Vallible One PLC Annual Report 2017-18

2017/18
Vision MISSION
Achieve uniqueness To run healthy core businesses,

through diversity, leverage strengths into new
leadership, creativity ventures, work together with
and inspiration. people to be Sri Lanka’s
corporate leader.
The Vallibel One PLC 2017/18 Annual Report

continues our story of Wealth Creation for
Value Creation.
2
VALLIBEL ONE PLC
ANNUAL REPORT 2017/18
CONTENTS
About Our Report 5 Delivering Value 70-90 Annexes 221-230

Financial Capital 70 Five Year Summary – Company 222
About Us 6
Manufactured Capital 74 Group Value Added Statement 223
Our Impact on the
Sri Lankan Economy 7 Human Capital 77 Shareholder Information 224
Our Business Sectors 8 Intellectual Capital 81 Subsidiary/Associate
Our Milestones 12 Social and Relationship Capital 83 Companies of Vallibel One PLC 226
Customers 84 Glossary of financial terms 232
Performance Highlights 14-15
Suppliers and Business Partners 86 Notice of Annual General Meeting 233
Financial Capital Highlights 14
Community 87 Form of Proxy Enclosed
Operational and
Natural Capital 88
Non-Financial Highlights 15
Board of Directors 16-17 Governance 91-107

Corporate Governance 91
Chairman’s Message 18-19
Annual Report of the Board
Chief Executive Officer’s Review 20-23 of Directors on the affairs
of the Company 97
Creating Value for
Report of the Related party
Our Stakeholders 24-31
Transactions Review Committee 101
How we create value 24
Directors' Responsibility
Stakeholder Engagement 26
for Financial Reporting 102
Determining Material Content 27
Report of the Audit Committee 103
Our Strategy 29
GRI Context Index 104
Risk Management 32-35
Financial Reports 109-220
Operating Environment 36-37
Independent Auditors' Report 110
Sector Review 38-69
Statement of Financial Position 115
Lifestyle 38
Statement of Profit or Loss 117
Finance 44
Statement of
Aluminium 49 Comprehensive Income 118
Plantations 53 Statement of Changes in Equity 119
Leisure 58 Statement of Cash Flows 122
Consumer 62 Notes to the Financial Statements 124
Investments and Others 66
3
> VALLIBEL ONE PLC
A tree bearing fruit symbolises energy, prosperity

and the beginning of life that will give life to the
next generation and nourish living beings. It has
reached maturity having sprouted from a seed,
branched out and stands firm with the promise of
many years of abundance.
Vallibel One has grown branches as we

diversified our portfolio, seeking new
opportunities and anchoring itself through
strong networks of business partners to stand
firm and tall. Our investments, like the fruit, are
yielding positive returns and hold the promise of
sustainable value creation for our stakeholders in
the years to come.
Determining Material Content (Contd.)
5
VALLIBEL ONE PLC
About
Our Report
We present our third Integrated Annual ability to create value over the short, Improvements to Annual Report
Report, which sets out a balanced and medium and long term. The process
concise assessment of the Group’s financial, for determining material content to be Corporate reporting is an evolving process
social and environmental performance and included in this Report is described for us and we constantly strive to enhance
how we drive sustainable growth balancing on page 27 of this Report. the quality and readability of our Annual
stakeholder interests. This Report is the Report. This year too we have introduced a
primary publication to the shareholders of Key Concepts number of improvements to provide more
Vallibel One PLC and has been prepared meaningful and relevant information to our
in accordance with the Integrated In preparing this Report, we have stakeholders while keeping abreast of latest
Reporting Framework published by the given due consideration to the developments in corporate reporting.
International Integrated Reporting Council. following principles:
zzAdoption of the GRI standards for
Scope and Boundary sustainability reporting
zzDisclosure of comprehensive qualitative

The Report covers the operations of Vallibel
One PLC and its subsidiaries, based in Sri information for social and environmental
Lanka and overseas for the period from 1st Connectivity of Accuracy and performance for sectors and at
April 2017 to 31st March 2018 which is the Information Completeness Group level
Group’s annual reporting cycle. Our report
focuses on aspects that are material and
relevant to the Group’s operations and to
our key stakeholders. Materiality is based
on the extent to which a certain aspect
will materially impact the Group's Balance Consistency
Guiding Principles and Assurance
Integrated Report Annual Financial Statements Corporate Governance Sustainability

Risk Management Report Performance
Standards Integrated Reporting Framework Sri Lanka Financial Code of Best Practice GRI-G4 Guidelines
and of the International Integrated Reporting Standards on Corporate Governance (Core)
Principles Reporting Council (IIRC) Companies Act No. 07 of 2007 issued jointly by the UN Sustainability
CA Sri Lanka and SEC Development Goals
Listing Requirements of the
Colombo Stock Exchange (SDGs)
Assurance Assurance on the Financial Statements has been provided by Messrs Ernst & Young
Feedback
We welcome your comments or

questions on this Report. Please
direct your feedback to:
Email: info@vallibel.com
6
VALLIBEL ONE PLC
About Us
We are an innovation driven diversified within the country’s key growth sectors
conglomerate with a compelling purpose: of manufacturing, leisure and finance
to power our communities and economy among others. Decisive leadership, an
by creating wealth and value for all our agile business model and transformative
stakeholders. The Group has aligned its ideas have enabled the Group to sustain its
growth strategy to that of the broader competitive position in several key sectors.
economy and is strongly positioned
We operate 46 Subsidiaries,
across 7 industry sectors
We develop creative We hold dominant market
customer solutions for a positions in several of our
wide range of customers industry sectors
DIVERSITY
ITY
LE
AD
TIV
ERS
CREA
HIP
ACHIEVING
UNIQUENESS TO
CREATE WEALTH
N
O P
EO
TI A PL
OV E
INN
We drive innovation through

all our businesses to create Our dynamic team of 13,739
globally competitive brands employees are young and
agile and a key factor driving
our success
7
About Us VALLIBEL ONE PLC
Our Impact on the Sri Lankan Economy
Diversified conglomerate
with a strong presence in
7 key Industries
Government Taxes Paid Market Capitalisation of

in FY 2017/18
Rs. 18,689 Mn
Rs. 10,076 Mn as at 31st March 2018
Total Number Export Revenue of

of Employees
Rs. 1,054 Mn
13,739
in FY 2017/18
Investment in Community Programmes and Initiatives Rs. 102 Mn

8
VALLIBEL ONE PLC About Us
Our Business Sectors
Lifestyle Finance
Sri Lanka’s leading tile and sanitaryware manufacturer and We continue to transform the NBFI sector in the country
retailer, we are rapidly becoming one of Sri Lanka’s leading through our involvement in L B Finance PLC,
lifestyle brands. Our lifestyle portfolio also includes Interior one of Sri Lanka’s premier NBFIs.
Décor, Office Furniture, Power Tools and Home Appliances.
Contribution to Group
Employment
Employment
Total Liabilities
Total Liabilities
Total Assets
Total Assets
PBT
PBT
Revenue
Revenue
(%) 0 15 30 45 60 75
(%) 0 8 16 24 32 40
Accolades/Accreditations
Ranked 33rd in LMD’s Most Respected Entities in 2017
Rocell among Top 20 Best Sri Lankan Brands – with 2 Gold, 3 Silver and 2 Bronze medals
Interbrand Awards 2017
L B Finance among Top 20 Best Sri Lankan Brands –
Among Forbes Asia’s 200 Best under a Billion (2016) Interbrand Awards 2017
National Long-Term Rating at “A-(lka)”; Outlook Stable
National Long-Term Rating for subordinated debt at

“BBB+(lka)”
9
About Us Our Business Sectors > VALLIBEL ONE PLC
Aluminium Plantations
We are a leading player in the rapidly expanding aluminium Horana Plantations accounts for almost 1% of the total tea
extrusion market. production and 1.2% of the country’s rubber production.
Contribution to Group Contribution to Group

Employment Employment
Total Liabilities Total Liabilities
Total Assets Total Assets
PBT PBT
Revenue Revenue
(%) 0 1.2 2.4 3.6 4.8 6.0 (%) 0 10 20 30 40 50
Accolades/Accreditations Accolades/Accreditations
ISO 9001:2008 Ranked No. 1 in the High Grown Category among
Regional Plantations Companies in the CTTA ranking
SLS 1410:2011 Specification for Extracted Aluminium for the year 2017
alloy profiles for architectural applications
ISO 22000:2005 and HACCP to all Tea Factories
ISO 9001 QMS certification to all Rubber factories

10
VALLIBEL ONE PLC < Our Business Sectors About Us
Leisure Consumer
Our plans to transform the concept of hospitality Our consumer sector includes well known food and
and position Sri Lanka as a world class destination are beverages brands such as Motha and Delmege as well as a
taking shape with the construction of the Greener Water wide range of medical equipment and pharmaceuticals.
Hotel Project scheduled for completion in 2020.
The Fortress Resorts and Spa will continue to redefine the Contribution to Group
standards of luxury boutique hospitality in Sri Lanka.
Employment
Total Liabilities
Employment
Total Assets
Total Liabilities
PBT
Total Assets
Revenue
PBT
(%) -2 0 2 4 5 6
(%) -0.5 0 0.5 1.0 1.5 2.0
Accolades/Accreditations Kiwani Team Excellence Award – 2016/17
The Fortress Resorts & Spa
Best Luxury Boutique Spa – Country Winner,

Sri Lanka (2017)
Listed among Top Hotels in Sri Lanka

by TripAdvisor (2012 and 2017)
Best Small Hotel in Sri Lanka (2016/2017) Awarded by

International Hotel Awards
and International Five Star Standards
in association with Rolls Royce Motor Cars
CONDÉ NAST JOHANSENSA – global collection

approved by local experts (2017)
11
About Us Our Business Sectors > VALLIBEL ONE PLC
Investments & Others
This sector represents Vallibel One PLC’s investments and

other sectors which includes packaging, mining, insurance
brokering, travel and transportation.
Employment
Total Liabilities
Total Assets
PBT
Revenue
(%) 0 4 8 12 16 20
Among the Business today Top 30 business
entities for 2016-17
Among the CIMA-LMD Top 100 companies

12
VALLIBEL ONE PLC About Us
Our
Milestones
The Group’s growth trajectory has been
defined by its unique ability to predict industry
growth trends and position itself to capture these
emerging opportunities. Well-timed acquisitions
and judicious organic growth has cemented
the Group’s position in several key sectors of
the economy, affording it a strong platform for
earnings expansion over the
medium to long term.
2010 2010/11 2011 2011/12

Incorporation Acquisition of Royal Listed on the Colombo Acquisition of the
of Vallibel One Ceramics Lanka PLC, Stock Exchange Delmege Group,
L B Finance PLC and a highly diversified
Greener Water Ltd. as its conglomerate
subsidiary companies and
a stake in Sampath Bank
as a long-term strategic
investment
13
About Us Our Milestones > VALLIBEL ONE PLC
2012/13 2013/14 2015/16

Acquired Grip Nordic Acquired Lanka Ceramic Group Signed the
through Delmege Ltd. through Royal Ceramics Lanka PLC Agreement with
BOI and commenced
construction
of Greener Water
Hotel Project
14
VALLIBEL ONE PLC
Performance Financial Capital Highlights

Highlights
Consolidated Statement of Financial Performance
2017/18 2016/17 Change

(Restated) %
Earnings Highlights and Ratios

Revenue Rs. Mn 60,969 52,936 15
Results from Operating Activities Rs. Mn 13,723 10,535 30
Profit before Tax Rs. Mn 10,737 8,391 28
Profit after Tax Rs. Mn 6,769 4,434 53
Profit Attributable to Owners of the Parent Rs. Mn 3,609 640 464
Dividends Rs. Mn 543 543 –
Gross Profit Margin Rs. Mn 42.9 44.8 -4
Operating Profit Margin % 22.5 19.9 13
Net Profit Margin % 11.1 8.4 32
Return on Assets (ROA) % 3.3 2.5 32
Return on Equity (ROE) % 10 7 42
Interest Cover No. of Times 6.9 6.3 10
Financial Position Highlights and Ratios

Total Assets Rs. Mn 206,173 176,050 17
Earnings per Share (Basic) Rs. 3.32 0.59 462
Net Assets per Share Rs. 44.1 38.3 15
Equity Attributable to Equity Holders Rs. Mn 47,891 41,582 15
Equity Asset Ratio % 33.2 34.4 -3
No. of Shares in Issue No. Mn 1,087 1,087 –
Market/Shareholders Information
Market Value per Share Rs. 17.20 17.50 -2
Dividend per Share Rs. 0.50 0.50 –
Company Market Capitalisation Rs. Mn 18,689 19,015 -2
Dividend Yield Ratio % 2.9 2.9 –
Economic Value
Economic Value Generated Rs. Mn 27,116 23,647 15
Economic Value Distributed Rs. Mn 21,506 19,493 10
Government Rs. Mn 10,076 8,900 13
Employees Rs. Mn 7,737 7,139 8
Others Rs. Mn 3,693 3,454 7
15
Performance Highlights VALLIBEL ONE PLC
Operational and Non-Financial Highlights
Manufactured Capital

Property, plant and equipment Capital expenditure Manufacturing capacity
Rs. 37,480 Mn Rs. 5,611 Mn 12.7 Mn sqm of tiles per annum

360,000 pieces of sanitaryware
per annum
Human Capital
Group employment Gender Revenue per Investment in Total number of Retention rate
representation employee training training hours
13,739 84%
Male 63% Rs. 4.4 Mn Rs. 19 Mn 33,177
New recruits
Female 37%
2,481
Social and Relationship Capital
Customers Suppliers and Business Partners Community Engagement

Customer Touch Points Total No. of Small and Investment in CSR Beneficiaries
suppliers medium-scale initiatives reached
56 Rocell showrooms
suppliers
48 Lanka Tiles showrooms > 700 Rs. 102 Mn > 10,000
123 L B Finance branches > 500
36 Gold Loan centres
Natural Capital
Main Raw Materials Electricity Water usage Recycled Input Estimated savings Water recycled
consumed: Consumption: Materials from Energy
270 Mn M3 Reduction initiatives 25%
Feldspar: 98,763 MT 65 Mn kWh 6,017 MT
Ball Clay: 79,454 MT 183,169 Joules
Aluminium Billets:
5,991 MT
16
VALLIBEL ONE PLC
Board of Directors
Standing from Left

Mr. Harsha Amarasekera – Independent Non-Executive Director, Mrs. Kimarli Fernando – Independent Non-Executive Director,
Mr. Sumith Adhihetty – Non-Executive Director
Seated from Left

Mr. Rajan Asirwatham – Independent Non-Executive Director, Mr. Dhammika Perera – Chairman
17
Board of Directors VALLIBEL ONE PLC
MR. DHAMMIKA PERERA MR. SUMITH ADHIHETTY MR. RAJAN ASIRWATHAM

Chairman Non-Executive Director Independent Non-Executive Director
Mr. Dhammika Perera is the quintessential Mr. Sumith Adhihetty is a top-notch Mr. Rajan Asirwatham, who is a renowned
strategist and business specialist with marketing professional who counts over accounting professional, was a Senior
interests in a variety of key industries 35 years of experience in the finance sector. Partner and Country Head of KPMG from
including Manufacturing, Banking and He is the Managing Director of 2001 to 2008. He was the Chairman of the
Finance, Hospitality and Hydropower L B Finance PLC. He also serves on the Steering Committee for the Sustainable
generation. He has nearly thirty years of Boards of Summer Season Residencies Tourism Project funded by the World Bank
experience in building formidable business Limited, Summer Season Limited and for the Ministry of Tourism and was also a
through unmatched strategic foresight. La Forteresse (Private) Limited, Greener Member of the Presidential Commission on
Water Limited and Alila Hotels and Resorts Taxation, appointed by His Excellency the
Mr. Perera is the Chairman of Royal (Private) Limited and The Fortress Resorts President. He is also the Chairman of the
Ceramics Lanka PLC, Lanka Ceramic PLC, PLC. He was formerly the Deputy Managing Financial Systems Stability Committee of
Lanka Tiles PLC, Lanka Walltiles PLC, Director of Mercantile Investments Limited the Central Bank of Sri Lanka and Chairman
The Fortress Resorts PLC, Vallibel Power and served as a Director of Nuwara Eliya of the Audit Committee of The Institute of
Erathna PLC, Delmege Limited, and L B Hotels Company Limited, Grand Hotel Chartered Accountants of Sri Lanka.
Microfinance Myanmar Company Limited. (Private) Limited, Royal Palm Beach
He is the Co-Chairman of Hayleys PLC, Hotels Limited, Tangerine Tours Limited, Mr. Asirwatham is a fellow member of The
The Kingsbury PLC, Singer (Sri Lanka) Security Ceylon (Private) Limited, Vallibel Institute of Chartered Accountants of Sri
PLC, Executive Deputy Chairman of L B Finance PLC and Pan Asia Banking Lanka. He is also a member of the Council
Finance PLC and Deputy Chairman of Corporation PLC. of the University of Colombo and the Board
Horana Plantations PLC. He is also the of Management, Postgraduate Institute of
Executive Director of Vallibel Finance PLC MS. KIMARLI FERNANDO Medicine. He has made his mark in the
and serves on the Boards of Amaya Leisure Independent Non-Executive Director corporate world by serving on the Boards
PLC, Haycarb PLC, Hayleys Fabric PLC, of Royal Ceramics Lanka PLC, Dilmah
Dipped Products PLC, and Hayleys Global Ms. Kimarli Fernando brings to the Board Ceylon Tea Company PLC, Aitken Spence
Beverages (Pvt) Limited. over 30 years experience in the field of PLC, Aitken Spence Hotel Holdings PLC,
banking built on her legal background. Ceylon Agro Industries, Renuka Hotels
She holds a LLB (Hons.) from the London (Private) Limited, Mercantile Merchant
MR. HARSHA AMARASEKERA
School of Economics and Political Science, Bank, Dankotuwa Porcelain PLC, Colombo
Independent Non-Executive Director
London, UK, is a Barrister-at-Law, Lincoln’s City Holdings PLC, Peninsular Properties
Mr. Harsha Amarasekera, President Counsel Inn, UK (1987) and also an Attorney-at-Law, (Private) Limited, Yaal Hotels (Private)
is a leading light in the legal profession Sri Lanka. Ms. Fernando currently serves Limited and Browns Beach Hotels PLC.
in Sri Lanka having a wide practice in the as a Director of National Development
Original Courts as well as in the Appellate Bank PLC, Delmege Limited and Richard
Courts. His fields of expertise include Pieris Distributors Limited. Previously, she
Commercial Law, Business Law, Securities was the Acting Chairperson of L B Finance
Law, Banking Law and Intellectual Property PLC and has held senior positions at Pan
Law. He also serves as an Independent Asia Banking Corporation PLC, Standard
Director in several listed companies in Chartered Bank, Sri Lanka and Deutsche
the Colombo Stock Exchange including Bank AG, Sri Lanka and in Frankfurt,
CIC Holdings PLC (Chairman), Chemanex Germany.
PLC (Chairman), Royal Ceramics Lanka
PLC, Expo Lanka Holdings PLC, Chevron
Lubricants Lanka PLC, Keells Food
Products PLC, Amãna Bank PLC, Amaya
Leisure PLC and Vallibel Power Erathna
PLC. He is also the Chairman of CIC
Agri Business (Private) Limited.
18
VALLIBEL ONE PLC
Chairman’s
Message
It is my pleasure to present the Annual Taking the long term view has ensured
Acknowledgements
Report for Vallibel One PLC for the year that our businesses integrate sustainability
ended 31st March 2018 and welcome into their business models and practices. The Board joins me in extending our
you to the 8 Annual General Meeting. In fact, we believe that sustainability and appreciation to employees of the Vallibel
The Group delivered a commendable long term value creation are synonymous Group for their commitment and hard work
performance recording a profit before tax and it is reflected in our business decisions which is reflected in this Annual Report.
of Rs. 10.7 Bn reflecting growth of 28%. whether it is investing in energy efficient I also wish to thank the Boards of the Group
Balance Sheet growth was 17% as we plants or driving responsible consumption companies for the leadership provided by
continued to invest in capacity expansion through out our manufacturing facilities. We them in alignment with our vision. I thank
in key sectors recording Total Assets of are also reaping the benefits of integrated my fellow Board members for their counsel
Rs. 206 Bn at the close of the year. sustainability into our business models as and diligent oversight of the affairs of the
a plethora of certifications enhance access Group. I close by thanking our shareholders
Creating Sustainable Value to global markets and underpin our brand for their confidence in our leadership and
equity in the respective business sectors. vision and count on their continued support
Sustainable value creation is the core as we move forward.
business proposition of Vallibel One Vallibel One continues to review our
since inception in 2010. A relatively business portfolios to ensure alignment
young conglomerate that has grown with forecast growth areas, seeking new
through acquisition of mature businesses opportunities for growth and changing
across diverse industry sectors, we have strategy with visionary business acumen
established a track record of adding value to deliver shareholder value. Our portfolio
to our investments by sharpening focus on of investments are at different stages of
potential areas for growth and investing maturity, offsetting impacts of varying
Dhammika Perera
for long term growth. Today, many of our business cycles to deliver sustained
Chairman
brands are trendsetters in their respective earnings despite volatility in our respective
industries, serving as a catalyst to drive operating environments as we have done
change and ensure that our businesses this year. 30th May 2018
are future ready with strong innovation
capability and agile strategy. A Positive Outlook
Creating sustainable value is the art Despite the moderation in growth witnessed
of allocating finite resources to those in the economy this year, I am optimistic
areas where they will be utilised to drive about the Group’s prospects for profitable
meaningful and positive change. We ensure growth. Vallibel One well positioned for
that we nurture our capitals to this effect, growth with investments in thriving sectors
deploying resources astutely to create of the economy which will pick up pace as
broad based competitive advantage. As projects in the pipeline are implemented,
a Group, we also drive synergies within driving growth. We will also continue to
our businesses, leveraging expertise and drive change to ensure that productivity
networks to augment and magnify the and efficiency in utilisation of resources
impact of resources deployed. Our top line is enhanced through innovation and lean
and balance sheet growth bear testimony to workflows. Our strong performance despite a
our impact and efficient utilisation challenging socio-economic climate, stands
of resources over the long term. testimony to our ability to deliver value.
19
Chairman’s Message Financial Capital Highlights > VALLIBEL ONE PLC
D H AM M I K A P ER ER A
CHA IRMA N
20
VALLIBEL ONE PLC
Chief Executive
Officer’s Review
Dear Shareholder,
I am pleased to report on Vallibel One reflects its strong domestic franchise, while as we pursued a strategy of growth in
PLC’s exceptional performance – as the a National Long term rating of A-(lka) with a regional markets. Profit for the year declined
Group went from strength to strength, stable outlook by Fitch Ratings Lanka Ltd. by 22% due to increased distribution and
delivering a profit after tax of Rs. 6.78 Bn affirms its sound financial health. This sector interest costs since interest rates and
for the year ended 31st March 2018. Once accounts for 59% of the total Group assets borrowings rose during the year. Expanded
again, the Group’s Finance sector posted and 77% of total liabilities of the Group. capacity and increasing capacity utilisation
strong earnings. The combination of the The positive outlook for this Company supported performance and positions the
Finance and Lifestyle sectors were the main is evident in its balance sheet while its Company to realise its growth aspirations in
contributors to Group profitability for the robust performance for the year can also the South Asian region in the coming years.
year under review. The balance sheet too be attributed to well-established financial
strengthened noticeably during the period governance systems and processes. Buoyant tea and rubber prices supported
under review, with total assets increasing top line growth of 15% in the Plantations
by 17% due to investments in increased Meanwhile, the Lifestyle sector, comprising sector, enabling a turnaround in this sector,
capacity in the Lifestyle sector and capital Tiles, Bathware and Interiors, recorded a which recorded a profit of Rs. 36 Mn for the
investments made in the Leisure sector. commendable performance – contributing reporting year. Cost escalations stemming
Rs. 2.6 Bn to Group profits, which reflects from declining productivity due to the
Sector Review a decline of 29% over the previous year glyphospate ban and inclement weather
due to higher input costs and a decline were largely cushioned by improved
I am elated to report that five sectors of in disposable incomes. This sector profitability. The sector continued its
the Group delivered profits – as Horana accounts for 19% of total assets of the strategy of crop diversification, increasing
Plantations too experienced a turnaround, Group and 16% of its liabilities. The Group the hectares of Palm Oil plantations during
supported by buoyant markets. However, is the market leader and trendsetter in the year and introducing cinnamon and
sectors engaged in manufacturing and tiles and bathware backed by product coconut to the low country plantations.
distribution faced significant challenges innovation and investments in technology. Upcoming wage negotiations scheduled for
owing to the devaluation of the rupee With four entities producing tiles under October 2018 remain a concern despite the
against the dollar, resulting in a sharp the “Rocell” and “Lanka Tiles” brands, shift to a revenue-based model.
rise in raw materials and energy and we are well positioned for growth in this
labour costs, which combined to make sector. Additionally, Rs. 2.86 Bn was Performance of the Consumer sector was
this year an extremely challenging one. invested in capital expenditure in the dampened by the continuous decline
sector to focus on manufacturing larger in household consumption which was
The ongoing Greener Water Hotel project tile sizes, driving economies of scale observed throughout the industry. Despite
in Negombo, the maiden investment by and ushering in more energy efficiency. this, the sector continues to strengthen
Greener Water, is expected to complete Future plans include expansion of export its marketing and distribution channels
the super structure by end of this year markets and increasing market share in to support growth and is optimistic
and commercial operations scheduled to the domestic market where it aspires to be about the outlook for this sector.
commence in April 2020. the undoubted market leader, as affirmed
by the inclusion of Rocell in the country’s The other sector comprises a diverse
The Finance sector, comprising L B top 20 brands by Interbrand as well. mix of investments in packaging, mining,
Finance, contributed Rs. 4.24 Bn to Group insurance brokering, travel and transport.
PAT, which accounts for 63% of Group The Aluminium sector comprising Swisstek However, the Packaging sector, which was
profits. Rising interest rates, innovative Aluminium delivered strong top line growth a key contributor in the previous reporting
products and a strong market presence, of 18% driven by strong demand in both year, was impacted by a sharp increase in
backed by growth and market penetration domestic market and regional markets. paper costs, which eroded profit margins
enabled the Company to outperform However, margins were impacted by significantly. Profitability of this segment is
industry benchmarks. Its ranking among increased costs of Aluminium in global expected to grow in the upcoming financial
the country’s top 20 brands by Interbrand markets and higher distribution expenses, year as Uni-Dil Packaging improves in
21
Chief Executive Officer’s Review Financial Capital Highlights > VALLIBEL ONE PLC
Y O G AD I N U SH A B H A SKAR A N
C H I E F EXEC UTIVE OFFIC ER
22
VALLIBEL ONE PLC Chief Executive Officer’s Review
profitability. Downside risks include supply Vallibel One commenced an initiative to

issues related to paper while export capture information on material issues
opportunities in the region support forecasts. relating to the Group during the reporting Group Performance
year, which has enabled us to publish 2017/18
Financial Review information on a number of key indicators
for the first time in the history of the
On a consolidated basis, Group turnover was
Rs. 60.9 Bn, with the Lifestyle and Finance
Group – bearing testimony to the Group’s Group Revenue
commitment to integrating sustainability in
sectors accounting for 37% and 41% of a holistic manner. We are conscious that it Rs. 60.9 Bn
revenue respectively. Margin pressures were is a journey and that we have just started
evident across all sectors due to increased
input costs and high levels of price sensitivity
on ours. Our experience inspired us to
sustain the momentum, as we found many
15%
in the market. Operating profit of Rs. 13.7 Bn instances of sustainable practices within
was supported by the improved performance the Group. We look forward to sharing
of the Financial and Plantation sectors these best practices across the Group to
while the Lifestyle sector also made a vital raise awareness and embed sustainability
PBT Rs. 10.7 Bn
contribution. Finance costs increased across
the Group as interest rates and borrowings
principles into our operations.
28%
incresed by 8% across all sectors except Our CSR initiatives go beyond philanthropy
Plantations. Profit after tax recorded for the to strategically provide tangible long
year amounted to Rs. 6.76 Bn. The earnings term support facilitating community
per share during the year under review was empowerment and development. We PAT Rs. 6.7 Bn
Rs. 3.32. continue to operate in communities where
Further, Net assets per share

we provide employment and support
development through numerous initiatives.
53%
increased from Rs. 38.27 to Rs. 44.08,
reflecting the strengthening of the Our flagship philanthropy project, which
balance sheet as sectors enhanced consisted of upgrading 450 preschools, was
capacity and grew their respective successfully completed with the year under Total Assets Rs. 206 Bn
portfolios, positioning the Company
17%
review, with the valuable cooperation by all
for sustainable growth in the future. group entities. This initiative will enhance
the learning environment for young children
Sustainability at Vallibel at these preschools.
As Vallibel One grows via acquisition of

mature businesses, sustainability of our
businesses remains the responsibility of
the various sectors. Most of our group
companies are active champions of
sustainable business models such as the
Tiles sector, which holds ISO 14000:2004
certification; and the Plantations
sector, which is certified by Rainforest
Alliance and the Ethical Tea Partnership,
discussed in greater detail in the relevant
sections of the Annual Report.
23
Chief Executive Officer’s Review VALLIBEL ONE PLC
Sector Review Acknowledgements
I take this opportunity to thank the Board for their vision and
guidance, which has been invaluable in helping us to deliver
the performance set out in this annual report. I also thank
the Boards of our subsidiaries who have exercised diligent
Lifestyle Sector Finance Sector oversight of their respective operations to propel our growth.
We thank our business partners who play a key role in driving
PAT Rs. 2.6 Bn PAT Rs. 4.25 Bn our growth and success. I extend my sincere appreciation
Total Assets Rs. 42 Bn Total Assets Rs. 121 Bn of the hard work and dedication of the team at Vallibel One
Total Liabilities Rs. 21.8 Bn Total Liabilities Rs. 105 Bn and our extended family across the Group for the exceptional
results. I thank our shareholders who have placed their
confidence in our ability to deliver shareholder value and
I look forward to your continued support in the future as we
raise the bar with each passing year.
Aluminium Sector Plantations Sector
PAT Rs. 0.2 Bn PAT Rs. 0.03 Bn

