contentsdisclosures were made by the company to the colombo stock exchange on 13th may 2014, 2nd...

ContentsGroup Financial Highlights 1Board of Directors - Profile 2-3Chairman’s Message 4-5Managing Director’s Review of the Operations 6-7Report of the Directors’ on the Affairs of the Company 8-11Report of The Audit Committee 12Report of the Remuneration Committee 13Product Portfolio 14-15Our Values 16New Initiatives 17Risk Management 18-19Corporate Governance 20-22Statement of Directors’ Responsibilities 23

Financial StatementsIndependent Auditors’ Report 26Consolidated Statement of Comprehensive Income 27Consolidated Statement of Financial Position 28Consolidated Statement of Changes In Equity 29-30Cash Flow Statement 31-32Notes to the Financial Statements 33-62

Supplementary Information Ten Year Summary 63Notice of Meeting 64Form of Proxy EnclosedCorporate Information Inner Back Cover

1Sierra Cables PLC • Annual Report 2013/14

Group Financial Highlights

For the year ended 31st March 2014 2013Rs. Rs.

Result for the Year

Revenue 2,284,934,549 2,141,353,995

Loss Before Tax (376,269,221) (20,005,638)

Loss After Tax (306,478,634) (24,561,745)

Position at the year End

Shareholders Funds 1,367,085,768 1,674,149,443

Total Assets 3,017,925,825 3,415,142,210

ROCE (13%) 7%

Current Ratio 1.24 : 1 1.54 : 1

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

Information Per Share (Rs.)

Earnings/(Loss) (0.54) (0.02)

Net Assets 2.52 3.08

Share Price

Lowest 1.60 2.00

Highest 2.70 3.70

Last Transaction 2.20 2.20


Board of Directors - Profile

W.A.P. PereraChairman

Mr. W.A.P. Perera is a founder Director of

Sierra Construction (Private) Limited and

serves as the Chairman of Sierra Cables

PLC. He has over 34 years experience in

the construction industry.

D.S. PandithaManaging Director/CEO

Mr. D.S. Panditha is the Managing Director

and Chief Executive Officer of Sierra Cables

PLC. He is a member of both the Institute

of Incorporated Engineers and the Institute

of Marketing (SL). He has over 37 years

of experience in the cable and plastic

industry.

G.S.M. IrugalbandaraMs. G.S.M. Irugalbandara was the Director

of Alucop Cables for last five years. She

has an MBA from the University of South

Queensland. She has been attached to

KPMG as a Tax Manager prior to joining

Alucop Cables. She now serves as an

Executive Director at Sierra Cables PLC.

D.N.N. LokugeMr. D.N.N. Lokuge is a founder Director of

Sierra Construction (Private) Limited with

34 years experience in the construction

industry.

J.H.P. RatnayekeMr. J.H.P. Ratnayeke is a Senior Corporate

Lawyer who is also the precedent partner

of Paul Ratnayeke Associates, a leading

firm in Sri Lanka which he founded in 1987

handling all areas of law and International

Legal Consultancy work. Mr. Ratnayeke is

a Solicitor of England and Wales and an

Attorney-at-Law of the Supreme Court

of Sri Lanka. He has been awarded a

Masters Degree in Law by the University

of London. Currently, Mr. Ratnayeke holds

directorships in 62 Companies of which 08

are Public Quoted Companies.

He has also been elected/appointed as

Chairman/Deputy Chairman to several of

these companies. He is also Chairman of

P.R. Secretarial Services (Pvt) Ltd.

E.A.D.T.B. PereraMr. E.A.D.T.B. Perera is a founder Director

of Sierra Construction (Private) Limited with

34 years experience in the construction

industry.

Dr. D.G.K.E. WeerapperumaDr. Kamal Weerapperuma is currently

the Managing Director of PE Consultancy

Services Ltd. and serves as Independent

Director of ACL Plastics, Plastishells

Limited, Arpico Plastics Limited, Arpico

Flexifoam (Pvt) Limited and RPC Polymers

(Pvt) Limited. He held positions of CEO/

Director of Delmege Forsyth Group,

Kelani Cables Ltd., Central Industries

Ltd., Executive Director, Haycarb Ltd. and

Research Fellow in Chemical Engineering,

Imperial College, University of London.

Dr. Weerapperuma served as consultant

to several Industries and Banks. Further,

he served on the Prime Ministers advisory

Committee on Power and Energy, and on

several public sector committees including

those in the Ministries of Science and

Technology, and in the Ministry of Industry.

He currently serves as an examiner/

scrutineer for Chartered Engineer (UK)

and Fellowship reviews of the Institute of

Materials, Mining, and Minerals (UK). In

addition, he serves on the Ethics review

committee of the Sri Lanka Medical

Association.

He holds a B.Sc. Degree from University

of Ceylon, M.Sc. and Ph.D. Degrees from

the UK. He is a Chartered Engineer (UK), a

Fellow of the Institute of Materials, Mining,

and Minerals (UK), and an Alumnus of

“Insead”, France.


Prof. A.K.W. JayawardaneProf. Jayawardane is the Vice-Chancellor

and Professor in Civil Engineering,

University of Moratuwa. He is an

academic, a researcher and consultant

with experience and expertise in teaching,

research and consultancy in the broad

areas of construction management,

project management and technology

management. He is having a BSc. Eng.in

Civil Engineering with first class honours,

University of Moratuwa and MSc. in

Construction, University of Technology,

United Kingdom. He is also a fellow

member of the Institution of Engineers

and founder member of the Society of

Structural Engineers and Institute of

Project Managers in Sri Lanka.

B.W.N. RupasingheMr. B.W.N. Rupasinghe holds a B.Sc. Degree

in Electrical & Electronics from University

of Peradeniya. Further has a M.Sc. Degree

in Electrical Power Transmission and

Distribution from Manchester Institute of

Science and Technology, UK with a MA.

Degree in Economics. He was the former

General Manager of Central Engineering

and Consultancy Bureau.

P.R. SaldinMr. Rimoe Saldin is a Fellow of the Institute

of Chartered Accountants of Sri Lanka. He

is also a Fellow of the Chartered Institute

of Management Accountants in the United

Kingdom and a Certified Management

Accountant, Australia. He is an Alumni of

the Asian Institute of Management, Manila.

He has over 21 years of experience at top

management level in the areas of Finance,

Human Resource Development, General

Management and Operations. Presently,

Mr. Saldin serves as the Group Chief

Operating Officer of the Browns Group of

Companies and Director/Chief Executive

Officer of Browns Investments PLC. He

also serves on the Board of Directors of a

number of listed and unlisted Companies.

He was previously, the Country Controller

for Royal Dutch Shell in Sri Lanka and

Finance Director of Shell Gas Lanka Ltd.

and Shell Terminal Lanka Ltd. Mr. Saldin,

also served as Group Finance Director and

Commercial Director of CIC Holdings PLC.

He also served on the Board of Directors of

number of listed and unlisted Companies

in the CIC Group.

Board of Directors - Profile


It gives me much pleasure to present to

you the Annual Report of the Company

and its Subsidiaries for the year ended

31st March 2014 and welcome you warmly

to the eleventh Annual General Meeting of

Sierra Cables PLC.

A Resilient EconomyThe state of the economy during the year

under review was indeed heartening.

GDP growth that had slowed in 2012

rebounded strongly to record 7.3% in

2013, compared to 6.3% in 2012, driven

mainly by the services sector that grew at a

robust 6.4% compared to 4.6% a year ago.

The industry sector expanded by 9.9%,

albeit somewhat slower than the previous

year due to slower growth in mining,

quarrying and construction. This sector

nonetheless continued to be the key driver

underpinning national economic growth.

It is noteworthy that per capita income

crossed the US$ 3,000 threshold this year.

Inflation meanwhile, trended downward,

averaging 6.9% in 2013 compared with

7.6% in 2012 and was contained at single

digits for the fifth successive year.

Export earnings picked up to 6.4% in

2013 in comparison with a contraction

of 7.4% last year, buoyed by improved

demand for garments and tea from major

export destinations. Import expenditure

contracted by 6.2% in 2013, mainly due to

lower fuel imports, the policies introduced

to rationalize imports and subdued

international commodity prices. Workers’

remittances meanwhile expanded by 13%

to reach US $6.8 billion in 2013. The trade

deficit narrowed by 19.2% to US$ 7,609

million in 2013 from US$ 9,417 million

in 2012. Moderate inflation and policies

to propel credit growth led to a softened

monetary stance that, together with the

excess rupee liquidity in the market,

provided the impetus for market interest

rates to tumble, as evidenced by the

AWPLR that declined sharply from 14.40%

in 2012 to 8.57% by end March 2014.

Post-conflict GDP growth has been

underpinned by strong growth in the

construction subsector that raised its share

of GDP from 6.6% in 2009 to 8.7% by 2013.

The construction subsector will continue

to drive growth in the future, given the

government’s commitment towards post-

conflict reconstruction, national integration

and infrastructure development. High

tourist arrivals that reached 1.27 million in

2013, a rise of 26.7%, signify the continuing

tourism boom and the healthy prospects

for tourism related infrastructure

development, including large hotels

and restaurants. We are hopeful that

opportunities associated with such large-

scale infrastructure development projects

will offer scope for own product range.

Operating ResultsDuring the year under review the Company

revenue grew by about 4% from Rs 2.05

billion a year ago to Rs 2.13 billion this

year, while Group revenue grew by 6.71%

from Rs 2.14 billion last year to Rs 2.28

billion this year. In tandem, our Company

gross profit rose by 1.41% this year, while

the Group gross profit rose by 4.06% this

year. In contrast however, the Company

reported a post-tax loss of Rs 270.0 million

this year, compared to a profit of Rs 15.1

million last year, while Group post-tax

losses increased from Rs 24.5 million in

2013 to Rs 306.4 million this year.

Operational performance this year was

undermined pursuant to the identification

of certain unrecorded transactions as well

as discrepancies between the physical

stock of inventory and recorded balances,

in relation to both prior and current

year. These unrecorded transactions and

discrepancies were quantified following a

report from the auditors. The current year’s

financial statements now incorporate

the unrecorded revenue, expenses

and assets, while a part of the value of

inventories and finished goods were

written-off. These adjustments triggered

“I am happy report that

we have in hand, a

major order surpassing Rs.1 billion,

which will contribute

significantly to our

growth plans”

Chairman’s Message


a considerable negative impact on the

current year’s reported results. Relevant

disclosures were made by the Company

to the Colombo Stock Exchange on 13th

May 2014, 2nd June 2014, 11th June 2014

and 11th July 2014, while the Company

has in the meantime, initiated action to

rectify and prevent such occurrences in

the future.

Of the two associate companies, T & G

Lanka (Pvt.) Limited, reported a profit of Rs

0.36 million in 2014 compared to a loss of

Rs. 5 million in 2013, while Tea Leaf Resort

Holdings (Pvt) Limited reported a loss of Rs

0.71 million this year compared to a loss

of Rs 0.05 million in 2013. Tea Leaf Resort

Holdings (Pvt) Limited is presently awaiting

approval from relevant authorities to

commence operations.

Of the two subsidiary companies, Sierra

Industries (Pvt.) Limited, the company

engaged in the manufacture of PVC pipes,

commenced commercial operations in

2012. However its operational results have

been hindered due to a delay in receiving

anticipated commercial orders for water

supply schemes from within the Group,

lower-than-forecast margins and the delay

in obtaining SLS standards for fittings.

Several measures were implemented to

arrest losses, including strengthening

the sales team and the debt collection

process. Sierra Power (Pvt.) Ltd, focused on

mini-hydro projects has commenced civil

construction work.

A Glimpse into the Year AheadWhilst our inherent strengths and

resilience enabled us to surmount

challenges, the disquieting occurrence

this year has strengthened our resolve

to fortify our internal control systems,

an aspect we have undertaken without

delay. Measures have been introduced to

tighten and improve internal processes as

well as our computerized systems so as to

augment our risk management framework.

Our Audit Committee closely reviews the

progress of the on-going investigation and

the implementation of remedial action.

Our approach to governance remains

focused on driving ethical values across

the organization.

I am happy report that we have in hand, a

major order surpassing Rs.1 billion, which

will contribute significantly to our growth

plans. The ensuing year will probably pose

its own share of challenges. Nonetheless,

the improved prognosis for infrastructure

development and national development

offers considerable business opportunities

for our diverse business segments. The

country’s growth plans to reach per capita

income of US$ 4,000 by 2015 and a US$

100 billion economy by 2016 is expected

to propel demand for reliable and efficient

power and communication cables and

wires in our market segments.

We remain mindful of our objective of

enhancing shareholder wealth and will

relentlessly pursue strategies to operate

as a strong, profitable, sustainable

organization.

AppreciationsAs always, I am sincerely grateful to

my fellow Directors for their invaluable

contribution, cooperation and guidance.

My deep appreciation is due to our

Managing Director and our team for their

dedicated, relentless efforts during a

turbulent year. Our bankers, customers

and business partners are always an

important part of our journey and I extend

my sincere thanks for their valuable

support and strong relationship with our

Company.

May I also take this opportunity to thank

our shareholders most sincerely, for their

understanding and steadfast support in

the midst of difficulties encountered this

year. I assure you of our continued passion

and commitment to take this Company to

greater heights.

Priyantha Perera Chairman

Colombo

22nd August, 2014

Chairman’s Message


Cable and wire form the mainstay of

the construction industry, the essential

conduits in the provision of power and

communication. In 2013 the construction

subsector grew by 14.4% compared to a

21.6% growth in 2012. Building material

imports rose by 11.9% in 2013. Credit

granted by banks to the private sector

for construction activities increased by

16.6%, while credit granted for housing

development grew by 9.1%, reflecting

private sector participation in the

construction of hotels, condominiums and

housing units. Rising raw material costs,

however, brought about an increase in the

cost of construction, which rose by 7.2% in

2013.

Nevertheless, the PVC cable industry has

been beleaguered with over capacity, as

manufacturers were prone to enhance

capacity given the high anticipation of

post-conflict demand, which lamentably,

has as yet, failed to materialize. Against

this backdrop, we have been extremely

cautious to avoid the pitfalls associated

with lowering selling prices, as sometimes

witnessed in the market as the industry

grapples with intense competition, over-

capacity and low profitability.

The Year in FocusOur performance this year is a mixed

reflection of external challenges, internal

achievements and an unexpected setback.

Top line growth was evidenced as the

revenue of the Company improved from

Rs 2.05 billion last year to Rs 2.13 billion

this year, reflecting an increase of 4%.

Group revenue rose by 6.7% from Rs 2.14

billion to Rs 2.28 billion this year. Growth

in turnover was largely attributable to the

expansion in overseas markets as reflected

in export sales which grew by 129.4% from

Rs 6.6 million last year to Rs 15.1 million

this year.

0

500

1000

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20142013201220112010

Rs. Mn

REVENUE

The Company benefited from falling raw

material prices, in particular copper LME

prices that declined from an average US$/

PMT 7,951 a year ago to US$/PMT 7,326

this year. A stable exchange rate that

prevailed over much of 2013, with the

rupee depreciating by just 2.75% against

the dollar, from Rs/US$ 127.16 in 2012

to Rs/US$ 130.75 in 2013, which further

boosted corporate performance.

The above gains are reflected in the Gross

Profit of the Company, which rose by

1.41% from Rs 298.8 million a year ago

to Rs 303.0 million this year, while Gross

profit of the Group increased by 4.06%

from Rs 305.0 million last year to Rs 317.4

million this year.

In tandem with the benign interest rate

regime fostered by the Central Bank of

Sri Lanka in order to accelerate credit

growth in the country, finance costs of the

Company at Rs 145.9 million reflected a

decline of 9.9% over the finance costs of Rs

161.9 million reported a year ago. Group

finance costs declined by 6.2% to Rs 176.0

million this year against Rs 187.7 million

last year.

Our plans for profitability, however, was

impeded and the operational results

we post this year have been skewed by

the inclusion in the financial statements

of certain adjustments relating to prior

years and current year, which have been

discussed by the Chairman in his message

to shareholders. These adjustments

were made consequent to identifying

and incorporating in this year’s financial

statements, certain transactions with

regard to revenue, other income, expenses

and assets that were not recorded in

the general ledger and in the financial

statements of the Company during prior

years and current year.

The Company’s current year’s financial

statements therefore incorporate

adjustments pertaining to revenue,

expenses and assets unrecorded in prior

years amounting to Rs 113 million and

write down of inventory and finished

goods amounting to Rs 220 million, which

together with the impairment provisions

made by the Company in respect of trade

and other receivables and investment

in subsidiaries aggregating Rs 53 million

have exerted downward pressure on the

bottom-line. As a result the Company

reported a post-tax loss of Rs.270.0 million

this year compared to a profit of Rs.15.1

million a year ago, while Group post-

tax losses increased to Rs.306.4 million

compared to a loss of Rs.24.5 million last

year.

During the year under review, the company

disposed one of the two apartments it

owns in Fairfield Residencies, situated in

Colombo 8, at a price of Rs.15 million.

Managing Director’s Review of the Operations


New Product OfferingWith the country on a growth trajectory,

there is much anticipation for tourist

arrivals and growth in local per capita

income. Increased demand is anticipated

in the construction of hotels, diners and

cafeterias, housing, apartment complexes

and high rise buildings. Given the increased

awareness of public safety measures,

greater focus is directed at installing

materials that are non-hazardous to the

public in case of fire.

