624_1441966321979

SERENDIB ENGINEERING GROUP PLC
PQ 230
ANNUAL REPORT 2014/2015
Serendib Engineering Group PLC I Annual Report 2014/2015 1

Annual Report
2014/2015
SERENDIB ENGINEERING GROUP PLC
Serendib Engineering Group PLC I Annual Report 2014/2015 i

Table of Contents
1. ABOUT US.........................................................1 7. SHARE INFORMATION....................................75
2. PERFORMANCE HIGHLIGHTS OF THE YEAR....2 7.1 Stated Capital....................................................75

7.2 Twenty Largest Shareholders of the Company.... 75
3. CHAIRMAN’S MESSAGE.....................................3 7.3 Distribution of Shareholders.............................. 76
7.4 Composition of Shareholders............................ 77
4. MANAGEMENT DISCUSSION AND ANALYSIS......4 7.5 Market Information on Ordinary
Shares of the Company...................................... 77
4.1 The Macroeconomic Review............................... 4 7.6 Directors and CEO’s Shareholding..................... 77
4.2 Financial Review................................................. 5 7.7 Public Shareholding.......................................... 78
4.3 Operational Review of the Group........................ 6
8. SUPPLEMENTARY INFORMATION..................79
4.4 Integrated Risk Management............................... 7
4.5 Future Outlook.................................................. 11 8.1 Group Structure................................................ 79
8.2 Performance Summary...................................... 80
5. GOVERNANCE.................................................12
9. CORPORATE INFORMATION..........................82
5.1 Board of Directors............................................. 12
5.2 Corporate Management Team............................ 15
5.3 Corporate Governance Report........................... 18
5.4 Audit Committee Report.................................... 22
5.5 Remuneration Committee Report...................... 24
5.6 Directors’ Statement on Internal Controls.......... 25
5.7 Compliance Report........................................... 27
6. FINANCIAL STATEMENTS OF THE COMPANY....36
6.1 Annual Report of the Board of Directors............ 36
6.2 The Statement of Directors’ Responsibility......... 39
6.3 Independent Auditors’ Report............................ 40
6.4 Statement of Profit or loss and Other

Comprehensive Income..................................... 42
6.5 Statement of Financial Position.......................... 43
6.6 Statement of Changes in Equity......................... 44
6.7 Statement of Cash Flows.................................... 46
6.8 Notes to the Financial Statements...................... 48
ii Serendib Engineering Group PLC I Annual Report 2014/2015

01. About us
Serendib Engineering Group PLC (SEG) is a multifaceted of tea industry machinery and pre-cast concrete polls
engineering company listed on the Colombo Stock through their subsidiaries. In order to succeed in all
Exchange with a leveraged vision and expertise over the these aforementioned areas we are strengthened with
last 20 years to grow in to the multidisciplinary engineering professionals who have complementary skills, a depth
company in Sri Lanka. The Company was incorporated as of expertise and a commitment to excellence covering
a Public Limited Liability Company on 07 Septemberth
diverse disciplines which allows SEG to meet its corporate
1992 and re-registered under the Companies Act no 07 objectives. This has been the foundation for our success
of 2007 and obtained a listing on the Colombo Stock over the years and remains the foundation for our future
Exchange in 2002 under Land and Property sector which growth.
trade as “IDL. N0000”. The Company formerly operated
SEG also holds the Sri Lankan agencies for some prestigious
as “Infrastructure Developers PLC” and Navara Capital
global principles such as Rolls-Royse Marine, MAN diesel
Limited acquired the controlling interest of Infrastructure
and Turbo, R & M India (Pvt) Ltd , Seamaster paints of
Developers PLC in October 2011. The Company renamed
Singapore, Brush Traction, ROMIC-ACE (Alsthom) and
as Serendib Engineering Group PLC with effect from
Lincoln Diesel.
February 2013.
Navara Capital Limited is the parent of the Company which

SEG serves as the holding company of Serendib Engineering
is an Investment Holding Company consists of subsidiaries
& Agencies (Pvt) Limited, CCC Plantation Engineering
to represent key sectors of the economy; namely Navara
Limited and Serendib Investment Holdings Limited.
Capital Partners Limited for Financial Services sector,
The Company mainly focused on telecom infrastructure
Serendib Engineering Group PLC for Construction and
engineering and now has expanded its solutions to
Engineering sector, Mandarin Capital Limited and Alerics
diversified engineering portfolio including railway, marine,
Dairy Products Limited for Food and Beverages sector and
public infrastructure, plantation, power generation,
Master Campers Limited for Leisure sector.
water supply, civil engineering, as well as manufacture
Vision
“To be the premier multi-disciplinary engineering organization in Sri Lanka”
Mission
“To be the most sought after engineering organization dedicated to innovation, quality and customer
satisfaction manned by a dynamic and motivated team of professionals leading to sustainable shareholder
returns”
Corporate Obejctives
• Achieving diverse requirements of our stakeholders
• Quality and customer satisfaction
• Ethics, integrity and accountability in our conduct
• Innovation and best industry practices
• Attracting and developing a dynamic and motivated team of professionals
• Health and safety in the work place
• Sustainable shareholder returns

02. Performance Highlights of the Year
Total Revenue Profitability & Earnings per Share
70 1.00
Rs. Millions
400
Rs.
Rs. Millions
60 0.84 0.80
350
50
300 0.60
40
250
30 0.40
200 0.31
339 20 0.20
150
261 266 10 0.07
-
100
-
50 (0.20)
- (10) 2012 2013 2014 2015
- (20) (0.40)
Net Profit/Loss before Tax (0.41)
2012 2013 2014 2015 Proft/Loss for the Year
(30) (0.60)
Eearnings Per Share (Rs.)
Stated Capital & Net Asset per Share Total Asset Base
200 6.66 7.00 400

Rs. Millions
Rs.
Rs. Millions
6.27
180 350
6.00
160 5.17 300
140 5.00
120 250
4.00
100 200
3.00 332 330 346
80 150
60 2.00 208
100
40
1.00 50
20 0.05
- - -
2012 2013 2014 2015 2012 2013 2014 2015
Stated Capital Net Asset Value Per Share (Rs.)
Asset Composition ROE & ROA
400 140%
Rs. Millions
350 120%
300 100%
250 80%
200 60%
150 40%
100
20%
50
0%
- 2012 2013 2014 2015
-20%
2012 2013 2014 2015 ROA (%) ROE (%)
Property,Plant & Equipment Total Current Assets Other
02 Serendib Engineering Group PLC I Annual Report 2014/2015

03. Chairman’S MESSAGE
early stage and the benefits of these moves are not reflected
in the reported financials.
Measures have been introduced to tighten and improve

internal processes, internal controls, and information
and reporting systems. During the year the company
continued with its restructuring process focusing on the
risk management framework, in order to reduce risk
volatility and to achieve sustainable long-term returns. We
believe these measures as well as our inherent strength
will enable us to successfully overcome the challenges we
will encounter in the future.
As we look to the year ahead and beyond, we will continue

to review our strategies in keeping with the changing
dynamics of the external environment. Reflecting our
I am pleased to present to you the Audited Financials and triple bottom line focuses, the Group will make attempts to
the Annual Report of your company, Serendib Engineering be a premier multi-disciplinary engineering organization
Group PLC for the financial year ended 31st March 2015. in Sri Lanka and continue to build long term sustainability.
During the financial year the company recorded a I wish to thank my colleagues on the Board of Directors
consolidated turnover of Rs. 266 Mn which was marginally for their support and guidance during the year and our
above Rs. 261 Mn achieved in the previous year. However management team and staff for their dedication and hard
the GP declined from Rs. 104 Mn in 2014 to Rs. 76 Mn in work.
2015 leading to a disappointing Rs. 13.9 Mn loss for the
financial year compared with Rs. 16 Mn profit achieved Finally I thank you, our loyal shareholders for your support
during the previous year. and the confidence you have placed in us.
During the year under review the Telecom infrastructure

business continued to be the main line of business for
the company contributing 69% of the group’s turnover.
Electricity infrastructure business contributed 14% while ………………...........................
Plantation machinery business contributed 8%. The
Harsha N De Silva
balance was from Civil engineering and other business.
Chairman
The group continues to push ahead with the strategy of
building a diversified engineering business portfolio with
24th August 2015
developments in power and energy, civil engineering,
Colombo
water distribution and road infrastructure development.
During the year the group also began acting as the
distributor in Sri Lanka for R & M India (Pvt) Ltd. and
Seamaster paints of Singapore expanding our agency
business. Our involvements in these areas are still at an

04. Management Discussion and Analysis
4.1 The Macroeconomic Review

Inflation - Annual Average
%
Source CBSL
The Sri Lankan economy continued to grow robustly 25
22.6
in 2014 with inflation fell significantly and the current 21.5
20
account deficit narrowed. Reporting its continued growth 15.9
15 14.2 15.8
momentum, an annual Gross Domestic Product (GDP) 12.2 10
11
grew by 7.4% for the calendar year 2014 compared to 10 11.4 11.7 9.6 6.2 9.6
9
7.2% in year ended 2013. Continued high growth was 6.7
6.2 7.6
5 8.4 6.9
driven by faster expansion in Industry sector, which offset 6.3 3.3
4.7 3.4 1.3
substantially weaker growth in agriculture as show below; 0
Time
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Aprl
May
Feb
July
Mar
June
Jan
Sectoral classification of GDP Vs GDP
Growth - Source CBSL
%
12
As of end July, the Inflation, as measured by CCPI,
10
decreased to -0.2% from 0.1% in June 2015 on a year-
7.7 8 7.2
8 8.2 on-year basis and annual average inflation declined from
6.2 6.8 6 6.3 7.4
6 1.7% in June 2015 to 1.3% in July 2015. Single one digit
3.5
4 levels were maintained throughout the year reflecting the
2 impact of downward price revisions of commodity prices,
0 electricity, water, LP gas, petrol and diesel prices etc.. As
Year
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 per CBSL, the inflation is projected to remain at low mid-
Agriculture Sector Industry Sector single digit level in 2015.
Services Sector GDP
The unemployment rate for the year 2014 has declined
to 4.3% from 4.4% in 2013. A declining trend during last
Economic growth in Sri Lanka has been among the decade reflects the expansion in economic activities. The
fastest in South Asia in recent years with an average GDP main contributor to employment is the services sector
growth rate of 6.73% between 2005 and 2014. All the (45%) followed by agriculture sector (28.5%) and industry
sectors contributed to sustain this growth as it advanced sector (26.5%) respectively.
particularly by the Industry and Services sectors reporting

11.4% up from 9.9% a year earlier and 6.5% up from Unemployment Rate - Source CBSL
%
6.4% in 2013 respectively. The Construction sector, a sub 20

sector of the Industry Sector recorded 20%, the highest 15.9
15
contribution to the growth of the Industry sector, while
Rate
10
Food & beverages, Tobacco and Textile, Wearing apparel
5 4.3
and Leather sub sectors within Factory Industry also made
0
substantial contribution to growth. Further, the GDP grew Year
by 6.4% in the first quarter 2015 and it is projected to

ease to 7% in 2015 and then strengthen to 7.3% in 2016.
However, growth in 2015 will be affected by the political
transition. Expenditure on imports increased by 3.2% in April 2015
leading to trade deficit to widen by 15.1% in April and
During 2014, the country experienced 2.1% Year on Year 3.9% from January to April. Due to nominal revenue
inflation while annual average inflation rate was 3.3% increase of 14.5% and 3.9% reduction in expenditure the
which is the lowest inflation rate since 1990. Inflation budget deficit declined to 2.4% in 1Q 2015 as compared
Rate in Sri Lanka averaged 10.05% from 1990 until 2015, to 3.5% of GDP in 2014.
reaching an all-time high of 22.6% in 2008.
The Rupee depreciated to Rs. 133.32 as at 31 March 2015
against the US Dollar compared to Rs.130.73 in 2014.

Interest rate continued to remain low during 2014, This resulted in an immediate downward adjustment in
following the relatively relaxed monetary policy by CBSL. market interest rates as follows.
Interest Rates - Source CBSL

%
25 AWPLR
AWDR
20
3 Months T-Bill Rate
Repo
15
Reverse Repo
10
0 Time
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Apri
March
May
Feb
Jun
Jan
4.2 Financial Review

During the year under review, the company recorded a Investments Asset Utilization
revenue of Rs. 266 Mn and which is marginally above
The net asset value per share attributable to ordinary
compared with the previous year. During the year
shareholder increase by 6.06% to Rs. 6.65 at the financial
company recorded a gross profit of Rs. 76 Mn. The gross
year end, compared to previous year. (2013/2014 Rs. 6.27)
profit margin decreased from 40.1% to 28.5% compared
with the year before. This is mainly due to the increasing
of the cost of materials and wages. Therefore, the company
is planning to enhance the profitability by restructuring the
cost structure of the company.
Expenses
During the year under review, Administration expenses

showed an increase by Rs. 10 Mn in compared to previous
year mainly due to the increase in office rent, staff cost and
security charges.
Profit / (Loss) after Tax
During under year review, the loss attributable to equity

shareholders of the group was Rs. 13.8 Mn.
Earnings / (Loss) per Share
During the year, loss per share was Cents 41.

4.3 Operational Review of the Group
Serendib Engineering Group PLC is the holding company - Telecom Infrastructure Engineering
of the group. It carries out its business operations mainly
via two operating subsidiaries; Serendib Engineering & The main revenue stream of the group is from telecom
Agencies Private Limited and CCC Plantation Engineering infrastructure engineering and the company serves to
Limited. the market leader. Telecom infrastructure engineering

includes network development including Outside Plant
Serendib Engineering Group PLC Engineering (OPE) that involves expansions in optical fibre
cable network, optical fibre backbone/ junction network
The Company serves as the holding company to
development (optical fibre metro network development
Serendib Engineering & Agencies Pvt Ltd, CCC Plantation
and optical fibre secondary expansions), copper cable
Engineering Ltd and Serendib Investments Holding Limited.
network development, new subscriber connections, fault
The company also provides centralized management
clearance, removals, installation of PEO TV connections,
support to the Group.
site acquisition, FTTH (Fiber-to-the-Home) projects and
The company is focusing on the manufacture of precast tower erection.
concrete polls for the telecom industry and power

During the period company focused its attention in
distribution and Company believes the exposure to this
providing similar engineering solutions to other telecom
sector will yield positive results in the coming years.
operators such as Mobile phone carriers and it is expected
Serendib Engineering & Agencies Private Limited to commence business with such operators during the
current financial year.
Serendib Engineering & Agencies (Pvt) Ltd is a multi-faceted
engineering company involved in Telecommunications, - Civil Engineering
Plantation Engineering, Civil Engineering, Water supply

During the period under review the company was able
and Filtration, Marine & Railway Engineering etc. Serendib
to execute several Civil Engineering projects such as
Engineering & Agencies (Pvt) Ltd was established in 1991.
construction of roads, culverts, bridges, water supply and
Serendib Engineering & Agencies (Pvt) Ltd mainly focused drainage projects, power generation projects as well as
on telecommunication projects and it is one of the leading the construction of residential and commercial buildings.
telecom infrastructure development companies of Sri Lanka Company believes the exposure to this sector will yield
Telecom. However as a strategic move the Company is in positive results in the coming years.
the process of building a Diversified Engineering portfolio.

CCC Plantation Engineering Limited
In fact during the financial year 2014/15 Company moved

CCC Plantation Engineering Ltd, a fully owned subsidiary
in to other areas such as Civil Constructions, Power and
of Serendib Engineering Group PLC, is carrying on the
Energy projects and Housing Construction. Also Serendib
heritage of the oldest tea machinery manufacturer in the
Engineering & Agencies (Pvt) Ltd act as the distributor in
country.
Sri Lanka for R & M India (Pvt) Ltd. and Seamaster Paints
Singapore. During the financial year 2014/15, 75% of CCC Plantation Engineering Ltd remains one of the key
the revenue is generated from Telecom Infrastructure organizations having a wide infrastructure to service the
Engineering, 15% of the revenue is generated from Power Tea industry in Sri Lanka.
and Energy projects and balance 10% of the revenue
is generated from Civil and other projects. Serendib - Manufacturing of Plantation Machinery
Engineering Group PLC holds an effective control of

CCC Plantation Engineering Ltd has a substantial market
94.23% as at 31st March 2015 in Serendib Engineering &
share and a high reputation in this sector. The company
Agencies Private Limited.
specializes in manufacturing and supply of tea factory

machineries and processing equipments. Machineries are Serendib Investments Holding Limited
manufactured and marketed under the CCC brand.
As at 31 March 2015, Serendib Engineering Group PLC
The range of machinery manufactured includes Fluid holds 60% ownership of Serendib Investments Holding
Bed Driers, Rotorvanes, Winnowers, Sorting & Grading Limited and Serendib Investments Holding Limited owns
Equipment, Conveyors, and Ducting for all Applications, 14% of the stated capital of Serendib Engineering &
Chimneys, and Dust Extraction Equipment etc. Agencies Private Limited.
- Maintenance of Plantation Machinery
CCC Plantation Limited also undertakes the repair and

maintenance of existing machinery and the mechanical
maintenance of Tea factories on behalf of clients.
4.4 Integrated Risk Management
4.4.1 Introduction fine-tuning of key risk indicators for operational risk.
Almost all business decisions contain an element of risk. Subsequent to the developments in rules and regulations,
Therefore analyzing and managing risk is an integral employee-related lawsuits risk management became a
part of any organization to formulate its strategies to serious management criterion. Today risk management has
accomplish the desired objectives. Risk management become an integral part of proper management practices,
consists of identifying, analyzing and managing all the placing equal importance as financials or facilities.
existing and potential internal & external risks that could
4.4.2 Framework and Procedures
adversely affect the achievement of expected goals of the
Company. Generally, this involves reviewing operations Serendib Engineering Group PLC has given due
of the organization, identifying potential risks and the consideration to its risk management process. The group
likelihood of their occurrence, and taking appropriate seeks a proactive and holistic approach to manage and
actions to address them, in order to prevent most likely mitigate the risk to improve returns. Engineering as an
threats. industry is known to be of very high risk, internal as well
as external.
Group’s risk management framework has remained resilient
throughout 2014/15, amidst a challenging macroeconomic Serendib Engineering Group PLC focuses on long term
environment. The Group manages risks under an overall sustainable value to all our stakeholders by identifying the
strategy formulated by the Board of Directors, supported risks, both existing and potential and analyzes all risks to
by the senior Management team which continuously determine their most probable impact, as well as to take
reviews and enhances the effectiveness of the Group’s risk precautions as far as reasonably practicable by taking
management plans, systems, processes and procedures. prompt actions to mitigate them.
Over the past year, the Group has taken a number of Several key risks are identified as exiting risks, to which
initiatives to strengthen its risk management capabilities. the company is exposed, in its day to day business
Some of these initiatives include adopting faster and more activities and categorize them as Internal and external, for
efficient system-driven processes, internal controls, and assessment and to facilitate taking adequate precautionary

measures. Risk Assessment can include both qualitative • Operational Risk Management
and quantitative assessments of the likelihood of the
• Information Technological Risk Management
various risks occurring and the impact of these in terms of
cost, schedule and/or performance. • Market Risk Management
The assessment of such risks and the related responses are • Financial Risk management
set out below:
4.4.2.1 Operational Risk Management
Operational risk, is an inherent risk in all business and that the cost of minimizing it may outweigh the
activities, which may result in potential financial loss potential benefits. However the Group has designed and
and/or business instability arising due to human errors implemented comprehensive and sound internal controls
and failures in internal controls, operational processes and other safety measures which are reviewed regularly to
or the systems that support them. Although the complete overcome the operational risk.
elimination of the operational risk is not entirely possible
Risk and Uncertainties Groups’ Response
Failure to address these risks promptly and prudently will During the year under review steps were taken to carry
subsequently create a negative impact to its operations out detailed project planning. In addition meetings were
and the principle of “going concern”. scheduled regularly in order to review the progress of
operations.
The project implementation activities are carried out

under direct supervision of qualified and well experienced
engineers and technically qualified supervisors to ensure
strict enforcement of quality standards. Also measures
were taken to ensure regular check on the accuracy
of functionality of tools, equipment and machinery,
delegation of authority, permit to work systems, guidelines
and a regular reporting framework, creating awareness
and consciousness and accountability in the operational
activities.
In addition, where applicable, the risk mitigation actions

are supported by risk transfer mechanisms such as
insurance.
Measures were taken for the establishment of Safety

& Health of all engaged in the yard and sites including
our visitors and we address this thoroughly, with the
continuous education, compliance and audits, carried
out by our own Health, Environment & Safety Advisory
Committee.

