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Annual Report 2013/2014 | SERENDIB ENGINEERING GROUP PLC i

SERENDIB ENGINEERING GROUP PLCPQ 230

ANNUAL REPORt 2013/2014

ii Annual Report 2013/2014 | SERENDIB ENGINEERING GROUP PLC

ANNUAL REPORT

2013/2014

SERENDIB ENGINEERING GROUP PLC

Annual Report 2013/2014 | SERENDIB ENGINEERING GROUP PLC 1

Contents

1. Corporate Information 1

2. Financial Highlights 2

3. Chairman's Review 3

4. Director’sProfile 4-5

5. CorporateManagementTeam 6

6. ReviewofOperationsofSubsidiaries 7

7. ManagementDiscussionandFinancialAnalysis 8

8. IntegratedRiskManagement 9-10

9. DirectorsStatementofInternalControls 11

10. CorporateGovernanceReport 12-19

11. AuditCommitteeReport 20

12. Remuneration Committee Report 21

13. AnnualReportoftheBoardontheStateofAffairsoftheCompany 22-23

14. StatementsofDirectorsResponsibilities 24

15. IndependentAuditor’sReport 25

16. StatementofComprehensiveIncome 26

17. StatementofFinancialPosition 27

18. StatementofChangesInEquity 28-29

19. StatementofCashFlows 30

20. NotestotheFinancialStatements 31-51

21. ShareholderInformation 52-53

22. SixYearsSummary 54

2 Annual Report 2013/2014 | SERENDIB ENGINEERING GROUP PLC


Corporate Information

NAME OF COMPANY

SerendibEngineeringGroupPLC

FORMER NAME OF THE COMPANY

Infrastructure Developers PLC

LEGAL FORM

A Public Quoted Company with LimitedLiability incorporated in Sri Lanka on 7thSeptember 1992, and re-registered undertheCompaniesAct07of2007.Listedon the DiriSaviBoardoftheColomboStockExchange.

REGISTRATION NUMBER

PQ230

ACCOUNTING YEAR END

31stMarch2014

BOARD OF DIRECTORS

Mr.H.N.DeSilva

Mrs.D.L.DeSilva

Mr.H.G.S.Kariyawasam

Prof.R.W.T.M.R.Bandara

Dr. A. G. P. A. Gunawansa

Mr.A.C.DeSilva

SUBSIDIARIES

SerendibInvestmentHoldingsLimited

SerendibEngineering&Agencies(Pvt)Limited

CCCPlantationEngineeringLimited

PARENT COMPANY

NavaraCapitalLimited

SECRETARIES

CorporateArcadeLimited

122/37,KirulaponaAvenue

Kirulapona

Tel:2514420/2514421

Fax:2513621

Email:[email protected]

REGISTERED OFFICE

No.12B,

Gregory’sRoad,Colombo7

Tel:4422444/4378389

Fax:112698524

AUDITORS

V.S.&Associates

CharteredAccountants

20/62,FairfieldGardens

Colombo8

BANKERS

HattonNationalBankPLC

NationalDevelopmentBankPLC

NationsTrustBankPLC

SeylanBankPLC

PanAsiaBankingCorporationPLC


Financial Highlights

EARNINGS PER SHARE (Rs.) NET ASSETS PER SHARE (Rs.)

2012 2013 2014 2012 2013 2014

6

4

2

0

40

30

20

10

0

STATED CAPITAL (Rs. Millions) TOTAL ASSETS (Rs. Millions)

2012 2013 2014

200

150

100

50

0

400

300

200

100

0 2012 2013 2014

400

300

200

100

0

2012 2013 2014

TOTAL REVENUE (Rs. Millions) PROFITABILITY (Rs. Millions)

80

60

40

20

0

2012 2013 2014

PBT

PAT


Chairman's Review

IampleasedtopresenttoyoutheAuditedFinancialsandtheAnnualReportofyourcompany,SerendibEngineeringGroupPLCanditssubsidiariesinrespectofthefinancialyear2013/2014.

The year under review was the second full year ofoperation since the company was acquired andrestructured by Navara Capital Limited. During thefinancialyearthecompanyrecordedaconsolidatednetprofit after tax of Rs. 16.24Mn from a turnover of Rs.261.36Mnreflectinganetprofitmarginof6.21%.Theprofitsattributable toequityholdersof theparentwereRs9.96MnthusreflectingEarningsperShareofRs.1.54.

DuringtheyearunderreviewtheTelecomInfrastructurebusiness continued to be themain line of business forthe company contributing 81%of the groups turnover.However the group continued its focus on buildinga diversified engineering services portfolio withdevelopmentsandnewinvestmentsinseveralidentifiedkeystrategicareas.

The business of the manufacture and servicing of Teaindustry machinery which we entered in the previousyear continued to grow and contributed 17% ofthe groups’ turnover. A dedicated subsidiary is nowengaged in themanufacture of driers, rotor-vanes, leafelevators,siftersetc.aswellasthesettingup,repairandmaintenanceofteamachineryorcompletefactories.Thepre-cast concreteyardwhichcommenced itsoperationduringthepreviousfinancialyear,withthemanufactureof telecommunication poles, has now moved into themanufactureofpolesfortheelectricpowerindustryandisbeinggearedtohandlealargervolumeaswellasotherprecast structures.

ApartfromtheabovetheBoardofDirectorsalongwiththeseniormanagementhasidentifiedseveralnewareaswithhighgrowthpotentialthatthecompanywishestobeinvolvedinthelongterm.DuringthefinancialyearthegroupsteppedintotheCivilEngineeringsectorwhichwebelievehassubstantialgrowthpotentialandiscurrentlyfocusing on areas such as Industrial and Residentialconstruction as well as Roads, with the connectedstructuresincludingCulvertsandBridgesetc.ThegrouphasalsosteppedintoPowerandwaterdistributionsectorswherewith twoprojects inaColombo suburband thenorth central province. Our involvement in these areas isataveryearlystageandthefullbenefitofthesemovescanbeexpectedinthenextfewyears.

During the year the company continued with therestructuringprocesslargelyfocusingonthedevelopmentoftheinternalinfrastructuresuchasinformationsystems,processes and internal controls. Focus was also givenon the development of human resources aspect of theorganizationthroughtherecruitmentofsuitablyqualifiedandexperiencedpersonalsandtheestablishmentofHRsystems and procedures aswell as redefining the rolesandresponsibilitiesacrosstheorganization.

With the Sri Lankan economy progressing well andthe government’s continued focus on the developmentof the country’s infrastructure through Public-PrivatePartnerships, we believe the overall operating climatetobepositiveforthegroup.Webelievethecompanyisnowinabetterpositiontocapitalizeonthesetrendsanddevelopmentsinthelongterm.

IwishtothankmycolleaguesontheBoardofDirectorsfor their supportandguidanceduring theyearandourmanagementteamandstafffortheirdedicationandhardwork.

Finally I thank you, our loyal shareholders for yoursupportandtheconfidenceyouhaveplacedinus.

Harsha N De SilvaChairman

30th August 2014

Colombo


Director’s Profile

Mr. H. N. De Silva

Prof. R. W. T. M. R. Bandara

Mrs. D. L. De Silva


Mr. H. G. S. Kariyawasam

Mr. A. C. De Silva

Mr. H. N. De Silva - ACMA,ACIB,FCMA,MBA

Mr. Harsha N. De Silva is the Chairman and GroupManagingDirectorof theNavaraGroupofCompanies,whichhasinterestinFinancialServices,EngineeringandFoodIndustry.

HeisaFinancialMarketsspecialistandcountsover20year’smanagement experience in the corporate spherelocally and internationally.His CorporateManagementexperiencecoversarangeofindustriesincludingBankingandInvestmentBanking,HousingandRealEstate,FMCG,LogisticsandApparel.

He is an Associate member of the Chartered Instituteof Management Accountants (UK) and the CharteredInstituteofBankers (UK).HeisaFellowof the Instituteof CertifiedManagementAccountants (SL) and holds a

MBA from thePIM,Universityof Sri Jayewardenepura.Mr. De Silva continues to hold Executive and Non-ExecutiveDirectorpositionsinmanyListedandunlistedcompanies.

Mrs. D. L. De Silva -MABE,MBA

Ms.DimanthiL.DeSilvaisaGroupDirectorofNavaraGroup of Companies and is theManagingDirector ofAlericsDairyProductsLimited.

Shecountsover20yearsofmanagementexperienceinConsultancy,Finance,ProjectManagementandLogistics.Ms.DeSilvaisamemberoftheAssociationofBusinessExecutives(UK)andholdanMBAfromtheEdithCowanUniversityofWesternAustralia.


Mr. H. G. S. Kariyawasam -Attorney-at-Law

Mr.SagaraKariyawasamisanAttorneyatLawandservedasaStateCounselattheAttorneyGeneralsDepartmentforover7years.HecurrentlyservesasaLegalCounselattachedtothePresidentialSecretariatofSriLanka.HeisalsocurrentlytheChairmanofLankaElectricityCompanyPrivateLimited(LECO).

Mr.KariyawasamservedastheChairmanofCorporativeWholesale Establishment (CWE) during 2009/2010 andastheChairmanoftheEducationEmployeesCorporativeandThriftSocietyLimitedduring2011/2012.

Mr. Kariyawasam is also a Director of Navara CapitalLimited.

Prof. R. W. T. M. R. Bandara

Prof. RanjithBandara is theChairmanof the Sri LankaFoundationandservesasaSeniorEconomicadvisorandadirectoroftheFinancialServiceclusterattheStrategicEnterpriseManagementAgencyofthePresident’sOffice.Prof. Bandara is also a senior academic staff memberattachedtotheDepartmentofEconomics,UniversityofColomboandalsoservesasaDirector inseveralotherreputed companies. Prof. Bandara earned his B.A inEconomics Honours from the University of Peradeniyaandsubsequentlycompletedtwomastersdegrees.M.AinEconomicsfromtheUniversityofColomboandMsc.in Management of Natural Resources and SustainableAgriculturefromtheAgriculturalUniversityofNorway.

HeearnedaPhdinEconomicsin2003fromtheUniversityofQueensland,Australia.Prof.BandarahascontributedtoanumberofNationaland International Journalsandalsoservesasaseniorbusinessadvisor/consultanttoanumberofbusinessorganizationsinthecountry.


Dr.GunawansaholdsaPh.D.inLawfromtheNationalUniversity of Singapore and an LLM in InternationalEconomicLaw,fromUniversityofWarwickEngland.HeisanAttorney-at-LawoftheSupremeCourtofSriLankaandhasover19yearsofexperienceasaLegalCounsel.

HeisalsoamemberoftheLawReformSub-Committeefor Building and Construction Law in Singapore. Inadditiontohislegalpractice,Dr.GunawansaiscurrentlyattachedtotheLeeKuanYewSchoolofPublicPolicyoftheNationalUniversityofSingapore (NUS)asaSeniorInternationalResearchAssociate.Heisalsoattachedtothe Centre for Project Management and ConstructionLawof the School ofDesign and Environment ofNUSasanAdjunctProfessor.HeisalsoanAssociateMemberoftheExecutiveCommitteeoftheAsiaPacificCentreofEnvironmental Law.

Mr. A. C. De Silva –FCMA

Mr.AjithDeSilva isa fellowmemberof theCharteredInstitute of Management Accountants UK and countsover twentyyearsofcorporatemanagementexperienceindiversefieldslocallyandinternationally.

Mr.DeSilvacommencedhiscareeratKPMGandalsoserved as Chief Accountant within the Aitken SpenceGroup,asthemanagerInvestmentandResearchatCKNFundManagementCo.Limited,astheCFOofBodylinePvtLimitedandastheGeneralManagerofGrowthLankaPrivateLimited.

HeiscurrentlyalsotheDirector/ChiefExecutiveOfficerof Kenpark Bangladesh Private Limited and KenparkBangladeshApparelPrivateLimited.


Corporate Management Team

Mr. S. C. De Silva Mr. A. N. D. De Silva Mr. V. J. Alahendra

Mr. S. C. De Silva

Group Chief Executive Officer

Mr. Clive De Silva is aMechanicalEngineer by profession who countsfor over 40 years of experiencein the Engineering Industry. Hecommenced his career at one ofthe premier Engineering & TradinggroupsinSriLankaandheldvariouspositions including senior Researchand Development Engineer, SeniorProject Engineer, Director BusinessDevelopment,DirectorEngineering.

In 1991 he ventured in out and setupSerendibEngineering&AgenciesLimited and was the founderChairman/ Managing Director.Mr. De Silva’s experience coversa range of engineering disciplinesincluding civil, electronics,mechanical,automobile,marineandplantationmachinery.Heisskilledinengineeringdesignandisamemberof the Institute of Engineering DesignersUK.

Mr. A. N. D. De Silva ACA, ACMA, MBA, FMAATGroup Chief Finance Officer

Mr. Naleen De Silva is the GroupChief FinanceOfficerof theNavaraCapital Group of Companies. He countsforover22yearsofexperiencein various industries includingHousing & Property Development,Engineering, Manufacturing,Financial services and Media. Healso specializes in management consultancy, restructuring andauditing. He is an AssociatememberoftheInstituteofCharteredAccountants of Sri Lanka and theInstitute of Certified ManagementAccountants of Sri Lanka. Mr. DeSilva holds a MBA from the PIM,University of Sri Jayewardenepura.HeisalsoamemberoftheGoverningCouncilofAATSriLanka.

Mr. V. J. Alahendra MBAGroup Chief Operations Officer

Mr. Jayasankha Alahendra countsfor over 20 years of experience inthe corporate sphere of which he has served as a Director/SeniorManager for more than 10 years.PriortojoiningSerendibEngineeringGrouphehasheldvariouspositionsin Finance, Credit & Leasing,Treasury Management and RealEstate Development. He is also an experienced corporate trainerin the areas of Human Resource DevelopmentandCreditEvaluation.Mr.V.J.AlahendraholdsaMBAfromCardiff Metropolitan University ofUK.


Review of Operations of Subsidiaries

SerendibEngineeringGroupPLCcarriesoutitsbusinessoperationsviatheholdingcompanyanditstwooperatingsubsidiaries Serendib Engineering & Agencies PrivateLimitedandCCCPlantationEngineeringLimited.

Serendib Engineering Group PLCCompany began its operations in manufacturing pre-cast concrete polls for Telecom industry and Powerdistributionsduring thepreviousfinancialyearandhassuccessfully continued and developed its operationsduringtheperiodunderreview.Thecompanyiscurrentlyfocussing on increasing the manufacturing capacityand to extend in to themanufacturingof other precaststructures. The company also provides centralizedmanagement support to the Group.

Serendib Engineering & Agencies Private LimitedSerendib Engineering & Agencies (Pvt) Ltd wasestablished in1991, to focusonTransportandRailwayEngineering and today it’s a multi-faceted engineeringcompany delivering solutions in Telecommunications,Public infrastructure, Railways, Marine, Water supplyand Civil Engineering sectors. Serendib Engineering &Agencies(Pvt)Ltdalsoactsasthelocalagentforarangeof prestigious brands inMarine, Railways andTelecomIndustries. Serendib Engineering Group PLC holds aneffective control of 94.23% as at 30th August 2014 in SerendibEngineering&AgenciesPrivateLimited.

Telecom Infrastructure Engineering

Telecommunicationservice is thecorebusinessactivityof the group and companyhas beenmainly serving tothe market leader.This includes network developmentincludingOutsidePlantEngineering(OPE)thatinvolvesexpansions in optical fibre cable network, optical fibrebackbone/ junction network development (optical fibremetronetworkdevelopmentandopticalfibre secondaryexpansions), copper cable network development, newsubscriberconnections,siteacquisitionandtowererection.

During the period company focused its attention inprovidingsimilarengineeringsolutionstoothertelecomoperatorssuchasMobilephonecarriers.

Civil Engineering

During the period under review Company ventured into Infrastructure and Civil Engineering sector such asconstruction of roads, culverts, bridges etc, as well astheconstructionofresidentialandcommercialbuildings.Companybelievestheexposuretothissectorwillyieldpositive results in the coming years and may take theleadershipinitsportfolioofproducts.

Railway & Marine Engineering

TheRailway&MarineEngineeringServicesprovidedbythe company include refurbishment and re-engineering

of locomotives as well as marine propulsion controls andsystems.ThecompanyrepresentsprestigiousforeignprincipalsinMarinepropulsionssystems,DieselenginesandRailwaylocomotivespears.TheyareMANDiesel&Turbo (UK) ltd, BrushTraction Limited and Romic-ACEInternationalLimited.

General Engineering

SerendibEngineeringGroupPLCisaproviderofgeneralengineeringservicessuchaswatersupplyanddrainageprojects (rehabilitation of water pumping facilities &filtrationplants),PowerGenerationprojects(construction,maintenanceandrehabilitationofthermal&hydropowerstations), FabricationandMaintenanceof food industrymachineryetc.

CCC Plantation Engineering LimitedCCCPlantationEngineeringLtdiscarryingontheheritageoftheoldestteamachinerymanufacturerinthecountry.

CCCPlantationEngineeringLtdremainsoneof thekeyorganizationshavingawideinfrastructuretoservicetheTeaindustryinSriLanka.ThecompanyisafullyownedsubsidiaryofSerendibEngineeringGroupPLC.

Manufacturing of Plantation Machinery

The company specializes inmanufacturing and supplyof complete tea factories and processing equipments.Machineriesaremanufacturedandmarketedunder theCCCbrandcommandsahighreputationandasubstantialmarketshare.

The range of machinery manufactured includes thefollowing:

• FluidBedDriers

• Rotorvanes

• Winnowers

• Sorting&GradingEquipment

• Conveyors

• DuctingforallApplications

• Chimneys

• DustExtractionEquipment

Maintenance Of Plantation Machinery

CCCPlantation Limited also undertakes the repair andmaintenanceofexistingmachineryandthemechanicalmaintenanceofTeafactoriesonbehalfofclients.

Serendib Investments Holding Limited

Serendib Engineering Group PLC holds 60% effectivecontrol of Serendib Investments Holding Limited andSerendibInvestmentsHoldingLimitedcarries14.44%ofSerendibEngineeringandAgenciesPrivateLimitedasat30th August 2014.


Management Discussion and Financial Analysis

Industry Challenges and Business Re-Engineering

OneofthebiggestchallengesfacedduringtheyearwasthecontractionintelecomO.S.P.projectsduetothecostreductionandre-orientationpoliciesimplementedbyourprime customer.

TheGrouphad to reactextremely fast to this situation,and it was pleased to report that by re-assessing andtransforming our approach to this business sector, thecompanyhasbeenabletonotonlymitigatesuchimpactto a minimum, but also re-orient and strengthen ouroperations,andnoteasurgeintherightdirection.