As part of our product innovation, we

ventured into the manufacture and

marketing of our latest product offering,

the Low Smoke Halogen Free (LSHF) Cable,

during this year. These cables reduce the

amount of toxic and corrosive gas emitted

during combustion through special

features pertaining to halogen content, low

smoke density and flame propagation that

ensures safety during fire.

We will shortly supplement our portfolio

of wire and cables by developing and

marketing fire resistant cables. Customers

of this product will benefit from flexibility,

resistance to high temperatures and

combustion, with low smoke and toxic gas

emission.

Plans for Subsidiary CompaniesThe Company made investments in Sierra

Industries (Pvt) Ltd and Sierra Power

(Pvt) Ltd with the objective of broad-

basing revenue sources, given the high

competition and diminishing margins

associated with traditional wires and

cables. These investments however,

involve longer gestation period due to the

very nature of operations.

Sales of PVC pipes the main product of

Sierra Industries Ltd were constrained

during the year under review by a delay

in obtaining certification for fittings. Pipes

and fittings are usually sold together. We

were awarded SLS 659 for uPVC Fittings

in May 2014 and ISO 9001:2008 Quality

management system certificate for fittings

in June 2014, as a result of which, we are

now geared to penetrate the market and

achieve the required target.

Sierra Power (Pvt.) Ltd on the other has

received required approvals and we have

commenced civil construction works.

Head Race Channel has been initiated

and almost 90% of the weir construction

has been completed. Meantime, the

addendum for SPPA was signed in March

2014 with a new tariff structure which will

yield greater benefit for the subsidiary.

Promising OutlookThe country is placed on the threshold of

economic prosperity. We are encouraged

that the government is not only focused

on mega-scale infrastructure projects but

also on housing and building construction,

essential market segments for our

company.

Our critical focus rests on operating a

viable, thriving business model, towards

which end we have reinforced our internal

control measures and reviewed and

strengthened processes and reporting

mechanisms including information

technology. We are poised to enter a year

of growth, given several orders in hand.

Managing Director’s Review of the Operations

AppreciationsBefore concluding I would like to express

my sincere thanks to my Chairman and

members of the Board for their guidance

and support. Our staff, as always, rallied

around to deliver their best in a difficult

year and I thank them warmly for their

resilience. My grateful thanks to our

customers and suppliers for their loyal

patronage and trust and to all our other

stakeholders whose relationships we truly

treasure.

D. Shamendra PandithaManaging Director

Colombo

22nd August, 2014


The Board of Directors of Sierra Cables PLC

are pleased to present their Report on the

affairs of the Company together with the

Audited Financial Statements for the year

ended 31st March 2014.

Principal ActivitiesThe principal activities of the Company are

the manufacturing and sale of cables, wires

and conductors primarily for electrification

and telecommunication purposes. Of the

two subsidiaries, Sierra Power (Private) Ltd.

has commenced civil construction work to

engage in power generation to the national

grid, while Sierra Industries (Private) Ltd.

is engaged in the manufacturing of uPVC

pipes and fittings. The two associate

companies T & G Lanka (Private) Ltd. and

Tea Leaf Resort (Private) Ltd. are diversified

into manufacturing of Patch Cables and

the Leisure Sector, respectively.

Review of OperationsA review of the Company’s business and

its performance during the financial year

is contained in the Chairman’s Message

on pages 4, 5 and in the Managing

Director’s Report on pages 6 & 7 of this

Annual Report. Together with the Financial

Statements, these reports reflect the state

of affairs of the Company.

RevenueThe revenue of the Group for the year

amounted to Rs 2,284.93 million compared

to Rs 2,141.35 million in 2012/13.

Results and AppropriationsThe Group made a Loss before Taxation

of Rs 376.26 million compared to a Loss

before Taxation of Rs 20.00 million in

2012/13. The detailed results are given in

the Statement of Comprehensive Income

on page 27.

Financial StatementsThe Financial Statements of the Company

are given on pages 27 to 62.

Significant Accounting PoliciesThe significant accounting policies

adopted in the preparation of the financial

statements are given on pages 33 to 39

Changes in accounting policies made

during the accounting period is described

under Note 2.5 to the Financial Statements.

Auditors’ ReportThe Independent Auditors Report on the

Financial Statements is given on page 26.

Group Company

2014 2013 2014 2013For the year ended 31st March Rs. Rs. Rs. Rs.

Revenue 2,284,934,549 2,141,353,995 2,137,572,003 2,055,318,338

Cost of Sales (1,967,488,040) (1,836,300,771) (1,834,518,102) (1,756,473,539)

Gross Profit 317,446,509 305,053,224 303,053,901 298,844,799

Other Income 39,705,634 6,137,840 39,705,634 6,137,840

Selling and Distribution Expenses (146,149,660) (103,030,304) (145,212,139) (88,436,991)

Administrative Expenses (146,979,750) (67,271,954) (141,289,774) (64,211,117)

Other Operating Expenses (272,616,893) (2,515,236) (272,616,894) (2,515,236)

Profit/(Loss) from Operations (208,594,160) 138,373,570 (216,359,272) 149,819,295

Net Finance Costs (167,578,713) (158,354,069) (137,248,148) (132,932,082)

Profit/(Loss) Before Associate Companies’ Share of Loss

(376,172,873) (19,980,499) (353,607,420) 16,887,213

Share of Loss of associate companies (96,348) (25,139) - -

Profit/(Loss) Before Taxation (376,269,221) (20,005,638) (353,607,420) 16,887,213

Income Tax Expense 69,790,587 (4,556,107) 83,541,215 (1,740,666)

Profit/(Loss) for the year (306,478,634) (24,561,745) (270,066,205) 15,146,547

Other Comprehensive Income/(Expense)

Net change in fair value of available-for-sale Investments (7,272,588) (9,853,492) (7,272,588) (9,853,492)

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

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

Actuarial Gain/(Loss) on Defined Benefit Obligation Net of Tax (2,312,453) 1,380,312 (2,114,672) 1,380,312

Other Comprehensive Income/(Expense) for the Year, Net of Income Tax (9,585,041) 324,465,752 (9,387,260) 324,465,752

Total Comprehensive Income/(Expense) for the year (316,063,675) 299,904,007 (279,453,465) 339,612,299

Profit/(Loss) Attributable to:

Owners of the Company (290,881,814) (12,693,539) (270,066,205) 15,146,547

Non - Controlling Interests (15,596,820) (11,868,206) - -

(306,478,634) (24,561,745) (270,066,205) 15,146,547

Total Comprehensive Income/(Expense) attributable to:

Owners of the Company (300,400,357) 311,772,213 (279,453,465) 339,612,299

Non-Controlling Interests (15,663,318) (11,868,206) - -

(316,063,675) 299,904,007 (279,453,465) 339,612,299

Basic Earnings/(Loss) Per Share (0.54) (0.02) (0.50) 0.03

Report of the Directors’ on the Affairs of the Company


Corporate DonationsNo donations were made by the Company

during the year under review.

Property Plant & EquipmentDetails of the Property, Plant and

Equipment of the Company and the

Group is set out in Note 11 to the Financial

Statements on pages 44, 45 & 46. Extents,

locations and valuations of the properties

of the Group are given in Note 11.3 to the

Financial Statements on page 46.

InvestmentsDetails of Investments held by the

Company are disclosed in Notes 14 to16

the Financial Statements on pages 47 & 48.

Stated CapitalThe stated capital of the Company as at

31st March 2014 was Rs.894.56 million

and is represented by 537,512,430 issued

and fully paid Ordinary Shares. There was

no change in the stated capital during the

year.

ReservesThe Group’s retained earnings and other

reserves as at 31st March 2014 amounted

to Rs 461 million. Movement of the

reserves are given in the Statement of

Changes in Equity on pages 29 & 30 of the

Financial Statements.

DirectorateThe names of the Directors who held office

during the financial year and who are

currently in office are listed below. Brief

profiles of the directors are given on pages

2 & 3.

Mr. W.A.P. PereraChairmanNon-Executive Director

Mr. D.N.N. LokugeNon-Executive Director and Alternate Director to D.S. Panditha

Mr. E.A.D.T.B. PereraNon-Executive Director

Mr. D.S. PandithaExecutive Director

Mr. J.H.P. RatnayekeNon-Executive Independent Director

No of Shares

As at 31.03.2014 As at 31.03.2013

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

Mr. D.S.Panditha 17,022,950 17,022,050

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

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

Mr. D.N.N. Lokuge 100,010 10

Mr. J.H.P.Ratnayeke Nil Nil

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

Mr. P.R. Saldin Nil Nil

Prof. A.K.W. Jayawardane Nil Nil

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

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

Eng. B.W.N. Rupasinghe Nil Nil

Dr. D.G.K.E. WeerapperumaNon-Executive Independent Director

Ms. G.S.M. IrugalbandaraExecutive Director

Eng. B.W.N. RupasingheNon-Executive Independent Director

Prof. A.K.W. JayawardaneNon-Executive Independent Director

Mr. P.R. SaldinNon-Executive Director

Mr. F.A.W. IrugalbandaraAlternate Director to W.A.P. Perera

Ms. K.A. SuraweeraAlternate Director to E.A.D.T.B. Perera

Retirement by RotationMr. W.A.P. Perera, Mr. D.N.N. Lokuge

and Mr. J.H.P. Ratnayeke will retire at

the Annual General Meeting in terms of

Article 91 of the Articles of Association and

being eligible, will offer themselves for

re-election.

Directors’ Interest RegisterThe Company maintains an Interest

Register in terms of the Companies Act

No. 7 of 2007. The Directors have made

declarations and disclosed their interests to

the Board and those interests are recorded

in the interests register as provided for in

Section 192(2) of the Companies Act No. 7

of 2007.

Directors’ Remuneration and Other BenefitsDirectors’ remuneration in respect of the

Company for the financial year 2013/14 is

given in Note 7 to the Financial Statements

on page 40.

Corporate GovernanceThe Directors confirm that the Company is

in compliance with the rules on Corporate

Governance contained in the Listing Rules

of the Colombo Stock Exchange. Corporate

governance practices adopted by the

Company in respect of the management of

the Company is given on pages 20 to 22.

Board Sub CommitteesThe Board has appointed Board Sub-

Committees to assist the Board to ensure

oversight and control over specific affairs

of the Company.

Audit Committee comprises of

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

Prof. A.K.W. Jayawardane

Mr. P.R. Saldin

Eng. B.W.N. Rupasinghe

Remuneration Committee comprises of






AuditorsThe Financial Statements of the Company

for the year have been audited by KPMG,

Chartered Accountants, the retiring

auditors, who have expressed their

willingness to continue as auditors of the

Company and who are recommended

by the directors for re-appointment. A

resolution relating to their re-appointment

and authorizing the Directors to determine

their remuneration will be proposed at the

forthcoming Annual General Meeting.

The Auditors, KPMG, were paid

Rs.700,000/- (2012/2013 - Rs.630,000/-) as

Audit Fees by the Company. In addition,

they were paid Rs.327,794/- (2012/2013 –

Rs.383,853/-) by the Company for audit

related services.

As far as the Directors are aware the

Auditors do not have any relationship

(other than that of an Auditor) with the

Company other than those disclosed

above. The Auditors do not have any

interest in the Company.

Shareholding and Share InformationThe Company had 23,783 registered

shareholders as at 31st March 2014. The

distribution and analysis of shareholding,

the holding of the 20 largest shareholders,

Directors and Chief Executive Officer’s

shareholding, public holding percentage

as well as information relating to earnings,

net assets per share and share trading is

given on pages 1, 9, 10 & 11.

List of Directors of Subsidiaries and Associate Companies

SubsidiariesSierra Power (Private) Ltd.

Mr. W.A.P.Perera

Mr. D.S. Panditha

Ms. G. S. M. Irugalbandara

Prof. A. Senaratne

Sierra Industries (Private) Ltd.

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

Mr. W.A.P.Perera

Mr. D. S. Panditha

Associate CompaniesT & G Lanka (Private) Ltd.

Mr. O. M. Grimsgaard

Mr. M. Grimsgaard

Mr. D. S. Panditha

Mr. A. D.M.M.L.S.Madappulli

Tea Leaf Resort (Private) Ltd

Mr. W. A. P.Perera

Mr. G.A.Aloysius

Mr. D.S.Panditha

Mr. D.S.K.Amarasekara

Mr. J.M.S.De Mel

Mr. N.M.Prakash

Mr. G. J Alosius

Statutory PaymentsThe Directors, to the best of their knowledge

and belief, are satisfied that all statutory

payments due to relevant authorities have

been made by the Company.

Events Occurring after the Reporting DateNo circumstances have arisen since the

reporting date, which require adjustments

to or disclosure in the accounts.

Capital CommitmentsThere were no material capital

commitments as at the reporting date.

Contingent LiabilitiesThere were no material contingent

liabilities as at the reporting date which

require adjustments to or disclosure in the


Going ConcernThe Directors having made an assessment

of the Company’s operating conditions,

financial position, risks and future

prospects, have a reasonable expectation

that the Company has adequate resources

to continue its operations as a going

concern in the foreseeable future.

RESIDENT NON -RESIDENT

Number ofShareholders No of Shares (%) Number of

Shareholders No. of Shares (%)

1 - 1000 14,972 13,939,959 2.59 9 6,400 0.00

1001 - 10,000 7,418 18,177,614 3.38 17 89,800 0.02

10,001 - 100,000 1,134 36,048,676 6.71 16 715,054 0.13

100,001 - 1000,000 189 51,921,867 9.66 4 2,400,000 0.45

Over - 1,000,000 23 410,613,060 76.39 1 3,600,000 0.67

Total 23,736 530,701,176 98.73 47 68,11,254 1.27

Analysis of Shareholders

Number ofShareholders No. of Shares (%)

Resident 23,736 530,701,176 98.73

Non-Resident 47 6,811,254 1.27

Total 23,783 537,512,430 100.00

Analysis of Shareholders

Number ofShareholders No. of Shares (%)

Individual 23,446 143,990,321 26.79

Institutional 337 393,522,109 73.21

Total 23,783 537,512,430 100.00



Name of Shareholder No. of Shares31-03-2014

% ofIssued Capital

No. of Shares31-03-2013

% ofIssued Capital

1 Sierra Holdings (Private) Limited 312,335,490 58.11 312,335,490 58.11

2 Browns Investments PLC 32,210,943 5.99 32,210,943 5.99

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

4 Employees’ Provident Fund 8,113,032 1.51 8,113,032 1.51

5 Seylan Bank PLC 5,495,149 1.02 7,585,000 1.41

6 Mr. Abeyratna Banda Sarath Herath 5,000,000 0.93 5,000,000 0.93

7 Mr. Wahalathanthrige Anil Priyantha Perera 3,920,510 0.73 3,920,510 0.73

8 Mr. Tranz Dominion, L.L.C 3,600,000 0.67 3,500,000 0.65

9 Mr. Wickramasinghe Arachchige Kassapa Dewamitta Saparamadu 3,488,000 0.65 3,488,000 0.65

10 Nuwara Eliya Property Developers (Private) Limited 2,767,200 0.51 2,841,000 0.53

11 Mr. Munidasa Ilamperuma 2,150,000 0.40 2,050,000 0.38

12 Nexus Nubart Holdings (Private) Limited 2,000,000 0.37 2,000,000 0.37

13 Seylan Bank PLC/Arc Capital (Private) Limited 1,905,549 0.35 - -

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

15 Ms. Genevive Sujivie Madhuni Irugalbandara 1,709,800 0.32 1,709,800 0.32

16 Mr. Rajinda Goonewardene Seneviratne 1,423,600 0.26 1,423,600 0.26

17 Dr. Abdul Rahuman Mohamed 1,284,073 0.24 - -

18 Dee Sanda Holdings (Private) Limited 1,260,172 0.23 - -

19 Mrs. Kalanie Sandya Rangedara 1,248,000 0.23 - -

20 Seylan Bank PLC/Priyani Dharshini Ratnagopal 1,219,600 0.23 - -

Total 409,954,068 76.27 - -

SecretariesP.R. SECRETARIAL SERVICES (PRIVATE) LIMITEDColombo

Priyantha Perera D.S. PandithaDirector Director

22nd August, 2014



Role of the CommitteeThe role of the Audit committee which

reports its findings to the Board, is to

ensure the integrity of the financial

reporting of the Company, internal and

external audit processes of the Company

and the maintenance of sound internal

control and risk management of the

Company and it’s compliance with legal

and regulatory requirements.

The Audit Committee, appointed by and

responsible to the Board of Directors,

comprises of 03 Independent Non-

Executive Directors and one Non-Executive

Director, during the said financial year

2013/14 Ms. G.S.M. Irugalbandara acted

as Secretary. All Non-Executive Directors

satisfy the criteria for independence as

specified in the Standards on Corporate

Governance for listed Companies issued

by the Securities & Exchange Commission

of Sri Lanka.

The members of the Audit Committee

are:-

Dr. Kamal Weerapperuma(Chairman) – Independent Non-Executive Director

Mr. P.R. SaldinNon-Executive Director

Mr. Nimal RupasingheIndependent Non-Executive Director

Prof. Ananda JayawardhenaIndependent Non-Executive Director

The Chief Executive Officer/Managing

Director, Finance Director and Group Chief

Financial Officer attend all meetings of the

Committee by invitation.

The Audit Committee meetings were held

five times during the year under review

and also met on four occasions after 31st

March 2014 up to 15th July 2014.

Duties and Responsibilities

Audit

1. Recommends to the Board of the

appointment and removal of external

auditors and review their terms of

engagement.

2. Determines with the external auditors,

the audit plan and scope and their

authority and responsibilities.