4.4.2.2 Information Technological Risk Management
An integrated and updated Management Information System which generates accurate and timely information for
prudent decision making is the key to company’s sustainability.
Any disruption or failures of such system, infrastructure The company always maintains an updated information
and applications, may have a negative impact to the system to avoid obsolescence. It has further strengthen
company operations and could possibly result in financial through the establishment of regular backups procedures,
losses. standby file servers, regularized maintenance etc.
4.4.2.3 Market Risk Management
Although the company has a high reputation, it operates impact on the upper levels of the pricing. In view of these
in a very competitive market comprising of hostile players. market pressures, it is essential that the group focuses on
As group’s businesses are generated from the domestic providing competitive products and service.
market, our competition faced is largely through the
domestic market. Several key players in the industry can
The pressure from price competition and increasing Although the expertise gained over two decades has
customer demands/expectations are expected to have a strengthened our capabilities enabling us to add more
serious impact in the long run as well as the competition values to our customers, the increasing level of competition
within the industry grows as is expected to affect the and the saturation levels in the existing markets has create
business volumes and prices in selected areas of business. limitations. To overcome these challenges the Company
has adopted strategies to diversify its product portfolio and
position itself in a larger market, based on the competitive
advantage. Further Serendib Engineering Group PLC has
put continuous effort in image building and has focusing
on credible business relationship management.
During the year under review the company started power

supply projects and civil engineering projects to attract
available opportunities as much as possible.
4.4.2.4 Financial Risk Management
Financial risks relates to company’s ability to meet activities expose to a variety of financial risks including
financial obligations and mitigate credit risks, liquidity changes in interest rates, foreign exchange rates and
risks, currency risks, interest rate risk and price risks. liquidity.
To manage these risks, the Group’s policies and financial

authority levels are continuously reviewed. The Group’s

(a) Interest Rate Risk
The Group’s objective is to maintain an efficient optimal interest cost structure to minimize the adverse effects of interest
volatility.
The risk would impact the company’s’ interest earnings, The group employs various financial instruments to manage
costs, cash flows and profitability. its exposure to interest rates risk arising from operational,
financial and investing activities. We continuously
negotiate with banks to obtain the best possible interest
rate for Group’s borrowings and investments.
(b) Foreign Exchange Risk
Risk arising due to foreign currency fluctuations when dealing with foreign clients such as entering in to agency
agreements, sales, purchases mainly via Sterling Pound and US Dollars
Exchange rate fluctuations are known to create an impact The group expects to minimize the risks in future by
on the cost structure and the bottom line of the company. using techniques such as hedging the currency: either by
forward foreign exchange contracts in respect of actual or
forecasted currency exposures or hedged naturally by a
matching sales or purchase of a matching assets or liability
of the same currency and amount as volumes increase in
future.
(c) Liquidity Risk
The Group manages its working capital requirements with the view to minimize the cost and maintain a healthy level
of liquidity appropriate to the operations of the Group. Working capital requirements are maintained within the credit
facilities established and are adequate and available to the Group to meet its obligations.
Inability or difficulty to meet financial obligations as they The regular preparation of cash flows and close monitoring
become due would lead to greater financing costs. will ensure the smooth matching of collections and
borrowings against the expenses. The close monitoring of
trade debtors will also smooth the cash flows.

4.5 Future Outlook
As we look to the year ahead and beyond, we will continue Meanwhile group has begun acting as the distributor in Sri
to review our strategies in keeping with the changing Lanka for Companies such as R & M India (Pvt) Ltd. and
dynamics of the external environment. It is pictured that the Seamaster Paints and venture in to these areas will generate
growth in the infrastructure, construction and engineering an agency income and will produce a substantial growth
sectors looks set to continue in Sri Lanka, at least for the in our earnings. Further the Group is planning to move
short to medium term. The primary concern of the group in to Housing and Property development and expand its
is to be the most sought after engineering organization presence both commercially and geographically.
dedicated to innovation and quality. Reflecting our triple
Future outlook for the Group is very promising and it will
bottom line focus, the Group will make attempts to be the
leverage on and continue to strengthen relationships with
premier multi-disciplinary engineering organization in Sri
all its stakeholders which include shareholders, customers,
Lanka and continue to build long term sustainability.
partners, principals, investors, regulators, employees and
During the year ahead contribution from Civil society at large.
Construction, Power and Energy is expected to increase
while the construction of Telecom infrastructure and
its maintenance will remain our main field of activity.

05. Governance
The Board of Directors guides and supervises the business and operations of the Company to accomplish their operational
goals and objectives in order to maximize shareholder wealth. Further, the board believes that highest standards in
governance are indispensable to create long term value to its stakeholders and to grow in a sustainable manner. The
board comprises of six (06) directors.
5.1 Board of Directors
Mr. H N De Silva Ms. D L De Silva Prof. R W T M R Bandara
Mr. H G S Kariyawasam Dr. A G P A Gunawansa Mr. A C De Silva

Mr. H N De Silva Chairman of the Education Employees Corporative and
Chairman Thrift Society Limited during 2011/2012 and the Chairman
of Corporative Wholesale Establishment (CWE) during
Mr. Harsha N De Silva is the Chairman and Group
2009/2010.
Managing Director of the Navara Group of Companies,
which has interest in Financial Services, Engineering, Food Mr. Kariyawasam has pursued further studies in Commercial
Industry and Leisure Industry. Law and International Trade Law in the National University
He is a Financial Markets specialist and counts over 21 of Singapore and University of Turin Italy. Presently, apart
year’s management experience in the corporate sphere from his professional work Mr. Kariyawasam serves as a
locally and internationally. His Corporate Management visiting lecturer of Sri Lanka Law College.
experience covers a range of industries including Banking
and Investment Banking, Housing and Real Estate, FMCG,
Logistics and Apparel.
Prof. R W T M R Bandara
Independent Non-executive Director
He is an Associate member of the Chartered Institute of
Management Accountants (UK) and the Chartered Institute Prof. Ranjith Bandara is a Professor in Economics attached
of Bankers (UK). He is a fellow of the Institute of Certified to the academic staff of the Department of Economics,
Management Accountants (SL) and holds a MBA from University of Colombo. Prof. Bandara is also a professional
the PIM, University of Sri Jayewardenepura. Mr. De Silva trainer and master facilitator who has a broad experience
continues to hold Executive and Non- Executive Director in leadership, strategic management and coaching and
positions in many listed and unlisted companies. mentoring. He was a member of the National Economic
Council of Sri Lanka and the Financial System Stability
Consultative and the Rating Committees of the Central
Ms. D L De Silva
Non-executive Director Bank of Sri Lanka. Prof. Bandara was also the Chairman of
Sri Lanka Foundation and Senior Economic Adviser of the
Ms. Dimanthi L De Silva is a Group Director of Navara Strategic Enterprise Management Agency at the President’s
Group of Companies and is the Managing Director of Office. He has also served as a Senior Director on the
Alerics Dairy Products Limited. Board of Directors - Merchant Bank of Sri Lanka PLC,
She counts over 21 years of management experience in Director Merchant Insurance Company Limited, Merchant
Consultancy, Finance, Project Management and Logistics. Credit Financial Services Limited, MBSL Savings Bank
Ms. De Silva is a Member of the Association of Business Limited, National Livestock Development Board, Lanka
Executives (UK) and hold an MBA from Edith Cowan Libya Agricultural And Livestock Development Co. Ltd, Sri
University of Western Australia. Jayawardenepura General Hospital Board. Prof. Bandara
serves as a Director on the Board of Serendib Engineering
Group PLC, Director / Business Development at Melwire
Mr. H G S Kariyawasam Group of Sri Lanka, Chairman, Spell Solutions (Pvt) Limited
Non-executive Director and Chairman and Managing Partner, Colombo School of
Business Management.
Having called to the BAR in 1993 Mr. Sagara Kariyawasam
Prof. Bandara earned his B.A Honours degree in
commenced his career as a State Counsel in 1994 and
Economics from the University of Peradeniya in 1990 and
possesses more than 20 years of experience as an Attorney
subsequently completed two Masters Degrees, M.A in
at Law. Mr. Kariyawasam is also a Director of Navara
Economics from the University of Colombo in 1992 and
Capital Limited and the present Chairman of the Board of
MSc in Management of Natural Resources and Sustainable
Navara Securities (Pvt) Limited.
Agriculture from the Agricultural University of Norway
He has held the position of Chairman of Lanka Electricity
in 1995. He earned his PhD in Economics from the
Company Private Limited (LECO) during 2013/ 2015,
University of Queensland, Australia in 2003. Prof. Bandara

has contributed to a number of National and International Mr. A C De Silva
Journals and is the author of a few books written under Independent Non-executive Director
various themes in Economics and related subjects and

Mr. Ajith De Silva is a Fellow Member of the Chartered
has also served as the Editor of the Sri Lanka Economic
Institute of Management Accountants (UK) and counts
Journal. He is also currently the Editor of the Management
over 21 years of Corporate Management experience in
Digest, a premier Management Journal in Sri Lanka.
diverse fields locally and internationally.
Mr. De Silva commenced his career at KPMG and also
served as Chief Accountant within the Atken Spence
Dr. A G P A Gunawansa
Group, as the Manager Investment and Research at CKN
Independent Non-executive Director
Fund Management Co. Limited, as the CFO of Bodyline
Dr. Gunawansa holds a Ph.D in Law from the National (Pvt) Limited and as the General Manager of Growth Lanka
University of Singapore and an LLM in International (Pvt) Limited. He is currently also the Director/ Chief
Economic Law from University of Warwick England. He is Executive Officer of Kenpark Bangladesh (Pvt) Limited and
an Attorney-at-Law of the Supreme Court of Sri Lanka and Kenpark Bangladesh Apparel (Pvt) Limited.
has over 22 years of experience as a Legal Counsel.

He is also a Member of the Law Reform Sub-Committee for
Building and Construction Law in Singapore and a member
of the board of studies, Council of Legal Education on Sri
Lanka. In addition to his legal practice, Dr Gunawansa is
currently attached to the Lee Kuan Yew School of Public
Policy of the National University of Singapore (NUS) as a
Senior International Research Associate. He is also attached
to the Centre for Project Management and Construction
Law of the School of Design and Environment of NUS
as an Adjunct Professor. He is also an Associate Member
of the Executive Committee of the Asia Pacific Centre of
Environmental Law.

5.2 Corporate Management Team
Mr. S C De Silva Mr. A N D De Silva Mr. V J Alahendra
Mr. Harshan Fernando Mr. D M G Dissanayake Mr. H M W Herath
Mr. Ruwan Fernando Mr. K W B T Pradeep Mr. I S De Silva

Mr. S C De Silva Mr. V J Alahendra
Group Chief Executive Officer Group Chief Operations Officer
(Retired with effect from 31st March 2015)
Mr. Clive De Silva is a Mechanical Engineer by profession Mr. Jayasankha Alahendra counts for over 21 years of
who counts for over 41 years of experience in the experience in the corporate sphere of which he has
Engineering Industry. He commenced his carrier at one served as a Director/ Senior Manager for more than 10
of the premier Engineering & Trading groups in Sri Lanka years. Prior to joining Serendib Engineering Group he
and held various positions including senior Research and has held various positions in Finance, Credit & Leasing,
Development Engineer, Senior Project Engineer, Director Treasury Management and Real Estate Development. He
Business Development and Director Engineering. is also an experienced corporate trainer in the areas of
Human Resource Development and Credit Evaluation.
In 1991, he ventured in out and set up Serendib Mr. Alahendra holds a MBA from Cardiff Metropolitan
Engineering & Agencies Limited and was the founder University of UK. He is currently a Director of Navara
Chairman/ Managing Director. Mr. De Silva’s experience Capital Partners Limited, Navara Securities (Private)
covers a range of engineering disciplines including Limited and Navara Forex & Money Brokers Limited.
civil, electronics, mechanical, automobile, marine and
plantation machinery. He is skilled in engineering design
and is a member of the Institute of Engineering Designers
Mr. Harshan Fernando
UK. Deputy General Manager
Mr. Harshan Fernando counts for over 12 years of experience
Mr. A N D De Silva in the corporate sector at different capacities. Prior to

Group Chief Finance Officer joining Serendib Engineering Group he has held various
positions in Software Engineering, Telecommunication
Mr. Naleen De Silva is the Group Chief Finance Officer Engineering, and International Business & Product
of the Navara Capital Group of Companies. He counts Marketing in mobile communication sector. He holds a
for over 23 years of experience in various industries Bachelor of Science Engineering degree from University of
including Housing & Property Development, Engineering, Peradeniya and holds his MBA from Post Graduate Institute
Manufacturing, Financial services and Media. He also of Management (PIM) University of Sri Jayawardenepura.
specializes in management consultancy, restructuring At present he is working as the Deputy General Manager
and auditing. He is an Associate Member of the Institute at Serendib Engineering & Agencies (Pvt) Ltd.
of Chartered Accountants of Sri Lanka and the Institute
of Certified Management Accountants of Sri Lanka. Mr.
De Silva holds a MBA from the PIM, University of Sri Mr. D M G Dissanayake
Assistant General Manager
Jayewardenepura. He is also a member of the Governing
Council of AAT Sri Lanka.
Mr. Gamini Dissanayake holds a degree of B.Sc. Engineering
Mr. De Silva is presently a Director of Serendib Engineering from the University of Peradeniya. He started his career
& Agencies (Pvt) Limited, CCC Plantation Engineering as an Assistant Engineer and he counts over 22 years of
Limited, Navara Capital Partners Limited, Navara Securities experience in the telecommunication field. Besides he has
(Pvt) Limited, Navara Forex & Money Brokers Limited and served as a consultant for telecom engineering companies
Alerics Dairy Products Limited. and conducted industrial training programs in Road
Development Authority, Road Construction Development
Company & State Engineering Corporation. At present he
is working as an Assistant General Manager at Serendib
Engineering & Agencies (Pvt) Ltd.

Mr. H M W Herath Mr. I S De Silva
Assistant General Manager Manager – Projects Coordination
Mr. Herath is an Engineer & a Member of the Institution Mr. De Silva counts over 20 years of management
of Engineers Sri Lanka. He has obtained his Diploma in experience in Telecom/ITC Engineering in Local &
Civil Engineering from University of Moratuwa. He counts International Organizations. Mr. I. S. De Silva commenced
over 21 years of experience and has served as a Project his Telecom/ITC career in 1995 and also served as Project
Engineer in telecommunication industry for many years. Engineer. He is currently working as the Manager, Projects
Mr. Herath is currently working as an Assistant General Coordination at Serendib Engineering. He was awarded a
Manager of the Serendib Engineering & Agencies (Pvt) Ltd Bachelor of Information Technology degree from University
and He joined the company in 2003. of Colombo and earned Post graduate Diploma in Business
Administration from University of Wales (PGDBA-wales).
Mr. Ruwan Fernando

Head of Business Development & Civil Engineering
Mr. Fernando currently serves as the Head of business

development & civil engineering and infrastructure
development at Serendib Engineering & Agencies (Pvt) Ltd.
He has more than 10 years of experience in commercial
and industrial market development. Also Mr. Fernando
held Director positions in many companies.
Mr. K W B T Pradeep
Civil Engineer
Mr. Bhathiya Pradeep is a Civil Engineer of Serendib

Engineering Group PLC. He is a Post graduate diploma
holder of Construction Project Management from
Department of Civil Engineering, University of Moratuwa
and also holds a bachelor’s of degree in engineering from
the same University.
He has more than 8 years of experience as a Civil

Engineer and Project Manager in various kinds of
development projects such as design, construction and
project management of mini hydropower projects, wind
power projects and infrastructure development projects.
Mr. Pradeep is also an associate member of Institution of
Engineers, Sri Lanka and member of Project Management
Institute, Colombo Chapter.

5.3 Corporate Governance Report
Serendib Engineering Group PLC is one of the leading Construction and Engineering Companies in the country, listed
on the Colombo Stock Exchange.
This report outlines the Company’s Corporate Governance processes and activities for the financial year under review
with reference to the Code of Best Practice of the Institute of Chartered Accountant Sri Lanka (ICASL), the requirements
of the Securities and Exchange Commission of Sri Lanka (SEC) and the Colombo Stock Exchange (CSE).
The Board has been continuously committed towards improving the internal control systems with the view to provide
transparency and accountability to ensure best practices of Corporate Governance principles. The internal governance
structure of the Company encompasses, the Board of Directors, Board Sub-committees such as Audit Committee and
Remuneration Committee, Qualified Senior Management team. As depicted below the corporate governance framework
shows how effectively managed the above internal governance components through strengthened internal policies,
process and procedures.
External Audit
● ● ● ncy Poli
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● ● ● The Code
Listing Rules of of Best Practice
Regulatory Framework Companies Act on Corporate
the Colombo
No. 07 of 2007 Governance jointly
● ● ● Stock Exchange
Issued by SEC
and ICASL

5.3.1 Role and Responsibilities of the Board Economics, Marketing, Human Resource Management
of Directors and People Mamangement , Project Management and
Logisctics etc.. The Board as a whole annually assess
The core responsibility of the Directors is to exercise their
the Board composition to ascertain whether the overall
judgment to act in what they reasonably believe to be the
experitise expected from the Board matches with the
best interest of the Company and for the creation of long-
corpoarte strategic requirements in order to achieve
term value and return for shareholders. Further, the Board
stipulated corporate objectives and collectively and
seeks independent professional advice when deemed
indivudually act in accordance with the laws of the
necessary.
country.
The Board is responsible for the achievement of the

Group’s overall performance objectives, accurate and
5.3.3 Board Appointments
efficient financials plans and annual budgets, major There were no new appointments to the Board during
investments, divestment and evaluation and assessment the financial year 2015. The group practices a formal and
of funding proposals, risk management and ensuring transparent procedure for the new appointments to the
corporate governance practices are adhered to. Board by assessing their Non-executive and Independence
at the time of appointment. When directors are newly
To ensure the efficiency and effectiveness of the delegation appointed to the Board, they will get an induction about
of responsibilities and to provide an independent oversight the Group direction, values, culture, policies, governing
of Management, the Board has established a number of framework, procedures and operating environment etc.
Board sub-committees, including the Audit Committee and
Remuneration Committee. These committees are primarily Details of the new appointments including a brief resume,
consists of Non-Executive Directors. The respective roles the nature of his expertise in relevant functional areas, other
and responsibilities of each Board sub-committees are directorships and “independent” will be disclosed to the
included in this report. company’s shareholders and regulatory authorities at the
time of their appointment as per the CSE Continues Listing
5.3.2 Board Composition Rules and Code of Best Practice on Corporate Governance.
As at 31 March 2015, the Board comprised of 06 Directors

st
with 05 of them being Non-Executive Directors of which

5.3.4 Retirement of Directors and
03 directors are Independent Non-Executive.
Re-election
In accordance with Article 118 of the Articles of Association
of the Company, Ms. D L De Silva retires by rotation and is
eligible for re-election.
All Directors including Chairman of the Board is subject to

re-election at intervals of no more than 03 years.
5.3.5 Board Meetings

During the financial year under review, there were 04 Board
Meetings. Also, the Board of Directors was provided with
Execuitve Non- Exective Independent Non-Executive
the necessary information well in advance by sending them
Mr. H N De Silva served as the Chairman of the Board and
the Board papers, proposals and discussion topics in order
ensured that all Board proceddings were conducted in a
to ensure the informed deliberation and effective decision
proper manner.
making at the time of the Board Meeting.
The group policy is to maintain a healthy balance between

the Executive, Non-Executive and Independent Directors
5.3.6 Board Evaluation
with vast range of expreince and experitse in the industry The Board conducted its annual performance evaluation of
including fields of Management, Business, Adminstration, the Board and individual director’s by end of the financial
Contruction, Law, Banking, Finance and Accounting, year 2014/15 on a self-appraisal basis. This performance

evaluation carried out on the basis of contribution and (iii) that has a Significant Shareholding in the Listed
commitment towards achieving corporate goals and Entity or with which the Listed Entity has a Business
objectives. Also, the CEO‘s performance appraisal is Connection;
carried out by annually against the set strategic targets.
g. is a director of another company,
5.3.7 Independence
(i) in which a majority of the other directors of the Listed
Independence of the Directors has been determined in
Entity are employed or are directors; or
accordance with the CSE Listing Rules and Independent
Non-Executive Directors have submitted declarations of
(ii) that has a Business Connection in the Listed Entity or
their independence up on appointments and during the
a Significant Shareholding;
year as required.
h. has a Material Business Relationship (income or non-

The Independence of all its Non-executive directors was
cash benefits equivalent to 20% of the director’s
reviewed on the basis of criteria given by the CSE Listing
income) or a Significant Shareholding in another
Rules 7.10.4 as follows;
company or business,
Non-executive director shall not be considered

independent if he/she,
Entity are employed or are directors; and/or
a. has been employed by the Listed Entity during

(ii) which has a Business Connection (transaction value
the period of two years immediately preceding
equivalent to 10% of the turnover) with the Listed
appointment as director;
Entity or 10% Shareholding in the same.
b. currently has/had during the period of two (2) years

5.3.8 Board Secretary
immediately preceding appointment as a director, a
Material Business Relationship with the Listed Entity, The Company Secretary functions as the Secretary to
whether directly or indirectly; the Board. In addition to maintaining board minutes

and records the Board Secretary has provided support
c. has a Close Family Member who is a director, Chief in ensuring that the Board receives timely and accurate
Executive Officer (and/or an equivalent position) in information, advices related to corporate governance
the Listed Entity; matters, Board procedures and regulatory requirements
during the year under reviewed.
d. has a 10% Shareholding in the Listed Entity;
5.3.9 Board Sub-committees
e. has served on the board of the Listed Entity continuously The Board has delegated some of its functions to Board
for a period exceeding nine (9) years from the date Sub-committees, while retaining the final decision rights.
of the first appointment; provided however, if such Two Board Sub-committees are as follows;
director is re-appointed after a period of two (2) years
from the date of completion of the preceding nine (9) 5.3.9 (a) Audit Committee
year period,
The Audit Committee comprises of two (02) Independent
f. is employed in another company or business, Non-Executive Directors and one (01) Non-Executive
Director.
• Prof. R W T M R Bandara - Chairman of the
Entity are employed or are directors; or
Committee
• Mr. A C De Silva – Independent Non-Executive
(ii) in which a majority of the other directors of the Listed Director
Entity have a 10% Shareholding or Material Business • Mr. H G S Karaiyawasam - Non-Executive Director
Relationship; or