In respect of consolidation, one of themain tasks thattheManagementhadtoachieveisre-orientationofourbusinessmodelandtobroadbaseoursectarianpresencetomitigate thehighrelianceontelecomOSPwork. Inthis regard, the Company has succeeded in enteringinto new infrastructure oriented business sectors withour entry into Civil Engineering, High Tension PowerEngineeringandexpansiontoothertelcos.Ourfledgling,Civil EngineeringDepartmenthas showna tremendouspromise in a very short time, and we are confidentthat this sectorwouldmakeagreatcontribution toourbottom-lineintheimmediatefuture.

Entry to Marketing Arena

The Company in an active effort to broad base ourbusinesses has successfully entered into the area ofmarketing, focusing on the telecommunications and ITsectors.WearepleasedtoannouncethattheCompanyis now the sole local representative of “Reichle&De-MassariMEA”(R&M),whichisaSwissbasedCompanywithatrackrecordofover50yearsoperationworldwideincablingandnetworksolutions.Weareconfidentthatthe efforts that we sustained and implemented in thefinancialyearunderreviewwouldbearfruitintheyear2014/15withaquantumleapintheCompany’stop-lineandcontributesubstantiallytoourprofitability.

Employee Relations & Human Resources

Duringtheperiodunderreview,several initiativeshavebeen undertaken to improve and sustain the HumanResources of the entire Group.We are blessed with ahighlycommittedworkforceandexecutivecadre,whomwe have retained over a long period of time andwhototallyidentifywiththeSerendibFamily.TheCompanyhas also been successful in adding specific skills andexperiencethroughnewrecruitments,whichaugurwellforthefuturestrengthofourcadre.

CCC Plantation Engineering Ltd:

The operations of CCC Plantation Engineering Limitedwereincorporatedintothegroupwitheffectfrom1April

2013bringinganewdimensiontotheGroup’soperationsby servicing the needs of the Tea Plantations in SriLanka.CCCPlantationEngineeringLimited (CCCP)hasshownasignificantimprovementinrevenuegeneration,comparedtopreviousyear.TheCompanyprovidesaveryspecializedservicetotheteaindustry.OurclientsrangefromthehighestpeaksofSriLankatothelowgrownintheGalleDistrict.Theproductsandservicesofferedarecomprehensiveandwehavenotedwithsatisfactiontheentre’ the Company has made with new clients beingadded continuously to our portfolio in the year underreview.Inaddition,theCompanyhasembarkedonanambitiousplantoreachthecuttingedgeofteaprocessingtechnology, with a comprehensive scheme of productresearchanddevelopment.Thiscertainlyaugurswellforthe future of the Group as a whole.

Financial Review

In theyearunder review, thecompanyrecordedagrossprofit of Rs 105Mn. The Gross profit margin increasedfrom 36.8% to 40.1% compared with the year before.The reduction in the gross profitwasmainly due to thedecreaseinvolumes.Therefore,thecompanyisexploringthe possibility of further enhancing its operations byheading in tonewareassuchasCivilEngineeringwhilestrengthening its operations in the Telecommunicationsector.

Expenses

AdministrationexpensesshowRs17Mnincrease in theyearunderreviewcomparedtopreviousyearmainlyduetotheincreaseinstaffcostanddepreciationexpense.

Profit after Tax

GrouprecordedaProfitaftertaxofRs16.2Mnduringtheyearunderreview.

Earnings per Share

During the financial year the Group has generated Rs1.54 earning for each unit of shares. (Total Ordinaryshares:6,476,650).

Return on Equity

TheReturnonEquity (ROE) for theGroupstoodat7%fortheyear.

Investments Asset Utilization

ThenetassetvalueattributabletoanordinarysharewasRs31.35attheyearend,whichisa31.82%increaseoverthepreviousyear.


Integrated Risk Management

Introduction

Riskmanagement consists of identifying andmanagingall the existing and potential internal & external risksthat could severely impact the future of the Company.Generally, this involves reviewing operations of theorganization,identifyingpotentialrisksandthelikelihoodof their occurrence, and taking appropriate actions toaddressthem,inordertopreventmostlikelythreats.

The Group manages risks under an overall strategydeterminedbytheBoardofDirectors,supportedbythesenior Management team which continuously reviewsand enhances the effectiveness of the Group’s riskmanagementplans,systems,processesandprocedures.

Subsequenttothedevelopmentsinrulesandregulations,employee-related lawsuits risk management became aserious management criterion. Today risk managementhas become an integral part of proper managementpractices, placing equal importance as financials orfacilities.

Framework and Procedures

Riskmanagementisdoneonacontinuingbasisthroughoutthe organization, in order to reduce risk volatility andimprovereturns.Engineeringasanindustryisknowntobeofveryhighrisk,internalaswellasexternal.

Thus, we as a responsible business entity, focus onlong term sustainable value to all our stakeholders byidentifying the risks, both existing and potential withthe objective of identifying and assessing all risks todeterminetheirmostprobableimpact,aswellastotakeprecautions as far as reasonably practicable by takingprompt actions to mitigate them.

Severalkeyrisksareidentifiedasexitingrisks,towhichthe company is exposed, in its day to day businessactivitiesandcategorizethemasInternalandexternal,forassessmentandtofacilitatetakingadequateprecautionarymeasures.RiskAssessmentcan includebothqualitativeand quantitative assessments of the likelihood of thevariousrisksoccurringandtheimpactoftheseintermsofcost,scheduleand/orperformance.

Theassessmentofsuchrisksandtherelatedresponsesaresetoutbelow:

• OperationalRiskManagement

• InformationTechnologicalRiskManagement

• MarketRiskManagement

• FinancialRiskmanagement

• Operational Risk Management

Operational risk, which is inherent in all businessactivities, is the risk of potential financial loss and/or business instability arising from failures in internalcontrols, operational processes or the systems thatsupport them.

Althoughthecompleteeliminationoftheoperationalriskisnotentirelypossibleandthatthecostofminimizingitmayoutweighthepotentialbenefits.HowevertheGrouphas placed sufficient internal controls and other safetymeasureswhicharereviewedregularlytoovercometheoperationalrisks.

Thegrouphasidentifiedtheimpactasfollows;

Failuretoaddresstheseriskspromptlyandprudentlywillsubsequently create anegative impact to its operationsandtheprincipleof“goingconcern”.

Thegroups'responseisasfollows;

Duringtheyearunderreviewmeasureswereundertakenin updating operating manuals and standard operatingprocedures,regularcheckontheaccuracyoffunctionalityof tools, equipment and machinery, delegation ofauthority, permit to work systems, guidelines and aregular reporting framework, creating awareness andconsciousness and accountability in the operationalactivities.

Inaddition,whereapplicable,theriskmitigationactionsare supported by risk transfer mechanisms such asinsurance.

Measureswere taken for the establishment of Safety&Health of all engaged in the yard and sites includingour visitors and we address this thoroughly, with thecontinuous education, compliance and audits, carriedoutbyourownHealth,Environment&SafetyAdvisoryCommittee.

• Information Technological Risk Management

ItisidentifiedthattheCompany’ssustainabilitydependsonaccurateinformationgeneratedthroughanIntegratedManagementInformationSystemforprudentandtimelydecisionmaking.

Thegroups'hasidentifiedtheimpactasfollows;

Anydisruptionor failuresof suchsystem, infrastructureand applications, may have a negative impact to theCompany operations and could possibly result infinanciallosses.



This has been addressed through the establishmentof regular backups procedures, standby file servers,regularizedmaintenanceetc.

• Market Risk Management

Majorityofthegroup’sbusinessesaregeneratedfromthedomesticmarket.Accordingly,ourcompetition faced islargelythroughthedomesticmarket.Severalkeyplayersin the industry can impact on the upper levels of thepricing.Inviewofthesemarketpressures,itisessentialthatthegroupfocusesonprovidingcompetitiveproductsandservices.


Thepressurefrompricecompetitionisexpectedtohavea serious impact in the long run as the competition within the industrygrowsas isexpected toaffect thebusinessvolumesandpricesinselectedareasofbusiness.


In light of the increasing levels of competition and thesaturation levels in thecompany’s existingmarkets, theCompanyhasadoptedstrategies todiversify itsproductportfolioandpositionitselfinalargermarket,basedonthecompetitiveadvantage.

Focused power supply projects and civil engineeringprojects are in the pipeline, to attract availableopportunitiesasmuchaspossible.

• Financial Risk Management

Financial risks relates to our ability to meet financialobligations and mitigate credit risks, liquidity risks,currencyrisks,interestrateriskandpricerisks.

Tomanagetheserisks,theGroup’spoliciesandfinancialauthoritylevelsarecontinuouslyreviewed.TheGroup’sactivitiesexposetoavarietyoffinancialrisks includingchanges in interest rates, foreign exchange rates andliquidityaswellascreditrisk.

Interest Rate Risk

TheGroup’sobjectiveistomaintainanefficientoptimalinterestcoststructuretominimizetheadverseeffectsoffluctuatinginterestrates.


Theriskwould impact thecompanys' interestearnings,costs,cashflowsandprofitability.


The group employs various financial instruments tomanage its exposure to interest rates risk arising fromoperational,financialandinvestingactivities.Borrowing&investinginterestratesarealwaysbeingnegotiatedtothemostfeasibleextentinourfavor.

Foreign Exchange Risk

Risk of foreign currency fluctuations in dealing withforeign clients such as agency agreements, sales andpurchases,mainlyviaSterlingPoundandUSDollars.


Exchangeratefluctuationsareknowntocreateanimpactontherevenueaswellasthecostandsubsequentlyresultinchangesinthelevelsofprofitability.


The group expects to minimize the risks in future byusingtechniquessuchashedgingthecurrency:eitherbyforward foreignexchangecontracts in respectofactualor forecasted currency exposures or hedged naturallybyamatchingsalesorpurchaseofamatchingassetsorliability of the same currency and amount as volumesincrease in future.

Liquidity Risk

The Group manages its working capital requirementswith the view to minimize the cost and maintain ahealthylevelofliquidityappropriatetotheoperationsoftheGroup.Workingcapitalrequirementsaremaintainedwithin thecredit facilitiesestablishedandareadequateandavailabletotheGrouptomeetitsobligations.


Inadequate net working capital would lead to greaterfinancingcosts.


In order to minimize the liquidity risk, the Companycloselymonitorsitsnetoperatingcashflowandmaintainsahealthy levelofcashandcashequivalentsaswellasobtainsfundingfacilitiesfromfinancialinstitutions.


InlinewithSectionD.1.3.OfCodeofBestPracticeonCorporate Governance jointly issued by the SecuritiesandExchangeCommissionofSriLankaandtheInstituteof Chartered Accountants of Sri Lanka, the Board ofDirectors present this Report on Internal Control.

TheBoardofDirectorsareresponsiblefortheadequacyand effectiveness of the Serendib Engineering GroupPLC systems of Internal Controls. However, the Boardrecognizes that such systems are designed to manage,rather than eliminate, the risks identified to acceptablelevels.Therefore, thesystems implementedcanprovideonly reasonable and not absolute assurance againstmaterial misstatement of management and financialinformation and records or against financial losses offraud.

Whilst the board has overall responsibility for thecompany’ssystemofinternalcontrols,ithasdelegatedtheimplementationof these internalcontrol systems to themanagement.Furthertoimplementtherecommendation,the internal control systems are subject to the board’sregular review with a view towards appraising theeffectivenessofthesesystemswithinthecompany.

Key Features of the process adopted in applying and reviewing the design and effectiveness of the Internal Control System on Financial Reporting

Thekeyprocessesthathavebeenestablishedinreviewingthedesignandeffectivenessand integrityof thesystemof internal controls with respect to financial reportingincludethefollowing:

• TheBoardCommitteesestablishedbytheBoard,assiststheBoardinensuringtheeffectivenessoftheGroups’dailyoperationsandthattheGroupoperationsareinaccordancewith the corporate objectives, strategiesand the annual budget as well as the policies andbusinessdirectionsthathavebeenapproved.

• TheInternalAuditoroftheGroupverifiescompliancewithpoliciesandproceduresandtheeffectivenessoftheinternalcontrolsystemsonanongoingbasisusingsamplesandrotationalbasisandhighlightssignificantfindings in respect of any non-compliance. TheinternalauditplanthatcoversinternalauditcoverageandscopeofworkispresentedforAuditCommitteeandtheBoard.

• Internal audit reports are presented to the AuditCommittee during its quarterly meetings whichencompasses the audit findings together withrecommendationsthereon.Seniorandfunctionallinemanagementaretaskedtoensuremanagementactionplans are carried out effectively and regular follow-up audits are performed to monitor the continuedcompliance. Inaddition to this internalmechanism,the Company also received extensive and detailedreports,managementlettersfromitsExternalAuditorsthat primarily focuses on financial controls. ThemanagementletterswerealsopresentedtotheAudit

Committeefordeliberations.Intheeventofanynon-compliance, appropriate corrective actions havebeentakeninadditiontoamendmentstotherelevantprocedures,ifrequired.

• The Board and employees of the Company arecommittedtoadheringtothebestpracticeincorporategovernance and observing the highest standards ofintegrityandbehaviorinallactivitiesconductedbytheCompany,includingtheinteractionwithitscustomers,suppliers,shareholders,employees,businesspartners,andwithin thecommunity&environment inwhichtheCompanyoperates.

• RiskManagement is vital for continued profitabilityand enhancement of shareholder value; hence RiskManagementispracticedwithintheCompanyonaniterative basis. The Board regards risk managementas an integral part of business operations. All newandmajor investmentshave toobserveaprocessofapprovalthatincludesanevaluationoftheassociatedrisks. A Corporate Risk Management Frameworkwas developed and documented via a CorporateRisk Management Manual which sets out in acomprehensivemanner the process adopted by theCompanytowardsriskidentification,evaluation,andcontrol and monitoring. Further information on theCompany’s riskmanagementactivities ishighlightedintheRiskManagementReportonpages9to10ofthis Annual Report.

Confirmation

• Based on the above processes, the Board confirmsthat the financial reporting system of the Grouphas been designed to provide reasonable assuranceregarding the reliability of financial reporting andthe preparation of Financial Statements for external purposes has been done in accordance with SriLankaAccountingStandards(SLFRS/LKAS)andotherregulatoryrequirements.

ByOrderoftheBoardofDirectorsofSerendibEngineeringGroup PLC.

H. N. De Silva D. L. De Silva Chairman Director

Prof. R. W. T. R. Bandara

Chairman AuditCommittee30th August 2014

Directors Statement of Internal Controls


Corporate Governance Report

Statement of Corporate Governance

Serendib EngineeringGroup PLC is one of the leadingConstructionandEngineeringCompaniesinthecountry,listedontheColomboStockExchange.

The Board has been continuously committed towardsimprovingtheinternalcontrolsystemswiththeviewtoprovide transparency and accountability to ensure bestpractices of Corporate Governance principles.

ThisreportoutlinestheCompany’sCorporateGovernanceprocessesandactivitiesforthefinancialyearunderreviewwithreferencetotheCodeofBestPracticeoftheInstituteofCharteredAccountantSriLanka, the requirementsoftheSecuritiesandExchangeCommissionofSriLankaandtheColomboStockExchange.

Role of Board of Directors

ThecoreresponsibilityoftheDirectorsistoexercisetheirjudgment to act inwhat they reasonably believe to bethebestinterestsoftheCompanyandforthecreationoflong-termvalueandreturnforshareholders.

The Board is responsible for the achievement of theGroup’s overall performance objectives, accurate andefficient financial plans and annual budgets, majorinvestments,divestment andevaluationandassessmentof funding proposals, risk management and ensuringcorporategovernancepracticesareadheredto.

ToensuretheefficiencyandeffectivenessofthedelegationofresponsibilitiesandtoprovideanindependentoversightofManagement,theBoardhasestablishedanumberofBoardSubCommittees, including theAuditCommitteeand Remuneration Committee. These committees areprimarily consists of Non-Executive Directors. Therespective roles and responsibilities of eachBoard SubCommitteesareincludedinthisreport.

As at 31stMarch2014theBoardcomprisesofsixdirectors,five of them are non-executive directors whereas theChairmanMr.H.N.DeSilvaisanExecutiveDirector.

Board Committees

The responsibilities & duties have been delegated tothe followingsubcommittees&allsubcommitteesarerepresentedbytheboardmembersofthecompany.TheSubcommitteesare,

1.AuditCommittee

2. Remuneration Committee

Audit Committee

TheauditcommitteecomprisestwoIndependentDirectorsandoneNon-ExecutiveDirectorasat31stMarch2014.OneofthemisqualifiedManagementaccountant,havingextensive experience in field of finance.The committeeis headed by Professor R. W. T. M. R. Bandara, Non-Executive Director.

The Committee ensures the independence of theexternalauditorsandconfirmsthecompliancewiththerequirementsunder theAct in relation to appointment,re-appointment and removal of the External Auditors.TheCommitteemakesrecommendationstotheBoardasappropriate.TheExternalAuditorsaredulyappointedbytheshareholdersattheAnnualGeneralMeetingofeachyear.

Thecommitteeconfirms to thebestof theirknowledgethat the functions of the Audit Committee are inaccordancewiththerequirementsundertheListingRulesoftheColomboStockExchange.

The Audit committee met four times for the year2013/2014 with the presence of internal auditors.TheReportoftheAuditcommitteeappearsonpagesno.20.

Remuneration Committee

The Remuneration committee comprises three NonExecutive Directors as at 31stMarch2014.ThecommitteeheadedbyProfessorR.W.T.M.R.Bandara,whileMrsD.L.DeSilvaandDr.A.G.P.A.Gunawansaserveasmembers. Responsibilities of the committee include,formulation, establishment of remuneration policiesaswell as reviewing, approving and recommending totheboard remunerationsofDirectors including thekeypositionofthecompanyandworkforceofthecompany.

TheReportof theRemunerationCommitteeappearsonpage no 21.

Accountability and Internal Control Financial Reporting

The Board of Directors are directly responsible for overall company’s activities to shareholders of the company.

Therefore the Board of Directors and theManagementpaytheirutmostprioritytoprovidecompletedisclosureoffinancialandnonfinancialinformationinaccordancewith commercial practices.TheBoard ofDirectors paybroad attention to the adoption of sound and accuratereportingpracticestoensurethatanhonestandbalancedassessmentispresentedatalltimes.

Internal Control

TheBoardofDirectorsensuretomaintainstronginternalcontrol system to safeguard shareholders wealth. TheBoard periodically reviews and assesses the internalcontrolsystemwithaviewtoincreasetheefficiencyandproductivityofthecompany’swealth.TheBoardensuresthe timely reporting to shareholders and compliancewith the statutory requirements and provisions. FurthertheBoard confirms that there is anongoingprocess toidentifying,evaluatingandmanagingthesignificantriskfacedbytheorganization.


Theframeworkisdesignedtoprovidereasonablecareof,

• Efficiencyandeffectivenessofoperations.

