New Doc 1 - Colombo Stock Exchange1. REPORTING ENTITY 1.1. Domicile and Legal Form Sierra Cables PLC is a public limited liability Company incorporated and domiciled in Sri Lanka

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SIERRA CABLES PLCCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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

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

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

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

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

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

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

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

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

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

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

Share of Loss of associate companies 15 (96,348) (25,139) - -

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

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

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

Other Comprehensive Income/(Expense)

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

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

Deferred Tax Impact on Revaluation surplus on Property Plant and Equipment - (97,136,079) - (97,136,079) Actuarial Gain/(Loss) on Defined Benefit Obligation Net of Tax (2,312,453) 1,380,312 (2,114,672) 1,380,312

Other comprehensive Income/(Expense) for the Year, net of income tax (9,585,041) 324,465,752 (9,387,260) 324,465,752

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

Profit/(Loss) Attributable to :Owners of the Company (290,881,814) (12,693,539) (270,066,205) 15,146,547 Non - Controlling Interests (15,596,820) (11,868,206) - -

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

Total Comprehensive Income/(Expense) attributable to :Owners of the Company (300,400,357) 311,772,213 (279,453,465) 339,612,299 Non - Controlling Interests (15,663,318) (11,868,206) - -

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

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

Figures in brackets indicate deductions.

Group Company

The Financial Statement are to be read in conjunction with the related notes which form a part of these Financial Statements set out on pages 8 to 44

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SIERRA CABLES PLCSTATEMENT OF CHANGES IN EQUITY

For the Year ended 31st March 2014Stated Revaluation Fair Value Retained Total

Company Capital Reserve Reserve EarningsRs. Rs. Rs. Rs. Rs.

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

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

Other Comprehensive Income/(Expense)Net change in fair value of available for sale investments - - (9,853,492) - (9,853,492) Revaluation surplus on Property, Plant and Equipment - 430,075,011 - - 430,075,011 Deferred Tax on Revaluation Surplus of Property, Plant and Equipment - (97,136,079) - - (97,136,079) Actuarial Gain on Defined Benefit Obligation Net of tax 1,380,312 1,380,312 Total Comprehensive Income/(Expense) for the year - 332,938,932 (9,853,492) 16,526,859 339,612,299

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

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

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

Other Comprehensive Income/(Expense)Fair value loss on available for sale investments - - (7,272,588) - (7,272,588) Actuarial Loss on Defined Benefit Obligation - - - (2,114,672) (2,114,672)

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

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


The Financial Statements are to be read in conjunction with the related notes which form a part of these Financial Statements set out on pages 8 to 44.

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SIERRA CABLES PLCCONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the Year ended 31st March 2014

Non Controlling TotalGroup Stated Revaluation Fair Value Retained Total Interest Equity

Capital Reserve Reserve EarningsRs. Rs. Rs. Rs. Rs. Rs. Rs.

Balance as at 1st April 2012 894,565,898 - 104,938,895 345,213,850 1,344,718,643 29,451,690 1,374,170,333 p , , , , , , , , , , ,

Loss for the year - - - (12,693,539) (12,693,539) (11,868,206) (24,561,745)

Other Comprehensive IncomeNet change in fair value of available for sale investments - - (9,853,492) - (9,853,492) - (9,853,492) Revaluation Surplus on Property, Plant and Equipment - 430,075,011 - - 430,075,011 - 430,075,011 Deferred Tax on Revaluation surplus of Property, Plant and Equipment - (97,136,079) - - (97,136,079) - (97,136,079) Actuarial Gain on Defined Benefit Obligation Net of tax - - - 1,380,312 1,380,312 - 1,380,312 Total Comprehensive Income/(Expense) for the year - 332,938,932 (9,853,492) (11,313,227) 311,772,213 (11,868,206) 299,904,007

Adjustment due to changes in effective holdings - - - - - 75,103 75,103

Balance as at 31st March 2013 894,565,898 332,938,932 95,085,403 333,900,623 1,656,490,856 17,658,587 1,674,149,443

Balance as at 1st April 2013 894,565,898 332,938,932 95,085,403 333,900,623 1,656,490,856 17,658,587 1,674,149,443

Loss for the year - - - (290,881,814) (290,881,814) (15,596,820) (306,478,634)

Other Comprehensive Income/(Expense)Fair value loss on available for sale investments - - (7,272,588) - (7,272,588) - (7,272,588) Actuarial Loss on Defined Benefit Obligation - - - (2,312,453) (2,312,453) - (2,312,453)

Total Comprehensive income for the year - - (7,272,588) (293,194,267) (300,466,855) (15,596,820) (316,063,675)

Adjustment due to changes in effective holdings - - - (250,724) (250,724) 9,250,724 8,999,999

Balance as at 31st March 2014 894,565,898 332,938,932 87,812,815 40,455,632 1,355,773,277 11,312,491 1,367,085,768


The Financial Statements are to be read in conjunction with the related notes which form a part of these Financial Statements set out on pages 8 to 44.