Total Assets Rs. 3.2 Bn Total Assets Rs. 3.3 Bn
Total Liabilities Rs. 2.6 Bn Total Liabilities Rs. 2.3 Bn
Yogadinusha Bhaskaran
Chief Executive Officer
Leisure Sector Consumer Sector 30th May 2018
PAT (Rs. 0.02 Bn) PAT (Rs. 0.2 Bn)

Total Assets Rs. 4.6 Bn Total Assets Rs. 2.8 Bn
Total Liabilities Rs. 0.6 Bn Total Liabilities Rs. 4.4 Bn
Investments and Others
PAT Rs. 1.3 Bn

Total Assets Rs. 42.2 Bn
Total Liabilities Rs. 5.7 Bn
24
VALLIBEL ONE PLC
Creating Value for Our Stakeholders

How We Create Value
We create value by continuously finding Our strategy which centres on the key dynamic operating landscape. It is this
unique and innovative ways to leverage strategic pillars of growth, people, uniqueness that helps us stay ahead of the
our resources and relationships to create leadership and sustainability has enabled game and consistently deliver value to our
sustainable wealth for our stakeholders. us to remain relevant and unique in a stakeholders.
Capital Inputs Value Added to Our Business Verticals
Financial Capital Lifestyle Leisure Investments

Shareholders’ funds & Others
(page 70)
Fortress Resort
Titles Packaging
Manufactured Capital and Spa
Property, Plant and Equipment
Ongoing Greener Water
Manufacturing facilities: Sanitaryware Mining
Hotel Project
(page 74)
Wooden and Insurance

steel furniture Plantations brokering
Human Capital
Team of employees Interior and
Travel
(page 77) building products
Tea
Power tools and Shipping
Social and Relationship Capital home appliances agency
Customer relationships Rubber
Supplier relationships
Relationships with our communities
Aluminium
Other agricultural
(page 83) products
Aluminium
Extrusions
Intellectual Capital Consumer
Tacit knowledge
Brand Finance
Research and development capabilities FMCG
(page 81)
Leasing
Pharmaceutical items
Natural Capital
Raw material consumption Loan facilities
Medical equipment
Water use
Energy consumption
Deposits
(page 88)
25
Creating Value for Our Stakeholders How We Create Value > VALLIBEL ONE PLC
Value Delivered and Shared KPIs
Shareholders • ROE
(page 73) • Dividends paid
Wealth Maximisation • EPS
Employees • Payments to employees

(page 77) • Productivity
Employee Satisfaction • Rev/Employee
Customers • Market Share

Pe
h o (page 84)
pl
Customer Satisfaction
t
ow
e
Gr
Suppliers • Payments to suppliers

Wealth • Investment in supplier
(page 86)
Creation development
Mutually Beneficial
Through Relationships
Uniqueness
Community • Investment in CSR
Su
Empowered Communities • No. of Beneficiaries

st
• Raw material consumption

ip
ai
ab
sh
r
n
• Waste
ili
ty a de
Le • Energy consumption
26
VALLIBEL ONE PLC Creating Value for Our Stakeholders
Stakeholder Engagement
Stakeholder engagement is our way of gauging
the pulse of our stakeholders and is a key
ID
determinant of our strategic direction. Formal E
mechanisms are in place for engaging with
N
E
TI
AG
each group of stakeholders which have enabled
FY
ENG
us to pro-actively identify opportunities,
continuously enhance our value propositions
and forge ahead in an increasingly complex
business environment.
STR SE
ATEGI
Shareholders and Employees Customers Business Society and

Investors Partners Environment
Key Engagement Key Engagement Activities Key Engagement Activities Key Engagement Activities Key Engagement
Activities Activities
• Annual General • Performance management • Customer satisfaction surveys • Visits from principals and • CSR initiatives
Meeting system • Customer Relationship visits to principals’ locations
• Quarterly Financial • Formal and informal meetings Managers • Distributor and dealer
Reports disseminated • Interactive forums with Senior • Customer visits and review conventions
through Colombo Management followed by a • Participation
Stock Exchange • Dealer and distribution
question and answer sessions conventions at international trade fairs
• Corporate website • Group-wide employee intranet
• Email broadcast system
• Social occasions and other
events
Key Concerns Key Concerns Key Concerns Key Concerns Key Concerns
• Financial • Performance and Reward • Product Quality • Future Business • Impact on
Performance Management • Customer Service Opportunities Environment
• Governance • Investment in HR • Availability of Product • Contractual Performance • Responsible
• Risk Management • Work Life Balance • Responsible Sourcing Sourcing
• Sustainable growth • Recruitment, Retention • Community
and Turnover Investments
• Diversity and Inclusion
• Career Progression
27
Creating Value for Our Stakeholders VALLIBEL ONE PLC
Determining Material Content

Materiality assessment is a vital element the Group’s ability to create value in the issues we identify form the basis of our
of our value creation process as it ensures short, medium and long term. To assess internal and external reporting throughout
that we remain focused on what really materiality, we evaluate all possible risks, the year and reflect the issues we focus on
matters to our stakeholders. Our material opportunities and issues in terms of relative to maximise value for our stakeholders.
matters constitute those risks, opportunities importance to stakeholders and impact on
or issues that could substantively affect the operations of the Group. The material
Evaluate Identify
Prioritise
Material Issues
Disclosed fully in
the Report
1,2,4,7,9,10
Importance to stakeholders
Disclosed in
summary form
3,5,6,8
Impact on business
28
VALLIBEL ONE PLC < Determining Material Content Creating Value for Our Stakeholders
Material Issue in 2017/18 Strategic Pillar Corresponding GRI Topics Aspect

Affected Boundary
1 Financial performance
Effective management of the Group’s financial Growth GRI: Economic performance Internal
performance is critical in delivering continued Sustainability
stakeholder value while driving the Group’s
organic and inorganic growth aspirations.
2 People management
Our employees deliver our strategic ambitions, facilitate Innovation GRI: Employment, Labour/management Internal
the customer experience and drive innovation and are relations, Training and education, Freedom of
therefore a vital aspect of our value creation process. association and collective bargaining, Equal
remuneration, Child labour, Forced/ compulsory
labour, Occupational health and safety
3 Sustainable sourcing
As a Group with substantial interests in manufacturing, Sustainability GRI: Procurement practices, External
the uninterrupted supply of high quality raw materials Supplier assessment for labour practices
is essential in ensuring the continuity of operations.
4 Product quality and responsibility

Given intensifying competitive pressures in most Leadership GRI: Customer health and safety, Internal/
of our business sectors, delivering products of the Compliance – Product responsibility External
highest quality is essential to customer retention.
5 Satisfied customers
Customers who are satisfied with our products and Leadership External
services are highly likely to return to us, supporting
our retention levels and growth aspirations.
6 Preserving the environment

As a responsible corporate citizen, we are Sustainability GRI: Energy, Water, Waste and Internal/
cognisant of the potential environmental impacts effluents, Emissions External
of our operations, particularly with regards to the
consumption of non-renewable natural resources.
7 Compliance
Compliance to all relevant laws and regulations Sustainability GRI: Compliance (EN) Internal
is a prerequisite for business continuity
8 Community engagement
Inability to maintain healthy relationships with the Innovation GRI: Local communities External
communities we operate with could lead to reputational
damage and threaten our social license to operate.
9 Product and process efficiencies

As operating environments become increasingly Growth Internal
challenging, we are pursuing ways to drive lean
and process efficiencies to preserve profitability.
10 Marketing communications
Responsible communications with our customers Leadership GRI: Marketing communications External
and other stakeholders are essential to maintaining
proactive and meaningful engagement.
29
Creating Value for Our Stakeholders VALLIBEL ONE PLC
Our Strategy
Our strategy revolves around the four strategic is firmly rooted in our core values of
objectives of Growth, Leadership, People and diversity, creativity, leadership, innovation
Sustainability. Whilst evolving in response to the and people and has the singular vision
dynamic and complex business environment we of achieving our fundamental objective;
operate in, our strategy creating wealth for our stakeholders.
Risk Management
Pe
h
op
t
ow
le
Gr
Opportunities
Threats
Wealth
Creation
Through
Uniqueness
Su
st
ip
ai
ab
sh
r
n
ili
ty a de
Le
Stakeholder Stakeholder
Engagement Corporate Governance Engagement
30
VALLIBEL ONE PLC < Our Strategy Creating Value for Our Stakeholders
The table below provides a summary of our performance, based on the aforementioned strategic objectives. A detailed discussion on these
indicators is available in the respective capital reports on pages 70 to 90 of this Report.
Growth Leadership
Strategic • Revenue Growth • Market Position

drivers • New Markets • Satisfied customers
Key Revenue growth Market Share by Industry

performance
indicators (Rs. Bn) (%)
75 20
A
60 16
B
45 12
C
30 8
D
15 4
0 0 E
2015/16 2016/17 2017/18
0 10 20 30 40 50 (%)
Revenue Growth
A – Financial services
B – Aluminium C – Sanitaryware
D – Floor tiles E – Wall tiles
Growing distribution network

• During the year we expanded our branch network with
4 new Lanka Tiles showrooms and 3 new Rocell showrooms
Growing global presence

• Lifestyle sector expanded its global presence in Australia,
India and the Maldives
• L B Finance expanded into Myanmar
Risks/ Sluggish economic conditions during the year had a Growing competition from cheaper
challenges negative impact on the construction industry which had imports particularly from India and China
in 2017/18 a knock-on effect on the tiling and aluminium sectors. continued to pose a challenge in the tiling,
Meanwhile slower private consumption had a negative aluminium and packaging industries.
impact on the consumer sector and packaging as well.
Outlook for The pickup in the global economy together with structural reforms Growing trade with China and India is
2018/19 currently underway is expected to improve prospects for the likely to increase competition from cheaper
economy in 2018. The construction and manufacturing industries imports, however our focus on cost
are expected to pick up as large-scale infrastructure developments management and productivity enhancements
such as the Port City Project gain momentum. Meanwhile prospects across sectors will enable us to leverage
for the tourism sector are also positive due to the recovery of the on comparatively lower costs while
global economy and growing importance of emerging markets. delivering a superior value proposition.
31
Creating Value for Our Stakeholders Our Strategy > VALLIBEL ONE PLC
Sustainability People
• Responsible consumption of raw materials • Employee engagement

• Empowering communities • Training and development
• Health and Safety
• Remuneration and Rewards
• Employee productivity
Employee Retention
Recycled 6,017 MT by Sector
Input (%)
Materials 100
80
Savings
60
from Energy
Reduction 183,169
initiatives Joules 40
20
0
A B C D E F G
A – Lifestyle B – Finance C – Aluminium
D – Plantations E – Leisure F – Consumer
G – Investments and Others
Community Engagement
Sector New Markets
Expanded Into
Investment in CSR during the period Rs. 102 Mn

Number of Beneficiaries >10,000
Adverse weather conditions had a significant impact on Employee retention was a challenge particularly in the
the plantations sector while impacting some of our mining consumer and finance sectors mainly due to increasing
sources as well. mobility of employees at lower employment grades.
Climate change will continue to impact our operations however We will continue to focus on engaging with our employees,
we continue to invest in sustainable technology and processes in empowering and developing them in response to changing
order to ensure our long-term sustainability. labour dynamics.
32
VALLIBEL ONE PLC Risk Management
Risk Management
The depth and diversity of the Group’s comprises of investments in 4 subsidiaries, The Group turned in a year of strong growth
operations render our risk profile a complex a further 42 entities held under those with consolidated revenue and pre-tax profit
matrix which reflects the risk exposures subsidiaries and another entity accounted increasing by 15% and 28% respectively.
of the key sectors. Vallibel One Group as an associate company.
Revenue Composition Profit after Tax

Composition
(%)
0% 7% 100
80
4% 6%
60
40
5% 37% 20
2017/18
0
-20
2017/18
41%
0% 9% (%)
4% 6% 100
80
60
5% 40
2016/17 40%
20
-20
2016/17
36%
Note: “Consolidate adjustments” not accounted for in above graphs.
Lifestyle Sector Finance Sector Aluminium Sector Plantation sector Leisure Sector Consumer Sector Investments & Other Sector
33
Risk Management Our Strategy > VALLIBEL ONE PLC
The earnings profile is dominated Profit growth during the year primarily widening by 10% supported by good loan
by the Lifestyle and Finance Sectors reflects the improved profitability of the growth and wider NIMs.
which collectively accounted for 96% of Finance sector which saw pre-tax profit
consolidated earnings.
Total Asset Composition Total Liabilities Composition
1% 1% 3%
2% 2% 4%
19%
2% 2% 15%
19%
2017/18
2% 2017/18
73%
55%
2% 1% 4%
1%
20% 2% 3%
2%
1% 14%
20%
1% 2016/17 2016/17
54% 75%
Note: “Consolidate adjustments” not accounted for in above graphs.
Lifestyle Sector Finance Sector Aluminium Sector Plantation sector Leisure Sector Consumer Sector Investments & Other Sector
34
VALLIBEL ONE PLC < Our Strategy Risk Management
Given the relative contribution of the Lifestyle and Finance sectors, it is evident that the risk arising from these sectors will determine the
Group’s overall risk profile. Taking this, and other factors into account, our principal risks for the year under review are as follows:
Risk Mitigating Actions Risk Rating Trend

Compared to
2016/17
Concentration Risk The portfolio is skewed towards the most profitable and Moderate Unchanged
growing sectors of the economy and we believe these
The risk that an investor will exposures are an optimum mix which will yield returns
suffer from lack of diversification, above market rates in the long term.
investing too heavily in one
industry, one geographic area
or one type of security
Relative Autonomy of Directors of Vallibel One are also Directors of investee Moderate Unchanged
companies where Vallibel One has a significant stake. This
Investee Companies
enables the Board to monitor the performance of Group
Could lead to weaknesses in companies.
implementing Group-wide policy
frameworks and/or governance
structures.
Macro-economic Fiscal and monetary policy changes can have significant Moderate
policy changes impacts on the operations of various entities in the Group.
• Inflation Inflationary pressures increasing during the year due to a High

tighter monetary policy, depreciation of the exchange rate and
weather-related food supply constraints. This will be a key
concern as it diminishes consumer purchasing power which
could have an adverse impact on volume growth for the Group.
However, the stated government policy of managing inflation
within the high mid-single digit range is welcome in this regard.
• Interest Rates Due to the exposure to the Banking & Financial sector, Moderate
interest rates play a key role in determining the profitability of
the Group. Rising interest rates during most part of the year,
resulted in an increase in the Finance arm’s cost of funding,
thereby pressurizing NIMs. However, the track record of the
institutions in managing interest rates reduces the risk, although
interest rates are expected to maintain their upward trend.
Profitability of other companies in the Group will also be

impacted due to increased costs of debt. However, we expect
business growth to compensate for this, ensuring growth in
profitability of the Group over the long term.
35
Risk Management Our Strategy > VALLIBEL ONE PLC
Risk Mitigating Actions Risk Rating Trend

Compared to
2016/17
• Exchange Rates Depreciation of the Sri Lankan Rupee impacts the Group High
as many of the investee companies import key inputs which
may exert pressure over margins. Group foreign exchange
earnings are minimal, confined mainly to the Leisure sector
as most entities derive revenue from the local market. Ability
to pass on cost increases may be limited if inflation also
increases simultaneously, diminishing the purchasing power of
consumers.
• Equity Price Risk As a holding company, Vallibel One is exposed to volatility in Moderate Unchanged
the market price of its equity investments. Market values of its
investments are reviewed on a regular basis to monitor their
performance and further information in this regard is provided
in Note 43 to the Financial statements including a sensitivity
analysis of the same.
Credit Risk The Group has significant exposure to credit risk, mainly Moderate Unchanged
through the investments in the Banking & Finance sector and,
The risk of default on a debt that may to a lesser extent, through other Group companies. However,
arise from a borrower failing to make the prudent policies in place for managing credit risk are
required payments expected to facilitate management of risk within the Group.
Liquidity Risk Group debt equity remains at satisfactory levels with sufficient Moderate Unchanged
cashflow to facilitate repayment of debt and interest without
The risk that a company may be unable impairment of its financial strength.
to meet short term financial demands.
This usually occurs due to the inability
to convert a security or hard asset to
cash without a loss of capital and/or
income in the process.
Supply Chain Risk The relative autonomy enjoyed by the holding companies within Low Unchanged
the Group is a key mitigating factor as the entities operate with
Routine and exceptional risks along their own supply chains rather than a centralized one.
the supply chain
Compliance Risk Compliance risk is managed by the individual Boards of the Moderate Unchanged
various entities. This risk is mitigated at entity level for large
Exposure to legal penalties, financial exposures as many are mature businesses with highly evolved
forfeiture and material loss an governance processes. Additionally, our own Board members
organization faces when it fails to are on the boards of subsidiary entities, further moderating this
act in accordance with industry laws risk.
and regulations, internal policies or
prescribed best practices.
Litigation Risk This risk is inevitable given the diversity and scope of High Unchanged
operations of the Group. Pending litigation is disclosed in
The possibility that legal action will Note 43 to the financial statements.
be taken because of an individual's
or corporation's actions, inactions,
products, services or other events.
36
VALLIBEL ONE PLC
Operating Environment
Global Economic Growth
Global Economic Conditions Economic Growth
The Global Economy performed above (%) 2017 was a challenging year for the
expectations in 2017 recording a growth 5.0
Sri Lankan economy with GDP growth
of 3.7%, compared to a growth of 3.2 % in slowing down to 3.1%, the lowest recorded
2016, and the highest rate of global growth since 2001. Adverse weather conditions
4.0
recorded since 2011. Both advanced and and their spill over effects together with a
emerging economies improved economic tightening monetary and fiscal policy stance
3.0
performances, bolstered by a strong revival were the main factors contributing to the
in global trade and investment as well as an slower growth during the year. Adverse
2.0
overall improvement in business sentiments. weather conditions in several parts of the
Growth in advanced economies, particularly country resulted in the Agricultural sector
1.0
the United States, and Japan were above contracting by 0.8% during the year. The
expectations upheld by a recovery in Industries Sector grew by 3.9% supported
0
investments following accommodative 2015 2016 2017 2018*
by the expansion in construction, mining
monetary policies and stronger balance Advanced Economise, Emerging markets and quarry activities. Expansion in the
sheets. Emerging markets and developing and Developing Economies services sector was also moderate at
economies grew by 4.8% in 2017 with Emerging Markets and Developing Economies 3.2% driven mainly by growth in financial
stronger private consumption and a World services, telecommunication and wholesale
recovery in trade. Meanwhile, commodity and retail trade activities.
exporting countries like Brazil and Russia Source – CBSL Annual Report
also contributed to the growth following the Inflation
uptick in commodity prices during the year. Commodity Prices
Inflation continued to increase during 2017
(Annual Averages)
Commodity Prices and remained relatively high during the
($/bbl) ($/Mt) year. The prolonged drought in most parts
Global commodity prices were on an 75 2,500 of the country from the latter part of 2016
upward trend for most part of 2017, driven and throughout most of 2017 had a negative
by increasing oil and natural gas prices. Oil 60 2,000 impact on key domestically produced
prices increased by around 23% in 2017 goods, exerting upward pressure on their
due to unplanned outages in several oil- 45 1,500 prices. Meanwhile higher prices of non-food
producing nations and further extension of commodities, due to upward revisions on
the OPEC production agreement. Meanwhile 30 1,000 the prices of certain items also contributed
industrial metals also witnessed notable to the upward trend in general price levels.
increases in price with Aluminium recording 15 500 Accordingly, the year-on-year headline
a growth of almost 23% during the year. inflation remained above the desired mid-
Agricultural commodities including Tea 0 0
single digit levels during much of 2017.
and Rubber increased during 2017 as well 2015 2016 2017 2018 With monetary measures to contain inflation
although prices have stabilised during the Crude Oil ($/bbl) Aluminium ($/Mt) taking to effect during the latter part of
first quarter of 2018. 2017 however, headline inflation showed a
deceleration during the first quarter of 2018,
reducing to 6.7% in March 2018 compared
to 7.7% at the end of 2017.
37
Operating Environment VALLIBEL ONE PLC
GDP Growth
Interest Rates Outlook
(%) A relatively tight monetary policy stance The pickup in the global economy together
6
was maintained during most part of the with structural reforms currently underway
year with a view to addressing inflationary is expected to improve prospects for the
pressures. The policy rate was raised by economy in 2018. Growth is projected
4
25 bps in March 2017, resulting in the to rebound in 2018 from a low base and
Standing Deposit Facility Rate (SDFR) and continue to be around 4.5% in the medium
2
the Standard Lending Facility Rate (SLFR) term, driven by private consumption and
increasing to 7.25% and 8.75% respectively. investment. Inflation is expected to stabilize
0
As a result, market interest rates moved at mid- single digit level as the impact of
up during the first half of the year, with natural disasters wears off, although the
-2
commercial banks’ deposit and lending upward trend in oil prices may exert some
rates also increasing. However, liquidity upward pressure. The construction and
-4
2015 2016 2017
improvements in the domestic money manufacturing industries are expected
Agriculture Industries market during the second half of 2017 to pick up as large-scale infrastructure
Services GDP Growth resulted in market interest rates tapering developments such as the Port City Project
off towards the latter part of 2017. gain momentum. Meanwhile prospects for
the tourism sector is also positive due to
Inflation and Exchange Rates the recovery of the global economy and
Interest Rates growing importance of emerging markets.
The Rupee remained relatively stable in
(%)
2017, depreciating by around 2% during
10 15
the year. The first quarter of 2018 however
witnesses some downward pressure as a
8 12
result of increased foreign outflows following
the political instability brought about by the
6 9
local council elections.
4 6
2 3
0 0
2015/16 2016/17 2017/18
AWPLR (LHS) AWDR (LHS)
NCPI (RHS)
38
VALLIBEL ONE PLC
Sector Review
Lifestyle
The year under review proved to be a difficult year for the lifestyle sector
amidst rising manufacturing costs, increasing competition and subdued
demand conditions. The sector demonstrated resilience against these
challenges, to maintain market position through targeted volume growth
whilst ensuring quality and value to our customers by adopting process
efficiencies and supply chain improvements across our operation.
39
Sector Review Lifestyle > VALLIBEL ONE PLC
Market Position Key Indicators 2017/18

Market leader in floor and walltiles with
respective market shares of 33% and
35% in the local market and a growing Financial Capital
presence in international markets such as
Australia, India, Maldives. Revenue (Rs. Mn) 22,948 Total Assets (Rs. Mn) 41,523
PBT (Rs. Mn) 3,852 Total Liabilities (Rs. Mn) 21,885