• Reliability of financial and other managementinformation.

• Thepreventionoffraud.

• Compliance with relevant national laws andcompanyregulations.

The board has delegated the process of reviewingthe effectiveness of the internal controls to the AuditCommittee.

Code of Business Conduct and Ethics

Although there is no written code of conduct of theDirectors, they are conscious of the duties requiredof them. The transactions and activities which wereassociated with the company are disclosed under therelatedpartytransaction,whichisappearingatNote26ofthefinancialreport.

TheCompanyiscompliantwiththeCodeofBestPracticeonCorporateGovernancejointlyissuedbytheSECandICASL.

Corporate Governance Disclosure

The quarterly financial statements published by thecompany with the explanatory notes as per requiredrulesoftheColomboStockexchangeandtheSecuritiesexchange Commission of Sri Lanka is disclosed to allstakeholders. Furthermore any other financial and nonfinancialinformationwhicharepricesensitiveorwarrantstheshareholdersattentionandconsiderationispromptlydisclosedtothepublic.

Compliance with the Colombo Stock Exchange Rules on Corporate Governance

Levels of Compliance with the CSE’s Listing Rules Section 07 – Rules on CorporateGovernance are given in thefollowingtable


Rule No Subject Applicable Requirement Compliance Status

Reference

7.10.1(a)/(b)/(c)

Non-Executive

Directors

AtleastonethirdofthetotalnumberofDirectorsshouldbenonexecutivedirectors

Complied Refer on page 22.

7.10.2(a) IndependentDirectors

Twooronethirdofnonexecutivedirectorswhicheverishighershouldbeindependent

Complied Refer on page 22 out of sixdirectors,threeareIndependent.

7.10.2(b) IndependentDirectors

EachNon-ExecutiveDirectorshouldsubmitadeclarationofindependence/non-independenceintheprescribedformat

Complied Refer Annual Report oftheBoardonthestate of Affairs of the Companyonpage22.

7.10.3(a) Disclosure relating to Directors

TheBoardshallannuallymakeadeterminationastotheindependenceoftheNonExecutiveDirectorsandnamesofindependentDirectorsshouldbedisclosedintheAnnualReport.


7.10.3(b) Disclosure relating to Directors

ThebasisfortheBoardtodetermineaDirectorisindependent,ifcriteriaspecifiedforindependenceisnotmet


7.10.3(c) Disclosure relating to Directors

AbriefresumeofeachDirectorshouldbeincludedintheAnnualReportandshouldincludetheDirector’sareasofexpertise

Complied ReferDirectors’ProfileonpageNo4to5.

7.10.3(d) Disclosure relating to Directors

ForthwithprovideabriefresumeofnewDirectorsappointedtotheBoardwithdetailsspecifiedin7.10.3(a),(b)and(c)totherulesoftheColomboStockExchange.

Compliedatthe time of new appointment

Abriefresumeofnewdirectorsandthe appointments weresubmittedtotheColomboStockExchange when such appointments were made.

7.10.5 Remuneration Committee

AlistedCompanyshallhaveaRemunerationCommittee.

Complied Refer on page 21

7.10.5(a) Composition of Remuneration Committee

ShallcompriseNon-ExecutiveDirectors,atwhichamajorityofwhomshallbeindependent

Complied Refer on page 21

7.10.5(b) Function of Remuneration Committee

TheRemunerationCommitteeshallrecommendtheremunerationoftheChiefExecutiveOfficerandExecutiveDirectors.

Complied Remuneration Committee report on page 21 of this report which set out the functions of the Committee

7.10.5(c) Disclosure in the Annual Report relating to Remuneration Committee.

TheAnnualReportshouldsetout;

a. Names of Directors comprising the Remuneration Committee.

b.StatementofRemunerationpolicy.

c.AggregateremunerationpaidtoExecutive &NonExecutiveDirectors.


Refer on page 21.

Refer Directors’ emoluments on page 22.

7.10.6 AuditCommittee.

TheCompanyshallhaveanAuditCommittee. Complied. NamesofthemembersoftheAuditCommitteearestatedonpage20.

7.10.6(a) Composition ofAuditCommittee.

ShallcompriseofNon-ExecutiveDirectors,amajorityofwhoshallbeIndependent.

Complied TwoofthreeNon-Executive Directors areindependent.ReferAuditcommitteereportpage 20.

ANonExecutiveDirectorshallbeappointedastheChairmanoftheCommitteeMeetings.

Complied A Non Executive DirectorhasbeenappointedastheChairman of the CommitteeMeetings.

Corporate Governance Report (Contd)



ChiefExecutiveOfficerandChiefFinancialOfficershouldattendAuditCommitteeMeetings.

Complied CEOandtheCFOparticipate for the meetings.

TheChairmanoftheAuditCommitteeoronemembershouldbeamemberofaprofessionalAccountingbody.

Complied ChairmanoftheAuditCommitteeisamemberof a professional accountingbody.

7.10.6(b) AuditCommitteeFunctions

Functionsshallinclude;

a.Overseeingofthepreparation,presentationandadequacyofdisclosuresintheFinancialStatementsinaccordancewithSriLankaAccountingStandards.

Complied Refer on page 20 for thefunctionsofAuditCommittee

b.Overseeingofthecompliancewithfinancialrequirements,informationrequirementsoftheCompaniesActandotherrelevantfinancialreportingrelatedregulationsandrequirements.

Complied Refer on page 20 for thefunctionsofAuditCommittee.

c. Overseeing the process to ensure that the internalcontrolsandriskmanagementprocessesareadequatetomeettherequirementsoftheSriLankaAuditingStandards.


d.AssessmentoftheindependenceandperformanceoftheexternalAuditors.


e.MakerecommendationstotheBoardpertainingtoappointment,reappointmentandremovalofexternalAuditors,andapprovethefeesandtermsofengagementoftheexternalAuditors.

Complied Refer on page 20 for

thefunctionsofAuditCommittee.

7.10.6(c) Disclosure in the Annual Report relatingtoAuditCommittee.

a.NamesofDirectorscomprisingtheAuditCommittee.

b.TheAuditCommitteeshallmakeadeterminationoftheindependenceoftheAuditorsanddisclosethebasisforsuchdeterminations.

c.TheAnnualReportshallcontainaReportoftheAuditCommitteesettingoutthemannerofcompliance with their functions

Complied

Complied

Complied

Refer on page 20.

Refer on page 20.

Refer on page 20.

Rule No Subject Applicable Requirement Compliance Status

Reference


COMPLIANCE WITH THE CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE ISSUED JOINTLY BY THE SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA (SEC) AND THE INSTITUTE OF CHARTERED ACCOUNATANTS OF SRI LANKA (ICASL)

A. ANNUAL REPORT

Subject & Ref Corporate Governance Principle Level of Compliance

Chairman&CEO

A.2.1&A.5.6

IfChairmanandCEOisoneandthesameperson,thenameoftheChairman/CEOandSeniorIndependentDirectorappointedandjustificationofthedecisiontocombinethepositions.

Asoutlinedearlier,thepositionsoftheChairmanandtheCEOhavebeenseparatedonpages4to6.

BoardBalanceA.5.5 ShouldidentifytheindependentNon-ExecutiveDirectors

Complied

TheBoardConsistfivenon-executiveDirectors.Threeoutofsixareindependent.

Nominations Committee A.7.1

TheChairmanandmembersoftheNominationCommitteeshouldbeidentified.

ThecompanydoesnothaveaNominationsCommitteeaswebelievegiventhestructureoftheCompanyitwouldnotberequired.

Appointment of New DirectorsA.7.3

WhennewDirectorsareappointed,thefollowingdetailsshouldbedisclosed.

•AbriefrésuméofeachDirector;

•Thenatureofhisexpertiseintherelevantfunctionalareas;

•ThenamesofCompaniesinwhichtheDirectorholds

DirectorshipsormembershipsinBoardcommittees;and

•WhetherWhethersuchDirectorcanbeconsideredindependent.

Complied

DisclosureofdetailsasrequiredofnewappointmentstotheBoardwasinformedtotheColomboStockExchangeandalsodisclosedintheAnnualReport.ProfilesofDirectorsaregivenonpages4to5.

AppraisalofBoardPerformanceA.9.3.

Shoulddisclosehowperformanceevaluationhavebeenconducted

Complied

PerformanceevaluationoftheBoardandindividualDirectorstakesplaceannuallyonaself-appraisalbasis.

BoardRelatedDisclosuresA.10.1

ThefollowingdetailspertainingtoeachDirectorshouldbedisclosed

•Name,qualificationandbriefprofile;

•Thenatureofhis/herexpertiseinrelevantfunctionalareas;

•Immediatefamilyand/ormaterialbusinessrelationship with other Directors of the Company;

•Whetherexecutive,non-executiveand/orindependentDirector;

•NamesofotherlistedCompaniesinSriLankainwhichtheDirectorconcernedservesasaDirector;

•NamesofCompaniesinwhichtheDirectorconcernedservesasaDirectorand/orthefactthathe/sheholdsotherDirectorshipsingroupCompanies;

•Number/percentageofBoardmeetingsoftheCompanyattendedduringtheyear;

•ThetotalnumberofBoardseatsheldbyeachDirectorindicatinglistedandunlistedCompaniesandwhetherinanexecutiveornon-executivecapacity;

•NamesoftheBoardCommitteesinwhichtheDirectorservesastheChairmanoramember;and

•Number/percentage

Complied

Directors’profileswiththeirqualifications,areas of expertise etc. are given on pages 4 &5.Detailsofdirectorships/otherpositionsheld,Directors’interestsincontractsandrelatedpartytransactionsaredisclosedinNotes26oftheFinancialStatementsgivenonpage47.DetailsofBoardmeetingsandBoardsubcommittees,theircomposition,AttendancebyDirectorsofmeetingsheldduringtheyeararegivenonpages20to21.



Disclosure of RemunerationB.3&B.3.1

•AStatementofRemunerationPolicyanddetailsofRemunerationoftheBoardasawhole.

•NamesofDirectorscomprisingtheremunerationcommittee,containastatementofremunerationpolicyandsetouttheaggregateremunerationpaidtoExecutiveandNon-ExecutiveDirectors

Complied

Refer Remuneration Committee Report on page21andalsoNote6oftheAuditedFinancial Statements.

Majortransactions C.3&C3.1

•AllmajortransactionsenteredintobytheCompanyshouldbedisclosed.

Nosuchtransactionsduringthefinancialyear.

AuditCommitteeD.3.4 •NamesofthemembersoftheAuditCommitteeshouldbedisclosed.

•BasisfordeterminingtheindependenceofAuditors.

Complied

RefertheAuditCommitteeReportonpage20.

CodeofBusinessConductandEthicsD.4.1&D.4.2

ShoulddisclosewhethertheCompanyhasaCodeofBusinessConduct&EthicsforDirectorsandmembersoftheSeniorManagementteam.

•ShouldalsodiscloseanaffirmativedeclarationthattheyhaveabidedbysuchCode.

•TheChairmanmustcertifythathe/sheisnotawareofanyviolationofanyoftheprovisionsofthisCode.

ThereisnowrittenCodeofConduct.

Refer the Corporate Governance Report on pages12to19.

GoingConcernD.1.5 •ShouldreportthattheCompanyisagoingconcern,withsupportingassumptionsandqualificationsasnecessary

Complied

ReferAnnualReportoftheBoardonthestateofaffairsoftheCompanyonpages22to23.

Communication with ShareholdersC.2.2-C.2.7

•TheCompanyshoulddisclosethepolicyandmethodologyforcommunicationwithshareholders.

•Shoulddisclosehowtheyimplementtheabovepolicyandmethodology.

•Disclosethecontactpersonforsuchcommunication.

•ThereshouldbeaprocesstomakeallDirectorsawareofmajorissuesandconcernsofshareholders,theprocessshouldbedisclosed.

•Thecompanyshoulddecidethepersontocontactinrelationtoshareholdersmatters

•Theprocessforrespondingtoshareholdermattersshouldbedisclosed.

Thecompanycontinuouslyfocusesonmaintaininganactivedialoguewithshareholders,potentialinvestors,investmentbanks,stockbrokersandotherinterestedparties in ensuring effective investor communications.

Theinvestorrelationsteamfocusesonthefollowing:

− Maintainingandbuildingahealthyrelationships

− Keepinvestorsinformedaboutgroup’sperformance.

− respondingtoqueriesandclarifyingonconcerns of investors

− coordinatingmediarelationsandinvestorcommunications

InadditiontothesaidmethodstheBoardofDirectorsareavailabletomeetordiscusswithshareholderswithregardtoanyqueriesor concerns.

B. REMUNERATION COMMITTEE REPORT


MembersofRemunerationCommittee B.1.3

ThenamesofthemembersofRemunerationCommitteeshouldbedisclosedintheRemunerationCommittee Report.

Complied

Refer the Remuneration Committee Report on page 21.




C. DIRECTORS REPORT


Directors’ Report D.1.2 ShouldcontainthefollowingdeclarationsmadebytheDirectors,•TheCompanyhasnotengagedinanyactivities,whichcontraveneslawsandregulations;

•TheDirectorshavedeclaredallmaterialinterestsincontractsinvolvingtheCompanyandrefrainedfromvotingonmattersinwhichtheyweremateriallyinterested;

•TheCompanyhasmadeallendeavorstoensuretheequitabletreatmentofshareholders;

•Thebusinessisagoingconcernwithsupportingassumptionsorqualificationsasnecessary;and

•Theyhaveconductedareviewofinternalcontrolscoveringfinancial,operationalandcompliancecontrolsandriskmanagementandhaveobtainedreasonableassuranceoftheireffectivenessandsuccessfuladherenceherewith.

Complied

ReferAnnualReportoftheBoardonthestateofaffairsofthecompanyonpages22to 23

D. FINANCIAL STATEMENTS


Financial Statements D.1.3 •TheBoardofDirectorsshouldincludeaStatementofResponsibilityforthepreparationandpresentationofFinancialStatements.

•Auditorsshouldalsohaveastatementabouttheirreportingresponsibility

Complied

Referonpage27.

ForAuditorsStatementReferonpage25.

RelatedPartyTransactionsD.1.7

•ShoulddisclosetherelatedpartiesandrelatedpartytransactionsasspecifiedbySriLankaAccountingStandards,SECregulationsandotherrelatedregulations

Complied

ReferNote26onpage47.

E. MANAGEMENT REPORT


ManagementReportD.1.4 •ShouldincludeaManagementDiscussionandAnalysisReportdiscussingatleastthefollowingissues:

•Industrystructureanddevelopments;•Opportunitiesandthreats;•Risksandconcerns;•Internalcontrolsystemsandtheiradequacy;•SocialandenvironmentalprotectionactivitiescarriedoutbytheCompany;

•Financialperformance;•Materialdevelopmentsinhumanresources/industrialrelations

Complied.

ReferChairman’sReviewonpage3andManagementDiscussionandFinancialAnalysisonpage8.

F. CORPORATE GOVERNANCE REPORT


Corporate Governance reportD5.1

ShoulddisclosethemannerandextenttowhichtheCompanyhascompliedwiththeprinciplesandprovisionsoftheCode

Complied.

Referonpages12to19.



G. AUDIT COMMITTEE REPORT


AuditCommitteereportD 3.3

ShouldsetouttheworkcarriedoutbytheCommittee

Complied.

Refer on page 20.

H. STATEMENT OF INTERNAL CONTROL


Statement of Internal Control

D.1.3&D.2.3

Shoulddisclosethefollowingasaminimum.

a) TheBoard should summaries theprocess it hasappliedinreviewingthedesignandeffectivenessofthesystemofinternalcontrol.

b) Should disclose the process it has applied todeal with material internal control aspects ofanysignificantproblemsdisclosedintheannualreport.

c) An acknowledgement by the Board that itis responsible for the Company’s system ofinternal control and for reviewing its designandeffectiveness.Shouldalsoexplain that sucha system is designed to manage rather thaneliminatetheriskoffailuretoachieveobjectives,andcanonlyprovidereasonableandnotabsoluteassurance against material misstatements of loss.

d)Shoulddisclosethatthereisanongoingprocessfor identifying, evaluating and managing thesignificant risks facedby theCompany,whetherit has been in place for the year under reviewwhetheritisregularlyreviewedbytheBoard.

e)TheBoardhastodiscloseifithasfailedtoconducta review of design and effectiveness of theCompany’ssystemofinternalcontrol

f) Should ensure that its disclosures providemeaningful, high level information and do notgiveamisleadingimpression.

g) Wherematerial subsidiaries, joint ventures andassociateshavenotbeendealtwith inapplyingthis guidance, as part of the group, that factshouldbedisclosed.

h)TheConfirmationbytheBoard;

The Board should confirm in its report that thefinancial reporting system has been designedto provide reasonable assurance regardingthe reliability of financial reporting and thepreparation of financial statements for externalpurposes has been done in accordance withapplicable accounting standards and regulatoryrequirements.ShouldbesignedbytheDirectorswho signed the financial statements and thechairmanoftheAuditCommittee.

Complied.

Refer Statement of Internal Control on page 11.



Audit Committee Report

The Audit Committee comprises of two IndependentNon-Executive Directors and one Non-ExecutiveDirector,Prof.R.W.T.R.BandarawhoisanIndependentNon-ExecutiveDirectorfunctionsastheChairmanofthecommittee.The restof thecommitteecomprisesofMr.A. C. De Silva who is an Independent Non-ExecutiveDirectorandalsoamemberoftheCharteredInstituteofManagementAccountantsandMr.H.G.S.KariyawasamwhoisaNon-ExecutiveDirectorofthecompany.

TheChief ExecutiveOfficer, Chief FinanceOfficer andChief Operating Officer attend meetings by invitation.RepresentativesofexternalandinternalAuditorswillbeinvitedwhen necessary. Proceedings of the CommitteemeetingsarereportedtotheBoardofDirectors.

TheattendanceoftheDirectorsattheAuditCommitteemeetingduringtheyearistabulated.

NameoftheDirector Eligibleto Attended attend

Prof.R.W.T.M.R.Bandara 4 4

Mr.A.C.DeSilva 4 4

Mr.H.G.S.Kariyawasam 4 4

The Audit Committee has written terms of referenceand is empowered to examine any matters relatingto the financial affairs of theCompany and its internaland external audits. Its duties include reviews offinancial statements, internal control procedures andrisk management, accounting policies and compliancewithSriLankaAccountingStandards.ItalsoreviewstheadequacyofsystemsforcompliancewiththeCompaniesAct No.7 of 2007, other relevant legal, regulatoryand ethical requirements and company policies. TheCommitteeendeavorstoassisttheDirectorstodischargetheirduties and responsibilities in respectof regulatorycomplianceandriskmanagement.

ThefollowingactivitieswerecarriedoutbytheCommittee

Financial Reporting and Internal Control System

• TheCommitteereviewedtheInterimandAnnualFinancial Statements of the Company and hasrecommended same to the Board for approvalandpublication.