Attributable to owners of the Company

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SIERRA CABLES PLCCASH FLOW STATEMENT

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

Cash Flow from Operating ActivitiesProfit/(Loss) before Share of Loss of Associate (376,172,873) (19,980,499) (353,607,420) 16,887,213

AdjustmentsDepreciation 77,032,206 79,806,262 65,666,707 72,818,926 Amortization of Intangible asset 2,103,351 2,070,440 2,103,351 2,070,440 Impairment of Assets Held for sale - 2,515,236 - 2,515,236 Depreciation of investment property 1,163,580 1,642,700 1,163,580 1,642,700 Provision for Impairment of Other Receivables 15,000,000 - 15,000,000 - Provision for Impairment of Trade Receivables 21,636,318 (2,028,726) 21,636,318 (2,028,726) Provision for Impairment of Subsidiaries - - 17,000,000 - Profit on sale of property, plant and equipment (885,276) - (885,276) - Loss on Disposal of Investment Property 263,421 - 263,421 - Profit on Disposal of Investment Available for sale (1,519,434) (1,607,969) (1,519,434) (1,607,969) Write off of Work in Progress 127,482,528 - 127,482,528 - Write off of Finished Goods 93,394,610 - 93,394,610 - Impairment of Goodwill 329,300 - - - Provision for Retirement Benefit Obligation 4,853,501 3,453,854 4,599,133 3,453,854 Interest Expenses 176,051,617 187,760,457 145,929,108 161,984,579 Interest Income (1,166,742) (6,657,304) (1,166,742) (6,657,304) Dividend Income (4,868,130) (4,529,871) (4,868,130) (4,529,871) Operating Profit Before Working Capital Changes 134,697,977 242,444,579 132,191,754 246,549,078

(Increase)/Decrease in Inventories 194,010,728 (83,301,377) 206,450,135 (48,687,652) (Increase)/Decrease in Trade and Other Receivables (116,255,625) (63,692,303) (29,677,341) 3,414,173 (Increase)/Decrease in Dues from Related Parties 2,829,267 9,990,881 (142,254,239) 27,873,037 Increase/(Decrease) in Trade and Other Payables 22,544,860 (192,058,267) (2,839,939) (213,761,098) Increase/(Decrease) in Dues to Related Parties - - - (38,512,994) Cash Generated from/(used In) Operations 237,827,208 (86,616,487) 163,870,370 (23,125,456)

Interest Paid (174,577,616) (187,760,457) (144,455,108) (159,443,328) Income Tax/ Esc Paid (19,145) (8,531,862) (19,145) (8,531,838) Gratuity Paid (781,100) (501,525) (781,100) (501,525) Net Cash Flows Generated from /(Used in) Operating Activities

62,449,347 (283,410,331) 18,615,017 (191,602,146)

Cash Flows from Investing ActivitiesInterest Income 1,166,742 6,657,304 1,166,742 6,657,304 Dividend Received 4,868,130 4,529,871 4,868,130 4,529,871 Acquisition of Property, Plant and Equipment (104,997,639) (72,818,240) (2,800,227) (34,292,909) Acquisition of Intangible Assets (140,516) (480,000) (140,516) (480,000) Proceeds from Disposal of Property, Plant and Equipment 1,565,572 1,334,519 1,565,573 1,334,519 Proceeds from Disposal of Investment Property 15,000,000 - 15,000,000 - (Investment in)/ Maturity Proceeds from Treasury Bills 53,134,656 (14,308,278) 53,134,656 (14,308,278) Proceeds from Disposal of Available of Sale Investments 3,060,431 5,089,355 3,060,431 5,089,355 Investment in Subsidiary Net of Cash Acquired - 2,817,124 (10,000,000) (880,000) Investment in Available for sale Investment - (656,097) - (656,097) Net Cash From/(Used) in Investing Activities (26,342,624) (67,834,441) 65,854,789 (33,006,234)

Cash Flows from Financing ActivitiesBorrowing during the period 1,800,105,539 1,928,554,099 1,667,543,835 1,821,280,408 Repayment of Borrowings (1,897,855,076) (1,566,578,669) (1,795,418,088) (1,565,277,108) Repayment of Lease (7,330,174) (6,153,940) (7,330,174) (7,537,608) Proceeds from Share Issue to Non Controlling Interests 9,000,000 - - - Net Cash Flows From/(Used) in Financing Activities (96,079,711) 355,821,490 (135,204,427) 248,465,692

Net Increase/ (Decrease) in Cash and Cash Equivalents (59,972,988) 4,576,718 (50,734,621) 23,857,312 Cash and Cash Equivalents at the beginning of the Period (57,686,185) (62,262,903) 489,731 (23,367,581) Cash and Cash Equivalents at the End of the Period (Note 21) (117,659,173) (57,686,185) (50,244,891) 489,731

Analysis of Cash and Cash Equivalents at the end of the year;Cash in Hand and at Bank 10,421,297 16,080,412 10,257,327 15,776,180 Bank Overdraft (128,080,471) (73,766,597) (60,502,218) (15,286,449)

(117,659,174) (57,686,185) (50,244,891) 489,731 Figures in brackets indicate deductions.

