000 2,400,000 24,000,000 24,000,000 24,000,000 24,000,000

Total Investments in Non-Quoted Associate Equity Securities 24,000,000 24,000,000 24,000,000 24,000,000

Net Carrying Amount of Investment in Equity Accounted Investees 24,000,000 24,000,000 24,000,000 24,000,000

15.6 Investment in Telshan Network (Pvt) Ltd. amounting to Rs. 20,000,000/- had been written off since it carries negative net assets position.



16. Other Long-Term Investments16.1 ConsolidatedInvestments in Equity Securities - Non-Current


No. of Shares 2010 Valuation 2009 Valuation2010 2009 Rs. Rs. Rs. Rs.

(a) Quoted (Marketable Equity Securities)

Investments with Related Parties

Regnis (Lanka) PLC (Note 16.3) – 42,795 – – 1,428,473 2,856,566

Total Investments in Quoted Marketable Equity Securities – – 1,428,473 2,856,566

(b) Non-Quoted


Credit Information Bureau of Sri Lanka 100 100 41,300 41,300 41,300 41,300





No. of Shares 2010 Valuation 2009 Valuation2010 2009 Rs. Rs. Rs. Rs.

(a) Quoted (Marketable Equity Securities)

Investments with Related Parties

Regnis (Lanka) PLC – 42,795 – – 1,428,473 2,856,566

Total Investments in Quoted Equity Securities – – 1,428,473 2,856,566

(b) Non-Quoted




16.3 Singer (Sri Lanka) PLC sold the entire 42,795 shares of Regnis (Lanka) PLC for Rs. 5,067,392/-. The purchase consideration of such sold shares was Rs. 1,428,473/-. The resulting gain on disposal of Other Long-Term Investments amounting to Rs. 3,638,919/- is recognised to the Consolidated and Company Income Statements under Other Income.




2010 2009 2010 2009Rs. Rs. Rs. Rs.

Raw Materials 104,156,594 86,233,313 104,156,594 86,233,313

Work-in-Progress 23,315,632 21,894,175 23,315,632 21,894,175

Finished Goods 1,824,856,499 1,635,240,695 1,824,856,499 1,635,240,695

Supplies and Parts 224,440,896 226,990,131 224,440,896 226,990,131

Goods-in-Transit 133,305,325 90,066,197 133,305,325 90,066,197

2,310,074,946 2,060,424,511 2,310,074,946 2,060,424,511

Less: Provision for Inventory (148,656,924) (72,608,925) (148,656,924) (72,608,925)

Consignment Inventory (12,376,604) (2,896,303) (12,376,604) (2,896,303)

Total Inventories 2,149,041,418 1,984,919,283 2,149,041,418 1,984,919,283




Reality Lanka Ltd. Associate Company 102,217,767 110,515,421 102,217,767 110,515,421

Singer Industries (Ceylon) PLC Affiliate Company 30,000,000 – 30,000,000 –

Singer Finance (Lanka) Ltd. Subsidiary – – 409,192,424 –

202,217,767 240,515,421 611,410,191 240,515,421

18.1 The Management intends to recover the above loans within one year from the Balance Sheet date. Interest is charged at the rateof 1% above the Company’s effective rate. The aforesaid loans are not secured.

19. Trade and Other Receivables19.1 Non-Current


2010 2009 2010 2009Rs. Rs. Rs. Rs.

Hire Debtors 1,909,741,950 1,575,178,134 686,833,953 830,929,531


1,003,319,771 1,315,009,033 552,901,332 709,721,096

Lease Rental Receivables

Gross Instalment in Lease 404,145,149 284,467,870 – –

Rental Received in Advance (1,429,770) (3,190,141) – –

402,715,379 281,277,729

Unearned Income (75,136,106) (51,593,876) – –

327,579,273 229,683,854 – –

Loan DebtorsConsumer and Personal Loans 178,055,108 191,741,120

Rental Received in Advance (138,270) (990,131)

Less: Unearned Loan Interest Income (20,778,524) (28,401,255)

157,138,314 162,349,734 – –

Other Receivables 344,221,130 211,302,704 344,221,130 211,302,704


504,802,999 332,479,452 482,398,625 314,722,211

2,545,741,689 2,039,522,072 1,035,299,957 1,024,443,307




2010 2009 2010 2009Rs. Rs. Rs. Rs.

19.2 CurrentHire Debtors 3,273,885,461 2,778,837,501 2,373,187,515 2,161,103,544

Rental Received in Advance (440,561) (1,025,946) – –



2,557,984,224 1,905,108,465 1,954,165,705 1,599,617,978

Lease Rental ReceivablesGross Instalment in Lease 335,953,903 277,881,823 – –

Unearned Income (103,526,578) (86,753,413) – –

Provision for Doubtful Debts (7,285,731) (5,612,178) – –

225,141,595 185,516,231 – –

Loan DebtorsConsumer and Personal Loans 1,567,955,974 1,397,434,571 – –


FD Loans 45,548,790 34,135,487 – –

Net Receivable 1,358,354,335 1,203,363,936 – –

Less: Provision for Bad & Doubtful Debts (18,020,195) (26,293,430) – –

1,340,334,139 1,177,070,506 – –

Other DebtorsTrade Receivables 718,285,506 517,969,355 718,285,506 517,969,355


Advance and Other Receivables 517,278,646 750,447,002 425,063,016 701,726,980


Shipping Guarantees 4,359,274 2,573,000 4,359,274 2,573,000

Prepayments 338,478,313 48,666,492 331,257,829 42,751,785

Interest Receivable from Reality Lanka Ltd. 17,837,118 10,448,498 17,837,118 10,448,498


1,352,284,836 1,125,012,211 1,265,673,350 1,071,092,347

5,475,744,793 4,392,707,413 3,219,839,055 2,670,710,325

19.3 Loans to Company EmployeesConsolidated Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

Movement


Loans Granted during the Year 98,514,044 39,149,000 69,961,000 35,247,000

Less: Repayments (78,078,843) (58,271,329) (66,099,864) (52,804,837)


Due within One Year 58,616,695 91,171,659 54,737,700 85,634,552

Due after One Year 160,581,869 121,176,748 138,177,495 103,419,507



20. Amounts Due from Related PartiesConsolidated Company


20.1 Trade

Singer Finance (Lanka) Ltd. Subsidiary – – 947,126,673 932,818,537

Singer Asia Sourcing Ltd. Affiliate Company 6,723,621 7,074,245 6,723,621 7,074,245

6,723,621 7,074,245 953,850,294 939,892,782

20.2 Non-Trade

Singer Industries (Ceylon) PLC Associate 21,987,873 – 21,987,873


29,556,243 5,241,249 29,556,243 5,241,249

21. Marketable SecuritiesInvestment in Repurchase Agreement 410,551,810 160,473,932 – –

410,551,810 160,473,932 – –


22.1 Favourable Cash and Cash Equivalent Balances

Cash and Bank Balances 250,573,958 385,446,050 200,402,845 361,764,748

22.2 Unfavourable Cash and Cash Equivalent Balances

Bank Overdrafts (Notes 26.1 and 26.7) (457,771,513) (160,344,548) (457,771,513) (160,344,548)

Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement (207,197,556) 225,101,502 (257,368,668) 201,420,200

23. Stated Capital23.1 Issued and Fully Paid

At the Issued for Issued for At the beginning Cash during Non-Cash end of

of the Year the Year Consideration the Year01.01.2010 31.12.2010

Number Number Number Number

Number of Shares - Ordinary Shares 62,604,805 – – 62,604,805

62,604,805 – – 62,604,805

Rs. Rs. Rs. Rs.

Rupees - Ordinary Shares 626,048,050 – – 626,048,050

626,048,050 – – 626,048,050

23.2 Rights, Preference and Restrictions of Classes of Capital

The holders of ordinary shares are entitled to receive dividend as declared from time to time and are entitled to one vote per share at a meeting of the Company.



23.3 Shares held by Group Companies

The shares of the Company held by the Group Companies are as follows:

2010 2009Number Number

Singer (Sri Lanka) B.V. 52,252,125 52,252,125

Singer Industries (Ceylon) PLC 1,050,700 1,050,700


2010 2009 2010 2009Rs. Rs. Rs. Rs.

(a) Reserve Fund

Reserve Fund (Note 24.1) 10,748,118 8,042,188 – –

10,748,118 8,042,188 – –

(b) Revaluation Reserve

Revaluation Reserve (Note 24.2) 664,542,029 404,084,718 664,542,029 404,084,718

664,542,029 404,084,718 664,542,029 404,084,718

675,290,147 412,126,906 664,542,029 404,084,718


2010 2009 2010 2009Rs. Rs. Rs. Rs.

24.1 Reserve Fund

Balance as at the beginning of the Year 8,042,189 3,012,962 – –

Transfer of Surplus during the Year 2,705,929 5,029,226 – –

Balance as at the end of the Year 10,748,118 8,042,188 – –

24.2 Revaluation Reserve


Revaluation during the Year 359,796,766 – 359,796,766 –

Deferred Tax on Revaluation (99,339,454) – (99,339,454) –


25. Revenue ReservesConsolidated Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

Summary

(a) General Reserve (Note 25.1) 2,000,000,000 1,600,000,000 2,000,000,000 1,600,000,000

2,000,000,000 1,600,000,000 2,000,000,000 1,600,000,000

(b) Retained Earnings (Note 25.2) 578,324,678 375,624,170 316,845,046 356,088,037

578,324,678 375,624,170 316,845,046 356,088,037

2,578,324,678 1,975,624,170 2,316,845,046 1,956,088,037



25.1 General Reserve

The general reserve which is a revenue reserve represents the amounts set aside by the Directors for general application.

The movement of General Reserve is as follows:


2010 2009 2010 2009Rs. Rs. Rs. Rs.

At the beginning of the Year 1,600,000,000 1,500,000,000 1,600,000,000 1,500,000,000

Transferred from Retained Earnings 400,000,000 100,000,000 400,000,000 100,000,000

Issue of Bonus Shares – – – –

At the end of the Year 2,000,000,000 1,600,000,000 2,000,000,000 1,600,000,000


Singer (Sri Lanka) PLC 316,845,046 356,088,037 316,845,046 356,088,037

Equity Accounted Investees (Note 15.2) (475,379) 541,304 – –

Subsidiary Company 86,189,385 18,994,829 – –

Gain on Dilution of Equity Holding in Singer Finance (Lanka) Ltd. 176,573,748 – – –

Retained Earnings Attributable to Minority Shareholders (808,122) – – –

578,324,678 375,624,170 316,845,046 356,088,037

26. Interest Bearing Loans & Borrowings26.1 Interest Bearing Loans & Borrowings - Consolidated

2010 2010 2009 2009Amount Amount Amount Amount

Repayable Repayable 2010 Repayable Repayable 2009Within 1 Year After 1 Year Total Within 1 Year After 1 Year Total


Debentures (Note 26.2) 300,000,000 1,060,000,000 1,360,000,000 875,000,000 480,000,000 1,355,000,000

Bank Loans (Note 26.3) 2,157,712,738 227,290,697 2,385,003,435 2,358,114,881 33,935,865 2,392,050,746

Promissory Notes (Note 26.4) – – – 300,000,000 – 300,000,000


Commercial Papers (Note 26.5) 250,000,000 – 250,000,000 – 250,000,000 250,000,000

3,165,484,251 1,287,290,697 4,452,774,948 3,693,459,429 763,935,865 4,457,395,294



26.2 Debentures - Consolidated


Rs. Rs. Rs. Rs.

14.0% Debentures Unsecured Redeemable on 06.08.2010 242,500,000 – 242,500,000 –

6 Month TB+1.50% (Floor 9.75%, Cap 16%) Debentures Unsecured Redeemable on 06.08.2010 357,500,000 – 357,500,000 –


6 month TB+1.50% (Floor 9.75%, Cap 16%) Debentures Unsecured Redeemable on 06.08.2010 192,500,000 – 192,500,000 –

AWPLR+1.75 (Floor 14.5%, Cap 16.5%) Unsecured Redeemable on 06.08.2010 75,000,000 75,000,000 –

6 Month TB+1.75% Debentures Unsecured Redeemable on 05.06.2012 45,000,000 – 15,000,000 30,000,000


19.75% Debentures Unsecured Redeemable on 29.02.2011/2012 and 2013 272,000,000 – – 272,000,000


AWPLR+1.25 Debentures Unsecured Redeemable on 31.12.2011/2012 – 300,000,000 300,000,000 270,000,000


AWPLR+1.25 Debentures Unsecured Redeemable on 31.12.2011/2012 and 2013 – 400,000,000 – 400,000,000

1,355,000,000 1,000,000,000 995,000,000 1,360,000,000

26.3 Bank Loans - Consolidated

Balance as at Loans Repayment As at 01.01.2010 Obtained 31.12.2010

Rs. Rs. Rs. Rs.


Bank Loans 2,392,050,746 3,086,605,327 3,093,652,638 2,385,003,435

2,392,050,746 3,086,605,327 3,093,652,638 2,385,003,435


Company Lender/Rate Repayment Security 31.12.2010 31.12.2009of Interest (p.a.) Rs. Rs.

Singer (Sri Lanka) PLC E-Friends Loan @6.5% At Maturity No Assets Pledged 5,832,925 7,632,975

National Savings Bank AWPLR+1.25%

Rs. 200 million to be paid in May 2012.

No Assets Pledged200,000,000 –

205,832,925 7,632,975

Singer Finance (Lanka) Ltd. BOC AWPLR+2.5% Rate (Floor Rate 23%)Reviewed Monthly

Monthly Payment Lease Debtors

1,570,316 6,415,434

Loan on Securitisation Fixed Rate 25.75%

Monthly Repayment Hire Purchase Receivable 19,887,456 19,887,456

21,457,772 26,302,890

227,290,697 33,935,865



26.4 Promissory Notes - Consolidated


Rs. Rs. Rs. Rs.

Promissory Notes 300,000,000 – 300,000,000 –

300,000,000 – 300,000,000 –


Commercial Papers 250,000,000 – – 250,000,000

250,000,000 – – 250,000,000

26.6 Bank Facilities - Consolidated


Rs. Rs. Rs. Rs.

Overdraft 457,771,513 1,045,000,000 160,344,548 670,000,000

Term Loans 312,597,484 1,410,000,000 339,853,668 339,853,668

Short-Term Loans 2,322,405,951 3,655,800,000 2,602,197,078 4,100,000,000

Debentures 1,360,000,000 1,360,000,000 1,355,000,000 1,355,000,000


Public Deposits 1,647,985,384 – 1,463,621,740 –

Guarantees 254,359,274 350,000,000 – 350,000,000

Letter of Credit 1,408,218,372 1,685,000,000 556,677,296 1,660,000,000


26.7 Interest Bearing Loans & Borrowings - Company




Debentures (Note 26.8) 300,000,000 1,060,000,000 1,360,000,000 875,000,000 480,000,000 1,355,000,000

Bank Loans (Note 26.9) 2,152,867,617 205,832,925 2,358,700,542 2,330,858,694 7,632,975 2,338,491,669

Promissory Notes (Note 26.10) – – – 300,000,000 – 300,000,000


Commercial Papers (Note 26.11) 250,000,000 – 250,000,000 – 250,000,000 250,000,000

3,160,639,130 1,265,832,925 4,426,472,055 3,666,203,242 737,632,975 4,403,836,217



26.8 Debentures - Company


Rs. Rs. Rs. Rs.





AWPLR+1.75 (Floor 14.5%, Cap 16.5%) Unsecured Redeemable on 06.08.2010 75,000,000 75,000,000 –

6 Month TB+1.75% Debentures Unsecured Redeemable on 05.06.2011/2012 45,000,000 – 15,000,000 30,000,000


19.75% Debentures Unsecured Redeemable on 29.02.2011/2012 and 2013 272,000,000 – – 272,000,000




AWPLR+1.25 Debentures Unsecured Redeemable on 31.12.2011/2012 and 2013 – 400,000,000 – 400,000,000

1,355,000,000 1,000,000,000 995,000,000 1,360,000,000

26.9 Bank Loans - Company

As at Loans Repayment As at 01.01.2010 Obtained 31.12.2010

Rs. Rs. Rs. Rs.