• ReviewofthepreparationoftheAnnualReporttoensure the reliabilityof theprocess,consistencyof the accounting policies and methods andcompliancewithSriLankaAccountingStandards.

• The Committee is satisfied that the controlenvironmentprevailingintheCompanyprovidesreasonable but not absolute assurance that thefinancialpositionof theCompany isadequatelymonitored and that the systems are in place tominimizetheimpactofidentifiablerisks.

• TheCommitteealsomonitorsthetimelypaymentsofallstatutoryobligations.

• TheCommitteealsomonitorstheeffectivenessofthe internalandfinancialcontrolproceduresonthebasisofthereportsandfindingssubmittedbytheInternalandexternalAuditorsoftheCompany.

External Audit

The Committee has reviewed the services provided bythe External Auditors to the Company to ensure theirindependenceasAuditorshasnotbeencompromised.AsfarastheDirectorsareaware,theAuditordoesnothaveanyrelationship(otherthanthatofanAuditor)withtheCompanyotherthanthosedisclosedabove.TheAuditorsalsodonothaveanyinterestintheCompany.ForthesaidreasonstheCommitteedeterminedthattheAuditorsareindependent.

TheAuditCommitteehasrecommendedtotheBoardofDirectorsthat,V.S.&Associates,CharteredAccountantsbere-appointedasAuditorsforthefinancialyearending31stMarch2015atremunerationtobedeterminedbytheBoard,subjecttotheapprovaloftheShareholdersattheAnnualGeneralMeeting.


ChairmanAuditCommittee30th August 2014


shouldbeinparwiththeindustrystandardsinordertomotivate, attract and retain the best with professionalandmanagerialtalent.TheCommitteeisalsoresponsiblefor the remuneration structure of the employees of thecompany.The recommendations of the Committee areimplementedwiththeapprovaloftheBoardofDirectors.

Procedure

Thecommittee in fulfilling the above tasks reviews theinformation relating to retirement and remuneration ofemployees.Extensionofservicesnotexceedingoneyearisconsideredonacasebycasebasisovertheretirementage of 55 years. Remuneration packages are decidedin par with market rates and practices and similar toother establishments. The Committee determines therevision/ increments based on performance andmakesrecommendation to the board of directors and uponconsiderationofsuchrecommendationstheBoardmakesthefinaldetermination.


ChairmanRemuneration Committee

30th August 2014

Remuneration Committee Report

The Composition & Attendance

TheRemunerationCommittee appointed by theBoard,comprises three (3) Non Executive Directors as at 31st

March 2014. Two of the members are independentDirectors.Themembersofthecommitteeareasfollows:

Prof.R.W.T.M.R.Bandara–Chairman

Mrs.D.L.DeSilva


The attendance of the Directors at the RemunerationCommitteemeetingduringtheyearistabulated.

NameoftheDirector Eligibleto Attended attend

Prof.R.W.T.M.R.Bandara 2 2

Mrs.D.L.DeSilva 2 2

Dr. A. G. P. A. Gunawansa 2 2

Chief Operating Officer functioned as secretary to thecommitteeexceptwhenownevaluationandremunerationwas under discussion. The Accountant assisted theCommitteebyprovidingtherelevantinformationfortheirdecisionwithin the termsof referenceapprovedby theBoard.

Remuneration Policy

The Remuneration Committee is responsible forrecommendingremunerationpayabletokeymanagerialpersonnel based on performance parameters. TheCommitteestronglybelievesthattheremunerationpolicy


Annual Report of the Board on the State of Affairs of the CompanyTheDirectorsoftheSerendibEngineeringGroupPLChavepleasureinpresentingtheirreportfortheyear2013/2014together with the Audited Financial Statements for theyearended31stMarch2014.Thedetails setouthereinprovidethepertinentinformationincompliancewiththeCompaniesActNo.07of2007andtheColomboStockExchangeListingRulesandareguidedbyrecommendedbestaccountingpractices.

Principal Activities A holding company involved in diverse engineeringactivities.

Results and AppropriationsTheFinancial Statementsof theCompanyaregivenonPage26to51ofthisAnnualReport.

Review of Operations & PerformanceTheChairman’s Reviewprovides an overall assessmentoftheCompany’soperationsandperformanceduringthefinancialyearunderreviewonpage3.

DirectorateThe Members of the Board during the financial yearunderreviewasatthedateofthereportwereasfollows:-

Mr.H.N.DeSilva - Chairman

Mrs.D.L.DeSilva - Non-ExecutiveDirector

Mr.H.G.S.Kariyawasam - Non-ExecutiveDirector

Dr.R.Bandara - Non-Executive/ IndependentDirector

Dr.A.G.P.A.Gunawansa - Non-Executive/ IndependentDirector

Mr.A.C.DeSilva - Non-Executive/ IndependentDirector

TheProfileoftheBoardofDirectorsoftheCompanyisgiveninPages4to5ofthisreport.

New AppointmentsMr.ACDeSilvawasappointedtotheBoardon9th April 2013.

Executive AppointmentsMr.SamuelCliveDeSilvawasappointedastheCEOoftheCompanyw.e.f.20thMay2013.

Retirement of Directors and their Re-ElectionInaccordancewithArticle118oftheArticlesofAssociationof theCompany,Prof.RWTMRBandararetiresbyrotationandiseligibleforre-election.

Directors and CEO's Shareholdings 31st March 31st March 2014 2013 Number Number

Mr.H.N.DeSilva Nil Nil

Mrs.D.L.DeSilva Nil Nil

Mr.H.G.S.Kariyawasam Nil Nil

Prof.R.Bandara Nil Nil

Dr. A. G. P. A. Gunawansa Nil Nil

Mr.A.C.DeSilva Nil Nil

Mr.S.C.DeSilva 200,000 200,000

Director’s Remuneration DirectorsremunerationisdisclosedinNoteNo.6totheFinancial Statements on page 40 of the Annual Report.

DividendsTheBoardofDirectorsdoesnotrecommendthepaymentofadividendforthefinancialyearunderreview.

Major ShareholdingsThe 20 major Shareholders of the Company as at 31st

March2013and2014arelistedonPages52to53underShareholderInformation.

ShareholdingAsat31/03/2014therewere258RegisteredShareholders.Thedistributionofshareholdersisindicatedonpage52under“Shareholderinformation”.

Stock Market InformationInformationrelatingtoearnings,dividends,netassetspershareisgivenonpage2and53ofthisdocument.

Stated CapitalTheStatedCapitaloftheCompanyasat31stMarch2014wasRs.178,107,910/- representing 6,476,650OrdinaryShares.ThestructureoftheStatedCapitalisgiveninNote19totheFinancialStatements.

Going ConcernTheBoardofDirectorsoftheCompanyaresatisfiedthatthe Company has adequate resources to continue itsoperationsintheforceablefuture.ThereforetheCompanycontinuestoadoptagoingconcernconceptinpreparingtheaccountsoftheCompany.


Interests Register An InterestsRegister ismaintained, incompliancewiththeCompaniesActNo.07of2007.

The particulars of the entriesmade in connectionwiththe General Disclosure in terms of Section 192(2) oftheCompaniesActNo.07of2007aregiveninNote26underRelatedPartytransactions.

Audit CommitteeTheAuditCommitteecompriseofProf.RWTRBandara,MrACDeSilvaandMrHGSKariyawasam.Prof.RWTRBandara,functionsastheChairmanoftheCommittee.

ThereportoftheAuditCommitteeisgivenonPage20.

Remuneration CommitteeTheRemunerationCommitteecomprisesofProf.RWTRBandara,Mrs.DLDeSilvaandDr.AGPAGunawansa,Prof.RWTRBandarafunctionsastheChairmanoftheCommittee.

ThefunctionsoftheRemunerationCommitteearegivenon Page 21.

Statutory PaymentsTheDirectors,tothebestoftheirknowledgeandbeliefaresatisfiedthatallstatutorypaymentshavebeenmadeuptodateorprovidedforsame.

Environmental Protection TheBoardofDirectorshas takenadequateprecautionswhendiversifyingthebusinessactivitiestoensurethattheCompanydoesnotengageinanyactivitieswhichcouldbedetrimentaltotheenvironment.

Risk Management The Board of Directors has structured proper systemsand controls to identify probable risk. These systemsare periodically evaluated and reviewed by the boardthrough the IntegratedRiskManagementCommittee toensuresmoothfunctioning.Remedialmeasuresalsohavebeenimplementedtomitigaterisk.

ReviewoftheRiskManagementCommitteeisgivenonPages9to10.

Contributions To CharitiesTheCompanyhasnotcontributedtocharitiesduringthefinancialyearunderreview.

Accounting Policies There has been no change in the Accounting Policiesadopted by the Company in preparation of FinancialStatementsduringtheFinancialYearunderreviewotherthanwhatisstatedintheFinancialStatements.

Events After The Reporting PeriodSubsequent to the date of the Balance Sheet nocircumstancehasarisenwhichrequireadjustmentstotheaccounts except for the Note 30.

AuditorsTheaccountsfortheyearhavebeenauditedbyM/sVS&Associates,CharteredAccountants,whoretireandareeligible for re-appointment. The Directors recommendtheirre-appointment.

TheAuditorswerepaidasumofRs80,000/-asAuditFeesabytheCompanyforthefinancialyearunderreview.Asfaras theBoard isaware theAuditorsdonothaveanyrelationshipwith theCompany other than carrying outtheExternalAudit.

ByorderoftheBoardofSerendibEngineeringGroupPLC

H. N. De Silva D. L. De Silva Director Director

Corporate Arcade Limited

CompanySecretariesColombo

30th August 2014


Statements of Directors Responsibilities

The following statement sets out the responsibilities ofthe Directors in relation to the Financial Statements of theCompany.ThesedifferfromtheresponsibilitiesoftheAuditors,whicharesetoutintheirreportappearingonpage25.

TheCompaniesActNo.7of2007requirestheDirectorsto prepare Financial Statements for each financial yeargiving a true and fair viewof the stateof affairs of theCompanyasat theendof thefinancialyearandof theprofit or loss of the company for the financial year. Inpreparingthefinancialstatementsappropriateaccountingpolicies have been selected and applied consistently,reasonable and prudent judgments and estimates have

been made and applicable accounting standards havebeenfollowed.

The Directors are responsible for ensuring that theCompanykeepssufficientaccountingrecordstodisclosewithreasonableaccuracyofthefinancialpositionoftheCompanyandforensuring that thefinancialstatementscomply with the Companies Act No. 7 of 2007.Theyare also responsible for taking reasonablemeasures tosafeguardtheassetsoftheCompany,andinthatcontexttohaveproperregardedtotheestablishmentofappropriatesystemsof internalcontrol topreventanddetect fraudsandotherirregularities.


Wehaveobtainedall the informationandexplanationswhich to the best of our knowledge and belief werenecessary for the purposes of our audit.We thereforebelievethatourauditprovidesareasonablebasisforouropinion.

Opinion -Company

Inouropinion,sofarasappearsfromourexamination,theCompanymaintainedproperaccountingrecordsfortheyearended31stMarch2014andthefinancialstatementsgive a true and fair view of the financial position ofthe Company as at 31st March 2014 and its financialperformanceandcashflows for theyear thenended inaccordancewithSriLankaAccountingStandards.

Opinion - Group

Inouropinion,theconsolidatedfinancialstatementsgivea true and fair viewof the financial position as at 31st

March2014anditsfinancialperformanceandcashflowsfor the year then ended, in accordancewith Sri LankaAccountingStandards.

Report on Other Legal and Regulatory Requirements

These financial statements also comply with therequirementsofSection151(2)and153(2) to153(7)oftheCompaniesActNo.07of2007.

V.S. & ASSOCIATESCHARTERED ACCOUNTANTSColombo

30th August 2014

Report on the Financial Statements

Wehaveauditedtheaccompanyingfinancialstatementsof Serendib Engineering Group PLC (“Company”), theconsolidated financial statements of the Company anditsSubsidiaries(“Group’’)whichcomprisetheStatementof Financial Position as at 31st March 2014, and theStatement of Comprehensive Income, Statement ofChanges inEquityandStatementofCashFlows for theyear then ended, and notes comprising a summary ofsignificant accounting policies and other explanatorynotesthereonassetoutonpages26to51.

Management’s Responsibility for the Financial Statements

Management is responsible for thepreparationand fairpresentationofthesefinancialstatementsinaccordancewithSriLankaAccountingStandards.Thisresponsibilityincludes: designing, implementing and maintaininginternal control relevant to the preparation and fairpresentation of financial statements that are free frommaterial misstatement, whether due to fraud or error;selectingandapplyingappropriateaccountingpolicies;andmakingaccountingestimatesthatarereasonableinthe circumstances.

Scope of Audit and Basis of Opinion

Our responsibility is to express an opinion on thesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithSriLankaAuditingStandards.Those standards require that we plan and performthe audit to obtain reasonable assurance whether thefinancialstatementsarefreefrommaterialmisstatement.

Anaudit includes examining, ona test basis, evidencesupportingtheamountsanddisclosures in thefinancialstatements. An audit also includes assessing theaccounting policies used and significant estimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.

Independent Auditor’s Report

TO THE SHAREHOLDERS OFSERENDIB ENGINEERING GROUP PLC

PartnersMrs.L.R.SHAH F.C.A. L.J.SELVANAYAGAM F.C.A

20/62,FairfieldGardens,Colombo8.

SriLankaTel:(94-11)2699606,2699917,2691281

Fax:(94-11)2699918E-mail:[email protected]


Statement of Comprehensive Income

For the year ended 31st March Note Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.

Revenue 2 261,357,719 339,100,825 11,975,000 -

CostofSales (156,495,537) (214,125,825) (10,891,738) -

GrossProfit 104,862,182 124,975,000 1,083,262 -

OtherIncome 3 3,704,518 1,467,939 - 145,126

108,566,700 126,442,939 1,083,262 145,126

AdministrativeExpenses (80,353,244) (63,296,897) (1,391,853) (1,666,069)

DistributionExpenses (9,371,712) (5,480,081) - -

Results from Operating Activities 18,841,744 57,665,961 (308,591) (1,520,943)

FinanceIncome 4 6,703,172 8,889,746 1,037,026 1,557,702

FinanceCost 5 (3,873,411) (3,838,689) (167,612) (2,204,223)

Net Finance Income / (Cost) 2,829,761 5,051,057 869,414 (646,521)

Profit / (Loss) before Tax 6 21,671,505 62,717,018 560,823 (2,167,464)

IncomeTaxExpense 7 (5,430,594) (14,945,744) (92,615) (326,504)

Profit / (Loss) for the year 16,240,911 47,771,274 468,208 (2,493,968)

Other Comprehensive Income - - - -

Total Other Comprehensive Income for the year - - - -

Total Comprehensive Income for the year 16,240,911 47,771,274 468,208 (2,493,968)

Attributable to:

EquityHoldersoftheParent 9,964,949 25,003,987 468,208 (2,493,968)

Non-ControllingInterest 6,275,962 22,767,287 - -

Total Comprehensive Income for the year 16,240,911 47,771,274 468,208 (2,493,968)

Earnings / (Loss) per Share 8 1.54 4.20 0.07 (0.42)

Figures in brackets indicate deductions.

TheFinancialStatementsaretobereadinconjunctionwiththerelatednotes,whichformanintegralpartoftheFinancialStatementssetoutonpages31to51.


Statement of Financial Position

As at 31st March Note Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs. ASSETS Non - Current AssetsPlant&Equipment 9 17,678,735 16,143,937 1,481,234 1,168,233IntangibleAssets 10 21,769,593 21,769,593 - -InvestmentsinSubsidiaries 11 - - 138,737,890 103,588,890OtherFinancialAssets 12 15,000,000 - - -DeferredTaxAssets 13 2,307,996 1,572,418 - - 56,756,324 39,485,948 140,219,124 104,757,123Current Assets Inventories 14 35,762,717 20,171,102 1,732,662 -TradeandOtherReceivables 15 179,219,915 209,867,758 91,859 76,383AmountsduefromRelatedParties 16 3,500,000 891,227 2,946,220 4,979,551OtherFinancialAssets 12 17,192,988 7,926,313 3,109,983 5,426,313ShortTermInvestments 17 12,186,350 37,624,167 - 2,853,957CashandCashEquivalents 18 25,297,677 16,087,659 1,519,004 7,353,042 TOTAL ASSETS 329,915,971 332,054,174 149,618,852 125,446,369 EQUITY AND LIABILITIES StatedCapital 19 178,107,910 178,107,910 178,107,910 178,107,910RetainedEarnings 24,921,589 (24,091,129) (52,663,885) (53,132,093) EquityAttributabletoEquity HoldersoftheParent 203,029,499 154,016,781 125,444,025 124,975,817Non-ControllingInterest 30,716,953 63,525,680 - - Total Equity 233,746,452 217,542,461 125,444,025 124,975,817

Non - Current Liabilities

FinanceLeaseObligations 20 5,086,416 6,722,008 - -EmployeeBenefits 21 6,763,918 5,802,230 - -DeferredTaxLiabilities 13 151,286 89,815 151,286 89,815 12,001,620 12,614,053 151,286 89,815Current LiabilitiesTradeandOtherPayables 22 68,518,070 88,806,368 677,324 254,071AmountsduetoRelatedParties 23 6,796,502 4,263,396 23,334,014 -FinanceLeaseObligations 20 4,409,561 2,595,928 - -InterestBearingBorrowings 24 3,302,000 - - -IncomeTaxLiabilities 25 608,608 273,664 12,203 126,666BankOverdrafts 18 533,158 5,958,304 - - TOTAL EQUITY & LIABILITIES 329,915,971 332,054,174 149,618,852 125,446,369 Figures in brackets indicate deductions.

IcertifythattheFinancialStatementshavebeenpreparedincompliancewiththerequirementsoftheCompaniesActNo.7of2007.

A. N. D. De Silva

GroupChiefFinancialOfficer

TheBoardofDirectorsisresponsibleforpreparationandpresentationoftheseFinancialStatements.

The Financial Statements on pages 26 to 51 were approved by the Board of Directors on 30th August 2014 and were signedinColomboon30thAugust2014onitsbehalfby:

H. N. De Silva D. L. De Silva Director Director


Statement of Changes In Equity

For the year ended 31st March 2014

Group Stated Retained Total Non Total Capital Earnings Controlling Equity Interest Rs. Rs. Rs. Rs. Rs.