CompanyGroup

The Financial Statements are to be read in conjunction with the related notes which form a part of these Financial Statements set out on pages 8 to44.

SIERRA CABLES PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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1. REPORTING ENTITY

1.1. Domicile and Legal Form

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

The consolidated financial statements of the Company as at and for the year ended 31st March

2014 comprise the Company and its Subsidiaries (together referred as the “Group” individually as Group entities) and the group interest in associates.

Sierra Cables being a part of a large conglomerate is also a Group on its own. The principal

activity of the Company is manufacture and sale of wires and cables. The two subsidiaries, Sierra Power (Private) Ltd. and Sierra Industries (Private) Ltd. are engaged in the power generation to the National Grid and manufacture of UPVC pipes and fittings respectively. The two associate companies T & G Lanka (Private) Ltd. and Tea Leaf Resort (Private) Ltd. are diversified to manufacturing of Patch Cables and to leisure sector. All the companies in the Group have a common financial year, which ends on 31st March.

2. BASIS OF PREPARATION

2.1. Statement of Compliance The consolidated financial statements have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRSs/LKASs) promulgated by the Institute of Chartered Accountants of Sri Lanka (ICASL) and comply with the requirement of Companies Act No.07 of 2007. The consolidated financial statements were authorised for issue by the Board of Directors on 9th July 2014.

2.2. Basis of Measurement

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


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2. BASIS OF PREPARATION (CONTINUED)

2.3. Functional and Presentation Currency

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

2.4. Use of Estimates and Judgments

The preparation of Financial Statements in conformity with Sri Lanka Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about critical estimates and judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is provided in the following notes.

• Identification, measurement and assessment of impairment • Recognition and measurement of financial instruments • Retirement Benefit Obligations

2.5. Change in Accounting Policy

Defined Benefit Plans The Company adopted LKAS 19 – ‘Employee Benefits’ (Revised 2013) which became effective from 1st January 2013 as part of its mandatory application and changed its basis for determining the income or expense related to defined benefit plan. As a result of the change, the Company now recognizes all the re measurements of the net defined benefit liability in other comprehensive income. Re measurements of the net defined benefit liability comprise of Acturial gain or loss.

Previously, the Company recognized actuarial gain or losses in profit or loss. Impact of change in accounting policy The change in accounting policy has been applied retrospectively.


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2. BASIS OF PREPARATION (CONTINUED)

2.5. Change in Accounting Policy (Continued) The following table summarizes the financial effects on the financial statements on implementation of the new accounting policy:

Description Group Company 2013 Rs.

2013 Rs.

Consolidated Statement of Comprehensive Income Comprehensive Income 1,913,910 1,913,910 Other Comprehensive Income (1,913,910) (1,913,910)

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

3. SIGINIFICANT 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.

(a) 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.


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3. SIGINIFICANT ACCOUNTING POLICIES (CONTINUED)

3.1. Basis of Consolidation (Continued)

(b) 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.

(c) 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.

(d) 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.

(a) Transactions Eliminated on Consolidation

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

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


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3.2. Foreign currency transactions (Continued)

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

3.3. Assets and bases of their valuation

3.3.1 Property Plant and Equipment

(a) Recognition and Measurement All items of property, plant and equipment are initially recorded at cost. Where items of property, plant and equipment are subsequently revalued, the entire class of such assets is revalued. Revaluations are made with sufficient regularity to ensure that their carrying amounts do not differ materially from their fair values at the reporting date. Subsequent to the initial recognition of the asset at cost, the revalued property, plant and equipment are carried at revalued amounts less accumulated depreciation thereon and accumulated impairment losses. The Group applies revaluation model to land, building and plant and meachinery 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.


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3.3. Assets and bases of their valuation (Continued)

3.3.1 Property Plant and Equipment (Continued)

(c) Derecognition

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

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

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

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.

Asset Catogary Usefull Life (Years) Depreciation Rate (%)

Building 20-25 Years 4%-5% Plant and Meachinary 10-20 5%-10% Factory Equipment 5 20% Furniture Fittings 5 20% Motor Vehicles 5 20% Offices and Computer Equipment 5 20%


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3.3. Assets and bases of their valuation (Continued)

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.

(a) Computer Software All computer software cost incurred, which are not an integral part of the related hardware, which can be clearly identified, reliably measured and its probable that they will lead to future economic benefits, are included in the Statement of Financial Position under the category of intangible assets. Subsequent Expenditure Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred. Amortization Intangible assets are amortized on a straight-line basis in profit or loss over their estimated useful lives from the date that they are available for use. The estimated useful lives for the current and comparative years are as follows: Asset Category Useful Life (Years) Depreciation Rate (%) Computer Software 05 20%

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


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3.3 Assets and bases of their valuation (Continued)

3.3.3 Leased Assets Leases in terms of which the Group assumes substantially all of the risks and rewards of ownership are classified as finance leases On initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and are not recognized in the Group's statement of financial position.

