TO ALL SHAREHOLDERS OF LAKE HOUSE PRINTERS AND PUBLISHERS PLC.

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3 TO ALL SHAREHOLDERS OF LAKE HOUSE PRINTERS AND PUBLISHERS PLC. NOTICE OF MEETING Fifty Third Annual General Meeting Notice is hereby given that the Fifty Third Annual General Meeting of the Company will be held on 28 th September 2017 at am at the J.R. Jayawardane Center,Dharmapala MW, Colombo 07. All the shareholders of the Company are entitled to attend and vote at this meeting. Also, a shareholder is entitled to appoint a proxy to attend and vote instead of such shareholder, and that proxy need not be a shareholder. Agenda 1. To receive, consider and adopt the Directors Report and Audited Financial Statements for the year ended 31 st March 2017 with the Report of the Auditors thereon. 2. To declare a first and final dividend of Rs per share as recommended by the Directors. 3. To pass the under mentioned Resolutions, in terms of Section 211 of the Companies Act No.7 of 2007 of which special notice is hereby given to shareholders. Resolved that the age limit referred to in Section 210 of the Companies Act No.07 of 2007 shall not apply to Mr.Ranjit Sujiva Wijewardene who is 80 years and that he be re-elected a Director of the Company Resolved that the age limit referred to in Section 210 of the Companies Act No.07 of 2007 shall not apply to Dr.Nimal Ebenezer Herath Sanderatne who is 79 years and that he be re-elected a Director of the Company 4. To reappoint Auditors, for the year 2017/2018 and to authorize the Directors to determine their remuneration. 5. Any other matters BY ORDER OF THE BOARD D.P.A.N.Kumara Company Secretary 31 st August, 2017 Note: - Any member entitled to attend and vote is entitled to appoint a proxy in his stead. A form of proxy accompanies this notice. A proxy need not be a member. Instruments appointing proxies must be lodged with the Company at its Registered Office not less than 48 hours before the meeting. 1

4 CORPORATE INFORMATION Legal Status A Quoted Public Company Registered Number PQ 175 Board of Directors R.S.Wijewardene (Chairman) P.S.Wijewardene R.C.Samarasinghe R.P.Hulugalle Prof.L.R.Watawala(Independent) Dr.Nimal Sanderatne (Independent) Secretary D.P.A.N.Kumara Auditors KPMG Chartered Accountants Bankers Bank of Ceylon, Corporate Branch. Sampath Bank PLC, Headquarters Branch. NDB Bank PLC, Headquarters Branch Commercial Bank PLC, Dharmapala Mawatha Branch. Commercial Bank PLC, W.A.D.Ramanayake Mawatha Branch. DFCC Bank PLC, Head Office Branch. Registered Office No.41, W.A.D.Ramanayake Mw, Colombo 02. Fax E- Mail lhpp@sltnet.lk Telephones

5 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 He holds a Master s Degree from the University of Leicester, U.K. He counts over 16 years in the Company specially overseeing the Security Card Division activities (as distinct from Security Printing Division) of the Company. Mr.P.S.Wijewardene is also a Director of subsidiary company LH Plantations (Private) Limited, and closely related companies Ranweli Holiday Village Limited, and Freudenberg & Company Limited. He is also the deputy Chairman of Wijeya Newspapers Limited.Mr.P.S.Wijewardene is a Director of the Sri Lanka Press Institute. Mr.R.C.Samarasinghe Director Mr.Samarasinghe who became a Director of the Company in March 2005, is a Senior Chartered Accountant who prior to his present position, has held senior management positions at several well known and diverse companies. He was the Finance Director of Textured Jersey Lanka PLC, a group company of MAS Holdings (Private) Limited, General Manager, Finance and Administration of Mobitel (Private) Limited, Project Manager of Public Enterprise Reform Commission of Sri Lanka and Financial Controller of Electronic Data Systems (Private) Limited, Singapore.Mr. Samarasinghe is a Fellow member of the Institute of Chartered Accountants of Sri Lanka. Prof. Lakshman R.Watawala Director Prof.Lakshman R.Watawala is a Fellow of the Institute of Chartered Accountants of Sri Lanka, Fellow of the Institute of Certified Management Accountants of Sri Lanka and, a Fellow of the Chartered Institute of Management Accountants of U.K. He has held the position of Chairman and Managing Director of the Board of Investment of Sri Lanka twice. He has also served as the Chairman of People s Bank, People s Merchant Bank and other State Corporations. He has also functioned as an adviser in the Ministry of Finance. He is a Past President of the Institute of Chartered Accountants of Sri Lanka, South Asian Federation of Accountants and the Founder President of AAT Sri Lanka and also the Founder President of the Institute of Certified Management Accountants of Sri Lanka. He was formerly a Committee Member of the Ceylon Chamber of Commerce and serves on the Boards of a number of Public Quoted Companies. Mr.Ranjit Hulugalle Director Mr.Ranjit Hulugalle was appointed as a Non Executive Director of the Company w.e.f 1st June 2014.He holds a B.Sc (Econ) Hons Degree from the University of Bristol, UK. He is also an Associate Member of the Institute of Chartered Accountants of England & Wales. He has worked as the Manager, London,Deloitte Haskins and Sells, UK, Vice President -Finance & Operations Broughton Hall Inc, Santa Barbara, California, Country Manager Dilmah Tea in the UK and as the Head of Finance and Compliance, First Guardian Equities (Pvt) Ltd. Mr.Ranjit Hulugalle is also a Director of closely related company R. S Printek (Private) Limited. 3

