glance of...renowned with iso 9001, iso 14001, ohsas 18001 as well as sls certiﬁcations to name a...

This past year has been a remarkable

journey with our stakeholders where

excellence is demonstrated in all segments

of the business. Our strategic moves beyond

the borders are expected to strengthen the

foundation to build our future success upon.

Investing in the rapidly growing East African

region is just one example of the fact that

we take our shareholders’ interests serious

whilst creating the finest value.

GLANCE OF EXCELLENCE

We are focused in delivering the highest quality for the readers of this report and welcome your suggestions and comments.

To view this report online; Scan the QR Code with your smart device.

Annual Report 2015/2016 Sierra Cables PLC 3

ABOUT THEREPORTSierra 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 2015 to 31 March 2016. 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

reports in this report and the supplementary notes.

4 Sierra Cables PLC Annual Report 2015/2016

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.

Today we have surpassed the 3 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, maintain 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 a manufacturing plant overseas through

our landmark investment in East Africa.

ABOUT US

37Years of operations in Sri Lanka

5000+Livelihoods through directand indirect opportunities

99.9%Purity of our input CopperSourced only through imports

Rs.1,800Million Market Capitalizationas at 31st March 2016

20%Dividend Payments

Sierra Cables

East Africa Ltd.Expected to supply power cables toAfrican Region

Sierra Industries (Pvt) Ltd.PVC pipe manufacturing factory

EQUIPPED TO DELIVER THE BEST...


GROUP FINANCIAL HIGHLIGHTSFinancial Year Ended 31st March 2016 2015

Rs. Rs.

Gross Turnover (Including VAT) 3,036,010,858 3,482,533,154

Profit Before Tax 273,428,180 358,949,513

Profit After Tax 193,103,960 250,223,630

Shareholders’ Funds 1,546,612,947 1,461,183,764

Issued & Fully Paid Number of Shares 537,512,430 537,512,430

Total Assets 3,260,001,870 3,092,871,311

Market Capitalization (Million) 1,800 2,150

Dividend Payout Ratio 54.05 40.8

Current Ratio 1.4 1.4

Return on Capital Employed (ROCE) 20 26

Per Share (LKR)

Market Value

Earnings 0.37 0.49

Dividends 0.20 0.20

Net Assets 2.88 2.70

0 400 800

(2016)

(2015)

(2014)

0 2000 4000

(2016)

(2015)

(2014)

Gross Profit (Rs. Mn) Group Turnover (Rs. Mn)

Dividend Per Share (Rs.)

ROE %

12.5%Government Taxes Paid (Rs. Mn)

78.5

0.0

0.1

0.2

(2014)(2015)(2016)

Earnings Per Share (Rs.)

-0.6

0.0

0.6

(2014)(2015)(2016)

“We have distributed overRs.107 million as Dividends for this financial year maintaining our Dividend Policy’’

Dividend Payout Ratio

54.05%

Profit Before Tax (Rs.)

273,428,180


OUR VISIONBeing the bridge in energizing the community.

MISSION STATEMENTAchieve a continuous growth to enhancethe stakeholders’ value while offering ahigh quality product.

Become a reputed organization by promoting sustainable development.

Uplift the living standards of Sierra Cables family.


OUR VALUESAs a responsible and ethical corporate citizen, Sierra Cables PLC carries out its affairs based on a set of values. Every member of Sierra Cables family is committed to follow them.

Quality

Integrity Passion Service

Productivity

We are committed to produce highest quality

products for our customers.

We will embrace challenges with passion and

aggressively pursue our goals to reach the pinnacle.

We believe in truth, justice and fair play together with

professionalism above everything.

We always strive for excellence in serving our

customers and making sure that the service at the

required level.

As a manufacturer,we always try to take the

maximum output fromresources without

exploiting them.


OUR COMMITMENT TOEXCELLENCEExcellence should be awarded. Awards should be excellent. When

both fused together, emerge the superiority and brilliance. These

make an organization a forerunner in the race. These distinguish an

outstanding performer from the rest. We, Sierra Cables excel in the

business arena with ascendancy and fineness. We are bravura in our

field. Thus, our excellent business performance has been recognized

by many International, National, Government, Private institutions

and Organizations.

UDC Best Cable Manufacture of the YearThe UDC Business Awards 2011 was an international awards program which recognized the success, innovation of a business leaders and organizations. UDC Business Awards honors business industry leaders through the acknowledgment of innovative business processes, product development, sustainability and overall business success.

IESL Engineering Excellence AwardSierra Cables was a recognized by Institute of Engineers of Sri Lanka awarding "Excellence in Engineering" in 2011 for the manufacturing section. This is in recognition of the excellence in the manufacturing sector of cables over three decades in Sri Lankan cable industry.

Sri Lanka Malaysia Business Awards Sierra Cable 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 economy.

CNCI Achiever of Industrial Excellence Merit AwardsSierra 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, about relations and adherence to statutory requirements.

Quality Crown Award Sierra Cables is proud to pronounce that, “we won the challenge”. Beyond local boundaries we have been able to excel the c ass of international Quality standards. This 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.


CHAIRMAN’SMESSAGE

OUR RESULTS RECORDED

A SIGNIFICANT REVENUE

GROWTH, IN EXCESS

OF 20%, IN THE DEALER

MARKET, PROJECTS AND

EXPORT MARKET DESPITE

THE BACKDROP IN THE

REVENUE STEMMING FROM

THE GOVERNMENT TENDER

CONTRACTS COMPARED TO

THE LAST FINANCIAL YEAR.Dear Shareholders,

I take pleasure in welcoming our shareholders to the thirteenth

Annual General Meeting of Sierra Cables PLC and in presenting

to you, the Annual Report and Financial Statements for the year

ended 31st March 2016. I would like, at the outset, to take a moment

to briefly reflect upon the external environment that formed the

landscape to the operational performance of the company this year.

In the global front, whilst advanced economies registered modest

recovery, most emerging and developing economies faltered.

Declining commodity prices, particularly oil prices, weak aggregated

demand, worsening terms of trade, heightened geopolitical tensions

and the gradual slowdown in China, were some of the fundamental

factors that hindered global economic growth. Consequently, global

economic growth moderated to 3.1% in 2015 compared to 3.4% in the

previous year.

The local economy too, recorded a dismal performance as activities

slowed against the backdrop of a Parliamentary Election that led to

the birth of a coalition government. It was a year that the nation had

to reckon with natural disasters, specifically floods and landslides

that affected key sectors of the economy. Moreover, weak global

demand for the country’s key exports, a widened budget deficit

and depleted foreign exchange reserves worsened the situation,

thereby obliterating the benefits associated with declining oil prices,

moderating inflation and an improved current account balance.

With Central Bank tightening monetary policy in response to

mounting stress on the balance of payments and foreign exchange

reserves, the excess market liquidity dried up. This exerted pressure

on interest rates as evidenced by the significant rise in the average

weighted prime lending rate of the banks, by 2% year-on-year. The

local currency depreciated considerably against the US dollar, by 9%

from Rs. 131.0 to Rs. 141.1 during 2015.

Thus, overall economic growth in 2015 was restrained at 4.8%, lower

than the preceding year’s growth of 4.9%. The services sector, which

accounts for 56.6% of GDP, emerged as the key driver of growth,

expanding by 5.3%, supported by the agriculture sector that grew

by 5.5%. However, growth in the industry sector was mediocre,

mainly reflecting a 0.9% decline in the construction sub sector,

which in turn was due to the slowdown in large scale infrastructure

construction activities during the year. Nonetheless, private and

public consumption surged, as disposable income increased, notably

amongst public sector workers.

Against this turbulent backdrop, profits reported by your company

moderated this year, compared to the outstanding results posted last

year. Your company did well to record significant revenue growth,

in excess of 20%, in the dealer market, projects and export market.

However, revenue stemming from government contracts that

constitutes a core business segment, declined by 47.5%, this year.

This was primarily due to the delays in the awarding of government

contracts, in the run up to the parliamentary elections and during

the transitional period thereafter. In this scenario, the considerable

growth in the dealer, projects and export market segments lessened

the impact from lower revenue derived through public sector based

contracts. Consequently overall revenue dipped only by 12.5% from

Rs. 3.27 billion last year to Rs. 2.86 billion this year.

Meanwhile, post-tax profits at Rs. 175.92 million was a 42.1% decline

this year compared to Rs. 303.77 million reported last year. It is also

noteworthy that your Company continued to report a strong Gross

Profit Margin of 21.8% and a Net Profit Margin of 6.1% respectively,

this year, bolstered primarily by efficient operational practices.

At Group level, the impact discussed above was reflected in the top-

line growth, with revenue decreasing by 12.8% from Rs. 3.48 billion

a year ago to Rs. 3.03 billion this year, while post -tax profits declined

by 22.8% from Rs. 250.23 million last year to Rs. 193.10 million this

year. A detailed insight into the operational performance of your

Company as well as the Group and our plans for the group are

contained in the Managing Director’s Review Statement.

This year the Directors paid an interim dividend of Rs. 0.20 per share,

which represents a payout of 54.05% of distributable profits. The

Directors have not recommended a final dividend for the year under

review, in order to strengthen the reserve base so as to facilitate

growth opportunities for your Company.


Looking to the future, from a global perspective, several downside

risks have been identified that could disrupt projected figures for

global growth. Headwinds faced by many economies, include

slow global trade, weak growth among advanced economies, low

commodity prices, as well as continuing geopolitical uncertainties. At

home, several near term challenges need to be overcome to revitalize

the economy. Foremost amongst these challenges are establishing

clear paths to spur government revenue and stimulating investor

confidence. Financial market conditions continue to remain fragile,

posing a threat to corporate earnings and business growth. Despite

these concerns, we are undoubtedly poised on an era of emerging

opportunities. We welcome the encouraging measures proposed by

the government to propel construction sector growth, including the

mandatory participation of local contractors in any construction

work undertaken by foreign contractors.

Your company will continue to focus on building market share,

both in existing and new markets. We will seek to widen our global

presence, by constantly exploring avenues to penetrate new export

markets, especially in the light of declining commodity prices. This

year we successfully initiated steps to penetrate the East African

market, which will undoubtedly contribute to shareholder value.

We also plan to intensify our presence in the Maldives, Bangladesh

and Vietnam, where we have already achieved success.

The government’s policy initiatives for public and private sector

partnerships and focus on infrastructure development, would

undoubtedly give rise to many opportunities for Sierra Cables and

our group companies. Such opportunities include the Megapolis, and

the Port City Project. The revival and enhanced opportunities in the

property development market will open up many opportunities for

cable manufacturers. In particular the anticipated boom in housing

construction, including apartment complexes and high-rise buildings

will auger well for our company.

We will continue to be mindful of enhancing shareholder value.

Towards this end we will rely on our proven inherent strengths

and resilience skills. Cost rationalization and risk management

will remain priorities as we drive forward our strategies to boost

profitability. We are confident of realizing our vision, despite the

temporary setback we experienced this year.

This year we bid adieu to Dr. D.G.K.E. Weerapperuma who served

the Board since 06th July 2007. I thank Dr. Weerapperuma for

his steadfast contribution as a valuable member of the Board,

Chairman of the Audit Committee and Member of the Remuneration

Committee. We also welcomed Mr. M.N. Gunasekera to our Board

in July 2015 and who will undoubtedly strengthen the Board’s

composition of Independent, Non-Executive directors. A former

Chief Executive Officer/Director of Shaw Wallace and Hedges PLC,

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, Mr. Gunasekera

brings in extensive skills in financial, tax and general management.

In closing, I would like to place on record my sincere appreciation of

the contribution made by several parties this year. I am extremely

thankful to my colleagues on the Board for their guidance, insight

and support at Board deliberations. My grateful thanks as always, to

the dedicated and loyal team, led by our resourceful and experienced

Managing Director, for navigating safely in troubled seas. I am deeply

grateful to our customers, bankers, business partners and all other

stakeholders for their trust and confidence. Finally I thank you, our

valued shareholders for your understanding and steadfast support in

the midst of the difficulties encountered this year. My team & I are

committed to enhance your value in this Company and look forward

to your continued support as we step forward into an exciting new

financial year.

Priyantha PereraChairman

Colombo

11th August, 2016

CHAIRMAN’SMESSAGE


This was a year in which the local business sector, grappling with

political and macro-economic uncertainties, experienced mixed

fortunes, resulting in most businesses, by and large, failing to

maximize potential. Local economic growth was slightly slower than

the previous year, clocking just 4.8%, compared to 4.9% achieved

last year. Growth this year was driven largely by robust consumer

spending and strong performance in the agricultural and services

sectors.

Notwithstanding the dreary macroeconomic fundamentals, this year

too, we continued to exhibit our resilience and sound business model

that enabled us to withstand shocks and deliver profits, adding value

to our stakeholders.

A Slowed Industry

Our industry, the construction sub-sector, endured a difficult phase

this year, with growth faltering amidst the slowdown in large

infrastructure projects. The sub-sector which depicted a strong

growth of 6.6% last year, contracted by 0.9% this year, whilst its share

in the country’s GDP plummeted from 7.2% in 2014 to 6.8% in 2015.

However, the sector, since the final quarter of 2015/16, has indicated

steady signs of revival, aided by the resumption of some large

infrastructure projects spearheaded by the public sector, including

water, drainage and road construction. The recommencement of

these activities, coupled with several new large ticket projects on the

horizon, has bolstered the sector’s overall outlook to a great extent.

Operational Highlights

This year we achieved an impressive growth in revenue in most of

our market segments. Income arising from government tenders, the

key driver of last year’s revenue growth, was however adversely

affected, as activities in the external front slowed on account of the

parliamentary elections and the process of forming the coalition

government. This situation resulted in considerable delays in

awarding of government tenders to the private sector in 2015.

YOUR COMPANY HAS SURPASSED THE

RS. 3 BILLION TURNOVER SUPPORTED BY

OUT-PERFORMING KEY SEGMENTS OF THE

MARKET AND OPERATIONAL EFFICIENCIES.

Our strategic focus therefore rested on consolidating and expanding

market share in three other vital market segments, namely the dealer

market, projects market and the export market. All these segments

performed creditably, with revenue as a whole growing by an

impressive 20.4% over the previous year. This included a significant

increase in revenue from export sales, in excess of

IT IS MY PLEASURE TO

ANNOUNCE YOU THAT

WE HAVE SUCCESSFULLY

LAUNCHED OUR STEPPING

STONE INVESTMENT

PROJECT IN THE AFRICAN

REGION BY SETTING UP A

CABLE MANUFACTURING

PLANT IN NAIROBI, KENYA,

IN CAPITALIZING ON THE

OPPORTUNITIES ARISING.333%, amply illustrating the steady in-roads we made into overseas

markets. It is also pertinent to note that we secured an order to supply

the entire cable requirement for the country’s newest upscale hotel

in Hambantota, the Shangri-La. Despite these gains, reflecting the

impact of the public sector dependent revenue, overall revenue of

the Company however, declined by 12.5% to reach Rs. 2.86 billion this

year in contrast to Rs. 3.27 billion last year.

Reaping the benefits of our cost rationalize drive, strengthened

internal controls and risk management strategies, we nonetheless

contained overall operating costs at satisfactory levels. Other

income for the year was boosted by one-off gains of Rs. 46 million

arising from the disposal of investments in condominium properties,

an apartment each in Fairfield Residencies and in Plaza 2000.

Other income of Rs. 51 million for the year reflected a decline of 57.5%

compared to the previous year, which, last year, included a gain

of Rs. 111 million derived from the sale of the share of Central

Industries Ltd.

Net finance costs were affected by the depreciating currency as well

as the gradual upward trend in interest rates since the second half of

the year. With the Central Bank ceasing to intervene in the foreign

exchange market, the local currency which was broadly stable

against the dollar, depreciated notably in the latter half of 2015/16

by 6.2% from Rs. 134.3 to the dollar at end August 2015 and closed at

Rs. 143.9 by end March 2016. Interest rates on the other hand rose

sharply during the second half of the year, while the Central Bank

hiked policy rates to curtail credit expansion due to excess market

liquidity.

MANAGING DIRECTOR’S STATEMENT


Reflecting the above influences, this year we reported pre-tax

profits of Rs. 255 million in contrast to Rs. 401 million posted last

year, a decline of 36.4%. Post-tax profits of the Company reflected

a decline of 42.1% from Rs. 303.77 million reported last year to

Rs. 175.92 million this year. Nonetheless, we succeeded in maintaining

robust Gross Profit and Net Profit Margins that depicted 21.8% and

6.1% respectively. Total assets meanwhile, crossed the Rs. 3 billion

mark, growing by 4.1% from Rs. 2.90 billion last year to Rs. 3.02

billion this year, mainly reflecting an increase in work in progress

and finished goods inventories.

A Strengthened IT Platform

During the year under review we rolled out the upgraded Enterprise

Resource Planning (ERP) system, incorporating an advanced

manufacturing module. The new Microsoft Dynamics NAV

(Navision) version facilitates the integration of the module with core

functions of Marketing, Purchasing, Administration and Finance

Management, enabling us to operate on a lean and efficient cost

structure.

In addition, we installed the Business Intelligence (BI Tool) Qlik View

software which involves data visualization and guided analytics that

facilitates faster and more accurate decision making.

Performance of Group Companies

Group revenue for the year declined by 12.8% to reflect Rs. 3.03 billion

compared to Rs. 3.48 billion the previous year. Pre-tax profits of the

group dipped by 23.8% from Rs. 358.95 million a year ago to Rs. 273.43

million this year, while post -tax profits declined by 22.8% from

Rs. 250.23 million last year to Rs. 193.10 million this year.

Our subsidiary Sierra Industries (Pvt) Ltd, engaged in the

manufacture of uPVC pipes and fittings, has thus far yet to perform

up to expectations, which has given rise to a new strategy. Several

judicious revival strategies have already been implemented, centered

on acquiring requisite human talent, re-aligning marketing strategy,

product quality improvements as well as cost rationalization and

waste minimization. The success of the turnaround strategy,

particularly the sales and marketing strategy, is already evidenced

in the marked increase in sales orders received subsequently, by

way of tenders and confirmed export orders which are presently in

excess of Rs. 750 million. We are confident that the company could

turnaround in the ensuing year.

We are presently evaluating an option to dispose of our investment

in Sierra Power (Private) Ltd, the power sector subsidiary.

The newly inaugurated Sierra Cables East Africa Limited, a 95%

owned subsidiary, is the most recent venture to be undertaken in

the overseas market. This company was commissioned to operate a

cable manufacturing plant in Nairobi, Kenya to supply transmission

and distribution cables to East African region. Construction work

pertaining to the project commenced during the third quarter.

As per the World Bank, the Kenyan economy is projected to grow

at around 5%-6%, whilst the Bank maintains a positive outlook

for infrastructure investments. The planned operation would

undoubtedly benefit from the potential in the targeted market, along

with our proven expertise in this sphere of operation.

(Main Factory Premises, Sierra Cables East Africa, Nairobi, Kenya)

Of the two associate companies, T & G Lanka (Private) Ltd which

is involved in manufacturing patch cables, commenced reporting

profits from operations from the 3rd quarter last year. The Company

yielded profits of Rs. 1 million this year, returning a share of Rs. 0.3

million profit on our investment. Plans are presently underway to

expand the facility in Sri Lanka. Tea Leaf Resort Holdings (Private)

Ltd, on the other hand, is engaged in the leisure sector and is yet to

receive final approvals to commence business.

