at sierra cables, providing excellence has · consistent throughout, making the organization one of...
TRANSCRIPT
At Sierra Cables, providing excellence has always been our top goal. We take pride in our
ability to continuously raise the bar in our standards of excellence. Having conquered the local market by gaining
recognition of being a veritable powerhouse in the local cable industry, we have once again performed beyond expectations
by benchmarking ourselves against global standards.
Our overseas reach built up throughout the years has now become recognized and distinguished globally for its high standards of quality and performance excellence. This has
in turn helped us become one of the foremost cable manufacturers in Sri Lanka with an outstanding
international presence.
CONTENT
ABOUT US
Company Vision, Mission & Values 06
About This Report 08
Our Commitment to Excellence 09
Financial Highlights (Group) 10
About Us 11
The Chairman’s Review 12
Managing Director’s Review 14
The Board of Directors 16
Operational Review 20
Our Product Portfolio 24
Sustainability Review 26
HR Review 28
Risk Management Review 31
IT Review 34
Corporate Governance 35
Audit Committee Report 47
Board Compensation and Remuneration Committee Report 49
Related Party Transaction Review Committee Report 50
Statement of Directors’ Responsibilities 51
Annual Report of the Board of Directorson the Affairs of the Company 52
MANAGEMENTDISCUSSION &
ANALYSIS
Independent Auditors' Report 61
Income Statement 62
Statement of Profit or Loss and Other Comprehensive Income 63
Statement of Financial Position 64
Consolidated Statement of Changes in Equity 66
Statement of Changes in Equity 67
Statement of Cash Flows 68
Notes to the Financial Statemements 70
10 Year Summary 114
Quarterly Performance 115
Notice of Meeting 116
Form of Proxy 117
Corporate Information 120SUPPLEMENTARY
INFORMATION
FINANCIALSTATEMENTS
Sierra Cables PLCAnnual Report 2016 / 2017
6
Vision
Mission
Being the bridge in energizing the community.
Achieve a continuous growth to enhance the stakeholders’ value while offering a high quality product.
Become a reputed organization by promoting sustainable development.
Uplift the living standards of the Sierra Cables family.
Company Vision & Mission
Sierra Cables PLCAnnual Report 2016 / 2017
7
ValuesAs a responsible and ethical corporate citizen, Sierra Cables PLC carries out its affairs based on a set of values. Every member of the Sierra Cables family is committed to follow them.
ProductivityAs a manufacturer, we always try to take the maximum output from resources without exploiting them.
IntegrityWe believe in truth, justice and fair play, together with professionalism, above everything.
PassionWe will embrace challenges with passion and aggressively pursue our goals to reach the pinnacle.
ServiceWe always strive for excellence in serving our customers and ensure that the service provided is at the required level.
QualityWe are committed to produce the highest quality products for our customers.
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About This ReportSierra Cables PLC formulates its strategy and manages its business in an integrated manner, taking full cognizance of the requirements of its diverse stakeholders and capital resources. In complementing our integrated thinking, we adopt a similar approach towards corporate reporting and through this Annual Report, strive to present a balanced and cohesive assessment of the Company’s strategy, performance and outlook in relation to our economic, social and environmental goals.
Scope and Boundary
This report covers Sierra Cables’ operations for the period from 01 April 2016 to 31 March 2017. The financial and non-financial information pertaining to material developments and issues that shaped the Company’s performance during the reporting period are discussed comprehensively. Material aspects included in the Report were selected through a systematic and comprehensive process which involved robust stakeholder engagement at all levels.
Reporting Principles
This integrated report conforms to the requirements of several mandatory and voluntary frameworks including the Sri Lanka Financial Reporting Standards, Companies Act No. 7 of 2007, Listing Rules of the Colombo Stock Exchange, Code of Best Practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka.
Third Party Assurance and Verification
We believe that third party assurance is vital in establishing credibility and transparency of our Report. We have engaged Messrs KPMG, Chartered Accountants to provide assurance on the financial statements in this report and the supplementary notes.
This Report covers Sierra Cables operations for the period from 01 April 2016 to 31 March 2017. The Financial and non-financial information pertaining to material developments and issues that shaped the Company’s performance during the reporting period are discussed comprehensively.
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Our Commitment to ExcellenceAs one of the most foremost cable manufactures in the country, Sierra Cables PLC is a leading expert in the field of electric power distribution, whose performance and production excellence has received many accolades and awards over the years. These awards help to highlight the superiority of the products along with our outstanding performance which has proved to be consistent throughout, making the organization one of the undisputed forerunners in the race.
These awards showcases the recognition received on local as well as international arenas, along with other government and private organizations. This further encourages us to aim higher, raising the goals to bring local performance to global standards.
UDC Best Cable Manufacture of the YearThe UDC Business Awards 2011 was an international awards program which recognized the success and innovation of business leaders and organizations. UDC Business Awards honors businesses and industry leaders through the acknowledgment of innovative business processes, product development, sustainability and overall business success.
IESL Engineering Excellence AwardSierra Cables was recognized by the
Institution of Engineers of Sri Lanka by being awarded the “Excellence in Engineering” in 2011 for the manufacturing section. This is in recognition
of the performance excellence in the manufacturing sector of the
cables over three decades in Sri Lankan cable industry.
Sri Lanka Malaysia Business AwardsSierra Cables was the proud winner of the 6th annual Sri Lanka-Malaysia Business Gold Award 2010 in the open category for the contribution made to the growth of the economy.
CNCI Achiever of Industrial Excellence Merit Awards
Sierra Cables was a Merit award winner in CNCI Achiever of Industrial
Excellence in 2010 for excellence in the industrial sector and for enhanced quality standards, productivity, employee benefits
and relations and adherence to statutory requirements.
Quality Crown AwardThis award is based on QC100 TQM mode, developed by Business Initiative Directions in collaboration with a highly qualified team of professionals regarding the total quality management system of an organization.
Global Green Mark CertificateSierra Cables PLC was awarded
the CIOB (Ceylon Institute of Builders) Green Mark Certificate Silver award for the product category of electric cables in December 2015.
10
Financial Highlights (Group)
1,000
02015 2016 2017
3,4823,036
4,044
2,000
3,000
4,000
Group TurnoverMillions
(Rs.)
5,000
1.00
02015 2016 2017
2.702.87
3.12
2.00
3.00
Net Asset per Share(Rs.)
4.00
0.10
02015 2016 2017
0.49
0.37
0.50
0.20
0.30
0.40
0.50
EPS(Rs.)
0.60
0.05
02015 2016 2017
0.20 0.20
0.25
0.10
0.15
0.20
0.25
DPS(Rs.)
0.30
2015 2016 2017
Gross ProfitMillions
(Rs.)
741
630
879
200
0
400
600
800
1,000
2015 2016 2017
Net ProfitMillions
(Rs.)
50
0
100
150
200
250
300250
193
265
Financial Year ended 31st March2017
Rs.2016
Rs.
Net Turnover 4,044,449,473 3,036,010,858
Profit Before Tax 347,668,988 273,428,180
Profit After Tax 265,459,538 193,103,960
Shareholders’ Funds 1,679,694,650 1,546,612,947
Issued & Fully Paid Number of Shares 537,512,430 537,512,430
Total Assets 4,416,039,734 3,260,001,870
Market Capitalization (Million) 1,613 1,800
Dividend Payout Ratio (%) 50 54
Current Ratio 1.26 1.44
Return on Capital Employed (ROCE) (%) 25 20
Per Share (LKR)
Market Value - Highest 3.80 4.80
- Lowest 2.80 2.60
- Last Traded 3.00 2.90
Earnings 0.50 0.37
Dividends 0.25 0.20
Net Assets 3.12 2.87
11
About Us
Purity of our input Copper sourced only
through imports
99.9%
DividendPayments
25%
Direct Employment
Generated
500+
Countries Product Reach
15+
• Sierra Cables East Africa Ltd.• Sierra Industries (Pvt) Ltd.• T & G Lanka (Pvt) Ltd. • Tea Leaf Resort Holdings
(Pvt) Ltd.
Subsidiaries &
Associates
Years of operations in
Sri Lanka
38
Indirect Employment
2000+
Sierra Cables PLC is one of the leading and prestigious corporates in the business of manufacturing Electric Power Cables in Sri Lanka. With over 30 years of industry presence, today we are a front runner in manufacturing, marketing and distributing Copper and Aluminum cable products locally and across number of international markets. We have surpassed 4 billion rupee turnover level as a result of the trust placed on our products and services by our valued customers. The Quality, Sustainability and Responsibility that we placed on our undertakings are renowned with ISO 9001, ISO 14001,
OHSAS 18001 as well as SLS certifications to name a few. We work closely with our strong distribution channel agents across the island covering all the regions, maintaining virtuous partnerships with private and government project owners as well as our international agents. As a public quoted company, our policy is to generate maximum value for our shareholders, hence we are proud to have the distinction as the only cable manufacturer in Sri Lanka to operate manufacturing plants overseas through our landmark investments in East Africa and Fiji.
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The Chairman’s MessageIt is with great pleasure that I present the Annual Report and Financial Statements for the year ended 31st March 2017. The year under review was a strategically significant time for Sierra Cables as we took several key steps on our new strategic direction of exploring the export market and taking the Sri Lankan Cable manufacturing industry to the global stage. In short, Sierra Cables has already commenced laying the groundwork through increased network expansion and investments to become a global player.
Let us first take a look at our operating environment. The Sri Lankan economy grew at a slower rate of 4.4 per cent in 2016 in real terms, in comparison to 4.8 per cent in the previous year, largely due to volatile weather conditions that affected the agricultural sector. The industry related activities however recorded a notable growth of 6.7 per cent year on year largely driven by the boom in the construction, mining and quarrying subsectors. In 2016, the construction sector grew by 14.9 per cent as a direct outcome of the increase in the residential and mixed development boom.
In this context, Sierra Cables recorded a commendable overall revenue growth of 30 per cent. The Group’s core business segment, government contracts, grew by 42 per cent during the period under review while the export market indicated a rapid growth of over 300 per cent. Consequently overall revenue at Group level increased to 33 per cent from Rs. 3.04 billion in the previous financial year.
The Company’s profit after tax grew by 34 per cent to Rs. 236 million from Rs 175 million in the previous financial year. At the Group level profit after taxation grew by 37 per cent to Rs 265 million in comparison to the Rs. 193 million recorded the year before. As a result of increased profitability, this year we were able to increase
our dividend payments to Rs. 134 million in total when compared to the total dividend payment
of Rs. 107 million posted in the previous financial year.
Strategic Direction
During the year under review Sierra Cables took several strategic steps to strengthen our position as a resilient and a profitable business with vested interest in exploring the export market and enhancing the existing local market position. In line with our growth strategies, this year we entered into a joint venture agreement with three Fijian companies to start a USD 4 million power cable manufacturing plant in the Pacific island nation. This investment will enable Sierra Cables to tap the cable markets in New Zealand, Australia and Papua New Guinea. Our previous venture into the East African market through a manufacturing plant in Kenya has already delivered positive results in terms of tenders and market growth. In preparation to cater to the growing export market, we have already taken steps to obtain international standard certifications.
As a relatively new entrant to the export market, we foresee challenges in terms of managing exchange rate risk given the fluctuating currency exchange rates. Nevertheless, we will continue to view foreign investment opportunities prudently and consider those based on the value it would bring to our core proposition.
Sierra Cables took several strategic steps
to strengthen our position
as a resilient and a profitable business with vested interest in exploring the export market and enhancing the existing local
market position.
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Sustainable Growth
In order to support our growth strategy to maintain a futuristic and long-term vision, we continue to invest in certain resources, specifically technology, infrastructure and people, which will contribute to enhance the scalability of our business and allow us to become a more sustainable entity.
Our sustainability agenda focuses on efficient production methods to maintain our profitability and competitive position while striving for minimal environmental impact. Our wastage mitigation measures include recycling of Copper, Aluminum and PVC as well as stringent and responsible methodologies to manage our electronic waste without harming the environment. We maintain a carefully monitored supply chain process to maximize the use of wooden drums used to transport cables and have already implemented measures to replace these wooden drums with steel drums which affords a lengthier period of usage.
Sierra Cables is committed to investing in our people to pave the way for business growth that coincides with human capital growth. We provide essential training both locally and at international levels to our employees, while providing them timely rewards and remunerations. Our human capital growth strategy focuses on selecting the right talent for the industry and assisting their growth through a streamlined development process.
Growth Prospects
In the near future, Sierra Cables will face positive growth prospects given the sheer number of state and private sector construction projects scheduled to commence in the latter part of 2017 and early 2018. The proposed megapolis project will usher in an era of rapid growth in the construction industry aided by the emerging private construction projects as well as various state infrastructure development projects.
The government’s export-oriented industrialization strategy augurs well for our own export strategy. According to the Central Bank of Sri Lanka the economy is expected to grow at an increased rate of 4.5 per cent in the year 2018. Positive economic growth will directly impact our own growth through increased opportunities for business expansion.
In the near future, Sierra Cables will invest further Rs. 120 million in additional storage facilities to meet expected export and local demand.
Appreciation
I would like to express my sincere appreciation of the contribution made by several parties this year. I am grateful to the contribution of my colleagues in the Board for their guidance, insight and support at Board deliberations. I am extremely thankful to the management team led by the Managing Director. I would also like to express my sincere gratitude to our customers, bankers, business partners and all other stakeholders for the trust they have placed in us. Last but not least, my sincere gratitude to our shareholders for their continued support. We are committed to enhancing your value in this Company and look forward to your unwavering support in our future endeavours.
Priyantha PereraChairman
Colombo
29th August 2017
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Managing Director's StatementDespite slow overall economic growth, increased investment expenditure, especially in the construction sector, drove the economic growth during the year under review. The country’s industry related activities grew notably recording a growth rate of 6.7 per cent partly driven by increased activity in the construction industry which grew by 14.9 per cent. Gross domestic capital formation which represents the level of investment activity grew by 19.6 per cent mainly driven by the expansion of construction activities in 2016. However given the volatile weather conditions and lackluster global economy, the Sri Lankan economy indicated a downward trend.
Industry Activity
During the year under review, the construction industry in Sri Lanka gained momentum providing power cable manufacturers opportunities for business growth. A number of private entities invested in the construction of apartment complexes while the state projects focused on development of the transport system and roadways, energy and water resources. Low interest rate regime and the declining prices of copper, aluminum and plastics globally added to demand in the cable industry and enabled local cable manufacturing companies to increase profitability.
In this backdrop, as the third largest power cable manufacturer, Sierra Cables garnered increased profitability during the year under review. Nevertheless, augmented competition and price wars affected overall industry profitability.
Operational Highlights
During the year under review, Sierra Cables recorded a steady growth in revenue in the core market segments including government tenders as well as a rapid rise
in export revenue. This year, we were one of the main contributors to the national level electrification programme as a key supplier to the Ceylon Electricity Board (CEB). In 2016, Sierra Cables supplied the entire cable requirements of the high end ‘Shangri-La Hambantota’ project and secured an order to cater to the cable requirements of the ’Iconic Development’ project in Rajagiriya.
Our strategic focus in the year 2016 rested principally on developing the export market. Following the success of our venture into the East African market via the investment of USD 2 million on a power transmission cable manufacturing plant in Nairobi, Kenya, this year, we ventured into Fiji. The joint venture that we entered into with three Fijian companies helped fund the set - up of a power cable plant in Fiji giving us access to the nearby markets, namely Australia, New Zealand and Papua New Guinea.
In 2016, Sierra Cables East Africa Limited (SCEAL), the Group’s first ever overseas venture secured the first order from the Kenyan Rural Electrification Authority (REA). Both SCEAL and the recently initiated plant in Fiji are expected to show considerable performance growth in the near future.
Group revenue for the year increased by 33 per cent posting Rs. 4.04 billion in comparison to the Rs. 3.04 billion recorded in the previous financial year. In 2016, Sierra Cables posted a PBT (Profit Before Tax) of Rs. 347 million at the Group level in comparison to the Rs. 273 million recorded in the previous financial year.
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Sharpening the Focus on Growth
As the first ever Sri Lankan power cable manufacturer to venture overseas, we have already envisioned a clear growth strategy to succeed in the export market as well as the local market. We have already implemented practical measures to ensure sustainable growth driven by increased efficiency of operations, adoption of innovative technologies, a strengthened IT platform as well as an effective environmental policy framework. We will continue to maintain international quality standards and sustainability practices in order to foster viable and long-term growth.
In the long term, we foresee immense potential for growth in the African region as the region itself is geared to increase their energy requirements. We will continue to work towards enhancing growth and increased profitability in all areas of operation to create value for all our stakeholders.
Appreciation
I wish to convey my sincere gratitude to our Chairman and members of the Board for their guidance and unwavering support. My sincere appreciation goes to Sierra Cables staff for their valuable contribution and commitment. I also wish to express my gratitude to our customers, dealers, suppliers, bankers and all other stakeholders for their continued faith in us.
D. Shamendra PandithaManaging Director
Colombo
29th August 2017
Our strategic focus in the year
2016 rested principally on developing the
export market, following the success of our
venture into the East African market in
Kenya.
Sierra Cables PLCAnnual Report 2016 / 2017
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The Board of Directors
W.A.P. PereraChairman
Mr. W.A.P. Perera is a founder Director of Sierra Construction (Private) Limited and serves as the Chairman of Sierra Cables PLC. He has over 37 years of experience in the construction industry.
D.S. PandithaManaging Director & Chief Executive Officer
Mr. D.S. Panditha is the Managing Director and Chief Executive Officer of Sierra Cables PLC. He is a member of both the Institute of Incorporated Engineers and the Institute of Marketing (SL). He has over 40 years of experience in the cable and plastic industry.
E.A.D.T.B. PereraMr. E.A.D.T.B. Perera is a founder Director of Sierra Construction (Private) Limited with 36 years of experience in the construction industry.
J.H.P. RatnayekeMr. J.H.P. Ratnayeke is a Senior Corporate Lawyer who is also the precedent partner of Paul Ratnayeke Associates, a leading law firm in Sri Lanka which he founded in 1987 handling all areas of law and International Legal Consultancy work.
Mr. Ratnayeke is a Solicitor of England and Wales and an Attorney-at-Law of the Supreme Court of Sri Lanka. He has been awarded a Masters Degree in Law by the University of London. Currently, Mr. Ratnayeke holds directorships in over 62 Companies. He has also been elected / appointed as Chairman / Deputy Chairman to several of these companies. He is also the Chairman of P.R. Secretarial Services (Pvt) Ltd.
G.S.M. IrugalbandaraMs. G.S.M. Irugalbandara was the Director of Alucop Cables. She has an MBA from the University of South Queensland. She has been attached to KPMG as a Tax Manager prior to joining Alucop Cables. She now serves as a Non-Executive Director at Sierra Cables PLC.
Eng. B.W.N. RupasingheEng. B.W.N. Rupasinghe is an electrical & electronics engineer by profession with a BSc in Electrical & Electronics from the University of Peradeniya. He is a holder of an MSc Degree in electrical power transmission and distribution from the University of Manchester Institute of Science & Technology, UK and a MA Degree in Economics. He was a former General Manager of Central Engineering and Consultancy Bureau.
Prof. A.K.W. JayawardaneProf. A.K.W. Jayawardane is the Vice-Chancellor and Senior Professor in Civil Engineering, University of Moratuwa. He is an administrator, an academic, a researcher and a consultant with experience and expertise in university leadership, teaching, research and consultancy in the broad areas of construction management, project management, technology management and entrepreneurship.
He has a BSc Eng in Civil Engineering with first class honors, University of Moratuwa, MSc in Construction, Loughborough University of Technology, United Kingdom and a PhD from the same University. He is a Past President and a Fellow of the Institution of Engineers, Sri Lanka, a Fellow of National Academy of Sciences Sri Lanka, a Fellow of Institute of Project Managers and a founding member of the Society of Structural Engineers Sri Lanka.
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M.N. GunasekaraMr. M.N. Gunasekera was a former Chief Executive Officer / Director of Shaw Wallace & Hedges PLC, and its Subsidiary and Associate Companies. He counts approximately 41 years of work experience, out of which, 34 years have been with the Shaw Wallace Group and 12 years as the Chief Executive Officer. He has extensive experience in the total finance function and legal matters, specializing in taxation and overall general management.
He was a former Council Member and President of the Sri Lanka Institute of Taxation. He is a Fellow of the Institute of Chartered Accountants of Sri Lanka, Fellow of the Institute of Certified Management Accountants of Sri Lanka and Fellow of the Sri Lanka Institute of Taxation. He has followed a Management Development Program at the Cranfield School of Management, Bedford, England.
S.N. LokugeMs. S.N. Lokuge is a Non-Executive Director and is currently reading for her Masters in International Business (Deakin University) whereas she has earned her Bachelors of Commerce degree from Swinburne University of Technology in Australia, with a Graduate Certificate in Business Administration from the Swinburne University of Technology.
In addition, she serves as a Director for the International Tertiary Education Campus (INTEC) Asia, Director, NNL Holdings Pvt. Ltd, Deputy CEO, Sierra Construction “Road Division”, Alternative Director for Sierra Construction, Alternative Director for Sierra Holdings, and as Director of Sansun Boutique Hotel Limited.
Annual Report 2016 / 2017
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Sierra Cables PLC
Operational Review
Global Economic Outlook The World Economic Outlook prepared by the International Monetary Fund (IMF) revealed that while developed economies registered strong performances in the second half of the year 2016 that led to a momentum gain in the global economy, emerging economies on the other hand registered a lackluster performance. Political changes in the US and UK created uncertainties in the financial market as well as the global economic outlook. Oil producing economies showed signs of improvement with the stabilizing of oil prices during the second half of the year.
As predicted global economic activity is on the rise with a cyclical recovery in investment, manufacturing, and trade. The global economic growth rate is expected to increase from 3.1% in 2016 to 3.5% in 2017 with further growth opportunities expected in 2018.
Global Activity IndicatorsThe IMF further revealed a considerable growth in global economic activity in the fourth quarter of 2016 with manufacturing PMIs and consumer confidence indicating a positive turn in advanced economies. In emerging economies economic activity showed a modest growth.
Figure 1.1. Global Activity Indicators
Global economic activity gained momentum in the fourth quarter of 2016. Manufacturing PMIs and consumer confidence increased noticeably in advanced economies in the last few months of 2016 and early 2017. They also recovered to a more modest extent in emerging market economies.
-10
-5
0
5
10
15
20
–4
0
2
4
6
8
2011 12 13 14 15 16 Feb. 2017
Manufacturing PMI (deviations from 50; right scale)Industrial production
World trade volumes
1. World Trade, Industrial Production, and Manufacturing PMI (Three month moving average; annualized percent change unless noted otherwise
-2
-4-202468
101214
2012 13 14 15 16Feb. 2017 2017
90
95
100
105
110
115
120
125
130
2012 13 14 15 16Feb.
Advanced economies1
World
2. Manufacturing PMI(Three month moving average; deviations from 50)
Emerging market economies2 Advanced economies1
3. Consumer Confidence(Index, 2010 = 100)
Emerging market economies2
0
1
2
3
4
2011:H1
13:H1
15:H1
17:H1
18:H2
October 2016 WEO April 2017 WEO
3
4
5
6
7
8
9
2011:H1
13:H1
15:H1
17:H1
18:H2
GDP Growth(Annualized semiannual percent change)
4. Advanced Economies 5. Emerging Market and Developing Economies
The Following Charts are Sourced From :CPB Netherlands Bureau for Economic Policy Analysis; Haver Analytics; Markit Economics; and IMF staff estimates.
Note: CC = consumer confidence; PMI = purchasing managers index.
Australia, Canada (PMI only), Czech Republic, Denmark, euro area, Hong Kong SAR (CC only), Israel, Japan, Korea, New Zealand (PMI only), Norway (CC only), Singapore (PMI only), Sweden (CC only), Switzerland, Taiwan Province of China, United Kingdom, United States.
Argentina (CC only), Brazil, China, Colombia (CC only), Hungary, India (PMI only),
Indonesia, Latvia (CC only), Malaysia (PMI only), Mexico (PMI only), Philippines (CC only), Poland, Russia, South Africa, Thailand (CC only), Turkey, Ukraine (CC only).
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Sierra Cables PLC
However, preservation of global economic expansion will require a framework that avoids protectionist measures as well as a mechanism to distribute the gains widely. Surpassing global economic challenges require collective action by individual countries as well as multilateral cooperation. These actions include efforts to preserve open trading systems, preserving global financial stability, establishing equitable tax systems, continued support towards emerging economies to pursue development goals and adapting strict climate change measures to improve sustainability.
Sri Lankan Economy Due to volatile weather conditions and slow global economic recovery, the Sri Lankan economy grew at a 4.4% growth rate in real terms in comparison to 4.8% rate recorded during the previous year. However, the economy indicated signs of stabilization largely driven by corrective steps taken by the government and the Central Bank. Inflation remained low during the first quarter of the year 2016 but continued to rise during the year recording an annual average of 4.0% in 2016. The Central Bank attributes the high level of inflation in 2016 and the first quarter of 2017 to adverse weather conditions that the country experienced, tax adjustments as well as increasing international commodity prices.
Industry related activities expanded to 6.7% in comparison to the 2.1% recorded in the previous year. Construction recorded a healthy growth of 14.9% along with growth in mining and quarrying; manufacture of rubber and plastic products; manufacture of basic metals and fabricated metal products.
The government continued to support the industry sector in line with its export-oriented industrialization strategy. The Sri Lankan government also continues to implement measures to establish the Sri Lankan economy as an export driven economic hub through expansion of technological support, promoting investment and the provision of infrastructure facilities.
In spite of the negative impact of adverse weather conditions and inflation growth, the Sri Lankan economy is expected to reach a moderate growth rate of 5% in the year 2017 and record an annual growth rate of 7% by 2020. The Central Bank reveals that the private sector is expected to contribute to achieving a higher growth rate by leveraging potential growth opportunities in the economy as well as external markets.
