LAKE HOUSE PRINTERS AND PUBLISHERS PLC

LAKE HOUSE PRINTERS AND PUBLISHERS PLC

CONTENTS

Page No.

Notice of Meeting............................................................................................................. 1 Corporate Information.................................................................................................... 2 Board of Directors............................................................................................................ 3 - 4 Chairman’s Review.......................................................................................................... 5 - 6 Corporate Governance.................................................................................................... 7 - 8 Report of the Audit Committee....................................................................................... 9 Report of the Remuneration Committee........................................................................ 10 Statement of Directors’ Responsibilities......................................................................... 11 Report on the Affairs of the Company..........................................................................12 - 14 Independent Auditor’s Report.......................................................................................15 - 16 Statement of Profit or Loss and Comprehensive Income................................................ 17 Statement of Financial Position………………................................................................. 18 Statement of Changes in Equity...................................................................................... 19 Cash Flow Statement....................................................................................................... 20 Notes to the Financial Statements……………………………………………………..21 - 49 Statistical Information……………………………………………………………….. 50 - 54 Form of Proxy………………………………………………………………………. Enclosed

ANNUAL REPORT AND FINANCIAL STATEMENTS 2014/2015


TO ALL SHAREHOLDERS OF LAKE HOUSE PRINTERS AND PUBLISHERS PLC.

NOTICE OF MEETING

Fifty Second Annual General Meeting

Notice is hereby given that the Fifty Second Annual General Meeting of the Company will be held on 27th September 2016 at 11.00 am at the Sri Lanka Foundation Institute, (Lecture Hall – 08), No :- 100, Padanam Mawatha, Independent Square, 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.

Agenda1. To receive, consider and adopt the Directors’ Report and Statement of Accounts for the year ended 31st March

2016 with the Report of the Auditors thereon.

2. To declare a first and final dividend of Rs. 1.00 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 79 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 78 years and that he be re-elected a Director of the Company”

4. To reappoint Auditors, for the year 2016/2017 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, 2016

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 2015/2016 -1-

1


TO ALL SHAREHOLDERS OF LAKE HOUSE PRINTERS AND PUBLISHERS PLC.

NOTICE OF MEETING

Fifty Second Annual General Meeting

Notice is hereby given that the Fifty Second Annual General Meeting of the Company will be held on 27th September 2016 at 11.00 am at the Sri Lanka Foundation Institute, (Lecture Hall – 08), No :- 100, Padanam Mawatha, Independent Square, 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.

Agenda1. To receive, consider and adopt the Directors’ Report and Statement of Accounts for the year ended 31st March

2016 with the Report of the Auditors thereon.

2. To declare a first and final dividend of Rs. 1.00 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 79 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 78 years and that he be re-elected a Director of the Company”

4. To reappoint Auditors, for the year 2016/2017 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, 2016

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.


2


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 D.R.Wijewardene R.P.Hulugalle Prof.L.R.Watawala(Independent)Dr.Nimal Sanderatne (Independent)

SecretaryD.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.

Fax011 – 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.

Mr.D.R.Wijewardene – Director Appointed as a Director in March of 2008, Mr.D.R.Wijewardene is the holder of a Bachelor’s Degree from the Universityof Sussex, U.K. Mr. D.R.Wijewardene is also a Director of closely related company R. S Printek (Private) Limited.

Prof. Lakshman R.Watawala – DirectorProf.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.


3


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 D.R.Wijewardene R.P.Hulugalle Prof.L.R.Watawala(Independent)Dr.Nimal Sanderatne (Independent)

SecretaryD.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.

Fax011 – 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.

Mr.D.R.Wijewardene – Director Appointed as a Director in March of 2008, Mr.D.R.Wijewardene is the holder of a Bachelor’s Degree from the Universityof Sussex, U.K. Mr. D.R.Wijewardene is also a Director of closely related company R. S Printek (Private) Limited.

Prof. Lakshman R.Watawala – DirectorProf.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.


4


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, 2016 Colombo



THE CHAIRMAN’S REVIEW

The performance in the current financial year has been satisfactory though there has been a slight drop of Rs. 1Mn against the Net Profit before Tax over the previous Financial Year.

However, the current year’s profit before tax of Rs 27Mn was after adjusting for a Rs 8.3Mn gain on the Fair Valuation of the Investment Property value. Hence, the profit before tax prior to this adjustment was Rs 18.7Mn, which reflects a drop of Rs. 9.3Mn in Operational Profits against the previous financial year.

Reduced margins in both the main operating divisions were driven mainly by external factors such as the upward movements in the rates of exchange and interest, over which we had no control.

Intense completion prevented us from effectively combating the full impact of these cost increases, thus reducing our margins. The recent wage increase of Rs 2,500/- per employee also had a significant impact on our costs of production.

On the positive side, there was a reduction in the net finance costs by Rs 0.7Mn. This reduction was significant as this was despite additional borrowings having to be made during the year to fund further extensions to our buildings, to add additional space for rental purposes. This has only been possible mainly through improved collections and tighter cash management. The financial year 2016/17 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 trading activities.

While there was a marginal drop in the revenue of the Security Printing Division, the Security Cards Division has shown reasonable growth. There was a reduction in the profitability of both our main operating divisions due to aforementioned reasons.

The overall operational performance of the Company at the Gross Margin level has shown a drop of Rs 3.7Mn which is a 3.3% reduction from the previous financial year.

Also making a significant impact on the performance have been the increases in the Administration Costs by Rs 7.1Mn and Distribution Expenses by Rs 1.2Mn. The major reason for the increase in Administration Costs was the government recommended increase of Rs.2500/- p.m. in the Salaries.

This year as in the past, the major contributor to operational profitability has been the Security Printing Division despite a reduction in the profitability by Rs 7.6Mn compared to the last financial year. A reduction in revenue of Rs.4.8Mn and the reduction in the gross margin by 6% has impacted on the performance adversely. 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 by the results of the current financial year. The 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. 110.5Mn during the year, compared to Rs. 97.8Mn in the last financial year, an improvement of 13%. The Division has made reasonable progress in establishing itself as a key supplier to the Banking sector. It has made satisfactory progress in the financial year under review, recording a profit of Rs 2.9Mn compared to a profit of Rs.4.1Mn in the last financial year. It was successful in maintaining the gross margin percentage of last year. The division continues to face intense competition from many other players in the market.


5


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, 2016 Colombo



THE CHAIRMAN’S REVIEW

The performance in the current financial year has been satisfactory though there has been a slight drop of Rs. 1Mn against the Net Profit before Tax over the previous Financial Year.

However, the current year’s profit before tax of Rs 27Mn was after adjusting for a Rs 8.3Mn gain on the Fair Valuation of the Investment Property value. Hence, the profit before tax prior to this adjustment was Rs 18.7Mn, which reflects a drop of Rs. 9.3Mn in Operational Profits against the previous financial year.

Reduced margins in both the main operating divisions were driven mainly by external factors such as the upward movements in the rates of exchange and interest, over which we had no control.

Intense completion prevented us from effectively combating the full impact of these cost increases, thus reducing our margins. The recent wage increase of Rs 2,500/- per employee also had a significant impact on our costs of production.

On the positive side, there was a reduction in the net finance costs by Rs 0.7Mn. This reduction was significant as this was despite additional borrowings having to be made during the year to fund further extensions to our buildings, to add additional space for rental purposes. This has only been possible mainly through improved collections and tighter cash management. The financial year 2016/17 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 trading activities.

While there was a marginal drop in the revenue of the Security Printing Division, the Security Cards Division has shown reasonable growth. There was a reduction in the profitability of both our main operating divisions due to aforementioned reasons.

The overall operational performance of the Company at the Gross Margin level has shown a drop of Rs 3.7Mn which is a 3.3% reduction from the previous financial year.

Also making a significant impact on the performance have been the increases in the Administration Costs by Rs 7.1Mn and Distribution Expenses by Rs 1.2Mn. The major reason for the increase in Administration Costs was the government recommended increase of Rs.2500/- p.m. in the Salaries.

This year as in the past, the major contributor to operational profitability has been the Security Printing Division despite a reduction in the profitability by Rs 7.6Mn compared to the last financial year. A reduction in revenue of Rs.4.8Mn and the reduction in the gross margin by 6% has impacted on the performance adversely. 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 by the results of the current financial year. The 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. 110.5Mn during the year, compared to Rs. 97.8Mn in the last financial year, an improvement of 13%. The Division has made reasonable progress in establishing itself as a key supplier to the Banking sector. It has made satisfactory progress in the financial year under review, recording a profit of Rs 2.9Mn compared to a profit of Rs.4.1Mn in the last financial year. It was successful in maintaining the gross margin percentage of last year. The division continues to face intense competition from many other players in the market.


6

LAKE HOUSE PRINTERS AND PUBLISHERS PLC THE CHAIRMAN’S REVIEW (CONTINUED)

In 2015/16, we successfully penetrated the plastic card market sector further, establishing ourselves as one of the leaders in this sector.Notable progress was also made in providing services to the banking sector during this year resulting in an improvement of the Turnover. We are now offering our clients more advanced card solutions which should reflect in an improved performance in the financial year 2016/17. We have been deploying more resources into this lucrative 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 General Printing Division was closed down and operations discontinued during the year. Only two presses (printing one colour at a time) were left in this division and one of them was transferred to the Security Printing Division while the other machine would be disposed of.

The Company has measured the Investment Property on a fair value basis and The Company has valued the Investment Property during the current financial year. Based on a valuation submitted by a professional and independent valuer, we have incorporated the fair value adjustment of Rs 8.3Mn in our financial statements. An Investment Property value of Rs.130Mn is disclosed under Non Current Assets and a Revaluation Reserve of Rs. 100.2Mn 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. 11in page no 35 in the Financial Report.

Our decision to develop two areas of property for rental has borne fruitful results. Expenses incurred in the relocation of the Security Printing Division and in relation to the refurbishment of other specific areas for renting purposes in the last financial year, have been fully justified. Work is already under way to develop two further areas for a similar purpose and this will be completed before the end of the financial year 2016/17.

The volatility of the exchange and interest rates have had a negative bearing on our performance in the financial year 2015/2016 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 had a quiet year, posting a Net Profit After Tax of Rs.2.39Mn. Its main source of income comes from the Investments made in Securities. The relatively low rates of interest earned there from and, increased Administration Expenditure (most of it being non cash, however) have not helped the cause.

Whenever the opportunity arises, this company acquires Fixed Assets which it hires to related companies, earning income at substantially rates higher than its traditional income from interest from Investments. Expectations are that the performance in 2015/16 can be comfortably exceeded in the future. The Net Wealth of the LH Plantations (Pvt) Ltd as at 31st March 2016 was Rs.82.7Mn and its Stated Capital Rs.23.21Mn. Basically, the financial structure of the Company continues to remain strong despite the drop in performance in the financial year 2015/16.

This has been recognized and, the Directors have accordingly recommended a dividend of Rs.1.00 per Share for 2015/16.

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 2016 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 2016.

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 Executive. 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 Transaction Committee

In compliance with the rules of Corporate Governance of the Colombo Stock Exchange, a Related Party Transaction Committee was set up during the financial year 2015/2016.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.















7















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 2016.

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 Executive. 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 Transaction Committee

In compliance with the rules of Corporate Governance of the Colombo Stock Exchange, a Related Party Transaction Committee was set up during the financial year 2015/2016.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.















8


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 theFinancial 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 Secretary31st August 2016



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 2017, 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 2016 Colombo






Disclosure


Compliance Report


Other Information











9





Disclosure


Compliance Report


Other Information












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 2017, 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 2016 Colombo






Disclosure


Compliance Report


Other Information











10


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 2016 Colombo



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 49 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 2016


11


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 2016 Colombo



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 49 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.


D.P.A.N.Kumara Company Secretary 31st August 2016


12

LAKE HOUSE PRINTERS & PUBLISHERS PLC

REPORT ON THE AFFAIRS OF THE COMPANY

TO THE SHAREHOLDERS

The Board of Directors has pleasure in presenting the 52nd Annual Report and the Audited Financial Statements of the Company for the year ended 31st March 2016. 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 2016, which include the Statement of Comprehensive Income, Statement of Financial Position and the Notes to the Financial Statements, are given from Page 17 to 49.

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 Page No.15 & 16.

5. CHANGE IN ACCOUNTING POLICIES Any changes in accounting policies made during the financial year ended 31st March 2016, are recorded under Notes to the Financial Statements

6. NAMES OF THE DIRECTORS AND THEIR INTEREST IN SHARES

NAME NO: OF SHARES

As At 31/03/2016 As at31/03/2015

Mr.R.S.Wijewardene (Chairman) 1,018,557 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) 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 1,985,743 1,985,743

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 34 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 2015/2016 amounted to LKR. 4,749,000/= (14/15- LKR.4, 436, 000/=)

9. DIVIDENDS The Directors recommend the payment of a dividend of Rs. 1/00 per share for the year ended 31st March 2016. The company paid a dividend of LKR. 1/20 per share for the year ended 31/03/2015 in September 2015.

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 2015/2016 was fixed at LKR 330,000/= for the Company and LKR 410,000/= 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 2015/2016 at a remuneration of LKR 135,000/=.

12. DONATIONS The Company has made donations amounting to LKR 34,500/= during the year ended 31st March 2016 (2014/15 -LKR 20, 000/=)

13. CHANGES IN PROPERTY, PLANT AND EQUIPMENT The movements in Property, Plant and Equipment during the year ended 31st March 2016 and 31st March 2015 are set out in Note No.11 to the financial statements. A sum of LKR 21.721Mn has been spent on the purchase of Machinery, Equipment, Motor Vehicles and Constructions on the third floor of the Security Printing Division building during the year. Further, LKR 12.833Mn was incurred for Capital Work in Progress during the year.

A Motor Vehicle valued at LKR 0.92Mn (purchased in 1999) was sold during the year for LKR 2.805Mn. The book profit arising on this transaction was LKR 2.80Mn

Further, Investment Property has been revalued during the year and Valued at LKR.130Mn as at 31/03/2016 (2014/2015 – LKR.121.7Mn).

The Revaluation Reserve remains the same at LKR 100.247Mn

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 2016 rose to LKR 77.487Mn (2015 LKR 60.349Mn) and Retained Earnings of the Group to LKR 167.905Mn (2015 - LKR 148.042Mn). The Revaluation Reserve as at 31st March 2016 amounted to LKR 100.247Mn.


13


REPORT ON THE AFFAIRS OF THE COMPANY

TO THE SHAREHOLDERS

The Board of Directors has pleasure in presenting the 52nd Annual Report and the Audited Financial Statements of the Company for the year ended 31st March 2016. 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 2016, 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 Page No.15 & 16.

5. CHANGE IN ACCOUNTING POLICIES Any changes in accounting policies made during the financial year ended 31st March 2016, are recorded under Notes to the Financial Statements

6. NAMES OF THE DIRECTORS AND THEIR INTEREST IN SHARES

NAME NO: OF SHARES

As At 31/03/2016 As at31/03/2015

Mr.R.S.Wijewardene (Chairman) 1,018,557 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) 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 1,985,743 1,985,743

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.




7. TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL The Company maintains a Directors’ Interest Register. Transactions with key management personnel are comprehensively recorded under Note 34 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 2015/2016 amounted to LKR. 4,749,000/= (14/15- LKR.4, 436, 000/=)

9. DIVIDENDS The Directors recommend the payment of a dividend of Rs. 1/00 per share for the year ended 31st March 2016. The company paid a dividend of LKR. 1/20 per share for the year ended 31/03/2015 in September 2015.

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 2015/2016 was fixed at LKR 330,000/= for the Company and LKR 410,000/= 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 2015/2016 at a remuneration of LKR 135,000/=.

12. DONATIONS The Company has made donations amounting to LKR 34,500/= during the year ended 31st March 2016 (2014/15 -LKR 20, 000/=)

13. CHANGES IN PROPERTY, PLANT AND EQUIPMENT The movements in Property, Plant and Equipment during the year ended 31st March 2016 and 31st March 2015 are set out in Note No.11 to the financial statements. A sum of LKR 21.721Mn has been spent on the purchase of Machinery, Equipment, Motor Vehicles and Constructions on the third floor of the Security Printing Division building during the year. Further, LKR 12.833Mn was incurred for Capital Work in Progress during the year.

A Motor Vehicle valued at LKR 0.92Mn (purchased in 1999) was sold during the year for LKR 2.805Mn. The book profit arising on this transaction was LKR 2.80Mn

Further, Investment Property has been revalued during the year and Valued at LKR.130Mn as at 31/03/2016 (2014/2015 – LKR.121.7Mn).

The Revaluation Reserve remains the same at LKR 100.247Mn

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 2016 rose to LKR 77.487Mn (2015 LKR 60.349Mn) and Retained Earnings of the Group to LKR 167.905Mn (2015 - LKR 148.042Mn). The Revaluation Reserve as at 31st March 2016 amounted to LKR 100.247Mn.


14


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 2016, 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 49 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 viewin 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 considersinternal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to designaudit 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 2016 and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.




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.


………………… …………………. …………………

R. S. Wijewardene R. C. Samarasinghe D. P. A. N. Kumara Chairman Director Company Secretary 31st August, 2016 31st August, 2016 31st August, 2016



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 2016, 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 AccountantsColombo 31st August 2016


15





CONCLUSION



………………… …………………. …………………



15


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 2016, 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 49 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 viewin 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 considersinternal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the Consolidated financial statements give a true and fair view of the financial position of the Group as at 31st

March 2016 and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting






CONCLUSION



………………… …………………. …………………












Standards.

16










STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 ST MARCH 2016 2015 2016 2015Note Rs.'000 Rs.'000 Rs.'000 Rs.'000

Revenue 5 336,922 328,833 336,632 328,543

Cost of Sales (229,202) (217,386) (229,202) (217,386)

Gross Profit 107,720 111,447 107,430 111,157

Other Operating Income 6 27,279 17,551 27,397 17,136

Administration Expenses (88,126) (79,903) (84,876) (77,810)

Distribution Expenses (20,021) (18,845) (20,021) (18,845)

Results from Operating Activities 26,852 30,250 29,930 31,638

Net Finance Income / (Costs) 7 3,587 1,734 (2,862) (3,562)

Share of Profit of Associate (Net of Tax) 14.1 769 206 - -

Profit Before Tax 8 31,208 32,190 27,068 28,076

Income Tax Expenses 9 (7,833) (11,934) (6,418) (11,210)

Profit for The Year 23,375 20,256 20,650 16,866

Other Comprehensive IncomeActuarial Gain on Defined Benefit Obligations 18 (121) 18 (121)Tax Effect on Actuarial Gain on Defined Benefit Obligations (5) 34 (5) 34Net amount transfered to Income Statement on disposal of Available for Sale Financial Assets 23 (306) - -Net change in Fair Value of Available for Sale Investment (6) 51 (6) (21)Total Comprehensive Income for the Year,net of Tax 30 (342) 7 (108)Total Comprehensive Income 23,405 19,914 20,657 16,758

Attributable toEquity holders of the Parent 23,375 20,256 20,650 16,866Non – Controlling Interest - - - -

23,375 20,256 20,650 16,866Total Comprehensive Income Attributable to:Equity holders of the Parent 23,405 19,914 20,657 16,758Non – Controlling Interest - - - -Total Comprehensive Income 23,405 19,914 20,657 16,758

Basic Earnings Per Share (Rs.) 10 7.96 6.90 7.03 5.74

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 Statementsof the group set out on pages 21 to 49.

GROUP


COMPANY


17










STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 ST MARCH 2016 2015 2016 2015Note Rs.'000 Rs.'000 Rs.'000 Rs.'000

Revenue 5 336,922 328,833 336,632 328,543

Cost of Sales (229,202) (217,386) (229,202) (217,386)

Gross Profit 107,720 111,447 107,430 111,157

Other Operating Income 6 27,279 17,551 27,397 17,136

Administration Expenses (88,126) (79,903) (84,876) (77,810)

Distribution Expenses (20,021) (18,845) (20,021) (18,845)

Results from Operating Activities 26,852 30,250 29,930 31,638

Net Finance Income / (Costs) 7 3,587 1,734 (2,862) (3,562)

Share of Profit of Associate (Net of Tax) 14.1 769 206 - -

Profit Before Tax 8 31,208 32,190 27,068 28,076

Income Tax Expenses 9 (7,833) (11,934) (6,418) (11,210)

Profit for The Year 23,375 20,256 20,650 16,866

Other Comprehensive IncomeActuarial Gain on Defined Benefit Obligations 18 (121) 18 (121)Tax Effect on Actuarial Gain on Defined Benefit Obligations (5) 34 (5) 34Net amount transfered to Income Statement on disposal of Available for Sale Financial Assets 23 (306) - -Net change in Fair Value of Available for Sale Investment (6) 51 (6) (21)Total Comprehensive Income for the Year,net of Tax 30 (342) 7 (108)Total Comprehensive Income 23,405 19,914 20,657 16,758

Attributable toEquity holders of the Parent 23,375 20,256 20,650 16,866Non – Controlling Interest - - - -

23,375 20,256 20,650 16,866Total Comprehensive Income Attributable to:Equity holders of the Parent 23,405 19,914 20,657 16,758Non – Controlling Interest - - - -Total Comprehensive Income 23,405 19,914 20,657 16,758

Basic Earnings Per Share (Rs.) 10 7.96 6.90 7.03 5.74


The Financial Statements are to be read in conjunction with the related notes, which form an integral part of the Financial Statementsof the group set out on pages 21 to 49.

GROUP


COMPANY


18

STATEMENT OF FINANCIAL POSITION

AS AT 31ST MARCH 2016 2015 2016 2015Note Rs.'000 Rs.'000 Rs.'000 Rs.'000

ASSETS Non Current AssetsProperty, Plant and Equipment 11 61,881 52,416 58,054 47,197Investment Property 12 130,000 121,700 130,000 121,700Investment in Subsidiary 13 - - 2,983 2,983Investments in equity accounted investees 14 15,599 14,829 4,889 4,889Available for Sale Investment 15 9,050 9,316 9,050 9,057Deferred Tax Assets 24 - 138 - 138Total Non Current Assets 216,530 198,399 204,976 185,9640Current AssetsInventories 16 47,875 31,236 47,875 31,236Trade and Other Receivables 17 50,271 44,446 48,553 42,437Amounts due from Related Parties 18 8,639 9,257 8,275 8,825Loans given to Related Party 18.2 1,500 3,500 - -Tax Recoverable 251 28 - -Held to Maturity Investment 19 - 38,864 - -Cash and Cash Equivalents 20.1 62,836 29,016 2,920 10,487Total Current Assets 171,372 156,347 107,623 92,9850TOTAL ASSETS 387,902 354,746 312,599 278,949

EQUITY AND LIABILITIESCapital and ReservesStated Capital 21 35,247 35,247 35,247 35,247Capital Reserves 22 6,197 6,197 6,197 6,197Revaluation Reserves 23 100,247 100,247 100,247 100,247Available for Sale Reserves 5,402 5,385 5,401 5,407Retained Earnings 167,905 148,042 77,487 60,349Total Equity atttributable to Equity Holders of the Compan 314,998 295,118 224,579 207,447Non – Controlling Interest - - - -Total Equity 314,998 295,118 224,579 207,447

Non - Current LiabilitieDeferred Tax Liability 24 932 - 865 -Retirement Benefit Obligations 25 9,665 9,288 9,665 9,288Interest Bearing Borrowings 26.1 - 2,623 - 2,623Loans from Related Party 29 - - 13,539 10,533Total Non - Current Liabilitie 10,597 11,911 24,069 22,444

Current LiabilitiesInterest Bearing Borrowings 26.2 19,365 12,711 19,365 12,711Trade and Other Payables 27 29,717 24,558 29,489 24,411Amount Due to Related Party 28 - 2,731 - 2,731Loans from Related Party 29 - - 1,872 1,488Current Tax Liabilities 872 3,500 872 3,500Bank Overdrafts 20.2 12,353 4,217 12,353 4,217Total Current Liabilitie 62,307 47,717 63,951 49,058

Total Liabilities 72,904 59,628 88,020 71,502

Total Equity and Liability 387,902 354,746 312,599 278,949

Net Assets Per Share (Rs.) 107.24 100.47 76.46 70.63

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 (D.G.M.Finance)

Approved and signed on behalf of the Board of the Directors;

R. S. Wijewardene (Chairman) R. C. Samarasinghe (Director)r31st August, 2016

Colombo

GROUP COMPANY


-18-ANNUAL REPORT AND FINANCIAL STATEMENTS 2015/2016

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 49.

The Board of Directors is responsible for the preparation and presentation of these Financial Statements.













R. S. Wijewardene (Chairman) R. C. Samarasinghe (Director)r

31st August, 2016Colombo

GROUP COMPANY





STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31ST MARCH 2016

COMPANY STATED CAPITAL

CAPITAL RESERVES

REVALUATIONRESERVE

AVAILABLE FOR SALE RESERVES

RETAINED EARNINGS TOTAL

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

Balance as at 1st April 2014 35,247 6,197 100,247 5,428 46,213 193,332Profit for the year - - - - 16,866 16,866Other Comprehensive Income - - - (21) (87) (108)Total Comprehensive Income - - - (21) 16,779 16,758

Transactions with Equity HoldersContribution by and Distribution to Equity HoldersDividend for the year - - - - (2,643) (2,643)Balance as at 31st March 2015 35,247 6,197 100,247 5,407 60,349 207,447

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


GROUP STATED CAPITAL

CAPITAL RESERVES

REVALUATIONRESERVE



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

Balance as at 1st April 2014 35,247 6,197 100,247 5,640 130,516 277,847

Profit for the year - - - - 20,256 20,256Other Comprehensive Income - - - (255) (87) (342)Total Comprehensive Income - - - (255) 20,169 19,914



Profit for the year 23,375 23,375Other Comprehensive Income - - - 17 13 30Total Comprehensive Income - - - 16 23,388 23,405




ANNUAL REPORT AND FINANCIAL STATEMENTS 2015/2016-19-

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 setout on pages 21 to 49.

19













R. S. Wijewardene (Chairman) R. C. Samarasinghe (Director)r31st August, 2016Colombo

GROUP COMPANY

















R. S. Wijewardene (Chairman) R. C. Samarasinghe (Director)r31st August, 2016Colombo

GROUP COMPANY





STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31ST MARCH 2016

COMPANY STATED CAPITAL

CAPITAL RESERVES

REVALUATIONRESERVE



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

Balance as at 1st April 2014 35,247 6,197 100,247 5,428 46,213 193,332Profit for the year - - - - 16,866 16,866Other Comprehensive Income - - - (21) (87) (108)Total Comprehensive Income - - - (21) 16,779 16,758


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


GROUP STATED CAPITAL

CAPITAL RESERVES

REVALUATIONRESERVE



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


Profit for the year - - - - 20,256 20,256Other Comprehensive Income - - - (255) (87) (342)Total Comprehensive Income - - - (255) 20,169 19,914



Profit for the year 23,375 23,375Other Comprehensive Income - - - 17 13 30Total Comprehensive Income - - - 16 23,388 23,405





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 setout on pages 21 to 49.

20

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31ST MARCH2016 2015 2016 2015

Rs.'000 Rs.'000 Rs.'000 Rs.'000CASH FLOWS FROM OPERATING ACTIVITIESProfit before Tax 31,208 32,190 27,068 28,076Adjustments for,Dividend Income (147) (211) (143) (604)Profit on disposal of Property,Plant & Equipment (2,805) (1,231) (2,805) (1,231)Profit on Sale of Shares - (252) - -Gain on Fair Value of Investment Property (8,300) - (8,300) -Unrealized gain on disposal of Shares - (306) - -Share of profit of Associate (Net of Tax) (769) (206) - -Provision for Retiring Gratuity 1,674 1,716 1,674 1,716Depreciation 12,219 10,461 10,827 10,111Write-off of Trade and Other Receivables 966 - 966 -Write-off of Inventories - 553 - 553Interest income (5,743) (4,457) (90) (60)Interest Expense 2,157 2,723 2,952 3,622Write-off of Property, Plant & Equipment 37 - 37 -Operating Profit Before Working Capital Changes 30,495 40,980 32,186 42,183

(Increase)/Decrease in Inventories (16,639) (1,081) (16,639) (1,081)(Increase)/Decrease in Trade & Other Receivables (6,790) (19,512) (7,082) (18,113)(Increase)/Decrease in Dues from Related Companies 618 (1,231) 550 (1,169)Increase / (Decrease) in Trade & Other Creditors 5,158 7,957 5,078 7,939Increase/(Decrease) in Dues to Related Companies (2,731) 1,005 (2,732) 1,005

10,111 28,118 11,361 30,764

Intrest Paid (2,157) (2,723) (2,952) (3,622)Gratuity Paid (1,283) (1,397) (1,283) (1,397)Tax Paid (9,600) (7,197) (8,044) (6,839)Net Cash Flow Generated from / (Used in) Operating Activities (2,927) 16,801 (918) 18,906

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of Property,Plant and Equipment (21,721) (8,156) (21,721) (2,594)Proceeds from Sale of Property,Plant and Equipment 2,805 1,231 2,805 1,231Interest Received 5,743 4,457 90 60Dividend Received 147 211 143 604Sale of Shares 265 828 - -Investment in Repos 38,864 (10,612) - -Loans given to Related Parties 2,000 2,400 - -Net Cash Flow Generated from / (Used in) Investing Activities 28,103 (9,641) (18,683) (699)

CASH FLOWS FROM FINANCING ACTIVITIESRepayment of Loans During the year (48,367) (46,606) (43,367) (46,606)Loans Obtained during the Year 54,878 43,472 53,268 41,972Lease Rentals Paid (2,478) (3,675) (2,478) (3,675)Dividend Paid (3,525) (2,643) (3,525) (2,643)Net Cash Flow Generated from / (Used in) Financing Activities 508 (9,452) 3,898 (10,952)

