lake house printers and publishers plcno.41, w.a.d.ramanayake mw, colombo 02. fax 011 – 2449504 e-...

LAKE HOUSE PRINTERS AND PUBLISHERS PLC TO ALL SHAREHOLDERS OF LAKE HOUSE PRINTERS AND PUBLISHERS PLC. NOTICE OF MEETING Fifty Third Annual General Meeting

Notice is hereby given that the Fifty Third Annual General Meeting of the Company will be held on 28th September 2017 at 11.00 am at the J.R. Jayawardane Center,Dharmapala MW, Colombo 07.

All the shareholders of the Company are entitled to attend and vote at this meeting. Also, a shareholder is entitled to appoint a proxy to attend and vote instead of such shareholder, and that proxy need not be a shareholder. Agenda

1. To receive, consider and adopt the Directors’ Report and Audited Financial Statements for the year ended 31st March 2017 with the Report of the Auditors thereon.

2. To declare a first and final dividend of Rs. 1.25 per share as recommended by the Directors.

3. To pass the under mentioned Resolutions, in terms of Section 211 of the Companies Act No.7 of 2007 of which special notice is hereby given to shareholders. “Resolved that the age limit referred to in Section 210 of the Companies Act No.07 of 2007 shall not apply to Mr.Ranjit Sujiva Wijewardene who is 80 years and that he be re-elected a Director of the Company”

“Resolved that the age limit referred to in Section 210 of the Companies Act No.07 of 2007 shall not apply to Dr.Nimal Ebenezer Herath Sanderatne who is 79 years and that he be re-elected a Director of the Company”

4. To reappoint Auditors, for the year 2017/2018 and to authorize the Directors to determine their remuneration.

5. Any other matters

BY ORDER OF THE BOARD D.P.A.N.Kumara Company Secretary 31st August, 2017 Note: - Any member entitled to attend and vote is entitled to appoint a proxy in his stead. A form of proxy accompanies this notice. A proxy need not be a member. Instruments appointing proxies must be lodged with the Company at its Registered Office not less than 48 hours before the meeting.

ANNUAL REPORT AND FINANCIAL STATEMENTS 2016/2017 -1- 1

LAKE HOUSE PRINTERS AND PUBLISHERS PLC

CORPORATE INFORMATION Legal Status A Quoted Public Company Registered Number – PQ 175 Board of Directors R.S.Wijewardene (Chairman) P.S.Wijewardene R.C.Samarasinghe R.P.Hulugalle Prof.L.R.Watawala(Independent) Dr.Nimal Sanderatne (Independent) Secretary D.P.A.N.Kumara Auditors KPMG Chartered Accountants Bankers Bank of Ceylon, Corporate Branch. Sampath Bank PLC, Headquarters Branch. NDB Bank PLC, Headquarters Branch Commercial Bank PLC, Dharmapala Mawatha Branch. Commercial Bank PLC, W.A.D.Ramanayake Mawatha Branch. DFCC Bank PLC, Head Office Branch. Registered Office No.41, W.A.D.Ramanayake Mw, Colombo 02. Fax 011 – 2449504 E- Mail [email protected] Http://www.lhppl.com Telephones 0112433272-3 0112332271



BOARD OF DIRECTORS Mr.R.S.Wijewardene – Chairman/Managing Director Mr.Wijewardene is the Chairman and a founder Director of the Company. He is the holder of a Master’s Degree from the University of Cambridge U.K and has guided the destiny of the Company from 1965 when it was initially floated as a Private Limited Liability Company. Mr.Wijewardene is a recognized personality in business and the media professions and has held the post of the President of the Sri Lanka Press Institute. He is also the President of the Newspaper Society of Sri Lanka. He is the Chairman of subsidiary company L H Plantations (Private) Limited, and associate company Stamford Lake(Private) Limited. He is also the Chairman of closely related companies Wijeya Newspapers Limited, Ranweli HolidayVillage Limited, Freudenberg & Company Limited, Sarathi Limited, R. S Printek (Private) Limited and Wijeya Graphics (Private) Limited. Mr.P.S.Wijewardene – Director Mr.P.S.Wijewardene was appointed as a Director of the Company in November 1999. He holds a Master’s Degree from the University of Leicester, U.K. He counts over 16 years in the Company specially overseeing the Security Card Division activities (as distinct from Security Printing Division) of the Company. Mr.P.S.Wijewardene is also a Director of subsidiary company LH Plantations (Private) Limited, and closely related companies Ranweli Holiday Village Limited, and Freudenberg & Company Limited. He is also the deputy Chairman of Wijeya Newspapers Limited.Mr.P.S.Wijewardene is a Director of the Sri Lanka Press Institute. Mr.R.C.Samarasinghe – Director Mr.Samarasinghe who became a Director of the Company in March 2005, is a Senior Chartered Accountant who prior to his present position, has held senior management positions at several well known and diverse companies. He was the Finance Director of Textured Jersey Lanka PLC, a group company of MAS Holdings (Private) Limited, General Manager, Finance and Administration of Mobitel (Private) Limited, Project Manager of Public Enterprise Reform Commission of Sri Lanka and Financial Controller of Electronic Data Systems (Private) Limited, Singapore.Mr. Samarasinghe is a Fellow member of the Institute of Chartered Accountants of Sri Lanka. Prof. Lakshman R.Watawala – Director Prof.Lakshman R.Watawala is a Fellow of the Institute of Chartered Accountants of Sri Lanka, Fellow of the Institute of Certified Management Accountants of Sri Lanka and, a Fellow of the Chartered Institute of Management Accountants of U.K. He has held the position of Chairman and Managing Director of the Board of Investment of Sri Lanka twice. He has also served as the Chairman of People’s Bank, People’s Merchant Bank and other State Corporations. He has also functioned as an adviser in the Ministry of Finance. He is a Past President of the Institute of Chartered Accountants of Sri Lanka, South Asian Federation of Accountants and the Founder President of AAT Sri Lanka and also the Founder President of the Institute of Certified Management Accountants of Sri Lanka. He was formerly a Committee Member of the Ceylon Chamber of Commerce and serves on the Boards of a number of Public Quoted Companies. Mr.Ranjit Hulugalle –Director Mr.Ranjit Hulugalle was appointed as a Non Executive Director of the Company w.e.f 1st June 2014.He holds a B.Sc (Econ) Hons Degree from the University of Bristol, UK. He is also an Associate Member of the Institute of Chartered Accountants of England & Wales. He has worked as the Manager, London,Deloitte Haskins and Sells, UK, Vice President -Finance & Operations Broughton Hall Inc, Santa Barbara, California, Country Manager Dilmah Tea in the UK and as the Head of Finance and Compliance, First Guardian Equities (Pvt) Ltd. Mr.Ranjit Hulugalle is also a Director of closely related company R. S Printek (Private) Limited.



BOARD OF DIRECTORS (CONTINUED) Dr.Nimal Sanderatne – Director Dr.Nimal Sanderatne holds a B.Sc. Degree from the University of London, M.Sc. Degree from the University of Saskatchewan, M.A. and Ph.D. Degree from the University of Wisconsin. He was conferred the Doctor of Science (Honoris Causa) degree by the University of Peradeniya in 2004. Among the positions he has held are those of Director of Statistics, Director of Economic Research and Adviser Research and Training at the Central Bank of Sri Lanka. He was the Chairman of Bank of Ceylon; Chairman of the National Development Bank; Chairman of the Merchant Bank of Sri Lanka, He has also been the Chairman and Director of Property Development Ltd (PDL), Chairman and Director of the Merchant Bank of Sri Lanka (MBSL), Chairman and Director of NDBS Securities (Pvt) Ltd, Chairman and Director of Lanka Securities (Pvt) Ltd, Chairman and Director of Citi National Investment Bank, Director of Union Assurance Ltd. (UAL), Director of Lanka Orix Leasing Company (LOLC).He was the founder Chairman of the Centre for Poverty Analysis (CEPA); Senior Fellow of the Institute of Policy Studies (IPS) and Visiting Senior Fellow of the Post Graduate Institute of Agriculture (PGIA) of the University of Peradeniya where he continues to teach. He was the President of the Sri Lanka Association of Economists (SLAE), President of the Sri Lanka Association for the Advancement of Science Section F (Social Sciences), a founder member of Ceylon Agricultural Economics Society and is Patron of the Sri Lankan Agricultural Economists Association. He is an Honorary Fellow of the Sri Lanka Economists Association. He has been a Consultant to the World Bank, UNDP, UNICEF, Harvard Institute of International Development (HID) SIDA, ODI and ILO.Dr.Nimal Sanderatne is the author of several books on economics and social sciences and contributed many articles to Journals and Newspapers. D.P.A.N.Kumara Secretary to the Board 31st August, 2017 Colombo

ANNUAL REPORT AND FINANCIAL STATEMENTS 2016/2017

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LAKE HOUSE PRINTERS AND PUBLISHERS PLC THE CHAIRMAN’S REVIEW The performance in the current financial year has been satisfactory reflecting an increase in the profit before tax by Rs 7.4Mn over the last financial year, with both divisions showing an increase in turnover and net margin.

However, the current year’s profit before tax of Rs 34.5Mn was after adjusting for a Rs 2.4Mn gain on the Fair Valuation of the Investment Property value. Hence, the Profit Before Tax prior to this adjustment was Rs 32.1Mn, which reflects an increase of operational profits by Rs 13.4Mn against the previous financial year.

Intense competition prevented us from effectively passing on the impact of cost increases, which affected the margin of the main operating divisions. The recent government induced wage increase of Rs 2,500/- per employee also had a significant impact on our costs of production. On the positive side, despite an increase in the main Administration and Distribution Expenses the Company has achieved an increase of Rs 7.4M in the profit before tax. Despite additional borrowings having to be resorted to, to fund further extensions to our buildings, to add additional space for rental purposes and, increases in the interest rates during the current financial year the Company has managed to keep its Finance Costs down to only Rs 0.8M over the last financial year. This has mainly been possible through improved collections and tighter cash management. The financial year 2017/18 could probably be adversely affected if the rates of interest continue to rise. Steady inflows from rental income have contributed notably towards the bottom line and, in the improvement of overall liquidity. This is an area which in the last couple of years has provided the Company with an additional source of income to supplement its earnings from trading activities. Construction work on further office space which was in progress at the end of the last financial year was completed during the year and the completed buildings have been rented out. The overall operational performance of the Company at the Gross Margin level has shown an increase of Rs 29.9Mn which is a 28% increase over the previous financial year. While there was an increase of revenue in both operating divisions, the positive impact of an improved net margin has been hampered by cost increases. Making a significant impact on the performance has been the increases in the Administration Costs by Rs 6.3Mn and Distribution Expenses by Rs 15Mn. The major reason for the increase in Administration Costs was, as stated earlier, the government recommended increase of Rs.2,500/- p.m. in wages. The increase in the Distribution costs was mainly due to costs associated with securing additional business. This year as in the past, the major contributor to operational profitability has been the Security Printing Division increasing its revenue by Rs 39.5Mn (18%) with an increase in its net margin by Rs 2.7Mn, despite an increase in its distribution costs compared to the last financial year. The gross margin of the division has held steady despite increased expenses. This Division continues to be the backbone of the Company and its performance has always had a significant impact on the overall results of the Company as confirmed once again, by the results of the current financial year. Competition to our security printing business continues to present a strong challenge to our long maintained prominence in the market. We continue to explore related business opportunities to mitigate and counter the effect of such competition. The Security Cards Division was set up a few years ago for the manufacture and supply of security cards for the banking / telecom sector and, plastic cards for the corporate sector. It generated a Revenue of Rs. 161.9Mn during the year, compared to Rs. 110.5Mn in the last financial year, an improvement of 47%. The Division has made satisfactory progress in establishing itself as a key service supplier to the Banking sector in the financial year under review, recording a profit of Rs 6.5Mn compared to a profit of Rs. 2.9Mn in the last financial year. However due to intense competition from many other players in the market the gross margin percentage has dropped slightly compared to the last financial year.



THE CHAIRMAN’S REVIEW (CONTINUED) Notable progress was also made in providing services to the banking sector during this year resulting in a substantial improvement in the Turnover. We are now offering our Banking clients more advanced card solutions evidenced by the improved performance in the financial year 2016/17. We have successfully penetrated further into the plastic card market sector further, establishing ourselves as one of the leaders in this sector. We have been deploying more resources into this sector as the current magstripe cards are being phased out in the market and will eventually be replaced by chip cards, which carry more features and are more secure than the magstripe cards. The Company has measured the Investment Property mainly on a fair value basis and re-valued the Investment Property during the current financial year. Based on a valuation submitted by a professional and independent valuer, we have incorporated a fair value adjustment of Rs 2.4Mn in our financial statements. An Investment Property value of Rs.262.350Mn is disclosed under Non Current Assets and a Revaluation Reserve of Rs. 201.245Mn is disclosed under Capital & Reserves. A foot note in relation to the current value of the Company property as assessed by the aforementioned valuer, is given in note No. 11 in page no 34 in the Financial Report.

Our decision to develop areas of property for rental has borne fruitful results. Expenses incurred in the relocation of the Security Printing Division and developing sections of the property for rental purposes have been fully justified in terms of the rental income that has constituted as a major source of income to support the two operating divisions. The volatility of the exchange and interest rates have had some bearing on our performance in the financial year 2016/2017 and, any further significant changes in these could have a further impact on our performance in the future.

Countering competition in our key operating divisions to maintain and consolidate our market share in the future will continue to be the main thrust of our approach.

The fully owned subsidiary LH Plantations (Pvt) Ltd has improved its performance over the previous year, posting an after tax profit of Rs.4.77 mn, an improvement of 101%. Its main source of income comes from the Investments made in Securities. Rates of interest on Investments picked up during the year and this has boosted the performance. With a Solid Assets Base of over Rs.87 mn and relatively insignificant Liabilities, it adds substantial value to the Group figures. The value of a Share of LH Plantations (Pvt) Ltd stands at Rs.44/=. The performance of Associate Company Stamford Lake (Pvt) Ltd has been lacklustre in the Financial Year under review and a Net Profit after Tax of Rs.0.3 mn, despite being an improvement over the NPBT of Rs.0.062 mn in the Financial Year 2015/16, is disappointing. Basically, the financial structure of the Company continues to remain strong with an improved performance in the financial year 2016/17.