Domestic production is expected to improve through better trade linkage, reinstating of GSP+ concession as well as proposed trade and economic partnerships within the region. Imports too would continue to rise as a result of the increase in higher intermediate goods imports, rising global oil prices and particularly an increased demand for investment goods in view of increased investment expenditure.
Performance Summary During 2016, the growth in the construction industry including urban dwellings, energy and water resources, mixed developments, hotels and similar projects boosted demand for the entire cable industry. Declining prices of copper, aluminum and plastics globally added to the demand as well. During the year under review, Sierra Cables maintained a strong market position as the third largest manufacturer of power cables in Sri Lanka and leveraged on the market opportunities to boost profitability.
While the demand from the government sector through tenders remained the largest contributor to Sierra Cables profit growth, the dealer market too continued to have a positive impact on the Company’s growth as well. In 2016, Sierra Cables played a key role in the national level electrification programme as a key supplier to the Ceylon Electricity Board (CEB).
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Sierra Cables PLC
The institutional or the project sector also contributed to the company’s revenue generation. However, in line with our focus on leveraging the international market, we succeeded in expanding our export market during the year under review to record an export gain that exceeds 437 Mn. LKR.
Our strategic steps to build cordial relations with industry players and our concrete efforts to increase product quality through obtaining standard certifications from relevant markets contributed to our success in the export market. Currently, Sierra Cables is the only Sri Lankan Cable manufacturer to have established subsidiary operations overseas with plants in Kenya and Fiji.
Following the success of our venture into the East African market with the establishment of a manufacturing plant in Kenya in 2016, this year we entered into a joint venture with three Fijian companies to tap the markets in Australia, New Zealand and Papua New Guinea.
Business Development Sierra Cables communication platforms and tools are multi-pronged and varied. While our main focus remains on striving for excellence in manufacturing, safety standards and customer service, we utilize various tools to communicate with our existing and potential customer base.
Awareness and Educational Programmes During the year under review Sierra Cables conducted informative seminars targeting electricians in various regions in Sri Lanka. Conducted by the engineering
professionals attached to Sierra Cables as well as instructors from renowned Technical Colleges, the seminars conveyed key information about the latest developments in the industry as well as technical guidance in cable installation and maintenance.
Jaffna District Electrician Club Seminar
Jaffna International Trade Fair
Operational Review Contd.
Annual Report 2016 / 2017
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Sierra Cables PLC
Kurunegala District Electrician Club Seminar
The programmes are organized and implemented by Sales Professionals with the guidance of respective Area Sales Managers in each region.
Print and Electronic Media and Digital Campaigns We conduct timely advertising and public relations campaigns using both print and electronic media platforms. Several media campaigns were successfully carried out during the year supported by a media buying strategy and media monitoring. Our marketing and IT departments work together to maintain an engaged digital presence through timely updates on social media platforms and utilize the Sierra corporate website to communicate new developments with all stakeholders.
Sierra Cables Product Catalog and ProfileDuring the year under review, we compiled a comprehensive product catalog and a profile with detailed information such as product certifications, a list of raw material suppliers, test reports as well as examples of previous projects.
International Standards and Approval to Increase DemandRecently Sierra Cables obtained the manufacturing approval for our products from the Maldivian Energy Authority which had a considerable positive impact on our export growth. In 2016, we obtained an International Conformity Report from TÜV SÜD PSB, Singapore, known for premium quality, safety and sustainability certifications world wide.
This enables Sierra Cables to further enhance our reputation and positioning as an entity that complies with international manufacturing standards.
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Sierra Cables PLC
Our Product Portfolio
Telecommunication CablesPVC insulated, self-supporting one-pair drop wire and polyethylene insulated copper conductors used as telecommunication distribution cables. The cables are manufactured according to BS 3573 and SLT standards.
Single and Multi-Core Unarmoured CablesSingle and Multi-core unarmoured
cables are solid or stranded copper conductors with PVC insulation and sheathing that comes with voltage rating of 300/500v, 450/750v. This
type of cables can be utilized for in-house wiring in distribution
of electricity within buildings and factories. The cables are manufactured according to BS 3573 and SLT standards.
Aluminium / PVC CablesThese are PVC insulated aluminum service main-wire cables with a voltage rating of 300/500v. Single-core, twin and flat-twin cables are manufactured to BS 6004 and CEB specifications.
Control CablesControl Cables with copper
conductors with PVC insulation and sheathing or with added steel wire armouring. These are manufactured according to BS 6346 specifications with
a voltage rating of 600/1000v and can be utilized for transmissions to control units in industry, railways, traffic signals, thermal power and hydro power systems.
Aerial Bundle ConductorsSelf-supporting insulated cables are used for low-voltage electricity distribution. These comprise of three phase conductors (aluminium) and a neutral conductor (alloy aluminum) bundled together with or without street lamp wires. The neutral conductor also acts as a messenger or a load bearer. The cables are manufactured to the National French Standard NFC 33:209.
Aluminium Conductors (AAC & ACSR)All Aluminium Conductors (AAC) and Aluminium
Conductors Steel Reinforced (ACSR) are used for low, medium
and high-voltage electricity transmission and distribution. The cables are manufactured according to SLS 750, BS 215
(Parts I & II) and ASTM standards.
Auto CablesPVC insulated single core auto cables are used in motor vehicles and general wiring.
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Sierra Cables PLC
Unarmoured Cables (Multi-Core)Copper conductors insulated with PVC or XLPE and PVC
sheathed, with a voltage rating of 600/1000v. These are utilised for
the distribution of electricity within factories and buildings and manufactured to BS 6346 and BS 5467 standards.
Co-axial CablesAnnealed copper conductors with polyethylene Insulated and copper braided co-axial cables, used as television antenna wires. The cables are manufactured to JIS Standards.
Earth CablesSierra Earth cables are solid,
stranded or flexible copper conductors with PVC insulation, non-sheathed with a voltage rating of 450/750v. These single-core Earth
conductors are used as general-purpose cables and manufactured
according to BS 6004 and SLS 733 standard.
Flexible CablesPVC insulated and sheathed flexible cables with a voltage rating of 300/300v and 300/500v are used as general purpose cables. These are manufactured to BS 6500 and SLS 1143 standards.
LSHF (Low Smoke Halogen Free) Cables
LV cables with LSFZH, thermosetting insulation generates slow emission
of smoke fumes and toxic gasses and zero halogens with exposure to fire. This type of earth cables are used in areas with high risk of
fire hazards.
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Sustainability ReviewSustainability is not merely a static agenda for Sierra Cables. We are aware that the issues that impact the environment, our customers, employees and the larger community change over time and we as a responsible corporate entity are prepared to evolve with these changes. Our approach to sustainability is based on a holistic view which integrates the sustainability agenda to the entire business process.
Strategic Sustainability Drivers
Stakeholder Engagement
We engage with a range of stakeholders and our relationships with each of these stakeholders have an impact on the viability and the success of our business and vice versa. Therefore, Sierra Cables constantly commit to a transparent and ongoing communications with each stakeholder group to form mutually beneficial relationships. We engage with stakeholders in numerous ways and the frequency of engagement depends on the issues that are being addressed.
Stakeholder Method of Engagement Business Objective
Shareholders Annual General Meeting / Group website / Timely communications / Email access to group management
Maintain shareholder confidence and maintain a balance between profits and sustaining long term profitability
Customers Group website and social media / Customer relationship management / Interactions at operational levels / Media
Achieving customer service excellence
Employees Regular meetings / Circulars / Emails / Performance review
To assist employees reach their potential and increase performance efficiency while rewarding dedication and positive end results
Suppliers Feedback evaluation / Registration of suppliers To source optimal raw material and maintain internationally accepted standards
Environment Audits / Obtaining standardization certificates To promote environmental conservation and mitigate the effects of environmental damage
Environmental impact management
Sierra Cables employs a well-placed environmental strategy and a framework to mitigate environmental damage and continuously explore innovative processes that will complement this endeavour. This framework has enabled us to better control the impacts on the environment, reduce the risk of potential costly pollution incidents and ensure compliance with
Adherence to
Local and
International
Standards and
Protocol
Innovation
ResourceOptimization
MinimizingEnvironmental
Damage
SustainableGrowth
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Sierra Cables PLC
environmental legislation. Our environmental policies and practices comply with specifications of ISO 14001 Standard certification.
Environmental Policy Objectives
• Optimizing the use of raw materials, energy and natural resources.
• Identifying waste streams and implementing measures to minimize generation of such, in order to reduce environmental pollution.
• Communicating this policy effectively to employees, suppliers and other stake holders.
• Provide necessary training to create the awareness towards the achievement of the greener responsibilities of employees.
Sustainability through Product Quality
Our manufacturing process is conducted in accordance with international standards and we constantly strive to create value for customers without compromising our environmental standards. During our manufacturing process we follow British Standards (BS) and French Standards (NFC) while our products intended for the Sri Lankan market are certified by the Sri Lankan Standards Institution (SLSI) through which Sierra Cables has obtained the ISO 9001:2008 for its quality management system.
RoHS Compliance Initiatives
We strictly adhere to RoHS compliance standards. RoHS stands for Restriction of Hazardous Substances. RoHS, also known as Directive 2002/95/EC, originated in the European Union and restricts the use of specific hazardous materials found in electrical and electronic products. The restricted materials which include lead (Pb), used in cable insulation and sheathing are hazardous to the environment and pollute landfills, and are dangerous in terms of occupational exposure during manufacturing and recycling. Accidental fires and incineration of waste scrap from wire and cable leads to the release of lead
(Pb) and other heavy metals and toxic substances. In the case of a landfill, especially under acidic conditions, this hazardous substance is likely to contaminate soil and ground water. We utilize lead (Pb) free PVC to manufacture cables in compliance to RoHS standards to minimize the negative impact on the environment.
Cable Drum Re-use Programme
In line with our sustainability agenda and the strategy to optimize resources, Sierra Cables follow a wooden drum recycle and reuse programme. Wooden drums are used to wind cables and transport those to customers which we collect from the customers once the purpose is served and the drums are empty. Following an assessment of each wooden drum, we reuse the drums for the next rewinding process.
Supplier Standard Management
We follow a rigorous selection as well as a pre and post analysis process to ensure that our suppliers adhere to a high level of environmental impact mitigation and health and safety standards. We are committed to sourcing raw material from reputed suppliers that adhere to the same standards that we uphold.
Sustainability Challenges and Opportunities
Lack of awarenessamongst suppliers andcustomers with regard
to sustainablebusiness practices
Engage withcustomers and
suppliers to promoteoptimum capacity
utilization and promotethe business
advantages ofsustainablepractices
Maximizing assetand resources
utilization
Improveresource utilization
across all crossfunctions and upgradebusiness infrastructure
to enhanceefficiency
Challenges Opportunities
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HR Review
Human Capital
Our human capital plays a key role in business growth and success. Sierra Cables is committed to providing essential training to enhance employee skills, timely rewards and remuneration as well as creating a safe working environment.
We provide equal opportunities for the employees and the company does not discriminate existing and potential employees based on their ethnicity, gender or sexual orientation.
At Sierra Cables we strictly refrain from employing forced labour and child labour or conducting any type of unfair labour practices. As at 31st March 2017 the total workforce of Sierra Cables was 318. Majority of employees are from the age group 25 - 35 years.
Age-wise Analysis
8%
25%
35%
17%
15%
18-25 Years 26-35 Years 36-40 Years
41-50 Years Above 50 Years
Employee Category-wise Analysis
Permanent Casual Contract
95%
4%1%
Service Period-wise Analysis
23%23%
18%
15%
21%
Above 10 Years 6-10 Years 3-05 Years
1-02 Years Below 1 Years
Training & Development
We continuously provide training and development opportunities to our staff both locally and abroad. Each department utilizes the annual performance evaluation system to identify key training requirements and organize training programmes accordingly.
In addition, Line Managers hold the responsibility of identifying training requirements and proposing necessary training programmes to the Human Resources Department. Training programmes are designed with the dual goal of enhancing business success and employee growth. Apart from specific training programmes, the company facilitates employees’ higher education aspirations.
We offer a range of structured and on the job training programmes designed to develop technical competencies as well as soft skills of our employees through leadership development, motivational training and guidance in management practices.
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In addition, we engage external parties such as the Industrial Training Institute (ITI), Sri Lanka Standard Institute (SLSI) and the Sri Lanka Institute of Marketing (SLIM). Annually a selected number of senior employees attend training programmes conducted overseas.
HR Audit
In 2016, we conducted an employee attitude survey to identify areas that requires improvement and the feedback concluded the necessity of revisiting the employee benefit plan. We have reviewed the existing benefit plan and have laid out the groundwork to implement a grading system which will allow us to address employee concerns and improve the existing benefit plan.
Currently, we evaluate employees bi-annually and salary increments are identified based on the performance of the employee.
Health & Safety
Employee safety is a key concern for Sierra Cables and in this regard we have implemented a set of practical steps to create a safe working environment. Apart from providing timely training and instructions on safety and wellbeing, we provide required Personal Protection Equipment (PPE) to our employees.
We also carry out frequent safety awareness meetings and workshops. Sierra Cables has been certified by Sri Lanka Standards Institution through OHSAS 18001: 2007 for Occupational Health & Safety practice in the organization.
Employee Engagement
We believe that cordial relations amongst employees and networking opportunities have a direct impact on work efficiency and employee satisfaction. The company organizes various social gatherings and activities to engage employees to network and make connections.
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Sierra Cables PLC
Risk Management ReviewThe management of risk in a corporate world consists of identifying, analyzing, quantifying and addressing all possible risk factors to minimize threats that could harm an organization. The competent management of risk can also help identify potential opportunities while ensuring good governance. It is equally important to note that risk management is a recurrent process which plays a vital role in an organization’s performance from the level of corporate decision making.
To conduct a successful risk management process an organization must achieve the effective balance between identifying and minimizing the threat to future losses and recognizing true opportunities for future growth and development.
Risk management strategies are focused on identifying risk factors, developing solutions to overcome them and implementing effective strategies to reduce the impact. It is best to give special consideration to the suggestions of the experienced personnel within the organization since the relative importance of a risk can be elaborated more precisely by them.
The risk management of a company is based on the level of risk appetite. At Sierra Cables our appetite is neither low nor high but moderate or more often above the moderate level. This has enabled us to accept the right level of risk suitable for the company avoiding unnecessary risk that could hinder the future of the company, thereby ensuring a smoother process.
Sierra Cables Risk Management Process
Identification of possible risk factors, both within and outside the company is a continuous and vigilant task. It requires a proactive mindset from all personnel at every level within the organization. Their equal contribution is highly valued and encouraged by the top management in order to achieve a broader perspective in decision making. With these perspectives the top management is then able to commence the next vital step in risk management, which is to analyze and prioritize the potential risk factors accordingly.
This is vital when operating in a highly volatile environment as the company’s resources need to be ready at any given time. At this stage it is mainly the top management that takes the initiatives of clearing the path for future objectives and goals. However, in the planning stage the middle level managers who are experts in various fields takes part to better formulate and strategize the plans. Their ideas together with previous experiences will support to develop an action plan on how to face future risks and take effective actions appropriately.
The action taken for risks can be threefold. They are acceptance, avoidance and mitigation. The finalized action plan will be implemented concentrating on taking any of the three actions specified above. Similarly the implementation demonstrates the quality of the previous stages of the risk management process. The final step is crucial if the company is to reap the benefits of risk management because it guarantees that the implementation has taken place according to the planned manner. At the same time the controlling and monitoring stage also considers environmental change to ensure the actions taken are complied according to the timely needs.
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We have identified the below as key risks faced by the Company.
Financial Risk Impact Mitigation Process
Liquidity
Interest Rates
Exchange Rates
Credit Collection
Main impact is on the working capital and profitability whereas the sustainability of the Company is affected
Monthly meetings with sales representatives to review on debt collection. Positive relationships with financial institutions in order to obtain lucrative rates
A separate method to assess the potential of customers in terms of their credit worthiness
Agreeing for "Call Options Forward Contract"
Looking for supplier credit to mitigate costly fluctuations in local interest rates
Business Risk Impact Mitigation Process
Market Risk Price changes can directly impact on the profit When setting prices it is possible to match with raw material prices
Setting sales targets considering Company’s potential
Having a thorough idea on the trends in the market
Planning
ImplementingAnalysing &Prioritizing
the Risks
Monitoring& Controlling
BusinessContext
IdentifyingKey Risks
RiskManagementFramework
Risk Management Review Contd.
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Sierra Cables PLC
Operational Risk Impact Mitigation Process
Health & Safety of Employees
Changes in Environmental
International Quality Standards
& Regulatory Environment
Impact on employees personal and work life
Future existence of the business
Employee performance evaluation scheme
Good relationships with employees through the activities of the employee welfare society
Providing training on industrial safety
Obtaining the ISO 9001:2000 Standard
Obtaining the ISO 14001 Standard
Obtaining the OHSAS Certificate
Providing required Personal Protection Equipment
Continues inspection on working environment condition
Product Risk Impact Mitigation Process
Customer satisfaction
Cost effectiveness
Decline in market share Maintaining SLS Standard
Bidding with competitive prices
Proper testing to identify quality defects
Production planning
Information Risk Impact Mitigation Process
Timely & accurate information for decision making
Systems operation & application.
Lack of accurate and timely decision making Use of an ERP system for timely decision making
Data backup procedure
Agreements with IT vendors for support and maintenance
Regular upgrading of the systems
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Sierra Cables PLC
IT ReviewInformation Technology and the use of the latest technological advancements are essential ingredients of business growth, cost reduction and environmental impact mitigation. In this context, Sierra Cables have taken several practical measures to adopt new technologies and leverage competitive advantage in a competitive industry.
A Strengthened IT Platform
The current Enterprise Resource Planning (ERP) system (Microsoft Dynamics NAV (Navision) that the company employs, facilitates the integration of the modules with core functions including Marketing, Purchasing, Administration and Finance Management, enabling us to operate on a lean and efficient cost structure.
Our systems have been designed and developed using the latest technology and is backed by the best practices and internal controls of the highest standards. Our Business Intelligence processes enable employees to analyze data more sensibly and come up with actionable information to make informed business decisions.
Sales Force Automation
In 2016, we took the initial step to automate our sales force in order to streamline our sales process and improve efficiency. This effort also aligns with our plan to operate in an entirely paperless business environment by 2020.
The company has already laid out the groundwork to operate entirely within a digitalized environment.
"Sierra Cables is committed to investing in our people to pave the way for business growth that coincides with human capital growth."
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Sierra Cables PLC
Corporate GovernanceSierra Cables PLC has always paid close attention to maintaining high standards of corporate governance. It has been an ongoing focus point of importance with the Board of Directors ever since the Company was listed. The Directors have ensured that the company adheres to the various guidelines, especially those issued by regulatory bodies and the legislation of the company, such as the Institute of Chartered Accountants Sri Lanka, Securities & Exchange Commission and the Companies Act of 2007.
Furthermore, the Board conducts all acts with transparency and are bound by the directives issued by the CSE. As the Board is appointed annually by the company shareholders each Board member seeks to achieve the objectives of the company including good governance, on behalf of them. Hence, this concept was developed to ensure that the above goal is met by
ensuring good relationships between the shareholders, Board of Directors, management and other stakeholders. The Board is also obliged to act in the best interest of the company and thereby work to enhance the shareholders’ wealth.
When the management takes part in governance in a responsible way it will provide a fundamental background for sound decision making and help raise the performance of the company. With this in mind the Board always strikes a balance on the two dimensions, conformance and performance. Therefore we believe that we have maintained the right level of governance while achieving the highest possible profit. Sierra Cables corporate governance framework can be demonstrated as follows.
BOARD OFDIRECTORS
SHAREHOLDERS
AUDITORS
BOARD SUBCOMMITTEES
(AUDIT,REMUNERATION
& RELATED PARTY TRANSACTION)
MANAGINGDIRECTOR /
CEO
TOPMANAGEMENT
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Annual Report 2016 / 2017Sierra Cables PLC
The Board Balance
The responsibility of the Board of Directors is to operate the company by acting in a manner that reflects the best interest of the company. Nine Directors were appointed as the Board of Directors. Out of the nine, eight are Non-Executive Directors. Three out of the eight Non-Executive Directors are Independent Directors. All directors are veterans in their fields such as engineering, law, construction, marketing, finance and public administration. Their years of experiences are the reason for the continual success of the company.
Despite the varying levels of shareholding possessed by the Directors, equality is a major fact that is prevalent at all times within the Board. It is not compromised with the dominance of one or group of Directors when decision making comes.
Chairman and Chief Executive Officer
The Board is led by a Non-Executive Chairman. The Chairman’s leadership will take the company to unattainable heights with high strands of efficiency, effectiveness and professionalism.
In an ever changing environment such a leadership is the core on directing and controlling the organization for better performance. The CEO on the other hand handles a totally different set of duties and responsibilities. The CEO will contemplate on improving the shareholder value by formulating strategy, evaluating its viability and implementing them to reach for the desired purposes.
Board Meetings
Board meetings are scheduled to be held every two months. In these meetings the Board considers the performance of the company from many angles. The monthly financial performance, selling and distribution, key projects, investment opportunities, key risks faced, appointments, etc. are some of the areas thoroughly considered. This is also one of the main controlling techniques of the Board.
Responsibilities of the Board
The Board is responsible for :
1. Enhancing shareholder wealth.
2. Planning and guiding the business towards meeting the set objectives.
3. Ensuring the interests of all stakeholders is considered in corporate decisions.
4. Formulating, communicating, and monitoring business policies, overall strategies and corporate goals to ensure sustained growth.
5. Assessing and approving the implementation of management and internal control systems.
6. Ensuring the compliance with all statutory and other obligations being met.
Audit Committee
The audit committee mainly looks at legal and financial compliance of the company. Both these areas will cover the accounting practices, financial control, risk management, etc. In order to look into these matters responsibly the board has appointed three Independent Non-Executive Directors. They are,
Corporate Governance Contd.
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Annual Report 2016 / 2017Sierra Cables PLC
Mr. M.N. GunasekeraChairman - Non-Executive Independent Director
Eng. B.W.N. RupasingheNon-Executive Independent Director
Prof. A.K.W. JayawardaneNon-Executive Independent Director
The committee has met six times during the year. The meetings are attended by the Managing Director and Chief Financial Officer by invitation and other Directors and Executives when required. The chairman of the committee comes with a vast experience. Mr. M.N. Gunasekera is also a fellow member of the Institute of Chartered Accountants of Sri Lanka.
Duties and Responsibilities
Audit
1 Recommend the Board of the appointment and removal of external auditors and review their terms of engagement.
2. Determine with the external auditors, the audit plan and scope and their authority and responsibilities.
3. Oversee and appraise the quality of audits conducted and monitor their effectiveness.
4. Review external audit reports and recommendations and ensure appropriate management response to recommendations.
5. Monitor the relationship between management and the external auditors.
6. Review and assess the independence of the external auditor.
Accounting
1. Monitor and review the adequacy of the company’s accounting system and internal control environment.
2. Review the annual and semi-annual financial statements of the company, and make recommendations to the Board.
3. Determine company specific accounting policies within the ambit of the accounting standards.
4. Review significant transactions which are not a normal part of the company’s business.
Risk Management
1. Identify and assess areas of risks which might impact on the company and research appropriate mitigations.
2. Monitor, review and evaluates the adequacy and effectiveness of the company’s risk management controls, both internally and externally.
3. Evaluate the effectiveness of the company’s business continuity plans.
4. Evaluate the adequacy of the company’s insurance covers at least annually.
The Audit Committee has recommended to the Board of Directors that Messers KPMG, Chartered Accountants to appoint as Auditors for the year ending 31st March 2018 subject to the approval of the shareholders at the next annual general meeting.
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Remuneration Committee
The Remuneration Committee works to attract and retain Directors, executives and employees for the company. Also through the decisions of the Remuneration Committee it is expected to obtain the highest level of contribution for the achievement of goals and objectives of the company. There by it expects to create a good value for the shareholders.
The Sierra Cables PLC's Remuneration Committee consists of three Non-Executive Independent Directors as follows;
Prof. A.K.W. JayawardaneChairman - Non-Executive Independent Director
Eng. B.W.N. RupasingheNon-Executive Independent Director
Mr. M.N. GunasekeraNon-Executive Independent Director
The main responsibilities of the Remuneration Committee are;
1. To review and approve the Remuneration policy of the company.
2. To advice on structuring Remuneration packages that enable the company to attract, retain and motivate high caliber individuals with the requisite skills.
3. To recommend to the Board of Directors the Remuneration to be paid to the Executive Directors, Non-Executive Directors, their pre-requisites and allowances.
Related Party Transactions Review Committee
The members of the Related Party Transactions Review Committee are;
Mr. M.N. GunasekeraChairman - Non-Executive Independent Director
Eng. B.W.N. RupasingheNon-Executive Independent Director
Prof. A.K.W. JayawardaneNon-Executive Independent Director
The main responsibilities of the Related Party Transactions Review Committee are as follows;
Authorise and review all Related Party Transactions to ensure compliance with the Listing Rules, compliance with stock exchange and legal requirements, concerning the respective transactions.
In the event a Related Party Transaction will be ongoing (recurrent transactions), the Related Party Transactions Review Committee has established guidelines for the senior management to follow in respect of ongoing dealings with the Related Parties.
Thereafter, the Committee on an annual basis, would review and assess ongoing relationships with the related parties, to determine whether they are in compliance with the Committee’s guidelines and that the Related Party Transactions remain appropriate.
Corporate Governance Contd.