Strategy
Enhancing customer value
proposition through value addition. Human Capital
Head count 3,233 Net profit/Employee (Rs. Mn) 0.80
Outlook
Cautiously optimistic considering Social and Relationship Capital
expected growth prospects in
construction sector Investment in CSR (Rs. Mn) 32 Payments to suppliers (Rs. Mn) 18,399
PPE (Rs. Mn) 20,683 Capital Expenditure (Rs. Mn) 2,847
Intellectual Capital
New products Tiles: Investments in R&D (Rs. Mn) 92
13 new collections and
1 new large size
Sanitaryware:
new collections
Natural Capital
Water Use (M3) 158,943 Energy Consumption
Raw Material Feldspar: 98,763 Electricity (Mn kWh) 50.02

Consumption Ball Clay: 79,454
(MT) LPG (Mn Kg) 20.4
Rocell Bathware Design Hub in Nawala

40
VALLIBEL ONE PLC < Lifestyle Sector Review
Our Business
Company Product Factory Production
Location Capacity
We are the country’s leading floor,
walltile and sanitaryware manufacturer
with market shares of 33%, 35% and Royal Ceramics Manufacture and retail Eheliyagoda 2.35 Mn square
Lanka (PLC) of Homogeneous verified meters per
40% respectively. Our pioneering lifestyle
porcelain tiles and annum
brands Rocell and Lanka Tiles have glazed porcelain tiles
nurtured a reputation for quality, elegance for the Rocell brand.
and uniqueness and continue to be proud
ambassadors for the “Made in Sri Lanka”
Royal Porcelain (Pvt) Ltd. Designs and Horana 3.85 Mn square
brand both locally and overseas.
manufactures glazed meters per
ceramic, vitrified annum
glazed porcelain and
vitrified glazed polished
Operating Environment porcelain floor tiles
under Rocell brand
Construction industry growth moderated
in 2017, recording a marginal growth
Lanka Tiles PLC Manufacture of glazed Ranala 4 Mn square
of only 3.1% compared to a growth of porcelain and ceramic meters per
7.6% in 2016. The Government’s fiscal floor tiles under the annum
consolidation efforts resulted in a slow- brand Lanka Tiles
down of Government infrastructure projects,
while private investors adopted a “wait and
Lanka Walltiles PLC Manufacture of Meepe 2.5 Mn square
see” approach given moderating economic ceramic walltiles meters per
conditions and policy instability. As a annum
result, the tiling subsector too witnessed a
subdued growth of 7.5% during the year.
Rocell Bathware Ltd. Manufacture of Homagama 360,000 units
Profit margins were also affected by rising
Sanitaryware solutions per annum
manufacturing costs stemming from
an increase in global commodity prices
(including fuel) and the depreciation of the
Rupee. Meanwhile growing competition
from cheaper imports particularly from India
and China continued to pose a challenge
for domestic manufacturers.
Lanka Walltiles – Meepe – Glazing Line

41
Capital Expenditure for FY 2017/18

Factory Location Capex
(Rs. Mn)
Ranala 402
Meepe 167
Eheliyagoda 760
Horana 128
Homagama 78
Sector Financial
Performance
(Rs. Bn)
25
By Delmege Interior
20
Strategy and Performance 15
growth of 5%, revenue growth remained flat

The lifestyle sector which contributed 38.5% 10
during the year. The interior solutions cluster
to Group profits, saw revenue increasing
under Delmege Interiors too recorded a
by 7%; however profit declined by 29% 5
revenue growth of 5% contributing to the
due to the escalation in input costs. Our
revenue growth in the sector. Meanwhile,
strategy during the year centered on
Lanka Walltiles PLC recorded a revenue of 0
defending our market share from cheaper 2015/16 2016/17 2017/18
Rs. 3.316 Bn, a 1% decline from last year,
imports to maintain our competitive edge Revenue PBT
mainly due to the decline in demand for
through targeted volume growth. During
the 8” X 12” wall tiles which were gradually
the year, Lanka Tiles PLC which accounts
phased out and replaced with a larger
for almost 27% of the sector’s revenue, Construction Sector
tile size.
recorded a revenue growth of 18% by Contribution to GDP
successfully capturing market share from
The sanitaryware sector recorded a growth (%)
importers by strengthening its customer
of 3.7% in FY 2017/18 compared to a
value proposition through value added 8.0
growth of 25% last year reflecting subdued
products and importing and selling tiles at
economic conditions. Volume growth was
competitive prices. Royal Ceramics Lanka 7.4
maintained by offering discounts and
PLC, which caters mainly to the mass
promotions enabling it to retain market
affluent market, enhanced its customer 6.8
share despite the sluggish economic
proposition by offering more competitive
conditions.
prices which enabled it to sustain its market 6.2
share. Consequently, despite a volume
5.6
5.0
2015 2016 2017
Source: CBSL Annual Report
42
VALLIBEL ONE PLC < Lifestyle Sector Review
With margins being severely pressured Achieving deeper market penetration We continue to focus on employee
by increasing cost of production and by leveraging on our extensive distribution development and engagement programmes
intense price competition, we adopted network to enhance customer accessibility to ensure that our team is fulfilled both
proactive cost optimisation strategies was a key priority during the year. We professionally and personally. Technical
across the sector to maintain margins. increased our warehousing capacity and soft skills training programmes are
During the year we implemented 100 across the country to 240,000 sq. ft. in conducted for employees, including
Kobutzu Kaizen (focused improvement) order to increase the speed to market while overseas exposure in international
projects aimed at improving organisational continuing to upgrade and enhance our exhibitions and manufacturing plants.
equipment and resources by improving showroom and branch network. During the During the year we also introduced a
productivity, quality, cost effectiveness, year, we expanded our showroom network spiritual management programme for our
delivery, safety and morale. We also with 4 new Lanka Tiles show rooms and 3 staff. Our commitment to consistently
significantly reduced production cost by new Rocell showrooms. We are cognisant enhancing our employee value proposition
implementing Total Productive Maintenance of the vital role played by our value chain is demonstrated in our healthy retention rate
(TPM) initiatives while eliminating losses partners, and continue to invest in providing of over 95% and a consistently high “great
and waste across the Group that are technological and financial support to place to work” score.
inherent to production system. This our dealers and suppliers to support their
cohesive cost management strategy which sustainable business growth. Outlook
resulted in a total cost saving of Rs. 542 Mn
enabled the sector to maintain margins As a responsible corporate citizen, With large scale infrastructure
without increasing prices. we continuously strive to minimise the developments such as the Port City Project
environmental footprint of our operations. expected to gain momentum, we expect
Our manufactured capital consisting of our Investments were made throughout the the high-end luxury housing and business
state-of-the art factories, technologically Group to ensure environmental compliance, space segments to be key areas for growth
advanced machinery and extensive energy efficiency, emission reduction, as in the medium to long term. While we
showroom network is one of our key well as water and waste management. target growth in these niche markets, we
strengths, setting us apart as pioneers and also expect the growth momentum in mass
visionaries in the industry. We continue
to invest in our manufactured capital, to
increase capacity, efficiency and capability.
During the year, we intend to invest Rs.
1.2 Bn in our Royal Ceramics factory in
Eheliyagoda, expanding its capacity by
35% and enabling the plant to increase
production of full body porcelain tiles, a
tile category in which we see significant
growth potential. Meanwhile, technology
and machinery upgrades were carried out
across the factories in order to improve
efficiencies and productivity.
Robotised Glazing Machine – Rocell Bathware Godagama

43
markets to continue due to rising demand

for affordable housing particularly in
urban areas. Our key focus for FY 2018/19
would therefore be to continue to grow
our distribution network and consolidate
our market position both in the local and
export market while increasing capacity in
identified growth segments. To this end, the
proposed Rs. 2 Bn investment in the Lanka
Tiles factory in Ranala will increase capacity
by 30% adding capabilities to manufacture
a wider range of floor tiles including larger
tiles. The sanitary ware manufacturing
plant in Homagama will also see capacity
increase by 40% through a Rs. 580 Mn
investment in 6 new lines, a new kiln and a
pressure casting machine.
The Rocell Bathware Design Hub - Nawala
Our Expanding Footprint
The Rocell retail network comprises of

56 island-wide showrooms. This includes 2
35 concept centres aimed at providing
customers inspirational experiences.
Northern
The Lanka Tiles network consists of 48 own Province
branded and franchise showrooms.
1
We continue to expand our overseas
presence with concept centres in key
North Central
locations. Rocell currently has two concept Province
4
centres in Melbourne, in the suburbs
of Oakleigh and Mitcham.
2
North
Western
Province 6
Eastern
Province
29 Central
Province
3
5
Western
Province
Uva
Sabaragamuwa Province
Province
Southern
Province
44
VALLIBEL ONE PLC Sector Review
Finance
The finance sector performed well during the year despite an environment
of increasing interest rates, restrictions in the leasing market and
curtailed credit growth. The sector recorded a commendable revenue
growth of 30% and profit growth of 8% (excluding the impact of Sampath
Bank), supported by entry into new market segments, strategic focus on
consolidating its position in core businesses and careful management
of costs.
45
Sector Review Finance > VALLIBEL ONE PLC

9% of the industry’s assets
and deposit portfolio
Source: CBSL Annual Report 2017

Financial Capital
Revenue (Rs. Mn) 24,900 Total Assets (Rs. Mn) 120,821
Strategy
Customer acquisition by targeting
untapped customer segments
Diversification of deposit base Human Capital
Head count 3,468 Net profit/Employee (Rs. Mn) 1.2
Outlook
Positive Outlook for gold loans
and asset financing Social and Relationship Capital
Cautious outlook for leasing Investment in CSR (Rs. Mn) 42
PPE (Rs. Mn) 4,682 Capital Expenditure (Rs. Mn) 1,539
Brand Value – LMD (Rs. Mn) 3,853
Natural Capital
Water Use (M3) 29,891 Non-renewable Sources 16,131
Electricity (Mn kWh) 3.9
Diesel (L) 54,900
L B Finance Building
46
VALLIBEL ONE PLC < Finance Sector Review
Our Business Operating Environment Strategy and Performance
L B Finance PLC, is one of the country’s Fiscal consolidation and macro prudential With vehicle financing accounting for
largest NBFI’s, with an established policy measures taken to curtail imports, almost 70% of our lending portfolio, FY
track record of over 47 years and an asset restrict credit growth as well as the 2017/18 proved to be a challenging year
base of Rs. 121 Mn as at 31st March 2018. increasing trend in lending rates during due measures taken by the Government
We offer a gamut of lending products the year the negatively affected the to curtail vehicle imports. The significant
including leasing, vehicle loans, mortgage demand for core lending products in the drop in three-wheeler registrations, one of
loans, gold loans, factoring, working Non-Banking Financial Sector. Total vehicle our key growth markets had a substantial
capital solutions and Islamic Finance as registrations which dropped drastically impact on asset expansion, Despite these
well as a range of deposit products to a in 2016 continued to decline steadily in challenges, we stood firm in our strategy
wide spectrum of customers including 2017. As a result, expansion of the NBFI of consolidating our position in our core
Corporates, SMEs and individuals through sector slowed down noticeably during the businesses; leasing, gold loans and asset
our expanding network of 123 branches and year with credit extended by LFC’s and financing by exploring new target markets.
36 gold loan centres. SLC expanding 9.8% to Rs. 1,057.1 Bn in During the year, we shifted focus to the
2017 compared to the growth of 21% in two-wheeler segment to compensate for the
Pushing the Frontiers 2016. The Sector maintained its moderate volume drop in the three-wheeler segment.
of Our Business growth momentum by shifting focus to other We adopted a dual approach to growth in
areas of lending, as the leasing sector was gold loans, seeking deeper penetration in
We continue to push the boundaries of affected by LTV restrictions. Amid concerns the rural markets while also tapping the
our industry by expanding into frontier of overdependence of the industry on salaried, middle income segment. We also
market and reaching out to new customer borrowings for expansion, there was also a continue to introduce and relaunch targeted
segments. gradual shift toward deposit financing products to segments in which we see
in 2017.
New customer segments
zzTwo wheeler segment for leasing.
zzSalaried,middle income segment for
gold loans.
zzPensionersthrough the relaunched
“Sanda Saviya” personal loan.
Frontier markets
zzIncreased presence in the Northern and
Eastern province.
zzIncreased presence in Myanmar.
L B Corporate Office
47
Sector Review Finance > VALLIBEL ONE PLC
potential for growth. During the year we As we extend the boundaries of our Sector Financial
introduced “mul gala home loans”. operations by moving beyond traditional Performance
We also relaunched our existing personal customer segments, we continue to (Rs. Bn)
loans “Saviya” as “Sanda Saviya” find ways in which we can promote 30
specifically targeting pensioners. economic empowerment amongst
unbanked and under-banked communities 24
Broad-basing our deposit base was a key of this country. Targeting lower income
strategy during the year and will continue groups through tailor made products 18
to drive our liability strategy going forward. such as the “mul gala home loans” and
This strategy not only enabled us to build “Saviya” personal loan is an example of
12
brand value across a wider cross section our endeavours in this regard. With a 60%
of customers it also enabled to achieve customer penetration outside of the Western
6
increased granularity and access low cost Province we strive to drive a more equitable
funds in a high interest rate environment. growth by providing more individuals the
0
A greater focus on cost management opportunities to productively participate in 2015/16 2016/17 2017/18
combined with targeted volume growth the country’s economy. Revenue PBT
resulted in the sector recording a profit
growth of 8% despite the challenging During the year we expanded our branch
Our Portfolio Composition
market conditions. It is also noteworthy network by adding 5 new branches in
that we maintained our NPL ratio at 2.75% the Northern and the Eastern Provinces.
(%)
compared to 5.5% in the industry. We also strengthened our island wide
100
presence with several new CDM’s across
Our staff consisting of 3,468 employees is the country. In addition to the “brick and
80
one of our greatest strengths. Our talent mortar” branches, we continue to develop
acquisition strategy involves recruiting our digital platforms in order to offer
60
school leavers and providing training more convenience to our customers while
opportunities to groom them to become attracting a new generation of more tech
40
the next generation of leaders in the savvy customers. During the year we also
organisation and society as a whole. In expanded our overseas presence, opening
line with industry trends, retention at entry our second branch in Myanmar under our 20
levels continues to be challenging, however subsidiary “L B Micro Finance Myanmar”.

our “Triple-E approach” which involves 0
2016/17 2017/18
increasing staff engagement and motivation
Lease Gold Loan Mortgage Loan
through Education, Experiences and
Vehicle Loan Other
Exposure has proved to be successful as
indicative from our increased retention ratio
NBFI Sector Performance
during the year. The Company’s retention
ratio increased to 76% during the period.
(Nos. ‘000) (%)
75 35
60 28
45 21
30 14
15 7
0 0
2015 2016 2017
NBFI SEctor Performance
NBFI Loans and Advances growth
Source: CBSL Annual Report, SLTB
48
VALLIBEL ONE PLC < Finance Sector Review
Outlook
We expect FY 2018/19 to be somewhat

of a challenging year with asset quality
and profitability being stressed by lower
economic growth, higher credit costs
and inflation. Despite these challenges,
we will continue to focus on deepening
relationships with our customers through
new product development and expansion
into new market segments. We have
strengthened our credit underwriting and
risk management processes, as the industry
is likely to see a deterioration in asset
quality given moderating economic growth.
We are positive about the recent changes
to the risk management, liquidity and
provisioning regulations for the industry,
which we are confident will result in the
stability of the sector in the medium to
long term.
Our Reach
Our presence in all 9 districts of

the country through our extensive 11
network of 123 branches and
36 Gold loan centres enables Northern
us to reach Sri Lankans across Province
the country, promoting financial

inclusivity amongst all segments 7
of society.
North Central
Province
10
15
North
Western
Province 15
Eastern
Province
41 Central
Province
Western 6
Province 6
36
Gold Loan Uva

Centres Sabaragamuwa Province
Province
12
Southern
Province
49
Sector Review VALLIBEL ONE PLC
Aluminium
The subdued performance of the construction industry together with rising
aluminium prices in the global market resulted in the aluminium sector
performing below expectations in FY 2017/18. Despite these external
challenges, we continued with a two-pronged strategy of aggressively
expanding our distribution network in tandem with capacity expansion to
fortify our position in the market.
50
VALLIBEL ONE PLC < Aluminium Sector Review

A leading player in the Aluminium Profiles
Market with a 35% market share
Financial Capital
Strategy Revenue (Rs. Mn) 3,341 Total Assets (Rs. Mn) 3,299
Fortify market position through a

PBT (Rs. Mn) 339 Total Liabilities (Rs. Mn) 2,600
two-pronged strategy of capacity
expansion and network expansion
Human Capital
Outlook
Head count 261 Net profit/Employee (Rs. Mn) 1
Optimistic considering the long-term growth
prospects in the construction sector
Investment in CSR (Rs. Mn) 1 Payments to suppliers
(Rs. Mn) 2,201
PPE (Rs. Mn) 1,395 Capital Expenditure (Rs. Mn) 490
Natural Capital
Raw Material Consumption Aluminium Billet Energy Consumption Electricity:
(MT) 5,991 5.7 (Mn kWh)
Chemicals LPG 0.67 (Mn kg)
384 Furnace Oil
188,505 Litres
Water Use (M3) 39,554

51
Sector Review Aluminium > VALLIBEL ONE PLC
Sector Financial
Our Business
Our Expanding Product Range Performance
Despite being a relatively new entrant (Rs. Mn)
into the market, Swisstek Aluminium 2017 Sand blasted and
4,000
Limited is rapidly gaining ground in the polished anodized range
aluminium profiles market with its innovative
3,200
and expanding product portfolio and 2016 Wood and Bright finish
uncompromising focus on quality. In range
2,400
response to increasing market demand, the
Company increased capacity in its Dompe 2015 Special architectural range
1,600
Factory from 400 MT to 1,000 MT during FY
2017/18 enabling it to manufacture a wider
800
range of products including larger sized
Strategy and Performance
aluminium extrusions used in high rise
0
buildings. The Sector’s revenue growth was 2015/16 2016/17 2017/18
commendable at 18%, although slowed Revenue PBT
Operating Environment in comparison to the previous year.
Investments in capacity expansions came
Demand for aluminium profiles is on an Aluminium Prices
into operation in August 2017, contributing
upward trajectory, despite the modest (Annual Averages)
to a manufacturing volume growth of
performance of the construction industry
almost 12%. ($/Mt)
during the second half of the year. The
growth in the market for mid to low cost 2,000
Rising global aluminium prices and the 2%
apartments and high-rise office space
depreciation of the Rupee continued to
continued to drive demand for aluminium 1,900
strain our margins during the year. Careful
profiles. Aluminium profiles are also
management of costs however enabled
emerging as a popular alternative to timber 1,800
us to minimise the impact on GP margins
profiles in residences, due to durability,
which witnessed a decline of only 2%
ease of maintenance and lower cost. 1,700
despite aluminium import prices increasing
Meanwhile, global primary aluminium prices
by almost 20%. In spite of GP margins
were on the rise during the year, negatively 1,600
declining only by 2%, the sector profits in
impacting the margins of manufacturers
FY 2017/18 declined by 22% to Rs. 254
engaged in the processing of aluminium. 1,500
Mn compared to Rs. 325 Mn in FY 2016/17
2015 2016 2017
mainly due to rise in both finance
Our Expanding Product Portfolio Source: World Bank Commodity Prices
and tax charges.
Our relentless focus on research

Whilst expanding capacity we also
and development and investments
aggressively expanded our distribution
in cutting edge technology enable us
network by increasing the number of
to continue to expand our product portfolio
franchise and direct dealers islandwide.
to address ever evolving customer
During the year, we added 24 dealers to
requirements.
our network increasing our network to
133 dealers islandwide.
52
VALLIBEL ONE PLC < Aluminium Sector Review
Swisstek Concept Centre – Nawala
During the year, we continued to focus

Outlook
on improving our labour relations.
Approximately 95% of our employees are Demand is expected to pick-up over
unionised and we are currently in the the medium term given the gradual
process of negotiating a collective recommencement of construction projects
agreement with our factory employees together with the increased substitution of
aimed at nurturing a more conducive work timber windows with aluminium particularly
environment. in the residential segment. On the costs
front, whilst global aluminium prices are
As an industry with significant environmental expected to soften in 2018, high energy
impacts, we are cognisant of our obligations costs and labour costs are expected to
in minimising the negative impact from our continue to negatively impact margins.
operations. We also engage in an ongoing
dialogue with our community to proactively
identify and address any concerns they may
have.
Alton Estate, Upcot

53
Sector Review VALLIBEL ONE PLC
Plantations Sector
We continue to introduce sustainable agricultural practices, innovation,
new management practices and quality assurance techniques to drive
sustainable long term growth in a mature plantations sector. During the
year, the plantation sector contributed Rs. 36.4 Mn to Group profits with a
revenue growth of 15%.
54
VALLIBEL ONE PLC < Plantations Sector Sector Review

zz1% of total national tea production
zz1.2% of total national rubber production
Financial Capital
Diversification of crops,
markets and technology PBT (Rs. Mn) 50 Total Liabilities (Rs. Mn) 2,309
Outlook Human Capital

Increasing costs are expected
to continue to pressure margins Head count 5,825 Net profit/Employee (Rs. Mn) 0.01

Investment in CSR (Rs. Mn) 27 No. of Beneficiaries 7,253
PPE (Rs. Mn) 572 Capital Expenditure (Rs. Mn) 15
Natural Capital
Water Use (Mn L) 0.30 Energy Consumption 3.2
(Mn kWh)
Raw Material Consumption Bought Leaf

(MT) 14,124
Natural Latex
833
55
Sector Review Plantations Sector > VALLIBEL ONE PLC
Our Business Validation of our Commitment Our Diversification Strategy

to Sustainability • Market Diversification
Horana Plantations PLC (HPL) is one of New Export Markets in China, Taiwan
• First Company to be accredited for
Sri Lanka’s leading plantation companies, • Crop Diversification
“Certified Oil Palm” in the world by the
comprising 16 estates and employing • Diversification into ancillary crops such
Forest Stewardship Council (FSC) which
a workforce of 5,825. The Company’s as Oil Palm, Cinnamon, Coconut, Timber,
certifies sustainable forest management
estates are spread over a total area of Fruits
practices after a thorough evaluation of all
7,534 hectares, primarily in the Central and • Technology Diversification
three pillars namely being environmentally
Western Provinces of Sri Lanka. 40% of the Introduction of newer agricultural
friendly, socially acceptable and
cultivated area has been dedicated to tea, practices to improve productivity and
economically viable.
39% to rubber, 9% to timber, and 11% to lower cost of production
• ISO 22000:2005:HACCP for all tea
other diversified agricultural crops. HPL has
factories and ISO 9001-2008 Certification
an annual production of 4 Mn Kg of tea and
for all rubber factories Operating Environment
1.4 Mn Kg of rubber.
• Ethical Tea Partnership (ETP) and Fair
Trade Certification The country’s tea production which was
The Company strives to embed sustainable • Rainforest Alliance Certification (RA) for severely affected by erratic weather
business practices in every aspect of its 8 estates conditions in 2016, increased only
operation. Its emphasis on uplifting the marginally by 5% to 307.08 Mn kg in
social standards of its workforce at every 2017 from an all-time low of 292.57 Mn
Our Diversification Strategy
level, investing in adequate and relevant kg in 2016. Total tea export volumes in
training, protecting and conserving the Given Sri Lanka’s waning competitiveness 2017 increased only marginally by 0.1%
environment as well as being a responsible in the world tea and rubber markets, and compared to 2016 as well. Despite the
player by way of its ethical agricultural increasingly serious impacts of climate poor performance in terms of production
practices is evidence of the Company change, diversification of markets, products and export volumes, 2017 proved to be a
ethos of sustainable value creation for and technology will be the key to the long- favourable year for Sri Lankan tea prices,
all its stakeholders. term sustainability of the sector. with average sales prices (FOB) prices
Gouravilla Estate, Upcot

56
VALLIBEL ONE PLC < Plantations Sector Sector Review
Tea Sector Performance
(kg Mn) (Rs./kg)

310 1,000
304 800
298 600
292 400
286 200
280 0
2015 2016 2017
Export Volumes (kg Mn) FOB (Rs./kg)
Cost of Production (Rs./kg)
Rubber Sector Performance
(kg Mn) (Rs./kg)