This has been recognized and, the Directors have accordingly recommended a dividend of Rs.1.25 per Share for 2016/17.

Finally, on behalf of the Company and the Board, I would like to place on record my appreciation to the Management and the Staff at all levels who have given of their best during the year under review

R.S.Wijewardene Chairman 31st August 2017 Colombo.



CORPORATE GOVERNANCE The Directors hereby confirm that the Company is in compliance with Section 7.10 of the Listing Rules of Corporate Governance as at 31st March 2017.

Board of Directors

The Board meets approximately once a month and discusses matters that need their direction and guidance. The Directors also acknowledge that they are responsible for protecting the rights and interests of shareholders and their accountability towards them on behalf of the overall management of the Company.

The Directors are responsible for the governance of the Company including the establishment and maintenance of Internal Control systems of the Company, setting out strategic aims and providing leadership. Internal Control systems are designed to meet the particular needs of the organization and the risks to which it is exposed to.

Composition of the Board

The names of the Directors of the Company who held office in the Company as at the date of the Annual Report are set out on page no 02, Of the seven members of the Board, four Members are Executives. There is one non Executive Director namely Mr. Ranjit Hulugalla.There are two Independent Non Executive Directors namely Prof. L.R Watawala and Dr. Nimal Sanderatne.

Board Meeting

The Board Meetings with Independent Directors are scheduled once in two months, to consider the performance and Financial Statements of the period and to approve routine Capital Expenditure, among other matters.

Audit Committee and Remuneration Committee

In compliance with the rules of Corporate Governance of the Colombo Stock Exchange, an Audit Committee and a Remuneration Committee are in place. The Audit Committee comprises of two Independent Directors Prof.L.R Watawala who acts as the Chairman of the Audit Committee and Dr.Nimal Sanderatne as a Member. The Remuneration Committee comprises of Dr.Nimal Sanderatne as the Chairman and, Prof L.R Watawala. The Audit Committee met four times whilst the Remuneration Committee did not meet during the year under review.

Related Party Transactions Committee

In compliance with the rules of Corporate Governance of the Colombo Stock Exchange, a Related Party Transactions Committee was set up during the financial year 2016/2017.Its Composition is as follows,

Dr.Nimal Sanderatne - Chairman Prof.L.R.Watawala - Member R.P.Hulugalle - Member R.C.Samarasinghe - Member

Relationship with Shareholders

The shareholders have the opportunity of meeting the Board and forwarding their questions at the Annual General Meeting. However, this does not limit their communication with the Board and they are free to communicate with the Directors, Company Secretary or any of the Senior Managers depending on the matters that need to be addressed.



CORPORATE GOVERNANCE (CONTINUED) Internal Control

The Board places a high priority on internal controls to manage the day-to-day affairs of the Company. The Board is responsible for the Company’s systems of internal controls and for reviewing their effectiveness. This is ensured and the system is designed to safeguard assets from unauthorized use or disposal and to ensure that proper records are maintained and reliable information is produced including financial, operational, compliance controls and risk management.

However, the Board is of the view that the company’s systems of internal controls provide only a reasonable and not absolute assurance that material errors and irregularities are either prevented or detected within a reasonable time period.

Disclosure

The Board’s policy is to disclose all relevant information to stakeholders, within the bounds of prudent commercial judgment, in addition to preparing the Financial Statements in accordance with Sri Lanka Accounting Standards, the Companies Act No.7 of 2007 and in conformity with Stock Exchange disclosure of requirements.

Compliance Report

The Directors confirm that to the best of their knowledge all taxes and duties payable by the Company and all contributions, levies and taxes payable on behalf of and in respect of the Company and all other known statutory dues payable as at the Balance Sheet date, have been paid or are provided for in the accounts.

Other Information

The Annual Report contains statements from the Board including the responsibilities of the Directors for the preparation of the Financial Statements and the Directors are of the view that they have discharged their responsibilities as set out in this statement. The performance of the Company during the year under review and the future prospects of the Company are covered in the Chairman’s Review of Operations.

Independence of Directors

In accordance with Rule 7.10 2 (b) of the Colombo Stock Exchange (CSE) Listing Rules, Professor L.R Watawala and Dr. Nimal Sanderatne are Independent Non Executive Directors of the Company. They have submitted signed dated declarations as per specimen given in Appendix 7A of Continuing Listing Requirements of the CSE.

Although Dr. Nimal Sandaratne holds 2067 (0.07%) shares of the Company, as per Rule 7.10.4 f(3), the Board of Directors is in the opinion that it is not a significant shareholding of the Company Based on the above declarations and other information available, the Board is of the view that Professor L.R Watawala and Dr. Nimal Sanderatne are eligible to act as Independent Directors of the Company. Industrial Relations There were no material issues pertaining to employees and industrial relations of the entity which need disclosure. By Order of the Board, D.P.A.N.Kumara Company Secretary 31st August 2017



REPORT OF THE AUDIT COMMITTEE The Company’s Audit Committee comprises of two Non-Executive Independent Directors as per the Code of Best Practice on Corporate Governance. Prof. Lakshman R.Watawala FCA, FCMA, FCMA (UK), serves as the Chairman of the Audit Committee. Dr.Nimal Sanderatne Ph.D University of Wisconsin, USA serves as a Member of the Audit Committee.

Members who are invited to participate at the Audit Committee meetings are the Finance Consultant, the Finance Director, the Deputy General Manager (Finance) and the Chief Internal Auditor of the Company. The Company Secretary serves as the Secretary of the Audit Committee.

During the year under review, the Audit Committee met four times. Measures were taken to review Internal Control systems, analyse Internal Audit reports and necessary recommendations made to the Board. Further, the Audit Committee continuously reviewed the financial performance of the Company in order to advise the Board.

The objective of the Audit Committee is to assist the Board of Directors of the Company in fulfilling its responsibilities for the financial reporting process, the effectiveness of internal control systems, the audit process and the Company’s process for monitoring compliance with laws, regulations and best practices.

The Audit Committee has examined the financial, business and other risks faced by the Company and recommended to the Board controls to mitigate risk management within the company.

The Committee also reviewed the reports submitted by the Internal Auditor and recommendations were made to the Board and implementation monitored.

Quarterly Accounts and the Annual Audited Accounts are reviewed by the Audit Committee before being submitted to the Board for approval and subsequent release to the Shareholders and other statutory institutions.

The Audit Committee has recommended to the Board of Directors that Messers KPMG Chartered Accountants be re appointed as the auditors of the Company for the financial year ending 31st March 2018, subject to the approval of the shareholders at the Annual General Meeting and the audit fee to be determined by the Board of Directors.

Prof.Lakshman. R. Watawala. Chairman of the Audit Committee 31st August 2017 Colombo


LAKE HOUSE PRINTERS AND PUBLISHERS PLC REPORT OF THE REMUNERATION COMMITTEE Prof.Lakshman Watawala and I functioned as the members of the Remuneration Committee. The Remuneration policy of the Company is based on performance. A performance appraisal is done annually on employees and remuneration is decided. The Remuneration of Senior Executives and Executive Directors are recommended by the Chairman to the Remuneration Committee which makes its observations and recommendations for implementation.

Dr.Nimal Sanderatne, Chairman, Remuneration Committee. 31st August 2017 Colombo


LAKE HOUSE PRINTERS AND PUBLISHERS PLC STATEMENT OF DIRECTORS’ RESPONSIBILITIES The following statement which should be read in conjunction with the Auditors’ statement of their responsibilities set out in their report, is made with a view to distinguish the respective responsibilities of the Directors and of the Auditors,in relation to the financial statements. The Directors are required by the Companies Act No.07 of 2007 to prepare Financial Statements for each financial year which give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit or loss for the financial year. The Directors are required to prepare these financial statements on going concern basis, unless it is not appropriate. Since the Directors are satisfied that the Company has resources to continue in business for the foreseeable future, the financial statements continue to be prepared on the said basis. The Directors consider that in preparing the financial statements on pages 17 to 50 the Company has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates and that all accounting standards, which they consider to be applicable, are followed. The Directors are responsible for ensuring that the Company keeps accounting records, which will disclose with reasonable accuracy the financial position of the Company and which will enable them to ensure that financial statements comply with the Companies Act No.07 of 2007. The Directors are generally responsible for taking such steps that are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities. The Directors are confident that they have discharged their responsibility as set out in this statement. They also confirm that to the best of their knowledge all statutory payments payable by the Company as at the reporting date, are paid or where relevant, provided for. By Order of the Board D.P.A.N.Kumara Company Secretary 31st August 2017


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LAKE HOUSE PRINTERS & PUBLISHERS PLC

REPORT ON THE AFFAIRS OF THE COMPANY

TO THE SHAREHOLDERS

The Board of Directors has pleasure in presenting the 53rd Annual Report and the Audited Financial Statements of the Company for the year ended 31st March 2017. The Directors confirm that the financial statements have been prepared in accordance with the Sri Lanka Accounting Standards, which have been consistently applied and supported by reasonable and prudent judgments and estimates.

1. REVIEW OF THE YEAR The Chairman’s Review describes in brief the Company’s affairs and the performance during the year.

2. FINANCIAL STATEMENTS The Financial Statements of the Company for the year ended 31st March 2017, which include the Statement of Comprehensive Income, Statement of Financial Position and the Notes to the Financial Statements, are given from Page 17 to 50.

3. NATURE OF BUSINESS The major activities of the Company during the year were the printing of Cheque Leaves & Security Documents. The Company is also in the business of manufacturing & marketing plastic security cards and the supply of related equipment and Machinery and publishing & distributing the Lake House Atlas. Our Subsidiary Company LH Plantations (Private) Limited functions as a managing agent of coconut plantations. Our Associate Company Stamford Lake Private Limited is involved in the printing & publishing and the marketing of literary works.

4. AUDITORS’ REPORT The Auditors’ Report on the Financial Statements is set out on Pages No.15 & 16.

5. CHANGE IN ACCOUNTING POLICIES Any changes in accounting policies made during the financial year ended 31st March 2017, are recorded under Notes to the Financial Statements

6. NAMES OF THE DIRECTORS AND THEIR INTEREST IN SHARES NAME NO: OF SHARES

As At 31/03/2017 As at 31/03/2016

Mr.R.S.Wijewardene (Chairman) 1,047,710 1,018,557 Mr.P.S.Wijewardene (Executive Director) 108,282 108,282 Mr.R.C.Samarasinghe (Executive Director) - - Mr.D.R.Wijewardene (Executive Director) (Resigned 13th March 2017) 856,837 856, 837 Mr.R.P. Hulugalle (Non Executive Director) - - Prof.L.R.Watawala (Independent Non Executive Director) - - Dr.N.E.H.Sandaratne (Independent Non Executive Director) 2,067 2,067 1,014,896 1,985,743 The Board wishes to place on record its appreciation to Mr.D.R.Wijewardene who resigned on 13/03/2017, for the invaluable Services rendered by him to the Company.

In accordance with Rule 7.10 2 (b) of the Colombo Stock Exchange (CSE) Listing Rules, Professor L.R. Watawala and Dr.Nimal Sandaratne are Independent Non Executive Directors of the Company. They have submitted signed declarations as per specimen given in Appendix 7A of continuing listing requirements of CSE. Although Dr.Nimal Sandaratne holds 2,067 (0.07%) shares of the Company, as per rule 7.10.4 f (3) the Board of Directors is in the opinion that it is not a significant shareholding of the Company.



REPORT ON THE AFFAIRS OF THE COMPANY (CONTINUED)

7. TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL The Company maintains a Directors’ Interest Register. Transactions with key management personnel are comprehensively recorded under Note 32 to the Financial Statements on Page 44.

8. REMUNERATION AND OTHER BENEFITS OF DIRECTORS The aggregate remuneration and other benefits of Directors of the company for the financial year 2016/2017 amounted to LKR. 4,861,000/= (15/16- LKR.4, 749, 000/=)

9. DIVIDENDS The Directors recommend the payment of a dividend of LKR.1.25 per share for the year ended 31st March 2017. The company paid a dividend of LKR. 1.00 per share for the year ended 31/03/2016 in September 2016.

10. APPOINTMENT OF AUDITORS Messrs KPMG, Chartered Accountants are recommended for reappointment. A Resolution pertaining to their re-appointment and authorizing the directors to determine their remuneration will be proposed at the Annual General Meeting.

The Auditors’ remuneration for the year 2016/2017 was fixed at LKR 350,000/= for the Company and LKR 438,000/= for the Group as disclosed in Note 8 to the financial statements.

11. AUDITORS’ RELATIONSHIP OR ANY INTEREST WITH THE COMPANY The Directors are satisfied that based on written representations made by the independent auditors to the Board, the auditors did not have any relationship or any interest with the company that would impair with their independence. M/S KPMG were also engaged as tax consultants of the Company for the year 2016/2017 at a remuneration of LKR 141,000/=.

12. DONATIONS The Company has made donations amounting to LKR 38,000/= during the year ended 31st March 2017 (2015/16 -LKR 34, 500/=)

13. CHANGES IN PROPERTY, PLANT AND EQUIPMENT The movements in Property, Plant and Equipment during the year ended 31st March 2017 and 31st March 2016 are set out in Note No.11 to the financial statements. A sum of LKR 17.907Mn has been spent on the purchase of Machinery, Equipment, Motor Vehicles and Construction of new building during the year.

Machinery valued at LKR 5.560Mn (purchased in 1988 & 2003) was sold during the year for LKR 4.224Mn. The book profit arising on this transaction was LKR 2.138Mn

Further, Investment Property has been revalued during the year and valued at LKR.262.350Mn as at 31/03/2017 (2015/2016 – LKR.130.000Mn).

The Revaluation Reserve increased to LKR.201.245Mn due to two new Buildings rented out during the year. (2015/2016 LKR 100.247Mn net of deferred Tax).

14. STATED CAPITAL AND RESERVES There was no change in the Issued Share Capital and Capital Reserves of the Company during the year under review. The total Retained Earnings of the Company as at 31st March 2017 rose to LKR 105.345Mn (2016 LKR 77.487Mn) and Retained Earnings of the Group to LKR 199.918Mn (2016 - LKR 167.905Mn). The Revaluation Reserve as at 31st March 2017 amounted to LKR 201.245Mn.