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

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

3.3.5 Inventories

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

Finished Goods and Work-in-Progress - At actual cost, on first-in-first-out basis for work in progress - At standard cost for finished goods

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


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3.3.6 Impairment of non financial assets (Continued) The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to CGU (if any) and then to reduce the carrying amounts of other assets in the CGU (group of CGUs) on pro rata basis. An impairment loss in respect of goodwill is not reversed. For other assets , an impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined , net of depreciation or amortisation, if no impairment loss had been recognised.

3.3.7 Financial Instruments (i) Non derivative financial assets The group initially recognizes loans and receivables on the date that they are originated. All other financial assets are recognized initially on the trade date at which the group becomes a party to the contractual provisions of the instrument. A financial asset is measured initially at fair value plus, in the case of assets not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue. The group derecognises a financial asset when the contractual rights to the cash flows from the asset expire; it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the group is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to set off the amounts and it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The group classifies non derivative financial assets into the following categories; • Loans and receivables • 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.


17



3.3.6 Financial Instruments (Continued)

(i) Non derivative financial assets (Continued)

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

c. Available for sale financial assets Available-for-sale financial assets are financial assets that are designated as available for sale and are not classified in any other categories. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses on available for sale equity instruments are recognised in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in other comprehensive incomes transferred to profit or loss.

Available for sales financial assets comprise of investment in equity shares and treasury bills. (ii) Non derivative financial liabilities The Group recognizes financial liabilities initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group classifies financial liabilities into other financial liabilities category. Such finance liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. The Group derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired. Other financial liabilities comprise trade payables, other liabilities and bank borrowings. (iii) Share Capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.


18


3.4 Assets and bases of their valuation (Continued) 3.3.7 Financial Instruments (Continued)

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

(v) Fair value measurement Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction on the measurement date. The fair value of financial instruments that are traded in an active market at each reporting date is determined by reference to quoted market prices or dealer price quotations, without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models. (vi) Impairment The group assesses at each reporting date whether there is any objective evidence that financial assets or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset that can be estimated reliably

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


19


3.3 Assets and bases of their valuation (Continued) 3.3.7 Financial Instruments (Continued)

(i) Impairment (Continued)

a. Impairment losses on available for sale financial assets Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss. Changes in cumulative impairment losses attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period,the fair value of an impaired available-far-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-far-sale equity security is recognised in other comprehensive income

3.3.7 Defined Benefit Plan A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The retirement benefit obligation of the group is based on the actuarial valuation using Projected Unit Credit (PUC) methods as recommended by Sri Lanka Accounting Standard (LKAS 19) Employee Benefits. The calculation is performed by independent Actuary using the projected unit credit method. The assumptions based on which the results of the actuarial valuation was determined, are included in Note 23.2 to the Financial Statements. The Group recognizes all actuarial gains and losses arising from the defined benefits plans immediately in the other comprehensive income. The liability is disclosed under Non-current liabilities in the Stament of Financial Position and not externally funded. However, as per the Payment of Gratuity Act No. 12 of 1983 the liability to an employee arises only on completion of 5 years of continued service. (i) Defined Contribution Plans – Employees’ Provident Fund and Employee Trust Fund All employees who are eligible for Employees’ Provident Fund Contributions and Employees’ Trust Fund Contributions are covered by relevant contributions funds in line with the relevant statutes. Employer’s contributions to the defined contribution plans are recognized as an expense in profit or loss when incurred.


20


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

3.4 Statement of Comprehensive Income

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

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

(ii) Dividend Income Dividend income recognized when the right to receive the dividend is established. (iii) Interest Income Interest income is recognized on an accrual basis unless collection is in doubt. (iv) Gains and losses Net gains and losses of a revenue nature arising from the disposal of property, plant and equipment and other non-current assets, including investments, are accounted for in the statement of comprehensive income, after deducting from the proceeds on disposal, the carrying amount of such assets and the related selling expenses.

(v) Other income

Other income is recognized on an accrual basis


21

3. SIGINIFICANT ACCOUNTING POLICIES (CONTINUED) 3.4 Statement of Comprehensive Income (Continued)

(b) Expenditure Recognition (i) Operating Expenses

All expenses incurred in day to day operations of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to the statement of comprehensive income in arriving at the profit for the year. Provision has also been made for impairment of financial assets, slow moving inventories, all known liabilities and depreciation on property, plant and equipment. (ii) Borrowing Costs Borrowing costs directly attributable to acquisition, construction or production of assets that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that Group incurs in connection with the borrowing of funds.