Net Increase/ (Decrease) in Cash & Cash Equivalents 25,684 (2,292) (15,703) 7,256Cash & Cash Equivalents at the Beginning of the year 24,799 27,091 6,270 (986)Cash & Cash Equivalents at the End of the year (Note 20) 50,483 24,799 (9,433) 6,270



COMPANY GROUP



LAKE HOUSE PRINTERS & PUBLISHERS PLC NOTES TO THE FINANCIAL STATEMENTS

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. 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 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 • Held to Maturity Investments are measured at amortized cost • 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 Judgements

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

21

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31ST MARCH2016 2015 2016 2015

Rs.'000 Rs.'000 Rs.'000 Rs.'000CASH FLOWS FROM OPERATING ACTIVITIESProfit before Tax 31,208 32,190 27,068 28,076Adjustments for,Dividend Income (147) (211) (143) (604)Profit on disposal of Property,Plant & Equipment (2,805) (1,231) (2,805) (1,231)Profit on Sale of Shares - (252) - -Gain on Fair Value of Investment Property (8,300) - (8,300) -Unrealized gain on disposal of Shares - (306) - -Share of profit of Associate (Net of Tax) (769) (206) - -Provision for Retiring Gratuity 1,674 1,716 1,674 1,716Depreciation 12,219 10,461 10,827 10,111Write-off of Trade and Other Receivables 966 - 966 -Write-off of Inventories - 553 - 553Interest income (5,743) (4,457) (90) (60)Interest Expense 2,157 2,723 2,952 3,622Write-off of Property, Plant & Equipment 37 - 37 -Operating Profit Before Working Capital Changes 30,495 40,980 32,186 42,183

(Increase)/Decrease in Inventories (16,639) (1,081) (16,639) (1,081)(Increase)/Decrease in Trade & Other Receivables (6,790) (19,512) (7,082) (18,113)(Increase)/Decrease in Dues from Related Companies 618 (1,231) 550 (1,169)Increase / (Decrease) in Trade & Other Creditors 5,158 7,957 5,078 7,939Increase/(Decrease) in Dues to Related Companies (2,731) 1,005 (2,732) 1,005

10,111 28,118 11,361 30,764

Intrest Paid (2,157) (2,723) (2,952) (3,622)Gratuity Paid (1,283) (1,397) (1,283) (1,397)Tax Paid (9,600) (7,197) (8,044) (6,839)Net Cash Flow Generated from / (Used in) Operating Activities (2,927) 16,801 (918) 18,906

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of Property,Plant and Equipment (21,721) (8,156) (21,721) (2,594)Proceeds from Sale of Property,Plant and Equipment 2,805 1,231 2,805 1,231Interest Received 5,743 4,457 90 60Dividend Received 147 211 143 604Sale of Shares 265 828 - -Investment in Repos 38,864 (10,612) - -Loans given to Related Parties 2,000 2,400 - -Net Cash Flow Generated from / (Used in) Investing Activities 28,103 (9,641) (18,683) (699)

CASH FLOWS FROM FINANCING ACTIVITIESRepayment of Loans During the year (48,367) (46,606) (43,367) (46,606)Loans Obtained during the Year 54,878 43,472 53,268 41,972Lease Rentals Paid (2,478) (3,675) (2,478) (3,675)Dividend Paid (3,525) (2,643) (3,525) (2,643)Net Cash Flow Generated from / (Used in) Financing Activities 508 (9,452) 3,898 (10,952)

Net Increase/ (Decrease) in Cash & Cash Equivalents 25,684 (2,292) (15,703) 7,256Cash & Cash Equivalents at the Beginning of the year 24,799 27,091 6,270 (986)Cash & Cash Equivalents at the End of the year (Note 20) 50,483 24,799 (9,433) 6,270



COMPANY GROUP



LAKE HOUSE PRINTERS & PUBLISHERS PLC NOTES TO THE FINANCIAL STATEMENTS

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. 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 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 • Held to Maturity Investments are measured at amortized cost • 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 Judgements

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

22

LAKE HOUSE PRINTERS & PUBLISHERS PLC NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

2. BASIS OF PREPARATION (CONTINUED)

2.4 Use of Estimates and Judgements (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


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 • Held to Maturity Financial Assets • Available-for-Sale Financial Assets

23

23


2. BASIS OF PREPARATION (CONTINUED)

2.4 Use of Estimates and Judgements (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



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 • Held to Maturity Financial Assets • Available-for-Sale Financial Assets

23

24



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) Held to Maturity Financial Assets

Held-to-maturity financial assets are non derivative assets with fixed or determinable payments and fixed maturity that the Group has the positive intent and ability to hold until maturity, and which were not designated as at fair value through profit or loss or as available-for-sale.

Held-to-maturity financial assets are carried at amortized cost using effective interest rate method. A sale or reclassification of a more than insignificant amount of held-to-maturity investments would result in the reclassification of all held-to-maturity investments as available-for-sale.

Held-to-maturity investments comprises of investments in Government securities purchased under re-purchase agreements.

(c) 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.

(d) 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.

24



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.

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.

25

25



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) Held to Maturity Financial Assets

Held-to-maturity financial assets are non derivative assets with fixed or determinable payments and fixed maturity that the Group has the positive intent and ability to hold until maturity, and which were not designated as at fair value through profit or loss or as available-for-sale.

Held-to-maturity financial assets are carried at amortized cost using effective interest rate method. A sale or reclassification of a more than insignificant amount of held-to-maturity investments would result in the reclassification of all held-to-maturity investments as available-for-sale.

Held-to-maturity investments comprises of investments in Government securities purchased under re-purchase agreements.

(c) 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.

(d) 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.

24



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.

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.

25

26



3.5 Property, Plant and Equipment (Continued) 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.

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

3.5.4. 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.

3.6. 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.

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.

26


3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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.

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.

27

27



3.5 Property, Plant and Equipment (Continued) 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.

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

3.5.4. 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.

3.6. 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.

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.

26


3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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.

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.

27

28



3.8. Impairment (Continued)

3.8.1. Financial Assets (Continued)

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.

3.9.2. Defined Benefit Plan - Gratuity

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

28



3.9.2. Defined Benefit Plan – Gratuity (continued)

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.

3.9.3. 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.

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.

29

29



3.8. Impairment (Continued)

3.8.1. Financial Assets (Continued)

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.

3.9.2. Defined Benefit Plan - Gratuity

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

28



3.9.2. Defined Benefit Plan – Gratuity (continued)

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.

3.9.3. 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.

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.

29

30



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;

• 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.

30



3.14. Income Tax (Continued)

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.

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.

31

31



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;

• 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.

30



3.14. Income Tax (Continued)

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.

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.

31

32


4. NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE (CONTINUED)

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.

32

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST MARCH

2016 2015 2016 20155 REVENUE Rs.'000 Rs.'000 Rs.'000 Rs.'000

Gross Revenue 380,329 373,429 380,039 373,139Less:- Revenue Related Taxes (43,407) (44,596) (43,407) (44,596)Net Revenue 336,922 328,833 336,632 328,543

6 OTHER INCOME2016 2015 2016 2015

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

Profit on Disposal of Property Plant and Equipment 2,805 1,231 2,805 1,231Rent Income 9,246 9,737 9,246 9,737Dividend Income 147 211 143 604Sundry Income 6,781 6,372 6,903 5,564Gain on Fair valuation of Investment Property 8,300 - 8,300 -

27,279 17,551 27,397 17,136

7 NET FINANCE COSTS2016 2015 2016 2015

Rs.'000 Rs.'000 Rs.'000 Rs.'000Finance IncomeInterest Income 5,743 4,457 90 60

5,743 4,457 90 60

Finance CostsInterest On, - Term Loans 309 616 1,105 1,515 - Bank Overdrafts 429 198 429 198 - Trust Receipt Loans 846 1,048 846 1,048 - Finance Lease 205 603 205 603 - Other Finance Costs 367 258 367 258

2,156 2,723 2,952 3,622

3,587 1,734 2,862 3,562

8 PROFIT BEFORE TAXProfit before tax is stated after charging all theexpenses including the followings; 2016 2015 2016 2015

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

Directors' Emoluments 5,189 4,856 4,749 4,436Auditors' Remuneration - Audit Fees 410 371 330 305 - Non Audit Fees 135 129 135 129Depreciation 12,219 10,461 10,827 10,111Write Off of Trade and Other Receivables 966 - 966 -Write Off of Inventories - 553 - 553Donations 35 20 35 20Royalties 54 576 54 576Personnel Costs:- Defined Benefit Plan Costs-Gratuity 1,674 1,716 1,674 1,716 Defined Contribution Plan Costs - EPF and ETF 5,683 5,852 5,683 5,815 Other Staff Costs 22,037 20,508 22,037 19,294

GROUP

GROUP

GROUP



COMPANY

COMPANY

COMPANY

COMPANY

GROUP

33


4. NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE (CONTINUED)

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.

32

NOTES TO THE FINANCIAL STATEMENTS


2016 2015 2016 20155 REVENUE Rs.'000 Rs.'000 Rs.'000 Rs.'000

Gross Revenue 380,329 373,429 380,039 373,139Less:- Revenue Related Taxes (43,407) (44,596) (43,407) (44,596)Net Revenue 336,922 328,833 336,632 328,543

6 OTHER INCOME2016 2015 2016 2015

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

Profit on Disposal of Property Plant and Equipment 2,805 1,231 2,805 1,231Rent Income 9,246 9,737 9,246 9,737Dividend Income 147 211 143 604Sundry Income 6,781 6,372 6,903 5,564Gain on Fair valuation of Investment Property 8,300 - 8,300 -

27,279 17,551 27,397 17,136

7 NET FINANCE COSTS2016 2015 2016 2015

Rs.'000 Rs.'000 Rs.'000 Rs.'000Finance IncomeInterest Income 5,743 4,457 90 60

5,743 4,457 90 60

Finance CostsInterest On, - Term Loans 309 616 1,105 1,515 - Bank Overdrafts 429 198 429 198 - Trust Receipt Loans 846 1,048 846 1,048 - Finance Lease 205 603 205 603 - Other Finance Costs 367 258 367 258

2,156 2,723 2,952 3,622

3,587 1,734 2,862 3,562

8 PROFIT BEFORE TAXProfit before tax is stated after charging all theexpenses including the followings; 2016 2015 2016 2015

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

Directors' Emoluments 5,189 4,856 4,749 4,436Auditors' Remuneration - Audit Fees 410 371 330 305 - Non Audit Fees 135 129 135 129Depreciation 12,219 10,461 10,827 10,111Write Off of Trade and Other Receivables 966 - 966 -Write Off of Inventories - 553 - 553Donations 35 20 35 20Royalties 54 576 54 576Personnel Costs:- Defined Benefit Plan Costs-Gratuity 1,674 1,716 1,674 1,716 Defined Contribution Plan Costs - EPF and ETF 5,683 5,852 5,683 5,815 Other Staff Costs 22,037 20,508 22,037 19,294

GROUP

GROUP

GROUP



COMPANY

COMPANY

COMPANY

COMPANY

GROUP

34

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)


9 INCOME TAX EXPENSES2016 2015 2016 2015

Rs.'000 Rs.'000 Rs.'000 Rs.'000Current Tax for the year (Note 9.1) 6,317 8,216 5,372 7,501Under Provision for Income Tax 282 3,320 38 3,320Deemed Dividend Tax 159 9 - -Deferred Tax Charge (Note 24) 1,075 389 1,008 389

7,833 11,934 6,418 11,210

9.1 The Reconciliation between Accounting Profit and Taxable Profit is as follow

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Accounting Profit Before Tax 31,208 32,190 27,068 28,076Aggregate Tax Disallowable Items 18,585 15,105 17,126 14,755Aggregate Tax Allowable Items (25,415) (16,579) (25,009) (16,042)Statiutory Income 24,378 30,716 19,185 26,789Tax Losses Set Off (Note 9.2) (1,819) (1,373) - -Taxable Income 22,559 29,343 19,185 26,789Income Tax @ (28%) 6,317 8,216 5,372 7,501Current Tax for the year 6,317 8,216 5,372 7,501

9.2 Accumulated Tax LossesTax Losses as at 1st April 2015 1,004 1,091 - -Tax Losses for the year 2,542 1,286 - -Loss Set off during the year (1,819) (1,373) - -Tax Losses as at 31st March 2016 1,727 1,004 - -

10 BASIC EARNINGS PER SHARE

2016 2015 2016 2015

Profit attributable to Ordinary Shareholders (Rs'000) 23,375 20,256 20,650 16,866Weighted average number of Ordinary Shares 2,937 2,937 2,937 2,937

Basic Earnings Per Share (Rs.) 7.96 6.90 7.03 5.74

11 PROPERTY, PLANT AND EQUIPMENT

GROUP


GROUP

GROUP

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.


The Freehold Land of Lake House Printers and Publishers PLC situated at No: 41, W.A.D.Ramanayaka Mawatha, Colombo was revalued as at23rd March 2016 by an Independent Qualified Valuer for Rs. 927,000,000/-. However, the revalued amount excluding Investment Property has notbeen incorporated into the Financial Statements. There are three Buildings situated at the above address and the total extent of which is 33,650 sqfeet.