Bank Loans 2,338,491,669 3,086,605,327 3,066,376,454 2,358,700,542

2,338,491,669 3,086,605,327 3,066,376,454 2,358,700,542


Lender/Rate Repayment Security 31.12.2010 31.12.2009of Interest (p.a.) Rs. Rs.

E-Friends Loan @ 6.5% At Maturity No Assets Pledged 5,832,925 7,632,975

National Savings Bank -

AWPLR +1.25%

Rs. 200 million to be

paid in May 2012

No Assets Pledged 200,000,000 –

205,832,925 7,632,975



26.10 Promissory Notes - Company


Rs. Rs. Rs. Rs.

Promissory Notes 300,000,000 – 300,000,000 –

300,000,000 – 300,000,000 –

26.11 Commercial Papers - Company

Commercial Papers 250,000,000 – – 250,000,000

250,000,000 – – 250,000,000

26.12 Bank Facilities


Rs. Rs. Rs. Rs.

Overdraft 457,771,513 1,020,000,000 160,344,548 645,000,000

Term Loans 286,294,591 1,310,000,000 286,294,591 286,294,591

Short-Term Loans 2,322,405,951 3,655,800,000 2,602,197,078 4,100,000,000

Debentures 1,360,000,000 1,360,000,000 1,355,000,000 1,355,000,000


Guarantees 254,359,274 350,000,000 – 350,000,000

Letter of Credit 1,408,218,372 1,685,000,000 556,677,296 1,660,000,000


27. Deferred Tax Assets/(Liabilities)Consolidated Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

27.1 Deferred Tax AssetsBalance as at beginning of the Year 143,053,325 96,480,763 143,053,325 96,480,763

Adjustment due to Change in Tax Rate - Recognised in Income Statement (28,610,667) – (28,610,667) –

Origination and Reversal of Timing Differences - Recognised in Income Statement (89,402) 46,572,562 (89,402) 46,572,562


27.2 Deferred Tax Liabilities Deferred Tax Liability/(Asset) balance as at beginning of the Year 14,749,401 22,705,744 – –

Origination of Deferred Tax Liability due to Revaluation of Building - Recognised in Equity 99,339,454 – 99,339,454 –

Origination and Reversal of Timing Differences - Recognised in Income Statement (10,622,094) (7,956,343) – –

Deferred Tax Liabilities/(Asset) balance as at the end of the Year 103,466,761 14,749,401 99,339,454 –



27.3 Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against taxliabilities and when the deferred tax relate to the same fiscal authority.

The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

27.3.1 Consolidated


Rs. Rs. Rs. Rs.




Inventories 41,623,938 – 25,413,124 –



187,150,376 72,797,120 218,935,979 75,882,654

Net Deferred Tax 114,353,256 – 143,053,325 –



Intangible Assets – – – 12,274,515

Provision on Assets 281,998 – – –


1,744,236 105,210,997 1,186,929 15,936,330

Net Deferred Tax – 103,466,761 – 14,749,401

27.3.2 Company




Inventories 41,623,938 – 25,413,124 –



187,150,376 72,797,120 218,935,979 75,882,654

Net Deferred Tax 114,353,256 – 143,053,325 –


Property, Plant & Equipment – 99,339,454 – –

– 99,339,454 – –

Net Deferred Tax – 99,339,454 – –



28. Retirement Benefit ObligationsConsolidated Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

Present Value of Unfunded Gratuity 181,875,758 158,555,375 176,663,436 155,164,141

Total Present Value of the Obligation 181,875,758 158,555,375 176,663,436 155,164,141

Provision for Retiring Gratuity

At the beginning of the Year 158,545,420 148,418,813 155,164,141 145,875,322

Actuarial Gain/(Loss) on Obligation 220,509 1,756,142 (247,944) 1,980,250

Current Service Cost 16,018,237 13,173,214 15,028,682 12,365,416

Interest on Obligation 17,573,814 18,204,804 17,200,779 17,940,751

192,357,980 181,552,973 187,145,658 178,161,739

Benefits Paid (10,482,222) (22,997,598) (10,482,222) (22,997,598)

At the end of the Year 181,875,758 158,555,375 176,663,436 155,164,141

The Company maintains a non-contributory defined benefit plan providing for gratuity benefits payable to employees expressed in term of final monthly salary and service.

As at 31st December 2010, the gratuity liability was actuarial valued under the Projected Unit Credit (PUC) method by a professionallyqualified actuary firm Messrs Actuarial & Management Consultants (Private) Ltd.

The required accounting provision of the Company as at 31st December 2010, has been determined based on the recommendation on this Report.

Following key assumptions were made in arriving at the above figures:

(a) Rate of Discount - 10.5% p.a. (net of tax)(b) Salary Increment Rate

Year 1 - 10% Year 2+ - 9%

(c) Retirement Age

Other than Factory General Staff Factory General Staff

Males 60 years 55 years

Females 60 years 55 years

(d) Assumptions regarding future mortality are based on A67/70 Mortality Table, issued by the Institute of Actuaries, London. The demographic assumptions underlying the valuation are with respect to retirement age, early withdrawal from service and retirement on medical grounds.

The expense so recognised is included in Selling and Administrative expenses in the Income Statement.

The Group's and Company's retirement benefit obligation would have been Rs. 189.5 million and Rs. 185.6 million respectively as at the Balance Sheet date, had their retirement benefit obligation been calculated as per the requirements of Payment of Gratuity Act No. 12 of 1983.




2010 2009 2010 2009Rs. Rs. Rs. Rs.

Trade Payables 551,474,918 400,274,704 458,339,232 358,058,716

Interest Payable 112,817,313 127,868,253 47,113,516 58,953,727

Value Added Tax Payable 53,949,856 68,520,446 51,439,712 65,997,250

MSPS Payable 13,839,778 8,803,362 13,839,778 8,803,362

ETF Payable 3,701,930 647,802 3,701,930 647,802

Advances Received from Customers 109,605,148 62,226,462 109,605,148 62,226,462

Accrued Expenses 404,122,470 242,590,160 392,252,500 237,489,206

Turnover Tax Payable 31,802,374 32,059,767 31,802,374 32,059,767

Other Payables 188,243,317 81,899,095 79,352,452 40,889,255

Warranty Provisions (Note 29.1) 30,758,736 24,758,736 30,758,736 24,758,736

1,500,315,840 1,050,114,260 1,218,205,378 889,883,283

29.1 Warranty provisions have been recognised for expected warranty claims on products sold by the Company.


2010 2009 2010 2009Rs. Rs. Rs. Rs.


Amounts Collected during the Year 192,535,962 189,085,772 174,783,463 179,909,574

Amounts Recognised as Revenue during the Year (170,238,712) (211,135,180) (158,031,973) (203,429,058)


30.1 Deferred revenue includes deferred service fee and amount deferred on extended warranty income as at 31st December 2010.


2010 2009 2010 2009Rs. Rs. Rs. Rs.

Unclaimed Dividends 3,204,691 2,978,168 3,204,691 2,978,168

3,204,691 2,978,168 3,204,691 2,978,168

32. DividendsConsolidated Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

Ordinary Shares

Interim Dividend 2010 - Rs. 1.00 (2009 - Nil) 62,604,805 – 62,604,805 –

Proposed Final Dividend 2010 - Rs. 3.50 (2009 - Nil) 219,116,818 – 219,116,818 –

281,721,623 – 281,721,623 –





33.1 Trade

Singer Industries (Ceylon) PLC Affiliate Company 160,845,568 67,182,017 160,845,568 67,182,017


Reality Lanka Ltd. Associate Company – 5,350,000 – 5,350,000


268,647,603 233,475,033 268,647,603 233,475,033

33.2 Non-Trade

Singer Asia Ltd. Affiliate Company 53,272,425 37,104,053 53,272,425 37,580,483

Singer Finance (Lanka) Ltd. Subsidiary Company – – – 101,329,881

53,272,425 37,104,053 53,272,425 138,910,364

34. Deposits from Customers

Balance as at the beginning of the Year 1,463,621,740 1,129,647,116 – –

New Deposits 716,990,498 796,913,458 – –

Capitalisation of Interest 87,998,515 91,814,620 – –

2,268,610,753 2,018,375,194 – –

Repaid Deposits (620,625,369) (554,753,454) – –

Balance as at the end of the Year 1,647,985,384 1,463,621,740 – –

Payable within One Year 1,451,990,703 1,313,620,654 – –

Payable after One Year 195,994,681 150,001,086 – –

35. Commitments and Contingencies - Group/Company35.1 Financial Commitments

Documentary Credits effected for foreign purchases amounting to Rs. 1,408,218,372/- (2009 - Rs. 556,677,296/-).


There were no significant capital commitments, which have been approved or contracted for by the Company/Subsidiary as at the Balance Sheet date except for the following:

The Company on 12th February 2004 signed an agreement with IFS R&D Ltd. to implement a Software Solution System at a cost of US$ 850,000 (Rs. 84 million approximately) and is in a process of implementation. Payments up to 31st December 2010 were Rs. 76.7 million (2009 - Rs. 65.7 million).

Operating Lease commitment as at 31st December 2010 is as follows:

Within one Year - Rs. 307.9 millionBetween one to five Years - Rs. 1,009.0 millionOver five Years - Rs. 524.1 million



35.3 Assets Pledged

Company has given a negative pledge over the Company's total assets, except immovable assets, for the following banks over the Loans and Overdrafts having a carrying value of Rs. 1.3 billion as at the year end:

Hongkong & Shanghai Banking Corporation Ltd.Commercial Bank of Ceylon PLCSeylan Bank PLCSampath Bank PLCNations Trust Bank PLCDeutsche Bank AGNational Development Bank PLCMuslim Commercial Bank Ltd.DFCC Vardhana Bank Ltd.

Lease debtors portfolio had been pledged by the Subsidiary Singer Finance (Lanka) Ltd. against loan obtained of Rs. 60.7 million from Bank of Ceylon, Sampath Bank PLC and DFCC Vardhana Bank Ltd., which has a carrying amount of Rs. 26.3 million as at the year end.

35.4 Contingencies

(a) Guarantees given to banks and other lending institutions on behalf of Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC amounts to Rs. 75 million and Rs. 455.5 million respectively.

(b) The Company has provided bank guarantees amounting to Rs. 105.2 million to the Director General of Customs to clear imports during the year under review pending completion of legal proceedings in the Court of Appeal.

The bank guarantees related to alleged additional duty payable on imports, is being contested by the Company in Courts.


36. Events Occurring after the Balance Sheet DateThere have been no material events occurring after the Balance Sheet date that require disclosure in the Financial Statements except,

(i) Pursuant to the Special Resolution passed by the shareholders on 21st December 2010, name of the Subsidiary Company was changed from Singer Finance (Lanka) Ltd. to Singer Finance (Lanka) PLC . The name change was gazetted on 18th February 2011.

(ii) On the 28th February 2011, the Board of Directors approved a final Dividend of Rs. 3.50 per share amounting to Rs. 219.1 million for the year ended 31st December 2010. This dividend will be paid on 21st March 2011.




The Company has a related party relationship with its Parent Company, its Associate Companies, its Affiliate Companies and with its Directors.


(a) During the year, the Company had following transactions with its Parent Companies:



Royalty Expenses 178.3 126.9

Royalty Payable Balance as at the year end 53.3 36.7

Singer Asia Holdings B.V. (Intermediate Parent)Royalty paid to Singer Asia Ltd. through Singer Asia Holdings B.V.

(b) Following companies are also Parent Companies of Singer (Sri Lanka) PLC and Singer Finance (Lanka) Ltd., with whom no transactions were entered into during the year:


Singer (Sri Lanka) B.V. Intermediate Parent

Singer Asia Holdings N.V. Intermediate Parent

Retail Holdings N.V. Ultimate Parent

37.3 Transactions with Subsidiary Company



Sales Financed through Singer Finance (Lanka) Ltd. 2,096.8 2,080.0


Short-Term Loans Given – 121.5

Short-Term Loans Settled – 177.5


Dividend Received - Gross 20.0 10.0

Investment in Shares – 200.0

Cash Collections by Singer (Sri Lanka) PLC 618.4 314.0




Purchase of Assets 0.4 0.9



Balance Receivable 947.1 831.5




(a) During the year the Company had following transactions with its Associate Companies:


Reality (Lanka) Ltd.



Interest Receivable 17.8 10.4

Rent Expense 3.6 3.6

(b) Following company is an Associate Company of Singer (Sri Lanka) PLC, with whom Singer (Sri Lanka) PLC or Singer Finance (Lanka) Ltd. had no transactions taken place other than through Advertising Agencies during the year.



Transactions with the following parties have been disclosed in Note 37.6.

Relationship

Regnis (Lanka) PLC Affiliate Company

Singer Industries (Ceylon) PLC Affiliate Company

Singer Asia Sourcing Ltd. Affiliate Company

Singer Asia Logistic Ltd. Affiliate Company

37.6 Transactions with Key Management Personnel and Directors

A number of Key Management Personnel or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of these entities. These transactions are given below:


Singer Industries (Ceylon) PLC Mr. H.D.S. Amarasuriya (Chairman) Purchases 1,159.0 560.0


Mr. H.A. Pieris Lease Rental paid 2.5 3.0

Mr. V.G.K. Vidyaratne Net Finance Income 0.8 5.0

Mr. G.J. Walker Trade Credit Settled 1,070.0 589.0

Loans Granted 30.0 –

Loans Receivable 30.0 –

Deshabandu Ajit Jayaratne Balance Payable 139.0 67.1

Regnis (Lanka) PLC Mr. H.D.S. Amarasuriya (Chairman) Purchases 2,380.5 1,685.0



Mr. V.G.K. Vidyaratne Non-Trade Settlement 44.0 58.8

Mr. G.J. Walker Trade Credit Settled 2,490.2 1,632.0

Dr. Saman Kelegama Loans Granted – 130.0

Loans Recovered 60.0 –


Expenses Incurred 28.2 30.0





Singer Finance (Lanka) Ltd. (Subsidiary Company)

Mr. H.D.S. Amarasuriya (Chairman) Sales Financed through Singer Finance (Lanka) Ltd. 2,096.8 2,080.0

Dr. G.C.B. WijeyesingheMr. H.A. Pieris


Dr. Saman Kelegama Short-Term Loans given – 121.5

Mr. G.J. Walker Short-Term Loans settled – 177.5

Mr. M.P.A. Salgado Interest Income 52.7 49.6

Dividend Received (Gross) 20.0 10.0

Investment in Shares – 200.0

Cash Collection by Singer (Sri Lanka) PLC 618.4 314.0




Purchase of Assets 0.4 0.9




National Development Bank PLC Mr. H.D.S. Amarasuriya Borrowed Funds 255.1 250.0

Interest Expense 26.5 –

Dr. G.C.B. Wijeyesinghe (Resigned w.e.f. 31.03.2010) Issue of Debentures 270.0 –

Debenture Interest 21.1 –

Singer Asia Sourcing Ltd. (Affiliate Company)

Mr. H.D.S. Amarasuriya(Resigned w.e.f. 30.06.2010) Purchases 29.4 22.4

Mr. G.J. Walker Settlement 29.8 66.0



Mr. H.D.S. Amarasuriya(Resigned w.e.f. 30.06.2010) Royalty Expense 178.3 126.9

Mr. P.J. O’Donnell Royalty Payable 53.3 36.7

Mr. T. Brown

Mr. G.J. Walker

Mr. H.A. Pieris

Sampath Bank PLC Dr. Saman Kelegama Borrowed Funds 210.5 300.0

Interest Expense 4.8 24.0

DFCC Bank PLC Deshabandu Ajit Jayaratne Investment in Debenture 400.0 75.0

(Resigned w.e.f. 30.04.2010) Debenture Repayment 75.0 –

Debenture Interest Repayment 16.9 –

Reality Lanka Ltd. (Associate Company) Mr. H.D.S. Amarasuriya Loan Receivable 102.2 110.5


Mr. V.G.K. Vidyaratne Interest Receivable 17.8 10.4

Mr. G.J. Walker Rent Charge 3.6 3.6

Regnis Appliances (Pvt) Ltd. Mr. H.D.S. Amarasuriya Purchases 142.6 –

Mr. H.A. Pieris Settlements 88.2 –

Mr. V.G.K. Vidyaratne Balance Payable 54.4 –

Mr. A.N. Majeed




38. Transactions with Key Management Personnel (a) Key Management Personnel includes members of the Board of Directors of the Company, its Subsidiary and Parent. Transaction with Key Management Personnel, their close family members and parties/entities in which such Key Management Personnel or their close family members have control, joint control or significant influence can be shown as follows:



Deposit Kept by Key Management Personnel or their close family members at

Singer Finance (Lanka) Ltd. 45.8 12.1

Group Company

2010 2009 2010 2009Rs. Rs. Rs. Rs.