(iii) Net Finance Income / (Expenses) Finance income comprises interest income on funds invested. Interest income is recognized as it accrues in profit or loss, using the effective interest method. Finance costs comprise interest expense on borrowings that are not directly attributable to the acquisition, construction or productions of a qualifying asset recognised using the effective interest method.

(c) Taxation

(i) Current Taxes Current Income tax liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Commissioner General of Inland Revenue. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. The provision for income tax is based on the elements of income and expenditures reported in the Financial Statements and computed in accordance with the provisions of the Inland Revenue Act. (ii) Deferred Taxation Deferred taxation is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.


22


(d) Taxation (Continued)

(ii) Deferred Taxation (Continued) 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.

(e) 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.

(f) 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’.

(g) 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.

(h) Events occurring after the Reporting Period

Events after the reporting period are those events favorable and un favorable, 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.


23


(i) Assets Held for Sale

Non-current assets that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale the assets are re measured in accordance with the Group’s accounting policies. Thereafter the assets are measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification and subsequent gains and losses on remeasurement are recognized in profit or loss. Gains are not recognized in excess of any cumulative impairment loss. Once classified as held for sale, property plant and equipment are no longer amortized or depreciated

4. EFFECT OF ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE New Accounting Standards Issued but not Effective as at Reporting Date The Institute of Chartered Accountants of Sri Lanka has issued the following new Sri Lanka Accounting Standards which will become applicable for financial periods beginning on or after 1st January 2014/ 2015. Accordingly, these Standards have not been applied in preparing these financial statements.

Sri Lanka Accounting Standards - SLFRS 10 “Consolidated financial statements” The objective of this SLFRS is to establish principles for the presentation and preparation of consolidated financial statements when a company controls one or more other entities. An investor is expected to control an investee if and only if the investor has all the following: • Power over the investee; • Exposure, or rights, to variable returns from its involvement with the investee; and • The ability to use its power over the investee to affect the amount of the investor’s returns This Standard will require the Group to review the group structure in the context of the new Standard and its requirements. Accordingly adoption of this standard is expected to have an impact on the Group structure, and consolidated reporting. SLFRS 10 will become effective from 1st April 2014 for the Group with early adoption permitted. This SLFRS will supersede the requirements relating to consolidated financial statements in LKAS 27”Consoliadated and Separate Financial Statements.


24

4. EFFECT OF ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE (CONTINUED)

Sri Lanka Accounting Standard - SLFRS 13, “Fair Value Measurement” This SLFRS defines fair value, sets out in a single SLFRS a framework for measuring fair value; and requires disclosures about fair value measurements. This SLFRS will become effective for the Group from 1st April 2014. Earlier application is permitted. This SLFRS shall be applied prospectively as of the beginning of the annual period in which it is initially applied. The disclosure requirements of this SLFRS need not be applied in comparative information provided for periods before initial application of this SLFRS.

Sri Lanka Accounting Standard – SLFRS 9 “Financial Instruments” The objective of this SLFRS is to establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an company’s future cash flows. A company shall apply this SLFRS to all items within the scope of LKAS 39 Financial Instruments: Recognition and Measurement. This SLFRS will become effective for the Group from 1st April 2015. Earlier application is permitted for the financial period beginning on or after 1st January, 2013.

25

SIERRA CABLES PLCNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

For the Year ended 31st March

5 Revenue 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Local Sales 2,269,758,619 2,134,739,158 2,122,396,073 2,048,703,501 Export Sales 15,175,930 6,614,837 15,175,930 6,614,837

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

6 Other Income 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Profit on disposal of Available for Sale Investments 1,519,434 1,607,969 1,519,434 1,607,969 Profit on disposal of Property, Plant and equipment 885,276 - 885,276 - Dividend Income 4,868,130 4,529,871 4,868,130 4,529,871 Scrap Sales 32,432,794 - 32,432,794 -

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

7 Profit/(Loss) from Operations 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Directors' Fees and emoluments* 39,529,500 11,260,000 38,329,500 10,560,000 Auditors' remuneration - Audit 775,000 684,000 700,000 630,000 - Audit Related Services 327,794 383,853 327,794 383,853 Depreciation and Amortization 80,299,137 83,519,402 68,933,638 76,532,066 Write off of Work in progress (Note 7.2) 127,482,528 - 127,482,528 - Write off of Finished Goods (Note 7.3) 93,394,610 - 93,394,610 - Provison for impairment of subsidiaries - - 17,000,000 - Provision for impairment of other receivables 15,000,000 - 15,000,000 - Provision for Impairment of Trade Receivables 21,636,318 - 21,636,318 - Loss on disposal of Investment Property 263,421 - 263,421 - Bad debt written off 1,608,479 6,601,488 1,608,479 6,601,488 Personnel Costs Salaries, wages and related costs 105,587,015 96,363,267 99,217,061 90,025,816 Defined contribution plans 11,766,725 10,786,800 11,288,197 10,319,431 Defined benefit Plan (Note 23) 4,853,501 3,453,854 4,599,133 3,453,854

7.1 Unrecorded Revenue, Expenses and Assets in the General Ledger

Rs.IncomeLocal Sales 80,994,023 Scrap Sales 32,403,794 Total 113,397,817

Expenses Selling and distribution Expenses 14,970,229 Administration Expenses 47,404,231 Other Operating Expenses 5,000,486

67,374,946

Group Company

Group Company

Group Company

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

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

*The Directors Fees and emoluments for the year ended 31st March 2014 include the directors' fees and emoluments paid but notaccounted for during the previous periods as explained in Note 7.1 to the financial statements. These have now been recognized inthe financial statements for the year ended 31st March 2014.