Balance as at 31st March 2012 48,574,870 (47,324,604) 1,250,266 55,727,673 56,977,939

Profitfortheyear - 25,003,987 25,003,987 22,767,287 47,771,274

OtherComprehensiveIncome - - - - - Total Comprehensive Income for the year - 25,003,987 25,003,987 22,767,287 47,771,274

Transaction with owners of the Company, recognised directly in equity

IssueofRights 129,533,040 - 129,533,040 - 129,533,040

DirectCostonIssueofRights - (1,112,690) (1,112,690) - (1,112,690)

Acquisitionandchangesin Non-ControllingInterest - (657,822) (657,822) (14,731,068) (15,388,890)

SubsidiaryDividendto

Non-ControllingInterest - - - (238,212) (238,212) Total transaction with owners of the Company 129,533,040 (1,770,512) 127,762,528 (14,969,280) 112,793,248 Balance as at 31st March 2013 178,107,910 (24,091,129) 154,016,781 63,525,680 217,542,461

Profitfortheyear - 9,964,949 9,964,949 6,275,962 16,240,911

OtherComprehensiveIncome - - - - - Total Comprehensive Income for the year - 9,964,949 9,964,949 6,275,962 16,240,911

Transaction with owners of the Company,

recognised directly in equity

Acquisitionandchangesin Non-ControllingInterest - 39,047,769 39,047,769 (39,047,769) -

SubsidiaryDividendto

Non-ControllingInterest - - - (36,920) (36,920) Total transaction with owners of the Company - 39,047,769 39,047,769 (39,084,689) (36,920) Balance as at 31st March 2014 178,107,910 24,921,589 203,029,499 30,716,953 233,746,452


TheFinancialStatementsaretobereadinconjunctionwiththerelatednotes,whichformanintegralpartoftheFinancialStatementssetoutonpages31to51.


Statement of Changes In Equity

For the year ended 31st March 2014

Company Stated Retained Total capital earnings

(Rs.) (Rs.) (Rs.)

Balance as at 31st March 2012 48,574,870 (49,525,435) (950,565)

Lossfortheyear - (2,493,968) (2,493,968)

OtherComprehensiveIncome - - -

Total Comprehensive Income for the year - (2,493,968) (2,493,968)

Transaction with owners of the Company, recognised directly in equity

IssueofRights 129,533,040 - 129,533,040

DirectCostonIssueofRights - (1,112,690) (1,112,690)

Total transaction with owners of the Company 129,533,040 (1,112,690) 128,420,350

Balance as at 31st March 2013 178,107,910 (53,132,093) 124,975,817

Profitfortheyear - 468,208 468,208

OtherComprehensiveIncome - - -

TotalComprehensiveIncomefortheyear - 468,208 468,208

TotaltransactionwithownersoftheCompany - - -

Balance as at 31st March 2014 178,107,910 (52,663,885) 125,444,025


TheFinancialStatementsaretobereadinconjunctionwiththerelatednotes,whichformanintegralpartoftheFinancial Statementssetoutonpages31to51.


Statement of Cash Flows

For the year ended 31st March Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs. CASH FLOWS FROM OPERATING ACTIVITIES Profit/(Loss)beforeInterest&Tax 20,604,916 55,918,338 499,457 (3,437,316)Adjustmentfor;Depreciation 4,717,293 2,106,416 462,151 102,967ProfitonDisposalofPlant&Equipment (3,616,518) - - -GratuityProvision 1,430,438 - - -OverProvisionofEmployeeBenefits - (1,262,020) - -DividendIncome (377,273) (286,652) (563,787) (117,902)ProfitonDisposalofFinancialAssets 1,650,372 (139,310) (302,121) (139,310)FairValueChangesonFinancialAssets (3,007,070) 2,107,285 140,131 2,107,285 Profit / (Loss) before Working Capital Changes 21,402,158 58,444,057 235,831 (1,484,276)Changes in Working Capital(Increase)/DecreaseinInventories (15,591,615) (9,354,099) (1,732,662) -(Increase)/DecreaseinWorkinProgress - 33,553,926 - -(Increase)/DecreaseinTradeandOtherReceivables 30,647,843 (160,403,811) (15,476) (76,383)(Increase)/DecreaseinAmountsduefromRelatedParties (75,667) (81,573,257) 25,367,345 (92,933,988)Increase/(Decrease)inTradeandOtherPayables (20,288,298) 50,693,482 423,253 31,446 Cash Generated from / (used in) Operating Activities 16,094,421 (108,639,701) 24,278,291 (94,463,201)TaxPaid (5,769,757) (1,107,146) (145,607) (110,023)InterestPaid (1,611,149) (1,665,104) (26,988) (30,638)GratuityPaid (468,750) (2,894,000) - - Net Cash Flows from / (used in) Operating Activities 8,244,765 (114,305,951) 24,105,696 (94,603,862) CASH FLOWS FROM INVESTING ACTIVITIES PurchaseofPlant&Equipment (2,670,757) (2,433,409) (775,152) (1,271,200)ProceedsfromDisposalofPlant&Equipment 3,635,184 - - -AcquisitionofSubsidiary - (2,289,940) (35,149,000) (18,388,890)AcquisitionandchangesinNon-ControllingInterest - (15,388,890) - -AcquisitionofFinancialAssets (50,347,838) (6,342,098) (44,001) (6,342,098)ProceedsfromDisposalofFinancialAssets 27,437,861 821,310 2,522,321 821,309(Purchase)/DisposalofShortTermInvestments 25,437,817 5,220,374 2,853,957 (2,853,957)InterestReceived 2,677,738 8,463,784 88,354 1,300,490DividendIncomeReceived 377,273 286,652 563,787 117,902LeaseRentalsPaid (3,421,959) (1,113,986) - - NetCashFlowsfrom/(usedin)InvestingActivities 3,125,319 (12,776,202) (29,939,734) (26,616,444) CASH FLOWS FROM FINANCING ACTIVITIESIssueofRights - 129,533,040 - 129,533,040DirectCostonIssueofRights - (1,112,690) - (1,112,690)SubsidiaryDividendtoNon-ControllingInterest (36,920) (238,212) - -ProceedsfromInterestBearingBorrowings 3,302,000 - - - NetCashFlowsfrom/(usedin)FinancingActivities 3,265,080 128,182,138 - 128,420,350 NetIncrease/(Decrease)inCashandCashEquivalents 14,635,164 1,099,985 (5,834,038) 7,200,044CashandCashEquivalentsatthebeginningoftheyear 10,129,355 9,029,371 7,353,042 152,998 CashandCashEquivalentsattheendoftheyear 24,764,519 10,129,355 1,519,004 7,353,042 ANALYSIS OF CASH AND CASH EQUIVALENTSFavorable balancesSavingsAccounts 981,608 - 4,387 -CallDeposits - 600,000 - -CashinHand&atBank 24,316,069 15,487,659 1,514,617 7,353,042Un-favorable balancesBankOverdrafts (533,158) (5,958,304) - - 24,764,519 10,129,355 1,519,004 7,353,042 Figures in brackets indicate deductions.TheFinancialStatementsaretobereadinconjunctionwiththerelatednotes,whichformanintegralpartoftheFinancialStatementssetoutonpages31to51.


Notes to the Financial Statements For the year ended 31st March, 2014

1. REPORTING ENTITY

1.1. General

Serendib Engineering Group PLC is a Public QuotedCompany with Limited Liability incorporated anddomiciled in Sri Lanka. The registered office of theCompanyandtheprincipalplaceofbusinessislocatedatNo.12B,Gregory'sRoad,Colombo07andprincipalplace of business is located at No.20/7A, AverihenaRoad,Colombo05.

Ordinary Shares of the Company are listed on theColombo Stock Exchange. In the Financial Statements,’the Company’ refers to Serendib Engineering GroupPLC as the Parent Company and ’the Group’ refers totheCompanieswhoseaccountshavebeenconsolidatedtherein.

1.1.2. Principal Activities and Nature of Operations

The principal activities of the company wereManufacturing of precast Concrete poles used inTelecommunicationandElectricityIndustriesandactingas a Holding Company for Subsidiaries engaged in arange of Engineering Services.

ThecompanieswithintheGroupareengagedin;

a) CCCPlantationEngineeringLtd.

Manufacturing of machinery items for PlantationSector and service & repair ofmachines used inPlantation Sector.

b) SerendibEngineering&Agencies(Pvt)Ltd.

A multifaceted Engineering Company involvedin Telecommunications, Plantation Engineering,Water Supply and Filtration,Marine andRailwayEngineering.

c) SerendibInvestmentHoldingsLtd.

Investinginequityshares

1.2. BASIS OF PREPARATION

1.2.1. Statement of Compliance

The financial statements of the Company and theconsolidated financial statements have been preparedin accordance with Sri Lanka Accounting Standards(SLFRS / LKASs) adopted byThe Institute of CharteredAccountants of Sri Lanka (ICASL) and the requirementsof the CompaniesAct, No. 07 of 2007 and Sri LankaAccountingandAuditingStandardsAct,No.15of1995.

The financial statements of the Company and thoseconsolidated with such comprise of the Statement ofComprehensiveIncome,StatementofFinancialPosition,Statement ofChanges in Equity and Statement ofCashFlowstogetherwiththeAccountingPoliciesandNotestothefinancialstatements.

TheconsolidatedfinancialstatementsoftheGroupandtheCompanyfortheyearended31st March2014,wereauthorised for issue by theBoard ofDirectors on 30th August 2014.

1.2.2. Basis of Measurement

The Consolidated Financial Statements have beenprepared on the historical cost basis except for themeasurement of the following material items in the Statement of Financial Position.

a) FinancialInstrumentsatfairvaluethroughprofitorlossmeasuredatfairvalue.

b) Defined benefit planswhich aremeasured at thepresentvalueoftheEmployeeBenefits.

1.2.3. Functional and Presentation Currency

The financial statements are presented in Sri LankanRupees,whichistheGroup’sfunctionalcurrency.

1.2.4. Use of Estimates, Judgements and Assumptions

Thepresentationofthefinancialstatementsinconformitywith SLFRS / LKASs requires management to makejudgements, estimates and assumptions that affect theapplication of accounting policies and the reportedamountsofassets, liabilities, incomeandexpensesandthe disclosure of contingent liabilities at the reportingdate.Actualresultsmaydiffer fromthoseestimatesandjudgementaldecisions.

Estimates and underlying assumptions are reviewed onan ongoing basis. Revisions to accounting estimatesarerecognisedin theperiodinwhichtheestimatesarerevisedandinanyfutureperiodsaffected.

1.2.5. Materiality and Aggregation

Each material item is presented separately in theConsolidated Financial Statements. Other amounts areaggregatedwithamountsofsimilarnatureorfunction.

1.3. SIGNIFICANT ACCOUNTING POLICIES

Theaccountingpoliciessetoutbelowhavebeenappliedconsistentlytoallperiodspresentedintheseconsolidatedfinancial statements and the accounting policies havebeenappliedconsistentlybytheGroup.

Comparative information has where necessary beenreclassifiedtoconformtothecurrentyear’spresentation.

1.3.1. Basis of Consolidation

The consolidated financial statements (referred to asthe Group), comprise of the financial statement of theCompanyanditsSubsidiaries.

Business combinations are accounted for using theacquisitionmethodasattheacquisitiondatewhichisthedateonwhichcontrolistransferredtotheGroup.Control


isthepowertogovernthefinancialandoperatingpoliciesof an entity so as to obtain benefits from its activities.Inassessingcontrol, theGrouptakesintoconsiderationpotentialvotingrightsthatarecurrentlyexercisable.

1.3.1.1. Subsidiaries

Subsidiariesareentitiescontrolledbythegroup.Controlexists when the Company has the power, directly orindirectlytogovernthefinancialandoperatingactivitiesofanentitysoastoobtainbenefitsfromitsactivities.Thefinancial statements of subsidiaries are included in theconsolidatedfinancialstatementsfromthedatethatthecontrolcommences,untilthedatecontrolceases.

1.3.1.2. Transactions with Non-controlling Interests

Theprofitorlossandnetassetsofasubsidiaryattributableto equity interests that are not owned by the parent,directly or indirectly through subsidiaries, is disclosedseparatelyundertheheading“Non-ControllingInterest”.

TheGroupappliesapolicyoftreatingtransactionswithnon-controlling interests as transactions with partiesexternal to the Group.

Losses within a subsidiary are attributed to the non-controllinginterestevenifthatresultsinadeficitbalance.

1.3.1.3. Loss of Control

Onthelossofcontrol,theGroupderecognisestheassetsand liabilities of the subsidiary, any non-controllinginterestsandothercomponentsofequityrelatingtothesubsidiary.Any surplus or deficit arising on the loss ofcontrolisrecognisedinprofitorlossintheStatementofComprehensiveIncome.IftheGroupretainsanyinterestintheprevioussubsidiary,thensuchinterestismeasuredatfairvalueatthedatethatcontrolislost.Subsequentlyitisaccountedforasanequity-accountedinvesteeorasanavailable-for-salefinancialassetdependingon the levelofinfluencedretained.

1.3.1.4. Profits and Losses

The total profits and losses of the Company andits subsidiaries for the period are included in theconsolidation. The proportion of the profit or lossafter taxation attributable to Non-Controlling InterestshareholdersofthesubsidiariesisshownasacomponentofprofitfortheperiodintheConsolidatedStatementofComprehensive Income.

1.3.1.5. Transactions Eliminated on Consolidation

All intra group balances and transactions, income andexpensesandprofitsandlossesresultingfromintragrouptransactions that are recognised in assets, liabilities,income and expenses are eliminated in preparing theconsolidatedfinancialstatements.

1.3.1.6. Financial Period

AllSubsidiariesof theGrouphaveacommonfinancialyearastheParentCompany.

1.3.1.7. Goodwill

Goodwillacquiredinabusinesscombinationisinitiallymeasured at cost being the excess of the cost of thebusiness combination over the Group’s interest in thenet fair value of the identifiable assets, liabilities andcontingent liabilities. Following initial recognition,goodwill is measured at cost less any accumulatedimpairmentlosses.Goodwillisreviewedforimpairment,annually or more frequently if events or changes incircumstances indicate that the carrying value maybe impaired. For the purpose of impairment testing,goodwillacquiredinabusinesscombinationis,fromtheacquisitiondate,allocated togroupsofcash-generatingunits that areexpected tobenefit from the synergiesofthecombination.

Impairment is determined by assessing the recoverableamount of the cash-generating unit to which thegoodwill relates.Where the recoverable amount of thecash generating unit is less than the carrying amount,an impairment loss is recognised. The impairmentloss is allocated first to reduce the carrying amount ofanygoodwillallocatedtotheunitandthentotheotherassets pro-rata to the carrying amount of each asset inthe unit.

1.3.2. Foreign Currency Transactions

Transactions in foreign currencies are translated to SriLankaRupeesattheforeignexchangerateprevailingatthedateofthetransaction.Monetaryassetsandliabilitiesdenominated in foreign currencies are translated to SriLankaRupeesattheforeignexchangeraterulingasatthereportingdate.

Non-monetary assets and liabilitieswhich are stated athistorical cost denominated in foreign currencies aretranslatedtoSriLankaRupeesattheexchangeraterulingat the dates of the transactions. Non-monetary assetsandliabilities thatarestatedat fairvalue,denominatedin foreigncurrenciesare translated toSriLankaRupeesat the exchange rate ruling at the dates that the fairvalue were determined. Foreign exchange differencesarisingontranslationarerecognisedintheStatementofComprehensive Income.

1.3.3. Financial Instruments – Initial Recognition and Subsequent Measurement

1.3.3.1. Financial Assets

Initial Recognition & MeasurementFinancial assets within the scope of LKAS 39 areclassifiedasfinancialassetsatfairvaluethroughprofitorloss, loans& receivables, held-to-maturity investments, available-for-sale financial assets as appropriate anddeterminetheclassificationofitsfinancialassetsatinitialrecognition.

The Group’s financial assets include quoted andunquoted financial instruments and derivative financialinstruments,loansandotherreceivables,tradeandotherreceivables, held-to-maturity financial assets, cash andshort-termdeposits.

Notes to the Financial Statements (Contd)


Subsequent Measurement

Thesubsequentmeasurementoffinancialassetsdependsontheirclassificationasfollows.

a) Financial Assets at fair value through profit or loss

Financialassetsatfairvaluethoughprofitorlossincludesfinancial assets held for trading and financial assetsdesignateduponinitialrecognitionatfairvaluethroughprofit or loss. Financial assets are classified as held fortradingiftheyareacquiredforthepurposeofsellingorrepurchasing in the near term. Financial assets at fair valuethroughprofitandlosscarriedinthestatementoffinancialpositionatfairvaluewithchangesinfairvaluerecognisedintheStatementofComprehensiveIncome.

b) Loans and Receivables

LoanandReceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedin an active market. After initial measurement, suchfinancialassetsaresubsequentlymeasuredatamortisedcost using the effective interest rate method (EIR), lessimpairment.

A provision for impairment of trade receivable isestablished when there is objective evidence that theCompany will not be able to collect all amounts dueaccordingtothereceivables.

Loans and receivables comprise cash and cashequivalents,tradeandotherreceivables.

c) Investments held-to-maturity

Investments held-to-maturity are non-derivativefinancial assets with fixed or determinable paymentsandfixedmaturitieswhenthecompanyhasthepositiveintention and ability to hold it tomaturity.After initialmeasurement,held-to-maturityinvestmentsaremeasuredatamortisedcostusingtheeffectiveinterestmethod(EIR),less impairment.Amortisedcost iscalculatedby takinginto account any discount or premium on acquisitionandfeesorcoststhatareanintegralpartoftheEIR.TheEIR amortisation is included in finance income in theStatementofComprehensive Income.The lossesarisingfrom impairment are recognised as finance cost in theStatement of Comprehensive Income.

d) Financial Assets available-for-sale

Financial Assets available-for-sale include equity anddebt securities. Equity securities classified as available-for-sale are those, which are neither classified as heldfortradingnordesignatedatfairvaluethroughprofitorloss.Debtsecuritiesinthiscategoryarethosewhichareintendedtobeheldforanindefiniteperiodoftimeandwhichmaybesoldinresponsetoneedsforliquidityorinresponsetochangesinthemarketconditions.

After initial measurement, available-for-sale financialassets are subsequently measured at fair value withunrealised gains or losses recognised in Available-for-sale Reserve through Other Comprehensive Income until the investment isderecognised,atwhich time the

cumulativegainorlossisrecognisedintheStatementofComprehensive Income,ordetermined tobe impaired,atwhich time the cumulative loss is reclassified to theStatementofComprehensiveIncomeandremovedfromtheavailable-for-salereserve.

If there isan indicationof impairment in theunquotedequity securities, it is recognised in the Statement ofComprehensive Income.

Derecognition

The Company derecognises a financial asset when thecontractualrightstothecashflowsfromtheassetexpire,or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in whichsubstantiallyalltherisksandrewardsofownershipofthefinancialassetaretransferred.