(ii) Compensation of Key Management Personnel

Short-Term Employee Benefits 28,628,060 22,617,064 23,510,766 18,326,014

Post-Employment Benefit Paid 7,030,000 11,832,380 7,030,000 11,832,380

In addition to their salaries the Company provides non-cash benefits to the Key Management Personnel and contributes to a past employment defined benefit plan on their behalf. Directors emoluments are disclosed in Note 9 to the Financial Statements.

(iii) No transactions had been taken place during the year with the parties/entities in which Key Management Personnel or their close family members have control, joint control or significant influence.

(b) The amounts receivable from or payable by above related parties as at 31st December 2010, are disclosed in Notes 18, 20 and 33respectively.

39. Restated Financial Statements39.1 Consolidated

The Group has calculated the amount recognised as interest income on Hire Purchase, Lease, and Loans on Sum of Digit Method. However, with the effect of SLAS 33, this interest calculation should change to Constant Periodic Rate. The Company has restated the Financial Statements with retrospective effect applicable for the accounting period starting from 01st of January 2008, which is the earliest prior period where such adjustment is practicable due to limitations placed on the availability of information. The effect of the restatement is summarised below:

2009Periods Prior to

31st December 2008

Balance Sheet

Increase/(Decrease) in Trade and Other Receivables (80,419,063) (115,698,532)

Increase/(Decrease) in Amounts due to Related Parties 376,529 (1,142,729)

Increase/(Decrease) in Income Tax Payable (28,977,225) (39,145,178)

Interest Income

Increase/(Decrease) In Revenue 24,179,198 (114,342,314)

Increase/(Decrease) in Selling and Administrative Expense 291,891 (2,498,947)

Increase/(Decrease) in Income Tax Expense 3,007,485 (39,145,178)

Statement in Change in Equity

Increase/(Decrease) In Retained Earnings 20,879,822 (72,698,190)

Retained Earning Brought Forward (72,698,190) –

(51,818,368) (72,698,190)



39.2 Company

The Company has calculated the amount recognised as interest income on Hire Purchase, on Sum of Digit method. However, with the effect of SLAS 33, this interest calculation should change to Constant Periodic Rate. The Company has restated the Financial Statements with retrospective effect applicable for the accounting period starting from 01st of January 2008, which is the earliest prior period where such adjustment is practicable due to limitations placed on the availability of information. The effect of the restatement is summarised below:

2009Periods Prior to

31st December 2008

Balance Sheet

Increase/(Decrease) in Trade and Other Receivables 3,524,341 (60,572,757)

Increase/(Decrease) in Related Party Payable 1,214,452 (666,300)

Increase/(Decrease) in Income Tax Payable 689,632 (20,967,260)

Interest Income

Increase/(Decrease) in Revenue 56,713,603 (60,572,757)

Increase/(Decrease) in Selling an Administrative Expense 1,657,725 (666,300)

Increase/(Decrease) in Income Tax Expense 14,496,424 (20,967,260)

Statement in Change in Equity

Increase/(Decrease) In Retained Earnings 40,559,454 (38,939,197)

Retained Earning Brought Forward (38,939,197) –

1,620,257 (38,939,197)



Independent Auditors’ Report


Report on the Financial Statements


Opinion


KPMG Ford, Rhodes, Thornton & Co.Chartered Accountants,

Singer (Sri Lanka) PLC Annual Report 200968

Income Statement


Year ended 31st December 2009 2008 2009Note Rs. Rs.

Revenue 3 11,889,324,113 11,284,824,680 (7,281,813,332) (7,281,813,332)

4,607,510,781 4,003,011,348

96,752,099 100,610,250

(3,119,452,719) (2,912,598,085)

(209,456,100) (200,336,559)

(1,193,592,345) (916,267,818)

85,320,937 113,349,832

(1,108,271,408) (802,917,986)

8 (891,318) – –

(42,350,000) (21,100,000)

223,841,335 166,668,968

(111,822,616) (86,152,366)

112,018,719 80,516,602

1.79 1.29

1.79 1.29

32 – –



As at 31st December 2009 2008 2009 2008Note Rs. Rs.

ASSETSNon-Current Assets

1,285,727,688 1,261,639,286 165,740,939 157,619,048

– – 400,000,000 24,541,304 24,000,000 18,489,773 18,448,473

2,039,522,072 1,024,443,307 143,053,325 143,053,325

3,677,075,101 3,029,203,439

Current Assets 1,984,919,283 1,984,919,283

240,515,421 240,515,421 – –

4,473,126,475 2,667,185,984 7,074,245 939,892,782 5,241,249 5,241,249

160,473,932 – –22 385,446,050 361,764,748

7,256,796,655 6,199,519,467Total Assets 10,933,871,756 9,228,722,906

Equity23 626,048,050 626,048,050

412,126,906 404,084,7182,027,442,537 1,954,467,780

Total Equity 3,065,617,493 2,984,600,548

Non-Current Liabilities 763,935,865 737,632,975

28 158,555,375 155,164,141 14,749,401 – –

359,515,564 359,515,564 150,001,086 – –

1,446,757,291 1,252,312,680

Current Liabilities 1,050,114,260 889,883,283

30 57,011,584 49,532,150 34,110,320 – 12,041,890 – 2,978,168 – 2,978,168 –

233,475,033 233,475,033 36,727,524 137,695,912

1,313,620,654 – – 3,693,459,429 3,666,203,242 6,421,496,972 4,991,809,678

Total Equity and Liabilities 10,933,871,756 9,228,722,906

Priyath SalgadoFinance Director

Hemaka AmarasuriyaDirector Director

Balance Sheet


Statement of Changes in Equity

ConsolidatedStated Total

Retained

Note

32

– – – –

– – – –

– – –

– – –

– – –

626,048,050 8,042,189 404,084,717 1,600,000,000 427,442,537 3,065,617,493

CompanyStated Total

Note

32

– – –

–

– – –

626,048,050 404,084,718 1,600,000,000 354,467,780 2,984,600,548


Cash Flow Statement


Year ended 31st December 2009 2008 2009 2008Note Rs. Rs.

Cash Flows from Operating Activities 223,841,335 166,668,968

201,259,195 195,570,682 8 891,318 – –

23,829,976 20,398,948 398,977 398,977

– – 1,107,616,753 802,263,331 (232,261,629) (359,051,575)

2,585,883 2,585,883 75,946,242 85,045,073

30 (22,049,408) (23,519,484) (528,019) (10,513,619)

28 33,134,160 32,286,417 1,414,664,783 912,133,601

951,024,865 951,024,865 374,960,878 355,038,469 607,342,058 1,940,837,880 120,407,940 (812,410,597)

(120,980,490) (40,795,492)24,678,257 24,678,257

333,974,625 – – (83,202,661) (105,669,023)

3,622,870,255 3,224,837,960(1,214,427,785) (923,945,555)

28 (22,997,598) (22,997,598) (78,364,951) (66,806,789)

2,307,079,921 2,211,088,016

Cash Flows from Investing Activities

(53,068,841) (46,181,235) 3,938,210 3,938,210

– – 15,410,586 – –

– – (200,000,000) –(240,515,421) – (184,515,421)

74,872,439 102,901,334528,019 10,513,619

(198,835,008) (313,343,493)

Cash Flows from Financing Activities 2,359,729,000 2,359,729,000

(3,799,708,214) (3,623,954,536)– –

(1,439,979,214) (1,264,225,536)Net Increase/(Decrease) in Cash and Cash Equivalents 668,265,699 633,518,987 Cash and Cash Equivalents at the beginning of the Year 22 (443,164,197) (432,098,787)Cash and Cash Equivalents at the end of the Year 22 225,101,502 201,420,200



Year ended 31st December 2009

1. Corporate Information1.1 Reporting Entity1.1.1 General

1.1.2 Companies in the GroupSubsidiary

Associates (Equity Accounted Investees)

1.1.3 Principal Activities and Nature of OperationsCompany

Subsidiary

page 72

Note 2 page 73

Note 3 page 80

page 80

page 81

page 81

page 82

Note 8page 82

page 82

page 83

page 84

page 85

page 88

page 89

page 90

page 92

page 93

page 93

page 94

Note 20 page 95

page 95

Note 22 page 95

Note 23 page 96

page 96

page 97

page 97

page 101

Note 28 page 101

page 102

Note 30 page 102

page 103

Note 32 page 103

Note 33 page 103

page 103

page 103

page 104

page 104

Note 38 page 107





1.2.1 Statement of Compliance




2.1.1 Subsidiaries






(a) Cost and Valuation

(b) Subsequent Costs

(c) Depreciation

(d) Derecognition







2.2.4 Investments2.2.4.1 Non-Current Investments

2.2.4.2 Current InvestmentsMarketable Securities



2.2.5 Inventories

Provisions for Inventory



2.3 Liabilities and Provisions

2.3.1 Provisions

2.3.1.1 Provisions for Warranties





Provident Fund/ Mercantile Services Provident Society and


2.4 Income Statement2.4.1 Revenue Recognition

(c) Interest - Other

(d) Dividends

(e) Service Fee Income on Hire Purchase

(f) Income on Suraksha and Extended Warranty Scheme

(g) Others



2.4.2 Revenue Recognition Policy of Singer Finance (Lanka) Ltd.(a) Hire Purchase

so as to produce a constant periodic rate of return on the

(b) Lease

(c) Interest on Government Securities

(d) Commissions, Service Charges and Others


(a)

(b)

Net Finance Cost

2.4.4 Taxation



2.4.7 Earnings per Share




2.4.10 New Standards and Interpretations not yet Adopted



2009 2008 2009 2008Rs. Rs.

3.1 Summary11,962,242,590 11,357,743,157

(72,918,477) (72,918,477)11,889,324,113 11,284,824,680

3.2 Revenue9,993,830,000 9,993,830,0001,895,494,113 1,290,994,680

11,889,324,113 11,284,824,680



Transportation

4.2 Segmental Analysis of Revenue is as Follows:Consolidated Company

2009 2008 2009 2008Rs. '000 Rs. '000

1,570,999 1,570,999 2,733,812 2,733,812 3,896,247 3,896,247

712,467 712,467 680,366 680,366 524,751 524,751

Transportation 756,728 756,728 409,455 409,455 604,499 – –

11,889,324 11,284,825




2009 2008 2009 2008Rs. '000 Rs. '000

22,925 22,925 46,090 46,090 52,570 52,570 9,454 9,454 8,132 8,132 6,295 6,295

Transportation 4,310 4,310 6,379 6,379

68,049 – –– –

528 10,514 (891) – –

223,841 166,669

4.3


2009 2008 2009 2008Rs. Rs.

528,019 513,619 – – 10,000,000

(398,977) (398,977) 62,178,197 17,928,510

– – 38,122,238 – 34,444,860 34,444,860

– – 96,752,099 100,610,250

– – – 96,752,099 100,610,250

6. Other Expenses185,626,124 179,937,61123,829,976 20,398,948

209,456,100 200,336,559



7. Finance CostConsolidated Company

2009 2008 2009 2008Rs. Rs.

7.1 Finance Cost893,762,997 875,180,976 46,566,856 35,347,269

247,522,919 – –5,084,918 5,084,918 654,655 654,655

1,193,592,345 916,267,818

7.2 Finance Income27,052,723 76,634,009 58,268,214 36,715,823 85,320,937 113,349,832

Net Finance Cost 1,108,271,408 802,917,986

Consolidated

2009 2008

– – – (891,318) (891,318)


2009 2008 2009 2008Rs. Rs.

22,577,269 17,524,089 3,405,000 2,685,000 1,373,924 975,000

586,200 425,000 134,220,403 92,410,414 47,197,423 7,345,514 2,585,883 2,585,883

1,577,755,377 1,470,621,608 287,444,159 282,784,559

Donations 210,744 210,744 23,829,976 20,398,948

201,259,195 195,570,682

9.1 Personnel Cost1,391,604,825 1,289,338,359

24,673,044 24,673,04433,134,160 32,286,418

128,343,348 124,323,7871,577,755,377 1,470,621,608




2009 2008 2009 2008Rs. Rs.

Current Tax Expense

160,177,319 134,507,291 5,174,202 – (2,782,363) – 1,000,000 1,000,000

166,351,521 132,724,928

Deferred Tax Charge/(Credit) (54,528,905) (46,572,562) 111,822,616 86,152,366


2009 2008 2009 2008Rs. Rs.

223,841,335 166,668,968 891,318 – –

10,000,000 – –234,732,653 166,668,968 652,875,976 412,296,101

(425,638,552) (190,337,929) (10,000,000) (10,000,000)451,970,077 378,627,140

– – –451,970,077 378,627,140 158,189,527 132,519,499

1,987,792 1,987,792 160,177,319 134,507,291

10.2 Deferred Tax Charge/(Credit)Consolidated Company

2009 2008 2009 2008Rs. Rs.

(54,528,905) (46,572,562) (54,528,905) (46,572,562)

10.3



11. Earnings per Share11.1

11.2Consolidated Company

2009 2008 2009 2008Rs. Rs.

Amounts used as the Numerator 112,018,719 80,516,602

112,018,719 80,516,602


62,604,805 62,604,8051.79 1.29

11.3


2009 2008 2009 2008Rs. Rs.


112,018,719 80,516,602

112,018,719 80,516,602


62,604,805 62,604,805

1.79 1.29




Balanceas at Transfers Transfers as at

31.12.2009Rs.

At Cost– – – 271,063,313

– 169,825,467 – – 175,929,014 – – 154,526,061

– – – 75,814 – 255,983,550 – – 91,647,056 – – 187,231,967 – – 370,923,782 – 1,677,206,024

At Valuation– – – 507,423,500 – – – 507,423,500

Gross Carrying Amount Excluding Capital Work-in-Progress – 2,184,629,524

12.2 In the Course of Construction/Development Balance Incurred

as at Transferred as at31.12.2009

Rs.

– –Total Capital Work-in-Progress – –Total Gross Carrying Amount 2,184,629,524

12.3 Depreciation and Impairment LossesBalance

as at Transfers as atTransfers 31.12.2009

Rs.

– 74,668,421 88,886,945

– 99,252,206 – 89,156,211

– – 75,814 173,767,979

– 50,080,962 – 105,591,801 – 217,421,497

Total Depreciation and Impairment Losses 898,901,836




2009 2008Rs.

778,304,188 507,423,500

– 1,285,727,688

12.5

12.6

12.7

12.8

12.9

12.10

12.11 Gross Carrying Amounts - CompanyBalance

as at Transfers as at31.12.2009

Rs.

At Cost– – 271,063,314

166,024,440 – 166,591,865 – 154,526,061

– – 75,814 247,103,388

– 91,647,056 – 187,231,967 – 352,742,816

1,637,006,721

At Valuation– – 507,423,500 – – 507,423,500

Gross Carrying Amount Excluding Capital Work-in-Progress 2,144,430,221



12.12 In the Course of Construction/Development

Balance Incurredas at Transferred as at

31.12.2009Rs.