Principally, the Audit Committee monitor and supervise honest and balanced assessment is presented at all times.
management’s financial reporting process to ensure that ,
the accuracy and timely disclosure , transparency, integrity 5.3.11 Internal Control
and quality financial reporting within the Group. The Board of Directors ensures to maintain strong internal
control system to safeguard shareholders wealth. The
The Committee ensures the independence of the Board periodically reviews and assesses the internal
external auditors and confirms the compliance with control system with a view to increase the efficiency and
the requirements under the Companies Act No 07. of productivity of the Company’s wealth. The Board ensures
2007 in relation to appointments, re-appointments and the timely reporting to shareholders and compliance
removal of the External Auditors. The Committee makes with the statutory requirements and provisions. Further
recommendation to the Board as appropriate. The External the Board confirms that there is an ongoing process to
Auditors are duly appointed by the shareholders at the identifying, evaluating and managing the significant risk
Annual General Meeting of each year. faced by the organization.
The Committee confirms to the best of their knowledge that The framework is designed to provide reasonable care of,
the functions of the Audit Committee are in accordance • Efficiency and effectiveness of operations
with the requirements under the Listing Rules of the • Reliability of financial and other management
Colombo Stock Exchange. information
• The prevention of fraud.
• Compliance with relevant national laws and
The Audit Committee met four (04) times for the year
Company regulations.
ended 31st March 2015 with the presence of internal
auditors. The report of the Audit Committee is presented The board has delegated the process of reviewing
on pages 22 and 23. the effectiveness of the internal controls to the Audit
Committee.
5.3.9 (b) Remuneration Committee
5.3.12 Code of Business Conduct and Ethics
Main responsibility of the Remuneration Committee Although there is no written code of conduct of the
includes, formulation, establishment of remuneration Directors, they are conscious of the duties required of
policies, reviewing, approving and recommending to the them. The transactions and activities which were associated
board, as well as remunerations of Directors including with the Company are disclosed under the related party
the key position of the Company and employees of the transaction, which is revealed on page 69 under Note 26
Company. to the Financial Statements.
The details Remuneration Committee report is presented The Company complies with the Code of Best Practices on
on page no 24. Corporate Governance jointly issued by the Securities and
Exchange Commission of Sri Lanka (SEC) and Institute of
5.3.10 Accountability and Financial Chartered Accountants of Sri Lanka (ICASL) as disclosed
Reporting under the Compliance Report on pages no 27 to 35 of this
The Board of Directors are directly responsible for overall report.
company’s activities to shareholders of the Company.
5.3.13 Disclosures to the Public, SEC and
Therefore, the Board of Directors and the Management CSE
pay their utmost priority to provide complete disclosure The Board of Directors, in conjunction with the Audit
of financial and non-financial information in accordance Committee where applicable, is responsible in ensuring
with commercial practices. the accuracy and timeliness of published information.
The Annual Report and Quarterly Financial Statements
The Board of Directors pay broad attention to the adoption
along with the explanatory notes are disclosed and
of sound and accurate reporting practices to ensure that an
published to all company’s stakeholders by the Company

in accordance with the SLAS, Listing Rules of the Colombo In order to achieve this objective, there is an Investor
Stock Exchange and Securities and Exchange Commission Relations team focuses on the followings;
of Sri Lanka.
• Maintaining and building a healthy relationships
• Keep investors informed about group’s performance
Furthermore, any other material and financial and non- and obtain constructive feedback
financial information which are price sensitive information • Responding to queries and clarifying on concerns
about the Company is promptly communicated to the CSE of investors
• Coordinating media relations and investor
and such information is also released to all stakeholders
communications
including employees, shareholders and regulatory
Further, individual shareholders are encouraged to carry
authorities and the press.
out adequate analysis or seek independent advice on their
5.3.14 Investor Relations investing, holding or divesting decisions at all times.
The Company continuously focuses on maintaining an

5.3.15 Compliance with the Colombo
active dialogue with shareholders, potential investors,
Stock Exchange Rules on Corporate
investment banks, stock brokers and other interested
Governance
parties in ensuring effective investor communications. The
Levels of Compliance with the CSE Listing Rules and Code
Primary mode of communication between the Company
of Best Practices on Corporate Governance are given in
and the shareholders are through the Annual Report,
the Compliance Report under section 5.7 in this report.
Interim Reports and Annual General Meeting.
5.4 Audit Committee Report

Composition of the Committee company policies. The Committee endeavors to assist the
Directors to discharge their duties and responsibilities in
The Audit Committee comprises of two (02) Independent
respect of regulatory compliance and risk management as
Non-Executive Directors and one (01) Non-Executive
well as performance of the Company’s External Auditors.
Director.
Meetings
• Prof. R W T M R Bandara - Independent Non-
Executive Director
The attendance of the Directors at the Audit Committee
• Mr. A C De Silva – Independent Non-Executive
Director meeting during the year is tabulated below;
• Mr. H G S Karaiyawasam - Non-Executive Director

Eligible to
Name of the Director Attended
attend
Prof R W T M R Bandara was appointed as the Chairman Prof. R W T M R Bandara 4 4
of the Committee by the Board and Mr. A C De Silva is Mr. A C De Silva 4 4
a Member of the Chartered Institute of Management Mr. H G S Kariyawasam 4 4
Accountants (UK).
Role of the Committee The Chief Executive Officer, Group Chief Finance Officer
and Chief Operating Officer attend meetings by invitation.
The Audit Committee has written terms of reference and is
Representatives of External and Internal Auditors will be
empowered to examine any matters relating to the financial
invited on a need basis.
affairs of the company and its internal and external audits.
Its duties include reviews of financial statements, internal The results of the review have been communicated to the
control procedures and risk management, accounting Board of Directors verbally in quartely basis.
policies and compliance with Sri Lanka Accounting
Standards. It also reviews the adequacy of systems for
compliance with the Companies Act No. 07 of 2007, other
relevant legal, regulatory and ethical requirements and

Financial Reporting External Audit
• The Committee has reviewed and deliberated the The Committee has reviewed the services provided by
Interim and Annual Financial Statements of the the External Auditors to the Company to ensure their
company prior to publication and has recommended independence as Auditors has not been compromised.
same to the Board for approval and publication. As far as the Directors are aware, the Auditors doesn’t not
have any relationship (other than that of an Auditor) with
• Review of the preparation of the Annual report to
the Company other than disclosed above. The Auditors
ensure the reliability of the process, consistency of
also do not have any interest in the Company. For the said
the accounting policies and methods and compliance
reasons the Committee determined that the Auditors are
with Sri Lanka Accounting Standards.
Independent.
Internal Control System

The performance of the External Auditors has been
• The Committee is satisfied that the control environment evaluated and the Audit Committee has recommended
prevailing in the Company provides reasonable but to the Board of Directors that V.S.& Associates, Chartered
not absolute assurance that the financial position Accountants be re-appointed as Auditors for the financial
of the Company is adequately monitored and that year ending 31st March 2016 at remuneration to be
the systems are in place to minimize the impact of determined by the Board, subject to the approval of the
identifiable risks. Shareholders at the Annual General Meeting.
• The Committee also monitors the timely payments of

all statutory obligations.
• The Committee also monitors the effectiveness of the

internal and financial control procedures on the basis
of the reports and findings submitted by the Internal ……………………………………………
and External Auditors of the Company.
Chairman of the Audit Committee
24th August 2015

Colombo

5.5 Remuneration Committee Report
The Composition The Chief Operating Officer and the Accountant attended
meetings by invitation.
The Remuneration Committee comprises of two (02)
Independent Non-Executive Directors and one (01) Non- Remuneration Policy
Executive Director.
The Remuneration Committee strongly believes that the
• Prof. R W T M R Bandara - Independent Non- remuneration policy should be in par with the industry
Executive Director
• Ms. D L De Silva – Non-Executive Director standards in order to motivate, attract and retain the best
• Dr. A G P A Gunawansa – Independent Non- professional and managerial talent and expertise. The
Executive Director recommendations of the Committee are implemented with
the approval of the Board of Directors.
Prof. R W T M R Bandara served as the Chairman of the
Remuneration Committee while Chief Operating Officer Procedure
functioned as the Secretary to the Remuneration Committee
The Committee is fulfilling the above tasks by reviewing
except when own evaluation and remuneration was under
the information relating to retirement and remuneration
discussion. The Accountant assisted the Committee by
of employees. Extension of services not exceeding one
providing the relevant information for their decision within
year is considered on a case by case basis over the
the terms of reference approved by the Board.
retirement age of 55 years. The Remuneration packages
Role of the Committee are decided in par with market rates and practices and
similar to other establishments. The Committee determines
The Remuneration Committee is responsible for
the revision/increments based on performance and makes
recommending remuneration payable to Executive
recommendation to the Board of Directors and upon
Directors, Non-executive Directors and Key managerial
consideration of such recommendations the Board makes
personnel including the Chief Executive Officer based
the final determination.
on performance parameters. Also, the Committee is
responsible for the remuneration structure of the employees
of the Company.
Responsibilities of the Committee include a review of and

...................................................
recommendation to the Board on;
• Remuneration policy and framework Chairman of the Remuneration Committee
• Senior executives’ remuneration and incentives
schemes 24th August 2015
Colombo.
Meetings
The attendance of the Committee members of the

Remuneration Committee during the year under reviewed
is tabulated below;
Name of the Director Eligible to Attended
attend
Prof. R W T M R Bandara 2 2
Ms. D L De Silva 2 2
Dr. A G P A Gunawansa 2 2

5.6 Directors’ Statement on Internal Controls
Responsibility Key Features of the process adopted in applying and

reviewing the design and effectiveness of the Internal
In line with Section D.1.3 of Code of Best Practice on
Control System on Financial Reporting
Corporate Governance jointly issued by the Securities and
Exchange Commission of Sri Lanka and the Institute of The key processes that have been established in reviewing
Chartered Accountants of Sri Lanka, the Board of Directors the adequacy and integrity of the system of internal controls
presents this report on Internal Control. with respect to financial reporting include the following;
The Board of Directors are responsible for the adequacy • The Board Committees established by the Board
and effectiveness of the Serendib Engineering Group of the Company assists the Board in ensuring the
PLC systems of Internal Controls. However, the Board effectiveness of the Groups’ daily operations and
recognizes that such systems are designed to manage that the Group operations are in accordance with the
the company’s key areas of risk within an acceptable risk corporate objectives, strategies and the annual budget
profile, rather than to eliminate the risk of failure to achieve as well as the policies and business directions that
the strategies and corporate objectives of the Company. have been approved.
Accordingly, the systems implemented can provide only
• The Internal Auditor of the Group checks for
reasonable but not absolute assurance against material
compliance with policies and procedures and the
misstatement of management and financial information
effectiveness of the internal control systems on an
and records or against financial losses of fraud.
ongoing basis using samples and rotational basis and
Whilst the board has overall responsibility for the highlights significant findings in respect of any non-
company’s system of internal controls, it has delegated compliance. Audits are carried out on all subsidiaries
the implementation of these internal control systems to and within the Group in accordance with the annual
the management. The board has established an ongoing audit plan which approved by the Board of Audit
process for identifying, evaluating and managing the risks Committee. The internal audit plan that covers internal
faced by the Company as stated in the section of Integrated audit coverage and scope of work is presented for
Risk Management in this annual report. Moreover, the Audit Committee and the Board. Further, the annual
monitoring process includes enhancing the systems of audit plan is reviewed and approved by the Board of
internal controls as and when there are changes to business Audit Committee.
environment or regulatory guidelines. The Management
• Internal audit reports are submitted to the Audit
assists the Board in the implementation of the Board’s
Committee during its quarterly meetings which
policies and procedures to mitigate and control risks.
encompasses the audit findings together with
Further to implement the recommendation, the internal
recommendations thereon. The senior and functional
control systems are subject to the board’s regular review
line management are tasked to ensure management
with a view towards appraising the effectiveness of these
action plans are carried out effectively and regular
systems within the Company.
follow up audits are performed to monitor the
continued compliance.
• In addition to this internal control mechanism,

the Company also received extensive and detailed
reports, management letters from its external Auditors
that primarily focuses on financial controls. The
management letters were also presented to the Audit
Committee for deliberations. In the event of non-

compliance, appropriate corrective actions have Confirmation
been taken in addition to amendments to the relevant
Based on the above processes, the Board of Directors
procedures, if required.
confirm that the financial reporting system of the Group has
• The Board and employees of the Company are been designed to provide reasonable assurance regarding
committed to adhere to the best practice in corporate the reliability of financial reporting and the preparation of
governance and observing the highest standards of Financial Statements for external purposes has been done
integrity and behavior in all activities conducted by the in accordance with the Sri Lanka Accounting Standards
Company, including relationships with its customers, (SLFRS/LKAS) and other regulatory requirements.
suppliers, shareholders, employees, business partners
Review by External Auditors
and within the community and environment in which
company operates. The External Auditors have reviewed the Internal Control
System of the Group and reported to the Board of Directors
• Risk Management is vital for continued profitability
that nothing has come to their attention that causes them
and enhancement of shareholder value; hence Risk
to believe that the statement is inconsistent with their
Management is practiced within the Group on an
understanding of the process adopted by the Board in
interactive basis. The Board regards risk management
the review of the design and effectiveness of the internal
as an integral part of its business operation where
control system over financial reporting of the Company.
oversee the implementation of the risk management
framework, periodically review the risk management By order of the Board of Directors of Serendb Engineering
processes and ensure that on-going measures taken Group PLC,
were adequate to manage, address or mitigate the
identified risks. All new and major investments
have to observe a process of approval that includes
an evaluation of the associated risks. A Corporate
risk Management Framework was developed and ........................................ .....................................
documented via a Corporate Risk Management H N De Silva H G S Kariyawasam
Manual which sets out in a comprehensive manner Chairman Director
the process adopted by the Company towards risk
identification, evaluation and control and monitoring.
Further detailed information on the Company’s
risk management activities are highlighted in the
Integrated Risk Management Report on pages 7 to 10 ........................................
of this Annual Report. Prof. R W T R Bandara
Chairman – Audit Committee
24th August 2015
Colombo

5.7 Compliance Report
5.7.1 Statement of Compliance under Section 7.10 of the Rules of the Colombo Stock Exchange (CSE) on Corporate
Governance
Relevant Degree of
CSE Rule SEG
Section Compliance
7.10 Compliance
The Group is in compliance with
Compliance with Corporate Governance the Corporate Governance Rules
a./b./c. Complied with
Rules and deviations are explained where
applicable.
7.10.1 Non-Executive Directors
5 out of 6 Board Members are Non-
At least two members or 1/3 of the
Executive Directors. SEG concerns to
a./b./c. Board, which is higher should be Non- Complied with
maintain an appropriate mix of skills
Executive Directors
and experience in the Board.
7.10.2 Independent Directors
2 or 1/3 of Non-executive directors, 3 out of 5 Non-Executive Directors are
a. Complied with
which is higher shall be “Independent” Independent
Independence of the Directors has
Each Non-Executive Director to submit been determined in accordance with
a signed and dated declaration of his/her CSE Listing Rules (Appendix 7A) and 3
b. Complied with
independence or non-independence in independent Non-Executive Directors
the prescribed format have submitted signed confirmation of
their independence
7.10.3 Disclosures Relating to Directors
All Independent Non-Executive
The Board shall annually make a
Directors have submitted declarations
determination as to the independence of
as to their independence up on
a./b. the Non-executive Directors and names Complied with
appointments and subsequently
of Independent Directors should be
review the independence of each non-
disclosed in the Annual Report
executive as required.
A brief resume of each Directors should
Refer Board of Directors section of the
c. be included in the Annual Report Complied with
Annual Report.
including the Director’s experience
Forthwith provide a brief resume of new A brief resume of new directors and
Directors appointed to the Board with the appointments were submitted to
d. Complied with
details specified in 7.10.3 a, b and c to the CSE when such appointments were
the CSE made.
7.10.4 Criteria for Defining Independence
3 directors are qualified as
Requirements for meeting the criteria to
a. - h. Complied with “Independent” as per the criteria given
be an Independent Director
under Listing Rules
7.10.5. Remuneration Committee
Remuneration Committee shall Remuneration Committee is comprises
a.1 comprise of Non-Executive Directors, a Complied with of 2 Independent Non-Executive
majority of whom will be independent Directors and 1 Non-executive Director

Compliance Report (Contd)
One Non-Executive Director shall be

Refer Remuneration Committee report
a.2 appointed as Chairman of the Committee Complied with
of the Annual Report
by the Board of Directors
Remuneration Committee shall
recommend the remuneration of Refer Remuneration Committee report
b. Complied with
the Chief Executive Officer and the of the Annual Report
Executive Directors
Names of Remuneration Committee Refer Remuneration Committee report
c.1 Complied with
members of the Annual Report
Refer Remuneration Committee report
c.2 Statement of Remuneration policy Complied with
of the Annual Report
Refer Directors’ Remuneration sub
Aggregate remuneration paid to
section under Annual report of the
c.3 Executive Directors and Non-Executive Complied with
Board on the State of Affairs of the
Directors
Annual Report
7.10.6 Audit Committee
Audit Committee is comprises of 2
Audit Committee shall comprise of Non- Independent Non-Executive Directors
a.1 Executive Directors, a majority of whom Complied with and 1 Non-executive Director as stated
should be independent in the Audit Committee Report of the
Annual Report
A Non-Executive Director shall be the Chairman of the Audit Committee is an
a.2 Complied with
Chairman of the committee Independent Non-Executive Director
The Chairman, Chief Executive Officer
Chief Executive Officer and Chief
and Group Chief Financial Officer
a.3 Financial Officer should attend Audit Complied with
attended most of the Audit Committee
Committee meetings
meetings by invitation
The Chairman of the Audit Committee or The Chairman of the Audit Committee is
a.4 one member should be a member of a Complied with a member of a professional accounting
professional accounting body body
Refer Report of the Audit Committee in
b. Functions of the Audit Committee Complied with
the Annual Report
The Audit Committee assists the Board
Overseeing of the preparation,
in fulfilling its oversight responsibilities
presentation and adequacy of
b.1 Complied with for the integrity of the financial
disclosures in the financial statements in
statements of the Company and the
accordance with SLFRS/LKAS
Group
The Audit Committee has the overall
responsibility for overseeing the
Overseeing the compliance with
preparation of financial statements
financial reporting requirements,
b.2 Complied with in accordance with the laws and
information requirements as per laws
regulations of the country and also
and regulations
recommending to the Board, on the
adoption of best accounting policies
The Audit Committee assesses the role
Ensuring the internal and risk
and the effectiveness of the Group
management controls are adequate to
b.3 Complied with Business Process Review division
meet the requirements of the SLFRS/
which is largely responsible for internal
LKAS
control and risk management

Compliance Report (Cont)
Assessment of the independence and The Audit Committee assesses the

b.4 performance of the entity’s External Complied with external auditor’s performance,
Auditors qualifications and independence
The Committee is responsible for
appointment, reappointment, removal
Make recommendations to the Board
b.5 Complied with of External Auditors and also the
pertaining to External Auditors
approval of the remuneration and
terms of Engagement
Names of the Audit Committee members Refer Board Sub Committees section of
c.1 Complied with
shall be disclosed the Annual Report
Audit Committee shall make a
Refer Report of the Audit Committee in
c.2 determination of the independence of Complied with
the Annual Report
the external auditors
Report on the manner in which Audit Refer Report of the Audit Committee in
c.3 Complied with
Committee carried out the Annual Report
5.7.2 Compliance with the Code of Best practice of Corporate Governance Issued jointly by the Securities and
Exchange Commission of Sri Lanka (SEC) and the Institute of Chartered Accountants of Sri Lanka (ICASL).
A. Directors
Relevant Degree of
CSE Rule SEG
Section Compliance
A.1. The Board - Effective Board , which should direct, lead and control the Company
Regular Board meetings and supply of
A.1.1 Complied with Refer page no19 section 5.3.5
information
The Board should be responsible for
matters including , formulation and
implementation of a sound business
strategy, Skills and succession of the
Management team, effective systems to
secure integrity of information, internal
controls, business continuity and risk
A.1.2 management, compliance with laws, Complied with Refer page no 19 section 5.3.1
regulations and ethical standards,
stakeholder interests, recognize
sustainable business development in
corporate strategy, adopting appropriate
accounting policies and fostering
compliance with financial regulations
and fulfilling other Board functions
Collectively and individually act in
accordance with the laws of the country Refer page no 19 section 5.3.1 and
A.1.3 Complied with
and obtain professional advice as and 5.3.2
where necessary
Access to advice and services of the
A.1.4 Complied with Refer page no 20 section 5.3.8
Company Secretary