COMPANY

COMPANY

COMPANY

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

11 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)11.1 GROUP

Land Buildings Plant & Machinery

Furniture,Fittings & Equipment

MotorVehicles


MotorVehicles

CapitalWork in Progress

Total

Cost Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000Balance as at 1st April 2014 10,859 18,449 162,873 21,728 18,140 10,330 4,400 - 246,779Additions during the year - - 1,386 1,220 5,550 - - - 8,156Transfers - - 2,231 - - (2,231) - - - Disposals during the Year - - - - (1,502) - - - (1,502)Balance as at 31st March 2015 10,859 18,449 166,490 22,948 22,188 8,099 4,400 - 253,433

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 - 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

Accumulated DepreciationBalance as at 1st April 2014 - 8,748 148,137 17,379 12,533 3,519 1,742 - 192,058Charge during the Year - 661 3,806 1,131 2,549 1,214 1,100 - 10,461Transfers - - 781 - - (781) - - - Disposals during the Year - - - - (1,502) - - - (1,502)Balance as at 31st March 2015 - 9,409 152,724 18,510 13,580 3,952 2,842 - 201,017

Balance 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 - - 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

Net Book ValueBalance as at 31st March 2015 10,859 9,040 13,766 4,438 8,608 4,147 1,558 - 52,416

Balance as at 31st March 2016 10,859 16,139 14,265 4,458 10,024 605 458 5,073 61,881

11.2 COMPANY



MotorVehicles


MotorVehicles


Total

Cost Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000Balance as at 1st April 2014 10,859 18,449 162,873 21,728 18,140 10,323 4,400 - 246,772Additions during the year - - 1,386 1,208 - - - - 2,594Transfers - - 2,231 - - (2,231) - - - Disposals during the Year - - - - (1,502) - - - (1,502)Balance as at 31st March 2015 10,859 18,449 166,490 22,936 16,638 8,092 4,400 - 247,864

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 - 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



Net Book ValueBalance as at 31st March 2015 10,859 9,040 13,766 4,429 3,405 4,140 1,558 - 47,197Balance as at 31st March 2016 10,859 16,139 14,265 4,453 6,209 598 458 5,073 58,054


Freehold Leasehold

Freehold Leasehold

35


11 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)11.1 GROUP



MotorVehicles


MotorVehicles


Total

Cost Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000Balance as at 1st April 2014 10,859 18,449 162,873 21,728 18,140 10,330 4,400 - 246,779Additions during the year - - 1,386 1,220 5,550 - - - 8,156Transfers - - 2,231 - - (2,231) - - - Disposals during the Year - - - - (1,502) - - - (1,502)Balance as at 31st March 2015 10,859 18,449 166,490 22,948 22,188 8,099 4,400 - 253,433

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 - 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



Net Book ValueBalance as at 31st March 2015 10,859 9,040 13,766 4,438 8,608 4,147 1,558 - 52,416

Balance as at 31st March 2016 10,859 16,139 14,265 4,458 10,024 605 458 5,073 61,881

11.2 COMPANY



MotorVehicles


MotorVehicles


Total

Cost Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000Balance as at 1st April 2014 10,859 18,449 162,873 21,728 18,140 10,323 4,400 - 246,772Additions during the year - - 1,386 1,208 - - - - 2,594Transfers - - 2,231 - - (2,231) - - - Disposals during the Year - - - - (1,502) - - - (1,502)Balance as at 31st March 2015 10,859 18,449 166,490 22,936 16,638 8,092 4,400 - 247,864

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 - 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



Net Book ValueBalance as at 31st March 2015 10,859 9,040 13,766 4,429 3,405 4,140 1,558 - 47,197Balance as at 31st March 2016 10,859 16,139 14,265 4,453 6,209 598 458 5,073 58,054


Freehold Leasehold

Freehold Leasehold

36


11 PROPERTY, PLANT & EQUIPMENT (CONTINUED)

11.3 COMPANY

11.4 GROUPThe cost of fully depreciated item of property, Plant and Equipment which are still in use as at 31st March 2016 are as follows.

Buildings Plant and

Machinery

Furniture, Fittings and Equipment

Motor Vehicles

Cost as at 1st April 2015 (Rs.'000) 1,857 142,164 15,694 7,508Cost as at 31st March 2016 (Rs.'000) 1,857 143,808 16,229 8,243

The Property, Plant & Equipment pledged as Collaterals have been disclosed under Note 26.4.

12 INVESTMENT PROPERTY

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 31st March 2015 121,700 121,700 121,700 121,700Fair value Gain for the year 8,300 - 8,300 - Balance as at 31st March 2016 130,000 121,700 130,000 121,700

12.1

Measurement of Fair Value

(i) Fair value hierarchy

(ii) Valuation techniques and significant unobservable data

Expected rental growth - 5% - 10%Risk adjusted discount rate - 12%Y.P in perpetuity - 6.5%Cost not paid by tenents 25% of expected rent income

The estimate of fair value would increase

Expected rental growth were highThe risk adjusted discount rate were lowY.P in perpetuity were lowCosts not paid by tenents were low

The Company has started construction of a building during the year ended 31st March 2016 and the cost incurred up to the reporting date is LKR 5Mn . Capitalizedborrowing cost of LKR 0.073Mn 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 building has beenclassified as investment property and accounted on "fair value model" as required by LKAS 40 - "Investment Property".

COMPANY

Discounted cash flows: The valuation model considers the present value ofnet cash flows to be generated from the property, taking into account theexpected rental growth rate and other cost not paid by tenents. Theexpected net cash flows are discounted using risk adjusted discount rate.Among other factors, discount rate estimation considers the quality of thebuildings and its location.


Valuation technique

Significant unobservable inputs

Inter-relationship between key unobservable inputs and fair value measurement

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


The above mentioned investment property was valued for Rs. 130 Mn on discounted cash flow basis as a going concern as at 31st March 2016.

The fair value of investment property was determined by an external, independent professional valuer, J. M. Senanayake Bandara, B.Sc Hons (Estate Managementand Valuation), F.I.V (Sri Lanka), I.R.R.V (UK), Chartered Valuation surveyor, on 23rd March 2016.

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 valuationtechniques used.

The following table shows the valuation technique used in measuring the fair value of investment property, as well as the signficant unobservableinputs used.

GROUP


13 INVESTMENTS IN SUBSIDIARY

Holdings No of Cost Holdings No of Cost% Shares Rs.'000 % Shares Rs.'000

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

14 INVESTMENTS IN EQUITY ACCOUNTED INVESTEES2016 2015 2016 2015

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

Stamford Lake (Private) Limited (Note 14.1) 15,599 14,829 4,889 4,88915,599 14,829 4,889 4,889

Stamford Lake (Private) Limited

14.1 Stamford Lake (Private) Limited 2016 2015 2016 2015

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

Cost of the Investment 4,889 4,889 4,889 4,889Accumulated share of profit 9,941 9,734 - -Share of profit for the year, net of tax 769 206 - -Net asset value of Associate 15,599 14,829 4,889 4,889

14.2 Summarized Financial Information of Associate

2016 2015Rs.'000 Rs.'000

Percentage Ownership Interest 49% 49%Non Current Asstes 2,279 2,344Current Assets 40,865 45,877Non Current Liabilities (14,163) (20,810)Net Assets (100%) 28,981 27,411Group share of Net Assets (49%) 14,201 13,431Goodwill 1,398 1,398Carrying amount in the Statement of Financial Position 15,599 14,829

Revenue (49%) 13,281 11,210Profit from Operations (49%) 884 335Net Profit After Taxation (49%) 769 206

15 AVAILABLE FOR SALE INVESTMENT GROUP No of 2016 2015

Shares Rs.'000 Rs.'000

Unquoted - Investments (Note 15.1) 460,471 8,957 8,957Quoted Investments (Note 15.2) 552 93 359

9,050 9,316

COMPANY No of 2016 2015Shares Rs.'000 Rs.'000


9,050 9,05715.1 Unquoted - Investments

No of 2016 2015 No of 2016 2015Shares Rs.'000 Rs.'000 Shares Rs.'000 Rs.'000

Ranweli Holiday Village Limited 460,471 8,918 8,918 385,548 8,918 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 of Printing and Graphics Limited (Note 15.1.3) 2,500 - - 2,500 - -

8,957 8,957 8,957 8,957

-37-


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


The following table summerizes the financial information of Stamford Lake (Private) Limited as included in its own financial statements adjusted for fair valueadjustments at acquisition and differences in accounting policies. The reconciliation from the summerized financial information to the carrying amount of the Group'sinterest in Stamford Lake (Private) Limited is given below.

Company

2016 2015

Group

COMPANYGROUP

Group Company

37


11 PROPERTY, PLANT & EQUIPMENT (CONTINUED)

11.3 COMPANY

11.4 GROUPThe cost of fully depreciated item of property, Plant and Equipment which are still in use as at 31st March 2016 are as follows.

Buildings Plant and

Machinery

Furniture, Fittings and Equipment

Motor Vehicles

Cost as at 1st April 2015 (Rs.'000) 1,857 142,164 15,694 7,508Cost as at 31st March 2016 (Rs.'000) 1,857 143,808 16,229 8,243

The Property, Plant & Equipment pledged as Collaterals have been disclosed under Note 26.4.

12 INVESTMENT PROPERTY

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 31st March 2015 121,700 121,700 121,700 121,700Fair value Gain for the year 8,300 - 8,300 - Balance as at 31st March 2016 130,000 121,700 130,000 121,700

12.1

Measurement of Fair Value

(i) Fair value hierarchy

(ii) Valuation techniques and significant unobservable data

Expected rental growth - 5% - 10%Risk adjusted discount rate - 12%Y.P in perpetuity - 6.5%Cost not paid by tenents 25% of expected rent income

The estimate of fair value would increase

Expected rental growth were highthe risk adjusted discount rate were lowY.P in perpetuity were lowCosts not paid by tenents were low

The Company has started construction of a building during the year ended 31st March 2016 and the cost incurred up to the reporting date is LKR 5Mn . Capitalizedborrowing cost of LKR 0.073Mn 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 building has beenclassified as investment property and accounted on "fair value model" as required by LKAS 40 - "Investment Property".

COMPANY

Discounted cash flows: The valuation model considers the present value ofnet cash flows to be generated from the property, taking into account theexpected rental growth rate and other cost not paid by tenents. Theexpected net cash flows are discounted using risk adjusted discount rate.Among other factors, discount rate estimation considers the quality of thebuildings and its location.


Valuation technique

Significant unobservable inputs

Inter-relationship between key unobservable inputs and fair value measurement

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


The above mentioned investment property was valued for Rs. 130 Mn on discounted cash flow basis as a going concern as at 31st March 2016.

The fair value of investment property was determined by an external, independent professional valuer, J. M. Senanayake Bandara, B.Sc Hons (Estate Managementand Valuation), F.I.V (Sri Lanka), I.R.R.V (UK), Chartered Valuation surveyor, on 23rd March 2016.

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 valuationtechniques used.

The following table shows the valuation technique used in measuring the fair value of investment property, as well as the signficant unobservableinputs used.

GROUP


13 INVESTMENTS IN SUBSIDIARY

Holdings No of Cost Holdings No of Cost% Shares Rs.'000 % Shares Rs.'000

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

14 INVESTMENTS IN EQUITY ACCOUNTED INVESTEES2016 2015 2016 2015

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

Stamford Lake (Private) Limited (Note 14.1) 15,599 14,829 4,889 4,88915,599 14,829 4,889 4,889

Stamford Lake (Private) Limited

14.1 Stamford Lake (Private) Limited 2016 2015 2016 2015

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

Cost of the Investment 4,889 4,889 4,889 4,889Accumulated share of profit 9,941 9,734 - -Share of profit for the year, net of tax 769 206 - -Net asset value of Associate 15,599 14,829 4,889 4,889

14.2 Summarized Financial Information of Associate

2016 2015Rs.'000 Rs.'000

Percentage Ownership Interest 49% 49%Non Current Asstes 2,279 2,344Current Assets 40,865 45,877Non Current Liabilities (14,163) (20,810)Net Assets (100%) 28,981 27,411Group share of Net Assets (49%) 14,201 13,431Goodwill 1,398 1,398Carrying amount in the Statement of Financial Position 15,599 14,829

Revenue (49%) 13,281 11,210Profit from Operations (49%) 884 335Net Profit After Taxation (49%) 769 206

15 AVAILABLE FOR SALE INVESTMENT GROUP No of 2016 2015

Shares Rs.'000 Rs.'000


9,050 9,316

COMPANY No of 2016 2015Shares Rs.'000 Rs.'000


9,050 9,05715.1 Unquoted - Investments

No of 2016 2015 No of 2016 2015Shares Rs.'000 Rs.'000 Shares Rs.'000 Rs.'000

Ranweli Holiday Village Limited 460,471 8,918 8,918 385,548 8,918 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 of Printing and Graphics Limited (Note 15.1.3) 2,500 - - 2,500 - -

8,957 8,957 8,957 8,957

-37-


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


The following table summerizes the financial information of Stamford Lake (Private) Limited as included in its own financial statements adjusted for fair valueadjustments at acquisition and differences in accounting policies. The reconciliation from the summerized financial information to the carrying amount of the Group'sinterest in Stamford Lake (Private) Limited is given below.

Company

2016 2015

Group

COMPANYGROUP

Group Company

38


15 AVAILABLE FOR SALE INVESTMENT (CONTINUED)15.1 Unquoted - Investments (Continued)

15.1.1 Unquoted - Investment 2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Lake House Investments Limited 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

2016 2015 2016 2015No 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 552 93 100 552 93 100Vanik Incorporation PLC (Note 15.2.1) 15 % Debentures 800 - - 800 - - Voting 800 - - 800 - - Non Voting Shares 1000 - - 1000 - - Warrants 800 - - 800 - -Sampath Bank PLC 1028 - 259 - - -

93 359 93 100

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



GROUP COMPANY


16 INVENTORIES2016 2015 2016 2015

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

Raw Materials 39,540 24,331 39,540 24,331Work In Progress 9,762 10,690 9,762 10,690Finished Goods 250 610 250 610Goods in Transit 2,627 - 2,627 -

52,179 35,631 52,179 35,631

Less: Provision for Impairment (Note 16.1) (4,304) (4,395) (4,304) (4,395)47,875 31,236 47,875 31,236

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

17 TRADE AND OTHER RECEIVABLES 2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Trade Debtors 51,052 47,509 51,052 47,509Less: Provision for Impairment (Note 17.1) (9,031) (10,675) (9,031) (10,675)

42,021 36,834 42,021 36,834Deposits and Prepayments 1,105 610 1,105 610Other Receivables 7,145 7,002 5,427 4,993

50,271 44,446 48,553 42,437

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

18 AMOUNT DUE FROM RELATED PARTIES

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Wijeya Graphics (Private) Limited 102 - 102 -Wijeya Newspapers Limited 5,830 5,774 5,740 5,684L H Plantations (Private) Limited - - 64 121Ranweli Holiday Village Limited - 36 - 36Sarathi Limited 127 145 127 145Stamford Lake (Private) Limited 933 1,122 933 1,122R.S Printek (Private) Limited 1,250 1,089 1,250 1,089Lake House Bookshop (Private) Limited 59 628 59 628Geekiyanagedara Estate 338 463 - -

8,639 9,257 8,275 8,825


-39-

GROUP COMPANY

GROUP

GROUP

COMPANY

COMPANY


39


15 AVAILABLE FOR SALE INVESTMENT (CONTINUED)15.1 Unquoted - Investments (Continued)

15.1.1 Unquoted - Investment 2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Lake House Investments Limited 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

2016 2015 2016 2015No 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 552 93 100 552 93 100Vanik Incorporation PLC (Note 15.2.1) 15 % Debentures 800 - - 800 - - Voting 800 - - 800 - - Non Voting Shares 1000 - - 1000 - - Warrants 800 - - 800 - -Sampath Bank PLC 1028 - 259 - - -

93 359 93 100

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



GROUP COMPANY


16 INVENTORIES2016 2015 2016 2015

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

Raw Materials 39,540 24,331 39,540 24,331Work In Progress 9,762 10,690 9,762 10,690Finished Goods 250 610 250 610Goods in Transit 2,627 - 2,627 -

52,179 35,631 52,179 35,631

Less: Provision for Impairment (Note 16.1) (4,304) (4,395) (4,304) (4,395)47,875 31,236 47,875 31,236

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

17 TRADE AND OTHER RECEIVABLES 2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Trade Debtors 51,052 47,509 51,052 47,509Less: Provision for Impairment (Note 17.1) (9,031) (10,675) (9,031) (10,675)

42,021 36,834 42,021 36,834Deposits and Prepayments 1,105 610 1,105 610Other Receivables 7,145 7,002 5,427 4,993

50,271 44,446 48,553 42,437

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

18 AMOUNT DUE FROM RELATED PARTIES

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Wijeya Graphics (Private) Limited 102 - 102 -Wijeya Newspapers Limited 5,830 5,774 5,740 5,684L H Plantations (Private) Limited - - 64 121

Ranweli Holiday Village Limited - 36 - 36Sarathi Limited 127 145 127 145Stamford Lake (Private) Limited 933 1,122 933 1,122R.S Printek (Private) Limited 1,250 1,089 1,250 1,089Lake House Bookshop (Private) Limited 59 628 59 628Geekiyanagedara Estate 338 463 - -

8,639 9,257 8,275 8,825


-39-

GROUP COMPANY

GROUP

GROUP

COMPANY

COMPANY


Lake House Investments Limited (Note - 18.1) - -- -

40


18.1 Lake House Investments Limited 2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Amount Due 718 753 718 718Less: Provision for Impairment (718) (753) (718) (718)

- - - -

18.2 LOANS GIVEN TO RELATED PARTIES

Ranweli Holiday Village Limited2016 2015 2016 2015

Rs.'000 Rs.'000 Rs.'000 Rs.'000Balance as at 1st April 3,500 5,500 - -Loan repayments during the year (2,000) (2,000) - -Balance as at 31st March 1,500 3,500 - -

19 HELD TO MATURITY INVESTMENTS2016 2015 2016 2015

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

Investments in Government securities - 38,864 - -

Held-to-maturity investments comprise of Investments in Government securities purchased under re-purchase agreements.

