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At Sierra Cables, providing excellence has always been our top goal. We take pride in our
ability to continuously raise the bar in our standards of excellence. Having conquered the local market by gaining
recognition of being a veritable powerhouse in the local cable industry, we have once again performed beyond expectations
by benchmarking ourselves against global standards.
Our overseas reach built up throughout the years has now become recognized and distinguished globally for its high standards of quality and performance excellence. This has
in turn helped us become one of the foremost cable manufacturers in Sri Lanka with an outstanding
international presence.
CONTENT
ABOUT US
Cover Story 01
Company Vision, Mission & Values 06
About This Report 08
Our Commitment to Excellence 09
Financial Highlights (Group) 10
About Us 11
The Chairman’s Review 12
Managing Directors' Review 14
The Board of Directors 16
Operational Review 20
Our Product Portfolio 24
Sustainability Review 26
HR Review 28
Risk Management Review 31
IT Review 34
Corporate Governance 35
Audit Committee Report 47
Board Compensation and Rumeration Committee Report 49
Related Party Transaction Committee Report 50
Statement of Directors’ Responsibilities 51
Annual Report of the Board of Directorson the A�airs of the Company 52
MANAGEMENTDISCUSSION &
ANALYSIS
Independent Auditors' Report 61
Income Statement 62
Statement of Profit or Loss and Other Comprehensive Income 63
Statement of Financial Position 64
Consolidated Statement of Changes in Equity 66
Statement of Changes in Equity 67
Statement of Cash Flow 68
Notes to the Financial Statemements 70
10 Year Summery 114
Quarterly Performance 115
Notice of Meeting 116
Form of Proxy 117
Corporate Information 119SUPPLIMENTARY
INFORMATION
FINANCIALSTATEMENTS
CONTENT
ABOUT US
Cover Story 01
Company Vision, Mission & Values 06
About This Report 08
Our Commitment to Excellence 09
Financial Highlights (Group) 10
About Us 11
The Chairman’s Review 12
Managing Directors' Review 14
The Board of Directors 16
Operational Review 20
Our Product Portfolio 24
Sustainability Review 26
HR Review 28
Risk Management Review 31
IT Review 34
Corporate Governance 35
Audit Committee Report 47
Board Compensation and Rumeration Committee Report 49
Related Party Transaction Committee Report 50
Statement of Directors’ Responsibilities 51
Annual Report of the Board of Directorson the A�airs of the Company 52
MANAGEMENTDISCUSSION &
ANALYSIS
Independent Auditors' Report 61
Income Statement 62
Statement of Profit or Loss and Other Comprehensive Income 63
Statement of Financial Position 64
Consolidated Statement of Changes in Equity 66
Statement of Changes in Equity 67
Statement of Cash Flow 68
Notes to the Financial Statemements 70
10 Year Summery 114
Quarterly Performance 115
Notice of Meeting 116
Form of Proxy 117
Corporate Information 119SUPPLIMENTARY
INFORMATION
FINANCIALSTATEMENTS
Sierra Cables PLCAnnual Report 2016 / 2017
6
Vision
Mission
Being the bridge in energizing the community.
Achieve a continuous growth to enhance the stakeholders’ value while offering a high quality product.
Become a reputed organization by promoting sustainable development.
Uplift the living standards of Sierra Cables family.
Company Vision & Mission
Sierra Cables PLCAnnual Report 2016 / 2017
7
ValuesAs a responsible and ethical corporate citizen, Sierra Cables PLC carries out its affairs based on a set of values. Every member of the Sierra Cables family is committed to follow them.
ProductivityAs a manufacturer, we always try to take the maximum output from resources without exploiting them.
IntegrityWe believe in truth, justice and fair play together with professionalism above everything.
PassionWe will embrace challenges with passion and aggressively pursue our goals to reach the pinnacle.
ServiceWe always strive for excellence in serving our customers and making sure that the service provided is at the required level.
QualityWe are committed to produce the highest quality products for our customers.
Sierra Cables PLCAnnual Report 2016 / 2017
8
About This Report
Sierra Cables PLC formulates its strategy and manages its
business in an integrated manner, taking full cognizance
of the requirements of its diverse stakeholders and
capital resources. In complementing our integrated
thinking, we adopt a similar approach towards corporate
reporting and through this Annual Report strive to
present a balanced and cohesive assessment of the
Company’s strategy, performance and outlook in relation
to our economic, social and environmental goals.
Scope and Boundary
This report covers Sierra Cables’ operations for the
period from 01 April 2016 to 31 March 2017. Financial
and non-financial information pertaining to material
developments and issues that shaped the Company’s
performance during the reporting period are discussed
comprehensively. Material aspects included in the Report
were selected through a systematic and comprehensive
process which involved robust stakeholder engagement
at all levels.
Reporting Principles
This integrated report conforms to the requirements of
several mandatory and voluntary frameworks including
the Sri Lanka Financial Reporting Standards, Companies
Act No. 7 of 2007, Listing Rules of the Colombo
Stock Exchange, Code of Best Practice on Corporate
Governance issued jointly by the Institute of Chartered
Accountants of Sri Lanka and the Securities and
Exchange Commission of Sri Lanka.
Third Party Assurance and Verification
We believe that third party assurance is vital in
establishing credibility and transparency of our Report.
We have engaged Messrs KPMG, Chartered Accountants
to provide assurance on the financial statements in this
report and the supplementary notes.
This Report covers Sierra Cables’ operations for the period from 01 April 2016 to 31 March 2017. Financial and non-financial information pertaining to material developments and issues that shaped the Company’s performance during the reporting period are discussed comprehensively.
Sierra Cables PLCAnnual Report 2016 / 2017
9
Our Commitment to Excellence
As one of the most foremost cable manufactures in the
country, Sierra Cables PLC is a leading expert in the field
of electric power, whose performance and production
excellence has received many accolades and awards over
the years. These awards help to highlight the superiority
of the products along with our outstanding performance
which has proved to be consistent throughout, making
the organization one of the undisputed forerunners in
the race.
These awards showcases the recognition received on
local as well as international arenas, along with other
government and private organizations. This further
encourages us to aim higher, raising the goals to bring
local performance to global standards.
UDC Best Cable Manufacture of the YearThe UDC Business Awards 2011 was an international
awards program which recognized the success and
innovation of business leaders and organizations. UDC
Business Awards honors businesses
and industry leaders through
the acknowledgment of
innovative business processes,
product development,
sustainability and overall
business success.
IESL Engineering Excellence AwardSierra Cables was recognized by the
Institute of Engineers of
Sri Lanka by awarding
“Excellence in Engineering” in
2011 for the manufacturing
section. This is in recognition
of the performance excellence
in the manufacturing sector of the
cables over three decades in Sri Lankan cable industry.
Sri Lanka Malaysia Business AwardsSierra Cables was the proud winner
of the 6th annual Sri Lanka-
Malaysia Business Gold Award
2010 in the open category for
the contribution made to the
growth of economy.
CNCI Achiever of Industrial Excellence Merit Awards
Sierra Cables was a Merit award winner
in CNCI Achiever of Industrial
Excellence in 2010 for excellence
in the industrial sector and for
enhanced quality standards,
productivity, employee benefits,
about relations and adherence to
statutory requirements.
Quality Crown AwardSierra Cables is proud to pronounce
that, “we won the challenge”.
Beyond local boundaries we
have been able to excel the
class 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.
10
Financial Highlights (Group) About Us
1,000
0
2015 2016 2017
3,4823,036
4,061
2,000
3,000
4,000
Group TurnoverMillions
(Rs.)
5,000
1.00
0
2015 2016 2017
2.702.88
3.10
2.00
3.00
Net Asset per Share(Rs.)
4.00
0.10
0
2015 2016 2017
0.49
0.37
0.48
0.20
0.30
0.40
0.50
EPS(Rs.)
0.60
0.05
0
2015 2016 2017
0.20 0.20
0.25
0.10
0.15
0.20
0.25
DPS(Rs.)
0.30
2015 2016 2017
Gross ProfitMillions
(Rs.)
741
630
878
200
0
400
600
800
1,000
2015 2016 2017
Net ProfitMillions
(Rs.)
50
0
100
150
200
250
300
250
193
249
DividendPayments
25%
Sierra Cables East Africa Ltd.
Sierra Industries (Pvt) Ltd.T & G Lanka (Pvt) Ltd.
Tea Leaf Resort Holdings (Pvt) Ltd.
Subsidiaries &
Associates
Purity of our input Copper Sourced only
through imports
99.9%
Direct Employment
Generated
500+
Countries Product Reach
15+
Years of operations in
Sri Lanka
38
Market Capitalization
as at 31st March 2017
Rs.1,613
Mn
Indirect Employment, International
Presence
2000+
Financial Year ended 31st March2017
RS.2016
RS.
Net Turnover 4,044,449,473 3,036,010,858
Profit Before Tax 347,668,990 273,428,180
Profit After Tax 263,479,044 193,103,960
Shareholders’ Funds 1,676,847,403 1,546,612,947
Issued & Fully Paid Number of Shares 537,512,430 537,512,430
Total Assets 4,416,034,134 3,260,001,870
Market Capitalization (Million) 1,613 1,800
Dividend Payout Ratio (%) 52.08 54.05
Current Ratio 1.25 1.40
Return on Capital Employed (ROCE) (%) 26 20
Per (LKR)
Market Value 3.00 2.90
Earnings 0.48 0.37
Dividends 0.25 0.20
Net Assets 3.10 2.88
11
Financial Highlights (Group) About Us
1,000
0
2015 2016 2017
3,4823,036
4,061
2,000
3,000
4,000
Group TurnoverMillions
(Rs.)
5,000
1.00
0
2015 2016 2017
2.702.88
3.10
2.00
3.00
Net Asset per Share(Rs.)
4.00
0.10
0
2015 2016 2017
0.49
0.37
0.48
0.20
0.30
0.40
0.50
EPS(Rs.)
0.60
0.05
0
2015 2016 2017
0.20 0.20
0.25
0.10
0.15
0.20
0.25
DPS(Rs.)
0.30
2015 2016 2017
Gross ProfitMillions
(Rs.)
741
630
878
200
0
400
600
800
1,000
2015 2016 2017
Net ProfitMillions
(Rs.)
50
0
100
150
200
250
300
250
193
249
DividendPayments
25%
Sierra Cables East Africa Ltd.
Sierra Industries (Pvt) Ltd.T & G Lanka (Pvt) Ltd.
Tea Leaf Resort Holdings (Pvt) Ltd.
Subsidiaries &
Associates
Purity of our input Copper Sourced only
through imports
99.9%
Direct Employment
Generated
500+
Countries Product Reach
15+
Years of operations in
Sri Lanka
38
Market Capitalization
as at 31st March 2017
Rs.1,613
Mn
Indirect Employment, International
Presence
2000+
Sierra Cables PLC is one of the leading and prestigious
corporates in the business of manufacturing Electric
Power Cables in Sri Lanka. With over 30 years of industry
presence, today we are a front runner in manufacturing,
marketing and distributing Copper and Aluminum cable
products locally and across number of international
markets. Today we have surpassed the 4 billion rupee
turnover level as a result of the trust placed on our
products and services by our valued customers. The
Quality, Sustainability and Responsibility that we placed
on our undertakings are renowned with ISO 9001, ISO
14001, OHSAS 18001 as well as SLS certifications to
name a few. We work closely with our strong distribution
channel agents across the island covering all the
regions, 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 investments in East
Africa and Fiji.
Sierra Cables PLCAnnual Report 2016 / 2017
12
The Chairman’s MessageIt is with great pleasure that I present the Annual Report
and Financial Statements for the year ended 31st
March 2017. The year under review was a strategically
significant time for Sierra Cables as we took several
key steps on our new strategic direction of exploring
the export market and taking the Sri Lankan Cable
manufacturing industry to the global stage. In short,
Sierra Cables has already commenced laying the
groundwork through increased network expansion and
investments to become a global player.
Let us first take a look at our operating environment. The
Sri Lankan economy grew at a slower rate of 4.4 per cent
in 2016 in real terms, in comparison to 4.8 per cent in the
previous year, largely due to volatile weather conditions
that affected the agricultural sector. The industry related
activities however recorded a notable growth of 6.7
per cent year on year largely driven by the boom in the
construction, mining and quarrying subsectors. In 2016,
the construction sector grew by 14.9 per cent as a direct
outcome of the increase in the residential and mixed
development boom.
In this context, Sierra Cables recoded a commendable
overall revenue growth of 30 per cent. The Group’s core
business segment, government contracts, grew by 42
per cent during the period under review while the export
market indicated a rapid growth of over 300 per cent.
Consequently overall revenue at Group level increased to
33 per cent from Rs. 3.4 billion in the previous financial
year.
The Company’s profit after tax grew by 34 per cent to
Rs. 235 million from Rs 175 million in the previous
financial year. At the Group level profit after taxation
grew by 35 per cent to Rs 261 million in comparison
to the Rs. 193.10 million recorded the year before. As a
result of increased profitability, this year we were able to
increase our dividend payments to Rs. 134 million
in total when compared to the total dividend
payment of Rs. 107 million posted in the
previous financial year.
Strategic Direction
During the year under review Sierra Cables took several
strategic steps to strengthen our position as a resilient
and a profitable business with vested interest in exploring
the export market and enhancing the existing local
market position. In line with our growth strategies,
this year we ventured into three joint agreements with
three Fijian companies to start a USD 4 million power
cable manufacturing plant in the Pacific island nation.
This investment will enable Sierra Cables to tap the
cable markets in New Zealand, Australia and Papua
New Guinea. Our previous venture into the East African
market through a manufacturing plant in Kenya has
already delivered positive results in terms of tenders
and market growth. In preparation to cater to the
growing export market, we have already taken steps to
obtain international standard certifications such as the
International Conformity Report from the Singaporean
Standardization Institute.
As a relatively new entrant to the export market, we
foresee challenges in terms of managing exchange
rate risk given the fluctuating currency exchange rates.
Nevertheless, we will continue to view foreign investment
opportunities prudently and consider those based on the
value it would bring to our core proposition.
Sierra Cables took several strategic steps
to strengthen our position
as a resilient and a profitable business with vested interest in exploring the export market and enhancing the existing local
market position.
Sierra Cables PLCAnnual Report 2016 / 2017
13
Sustainable Growth
In order to support our growth strategy to maintain a
futuristic and long-term vision, we continue to invest in
certain resources, specifically technology, infrastructure
and people, which will contribute to enhance the
scalability of our business and allow us to become a more
sustainable entity.
Our sustainability agenda focuses on efficient production
methods to maintain our profitability and competitive
position while striving for minimal environmental impact.
Our wastage mitigation measures include recycling of
Copper, Aluminum and PVC as well as stringent and
responsible methodologies to manage our electric
waste without harming the environment. We maintain a
carefully monitored supply chain process to maximize the
use of wooden drums used to transport cables and have
already implemented measures to replace these wooden
drums with steel drums which affords a lengthier period
of usage.
Sierra Cables is committed to investing in our people to
pave the way for business growth that coincides with
human capital growth. We provide essential training both
locally and at international levels to our employees, while
providing them timely rewards and remunerations. Our
human capital growth strategy focuses on selecting the
right talent for the industry and assisting their growth
through a streamlined development process.
Growth Prospects
In the near future, Sierra Cables will face positive growth
prospects given the sheer number of state and private
sector construction projects scheduled to commence
in the latter part of 2017 and early 2018. The proposed
megapolis project will usher in an era of rapid growth
in the construction industry aided by the emerging
private construction projects as well as various state
infrastructure development projects.
The government’s export-oriented industrialization
strategy augurs well for our own export strategy.
According to the Central Bank of Sri Lanka the economy
is expected to grow at an increased rate of 4.5 per cent
in the year 2018. Positive economic growth will directly
impact our own growth through increased opportunities
for business expansion.
In the near future, Sierra Cables will invest further Rs. 120
million in additional storage facilities to meet expected
export and local demand.
Appreciation
I would like to express my sincere appreciation of
the contribution made by several parties this year. I
am grateful to the contribution of my colleagues in
the Board for their guidance, insight and support at
Board deliberations. I am extremely thankful to the
management team led by the Managing Director. I would
also like to express my sincere gratitude to our customers,
bankers, business partners and all other stakeholders for
the trust they have placed in us. Last but not least, my
sincere gratitude to our shareholders for their continued
support. We are committed to enhancing your value
in this Company and look forward to your unwavering
support in our future endeavours.
Priyantha Perera
Chairman
Colombo
11th August 2017
Sierra Cables PLCAnnual Report 2016 / 2017
14
Managing Director's StatementDespite slow overall economic growth, increased
investment expenditure, especially in the construction
sector, drove the economic growth during the year under
review. The country’s industry related activities grew
notably recording a growth rate of 6.7 per cent partly
driven by increased activity in the construction industry
which grew by 14.9 per cent. Gross domestic capital
formation which represents the level of investment
activity grew by 19.6 per cent mainly driven by the
expansion of construction activities in 2016. However
given the volatile weather conditions and lackluster global
economy, the Sri Lankan economy indicated a downward
trend.
Industry Activity
During the year under review, the construction industry
in Sri Lanka gained momentum providing power cable
manufacturers opportunities for business growth. A
number of private entities invested in the construction
of apartment complexes while the state projects focused
on development of the transport system and roadways,
energy and water resources. Low interest rate regime
and the declining prices of copper, aluminum and plastics
globally added to demand in the cable industry and
enabled local cable manufacturing companies to increase
profitability.
In this backdrop, as the third largest power cable
manufacturer, Sierra Cables garnered increased
profitability during the year under review. Nevertheless,
augmented competition and price wars affected overall
industry profitability.
Operational Highlights
During the year under review, Sierra Cables recorded a
steady growth in revenue in the core market segments
including government tenders as well as a rapid rise
in export revenue. This year, we were one of the
main contributors to the national level electrification
programme as a key supplier to the Central Electricity
Board. In 2016, Sierra Cables supplied the entire cable
requirements of the high end ‘Shangri-La Hambantota’
project and secured an order to cater to the cable
requirements of the ’Iconic Development’ project in
Rajagiriya.
Our strategic focus in the year 2016 rested principally
on developing the export market. Following the success
of our venture into the East African market via the
investment of USD 2 million on a power transmission
cable manufacturing plant in Nairobi, Kenya, this year, we
ventured into Fiji. The joint venture that we entered into
with three Fijian companies helped fund the set - up of
a power cable plant in Fiji giving us access to the nearby
markets, namely Australia, New Zealand and Papua New
Guinea.
In 2016, Sierra Cables East Africa Limited (SCEAL), the
Group’s first ever overseas venture secured the first order
from the country’s Urban Electricity Company. Both
SCEAL and the recently initiated plant in Fiji are expected
to show considerable performance growth in the near
future.
Group revenue for the year increased by 33 per cent
posting Rs. 4.04 billion in comparison to the Rs. 3.03
billion recorded in the previous financial year. In 2016,
Sierra Cables posted a PBT (Profit Before Tax) of Rs. 347
million at the Group level in comparison to the Rs. 255
million recorded in the previous financial year.
Sierra Cables PLCAnnual Report 2016 / 2017
15
Sharpening the Focus on Growth
As the first ever Sri Lankan power cable manufacturer
to venture overseas, we have already envisioned a clear
growth strategy to succeed in the export market as
well as the local market. We have already implemented
practical measures to ensure sustainable growth driven
by increased efficiency of operations, adoption of
innovative technologies, a strengthened IT platform as
well as an effective environmental policy framework. We
will continue to maintain international quality standards
and sustainability practices in order to foster viable and
long-term growth.
In the long term, we foresee immense potential for
growth in the African region as the region itself is geared
to increase their energy requirements. We will continue
to work towards enhancing growth and increased
profitability in all areas of operation to create value for all
our stakeholders.
Appreciation
I wish to convey my sincere gratitude to our Chairman
and members of the Board for their guidance and
unwavering support. My sincere appreciation goes to
Sierra Cables staff for their valuable contribution and
commitment. I also wish to express my gratitude to
our customers, dealers, suppliers, bankers’ and all other
stakeholders for their continued faith in us.
D. Shamendra Panditha
Managing Director
Colombo
11th August 2017
Our strategic focus in the year
2016 rested principally on developing the
export market, following the success of our
venture into the East African market in
Kenya.
Sierra Cables PLCAnnual Report 2016 / 2017
16
The Board of Directors
W.A.P. Perera
Chairman
Mr. W.A.P. Perera is the founder Director of Sierra
Construction (Private) Limited and serves as the
Chairman of Sierra Cables PLC. He has over 37 years of
experience in the construction industry.
D.S. Panditha
MD & Chief Executive Officer
Mr. D.S. Panditha is the Managing Director and Chief
Executive Officer of Sierra Cables PLC. He is a member
of both the Institute of Incorporated Engineers and
the Institute of Marketing (SL). He has over 40 years of
experience in the cable and plastic industry.
J.H.P. Ratnayeke
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. A.K.W. Jayawardane is the Vice-Chancellor and
Senior Professor in Civil Engineering, University of
Moratuwa. He is an administrator, an academic, a
researcher and a consultant with experience and
expertise in university leadership, teaching, research
and consultancy in the broad areas of construction
management, project management, technology
management and entrepreneurship.
He has a BSc Eng in Civil Engineering with first class
honors, University of Moratuwa, MSc in Construction,
Loughborough University of Technology, United Kingdom
and a PhD from the same University. He is a Past
President and a Fellow of the Institution of Engineers,
Sri Lanka, a Fellow of National Academy of Sciences Sri
Lanka, a Fellow of Institute of Project Managers and a
founding member of the Society of Structural Engineers
Sri Lanka. He is also a board member of several private
and public institutions.
E.A.D.T.B. Perera
Mr. E.A.D.T.B. Perera is a founder Director of Sierra
Construction (Private) Limited with 36 years of
experience in the construction industry.
Sierra Cables PLCAnnual Report 2016 / 2017
17
Eng. 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 holds the place as a Non-Executive
Director in the Board of Directors. She is currently
reading for her Masters in International Business (Deakin
University) whereas she has earned her Bachelors of
Commerce degree in Management from Swinburne
University of Technology in Australia. She is also
the holder of the Graduate Certificate in Business
Administration from the Swinburne University of
Technology.
In addition, she serves as a Director for the International
Tertiary Education Campus (INTEC) Asia, Director, NNL
Holdings Pvt. Ltd, Deputy CEO, Sierra Construction “Road
Division”, Alternative Director for Sierra Construction,
Alternative Director for Sierra Holdings, and as Director of
Sansun Boutique Hotel Limited.
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 41 years of work experience, out of which,
34 years have been with the Shaw Wallace Group and 12
years as their Chief Executive Officer. He has extensive
experience in the total finance function and legal matters,
specializing in taxation and overall general management.
He was a former Council Member and President of the Sri
Lanka Institute of Taxation. He is a Fellow of the Institute
of Chartered Accountants of Sri Lanka, Fellow of the
Institute of Certified Management Accountants of Sri
Lanka and Fellow of the Sri Lanka Institute of Taxation.
He has followed a Management Development Program at
the Cranfield School of Management, Bedford, England.
Annual Report 2016 / 2017
20
Sierra Cables PLC
Operational Review
Global Economic Outlook
The World Economic Outlook prepared by the
International Monetary Fund (IMF) revealed that while
developed economies registered strong performances in
the second half of the year 2016 that led to a momentum
gain in the global economy, emerging economies on the
other hand registered a lackluster performance. Political
changes in the US and UK created uncertainties in the
financial market as well as the global economic outlook.
Oil producing economies showed signs of improvement
with the stabilizing of oil prices during the second half of
the year.
As predicted global economic activity is on the rise with a
cyclical recovery in investment, manufacturing, and trade.
The global economic growth rate is expected to increase
from 3.1% in 2016 to 3.5% in 2017 with further growth
opportunities expected in 2018.
Global Activity Indicators
The IMF further revealed a considerable growth in global
economic activity in the fourth quarter of 2016 with
manufacturing PMIs and consumer confidence indicating
a positive turn in advanced economies. In emerging
economies economic activity showed a modest growth.
Figure 1.1. Global Activity Indicators
Global economic activity gained momentum in the fourth
quarter of 2016. Manufacturing PMIs and consumer
confidence increased noticeably in advanced economies
in the last few months of 2016 and early 2017. They also
recovered to a more modest extent in emerging market
economies.
-10
-5
0
5
10
15
20
–4
0
2
4
6
8
2011 12 13 14 15 16 Feb. 2017
Manufacturing PMI (deviations from 50; right scale)
Industrial production
World trade volumes
1. World Trade, Industrial Production, and Manufacturing PMI (Three month moving average; annualized percent change unless noted otherwise
-2
-4
-2
0
2
4
6
8
10
12
14
2012 13 14 15 16Feb. 2017 2017
90
95
100
105
110
115
120
125
130
2012 13 14 15 16Feb.
Advanced economies1
World
2. Manufacturing PMI(Three month moving average; deviations from 50)
Emerging market economies2 Advanced economies1
3. Consumer Confidence(Index, 2010 = 100)
Emerging market economies2
0
1
2
3
4
2011:H1
13:H1
15:H1
17:H1
18:H2
October 2016 WEO April 2017 WEO
3
4
5
6
7
8
9
2011:H1
13:H1
15:H1
17:H1
18:H2
GDP Growth(Annualized semiannual percent change)
4. Advanced Economies 5. Emerging Market and Developing Economies
The Following Charts are Sourced From :CPB Netherlands Bureau for Economic Policy Analysis; Haver Analytics; Markit Economics; and IMF staff estimates.