All directors possess the skills and

Bring independent judgment on various
expertise in diverse fields and
A.1.5 business issues and standards of business Complied with
contributed by giving their independent
conduct
judgments and ideas when required.
A.1.7 Board induction and training Complied with Refer page no 19 section 5.3.3
A.2 Chairman and Chief Executive Officer (CEO)
Justification for combining the roles
A.2.1 N/A N/A
of the Chairman and the CEO
A.3 Chairman’s Role
The Chairman should ensure Board
A.3.1 proceedings are conducted in a proper Complied with Refer page no19 section 5.3.2
manner
A.4 Financial Acumen
The Board should ensure the availability
within it of those with sufficient
A.4 Complied with Refer page no 19 section 5.3.2
financial acumen and knowledge to
offer guidance on matters of finance
A.5 Board Balance
In the event the Chairman and CEO
The positions of the Chairman and the
is the same person, Non-Executive
A.5.1 N/A CEO have been separated as outlined
Directors should comprise a majority of
on pages 12 to 17
the Board
Where the constitution of the Board
of Directors includes only two Non-
A.5.2 Executive Directors, both such N/A N/A
Non-Executive Directors should be
“Independent”
A.5.3 Definition of Independent Directors Complied with Refer page no 20 section 5.3.7
A.5.4 Declaration of Independent Directors Complied with Refer page no 20 section 5.3.7
Board determinations on independence
A.5.5 or non-independence of Non-Executive Complied with Refer page no 20 section 5.3.7
Directors
If an Alternate Director is appointed by a
Non-Executive Directors such Alternate
A.5.6 N/A N/A
Director should not be an Executive of
the company
In the event the Chairman and CEO
is the same person, the Board should
A.5.7 appoint one of the Independent Non- N/A N/A
Executive Directors to be the “Senior
Independent Director”
The Senior Independent Director should
make himself available for confidential
A.5.8 N/A N/A
discussions with other Directors who
may have concerns
The Chairman should hold meetings
with the Non-Executive Directors only, Chairman meets Non-Executive
A.5.9 Complied with
without the presence of Executive Directors when it is required
Directors

A.6 Supply of Information

Board should be provided with timely
A.6.1 information to enable it to discharge its Complied with Refer page no 19 section 5.3.5
duties
Timely submission of the minutes,
A.6.2 agenda and papers required for the Complied with Refer page no 19 section 5.3.5
Board Meeting
A.7 Appointments to the Board
The Company doesn’t not have a
Nomination Committee to make
Nomination Committee as we believe
A.7.1 recommendations on new Board N/A
given the structure of the Company it
appointments
would not be required
Assessment of the capability of Board to
A.7.2 Complied with Refer page no 19 and 20 section 5.3.6
meet strategic demands of the Company
Disclosure of new Board member profile
and Interests
A.8 Re-election
Re-election at regular intervals and
A.8.1/A.8.2 should be subject to election and re- Complied with Refer page no 19 section 5.3.4
election by shareholders
A.9 Appraisal of Board Performance
The Board should annually appraise
A.9.1 itself on its performance in the discharge Complied with Refer page no 19 and 20 section 5.3.6
of its key responsibilities
The Board should also undertake
A.9.2 an annual self-evaluation of its own Complied with Refer page no 19 and 20 section 5.3.6
performance and that of its Committees
The Board should state how such
A.9.2 performance evaluations have been Complied with Refer page no 19 and 20 section 5.3.6
conducted
A.10 Disclosure of Information in respect of Directors
Profiles of the Board of Directors and
Board meeting attendance
A.11 Appraisal of Chief Executive Officer (CEO)
Appraisal of the CEO against the set
A.11.1/A.11.2 Complied with Refer page no 19 section 5.3.6
strategic targets

B. Directors’ Remuneration
Relevant Degree of
CSE Rule SEG
Section Compliance
B.1 Remuneration Procedure
The Board of Directors should set up a
B.1.1 Complied with Refer page no 24 section 5.5
Remuneration Committee
Remuneration Committees should
B.1.2 consist exclusively of Non-Executive Complied with Refer page no 24 section 5.5
Directors
The Chairman and members of the
B.1.3 Remuneration Committee should be Complied with Refer page no 24 section 5.5
listed in the Annual Report each year
Determination of the remuneration of
Non-Executive Directors
The Remuneration Committee should
consult the Chairman and/or CEO about
its proposals relating to the remuneration
of other Executive Directors
B.2 The level and make up of remuneration
Performance related elements in pay
B.2.1 to B.2.4 structure and alignment to Industry Complied with Refer page no 24 section 5.5
practices
Executive share options should not be
B.2.5 N/A N/A
offered at a discount
Designing schemes of performance-
related remuneration
B.3 Disclosure of Remuneration
Refer page no 59 note no 06 to the
Disclosure of remuneration policy and
B.3.1 Complied with financial statements for the year ended
aggregate remuneration
31st March 2015
C. Relations with Shareholders
Relevant Degree of
CSE Rule SEG
Section Compliance
C.1 Constructive use of the AGM and conduct of General Meetings
Proxy votes, those for and against and
C.1.1 Counting of proxy votes Complied with
withheld are counted
Separate resolution to be proposed for Separate resolutions are proposed for
C.1.2 Complied with
each item each item
All the Executive and Non-Executive
Heads of Board Sub-Committees to be
C.1.3 Complied with Directors are available to answer
available to answer queries
queries or concerns
Notice of AGM and related documents
Notice of Annual General Meeting to be
are sent to the shareholders along with
C.1.4 sent to shareholders with other papers as Complied with
the Annual Report within the specified
per statute
time

C.2 Communication with shareholders

Channel to reach all shareholders to Refer page no 22 section 5.3.14 of this
C.2.1 Complied with
disseminate timely information Annual Report
Policy and methodology of
Refer page no 22 section 5.3.14 of this
C.2.2 communication with shareholders and Complied with
Annual Report
implementation
C.3 Major and material Transactions including related party transactions
Disclosure of all material facts involving Refer page no 69, note no 26 of the
C.3.1 all material transactions including Complied with financial statement for the year ended
related party transactions 31st March 2015
D. Accountability and Audit
Relevant Degree of
CSE Rule SEG
Section Compliance
D.1 Financial Reporting
Disclosure of interim and other price-
D.1.1 sensitive and statutorily mandated Complied with Refer page no 21 section 5.3.13
reports to Regulators
Declaration by the Directors that the
company has not engaged in any
activities, which contravene laws and
Refer Annual Report of the Board on
regulations, declaration of all material
D.1.2 Complied with the state of affairs of the Company on
interests in contracts, equitable treatment
page 36 and 37
of shareholders and going concern with
supporting assumptions or qualifications
as necessary
Refer Annual Report 2014/15
D.1.3 Statement of Directors’ responsibility Complied with Statement on Director’s Responsibility
on page no 39
D.1.4 Management Discussion and Analysis Complied with Management Discussion and Analysis
on page no 04 and 05
The Directors should report that the
business is a going concern, with
D.1.5 Complied with Statement on Director’s Responsibility
supporting assumptions or qualifications
on page no 39
as necessary
Refer page no 69 , note no 26 of the
D.1.7 Disclosure of Related Party Transactions Complied with financial statement for the year ended
31st March 2015
D.2 Internal Control
Annual review of effectiveness of Refer Directors Statement on Internal
D.2.1 system of Internal Control and report to Complied with Controls on page no 25 and 26 Section
shareholders as required 5.6 of this Annual Report
Refer Directors Statement on Internal
D.2.2 Internal Audit function Complied with Controls on page no 25 and 26 Section
5.6 of this Annual Report
Refer Directors Statement on Internal
Maintaining a sound system of internal
D.2.3/D.2.4 Complied with Controls on page no 25 and 26 Section
control
5.6 of this Annual Report

D.3 Audit Committee

The Audit Committee should be
comprised of a minimum of two
Independent Non-Executive Directors or
exclusively by Non-Executive Directors
Refer Audit Committee Report on page
D.3.1 or, a majority of whom should be Complied with
no 22 Section 5.4 of this Annual Report
independent, whichever is higher. The
Chairman of the Committee should be
a Non-Executive Director, appointed by
the Board
Terms of reference, duties and Refer Audit Committee Report on page
D.3.2 Complied with
responsibilities no 22 Section 5.4 of this Annual Report
The Audit Committee to have written
Refer Audit Committee Report on page
D.3.3 Terms of Reference covering the salient Complied with
no 22 Section 5.4 of this Annual Report
aspects
Disclosure of Audit Committee Refer Audit Committee Report on page
D.3.4 Complied with
membership no 22 Section 5.4 of this Annual Report
D.4 Code of Business Conduct and Ethics
There is no written Code of Business
Availability of a Code of Business
Conduct. (page no 21 section 5.3.12)
Conduct and Ethics and an affirmative
D.4.1 Complied with Refer Corporate Governance Report
declaration that the Board of Directors
on pages 18 to 24 Section 5.3 of this
abide by such Code
Annual Report
The Chairman must certify that he/she is Refer Corporate Governance Report
D.4.2 not aware of any violation of any of the Complied with on pages 18 to 24 Section 5.3 of this
provisions of this Code Annual Report
D.5 Corporate Governance Disclosures
The Directors should include in the Refer Corporate Governance Report
D.5.1 company’s Annual Report a Corporate Complied with on pages 18 to 24 Section 5.3 of this
Governance Report Annual Report
E. Institutional Investors
Relevant Degree of
CSE Rule SEG
Section Compliance
E.1 Shareholder Voting
Conducting regular and structured There is an Investor Relations team
E.1.1 dialogue with shareholders based on a Complied with to conduct regular discussions with
mutual understanding of objectives shareholders as and when applicable.
E.2 Evaluation of Governance Disclosures
When evaluating companies’
governance arrangements, particularly
those relating to Board structure and
Refer page no 21 Section 5.3.12 of this
E.2 composition, institutional investors Complied with
Annual Report
should be encouraged to give due
weight to all relevant factors drawn to
their attention

F. Other Investors
Relevant Degree of
CSE Rule SEG
Section Compliance
F.1 Investing Divesting Decision
Individual shareholders, investing
directly in shares of companies should
Refer page no 22 section 5.3.14 of this
F.1 be encouraged to carry out adequate Complied with
Annual Report
analysis or seek independent advice in
investing or divesting decisions
F.2 Shareholder Voting
Individual shareholders should be
encouraged to participate in General
F.2 Complied with Complied at AGM / EGM
Meetings of companies and exercise
their voting rights

06. Financial Statements of the company
6.1 Annual Report of the Board of Directors
The Directors of the Serendib Engineering Group PLC have pleasure in presenting their report for the year 2014/2015
together with the Audited Financial Statements for the year ended 31st March 2015. The details set out herein provide the
pertinent information in compliance with the Companies Act No. 07 of 2007 and the Colombo Stock Exchange Listing
Rules and are guided by recommended best accounting practices.
Principal Activities Retirement of Directors and their Re-Election
A holding company involved in diverse engineering In accordance with Article 118 of the Articles of
activities. Association of the Company, Ms. D L De Silva, retires by
rotation and is eligible for re-election
Results and Appropriations
Directors and CEO’s Shareholdings
The Financial Statements and the Independent Auditor’s
Report of the Company are given on pages 40 to 74 of this 2014/ 2013/
Annual Report. 2015 2014
No of No of
Name of the Director
Review of Operations & Performance Shares Shares
Mr. H N De Silva Nil Nil
The Chairman’s Review provides an overall assessment Ms. D L De Silva Nil Nil
Mr. H G S Kariyawasam Nil Nil
of the Company’s operations and performance during the
Prof. R W T M R Bandara Nil Nil
financial year under review on page 03.
Dr. A G P A Gunawansa Nil Nil
Directorate Mr. A C De Silva Nil Nil
Mr. S C De Silva (Former CEO) 1,000,000 200,000
The Members of the Board during the financial year under Total
1,000,000 200,000
review as at the date of the report were as follows:-
Director’s Remuneration
Mr. H N De Silva - Chairman
Ms. D L De Silva - Non-Executive Director Directors remuneration is disclosed in Note No. 06 to the
Financial Statements on page 59 of the Annual Report.
Mr. H G S Kariyawasam - Non-Executive Director
Prof. R W T M R Bandara - Independent Non- Dividends

Executive Director
The Board of Directors does not recommend the payment
Dr. A G P A Gunawansa - Independent Non- of a dividend for the financial year under review.
Executive Director
Mr. A C De Silva - Independent Non- Major Shareholdings

Executive Director
The 20 major Shareholders of the Company as at 31st
The Profile of the Board of Directors of the Company is March 2014 and 2015 are listed on page 75 under “Share
given in pages 12 to 14 of this report. Information”.
Resignation of Executive
Mr. Samual Clive De Silva retired from the position of CEO

w.e.f. 31st March 2015.

Shareholding Remuneration Committee
As at 31/03/2015 there were 529 Registered Shareholders. The Remuneration Committee comprises of Prof. R W T M
The distribution of shareholders is indicated on page 76 R Bandara, Ms. D L De Silva and Dr. A G P A Gunawansa
under “Share Information”. of whom Professor Bandara functions as the Chairman of
the Committee.
Stock Market Information
Statutory Payments
Information relating to earnings, dividends, net assets per
share is given on page 02,80 and 81 of this document. The Directors, to the best of their knowledge and belief are
satisfied that all statutory payments have been made up to
Stated Capital date or provided for same.
At an Extraordinary General Meeting of the Shareholders Environmental Protection

of the Company held on 12th January 2015, each Ordinary
Share of the Company was Sub-Divided into Five (05) The Board of Directors has taken adequate precautions
Ordinary Shares, thereby increasing the number of issued when diversifying the business activities to ensure that the
Ordinary Shares of the Company from 6,476,650 to Company does not engage in any activities which could
32,383,250. be detrimental to the environment.
The Stated Capital of the Company as at 31st March 2015 Risk Management
was Rs.178,107,910/- representing 32,383,250 Ordinary
Shares. The structure of the Stated Capital is given in Note The Board of Directors has structured proper systems
19 to the Accounts. and controls to identify probable risk. These systems are
periodically evaluated and reviewed by the Board through
Going Concern the Integrated Risk Management Committee to ensure
smooth functioning. Remedial measures also have been
The Board of Directors of the Company are satisfied that implemented to mitigate risk.
the Company has adequate resources to continue its
operations in the forceable future. Therefore the Company Contributions to Charities
continues to adopt a going concern concept in preparing
the accounts of the Company. The Company has not contributed to charities during the
financial year under review.
Interests Register
Accounting Policies
An Interests Register is maintained, in compliance with the
Companies Act No.07 of 2007. There has been no change in the Accounting Policies
adopted by the Company in preparation of Financial
The particulars of the entries made in connection with Statements during the Financial Year under review other
the General Disclosure in terms of Section 192(2) of the than what is stated in the Financial Statements.
Companies Act No.07 of 2007 are given in Note 26 under
Related Party transactions. Post-Balance Sheet events
Audit Committee Subsequent to the date of the Balance Sheet no

circumstance has arisen which require adjustments to the
The Audit Committee comprises of Mr. H G S accounts.
Kariyawasam, Prof. R W T M R Bandara and Mr. A C De
Silva, of whom Prof. Bandara functions as the Chairman of Events After The Reporting Period
the Committee. The report of the Audit Committee is given
on Page 22 and 23. Subsequent to the date of the Balance Sheet no
circumstance has arisen which require adjustments to the
accounts except for the Note 30.

Auditors This Annual Report is signed for and on behalf of the Board
of Directors
The accounts for the year have been audited by V S and
Associates, Chartered Accountants, who retire and are By order of the Board of Serendib Engineering Group PLC
eligible for re-appointment. The Directors recommend
their re-appointment.
The Auditors were paid a sum of Rs. 362,097 as Audit Fees

by the Company for the financial year under review. As
far as the Board is aware the Auditors do not have any .............................. ..............................
relationship with the Company other than carrying out the H N De Silva D L De Silva
External Audit. Director Director
..............................
Corporate Arcade Limited
Company Secretaries
Colombo
24th August 2015

6.2 The Statement of Directors’ Responsibility
The responsibility of the Directors in relation to the Financial Statements of the Company and the Consolidated Financial
Statements of the Company and its Subsidiaries are set out in the following statement. These differ from the responsibilities
of the Auditors, which are set out in the Report of the Auditors given on page 40
In accordance with the provisions of the Companies Act of the Company and of the Group for ensuring that the
No.7 of 2007, the financial statements comprise of ; financial statements comply with the Companies Act No.
07 of 2007.
• A statement of Comprehensive Income of the
Company and its Subsidiaries in which present a true The Directors are also responsible for taking reasonable
and fair view of the profit and loss generated by the measures to safeguard the assets of the Company and of
Company and its Subsidiaries for the financial year the Group, and in that context to have proper regarded to
2014/15. the establishment of appropriate systems of internal control
to preventing and detecting frauds and other irregularities.
• A statement of Financial Position of the Company and
its Subsidiaries in which present a true and fair view The Directors of the Company are of the view that they
of the state of affairs as at the end of the financial year. have discharged their responsibilities as set out in this
statement.
Accordingly, the Board of Directors also wishes to confirm
that in preparing the financial statements;
• Appropriate accounting policies have been selected By Order of the Board

and applied in a consistent manner
• Reasonable and prudent judgments and estimates

have been made and applicable accounting standards
have been followed ................................................
• Presented in accordance with the Sri Lanka Corporate Arcade Limited

Accounting Standards (SLFRS/LKAS) Company Secretaries
24th August 2015

Further, the Board of Directors are responsible for ensuring
Colombo
that the Company keeps sufficient accounting records to
disclose with reasonable accuracy of the financial position

6.3 Independent Auditors’ Report
20/62, Fairfield Gardens,

Colombo 08,
Sri Lanka.
Tel : (94-11) 2699606, 2699917, 2691281
Fax:(94-11) 2699918.
Partners email: vsa@slt.lk
Mrs. L. R. SHAH F.C.A.
L.J. SELVANAYAGAM F.C.A
TO THE SHAREHOLDERS OF ethical requirements and plan and perform the audit to
SERENDIB ENGINEERING GROUP PLC obtain reasonable assurance about whether the financial
statements are free from material misstatement.
Report on the Financial Statements An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial
We have audited the accompanying financial statements statements. The procedures selected depend on the
of Serendib Engineering Group PLC (“the Company”), and auditor’s judgment, including the assessment of the risks of
the consolidated financial statements of the Company material misstatement of the financial statements, whether
and its subsidiaries (“the Group”), which comprise the due to fraud or error. In making those risk assessments, the
Statement of Financial Position as at 31st March 2015, and auditor considers internal control relevant to the entity’s
the Statement of Profit or Loss and Other Comprehensive preparation of the financial statements that give a true
Income, Statement of Changes in Equity and Statement and fair view in order to design audit procedures that are
of Cash Flows for the year then ended, and a summary appropriate in the circumstances, but not for the purpose
of significant accounting policies and other explanatory of expressing an opinion on the effectiveness of the
information set out on pages 42 to 74. entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the
Board’s Responsibility for the Financial Statements
reasonableness of accounting estimates made by Board, as
The Board of Directors (“Board”) is responsible for the well as evaluating the overall presentation of the financial
preparation of these financial statements that give a true statements.
and fair view in accordance with Sri Lanka Accounting
We believe that the audit evidence we have obtained is
Standards and for such internal control as Board determines
sufficient and appropriate to provide a basis for our audit
is necessary to enable the preparation of financial
opinion.
statements that are free from material misstatement,
whether due to fraud or error. Opinion
Auditors’ Responsibility In our opinion, the consolidated financial statements give

a true and fair view of the financial position of the Group
Our responsibility is to express an opinion on these
as at 31st March 2015, and of its financial performance
financial statements based on our audit. We conducted
and cash flows for the year then ended in accordance with
our audit in accordance with Sri Lanka Auditing
Sri Lanka Accounting Standards.
Standards. Those standards require that we comply with

Report on Other Legal and Regulatory Requirements - The financial statements of the Company and
the Group comply with the requirements of
As required by section 163 (2) of the Companies Act No.
sections 151and 153 of the Companies Act
07 of 2007, we state the following:
No. 07 of 2007.
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
V.S. & ASSOCIATES
and, as far as appears from our examination,
CHARTERED ACCOUNTANTS
proper accounting records have been kept
by the Company,
Colombo
- The financial statements of the Company 24th August 2015
give a true and fair view of its financial
position as at 31st March 2015, and of its
financial performance and cash flows for
the year then ended in accordance with Sri
Lanka Accounting Standards.

6.4 Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31st March Note Group Company

2015 2014 2015 2014
Rs. Rs. Rs. Rs.
Revenue 2 266,049,940 261,357,719 736,000 11,975,000

Cost of Sales (190,004,705) (156,495,537) (1,680,166) (10,891,738)
Gross Profit / (Loss) 76,045,235 104,862,182 (944,166) 1,083,262
Other Income 3 2,184,797 3,704,518 - -
78,230,032 108,566,700 (944,166) 1,083,262
Administrative Expenses (90,704,335) (80,353,244) (1,672,743) (1,391,853)

Distribution Expenses (8,798,613) (9,371,712) - -
Results from Operating Activities (21,272,916) 18,841,744 (2,616,909) (308,591)
Finance Income 4 5,581,312 6,703,172 2,498,154 1,037,026

Finance Costs 5 (3,244,211) (3,873,411) (814,658) (167,612)
Net Finance Income 2,337,101 2,829,761 1,683,496 869,414
Profit / (Loss) before Tax 6 (18,935,815) 21,671,505 (933,413) 560,823

Income Tax Expense 7 5,041,785 (5,430,594) (51,816) (92,615)
Profit / (Loss) for the year (13,894,030) 16,240,911 (985,229) 468,208
Other Comprehensive Income - - - -
Total Other Comprehensive Income for the

- - - -
year
Total Comprehensive Income / (Expense)

for the year (13,894,030) 16,240,911 (985,229) 468,208
Attributable to:
Equity Holders of the Parent (13,352,159) 9,964,949 (985,229) 468,208
Non-Controlling Interest (541,871) 6,275,962 - -
Total Comprehensive Income / (Expense)

for the year (13,894,030) 16,240,911 (985,229) 468,208
Earnings / (Loss) per Share 8 (0.41) 0.31 (0.03) 0.01
Figures in brackets indicate deductions.
The Financial Statements are to be read in conjunction with the related notes, which form an integral part of the Financial
Statements set out on pages 42 to 74.