20 CASH AND CASH EQUIVALENTS 2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

20.1 Favourable Balance

Cash in Hand - - 215 293Balances with Banks 62,836 29,016 2,705 10,194

62,836 29,016 2,920 10,48720.2 Unfavourable Balance

Bank Overdraft (12,353) (4,217) (12,353) (4,217)Cash and Cash Equivalents for the purpose of Cash Flow Statement 50,483 24,799 (9,433) 6,270

2016 2015 2016 201521 STATED CAPITAL Rs.'000 Rs.'000 Rs.'000 Rs.'000

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

22 CAPITAL RESERVES 2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

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

23 REVALUATION RESERVES 2016 2015 2016 2015Rs.'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 - - - -Balance as at 31st March 100,247 100,247 100,247 100,247

COMPANY

COMPANY

The Land and Buildings situated at No: 41, W.A.D Ramanayaka Mawatha, Colombo 02 have been revalued by Mr.J.M.SenanayakaBandara, a qualified valuer (B.Sc.Hons. State Management and Valuation ) as at 28th October 2012. Accordingly the Land and Buildingsrelating to Investment Property were revalued for Rs.115Mn (land for Rs.100Mn and Buildings for Rs.15Mn) which had a carryingamount of Rs.14.2Mn (Land of 1.2Mn and Building of 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

GROUP

COMPANY


24 DEFERRED TAXATION2016 2015 2016 2015

Rs.'000 Rs.'000 Rs.'000 Rs.'000Balance as at 1st April (138) (493) (138) (493)Recognized in the Profit or LossProvision /(Reversal) for the Year 1,075 389 1,008 389Recognized in the Other Comprehensive IncomeProvision /(Reversal) for the Year (5) (34) (5) (34)Balance as at 31st March 932 (138) 865 (138)

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 and Equipment 10,734 3,073 10,734 3,006 6,897 1,931 6,897 1,931Retiring Benefit Obligation (9,665) (2,706) (9,665) (2,706) 9,288 (2,635) 9,288 (2,635)Investment Property 2,020 565 2,020 565 2,020 566 2,020 566

3,089 932 3,089 865 18,205 (138) 18,205 (138)

2016 2015 2016 201525 RETIREMENT BENEFIT OBLIGATIONS Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1st April 9,288 8,846 9,288 8,846Interest Cost 859 884 859 884Current Services Cost 819 834 819 834Benefits Paid (1,283) (1,397) (1,283) (1,397)Actuarial Loss (18) 121 (18) 121Balance as at 31st March 9,665 9,288 9,665 9,288

25.1

25.2 The Key assumptions used in determining the above were as follows2016 2015

Rate of Discount 10.5% 10%Salary Increment rate - Senior Management/Executive 5.5% 5.5%Salary Increment rate - Other Staff 3.5% 3.5%Retiring age of the employees 55 Years 55 Years

25.3 Sensitivity AnalysisSensitivity Analysis - Salary Increment Rate

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

Present Value of Defined Benefit Obligation 9,328 10,033Total 9,328 10,033

Sensitivity Analysis - Discount Rate

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



The Company has made provision for employees retirment benefit obligation as at 31st March 2016 based on an actuary valuation carried out by professianally qualified actuary Mr.R.Kahakachchi of M/s.Actuarial and Management Consultant (Private) Limited,a firm of professionally qualified actuaries, as required by LKAS 19 "Employee Benefits".

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.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 of salary 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.The sensitivity 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 the following effect on the retirement benefit obligation.

The effective rate of 28% (2015 - 28 %) and 28% (2015 - 28%) were applied respectively by the Company and its Subsidiary of LH Plantation (Private) Limited, forcalculation of deferred tax Asset / Liability as at the reporting date.

LH Plantation (Private) Limited has not recognized the deferred tax asset amounting to Rs. 123,496/- for the year ended 31st March 2015, since the management is of the viewthat asset will not be realised in the foreseeable future.

COMPANY2016

GROUP


COMPANY GROUP

GROUP COMPANY

2015 GROUP COMPANY

41


18.1 Lake House Investments Limited 2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Amount Due 718 753 718 718Less: Provision for Impairment (718) (753) (718) (718)

- - - -

18.2 LOANS GIVEN TO RELATED PARTIES

Ranweli Holiday Village Limited2016 2015 2016 2015

Rs.'000 Rs.'000 Rs.'000 Rs.'000Balance as at 1st April 3,500 5,500 - -Loan repayments during the year (2,000) (2,000) - -Balance as at 31st March 1,500 3,500 - -

19 HELD TO MATURITY INVESTMENTS2016 2015 2016 2015

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

Investments in Government securities - 38,864 - -

Held-to-maturity investments comprise of Investments in Government securities purchased under re-purchase agreements.

20 CASH AND CASH EQUIVALENTS 2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

20.1 Favourable Balance

Cash in Hand - - 215 293Balances with Banks 62,836 29,016 2,705 10,194

62,836 29,016 2,920 10,48720.2 Unfavourable Balance

Bank Overdraft (12,353) (4,217) (12,353) (4,217)Cash and Cash Equivalents for the purpose of Cash Flow Statement 50,483 24,799 (9,433) 6,270

2016 2015 2016 201521 STATED CAPITAL Rs.'000 Rs.'000 Rs.'000 Rs.'000

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

22 CAPITAL RESERVES 2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

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

23 REVALUATION RESERVES 2016 2015 2016 2015Rs.'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 - - - -Balance as at 31st March 100,247 100,247 100,247 100,247

COMPANY

COMPANY

The Land and Buildings situated at No: 41, W.A.D Ramanayaka Mawatha, Colombo 02 have been revalued by Mr.J.M.SenanayakaBandara, a qualified valuer (B.Sc.Hons. State Management and Valuation ) as at 28th October 2012. Accordingly the Land and Buildingsrelating to Investment Property were revalued for Rs.115Mn (land for Rs.100Mn and Buildings for Rs.15Mn) which had a carryingamount of Rs.14.2Mn (Land of 1.2Mn and Building of 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

GROUP

COMPANY


24 DEFERRED TAXATION2016 2015 2016 2015

Rs.'000 Rs.'000 Rs.'000 Rs.'000Balance as at 1st April (138) (493) (138) (493)Recognized in the Profit or LossProvision /(Reversal) for the Year 1,075 389 1,008 389Recognized in the Other Comprehensive IncomeProvision /(Reversal) for the Year (5) (34) (5) (34)Balance as at 31st March 932 (138) 865 (138)

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 and Equipment 10,734 3,073 10,734 3,006 6,897 1,931 6,897 1,931Retiring Benefit Obligation (9,665) (2,706) (9,665) (2,706) 9,288 (2,635) 9,288 (2,635)Investment Property 2,020 565 2,020 565 2,020 566 2,020 566

3,089 932 3,089 865 18,205 (138) 18,205 (138)

2016 2015 2016 201525 RETIREMENT BENEFIT OBLIGATIONS Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1st April 9,288 8,846 9,288 8,846Interest Cost 859 884 859 884Current Services Cost 819 834 819 834Benefits Paid (1,283) (1,397) (1,283) (1,397)Actuarial Loss (18) 121 (18) 121Balance as at 31st March 9,665 9,288 9,665 9,288

25.1

25.2 The Key assumptions used in determining the above were as follows2016 2015

Rate of Discount 10.5% 10%Salary Increment rate - Senior Management/Executive 5.5% 5.5%Salary Increment rate - Other Staff 3.5% 3.5%Retiring age of the employees 55 Years 55 Years

25.3 Sensitivity AnalysisSensitivity Analysis - Salary Increment Rate

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


Sensitivity Analysis - Discount Rate

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



The Company has made provision for employees retirment benefit obligation as at 31st March 2016 based on an actuary valuation carried out by professianally qualified actuary Mr.R.Kahakachchi of M/s.Actuarial and Management Consultant (Private) Limited,a firm of professionally qualified actuaries, as required by LKAS 19 "Employee Benefits".

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.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 of salary 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.The sensitivity 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 the following effect on the retirement benefit obligation.

The effective rate of 28% (2015 - 28 %) and 28% (2015 - 28%) were applied respectively by the Company and its Subsidiary of LH Plantation (Private) Limited, forcalculation of deferred tax Asset / Liability as at the reporting date.

LH Plantation (Private) Limited has not recognized the deferred tax asset amounting to Rs. 123,496/- for the year ended 31st March 2015, since the management is of the viewthat asset will not be realised in the foreseeable future.

COMPANY2016

GROUP


COMPANY GROUP

GROUP COMPANY

2015 GROUP COMPANY

42


25 RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)25.4

2016 2015 2016 2015Recognized in Profit and Loss Rs.'000 Rs.'000 Rs.'000 Rs.'000

Current Services Cost for the year 819 834 819 834Interest Cost for the year 859 884 859 884

1,679 834 1,679 834Recognized in Other Comprehensive ExpenseRecognition of Actuarial Loss/(Gain) for the Year (18) 121 (18) 121

(18) 121 (18) 12126 INTEREST BEARING BORROWINGS

26.1 Interest bearing borrowings - Payable after one year

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Long Term Loans (Note - 26.3) - 1,945 - 1,945Lease Creditors (Note - 26.5) - 678 - 678

- 2,623 - 2,623

26.2 Interest bearing borrowings - Payable within one year

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Interest bearing borrowings - current portion (Note 26.3) 1,944 2,333 1,944 2,333Lease Creditors current portion (Note 26.5) 677 2,478 677 2,478Trust Receipt Loans - Bank of Ceylon (Note 26.6) 16,708 7,864 16,708 7,8649% Unsecured Loan Stocks 36 36 36 36

19,365 12,711 19,365 12,711

26.3 Long Term Loans

Total Total Total Total2016 2015 2016 2015

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

Balance as at 1st April 4,278 7,606 4,278 7,606Obtained during the year - - - -Payments during the year (2,334) (3,328) (2,334) (3,328)Balance as at 31st March 1,944 4,278 1,944 4,278

Transferred to Current Liabilities (Payable within one year) (1,944) (2,333) (1,944) (2,333)Loan Payable after one year - 1,945 - 1,945

26.4

26.5 Lease Creditors2016 2015 2016 2015

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

Balance as at 1st April 3,379 7,657 3,379 7,657Lease obtained during the year - - - -Payments during the year (2,684) (4,278) (2,684) (4,278)

695 3,379 695 3,379Less: Interest in Suspense (18) (223) (18) (223)Balance as at 31st March 677 3,156 677 3,156Transferred to Current Liabilities (Payable within one year) (677) (2,478) (677) (2,478)Loan Payable after one year - 678 - 678

26.6 Trust Receipt Loans - Bank of Ceylon2016 2015 2016 2015

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

Balance as at 1 April 7,864 7,610 7,864 7,610Obtained during the year 54,878 43,473 54,878 43,473 Payments during the year (46,034) (43,219) (46,034) (43,219) Balance as at 31 March 16,708 7,864 16,708 7,864

COMPANY

COMPANYGROUP



GROUP

GROUP

GROUP

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

The amount charged to Statement of Profit or Loss and Other Comprehensive Income in respect of retirement benefit obligation is made up as follows;

COMPANY

COMPANY

COMPANY

GROUP COMPANY

GROUP


27 TRADE AND OTHER PAYABLES2016 2015 2016 2015

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

Trade Creditors 10,948 5,297 10,948 5,297Other Payables 18,769 19,261 18,541 19,114

29,717 24,558 29,489 24,411

28 AMOUNT DUE TO RELATED PARTY2016 2015 2016 2015

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

Wijeya Newspapers Limited - 2,731 - 2,731- 2,731 - 2,731

29 LOANS FROM RELATED PARTYBalance as at 1st April - - 12,021 13,521Loans obtained during the year - - 5,000 -Payments during the year - - (1,610) (1,500)Balance as at 31st March - - 15,411 12,021

Transferred to Current Liabilities (Payable within one year) 1,872 1,488Loan Payable after one year 13,539 10,533

29.1 L H Plantations (Private) Limited - LoanBalance as at 1st April - - 15,002 11,598Fair Value difference of Related Party loan - - 409 423Balance as at 31st March - - 15,411 12,021

30 EVENTS OCCURRING AFTER THE REPORTING DATE

31 CAPITAL COMMITMENTS

32 CONTINGENT LIABILITIES

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

33 COMPARATIVE INFORMATION

Comparative information has been reclassified where necessary to conform to current year presentation.

-43-


GROUP COMPANY

The Board of Directors has recommended a payment of Rs.1.00 Per share for the year 2015/2016. No circumstances other than disclosed above have arisen since the reporting date which would require adjustments to or disclosure in theFinancial Statements.


Capital Commitments to the value of LKR 11Mn is estimated on an ongoing Construction Project within the Property.There are no Capital Commitments other than stated above as at the reporting date.