Note: CC = consumer confidence; PMI = purchasing managers index.
1Australia, Canada (PMI only), Czech Republic, Denmark, euro area, Hong Kong SAR (CC only), Israel, Japan, Korea, New Zealand (PMI only), Norway (CC only), Singapore (PMI only), Sweden (CC only), Switzerland, Taiwan Province of China, United Kingdom, United States.
Argentina (CC only), Brazil, China, Colombia (CC only), Hungary, India (PMI only),
Indonesia, Latvia (CC only), Malaysia (PMI only), Mexico (PMI only), Philippines (CC only), Poland, Russia, South Africa, Thailand (CC only), Turkey, Ukraine (CC only).
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Sierra Cables PLC
However, preservation of global economic expansion will
require a framework that avoids protectionist measures
as well as a mechanism to distribute the gains widely.
Surpassing global economic challenges require collective
action by individual countries as well as multilateral
cooperation. These actions include efforts to preserve
open trading systems, preserving global financial stability,
establishing equitable tax systems, continued support
towards emerging economies to pursue development
goals and adapting strict climate change measures to
improve sustainability.
Sri Lankan Economy
Due to volatile weather conditions and slow global
economic recovery, the Sri Lankan economy grew at a
4.4% growth rate in real terms in comparison to 4.8%
rate recorded during the previous year. However, the
economy indicated signs of stabilization largely driven by
corrective steps taken by the government and the Central
Bank. Inflation remained low during the first quarter
of the year 2016 but continued to rise during the year
recording an annual average of 4.0% in 2016. The Central
Bank attributes the high level of inflation in 2016 and
the first quarter of 2017 to adverse weather conditions
that the country experienced, tax adjustments as well as
increasing international commodity prices.
Industry related activities expanded to 6.7% in
comparison to the 2.1% recorded in the previous year.
Construction recorded a healthy growth of 14.9% along
with growth in mining and quarrying; manufacture of
rubber and plastic products; manufacture of basic metals
and fabricated metal products.
The government continued to support the industry
sector in line with its export-oriented industrialization
strategy. The Sri Lankan government also continues to
implement measures to establish the Sri Lankan economy
as an export driven economic hub through expansion of
technological support, promoting investment and the
provision of infrastructure facilities.
In spite of the negative impact of adverse weather
conditions and inflation growth, the Sri Lankan economy
is expected to reach a moderate growth rate of 5% in
the year 2017 and record an annual growth rate of 7%
by 2020. The Central Bank reveals that the private sector
is expected to contribute to achieving a higher growth
rate by leveraging potential growth opportunities in the
economy as well as external markets.
Domestic production is expected to improve through
better trade linkage, reinstating of GSP+ concession as
well as proposed trade and economic partnerships within
the region. Imports too would continue to rise as a result
of the increase in higher intermediate goods imports,
rising global oil prices and particularly an increased
demand for investment goods in view of increased
investment expenditure.
Performance Summary
During 2016, the growth in the construction industry
including urban dwellings, energy and water resources,
mixed developments, hotels and similar projects boosted
demand for the entire cable industry. Declining prices
of copper, aluminum and plastics globally added to the
demand as well. During the year under review, Sierra
Cables maintained a strong market position as the
third largest manufacturer of power cables in Sri Lanka
and leveraged on the market opportunities to boost
profitability.
While the demand from the government sector through
tenders remained the largest contributor to Sierra Cables
profit growth, the dealer market too continued to have
a positive impact on the Company’s growth as well. In
2016, Sierra Cables played a key role in the national level
electrification programme as a key supplier to the Central
Electricity Board.
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Sierra Cables PLC
The institutional or the project sector contributed to
the company’s revenue generation. However, in line with
our focus on leveraging the international market, we
succeeded in expanding our export market during the
year under review to record an export gain that exceeds
437 Mn. LKR.
Our strategic steps to build cordial relations with industry
players and our concrete efforts to increase product
quality through obtaining standard certifications from
relevant markets contributed to our success in the export
market. Currently, Sierra Cables is the only Sri Lankan
Cable manufacturer to have established subsidiary
operations overseas with offices in Kenya and Fiji.
Following the success of our venture into the East African
market with the establishment of a manufacturing
plant in Kenya in 2015, this year we entered into a joint
venture with three Fijian companies to tap the markets in
Australia, New Zealand and Papua New Guinea.
Business Development
Sierra Cables communication platforms and tools are
multi-pronged and varied. While our main focus remains
on striving for excellence in manufacturing, safety
standards and customer service, we utilize various tools
to communicate with our existing and potential customer
base.
Awareness and Educational Programmes
During the year under review Sierra Cables conducted
informative seminars targeting electricians in various
regions in Sri Lanka. Conducted by the engineering
professional attached to Sierra Cables as well as
instructors from renowned Technical Colleges, the
seminars conveyed key information about the latest
developments in the industry as well as technical
guidance in cable installation and maintenance.
Jaffna District Electrician Club Seminar
Jaffna International Trade Fair
Operational Review Contd.
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Sierra Cables PLC
Kurunegala District Electrician Club Seminar
The programmes are organized and implemented by
Sales Professionals with the guidance of respective Area
Sales Managers in each region.
Print and Electronic Media and Digital Campaigns
We conduct timely advertising and public relations
campaigns using both print and electronic media
platforms. Several media campaigns were successfully
carried out during the year supported by a media buying
strategy and media monitoring. Our marketing and IT
departments work together to maintain an engaged
digital presence through timely updates on social media
platforms and utilize the Sierra corporate website to
communicate new developments with all stakeholders.
Sierra Cables Product Catalog and Profile
During the year under review, we compiled a
comprehensive product catalog and a profile with
detailed information such as product certifications, a list
of raw material suppliers, test reports as well as examples
of previous projects.
International Standards and Approval to Increase Demand
In recently times Sierra Cables obtained the
manufacturing approval for our products from the
Maldivian Energy Authority which had a considerable
positive impact on our export growth. In 2016, we
obtained an International Conformity Report from TÜV
SÜD PSB, Singapore, known for premium quality, safety
and sustainability certifications world wide.
This enables Sierra Cables to further enhance our
reputation and positioning as an entity that complies
with international manufacturing standards.
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Sierra Cables PLC
Our Product Portfolio
Telecommunication CablesPVC insulated, self-supporting
one-pair drop wire and
polyethylene insulated
copper conductors used
as telecommunication
distribution cables. The cables
are manufactured according to
BS 3573 and SLT standards.
Single and Multi-Core Unarmoured CablesSingle and Multi-core unarmoured
cables are solid or stranded
copper conductors with PVC
insulation and sheathing that
comes with voltage rating
of 300/500v, 450/750v. This
type of cables can be utilized
for in-house wiring in distribution
of electricity within buildings and factories. The
cables are manufactured according to BS 3573 and SLT
standards.
Aluminium / PVC CablesThese are PVC insulated
aluminum service main-wire
cables with a voltage rating
of 300/500v. Single-core,
twin and flat-twin cables are
manufactured to BS 6004 and
CEB specifications.
Control CablesControl Cables with copper
conductors are incorporated
with PVC insulation and
sheathing or with PVC
insulation and sheathing and
added steel wire armouring.
These are manufactured according to BS 6346
specifications with a voltage rating of 600/1000v and can
be utilized for transmissions to control units in industry,
railways, traffic signals, thermal power and hydro power
systems.
Aerial Bundle ConductorsSelf-supporting insulated cables
are used for low-voltage
electricity distribution. These
comprise of three phase
conductors (aluminium) and
a neutral conductor (alloy
aluminum) bundled together
with or without street lamp wires.
The neutral conductor also acts as a messenger or a load
bearer. The cables are manufactured to the National
French Standard NFC 33:209.
Aluminium Conductors (AAC & ACSR)All Aluminium Conductors (AAC) and Aluminium
Conductors Steel Reinforced (ACSR)
are used for low, medium
and high-voltage electricity
transmission and distribution.
The cables are manufactured
according to SLS 750, BS
215 (Parts I & II) and ASTM
standards.
Auto CablesPVC insulated single core auto
cables are used in motor
vehicles and general wiring.
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Sierra Cables PLC
Unarmoured Cables (Multi-Core)Copper conductors insulated with PVC or XLPE and PVC
sheathed, with a voltage rating of
600/1000v. These are utilised for
the distribution of electricity
within factories and buildings
and manufactured to BS 6346
and BS 5467 standards.
Co-axial CablesAnnealed copper conductors
with polyethylene Insulated
and copper braided co-axial
cables, used as television
antenna wires. The cables are
manufactured to JIS Standards.
Earth CablesSierra Earth cables are solid,
stranded or flexible copper
conductors with PVC
insulation, non-sheathed with
a voltage rating of 450/750v.
These single-core Earth
conductors are used as general-
purpose cables and manufactured
according to BS 6004 and SLS 733 standard.
Flexible CablesPVC insulated and sheathed
flexible cables with a voltage
rating of 300/300v and
300/500v are used as general
purpose cables. These are
manufactured to BS 6500 and
SLS 1143 standards.
LSHF (Low Smoke Halogen Free) cables
LV cables with LSFZH, thermosetting
insulation generates slow emission
of smoke fumes and toxic gasses
and zero halogens with exposure
to fire. This type of earth cables
are used in areas with high risk of
fire hazards.
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Sierra Cables PLC
Sustainability Review
Sustainability is not merely a static agenda for Sierra
Cables. We are aware that the issues that impact the
environment, our customers, employees and the larger
community change over time and we as a responsible
corporate entity are prepared to evolve with these
changes. Our approach to sustainability is based on a
holistic view which integrates the sustainability agenda to
the entire business process.
Strategic Sustainability Drivers
Stakeholder Engagement
We engage with a range of stakeholders and our relationships with each of these stakeholders have an impact on the
viability and the success of our business and vice versa. Therefore, Sierra Cables constantly commit to a transparent
and ongoing communications with each stakeholder group to form mutually beneficial relationships. We engage with
stakeholders in numerous ways and the frequency of engagement depends on the issues that are being addressed.
Stakeholder Method of Engagement Business Objective
Shareholders Annual General Meeting / Group website / Timely communications / Email access to group management
Maintain shareholder confidence and maintain a balance between profits and sustaining long term profitability
Customers Group website and social media / Customer relationship management / Interactions at operational levels / Media
Achieving customer service excellence
Employees Regular meetings / Circulars / Emails / Performance review
To assist employees reach their potential and increase performance efficiency while rewarding dedication and positive end results
Suppliers Feedback evaluation / Registration of suppliers To source optimal raw material and maintain internationally accepted standards
Environment Audits / Obtaining standardization certificates To promote environmental conservation and mitigate the effects of environmental damage
Environmental impact management
Sierra Cables employs a well-placed environmental strategy and a framework to mitigate environmental damage and
continuously explore innovative processes that will complement this endeavour. This framework has enabled us to better
control the impacts on the environment, reduce the risk of potential costly pollution incidents and ensure compliance with
Adherence to
Local and
International
Standards and
Protocol
Innovation
ResourceOptimization
MinimizingEnvironmental
Damage
SustainableGrowth
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Sierra Cables PLC
environmental legislation. Our environmental policies
and practices comply with specifications of ISO 14001
Standard certification.
Environmental Policy Objectives
• Optimizing the use of raw materials, energy
and natural resources.
• Identifying waste streams and implementing
measures to minimize generation of such, in
order to reduce environmental pollution.
• Communicating this policy effectively to
employees, suppliers and other stake holders.
• Provide necessary training to create the
awareness towards the achievement of the
greener responsibilities of employees.
Sustainability through Product Quality
Our manufacturing process is conducted in accordance
with international standards and we constantly strive
to create value for customers without compromising
our environmental standards. During our manufacturing
process we follow British Standards (BS) and French
Standards (NFC) while our products intended for the Sri
Lankan market are certified by the Sri Lankan Standards
Institution (SLSI) through which Sierra Cables has
obtained the ISO 9001:2008 for its quality management
system.
RoHS Compliance Initiatives
We strictly adhere to RoHS compliance standards.
RoHS stands for Restriction of Hazardous Substances.
RoHS, also known as Directive 2002/95/EC, originated
in the European Union and restricts the use of specific
hazardous materials found in electrical and electronic
products. The restricted materials which include lead (Pb),
used in cable insulation and sheathing are hazardous to
the environment and pollute landfills, and are dangerous
in terms of occupational exposure during manufacturing
and recycling. Accidental fires and incineration of waste
scrap from wire and cable leads to the release of lead
(Pb) and other heavy metals and toxic substances. In
the case of a landfill, especially under acidic conditions,
this hazardous substance is likely to contaminate soil
and ground water. We utilize lead (Pb) free PVC to
manufacture cables in compliance to RoHS standards to
minimize the negative impact on the environment.
Cable Drum Re-use Programme
In line with our sustainability agenda and the strategy to
optimize resources, Sierra Cables follow a wooden drum
recycle and reuse programme. Wooden drums are used
to wind cables and transport those to customers which
we collect from the customers once the purpose is served
and the drums are empty. Following an assessment of
each wooden drum, we reuse the drums for the next
rewinding process.
Supplier Standard Management
We follow a rigorous selection as well as a pre and post
analysis process to ensure that our suppliers adhere to a
high level of environmental impact mitigation and health
and safety standards. We are committed to sourcing raw
material from reputed suppliers that adhere to the same
standards that we uphold.
Sustainability Challenges and Opportunities
Lack of awarenessamongst suppliers andcustomers with regard
to sustainablebusiness practices
Engage withcustomers and
suppliers to promoteoptimum capacity
utilization and promotethe business
advantages ofsustainablepractices
Maximizing assetand resources
utilization
Improveresource utilization
across all crossfunctions and upgradebusiness infrastructure
to enhancee�ciency
Challenges Opportunities
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Sierra Cables PLC
HR Review
Human Capital
Our human capital plays a key role in business growth and
success. Sierra Cables is committed to providing essential
training to enhance employee skills, timely rewards
and remuneration as well as creating a safe working
environment.
We provide equal opportunities for the employees and
the company does not discriminate existing and potential
employees based on their ethnicity, gender or sexual
orientation.
At Sierra Cables we strictly refrain from employing
forced labour and child labour or conducting any type
of unfair labour practices. As at 31st March 2017 the
total workforce of Sierra Cables was 318. Majority of
employees are from the age group 25 – 35 years.
Age-wise Analysis
8%
25%
35%
17%
15%
18-25 Years 26-35 Years 36-40 Years
41-50 Years 26-35 Years
Employee Category-wise Analysis
Permanent Casual Contract
95%
4%1%
Service Period-wise Analysis
23%23%
18%
15%
21%
Above 10 Years 6-10 Years 3-05 Years
1-02 Years Below 1 Years
Training & Development
We continuously provide training and development
opportunities to our staff both locally and abroad. Each
department utilizes the annual performance evaluation
system to identify key training requirements and organize
training programmes accordingly.
In addition, Line Managers hold the responsibility
of identifying training requirements and proposing
necessary training programmes to the Human Resources
Department. Training programmes are designed with the
dual goal of enhancing business success and employee
growth. Apart from specific training programmes,
the company facilitates employees’ higher education
aspirations.
We offer a range of structured and on the job training
programmes designed to develop technical competencies
as well as soft skills of our employees through leadership
development, motivational training and guidance in
management practices.
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Sierra Cables PLC
In addition, we engage external parties such as the
Industrial Training Institute (ITI), Sri Lanka Standard
Institute (SLSI) and the Sri Lanka Institute of Marketing
(SLIM). Annually a selected number of senior employees
attend training programmes conducted overseas.
HR Audit
In 2016, we conducted a employee attitude survey
to identify areas that requires improvement and the
feedback concluded the necessity of revisiting the
employee benefit plan. We have reviewed the existing
benefit plan and have laid out the groundwork to
implement a grading system which will allow us to
address employee concerns and improve the existing
benefit plan.
Currently, we evaluate employees bi-annually and salary
increments are identified based on the performance of
the employee.
Health & Safety
Employee safety is a key concern for Sierra Cables and
in this regard we have implemented a set of practical
steps to create a safe working environment. Apart from
providing timely training and instructions on safety
and wellbeing, we provide required Personal Protection
Equipment (PPE) to our employees.
We carry out frequent safety awareness meetings
and workshops. Sierra Cables has been certified by Sri
Lanka Standards Institution through OHSAS 18001:
2007 for Occupational Health & Safety practice in the
organization.
Employee Engagement
We believe that cordial relations amongst employees
and networking opportunities have a direct impact on
work efficiency and employee satisfaction. The company
organizes various social gatherings and activities to
engage employees to network and make connections.
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Sierra Cables PLC
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Sierra Cables PLC
Risk Management Review
The management of risk in a corporate world consists
of identifying, analyzing, quantifying and addressing all
possible risk factors to minimize threats that could harm
an organization. The competent management of risk can
also help identify potential opportunities while ensuring
good governance. It is equally important to note that risk
management is a recurrent process which plays a vital
role in an organization’s performance from the level of
corporate decision making.
To conduct a successful risk management process an
organization must achieve the effective balance between
identifying and minimizing the threat to future losses
and recognizing true opportunities for future growth and
development.
Risk Management strategies are focused on identifying
risk factors, developing solutions to overcome them and
implementing effective strategies to reduce the impact. It
is best to give special consideration to the suggestions of
the experienced personnel within the organization since
the relative importance of a risk can be elaborated more
precisely by them.
The risk management of a company is based on the
level of risk appetite. At Sierra Cables our appetite is
neither low nor high but moderate or more often above
the moderate level. This has enabled us to accept the
right level of risk suitable for the company avoiding
unnecessary risk that could hinder the future of the
company, thereby ensuring a smoother process.
Sierra Cables Risk Management Process
Identification of possible risk factors, both within and
outside the company is a continuous and vigilant task. It
requires a proactive mindset from all personnel at every
level within the organization. Their equal contribution is
highly valued and encouraged by the top management in
order to achieve a broader perspective in decision making.
With these perspectives the top management is then
able to commence the next vital step in risk management,
which is to analyze and prioritize the potential risk factors
accordingly.
This is vital when operating in a highly volatile
environment as the company’s resources need to be
ready at any given time. At this stage it is mainly the
top management that takes the initiatives of clearing
the path for future objectives and goals. However, in
the planning stage the middle level managers who are
experts in various fields’ takes part to better formulate
and strategize the plans. Their ideas together with
previous experiences will support to develop an action
plan on how to face future risks and take effective actions
appropriately.
The action taken for risks can be threefold. They are
acceptance, avoidance and mitigation. The finalized
action plan will be implemented concentrating on
taking any of the three actions specified above. Similarly
the implementation demonstrates the quality of the
previous stages of the risk management process. The
final step is crucial if the company is to reap the benefits
of risk management because it guarantees that the
implementation has taken place according to the planned
manner. At the same time the controlling and monitoring
stage also considers environmental change to ensure the
actions taken are complied according to the timely needs.
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Sierra Cables PLC
We have identified the below as key risks faced by the Company.
Financial Risk Impact Mitigation Process
Liquidity
Interest Rates
Exchange Rates
Credit Collection
Main impact is on the working capital and profitability whereas the sustainability of the Company is affected
Monthly meetings with sales representatives to review on debt collection. Positive relationships with financial institutions in order to obtain lucrative rates
A separate method to assess the potential of customers in terms of their credit worthiness
Agreeing for "Call Options Forward Contract"
Looking for supplier credit to mitigate costly fluctuations in local interest rates
Business Risk Impact Mitigation Process
Market Risk Price changes can directly impact on the profit When setting prices it is possible to match with raw material prices
Setting sales targets considering Company’s potential
Having a thorough idea on the trends in the market
Planning
ImplementingAnalysing &Prioritizing
the Risks
Monitoring& Controlling
BusinessContext
IdentifyingKey Risks
RiskManagementFramework
Risk Management Review Contd.
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Sierra Cables PLC
Operational Risk Impact Mitigation Process
Health & Safety of Employees
Changes in Environmental
International Quality Standards
& Regulatory Environment
Impact on employees personal and work life
Future existence of the business
Employee performance evaluation scheme
Good relationships with employees through the activities of the employee welfare society
Providing training on industrial safety
Obtaining the ISO 9001:2000 Standard
Obtaining the ISO 14001 Standard
Obtaining the OHSAS Certificate
Providing required Personal Protection Equipment
Continues inspection on working environment condition
Product Risk Impact Mitigation Process
Customer satisfaction
Cost effectiveness
Decline in market share Maintaining SLS Standard
Bidding with competitive prices
Proper testing to identify quality defects
Production planning
Information Risk Impact Mitigation Process
Timely & accurate information for decision making
Systems operation & application.
Lack of accurate and timely decision making Use of an ERP system for timely decision making
Data backup procedure
Agreements with IT vendors for support and maintenance
Regular upgrading of the systems
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Sierra Cables PLC
IT Review
Information Technology and the use of the latest
technological advancements are essential ingredients
of business growth, cost reduction and environmental
impact mitigation. In this context, Sierra Cables
have taken several practical measures to adopt new
technologies and leverage competitive advantage in a
competitive industry.
A Strengthened IT Platform
The current Enterprise Resource Planning (ERP) system
(Microsoft Dynamics NAV (Navision) )that the company
employs facilitates the integration of the module with
core functions of Marketing, Purchasing, Administration
and Finance Management, enabling us to operate on a
lean and efficient cost structure.
Our systems have been designed and developed using the
latest technology and is backed by the best practices and
internal controls of the highest standards. Our Business
Intelligence processes enable employees to analyze data
intelligently and come up with actionable information to
make informed business decisions.
Sales Force Automation
In 2016, we took the initial step to automate our sales
force in order to streamline our sales process and improve
efficiency. This effort also aligns with our plan to operate
in an entirely paperless business environment by 2020.
The company has already laid out the groundwork to
operate entirely within a digitalized environment.
"Sierra Cables is committed to investing in our people to pave the way for business growth that coincides with human capital growth."
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Sierra Cables PLC
Corporate Governance
Sierra Cables PLC has always paid close attention to
maintaining high standards of corporate governance. It
has been an ongoing focus point of importance with the
Board of Directors ever since the Company was listed. The
Directors have ensured that the company adheres to the
various guidelines, especially those issued by regulatory
bodies and the legislation of the company, such as the
Institute of Chartered Accountants Sri Lanka, Securities &
Exchange Commission and the Companies Act of 2007.
Furthermore, the Board conducts all acts with
transparency and are bound by the directives issued
by the CSE. As the Board is appointed annually by the
company shareholders each Board member seeks to
achieve the objectives of the company including good
governance, on behalf of them. Hence, this concept
was developed to ensure that the above goal is met by
ensuring good relationships between the shareholders,
Board of Directors, management and other stakeholders.
The Board is also obliged to act in the best interest of the
company and thereby work to enhance the shareholders’
wealth.
When the management takes part in governance in a
responsible way it will provide a fundamental background
for sound decision making and help raise the performance
of the company. With this in mind the Board always
strikes a balance on the two dimensions, conformance
and performance. 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
AUDITORS
BOARD SUBCOMMITTEES
(AUDIT,REMUNERATION
& RELATED PARTY TRANSACTION)
MANAGINGDIRECTOR /
CEO
TOPMANAGEMENT
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Sierra Cables PLC
The Board Balance
The responsibility of the Board of Directors is to operate
the company by acting in a manner that reflects the
best interest of the company. Nine Directors were
appointed as the Board of Directors. Out of the nine,
eight are Non-Executive Directors. Four out of the eight
Non- Executive Directors are Independent Directors. All
directors are veterans in their fields such as engineering,
law, construction, marketing, finance and public
administration. Their years of experiences are the reason
for the continual success of the company.
Despite the varying levels of shareholding possessed by
the Directors, equality is a major fact that is prevalent
at all times with 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,
Corporate Governance Contd.
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Sierra Cables PLC
Mr. M.N. Gunasekera
Chairman - Non-Executive Independent Director
Prof. A.K.W. Jayawardane
Non-Executive Independent Director
Eng. B.N.W. Rupasinghe
Non-Executive Independent Director
The committee has met six times during the year.
The meetings are attended by the 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 also 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
1. Monitor and review the adequacy of the
company’s accounting system and internal
control environment.
2. Review the annual and semi-annual financial
statements of the company, and make
recommendations to the Board.
3. Determine company specific accounting
policies within the ambit of the accounting
standards.
4. Review significant transactions which are not a
normal part of the company’s business.
Risk Management
1. Identify and assess areas of risks which
might impact on the company and research
appropriate mitigations.
2. Monitor, review and evaluates the adequacy
and effectiveness of the company’s risk
management controls, both internally and
externally.
3. Evaluate the effectiveness of the company’s
business continuity plans.
4. Evaluate the adequacy of the company’s
insurance covers at least annually.
The Audit Committee has recommended to the Board of
Directors that Messers KPMG, Chartered Accountants to
appoint as Auditors for the year ending 31st March 2018
subject to the approval of the shareholders at the next
annual general meeting.
Annual Report 2016 / 2017
38
Sierra Cables PLC
Remuneration Committee
The Remuneration Committee works to attract and
retain Directors, executives and employees for the
company. Also through the decisions of the Remuneration
Committee it is expected to obtain the highest level of
contribution for the achievement of goals and objectives
of the company. There by it expects to create a good
value for the shareholders.