6.5 Statement of Financial Position
As at 31st March Note Group Company

2015 2014 2015 2014
Rs. Rs. Rs. Rs.
ASSETS
Non - Current Assets
Plant & Equipment 9 23,002,618 17,678,735 1,004,674 1,481,234
Intangible Assets 10 21,769,593 21,769,593 - -
Investments in Subsidiaries 11 - - 149,737,890 138,737,890
Other Financial Assets 12 15,000,000 15,000,000 - -
Deferred Tax Asset 13 7,650,507 2,307,996 - -
67,422,718 56,756,324 150,742,564 140,219,124
Current Assets
Inventories 14 35,123,649 35,762,717 2,975,148 1,732,662
Trade and Other Receivables 15 195,821,653 179,019,915 172,872 91,859
Amounts due from Related Parties 16 245,304 3,500,000 2,728,553 2,946,220
Other Financial Assets 12 3,830,044 17,192,988 1,560,000 3,109,983
Short Term Investments 17 - 12,186,350 - -
Cash and Cash Equivalents 18 43,190,917 25,497,677 2,713,305 1,519,004
TOTAL ASSETS 345,634,285 329,915,971 160,892,442 149,618,852
EQUITY AND LIABILITIES

Equity
Stated Capital 19 178,107,910 178,107,910 178,107,910 178,107,910
Revenue Reserves 37,404,615 24,921,589 (53,649,114) (52,663,885)
Equity Attributable to Equity
Holders of the Parent 215,512,525 203,029,499 124,458,796 125,444,025
Non-Controlling Interest 4,339,897 30,716,953 - -
Total Equity 219,852,422 233,746,452 124,458,796 125,444,025
Non - Current Liabilities

Finance Lease Obligations 20 5,494,803 5,086,416 - -
Employee Benefits 21 5,397,789 6,763,918 - -
Deferred Tax Liability 13 202,786 151,286 202,786 151,286
Current Liabilities
Trade and Other Payables 22 101,122,008 68,518,070 1,811,954 677,324
Amounts due to Related Parties 23 7,800,674 6,796,502 34,418,763 23,334,014
Finance Lease Obligations 20 4,947,839 4,409,561 - -
Interest Bearing Borrowings 24 600,000 3,302,000 - -
Income Tax Liability 25 134,069 608,608 143 12,203
Bank Overdrafts 18 81,895 533,158 - -
TOTAL EQUITY & LIABILITIES 345,634,285 329,915,971 160,892,442 149,618,852
I certify that these financial statements are in compliance with the requirements of the Companies Act No. 07 of 2007.
……………………………………
A.N.D. De Silva
Group Chief Financial Officer
The Board of Directors is responsible for the preparation and presentation of these financial statements.
The Financial Statements on page 42 to 74 were approved by the Board of Directors on 24th August 2015and were
sign in Colombo on 24th August 2015 on its behalf by :
………………………… …………………………
H.N. De Silva D.L. De Silva
Director Director

6.6 Statement of Changes in Equity
Attributable to Equity Holders Non-

For the year ended 31 March
st Controlling Total
of the Parent
Group Interest Equity
Stated Retained Total
Capital Earnings
Rs. Rs. Rs. Rs. Rs.
Balance as at 31st March 2013 178,107,910 (24,091,129) 154,016,781 63,525,680 217,542,461
Profit for the year - 9,964,949 9,964,949 6,275,962 16,240,911

Other Comprehensive Income - - - - -
Total Comprehensive Income for the

- 9,964,949 9,964,949 6,275,962 16,240,911
year
Transaction with owners of the

Company, recognised directly in equity
Acquisition and changes in Non-
- 39,047,769 39,047,769 (39,047,769) -
Controlling Interest
Subsidiary Dividend to Non-Controlling
- - - (36,920) (36,920)
Interest
Total transaction with owners of the

- 39,047,769 39,047,769 (39,084,689) (36,920)
Company
Balance as at 31st March 2014 178,107,910 24,921,589 203,029,499 30,716,953 233,746,452
Loss for the year - (13,352,159) (13,352,159) (541,871) (13,894,030)

Other Comprehensive Income - - - - -
Total Comprehensive Income /

(Expense) for the year - (13,352,159) (13,352,159) (541,871) (13,894,030)
Transaction with owners of the

Company, recognised directly in equity
Acquisition and changes in Non-
- 25,835,185 25,835,185 (25,835,185) -
Controlling Interest
Total transaction with owners of the

- 25,835,185 25,835,185 (25,835,185) -
Company
Balance as at 31st March 2015 178,107,910 37,404,615 215,512,525 4,339,897 219,852,422

For the year ended 31st March
Company
Stated Retained Total

Capital Earnings
Rs. Rs. Rs.
Balance as at 31st March 2013 178,107,910 (53,132,093) 124,975,817
Profit for the year - 468,208 468,208

Other Comprehensive Income - - -
Total Comprehensive Income for the year - 468,208 468,208
Total transaction with owners of the Company - - -
Loss for the year - (985,229) (985,229)

Other Comprehensive Income - - -
Total Comprehensive Income for the year - (985,229) (985,229)
Total transaction with owners of the Company - - -

6.7 Statement of Cash Flows
For the year ended 31st March GROUP COMPANY

2015 2014 2015 2014
Rs. Rs. Rs. Rs.
CASH FLOWS FROM OPERATING ACTIVITIES
Profit / (Loss) before Interest & Tax (17,941,729) 20,406,076 (933,901) 416,693
Adjustment for;
Depreciation 5,150,685 4,717,293 508,360 462,151
Profit on Disposal of Plant & Equipment (831,725) (3,616,518) - -
Gratuity Provision 45,973 1,430,438 - -
Write back of Gratuity Overprovision (1,260,102) - - -
Dividend Income (106,350) (377,273) (1,270,948) (563,787)
Profit on Disposal of Financial Assets (4,531,721) 1,650,372 (1,225,468) (302,121)
Fair Value Changes on Financial Assets 778,140 (3,007,070) 778,140 140,131
Profit / (Loss) before Working Capital Changes (18,696,829) 21,203,318 (2,143,817) 153,067
Changes in Working Capital

(Increase) / Decrease in Inventories 639,068 (15,591,615) (1,242,486) (1,732,662)
(Increase) / Decrease in Trade and Other Receivables (16,801,738) 30,647,843 (81,013) (15,476)
(Increase) / Decrease in Amounts due from Related
4,258,868 (75,667) 11,302,416 25,367,345
Parties
Increase / (Decrease) in Trade and Other Payables 32,603,938 (20,288,298) 1,134,630 423,253
Cash Generated from / (used in) Operating Activities 2,003,307 15,895,581 8,969,730 24,195,527
Tax Paid (723,765) (5,769,757) (12,376) (145,607)
Interest Paid (1,474,983) (1,611,149) (1,250) (26,988)
Gratuity Paid (152,000) (468,750) - -
Net Cash Flows from / (used in) Operating Activities (347,441) 8,045,925 8,956,104 24,022,932
CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of Plant & Equipment (5,024,568) (2,670,757) (31,800) (775,152)
Proceeds from Disposal of Plant & Equipment 831,725 3,635,184 - -
Acquisition of Subsidiary - - (11,000,000) (35,149,000)
Acquisition of Financial Assets (5,268,639) (50,347,838) (3,148,924) (44,001)
Proceeds from Disposal of Financial Assets 22,385,164 27,437,861 5,146,235 2,522,321
(Purchase) / Disposal of Short Term Investments 12,186,350 25,437,817 - 2,853,957
Interest Received 480,897 2,876,578 1,738 171,118
Dividend Income Received 106,350 377,273 1,270,948 563,787
Lease Rentals Paid (4,503,335) (3,421,959) - -
Net Cash Flows from / (used in) Investing Activities 21,193,944 3,324,159 (7,761,803) (29,856,970)

Statement of Cash Flows (Contd)
GROUP COMPANY
2015 2014 2015 2014
Rs. Rs. Rs. Rs.
CASH FLOWS FROM FINANCING ACTIVITIES
Subsidiary Dividend to Non-Controlling Interest - (36,920) - -
Proceeds form Interest Bearing Borrowings 600,000 3,302,000 - -
Repayment of Interest Bearing Borrowings (3,302,000) - - -
Net Cash Flows from / (used in) Financing Activities (2,702,000) 3,265,080 - -
Net Increase / (Decrease) in Cash and Cash

18,144,503 14,635,164 1,194,301 (5,834,038)
Equivalents
Cash and Cash Equivalents at the beginning of the year 24,964,519 10,329,355 1,519,004 7,353,042
Cash and Cash Equivalents at the end of the year 43,109,022 24,964,519 2,713,305 1,519,004
ANALYSIS OF CASH AND CASH EQUIVALENTS

Favourable balances
Savings Accounts 1,333,837 981,608 1,305,951 4,387
Cash in Hand & at Bank 41,857,080 24,516,069 1,407,354 1,514,617
Un-favourable balances
Bank Overdrafts (81,895) (533,158) - -
43,109,022 24,964,519 2,713,305 1,519,004

6.8 Notes to the Financial Statements For The Year Ended 31st March 2015
1. REPORTING ENTITY of Sri Lanka (ICASL) and the requirements of the

Companies Act, No. 07 of 2007 and Sri Lanka Accounting
1.1.1. General and Auditing Standards Act, No. 15 of 1995.
Serendib Engineering Group PLC is a Public Quoted The consolidated financial statements of the Group and
Company with Limited Liability incorporated and the Company for the year ended 31st March 2015, were
domiciled in Sri Lanka. The registered office of the authorised for issue by the Board of Directors on 24th
Company is located at No.12B, Gregory’s Road, Colombo August 2015.
07 and principal place of business is located at No. 20/7 A,
Averihena Road, Colombo 05. 1.2.2. Basis of Measurement
Ordinary Shares of the Company are listed on the The Consolidated Financial Statements have been prepared
Colombo Stock Exchange. In the Financial Statements, on the historical cost basis except for the measurement of
‘the Company’ refers to Serendib Engineering Group the following material items in the Statement of Financial
PLC as the Holding Company and ‘the Group’ refers to Position.
the companies whose accounts have been consolidated
therein. a) Financial Instruments at fair value through profit or
loss measured at fair value.
1.1.2. Principal Activities and Nature of Operations
b) Defined benefit plans which are measured at the
The principal activities of the Company were manufacturing present value of the Employee Benefits.
of precast Concrete Poles used in Telecommunication and
Electricity Industries and acting as a Holding Company
1.2.3. Functional and Presentation Currency
for Subsidiaries engaged in a range of Engineering
Services. The financial statements are presented in Sri Lankan
Rupees, which is the functional currency of the Company
The companies within the Group are engaged in;
and its Subsidiaries.
a) C C C Plantation Engineering Ltd.

1.2.4. Use of Estimates, Judgements and Assumptions
Manufacturing of machinery equipment for
Plantation Sector, servicing and repairing of The presentation of the Consolidated Financial Statements
machines used in Plantation Sector. in conformity with SLFRS / LKAS requires management to
make judgements, estimates and assumptions that affect
b) Serendib Engineering & Agencies (Pvt) Ltd.
the application of accounting policies and the reported
A multifaceted Engineering Company involved
amounts of assets, liabilities, income and expenses. Actual
in Telecommunications, Plantation Engineering,
results may differ from those estimates.
Water Supply and Filtration, Marine and Railway
Engineering. Estimates and underlying assumptions are reviewed on
c) Serendib Investment Holdings Ltd. an ongoing basis. Revisions to accounting estimates are
Investing in Shares recognised in the period in which the estimates are revised
and any future periods affected.
1.2. BASIS OF PREPARATION 1.2.5. Materiality and Aggregation
1.2.1. Statement of Compliance Each material class of similar items is presented separately
in the Consolidated Financial Statements. Items of a
The financial statements of the Company and the
dissimilar nature or function are presented separately
consolidated financial statements have been prepared in
unless they are immaterial.
accordance with Sri Lanka Accounting Standards (SLFRS /
LKASs) adopted by The Institute of Chartered Accountants

Notes to the Financial Statements (Contd)
1.3. SIGNIFICANT ACCOUNTING POLICIES from the synergies of the combination.
The accounting policies set out below have been applied Impairment is determined by assessing the recoverable
consistently to all periods presented in these consolidated amount of the cash-generating unit to which the
financial statements and the accounting policies have goodwill relates. Where the recoverable amount of the
been applied consistently by the Group. cash generating unit is less than the carrying amount,
an impairment loss is recognised. The impairment loss
The Directors have made an assessment of the Group’s is allocated first to reduce the carrying amount of any
ability to continue as a going concern in the foreseeable goodwill allocated to the unit and then to the other assets
future, and they do not intend either to liquidate or cease pro-rata to the carrying amount of each asset in the unit.
trading.
1.3.1.3. Transactions with Non-controlling Interests
1.3.1. Basis of Consolidation
The profit or loss and net assets of a subsidiary attributable
The consolidated financial statements (referred to as to equity interests that are not owned by the Parent, directly
the Group), comprise of the financial statement of the or indirectly through subsidiaries, is disclosed separately
Company and its Subsidiaries. Subsidiaries are disclosed under the heading “Non-Controlling Interest”.
in Note 11 to the Financial Statements.
The Group applies a policy of treating transactions with
1.3.1.1. Subsidiaries non-controlling interests as transactions with parties
external to the Group.
Subsidiaries are entities controlled by the Group. Control
exists when the Company has the power, directly or Losses within a subsidiary are attributed to the non-
indirectly to govern the financial and operating activities controlling interest even if that results in a deficit balance.
of an entity so as to obtain benefits from its activities. The
financial statements of subsidiaries are included in the The acquisition of an additional ownership interest or
Consolidated Financial Statements from the date on which a disposal of ownership interest in a subsidiary without
control commences until the date when control ceases. a change of control is accounted for as an equity
transaction. Any excess or deficit of consideration paid
1.3.1.2. Business Combination and Goodwill over the carrying amount of the non-controlling interests is
recognised in equity of the parent. No adjustment is made
Business combinations are accounted for using the
to goodwill as a result of such transactions.
acquisition method as at the acquisition date which is the
date on which control is transferred to the Group. Control 1.3.1.4. Loss of Control
is the power to govern the financial and operating policies
of an entity so as to obtain benefits from its activities. On the loss of control, the Group derecognises the assets
In assessing control, the Group takes into consideration and liabilities of the subsidiary, any non-controlling
potential voting rights that are currently exercisable. interests and other components of equity relating to the
subsidiary. Any surplus or deficit arising on the loss of
Goodwill acquired in a business combination is initially control is recognised in the Statement of Proft or Loss. If
measured at cost being the excess of the cost of the business the Group retains any interest in the previous subsidiary,
combination over the Group’s interest in the net fair then such interest is measured at fair value at the date
value of the identifiable assets, liabilities and contingent that control is lost. Subsequently it is accounted for as
liabilities. Following initial recognition, goodwill is an equity-accounted investee or as an available-for-sale
measured at cost less any accumulated impairment losses. financial asset depending on the level of influenced
Goodwill is reviewed for impairment, annually or more retained.
frequently if events or changes in circumstances indicate
that the carrying value may be impaired. For the purpose 1.3.1.5. Transactions Eliminated on Consolidation
of impairment testing, goodwill acquired in a business
combination is, from the acquisition date, allocated to All intra group balances and transactions, income and
groups of cash-generating units that are expected to benefit expenses, profits and losses resulting from intra group
transactions that are recognised in assets, liabilities,

income and expenses are eliminated in preparing the part is derecognised in accordance with the derecognition
consolidated financial statements. policy given below. The costs of the day-to-day servicing
of plant & equipment are recognised in Statement of Proft
1.3.1.6. Financial Period or Loss as incurred.
All Subsidiaries of the Group have a common financial 1.3.3.4. Derecognition

year as the Parent Company.
An item of plant & equipment is derecognised upon
1.3.2.Foreign Currency Transactions disposal of or when no future economic benefits are
expected from its use or disposal. Gains and losses arising
Transactions in foreign currencies are translated to Sri
on derecognition of the assets determined by comparing
Lankan Rupees at the foreign exchange rate prevailing at
the proceeds from disposal with the carrying amount of
the date of the transaction. Monetary assets and liabilities
plant & equipment and are recognised net within ‘Other
denominated in foreign currencies are translated to Sri
Income’ in Proft or Loss.
Lankan Rupees at the foreign exchange rate ruling as at
the reporting date. 1.3.3.5. Depreciation
Non-monetary assets and liabilities that are stated at fair Depreciation is recognised in profit or loss on a straight-
value, denominated in foreign currencies are translated to line basis over the estimated useful lives of each part of
Sri Lankan Rupees at the exchange rate ruling at the dates an item of plant & equipment, since this most closely
that the fair value were determined. Foreign exchange reflected the expected pattern of consumption of the future
differences arising on translation are recognised in the economic benefits embodied in the asset.
Statement of Profit or Loss.
The estimated useful lives for the current and comparative
1.3.3. Plant & Equipment periods are as follows.
1.3.3.1. Recognition and Measurement

Furniture & Fittings Over 5 -10 Years
Items of plant & equipment are measured at cost or Office Equipment Over 5 -10 Years
valuation less accumulated depreciation and accumulated
Computers Over 2 Years
impairment losses.
Motor Vehicles Over 5 Years
1.3.3.2. Owned Assets
Tools & Equipment Over 2 - 5 Years
The cost of plant & equipment includes expenditure that Plant & Machinery Over 10 Years
are directly attributable to the acquisition or construction
together with any expenses incurred in bringing the assets
Depreciation of an asset begins when it is available for
to its working condition for its intended use.
use and ceases at the earlier of the date that the asset is
Expenditure incurred for the purpose of acquiring, classified as held for sale and the date that the asset is
extending or improving assets of a permanent nature by derecognised.
means of which to carry on the business or to increase

1.3.3.6. Finance Leases
the earning capacity of the business is treated as capital
expenditure. Plant and Equipment on finance leases, which effectively
transfers to the Group substantially all of the risk and
1.3.3.3. Subsequent Costs
benefits incidental to ownership of the leased item, are
The cost of replacing part of an item of plant & equipment capitalised at their cash price and disclosed as Plant and
is recognised in the carrying amount of the item if it is Equipment and depreciated over the period the Group is
probable that the future economic benefits embodied expected to benefit from the use of the leased assets.
within that part will flow to the Group and its cost can
be measured reliably. The carrying amount of the replaced

The corresponding principal amount payable to the lessor financial assets at fair value through profit or loss are
is shown as a liability, lease payments are apportioned recognised immediately in the Statement of Proft or Loss.
between the finance charges and reduction of the lease
liability so as to achieve a constant rate of interest on the The Group derecognises financial assets when the
remaining balance of the liability. The interest payable contractual rights to the cash flows from the asset expire,
over the period of the lease is transferred to an interest or it transfers the rights to receive the contractual cash
in suspense account. The interest element of the rental flows on the financial assets in a transaction in which
obligations applicable to each financial year is charged to substantially all the risks and rewards of ownership of the
the Statement of Proft or Loss over the period of the lease. financial assets are transferred. Any interest in transferred
financial assets that is created or retained by the Group is
1.3.4. Intangible Assets recognised as a separate asset or liability.
An intangible asset is initially recognised at cost, if it is Financial assets and liabilities are offset and the net
probable that future economic benefit will flow to the amount presented in the statement of financial position
enterprise, and the cost of the asset can be measured when, and only when, the Group has a legal right to offset
reliably. the amounts and intends either to settle on a net basis or
to realise the asset and settle the liability simultaneously.
Intangible assets with indefinite useful lives are tested for
impairment annually either individually or at the cash - The Group classifies non-derivative financial assets into
generating unit level. the following categories; financial assets at fair value
through profit or loss, loans and other receivables, held-
1.3.4.1.Intangible Assets recognised by the Group to-maturity financial assets and available-for-sale financial
a) Goodwill assets.
Goodwill arising on an acquisition represents the excess a) Financial Assets at fair value through profit or loss
of the cost of acquisition over the fair value of net assets Financial assets at fair value through profit or loss include
acquired. Goodwill is measured at cost less accumulated financial assets held for trading and financial assets
impairment losses. designated upon initial recognition at fair value through
profit or loss. Financial assets are classified as held for
Gain from bargain purchase arising on an acquisition
trading if they are acquired for the purpose of selling or
represents the excess of the fair value of the net assets
repurchasing in the near term. Financial assets at fair value
acquired over the cost of acquisition. Gain from bargain
through profit and loss carried in the statement of financial
purchase is recognised immediately in the Statement of
position at fair value with changes in fair value recognised
Proft or Loss.
in finance income or finance costs in the Statement of Proft
or Loss.
1.3.5. Financial Instruments
1.3.5.1. Non-Derivative Financial Assets b) Loans and Receivables

Loan and Receivables are non-derivative financial assets
The Group recognises financial assets in its statement of with fixed or determinable payments that are not quoted in
financial position when the Group becomes a party to the an active market. After initial measurement, such financial
contractual provisions of the instrument. assets are subsequently measured at amortised cost using
the effective interest rate method (EIR), less impairment
Financial assets are initially measured at fair value.
losses.
Transaction costs that are directly attributable to the
acquisition or issue of a financial asset or a liability (other A provision for impairment of trade receivable is established
than financial assets at fair value through profit or loss) when there is objective evidence that the Group will
are added or deducted from the fair value of the financial not be able to collect all amounts due according to the
asset, as appropriate, on initial recognition. Transaction receivables.
costs that are directly attributable to the acquisition of