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Annual Report 2016 / 2017Sierra Cables PLC
Board Meetings and Sub Committee Meetings
Name of the Director Board MeetingsAudit Committee
Meetings
Remuneration Committee Meetings
Related Party Transaction
Review Committee Meetings
Executive Directors
Mr. D.S. Panditha 6/7 - - -
Non-Executive Directors
Mr. W.A.P. Perera (Chairman) 7/7 - - -
Mr. D.N.N. Lokuge (Resigned w.e.f. 27th May 2016) 1/7 - - -
Mr. E.A.D.T.B. Perera 3/7 - - -
Ms. G. S. M. Irugalbandara 5/7 - - -
Ms. S.N. Lokuge (Appointed on 26th May 2016) 3/7 - - -
Mr. J. H. P. Ratnayake 2/7 - - -
Non-Executive Independent Directors
Prof. A.K.W. Jayawardane 6/7 6/6 1/1 1/1
Eng. B.W.N. Rupasinghe 4/7 6/6 1/1 1/1
Mr. M.N. Gunasekara 7/7 6/6 1/1 1/1
Dates of Meetings
27.05.2016 27.05.2016 11.08.2016 11.08.2016
11.08.2016 11.08.2016 - -
28.10.2016 25.10.2016 - -
30.11.2016 28.10.2016 - -
26.01.2017 20.01.2016 - -
06.02.2017 25.01.2016 - -
30.03.2017 - - -
Internal Control
The Internal Control system encompasses the financial, operational, risk management and regulatory compliances of the company. Maintaining effective control is vital as it is the responsibility of the Board. All the sectors have different controls developed uniquely for themselves.
Their discipline and commitment will ensure correct processes are maintained within the company. The effectiveness of these controls is reviewed regularly through the Management Review meeting and Board Meetings. One of the main items heavily discussed in every Management Review meeting is the Key Performance Indicators (KPI).
It summarizes the performance of every department of the company on a monthly basis. Even though all these controls are in place we cannot reject the fact that exceptions can appear in an unexpected manner. Therefore either through preventive or corrective actions such situations should be managed.
However the ultimate expectations thus will be to develop and maintain accurate processes, information and customer satisfaction. Simply this will ensure maximization of shareholder wealth and the quality of the company’s performance.
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Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
1. COMPANY
A.1. Director
(The Board)
A . 1/7.10.1(a)
7.10.2(a) and 7.10.3 (c-d)
Compliant The Board of Directors currently consists of nine (09) members including Chairman.
The day to day monitoring and operations of the organization has been delegated to the Chief Executive Officer (CEO) and the Executive Committee governed by policies, procedures and authority by the Board of Directors.
The Board is accountable to the stakeholders of the Company to ensure that the business is conducted in an appropriate manner based on an approval business plan and the financial and non-financial targets of the Company are achieved. The Board’s Terms of Reference stipulate the specific duties of the Board and the following are some key matters which come under the Board’s review and approval;
I. Company strategy and business plan
II. Financial reporting and internal controls
III. Financial performance
IV. Dividend policy
V. Changes to capital structure
VI. Constitution and performance of the Board Committee
VII. Regulatory compliance
Company Board Meetings A.1.1 Complied Seven (07) Board meetings were held to review financial performance and to consider other matters such as strategic and operational plans.
Responsibilities of the Board
A.1.2 Complied The Board is collectively responsible for formulation, implementations and monitoring of business strategies. In order to do so, the Board appointed committees are constituted to assist the main board in fulfilling its stewardship function by reviewing systems of internal control, internal and external audit, risk management, IT systems and financial reporting to shareholders.
Compliance with laws and access to independent professional advice
A.1.3 Complied The Board members are permitted to obtain independent professional advice from third parties as deemed necessary which includes the Company’s external lawyers and auditors at the expense of the Company.
Company Secretary A.1.4 Complied The Company secretary possesses the required qualifications and expertise, and advises the Board on matters concerning the Companies Act and other relevant rules, regulations and regulatory guidelines.
Independent judgment of the Directors
A.1.5 Complied All the Board members actively participate in the Board meeting by bringing up their own independent judgment.
Corporate Governance Contd.
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Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
Dedicating Adequate time and effort
A.1.6 Complied The Board members dedicate adequate time for the affairs of the Company by attending Board meetings, Board appointed sub-committee meetings and by making decisions via circular resolutions.
A.2 Chairman and Chief Executive Officer (CEO)
There is a clear demarcation of the responsibilities between the Chairman and the CEO. The functions performed by the Chairman and the CEO are distinct and separate, ensuring the balance of power and authority within the organization, so that no person has unattended powers of decision-making and implementations.
A.3 Chairman’s Role
The Chairman is responsible for leadership of the Board, managing Board meetings and the business undertaken threat. The Chairman is responsible to ensure that all relevant issues of the Company are dealt with on the Board Agenda and that Directors receive all appropriate information and documentation in a timely manner, thus facilitating the Directors to contribute at the deliberations.
Role of Chairman A.3.1 Complied The Chairman should ensure Board proceedings are conducted in a proper manner.
A.4 Financial Acumen
Financial Acumen A.4 Complied Our Directors with their academic and/or entrepreneurial financial skill, business acumen and wide practical wisdom contribute substantial value, knowledge and independent judgment to decision making on matters concerning finance and investment.
A.5 Board Balance
Presence of Non- Executive Directors
A.5.1
7.10.1(a), 7.10.2(a) and 7.10.3(a)
Complied Eight of the nine Directors of the Board hold office in a Non-Executive capacity.
Independence of Non-Executive Directors
A.5.2 & 5.3
5.5, 7.10.2(a-b) and 7.10.3(a-b)
Complied The Board comprises of three Independent Non-Executive Directors.
Annual Declaration of Non-Executive Directors
A.5.4
7.10.2(b)
Complied Each Non-Executive Director submits a signed and dated declaration annually of his Independence or Non -Independence against a specified criteria as set out in Appendix 7A of Colombo Stock Exchange listing rule section 7.10.2(b).
Requirement to appoint a ‘Senior Non-Executive Director’
Requirement to appoint a ‘Senior Non-Executive Director’
Not applicable This is not relevant to the Company as the Chairman and CEO roles are segregated.
Chairman conducting meetings with the Non-Executive Director
A.5.9 Complied The Chairman meets with the Independent Non-Executive Director as and when necessary.
Recording of concerns in the Board minutes
A.5.10 Complied Where Directors have concerns about the matters of the Company which cannot be unanimously resolved, their concerns are recorded in the Board minutes.
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Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
A.6 Supply Information
Obligation of the Management to provide appropriate and timely information
A.6.1 Complied The Group has a state-of-art management information system to process and monitor the performance of the Group. Appropriate and timely information is made available to the Board members who make further inquiries when necessary.
Adequate time for circulation ad respective Board documents
A.6.2 Complied Board papers, agenda and previous Board minutes to be tabled one week prior to Board Meeting.
A.7 Appointment to the Board
Disclosure to Shareholders
A.7.3 Complied
A.8 Re-election
Re-election of Directors A.8.1 and A.8.2 Complied To comply with the Articles of Association, the Directors who have been appointed to the Board during the year, hold office until the next AGM, and are required to retire and a new Director to be re-elected by the shareholders.
A.9 Appraisal of Board and the subcommittees
A.9.1, A.9.2 and A.9.3 Complied The Board annually appraises itself on its performance in the discharge of its key responsibilities. The Board also undertakes an annual self evaluation of its own performance and that of its committees and the Board states on how such performance evaluations have been concluded.
A.10 Disclosure of information in respect of Directors
Directors’ Disclosures A.10.1
7.10.3(c-d)
Complied The names of the Directors of the Board, their leadership expertise, skills and their profiles are disclosed on page 16 to 17 of this Annual Report. Director’s interests in contracts are indicated in Note 35.2 of the Financial Statements of this Annual Report. Names of the Chairman and the members of the Boards Committees are provided on page 54.
A.11 Appraisal of Chief Executive
Setting of the annual targets and the appraisals of the CEO
A.11.1 and A.11.2 Complied The CEOs performance is reviewed annually.
Corporate Governance Contd.
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Annual Report 2016 / 2017Sierra Cables PLC
Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
B. DIRECTOR’S REMUNERATION
B.1/7.10.5 Remuneration Procedure
Establishment of a Remuneration Committee and its composition
B.1.1, B.1.2 and B.1.3
7.10.5(a) and 7.10(b)
Complied The Remuneration Committee comprises of Prof. A.K.W. Jayawardane, Mr. M.N. Gunasekera and Eng. B.W.N. Rupasinghe being Independent Non-Executive Directors. Prof. A.K.W. Jayawardane is the Chairman of the Committee. The details of the Remuneration Committee’s composition, policies and responsibilities are set out on page 49 of this Annual Report.
Determination of the remuneration of the Non-Executive Directors
B.1.4 Complied The Board as a whole decides the remuneration of the Non-Executive Directors. The Non-Executive Directors receive a fee for being a Director of the Board and fee participating as a sub committee member.
Consultation with the Chairman and the CEO
B.1.5 Complied Input of the Chairman is obtained as the Chairman of the said Sub Committee. External professional advice is sought on a need basis.
B.2 Level and Makeup of Remuneration
Level and makeup of the remuneration of Directors and comparison of remuneration with other Companies
B.2.1, 2.2 and 2.3 Complied The remuneration scheme for Executive Directors is structured to align rewards to their individual and Corporate performance targets.
Performance – based remuneration
B.2.4 Complied The performance related payments for Executive Directors is structured to align with individual Corporate performance targets.
Executive share options B.2.5 Not Applicable
Designing the remuneration
B.2.6 Complied Provisions set-out in Schedule E of the Code of Best Practice is considered.
Early termination of Directors
B.2.7 and B.2.8 Complied
Remuneration of Non-Executive Directors
B.2.9 Complied Non-Executive Directors fee are compared with the market rates
B.3/7.10.5 (C) DISCLOSURE OF REMUNERATION
Disclosure of remuneration policy and aggregate remuneration
B.3.1 Complied Please refer Remuneration Committee Report
C. RELATIONS WITH SHAREHOLDERS
C.1 Constructive use of Annual General Meeting
Use of Proxy C.1.1 Complied We ensure that all proxy votes are counted and the quantum of proxies lodged on each resolution is conveyed to our Chairman.
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Annual Report 2016 / 2017Sierra Cables PLC
Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
Separate resolution for substantially separate issues
C.1.2 Complied Separate resolutions are proposed at an Annual General Meeting on each substantial issue.
Chairman of Board Committee to be present
C.1.3 Complied At an Annual General Meeting (AGM) the respective Chairman of the Remuneration, Audit and Nomination Committees are present to provide any clarification to shareholders as necessary.
Adequate notice of Annual General Meeting and summary of Procedure
C.1.4 and C.1.5 Complied The notice and the agenda of the AGM together with the Annual Report of the Company containing the relevant documents are sent to the shareholders giving 15 working days’ notice prior to the date of the AGM
C.2 COMMUNICATION WITH SHAREHOLDERS
Effective communication with the shareholders
C.2.1,C.2.2,C.2.3, C.2.4 Complied The Board maintains a two-way communication with all investors providing an opportunity to seek non-price sensitive information throughout the year by conducting meetings and discussions and answering queries through our Company Secretarial Division and/or Communications Teams.
D. ACCOUNTABILITY AND AUDIT
D.1 Financial Reporting
Board responsibility to present the financial statement
D.1.1 Complied The Board presents a balanced and understandable assessment extending to interim and other price-sensitive public reports to regulators, as well as the information required to be presented by statutory requirements complying with regulatory deadlines.
Annual Report of the Directors
D.1.2 Complied Declaration by the Directors that the Company has not engaged in any activities, which contravenes laws and regulations, declaration of all material interests in contracts, equitable treatment of shareholders and going concern with supporting assumptions or qualifications as necessary.
Please refer to Annual Report of the Board of Directors on pages 52 to 57.
Statement by the Directors and the Auditors
D.1.3 Complied Please refer the Statement of Directors' Responsibilities on page 51.
Management discussion and analysis
D.1.4 Complied Please refer Management Discussion and Analysis on pages 20 to 57.
Declaration by the Board as to whether the business is a going concern
D.1.5 Complied Please refer to Annual Report of the Board of Directors on pages 52 to 57.
Requirement for an Extraordinary General meeting in a situation of serious loss of capital
D.1.6 Not Applicable -
Corporate Governance Contd.
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Annual Report 2016 / 2017Sierra Cables PLC
Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
D.2 Internal Control
Directors to review Internal Controls
D.2.1 Complied The Board is responsible for establishing a sound framework of risk management and internal controls and monitoring its effectiveness on a continuous basis
Requirement to review the need for an Internal Audit function
D.2.2 Not Applicable The Group already has an internal audit division, and as such this is not applicable.
D.3/7.10.6 Audit Committee
Composition of the Audit Committee and its duties
D.3.1 and D.3.2/7.10.6(a) and 7.10.6(b)
Complied The Audit Committee comprises of Mr. M.N. Gunasekara, Prof. A.K.W. Jayawardene and Eng. B.W.N. Rupasinghe being Independent Non-Executive Directors. Mr. M.N. Gunasekara is the Chairman of the Committee. The details of the Audit Committee’s composition, policies and responsibilities are set out on pages 47 to 48 of this Annual Report.
Terms of reference of the Audit Committee
D.3.3 Complied Please refer to the Audit Committee Report on pages 47 to 48 of this Annual Report.
Disclosure of names of the members of the Audit Committee
D.3.4
7.10.6(C)
Complied Please refer to the Audit Committee Report on pages 47 to 48 of this Annual Report.
D.4/ 9. Related Party Transactions Review Committee
Composition of the Related Party Transactions Review Committee and its duties
D.4.1
9.2
Complied The Related Party Transactions Review Committee comprises of Mr. M.N. Gunasekara, Prof. A.K.W. Jayawardene and Eng. B.W.N. Rupasinghe being Independent Non-Executive directors. Mr. M.N. Gunasekara is the Chairman of the Committee. The details of the Related Party Transactions Review Committee’s composition, policies and responsibilities are set out on page 50 of this Annual Report.
Terms of reference of the Related Party Transactions Review Committee
D.4.2 Complied Please refer to the Related Party Transactions Review Committee Report on page 50 of this Annual Report.
Disclosure of names of the members of the Related Party Transactions Review Committee
D.4.3 Complied Please refer to the Related Party Transactions Review Committee Report on page 50 of this Annual Report.
D.5 Code of Business Conduction and Ethics
We are committed to carrying out all business activities to the highest standards of integrity, ethical values and professionalism, whilst following the laws of the country, international laws and compliance as per our stakeholders’ expectations.
Disclosure on the presence of Code of Business Conduct and Ethics
D.5.1 Complied
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Annual Report 2016 / 2017Sierra Cables PLC
Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
Affirmation of the code of conduct and ethics
D.5.2 Complied As per our Chairman’s statements on Pages 12 to 13 of this Annual Report, we affirm our adherence to good business conduct and ethics.
D.6 Corporate Governance Disclosures
Disclosures of Corporate Governance
D.6.1 Complied We aim to achieve greater year-on-year growth and value creation, improve stakeholder satisfaction and relationships in our business activities, whilst adhering to the highest standards of corporate governance as is evident in this Annual Report on pages 35 to 46.
2. SHAREHOLDERS
E. INSTITUTIONAL INVESTORS
Shareholder voting E.1.1 Complied We conduct regular and structured dialogues with shareholders based on a mutual understanding of objectives.
F. OTHER INVESTORS
F.1 Investing and divesting decision
Investing and divesting decision
F.1 Complied Individual shareholders, investing directly in shares of companies are encouraged to carry out adequate analysis or seek independent advice in investing or divesting decision.
F.2 Shareholders Voting
Individual shareholders’ voting
F.2 Complied Individual shareholders are encouraged to participate in General Meetings of companies and exercise their voting rights.
Corporate Governance Contd.
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Annual Report 2016 / 2017Sierra Cables PLC
Audit Committee Report Role of the Audit Committee
The role of the Audit Committee is to oversee and review the financial reporting system of the Company, with a view to safeguarding the interest of the shareholders and all other stakeholders.
Composition
The Audit Committee, consisting of three Non-Executive Independent Directors, has been constituted in compliance with the 'Rules on Corporate Governance’ under the Listing Rules of the Colombo Stock Exchange.
The members of the Audit Committee are:
• Mr. M.N. Gunasekera - Chairman Non-Executive Independent Director
• Eng. B.W.N. Rupasinghe Non-Executive Independent Director
• Prof. A.K.W. Jayawardane Non-Executive Independent Director
The other members participating, by invitation, at the Audit Committee meetings are the Managing Director and Chief Financial Officer.
Meetings
The Audit Committee had six meetings during the year under review.
Name Attendance
Mr. M.N. Gunasekera 6/6
Prof. A.K.W. Jayawardane 6/6
Eng. B.W.N. Rupasinghe 6/6
Terms of Reference
As specified in the terms of reference, in relation to its authority and duties,the Audit Committee was established to assist the Board of Directors to fulfill their oversight responsibilities, which include the integrity of financial statements, risk management, business ethics, internal control, compliance with legal and regulatory requirements, review of Independent External Auditors’ performance and the Internal Audit.
Financial Reporting
In accordance with the stipulated requirements of the Sri Lanka Accounting Standards, the Committee reviews the following:
• Procedures to provide reasonable assurance that all transactions are accurately and completely recorded in the books of account.
• Effectiveness of the financial reporting system is in place to ensure reliability of the information provided to the stakeholders. Accounting policies to determine most appropriate accounting policies after considering all choices available.
• Process by which compliance with Sri Lanka Accounting Standards, Companies Act No 7 of 2007 and other regulatory provisions relating to financial reporting and disclosures are ensured.
• Annual report and interim financial statements are prepared for publication, prior to submission to the Board.
Compliance with Laws and Regulations
The Audit Committee reviewed the reports submitted by the Management and the Internal Auditors on compliance with applicable laws and regulations. The Committee is satisfied that Laws and Regulations are duly complied with and statutory payments have been made on a timely basis.
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Annual Report 2016 / 2017Sierra Cables PLC
Internal Control, Internal Audit & Risk Management
In its review of effectiveness of internal controls, the Committee examined the business processes to ensure that reasonable assurance can be provided to the Directors that assets are safeguarded and that the financial reporting system can be relied upon in the preparation and presentation of the financial statements. The Audit Committee monitors and guides the firm of Chartered Accountants engaged in the Internal Audit, in its audits, according to the plan of activities which covers financial and operational audits, risk assessments and IT security reviews. The reports of the Internal Auditors have been reviewed, discussed by the Committee, and initiated corrective measures.
Independent Auditors
The Committee is satisfied that the independence and objectivity of the Independent External Auditors have not been impaired by any event or service that gives rise to a conflict of interest. Due consideration has been given to the nature of the services provided by the Auditors and the level of audit and non-audit fees received by the Auditors from the Group. The Committee also reviewed
the arrangements made by the Auditors to maintain their independence and confirmation has been received from the Auditors of their compliance with the independence guidance given in the Code of Ethics of the Institute of Chartered Accountants of Sri Lanka. The Audit Committee recommends the re-appointment of Messrs KPMG, Chartered Accountants for the financial year ending 31st March 2018.
Conclusion
In its continuous assessments, the Audit Committee is satisfied that the Group's accounting policies, internal controls, including operational controls, provide reasonable assurance that the affairs of the Group are managed in accordance with the policy framework of the Group, set out by the Board of Directors and that the Group assets are properly accounted and adequately safeguarded.
(Sgd)M.N. Gunasekera
Chairman - Audit Committee
29th August 2017
Audit Committee Report Contd.
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Annual Report 2016 / 2017Sierra Cables PLC
Board Compensation and Remuneration Committee Report The main functions of the Remuneration Committee include the provision of policy advice and recommendations to the Board of Directors with regard to remuneration of Executive Directors and Senior Executives. The recommendations are aimed at being attractive, fair and competitive to attract and retain the executive staff.
The Remuneration Committee appointed for the financial year 2016 - 17 consists of three Non-Executive Independent Directors as follows:
• Prof. A.K.W. Jayawardane - Chairman Non-Executive Independent Director
• Eng. B.W.N. Rupasinghe Non-Executive Independent Director
• Mr. M.N. Gunasekera Non-Executive Independent Director
The Committee met once during the year under review and discussed the current remuneration policy and remuneration applicable to Executive Directors, and the mechanism adopted to revise remuneration of Executive Staff in line with company policies of employee remuneration. Having carefully looked at the new initiatives during the year under review, especially Sierra Cables East Africa Limited, the Committee recommended an appropriate salary increase to the Chief Executive Officer.
(Sgd)Prof. A.K.W. Jayawardane
Chairman - Remuneration Committee
29th August 2017
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Annual Report 2016 / 2017Sierra Cables PLC
Related Party Transaction Review Committee ReportRole of the Committee
The Committee assists the Board in reviewing all related party transactions carried out by the company. The Committee also performs the oversight function on behalf of the Board in complying with the Listing Rules of the Colombo Stock Exchange and with the Code of Best Practices on Related Party Transactions issued by the Securities and Exchange Commission.
Composition
The Committee, consisting of three Non-Executive Independent Directors, has been constituted in compliance with the Listing Rules of the Colombo Stock Exchange.
The Committee Members are :
• Mr. M.N. Gunasekera - Chairman Non-Executive Independent Director
• Eng. B.W.N. Rupasinghe Non-Executive Independent Director
• Prof. A.K.W. Jayawardane Non-Executive Independent Director
The other members participating, by invitation, at Committee meetings are the Managing Director and the Chief Financial Officer.
The Committee had one meeting during the year under review.
Policies and Procedures
The above committee was authorized to review all Related Party Transactions to ensure compliance with the Listing Rules, compliance with Stock Exchange and legal requirements concerning the respective transactions.
Terms of Reference
The Related Party Transactions Review Committee has terms of reference, dealing with its authority and duties. The Terms of Reference covers aspects relating to matters prescribed in the listing rules of the Colombo Stock Exchange.
Related Party Transactions during the Year
The activities and observations of the Committee are communicated to the Board. Details of related party transactions are disclosed in note 35.1 in the financial statements.
(Sgd)M.N Gunasekera
Chairman - Related Party Transactions Review Committee
29th August 2017
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Annual Report 2016 / 2017Sierra Cables PLC
Statement of Directors’ ResponsibilitiesThe responsibility of Directors in relation to the financial statements is set out in the following statements. The responsibility of the auditors, in relation to the financial statements prepared in accordance with the provisions of the Companies Act No. 7 of 2007 and other status which are applicable to the preparation of financial statements are set out in the Independent Auditors’ Reports.
The Financial Statements comprise of:
A Statement of financial position, which presents a true and fair view of the state of affairs of the company and its subsidiaries as at the end of the financial year; and
A Statement of Comprehensive Income, which presents a true and fair view of the profit and loss of the company and its subsidiaries for the financial year, which comply with the requirements of the Act.
The Directors are required to ensure that, in preparing these financial statements:
The appropriate Accounting Policies have been selected and applied in a consistent manner and material departures, if any, have been disclosed and explained;
Requirements in the Sri Lanka Accounting Standards, Companies Act No.07 of 2007 and listing rules of the Colombo Stock Exchange, have been followed;
Judgements and estimates have been made which are reasonable and prudent.
The Directors and also required to ensure that the company has adequate resources to contain basis in preparing the Financial Statements.
Further, the Directors have a responsibility to ensure that the Company maintains sufficient accounting records to disclose, with reasonable accuracy, the financial position of the Company and of the Group, and to ensure that the Financial Statements presented comply with the requirements of the Act.
The Directors are also responsible for taking reasonable steps to safeguard the assets of the company and of the Group and in this regard to give proper consideration to the establishment of appropriate internal control systems with a view to preventing and detecting fraud and other irregularities.
The Directors are required to prepare the financial statements and to provide the auditors with every opportunity to take whatever steps and undertake whatever inspections they may consider to be appropriate to enable them to give their independent audit opinion.
The Directors are of the view that they have discharged their responsibilities as set out in this statement.
By Order of the Board of Sierra Cables PLC
P.R. Secretarial Services (Private) Limited
Secretaries
29th August 2017
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Annual Report 2016 / 2017Sierra Cables PLC
Annual Report of the Board of Directors on the Affairs of the CompanyThe Directors of Sierra Cables PLC (the Company) have the pleasure in submitting their Report together with the Audited Financial Statements of the Company and the Audited Consolidated Financial Statements of the Group for the year ended 31st March 2017.
Principal Activities
The principal activities of the Company are manufacturing and selling of wires and cables. The three subsidiaries, Sierra Power (Private) Limited, Sierra Industries (Private) Limited and Sierra Cables East Africa Limited are engaged in the power generation to the National Grid, manufacture of UPVC pipes and fittings and manufacture and sale of wires and cables respectively. The two associate Companies, T & G Lanka (Private) Limited and Tea Leaf Resort (Private) Limited are diversified to manufacturing of Patch Cables and leisure sector respectively.
Review of Operations
A review of the Company’s business and its performance during the financial year is contained in the Chairman’s message on pages 12 to 13 and MD / Chief Executive Officer’s report on pages 14 to 15 of the Annual Report, together with the financial statements which reflects the state of affairs of the Company.
Financial Statements
The completed financial statements of the Group has been duly certified by the person responsible for the preparation of the financial statements of the Company, and has been signed by two Directors on behalf of the Board of Directors and the Auditors and confirmed that the Company is in compliance with the requirements of the Companies Act No. 07 of 2007. Details are given on pages 62 to 111.
Auditors Report
The Auditor’s Report on the financial statements is given in page 61.
Financial Results
The Group made a Profit before Taxation of Rs. 347.67 million during the financial year compared to Rs. 273.43 million in 2015/16. The detailed results are given in the Income Statement on page 62.
Dividends
The Company declared an interim dividend payment of Rupees 0.25 per share on 08th February 2017.
As required by Section 56(2) of the Companies Act No. 7 of 2007, the Board of Directors have confirmed that the Company satisfies the solvency test immediately after the payment of dividend and have obtained the certificate of solvency from the Auditors.