REPORT ON THE AFFAIRS OF THE COMPANY (CONTINUED)

15. STATUTORY PAYMENT The Directors to the best of their knowledge and belief are satisfied that all statutory payments in relation to the employees and the Government up to the reporting date have been made.

16. GOING CONCERN The Directors have adopted the going concern basis in preparing the financial statements. The directors after making inquiry and following a review of the Company’s budget, future cash flows and borrowing facilities, consider the Company has adequate resources to continue in operation.

CONCLUSION

The Directors thank the members at all levels for their efforts during the period under review.

By Order of the Board

………………… …………………. …………………

R. S. Wijewardene R. C. Samarasinghe D. P. A. N. Kumara Director Director Company Secretary 31st August, 2017 31st August, 2017 31st August, 2017



INDEPENDENT AUDITORS’ REPORT

TO THE SHAREHOLDERS OF LAKE HOUSE PRINTERS AND PUBLISHERS PLC

Report on the Financial Statements

We have audited the accompanying financial statements of Lake House Printers and Publishers PLC, (“the Company”), and the consolidated financial statements of the Company and its subsidiaries (“Group”), which comprise the statement of financial position as at 31st March 2017, and the statements of profit or loss and other comprehensive income, changes in equity and, cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information set out on pages 17 to 50 of the annual report.

Board’s Responsibility for the Financial Statements

The Board of Directors (“Board”) is responsible for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group as at 31st March 2017 and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.


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Report on Other Legal and Regulatory Requirements

As required by section 163 (2) of the Companies Act No. 07 of 2007, we state the following:

a) The basis of opinion and scope and limitations of the audit are as stated above. b) In our opinion,

We have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company.

The financial statements of the Company give a true and fair view of its financial position as at 31st March 2017, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

The financial statements of the Company and the Group comply with the requirements of sections 151 and 153 of the Companies Act No 07 of 2007.

Chartered Accountants Colombo 31st August 2017


-16-

16

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31ST MARCH 2017 2016 2017 2016Note Rs.'000 Rs.'000 Rs.'000 Rs.'000

Revenue 5 426,291 336,922 426,001 336,632

Cost of Sales (288,694) (229,202) (288,694) (229,202)

Gross Profit 137,597 107,720 137,307 107,430

Other Operating Income 6 27,965 27,279 27,112 27,397

Administration Expenses (94,576) (88,126) (91,200) (84,876)

Distribution Expenses (35,087) (20,021) (35,087) (20,021)

Results from Operating Activities 35,899 26,852 38,132 29,930

Net Finance Income / (Costs) 7 4,286 3,587 (3,635) (2,862)

Share of Profit of Associate (Net of Tax) 14.1 154 769 - -

Profit Before Tax 8 40,339 31,208 34,497 27,068

Income Tax Expenses 9 (4,735) (7,833) (3,048) (6,418)

Profit for The Year 35,604 23,375 31,449 20,650

Other Comprehensive IncomeActuarial Gain/(Loss) on Defined Benefit Obligations (908) 18 (908) 18Revaluation Gain on Property Plant and Equipment 108,706 - 108,706 -Net amount transferred to Income Statement on disposal of Available for Sale Financial Assets - 23 - -Net change in Fair Value of Available for Sale Investment 1,314 (6) 1,314 (6)Tax Effect on Other Comprehensive Income (7,454) (5) (7,454) (5)Total Comprehensive Income for the Year,net of Tax 101,658 30 101,658 7Total Comprehensive Income 137,262 23,405 133,107 20,657

Attributable toEquity holders of the Parent 35,604 23,375 31,449 20,650Non – Controlling Interest - - - -

35,604 23,375 31,449 20,650Total Comprehensive Income Attributable to:Equity holders of the Parent 137,262 23,405 133,107 20,657Non – Controlling Interest - - - -Total Comprehensive Income 137,262 23,405 133,107 20,657

Basic Earnings Per Share (Rs.) 10 12.12 7.96 10.71 7.03

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 of the group set out on pages 21 to 50 .

ANNUAL REPORT AND FINANCIAL STATEMENTS 2016/2017 -17-


COMPANYGROUP

17

STATEMENT OF FINANCIAL POSITION

AS AT 31ST MARCH 2017 2016 2017 2016Note Rs.'000 Rs.'000 Rs.'000 Rs.'000

ASSETS Non Current AssetsProperty, Plant and Equipment 11 45,697 61,881 43,249 58,054Investment Property 12 262,350 130,000 262,350 130,000Investment in Subsidiary 13 - - 2,983 2,983Investment in Associate 14 15,753 15,599 4,889 4,889Available for Sale Investment 15 10,364 9,050 10,364 9,050Total Non Current Assets 334,164 216,530 323,835 204,976

Current AssetsInventories 16 60,782 47,875 60,782 47,875Trade and Other Receivables 17 57,161 50,271 54,356 48,553Amounts due from Related Parties 18 9,816 8,639 9,621 8,275Loans given to Related Party 18.2 - 1,500 - -Tax Recoverable - 251 - -Cash and Cash Equivalents 19 68,173 62,836 2,837 2,920Total Current Assets 195,932 171,372 127,596 107,623Total Assets 530,096 387,902 451,431 312,599

EQUITY AND LIABILITIESCapital and ReservesStated Capital 20 35,247 35,247 35,247 35,247Capital Reserves 21 6,197 6,197 6,197 6,197Revaluation Reserves 22 201,245 100,247 201,245 100,247Available for Sale Reserves 6,716 5,402 6,715 5,401Retained Earnings 199,918 167,905 105,345 77,487Total Equity atttributable to Equity Holders of the Company 449,323 314,998 354,749 224,579Non – Controlling Interest - - - -Total Equity 449,323 314,998 354,749 224,579

Non - Current LiabilitiesDeferred Taxation 23 2,074 932 1,753 865Retirement Benefit Obligations 24 11,840 9,665 11,840 9,665Interest Bearing Borrowings 25 - - - -Loans from Related Party 27 - - 13,283 13,539Total Non - Current Liabilities 13,914 10,597 26,876 24,069

Current LiabilitiesInterest Bearing Borrowings 25 8,657 19,365 8,657 19,365Trade and Other Payables 26 42,080 29,717 41,944 29,489Loans from Related Party 27 - - 3,188 1,872Current Tax Liabilities 4,633 872 4,528 872Bank Overdrafts 19 11,489 12,353 11,489 12,353Total Current Liabilities 66,859 62,307 69,806 63,951

Total Liabilities 80,773 72,904 96,682 88,020

Total Equity and Liabilities 530,096 387,902 451,431 312,599

Net Assets Per Share (Rs.) 152.97 107.24 120.78 76.46

It is certified that the Financial Statements have been prepared in compliance with requirements of the Companies Act No.7 of 2007.

D.G.M.Finance T.A.U.Jinadasa

R.S.Wijewardene (Chairman) R.C.Samarasinghe (Director)31st August, 2017Colombo


-18-

The Financial Statements are to be read in conjunction with the related notes, which form an integral part of the Financial Statements of the group set out on pages 21 to 50.

The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Approved and signed on behalf of the Boardof the Directors;

COMPANYGROUP


18

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31ST MARCH 2017

COMPANY STATED CAPITAL

CAPITAL RESERVES

REVALUATION

RESERVE

AVAILABLE FOR SALE RESERVES

RETAINED EARNINGS TOTAL

Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1st April 2015 35,247 6,197 100,247 5,407 60,349 207,447Profit for the year - - - - 20,650 20,650Other Comprehensive Income - - - (6) 13 7Total Comprehensive Income - - - (6) 20,663 20,657

Transactions with Equity HoldersContribution by and Distribution to Equity HoldersDividend for the year - - - - (3,525) (3,525)Balance as at 31st March 2016 35,247 6,197 100,247 5,401 77,487 224,579

Balance as at 1st April 2016 35,247 6,197 100,247 5,401 77,487 224,579Profit for the year 31,449 31,449Other Comprehensive Income - - 100,998 1,314 (654) 101,658Total Comprehensive Income - - 100,998 1,314 30,795 133,107


GROUP STATED CAPITAL

CAPITAL RESERVES

REVALUATION

RESERVE

AVAILABLE FOR SALE RESERVES

RETAINED EARNINGS TOTAL

Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1st April 2015 35,247 6,197 100,247 5,385 148,042 295,118Profit for the year - - - - 23,375 23,375Other Comprehensive Income - - - 17 13 30Total Comprehensive Income - - - 17 23,388 23,405


Balance as at 1st April 2016 35,247 6,197 100,247 5,402 167,905 314,998Profit for the year 35,604 35,604Other Comprehensive Income - - 100,998 1,314 (654) 101,658Total Comprehensive Income - - 100,998 1,314 34,950 137,262


Figures in brackets indicate deductions.


-19-

The Financial Statements are to be read in conjunction with the related notes, which form an integral part of the Financial Statements of the group set outon pages 21 to 50 .


19

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31ST MARCH2017 2016 2017 2016

Rs.'000 Rs.'000 Rs.'000 Rs.'000CASH FLOWS FROM OPERATING ACTIVITIESProfit before Tax 40,339 31,208 34,497 27,068Adjustments for,Dividend Income (141) (147) (440) (143)Profit on disposal of Property,Plant & Equipment (2,138) (2,805) (2,138) (2,805)Gain on Fair Value of Investment Property (2,350) (8,300) (2,350) (8,300)Share of profit of Associate (Net of Tax) (154) (769) - -Provision for Retiring Gratuity 1,994 1,674 1,994 1,674Depreciation 10,728 12,219 9,333 10,827Interest Income (6,905) (5,743) (7) (90)Interest Expense 2,618 2,157 3,642 2,952Write-off of Trade and Other Receivables 690 966 690 966Write-off of Property Plant & Equipment - 37 - 37Write back of Other Payables (382) - (310) -Operating Profit Before Working Capital Changes 44,298 30,495 44,911 32,186

Increase in Inventories (12,907) (16,639) (12,907) (16,639)Increase in Trade & Other Receivables (6,927) (6,790) (5,840) (7,082)(Increase)/Decrease in Dues from Related Companies (1,178) 618 (1,347) 550Increase in Trade & Other Payables 12,363 5,158 12,408 5,078Decrease in Dues to Related Companies - (2,731) - (2,732)

35,650 10,111 37,225 11,361Interest Paid (2,618) (2,157) (3,642) (2,952)Gratuity Paid (728) (1,283) (728) (1,283)Tax Paid (7,305) (9,600) (6,253) (8,044)Net Cash Flow Generated from (Used in) Operating Activities 24,999 (2,927) 26,602 (918)

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of Property,Plant and Equipment (17,923) (21,721) (17,907) (21,721)Proceeds from Sale of Property,Plant and Equipment 4,224 2,805 4,224 2,805Interest Received 6,905 5,743 7 90Dividend Received 141 147 440 143Sale of Shares - 265 - -Investment in Repos - 38,864 - -Loans given to Related Parties 1,500 2,000 - -Net Cash Flow Generated from / (Used in) Investing Activities (5,153) 28,103 (13,236) (18,683)

CASH FLOWS FROM FINANCING ACTIVITIESRepayment of Loans during the year (53,832) (48,367) (55,772) (43,367)Loans Obtained during the Year 43,801 54,878 46,801 53,268Lease Rentals Paid (677) (2,478) (677) (2,478)Dividend Paid (2,937) (3,525) (2,937) (3,525)Net Cash Flow Generated from/ (Used in) Financing Activities (13,645) 508 (12,585) 3,898

Net Increase/ (Decrease) in Cash & Cash Equivalents 6,201 25,684 781 (15,703)Cash & Cash Equivalents at the Beginning of the year 50,483 24,799 (9,433) 6,270Cash & Cash Equivalents at the End of the year (Note 19) 56,684 50,483 (8,652) (9,433)

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 of the group set out on pages 21 to 50.

COMPANY GROUP


-20-ANNUAL REPORT AND FINANCIAL STATEMENTS 2016/2017

20


NOTES TO THE FINANCIAL STATEMENTS

21

1. REPORTING ENTITY

Lake House Printers and Publishers PLC (the “Company”), is a limited liability company incorporated and domiciled in Sri Lanka, and listed on the Colombo Stock Exchange. The registered office of the Company and the principal place of business are situated at No.41, W.A.D.Ramanayake Mawatha, Colombo 02.

The major activities of the Company during the year were the printing of Cheque Leaves and Security Documents. The Company is also in the business of manufacturing and marketing plastic security cards and the supply of related equipment and machinery and, publishing and distributing the Lake House Atlas. The Subsidiary Company LH Plantations (Private) Limited functions as a managing agent of coconut plantations. The Associate Company Stamford Lake Private Limited is involved in the Printing and Publishing and the marketing of literary works.

The Consolidated Financial Statements of Lake House Printers and Publishers PLC comprise the Company and its fully owned subsidiary, L H Plantations (Private) Limited, (together referred to as the “Group”) and the Group’s interest in 49% owned associate, Stamford Lake (Private) Limited.

2. BASIS OF PREPARATION

2.1 Statement of Compliance

Financial Statements have been prepared in accordance with the Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka and the requirements of the Companies Act No. 7 of 2007.

2.2 Basis of Measurement

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

Available for Sale Investments are measured at fair value Investment Property is measured at fair value Liability for defined benefit obligations is carried at the present value of the defined benefit

obligations. 2.3 Functional and Presentation Currency

Financial Statements of the group are presented in Sri Lankan rupees, which is the Group’s functional currency. All financial information presented has been rounded to the nearest thousand unless otherwise indicated. All values presented in the financial statements are in Sri Lankan Rupees unless otherwise indicated.

2.4 Use of Estimates and Judgments

The preparation of the financial statements in conformity with SLFRSs requires the management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

21


NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

22

2. BASIS OF PREPARATION (CONTINUED) 2.4 Use of Estimates and Judgments (continued)

Information about critical judgments in applying accounting policies that have a significant effect on the amounts recognized in the Group’s Financial Statements is included in the respective notes.

2.5 Going Concern

The Board of Directors has made an assessment of the Group’s ability to continue as a going concern in the foreseeable future and they do not intend to liquidate or cease trading.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these Consolidated Financial Statements.