– –Total Capital Work-in-Progress – –Total Gross Carrying Amount 2,144,430,221


Balanceas at Transfers as at

Transfers 31.12.2009Rs.

– – 74,668,421 – 88,466,705 – – 96,419,691 – – 89,156,210

– – – 75,814 – 169,005,426 – – 50,080,962 – – 105,591,803 – – 209,325,903

Total Depreciation and Impairment Losses – 882,790,935


2009 2008Rs.

754,215,786 507,423,500

–Total Carrying Amount of Property, Plant & Equipment 1,261,639,286

12.15

12.16

12.17

12.18

12.19

12.20




2009 2008 2009 2008Rs. Rs.

13.1 Trade MarkSummaryCost

79,762,500 79,762,500– – – –

79,762,500 79,762,500

SummaryCost

83,585,162 67,762,281 15,915,919 12,738,425 99,501,081 80,500,706

Amortisation 21,692,666 14,245,210 17,429,976 13,998,948 39,122,642 28,244,158

Carrying Amount 61,892,496 53,517,071 60,378,439 52,256,548

Cost 9,093,200 9,093,200

– – (9,093,200) – (9,093,200) –

– –

13.4 Other Intangible Assets Externally Acquired

Cost 32,000,000 – 32,000,000 –

– –– – – –

32,000,000 32,000,000

Amortisation– – – –

6,400,000 – 6,400,000 –6,400,000 – 6,400,000 –

Carrying Amount32,000,000 – 32,000,000 –25,600,000 25,600,000

Net Carrying Amount 165,740,939 157,619,048



13.5 SISIL Trademark

SISIL

13.6 UNIC Trademark

13.7

13.8

13.9

14. Investment in Subsidiary - CompanyHolding % Cost

of as at as at 2009 2008Incorporation 31.12.2009 31.12.2009 Rs.

100 400,000 200,000,000 200,000,000 – 400,000,000



15. Investments in Equity Accounted Investees15.1 Investment in Equity Accounted Investees - Consolidated

Share of

Consolidated Net ofCarrying

Holding Amount% 2009 2008

2009 2008 Rs.

Non-Quoted40 24,541,304

23.56 – – –

Total Non-Quoted Investments in Equity Accounted Investees 24,541,304 Net Carrying Amount of Investments in Equity Accounted Investees 24,541,304

Consolidated

as at31.12.2009

Rs.

Commercial Leasing Company Ltd.–––––––

Reality (Lanka) Ltd. 1,432,622 (891,318)

– (891,318) 541,304

15.3RIX



2009 2008Rs.

–Less

–––––

ConsolidatedBalance as at

31.12.2009Rs.

541,304 – –

24,000,000 24,541,304

15.4 Movement of Investment - CostConsolidated

Balance as at31.12.2009

Rs.

– 24,000,000–– 24,000,000

15.5 Summarised Financial Information of Equity Accounted Investee

In thousands of Rs. Assets AssetTotal

AssetsTotal

2008

––

2009Reality (Lanka) Ltd. (Associate) 40% 122 174,966 175,088 113,735 – 113,735 3,600 (5,828) (2,228)

122 174,966 175,088 113,735 – 113,735 3,600 (5,828) (2,228)




Carrying Market Value/ Amount Directors’

2009 Valuation2009 2008 Rs. Rs.

Non-Quoted2,000,000 – –2,400,000 2,400,000 2,400,000

Total Investments in Non-Quoted Associate Equity Securities 2,400,000 2,400,000Net Carrying Amount of Investment in Equity Accounted Investees 2,400,000 2,400,000

15.7

15.8RIX

2009 2008Rs.

–––

16. Other Investments16.1 ConsolidatedInvestments in Equity Securities - Non-Current

Carrying Market Value/Amount Directors’

2009 Valuation 20082009 2008 Rs. Rs.

(a) Quoted (Marketable Equity Securities)Investments with Related Parties

42,795 1,428,473 2,856,566 Total Investments in Quoted Marketable Equity Securities 1,428,473 2,856,566

(b) Non-Quoted 1,665,000 17,020,000 18,683,790

100 41,300 41,300 Total Investments in Non-Quoted Equity Securities 17,061,300 18,725,090 Total Net Carrying Amount of Other Investments - Non-Current 18,489,773 21,581,656




Carrying Market Value/Amount Directors’

2009 Valuation 20082009 2008 Rs. Rs.

(a) Quoted (Marketable Equity Securities)Investments with Related Parties

42,795 1,428,473 2,856,566 Total Investments in Quoted Equity Securities 1,428,473 2,856,566

(b) Non-Quoted 1,665,000 17,020,000 18,683,790

Total Investments in Non-Quoted Equity Securities 17,020,000 18,683,790 Total Net Carrying Amount of Other Investments - Non-Current 18,448,473 21,540,356


2009 2008 2009 2008Rs. Rs.

86,233,313 86,233,313 21,894,175 21,894,175

1,635,240,695 1,635,240,695 226,990,131 226,990,131 90,066,197 90,066,197

2,060,424,511 2,060,424,511 (72,608,925) (72,608,925)

(2,896,303) (2,896,303)Total Inventories 1,984,919,283 1,984,919,283


2009 2008 2009 2008Relationship Rs. Rs.

130,000,000 – 130,000,000 –110,515,421 110,515,421

– – –240,515,421 240,515,421

18.1



19. Trade and Other Receivables19.1 Non-Current


2009 2008 2009 2008Rs. Rs.

Hire Debtors 1,575,178,134 830,929,531 (260,169,101) (121,208,435)

1,315,009,033 709,721,096

Lease Rental Receivables 284,467,870 – –

(3,190,141) – – 281,277,729 – – (51,593,876) – – 229,683,853 – –

Loan Debtors 191,741,120 – –

(990,131) – – (28,401,255) – – 162,349,734 – –

Other Receivables 211,302,704 211,302,704121,176,748 103,419,507332,479,452 314,722,211

2,039,522,072 1,024,443,307

19.2 CurrentHire Debtors 2,778,837,501 2,161,103,544

(1,025,946) – – (702,441,538) (482,022,167) (89,842,489) (82,987,740)

1,985,527,528 1,596,093,637

Lease Rental Receivables 277,881,823 – – (86,753,414) – – (5,612,178) – –

185,516,231 – –

Loan Debtors 1,397,434,571 – – (228,206,123) – –

34,135,487 – – 1,203,363,935 – –

(26,293,430) – – 1,177,070,505 – –

Other Debtors 517,969,355 517,969,355 (18,927,546) (18,927,546) 750,447,002 701,726,980

(277,336,249) (271,084,277) 2,573,000 2,573,000

48,666,492 42,751,785 10,448,498 – 10,448,498 – 91,171,659 85,634,552

1,125,012,211 1,071,092,3474,473,126,475 2,667,185,984



19.3 Loans to Company EmployeesConsolidated Company

2009 2008 2009 2008Rs. Rs.

Movement 231,470,736 206,611,896

39,149,000 35,247,000 (58,271,329) (52,804,837) 212,348,407 189,054,059 91,171,659 85,634,552

121,176,748 103,419,507

20. Amounts due from Related PartiesConsolidated Company


20.1 Trade– – 932,818,537 –– –

7,074,245 – 7,074,245 – 7,074,245 939,892,782

20.2 Non-Trade5,241,249 5,241,2495,241,249 5,241,249

21. Marketable Securities160,473,932 –160,473,932 – –


385,446,050 361,764,748

(160,344,548) (160,344,548)Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement 225,101,502 201,420,200



23. Stated Capital23.1 Issued and Fully Paid

At the Issued for Issued for

31.12.2009

– – 62,604,805– – 62,604,805

– – 626,048,050– – 626,048,050

23.2 Rights, Preference and Restrictions of Classes of Capital

23.3 Shares held by Group Companies

2009 2008Number

52,252,125 1,050,700


2009 2008 2009 2008Rs. Rs.

Summary8,042,189 –8,042,189

404,084,717 404,084,718404,084,717 404,084,718412,126,906 404,084,718


2009 2008 2009 2008Rs. Rs.

24.1 Reserve Fund 3,012,962 5,029,2278,042,189

24.2 Revaluation Reserve 404,084,717 404,084,718

404,084,717 404,084,718



25. Revenue ReservesConsolidated Company

2009 2008 2009 2008Rs. Rs.

Summary1,600,000,000 1,600,000,0001,600,000,000 1,600,000,000

427,442,537 354,467,780427,442,537 354,467,780

2,027,442,537 1,954,467,780

25.1 General Reserve


2009 2008 2009 2008Rs. Rs.

1,500,000,000 1,500,000,000

Issue of Bonus Shares 1,600,000,000 1,600,000,000

25.2 Retained EarningsConsolidated Company

2009 2008 2009 2008Rs. Rs.

354,467,780 354,467,780 541,304

72,433,453427,442,537 354,467,780

2009 2009 2008 2008Amount Amount

Repayable Repayable 2009 2008Within 1 Year Total Total

Rs. Rs. Rs.

875,000,000 480,000,000 1,355,000,0002,358,114,881 33,935,865 2,392,050,746 300,000,000 – 300,000,000 –160,344,548 – 160,344,548 –

250,000,000 250,000,000 –3,693,459,429 763,935,865 4,457,395,294



26.2 Debentures - ConsolidatedBalance as at As at

Issues 31.12.2009Rs.

242,500,000

357,500,0007,500,000

192,500,000

75,000,000

45,000,000135,000,000272,000,000

28,000,0001,355,000,000

Balance as at Loans As at 31.12.2009

Rs.

2,392,050,746 2,392,050,746

31.12.2009Rs.

–7,632,975 –7,632,975

6,415,434

Loan on Securitisation 19,887,456

26,302,89033,935,865



26.4 Promissory Notes - ConsolidatedBalance as at As at


300,000,000300,000,000


250,000,000250,000,000

2009 2008Utilised Total Facility

Rs. Rs.

160,344,548 670,000,000 339,853,668 339,853,668

2,602,197,078 4,100,000,000 1,355,000,000 1,355,000,000

Total Debt Facility 4,457,395,294 6,464,853,668

1,463,621,741 1,129,647,116 – 350,000,000

556,677,296 1,660,000,000 Total Debt & Other Facilities 6,477,694,331 9,604,500,784

2009 2009 2008 2008Amount Amount

Repayable Repayable 2009 2008Within 1 Year Total Total

Rs. Rs. Rs.

875,000,000 480,000,000 1,355,000,0002,330,858,694 7,632,975 2,338,491,669 300,000,000 – 300,000,000 –160,344,548 – 160,344,548 –

– 250,000,000 250,000,000 –3,666,203,242 737,632,975 4,403,836,217

26.8 Debentures - CompanyAs at As at


242,500,000

357,500,0007,500,000

192,500,000



As at As at Issues 31.12.2009

Rs.

75,000,000

45,000,000

135,000,000272,000,000

28,000,0001,355,000,000

As at Loans As at 31.12.2009

Rs.

2,338,491,669 2,338,491,669

31.12.2009Rs.

assets –

assets –7,632,975 –7,632,975

26.10 Promissory Notes - CompanyAs at As at


300,000,000300,000,000

26.11 Commercial Papers - Company

250,000,000250,000,000

2009 2008Utilised Total Facility

Rs. Rs.

160,344,548 645,000,000 286,294,591 286,294,591

2,602,197,078 4,100,000,000 1,355,000,000 1,355,000,000

Total Debt Facility 4,403,836,217 6,386,294,591– 350,000,000

556,677,296 1,660,000,000 Total Debt & Other Facilities 4,960,513,513 8,396,294,591



27. Deferred TaxationConsolidated Company

2009 2008 2009 2008Rs. Rs.

27.1 Deferred Tax Assets 96,480,763 96,480,763 46,572,562 46,572,562

143,053,325 143,053,325

27.2 Deferred Tax Liability 22,705,744 – – (7,956,343) – – 14,749,401 – –

27.3

2009 2008Assets Assets

Rs. Rs.

(a) Composition of Deferred Tax Assets70,490,9045,391,750

25,413,124139,215,40554,307,450

218,935,979143,053,325

(b) Composition of Deferred Tax Liability3,661,815

– 12,274,515 – ––

1,186,9291,186,929 15,936,330

14,749,401


2009 2008 2009 2008Rs. Rs.

158,555,375 148,418,813 155,164,141158,555,375 148,418,815 155,164,141

Provision for Retiring Gratuity 148,418,813 145,875,322

Actuarial Loss 1,756,142 1,980,25013,173,214 12,365,41618,204,804 17,940,751

181,552,973 178,161,739

(22,997,598) (22,997,598) 158,555,375 155,164,141




2009 2008 2009 2008Rs. Rs.

400,274,704 358,058,716 127,868,253 58,953,727 68,520,446 65,997,250 8,803,362 8,803,362

647,802 647,802 419,240,957 372,663,690 24,758,736 24,758,736

1,050,114,260 889,883,283

29.1


2009 2008 2009 2008Rs. Rs.

79,060,992 73,051,634 189,085,772 179,909,574

(211,135,180) (203,429,058) 57,011,584 49,532,150

30.1




2009 2008 2009 2008Rs. Rs.

2,978,168 2,978,168 2,978,168 2,978,168

32. Dividends

Ordinary Shares – –– –– –



33.1 Trade67,182,017 67,182,017

160,943,016 160,943,016– –

5,350,000 5,350,000 233,475,033 233,475,033

33.2 Non-Trade 36,727,524 36,727,524

– – 100,968,388 36,727,524 137,695,912

34. Deposits from Customers

1,129,647,116 796,913,458 91,814,620

2,018,375,194 Repaid Deposits (554,753,454)

1,463,621,740 1,313,620,654

150,001,086 – –

35. Commitments and Contingencies - Group/Company35.1 Financial Commitments




35.3 Assets Pledged

35.4 Contingencies

(a)

(b)


37.2 Transactions with Parent Companies(a)


2009 2008Rs. million

126.936.7

(b)

Relationship



37.3 Transactions with Subsidiary Companies2009 2008

Rs. million

Singer Finance (Lanka) Ltd.2,0801,047121.5177.5

49.6–10

200 –31443.4

–38.1 –61.7 –

0.9 –2.2

149.8831.8

37.4 Transactions with Associate Companies(a)


Reality (Lanka) Ltd.110.510.4 –10.4 –3.6

115.6

Commercial Leasing Company Ltd. (Ceased to be an Associate Company from 20th June 2008)–

(b)



Relationship



37.6 Transactions with Key Management Personnel and Directors

Nature of 2009 2008and Relationship Director Transaction Rs. million

(Chairman) 560.0 75.0

Lease Rental paid 3.0 5.0

589.0 67.1

(Chairman) 1,685.0 455.5 16.3 58.8

1,632.0 130.0 –

30.0155.7

(Chairman) 2,080.0

1,047.0 121.5 177.5 49.6

– 10.0

200.0 – 314.0 43.4

– 38.1 –

61.7 –0.9 –

149.82.26.8

831.8(Chairman) –

250.0

22.466.0 –7.1



Nature of 2009 2008and Relationship Director Transaction Rs. million

126.936.7

300.024.075.0––

110.510.4 –10.4 –3.6

115.6Nil

Business Transactions 0.5

38. Transactions with Key Management Personnel (a)



12.1

Group Company

2009 2008 2009 2008Rs. Rs.