Future Strategies

Prospects for the country has brightened to a considerable extent,

as the new government settles into office. We are optimistic of

the near-term scope for infrastructure development, housing and

other construction projects, the bedrock of our business. Whilst

consolidating and building share in the domestic market, our focus

will continue to rest on expanding our international footprint, by

seeking to strengthen relationships in existing markets as well as

identifying strategic emerging markets. We will continue to invest in

human capital and strengthen operational efficiencies to withstand

increasing challenges.



In Appreciation

In conclusion, I wish to express my sincere thanks to our Chairman

and members of the Board for their guidance and unstinted support.

I also wish to extend a grateful thank you to our staff for their

enthusiasm and commitment in a difficult year. My heartfelt thanks

are also due to our customers, dealers, suppliers, bankers’ and all

other stakeholders for their loyal patronage and trust.

Given our inherent strengths, focused strategies and business

acumen, along with the plethora of imminent market opportunities,

we are confident of reaching greater heights in the future.

D. Shamendra PandithaManaging Director

Colombo

11th August, 2016



THE BOARD OFDIRECTORSW.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 36 years of experience in the construction industry.

D.S. PandithaMD & 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 39 years of experience in the cable and plastic industry.

D.N.N. Lokuge

Mr. D.N.N. Lokuge is a founder Director of Sierra Construction

(Private) Limited with 36 years of experience in the construction

industry.

J.H.P. Ratnayake

Mr. 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 62 Companies of which 08 are Public Quoted Companies. He has

also been elected/appointed as Chairman/Deputy Chairman to

several of these companies. He is also Chairman of P.R. Secretarial

Services (Pvt) Ltd.

G.S.M. Irugalbandara

Ms. G.S.M. Irugalbandara was the Director of Alucop Cables for five

years. She has an MBA from the University of South Queensland. She

has been attached to KPMG as a Tax Manager prior to joining Alucop

Cables. She now serves as a Non-executive Director at Sierra Cables

PLC.

Prof. A.K.W. Jayawardane

Prof. Jayawardane is the Vice-Chancellor and Professor in Civil

Engineering, University of Moratuwa. He is an academic, a researcher

and consultant with experience and expertise in teaching, research

and consultancy in the broad areas of construction management,

project management and technology management. He is having

a BSc Eng in Civil Engineering with first class honours, University

of Moratuwa and MSc in Construction, University of Technology,

United Kingdom. He is also a fellow member of the Institution

of Engineers and founder members of the Society of Structural

Engineers and Institute of Project Managers in Sri Lanka.

E.A.D.T.B. Perera

Mr. E.A.D.T.B. Perera is a founder Director of Sierra Construction

(Private) Limited with 35 years of experience in the construction

industry.

B.W.N. Rupasinghe

Mr. B.W.N. Rupasinghe is an electrical & electronics engineer by

profession with a BSc in Electrical & Electronics from Peradeniya.

He is having an MSc Degree in electrical power transmission and

distribution from University of Manchester Institute of Science &

Technology, UK and a MA Degree in Economics. He was the former

General Manager of Central Engineering and Consultancy Bureau.

S.N. Lokuge

Ms. S.N. Lokuge is the newly elected member to our Board of Directors

with effect from 27th May 2016. She is currently reading for her

Masters Degree in Business Management whereas she has earned

her Bachelor of Science degree in Management from Swinburne

University of Technology in Australia. In addition, she serves as a

Director for International Tertiary Education Campus (INTEC) Asia,

Director, NNL Holdings Pvt. Ltd and as Assistant Financial Controller

for Sierra Construction Pvt. Ltd.

M.N. Gunasekara

Mr. M.N. Gunasekera was a former Chief Executive Officer/Director

of Shaw Wallace & Hedges PLC, and its Subsidiary and Associate

Companies. He counts approximately 40 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 has been a Council Member since July 1999 and is currently the

President of the Sri Lanka Institute of Taxation, which position he

has held for a period of 8 years.

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.


OUR PRODUCTPORTFOLIO

Armoured Cables

Copper conductors insulated with PVC or XLPE, steel wire armored and PVC sheathed, with a voltage rating of 600/1000v. Utilised for the distribution of electricity within Factories and buildings, manufactured to BS 6346 and BS 5467 standards.

LSHF (Low Smoke Halogen Free) Unarmoured Power Cables

LV cables with LSFZH, thermosetting insulation which under exposure of to fire generates slow emission of smoke, fumes and toxic gasses and zero halogens. The unarmored cables often lay in places where there are higher threats of fire.

LSHF (Low Smoke Halogen Free) Armourd Power Cables

LV cables with LSFZH, thermosetting insulation which under exposure of to fire generate low emission of smoke, fumes and toxic gasses and zero halogens. Commonly use in places where there are lot of environmental hazard including fire.

Auto Cables

PVC insulated single core auto cables, used in motor vehicles and also for general wiring

Unarmoured Cables (Multi-Core)

Copper conductors insulated with PVC or XLPE and PVC sheathed, with a voltage rating of 600/1000v. Utilised for the distribution of electricity within factories and buildings, manufactured to BS 6346 and BS 5467 standards.

Co-axial Cables

Annealed copper conductors with polyethylene Insulated and copper braided co-axial cables, used as television antenna wires. Manufactured to JIS Standards.

g g

Control Cables

Control Cables with copper conductors, with PVC insulation and sheathing or with PVC insulation and sheathing and added steel l wire armouring. Manufactured according to BS 6346 specifications with a voltage rating of 600/1000v, utilized for transmissions to control units in industry, railways, traffic signals, thermal power and hydro power systems.

Aerial Bundle Conductors

Self-supporting insulated Cables are used for low-voltage electricity distribution. 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. Manufactured to National French standard NFC 33:209.

Aluminium Conductors (AAC & ACSR)

All Aluminium Conductors (AAC) and Aluminium Conductors Steel Reinforced (ACSR), used for low, medium and high-voltage electricity transmission and distribution. Manufactured to SLS 750, BS 215 (Parts I & II) and ASTM standards.


Telecommunication Cables

PVC insulated, self-supporting one-pair drop wire and polyethylene insulated copper conductors used as telecommunication distribution cables. Manufactured to BS 3573 and SLT standards.

Single & Multi-Core Unarmoured Cables

Solid or stranded copper conductors with PVC insulation and sheathing, with a voltage rating of 300/500v, 450/750v. Utilized for in-house wiring distribution of electricity within buildings and factories. Manufactured to BS 6004 and SLS 733 standards.

Aluminium / PVC Cables

PVC insulated aluminum service main-wire with a voltage rating of 300/500v. Single-core, twin and flat-twin cables manufactured to BS 6004 and CEB specifications.

Earth Cables

Solid, stranded or flexible copper conductors with PVC insulation, non-sheathed with a voltage rating of 450/750v. Single-core Earth conductors used as general-purpose cables manufactured to BS 6004 and SLS 733 standards.

Flexible Cables

PVC insulated and sheathed flexible cables with a voltage rating of 300/300v and 300/500v, used as general-purpose cables. Manufactured to BS 6500 and SLS 1143 standards.

LSHF (Low Smoke Halogen Free)Earth cable

LV cables with LSFZH, thermosetting insulation which under exposure of fire generate slow emission of smoke, fumes and toxic gasses and zero halogens. The earth cables often lay in places where there are higher threats of fire.

OUR PRODUCTPORTFOLIO


SUSTAINABILITYREPORTSierra Cables engages with a range of stakeholders to understand

society’s expectations and strong foundations were built on that for

the sustainability of our business.

Our stakeholders are the individuals and organizations who are

affected in some way by Sierra Cables affairs; whether it is in our role

as an electrification solution provider, an employer, or as a business

that generates revenue and to boost local economics.

Sustainability through the Product Quality

Sierra manufactures cables in a responsible manner which to create

highest potential value to the customer without compromising the

natural environmental standards. To achieve this, we embark upon

good manufacturing practices, renowned product standards and

continuous product development.

Sierra highly focuses on the energy cost and finding the ways

to minimize. Several energy saving programs are followed and

monitored. The cost is measured as a fraction of the production value

and targets are set accordingly.

The safety of the cables manufactured is maintained in all means

for both residential and commercial customer who uses our branded

cables. Sierra has tested the compliance of the cables for many

international standards; British Standards (BS) and National French

Standards (NFC) are few. Several productions made to the Sri Lankan

market are certified by Sri Lankan Standards Institution (SLSI).

Sierra has been certified by Sri Lanka Standards Institution through

ISO 9001:2008 for quality management system.

FlexibleCords

PVCInsulated

Cables

AluminumConductors

ArmouredCables

RoHS Compliance Initiatives

Sierra Cables has taken initiatives to manufacture Restriction of

Hazardous Substances (RoHS) certified cables. In cable insulation and

sheathing lead (Pb) is bound to the PVC-matrix, therefor most of it

remain in the product and emissions during product use have been

thought to be negligible. We focus on the impacts during refining,

accidental fire and during disposal. Since it is difficult to recycle wire

and cable, virgin material is typically used. This leads to emissions

from refining and manufacturing. 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 landfill,

especially under acidic conditions, leaching of lead is possible into

the soil and ground water. While the lead compounds impart

necessary properties to the wire and cable coatings, their presence

can be environmentally detrimental. Not too many years ago it was

common practice to burn wire removed from buildings to recover

and sell the copper portion.

Sierra initiative of using lead (Pb) free PVC while compliance to RoHS

standards, minimizes the impacts on human and environment at

large.

Cable Drum Re-use Program

Sierra continues to reinforce its commitment to sustainable

development by rolling out a new program to collect and reuse its

wooden cable drums. Wooden drums used for winding the cables.

They are sent to customers and empty drums are recollected from

the customers after they used the cables. As per the condition of the

drum, it is used for the next rewinding process.

WoodenDrum Reuse

Programrum Reuse

Program

1

2

3

4

5

START

FINISH

WoodenDrum Input

Factory

Customer

Pickup theused Drum

Drumre-conditioning

Ready toDespatch

3


Sustainability through Environmental Management

Through successful environment management at Sierra Cables PLC,

it has helped to put in place a structured management framework

to better control the impacts on the environment, reduce the risk

of potential costly pollution incidents and ensure compliance with

environmental legislation.

To demonstrate responsible corporate citizenship, sustainable

environment management as a tool to boost profitability–by

improving waste management, optimizing the use of resources and

taking greater control over related costs.

The company has put together all review systems, policies,

procedures and processes which are in place and then compare those

with specifications of ISO 14001.

The Environmental Policy of the company states;

Committed to conduct all its operations with practicably minimum

negative impact on the environment and complying with

environmental related legal and other requirements. In this regard

Sierra shall continually improve its environmental performance by,

� 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.

Stakeholder Management

Sierra strives to maintain the best relationship with all stakeholders

of the organization. Shareholders, customers, suppliers, employees,

community, other regulatory bodies and government organizations

are unique.

ControlMutuality

Trust

Satisfaction

Commitment

ExchangeRelationship

CommunalRelationship

StakeholderManagement

Sierra places a high priority on communications with accountability

to shareholders. The Board recognizes that shareholders, as the

ultimate owners of the company, are entitled to receive timely and

relevant high quality information about their investment. Similarly,

prospective investors should be able to make an informed decision

when considering the investment in the company.

Customers are the most important part of our total process and

fulfillment of customer expectation is monitored throughout the

product life cycle of Sierra Cables. A well maintained supply chain

function has helped us to go beyond the customer expectation.

Well managed suppliers strengthen our supply chain. Right Source

(supplier) aligned with Right Quality, Right Quantity, Right Time,

and Right Place are prime to the delight of Sierra end customers.

SUSTAINABILITYREPORT


HUMAN CAPITALHuman Capital is the most important factor in modern business

world. They can enhance the value of business by adding unique

competitive advantage through innovation & creativity. At Sierra

Cables PLC we have set our HR strategies to Attract, Develop & Retain

the best talent within the organization to achieve the organizational

success. Our HR policies are focused on the development of our

human capital. Therefore we have set our strategies to establish a

learning culture within the Company by enriching their jobs with a

high level of autonomy to continually expand their working abilities.

Retairn

Attr

act

Develop

Attracting the Best Talent

Our recruitment policies are set out to attract the best talent of those

who are highly committed towards the organizational success. We

always provide equal opportunities for our employees and do not

discriminate them based on their Ethnicity, Gender, Age or Race. We

do not employ forced labour & child labour or conduct any kind of

unfair labour practices.

Throughout the employee referral method, we encourage our

employees to introduce new members to the company and our

internship training programme designed to the undergraduates in

local universities & apprentice training schools help us to attract

professionally qualified individuals to the company.

As at 31st March 2016 the total workforce of Sierra Cables PLC was

recorded as 282 employees including 23 casual workers. Amongst

them, majority represent the age group of 26-35 years. Sixty four

percent of the total employment are under the age of 35 years and

it reflects the young talent lined up to drive the company in future.

Employees byCategory

3% - Permanant

58% - Casual

8% - Fixed Term Contract

22% - 18-25 Years

42% - 26-35 Years

14% - 36-40 Years

14% - 41-50 Years

8% - Above 50 Years

Age Analysisof Employees

Training & Development

We believe that the proper Training & development opportunities

are essential to develop our Human Capital. It can enhance the

employee’s commitment by improving their knowledge, skills &

abilities. At sierra Cables PLC, we have set out a systematic approach

along with the annual performance evaluation system to identify the

key development areas of our employees. Apart from that each line

manager also holds the responsibility to develop their subordinates

whilst each employee is encouraged and held responsible for their

development.

When designing the training programs we consider not only the

company objectives but also our employee’s future aspirations. It will

always help us to increase the success rate of our training programs

and also it will ensure that the employees deliver their best, whilst

enhancing their personal development and thereby contributing to

the overall growth of the company.

We offer a range of structured and on the job training programs

designed to develop the technical competencies as well as the soft

skills of our employees such as leadership development, motivational

& positive attitude development, logistic management etc. Further

our senior members are recommended to attend for the overseas

training opportunities as listed below.


HUMAN CAPITALThe program for quality problem solving (PQPS) - Tokyo, Japan

(March 2016)

Management training program conducted by the Overseas Human

Resources and Industry Development Association (HIDA). Our

Quality Control staff members took part in the training course of

which the core is to learn Quality Control (QC) methods intensively,

considered as key factor in Japanese way of TQM.

ISO 9001:2015 Certification Training in Kenya

At Kenya Bureau of Standards (KEBS): Our Quality Control staff

members attended a training program on ISO 9001:2015, mainly

targeting on our operations in Nairobi, Kenya.

Performance Management

Evaluating employee’s performance will provide a great platform

to analyze the individual contribution of our employees towards

the organizational achievement. At sierra cables PLC all permanent

employees are evaluated bi-annually with a structured performance

evaluation system. This process will provide an opportunity for all

permanent employees to have a comprehensive discussion with

their superiors and obtain constructive feedback as well as positive

remarks on their performance for future personal development. At

the end of the evaluation process, identified performance gap will be

addressed by selecting the proper training needs.

At Sierra cables PLC we always encourage performance driven

culture within the organization and the salary increments are

identified based on the performance of the employee.

Creating a second layer is another most important factor which will

decide the future of our company. Our succession planning process

is focused on to develop the future leaders within the company.

During the last financial year we have promoted four staff members

to Assistant Manager grade.


HUMAN CAPITALHealth & Safety

Healthy worker means a happy person. We committed to assure our

employees physical & mental health at workplace as well as their

personal life. We are continuously providing training programs for

our safety committee members to improve their knowledge about

the work place safety, Emergency evacuation as well as first aid. It

helped us to create a significant improvement towards the health &

safety of our employees.

We have provided required Personal Protection Equipment (PPE)

to our shop floor level employees. Safety awareness meetings &

workshops are carried out during the last year to enhance the

knowledge & the safe practices of our employees.

19% - Above 10 Years

21% - 6-10 Years

23% - 3-5 Years

16% - 1-2 Years

21% - Below 1 Years

Service PeriodAnalysis

Sierra has been certified by Sri Lanka Standards Institution through

OHSAS 18001: 2007 for Occupational Health & Safety practice in the

organization.

Employee Retention

Retaining the best talent within the organization is a challenging task.

But we are proud to say that we have successfully achieved 92.16%

employee retention rate during this financial year. We believe that

the Success behind this year is our competent employees those who

provide their maximum contribution to take up new challenges to

move our company forward.

At Sierra Cables PLC we have a blend of well experienced & energetic

team. Fifteen percent of our workforce are having more than 10 years

of service period within the company. It clearly shows the retention

of experienced employees within the company.

Our open-door policy towards the employees grievances provide

a significant contribution to maintain a high level of employee

retention. In the case of grievance not solved He/She may go up to the

level of Managing Director to present their grievances. It increases

the transparency & fairness of our grievance settlement procedure.

Work life Balance

Work life balance is another most important factor to retain

satisfied workforce within the company. It improves staff morale

and engagement. The company has always maintained a balance

between skilled and unskilled workers. Last year the company

engaged the employees in several non-work related activities to

balance their personal & professional life. It develops good inter-

relationship amongst our employees by enhancing their team work.

Sierra Cables Management team plays a major role in uplifting moral

of our employees. Moral development program for all employees in

the organization during this year was successfully completed.

7.84%Labour Turnover


REPORT OF THE DIRECTORSThe 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 2016.

Principal Activities

The principal activities of the Company are the manufacturing and

sale of cables, wires and conductors primarily for electrification and

telecommunication purposes. Of the two subsidiaries, Sierra Power

(Private) Ltd. and Sierra Industries (Private) Ltd. which is engaged

in the manufacturing of uPVC pipes and fittings. The two associate

Companies T & G Lanka (Private) Ltd. and Tea Leaf Resort (Private)

Ltd. are diversified into manufacturing of Patch Cables and the

Leisure Sector, respectively.

Review of Operations

A review of the Company’s business and its performance during the

financial year is contained in the Chairman’s message on pages 9 to

10 and the Managing Director’s report on pages 11 to 13 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. These have been signed by two Directors

on behalf of the Board of Directors and the Auditors and confirm the

Company is in compliance with the requirements of the Companies

Act No. 07 of 2007. Details are given in pages 47 to 92.

Auditors Report

The Auditor’s Report on the Financial Statements is given on page 46.

Financial Results

The Group made a Profit before Taxation of Rs. 273.43 million during

the financial year compared to Rs. 358.95 million in 2014/15. The

detailed results are given in the Income Statement on page 47.

Group Company

For the year ended 31st March 2016 2015 2016 2015Rs. Rs. Rs. Rs.