3.1 Basis of Consolidation The Consolidated Financial Statements include the Financial Statements of the company and its subsidiaries and associates. The Group’s Financial Statements comprise of the Consolidated Financial Statements of the Company and the Group which have been prepared in compliance with the Group’s Accounting Policies.

3.1.1 Subsidiaries

Subsidiaries are entities controlled by the Group. The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.

3.1.2 Investment in Associates

An Associate is an entity over which the Group has significant influence and that is neither Subsidiary nor an interest in Joint Venture. Significant influence is the power to participate in the Financial and operating policy decisions of the investee but not have any control over those policies.

Investments in associates are accounted for using the equity method (equity accounted investees) and are recognized initially at cost. The Consolidated Financial Statements include the Group’s share of the income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to nil, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

22



23

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.1.3 Loss of Control

On the loss of control, the Group derecognizes the assets and liabilities of the subsidiary. Any non controlling interests and the other components of equity related to the subsidiary, any surplus or deficit arising on the loss of control is recognized in comprehensive income. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

3.1.4 Transactions Eliminated on Consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the Consolidated Financial Statements. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

3.2 Foreign Currency Transactions

Transactions in foreign currencies are translated to the functional currency of the Group at exchange rates at the dates of the transactions. Monetary assets and liabilities are denominated in foreign currencies rate at that date.

Non-monetary assets and liabilities that are measured at fair value in a foreign currency are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on retranslation are generally recognized in Profit or Loss.

3.3 Financial Instruments 3.3.1 Non-derivative Financial Assets

The Group initially recognizes loans and receivables and deposits on the date that they are originated. All other financial assets are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognized as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

The Group classifies non derivative financial assets into the following categories;

Loans and Receivables Available-for-Sale Financial Assets

23



24

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.3 Financial Instruments (Continued)

3.3.1 Non-derivative Financial Assets (Continued) (a) Loans and Receivables

Loans and receivables are financial assets with fixed or determinable payment that are not quoted in an active market. Such assets are recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and Receivables comprise of Trade Receivables, Other Receivables, Loans given to Related Parties and amount due from Related Parties.

(b) Available-for-Sale Financial Assets

Available-for-Sale financial assets are non-derivative investments that were designated as available-for-sale or are not classified as another category of financial assets. Unquoted equity securities whose fair value cannot reliably be measured are carried at cost less impairment. All other available for sale investments are carried at fair value.

Dividend income is recognized in the comprehensive income when the Company becomes entitled to the dividend. Other fair value changes are recognized in the other comprehensive income until the investment is sold or impaired, whereupon the cumulative gains and losses previously recognized in the other comprehensive income are reclassified to comprehensive income as a reclassification adjustment. Available-for-Sale financial assets include investments in quoted shares and unquoted shares which are not classified as investment in Subsidiaries or investment in Associates.

(c) Cash and Cash Equivalents

Cash and Cash Equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value and are used by the Group in the management of its short-term commitments. Bank overdrafts that are repayable on demand which from an integral part of the Company’s cash management are included as a component of Cash and Cash Equivalents for the purpose of Statement of cash flow.

3.3.2 Non-derivative Financial Liabilities

The Group initially recognizes debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled or expired. Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

24



25


3.3 Financial Instruments (Continued)

3.3.2 Non-derivative Financial Liabilities (Continued)

The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.

Other financial liabilities comprise loans and borrowings, debt securities issued, bank overdrafts, and trade and other payables.

3.4 Stated Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity, net of any tax effects.

3.5 Property, Plant and Equipment 3.5.1 Recognition and Measurement

Items of Property, Plant and Equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalized as part of the equipment. When parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate items (major components) of Property, Plant and Equipment. Any gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized net within the profit or loss.

3.5.2 Subsequent Costs

The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.

3.5.3 Depreciation

Items of Property, Plant and Equipment are depreciated from the date they are available for use or, in respect of self-constructed assets, from the date that the asset is completed and ready for use.

25



26


3.5 Property, Plant and Equipment (Continued) 3.5.4 Depreciation (Continued)

Depreciation is calculated to write off the cost of items of Property, Plant and Equipment less their estimated residual values using the straight-line basis over their estimated useful lives. Depreciation is generally recognized in comprehensive income, unless the amount is included in the carrying amount of another asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated. The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows: Class of Assets Useful Lifetime (Years) Building -General Printing Division 40 Security Printing Division 20 Plant and Machinery 6.66 Motor Vehicles 4 Furniture and Fittings 6.6 - 13.3

3.5.5 Leased Assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as “finance leases”. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Operating leases are not recognized in the Group’s Statement of Financial Position.

3.5.6 Capital work-in-progress

Capital expenses incurred during the year which are not completed as at the reporting date are shown as capital work-in-progress, whilst the capital assets which have been completed during the year and in use have been transferred to property plant & equipment.

3.6 Investment Property

Investment Property is a property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.

3.6.1 Basis of Recognition

Investment Property is recognized if it is probable that future economic benefits that are associated with the Investment Property will flow to the Group and cost of the Investment Property can be reliably measured.

3.6.2 Measurement

An Investment Property is measured initially at its cost. The cost of a purchased Investment Property comprises of its purchase price and any directly attributable expenditure. The cost of a self-constructed Investment Property is its cost at the date when the construction or development is complete.

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27

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.6 Investment Property (Continued) 3.6.2 Measurement (Continued)

The Group applies the fair value model for Investment Properties in accordance with Sri Lanka Accounting Standard 40 (LKAS 40) “Investment Property”. Accordingly, land and buildings classified as Investment Properties are stated at its fair value and the resulting gain or loss arising from the change in fair value of the Investment Property is recognized in Profit or loss.

3.6.3 Transfers to and from Investment Property

When the use of a property changes from owner-occupied to Investment Property, the property is remeasured to fair value and reclassified as Investment Property. Any difference between carrying amount as per LKAS 16 “Property Plant and Equipment” and its fair value is treated in the same way as revaluation in accordance with LKAS 16. For a transfer from Investment Property carried at fair value to owner-occupied property or inventories, the property’s deemed cost for subsequent accounting in accordance with LKAS 16 or LKAS 2 “Inventories” shall be its fair value at the date of change in use.

3.6.4 Derecognition

Investment Properties are derecognized when disposed of, or permanently withdrawn from use because no future economic benefits are expected. Transfers are made to and from Investment Properties only when there is a change in use. Any gain or loss on disposal of an Investment Property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in comprehensive income. When an Investment Property that was previously classified as Property Plant and Equipment is sold, any related amount included in the Revaluation Reserve is transferred to Retained Earnings.

3.7 Inventories

Inventories are measured at the lower of cost and net realizable value.

The cost of inventories includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Cost incurred in bringing inventories to the present location and condition is recognized as follows; Raw Material - At cost determined at the factory on Weighted Average Cost Method Packing Material - At cost determined at the factory on Weighted Average Cost Method Finished Goods - At factory cost of direct materials, direct labour and appropriate proportion of fixed production overheads at normal operating capacity. Goods in Transit - At the actual cost Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

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3.8 Impairment 3.8.1 Financial Assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

3.8.2 Non-financial Assets

The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets.

An impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are recognized in comprehensive income.

3.9 Employee benefits

3.9.1 Defined Contribution Plans

A defined contribution plan is a post-employment benefit plan under which contributions are made into a separate fund and the entity will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plan are recognized as an employee benefit expense in profit or loss in the periods during services is rendered by employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

3.9.1.1 Defined Contribution Plans - Employees Provident Fund and Employees Trust Fund

All employees who are eligible for Employees’ Provident Fund contribution and Employees’ Trust Fund contribution are covered by relevant contribution funds in line with respective statutes and regulations. The Group contributes 12 % and 3% of gross emoluments of employees to Employees’ Provident Fund and Employees’ Trust Fund respectively.

28



29


3.9 Employee benefits (Continued)

3.9.1 Defined Benefit Plan - Gratuity

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.

Retiring Gratuity

The Retirement Benefit Plan adopted is as required under the Payment of Gratuity Act No. 12 of 1983. This item is grouped under Retirement Benefit Obligation in the Statement of Financial Position.

Provision for the retirement benefit obligation on the employees of the Group is on an actuarial basis using the project unit credit method (PCU method) as recommended by LKAS 19, “Employee Benefit”. The Group continues to use the actuarial method under Sri Lanka Accounting Standard 19, “Employee Benefit”. However, under the Payment of Gratuity Act No. 12 of 1983, the liability to an employee arises only on completion of 5 years of continued service. The liability is not externally funded.

The Group recognizes all the re-measurements of the net defined benefit liability in other comprehensive income. Re-measurements of the net defined benefit liability comprise an actuarial gain or loss. The assumption based on which the result of actuarial revaluation was determined are included in the note 25 to the Financial Statements.

3.9.2 Short-term benefits

Short-term employee benefits are measured on an undiscounted basis and are expensed as the related service is provided.

3.10 Provisions

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as a finance cost.

3.10.1 Commitments and Contingent Liabilities

Contingent Liabilities are possible obligations whose existence will be confirmed only by occurrence or non-occurrence of uncertain future events not wholly within the control of the Group or present obligations where the transfer of economic benefits is not probable or cannot be reliably measured. Capital Commitments and Contingent Liabilities of the Group and the Group are disclosed in the respective notes to the Financial Statements.

3.11 Events after the Reporting Date

The materiality of the events after the reporting period has been considered and appropriate adjustments and provisions have been made in the Financial Statements wherever necessary.

3.12 Revenue

The Group net revenue excludes turnover taxes and trade discounts. The gross revenue represents the invoiced value of goods and services to customers outside the Group.

29



30


3.12. Revenue (Continued) 3.12.1 Sale of Goods

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates.

3.12.2 Rental Income

Rental income from Investment Property is recognized in comprehensive income on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

3.12.3 Revenue Recognition

Revenue is recognized when significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.

If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue as the sales are recognized.

3.13 Finance Income and Finance Costs

Finance Income comprises interest income on funds invested recognized in profit or loss using the effective interest method. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in comprehensive income using the effective interest method.

Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

3.14 Income Tax

Tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in Profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

3.14.1 Current Tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends.

3.14.2 Deferred Tax

Deferred tax is recognized incomprehensive income in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, except to that it relates to items recognized directly in equity or other comprehensive income. Deferred tax is not recognized for:

Temporary differences on the initial recognition of assets or liabilities in a transaction that is

not a business combination and that affects neither accounting nor taxable profit or loss;

30



31


3.14. Income Tax (Continued) 3.14.2. Deferred Tax (Continued)

Temporary differences related to investments in subsidiaries, associates and to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

3.15 Statement of Cash Flows The Statement of Cash Flows has been prepared using the “Indirect Method”.

Interest paid is classified as operating cash flows, interest received is classified as investing cash flows for the purpose of presenting Statement of Cash Flows.

3.16 Earnings per Share

The Company presents Basic Earnings Per Share (EPS) data for its Ordinary Shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of Ordinary Shares outstanding during the period.

3.17 Related Party Transactions

Disclosure has been made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating policies/decisions of the other, irrespective of whether a price is charged.

3.18 Segment Reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments operating results are reviewed regularly by the Group’s operating decision maker to make decisions about the resources to each segment and to assess its performance and for which discrete financial information is available. Details of financial reporting by segment as required by the SLFRS 8 “Operating Segment” are given in the Note 36 to the Financial Statements.

31



32

4. NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE

The Institute of Chartered Accountants of Sri Lanka has issued the following new Accounting Standards which will become applicable for financial periods beginning on or after 1st January 2018, Accordingly these standards have not been applied for preparing these Financial Statements.

4.1 SLFRS 9 “Financial Instruments”

The objective of this SLFRS is to establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows.

An entity shall apply this SLFRS to all items within the scope of LKAS 39 Financial Instruments: Recognition and Measurement. SLFRS 9 is effective for annual reporting periods beginning on or after 1st January 2018, with early adoption permitted.

4.2 SLFRS 15 “Revenue from Contracts with Customers”

SLFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including LKAS 18 Revenue, LKAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programs.

SLFRS 15 is effective for annual reporting periods beginning on or after 1st January 2018, with early adoption permitted.

4.3 SLFRS 16 - “Leases”

SLFRS 16 requires lessees to recognise all leases on their Statement of Financial Position as lease liabilities, with the corresponding right of use assets. The profit or loss recognition pattern for recognised leases will be similar to existing finance lease accounting, with interest and depreciation expense recognised separately in Profit or Loss.

SLFRS 16 is effective for annual periods beginning on or after 1st January 2019.