3. Oversees and appraises the quality of

audits conducted and monitors their

effectiveness.

4. Reviews external audit reports and

recommendations and ensures

appropriate management response to

recommendations.

5. Monitors the relationship between

management and the external

auditors.

6. Reviews and assesses the

independence of the external auditor.

Accounting1. Identifies and assesses areas of risks

which might impact on the company

and research appropriate mitigations.

2. Monitors and review the adequacy of

the company’s accounting system and

internal control environment.

3. Reviews the annual and quarterly

financial statements of the company,

and make recommendations to the

board.

4. Determines company - specific

accounting policies within the ambit of

the accounting standards.

5. Reviews significant transactions which

are not a normal part of the company’s

business.

Risk Management1. Monitors, reviews and evaluates the

adequacy and effectiveness of the

company’s risk management controls,

both internally and externally.

2. Evaluates the effectiveness of the

company’s business continuity plans.

3. Evaluates the adequacy of the

company’s insurance covers at least

annually.

The Audit Committee has recommended to

the Board of Directors that Messrs KPMG,

be appointed as Auditors for the financial

year ending 31st March, 2015 subject to

the approval of the shareholders at the

next annual general meeting.

As advised by the announcement of 12th

May 2014, the Board of Directors of Sierra

Cables PLC informed the Colombo Stock

Exchange that there had been significant

misstatements in the financial statements

of the Company in 2010/2011, 2011/2012,

2012/2013 and 2013/2014. The Board of

Directors then commissioned an inquiry by

Auditors to investigate the discrepancy and

also commissioned a forensic investigation

into the matter. The shareholders were

updated on the states of the matter

referred to above, by the Company’s

announcements to the Colombo Stock

Exchange dated 3rd June 2014, 11th June

2014 and 11th July 2014.

Based on the relevant reports and further

investigations carried out, the financial

statements of the company were prepared

and audit was completed. Steps have been

taken to tighten and improve the processes

and computerized systems within the

Company. The Audit Committee has been

reviewing the progress of the investigation

and remedial actions closely.

The required changes arising out of the

investigations were made in the financial

statements for the year ended 31st March

2014.

Dr. D.G.K.E. WeerapperumaChairman

Audit Committee

22nd August, 2014

Report of The Audit Committee


The same Remuneration Committee

appointed for the year 2012/2013

continued to function for 2013/2014. The

Committee consists of three Non-Executive

Independent Directors as follows:




The main function of the Remuneration

Committee during the year 2013/2014

was to provide policy advice with regard to

remuneration of Directors and Executive

Staff.

Dr. D.G.K.E. WeerapperumaChairman

Remuneration Committee

22nd August, 2014

Report of the Remuneration Committee


Armoured Cables

Copper conductors insulated with PVC or XLPE, steel wire armoured

and PVC sheathed, with a voltage rating of 600/1000v. Utilised for the

distribution of electricity within factories and buildings, manufactured

to BS 6346 and BS 5467 standards.

LSHF (Low Smoke Halogen Free) Armourd Power Cables

LV cables with LSZH, thermosetting insulation which under exposure

of to fire generate low emission of smoke, fumes and toxic gasses

and zero halogens. Commonly use in places where there are lot of

environmental hazard including fire.

Earth Cables

Solid, stranded or flexible copper conductors with PVC insulation,

non sheathed with a voltage rating of 450/750v. Single-core Earth

conductors used as general-purpose cables manufactured to BS 6004

and SLS 733 standards.

Aerial Bundle Conductors

Aerial Bundle Conductors are self-supporting insulated cables used for low-

voltage electricity distribution. Comprise of three phase conductors (aluminium)

and a neutral conductor (alloy aluminium) bundled together with or without

street lamp wires. The neutral conductor also acts as a messenger or a load

bearer. Manufactured to National French standard NFC 33:209.

LSHF (Low Smoke Halogen Free) Unarmoured Power Cables

LV cables with LSZH, thermosetting insulation which under exposure of

to fire generate slow emission of smoke, fumes and toxic gasses and

zero halogens. The unarmoured cables often lay in places where there

are higher threats of fire.

Control Cables

Control Cables with copper conductors, with PVC insulation and sheathing or with PVC

insulation and sheathing and added steel wire armouring. Manufactured according to BS

6346 specifications with a voltage rating of 600/1000v, utilized for transmissions to control

units in industry, railways, traffic signals, thermal power and hydro power systems.

Flexible Cables

PVC insulated and sheathed flexible cables with a voltage rating of

300/300v and 300/500v, used as general-purpose cables. Manufactured

to BS 6500 and SLS 1143 standards.

Product Portfolio


Aluminium Conductors (AAC & ACSR)

All Aluminium Conductors (AAC) and Aluminium Conductors Steel

Reinforced (ACSR), used for low, medium and high-voltage electricity

transmission and distribution. Manufactured to SLS 750, BS 215 (Parts I

& II) and ASTM standards.

Co-axial Cables

Annealed copper conductors with polyethylene insulated and copper

braided co-axial cables, used as television antenna wires. Manufactured

to JIS standards.

Single & Multi-Core Unarmoured Cables

Solid or stranded copper conductors with PVC insulation and sheathing,

with a voltage rating of 300/500v, 450/750v. Utilised for in-house wiring

distribution of electricity within buildings and factories. Manufactured

to BS 6004 and SLS 733 standards.

Telecommunication Cables

PVC insulated, self-supporting one-pair dropwire and polyethylene

insulated copper conductors used as telecommunication distribution

cables. Manufactured to BS 3573 and SLT standards.

Unarmoured Cables (Multi-Core)

Copper conductors insulated with PVC or XLPE and PVC sheathed, with

a voltage rating of 600/1000v. Utilised for the distribution of electricity

within factories and buildings, manufactured to BS 6346 and BS 5467

standards.

Auto Cables

All Copper Conductors PVC insulated single-core auto cables, used in

motor vehicles and also for general wiring.

Aluminium/PVC Cables

PVC insulated aluminum service main-wire with a voltage rating of

300/500v. Single-core, twin and flat-twin cables manufactured to BS

6004 and CEB specifications.

Product Portfolio


As a responsible and ethical corporate citizen, Sierra Cables PLC carries out its business based on set of values, where each member of Sierra Cables family is committed to follow.

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

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

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

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

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

Our Values


uPVC FittingsAs s part of the ongoing initiative strategy,

Sierra industries (Pvt) Ltd, a booming

subsidiary company of Sierra Cables,

started manufacturing uPVC fittings aiming

to increase market share of uPVC Pipes

since both products can be sold together.

Further, SLS 659 certificate was obtained in

May 2014.

Karapalagama Mini Hydro ProjectThe civil construction of the Mini Hydro Power Plant which is located

in Walapane, Nuwara Eliya District, has been commenced. Weir

construction along with 80% of work of access road to the Power House

and 10% of civil work of Head Race Channel has also been completed.

Since Company uses European origin machinery and aims to uplift the

livelihood of villagers in remote areas of Walapane, 1/3 of machinery

cost is to be received from Belgium Government as a grant.

New Initiatives


The corporate world is inevitably

comprised with many risks.

They are the possibilities of failure that

can make or break an organization. The

extent to which we are exposed to risk

determines the extent of the return we get

compensated. High exposure to risk gives

high return for the company and vice versa.

However, this is only a general rule and

that is where the vitality of a competent

management is arisen for the purpose of

managing the risk at exceptional times.

Risk management is about identifying risks,

developing solutions to overcome them

and implementing strategies to reduce the

impact. It gives special consideration for

the experience possessed by the persons

involved since the relative importance

of a risk can be elaborated by highly

experienced persons.

The risk management of the company is

based on the level of risk appetite.

At Sierra Cables our appetite is neither low

nor high but moderate or more often above

the moderate level. This has enabled us to

accept the right level of risk suitable for the

company avoiding unnecessary risk that

could hinder the future of the company.

Therefore risk management is a smooth

process implemented by the company.

Sierra Cables Risk Management ProcessIt is required to identify possible risks in the

environment and in the company from time

to time. This will form a proactive mindset

in the company amongst its members at

any level. Thus the identification will involve

the contributions from all employees. The

top management that plays a main role in

the risk management will commence its

activities from this point onwards looking

at issues with a broader perspective.

The next step is to analyze the risks and

prioritize them accordingly. This is vital

when we operate in a highly volatile

environment as our resources need to be

ready at any given time for the purpose.

Mostly it is the top management that takes

the initiative at this point clearing the path

of the company for future objectives and

goals. However, in the planning stage the

middle level managers who are experts

in various fields take part to form a better

plan. Their ideas together with experience

will support to develop an action plan on

how to face the future risks and take the

action suitably.

The action taken for risks can be threefold.

They are acceptance, avoidance and

mitigation. The finalized action plan will

now be implemented concentrating on

taking any of the three actions specified

above. It is not easy to implement if the

planning has not been done well.

Similarly the implementation demonstrates

the quality of the previous stages of the

risk management process.

The final step is crucial if we are to reap

the benefits of risk management because

it guarantees the implementation taking

place according to the planned manner.

At the same time controlling and monitoring

stage also considers environmental

changes to ensure the actions taken are

complied according to the timely needs.

PLANNING

IMPLEMENTING

CONTROLLING &MONITORING

IDENTIFYINGRISKS

ANALYSING &PRIORITIESTHE RISKS

Risk

Man

agem

ent

Fram

ewor

k

Risk Management


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

Financial Risk

C Liquidity.

C Interest rates.

C Exchange rates.

C Credit collection.

C Main impact is on the working capital and

profitability where as the sustainability of

the company is affected.

C Monthly meetings with sales

Representatives to review on debt

collection. Positive relationships with

financial institutions in order to obtain

lucrative rates.

C A separate method to assess the potential

of customers in terms of their credit

worthiness.

C Agreeing for call options.

C Looking for supplier credit to mitigate

costly fluctuations in local interest rates.

Business Risk

C Market Risk. C Price changes can directly impact on the

profit.

C When setting prices it is possible to match

with raw material prices.

C Setting sales targets considering

company’s potential.

C Having a thorough idea on the trends in

the market.

Operational Risk

C Health & safety of employees.

C Changes in environmental, international

quality standards & regulatory

environment.

C Impact on employees personal and work

life.

C Future existence of the business.

C Employee performance evaluation

scheme.

C Good relationships with employees

through the activities of the employee

welfare society.

C Providing training on industrial safety.

C Obtaining the ISO 9001:2000 standard.

C Obtaining the ISO 14001 standard.

C Obtaining the OHSAS Certificate

Product Risk

C Customer satisfaction.

C Cost effectiveness.

C Decline in market share. C Maintaining SLS standard.

C Bidding with competitive prices.

C Proper testing to identify quality defects.

C Production planning on monthly basis.

Information Risk

C Timely & accurate information for

decision making.

C Systems operation & application.

C Lack of accurate and timely decision

making.

C Use of an ERP system for timely decision

making.

C Data backup procedure.

C Agreements with IT vendors for support

and maintenance.

C Regular upgrading of the systems.

Risk Management


Sierra Cables is a company which is highly

concentrated on the corporate governance

aspect. Company is highly appreciates

and believes responsibilities and activities

of a good corporate citizen. Company

maintains a higher transparency in each

and every activity it undertakes with the

government and with the rest of the public.

From the day it was listed, the Board of

Directors understanding the importance of

governance took steps to adhere to various

guidelines. Specifically this includes the

guidelines issued by regulatory bodies and

legislation of the country such as institute

of Chartered Accountants of Sri Lanka,

Securities & Exchange Commission and the

Companies Act of 2007.

The acts of the board are transparent

and they are bounded by the directives

issued by the CSE, regarding governance

of companies. The board is appointed

annually by the shareholders and the

board seeks to achieve the objectives

of the company on behalf of them. Lack

of communication between the parties

can lead to problems. Such that this

concept was developed to ensure a good

relationship between the shareholders,

board of directors, the management and

other stakeholders. Also at all times the

board is obliged to act in the best interest

of the company and there by enhance the

shareholders’ wealth.

When the management takes part in

governance in a responsible way it will

provide a fundamental background for

sound decision making and performance

of the company. With this in mind

the board always strikes a balance

on the two dimensions, conformance

and performance. Otherwise lack of

concentration on either can yield a wrong

doing from both aspects. Therefore, we

believe that we have maintained the

right level of governance while achieving

the highest possible profit. Sierra Cables

corporate governance framework can be

demonstrated as follows.

The Board BalanceThe responsibility of the Board of Directors

is to operate the company by acting in a

manner that reflects the best interest of the

company. Ten Directors were appointed

as the Board of Directors. Out of the ten,

eight are Non-Executive Directors. Four

out of the eight Non-Executive Directors

are Independent Directors. All directors

are veterans in their fields such as

engineering, law, construction, marketing,

finance and public administration. Their

years of experiences are the reason for the

continual success of the company.

Despite the varying levels of shareholding

possessed by the directors, equality is a

major fact that is prevalent at all times in

the board. It is not compromised with the

dominance of one or group of directors

when decision making comes.

Chairman and Managing Director/ Chief Executive OfficerThe Board is lead by the Chairman who

is also a Non-Executive Director. The

Chairman’s leadership will take the

company to unattainable heights with

high strands of efficiency, effectiveness

and professionalism. In an ever changing

environment such a leadership is the

core on directing and controlling the

organization for better performance.

The MD/CEO on the other hand

handles a totally different set of duties

and responsibilities. The MD/CEO will

contemplate on improving the shareholder

value by formulating strategy, evaluating

its viability and implementing them to

reach for the desired purposes.

Board MeetingsBoard meetings are scheduled to be held

every two months. In these meetings

the board considers the performance

of the company from many angles.

The monthly financial performance,

selling and distribution, key projects,

investment opportunities, key risks faced,

appointments, etc. are some of the areas

thoroughly considered. This is also one

of the main controlling techniques of the

board.

Responsibilities of the BoardThe Board is responsible for

1. Enhancing shareholder wealth.

2. Planning and guiding the business

towards meeting the set objectives.

3. Ensuring the interests of all

stakeholders is considered in

corporate decisions.

4. Formulating, communicating, and

monitoring business policies, overall

strategies and corporate goals to

ensure sustained growth.

5. Assessing and approving the

implementation of management and

internal control systems.

6. Ensuring the compliance with all

statutory and other obligations being

met.

Audit CommitteeThe Audit Committee mainly looks at

legal and financial compliance of the

company. Both these areas will cover the

accounting practices, financial control, risk

management, etc. In order to look into

these matters responsibly the board has

appointed four Non-Executive Directors

out of which three are independent.

They are,



Mr. P.R. Saldin


The Committee has met five times during

the year. The meetings are attended by

Executive Director, Chief Financial Officer

by invitation and other Directors and

Executives when required.

Corporate Governance


Duties and ResponsibilitiesAudit

1. Recommend the Board of the

appointment and removal of external

auditors and review their terms of

engagement.

2. Determine with the external auditors,

the audit plan and scope and their

authority and responsibilities.

3. Oversee and appraise the quality of

audits conducted and monitor their

effectiveness.

4. Review external audit reports and

recommendations and ensure

appropriate management response to

recommendations.

5. Monitor the relationship between

management and the external

auditors.

6. Review and assess the independency

of the external auditor.

Accounting

1. Monitor and review the adequacy of

the company’s accounting system and

internal control environment.

2. Review the annual and quarterly

financial statements of the company,

and make recommendations to the

board.

3. Determine company - specific

accounting policies within the ambit of

the accounting standards.

4. Review significant transactions which

are not a normal part of the company’s

business.

Risk Management1. Identify and assess areas of risks which

might impact on the company and

research appropriate mitigations.

2. Monitor, review and evaluates the

adequacy and effectiveness of the

company’s risk management controls,

both internally and externally.

3. Evaluate the effectiveness of the

company’s business continuity plans.

4. Evaluate the adequacy of the

company’s insurance covers at least

annually.

The Audit Committee has recommended

to the Board of Directors that Messers.

KPMG, Chartered Accountants to

appointed as Auditors for the year ending

31st March, 2015 subject to the approval

of the shareholders at the next annual

general meeting.

Remuneration CommitteeThe Remuneration Committee looks

forward to attract and retain directors,

executives and employees for the

company. Also through the decisions of

Remuneration Committee it is expected to

obtain the highest level of contribution for

the achievement of goals and objectives of

the company. There by it expects to create

a good value for the shareholders.

The Sierra Cables PLCs Remuneration

Committee consists of three Non-Executive

Independent Directors as follows;




The main responsibilities of the

Remuneration Committee is,

1. To review and approve Remuneration

policy of the Company.

2. To advice on structuring Remuneration

packages that enable the Company

to attract, retain and motivate high

calibre individuals with the requisite

skills.

3. To recommend to the Board of

Directors the Remuneration to be

paid to the Executive Directors,

Non-Executive Directors, their pre-

requisites and allowances.

Internal ControlThe Internal Control system encompasses

the financial, operational, risk

management, regulatory compliances of

the company. Maintaining effective control

is vital as it is the responsibility of the Board.

All the sectors have different controls

developed uniquely for themselves.

Their discipline, commitment will ensure

correct processes are maintained within

the company. The effectiveness of these

controls is reviewed regularly through the

Management Review Meeting and Board

Meetings. One of the main items heavily

discussed in every Management Review

Meeting is the Key Performance Indicators

(KPI). It summarizes the performance of

every department of the company on

a monthly basis.

Even though all these controls are in place

we cannot reject the fact that exceptions

can appear in an unexpected manner.