Revenue 3,036,010,858 3,482,533,154 2,865,490,013 3,276,059,072

Cost of Sales (2,405,308,962) (2,740,581,969) (2,240,987,288) (2,540,699,016)

Gross Profit 630,701,896 741,951,185 624,502,725 735,360,056 Other Income 51,222,884 120,175,889 50,991,533 120,175,889 Selling and Distribution Expenses (188,820,709) (201,483,871) (167,281,847) (182,745,365)Administrative Expenses (110,914,037) (93,604,891) (99,869,814) (88,674,193)Other Operating Expenses (4,526,533) (92,066,723) (66,500,000) (91,936,723)Profit from Operations 377,663,501 474,971,589 341,842,597 492,179,664 Net Finance Costs (104,529,263) (115,785,899) (86,557,006) (90,366,488)Profit Before Share of Profit/(Loss) of Equity-Accounted Investees 273,134,238 359,185,690 255,285,591 401,813,176 Share of Profit/( Loss) of Equity-Accounted Investees, (Net of Tax) 293,942 (236,177) - - Profit Before Taxation 273,428,180 358,949,513 255,285,591 401,813,176 Income Tax Expense (78,501,676) (108,725,883) (79,364,029) (98,036,861)Profit from Continuing Operations 194,926,504 250,223,630 175,921,562 303,776,315 Discontinued OperationLoss from Discontinued Operations (1,822,544) - - - Profit for the Year 193,103,960 250,223,630 175,921,562 303,776,315

Profit Attributable to :Owners of the Company 199,934,090 262,508,543 175,921,562 303,776,315 Non - Controlling Interests (6,830,130) (12,284,913) - - Profit for the Year 193,103,960 250,223,630 175,921,562 303,776,315

Basic Earnings Per Share 0.37 0.49 0.33 0.57 Dividend Per Share 0.20 0.20 0.20 0.20


Dividends

The Company declared an interim dividend payment of Rupees 0.20

per share on the 11th February 2016.

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 54 to 61.

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 66 to 68.

Stated Capital

The stated Capital of the Company as at 31st March 2016 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’s retained earnings and other reserves as at 31st March

2016 amounted to Rs.648,071,459 and movement of the reserves are

given in the Statement of Changes in Equity on pages 50 and 51 of the

Financial Statements.

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 to or disclosure in the Financial

Statements.

Events After the Reporting Date

There were no material events occurring after the reporting period

that require adjustments to or disclosure 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 on pages

27 and 28.

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. PereraChairman/Non-Executive Director

Mr. D.S. PandithaManaging Director/CEO

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

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

Ms. G.S.M. IrugalbandaraNon-Executive Director

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

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

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

Ms. S.N. LokugeNon-Executive Director

Mr. M.N. GunasekaraNon-Executive Independent Director

Mr. D.N.N. LokugeNon-Executive Director

Appointments during the year

Nil

Resignations during the year

Dr. D.G.K.E. Weerapperuma (resigned from 22nd September 2015)

Resignations after the conclusion of the year

Mr. D.N.N. Lokuge (resigned from 27th May 2016)

Appointments after the conclusion of the year

Ms. S.N. Lokuge

REPORT OF THE DIRECTORS


Directors who held office as at the end of the Accounting period

Mr. W.A.P. Perera

Mr. D.S. Panditha

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

Mr. J.H.P. Rathnayake

Ms. G.S.M. Irugalbandara

Mr. B.W.N. Rupasinghe

Prof. A.K.W. Jayawardena

Mr. M.N. Gunasekera

Ms. S.N. Lokuge

Directors Retiring (at the Annual General Meeting)

1. To re-elect Mr. E.A.D.T.B. 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 Mr. B.W.N. Rupasinghe, 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 Ms. S. N. Lokuge who was appointed to office on 27th

May 2016 will be eligible for re-election in terms of Articles 97

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.

An Audit Committee, Remuneration Committee, Nominations

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 2016

Mr. M.N. GunasekeraChairman - Non-Executive Independent Director


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

Remuneration Committee as at 31st March 2016

Prof. A.K.W. JayawardaneChairman - Non-Executive Independent Director

Dr. D.G.K.E. Weerapperuma (Until 22nd September 2015)Non-Executive Independent Director

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

Related Party Transactions Review Committee as at 31st March

2016



Mr. B.W.N. Rupasinghe

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

Directors’ Interest in Shares

Directors Shareholding31st March 2016 31st March 2015

No. of Shares No. of Shares

Mr. D.S. Panditha 17,401,297 17,022,950

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

Mr. L.D.N. Nayana 100,010 100,010

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

Prof. A.K.W. Jayawardena Nil Nil

Mr. B.W.N. Rupasinghe Nil Nil

Mr. M.N. Gunasekera Nil Nil

Mr. J.H.P. Ratnayake Nil Nil


REPORT OF THE DIRECTORSrecorded in the interests register as provided for in Section 192(2) of

the Companies Act No. 7 of 2007

List of Directors of Subsidiaries and Associate Companies

Subsidiaries

Sierra Power (Private) Limited

Mr. W.A.P. PereraChairman

Mr. D.S. Panditha

Ms. G.S.M. Irugalbandara

Prof. A. Senaratne

Sierra Industries (Private) Limited

Dr. D.G.K.E. Weerapperuma (Until 04th August 2015)Chairman

Mr. W.A.P. Perera

Mr. D.S. Panditha

Mr. E.H.C. Ranasinghe

Associate Companies

T & G Lanka (Private) Limited

Mr. D.S. PandithaChairman

Mr. O.M. Grimsgaard

Mr. M. Grimsgaard

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

Tea Leaf Resort (Private) Limited

Mr. W.A.P. PereraChairman

Mr. G.A. Aloysius

Mr. D.S. Panditha

Mr. D.S.K. Amarasekara

Mr. J.M.S. De Mel

Mr. N.M. Prakash

Mr. G. J. Alosius

Distribution of Shareholders as at 31st March 2016

Registered Number of Shareholders as at 31st March 2016 were 22,579 whereas 22,638 as at 31st March 2015.

Shareholding As at 31st March 2016 As at 31st March 2015

From ToNo of

ShareholdersNo of Shares (%)

No ofShareholders

No of Shares (%)

1 - 1,000 14,331 13,177,44 2.45 14,505 13,409,174 2.49

1,001 - 10,000 6,925 16,740,876 3.12 6,942 16,512,769 3.08

10,001 - 1,00,000 1,073 36,216,841 6.74 973 32,636,727 6.06

100,001 - 1,000,000 217 61,702,179 11.48 186 57,851,447 10.77

Over 1,000,000 33 409,675,090 76.22 32 417,102,313 77.60

Total 22,579 537,512,430 100.00 22,638 537,512,430 100.00

Composition of Shareholders

As at 31st March 2016 As at 31st March 2015

No of Shareholders

No of Shares (%)No of

ShareholdersNo of Shares (%)

Resident 22,531 525,375,039 97.74 22,596 531,620,443 98.90

Non Resident 48 12,137,391 2.26 42 5,891,987 1.10

Total 22,579 537,512,430 100.00 22,638 537,512,430 100.00

Individual 22.258 152,378,444 28.35 22,319 170,217,044 31.67

Institutional 321 385,133,986 71.65 319 367,295,386 68.33

Total 22,579 537,512,430 100.00 22,638 537,512,430 100.00


List of 20 Major Shareholders

Name of the ShareholderNo of Shares

31.03.2016

% ofIssued

Capital

No of Shares31.03.2015

% of Issued

Capital

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

2. Mr. Daya Shamendra Panditha 17,401,297 3.24 17,301,297 3.22

3. People’s Leasing Finance PLC/Carlines Holdings (Pvt) Ltd 11,885,290 2.21 - -

4. Seylan Bank PLC/Carlines Holdings (Private) Limited 6,698,853 1.25 - -

5. Mellon Bank N.A./Commonwealth of Massachusetts 5,110,155 0.95 - -

6. Seylan Bank PLC/Almas Organisation (Pvt) Limited 5,055,076 0.94 2,900,000 0.54

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

8. Tranz Dominion, L.L.C. 3,600,000 0.67 3,600,000 0.67

9. Mr. Herath Abeyratne Bandara Sarath 3,450,000 0.64 4,750,000 0.88

10. Mr. Ponweera Arachchige Don Ruwan Udayangana Pushpakumara 2,985,000 0.56 - -

11. Mr. Shivantha Chulaka De Zoysa 2,500,000 0.47 2,500,000 0.47

12. People’s Leasing & Finance PLC/Mr. C.N. Jayasuriya 2,500,000 0.47 - -

13. People’s Leasing & Finance PLC/Hi Line Trading (Pvt) Ltd 2,428,162 0.45 2,975,000 0.55

14. Almar Trading Co. (Pvt) Ltd 2,275,800 0.42 - -

15. Deutsche Bank Ag As Trustee to Capital Alliance Quantitative Equity Fund 2,223,194 0.41 - -

16. Mr. Munidasa Ilamperuma 2,150,000 0.4 2,150,000 0.40

17. Mr. Bathiya Chandana Ranaweera 2,000,000 0.37 - -

18. Mrs. Kalanie Sandya Rangedara 1,786,493 0.33 - -

19. Mrs. Genevieve Sujivie Madhuni Irugalbandara 1,709,800 0.32 - -

20. Mr. Fazley Ahamed Azhar 1,508,724 0.28 2,120,000 0.39

TOTAL 393,523,844 73.21 354,552,297 65.96


Public Shareholding

The percentage of public shareholding as at the 31st of March 2016

was 37.55%.

Shareholding and Share Information

The Company had 22,579 registered shareholders as at 31st March

2016. The distribution and analysis of shareholding, the holding of

the 20 largest shareholders, Directors and Chief Executive Officer’s

shareholding, public holding percentage as well as information

relating to earnings, net assets per share and share trading is given on

pages 5, 24, 25 and 26 respectively.

Annual General Meeting

The notice of the Annual General Meeting is on page 95.

Auditors

The Financial Statements for the year ended 31st March 2016 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, KPMG, were paid Rs.900,000/- (Rs.800,000/-

2014/2015) as Audit Fees by the Company. In addition, they were

paid Rs.279,970/- (2014/2015 – Rs.1,180,332/-) by the Company for

audit related services.

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

W.A.P. Perera D.S. PandithaChairman/Director Executive Director

P.R. Secretarial Service (Private) LimitedSecretaries

11th August, 2016


MANAGING RISKThe corporate world is inevitably comprised with many risks.

They are the possibilities of failure that can make or break an

organization. The extent to which we are exposed to risk determines

the extent of the return we get. High exposure to risk gives high return

for the company and Vice Versa. However, this is only a general

rule and that is where the vitality of a competent management.

Risk Management is about identifying risks, developing solutions to

overcome them and implementing strategies to reduce the impact.

It gives special consideration for the experience possessed by the

persons involved since the relative importance of a risk can be

elaborated by highly experienced personnel.

The risk management of the company is based on the level of risk

appetite.

At Sierra Cables our appetite is neither low nor high but moderate or

more often above the moderate level. This has enabled us to accept

the right level of risk suitable for the company avoiding unnecessary

risk that could hinder the future of the company. Therefore risk

management is a smooth process implemented by the company.

Sierra Cables Risk Management Process

It is required to identify possible risks in the environment and in

the company from time to time. This will from proactive mindset

in the Company amongst its members at any level. Thus the

identification will involve the contribution from all employees. The

top management that plays a main role in the risk management will

commence its activities from this point onwards looking at issues

with a broader perspective.

The next step is to analyze the risk and prioritize them accordingly.

This is vital when we operate in a highly volatile environment as our

resources need to be ready at any given time for the purpose. Mostly it

is the top management that takes the initiatives at this point clearing

the path of the company for future objectives and goals. However,

in the planning stage the middle level managers who are experts in

various fields take part to form a better plan. Their ides together with

experience will support to develop an action plan on how to face the

future risks and take the action suitably.

The action taken for risks can be threefold. They are acceptance,

avoidance and mitigation. The finalized action plan will be

implemented concentrating on taking any of 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 we are to reap the benefits of risk

management because it guarantees the implementation has taken

place according to the planned manner.

At the same time controlling and monitoring stage also considers

environmental change to ensure the action taken are complied

according to the timely needs.

0506

05

04

03

02

01BusinessContext

Identifyingkey Risks

Analysing &Prioritizing the Risks

Planning

Implementing

Monitoring &Controlling

Risk ManagementFramework


MANAGING RISKWe 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 where as

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.

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 Equipments.

� 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 time y decision making.

� Data backup procedure.

� Agreements with IT vendors for support and

maintenance.

� Regular upgrading of the systems.


CORPORATEGOVERNANCESierra Cables has been maintaining high level of corporate

governance in the company. From the day it was listed the board

of directors understanding the importance of governance took

steps to adhere to various guidelines. Specifically this includes the

guidelines issued by regulatory bodies and legislation of the country

such as institute of Chartered Accountants of Sri Lanka, Securities &

Exchange Commission and the Companies Act of 2007.

The acts of the board are transparent and they are bound by the

directives issued by the CSE, regarding governance of companies.

The board is appointed annually by the shareholders and the board

seeks to achieve the objectives of the company on behalf of them.

Lack of communication between the parties can lead to problems. As

such that this concept was developed to ensure a good relationship

between the shareholders, board of directors, the management and

other stakeholders. Also at all times the board is obliged to act in the

best interest of the company and there by enhance the shareholders’

wealth

When the management takes part in governance in a responsible

way it will provide a fundamental background for sound decision

making and performance of the company. With this in mind the

board always strikes a balance on the two dimensions, conformance

and performance. Otherwise lack of concentration on either can yield

a wrong doing from both aspects. Therefore we believe that we have

maintained the right level of governance while achieving the highest

possible profit. Sierra Cables corporate governance framework can be

demonstrated as follows.

BOARD OFDIRECTORS

SHAREHOLDERS

TOP MANAGEMENT

MANAGING DIRECTOR/CEO

BOARD SUB COMMITTEES(AUDIT, REMUNERATION

& RELATED PARTYTRANSACTION)

AUDITORS

CORPORATEGOVERNANCEFRAMEWORK


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, six are Non-Executive Directors. Two out of the six Non-

Executive Directors are Independent Directors. All directors are

veterans in their fields such as engineering, law, construction,

marketing, finance and public administration. Their years of

experiences are the reason for the continual success of the company.

Despite the varying levels of shareholding possessed by the directors,

equality is a major fact that is prevalent at all times in the board. It

is not compromised with the dominance of one or group of directors

when decision making comes.

Chairman and Chief Executive Officer

The board is led by the Chairman who is also an Executive Director. The

Chairman’s leadership will take the company to unattainable heights

with high strands of efficiency, effectiveness and professionalism.

In an ever changing environment such a leadership is the core on

directing and controlling the organization for better performance.

The 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,


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

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

The committee has met six times during the year. The meetings are

attended by Managing Director, 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 a fellow member of the Institute of Certified Management

Accountants.

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

� Monitor and review the adequacy of the company’s accounting

system and internal control environment.

� Review the annual and semiannual financial statements of the

company, and make recommendations to the board.

� Determine company - specific accounting policies within the

ambit of the accounting standards.

� Review significant transactions which are not a normal part of

the company’s business.

CORPORATEGOVERNANCE


Risk Management

� Identify and assess areas of risks which might impact on the

company and research appropriate mitigations.

� Monitor, review and evaluates the adequacy and effectiveness

of the company’s risk management controls, both internally

and externally.

� Evaluate the effectiveness of the company’s business

continuity plans.

� 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 2017 subject to the approval of the

shareholders at the next annual general meeting.

Remuneration Committee

The Remuneration Committee looks forward to attract and retain

directors, executives and employees for the company. Also through

the decisions of Remuneration Committee it is expected to obtain

the highest level of contribution for the achievement of goals and

objectives of the company. There by it expects to create a good value

for the shareholders.

The Sierra Cables PLCs Remuneration Committee consists of two

Non-Executive Independent Directors as follows;

Prof. A.K.W. JayawardaneChairman - Non-Executive Independent Director


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

The main responsibilities of the Remuneration Committee are;

1. To review and approve Remuneration policy of the Company.

2. To advice on structuring Remuneration packages that enable

the Company to attract, retain and motivate high 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

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.

CORPORATEGOVERNANCE


CORPORATEGOVERNANCEBoard Meetings and Sub Committee Meetings

Name of the Director Board MeetingsAudit Committee

MeetingRemuneration

Committee Meeting

Executive Non-Independent Directors

Mr. D.S. Panditha 5/5 - -

Non-Executive Directors

Mr. W.A.P. Perera (Chairman) 4/5 - -

Mr. D.N.N. Lokuge 3/5 - -

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

Ms. G. S. M. Irugalbandara 2/5 - -

Non-Executive Independent Directors

Mr. J. H. P. Ratnayake 3/5 - -

Dr. D.G.K.E. Weerapperuma 1/5 3/6 -

Prof. A.K.W. Jayawardane 4/5 5/6 1/1

Mr. B.W.N. Rupasinghe 4/5 4/6 1/1

Mr. M.N. Gunasekara 4/5 4/6 1/1

Dates of Meetings

28.05.2015 19.05.2015 05.06.2015

04.08.2015 28.05.2015 -

05.11.2015 04.08.2015 -

28.01.2016 11.05.2015 -

10.02.2016 13.01.2016 -

- 28.01.2016 -

Internal Control

The Internal Control system encompasses the financial, operational,

risk management, regulatory compliances of the company.

Maintaining effective control is vital as it is the responsibility of the

board. All the sectors have different controls developed uniquely

for themselves. Their discipline, commitment will ensure correct

processes are maintained within the company. The effectiveness

of these controls is reviewed regularly through the Management

Review meeting and Board Meetings. One of the main items

heavily discussed in every Management Review meeting is the Key

Performance Indicators (KPI). It summarizes the performance of

every department of the company on a monthly basis.

Even though all these controls are in place we cannot reject the fact

that exceptions can appear in an unexpected manner. Therefore

either through preventive or corrective actions such situations

should be managed. However the ultimate expectations thus will

be to develop and maintain accurate processes, information and

customer satisfaction. Simply this will ensure maximization of

shareholder wealth and the quality of company’s performance.


CORPORATEGOVERNANCE

PrincipleReference to the

SEC & ICASL Code,CSE Listing Rules

Extent ofCompliance

Details ofCompliance

1. COMPANYA.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 approved

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 Five 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.




Extent ofCompliance


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

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 clear demarcation of the responsibilities between our Chairman and 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 there at. 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 matter concerning finance

and investment.

CORPORATEGOVERNANCE




Extent ofCompliance


A.5 Board Balance

Presence of Non- Executive Directors A.5.17.10.1(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 & 5.35.5, 7.10.2(a-b) and7.10.3(a-b)

Complied The Board comprises of four Independent Non

Executive Directors.

Annual Declaration of Non-Executive Directors

A.5.47.10.2(b)

Complied Each non executive director has submitted his/her

declaration to CSE.

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’

A.5.6 and A.5.7 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

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 and

respective Board documents

A.6.2 Complied Board papers, agenda and previous board minutes

to be tabled one week prior to board Meeting.

CORPORATEGOVERNANCE


CORPORATEGOVERNANCE



Extent ofCompliance


A.7 Appointment to the Board

Nomination Committee and the

assessment of composition of the

Board

A.7.1 and A.7.2 Complied The main Board acts as the committee and covered

through the Board meetings.

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 anew director to

be re-elected by the shareholders

A.9 Appraisal Board Performance

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 state

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 14 of this Annual Report.