Significant Accounting Policies
The significant accounting policies adopted in the preparation of the financial statements are given in pages 70 to 81.
Property, Plant and Equipment
An analysis of the Property, Plant and Equipment of the Company is disclosed in Note 13 of the Financial Statements on pages 86 to 89.
Stated Capital
The Stated Capital of the Company as at 31st March 2017 was Rs. 894,565,898 and is represented by 537,512,430 issued and fully paid Ordinary Shares. There was no change in the Stated Capital during the year.
Reserves
The group retained earnings and other reserves as at 31st March 2017 amounted to Rs. 786,871,222.
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Annual Report 2016 / 2017Sierra Cables PLC
Donations
No donations were made by the Company during the year under review.
Capital Commitments
There were no material capital commitments as at the reporting date.
Provision for the Taxation
Provision for the Taxation of the Company is disclosed in Note 9 of the Financial Statements.
Statutory Payments
The Directors, to the best of their knowledge and belief, are satisfied that all statutory payments due to relevant authorities have been made by the Company.
Contingent Liabilities
There were no material contingent liabilities as at the reporting date which require adjustments other than disclosed in Note 31 in the Financial Statements.
Events After the Reporting Date
There were no material events occurring after the reporting period that require adjustments other than disclosed in Note 33 in the Financial Statements.
Risk Management and Internal Control
The details of the significant risks identified by the Company and strategies and actions adopted in managing them are set out in pages 31 to 33.
Going Concern
The Directors having made an assessment of the Company’s operating conditions, financial position, risks and future prospects have a reasonable expectation that the Company has adequate resources to continue its operations as a going concern in the foreseeable future.
Directors who held office during the Year
The Directors of the Company during the year were as follows.
Mr. W. A. P. Perera - Non-Executive Chairman
Mr. D. S. Panditha - Managing Director (CEO) / Executive Director
Mr. E. A. D. T. B. Perera - Non-Executive Director
Mr. J. H. P. Rathnayake - Non-Executive Director
Ms. G. S. M. Irugalbandara - Non-Executive Director
Mr. D. N. N. Lokuge - Non-Executive Director
Eng. B. W. N. Rupasinghe - Non-Executive Independent Director
Prof. A. K. W. Jayawardane - Non-Executive Independent Director
Mr. M. N. Gunasekara - Non-Executive Independent Director
Ms. S. N. Lokuge - Non-Executive Director
Mr. D. N. N. Lokuge - Non-Executive Director (Resigned with effect from 27th May 2016)
Appointments during the Year
Ms. Shalini Nimendranie Lokuge with effect from 26th May 2016
Resignations during the Year
Mr. Don Nimal Nayana Lokuge with effect from 27th May 2016
Appointments after the Conclusion of the Year
Nil
Resignations after the Conclusion of the Year
Nil
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Annual Report 2016 / 2017Sierra Cables PLC
Directors who held office as at the end of the Accounting Period
Mr. W. A. P. Perera - Non-Executive Chairman
Mr. D. S. Panditha - Managing Director (CEO) / Executive Director
Mr. E. A. D. T. B. Perera - Non-Executive Director
Mr. J. H. P. Rathnayake - Non-Executive Director
Ms. G. S. M. Irugalbandara - Non-Executive Director
Eng. B. W. N. Rupasinghe - Non-Executive Independent Director
Prof. A. K. W. Jayawardane - Non-Executive Independent Director
Mr. M. N. Gunasekara - Non-Executive Independent Director
Ms. S. N. Lokuge - Non-Executive Director
Directors retiring (at the Annual General Meeting)
1. To re-elect Mr. W.A.P. Perera, who retires by rotation in terms of Articles 91 of the Articles of Association of the Company as a Director of the Company.
2. To re-elect Ms. G.S.M. Irugalbandara, who retires by rotation in terms of Articles 91 of the Articles of Association of the Company as a Director of the Company.
3. To re-elect Mr. J.H.P. Ratnayeke, who retires by rotation in terms of Articles 91 of the Articles of Association of the Company as a Director of the Company.
Corporate Governance
The Board of Directors confirm that the Company is compliant with section 7.10 of the Listing Rules of the Colombo Stock Exchange.
The Audit Committee, Remuneration Committee and Related Party Transactions Review Committee function as Board sub committees with Directors who possess the requisite qualifications and experience. The composition of the said committees is as follows;
Audit Committee as at 31st March 2017
• Mr. M.N. Gunasekera - Chairman Non-Executive Independent Director
• Eng. B.W.N. Rupasinghe Non-Executive Independent Director
• Prof. A.K.W. Jayawardane Non-Executive Independent Director
Remuneration Committee as at 31st March 2017
• Prof. A.K.W. Jayawardane - Chairman Non-Executive Independent Director
• Eng. B.W.N. Rupasinghe Non-Executive Independent Director
• Mr. M.N. Gunasekera Non-Executive Independent Director
Related Party Transaction Review Committee as at 31st March 2017
• Mr. M.N. Gunasekera - Chairman Non-Executive Independent Director
• Eng. B.W.N. Rupasinghe Non-Executive Independent Director
• Prof. A.K.W. Jayawardane Non-Executive Independent Director
Directors’ Interest Register
The Company maintains an Interest Register in terms of the Companies Act No. 7 of 2007. The Directors have made declarations and disclosed their interests to the Board and those interests are recorded in the interests register as provided for in Section 192(2) of the Companies Act No. 7 of 2007.
Annual Report of the Board of Directors on the Affairs of the Company Contd.
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Annual Report 2016 / 2017Sierra Cables PLC
Directors Remuneration and Other Benefits of Directors
Directors’ remuneration in respect of the Company for the financial year 2016/17 is given in Note 35.2 to the financial statements on page 104.
List of Directors of Subsidiaries and Associate Companies
Subsidiaries
Sierra Cables East Africa Limited
• Mr. W.A.P. Perera - Chairman
• Mr. D.S. Panditha
• Mr. R.S.P. Fernando
Sierra Power (Private) Limited
• Mr. W.A.P. Perera - Chairman
• Mr. D.S. Panditha
• Ms. G.S.M. Irugalbandara
• Prof. A. Senaratne
Sierra Industries (Private) Limited
• Mr. W.A.P. Perera - Chairman
• Mr. D.S. Panditha
• Mr. E.H.C. Ranasinghe
Associate Companies
T & G Lanka (Private) Limited
• Mr. D.S. Panditha - Chairman
• Mr. O.M. Grimsgaard
• Mr. M. Grimsgaard
• Mr. A.D.M.M.L.S. Madappulli
Tea Leaf Resort (Private) Limited
• Mr. W.A.P. Perera - Chairman
• Mr. G.A. Aloysius
• Mr. D.S. Panditha
• Mr. D.S.K. Amarasekara
• Mr. G. J. Alosius
Directors’ Interest In Shares
The Company maintains an interest register in terms of the Companies Act No. 7 of 2007. The Directors have made declarations and disclosed their interests to the Board and those are recorded in the interest register as provided for in Section 192(2) of the Companies Act No. 7 2017.
NameNo. of Shares as at 31st
March 2017.No. of Shares as at 31st
March 2016
Mr. D.S. Panditha 17,501,297 17,401,297
Mr. W.A.P. Perera 3,920,510 3,920,510
Ms. G.S.M. Irugalbandara 1,709,800 1,709,800
Mr. F.A.W. Irugalbandara (Alternate Director) 200,010 200,010
Ms. S.N. Lokuge 100,000 Nil
Mr. D.N.N. Lokuge (Alternate Director) Nil 100,010
Mr. E.A.D.T.B. Perera 10 10
Prof. A.K.W. Jayawardena Nil Nil
Eng. B.W.N. Rupasinghe Nil Nil
Mr. M.N. Gunasekera Nil Nil
Mr. J.H.P. Ratnayake Nil Nil
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Annual Report 2016 / 2017Sierra Cables PLC
Distribution of Shareholders as at 31st March 2017
The distribution and analysis of shareholdings were as follows;
Shareholding As at 31st March 2017 As at 31st March 2016
From ToNo. of
Shareholders No. of Shares %No. of
Shareholders No. of Shares %
1 - 1,000 14,162 12,965,505 2.41 14,331 1,317,744 2.451,001 - 10,000 6,759 24,582,174 4.58 6,925 16,740,876 3.12
10,001 - 100,000 984 32,974,996 6.13 1,073 36,216,841 6.74100,001 - 10,00,000 217 61,434,164 11.43 217 61,702,179 11.48
10,00,001 - 10,000,000 29 405,555,591 75.45 33 409,675,090 77.22Total 22,151 537,512,430 100.00 22,579 537,512,430 100.00
As at 31st March 2017 As at 31st March 2016
Composition of ShareholdersNo. of
Shareholders No. of Shares %No. of
Shareholders No. of Shares %
Resident 22,102 528,958,800 98.40 22,531 525,375,039 97.74Non-Resident 49 8,553,630 1.60 48 12,137,391 2.26Total 22,151 537,512,430 100.00 22,579 537,512,430 100.00
Individual 21,832 149,516,700 27.82 22,258 152,378,444 28.35Institutional 319 387,995,730 72.18 321 385,133,986 71.65Total 22,151 537,512,430 100.00 22,579 537,512,430 100.00
20 Largest Shareholders
As at 31st March 2017 As at 31st March 2016
Name No. of Shares % No. of Shares %
1. Sierra Holdings (Pvt) Ltd 312,335,490 58.11 312,335,490 58.112. Mr. D.S. Panditha 17,501,297 3.26 17,401,297 3.243. People's Leasing Finance PLC / Carlines Holdings (Pvt) Ltd 12,135,290 2.26 11,885,290 2.214. Seylan Bank PLC / Carlines Holdings (Private) Limited 7,237,056 1.35 6,698,853 1.255. Seylan Bank PLC / Almas Organisation (Pvt) Limited 6,453,091 1.20 5,055,076 0.946. Mr. P.A.D.R.U. Pushpakumara 4,758,754 0.89 2,985,000 0.567. Mr. W.A.P. Perera 3,920,510 0.73 3,920,510 0.738. Tranz Dominion, L.l.C. 3,600,000 0.67 3,600,000 0.679. People's Leasing & Finance PLC / Hi Line Trading (Pvt) Ltd 3,135,233 0.58 2,428,162 0.45
10. Mr. A.B.S. Herath 3,130,000 0.58 3,450,000 0.6411. Mr. T.L.M. Imtiaz 2,857,996 0.53 2,500,000 0.4712. People's Leasing & Finance PLC / Mr. C.N. Jayasuriya 2,500,000 0.47 2,500,000 0.4713. Mr. S.C. De Zoysa 2,500,000 0.47 2,500,000 0.4714. Colombo Trust Finance PLC / Almas Organisation Private Ltd 2,436,638 0.45 2,275,800 0.4215. Deutsche Bank Ag As Trustee To Capital Alliance Quantitative
Equity Fund 2,223,194 0.41 2,223,194 0.4116. Mr. M. Ilamperuma 2,150,000 0.40 2,150,000 0.417. Elgin Investments Limited 2,000,000 0.37 - -18. Mr. B.C. Ranaweera 2,000,000 0.37 2,000,000 0.3719. Mrs. K.S. Rangedara 1,786,493 0.33 1,786,493 0.3320. Ms. G.S.M. Irugalbandara 1,709,800 0.32 1,709,800 0.32
Annual Report of the Board of Directors on the Affairs of the Company Contd.
57
Annual Report 2016 / 2017Sierra Cables PLC
Public Shareholding
The percentage of public shareholding as at 31st of March 2017 was 37.46%
Shareholding and Share Information
The Company had 22,151 registered shareholders as at 31st March 2017. The information relating to earnings, net assets per share and share trading, distribution and analysis of shareholding, the holding of the 20 largest shareholders, Directors and Chief Executive Officer’s shareholding and public holding percentage is given on pages 10, 55 & 56 respectively.
Annual General Meeting
The notice of the Annual General Meeting is on page 116.
Auditors
The financial statements for the year ended 31st March 2017 have been audited by Messrs KPMG, Chartered Accountants who offer themselves for reappointment. As far as the Directors are aware, the Auditors do not have any relationship (other than that of an Auditor) with the Company other than those disclosed above. The Auditors also do not have any interest in the Company.
The Auditors Messrs KPMG, Chartered Accountants were paid Rs. 1,000,000/- (2015/16 - Rs. 900,000/-) as Audit fees by the Company.
A resolution relating to their reappointment and authorising the Directors to determine their remuneration will be proposed at the Annual General Meeting.
By Order of the Board
Mr. W. A. P. Perera Mr. D. S. Panditha P. R. Secretarial Services (Private) Limited
Chairman / Director Executive Director Secretaries
29th August 2017
We are focused on continuous improvement from all aspects of our operations which in turn crafts value for all our stakeholders. Key strategic focus areas for growth prospects in the long term are identified while taking calculated risks. Our strategic market growth initiatives in Africa and Fiji and keeping pace with the emerging
opportunities of Sri Lanka’s development program set the shape of this growth.
Rs.
4Bn
Rs.
134Mn
25%
37%
GROUP TURNOVERSCPLC Exceeded Rs. 4Bn Turnover Level
during the Reporting Period (33% Growth)
TOTAL ASSETSSignificant Growth in Asset Base
DIVIDENDS PAIDShareholders were paid a total Dividend of
Rs.134,378,108, 25% Growth compared to FY16
ROCE %Group reported an Operating Profit ofRs. 498Mn, 32% Growth (Rs. 377Mn in FY16)
PAT GROWTHRs. 265Mn Net Profit after Tax(Rs. 193Mn in FY16)
LOCAL PERFORMANCE TOGLOBAL STANDARDS
Rs.
4.4Bn
Annual Report 2016 / 2017
61
Sierra Cables PLC
Independent Auditors’ Report
TO THE SHAREHOLDERS OF SIERRA CABLES PLC
Report on the Financial StatementsWe have audited the accompanying financial statements of Sierra Cables PLC (the “Company”), and the consolidated financial statements of the Company and its subsidiaries (the “Group”), which comprise the statement of financial position as at 31st March 2017, and the statements of income, profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes comprising a summary of significant accounting policies and other explanatory information set out on page 62 to 111.
Board’s Responsibility for the Financial Statements The Board of Directors (“Board”) is responsible for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31st March 2017, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.
Emphasis of MatterWithout qualifying our opinion, we draw attention to Note 36 to the financial statements which indicates the existence of the material uncertainty which may cast significant doubt on the subsidiary’s ability to continue as a going concern and the steps taken by the Group. The financial statements do not include any adjustments that may be necessary if the subsidiary is unable to continue as a going concern.
Report on Other Legal and Regulatory Requirements As required by section 163 (2) of the Companies Act No. 07 of 2007, we state the following:
a) The basis of opinion and scope and limitations of the audit are as stated above.
b) In our opinion;
‒ we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company.
‒ the financial statements of the Company give a true and fair view of its financial position as at 31st March 2017,and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.
‒ the financial statements of the Company and the Group comply with the requirements of sections 151 and 153 of the Companies Act No. 07 of 2007.
Chartered AccountantsColombo29th August 2017
Annual Report 2016 / 2017
62
Sierra Cables PLC
Income StatementGroup Company
For the year ended 31st March Note2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Revenue 5 4,044,449,473 3,036,010,858 3,724,981,774 2,865,490,013
Cost of Sales (3,165,556,059) (2,405,308,962) (2,880,335,542) (2,240,987,288)
Gross Profit 878,893,414 630,701,896 844,646,232 624,502,725
Other Income 6 26,903,100 51,222,884 26,902,525 50,991,533
Selling and Distribution Expenses (238,232,735) (188,820,709) (213,485,628) (167,281,847)
Administrative Expenses (156,899,782) (110,914,037) (155,481,754) (99,869,814)
Other Operating Expenses (11,801,897) (4,526,533) (57,500,000) (66,500,000)
Profit from Operations 7 498,862,100 377,663,501 445,081,375 341,842,597
Net Finance Costs 8 (152,067,336) (104,529,263) (123,600,270) (86,557,006)
Share of Profit of Equity-Accounted Investees, (Net of Tax) 17 874,224 293,942 - -
Profit Before Taxation 347,668,988 273,428,180 321,481,105 255,285,591
Income Tax Expenses 9 (80,243,893) (78,501,676) (81,809,721) (79,364,029)
Profit from Continuing Operations 267,425,095 194,926,504 239,671,384 175,921,562
Discontinued Operations
Loss from Discontinued Operations 12 (1,965,557) (1,822,544) - -
Profit for the Year 265,459,538 193,103,960 239,671,384 175,921,562
Profit Attributable to :
Owners of the Company 271,293,076 199,934,090 239,671,384 175,921,562
Non - Controlling Interests (5,833,538) (6,830,130) - -
Profit for the Year 265,459,538 193,103,960 239,671,384 175,921,562
Basic Earnings Per Share 10 0.50 0.37 0.45 0.33
Figures in brackets indicate deductions.
The Financial Statements are to be read in conjunction with the related notes which form a part of these Financial Statements of the Group set out on pages 70 to 111.
Annual Report 2016 / 2017
63
Sierra Cables PLC
Statement of Profit or Loss and Other Comprehensive Income
Group Company
For the year ended 31st March Note2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Profit for the Year 265,459,538 193,103,960 239,671,384 175,921,562
Other Comprehensive Income/(Expense)
Net Change in Fair Value of Available-for-Sale Investments 170,023 (1,291,700) 170,023 (1,291,700)
Foreign Currency Translations Gain 309,564 - - -
Actuarial Gain on Defined Benefit Obligation, (Net of Tax) 1,520,687 1,119,409 1,520,687 1,119,409
Other Comprehensive Income/(Expense) for the Year, Net of Tax 2,000,274 (172,291) 1,690,710 (172,291)
Total Comprehensive Income for the Year 267,459,812 192,931,669 241,362,094 175,749,271
Total Comprehensive Income Attributable to :
Owners of the Company 273,277,872 199,761,799 241,362,094 175,749,271
Non - Controlling Interests (5,818,060) (6,830,130) - -
Total Comprehensive Income for the Year 267,459,812 192,931,669 241,362,094 175,749,271
Figures in brackets indicate deductions.
The Financial Statements are to be read in conjunction with the related notes which form a part of these Financial Statements of the Group set out on pages 70 to 111.
Annual Report 2016 / 2017
64
Sierra Cables PLC
Statement of Financial PositionGroup Company
As at 31st March Note2017
Rs.2016
Rs.2017
Rs.2016
Rs.
ASSETS
Non Current Assets
Property, Plant & Equipment 13 1,114,052,321 1,100,391,556 818,344,603 868,763,794
Intangible Assets 14 6,859,050 1,269,421 6,859,050 1,269,421
Investment Property 15 - - - -
Investment in Subsidiaries 16 - - 160,522,720 182,060,020
Investment in Equity Accounted Investees 17 3,621,186 2,746,962 3,300,000 5,800,000
Available for Sale Investments 18 29,142,315 44,755,691 29,142,315 44,755,691
Total Non Current Assets 1,153,674,872 1,149,163,630 1,018,168,688 1,102,648,926
Current Assets
Inventories 19 1,233,919,344 705,075,020 1,160,345,333 653,626,097
Trade and Other Receivables 20 1,673,034,765 1,045,452,578 1,362,539,188 863,144,766
Income Tax Recoverable 1,883 8,333,948 - 8,333,948
Amounts due from Related Companies 21 110,013,316 105,887,739 398,554,835 303,227,360
Cash in Hand and at Bank 22 78,771,458 80,234,093 73,481,406 73,005,443
Total Current Assets 3,095,740,766 1,944,983,378 2,994,920,762 1,901,337,614
Assets Classified as Held for Sale 12 166,624,096 165,854,862 18,000,000 18,000,000
Total Assets 4,416,039,734 3,260,001,870 4,031,089,450 3,021,986,540
EQUITY AND LIABILITIES
Equity
Stated Capital 23 894,565,898 894,565,898 894,565,898 894,565,898
Fair Value Reserve 17,892,855 17,722,832 17,892,855 17,722,832
Foreign Currency Translation Reserve 294,085 - - -
Revaluation Reserve 349,909,786 349,909,786 332,938,932 332,938,932
Retained Earnings 418,874,496 280,438,841 465,840,114 359,026,151
Total Equity Attributable to Equity Holders of the Company 1,681,537,120 1,542,637,357 1,711,237,799 1,604,253,813
Non-Controlling Interests (1,842,470) 3,975,590 - -
Total Equity 1,679,694,650 1,546,612,947 1,711,237,799 1,604,253,813
Annual Report 2016 / 2017
65
Sierra Cables PLC
Statement of Financial Position Contd.
Group Company
As at 31st March Note2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Non Current Liabilities
Retirement Benefit Obligations 24 27,835,163 26,208,882 27,528,994 25,929,429
Deferred Tax Liabilities 25 173,166,842 186,911,342 148,620,754 160,774,382
Long Term Loans 26 71,484,209 142,263,091 56,613,998 106,604,820
Total Non Current Liabilities 272,486,214 355,383,315 232,763,746 293,308,631
Current Liabilities
Trade and Other Payables 28 972,584,671 412,316,074 861,280,484 305,945,819
Current Portion of Long Term Loans 26 106,906,114 98,817,384 48,646,677 68,818,200
Current Portion of Lease Liability 27 - - - -
Amounts due to Related Companies 29 5,583 - 91,400 19,838
Import Demand Loans 30 1,206,197,811 768,178,333 1,065,874,913 714,097,468
Income Tax Payable 73,512,534 - 73,512,534 -
Bank Overdraft 22 98,056,157 72,104,387 37,681,897 35,542,771
Total Current Liabilities 2,457,262,870 1,351,416,178 2,087,087,905 1,124,424,096
Liabilities Directly Associated with Assets Classified as Held for Sale
12 6,596,000 6,589,430 - -
Total Liabilities 2,736,345,084 1,713,388,923 2,319,851,651 1,417,732,727
Total Equity and Liabilities 4,416,039,734 3,260,001,870 4,031,089,450 3,021,986,540
Net Asset Value per Share 3.12 2.87 3.18 2.98
Figures in brackets indicate deductions.
The Financial Statements are to be read in conjunction with the related notes which form a part of these Financial Statements of the Group set out on pages 70 to 111.
It is certified that the Financial Statements have been prepared in compliance with the requirements of the Companies Act No 07 of 2007.
(Sgd)Mervyn De SilvaChief Financial Officer.
The Board of Directors is responsible for the preparation and presentation of the Financial Statements.Approved and signed for and on behalf of the Board of Directors.
(Sgd) (Sgd)Priyantha Perera G. S. M. Irugalbandara Chairman Director
29th August 2017Colombo
Annual Report 2016 / 2017
66
Sierra Cables PLC
Consolidated Statement of Changes in Equity
Attributable to Owners of the Company
For the year ended 31st March
Group
Stated Capital
Rs.
Revaluation
ReserveRs.
Foreign Currency
Translation Reserve
Rs.
Fair ValueReserve
Rs.
RetainedEarnings
Rs. Total
Rs.
Non Controlling
InterestRs.
Total Equity
Rs.
Balance as at 1st April 2015 894,565,898 349,909,786 - 19,014,532 186,887,828 1,450,378,044 10,805,720 1,461,183,764
Profit / (Loss) for the Year - - - - 199,934,090 199,934,090 (6,830,130) 193,103,960
Other Comprehensive Income/(Expense)
Net Change in Fair Value of Available-for-
Sale Financial Assets - - - (1,291,700) - (1,291,700) - (1,291,700)
Actuarial Loss on Retirement Benefit
Obligation, Net of Tax - - - - 1,119,409 1,119,409 - 1,119,409
Total Comprehensive Income / (Expense)
for the Year - - - (1,291,700) 201,053,499 199,761,798 (6,830,130) 192,931,668
Transactions with Owners, Recognised
Directly in Equity
Dividend Paid - Ordinary Shares - - - - (107,502,486) (107,502,486) - (107,502,486)
Total Transactions with Owners of the
Company - - - - (107,502,486) (107,502,486) - (107,502,486)
Balance as at 31st March 2016 894,565,898 349,909,786 - 17,722,832 280,438,841 1,542,637,356 3,975,590 1,546,612,947
Balance as at 1st April 2016 894,565,898 349,909,786 - 17,722,832 280,438,841 1,542,637,356 3,975,590 1,546,612,947
Profit / (Loss) for the Year - - - - 271,293,076 271,293,076 (5,833,538) 265,459,538
Other Comprehensive Income / (Expense)
Net Change in Fair Value of Available-for-
Sale Financial Assets - - - 170,023 - 170,023 - 170,023
Actuarial Gain on Retirement Benefit
Obligation, Net of Tax - - - - 1,520,687 1,520,687 - 1,520,687
Foreign Currency Translation Gain - - 294,085 - - 294,085 15,478 309,564
Total Comprehensive Income / (Expense)
for the Year - - 294,085 170,023 272,813,763 273,277,871 (5,818,060) 267,459,811
Transactions with Owners, Recognised
Directly in Equity
Dividend Paid - Ordinary Shares - - - - (134,378,108) (134,378,108) - (134,378,108)
Total Transactions with Owners of the
Company - - - - (134,378,108) (134,378,108) - (134,378,108)
Balance as at 31st March 2017 894,565,898 349,909,786 294,085 17,892,855 418,874,496 1,681,537,120 (1,842,470) 1,679,694,650
Figures in brackets indicate deductions.
The Financial Statements are to be read in conjunction with the related notes which form a part of these Financial Statements of the Group set out on pages 70 to 111.
Annual Report 2016 / 2017
67
Sierra Cables PLC
Statement of Changes in EquityFor the year ended 31st March
Company
Stated Capital
Rs.
Revaluation Reserve
Rs.
Fair Value Reserve
Rs.
Retained Earnings
Rs. Total
Rs.