Therefore, either through preventive or

corrective actions such situations should

be managed. However, the ultimate

expectations thus will be to develop and

maintain accurate processes, information

and customer satisfaction. Simply this

will ensure maximization of shareholders’

wealth and the quality of company’s

performance.

BOARD OFDIRECTORS

SHAREHOLDERS

BOARDCOMMITTEES

(AUDIT &REMUNERATION)

AUDITORS

Appoint

Appoint

Appoint

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Report

TOPMANAGEMENT

MANAGINGDIRECTOR/CEO

Corp

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e G

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Rule Board of Directors Status

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

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

7.10.2(b) Specified whether the Non-Executive directors submitted a declaration annually of his/her

independence or Non-Independence to the Board of Directors.

Complied

7.10.3(a) Confirmed that the Board of Directors made an annual determination as to the Independence or

Non-Independence of each Non-Executive Director based on the declaration mentioned above and

other information available to the Board and states the names of Non-Executive Directors determined

to the Independent.

Complied

7.10.3(b) If the Directors does not qualify as Independent, the Board taking in to account all the circumstances

if of the opinion that the Non-Executive Director is Independent, the Board has specified, in annual

report, the qualification not met under CSE listing rules and the basis for determining the Director to

be Independent.

Complied

7.10.3(c) Published a small resume in the annual report, of each Director of the Board, which includes

information on the nature of his/her expertise.

Complied

Rule Remuneration & Remuneration Committee Status

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

7.10.5(a) Specified whether a separate remuneration committee was formed or whether listed parents

remuneration committee used.

Complied

7.10.5(c) Specified the names of the directors comprising the remuneration committee (where the parent

company’s remuneration committee, qualifies to function as the listed company’s remuneration

committee, a statement in the annual report to this effect and disclosed the names of the Directors.

Complied

7.10.5.(b) Disclosed the functions of the remuneration committee Complied

7.10.5.(a) Specified whether the chairman of the committee is a Non-Executive Director. Complied

7.10.5(c) Specified the aggregate remuneration paid to Executive and Non-Executive Directors in the annual

report - (Remuneration should include cash and all non-cash benefits paid in consideration of

employment with the listed Entity)

Complied

Rule Contents Under the Audit Committee Report Status

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

7.10.6(a) & (C) Specified whether a separate Audit committee was formed or whether listed parent’s Audit Committee

was used.

Complied

7.10.6(c) Specified whether the names of the Directors comprising the Audit Committee (where the parent

company’s Audit Committee qualifies to functions as the listed company’s Audit Committee, a

statement to this effect and disclose the names of the Directors).

Complied

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

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

7.10.6(a) & (c) Specified whether the chairman or 1 member of the audit committee is a member of a recognized

professional Accounting body.

Complied

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

the Audit committee.

Complied

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



The responsibility of Directors in relation

to the Financial Statements is set out in

the following statement. The responsibility

of the auditors, in relation to the Financial

Statements prepared in accordance with

the provisions of the Companies Act No.

7 of 2007 and other statutes which are

applicable to the preparation of Financial

Statements are set out in the Independent

Auditors’ Reports.

The Financial Statements comprise of:

C A Statement of Financial Position,

which presents a true and fair view

of the state of affairs of the Company

and its subsidiaries as at the end of the

financial year; and

C An Statement of Comprehensive

Income, which presents a true and

fair view of the profit and loss of the

Company and its subsidiaries for the

financial year, which comply with the

requirements of the Act.

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

C The appropriate Accounting Policies

have been selected and applied in

consistent manner and material

departures, if any, have been disclosed

and explained;

C Requirements in the Sri Lanka

Accounting Standards, Companies Act

No.07 of 2007 and listing rules of the

Colombo Stock Exchange, have been

followed;

C Judgments and estimates have been

made which are reasonable and

prudent.

The Directors are also required to ensure

that the Company has adequate resources

to continue in operation to justify applying

the going concern basis in preparing the


Further, the Directors have a responsibility

to ensure that the Company maintains

sufficient accounting records to disclose,

with reasonable accuracy, the financial

position of the Company and of the

Group, and to ensure that the Financial

Statements presented comply with the

requirements of the Act.

The Directors are also responsible for

taking reasonable steps to safeguard

the assets of the Company and of the

Group and in this regard to give proper

consideration to the establishment of

appropriate internal control systems with

a view to preventing and detecting fraud

and other irregularities.

The Directors are required to prepare the

Financial Statements and to provide the

auditors with every opportunity to take

whatever steps and undertake whatever

inspections they may consider to be

appropriate to enable them to give their

independent audit opinion.

The Directors are of the view that they

have discharged their responsibilities as

set out in this statement.

By Order of the Board

P.R. Secretarial Services(Private) Limited

Secretaries

22nd August, 2014

Statement of Directors’ Responsibilities


Fina

ncia

l Sta

tem

ents

ContentsIndependent Auditors’ Report 26

Consolidated Statement of Comprehensive Income 27

Consolidated Statement of Financial Position 28

Consolidated Statement of Changes In Equity 29-30

Cash Flow Statement 31-32

Notes to the Financial Statements 33-62


Independent Auditors’ Report

TO THE SHAREHOLDERS OF SIERRA CABLES PLC

Report on the Financial Statements

We have audited the accompanying financial

statements of Sierra Cables PLC (“the Company”)

and the consolidated financial statements of

the Company and its subsidiaries (“the Group”),

which comprise the statements of financial

position as at 31st March 2014, the statements

of comprehensive income, changes in equity and

cash flows for the year then ended, and notes,

comprising a summary of significant accounting

policies and other explanatory information set

out on pages 27 to 62 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.

Except as discussed in the following paragraphs,

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.

Qualified Opinion - Company

As disclosed in Note 7.1 to the financial

statements, the Company has incorporated

certain income, expenses and assets in the

Statement of Comprehensive Income and the

Statement of Financial Position of the Company

for the year ended and as at 31st March 2014.

The transactions relating to these income,

expenses and the assets are related to the

operations of the Company, but had not been

recorded either in the general ledger or in the

financial statements of the Company up to 31st

March 2014 as disclosed in the said Note 7.1

to the financial statements. The Company has

neither followed the established accounting

procedures nor used the accounting system

of the Company for recording and accounting

for these transactions as it had followed for

recording and accounting for other transactions

of the Company up to 31st March 2014.

In our opinion, except for the effects of the

matter described in the preceding paragraph,

the financial statements give a true and fair view

of the financial position of the Company as at

31st March 2014, and its financial performance

and its cash flows for the year then ended in

accordance with Sri Lanka Accounting Standards.

Qualified Opinion - Group

As disclosed in Note 7.1 to the financial

statements, the Company has incorporated

certain income, expenses and assets in the

Statement of Comprehensive Income and the

Statement of Financial Position of the Company

for the year ended and as at 31st March 2014.

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

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

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

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

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

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

The transactions relating to these income,

expenses and the assets are related to the

operations of the Company, but had not been

recorded either in the general ledger or in the

financial statements of the Company up to 31st

March 2014 as disclosed in the said Note 7.1

to the financial statements. The Company has

neither followed the established accounting

procedures nor used the accounting system

of the Company for recording and accounting

for these transactions as it had followed for

recording and accounting for other transactions

of the Company up to 31st March 2014.

In our opinion, except for the effects of the

matter described in the preceding paragraph, the

consolidated financial statements give a true and

fair view of the financial position of the Company

and its subsidiaries dealt with thereby as at 31st

March 2014, and of its financial performance

and its cash flows for the year then ended in

accordance with Sri Lanka Accounting Standards.

Without further qualifying our opinion, we

draw attention to Note 34 and Note 35 to the

consolidated financial statements which more

fully explain existence of doubt on the going

concern of Sierra Industries (Private) Limited,

a subsidiary of the group and non-completion

of contractual agreement between the main

contractor of Sierra Power (Private) Limited, a

subsidiary of the Group respectively.

Report on Other Legal and Regulatory Requirements

These financial statements also comply with the

requirements of Sections 153(2) to 153(7) of the

Companies Act No. 07 of 2007.

Chartered Accountants

10th July 2014Colombo


Group CompanyFor the year ended 31st March 2014 2013 2014 2013

Note Rs. Rs. Rs. Rs.

Revenue 5 2,284,934,549 2,141,353,995 2,137,572,003 2,055,318,338

Cost of Sales (1,967,488,040) (1,836,300,771) (1,834,518,102) (1,756,473,539)

Gross Profit 317,446,509 305,053,224 303,053,901 298,844,799

Other Income 6 39,705,634 6,137,840 39,705,634 6,137,840

Selling and Distribution Expenses (146,149,660) (103,030,304) (145,212,139) (88,436,991)

Administrative Expenses (146,979,750) (67,271,954) (141,289,774) (64,211,117)

Other Operating Expenses (272,616,893) (2,515,236) (272,616,894) (2,515,236)

Profit/(Loss) from Operations 7 (208,594,160) 138,373,570 (216,359,272) 149,819,295

Net Finance Costs 8 (167,578,713) (158,354,069) (137,248,148) (132,932,082)

Profit/(Loss) Before Associate Companies’ Share of Loss (376,172,873) (19,980,499) (353,607,420) 16,887,213

Share of Loss of Associate Companies 15 (96,348) (25,139) - -

Profit/(Loss) Before Taxation (376,269,221) (20,005,638) (353,607,420) 16,887,213

Income Tax Expense 9 69,790,587 (4,556,107) 83,541,215 (1,740,666)

Profit/(Loss) for the year (306,478,634) (24,561,745) (270,066,205) 15,146,547


Net Change in Fair Value of Available-for-Sale Investments (7,272,588) (9,853,492) (7,272,588) (9,853,492)

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

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

Actuarial Gain/(Loss) on Defined Benefit Obligation Net of Tax (2,312,453) 1,380,312 (2,114,672) 1,380,312

Other Comprehensive Income/(Expense) for the year, Net of Income Tax (9,585,041) 324,465,752 (9,387,260) 324,465,752

Total Comprehensive Income/(Expense) for the year (316,063,675) 299,904,007 (279,453,465) 339,612,299

Profit/(Loss) Attributable to:

Owners of the Company (290,881,814) (12,693,539) (270,066,205) 15,146,547


(306,478,634) (24,561,745) (270,066,205) 15,146,547

Total Comprehensive Income/(Expense) attributable to:

Owners of the Company (300,400,357) 311,772,213 (279,453,465) 339,612,299


(316,063,675) 299,904,007 (279,453,465) 339,612,299

Basic Earnings/(Loss) per Share 10 (0.54) (0.02) (0.50) 0.03

Figures in brackets indicate- deductions.

The Financial Statement are to be read in conjunction with the related notes which form a part of these Financial Statements set out on pages 33 to 62.

Consolidated Statement of Comprehensive Income


Group CompanyAs at 31st March 2014 2013 2014 2013

Note Rs. Rs. Rs. Rs.

ASSETSNon-Current AssetsProperty, Plant and Equipment 11 1,206,366,843 1,179,081,707 890,561,492 954,108,269 Intangible Assets 12 2,087,725 4,050,560 2,087,725 4,050,560 Investment Property 13 14,784,299 31,211,300 14,784,299 31,211,300 Investments in Subsidiaries 14 - - 160,680,020 70,880,020 Investments in Associates 15 2,689,197 2,785,545 5,800,000 5,800,000 Investments Available for Sale 16 112,951,573 121,765,158 112,951,573 121,765,158 Goodwill on Acquisition 14 - 329,300 - -

1,338,879,637 1,339,223,570 1,186,865,109 1,187,815,307

Current AssetsInventories 17 612,006,180 1,026,894,046 564,953,048 992,280,321 Trade and Other Receivables 18 950,307,110 870,687,803 788,608,741 795,567,718 Income Tax Receivable 15,830,737 15,811,592 15,830,737 15,811,592 Asset Held for Sale 19 21,000,000 21,000,000 21,000,000 21,000,000 Amounts Due from Related Companies 20 69,480,864 72,310,131 134,499,606 89,045,367 Available-for-Sale Financial Assets 16 - 53,134,656 - 53,134,656 Cash in Hand and at Bank 21 10,421,297 16,080,412 10,257,327 15,776,180

1,679,046,188 2,075,918,640 1,535,149,459 1,982,615,834 Total Assets 3,017,925,825 3,415,142,210 2,722,014,568 3,170,431,141

EQUITY AND LIABILITIESEquity Stated Capital 22 894,565,898 894,565,898 894,565,898 894,565,898 Retained Earnings 40,455,632 333,900,623 93,828,558 366,009,435 Fair Value Reserve 87,812,815 95,085,403 87,812,815 95,085,403 Revaluation Reserve 332,938,932 332,938,932 332,938,932 332,938,932 Total Equity Attributable to Equity Holders of the Company 1,355,773,277 1,656,490,856 1,409,146,203 1,688,599,668 Non-Controlling Interest 11,312,491 17,658,587 - - Total Equity 1,367,085,768 1,674,149,443 1,409,146,203 1,688,599,668

Non Current LiabilitiesRetirement Benefit Obligations 23 22,153,322 14,874,524 21,624,714 14,874,524 Deferred Tax Liability 24 84,844,699 155,529,230 68,355,089 152,713,789 Long Term Loans 25 182,843,657 217,485,541 98,773,221 113,440,531 Long Term Lease Liability 26 2,757,920 6,234,846 2,757,920 6,234,846

292,599,598 394,124,141 191,510,944 287,263,690

Current LiabilitiesTrade and Other Payables 27 392,351,499 369,806,639 336,227,201 339,067,141 Current Portion of Long Term Loans 25 63,292,945 54,158,846 43,000,700 37,758,056 Current Portion of Lease Liability 26 3,480,568 5,859,816 3,480,568 5,859,816 Import Demand Loans 28 771,034,976 843,276,728 678,146,734 796,596,321 Bank Overdraft 21 128,080,471 73,766,597 60,502,218 15,286,449 Total Current Liabilities 1,358,240,459 1,346,868,626 1,121,357,421 1,194,567,783 Total Liabilities 1,650,840,057 1,740,992,767 1,312,868,365 1,481,831,473 Total Equity and Liabilities 3,017,925,825 3,415,142,210 2,722,014,568 3,170,431,141

Net Assets per Share 2.52 3.08 2.62 3.14

The Financial Statement are to be read in conjunction with the related notes which form a part of these Financial Statements set out on pages 33 to 62.

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

Thusitha SiriwardeneFinance Manager

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

Priyantha Perera D.S. PandithaChairman Managing Director

10th July, 2014Colombo

Consolidated Statement of Financial Position


For the Year ended 31st March, 2014 Stated Capital

Revaluation Reserve

Fair Value Reserve

Retained Earnings

Total

Company Rs. Rs. Rs. Rs. Rs.

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

Profit for the year - - - 15,146,547 15,146,547


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

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

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

Actuarial Gain on Defined Benefit Obligation Net of Tax - - - 1,380,312 1,380,312

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

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

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

Loss for the year (270,066,205) (270,066,205)


Fair Value Loss on Available for Sale Investments - - (7,272,588) - (7,272,588)

Actuarial Loss on Defined Benefit Obligation - - - (2,114,672) (2,114,672)

Total Comprehensive Income/(Expense) for the year - - (7,272,588) (272,180,877) (279,453,465)

Balance as at 31st March 2014 894,565,898 332,938,932 87,812,815 93,828,558 1,409,146,203

Figures in brackets indicate deductions.

The Financial Statements are to be read in conjunction with the related notes which form a part of these Financial Statements set out on pages 33 to 62.

Statement of Changes In Equity


Att

ribu

tabl

e to

ow

ners

of t

he C

ompa

ny

For t

he Y

ear e

nded

31s

t Mar

ch S

tate

d C

apit

al R

eval

uati

on R

eser

ve F

air

Valu

e

Res

erve

Ret

aine

d E

arni

ngs

Tot

alN

on C

ontr

ollin

g In

tere

st

Tot

al

Equi

ty

Gro

up R

s.

Rs.

R

s. R

s. R

s. R

s. R

s.