Impairment of Financial Assets

The Company assesses at each reporting date whetherthere isanyobjectiveevidence thatafinancialassetoragroupoffinancialassetsisimpaired.Afinancialassetoragroupoffinancialassetsisdeemedtobeimpairedif,andonlyif,thereisobjectiveevidenceofimpairmentasaresultofoneormoreeventsthathasoccurredafterthe initial recognition of the asset (an incurred ‘lossevent’)andthatlosseventhasanimpactontheestimatedfuture cashflowsof the financial asset or the groupoffinancialassetsthatcanbereliablyestimated.Evidenceof impairmentmay include indications that thedebtorsoragroupofdebtorsisexperiencingsignificantfinancialdifficulty,defaultordelinquencyin interestorprincipalpayments,theprobabilitythattheywillenterbankruptcyor other financial reorganisation and when observabledataindicatethatthereisameasurabledecreaseintheestimatedfuturecashflows,suchaschangesinarrearsoreconomicconditionsthatcorrelatewithdefaults.

Financial Assets Carried at Amortised Cost

Forfinancialassetscarriedatamortisedcost,theCompanyfirstassesseswhetherobjectiveevidenceof impairmentexistsindividuallyforfinancialassetsthatareindividuallysignificant or collectively for financial assets that arenot individually significant. If theCompanydeterminesthat no objective evidence of impairment exists for anindividuallyassessedfinancialasset,whethersignificantornotitincludestheassetinagroupoffinancialassetswith similar credit risk characteristics and collectivelyassessesthemforimpairment.Assetsthatareindividuallyassessed for impairment and for which an impairmentlossis,orcontinuestobe,recognisedarenotincludedina collective assessment of impairment.

If there is objective evidence that an impairment losshas been incurred, the amount of the loss is measuredas the difference between the asset’s carrying amountand the present value of estimated future cash flows(excludingfutureexpectedcreditlossesthathavenotyetbeenincurred).Thepresentvalueoftheestimatedfuturecash flows is discounted at the financial asset’s originaleffectiveinterestrate.Ifaloanhasavariableinterestrate,



thediscountrateformeasuringanyimpairmentlossisthecurrent EIR.

ThecarryingamountoftheassetisreducedthroughtheuseofanallowanceaccountandtheamountofthelossisrecognisedintheStatementofComprehensiveIncome.InterestIncomecontinuestobeaccruedonthereducedcarryingamountandisaccruedusingtherateofinterestused to discount the future cash flows for the purposeof measuring impairment loss. The interest income isrecorded as part of finance income in the Statementof Comprehensive Income. Loans together with the associate allowance are written off when there is no realisticprospectoffuturerecoveryandallcollateralhasbeen realised or has been transferred to theCompany.If, in a subsequent year, the amount of the estimatedimpairment loss increases or decreases because of aneventoccurringaftertheimpairmentwasrecognised,thepreviously recognised impairment loss is increased orreducedbyadjustingtheallowanceaccount. Ifafuturewrite off is later recovered, the recovery is credited tofinancecostsintheStatementofComprehensiveIncome.

1.3.3.2. Financial Liabilities

Initial Recognition and Measurement

Financial liabilities within the scope of LKAS 39 arerecognisedwhenandonlywhentheCompanybecomesa party to the contractual provisions of the financialinstrument. Financial Liabilities are recognised initiallyat fair value plus directly attributable transaction costs,however in the case of financial liabilities classified asfair value throughprofit& loss thedirectly attributablecostsarenotconsidered.

Thefinancialliabilitiesincludetradeandotherpayables,loansandborrowingsandbankoverdrafts.

Subsequent Measurement

The subsequent measurement of financial liabilitiesdependsontheirclassificationasfollows.

a) Loans and Borrowings

After initial recognition, interest bearing loans andborrowings are subsequently measured at amortisedcostusing theeffective interest ratemethod.Gainsandlosses are recognised in the income statement whenthe liabilities are derecognised as well as through theeffectiveinterestratemethod(EIR)amortisationprocess.

Amortisedcostiscalculatedbytakingintoaccountanydiscount or premium on acquisition and fees or coststhatareanintegralpartoftheEIR.TheEIRamortisationis included in finance costs in the Statement ofComprehensive Income.

b) Trade and Other Payables

Trade and Other Payables are non-derivative FinancialLiabilities. After initial measurement such FinancialLiabilitiesaresubsequentlymeasuredatAmortisedCostusingtheeffectiveinterestratemethod.

Derecognition

Financial Liabilities are derecognised when and onlywhentheyareextinguished,thatiswhentheobligationisdischarged,cancelledorexpired.

1.3.4. Plant & Equipment and Depreciation

1.3.4.1. Recognition and Measurement

ItemsofPlant&Equipmentaremeasuredatcost (oratvaluationinthecaseofcertainitems)lessaccumulateddepreciationandaccumulatedimpairmentlosses.

1.3.4.2. Owned Assets

ThecostofPlant&equipmentincludesexpenditurethataredirectlyattributabletotheacquisitionorconstructiontogetherwithanyexpensesincurredinbringingtheassetstoitsworkingconditionforitsintendeduse.

Expenditure incurred for the purpose of acquiring,extendingorimprovingassetsofapermanentnaturebymeansofwhich tocarryon thebusinessor to increasetheearningcapacityofthebusinessistreatedascapitalexpenditure.

1.3.4.3. Subsequent Expenditure

The cost of replacing part of an item of plant andequipment is recognised in the carrying amount of theitem if it is probable that the future economic benefitsembodiedwithinthatpartwillflowtotheCompanyanditscostcanbemeasuredreliably.Thecarryingamountofthereplacedpartisderecognisedinaccordancewiththederecognitionpolicygivenbelow.Thecostsof theday-to-dayservicingofplantandequipmentarerecognisedinprofitandlossasincurred.

1.3.4.4. Derecognition

ThecarryingamountofanitemofPlant&Equipmentisderecognisedondisposal,orwhennofutureeconomicbenefitsareexpected fromitsuse.Gainsand lossesonderecognitionarerecognisedinprofitandlossandgainsarenotclassifiedas revenue.Whenrevaluedassetsaresold, any related amount included in the RevaluationReserveistransferredtoRetainedEarnings.

1.3.4.5. Depreciation

Depreciationisrecognisedinprofitandlossonastraight-linebasisovertheestimatedusefullivesofeachpartofan item of Plant & Equipment, since thismost closelyreflectstheexpectedpatternofconsumptionofthefutureeconomicbenefitsembodiedintheasset.

Theestimatedusefullivesforthecurrentandcomparativeperiodsareasfollows.

Furniture&Fittings Over5-10Years

OfficeEquipment Over5-10Years

MotorVehicles Over5Years

Tools&Equipment Over2-5Years



Depreciationofanassetbeginswhenitisavailableforuseandceasesattheearlierofthedatethattheassetisclassifiedasheldforsaleandthedatethattheassetisderecognised.

1.3.4.6. Finance Leases

PlantandEquipmentonfinanceleases,whicheffectivelytransferstotheCompanysubstantiallyalloftheriskandbenefits incidental toownershipof the leased item,arecapitalisedattheircashpriceanddisclosedasPlantandEquipmentanddepreciatedovertheperiodtheCompanyisexpectedtobenefitfromtheuseoftheleasedassets.

Thecorrespondingprincipalamountpayabletothelessoris shownas a liability, leasepayments are apportionedbetweenthefinancechargesandreductionoftheleaseliabilitysoastoachieveaconstantrateofinterestontheremainingbalanceof the liability. The interestpayableover theperiodof the lease is transferred toan interestinsuspenseaccount. Theinterestelementof therentalobligationsapplicabletoeachfinancialyearischargedtothestatementofcomprehensiveincomeovertheperiodof the lease.

1.3.5. Investments in Subsidiaries

UnquotedInvestmentsinSubsidiariesaretreatedasLongTerm Investments and are valued at cost. Provision ismadefordiminutioninvalueofInvestmentsonlyifsuchdiminutionisexpectedtobepermanent.

1.3.6. Intangible Assets

Anintangibleasset is initiallyrecognisedatcost, if it isprobable that future economic benefit will flow to theenterprise, and the cost of the asset can be measuredreliably.

Intangibleassetswithindefiniteusefullivesaretestedforimpairmentannuallyeitherindividuallyoratthecash-generating unit level.

1.3.6.1. Intangible Assets recognised by the Group

Goodwill

Goodwillarisingonanacquisitionrepresentstheexcessofthecostofacquisitionoverthefairvalueofnetassetsacquired.Goodwillismeasuredatcostlessaccumulatedimpairment losses.

Gain from bargain purchase arising on an acquisitionrepresents the excess of the fair value of the net assets acquiredoverthecostofacquisition.Gainfrombargainpurchase is recognised immediately in theStatementofComprehensive Income.

1.3.7. Inventories

Inventories are valued at the lower of cost and netrealisablevalueaftermakingdueallowancesforobsoleteandslowmovingitems.Netrealisablevalueisthepriceatwhichinventoriescanbesoldintheordinarycourseofbusinesslesstheestimatedcostofcompletionandtheestimatedcostnecessarytomakethesale.

The cost incurred in bringing inventories to its presentlocationandcondition,areaccountedforasfollows.

a) Raw Materials

Atactual costonfirst-in-first-out andweightedaveragecost.

b) Work-in-Progress

At the cost of direct materials, direct labour and anappropriate proportion of production overheads basedonnormaloperatingcapacity.

c) Finished Goods

At purchase cost and/or cost of directmaterials, directlabour and an appropriate proportion of productionoverheadsbasedonnormaloperatingcapacity.

1.3.8. Cash and Cash Equivalents

CashandCashequivalentsaredefinedascashinhand,demanddepositsandshorttermhighlyliquidinvestments,readilyconvertibletoknownamountsofcashandsubjecttoinsignificantriskofchangesinvalue.

Forthepurposeofthestatementofcashflows,cashandcashequivalents compriseof savings accounts, cash inhand,cashatbanksandbankoverdrafts.

1.3.9. Impairment of Non-Financial Assets

The carrying amounts of the Company’s non-financialassetsarereviewedateachreportingdatetodeterminewhetherthereisanindicationofimpairment.Ifanysuchindicationexists,orwhenannualimpairmenttestingforanassetisrequired,thentheasset'srecoverableamountisestimated.

The recoverable amount of an asset or cash-generatingunit is the greater of its value in use and its fair valuelesscoststosell.Inassessingvalueinuse,theestimatedfuture cash flows are discounted to their present valueusingapre-taxdiscountratethatreflectscurrentmarketassessments of the time value of money and the risksspecifictotheasset.Indeterminingfairvalue,lesscoststosell,anappropriatevaluationmodelisused.

Animpairmentlossisrecognisedifthecarryingamountofanassetorcash-generatingunitexceedsitsestimatedrecoverableamount.Impairmentlossesarerecognisedinprofit and loss.An impairment loss is reversed if therehas been a change in the estimates used to determinetherecoverableamount.Animpairmentlossisreversedonlytotheextentthattheasset'scarryingamountdoesnot exceed the carrying amount thatwould have beendetermined, net of depreciation or amortisation, if noimpairmentlosshadbeenrecognised.

1.3.10. Employee Benefits

a) Defined Benefit Plan - Retirement Gratuity

Company

ProvisionhasnotbeenmadeforgratuityintheaccountsunderthepaymentofGratuityActNo.12of1983,sincetheCompanydidnot employ any staff.All operationalservicesareprovidedbyNavaraCapitalLtd.



Group

Serendib Engineering Agencies (Pvt) Ltd.

A defined benefit plan is a post-employment benefitplanotherthanadefinedcontributionplan.Theliabilityrecognised in the Statement of Financial Position inrespectofdefinedbenefitplansisthepresentvalueofthedefined benefit obligation as at the reporting date.Thedefinedbenefitobligationiscalculatedbythecompanyusing the projected unit credit method based on theformulaprescribedin“LKAS19-EmployeeBenefits”.

The present value of the defined benefit obligation isdetermined by discounting the estimated future cashoutflows using interest rates that are denominated inthecurrencyinwhichthebenefitswillbepaid,andthathavetermstomaturityapproximatingtothetermsoftherelatedliability.

Provision has been made for retirement gratuities forthefirstyearofserviceforallemployees,inconformitywith “LKAS 19 - Employee Benefits”. However, underthePaymentofGratuityActNo.12of1983,theliabilitytoanemployeearisesonlyoncompletionof5yearsofcontinuedservice.

Thekeyassumptionsusedinthecomputationarestatedinthenote21tothefinancialstatements.

No provision has been made for Retiring Gratuity inthe accounts of subsidiaries namely CCC PlantationEngineeringLtdandSerandibInvestmentHoldingLtdasthesecompaniesdonotemployanystaff.AlloperationalservicesareprovidedbyNavaraCapitalLtd.

b) Defined Contribution Plans - Employees Provident Fund & Employees Trust Fund

Company

Contribution for Employees Provident Fund andEmployees Trust Fund have not been made since theCompanydoesnotemployanystaff.

Group

Serendib Engineering Agencies (Pvt) Ltd.

Adefinedcontributionplanisapost-employmentbenefitplanunderwhichanentitypaysfixedcontributionsintoaseparateentityandwillhaveno legalorconstructiveobligations to pay further amounts. Obligations forcontributions to a defined contribution plan arerecognised as an employee benefit expense in theStatement of Comprehensive Income in the periodsduringwhichservicesarerenderedbyemployees.

Contribution for Employees Provident Fund andEmployeesTrustFundhavenotbeenmadeintheaccountsof subsidiaries namely CCC Plantation Engineering LtdandSerandibInvestmentHoldingLtdasthesecompaniesdo not employ any staff. All operational services areprovidedbyNavaraCapitalLtd.

1.3.11. Provisions

ProvisionarerecognisedwhentheGrouphasapresentobligation (legal or constructive) as a result of a pastevent, and it is probable that an outflow of resourcesembodyingeconomicbenefitswillberequiredtosettletheobligationandareliableestimatecanbemadeoftheamountoftheobligation.

1.3.12. Capital Commitments and Contingencies

Contingenciesarepossibleassetsorobligationsthatarisefrompasteventsandwhoseexistencewillbeconfirmedonly by occurrence or non-occurrence of uncertainfutureeventsnotwhollywithinthecontroloftheGroup.Capital Commitments and Contingencies of theGroupare disclosed in Note 27 and 28 respectively to theFinancial Statements.

1.4. STATEMENT OF COMPREHENSIVE INCOME

1.4.1. Revenue Recognition

Revenue is recognised to the extent that it is probablethattheeconomicbenefitswillflowtothegroup,andtherevenueandassociatedcostsincurredortobeincurredcanbereliablymeasured.Revenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivable,netoftradediscountsandvalueaddedtaxes,aftereliminatingsales within the group.

Revenueisgenerallyaccountedforonanaccrualbasisand following specific criteria are used for recognitionof revenue.

a) Sale of Goods

Revenueisrecognisedonsaleofgoodswhenallsignificantrisksandrewardsofownershiphavebeentransferredtothebuyerwhichnormallyoccursondeliveryofgoods.Turnoverrepresentstheinvoicedvalueofgoodssuppliedto customers.

b) Construction Contract

When the outcome of the contract can be measuredreliably, contract revenue is recognised by referenceto the stage of completion of the contract activity asat the reporting date. Further, the company recogniseconstructionrevenueonlyafterreceivingtheworkdonecertification from the engineer. Any expected losseson specific contracts are recognised immediately by acorrespondingreductionintheirrevenue.

c) Rendering of Services

Revenuefromrenderingofservicesisrecognisedintheaccountingperiodinwhichtheservicesarerenderedorperformed.

d) Finance Income and Finance Cost

Finance income comprises interest income on fundsinvested, dividend income, gains on the disposal offinancialassetsatfairvaluethroughprofitorlossandthechangesinthefairvalueoffinancialassets.



Interest income is recognised on an accrual basis.Dividend Income is recognisedwhen the Shareholdersright to receive such dividend is established. Profit orLossesondisposalofFinancialAssetsareaccountedforintheStatementofComprehensiveIncomeonthebasisofrealisednetprofitorloss.

Financecostcomprisesofinterestexpenseonborrowingsgains on the disposal of financial assets at fair valuethroughprofitorlossandthechangesinthefairvalueoffinancialassets.Allborrowingcostsarerecognisedasanexpenseintheperiodinwhichtheyareincurred.

e) Other Income

Otherincomeisrecognisedonanaccrualbasis.

Gains and Losses on disposal of an item of Plant &Equipment are determined by comparing the net salesproceedswiththecarryingamountsofPlant&Equipmentand are recognised net within “Other Income” in theStatement of Comprehensive Income.

1.4.2. Segmental Reporting

Asegmentisadistinguishablecomponentofanenterprisethat isengaged ineitherprovidingproductsor services(BusinessSegments)orinprovidingproductsorserviceswithinaparticular economicenvironment (GeographicSegment)which issubject to risksandrewards thataredifferentfromthoseofothersegments.

Segment information is presented in respect of theGroup’s business activities. The business segment hasbeen identified as theprimary segmentof theGroupastherearenodistinguishablecomponentstobeidentifiedas geographical segments for the Group. The businesssegmentsarereportedbasedontheGroup’smanagementandinternalreportingstructure.

1.4.3. Expenditure Recognition

Allexpenditure incurred in the runningof thebusinessand in maintaining the plant & equipment in astate of efficiency has been charged to statement ofcomprehensive income in arriving at the profit for theyear. Expenditure incurred for thepurposeof acquiringandextendingorimprovingassetsofapermanentnaturebymeans ofwhich to carry on the business or for thepurposeofincreasingtheearningcapacityofthebusinesshasbeentreatedascapitalexpenditure.

Borrowing Costs

As per LKAS 23 on “Borrowing costs”, the groupcapitalizesborrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetaspartofthecostoftheasset.Aqualifyingassetisanassetwhich takesasubstantialperiodof time togetreadyforitsintendeduseorsale.Otherborrowingcostsare recognised in theprofit and loss in theperiod it isincurred.

1.4.4. Income Tax Expenses

Incometaxexpensescomprisecurrentanddeferredtax.Incometaxexpenseisrecognisedinprofitandlossexcept

to theextent that it relates to items recogniseddirectlyin equity or other comprehensive income, which caseit isrecognisedeitherinequityorothercomprehensiveincomerespectively.

a) Current Tax

Theprovisionfor IncomeTaxisbasedontheelementsof Income & Expenditure as reported in the financialstatements and computed in accordance with theprovisionsoftheInlandRevenueActNo.10of2006andtheamendmentsthereto.

b) Deferred Tax

DeferredTaxisprovidedinfull,usingtheliabilitymethodontemporarydifferencesarisingbetweenthetaxbaseofassets and liabilities and their carrying amounts in theFinancialStatements.DeferredtaxisdeterminedusingtaxratesthathavebeenenactedorsubstantivelyenactedbythereportingdateoftheStatementofFinancialPositionand are expected to apply when the related deferredincome taxasset is realisedor thedeferred income taxliabilitysettled.

Adeferredtaxassetisrecognisedonlytotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichtheassetcanbeutilised.Deferredtaxassetsarereviewedateachreportingdateandarereducedtotheextentthatitisnolongerprobablethattherelatedtaxbenefitwillberealised.

c) Withholding Tax on Dividend

TaxonDividendIncomefromsubsidiariesisrecognisedasanexpenseintheConsolidatedIncomeStatement.

d) Value Added Tax (VAT)

As per the provision of the Act No. 14 of 2002 (andamendmentthereto),VATischargedonsupplyofgoodsandservicesattherateof12%.DisallowedValueAddedTaxischargedtotheStatementofComprehensiveIncomeindeterminingtheprofitsfortheperiod.

e) Nation Building Tax (NBT)

Nation BuildingTax has been calculated at the rate of2%ontheliableturnoverintermsoftheNationBuildingTaxActNo.09of2009andsubsequentamendmentActs.

1.5. STATEMENT OF CASH FLOWS

TheStatementofCashFlowshasbeenpreparedusingthe“Indirectmethod”.

1.6. EARNINGS PER SHARE

TheGrouppresentsEarningsperShare(EPS)dataforitsordinaryshares.EPSiscalculatedbydividingtheprofitorlossattributabletoordinaryshareholdersoftheCompanyby the weighted average number of ordinary sharesoutstandingduringtheperiod.



1.7. RELATED PARTY TRANSACTIONS

Disclosures are made in respect of the transactions inwhich one party has the ability to control or exercisesignificant influence over the financial and operatingpolicies of the other, irrespective ofwhether a price ischarged.

Related Party receivables and payables are treated ascurrentassetsandcurrentliabilitiestheyaredeemedtobeofatemporarynature.

1.8. NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE AS AT THE REPORTING DATE

The InstituteofCharteredAccountantsofSriLankahasissuedthefollowingstandardswhichbecomeeffectiveforannualperiodsbeginningafterthecurrentfinancialyear.Accordingly these standards have not been applied inpreparingthesefinancialstatements.TheGroupexpectsthat thesestandardswhenappliedwillhavesubstantialimpacton thefinancialperformance,financialpositionand disclosures. The Group will be adopting thesestandardswhentheybecomeeffective.

a) SLFRS 9 – Financial Instruments

TheobjectiveofthisSLFRSistoestablishprinciplesforthefinancial reportingoffinancialassetsand liabilities thatwill present relevant anduseful information tousersofFinancialStatementsfortheirassessmentoftheamounts,timing and uncertainty of an entity’s future cash flows.SLFRS 9, as issued, reflects the first phase of work onreplacementofSriLankaAccountingStandards(LKAS39)-‘FinancialInstrumentsRecognitionandMeasurements’and applies to classification and measurement offinancial assets and liabilities. The application of thisstandard has been currently deferred by the Chartered

AccountantsofSriLankaconsequenttotheInternationalAccounting Standards Board’s (IASB) decision, to deferthemandatoryeffectivedateofIFRS9.HoweverSLFRS9willbeavailableforearlyadoption.

b) SLFRS 10 – Consolidated Financial Statements

The objective of this SLFRS is to establish principlesfor the presentation and preparation of ConsolidatedFinancial Statements when an entity controls one ormore other entities. SLFRS 10 will become effectivefrom 1stJanuary2014fortheGroupwithearlyadoptionpermitted.This SLFRS will supersede the requirementsrelatingtoConsolidatedFinancialStatementsinLKAS27’ConsolidatedandSeparateFinancialStatements’.

c) SLFRS 12 – Disclosure of Interest in other entities

SLFRS 12 includes all of the disclosures that werepreviously inLKAS27 related toconsolidatedfinancialstatements, as well as all of the disclosures that werepreviouslyincludedinLKAS31andLKAS28.Anumberofnewdisclosersarealsorequired.ThisstandardbecomeseffectiveforannualperiodsbeginningonorafterJanuary01,2014.

d) SLFRS 13 – Fair Value Measurement

ThisSLFRSdefines fair value, setout ina singleSLFRSframework for measuring fair value and requiresdisclosures about fair value measurements.This SLFRSwill becomeeffective to theCompany from1st January2014. Early adoption is permitted.This SLFRS shall beappliedprospectivelyasof thebeginningof theannualperiod in which it is initially applied. The disclosurerequirements of this SLFRS need not be applied incomparative information provided for periods beforeinitial application of this SLFRS.




Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs. 2 Revenue 2.1 Income IncomeonConcretePoles 375,000 - 11,975,000 - ProjectsIncome 214,157,423 331,445,616 - - IncomefromManufacturingofMachinery 38,269,588 - - - AgencyIncome-Foreign 3,008,632 7,655,209 - - Repair&ServiceIncome 5,547,076 - - - 261,357,719 339,100,825 11,975,000 - 2.2 Business Segment Analysis IncomeonConcretePoles 375,000 - 11,975,000 - ProjectsIncome 214,157,423 331,445,616 - - IncomefromManufacturingofMachinery 38,269,588 - - - Others 8,555,708 7,655,209 - - 261,357,719 339,100,825 11,975,000 - 3 OTHER INCOME ProfitonDisposalofPlant&Equipment 3,616,518 - - - ConsultationFees 45,000 - - - SaleofScraps 43,000 45,000 - - PayableBalancesWrittenBack - 160,919 - 145,126 WritebackofGratuityOverprovision - 1,262,020 - - 3,704,518 1,467,939 - 145,126

4 FINANCE INCOME InterestonFixedDeposits 2,677,738 7,635,940 88,354 518,596 InterestonSavingsAccounts 166,041 794,205 82,764 - InterestonRepo 32,799 - - - InterestonCallDeposits - - - 781,894 InterestonDebentures - 33,639 - - DividendIncome 377,273 286,652 563,787 117,902 ProfitonDisposalofFinancialAssets 302,121 139,310 302,121 139,310 FairValueChangesonFinancialAssets 3,147,200 - - - 6,703,172 8,889,746 1,037,026 1,557,702

5 FINANCE COST InterestonBankOverdrafts 203,673 785,789 23,462 30,638 InterestonFinanceLeaseObligations 1,403,950 879,315 - - InterestonStockBroker 3,526 - 3,526 - TransactionCost 169,639 66,300 493 66,300 LossonDisposalofFinancialAssets 1,952,493 - - - FairValueChangesonFinancialAssets 140,130 2,107,285 140,131 2,107,285

3,873,411 3,838,689 167,612 2,204,223


6 PROFIT / (LOSS) BEFORE TAX Profit before Tax is stated after charging all expenses including the following: RemunerationtoDirectors 4,717,500 - 122,500 - PersonalExpenses 32,138,081 27,502,999 - - ProfessionalFees 464,918 370,230 138,600 50,000 AuditorsRemuneration 554,086 226,112 80,000 70,000 Depreciation 4,717,293 2,106,416 462,151 102,967

7 INCOME TAX EXPENSE Current Income Tax Expense TaxExpensesonOrdinaryActivities 6,104,701 16,428,347 31,144 236,689 Deferred Tax Expense DeferredTaxExpense/(Income) (674,107) (1,482,603) 61,471 89,815

5,430,594 14,945,744 92,615 326,504

7.1 Reconciliation of Accounting Profit / (Loss) and Taxable Income AccountingProfit/(Loss)beforeTaxation 21,671,505 62,717,018 560,823 (2,167,464) AggregateDisallowedExpenses 14,262,599 6,535,462 686,601 2,850,337 AggregateAllowableExpenses (11,937,305) (13,591,173) (1,718,077) (1,981,435) ProfitExemptedfromIncomeTax (6,489,965) (5,762,931) - - AdjustedProfit/(Loss) 17,506,834 49,898,376 (470,653) (1,298,562)

AdjustedTradingProfit 17,506,834 49,898,376 - - AggregateStatutoryIncome 2,906,580 8,463,784 171,118 1,300,490 TaxLossesfortheyear&Utilised (123,368) (455,171) (59,891) (455,171)

TaxableIncome 20,290,046 57,906,989 111,227 845,319

IncomeTaxExpensesfortheyearismadeup StatutoryTaxRate -IncomeTax@28% 5,681,213 16,213,957 31,144 236,689 -DividendTax 423,488 214,390 - - 6,104,701 16,428,347 31,144 236,689

7.2 CorporateincometaxesofcompaniesintheGrouparecomputedinaccordancewiththeInlandRevenueAct,No.10of2006andsubsequentamendmentsthereto.ThetaxliabilityoftheCompanyanditsSubsidiariesare computed at28%asat31st March2014.

7.3 Deferred Tax Expense / (Income) Deferredtaxhasbeencomputedbyusingthefuturetaxrateof28%forsubsidiarieswhichareliableforincometaxat

thestandardratefortheYearofAssessment2013/2014.

8 EARNINGS / (LOSS) PER SHARE

The calculation of earnings / (loss) per share is based on the profit / (loss) for the year attributable toordinaryshareholders and the weighted average number of ordinary shares outstanding during the year as givenbelow,aspertherequirementsoftheSriLankaAccountingStandard(LKAS33)-‘EarningsperShare’.

Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.



Amounts used as the Numerators (Rs.) Profit/(Loss)fortheyear 9,964,949 25,003,987 468,209 (2,493,968)

Number of Ordinary Shares used as Denominators WeightedaveragenumberofOrdinaryShares(I) 6,476,650 5,948,803 6,476,650 5,948,803

Basicearnings/(loss)pershare(Rs.) 1.54 4.20 0.07 (0.42)

(I)IssuednumberofOrdinaryShares asat01stApril 6,476,650 4,857,487 6,476,650 4,857,487 EffectofRightIssue - 1,091,316 - 1,091,316 WeightedaveragenumberofOrdinaryShares 6,476,650 5,948,803 6,476,650 5,948,803

Balance as at Additions Disposals Balance as at 01.04.2013 31.03.2014 Rs. Rs. Rs. Rs.

9 PLANT & EQUIPMENT9.1 GROUP Cost Furniture&Fittings 2,197,730 61,005 - 2,258,735 OfficeEquipment 9,139,177 1,555,950 - 10,695,127 MotorVehicles 21,267,574 - (2,210,000) 19,057,574 Tools&Equipment 5,730,189 1,053,802 (18,666) 6,765,325 38,334,670 2,670,757 (2,228,666) 38,776,761 Leased Assets Tools&Equipment - 3,600,000 - 3,600,000 MotorVehicles 11,314,285 - - 11,314,285 49,648,955 6,270,757 (2,228,666) 53,691,046 Accumulated Depreciation Furniture&Fittings 1,449,360 193,542 - 1,642,902 OfficeEquipment 4,676,004 1,132,037 - 5,808,041 MotorVehicles 21,141,443 27,771 (2,210,000) 18,959,214 Tools&Equipment 4,163,925 651,086 - 4,815,011 31,430,732 2,004,436 (2,210,000) 31,225,168 Leased Assets Tools&Equipment - 450,000 - 450,000 MotorVehicles 2,074,286 2,262,857 - 4,337,143 33,505,018 4,717,293 (2,210,000) 36,012,311 Carrying Value 16,143,937 17,678,735




Balance as at Additions Disposals Balance as at 01.04.2013 31.03.2014 Rs. Rs. Rs. Rs.

9.2 COMPANY Cost Furniture&Fittings - 3,200 - 3,200 Equipment 1,271,200 700,000 - 1,971,200 Tools - 71,952 - 71,952 1,271,200 775,152 - 2,046,352

Accumulated Depreciation Furniture&Fittings - 373 - 373 Equipment 102,967 449,050 - 552,017 Tools - 12,728 - 12,728 102,967 462,151 - 565,118 CarryingValue 1,168,233 1,481,234

9.3 Fully depreciated Plant & Equipment still in use Group ThegrosscarryingamountoffullydepreciatedPlant&Equipmentstillinuseasat31stMarch2014isRs.25,623.998. Company TherewerenofullydepreciatedPlant&Equipmentasat31stMarch2014.

Group 2014 2013 Rs. Rs.

10 INTANGIBLE ASSETS10.1 GOODWILL Balanceatthebeginningoftheyear 21,769,593 21,669,723 GoodwillonAcquisitionofSubsidiary - 99,870 Balanceasattheendoftheyear 21,769,593 21,769,593

ThisrepresentstheexcessofthecostofacquisitionofthenetAssetsofthefollowingcompanies. TheaggregatecarryingamountofGoodwillallocatedtoeachCompanyisasfollows. CCCPlantationEngineeringLtd. 99,870 99,870 SerendibEngineering&Agencies(Pvt)Ltd. 21,002,412 21,002,412 SerendibInvestmentHoldingsLtd. 667,311 667,311 21,769,593 21,769,593

Themanagementisoftheviewthataprovisionforimpairmentofgoodwillisnotrequiredasattheendofthe reportingperiod.



COMPANY 2014 2013 Holding No. of Cost Holding No. of Cost Shares Rs. Shares Rs.

11 INVESTMENTS IN SUBSIDIARIES Un-quoted Investments CCCPlantationEngineeringLtd. 100% 1,800,000 3,000,000 100% 1,800,000 3,000,000 SerendibEngineering &Agencies(Pvt)Ltd. 56.69% 623,576 50,537,890 10% 52,936 15,388,890 SerendibInvestmentHoldingsLtd. 60% 85,200,000 85,200,000 60% 85,200,000 85,200,000

138,737,890 103,588,890

11.1 The Company has an investment in the shares of CCC Plantation Engineering Ltd and the carrying amount of theinvestmentatcostamountstoRs.3,000,000/-asat31stMarch2014.CCCPlantationEngineeringLtdcarryonbusinessofmanufacturemachineryitemsforPlantationSectorandservice&repairofmachinesusedinPlantationSector.

TheCompanyhasaninvestmentinthesharesofSerendibEngineering&Agencies(Pvt)LtdandthecarryingamountatcostamountedtoRs.50,537,890/-asaat31st March2014.

Duringtheyearunderreview,SerendibEngineering&Agencies(Pvt)LtdmadeaRightsIssueof264,680ordinarysharesatapriceofRs.75/-asat5thAugust2013intheproportionofone(01)ordinarysharefortwo(02)ordinarysharesheld.FurtherSerendibEngineering&Agencies(Pvt)LtdmadeaRightsIssueof305,960ordinarysharesasatapriceofRs.50/-persharetoholderoftheissuedordinaryshareoftheCompanyasat1stDecember2013intheproportionofseventhousandsixhundred&fortynineordinaryshares(7,649)foreverynineteenthousandeighthundred&fiftyone(19,851)sharesheld,thusincreasingthenumberofinvestedsharesofthesubsidiaryfrom52,936to623,576.FurthertheCompanyheld25.99%indirectshareholdinginSerendibEngineering&Agencies(Pvt)Ltdasatthereportingdate.

Serendib Engineering &Agencies (Pvt) Ltd is amultifaceted Engineering Company involved inTelecommunications,PlantationEngineering,WaterSupplyandFiltration,Marine,RailwayandCivilEngineering.

11.3 TheCompany has an investment in the shares of Serendib InvestmentHoldings Ltd and the carrying amount of theinvestmentatcostamountstoRs85,200,000/-SerendibInvestmentHoldingsLtdcarryonthebusinessofInvestinginshares.

Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs. 12 OTHER FINANCIAL ASSETS12.1 Other Non-Current Financial Assets Available-for-SaleFinancialAssets 15,000,000 - - -

12.2 Other Current Financial Assets FinancialAssetsatFairValueThrough ProfitorLoss 17,192,988 7,926,313 3,109,983 5,426,313 32,192,988 7,926,313 3,109,983 5,426,313

GROUP 2014 2013 No. of Cost Shares Rs. 12.1 OTHER NON CURRENT FINANCIAL ASSETS Available-For-Sale Financial Assets Un-quoted NavaraCapitalPartnersLtd. 15,000,000 15,000,000 - 15,000,000 -


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13 DEFERRED TAXATION DeferredTaxAssets (735,578) (1,572,418) - - DeferredTaxLiabilities 61,471 89,815 61,471 89,815 Provisionmade/(Released)to StatementofComprehensiveIncome (674,107) (1,482,603) 61,471 89,815 13.1 Deferred Tax Assets Balanceasatbeginningoftheyear 1,572,418 - - - AcceleratedDepreciationforTaxpurposes 361,891 52,207 - - EmployeeBenefitLiability 373,687 1,520,211 - - Balanceasatendoftheyear 2,307,996 1,572,418 - -

13.2 Deferred Tax Liabilities Balanceasatbeginningoftheyear 89,815 - 89,815 - AcceleratedDepreciationforTaxpurposes 61,471 89,815 61,471 89,815 EmployeeBenefitLiability - - - - Balanceasatendoftheyear 151,286 89,815 151,286 89,815

13.3 DeferredTaxhasbeencomputedusingcurrenteffectivetaxrateof28%applicablefortheyearofassessment2013/2014toeachGroupCompany.

14 INVENTORIES RawMaterials 33,588,257 - 233,062 - WorkinProgress 1,254,460 - 579,600 - FinishedGoods 920,000 20,171,102 920,000 - 35,762,717 20,171,102 1,732,662 -

14.1 Inventoriescarriedatthelowerofcostornetrealisablevalue.

15 TRADE AND OTHER RECEIVABLES Debtors&Retentions 175,999,580 199,787,005 - - OtherReceivables 688,747 2,846,383 - 18,297 TaxReceivables 109,465 5,078,586 - 55,829 Deposits,Advances&Prepayments 2,422,123 2,155,784 91,859 2,257 179,219,915 209,867,758 91,859 76,383

16 AMOUNTS DUE FROM RELATED PARTIES Subsidiaries CCCPlantationEngineeringLtd. - - 2,890,840 - SerendibEngineering&Agencies(Pvt)Ltd. - - - 4,979,551 SerendibInvestmentHoldingsLtd. - - 55,380 - Affiliate NavaraCapitalPartnersLtd. 3,500,000 - - - Key Management Personnel Mr.S.C.DeSilva - 891,227 - - 3,500,000 891,227 2,946,220 4,979,551

17 SHORT TERM INVESTMENTS Held-To-Maturity Investments FixedDeposits 12,186,350 37,624,167 - 2,853,957 12,186,350 37,624,167 - 2,853,957




18 CASH AND CASH EQUIVALENTS Favorable Balances SavingsAccounts 981,608 - 4,387 - CallDeposits - 600,000 - - CashatBank 23,646,069 14,531,953 1,514,617 7,353,042 CashinHand 670,000 955,706 - - 25,297,677 16,087,659 1,519,004 7,353,042 Bank Overdrafts 533,158 5,958,304 - - Cash and Cash Equivalents as per the Statement of Cash Flows 24,764,519 10,129,355 1,519,004 7,353,042

19 STATED CAPITAL No. of Shares No. of Shares No. of Shares No. of Shares

Balanceasatbeginningoftheyear 6,476,650 4,857,487 6,476,650 4,857,487 RightsIssue - 1,619,163 - 1,619,163 Balanceasatendoftheyear 6,476,650 6,476,650 6,476,650 6,476,650

19 STATED CAPITAL Balanceasatbeginningoftheyear 178,107,910 48,574,870 178,107,910 48,574,870 RightsIssue - 129,533,040 - 129,533,040 Balanceasatendoftheyear 178,107,910 178,107,910 178,107,910 178,107,910 20 FINANCE LEASE OBLIGATIONS 20.1 Lease Obligations Repayable between one and five years from year end GrossLeaseLiability 5,569,886 7,787,309 - - FinanceChargeUnamortised (483,470) (1,065,301) - - 5,086,416 6,722,008 - - 20.2 Lease Obligations Repayable within one year from year end GrossLeaseLiability 5,528,904 4,094,253 - - FinanceChargeUnamortised (1,119,343) (1,498,325) - - 4,409,561 2,595,928 - - 21 EMPLOYEE BENEFITS Balanceasatbeginningoftheyear 5,802,230 9,958,250 - - Add: Provisionfortheyear 1,430,438 - - - 7,232,668 9,958,250 - - Less: Paymentmadeduringtheyear (468,750) (2,894,000) - - WritebackofGratuityOverprovision - (1,262,020) - - Balanceasattheendoftheyear 6,763,918 5,802,230 - -

SerendibEngineeringAgencies (Pvt)Ltdhadadopted theLKAS19-“EmployeeBenefits”andapplied the formulamethodtomakeareliableestimateoftheCompany’semployeebenefitsusingthe“ProjectedUnitCreditMethod”inordertodeterminethepresentvalueoftheemployeebenefits.