(ii) Compensation of Key Management Personnel25,982,269 20,209,08911,833,350 11,832,350

(iii)

(b)



Statement of Value Added

2009 2008Rs. '000

12,798,13196,752

12,894,8837,774,2785,120,605

%

Distribution of Value Added

To Employees and Dealers1,577,755 31

To Government

2,103,871 41

1,108,271 22

To Suppliers of Capital– –

Retained for Re-investment and Future GrowthDepreciation 218,689 4 3

112,019 25,120,605 100

Annexure III : Members of the Colombo Stock Exchange

Members of the Colombo stock Exchange

• Bartleet Religare Securities (Pvt) Limited , Level "G", "Bartleet House",65, Braybrooke Place, Colombo 2.Tel:+94 11 5 220 200 Fax: +94 11 2 434 985 E-mail: [email protected], Website:www.bartleetstock.com

•Acuity Stockbrokers (Pvt) Ltd. Level 6, Acuity House, No. 53, Dharmapala Mawatha, Colombo 3. Tel: +9411 2 206 206, Fax: +94 11 2 206 298 / 9, E-mail: [email protected], Website: www.acuity.lk

• John Keells Stock Brokers (Pvt) Ltd. 130, Glennie Street,Colombo 2. Tel: +94 (0) 11 2 306 250, 2 342 066-7,2 446 694-5, 2 338 066-7, 2 439 047-8, 4 710 721-4, Fax: +94 (0) 11 2 342 068, 2 326 863, E-mail:[email protected], Website: www.jksb.keells.lk

•Asha Phillip Securities Ltd. 10, Prince Alfred Towers, 2nd Floor, Alfred House Gardens, Colombo - 03. Tele :+94 11 2 429 100, Fax : +94 11 2 429 199, E-mail: [email protected], Website:www.ashaphillip.net

• Assetline Securities (Pvt) Ltd. No.120, 120A, Pannipitiya Road, Battaramulla. Tel: +94 11 4 700 111, 2 307366, Fax: +94 11 4 700 112, 2 307 365, E-mail:[email protected],Website:http://www.assetline.lk/stock_brokering.html

• CT Smith Stockbrokers (Pvt) Ltd. 4-14, Majestic City, 10, Station Road, Colombo 4. Tel. +94 11 2 552 290 -4, Fax: +94 11 2 552 289, E-mail: [email protected], Website: www.ctsmith.lk

• Somerville Stockbrokers (Pvt) Ltd. 137, Vauxhall Street,Colombo 2.Tel: +94 11 2 329 201-5, 2 332 827, 2338 292-3, Fax: +94 11 2 338 291,E-Mail: [email protected]

•J B Securities (Pvt) Ltd. 150, St. Joseph Street,Colombo 14. Tel:+94 11 2 490 900, 077 2 490 900, 077 2490 901, Fax:+94 11 2 430 070, 2 446 085, 2 447 875, E-mail: [email protected], Website:www.jbs.lk

• Lanka Securities (Pvt) Ltd. 228/2, Galle Road, Colombo 04. Tel:+94 11 4 706 757, 2 554 942, Fax:+94 11 4706 767, E-mail: [email protected], Website:www.lsl.lk

• Asia Securities (Pvt) Ltd. Level 21, West Tower, World Trade Centre, Echelon Square, Colombo 1, Tel:+9411 2 423 905, 5 320 000, Fax:+94 11 2 336 018, E-mail: [email protected], Website:www.asiasecurities.net

•Nation Lanka Equities (Pvt) Ltd. 44, Guildford Crescent, Colombo - 07. Tel:+94 11 4 714 300, 4 714 388, 4714 389, 077 3 421 821, Fax:+94 11 2 387 228, E-mail: [email protected], Website: www.nlequities.com

•Capital Trust Securities (Pvt) Ltd. 42, Mohamed Macan Markar Mawatha, Tel:+94 11 2 174 174, +94 11 2174 175, Fax:+94 11 2 174 173,E-mail: [email protected], Website: www.capitaltrust.lk

•S C Securities (Pvt) Ltd. 2nd Floor, 55 D.R. Wijewardena Mawatha,Colombo 10. Tel:+94 11 4 711 000 / +9411 47 11 001, Fax:+94 11 2 394 405, E-mail:[email protected], Website: www.sampathsecurities.lk

•DNH Financial (Pvt) Limited. Level 16, West Tower, World Trade Center, Colombo 01. Tel:+94 11 5 700777, Fax:+94 11 5 736 264, E-mail: [email protected], Website: www.dnhfinancial.com

•NDB Stockbrokers (Pvt) Ltd. 5th Floor, NDB Building, 40, Navam Mawatha,Colombo 2. Tel:+94 11 2 314170 to 2 314 178, Fax:+94 11 2 314 180,E-mail: [email protected],Website: www.ndbs.lk

Trading Members of the Colombo stock Exchange

• Capital Alliance Securities (Pvt) Ltd. Level 5, "Millennium House", 46/58Navam Mawatha,Colombo 2.Tel:+94 11 2 317 777,Fax:+94 11 2 3177 88, E-mail: [email protected],Website: www.capitalalliance.lk

• SMB Securities (Pvt) Ltd. No. 47, Dharmapala Mawatha, Colombo 3.Tel:+94 5 232 091, Fax: +94 2 339 292,E-mail:[email protected],Website: www.smblk.com

• First Guardian Equities (Pvt) Ltd. 32nd Floor, East Tower, World TradeCentre, Echelon Square,Colombo 1.Tel: +94 11 5 884 400 (Hunting)Fax:+94 11 5 884 401,E-mail: [email protected], Website:www.firstguardianequities.com

• Taprobane Securities (Pvt) Ltd. 2nd Floor, No. 10, Gothami Road,Colombo08.Tel: +94 11 5 328 200, Fax: +94 11 5 328 277,E-mail: [email protected], [email protected],Website: www.taprobanestocks.com

• Heraymila Securities Ltd. Level 8, South Wing, Millennium House,46/58Nawam Mawatha, Colombo 02.Tel: +94 11 2 359 100,Fax: +94 11 2 305522,E-mail:[email protected],Website: www.heraymila.com

• SKM Lanka Holdings (Pvt) Ltd. No 35/1, Alwis Place, Colombo - 03. Tele :+94 11 2 344 444,Fax : +94 11 2 434 198,E-mail:[email protected],Website: www.skmlankaholdings.com

• IIFL Securities Ceylon (Pvt) Ltd. 27th Floor, East Tower, World TradeCentre, Echelon Square,Colombo 1,Tel: +94 11 2 333 000,Fax: +94 11 2333 383,E-mail:[email protected]

• New World Securities (Pvt) Ltd. 2nd Floor, 45/2, BraybrookeStreet,Colombo 2. Tel: +94 11 2 358 700 / 20, Fax: +94 11 2 358 701,Email: [email protected],Website: www.nws.lk

• Softlogic Stockbrokers (Pvt) Ltd, Level 23, East Tower, World TradeCentre, Colombo 1, Tel: +94 11 7 277 000 to 98,Fax: +94 11 7 277099,Email: [email protected],Website: www.softlogicequity.lk

• LOLC Securities Limited . Level 18, West Tower,World TradeCentre,Echelon Square,Colombo 1.Tel: +94 11 7 880 880,Fax: +94 11 2 434771

• First Capital Markets Limited (Trading Member - Debt) No.75, ArnoldRatnayake Mawatha,Colombo 10. Tel: +94 11 2 639 898, +94 11 2 681888,Fax: +94 11 2 639 899, +94 11 2 681 460,E-Mail:[email protected],Web site: www.firstcapital.lk

• TKS Securities (Pvt) Ltd. 19-01, East Tower, World Trade Centre,EchelonSquare,Colombo 1. Tel: +94 11 7 857 799,Fax: +94 11 7 857 857,E-mail:[email protected],Website: www.tks.lk

• Richard Pieris Securities (Pvt) Ltd. 69, Hyde Park Corner, Colombo 02. Tel:+94 11 7 448 900,Fax: +94 11 2 675 064, Email:[email protected]

• Claridge Stockbrokers (Pvt) Ltd. No.10 Gnanartha Pradeepa Mawatha,Colombo 8. Tel: +94 11 2 697 974,Fax: +94 11 2 689 250,E-mail:[email protected]

Annexure : IV Trust deed

1

Trust Deed for the Issue of up to Five Million (5,000,000) Senior Rated Unsecured Redeemable Three YearDebentures (with an option to be increased to Six Million Four Hundred Forty Four Thousand (6,444,000) of the

par value of LKR 100/- each by Singer Sri Lanka PLC

This Trust Deed is made and entered into at Colombo in the Democratic Socialist Republic of Sri Lanka on thisTwenty Eighth (28th) Day of September in the Year Two Thousand and Twelve (2012)

By and between

Singer Sri Lanka PLC a Company duly established under the Companies Act No 17 of 1982 and re–registered underthe Companies Act No 7 of 2007 (Registration No PQ160) in the Democratic Socialist Republic of Sri Lanka andhaving its Registered Office at No. 80, Nawam Mawatha, Colombo 2 (hereinafter referred to as “the Company“which term or expression as herein used shall where the context so requires or admits mean and include the saidSinger Sri Lanka PLC its successors and assigns) of the ONE PART

And

Bank of Ceylon, a Banking Corporation duly established under Bank of Ceylon Ordinance (Cap. 397) and having itsHead Office at “BOC Square,” No.1, Bank of Ceylon Mawatha, Colombo, Sri Lanka (hereinafter referred to as “theTrustee “which term or expression as herein used shall where the context so requires or admits mean and includethe said Bank of Ceylon its successors and assigns) of the of the OTHER PART.

WHEREAS:a. The Company being duly empowered in that behalf by its Articles of Association has by a Resolution

passed on 4th September 2012 by its Board of Directors, resolved to raise a sum of upto Sri LankanRupees Five Hundred Million (LKR 500,000,000) by the issue of up to Five Million (5,000,000) SeniorRated Unsecured Redeemable Three Year Debentures of the par value of Rupees One Hundred (Rs100/-) each with the option to increase the issue upto Sri Lankan Rupees Six Hundred Forty FourMillion Four Hundred Thousand (LKR644,400,000).

b. The said Debentures shall be constituted in the manner and upon the terms and conditionshereinafter contained.

c. The Company has obtained a rating of 'A (lka)' from Fitch Ratings Lanka Ltd. for the aforesaidDebentures.

d. The Trustee being duly qualified to act as a Trustee has agreed to accept the office of Trustee and actunder the provisions of this Deed as Trustee for the benefit of and in the interests of the DebentureHolders on the terms and conditions hereinafter contained.

NOW THIS DEED WITNESSETH AND IT IS HEREBY AGREED AND DECLARED AS FOLLOWS:

1. DEFINITIONS

(a) In these Presents unless the subject or context otherwise requires the following expressions shallhave the respective meanings given below:

1. “CENTRAL DEPOSITORY or CDS” means the Central Depository Systems (Pvt) Limited.

2. “CSE ” means the Colombo Stock Exchange.

3. “CERTIFICATE” means a bi-annual certificate issued by the Company signed by TwoDirectors or a Director and the Company Secretary.

4. “DEBENTURE HOLDERS” means the holders of the Debentures for the time being whosenames are entered as holders of the Debentures in the Register or in the case ofDebentures listed on the CSE and lodged with the CDS the persons in whose account theDebentures are lodged as at the relevant date.

5. “DEBENTURE CERTIFICATE” means a Certificate issued to a Debenture Holder in respectof any Debenture or Debentures.

6. “DEBENTURES” shall mean the Five Million (5,000,000) Senior Rated UnsecuredRedeemable Three Year Debentures of Rupees One Hundred (LKR.100) each of Type ADebentures and Type B Debentures of the aggregate value of Sri Lankan Rupees Five

2

Hundred Million (LKR 500,000,000) with the option of increase up to Sri Lankan RupeesSix Hundred Forty Four Million Four Hundred Thousand (LKR. 644,400,000).

7. “DUE DATE OF INTEREST” means 31st December, 31st March, 30th June and 30th

September until the Date of Redemption on the principal sum of the Debentures withthe first of such payments being due on 31st December 2012 and the final interestpayments in respect of Debentures shall be made with the repayment of the Principalsum on the Date of Redemption of the Debentures.

8. “EVENT OF DEFAULT” means any event set out in Clause 12.

9. “MARKET DAY” means a day on which trading takes place at the Colombo StockExchange.

10. “LISTED” means tradable on the Colombo Stock Exchange.

11. “RATE OF INTEREST” means (i) Seventeen per centum (17%) per annum on theprincipal sum, in the case of Type A Debentures and (ii) Three months Gross TreasuryBill Rate plus two point two five (2.25%) per annum on the Principal Sum, in the case ofType B Debentures.

12. “RESOLUTION” means a Resolution passed by the Debenture holders in terms of Clause21 unless otherwise provided for.

13. “SEC” means the Securities and Exchange Commission of Sri Lanka.

14. “SRI LANKAN RUPEES” and the sign “LKR” mean the lawful currency of the Republic ofSri Lanka.

15. “REGISTERED ADDRESS” when used in relation to a Debenture holder means therespective address of the Debenture holder registered in the Register. In the case of theDebentures lodged with CDS the registered address shall be deemed to be the addressprovided by the Debenture holder to the CDS.

16. “THE DATE OF ALLOTMENT” means the date on which the Debentures will be allottedto the Debenture holders under the Prospectus, which date will be stated in theDebenture Certificate.

17. “THE DATE OF MATURITY” means the date on which the period of Three (03) yearsfrom the date of allotment expires, which date will be stated in the DebentureCertificate.

18. “THE DATE OF REDEMPTION” means the date of Maturity of the Debentures, which willbe stated in the Debenture Certificate or such earlier date on which the Debenturesbecome payable in terms of these presents and the Conditions endorsed on thedebenture certificates or the date on which the principal sum of the Debentures arepaid in full.

19. “THE REGISTER” means the register of the Debenture holders hereinafter covenanted tobe kept by the Company.

20. “THE REGISTRARS” means the person(s) holding the office of Company Secretary for thetime being of the Company or such other entity appointed with the approval of theTrustee.

21. “THESE PRESENTS’’ means this Trust Deed including the Schedules hereto as from timeto time modified in accordance with the provisions herein contained and/or accordingto law and shall include any Supplementary Trust Deed executed in accordance with theprovisions hereof.

22. “WORKING DAY “ means any day (other than a Saturday or Sunday or any statutoryholiday) on which Banks and Foreign Exchange Markets are open for business in SriLanka.

23. “TRUST DEED” means these presents including the Schedules hereto as from time totime modified in accordance with the provisions herein contained and/or according tolaw and shall include any Supplementary Trust Deed executed in accordance with theprovisions hereof.

3

24. “TRUSTEE” means Trustee above named and any other banking corporation appointedas Trustee under these Presents duly recognized by the Securities and ExchangeCommission of Sri Lanka (SEC) to perform such role.

25. “ Type A Debentures” means Senior Rated Unsecured Redeemable Three (03) yearDebentures with a fixed interest rate of Seventeen per centum (17%) per annumpayable quarterly until the Date of Redemption.

26. “Type B Debentures“ means Senior Rated Unsecured Redeemable Three (03) yearDebentures with a variable interest rate of Three months Gross Treasury Bill rate plustwo point two five per centum (2.25%) per annum payable quarterly until the Date ofRedemption.

(b) Words denoting or importing the singular number shall include the plural number and vice versaand words denoting or importing the masculine gender only shall include the feminine genderand shall include corporate and unincorporated bodies of persons.

(c) In these Presents references to :

(i) any provision of any statute shall be deemed also to refer to any statutory modificationor re-enactment thereof or any statutory instrument, order or regulation made thereunder or under such modifications or re-enactment.

(ii) Principal and/or interest in respect of the Debentures or to any monies payable by theCompany under these presents or under the Debentures shall be deemed also toinclude references to any additional amounts which may be payable under thesepresents.

(iii) Costs, charges or expenses shall include (but not be limited to) the Value Added Tax,Nation Building Tax or similar tax charged or chargeable in respect thereof.

(d) References in this Trust Deed to Schedules, clauses, sub-clauses, paragraphs and sub-paragraphsshall be construed as references to the Schedules to this Trust Deed and the clauses, sub clauses,paragraphs and sub-paragraphs of this Trust Deed respectively.

(e) The headings are inserted herein only for conveniences and shall not affect the construction ofthese presents.