6 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 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 31 st August, 2017 Colombo 4

7 THE CHAIRMAN S REVIEW The performance in the current financial year has been satisfactory reflecting an increase in the profit before tax by Rs 7.4Mn over the last financial year, with both divisions showing an increase in turnover and net margin. However, the current year s profit before tax of Rs 34.5Mn was after adjusting for a Rs 2.4Mn gain on the Fair Valuation of the Investment Property value. Hence, the Profit Before Tax prior to this adjustment was Rs 32.1Mn, which reflects an increase of operational profits by Rs 13.4Mn against the previous financial year. Intense competition prevented us from effectively passing on the impact of cost increases, which affected the margin of the main operating divisions. The recent government induced wage increase of Rs 2,500/- per employee also had a significant impact on our costs of production. On the positive side, despite an increase in the main Administration and Distribution Expenses the Company has achieved an increase of Rs 7.4M in the profit before tax. Despite additional borrowings having to be resorted to, to fund further extensions to our buildings, to add additional space for rental purposes and, increases in the interest rates during the current financial year the Company has managed to keep its Finance Costs down to only Rs 0.8M over the last financial year. This has mainly been possible through improved collections and tighter cash management. The financial year 2017/18 could probably be adversely affected if the rates of interest continue to rise. Steady inflows from rental income have contributed notably towards the bottom line and, in the improvement of overall liquidity. This is an area which in the last couple of years has provided the Company with an additional source of income to supplement its earnings from trading activities. Construction work on further office space which was in progress at the end of the last financial year was completed during the year and the completed buildings have been rented out. The overall operational performance of the Company at the Gross Margin level has shown an increase of Rs 29.9Mn which is a 28% increase over the previous financial year. While there was an increase of revenue in both operating divisions, the positive impact of an improved net margin has been hampered by cost increases. Making a significant impact on the performance has been the increases in the Administration Costs by Rs 6.3Mn and Distribution Expenses by Rs 15Mn. The major reason for the increase in Administration Costs was, as stated earlier, the government recommended increase of Rs.2,500/- p.m. in wages. The increase in the Distribution costs was mainly due to costs associated with securing additional business. This year as in the past, the major contributor to operational profitability has been the Security Printing Division increasing its revenue by Rs 39.5Mn (18%) with an increase in its net margin by Rs 2.7Mn, despite an increase in its distribution costs compared to the last financial year. The gross margin of the division has held steady despite increased expenses. This Division continues to be the backbone of the Company and its performance has always had a significant impact on the overall results of the Company as confirmed once again, by the results of the current financial year. Competition to our security printing business continues to present a strong challenge to our long maintained prominence in the market. We continue to explore related business opportunities to mitigate and counter the effect of such competition. The Security Cards Division was set up a few years ago for the manufacture and supply of security cards for the banking / telecom sector and, plastic cards for the corporate sector. It generated a Revenue of Rs Mn during the year, compared to Rs Mn in the last financial year, an improvement of 47%. The Division has made satisfactory progress in establishing itself as a key service supplier to the Banking sector in the financial year under review, recording a profit of Rs 6.5Mn compared to a profit of Rs. 2.9Mn in the last financial year. However due to intense competition from many other players in the market the gross margin percentage has dropped slightly compared to the last financial year. 5