Director’s interests in contracts are indicated

in Note 35.1 of the Financial Statements of this

Annual Report. Names of the Chairman and the

members of the Board Committees are provided

on pages 30 and 31 and in the inner back cover of

this Annual Report.

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 CEO’s performance is reviewed annually.


CORPORATEGOVERNANCE



Extent ofCompliance


B. Director’s Remuneration

B.1/7.10.5 Remuneration Procedure

Establishment of a Remuneration and

its composition

B.1.1, B.1.2 and B1.37.10.5(a) and 7.10(b)

Complied The Remuneration Committee comprises of two

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 31 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 a fee for 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 -

Non-Executive Directors B.2.9 Complied Non-Executive Directors fee are compared with

the market rates.


CORPORATEGOVERNANCE



Extent ofCompliance


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 on

page 42.

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.

Separate resolution for substantially

separate issues

C.1.2 Complied Separate resolutions are proposed at an Annual

General Meeting on each substantially 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, Related Party Transactions Review 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 extends to interim and other price-

sensitive public reports to regulators, as well as to

information required to be presented by statutory

requirements complying with regulatory

deadlines.


CORPORATEGOVERNANCE



Extent ofCompliance


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 Directors on

page 22.

Statement by the Directors and the

Auditors

D.1.3 Complied Please refer the Statement of Directors

Responsibility on page 44.

Management discussion and analysis D.1.4 Complied Please refer Management Discussion and Analysis

on pages 14 to 21.

The Board as to whether the business

is a going concern

D.1.5 Complied Please refer to Annual Report of the Directors on

page 22.

Requirement for an Extraordinary

General meeting in a situation of

serious loss of capital

D.1.6 Not Applicable -

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 effective on a

continuous basis.

Requirement to review the need for

an Internal Audit function

D.2.2 Complied The Group already has appointed a professional

audit firm as their internal Auditor.

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 Please refer to the Audit Committee Report on

page 41.

Terms of reference of the Audit

Committee

D.3.3 Complied Please refer to the Audit Committee Report on

page 41.

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

page 41.


CORPORATEGOVERNANCE



Extent ofCompliance


D.4 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 a presence of code of

business conduct and ethics

D.4.1 Complied -

Affirmation of the code of conduct

and ethics

D.4.2 Complied As per our Chairman’s statements on page 9 of this

Annual Report, we affirm our adherence to good

business conduct and ethics.

D.5 Corporate Governance

Disclosures

Disclosures of Corporate Governance D.5.1 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 is evident in

this Annual Report on pages 29 to 40.

2. Shareholders

E. Institutional Investors

Shareholder voting E.1.1 Complied We conduct regular and structured dialogue 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


REPORT OF THEAUDIT COMMITTEERole of the Audit Committee

As specified by its Terms of Reference, the Audit Committee is

responsible to the Board of Directors and periodically reports to the

Board. Its mandate includes assisting the Board of Directors in the

general oversight of the integrity of the financial reporting, oversee

and review sound internal controls and risk management and

functions relating to internal and external audit and the monitoring

of the compliance with legal and regulatory requirements and best

practices.

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 and ‘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.

The members of the Audit Committee are:

Mr. M.N. GunasekeraChairmanNon -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 4/6

Prof. A.K.W. Jayawardane 5/6

Mr. B.N.W. Rupasinghe 4/6

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 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 prepared for

publication, prior to submission to the Board.

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 of the External

Auditors has 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, for the financial year ending 31st

March 2017.

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 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. GunasekeraChairman - Audit Committee

11th August, 2016


BOARD COMPENSATIONAND REMUNERATIONCOMMITTEE REPORTThe 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 executive staff.

The Remuneration Committee appointed for the financial year

2015-2016 consists of three Non-Executive Independent Directors as

follows:

Prof. A.K.W. JayawardaneChairman, Non-Executive Independent Director


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

The Committee met once during the year under review and discussed

in detail 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 positive

company performance during the year under review, the Committee

recommended an appropriate salary increase to the Chief Executive

Officer.

(Sgd)Prof. A.K.W. JayawardaneChairman - Remuneration Committee

11th August, 2016


REPORT OF THERELATED PARTY TRANSACTIONS REVIEW COMMITTEEThe Related Party Transactions Review Committee was formed by

the Board of Directors on 10th February 2016, in accordance with the

provisions contained in Section 9 of the Listing Rules of the Colombo

Stock Exchange.

The members of the Related Party Transactions Review Committee

are:

Mr. M.N. GunasekeraChairman, Non-Executive Independent Director

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

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

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.

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.

The committee had one meeting during the year under review.

(Sgd)M.N. GunasekeraChairmanRelated Party Transactions Review Committee

11th August, 2016


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

An Statement of Comprehensive Income, which presents a true and

fair view of the profit and loss of the Company and its subsidiaries for

the financial year, which comply with the requirements of the Act.

The Directors are required to ensure that, in preparing these financial

statements:

� The appropriate Accounting Policies have been selected and

applied in 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

P.R. Secretarial Services (Private) LimitedSecretaries

11th August, 2016


FINANCIALINFORMATION

46

48

50

52

49

51

54

47

Independent Auditors’ Report

Income Statement

Statement of Profit or Loss andOther Comprehensive Income

Statement ofFinancial Position

Consolidated Statement ofChanges in Equity

Cash Flow Statement

Statement of Changes in Equity

Notes to the Financial Statements


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

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

Principals - S.R.I. Perera FCMA(UK), LLB, Attorney-at-law, H.S. Goonewardene ACA

P.Y.S. Perera FCAW.W.J.C. Perera FCAW.K.D.C Abeyrathne FCAR.M.D.B. Rajapakse FCA

C.P. Jayatilake FCAMs. S. Joseph FCAS.T.D.L. Perera FCAMs. B.K.D.T.N. Rodrigo FCA

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

INDEPENDENTAUDITORS’ REPORT

TO THE SHAREHOLDERS OF SIERRA CABLES PLC

Report on the Financial Statements

We have audited the accompanying financial statements of

Sierra Cables PLC (the “Company”), and the consolidated financial

statements of the Company and its subsidiary (the “Group”), which

comprise the statement of financial position as at 31st March 2016,

and the statements of profit or loss and other comprehensive

income, of changes in equity and cash flows and notes, comprising

a summary of significant accounting policies and other explanatory

information set out on page 47 to 92.

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’ Responsibility

Our responsibility is to express an opinion on these financial

statements based on our audit. We conducted our audit in

accordance with Sri Lanka Auditing Standards. Those standards

require that we 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.

Opinion

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

fair view of the financial position of the Group as at 31st March 2016,

and of its financial performance and cash flows for the year then

ended in accordance with Sri Lanka Accounting Standards.

Emphasis of Matter

Without qualifying our opinion, we draw your attention to Note

36 to the financial statements which indicate the existence of the

material uncertainty which may cast significant doubt on the

subsidiaries ability to continue as a going concern and the steps

taken by the Group. The financial statements do not include any

adjustments that may necessary if the subsidiary is unable to

continue as 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:

f 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.

f The financial statements of the Company give a true and

fair view of its financial position as at 31st March 2016,

and of its financial performance and cash flows for the

year then ended in accordance with Sri Lanka Accounting

Standards.

f 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 Accountants

11th August, 2016

Colombo


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

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

Principals - S.R.I. Perera FCMA(UK), LLB, Attorney-at-law, H.S. Goonewardene ACA

P.Y.S. Perera FCAW.W.J.C. Perera FCAW.K.D.C Abeyrathne FCAR.M.D.B. Rajapakse FCA

C.P. Jayatilake FCAMs. S. Joseph FCAS.T.D.L. Perera FCAMs. B.K.D.T.N. Rodrigo FCA

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

INCOMESTATEMENT

Group Company

For the year ended 31st March 2016 2015 2016 2015Note Rs. Rs. Rs. Rs.

Revenue 5 3,036,010,858 3,482,533,154 2,865,490,013 3,276,059,072

Cost of Sales (2,405,308,962) (2,740,581,969) (2,240,987,288) (2,540,699,016)

Gross Profit 630,701,896 741,951,185 624,502,725 735,360,056

Other Income 6 51,222,884 120,175,889 50,991,533 120,175,889

Selling and Distribution Expenses (188,820,709) (201,483,871) (167,281,847) (182,745,365)

Administrative Expenses (110,914,037) (93,604,891) (99,869,814) (88,674,193)

Other Operating Expenses (4,526,533) (92,066,723) (66,500,000) (91,936,723)

Profit from Operations 7 377,663,501 474,971,589 341,842,597 492,179,664

Net Finance Costs 8 (104,529,263) (115,785,899) (86,557,006) (90,366,488)

Profit Before Share of Profit/(Loss) of Equity-Accounted Investees 273,134,238 359,185,690 255,285,591 401,813,176

Share of Profit/( Loss) of Equity-Accounted Investees, (Net of Tax) 293,942 (236,177) - -

Profit Before Taxation 273,428,180 358,949,513 255,285,591 401,813,176

Income Tax Expense 9 (78,501,676) (108,725,883) (79,364,029) (98,036,861)

Profit from Continuing Operations 194,926,504 250,223,630 175,921,562 303,776,315

Discontinued Operation

Loss from Discontinued Operations 12.1.1 (1,822,544) - - -

Profit for the Year 193,103,960 250,223,630 175,921,562 303,776,315

Profit Attributable to :

Owners of the Company 199,934,090 262,508,543 175,921,562 303,776,315

Non - Controlling Interests (6,830,130) (12,284,913) - -


Basic Earnings Per Share 10 0.37 0.49 0.33 0.57

Figures in brackets indicate deductions.

The Financial Statement are to be read in conjunction with the related notes which form a part of these Financial Statements of the Group set out on pages 47 to 92.


STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Group Company

For the year ended 31st March 2016 2015 2016 2015Note Rs. Rs. Rs. Rs.


Other Comprehensive Income/(Expense)

Net Change in Fair Value of Available-for-Sale Investments (1,291,700) 31,484,998 (1,291,700) 31,484,998

Revaluation Surplus on Property, Plant and Equipment - 20,608,202 - -

Actuarial Gain/(Loss) on Defined Benefit Obligation, (Net of Tax) 1,119,409 (433,067) 1,119,409 (614,721)

Other Comprehensive Income/(Expense) for the Year, Net of Tax (172,291) 51,660,133 (172,291) 30,870,277

Total Comprehensive Income for the Year 192,931,669 301,883,763 175,749,271 334,646,592

Total Comprehensive Income Attributable to:

Owners of the Company 199,761,799 310,499,267 175,749,271 334,646,592

Non-Controlling Interests (6,830,130) (8,615,504) - -

Total Comprehensive Income for the Year 192,931,669 301,883,763 175,749,271 334,646,592




Group Company

As at 31st March 2016 2015 2016 2015Note Rs. Rs. Rs. Rs.

ASSETSNon Current AssetsProperty, Plant & Equipment 13 1,100,391,556 1,251,329,991 868,763,794 883,363,592

Intangible Assets 14 1,269,421 1,609,497 1,269,421 1,609,497

Investment Property 15 - 13,962,949 - 13,962,949

Investments in Subsidiaries 16 - - 182,060,020 215,280,020

Investments in Equity AccountedInvestees 17 2,746,962 2,453,020 5,800,000 5,800,000

Available for Sale Investments 18 44,755,691 30,263,993 44,755,691 30,263,993

Total Non Current Assets 1,149,163,630 1,299,619,450 1,102,648,926 1,150,280,051

Current AssetsInventories 19 705,075,020 615,794,937 653,626,097 557,877,848

Trade and Other Receivables 20 1,045,452,578 1,026,090,599 863,144,766 829,782,494

Income Tax Recoverable 8,333,948 - 8,333,948 -

Amounts due from Related Companies 22 105,887,739 90,353,506 303,227,360 305,072,505 Cash in Hand and at Bank 23 80,234,093 43,012,819 73,005,443 42,405,237

Total Current Assets 1,944,983,378 1,775,251,861 1,901,337,614 1,753,138,084

Assets Classified as Held for Sale 12 165,854,862 18,000,000 18,000,000 18,000,000Total Assets 3,260,001,870 3,092,871,311 3,021,986,540 2,903,418,135

EQUITY AND LIABILITIESEquity Stated Capital 24 894,565,898 894,565,898 894,565,898 894,565,898

Retained Earnings 280,438,841 186,887,828 359,026,151 289,487,666

Fair Value Reserve 17,722,832 19,014,532 17,722,832 19,014,532 Revaluation Reserve 349,909,786 349,909,786 332,938,932 332,938,932

Total Equity Attributable to EquityHolders of the Company

1,542,637,357 1,450,378,044 1,604,253,813 1,536,007,028

Non-Controlling Interest 3,975,590 10,805,720 - -

Total Equity 1,546,612,947 1,461,183,764 1,604,253,813 1,536,007,028

Non Current LiabilitiesRetirement Benefit Obligations 25 26,208,882 26,793,172 25,929,429 26,282,368

Deferred Tax Liabilities 26 186,911,342 135,787,695 160,774,382 108,788,382

Long Term Loans 27 142,263,091 187,473,974 106,604,820 121,816,521 Long Term Lease Liability 28 - 1,058,410 - 1,058,410

Total Non Current Liabilities 355,383,315 351,113,251 293,308,631 257,945,681

Current LiabilitiesTrade and Other Payables 29 412,316,074 331,933,926 305,965,657 269,231,296

Current Portion of Long Term Loans 27 98,817,384 93,990,384 68,818,200 57,991,200

Current Portion of Lease Liability 28 - 1,629,556 - 1,629,556

Amounts due to Related Companies - - - -

Import Demand Loans 30 768,178,333 767,506,149 714,097,468 730,653,350

Income Tax Payable - 50,120,715 - 49,960,024 Bank Overdraft 23 72,104,387 35,393,566 35,542,771 -

Total Current Liabilities 1,351,416,178 1,280,574,296 1,124,424,096 1,109,465,426

Liabilities Directly Associated with Assets Classified as Held for Sale

12 6,589,430 - - -

Total Liabilities 1,713,388,923 1,631,687,547 1,417,732,727 1,367,411,107 Total Equity and Liabilities 3,260,001,870 3,092,871,311 3,021,986,540 2,903,418,135



STATEMENT OFFINANCIAL POSITION

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.)Priyantha PereraChairman

(Sgd.)Shamendra PandithaManaging Director

11th August, 2016

Colombo

50 Sierra C

ables P

LC

An

nu

al Rep

ort 2015/20

16

CO

NSO

LID

AT

ED

STA

TE

ME

NT

OF

C

HA

NG

ES IN

EQ

UIT

Y

Attributable to Owners of the Company Non

ControllingInterest

Total Equity

For the year ended 31st March Stated Capital

Revaluation Reserve

Fair Value Reserve

Retained Earnings

Total

Group Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Balance as at 1st April 2014 894,565,898 332,938,932 87,812,815 40,455,632 1,355,773,277 11,312,491 1,367,085,768

Profit / (Loss) for the Year - - - 262,508,543 262,508,543 (12,284,913) 250,223,630

Amounts Transferred to Profit or Loss - - (100,283,281) - (100,283,281) - (100,283,281)


Net Change in Fair Value of Available-for-Sale Financial Assets - - 31,484,998 - 31,484,998 - 31,484,998

Actuarial Loss on Retirement Benefit Obligation, Net of Tax - - - (465,129) (465,129) 32,062 (433,067)

Revaluation Surplus on Property, Plant and Equipment - 16,970,854 - - 16,970,854 3,637,348 20,608,202

Total Comprehensive Income for the Year - 16,970,854 (68,798,283) 262,043,414 210,215,985 (8,615,503) 201,600,482

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)

Adjustment due to Changes in Effective Holdings - - - (8,108,732) (8,108,732) 8,108,732 -

Balance as at 31st March 2015 894,565,898 349,909,786 19,014,532 186,887,828 1,450,378,044 10,805,720 1,461,183,764

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


Net Change in Fair Value of Available-for-Sale Financial Assets - - (1,291,700) - (1,291,700) - (1,291,700)

Actuarial Gain on Retirement Benefit Obligation, Net of Tax - - - 1,119,409 1,119,409 - 1,119,409

Total Comprehensive Income for the Year - - (1,291,700) 201,053,499 199,761,798 (6,830,130) 192,931,669


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


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 47 to 92.


For the year ended 31st March Stated Capital

Revaluation Reserve

Fair Value Reserve

Retained Earnings

Total

Company Rs. Rs. Rs. Rs. Rs.