GROUP COMPANY

st

st

43


25 RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)25.4

2016 2015 2016 2015Recognized in Profit and Loss Rs.'000 Rs.'000 Rs.'000 Rs.'000

Current Services Cost for the year 819 834 819 834Interest Cost for the year 859 884 859 884

1,679 834 1,679 834Recognized in Other Comprehensive ExpenseRecognition of Actuarial Loss/(Gain) for the Year (18) 121 (18) 121

(18) 121 (18) 12126 INTEREST BEARING BORROWINGS

26.1 Interest bearing borrowings - Payable after one yea

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Long Term Loans (Note - 26.3) - 1,945 - 1,945Lease Creditors (Note - 26.5) - 678 - 678

- 2,623 - 2,623

26.2 Interest bearing borrowings - Payable within one yea

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Interest bearing borrowings - current portion(Note 26.3) 1,944 2,333 1,944 2,333Lease Creditors current portion (Note 26.5) 677 2,478 677 2,478Trust Receipt Loans - Bank of Ceylon (Note 26.6) 16,708 7,864 16,708 7,8649% Unsecured Loan Stocks 36 36 36 36

19,365 12,711 19,365 12,711

26.3 Long Term Loans

Total Total Total Total2016 2015 2016 2015

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

Balance as at 1st April 4,278 7,606 4,278 7,606Obtained during the year - - - -Payments during the year (2,334) (3,328) (2,334) (3,328)Balance as at 31st March 1,944 4,278 1,944 4,278

Transferred to Current Liabilities (Payable within one year) (1,944) (2,333) (1,944) (2,333)Loan Payable after one year - 1,945 - 1,945

26.4

26.5 Lease Creditors2016 2015 2016 2015

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

Balance as at 1st April 3,379 7,657 3,379 7,657Lease obtained during the year - - - -Payments during the year (2,684) (4,278) (2,684) (4,278)

695 3,379 695 3,379Less: Interest in Suspense (18) (223) (18) (223)Balance as at 31st March 677 3,156 677 3,156Transferred to Current Liabilities (Payable within one year) (677) (2,478) (677) (2,478)Loan Payable after one year - 678 - 678

26.6 Trust Receipt Loans - Bank of Ceylon2016 2015 2016 2015

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

Balance as at 1st April 7,864 7,610 7,864 7,610Obtained during the year 54,878 43,473 54,878 43,473 Payments during the year (46,034) (43,219) (46,034) (43,219) Balance as at 31st March 16,708 7,864 16,708 7,864

COMPANY

COMPANYGROUP



GROUP

GROUP

GROUP

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

The amount charged to Statement of Profit or Loss and Other Comprehensive Income in respect of retirement benefit obligation is made up as follows;

COMPANY

COMPANY

COMPANY

GROUP COMPANY

GROUP


27 TRADE AND OTHER PAYABLES2016 2015 2016 2015

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

Trade Creditors 10,948 5,297 10,948 5,297Other Payables 18,769 19,261 18,541 19,114

29,717 24,558 29,489 24,411

28 AMOUNT DUE TO RELATED PARTY2016 2015 2016 2015

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

Wijeya Newspapers Limited - 2,731 - 2,731- 2,731 - 2,731

29 LOANS FROM RELATED PARTYBalance as at 1st April - - 12,021 13,521Loans obtained during the year - - 5,000 -Payments during the year - - (1,610) (1,500)Balance as at 31st March - - 15,411 12,021

Transferred to Current Liabilities (Payable within one year) 1,872 1,488Loan Payable after one year 13,539 10,533

29.1 L H Plantations (Private) Limited - LoanBalance as at 1st April - - 15,002 11,598Fair Value difference of Related Party loan - - 409 423Balance as at 31st March - - 15,411 12,021

30 EVENTS OCCURRING AFTER THE REPORTING DATE

31 CAPITAL COMMITMENTS

32 CONTINGENT LIABILITIES

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

33 COMPARATIVE INFORMATION

Comparative information has been reclassified where necessary to conform to current year presentation.

-43-


GROUP COMPANY

The Board of Directors has recommended a payment of Rs.1.00 Per share for the year 2015/2016. No circumstances other than disclosed above have arisen since the reporting date which would require adjustments to or disclosure in theFinancial Statements.


Capital Commitments to the value of LKR 11Mn is estimated on an ongoing Construction Project within the Property.There are no Capital Commitments other than stated above as at the reporting date.

GROUP COMPANY

44



34 RELATED PARTY DISCLOSURES

(a) Transactions with Related Companies

Name of the Company Relationship Name of Director

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

L.H. Plantations (Pvt) Subsidiary Mr. R. S Wijewardene Loan Interest 794 899 Ltd Mr. P. S Wijewardene Hire of vehicle & Salary 343 349

Settlement of Current Account (1,080) (1,173)Loan obtained 5,000 -Loans Repayments (1,610) (1,500)Current Account Balance - - 15,347 11,900

Stamford Lake (Pvt) Associate Mr. R.S Wijewardene Sales of Atlases 5,038 4,294Ltd Settlement of Current Account (5,227) (4,157)

Current Account Balance - - 933 1,122

Wijeya Newspapers Affiliate Mr.R.S Wijewardene Security Charges 46,702 48,200Ltd Mr. P. S Wijewardene Printing and Other Services 5,289 879

Mr. R. C. Samarasinghe Rent on Bulding 4,216 3,514Settlement of Current Account (56,151) (49,353)Printing Charges for Atlas - (2,731)Current Account Balance - - 5,740 5,684

Sarathi Ltd Affiliate Mr.R.S Wijewardene Security Charges 1,094 903Mr. D.R Wijewardene Sales of Atlas 283 224

Settlement of Current Account (1,395) (1,121)Current Account Balance - - 127 145

R.S.Printek (Pvt) Ltd Affiliate Mr.R.S Wijewardene Security Charges 3,895 3,358Mr.D.R.Wijewardene Internal Auditors' Fees 114 114Mr.Ranjit Hulugalle Settlement of Current Account (3,848) (3,495)

Current Account Balance - - 1,250 1,089

Ranweli Holiday Village Affiliate Mr.R.S Wijewardene Printing Charges 10 45 Ltd Mr. P. S Wijewardene Settlement of Current Account (46) (44)

Current Account Balance - - - 36

Lake House Bookshop Affiliate Mr.R.S Wijewardene Sales of Atlas 1,211 1,691(Pvt) Ltd Printing Charges - 29


Wijeya Graphics Affiliate Mr.R.S Wijewardene Printing Charges 209 112 (Private) Limited Settlement of Current Account (107) (158)

Current Account Balance - - 102 -

Amount Receivable from and/or due to related entities as at 31st March 2016 are disclosed in Notes 18 and 28 to the Financial Statements.

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

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Short Term Employment Benefits 5,189 4,856 4,749 4,4365,189 4,856 4,749 4,436


Amount Balance as at 31st

March


GROUP COMPANY

Nature of the Transaction


35 FINANCIAL RISK MANAGEMENT

Overview


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

▪ 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 measuringand managing risks, and the Group’s management of capital.

▪ Credit risk ▪ Liquidity risk ▪ Market risk

(i) Credit Risk

Exposure to Credit Risk

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 monitorrisks and 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.



2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Trade and Other Receivables 50,271 44,446 48,553 42,437Amount due from Related Parties 8,639 9,257 8,275 8,825

Carrying Amount

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 COMPANY

Amount due from Related Parties 8,639 9,257 8,275 8,825Loans given to Related Party 1,500 3,500 - - Balances with Banks 62,621 18,823 2,705 10,193

123,031 76,026 59,533 61,456

Impairment Losses

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

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of Trade and Other Receivables. Themain components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component

GroupGross Balance

Rs.'000 Impairment

Rs.'000Gross Balance

Rs.'000 Impairment

Rs.'000

Past due 0-90 days 53,787 3,515 45,986 1,540

2016 2015

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

main components 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 isdetermined based on historical data of payment statistics for similar financial assets.

Past due 0 90 days 53,787 3,515 45,986 1,540 Past due 91-365 days 3,179 3,179 3,999 3,999 More than one year 2,336 2,337 5,136 5,136

59,302 9,031 55,121 10,675

Company

Gross BalanceRs.'000

ImpairmentRs.'000


ImpairmentRs.'000

Past due 0-90 days 52,069 3,515 43,977 1,540 Past due 91-365 days 3,179 3,179 3,999 3,999

2016 2015

y , ,More than one year 2,336 2,337 5,136 5,136

57,584 9,031 53,112 10,675

Balance with Banks


The Group held balance with banks of Rs. 62,836,284/- at 31st March 2016 ( Rs. 29,016,097/- as at 31st March 2015) which represent its maximumcredit exposure on these assets.

45



34 RELATED PARTY DISCLOSURES

(a) Transactions with Related Companies

Name of the Company Relationship Name of Director

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

L.H. Plantations (Pvt) Subsidiary Mr. R. S Wijewardene Loan Interest 794 899 Ltd Mr. P. S Wijewardene Hire of vehicle & Salary 343 349

Settlement of Current Account (1,080) (1,173)Loan obtained 5,000 -Loans Repayments (1,610) (1,500)Current Account Balance - - 15,347 11,900

Stamford Lake (Pvt) Associate Mr. R.S Wijewardene Sales of Atlases 5,038 4,294Ltd Settlement of Current Account (5,227) (4,157)

Current Account Balance - - 933 1,122

Wijeya Newspapers Affiliate Mr.R.S Wijewardene Security Charges 46,702 48,200Ltd Mr. P. S Wijewardene Printing and Other Services 5,289 879

Mr. R. C. Samarasinghe Rent on Bulding 4,216 3,514Settlement of Current Account (56,151) (49,353)Printing Charges for Atlas - (2,731)Current Account Balance - - 5,740 5,684

Sarathi Ltd Affiliate Mr.R.S Wijewardene Security Charges 1,094 903Mr. D.R Wijewardene Sales of Atlas 283 224


R.S.Printek (Pvt) Ltd Affiliate Mr.R.S Wijewardene Security Charges 3,895 3,358Mr.D.R.Wijewardene Internal Auditors' Fees 114 114Mr.Ranjit Hulugalle Settlement of Current Account (3,848) (3,495)

Current Account Balance - - 1,250 1,089

Ranweli Holiday Village Affiliate Mr.R.S Wijewardene Printing Charges 10 45 Ltd Mr. P. S Wijewardene Settlement of Current Account (46) (44)

Current Account Balance - - - 36

Lake House Bookshop Affiliate Mr.R.S Wijewardene Sales of Atlas 1,211 1,691(Pvt) Ltd Printing Charges - 29


Wijeya Graphics Affiliate Mr.R.S Wijewardene Printing Charges 209 112 (Private) Limited Settlement of Current Account (107) (158)

Current Account Balance - - 102 -

Amount Receivable from and/or due to related entities as at 31st March 2016 are disclosed in Notes 18 and 28 to the Financial Statements.

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

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Short Term Employment Benefits 5,189 4,856 4,749 4,4365,189 4,856 4,749 4,436


Amount Balance as at 31st

March


GROUP COMPANY

Nature of the Transaction


35 FINANCIAL RISK MANAGEMENT

Overview


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

▪ Operational risk


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

▪ Credit risk ▪ Liquidity risk ▪ Market risk

(i) Credit Risk


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 monitorrisks and 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.



2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Trade and Other Receivables 50,271 44,446 48,553 42,437Amount due from Related Parties 8,639 9,257 8,275 8,825

Carrying Amount

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 COMPANY

Amount due from Related Parties 8,639 9,257 8,275 8,825Loans given to Related Party 1,500 3,500 - - Balances with Banks 62,621 18,823 2,705 10,193

123,031 76,026 59,533 61,456

Impairment Losses

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

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of Trade and Other Receivables. Themain components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component

GroupGross Balance

Rs.'000 Impairment

Rs.'000Gross Balance

Rs.'000 Impairment

Rs.'000

Past due 0-90 days 53,787 3,515 45,986 1,540

2016 2015

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

main components 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 isdetermined based on historical data of payment statistics for similar financial assets.

Past due 0 90 days 53,787 3,515 45,986 1,540 Past due 91-365 days 3,179 3,179 3,999 3,999 More than one year 2,336 2,337 5,136 5,136

59,302 9,031 55,121 10,675

Company


ImpairmentRs.'000


ImpairmentRs.'000

Past due 0-90 days 52,069 3,515 43,977 1,540 Past due 91-365 days 3,179 3,179 3,999 3,999

2016 2015

y , ,More than one year 2,336 2,337 5,136 5,136

57,584 9,031 53,112 10,675

Balance with Banks


The Group held balance with banks of Rs. 62,836,284/- at 31st March 2016 ( Rs. 29,016,097/- as at 31st March 2015) which represent its maximumcredit exposure on these assets.

46


35 FINANCIAL RISK MANAGEMENT (CONTINUED)(ii) Liquidity Risk

The Company maintains the following lines of credit,

Carrying 0-12 More than Carrying 0-12 More thanAs at 31st March 2016 Amount Months 1 year Amount Months 1 year

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

As at 31st March 2015 Carrying 0-12 More than Carrying 0-12 More thanAmount Months 1 year Amount Months 1 year

Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000Financial Liabilities (Non- Derivative)Interest Bearing Borrowings from Related Company - - - 12,021 1,488 10,533Amounts Due to Related Company 2,731 2,731 - 2,731 2,731 - Trade and Other Payables 24,558 24,558 - 24,411 24,411 - Bank Overdraft 4,217 4,217 - 4,217 4,217 - Total 31,506 31,506 - 43,380 32,848 10,533

(iii) Market Risk

(a) Currency Risk

(a) Interest Rate Risk

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Fixed Rate InstrumentsFinancial Liabilities Interest Bearing Borrowings from Related Company - - 15,411 12,021 Interest Bearing Borrowings 713 15,334 713 15,334

713 15,334 16,124 27,355

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

Bank Overdrafts (12,353) (4,217) (12,353) (4,217)6,299 (4,217) 6,299 (4,217)

Fair value sensitivity analysis for fixed rate instruments

31st March 2016100 bp

IncreaseRs.000

100 bp DecreaseRs.000

Variable Rate Instruments (310) 310Cash Flow Sensitivity (Net) (310) 310

-46-


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 to meetits 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.123,531/-

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


Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income or the value of its holdings offinancial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizingthe 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 15.411 Mn Loan from Subsidiay Company (LH Plantations (Private) Limited that is unsecured and Interest would be payable at 8.75% p.a.

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


35 FINANCIAL RISK MANAGEMENT (CONTINUED)(iv) Capital management

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Total Liabilities 72,904 59,628 88,020 71,502Less: Cash and Cash Equivalents 62,836 29,016 2,920 10,487Net Debt 10,068 30,612 85,100 61,015Total Equity 314,998 295,118 224,579 207,447Net Debt to Equity Ratio 3% 10% 38% 29%

(v) Operational risk

(vi) Fair values

Fair values versus the Carrying amounts

CarryingAmountRs.'000

Fair Value

Rs.'000


Fair Value

Rs.'000

Assets carried at fair valueAvailable for Sale Investment 9,050 9,050 9,050 9,050

Assets carried at amortized costLoans and Receivables 60,661 60,661 56,828 56,828Cash and Cash Equivalents 62,836 62,836 2,920 2,920

Liabilities carried at amortized costTrade and Other Payables 29,717 29,717 29,489 29,489Loans from Related Party - - 15,411 15,411Interest Bearing Borrowings 19,365 19,365 19,365 19,365Bank Overdraft 12,353 12,353 12,353 12,353

Fair values

Sensitivity AnalysisSensitivity Analysis - Quoted Investments Rs.'000 Rs.'000 Rs.'000 Rs.'000

-1% +1% -1% +1%

Quoted Investments 92 94 92 94Total 92 94 92 94

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes, personnel,

technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and

regulatory requirements and generally accepted standards of corporate behavior. Operational risks arise from all of the Group’s operations.

The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management. Thisresponsibility is supported by the development of overall Group standards for the management of operational risk.Compliance with Group standards is supported by a programme of periodic reviews undertaken by Internal Audit. The results of Internal Auditreviews are discussed with the Management and summaries submitted to the senior management of the Group.