Balance as at 1st April 2015 894,565,898 332,938,932 19,014,532 289,487,666 1,536,007,028
Profit for the Year - - - 175,921,562 175,921,562
Other Comprehensive Income/(Expense)
Net Change in Fair Value of Available-for-
Sale Financial Assets - - (1,291,700) - (1,291,700)
Actuarial Loss on Retirement Benefit
Obligation, Net of Tax - - - 1,119,409 1,119,409
Total Comprehensive Income / (Expense)
for the Year - - (1,291,700) 177,040,971 175,749,271
Transactions with Owners, Recognised
Directly in Equity
Dividend Paid - Ordinary Shares - - - (107,502,486) (107,502,486)
Total Transactions with Owners of the
Company - - - (107,502,486) (107,502,486)
Balance as at 31st March 2016 894,565,898 332,938,932 17,722,832 359,026,151 1,604,253,813
Balance as at 1st April 2016 894,565,898 332,938,932 17,722,832 359,026,151 1,604,253,813
Profit for the Year - - - 239,671,384 239,671,384
Other Comprehensive Income/(Expense)
Net Change in Fair Value of Available-for-
Sale Financial Assets - - 170,023 - 170,023
Actuarial Loss on Retirement Benefit
Obligation, Net of Tax - - - 1,520,687 1,520,687
Total Comprehensive Income for the Year - - 170,023 241,192,071 241,362,094
Transactions with Owners, Recognised
Directly in Equity
Dividend Paid - Ordinary Shares - - - (134,378,108) (134,378,108)
Total Transactions with Owners of the
Company - - - (134,378,108) (134,378,108)
Balance as at 31st March 2017 894,565,898 332,938,932 17,892,855 465,840,114 1,711,237,799
Figures in brackets indicate deductions.
The Financial Statements are to be read in conjunction with the related notes which form a part of these Financial Statements of the Group set out on pages 70 to 111.
Annual Report 2016 / 2017
68
Sierra Cables PLC
Statement of Cash FlowsGroup Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Cash Flow from Operating Activities
Profit Before tax from continuing operations 346,794,764 273,134,238 321,481,105 255,285,591
Loss Before tax from discontinued operations (1,965,557) (1,822,544) - -
Adjustments for:
Depreciation 85,216,844 83,890,706 68,632,183 67,600,893
Amortization of Intangible Asset 2,148,915 977,166 2,148,915 977,166
Net Gain on Translation of Foreign Currency (1,938,439) - - -
Depreciation of Investment Property - 68,446 - 68,446
Provision for Impairment of Trade Receivables 34,228,581 24,350,525 29,438,139 9,532,904
Provision for Impairment of Investment in Subsidiary - - 55,000,000 62,000,000
Gain on Sale of Property, Plant and Equipment - (46,690,847) - (46,690,847)
Gain on Disposal of Investment Property - (8,105,497) - (8,105,497)
Gain on Disposal of Available For Sale Investment (554,968) - (554,968) -
Provision for Impairment of Investment in Associates - - 2,500,000 -
Written off of Finished Goods 44,296,346 - 44,296,346 -
Provision for Obsolete Inventories 2,119,931 9,669,251 - 9,669,251
Provision for Retirement Benefit Obligation 5,790,171 5,356,866 5,763,455 5,588,217
Interest Expenses 153,720,896 107,297,800 125,335,581 89,325,542
Interest Income (401,440) (2,768,536) (391,517) (2,768,536)
Dividend Income (134,998) (523,091) (134,998) (523,091)
Operating Profit Before Working Capital Changes 669,321,046 444,834,483 653,514,241 441,960,039
Increase in Inventories (573,140,670) (98,949,334) (551,015,578) (105,417,501)
Increase in Trade and Other Receivables (664,165,852) (68,297,294) (528,304,713) (43,055,547)
(Increase) / Decrease in Dues from Related Parties (4,125,577) (15,534,232) (95,327,475) 1,845,145
Increase in Trade and Other Payables 557,168,596 80,971,580 555,334,659 36,734,360
Increase in Dues to Related Parties 5,583 - 71,562 -
Cash Generated from / (Used in) Operations (14,936,874) 343,025,203 34,272,696 332,066,496
Interest Paid (150,620,896) (107,297,800) (125,335,581) (89,325,542)
Income Tax Paid (26,050,385) (86,259,001) (26,048,502) (86,098,310)
Retirement Benefit Paid (2,093,801) (4,395,438) (2,093,801) (4,395,438)
Net Cash Flows Generated from / (Used in) Operating Activities (193,701,956) 145,072,964 (119,205,188) 152,247,206
Annual Report 2016 / 2017
69
Sierra Cables PLC
Statement of Cash Flows Contd.
Group Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Cash Flows from Investing Activities
Interest Received 401,440 2,768,536 391,517 2,768,536
Dividend Received 134,998 523,091 134,998 523,091
Acquisition of Property, Plant and Equipment (97,197,965) (59,397,315) (18,740,838) (56,016,332)
Acquisition of Intangible Assets (7,738,544) (637,089) (7,738,544) (637,089)
Proceeds from Disposal of Property, Plant and Equipment - 49,866,455 - 49,866,455
Proceeds from Disposal of Investment Property - 22,000,000 - 22,000,000
Investment in Available of Sale Investments - (15,783,398) - (15,783,398)
Investment in Subsidiary - - (33,462,700) (28,780,000)
Proceeds from Disposal of Available of Sale Investments 16,338,367 - 16,338,367 -
Net Cash Used In Investing Activities (88,046,226) (659,720) (43,077,200) (26,058,737)
Cash Flows from Financing Activities
Proceeds from Interest-Bearing Borrowings 2,605,221,880 2,116,584,799 2,329,593,559 2,035,681,382
Repayments of Interest-Bearing Borrowings (2,229,892,554) (2,150,296,499) (2,047,978,459) (2,056,621,964)
Repayment of Lease - (2,687,966) - (2,687,966)
Dividend Paid (120,995,875) (107,502,486) (120,995,875) (107,502,486)
Net Cash Flows Generated From/(Used In) Financing Activities 254,333,451 (143,902,152) 160,619,225 (131,131,034)
Net Increase / (Decrease) in Cash and Cash Equivalents (27,414,731) 511,092 (1,663,163) (4,942,565)
Cash and Cash Equivalents Classified as Asset Held For Sale 326 (639) - -
Cash and Cash Equivalents at the Beginning of the Year 8,129,706 7,619,253 37,462,672 42,405,237
Cash and Cash Equivalents at the End of the Year (19,284,699) 8,129,706 35,799,509 37,462,672
Analysis of Cash & Cash Equivalents
Cash in Hand and at Bank 78,771,458 80,234,093 73,481,406 73,005,443
Bank Overdraft (98,056,157) (72,104,387) (37,681,897) (35,542,771)
(19,284,699) 8,129,706 35,799,509 37,462,672
Figures in brackets indicate deductions.
The Financial Statements are to be read in conjunction with the related notes which form a part of these Financial Statements of the Group set out on pages 70 to 111.
Annual Report 2016 / 2017
70
Sierra Cables PLC
1. REPORTING ENTITY
1.1. Domicile and Legal Form
Sierra Cables PLC is a public limited liability Company incorporated and domiciled in Sri Lanka. The registered office of the Company is located at 112, Havelock Road, Colombo 05 and principal place of business is located at 39/1A, Galwarusawa Road, Korathota, Kaduwela.
The consolidated financial statements of the Company as at and for the year ended 31st March 2017 comprise the Company and its Subsidiaries (together referred as the“Group” individually as Group entities) and the group interest in associates.
Sierra Cables PLC being a part of a large conglomerate is also a Group on its own. The principal activity of the Company is manufacture and sale of wires and cables. The three subsidiaries, Sierra Power (Private) Limited, Sierra Industries (Private) Limited and Sierra Cables East Africa Limited are engaged in the power generation to the National Grid, manufacture of UPVC pipes and fittings and manufacture and sale of wires and cables respectively. The two associate Companies, T & G Lanka (Private) Limited and Tea Leaf Resort (Private) Limited are diversified to manufacturing of Patch Cables and leisure sector respectively.
Ultimate Parent Company of Sierra Cables PLC is Sierra Holdings (Private) Limited, a Company domiciled in Sri Lanka.
All the Companies in the Group have a common financial year, which ends on 31st March other than Sierra Cables East Africa Limited which has been prepared up to 31st December as per their reporting requirements.
2. BASIS OF PREPARATION
2.1. Statement of Compliance
The consolidated financial statements have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRSs/LKASs) promulgated by the Institute of Chartered Accountants of Sri Lanka (ICASL) and comply with the requirement of Companies Act No.07 of 2007.
The consolidated financial statements were authorised for issue by the Board of Directors on 29th August 2017.
2.2. Basis of Measurement
The Financial Statements have been prepared on the historical cost basis except for the following material items in the statement of financial position.
• Available-for-Sale Financial Assets are measured at fair value;
• Liability for Defined Benefit Obligations is carried at the present value of the defined benefit obligations.
• Land, Buildings and Plant and Machinery are measured at cost at the time of acquisition and subsequently at revalued amounts, which are the fair values at the date of revaluation.
The Directors have made an assessment of the Group’s ability to continue as a going concern in the foreseeable future and they do not foresee a need for liquidation or cessation of trading.
2.3. Functional and Presentation Currency
The Financial Statements are presented in Sri Lankan Rupees which is the Group’s functional currency. All financial information presented in Sri Lankan Rupees has been rounded to the nearest rupee, unless stated otherwise.
2.4. Use of Estimates and Judgments
The preparation of Financial Statements in conformity with Sri Lanka Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Notes to the Financial Statements
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Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Information about critical estimates and judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is provided in the following notes.
• Identification, measurement and assessment of impairment
• Recognition and measurement of financial instruments
• Retirement Benefit Obligations
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.
3.1. Basis of Consolidation
(a) Business Combination
Business combinations are accounted for using the acquisition method as at the acquisition date when control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.
The Group measures goodwill at the acquisition date as:
• The fair value of the consideration transferred; plus
• The recognised amount of any non-controlling interests in the acquire; plus
• If the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquire; less
• The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
• When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
(b) Non - Controlling Interests
For each business combination, the Group elects to measure any non-controlling which are generally at fair value.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. No adjustments are made to goodwill and no gain or loss is recognised in profit or loss.
(c) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the Consolidated Financial statements from the date that control commences until the date that control ceases.
(d) Loss of Control
On the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an Equity-Accounted Investee or as an Available-for-Sale Financial Asset depending on the level of influence retained.
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(e) Equity Accounted Investees (Investments In Associates)
Associates are those entities in which the Group has significant influence but not control, over the financial and operating policies, Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Investments in Associates are accounted for using the Equity Method and are recognised initially at cost. The cost of the investment includes transaction costs.
The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity accounted investees, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.
At each reporting date, the Group determines whether there is objective evidence that the investment in associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, and then recognises the loss as “Share of profit of an associate” in the income statement.
(f) Intra-Group Transactions
Pricing policies of all intra-group sales are identical to those adopted for normal trading transactions, which are at market prices.
(g) Transactions Eliminated on Consolidation
Intra group balances and transactions, and any unrealised income and expenses arising from intra group
transactions, are eliminated in preparing the consolidated financial statements, Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.
3.2. Foreign Currency
3.2.1 Foreign Currency Transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are re-translated to the functional currency at the exchange rate at that date.
Non monetary assets and liabilities denominated in foreign currencies that are measured at fair value are re-translated to the functional currency at the exchange rate at the date that the fair value was determined. Non monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of the transaction.
Foreign currency differences arising on retranslation are recognised in profit or loss.
3.2.2 Foreign Operations
The results and financial position of overseas operations that have a Functional Currency different from the Company’s Presentation Currency are translated into the Company’s Presentation Currency as follows:
• Assets and liabilities, including goodwill and fair value adjustments arising on acquisition, are translated at the rates of exchange ruling as at the Reporting date.
• Income and expenses are translated at the average exchange rate for the period.
Notes to the Financial Statements Contd.
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The exchange differences arising on translation for Consolidation are recognised in Other Comprehensive Income and accumulated in the Foreign Currency Translation Reserve (Translation Reserve), which is a separate component of Equity, except to the extent that the translation difference is allocated to the NCI.
When a Foreign Operation is disposed of such that the control is lost, the cumulative amount in the Translation Reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of only part of its interest in a subsidiary that includes a Foreign Operation while retaining control, then the relevant proportion of the cumulative amount of the Translation Reserve is reattributed to NCI.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation.
3.3. Assets and Bases of Their Valuation
3.3.1 Property, Plant and Equipment
(a) Recognition and Measurement
All items of property, plant and equipment are initially recorded at cost. Where items of property, plant and equipment are subsequently revalued, the entire class of such assets is revalued. Revaluations are made with sufficient regularity to ensure that their carrying amounts do not differ materially from their fair values at the reporting date.
Subsequent to the initial recognition of the asset at cost, the revalued property, plant and equipment are carried at revalued amounts less accumulated depreciation thereon and accumulated impairment losses. The Group applies revaluation model to land, building and plant and machinery and cost model to the remaining assets under property, plant and equipment which are stated at historical cost less accumulated depreciation less accumulated impairment losses, if any.
The cost of an item of property, plant and equipment comprise its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. The cost of self-constructed assets includes the cost of materials, direct labour, any other costs directly attributable to bringing the asset to the working condition for its intended use and capitalised borrowing costs. This also includes cost of dismantling and removing the items and restoring in the site on which they are located. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.
(b) Subsequent Costs
The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized.
The costs of the day to day servicing of property, plant and equipment are recognized in profit or loss as incurred.
(c) Derecognition
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal.
Any gain or loss on disposal of an item of property, plant and equipment calculated as the difference between the net proceeds from disposal and the carrying amount of the item is recognized within other income in profit or loss.
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(d) Depreciation
Items of property, plant and equipment are depreciated on a straight-line basis in profit or loss over the estimated useful lives of each component. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.Land is not depreciated. Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use.
The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:
Asset Category Useful Life (Years)
Depreciation Rate (%)
Building 20-25 4-5
Plant and Machinery 10-20 5-10
Factory Equipment 5 20
Furniture Fittings 5 20
Motor Vehicles 5 20
Offices and Computer Equipment 5 20
Depreciation of an asset begins when it is available for use where as depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognized.
Depreciation method, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.
(e) Revaluation Policy
The Company’s land, buildings, plant and machinery, factory equipment are revalued with sufficient regularity once in five years. The revaluation surplus is accounted in the revaluation reserve.
3.3.2 Intangible Assets and Goodwill
(a) Intangible Assets
An Intangible Asset is recognized if it is probable that economic benefits are attributable to the assets will flow to the Group and cost of the assets can be measured reliably and carried at cost less accumulated amortization and accumulated impairment losses.
(b) Goodwill
Goodwill that arises on the acquisition of subsidiaries is presented with intangible assets. For the measurement of goodwill at initial recognition, see Note 3.1 (a).
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and any impairment loss is allocated to the carrying amount of the equity accounted investee as a whole.
(c) Computer Software
All computer software cost incurred, which are not an integral part of the related hardware, which can be clearly identified, reliably measured and its probable that they will lead to future economic benefits, are included in the Statement of Financial Position under the category of intangible assets.
Subsequent Expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.
Amortization
Intangible assets are amortized on a straight-line basis in profit or loss over their estimated useful lives from the date that they are available for use. The estimated useful lives for the current and comparative years are as follows:
Notes to the Financial Statements Contd.
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Asset Category Useful Life (Years)
Depreciation Rate (%)
Computer Software 5 20
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
3.3.3 Leased Assets
Leases in terms of which the Group assumes substantially all of the risks and rewards of ownership are classified as finance leases on initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and are not recognized in the Group’s statement of financial position.
3.3.4 Investment Property
Investment properties are properties held either to earn rental income or for capital appreciation or both but not for sale in the ordinary course of business, used in the production or supply of goods or services for administrative purposes.
Investment property is recognized, if it is probable that future economic benefits that are associated with the investment property, will flow to the Group and cost of the investment property can be reliably measured.
An investment property is measured initially at its cost. The cost of a purchased investment property comprises of its purchase price and directly attributable expenditure, the cost of the self-constructed investment property is its cost at the date of when the construction or development is completed. The Group applies the cost model for investment properties in accordance with LKAS 40 – “Investment property.”
3.3.5 Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sales.
The costs incurred in bringing inventories to its present location and condition, are accounted for as follows:
Raw Materials
- At actual cost, on Weighted Average basis.
Finished Goods and Work-in-Progress
- At actual cost, on Weighted Average for work in progress and finished goods.
3.3.6 Impairment of Non-Financial Assets
The carrying amounts of the group’s non-financial assets, other than inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss isrecognised if the carrying amount of an assets or cash generating unit (CGU) exceeds its recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
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For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.
Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to CGU (if any) and then to reduce the carrying amounts of other assets in the CGU (group of CGUs) on pro rata basis. An impairment loss in respect of goodwill is not reversed. For other assets , an impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined , net of depreciation or amortisation, if no impairment loss had been recognised.
3.3.7 Financial Instruments
(i) Non Derivative Financial Assets
The group initially recognizes loans and receivables on the date that they are originated. All other financial assets are recognized initially on the trade date at which the group becomes a party to the contractual provisions of the instrument.
A financial asset is measured initially at fair value plus, in the case of assets not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue.
The group derecognises a financial asset when the contractual rights to the cash flows from the asset expire; it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to set off the amounts and it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
The Group classifies non derivative financial assets into the following categories;
• Loans and Receivables
• Cash and Cash Equivalents
• Available for Sale Financial Assets
a. Loans and Receivables
Loans and receivables are financial assets with fixed or determinable payment that are not quoted in an active market. Such assets are recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.
b. Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value and are used by the Group in the management of its short-term commitments.
c. Available for Sale Financial Assets
Available-for-sale financial assets are financial assets that are designated as available for sale and are not classified in any other categories. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses on available for sale equity instruments are recognised in other comprehensive
Notes to the Financial Statements Contd.
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income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in other comprehensive incomes transferred to profit or loss.
Available for sales financial assets comprise of Investment in Equity Shares and Treasury Bills.
(ii) Non Derivative Financial Liabilities
The Group recognizes financial liabilities initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.
The Group classifies financial liabilities into other financial liabilities category. Such finance liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.
The Group derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.
Other financial liabilities comprise Trade Payables, Other Liabilities and Bank Borrowings.
(iii) Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from Equity, net of any tax effects.
(iv) Amortized Cost Measurement
The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal
repayments and any impairment and plus/minus the cumulative amortization using the effective interest method of any difference between the initial amount recognised and the maturity amount.
(v) Fair Value Measurement
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction on the measurement date.
The fair value of financial instruments that are traded in an active market at each reporting date is determined by reference to quoted market prices or dealer price quotations, without any deduction for transaction costs.
For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models.
(vi) Impairment
The group assesses at each reporting date whether there is any objective evidence that financial assets or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset that can be estimated reliably
Objective evidence that a financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the company on terms that the company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse
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changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security.
Impairment Losses on Available for Sale Financial Assets
Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss. Changes in cumulative impairment losses attributable to application of the effective interest method are reflected as a component of interest income.
If, in a subsequent period,the fair value of an impaired available-far-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-far-sale equity security is recognised in other comprehensive income
3.3.8 Defined Benefit Plan
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value.
The retirement benefit obligation of the group is based on the actuarial valuation using Projected Unit Credit (PUC) methods as recommended by Sri Lanka Accounting Standard (LKAS 19) Employee Benefits. The calculation is performed by independent Actuary using the projected
unit credit method. The assumptions based on which the results of the actuarial valuation was determined, are included in Note 23.2 to the Financial Statements.
The Group recognizes all actuarial gains and losses arising from the defined benefits plans immediately in the other comprehensive income. The liability is disclosed under Non-current liabilities in the Statement of Financial Position and not externally funded.
However, as per the Payment of Gratuity Act No. 12 of 1983 the liability to an employee arises only on completion of 5 years of continued service.
Defined Contribution Plans – Employees’ Provident Fund and Employee Trust Fund
All employees who are eligible for Employees’ Provident Fund Contributions and Employees’ Trust Fund Contributions are covered by relevant contributions funds in line with the relevant statutes. Employer’s contributions to the defined contribution plans are recognized as an expense in profit or loss when incurred.
3.3.9 Provisions
A provision is recognized if, as a result of a past event the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefit will be required to settle the obligation.
3.4 Statement of Comprehensive Income
(a) Revenue
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue and the associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and sales taxes.
Notes to the Financial Statements Contd.
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(i) Sale of Goods
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably.
(ii) Dividend Income
Dividend income recognized when the right to receive the dividend is established.
(iii) Interest Income
Interest income is recognized on an accrual basis unless collection is in doubt.
(iv) Gains and Losses
Net gains and losses of a revenue nature arising from the disposal of property, plant and equipment and other non-current assets, including investments, are accounted for in the statement of comprehensive income, after deducting from the proceeds on disposal, the carrying amount of such assets and the related selling expenses.
(v) Other Income
Other income is recognized on an accrual basis.
(b) Expenditure Recognition
(i) Operating Expenses
All expenses incurred in day to day operations of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to the statement of comprehensive income in arriving at
the profit for the year. Provision has also been made for impairment of financial assets, slow moving inventories, all known liabilities and depreciation on property, plant and equipment.
(ii) Borrowing Costs
Borrowing costs directly attributable to acquisition, construction or production of assets that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that Group incurs in connection with the borrowing of funds.
(iii) Net Finance Income / (Expenses)
Finance income comprises interest income on funds invested. Interest income is recognized as it accrues in profit or loss, using the effective interest method.
Finance costs comprise interest expense on borrowings that are not directly attributable to the acquisition, construction or productions of a qualifying asset recognised using the effective interest method.
(c) Taxation
(i) Current Taxes
Current Income tax liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Commissioner General of Inland Revenue. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.
The provision for income tax is based on the elements of income and expenditures reported in the Financial Statements and computed in accordance with the provisions of the Inland Revenue Act.
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(ii) Deferred Taxation
Deferred taxation is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences and carry forward of unused tax losses / credits can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted as at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if legally enforceable right exists to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxable entity and the same taxation authority.
(d) Related Party Transactions
Disclosure has been made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating policies/decisions of the other, irrespective of whether a price is being charged or not.
The relevant details are disclosed in the respective notes to the Financial Statements.
(e) Cash Flow Statement
Interest received and dividends received are classified as investing cash flows, while dividend paid and interest paid, is classified as financing cash flows for the purpose of presentation of Statement of Cash Flows which has been prepared using the ‘Indirect Method’.
(f) Earnings Per Share
Basic Earning Per Share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the number of shares outstanding at the reporting date.
(g) Events Occurring After the Reporting Period
Events after the reporting period are those events favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue.
The materiality of the events occurring after the reporting period is considered and appropriate adjustments to or disclosures are made in the Financial Statements, where necessary.
(h) Assets Held for Sale
Non-current assets that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale the assets are re measured in accordance with the Group’s accounting policies. Thereafter the assets are measured at the lower of their carrying amount or fair value less costs to sell.
Notes to the Financial Statements Contd.
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Impairment losses on initial classification and subsequent gains and losses on re-measurement are recognized in profit or loss. Gains are not recognized in excess of any cumulative impairment loss.
Once classified as held for sale, property plant and equipment are no longer amortized or depreciated.
4. NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE AS AT REPORTING DATE
The Institute of Chartered Accountants of Sri Lanka has issued the following new Sri Lanka Accounting Standards which will become applicable for financial periods beginning on or after 1st April 2017 or at a later date.
Accordingly, these Standards have not been applied in preparing these financial statements.
SLFRS 9 – “Financial Instruments”
SLFRS 9, issued in 2014, replaces the existing guidance in LKAS 39 Financial Instruments: Recognition and Measurement. SLFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets. SLFRS 9 is effective for annual period beginning on or after 1st January 2018 with early adoption permitted.
The Group is assessing the potential impact on its consolidated financial statements resulting from the application of SLFRS 9.
SLFRS 15 – “Revenue from Contracts with Customers”
SLFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including LKAS 18 Revenue, LKAS 11 Construction Contracts. SLFRS 15 is effective for annual reporting periods beginning on or after 1st January 2018, with early adoption permitted.
The Group is assessing the potential impact on its consolidated financial statements resulting from the application of SLFRS 15.
SLFRS 16 – “Leases”
SLFRS 16 requires lessees to recognise all leases on their Statement of Financial Position as lease liabilities with the corresponding right of use assets. The profit or loss recognition pattern for recognised leases will be similar to existing finance lease accounting, with interest and depreciation expense recognized separately in Profit or Loss. SLFRS 16 is effective for annual reporting periods beginning on or after 1st January 2019.
The Group is currently evaluating the impact of SLFRS 16.