The Sierra Cables PLC's Remuneration Committee
consists of two Non-Executive Independent Directors as
follows;
Prof. A.K.W. Jayawardane
Chairman - Non-Executive Independent Director
Mr. M.N. Gunasekera
Non -Executive Independent Director
Eng. B.W.N. Rupasinghe
Non-Executive Independent Director
The main responsibilities of the Remuneration Committee
are;
1. To review and approve the Remuneration
policy of the company.
2. To advice on structuring Remuneration
packages that enable the company to attract,
retain and motivate high caliber individuals
with the requisite skills.
3. To recommend to the Board of Directors the
Remuneration to be paid to the Executive
Directors, Non-Executive Directors, their pre-
requisites and allowances.
Related Party Transactions Review Committee
The members of the Related Party Transactions Review
Committee are;
Mr. M.N. Gunasekera
Chairman - Non-Executive Independent Director
Prof. A.K.W. Jayawardane
Non-Executive Independent Director
Eng. B.N.W. Rupasinghe
Non-Executive Independent Director
The main responsibilities of the Related Party
Transactions Review Committee are as follows;
Authorise and review all Related Party Transactions to
ensure compliance with the Listing Rules, compliance
with stock exchange and legal requirements, concerning
the respective transactions.
In the event a Related Party Transaction will be ongoing
(recurrent transactions), the Related Party Transactions
Review Committee has established guidelines for the
senior management to follow in respect of ongoing
dealings with the Related Parties.
Thereafter, the Committee on an annual basis, would
review and assess ongoing relationships with the related
parties, to determine whether they are in compliance
with the Committee’s guidelines and that the Related
Party Transactions remain appropriate.
Corporate Governance Contd.
Annual Report 2016 / 2017
39
Sierra Cables PLC
Board Meetings and Sub Committee Meetings
Name of the Director Board MeetingsAudit Committee
Meetings
Remuneration Committee Meetings
Related Party Transaction
Review Committee Meetings
Executive Non-Independent Directors
Mr. D.S. Panditha 6/7 - - -
Non-Executive Directors
Mr. W.A.P. Perera (Chairman) 7/7 - - -
Mr. D.N.N. Lokuge 1/7 - - -
Mr. E.A.D.T.B. Perera 3/7 - - -
Ms. G. S. M. Irugalbandara 5/7 - - -
Ms. S.N. Lokuge 3/7 - - -
Non-Executive Independent Directors
Mr. J. H. P. Ratnayake 2/7 - - -
Prof. A.K.W. Jayawardane 6/7 6/6 1/1 1/1
Eng. B.W.N. Rupasinghe 4/7 6/6 1/1 1/1
Mr. M.N. Gunasekara 7/7 6/6 1/1 1/1
Dates of Meetings
27.05.2016 27.05.2016 11.08.2016 11.08.2016
11.08.2016 11.08.2016 - -
28.10.2016 25.10.2016 - -
30.11.2016 28.10.2016 - -
26.01.2017 20.01.2016 - -
06.02.2017 25.01.2016 - -
30.03.2017 - - -
Internal Control
The Internal Control system encompasses the financial,
operational, risk management and regulatory compliances
of the company. Maintaining effective control is vital as
it is the responsibility of the Board. All the sectors have
different controls developed uniquely for themselves.
Their discipline and commitment will ensure correct
processes are maintained within the company. The
effectiveness of these controls is reviewed regularly
through the Management Review meeting and Board
Meetings. One of the main items heavily discussed
in every Management Review meeting is the Key
Performance Indicators (KPI).
It summarizes the performance of every department
of the company on a monthly basis. Even though all
these controls are in place we cannot reject the fact
that exceptions can appear in an unexpected manner.
Therefore either through preventive or corrective actions
such situations should be managed.
However the ultimate expectations thus will be to
develop and maintain accurate processes, information
and customer satisfaction. Simply this will ensure
maximization of shareholder wealth and the quality of
the company’s performance.
40
Annual Report 2016 / 2017Sierra Cables PLC
Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
1. COMPANY
A.1. Director
(The Board)
A . 1/7.10.1(a)
7.10.2(a) and 7.10.3 (c-d)
Compliant The Board of Directors currently consists of nine (09) members including Chairman.
The day to day monitoring and operations of the organization has been delegated to the Chief Executive Officer (CEO) and the Executive Committee governed by policies, procedures and authority by the Board of Directors.
The Board is accountable to the stakeholders of the Company to ensure that the business is conducted in an appropriate manner based on an approval business plan and the financial and non-financial targets of the Company are achieved. The Board’s Terms of Reference stipulate the specific duties of the Board and the following are some key matters which come under the Board’s review and approval;
I. Company strategy and business plan
II. Financial reporting and internal controls
III. Financial performance
IV. Dividend policy
V. Changes to capital structure
VI. Constitution and performance of the Board Committee
VII. Regulatory compliance
Company Board Meetings A.1.1 Complied Seven (07) Board meetings were held to review financial performance and to consider other matters such as strategic and operational plans.
Responsibilities of the Board
A.1.2 Complied The Board is collectively responsible for formulation, implementations and monitoring of business strategies. In order to do so, the Board appointed committees are constituted to assist the main board in fulfilling its stewardship function by reviewing systems of internal control, internal and external audit, risk management, IT systems and financial reporting to shareholders.
Compliance with laws and access to independent professional advice
A.1.3 Complied The Board members are permitted to obtain independent professional advice from third parties as deemed necessary which includes the Company’s external lawyers and auditors at the expense of the Company.
Company Secretary A.1.4 Complied The Company secretary possesses the required qualifications and expertise, and advises the Board on matters concerning the Companies Act and other relevant rules, regulations and regulatory guidelines.
Independent judgment of the Directors
A.1.5 Complied All the Board members actively participate in the Board meeting by bringing up their own independent judgment.
Corporate Governance Contd.
41
Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
Dedicating Adequate time and effort
A.1.6 Complied The Board members dedicate adequate time for the affairs of the Company by attending Board meetings, Board appointed sub-committee meetings and by making decisions via circular resolutions.
A.2 Chairman and Chief Executive Officer (CEO)
There is a clear demarcation of the responsibilities between the Chairman and the CEO. The functions performed by the Chairman and the CEO are distinct and separate, ensuring the balance of power and authority within the organization, so that no person has unattended powers of decision-making and implementations.
A.3 Chairman’s Role
The Chairman is responsible for leadership of the Board, managing Board meetings and the business undertaken threat. The Chairman is responsible to ensure that all relevant issues of the Company are dealt with on the Board Agenda and that Directors receive all appropriate information and documentation in a timely manner, thus facilitating the Directors to contribute at the deliberations.
Role of Chairman A.3.1 Complied The Chairman should ensure Board proceedings are conducted in a proper manner.
A.4 Financial Acumen
Financial Acumen A.4 Complied Our Directors with their academic and/or entrepreneurial financial skill, business acumen and wide practical wisdom contribute substantial value, knowledge and independent judgment to decision making on matters concerning finance and investment
A.5 Board Balance
Presence of Non- Executive Directors
A.5.1
7.10.1(a), 7.10.2(a) and 7.10.3(a)
Complied Eight of the nine Directors of the Board hold office in a Non-Executive capacity.
Independence of Non-Executive Directors
A.5.2 & 5.3
5.5, 7.10.2(a-b) and 7.10.3(a-b)
Complied The Board comprises of four Independent Non-Executive Directors.
Annual Declaration of Non-Executive Directors
A.5.4
7.10.2(b)
Complied Each Non-Executive Director submits a signed and dated declaration annually of his Independence or Non -Independence against a specified criteria as set out in Appendix 7A of Colombo Stock Exchange listing rule section 7.10.2(b).
Requirement to appoint a ‘Senior Non-Executive Director’
Requirement to appoint a ‘Senior Non-Executive Director’
Not applicable This is not relevant to the Company as the Chairman and CEO roles are segregated.
Chairman conducting meetings with the Non-Executive Director
A.5.9 Complied The Chairman meets with the Independent Non-Executive Director as and when necessary.
Recording of concerns in the Board minutes
A.5.10 Complied Where Directors have concerns about the matters of the Company which cannot be unanimously resolved, their concerns are recorded in the Board minutes.
Annual Report 2016 / 2017Sierra Cables PLC
42
Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
A.6 Supply Information
Obligation of the Management to provide appropriate and timely information
A.6.1 Complied The Group has a state-of-art management information system to process and monitor the performance of the Group. Appropriate and timely information is made available to the Board members who make further inquiries when necessary.
Adequate time for circulation ad respective Board documents
A.6.2 Complied Board papers, agenda and previous Board minutes to be tabled one week prior to Board Meeting.
A.7 Appointment to the Board
Disclosure to Shareholders
A.7.3 Complied
A.8 Re-election
Re-election of Directors A.8.1 and A.8.2 Complied To comply with the Articles of Association, the Directors who have been appointed to the Board during the year, hold office until the next AGM, and are required to retire and a new Director to be re-elected by the shareholders.
A.9 Appraisal of Board and the subcommittees
A.9.1,A.9.2 and A.9.3 Complied The Board annually appraises itself on its performance in the discharge of its key responsibilities. The Board also undertakes an annual self evaluation of its own performance and that of its committees and the Board states on how such performance evaluations have been concluded.
A.10 Disclosure of information in respect of Directors
Directors’ Disclosures A.10.1
7.10.3(c-d)
Complied The names of the Directors of the Board, their leadership expertise, skills and their profiles are disclosed on page 16 to 17 of this Annual Report. Director’s interests in contracts are indicated in Note 35.2 of the Financial Statements of this Annual Report. Names of the Chairman and the members of the Boards Committees are provided on page 54.
A.11 Appraisal of Chief Executive
Setting of the annual targets and the appraisals of the CEO
A.11.1 and A.11.2 Complied The CEOs performance is reviewed annually.
Appraisals of the CEO
Annual Report 2016 / 2017Sierra Cables PLC
Corporate Governance Contd.
43
Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
B. DIRECTOR’S REMUNERATION
B.1/7.10.5 Remuneration Procedure
Establishment of a Remuneration Committee and its composition
B.1.1, B.1.2 and B1.3
7.10.5(a) and 7.10(b)
Complied The Remuneration Committee comprises of Prof. A.K.W. Jayawardane, Mr. M.N. Gunasekera and Eng. B.W.N. Rupasinghe being independent Non-Executive Directors. Prof. A.K.W. Jayawardane is the Chairman of the Committee. The details of the Remuneration Committee’s composition, policies and responsibilities are set out on page 49 of this Annual Report.
Determination of the remuneration of the Non-Executive Directors
B.1.4 Complied The Board as a whole decides the remuneration of the Non-Executive Directors. The Non-Executive Directors receive a fee for being a Director of the Board and fee participating as a sub committee member.
Consultation with the Chairman and the CEO
B.1.5 Complied Input of the Chairman is obtained as the Chairman of the said Sub Committee. External professional advice is sought on a need basis.
B.2 Level and Makeup of Remuneration
Level and makeup of the remuneration of Directors and comparison of remuneration with other Companies
B.2.1, 2.2 and 2.3 Complied The remuneration scheme for Executive Directors is structured to align rewards to their individual and Corporate performance targets.
Performance –based remuneration
B.2.4 Complied The performance related payments for Executive Directors is structured to align with individual Corporate performance targets.
Executive share options B.2.5 Not applicable
Designing the remuneration
B.2.6 Complied Provisions set-out in Schedule E of the Code of Best Practice is considered.
Early termination of Directors
B.2.7 and B.2.8 Complied
Remuneration of Non-Executive Directors
B.2.9 Complied Non-Executive Directors fee are compared with the market rates
B.3/7.10.5 (C) DISCLOSURE OF REMUNERATION
Disclosure of remuneration policy and aggregate remuneration
B.3.1 Complied Please refer Remuneration Committee Report
C. RELATIONS WITH SHAREHOLDERS
C.1 Constructive use of Annual General Meeting
Use of Proxy C.1.1 Complied We ensure that all proxy votes are counted and the quantum of proxies lodged on each resolution is conveyed to our Chairman.
Annual Report 2016 / 2017Sierra Cables PLC
44
Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
Separate resolution for substantially separate issues
C.1.2 Complied Separate resolutions are proposed at an Annual General Meeting on each substantial issue.
Chairman of Board Committee to be present
C.1.3 Complied At an Annual General Meeting (AGM) the respective Chairman of the Remuneration, Audit and Nomination Committees are present to provide any clarification to shareholders as necessary.
Adequate notice of Annual General Meeting and summary of Procedure
C.1.4 and C.1.5 Complied The notice and the agenda of the AGM together with the Annual Report of the Company containing the relevant documents are sent to the shareholders giving 15 working days’ notice prior to the date of the AGM
C.2 COMMUNICATION WITH SHAREHOLDERS
Effective communication with the shareholders
C.2.1,C.2.2,C.2.3, C.2.4 Complied The Board maintains a two-way communication with all investors providing an opportunity to seek non-price sensitive information throughout the year by conducting meetings and discussions and answering queries through our Company Secretarial Division and/or Communications Teams.
D. ACCOUNTABILITY AND AUDIT
D.1 Financial Reporting
Board responsibility to present the financial statement
D.1.1 Complied The Board presents a balanced and understandable assessment extending to interim and other price-sensitive public reports to regulators, as well as the information required to be presented by statutory requirements complying with regulatory deadlines.
Annual Report of the Directors
D.1.2 Complied Declaration by the Directors that the Company has not engaged in any activities, which contravenes laws and regulations, declaration of all material interests in contracts, equitable treatment of shareholders and going concern with supporting assumptions or qualifications as necessary.
Please refer to Annual Report of the Board of Directors on pages 52 to 57.
Statement by the Directors and the Auditors
D.1.3 Complied Please refer the Statement of Directors' Responsibilities on page 51.
Management discussion and analysis
D.1.4 Complied Please refer Management Discussion and Analysis on pages 16 to 29.
Declaration by the Board as to whether the business is a going concern
D.1.5 Complied Please refer to Annual Report of the Board of Directors on pages 52 to 57.
Requirement for an Extraordinary General meeting in a situation of serious loss of capital
D.1.6 Not Applicable
Annual Report 2016 / 2017Sierra Cables PLC
Corporate Governance Contd.
45
Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
D.2 Internal Control
Directors to review Internal Controls
D.2.1 Complied The Board is responsible for establishing a sound framework of risk management and internal controls and monitoring its effectiveness on a continuous basis
Requirement to review the need for an Internal Audit function
D.2.2 Not applicable The Group already has an internal audit division, and as such this is not applicable.
D.3/7.10.6 Audit Committee
Composition of the Audit Committee and its duties
D.3.1 and D.3.2/7.10.6(a) and 7.10.6(b)
Complied The Audit Committee comprises of Mr. M.N. Gunasekara, Prof. A.K.W. Jayawardene and Eng. B.W.N. Rupasinghe being Independent Non-Executive Directors. Mr. M.N. Gunasekara is the Chairman of the Committee. The details of the Audit Committee’s composition, policies and responsibilities are set out on pages 47 to 48 of this Annual Report.
Terms of reference of the Audit Committee
D.3.3 Complied Please refer to the Audit Committee Report on pages 47 to 48 of this Annual Report.
Disclosure of names of the members of the Audit Committee
D.3.4
7.10.6(C)
Complied Please refer to the Audit Committee Report on pages 47 to 48 of this Annual Report.
D.4/ 9. Related Party Transactions Review Committee
Composition of the Related Party Transactions Review Committee and its duties
D.4.1
9.2
Complied The Related Party Transactions Review Committee comprises of Mr. M.N. Gunasekara, Prof. A.K.W. Jayawardene and Eng. B.W.N. Rupasinghe being Independent Non-Executive directors. Mr. M.N. Gunasekara is the Chairman of the Committee. The details of the Related Party Transactions Review Committee’s composition, policies and responsibilities are set out on page 50 of this Annual Report.
Terms of reference of the Related Party Transactions Review Committee
D.4.2 Complied Please refer to the Related Party Transactions Review Committee Report on page 50 of this Annual Report.
Disclosure of names of the members of the Related Party Transactions Review Committee
D.4.3 Complied Please refer to the Related Party Transactions Review Committee Report on page 50 of this Annual Report.
D.5 Code of Business Conduction and Ethics
We are committed to carrying out all business activities to the highest standards of integrity, ethical values and professionalism, whilst following the laws of the country, international laws and compliance as per our stakeholders’ expectations.
Disclosure on a the presence of Code of Business Conduct and Ethics
D.5.1 Complied
Annual Report 2016 / 2017Sierra Cables PLC
46
Reference to the SEC & ICASL Code, CSE Listing
Rules Compliance Details of Compliance
Affirmation of the code of conduct and ethics
D.5.2 Complied As per our Chairman’s statements on Pages 12 to 13 of this Annual Report, we affirm our adherence to good business conduct and ethics.
D.6 Corporate Governance Disclosures
Disclosures of Corporate Governance
D.6.1 Complied We aim to achieve greater year-on-year growth and value creation, improve stakeholder satisfaction and relationships in our business activities, whilst adhering to the highest standards of corporate governance as is evident in this Annual Report on pages 35 to 46.
2. SHAREHOLDERS
E. INSTITUTIONAL INVESTORS
Shareholder voting E.1.1 Complied We conduct regular and structured dialogues with shareholders based on a mutual understanding of objectives.
F. OTHER INVESTORS
F.1 Investing and divesting decision
Investing and divesting decision
F.1 Complied Individual shareholders, investing directly in shares of companies are encouraged to carry out adequate analysis or seek independent advice in investing or divesting decision.
F.2 Shareholders Voting
Individual shareholders’ voting
F.2 Complied Individual shareholders are encouraged to participate in General Meetings of companies and exercise their voting rights.
Annual Report 2016 / 2017Sierra Cables PLC
Corporate Governance Contd.
Annual Report 2016 / 2017
47
Sierra Cables PLC
Audit Committee Report Role of the Audit Committee
The role of the Audit Committee is to oversee and review
the financial reporting system of the Company, with a
view to safeguarding the interest of the shareholders and
all other stakeholders.
Composition
The Audit Committee, consisting of three non-executive
independent directors, has been constituted in
compliance with the 'Rules on Corporate Governance’
under the Listing Rules of the Colombo Stock Exchange.
The members of the Audit Committee are:
• Mr. M.N. Gunasekera - Chairman
Non-Executive Independent Director
• Prof. A.K.W. Jayawardane
Non-Executive Independent Director
• Eng. B.N.W. Rupasinghe
Non-Executive Independent Director
The other members participating, by invitation, at the
Audit Committee meetings are the Managing Director
and Chief Financial Officer.
Meetings
The Audit Committee had six meetings during the year
under review.
Name Attendance
Mr. M.N. Gunasekera 6/6
Prof. A.K.W. Jayawardane 6/6
Eng. B.N.W. Rupasinghe 6/6
Terms of Reference
As specified in the terms of reference, in relation to
its authority and duties,the Audit Committee was
established to assist the Board of Directors to fulfill their
oversight responsibilities, which include the integrity of
Financial Statements, risk management, business ethics,
internal control, compliance with legal and regulatory
requirements, review of Independent External Auditors’
performance and the Internal Audit.
Financial Reporting
In accordance with the stipulated requirements of the Sri
Lanka Accounting Standards, the Committee reviews the
following:
• Procedures to provide reasonable assurance
that all transactions are accurately and
completely recorded in the books of account.
• Effectiveness of 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.
Compliance with Laws and Regulations
The Audit Committee reviewed the reports submitted
by the Management and the Internal Auditors on
compliance with applicable laws and regulations. The
Committee is satisfied that Laws and Regulations are duly
complied with and statutory payments have been made
on a timely basis.
Annual Report 2016 / 2017
48
Sierra Cables PLC
Internal Control, Internal Audit & Risk Management
In its review of effectiveness of internal controls,
the Committee examined the business processes to
ensure that reasonable assurance can be provided to
the directors that assets are safeguarded and that the
financial reporting system can be relied upon in the
preparation and presentation of the financial statements.
The Audit Committee monitors and guides the firm of
Chartered Accountants engaged in the Internal Audit, in
its audits, according to the plan of activities which covers
financial and operational audits, risk assessments and IT
security reviews. The reports of the Internal Auditors have
been reviewed, discussed by the Committee, and initiated
corrective measures.
Independent Auditors
The Committee is satisfied that the independence and
objectivity of the Independent External Auditors 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 2018
Conclusion
In its continuous assessments, the Audit Committee is
satisfied that the Group's accounting policies, internal
controls, including operational controls, provide
reasonable assurance that the affairs of the Group are
managed in accordance with policy framework of the
Group, set out by the Board of Directors and that the
Group assets are properly accounted and adequately
safeguarded.
(Sgd)
M.N. Gunasekera
Chairman - Audit Committee
11th August 2017
Audit Committee Report Contd.
Annual Report 2016 / 2017
49
Sierra Cables PLC
Board Compensation and Remuneration Committee Report The main functions of the Remuneration Committee
include the provision of policy advice and
recommendations to the Board of Directors with regard
to remuneration of Executive Directors and Senior
Executives. The recommendations are aimed at being
attractive, fair and competitive to attract and retain
executive staff.
The Remuneration Committee appointed for the
financial year 2016-17 consists of three Non-Executive
Independent Directors as follows:
• Prof. A.K.W. Jayawardane - Chairman
Non-Executive Independent Director
• Eng. B.W.N. Rupasinghe
Non-Executive Independent Director
• Mr. M.N. Gunasekera
Non-Executive Independent Director
The Committee met once during the year under
review and discussed the current remuneration policy
and remuneration applicable to Executive Directors,
and the mechanism adopted to revise remuneration
of Executive Staff in line with company policies of
employee remuneration. Having carefully looked at the
new initiatives during the year under review, especially
the Sierra Cables East Africa Limited, the Committee
recommended an appropriate salary increase to the Chief
Executive Officer.
(Sgd)
Prof. A.K.W. Jayawardane
Chairman - Remuneration Committee
11th August 2017
Annual Report 2016 / 2017
50
Sierra Cables PLC
Related Party Transaction Review Committee ReportRole of The Committee
The Committee assists the Board in reviewing all related
party transactions carried out by the Company. The
Committee also performs the oversight function on
behalf of the Board in complying with the Listing Rules
of the Colombo Stock Exchange and with the Code of
Best Practices on Related Party Transactions issued by
the Securities and Exchange Commission.
Composition
The Committee, consisting of three non-executive
independent directors, has been constituted in
compliance with the Listing Rules of the Colombo Stock
Exchange.
The Committee Members are :
• Mr. M.N. Gunasekera - Chairman
Non-Executive Independent Director
• Prof. A.K.W. Jayawardane
Non-Executive Independent Director
• Eng. B.N.W. Rupasinghe
Non-Executive Independent Director
The other members participating, by invitation, at
Committee meetings are the Managing Director and the
Chief Financial Officer.
The Committee had one meeting during the year under
review
Policies & Procedures
The above committee was authorized to review all
Related Party Transactions to ensure compliance with the
Listing Rules, compliance with Stock Exchange and legal
requirements, concerning the respective transactions.
Terms of Reference
The Related Party Transactions Review Committee
has terms of reference, dealing with its authority and
duties. The Terms of Reference covers aspects relating
to matters prescribed in the listing rules of the Colombo
Stock Exchange.
Terms of reference of the Committee, among others,
include the following:
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.
Related Party Transactions during the Year
The activities and observations of the Committee are
communicated to the Board. Details of related party
transactions are disclosed in note 35.1 in the financial
statements.
(Sgd)
M.N Gunasekera
Chairman - Related Party Transactions Review Committee
11th August 2017
Annual Report 2016 / 2017
51
Sierra Cables PLC
Statement of Directors’ ResponsibilitiesThe responsibility of Directors in relation to the Financial
Statements is set out in the following statements. The
responsibility of the auditors, in relation to the Financial
Statements prepared in accordance with the provisions of
the Companies Act No. 7 of 2007 and other status which
are applicable to the preparation of Financial Statements
are set out in the Independent Auditors’ Reports.
The Financial Statements Comprise of:
A Statement of Financial Position, which presents a true
and fair view of the state of affairs of the Company and
its subsidiaries as at the end of the financial year; and
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 of Sierra Cables PLC
P.R. Secretarial Services (Private) Limited
Secretaries
11th August 2017
Annual Report 2016 / 2017
52
Sierra Cables PLC
Annual Report of the Board of Directors on the Affairs of the CompanyThe Directors of Sierra Cables PLC (the Company) have
the pleasure in submitting their Report together with the
Audited Financial Statements of the Company and the
Audited Consolidated Financial Statements of the Group
for the year ended 31st March 2017.
Principal Activities
The principal activities of the Company are
manufacturing and selling of wires and cables. The
three subsidiaries, Sierra Power (Private) Limited, Sierra
Industries (Private) Limited and Sierra Cables East
Africa Limited are engaged in the power generation
to the National Grid, manufacture of UPVC pipes and
fittings and manufacture and sale of wires and cables
respectively. The two associate Companies, T & G Lanka
(Private) Limited and Tea Leaf Resort (Private) Limited
are diversified to manufacturing of Patch Cables and to
leisure sector.
Review of Operations
A review of the Company’s business and its performance
during the financial year is contained in the Chairman’s
message on pages 12 to 13 and MD / Chief Executive
Officer’s report on pages 14 to 15 of the Annual Report,
together with the Financial Statements which reflects the
state of affairs of the Company.
Financial Statements
The completed financial statements of the Group has
been duly certified by the person responsible for the
preparation of the financial statements of the Company
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 on pages 62 to 111.
Auditors Report
The Auditor’s Report on the Financial Statements is given
in page 61.