8 THE CHAIRMAN S REVIEW (CONTINUED) Notable progress was also made in providing services to the banking sector during this year resulting in a substantial improvement in the Turnover. We are now offering our Banking clients more advanced card solutions evidenced by the improved performance in the financial year 2016/17. We have successfully penetrated further into the plastic card market sector further, establishing ourselves as one of the leaders in this sector. We have been deploying more resources into this sector as the current magstripe cards are being phased out in the market and will eventually be replaced by chip cards, which carry more features and are more secure than the magstripe cards. The Company has measured the Investment Property mainly on a fair value basis and re-valued the Investment Property during the current financial year. Based on a valuation submitted by a professional and independent valuer, we have incorporated a fair value adjustment of Rs 2.4Mn in our financial statements. An Investment Property value of Rs Mn is disclosed under Non Current Assets and a Revaluation Reserve of Rs Mn is disclosed under Capital & Reserves. A foot note in relation to the current value of the Company property as assessed by the aforementioned valuer, is given in note No. 11 in page no 34 in the Financial Report. Our decision to develop areas of property for rental has borne fruitful results. Expenses incurred in the relocation of the Security Printing Division and developing sections of the property for rental purposes have been fully justified in terms of the rental income that has constituted as a major source of income to support the two operating divisions. The volatility of the exchange and interest rates have had some bearing on our performance in the financial year 2016/2017 and, any further significant changes in these could have a further impact on our performance in the future. Countering competition in our key operating divisions to maintain and consolidate our market share in the future will continue to be the main thrust of our approach. The fully owned subsidiary LH Plantations (Pvt) Ltd has improved its performance over the previous year, posting an after tax profit of Rs.4.77 mn, an improvement of 101%. Its main source of income comes from the Investments made in Securities. Rates of interest on Investments picked up during the year and this has boosted the performance. With a Solid Assets Base of over Rs.87 mn and relatively insignificant Liabilities, it adds substantial value to the Group figures. The value of a Share of LH Plantations (Pvt) Ltd stands at Rs.44/=. The performance of Associate Company Stamford Lake (Pvt) Ltd has been lacklustre in the Financial Year under review and a Net Profit after Tax of Rs.0.3 mn, despite being an improvement over the NPBT of Rs mn in the Financial Year 2015/16, is disappointing. Basically, the financial structure of the Company continues to remain strong with an improved performance in the financial year 2016/17. This has been recognized and, the Directors have accordingly recommended a dividend of Rs.1.25 per Share for 2016/17. Finally, on behalf of the Company and the Board, I would like to place on record my appreciation to the Management and the Staff at all levels who have given of their best during the year under review R.S.Wijewardene Chairman 31 st August 2017 Colombo. 6

9 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 31 st March Board of Directors The Board meets approximately once a month and discusses matters that need their direction and guidance. The Directors also acknowledge that they are responsible for protecting the rights and interests of shareholders and their accountability towards them on behalf of the overall management of the Company. The Directors are responsible for the governance of the Company including the establishment and maintenance of Internal Control systems of the Company, setting out strategic aims and providing leadership. Internal Control systems are designed to meet the particular needs of the organization and the risks to which it is exposed to. Composition of the Board The names of the Directors of the Company who held office in the Company as at the date of the Annual Report are set out on page no 02, Of the seven members of the Board, four Members are Executives. There is one non Executive Director namely Mr. Ranjit Hulugalla.There are two Independent Non Executive Directors namely Prof. L.R Watawala and Dr. Nimal Sanderatne. Board Meeting The Board Meetings with Independent Directors are scheduled once in two months, to consider the performance and Financial Statements of the period and to approve routine Capital Expenditure, among other matters. Audit Committee and Remuneration Committee In compliance with the rules of Corporate Governance of the Colombo Stock Exchange, an Audit Committee and a Remuneration Committee are in place. The Audit Committee comprises of two Independent Directors Prof.L.R Watawala who acts as the Chairman of the Audit Committee and Dr.Nimal Sanderatne as a Member. The Remuneration Committee comprises of Dr.Nimal Sanderatne as the Chairman and, Prof L.R Watawala. The Audit Committee met four times whilst the Remuneration Committee did not meet during the year under review. Related Party Transactions Committee In compliance with the rules of Corporate Governance of the Colombo Stock Exchange, a Related Party Transactions Committee was set up during the financial year 2016/2017.Its Composition is as follows, Dr.Nimal Sanderatne - Chairman Prof.L.R.Watawala - Member R.P.Hulugalle - Member R.C.Samarasinghe - Member Relationship with Shareholders The shareholders have the opportunity of meeting the Board and forwarding their questions at the Annual General Meeting. However, this does not limit their communication with the Board and they are free to communicate with the Directors, Company Secretary or any of the Senior Managers depending on the matters that need to be addressed. 7