26



7.1 Unrecorded Revenue, Expenses and Assets in the General Ledger (Continued)7 Profit/(Loss) from Operations (Continued)

Assets

Trade and other receivables 3,810,964 Cash in hand and at bank 2,146,743

5,957,707

Selling and distribution 10,353,837 Administration Expenses 29,711,327

40,065,164

Total 113,397,817

7.2 Write off of Work in Progress

7.3

8 Net Finance Costs2014 2013 2014 2013Rs. Rs. Rs. Rs.

8.1 Finance IncomeInterest Income 1,166,742 6,657,304 1,166,742 6,657,304 Net Exchange Gain 7,306,162 22,749,084 7,514,218 22,395,193

8,472,904 29,406,388 8,680,960 29,052,497 8.2 Finance Costs

Interest on - Overdraft 17,307,132 15,493,496 6,859,798 6,371,973 - Lease 1,474,000 2,541,272 1,474,000 2,541,272 - Import demand loans 123,437,706 141,777,564 116,652,817 136,760,055 - Bank Loans 33,832,779 27,948,125 20,942,493 16,311,279

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

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

9 Income Tax expense 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Income Tax for the Year (Note 9.1) - - - - Deferred Tax charge / (Reversal) for the year (Note 24) 69,790,587 4,556,107 (83,541,215) 1,740,666

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

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

Profit/(Loss) before Tax (376,269,221) (20,005,638) (353,607,420) 16,887,213 Aggregate disallowed Income (8,439,582) (10,502,736) (8,439,582) (10,502,736) Aggregate disallowable Expenses 177,676,721 96,652,956 164,548,359 89,416,264 Aggregate allowable expenses (166,289,326) (162,598,807) (121,122,138) (126,252,442) Taxable Loss (373,321,408) (96,454,225) (318,620,781) (30,451,701) Income from other sources 1,191,877 7,155,130 1,191,877 7,155,130 Total Statutory Income 1,191,877 7,155,130 1,191,877 7,155,130 Tax loss claimed (417,157) (2,504,296) (417,157) (2,504,296) Qualifying Payments (774,720) (4,650,835) (774,720) (4,650,835) Taxable Income / (Loss) - - - - Tax on Exports @ 12% ( 2013 - 12%) - - - - Tax on balance income @ 28% - - - -

- - - -

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

CompanyGroup

Group Company

Reinstatement of the effect of understated expenses in theGeneral Ledger

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

Write off of Finished Goods

27



9 Income Tax expense (Continued)

9.3 Accumulated Tax Losses 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Balance as at 1st April 27,946,811 - 27,946,811 - Adjustments 3,700,069 - 3,700,069 - Tax loss for the year 318,620,781 30,451,107 318,620,781 30,451,107 Tax loss set off during the year (417,157) (2,504,296) (417,157) (2,504,296)Balance as at 31st March 349,850,504 27,946,811 349,850,504 27,946,811

Sierra Cables PLC

Sierra Industries (Private) Limited

Sierra Power (Private) Limited

10 Basic Earning/(Loss) per Share

For the Year ended 31st March2014 2013 2014 2013

Profits/(Loss) attributable to ordinary shareholders (Rs.) (290,881,814) (12,693,539) (270,066,205) 15,146,547 Weighted average number of ordinary shares 537,512,430 537,512,430 537,512,430 537,512,430 Basic Earnings/(Loss) per share (Rs.) (0.54) (0.02) (0.50) 0.03

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

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

Group Company

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

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

Group Company

28

SIERRA CABLES PLCNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)As at 31st March 2014

11 Property, Plant and EquipmentLand Buildings Plant and Motor Leased Furniture Factory Office & Capital Total Total

Machinery Vehicle Motor and Fittings Equipment Computer Work in 2014 2013Vehicle Equipment Progress