Financial Results
The Group made a Profit before Taxation of Rs. 347.67
million during the financial year compared to Rs. 273.43
million in 2015/16. The detailed results are given in the
Income Statement on page 62.
Dividends
The Company declared an interim dividend payment of
Rupees 0.25 per share on the 08th February 2017.
As required by Section 56(2) of the Companies Act No. 7
of 2007, the Board of Directors have confirmed that the
Company satisfies the solvency test immediately after the
payment of dividend and have obtained the certificate of
solvency from the Auditors.
Significant Accounting Policies
The significant accounting policies adopted in the
preparation of the financial statements are given in pages
70 to 81.
Property, Plant and Equipment
An analysis of the Property, Plant and Equipment of
the Company is disclosed in Note 13 of the Financial
Statements on pages 86 to 89.
Stated Capital
The Stated Capital of the Company as at 31st March
2017 was Rs. 894,565,898 and is represented by
537,512,430 issued and fully paid Ordinary Shares. There
was no change in the Stated Capital during the year.
Reserves
The group retained earnings and other reserves as at
31st March 2017 amounted to Rs. 784,307,937.
Annual Report 2016 / 2017
53
Sierra Cables PLC
Donations
No donations were made by the Company during the year
under review.
Capital Commitments
There were no material capital commitments as at the
reporting date.
Provision for the Taxation
Provision for the Taxation of the Company is disclosed in
Note 9 of the Financial Statements.
Statutory Payments
The Directors, to the best of their knowledge and belief,
are satisfied that all statutory payments due to relevant
authorities have been made by the Company.
Contingent Liabilities
There were no material contingent liabilities as at the
reporting date which require adjustments 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 in pages 31 to 33.
Going Concern
The Directors having made an assessment of the
Company’s operating conditions, financial position, risks
and future prospects have a reasonable expectation that
the Company has adequate resources to continue its
operations as a going concern in the foreseeable future.
Directors who held office during the Year
The Directors of the Company during the year were as
follows.
Mr. W. A. P. Perera - Non- Executive Director
Mr. D. S. Panditha - Executive Non-Independent
Director
Mr. E. A. D. T. B. Perera - Non- Executive Director
Mr. J. H. P. Rathnayake - Non- Executive Independent
Director
Ms. G. S. M. Irugalbandara - Non- Executive Director
Mr. D.N.N. Lokuge - Non- Executive Director
Eng. B. W. N. Rupasinghe - Non- Executive Independent
Director
Prof. A. K. W. Jayawardena - Non- Executive Independent
Director
Mr. M.N. Gunasekara - Non- Executive Independent
Director
Ms. S.N. Lokuge - Non- Executive Director
Appointments during the year
Ms. Shalini Nimendranie Lokuge with effect from 26th
May 2016
Resignations during the year
Mr. Don Nimal Nayana Lokuge with effect from 27th May
2016
Appointments after the conclusion of the year
Nil
Resignations after the conclusion of the year
Nil
Annual Report 2016 / 2017
54
Sierra Cables PLC
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
Eng. 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. W.A.P. Perera, who retires by
rotation in terms of Articles 91 of the Articles
of Association of the Company as a Director of
the Company.
2. To re-elect Ms. G. S. M. Irugalbandara
, who retires by rotation in terms of Articles 91
of the Articles of Association of the Company
as a Director of the Company.
3. To re-elect Mr. J.H.P.Ratnayeke, who retires by
rotation in terms of Articles 91 of the Articles
of Association of the Company as a Director of
the Company.
Corporate Governance
The Board of Directors confirm that the Company is
compliant with section 7.10 of the Listing Rules of the
Colombo Stock Exchange.
An Audit Committee, Remuneration Committee and
Related Party Transactions Review Committee function
as Board sub committees with Directors who possess the
requisite qualifications and experience. The composition
of the said committees is as follows;
Audit Committee as at 31st March 2017
• Mr. M.N. Gunasekera - Chairman
Non-Executive Independent Director
• Prof. A.K.W. Jayawardane
Non-Executive Independent Director
• Mr. B.N.W. Rupasinghe
Non-Executive Independent Director
Remuneration Committee as at 31st March 2017
• Prof. A.K.W. Jayawardane - Chairman
Non-Executive Independent Director
• Eng. B.W.N. Rupasinghe
Non-Executive Independent Director
• Mr. M.N. Gunasekera
Non-Executive Independent Director
Related Party Transaction Review Committee as at 31st March 2017
• Mr. M.N. Gunasekera - Chairman
Non-Executive Independent Director
• Eng. B.W.N. Rupasinghe
Non-Executive Independent Director
• Prof. A.K.W. Jayawardane
Non-Executive Independent Director
Directors’ Interest Register
The Company maintains an Interest Register in terms
of the Companies Act No. 7 of 2007. The Directors
have made declarations and disclosed their interests
to the Board and those interests are recorded in the
interests register as provided for in Section 192(2) of the
Companies Act No. 7 of 2007.
Annual Report of the Board of Directors on the Affairs of the Company Contd.
Annual Report 2016 / 2017
55
Sierra Cables PLC
Directors Remuneration and Other Benefits of Directors
Directors’ remuneration in respect of the Company for the financial year 2016/17 is given in Note 35.2 to the Financial
Statements on page 104.
Directors’ Interest In Shares
The Company maintains an interest register in terms of the Companies Act No. 7 of 2007. The Directors have made
declarations and disclosed their interests to the Board and those are recorded in the interest register as provided for in
Section 192(2) of the Companies Act No. 7 2017.
NameNo. of Shares as at 31st
March 2017.No. of Shares as at 31st
March 2016
Mr. D.S. Panditha 17,501,297 17,022,950
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
Ms. S.N. Lokuge 100,000 Nil
Mr. D.N.N. Lokuge (Alternate Director) Nil 100,010
Mr. E.A.D.T.B. Perera 10 10
Prof. A.K.W. Jayawardena Nil Nil
Mr. B.W.N. Rupasinghe Nil Nil
Mr. M.N. Gunasekera Nil Nil
Mr. J.H.P. Ratnayake Nil Nil
Distribution of Shareholders as at 31st March 2017
The distribution and analysis of shareholdings were as follows;
Shareholding As at 31st March 2017 As at 31st March 2016
From ToNo. of
Shareholders No. of Shares %No. of
Shareholders No. of Shares %
1 - 1,000 14,162 12,965,505 2.41 14,331 1,317,744 2.45
1,001 - 10,000 6,759 24,582,174 4.58 6,925 16,740,876 3.12
10,001 - 100,000 984 32,974,996 6.13 1,073 36,216,841 6.74
100,001 - 10,00,000 217 61,434,164 11.43 217 61,702,179 11.48
10,00,001 - 10,000,000 29 405,555,591 75.45 33 409,675,090 77.22
Total 22,151 537,512,430 100.00 22,579 537,512,430 100.00
Annual Report 2016 / 2017
56
Sierra Cables PLC
As at 31st March 2017 As at 31st March 2016
NameNo. of
Shareholders No. of Shares %No. of
Shareholders No. of Shares %
Resident 22,102 528,958,800 98.40 22,531 525,375,039 97.74
Non-Resident 49 8,553,630 1.60 48 12,137,391 2.26
Total 22,151 537,512,430 100.00 22,579 537,512,430 100.00
As at 31st March 2017 As at 31st March 2016
NameNo. of
Shareholders No. of Shares %No. of
Shareholders No. of Shares %
Individual 21,832 149,516,700 27.82 22,258 152,378,444 28.35
Institutional 319 387,995,730 72.18 321 385,133,986 71.65
Total 22,151 537,512,430 100.00 22,579 537,512,430 100.00
20 Largest Shareholders of Equity
As at 31st March 2017 As at 31st March 2016
Name No. of Shares % No. of Shares %
1. Sierra Holdings (Pvt) Ltd 312,335,490 58.11 312,335,490 58.11
2. Mr. D.S. Panditha 17,501,297 3.26 17,401,297 3.24
3. People's Leasing Finance PLC / Carlines Holdings (Pvt) Ltd 12,135,290 2.26 11,885,290 2.21
4. Seylan Bank PLC / Carlines Holdings (Private) Limited 7,237,056 1.35 6,698,853 1.25
5. Seylan Bank PLC / Almas Organisation (Pvt) Limited 6,453,091 1.20 5,110,155 0.95
6. Mr. P.A.D.R.U. Pushpakumara 4,758,754 0.89 5,055,076 0.94
7. Mr. W.A.P. 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. People's Leasing & Finance PLC / Hi Line Trading (Pvt) Ltd 3,135,233 0.58 3,450,000 0.64
10. Mr. A.B.S. Herath 3,130,000 0.58 2,985,000 0.56
11. Mr. T.L.M. Imtiaz 2,857,996 0.53 2,500,000 0.47
12. People's Leasing & Finance PLC / Mr. C.N. Jayasuriya 2,500,000 0.47 2,500,000 0.47
13. Mr. S.C. De Zoysa 2,500,000 0.47 2,428,162 0.45
14. Colombo Trust Finance PLC / Almas Organisation Private Ltd 2,436,638 0.45 2,275,800 0.42
15. Deutsche Bank Ag As Trustee To Capital Alliance Quantitative Equity Fund 2,223,194 0.41 2,223,194 0.41
16. Mr. M. Ilamperuma 2,150,000 0.40 2,150,000 0.4
17. Elgin Investments Limited 2,000,000 0.37 2,000,000 0.37
18. Mr. B.C. Ranaweera 2,000,000 0.37 1,786,493 0.33
19. Mrs. K.S. Rangedara 1,786,493 0.33 1,709,800 0.32
20 Ms. G.S.M. Irugalbandara 1,709,800 0.32 1,508,724 0.28
Annual Report of the Board of Directors on the Affairs of the Company Contd.
Annual Report 2016 / 2017
57
Sierra Cables PLC
Public Shareholding
The percentage of public shareholding as at the 31st of March 2017 was 37.46%
Shareholding and Share Information
The Company had 22,151 registered shareholders as at 31st March 2017. The information relating to earnings, net assets
per share and share trading, distribution and analysis of shareholding, the holding of the 20 largest shareholders, Directors
and Chief Executive Officer’s shareholding and public holding percentage is given on pages 10, 55 & 56 respectively.
Annual General Meeting
The notice of the Annual General Meeting is on page 116.
Auditors
The Financial Statements for the year ended 31st March 2017 have been audited by Messrs KPMG, (Chartered
Accountants) who offer themselves for reappointment. As far as the Directors are aware, the Auditors do not have any
relationship (other than that of an Auditor) with the Company other than those disclosed above. The Auditors also do not
have any interest in the Company.
The Auditors Messrs KPMG, Chartered Accountants were paid Rs. 1,000,000/- (2015/16 - Rs. 900,000/-) as Audit fees by the
Company.
A resolution relating to their reappointment and authorising the Directors to determine their remuneration will be
proposed at the Annual General Meeting.
By Order of the Board
Mr. W. A. P. Perera Mr. D. S. Panditha
Chairman / Director Executive Director
P.R. Secretarial Service (Private) Limited
Secretaries
11th August 2017
Annual Report 2016 / 2017
60
Sierra Cables PLC
Sierra Family
Annual Report 2016 / 2017
61
Sierra Cables PLC
Independent Auditors’ Report
TO THE SHAREHOLDERS OF SIERRA CABLES PLCReport on the Financial StatementsWe have audited the accompanying financial statements of Sierra Cables PLC (the “Company”), and the consolidated financial statements of the Company and its subsidiary (the “Group”), which comprise the statement of financial position as at 31st March 2017, and the statements of income, profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes comprising a summary of significant accounting policies and other explanatory information set out on page 62 to 111.
Board’s Responsibility for the Financial Statements The Board of Directors (“Board”) is responsible for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31st March 2017, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.
Emphasis of MatterWithout qualifying our opinion, we draw your attention to Note 36 to the financial statements which indicate the existence of the material uncertainty which may cast significant doubt on the subsidiary’s ability to continue as a going concern and the steps taken by the Group. The financial statements do not include any adjustments that may 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;
‒ we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company.
‒ the financial statements of the Company give a true and fair view of its financial position as at 31st March 2017,and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.
‒ the financial statements of the Company and the Group comply with the requirements of sections 151 and 153 of the Companies Act No. 07 of 2007.
Chartered AccountantsColombo11th August 2017
Annual Report 2016 / 2017
62
Sierra Cables PLC
Income StatementGroup Company
For the year ended 31st March Note2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Revenue 5 4,044,449,473 3,036,010,858 3,724,981,774 2,865,490,013
Cost of Sales (3,165,556,059) (2,405,308,962) (2,880,335,542) (2,240,987,288)
Gross Profit 878,893,414 630,701,896 844,646,232 624,502,725
Other Income 6 26,903,100 51,222,884 26,902,525 50,991,533
Selling and Distribution Expenses (238,232,735) (188,820,709) (213,485,628) (167,281,847)
Administrative Expenses (156,899,782) (110,914,037) (155,481,754) (99,869,814)
Other Operating Expenses (11,801,897) (4,526,533) (57,500,000) (66,500,000)
Profit from Operations 7 498,862,100 377,663,501 445,081,375 341,842,597
Net Finance Costs 8 (152,067,334) (104,529,263) (123,600,270) (86,557,006)
Share of Profit of Equity-Accounted Investees, (Net of Tax) 17 874,224 293,942 - -
Profit Before Taxation 347,668,990 273,428,180 321,481,105 255,285,591
Income Tax Expense 9 (84,189,946) (78,501,676) (85,755,775) (79,364,029)
Profit from Continuing Operations 263,479,044 194,926,504 235,725,330 175,921,562
Discontinued Operation
Loss from Discontinued Operations 12 (1,965,557) (1,822,544) - -
Profit for the Year 261,513,487 193,103,960 235,725,330 175,921,562
Profit Attributable to :
Owners of the Company 267,515,510 199,934,090 235,725,330 175,921,562
Non - Controlling Interests (6,002,023) (6,830,130) - -
Profit for the Year 261,513,487 193,103,960 235,725,330 175,921,562
Basic Earnings Per Share 10 0.50 0.37 0.44 0.33
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 70 to 111.
Annual Report 2016 / 2017
63
Sierra Cables PLC
Statement of Profit or Loss and Other Comprehensive Income
Group Company
For the year ended 31st March Note2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Profit for the Year 261,513,487 193,103,960 235,725,330 175,921,562
Other Comprehensive Income/(Expense)
Net Change in Fair Value of Available-for-Sale Investments 170,023 (1,291,700) 170,023 (1,291,700)
Gains from Foreign Currency Translations 309,564 - - -
Actuarial Gain on Defined Benefit Obligation, (Net of Tax) 2,619,490 1,119,409 2,619,490 1,119,409
Other Comprehensive Income/(Expense) for the Year, Net of Tax 3,099,077 (172,291) 2,789,513 (172,291)
Total Comprehensive Income for the Year 264,612,564 192,931,669 238,514,843 175,749,271
Total Comprehensive Income Attributable to :
Owners of the Company 270,614,587 199,761,799 238,514,843 175,749,271
Non - Controlling Interests (6,002,023) (6,830,130) - -
Total Comprehensive Income for the Year 264,612,564 192,931,669 238,514,843 175,749,271
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 70 to 111.
Annual Report 2016 / 2017
64
Sierra Cables PLC
Statement of Financial PositionGroup Company
As at 31st March Note2017
Rs.2016
Rs.2017
Rs.2016
Rs.
ASSETS
Non Current Assets
Property, Plant & Equipment 13 1,114,052,313 1,100,391,556 818,344,602 868,763,794
Intangible Assets 14 6,859,049 1,269,421 6,859,049 1,269,421
Investment Property 15 - - - -
Investments in Subsidiaries 16 - - 127,060,020 182,060,020
Investments in Equity Accounted Investees 17 3,621,185 2,746,962 3,300,000 5,800,000
Available for Sale Investments 18 29,142,315 44,755,691 29,142,315 44,755,691
Total Non Current Assets 1,153,674,862 1,149,163,630 984,705,986 1,102,648,926
Current Assets
Inventories 19 1,233,919,344 705,075,020 1,160,345,333 653,626,097
Trade and Other Receivables 20 1,673,026,254 1,045,452,578 1,362,539,187 863,144,766
Income Tax Recoverable 1,883 8,333,948 - 8,333,948
Amounts due from Related Companies 21 110,016,242 105,887,739 432,011,951 303,227,360
Cash in Hand and at Bank 22 78,771,458 80,234,093 73,481,406 73,005,443
Total Current Assets 3,095,735,191 1,944,983,378 3,028,377,877 1,901,337,614
Assets Classified as Held for Sale 12 166,624,096 165,854,862 18,000,000 18,000,000
Total Assets 4,416,034,139 3,260,001,870 4,031,083,863 3,021,986,540
EQUITY AND LIABILITIES
Equity
Stated Capital 23 894,565,898 894,565,898 894,565,898 894,565,898
Retained Earnings 416,195,733 280,438,841 462,992,865 359,026,151
Fair Value Reserve 17,892,855 17,722,832 17,892,855 17,722,832
Foreign Currency Translation Reserve 309,564 - - -
Revaluation Reserve 349,909,786 349,909,786 332,938,932 332,938,932
Total Equity Attributable to Equity Holders of the Company 1,678,873,836 1,542,637,357 1,708,390,550 1,604,253,813
Non-Controlling Interests (2,026,433) 3,975,590 - -
Total Equity 1,676,847,403 1,546,612,947 1,708,390,550 1,604,253,813
Annual Report 2016 / 2017
65
Sierra Cables PLC
Group Company
As at 31st March Note2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Non Current Liabilities
Retirement Benefit Obligations 24 27,835,163 26,208,882 27,528,994 25,929,429
Deferred Tax Liabilities 25 176,014,092 186,911,342 151,468,004 160,774,382
Long Term Loans 26 71,484,209 142,263,091 56,613,998 106,604,820
Total Non Current Liabilities 275,333,464 355,383,315 235,610,996 293,308,631
Current Liabilities
Trade and Other Payables 28 972,584,651 412,316,074 861,280,482 305,965,657
Current Portion of Long Term Loans 26 106,906,114 98,817,384 48,646,677 68,818,200
Current Portion of Lease Liability 27 - - - -
Amounts due to Related Companies 29 - - 85,817 19,838
Import Demand Loans 30 1,206,197,811 768,178,333 1,065,874,913 714,097,468
Income Tax Payable 73,512,534 - 73,512,534 -
Bank Overdraft 22 98,056,157 72,104,387 37,681,897 35,542,771
Total Current Liabilities 2,457,257,267 1,351,416,178 2,087,082,320 1,124,424,096
Liabilities Directly Associated with Assets Classified as Held for Sale
12 6,596,000 6,589,430 - -
Total Liabilities 2,739,186,731 1,713,388,923 2,322,693,316 1,417,732,727
Total Equity and Liabilities 4,416,034,134 3,260,001,870 4,031,083,864 3,021,986,540
Net Asset Value per Share 3.12 2.87 3.18 2.98
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 70 to 111.
It is certified that the Financial Statements have been prepared in compliance with the requirements of the Companies Act
No 07 of 2007.
Mervyn De Silva
Chief 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.
Priyantha Perera Shamendra Panditha
Chairman Managing Director
11th August 2017
Colombo
Annual Report 2016 / 2017
66
Sierra Cables PLC
Consolidated Statement of Changes in Equity
Attributable to Owners of the Company
For the year ended 31st March
Group
Stated Capital
Rs.
Revaluation
ReserveRs.
Foreign Currency
Translation Reserve
Rs.
Fair ValueReserve
Rs.
RetainedEarnings
Rs. Total
Rs.
Non Controlling
InterestRs.
Total Equity
Rs.
Balance as at 1st April 2015 894,565,898 349,909,786 - 19,014,532 186,887,828 1,450,378,044 10,805,720 1,461,183,764
Profit / (Loss) for the Year - - - - 199,934,090 199,934,090 (6,830,130) 193,103,960
Other Comprehensive Income/(Expense)
Net Change in Fair Value of Available-for-
Sale Financial Assets - - - (1,291,700) - (1,291,700) - (1,291,700)
Actuarial Loss on Retirement Benefit
Obligation, Net of Tax - - - - 1,119,409 1,119,409 - 1,119,409
Total Comprehensive Income / (Expense)
for the Year - - - (1,291,700) 201,053,499 199,761,798 (6,830,130) 192,931,668
Transactions with Owners, Recognised
Directly in Equity
Dividend Paid - Ordinary Shares - - - - (107,502,486) (107,502,486) - (107,502,486)
Total Transactions with Owners of the
Company - - - - (107,502,486) (107,502,486) - (107,502,486)
Balance as at 31st March 2016 894,565,898 349,909,786 - 17,722,832 280,438,841 1,542,637,356 3,975,590 1,546,612,947
Balance as at 1st April 2016 894,565,898 349,909,786 - 17,722,832 280,438,841 1,542,637,356 3,975,590 1,546,612,947
Profit / (Loss) for the Year - - - - 267,515,510 267,515,510 (6,002,023) 261,513,487
Other Comprehensive Income / (Expense)
Net Change in Fair Value of Available-for-
Sale Financial Assets - - - 170,023 - 170,023 - 170,023
Actuarial Gain on Retirement Benefit
Obligation, Net of Tax - - - - 2,619,490 2,619,490 - 2,619,490
Foreign Currency Translation Gain - - 309,564 - - 309,564 - 309,564
Total Comprehensive Income / (Expense)
for the Year - - 309,564 170,023 270,135,000 270,614,587 (6,002,023) 264,612,564
Transactions with Owners, Recognised
Directly in Equity
Dividend Paid - Ordinary Shares - - - - (134,378,108) (134,378,108) - (134,378,108)
Total Transactions with Owners of the
Company - - - - (134,378,108) (134,378,108) - (134,378,108)
Balance as at 31st March 2017 894,565,898 349,909,786 309,564 17,892,855 416,195,733 1,678,873,835 (2,026,433) 1,676,847,403
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 70 to 111.
Annual Report 2016 / 2017
67
Sierra Cables PLC
Statement of Changes in EquityFor the year ended 31st March
Company
Stated Capital
Rs.
Revaluation Reserve
Rs.
Fair Value Reserve
Rs.
Retained Earnings
Rs. Total
Rs.
Balance as at 1st April 2015 894,565,898 332,938,932 19,014,532 289,487,666 1,536,007,028
Profit for the Year - - - 175,921,562 175,921,562
Other Comprehensive Income/(Expense)
Net Change in Fair Value of Available-for-
Sale Financial Assets - - (1,291,700) - (1,291,700)
Actuarial Loss on Retirement Benefit
Obligation, Net of Tax - - - 1,119,409 1,119,409
Total Comprehensive Income / (Expense)
for the Year - - (1,291,700) 177,040,971 175,749,271
Transactions with Owners, Recognised
Directly in Equity
Dividend Paid - Ordinary Shares - - - (107,502,486) (107,502,486)
Total Transactions with Owners of the
Company - - - (107,502,486) (107,502,486)
Balance as at 31st March 2016 894,565,898 332,938,932 17,722,832 359,026,151 1,604,253,813
Balance as at 1st April 2016 894,565,898 332,938,932 17,722,832 359,026,151 1,604,253,813
Profit for the Year - - - 235,725,330 235,725,330
Other Comprehensive Income/(Expense)
Net Change in Fair Value of Available-for-
Sale Financial Assets - - 170,023 - 170,023
Actuarial Loss on Retirement Benefit
Obligation, Net of Tax - - - 2,619,490 2,619,490
Total Comprehensive Income for the Year - - 170,023 238,344,820 238,514,843
Transactions with Owners, Recognised
Directly in Equity
Dividend Paid - Ordinary Shares - - - (134,378,108) (134,378,108)
Total Transactions with Owners of the
Company - - - (134,378,108) (134,378,108)
Balance as at 31st March 2017 894,565,898 332,938,932 17,892,855 462,992,863 1,708,390,548
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 70 to 111.