2. APPOINTMENT OF THE TRUSTEE

The Trustee is hereby appointed as Trustee for the purposes of the Debentures and for the benefit of andin the interests of the Debenture Holders as provided herein and the Trustee accordingly accepts theappointment upon the terms and conditions contained herein and agrees to act under the provisions ofthis Deed as the Trustee.

3. AMOUNT OF THE DEBENTURE ISSUE

Debentures will be issued by the Company to raise a sum of upto Sri Lankan Rupees Five Hundred Million(LKR 500,000,000/-) with the option to increase upto Sri Lankan Rupee Six Hundred Forty Four MillionFour Hundred Thousand (LKR. 644,400,000 ).

4. COVENANTS TO REPAY THE PRINCIPAL SUM AND INTEREST

4.1 Debentures not deposited with the CDS.

(a) The Company hereby covenants with the Trustee for the benefit of the Debenture Holdersthat prior to the listing of the Debentures on the CSE whilst the Debentures are notdeposited with the CDS it will :

(i) as and when the Debentures ought to be redeemed in accordance with theprovisions of these Presents and upon surrendering the Debenture Certificateto the Registrar, pay to the Debenture Holders registered as at the market dayimmediately prior to date of Maturity by RTGS transfer if so requested by theDebenture Holder at the cost and expense of the Debenture Holder or bycrossed cheque marked “Account Payee only” sent by ordinary mail to theregistered addresses of the Debenture Holders the principal sum of the

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Debentures which ought to be redeemed and interest (if any) remainingunpaid up to the Date of Redemption of the Debentures.

(ii) pay to the Debenture Holders registered as at the Due Date of Interest by RTGStransfer if so requested by the Debenture Holder at the cost and expense of theDebenture Holder or by crossed cheque marked “Account Payee only” intereston the principal sum of the Debentures for the time being outstanding at thesaid Rate of Interest in accordance with the provisions of these presents.Provided however that the final interest payments in respect of Debenturesshall be made with the repayment of the principal sum on the Date ofRedemption of the Debentures.

(iii) Interest calculation shall be based upon the actual number of days in eachinterest payment period and a year of 365 days. Provided however that in aleap year the first interest payment for such year shall be based upon theactual number of days in such interest payment period and a year of 366 days.

(iv) the payment of the Principal sum and interest shall be made in Sri LankanRupees. Interest payments shall be made on the due date of interest afterdeducting any taxes and charges thereon, if any applicable in terms of the lawprevailing at the time of payment.

(b) The Debentures shall be redeemed in accordance with the provisions contained in thesePresents on the Date of Maturity or on such earlier date in the event of default togetherwith interest (if any) remaining unpaid therefore.

(c ) On the Date of Maturity, the holder of every such Debentures to be redeemed shall bebound to surrender such original Debenture Certificate, either by person or throughregistered post to the Registrar.

(d) If any Debenture Holder fails or refuses to claim by surrender of the DebentureCertificate and receive payment of the redemption monies payable to such DebentureHolder, or any part thereof within 90 days from the Date of Maturity of the Debentures,the amount due to him shall be transferred by the Company to a suspense account atthe end of 90 days after the Date of Maturity of the Debentures and shall be paid by theCompany to the holder of the Debentures when the original Debenture Certificate issurrendered and no interest will be payable by the Company on such Debentures for theperiod between the Date of Maturity and the date of the said payment.

(e) If any cheques for redemption and interest payment sent by post to the DebentureHolders are returned to the Company undelivered, the amounts represented by each ofsuch returned cheques shall also be transferred by the Company to the aforementionedsuspense account and retained therein for a period of Six (06) years from the Date ofMaturity of the Debentures. Such monies will be repaid to the Debenture Holders if thesame is claimed in writing by such Debenture Holder within the said Six (06) yearsperiod. No person shall be entitled to claim any such redemption and interest paymentafter the completion of six years from the Date of Maturity and all unclaimed moniesshall cease to be owed and payable by the Company to any Debenture Holder after thesaid period of Six (06) years.

(f) All Debenture Certificates pertaining to the Debentures redeemed as aforementionedshall be cancelled and shall not be reissued.

4.2 Debentures deposited with the CDS

(a) The provisions of the Clause 4.1 shall mutatis mutandis apply to the Debentures uponthe Debenture certificates being deposited with the CDS.

(b) upon the dematerialization of the Debentures the Company shall always act on theinformation furnished by the CDS regarding the beneficial ownership of the Debentures.It shall therefore be the responsibility of each Debenture Holder to keep all theinformation in respect of such Debenture Holder updated. The Company shall beabsolved from any responsibility or liability in respect of any error or absence ofnecessary changes in the information recorded with the CDS.

(c ) The Company shall be entitled to make all interest and redemption payments to thepersons who are registered as the beneficial owners of the Debentures as of the date onwhich such payments are due without any request for claim from such DebentureHolders and the Company shall accordingly send the payment by RTGS transfer if sorequested by the Debenture Holder at the cost and expense of the Debenture Holder or

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by crossed cheque marked “ Account Payee only” to the registered address of theDebenture Holder as may be furnished by the CDS and such payment shall be deemedto be a payment duly made by the Company to the respective Debenture Holders inredemption of the Debentures of such Holders.

(d) In order to accommodate the Debenture interest cycles in the Debt Trading System(DEX) the payment of interest shall not include Debenture Holders holding Debenturesin the DEX on the Due Date of Interest but one day prior to the due date of interest (iethe entitlement date). If the entitlement date is a holiday interest shall be calculatedincluding the entitlement date.

(e) If any of the cheques referred to in (c ) above is returned undelivered the Company shalltransfer the amount represented by each of such returned cheques to the suspenseaccount referred to in the Clause 4.1 (d) above.

4.3 If the Date of Redemption falls on a non working day on which the Banks are closed for businessin Sri Lanka, then the Debentures will be redeemed with interest on the next working day whenthe Banks are open for business in Sri Lanka.

4.4 The claims of the Debenture Holders shall in the event of winding up of the Company, rank afterall the claims of secured creditors of the Company and any preferential claims under anyStatutes governing the Company but in priority to subordinated creditors of the Company, if anyor over the claims and rights of the shareholder/s of the Company.

5. DEBENTURE CERTIFICATES

5.1. The Company shall within 15 days from the date of closing of the issue send by registered mail theDebenture Certificates to the Debenture Holders. Provided however that in the event of theDebentures being listed on the CSE prior to the expiry of such period the Company may deposit suchDebenture Certificates with the CDS.

5.2 Upon listing on the CSE the Debentures shall be held and transferred according to the rules of theCSE and CDS.

6. STAMP DUTY & OTHER CHARGES (IF ANY)

The Company shall pay all charges, stamp duties and other similar duties or taxes (if any) payable on or inconnection with (I) the issue of the Debentures and (II) the execution of these Presents.

7. ELIGIBILITY FOR DEBENTURES

The Debentures may be issued to:

(a) Citizens of Sri Lanka who are resident in Sri Lanka and above 18 years of age.

(b) Corporate bodies and societies registered/ incorporated/established in Sri Lanka and authorizedto invest in the Debentures.

(c) Foreign institutional investors, corporate bodies incorporated outside Sri Lanka, individualsresident outside Sri Lanka and Sri Lankans resident outside Sri Lanka who qualify to be issuedDebentures in terms of the Direction of the Controller of Exchange dated 22nd November 2010.

(d) Approved Provident Funds, Trust Funds and Contributory Pension Schemesregistered/established in Sri Lanka and authorized to invest in the Debentures.

( In the case of Approved Provident Funds, Trust Funds and Contributory Pension schemes theApplication should be in the name of the Board of Management/Trustee of such ApprovedProvident Funds, Trust Funds and Contributory Pension Schemes in order to facilitate theopening of the CDS Accounts).

8. ISSUE OF CERTIFICATES

Subject to the rules of the SEC, CSE and the CDS, the Company shall issue to every Debenture Holder,one (01) certificate in respect of the number of Debentures held by such Debenture Holder. JointDebenture Holders shall be entitled to only one certificate for any Debentures held jointly by themwhich Certificate shall be delivered to that one of the joint holders whose name appears first in the

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Register of Debentures and the Company shall not be bound to register more than Three (03) persons(including the principal holder) as the joint holders of any of the Debentures (except in the case ofexecutors, administrators or heirs of a deceased member). The Debenture Holder may apply in writingto the Company for the issue of more than one certificate for the Debentures if such Debenture Holderso wishes. Upon the certificate which it is applied to be replaced by two or more certificates beingsurrendered to the Company and on payment of such fee as the Company may determine from time totime for such issue the Company shall issue to the applicant Debenture Holder two or more certificatesfor such Debentures as the applicant may apply for. The Debenture Certificates in respect of Type ADebentures and Type B Debentures shall be substantially in the forms set out in the First and SecondSchedule hereto and have endorsed thereon the conditions mentioned in the Third Schedule heretoand the Certificate shall be held subject to and with the benefit of all such conditions or such otherconditions (having substantially the same effect) as may be endorsed on any Debenture Certificate.Every Debenture Certificate shall be under the common seal of the Company affixed with the authorityof its Two Directors or a Director and the Company Secretary in accordance with its Articles.

9 TRANSFER OF DEBENTURES

(a) These Debentures shall be freely transferable and the registration of such transfer shall not besubject to any restriction, save and except to the extent required for compliance with statutoryrequirements.

(b) The Debentures shall be transferable and transmittable through the CDS as long as theDebentures are listed in the CSE. Subject to the provisions contained herein the Company mayregister without assuming any liability any transfer of Debentures, which are in accordance withthe statutory requirements and rules and regulations in force for the time being as laid down bythe CSE, SEC and the CDS.

(c ) In the case of death of a Debenture Holder

* The survivor where the deceased was a joint holder; and

* The executors or administrators of the deceased or where the administration of theestate of the deceased is in law not compulsory the heirs of the deceased where suchDebenture Holder was the sole or only surviving holder; shall be the only personsrecognized by the Company as having any title to his/her Debentures.

(d) Any person becoming entitled to any Debenture in consequence of bankruptcy or winding up ofany Debenture Holder, upon producing proper evidence that he/she sustains the character inrespect of which he/she proposes to act or his/her title as the Board of Directors of the Companythinks sufficient may in the discretion of the Board be substituted and accordingly registered as aDebenture Holder in respect of such Debentures subject to the applicable laws rules andregulations of CDS, CSE and SEC.

(e) No change of ownership in contravention to these conditions will be recognized by the Company.

10 COVENANT TO OBSERVE PROVISIONS OF THE TRUST DEED AND SCHEDULES.

The Company hereby covenants with the Trustee to comply with the provisions contained herein and toperform and observe the same. It is expressly agreed between the Company and the Trustee that theTrustee shall not be liable for any loss or damage however caused by non-observance or non-compliancewith the covenants contained in Clause 11 by the Company.

11 COVENANTS BY THE COMPANY

The Company hereby covenants with the Trustee for the benefit of the Debenture Holders that, so long asany of the Debentures remain outstanding;

(a) The Company shall at all times carry on and conduct its affairs in a proper and appropriatemanner.

(b) The Company shall at all times keep such books of accounts as it is obliged to keep under theapplicable laws and (to the extent not prohibited by law or otherwise by virtue of any duty ofconfidentiality) at any time after an event of Default shall have occurred or the Trustee shall havereasonable cause to believe that an Event of Default will occur, allow a reputed Audit Firmappointed by the Trustee in consultation with the Company free access to the same at all timesduring working hours and to discuss the same with the Directors and Officers of the Company,

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PROVIDED however that the Trustee and the Audit Firm shall, to the extent legally permitted,maintain confidentiality in respect of all the matters relating to the Company and its business andshall not use any information they acquire pursuant to these provisions for any other purpose.

(c ) The Company shall give a Certificate in writing to the Trustee within 30 days from the date ofexpiry of every bi-annual period commencing from the date of allotment of the Debentures,signed by Two Directors or a Director and the Company Sectary of the Company, certifying thatthe interest on the Debentures has been paid to the Debenture Holders in terms of the Clause4.1 and Clause 4.2 above. In the event the Company defaults in submitting such Certificate theTrustee shall treat it as an Event of Default as set out in Clause 12.1 hereof.

(d) The Company shall at all times keep a correct Register of Debenture Holders showing:

i. The names and addresses (which shall be the registered addresses of the DebentureHolders) of all Debenture Holders.

ii The number, type and the value of the Debentures held by each Debenture Holder.

iii The date on which each Debenture Holder became registered as the holder of anyDebentures and the date on which such holder ceased to be so registered.

iv. The date of the issue of Debentures.

Provided however, that in the case of Debentures that are lodged with the CDS, theCompany may treat the records maintained by the CDS as an accurate record of thedetails required herein above.

(e) The Company shall permit the,

i. Trustee at all reasonable times without payment of any fee to inspect the Register ofDebenture Holders and to take copies thereof.

ii Debenture Holders at all reasonable times without payment of any fee to inspect theRegister of Debenture Holders pertaining to such Debenture Holder and to take copiesthereof.

(f) The Company shall forthwith upon becoming aware of the happening of any and every suchevent as in mentioned in Clause 12.1 hereof give notice thereof in writing to the TrusteePROVIDED that the Company shall in any event issue a certificate to the Trustee within 30 daysfrom the end of every bi-annual period commencing from the date of allotment of theDebentures signed by Two Directors or a Director and the Company Sectary the Companycertifying that no event mentioned in paragraphs (c) and (d) of Clause 12.1 hereof has occurredduring the previous Six (06) month period which would have resulted in the Debenturesbecoming payable in terms of the said Clause 12.1 . In the event the Company defaults in issuingsuch Certificates the Trustee shall treat it as an Event of Default as set out in Clause 12.1 hereof.

(g) The Company shall submit a certificate to the Trustee within 30 days from the end of every bi-annual period commencing from the date of allotment of the Debentures signed by TwoDirectors or a Director and the Company Sectary of the Company certifying that all of thecovenants set out in clause 11 hereof have been complied with and whether or not anyborrowing limits have been exceeded. In the event the Company defaults in submitting suchCertificate the Trustee shall treat it as an Event of Default as set out in Clause 12.1 hereof.

(h) The Company shall issue to the Trustee such certificates as the Trustee may require to carry outits obligations in terms of these presents PROVIDED such certificates can be issued by theCompany without committing any breach of its duty of confidentiality to any person or entity.

(i) The Company shall reproduce the Trust Deed in full in the prospectus relating to the issue ofthese Debentures, and shall make available to any Debenture Holder immediately on request acertified copy of the Trust Deed upon payment of a fee of LKR 500/-.

(j) The Company shall send to the Debenture Holders and the CSE an Interim Financial Statementprepared on a quarterly basis, no later than forty five days from the end of the first, second andthird quarters and two months from the end of the fourth quarter.

(k) The Company shall send the Trustee all published financial information, which is normallyprovided to ordinary shareholders at the same time that it is sent to the shareholders.

(l) The Company shall not without the prior written approval of the Trustee which approval shall notbe unreasonably with held declare or pay any dividend to its shareholders during any financial

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year unless it has paid all the dues to the Debenture Holders upon the date on which thedividend is proposed to be declared or paid or has made satisfactory provisions therefore.

(m) The Company shall reimburse all reasonable expenses incurred by the DebentureHolders/Trustee after an Event of Default has occurred in connection with:

(i) Preservation of the Company’s assets (whether then or thereafter existing)

(ii) Collection of amounts due under this Deed.

(All such sums shall be reimbursed by the Company within 30 days from the date ofnotice of demand from the Debenture Holders or the Trustee. Provided in any eventthat the Company shall give the Trustee immediate notice upon it being aware of theoccurrence of an Event of Default and/or if the Company becomes aware that anycondition of the Trust Deed cannot be fulfilled and in any such event, to forward to theTrustee, as and when required by the Trustee, a confirmation that no Event of Defaulthas occurred or is continuing)

(n) The Company shall submit to the Trustee a certificate in writing that the principal amount hasbeen paid to the Debenture Holders in accordance with the terms or conditions of theDebentures and provisions of the Trust Deed, immediately upon such payments become due.