32

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST MARCH

2017 2016 2017 20165 REVENUE Rs.'000 Rs.'000 Rs.'000 Rs.'000

Gross Revenue 488,937 380,329 488,647 380,039Less:- Revenue Related Taxes (62,646) (43,407) (62,646) (43,407)Net Revenue 426,291 336,922 426,001 336,632

6 OTHER OPERATING INCOME2017 2016 2017 2016

Rs.'000 Rs.'000 Rs.'000 Rs.'000

Profit on Disposal of Property Plant and Equipment 2,138 2,805 2,138 2,805Rent Income 14,164 9,246 14,164 9,246Dividend Income 141 147 440 143Sundry Income 9,172 6,781 8,020 6,903Gain on Fair valuation of Investment Property 2,350 8,300 2,350 8,300

27,965 27,279 27,112 27,397

7 NET FINANCE COSTS2017 2016 2017 2016

Rs.'000 Rs.'000 Rs.'000 Rs.'000Finance IncomeInterest Income 6,905 5,743 7 90

6,905 5,743 7 90

Finance CostsInterest On, - Term Loans 182 309 1,205 1,105 - Bank Overdrafts 783 429 783 429 - Trust Receipt Loans 1,023 846 1,023 846 - Finance Lease 18 205 18 205 - Other Finance Costs 613 367 613 367

2,619 2,156 3,642 2,952

4,286 3,587 (3,635) (2,862)

8 PROFIT BEFORE TAXProfit before tax is stated after charging all 2017 2016 2017 2016expenses including the following; Rs.'000 Rs.'000 Rs.'000 Rs.'000

Directors' Emoluments 5,253 5,189 4,861 4,749Auditors Remuneration - Audit Fees 438 410 350 330 - Non Audit Fees 135 135 135 135Depreciation 10,827 12,219 9,333 10,827Write Off of Trade and Other Receivables 690 966 690 966Donations 38 35 38 35Royalties - 54 - 54Personnel Costs:- Defined Benefit Plan Costs-Gratuity 1,994 1,674 1,994 1,674 Defined Contribution Plan Costs - EPF and ETF 6,820 5,683 6,792 5,683 Other Staff Costs 25,067 22,037 23,731 22,037


-33-

COMPANY

COMPANY

GROUP

GROUP


GROUP COMPANY

COMPANYGROUP

33


FOR THE YEAR ENDED 31ST MARCH

9 INCOME TAX EXPENSES2017 2016 2017 2016

Rs.'000 Rs.'000 Rs.'000 Rs.'000Current Tax for the year (Note 9.1) 11,020 6,317 9,588 5,372Under Provision for Income Tax 27 282 26 38Deemed Dividend Tax - 159 - -(Reversal)/ Provision for Deferred Taxation (Note 23) (6,312) 1,075 (6,566) 1,008

4,735 7,833 3,048 6,418

9.1 The Reconciliation between Accounting Profit and Taxable Profit is as follows;

2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Accounting Profit Before Tax 40,339 31,208 34,497 27,068Aggregate Tax Disallowable Items 19,681 18,585 16,812 17,126Aggregate Tax Allowable Items (17,910) (25,415) (17,066) (25,009)Statutory Income 42,110 24,378 34,243 19,185Tax Losses Set Off (Note 9.2) (2,754) (1,819) - - Taxable Income 39,356 22,559 34,243 19,185Income Tax @ (28%) 11,020 6,317 9,588 5,372Current Tax for the year 11,020 6,317 9,588 5,372

9.2 Accumulated Tax LossesTax Losses as at 1st April 2016 1,727 1,004 - -Tax Losses for the year 2,317 2,542 - -Loss Set off during the year (2,754) (1,819) - -Tax Losses as at 31st March 2017 1,290 1,727 - -

10 BASIC EARNINGS PER SHARE

2017 2016 2017 2016

Profit attributable to Ordinary Shareholders (Rs'000) 35,604 23,375 31,449 20,650Weighted average number of ordinary shares 2,937 2,937 2,937 2,937

Basic Earnings Per Ordinary Share (Rs.) 12.12 7.96 10.71 7.03

11 PROPERTY, PLANT & EQUIPMENT

GROUP COMPANY

The Freehold Land of Lake House Printers and Publishers PLC situated at No: 41, W.A.D.Ramanayaka Mawatha, Colombo was revalued as at 31st

March 2017 by an Independent Qualified Valuer at Rs 902,690,000/-. However, the revalued amount excluding Investment Property has not been

incorporated into the Financial Statements. There are three Buildings situated at the above address, the total extent of which is 33,650 sq feet.

ANNUAL REPORT AND FINANCIAL STATEMENTS 2016/2017-34-

Basic Earnings Per Share is calculated based on the profit after taxation attributable to the Ordinary Shareholders divided by the weighted averagenumber of Ordinary Shares outstanding during the year.


GROUP COMPANY

GROUP COMPANY

34


AS AT 31ST MARCH

11 PROPERTY, PLANT & EQUIPMENT (CONTINUED)

11.1 GROUP

CostLand Buildings

Plant & Machiner

y

Furniture, Fittings & Equipment

Motor Vehicles


Motor Vehicles

Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1st April 2015 10,859 18,449 166,490 22,948 22,188 8,099 4,400 - 253,433Additions during the year - - 1,786 1,202 5,900 - - 12,833 21,721Transfers/Write off - 7,760 6,760 - - (6,760) - (7,760) - Disposals during the Year - - - (95) (924) - - - (1,019)Balance as at 31st March 2016 10,859 26,209 175,036 24,055 27,164 1,339 4,400 5,073 274,135

Balance as at 1st April 2016 10,859 26,209 175,036 24,055 27,164 1,339 4,400 5,073 274,135Additions during the year - 12,729 8,231 2,036 - - - 7,656 30,652Transfers/Write off (804) (20,489) 1,339 - 4,400 (1,339) (4,400) (12,729) (34,022)Disposals during the Year - - (5,560) - - - - - (5,560)Balance as at 31st March 2017 10,055 18,449 179,046 26,091 31,564 - - - 265,205

Accumulated DepreciationBalance as at 1st April 2015 - 9,409 152,724 18,510 13,580 3,952 2,842 - 201,017Charge during the Year - 661 4,629 1,145 4,484 200 1,100 - 12,219Transfers/Write off - - 3,418 - - (3,418) - - - Disposals during the Year - - - (58) (924) - - - (982)Balance as at 31st March 2016 - 10,070 160,771 19,597 17,140 734 3,942 - 212,254

Balance as at 1st April 2016 - 10,070 160,771 19,597 17,140 734 3,942 - 212,254Charge during the Year - 661 4,244 1,240 4,583 - - - 10,728Transfers/Write off - - 734 - 3,942 (734) (3,942) - -Disposals during the Year - - (3,474) - - - - - (3,474)Balance as at 31st March 2017 - 10,731 162,275 20,837 25,665 - - - 219,508

Net Book ValueBalance as at 31st March 2016 10,859 16,139 14,265 4,458 10,024 605 458 5,073 61,881Balance as at 31st March 2017 10,055 7,718 16,771 5,254 5,899 - - - 45,697

11.2 COMPANY

CostLand Buildings

Plant & Machiner

y


Motor Vehicles


Motor Vehicles

Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1st April 2015 10,859 18,449 166,490 22,936 16,638 8,092 4,400 - 247,864Additions during the year - - 1,786 1,202 5,900 - - 12,833 21,721Transfers/Write off - 7,760 6,760 - - (6,760) - (7,760) -Disposals during the Year - - - (95) (924) - - - (1,019)Balance as at 31st March 2016 10,859 26,209 175,036 24,043 21,614 1,332 4,400 5,073 268,566

Balance as at 1st April 2016 10,859 26,209 175,036 24,043 21,614 1,332 4,400 5,073 268,566Additions during the year - 12,729 8,231 2,020 - - - 7,656 30,636Transfers/Write off (804) (20,489) 1,332 - 4,400 (1,332) (4,400) (12,729) (34,022)Disposals during the Year - - (5,560) - - - - - (5,560)Balance as at 31st March 2017 10,055 18,449 179,039 26,063 26,014 - - - 259,620

Accumulated DepreciationBalance as at 1st April 2015 - 9,409 152,724 18,507 13,233 3,952 2,842 - 200,667Charge during the Year - 661 4,629 1,141 3,096 200 1,100 - 10,827Transfers/Write off - - 3,418 - - (3,418) - - -Disposals during the Year - - - (58) (924) - - - (982)Balance as at 31st March 2016 - 10,070 160,771 19,590 15,405 734 3,942 - 210,512

-Balance as at 1st April 2016 - 10,070 160,771 19,590 15,405 734 3,942 - 210,512Charge during the Year - 661 4,244 1,233 3,195 - - - 9,333Transfers/Write off - - 734 - 3,942 (734) (3,942) - - Disposals during the Year - - (3,474) - - - - - (3,474)Balance as at 31st March 2017 - 10,731 162,275 20,823 22,542 - - - 216,371

Net Book ValueBalance as at 31st March 2016 10,859 16,139 14,265 4,453 6,209 598 458 5,073 58,054Balance as at 31st March 2017 10,055 7,718 16,764 5,240 3,472 - - - 43,249



Freehold Leasehold

Freehold Leasehold Capital Work in Progress

Total

Capital Work in Progress

Total

35


AS AT 31ST MARCH

11 PROPERTY, PLANT & EQUIPMENT (CONTINUED)

11.2 Borrowing Costs

11.3 GROUPThe costs of fully depriciated item of property, Plant and Equipment which are still in use as at 31st March 2017 are as follows.

Buildings Plant and

Machinery

Furniture, Fittings and Equipment

Motor Vehicles

Cost as at 31st March 2016 (Rs.'000) 1,857 143,808 16,229 8,243Cost as at 31st March 2017 (Rs.'000) 1,857 145,803 21,773 19,791

The Property, Plant & Equipment pledged as Collaterals have been disclosed under Note 25.4.

12 INVESTMENT PROPERTY

COMPANY 2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 31st March 130,000 121,700 130,000 121,700Transfer From Property Plant and Equipment at fair value 130,000 - 130,000 -Fair value Gain for the year 2,350 8,300 2,350 8,300Balance as at 31st March 262,350 130,000 262,350 130,000

12.1

Measurement of Fair Value

(i) Fair value hierarchy

Property

Expected rental growth - 5% - 10% The estimate of fair value would increaseRisk adjusted discount rate - 12.5% Expected rental growth were highY.P in perpetuity - 6.5% the risk adjusted discount rate were low

Y.P in perpetuity were lowCost not paid by tenants were low

- Commercial Bank PLC

Price Per perch for landPrice Per square foot for buildingDepreciation Rate - Price per perch increases/(decreases)

Limited - Depreciation rate for building increases/(decreases)

36

(ii) Methods and Assumptions used in the Fair Valuation of Investment Properties

Cost not paid by tenants 30% of expected rent income

Property rented out to

Significant unobservable inputsValuation technique

Discounted cash flows: The valuation modelconsiders the present value of net cashflows to be generated from the property,taking into account the expected rentalgrowth rate and other cost not paid bytenants. The expected net cash flows arediscounted using risk adjusted discount rate.Among other factors, discount rateestimation considers the quality of thebuildings and its location.

Inter-relationship between key unobservable inputs and fair value


Property rented out to

- Wijeya News Papers Limited

Estimated fair value wouldincrease/(decrease) if;

- Lideshi (Private) - Price per perch square foot increases/(decreases)

Market Comparable Method- This methodconsiders the selling price of a similarproperty within a reasonably recent periodof time in determining the fair value of theproperty being revalued. This involvesevaluation of recent market prices of similarassets, making appropriate adjustments fordifferences in size, nature, location,condition of specific property. In thisprocess outlier transactions, indicative ofparticular motivated buyers or sellers aretoo compensated for since the price may notadequately reflect the fair market value.

The fair value of investment property was determined by an external, independent professional valuer, J. M. Senanayake Bandara, B.Sc Hons (EstateManagement and Valuation), F.I.V (Sri Lanka), I.R.R.V (UK), Chartered Valuation survayor, fair value of the investment property on 31st March 2017.


GROUP COMPANY

The fair value measurement for the investment property of the Company has been categoried as a Level 3 fair value measurement based on the inputs to the valuation techniques used.

The Company has completed construction of a building during the year ended 31st March 2017 and cost incurred is LKR 12.7Mn up to the reporting date.Capitalized borrowing cost of LKR 0.35Mn calculated using a capitalization rate of 8.75% is included in the cost of construction.

The Company has rented out its land and buildings situated at No 41, W. A. D. Ramanayake Mawatha, Colombo 02 and the value of land and buildingshas been classified as investment property and accounted on "fair value model" as required by LKAS 40 - "Investment Property".

There were no Direct Operating expenses (including repairs and maintenance ) arising from Investment Property that generated Rental Income during theyear. Rent income received for the year is disclosed in Note 6 to the financial statements.

36


AS AT 31ST MARCH

13 INVESTMENTS IN SUBSIDIARY Holdings No of Cost Holdings No of Cost

Shares Shares% 000' Rs.'000 % 000' Rs.'000

L.H. Plantations (Private) Limited 100 1,990 2,983 100 1,990 2,983

14 INVESTMENTS IN EQUITY ACCOUNTED INVESTEES

2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Stamford Lake Private Limited (Note 14.1) 15,753 15,599 4,889 4,88915,753 15,599 4,889 4,889

Stamford Lake Private Limited

14.1 Stamford Lake Private Limited

Rs.'000 Rs.'000 Rs.'000 Rs.'000

Cost of the Investment 4,889 4,889 4,889 4,889Accumulated share of profit 10,710 9,941 - -Share of profit for the year, net of tax 154 769 - -Net asset value of Associate 15,753 15,599 4,889 4,889

14.2 Summarized Financial Information of Associates

2017 201649% 49%

Non Current Asstes 99 2,280Current Assets 45,843 40,864Non Current Liabilities (18,153) (14,163)Net Assets (100%) 27,788 28,981Group share of net assets (49%) 13,616 14,201Goodwill 1,398 1,398Carrying amount in the Statement of Financial Position 15,014 15,599

Revenue (49%) 14,220 13,281Profit from operations (49%) 17 884Net Profit after Taxation (49%) 154 769

15 AVAILABLE FOR SALE INVESTMENT

GROUP No of 2017 2016Shares Rs.'000 Rs.'000

Unquoted - Investments (Note - 15.1) 385,548 10,285 8,957Quoted Investments (Note - 15.2) 573 79 93

10,364 9,050

COMPANY No of 2017 2016Shares Rs.'000 Rs.'000

Unquoted - Investment (Note - 15.1) 385,548 10,285 8,957Quoted Investments (Note - 15.2) 573 79 93

10,364 9,050

-37-

Company



The following table summarizes the financial information of Stamford Lake (Private) Limited as included in its own financial statements adjusted forfair value adjustments at acquisition and differences in accounting policies. The table also reconciles the summarized financial information to thecarrying amount of the Group's interest in Stamford Lake (Private) Limited.

20162017

2017 2016

The Group's interest in equity accounted investee relates to Stamford Lake (Private) Limited is 49%. The Principal activities of the associate isPrinting, Publishing and the Marketing of literary works.