Annual Report 2016 / 2017
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Sierra Cables PLC
Statement of Cash FlowsGroup Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Cash Flow from Operating Activities
Profit Before tax from continuing operations 346,794,766 273,134,238 321,481,105 255,285,591
Loss Before tax from discontinued operations (1,965,557) (1,822,544) - -
Adjustments for:
Depreciation 85,216,844 83,890,706 68,632,183 67,600,893
Amortization of Intangible Asset 2,148,915 977,166 2,148,915 977,166
Net Gain on Translation of Foreign Currency (1,931,470) - - -
Depreciation of Investment Property - 68,446 - 68,446
Provision for Impairment of Trade Receivables 34,228,581 24,350,525 29,438,139 9,532,904
Provision for Impairment of Investment in Subsidiary - - 55,000,000 62,000,000
Gain on Sale of Property, Plant and Equipment - (46,690,847) - (46,690,847)
Gain on Disposal of Investment Property - (8,105,497) - (8,105,497)
Gain on Disposal of Available For Sale Investment (554,968) - (554,968) -
Provision for Impairment of Investment in Associates - - 2,500,000 -
Written off of Finished Goods 44,296,346 - 44,296,346 -
Provision for Obsolete Inventories 2,119,931 9,669,251 - 9,669,251
Provision for Retirement Benefit Obligation 5,790,171 5,356,866 5,763,455 5,588,217
Interest Expenses 153,720,896 107,297,800 125,335,581 89,325,542
Interest Income (401,440) (2,768,536) (391,517) (2,768,536)
Dividend Income (134,998) (523,091) (134,998) (523,091)
Operating Profit Before Working Capital Changes 669,328,017 444,834,483 653,514,241 441,960,039
Increase in Inventories (573,140,666) (98,949,334) (551,015,580) (105,417,501)
Increase in Trade and Other Receivables (664,157,332) (68,297,294) (528,304,713) (43,055,547)
(Increase) / Decrease in Dues from Related Parties (4,119,994) (15,534,232) (128,784,951) 1,845,145
Increase in Trade and Other Payables 557,168,584 80,971,580 555,400,639 36,734,360
Cash Generated from / (Used in) Operations (14,921,391) 343,025,203 809,996 332,066,496
Interest Paid (150,620,896) (107,297,800) (125,335,581) (89,325,542)
Income Tax Paid (26,050,407) (86,259,001) (26,048,502) (86,098,310)
Retirement Benefit Paid (2,093,801) (4,395,438) (2,093,801) (4,395,438)
Net Cash Flows Generated from / (Used in) Operating Activities (193,686,474) 145,072,964 (152,667,888) 152,247,206
Annual Report 2016 / 2017
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Sierra Cables PLC
Group Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Cash Flows from Investing Activities
Interest Received 401,440 2,768,536 391,517 2,768,536
Dividend Received 134,998 523,091 134,998 523,091
Acquisition of Property, Plant and Equipment (107,129,978) (59,397,315) (26,479,382) (56,016,332)
Acquisition of Intangible Assets - (637,089) - (637,089)
Proceeds from Disposal of Property, Plant and Equipment - 49,866,455 - 49,866,455
Proceeds from Disposal of Investment Property - 22,000,000 - 22,000,000
Investment in Available of Sale Investments - (15,783,398) - (15,783,398)
Investment in Subsidiary - - - (28,780,000)
Proceeds from Disposal of Available of Sale Investments 16,338,367 - 16,338,367 -
Net Cash Used In Investing Activities (90,255,173) (659,720) (9,614,500) (26,058,738)
Cash Flows from Financing Activities
Proceed from Interest-Bearing Borrowing 2,605,221,880 2,116,584,799 2,329,593,559 2,035,681,382
Repayment of Interest-Bearing Borrowing (2,229,892,554) (2,150,296,499) (2,047,978,459) (2,056,621,964)
Repayment of Lease - (2,687,966) - (2,687,966)
Dividend Paid (120,995,875) (107,502,486) (120,995,875) (107,502,486)
Net Cash Flows Generated From/(Used In) Financing Activities 254,333,451 (143,902,152) 160,619,225 (131,131,034)
Net Increase/(Decrease) in Cash and Cash Equivalents (27,414,729) 511,092 (1,663,163) (4,942,565)
Cash and Cash Equivelents Classified as Asset Held For Sale 326 (639) - -
Cash and Cash Equivalents at the Beginning of the Year 8,129,706 7,619,253 37,462,672 42,405,237
Cash and Cash Equivalents at the End of the Year (19,284,697) 8,129,706 35,799,509 37,462,672
Analysis of Cash & Cash Equivalents
Cash in Hand and at Bank 78,771,458 80,234,093 73,481,406 73,005,443
Bank Overdraft (98,056,157) (72,104,387) (37,681,897) (35,542,771)
(19,284,699) 8,129,706 35,799,509 37,462,672
Figures in brackets indicate deductions.
The Financial 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 70 to 111.
Annual Report 2016 / 2017
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Sierra Cables PLC
1. REPORTING ENTITY
1.1. Domicile and Legal Form
Sierra Cables PLC is a public limited liability Company
incorporated and domiciled in Sri Lanka. The registered
office of the Company is located at 112, Havelock Road,
Colombo 05 and principal place of business is located at
39/1A, Galwarusawa Road, Korathota, Kaduwela.
The consolidated financial statements of the Company
as at and for the year ended 31st March 2017 comprise
theCompany and its Subsidiaries (together referred as
the“Group” individually as Group entities) and the group
interestin 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 three subsidiaries, Sierra Power (Private) Limited,
Sierra Industries (Private) Limited and Sierra Cables East
Africa Limited are engaged in the power generation
to the National Grid, manufacture of UPVC pipes and
fittings and manufacture and sale of wires and cables
respectively. The two associate Companies, T & G Lanka
(Private) Limited and Tea Leaf Resort (Private) Limited
are diversified to manufacturing of Patch Cables and to
leisure sector.
All the Companies in the Group have a common financial
year, which ends on 31st March other than Sierra Cables
East Africa Limited which has been prepared up to 31st
December as per their reporting requirements.
2. BASIS OF PREPARATION
2.1. Statement of Compliance
The consolidated financial statements have been
prepared in accordance with the Sri Lanka Accounting
Standards (SLFRSs/LKASs) promulgated by the Institute
of Chartered Accountants of Sri Lanka (ICASL) and
comply with the requirement of Companies Act No.07 of
2007.
The consolidated financial statements were authorised
for issue by the Board of Directors on11th August 2017.
2.2. Basis of Measurement
The Financial Statements have been prepared on the
historical cost basis except for the following material
items in the statement of financial position.
• Available-for-Sale Financial Assets are measured at fair
value;
• Liability for Defined Benefit Obligations is carried at the
present value of the defined benefit obligations.
• Land, Buildings and Plant and Machinery are measured
at cost at the time of acquisition and subsequently at
revalued amounts, which are the fair values at the date
of revaluation.
The Directors have made an assessment of the Group’s
ability to continue as a going concern in the foreseeable
future and they do not foresee a need for liquidation or
cessation of trading.
2.3. Functional and Presentation Currency
The Financial Statements are presented in Sri Lankan
Rupees which is the Group’s functional currency. All
financial information presented in Sri Lankan Rupees
has been rounded to the nearest rupee, unless stated
otherwise.
2.4. Use of Estimates and Judgments
The preparation of Financial Statements in conformity
with Sri Lanka Accounting Standards requires
management to make judgments, estimates and
assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from
these estimates.
Notes to the Financial Statements
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Sierra Cables PLC
Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are
revised and in any future periods affected.
Information about critical estimates and judgments
in applying accounting policies that have the most
significant effect on the amounts recognized in the
financial statements is provided in the following notes.
• Identification, measurement and assessment of
impairment
• Recognition and measurement of financial instruments
• Retirement Benefit Obligations
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements, and have been applied consistently
by Group entities.
3.1. Basis of Consolidation
(a) Business Combination
Business combinations are accounted for using the
acquisition method as at the acquisition date when
control is transferred to the Group. Control is the power
to govern the financial and operating policies of an entity
so as to obtain benefits from its activities. In assessing
control, the Group takes into consideration potential
voting rights that are currently exercisable.
The Group measures goodwill at the acquisition date as:
• The fair value of the consideration transferred; plus
• The recognised amount of any non-controlling interests
in the acquire; plus
• If the business combination is achieved in stages, the
fair value of the pre-existing equity interest in the
acquire; less
• The net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
• When the excess is negative, a bargain purchase gain is
recognised immediately in profit or loss.
(b) Non - Controlling Interests
For each business combination, the Group elects to
measure any non-controlling which are generally at fair
value.
Changes in the Group’s interest in a subsidiary that
do not result in a loss of control are accounted for as
transactions with owners in their capacity as owners.
Adjustments to non-controlling interests are based on a
proportionate amount of the net assets of the subsidiary.
No adjustments are made to goodwill and no gain or loss
is recognised in profit or loss.
(c) Subsidiaries
Subsidiaries are entities controlled by the Group. The
financial statements of subsidiaries are included in the
Consolidated Financial statements from the date that
control commences until the date that control ceases.
(d) Loss of Control
On the loss of control, the Group derecognises the assets
and liabilities of the subsidiary, any non-controlling
interests and the other components of equity related to
the subsidiary. Any surplus or deficit arising on the loss of
control is recognised in profit or loss. If the Group retains
any interest in the previous subsidiary, then such interest
is measured at fair value at the date that control is lost.
Subsequently it is accounted for as an Equity-Accounted
Investee or as an Available-for-Sale Financial Asset
depending on the level of influence retained.
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Sierra Cables PLC
(e) Equity Accounted Investees (Investments In
Associates)
Associates are those entities in which the Group has
significant influence but not control, over the financial
and operating policies, Significant influence is presumed
to exist when the Group holds between 20% and 50%
of the voting power of another entity. Investments in
Associates are accounted for using the Equity Method
and are recognised initially at cost. The cost of the
investment includes transaction costs.
The consolidated financial statements include the Group’s
share of the profit or loss and other comprehensive
income of equity accounted investees, from the date
that significant influence commences until the date that
significant influence ceases. When the Group’s share
of losses exceeds its interest in an equity-accounted
investee, the carrying amount of the investment,
including any long-term interests that form part thereof,
is reduced to zero, and the recognition of further losses
is discontinued except to the extent that the Group has
an obligation or has made payments on behalf of the
investee.
At each reporting date, the Group determines whether
there is objective evidence that the investment in
associate is impaired. If there is such evidence, the Group
calculates the amount of impairment as the difference
between the recoverable amount of the associate and its
carrying value, and then recognises the loss as “Share of
profit of an associate” in the income statement.
f) Intra-Group Transactions
Pricing policies of all intra-group sales are identical to
those adopted for normal trading transactions, which are
at market prices.
(g) Transactions Eliminated on Consolidation
Intra group balances and transactions, and any
unrealised income and expenses arising from intra group
transactions, are eliminated in preparing the consolidated
financial statements, Unrealised gains arising from
transactions with equity-accounted investees are
eliminated against the investment to the extent of the
Group’s interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains but only
to the extent that there is no evidence of impairment.
3.2. Foreign Currency
3.2.1 Foreign Currency Transactions
Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at
exchange rates at the dates of the transactions. Monetary
assets and liabilities denominated in foreign currencies
at the reporting date are re-translated to the functional
currency at the exchange rate at that date.
Non monetary assets and liabilities denominated in
foreign currencies that are measured at fair value are
re-translated to the functional currency at the exchange
rate at the date that the fair value was determined. Non
monetary items in a foreign currency that are measured
based on historical cost are translated using the exchange
rate at the date of the transaction.
Foreign currency differences arising on retranslation are
recognised in profit or loss.
3.2.2 Foreign Operations
The results and financial position of overseas operations that
have a Functional Currency different from the Company’s
Presentation Currency are translated into the Company’s
Presentation Currency as follows:
• Assets and liabilities, including goodwill and fair value
adjustments arising on acquisition, are translated at the
rates of exchange ruling as at the Reporting date.
• Income and expenses are translated at the average
exchange rate for the period.
Notes to the Financial Statements Contd.
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Sierra Cables PLC
The exchange differences arising on translation for
Consolidation are recognised in Other Comprehensive
Income and accumulated in the Foreign Currency
Translation Reserve (Translation Reserve), which is a
separate component of Equity, except to the extent that
the translation difference is allocated to the NCI.
When a Foreign Operation is disposed of such that the
control is lost, the cumulative amount in the Translation
Reserve related to that foreign operation is reclassified to
profit or loss as part of the gain or loss on disposal. If the
Group disposes of only part of its interest in a subsidiary
that includes a Foreign Operation while retaining control,
then the relevant proportion of the cumulative amount
of the Translation Reserve is reattributed to NCI.
Any goodwill arising on the acquisition of a foreign
operation and any fair value adjustments to the carrying
amounts of assets and liabilities arising on the acquisition
are treated as assets and liabilities of the foreign
operation.
3.3. Assets and Bases of Their Valuation
3.3.1 Property, Plant and Equipment
(a) Recognition and Measurement
All items of property, plant and equipment are initially
recorded at cost. Where items of property, plant and
equipment are subsequently revalued, the entire class
of such assets is revalued. Revaluations are made with
sufficient regularity to ensure that their carrying amounts
do not differ materially from their fair values at the
reporting date.
Subsequent to the initial recognition of the asset at cost,
the revalued property, plant and equipment are carried
at revalued amounts less accumulated depreciation
thereon and accumulated impairment losses. The Group
applies revaluation model to land, building and plant
and machinery and cost model to the remaining assets
under property, plant and equipment which are stated
at historical cost less accumulated depreciation less
accumulated impairment losses, if any.
The cost of an item of property, plant and equipment
comprise its purchase price and any directly attributable
costs of bringing the asset to working condition for its
intended use. The cost of self-constructed assets includes
the cost of materials, direct labour, any other costs
directly attributable to bringing the asset to the working
condition for its intended use and capitalised borrowing
costs. This also includes cost of dismantling and removing
the items and restoring in the site on which they are
located. When parts of an item of property, plant and
equipment have different useful lives, they are accounted
for as separate items (major components) of property,
plant and equipment.
Any gain or loss on disposal of an item of property, plant
and equipment (calculated as the difference between the
net proceeds from disposal and the carrying amount of
the item) is recognised in profit or loss.
(b) Subsequent Costs
The cost of replacing part of an item of property, plant
and equipment is recognized in the carrying amount
of the item if it is probable that the future economic
benefits embodied within the part will flow to the
company and its cost can be measured reliably. The
carrying amount of the replaced part is derecognized.
The costs of the day to day servicing of property,
plant and equipment are recognized in profit or loss as
incurred.
(c) Derecognition
The carrying amount of an item of property, plant and
equipment is derecognized on disposal or when no future
economic benefits are expected from its use or disposal.
Any gain or loss on disposal of an item of property, plant
and equipment calculated as the difference between the
net proceeds from disposal and the carrying amount of
the item is recognized within other income in profit or
loss.
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Sierra Cables PLC
(d) Depreciation
Items of property, plant and equipment are depreciated
on a straight-line basis in profit or loss over the estimated
useful lives of each component. Leased assets are
depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Group
will obtain ownership by the end of the lease term.Land is
not depreciated. Items of property, plant and equipment
are depreciated from the date that they are installed and
are ready for use, or in respect of internally constructed
assets, from the date that the asset is completed and
ready for use.
The estimated useful lives for the current and
comparative years of significant items of property, plant
and equipment are as follows:
Asset Category Useful Life
(Years)
Depreciation
Rate (%)
Building 20-25 4-5
Plant and Machinery 10-20 5-10
Factory Equipment 5 20
Furniture Fittings 5 20
Motor Vehicles 5 20
Offices and Computer
Equipment 5 20
Depreciation of an asset begins when it is available for
use where as depreciation of an asset ceases at the earlier
of the date that the asset is classified as held for sale and
the date that the asset is derecognized.
Depreciation method, useful lives and residual values
are reviewed at each financial year end and adjusted if
appropriate.
(e) Revaluation Policy
The Company’s land, buildings, plant and machinery,
factory equipment are revalued with sufficient regularity
once in five years. The revaluation surplus is accounted in
the revaluation reserve.
3.3.2 Intangible Assets and Goodwill
(a) Intangible Assets
An Intangible Asset is recognized if it is probable that
economic benefits are attributable to the assets will flow
to the Group and cost of the assets can be measured
reliably and carried at cost less accumulated amortization
and accumulated impairment losses.
(b) Goodwill
Goodwill that arises on the acquisition of subsidiaries is
presented with intangible assets. For the measurement
of goodwill at initial recognition, see Note 3.1 (a).
Subsequent measurement
Goodwill is measured at cost less accumulated
impairment losses. In respect of equity accounted
investees, the carrying amount of goodwill is included
in the carrying amount of the investment, and any
impairment loss is allocated to the carrying amount of
the equity accounted investee as a whole.
(c) Computer Software
All computer software cost incurred, which are not an
integral part of the related hardware, which can be clearly
identified, reliably measured and its probable that they
will lead to future economic benefits, are included in the
Statement of Financial Position under the category of
intangible assets.
Subsequent Expenditure
Subsequent expenditure is capitalized only when it
increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is
recognised in profit or loss as incurred.
Amortization
Intangible assets are amortized on a straight-line basis
in profit or loss over their estimated useful lives from the
date that they are available for use. The estimated useful
lives for the current and comparative years are as follows:
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
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Sierra Cables PLC
Asset Category Useful Life
(Years)
Depreciation
Rate (%)
Computer Software 5 20
Amortization methods, useful lives and residual values
are reviewed at each reporting date and adjusted if
appropriate.
3.3.3 Leased Assets
Leases in terms of which the Group assumes substantially
all of the risks and rewards of ownership are classified
as finance leases on initial recognition, the leased asset
is measured at an amount equal to the lower of its
fair value and the present value of the minimum lease
payments. Subsequent to initial recognition, the asset is
accounted for in accordance with the accounting policy
applicable to that asset. Other leases are operating leases
and are not recognized in the Group’s statement of
financial position.
3.3.4 Investment Property
Investment properties are properties held either to
earn rental income or for capital appreciation or both
but not for sale in the ordinary course of business, used
in the production or supply of goods or services for
administrative purposes.
Investment property is recognized, if it is probable that
future economic benefits that are associated with the
investment property, will flow to the Group and cost of
the investment property can be reliably measured.
An investment property is measured initially at its
cost. The cost of a purchased investment property
comprises of its purchase price and directly attributable
expenditure, the cost of the self-constructed investment
property is its cost at the date of when the construction
or development is completed. The Group applies the cost
model for investment properties in accordance with LKAS
40 – “Investment property.”
3.3.5 Inventories
Inventories are measured at the lower of cost and
net realizable value. The cost of inventories includes
expenditure incurred in acquiring the inventories,
production or conversion costs, and other costs
incurred in bringing them to their existing location and
condition. In the case of manufactured inventories and
work in progress, cost includes an appropriate share
of production overheads based on normal operating
capacity. Net realizable value is the estimated selling price
in the ordinary course of business less the estimated
costs of completion and the estimated costs necessary to
make the sales.
The costs incurred in bringing inventories to its present
location and condition, are accounted for as follows:
Raw Materials
- At actual cost, on Weighted Average basis.
Finished Goods and Work-in-Progress
- At actual cost, on Weighted Average for work in
progress and finished goods.
3.3.6 Impairment of Non-Financial Assets
The carrying amounts of the group’s non-financial assets,
other than inventories are reviewed at each reporting
date to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s
recoverable amount is estimated. An impairment loss
isrecognised if the carrying amount of an assets or cash
generating unit (CGU) exceeds its recoverable amount.
The recoverable amount of an asset or CGU is the greater
of its value in use and its fair value less costs to sell. In
assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time
value of money and the risks specific to the asset or CGU.
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Sierra Cables PLC
For impairment testing, assets are grouped together into
the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the
cash inflows of other assets or CGUs.
Impairment losses are recognised in the statement of
comprehensive income. Impairment losses recognised
in respect of CGUs are allocated first to reduce the
carrying amount of any goodwill allocated to CGU (if
any) and then to reduce the carrying amounts of other
assets in the CGU (group of CGUs) on pro rata basis. An
impairment loss in respect of goodwill is not reversed. For
other assets , an impairment loss is reversed only to the
extent that the assets carrying amount does not exceed
the carrying amount that would have been determined ,
net of depreciation or amortisation, if no impairment loss
had been recognised.
3.3.7 Financial Instruments
(i) Non Derivative Financial Assets
The group initially recognizes loans and receivables on
the date that they are originated. All other financial assets
are recognized initially on the trade date at which the
group becomes a party to the contractual provisions of
the instrument.
A financial asset is measured initially at fair value plus,
in the case of assets not at fair value through profit or
loss, transaction costs that are directly attributable to its
acquisition or issue.
The group derecognises a financial asset when the
contractual rights to the cash flows from the asset
expire; it transfers the right to receive the contractual
cash flows on the financial asset in a transaction in which
substantially all the risks and rewards of ownership of the
financial asset are transferred. Any interest in transferred
financial assets that is created or retained by the Group is
recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net
amount presented in the statement of financial position
when, and only when, the Company has a legal right to
set off the amounts and it intends either to settle on a
net basis or to realise the asset and settle the liability
simultaneously.
The Group classifies non derivative financial assets into
the following categories;
• Loans and Receivables
• Cash and Cash Equivalents
• Available for Sale Financial Assets
a. Loans and Receivables
Loans and receivables are financial assets with fixed or
determinable payment that are not quoted in an active
market. Such assets are recognised at fair value plus any
directly attributable transaction costs. Subsequent to
initial recognition loans and receivables are measured at
amortised cost using the effective interest method, less
any impairment losses.
b. Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances
and call deposits with maturities of three months or
less from the acquisition date that are subject to an
insignificant risk of changes in their fair value and are
used by the Group in the management of its short-term
commitments.
c. Available for Sale Financial Assets
Available-for-sale financial assets are financial assets that
are designated as available for sale and are not classified
in any other categories. Subsequent to initial recognition,
they are measured at fair value and changes therein,
other than impairment losses on available for sale equity
instruments are recognised in other comprehensive
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
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Sierra Cables PLC
income and presented within equity in the fair value
reserve. When an investment is derecognised, the
cumulative gain or loss in other comprehensive incomes
transferred to profit or loss.
Available for sales financial assets comprise of Investment
in Equity Shares and Treasury Bills.
(ii) Non Derivative Financial Liabilities
The Group recognizes financial liabilities initially on the
trade date at which the Group becomes a party to the
contractual provisions of the instrument.
The Group classifies financial liabilities into other financial
liabilities category. Such finance liabilities are recognized
initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, these
financial liabilities are measured at amortised cost using
the effective interest method.
The Group derecognizes a financial liability when its
contractual obligations are discharged, cancelled or
expired.
Other financial liabilities comprise Trade Payables, Other
Liabilities and Bank Borrowings.
(iii) Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of ordinary shares are
recognised as a deduction from Equity, net of any tax
effects.
(iv) Amortized Cost Measurement
The amortised cost of a financial asset or liability is
the amount at which the financial asset or liability
is measured at initial recognition, minus principal
repayments and any impairment and plus/minus the
cumulative amortization using the effective interest
method of any difference between the initial amount
recognised and the maturity amount.
(v) Fair Value Measurement
Fair value is the amount for which an asset could be
exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction on the
measurement date.
The fair value of financial instruments that are traded in
an active market at each reporting date is determined
by reference to quoted market prices or dealer price
quotations, without any deduction for transaction costs.
For financial instruments not traded in an active
market, the fair value is determined using appropriate
valuation techniques. Such techniques may include
using recent arm’s length market transactions; reference
to the current fair value of another instrument that is
substantially the same; a discounted cash flow analysis or
other valuation models.
(vi) Impairment
The group assesses at each reporting date whether there
is any objective evidence that financial assets or group of
financial assets is impaired. A financial asset or a group
of financial assets is deemed to be impaired if, and only
if there is objective evidence of impairment as a result
of one or more events that has occurred after the initial
recognition of the asset and that loss event has an impact
on the estimated future cash flows of the financial asset
that can be estimated reliably
Objective evidence that a financial assets are impaired
includes default or delinquency by a debtor, restructuring
of an amount due to the company on terms that the
company would not consider otherwise, indications
that a debtor or issuer will enter bankruptcy, adverse
Annual Report 2016 / 2017
78
Sierra Cables PLC
changes in the payment status of borrowers or issuers,
economic conditions that correlate with defaults or the
disappearance of an active market for a security.
Impairment Losses on Available for Sale Financial Assets
Impairment losses on available-for-sale financial assets
are recognised by reclassifying the losses accumulated
in the fair value reserve in equity to profit or loss. The
cumulative loss that is reclassified from equity to profit
or loss is the difference between the acquisition cost, net
of any principal repayment and amortisation, and the
current fair value, less any impairment loss recognised
previously in profit or loss. Changes in cumulative
impairment losses attributable to application of the
effective interest method are reflected as a component of
interest income.
If, in a subsequent period,the fair value of an impaired
available-far-sale debt security increases and the increase
can be related objectively to an event occurring after the
impairment loss was recognised, then the impairment loss
is reversed, with the amount of the reversal recognised
in profit or loss. However, any subsequent recovery in the
fair value of an impaired available-far-sale equity security
is recognised in other comprehensive income
3.3.8 Defined Benefit Plan
A defined benefit plan is a post-employment benefit
plan other than a defined contribution plan. The Group’s
net obligation in respect of defined benefit plans is
calculated by estimating the amount of future benefit
that employees have earned in return for their service in
the current and prior periods; that benefit is discounted
to determine its present value.
The retirement benefit obligation of the group is based
on the actuarial valuation using Projected Unit Credit
(PUC) methods as recommended by Sri Lanka Accounting
Standard (LKAS 19) Employee Benefits. The calculation
is performed by independent Actuary using the projected
unit credit method. The assumptions based on which the
results of the actuarial valuation was determined, are
included in Note 23.2 to the Financial Statements.
The Group recognizes all actuarial gains and losses arising
from the defined benefits plans immediately in the other
comprehensive income. The liability is disclosed under
Non-current liabilities in the Statement of Financial
Position and not externally funded.
However, as per the Payment of Gratuity Act No. 12
of 1983 the liability to an employee arises only on
completion of 5 years of continued service.
Defined Contribution Plans – Employees’ Provident Fund
and Employee Trust Fund
All employees who are eligible for Employees’ Provident
Fund Contributions and Employees’ Trust Fund
Contributions are covered by relevant contributions
funds in line with the relevant statutes. Employer’s
contributions to the defined contribution plans are
recognized as an expense in profit or loss when incurred.
3.3.9 Provisions
A provision is recognized if, as a result of a past event
the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an
outflow of economic benefit will be required to settle the
obligation.
3.4 Statement of Comprehensive Income
(a) Revenue
Revenue is recognized to the extent that it is probable
that the economic benefits will flow to the Group and
the revenue and the associated costs incurred or to be
incurred can be reliably measured. Revenue is measured
at the fair value of the consideration received or
receivable, net of trade discounts and sales taxes.