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

Profit for the Year - - - 303,776,315 303,776,315

Amounts Transferred to Profit or Loss - - (100,283,281) - (100,283,281)


Net Change in Fair Value of Available-for-Sale Financial Assets

- - 31,484,998 - 31,484,998

Actuarial Loss on Retirement Benefit Obligation, Net of Tax - - - (614,721) (614,721)

Total Comprehensive Income/(Expense) for the Year - - (68,798,283) 303,161,594 234,363,311


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 2015 894,565,898 332,938,932 19,014,532 289,487,666 1,536,007,028

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


Net Change in Fair Value of Available-for-Sale Financial Assets

- - (1,291,700) - (1,291,700)

Actuarial Gain on Retirement Benefit Obligation, Net of Tax - - - 1,119,409 1,119,409

Total Comprehensive Income for the Year - - (1,291,700) 177,040,971 175,749,271


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



STATEMENT OFCHANGES IN EQUITY


CASH FLOWSTATEMENT

Group Company


Cash Flow from Operating Activities

Profit/(Loss) Before tax from continuing operations 273,134,238 359,185,690 255,285,591 401,813,176

Profit/(Loss) Before tax from discontinued operations (1,822,544) - - -

Adjustments for:

Depreciation 83,890,706 79,706,647 67,600,893 64,286,146

Amortization of Intangible Asset 977,166 928,227 977,166 928,227

Impairment of Assets Held for Sale - 3,000,000 - 3,000,000

Depreciation of Investment Property 68,446 821,350 68,446 821,350

Provision for Impairment of Other Receivables - 88,835,057 - 88,835,057

Provision for Impairment of Trade Receivables 24,350,525 53,362,608 9,532,904 48,798,529

Provision for Impairment of Subsidiaries - - 62,000,000 -

Gain on Sale of Property, Plant and Equipment (46,690,847) (158,533) (46,690,847) (158,533)

Gain on Disposal of Investment Property (8,105,497) - (8,105,497) -

Gain on Disposal of Available for Sale Investment - (111,421,175) - (111,421,175)

Provision for Obsolete Inventories 9,669,251 52,289,541 9,669,251 52,289,541

Provision for Retirement Benefit Obligation 5,356,866 5,927,428 5,588,217 5,692,935

Interest Expenses 107,297,800 118,437,294 89,325,542 92,029,453

Interest Income (2,768,536) (2,135,135) (2,768,536) (1,242,408)

Dividend Income (523,091) (5,104,813) (523,091) (5,104,813)

Operating Profit Before Working Capital Changes 444,834,483 643,674,186 441,960,039 640,567,485

(Increase)/Decrease in Inventories (98,949,334) (56,078,294) (105,417,501) (45,214,339)

(Increase)/Decrease in Trade and Other Receivables (68,297,294) (220,481,154) (43,055,547) (181,307,344)

(Increase)/Decrease in Dues from Related Parties (15,534,232) (18,372,642) 1,845,145 (168,072,899)

Increase/(Decrease) in Trade and Other Payables 80,971,580 (60,417,574) 36,734,360 (68,282,519)

Cash Generated from Operations 343,025,203 288,324,522 332,066,496 177,690,384

Interest Paid (107,297,800) (117,965,047) (89,325,542) (90,270,587)

Income Tax Paid (86,259,001) - (86,098,310) -

Retirement Benefit Paid (4,395,438) (1,888,113) (4,395,438) (1,888,113)

Net Cash Flows Generated from Operating Activities 145,072,964 168,471,362 152,247,206 85,531,684

Cash Flows from Investing Activities

Interest Received 2,768,536 2,039,030 2,768,536 1,235,576

Dividend Received 523,091 4,608,297 523,091 4,608,297

Acquisition of Property, Plant and Equipment (59,397,315) (104,101,060) (56,016,332) (57,127,712)

Acquisition of Intangible Assets (637,089) (450,000) (637,089) (450,000)

Proceeds from Disposal of Property, Plant and Equipment 49,866,455 198,000 49,866,455 198,000

Proceeds from Disposal of Investment Property 22,000,000 - 22,000,000 -

Proceeds from Disposal of Available of Sale Investments - 125,310,473 - 125,310,473

Investment in Available of Sale Investments (15,783,398) - (15,783,398) -

Investment in Subsidiary - - (28,780,000) (54,600,000)

Net Cash From/(Used In) Investing Activities (659,720) 27,604,741 (26,058,737) 19,174,634


Group Company


Cash Flows from Financing Activities

Proceed from Interest-Bearing Borrowing 2,116,584,799 2,794,672,271 2,035,681,382 2,670,371,131

Repayment of Interest-Bearing Borrowing (2,150,296,499) (2,762,873,342) (2,056,621,964) (2,579,830,715)

Repayment of Lease (2,687,966) (4,022,769) (2,687,966) (4,022,769)

Dividend Paid (107,502,486) (98,573,836) (107,502,486) (98,573,836)

Net Cash Flows From/(Used In) Financing Activities (143,902,152) (70,797,676) (131,131,034) (12,056,189)

Net Increase/ (Decrease) in Cash and Cash Equivalents 511,092 125,278,427 (4,942,565) 92,650,128

Cash and Cash Equivalents Classified as Asset Held For Sale (639) - - -

Cash and Cash Equivalents at the Beginning of the Year 7,619,253 (117,659,174) 42,405,237 (50,244,891)

Cash and Cash Equivalents at the End of the Year 8,129,706 7,619,253 37,462,672 42,405,237

Analysis of Cash & Cash Equivalents

Cash in Hand and at Bank 80,234,093 43,012,819 73,005,443 42,405,237

Bank Overdraft (72,104,387) (35,393,566) (35,542,771) -

8,129,706 7,619,253 37,462,672 42,405,237



CASH FLOWSTATEMENT


NOTES TO THE FINANCIAL STATEMENTS1. Reporting Entity1.1 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 2015 comprise

the Company and its Subsidiaries (together referred as

the“Group” individually as Group entities) and the group

interest in associates.

Sierra Cables being a part of a large conglomerate is also a

Group on its own. The principal activity of the Company

is manufacture and sale of wires and cables. The two

subsidiaries, Sierra Power (Private) Limited and Sierra

Industries (Private) Limited are engaged in the power

generation to the National Grid and manufacture of UPVC

pipes and fittings respectively. The two associate Companies

T & G Lanka (Private) Limited and Tea Leaf Resort (Private)

Limited are diversified to manufacturing of Patch Cables

and to leisure sector.

All the Companies in the Group have a common financial

year, which ends on 31st March.

2. Basis of Preparation2.1 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 11th August 2016.

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.

f Available-for-Sale Financial Assets are measured at

fair value;

f Liability for Defined Benefit Obligations is carried at

the present value of the defined benefit obligations.

f Land, Buildings and Plant and Machinery are

measured at cost at the time of acquisition and

subsequently at revalued amounts, which are the fair

values at the date of revaluation.

The Directors have made an assessment of the Group’s

ability to continue as a going concern in the foreseeable

future and they do not foresee a need for liquidation or

cessation of trading.

2.3 Functional and Presentation Currency

The Financial Statements are presented in Sri Lankan

Rupees which is the Group’s functional currency. All

financial information presented in Sri Lankan Rupees has

been rounded to the nearest rupee, unless stated otherwise.

2.4 Use of Estimates and Judgments

The preparation of Financial Statements in conformity with

Sri Lanka Accounting Standards requires management to

make judgments, estimates and assumptions that affect the

application of accounting policies and the reported amounts

of assets, liabilities, income and expenses. Actual results

may differ from these estimates.

Estimates and underlying assumptions are reviewed on

an ongoing basis. Revisions to accounting estimates are

recognized in the period in which the estimates are revised

and in any future periods affected.

Information about critical estimates and judgments in

applying accounting policies that have the most significant

effect on the amounts recognized in the financial statements

is provided in the following notes.

f Identification, measurement and assessment of

impairment

f Recognition and measurement of financial

instruments

f Retirement Benefit Obligations

3. Significant Accounting PoliciesThe 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.


NOTES TO THE FINANCIALSTATEMENTS

The Group measures goodwill at the acquisition date as:

f The fair value of the consideration transferred; plus

f The recognised amount of any non-controlling

interests in the acquire; plus

f If the business combination is achieved in stages, the

fair value of the pre-existing equity interest in the

acquire; less

f The net recognised amount (generally fair value) of

the identifiable assets acquired and liabilities assumed.

f When the excess is negative, a bargain purchase gain

is recognised immediately in profit or loss.

(b) Non - Controlling Interests

For each business combination, the Group elects to measure

any non-controlling which are generally at fair value.

Changes in the Group’s interest in a subsidiary that do not

result in a loss of control are accounted for as transactions

with owners in their capacity as owners. Adjustments

to non-controlling interests are based on a proportionate

amount of the net assets of the subsidiary. No adjustments

are made to goodwill and no gain or loss is recognised in

profit or loss.

(c) Subsidiaries

Subsidiaries are entities controlled by the Group. The

financial statements of subsidiaries are included in the

Consolidated Financial statements from the date that

control commences until the date that control ceases.

(d) Loss of Control

On the loss of control, the Group derecognises the assets and

liabilities of the subsidiary, any non-controlling interests

and the other components of equity related to the subsidiary.

Any surplus or deficit arising on the loss of control is

recognised in profit or loss. If the Group retains any interest

in the previous subsidiary, then such interest is measured

at fair value at the date that control is lost. Subsequently it

is accounted for as an Equity-Accounted Investee or as an

Available-for-Sale Financial Asset depending on the level of

influence retained.

(e) 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.

(f) Transactions Eliminated on Consolidation

Intra group balances and transactions, and any unrealised

income and expenses arising from intra group transactions,

are eliminated in preparing the consolidated financial

statements, Unrealised gains arising from transactions

with equity-accounted investees are eliminated against

the investment to the extent of the Group’s interest in the

investee. Unrealised losses are eliminated in the same way

as unrealised gains but only to the extent that there is no

evidence of impairment.

3.2. Foreign Currency Transactions

Transactions in foreign currencies are translated to the

respective functional currencies of the Group entities at

exchange rates at the dates of the transactions. Monetary

assets and liabilities denominated in foreign currencies

at the reporting date are re-translated to the functional

currency at the exchange rate at that date.

Non monetary assets and liabilities denominated in foreign

currencies that are measured at fair value are re-translated

to the functional currency at the exchange rate at the date

that the fair value was determined. Non monetary items in

a foreign currency that are measured based on historical

cost are translated using the exchange rate at the date of the

transaction.

Foreign currency differences arising on retranslation are

recognised in profit or loss.

3.3. Assets and Bases of Their Valuation

3.3.1 Property, Plant and Equipment

(a) Recognition and Measurement

All items of property, plant and equipment are initially

recorded at cost. Where items of property, plant and

equipment are subsequently revalued, the entire class

of such assets is revalued. Revaluations are made with

sufficient regularity to ensure that their carrying amounts

do not differ materially from their fair values at the

reporting date.


Subsequent to the initial recognition of the asset at cost,

the revalued property, plant and equipment are carried at

revalued amounts less accumulated depreciation thereon

and accumulated impairment losses. The Group applies

revaluation model to land, building and plant and machinery

and cost model to the remaining assets under property,

plant and equipment which are stated at historical cost less

accumulated depreciation less accumulated impairment

losses, if any.

The cost of an item of property, plant and equipment

comprise its purchase price and any directly attributable

costs of bringing the asset to working condition for its

intended use. The cost of self-constructed assets includes

the cost of materials, direct labour, any other costs directly

attributable to bringing the asset to the working condition

for its intended use and capitalised borrowing costs. This

also includes cost of dismantling and removing the items

and restoring in the site on which they are located. When

parts of an item of property, plant and equipment have

different useful lives, they are accounted for as separate

items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant

and equipment (calculated as the difference between the net

proceeds from disposal and the carrying amount of the item)

is recognised in profit or loss.

(b) Subsequent Costs

The cost of replacing part of an item of property, plant and

equipment is recognized in the carrying amount of the item

if it is probable that the future economic benefits embodied

within the part will flow to the company and its cost can

be measured reliably. The carrying amount of the replaced

part is derecognized.

The costs of the day to day servicing of property, plant and

equipment are recognized in profit or loss as incurred.

(c) Derecognition

The carrying amount of an item of property, plant and

equipment is derecognized on disposal or when no future

economic benefits are expected from its use or disposal.

Gains or losses on derecognition are recognized within other

income in profit or loss.

(d) Depreciation

Items of property, plant and equipment are depreciated on a

straight-line basis in profit or loss over the estimated useful

lives of each component. Leased assets are depreciated over

the shorter of the lease term and their useful lives unless it

is reasonably certain that the Group will obtain ownership

by the end of the lease term. Land is not depreciated. Items

of property, plant and equipment are depreciated from

NOTES TO THE FINANCIAL STATEMENTS

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 CategoryUseful Life

(Years)Depreciation

Rate

Building 20-25 Years 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.


NOTES TO THE FINANCIALSTATEMENTS(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:

Asset CategoryUseful Life

(Years)Depreciation

Rate

Computer Software 05 20%

Amortization methods, useful lives and residual values are

reviewed at each reporting date and adjusted if appropriate.

3.3.3 Leased Assets

Leases in terms of which the Group assumes substantially

all of the risks and rewards of ownership are classified

as finance leases on initial recognition, the leased asset is

measured at an amount equal to the lower of its fair value

and the present value of the minimum lease payments.

Subsequent to initial recognition, the asset is accounted

for in accordance with the accounting policy applicable

to that asset. Other leases are operating leases and are not

recognized in the Group’s statement of financial position.

3.3.4 Investment Property

Investment 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

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

Finished Goods and Work-in-Progress

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

- At standard cost for finished goods

3.3.6 Impairment of Non-Financial Assets

The carrying amounts of the group’s non-financial assets,

other than inventories are reviewed at each reporting date

to determine whether there is any indication of impairment.

If any such indication exists, then the asset’s recoverable

amount is estimated. An impairment loss is recognised if the

carrying amount of an assets or cash generating unit (CGU)

exceeds its recoverable amount.

The recoverable amount of an asset or CGU is the greater

of its value in use and its fair value less costs to sell. In

assessing value in use, the estimated future cash flows are

discounted to their present value using a pre-tax discount

rate that reflects current market assessments of the time

value of money and the risks specific to the asset or CGU.

For impairment testing, assets are grouped together into the

smallest group of assets that generates cash inflows from

continuing use that are largely independent of the cash

inflows of other assets or CGUs.

Impairment losses are recognised in the statement of

comprehensive income. Impairment losses recognised in

respect of CGUs are allocated first to reduce the carrying

amount of any goodwill allocated to CGU (if any) and then


to reduce the carrying amounts of other assets in the CGU

(group of CGUs) on pro rata basis. An impairment loss in

respect of goodwill is not reversed. For other assets, an

impairment loss is reversed only to the extent that the assets

carrying amount does not exceed the carrying amount

that would have been determined, net of depreciation or

amortisation, if no impairment loss had been recognised.

3.3.7 Financial Instruments

(i) Non Derivative Financial Assets

The group initially recognizes loans and receivables on

the date that they are originated. All other financial assets

are recognized initially on the trade date at which the

group becomes a party to the contractual provisions of the

instrument.

A financial asset is measured initially at fair value plus,

in the case of assets not at fair value through profit or

loss, transaction costs that are directly attributable to its

acquisition or issue.

The Group derecognises a financial asset when the

contractual rights to the cash flows from the asset expire;

it transfers the right to receive the contractual cash flows

on the financial asset in a transaction in which substantially

all the risks and rewards of ownership of the financial asset

are transferred. Any interest in transferred financial assets

that is created or retained by the Group is recognised as a

separate asset or liability.

Financial assets and liabilities are offset and the net amount

presented in the statement of financial position when, and

only when, the Group 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;

f Loans and Receivables

f Cash and Cash Equivalents

f Available for Sale Financial Assets

a. Loans and Receivables

Loans and receivables are financial assets with fixed or

determinable payment that are not quoted in an active

market. Such assets are recognised at fair value plus any

directly attributable transaction costs. Subsequent to

initial recognition loans and receivables are measured at

amortised cost using the effective interest method, less any

impairment losses.

b. Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances and call

deposits with maturities of three months or less from the

acquisition date that are subject to an insignificant risk of

changes in their fair value and are used by the Group in the

management of its short-term commitments.

c. Available for Sale Financial Assets

Available-for-sale financial assets are financial assets that

are designated as available for sale and are not classified in

any other categories. Subsequent to initial recognition, they

are measured at fair value and changes therein, other than

impairment losses on available for sale equity instruments

are recognised in other comprehensive income and

presented within equity in the fair value reserve. When an

investment is derecognised, the cumulative gain or loss in

other comprehensive incomes transferred to profit or loss.

Available for sales financial assets comprise of Investment

in Equity Shares and Treasury Bills.

(ii) Non Derivative Financial Liabilities

The Group recognizes financial liabilities initially on the

trade date at which the Group becomes a party to the

contractual provisions of the instrument.

The Group classifies financial liabilities into other financial

liabilities category. Such finance liabilities are recognized

initially at fair value plus any directly attributable

transaction costs. Subsequent to initial recognition, these

financial liabilities are measured at amortised cost using the

effective interest method.

The Group derecognizes a financial liability when its

contractual obligations are discharged, cancelled or expired.

Other financial liabilities comprise Trade Payables, Other

Liabilities and Bank Borrowings.

(iii) Stated 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 price that would be received to sell an

asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date in

the principal or, in absence, the most advantageous market

to which the Group has access at the date.

The fair value of financial instruments that are traded in

an active market at each reporting date is determined by

reference to quoted market prices or dealer price quotations,

without any deduction for transaction costs.

For financial instruments not traded in an active market,

the fair value is determined using appropriate valuation

techniques. Such techniques may include using recent arm’s

length market transactions; reference to the current fair

value of another instrument that is substantially the same;

a discounted cash flow analysis or other valuation models.

(vi) Impairment

The group assesses at each reporting date whether there

is any objective evidence that financial assets or group of

financial assets is impaired. A financial asset or a group of

financial assets is deemed to be impaired if, and only if there

is objective evidence of impairment as a result of one or

more events that has occurred after the initial recognition of

the asset and that loss event has an impact on the estimated

future cash flows of the financial asset that can be estimated

reliably

Objective evidence that a financial assets are impaired

includes default or delinquency by a debtor, restructuring

of an amount due to the company on terms that the

company would not consider otherwise, indications that

a debtor or issuer will enter bankruptcy, adverse changes

in the payment status of borrowers or issuers, economic

conditions that correlate with defaults or the disappearance

of an active market for a security.

(vii) 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.

3.3.7 Defined Benefit Plan

A defined benefit plan is a post-employment benefit plan

other than a defined contribution plan. The Group’s net

obligation in respect of defined benefit plans is calculated

by estimating the amount of future benefit that employees

have earned in return for their service in the current and

prior periods; that benefit is discounted to determine its

present value.

The retirement benefit obligation of the group is based

on the actuarial valuation using Projected Unit Credit

(PUC) methods as recommended by Sri Lanka Accounting

Standard (LKAS 19) Employee Benefits. The calculation is

performed by independent Actuary using the projected unit

credit method. The assumptions based on which the results

of the actuarial valuation was determined, are included in

Note 23.2 to the Financial Statements.

The Group recognizes all actuarial gains and losses arising

from the defined benefits plans immediately in the other

comprehensive income. The liability is disclosed under Non-

current liabilities in the Statement of Financial Position and

not externally funded.

However, as per the Payment of Gratuity Act No. 12 of 1983

the liability to an employee arises only on completion of 5

years of continued service.

(i) Defined Contribution Plans – Employees’ Provident

Fund and Employee Trust Fund

All employees who are eligible for Employees’ Provident

Fund Contributions and Employees’ Trust Fund

Contributions are covered by relevant contributions funds

in line with the relevant statutes. Employer’s contributions

to the defined contribution plans are recognized as an

expense in profit or loss when incurred.

3.3.8 Provisions

A provision is recognized if, as a result of a past event the

Group has a present legal or constructive obligation that can

be estimated reliably, and it is probable that an outflow of

economic benefit will be required to settle the obligation.



3.4 Statement of Comprehensive Income

(a) Revenue

Revenue is recognized to the extent that it is probable

that the economic benefits will flow to the Group and the

revenue and the associated costs incurred or to be incurred

can be reliably measured. Revenue is measured at the fair

value of the consideration received or receivable, net of

trade discounts and sales taxes.

(i) Sale of Goods

Revenue from the sale of goods in the course of ordinary

activities is measured at the fair value of the consideration

received or receivable, net of returns, trade discounts and

volume rebates. Revenue is recognised when persuasive

evidence exists, that the significant risks and rewards of

ownership have been transferred to the customer, recovery

of the consideration is probable, the associated costs and

possible return of goods can be estimated reliably, there is

no continuing management involvement with the goods

and the amount of revenue can be measured reliably.

(ii) Dividend Income

Dividend income recognized when the right to receive the

dividend is established.

(iii) Interest Income

Interest income is recognized on an accrual basis unless

collection is in doubt.

(iv) Gains and Losses

Net gains and losses of a revenue nature arising from the

disposal of property, plant and equipment and other non-

current assets, including investments, are accounted for in

the statement of comprehensive income, after deducting

from the proceeds on disposal, the carrying amount of such

assets and the related selling expenses.

(v) Other Income

Other income is recognized on an accrual basis

(b) Expenditure Recognition

(i) Operating Expenses

All expenses incurred in day to day operations of the business

and in maintaining the property, plant and equipment in

a state of efficiency has been charged to the statement of

comprehensive income in arriving at the profit for the year.

Provision has also been made for impairment of financial

assets, slow moving inventories, all known liabilities and

depreciation on property, plant and equipment.

(ii) Borrowing Costs

Borrowing costs directly attributable to acquisition,

construction or production of assets that necessarily takes

a substantial period of time to get ready for its intended use

or sale are capitalised as part of the cost of the respective

assets. All other borrowing costs are expensed in the period

they occur. Borrowing costs consist of interest and other

costs that Group incurs in connection with the borrowing

of funds.