Loans and receivables comprise of amounts due from If there is an indication of impairment in the unquoted
related parties, cash and cash equivalents and trade and equity securities, it is recognised in the Statement of Proft
other receivables. or Loss.
Cash and Cash Equivalents 1.3.5.2. Non-Derivative Financial Liabilities
Cash and Cash equivalents are defined as cash in hand, The Group initially recognises debt securities issued and
demand deposits and short term highly liquid investments, subordinated liabilities on the date that they are originated.
readily convertible to known amounts of cash and subject All other financial liabilities are recognised initially on the
to insignificant risk of changes in value. trade date, which is the date which the Company becomes
a party to the contractual provisions of the instrument.
For the purpose of the statement of cash flows, cash and
cash equivalents comprise of savings accounts, cash in The Group classifies non-derivative financial liabilities
hand, cash at banks and bank overdrafts. into the other financial liabilities category. Such financial
liabilities are recognised initially at fair value, plus any
c) Held-to-maturity Financial Assets directly attributable transaction costs. Subsequent to initial
Held-to-maturity investments are non-derivative financial recognition, these financial liabilities are measured at
assets with fixed or determinable payments and fixed amortised cost using the effective interest method.
maturities when the Group has the positive intention and
The Group derecognises a financial liability when its
ability to hold it to maturity. After initial measurement, held-
contractual obligations are discharged, cancelled or
to-maturity investments are measured at amortised cost
expired.
using the effective interest method (EIR), less impairment.
Amortised cost is calculated by taking into account any
Financial assets and liabilities are offset and the net
discount or premium on acquisition and fees or costs
amount presented in the statement of financial position
that are an integral part of the EIR. The EIR amortisation
when, and only when, the Group has a legal right to offset
is included in finance income in the Statement of Proft or
the amounts and intends either to settle on a net basis or
Loss. The losses arising from impairment are recognised as
to realise the asset and settle the liability simultaneously.
finance cost in the Statement of Proft or Loss.
The Group’s other financial liabilities comprise loans
d) Available-for-sale Financial Assets and borrowings, bank overdrafts amounts due to related
Available-for-sale financial assets include equity and debt parties and trade and other payables. Bank overdrafts that
securities. Equity securities classified as available-for-sale are repayable on demand and form an integral part of the
are those, which are neither classified as held for trading Group’s cash management are included as a component of
nor designated at fair value through profit or loss. Debt cash and cash equivalents for the statement of cash flows.
securities in this category are those which are intended
to be held for an indefinite period of time and which may a) Loans and Borrowings
be sold in response to needs for liquidity or in response to After initial recognition, interest bearing loans and
changes in the market conditions. borrowings are subsequently measured at amortised cost
using the effective interest rate (EIR) method. Gains and
After initial measurement, available-for-sale financial
losses are recognised in profit or loss when the liabilities are
assets are subsequently measured at fair value with
derecognised as well as through the effective interest rate
unrealised gains or losses recognised in Available-for-
method (EIR) amortisation process.
sale Reserve through Other Comprehensive Income
until the investment is derecognised, at which time the Amortised cost is calculated by taking into account any
cumulative gain or loss is recognised in the Statement of discount or premium on acquisition and fees or costs
Comprehensive Income, or determined to be impaired, that are an integral part of the EIR. The EIR amortisation is
at which time the cumulative loss is reclassified to the included in finance costs in the Statement of Proft or Loss.
statement of profit or loss and removed from the available-
for-sale reserve.

1.3.6. Stated Capital b) Impairment Losses on Available-for-Sale Financial

Assets
Ordinary shares are classified as equity. As per the
Impairment losses on available-for-sale financial assets are
Companies Act No. 07 of 2007, Section 58(1), Stated
recognised by reclassifying the losses accumulated in the
Capital in relation to a Company means the total of all
fair value reserve to profit or loss. The amount reclassified
amounts received by the Company or due and payable
is the difference between the acquisition cost (net of any
to the Company in respect of the issue of shares and in
principal repayment and amortisation) and the current fair
respect of calls in arrears.
value, less any impairment loss previously recognised in
1.3.7. Impairment profit or loss. If the fair value of an impaired available-for-
sale debt security subsequently increases and the increase
1.3.7.1. Impairment of Non-Derivative Financial Assets can be related objectively to an event occurring after the
impairment loss was recognised, then the impairment loss
Financial assets, other than those measured at fair value
is reversed through profit or loss; otherwise, it is reversed
are assessed for indicators of impairment at the end of
through other comprehensive income.
each reporting period. Financial assets are considered to
be impaired when there is objective evidence that as a 1.3.7.2. Impairment of Non Financial Assets
result of one or more events that occurred after the initial
recognition of the financial assets, the estimated future The carrying amounts of the Group’s non-financial assets
cash from the asset have been affected. other than inventories are reviewed at each reporting date
to determine whether there is an indication of impairment.
The Group assesses at each reporting date, whether there is If any such indication exists, or when annual impairment
any objective evidence that a financial asset or a group of testing for an asset is required, then the asset’s recoverable
financial assets are impaired. A financial asset or a group amount is estimated.
of financial assets are deemed to be impaired if, and only
if, there is objective evidence of impairment as a result The recoverable amount of an asset or cash-generating unit
of one or more events that have occurred after the initial is the greater of its value in use and its fair value less costs
recognition of the assets and that loss event has an impact to sell. In assessing value in use, the estimated future cash
on the estimated future cash flows of the financial asset or flows are discounted to their present value using a pre-tax
the group of financial assets that can be reliably estimated. discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
a) Impairment Losses on Financial Assets Carried at In determining fair value, less costs to sell, an appropriate
Amortised Cost valuation model is used.
Impairment losses on assets carried at amortised cost are
An impairment loss is recognised if the carrying amount
measured as the difference between the carrying amount
of an asset or cash-generating unit exceeds its estimated
of the financial asset and the present value of estimated
recoverable amount. Impairment losses are recognised
future cash flows discounted at the asset’s original effective
in profit or loss. An impairment loss is reversed if there
interest rate.
has been a change in the estimates used to determine the
When the Group considers that there are no realistic recoverable amount. An impairment loss is reversed only to
prospects of recovery of the asset, the relevant amounts the extent that the asset’s carrying amount does not exceed
are write off. the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had
Impairment losses are recognised in profit or loss and been recognised.
reflected in an allowance account against receivables.
When a subsequent event causes the amount of 1.3.8. Inventories
impairment loss to decrease, the decrease in impairment
Inventories are valued at the lower of cost and net
loss is reversed through profit or loss.
realisable value after making due allowances for obsolete
and slow moving items. Net realisable value is the price
at which inventories can be sold in the ordinary course

of business less the estimated cost of completion and the with “LKAS 19 - Employee Benefits”. However, under
estimated cost necessary to make the sale. the Payment of Gratuity Act No. 12 of 1983, the liability
to an employee arises only on completion of 5 years of
The cost incurred in bringing inventories to its present continued service. The liability is not externally funded.
location and condition, are accounted for as follows.
1.3.10.2. Defined Contribution Plans - Employees
a) Raw Materials Provident Fund & Employees Trust Fund
At actual cost on first-in-first-out and weighted average
All employees who are eligible for Employees Provident
cost.
Fund Contributions and Employees Trust Fund
b) Work-in-Progress Contributions are covered by relevant contribution funds in
line with respective statutes and regulations. Contribution
At the cost of direct materials, direct labour and an
plans are recognised as an expense in the statement of
appropriate proportion of production overheads based on
profit or loss when incurred.
normal operating capacity.
1.3.11. Commitments and Contingencies

c) Finished Goods
At purchase cost and/or cost of direct materials, direct Contingencies are possible assets or obligations that arise
labour and an appropriate proportion of production from past events and whose existence will be confirmed
overheads based on normal operating capacity. only by occurrence or non-occurrence of uncertain future
events not wholly within the control of the Group.
1.3.9. Provisions
Capital commitments and contingencies of the Group are
A provision is recognised in the Statement of Financial disclosed in Note 27 and 28 respectively to the Financial
Position when the Group has a legal or constructive Statements.
obligation as a result of a past event and it is probable that
an outflow of economic benefits will be required to settle 1.3.12. Statement of Comprehensive Income
the obligation.
1.3.12.1. Revenue Recognition
1.3.10.Employee Benefits
Revenue is recognised to the extent that it is probable that
1.3.10.1. Defined Benefit Plan - Retirement Gratuity the economic benefits will flow to the Group, and the
revenue and associated costs incurred or to be incurred
A defined benefit plan is a post-employment benefit can be reliably measured. Revenue is measured at the fair
plan other than a defined contribution plan. The liability value of the consideration received or receivable, net of
recognised in the statement of financial position in respect trade discounts and value added taxes, after eliminating
of defined benefit plans is the present value of the defined sales within the Group.
benefit obligation as at the reporting date. The defined
benefit obligation is calculated by the Group using Revenue is generally accounted for on an accrual basis
the projected unit credit method based on the formula and following specific criteria are used for recognition of
prescribed in “LKAS 19 - Employee Benefits”. revenue.
The present value of the defined benefit obligation is a) Sale of Goods

determined by discounting the estimated future cash Revenue is recognised on sale of goods when all significant
outflows using interest rates that are denominated in the risks and rewards of ownership have been transferred to
currency in which the benefits will be paid, and that have the buyer which normally occurs on delivery of goods.
terms to maturity approximating to the terms of the related Turnover represents the invoiced value of goods supplied
liability. to customers.
The provision has been made for retirement gratuities for

the first year of service for all employees, in conformity

b) Construction Contract (Business Segments) or in providing products or services

When the outcome of the contract can be measured within a particular economic environment (Geographic
reliably, contract revenue is recognised by reference to Segment) which is subject to risks and rewards that are
the stage of completion of the contract activity as at the different from those of other segments.
reporting date. Further, the Group recognise construction
Segment information is presented in respect of the
revenue only after receiving the work done certification
Group’s business activities. The business segment has
from the engineer. Any expected losses on specific
been identified as the primary segment of the Group as
contracts are recognised immediately by a corresponding
there are no distinguishable components to be identified
reduction in their revenue.
as geographical segments for the Group. The business
segments are reported based on the Group’s management
c) Rendering of Services
and internal reporting structure.
Revenue from rendering of services is recognised in the
accounting period in which the services are rendered or Segment information of the Group is stated in Note No.
performed. 2.2.
d) Finance Income and Finance Costs 1.3.12.3. Expenditure Recognition

Finance income comprises interest income on funds
All expenditure incurred in the running of the business
invested, dividend income, gains on the disposal of
and in maintaining the capital assets in a state of efficiency
financial assets at fair value through profit or loss and the
has been charged to Statement of Proft or Loss in arriving
changes in the fair value of financial assets.
at the profit for the year.
Interest Income is recognised on an accrual basis.
Expenditure incurred for the purpose of acquiring and
Dividend Income is recognised when the Shareholders
extending or improving assets of a permanent nature by
right to receive such dividend is established. Profit or
means of which to carry on the business or for the purpose
Losses on disposal of Financial Assets are accounted for in
of increasing the earning capacity of the business has been
the statement of profit or loss on the basis of realised net
treated as capital expenditure.
profit or loss.
a) Borrowing Costs
Finance costs comprises of interest expense on borrowings,
loss on the disposal of financial assets at fair value through Borrowing costs directly attributable to the acquisition,
profit or loss and the changes in the fair value of financial construction or production of an asset that necessarily
assets. takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost of
All borrowing costs are recognised as an expense in the the asset. All other borrowing costs are expensed in the
period in which they are incurred. Interest expenses are period they occur. Borrowing costs consists of interest and
recognised using the effective interest method. other costs that an entity incurs in connection with the
borrowing of funds.
e) Others
Other income is recognised on an accrual basis. b) Income Tax Expense
Income tax expense comprises current and deferred tax.
Net gains and losses of a revenue nature on disposal of an
Income tax expense is recognised in profit or loss except
item of plant & equipment and other non-current assets
to the extent that it relates to items recognised directly
including investments have been accounted for in profit
in equity or other comprehensive income, which case
or loss, having deducted from proceeds from disposal, the
it is recognised either in equity or other comprehensive
carrying amount of the assets and related selling expenses.
income respectively.
1.3.12.2. Segmental Reporting
A segment is a distinguishable component of an enterprise

that is engaged in either providing products or services

Current Tax 1.4. STATEMENT OF CASH FLOWS
The provision for Income Tax is based on the elements The Statement of Cash Flows has been prepared using the
of Income & Expenditure as reported in the financial “Indirect method”.
statements and computed in accordance with the
provisions of the Inland Revenue Act No. 10 of 2006 and 1.5. EARNINGS PER SHARE
the amendments thereto.
The Group presents Earnings per Share (EPS) data for its
Deferred Tax ordinary shares. EPS is calculated by dividing the profit or
loss attributable to ordinary shareholders of the Company
Deferred Tax is provided in full, using the liability method by the weighted average number of ordinary shares
on temporary differences arising between the tax base outstanding during the period.
of assets and liabilities and their carrying amounts in the
Financial Statements. Deferred tax is determined using tax 1.6. RELATED PARTY TRANSACTIONS
rates that have been enacted or substantively enacted by
Disclosures has been made in respect of the transactions
the reporting date and are expected to apply when the
in which one party has the ability to control or exercise
related deferred income tax asset is realised or the deferred
significant influence over the financial and operating
income tax liability settled.
policies / decisions of the other, irrespective of whether a
Deferred tax assets are recognised for all deductible price is charged.
temporary differences and tax losses carried forward
Related Party Receivables and Payables are treated as
to the extent that it is probable that future taxable profit
Current Assets and Current Liabilities as they are deemed
will be available against which the deductible temporary
to be of a temporary nature.
differences and tax losses carried forward can be utilised.
1.7. NEW ACCOUNTING STANDARDS ISSUED BUT
Deferred tax is not recognised for the following temporary
NOT YET EFFECTIVE
differences: the initial recognition of goodwill, the initial
recognition of assets or liabilities in a transaction that is not The Institute of Chartered Accountants of Sri Lanka has
a business combination and that affects either accounting issued the following standard which becomes effective
nor taxable profit, and difference relating to investments for annual periods beginning after the current financial
in subsidiaries to the extent that they probably will not year. Accordingly, this standard has not been applied in
reverse in the foreseeable future. preparing these financial statements. The Group will be
adopting this standard when it becomes effective.
Deferred tax is measured at the tax rates that are expected
to be applied to the temporary differences when they SLFRS 9 Financial Instruments
reverse, based on the laws that have been enacted or
substantively enacted by the reporting date. Summary of the requirements
A deferred tax asset is recognised only to the extent that SLFRS 9, published in July 2014, replaces the existing
it is probable that future taxable profits will be available guidance in LKAS 39 Financial Instruments: Recognition
against which the asset can be utilised. Deferred tax assets and Measurement. SLFRS 9 includes revised guidance
are reviewed at each reporting date and are reduced to on the classification and measurement of financial
the extent that it is no longer probable that the related tax instruments, including a new expected credit loss model
benefit will be realised. for calculating impairment on financial assets, and the
new general hedge accounting requirements. It also carries
Deferred tax assets and liabilities recognised by individual forward the guidance on recognition and de-recognition
companies within the Group are disclosed separately as of financial instruments from LKAS 39.
assets and liabilities in the Group Statement of Financial
Position and are not offset against each other. SLFRS 9 is effective for annual reporting periods beginning
on or after 1 January 2018, with early adoption permitted.

SLFRS 15 Revenue from Contracts with Customers
Summary of the requirements
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 and IFRIC 13 Customer Loyalty
Programmes.
IFRS 15 is effective for annual reporting periods beginning

on or after 1 January 2018, with early adoption permitted.

GROUP COMPANY
2015 2014 2015 2014
Rs. Rs. Rs. Rs.
2 REVENUE
2.1 Income
Income on Concrete Poles - 375,000 136,000 11,975,000
Management Fees - - 600,000 -
Projects Income 240,091,780 214,157,423 - -
Income from Manufacturing of Machinery 6,737,245 38,269,588 - -
Agency Income - Foreign 3,612,930 3,008,632 - -
Repair & Service Income 15,607,985 5,547,076 - -
266,049,940 261,357,719 736,000 11,975,000
2.2 Business Segment Analysis

Concrete Poles - 375,000 136,000 11,975,000
Projects Income 240,091,780 214,157,423 - -
Manufacturing 6,737,245 38,269,588 - -
Others 19,220,915 8,555,708 600,000 -
266,049,940 261,357,719 736,000 11,975,000
3 OTHER INCOME
Profit on Disposal of Plant & Equipment 831,725 3,616,518 - -
Consultation Fees - 45,000 - -
Sale of Scraps 87,970 43,000 - -
Payable Balances Written Back 5,000 - - -
Write back of Gratuity Overprovision 1,260,102 - - -
2,184,797 3,704,518 - -
4 FINANCE INCOME
Interest on Fixed Deposits 313,853 2,677,738 - 88,354
Interest on Savings Accounts 38,261 166,041 1,738 82,764
Interest on Repo 128,783 32,799 - -
Dividend Income 106,350 377,273 1,270,948 563,787
Profit on Disposal of Financial Assets 4,994,065 302,121 1,225,468 302,121
Fair Value Changes on Financial Assets - 3,147,200 - -
5,581,312 6,703,172 2,498,154 1,037,026
5 FINANCE COSTS
Interest on Bank Overdrafts 313,570 203,673 1,250 23,462
Interest on Finance Lease Obligations 1,161,413 1,403,950 - -
Interest on Stock Broker - 3,526 - 3,526
Transaction Cost 369,463 169,639 35,268 493
Loss on Disposal of Financial Assets 462,344 1,952,493 - -
Fair Value Changes on Financial Assets 778,140 140,130 778,140 140,131
Exchange Loss on Conversion of
Foreign Currency 159,281 - - -
3,244,211 3,873,411 814,658 167,612

GROUP COMPANY
2015 2014 2015 2014
Rs. Rs. Rs. Rs.
6 PROFIT / (LOSS) BEFORE TAX
Profit / Loss before Tax is stated after charging
all expenses including the following:
Remuneration to Directors 5,340,000 4,717,500 - 122,500
Auditors Remuneration 362,097 554,086 85,000 80,000
Personnel Costs
- Staff Costs 31,081,684 27,112,668
- Defined Benefit Plan Costs 45,973 1,430,438 - -
- Defined Contribution Plan Costs 4,563,646 3,594,975 - -
Depreciation 5,150,685 4,717,293 508,360 462,151
7 INCOME TAX EXPENSE

Current Income Tax Expense
Tax Expenses on Ordinary Activities 249,226 6,104,701 316 31,144
Deferred Tax
Origination and Reversal of temporary differences (5,291,011) (674,107) 51,500 61,471
(5,041,785) 5,430,594 51,816 92,615
7.1 Reconciliation of Accounting Profit / (Loss)

and Taxable Income
Accounting Profit / (Loss) before Tax (18,935,815) 21,671,505 (933,413) 560,823
Intra Group Adjustments 1,428,300 3,866,773 - -
(17,507,515) 25,538,278 (933,413) 560,823
7.1 Reconciliation of Accounting Profit / (Loss)
and Taxable Income
Aggregate Disallowed Expenses 9,791,486 14,262,599 1,343,617 686,601
Aggregate Allowable Expenses (16,284,050) (15,804,078) (3,189,805) (1,718,077)
Profit Exempted from Income Tax (2,851,956) (6,489,965) - -
Adjusted Profit / (Loss) (26,852,035) 17,506,834 (2,779,601) (470,653)
Adjusted Trading Profit - 17,506,834 - -

Aggregate Statutory Income 497,394 2,906,580 1,738 171,118
Tax Losses Utilised during the year (174,088) (123,368) (608) (59,891)
Taxable Income 323,305 20,290,046 1,130 111,227
Income Tax Expenses for the period is made up

Statutory Tax Rate
- Income Tax @ 28% 90,526 5,681,213 316 31,144
- 10% WHT on Inter Company Dividend 158,700 423,488 - -
Current Income Tax Expenses 249,226 6,104,701 316 31,144

7.2 In terms of the provisions of the Inland Revenue Act, No. 10 of 2006 and amendments thereto, the tax laibility
of the Company and its Subsidiaries are computed at 28% as at 31st March 2015.
7.3 The utilisation of tax losses brought forward is restricted to 35% of current year's statutory income unabsorbed
tax losses can be carried forward indefinitely.
7.4 No tax has been provided in the financial statements of CCC Plantation Engineering Limited, since the
Company has not made any taxable profit during the year.
7.5 Deferred Tax

Deferred tax has been computed using current tax rate of 28% for the Company and the Group. There was no
temporary differences for Serendib Investment Holdings Ltd and as such no provision has been
made for deferred taxation.
No Deferred tax assets have been recognised in the financial statements of Serendib Engineering Group PLC and
Serendib Investment Holdings Ltd, in respect of tax losses carried forward because it is not probable that future
taxable profit will be available against which these companies can utilise the benefit there from, and the tax losses
carried forward are given below.
GROUP
2015 2014
Rs. Rs.
Serendib Engineering Group PLC 4,949,202 2,170,209

Serendib Investment Holdings Ltd. 1,260,590 1,156,251
8 EARNINGS / (LOSS) PER SHARE

Basic Earnings Per Share
The Company’s and the Group’s earnings per share is computed on the net profit / (loss) attributable to equity
holders of the parent and the weighted average number of ordinary shares in issue during the year as required
by LKAS 33 “Earnings per share”.
GROUP COMPANY
2015 2014 2015 2014
Rs. Rs. Rs. Rs.
Amounts used as the Numerators (Rs.)
Profit / (Loss) attributable to equity holders of the parent (13,352,159) 9,964,949 (985,229) 468,208
Number of Ordinary Shares

used as Denominators
Weighted average number of Ordinary Shares (I) 32,383,250 32,383,250 32,383,250 32,383,250
Basic earnings / (loss) per share (Rs.) (0.41) 0.31 (0.03) 0.01
(I) Issued number of Ordinary Shares as at 01st April 6,476,650 6,476,650 6,476,650 6,476,650
Sub Division 1 into 5 25,906,600 25,906,600 25,906,600 25,906,600
Weighted average number of Ordinary Shares 32,383,250 32,383,250 32,383,250 32,383,250
The weighted average number of ordinary shares outstanding during the year and the previous year are adjusted
for sub division of shares that have changed the number of ordinary shares outstanding during the year.