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Group Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
5. RevenueLocal Sales 3,607,479,136 2,952,483,649 3,385,067,275 2,790,532,513
Export Sales 436,970,337 83,527,209 339,914,499 74,957,500
4,044,449,473 3,036,010,858 3,724,981,774 2,865,490,013
6. Other IncomeGain on Disposal of Property, Plant and Equipment - 46,690,847 - 46,690,847
Dividend Income 134,998 523,090 134,998 523,090
Scrap Sales Income 26,768,102 4,008,947 26,767,527 3,777,596
26,903,100 51,222,884 26,902,525 50,991,533
7. Profit from OperationsProfit from Operations is stated after charging all the expenses including following;
Directors' Fees and Emoluments 21,607,250 17,813,750 21,607,250 16,713,750
Auditors' Remuneration - Audit 1,302,292 1,046,300 1,000,000 900,000
- Audit Related Services 300,000 279,970 300,000 279,970
Depreciation and Amortization 87,334,059 84,936,318 70,781,098 68,646,505
Write off of Inventories 44,296,346 - 44,296,346 -
Provision for Obsolete Inventories 2,119,931 9,669,251 - 9,669,251
Provision for Impairment of Investment in Subsidiaries - - 55,000,000 62,000,000
Provision for Impairment of Other Receivables - 4,500,000 - 4,500,000
Provision for Impairment of Trade Receivables 34,228,581 24,350,525 29,438,139 9,532,904
Personnel Costs
Salaries, Wages and Related Costs 158,964,415 136,348,081 147,720,745 130,502,864
Defined Contribution Plan Cost 19,353,861 17,459,396 18,596,451 16,701,986
Defined Benefit Plan Cost (Note 24.1) 5,790,171 5,356,866 5,763,455 5,588,217
8. Net Finance Costs8.1 Finance IncomeInterest Income 966,938 2,768,536 946,485 2,768,536
Net Exchange Gain 686,622 - 788,826 -
1,653,560 2,768,536 1,735,311 2,768,536
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
83
Sierra Cables PLC
Group Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
8.2 Finance CostsInterest on - Overdraft 12,087,518 6,790,597 3,852,328 2,208,297
- Leases - 146,957 - 146,957
- Import Demand Loans 112,178,830 55,539,713 101,994,920 51,449,934
- Bank Loans 29,095,025 22,420,515 19,128,810 14,438,296
- Promissory Note Interests 359,523 - 359,523 -
Net Exchange Loss - 22,400,017 - 21,082,058
153,720,896 107,297,799 125,335,581 89,325,542
Net Finance Costs 152,067,336 104,529,263 123,600,270 86,557,006
9. Income Tax ExpenseIncome Tax on Profit for the Year (Note 9.1) 84,650,518 27,804,338 84,650,518 27,804,338
Under provision in respect of previous year 9,862,233 - 9,862,233 -
Deferred Tax (Reversal)/Charge for the Year (Note 25.2) (14,268,858) 50,697,338 (12,703,030) 51,559,691
80,243,893 78,501,676 81,809,721 79,364,029
9.1 Reconciliation Between Accounting Profit and Tax ExpenseProfit Before Tax 346,794,764 273,134,238 321,481,105 255,285,591
Aggregate Disallowed Income (1,081,483) (3,291,626) (1,081,483) (3,291,626)
Aggregate Disallowable Expenses 157,743,952 139,879,409 134,065,401 162,453,390
Aggregate Allowable expenses (146,380,583) (212,815,209) (128,016,331) (186,857,538)
Taxable Profit 357,076,650 196,906,813 326,449,095 227,589,817
Income from Other Sources 653,059 23,337 653,059 23,337
Total Statutory Income 357,729,710 196,930,149 327,102,154 227,613,154
Tax Loss Claimed (Note 9.2) (7,756,392) (79,664,604) (7,756,392) (79,664,604)
Qualifying Payments - (33,967,504) - (33,967,504)
Taxable Income 349,973,318 83,298,041 319,345,762 113,981,046
Tax on Exports @ 12% 3,574,722 794,638 3,574,722 794,638
Tax on Balance Income @ 28% 81,075,796 27,009,700 81,075,796 27,009,700
84,650,518 27,804,338 84,650,518 27,804,338
9.2 Accumulated Tax LossesBalance as at 1st April 10,895,851 228,698,903 10,895,851 228,698,903
Adjustments during the Year (3,139,459) (138,138,448) (3,139,459) (138,138,448)
Tax Loss for the Year 2,997,849 - - -
Tax Loss Claimed during the Year (7,756,392) (79,664,604) (7,756,392) (79,664,604)
Balance as at 31st March 2,997,849 10,895,851 - 10,895,851
Annual Report 2016 / 2017
84
Sierra Cables PLC
Sierra Cables PLC
In terms of Section 52 of Inland Revenue Act No. 10 of 2006, the profit from exports of Sierra Cables PLC is taxable at the rate of 12% and other profits and income are taxable at the rate of 28%.
Sierra Industries (Private) Limited
As per the section 16 (c) (1) and (2) of the Inland Revenue (Amendment) Act No. 22 of 2011 as amended by Act No. 08 of 2012, the Sierra Industries (Private) Limited’s profits and income (Other than any profits and income from the Sale of any Capital Asset) shall be exempted from income tax for a period of six years.
10. Basic Earnings Per Share
Basic Earnings Per Share is calculated based on the Profit after taxation attributable to the Ordinary Shareholders divided by the Weighted Average Number of Ordinary Shares outstanding during the year.
Group Company
For the year ended 31st March 2017 2016 2017 2016
Profits attributable to ordinary shareholders (Rs.) 271,293,076 199,934,090 239,671,384 175,921,562
Weighted average number of ordinary shares 537,512,430 537,512,430 537,512,430 537,512,430
Basic Earnings per share (Rs.) 0.50 0.37 0.45 0.33
11. Dividend per ShareDividend Declared and Paid During the Year (Rs.) 134,378,108 107,502,486 134,378,108 107,502,486
Average Number of Ordinary Shares 537,512,430 537,512,430 537,512,430 537,512,430
Dividend per Share (Rs.) 0.25 0.20 0.25 0.20
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
12. Discontinued OperationsAssets Classified as Held for Sale
Sierra Power (Private) Limited (Note 12.1) 148,624,096 147,854,862 - -
Plant & Machinery (Note 12.2) 18,000,000 18,000,000 18,000,000 18,000,000
166,624,096 165,854,862 18,000,000 18,000,000
Liabilities Directly Associated with Assets Classified as Held for Sale
Sierra Power (Private) Limited 6,596,000 6,589,430 - -
6,596,000 6,589,430 - -
12.1 Sierra Power (Private) Limited
The Board of Directors have resolved to dispose the investment in Sierra Power (Private) Limited at the meeting held on 27th January 2015. The Company has initiated the process of disposing this investment by signing a Memorandum of Understanding of the disposal of entire investment of the subsidiary for Rs. 180 Mn with a third party as at 27th January 2016. An advance payment of Rs. 10 Mn has been received on 09th August 2016. However, the disposal of investment has not been occurred as at 31st March 2017 due to legal documentation process is in progress that need to be obtained before transferring the assets of Sierra Power (Private) Limited. Accordingly, this investment has been classified as an Asset Held for Sale Investment as at the reporting date.
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
85
Sierra Cables PLC
For the year ended 31st March2017
Rs.2016
Rs.
12.1.1 Loss after tax From Discontinued OperationsRevenue - -
Cost of Sales - -
Gross Profit/Loss - -
Other Income - -
Administrative Expenses (1,965,557) (1,822,544)
Loss from Operations (1,965,557) (1,822,544)
Loss before tax from discontinued operations (1,965,557) (1,822,544)
Loss for the year from Discontinued Operations (1,965,557) (1,822,544)
Loss per Share (0.23) (0.21)
As at 31st March
12.1.2 Assets and Liabilities Classified as Held for SaleAssets
Property, Plant & Equipment 124,267,453 123,269,433
Debtors & Other Receivables 24,356,317 24,584,790
Cash in Hand & Bank 326 639
Assets classified as held for sale 148,624,096 147,854,862
Liabilities
Amount Due To Related Company 62,574,480 59,846,259
Long Term Loans 6,000,000 6,000,000
Trade & Other Payables 596,000 589,430
Liabilities Directly Associated with Assets Classified as Held for Sale 69,170,480 66,435,689
Net Assets Directly Associated with Disposal 79,453,616 81,419,173
For the year ended 31st March
12.1.3 Cash flow from/(Used in) Discontinued OperationNet Cash Flows Generated from Operating Activities 1,009,177 715,511
Net Cash Flows Used in Investing Activities (1,009,490) (1,185,101)
Net Decrease in Cash and Cash Equivalents (313) (469,590)
12.2 Plant & Machinery
The Company has classified part of its Plant and Machinery as Non Current Asset Held for Sale during the previous year, following the decision by Board of the Directors to dispose the same. Effort to sell the Plant and Machinery was commenced during the previous financial year and Directors are of the opinion that they still commit to the initial decision to sell the assets and actively involved in the same as at the end of the reporting period and explore possibilities of disposing the machinery to overseas buyer. Further Directors are of the opinion that, there is no further impairment on the carrying amount of the asset as at 31st March 2017.
Annual Report 2016 / 2017
86
Sierra Cables PLC
13. P
rope
rty,
Pla
nt a
nd E
quip
men
t
As
at 3
1st
Mar
chLa
nd
Rs.
Bui
ldin
gs
Rs.
Pla
nt a
ndM
achi
nery Rs.
Mot
orVe
hicl
es Rs.
Fur
nitu
re
and
Fitt
ings Rs.
Fac
tory
Equi
pmen
tR
s.
Offi
ce &
Com
pute
rEq
uipm
ent
Rs.
Cap
ital
W
ork
inPr
ogre
ss Rs.
Tot
al20
17 Rs.
Tot
al20
16 Rs.
Gro
up
Cost
/ Re
valu
ed
Bala
nce
as a
t 1s
t A
pril
202
,874
,851
3
64,9
69,0
42
708
,966
,452
3
3,56
0,26
1 5
,333
,073
5
8,25
6,05
8 2
6,80
5,85
2 1
4,25
4,03
9 1
,415
,019
,629
1
,516
,803
,036
Add
itio
ns -
-
-
9,
462
123,
132
933
,060
1
,393
,312
94
,738
,999
97,1
97,9
65 5
9,39
7,31
2
Tran
sfer
s -
7
,254
,577
-
-
-
-
-
(7
,254
,577
)-
-
Dis
posa
ls -
-
(2
,111
,381
) -
-
(2
6,45
0) -
-
(2
,137
,831
) (3
7,86
5,54
4)
Exch
ange
Diff
eren
ce
-
-
-
29,
613
9,2
46
-
-
2,1
77,1
95
2,2
16,0
54
-
Recl
assifi
catio
n to
Ass
ets
Hel
d fo
r Sal
e -
(1
23,3
15,1
75)
Bala
nce
as a
t 31
st M
arch
2
02,8
74,8
51
372
,223
,619
7
06,8
55,0
71
33,
599,
336
5,4
65,4
51
59,
162,
668
28,
199,
164
103,
915,
656
1,5
12,2
95,8
17
1,4
15,0
19,6
29
Dep
reci
atio
n
Bala
nce
as a
t 1s
t A
pril
-
59,
999,
863
174
,791
,611
1
6,38
4,58
6 4
,149
,822
3
9,93
8,83
7 1
9,36
3,35
4 -
3
14,6
28,0
73
265
,473
,045
Char
ge fo
r the
Yea
r -
1
8,24
8,45
1 5
1,29
6,02
0 4
,224
,475
4
43,1
01
8,5
84,6
62
2,4
20,1
37
-
85,
216,
846
83,
890,
706
Dis
posa
ls -
-
(1
,583
,536
) -
-
(2
6,45
0) -
-
(1
,609
,986
) (3
4,68
9,93
6)
Exch
ange
Diff
eren
ce
-
-
-
7,4
03
1,1
60
-
-
-
8,5
63
-
Recl
assifi
catio
n to
Ass
ets
Hel
d fo
r Sal
e -
-
-
-
-
-
-
-
-
(4
5,74
2)
Bala
nce
as a
t 31
st M
arch
-
7
8,24
8,31
4 2
24,5
04,0
95
20,
616,
464
4,5
94,0
83
48,
497,
049
21,
783,
491
-
398
,243
,496
3
14,6
28,0
73
Net
Boo
k Va
lue
As
at 3
1st
Mar
ch 2
016
202
,874
,851
3
04,9
69,1
79
534
,174
,841
1
7,17
5,67
5 1
,183
,251
1
8,31
7,22
1 7
,442
,498
1
4,25
4,03
9 1
,100
,391
,556
As
at 3
1st
Mar
ch 2
017
202
,874
,851
2
93,9
75,3
05
482
,350
,976
1
2,98
2,87
2 8
71,3
68
10,
665,
619
6,4
15,6
73
103,
915,
656
1,1
14,0
52,3
21
Ass
ets
pled
ged
as s
ecur
ity
agai
nst
the
long
ter
m a
nd s
hort
ter
m b
orro
win
gs h
ave
been
dis
clos
ed in
Not
e 34
to
the
Fina
ncia
l Sta
tem
ents
.
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
87
Sierra Cables PLC
13. P
rope
rty,
Pla
nt a
nd E
quip
men
t Con
td.
As
at 3
1st
Mar
chLa
nd
Rs.
Bui
ldin
gs
Rs.
Pla
nt a
ndM
achi
nery Rs.
Mot
orVe
hicl
es Rs.
Fur
nitu
re
and
Fitt
ings Rs.
Fac
tory
Equi
pmen
tR
s.
Offi
ce &
Com
pute
rEq
uipm
ent
Rs.
Cap
ital
W
ork
inPr
ogre
ss Rs.
Tot
al20
17 Rs.
Tot
al20
16 Rs.
Com
pany
Cost
/ Re
valu
ed
Bala
nce
as a
t 1s
t A
pril
135
,949
,350
3
16,2
69,4
17
548
,150
,495
2
6,62
6,44
7 4
,614
,756
5
5,30
2,10
8 2
3,89
1,57
9 1
5,24
8,93
1 1
,126
,053
,083
1
,107
,483
,938
Add
itio
ns -
-
2
5,73
1 1
58,0
60
1,3
23,4
12
17,2
33,6
3518
,740
,838
56,
016,
332
Tran
sfer
s -
7
,254
,577
-
-
-
-
-
(7
,254
,577
)-
-
Dis
posa
ls -
-
(2
,111
,381
) -
(2
6,45
0) -
-
(2
,137
,831
) (3
7,44
7,18
7)
Bala
nce
as a
t 31
st M
arch
1
35,9
49,3
50
323
,523
,994
5
46,0
39,1
14
26,
626,
447
4,6
40,4
87
55,
433,
718
25,
214,
991
25,
227,
989
1,1
42,6
56,0
90
1,1
26,0
53,0
83
Dep
reci
atio
n
Bala
nce
as a
t 1s
t A
pril
-
5
4,48
3,34
9 1
39,2
90,0
48
10,
639,
956
3,6
45,0
54
32,
234,
379
16,
996,
503
-
257
,289
,289
2
24,1
20,3
46
Char
ge fo
r the
Yea
r -
1
5,81
3,47
1 3
9,90
4,46
8 3
,881
,668
3
62,0
93
6,4
38,8
42
2,2
31,6
42
-
68,
632,
184
67,
600,
894
Dis
posa
ls -
-
(1
,583
,536
) -
(2
6,45
0) -
-
(1
,609
,986
) (3
4,43
1,95
1)
Bala
nce
as a
t 31
st M
arch
-
7
0,29
6,82
0 1
77,6
10,9
80
14,
521,
624
4,0
07,1
47
38,
646,
771
19,
228,
145
-
324
,311
,487
2
57,2
89,2
89
Net
Boo
k Va
lue
As
at 3
1st
Mar
ch 2
016
135
,949
,350
2
61,7
86,0
68
408
,860
,447
1
5,98
6,49
1 9
69,7
02
23,
067,
729
6,8
95,0
76
15,
248,
931
868
,763
,794
As
at 3
1st
Mar
ch 2
017
135
,949
,350
2
53,2
27,1
74
368
,428
,134
1
2,10
4,82
3 6
33,3
40
16,
786,
947
5,9
86,8
46
25,
227,
989
818
,344
,603
Ass
ets
pled
ged
as s
ecur
ity
agai
nst
the
long
ter
m a
nd s
hort
ter
m b
orro
win
gs h
ave
been
dis
clos
ed in
Not
e 34
to
the
Fina
ncia
l Sta
tem
ents
.
Annual Report 2016 / 2017
88
Sierra Cables PLC
13.1 Fully-Depreciated Assets
The initial cost of fully-depreciated Property, Plant and Equipment which are still in use as at Reporting Date are as follows:
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Motor Vehicles 7,142,591 7,026,200 7,142,591 7,026,200
Furniture and Fittings 3,161,196 2,123,013 3,161,196 2,123,013
Factory Equipment 27,015,887 20,609,025 27,015,887 20,609,025
Office & Computer Equipment 15,202,305 7,564,055 15,202,305 7,564,055
52,521,979 37,322,293 52,521,979 37,322,293
13.2 Details of Property, Plant and Equipment of the Group Stated at Valuation are Indicated below:
Property Location
Method of Valuation
Effective date of valuation
Valuer Land Extent (Acres)
Carrying Value of Revalued
Assets as at 31st March 2017 if carried at
Historical Cost Rs.
Carrying Value of Revalued
Assets Based on Revalued
Amount as at 31st March 2017
Rs.
Land, buildings,
Plant and
machinery at
Sierra Cables
PLC Galwarusa
Road, Korathota
(within the limits
of Kaduwela
Pradeshiya Sabha)
Market Approach 31st March 2013 Mr. K. Arthur Perera
A.M.I.V.(Sri Lanka)
Valuer & Consultant
5.6375 300,362,103 691,895,396
300,362,103 691,895,396
Land at Sierra
Industries (Pvt)
Ltd Galwarusa
Road, Korathota
(within the limits
of Kaduwela
Pradeshiya Sabha)
Market Approach 31st March 2015 Mr. K. Arthur Perera
A.M.I.V.(Sri Lanka)
Valuer & Consultant
2.7886 46,317,298 66,925,500
46,317,298 66,925,500
Sierra Cables PLC
Land 12,667,057 95,827,501
Building 69,946,628 233,916,639
Machinary 217,748,418 362,151,256
300,362,103 691,895,396
Sierra Industries (Private)Limited
Land 46,317,298 66,925,500
46,317,298 66,925,500
Total 346,679,401 758,820,896
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
89
Sierra Cables PLC
13.3 The carrying amount of revalued assets that would have been included in the Financial Statements, had the assets been carried at Cost less Accumulated Depreciation is as follows;
As at 31st March2017
Rs.2016
Rs.
At Cost 346,679,401 373,442,000
At Valuation 758,820,896 717,807,238
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
14. Intangible Assets Cost
Balance as at 1st April 11,726,482 11,089,392 11,726,482 11,089,392
Additions During the Year 7,738,544 637,090 7,738,544 637,090
Balance as at 31st March 19,465,026 11,726,482 19,465,026 11,726,482
Amortization
Balance as at 1st April 10,457,061 9,479,895 10,457,061 9,479,895
Charge for the year 2,148,915 977,166 2,148,915 977,166
Balance as at 31st March 12,605,976 10,457,061 12,605,976 10,457,061
Carrying Value as at 31st March 6,859,050 1,269,421 6,859,050 1,269,421
Intangible Assets represent the cost of Computer Software acquired by the Company. The initial cost of fully-amortised intangible assets which are still in use as at 31st March 2017 was Rs. 10,018,868/-
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
15. Investment PropertyBalance as at 1st April - 16,427,000 - 16,427,000
Disposals - (16,427,000) - (16,427,000)
Balance as at 31st March - - - -
Depreciation
Balance as at 1st April - 2,464,051 - 2,464,051
Charge for the Year - 68,446 - 68,446
Disposals - (2,532,497) - (2,532,497)
Balance as at 31st March - - - -
The Investment Property which consisted of an apartment in Fairfield Residencies a Condominium Property situated in Colombo 08, having a floor area of 1,720 sq.ft. has been sold for Rs 22,000,000 during the year ended 31st March 2016.
Annual Report 2016 / 2017
90
Sierra Cables PLC
Company
As at 31st March2017
Rs.2016
Rs.
16. Investments in SubsidiariesSierra Power (Private) Limited (Note 12.1) 86,680,010 86,680,010
Sierra Industries(Private) Limited 145,600,010 145,600,010
Sierra Cables East Africa Limited (Note 16.1) 62,242,700 28,780,000
294,552,720 261,060,020
Less: Provision for Impairment of Subsidiaries (Note 16.2) (134,000,000) (79,000,000)
160,522,720 182,060,020
16.1 Sierra Cables East Africa LimitedInvestment as at beginning of the year 28,780,000 28,780,000
Investment made during the Year 33,462,700 -
62,242,700 28,780,000
16.2 Provision for Impairment of Subsidiaries
The Company has made a provision for impairment of Rs. 134,000,000/- on the investment in subsidiaries as at 31st March 2017 due to adverse business environment in which the subsidiary companies are operated. This has resulted in continuous operating losses and negative operating cash flows in subsidiary companies and discounted future cash flows has been considered as the recoverable amount for the calculation of provision for impairment as at the each reporting date. The breakup of the impairment provision is as follows;
Company
As at 31st March2017
Rs.2016
Rs.
Provision for Impairment of Subsidiaries
Balance as at 1st April 79,000,000 17,000,000
Provision made during the Year 55,000,000 62,000,000
Balance as at 31st March 134,000,000 79,000,000
Sierra Power (Private) Limited 2,000,000 2,000,000
Sierra Industries (Private) Limited 132,000,000 77,000,000
134,000,000 79,000,000
As at 31st March 2017
Sierra Industries
(Private) Limited
Sierra Cables East Africa
Limited
16.3 Investment Information of SubsidiariesNumber of shares 22,100,002 4,085
Holding 82.35% 95%
Cost of the Investment 145,600,010 62,242,700
Notes to the Financial Statements Contd.
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Sierra Cables PLC
Sierra Industries (Private) Limited Sierra Cables East Africa Limited
As at 31.03.2017Rs.
31.03.2016Rs.
31.12.2016Rs.
31.03.2016Rs.
16.4 Non-Controlling Interest (NCI) in SubsidiaryNCI Percentage (%) 17.65% 17.65% 5% 0%
Total Assets 587,749,311 455,296,383 98,071,273 26,457,039
Total Liabilities (598,998,399) (432,555,267) (37,617,505) (3,145,226)
Net Assets / (Liabilities) (11,249,088) 22,741,116 60,453,768 23,311,813
Carrying Amount of NCI (1,985,464) 4,013,807 3,022,688 -
Profit / (Loss) for the Period (33,990,204) (37,820,814) 3,369,692 (5,468,187)
Other Comprehensive Income - - 309,564 -
Total Comprehensive Income / (Expense) for the Period (33,990,204) (37,820,814) 3,679,256 (5,468,187)
Total Comprehensive Income / (Expense) allocated to NCI (5,999,271) (6,675,374) 183,963 -
Cash Flows from Operating Activities (81,055,553) 11,898,248 22,015,266 (11,413,884)
Cash Flows from Investing Activities (876,994) (103,705) (81,796,364) 18,313,707
Cash Flows from Financing Activities 57,811,804 (12,771,119) 65,050,422 -
Net Increase / (Decrease) in Cash and Cash Equivalents (24,120,743) (976,576) 5,269,324 6,899,823
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
17. Investments in Equity Accounted InvesteesTea Leaf Resort Holdings (Private) Limited (Note 17.2) - - 2,500,000 2,500,000
T & G Lanka (Private) Limited (Note 17.3) 3,621,186 2,746,962 3,300,000 3,300,000
3,621,186 2,746,962 5,800,000 5,800,000
Less: Provision for Impairment of Equity Accounted Investee (Note 17.1) - - (2,500,000) -
3,621,186 2,746,962 3,300,000 5,800,000
17.1 Provision for Impairment of Equity Accounted InvesteesTea Leaf Resort Holdings (Private) Limited - - (2,500,000) -
- - (2,500,000) -
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Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
17.2 Tea Leaf Resort Holdings (Private) LimitedCost of the Investment 2,500,000 2,500,000 2,500,000 2,500,000
Share of Loss for the Year (Net of Tax) - - - -
Accumulated Share of Loss Brought Forward (2,500,000) (2,500,000) - -
Net Asset Value of Associate as at 31 March - - 2,500,000 2,500,000
17.3 T & G Lanka (Private) LimitedCost of the Investment 3,300,000 3,300,000 3,300,000 3,300,000
Share of Profit for the Year (Net of Tax) 874,224 293,942 - -
Accumulated Share of Loss (553,038) (846,980) - -
Net Asset Value of Associate as at 31 March 3,621,186 2,746,962 3,300,000 3,300,000
T & G Lanka (Private) Limited Tea Leaf Resort Holdings (Private) Limited
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
17.4 Summarized Financial Information of AssociatesRevenue 64,946,509 37,960,270 - -
Profit/(Loss) after Tax 3,122,227 1,049,790 (4,068,415) (119,470)
Total Assets 38,550,591 20,499,195 2,470,804 6,657,719
Total Liabilities 26,390,081 9,421,729 7,125,540 7,114,040
Group / Company
2017 2016
As at 31st MarchNo of Ordinary
Shares/UnitsFair Value
Rs.No of Ordinary
Shares/UnitsFair Value
Rs.
18. Available for Sale InvestmentsNational Development Bank PLC 21,022 2,837,970 20,250 3,404,025
Richard Pieris Exports PLC 10,359 2,123,595 10,359 2,278,980
ACL Cables PLC 1,520 82,080 760 76,000
DFCC Bank PLC 10,000 1,140,000 10,000 1,385,000
Chevron Lubricants PLC 3,678 628,938 1,839 555,562
Kelani Cables PLC 200 23,400 200 22,500
NDB Aviva Growth Fund Investment in Units 2,199,836 22,306,332 219,984 20,999,628
Capital Alliance High Yield FundInvestment in Units - - 1,050,280 16,033,996
- 29,142,315 - 44,755,691
Notes to the Financial Statements Contd.
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Sierra Cables PLC
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
19. InventoriesRaw Materials 468,981,718 120,700,207 424,493,008 98,936,178
Work in Progress 294,452,793 132,600,328 294,452,793 132,600,328
Finished Goods 473,048,041 455,455,028 441,842,809 430,668,490
Packing Materials 9,707,422 13,300,592 9,707,422 13,300,592
Stationeries - 1,802,747 - 1,802,747
Engineering Items 22,209,520 24,562,288 22,209,520 19,663,932
Goods in Transit 18,612,623 18,612,623 18,612,623 18,612,622
1,287,012,117 767,033,812 1,211,318,175 715,584,889
Less: Provision for Obsolete Inventories (Note 19.1) (53,092,773) (61,958,792) (50,972,842) (61,958,792)
1,233,919,344 705,075,020 1,160,345,333 653,626,097
Inventories pledged as security against the long term and short term borrowings have been disclosed in Note 34 to the Financial Statements.