(o) The Company shall immediately notify the Trustee in the event that the Company becomesaware of the occurrence of any of the following events that has caused or could cause:

(a) Any amount payable under the Debenture to become immediately payable.(b) Any event in the opinion of the Company that may lead to the acceleration of either the

payment of interest or redemption.(c) Any other right or remedy under the terms and conditions of the Debentures or the

provisions or covenants of the Trust Deed to become immediately enforceable.

(p) The Company shall submit to the Trustee within one month after the end of every quarter, acertificate that the Company has complied with each and all of the covenants. The certificateshould include:

(a) The date of the certificate;(b) the extent of liabilities or borrowing as per Articles of Association and whether or not they

have been exceeded;(c) whether any material trading or capital loss has been sustained by the Company. ( in the

event the Company fails to deliver the certificate to the Trustee, the Trustee shall inform theDebenture Holders of this fact);

(d) whether or not any circumstances materially affecting the Company has occurred whichadversely affect the Debentures;

(e) whether any contingent liabilities have been incurred by the Company, and if so, the amountincurred and whether or not any contingent liability has matured or is likely to mature withinthe next twelve months, which will materially affect the ability of the Company to repay theDebentures;

(f) whether the Company has assumed a liability of a related corporate body during the quarter,the extent of the liability assumed during the quarter and the extent of the liability at theend of the quarter;

(g) Whether or not there has been any change in any accounting method or method ofvaluation of assets or liabilities of the Company;

(h) Whether or not any circumstances have arisen which render adherence to the existingmethod of valuation of assets or liabilities of the Company misleading or inappropriate;

(i) Any substantial change in the nature of the Company’s business since the issue of theDebentures;

(j) Whether or not any action has been taken by the Board of Directors of the Company interms sections 219 and 220 the Companies No. 7 of 2007 during the quarter;

(k) Whether or not the company has observed and performed all the covenants and obligationsbinding upon them respectively pursuant to the Trust Deed.

The certificate shall be made in accordance with a resolution of the Board of Directors and wherethe Company fails to deliver the certificate to the Trustee, the Trustee shall inform he DebentureHolders of that fact.

(q) In the event that the Company creates a charge, the Company shall submit to the Trustee the writtendetails of the charge within 21 days after it is created. If the amount to be advanced on the securityof the charge is indeterminate, the Company shall submit to the Trustee the written details of theamount of each claim, within 5 market days from the date the claim is made.

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(r) The Company shall at all times maintain records of all its published information and make themavailable for inspection by the Trustee and Debenture Holders.

(s) The Company shall reimburse the Trustee all reasonable costs, charges and expenses which theTrustee may incur in relation to the exercise of its duties hereunder.

12 EVENTS OF DEFAULT

12.1 The following shall constitute Events of Default under these Presents:

a) If the Company defaults the payment of principal sum or any interest due on the whole or anypart of the Debentures in accordance with the provisions contained in these presents.

b) If the Debentures cease to be listed in the CSE at any time between the time of issue and theDate of Maturity, due to any default on the part of the Company.

c) If the Company stops or threatens to stop payment of its debts or ceases to carry on its business,which may lead to the winding up of the Company.

d) If any liquidation, bankruptcy, insolvency, receivership or similar action or proceeding iscommenced against the Company or an order shall be made or an effective resolution shall bepassed for the winding up of the Company.

e) If the Company does not submit a Certificate to the Trustee as set out in Clause 11 (c ) abovecertifying that the interest has been paid to the Debenture Holders in terms of the Trust Deed.

f) If the Company does not submit a Certificate to the Trustee as set out in Clause 11 (f) abovecertifying that no event mentioned in paragraphs (c ) and (d) of this clause hereof has occurredduring the previous Six (06) month period, which would have resulted in the Debenturesbecoming payable in terms of this Clause.

g) If the Company does not submit a Certificate to the Trustee as set out in Clause 11 (g) abovecertifying that all of the covenants set out in clause 11 of the Trust Deed have been fullycomplied with.

h) If the Company commits a breach of any of the other covenants or provisions herein containedand on its part to be observed and performed provided however that the Trustee shall give theCompany up to 30 days notice before declaring such breach to be an Event of Default.

i) Where any other indebtedness of the Company becomes due and payable prior to its statedmaturity or where security created for any of their indebtedness becomes enforceable.

j) Where there is revocation, withholding or modification of a license, authorization or approvalthat impairs or prejudices the Company’s ability to comply with the terms and conditions of theDebentures or the provisions of the Trust Deed or any other document relating to the issue, offeror invitation in respect of the Debentures.

k) Where any mortgage, charge, pledge, lien or any other encumbrance, present or future iscreated or assumed by the Company contrary to the terms or conditions of the Debentures andthe provisions of the Trust Deed.

12.2 Upon the occurrence of an Event of Default the Trustee may at its discretion and if so requested in writingby the Debenture Holders of at least one fifth (1/5) of the face value of the Debentures outstanding, or ifso directed by a Special Resolution of the Debenture Holders give notice to the Company that theprincipal and interest on the Debentures becomes immediately due and payable.

12.3 Repayment before the maturity of the principal sum on the Debentures or any part thereof in anycircumstance shall be subject to the prior written consent of the Central Bank of Sri Lanka.

13 ENFORCEMENT OF OBLIGATIONS

At any time after the Debentures shall have become repayable on maturity or otherwise under anyprovision of these Presents, the Trustee may at its discretion, or upon the request in writing of theDebenture Holders of at least one fifth (1/5) of the face value of the Debentures outstanding, and in theevent that there is no Trustee, the Debenture Holders pursuant to an Extraordinary Resolution andwithout any further notice, may institute such proceedings as they think fit to enforce repayment andother obligations of the Company under these Presents.

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Provided that nothing in these Presents shall preclude a Debenture Holder from initiating legal action onhis own right.

14 APPLICATION OF MONIES RECEIVED BY THE TRUSTEE

In the event of the Trustee recovering or receiving any monies from the Company consequent to anyaction taken by the Trustee against the Company, the Trustee shall apply such monies,

(a) In the first place in paying or providing for the payment or satisfaction of the costs chargesexpenses and liabilities incurred in or about the execution of the trust constituted by thesepresents (including remuneration of the Trustee);

(b) Secondly, in or towards payment to the Debenture Holders of all arrears of interest remainingunpaid on the Debentures held by them respectively;

(c ) Thirdly in or towards payment to the Debenture Holders of all principal monies due in respect ofthe Debentures held by them respectively and;

(d) Finally, the Trustee shall pay the surplus (if any) of such monies to the Company or its assigns,PROVIDED that at the discretion of the Trustee payments may be made on account of principalmonies before any part of the interest or the whole of the interest on the Debentures have beenpaid but such alteration in the order of payment of the principal monies and interest shall notprejudice the right of the Debenture Holder to receive the full amount to which they would havebeen entitled if the ordinary order of payment had been observed. Any payment to theDebenture Holders under this clause shall be made pari passu in proportion to the Debenturesheld by them respectively.

15 MANNER OF PAYMENT AND ENFORCEMENT OF DEBENTURES

Any payment to be made in respect of the Debentures by the Company or the Trustee may be made inthe manner provided in this Trust Deed and any payments so made shall be good discharge pro tanto tothe Company or the Trustee, as the case may be. Any payment of interest in respect of a Debenture shallextinguish any claim which may arise directly or indirectly in respect of such interest from a DebentureHolder.

Upon any payment under the provisions of Clause 14(c), the Debentures in respect of which suchpayment is made in full shall be produced to the Trustee through whom such payment is made and theCompany shall call such Debentures to be cancelled (whether lodged in CDS or held in certificate form)and shall certify or procure the certification of such cancellation.

16 REMUNERATION OF THE TRUSTEE

The Company shall pay the Trustee during the continuation of these presents a sum of Sri Lankan RupeesTwo Hundred Forty Thousand (LKR 240,000./-) per annum paid semi annually plus the applicablegovernment taxes on account of remuneration for the Trustee for its services under these presents. Thesaid fee shall be paid at the expiry of every one (01) year period commencing from the date of allotmentof the Debentures.

Further, the Trustee shall be entitled to reimbursement from the Company all reasonable costs, chargesand expenses which the Trustee may incur in relation to the exercise of its duties hereunder.

17 GENERAL POWERS OF THE TRUSTEE

Without prejudice to the powers and reliefs conferred on Trustees by these Presents or by the lawsrelating to the Trusts or any other applicable law the Trustee shall have the following powers:-

(a) the Trustee may in relation to these presents act on the opinion or advice of or a certificate orany information obtained from any lawyer, banker, valuer, surveyor, broker, auctioneer,accountant or other expert (whether obtained by the Trustee or the Company) and shall not beresponsible for any loss occasioned by acting on any such opinion, advice, certificate orinformation and that the Trustee shall not be liable for acting on any opinion, advice, certificateor information purporting to be so conveyed although the same shall contain some error as longas the Trustee has acted in good faith and if the Trustee has reasonable grounds for believingthat the auditor or officer was competent to give or make the certificate, report or statement;

(b) The Trustee shall as regards all the trusts, powers authorities and discretion vested in it by thesePresents or by operation of law, have absolute and uncontrolled discretion as to the exercise or

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non-exercise thereof and the Trustee shall not be responsible for any loss, costs, damages,expenses or inconvenience that may result from the exercise or non exercise thereof butwhether the Trustee is under the provisions of these Presents bound to act at the request ordirection of the Debenture Holders the Trustee shall nevertheless not be bound unless firstindemnified to its satisfaction against all actions, proceedings, claims and demands to which itmay render itself liable and all costs, charges, damages, expenses and liabilities which it mayincur by so doing. However nothing in this Clause shall preclude a Debenture Holder from filingaction on his own if he so wishes;

(c ) To summon any meeting of the Debenture Holders in accordance with the provisions of Clause21 hereof;

(d) In case of default by the Company, the Trustee may but shall not be bound unless directed eitherby an instrument in writing signed by the Debenture Holders of at least Seventy Five per centum(75%) of the face value of the Debentures for the time being outstanding or in accordance with aSpecial Resolution passed by the Debenture Holders in accordance with Clause 21 of thesePresents, to waive such terms and conditions as they shall deem expedient any of the covenantsand provisions contained in these Presents on the part of the Company to be performed andobserved;

(e) The Trustee as between itself and the Debenture Holders shall have full power to determine allquestions and doubts arising in relation to any of the provisions of these Presents and every suchdetermination, whether made upon a question actually raised or implied in the acts orproceedings of the Trustee. If a Debenture Holder is not satisfied with the said determinationprovided by the Trustee then the Debenture Holder may challenge such determination in a courtof law, provided that

* Such Debenture Holder has the written consent of the Debenture Holders of at least tenper centum (10%) of the face value of Debentures for the time being outstanding.

* Such application to a Court of law is instituted within Thirty (30) days of notification ofsuch determination to the Debenture Holders.

(f) The Trustee may, in the conduct of the trusts of these Presents, instead of acting through itsstaff, employ and pay a professional person, to transact or conduct, or concur in transacting orconducting, any business and to do or concur in doing all acts required to be done by the Trustee;

(g) The Trustee shall not be liable to the Company or any Debenture Holder by reason of havingrecognized or treated as a Debenture Holder any person subsequently found not to be soentitled to be recognized or treated;

(h) Whenever in these presents the Trustee is required in connection with any exercise of itspowers, trusts, authorities or discretions to have regard to the interests of the DebentureHolders, it shall have regard to the interests of the Debenture Holders as a class and in particular,but without prejudice to the generality of the foregoing, shall not be obliged to have regard tothe consequences of such exercise for any individual Debenture Holders resulting from his or itsbeing for any purpose domiciled or resident in, or otherwise connected with, or subject to thejurisdiction of, any particular territory, Provided further that the Trustee shall not be liable foranything done or omitted to be done in accordance with any direction given to the Trustee bythe Debenture Holders pursuant to any duly convened meeting being held;

(i) The Trustee may, accept a certificate signed by Two Directors or a Director and the CompanySecretary of the Company certifying that all Debentures have been redeemed or relating to anyother matter primarily in the knowledge of the Company as sufficient evidence thereof and suchCertificate shall be a complete protection to the Trustee who acts thereon;

(j) Where an Event of Default has occurred and is continuing to occur, the Trustee shall exercisesuch rights and powers vested in it by the Trust Deed and use a reasonable amount of skill anddiligence in exercising such powers;

(k) The Trustee shall give notice in writing to the Debenture Holders as and when the Trustee isnotified by the Company of any occurrence mentioned in Clause 12.1 or any condition of theTrust Deed which cannot be fulfilled;

PROVIDED nevertheless that none of the provisions of these Presents shall in any case in whichthe Trustee has failed to show the degree of care and diligence required by it, having regard tothe provisions of these Presents, conferring on the Trustee the powers, authorities or discretions,relieve or indemnify the Trustee against any liabilities which by virtue of any rule of law wouldotherwise attach to it in respect of any negligence , default , breach of duty or breach of trust ofwhich it may be guilty in relation to its duties under these Presents.

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PROVIDED FURTHER that it shall exercise reasonable diligence to ascertain whether the Companyhas committed any breach of the terms and conditions of the Debentures or provisions of theTrust Deed or whether an Event of Default has occurred or is continuing to occur, on perusal ofthe documents submitted in terms of the covenants set out in the Trust Deed.

(l) The Trustee’s role shall be passive prior to the Trustee being notified of any occurrence of anEvent of Default and the Trustee shall not have any other duty apart from those expressly statedherein;

(m) For the avoidance of doubt, the Trustee shall not be considered, nor have any responsibility orliability, as a lender or borrower. The obligation to repay any debts owing to Debenture Holdersshall remain with the Company and the Trustee shall not be liable nor responsible for any act,omission or default of the Company nor any other party. The Trustee shall also not be liable forany loss due to any cause beyond its control, nor to take any action in relation to any Event ofDefault which it is not aware of, nor for consequential or indirect loss, nor for market loss, risk ormovement affecting any investments. The Company shall fully indemnify the Trustee for anyliability, claim, expense, damage or loss that the Trustee may incur in connection with this TrustDeed, save and except where such liability or loss is due solely to the negligence or willfulmisconduct of the Trustee. The Trustee shall be entitled to rely and act on any document orinstrument which it has received from the Company and to treat it as authentic and authorizedunless the Trustee has actual notice otherwise. In performing its duties, the Trustee shallmaintain the confidentiality of confidential information received by it, but the Trustee maydisclose any such information to a branch, head office, subsidiary or agent of the Trustee on aneed to know basis in connection with this Trust Deed, to any government body or court and/orto any party in accordance with the requirement of a law, regulatory directive or regulation;

(n) The Trustee shall ensure that all documents required to be submitted by the Company in termsof the covenants set out in the Trust Deed are forwarded in a timely manner;

(o) The Trustee shall give notice in writing to the Debenture holders as soon as practicable if theCompany fail to remedy any breach of terms and conditions of the Debentures or theprovisions/covenants of the Trust Deed;

(p) The Trustee is not liable for anything done or omitted to be done in accordance with a directiongiven to the Trustee by the Debenture Holders at any meeting called.

18 APPOINTMENT AND REMOVAL OF THE TRUSTEE

(a) Subject to the provisions of this Trust Deed, the power of appointing new Trustees shall be vested inthe Company, provided further that the Company shall obtain the approval of Debenture Holdersholding not less than fifty per centum (50%) of the nominal value of the Debentures for the timebeing outstanding prior to the appointment of the new Trustee. Notice of such appointment shall begiven to the Debenture Holders within thirty (30) days of such appointment by an advertisementpublished in national newspapers in all three languages (Sinhala, Tamil and English) of the Company’schoice circulating in Sri Lanka.

(b) In the event the Company does not or cannot exercise its power to appoint a new trustee and therebeing no new trustee appointed as of thirty (30) days before the removal/retirement of the Trusteetaking effect in accordance with the terms hereof, the Debenture Holders of not less than 20% of thenominal value of the Debentures in issue may convene a meeting to appoint a new trustee by anordinary resolution.