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
79
Sierra Cables PLC
(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.
Annual Report 2016 / 2017
80
Sierra Cables PLC
(ii) Deferred Taxation
Deferred taxation is provided, using the liability method,
on all temporary differences at the reporting date
between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred tax assets are recognised for all deductible
temporary differences, carry forward of unused tax losses
and unused tax credits to the extent that it is probable
that future taxable profits will be available against which
the deductible temporary differences and carry forward
of unused tax losses / credits can be utilised.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it
is no longer probable that the related tax benefit will be
realised.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply to the year when
the asset is realized or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted as at the reporting date.
Deferred tax assets and deferred tax liabilities are offset
if legally enforceable right exists to set off current
tax assets against current tax liabilities and when the
deferred taxes relate to the same taxable entity and the
same taxation authority.
(d) Related Party Transactions
Disclosure has been made in respect of the transactions
in which one party has the ability to control or exercise
significant influence over the financial and operating
policies/decisions of the other, irrespective of whether a
price is being charged or not.
The relevant details are disclosed in the respective notes
to the Financial Statements.
(e) Cash Flow Statement
Interest received and dividends received are classified
as investing cash flows, while dividend paid and interest
paid, is classified as financing cash flows for the purpose
of presentation of Statement of Cash Flows which has
been prepared using the ‘Indirect Method’.
(f) Earnings Per Share
Basic Earning Per Share is calculated by dividing the
profit or loss attributable to ordinary shareholders of the
Company by the number of shares outstanding at the
reporting date.
(g) Events Occurring After the Reporting Period
Events after the reporting period are those events
favorable and unfavorable, that occur between the end
of the reporting period and the date when the financial
statements are authorized for issue.
The materiality of the events occurring after the
reporting period is considered and appropriate
adjustments to or disclosures are made in the Financial
Statements, where necessary.
(h) Assets Held for Sale
Non-current assets that are expected to be recovered
primarily through sale rather than through continuing
use are classified as held for sale. Immediately before
classification as held for sale the assets are re measured
in accordance with the Group’s accounting policies.
Thereafter the assets are measured at the lower of
their carrying amount and fair value less costs to sell.
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
81
Sierra Cables PLC
Impairment losses on initial classification and subsequent
gains and losses on re-measurement are recognized in
profit or loss. Gains are not recognized in excess of any
cumulative impairment loss.
Once classified as held for sale, property plant and
equipment are no longer amortized or depreciated
4. NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE AS AT REPORTING DATE
The Institute of Chartered Accountants of Sri Lanka has
issued the following new Sri Lanka Accounting Standards
which will become applicable for financial periods
beginning on or after 1st April 2017 or at a later date.
Accordingly, these Standards have not been applied in
preparing these financial statements.
SLFRS 9 – “Financial Instruments”
SLFRS 9, issued in 2014, replaces the existing guidance
in LKAS 39 Financial Instruments: Recognition and
Measurement. SLFRS 9 includes revised guidance on the
classification and measurement of financial instruments,
including a new expected credit loss model for calculating
impairment on financial assets. SLFRS 9 is effective for
annual period beginning on or after 1st January 2018
with early adoption permitted.
The Group is assessing the potential impact on its
consolidated financial statements resulting from the
application of SLFRS 9.
SLFRS 15 – “Revenue from Contracts with Customers”
SLFRS 15 establishes a comprehensive framework for
determining whether, how much and when revenue
is recognised. It replaces existing revenue recognition
guidance, including LKAS 18 Revenue, LKAS 11
Construction Contracts. SLFRS 15 is effective for annual
reporting periods beginning on or after 1st January 2018,
with early adoption permitted.
The Group is assessing the potential impact on its
consolidated financial statements resulting from the
application of SLFRS 15.
SLFRS 16 – “Leases”
SLFRS 16 requires lessees to recognise all leases on their
Statement of Financial Position as lease liabilities with
the corresponding right of use assets. The profit or loss
recognition pattern for recognised leases will be similar
to existing finance lease accounting, with interest and
depreciation expense recognized separately in Profit or
Loss. SLFRS 16 is effective for annual reporting periods
beginning on or after 1st January 2019.
The Group is currently evaluating the impact of SLFRS
16 adoption in 2019 except for short term and low value
leases.
Annual Report 2016 / 2017
82
Sierra Cables PLC
Group Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
5. RevenueLocal Sales 3,607,479,136 2,952,483,649 3,385,067,275 2,790,532,513
Export Sales 436,970,337 83,527,209 339,914,499 74,957,500
4,044,449,473 3,036,010,858 3,724,981,774 2,865,490,013
6. Other IncomeGain on Disposal of Property, Plant and Equipment - 46,690,847 - 46,690,847
Dividend Income 134,998 523,090 134,998 523,090
Scrap Sales Income 26,768,102 4,008,947 26,767,527 3,777,596
26,903,100 51,222,884 26,902,525 50,991,533
7. Profit from OperationsProfit from Operations is stated after charging all the expenses including following;
Directors' Fees and Emoluments 21,607,250 17,513,750 21,607,250 16,713,750
Auditors' Remuneration - Audit 1,302,292 1,046,300 1,000,000 900,000
- Audit Related Services 300,000 279,970 300,000 279,970
Depreciation and Amortization 87,334,061 84,936,318 70,781,100 68,646,505
Written off of Inventories 44,296,346 - 44,296,346 -
Provision for Obsolete Inventories 2,119,931 9,669,251 - 9,669,251
Provision for Impairment of Investment in Subsidiary - - 55,000,000 62,000,000
Provision for Impairment of Other Receivables - 4,500,000 - 4,500,000
Provision for Impairment of Trade Receivables 34,228,581 24,350,525 29,438,139 9,532,904
Personnel Costs
Salaries, Wages and Related Costs 158,964,415 136,348,081 147,720,745 130,502,864
Defined Contribution Plan Cost 19,353,861 17,459,396 18,596,451 16,701,986
Defined Benefit Plan Cost (Note 24) 5,790,171 5,356,867 5,763,455 5,588,217
8. Net Finance Costs8.1 Finance Income
Interest Income 966,938 2,768,536 946,485 2,768,536
Net Exchange Gain 686,622 - 788,826 -
1,653,560 2,768,536 1,735,311 2,768,536
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
83
Sierra Cables PLC
Group Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
8.2 Finance Costs
Interest on - Overdraft 12,087,518 6,790,597 3,852,328 2,208,297
- Lease - 146,957 - 146,957
- Import Demand Loans 112,178,830 55,539,713 101,994,920 51,449,934
- Bank Loans 29,095,025 22,420,515 19,128,810 14,438,296
- Pro Note Interest 359,523 - 359,523 -
Net Exchange Loss - 22,400,017 - 21,082,058
153,720,896 107,297,799 125,335,581 89,325,542
Net Finance Costs 152,067,334 104,529,263 123,600,270 86,557,006
9. Income Tax ExpenseIncome Tax on Profit for the Year (Note 9.1) 84,650,518 27,804,338 84,650,518 27,804,338
Under provision in respect of previous year 9,862,233 - 9,862,233 -
Deferred Tax (Reversal)/Charge for the Year (Note 25.2) (10,322,805) 50,697,338 (8,756,976) 51,559,691
84,189,946 78,501,676 85,755,775 79,364,029
9.1 Reconciliation Between Accounting
Profit and Tax Expense
Profit Before Tax 346,794,767 273,134,238 321,481,105 255,285,591
Aggregate Disallowed Income (1,081,483) (3,291,626) (1,081,483) (3,291,626)
Aggregate Disallowable Expenses 157,743,952 139,879,409 134,065,804 162,453,390
Aggregate Allowable expenses (146,380,583) (212,815,209) (128,016,331) (186,857,538)
Taxable Profit 357,076,653 196,906,813 326,449,095 227,589,817
Income from Other Sources 653,059 23,337 653,059 23,337
Total Statutory Income 357,729,712 196,930,149 327,102,154 227,613,154
Tax Loss Claimed (Note 9.2) (7,756,392) (79,664,604) (7,756,392) (79,664,604)
Qualifying Payments - (33,967,504) - (33,967,504)
Taxable Income 349,973,320 83,298,041 319,345,762 113,981,046
Tax on Exports @ 12% 3,574,722 794,638 3,574,722 794,638
Tax on Balance Income @ 28% 81,075,796 27,009,700 81,075,796 27,009,700
84,650,518 27,804,338 84,650,518 27,804,338
9.2 Accumulated Tax Losses
Balance as at 1st April 10,895,851 228,698,903 10,895,851 228,698,903
Adjustments during the Year (3,139,459) (138,138,448) (3,139,459) (138,138,448)
Tax Loss for the Year 2,997,849 - - -
Tax Loss Claimed during the Year (7,756,392) (79,664,604) (7,756,392) (79,664,604)
Balance as at 31st March 2,997,849 10,895,851 - 10,895,851
Annual Report 2016 / 2017
84
Sierra Cables PLC
Sierra Cables PLC
In terms of Section 52 of Inland Revenue Act No. 10 of 2006, the profit from exports of Sierra Cables PLC is taxable at the
rate of 12% and other profits and income are taxable at the rate of 28%.
Sierra Industries (Private) Limited
As per the section 16 (c) (1) and (2) of the Inland Revenue (Amendment) Act No. 22 of 2011 as amended by Act No. 08 of
2012, the Sierra Industries (Private) Limited’s profits and income (Other than any profits and income from the Sale of any
Capital Asset) shall be exempted from income tax for a period of six years.
10. Basic Earning Per Share
Basic Earnings Per Share is calculated based on the Profit after taxation attributable to the Ordinary Shareholders divided
by the Weighted Average Number of Odinary Shares outstanding during the year.
Group Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Profits attributable to ordinary shareholders (Rs.) 267,515,510 199,934,090 235,725,330 175,921,562
Weighted average number of ordinary shares 537,512,430 537,512,430 537,512,430 537,512,430
Basic Earnings per share (Rs.) 0.50 0.37 0.44 0.33
11. Dividend per ShareDividend Declared and Paid During the Year (Rs.) 134,378,108 107,502,486 134,378,108 107,502,486
Average Number of Ordinary Shares 537,512,430 537,512,430 537,512,430 537,512,430
Dividend per Share (Rs.) 0.25 0.20 0.25 0.20
As at 31st March
12. Discontinued OperationsAssets Classified as Held for Sale
Sierra Power (Private) Limited (Note 12.1) 148,624,096 147,854,862 - -
Plant & Machinery (Note 12.2) 18,000,000 18,000,000 18,000,000 18,000,000
166,624,096 165,854,862 18,000,000 18,000,000
Liabilities Directly Associated with Assets Classified as Held for Sale
Sierra Power (Private) Limited 6,596,000 6,589,430 - -
6,596,000 6,589,430 - -
12.1 Sierra Power (Private) Limited
The Board of Directors have resolved to dispose the investment in Sierra Power (Private) Limited at the meeting held on
27th January 2015. The Company has initiated the process of disposing this investment by signing a Memorandum of
Understanding of the disposal of entire investment of the subsidiary for Rs. 180 Mn with a third party as at 27th January
2016. An advance payment of Rs. 10 Mn has been received on 09th August 2016. Accordingly, this investment has been
classified as an Held for Sale Investment as at the reporting date.
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
85
Sierra Cables PLC
For the year ended 31st March2017
Rs.2016
Rs.
12.1.1 Loss after tax From Discontinued Operations
Revenue - -
Cost of Sales - -
Gross Profit/Loss - -
Other Income - -
Administrative Expenses (1,965,557) (1,822,544)
Loss from Operations (1,965,557) (1,822,544)
Loss before tax from discontinued operations (1,965,557) (1,822,544)
Loss for the year from Discontinued Operations (1,965,557) (1,822,544)
Deficit per Share (0.23) (0.21)
As at 31st March
12.1.2 Assets and Liabilities Classified as Held for Sale
Assets
Property, Plant & Equipment 124,267,453 123,269,433
Debtors & Other Receivables 24,356,317 24,584,790
Cash in Hand & Bank 326 639
Assets classified as held for sale 148,624,096 147,854,862
Liabilities
Amount Due To Related Companies 62,574,480 59,846,259
Long Term Loans 6,000,000 6,000,000
Trade & Other Payables 596,000 589,430
Liabilities Directly Associated with Assets Classified as Held for Sale 69,170,480 66,435,689
Net Assets Directly Associated with Disposal 79,453,616 81,419,173
For the year ended 31st March
12.1.3 Cash flow from/(Used in) Discontinued Operation
Net Cash Flows Generated from Operating Activities 1,009,177 715,511
Net Cash Flows Used in Investing Activities (1,009,490) (1,185,101)
Net Decrease in Cash and Cash Equivalents (313) (469,590)
12.2 Plant & Machinery
The Company has classified part of its Plant and Machinery as Non Current Asset Held for Sale during the previous
year, following the decision by Board of The Directors to dispose the same. Effort to sell the Plant and Machinery was
commenced during the previous financial year and Directors are of the opinion that they still commit to the initial decision
to sell the assets and actively involved in the same as at the end of the reporting period. Further Directors are of the
opinion that, there is no further impairment on the carrying amount of the asset as at 31st March 2017.
Annual Report 2016 / 2017
86
Sierra Cables PLC
13. P
rope
rty,
Pla
nt a
nd E
quip
men
t
As
at 3
1st
Mar
ch
Land
Rs.
Bui
ldin
gs
Rs.
Pla
nt a
nd
Mac
hine
ry Rs.
Mot
or
Veh
icle
s
Rs.
Fur
nitu
re
and
Fitt
ings Rs.
Fac
tory
Equi
pmen
t
Rs.
Offi
ce &
Com
pute
r
Equi
pmen
t
Rs.
Cap
ital
Wor
k in
Pro
gres
s
Rs.
Tot
al
2017 R
s.
Tot
al
2016 R
s.
Gro
up
Cos
t /
Rev
alua
tion
Bal
ance
as
at 1
st A
pril
202
,874
,851
3
64,9
69,0
42
708
,966
,452
3
3,56
0,26
1 5
,333
,073
5
8,25
6,05
8 2
6,80
5,85
2 1
4,25
4,03
9 1
,415
,019
,629
1
,516
,803
,035
Add
itio
ns -
-
-
9,
462
123,
132
933
,060
1
,393
,312
94
,738
,999
97,1
97,9
65 5
9,39
7,31
2
Tran
sfer
s -
7
,254
,577
-
-
-
-
-
(7
,254
,577
)-
-
Dis
posa
ls -
-
(2
,111
,381
) -
-
(2
6,45
0) -
-
(2
,137
,831
) (3
7,86
5,54
4)
Exch
ange
Diff
eren
ce
-
-
-
29,
613
9,2
46
-
-
2,1
77,1
95
2,2
16,0
54
-
Recl
assi
ficat
ion
to A
sset
s
Hel
d fo
r Sal
e -
(1
23,3
15,1
75)
Bal
ance
as
at 3
1st
Mar
ch
202
,874
,851
3
72,2
23,6
19
706
,855
,071
3
3,59
9,33
6 5
,465
,451
5
9,16
2,66
8 2
8,19
9,16
4 10
3,91
5,65
6 1
,512
,295
,816
1
,415
,019
,628
Dep
reci
atio
n
Bal
ance
as
at 1
st A
pril
-
59,
999,
863
174
,791
,611
1
6,38
4,58
6 4
,149
,822
3
9,93
8,83
7 1
9,36
3,36
4 -
3
14,6
28,0
83
265
,473
,055
Cha
rge
for t
he Y
ear
-
18,
248,
451
51,
296,
020
4,2
24,4
75
443
,101
8
,584
,662
2
,420
,137
-
8
5,21
6,84
6 8
3,89
0,70
6
Dis
posa
ls -
-
(1
,583
,536
) -
-
(2
6,45
0) -
-
(1
,609
,986
) (3
4,68
9,93
6)
Exch
ange
Diff
eren
ce
-
-
-
7,4
03
1,1
60
-
-
-
8,5
63
-
Recl
assi
ficat
ion
to A
sset
s
Hel
d fo
r Sal
e -
-
-
-
-
-
-
-
-
(4
5,74
2)
Bal
ance
as
at 3
1st
Mar
ch
-
78,
248,
314
224
,504
,095
2
0,61
6,46
4 4
,594
,082
4
8,49
7,04
9 2
1,78
3,50
1 -
3
98,2
43,5
06
314
,628
,083
Net
Boo
k V
alue
Bal
ance
as
at 3
1st
Mar
ch
2016
202
,874
,851
3
04,9
69,1
79
534
,174
,841
1
7,17
5,67
5 1
,183
,251
1
8,31
7,22
2 7
,442
,488
1
4,25
4,03
9 -
1
,100
,391
,545
Bal
ance
as
at 3
1st
Mar
ch
2017
202
,874
,851
2
93,9
75,3
05
482
,350
,976
1
2,98
2,87
2 8
71,3
68
10,
665,
619
6,4
15,6
63
103,
915,
656
1,1
14,0
52,3
13
-
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
87
Sierra Cables PLC
As
at 3
1st
Mar
ch
Land
Rs.
Bui
ldin
gs
Rs.
Pla
nt a
nd
Mac
hine
ry Rs.
Mot
or
Veh
icle
s
Rs.
Fur
nitu
re
and
Fitt
ings Rs.
Fac
tory
Equi
pmen
t
Rs.
Offi
ce &
Com
pute
r
Equi
pmen
t
Rs.
Cap
ital
Wor
k in
Pro
gres
s
Rs.
Tot
al20
17 Rs.
Tot
al
2016 R
s.
Com
pany
Cos
t /
Rev
alue
d A
mou
nt
Bal
ance
as
at 1
st A
pril
135
,949
,350
3
16,2
69,4
17
548
,150
,495
2
6,62
6,44
7 4
,614
,756
5
5,30
2,10
8 2
3,89
1,57
9 1
5,24
8,93
1 1
,126
,053
,083
1
,107
,483
,938
Add
itio
ns -
-
2
5,73
1 1
58,0
60
1,3
23,4
12
17,2
33,6
3518
,740
,838
56,
016,
332
Tran
sfer
s -
7
,254
,577
-
-
-
-
-
(7
,254
,577
)-
-
Dis
posa
ls -
-
(2
,111
,381
) -
(2
6,45
0) -
-
(2
,137
,831
) (3
7,44
7,18
7)
Bal
ance
as
at 3
1st
Mar
ch
135
,949
,350
3
23,5
23,9
94
546
,039
,114
2
6,62
6,44
7 4
,640
,487
5
5,43
3,71
8 2
5,21
4,99
1 2
5,22
7,98
9 1
,142
,656
,090
1
,126
,053
,083
Dep
reci
atio
n
Bal
ance
as
at 1
st A
pril
-
5
4,48
3,34
9 1
39,2
90,0
48
10,
639,
956
3,6
45,0
54
32,
234,
379
16,
996,
503
-
257
,289
,289
2
24,1
20,3
46
Cha
rge
for t
he Y
ear
-
15,
813,
471
39,
904,
468
3,8
81,6
68
362
,093
6
,438
,842
2
,231
,642
-
6
8,63
2,18
4 6
7,60
0,89
4
Dis
posa
ls -
-
(1
,583
,536
) -
(2
6,45
0) -
-
(1
,609
,986
) (3
4,43
1,95
1)
Bal
ance
as
at 3
1st
Mar
ch
-
70,
296,
820
177
,610
,980
1
4,52
1,62
4 4
,007
,147
3
8,64
6,77
1 1
9,22
8,14
5 -
3
24,3
11,4
87
257
,289
,289
Net
Boo
k V
alue
Bal
ance
as
at 3
1st
Mar
ch
2016
135
,949
,350
2
61,7
86,0
68
408
,860
,447
1
5,98
6,49
1 9
69,7
02
23,
067,
729
6,8
95,0
76
15,
248,
931
- 8
68,7
63,7
94
Bal
ance
as
at 3
1st
Mar
ch
2017
135
,949
,350
2
53,2
27,1
74
368
,428
,154
1
2,10
4,82
4 6
33,3
40
16,
786,
947
5,9
86,8
46
25,
227,
989
818
,344
,603
-
Annual Report 2016 / 2017
88
Sierra Cables PLC
13.1 Fully-Depreciated Assets
The initial cost of fully-depreciated Property, Plant and Equipment which are still in use as at Reporting Date are as follows:
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Motor Vehicles 7,142,591 7,026,200 7,142,591 7,026,200
Furniture and Fittings 3,161,196 2,123,013 3,161,196 2,123,013
Factory Equipment 27,015,887 20,609,025 27,015,887 20,609,025
Office & Computer Equipment 15,202,305 7,564,055 15,202,305 7,564,055
52,521,979 37,322,293 52,521,979 37,322,293
13.2 Details of Property, Plant and Equipment of the Group Stated at Valuation are Indicated below:
Property
Location
Method of
Valuation
Effective date of
valuation
Valuer Land Extent
(Acres)
Carrying Value
of Revalued
Assets as at 31st
March 2017
if carried at
Historical Cost
Rs.
Carrying Value
of Revalued
Assets as at 31st
March 2017
Rs.
Land, buildings,
Plant and
machinery at
Sierra Cables
PLC Galwarusa
Road, Korathota
(within the limits
of Kaduwela
Pradeshiya Sabha)
Market Approach 31st March 2013 Mr. K. Arthur Perera
A.M.I.V.(Sri Lanka)
Valuer & Consultant
5.6375 287,695,046 596,067,895
287,695,046 596,067,895
Land at Sierra
Industries (Pvt)
Ltd Galwarusa
Road, Korathota
(within the limits
of Kaduwela
Pradeshiya Sabha)
Market Approach 31st March 2015 Mr. K. Arthur Perera
A.M.I.V.(Sri Lanka)
Valuer & Consultant
2.7886 46,317,298 66,925,500
46,317,298 66,925,500
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
89
Sierra Cables PLC
13.3 The carrying amount of revalued assets that would have been included in the Financial Statements, had the assets
been carried at Cost less Accumulated Depreciation is as follows;
As at 31st March2017
Rs.2016
Rs.
At Cost 334,012,344 373,442,000
At Valuation 662,993,395 717,807,238
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
14. Intangible Assets Cost
Balance as at 1st April 11,726,481 11,089,392 11,726,481 11,089,392
Additions During the Year 7,738,544 637,090 7,738,544 637,090
Balance as at 31st March 19,465,025 11,726,482 19,465,025 11,726,482
Amortization Charge
Balance as at 1st April 10,457,061 9,479,895 10,457,061 9,479,895
Charge for the year 2,148,915 977,166 2,148,915 977,166
Balance as at 31st March 12,605,976 10,457,061 12,605,976 10,457,061
Carrying Value as at 31st March 6,859,049 1,269,421 6,859,049 1,269,421
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 2017 was Rs. 10,018,868/-
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
15. Investment PropertyBalance as at 1st April - 16,427,000 - 16,427,000
Disposals - (16,427,000) - (16,427,000)
Balance as at 31st March - - - -
Depreciation
Balance as at 1st April - 2,464,051 - 2,464,051
Charge for the Year - 68,446 - 68,446
Disposals - (2,532,497) - (2,532,497)
Balance as at 31st March - - - -
The Investment Property which was consisted of an apartment in Fairfield Residencies a Condominium Property situated
in Colombo 08, having a floor area of 1,720 sq.ft. has been sold for Rs 22,000,000 during the year ended 31st March 2016.
Annual Report 2016 / 2017
90
Sierra Cables PLC
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
16. Investments in SubsidiariesSierra 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 28,780,000
261,060,020 261,060,020
Provision for Impairment of Subsidiaries (Note 16.1) - - (134,000,000) (79,000,000)
- - 127,060,020 182,060,020
16.1 Provision for Impairment of Subsidiaries
The Company has made a provision for impairment of Rs. 134,000,000 /- on the investment in subsidiaries as at 31st March
2017 due to adverse business environment in which the subsidiary companies are operated. This has resulted in continuous
operating losses and negative operating cash flows in subsidiary companies and discounted future cash flows has been
considered as the recoverable amount for the calculation of provision for impairment as at the each reporting date. The
breakup of the impairment provision is as follows;
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Provision for Impairment of Subsidiaries
Balance as at 1st April - - 79,000,000 17,000,000
Provision Made During the Year - - 55,000,000 62,000,000
Balance as at 31st March - - 134,000,000 79,000,000
As at
Sierra Industries
(Private) Limited
31.03.2017
Sierra Cables East Africa
Limited31.12.2016
16.2 Summarized Financial Information of Subsidiaries
Number of shares 22,100,002 2,000
Holding 82.35% 100%
Cost of the Investment 145,600,010 28,780,000
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
91
Sierra Cables PLC
Sierra Industries (Private) Limited Sierra Cables East Africa Limited
As at 31.03.2017Rs.
31.03.2016Rs.
31.12.2016Rs.
31.03.2016Rs.