(iii) Net Finance Income / (Expenses)

Finance income comprises interest income on funds

invested. Interest income is recognized as it accrues in profit

or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings that

are not directly attributable to the acquisition, construction

or productions of a qualifying asset recognised using the

effective interest method.

(c) Taxation

(i) Current Taxes

Current Income tax liabilities for the current and prior

periods are measured at the amount expected to be

recovered from or paid to the Commissioner General of

Inland Revenue. The tax rates and tax laws used to compute

the amount are those that are enacted or substantively

enacted by the reporting date.

The provision for income tax is based on the elements

of income and expenditures reported in the Financial

Statements and computed in accordance with the provisions

of the Inland Revenue Act.

(ii) Deferred Taxation

Deferred taxation is provided, using the liability method, on

all temporary differences at the reporting date between the

tax bases of assets and liabilities and their carrying amounts

for financial reporting purposes.

Deferred tax assets are recognised for all deductible

temporary differences, carry forward of unused tax losses

and unused tax credits to the extent that it is probable that

future taxable profits will be available against which the

deductible temporary differences and carry forward of

unused tax losses / credits can be utilised.

The carrying amount of deferred tax assets is reviewed at

each reporting date and reduced to the extent that it is no

longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are measured at the tax

rates that are expected to apply to the year when the asset is

realized or the liability is settled, based on tax rates (and tax

laws) that have been enacted or substantively enacted as at

the reporting date.

Deferred tax assets and deferred tax liabilities are offset if

legally enforceable right exists to set off current tax assets

against current tax liabilities and when the deferred taxes

relate to the same taxable entity and the same taxation

authority.



(d) Related Party Transactions

Disclosure has been made in respect of the transactions

in which one party has the ability to control or exercise

significant influence over the financial and operating

policies/decisions of the other, irrespective of whether a

price is being charged or not.

The relevant details are disclosed in the respective notes to

the Financial Statements.

(e) Cash Flow Statement

Interest received and dividends received are classified as

investing cash flows, while dividend paid and interest

paid, is classified as financing cash flows for the purpose of

presentation of Statement of Cash Flows which has been

prepared using the ‘Indirect Method’.

(f) Earnings Per Share

Basic Earning Per Share is calculated by dividing the profit or

loss attributable to ordinary shareholders of the Company

by the number of shares outstanding at the reporting date.

(g) Events Occurring After the Reporting Period

Events after the reporting period are those events favorable

and unfavorable, that occur between the end of the

reporting period and the date when the financial statements

are authorized for issue.

The materiality of the events occurring after the reporting

period is considered and appropriate adjustments to or

disclosures are made in the Financial Statements, where

necessary.

(h) Assets Held for Sale

Non-current assets, or disposal groups comprising assets and

liabilities, are classified as held for sale if it is highly probable

that they will be recovered primarily through sale rather

than through continuing use.

Such assets, or disposal groups are generally measured at

lower of their carrying value and fair value less cost to sell.

Any impairment loss on a disposal group is allocated first to

good will, and then to the remaining assets and liabilities on

a pro rata basis, except that no loss is allocated to inventories,

financial assets, deferred tax assets, employee benefit assets,

investment property or biological assets, which continue to

be measured in accordance with the Groups other accounting

policies. Impairment losses on initial classification as held for

sale or held for distribution and subsequent gains and losses

on remeasurement are recognized in profit or loss.

Once classified as held for sale, intangible assets and

property, plant and equipment are no longer amortised or

depreciated and any equity accounted investee is no longer

equity accounted.

04) New Accounting Standards Issued But Not Effective as at Reporting DateThe Institute of Chartered Accountants of Sri Lanka has

issued the following new Sri Lanka Accounting Standards

which will become applicable for financial periods beginning

on or after 1st January 2015.

Accordingly, these Standards have not been applied in

preparing these financial statements.

f SLFRS 9 – “Financial Instruments”

This standard 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 of

financial assets.

SLFRS 9 is effective for annual periods beginning on or after

1st January 2018 with early adoption being permitted.

f SLFRS 14- “Regulatory Deferral Account”

SLFRS 14 establishes the financial reporting requirements

for regulatory deferral account balances that arise when an

entity provides goods or services to customers at a price or

rate that is subject to rate regulation. SLFRS 14 is effective

for annual reporting periods beginning on or after 1st

January 2016, with early adoption permitted.

f SLFRS 15 – “Revenue from Contracts with Customers”

SLFRS 15 establishes a comprehensive framework for

determining whether, how much and when revenue

is recognized. It replaces existing revenue recognition

guidance, including LKAS 18 “Revenue” and LKAS 11

“Construction Contracts”

The Group has not yet assessed the impact on the application

of these standards mentioned above.



Group Company


5. Revenue

Local Sales 2,952,483,649 3,449,996,949 2,790,532,513 3,258,774,169

Export Sales 83,527,209 32,536,205 74,957,500 17,284,903

3,036,010,858 3,482,533,154 2,865,490,013 3,276,059,072

6. Other Income

Gain on Disposal of Available for Sale Investments - 111,421,175 - 111,421,175

Gain on Disposal of Property, Plant and Equipment 46,690,847 158,533 46,690,847 158,533

Dividend Income 523,090 5,104,813 523,090 5,104,813

Scrap Sales 4,008,947 3,491,368 3,777,596 3,491,368

51,222,884 120,175,889 50,991,533 120,175,889

7. Profit from Operations

Profit from Operations is stated after charging all the expenses including following;

Directors' Fees and Emoluments 17,513,750 16,627,732 16,713,750 15,527,732

Auditors' Remuneration - Audit 1,046,300 940,600 900,000 800,000

- Audit Related Services 279,970 1,180,332 279,970 1,180,332

Depreciation and Amortization 84,936,318 81,456,225 68,646,505 66,035,723

Provision for Obsolete Inventories 9,669,251 52,289,541 9,669,251 52,289,541

Provision for Impairment of Subsidiaries - - 62,000,000 -

Provision for Impairment of Other Receivables 4,500,000 88,936,723 4,500,000 88,936,723

Provision for Impairment of Trade Receivables 24,350,525 53,362,608 9,532,904 48,798,529

Provision for Impairment of Assets Held for Sale - 3,000,000 - 3,000,000

Personnel Costs

Salaries, Wages and Related Costs 136,348,081 125,389,884 130,502,864 119,120,769

Defined Contribution Plan Cost 17,459,396 15,292,184 16,701,986 14,352,746

Defined Benefit Plan Cost (Note 25) 5,356,867 5,927,428 5,588,217 5,692,935



Group Company


8. Net Finance Costs

Interest Income 2,768,536 2,135,135 2,768,536 1,242,408

Net Exchange Gain - 516,261 - 420,557

2,768,536 2,651,396 2,768,536 1,662,965

8.2 Finance Costs

Interest on - Overdraft 6,790,597 10,554,055 2,208,297 4,017,056

- Lease 146,957 472,247 146,957 472,247

- Import Demand Loans 55,539,713 74,144,580 51,449,934 64,500,813

- Bank Loans 22,420,515 32,999,116 14,438,296 22,772,040

- Commercial Papers Issuing Interest - 267,297 - 267,297

Net Exchange Loss 22,400,017 - 21,082,058

107,297,799 118,437,295 89,325,542 92,029,453

Net Finance Costs 104,529,263 115,785,899 86,557,006 90,366,488

9. Income Tax Expense

Income Tax on Profit for the Year (Note 9.1) 27,804,338 57,615,420 27,804,338 57,365,457

Deferred Tax Charge (Note 26.2) 50,697,338 51,110,463 51,559,691 40,671,404

78,501,676 108,725,883 79,364,029 98,036,861

9.1 Reconciliation Between Accounting Profit/(Loss) and Tax Expense

Profit Before Tax 273,134,238 359,185,690 255,285,591 401,813,176

Aggregate Disallowed Income (3,291,626) (138,535,131) (3,291,626) (117,926,929)

Aggregate Disallowable Expenses 139,879,409 239,377,301 162,453,390 223,846,579

Aggregate Allowable expenses (212,815,209) (160,766,664) (186,857,538) (103,918,869)

Taxable Profit 196,906,813 299,261,196 227,589,817 403,813,957

Income from Other Sources 23,337 1,162,888 23,337 270,161

Total Statutory Income 196,930,149 300,424,084 227,613,154 404,084,118

Tax Loss Claimed (Note 9.2) (79,664,604) (141,429,441) (79,664,604) (141,429,441)

Qualifying Payments (33,967,504) (56,559,978) (33,967,504) (56,559,978)

Taxable Income 83,298,041 102,434,665 113,981,046 206,094,699

Tax on Exports @ 12% 794,638 255,794 794,638 255,794

Tax on Balance Income @ 28% 27,009,700 57,359,626 27,009,700 57,109,663

27,804,338 57,615,420 27,804,338 57,365,457

9.2 Accumulated Tax Losses

Balance as at 1st April 228,698,903 349,850,504 228,698,903 349,850,504

Adjustments (138,138,448) 20,277,840 (138,138,448) 20,277,840

Tax Loss Claimed (79,664,604) (141,429,441) (79,664,604) (141,429,441)

Balance as at 31st March 10,895,851 228,698,903 10,895,851 228,698,903



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%.


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 Earning Per ShareBasic 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 2016 2015 2016 2015

Profits Attributable to Ordinary Shareholders (Rs.) 199,934,090 262,508,543 175,921,562 303,776,315

Weighted Average Number of Ordinary Shares 537,512,430 537,512,430 537,512,430 537,512,430

Basic Earnings Per Share (Rs.) 0.37 0.49 0.33 0.57

11. Dividend per Share

Dividend Declared and Paid During the Year (Rs.) 107,502,486 107,502,486 107,502,486 107,502,486

Average Number of Ordinary Shares 537,512,430 537,512,430 537,512,430 537,512,430

0.20 0.20 0.20 0.20

12. Discontinued Operations

Group Company


Assets Classified as Held for Sale

Sierra Power (Private) Limited (Note 12.1) 147,854,862 - - -

Plant & Machinery (Note 12.2) 18,000,000 18,000,000 18,000,000 18,000,000

165,854,862 18,000,000 18,000,000 18,000,000

Liabilities Directly Associated with Assets Classified as Held for Sale

Sierra Power (Private) Limited (Note 12.1) 6,589,430 - - -

6,589,430 - - -

12.1 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. Accordingly, this investment has been

classified as an Held for Sale Investment as at the reporting date.



For the year ended 31st March 2016 2015Rs. Rs.

12.1.1 Loss After Tax From Discontinued Operations

Revenue - -

Cost of Sales - -

Gross Profit - -

Other Income - 892,727

Administrative Expenses (1,822,544) (2,085,388)

Loss from Operations (1,822,544) (1,192,661)

Finance Cost - (2,261)

Loss before Tax (1,822,544) (1,194,922)

Taxation - (249,964)

Loss for the year from Discontinued Operations (1,822,544) (1,444,886)

Loss per Share (0.21) (0.17)

As at 31st March 2016 2015Rs. Rs.

12.1.2 Assets and Liabilities Classified as held for sale

Assets

Property, Plant & Equipment 123,269,433 122,095,803

Debtors & Other Receivables 24,584,790 24,734,550

Cash in Hand & Bank 639 470,229

Assets Classified as Held for Sale 147,854,862 147,300,582

Liabilities

Amount Due to Sierra Cables PLC 59,846,259 56,750,375

Long Term Loans 6,000,000 6,000,000

Trade & Other Payables 589,430 1,147,800

Income Tax Payables - 160,691

Liabilities Directly Associated with Assets Classified as Held for Sale 66,435,689 64,058,866

Net Assets Directly Associated with Disposal 81,419,173 83,241,716

For the year ended 31st March 2016 2015Rs. Rs.

12.1.3 Cash flow from/(Used in) Discontinued Operation

Net Cash Flows Generated from /(Used In) Operating Activities 715,511 31,604,849

Net Cash From/(Used In) in Investing Activities (1,185,101) (14,282,990)

Net Cash Flows From/(Used In) in Financing Activities - (15,747,400)

Net Increase/ (Decrease) in Cash and Cash Equivalents (469,590) 1,574,459

12.2 The Company has classified part of its Plant and Machinery as Non Current Asset Held for Sale during the previous year, following

the decision by Board of The Directors to dispose the same. Effort to sell the Plant and Machinery was commenced during the previous

financial year and Directors are of the opinion that they still commit to the initial decision to sell the assets and actively involved in

the same as at the end of the reporting period. Further Directors are of the opinion that, there is no further impairment on the carrying

amount of the asset as at 31st March 2016.


66 Sierra Cab

les PLC

A

nn

ual R

eport 20

15/2016

13. Property, Plant and Equipment

Land Buildings Plant and

Machinery Motor

Vehicle

Leased Motor Vehicle

Furniture and

Fittings

Factory Equipment

Office & Computer

Equipment

Capital Work in Progress

Total2016

Total 2015

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Company

Cost/Revalued AmountBalance as at 1st April

135,339,300 312,160,111 544,042,974 25,362,504 20,071,130 4,341,989 43,225,158 19,048,419 3,892,353 1,107,483,938 1,050,581,573

Additions 610,050 - 4,107,521 18,640,000 - 272,767 12,076,950 4,843,160 15,465,884 56,016,332 53,706,357

Transfers - 4,109,306 - - - - - - (4,109,306) - 3,421,356

Disposals - - - (17,376,057) (20,071,130) - - - - (37,447,187) (225,348)

Balance as at 31st March 135,949,350 316,269,417 548,150,495 26,626,447 - 4,614,756 55,302,108 23,891,579 15,248,931 1,126,053,083 1,107,483,938

Depreciation

Balance as at 1st April - 38,823,977 99,253,928 24,352,851 16,438,141 3,111,399 27,427,058 14,712,992 - 224,120,346 160,020,081

Charge for the Year - 15,659,372 40,036,120 3,355,126 925,789 533,655 4,807,321 2,283,511 - 67,600,894 64,286,146

Disposal - - - (17,068,021) (17,363,930) - - - - (34,431,951) (185,881)

Balance as at 31st March - 54,483,349 139,290,048 10,639,956 - 3,645,054 32,234,379 16,996,503 - 257,289,289 224,120,346

Net Book Value

Balance as at 31st March 2015 135,339,300 273,336,134 444,789,046 1,009,653 3,632,989 1,230,590 15,798,100 4,335,427 3,892,353 883,363,592

Balance as at 31st March 2016 135,949,350 261,786,068 408,860,447 15,986,491 - 969,702 23,067,729 6,895,076 15,248,931 868,763,794

NO

TE

S TO

TH

E F

INA

NC

IAL

ST

AT

EM

EN

TS

An

nu

al Rep

ort 2015/20

16 Sierra C

ables P

LC 67

13. Property, Plant and Equipment

As at 31st March 2016 Land Buildings Plant and

Machinery Motor

Vehicle

Leased Motor Vehicle

Furniture and

Fittings

Factory Equipment

Office & Computer

Equipment

Capital Work in Progress

Total2016

Total 2015

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Group

Cost/Revaluation

Balance as at 1st April 202,264,801 360,859,736 704,858,931 31,660,700 20,071,130 4,897,486 46,073,208 21,826,317 124,290,727 1,516,803,036 1,392,319,122

Additions 610,050 - 4,107,521 19,693,975 - 435,587 12,182,850 5,036,885 17,330,444 59,397,312 104,101,060

Transfers - 4,109,306 - - - - - - (4,109,306) - -

Disposals - - - (17,794,414) (20,071,130) - - - - (37,865,544) (225,348)

Surplus on Revaluation - - - - - - - - - - 20,608,202

Reclassification to Assets Held for Sale

- - - - - - - (57,350) (123,257,825) (123,315,175) -

Balance as at 31st March 202,874,851 364,969,042 708,966,452 33,560,261 - 5,333,073 58,256,058 26,805,852 14,254,039 1,415,019,629 1,516,803,036

Depreciation

Balance as at 1st April - 41,905,511 123,363,940 30,152,469 16,438,131 3,564,594 33,101,387 16,947,013 - 265,473,045 185,952,279

Charge for the Year - 18,094,352 51,427,671 3,558,123 925,789 585,228 6,837,450 2,462,093 - 83,890,706 79,706,647

Disposal - - - (17,326,006) (17,363,920) - - - - (34,689,936) (185,881)

Reclassification to Assets Held for Sale

- - - - - - - (45,742) - (45,742) -

Balance as at 31st March - 59,999,863 174,791,611 16,384,586 - 4,149,822 39,938,837 19,363,364 - 314,628,073 265,473,045

Net Book Value

Balance as at 31st March 2015 202,264,801 318,954,225 581,494,991 1,508,231 3,632,999 1,332,892 12,971,821 4,879,304 124,290,727 - 1,251,329,991

Balance as at 31st March 2016 202,874,851 304,969,179 534,174,841 17,175,675 - 1,183,251 18,317,221 7,442,448 14,254,039 1,100,391,556 -

NO

TE

S TO

TH

E F

INA

NC

IAL

STA

TE

ME

NT

S


13. Property, Plant and Equipment (Continued)

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 March 2016 2015 2016 2015Rs. Rs. Rs. Rs.

Motor Vehicles 7,026,200 22,526,369 7,026,200 22,526,369

Leased Motor Vehicle - 8,339,319 - 8,339,319

Furniture and Fittings 2,123,013 1,656,822 2,123,013 1,656,822

Factory Equipment 20,609,025 20,350,554 20,609,025 20,350,554

Office & Computer Equipment 7,564,055 7,787,680 7,564,055 7,787,680

37,322,293 60,660,744 37,322,293 60,660,744

13.2 Details of Property Plant and Equipment of the Group recorded at Valuation are Indicated below:

Property LocationMethod of Valuation

Effective dateof valuation

ValuerLand Extent

(Acres)

Carrying Value of Revalued Assetsas at 31st March2016 if carried at

Historical Cost

Carrying Valueof Revalued

Assets as at 31st March 2016

Rs. Rs.

Sierra Cables PLC Galwarusa Road, Korathota (within the limits of kaduwela Pradeshiya Sabha)

MarketApproach

31st March2013

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

5.6375 339,791,759 806,595,865

339,791,759 806,595,865

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

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 March2016

As at 31st March2015

Rs. Rs.

At Cost 373,442,000 462,790,458

At Valuation 717,807,238 870,749,562



Group Company


14. Intangible Assets

Cost


Additions 637,090 450,000 637,090 450,000


Amortization Charge


Charge for the year 977,166 928,227 977,166 928,227


Carrying Value as at 31st March 1,269,421 1,609,497 1,269,421 1,609,497

Intangible assets represents the cost of Computer Software acquired by the Company. The initial cost of fully-amotised intangible

assets which are still in use as at 31st March 2016 was Rs.8,225,082/-.

Group Company


15. Investment Property

Cost


Disposals (16,427,000) - (16,427,000) -

Balance as at 31st March - 16,427,000 - 16,427,000

Depreciation


Charge for the Year 68,446 821,350 68,446 821,350

Disposals (2,532,497) - (2,532,497) -

Balance as at 31st March - 2,464,051 - 2,464,051

Carrying Value as at 31st March - 13,962,949 - 13,962,949

The Investment Property which consists 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 financial year ended 31st March 2016.