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.11.1 Company

Cost / Revalued Amount

Balance as at 1st April 98,977,501 311,028,399 542,232,534 26,791,740 21,779,603 3,527,839 29,710,983 16,513,460 511,344 1,051,073,403 1,029,028,711 Additions during the Year - - 466,089 - - 119,004 103,054 1,020,715 1,091,365 2,800,227 34,292,909 Transfers during the year - 1,131,712 - - - - - - (1,131,712) - Disposals during the Year - - - (1,583,584) (1,708,473) - - - - (3,292,057) (2,167,208) Transfers to subsidiary - - - - - - - - - - (44,617,000) Offset of Depreciation on Revalued Assets - - - - - - - - - - (301,743,210) Reclassification to Asset Held for Sale - - - - - - - - - - (93,795,810) Revaluation during the Year - - - - - - - - - - 430,075,011 Balance as at 31st March 98,977,501 312,160,111 542,698,623 25,208,156 20,071,130 3,646,843 29,814,037 17,534,175 470,997 1,050,581,573 1,051,073,403

Depreciation

Balance as at 1st April - 7,643,003 19,799,324 22,591,162 13,140,666 2,190,297 20,825,047 10,775,635 - 96,965,134 397,002,681 Charge for the year - 15,572,969 39,647,144 2,394,957 2,460,265 446,387 3,195,153 1,949,832 - 65,666,707 72,818,926 On Disposal - - - (1,102,608) (1,509,152) - - - - (2,611,760) (832,689) Reclassification to Asset Held for Sale - - - - - - - - - - (70,280,574) Offset of Depreciation on Revalued Assets - - - - - - - - - - (301,743,210) Balance as at 31st March - 23,215,972 59,446,468 23,883,511 14,091,779 2,636,684 24,020,200 12,725,467 - 160,020,081 96,965,134

Net Book Value

Balance as at 31st March 98,977,501 303,385,396 522,433,210 4,200,578 8,638,937 1,337,542 8,885,936 5,737,825 511,344 954,108,269

Balance as at 31st March 98,977,501 288,944,139 483,252,155 1,324,645 5,979,351 1,010,159 5,793,837 4,808,708 470,997 890,561,492

11.2 Group - Cost / Revaluation 23,304,351

Balance as at 1st April 145,294,799 311,812,855 642,427,647 33,089,936 21,779,603 4,070,870 32,514,036 18,870,758 80,753,036 1,290,613,540 1,169,284,159 Additions during the Year - - - - - 131,470 103,054 1,152,022 103,611,093 104,997,639 111,587,158 Additions due to acquisition of subsidiary 21,997,440 Transfers during the year - 49,046,881 23,304,351 - - - - - (72,351,232) - - Disposals during the Year - - - (1,583,584) (1,708,473) - - - - (3,292,057) (2,174,208) Transfers to subsidiary - - - - - - - - - - (44,617,000) Offset of Depreciation on Revalued Assets - - - - - - - - - - (301,743,210) Reclassification to Asset Held for Sale - - - - - - - - - - (93,795,810) Revaluation during the Year - - - - - - - - - - 430,075,011 Balance as at 31st March 145,294,799 360,859,736 665,731,998 31,506,352 20,071,130 4,202,340 32,617,090 20,022,780 112,012,897 1,392,319,122 1,290,613,540

Depreciation

Balance as at 1st April - 7,652,809 24,958,345 27,999,252 13,140,656 2,558,637 22,473,281 12,748,853 - 111,531,833 404,570,712

Additions due to acquisition of subsidiary - - - - - - - - - - 11,332 Charge for the year - 16,209,716 48,021,004 2,590,721 2,460,265 488,502 5,207,450 2,054,548 - 77,032,206 79,806,262 On Disposal - - - (1,102,608) (1,509,152) - - - - (2,611,760) (832,689) Reclassification to Asset Held for Sale - - - - - - - - - - (70,280,574) Offset of Depreciation on Revalued Assets - - - - - - - - - - (301,743,210) Balance as at 31st March - 23,862,525 72,979,349 29,487,365 14,091,769 3,047,139 27,680,731 14,803,401 - 185,952,279 111,531,833 Net Book Value Balance as at 31st March 2013 145,294,799 304,160,046 617,469,302 5,090,684 8,638,947 1,512,233 10,040,755 6,121,905 80,753,036 1,179,081,707 Balance as at 31st March 2014 145,294,799 336,997,211 592,752,649 2,018,987 5,979,361 1,155,201 4,936,359 5,219,379 112,012,897 1,206,366,843

29


As at 31st March 2014

11 Property, Plant and Equipment ( Continued)

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

Property Location Method of ValuationEffective date of

valuation Value Land Extent

Carrying Value of Revalued Assets as at

31st March 2014 if carried at Historical

Cost Rs.

Carrying Value of Revalued Assets as at 31st March 2014

Rs.

Land, buildings, Plant andmachinery at Sierra Cables PLCGalwarusa Road, Korathota(within the limits of kaduwelaPradeshiya Sabha)

Market Approach 31st March 2013Mr. K. Arthur Perera A.M.I.V.(Sri Lanka) Value & Consultant

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

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

11.4 Carrying Value of Property, Plant and Equipment

At cost 132,992,359 112,157,560 At valuation 1,073,374,484 1,066,924,147

As at 31st March 2014 Rs.