Bala

nce

as a

t 1s

t A

pril

2012

894

,565

,898

-

104

,938

,895

3

45,2

13,8

50

1,3

44,7

18,6

43

29,

451,

690

1,3

74,1

70,3

33

Loss

for

the

year

-

--

(12,

693,

539)

(12,

693,

539)

(11,

868,

206)

(24,

561,

745)

Oth

er C

ompr

ehen

sive

Inco

me

Net

Cha

nge

in F

air

Valu

e of

Ava

ilabl

e fo

r Sa

le In

vest

men

ts -

-

(9

,853

,492

) -

(9

,853

,492

) -

(9

,853

,492

)

Reva

luat

ion

Surp

lus

on P

rope

rty,

Pla

nt a

nd E

quip

men

t -

4

30,0

75,0

11

-

-

430

,075

,011

-

4

30,0

75,0

11

Def

erre

d Ta

x on

Rev

alua

tion

Surp

lus

of P

rope

rty,

Pla

nt a

nd E

quip

men

t -

(9

7,13

6,07

9) -

-

(9

7,13

6,07

9) -

(9

7,13

6,07

9)

Actu

aria

l Gai

n on

Defi

ned

Bene

fit O

blig

atio

n N

et o

f Tax

-

-

-

1,3

80,3

12

1,3

80,3

12

-

1,3

80,3

12

Tota

l Com

preh

ensi

ve In

com

e/(E

xpen

se) f

or t

he y

ear

-

332

,938

,932

(9

,853

,492

) (1

1,31

3,22

7) 3

11,7

72,2

13

(11,

868,

206)

299

,904

,007

Adj

ustm

ent

Due

to

Chan

ges

in E

ffec

tive

Hol

ding

s -

--

--

75,

103

75,

103

Bala

nce

as a

t 31

st M

arch

201

3 8

94,5

65,8

98

332

,938

,932

9

5,08

5,40

3 3

33,9

00,6

23

1,6

56,4

90,8

56

17,

658,

587

1,6

74,1

49,4

43

Bala

nce

as a

t 1s

t A

pril

2013

894

,565

,898

3

32,9

38,9

32

95,

085,

403

333

,900

,623

1

,656

,490

,856

1

7,65

8,58

7 1

,674

,149

,443

Loss

for

the

year

-

--

(290

,881

,814

) (2

90,8

81,8

14)

(15,

596,

820)

(306

,478

,634

)

Oth

er C

ompr

ehen

sive

Inco

me/

(Exp

ense

)-

Fair

Val

ue L

oss

on A

vaila

ble

for

Sale

Inve

stm

ents

--

(7,2

72,5

88)

-

(7,2

72,5

88)

- (7

,272

,588

)

Actu

aria

l Los

s on

Defi

ned

Bene

fit O

blig

atio

n-

- -

(2

,312

,453

) (2

,312

,453

)-

(2,3

12,4

53)

Tota

l Com

preh

ensi

ve In

com

e fo

r th

e ye

ar

--

(7,2

72,5

88)

(293

,194

,267

) (3

00,4

66,8

55)

(15,

596,

820)

(316

,063

,675

)

Adj

ustm

ent

Due

to

Chan

ges

in E

ffec

tive

Hol

ding

s-

--

(250

,724

) (2

50,7

24)

9,2

50,7

24

8,9

99,9

99

Bala

nce

as a

t 31

st M

arch

201

4 8

94,5

65,8

98

332

,938

,932

8

7,81

2,81

5 4

0,45

5,63

2 1

,355

,773

,277

1

1,31

2,49

1 1

,367

,085

,768

Figu

res

in b

rack

ets

indi

cate

ded

uctio

ns.

The

Fina

ncia

l Sta

tem

ents

are

to b

e re

ad in

con

junc

tion

with

the

rela

ted

note

s w

hich

form

a p

art o

f the

se F

inan

cial

Sta

tem

ents

set

out

on

page

s 33

to 6

2.

Statement of Changes In Equity


Group Company

2014 2013 2014 2013For the Year ended 31st March Rs. Rs. Rs. Rs.

Cash Flows from Operating Activities

Profit/(Loss) before Share of Loss of Associate (376,172,873) (19,980,499) (353,607,420) 16,887,213

Adjustments

Depreciation 77,032,206 79,806,262 65,666,707 72,818,926

Amortization of Intangible Asset 2,103,351 2,070,440 2,103,351 2,070,440

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

Depreciation of Investment Property 1,163,580 1,642,700 1,163,580 1,642,700

Provision for Impairment of Other Receivables 15,000,000 - 15,000,000 -

Provision for Impairment of Trade Receivables 21,636,318 (2,028,726) 21,636,318 (2,028,726)

Provision for Impairment of Subsidiaries - - 17,000,000 -

Profit on Sale of Property, Plant and Equipment (885,276) - (885,276) -

Loss on Disposal of Investment Property 263,421 - 263,421 -

Profit on Disposal of Investment Available for Sale (1,519,434) (1,607,969) (1,519,434) (1,607,969)

Write off of Work in Progress 127,482,528 - 127,482,528 -

Write off of Finished Goods 93,394,610 - 93,394,610 -

Impairment of Goodwill 329,300 - - -

Provision for Retirement Benefit Obligation 4,853,501 3,453,854 4,599,133 3,453,854

Interest Expenses 176,051,617 187,760,457 145,929,108 161,984,579

Interest Income (1,166,742) (6,657,304) (1,166,742) (6,657,304)

Dividend Income (4,868,130) (4,529,871) (4,868,130) (4,529,871)

Operating Profit Before Working Capital Changes 134,697,977 242,444,580 132,191,754 246,549,078

(Increase)/Decrease in Inventories 194,010,727 (83,301,377) 206,450,134 (48,687,652)

(Increase)/Decrease in Trade and Other Receivables (116,255,625) (63,692,303) (29,677,341) 3,414,175

(Increase)/Decrease in Dues from Related Parties 2,829,267 9,990,881 (142,254,239) 27,873,037

Increase/(Decrease) in Trade and Other Payables 22,544,861 (192,058,267) (2,839,939) (213,761,098)

Increase/(Decrease) in Dues to Related Parties - - - (38,512,994)

Cash Generated from/(used in) Operations 237,827,207 (86,616,486) 163,870,369 (23,125,454)

Interest Paid (174,577,616) (187,760,457) (144,455,108) (159,443,328)

Income Tax/ ESC Paid (19,145) (8,531,862) (19,145) (8,531,838)

Gratuity Paid (781,100) (501,525) (781,100) (501,525)

Net Cash Flows Generated from/(used in) Operating Activities 62,449,346 (283,410,330) 18,615,016 (191,602,145)

Cash Flows from Investing Activities

Interest Income 1,166,742 6,657,304 1,166,742 6,657,304

Dividend Received 4,868,130 4,529,871 4,868,130 4,529,871

Acquisition of Property, Plant and Equipment (104,997,639) (72,818,240) (2,800,227) (34,292,909)

Acquisition of Intangible Assets (140,516) (480,000) (140,516) (480,000)

Proceeds from Disposal of Property, Plant and Equipment 1,565,572 1,334,519 1,565,573 1,334,519

Proceeds from Disposal of Investment Property 15,000,000 - 15,000,000 -

(Investment in)/ Maturity Proceeds from Treasury Bills 53,134,656 (14,308,278) 53,134,656 (14,308,278)

Proceeds from Disposal of Available of Sale Investments 3,060,431 5,089,355 3,060,431 5,089,355

Investment in Subsidiary Net of Cash Acquired - 2,817,124 (10,000,000) (880,000)

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

Net Cash from/(used in) Investing Activities (26,342,624) (67,834,442) 65,854,789 (33,006,235)

Cash Flow Statement


Group Company

2014 2013 2014 2013For the Year ended 31st March Rs. Rs. Rs. Rs.

Cash Flows from Financing Activities

Borrowing During the Period 1,800,105,539 1,928,554,099 1,667,543,835 1,821,280,408

Repayment of Borrowings (1,897,855,076) (1,566,578,669) (1,795,418,088) (1,565,277,108)

Repayment of Lease (7,330,174) (6,153,940) (7,330,174) (7,537,608)

Proceeds from Share Issue to Non-Controlling Interests 9,000,000 - - -

Net Cash Flows from/(used in) Financing Activities (96,079,711) 355,821,490 (135,204,427) 248,465,692

Net Increase/(Decrease) in Cash and Cash Equivalents (59,972,989) 4,576,718 (50,734,622) 23,857,312

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

Cash and Cash Equivalents at the End of the Period (Note 21) (117,659,174) (57,686,185) (50,244,891) 489,731

Analysis of Cash and Cash Equivalents at the end of the year;

Cash in Hand and at Bank 10,421,297 16,080,412 10,257,327 15,776,180

Bank Overdraft (128,080,471) (73,766,597) (60,502,218) (15,286,449)

(117,659,174) (57,686,185) (50,244,891) 489,731

Figures in brackets indicate deductions.

The Financial Statements are to be read in conjunction with the related notes which form a part of these Financial Statements set out on pages 33 to 62.

Cash Flow Statement


Notes to the Financial Statements

1. REPORTING ENTITY

1.1 Domicile and Legal Form

Sierra Cables PLC is a public limited liability Company incorporated and domiciled in Sri Lanka. The registered office of the Company is located at 112, Havelock Road, Colombo 05 and principal place of business is located at 39/1A, Galwarusawa Road, Korathota, Kaduwela.

The consolidated financial statements of the Company as at and for the year ended 31st March 2014 comprise the Company and its Subsidiaries (together referred as the “Group” individually as Group entities) and the group interest in associates.

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

All the companies in the Group have a common financial year, which ends on 31st March.

2. BASIS OF PREPARATION

2.1 Statement of Compliance

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

The consolidated financial statements were authorised for issue by the Board of Directors on 10th July 2014.

2.2 Basis of Measurement

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

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

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

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

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

2.3 Functional and Presentation Currency

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

2.4 Use of Estimates and Judgments

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

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

Information about critical estimates and judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is provided in the following notes.

C Identification, measurement and assessment of impairment

C Recognition and measurement of financial instruments

C Retirement Benefit Obligations

2.5 Change in Accounting Policy

Defined Benefit Plans

The Company adopted LKAS 19 – ‘Employee Benefits’ (Revised 2013) which became effective from 1st January 2013 as part of its mandatory application and changed its basis for determining the income or expense related to defined benefit plan.

As a result of the change, the Company now recognizes all the re measurements of the net defined benefit liability in other comprehensive income. Re measurements of the net defined benefit liability comprise of Actuarial gain or loss.

Previously, the Company recognized actuarial gain or losses in profit or loss.

Impact of Change in Accounting Policy

The change in accounting policy has been applied retrospectively.

The following table summarizes the financial effects on the financial statements on implementation of the new accounting policy:

Group Company

Description 2013 2013Rs. Rs.

Consolidated Statement of Comprehensive Income

Comprehensive Income 1,913,910 1,913,910

Other Comprehensive Income (1,913,910) (1,913,910)

The change in Accounting policy has no material impact on income tax and the deferred tax computations as at the above dates.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.


3.1 Basis of Consolidation

(a) Business Combination

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

The Group measures goodwill at the acquisition date as:

C The fair value of the consideration transferred; plus

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

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

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

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

(b) Non-Controlling Interests

For each business combination, the Group elects to measure any non-controlling which are generally at fair value.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. No adjustments are made to goodwill and no gain or loss is recognised in profit or loss.

(c) Subsidiaries

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

(d) Loss of Control

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

(e) Investments in Associates

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

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

(f) Transactions Eliminated on Consolidation

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

3.2 Foreign Currency Transactions

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

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

Foreign currency differences arising on retranslation are recognised in profit or loss.

3.3 Assets and Bases of Their Valuation

3.3.1 Property, Plant and Equipment

(a) Recognition and Measurement

All items of property, plant and equipment are initially recorded at cost. Where items of property, plant and equipment are subsequently revalued, the entire class of such assets is revalued. Revaluations are made with sufficient regularity to ensure that their carrying amounts do not differ materially from their fair values at the reporting date.

Subsequent to the initial recognition of the asset at cost, the revalued property, plant and equipment are carried at revalued amounts less accumulated depreciation thereon and accumulated impairment losses. The Group applies revaluation model to land, building and plant and machinery and cost model to the remaining assets under property, plant and equipment which are stated at historical cost less accumulated depreciation less accumulated impairment losses, if any.

The cost of an item of property, plant and equipment comprise its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. The cost of self-constructed



assets includes the cost of materials, direct labour, any other costs directly attributable to bringing the asset to the working condition for its intended use and capitalised borrowing costs. This also includes cost of dismantling and removing the items and restoring in the site on which they are located.When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

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

(b) Subsequent Costs

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

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

(c) Derecognition

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

(d) Depreciation

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

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows.

AssetCategory

Useful Life(Years)

DepreciationRate(%)

Building 20-25 4-5

Plant and Machinery 10-20 5-10

Factory Equipment 5 20

Furniture Fittings 5 20

Motor Vehicles 5 20

Offices and Computer Equipment 5 20

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

Depreciation method, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

(e) Revaluation Policy

The Company’s land, buildings, plant and machinery, factory equipment are revalued with sufficient regularity once in five years. The revaluation surplus is accounted in the revaluation reserve.

3.3.2 Intangible Assets and Goodwill

(a) Intangible Assets

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

(b) Goodwill

Goodwill that arises on the acquisition of subsidiaries is presented with intangible assets. For the measurement of goodwill at initial recognition, see Note 3.1 (a).

Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and any impairment loss is allocated to the carrying amount of the equity accounted investee as a whole.

(c) Computer Software

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

Subsequent Expenditure

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

Amortization

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

AssetCategory

Useful Life(Years)

DepreciationRate(%)

Computer Software 05 20

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

3.3.3 Leased Assets

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



in accordance with the accounting policy applicable to that asset. Other leases are operating leases and are not recognized in the Group’s statement of financial position.

3.3.4 Investment property

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

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

3.3.5 Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sales.

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

Raw Materials

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

Finished Goods and Work-in-Progress

- At actual cost, on first-in-first-out basis for work in progress

- At standard cost for finished goods

3.3.6 Impairment of non financial assets

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

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

Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to CGU (if any) and then to reduce the carrying amounts of other assets in

the CGU (group of CGUs) on pro rata basis. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

3.3.7 Financial Instruments

(i) Non Derivative Financial Assets

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

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

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

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

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

C Loans and Receivables

C Available for Sale Financial Assets

(a) Loans and Receivables

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

(b) Cash and Cash Equivalents

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

(c) Available for Sale Financial Assets

Available-for-sale financial assets are financial assets that are designated as available for sale and are not classified in any other categories. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses on available for sale equity instruments are recognised in other comprehensive



income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in other comprehensive incomes transferred to profit or loss.

Available for sales financial assets comprise of investment in equity shares and treasury bills.

(ii) Non-Derivative Financial Liabilities

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

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

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

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

(iii) Share Capital

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

(iv) Amortized Cost Measurement

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

(v) 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.

(vi) Impairment

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

estimated future cash flows of the financial asset that can be estimated reliably.

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

(a) Impairment Losses on Available for Sale Financial Assets

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

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

3.3.8 Defined Benefit Plan

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

The retirement benefit obligation of the group is based on the actuarial valuation using Projected Unit Credit (PUC) methods as recommended by Sri Lanka Accounting Standard (LKAS 19) Employee Benefits. The calculation is performed by independent Actuary using the projected unit credit method. The assumptions based on which the results of the actuarial valuation was determined, are included in Note 23.2 to the Financial Statements.

The Group recognizes all actuarial gains and losses arising from the defined benefits plans immediately in the other comprehensive income. The liability is disclosed under Non-current liabilities in the Statement of Financial Position and not externally funded.

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

(i) Defined Contribution Plans – Employees’ Provident Fund and Employee Trust Fund

All employees who are eligible for Employees’ Provident Fund Contributions and Employees’ Trust Fund Contributions are covered



by relevant contributions funds in line with the relevant statutes. Employer’s contributions to the defined contribution plans are recognized as an expense in profit or loss when incurred.

3.3.9 Provisions

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

3.4 Statement of Comprehensive Income

(a) Revenue

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

(i) Sale of Goods

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

(ii) Dividend Income

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

(iii) Interest Income

Interest income is recognized on an accrual basis unless collection is in doubt.

(iv) Gains and Losses

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

(v) Other Income

Other income is recognized on an accrual basis

(b) Expenditure Recognition

(i) Operating Expenses

All expenses incurred in day to day operations of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to the statement of comprehensive income in arriving at the profit for the year. Provision has also been made for impairment of financial assets, slow moving inventories, all known liabilities and depreciation on property, plant and equipment.

(ii) Borrowing Costs

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

(iii) Net Finance Income/(Expenses)

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

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

(c) Taxation

(i) Current Taxes

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

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

(ii) Deferred Taxation

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

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

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

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

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

(D) Related Party Transactions

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



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

(e) Cash Flow Statement

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

(f) Earnings per Share

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

(g) Events Occurring After the Reporting Period

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

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

(h) Assets Held for Sale

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

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

4. EFFECT OF ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

New Accounting Standards Issued but not Effective as at Reporting Date

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

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

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

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

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

C Power over the investee;

C Exposure, or rights, to variable returns from its involvement with the investee; and

C The ability to use its power over the investee to affect the amount of the investor’s returns.

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

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

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

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

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

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

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

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

A company shall apply this SLFRS to all items within the scope of LKAS 39 Financial Instruments: Recognition and Measurement. This SLFRS will become effective for the Group from 1st April 2015. Earlier application is permitted for the financial period beginning on or after 1st January, 2013.



Group Company

For the year ended 31st March 2014 2013 2014 2013Rs. Rs. Rs. Rs.

5. REVENUE

Local Sales 2,269,758,619 2,134,739,158 2,122,396,073 2,048,703,501

Export Sales 15,175,930 6,614,837 15,175,930 6,614,837

2,284,934,549 2,141,353,995 2,137,572,003 2,055,318,338

6. OTHER INCOME

Profit on Disposal of Available for Sale Investments 1,519,434 1,607,969 1,519,434 1,607,969

Profit on Disposal of Property, Plant and Equipment 885,276 - 885,276 -

Dividend Income 4,868,130 4,529,871 4,868,130 4,529,871

Scrap Sales 32,432,794 - 32,432,794 -

39,705,634 6,137,840 39,705,634 6,137,840

7. PROFIT/(LOSS) FROM OPERATIONS

Profit/(Loss) from Operations is stated after charging all the expenses including following;

Directors’ Fees and Emoluments* 39,529,500 11,260,000 38,329,500 10,560,000

Auditors' Remuneration - Audit 775,000 684,000 700,000 630,000

- Audit Related Services 327,794 383,853 327,794 383,853

Depreciation and Amortization 80,299,137 83,519,402 68,933,638 76,532,066

Write off of Work in progress (Note 7.2) 127,482,528 - 127,482,528 -

Write off of Finished Goods (Note 7.3) 93,394,610 - 93,394,610 -

Provision for Impairment of Subsidiaries - - 17,000,000 -

Provision for Impairment of Other Receivables 15,000,000 - 15,000,000 -

Provision for Impairment of Trade Receivables 21,636,318 - 21,636,318 -

Loss on Disposal of Investment Property 263,421 - 263,421 -

Bad Debt Written Off 1,608,479 6,601,488 1,608,479 6,601,488

Personnel Costs

Salaries, Wages and Related Costs 105,587,015 96,363,267 99,217,061 90,025,816

Defined Contribution Plans 11,766,725 10,786,800 11,288,197 10,319,431

Defined Benefit Plan (Note 23) 4,853,501 3,453,854 4,599,133 3,453,854

*The Directors Fees and emoluments for the year ended 31st March 2014 include the directors’ fees and emoluments paid but not accounted for during the previous periods as explained in Note 7.1 to the financial statements. These have now been recognized in the financial statements for the year ended 31st March 2014.