10 CORPORATE GOVERNANCE (CONTINUED) Internal Control The Board places a high priority on internal controls to manage the day-to-day affairs of the Company. The Board is responsible for the Company s systems of internal controls and for reviewing their effectiveness. This is ensured and the system is designed to safeguard assets from unauthorized use or disposal and to ensure that proper records are maintained and reliable information is produced including financial, operational, compliance controls and risk management. However, the Board is of the view that the company s systems of internal controls provide only a reasonable and not absolute assurance that material errors and irregularities are either prevented or detected within a reasonable time period. Disclosure The Board s policy is to disclose all relevant information to stakeholders, within the bounds of prudent commercial judgment, in addition to preparing the Financial Statements in accordance with Sri Lanka Accounting Standards, the Companies Act No.7 of 2007 and in conformity with Stock Exchange disclosure of requirements. Compliance Report The Directors confirm that to the best of their knowledge all taxes and duties payable by the Company and all contributions, levies and taxes payable on behalf of and in respect of the Company and all other known statutory dues payable as at the Balance Sheet date, have been paid or are provided for in the accounts. Other Information The Annual Report contains statements from the Board including the responsibilities of the Directors for the preparation of the Financial Statements and the Directors are of the view that they have discharged their responsibilities as set out in this statement. The performance of the Company during the year under review and the future prospects of the Company are covered in the Chairman s Review of Operations. Independence of Directors In accordance with Rule (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 f(3), the Board of Directors is in the opinion that it is not a significant shareholding of the Company Based on the above declarations and other information available, the Board is of the view that Professor L.R Watawala and Dr. Nimal Sanderatne are eligible to act as Independent Directors of the Company. Industrial Relations There were no material issues pertaining to employees and industrial relations of the entity which need disclosure. By Order of the Board, D.P.A.N.Kumara Company Secretary 31 st August

11 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 31 st March 2018, subject to the approval of the shareholders at the Annual General Meeting and the audit fee to be determined by the Board of Directors. Prof.Lakshman. R. Watawala. Chairman of the Audit Committee 31 st August 2017 Colombo 9

12 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. 31 st August 2017 Colombo 10

13 STATEMENT OF DIRECTORS RESPONSIBILITIES The following statement which should be read in conjunction with the Auditors statement of their responsibilities set out in their report, is made with a view to distinguish the respective responsibilities of the Directors and of the Auditors,in relation to the financial statements. The Directors are required by the Companies Act No.07 of 2007 to prepare Financial Statements for each financial year which give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit or loss for the financial year. The Directors are required to prepare these financial statements on going concern basis, unless it is not appropriate. Since the Directors are satisfied that the Company has resources to continue in business for the foreseeable future, the financial statements continue to be prepared on the said basis. The Directors consider that in preparing the financial statements on pages 17 to 50 the Company has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates and that all accounting standards, which they consider to be applicable, are followed. The Directors are responsible for ensuring that the Company keeps accounting records, which will disclose with reasonable accuracy the financial position of the Company and which will enable them to ensure that financial statements comply with the Companies Act No.07 of 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 31 st August