Group Company

Group

37


AS AT 31ST MARCH

15 AVAILABLE FOR SALE INVESTMENT (CONTINUED)

15.1 Unquoted - InvestmentGROUP

No of 2017 2016 No of 2017 2016Shares Rs.'000 Rs.'000 Shares Rs.'000 Rs.'000

Ranweli Holiday Village Limited 385,548 10,246 8,918 385,548 10,246 8,918LHP & P Enterprises (Private) Limited 3410 39 39 3410 39 39Lake House Investments Limited (Note - 15.1.1) 1,464,969 - - 1,464,969 - -Lake House Bookshop (Private) Limited (Note - 15.1.2) 250,000 - - 250,000 - -Ingrine Institute (Note - 15.1.3) 2,500 - - 2,500 - -

10,285 8,957 10,285 8,957

15.1.1 Unquoted - Investment2017 2016 2017 2016

Lake House Investments Limited Rs.'000 Rs.'000 Rs.'000 Rs.'000 Cost 14,650 14,650 14,650 14,650Less: Provision for Impairment (14,650) (14,650) (14,650) (14,650)

- - - -

15.1.2 Lake House Bookshop (Private) Limited Cost 2,500 2,500 1,000 1,000Less: Provision for Impairment (2,500) (2,500) (1,000) (1,000)

- - - -

15.1.3 Ingrine Institute of Printing and Graphics Limited Cost 25 25 25 25Less: Provision for Impairment (25) (25) (25) (25)

- - - -

15.2 Quoted Investments

2017 2016 2017 2016No of Fair Value Fair Value No of Fair Value Fair Value

Shares Rs.'000 Rs.'000 Shares Rs.'000 Rs.'000

National Development Bank PLC 573 79 93 573 79 93Vanik Incorporation PLC (Note 15.2.1) 15 % Debentures 800 - - 800 - - Voting 800 - - 800 - - Non Voting Shares 1000 - - 1000 - - Warrants 800 - - 800 - -

79 93 79 93

15.2.1 Vanik Incorporation PLC 118 118 118 118 Cost (118) (118) (118) (118)Less: Provision for Impairment - - - -


COMPANY


GROUP

GROUP COMPANY

COMPANYGROUP

38


AS AT 31ST MARCH

16 INVENTORIES2017 2016 2017 2016

Rs.'000 Rs.'000 Rs.'000 Rs.'000

Raw Materials 34,723 39,540 34,723 39,540Work In Progress 12,486 9,762 12,486 9,762Finished Goods 6,903 250 6,903 250Goods in Transit 10,974 2,627 10,974 2,627

65,086 52,179 65,086 52,179

Less: Provision for Impairment (Note 16.1) (4,304) (4,304) (4,304) (4,304)60,782 47,875 60,782 47,875

16.1 Provision for ImpairmentBalance 1st April 4,304 4,395 4,304 4,395Write-off of Inventory - (91) - (91)Balance 31st March 4,304 4,304 4,304 4,304

17 TRADE AND OTHER RECEIVABLES 2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Trade Debtors 49,694 51,052 49,694 51,052Less: Provision for Impairment (Note 17.1) (8,994) (9,031) (8,994) (9,031)

40,700 42,021 40,700 42,021Deposits and Prepayments 2,158 1,105 2,158 1,105Other Receivables 14,303 7,145 11,498 5,427

57,161 50,271 54,356 48,553

17.1 Provision for ImpairmentBalance 1st April 9,031 10,675 9,031 10,675Write-off of Trade and Other Receivables (37) (1,644) (37) (1,644)Balance 31st March 8,994 9,031 8,994 9,031

18 AMOUNT DUE FROM RELATED PARTIES

2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Wijeya Graphics (Private) Limited - 102 - 102Wijeya Newspapers Limited 8,186 5,830 8,006 5,740L H Plantations (Private) Limited - - 106 64Lake House Investments Limited (Note - 18.1) - - - -Sarathi Limited 117 127 117 127Stamford Lake (Private) Limited 473 933 473 933R.S Printek (Private) Limited 915 1,250 915 1,250Lake House Bookshop (Private) Limited 4 59 4 59Geekiyanagedara Estate 121 338 - -

9,816 8,639 9,621 8,275


39

GROUP COMPANY

GROUP

GROUP

COMPANY

COMPANY


39


AS AT 31ST MARCH

18.1 Lake House Investments Limited 2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Amount Due 718 718 718 718Less: Provision for Impairment (718) (718) (718) (718)

- - - -

18.2 LOANS GIVEN TO RELATED PARTIES

Ranweli Holiday Village Limited2017 2016 2017 2016

Rs.'000 Rs.'000 Rs.'000 Rs.'000Balance as at 1st April 1,500 3,500 - -Loan repayments made during the year (1,500) (2,000) - -Balance as at 31st March - 1,500 - -

19 CASH AND CASH EQUIVALENTS 2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Favourable BalanceCash in Hand - - 486 215Balances with Banks 68,173 62,836 2,351 2,705

68,173 62,836 2,837 2,920Unfavourable BalanceBank Overdraft (11,489) (12,353) (11,489) (12,353)Cash and Cash Equivalents for the purpose of Cash Flow Statements

56,684 50,483 (8,652) (9,433)

2017 2016 2017 201620 STATED CAPITAL Rs.'000 Rs.'000 Rs.'000 Rs.'000

2,937,245 Ordinary Shares 35,247 35,247 35,247 35,247

21 CAPITAL RESERVES 2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Capital Reserves 6,197 6,197 6,197 6,197

22 REVALUATION RESERVE 2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1st April 100,247 100,247 100,247 100,247On Revaluation of Property Plant and Equipment 108,706 - 108,706 -Less:-Deferred Tax Adjustments (7,708) - (7,708) -Balance as at 31st March 201,245 100,247 201,245 100,247

The Land and Buildings situated at No: 41, W.A.D Ramanayaka Mawatha, Colombo 02 have been revalued by Mr.J.M.Senanayaka Bandara, a

qualified valuer (B.Sc.Hons. State Management and Valuation ) as at 1st July 2016 for the purpose of reclassification to Investment Property.Accordingly the Land and Buildings relating to Investment Property were revalued for Rs.130Mn (land Rs.85Mn and Buildings Rs.46Mn)

which had a carrying amount of Rs.21.2Mn (Land 0.8Mn and Building 20.4Mn), resulting in a Revaluation Reserve of Rs.108.7Mn as at 1st

July 2016 and Rs.100.9Mn as at 31st March 2017 after accounting for subsequent deferred tax adjustments.

The Land and Buildings situated at No: 41, W.A.D Ramanayaka Mawatha, Colombo 02 have been revalued by Mr.J.M.Senanayaka Bandara, aqualified valuer (B.Sc.Hons. State Management and Valuation ) as at 28th October 2012. Accordingly the Land and Buildings relating toInvestment Property were revalued for Rs.115Mn (land Rs.100Mn and Buildings Rs.15Mn) which had a carrying amount of Rs.14.2Mn (LandRs.1.2Mn and Building Rs.13Mn), resulting in a Revaluation Reserve of Rs.100.8Mn as at 28th October 2012 and Rs.100.247Mn as at 31st

March 2015 after accounting for subsequent deferred tax adjustments.



GROUP

GROUP

GROUP

GROUP

COMPANY

COMPANY

COMPANY

COMPANY

GROUP

GROUP

COMPANY

COMPANY

40


AS AT 31ST MARCH

23 DEFERRED TAXATION2017 2016 2017 2016

Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1st April 932 (138) 865 (138)Recognized in the Profit or LossProvision /(Reversal) for the Year (6,312) 1,075 (6,566) 1,008Recognized in the Other Comprehensive IncomeProvision /(Reversal) for the Year 7,454 (5) 7,454 (5)Balance as at 31st March 2,074 932 1,753 865

The provision for deferred tax is attributable to the following;

Temporary Tax Temporary Tax Temporary Tax Temporary TaxDifference Effect Difference Effect Difference Effect Difference Effect

Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Property, Plant & Equipment (6,991) (1,957) (9,429) (2,640) 12,703 3,557 10,734 3,006Retiring Benefit Obligations (11,840) (3,315) (11,840) (3,315) (9,665) (2,706) (9,665) (2,706) Accumulated Tax Losses (1,290) (362) - - (1,729) (484) - -Investment Property 27,530 7,708 27,530 7,708 2,020 565 2,020 565

7,409 2,074 6,261 1,753 3,329 932 3,089 865

24 RETIREMENT BENEFIT OBLIGATIONS 2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1st April 9,665 9,288 9,665 9,288Interest Cost 1,016 859 1,016 859Current Services Cost 979 819 979 819Benefits Paid (728) (1,283) (728) (1,283)Actuarial Loss / (Gain) 908 (18) 908 (18)Balance as at 31st March 11,840 9,665 11,840 9,665

24.1

24.2 The Key assumptions used in determining the above were as follows,2017 2016

Rate of Discount 12.5% 10.5%Salary Increment rate - Senior Management/Executives 10.0% 5.5%Salary Increment rate - Other Staff 7.0% 5.5%Retiring age of the employees 55 Years 55 Years

24.3 Sensitivity Analysis

Sensitivity Analysis - Salary Increment Rate

-1% +1%Rs.'000 Rs.'000

Present Value of Defined Benefit Obligation 11,433 12,285Total 11,433 12,285

Sensitivity Analysis - Discount Rate

-1% +1%Rs.'000 Rs.'000

Present Value of Defined Benefit Obligation 12,324 11,402Total 12,324 11,402

2017 GROUP COMPANY


COMPANY GROUP

GROUP COMPANY

Tax effective rate of 28% (2016 – 28% ) and were applied respectively by both Company and its Subsidiary of LH Plantation (Private) Limited, for the calculation ofdeferred tax Assets / Liability as at the reporting date.

COMPANY2016

GROUP

41ANNUAL REPORT AND FINANCIAL STATEMENTS 2016/2017

The Company has made provision for employees retirment benefit obligation as at 31st March 2017 based on an actuary valuation carried out by professionally qualifiedactuary Mr.R.Kahakachchi of M/s.Actuarial and Management Consultant (Private) Limited,a firm of professionally qualified actuaries, as required by LKAS 19 "EmployeeBenefits".

Values appearing in the financial statements are sensitive to the changes of financial and non - financial assumptions used in the valuation of retirement benefitobligation.The sensitivity was carried for salary increment rate. Simulations made for retirement benefit obligation shows that an increase or decrease by 1% of the rate ofsalary increment has the following effect on the retirement benefit obligation.

Values appearing in the financial statements are sensitive to the changes of financial and non-financial assumptions used in the valuation of retirement benefit obligation.Thesensitivity was carried for the discount rate. Simulations made for retirement benefit obligation shows that an increase or decrease by 1% of the discount rate has thefollowing effect on the retirement benefit obligation.

41


AS AT 31ST MARCH

24 RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)24.4

Recognized in Profit and Loss 2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Current Services Cost for the year 979 819 979 819Interest charge for the year 1,016 859 1,016 859

1,995 1,678 1,995 1,678Recognized in Other Comprehensive ExpenseActuarial Loss/(Gain) for the Year 908 (18) 908 (18)

908 (18) 908 (18)

25 INTEREST BEARING BORROWINGS

25.1 Interest bearing borrowings - Payable within one year

2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Interest bearing borrowings - current portion (Note 25.2) - 1,944 - 1,944Lease Creditors current portion (Note 25.4) - 677 - 677Trust Receipt Loans - Bank of Ceylon (Note 25.5) 8,621 16,708 8,621 16,7089% Unsecured Loan Stocks 36 36 36 36

8,657 19,365 8,657 19,365

25.2 Long Term Loans

2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1st April 1,944 4,278 1,944 4,278Obtained during the year - - - -Payments during the year (1,944) (2,334) (1,944) (2,334)Balance as at 31st March - 1,944 - 1,944Transferred to Current Liabilities (Payable within one year) - (1,944) - (1,944)Loan Payable after one year - - - -

25.3

25.4 Lease Creditors2017 2016 2017 2016

Rs.'000 Rs.'000 Rs.'000 Rs.'000Balance as at 1st April 695 3,379 695 3,379Lease obtained during the year - - - - Payments during the year (695) (2,684) (695) (2,684)

- 695 - 695Less: Interest in Suspense - (18) - (18)Balance as at 31st March - 677 - 677Transferred to Current Liabilities (Payable within one year) - (677) - (677)Loan Payable after one year - - - -

25.5 Trust Receipt Loans - Bank of Ceylon2017 2016 2017 2016

Rs.'000 Rs.'000 Rs.'000 Rs.'000Balance as at 1st April 16,708 7,864 16,708 7,864Obtained during the year 43,801 54,878 43,801 54,878Payments during the year (51,888) (46,034) (51,888) (46,034)Balance as at 31st March 8,621 16,708 8,621 16,708


GROUP

GROUP

COMPANYGROUP

The Loan obtained from Bank of Ceylon (Rs.7.00Mn) has been secured by a mortgage of the Direct mailer and Cheque Verifier.

The amount charged to comprehensive income in respect of retirement benefit obligation is made up as follows;

COMPANY

COMPANY


GROUP COMPANY

GROUP COMPANY

-42-

42


AS AT 31ST MARCH

26 TRADE AND OTHER PAYABLES2017 2016 2017 2016

Rs.'000 Rs.'000 Rs.'000 Rs.'000Trade Creditors 19,612 10,948 19,612 10,948Other Payables 22,468 18,769 22,332 18,541

42,080 29,717 41,944 29,489

27 LOANS FROM RELATED PARTYBalance as at 1st April - - 15,411 12,021New Loans obtained during the year - - 3,000 5,000Payments during the year - - (1,940) (1,610)Balance as at 31st March - - 16,471 15,411Transferred to Current Liabilities (Payable within one year) - - 3,188 1,872Loan Payable after one year - - 13,283 13,539

27.1 L H Plantations (Private) Limited - Loan

Balance as at 1st April - - 15,997 15,002Fair Value difference of Related Party loan - - 474 409Balance as at 31st March - - 16,471 15,411

28 EVENTS OCCURRING AFTER THE REPORTING DATE

29 COMMITMENTS

There were no material capital commitments as at the reporting date.

30 CONTINGENT LIABILITIES

31 COMPARATIVE INFORMATION

Comparative information has been reclassified to conform with current year presentation.



GROUP COMPANY

The Board of Directors has recommended a Dividend of Rs.1.25 Per share payable for 2016/2017. No circumstances other than those disclosed above have arisen since the reporting date which would require adjustments to or disclosure in the Financial Statements.