7.1 Unrecorded Revenue, Expenses and Assets in the General Ledger

The Company has identified that certain transactions with regard to revenue, other income, expenses and assets have not been recorded in the general ledger of the company during the previous years and the current year and accordingly in the financial statements of the company as well. The Board of Directors has investigated and quantified the unrecorded income, expenses and assets recorded in a separate system maintained by the management and the following amounts have now been recorded in the respective captions in the financial statements for the year ended 31st March 2014 based on the information available. It is impractical for the company to identify impact for respective prior periods since the records and information are inadequate and incomplete to make a reliable assessment of the impact for the each prior period. Therefore the following amounts of revenue, other income, expenses and assets have been recorded in the financial statements for the year ended 31st March 2014 and appropriate adjustments have been made accordingly.



7.1 Unrecorded Revenue, Expenses and Assets in the General Ledger (Continued)

Rs.

Income

Local Sales 80,994,023

Scrap Sales 32,403,794

Total 113,397,817

Expenses

Selling and Distribution Expenses 14,970,229

Administration Expenses 47,404,231

Other Operating Expenses 5,000,486

67,374,946

Assets

Trade and Other Receivables 3,810,964

Cash in Hand and at Bank 2,146,743

5,957,707

Reinstatement of the Effect of Understated Expenses in the General Ledger

Selling and Distribution 10,353,837

Administration Expenses 29,711,327

40,065,164

Total 113,397,817

7.2 Write off of Work in Progress

The Company has identified a difference of Rs. 172 Mn in the value of work in progress of inventories between the general ledger and Valuation carried out by the company as at 31st March 2014. Based on the analysis performed, it was identified that Rs. 49 Mn relates to the costs of sales of unrecorded revenue of Rs. 80 Mn disclosed in Note 7.1 and the balance due to overstatement of value of work in progress in the general ledger. However it is not practicable for the Company to identify the impact relating to the prior periods due to this overstatement of work in progress since the records and the information are inadequate and incomplete to make an accurate valuation of work in progress as at each previous year ends. Therefore, the Company has now recorded an amount of Rs. 49 Mn in cost of sales for the year ended 31st March 2014 and the balance has been written off during the year ended 31st March 2014.

7.3 Write off of Finished Goods

The Company has identified a difference of Rs. 93 Mn between the physical finished goods stock and the finished goods stock value in the general ledger as at 31st March 2014.This difference has been written off in the financial statements for the year ended 31st March 2014.

Group Company


8. NET FINANCE COSTS

8.1 Finance Income

Interest Income 1,166,742 6,657,304 1,166,742 6,657,304

Net Exchange Gain 7,306,162 22,749,084 7,514,218 22,395,193

8,472,904 29,406,388 8,680,960 29,052,497




Group Company


8.2 Finance Costs

Interest on - Overdraft 17,307,132 15,493,496 6,859,798 6,371,973

- Lease 1,474,000 2,541,272 1,474,000 2,541,272

- Import Demand Loans 123,437,706 141,777,564 116,652,817 136,760,055

- Bank Loans 33,832,779 27,948,125 20,942,493 16,311,279

176,051,617 187,760,457 145,929,108 161,984,579

Net Finance Costs 167,578,713 158,354,069 137,248,148 132,932,082

9. INCOME TAx ExPENSE

Income Tax for the year (Note 9.1) - - - -

Deferred Tax Charge / (Reversal) for the year (Note 24) (69,790,587) 4,556,107 (83,541,215) 1,740,666

(69,790,587) 4,556,107 (83,541,215) 1,740,666

9.1 Reconciliation between the accounting Profit/(Loss) and Tax Expense

Profit/(Loss) before Tax (376,269,221) (20,005,638) (353,607,420) 16,887,213

Aggregate Disallowed Income (8,439,582) (10,502,736) (8,439,582) (10,502,736)

Aggregate Disallowable Expenses 177,676,721 96,652,956 164,548,359 89,416,264

Aggregate Allowable Expenses (166,289,326) (162,598,807) (121,122,138) (126,252,442)

Taxable Loss (373,321,408) (96,454,225) (318,620,781) (30,451,701)

Income from Other Sources 1,191,877 7,155,130 1,191,877 7,155,130

Total Statutory Income 1,191,877 7,155,130 1,191,877 7,155,130

Tax Loss Claimed (417,157) (2,504,296) (417,157) (2,504,296)

Qualifying Payments (774,720) (4,650,835) (774,720) (4,650,835)

Taxable Income/(Loss) - - - -

Tax on Exports @ 12% ( 2013 - 12%) - - - -

Tax on Balance Income @ 28% - - - -

- - - -

9.2 Accumulated Tax Losses

Balance as at 1st April 27,946,811 - 27,946,811 -

Adjustments 3,700,069 - 3,700,069 -

Tax Loss for the year 318,620,781 30,451,107 318,620,781 30,451,107

Tax Loss set off During the year (417,157) (2,504,296) (417,157) (2,504,296)

Balance as at 31st March 349,850,504 27,946,811 349,850,504 27,946,811

Sierra Cables PLC

In terms of Section 52 of Inland Revenue Act No. 10 of 2006, the profit from exports of Sierra Cables PLC is taxable at the rate of 12% and other profits and income are taxable at the rate of 28%.

Sierra Industries (Private) Limited

As per the section 16 (c) (1) and (2) of the Inland Revenue (Amendment) Act No. 22 of 2011 as amended by Act No. 08 of 2012, the Sierra Industries (Private) Limited’s profits and income (Other than any profits and income from the sale of any capital asset) shall be exempted from income tax for a period of six years


9. INCOME TAx ExPENSE (Continued)

Sierra Power (Private) Limited

The Company has entered into an agreement with board of investment in Sri Lanka on 19th August 2013. According to the said agreement the Company shall qualify for a tax exemption period of 7 years in terms of the Sec. 17A of the Inland Revenue Act No. 10 of 2006 as amended by Inland Revenue Act No. 08 of 2012 subject to the investment made by the Company to the project over Rs. 500Mn or its equivalent in United State Dollars within a period to 24 months from the date of the agreement. The above investment should be made in fixed assets.

10. BASIC EARNING/(LOSS) PER SHARE

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

Group CompanyFor the year ended 31st March 2014 2013 2014 2013

Profits/(Loss) attributable to ordinary shareholders (Rs.) (290,881,814) (12,693,539) (270,066,205) 15,146,547

Weighted average number of ordinary shares 537,512,430 537,512,430 537,512,430 537,512,430

Basic Earnings/(Loss) per share (Rs.) (0.54) (0.02) (0.50) 0.03




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185

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,279

1

11,5

31,8

33

Net

Boo

k Va

lue

Bala

nce

as a

t 31s

t Mar

ch 2

013

145

,294

,799

3

04,1

60,0

46

617

,469

,302

5

,090

,684

8

,638

,947

1

,512

,233

1

0,04

0,75

5 6

,121

,905

8

0,75

3,03

6 -

1,1

79,0

81,7

07

Bala

nce

as a

t 31

st M

arch

201

4 1

45,2

94,7

99

336

,997

,211

5

92,7

52,6

49

2,0

18,9

87

5,9

79,3

61

1,1

55,2

01

4,9

36,3

59

5,2

19,3

79

112

,012

,897

1

,206

,366

,843

-



11. PROPERTY, PLANT AND EQUIPMENT (Continued)

11.3 Details of Property, Plant and Equipment of the Group Stated at Valuation are Indicated below:

PropertyLocation

Method of Valuation

EffectiveDate of

Valuation

Valuer LandExtent

Carrying Value of Revalued Assets as at 31st March 2014 if carried at

Historical Cost

Carrying Value of Revalued Assetsas at 31st March

2014

Rs. Rs.

Land, buildings, Plant and machinery at Sierra Cables PLC Galvarusa Road, Korathota (within the limits of Kaduwela Pradeshiya Sabha)

Market Approach

31st March 2013

Mr. K. Arthur Perera A.M.I.V. (Sri Lanka) Valuer & Consultant

5.6375 444,497,571 1,073,374,484

444,497,571 1,073,374,484

11.4 Carrying Value of Property, Plant and Equipment

As at 31st March As at 31st March

2014 2013Rs. Rs.

At Cost 132,992,359 112,157,560

At Valuation 1,073,374,484 1,066,924,147

Group Company

As at 31st March 2014 2013 2014 2013Rs. Rs. Rs. Rs.

12. INTANGIBLE ASSETS

Cost

Balance as at 1st April 10,498,876 10,018,876 10,498,876 10,018,876

Addition during the year 140,516 480,000 140,516 480,000


Amortization Charge


Charge for the year 2,103,351 2,070,440 2,103,351 2,070,440


Written Down Value as at 31st March 2,087,725 4,050,560 2,087,725 4,050,560

Intangible assets represents the cost of computer software acquired by the company.



Group Company


13. Investment Property


Disposals During the year (16,427,000) - (16,427,000) -


Depreciation


Charge for the year 1,163,580 1,642,700 1,163,580 1,642,700

Disposals During the year (1,163,579) - (1,163,579) -


Carrying Value as at 31st March 14,784,299 31,211,300 14,784,299 31,211,300

The Investment Property consisted of two apartments in Fairfield Residencies a Condominium Property situated in Colombo 8 having a floor area of 1,720 sq.ft. The Company has disposed one of the apartment at a price of Rs.15,000,000/-. The Fair Value of the remaining property as at 31st March 2014 is Rs.22,000,000/- (As at 31st March 2013, Rs.16,500,000/- per apartment).

Group Company


14. INVESTMENTS IN SUBSIDIARIES

Sierra Power (Private) Limited - - 86,680,010 880,010

Sierra Industries (Private) Limited - - 91,000,010 70,000,010

- - 177,680,020 70,880,020

Provision for Impairment (Note 14.1) - - (17,000,000) -

- - 160,680,020 70,880,020

14.1 Provision for Impairment

Sierra Industries (Private) Limited - - 15,000,000 -

Sierra Power (Private) Limited - - 2,000,000 -

- - 17,000,000 -

14.2 Goodwill on Acquisition

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

Impairment During the year (329,300) - - -

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



Group Company


15. Investments in Associates

Tea Leaf Resort Holdings (Private) Limited (Note 15.1) - 198,190 2,500,000 2,500,000

T & G Lanka (Private) Limited (Note 15.2) 2,689,197 2,587,355 3,300,000 3,300,000

2,689,197 2,785,545 5,800,000 5,800,000

15.1 Tea Leaf Resort Holdings (Private) Limited

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

Share of Loss for the year (Net of Income Tax) (198,190) (25,499) - -

Accumulated Share of Loss (2,500,000) (2,301,810) - -

Net Asset Value of Associate as at 31 March - 198,190 2,500,000 2,500,000

15.2 T & G Lanka (Private) Limited

Cost of the Investment 3,300,000 3,300,000 3,300,000 3,300,000

Share of Loss for the year (Net of Income Tax) 101,842 360 - -

Accumulated Share of Loss (610,803) (712,645) - -

Net Asset Value of Associate as at 31st March 2,689,197 2,587,355 3,300,000 3,300,000

15.3 Summarized Financial Information of Associates

T & G Lanka(Private) Limited

Tea Leaf Resort Holdings (Private) Limited

2014 2013 2014 2013Rs. Rs. Rs. Rs.

Revenue 14,513,706 11,009,441 - -

Profit/(Loss) After Tax 363,723 (5,020,518) (710,896) (50,977)

Assets 26,482,565 15,317,514 7,202,353 7,510,853

Liabilities 14,958,153 8,457,932 7,516,848 7,114,452

Group Company


16 AVAILABLE FOR SALE INVESTMENTS

16.1 Investment in Equity Securities

National Development Bank PLC 3,624,750 3,341,250 3,624,750 3,341,250

Richard Pieris Exports PLC 570,781 68,369 570,781 68,369

ACL Cables PLC 12,200 13,100 12,200 13,100

Central Industries PLC 89,862,664 99,033,625 89,862,664 99,033,625

DFCC Bank PLC 1,430,000 1,311,000 1,430,000 1,311,000

Chevron Lubricants PLC 486,048 2,170,000 486,048 2,170,000

NDB Aviva Growth Fund Investment in Units 16,965,130 15,827,814 16,965,130 15,827,814

112,951,573 121,765,158 112,951,573 121,765,158

16.2 Investment in Treasury Bills

Treasury Bills - 53,134,656 - 53,134,656

- 53,134,656 - 53,134,656



Group Company


17. Inventories

Raw Materials 89,660,017 95,191,445 73,380,869 84,778,234

Work in Progress 88,157,985 299,962,829 88,157,985 299,962,829

Finished Goods 370,332,692 595,893,623 339,558,708 571,693,109

Packing Materials 9,309,582 7,273,759 9,309,582 7,273,759

Stationeries 1,934,792 2,170,657 1,934,792 2,170,657

Engineering Items 28,503,836 25,996,607 28,503,836 25,996,607

Tool Boxes - 2,405,126 - 2,405,126

Goods in Transit 24,107,276 - 24,107,276 -

612,006,180 1,028,894,046 564,953,048 994,280,321

Less: Provision for Obsolete Inventories (Note 17.1) - (2,000,000) - (2,000,000)

612,006,180 1,026,894,046 564,953,048 992,280,321

17.1 Provision for Obsolete Inventories


Written off During the year (2,000,000) - (2,000,000) -

Balance as at 31st March - 2,000,000 - 2,000,000

18. TRADE AND OTHER RECEIVABLES

Trade Receivables 866,449,120 768,532,119 790,461,281 720,675,007

Less: Provision for Impairment (Note 18.1) (90,402,204) (68,765,886) (90,402,204) (68,765,886)

776,046,916 699,766,233 700,059,077 651,909,121

Other Receivables 41,746,428 11,014,231 - -

VAT Receivable 130,202,234 165,169,729 104,145,860 154,429,235

Deposits, Prepayments and Advances 39,311,532 16,737,610 21,403,804 11,229,362

987,307,110 892,687,803 825,608,741 817,567,718

Less: Provision for Impairment (37,000,000) (22,000,000) (37,000,000) (22,000,000)

950,307,110 870,687,803 788,608,741 795,567,718

18.1 Provision for Impairment of Trade Receivables


Impairment for the year 21,636,318 (2,028,727) 21,636,318 (2,028,727)


18.2 Provision for Impairment of Other Receivables


Impairment for the year 15,000,000 - 15,000,000 -




Group Company


19. ASSET HELD FOR SALE


Transferred During the year - 23,515,236 - 23,515,236

Impairment Loss for the year - (2,515,236) - (2,515,236)


The Company has classified part of its Plant and Machinery as Non Current Asset Held for Sale during the previous year, following the decision by Board of The Directors to dispose the same. Effort to sell the Plant and Machinery was commenced during the previous financial year and Directors are of the opinion that they still commit to the initial decision to sell the assets and actively involved in the same as at the end of the reporting period. Further Directors are of the opinion that, there is no further impairment on the carrying amount of the asset as at 31st March 2014.

Group Company

2014 2013 2014 2013Rs. Rs. Rs. Rs.

20. AMOUNTS DUE FROM RELATED COMPANIES

Non-Trading

Sierra Civil Engineering & Construction (Private) Limited 2,785,000 3,985,000 2,785,000 3,985,000

Sierra Power (Private) Limited - - 15,478,664 4,752,730

Sierra Industries (Private) Limited - - 49,540,078 11,982,506

2,785,000 3,985,000 67,803,742 20,720,236

Trading

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

Sierra Information Technologies (Private) Limited 459,781 - 459,781 -

Sierra Global Network (Private) Limited 2,393,006 2,393,056 2,393,006 2,393,056

Sierra Readymix (Private) Limited 138,281 107,203 138,281 107,203

Sierra Water Works (Private) Limited - 19,688 - 19,688

Sierra Construction (Private) Limited 63,088,011 64,794,757 63,088,011 64,794,757

Sierra Civil Engineering & Construction (Private) Limited - 345,572 - 345,572

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

66,695,864 68,325,131 66,695,864 68,325,131

Total 69,480,864 72,310,131 134,499,606 89,045,367

21. CASH AND CASH EQUIVALENTS

Favorable Balances

Cash in Hand and at Bank 10,421,297 16,080,412 10,257,327 15,776,180

10,421,297 16,080,412 10,257,327 15,776,180

Unfavorable Balances

Bank Overdraft (128,080,471) (73,766,597) (60,502,218) (15,286,449)

Cash and Cash Equivalents for Cash Flow Purposes (117,659,174) (57,686,185) (50,244,891) 489,731

22. STATED CAPITAL

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

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



Group Company


23. RETIREMENT BENEFIT OBLIGATIONS


Current Service Cost 2,814,191 1,931,884 2,814,191 1,931,884

Interest Charge for the year 2,039,310 1,521,970 1,784,942 1,521,970

Actuarial (Gain)/Loss 3,206,397 (1,913,910) 2,932,157 (1,913,910)

Payments During the year (781,100) (501,525) (781,100) (501,525)


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

Group Company

2014 2013 2014 2013As at 31st March Rs. Rs. Rs. Rs.