Moussella Tea Factory
20 400
reaching Rs. 618.14 per kg, the highest the country’s competitiveness in the world 16 320
achieved during the last four years and market. Contributing to this are factors
increasing almost 32% over 2016 prices. such as stagnation or shrinkage of areas 12 240
The buoyant prices however were mainly under cultivation, inadequate replanting,
attributed to the increase in international higher production costs, labour shortages 8 160
prices as a result of a global supply as well as ad hoc policy decisions such
shortage and the depreciation of the Rupee as the decision to ban weedicides such as 4 80
and therefore cannot be expected to be Glyphosate which in turn significantly affect
sustained throughout 2018/19. yield, productivity, profitability and long-
0 0
term sustainability of the industry. 2015 2016 2017
Rubber production too grew only by 7% Export Volumes (kg Mn) FOB (Rs./kg)
to 85,000 tons in 2017. The extent under Strategy and Performance Cost of Production (Rs./kg)
tapping has gradually declined over the Source: CBSL Annual Report
years due to competition for land for more FY 2017/18 saw Horana Plantations PLC
lucrative agricultural crops such as oil record a revenue growth of 15% to achieve
palm and for real estate development. a revenue of Rs. 2.2 Bn and a post-tax
Persistently low prices in the world profit of Rs. 84.3 Mn after two consecutive
market as well rising cost of production is years of losses. Buoyant tea prices during
increasingly making the rubber industry an the year, saw the tea sector perform
unviable sector. exceptionally well with a turnover and PAT
of Rs. 1.8 Bn and Rs. 275.6 Mn respectively
Low productivity, high labour costs and whilst the rubber sector reported a loss
declining margins continue to plague the of Rs. 35.5 Mn due to low yield owing to
plantation sector, increasingly affecting less tapping days (Adverse weather).
Continued focus on product quality through
the adoption of locally and internationally-
57
Sector Review Plantations Sector > VALLIBEL ONE PLC
accepted product certifications and We continue to enhance the quality of our Sector Financial
sustainable agricultural practices natural capital through sustainable business Performance
has enabled Horana Plantations to practices and community initiatives. Whilst (Rs. Mn)
consistently command premium pricing adopting sustainable business practices 2,400
in the tea auctions. by complying with multiple local and
international certifications of environmental 1,800
Despite the improved performance during management including Rainforest Alliance,
the year, the Company recognises the Ethical Tea Partnership Certification and 1,200
long-term risk of being solely reliant on tea Forest Stewardship Council Certification we
and rubber and is steadfastly committed are also committed to promoting sustainable
600
to its crop diversification initiative. The practices in our estate worker communities.
Company thus continued its diversification During the year (2012) HPL commenced a
0
into Oil Palm, Cinnamon, Coconut and other centralised waste disposal mechanism for
ancillary crops during the year, significantly its estate communities. Meanwhile we are
-600
increasing its future revenue potential. increasing by moving towards renewable 2015/16 2016/17 2017/18
energy sources such as solar power to Revenue PBT
Uplifting the living conditions and standards fulfil our energy requirement.
of our estate worker base and their families
is integral to our business as it has a Outlook
direct impact on productivity and labour
relations. We believe in creating empowered We expect tea prices to stabilise during the
communities that can actively participate in year, and for demand conditions to pick-up
their own welfare and development. To this due to the improving geopolitical situation
end, HPL’s initiative to develop Community in main import destinations in the Middle
Development Forums in several estates has East and Russia. With a plantation sector
given ownership of the development work wage negotiation expected during the third
to communities. Through this programme quarter of 2018, our cost base is expected
estate Worker Housing Corporative to continue to increase in 2018. However,
Societies are established on the estates the Government's decision to lift the ban
to provide assistance in disbursing loans on Glyphosate with effect from May 2018 is
for housing, construction, and distress a welcome development which is expected
assistance etc. Whilst empowering our to significantly ease the pressure on
estate worker communities, we continue industry margins.
to directly invest in the socioeconomic
progress of our workers and their
families. During the year, 27 housing
units were completed at an investment
of Rs. 27 Mn. We also work closely with
Non-Governmental Institutions such as
World Vision, ADRA, Berendina etc. In the
implementation of social programmes
aimed at eradicating malnutrition and
creating an Anemia free population within
our communities.
58
Leisure
Our award-winning boutique resort, The Fortress Resort and Spa,
Koggala has successfully maintained its edge by offering world-class
service, indulgent luxury and eco experiences to the discerning traveller.
During the year, The Fortress Resort and Spa contributed Rs. 30 Mn to
Group profit.
59
Sector Review Leisure > VALLIBEL ONE PLC

An established brand in the
high-end Luxury Hotel Category
Financial Capital
Strategy Associate Results from
Fortress Resort (Rs. Mn) 30 Total Assets (Rs. Mn) 4,690
Creating brand value and
customer loyalty through a
PBT (Rs. Mn) (15) Total Liabilities (Rs. Mn) 585
unique hospitality offering
Outlook
Changing supply and demand dynamics PPE (Rs. Mn) 4,669 Capital Expenditure (Rs. Mn) 651
expected to drive demand for a more
differentiated offering The Fortress Resort and Spa is accounted for as an Associate while “Greener Water
Hotel Project” Negombo is currently under construction.
Our Business
Currently the Group’s holdings include the proposition, through its unique, super luxury
award-winning Fortress Resort & Spa in integrated resort concept. Construction
Koggala and the ongoing Greener Water is currently underway with commercial
Hotel project in Negombo. The Fortress operations scheduled to commence in
Resort & Spa located in Koggala is a April 2020.
53 room boutique hotel which caters to
the high-end tourism market. The resort The resort project has been designed by
includes two Presidential Suites with private world renowned architect WATG while the
pools, two Junior Suites with in-room plunge supporting designing teams include well
pools, a luxury spa and three fine dining known international names such as T.Y.Lin
restaurants. Associates, Singapore, KK Lim Associates,
Bo Steiber Lighting,Singapore, Jokomo
The ongoing Greener Water Hotel Project Design, Malaysia, Cloward H2O, USA and
in Negombo once completed will comprise EDSA – USA.
of luxurious five-star rooms, a world-class
water park and 110 m swimming pool Our Brand Value
among other amenities. The resort will also
provide unique experiences through three Our unique brand of hospitality which
fine-dining restaurants and a luxury healing combines modernity and luxury with
and wellness spa spanning the entirety of tradition and holistic well-being has brought
the 2600 M2 mezzanine floor. The project, us many awards and helped place
which brings together some of the world’s Sri Lanka firmly on the World’s luxury
most renowned architects and design tourism map.
teams is expected to redefine the standards
of the Sri Lankan five-star beach resort
60
VALLIBEL ONE PLC < Leisure Sector Review
Award Name Received for Operating Environment

Wellness & Spa Europe Certificate Evaluated as “Leading Spa Selection” 2018 Performance of the tourism industry was
below expectations in 2017 with tourist
GMP Certification – by Sri Lanka Good Manufacturing Practices arrivals recording a growth of just 3.2%
Standards Institution over the previous year. The moderate
growth reflects subdued growth from key
Conde Nast Johansens A Global collection approved by local experts source markets such as Germany, France
for Luxury Hotels, Spas and Venues for 2018 and China during the second half on 2017.
Factors such as travel advisories issued
Trip Advisor Traveller’s Choice Award Winner of due to the Dengue outbreak, floods and
Top 25 Hotels – Sri Lanka landslides that affected the country and
the temporary closure of the Bandaranaike
Luxury Travel Guide (LTG) – Luxury Hotel & Spa – Sri Lanka International Airport for renovations
Asia & Australasia Awards 2017 also negatively impacted tourist arrivals
during 2017.
TripAdvisor Certificate of Excellence
On the supply side, the industry has seen
a sharp increase in room inventory over
the last few years, with the total number
of graded rooms surging by over 40%
during the last 4 years. Meanwhile, the
informal sector consisting of alternative
accommodation such as home-stays,
residential apartments etc. too have
witnessed significant growth, in response
to a rising preference for more authentic
travel experiences.
A key challenge for the tourism and

hospitality industry is a lack of skilled labour
particularly in key operational areas such as
in Kitchen, F & B, House Keeping and Front
Office operations. Meanwhile, the demand
for skilled employees in these areas is
growing at a substantial rate as larger
international hotel franchises make their way
into the Sri Lankan market, consequently,
recruitment continues to be a significant
challenge industry faces.
The Fortress Resort and Spa, Koggala

61
Sector Review Leisure > VALLIBEL ONE PLC
Traditional markets such as EU, UK and Tourism Industry Trends

Strategy and Performance
Australia continue to be our main markets
Occupancy rates of Fortress Resort and and we work closely with tour operators in
(Nos. ‘000) (Nos. Mn)
Spa declined marginally to 60% in FY these countries to promote our brand. Whilst
40 2.20
2017/18 from 65% during the previous focusing on these traditional markets we are
year. The decline reflects the slower growth also increasingly looking at attracting the
32 2.08
in tourist arrivals, intense competitive luxury traveller from emerging markets such
pressures and the Resort being closed for as India and China.
24 1.96
two months due to renovations. Average
Room Rate however increased during Progress on the super structure contractor’s
work of the Greener Water Hotel Project 16 1.84
the year increasing from Rs. 30,414 to
Rs. 34,341. As a result, turnover grew by was delayed due to a shortage of local
2% to Rs. 639 Mn while profits after tax labour for construction work. Absorbing this 8 1.72
increased by 5% due to a greater emphasis factor, we have rescheduled the expected

on cost management. completion date to 2020. 0 1.60
2015 2016 2017
Graded Rooms Tourist Arrivals
We place strategic emphasis on Outlook
continuously upgrading our Manufactured
Evolving dynamics in the country’s tourism
Capital and during the year, Fortress Resort
supply and demand are re-shaping how
and Spa invested approximately Rs. 89 Mn
hospitality operators can drive sustainable
on refurbishments and developments to
business growth. Guests are increasingly
its property. This includes refurbishments
looking for more authentic personal
to the lobby area and upgrading some
experiences, while emerging markets
of the interiors to improve the customer
such as India and China are growing in
experience and ambience of the property.
importance as source markets. On the
supply side, significant investments from
We make every effort to hire resort staff
established international chains as well as
from surrounding communities and our
the growth in boutique style accommodation
employee value proposition ensures that we
and the informal sector has resulted
contribute directly to their socio economic
in intensified competitive pressures.
progress and skill development. During the
Understanding these diverse trends,
year, we invested Rs. 1.3 Mn in 282 training
we will continue to strive to differentiate
hours for our people while total payments to
ourselves by offering a brand proposition
employees increased by 20%. With regard
that revolves around offering an unique
to labour shortages, The Fortress Resort
experience that combines modern luxury
PLC is actively working to improve the
with traditional Sri Lankan hospitality.
flow of talent into the organisation through
partnerships with leading local hospitality
training organisations such as the NAB
and SLITHEM to train their students in the
hotel as part of their curriculum and then
absorbing them into the hotel cadre at the
end of their training period.
62
Consumer
The Group’s Consumer sector consists of the Food and Beverage and
Healthcare clusters. The Sector performed moderately well amidst the
challenging macro economic conditions that prevailed during the year.
Being attuned to changing market dynamics and responding agilely to
these changes record a revenue decline of 9% over FY 2016/17.
63
Sector Review Consumer > VALLIBEL ONE PLC

zzSole distributor for Motha Products
zzMarketleader in ophthalmology
and physiotherapy. Financial Capital
Revenue (Rs. Mn) 4,387 Total Assets (Rs. Mn) 2,831
Strategy
zzStrategic diversification of PBT (Rs. Mn) (191) Total Liabilities (Rs. Mn) 4,421
portfolio and distribution channels
Human Capital
Outlook
zzCautious
Head count 265 Net profit/Employee (Rs. Mn) (0.8)
outlook in the short term due to
inflationary pressures.
zzPositiveoutlook in the medium to long
term due to the changing demographic
landscape to continue to pressure
Payments to suppliers (Rs. Mn) 2,490
margins
PPE (Rs. Mn) 19 Capital Expenditure (Rs. Mn) 9
New products >15
Natural Capital
Energy Consumption Electricity: 0.29 Mn kWh
Fuel (Company owned vehicles and commute): 229,154 L
64
VALLIBEL ONE PLC < Consumer Sector Review
Our Business Our Channels

F&B Revenue by Channel Sector Financial
Food and Beverage Performance
(%) (Rs. Mn)
Over its history of almost 166 years,
Delmege Forsyth & Co Ltd. has grown to be 75 6,000
one of the most trusted names in Sri Lanka’s

FMCG industry. Our food and beverage 60 4,500
cluster which includes leading brands such

as Motha dessert pre-mix range, Delmege 45 3,000
Soya meat range, Delmage Hiru Kahata and

Breez tea range,Delmege Mackeral Tinned 30 1,500
fish and Delmege tea have continued to
delight generations of Sri Lankans. 15 0
Healthcare 0 -1,500
2015/16 2016/17 2017/18 2015/16 2016/17 2017/18
Our healthcare cluster concentrates – General Trade – Modern Trade Revenue PBT
on three main product categories; – Horeca – Whole Sale – Exports
pharmaceuticals, medical equipment and
medical devices. With links to over 25
established principals we are one of the Operating Environment Strategy and Performance
leading suppliers of medical equipment to
Government and private sector hospitals in Private consumption which slowed down Sluggish consumer spending during the
the country. Together with our long standing considerably in 2016 due to the impact year resulted in a revenue drop of almost
partner Alcon, Enraf, Olympus, and Thermo. on disposable income levels from the 9% for the food and beverage cluster.
We remain the undisputed market leader increased value-added tax, higher inflation Despite these conditions, we continued
in ophthalmology, physiotherapy, medical and interest rates, improved only marginally with our strategy of maximising product
and laboratory microscope and blood bags in 2017. Total Private Consumption availability and visibility through greater
centrifuge. Expenditure (PCE) grew in 2017 compared outlet penetration in the retail sector and
to the marginal growth in 2016. Meanwhile better utilization of category space in the
Managing our Channels the share of private consumption modern trade sector. While consolidating
expenditure on food and beverages too has our position in the domestic market we also
We use multiple channels which evolve remained relatively stagnant at 28% during continued to explore export markets as the
in response to changing demographic the last three years. means of further diversifying our customer
dynamics to reach our diverse customer base. During the year we expanded into
segments. Inflationary pressures continued to affect UAE, Italy and France and Germany
margins due to higher administration, taking our products to over 10 countries
medical regulatory and distribution costs. worldwide.
The depreciation of the Sri Lankan Rupee
against the US Dollar also pushed up the
prices of imported goods, affecting margins
particularly in the healthcare cluster. This
was further aggravated by Government
imposed price controls on imported
medicines which does not allow price
increases to be passed on to the consumer.
65
Sector Review Consumer > VALLIBEL ONE PLC
We remain cognisant of the evolving nature able to benefit from the synergies in our Private Consumption
of customer tastes and preferences and operation. Performance of the cluster was Expenditure at
continued to introduce innovative products also affected by delayed payments from Current Prices (PCE)
to our portfolio such as the “double layer Government agencies which resulted in a (Rs. Mn) (%)
pudding”, while relaunching new and relatively high interest cost during the year. 8,500 10
improved versions of some of our existing
products. Meanwhile continuous efforts We view our role in the healthcare industry 8,000 8
were taken to build brand awareness as extending beyond merely being a
among consumers as well as distributors supplier to the industry to that of an 7,500 6
and agents. influencer and catalyst for change. We
continue to work closely with industry
7,000 4
Managing our costs is a key strategic focus stakeholders to promote awareness on
in an environment of rising inflation. The latest technology and research in order take
6,500 2
sales force automation system implemented the industry to the next level of excellence.
in 2016/17 bore fruit in 2017/18 by enabling During the year, we conducted 15 road
6,000 0
us to better monitor retail coverage and shows for physiotherapists, microbiologist 2015 2016 2017
performance of our distribution system as well as 10 workshops for lab technicians Total Private Consumption
while continuously identifying areas for with the aim of creating awareness on latest Expenditure (Rs. Mn) Growth
improvement. technology and trends in the industry. Source: CBSL Annual Report
We view our employees as the We continue to develop our staff by

ambassadors of our brand and therefore providing ongoing training including In the healthcare segment, we view
invest time, effort and money in talent overseas training in order to expose them to ourselves as a catalyst for introducing
development and talent retention. global best practices. During the year, our cutting-edge medical technologies such
Training is provided for sales staff through staff participated in 30 local programmes as cytogenetics and pulmonary testing
monthly sales conferences and sales and 10 overseas training programmes. to the Sri Lankan health sector. An aging
representatives are given the opportunity population, a rise in non-communicable
to interact closely with senior management diseases (NCDs) together with rising
Outlook
and address any issues and concerns on income levels is expected to drive demand
an ongoing basis. We also revamped our We see significant opportunities for for medical equipment and pharmaceuticals
incentive scheme during the year in order long term growth in the FMCG sector due to and we will continue to seek ways in which
to bring about greater alignment between an increasingly urbanised population and we can meet this demand with the most
performance and strategic objectives. the growing importance of modern trade. up-to-date technology.
We are well poised to capitalise on these
Amidst a year of restructure and opportunities by expanding our distribution
realignment, performance of the healthcare channels and product range to increase our
cluster was subdued in FY 2017/18 with market presence. Meanwhile, in response
a negative revenue growth of only 25% to changing consumer preferences and
compared to a growth of 0.10% in FY a decline in demand for sugar-based
2016/17 and incurred a loss of Rs. 19.3 Mn products we are pro actively identifying new
compared to a profit of Rs. 94.3 Mn. During food categories in which we can strengthen
the year, we re-evaluated our business our presence while re launching our existing
to identify product segments which products with further value additions.
were not aligned to our business model.
Accordingly, we exited from two pharma
agencies replacing them with new agencies
including local Ayurveda manufacturers
and medical equipment suppliers better
66
Investments and Others

The Investments and Others sector represent Vallibel One PLC’s
investments in a wide range of industries including finance, packaging,
mining, insurance brokering, travel, and transportation. This sector
collectively accounted for 6% of group revenue in FY 2017/18
while dividend income during the year amounted to Rs. 1,221 Mn.
67
Sector Review Investments and Others > VALLIBEL ONE PLC

Diversified conglomerate with interests in
a wide range of industries.
Financial Capital
Continue to invest in growth sectors and

add value through strategic involvement.
Outlook Human Capital

Positive outlook considering growth Head count 657 Net profit/Employee (Rs. Mn) 3.1
potential in industries with significant
interests.
Investment in CSR (Rs. Mn) 0.035 Payments to suppliers (Rs. Mn) 2,368
PPE (Rs. Mn) 5,460 Capital Expenditure (Rs. Mn) 60
Natural Capital
Water Use (M3) 41,906 Energy Usage Electricity:
1.83 (Mn kWh)
Unidil production facility

at Moragala, Dekatana
68
VALLIBEL ONE PLC < Investments and Others Sector Review
Our Business
Sector Financial
Clusters in Sector Contribution to Sector
Performance
Investments PBT: 80% (Rs. Mn)

4,000
Packaging Revenue: 80%
PBT: 1% 3,200
Mining Revenue: 5%
PBT: 5% 2,400
Insurance Brokering Revenue: 3% 1,600

PBT: 4%
800
Travel Revenue: 1%
PBT: 0.2%
0
2015/16 2016/17 2017/18
Shipping Agency Revenue: 3%
PBT: 2% Revenue PBT
Administration Services Revenue: 0.2%

PBT: 2% time, effort and money in understanding
these unique needs and developing
customised solutions.
In line with the principles of materiality, compared to a revenue drop of 2% in
the subsequent discussion will focus on FY 2016/17. The growth was achieved
The performance of the sector is strongly
the Packaging and Mining sub-sectors by successfully leveraging existing
linked to world paper prices, as paper costs
which collectively generate 5% of the other relationships to source more volumes from
account for nearly 70% of corrugated carton
Sector’s profits. Financial investments existing customers while actively exploring
manufacturing costs. World paper prices
discussed will be limited to Sampath Bank new markets. PAT of the packaging
escalated by almost 50% in 2017 due to
PLC where Vallibel One PLC is the single industry however decreased by 83% due to
supply deficits arising from the closure
largest shareholder with 32,481,024 shares, continued pressure on margins.
of several large paper mills in China.
or 14.95% of the issued shares of the Bank Meanwhile demand conditions remained
as at 31st March 2018. Whilst increasing capacity to meet long
subdued due to moderated growth in key
term demand expectations, we continue to
consumer industries such as tea exports
Nearly 80% of Sector's pre-tax profit invest in technology upgrades and process
and FMCG. Amidst these unfavourable
represents dividend income up-streamed automation which brought about significant
conditions, competition between players
from Vallibel One PLC's investment. cost savings and efficiency gains. During
intensified, due to excess production
the year we invested in new technology
capacity exerting further pressure on
bringing about productivity enhancements
Strategy and Performance margins. The ongoing paper crisis is
across the production process.
expected to continue through FY 2018/19,
Uni-Dil Packaging Limited and we expect margins in the packaging
Our employee base of over 300 is one of
and Uni-Dil Packaging Solution Ltd. industry to continue to be pressured in the
our key strengths, bringing in a level of
short to medium term. We are however more
The Uni-Dil Group consisting of expertise and skills which sets us apart in
optimistic about demand conditions due to
Uni-Dil Packaging Limited and Uni-Dil the industry. We continue to place emphasis
the gradual recovery of the economy and
Packaging Solution Ltd is a major player on nurturing our human capital with ongoing
our internal efforts to diversify and broad
in the packaging industry in Sri Lanka skill development initiatives across all
base our customer segments.
manufacturing a wide range of Corrugated employee categories. Understanding
packaging solutions. The packaging and effectively responding to customers’
industry which accounts for 80% of the requirements on marketing, operational and
“Others” sector's revenue, witnessed a distribution needs is key to nurturing long
revenue growth of 22% in FY 2017/18 term relationships. We invest considerable
69
Sector Review Investments and Others > VALLIBEL ONE PLC
Lanka Ceramic PLC Negative weather conditions and a subdued venture into offshore lending through its
construction industry impacted the mining first offshore banking unity in Myanmar.
Lanka Ceramic PLC, the mining arm
and quarrying industry during the year. Efforts are also underway to pursue offshore
of the group performed well during the
Meanwhile strict government regulations lending opportunities in other regions
year contributing 45% to sector profits.
on mining and growing competition from including several East African countries.
The Company’s mines are located in
imported ceramic raw material suppliers Bolstered by its financial performance and
Meetiyagoda, Owala, Balangoda and
continue to be key challenges faced by the forward looking strategic direction, the
Dediyawela from which Kaolin, Feldspar
industry. We are however confident about Bank’s share price moved up during the
and Ball Clay are mined. During the year
the prospects for FY 2018/19 considering year increasing from Rs. 260.40 as at the
under review the company’s production
the expected gain in momentum in the end of December 2016 to Rs. 315.79 as at
volume decreased from 74,000 MT in the
construction industry. the end of December 2017.Sampath Bank
year 2016/17 to 41,666 MT in 2017/18 while
PLC is listed is on Colombo Stock exchange
revenue decreased from Rs. 282 Mn to Rs.
Sampath Bank PLC an as at 28th May 2018 had a market
178 Mn.
capitalisation of Rs. 87,023 Mn.
Sampath Bank is a leading player in
We continue to capitalise on our specialised the Sri Lankan banking industry and a
mining expertise by diversifying into other systemically important bank; accounting
mining categories. We commenced the for 9% of the licensed commercial banking
manufacture of quartz and powdered sector’s asset base. The Bank operates
dolomite and have plans to supply the an island-wide network of 229 branches,
plantation sector with mineral fertilizer. We covering all districts in the island. The Bank
remain committed to the sustainability of performed commendably well in 2017 with
the resources we consume and continue gross income increasing by 37% to Rs.
to work in close collaboration with the 92.6 Bn and PAT increasing by 33% to Rs.
Geological Survey and Mines Bureau to 12.1 Bn. During the year the Bank rolled out
ensure the quality of our mines. “Paradigm Shift” an internal restructuring
effort aimed at improving efficiency and
effectiveness and providing greater
clarity between corporate and consumer
banking models. 2017 also saw the Bank
70
VALLIBEL ONE PLC Delivering Value
Delivering
Value
Financial Capital
The Group’s financial capital comprises of its shareholders’

funds, borrowings and customer deposits of the Financial
Services arm. Financial Capital is vital in driving the
Group’s strategic aspirations and day-to-day operations
and effective management of the financial resources is
critical in generating long term shareholder value.
71
Delivering Value Financial Capital > VALLIBEL ONE PLC
Financial Performance Revenue Trends
Revenue (Rs. Bn) (%)

80 60
The Group’s revenue increased by 15% The aluminium, plantations, investments and
to Rs.60.97 Bn during the year, led by others sectors also showed improvements 60 45
commendable top line growth in the finance at EBIT level while the consumer sector
sector (+30%) which witnessed robust recorded a 45% decline reflecting the
40 30
loan expansion and widening Net Interest contraction in top line. Over the past
Margins. The lifestyle sector recorded a 5 years, the Group has recorded robust
20 15
7% increase in revenue supported by the profit growth with operating profit increasing
strategy of value addition that was pursued at a CAGR of 27% since 2013.
0 0
during the year. It is noteworthy that all
sectors other than Consumer recorded Net Finance Cost
top line growth. The Group’s revenue -20 -15
2014 2015 2016 2017 2018
composition is dominated by the finance The Group’s net finance cost increased by
Consolidated Revenue (Rs. Bn)
and lifestyle sectors which contributed a 33% to Rs.1.53 Bn due to the prevalent Growth (%)
respective 41% and 37% to Consolidated rising interest rate scenario coupled
Revenue. with a 8% increase in the Group’s total Revenue Composition
debts (excluding customer deposits and
Operating Costs borrowing of L B Finance PLC). Finance 7% 6%
costs increased by 19% while finance
The Group’s operating costs increased income declined by 16% during the year.
by 17% to Rs.13.03 Bn, mainly led by
a near 70% increase in other operating Profitability
expenses. This increase stemmed primarily
from the Finance Sector due to a rise Consolidated pre-tax profit increased
in impairment charges on loans and by 28% to Rs.10.74 Bn during the year, 4% 37%
advances. The increase in administrative supported by the profit contributions from
expenses was curtailed to 1% reflective the finance and lifestyle sectors. During the
of cost optimisation and lean initiatives in year share of profits from equity accounted
several sectors while distribution expenses investees declined to Rs.30.55 Mn, from
5% 41%
grew by 14% during the year primarily due Rs. 687.15 Mn the year before due to the Lifestyle Sector Finance Sector
to increased marketing and promotional reclassification of the holding in Sampath Aluminium Sector Plantations sector
activities in the Lifestyle sector. Bank. The Finance Sector’s pre-tax profit Leisure Sector Consumer Sector
(excluding the impact of Sampath Bank) Investments and Other Sector
Operating Profits increased by 10% reflecting strong loan
growth and wider NIMs while the Lifestyle Consolidated EBIT
Consolidated earnings before interest sector’s pre-tax profit declined by 20%
and tax widened by 30% to Rs. 13.72 during the year. These two sectors (Rs. Bn) (%)
Bn; this reflects a normalisation of profits collectively accounted for 96% of the 16 80
following a one-off loss of Rs.3.90 Bn on the Group’s consolidated earnings. Income tax
reclassification of Sampath Bank PLC from expenses increased by 4% to Rs. 3.93 Bn 12 60
an associate to an investment in 2016/17. demonstrating continued value creation
Excluding this effect, the Group operating to the government in the form of taxes. 8 40
profit demonstrated a marginal decline of Meanwhile, the Group’s Return on Assets
1% during the year. The Finance Sector and Return on Capital Employed widened 4 20
saw commendable profit growth, which saw to 3.3% and 15% respectively compared to
operating profit increasing by nearly 13% to 2.6% and 13% the year before. 0 0
Rs. 7.81 Bn. The Lifestyle sector recorded
a 13% drop in operating profits primarily
-4 -20
due to a narrowing of gross profit margins 2014 2015 2016 2017 2018
against the backdrop of rising input costs. Consolidated Revenue (Rs. Mn)
Growth (%)
72
VALLIBEL ONE PLC < Financial Capital Delivering Value
Financial Position
Total Assets
The Group’s total assets increased by 17% of the Group’s total assets. Despite the Total Assets
to Rs. 206.17 Bn during the year, upheld increase in borrowings, the Group’s gearing
by the Finance Sector’s 15% portfolio level remained relatively unchanged at (Rs. Bn)
expansion. Credit assets accounted for 0.19 times; including customer deposits 250
nearly 50% of the Group’s total assets as and borrowings of L B Finance PLC the
at end-March 2018 relatively unchanged gearing level amounted to 0.64 times 200
compared to last year’s composition. compared to 0.63 the year before.
Property, plant and equipment also 150
increased by 27% during the year Cash Flow
reflecting ongoing capital investments in 100
manufactured capital in both the lifestyle The Group’s stronger performance was
and leisure sectors. The Group’s capital reflected in its cash flows with net operating
50
expenditure for the year amounted to Rs. cash flow increasing by 43% to Rs. 586 Bn
5.61 Bn, the sectoral composition of which during the year. Net cash from investing
activities amounted to an outflow of Rs. 7.81 0
is given below. The year under review 2014 2015 2016 2017 2018
also saw more intense working capital Bn demonstrating the Group’s continued
requirements with inventories commitment to strengthen its physical
increasing by 25% during the year. infrastructure- these investments primarily Asset Composition
reflect ongoing investments in the Group’s
new hotel project. Net cash inflows from
Total Liabilities 1% 19%
financing activities amounted to Rs. 3.7
Consolidated liabilities increased by Bn during the year; the Group’s proceeds
19% to Rs.137.71 Bn mainly due to an from borrowings were Rs. 20.4 Bn while
2%
expansion in LB Finance’s customer settlements amounted to Rs. 14.9 Bn during
deposit base which grew by 21% during the year. Overall the Group’s CCE position
the year. Other borrowings also increased strengthened by Rs.1.76 Bn.
by 13%, reflecting an increase of debt at
Company level and in the Lifestyle Sector. 2% 19%
Segment liabilities in the Leisure sector
also grew substantially to Rs. 584.85 Mn
compared to Rs. 61.74 Mn due to deferred 2% 55%
tax adjustments on revaluation of property.
Lifestyle Sector Finance Sector
The Group’s capital position strengthened
Aluminium Sector Plantation sector
during the year supported by profit retention
Leisure Sector Consumer Sector
with total shareholders’ funds increasing
Investments & Other Sector
by 13% to Rs. 68.46 Bn and funding 33%
73
Delivering Value Financial Capital > VALLIBEL ONE PLC
Shareholder Value Creation