Group Company


16. Investments in Subsidiaries

Sierra Power (Private) Limited (Note 12) - - 86,680,010 86,680,010

Sierra Industries (Private) Limited - - 145,600,010 145,600,010

Sierra Cables East Africa Limited - - 28,780,000 -

261,060,020 232,280,020

Provision for Impairment of Subsidiaries (Note 16.1) - - (79,000,000) (17,000,000)

- - 182,060,020 215,280,020

16.1 Provision for Impairment of Subsidiaries

Balance as at 1st April - - 17,000,000 17,000,000

Provision made during the year - - 62,000,000 -

Balance as at 31st March - - 79,000,000 17,000,000


16.2 Summarized Financial Information of Subsidiaries

Number of shares 22,100,002

Holding 82.35%

Cost of the Investment 145,600,010

16.3 Non-Controlling Interest (NCI) in Subsidiary

NCI Percentage (%)

Total Assets 455,296,381

Total Liabilities 433,417,618

Net Assets 21,878,763

Loss for the year (38,683,166)

Other Comprehensive Income -

Total Comprehensive Income (38,683,166)

Loss allocated to NCI (6,827,579)

Carrying Amount of NCI 3,861,602

Cash Flows from Operating Activities 11,846,584

Cash Flows from Investing Activities (52,041)

Cash Flows from Financing Activities (12,771,119)

Net Increase/ (Decrease) in Cash and Cash Equivalents (976,576)



Group Company


17. Investments in Equity Accounted Investees

Tea Leaf Resort Holdings (Private) Limited (Note 17.1) - - 2,500,000 2,500,000

T & G Lanka (Private) Limited (Note 17.2) 2,746,962 2,453,020 3,300,000 3,300,000

2,746,962 2,453,020 5,800,000 5,800,000

17.1 Tea Leaf Resort Holdings (Private) Limited

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

Share of Loss for the Year (Net of 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

17.2 T & G Lanka (Private)Limited

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

Share of Profit/(Loss) for the Year (Net of Tax) 293,942 (236,177) - -

Accumulated Share of Loss Brought Forward (846,980) (610,803) - -

Net Asset Value of Associate as at 31 March 2,746,962 2,453,020 3,300,000 3,300,000

T & G Lanka(Private) Limited

Tea Leaf Resort Holdings (Private) Limited

2016 2015 2016 2015Rs. Rs. Rs. Rs.

17.3 Summarized Financial Information of Associates

Revenue 37,960,270 42,209,727 - -

Profit/(Loss) after Tax 1,049,790 (843,488) (119,470) (22,356)

Total Assets 20,499,195 15,224,902 6,657,719 6,782,054

Total Liabilities 9,421,729 5,197,226 7,114,040 7,118,905



2016 2015

Group / CompanyNo of

Ordinary Shares/Units

Fair ValueNo of

Ordinary Shares/Units

Fair Value

Rs. Rs.

18. Available for Sale Investments

National Development Bank PLC 20,250 3,404,025 20,250 5,032,125

Richard Pieris Exports PLC 10,359 2,278,980 10,359 1,406,753

ACL Cables PLC 760 76,000 760 57,760

DFCC Bank PLC 10,000 1,385,000 10,000 2,029,000

Chevron Lubricants PLC 1,839 555,562 1,839 722,727

Kelani Cables PLC 200 22,500 200 16,000

NDB Aviva Growth Fund Investment in Units 219,984 20,999,628 219,984 20,999,628

Capital Alliance High Yield Fund Investment in Units 1,050,280 16,033,996 - -

44,755,691 30,263,993

Group Company


19. Inventories

Raw Materials 120,700,207 100,664,879 98,936,178 76,264,017

Work in Progress 132,600,328 91,894,477 132,600,328 91,894,477

Finished Goods 455,455,028 393,028,459 430,668,490 361,716,419

Packing Materials 13,300,592 17,392,486 13,300,592 17,392,486

Stationeries 1,802,747 2,906,230 1,802,747 2,906,230

Engineering Items 24,562,288 38,090,671 19,663,932 35,886,484

Goods in Transit 18,612,623 24,107,276 18,612,623 24,107,276

767,033,812 668,084,478 715,584,890 610,167,389

Less: Provision for obsolete Inventories (Note 19.1) (61,958,792) (52,289,541) (61,958,792) (52,289,541)

705,075,020 615,794,937 653,626,097 557,877,848

19.1 Provision for Obsolete Inventories

Balance as at 1st April 52,289,541 - 52,289,541 -

Provision made During the Year 9,669,251 52,289,541 9,669,251 52,289,541




Group Company


20. Trade and Other Receivables

Trade Receivables 1,090,617,177 1,134,735,082 969,566,099 1,009,227,726

Less: Provision for Impairment (Note 20.1) (168,115,337) (143,764,812) (148,733,637) (139,200,733)

922,501,840 990,970,270 820,832,462 870,026,993

VAT Receivable 88,243,685 86,113,291 34,893,842 37,078,188

Deposits, Prepayments and Advances 76,826,120 50,107,545 66,662,624 48,512,370

Other Receivables 17,125,095 24,734,550 - -

1,104,696,740 1,151,925,656 922,388,928 955,617,551

Less: Provision for Impairment (Note 20.2) (59,244,162) (125,835,057) (59,244,162) (125,835,057)

1,045,452,578 1,026,090,599 863,144,766 829,782,494

20.1 Provision for Impairment of Trade Receivables


Provision made during the Year 24,350,525 53,362,608 9,532,904 48,798,529


20.2 Provision for Impairment of Other Receivables


Provision made during the Year 4,500,000 88,835,057 4,500,000 88,835,057

Provision written off (71,090,895) - (71,090,895) -




Group Company


22. Amounts Due from Related Companies

Non trading

Sierra Civil Engineering & Construction (Private) Limited 385,000 1,685,000 385,000 1,685,000

Sierra Power ((Private) Limited - - 59,846,259 56,750,375

Sierra Industries (Private) Limited - - 134,638,698 157,968,624

Tea Leaf Holding (Private) Limited - 2,500,000 - 2,500,000

Sierra Cables East Africa Ltd - - 2,854,664 -

385,000 4,185,000 197,724,621 218,903,999

Trading

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

Sierra Information Technologies (Private) Limited 4,052,915 2,362,024 4,052,915 2,362,024

Sierra Readymix (Private) Limited 57,437 45,361 57,437 45,361

Sierra Water Works (Private) Limited 2,936 2,936 2,936 2,936

Sierra Construction Limited 100,626,267 82,922,887 100,626,267 82,922,887

Sierra Development (Private) Limited 55,868 217,654 55,868 217,654

Sierra Construction & General Sales Join Venture 859 859 859 859

Sierra Piling (Private) Limited 89,672 - 89,672 -

105,502,739 86,168,506 105,502,739 86,168,506

Total 105,887,739 90,353,506 303,227,360 305,072,505

23. Cash and Cash Equivalents

Favourable Balances

Cash in Hand and at Bank 80,234,093 43,012,819 73,005,443 42,405,237

80,234,093 43,012,819 73,005,443 42,405,237

Unfaovurable Balances

Bank Overdraft (72,104,387) (35,393,566) (35,542,771) -

Cash and Cash Equivalents for Cash Flow Purposes 8,129,706 7,619,253 37,462,672 42,405,237

24. Stated Capital

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

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

25. Retirement Benefit Obligations


Current Service Cost 2,868,404 3,740,558 3,099,755 3,530,464

Interest Cost 2,488,462 2,186,871 2,488,462 2,162,471

Actuarial (Gain) / Loss (1,545,718) 600,534 (1,545,718) 852,832

Benefits Paid by the Plan (4,395,438) (1,888,113) (4,395,438) (1,888,113)




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

Group Company


Current Service Cost 2,868,404 3,740,558 3,099,755 3,530,464

Interest Cost 2,488,462 2,186,871 2,488,462 2,162,471

Recognised in the Profit or Loss 5,356,866 5,927,429 5,588,217 5,692,935

Actuarial (Gain)/Loss (1,545,718) 600,534 (1,545,718) 852,832

Recognised in Other Comprehensive Income (1,545,718) 600,534 (1,545,718) 852,832

25.2 An Actuarial Valuation of the Retirement Benefit Obligations of the Company was carried out as at 31st March 2016, by Messes M.

Poopalanathan, a firm of Professional Actuaries. The valuation was carried out as per the “Projected Unit Credit” (PUC) method.

2016 2015Rs. Rs.

Expected Annual Average Salary Increment 10% 10%

Discount Rate 11% 9.5%

Retirement Age 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.

25.3 The calculation of the Employee Benefit Obligation is sensitive to the assumptions set out above. The following table summarizes how

the impact on the defined benefit obligation at the end of the reporting period would have increased (decreased) as a result of a change

in the respective assumptions by one percent.

Group Company

Defined Benefit Obligation Defined Benefit Obligation

One percentage point increase

One percentage point decrease

One percentage point increase

One percentage point decrease

Rs. Rs. Rs. Rs.

Effect on the Discounting Rate (599,354) 688,835 599,354 (688,835)

Effect on the Salary Escalation Rate (685,676) 601,339 685,676 (601,339)

Group Company


26. Deferred Tax Liability


Provision for the Year (Note 26.2) 51,123,647 50,942,996 51,986,000 40,433,293




26.1 The Deferred Tax Liability is attributable to the followings

2016 2015

As at 31st March Temporary Difference

Tax Effect Temporary Difference

Tax Effect

Rs. Rs. Rs. Rs.

Company

On Property, Plant and Equipment 619,929,501 170,976,557 644,624,474 179,979,153

On Retirement Benefit Obligations (25,929,429) (7,151,336) (26,282,368) (7,338,037)

On Accumulated Tax Losses (10,895,851) (3,050,838) (228,698,903) (63,852,734)

160,774,382 108,788,382

Group

On Property, Plant and Equipment 732,936,946 202,618,641 741,561,396 207,121,491

On Retirement Benefit Obligations (26,208,882) (7,229,583) (26,793,172) (7,481,062)

On Accumulated Tax Losses (10,895,851) (3,050,838) (228,698,903) (63,852,734)

On Impairment Provision (19,381,700) (5,426,876) - -

186,911,342 135,787,695

Group Company


26.2 Deferred Tax Liability - (Reversal)/Provision

Provision/(Reversal) for the Year

Statement of Comprehensive Income 50,697,338 51,110,463 51,559,691 40,671,404

Other Comprehensive Income 426,309 (167,467) 426,309 (238,111)

51,123,647 50,942,996 51,986,000 40,433,293

27. Long Term Loans


Loans Obtained 57,000,000 326,000,000 57,000,000 280,000,000

Repayments (91,383,883) (290,672,244) (61,384,701) (241,966,200)

Reclassified to Liabilities directly associated with Assets Held for Sale (6,000,000) - - -


Current Portion of Long Term Loans 98,817,384 93,990,384 68,818,200 57,991,200

Non Current Portion of Long Term Loans 142,263,091 187,473,974 106,604,820 121,816,521



Group Company


28. Lease Liabilities

Balance as at 1 April 2,966,779 6,989,548 2,966,779 6,989,548

Rentals Paid (2,966,779) (4,022,769) (2,966,779) (4,022,769)

Gross Lease Liability - 2,966,779 - 2,966,779

Less: Interest in Suspense - (278,813) - (278,813)

Total Liability at the end of the Year - 2,687,966 - 2,687,966

Current Portion of Lease Liabilities - 1,629,556 - 1,629,556

Non Current Portion of Lease Liabilities - 1,058,410 - 1,058,410

29. Trade and Other Payables

Trade Creditors 286,761,674 235,879,163 248,790,651 216,060,428

Other Payables 106,961,692 69,534,908 38,582,298 26,651,013

Taxes Payable 18,592,708 26,519,855 18,592,708 26,519,855

412,316,074 331,933,926 305,965,657 269,231,296

30. Import Demand Loan


Loans Obtained 2,059,584,799 2,446,672,271 1,978,681,382 2,368,371,131

Repayments (2,058,912,616) (2,450,201,098) (1,995,237,264) (2,315,864,515)


31. Contingent LiabilitiesThere were no material contingent liabilities as at the reporting date which require adjustments to or disclosure in the Financial

Statements

32. Commitments

There were no material Capital Commitments as at the reporting date.

33. Events Occurring After the Reporting PeriodThere were no material Events Occurring after the reporting period that require adjustments to or disclosure in the Financial

Statements.



34. Assets Pledged as Security and Repayment TermsThe following assets have been pledged as securities against the long term and short term borrowings that have been disclosed in Notes

26, 27 and 29 to the Financial Statement respectively.

Sierra Cables PLC

Name of the Bank Assets Pledged Facility Obtained Interest Rate/

Commission RateRepayment Terms

Commercial Bank of Ceylon PLC

(1) None Overdraft of

Rs.40 Mn

PLR+1.5% p.a None

(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+1.75% p.a

AWPLR+1.5% p.a

Repayable over 180 days


(3) A Primary Mortgage No.

FCC/11/140 Valued at Rs. 35 Mn

as at 13/1/2012secured upon

Tribular Strander /Rewinding

Machine.

Term Loan (1) of Rs. 35 Mn

AWPLR+2% p.a 49 monthly Installments

(4) A Primary Mortgage

No.FCC/11/141 secured upon

160mm Bow Standing Machine

and 8 Wire Drawing and

anncaling Line.



Term Loan of Rs. 30 Mn

AWPLR+2% p.a

AWPLR+2% p.a

AWPLR+2% p.a

22 Monthly Installments



(5) 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

(6) General term and conditions

relating to loan for Rs. 57 Mn to

be signed.

Term Loan for Rs. 57 Mn or equivalent USD 400,00

AWLR+ 1.5% 48 Monthly Installments

(6 months grace period)



Sierra Cables PLC



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

Sierra Cables PLC



Cargills Bank Limited

(1) Mortgage over stock and Debtors

for Rs. 100 Mn

Documentary Credit for Rs. 100 Mn

Sight- 0.25%

Usance- 0.375%



for Rs. 100 Mn

Acceptance Facility for Rs. 100 Mn

Bank’s prevaling schedule of charges.



for Rs. 100 Mn

Shipping Guarantee for Rs. 100 Mn.

0.25% together with levies


for Rs. 100 Mn

Clean Import Loan for Rs. 100 Mn

AWPLR+1.75% Repayable over 180 days



Sierra Cables PLC



People’s Bank

(1) i.) Indemnity of the Company

ii.) 10% cash Margin

iii.) 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 Company

ii.) 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. 500 Mn Promissory

note

Short term Loan (Import/Local)

(Sub limit of under facility No 02)

AWPLR+2.5%

2% rebate on Regular re payments


(4) Mortgage over machinery Term Loan for Rs. 200 Mn

(Sub limit of under facility No 02)

AWPLR+2.5%

2% rebate on Regular re payments


(5) Mortgage over stocks and book

debts for Rs. 500 Mn Promissory

note

Overdraft Facility for Rs. 20 Mn

AWPLR+0.5% On Demand




Sampath 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



Primary Mortgage bond for

Rs. 35 Mn over factory Land and

Building at Korathota, Kaduwela

in extent of 2A:3R:6.17P

Secondary Mortgage bond for

Rs. 17.6 Mn over factory Land and










Sampath Bank PLC


Primary Mortgage Bond for Rs. 65

Mn over machinery




Primary Mortgage bond for

Rs. 35 Mn over factory Land and



Secondary Mortgage bond for

Rs. 17.6 Mn over factory Land and





(5) Overdraft Agreement for Rs. 60

Mn

Hypothecation Bond over Stocks

and Book Debts of the Company

for Rs. 160 Mn

Overdraft of Rs. 40 Mn AWPLR+2.5% p.a On Demand

(6) Short term Import Loan

Agreement for Rs. 100 Mn



for Rs. 160 Mn

Short term Import Loan AWPLR+2.5% p.a Repayable over 180 days

(7) Accepted Bills of Exchanged



for Rs. 160 Mn

Acceptance facility for Rs. 100 Mn.

Prevailing Rate of the Bank


(8) Documentary Credit Agreement

Relative Bills of Exchange and

Shipping Documents



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



Sierra Cables East Africa Limited



Commercial Bank of Ceylon PLC

(1) i). Corporate Guarantee for Rupee

equivalent of USD 990,000.

ii). Lien over documents of title to

goods under import

iii). Individual drafts covering the

documents relating to goods

released on acceptance to be

lodged with the bank.

One-Off letter of Credit facility for USD 990,000.

Sight/Usance 0.25% p.q


(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


An

nu

al Rep

ort 2015/20

16 Sierra C

ables P

LC 83

35. Related Party Disclosure

35.1 Transactions with Related Parties

Name of the Company Nature of the Transactions Transaction ValueBalance Outstanding

as at 31st March

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Transactions with Subsidiary Companies

Sierra Power (Private) Limited Amount Paid for Capital Expenses 15,931,440 59,846,259 56,750,375

Amount Paid for Other Capital Expenses -

Amount Paid for Administration Expenses 3,095,884 1,892,525

Equity Shares allocated against the paid Expenses -

Funds Transfers 179,250,000

Settlements (149,802,254)

Transfer of Payable to Sierra Development (Private) Limited (6,000,000)

Sierra Industries (Private) Limited Amount Paid for Administration Expenses 2,959,854 4,178,315 134,638,698 157,968,624

Funds Received from Sierra Industries Customers (266,191) (415,100)

Interest Chargers on Import Loans 1,024,411 -

Funds Transfers /Settlements (27,048,000) 15,000,000

Payment for Equity Investment-Pending Allotment - 23,400,000

Payments for Import Related Expenses - 66,265,330

Funds Paid for Equity Investment - 54,600,000

Loan Granted - 700,000

Loan Repayment - (700,000)

Sierra Cables East Africa Limited Fund Transfers 20,305,265 - 2,854,664 -

Amount Paid for Pre Operation Expenses 2,854,664 -

Investment in Share Capital (20,305,265) -

NO

TE

S TO

TH

E F

INA

NC

IAL

STA

TE

ME

NT

S

84 Sierra C

ables P

LC

An

nu

al Rep

ort 2015/20

16

35. Related Party Disclosure (Continued)

35.1 Transactions with Related Parties (Continued)

Name of the Company Nature of the Transactions Transaction ValueBalance Outstanding

as at 31st March

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Transactions with Other Related Companies

Sierra Construction Limited Sale of Goods 158,627,411 135,398,320 100,626,267 82,922,887

Settlement of Invoices (140,924,031) (115,563,444) (17,703,380)

Sierra Civil Engineering and Construction (Private) Limited Loan Settlement (1,300,000) (1,100,000) 385,000 1,685,000

Sierra Electrical Engineering (Private) Limited Sale of Goods - - 616,785 616,785

Sierra Global Networks (Private) Limited Sale of Goods - - - -

Settlement of Invoices - (2,393,006)

Sierra Information Technologies (Private) Limited Sale of Goods 4,877,056 9,601,558 4,052,915 2,362,024

Settlement of Invoices (3,186,166) (7,699,315)

Sierra Water Works (Private) Limited Sale of Goods - 2,936 2,936 2,936

Settlement of Invoice - -

Sierra Redimix (Private) Limited Sale of Goods 43,418 294,488 57,437 45,361

Settlement of Invoice (31,343) (387,408)

Sierra Development (Private) Limited Sale of Goods 55,868 227,409 55,868 217,654

Settlement of Invoice (217,654) (9,755)

Sierra Construction & General Sales Join Venture Sale of Goods - 482,863 859 859

Settlement of Invoice - (482,004)

Tea Leaf Holding (Private) Limited Loan granted - - - 2,500,000

Provision made (2,500,000)

Sierra Piling (Private) Limited Sale of Goods 89,672 - 89,672 -

NO

TE

S TO

TH

E F

INA

NC

IAL

ST

AT

EM

EN

TS


35. Related Party Disclosure (Continued)

35.1 Transactions with Key Management Personnel

Key Management personnel are those having authority and responsibility for planning ,directing and controlling the activities of

the Group. Accordingly the Directors of the Company (including Executive and Non Executive Directors ) have been classified as Key

Management Personnel of the Company and the Group.