Current Service Cost 2,814,191 1,931,884 2,814,191 1,931,884

Interest Cost 2,039,310 1,521,970 1,784,942 1,521,970

4,853,501 3,453,854 4,599,133 3,453,854

Actuarial (Gain)/Loss 3,206,397 (1,913,910) 2,932,157 (1,913,910)

Expense recognised in Other Comprehensive Income 3,206,397 (1,913,910) 2,932,157 (1,913,910)

23.2 An Actuarial Valuation of the Retirement Benefit Obligations of the company was carried out as at 31st March 2014, by Messrs M. Poopalanathan, a firm of Professional Actuaries. The valuation was carried out as per the “Projected Unit Credit” (PUC) method.

As at 31st March 2014 2013

Expected Annual Average Salary Increment 10% 10%

Discount Rate 10% 12%

Retirement Age 55 Years 55 Years

Mortality A 67/70 Mortality Table issued by the Institute of Actuaries, London

Resignation Rate 1.7% for age up to 49 and thereafter zero.

23.3 The calculation of the retirement benefit obligation is sensitive to the assumptions set out above. The following table summarizes how the impact on the defined benefit obligation at the end of the reporting period would have increased/(decreased) as a result of a change in the respective assumptions by one percent.

Group Company

Defined Benefit Obligation Defined Benefit Obligation

OnePercentage

Point Increase

OnePercentage

Point Decrease

OnePercentage

Point Increase

OnePercentage

Point Decrease

Rs. Rs. Rs. Rs.

Effect on the Discounting Rate (2,570,292) 1,900,446 (2,041,684) 2,429,054

Effect on the Salary Escalation Rate 1,941,144 (2,637,626) 2,469,752 (2,109,018)

(629,148) (737,180) 428,068 320,036



Group Company


24. DEFERRED TAx LIABILITY


Provision/(Reversal) for the year (Note 24.2) (70,684,531) 102,225,784 (84,358,700) 99,410,343


As at 31st March 2014 2013

Temporary Difference

Tax Effect

Temporary Difference

Tax Effect

Rs. Rs. Rs. Rs.

24.1 The Deferred Tax Liability is Attributable to the Followings

Company

On Property, Plant and Equipment 616,614,378 171,937,974 588,593,439 164,681,712

On Retirement Benefit Obligations (21,264,714) (6,029,878) (14,874,524) (4,157,207)

On Accumulated Tax Losses (349,850,504) (97,553,007) (27,946,811) (7,810,716)

245,499,160 68,355,089 545,772,104 152,713,789

Group

On Property, Plant and Equipment 675,674,449 188,475,594 598,648,585 167,497,153

On Retirement Benefit Obligations (22,153,322) (6,077,888) (14,874,524) (4,157,207)

On Accumulated Tax Losses (349,850,504) (97,553,007) (27,946,811) (7,810,716)

303,670,623 84,844,699 555,827,250 155,529,230

Group Company


24.2 Deferred Tax Liability - Provision/(Reversal)

Provision/(Reversal) for the year

Statement of Comprehensive Income (69,790,587) 4,556,107 (83,541,215) 1,740,666

Other Comprehensive Income (893,944) 97,669,677 (817,485) 97,669,677

(70,684,531) 102,225,784 (84,358,700) 99,410,343

25. LONG TERM LOANS


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

Loans Obtained During the year 30,000,000 211,740,611 30,000,000 149,882,711

Repayments During the year (55,507,785) (48,735,657) (39,424,666) (47,434,096)


Amount Payable within one year 63,292,945 54,158,846 43,000,700 37,758,056

Amount Payable After one year 182,843,657 217,485,541 98,773,221 113,440,531



Group Company


26. LEASE LIABILITIES


Lease Obtained During the year - 3,982,610 - 3,982,610

14,319,722 21,857,330 14,319,722 21,857,330

Rentals Paid During the year (7,330,174) (7,537,608) (7,330,174) (7,537,608)

Gross Lease Liability 6,989,548 14,319,722 6,989,548 14,319,722

Less: Interest in Suspense (751,060) (2,225,060) (751,060) (2,225,060)

Total Liability at the End of the year 6,238,488 12,094,662 6,238,488 12,094,662

Amount Payable Within one year 3,480,568 5,859,816 3,480,568 5,859,816

Amount Payable After one year 2,757,920 6,234,846 2,757,920 6,234,846

27. TRADE AND OTHER PAYABLES

Trade Creditors 293,957,193 305,366,389 266,818,825 288,416,370

Other Payables 52,698,428 21,964,604 23,712,498 8,175,125

Taxes Payable 45,695,878 42,475,646 45,695,878 42,475,646

392,351,499 369,806,639 336,227,201 339,067,141

28. IMPORT DEMAND LOAN


Loans Obtained During the year 1,770,105,539 1,713,988,482 1,637,543,835 1,668,572,670

Repayments During the year (1,842,347,291) (1,517,843,012) (1,755,993,422) (1,517,843,012)


29. CONTINGENT LIABILITIES

There were no material contingent Liabilities as at the reporting date which require adjustments to or disclosure in the Financial Statements.

30. COMMITMENTS

There were no material capital commitments as at the reporting date.

31. EVENTS OCCURRING AFTER THE REPORTING PERIOD

There were no material events occurring after the reporting period that require adjustments to or disclosure in the Financial Statements.



32. ASSETS PLEDGED AS SECURITY AND REPAYMENT TERMSThe following assets have been pledged as securities against the long term and short term borrowings that have been disclosed in Notes 25, 26 and 29 to the financial statement respectively.

Name of the Bank Assets Pledged Facility Obtained Interest Rate Repayment Terms

Commercial Bank of Ceylon PLC

Overdraft of Rs.40 Mn PLR+1.5% p a -

1. A Primary Mortgage Numbered 3627 Valued at 550 Mn secured upon Land and Buildings and Plant and Machinery at 39/1A Galavarusa Road, Korathota and stocks and books of debt valued at Rs.490 Mn dated 13/1/2012.

Letter of Credit Facility for Rs. 400 Mn Combined Facility for the grant of Import Demand Loan and release of Document against Acceptance Rs.1,000 Mn.

AWPLR+1.75% p a

AWPLR+1.5% p a

Repayable over 180 days

Repayable over 180 days

2. A Primary Mortgage No. FCC/11/140 Valued at Rs.35 Mn as at 13/1/2012 secured upon Tribular Strander / Rewinding Machine.

Term Loan (1) of Rs.35 Mn.

AWPLR+2% p a 49 monthly Installments

3. A Primary Mortgage No.FCC/11/141 secured upon 160mm Bow Standing Machine and 8 Wire Drawing and anncaling Line.





Term Loan of Rs.30 Mn.


Sampath Bank PLC A Promissory Note Valued at Rs.10 Mn.

Temporary Overdraft of Rs.10 Mn.

15% p a 120 days from the date of grant



33.

RELA

TED

PA

RTY

DIS

CLO

SURE

33.1

Tran

sact

ions

wit

h Re

late

d Pa

rtie

s

Nam

e of

the

Com

pany

Nat

ure

of t

he T

rans

acti

ons

Tran

sact

ion

Valu

e Ye

ar E

nded

31s

t M

arch

Bala

nce

Out

stan

ding

as a

t 31

st M

arch

2014

2013

2014

2013

Rs.

Rs.

Rs.

Rs.

Tran

sact

ions

wit

h Su

bsid

iary

Com

pani

esSi

erra

Pow

er (P

riva

te) L

imite

dAm

ount

Pai

d fo

r Ca

pita

l Exp

ense

s 5

3,00

0,00

0 3

,872

,730

1

5,47

8,66

4 4

,752

,730

To

tal A

mou

nt P

aid

for

othe

r Ca

pita

l Exp

ense

s 4

2,04

5,52

4 -

--

Tota

l Am

ount

Pai

d fo

r th

e Ad

min

istr

atio

n Ex

pens

es 1

,480

,410

-

--

Equi

ty S

hare

s Al

loca

ted

Agai

nst t

he P

aid

Expe

nses

(85,

800,

000)

880

,010

-

-

Sier

ra In

dust

ries

(Pri

vate

) Lim

ited

Tota

l Am

ount

Pai

d fo

r th

e Ex

pens

e 1

8,93

4,32

0 5

,877

,698

4

9,54

0,07

8 1

1,98

2,50

6 La

nd T

rans

fer

Agai

nst t

he In

vest

men

t -

4

4,61

7,00

0 -

-Fu

nds

Rece

ived

from

Sie

rra

Cabl

es C

usto

mer

s (3

76,7

48)

--

-Eq

uity

Sha

res

Allo

cate

d Ag

ains

t the

Pai

d Ex

pens

es (1

1,00

0,00

0)-

--

Fund

s pa

id fo

r Eq

uity

inve

stm

ent

(10,

000,

000)

--

-Lo

an G

rant

ed D

urin

g th

e Pe

riod

40,

000,

000

--

-

Tran

sact

ions

wit

h O

ther

Rel

ated

Com

pani

esSi

erra

Pro

pert

y &

Dev

elop

men

t (Pr

ivat

e) L

imite

dSe

ttle

men

t of I

nvoi

ces

(48,

070)

--

48,

070

Sier

ra C

onst

ruct

ion

(Pri

vate

) Lim

ited

Sale

of G

oods

122

,257

,383

11

1,41

2,85

2 6

3,08

8,01

1 6

4,79

4,75

7 Se

ttle

men

t of I

nvoi

ces

(123

,964

,129

) (1

08,8

05,5

10)

--

Sier

ra C

ivil

Engi

neer

ing

and

Cons

truc

tion

(Pri

vate

) Lim

ited

Loan

Set

tlem

ent

(1,2

00,0

00)

(900

,000

) 2

,785

,000

3

,985

,000

Sa

le o

f Goo

ds 1

6,31

5 5

64,5

77

-

345

,572

Se

ttle

men

t of I

nvoi

ces

(361

,887

) (6

41,0

20)

--

Sier

ra E

lect

rica

l Eng

inee

ring

(Pri

vate

) Lim

ited

Sale

of G

oods

--

616

,785

6

16,7

85

Sier

ra G

loba

l Net

wor

ks (P

riva

te) L

imite

dSa

le o

f Goo

ds-

741

,249

2

,393

,006

2

,393

,056

Se

ttle

men

t of I

nvoi

ces

(50)

(912

,412

)-

-

Sier

ra In

form

atio

n Te

chno

logi

es (P

riva

te) L

imite

dSa

le o

f Goo

ds 4

59,7

81

- 4

59,7

81

-

Sier

ra W

ater

Wor

ks (P

riva

te) L

imite

dSa

le o

f Goo

ds -

4

91,8

17

- 1

9,68

8 Se

ttle

men

t of I

nvoi

ce (1

9,68

8) (9

94,3

53)

- -

Sier

ra R

edim

ix (P

riva

te) L

imite

dSa

le o

f Goo

ds 1

57,6

27

602

,517

1

38,2

81

107

,203

Se

ttle

men

t of I

nvoi

ce (1

26,5

49)

(495

,314

)-

-



33.2 Transactions with Key Management Personnel

Key Management personnel are those having authority and responsibility for planning, directing and controlling the activities of the Group. Accordingly the Directors of the Company (including Executive and Non-Executive Directors) have been classified as Key Management personnel of the Company, Group.

Group Company


Directors' Fees 8,250,000 4,950,000 7,050,000 4,250,000

Short term Employee Benefits 31,279,500 6,310,000 31,279,500 6,310,000

39,529,500 11,260,000 38,329,500 10,560,000

The Directors’ Fees and Short Term Employee benefits for the year ended 31st March 2014 include the directors’ fees and emoluments paid but not accounted for during the previous periods as explained in Note 7.1 to the financial statements. These have now been recognized in the financial statements for the year ended 31st March 2014.

34. CONTRACTUAL AGREEMENT WITH SUPPLIER OF SIERRA POWER (PRIVATE) LIMITED.

Sierra Cables PLC has made a payment of Rs.53,000,000/- on behalf of its subsidiary, Sierra Power (Private) Limited to one of its main contractor during the year ended 31st March 2014 . However the contractual agreement between this contractor and Sierra Power (Private) Limited had not been finalized until 4th June 2014, the date on which the financial statements of the subsidiary were authorized for issue by the Board of Directors.

35. GOING CONCERN

The Sierra Industries (Private) Limited, a subsidiary of the group has recorded accumulated losses of Rs.92, 956,323/- as at 31st March 2014. Further current liabilities of the subsidiary exceed its current assets by Rs.92,399,571/-. Further the subsidiary company is facing a serious loss of capital situation in terms of section 220 of the Companies Act No.7 of 2007. However the Directors of the subsidiary company have made an assessment of the Company’s ability to continue as a going concern and do not intend either to liquidate or cease trading.

36. FINANCIAL RISk MANAGEMENT

(i) Overview

The Group has exposure to the following risks from its use of financial instruments:

C Credit Risk

C Liquidity Risk

C Market Risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risks, and the Group’s management of capital.

(ii) Risk Management Framework

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management policies are established to identify and analyses the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations, and this principally arises from the Group’s receivables from customers.



36. FINANCIAL RISk MANAGEMENT (CONTINUED)

(ii) Risk Management Framework (Continued)

Exposure to Credit Risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows;

Group Company


Trade Receivables 776,046,916 699,766,233 700,059,077 651,909,121

Amounts Due from Related Companies 69,480,864 72,310,131 134,499,606 89,045,367

Balances with Banks 10,421,297 16,080,412 10,257,327 15,776,180

855,949,077 788,156,776 844,816,010 756,730,668

Trade Receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The management has established a credit policy under which each new customer is analysed individually for credit worthiness before the Group standard payment and delivery terms offered.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of Trade Receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

The maximum exposure to credit risk for trade and other receivables is the carrying amounts at the end of the reporting period, and it is analysed by geographic regions as follows:

Group Company


Local Debtors 836,687,468 744,878,364 760,699,629 697,021,452

Foreign Debtors 29,761,652 23,653,755 29,761,652 23,653,555

866,449,120 768,532,119 790,461,281 720,675,007

Provision for Impairment (90,402,204) (68,765,886) (90,402,204) (68,765,886)

776,046,916 699,766,233 700,059,077 651,909,121

Exposure to Currency Risk

The summarised quantitative data about the Group’s exposure to currency risk as reported to the Management of the Group based on its risk management policy was as follows:

Group Company

As at 31st March 2014 2013 2014 2013USD USD USD USD

Trade Receivables 226,144 198,353 226,144 198,353

Trade Payables (2,041,369) (2,315,414) (1,855,069) (2,193,289)

Net Statement of Financial Position Exposure (1,815,225) (2,117,061) (1,628,925) (1,994,936)



(ii) Risk Management Framework (Continued)

The following are the contractual maturities of financial liabilities.

As at 31st March 2014 CarryingAmount

0-6Months

6-12Months

More than 12 Months

Rs. Rs. Rs. Rs.

Non-Derivative Financial Liabilities

Trade and Other Payables 392,351,499 392,351,499 - -

Interest Bearing Borrowings 1,023,410,066 804,421,733 33,386,757 185,601,577

Bank Overdraft 128,080,471 128,080,471 - -

1,543,842,036 1,324,853,702 33,386,757 185,601,577

As at 31st March 2013 CarryingAmount

0-6Months

6-12Months

More than 12 Months

Rs. Rs. Rs. Rs.

Non-Derivative Financial Liabilities

Trade and Other Payables 369,806,639 369,806,639 - -

Interest Bearing Borrowings 1,127,015,777 871,600,015 30,548,347 224,867,415

Bank Overdraft 73,766,597 73,766,597 - -

1,570,589,013 1,315,173,251 30,548,347 224,867,415

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

(iii) Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

(a) Currency Risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than Sri Lankan Rupees. The foreign currencies in which these transactions primarily denominated are United Stated Dollars (USD) and Euro.

Exposure to Currency Risk

As at 31st March 2014 2013USD USD

Trade Payables - Foreign Creditors 2,041,369 2,315,414

Gross Statement of Financial Position Exposure 2,041,369 2,315,414

The following significant exchange rates were applicable during the year

Average Rate Reporting Date Spot Rate

2014 2013 2014 2013Rs. Rs. Rs. Rs.

US Dollars 130.05 129.87 130.69 126.85




(iii) Risk Management Framework (Continued)

(a) Currency Risk (Continued)

Sensitivity Analysis

A strengthening of the Rs, as indicated below, against the USD at 31st March 2014 would have increased/ (decreased) the equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant.

Strengthening Weakening

Profit or Loss Profit or LossRs. Rs.

31st March 2014

USD (10% Movement) (26,679,652) 26,679,652

31st March 2013

USD (10% Movement) (29,371,675) 29,371,675

(b) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument fluctuate because of changes in market interest rates. The groups exposure to the risk of changes in market interest rates relates primarily to the Group’s long term debt obligation .The Group utilises various financial instruments to manage exposures to interest rate risks .

At the reporting date, the Group’s interest-bearing financial instruments were as follows:

Carrying AmountAs at 31st March 2014 2013

Rs. Rs.