14 REPORT ON THE AFFAIRS OF THE TO THE SHAREHOLDERS The Board of Directors has pleasure in presenting the 53 rd Annual Report and the Audited Financial Statements of the Company for the year ended 31 st March 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 31 st March 2017, which include the Statement of Comprehensive Income, Statement of Financial Position and the Notes to the Financial Statements, are given from Page 17 to NATURE OF BUSINESS The major activities of the Company during the year were the printing of Cheque Leaves & Security Documents. The Company is also in the business of manufacturing & marketing plastic security cards and the supply of related equipment and Machinery and publishing & distributing the Lake House Atlas. Our Subsidiary Company LH Plantations (Private) Limited functions as a managing agent of coconut plantations. Our Associate Company Stamford Lake Private Limited is involved in the printing & publishing and the marketing of literary works. 4. AUDITORS REPORT The Auditors Report on the Financial Statements is set out on Pages No.15 & CHANGE IN ACCOUNTING POLICIES Any changes in accounting policies made during the financial year ended 31 st March 2017, are recorded under Notes to the Financial Statements 6. NAMES OF THE DIRECTORS AND THEIR INTEREST IN SHARES NAME NO: OF SHARES As At 31/03/2017 As at 31/03/2016 Mr.R.S.Wijewardene (Chairman) 1,047,710 1,018,557 Mr.P.S.Wijewardene (Executive Director) 108, ,282 Mr.R.C.Samarasinghe (Executive Director) - - Mr.D.R.Wijewardene (Executive Director) (Resigned 13 th March 2017) 856, , 837 Mr.R.P. Hulugalle (Non Executive Director) - - Prof.L.R.Watawala (Independent Non Executive Director) - - Dr.N.E.H.Sandaratne (Independent Non Executive Director) 2,067 2,067 1,014,896 1,985,743 The Board wishes to place on record its appreciation to Mr.D.R.Wijewardene who resigned on 13/03/2017, for the invaluable Services rendered by him to the Company. In accordance with Rule (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 f (3) the Board of Directors is in the opinion that it is not a significant shareholding of the Company. 12

15 REPORT ON THE AFFAIRS OF THE (CONTINUED) 7. TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL The Company maintains a Directors Interest Register. Transactions with key management personnel are comprehensively recorded under Note 32 to the Financial Statements on Page REMUNERATION AND OTHER BENEFITS OF DIRECTORS The aggregate remuneration and other benefits of Directors of the company for the financial year 2016/2017 amounted to LKR. 4,861,000/= (15/16- LKR.4, 749, 000/=) 9. DIVIDENDS The Directors recommend the payment of a dividend of LKR.1.25 per share for the year ended 31 st March The company paid a dividend of LKR per share for the year ended 31/03/2016 in September APPOINTMENT OF AUDITORS Messrs KPMG, Chartered Accountants are recommended for reappointment. A Resolution pertaining to their reappointment and authorizing the directors to determine their remuneration will be proposed at the Annual General Meeting. The Auditors remuneration for the year 2016/2017 was fixed at LKR 350,000/= for the Company and LKR 438,000/= for the Group as disclosed in Note 8 to the financial statements. 11. AUDITORS RELATIONSHIP OR ANY INTEREST WITH THE The Directors are satisfied that based on written representations made by the independent auditors to the Board, the auditors did not have any relationship or any interest with the company that would impair with their independence. M/S KPMG were also engaged as tax consultants of the Company for the year 2016/2017 at a remuneration of LKR 141,000/=. 12. DONATIONS The Company has made donations amounting to LKR 38,000/= during the year ended 31 st March 2017 (2015/16 - LKR 34, 500/=) 13. CHANGES IN PROPERTY, PLANT AND EQUIPMENT The movements in Property, Plant and Equipment during the year ended 31 st March 2017 and 31 st March 2016 are set out in Note No.11 to the financial statements. A sum of LKR Mn has been spent on the purchase of Machinery, Equipment, Motor Vehicles and Construction of new building during the year. Machinery valued at LKR 5.560Mn (purchased in 1988 & 2003) was sold during the year for LKR 4.224Mn. The book profit arising on this transaction was LKR 2.138Mn Further, Investment Property has been revalued during the year and valued at LKR Mn as at 31/03/2017 (2015/2016 LKR Mn). The Revaluation Reserve increased to LKR Mn due to two new Buildings rented out during the year. (2015/2016 LKR Mn net of deferred Tax). 14. STATED CAPITAL AND RESERVES There was no change in the Issued Share Capital and Capital Reserves of the Company during the year under review. The total Retained Earnings of the Company as at 31 st March 2017 rose to LKR Mn (2016 LKR Mn) and Retained Earnings of the Group to LKR Mn ( LKR Mn). The Revaluation Reserve as at 31 st March 2017 amounted to LKR Mn. 13