19.1 Provision for Obsolete InventoriesBalance as at 1st April 61,958,792 52,289,541 61,958,792 52,289,541
Provision Made during the Year 2,119,931 9,669,251 - 9,669,251
Write off during the Year (10,985,950) - (10,985,950) -
Balance as at 31st March 53,092,773 61,958,792 50,972,842 61,958,792
20. Trade and Other ReceivablesTrade Receivables 1,524,292,128 1,090,617,177 1,329,003,994 969,566,099
Less: Provision for Impairment (Note 20.1) (135,590,708) (168,115,337) (111,418,566) (148,733,637)
1,388,701,420 922,501,840 1,217,585,428 820,832,462
VAT Receivable 201,588,935 88,243,685 105,814,394 34,893,842
Deposits, Prepayments and Advances 94,687,006 76,826,120 84,032,916 66,662,624
Other Receivables 32,950,954 17,125,095 - -
329,226,895 182,184,900 189,847,310 101,556,466
Less: Provision for Impairment (Note 20.2) (44,893,550) (59,244,162) (44,893,550) (59,244,162)
284,333,345 122,950,738 144,953,760 42,312,304
Total Trade & Other Receivables 1,673,034,765 1,045,452,578 1,362,539,188 863,144,766
Trade receivables pledged as security against the long term and short term borrowings have been disclosed in Note 34 to the Financial Statements.
20.1 Provision for Impairment of Trade ReceivablesBalance as at 1st April 168,115,337 143,764,812 148,733,637 139,200,733
Provision made during the year 34,228,581 24,350,525 29,438,139 9,532,904
Write off during the Year (66,753,210) - (66,753,210) -
Balance as at 31st March 135,590,708 168,115,337 111,418,566 148,733,637
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Sierra Cables PLC
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
20.2 Provision for Impairment of Other ReceivablesBalance as at 1st April 59,244,162 125,835,057 59,244,162 125,835,057
Provision made during the year - 4,500,000 - 4,500,000
Write off during the Year (14,350,612) (71,090,895) (14,350,612) (71,090,895)
Balance as at 31st March 44,893,550 59,244,162 44,893,550 59,244,162
21. Amounts Due from Related CompaniesNon trading
Sierra Civil Engineering & Construction (Private) Limited - 385,000 - 385,000
Sierra Power (Private) Limited - - 62,574,480 59,846,259
Sierra Industries (Private) Limited - - 213,895,061 134,638,698
Sierra Cables East Africa Limited - - 12,071,978 2,854,664
- 385,000 288,541,519 197,724,621
Trading
Sierra Electrical Engineering (Private) Limited 616,785 616,785 616,785 616,785
Sierra Technology Holdings (Private) Limited 9,255,105 4,052,915 9,255,105 4,052,915
Sierra Readymix (Private) Limited 236,161 57,437 236,161 57,437
Sierra Water Works (Private) Limited 2,936 2,936 2,936 2,936
Sierra Construction Limited 99,902,329 100,626,267 99,902,329 100,626,267
Sierra Development (Private) Limited - 55,868 - 55,868
Sierra Construction & General Sales Join Venture - 859 - 859
Sierra Piling (Private) Limited - 89,672 - 89,672
110,013,316 105,502,739 110,013,316 105,502,739
Total 110,013,316 105,887,739 398,554,835 303,227,360
22. Cash and Cash EquivalentsFavourable Balances
Cash in Hand and at Bank 78,771,458 80,234,093 73,481,406 73,005,443
78,771,458 80,234,093 73,481,406 73,005,443
Unfavourable Balances
Bank Overdraft (98,056,157) (72,104,387) (37,681,897) (35,542,771)
Cash and Cash Equivalents for Cash Flows Purpose (19,284,699) 8,129,706 35,799,509 37,462,672
23. Stated Capital537,512,430 Ordinary Shares 894,565,898 894,565,898 894,565,898 894,565,898
894,565,898 894,565,898 894,565,898 894,565,898
Notes to the Financial Statements Contd.
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Sierra Cables PLC
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
24. Retirement Benefit ObligationsBalance as at 1st April 26,208,882 26,793,172 25,929,429 26,282,368
Current Service Cost 2,937,934 2,868,404 2,911,218 3,099,755
Interest Cost 2,852,207 2,488,462 2,852,237 2,488,462
Actuarial Gain (2,070,089) (1,545,718) (2,070,089) (1,545,718)
Benefits Paid by the Plan (2,093,801) (4,395,438) (2,093,801) (4,395,438)
Balance as at 31st March 27,835,163 26,208,882 27,528,994 25,929,429
24.1 The total amount charged to Statement of Profit or Loss and Other Comprehensive Income in respect of Retirement Benefit Obligations made up as follows;
Group Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Current Service Cost 2,911,218 2,868,404 2,911,218 3,099,755
Interest Cost 2,878,953 2,488,462 2,852,237 2,488,462
Recognise in Profit or Loss 5,790,171 5,356,866 5,763,455 5,588,217
Actuarial Gain (2,070,089) (1,545,718) (2,070,089) (1,545,718)
Recognised in Other Comprehensive Income (2,070,089) (1,545,718) (2,070,089) (1,545,718)
24.2 LKAS 19 requires the use of actuarial techniques to make a reliable estimate of the amount of retirement benefits that employees have earned in return for their service in the current and prior periods and discount that benefit using projected unit credit method in order to determine the present value of the retirement benefit obligation and the current service cost. This requires an entity to determine how much benefit is attributable to the current and prior periods and to make estimates about demographic variables and financial variables that will influence the cost of the benefit.
An Actuarial Valuation of the Retirement Benefit Obligations of the Company was carried out as at 31st March 2017, by Messers M. Poopalanathan, a firm of Professional Actuaries. The valuation was carried out as per the “Projected Unit Credit” (PUC) method.
The following key assumptions were made in arriving at the above figure.
Group Company
2017 2016 2017 2016
Expected Annual Average Salary Increment 10% 10% 10% 10%
Discount Rate 12% 11% 12% 11%
Retirement Age 55 Years 55 Years 55 Years 55 Years
Mortality A 67/70 Mortality Table issued by the Institute of Actuaries, London
Staff Turnover Rate 1.82% for age up to 50 and thereafter zero.
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24.3 Sensitivity of Assumptions Employed in Actuarial Valuation
The calculation of the Retirement Benefit Obligation is sensitive to the assumptions set out above. The following table summarizes how the impact on the retirement benefit obligation at the end of the reporting period would have increased / (decreased) as a result of a change in the respective assumptions by one percent.
Group Company
Retirement benefit obligation Retirement benefit obligation
One percentage point increase
Rs.
One percentage point decrease
Rs.
One percentage point increase
Rs.
One percentage point decrease
Rs.
Effect on the discounting rate (2,060,202) 2,397,623 (2,021,264) 2,352,458
Effect on the salary escalation rate 2,295,339 (2,006,110) 2,249,735 (1,966,179)
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
25. Deferred Tax LiabilityBalance as at 1st April 186,911,342 135,787,695 160,774,382 108,788,382
(Reversal) / Provision for the Year (Note 25.2) (13,719,456) 51,123,647 (12,153,628) 51,986,000
Effect of movement in Exchange Rate (25,044) - - -
Balance as at 31st March 173,166,842 186,911,342 148,620,754 160,774,382
The effective tax rates which were applied by the Company and its subsidiaries are as follows:
2017 2016
Sierra Cables PLC 26.54% 27.58%
Sierra Industries (Private) Limited 28% 28%
Sierra Cables East Africa Limited 30% 30%
2017 2016
As at 31st March
Temporary Difference
Rs.
Tax Effect
Rs.
Temporary Difference
Rs.
Tax Effect
Rs.
25.1 The Deferred Tax Liability is attributable to the followingsCompanyOn Property, Plant and Equipment 587,516,762 155,926,949 619,929,501 170,976,557 On Retirement Benefit Obligation (27,528,994) (7,306,195) (25,929,429) (7,151,336)On Accumulated Tax Losses - - (10,895,851) (3,050,838)
- 148,620,754 - 160,774,382
GroupOn Property, Plant and Equipment 705,081,030 188,844,944 732,936,946 202,618,641 On Retirement Benefit Obligation (27,835,163) (7,391,922) (26,208,882) (7,229,583)On Accumulated Tax Losses (2,997,849) (899,355) (10,895,851) (3,050,838)On Other Provisions (26,292,073) (7,361,781) (19,381,700) (5,426,876)Effect of movement in Exchange Rate - (25,044) - -
- 173,166,842 - 186,911,342
Notes to the Financial Statements Contd.
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Sierra Cables PLC
Group Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
25.2 Deferred Tax Liability - (Reversal)/Charge for the Year Income Statement (14,268,858) 50,697,338 (12,703,030) 51,559,691
Profit or Loss and Other Comprehensive Income 549,402 426,309 549,402 426,309
(13,719,456) 51,123,647 (12,153,628) 51,986,000
26. Long Term Loans Balance as at 1st April 241,080,475 281,464,358 175,423,020 179,807,721
Loans Obtained during the Year 35,902,422 57,000,000 - 57,000,000
Repayments during the Year (98,592,574) (91,383,883) (70,162,345) (61,384,701)
Classified as Assets Held for Sale - (6,000,000) - -
Balance as at 31st March 178,390,323 241,080,475 105,260,675 175,423,020
Non Current Portion of Long Term Loans 71,484,209 142,263,091 56,613,998 106,604,820
Current Portion of Long Term Loans 106,906,114 98,817,384 48,646,677 68,818,200
Total 178,390,323 241,080,475 105,260,675 175,423,020
27. Lease liabilitiesBalance as at 1 April - 2,966,779 - 2,966,779
Rentals Paid - (2,966,779) - (2,966,779)
Gross Lease Liability - - - -
Total Liability at the end of the Year - - - -
28. Trade and Other PayablesTrade Creditors 853,614,582 286,761,674 832,670,287 248,770,813
Other Payables 120,656,294 106,961,692 30,296,402 38,582,298
Taxes Payable (1,686,205) 18,592,708 (1,686,205) 18,592,708
972,584,671 412,316,074 861,280,484 305,945,819
29. Amount Due to Related CompaniesSierra Industries (Private) Limited - - 85,817 19,838
Sierra Construction & General Sales Join Venture 5,583 - 5,583 -
5,583 - 91,400 19,838
30. Import Demand LoanBalance as at 1st April 768,178,333 767,506,150 714,097,468 730,653,350
Loans Obtained during the Year 2,572,727,907 2,059,584,799 2,329,593,559 1,978,681,382
Repayments during the Year (2,134,708,429) (2,058,912,616) (1,977,816,114) (1,995,237,264)
Balance as at 31st March 1,206,197,811 768,178,333 1,065,874,913 714,097,468
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31. Contingent Liabilities
The following contingent liabilities exist as at the reporting date on account of the corporate guarantees given by the Company.
CORPORATE GUARANTEES PROVIDED ON BEHALF OF THE SUBSIDIARY
Sierra Cables East Africa Limited. USD 990,000/- (Rs. 152,757,000/-)
These corporate guarantees have been provided for Commercial Bank of Ceylon PLC on behalf of the subsidiary company for One off Letter of Credit and Term Loan facility, where repayment terms are 60 monthly installments with one year grace period.
There are no material contingent liabilities outstanding as at the reporting date other than as disclosed above which require adjustments to or disclosures in the Financial Statements.
32. Commitments
There were no material Capital Commitments as at the reporting date.
33. Events Occurring After the Reporting Period
Other than mentioned below, no other circumstances have arisen since the Reporting date, which would require adjustments to, or disclosure in the Financial Statements.
On 16th June 2016, Sierra Cables PLC entered into a MOU with two Fijian entities (Vinod Patel & Company Limited and R.C. Manubhai & Company Limited) for establishment of Cables PTE Limited in Fiji as a joint venture.
Sierra Cables PLC holds 30% of Cables PTE Limited and the investment details are as follows:
Date Rs.
20/06/2017 11,613,750
02/08/2017 11,646,000
24/08/2017 3,953,561
27,213,311
34. Assets Pledged as Security and Repayment Terms
The following assets have been pledged as securities against the long term and short term borrowings that have been disclosed in Notes 26, 27 and 30 to the Financial Statements respectively.
Name of the Bank
Assets Pledged Facility Obtained Interest Rate / Commission Rate
Repayment Terms
Sierra Cables PLCCommercial Bank of Ceylon PLC
(1) - Overdraft of Rs 40 Mn PLR+1.5% p.a -
(2) A Primary Mortgage Numbered 3627 Valued at Rs. 550 Mn secured upon Land and Buildings and Plant and Machinery at 39/1A Galawarusa Road, Korathota and Stocks and books of Debt valued at Rs. 490 Mn dated 13/1/2012
Letter of Credit Facility for Rs. 400 Mn Combined Facility for the grant of Import Demand Loan and Release of Document against Acceptance Rs. 1,000 Mn
AWPLR+1.5% p.a Repayable over 180 days
Notes to the Financial Statements Contd.
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Sierra Cables PLC
Name of the Bank
Assets Pledged Facility Obtained Interest Rate / Commission Rate
Repayment Terms
(3) A Primary Mortgage No. FCC/11/141 secured upon 160mm Bow Standing Machine and 8 Wire Drawing and Annealing Line.
Term Loan of Rs. 114 Mn AWPLR+2% p.a 56 Monthly Installments
(4) A Primary Mortgage Numbered 3627 Valued at Rs. 550 Mn secured upon Land and Buildings and Plant and Machinery at 39/1A Galawarusa Road,Korathota and Stocks and books of Debt valued at Rs. 490 Mn dated 13/1/2012
Term Loan of Rs.100 Mn granted as a sub limit of the Import Demand / Release of Document against Acceptance facility of Rs. 1,000 Mn .
AWPLR+1.5% p.a 60 Monthly Installments
(5) General term and conditions relating to loan for Rs.57 Mn.
Term Loan for Rs. 57Mn or equivalent USD 400,000
AWLR+ 1.5% 48 Monthly Installments (6 months grace period)
Bank of Ceylon
(1) Relative bills of Exchange, Shipping Documents and the underlying goods under the Bank’s Constructive control.
Letter of Credit for Rs. 200 Mn. 0.25% p.q Self liquidating
(2) Accepted Usance Drafts. Acceptance facility for Rs. 200 Mn. Sub limit of under Facility stated above.
0.125% p.m Repayable over 60 days
(3) Hypothecation over stocks. Hypothecation Loan for Rs. 200 Mn AWPLR+1.5% p.a Repayable over 180 days
People’s Bank
(1) i.) Indemnity of the Companyii.) 10% cash Marginiii.) Letter of Set-off
Letter of Guarantee Facility for Rs. 80 Mn
1% p.a pro rata basis Upon expiry or return of the original guarantee, whichever is earlier
(2) i.) Indemnity of the Companyii.) Documents of title to goods shipped
Letter of Credit (Sight/Usance) for Rs.400 Mn
0.2% p.q Repayable over 90 days
(3) Mortgage over stocks and book debts for Rs. 500Mn Promissory note
Short term Loan (Import/Local) (Sub limit of under facility No 02)
AWPLR+2.5%2% rebate on Regular re payments
Repayable over 90 days
(4) Mortgage over stocks and book debts for Rs. 500MnPromissory note
Overdraft Facility for Rs. 20 Mn AWPLR+0.5% On Demand
DFCC Bank
(1) - Overdraft Facility for Rs. 20 Mn AWPLR+2% On Demand
(2) A mortgage Bond for Rs. 120,000,000 over stock
Import line for Rs. 100 Mn Within which,
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Sierra Cables PLC
Name of the Bank
Assets Pledged Facility Obtained Interest Rate / Commission Rate
Repayment Terms
(i) Letter of Credit Facility for Rs. 100Mn(Sub limit of under facility No 02)
0.25% p.q With Company’s fund/ Proceed of Import Demand Loan
(ii) Acceptance Facility for Rs. 100 Mn(Sub limit of under facility No 02)
0.375% p.q With Company's fund/ Proceed of Import Demand Loan
(iii) Shipping Guarantee facility for Rs 100 MnEndorsement of Copy Document, Airway Bills
0.3% for First MonthRs. 2,000 p.m. thereafter0.3% for First MonthRs. 2,000 p.m. thereafter
-
Import Loans facility for Rs 100 Mn(Sub limit of under facility No 02)
Commission for Documents - DP-0.3% - DA-0.35%AWPLR(Spot) +1%Value < 10Mn - .05% p.a Value > 10Mn - 1.25% p.a(Subject to maximum Rs. 3,500
One- Off Facility
(1) Import line for Rs. 150 MnWithin which,
(i) Letter of Credit Facility for 150 Mn(Sub limit of under facility No 01)
0.25% p.q With Company's fund/ Proceed of Import Demand Loan
(ii) Acceptance Facility for Rs. 150 Mn(Sub limit of under facility No 01)
0.375% p.q With Company's fund/ Proceed of Import Demand Loan
(iii) Shipping Guarantee for Rs 150 MnEndorsement of Copy Document, Airway Bills (Sub limit of under facility No 01)
0.3% for First MonthRs. 2,000 p.m. thereafter 0.3% for First Month Rs. 2,000 p.m. thereafter
-
(iv) Import Loan facility for Rs. 150 Mn(Sub limit of under facility No 01)
Commission foe Documents - DP-0.3% - DA-0.35%AWPLR(Spot) +1.25%
Repayable over 180 days
Notes to the Financial Statements Contd.
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Sierra Cables PLC
Name of the Bank
Assets Pledged Facility Obtained Interest Rate / Commission Rate
Repayment Terms
Sierra Industries (Private) LimitedSampath Bank PLC
(1) Loan Agreement for Rs. 20 Mn Primary Mortgage Bond for Rs. 20 Mn over machinery
Medium Term Loan for Rs. 20 Mn AWPLR+2.5% p.a 48 Monthly Installments
(2) Loan Agreement for Rs. 20 Mn Primary Mortgage bond for Rs. 35 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17PSecondary Mortgage bond for Rs. 17.6 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17P
Medium Term Loan for Rs. 20 Mn AWPLR+2.5% p.a 48 Monthly Installments
(3) Loan Agreement for Rs. 65 MnPrimary Mortgage Bond for Rs. 65 Mn over machinery
Medium Term Loan for Rs. 65 Mn AWPLR+2.5% p.a 60 Monthly Installments
(4) Loan Agreement for Rs. 35 Mn Primary Mortgage bond for Rs. 35 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17PSecondary Mortgage bond for Rs. 17.6 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17P
Medium Term Loan for Rs. 35 Mn AWPLR+2.5% p.a 60 Monthly Installments
(5) Overdraft Agreement for Rs. 60 MnHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn
Overdraft of Rs. 60 Mn AWPLR+2.5% p.a On Demand
(6) Short term Import Loan Agreement for Rs. 100 MnHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn
Short term Import Loan for Rs. 100 Mn
AWPLR+2.5% p.a Repayable over 180 days
(7) Accepted Bills of ExchangedHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn
Acceptance facility for Rs. 100 Mn. Prevailing Rate of the Bank
Repayable over 180 days
(8) Documentary Credit AgreementRelative Bills of Exchange and Shipping DocumentsHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn
Documentary Credit facility for Rs. 100 Mn
Prevailing Rate of the Bank
Sight/ Usance up to 180 days
(9) Master Counter indemnity of the Company for Rs. 25 Mn
Bank Guarantee Facility for Rs. 25 Mn 1.25% p.a 1 Year, Renewable
Annual Report 2016 / 2017
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Sierra Cables PLC
Name of the Bank
Assets Pledged Facility Obtained Interest Rate / Commission Rate
Repayment Terms
Sierra Cables East Africa LimitedCommercial Bank of Ceylon PLC
(1) i). Corporate Guarantee for Rupee equivalent of USD 990,000.
One-Off letter of Credit facility for USD 990,000.
Sight/Usance 0.25% p.q
Repayable over 90 days
ii). Lien over documents of title to goods under importiii). Individual drafts covering the documents relating to goods released on acceptance to be lodged with the bank.
(2) i). Corporate Guarantee for Rupee equivalent of USD 990,000.ii). General term and conditions relating to loan to be signed.
Term Loan Facility for USD 990,000 LIBOR+5% p.a 60 monthly installments One year grace period
35. Related Party Disclosure
The Company carried out transactions in the ordinary course of the business on an arm’s length basis at commercial rates with parties who are defined as Related Parties as per the Sri Lanka Accounting Standard - LKAS 24 ‘Related Party Disclosures’, except for the transactions that the Key Management Personnel (KMP) have availed under schemes uniformly applicable to all staff at concessionary rates.
35.1 Transactions with Related Parties
(i) Companies within the Group engage in trading transactions under normal commercial terms and conditions.
Name of the Company Nature of the Transactions Transaction Value Balance Outstanding as at 31st March
2017Rs.
2016Rs.
2017Rs.
2016Rs.
Transactions with Subsidiary
Companies
Sierra Power (Private) Limited Amount Paid for Administration
Expenses 2,728,221 3,095,884 62,574,480 59,846,259
Sierra Industries (Private) Limited Amount Paid for Administration
Expenses 2,414,612 2,959,854 213,895,061 134,638,698
Funds Received from Sierra Industries
Customers (275,500) (266,191)
Interest chargers on import loans - 1,024,411
Funds Transfers /settlements 28,000,000 27,048,000
Payments for Custom 33,224,691 -
Payments for Suppliers 15,892,560 -
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
103
Sierra Cables PLC
Name of the Company Nature of the Transactions Transaction Value Balance Outstanding as at 31st March
2017Rs.
2016Rs.
2017Rs.
2016Rs.
Sierra Industries (Private) Limited Purchase of Goods (85,817) - (85,817) (19,838)
Settlement of Invoices 19,838 - - -
Sierra Cables East Africa Limited Fund transfers 47,741,800 20,305,265 12,071,978 2,854,664
Amount Paid for Pre operation
Expenses 3,412,949 2,854,664
Transfer to share capital (41,937,435) (20,305,265)
Transactions with Other Related
Companies
Sierra Construction Limited Sale of Goods 109,703,133 158,627,411 99,902,329 100,626,267
Settlement of Invoices (110,427,071) (140,924,031)
Sierra Civil Engineering and
Construction (Private) Limited
Loan Settlement
(385,000) (1,300,000) - 385,000
Sierra Electrical Engineering (Private)
Limited
Sale of Goods
- - 616,785 616,785
Sierra Technology Holdings
(Private) Limited
Sale of Goods
9,704,299 4,877,056 9,255,105 4,052,915
(Previously Known as Sierra
Information Technologies (Private)
Limited)
Settlement of Invoices
(4,502,109) (3,186,166)
Sierra Water Works (Private) Limited - - 2,936 2,936
Sierra Readymix (Private) Limited Sale of Goods 236,161 43,418 236,161 57,437
Settlement of Invoice (57,437) (31,343)
Sierra Development (Private) Limited Sale of Goods 1,085,188 55,868 - 55,868
Settlement of Invoice (1,141,056) (217,654)
Sierra Construction & General Sales
Join Venture
Sale of Goods
- - (5,583) 859
Settlement of Invoice (6,442) -
Tea Leaf Holding (Private) Limited Provision made for Impairment - (2,500,000)
Sierra Piling (Private) Limited Sale of Goods - 89,672 - 89,672
Settlement of Invoice (89,672) -
Annual Report 2016 / 2017
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Sierra Cables PLC
35.2 Key Management Personnel
Key Management personnel are those having authority and responsibility for planning ,directing and controlling the activities of the Group . Accordingly the Directors of the Company (including Executive and Non Executive Directors )have been classified as Key Management Personnel of the Company, Group.
Transactions with Key Management Personnel
(i) Loans to Directors
No loans have been given to the Directors of the Company.
(ii) Key Management Personnel Compensation
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Directors' Fees 7,560,000 6,600,000 7,560,000 5,500,000
Short Term Employee Benefits 14,047,250 11,213,750 14,047,250 11,213,750
21,607,250 17,813,750 21,607,250 16,713,750
(iii) Other Transactions With Key Management Personnel
The names of Directors of Sierra Cables PLC, who are also directors of subsidiaries and equity accounted investees companies are stated on page 55.
Details of directors and their share holdings are given on page 55. There were no other transactions with key management personnel other than those disclosed in Note 35 to the Financial Statement.
36. Going Concern
Sierra Industries (Private) Limited
The Company has recorded an accumulated loss amounting to Rs. 216,457,310/- as at 31st March 2017 and its Current Liabilities exceeded its Current Assets as at 31st March 2017 by Rs. 191,298,263/-. Further, the Company's net assets are less than half of its stated capital and faces serious loss of capital situation as at the reporting date. Therefore, the management has taken the following mitigating actions to ensure that the Company will be able to continue as a going concern.
Improvements to the quality of products, cost minimization by improving the productivity, minimize the wastage, introducing new product to the market, improved effective management and a tenders worth of Rs. 217 Mn has been confirmed in addition to normal sales. The Board expects this subsidiary to turn around by the end of the next financial year.
Further, Sierra Cables PLC, the parent of the Company has assured to provide necessary financial assistantance and support as necessary to the Company to manage day to day operations with the intention to continue the business without any interruption as per the letter of comfort dated 10th August 2017.
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
105
Sierra Cables PLC
37. Financial Risk Management
37.1 Introduction and Overview
The Group has exposure to the following risks from its use of financial instruments:
• Credit Risk
• Liquidity Risk
• Market Risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risks, and the Group’s management of capital.
Risk Management Framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.
i. Credit Risk
Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations, and this principally arises from the Group’s receivables from customers.