The Group continued to deliver on its the year before, reflecting the broader Funding composition
shareholder value commitments recording market conditions. The Company’s share
an increase in EPS and Net Asset value per is currently trading at a discount of around 8% 33%
Share. The market price per share declined 60% to its net asset value and is attractively
marginally to Rs.17.20 from Rs.17.50 priced.
2018 2017
Earnings per share (Rs.) 3.32 0.59

Net asset value per share (Rs.) 44.08 38.27 59%
P/E ratio (No. of time) 5.18 29.66
Dividend per share (Rs.) 0.50 0.50 Shareholders’ Funds
Market price per share (Rs.) 17.20 17.50 Borrowings
Price to book value (%) 39 45 Other Liabilities
74
Manufactured
Capital
Our Manufactured capital consists of state-of-the-art manufacturing

facilities, technologically advanced machinery, an extensive
network of showrooms and branches and hotel infrastructure of
international standards. The Group’s Manufactured Capital is a
vital component of its value creation and has been instrumental in
achieving the manufacturing excellence we are renowned for. Our
steadfast focus on expanding and upgrading our manufactured
capital continues to drive value across the Group, setting us apart
as pioneers and visionaries in the industries we operate in.
75
Delivering Value Manufactured Capital > VALLIBEL ONE PLC
Our Manufactured capital consists of

state-of-the-art manufacturing facilities, Sector Company Product/Service Factory Net Book
Location Value of PPE
technologically advanced machinery,
(March 2018)
an extensive network of showrooms (Rs. Mn)
and branches and hotel infrastructure
of international standards. The Group’s
Lifestyle Royal Ceramics Manufacture Eheliyagoda
Manufactured Capital is a vital component Lanka (PLC) and retail
of its value creation and has been of Homogeneous
instrumental in achieving the manufacturing verified porcelain
and operational excellence we are tiles and glazed
porcelain tiles
renowned for. Our steadfast focus on for the Rocell brand
expanding and upgrading our manufactured
capital continues to drive value across the Royal Porcelain Designs and Horana
Group, setting us apart as pioneers and (Pvt) Limited manufactures glazed
visionaries in the industries we operate in. ceramic, vitrified
glazed porcelain
and vitrified glazed
Manufacturing Facilities polished porcelain 14,092
floor tiles under
The Group’s Manufactured capital consists Rocell brand
of its property, plant and equipment, which
had a net book value of Rs. 37,480 Mn Lanka Tiles PLC Manufacture of glazed Ranala
as at end-March 2018. As a Group with porcelain and ceramic
floor tiles under the
substantial manufacturing interests across brand Lanka Tiles
a range of industries, a significant portion of
our capital stock consists of manufacturing Lanka Walltiles Manufacture of Meepe
facilities and related fixed assets. Our PLC ceramic walltiles
manufacturing facilities which are equipped
with the latest machinery and technology Rocell Bathware Manufacture of Homagama
Limited Sanitaryware solutions
continue to lead the way in the industries we
operate in while enabling us to consistently
maintain the quality and efficiency Aluminium Swisstek Aluminium Extrusions Dompe 892
standards that have come to be associated Aluminium Limited
with our brands.
Plantations Horana Tea and rubber 16 estates in 420
The table below lists the Group’s key Plantations the Western
manufacturing facilities and the current PLC and Central
aggregate net book value of these assets Provinces
by sector. Please refer to Note 3.2 of the
Financial Statements for the accounting Investments Unidil Packaging Corrugated cartons Dekatana 601
policy pertaining to the measurement and and Others Limited
recognition of these assets.
Retail Network
Our Manufactured capital also includes extensive networks of showrooms and
branches in several of our sectors.
Sector Retail/Branch Network
Lifestyle 56 Rocell showrooms and 48 Lanka Tiles Showrooms are spread

out across the country.
Finance 123 branches across 9 provinces

76
VALLIBEL ONE PLC < Manufactured Capital Delivering Value
Sector-Wise
Value Addition
Capital Expenditure
We create value from our manufactured capital through continuous capital expenditure
(Rs. Mn)
investments aimed at enhancing capacity, product quality, productivity and sustainability
3,000
throughout our operations. Total capital expenditure during the year amounted to
Rs. 5,611.8 Mn, with significant investments in the tiling, finance and leisure sectors.
2,400
Capacity Enhancement
1,800
During the year we increased the capacity in several of our factories in response to market
trends and envisaged growth opportunities. 1,200
Company Factory Capex Percentage 600

Location Increase
Rs. Mn in Capacity
0
A B C D E F G
Royal Ceramics Lanka (PLC) Eheliyagoda 76 35 A – Lifestyle B – Finance C – Aluminium
Lanka Tiles PLC Ranala 402 35 D – Plantations E – Leisure
Rocell Bathware Limited Homagama 78 25 F – Consumer G – Investments and Others
Lanka Walltiles PLC Meepe 167 5.7

Royal Porcelain (Pvt) Limited Horana 128 6.5 Property Plant and
Equipment by Sector
(Rs. Mn)
25,000
We also expanded our reach across sectors through investments in warehousing capacity
as well as showroom and branch network expansion. During FY 2017/18 we increased
20,000
our warehousing capacity for the tiling sector by 240,000 sq ft. We also expanded our
showroom network with 4 new Lanka Tiles show rooms and 3 new Rocell showrooms whilst
continuing to upgrade and enhance our existing showrooms. Meanwhile LB finance too 15,000
expanded its branch network with 5 new branches during FY 2017/18.

10,000
Technology Upgrades
5,000
We continue to invest in upgrading our technology across almost all our manufacturing
facilities to improve product quality, productivity and efficiency. During the year we invested
0
in cutting-edge technology and machine upgrades across our manufacturing facilities. A B C D E F G
Investment in Sustainable Operations
G – Investment and Other
Driving sustainable manufacturing practices through more energy efficient technology
and processes continues to be a priority. During the year we invested in green technology
across the group. Details of some of the initiatives are given below:
Creating value through our
Sector Green Initiative
Lifestyle Solarizing Main Warehoused Enhanced

Enhanced product Enhanced
capacity quality and sustainability
Aluminium New Effluent System productivity
Plantations Energy Efficient Utilities

77
Delivering Value VALLIBEL ONE PLC
Human Capital
Our strength as a group lies in the innovative and

pioneering spirit our employees. Fostering this spirit by
embracing the diversity of our employees and creating an
engaged and empowered team is the basis of our employee
value proposition.
78
VALLIBEL ONE PLC < Human Capital Delivering Value
Gender Analysis
Our Team Profile Gender Analysis
by Sector
Our team of 13,739 employees is as (Nos.)
Gender Analysis
diverse in composition as the skills and by Category 3,500
experiences they bring to the table. Whilst
embracing this diversity and understanding Employment Male Female
Category 2,800
the intricacies of each sector, we ensure
formalized governance structures and
2,100
policy frameworks that are uniform across Senior
sectors and compliant with all relevant management
and above 190 18 1,400
regulations. With a significant presence in
the manufacturing, plantation and finance Executive staff 1,714 762
700
sectors, almost 91% of our employees are Non-Executive
concentrated in the lifestyle, plantation staff 3,493 1,064
0
and finance sectors. We strive to bring in Other 3,298 3,200 A B C D E F G
gender balance into our operations and Total 8,695 5,044 Male Female
are proud that 36.7% of our workforce
is female. Meanwhile we continue to
D – Plantations E – Leisure
contribute to regional employment by
F – Consumer G – Investments and Others
providing employment to youth across the Regional Distribution
nine provinces.
Percentage of Total Employees New Recruits by Age
by Region
Talent Attraction
(%) 2%
Our recruitment polices across the group
50
are aimed at ensuring that people are
recruited for positions that best suit
40
their talents and capabilities. We are an
equal opportunity employer that provides
30
opportunities for all employees regardless
of their gender race or religion. We ensure
that our recruitment policies are compliance
20 21% 77%
with all legislative requirements.
10
18-30 years 30-55 years
During the year, the Group added 2,481
0 Above 56 years
new recruits. 78% of these new recruits
A B C D E F G H I
were under the age of 30 while females
A – Central Province B – Western Province New Recruits
accounted for 34% of new employee hires
C – Southern Province D – Northern Province by Gender
during the year.
E – Eastern Province F – North Central Province
(Nos.)
G – North Western Province
H – Sabaragamuwa Province I – Uva Province 1,750
1,400
Learning and Development
Empowering our people through continuous 1,050

learning forms the basis of our talent
management framework. Training needs are 700
identified through a continuous process of
performance management and employee 350
engagement in order to ensure close
alignment between business objectives 0
and personal aspirations. Male Female
79
Delivering Value Human Capital > VALLIBEL ONE PLC
Employees at all levels across the group Revenue per Employee

Rewards and Remuneration
are provided multiple opportunities for
knowledge and skill development through Remuneration is made up of guaranteed (Rs. Mn)
on-the-job training, cross functional and pay and performance-based variable pay 20
cross sectoral exposure and structured to encourage productivity. Remuneration is
training programs. International exposure determined based on competency level and
16
forms a vital component of our learning market rates and is linked to performance
and development and we continue to appraisals which are carried out on an
12
provide opportunities for our employees to annual or bi-annual basis. Several our
participate in international exhibitions and companies are currently in the process of
visit world class manufacturing plants. 8
upgrading their performance evaluation
systems in order to streamline the process
The Group invested Rs. 18.94 Mn in training further. The Group does not practice any
4
initiatives during the year. Out of the total form of gender-based discrimination when
training hours provided to employees determining remuneration.
0
A B C D E F G
across the group amounting to 2,977, 48%
A – Lifestyle B – Finance
of hours were dedicated for non-executive Full time employees receive a wide range of C – Aluminium D – Plantations
staff training indicating our commitment to benefits including as out-patient treatment E – Leisure F – Consumer
developing all categories of our employees. schemes, hospitalisation insurance, annual G – Investments and Others
company functions and gratuity etc.
Training Hours per
Employee Category Employee Productivity
No. of % of Measuring employee productivity is

Hours Total an ongoing process which enables us
Hours to pro-actively address gaps and take
necessary counter measures. Productivity
Senior measurement is carried out on a daily basis
management for most of our manufacturing facilities while
and above 1,515 4 other sectors too have stringent systems to
Executive staff 14,858 45 measure employee productivity.
Non-Executive
staff 15,843 48 Career Progression
Other 962 3
Career development is a critical component
Total 33,177 100 of our HR development framework as it
ensures effective succession planning
and professionally and personally fulfilled
employees. High performers are identified
and groomed for leadership positions while
employees are given multiple opportunities
for cross functional and cross sectorial
exposure.
80
VALLIBEL ONE PLC < Human Capital Delivering Value
We actively engage with our trade unions in Employee Retention

Health and Safety
addition to continuously obtaining feedback by Sector
from employees through employee surveys
(%)
Work-related fatalities 2 and open communication lines. This
100
Lost working days 1,013 ongoing dialog has enabled us to pro-
actively address any employee concerns
Work-related injuries 202 80
and as a result, there were no incidents of
industrial disputes during the year.
60
The health and safety of our employees
is of utmost importance to us. Health
Grievance Handling
40
and safety policies particularly in our All companies within the group have
manufacturing companies where the degree formalised procedures to handle grievances. 20
of occupational hazards is higher go well Supervisors are trained to handle grievances
beyond the legal requirements. Rocell however an effective escalation procedure 0
Bathware for example has implemented is also in place for employees to escalate
A B C D E F G
a stringent risk mitigation and accident issues to the HR department of Managing

prevention code which includes measures Director if required.
such as identification of hazardous areas, G – Investments and Others
mandatory protective covering for persons
Employee Retention
and machines, identification of unsafe
conditions and acts ongoing health and Employee retention is the litmus test of
safety training for employees. Meanwhile our employee value proposition and the
factory specific awareness programs are robustness of our HR policies. A holistic
conducted on a regular basis to ensure the approach to nurturing our human capital
highest degree of health and safety. which involves focusing on employee
development and engagement to make
Our health and safety policy go beyond our employees true partners of our growth
physical wellbeing to include spiritual and trajectory has paid dividends by way of
mental wellbeing as well. During the year healthy retention rates across the Group.
we conducted several spiritual management
programs for our employees while actively Several of our companies participate in
promoting work-life balance amongst our the Great Place to Work assessment and
employees. consistently receive high scores. During
the year Lanka Wall Tiles satisfaction score
Industrial Relations improved to 75% from 64% the previous
year, while Lanka Tiles score improved to
Positive industrial relations are critical for
66% from 63%. The employee turnover
the smooth operation of our business and
rate was the highest in the consumer
is therefore a key aspect of our employee
sector, due to high turnover levels at sales
engagement process. Many of our group
representative levels. We are actively
companies have active trade unions and
addressing this issue by re-vamping our
have entered into collective agreements
incentive schemes, conducting motivational
which are valid for a period of 3 years. In
programs and improving the prospects of
the plantation sector however, collective
our sales staff in this sector.
bargaining matters are directed through the
Employers Federation of Ceylon.
81
Intellectual
Capital
Our intellectual capital consisting of our collective knowledge

and unique systems and processes, continue to drive value by
fostering innovation and excellence throughout our business.
We nurture our intellectual capital by emphasising on a culture
of continuous learning, knowledge sharing and ongoing focus
on research and development. The Group’s intellectual capital
is a key source of competitive advantage and is reflected by
our dominant market positions in several key business lines.
82
VALLIBEL ONE PLC < Intellectual Capital Delivering Value
Brand Equity
Our brands which have grown to be synonymous with, quality, service excellence and
innovation are an important part of who we are and the values we espouse. A number of Our Strong Market
our brands were recognised during the year as top brands in the country.
Position
Leader in floor and
Rocell • Ranked 20th in Interbrand top 100 for 2017
walltiles Market
• Ranked 24th in Brand Finance 100 Most Valuable
Brands in 2017
Significant player in the
L B Finance • Ranked 45th in LMD top 100 for 2016/17 aluminium extrusions
• Ranked 17th in Intebrand top 100 for 2017
market
• Ranked 26th in Brand Finance 100 Most Valuable
Brands in 2017
• Rank 33rd in LMD's Most Respected Significant player in the
Entities in 2017 NBFI Sector
Vallibel One • Ranked 16th in LMD top 100 for 2016/17
• Among the Business today Top 30 Established presence in the
Business Entities for 2016-17 plantation sector
The Fortress Resort & Spa • Adjudged Sri Lanka’s Best at The World Luxury
Award winning boutique
Spa Awards 2017
resort
Tacit Knowledge Research and Development Market leader in the dessert

pre mixes food category
The vast amount of tacit knowledge our We continue to leverage our research and
diverse pool of employees possess is one development capabilities to drive innovation
of our main competitive advantages. A across the Group. Each of our factories has Market leader in
culture of knowledge-sharing and mentoring a dedicated Research and Development ophthalmology products
and coaching has been nurtured across the unit to drive product development and
Group to ensure this knowledge is passed process improvement in each of our
down and nurtured as organisation capital. factories. Meanwhile our partnerships A significant player in
with international production and design the corrugated carton
Systems and Processes companies, enable us to benefit from the manufacturing industry
transfer of world-class knowledge. Details
We continue to refine our systems of key innovations during the year could be
and processes by incorporating latest found on Page 84 of this Report.
technology trends and industry best
practices into our operations. Technical
teams stay abreast of global trends through
regular visits to international exhibitions
and worldclass manufacturing facilities.
Meanwhile we continue to introduce world
class by complying with an expanding
list of international quality and safety
certifications. Please refer page 85 for more
details on quality and safely certifications.
83
Social and
Relationship
Capital
“The Group’s Social and Relationship Capital reflects a vital

element of its capital inputs and consists primarily of the
relationships our businesses have nurtured with diverse
stakeholders. In ensuring the creation of an enabling and
conducive environment, we consistently strive to integrate
the needs of our stakeholders into our business strategy.”
84
VALLIBEL ONE PLC < Social and Relationship Capital Delivering Value
Customers Our Customer Value Proposition Customer Reach

Sector No. of customer
Creating value for customers has and Innovation contact points
always will continue to be at the core of our
business. Our customer value proposition Our ability to astutely gauge our customers’
Lifestyle 56 Rocell outlets and
which revolves around the pillars of changing expectations and fluidly evolve 48 Lankatiles outlets
innovation, product responsibility and in response to these preferences is due to
the ethos of innovation we drive through Finance 123 branches and
service quality enable us to stay relevant 36 gold loan centres
amidst constantly evolving attitudes, our entire business. We continued to
perceptions and socio-economic trends expand our product ranges in several Aluminium Islandwide distribution
while steadfastly gaining the trust of sectors including lifestyle, consumer and network
successive generations. packaging while exploring innovative ways
Consumer Islandwide distribution
of improving processes and systems across network
Customer Profile sectors. (Please refer to page 81 Intellectual
Capital for more information on innovation)
Through its’ strong market positions across
diverse industries, the Group caters to Product Responsibility Key Innovations of 2017/18
individuals, SMEs and corporates across
the island. A wide network of branches, Product responsibility is the foundation Lifestyle Tiles: 13 new collections
on which we have nurtured the trust our and 1 new large size
showrooms and retail outlets ensure Sanitaryware:
accessibility and act as key contact points customers have placed in our products.
New collections
We comply with a range of domestic and
for customer engagement.
international quality certifications and Finance Targeting new customer
accreditations pertaining to our processes, categories through tailor made
Customer Reach and Accessibility products such as 12 - month
systems and products across sectors
loan with flexible payment
The diversity of our customer base has and meticulously adhere to standards scheme, Mul-gala home loans,
prescribed. Saviya and Sanda Saviya
grown in tandem with the diversity of our
loans etc.
expanding portfolio and today spans across
There were no instances of non-compliance
a wide socio -economic and geographical Aluminium Introduction of thermal
to any regulations and/or guidelines resistant profiles
spectrum. Whilst a large majority of our pertaining to customer health and safety
customers are concentrated in the western marketing communications and product and Consumer Expansion of product portfolio
province we are actively expanding to include more sugar free/
service labelling requirements.
healthy products
our local footprint through targeted
geographical expansion. During the year Product responsibility for us goes beyond
the Group also expanded its overseas our own operation and includes that of
presence in the tiling and finance sectors. our suppliers as well. We have adopted a
policy of supporting the compliance journey
of our suppliers and continue to act as a
Customer Satisfaction
catalyst in their journey toward improved
environmental and social compliance.
Customer satisfaction is of paramount
importance to us as it is the yardstick by
Service Quality
which we measure the success of our
customer value proposition. Structured We believe in a holistic customer
mechanisms such as customer satisfaction experience which includes an exceptional
indexes, customer satisfaction surveys, experience both in terms of the products
mystery shopping visits etc. are in place to and services. We place strong emphasis
quantitatively measure customer satisfaction on customer convenience and continue to
across the group and the feedback is used expand and develop our service channels
continuously improve our offering.
85
Delivering Value Social and Relationship Capital > VALLIBEL ONE PLC
Sector Standards and Certifications
Royal Ceramics and Royal Porcelain

Lifestyle
• ISO 13006:2012 • SLS 1181:2005
• ISO 10545:2012 • CE Certification
• ISO 14001:2004 • Green Label certificate for sustainable
• ISO 9001:2008 building materials and products.
Rocell Bathware
• ISO 9001:2005 • Certificate and declaration of conformity

• ISO 14001:2015 for CE (European compatibility)
• Water mark certificate of conformity levels 1 and 2 • Green Label certificate for sustainable
• 4 star rating – water efficiency labelling scheme building materials and products.
Lanka Tile
• ISO 9001:2015 • SLS

• ISO 14001:2015 • Green Label certification.
• OHSAS 18001
Lanka Walltiles
• ISO 9001:2015 • SLS

• ISO 14001:2004 • Green Label certification.
Finance L B Finance
• National Long-Term Rating at “A-(lka)”; Outlook Stable – Nov 2017

• National Long-Term Rating for subordinated debt at “BBB+(lka)” – November 2017
Swisstek Aluminium
Aluminium
• ISO 9001:2008 • SLS 1410:2011
• SLS 1411:2011
Plantations • Accredited for “Certified Oil Palm” by the Forest • Ethical Tea Partnership (ETP) and
Stewardship Council (FSC) Fair Trade certification
• ISO 22000:2005:HACCP for all tea factories • Rainforest Alliance Certification (RA) for 8 estates
• ISO 9001 2008 certification for all rubber factories
Leisure • Wellness & Spa Europe Certificate • Conde Nast Johansens 2017
• GMP Certification for good manufacturing practices • Trip Advisor – Certificate of Excellence
– by Sri Lanka Standards Institution
Investments UNIDIL • HACCP

and Others • WRAP (Worldwide Responsible Accredited
• ISO 9001:2015
Production).
• ISO 14001:2015
• SMETA (Sedex Members Ethical Trade Audit)
• ISO 22000:2005
86
VALLIBEL ONE PLC < Social and Relationship Capital Delivering Value
across sectors to increase accessibility. ongoing basis to ensure that our customers Supplier Engagement
We are increasingly exploring online receive the same high quality of service
We engage with our suppliers through
channels such as online ordering, online through all channels.
monthly procurement committee meetings,
banking etc. in addition to expanding our
supplier reviews and assessments,
physical footprint. Suppliers and Business Partners
site visits and the annual registration of
Suppliers and other business partners suppliers. Constantly engaging with our
Constantly engaging with our customers
are integral to our business as the quality suppliers and business partners enables
has enabled us to be more attuned to their
of our products and sustainability of our us share knowledge on best practices
expectations and concerns, monitor our
business depend on the strength of these and industry developments while ensuring
service quality and proactively address
relationships. A philosophy of creating uniformity of compliance standards.
issues that may arise. Most sectors have
true partners in progress underpins our Ongoing suppler engagement is also a
structured mechanisms such as formal
relationships with our suppliers and key aspect of our supplier development
complaint management processes and
partners and has enabled us to foster programs particularly in relation to our small
customer grievance frameworks to identify
long-standing partnerships that continue to and medium suppliers as it an opportunity
and respond to customer grievances.
create synergies that drive mutual value. to provide support and guidance on
During the year Rocell introduced a
becoming more sustainable businesses.
“Customer Monitoring Centre” at their Head
office in Colombo to pro-actively engage Profile of Our Suppliers and Supplier Profile
with customers and obtain real-time Business Partners
feed-back on customer experience.
The Monitoring Centre is linked to showrooms The Group has a diverse pool of suppliers
across the country through CCTV’s to ranging from small scale suppliers to 6% 9%
ensure customer service excellence. reputed global brands. Almost 71% of our
suppliers are in the small and medium
Ensuring that all our business partners category. Over the years these partnerships
adopt the same standards we do is an have developed into symbiotic relationships 1%
integral part of ensuring service quality. that continue to drive mutual value
We carryout awareness and training and growth.
programs for tilers and distributors on
products and sales techniques on an Our principles and business partners
include a number of world renowned brands
for many of which we are the sole agent in 13% 71%
Sri Lanka.
Small and Medium Suppliers

Sector Partners
Large Scale Suppliers
Sub Contractors B2B Suppliers
Ophthalmic Solutions Alcon Others
Premixed Dessert Mixes Motha Supplier Development

Interior and Flooring Solutions Brintons, Shaw, Interface; Gerflor, Quick-step, We view our suppliers and principals as
Haworth, Godrej, Hunter Douglas, Hufcor partners in our growth journey and strive
to nurture mutually beneficial long-term
Building Products Dux, Alucoworld, Joven, Usaton and Havells
relationships with them. During the year we
Insurance Solutions AON continued to invest in supplier development
programs aimed at capacity building
Tools and Machinery Black and Decker and creating awareness on sustainable
practices.
Travel and Transportation services Lufthansa Cargo, Kuwait Airways, Philipines
Airlines Cargo, Kenyan Airways Cargo
87
Delivering Value Social and Relationship Capital > VALLIBEL ONE PLC
Tilers Club Disaster Relief