16 REPORT ON THE AFFAIRS OF THE (CONTINUED) 15. STATUTORY PAYMENT The Directors to the best of their knowledge and belief are satisfied that all statutory payments in relation to the employees and the Government up to the reporting date have been made. 16. GOING CONCERN The Directors have adopted the going concern basis in preparing the financial statements. The directors after making inquiry and following a review of the Company s budget, future cash flows and borrowing facilities, consider the Company has adequate resources to continue in operation. CONCLUSION The Directors thank the members at all levels for their efforts during the period under review. By Order of the Board. R. S. Wijewardene R. C. Samarasinghe D. P. A. N. Kumara Director Director Company Secretary 31 st August, st August, st August,

17 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 31 st March 2017, and the statements of profit or loss and other comprehensive income, changes in equity and, cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information set out on pages 17 to 50 of the annual report. Board s Responsibility for the Financial Statements The Board of Directors ( Board ) is responsible for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group as at 31 st March 2017 and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards. 15

18 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 31 st March 2017, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards. The financial statements of the Company and the Group comply with the requirements of sections 151 and 153 of the Companies Act No 07 of Chartered Accountants Colombo 31 st August

19 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 ST MARCH Note Rs.'000 Rs.'000 Rs.'000 Rs.'000 Revenue 5 426, , , ,632 Cost of Sales (288,694) (229,202) (288,694) (229,202) Gross Profit 137, , , ,430 Other Operating Income 6 27,965 27,279 27,112 27,397 Administration Expenses (94,576) (88,126) (91,200) (84,876) Distribution Expenses (35,087) (20,021) (35,087) (20,021) Results from Operating Activities 35,899 26,852 38,132 29,930 Net Finance Income / (Costs) 7 4,286 3,587 (3,635) (2,862) Share of Profit of Associate (Net of Tax) Profit Before Tax 8 40,339 31,208 34,497 27,068 Income Tax Expenses 9 (4,735) (7,833) (3,048) (6,418) Profit for The Year 35,604 23,375 31,449 20,650 Other Comprehensive Income Actuarial Gain/(Loss) on Defined Benefit Obligations (908) 18 (908) 18 Revaluation Gain on Property Plant and Equipment 108, ,706 - Net amount transferred to Income Statement on disposal of Available for Sale Financial Assets Net change in Fair Value of Available for Sale Investment 1,314 (6) 1,314 (6) Tax Effect on Other Comprehensive Income (7,454) (5) (7,454) (5) Total Comprehensive Income for the Year,net of Tax 101, ,658 7 Total Comprehensive Income 137,262 23, ,107 20,657 Attributable to Equity holders of the Parent 35,604 23,375 31,449 20,650 Non Controlling Interest ,604 23,375 31,449 20,650 Total Comprehensive Income Attributable to: Equity holders of the Parent 137,262 23, ,107 20,657 Non Controlling Interest Total Comprehensive Income 137,262 23, ,107 20,657 Basic Earnings Per Share (Rs.) Figures in brackets indicate deductions. The Financial Statements are to be read in conjunction with the related notes, which form an integral part of the Financial Statements of the group set out on pages 21 to