Thefollowingkeyassumptionsweremadeinarrivingattheretirementbenefitobligationasat31stMarch2014.

RetirementAge 55Years SalaryIncrementRate 7.5% DiscountRate 11% EmployeeTurnoverRatio 5%

NoprovisionhasbeenmadeforRetiringGratuityintheaccountsofsubsidiariesnamelyCCCPlantationEngineeringLtdandSerandibInvestmentHoldingLtdasthesecompaniesdonotemployanystaff.AlloperationalservicesareprovidedbyNavaraCapitalLtd.


22 TRADE AND OTHER PAYABLES TradeCreditors 25,544,993 22,923,511 - - AccruedExpenses 41,598,806 61,928,730 677,324 101,020 OtherPayables 1,337,351 3,954,127 - 153,051 DividendPayable 36,920 - - - 68,518,070 88,806,368 677,324 254,071

23 AMOUNTS DUE TO RELATED PARTIES Parent NavaraCapitalLtd. 5,333,292 4,213,396 54,103 -

Subsidiaries SerandibEngineering&Agencies(Pvt)Ltd. - - 23,279,911 -

Key Management Personnel Mr.H.NDeSilva 1,463,210 50,000 - - 6,796,502 4,263,396 23,334,014 -

24 INTEREST BEARING BORROWINGS PackingCreditLoans 3,302,000 - - - 3,302,000 - - -

25 INCOME TAX LIABILITIES IncomeTax -Y/A2012/2013 129,578 273,664 - 126,666 -Y/A2013/2014 479,030 - 12,203 - 608,608 273,664 12,203 126,666

26 RELATED PARTY DISCLOSURES

26.1 Parent and Ultimate Controlling Party

TheCompany’sparentundertakingandcontrollingpartyisNavaraCapitalLtdwhichisincorporatedinSriLanka,whiletheultimateparentundertakingisNawaraHoldings(Pvt)LtdwhichisincorporatedinSriLanka.



26.2 Identity of the Related Parties TheCompanycarriesouttransactionsinordinarycourseofitsbusinesswithpartieswhoaredefinedasrelatedpartiesin

SriLankaAccountingStandard(LKAS24)“RelatedPartyDisclosures”thedetailsofwhicharereportedbelow.

26.3 Transaction with Related Parties

TheCompanyhadfollowingtransactionswithrelatedentitiesduringtheyearunderreview.

Name of the Name of Relationship Nature of Transaction Value Company Directors Transaction 2014 2013, (Rs.) (Rs.)

NavaraCapitalLtd. Mr.H.N.DeSilva Parent SettlementofOutstanding Mrs.D.L.DeSilva OpeningBalance - (87,897,295) Mr.H.G.SagaraKariyawasam FundTransfers 2,550,000 1,002,500 FundTransfers - (1,002,500) RecoveryofExpenses - 1,765,098 SettlementofExpenses (2,604,103) (1,765,098) RelatedPartyBalancePayable (54,103) - CCCPlantation. Mr.H.N.DeSilva Subsidiary AcquisitionofShares - 3,000,000 EngineeringLtd Mrs.D.L.DeSilva FundTransfers 2,507,070 - Mr.H.G.SagaraKariyawasam FundTransfers (1,600,000) - RecoveryofExpenses 1,983,771 - RelatedPartyBalanceReceivable 2,890,840 -

SerendibInvestment Mr.H.N.DeSilva Subsidiary DividendIncomeReceived 55,380 - HoldingsLtd. Mrs.D.L.DeSilva RelatedPartyBalanceReceivable 55,380 - Mr.H.G.SagaraKariyawasam SerendibEngineering Mr.H.N.DeSilva Subsidiary AcquisitionofShares - 15,388,890 &Agencies(Pvt)Ltd. Mr.SagaraKariyawasam FundTransfers (41,398,815) 11,800,000 (Resignedw.e.f.10.01.2014) FundTransfers - (7,835,141) RecoveryofExpenses 1,778,500 1,014,692 SettlementofExpenses (620,286) - DividendIncomeReceived 381,139 - SaleofConcretePoles 11,600,000 - RelatedPartyBalanceReceivable (23,279,911) 4,979,551 AlloperationalservicesareprovidedbyNavaraCapitalLtd.

The above transactions were carried out an commercial terms and conditions and at a price agreed upon by the

management. NoInteresthavebeenreceivedorpaidontheaboveRelatedPartybalancessincetheyaredeemedtobeofatemporary

nature. 26.4 Transaction with Key Management Personnel (KMP)

AccordingtoSriLankaAccountingStandard(LKAS24)-“RelatedPartyDisclosures”,KeyManagementPersonnel(KMP)arethosehavingauthorityandresponsibilityforplanningandcontrollingtheactivitiesoftheentity.Accordingly,theDirectorsoftheCompany(includingexecutiveandnon-executivedirectors)andtheirimmediatefamilymembershavebeenclassifiedasKeyManagementPersonneloftheCompany.

26.4.1 Loans to Key Management Personnel

NoloanshavebeengiventoKeyManagementPersonnelduringtheyear.

26.4.2 Key Management Personnel Compensation

DetailsofCompensationaregiveninNote6totheFinancialStatements.

26.4.3 Transactions with Close Family Members

Therewerenotransactionswithclosefamilymembersduringtheyear.



26.4.4 Other Transactions with Key Management Personnel

Therewere no other transactionwith keymanagement personnel other than those disclosed inNote 26.4 to thesefinancialstatementsduringtheyear.

27 CAPITAL EXPENDITURE COMMITMENTS

TherewerenoCapitalCommitmentsoutstandingasat31st March2014.

28 CONTINGENT LIABILITIES

TherewerenomaterialContingentLiabilitiesoutstandingasat31stMarch2014.

29 RESTATEMENT OF COMPARATIVE FIGURES

Comparative information including quantitative, narrative and descriptive information is disclosed in respect of thepreviousperiodforallamountsreportedintheFinancialStatementsinordertoenhancetheunderstandingofthecurrentperiod'sFinancialStatementsandtoenhancetheinterperiodcomparability.

30 EVENTS AFTER THE REPORTING PERIOD

Subsequent to thedateof thefinancialpositionnocircumstanceshavearisenwhichwouldrequireadjustments toordisclosureinthefinancialstatementsexceptforwhatisgivenbelow,

SerendibEngineering&Agencies (Pvt)Ltd,aSubsidiaryof theCompanymadeaRights Issueof2,200,000OrdinarySharesintheproportionoftwo(02)OrdinaryShareforone(01)OrdinaryShareheldasat1stJuly2014atapriceof Rs.5/-pershare.The2,200,000OrdinarySharesissuedintheRightsIssuewerealltakenbytheCompany,thusincreasingthedirectshareholdingofthesubsidiaryfrom56.69%to85.56%,whileeffectiveshareholdingincreasedto94.23%.

31 DIRECTORS RESPONSIBILITIES

TheBoardofDirectorstakesresponsibilityforthepreparationandpresentationoftheseFinancialStatements.

32 ASSETS PLEDGED

FollowingassetspledgedbytheCompanyanditssubsidiarySerendibEngineeringandAgencies(Pvt)LtdassecurityforfacilitiesobtainedandutilisedjointlyfromtheNationalDevelopmentBankPLC.

Nature of Assets Nature of Liability

a) PrimaryMortgageoverstocksandbookdebtsforRs.60Mn. LetterofGuarantee (tobeexecuted) Rs.20.0Mn

b) CrossCorporateGuaranteeofSerendibEngineeringandAgencies ReceivableFinance (Pvt)Ltd.(PV9944)andSerendibEngineeringGroupPLC(PQ230) Rs.40.0Mn forRs.60Mneach.(tobeexecuted)

c) ReceivableFinanceAgreementbetweentheBorrowersandtheBank.

d) Postdatecheques

e) Lienovercashdeposit/s,tobebuiltupthroughthedepositoftwopercentum(2%)ofvalueofeachpayment/invoice,inthenameoftheBorrowersheldbythebank.

33 RISK MANAGEMENT OBJECTIVES AND POLICIES

TheBoardofDirectorshaveoverallresponsibilityfortheestablishmentandoversightoftheriskmanagementframework,includingpoliciesandprocedures.Indischargingitsgovernanceresponsibilityitoperatesthroughtwokeycommittees- theGroupManagement Committee and the Board of DirectorsAudit Committee. Riskmanagement framework isreviewedregularlytoreflectchanges.

TheGrouphasexposuretothefollowingrisksarisingfromitsuseoffinancialinstruments.

-CreditRisk

-LiquidityRisk

-MarketRisk

-Operationalrisk



33.1 Credit Risk

CreditriskistheriskoffinanciallosstotheGroupifacustomerorcounterpartyfailingtomeetcontractualobligations.CreditriskarisesprincipallyfromtheGroup’sreceivablesfromcustomersandinvestmentsinsecurities.

TheGrouphasaspecificmethodtoassessthepotentialofcustomersintermsoftheircreditworthiness.AlsoGrouptakesadequateprecautionaryactionsbeforegrantingcreditfacilities.Investmentinsecuritieswillalsobedoneaftercarefulevaluationoftheexpectedreturnandriskassociated.ThisapproachhasmitigatedthecreditriskoftheGroup.

33.2 Liquidity Risk

LiquidityriskistheriskthattheGroupwillencounterdifficultyinmeetingtheobligationsrelatedtoitsfinancialliabilities,throughsettlementbycashorfinancialassets.

TheGroup seldom utilises its' borrowing facilities.TheGroup ensures the availability of sufficient liquidity tomeetliabilitieswhenduewithpropercashflowplanning.TheboardregularlyreviewsliquiditypositionoftheGroup.Thiscautiousapproachensuresthemitigationofliquidityrisk.

33.3 Market Risk

Market risk is the risk thatchanges inmarketprices, suchas foreignexchange ratesand interest rates,willaffect theGroup’s incomeor thevalueof itsholdingsoffinancial instruments.Theobjectiveofmarket risk management is tomanageandcontrolmarketriskexposureswithinacceptableparameters,whileoptimisingthereturn.

33.3.1 Interest Rate Risk

TheGroup’sobjective is tomaintainanefficientoperational interestcoststructure tominimise theadverse effectsoffluctuatinginterestrates.

Atthereportingdate,theGroup’sinterest-bearingfinancialinstrumentswereasfollows:

Carrying amount

Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs. Fixed Rate Instruments

Financial Assets

FixedDeposits 12,186,350 37,624,167 - 2,853,957

FinancialLiabilities - - - -

12,186,350 37,624,167 - 2,853,957

Variable Rate Instruments

Financial Assets

SavingsAccounts 981,608 - 4,387 -

CallDeposit - 600,000 - -

FinancialLiabilities

BankOverdrafts (533,158) (5,958,304) - -

InterestBearingBorrowings (3,302,000) - - -

(2,853,550) (5,358,304) 4,387 -



33 RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)

33.3.1 Interest Rate Risk (Contd.)

Sensitivity analysis for variable rate instruments

Thefollowingtabledemonstratesthesensitivitytoareasonablypossiblechangeininterestrates,withallothervariablesheldconstant,oftheprofitbeforetax:

Profit or Loss

2014 2013

Rs. Rs. GROUP

Variablerateinstruments(1%decrease) 28,536 53,583

Variablerateinstruments(1%increase) (28,536) (53,583)

COMPANY

Variablerateinstruments(1%decrease) 44 -

Variablerateinstruments(1%increase) (44) -

33.4 Operational Risk

OperationalriskistheriskofdirectorindirectlossarisingfromawidevarietyofcausesassociatedwiththeGroup’sprocesses,personnel,technologyandinfrastructureandfromexternalfactorsotherthancredit,marketandliquidityriskssuchasthosearisingfromlegalandregulatoryrequirementsandgenerallyacceptedstandardsofcorporatebehaviour.OperationalrisksarisefromalloftheGroup’soperations.

TheGroup’sobjective is tomanageoperational risk so as tobalance the avoidanceof financial losses and damageto the Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative andcreativity.



Shareholder Information

Stated Capital

TheStatedCapitaloftheCompanyasat31stMarchwasRs.178,107,910/-representing6,476,650OrdinaryShares.Allsharesareissuedandfullypaid.

Major Shareholders Details

Name No of % No of % Shares Shares As At As At 31/03/14 31/03/13

1 NavaraCapitalLimited 4,937,577 76.24 4,937,577 76.24

2 LankemCeylonPlc 505,555 7.81 476,397 7.36

3 PanAsiaBankingCorporation Plc/LankemCeylonPlc 290,000 4.48 290,000 4.48

4 FlyasiaSdn.Bhd 235,235 3.63 235,135 3.63

5 Mr.S.C.DeSilva 200,000 3.09 200,000 3.09

6 PchHoldingsLimited 125,927 1.94 241,645 3.73

7 Mr.K.D.S.R.Kulatunga 92,074 1.42 31,167 0.48

8 Mr.D.Kotthoff 12,220 0.19 12,220 0.19

9 FirstCapitalMarketsLimited/ MrPRBPerera 9,592 0.15 1,592 0.02

10 Mr.K.D.R.Kulatunga 8,464 0.13 12,306 0.19

11 Ms.RSMMohideen 4,569 0.07 1,209 0.02

12 FlybruneiSdnBhd 4,259 0.07 - -

13 Mr.M.N.Burhan 3,500 0.05 - -

14 MrsH.P.Gin 2,440 0.04 2,440 0.04

15 Mr.U.I.Suriyabandara 1,757 0.03 - -

16 Mr.B.A.Gunathilaka 1,600 0.02 1,600 0.02

17 Ms.R.Randeniya 1,500 0.02 1,280 0.02

18 Mr.P.Arunachalam 1,351 0.02 - -

19 Mr.VGACMMubarak 1,300 0.02 1,300 0.02

20 MerchantBankOfSriLankaPlc/ Mr.KRUpali 1,290 0.02 - -

Total 6,440,210 99.44 6,445,868 99.53


Shareholder Analysis

31st March 2014 31st March 2013

Number of Percentage Number of Percentage Shares shares

Sharesheldbythepublic 1,339,073 20.67% 1,339,073 20.67%

Sharesheldbytheothers 5,137,577 79.33% 5,137,577 79.33%

Total 6,476,650 100.00% 6,476,650 100.00%

Distribution of Shareholdings

Resident Non – Resident Total

Value Band No of No of % No of No of % No of No of % Share Shares Share Shares Share Shares Holders Holders Holders

1 - 1,000 227 26,931 0.42 04 1,612 0.02 231 28,543 0.44

1,001 - 5,000 15 24,764 0.38 02 6,699 0.10 17 31,463 0.48

5,001 - 10,000 02 18,056 0.28 - - - 02 18,056 0.28

10,001 - 50,000 - - - 01 12,220 0.19 01 12,220 0.19

50,001 - 100,000 01 92,074 1.42 - - - 01 92,074 1.42

100,001 - 500,000 03 615,927 9.51 01 235,235 3.63 04 851,162 13.14

500,001 - 1,000,000 01 505,555 7.81 - - - 01 505,555 7.81

1,000,001 - 50,000,000 01 4,937,577 76.24 - - - 01 4,937,577 76.24

Total 250 6,220,884 96.05 08 255,766 3.95 258 6,476,650 100

Categories of Shareholders

2013/2014 2012/2013

Categories of No of No of % No of No of %Shareholders Shares share Shares share holders holders

Individuals 364,640 232 5.63 29,023 136 4.51

Institutions 6,112,010 26 94.37 6,184,627 19 95.49

Total 6,476,650 258 100 6,476,650 155 100

Share Price Information

31st March 2014 31st March 2013

HighestPricepershare(Rs.) 200.00 210.00

LowestPricepershare(Rs.) 86.00 106.00

ClosingPricepershare(Rs.) 103.50 204.20


Six Years Summary

Group Company

2014 2013 2012 2014 2013 2012 2011 2010 2009 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Revenue 261,357,719 339,100,825 - 11,975,000 - - - - -

NetProfit/Lossbeforetax 21,671,505 62,717,018 3,537,346 560,823 (2,167,464) (558,982) 38,605,342 (85,650) (110,385)

Profit/Lossfortheyear 16,240,911 47,771,274 3,516,451 468,208 (2,493,968) (558,982) 38,507,468 (85,650) (110,385)

Property,Plant&Equipment 17,678,735 16,143,937 6,977,659 1,481,234 1,168,233 - - - -

CurrentAssets 273,159,647 292,568,226 176,941,249 9,399,728 20,689,246 2,026,499 - 50,267,518 50,316,167

TotalAssets 329,915,971 332,054,172 208,088,631 149,618,852 125,446,369 87,226,499 - 50,342,628 50,391,277

Shareholder’sFunds 203,029,499 154,016,781 1,250,266 125,444,025 124,975,817 (950,565) (391,583) (38,899,051) (38,813,402)

CurrentLiabilities 84,167,899 101,897,660 140,098,150 24,023,541 380,737 88,177,064 391,583 89,241,679 89,204,679

EarningsPerShare(Rs.) 1.54 4.20 0.31 0.07 (0.42) (0.11) 7.93 (0.02) (0.02)

NetAssetsPerShare(Rs.) 31.35 23.78 0.26 19.37 19.30 (0.20) (0.08) (8.01) (7.99)

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