16.3 Non-Controlling Interest (NCI) in Subsidiary
NCI Percentage (%) 17.65% 17.65% 0% 0%
Total Assets 587,749,310 455,296,381 98,995,672 26,457,039
Total Liabilities 599,544,083 433,417,618 72,004,603 3,145,226
Net Assets / (Liabilities) (11,794,773) 21,878,763 26,991,069 23,311,813
Carrying Amount of NCI (1,985,464) 3,861,602 - -
Loss for the year (34,535,890) (38,683,166) (2,098,495) (5,468,187)
Other Comprehensive Income - - 309,564 -
Total Other Comprehensive Expense (34,535,890) (38,683,166) (1,788,931) (5,468,187)
Loss allocated to NCI (6,095,585) (6,827,579) - -
Cash Flows from Operating Activities (81,055,552) 11,846,584 22,015,266 (11,413,884)
Cash Flows from Investing Activities (876,994) (52,041) (81,796,364) 18,313,707
Cash Flows from Financing Activities 57,811,804 (12,771,119) 65,050,422 -
Net Increase / (Decrease) in Cash and Cash Equivalents (24,120,742) (976,576) 5,269,324 6,899,823
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
17. Investments in Equity Accounted InvesteesTea Leaf Resort Holdings (Private) Limited (Note 17.2) - - 2,500,000 2,500,000
T & G Lanka (Private) Limited (Note 17.3) 3,621,186 2,746,962 3,300,000 3,300,000
3,621,186 2,746,962 5,800,000 5,800,000
Provision for Impairment of Equity Accounted Investee (Note 17.1) - - (2,500,000) -
3,621,186 2,746,962 3,300,000 5,800,000
17.1 Provision for Impairment of Equity
Accounted Investees
Tea Leaf Resort Holdings (Private) Limited - - (2,500,000) -
- - (2,500,000) -
Annual Report 2016 / 2017
92
Sierra Cables PLC
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
17.2 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
17.3 T & G Lanka (Private)Limited
Cost of the Investment 3,300,000 3,300,000 3,300,000 3,300,000
Share of Profit for the Year (Net of Tax) 874,224 293,942 - -
Accumulated Share of Loss (553,038) (846,980) - -
Net Asset Value of Associate as at 31 March 3,621,186 2,746,962 3,300,000 3,300,000
T & G Lanka (Private) Limited Tea Leaf Resort Holdings (Private) Limited
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
17.4 Summarized Financial Information of
Associates
Revenue 64,946,509 37,960,270 - -
Profit/(Loss) after Tax 3,122,227 1,049,790 (4,068,415) (119,470)
Total Assets 38,550,591 20,499,195 2,470,804 6,657,719
Total Liabilities 26,390,081 9,421,729 7,125,540 7,114,040
Company
2017 2016
As at 31st MarchNo of Ordinary
Shares/UnitsFair Value
Rs.No of Ordinary
Shares/UnitsFair Value
Rs.
18. Available for Sale InvestmentsNational Development Bank PLC 21,022 2,837,970 20,250 3,404,025
Richard Pieris Exports PLC 10,359 2,123,595 10,359 2,278,980
ACL Cables PLC 1,520 82,080 760 76,000
DFCC Bank PLC 10,000 1,140,000 10,000 1,385,000
Chevron Lubricants PLC 3,678 628,938 1,839 555,562
Kelani Cables PLC 200 23,400 200 22,500
NDB Aviva Growth Fund Investment in Units 2,199,836 22,306,332 219,984 20,999,628
Capital Alliance High Yield FundInvestment in Units - - 1,050,280 16,033,996
- 29,142,315 - 44,755,691
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
93
Sierra Cables PLC
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
19. InventoriesRaw Materials 468,981,718 120,700,207 424,493,008 98,936,178
Work in Progress 294,452,793 132,600,328 294,452,793 132,600,328
Finished Goods 473,048,041 455,455,028 441,842,809 430,668,490
Packing Materials 9,707,422 13,300,592 9,707,422 13,300,592
Stationeries - 1,802,747 - 1,802,747
Engineering Items 22,209,520 24,562,288 22,209,520 19,663,932
Goods in Transit 18,612,623 18,612,623 18,612,623 18,612,623
1,287,012,117 767,033,812 1,211,318,175 715,584,890
Less: Provision for Obsolete Inventories (Note 19.1) (53,092,773) (61,958,792) (50,972,842) (61,958,792)
1,233,919,344 705,075,020 1,160,345,333 653,626,097
19.1 Provision for Obsolete Inventories
Balance as at 1st April 61,958,792 52,289,541 61,958,792 52,289,541
Provision Made during the Year 2,119,931 9,669,251 - 9,669,251
Written off during the Year (10,985,950) - (10,985,950) -
Balance as at 31st March 53,092,773 61,958,792 50,972,842 61,958,792
20. Trade and Other ReceivablesTrade Receivables 1,524,292,128 1,090,617,177 1,329,003,994 969,566,099
Less: Provision for Impairment (Note 20.1) (135,590,708) (168,115,337) (111,418,566) (148,733,637)
1,388,701,420 922,501,840 1,217,585,428 820,832,462
VAT Receivable 201,588,935 88,243,685 105,814,394 34,893,842
Deposits, Prepayments and Advances 94,678,496 76,826,120 84,032,916 66,662,624
Other Receivables 32,950,953 17,125,095 - -
1,717,919,804 1,104,696,740 1,407,432,738 922,388,928
Less: Provision for Impairment (Note 20.2) (44,893,550) (59,244,162) (44,893,550) (59,244,162)
1,673,026,254 1,045,452,578 1,362,539,188 863,144,766
20.1 Provision for Impairment of Trade
Receivables
Balance as at 1st April 168,115,337 143,764,812 148,733,637 139,200,733
Provision made during the year 34,228,581 24,350,525 29,438,139 9,532,904
Written off during the Year (66,753,210) - (66,753,210) -
Balance as at 31st March 135,590,708 168,115,337 111,418,566 148,733,637
Annual Report 2016 / 2017
94
Sierra Cables PLC
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
20.2 Provision for Impairment of Other
Receivables
Balance as at 1st April 59,244,162 125,835,057 59,244,162 125,835,057
Impairment for the Year - 4,500,000 - 4,500,000
Written off during the Year (14,350,612) (71,090,895) (14,350,612) (71,090,895)
Balance as at 31st March 44,893,550 59,244,162 44,893,550 59,244,162
21. Amounts Due from Related CompaniesNon trading
Sierra Civil Engineering & Construction (Private) Limited - 385,000 - 385,000
Sierra Power ((Private) Limited - - 62,574,480 59,846,259
Sierra Industries (Private) Limited - - 213,895,061 134,638,698
Tea Leaf Holding (Private) Limited - - - -
Sierra Cables East Africa Limited - - 45,534,678 2,854,664
Exchange Difference 8,510 - -
8,510 385,000 322,004,219 197,724,621
Trading
Sierra Electrical Engineering (Private) Limited 616,785 616,785 616,785 616,785
Sierra Technology Holdings (Private) Limited 9,255,105 4,052,915 9,255,105 4,052,915
Sierra Readymix (Private) Limited 236,161 57,437 236,161 57,437
Sierra Water Works (Private) Limited 2,936 2,936 2,936 2,936
Sierra Construction Limited 99,902,329 100,626,267 99,902,329 100,626,267
Sierra Development (Private) Limited - 55,868 - 55,868
Sierra Construction & General Sales Join Venture (5,583) 859 (5,583) 859
Sierra Piling (Private) Limited - 89,672 - 89,672
110,007,732 105,502,739 110,007,732 105,502,739
Total 110,016,242 105,887,739 432,011,951 303,227,360
22. Cash and Cash EquivalentsFavourable Balances
Cash in Hand and at Bank 78,771,458 80,234,093 73,481,406 73,005,443
78,771,458 80,234,093 73,481,406 73,005,443
Unfaovurable Balances
Bank Overdraft (98,056,157) (72,104,387) (37,681,897) (35,542,771)
Cash and Cash Equivalents for Cash Flow Purposes (19,284,699) 8,129,706 35,799,509 37,462,672
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
95
Sierra Cables PLC
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
23. Stated Capital537,512,430 Ordinary Shares 894,565,898 894,565,898 894,565,898 894,565,898
894,565,898 894,565,898 894,565,898 894,565,898
24. Retirement Benefit ObligationsBalance as at 1st April 26,208,882 26,793,172 25,929,429 26,282,368
Current Service Cost 2,911,218 2,868,404 2,911,218 3,099,755
Interest Cost 2,878,953 2,488,462 2,852,237 2,488,462
Actuarial (Gain) / Loss (2,070,089) (1,545,718) (2,070,089) (1,545,718)
Benefits Paid by the Plan (2,093,801) (4,395,438) (2,093,801) (4,395,438)
Balance as at 31st March 27,835,163 26,208,882 27,528,994 25,929,429
24.1 The total amount charged to Statement of Profit or Loss and Other Comprehensive Income in respect of Retirement
Benefit Obligations made up as follows;
Group Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Current Service Cost 2,911,218 2,868,404 2,911,218 3,099,755
Interest Cost 2,878,953 2,488,462 2,852,237 2,488,462
Recognise in Profit or Loss 5,790,171 5,356,867 5,763,455 5,588,217
Actuarial Gain (2,070,089) (1,545,718) (2,070,089) (1,545,718)
Recognised in Other Comprehensive Income (2,070,089) (1,545,718) (2,070,089) (1,545,718)
24.2 LKAS 19 requires the use of acturial techniques to make a reliable estimate of the amount of retirement benefits that
employees have earned in return for their service in the current and prior periods and discount that benefit using projected
unit credit method in order to determine the present value of the retirement benefit obligation and the current service
cost. This requires an entity to determine how much benefit is attributable to the current and prior periods and to make
estimates about demographic variables and financial variables that will influence the cost of the benefit.
An Actuarial Valuation of the Employee Benefit Obligations of the Company was carried out as at 31st March 2017, by
Messers M. Poopalanathan, a firm of Professional Actuaries. The valuation was carried out as per the “Projected Unit
Credit” (PUC) method.
The following key assumptions were made in arriving at the above figure.
2017 2016
Expected Annual Average Salary Increment 10% 10%
Discount Rate 12% 11%
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.
Annual Report 2016 / 2017
96
Sierra Cables PLC
24.3 Sensitivity of Assumptions Employed in Acturial Valuation
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
Retirement benefit obligation Retirement benefit obligation
One percentage point increase
Rs.
One percentage point increase
Rs.
One percentage point increase
Rs.
One percentage point increase
Rs.
Effect on the dicounting rate (2,060,202) 2,397,623 (2,021,264) 2,352,458
Effect on the salary escalation rate 2,295,339 (2,006,110) 2,249,735 (1,966,179)
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
25. Deferred Tax LiabilityBalance as at 1st April 186,911,342 135,787,695 160,774,382 108,788,382
(Reversal)/Provision for the Year (Note 25.2) (10,872,206) 51,123,647 (9,306,378) 51,986,000
Exchange Difference (25,044) - - -
Balance as at 31st March 176,014,092 186,911,342 151,468,004 160,774,382
2017 2016
As at 31st March
Temporary Difference
Rs.
Tax Effect
Rs.
Temporary Difference
Rs.
Tax Effect
Rs.
25.1 The Deferred Tax Liability is
attributable to the followings
Company
On Property, Plant and Equipment 598,244,910 158,774,199 619,929,501 170,976,557
On Retirement Benefit Obligation (27,528,994) (7,306,195) (25,929,429) (7,151,336)
On Accumulated Tax Losses - - (10,895,851) (3,050,838)
- 151,468,004 - 160,774,382
Group
On Property, Plant and Equipment 715,809,178 191,692,194 732,936,946 202,618,641
On Retirement Benefit Obligation (27,835,163) (7,391,922) (26,208,882) (7,229,583)
On Accumulated Tax Losses (2,997,849) (899,355) (10,895,851) (3,050,838)
On Other Provisions (26,292,073) (7,361,781) (19,381,700) (5,426,876)
Exchange Difference - (25,044) - -
- 176,014,092 - 186,911,342
Notes to the Financial Statements Contd.
Annual Report 2016 / 2017
97
Sierra Cables PLC
Group Company
For the year ended 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
25.2 Deferred Tax Liability - (Reversal)/
Charge for the Year
Income Statement (10,322,805) 50,697,338 (8,756,976) 51,559,691
Profit or Loss and Other Comprehensive Income (549,401) 426,309 (549,402) 426,309
(10,872,206) 51,123,647 (9,306,378) 51,986,000
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
26. Long Term Loans Balance as at 1st April 241,080,475 281,464,358 175,423,020 179,807,721
Loans Obtained during the Year 35,902,422 57,000,000 - 57,000,000
Repayments during the Year (98,592,574) (91,383,883) (70,162,345) (61,384,701)
Classified as Assets Held for Sale - (6,000,000) - -
Balance as at 31st March 178,390,323 241,080,475 105,260,675 175,423,020
Current Portion of Long Term Loans 106,906,114 98,817,384 48,646,677 68,818,200
Non Current Portion of Long Term Loans 71,484,209 142,263,091 56,613,998 106,604,820
27. Lease liabilitiesBalance as at 1 April - 2,966,779 - 2,966,779
Rentals Paid - (2,966,779) - (2,966,779)
Gross Lease Liability - - - -
Total Liability at the end of the Year - - - -
28. Trade and Other PayablesTrade Creditors 853,614,582 286,761,674 832,670,287 248,790,651
Other Payables 120,656,274 106,961,692 30,296,400 38,582,298
Taxes Payable (1,686,205) 18,592,708 (1,686,205) 18,592,708
972,584,651 412,316,074 861,280,482 305,965,657
29. Amount Due to Related CompaniesSierra Industries (Private) Limited - - 85,817 19,838
- - 85,817 19,838
30. Import Demand LoanBalance as at 1st April 768,178,333 767,506,150 714,097,468 730,653,350
Loans Obtained during the Year 2,572,727,907 2,059,584,799 2,329,593,559 1,978,681,382
Repayments during the Year (2,134,708,429) (2,058,912,616) (1,977,816,114) (1,995,237,264)
Balance as at 31st March 1,206,197,811 768,178,333 1,065,874,913 714,097,468
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31. Contingent Liabilities
There 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 Period
There 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 Terms
The following assets have been pledged as securities against the long term and short term borrowings that have been
disclosed in Notes 26, 27 and 30 to the Financial Statement respectively.
Name of the Bank
Assets Pledged Facility Obtained Interest Rate / Commission Rate
Repayment Terms
Sierra Cables PLC
Commercial Bank of Ceylon PLC
(1) - Overdraft of Rs 40 Mn PLR+1.5% p.a -
(2) A Primary Mortgage Numbered 3627 Valued at 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.aAWPLR+1.5% p.a
Repayable over 180 daysRepayable over 180 days
(3) A Primary Mortgage No.FCC/11/141 secured upon 160mm Bow Standing Machine and 8 Wire Drawing and anncaling Line.
Term Loan (3) of Rs. 114 Mn AWPLR+2% p.a 56 Monthly Installments
(4) A Primary Mortgage Numbered 3627 Valued at 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 490 Mn dated 13/1/2012
Term Loan of Rs.100 Mn granted as a sub limit of the Import Demand / Release of Document against Acceptance facility of Rs. 1,000 Mn .
AWPLR+1.5% p.a 60 Monthly Installments
(5) General term and conditions relating to loan for Rs.57 Mn to be signed.
Term Loan for Rs. 57Mn or equivalent USD 400,000
AWLR+ 1.5% 48 Monthly Installments (6 months grace period)
Notes to the Financial Statements Contd.
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Name of the Bank
Assets Pledged Facility Obtained Interest Rate / Commission Rate
Repayment Terms
Bank of Ceylon
(1) Relative bills of Exchange, Shipping Documents and the underlying goods under the Bank’s Constructive control.
Letter of Credit for 200 Mn. .25% p.q Self liquidating
(2) Accepted Usance Drafts. Acceptance facility for 200 Mn. Sub limit of under Facility stated above.
.125% p.m Repayable over 60 days
(3) Hypothecation over stocks. Hypothecation Loan for 200 Mn AWPLR+1.5% p.a Repayable over 180 days
Cargills Bank Limited
(1) Mortgage over stock and Debtors for Rs. 100 Mn
Documentary Credit for Rs.100 Mn Sight- 0.25% Repayable over 90 days Usance- 0.375%
(2) Mortgage over stock and Debtors for Rs. 100 Mn
Acceptance Facility for Rs. 100 Mn Bank's prevaling schedule of charges.
Repayable over 180 days
(3) Mortgage over stock and Debtors for Rs. 100 Mn
Shipping Guarantee for Rs. 100 Mn. 0.25% together with levies
(4) Mortgage over stock and Debtors for Rs. 100 Mn
Clean Import Loan for Rs. 100 Mn AWPLR+1.75% Repayable over 180 days
People’s Bank
(1) i.) Indemnity of the Companyii.) 10% cash Margineiii.) Letter of Set-off
Letter of Guarantee Facility for Rs. 80 Mn
1% p.a pro rata basis Upon expiry or return of the original guarantee, whichever is earlier
(2) i.) Indemnity of the Companyii.) Documents of tital to goods shipped
Letter of Credit (Sight/Usance) for Rs.400 Mn
0.2% p.q Repayable over 90 days
(3) Mortgage over stocks and book debts for Rs. 500Mn Promissory note
Short term Loan (Import/Local) (Sub limit of under facility No 02)
AWPLR+2.5%2% rebate on Regular re payments
Repayable over 90 days
(4) Mortgage over machinary Term Loan for Rs. 200mn (Sub limit of under facility No 02)
AWPLR+2.5%2% rebate on Regular re payments
36 Monthly Installments
(5) Mortgage over stocks and book debts for Rs. 500MnPromissory note
Overdraft Facility for Rs. 20 Mn AWPLR+0.5% On Demand
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Sierra Cables PLC
Name of the Bank
Assets Pledged Facility Obtained Interest Rate / Commission Rate
Repayment Terms
DFCC Bank
(1) - Overdraft Facility for Rs. 20 Mn AWPLR+2% On Demand
(2) A mortgage Bond for Rs. 120,000,000 over stock
Import line for Rs. 100 Mn Within which,
(i) Letter of Credit Facility for Rs. 100Mn(Sub limit of under facility No 02)
.25% p.q With Company’s fund/ Proceed of Import Demand Loan
(ii) Acceptance Facility for Rs. 100 Mn(Sub limit of under facility No 02)
.375% p.q With Company's fund/ Proceed of Import Demand Loan
(iii) Shipping Guarantee facility for Rs 100 MnEndoesement of Copy Document, Airway Bills
0.3% for First MonthRs. 2,000 p.m. thereafter0.3% for First MonthRs. 2,000 p.m. thereafter
-
Import Loans facility for Rs 100 Mn(Sub limit of under facility No 02)
Commission foe Documents - DP- 0.3% -DA-0.35%AWPLR(Spot) +1%Value < 10Mn - .05% p.a Value > 10Mn - 1.25% p.a(Subject to maximun Rs. 3,500
One- Off Facility
(1) Import line for Rs. 150 MnWithin which,
(i) Letter of Credit Facility for 150 Mn(Sub limit of under facility No 01)
.25% p.q With Company's fund/ Proceed of Import Demand Loan
(ii) Acceptance Facility for Rs. 150 Mn(Sub limit of under facility No 01)
.375% p.q With Company's fund/ Proceed of Import Demand Loan
(iii) Shipping Guarantee for Rs 150 MnEndoesement of Copy Document, Airway Bills (Sub limit of under facility No 01)
0.3% for First MonthRs. 2,000 p.m. thereafter 0.3% for First Month Rs. 2,000 p.m. thereafter
-
Notes to the Financial Statements Contd.
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Sierra Cables PLC
Name of the Bank
Assets Pledged Facility Obtained Interest Rate / Commission Rate
Repayment Terms
(iv) Import Loan facility for 150 Mn(Sub limit of under facility No 01)
Commission foe Documents - DP- 0.3% -DA-0.35%AWPLR(Spot) +1.25%
Repayable over 180 days
(v) Foreign Exchange Contract facility for USD 100,000(Sub limit of under facility No 01)
To be fixed at the time of contract
-
Sierra Industries (Private) Limited
Sampath Bank PLC
(1) Loan Agreement for Rs. 20 Mn Primary Mortgage Bond for Rs. 20 Mn over machinery
Medium Term Loan for 20 Mn AWPLR+2.5% p.a 48 Monthly Installments
(2) Loan Agreement for Rs. 20 Mn Primary Mortgage bond for Rs. 35 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17PSecondary Mortgage bond for Rs. 17.6 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17P
Medium Term Loan for 20 Mn AWPLR+2.5% p.a 48 Monthly Installments
(3) Loan Agreement for Rs. 65 MnPrimary Mortgage Bond for Rs. 65 Mn over machinery
Medium Term Loan for 65 Mn AWPLR+2.5% p.a 60 Monthly Installments
(4) Loan Agreement for Rs. 35 Mn Primary Mortgage bond for Rs. 35 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17PSecondary Mortgage bond for Rs. 17.6 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17P
Medium Term Loan for 35 Mn AWPLR+2.5% p.a 60 Monthly Installments
(5) Overdraft Agreement for Rs. 60 MnHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn
Overdraft of Rs. 40 Mn AWPLR+2.5% p.a On Demand
(6) Short term Import Loan Agreement for Rs. 100 MnHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn
Short term Import Loan AWPLR+2.5% p.a Repayable over 180 days
(7) Accepted Bills of ExchangedHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn
Acceptance facility for 100 Mn. Prevailing Rate of the Bank
Repayable over 180 days
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Sierra Cables PLC
Name of the Bank
Assets Pledged Facility Obtained Interest Rate / Commission Rate
Repayment Terms
(8) Documentary Credit AgreementRelative Bills of Exchange and Shipping DocumentsHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn
Documentary Credit facility for 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.
One-Off letter of Credit facility for USD 990,000.
Sight/Usance 0.25% p.q
Repayable over 90 days
ii). Lien over documents of title to goods under import
iii). Individual drafts covering the documents relating to goods released on acceptance to be lodged with the bank.
(2) i). Corporate Guarantee for Rupee equivalent of USD 990,000.ii). General term and conditions relating to loan to be signed.
Term Loan Facility for USD 990,000 LIBOR+5% p.a 60 monthly installments One year grace period
35. Related Party Disclosure
35.1 Transactions with Related Parties
Name of the Company Nature of the Transactions Transaction Value Balance Outstanding as at
31st March
2017
Rs.
2016
Rs.
2017
Rs.
2016
Rs.
Transactions with Subsidiary
Companies
Sierra Power (Private) Limited Amount Paid for Administration
Expenses 2,728,221 3,095,884 62,574,480 59,846,259
Sierra Industries (Private) Limited Amount Paid for Administration
Expenses 2,414,612 2,959,854 173,895,061 94,638,698
Funds Received from Sierra Industries
Customers (275,500) (266,191)
Interest chargers on import loans - 1,024,411
Funds Transfers /settlements 28,000,000 27,048,000
Payments for Custom 33,224,691 -
Payments for Suppliers 15,892,560 -
Loan Balance - - 40,000,000 40,000,000
Purchase of Goods (85,817) - (85,817) (19,838)
Settlement of Invoices 19,838 - - -
Notes to the Financial Statements Contd.
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Sierra Cables PLC
Name of the Company Nature of the Transactions Transaction Value Balance Outstanding as at
31st March
2017
Rs.
2016
Rs.
2017
Rs.
2016
Rs.
Sierra Cables East Africa Limited Fund transfers 47,741,800 20,305,265 45,534,678 2,854,664
Amount Paid for Pre operation
Expenses 3,412,949 2,854,664
Transfer to share capital (8,474,735) (20,305,265)
Transactions with Other Related
Companies
Sierra Construction Limited Sale of Goods 109,703,133 158,627,411 99,902,329 100,626,267
Settlement of Invoices (110,427,071) (140,924,031)
Sierra Civil Engineering and
Construction (Private) Limited
Loan Settlement
(385,000) (1,300,000) - 385,000
Sierra Electrical Engineering (Private)
Limited
Sale of Goods
- - 616,785 616,785
Sierra Technology Holdings
(Private) Limited
Sale of Goods
9,704,299 4,877,056 9,255,105 4,052,915
(Previously Known as Sierra
Information Technologies (Private)
Limited)
Settlement of Invoices
(4,502,109) (3,186,166)
Sierra Water Works (Private) Limited - - 2,936 2,936
Sierra Redimix (Private) Limited Sale of Goods 236,161 43,418 236,161 57,437
Settlement of Invoice (57,437) (31,343)
Sierra Development (Private) Limited Sale of Goods 1,085,188 55,868 - 55,868
Settlement of Invoice (1,141,056) (217,654)
Sierra Construction & General Sales
Join Venture
Sale of Goods
- - (5,583) 859
Settlement of Invoice (6,442) -
Tea Leaf Holding (Private) Limited Loan granted - - - -
Provision made - (2,500,000)
Sierra Piling (Private) Limited Sale of Goods - 89,672 - 89,672
Settlement of Invoice (89,672) -
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35.2 Transactions with Key Management Personnel
Key Management personnel are those having authority and responsibility for planning ,directing and controlling the
activities of the Group . Accordingly the Directors of the Company (including Executive and Non Executive Directors )have
been classified as Key Management Personnel of the Company, Group.
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Directors' Fees 7,560,000 6,600,000 7,560,000 5,500,000
Short Term Employee Benefits 14,047,250 11,213,750 14,047,250 11,213,750
21,607,250 17,813,750 21,607,250 16,713,750
36. Going Concern
Sierra Industries (Private) Limited
The Company has recorded an accumulated loss amounting to Rs. 216,457,310/- as at 31st March 2017 and its Current
Liabilities exceeded its Current Assets as at 31st March 2017 by Rs. 191,298,263/-. Further, the Company's net assets
are less than half of its stated capital and faces serious loss of capital situation as at the reporting date. Therefore, the
management has taken the following mitigating actions to ensure that the Company will be able to continue as a going
concern.