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 the Group's riskcapacity. Accordingly, the borrowings are kept at a minimum level and major part of the borrowings comprise short term fixed interest rate loansfrom the Subsidiary company and Bank Overdrafts with variable inteterst rates being used only to manage the working capital requirements of dayto day operations of the Group.

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

GROUP COMPANY

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

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

31st March 2016 31st March 2016COMPANYGROUP

47


35 FINANCIAL RISK MANAGEMENT (CONTINUED)(ii) Liquidity Risk

The Company maintains the following lines of credit,

Carrying 0-12 More than Carrying 0-12 More thanAs at 31st March 2016 Amount Months 1 year Amount Months 1 year

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

As at 31st March 2015 Carrying 0-12 More than Carrying 0-12 More thanAmount Months 1 year Amount Months 1 year

Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000Financial Liabilities (Non- Derivative)Interest Bearing Borrowings from Related Company - - - 12,021 1,488 10,533Amounts Due to Related Company 2,731 2,731 - 2,731 2,731 - Trade and Other Payables 24,558 24,558 - 24,411 24,411 - Bank Overdraft 4,217 4,217 - 4,217 4,217 - Total 31,506 31,506 - 43,380 32,848 10,533

(iii) Market Risk

(a) Currency Risk

(a) Interest Rate Risk

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Fixed Rate InstrumentsFinancial Liabilities Interest Bearing Borrowings from Related Company - - 15,411 12,021 Interest Bearing Borrowings 713 15,334 713 15,334

713 15,334 16,124 27,355

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

Bank Overdrafts (12,353) (4,217) (12,353) (4,217)6,299 (4,217) 6,299 (4,217)

Fair value sensitivity analysis for fixed rate instruments

31st March 2016100 bp

IncreaseRs.000

100 bp DecreaseRs.000

Variable Rate Instruments (310) 310Cash Flow Sensitivity (Net) (310) 310

-46-


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 to meetits 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.123,531/-

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


COMPANY


Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income or the value of its holdings offinancial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizingthe 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 15.411 Mn Loan from Subsidiay Company (LH Plantations (Private) Limited that is unsecured and Interest would be payable at 8.75% p.a.

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


35 FINANCIAL RISK MANAGEMENT (CONTINUED)(iv) Capital management

2016 2015 2016 2015Rs.'000 Rs.'000 Rs.'000 Rs.'000

Total Liabilities 72,904 59,628 88,020 71,502Less: Cash and Cash Equivalents 62,836 29,016 2,920 10,487Net Debt 10,068 30,612 85,100 61,015Total Equity 314,998 295,118 224,579 207,447Net Debt to Equity Ratio 3% 10% 38% 29%

(v) Operational risk

(vi) Fair values

Fair values versus the Carrying amounts


Fair Value

Rs.'000


Fair Value

Rs.'000

Assets carried at fair valueAvailable for Sale Investment 9,050 9,050 9,050 9,050

Assets carried at amortized costLoans and Receivables 60,661 60,661 56,828 56,828Cash and Cash Equivalents 62,836 62,836 2,920 2,920

Liabilities carried at amortized costTrade and Other Payables 29,717 29,717 29,489 29,489Loans from Related Party - - 15,411 15,411Interest Bearing Borrowings 19,365 19,365 19,365 19,365Bank Overdraft 12,353 12,353 12,353 12,353

Fair values

Sensitivity AnalysisSensitivity Analysis - Quoted Investments Rs.'000 Rs.'000 Rs.'000 Rs.'000

-1% +1% -1% +1%

Quoted Investments 92 94 92 94Total 92 94 92 94

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes, personnel,technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal andregulatory requirements and generally accepted standards of corporate behavior. Operational risks arise from all of the Group’s operations.

The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management. Thisresponsibility is supported by the development of overall Group standards for the management of operational risk.

Compliance with Group standards is supported by a programme of periodic reviews undertaken by Internal Audit. The results of Internal Auditreviews are discussed with the Management and summaries submitted to the senior management of the Group.



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 the Group's riskcapacity. Accordingly, the borrowings are kept at a minimum level and major part of the borrowings comprise short term fixed interest rate loansfrom the Subsidiary company and Bank Overdrafts with variable inteterst rates being used only to manage the working capital requirements of dayto day operations of the Group.

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

GROUP COMPANY

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

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

31st March 2016 31st March 2016COMPANYGROUP

48


35 FINANCIAL RISK MANAGEMENT (CONTINUED)

(vi) Fair values (Continued)

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

Financial Instruments Carried at Fair Value and Valuation Bases

GroupLevel I Level II Level III Total

As at 31st March 2016 Rs. Rs. Rs. Rs.Rs.'000 Rs.'000 Rs.'000 Rs.'000

Quoted Investments 93 - - 9393 - - 93

CompanyLevel I Level II Level III Total

As at 31st March 2016 Rs. Rs. Rs. Rs.Rs.'000 Rs.'000 Rs.'000 Rs.'000

Quoted Investments 93 - - 9393 - - 93


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

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 directly orindirectly 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, credit spreadsand other premia used in estimating discount rates. The objective of the valuation technique is to arrive at a fair value determination thatreflect the price of the financial instrument at the reporting date, that would have determined by the market participants acting at the armslength.

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.

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:



36 SEGMENTAL REPORTING

2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015Rs.'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 245,929 253,121 125,188 111,290 7,065 6,238 1,858 2,491 290 290 380,329 373,429Inter Segment Sales - - - - - - - - - - - -Gross Revenue 245,929 253,121 125,188 111,290 7,065 6,238 1,858 2,491 290 290 380,329 373,429Revenue Based Taxes (28,534) (30,867) (14,659) (13,448) - - (215) (281) - - (43,407) (44,596)Net Segment Revenue 217,396 222,253 110,530 97,841 7,065 6,238 1,642 2,210 290 290 336,922 328,832

Total Revenue - - - - - - - - - - 336,922 328,832Segment Operating Profit - - - - - - - - - - 107,720 111,447Other Operating Income - - - - - - - - 6,739 5,779 35,579 17,551Operating Profit - - - - - - - - - - 26,852 30,250Net Finance Cost - - - - - - - - - - 3,587 1,734

- - - - - - - - - 769 206Profit before Tax - - - - - - - - - - 31,208 32,190Income Tax Expense - - - - - - - - - - (7,833) (11,934)Profit for the year - - - - - - - - - - 23,375 20,256Other comprehensive Income - - - - - - - - - - 30 (342)Profit for the year - - - - - - - - - - 23,405 19,914

AssetsSegment Assets 102,387 77,646 29,486 34,512 3,114 4,121 39,108 22,800 68,209 58,276 242,303 197,355

Investment Property - - - - - - - - - - 130,000 121,700Investment in Associates - - - - - - - - - - 15,599 14,829Deferred Taxation - - - - - - - - - - - 138Other Investments - - - - - - - - - 11,407 - 20,723Total Assets 102,387 77,646 29,486 34,512 3,114 4,121 39,108 22,800 68,209 69,683 387,902 354,746LiabilitiesSegment Liabilities 4,196 3,615 11,023 8,973 - - 37,115 31,253 290 268 52,624 44,109Deferred Taxation - - - - - - - - - 67 932 - Interest bearing Borrowings 19,348 15,093 - 427 - - - - - - 19,348 15,520Total Liabilities 23,544 18,708 11,023 9,400 - - 37,115 31,253 290 335 72,904 59,629

Capital Expenditure 8,275 1,024 1,913 - - - 11,533 1,569 5,561 21,721 8,153Depreciation 6,749 6,834 1,485 1,562 - - 2,594 1,715 1,391 350 12,219 10,461



GROUPATLAS OTHER SECURITY CARD DIVISION

SECURITY PRINTING DIVISION LH PLANTATIONS

Share of Associate Company's Net Profit

49


36 SEGMENTAL REPORTING

2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015Rs.'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 245,929 253,121 125,188 111,290 7,065 6,238 1,858 2,491 290 290 380,329 373,429Inter Segment Sales - - - - - - - - - - - -Gross Revenue 245,929 253,121 125,188 111,290 7,065 6,238 1,858 2,491 290 290 380,329 373,429Revenue Based Taxes (28,534) (30,867) (14,659) (13,448) - - (215) (281) - - (43,407) (44,596)Net Segment Revenue 217,396 222,253 110,530 97,841 7,065 6,238 1,642 2,210 290 290 336,922 328,832

Total Revenue - - - - - - - - - - 336,922 328,832Segment Operating Profit - - - - - - - - - - 107,720 111,447Other Operating Income - - - - - - - - 6,739 5,779 35,579 17,551Operating Profit - - - - - - - - - - 26,852 30,250Net Finance Cost - - - - - - - - - - 3,587 1,734

- - - - - - - - - 769 206Profit before Tax - - - - - - - - - - 31,208 32,190Income Tax Expense - - - - - - - - - - (7,833) (11,934)Profit for the year - - - - - - - - - - 23,375 20,256Other comprehensive Income - - - - - - - - - - 30 (342)Profit for the year - - - - - - - - - - 23,405 19,914

AssetsSegment Assets 102,387 77,646 29,486 34,512 3,114 4,121 39,108 22,800 68,209 58,276 242,303 197,355

Investment Property - - - - - - - - - - 130,000 121,700Investment in Associates - - - - - - - - - - 15,599 14,829Deferred Taxation - - - - - - - - - - - 138Other Investments - - - - - - - - - 11,407 - 20,723Total Assets 102,387 77,646 29,486 34,512 3,114 4,121 39,108 22,800 68,209 69,683 387,902 354,746LiabilitiesSegment Liabilities 4,196 3,615 11,023 8,973 - - 37,115 31,253 290 268 52,624 44,109Deferred Taxation - - - - - - - - - 67 932 - Interest bearing Borrowings 19,348 15,093 - 427 - - - - - - 19,348 15,520Total Liabilities 23,544 18,708 11,023 9,400 - - 37,115 31,253 290 335 72,904 59,629

Capital Expenditure 8,275 1,024 1,913 - - - 11,533 1,569 5,561 21,721 8,153Depreciation 6,749 6,834 1,485 1,562 - - 2,594 1,715 1,391 350 12,219 10,461



GROUPATLAS OTHER SECURITY CARD DIVISION

SECURITY PRINTING DIVISION LH PLANTATIONS

Share of Associate Company's Net Profit

50

STATISTICAL INFORMATION (CONTINUED)

Rs.Mn % Rs.Mn % Rs.Mn % Rs.Mn % Rs.Mn %CAPITAL & RESERVESStated Capital 35.30 14.80 35.30 16.00 35.30 17.60 35.30 19.04 35.30 46.10 Capital Reserves 6.20 2.60 6.20 2.80 6.20 3.10 6.20 3.34 6.20 8.10 Other Reserves 105.60 44.30 105.60 47.90 105.60 52.60 105.60 56.96 5.10 - Retained Earnings 77.50 32.60 60.30 27.30 46.00 22.90 30.40 16.40 24.40 34.30Shareholders’ Funds 224.60 94.30 207.40 94.00 193.10 96.20 177.50 95.74 71.00 88.50 LONG TERM LOANS 13.50 5.70 13.10 6.00 7.50 3.80 7.90 4.26 8.80 11.50

238.10 100.00 220.50 100.00 200.60 100.00 185.40 100.00 79.80 100.00REPRESENTED BYProperty, Plant and Equipment 188.00 79.00 168.90 76.60 176.40 87.90 171.50 92.50 52.20 68.20 Investments 16.90 7.10 16.90 7.60 17.00 8.50 16.90 9.12 16.60 15.30 NON- CURRENT ASSETS 204.90 86.10 185.80 84.20 193.40 96.40 188.40 101.62 68.80 83.50

Current assets 107.60 45.20 93.00 42.20 63.30 31.50 90.20 48.65 98.00 130.70 Liabilities (73.50) (30.90) (58.40) (26.50) (56.60) (28.50) (94.40) (50.92) (85.50) (112.20)Deferred Tax (0.90) (0.40) 0.10 0.10 0.50 0.60 1.20 0.65 (1.50) (2.00) Net Assets 33.20 13.90 34.70 15.80 7.20 3.60 (3.00) (1.62) 11.00 16.50

238.10 100.00 220.50 100.00 200.60 100.00 185.40 100.00 79.80 100.00

TURNOVER 380.00 100.00 373.14 100.00 350.00 100.00 326.70 100.00 307.20 100.00 Bought out materials and services 228.70 60.18 219.58 58.85 202.00 57.70 185.20 56.80 174.30 57.40 Salaries and Wages 67.13 17.66 67.34 18.05 65.40 18.70 69.70 21.30 63.70 20.70 Depreciation 10.80 2.84 10.11 2.71 9.70 2.80 12.60 3.80 10.40 3.40 Loan Interest 2.90 0.76 3.56 0.95 6.20 1.80 10.30 3.20 7.40 2.40 Government Tax 49.82 13.11 55.80 14.95 49.20 14.00 40.00 12.20 38.50 11.90 Dividends 2.90 - 3.05 - 2.00 - 2.60 0.80 - - Profit/ (Loss) for the Year 20.65 5.45 16.75 4.49 17.60 5.00 8.90 2.70 17.30 4.20

Profit/ (Loss) Before Tax (Rs.Mn) 27.00 - 28.00 - 24.60 - 6.96 13.15

ACCOUNTING RATIOS

Current assets 1.68 1.89 1.30 1.05 1.26 Quick Assets 0.93 1.25 0.80 0.44 0.64 Gearing (Equity) 6.03% 6.34% 3.85% 4.45% 12.39%Gearing (Loans & Equity) 5.68% 5.96% 3.74% 4.26% 11.02%

-51-



PERFORMANCE SUMMARY FOR THE YEARS 2006/2007 - 2015/2016

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

2015/2016 2014/2015 2013/2014 2012/2013 2011/2012

2011/2012

Rs

51


Rs.Mn % Rs.Mn % Rs.Mn % Rs.Mn % Rs.Mn %CAPITAL & RESERVESStated Capital 35.30 14.80 35.30 16.00 35.30 17.60 35.30 19.04 35.30 46.10 Capital Reserves 6.20 2.60 6.20 2.80 6.20 3.10 6.20 3.34 6.20 8.10 Other Reserves 105.60 44.30 105.60 47.90 105.60 52.60 105.60 56.96 5.10 - Retained Earnings 77.50 32.60 60.30 27.30 46.00 22.90 30.40 16.40 24.40 34.30Shareholders’ Funds 224.60 94.30 207.40 94.00 193.10 96.20 177.50 95.74 71.00 88.50 LONG TERM LOANS 13.50 5.70 13.10 6.00 7.50 3.80 7.90 4.26 8.80 11.50

238.10 100.00 220.50 100.00 200.60 100.00 185.40 100.00 79.80 100.00REPRESENTED BYProperty, Plant and Equipment 188.00 79.00 168.90 76.60 176.40 87.90 171.50 92.50 52.20 68.20 Investments 16.90 7.10 16.90 7.60 17.00 8.50 16.90 9.12 16.60 15.30 NON- CURRENT ASSETS 204.90 86.10 185.80 84.20 193.40 96.40 188.40 101.62 68.80 83.50