Capacity • Provision of fertilizer Our tilers clubs which currently has over As we have done in the past, we stepped
building for tea smallholders 1700 tilers, aims to empower self-employed into support communities affected by
• Assistance tilers by providing financial and technical natural disasters. To this end we distributed
provided to SME assistance. During the year we conducted stationary and school books to school
suppliers to obtain awareness programs in addition to financial children affected by land-slides and floods
all required support to tilers across the country. in selected areas.
approvals
Environmental Conservation
Plantation Sector Welfare
Creating • Technical sessions Environmental conservation is an important
Good health and wellbeing is a key area of
Awareness on for tilers aspect of our CSR program and several
focus among our plantation communities
sustainable • Technical of our companies are actively engaged
practices
and Horana Plantations continues to
Assistance for in conservation efforts and promoting
dedicate significant resources for the
suppliers to obtain awareness. An e-waste art competition for
upliftment of the maternal and child
SLS certification employees and families was conducted
health and nutrition. Other health related
by L B Finance with the aim of creating
service provided to the community include
awareness on recycling and conservation.
immunizations, optical and dental care
L B Finance also financed a program to
Community services as well as regular awareness
install sign boards with environmentally
programs relation to maternal and child
Our CSR initiatives transcend philanthropy friendly messages at national parks and
health, family counseling services to
to strategically provide tangible long-term selected urban locations. Meanwhile tree
discourage child abuse, domestic violence
support to community empowerment and planting programs were carried out in
and teenage pregnancies. We continue to
development. Over the years we have several L B Finance branches. L B Finance
uplift the living conditions and standards
developed the communities surrounding also distributed wild life jackets for forest
of our estate worker base. Safe drinking
our operations through infrastructure rangers in selected reserves as part of
was provided to the community through a
developments, socio-economic upliftment their wild-life conservation project. Horana
large gravity fed water system constructed
and environmental conservation. Plantations is actively involved in protecting
in collaboration with the Adventist
bio-diversity of vulnerable regions through
Development and Relief Agency (ADRA).
Development of Community habitat enrichment program across its
During the year 27 housing units were
plantations. Meanwhile they regularly
Infrastructure completed at an investment of Rs. 27 Mn in
conduct programs to increase awareness
We actively engage in infrastructure order to enhance the living standards of our
on bio diversity conservation among
development in areas surrounding estate workers.
plantation communities.
our factories and continue to invest in
community infrastructure such as roads,
hospitals and schools. During the year we
were also involved in the renovation of the
Ragama Hospital.
Pre-schools Project
The project aims to improve the quality of
pre-school learning across the country.
The initiative, funded by L B Finance PLC,
Royal Ceramics Lanka PLC and Lanka Tiles
PLC supported infrastructure improvements
relating to hygiene and safety such as
improved washroom facilities and boundary
walls, class room improvement including
provision of chairs and tables and the
provision of early development toys. 450
schools across the country were selected
for the project which was successfully
completed during the year.
88
Natural
Capital
We recognise that our sustainability as a business is

inextricably linked to the sustainability of our environment.
Our Environmental Management Framework revolves around
three pillars of Responsible Consumption, Minimising
Negative Impacts and Ensuring Compliance.
89
Delivering Value Natural Capital > VALLIBEL ONE PLC
Responsible Consumption Energy Water

Our main sources of energy include Water management is a key area of our
As a Group with substantial interests in electricity from the national grid, fossil fuels sustainability agenda. we have incorporated
the manufacturing sector, we are heavily and renewable energy. Part of our energy water recycling and purification
dependent on the availability and quality of requirement is met by renewable energy mechanisms into our operations where
several key natural resources. Responsible sources such as hydro power and bio-mass ever possible to increase water efficiency
consumption of these natural resources is and we are actively seeking to increase this across the group. Almost 19% of water
thus vital for the long-term sustainability of percentage. used in our tiling factories is recycled and
our business. either re-used in the production process
We continuously seek ways in which we or to meet ancillary water requirements
Raw Materials can be more energy efficient. To this end such as gardening, floor washing and toilet
we introduced several and sector-specific flushing etc. All our estates also have water
Efficient Consumption initiatives to improve energy efficiency purification plants through which treated
We emphasise on responsible sourcing across the Group. water is released back into the environment.
of raw materials by encouraging all
our suppliers to comply with required Energy Initiatives 2017/18 Minimising Our Environmental
environmental regulations. We also continue Impact
to invest in technology and machinery that Usage of a waste heat recovery
improve our production processes and system in several factories As a responsible corporate citizen, we
ensure greater efficiency in raw material take every precaution to minimise negative
usage. Key raw material used in each of our Installation of capacitor banks impacts on the environment arising from our
sectors are listed in the table alongside. at several factories operations.
Energy generation from firewood

Recycling in corrugated packaging
Recycling continues to be an integral Routine machinery maintenance
component of our raw material management to reduce heat loss in Aluminium
process and is strictly adhered to across manufacturing
the sectors. In the tiling sector almost 99%
of the raw materials used is recycled while Energy Generation from firewood
the remaining 1% is crushed and used to in the plantation sector
refill source mines. Paper waste generated
Installation of Energy saving utilities
at Uni-dil, our corrugated packaging
company is exported to India for recycling.
Meanwhile 100% of billet scraps generated
We continually monitor the energy
from aluminium extrusions production
consumed outside the organisation.
process is recycled inhouse while a third
Consumption in 2017/18 amounted to
party has been contracted to recycle any
1,945,496 litres which included the fuel
waste that cannot be processed in-house.
consumption by company owned vehicles,
employee commuters and outsourced
distributors.
90
VALLIBEL ONE PLC < Natural Capital Delivering Value
Emissions Management Environmental Compliance

Dust is one of the primary pollutants in the
We pride ourselves in creating
manufacture of tiles and bathware. In order
environmentally friendly, sustainable
to reduce the impact from dust emissions,
brands across the sectors we operate in.
we are in the process of installing “water
All factories operate within the legal and
curtains” and dust suction plants in
regulatory limits specified by the Central
most of the factories involved in the tile
Environmental Authority (CEA). In addition,
manufacturing process. Meanwhile to
we have obtained and comply with several
contend with kiln exhaust and emissions,
domestic and global environmental
we are in the process of installing heat
measures in order to ensure the highest
exchangers at the Eheliyagoda and Horana
environmental standards.
factories. Emissions from our Aluminium
extrusions plant is safely discharged
through a 100 feet chimney. Sector Environmental Certifications
Effluent and Waste Management Tiling and Sanitaryware • ISO 14001:2004 certification for environment
Whilst we strive to minimize waste through management
innovative re-cycling mechanisms, any • GREEN Label (Green Star) certification from the
waste or effluents released into the Green Building Council of Sri Lanka (GBSL)
environment is done so in a responsible • CE certification indicating conformity with health,
manner in full compliance with regulatory safety, and environmental protection standards
requirements and industry best practices. In for products sold within the European Economic
the tiling sector almost 99% of solid waste is Area (EEA)
recycled either by reusing in the production • Rocell Bathware has obtained water mark certification
process or by converting into saleable and WELS certification for water efficiency
forms such as mosaic tiles or as inputs to
Plantations • Accredited for “Certified Oil Palm” by the
other industries. The remaining 1% of waste
Forest Stewardship Council (FSC) certifying
is used for quarry-filling. Segregation of that the Company adopts sustainable forest
solid waste is carried out across sectors. management practices
As part of our community involvement,
• Rain Forest Alliance certification for estates
we also commenced carrying out waste
disposal in our plantation communities. Packaging • ISO 14001:2004
Waste water from our manufacturing plants • Certificate of the Environmental Management
are all treated before being released into System by the Sri Lanka Standards Institution
the environment while Swisstek Aluminium
has a fully equipped sludge yard through
which sludge is handed over to cement During the year we had one instance of
manufacturing companies. non-compliance when effluent water from
our Swisstek Aluminium factory leaked into
a water-body in the area. We have however
taken all necessary corrective and proactive
actions to address the issue including
investing in a new effluent system for this
factory.
91
Governance VALLIBEL ONE PLC
Governance
Corporate Governance
The Directors of Vallibel One place a high This Report sets out how Vallibel One hold 8.464% and 8.461% respectively.
degree of importance on sound corporate complies with the provisions of the The public shareholding in Vallibel One is
governance practices and are committed Companies Act and the Listing Rules and 19.32% held by 11,063 public shareholders.
to the highest standards of corporate the measures taken to monitor performance
governance within the Group. of the significant investments made in Shareholders receive the Annual
the subsidiaries and the associate of Report including Financial Statements,
Being a diversified investment holding Vallibel One. Report of the Independent Auditors, Annual
company, Vallibel One PLC has grown Report of the Board of Directors, Notice of
through acquisition of mature businesses Meeting and the Form of Proxy, 15 working
across a number of industry sectors Shareholders days prior to the Annual General Meeting.
since inception. Vallibel One’s portfolio of
investments include controlling stakes in They vote at the Annual General
L B Finance PLC, Royal Ceramics Lanka Audit Meeting to re-elect/appoint Directors and
Committee
PLC and Delmege Limited which are in to re-appoint/appoint Auditors on a regular
turn holding companies with their own basis in accordance with the Companies
subsidiaries. Greener Water Limited is a Act and the Articles of Association of the
Remuneration Company
fully-owned subsidiary whilst The Fortress Committee
BOD
Secretary Company.
Resorts PLC is an equity accounted
Associate. The Group has 9 public The Board recommends the re-election/
listed companies which have their own Related Party
appointment of Directors, to shareholders
Transactions
governance framework in place and at Review for consideration at Annual General
MD
least one member from the Vallibel One Committee Meetings. They also recommend the
Board also sits on these Boards facilitating re-appointment/appointment of the Auditors
communication and oversight. Additionally, based on the recommendations of the Audit
L B Finance conforms to the Corporate Committee, who evaluate the competence,
Governance Directions issued by the CEO independence and objectivity of the
Monetary Board of the Central Bank of Auditors. Annual General Meetings provide
Sri Lanka for Non-Bank Financial Institutions a platform to the shareholders to raise any
as well. queries on the Financial Statements and
Corporate the affairs of the Company and to seek
As an investment company Vallibel One Management clarification from the Board of Directors.
relies on the corporate governance The Chairman of the Audit Committee,
framework in place at the subsidiaries Auditors and the Senior Management attend
while monitoring performance of the key Shareholders the Annual General Meetings to respond
investments through exercise of shareholder to queries that may be raised by the
rights. The Group companies conform to Vallibel One had 11,075 shareholders as at shareholders.
the requirements of the Companies Act the close of the year of which the largest
No. 07 of 2007, Articles of Association shareholder is Mr. K D D Perera who holds
of the respective companies and (where 63.478% shares. Vallibel Investments
applicable) Listing Rules of the Colombo (Private) Limited and Vallibel Leisure
Stock Exchange. (Private) Limited, two related companies,
92
VALLIBEL ONE PLC < Corporate Governance Governance
Shareholders are informed about the The Directors have disclosed their
Retirement/re-election of
performance of the Company and the Group interests in contracts and proposed
on a quarterly basis through press releases contracts with the Company in terms of the Directors/Appointment of
(where necessary) and the circulation of Companies Act, and have refrained from Directors over 70 years of age
Interim Financial Statements in compliance participating in deliberations of the Board
The Directors who are initially appointed by
with the Continuing Listing Requirements and of Subcommittees where any such
the Board are required to seek re-election
of the Colombo Stock Exchange. transactions were the subject of discussion.
at the next Annual General Meeting and one
Additionally, changes in appointments to or Such-related party transactions were
third of the Directors retire by rotation and
resignations from the Board or any material reviewed/recommended by the Related
are eligible for re-election at each Annual
developments deemed price sensitive Party Transactions Review Committee as
General Meeting, in terms of the Articles
information are notified to the Colombo applicable, as set out in the Report of
of Association. A Director appointed to the
Stock Exchange. The Articles of association the Related Party Transactions Review
office of Chairman, Deputy Chairman, Chief
also provide for Extraordinary General Committee on page 101 of this Report.
Executive, Managing or Joint Managing
Meetings to be convened by the Directors,
Director or other Executive Officer shall
whenever they think fit or on the requisition Composition of the Board not, whilst holding that office, be subject
of shareholders holding (as at the date of
The Board comprises one Executive to retirement by rotation. Directors over
deposit of the requisition) shares which
Director and four Non-Executive Directors 70 years of age shall be appointed/
carry not less than 10% of the votes which
of whom three are Independent Non- reappointed by the shareholders only.
may be cast on an issue, ensuring timely
Executive Directors, facilitating independent Accordingly, in terms of the provisions of the
communication of matters significantly
judgement in Board discussions and Companies Act, Mr. R.N. Asirwatham who
affecting the sustained operations of the
decisions. The names of the Directors is over 70 years of age was reappointed by
Company.
who held office during and as at the the shareholders at the preceding Annual
end of the financial year appear on page General Meeting and is recommended
Board of Directors by the Board for reappointment at the
16 and their brief Profiles on page 17.
The Board is responsible for providing forthcoming Annual General Meeting.
strategic direction, monitoring performance Collectively the Board has a broad range of
and ensuring that a system of internal skills, experience and attributes among its Independence of Directors
controls is in place to facilitate sound members which include entrepreneurship,
Based on the declarations submitted
financial reporting and decision-making as financial, legal, marketing and banking.
by the Non-Executive Directors, the Board
set out in the Continuing Listing Rules and Their standing as entrepreneurs and
has determined that three Non-Executive
the Companies Act No. 07 of 2007. professionals of high repute is evident
Directors – Mr. S H Amarasekera, Mrs.
in their profiles. Roles of the Chairman
Kimarli Fernando and Mr. R N Asirwatham
As an investment holding company, matters and Managing Director are combined
are “Independent” as per the criteria set
requiring Board attention centre around facilitating business alignment across
out in the Listing Rules of the Colombo
investment and divestment decisions and a diverse investment portfolio.
Stock Exchange.
monitoring performance of key investee
companies and progress of key projects.
Matters addressed by the Board In determining the Directors’ independence,
the Board has taken into consideration that
Directors have acted in conformity with
zzInvestment decisions Mr. S H Amarasekera and Mr. R N
the provisions of the Companies Act, on
Asirwatham serve as independent Directors
Directors’ duties and also complied with zzMonitoringperformance of
of Royal Ceramics Lanka PLC whilst
the remaining provisions of the Companies investments
Mr. S H Amarasekera and Mrs. Kimarli
Act and the Articles of Association of the zzDivestments
Fernando serve as Directors of Delmege
Company. In the discharge of Directors’ zzDelegation of Authority Limited. Mr. Dhammika Perera is the
duties, the Board has been guided by
zzVoting
at key AGMs of investee Chairman of both Royal Ceramics Lanka
professional/expert advice wherever
companies PLC and Delmege Limited. Furthermore,
necessary, in arriving at decisions in the
Mrs. Kimarli Fernando served as an
interests of the Company. zzAppointment of Company Secretary
Independent Director/Acting Chairperson
zzPolicy formulation
of L B Finance PLC upto 25th August
zzDirectors’ Remuneration 2017 where, Mr. Dhammika Perera and
93
Governance Corporate Governance > VALLIBEL ONE PLC
Mr. J A S S Adhihetty serve as the Executive namely, Mr. S H Amarasekera, Mrs. Kimarli independence and objectivity of the said
Deputy Chairman and the Managing Fernando and Mr. R N Asirwatham fall under Directors in discharging their functions as
Director, respectively. Accordingly, the total Rule 7.10.4 (g) (i) of the Listing Rules. Independent Directors.
number of common Directors on the Boards
of those three companies (upto 25th August The Board has decided that those Board Committees
2017 in the case of L B Finance PLC) is Directors shall nevertheless be treated as
three (3), being a majority of the Directors of Independent Directors, on the basis that the In accordance with the Listing Rules, the
the Company. As such, the said Directors, aforesaid factors do not compromise the Board has appointed three committees to
assist in the discharge of its duties
as summarised below:
Board Committee Composition Scope
Audit Committee Comprises three Exercising oversight over the following functions:
Independent • Control environment and risk management
Non-Executive Directors:
• Quality, cost and scope of external audit
Mr. R N Asirwatham • Evaluating and recommending appointment of Auditors to Board
Mr. S H Amarasekera • Management and statutory reporting including financial reporting
Mrs. K Fernando processes
• Review and approval of accounting policies and implementation
of the same
• Review of any non-audit services obtained from External Auditors
to ensure independence is maintained
Please refer the Report of the Audit Committee given on page 103
for more information.
Remuneration Comprises three Making recommendations to the Board on the following matters:
Committee Non-Executive Directors • Remuneration framework and levels of the Senior Management
of whom two are including the Chief Executive Officer
Independent:
• Remuneration of Executive Directors
Mr. S H Amarasekera
(Chairman) The remuneration policy is to attract and retain a highly qualified and
experienced staff.
Mrs. K Fernando
Mr. J A S S Adhihetty
Related Party Comprises three Independent review, approval and oversight of related party transactions.
Transactions Review Independent
Committee Non-Executive Directors: Please refer the Report of the Related Party Transactions Review
Committee is given on page 101 for more information.
Mr. S H Amarasekera
Mrs. K Fernando
Mr. R N Asirwatham
94
Meetings
The Board, Audit Committee and Related Party Transactions Review Committee meet quarterly with provision to schedule additional
meetings if required. The Remuneration Committee meets as and when necessary.
Director Board Meetings Attendance Related Party

Audit Committee Transactions Committee
Mr. K D D Perera 4/4 – –

Mr. S H Amarasekera 3/4 3/4 3/4
Mr. J A S S Adhihetty 3/4 – –
Mrs. K Fernando 3/4 3/4 3/4
Mr. R N Asirwatham 4/4 4/4 4/4

Monitoring Investments
Vallibel One derives income from dividends from investments which is the principal source of revenue for the Company. Consequently,
monitoring investments is a key priority and oversight of investments is exercised through appointment of members of the Board and the
CEO to subsidiaries and the associate of the Company and judicious exercise of shareholder rights. The team at Vallibel One provide
insights and analysis of information received from investee companies and developing trends to support oversight and strategy formulation
and also process improvement to enhance efficiency.
Directors of Vallibel One and the Chief Executive Officer sit on the Boards of subsidiaries and the associate as given below:
Investee Investment Category Common Directors
L B Finance PLC Subsidiary Mrs. K Fernando (Acting Chairperson up to

her retirement on 25th August 2017 on
completion of nine years)
Mr. K D D Perera (Executive Deputy Chairman)
Mr. J A S S Adhihetty (Managing Director)
Mrs. Y Bhaskaran
Royal Ceramics Lanka PLC Subsidiary Mr. K D D Perera (Chairman)

Mr. R N Asirwatham
Mr. S H Amarasekera
Delmege Ltd. Subsidiary Mr. K D D Perera (Chairman)

Mrs. K Fernando
Mr. S H Amarasekera
Mrs. Y Bhaskaran
Greener Water Ltd. Subsidiary Mr. J A S S Adihetty
The Fortress Resorts PLC Associate Mr. K D D Perera (Chairman)

Mr. J A S S Adhihetty (Managing Director
upto 2 March 2018 and Non-Executive Director
from 3 March 2018)
Sampath Bank PLC Former associate and classified as an Investee Mr. K D D Perera who served as Chairman
from the FY 2016/17 due to the retirement of common of the Board retired with effect from
Chairman. Vallibel One is the largest shareholder of 31 July 2016 on completion of nine years.
Sampath Bank PLC. During the year, the Company
subscribed for two Rights Issues of Sampath Bank
PLC with a total investment of Rs. 3,010,740,770 and
maintained its holding of 14.95%.
95
Governance Corporate Governance > VALLIBEL ONE PLC
As experienced Directors of public

Compliance with the Rules on
listed companies, entrepreneurs and
professionals, all Directors are fully aware Corporate Governance
of the need to act in the best interests of Contained in the Listing Rules
the respective companies on which they of the Colombo Stock Exchange
serve as Directors in accordance with the
Companies Act. They are expected to As at the applicable financial period, the
and do recuse themselves from voting on Company was in compliance with the
matters which have a potential conflict of Corporate Governance Rules contained
interest. Annual declarations of interests in the Listing Rules of the Colombo Stock
are filed with both Vallibel One and the Exchange. The compliance status against
investee company by the Directors. applicable requirements is set out in
the undernoted Table:
Rule No. Subject Applicable Requirement Compliance Applicable Section

Status in the Annual Report
7.10.1 (a) No. of Non-Executive Board shall include at least two Non-Executive Yes Corporate
Directors Directors or such number of Non-Executive Governance
Directors equivalent to one-third of the total
number of Directors whichever is higher.
7.10.2 (a) No. of Independent Two or one-third of the Non-Executive Directors, Yes Annual Report of the
Directors whichever is higher shall be Independent . Board of Directors and
7.10.2 (b) Submission of Declarations The Board shall require each Non-Executive Yes Corporate Governance
by Non-Executive Directors Director to submit a signed and dated
of his/her Independence/ declaration annually of his/her Independence
Non-Independence against the specified criteria.
7.10.3 (a) Annual determination The Board shall make a determination annually Yes – do –
by the Board of as to the independence or non-independence
the Independence/ of each Non-Executive Director and shall set
Non-Independence of out in the Annual Report the names of the
Non-Executive Directors Directors determined to be independent.
7.10.3 (b) Basis for the Board’s In the event a Director does not qualify as Yes – do –
determination as independent against any criteria as per Rule
per 7.10.3 (a) 7.10.4 but if the Board taking into account
all the circumstances is of the opinion that
the Director is nevertheless independent the
Board shall specify the criteria not met and the
basis for determination in the Annual Report.
7.10.3 (c) Brief Résumé of each A brief résumé of each Director should be Yes Profiles of Board
Director to be published included in the Annual Report including of Directors
in the Annual Report the Director’s areas of expertise.
96
Rule No. Subject Applicable Requirement Compliance Applicable Section

Status in the Annual Report
7.10.3 (d) Résumé of new Directors Upon appointment of new Directors the N/A N/A
to be provided to CSE Company shall provide a brief résumé of that No new
Director to the Colombo Stock Exchange. Directors were
appointed
during the year
7.10.5 (a) Composition of Remuneration Committee shall consist Yes Corporate Governance
Remuneration Committee of a minimum of two Independent
Non-Executive Directors or Non-Executive
Directors a majority of whom shall be
independent, whichever is higher.
7.10.5 (b) Functions of Remuneration The Remuneration Committee shall Yes – do –

Committee recommend the remuneration of the Executive
Directors and the Chief Executive Officer.
7.10.5 (c) Disclosure in the The Annual Report should set out the Yes Corporate Governance
Annual Report relating names of the Directors comprising the and Annual Report of
to the Remuneration Remuneration Committee, contain a the Board of Directors
Committee Statement of the Remuneration Policy and
set out the aggregate remuneration paid to
Executive and Non-Executive Directors
7.10.6 (a) Composition of The Audit Committee shall comprise of Yes Report of the Audit
Audit Committee two Independent Non-Executive Directors Committee
or Non-Executive Directors a majority of whom
shall be independent, whichever is higher and
the Chairman or a member should be a member
of a recognised professional body and unless
otherwise determined by the Audit Committee
Chief Executive Officer and the Chief Financial
Officer shall attend Audit Committee Meetings.
7.10.6 (b) Audit Committee Functions Functions of the Audit Committee shall include Yes Report of the Audit
those set out in (i) to (v) of Rule 7.10.6 (b) Committee and
7.10.6 (c) Disclosure in the The Annual Report should set out the names of Yes Annual Report of the
Annual Report relating the Directors comprising the Audit Committee Board of Directors
to Audit Committee and disclose the basis of determination of and the Report of the
the independence of the Auditors and shall Audit Committee
contain a report by the Audit Committee of
the manner of compliance by the Company.
97
Annual Report of the Board of