There are no material contingent liabilities outstanding as at the reporting date which require adjustments to or disclosure in the Financial Statements

43


AS AT 31ST MARCH

32 RELATED PARTY DISCLOSURES

(a) Transactions with Related Companies

(i) Name of the Company Relationship Name of Directors Nature of the Transaction

2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

L.H. Plantations (Pvt) Subsidiary Mr. R. S Wijewardene Loan Interest 1,388 794 Ltd Mr. P. S Wijewardene Hire of vehicle & Salary 544 343

Settlement of Current Account (1,974) (1,080) Loans obtained 3,000 5,000 Loans Repayments (1,940) (1,610) Loan outstanding balance - - 16,471 15,411

Stamford Lake (Pvt) Associate Mr. R.S Wijewardene Sales of Atlases 4,908 5,038 Ltd Settlement of Current Account (5,368) (5,228)

Current Account Balance - - 473 933

Wijeya Newspapers Affiliate Mr.R.S Wijewardene Security Charges 58,258 46,702 Ltd Mr. P. S Wijewardene Printing & Other Services 2,688 5,289

Mr. R. C. Samarasinghe Rent on Bulding 6,908 4,216 Settlement of Current Account (67,287) (56,151) Electricity 1,699 - Current Account Balance - - 8,006 5,740

Sarathi Ltd Affiliate Mr.R.S Wijewardene Security Charges 1,533 1,094 Mr. D.R Wijewardene Sales of Atlas 267 283

Settlement of Current Account (1,810) (1,395) Current Account Balance - 117 127

R.S.Printek (Pvt) Ltd Affiliate Mr.R.S Wijewardene Security Charges 5,926 3,895 Internal Auditors' Fee 114 114 Settlement of Current Account (6,375) (3,848) Current Account Balance - - 915 1,250

Ranweli Holiday Village Affiliate Mr.R.S Wijewardene Printing Charges - 10 Ltd Mr. P. S Wijewardene Settlement of Current Account - (46)

Lake House Bookshop Affiliate Mr.R.S Wijewardene Sales of Atlas 798 1,211 (Pvt) Ltd Printing Charges - -

Settlement of Current Account (853) (1,780) Current Account Balance - - 4 59

Wijeya Graphics Affiliate Mr.R.S Wijewardene Printing Charges - 209 (Private) Limited Settlement of Current Account - (107)

Current Account Balance - - - 102

(ii) Amount Receivable from and/or due to related entities as at 31st March 2017 are disclosed in Notes 18 and 27 to the Financial Statements.

(b) Transactions with Key Management PersonnelThe members of Board of Directors are considered as Key Management Personnel of the Group;

2017 2016 2017 2016Rs.'000 Rs.'000

Short Term Employment Benefits 5,253 5,189 4,861 4,7495,253 5,189 4,861 4,749



GROUP COMPANY

-44-

Value of the transactions

Balance as at 31 st March

44


AS AT 31ST MARCH

33 Financial Risk Management

OverviewThe Group has exposure to the following risks from its use of financial instruments:

(i) Credit Risk

Exposure to Credit Risk

2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Trade and Other Receivables 57,161 50,271 54,356 48,553Amount due from Related Parties 9,816 8,639 9,621 8,275Loans given to Related Parties - 1,500 - - Balances with Banks 68,173 62,836 2,351 2,705

135,150 123,246 66,328 59,533

Impairment Losses

Group

Gross BalanceRs.'000

ImpairmentRs.'000


ImpairmentRs.'000

Past due 0-90 days 60,364 3,203 53,787 3,515 Past due 91-365 days 3,791 3,791 3,179 3,179 More than one year 2,000 2,000 2,336 2,337

66,155 8,994 59,302 9,031

Company


ImpairmentRs.'000


ImpairmentRs.'000

Past due 0-90 days 57,559 3,203 52,069 3,515 Past due 91-365 days 3,791 3,791 3,179 3,179 More than one year 2,000 2,000 2,336 2,337

63,350 8,994 57,584 9,031

Cash and Cash Equivalents


Carrying AmountCOMPANY

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s riskmanagement policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risksand adherence to limits.

Credit risk is the risk of financial loss to the Group if a customer fails to meet his contractual obligations, and this principally arises from the Group’s receivables from customers.

▪ Operational risk

Risk management framework

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring andmanaging risks, and the Group’s management of capital.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was asfollows;

Carrying AmountGROUP


▪ Credit risk ▪ Liquidity risk ▪ Market risk

Trade and Other ReceivablesThe Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of Trade and Other Receivables. The maincomponents of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss componentestablished for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determinedbased on historical data of payment statistics for similar financial assets.

The Group held cash and Cash equivalents of Rs. 68,173,162/- at 31st March 2017 ( Rs. 62,836,284/- as at 31st March 2016) which represent itsmaximum credit exposure on these assets.

The ageing of Trade and other Receivables at the reporting date was as follows;

2017

2017

2016

2016

45


AS AT 31ST MARCH

33 Financial Risk Management (Continued)

(ii) Liquidity Risk

The Company maintains the following lines of credit,

Carrying 0-12 More than Carrying 0-12 More than

As at 31st March 2017 Amount Months 1 year Amount Months 1 yearRs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Financial Liabilities (Non- Derivative)Interest Bearing Borrowings from Related Company - - - 16,471 3,188 13,283Trade and Other Payables 42,080 42,080 - 41,944 41,944 - Bank Overdraft 11,489 11,489 - 11,489 11,489 -

Total 53,569 53,569 - 69,904 56,621 13,283

As at 31st March 2016 Carrying 0-12 More than Carrying 0-12 More thanAmount Months 1 years Amount Months 1 years

Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000Financial Liabilities (Non- Derivative)Interest Bearing Borrowings from Related Company - - - 15,411 1,872 13,539Trade and Other Payables 29,717 29,717 - 29,489 29,489 - Bank Overdraft 12,353 12,353 - 12,353 12,353 - Total 42,070 42,070 - 57,253 43,714 13,539

(iii) Market Risk

(a) Currency Risk

(a) Interest Rate Risk

2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Fixed Rate InstrumentsFinancial Liabilities Interest Bearing Borrowings from Related Company - - 16,471 15,411 Interest Bearing Borrowings 36 713 36 713

36 713 16,507 16,124

Variable Rate InstrumentsFinancial Liabilities Interest Bearing Borrowings 8,621 18,652 8,621 18,652

Bank Overdrafts (11,489) (12,353) (11,489) (12,353)(2,868) 6,299 (2,868) 6,299

Fair value sensitivity analysis for fixed rate instruments

31st March 2017100 bp

IncreaseRs.000

100 bp Decrease

Rs.000

Variable Rate Instruments (210) 210Cash Flow Sensitivity (Net) (210) 210

Carrying Amount Carrying Amount

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore a change in interest rates at the reporting date would not affect profit or loss.

▪ An Overdraft facility of Rs.35 Mn that is unsecured . Interest would be payable at the rate of SLIBOR plus 400 basis points. The utilized amount of this facility as at the year end is nil.

GROUP

GROUP

The Group is exposed to currency risk on purchases that are denominated in a currency other than Sri Lankan Rupees (LKR). The foreign currencies in which these transactions primarily denominated are United States Dollars (USD) and Euro.

GROUP COMPANY



Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by deliveringcash or another financial asset. The Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity tomeet its liabilities when due, without incurring unacceptable losses or risking damage to the Group’s reputation.

The following are the contractual maturities of financial liabilities.COMPANY

A change of 100 basis points in interest rates would have increased or decreased profit by Rs.114,984/-

At the reporting date, the Company’s interest-bearing financial instruments were as follows

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

COMPANY

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

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 itsholdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters,while optimizing the return.

Cash Flow Sensitivity Analysis for Variable Rate Instruments The Group is exposed to changes in market interest rates through bank borrowings at variable interest rates.

Profit or Loss

▪ Rs 16.486 Mn Loan from Subsidiay Company (LH Plantations (Private) Limited that is unsecured and Interest would be payable at 8.75% p.a.

46


AS AT 31ST MARCH


(iv) Capital management

2017 2016 2017 2016Rs.'000 Rs.'000 Rs.'000 Rs.'000

Total Liabilities 80,773 72,904 96,682 88,020Less: Cash and Cash Equivalents 68,173 62,836 2,837 2,920Net Debt 12,599 10,069 93,845 85,100Total Equity 449,323 314,998 354,749 224,579Net Debt to Equity Ratio 3% 3% 26% 38%

(v) Fair value Mesurement

Level I: Quoted market price (unadjusted) in an active market for an identical instrument.



The Board’s policy is to maintain a strong capital base so as to maintain shareholder, creditor and market confidence and to sustain futuredevelopment of the business. The Board of Directors monitors the return on capital and level of dividends to ordinary shareholders.

The Management seeks to maintain a lower level of gearing to go in line with the risk limits they have set for the Group based on theGroup's risk capacity. Accordingly, the borrowings are kept at a minimum level and major part of the borrowings comprise short termfixed interest rate loans from the Subsidiary company and Bank Overdrafts with variable inteterst rates being used only to manage theworking capital requirements of day to day operations of the Group.

GROUP COMPANYThe Group’s debt to adjusted capital ratio at the end of the reporting period was as follows:

The Group uses widely recognised valuation models for determining the fair value of common and more simple financial instruments,forward rated contracts that use only observable market data and require little management judgement and estimation. Observable pricesand model inputs are usually available in the market for listed debt and equity securities and government securities. Availability ofobservable market prices and model inputs reduces the need for management judgement and estimation and also reduces the uncertaintyassociated with determination of fair values. Availability of observable market prices and inputs varies depending on the products andmarkets and is prone to changes based on specific events and general conditions in the financial markets.

There were no changes in the Group’s approach to capital management during the year and the Company is not subject to externallyimposed capital requirements.

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.

Level II: Valuation techniques based on observable inputs, either directly – i.e. as prices or indirectly – i.e. derived from prices. Thiscategory includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical orsimilar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directlyor indirectly observable from market data.

Level III: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuationtechnique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’svaluation. This category includes instruments that are valued based on quoted prices for similar instruments where significantunobservable adjustments or assumptions are required to reflect differences between the instruments.

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer pricequotations. For all other financial instruments the bank determines fair values using valuation techniques.

Valuation techniques include net present value and discounted cash flow models, comparison to similar instruments for which marketobservable prices exist. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, creditspreads and other premia used in estimating discount rates. The objective of the valuation technique is to arrive at a fair valuedetermination that reflect the price of the financial instrument at the reporting date, that would have determined by the marketparticipants acting at the arms length.

47


AS AT 31ST MARCH


(v) Fair value Mesurement (Continued)

Fair values versus the Carrying amounts

Carrying AmountRs.'000

Fair Value

Rs.'000

Carrying AmountRs.'000

Fair Value

Rs.'000Assets carried at fair valueAvailable for Sale Investment 10,364 10,364 10,364 10,364

Assets carried at amortized costTrade and Other Receivables 57,161 57,161 54,356 54,356Amounts due from Related Parties 9,816 9,816 9,621 9,621Cash and Cash Equivalents 68,173 68,173 2,837 2,837

Liabilities carried at amortized costTrade and Other Payables 42,080 42,080 41,944 41,944Interest Bearing Borrowings 8,657 8,657 8,657 8,657Bank Overdraft 11,489 11,489 11,489 11,489

Cash and cash equivalents

Trade and other Receivables

Amount Due From Related Parties

Trade and other Payables and Income Tax Payable

Interest Bearing Borrowings



The fair values of financial assets and liabilities, together with the carrying amounts shown in the Statement of Financial Position, are asfollows;

2017GROUP COMPANY

The carrying amount of the cash and cash equivalents and balances with banks approximate the fair value as these are short term in nature.

Trade and other receivables are expected to be settled within one year from the reporting date and hence the discounting impact would beimmaterial. Therefore carrying amount approximate the fair value as at the reporting date.

Amount Due from Related Parties are expected to be settled within one year from the reporting date and hence the discounting impact wouldbe immaterial. Therefore carrying amount approximate the fair value as at the reporting date.

Trade and other payables are expected to be settled within one year from the reporting date and hence the discounting impact would beimmaterial. Therefore carrying amount approximate the fair value as at the reporting date.

Majority of loans outstanding as at the reporting date are floating rate instruments which are reprised upon changes in economic conditions.Therefore the carrying amount of interest bearing borrowings are approximate to the fair value.

48

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)AS AT 31ST MARCH


(v) Fair value Mesurement (Continued)

Financial Instruments Carried at Fair Value and Valuation Bases

Group Level I Level II Level III TotalRs. Rs. Rs. Rs.