Current assets 107.60 45.20 93.00 42.20 63.30 31.50 90.20 48.65 98.00 130.70 Liabilities (73.50) (30.90) (58.40) (26.50) (56.60) (28.50) (94.40) (50.92) (85.50) (112.20)Deferred Tax (0.90) (0.40) 0.10 0.10 0.50 0.60 1.20 0.65 (1.50) (2.00) Net Assets 33.20 13.90 34.70 15.80 7.20 3.60 (3.00) (1.62) 11.00 16.50

238.10 100.00 220.50 100.00 200.60 100.00 185.40 100.00 79.80 100.00

TURNOVER 380.00 100.00 373.14 100.00 350.00 100.00 326.70 100.00 307.20 100.00 Bought out materials and services 228.70 60.18 219.58 58.85 202.00 57.70 185.20 56.80 174.30 57.40 Salaries and Wages 67.13 17.66 67.34 18.05 65.40 18.70 69.70 21.30 63.70 20.70 Depreciation 10.80 2.84 10.11 2.71 9.70 2.80 12.60 3.80 10.40 3.40 Loan Interest 2.90 0.76 3.56 0.95 6.20 1.80 10.30 3.20 7.40 2.40 Government Tax 49.82 13.11 55.80 14.95 49.20 14.00 40.00 12.20 38.50 11.90 Dividends 2.90 - 3.05 - 2.00 - 2.60 0.80 - - Profit/ (Loss) for the Year 20.65 5.45 16.75 4.49 17.60 5.00 8.90 2.70 17.30 4.20

Profit/ (Loss) Before Tax (Rs.Mn) 27.00 - 28.00 - 24.60 - 6.96 13.15

ACCOUNTING RATIOS

Current assets 1.68 1.89 1.30 1.05 1.26 Quick Assets 0.93 1.25 0.80 0.44 0.64 Gearing (Equity) 6.03% 6.34% 3.85% 4.45% 12.39%Gearing (Loans & Equity) 5.68% 5.96% 3.74% 4.26% 11.02%

-51-




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

2015/2016 2014/2015 2013/2014 2012/2013 2011/2012

2011/2012

Rs

52


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

35.30 57.00 35.30 51.60 35.30 30.70 35.30 30.70 35.30 25.20 Stated Capital 6.20 10.00 6.20 9.00 6.20 5.40 6.20 4.70 6.20 4.00 Capital Reserves0.50 - - - - - - - - - Other Reserves

11.70 21.50 14.10 20.60 19.40 16.90 27.80 20.00 30.70 21.00 Retained Earnings 53.70 88.50 55.60 81.20 60.90 53.00 69.30 55.40 72.20 50.20 Shareholders’ Funds

7.10 11.50 12.90 18.80 53.60 47.00 70.40 50.40 76.90 51.30 LONG TERM LOANS60.80 100.00 68.50 100.00 114.50 100.00 139.70 105.80 149.10 100.00

REPRESENTED BY45.30 73.20 51.10 74.70 94.00 82.10 109.50 75.20 110.50 73.80 Property, Plant and Equipment11.30 17.30 10.70 15.60 10.70 9.30 11.70 8.00 11.50 7.70 Investments56.60 90.50 61.80 90.30 104.70 91.40 121.20 83.20 122.00 81.50 NON- CURRENT ASSETS

101.70 167.20 126.50 184.60 153.80 134.30 155.50 113.40 120.00 80.50 Current assets(94.70) (153.10) (115.70) (168.90) (132.10) (115.30) (128.10) 93.80 (88.20) 59.00 Liabilities

(2.80) (2.60) (4.10) (6.00) (11.90) (10.40) (8.90) 6.30 (4.70) 3.00 Deferred Tax4.20 9.50 6.70 9.70 9.80 8.60 18.50 213.50 27.10 142.50 Net Assets

60.80 100.00 68.50 100.00 114.50 100.00 139.70 296.70 149.10 224.00

286.00 100.00 310.50 100.00 425.10 100.00 330.90 100.00 297.00 100.00 TURNOVER173.40 60.60 183.80 59.30 284.10 66.80 197.70 57.70 165.80 54.60 Bought out materials and services

54.50 19.00 61.00 19.60 59.50 14.00 54.90 16.60 51.70 17.30 Salaries and Wages12.70 4.40 16.70 5.30 20.50 4.80 20.40 6.10 11.90 3.80 Depreciation11.10 3.90 23.60 7.60 27.70 6.50 23.50 7.10 13.20 4.50 Loan Interest35.10 12.40 30.70 9.90 41.70 9.80 37.30 11.30 42.60 14.10 Government Tax

- - - - - - - - 1.50 0.50 Dividends(0.80) (0.40) (5.30) (1.70) (8.40) (1.90) (2.90) 1.20 12.70 5.20 Profit/ (Loss) for the Year

(0.06) (5.90) (5.10) 1.00 17.00 Profit/ (Loss) Before Tax (Rs.Mn)

ACCOUNTING RATIOS

1.19 1.21 1.30 1.13 1.74 Current assets0.58 0.60 0.75 0.62 1 Quick Assets

13.00% 23.20% 88.00% 101% 106.00% Gearing (Equity)11.00% 18.80% 47.00% 50% 51.00% Gearing (Loans & Equity)




2010/2011 2009/2010 2008/2009

2007/2008 2006/2007

2007/2008 2006/2007

2010/2011 2009/2010 2008/2009


COMPANY2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Earnings/(Loss) per Share (Rs.) (0.28) 5.90 3.03 6.04 5.74 7.03Dividends per Share (Rs.) - 1.00 0.75 1.00 1.20 1.00Net Assets per Share (Rs.) 18.27 24.16 60.42 65.82 70.63 76.46Year on Year growth in Earnings per Share (%) 84.53 2,207.10 (48.48) 99.45 (4.96) 22.47Year on Year growth in Dividends per Share (%) - - (25.00) 33.33 20.00 ( - )Operating Return before Interest on Investments (%) 20.13 33.90 13.93 16.80 15.79 10.12Borrowing as a percentage of Total Assets (%) 66.12 57.60 36.60 24.94 25.63 28.15Interest Cover 0.99 2.65 1.68 4.70 8.88 10.17Price Earnings Ratio - 26.83 35.34 16.81 21.23 15.9Earnings Yield (%) - 3.72 2.83 5.95 4.17 6.29Dividend Payout Ratio (%) - 16.95 24.75 16.55 20.91 17.07

GROUP2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Earnings/(Loss) per Share (Rs.) (1.25) 7.27 5.22 7.51 6.90 7.96Net Assets per Share (Rs.) 42.03 49.30 87.74 100.47 100.47 107.24Year on Year growth in Earnings per Share (%) (184.46) 681.60 (28.20) 43.78 (8.48) 17.68Operating Return before Interest on Investments (%) 9.09 14.15 7.85 13.18 10.02 7.21Borrowing as a percentage of Total Assets (%) 44.48 37.23 25.32 15.48 16.78 18.76Interest Cover 1.08 6.74 5.53 6.61 12.82 16.05



53


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

35.30 57.00 35.30 51.60 35.30 30.70 35.30 30.70 35.30 25.20 Stated Capital 6.20 10.00 6.20 9.00 6.20 5.40 6.20 4.70 6.20 4.00 Capital Reserves0.50 - - - - - - - - - Other Reserves

11.70 21.50 14.10 20.60 19.40 16.90 27.80 20.00 30.70 21.00 Retained Earnings 53.70 88.50 55.60 81.20 60.90 53.00 69.30 55.40 72.20 50.20 Shareholders’ Funds

7.10 11.50 12.90 18.80 53.60 47.00 70.40 50.40 76.90 51.30 LONG TERM LOANS60.80 100.00 68.50 100.00 114.50 100.00 139.70 105.80 149.10 100.00

REPRESENTED BY45.30 73.20 51.10 74.70 94.00 82.10 109.50 75.20 110.50 73.80 Property, Plant and Equipment11.30 17.30 10.70 15.60 10.70 9.30 11.70 8.00 11.50 7.70 Investments56.60 90.50 61.80 90.30 104.70 91.40 121.20 83.20 122.00 81.50 NON- CURRENT ASSETS

101.70 167.20 126.50 184.60 153.80 134.30 155.50 113.40 120.00 80.50 Current assets(94.70) (153.10) (115.70) (168.90) (132.10) (115.30) (128.10) 93.80 (88.20) 59.00 Liabilities

(2.80) (2.60) (4.10) (6.00) (11.90) (10.40) (8.90) 6.30 (4.70) 3.00 Deferred Tax4.20 9.50 6.70 9.70 9.80 8.60 18.50 213.50 27.10 142.50 Net Assets

60.80 100.00 68.50 100.00 114.50 100.00 139.70 296.70 149.10 224.00

286.00 100.00 310.50 100.00 425.10 100.00 330.90 100.00 297.00 100.00 TURNOVER173.40 60.60 183.80 59.30 284.10 66.80 197.70 57.70 165.80 54.60 Bought out materials and services

54.50 19.00 61.00 19.60 59.50 14.00 54.90 16.60 51.70 17.30 Salaries and Wages12.70 4.40 16.70 5.30 20.50 4.80 20.40 6.10 11.90 3.80 Depreciation11.10 3.90 23.60 7.60 27.70 6.50 23.50 7.10 13.20 4.50 Loan Interest35.10 12.40 30.70 9.90 41.70 9.80 37.30 11.30 42.60 14.10 Government Tax

- - - - - - - - 1.50 0.50 Dividends(0.80) (0.40) (5.30) (1.70) (8.40) (1.90) (2.90) 1.20 12.70 5.20 Profit/ (Loss) for the Year

(0.06) (5.90) (5.10) 1.00 17.00 Profit/ (Loss) Before Tax (Rs.Mn)

ACCOUNTING RATIOS

1.19 1.21 1.30 1.13 1.74 Current assets0.58 0.60 0.75 0.62 1 Quick Assets

13.00% 23.20% 88.00% 101% 106.00% Gearing (Equity)11.00% 18.80% 47.00% 50% 51.00% Gearing (Loans & Equity)




2010/2011 2009/2010 2008/2009

2007/2008 2006/2007

2007/2008 2006/2007

2010/2011 2009/2010 2008/2009


COMPANY2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Earnings/(Loss) per Share (Rs.) (0.28) 5.90 3.03 6.04 5.74 7.03Dividends per Share (Rs.) - 1.00 0.75 1.00 1.20 1.00Net Assets per Share (Rs.) 18.27 24.16 60.42 65.82 70.63 76.46Year on Year growth in Earnings per Share (%) 84.53 2,207.10 (48.48) 99.45 (4.96) 22.47Year on Year growth in Dividends per Share (%) - - (25.00) 33.33 20.00 ( - )Operating Return before Interest on Investments (%) 20.13 33.90 13.93 16.80 15.79 10.12Borrowing as a percentage of Total Assets (%) 66.12 57.60 36.60 24.94 25.63 28.15Interest Cover 0.99 2.65 1.68 4.70 8.88 10.17Price Earnings Ratio - 26.83 35.34 16.81 21.23 15.9Earnings Yield (%) - 3.72 2.83 5.95 4.17 6.29Dividend Payout Ratio (%) - 16.95 24.75 16.55 20.91 17.07

GROUP2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Earnings/(Loss) per Share (Rs.) (1.25) 7.27 5.22 7.51 6.90 7.96Net Assets per Share (Rs.) 42.03 49.30 87.74 100.47 100.47 107.24Year on Year growth in Earnings per Share (%) (184.46) 681.60 (28.20) 43.78 (8.48) 17.68Operating Return before Interest on Investments (%) 9.09 14.15 7.85 13.18 10.02 7.21Borrowing as a percentage of Total Assets (%) 44.48 37.23 25.32 15.48 16.78 18.76Interest Cover 1.08 6.74 5.53 6.61 12.82 16.05



54


Share Structure as at 31st March 2016

No. Of Shareholders Range No. Of Shares Percentage461 1-1000 45800 1.5631 1001-5000 73707 2.517 5001-10000 50562 1.729 10001-20000 127743 4.352 20001-30000 58360 1.994 30001-40000 139211 4.741 40001-50000 48830 1.663 50001-100000 247635 8.433 100001-1000000 1126840 38.361 Over-1000000 1018557 34.68

522 2937245 100.00

Directors' Shareholdings

NAME OF THE DIRECTOR3/31/2016 3/31/2015

Mr.R.S. Wijewardene 1,018,557 1,018,557 Mr.P.S.Wijewardene 108,282 108,282 Mr.D.R.Wijewardene 856,837 856,837 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 1,018,557 34.68Mr.D.R.Wijewardene 856,837 29.17Mr.D.N.Wijewardane 161,721 5.51Mr.P.S.Wijewardene 108,282 3.67Mr.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 16,937 0.58Mrs.N.D.Hettiarachchi 15,099 0.52Miss.V.S.Wijewardene 14,038 0.48Mr.A.R.Wijewardene 11,722 0.41

2,735,340 93.13

Public Holding - Number of Shareholders 517 - No,of Shares 867,314 - As a Percentage 29.53Highest Price per share for the period (Rs) 144.00 Lowest Price per share for the period (Rs) 100.00 Market Value Per Share as at 31st March 2016 111.80


NO. OF SHARES


Major Shareholders

55


Share Structure as at 31st March 2016

No. Of Shareholders Range No. Of Shares Percentage461 1-1000 45800 1.5631 1001-5000 73707 2.517 5001-10000 50562 1.729 10001-20000 127743 4.352 20001-30000 58360 1.994 30001-40000 139211 4.741 40001-50000 48830 1.663 50001-100000 247635 8.433 100001-1000000 1126840 38.361 Over-1000000 1018557 34.68

522 2937245 100.00

Directors' Shareholdings

NAME OF THE DIRECTOR3/31/2016 3/31/2015

Mr.R.S. Wijewardene 1,018,557 1,018,557 Mr.P.S.Wijewardene 108,282 108,282 Mr.D.R.Wijewardene 856,837 856,837 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 1,018,557 34.68Mr.D.R.Wijewardene 856,837 29.17Mr.D.N.Wijewardane 161,721 5.51Mr.P.S.Wijewardene 108,282 3.67Mr.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 16,937 0.58Mrs.N.D.Hettiarachchi 15,099 0.52Miss.V.S.Wijewardene 14,038 0.48Mr.A.R.Wijewardene 11,722 0.41

2,735,340 93.13

Public Holding - Number of Shareholders 517 - No,of Shares 867,314 - As a Percentage 29.53Highest Price per share for the period (Rs) 144.00 Lowest Price per share for the period (Rs) 100.00 Market Value Per Share as at 31st March 2016 111.80


NO. OF SHARES


Major Shareholders


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 Mr.D.R.Wijewardene 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 27th September,2016 at 11.00 am at the Lanka Foundation Institute, (Lecture Hall – 08), No :- 100, Padanam Mawatha, Independent Square, 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 normallya 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.