Exposure to Credit Risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows;
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Trade Receivables 1,524,292,128 1,090,617,177 1,329,003,994 969,566,099
Amounts due from Related Companies 110,013,316 105,887,739 398,554,834 303,227,360
Balances with Banks 78,771,458 80,234,093 73,481,406 73,005,443
1,713,076,901 1,276,739,009 1,801,040,234 1,345,798,902
Trade Receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The management has established a credit policy under which each new customer is analysed individually for credit worthiness before the group standard payment and delivery terms offered.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of Trade Receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.
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106
Sierra Cables PLC
The aging of trade receivables at the reporting date was as follows:
2017 2016
As at 31st MarchGross Balance
Rs.Impairment
Rs.Gross Balance
Rs.Impairment
Rs.
Group
Past due 0-60 days 793,726,154 2,182,029 638,917,507 1,549,643
Past due 61-180 days 564,521,209 30,570,232 266,809,830 23,861,358
Past due 181-240 days 32,036,357 3,287,980 35,397,532 4,063,769
Past due 241-365 days 41,986,994 7,529,053 13,580,159 2,728,091
More than one year 92,021,415 92,021,414 135,912,148 135,912,476
Total 1,524,292,128 135,590,708 1,090,617,177 168,115,337
Company
Past due 0-60 days 751,388,717 2,182,029 608,640,911 1,549,643
Past due 61-180 days 411,570,512 6,398,090 176,035,348 4,479,658
Past due 181-240 days 32,036,357 3,287,980 35,397,532 4,063,769
Past due 241-365 days 41,986,994 7,529,053 13,580,159 2,728,091
More than one year 92,021,415 92,021,415 135,912,148 135,912,476
Total 1,329,003,994 111,418,566 969,566,099 148,733,637
The maximum exposure to credit risk for trade and other receivables is the carrying amounts at the end of the reporting period, and it is analysed by geographic regions as follows,
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Local Debtors 1,437,958,256 1,042,375,210 1,246,702,201 921,324,132
Foreign Debtors 86,333,872 48,241,967 82,301,793 48,241,967
1,524,292,128 1,090,617,177 1,329,003,994 969,566,099
Provision for Impairment (135,590,708) (168,115,337) (111,418,566) (148,733,637)
1,388,701,420 922,501,840 1,217,585,428 820,832,462
ii. Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
107
Sierra Cables PLC
As at 31st March 2017
Within 1 year
Rs.
Between1-2 years
Rs.
Between2-5 years
Rs.
More than 5 years
Rs.
Total
Rs.
Group
Non- Derivative Financial Liabilities
Trade and Other Payables 972,584,670 - - - 972,584,670
Borrowings 1,313,103,925 66,734,209 4,750,000 - 1,384,588,134
Bank Overdraft 98,056,157 - - - 98,056,157
As at 31st March 2016
Within 1 year
Rs.
Between1-2 years
Rs.
Between2-5 years
Rs.
More than 5 years
Rs.
Total
Rs.
Group
Non-Derivative Financial Liabilities
Trade and Other Payables 412,316,074 - - - 412,316,074
Borrowings 866,995,717 78,688,444 63,574,647 - 1,009,258,808
Bank Overdraft 72,104,387 - - - 72,104,387
As at 31st March 2017
Within 1 year
Rs.
Between1-2 years
Rs.
Between2-5 years
Rs.
More than 5 years
Rs.
Total
Rs.
Company
Non- Derivative Financial Liabilities
Trade and Other Payables 861,280,483 - - - 861,280,483
Borrowings 1,114,521,590 51,863,998 4,750,000 - 1,171,135,588
As at 31st March 2016
Within 1 year
Rs.
Between1-2 years
Rs.
Between2-5 years
Rs.
More than 5 years
Rs.
Total
Rs.
Company
Non- Derivative Financial Liabilities
Trade and Other Payables 305,965,657 - - - 305,965,657
Borrowings 782,915,668 49,990,821 56,614,000 - 889,520,489
iii. Market Risk
Market risk is the risk that changes in market prices, such as interest rates, equity prices, foreign exchange rates- will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on risk.
(a) Currency Risk
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than Sri Lankan Rupees. The foreign currencies in which these transactions primarily denominated are United Stated Dollars (USD).
Annual Report 2016 / 2017
108
Sierra Cables PLC
Exposure to Currency Risk
The summarised quantitative data about the Group’s exposure to currency risk as reported to the Management of the Group based on its risk management policy was as follows:
Group Company
As at 31st March2017USD
2016USD
2017USD
2016USD
Trade Receivables 584,284 326,180 556,996 326,180
Trade Payables (5,432,146) (1,896,772) (5,339,659) (1,668,644)
Net Statement of Financial Position Exposure (4,847,862) (1,570,592) (4,782,663) (1,342,464)
Exposure to Currency Risk
As at 31st March2017USD
2016USD
Trade Payables - Foreign Creditors 5,432,146 1,896,772
Gross Statement of Financial Position Exposure 5,432,146 1,896,772
Exchange Rates
Average Rate Reporting Date Spot Rate
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
USD 147.29 143.90 154.30 147.90
Sensitivity Analysis
A strengthening of the LKR, as indicated below, against the USD at 31st March 2017 would have increased/ (decreased) the Equity and Profit or Loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant.
Strengthening Weakening
GroupProfit or Loss
Rs.Profit or Loss
Rs.
As at 31st March 2017
USD (10% Movement) (83,818,016) 83,818,016
As at 31st March 2016
USD (10% Movement) (28,053,252) 28,053,252
(b) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument fluctuate because of changes in market interest rates. The Groups exposure to the risk of changes in market interest rates relates primarily to the Group’s long term debt obligation .The Group utilises various financial instruments to manage exposures to interest rate risks .
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
109
Sierra Cables PLC
At the reporting date, the Group’s interest-bearing financial instruments were as follows:
Carrying Amount
As at 31st March2017
Rs.2016
Rs.
Variable Rate Instruments
Financial Liabilities
Long Term Loans 178,390,323 247,080,474
Import Demand Loans 1,206,197,811 768,178,333
Bank Overdrafts 98,056,157 72,104,387
1,482,644,291 1,087,363,194
Cash Flow Sensitivity Analysis for Variable Rate Instruments
The Group is exposed to changes in market interest rates through bank borrowings at variable interest rates.
Profit or Loss
As at 31st March 2017100 bp Increase
Rs.100 bp Decrease
Rs.
Variable Rate Instruments (14,826,443) 14,826,443
Cash Flow Sensitivity (Net) (14,826,443) 14,826,443
37.2 Capital Management
The Board’s policy is to maintain a strong capital base so as to maintain share holder, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital and level of dividends to ordinary shareholders.
The Group’s Net Debt to adjusted Equity ratio at the end of the reporting period was as follows:
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Total Liabilities 2,736,345,084 1,713,388,923 2,319,851,651 1,417,732,727
Less: Cash and Cash Equivalents (78,771,458) (80,234,093) (73,481,406) (73,005,443)
Net Debt 2,657,573,625 1,633,154,830 2,246,370,245 1,344,727,284
Total Equity 1,679,694,650 1,546,612,947 1,708,109,764 1,604,253,813
Net Debt to Equity Ratio 158% 106% 132% 84%
There were no changes in the Group’s approach to Capital Management during the year and the Group is not subject to externally imposed capital requirements.
Annual Report 2016 / 2017
110
Sierra Cables PLC
Notes to the Financial Statements Contd.
38. Fair Value Measurement
The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.
Level 1 : Quoted market price (unadjusted) in an active market for an identical instrument.
Level 2 : Valuation techniques based on observable inputs.
Level 3 : Valuation techniques using significant unobservable inputs
38.1 Financial Instruments carried at Fair Value and Valuation Bases
The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in the fair value hierarchy into which the fair value measurement is categorized..
Company
As at 31st March 2017Level 1
Rs.Level 2
Rs.Level 3
Rs.Total
Rs.
Available for Sale Investments 29,142,315 - - 29,142,315
29,142,315 - - 29,142,315
Company
As at 31st March 2016Level 1
Rs.Level 2
Rs.Level 3
Rs.Total
Rs.
Available for Sale Investments 44,755,691 - - 44,755,691
44,755,691 - - 44,755,691
38.2 Fair Value of Financial Instruments carried at Amortized Cost
The following table summarizes the carrying amounts and the Group’s estimate of fair values of those financial assets and liabilities not presented on the Group’s Statement of Financial Position at fair value.
2017
Carrying Amount
Rs.Fair Value
Rs.
Assets
Cash and Cash Equivalents 78,771,458 78,771,458
Trade and Other Receivables 1,673,034,765 1,673,034,765
Amounts due from Related Companies 110,013,316 110,013,316
Liabilities
Trade and Other Payables 972,584,670 972,584,670
Interest Bearing Borrowings 1,384,588,134 1,384,588,134
Bank Overdraft 98,056,157 98,056,157
Amounts due to Related Companies 5,583 5,583
Annual Report 2016 / 2017
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Sierra Cables PLC
Cash and Cash Equivalents
The carrying amount of the cash and cash equivalents and balances with banks approximate the fair value as these are short term in nature.
Trade and Other Receivables
Trade and other receivables are expected to be settled within one year from the reporting date and hence the discounting impact would be immaterial. Therefore carrying amount approximates the fair value as at the reporting date.
Trade and Other Payables
Trade and other payables are expected to be settled within one year from the reporting date and hence the discounting impact would be immaterial. Therefore carrying amount approximates the fair value as at the reporting date.
Interest Bearing Borrowings
Long term borrowings are repriced either monthly, quarterly or semi annually in line with the changes in the market rates. Hence carrying value of these borrowings approximates the fair value since they are short term in nature and hence carrying value approximate the fair value.
(viii) Categorization of Financial Assets and Liabilities as at the Reporting Date
Classification Fair Value
Group
Loans and Receivables
Rs.
Other Financial
LiabilitiesRs.
Level 1
Rs.
Level 2
Rs.
Level 3
Rs.
Financial Instrument
Trade and Other Receivables 1,673,034,765 - - - 1,673,034,765
Amount due from Related Parties 110,013,316 - - - 110,013,316
Cash and Cash Equipments 78,771,458 - - 78,771,458 -
Financial liabilities
Trade and Other Payables - 972,584,670 - - 972,584,670
Interest Bearing Borrowings - 1,384,588,134 - - 1,384,588,134
Amount due to Related Parties - 5,583 - - 5,583
Bank Overdraft - 98,056,157 - - 98,056,157
Annual Report 2016 / 2017
114
Sierra Cables PLC
10 Year SummaryFo
r the
yea
r end
ed 3
1 M
arch
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Ope
rati
ng R
esul
ts
Turn
over
1,4
89,3
25,6
24
1,5
15,3
18,2
33
1,0
37,4
25,5
35
1,4
88,9
80,1
03
2,4
76,0
58,5
20
2,1
41,3
53,9
95
2,2
84,9
34,5
49
3,4
82,5
33,1
54
3,0
36,0
10,8
58
4,0
44,4
49,4
73
Gro
ss P
rofit
332
,724
,286
2
30,7
18,9
71
220
,372
,206
2
56,3
97,8
20
465
,475
,222
3
05,0
53,2
24
317
,446
,509
7
41,9
51,1
85
630
,701
,896
8
78,8
93,4
14
Profi
t Fr
om O
pera
tion
s 2
77,5
33,3
24
160
,014
,485
1
76,3
23,4
84
90,
731,
337
299
,500
,503
1
40,2
87,4
80
(208
,594
,160
) 4
74,9
71,5
89
377
,663
,501
4
98,8
62,1
00
Profi
t Bef
ore
Asso
ciat
e Co
mpa
ny's
Shar
e of
Pro
fit 1
74,6
94,1
15
25,
781,
080
108
,286
,675
4
7,55
2,97
5 1
45,3
65,2
14
(18,
066,
589)
(376
,172
,873
) 3
59,1
85,6
90
273
,134
,238
3
46,7
94,7
64
Profi
t Aft
er T
ax 1
29,2
37,6
27
26,
342,
486
108
,148
,358
1
6,11
6,63
3 1
20,3
33,8
88
(23,
181,
433)
(306
,478
,634
) 2
50,2
23,6
30
191
,013
,313
2
65,4
59,5
38
As
at 3
1 M
arch
Ass
ets
Prop
erty
Pla
nt &
Equ
ipm
ent
433
,763
,317
4
85,3
87,0
38
494
,452
,431
5
14,7
46,9
76
764
,713
,420
1
,179
,081
,707
1
,206
,366
,843
1
,251
,329
,990
1
,223
,660
,989
1
,114
,052
,321
Oth
er N
on C
urre
nt A
sset
190
,025
,284
2
03,6
29,2
48
113
,020
,866
1
51,7
35,1
24
175
,862
,949
1
60,1
41,8
63
132
,512
,794
4
8,28
9,45
9 4
8,77
2,07
4 3
9,62
2,55
2
Curr
ent
Ass
ets
1,2
10,1
65,5
31
1,2
10,2
63,0
60
1,4
71,8
52,6
28
1,8
21,0
08,9
72
1,8
50,1
46,3
11
2,0
33,4
42,9
94
1,6
79,0
46,1
88
1,7
93,2
51,8
61
1,9
87,5
68,8
05
3,2
62,3
64,8
61
Tota
l Ass
et 1
,833
,954
,132
1
,899
,279
,346
2
,079
,325
,925
2
,487
,491
,072
2
,790
,722
,680
3
,372
,666
,564
3
,017
,925
,825
3
,092
,871
,310
3
,260
,001
,867
4
,416
,039
,734
Liab
iliti
es
Long
Ter
m D
ebt
21,
564,
397
80,
174,
171
69,
435,
262
40,
405,
866
64,
899,
854
223
,720
,387
1
85,6
01,5
77
188
,532
,384
1
42,2
63,0
90
71,
484,
209
Oth
er N
on C
urre
nt L
iabi
litie
s 4
9,57
8,91
7 5
5,60
4,00
3 5
7,95
4,75
2 6
0,21
0,00
1 6
7,13
9,54
2 1
70,4
03,7
54
106
,998
,021
1
62,5
80,8
67
217
,033
,415
2
01,0
02,0
05
Shor
t Ter
m D
ebt
35,
317,
723
15,
743,
986
45,
152,
092
35,
406,
691
78,
700,
864
7,7
66,5
97
128
,080
,471
3
5,39
3,56
6 7
2,10
4,38
7 9
8,05
6,15
7
Oth
er C
urre
nt L
ibili
ties
451
,937
,460
4
72,3
55,3
66
523
,233
,642
1
,051
,167
,433
1
,205
,822
,048
1
,230
,626
,382
1
,230
,159
,988
1
,245
,180
,730
1
,285
,901
,220
2
,359
,206
,714
Shar
ehol
ders
' Fun
ds
Shar
e Ca
pita
l 8
94,5
65,8
98
894
,565
,898
8
94,5
65,8
98
894
,565
,898
8
94,5
65,8
98
894
,565
,898
8
94,5
65,8
98
894
,565
,898
8
94,5
65,8
98
894
,565
,898
Rese
rves
380
,989
,737
3
80,8
35,9
22
488
,984
,280
4
23,8
15,7
16
450
,152
,746
7
61,9
24,9
58
461
,207
,379
5
55,8
12,1
47
644
,158
,268
7
86,9
71,2
22
Min
orit
y In
tere
st -
-
-
-
29
,451
,690
17,6
58,5
87 1
1,31
2,49
1 1
0,80
5,72
0 3
,975
,590
(1
,842
,470
)
Rati
os
Tota
l Ass
ets/
Equi
ty 1
.44
1.4
9 1
.50
1.8
9 2
.03
2.0
1 2
.21
2.1
2 2
.11
2.6
3
Turn
over
/Ass
ets
0.8
1 0
.80
0.5
0.
600.
890.
630.
761.
130.
930.
92
Net
Mar
gin(
%)
8.7
0 1
.70
10.
40
1.0
8 4
.86
(1.0
8) (1
3.41
)7.
19%
6.2
9 6.
56%
Retu
rn o
n Eq
uity
(%)
10.
13
2.0
7 7
.82
1.2
2 8
.95
(0.7
7) (2
1.46
)18
.10%
12.
41
16.1
3%
Retu
rn o
n A
sset
s(%
) 7
.05
1.3
9 5
.20
0.6
5 4
.31
(0.7
2) (1
0.16
)8.
09%
5.8
6 6.
01%
Shar
e In
form
atio
n
Earn
ings
per
Sha
re0.
240.
050.
20.
030.
22 (0
.02)
(0.5
4) 0
.49
0.36
0.50
Pric
e Ea
rnin
gs R
atio
7.49
22.4
510
.93
180.
1014
.67
(104
.53)
(3.1
4) 8
.19
8.1
6 6
.23
Net
Ass
ets
Per s
hare
2.37
2.37
2.57
2.45
2.50
3.08
2.52
2.7
0 2
.86
3.1
2
Annual Report 2016 / 2017
115
Sierra Cables PLC
Quarterly PerformanceIncome Statement
2016 / 17
For the Three Months Ended,30th June
Rs.30th September
Rs.31st December
Rs.31st March
Rs.
Company
Revenue 728,704,242 1,011,033,700 1,002,545,208 982,698,624
Cost of Sales (561,268,154) (754,852,661) (788,117,067) (776,097,660)
Gross Profit 167,436,088 256,181,039 214,428,141 206,600,964
Other Income 725,170 4,334,654 18,329,721 3,512,980
Selling and Distribution Expenses (45,031,457) (62,535,860) (55,020,213) (50,898,098)
Administrative Expenses (21,192,492) (25,656,561) (21,691,204) (86,941,497)
Other Operating Expenses (16,000,000) (14,000,000) (14,000,000) (13,500,000)
Profit / (Loss) from Operations 85,937,309 158,323,272 142,046,445 58,774,349
Net Finance Costs (21,018,259) (28,872,572) (35,649,682) (38,059,757)
Profit/(Loss) Before Taxation 64,919,050 129,450,700 106,396,763 20,714,592
Income Tax Expense (10,000,000) (25,000,000) (25,000,000) (21,809,721)
Profit/(Loss) for the year 54,919,050 104,450,700 81,396,763 (1,095,129)
Statement of Financial Position
2016 / 17
As at,30th June
Rs.30th September
Rs.31st December
Rs.31st March
Rs.
Company
Assets 3,193,933,506 3,479,311,316 3,843,262,173 4,031,089,450
Liabilities 1,537,936,237 1,715,832,624 1,998,771,733 2,319,851,651
Net Assets 1,655,997,269 1,763,478,692 1,844,490,440 1,711,237,799
Stated Capital 894,565,898 894,565,898 894,565,898 894,565,898
Reserves 761,431,371 868,912,794 949,924,542 816,671,901
Stated Capital and Reserves 1,655,997,269 1,763,478,692 1,844,490,440 1,711,237,799
Annual Report 2016 / 2017
116
Sierra Cables PLC
Notice of MeetingSierra Cables PLCNotice of the 14th Annual General Meeting
NOTICE IS HEREBY GIVEN that the 14th Annual General Meeting of SIERRA CABLES PLC (the Company) will be held on
29th September 2017 at 10.00 a.m. at The Sri Lanka Foundation Institute, 100, Independence Square, Colombo 07.
Agenda
1. To receive and consider the Report of the Directors on the State of Affairs of the Company and the Audited Financial Statements for the year ended 31st March 2017 and the Report of the Auditors thereon.
2. To re-elect Mr. W.A. P.Perera who retire by rotation in accordance with Article 91 of the Articles of Association of the Company and being eligible, offer himself for re-election.
3. To re-elect Mr. J.H.P. Ratnayeke who retire by rotation in accordance with Article 91 of the Articles of Association of the Company and being eligible, offer himself for re-election.
4. To re-elect Ms. G. S. M. Irugalbandara who retire by rotation in accordance with Article 91 of the Articles of Association of the Company and being eligible, offer herself for re-election.
5. To re-appoint Messrs KPMG, Chartered Accountants as Auditors of the Company for the ensuing year and to authorize the Directors to determine their remuneration
BY ORDER OF THE BOARD OF DIRECTORS OF
SIERRA CABLES PLC
P.R. SECRETARIAL SERVICES (PRIVATE) LIMITED
Secretaries
At Colombo, this 29th August 2017
Note:
• A Member entitled to attend and vote at the meeting, is entitled to appoint a Proxy to attend and vote instead of him/her.
• A Proxy need not be a Member of the Company.
• A Member wishing to vote by Proxy at the meeting may use the Form of Proxy form enclosed.
• Any member or Proxy holder attending the meeting is kindly requested to bring this report.
• The completed Form of Proxy should also be deposited at the Registrars of the Company, SSP Corporate Services (Private) Limited,101, Inner Flower Road, Colombo 03 not less than forty eight (48) hours before the time appointed for holding of the meeting.
• For security reasons, Members. Proxy holders are kindly advised to bring along with them their National Identity Card or similar for of acceptance identity when attending the meeting.
Annual Report 2016 / 2017
117
Sierra Cables PLC
Form of ProxySierra cables plcI/We……………………………………………………………………………………………………………………………….of…
……………………………………………………………………………………being a Member/Member* of the above named
Company, hereby appoint (1)……………………………………………………….of………………………………………………
………………………………………………..failing him/her.
(2) Mr. W. A. P. Perera, or failing him (3) Mr. D. S. Panditha, or failing him (4) Ms. G. S. M. Irugalbandara, or failing her (5) Mr. J. H. P. Ratnayeke, or failing him (6) Mr. E.A.D.T.B. Perera, or failing him (7) Prof. A. K. W. Jayawardane, or failing him (8) Eng. B. W. N. Rupasinghe, or failing him (9) Mr. M. N. Gunasekara, or failing him (10) Ms. S. N. Lokuge or failing her
as my/our* Proxy to represent me/us* and vote and speak for me/us* on my/our* behalf at the 14th Annual General Meeting of the Company to be held on 29th September 2017 at 10.00 a.m. at The Sri Lanka Foundation Institute, 100, Independence Square, Colombo 07 and at ever poll which may be taken in consequence of the aforesaid meeting and at any adjournment thereof.
I/We Indicate My/Our Vote On The Resolutions Below As Follows;
1. To receive and consider the Audited Financial Statements for the year ended 31st March 2017 and the Report of the Auditors thereon.
2. To re-elect Mr. W.A.P.Perera who retire by rotation in accordance with Article 91 of the Articles of Association of the Company and being eligible, offer himself for re-election.
3. To re-elect Mr.J.H.P.Ratnayeke who retire by rotation in accordance with Article 91 of the Articles of Association of the Company and being eligible, offer himself for re-election.
4. To re-elect Ms. G. S. M. Irugalbandara who retire by rotation in accordance with Article 91 of the Articles of Association of the Company and being eligible, offer herself for re-election.
5. To re-appoint Messrs KPMG, Chartered Accountants as Auditors of the Company for the ensuing year and to authorize the Directors to determine their remuneration
Signed this ……………day of…………………………..2017.
……………………………………Signature of shareholder
AgainstFor
Annual Report 2016 / 2017
118
Sierra Cables PLC
Instructions For The Completion Of Proxy
1. Please perfect the form of Proxy after filling in legibly your full name and address and by signing in the space provided and fill-in the date of signature.
2. Please return the completed form to the Company after deletion of one or other of the alternate words indicated by asterisks in the body of the form.
3. The completed form of Proxy should be deposited at the Office of the Company Registrars at SSP Corporate Services (Private) Limited at No.101, Inner Flower Road, Colombo 3 not less than 48 hours before the time appointed for the holding of the meeting.
4. If the Proxy has been signed by an Attorney, the relative Power of Attorney should accompany the completed Proxy for registration, if such Power of Attorney had not been registered with the Company.
5. In the case of a Company/Corporation, the Proxy must be under its Common Seal which should be affixed and attested in the manner prescribed by its Articles of Association/Act of Incorporation.
Form of Proxy Contd.
Annual Report 2016 / 2017
119
Sierra Cables PLC
Notes
Annual Report 2016 / 2017
120
Sierra Cables PLC
Corporate InformationName of the Company
Sierra Cables PLC
Company Re-registration No.
PQ 166 (under Companies Act No.07 of 2007)
Registered Office
No.112, Havelock Road, Colombo 05
Company Secretaries
P.R. Secretarial Services (Private) Limited No.59, Gregory’s Road Colombo 07.
Tel : 0112671439, 0112671441
Email : [email protected]
Auditors
KPMG, (Chartered Accountants) No.32 A, Sir Mohomed Macan Marker Mawatha, P.O. Box 186, Colombo 03.
Tel : 0115426426
Fax : 0112445872
E-mail : [email protected]
Legal Advisors
Paul Ratnayeke Associates
No.59, Gregory’s Road Colombo 07.
Tel : 0112697893, 0112697894
Email : [email protected]
Bankers
Commercial Bank of Ceylon PLC Sampath Bank PLC Bank of Ceylon People’s Bank DFCC Bank Cargills Bank Limited
Subsidiary Companies
Sierra Industries (Private) Limited Sierra Power (Private) Limited Sierra Cables East Africa Limited
Associate Companies
T & G Lanka (Private) Limited Tea Leaf Resorts (Private) Limited
Domicile and Legal Form
Sierra Cables PLC is a limited liability company incorporated and domiciled in Sri Lanka.
The Registered office of the Company is at 112,Havelok Road, Colombo 05 and principle place of business is located at 39/1A, Galvarusa Road, Korathota, Kaduwela.
Tel : 0114412000-4
Fax : 0112770291, 0114412573
E-mail : [email protected]
Web : www.sierracables.com
Issued Ordinary shares of the Company is stated as listed on the Colombo Sock Exchange since 22nd November 2005.
Principal Activities and Nature of Operations
The principal activity of the company is manufacturing and sales of wires and cables.
Parent Enterprises and Ultimate Parent Enterprise
In the Directors opinion, the company’s ultimate parent undertaking and controlling party is Sierra Holdings (Private) Limited which is incorporated in Sri Lanka.
Number of Employees
The number of employees of the Group at the end of the year was 318 (2015/16 - 282).