Fixed Rate Instruments

Financial Assets

Treasury Bills - 53,134,656

Financial Liabilities

Lease Liabilities (6,238,488) (12,094,662)

(6,238,488) 41,039,994

Variable Rate Instruments


Long Term Loans (246,136,602) (271,644,387)

Import Demand Loans (771,034,976) (843,276,728)

Bank Overdrafts 128,080,471 (73,766,597)

(1,150,846,212) (1,188,687,712)




(iii) Risk Management Framework (Continued)

(b) Interest Rate Risk (Continued)

Cash Flow Sensitivity Analysis for Variable Rate Instruments

The Group is exposed to changes in market interest rates through bank borrowings at variable interest rates.

Profit or Loss100 bp Increase 100 bp Decrease

As at 31st March 2014 Rs. Rs.

Variable Rate Instruments (1,150,846) 1,150,846

Cash Flow Sensitivity (Net) (1,150,846) 1,150,846

(iv) Capital Management

The Board’s policy is to maintain a strong capital base so as to maintain share holder, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital and level of dividends to ordinary shareholders.

The Group’s Net Debt to adjusted Equity ratio at the end of the reporting period was as follows:

Group Company


Total Liabilities 1,650,840,057 1,740,992,767 1,312,868,365 1,481,831,473

Less: Cash and Cash Equivalents (10,421,297) (16,080,412) (10,257,327) (15,776,180)

Net Debt 1,640,418,760 1,724,912,355 1,302,611,038 1,466,055,293

Total Equity 1,367,085,768 1,674,149,443 1,409,146,203 1,688,599,668

Net Debt to Equity Ratio 120% 100% 92% 84%

There were no changes in the Group’s approach to capital management during the year and the Group is not subject to externally imposed capital requirements.

(v) Fair Value Measurement

The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.

Level 1 : Quoted market price (unadjusted) in an active market for an identical instrument.

Level 2 : Valuation techniques based on observable inputs.

Level 3 : Valuation techniques using significant unobservable inputs.




(vi) Financial Instruments Carried at Fair Value and Valuation Bases

The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in the fair value hierarchy into which the fair value measurement is categorized.

Company

As at 31st March 2014 Level 1 Level 2 Level 3 TotalRs. Rs. Rs. Rs.

Available for Sale Investments 112,951,573 - - 112,951,573

112,951,573 - - 112,951,573

(vii) Fair Value of Financial Instruments Carried at Amortized Cost

The following table summarizes the carrying amounts and the company’s estimate of fair values of those financial assets and liabilities not presented on the Company’s Statement of Financial Position at fair value.

2014

Carrying Amount

FairValue

Rs Rs

Assets 10,421,297 8,603,483

Cash and Cash Equivalents 950,307,110 949,821,912

Trade and Other Receivables 69,480,864 69,480,864

Amounts Due from Related Companies

Liabilities

Trade and Other Payables 392,351,499 379,939,522

Interest Bearing Borrowings 1,023,410,066 1,023,410,066

Cash and Cash Equivalents

The carrying amount of the cash and cash equivalents and balances with banks approximate the fair value as theses are short term in nature.

Trade and Other Receivables

Trade and other receivables are expected to be settled within one year from the reporting date and hence the discounting impact would be immaterial. Therefore carrying amount approximate the fair value as at the reporting date.

Trade and Other Payables

Trade and other payables are expected to be settled within one year from the reporting date and hence the discounting impact would be immaterial. Therefore carrying amount approximate the fair value as at the reporting date.

Interest Bearing Borrowings

Long term borrowings are repriced either monthly, quarterly or semi annually in line with the changes in the market rates. Hence carrying value of these borrowings approximate the fair value. Other borrowings are short term in nature and hence carrying value approximate the fair value.




(vii) Categorization of Financial Assets and Liabilities as at the Reporting Date

Classification

Loansand

Receivables

Available for Sale

Investments

Fair Value Through

Profit or Loss Investments

Held to Maturity

Investments

Rs. Rs. Rs. Rs.

Group

Financial Instrument

Trade and Other Receivables 950,307,110 - - -

Amount Due from Related Parties 69,480,864 - - -

Cash and Cash Equipments 10,421,297 - - -

Available for Sale Investments - 112,951,573 - -

Classification

Fair Value Through Profit

or Loss

AmortizedCost

Rs. Rs.


Trade and Other Payables - 392,351,499

Interest Bearing Borrowings - 1,023,410,066



2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

For t

he y

ear e

nded

31

Mar

chRs

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.Rs

.

Ope

rati

ng R

esul

tsTu

rnov

er 7

52,9

41,8

79

1,0

38,0

76,8

67

1,3

95,4

62,7

67

1,4

89,3

25,6

24

1,5

15,3

18,2

33

1,0

37,4

25,5

35

1,4

88,9

80,1

03

2,47

6,05

8,52

0 2,

141,

353,

995

2,2

84,9

34,5

49

Gro

ss P

rofit

144

,705

,928

2

30,9

40,9

97

272

,433

,383

3

32,7

24,2

86

230

,718

,971

2

20,3

72,2

06

256

,397

,820

4

65,4

75,2

22

305,

053,

224

317

,446

,509

Profi

t fro

m O

pera

tions

84,

502,

944

176

,436

1

99,4

32,2

74

277

,533

,324

1

60,0

14,4

85

176

,323

,484

9

0,73

1,33

7 2

99,5

00,5

03

140,

287,

480

(208

,594

,160

)

Profi

t bef

ore

Asso

ciat

e Co

mpa

ny's

Sha

re o

f Pro

fit 3

5,14

2,87

2 1

39,3

37,5

47 1

51,1

52,2

40

174

,694

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2

5,78

1,08

0 1

08,2

86,6

75

47,

552,

975

145

,365

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(1

8,06

6,58

9) (3

76,1

72,8

73)

Profi

t Aft

er T

ax 6

4,39

1,91

5 1

00,7

47,2

96

101

,695

,199

1

29,2

37,6

27

26,

342,

486

108

,148

,358

1

6,11

6,63

3 1

20,3

33,8

88

(23,

181,

433)

(306

,478

,634

)

As

at 3

1 M

arch

Ass

ets

Prop

erty

, Pla

nt &

Equ

ipm

ent

366

,987

,871

3

63,1

30,7

52

427

,095

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4

33,7

63,3

17

485

,387

,038

4

94,4

52,4

31

514

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,996

7

64,7

13,4

20

1,17

9,08

1,70

7 1

,206

,366

,843

Oth

er N

on-C

urre

nt A

sset

129

,106

,975

1

56,6

13,8

40

176

,276

,677

1

90,0

25,2

84

203

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,248

1

13,0

20,8

66

223

,029

,987

1

75,8

62,9

49

160,

141,

863

132

,512

,794

Curr

ent A

sset

s 4

12,2

38,7

92

1,1

39,4

57,0

86

1,1

05,9

79,8

83

1,2

10,1

65,5

31

1,2

10,2

63,0

60

1,4

71,8

52,6

28

1,7

67,7

33,3

96

1,85

0,14

6,31

1 2,

033,

442,

994

1,6

79,0

46,1

88

Tota

l Ass

et 9

08,3

33,6

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1,6

59,2

01,6

78

1,7

09,3

52,4

34

1,8

33,9

54,1

32

1,8

99,2

79,3

46

2,0

79,3

25,9

25

2,5

05,5

10,3

79

2,79

0,72

2,68

0 3

,372

,666

,564

3

,017

,925

,825

Liab

iliti

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ng T

erm

Deb

t 8

0,81

9,18

0 7

7,02

7,08

7 4

3,32

6,14

2 2

1,56

4,39

7 8

0,17

4,17

1 6

9,43

5,26

2 4

0,36

1,90

7 6

4,88

9,85

4 22

3,72

0,38

7 1

85,6

01,5

77

Oth

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on-C

urre

nt L

iabi

litie

s 2

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1

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2,27

9 2

9,20

4,03

7 4

9,57

8,91

7 5

5,60

4,00

3 5

7,95

4,75

2 6

0,21

0,00

1 6

7,13

9,54

2 17

0,40

3,75

4 1

06,9

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21

Shor

t Ter

m D

ebt

29,

753,

362

22,

842,

754

19,

987,

553

35,

317,

723

15,

743,

986

45,

152,

092

35,

406,

691

78,

700,

864

73,7

66,5

97 1

28,0

80,4

71

Oth

er C

urre

nt L

iabi

litie

s 3

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38,9

34

465

,272

,684

4

70,5

16,6

94

451

,937

,460

4

72,3

55,3

66

523

,233

,642

1

,051

,150

,166

1,

205,

822,

048

1,2

30,6

26,3

82

1,2

30,1

59,9

88

Shar

ehol

ders

' Fun

dsSh

are

Capi

tal

337

,512

,430

8

94,5

65,8

98

894

,565

,898

8

94,5

65,8

98

894

,565

,898

8

94,5

65,8

98

894

,565

,898

8

94,5

65,8

98

894,

565,

898

894

,565

,898

Re

serv

es 9

0,22

2,18

8 1

83,0

60,9

76

251

,752

,110

3

80,9

89,7

37

380

,835

,922

4

88,9

84,2

80

423

,815

,716

4

50,1

52,7

46

761,

924,

958

461

,207

,379

N

on-C

ontr

ollin

g In

tere

st-

--

--

-29

,451

,690

17

,658

,588

11,

312,

491

Rati

osTo

tal A

sset

s/Eq

uity

2.1

2 1

.54

1.4

9 1

.44

1.4

9 1

.50

1.9

0 2

.03

2.0

1 2

.21

Turn

over

/Ass

ets

0.8

3 0

.63

0.8

2 0

.81

0.8

0 0

.5

0.59

0.

89

0.63

0.

76

Net

Mar

gin

(%)

8.5

5 9

.70

7.3

0 8

.70

1.7

0 1

0.40

1

.08

4.8

6 (1

.08)

(13.

41)

Retu

rn o

n Eq

uity

(%)

15.

059.

358.

8710

.13

2.07

7.82

1.22

8.95

(0.7

7) (2

1.46

)

Retu

rn o

n As

sets

(%)

7.09

6.07

5.95

7.05

1.39

5.20

0.65

431

(0.7

2) (1

0.16

)

Shar

e In

form

atio

nEa

rnin

gs p

er S

hare

(LKR

) 0

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0.1

9 0.

190.

240.

050.

20.

030.

22(0

.02)

(0.5

4)

Pric

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gs R

atio

19.

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10.

67

10.5

77.

4922

.45

10.9

318

0.10

14.6

7(1

04.5

3) (3

.14)

Net

Ass

ets

Per

Shar

e 1

.27

2.0

0 2.

132.

372.

372.

572.

452.

503.

082.

52

Ten Year Summary


Notice of Meeting

NOTICE IS HEREBY GIVEN that the 11th Annual General Meeting of SIERRA CABLES PLC. Will be held on 29th of September 2014 at 10.00 a.m at The Sri Lanka Foundation Institute,100, Independence Square, Colombo 07.

AGENDA

1. To read the notice convening the meeting.

2. To receive and consider the Report of the Directors and the Statement of Audited Accounts for the year ended 31st March, 2014 and the Report of the Auditors.

3. To re-elect Mr. W.A.P. Perera who retires by rotation in terms of Articles 91 of the Articles of Association of the Company as a Director of the Company.

4. To re-elect Mr. D.N.N. Lokuge who retires by rotation in terms of Articles 91 of the Articles of Association of the Company as a Director of the Company.

5. To re-elect Mr. J.H.P. Ratnayeke who retires by rotation in terms of Articles 91 of the Articles of Association of the Company as a Director of the Company

6. To re-appoint Messrs KPMG, Charted Accountants as Auditors of the Company for ensuring year and to authorize the Directors to determine their remuneration.

7. To transact any other business of which due notice has been given.

By Order of the Board

(Sgd.)P.R. Secretarial Services (Private) LimitedSecretaries

Colombo.22nd August, 2014

Sierra Cables PLC • Annual Report 2013/14

I/We……………………….......................................................................………………………………………………………………………………………..................……….......……….of

…………………………………………………………...................................................................................................................................................................……………………being a Member/Member* of the above named Company, hereby appoint

(1)………………………………………………….................…….of………………………………………………………………………………………………..failing him/her.

(2) Mr. W.A.P. Perera, or failing him

(3) Mr. D.N.N. Lokuge, or failing him

(4) Mr. E.A.D.T.B. Perera, or failing him

(5) Mr. D.S. Panditha, or failing him

(6) Dr. D.G.K.E. Weerapperuma, or failing him

(7) Mr. J.H.P. Ratnayeke, or failing him

(8) Ms. G.S.M.Irugalbandara, or failing him

(9) Mr. A.K. W. Jayawardane, or failing him

(10) Mr. B.W.N. Rupasinghe, or failing him

(11) Mr. P.R. Saldin, or failing him

as my/our Proxy to represent me/us and vote and speak for me/us on my/our behalf at the 11th Annual General Meeting of the Company to be held on 29th of September 2014 at 10.00 a.m at The Sri Lanka Foundation Institute,100, Independence Square, Colombo 07 and at any adjournment thereof and at every poll which may be taken in consequence thereof.

I/WE INDICATE MY/OUR VOTE ON THE RESOLUTIONS BELOW AS FOLLOWS;

For Against

1. To receive and consider the report of the Directors and the audited financial statements for the year ended 31st March 2014 and the Report of the Auditors thereon.

2. To re-elect Mr. W.A.P. Perera who retires by rotation in terms of Articles 91 of the Articles of Association of the Company as a Director of the Company.

3. To re-elect Mr. D.N.N. Lokuge who retires by rotation in terms of Articles 91 of the Articles of Association of the Company as a Director of the Company.

4. To re-elect Mr. J.H.P. Ratnayeke who retires by rotation in terms of Articles 91 of the Articles of Association of the Company as a Director of the Company.

5. To re-appoint Messrs KPMG, Charted Accountants as Auditors of the Company for ensuring year and to authorize the Directors to determine their remuneration.

Signed this ………............................................…… day of ……………….......................………….. 2014.

………………………………................…… N.I.C. No. ……………………………….....................………

Signature of shareholder

Note:

1. A Proxy need not be a member of the Company

2. Instructions as to completion appear overleaf

Form of Proxy

Sierra Cables PLC • Annual Report 2013/14

INSTRUCTIONS AS TO COMPLETION

1. Kindly perfect the Form of Proxy by filing in legibly your full name, National Identity Card/ Passport/ Company Registration Number, your address and your instructions as to voting and by signing in the space provided and filing in the date of signature. Please ensure that all details are legible.

2. Please mark “X” in appropriate cages, to indicate your instructions as to voting on each resolution. If no indication is given, the Proxy holder in his/her discretion will vote as he/her thinks fit.

3. To be valid, the completed Form of Proxy must be deposited at the Registered Office at No. 9, Bawa Place, Borella, Colombo 8, not less than 48 hours before the time appointed for the holding of the meeting.

4. If you wish to appoint a person other than the Chairman (or failing him, one of the Directors) as your Proxy, please insert the relevant details (1) overleaf and initial against this entry.

5. In the case of a Company/Corporation, the Proxy must be under its Common Seal, which should be affixed and attested in the manner prescribed by Articles of Association/ Act of Incorporation.

6. In the case of a Proxy signed by an Attorney, a certified copy of the Power of Attorney should accompany the completed Form of Proxy for registration, if such Power of Attorney has not already been registered with the Company.

Form of Proxy

Please provide the following details to update our records:

Full Name of Shareholder/s:.................................................................

...............................................................................................................

...............................................................................................................

Address : ..............................................................................................

...............................................................................................................

...............................................................................................................

...............................................................................................................

N.I.C. No................................................................................................

Signature :............................................................................................

Name of the Company

Sierra Cables PLC

Company Re-Registration No.

PQ 166 (under the Companies Act No.07 of 2007)

Registered Office

112, Havelock Road, Colombo 05.

Company Secretaries

P.R. Secretarial Services (Pvt) Ltd. 59, Gregory’s Road, Colombo 07. Tel: 2671439, 2671441 E-mail: [email protected]

Auditors

KPMG 32 A, Sir Mohamed Macan Markar Mawatha, Colombo 03. Tel: 5426426 Fax: 2445872 Internet: www.lk.kpmg.com

Legal Advisors

Paul Ratnayeke Associates 59, Gregory’s Road, Colombo 07. Tel: 2697893, 2697894 E-mail [email protected]

Bankers

Commercial Bank of Ceylon PLC Sampath Bank PLC Bank of Ceylon

Subsidiary Companies

Sierra Industries (Pvt) Ltd.

Sierra Power (Pvt) Ltd.

Associate companies

T & G Lanka (Private) Ltd.

Tea Leaf Resorts (Private) Ltd.

Domicile and Legal Form

Sierra Cables PLC is a limited liability company incorporated and domiciled in Sri Lanka.

The Registered Office of the company is at 112, Havelock Road, Colombo 05 and the Principal Place of business is located at 39/1A, Galwarusa Road, Korathota, Kaduwela.

Tel: 4412000-5 Fax: 2770291, 4412573 E-mail: [email protected] Web: www.sierracables.com

Issued ordinary shares of the company is stated as listed on the Colombo Exchange since 22nd November 2005.

Principal Activities and Nature of Operations

The principal activity of the company is manufacturing and sales of wires and cables.

Parent Enterprises and Ultimate Parent Enterprise

In the Directors opinion, the company’s ultimate parent undertaking and controlling party is Sierra Holdings (Pvt) Ltd., which is incorporated in Sri Lanka.

Number of Employees

The number of employees of the Group at the end of the year was 318 (2012/13 - 307).

Cover Designed by Sierra Cables / Produced & Printed by Printel (Pvt) Limited

Corporate Information

contentsdisclosures were made by the company to the colombo stock exchange on 13th may 2014, 2nd...

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