As at 31st March 2013 Rs.

30


As at 31st March

12 Intangible Assets 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Cost Balance as at 1st April 10,498,876 10,018,876 10,498,876 10,018,876 Addition during the year 140,516 480,000 140,516 480,000 Balance as at 31st March 10,639,392 10,498,876 10,639,392 10,498,876

Amortization ChargeBalance as at 1st April 6,448,316 4,377,876 6,448,316 4,377,876 Charge for the year 2,103,351 2,070,440 2,103,351 2,070,440 Balance as at 31st March 8,551,667 6,448,316 8,551,667 6,448,316

Written Down Value as at 31st March 2,087,725 4,050,560 2,087,725 4,050,560 Intangible assets represents the cost of computer software acquired by the company.

13 Investment Property 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Balance as at 1st April 32,854,000 32,854,000 32,854,000 32,854,000 Disposals during the Year (16,427,000) - (16,427,000) - Balance as at 31st March 16,427,000 32,854,000 16,427,000 32,854,000

DepreciationBalance as at 1st April 1,642,700 - 1,642,700 - Charge for the Year 1,163,580 1,642,700 1,163,580 1,642,700 Disposals during the Year (1,163,579) (1,163,579) Balance as at 31st March 1,642,701 1,642,700 1,642,701 1,642,700

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

14 Investments in Subsidiaries 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Sierra Power (Private) Limited - - 86,680,010 880,010 Sierra Industries(Private) Limited - - 91,000,010 70,000,010

177,680,020 70,880,020 Provision for Impairment (Note 14.1) - - (17,000,000) -

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

14.1 Provision for ImpairmentSierra Industries(Private) Limited - - 15,000,000 - Sierra Power(Private) Limited - - 2,000,000 -

- - 17,000,000 -

14.2 Goodwill on AcquisitionBalance as at 31st April 329,300 329,300 - - Impairment during the year (329,300) - - - Balance as at 31st March - 329,300 - -

15 Investments in Associates 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Tea Leaf Resort Holdings (Private) Limited ( Note 15.1) - 198,190 2,500,000 2,500,000 T & G Lanka (Private)Ltd ( Note 15.2) 2,689,197 2,587,355 3,300,000 3,300,000

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

Group Company

Group Company

Group Company

Group Company

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

31


As at 31st March

15.1 Tea Leaf Resort Holdings (Private) Limited 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Cost of the Investment 2,500,000 2,500,000 2,500,000 2,500,000 Share of Loss for the Year (Net of Income Tax) (198,190) (25,499) - - Accumulated Share of Loss (2,500,000) (2,301,810) - - Net Asset Value of Associate as at 31 March - 198,190 2,500,000 2,500,000

15.2 T & G Lanka (Private)Limited Cost of the Investment 3,300,000 3,300,000 3,300,000 3,300,000 Share of Loss for the Year (Net of Income Tax) 101,842 360 - - Accumulated Share of Loss (610,803) (712,645) - - Net Asset Value of Associate as at 31 March 2,689,197 2,587,355 3,300,000 3,300,000

15.3 Summarized Financial Information of Associates

2014 Rs.

2013 Rs.

2014 Rs.

2013 Rs.

Revenue 14,513,706 11,009,441 - - Profit/(Loss) after tax 363,723 (5,020,518) (710,896) (50,977)

Assets 26,482,565 15,317,514 7,202,353 7,510,853 Liabilities 14,958,153 8,457,932 7,516,848 7,114,452

16 Available for Sale Investments2014 2013 2014 2013Rs. Rs. Rs. Rs.

16.1 Investment in Equity SecuritiesNational Development Bank PLC 3,624,750 3,341,250 3,624,750 3,341,250 Richard Pieris Exports PLC 570,781 68,369 570,781 68,369 ACL Cables PLC 12,200 13,100 12,200 13,100 Central Industries PLC 89,862,664 99,033,625 89,862,664 99,033,625 DFCC Bank PLC 1,430,000 1,311,000 1,430,000 1,311,000 Chevron Lubricants PLC 486,048 2,170,000 486,048 2,170,000 NDB Aviva Growth Fund Investment in Units 16,965,130 15,827,814 16,965,130 15,827,814

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

16.2 Investment in Treasury Bills Treasury Bills - 53,134,656 - 53,134,656

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

17 Inventories 2014 2013 2014 2013Rs. Rs. Rs. Rs.

Raw Materials 89,660,017 95,191,445 73,380,869 84,778,234 Work in Progress 88,157,985 299,962,829 88,157,985 299,962,829 Finished Goods 370,332,692 595,893,623 339,558,708 571,693,109 Packing Materials 9,309,582 7,273,759 9,309,582 7,273,759 S

Documents

New Doc 1 - Colombo Stock Exchange1. REPORTING ENTITY 1.1. Domicile and Legal Form Sierra Cables PLC is a public limited liability Company incorporated and domiciled in Sri Lanka