20 STATEMENT OF FINANCIAL POSITION AS AT 31 ST MARCH Note Rs.'000 Rs.'000 Rs.'000 Rs.'000 ASSETS Non Current Assets Property, Plant and Equipment 11 45,697 61,881 43,249 58,054 Investment Property , , , ,000 Investment in Subsidiary ,983 2,983 Investment in Associate 14 15,753 15,599 4,889 4,889 Available for Sale Investment 15 10,364 9,050 10,364 9,050 Total Non Current Assets 334, , , ,976 Current Assets Inventories 16 60,782 47,875 60,782 47,875 Trade and Other Receivables 17 57,161 50,271 54,356 48,553 Amounts due from Related Parties 18 9,816 8,639 9,621 8,275 Loans given to Related Party , Tax Recoverable Cash and Cash Equivalents 19 68,173 62,836 2,837 2,920 Total Current Assets 195, , , ,623 Total Assets 530, , , ,599 EQUITY AND LIABILITIES Capital and Reserves Stated Capital 20 35,247 35,247 35,247 35,247 Capital Reserves 21 6,197 6,197 6,197 6,197 Revaluation Reserves , , , ,247 Available for Sale Reserves 6,716 5,402 6,715 5,401 Retained Earnings 199, , ,345 77,487 Total Equity atttributable to Equity Holders of the Company 449, , , ,579 Non Controlling Interest Total Equity 449, , , ,579 Non - Current Liabilities Deferred Taxation 23 2, , Retirement Benefit Obligations 24 11,840 9,665 11,840 9,665 Interest Bearing Borrowings Loans from Related Party ,283 13,539 Total Non - Current Liabilities 13,914 10,597 26,876 24,069 Current Liabilities Interest Bearing Borrowings 25 8,657 19,365 8,657 19,365 Trade and Other Payables 26 42,080 29,717 41,944 29,489 Loans from Related Party ,188 1,872 Current Tax Liabilities 4, , Bank Overdrafts 19 11,489 12,353 11,489 12,353 Total Current Liabilities 66,859 62,307 69,806 63,951 Total Liabilities 80,773 72,904 96,682 88,020 Total Equity and Liabilities 530, , , ,599 Net Assets Per Share (Rs.) It is certified that the Financial Statements have been prepared in compliance with requirements of the Companies Act No.7 of The Financial Statements are to be read in conjunction with the related notes, which form an integral part of the Financial Statements of the group set out on pages 21 to 50. D.G.M.Finance T.A.U.Jinadasa The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Approved and signed on behalf of the Board of the Directors; 31 st August, 2017 Colombo R.S.Wijewardene (Chairman) R.C.Samarasinghe (Director) 18

21 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST MARCH 2017 STATED CAPITAL REVALUATION AVAILABLE FOR SALE RETAINED CAPITAL RESERVES RESERVE RESERVES EARNINGS TOTAL Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Balance as at 1 st April ,247 6, ,247 5,407 60, ,447 Profit for the year ,650 20,650 Other Comprehensive Income (6) 13 7 Total Comprehensive Income (6) 20,663 20,657 Transactions with Equity Holders Contribution by and Distribution to Equity Holders Dividend for the year (3,525) (3,525) Balance as at 31 st March ,247 6, ,247 5,401 77, ,579 Balance as at 1 st April ,247 6, ,247 5,401 77, ,579 Profit for the year 31,449 31,449 Other Comprehensive Income ,998 1,314 (654) 101,658 Total Comprehensive Income ,998 1,314 30, ,107 Transactions with Equity Holders Contribution by and Distribution to Equity Holders Dividend for the year (2,937) (2,937) Balance as at 31 st March ,247 6, ,245 6, , ,749 STATED CAPITAL REVALUATION AVAILABLE FOR SALE RETAINED CAPITAL RESERVES RESERVE RESERVES EARNINGS TOTAL Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Balance as at 1 st April ,247 6, ,247 5, , ,118 Profit for the year ,375 23,375 Other Comprehensive Income Total Comprehensive Income ,388 23,405 Transactions with Equity Holders Contribution by and Distribution to Equity Holders Dividend for the year (3,525) (3,525) Balance as at 31 st March ,247 6, ,247 5, , ,998 Balance as at 1 st April ,247 6, ,247 5, , ,998 Profit for the year 35,604 35,604 Other Comprehensive Income ,998 1,314 (654) 101,658 Total Comprehensive Income ,998 1,314 34, ,262 Transactions with Equity Holders Contribution by and Distribution to Equity Holders Dividend for the year (2,937) (2,937) Balance as at 31 st March ,247 6, ,245 6, , ,323 Figures in brackets indicate deductions. The Financial Statements are to be read in conjunction with the related notes, which form an integral part of the Financial Statements of the group set out on pages 21 to