As at 31st March 2017 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Available for Sale Investment (Note - 15) 79 - 10,285 10,36479 - 10,285 10,364

CompanyLevel I Level II Level III Total

As at 31st March 2017 Rs. Rs. Rs. Rs.Rs.'000 Rs.'000 Rs.'000 Rs.'000

Available for Sale Investment (Note - 15) 79 - 10,285 10,36479 - 10,285 10,364

Financial Instruments not carried at Fair Value and Valuation Bases

Level 1 Level 2 Level 3 TOTAL Level 1 Level 2 Level 3 TOTALRs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Assets Carried at amortized costTrade and Other Receivables - - 57,161 57,161 - - 54,356 54,356Amount due from Related Parties - - 9,816 9,816 - - 9,621 9,621Cash and Cash Equivalents - 68,173 - 68,173 - 2,837 - 2,837

- 68,173 66,977 135,150 - 2,837 63,977 66,814

Liabilities Carried at amortized costInterest Bearing Borrowings - - 8,657 8,657 - - 8,657 8,657Income Tax Payable - - 4,633 4,633 - - 4,528 4,528Trade and Other Payables - - 42,080 42,080 - - 41,944 41,944Bank Overdrafts - - 11,489 11,489 - - 11,489 11,489

- - 66,860 66,860 - - 66,618 66,618



GROUP COMPANY

The fair value of financial assets and liabilities, together with the amount carrying amounts shown in Statement of Financial Position, areas follows;

The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in the fair valuehierarchy into which the fair value measurement is categorised:

49

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)AS AT 31st MARCH

1 SEGMENTAL REPORTING

2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 Rs.000

RevenueExternal Sales 295,275 245,929 186,228 125,188 7,144 7,065 - 1,858 290 290 488,937 380,329Inter Segment Sales - - - - - - - - - - - -Gross Turnover 295,275 245,929 186,228 125,188 7,144 7,065 - 1,858 290 290 488,937 380,329Revenue Based Taxes (38,346) (28,534) (24,300) (14,659) - - - (215) - - (62,646) (43,407)Net Segment Revenue 256,929 217,396 161,929 110,530 7,144 7,065 - 1,642 290 290 426,291 336,922

Total Revenue - - - - - - - - - - 426,291 336,922Segment Operating Profit - - - - - - - - - 137,597 107,720Other Operating Income - - - - - - - - 9,547 6,739 35,886 35,759Operating Profit - - - - - - - - - - 35,899 26,852Net Finance Cost - - - - - - - - - - 4,286 3,587Share of Associate Company's Net Profit - - - - - - - - - - 154 769Profit before Tax - - - - - - - - - - 40,339 31,208Income Tax Expense - - - - - - - - - - (4,735) (7,833)Profit for the year - - - - - - - - - - 35,604 23,375Other Comprehensive Income - - - - - - - - - - 101,658 30

Total Comprehensive Income - - - - - - - - - - 137,262 23,405

AssetsSegment Assets 95,216 102,387 36,249 29,486 3,508 3,114 46,130 39,108 70,890 68,209 251,993 242,303

Investment Property - - - - - - - - - - 262,350 130,000Investment in Associates - - - - - - - - - - 15,753 15,599Total Assets 95,216 102,387 36,249 29,486 3,508 3,114 46,130 39,108 70,890 68,209 530,096 387,902LiabilitiesSegment Liabilities 12,295 4,196 13,332 11,023 - - 44,200 37,115 250 290 70,077 52,624Deferred Taxation 2,074 932Interest Bearing Borrowings 8,621 19,348 - - - - - - - - 8,621 19,348Total Liabilities 20,916 23,544 13,332 11,023 - - 44,200 37,115 250 290 80,772 72,904

Capital Expenditure 19,523 8,275 2,107 1,913 - - 362 11,533 - - 21,993 21,721Depreciation 4,875 6,749 1,701 1,485 - - 2,758 2,594 1,395 1,391 10,728 12,219

GROUP



SECURITY PRINTING DIVISION

SECURITY CARD DIVISION

ATLAS OTHER LH PLANTATION

50

STATISTICAL INFORMATION (CONTINUED)

Rs.Mn % Rs.Mn % Rs.Mn % Rs.Mn % Rs.Mn %CAPITAL & RESERVESStated Capital 35.30 9.60 35.30 14.80 35.30 16.00 35.30 17.60 35.30 19.04 Capital Reserves 6.20 1.60 6.20 2.60 6.20 2.80 6.20 3.10 6.20 3.34 Other Reserves 207.90 56.50 105.60 44.30 105.60 47.90 105.60 52.60 105.60 56.96 Retained Earnings 105.30 28.60 77.50 32.60 27.30 46.00 46.00 22.90 30.40 16.40 Shareholders’ Funds 354.70 96.30 224.60 94.30 207.40 94.00 193.10 96.20 177.50 95.74 LONG TERM LOANS 13.30 3.70 13.50 5.70 13.10 6.00 7.50 3.80 7.90 4.26

368.00 100.00 238.10 100.00 220.50 100.00 200.60 100.00 185.40 100.00 REPRESENTED BYProperty, Plant and Equipment 305.50 83.00 188.00 79.00 168.90 76.60 176.40 87.90 171.50 92.50 Investments 18.20 4.90 16.90 7.10 16.90 7.60 17.00 8.50 16.90 9.12 NON- CURRENT ASSETS 323.70 87.90 204.90 86.10 185.80 84.20 193.40 96.40 188.40 101.62

Current Assets 127.60 34.70 107.60 45.20 93.00 42.20 63.30 31.50 90.20 48.65 Liabilities (81.60) (22.20) (73.50) (30.90) (58.40) (26.50) (56.60) (28.50) (94.40) (50.92) Deferred Tax (1.80) (0.40) (0.90) (0.40) 0.10 0.10 0.50 0.60 1.20 0.65 Net Assets 44.20 12.10 33.20 13.90 34.70 15.80 7.20 3.60 (3.00) (1.62)

368.00 100.00 238.10 100.00 220.50 100.00 200.60 100.00 185.40 100.00

TURNOVER 488.60 100.00 380.00 100.00 373.14 100.00 350.00 100.00 326.70 100.00 Brought out materials and services 297.20 60.80 228.70 60.18 219.58 58.85 202.00 57.70 185.20 56.80 Salaries and Wages 74.80 15.30 67.13 17.66 67.34 18.12 65.40 18.70 69.70 21.30 Depreciation 9.30 1.90 10.80 2.84 10.11 2.71 9.70 2.80 12.60 3.80 Loan Interest 3.60 0.70 2.90 0.76 3.56 0.95 6.20 1.80 10.30 3.20 Government Tax 72.20 14.20 49.82 13.11 55.80 14.95 49.20 14.00 40.00 12.20 Dividends 2.90 - 2.90 - 3.05 - 2.00 - 2.60 0.80 Profit/ (Loss) for the Year 31.50 6.50 20.65 5.45 16.75 4.49 17.60 5.00 8.90 2.70

Profit/ (Loss) Before Tax (Rs.Mn) 34.50 - 27.00 - 28.00 - 24.60 - 6.96

ACCOUNTING RATIOS

Current Assets 1.83 1.68 1.89 1.30 1.05 Quick Assets 0.96 0.93 1.25 0.80 0.44 Gearing (Equity) 3.75% 6.03% 6.34% 3.85% 4.45%Gearing (Loans & Equity) 3.61% 5.68% 5.96% 3.74% 4.26%

2016/2017 2015/2016 2014/2015 2013/2014 2012/2013

2012/2013

-52-



PERFORMANCE SUMMARY FOR THE YEARS 2007/2008 - 2016/2017

2016/2017 2015/2016 2014/2015 2013/2014

52


Rs.Mn % Rs.Mn % Rs.Mn % Rs.Mn % Rs.Mn %CAPITAL & RESERVES

35.30 46.10 35.30 57.00 35.30 51.60 35.30 30.70 35.30 30.70 Stated Capital 6.20 8.10 6.20 10.00 6.20 9.00 6.20 5.40 6.20 4.70 Capital Reserves5.10 - 0.50 - - - - - - - Other Reserves

24.40 34.30 11.70 21.50 14.10 20.60 19.40 16.90 27.80 20.00 Retained Earnings 71.00 88.50 53.70 88.50 55.60 81.20 60.90 53.00 69.30 55.40 Shareholders’ Funds

8.80 11.50 7.10 11.50 12.90 18.80 53.60 47.00 70.40 50.40 LONG TERM LOANS79.80 100.00 60.80 100.00 68.50 100.00 114.50 100.00 139.70 105.80

REPRESENTED BY52.20 68.20 45.30 73.20 51.10 74.70 94.00 82.10 109.50 75.20 Property, Plant and Equipment16.60 15.30 11.30 17.30 10.70 15.60 10.70 9.30 11.70 8.00 Investments68.80 83.50 56.60 90.50 61.80 90.30 104.70 91.40 121.20 83.20 NON- CURRENT ASSETS

98.00 130.70 101.70 167.20 126.50 184.60 153.80 134.30 155.50 113.40 Current Assets(85.50) (112.20) (94.70) (153.10) (115.70) (168.90) (132.10) (115.30) (128.10) 93.80 Liabilities

(1.50) (2.00) (2.80) (2.60) (4.10) (6.00) (11.90) (10.40) (8.90) 6.30 Deferred Tax11.00 16.50 4.20 9.50 6.70 9.70 9.80 8.60 18.50 213.50 Net Assets79.80 100.00 60.80 100.00 68.50 100.00 114.50 100.00 139.70 296.70

307.20 100.00 286.00 100.00 310.50 100.00 425.10 100.00 330.90 100.00 TURNOVER174.30 57.40 173.40 60.60 183.80 59.30 284.10 66.80 197.70 57.70 Brought out materials and services

63.70 20.70 54.50 19.00 61.00 19.60 59.50 14.00 54.90 16.60 Salaries and Wages10.40 3.40 12.70 4.40 16.70 5.30 20.50 4.80 20.40 6.10 Depreciation

7.40 2.40 11.10 3.90 23.60 7.60 27.70 6.50 23.50 7.10 Loan Interest38.50 11.90 35.10 12.40 30.70 9.90 41.70 9.80 37.30 11.30 Government Tax

- - - - - - - - - - Dividends17.30 4.20 (0.80) (0.40) (5.30) (1.70) (8.40) (1.90) (2.90) 1.20 Profit/ (Loss) for the Year

13.15 (0.06) (5.90) (5.10) 1.00 Profit/ (Loss) Before Tax (Rs.Mn)

ACCOUNTING RATIOS

1.26 1.19 1.21 1.30 1.13 Current Assets0.64 0.58 0.60 0.75 0.62 Quick Assets

12.39% 13.00% 23.20% 88.00% 101% Gearing (Equity)11.02% 11.00% 18.80% 47.00% 50% Gearing (Loans & Equity)

2007/2008

2008/2009 2007/2008

2011/2012 2010/2011 2009/2010



PERFORMANCE SUMMARY FOR THE YEARS 2007/2008 - 2016/2017

2011/2012 2010/2011 2009/2010

2008/2009

53


COMPANY2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Earnings/(Loss) per Share (Rs.) 5.90 3.03 5.46 5.74 7.03 10.71Dividends per Share (Rs.) 1.00 0.75 1.00 1.20 1.00 1.25Net Assets per Share (Rs.) 24.16 60.42 76.46 110.84 76.46 120.78Year on Year growth in Earnings per Share (%) 2,207.10 (48.48) 80.34 13.74 22.47 52.34Year on Year growth in Dividends per Share (%) - (25.00) 33.33 20.00 - 25.00 Operating Return before Interest on Investments (%) 33.90 13.93 16.80 15.79 10.12 9.98Borrowing as a percentage of Total Assets (%) 57.60 36.60 24.94 25.63 28.15 21.42Interest Cover 2.65 1.68 4.70 8.88 10.17 10.49Price Earnings Ratio 26.83 35.34 18.59 17.74 15.9 12.41Earnings Yield (%) 3.72 2.83 5.38 5.63 6.29 8.05Dividend Payout Ratio (%) 16.95 24.75 18.30 17.46 17.07 11.67

GROUP2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Earnings/(Loss) per Share (Rs.) 7.27 5.22 6.93 6.90 7.96 12.12Net Assets per Share (Rs.) 49.30 87.74 107.24 141.62 107.24 152.97Year on Year growth in Earnings per Share (%) 681.60 (28.20) 32.70 9.32 17.68 51.63Operating Return before Interest on Investments (%) 14.15 7.85 13.18 10.02 7.21 7.82Borrowing as a percentage of Total Assets (%) 37.23 25.32 15.48 16.78 18.76 15.26Interest Cover 6.74 5.53 6.61 12.75 16.05 12.09



54


Share Structure as at 31st March 2017

No. Of Shareholders Range No. Of Shares Percentage471 1-1000 43488 1.4830 1001-5000 67609 2.305 5001-10000 38559 1.318 10001-20000 119003 4.052 20001-30000 58360 1.994 30001-40000 139211 4.741 40001-50000 48830 1.673 50001-100000 247635 8.433 100001-1000000 1126840 38.361 Over-1000000 1047710 35.67

528 2937245 100.00

Directors' Shareholdings

NAME OF THE DIRECTOR31/03/2017 31/03/2016

Mr.R.S. Wijewardene 1,047,710 1,018,557 Mr.P.S.Wijewardene 108,282 108,282 Mr.R.C.Samarasinghe - - Prof.L.R.Watawala - - Dr.N.E.H.Sandaratne 2,067 2,067 Mr.R.P. Hulugalle - -

NAME NO. OF SHARES PERCENTAGE ON TOTAL SHARES

Mr.R.S. Wijewardene 1,047,710 35.67Mr.D.R.Wijewardene 856,837 29.17Mr.D.N.Wijewardane 161,721 5.51Mr.P.S.Wijewardene 108,282 3.69Mr.A.I.Gooneratne 95,046 3.24Mr.S.R Gomes 92,340 3.14Mrs.A.I.Wijesundere 60,249 2.05Mrs.R.N.Wijewardene 48,830 1.66Mr.Ranil Wickremasinghe 38,964 1.33Mrs.I.N.Bulathsinghala 37,425 1.27Mr.N.W.W.Welgama 32,584 1.11Mr.R.N.Wickremasinghe 30,238 1.03Mrs.K.A.Weerathunge 29,730 1.01Estate of Late Mr.P.S.Wijewardene 28,630 0.97Mr.A.L.Gooneratne 20,000 0.68Miss.R.M.Wijewardene 18,111 0.62Mr.N.D.P.Hettiarachchi 18,000 0.61Mrs.N.D.Hettiarachchi 16,300 0.55Miss.V.S.Wijewardene 14,038 0.48Mr.A.R.Wijewardene 11,722 0.40

2,766,757 94.19

Public Holding - Number of Shareholders 523 - No,of Shares 873,519 - As a Percentage 29.74 Highest Price per share for the period (Rs) 139.90 Lowest Price per share for the period (Rs) 110.00 Market Value Per Share as at 31st March 2017 133.00

NO. OF SHARES


Major Shareholders


55


Form of Proxy

I/We……………………………………………………………. of ……………………………………. Being a member/members of Lake House Printers and Publishers PLC hereby appoint………………………………………………of……………………………........................................................... or failing him Mr.R.S.Wijewardene or failing him Mr.P.S.Wijewardene or failing him Mr.R.C.Samarasinghe or failing him Prof.L.R.Watawala or failing him Mr.Ranjit Hulugalle or failing him Dr.Nimal Sandaratne as my/our proxy to speak/vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held on the 28th September,2017 at 11.00 am at the J.R. Jayawardane Center,Dharmapala MW, Colombo 07. and at any adjournment thereof and at every poll which may be taken in connection with such meeting. Signature Note: Delete what is inapplicable Instructions as to completion 1. To be valid, this Form of Proxy must be deposited at the Registered Office at No: 41, W.A.D Ramanayake Mawatha, Colombo 02, not later than 48 hours before the time appointed, for holding the meeting. 2. The instrument appointing a proxy must be in writing under the hand of the appointer or his Attorney, duly authorized in writing. 3. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or normally a certified copy of that power of attorney or other authority will have to be deposited at the registered office of the company, not less than 48 hours before the time appointed for the holding of the meeting.