(c) Any removal of a Trustee and the subsequent appointment of a replacement trustee by the Companyshall be with the consent of 75% majority of Debenture Holders. In the event of the DebentureHolders not being satisfied with the Trustee, they have the right to remove the Trustee by way of aspecial resolution passed at a General Meeting convened under Clause 21 hereof.

(d) The Company shall be notified of any removal of the Trustee and subsequent appointment of areplacement Trustee by the Debenture Holders.

(e) The Company shall take reasonable steps to replace the Trustee as soon as practicable afterbecoming aware that:

a. The Trustee has ceased to existb. The Trustee is in the situation of conflict of interestsc. The Trustee has ceased to perform its function as a Trusteed. The Trustee is in the situation of being ineligible to be appointed as the Trustee and

does not eliminate such situation within 90 days, of being informed of the same.

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(f) In the event the Trustee discovers that it is not eligible to be appointed or act as Trustee, the Trusteeshall give notice in writing to the Company regarding the same.

19 COMPLIANCE OF MAJORITY OF TRUSTEES

If there be more than one Trustee under these Presents the Trustees shall with majority consent exerciseall or any of the trust’s powers and discretions vested in the Trustees generally under any clause of thesePresents.

20 RETIREMENT OF TRUSTEE

(a) In the event of the Trustee, in its sole and absolute discretion, desiring to retire, the Trustee shall givenot less than 90 days notice to the Company in writing to that effect, and the Company shallthereupon appoint a new Trustee in accordance with Clause 18 of these Presents. The Trustee shallcontinue in its capacity as Trustee until such time a new Trustee is appointed.

(b) In the event of such a retirement, the Trustee at its cost shall publish a notice to this effect inNewspapers in all three languages (Sinhala, Tamil and English) of its choice circulating in Sri Lanka andsuch notice shall be deemed to be sufficient notice to the Debenture Holders notwithstandinganything to the contrary herein contained.

(c) The aforesaid shall mutatis mutandis apply where there is a removal of a Trustee.

21 MEETINGS OF DEBENTURE HOLDERS

(a) The Trustee shall call a meeting/cause a meeting to be called of Debenture Holders with noticeto the Company and all Debenture Holders on a requisition being received in writing signed bythe Debenture Holder (s) of at least 1/5th of the face value of the Debentures for the time beingoutstanding or if requested by the Company.

(b) Not less than 21 days notice shall be given of a meeting for the purpose of passing a Resolution.

(c ) The quorum for the meeting (other than adjourned meeting) for the purpose of passing anyresolution shall be the Debenture Holders representing 10% of the face value of the Debenturesfor the time being outstanding, present in person or by proxy or by attorney.

(d) If such a quorum cannot be obtained, such meeting shall be adjourned for not less than fourteen(14) days in which event notice of adjourned meeting shall be sent to every Debenture Holderand shall state in such notice that if a quorum as above defined shall not be present at theadjourned meeting the Debenture Holders then present shall form a quorum.

(e) The necessary majority for passing a Special Resolution shall not be less than 3/4ths of thepersons voting thereat on a show of hands and if a poll is demanded then not less than 3/4ths ofthe votes given on such poll and the quorum for passing an Extraordinary Resolution shall notbe less than 50% of the persons voting thereat on a show of hands and if a poll is demanded thennot less than 50% of the votes given on such poll.

(f) On a poll, each Debenture Holder will be entitled to one vote for each Debenture held by suchperson.

(g) A proxy need not be a holder of the Debentures.

(h) The Trustee shall be the chairman of any meeting of the Debenture Holders and shall appoint aperson or body to act as a Secretary of such meeting and a copy of a resolution certified by theTrustee and such Secretary shall deem to be conclusive evidence that such Resolution has beenduly adopted.

(i) In the event the Company fails to remedy any breach of terms and conditions of the Debenturesor the provisions / covenants of the Trust Deed, the Trustee shall:

Call a meeting of the Debenture Holders with notice to the Company Inform the Debenture Holders of the failure at the meeting; and Submit proposals for the protection of the Debenture Holders interests or call for

proposals from the Debenture Holders at the meeting as the Trustee considersnecessary or appropriate and obtain the directions.

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22 MODIFICATION OF THE TRUST DEED

The Trustee and the Company may by mutual agreement agree to modify these presents which are notdetrimental to the Debenture Holders provided such modifications are of a routine nature. Providedhowever that any modification to these Presents shall only be made with the consent of the DebentureHolders of at least 3/4ths of the face value of the Debentures for the time being outstanding. Upon amodification being duly made, the Company may request the Debenture Holders to produce theirDebenture Certificates to the Company in order that a memorandum of such modification may beendorsed thereon.

23 NOTICES

(a) Any notice or demand to the Company, the Debenture Holder(s) or the Trustee required to be given,made or served for any purpose hereof shall be given, made or served by sending the same byprepaid registered post in the case of the Company or the Trustee to the address shown in this Deedand by delivering it by hand or by prepaid ordinary mail in the case of Debenture Holder(s), to theaddress which appear in the Debenture Certificate or at such other address as shall have beennotified (in accordance with this clause). For the purpose of this Clause, any notice sent by post ormail as provided in this Clause shall be deemed to have been given, made or served 72 hours afterdispatch.

(b) The Trustee shall at any time be entitled to give notice of any meeting or make any communication tothe Debenture Holders by notice published in Newspapers in all three languages (Sinhala, Tamil andEnglish) of its choice circulating in Sri Lanka and such notice will notwithstanding anything to thecontrary herein contained be deemed to be sufficient notice to the Debenture Holders including theprovisions of the above clause.

24 MISCELLANEOUS

(a) Nothing in the provisions of these presents shall require disclosure to the Trustee by theCompany of any information relating to the affairs of any of its customers except,

i) when required to do so by a Court of Law, orii) in order to comply with any of the provisions of any Law.

PROVIDED however that the Company shall be obliged to furnish to the Audit Firm referred to inthe clause 11(b) information in respect of the Company’s books of accounts.

(b) In the event of any inconsistency between these provisions and any rules, regulations ordirections of the Securities and Exchange Commission of Sri Lanka, or the Colombo StockExchange such rules, regulations or directions shall prevail.

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IN WITNESS WHEREOF the said Singer Sri Lanka PLC has caused its common seal to be fixed and authorizedsignatories of Bank of Ceylon have set their hands hereunto and to one other of the same tenor and date as thesepresents at Colombo on the day herein before mentioned.

The Common Seal of Singer Sri Lanka PLC )is hereto affixed on this 28th September 2012 )in the presence of …………………………………………………. )Director and……………………………………………Director/Secretary )who do hereby attest the sealing hereof in the presence of us )

Witnesses:1.

2.

Signed for and on behalf of )Bank of Ceylon by its duly )authorized signatories )

………………………………………………………. and )………………………………………………………. )have set their respective hands hereto on )this 28th September 2012 )

Witnesses:1.

2.

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THE FIRST SCHEDULE REFERRED TO IN THE TRUST DEED

Singer Sri Lanka PLC

No. 80, Nawam Mawatha, Colombo 2(a Company duly established under the Companies Act No 17 of 1982)

Issue of Senior Rated Unsecured Redeemable Three Year Debentures of the par value of Rs 100/- each .

Type A Debentures – 2012-2015 CERTIFICATE

Certificate number Number of Debentures

Date of Maturity/RedemptionPrincipal Sum

Principal Sum

Name & Address of the Debenture Holder/s NIC/PP/Co Reg No of the Debentures Holder/s

Singer Sri Lanka PLC, a Company duly established under the Companies Act No 17 of 1982 and re–registered underthe Companies Act No 7 of 2007 (Registration No PQ160) in the Democratic Socialist Republic of Sri Lanka andhaving its Registered Office at No. 80, Nawam Mawatha, Colombo 2(hereinafter sometimes called and referred to as “The Company”, shall pay on the Date of Maturity/Redemption

mentioned above or on such other earlier date on which the Debentures hereby covered become payable underthe conditions endorsed on the reverse hereof and the terms and conditions in the Trust Deed referred to in theconditions endorsed on the reverse hereof (hereinafter referred to as “the said Trust Deed”) to the person/smentioned above or the registered holder/s for the time being hereof (hereinafter called “the Debenture Holder”)the Principal Sum mentioned above representing the total value of the Debentures covered by this DebentureCertificate (hereinafter called “these Debentures”) in accordance with the provisions contained in the said TrustDeed.

Interest on these Debentures shall be paid at a fixed Interest rate of Seventeen per centum (17%) p.a. payablequarterly each year on 31st December, 31st March, 30th June and 30th September from Date of Allotment until theDate of Redemption on the principal sum of the Debentures in the case of Type A.

Interest payments shall be made on the due date of interest after deducting any taxes and charges thereon, if anyapplicable in terms of the law prevailing at the time of payment. The final interest payment shall be made with therepayment of the principal sum on the date of redemption. In order to accommodate the Debenture interestcycles in the Debt Trading System (DEX) the payment of interest shall not include Debenture Holders holdingDebentures in the DEX as at the last day of the payment cycle but one day prior to the Due Date of Interest(Entitlement Date). If the entitlement date is a holiday interest shall be calculated including the Entitlement Date.

This Debenture Certificate is issued subject to the conditions contained herein and on the reverse hereof and theterms and conditions in the said Trust Deed which is deemed to be a part hereof and all constituting integral partsof these Debentures.

GIVEN UNDER THE COMMON SEAL OF SINGER SRI LANKA PLC ON THIS ………. DAY OF….. IN THE YEAR 2012.

DIRECTOR DIRECTOR / COMPANY SECRETARY

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THE SECOND SCHEDULE REFERRED TO IN THE TRUST DEED

Singer Sri Lanka PLCNo. 80, Nawam Mawatha. Colombo 2

(a Company duly established under the Companies Act No 17 of 1982)

Issue of Senior Rated Unsecured Redeemable Three Year Debentures of the par value of Rs 100/- each .

Type B Debentures - 2012-2015 CERTIFICATE

Certificate number Number of Debentures

Date of Maturity/RedemptionPrincipal Sum

Name & Address of the Debenture Holder/s NIC/PP/Co Reg No of the Debenture Holder

Singer Sri Lanka PLC, a Company duly established under the Companies Act No 17 of 1982 and re–registered underthe Companies Act No 7 of 2007 (Registration No PQ160) in the Democratic Socialist Republic of Sri Lanka andhaving its Registered Office at No. 80, Nawam Mawatha, Colombo 2(hereinafter sometimes called and referred to as “the Company”),shall pay on the Date of Maturity/Redemption

mentioned above or on such other earlier date on which the Debentures hereby covered become payable underthe conditions endorsed on the reverse hereof and the terms and conditions in the Trust Deed referred to in theconditions endorsed on the reverse hereof (hereinafter referred to as “the said Trust Deed”) to the person/smentioned above or the registered holder/s for the time being hereof (hereinafter called “the Debenture Holder”)the Principal Sum mentioned above representing the total value of the Debentures covered by this DebentureCertificate (hereinafter called “these Debentures”) in accordance with the provisions contained in the said TrustDeed.

Interest on these Debentures shall be paid at a variable interest rate of Three months Gross Treasury Bill rate plustwo point two five (2.25%) per annum, payable quarterly, each year on the 31st December., 31st March, 30th Juneand 30th September in the case of Type B.

Interest payments shall be made on the due date of interest after deducting any taxes and charges thereon, if anyapplicable in terms of the law prevailing at the time of payment. The final interest payment shall be made with therepayment of the principal sum on the date of redemption. In order to accommodate the Debenture interestcycles in the Debt Trading System (DEX) the payment of interest shall not include Debenture Holders holdingDebentures in the DEX as at the last day of the payment cycle but one day prior to the Due Date of Interest(Entitlement Date). If the entitlement date is a holiday interest shall be calculated including the Entitlement Date.

This Debenture Certificate is issued subject to the conditions contained herein and on the reverse hereof and theterms and conditions in the said Trust Deed which is deemed to be a part hereof and all constituting integral partsof these Debentures.

GIVEN UNDER THE COMMON SEAL OF SINGER SRI LANKA PLC ON THIS ………. DAY OF…. IN THE YEAR 2012.

DIRECTOR DIRECTOR / COMPANY SECRETARY

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THE THIRD SCHEDULE REFERRED TO IN THE TRUST DEED

The Conditions Endorsed on the Debentures

1. These Debentures are part of a series of Five Million (5,000,000) Senior Rated Unsecured RedeemableThree Year Debentures with the option of increasing upto Six Million Four Hundred Forty Four Thousand(6,444,000) issued by Singer Sri Lanka PLC at an issue price of LKR 100/- per Debenture subject to theTerms and Conditions contained in this Debenture Certificate and the terms and conditions contained inthe Trust Deed dated 28th September 2012 (hereinafter referred to as “the said Trust Deed”)

2. These Debentures of the said series rank pari passu with each other and without any preference orpriority one over another. These Debentures will be subsequently be listed on the Main Board of the DebtSystem of the Colombo Stock Exchange (CSE).

3. Upon listing of the Debentures in respect of the Debenture Certificates which are dematerialized, theCompany shall thereafter always act on the information furnished by the CDS regarding the beneficialownership of the Debentures. It shall therefore be the responsibility of each Debenture Holder to keep allthe information in respect of such Debenture Holder updated. The Company shall be absolved from anyresponsibility or liability in respect of any error or absence of necessary changes in the informationrecorded with the CDS. The Company shall be entitled to make all interest and redemption payments tothe persons who are registered as the beneficial owners of the Debentures on the CDS as of the date onwhich such payments are due without any request for claim from such Debenture Holders and theCompany shall accordingly send the payment by RTGS transfer if so requested by the Debenture Holder atthe cost and expense of the Debenture Holder or by crossed cheque marked “ Account Payee only” to theregistered address of the Debenture Holder as may be furnished by the CDS and such payment shall bedeemed to be a payment duly made by the Company to the respective Debenture Holders in redemptionof the Debentures of such Holders. In order to accommodate the Debenture interest cycles in the DebtTrading System (DEX) the payment of interest shall not include Debenture holders holding Debentures inthe DEX on the Due Date of Interest but one day prior to the due date of interest (i.e. the entitlementdate). If the entitlement date is a holiday interest shall be calculated including the entitlement date.

4. (a) These Debentures shall be freely transferable and the registration of such transfer shall not besubject to any restrictions save and except to the extent required for compliance with statutoryrequirements.

(b) Upon a listing of these Debentures shall be transferable and transmittable through the CDS.Subject to the provisions contained herein the Company may register without assuming anyliability any transfer of Debentures, which are in accordance with the statutory requirements andrules and regulations in force for the time being as laid down by the CSE, SEC and CDS.

(c ) In the case of the death of a Debenture Holder the survivor where the deceased was a jointholder and the executors or administrators of the deceased or where the administration of theestate of the deceased is in law not compulsory the heirs of the deceased where such DebentureHolder was the sole or only surviving holder shall be the only persons recognized by theCompany as having any title to his/her Debentures.

(d) Any person becoming entitled to any Debenture in consequence of bankruptcy or winding up ofany Debenture Holder, upon producing proper evidence that he/she sustains the character inrespect of which he/she proposes to act or his/her title as the Board of Directors of the Companythinks sufficient may in the discretion of the Board be substituted and accordingly registered as aDebenture Holder in respect of such Debentures subject to the applicable laws rules andregulations of CDS, CSE and SEC.

5. No change of ownership in contravention of these conditions will be recognized by the Company. TheCompany shall only recognize and treat the registered Debenture Holder(s) as the owner hereof and asalone being entitled to receive and give effectual discharges for the monies hereby covered.

6. In the event of any inconsistency between the terms and conditions in this Debenture certificate and anyterm or condition of the said Trust Deed the terms or conditions in the said Trust Deed shall alwaysprevail.

singersrilankaplc - colombo stock exchange holds directorships in ndb capital ltd., bangladesh, bata...

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