Directors on the Affairs of the Company
The Board of Directors of Vallibel One The principal activities of the subsidiary Financial Statements
PLC has pleasure in presenting to the companies are referred to in Note 1.2
The Financial Statements of the Company
shareholders their Annual Report on the to the Financial Statements on page 124.
and the Consolidated Financial Statements
affairs of the Company together with
of the Group have been prepared in
the Audited Financial Statements of the There have been no significant changes in
accordance with the Sri Lanka Accounting
Company and the Consolidated Financial the nature of activities of the Company and
Standards (SLFRS) laid down by The
Statements of the Company and its its subsidiaries during the financial year
Institute of Chartered Accountants of
subsidiaries for the financial year ended under review except the following:
Sri Lanka and comply with the requirements
31st March 2018, conforming to all relevant
of the Companies Act No. 07 of 2007.
statutory requirements. (i) Lanka Walltiles PLC which was
previously held by Royal Ceramics
The aforesaid Financial Statements,
This Report provides the information as Lanka PLC through Lanka Ceramic PLC
duly signed by the Chief Financial Officer,
required by the Companies Act No. 07 of became a direct subsidiary of Royal
two Directors on behalf of the Board and the
2007, Listing Rules of the Colombo Stock Ceramics Lanka PLC consequent to the
Auditors are included in this Annual Report
Exchange and the recommended best repurchase of 80% of its own shares by
and form an integral part of this Annual
practices. Lanka Ceramic PLC.
Report of the Board of Directors.
(ii) L B Finance PLC extended its presence
General to the Republic of the Union of Myanmar
through the investment in its subsidiary Auditors’ Report
Vallibel One PLC (the Company) was L B Microfinance Myanmar Company The Report of the Auditors on the Group
incorporated as a limited liability company Limited which commenced business Financial Statements is on pages 110 to 114.
under the name “Vallibel One Limited” on during the year under review.
9th June 2010 under the Companies Act
Accounting Policies and changes
No. 07 of 2007. Review of Business during the year
Review of Operations The accounting policies adopted in the
The Registered Office of the Company is
preparation of the Financial Statements
situated at Level 29, West Tower, World
The Chairman’s Message on page 18 are given on pages 128 to 146. There were
Trade Centre, Echelon Square, Colombo 1.
and CEO’s Review on pages 20 to 23 no significant changes to the accounting
provide an overall assessment of business policies used by the Company during the
The ordinary shares of the Company are
performance of the Company and its year under review vis-à-vis those used in
listed on the Diri Savi Board of the Colombo
subsidiaries (hereinafter sometimes the previous year.
Stock Exchange since 8th July 2011 and
collectively referred to as the Group)
consequent thereto its name was changed
and the associate company and future
to Vallibel One PLC on 25th August 2011, Directors’ Responsibilities
developments. These Reports together with
under Registration No. PB 3831 PQ. for Financial Reporting
the Financial Statements, reflect the state
of affairs of the Company and its subsidiary The Directors are responsible for the
Principal activities of the companies. preparation of the Financial Statements of
Company and its subsidiaries the Company and the Group, which reflect
The segment-wise contribution to Group a true and fair view of the state of affairs.
The Company carried on business as a
Results, Assets and Liabilities are provided
diversified investment holding company
in Note 42 to the Financial Statements on
during the year under review.
pages 206 to 212.
98
VALLIBEL ONE PLC < Annual Report of the Board of Directors on the Affairs of the Company Governance
The Directors are of the view that the Dividends on Ordinary Shares Share Information
Statement of Financial Position, Statement of
An Interim Dividend of Fifty Cents per share
Profit or Loss, Statement of Comprehensive Distribution Schedule of
was paid for the year under review on 17th
Income, Statement of Changes in Equity, Shareholdings
July 2017.
Cash Flow Statement and Notes to Financial
Information on the distribution of
Statements appearing on pages 115 to 220
In view of the significant investment made/ shareholding and the respective
have been prepared in conformity with the
to be made in the Hotel Project undertaken percentages and analysis of shareholders
requirements of the Sri Lanka Accounting
by Greener Water Ltd. and the investment is given on page 224 under Shareholders’
Standards, Companies Act No. 07 of
made in two Rights Issues of Sampath Information.
2007, Sri Lanka Accounting and Auditing
Bank PLC during the year under review, the
Standards Act No. 15 of 1995 and the
Directors do not recommend the payment of Earnings, Dividends, Net Assets
amendments thereto and the Listing Rules
a final dividend for the year under review. and Market Value of Shares
of the Colombo Stock Exchange.
Information relating to earnings, dividend,
The Statement of Directors’ Responsibility Reserves
net assets and market value per share is
for Financial Reporting is given on page 102. A summary of the Group’s Reserves is given given on page 222.
in Note 29 to the Financial Statements on
Net Revenue pages 191 and 195. Major Shareholders
The net revenue of the Group during
Property, Plant and Equipment Information on the twenty largest
the year under review was Rs. 60.9 Bn
shareholders of the Company is given on
(Rs. 52.9 Bn in the year 2016/17). and Intangible Assets
page 225 under Shareholders’ Information.
Information on Property, Plant and
Results and Appropriations Equipment and Intangible Assets of the Public Holding
Group and the Company are given in
Performance of the Group and the Notes 15 and 16 of Financial Statements Information on public holding in terms of the
Company and Transfers to Reserves on pages 161 and 170 respectively. Listing Rules is given on page 224 under
Shareholders’ Information.
The Net Profit Before Tax of the Group and
the Company amounted to Rs. 10.7 Bn The Company does not own any land or
buildings. Information on the Directors of
and Rs. 1.2 Bn respectively in the year
under review [Rs. 8.3 Bn (restated) and the Company and the Group
Rs 1.3 Bn respectively in 2016/17]. Investments
Directors of the Company as at
Information on investments held by the
The Net Profit After Tax of the Group and 31st March 2018
Group and the Company are given in
the Company amounted to Rs. 6.7 Bn and Notes 4, 10 and 11 on pages 147, 157 The Board of Directors of the Company
Rs. 1.1 Bn respectively in the year under and 158 respectively. as at 31st March 2018 consisted of five
review [Rs. 4.4 Bn (restated) and Rs. 1.2 Bn (5) Directors, with a broad range of skills,
respectively in 2016/17]. experience and attributes which include
Stated Capital
entrepreneurship, financial, legal, marketing
Details of Appropriations are given in the The Stated Capital of the Company as at and banking, as detailed in the brief
Statement of Changes in Equity on pages 31st March 2018 was Rs. 27,163,983,720/- Profiles of the Directors on page 17.
119, 120 and 121. represented by 1,086,559,353 Ordinary
Shares. There were no changes in the
Stated Capital of the Company during
the year.
99
Governance Annual Report of the Board of Directors on the Affairs of the Company > VALLIBEL ONE PLC
Names of the Directors who held office during the year and as at 31st March 2018 as Directors’ Interests in Shares
required by Section 168 (1) (h) of the Companies Act, are given below:
The information pertaining to the Directors’
Shareholding in the Company is given on
Name of Director Executive Non-Executive Independent page 224.
Non-Executive
Mr. K D D Perera Directors’ Remuneration

(Chairman/Managing Director) √ The Directors’ remuneration is disclosed
Mr. S H Amarasekera √ under Key Management Personnel
Compensation in Note 44 to the
Mr. J A S S Adhihetty √
Financial Statements on page 214.
Mrs. Kimarli Fernando √
Mr. R N Asirwatham √ Directors Interests in Contracts
or Proposed Contracts and
Interests Register
New Appointments during the year Board Meetings Interests Register
None
Four (4) Board Meetings of the Company The Company maintains an Interests
Resignations during the year were held during the year under review and Register in terms of the Companies Act,
None the Directors’ attendance at those Meetings No. 07 of 2007, which is deemed to form
are set out on page 94. part and parcel of this Annual Report and is
available for inspection upon request.
Directors of the subsidiaries
and the associate company Board SubCommittees
All related party transactions which
as at 31st March 2018 The Board of Directors have formed three encompasses the transactions of Directors
Mandatory Board Subcommittees in terms who were directly or indirectly interested in
Names of the Directors of the subsidiaries
of the Listing Rules of the Colombo Stock a contract or a related party transaction with
and the associate company are given on
Exchange, namely, Audit Committee, the Company during the accounting period
pages 226 to 231.
Remuneration Committee and the Related are recorded in the Interests Register in
Party Transactions Review Committee. due compliance with the provisions of the
Recommendation for re-election of
Companies Act.
Directors who retire by rotation The composition of the said Board
Mrs. Kimarli Fernando retires by Subcommittees appear on page 93 and as
Material Foreseeable
rotation in terms of Articles 87 and 88 required by the Listing Rules, the Reports
of the Audit Committee and the Related
Risk Factors
of the Articles of Association and being
eligible is recommended by the Board for Party Transactions Review Committee are
Vallibel One PLC is a diversified
re-election. on pages 103 and 101 respectively, whilst
conglomerate of which the primary business
the remuneration policy is on page 93.
line is “Investment Holding”.
Re-appointment of Directors who
are over 70 years of age Declaration under Rule 9.3.2 (d) The Management considers qualitative
of Listing Rules and quantitative methods to evaluate the
Mr R N Asirwatham who is 75 years of age likelihood and impact of potential events
and vacates office at the conclusion of the The Directors declare that the Company
which might affect the achievement of
Annual General Meeting in terms of Section is in compliance with Rule 9 of the
objectives including the failure to capitalise
210 (2) (b) of the Companies Act No. 07 Listing Rules of the Colombo Stock
on opportunities.
of 2007, is recommended by the Board, Exchange pertaining to Related Party
for reappointment as a Director under Transitions during the financial year ended
Financial Risk Management objectives and
Section 211 of the Companies Act, specially 31st March 2018.
policies are set out in note 47 on page
declaring that the age limit stipulated in 217 to 220.
Section 210 of the Companies Act shall not
apply to the said Director.
100
VALLIBEL ONE PLC < Annual Report of the Board of Directors on the Affairs of the Company Governance
Professional Conduct and Ethics issued by

Donations Going Concern
The Institute of Chartered Accountants of Sri
During the year, neither the Company nor Lanka as at the reporting date. The Directors have made an assessment
the subsidiaries have made any donations. of the Company’s ability to continue as a
Human Resources going concern and is satisfied that it has
Independent Auditors resources to continue in business for the
The Group continued to invest in Human
foreseeable future.
Capital Development and implement
Company
effective Human Resource Practices and
Annual General Meeting
Messrs Ernst & Young, Chartered Policies to develop and build an efficient
Accountants served as the Auditors of the and effective workforce and to ensure that The Annual General Meeting will be held
Company and also provided tax compliance its employees are possessed of skills and on 29th June 2018 at 3.00 p.m. at The
services and other permitted non-audit knowledge required for the future growth of Victorian, The Kingsbury Hotel, No. 48,
services. the respective companies of the Group and Janadhipathi Mawatha, Colombo 01.
for their own career development.
A total amount of Rs. 1,433,062/- is payable The Notice of the Annual General Meeting
by the Company to the Auditors for the year Research and Development appears on page 233.
under review comprising Rs. 220,500/- as
audit fees and Rs. 1,212,562/- for other The Group has endeavoured to invest in
Acknowledgement
services. research and development and has made
and will continue to make substantial efforts The Board of Directors have approved the
The retiring Auditors have expressed to introduce new products and processes Audited Financial Statements together with
willingness to continue in office. A resolution and develop existing products and the Annual Report of the Board of Directors
to re-appoint the Auditors and authorising processes to improve operational efficiency and the Reviews which form part of the
the Directors to determine their remuneration of the relevant Group Companies. Annual Report on 30th May 2018.
will be proposed at the forthcoming Annual
General Meeting. Statutory Payments This Annual Report is signed for and on
behalf of the Board of Directors by
The Directors to the best of their knowledge
Group
and belief are satisfied that all statutory
The audits of subsidiary companies are payments due to the Government, other
handled by firms of Chartered Accountants regulatory institutions and related to
in Sri Lanka or their respective countries of employees have been paid on their due
incorporation. dates or where relevant have been provided Dhammika Perera
for in the Financial Statements. Chairman/Managing Director
Details of payments to such audit firms on
account of audit fees and for permitted Contingent Liabilities
non-audit services, are set out in Note 38 to
the Financial Statements on page 200. The contingent liabilities as at 31st March
2018 are given in Note 43 to the Financial
Independence of Auditors Statements on page 213. Sumith Adhihetty
Director
Based on the declaration provided by Events Occurring after the
Messrs Ernst & Young, Chartered Reporting Date
Accountants and to the extent that the
Directors are aware, the Auditors do not No event of material significance that
have any relationship with (other than that require adjustments to the Financial Anusha Wijesekara
of the Auditor), or interest in, the Company Statements, has occurred subsequent to the P W Corporate Secretarial (Pvt) Ltd.
and the Group, which in the opinion of the Reporting period other than those disclosed Secretaries
Board, may reasonably be considered to in Note 48 to the Financial Statements on
have a bearing on their independence page 220. 30th May 2018
within the meaning of the Code of Colombo
101
Report of the Related Party Transactions

Review Committee
The Related Party Transactions Review basis determined by market forces
Disclosure requirements of
Committee (RPTRC) of the Company was and details of those Recurrent RPTs
formed by the Board on 12th February, 2016 are presented to the Committee every Related Party Transactions
in accordance with Section 9 of the Listing quarter. During the year under review, during the year under review
Rules of the Colombo Stock Exchange the Company entered into Non-Recurrent
The aggregate value of Recurrent RPTs
to ensure compliance with those Rules RPTs on two occasions which were
entered into by the company during the
facilitating independent review, approval reviewed and recommended by the
year were below the threshold for disclosure
and oversight of Related Party Transactions Committee and approved by the Board.
in the Annual Report as per the Listing
of the Company. In its review of one RPT, the Committee
Rules.
was also guided by the advice
Composition of the Committee provided by an expert in the relevant
The value of Non-Recurrent RPTs too were
field. The said Non-Recurrent RPTs
below the threshold for immediate market
The Related Party Transactions Review did not require an immediate market
announcement or disclosure in the Annual
Committee of the Company comprises announcement or disclosure in the
the following Non-Executive Directors: Annual Report as per the Listing Rules. Report as per the Listing Rules.
Mr. Harsha Amarasekera – Chairman – In its review of RPTs, RPTRC considers

the terms and conditions of the RPT, Meetings
value, and the aggregate value of
Mrs. Kimarli Fernando – The Committee met four (4) times during the
transactions with the said related party
Independent Non-Executive Director financial year under review and attendance
during the financial year, in order to
of the members is given on page 94.
Mr. R N Asirwatham – determine whether they are carried out
Independent Non-Executive Director on an arm’s length basis, the disclosure
requirements as per the Listing Rules Declaration
of the Colombo Stock Exchange and
Policies and Procedures In terms of Rule 9.3.2 (d) of the Listing
the level of approval required for the
Rules of the Colombo Stock Exchange,
respective RPTs.
– The Charter of the Committee was a declaration by the Board of Directors as
– The RPTRC ensures that all transactions an affirmative statement of the compliance
adopted by the Board on 12th February
with Related Parties are in the best with the Listing Rules pertaining to Related
2016. It includes a Related Party
interests of all shareholders, adequate Party Transactions is given on page 99 of
Transactions (RPT) Policy whereby the
transparency is maintained and are in the Annual Report.
categories of persons/ entities who shall
compliance with the Listing Rules.
be considered as “related parties” have
been identified. – The Committee has established
guidelines in respect of Recurrent RPTs
– In accordance with the RPT Policy, self-
to be followed by the management of
declarations are obtained from each
the Company, in the Company’s dealings S H Amarasekera
Director for the purpose of identifying
with Related Parties.
parties related to them. Chairman
– Reviewing and approval of RPTs are Related Party Transactions
– The RPTRC reviews all the Non-Recurrent
either by meeting of at least members
RPTs of the Company, whilst Recurrent Review Committee
who form the quorum or by circulation,
RPTs are entered into on an arm’s length
approved by all the members. 30th May 2018
102
VALLIBEL ONE PLC Governance
Directors’ Responsibility
for Financial Reporting
The following statement sets out In preparing the Financial Statements, The Board of Directors also approves the
responsibility of the Directors in relation to the Directors are responsible to ensure Interim Financial Statements prior to their
the Financial Statements of the Company that appropriate accounting policies have release following a review and recommendation
and its subsidiaries prepared in accordance been selected and applied consistently, by the Board Audit Committee.
with the provisions of the Companies Act reasonable and prudent judgements
No. 7 of 2007. and estimates have been made and all The Board of Directors accepts
applicable accounting standards have been responsibility for the integrity and objectivity
The responsibility of the Independent Auditor complied with. of the Financial Statements presented in this
in relation to the Financial Statements is set Annual Report.
out in the Report of the Auditors given on The Directors are also required to ensure
page 110 of the Annual Report. that the Company and its subsidiaries have The Financial Statements of the Company
adequate resources to continue in operation and its subsidiaries have been certified by
As per the provisions of sections 151, 152 to justify applying the going concern basis the Chief Financial Officer of the Company,
(1) and (2), 153 (1) and (2) and 150 (1) in preparing these Financial Statements. the officer responsible for their preparation
of the Companies Act No. 7 of 2007, the as required by the Section 152 (1) (b)
Directors are required to prepare Financial Further, the Directors have a responsibility and they have also been signed by two
Statements for each financial year, which to ensure that the Companies within the Directors of the Company as required by
should give a true and fair view of the Group maintain sufficient accounting Section 152 (1) (c) of the Companies Act.
state of affairs of the Company and its records to disclose with reasonable
subsidiaries as at the Reporting date and accuracy, the financial position of the The Directors to the best of their knowledge
its profit or loss for the financial year then Company and the subsidiaries. and belief, are satisfied that all statutory
ended, ensure that they are completed payments in relation to all relevant
within six months or such extended period Financial Statements prepared and regulatory and statutory authorities which
as may be determined by the Registrar presented in this Report have been were due and payable by the Company
General of Companies, certified by the prepared based on Sri Lanka Accounting and its subsidiaries as at the reporting
person responsible for the preparation Standards (SLFRS/LKAS) and are consistent date have been paid or where relevant,
of the Financial Statements that it is in with the underlying books of accounts and provided for.
compliance with the said Companies Act are in conformity with the requirements
and dated and signed on behalf of the of Sri Lanka Accounting Standards, The Directors are of the view that they have
Board by two Directors of the Company. Companies Act No. 07 of 2007, Sri Lanka discharged their responsibilities as set out
Accounting and Auditing Standards Act in this statement.
In terms of section 166 (1) read together No. 15 of 1995 and the Listing Rules of the
with sections 168 (1) (b) and (c) and section Colombo Stock Exchange. By Order of the Board
167 (1) of the Companies Act, the Directors Vallibel One PLC
shall cause a copy of the aforesaid The Directors have also instituted effective
Financial Statements together with the and comprehensive systems of internal
Annual Report of the Board of Directors of control for identifying, recording, evaluating
the Company prepared as per section 166 and managing the significant risks faced by P W Corporate Secretarial (Pvt) Ltd
(1) of the Companies Act to be sent to every the Company throughout the year. Company Secretaries
shareholder not less than fifteen working
days before the date fixed for holding the The Directors have taken appropriate 30th May 2018
Annual General Meeting. steps to ensure that the Company and
its subsidiaries maintain proper books of
accounts and the financial reporting system
is directly reviewed by the Directors at
their regular meetings and also through the
Board Audit Committee. The Report of the
said Committee is given on page 103.
103
Report of the Audit Committee
The Audit Committee appointed by and The Audit Committee is of the view
responsible to the Board of Directors that the internal controls prevalent within
comprise the following members: the Company are satisfactory and provide
zzMr. R N Asirwatham reasonable assurance that the financial
Chairman – Independent Non-Executive position of the Company is well monitored
Director and the assets are safeguarded.
zzMr.S H Amarasekera
The Committee reviewed the non-audit
services provided by the Independent
zzMrs.Kimarli Fernando Auditors to ensure that the provision
Independent Non-Executive Director of these services do not impair their
independence.
The Chairman, Mr. R N Asirwatham is a
Fellow Member of The Institute of Chartered The Committee has recommended to the
Accountants of Sri Lanka. Board of Directors that Messrs Ernst &
Young, Chartered Accountants be re-
The Audit Committee is empowered to appointed the Auditors for the year ending
review and monitor the financial reporting 31st March 2019 subject to the approval
process of the Company, so as to provide of the Shareholders at the Annual General
additional assurance on the reliability of the Meeting.
Financial Statements through a process of
independent and objective review. As such,
the Audit Committee acts as an effective
forum in assisting the Board of Directors in
discharging their responsibilities of ensuring R N Asirwatham
the quality of financial reporting and related Chairman –
communications to the Shareholders and Audit Committee
the public.
30th May 2018
The Audit Committee is empowered, to
examine any matters relating to the financial
affairs of the Company and to review the
adequacy of the internal control procedures
and the Risk Management function.
The Committee along with the Board

reviewed the Consolidated Financial
Statements for the year ended 31st March
2018 to ensure compliance with mandatory
and statutory requirements. The Chief
Executive Officer and Manager – Finance
attend the meetings by invitation.
104
VALLIBEL ONE PLC < GRI Content Index Governance
GRI Content Index
GRI Standard Disclosure Page Omission

Number
GRI 101: Foundation 2016 (does not include any disclosures)
General Disclosures
102-1 Name of Organisation 5
GRI 102: General
Disclosures 2016 102-2 Activities, brands, products and services 8
102-3 Location of headquarters Inner back cover
102-4 Location of operations Inner back cover
102-5 Ownership and legal form Inner back cover
102-6 Markets served 6
102-7 Scale of the Organisation 6
102-8 Information on employees and other workers 15,77
102-9 Supply chain 86
102-10 Significant changes to the Organisation and supply chain 86
102-11 Precautionary principle 32
102-12 External initiatives 5
102-13 Membership of associations 8
102-14 Statement from senior decision-maker 18
102-15 Key impacts, risks and opportunities 30
102-16 Values, principles, norms and standards of behaviour 6
102-18 Governance structure 91
102-40 List of stakeholder groups 26
102-41 Collective bargaining agreements 80
102-42 Identifying and selecting stakeholders 26
102-43 Approach to stakeholder engagement 26
102-44 Key topics and concerns raised 27
102-45 Entities included in the Consolidated Financial Statements 124
102-46 Defining report content and topic boundary 27
102-47 Material topics 27
102-48 Restatement of information _ Not applicable
102-49 Changes in reporting 5
102-50 Reporting period 5
102-51 Date of most recent report 5
102-52 Reporting cycle 5
102-53 Contact point for questions regarding Report 5
102-54 Claims of reporting in accordance with GRI Standards 5
102-55 GRI Context Index 104
102-56 External assurance 110
105
Governance GRI Content Index > VALLIBEL ONE PLC

Number
Material topics
Economic Performance
GRI 103: Management 103-1 Explanation of material topics and its boundaries 70
Approach 103-2 The Management approach and its components 70
103-2 Evaluation of the Management approach 70
GRI 201: Economic 201-1 Direct economic value generated and distributed 14
Performance 2016 201-2 Financial Implications and other risks and opportunities due to
climate change 31
201-3 Defined benefit plan obligations and other retirement plans 129
Procurement Practices
Approach 103-2 The Management approach and its components 86
103-2 Evaluation of the Management Approach 86
GRI 204: Procurement
Practices 204-1 Proportion of spending on local suppliers 39,50,63,67
Raw materials
Approach 103-2 The Management Approach and its components 89
GRI 301: Raw Materials
(2016) 301-1 Raw materials used by weight or volume 39,50,54
Energy
GRI 302: Energy 2016 302-1 Energy consumption within the organisation 39,45,50,54,63,67
302-4 Reduction of energy consumption 89
Water
GRI 303: Water 2016 303-1 Water withdrawal by source 39,45,50,54,67
106

Number
Environmental Compliance
GRI 307: Environmental
Compliance 2016 307-1 Non-compliance with environmental laws and regulations 90
Employment
GRI 401: Employment 401-1 Employee hires and turnover 78,80
2016 401-2 Benefits provided to fulltime employees that are not provided to
temporary or part time employees 79
Labour Management
GRI 402: Labour
Management Relations 402-1 Minimum notice periods regarding operational changes 80
Health and Safety
GRI 403: Health and 403-2 Types of injury and rates of injury, occupational diseases,
Safety 2016 lost days and absenteeism and number of work-related fatalities 80
Training and Education
GRI 404: Training 404-1 Average hours of training per year per employee 79
and Education 404-2 Programmes for upgrading skills and transition assistance programmes 79
404-3 Percentage of employees receiving regular performance and
career development reviews 79
107
Governance GRI Content Index > VALLIBEL ONE PLC

Number
Local Communities
GRI 413: Local 413-1 Operations with local community engagement, impact assessments
Communities 2016 and development programmes 87
Customer health and safety
GRI 416: Customer 416-1 Assessment of the health and safety impacts of product and service
Health and Safety categories 84
416-2 Incidents of non-compliance concerning the health and safety impacts
of products and services 84
Marketing and Labelling
GRI 417: Marketing 417-1 Requirement for product and service information and labelling 84
and Labelling 417-2 Incidents of non-compliance concerning product and service
information and labelling 84
417-3 Incidents of non- compliance concerning marketing communications 84
Socio Economic Compliance
GRI 419: Socio 419-1 Non-compliance with laws and regulations in the social and
Economic Compliance economic area 84
108
f
oo
Pr
13
109
Financial Reports > VALLIBEL ONE PLC
Financial Calendar
Interim Financial Statements – 2017/18 1st Quarter 15th August 2017
Rs. 0.50 per Share Interim Dividend – 2017/18 17th July 2017
Interim Financial Statements – 2017/18 2nd Quarter 09th November 2017
Interim Financial Statements – 2017/18 3rd Quarter 15th Feb 2018
Interim Financial Statements – 2017/18 4th Quarter 28th May 2018
Annual Report 2017/18 30th May 2018
8th Annual General Meeting 29th June 2018
Financial
Reports
110 115 117
Independent Statement of Statement of
Auditors’ Report Financial Profit or loss
Position
118 119 122

Statement of Statement of Statement of
Comprehensive Changes in Cash Flows
Income Equity
124
Notes to the
Financial
Statements
110
VALLIBEL ONE PLC Financial Reports
Independent Auditors’ Report
TO THE SHAREHOLDERS OF VALLIBEL ONE PLC responsibilities for the audit of the financial statements section
of our report. We are independent of the Group in accordance
REPORT ON THE AUDIT OF FINANCIAL STATEMENTS
with the Code of Ethics issued by CA Sri Lanka (Code of
OPINION Ethics) and we have fulfilled our other ethical responsibilities
We have audited the financial statements of Vallibel One PLC in accordance with the Code of Ethics. We believe that the
(“the Company”) and the consolidated financial statements audit evidence we have obtained is sufficient and appropriate
of the Company and its subsidiaries (“the Group”), which to provide a basis for our opinion.
comprise the statement of financial position as at March
31, 2018, and the statement of profit or loss, statement of KEY AUDIT MATTERS
comprehensive income, statement of changes in equity and Key audit matters are those matters that, in our professional
statement of cash flows for the year then ended, and notes to judgement, were of most significance in our audit of the
the financial statements, including a summary of significant financial statements of the current period. These matters
accounting policies. were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
In our opinion, the accompanying financial statements of and we do not provide a separate opinion on these matters.
the Company and the Group give a true and fair view of For each matter below, our description of how our audit
the financial position of the Company and the Group as at addressed the matter is provided in that context.
March 31, 2018, and of their financial performance and cash
flows for the year then ended in accordance with Sri Lanka We have fulfilled the responsibilities described in the Auditor’s
Accounting Standards. responsibilities for the audit of the financial statements
section of our report, including in relation to these matters.
BASIS FOR OPINION Accordingly, our audit included the performance of
We conducted our audit in accordance with Sri Lanka procedures designed to respond to our assessment of the
Auditing Standards (SLAuSs). Our responsibilities under risks of material misstatement of the financial statements.
those standards are further described in the Auditor’s The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for
our audit opinion on the accompanying financial statements.
Partners: W R H Fernando FCA FCMA M P D Cooray FCA FCMA R N de Saram ACA FCMA Ms. N A De Silva FCA Ms. Y A De Silva FCA W K B S P Fernando FCA FCMA
Ms. K R M Fernando FCA ACMA Ms. L K H L Fonseka FCA A P A Gunasekera FCA FCMA A Herath FCA D K Hulangamuwa FCA FCMA LLB (Lond) H M A Jayesinghe FCA FCMA
Ms. A A Ludowyke FCA FCMA Ms. G G S Manatunga FCA Ms. P V K N Sanjeewani FCA N M Sulaiman ACA ACMA B E Wijesuriya FCA FCMA
Principal T P M Ruberu FCMA FCCA
A member firm of Ernst & Young Global Limited