Improvements to the quality of products, cost minimization by improving the productivity and minimize the wastage,
Introducing new product to the market, improved effective management and a tenders worth of Rs. 217 Mn has been
confirmed in addition to normal sales. The Board expects this subsidiary to turn around by the end of the next financial
year.
Further, Sierra Cables PLC, the parent of the Company has assured to provide necessary financial assistantance and support
as necessary to the Company to manage day to day operations with the intention to continue the business without any
interruption as per the letter of comfort dated 17th August 2017.
37. Financial Risk Management
37.1 Introduction and Overview
The Group has exposure to the following risks from its use of financial instruments:
• Credit Risk
• Liquidity Risk
• Market Risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and
processes for measuring and managing risks, and the Group’s management of capital.
Risk Management Framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management
framework. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to
set appropriate risk limits and controls, and to monitor risks and adherence to limits.
Notes to the Financial Statements Contd.
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Sierra Cables PLC
i. Credit Risk
Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations, and this principally
arises from the Group’s receivables from customers.
Exposure to Credit Risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at
the reporting date was as follows;
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Trade Receivables 1,524,292,128 1,090,617,177 1,329,003,994 969,566,099
Amounts due from Related Companies 110,016,242 105,887,739 432,011,951 303,227,360
Balances with Banks 78,771,458 80,234,093 73,481,406 73,005,443
1,713,079,828 1,276,739,009 1,834,497,351 1,345,798,902
Trade Receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The
management has established a credit policy under which each new customer is analysed individually for credit worthiness
before the group standard payment and delivery terms offered.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of Trade
Receivables. The main components of this allowance are a specific loss component that relates to individually significant
exposures, and a collective loss component established for groups of similar assets in respect of losses that have been
incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics
for similar financial assets.
The maximum exposure to credit risk for trade and other receivables is the carrying amounts at the end of the reporting
period, and it is analysed by geographic regions as follows,
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Local Debtors 1,437,958,257 1,042,375,210 1,246,702,201 921,324,132
Foreign Debtors 86,333,872 48,241,967 82,301,793 48,241,967
1,524,292,129 1,090,617,177 1,329,003,994 969,566,099
Provison for Impairment (135,590,708) (168,115,337) (111,418,566) (148,733,637)
1,388,701,421 922,501,840 1,217,585,428 820,832,462
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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.
As at 31st March 2017
Within 1 year
Rs.
Between1-2 years
Rs.
Between2-5 years
Rs.
More than 5 years
Rs.
Total
Rs.
Group
Non- Derivative Financial Liabilities
Trade and Other Payables 972,584,658 - - - 973,013,971
Borrowings 1,290,933,056 88,905,079 4,750,000 - 1,384,588,134
Bank Overdraft 98,056,157 - - - 98,056,157
As at 31st March 2016
Within 1 year
Rs.
Between1-2 years
Rs.
Between2-5 years
Rs.
More than 5 years
Rs.
Total
Rs.
Group
Non- Derivative Financial Liabilities
Trade and Other Payables 412,316,074 - - - 412,316,074
Borrowings 866,995,717 78,688,444 63,574,647 - 1,009,258,808
Bank Overdraft 72,104,387 - - - 72,104,387
As at 31st March 2017
Within 1 year
Rs.
Between1-2 years
Rs.
Between2-5 years
Rs.
More than 5 years
Rs.
Total
Rs.
Company
Non- Derivative Financial Liabilities
Trade and Other Payables 861,280,480 - - - 861,280,480
Borrowings 1,114,521,588 51,864,000 4,750,000 - 1,171,135,588
As at 31st March 2016
Within 1 year
Rs.
Between1-2 years
Rs.
Between2-5 years
Rs.
More than 5 years
Rs.
Total
Rs.
Company
Non- Derivative Financial Liabilities
Trade and Other Payables 305,965,657 - - - 305,965,657
Borrowings 782,915,668 49,990,821 56,614,000 - 889,520,489
Notes to the Financial Statements Contd.
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Sierra Cables PLC
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 March2017USD
2016USD
2017USD
2016USD
Trade Receivables 584,284 326,180 556,996 326,180
Trade Payables (5,432,146) (1,896,772) (5,339,659) (1,668,644)
Net Statement of Financial Position Exposure (4,847,862) (1,570,592) (4,782,663) (1,342,464)
Exposure to Currency Risk
As at 31st March2017USD
2016USD
Trade Payables - Foreign Creditors 5,432,146 1,896,772
Gross Statement of Financial Position Exposure 5,432,146 1,896,772
Exchange Rates
Average Rate Reporting Date Spot Rate
As at 31st March2017USD
2016USD
2017USD
2016USD
USD 147.29 143.90 154.30 147.90
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Sierra Cables PLC
Sensitivity Analysis
A strengthening of the LKR, as indicated below, against the USD at 31st March 2017 would have increased/ (decreased)
the Equity and Profit or Loss by the amounts shown below. This analysis is based on foreign currency exchange rate
variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes
that all other variables, in particular interest rates, remain constant.
Strengthening Weakening
As at 31st MarchProfit or Loss
Rs.Profit or Loss
Rs.
31st March 2017
USD (10% Movement) (83,818,016) 83,818,016
31st March 2016
USD (10% Movement) (28,053,252) 28,053,252
(b) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument fluctuate because of changes in
market interest rates. The Groups exposure to the risk of changes in market interest rates relates primarily to the Group’s
long term debt obligation .The Group utilises various financial instruments to manage exposures to interest rate risks .
At the reporting date, the Group’s interest-bearing financial instruments were as follows:
Carrying Amount
As at 31st March2017USD
2016USD
Variable Rate Instruments
Financial Liabilities
Long Term Loans (178,390,323) (247,080,474)
Import Demand Loans (1,206,197,811) (768,178,333)
Bank Overdrafts (98,056,157) (72,104,387)
(1,482,644,291) (1,087,363,194)
Cash Flow Sensitivity Analysis for Variable Rate Instruments
The Group is exposed to changes in market interest rates through bank borrowings at variable interest rates.
Profit or Loss
As at 31st March100 bp Increase
Rs.100 bp Decrease
Rs.
Variable Rate Instruments (14,826,433) 14,826,433
Cash Flow Sensitivity (Net) (14,826,433) 14,826,433
Notes to the Financial Statements Contd.
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Sierra Cables PLC
37.2 Capital Management
The Board’s policy is to maintain a strong capital base so as to maintain share holder, creditor and market confidence and
to sustain future development of the business. The Board of Directors monitors the return on capital and level of dividends
to ordinary shareholders.
The Group’s Net Debt to adjusted Equity ratio at the end of the reporting period was as follows:
Group Company
As at 31st March2017
Rs.2016
Rs.2017
Rs.2016
Rs.
Total Liabilities 2,739,272,553 1,713,388,923 2,322,693,316 1,417,732,727
Less: Cash and Cash Equivalents (78,771,458) (80,234,093) (73,481,406) (73,005,443)
Net Debt 2,660,501,095 1,633,154,830 2,249,211,911 1,344,727,284
Total Equity 1,676,847,404 1,546,612,947 1,708,390,550 1,604,253,813
Net Debt to Equity Ratio 159% 106% 132% 84%
There were no changes in the Group’s approach to Capital Management during the year and the Group is not subject to
externally imposed capital requirements.
38. Fair Value Measurement
The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used
in making the measurements.
Level 1 : Quoted market price (unadjusted) in an active market for an identical instrument.
Level 2 : Valuation techniques based on observable inputs.
Level 3 : Valuation techniques using significant unobservable inputs
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Sierra Cables PLC
Notes to the Financial Statements Contd.
38.1 Financial Instruments carried at Fair Value and Valuation Bases
The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in the
fair value hierarchy into which the fair value measurement is categorized..
Company
As at 31st March 2017Level 1
Rs.Level 2
Rs.Level 3
Rs.Total
Rs.
Available for Sale Investments 29,142,315 - - 29,142,315
29,142,315 - - 29,142,315
Company
As at 31st March 2016Level 1
Rs.Level 2
Rs.Level 3
Rs.Total
Rs.
Available for Sale Investments 7,722,067 37,033,624 - 44,755,691
7,722,067 37,033,624 - 44,755,691
38.2 Fair Value of Financial Instruments carried at Amortized Cost
The following table summarizes the carrying amounts and the Group’s estimate of fair values of those financial assets and
liabilities not presented on the Group’s Statement of Financial Position at fair value.
2017
Carrying Amount
Rs.Fair Value
Rs.
Assets
Cash and Cash Equivalents 78,771,458 78,771,458
Trade and Other Receivables 1,673,026,253 1,673,026,253
Amounts due from Related Companies 110,016,242 110,016,242
Liabilities
Trade and Other Payables 972,584,658 972,584,658
Interest Bearing Borrowings 1,384,588,134 1,384,588,134
Bank Overdraft 98,056,157 98,056,157
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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.
(viii) Categorization of Financial Assets and Liabilities as at the Reporting Date
Classification Fair Value
Loans and Receivables
Rs.
Other Financial
LiabilitiesRs.
Level 1
Rs.
Level 2
Rs.
Level 3
Rs.
Financial Instrument
Trade and Other Receivables 1,673,026,253 - - - 1,673,026,253
Amount due from Related Parties 110,016,242 - - - 110,016,242
Cash and Cash Equipments 78,771,458 - - 78,771,458 -
Financial liabilities
Trade and Other Payables - 972,584,658 - - 972,584,658
Interest Bearing Borrowings - 1,384,588,134 - - 1,384,588,134
Bank Overdraft - 98,056,157 - - 98,056,157
Annual Report 2016 / 2017
114
Sierra Cables PLC
10 Year SummeryFo
r th
e ye
ar e
nded
31
Mar
ch20
0820
0920
1020
1120
1220
1320
1420
1520
1620
17
Ope
rati
ng R
esul
ts
Turn
over
1,4
89,3
25,6
24
1,5
15,3
18,2
33
1,0
37,4
25,5
35
1,4
88,9
80,1
03
2,4
76,0
58,5
20
2,1
41,3
53,9
95
2,2
84,9
34,5
49
3,4
82,5
33,1
54
3,0
36,0
10,8
58
4,0
44,4
49,4
73
Gro
ss P
rofit
332
,724
,286
2
30,7
18,9
71
220
,372
,206
2
56,3
97,8
20
465
,475
,222
3
05,0
53,2
24
317
,446
,509
7
41,9
51,1
85
630
,701
,896
8
78,8
93,4
14
Profi
t Fr
om O
pera
tion
s 2
77,5
33,3
24
160
,014
,485
1
76,3
23,4
84
90,
731,
337
299
,500
,503
1
40,2
87,4
80
(208
,594
,160
) 4
74,9
71,5
89
377
,663
,501
4
98,8
62,1
01
Profi
t Bef
ore
Ass
ocia
te C
ompa
ny's
Sha
re o
f Pro
fit 1
74,6
94,1
15
25,
781,
080
108
,286
,675
4
7,55
2,97
5 1
45,3
65,2
14
(18,
066,
589)
(376
,172
,873
) 3
59,1
85,6
90
273
,134
,238
3
46,7
94,7
66
Profi
t A
fter
Tax
129
,237
,627
2
6,34
2,48
6 1
08,1
48,3
58
16,
116,
633
120
,333
,888
(2
3,18
1,43
3) (3
06,4
78,6
34)
250
,223
,630
1
91,0
13,3
13
263
,479
,044
As
at 3
1 M
arch
Ass
ets
Prop
erty
Pla
nt &
Equ
ipm
ent
433
,763
,317
4
85,3
87,0
38
494
,452
,431
5
14,7
46,9
76
764
,713
,420
1
,179
,081
,707
1
,206
,366
,843
1
,251
,329
,990
1
,223
,660
,989
1
,114
,052
,313
Oth
er N
on C
urre
nt A
sset
190
,025
,284
2
03,6
29,2
48
113
,020
,866
1
51,7
35,1
24
175
,862
,949
1
60,1
41,8
63
132
,512
,794
4
8,28
9,45
9 4
8,77
2,07
4 3
9,62
2,54
9
Cur
rent
Ass
ets
1,2
10,1
65,5
31
1,2
10,2
63,0
60
1,4
71,8
52,6
28
1,8
21,0
08,9
72
1,8
50,1
46,3
11
2,0
33,4
42,9
94
1,6
79,0
46,1
88
1,7
93,2
51,8
61
1,9
87,5
68,8
05
3,2
62,3
59,2
78
Tota
l Ass
et 1
,833
,954
,132
1
,899
,279
,346
2
,079
,325
,925
2
,487
,491
,072
2
,790
,722
,680
3
,372
,666
,564
3
,017
,925
,825
3
,092
,871
,310
3
,260
,001
,867
4
,416
,034
,139
Liab
iliti
es
Long
Ter
m D
ebt
21,
564,
397
80,
174,
171
69,
435,
262
40,
405,
866
64,
899,
854
223
,720
,387
1
85,6
01,5
77
188
,532
,384
1
42,2
63,0
90
71,
484,
208
Oth
er N
on C
urre
nt L
iabi
litie
s 4
9,57
8,91
7 5
5,60
4,00
3 5
7,95
4,75
2 6
0,21
0,00
1 6
7,13
9,54
2 1
70,4
03,7
54
106
,998
,021
1
62,5
80,8
67
217
,033
,415
2
03,8
49,2
55
Shor
t Te
rm D
ebt
35,
317,
723
15,
743,
986
45,
152,
092
35,
406,
691
78,
700,
864
7,7
66,5
97
128
,080
,471
3
5,39
3,56
6 7
2,10
4,38
7 9
8,05
6,15
7
Oth
er C
urre
nt L
ibili
ties
451
,937
,460
4
72,3
55,3
66
523
,233
,642
1
,051
,167
,433
1
,205
,822
,048
1
,230
,626
,382
1
,230
,159
,988
1
,245
,180
,730
1
,285
,901
,220
2
,365
,797
,117
Shar
ehol
ders
' Fun
ds
Shar
e C
apit
al 8
94,5
65,8
98
894
,565
,898
8
94,5
65,8
98
894
,565
,898
8
94,5
65,8
98
894
,565
,898
8
94,5
65,8
98
894
,565
,898
8
94,5
65,8
98
894
,565
,898
Rese
rves
380
,989
,737
3
80,8
35,9
22
488
,984
,280
4
23,8
15,7
16
450
,152
,746
7
61,9
24,9
58
461
,207
,379
5
55,8
12,1
47
644
,158
,268
7
84,3
07,9
37
Min
orit
y In
tere
st -
-
-
-
29
,451
,690
17,6
58,5
87 1
1,31
2,49
1 1
0,80
5,72
0 3
,975
,590
(2
,026
,433
)
Rat
ios
Tota
l Ass
ets/
Equi
ty 1
.44
1.4
9 1
.50
1.8
9 2
.03
2.0
1 2
.21
2.1
2 2
.11
2.6
3
Turn
over
/Ass
ets
0.8
1 0
.80
0.5
0.
600.
890.
630.
761.
130.
930.
92
Net
Mar
gin(
%)
8.7
0 1
.70
10.
40
1.0
8 4
.86
(1.0
8) (1
3.41
)7.
19%
6.2
9 6.
51%
Retu
rn o
n Eq
uity
(%)
10.
13
2.0
7 7
.82
1.2
2 8
.95
(0.7
7) (2
1.46
)18
.10%
12.
41
15.9
3%
Retu
rn o
n A
sset
s(%
) 7
.05
1.3
9 5
.20
0.6
5 4
.31
(0.7
2) (1
0.16
)8.
09%
5.8
6 5.
92%
Shar
e In
form
atio
n
Earn
ings
per
Sha
re0.
240.
050.
20.
030.
22 (0
.02)
(0.5
4) 0
.49
0.36
0.50
Pric
e Ea
rnin
gs R
atio
7.49
22.4
510
.93
180.
1014
.67
(104
.53)
(3.1
4) 8
.19
8.1
6 6
.23
Net
Ass
ets
Per
shar
e2.
372.
372.
572.
452.
503.
082.
52 2
.70
2.8
6 3
.12
Annual Report 2016 / 2017
115
Sierra Cables PLC
Quarterly PerformanceIncome Statement
2016 / 17
For the Three Months Ended,30th June
Rs.30th September
Rs.31st December
Rs.31st March
Rs.
Company
Revenue 728,704,242 1,011,033,700 1,002,545,208 982,698,624
Cost of Sales (561,268,154) (754,852,661) (788,117,067) (776,097,660)
Gross Profit 167,436,088 256,181,039 214,428,141 206,600,964
Other Income 725,170 4,334,654 18,329,721 3,512,980
Selling and Distribution Expenses (45,031,457) (62,535,860) (55,020,213) (50,898,098)
Administrative Expenses (21,192,492) (25,656,561) (21,691,204) (86,941,497)
Other Operating Expenses (16,000,000) (14,000,000) (14,000,000) (13,500,000)
Profit/(Loss) from Operations 85,937,309 158,323,272 142,046,445 58,774,349
Net Finance Costs (21,018,259) (28,872,572) (35,649,682) (38,059,757)
Profit/(Loss) Before Taxation 64,919,050 129,450,700 106,396,763 20,714,592
Income Tax Expense (10,000,000) (25,000,000) (25,000,000) (25,755,775)
Profit/(Loss) for the year 54,919,050 104,450,700 81,396,763 (5,041,183)
Statement of Financial Position
2016 / 17
As at,30th June
Rs.30th September
Rs.31st December
Rs.31st March
Rs.
Company
Assets 3,193,933,506 3,479,311,316 3,843,262,173 4,031,083,863
Liabilities 1,537,936,237 1,715,832,624 1,998,771,733 2,322,693,314
Net Assets 1,655,997,269 1,763,478,692 1,844,490,440 1,708,390,549
Stated Capital 894,565,898 894,565,898 894,565,898 894,565,898
Reserves 761,431,371 868,912,794 949,924,542 813,824,651
Stated Capital and Reserves 1,655,997,269 1,763,478,692 1,844,490,440 1,708,390,549
Annual Report 2016 / 2017
116
Sierra Cables PLC
Notice of MeetingSierra Cables PLCNotice of the 14th Annual General Meeting
NOTICE IS HEREBY GIVEN that the 14th Annual General Meeting of SIERRA CABLES PLC (the Company) will be held on
29th September 2017 at 10.00 a.m. at The Sri Lanka Foundation Institute, 100, Independence Square, Colombo 07.
Agenda
1. To receive and consider the Report of the Directors on the State of Affairs of the Company and the Statement of
Audited Accounts for the year ended 31st March 2017 and the Report of the Auditors thereon.
2. To re-elect Mr. W.A. P.Perera who retire by rotation in accordance with Article 91 of the Articles of Association of
the Company and being eligible, offer himself for re-election.
3. To re-elect Mr. J.H.P. Ratnayeke who retire by rotation in accordance with Article 91 of the Articles of Association
of the Company and being eligible, offer himself for re-election.
4. To re-elect Ms. G. S. M. Irugalbandara who retire by rotation in accordance with Article 91 of the Articles of
Association of the Company and being eligible, offer herself for re-election.
5. To re-appoint Messrs KPMG Ford, Rhodes, Thornton & Co., Chartered Accountants as Auditors of the Company
for the ensuing year and to authorize the Directors to determine their remuneration
BY ORDER OF THE BOARD OF DIRECTORS OF
SIERRA CABLES PLC
P.R. SECRETARIAL SERVICES (PRIVATE) LIMITED
Secretaries
At Colombo, this 11th August 2017
Note:
• A Member entitled to attend and vote at the meeting, is entitled to appoint a Proxy to attend and vote instead
of him/her.
• A Proxy need not be a Member of the Company.
• A Member wishing to vote by Proxy at the meeting may use the Form of Proxy form enclosed.
• Any member or Proxy holder attending the meeting is kindly requested to bring this report.
• The completed Form of Proxy should also be deposited at the Registrars of the Company, SSP Corporate
Services (Private) Limited,101, Inner Flower Road, Colombo 03 not less than forty eight (48) hours before the
time appointed for holding of the meeting.
• For security reasons, Members. Proxy holders are kindly advised to bring along with them their National Identity
Card or similar for of acceptance identity when attending the meeting.
Annual Report 2016 / 2017
117
Sierra Cables PLC
Form of ProxySierra cables plcI/We……………………………………………………………………………………………………………………………….of…
……………………………………………………………………………………being a Member/Member* of the above named
Company, hereby appoint (1)……………………………………………………….of………………………………………………
………………………………………………..failing him/her.
(2) Mr. W. A. P. Perera, or failing him (3) Mr. D. S. Panditha, or failing him
(4) Ms. G. S. M. Irugalbandara, or failing her (5) Mr. J. H. P. Ratnayeke, or failing him
(6) Mr. E.A.D.T.B. Perera, or failing him (7) Prof. A. K. W. Jayawardane, or failing him
(8) Eng. B. W. N. Rupasinghe, or failing him (9) Mr. M. N. Gunasekara, or failing him
(10) Ms. S. N. Lokuge or failing her
as my/our* Proxy to represent me/us* and vote and speak for me/us* on my/our* behalf at the 14th Annual General
Meeting of the Company to be held on 29th September 2017 at 10.00 a.m. at The Sri Lanka Foundation Institute, 100,
Independence Square, Colombo 07 and at ever poll which may be taken in consequence of the aforesaid meeting and at
any adjournment thereof.
I/We Indicate My/Our Vote On The Resolutions Below As Follows;
1. To receive and consider the Audited Financial Statements for the year ended 31st
March 2017 and the Report of the Auditors thereon.
2. To re-elect Mr. W.A.P.Perera who retire by rotation in accordance with Article 91
of the Articles of Association of the Company and being eligible, offer himself for
re-election.
3. To re-elect Mr.J.H.P.Ratnayeke who retire by rotation in accordance with Article 91
of the Articles of Association of the Company and being eligible, offer himself for
re-election.
4. To re-elect Ms. G. S. M. Irugalbandara who retire by rotation in accordance with
Article 91 of the Articles of Association of the Company and being eligible, offer
herself for re-election.
5. To re-appoint Messrs KPMG Ford, Rhodes, Thornton & Co., Chartered Accountants
as Auditors of the Company for the ensuing year and to authorize the Directors to
determine their remuneration
Signed this ……………day of…………………………..2017.
……………………………………
Signature of shareholder
AgainstFor
Annual Report 2016 / 2017
118
Sierra Cables PLC
Instructions For The Completion Of Proxy
1. Please perfect the form of Proxy after filling in legibly your full name and address and by
signing in the space provided and fill-in the date of signature.
2. Please return the completed form to the Company after deletion of one or other of the
alternate words indicated by asterisks in the body of the form.
3. The completed form of Proxy should be deposited at the Office of the Company
Secretaries at SSP Corporate Services (Private) Limited at No.101, Inner Flower Road,
Colombo 3 not less than 48 hours before the time appointed for the holding of the
meeting.
4. If the Proxy has been signed by an Attorney, the relative Power of Attorney should
accompany the completed Proxy for registration, if such Power of Attorney had not
been registered with the Company.
5. In the case of a Company/Corporation, the Proxy must be under its Common Seal which
should be affixed and attested in the manner prescribed by its Articles of Association/Act
of Incorporation.
Annual Report 2016 / 2017
119
Sierra Cables PLC
Corporate InformationName of the Company
Sierra Cables PLC
Company Re-registration No.
PQ 166(under Companies Act No.07 of 2007)
Registered Office
112, Havelock Road, Colombo 05
Company Secretaries
P.R. Secretarial Services (Private) Limited 59, Gregory’s
Road Colombe 07.
Tel : 0112671439,0112671441
Email : info@prsslk.com
Auditors
KPMG, (Chartered Accountants) 32 A, Sir Mohomed
Macan Marker Mawatha,
P.O. Box 186,Colombe 03.
Tel: 0115426426 Fax: 0112445872
E-mail: frt@kpmgJk
Legal Advisors
Paul Rat:hnayake Associates
59, Gregory’s Road Colombe 07.
Tel: 0112697893, 0112697894
Email: info@prlaw.lk
Bankers
Commercial Bank of Ceylon PLC Sampath Bank PLC
Bank of Ceylon
People’s Bank
Subsidiary Companies
Sierra Industries (Private) Limited Sierra Power (Private)
Umited Sierra Cables East Ahica Limited
Associate Companies
T & GLanka (Private) Limited
Tea Leaf Resorts (Private) Umited
Domicile and Legal Form
Sierra Cables PLC is a limited liability Company
incorporated and domiciled in Sri Lanka.
The Registered office of the Company is at 112,Havelok
Road, Colombo 05 and principle place of business is
located at 39/1A, Galvarusa Road, Korathota, kaduwela.
Tel : 0114412000-4
Fax : 0112770291, 0114412573
E-mail : info@sierracables.com
Web : www.sierracables.com
Issued Ordinary shares of the Company is stated as listed
on the Colombo Sock Exchange since 22”6 November
2005.
Principal Activities and Nature of Operations
The principal activity of the Company is manufacturing
and sales of wires and cables.
Parent Enterprises and Ultimate Parent Enterprise
In the Directors opinion, the company’s ultimate parent
undertaking and controlling party is Sierra Holdings
(Private) Limited which is incorporated in Sri Lanka.
Number of Employees
The number of employees of the Group at the end of the
year was 282 (2014/15 - 306).
Annual Report 2016 / 2017
120
Sierra Cables PLC
Recommended