22 CASH FLOW STATEMENT FOR THE YEAR ENDED 31 ST MARCH Rs.'000 Rs.'000 Rs.'000 Rs.'000 CASH FLOWS FROM OPERATING ACTIVITIES Profit before Tax 40,339 31,208 34,497 27,068 Adjustments for, Dividend Income (141) (147) (440) (143) Profit on disposal of Property,Plant & Equipment (2,138) (2,805) (2,138) (2,805) Gain on Fair Value of Investment Property (2,350) (8,300) (2,350) (8,300) Share of profit of Associate (Net of Tax) (154) (769) - - Provision for Retiring Gratuity 1,994 1,674 1,994 1,674 Depreciation 10,728 12,219 9,333 10,827 Interest Income (6,905) (5,743) (7) (90) Interest Expense 2,618 2,157 3,642 2,952 Write-off of Trade and Other Receivables Write-off of Property Plant & Equipment Write back of Other Payables (382) - (310) - Operating Profit Before Working Capital Changes 44,298 30,495 44,911 32,186 Increase in Inventories (12,907) (16,639) (12,907) (16,639) Increase in Trade & Other Receivables (6,927) (6,790) (5,840) (7,082) (Increase)/Decrease in Dues from Related Companies (1,178) 618 (1,347) 550 Increase in Trade & Other Payables 12,363 5,158 12,408 5,078 Decrease in Dues to Related Companies - (2,731) - (2,732) 35,650 10,111 37,225 11,361 Interest Paid (2,618) (2,157) (3,642) (2,952) Gratuity Paid (728) (1,283) (728) (1,283) Tax Paid (7,305) (9,600) (6,253) (8,044) Net Cash Flow Generated from (Used in) Operating Activities 24,999 (2,927) 26,602 (918) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Property,Plant and Equipment (17,923) (21,721) (17,907) (21,721) Proceeds from Sale of Property,Plant and Equipment 4,224 2,805 4,224 2,805 Interest Received 6,905 5, Dividend Received Sale of Shares Investment in Repos - 38, Loans given to Related Parties 1,500 2, Net Cash Flow Generated from / (Used in) Investing Activities (5,153) 28,103 (13,236) (18,683) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of Loans during the year (53,832) (48,367) (55,772) (43,367) Loans Obtained during the Year 43,801 54,878 46,801 53,268 Lease Rentals Paid (677) (2,478) (677) (2,478) Dividend Paid (2,937) (3,525) (2,937) (3,525) Net Cash Flow Generated from/ (Used in) Financing Activities (13,645) 508 (12,585) 3,898 Net Increase/ (Decrease) in Cash & Cash Equivalents 6,201 25, (15,703) Cash & Cash Equivalents at the Beginning of the year 50,483 24,799 (9,433) 6,270 Cash & Cash Equivalents at the End of the year (Note 19) 56,684 50,483 (8,652) (9,433) Figures in brackets indicate deductions The Financial Statements are to be read in conjunction with the related notes, which form an integral part of the Financial Statements of the group set out on pages 21 to

23 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. The Subsidiary Company LH Plantations (Private) Limited functions as a managing agent of coconut plantations. The Associate Company Stamford Lake Private Limited is involved in the Printing and Publishing and the marketing of literary works. The Consolidated Financial Statements of Lake House Printers and Publishers PLC comprise the Company and its fully owned subsidiary, L H Plantations (Private) Limited, (together referred to as the Group ) and the Group s interest in 49% owned associate, Stamford Lake (Private) Limited. 2. BASIS OF PREPARATION 2.1 Statement of Compliance Financial Statements have been prepared in accordance with the Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka and the requirements of the Companies Act No. 7 of Basis of Measurement Financial Statements have been prepared on the historical cost basis except for the following material items in the statement of financial position. Available for Sale Investments are measured at fair value Investment Property is measured at fair value Liability for defined benefit obligations is carried at the present value of the defined benefit obligations. 2.3 Functional and Presentation Currency Financial Statements of the group are presented in Sri Lankan rupees, which is the Group s functional currency. All financial information presented has been rounded to the nearest thousand unless otherwise indicated. All values presented in the financial statements are in Sri Lankan Rupees unless otherwise indicated. 2.4 Use of Estimates and Judgments The preparation of the financial statements in conformity with SLFRSs requires the management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. 21

24 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 2. BASIS OF PREPARATION (CONTINUED) 2.4 Use of Estimates and Judgments (continued) Information about critical judgments in applying accounting policies that have a significant effect on the amounts recognized in the Group s Financial Statements is included in the respective notes. 2.5 Going Concern The Board of Directors has made an assessment of the Group s ability to continue as a going concern in the foreseeable future and they do not intend to liquidate or cease trading. 3. SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to all periods presented in these Consolidated Financial Statements. 3.1 Basis of Consolidation The Consolidated Financial Statements include the Financial Statements of the company and its subsidiaries and associates. The Group s Financial Statements comprise of the Consolidated Financial Statements of the Company and the Group which have been prepared in compliance with the Group s Accounting Policies 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 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