Balance Balance
Additions Disposals Transfers
as at as at
01.04.2014 31.03.2015
Rs. Rs. Rs. Rs. Rs.
9 PLANT & EQUIPMENT
9.1 GROUP
Cost
Furniture & Fittings 2,258,736 528,888 - - 2,787,624
Office Equipment 10,695,127 1,581,549 - (700,000) 11,576,676
Computers - 47,700 - - 47,700
Motor Vehicles 19,057,574 313,394 (1,170,000) 2,475,000 20,675,968
Tools & Equipment 6,765,326 2,553,037 - 700,000 10,018,363
38,776,763 5,024,568 (1,170,000) 2,475,000 45,106,331
Leased Assets
Tools & Equipment 3,600,000 - - (3,600,000) -
Plant & Machinery - - - 3,600,000 3,600,000
Motor Vehicles 11,314,285 5,450,000 - (2,475,000) 14,289,285
53,691,048 10,474,568 (1,170,000) - 62,995,616
Accumulated Depreciation
Furniture & Fittings 1,643,312 207,203 - - 1,850,515
Office Equipment 5,807,464 789,851 - (449,050) 6,148,265
Computers - 5,963 - - 5,963
Motor Vehicles 18,960,373 225,239 (1,170,000) 2,310,000 20,325,612
Tools & Equipment 4,815,179 1,770,072 - 449,050 7,034,301
31,226,328 2,998,328 (1,170,000) 2,310,000 35,364,656
Leased Assets
Tools & Equipment 450,000 - - (450,000) -
Plant & Machinery - - - 450,000 450,000
Motor Vehicles 4,335,985 2,152,357 - (2,310,000) 4,178,342
36,012,313 5,150,685 (1,170,000) - 39,992,998
Carrying Value 17,678,735 23,002,618

9.2 COMPANY
Cost
Furniture & Fittings 3,200 - - - 3,200
Tools & Equipment 2,043,152 31,800 - - 2,074,952
2,046,352 31,800 - - 2,078,152
Accumulated Depreciation
Furniture & Fittings 373 640 - - 1,013
Tools & Equipment 564,745 507,720 - - 1,072,465
565,118 508,360 - - 1,073,478
Carrying Value 1,481,234 1,004,674
9.3 Fully depreciated Plant & Equipment still in use

Group
The gross carrying amount of fully depreciated Plant & Equipment still in use as at 31st March
2015 is Rs. 28,032,527.
Company
There were no fully deprecated Plant & Equipment as at 31st March 2015.

GROUP
2015 2014
10 INTANGIBLE ASSETS Rs. Rs.
10.1 GOODWILL
At the beginning of the year 21,769,593 21,769,593
Additions - -
At the end of the year 21,769,593 21,769,593
This represents the excess of the cost of acquisition of the net Assets of the following companies.
The aggregate carrying amount of Goodwill allocated to each Company is as follows.
CCC Plantation Engineering Ltd. 99,870 99,870

Serendib Engineering & Agencies (Pvt) Ltd. 21,002,412 21,002,412
Serendib Investment Holdings Ltd. 667,311 667,311
21,769,593 21,769,593
The management is of the view that a provision for impairment of goodwill is not required as at the end of the
reporting period.
COMPANY
2015 2014
Holding No. of Cost Holding No. of Cost
Shares Rs. Shares Rs.
11 INVESTMENTS IN SUBSIDIARIES
Un-quoted Investments
CCC Plantation Engineering Ltd. 100% 3,000,000 3,000,000 100% 3,000,000 3,000,000
Serendib Engineering
& Agencies (Pvt) Ltd. 85.56% 2,823,576 61,537,890 56.69% 623,576 50,537,890
Serendib Investment Holdings Ltd. 60% 85,200,000 85,200,000 60% 85,200,000 85,200,000
149,737,890 138,737,890
11.1 The Company has an investment in the shares of CCC Plantation Engineering Ltd and the carrying amount of
the investment at cost amounts to Rs. 3,000,000/- as at 31st March 2015. CCC Plantation Engineering Ltd carry
on business of manufacture machinery items for Plantation Sector and service & repair of machines used in
Plantation Sector. As per the Audited Accounts of CCC Plantation Engineering Ltd for the current year
reflects a negative net assets position of Rs. 3,339,680/-. No impairment has been made for fair value of
the above investment since the management has decided to expand the business domain of CCC Plantation
Engineering Ltd thereby increaing profitability.

11.2 The Company has an investment in the shares of Serendib Engineering & Agencies (Pvt) Ltd and the carrying amount at cost
amounted to Rs. 61,537,890/- as a at 31st March 2015.
During the year under review, Serendib Engineering & Agencies (Pvt) Ltd, a Subsidiary of the Company made a
Right Issue of 2,200,000 Ordinary Shares in the proportion of two (02) Ordinary Shares for one (01) Ordinary
Share held as at 01st July 2014 at a price of Rs. 5/- per share. The 2,200,000 Ordinary Shares issued in the Right
Issue were all taken by the Company, thus increasing the direct shareholding of the subsidiary from 56.69%
to 85.56%. Further the Company held 8.67% indirect share holding in Serendib Engineering & Agencies (Pvt)
Ltd as at the reporting date.
Serendib Engineering & Agencies (Pvt) Ltd is a multifaceted Engineering Company involved in Plantation
Engineering, Telecommunications, Water Supply and Filtration, Marine, Railway and Civil Engineering.
11.3 The Company has an investment in the shares of Serendib Investment Holdings Ltd and the carrying amount of
the investment at cost amounts to Rs 85,200,000/- Serendib Investment Holdings Ltd carry on the business of
Investing in shares.
GROUP COMPANY
2015 2014 2015 2014
Rs. Rs. Rs. Rs.
12 OTHER FINANCIAL ASSETS
12.1 Other Non Current Financial Assets

Available-for-Sale Financial Assets 15,000,000 15,000,000 - -
12.2 Other Current Financial Assets

Financial Assets at Fair Value Through
Profit or Loss 3,830,044 17,192,988 1,560,000 3,109,983
18,830,044 32,192,988 1,560,000 3,109,983
GROUP
2015 2014
No. of Cost No. of Cost
Shares Rs. Shares Rs.
12.1 OTHER NON CURRENT FINANCIAL ASSETS
Available-For-Sale Financial Assets
Un-quoted
Navara Capital Partners Ltd. 15,000,000 15,000,000 15,000,000 15,000,000
15,000,000 15,000,000

GROUP GROUP COMPANY COMPANY

2015 2014 2015 2014
No. of Cost Fair Value No. of Cost Fair Value No. of Cost Fair Value No. of Cost Fair Value
Shares Shares Shares Shares
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
12.2 OTHER CURRENT FINANCIAL ASSETS
Financial Assets at Fair Value Through Profit or Loss
Beverage, Food and Tobacco

Renuka Shaw Wallace PLC - - 77,000 2,230,707 1,239,700 - - 77,000 2,230,707 1,239,700
Diversified Holdings
F L C Holdings PLC 250,000 556,160 400,000 - - 250,000 556,160 400,000 - -
John Keels Holdings PLC - Warrant 2015 - - 55,000 3,948,736 3,773,000 - - - -
John Keels Holdings PLC - Warrant 2016 - - 10,000 657,280 719,000 - - - -
PCH Holdings PLC 100,000 130,000 210,000 1,000,000 4,060,000 800,000 - - - -
Softlogic Holdings PLC 10,000 163,000 132,000 60,000 763,475 636,000 - - 60,000 763,475 636,000
Construction & Engineering

MTD Walkers PLC 66,914 4,420,230 3,088,044 - - 25,000 1,808,167 1,160,000 - -
Motors
C M Holdings PLC - - 14,961 2,101,786 1,234,283 - - 14,961 2,101,786 1,234,283
Land and Property

Millennium Housing Developers PLC - - 1,417,904 2,500,000 8,791,005 - - - -
5,269,390 3,830,044 16,261,984 17,192,988 2,364,327 1,560,000 5,095,968 3,109,983
Sector Classification and market value per share are based on the official valuation list published by the Colombo stock exchange.

GROUP COMPANY
2015 2014 2015 2014
Rs. Rs. Rs. Rs.
13 DEFERRED TAX
Deferred Tax Asset (5,342,511) (735,578) - -
Deferred Tax Liability 51,500 61,471 51,500 61,471
Origination / (Reversal) of temporary differences
recognised in Statement of Profit or Loss (5,291,011) (674,107) 51,500 61,471
13.1 Deferred Tax Asset

Balance as at beginning of the year 2,307,996 1,572,418 - -
Accelerated Depreciation for Tax purposes (937,464) 361,891 - -
Employee Benefit Liability (382,517) 373,687 - -
Unutilised Tax Losses 6,662,492 - - -
Balance as at end of the year 7,650,507 2,307,996 - -
13.2 Deferred Tax Liability

Balance as at beginning of the year 151,286 89,815 151,286 89,815
Accelerated Depreciation for Tax purposes 51,500 61,471 51,500 61,471
Balance as at end of the year 202,786 151,286 202,786 151,286
13.3 Deferred Tax has been computed using current effective tax rate of 28% applicable for the year of assessment
2014/2015 to each Group Company.
14 INVENTORIES
Raw Materials 32,795,235 33,588,257 1,430,567 233,062
Work in Progress 963,233 1,254,460 179,400 579,600
Finished Goods 1,365,181 920,000 1,365,181 920,000
35,123,649 35,762,717 2,975,148 1,732,662
14.1 Inventories carried at the lower of cost or net realisable value.
15 TRADE AND OTHER RECEIVABLES

Debtors & Retentions 190,268,560 175,999,580 - -
Other Receivables - 488,747 - -
Tax Receivables 1,558,858 109,465 - -
Deposits, Advances & Prepayments 3,994,235 2,422,123 172,872 91,859
195,821,653 179,019,915 172,872 91,859

GROUP COMPANY
2015 2014 2015 2014
Rs. Rs. Rs. Rs.
16 AMOUNTS DUE FROM RELATED PARTIES

Subsidiaries
CCC Plantation Engineering Ltd. - - 2,673,173 2,890,840
Serendib Investment Holdings Ltd. - - 55,380 55,380
Affiliates
Navara Capital Partners Ltd. 125,000 3,500,000 - -
Alerics Dairy Products Ltd. 120,304 - - -
245,304 3,500,000 2,728,553 2,946,220
17 SHORT TERM INVESTMENTS

Held-To-Maturity Investments
Fixed Deposits - 12,186,350 - -
- 12,186,350 - -
18 CASH AND CASH EQUIVALENTS

Favourable Balances
Cash at Bank 36,704,836 23,646,069 1,407,354 1,514,617
Cash in Hand 5,152,244 870,000 - -
43,190,917 25,497,677 2,713,305 1,519,004
Bank Overdrafts 81,895 533,158 - -
Cash and Cash Equivalents

as per the Statement of Cash Flows 43,109,022 24,964,519 2,713,305 1,519,004
19 STATED CAPITAL
No. of No. of No. of No. of
Shares Shares Shares Shares
Balance as at beginning of the year 6,476,650 6,476,650 6,476,650 6,476,650

Sub Division 1 into 5 25,906,600 - 25,906,600 -
Balance as at end of the year 32,383,250 6,476,650 32,383,250 6,476,650
Rs. Rs. Rs. Rs.

Issued and Fully paid 178,107,910 178,107,910 178,107,910 178,107,910
178,107,910 178,107,910 178,107,910 178,107,910
During the year under review, the Company subdivided the issued ordinary shares in the proportion of five
(5) shares for every one (01) share held as at 12th January 2015, thus increasing the number of issued ordinary
shares of the Company from 6,476,650 to 32,383,250 without affecting an increase in the stated capital of the
Company.

GROUP COMPANY
2015 2014 2015 2014
Rs. Rs. Rs. Rs.
20 FINANCE LEASE OBLIGATIONS
20.1 Lease Obligations Repayable within

two to five years
Gross Lease Liability 6,119,509 5,569,886 - -
Finance Charge Unamortised (624,706) (483,470) - -
5,494,803 5,086,416 - -
20.2 Lease Obligations Repayable within

one year from year end
Gross Lease Liability 5,835,140 5,528,904 - -
Finance Charge Unamortised (887,301) (1,119,343) - -
4,947,839 4,409,561 - -
21 EMPLOYEE BENEFITS
Balance as at beginning of the year 6,763,918 5,802,230 - -
Add:
Provision for the year 45,973 1,430,438 - -
6,809,891 7,232,668 - -
Less:
Payment made during the year (152,000) (468,750) - -
Write back of Gratuity Overprovision (1,260,102) - - -
Balance as at the end of the year 5,397,789 6,763,918 - -
21.1 Serendib Engineering Agencies (Pvt) Ltd had adopted the LKAS 19 - “Employee Benefits” and applied the
formula method to make a reliable estimate of the Company’s employee benefits using the “Projected Unit
Credit Method” in order to determine the present value of the employee benefits.
The following key assumptions were made in arriving at the retirement benefit obligation as at 31st March 2015.
Retirement Age 55 Years

Salary Increment Rate 5%
Discount Rate 10.03%
Employee Turnover Ratio 5%
21.2 Employee benefits of CCC Plantation Engineering Limited had been made on half months salary based on
the last month of the financial year of all employees multiplied by the completed years of service, commencing
from the first year of service.
21.3 No provision has been made for Retiring Gratuity in the financial statements of Serendib Engineering Group
PLC and Serendib Investment Holdings Ltd as these companies do not employ any staff. All operational
services are provided by Navara Capital Ltd.

GROUP COMPANY
2015 2014 2015 2014
Rs. Rs. Rs. Rs.
22
TRADE AND OTHER PAYABLES
Trade Creditors 21,918,484 25,544,993 - -
Project Advances 4,424,027 1,337,351 - -
Accrued Expenses 59,380,683 41,598,806 471,078 677,324
Other Payables 15,361,894 - 1,340,876 -
Dividend Payable 36,920 36,920 - -
101,122,008 68,518,070 1,811,954 677,324
23
AMOUNTS DUE TO RELATED PARTIES
Parent
Navara Capital Ltd. 6,104,621 5,333,292 - 54,103
Subsidiaries
Serandib Engineering & Agencies
- - 32,772,710 23,279,911
(Pvt) Ltd.
Affiliates
Navara Securities (Pvt) Ltd. 1,646,053 - 1,646,053 -
Key Management Personnel

Mr. H.N De Silva 50,000 1,463,210 - -
7,800,674 6,796,502 34,418,763 23,334,014
24 INTEREST BEARING BORROWINGS

Packing Credit Loans - 3,302,000 - -
Corporate Loans 600,000 - - -
600,000 3,302,000 - -
24.1 Assets Pledged as Security against Interest Bearing Borrowings

GROUP
CCC Plantation Engineering Ltd.
Lender Approved Interest Terms of Security

Facility Rate Repayment Pledged
within 91
National Development Bank PLC Rs. 600,000/- 14% Lien over
days
purchase
order

GROUP COMPANY
2015 2014 2015 2014
Rs. Rs. Rs. Rs.
25 INCOME TAX LIABILITY
Income Tax
- Y/A 2012/2013 129,578 129,578 - -
- Y/A 2013/2014 - 479,030 - 12,203
- Y/A 2014/2015 4,491 - 143 -
134,069 608,608 143 12,203
26 RELATED PARTY DISCLOSURES
26.1 Parent and Ultimate Controlling Party
The Company’s parent undertaking and controlling party is Navara Capital Ltd which is incorporated in Sri
Lanka, while the ultimate parent undertaking is Nawara Holdings (Pvt) Ltd which is incorporated in Sri Lanka.
26.2 Identity of the Related Parties
The Company carries out transactions in ordinary course of its business with parties who are defined as
related parties in Sri Lanka Accounting Standard (LKAS 24) - “Related Party Disclosures”, the details of which
are reported below.

26.3 Transactions with Related Parties

The Group had following transactions with related entities during the year under review.
GROUP COMPANY
2015 2015 2014
Rs. Rs. Rs.
26.3.1 Transactions with Parent Company
Fund Transfers (629,651) 195,780 2,550,000
Recovery / (Settlement) of Expenses (141,677) (141,677) (2,604,103)
Interest Bearing Receivable /
(Payable) Balances (6,104,621) - (54,103)
26.3.2 Transactions with Subsidiaries

Acquisition of New Shares - (11,000,000) (35,149,000)
Dividend Income Received - 1,235,348 436,519
Funds Transfers - (11,087,000) (40,491,745)
Management Fees Received - 600,000 -
Sale of Concrete Poles - 152,320 11,600,000
Recovery / (Settlement) of Expenses - (611,134) 3,141,985
(Payable) Balances - (30,044,157) (20,333,691)
26.3.3 Transactions with Affiliate Companies

Funds Transfers (3,254,696) - -
(Payable) Balances (1,400,749) (1,646,053) -
Transactions with Navara Securities (Pvt) Ltd, Navara Capital Partners Ltd and Alerics Dairy Products Ltd
are given above under details of related party transactions with affiliates.
All operational services of the Company are provided by Navara Capital Ltd.
The Company and its subsidiary Serendib Engineering & Agencies (Pvt) Ltd have pledged as security the
assets mentioned in note no 32 for facilities obtained and utilised jointly from the National
Development Bank PLC.
The Company’s Investment portfolio is managed by Navara Securities (Pvt) Ltd from October 2014
26.3.3 Terms and Conditions of Transactions with Related Parties
Transactions with related parties are carried out in the ordinary course of the business. Outstanding
related party balances at the year end are unsecured.
No Interest have been received or paid on the above Related Party balances since they are deemed to
be of a temporary nature.

26.4 Transaction with Key Management Personnel
According to Sri Lanka Accounting Standard (LKAS 24) - “Related Party Disclosures”, Key Management
Personnel (KMP) are those having authority and responsibility for planning and controlling the activities of
the entity. Accordingly, the Directors of the Company (including executive and non-executive directors) and
their immediate family members have been classified as Key Management Personnel of the Company.
The consolidated financial statements of the Group under-mentioned Director has current account balance as
at 31st March 2015 is reported below.
GROUP COMPANY
Receivable / Receivable /
(Payable) (Payable)
Balance Balance
Rs. Rs.
Mr. H.N De Silva (50,000) -
26.4.1 Loans to Key Management Personnel

No loans have been given to Key Management Personnel during the year.
26.4.2 Key Management Personnel Compensation

Details of Compensation are given in Note 6 to the Financial Statements.
26.4.3 Transactions with Close Family Members

There were no transactions with close family members during the year.
26.4.4 The Directors of the Company are also Directors of the following Companies
Mr. H.N. Mrs. D.L. Mr. H. G. Sagara
De Silva De Silva Kariyawasam
Serendib Engineering Group PLC √ √ √
Parent
Navara Capital Ltd. √ √ √
Subsidiaries
CCC Plantation Engineering Ltd. √ √ √
Serendib Engineering & Agencies (Pvt) Ltd. √ - √
Serendib Investment Holdings Ltd. √ √ √
Affiliates
Navara Securities (Pvt) Ltd. - - √
Navara Capital Partners Ltd. √ √ √
Alerics Dairy Products Ltd. √ √ √

26.4.5 Other Transactions with Key Management Personnel

There were no other transactions with Key Management Personnel other than those disclosed in Note 26.4 to
these Financial Statements.
27 CAPITAL EXPENDITURE COMMITMENTS
27.1 COMPANY
The Company had no material capital or financial commitments as at the date of the Statement of Financial
Position.
27.2 GROUP
The Group had no material capital or financial commitments as at the date of the Statement of Financial
Position.
28 CONTINGENT LIABILITIES
28.1 COMPANY
There are no contingent liabilities as at the date of the Statement of Financial Position.
28.2 GROUP
There are no contingent liabilities as at the date of the Statement of Financial Position.
29 RESTATEMENT OF COMPARATIVE FIGURES

Comparative information including quantitative, narrative and descriptive information is disclosed in respect of
the previous period for all amounts reported in the Financial Statements in order to enhance the understanding
of the current period’s Financial Statements and to enhance the inter period comparability.
30 EVENTS AFTER THE REPORTING PERIOD

Subsequent to the date of the Financial Position, no circumstances have arisen which would require adjustments
to or disclosure in the financial statements.
31 DIRECTORS' RESPONSIBILITY
The Directors acknowledge the responsibility for the preparation and presentation of these Financial Statements.
32 ASSETS PLEDGED
Following assets pledged by the Company and its subsidiary Serendib Engineering and Agencies (Pvt) Ltd as
security for facilities obtained and utilised jointly from the National Development Bank PLC.
Nature of Assets Nature of Liability

Primary Mortgage Bond No. 1309 dated Letter of Guarantee
a) Rs. 50.0 Mn
22.08.2013 over stocks and book debts for Rs. 60 Mn.
b) Cross Corporate Guarantee of Serendib Engineering and Agencies Receivable Finance

(Pvt) Ltd. (PV 9944) and Serendib Engineering Group PLC (PQ 230) Rs. 20.0 Mn
for Rs. 70Mn each.
c) Receivable Finance Agreement between the Borrowers

and the Bank.
d) Post date cheques
Lien over cash deposit/s, to be built up through the deposit of two per centum (2%) of value of each payment/
e)
invoice , in the name of the Borrowers held by the bank.