Group Company


Directors' Fees 6,600,000 5,500,000 5,500,000 4,400,000

Short Term Employee Benefits 11,213,750 11,127,732 11,213,750 11,127,732

17,813,750 16,627,732 16,713,750 15,527,732

36. Going Concern


“The Company has recorded an accumulated loss amounting to Rs.183,329,458/- as at 31st March 2016 and its Current Liabilities

exceeded its Current Assets as at 31st March 2016 by Rs.144,857,127/-. 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.

These indications cast a significant doubt whether the Company will be able to continue as a going concern in the future. However,

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 appointing Production Manager & Consultant to improve the

productivity and minimize the wastage, restructuring the entire sales process by appointing a new Sales Manager, Redistributors,

Introducing new product to the market, registering and obtaining the water board approval for supply of uPVC pipes and fittings The

Board expects this subsidiary to turn around with the expected significant increase in revenue during the next financial year.

Further, Sierra Cables PLC, the parent of the Company has assured to provide necessary financial assistance 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 21st June 2016.

37. Financial Risk Management

37.1 Introduction and Overview

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

f Credit Risk

f Liquidity Risk

f 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.



37. Financial Risk Management (Continued)

i. Credit Risk (Continued)

Exposure to Credit Risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the

reporting date was as follows;

Group Company


Trade Receivables 1,090,617,177 1,134,735,082 969,566,099 1,009,227,726

Amounts due from Related Companies 105,887,739 90,353,506 303,227,360 305,072,505

Balances with Banks 80,234,093 43,012,819 73,005,443 42,405,237

1,276,739,009 1,268,101,407 1,345,798,902 1,356,705,468

Trade Receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The management has

established a credit policy under which each new customer is analysed individually for credit worthiness before the Group standard

payment and delivery terms offered.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of Trade Receivables. The

main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss

component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss

allowance is determined based on historical data of payment statistics for similar financial assets.

The maximum exposure to credit risk for trade and other receivables is the carrying amounts at the end of the reporting period, and

it is analysed by geographic regions as follows,

Group Company


Local Debtors 1,042,375,210 1,102,873,442 921,324,132 977,366,086

Foreign Debtors 48,241,967 31,861,640 48,241,967 31,861,640

1,090,617,177 1,134,735,082 969,566,099 1,009,227,726

Provision for Impairment (168,115,337) (143,764,812) (148,733,637) (139,200,733)

922,501,840 990,970,270 820,832,462 870,026,993

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.




ii. Liquidity Risk (Continued)

Within1 year

Between1-2 years

Between2-5 years

More than 5 years

Total

Rs. Rs. Rs. Rs. Rs.

Group

As at 31st March 2016

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




Borrowings 861,496,533 94,055,028 93,418,946 - 1,048,970,507

Finance Lease Liabilities 1,629,556 1,058,410 - - 2,687,966

Bank Overdraft 35,393,566 - - - 35,393,566

Within1 year

Between1-2 years

Between2-5 years

More than 5 years

Total

Rs. Rs. Rs. Rs. Rs.

Company




Borrowings 782,915,668 49,990,821 56,614,000 - 889,520,489




Borrowings 788,644,550 121,816,521 - - 910,461,071

Finance Lease Liabilities 1,629,556 1,058,410 - 2,687,966




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) and Euro.

Exposure to Currency Risk

The summarised quantitative data about the Group’s exposure to currency risk as reported to the Management of the Group based on

its risk management policy was as follows:

Group Company

As at 31st March 2016 2015 2016 2015USD USD USD USD

Trade Receivables 326,180 236,012 326,180 236,012

Trade Payables (1,896,772) (1,079,327) (1,668,644) (953,627)

Net Statement of Financial Position Exposure (1,570,592) (843,315) (1,342,464) (717,615)

As at 31st March2016 2015USD USD

Trade Payables - Foreign Creditors 1,896,772 1,079,327

Gross Statement of Financial Position Exposure 1,896,772 1,079,327

The following significant exchange rates were applicable during the year

Average Rate Reporting Date Spot Rate


USD 143.90 130.98 147.90 135.00

Sensitivity Analysis

A strengthening of the Rs, as indicated below, against the USD at 31st March 2016 would have increased/ (decreased) the Equity

and Profit or Loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group

considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular

interest rates, remain constant.

Strengthening Weakening

"Profit or Loss” “Profit or Loss”Rs. Rs.

31st March 2016

USD (10% Movement) (28,053,252) 28,053,252

31st March 2015

USD (10% Movement) (14,570,910) 14,570,910




iii. Market Risk (Continued)

(b) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument fluctuate because of changes in market

interest rates. The Groups exposure to the risk of changes in market interest rates relates primarily to the Group’s long term debt

obligation .The Group utilises various financial instruments to manage exposures to interest rate risks.

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

Carrying Amount

As at 31st March 2016 2015Rs. Rs.

Fixed Rate Instruments

Financial Liabilities

Lease Liabilities - (2,687,966)

- (2,687,966)

Variable Rate Instruments

Financial Liabilities

Long Term Loans (247,080,474) (281,646,358)

Import Demand Loans (768,178,333) (767,506,149)

Bank Overdrafts (72,104,387) (35,393,566)

(1,087,363,194) (1,084,546,073)

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 “100 bp Increase” “100 bp Increase”Rs. Rs.

31st March 2016

Variable Rate Instruments (10,873,632) 10,873,632

Cash Flow Sensitivity (Net) (10,873,632) 10,873,632

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.




37.2 Capital Management (Continued)

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

Group Company


Total Liabilities 1,713,388,923 1,631,687,547 1,417,732,727 1,367,411,107

Less: Cash and Cash Equivalents (80,234,093) (43,012,819) (73,005,443) (42,405,237)

Net Debt 1,633,154,830 1,588,674,728 1,344,727,284 1,325,005,870

Total Equity 1,546,612,947 1,461,183,764 1,604,253,813 1,536,007,028

Net Debt to Equity Ratio (%) 106 108 84 86

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.

38. Fair Value MeasurementThe 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

Level 1 Level 2 Level 3 TotalRs. Rs. Rs. Rs.


Available for Sale Investments 7,722,067 37,033,624 - 44,755,691

7,722,067 37,033,624 - 44,755,691


Available for Sale Investments 9,264,365 20,999,628 - 30,263,993

9,264,365 20,999,628 - 30,263,993



38. Fair Value Measurement

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.

2016

As at 31st March Carrying Amount Fair ValueRs. Rs.

Assets

Cash and Cash Equivalents 80,234,093 80,234,093

Trade and Other Receivables 1,045,452,578 1,045,452,578

Amounts due from Related Companies 105,887,739 105,887,739

Liabilities

Trade and Other Payables 412,316,074 412,316,074

Interest Bearing Borrowings 1,009,258,808 1,009,258,808

Bank Overdraft 72,104,387 72,104,387

Cash and Cash Equivalents

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

in nature.

Trade and Other Receivables

Trade and other receivables are expected to be settled within one year from the reporting date and hence the discounting impact

would be immaterial. Therefore carrying amount approximate the fair value as at the reporting date.

Trade and Other Payables

Trade and other payables are expected to be settled within one year from the reporting date and hence the discounting impact would

be immaterial. Therefore carrying amount approximate the fair value as at the reporting date.

Interest Bearing Borrowings

Long term borrowings are repriced either monthly, quarterly or semi annually in line with the changes in the market rates. Hence

carrying value of these borrowings approximate the fair value. Other borrowings are short term in nature and hence carrying value

approximate the fair value.



38.3 Categorization of Financial Assets and Liabilities as at the Reporting Date

Classification Fair Value

Loans and Receivables

Other Financial Liabilities

Level 1 Level 2 Level 3

Rs. Rs. Rs. Rs. Rs.

Group

Financial Instrument

Trade and Other Receivables 1,045,452,578 - - - 1,045,452,578

Amount due from Related Parties 105,887,739 - - - 105,887,739

Cash and Cash Equivalents 80,234,093 - - 80,234,093 -

Financial liabilities

Trade and Other Payables - 412,316,074 - - 412,316,074

Interest Bearing Borrowings - 1,009,258,808 - - 1,009,258,808

Bank Overdraft - 72,104,387 - - 72,104,387


An

nu

al Rep

ort 2015/20

16 Sierra C

ables P

LC 93

For the year ended 31 March2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Operating Results

Turnover 1,395,462,767 1,489,325,624 1,515,318,233 1,037,425,535 1,488,980,103 2,476,058,520 2,141,353,995 2,284,934,549 3,482,533,154 3,036,010,858

Gross Profit 272,433,383 332,724,286 230,718,971 220,372,206 256,397,820 465,475,222 305,053,224 317,446,509 741,951,185 630,701,896

Profit From Operations 199,432,274 277,533,324 160,014,485 176,323,484 90,731,337 299,500,503 140,287,480 (208,594,160) 474,971,589 377,663,501

Profit Before Associate Company's Share of Profit

151,152,240 174,694,115 25,781,080 108,286,675 47,552,975 145,365,214 (18,066,589) (376,172,873) 359,185,690 273,134,238

Profit After Tax 101,695,199 129,237,627 26,342,486 108,148,358 16,116,633 120,333,888 (23,181,433) (306,478,634) 250,223,630 191,013,313

As at 31 March

Assets

Property Plant & Equipment 427,095,874 433,763,317 485,387,038 494,452,431 514,746,976 764,713,420 1,179,081,707 1,206,366,843 1,251,329,990 1,223,660,989

Other Non Current Asset 176,276,677 190,025,284 203,629,248 113,020,866 151,735,124 175,862,949 160,141,863 132,512,794 48,289,459 48,772,074

Current Assets 1,105,979,883 1,210,165,531 1,210,263,060 1,471,852,628 1,821,008,972 1,850,146,311 2,033,442,994 1,679,046,188 1,793,251,861 1,987,568,805

Total Asset 1,709,352,434 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

Liabilities

Long Term Debt 43,326,142 21,564,397 80,174,171 69,435,262 40,405,866 64,899,854 223,720,387 185,601,577 188,532,384 142,263,090

Other Non Current Liabilities 29,204,037 49,578,917 55,604,003 57,954,752 60,210,001 67,139,542 170,403,754 106,998,021 162,580,867 217,033,415

Short Term Debt 19,987,553 35,317,723 15,743,986 45,152,092 35,406,691 78,700,864 7,766,597 128,080,471 35,393,566 72,104,387

Other Current Libilities 470,516,694 451,937,460 472,355,366 523,233,642 1,051,167,433 1,205,822,048 1,230,626,382 1,230,159,988 1,245,180,730 1,285,901,220

Shareholders' Funds

Share Capital 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898 894,565,898

Reserves 251,752,110 380,989,737 380,835,922 488,984,280 423,815,716 450,152,746 761,924,958 461,207,379 555,812,147 644,158,268

Minority Interest - - - - - 29,451,690 17,658,587 11,312,491 10,805,720 3,975,590

Ratios

Total Assets/Equity 1.49 1.44 1.49 1.50 1.89 2.03 2.01 2.21 2.12 2.11

Turnover/Assets 0.82 0.81 0.80 0.5 0.60 0.89 0.63 0.76 1.13 0.93

Net Margin(%) 7.30 8.70 1.70 10.40 1.08 4.86 (1.08) (13.41) 7.19% 6.29

Return on Equity(%) 8.87 10.13 2.07 7.82 1.22 8.95 (0.77) (21.46) 18.10% 12.41

Return on Assets(%) 5.95 7.05 1.39 5.20 0.65 4.31 (0.72) (10.16) 8.09% 5.86

Share Information

Earnings per Share 0.19 0.24 0.05 0.2 0.03 0.22 (0.02) (0.54) 0.49 0.36

Price Earnings Ratio 10.57 7.49 22.45 10.93 180.10 14.67 (104.53) (3.14) 8.19 8.16

Net Assets Per share 2.13 2.37 2.37 2.57 2.45 2.50 3.08 2.52 2.70 2.86

TE

N Y

EA

R SU

MM

AR

Y -

GR

OU

P


QUARTERLYPERFORMANCE

2015/16

For the Three Months Ended, 30th June 30th September 31st December 31st MarchRs. Rs. Rs. Rs.

Income Statement

Company

Revenue 624,501,082 894,230,416 683,905,170 662,853,345

Cost of Sales (485,722,492) (674,140,381) (526,171,284) (554,953,131)

Gross Profit 138,778,590 220,090,035 157,733,886 107,900,214

Other Income 24,030,939 3,532,175 15,963,775 7,464,644

Selling & Distribution Expenses (45,361,357) (41,734,087) (56,666,491) (23,519,912)

Administrative Expenses (23,795,813) (27,198,584) (23,887,014) (24,988,403)

Other Operating Expenses - (24,000,000) (24,000,000) (18,500,000)

Profit/(Loss) from Operations 93,652,359 130,689,539 69,144,156 48,356,543

Net Finance Cost (16,581,529) (43,672,885) (10,412,066) (15,890,526)

Profit/(Loss) Before Taxation 77,070,830 87,016,654 58,732,090 32,466,017

Income Tax Expenses (5,000,000) (15,000,000) (15,000,000) (47,414,867)

Profit/(Loss) for the year 72,070,830 72,016,654 43,732,090 (14,948,849)

2015/16

As at 30th June 30th September 31st December 31st MarchRs. Rs. Rs. Rs.

Statement of Financial Position

Company

Asset 2,810,419,276 3,236,281,585 2,981,327,228 3,021,986,540

Liabilities 1,202,068,092 1,555,957,489 1,257,259,626 1,420,783,565

Net Assets 1,608,351,184 1,680,324,096 1,724,067,602 1,601,202,975

Stated Capital 894,565,898 894,565,898 894,565,898 894,565,898

Reserves 713,785,286 785,758,198 829,501,704 706,637,077

Stated Capital and Reserves 1,608,351,184 1,680,324,096 1,724,067,602 1,601,202,975


NOTICE OFMEETINGNOTICE IS HEREBY GIVEN that the 13th Annual General Meeting of SIERRA CABLES PLC will be held on 22nd of September 2016 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 and the audited financial statements for the year ended 31st March 2016 and the Report

of the Auditors thereon.

2. To re-elect Mr. E.A.D.T.B. Perera, who retires by rotation in terms of Articles 91 of the Articles of Association of the Company as a Director

of the Company.

3. To re-elect Mr. B.W.N. Rupasinghe, who retires by rotation in terms of Articles 91 of the Articles of Association of the Company as a

Director of the Company.

4. To re-elect Ms. S. N. Lokuge who was appointed to office on 27th May 2016 will be eligible for re-election in terms of Articles 97 of the

Articles of Association of the Company as a Director of the Company.

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

determine their remuneration.

By Order of the Board of Sierra Cables PLC

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

Colombo.

11th August, 2016

Note:

f A Member entitled to attend and vote at the meeting, is entitled to appoint a Proxy to attend and vote instead of him/her.

f A Proxy need not be a Member of the Company.

f A Member wishing to vote by Proxy at the meeting may use the Form of Proxy form enclosed.

f Any member or Proxy holder attending the meeting is kindly requested to bring this report.

f The completed Form of Proxy should also be deposited at SSP Corporate Services (Private) Limited at No.101, Inner Flower Road, Colombo 3

not less than forty eight (48) hours before the time appointed for holding of the meeting.

f 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.

Sierra Cables PLC Annual Report 2015/2016

NOTES

Annual Report 2015/2016 Sierra Cables PLC

NOTES


NOTES

Annual Report 2015/2016 Sierra Cables PLC

FORM OFPROXYI/We……………………………………………………………………………………………………………………………………………………………………………………………………………………................

................................................................................................................................................................................................................................................................................……(full name)

of…………………………………………………………………………………………………....................................................................................................................................……..(address)

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

(1)………………………………………………………………………………………………..............................................................................................................................................…….. (full name)

of………………………………………………………………………….......................................................................……………………..(address) 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) Mr. B. W. N. Rupasinghe, or failing him

(9) Mr. M. N. Gunasekara, or failing him

(10) Ms. S. N. Lokuge,

as my/our* Proxy to represent me/us* and vote and speak for me/us* on my/our* behalf at the 13th Annual General Meeting of the Company

to be held on 22nd September 2016 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;

For Against

1. To receive and consider the report of the Directors and the audited financial statements for the year

ended 31st March 2016 and the Report of the Auditors thereon.

2. To re-elect Mr. E.A.D.T.B. Perera, who retires by rotation in terms of Articles 91 of the Articles of

Association of the Company as a Director of the Company

3. To re-elect Mr. B. W. N. Rupasinghe, who retires by rotation in terms of Articles 91 of the Articles of

Association of the Company as a Director of the Company

4. To re-elect Ms. S. N. Lokuge who was appointed to office on 27th May 2016 will be eligible for re-election

in terms of Articles 97 of the Articles of Association of the Company as a Director of the Company

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

authorize the Directors to determine their remuneration.

Signed this ………................................................……day of……………….........................…………..2016.

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

Signature of shareholder

Note:

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

2. Instructions as to completion appear overleaf


Please provide the following details to update our records:

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

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

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

Address : ...........................................................................................................................................

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

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

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

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

Signature :.........................................................................................................................................

FORM OFPROXY

Instructions as to completion

1. Kindly perfect the Form of Proxy by filing in legibly your full name, National Identity Card/ Passport/

Company Registration Number, your address and your instructions as to voting and by signing in the space

provided and filing in the date of signature. Please ensure that all details are legible.

2. Please mark “X” in appropriate cages, to indicate your instructions as to voting on each resolution. If no

indication is given, the Proxy holder in his/her discretion will vote as he/her thinks fit.

3. To be valid, the completed Form of Proxy must be deposited at the 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 you wish to appoint a person other than the Chairman (or failing him, one of the Directors) as your Proxy,

please insert the relevant details (1) overleaf and initial against this entry.

5. In the case of a Company/Corporation, the Proxy must be under its Common Seal, which should be affixed

and attested in the manner prescribed by Articles of Association/Act of Incorporation.

6. In the case of a Proxy signed by an Attorney, a certified copy of the Power of Attorney should accompany

the completed Form of Proxy for registration, if such Power of Attorney has not already been registered

with the Company.