33 RISK MANAGEMENT OBJECTIVES AND POLICIES
The Board of Directors have overall responsibility for the establishment and oversight of the risk
management framework, including policies and procedures. In discharging its governance responsibility
it operates through two key committees - the Group Management Committee and the Board of Directors
Audit Committee. Risk management framework is reviewed regularly to reflect changes.
The Group has exposure to the following risks arising from its use of financial instruments.
- Credit Risk
- Liquidity Risk
- Market Risk
- Operational risk
33.1 Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty failing to meet contractual
obligations. Credit risk arises principally from the Group’s receivables from customers and investments in
securities.
The Group has a specific method to assess the potential of customers in terms of their credit worthiness.
Also Group takes adequate precautionary actions before granting credit facilities. Investment in securities
will also be done after careful evaluation of the expected return and risk associated. This approach has
mitigated the credit risk of the Group.
33.2 Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations related to its
financial liabilities, through settlement by cash or financial assets.
The Group seldom utilises its' borrowing facilities. The Group ensures the availability of sufficient liquidity
to meet liabilities when due with proper cash flow planning. The board regularly reviews liquidity position
of the Group. This cautious approach ensures the mitigation of liquidity risk.
33.3 Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest 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
optimising the return.
33.3.1 Interest Rate Risk
The Group’s objective is to maintain an efficient operational interest cost structure to minimise the adverse
effects of fluctuating interest rates.

At the reporting date, the Group’s interest-bearing financial instruments were as follows:
Carrying amount
GROUP COMPANY
2015 2014 2015 2014
Rs. Rs. Rs. Rs.
Fixed Rate Instruments
Financial Assets
Fixed Deposits - 12,186,350 - -
Financial Liabilities - - - -
- 12,186,350 - -
Variable Rate Instruments

Financial Assets
Financial Liabilities
Bank Overdrafts (81,895) (533,158) - -
Interest Bearing Borrowings (600,000) (3,302,000) - -
651,942 (2,853,550) 1,305,951 4,387
Sensitivity analysis for variable rate instruments
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with
all other variables held constant, of the profit before tax:
As at 31st March 2015 Profit or Loss

2015 2014
Rs. Rs.
GROUP
Variable rate instruments (1% decrease) (6,519) 28,536
Variable rate instruments (1% increase) 6,519 (28,536)
COMPANY
Variable rate instruments (1% decrease) (13,060) (44)
Variable rate instruments (1% increase) 13,060 44
33 RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
33.4 Operational Risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with
the Group’s processes, personnel, technology and infrastructure and from external factors other than
credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally
accepted standards of corporate behaviour. Operational risks arise from all of the Group’s operations.
The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses
and damage to the Group’s reputation with overall cost effectiveness and to avoid control procedures
that restrict initiative and creativity.

07. Share Information
7.1 Stated Capital
The stated capital of the Company as at 31st March 2014 was Rs. 178,107,910 represented by 32,383,250 Ordinary
Voting Shares. All shares are issued and fully paid.
7.2 Twenty Largest Shareholders of the Company
As at 31/03/2015 As at 31/03/2014
Name of the Shareholder
Number of Shares % Number of Shares %
1 Navara Capital Limited 24,687,885 76.24 4,937,577 76.24
2 Lankem Ceylon PLC 2,527,200 7.80 505,555 7.81
Pan Asia Banking Corporation PLC /
3 1,450,000 4.48 290,000 4.48
Lankem Ceylon PLC
4 FlyasiaSdn.Bhd 1,175,625 3.63 235,235 3.63
5 Mr. S C De Silva 1,000,000 3.09 200,000 3.09

6 Mr. K D S R Kulatunga 240,124 0.74 92,074 1.42
7 Miss R S M Mohideen 63,209 0.20 4,569 0.07
First Capital Markets Limited / Mr.
8 53,450 0.17 9,592 0.15
P.R.B. Perera
9 Mrs H.P. Gin 50,920 0.16 2,440 0.04
First Capital Markets Limited / Bimputh
10 38,500 0.12 - 0.00
Finance PLC
11 Mrs. S.A.N.C. Jayarathna 25,941 0.08 - 0.00
12 Mr. H.H.J. Deerathilake 23,000 0.07 400 0.01
13 Mrs. M.P. Abeysinghe 22,500 0.07 - 0.00
14 Mr. A.P.D.D.S. Fonseka 22,425 0.07 - 0.00
15 Mr. M.M.A.D. Perera 22,000 0.07 - 0.00
16 FlybruneiSdnBhd 21,295 0.07 4,259 0.07
17 Mrs. T.A.H.R.G. Jayathilaka 20,000 0.06 - 0.00
Richard Pieris Financial Services (Pvt) Ltd
18 19,800 0.06 1,097 0.02
/ K.D.A.
18 Mrs. A. Rode 19,000 0.06 - 0.00
20 Mr. K.A.D.A. Meththasena 18,126 0.06 - 0.00
31,501,000 97.28 6,282,798 97.01
Others 882,250 2.72 193,852 2.99
Total 32,383,250 100.00 6,476,650 100.00

7.3 Distribution of Shareholders
As of 31st March 2015

Number of
% Number of Shares held %
Shareholders
Non- Non- Non- Non-
Resident Resident Resident Resident
Less than or equal to
325 01 61.44% 0.19% 120,152 1,000 0.37% 0.00%
1,000
1,001 to 5,000 123 02 23.25% 0.38% 316,515 7,500 0.98% 0.02%
5,001 to 10,000 44 - 8.32% 0.00% 321,785 - 0.99% 0.00%
10,001 to 50,000 24 01 4.54% 0.19% 460,931 21,295 1.42% 0.09%
50,001 to 100,000 02 01 0.38% 0.19% 117,659 50,920 0.36% 0.16%
100,001 to 500,000 01 - 0.19% 0.00% 204,124 - 0.63% 0.00%
500,001 to 1,000,000 01 - 0.19% 0.19% 1,000,000 - 3.09% 0.00%
Over 1,000,001 03 01 0.57% 0.00% 28,585,744 1,175,625 88.25% 3.63%
Total 523 06 98.87% 1.13% 31,126,910 1,256,340 96.10% 3.90%
Grand Total 52929 100% 32,383,250 100%
As of 31st March 2014

Number of
% Number of Shares held %
Shareholders
Non- Non- Non- Non-
Less than or equal to
227 4 87.98 1.55% 29,931 1,612 0.42% 0.02%
1,000
1,001 to 5,000 15 2 5.81 0.78% 24,764 6,699 0.38% 0.10%
5,001 to 10,000 2 0 0.78 0.00% 18,056 - 0.28% 0.00%
10,001 to 50,000 0 1 0.00 0.39% - 12,220 0.00% 0.19%
50,001 to 100,000 1 0 0.39 0.00% 92,074 - 1.42% 0.00%
100,001 to 500,000 3 1 1.16 0.39% 615,927 235,235 9.51% 3.63%
500,001 to 1,000,000 1 0 0.39 0.00% 505,555 - 7.81% 0.00%
Over 1,000,001 1 0 0.39 0.00% 4,937,577 - 76.24% 0.00%
Total 250 8 96.90 3.10% 6,220,884 255,766 96.05% 3.95%
Grand Total 25829 100.0% 6,476,650 100.00%

7.4 Composition of Shareholders
As at 31st March 2015 31st March 2014

Categories of No of No of
No of Shares Holding % No of Shares Holding %
Shareholders shareholders shareholders
Individuals 2,393,986 7.4% 489 364,640 5.63% 232
Institutions 29,989,264 92.6% 40 6,112,010 94.37% 26
Total 32,383,250 100% 529 6,476,650 100% 258
7.5 Market information on Ordinary Shares of the Company
Ordinary Voting Shares Rs. Rs.
Highest Price Per Share 124.00 200.00
Lowest Price Per Share 13.10 86.00
Closing Price Per Share 13.90 103.50
7.6 Directors and CEO’s Shareholding

The number of shares held by the Board of Directors and the Company CEO is as follows;

Holding % as of Holding % as of
Categories of Shareholders No of Shares total no of Issued No of Shares total no of Issued
Shares Shares
Mr. H. N. De Silva Nil 0.00% Nil 0.00%
Mrs. D. L. De Silva Nil 0.00% Nil 0.00%
Mr. H. G. S. Kariyawasam Nil 0.00% Nil 0.00%
Prof. R. W. T. M. R. Bandara Nil 0.00% Nil 0.00%
Dr. A. G. P. A. Gunawansa Nil 0.00% Nil 0.00%
Mr. A. C. De Silva Nil 0.00% Nil 0.00%
Mr. S. C. De Silva (Former CEO)* 1,000,000 0.31% 200,000 3.09%
Total 1,000,000 0.31% 200,000 3.09%
*Mr. S C De Silva has been resigned from the post of Chief Executive Officer of Serendib Engineering Group PLC
with effect from 31st March 2015.

7.7 Public Shareholding
The percentage of shares held by the public as at 31st March 2015 was 20.67%.

No of No of
No of Shares Holding % No of Shares Holding %
shareholders shareholders
Shares held by Public 7,695,365 20.67% 528 1,339,073 20.67% 256
Shares held by the
24,687,885 79.33% 02 5,137,577 79.33% 02
others
Total 32,383,250 100.00% 529 6,476,650 100% 258

08. Supplementary Information
8.1 Group Structure
Navara Capital Limited
76.24%
Serendib Engineering
Group PLC
60% 85.56% 100%
Serendib Investments Serendib Engineering & CCC Plantation

Holding Limited Agencies (Pvt) Limited Engineering Limited
14.44%

8.2 Performance Summary
2015 2014 2013 2012

Group
Rs. Rs. Rs. Rs.
OPERATING RESULTS
Revenue 266,049,939 261,357,719 339,100,825 -
Net Profit/(Loss) before Tax (18,935,815) 21,671,505 62,717,018 3,537,346
Profit/(Loss) for the Year (13,894,030) 16,240,911 47,771,274 3,516,451
Profit Attributable to Equity Holders of the
(13,352,159) 9,964,949 25,003,987 1,641,845
Parent
ASSETS EMPLOYED
Property, Plant & Equipment 23,002,619 17,678,735 16,143,937 6,977,659
Total Current Assets 278,211,567 273,159,647 292,568,226 176,941,249
Total Assets 345,634,285 329,915,971 332,054,172 208,088,631
Total Current Liabilities 114,686,485 84,167,899 101,897,660 140,098,150
CAPITAL EMPLOYED
Stated Capital 178,107,910 178,107,910 178,107,910 48,574,870
Shareholders’ Funds 215,512,525 203,029,499 154,016,781 1,250,266
CASH FLOW
Net Cash Flow from /(used in) Operating
(347,441) 8,045,925 (114,305,951) 86,166,216
Activities
Net Cash Flow from /(used in) Investing
21,193,944 3,324,159 (12,776,202) (77,136,845)
Activities
Net Cash Flow from /(used in) Financing
(2,702,000) 3,265,080 128,182,138 -
Activities
Cash and Cash Equivalents at the end of the
43,109,022 24,964,519 10,129,355 9,029,370
year
KEY INDICATORS
Earnings Per Share (Rs.) (0.41) 0.31 0.84 0.07
Net Asset Value Per Share (Rs.) 6.66 6.27 5.17 0.05
ROA (%) -4% 5% 14% 2%
ROE (%) -6% 5% 16% 131%
Debt/Equity Ratio (%) 57% 41% 53% 265%
Current Ratio (Times) 2.4 3.2 2.9 1.3

8.2 Performance Summary
Company 2015 2014 2013 2012 2011 2010 2009
OPERATING RESULTS
Revenue 736,00 11,975,000 - - - - -
Net Profit/Loss before
(933,413) 560,823 (2,167,464) (558,982) 38,605.342 (85,650) (110,385)
Tax
Profit/Loss for the Year (985,229) 468,208 (2,493,968) (558,982) 38,507,468 (85,650) (110,385)
ASSETS EMPLOYED
Property, Plant &
1,004,674 1,481,234 1,168,233 - - - -
Equipment
Total Current Assets 10,149,878 9,399,728 20,689,246 2,026,499 - 50,267,518 50,316,167
Total Assets 160,892,442 149,618,852 125,446,369 87,226,499 - 50,342,628 50,391,277
Current Liabilities 36,230,860 24,023,541 380,737 88,177,064 391,583 89,241,679 89,204,679
CAPITAL EMPLOYED
Stated Capital 178,107,910 178,107,910 178,107,910 45,574,870 48,574,870 48,574,870 48,574,870
Shareholders' Funds 124,458,796 125,444,025 124,975,817 (950,565) (391,583) (38,899,051) (38,813,402)
CASH FLOW
Net Cash Flow from /
(used in) Operating 8,956,103 24,022,931 (94,603,862) 87,073,861 (5,652) (43,534) 39,196
Activities
Net Cash Flow from
/(used in) Investing (7,761,803) (29,856,969) (26,616,444) (86,920,863) - - -
Activities
Net Cash Flow from /
(used in) Financing - - 128,420,350 - - - -
Activities
Cash and Cash
Equivalents at the end 2,713,305 1,519,004 7,353,042 152,998 - 5,652 49,186
of the year
KEY INDICATORS
Earnings Per Share
(0.03) 0.01 (0.08) (0.02) 1.59 (0.00) (0.00)
(Rs.)
Net Asset Value Per
3.84 3.87 4.20 (0.04) (0.02) (1.60) (1.60)
Share (Rs.)
ROA (%) -1% 0% -2% -1% 0% 0% 0%
ROE (%) -1% 0% -2% 59% -9834% 0% 0%
Debt/Equity Ratio (%) 29% 19% 0% -9276% -100% -229% -230%
Current Ratio (Times) 0.3 0.4 54.3 0.02 0 0.6 0.6

09. Corporate Information
Name of the Company Company Secretary

Serendib Engineering Group PLC Corporate Arcade Limited
No 122/37, Kirulapona Avenue, Kirilapona
Former Name of the Company
Tele: +94 112 514420/ 514421
Infrastructure Developers PLC
Fax: +94 112513621
Legal form Email: cal@sltnet.lk
A Public Quoted Company with Limited Liability

incorporated in Sri Lanka on 07th September 1992, and Registered Office of the Company
re-registered under the Companies Act No 07. of 2007. No 12 B, Gregory’s Road, Colombo 07
The Company was listed on the Diri Savi Board of the Tele: +94 114 422444/ 4378389
Colombo Stock Exchange.
Fax: +94 112 698524
Email: info@serendibengineering.com
Registration Number
PQ 230
Auditors of the Company
CSE Code V. S. & Associates
IDL.N0000 Chartered Accountants
Financial Year end 20/62, Fairfield Gardens

31 March 2015
st
Colombo 08, Sri Lanka
Tel : +94 112 699606/ 2699917/ 2691281
Board of Directors
Fax:+94 112 699918
Mr. H N De Silva – Chairman
email: vsa@slt.lk
Ms. D L De Silva – Non-Executive Director
Mr. H G S Kariyawasam – Non-Executive Director Bankers of the Company
Prof. R W T M R Bandara – Independent Non-Executive Hatton National Bank PLC
Director
National Development Bank PLC
Dr. A G P A Gunawansa – Independent Non-Executive
Director Nations Trust Bank PLC
Seylan Bank PLC
Mr. A C De Silva – Independent Non-Executive Director
Pan Asia Banking Corporation PLC
Subsidiaries
Serendib Investments Holdings Limited
Serendib Engineering & Agencies (Pvt) Limited
CCC Planation Engineering Limited
Parent Company
Navara Capital Limited

Glossary of Financial Terms
Glossary of Terms Description Glossary of Terms Description

Recording revenues and
Percentage of shares held by
expenses in the period in which
the public calculated as per
they are earned or incurred
Accrual basis Public Holding the Colombo Stock Exchange
regardless of whether cash is
Listing Rules as at the end of
received or disbursed in that
this financial year
period
Current Assets / Current Profit after Tax / Average Total
Current Ratio ROA
Liabilities Assets
Profit after Tax/ Average Total
Debt/Equity Total Debt / Total Equity ROE
Equity
Profit attributable to equity
Long term liabilities plus
EPS holders / Weighted Average Total Debt
short term liabilities
number of Shares in issue
Total assets minus current
Shareholders’ funds plus
Net Assets liabilities minus non-controlling Total Equity
non-controlling interest
interest
Non-controlling interest of
the parent company is the
Profit for the period/ Number of N o n - C o n t r o l l i n g
Net Asset Value per Share portion of equity ownership
shares as of period end Interest
in a subsidiary not attributable
to the parent company.
PAT Profit after tax
Abbreviations
Glossary of Terms Description Glossary of Terms Description

Abbreviation Description Abbreviation Description
Master of Business
Article Articles of Association MBA
Administration
AWDR Average Weighted Deposit Rate N/A Not Applicable
Average Weighted Prime
AWPLR (Pvt) Private
Lending Rate
CBSL Central Bank of Sri Lanka PLC Public Limited Company
Colombo Consumer Price
CCPI Rs. Sri Lankan Rupees
Index
Securities and Exchange
CSE Colombo Stock Exchange SEC
Commission of Sri Lanka
Serendib Engineering &
GDP Gross Domestic Product SEG / the Company
Group PLC
Sri Lanka Accounting
GP Gross Profit SLAS
Standards
Institute of Chartered
ICASL UK United Kingdom
Accountants of Sri Lanka
IDL Infrastructure Developers PLC Y-o-Y Year on Year
Mn Millions

Notes
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SERENDIB ENGINEERING GROUP PLC

Serendib Engineering Group PLC I Annual Report 2014/2015 1

SERENDIB ENGINEERING GROUP PLC

Serendib Engineering Group PLC I Annual Report 2014/2015 i

1. ABOUT US.........................................................1 7. SHARE INFORMATION....................................75

2. PERFORMANCE HIGHLIGHTS OF THE YEAR....2 7.1 Stated Capital....................................................75

6. FINANCIAL STATEMENTS OF THE COMPANY....36

6.1 Annual Report of the Board of Directors............ 36

6.2 The Statement of Directors’ Responsibility......... 39

6.3 Independent Auditors’ Report............................ 40

6.4 Statement of Profit or loss and Other

6.6 Statement of Changes in Equity......................... 44

6.7 Statement of Cash Flows.................................... 46

6.8 Notes to the Financial Statements...................... 48

ii Serendib Engineering Group PLC I Annual Report 2014/2015

Navara Capital Limited is the parent of the Company which

Serendib Engineering Group PLC I Annual Report 2014/2015 01

Total Revenue Profitability & Earnings per Share

200 6.66 7.00 400

Stated Capital Net Asset Value Per Share (Rs.)

Asset Composition ROE & ROA

02 Serendib Engineering Group PLC I Annual Report 2014/2015

Measures have been introduced to tighten and improve

As we look to the year ahead and beyond, we will continue

During the year under review the Telecom infrastructure

Serendib Engineering Group PLC I Annual Report 2014/2015 03

4.1 The Macroeconomic Review

sectors contributed to sustain this growth as it advanced sector (26.5%) respectively.

particularly by the Industry and Services sectors reporting

6.4% in 2013 respectively. The Construction sector, a sub 20

by 6.4% in the first quarter 2015 and it is projected to

04 Serendib Engineering Group PLC I Annual Report 2014/2015

Interest Rates - Source CBSL

4.2 Financial Review

During the year under review, Administration expenses

Profit / (Loss) after Tax

During under year review, the loss attributable to equity

Earnings / (Loss) per Share

During the year, loss per share was Cents 41.

Serendib Engineering Group PLC I Annual Report 2014/2015 05

Limited. the market leader. Telecom infrastructure engineering

The company is focusing on the manufacture of precast tower erection.

concrete polls for the telecom industry and power

Plantation Engineering, Civil Engineering, Water supply

the process of building a Diversified Engineering portfolio.

In fact during the financial year 2014/15 Company moved

Engineering Group PLC holds an effective control of

06 Serendib Engineering Group PLC I Annual Report 2014/2015

- Maintenance of Plantation Machinery

CCC Plantation Limited also undertakes the repair and

4.4 Integrated Risk Management

4.4.1 Introduction fine-tuning of key risk indicators for operational risk.

Serendib Engineering Group PLC I Annual Report 2014/2015 07

4.4.2.1 Operational Risk Management

Risk and Uncertainties Groups’ Response

The project implementation activities are carried out

In addition, where applicable, the risk mitigation actions

Measures were taken for the establishment of Safety

08 Serendib Engineering Group PLC I Annual Report 2014/2015