111
Financial Reports Independent Auditors’ Report > VALLIBEL ONE PLC
Key Audit Matter How our audit addressed the key audit matter
Impairment of loans and receivables and lease To assess the reasonableness of the allowance for impairment,
rentals receivable and stock out on hire We performed the following procedures, among others;
As at 31 March 2018, loans and receivables and – We understood and evaluated the key internal controls over
lease rentals receivable and stock out on hire estimation of the allowance for impairment including those over
(net of impairment) amounted to Rs. 39.8 Bn and identifying occurrence of loss events;
Rs. 62.4 Bn respectively. These collectively contributed
– We test – checked the underlying calculations and data used in
50% to the Group’s total assets.
such calculations;
The allowance for impairment (both individual and
– In addition to the above, focused procedures were performed
collective) of these financial assets is estimated by
as follows:
management. The estimation involves a complex
calculation. Assumptions used by management in this zzIndividual allowance for impairment:
calculation are inherently judgemental. Accounting For a sample of non-performing loans & leases, checked the
Policy Notes 10.1 and 10.2 to the financial statements management’s assessment of effectiveness of controls over the
more fully describes the assumptions to which this identification of customers for whom an impairment event has occurred.
estimate is most sensitive. Further, for such customers, we test-checked the appropriateness of
We considered the estimation of allowance for management’s calculation over the estimation of recoverable amount;
impairment as a Key Audit Matter due to sensitivity zzCollective allowance for impairment:
of reported results (on financial performance) to
For loss rates used by management, we assessed the appropriateness
this allowance and the inherent uncertainty involved
of the loss emergence period including consistency with historical
in its estimation.
loss experience; assessed the reasonableness of the assumptions on
effects arising from macroeconomic factors;
– We assessed the adequacy of the related financial statement
disclosures as set out in Note(s) 5, 6 and 47.
Provision for obsolete and slow moving Inventories Our procedures included, the following:
As at 31 March 2018, the carrying amount of – Assessed the reasonableness of the allowance policy based on
inventories amounted to Rs. 12.5 Bn, net of the historical usage of general stocks and historical sales of finished
provision for obsolete and slow moving inventories of goods.
Rs. 332 Mn. These inventories include finished goods
– Checked the relevant information to assess the reasonability of the
and general stocks representing “tiles & associated
valuation and net realisable value of the related inventories on a
Items” and “sanitaryware” inventories which together
sample basis.
represents 62% of total value of the Group inventories.
– We have reviewed the working papers of the component auditor
A provision for obsolete and slow moving inventories
for the audit procedures performed to assess the adequacy of the
of the above mentioned inventories is recognised
provision for obsolete and slow moving inventories and test the key
based on the best estimates available to management
controls on a sample basis over inventory valuation at lower of cost
on the future usability/sale. As management uses
and net realisable value.
historical information as the basis to determine the
future usability and recoverability, actual future losses – In addition, assessed the adequacy of the Group’s disclosures
could vary from the provision made. in Accounting Policy Note 3.2.1 (v), Note 3.2.1 (vi) and Inventory
Note 14.
The significance of the balance coupled with the
management’s judgement and estimation of the future
usability/sale, the provision for obsolete and slow moving
inventories has been considered a key audit matter.
112
VALLIBEL ONE PLC < Independent Auditors’ Report Financial Reports
Key Audit Matter How our audit addressed the key audit matter
Annual impairment of goodwill We performed the following procedures among others:

Intangible assets include Goodwill on consolidation – We have involved our internal specialists to assist us, in assessing
with infinite useful life. Goodwill is subject to an the appropriateness of the models and reasonableness of estimates
annual impairment test using significant estimates used by the management.
as disclosed in Note 15 to the financial statements. – We also assessed the adequacy of the related disclosures in
Therefore, we have determined this to be a Key Note 15 to the financial statements.
Audit Matter.
Valuation of land and buildings Our audit procedures focused on the valuations performed by the
As at 31 March 2018, Land and Buildings carried at external valuers engaged by the Group, and included the following:
fair value, classified as Property, Plant & Equipment – Assessed the competency, capability and objectivity of the external
and Investment Property amounted to Rs. 23 Bn and valuers engaged by the Group.
Rs. 1.3 Bn respectively represents 12% of the total
– Read the external valuer’s report and understood the key estimates
assets of the Group.
made and the approach taken by the valuer in determining the fair
The fair value of such properties was determined by value.
external valuers engaged by the Group. The valuation
– Engaged our internal specialised resources to assess the
of land and buildings was significant to our audit due to
reasonableness of the valuation techniques, per perch price and
the use of significant estimates such as per perch price
value per square foot.
and value per square foot.
– We have also assessed the adequacy of the disclosures made
in Notes 16.6 and 19.1 to the financial statements relating to the
valuation technique and estimates used by the external valuers.
OTHER INFORMATION INCLUDED IN THE 2018

Responsibilities of management and those charged
ANNUAL REPORT
with governance for the financial statements
Other information consists of the information included in the
Management is responsible for the preparation of financial
Annual Report, other than the financial statements and our
statements that give a true and fair view in accordance with
auditor’s report thereon. Management is responsible for the
Sri Lanka Accounting Standards, and for such internal control
other information. Our opinion on the financial statements
as management determines is necessary to enable the
does not cover the other information and we do not express
preparation of financial statements that are free from material
any form of assurance conclusion thereon.
misstatement, whether due to fraud or error.
In connection with our audit of the financial statements, our

In preparing the financial statements, management is
responsibility is to read the other information and, in doing
responsible for assessing the Group’s ability to continue as
so, consider whether the other information is materially
a going concern, disclosing, as applicable, matters related
inconsistent with the financial statements or our knowledge
to going concern and using the going concern basis of
obtained in the audit or otherwise appears to be materially
accounting unless management either intends to liquidate the
misstated. If, based on the work we have performed, we
Group or to cease operations, or has no realistic alternative
conclude that there is a material misstatement of this other
but to do so.
information, we are required to report that fact. We have
nothing to report in this regard.
113
Financial Reports Independent Auditors’ Report > VALLIBEL ONE PLC
Those charged with governance are responsible for zzevaluate the appropriateness of accounting policies used
overseeing the Company’s and the Group’s financial and the reasonableness of accounting estimates and
reporting process. related disclosures made by management.
zzconclude on the appropriateness of management’s use of
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT the going concern basis of accounting and, based on the
OF THE FINANCIAL STATEMENTS audit evidence obtained, whether a material uncertainty
Our objectives are to obtain reasonable assurance about exists related to events or conditions that may cast
whether the financial statements as a whole are free from significant doubt on the Group’s ability to continue as a
material misstatement, whether due to fraud or error, and going concern. If we conclude that a material uncertainty
to issue an auditor’s report that includes our opinion. exists, we are required to draw attention in our auditor’s
Reasonable assurance is a high level of assurance, but is report to the related disclosures in the financial statements
not a guarantee that an audit conducted in accordance with or, if such disclosures are inadequate, to modify our opinion.
SLAuSs will always detect a material misstatement when it Our conclusions are based on the audit evidence obtained
exists. Misstatements can arise from fraud or error and are up to the date of our auditor’s report. However, future events
considered material if, individually or in the aggregate, they or conditions may cause the Group to cease to continue as
could reasonably be expected to influence the economic a going concern.
decisions of users taken on the basis of these financial zzevaluate the overall presentation, structure and content
statements. of the financial statements, including the disclosures, and
whether the financial statements represent the underlying
As part of an audit in accordance with SLAuSs, we exercise transactions and events in a manner that achieves fair
professional judgement and maintain professional skepticism presentation.
throughout the audit. We also – zzobtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
zzidentifyand assess the risks of material misstatement of the within the Group to express an opinion on the consolidated
financial statements, whether due to fraud or error, design financial statements. We are responsible for the direction,
and perform audit procedures responsive to those risks, supervision and performance of the group audit. We remain
and obtain audit evidence that is sufficient and appropriate solely responsible for our audit opinion.
to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than
We communicate with those charged with governance
for one resulting from error, as fraud may involve collusion,
regarding, among other matters, the planned scope and
forgery, intentional omissions, misrepresentations, or the
timing of the audit and significant audit findings, including
override of internal control.
any significant deficiencies in internal control that we identify
zzobtain an understanding of internal control relevant to during our audit.
the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose We also provide those charged with governance with a
of expressing an opinion on the effectiveness of the internal statement that we have complied with ethical requirements in
controls of the Company and the Group. accordance with the Code of Ethics regarding independence,
and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
114
VALLIBEL ONE PLC < Independent Auditors’ Report Financial Reports
From the matters communicated with those charged with

governance, we determine those matters that were of most
significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because
the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such
communication.
REPORT ON OTHER LEGAL AND REGULATORY

REQUIREMENTS
As required by section 163 (2) of the Companies Act No. 07 of
2007, 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.
CA Sri Lanka membership number of the engagement partner

responsible for signing this Independent Auditor’s Report is
M-1697.
Ernst and Young

Chartered Accountants
30th May 2018

Colombo
115
Financial Reports VALLIBEL ONE PLC
Statement of Financial Position

Company Group
As at 31st March 2018 2017 2018 2017
(Restated)
Notes Rs. Rs. Rs. Rs.
ASSETS
Cash and Bank 31 9,838,289 399,210,107 7,384,584,190 5,378,756,448
Financial Assets – Fair Value Through Profit or Loss 4.2 65,046,345 110,560,185 118,234,338 161,264,120
Loans and Receivable 5 – 150,000,000 39,894,276,133 33,638,779,282
Lease Rentals Receivables and Stock Out on Hire 6 – – 62,489,685,766 55,659,387,808
Financial Investments – Available-for-Sale 4.1 11,618,686,194 7,883,555,153 11,694,855,586 7,951,947,177
Other Financial Assets 7 718,942,715 1,400,762,161 7,918,184,001 8,386,081,868
Trade and Other Debtors, Deposits and Prepayments 8 67,051,364 211,720,619 6,843,603,108 6,452,170,427
Other Non-Financial Assets 9 – – 1,892,176,250 1,296,826,030
Investments in Subsidiaries 10 19,318,389,684 18,802,889,683 – –
Investment in Associate 11 405,891,320 405,891,320 618,391,822 587,838,401
Amount due from Related Parties 13 215,624,662 45,334,491 – –
Deferred Tax Assets 12 – – 14,686,000 340,548,697
Income Tax Recoverable 4,219,107 5,269,642 136,770,945 115,943,422
Inventories 14 – – 12,552,520,329 10,031,784,843
Intangible Assets 15 – – 12,983,838,866 13,046,741,647
Property, Plant and Equipment 16 29,219,132 37,131,763 37,479,879,581 29,566,426,018
Biological Assets 17 – – 2,712,627,000 2,575,552,000
Investment Property 19 – – 1,287,007,000 706,000,000
Leasehold Rights Over Mining Lands 18 – – 6,536,000 16,080,000
Assets Held for Sale 41 – – 145,006,622 137,815,270
Total Assets 32,452,908,812 29,452,325,125 206,172,863,537 176,049,943,457
LIABILITIES
Due to Banks 20 63,243,199 2,004 25,693,372,083 26,636,388,491
Due to Customers 21 – – 72,946,010,796 60,401,954,526
Interest-Bearing Loans and Borrowings 22 1,000,000,000 400,000,000 22,601,387,336 16,155,167,093
Trade and Other Payables 23 6,006,869 8,855,425 5,389,102,192 4,954,352,948
Other Financial Liabilities 24 – – 2,192,470,402 2,403,942,650
Other Non-Financial Liabilities 25 – – 853,165,028 591,993,595
Dividend Payable 26 9,455,593 7,647,865 208,562,933 113,083,111
Employee Benefit Liabilities 27 5,975,791 3,808,881 1,478,706,517 1,211,122,077
Income Tax Liabilities 17,198,255 6,061,747 937,286,941 1,220,668,424
Deferred Tax Liabilities 12 1,280,322 2,461,089 5,391,523,503 1,711,056,168
Liabilities Directly associated with the Assets
Classified as Held for Sale 41 – – 18,822,478 137,943,724
Total Liabilities 1,103,160,029 428,837,011 137,710,410,209 115,537,672,807
116
VALLIBEL ONE PLC < Statement of Financial Position Financial Reports
Company Group
As at 31st March 2018 2017 2018 2017
(Restated)
Shareholders’ Funds
Equity Attributable to Equity Holders of the Parent
Stated Capital 28 27,163,983,720 27,163,983,720 27,163,983,720 27,163,983,720
Reserves 29 4,185,765,063 1,859,504,394 20,726,930,186 14,417,588,493
31,349,748,783 29,023,488,114 47,890,913,906 41,581,572,213
Non-Controlling Interest – – 20,571,539,422 18,930,698,437
Total Equity 31,349,748,783 29,023,488,114 68,462,453,328 60,512,270,650
Total Equity and Liabilities 32,452,908,812 29,452,325,125 206,172,863,537 176,049,943,457
These Financial Statements are in compliance with the requirements of Companies Act No. 07 of 2007.
Shyamalie Weerasooriya
Chief Financial Officer
The Board of Directors is responsible for these Financial Statements.

Signed for and on behalf of the Board by,

Dhammika Perera Sumith Adhihetty
Chairman/Managing Director Director
The Accounting Policies and Notes on pages 124 through 220 form an integral part of these Financial Statements.
30th May 2018

Colombo
117
Statement of Profit or loss

Company Group
For the year ended 31st March 2018 2017 2018 2017
(Restated)
Revenue 32 – – 60,968,861,713 52,936,401,547

Cost of Sales – – (34,808,482,313) (29,205,628,525)
Gross Profit – – 26,160,379,400 23,730,773,022
Dividend Income 33 1,221,111,519 2,020,304,582 18,431,322 473,325,814

Other Operating Income 34 157,613,991 48,215,887 575,007,262 721,926,263
Administrative Expenses (183,596,340) (162,505,542) (5,075,198,378) (5,031,122,279)
Distribution Expenses – – (4,786,366,939) (4,196,336,284)
Other Operating Expenses (166,796) – (3,165,882,895) (1,863,688,222)
Loss on reclassifying the Investment to Available-for-Sale
Financial Asset from Investment in Associate – (828,882,412) – (3,297,524,816)
Gold Loan Auction Losses – – (2,995,010) (2,200,719)
Result from Operating Activities 38 1,194,962,374 1,077,132,515 13,723,374,762 10,535,152,779
Finance Cost 35 (2,183,119) (14,186,890) (1,915,045,056) (1,611,278,651)

Finance Income 36 165,025,705 242,759,430 381,975,173 455,606,975
Net Finance Income/(Cost) 162,842,586 228,572,540 (1,533,069,883) (1,155,671,676)
Share of Results of Equity Accounted Investees – – 30,553,421 687,149,968
Reclassification of the Gain/Loss Recognised in OCI Through
Retained Earnings (147,163,699) – (147,163,699) (648,593,981)
Operating Profit before Value Added Tax 1,210,641,261 1,305,705,055 12,073,694,601 9,418,037,091
Value Added Tax on Financial Services – – (1,336,693,020) (1,027,100,778)
Profit Before Tax 1,210,641,261 1,305,705,055 10,737,001,581 8,390,936,312
Income Tax Expense 37 (55,792,090) (65,932,211) (3,926,814,560) (3,761,721,632)

Profit for the Year from Continuing Operations 1,154,849,171 1,239,772,844 6,810,187,021 4,629,214,680
Discontinued Operation
Loss After Tax for the Year from Discontinued Operations 41 – – (40,673,143) (195,549,696)
Profit for the Year 1,154,849,171 1,239,772,844 6,769,513,878 4,433,664,985
Attributable to:
Equity Holders of the Parent 1,154,849,171 1,239,772,844 3,609,109,440 640,203,634
Non-Controlling Interests – – 3,160,404,438 3,793,461,351
1,154,849,171 1,239,772,844 6,769,513,878 4,433,664,985
Earnings Per Share 39 1.06 1.14 3.32 0.59
118
Statement of Comprehensive Income

Company Group
For the year ended 31st March 2018 2017 2018 2017
(Restated)
Rs. Rs. Rs. Rs.
Profit for the Year 1,154,849,171 1,239,772,844 6,769,513,878 4,433,664,985

Other Comprehensive Income
Other Comprehensive Income to be Reclassified
to Income Statement in Subsequent Periods
Share of Other Comprehensive Income of Equity Accounted Investees – – – 23,432,032
Reclassification of the Gain/Loss Recognised in OCI
through Retained Earnings 147,163,699 – 147,163,699 648,593,981
Net Gain/(Loss) on Available-for-Sale Financial Assets 1,567,952,949 751,336,400 1,575,587,266 724,209,106
Exchange Difference on Translation of Foreign Operations – – 8,453,676 3,030,642
Other Comprehensive Income not to be Reclassified
to Income Statement in Subsequent Periods
Realisation of Revaluation Reserve – Transfer Out – – – (202,635,276)
Realisation of Actuarial Loss – Transfer Out – – – 39,734,253
Revaluation of Land and Building – Net of tax – – 1,564,625,424 2,387,695,614
Actuarial Gain/(Loss) on Retirement Benefit Obligation (590,936) 690,136 (154,280,242) 61,778,470
Income Tax Effect 165,462 (193,238) 36,248,514 (11,590,756)
Other Comprehensive Income for the Year, Net of tax 1,714,691,174 751,833,298 3,177,798,337 3,674,248,066
Total Comprehensive Income for the year, Net of Tax 2,869,540,345 1,991,606,142 9,947,312,215 8,107,913,050
Total Comprehensive Income Attributable to:

Equity Holders of the Parent 2,869,540,345 1,991,606,142 6,919,351,020 3,145,907,072
Non-Controlling Interests – – 3,027,961,195 4,962,005,978
2,869,540,345 1,991,606,142 9,947,312,215 8,107,913,050
119
Statement of Changes In Equity

COMPANY
For the year ended 31st March Stated Available-for-Sale Retained Total
Capital Reserve Earnings/Loss Equity
Rs. Rs. Rs. Rs.
Balance as at 01st April 2016 27,163,983,720 (351,118,193) 762,296,122 27,575,161,649

Net Profit/(Loss) for the Period – – 1,239,772,844 1,239,772,844
Dividend Paid – – (543,279,677) (543,279,677)
Other Comprehensive Income/(Loss) – 751,336,400 496,898 751,833,298
Balance as at 31st March 2017 27,163,983,720 400,218,207 1,459,286,187 29,023,488,114
Dividend Paid – – (543,279,677) (543,279,677)
Net Profit/(Loss) for the Period – – 1,154,849,171 1,154,849,171
Other Comprehensive Income/(Loss) – 1,567,952,949 (425,474) 1,567,527,475
Reclassification of the Gain/loss recognised in OCI by the
Available for Sale Reserve to Retained Earnings – 147,163,699 – 147,163,699
Balance as at 31st March 2018 27,163,983,720 2,115,334,855 2,070,430,207 31,349,748,783
120
VALLIBEL ONE PLC < Statement of Changes In Equity Financial Reports
GROUP
For the year ended 31st March Capital Reserves Other Component of Equity
Stated Capital Treasury Reserve Available-for- Foreign Revaluation
Shares Fund Sale Reserve Currency Reserve
Translation
Reserve
Rs. Rs. Rs. Rs. Rs. Rs.
Balance as at 31st March 2016 27,163,983,720 (44,111,716) 1,433,306,024 (996,971,504) 6,057,273 1,143,873,117
Prior Year Adjustment
Balance as at 01st April 2016 (Restated) 27,163,983,720 (44,111,716) 1,433,306,024 (996,971,504) 6,057,273 1,143,873,117
Profit for the Year – – – – – –
Realisation of Revaluation Reserve – Transfer in – – – – – –
Realisation of Actuarial Loss – Transfer in – – – – – –

Share of other comprehensive income of equity
accounted investees – – – 23,693,446 (261,414) –
Reclassification of the Gain/Loss Recognised in
OCI by the Investment in Associate to Retained Earnings – – – 654,012,009 (5,543,745) –
Realisation of Revaluation Reserve – Transfer out – – – – – (202,635,276)
Realisation of Actuarial loss – Transfer out – – – – – –
Revaluation – – – – – 1,255,448,944
Exchange Difference on Translation of Foreign Operations – – – – 1,545,930 –
Net Gain/(Loss) on Available for Sale – – – 733,756,196 – –
Actuarial Gain or Loss – – – – – –
Total Other Comprehensive Income – – – 1,411,461,651 (4,259,229) 1,052,813,668
Dividend Write Back – – – – – –

Transfer – – 783,640,862 – – –
Effect of change in holding – – – – – –
Dividend Paid – – – – – –
Balance as at 31st March 2017 (Restated) 27,163,983,720 (44,111,716) 2,216,946,886 414,490,147 1,798,044 2,196,686,785
Profit for the Period

Reclassification of the Gain/Loss recognised in OCI by the
Available for Sale Reserve to Retained Earnings – – – 147,163,699 – –
Revaluation – – – – – 1,655,026,911
Exchange difference on translation of foreign operations – – – – 5,275,295 –
Net Gain/(Loss) on Available for Sale – – – 1,573,017,461 – –
Actuarial Gain or Loss – – – – – –
Total Other Comprehensive Income – – – 1,720,018,160 5,275,295 1,655,026,911
Dividend Write Back of Unclaimed dividend – – – – – –
Transfer – – 850,144,268 – – –
Share Issue – Minority Interest – – – – – –
Acquisition of Non-Controlling Interest – – – – – –
Effect of Change in Holding – – – – – –
Dividend Paid – – – – – –
Balance as at 31st March 2018 27,163,983,720 (44,111,716) 3,067,091,154 2,134,671,307 7,073,339 3,851,713,696
121
Financial Reports Statement of Changes In Equity > VALLIBEL ONE PLC
Revenue Reserve
General Retained Actuarial Gain/ Hedge Shareholders' Non- Total
Reserve Earnings (Loss) Reserve Funds Controlling Equity
Reserve Interest
Rs. Rs. Rs. Rs. Rs. Rs. Rs.
578,449,249 8,839,684,930 (32,983,859) (125,718) 38,091,161,514 16,579,366,919 54,670,528,433

– 129,656,654 – – 129,656,654 158,879,345 288,535,999
578,449,249 8,969,341,584 (32,983,859) (125,718) 38,220,818,169 16,738,246,264 54,959,064,432
– 640,203,634 – – 640,203,634 3,793,461,351 4,433,664,985
– 202,635,276 – – 202,635,276 – 202,635,276
– (39,734,253) – – (39,734,253) – (39,734,253)
– – – – 23,432,032 – 23,432,032
– – – 125,718 648,593,981 – 648,593,981

– – – (202,635,276) – (202,635,276)
– – 39,734,253 – 39,734,253 – 39,734,253
– – – – 1,255,448,944 1,132,246,669 2,387,695,613
– – – – 1,545,930 1,484,712 3,030,642
– – – – 733,756,196 (9,547,090) 724,209,106
– – 5,827,378 – 5,827,378 44,360,336 50,187,714
– – 45,561,631 125,718 2,505,703,438 1,168,544,627 3,674,248,065
– 15,010,056 – – 15,010,056 – 15,010,056

– (783,640,862) – – – – –
– 580,215,569 – – 580,215,569 (1,530,339,758) (950,124,189)
– (543,279,677) – – (543,279,677) (1,239,214,046) (1,782,493,723)
578,449,249 9,040,751,328 12,577,772 – 41,581,572,213 18,930,698,437 60,512,270,650
3,609,109,440 – – 3,609,109,440 3,160,404,438 6,769,513,878
– – – – 147,163,699 – 147,163,699
– – – – 1,655,026,911 (90,401,487) 1,564,625,424
– – – – 5,275,295 3,178,381 8,453,676
– – – – 1,573,017,461 2,569,805 1,575,587,266
– – (70,241,785) – (70,241,785) (47,789,942) (118,031,727)
– – (70,241,785) – 3,310,241,581 (132,443,243) 3,177,798,338
– 4,231,479 – – 4,231,479 3,620,801 7,852,280
– (850,144,268) – – – – –
– – – – – 5,996,000 5,996,000
– (71,421,836) – – (71,421,836) (219,616,055) (291,037,891)
– – – – – – –
– (542,818,972) – – (542,818,972) (1,177,120,956) (1,719,939,928)
578,449,249 11,189,707,171 (57,664,013) – 47,890,913,905 20,571,539,422 68,462,453,328
122
Statement of Cash Flows

Company Group
As at 31st March Notes 2018 2017 2018 2017
Rs. Rs. Rs. (Restated)
Rs.
Cash Flows from Operating Activities

Net Profit/(Loss) before Taxation 1,210,641,261 1,305,705,057 10,737,001,581 8,390,936,312
Loss from Discontinued operation 41 – – (40,673,143) (195,549,696)
Adjustments for
Profit/(Loss) on sale of Property, Plant and Equipment 34 166,798 (2,856,667) (17,676,580) (20,861,038)
Depreciation 16 10,227,613 10,566,912 1,820,215,783 1,602,438,577
Change in Fair Value of Available-for-Sale Financial Assets (5,395,848) (3,413,677)
Provision/(Reversal) for Change in Market Value of the Investments of
Fair Value Through Profit or Loss Financial Assets 36 (5,368,162) (3,413,677) (10,671,699) (13,908,916)
Change in Fair Value of Biological Assets 34 – – (44,995,000) (89,187,000)
Change in Fair Value of Investment Property 34 – – (121,600,000) (179,440,000)
Change in Fair Value of Fair Value Through Profit or Loss Financial Assets – – (12,040,942) 72,249,540
Script Dividend – (334,009,615) – (334,009,615)
Impairment of Assets Held for Sale – – – 131,480,476
Impairment of Loans 5.1 – – 341,654,637 –
Impairment of Goodwill 15 – – 2,387,160 71,866,701
Allowance for Impairment Losses 195,831,158 –
Amortisation – – 232,007,951 83,876,430
Lease Hold Right Amortisation/Capital Grant Amortisation – – (2,407,000) (3,522,000)
Share of Results of Equity Accounted Investees 11.2 – – (30,553,421) (687,149,968)
Reclassification of the Loss Recognise in OCI by the Investment in Associate – – – 648,593,981
Net adjustments in Investment in Associates due to the Reclassification 147,163,699 828,882,412 147,163,699 3,297,524,253
Gain/(Loss) on Foreign Exchange (84,638) (1,235,250) (40,699,784) (12,363,217)
Profit/(Loss) on disposal of Investment – – (1,453,491) –
Provision for impairment of Financial Assets 4.1 – – 3,361,951 8,738,678
Provision for Employee Benefit Liabilities 27 1,575,974 1,390,118 265,273,651 230,348,774
Provision for Inventory 14 – – 63,703,313 36,937,974
Dividend Received 33 – – (18,431,322) (468,687,609)
Finance Cost 35 2,183,119 14,186,889 1,915,045,056 1,610,700,651
Finance Income 36 (159,572,904) (238,110,503) (324,912,059) (348,477,240)
Operating Profit/(Loss) before Working Capital Changes 1,206,932,760 1,581,105,676 15,052,135,651 13,829,122,372
(Increase)/Decrease in Loans and Advances 150,000,000 225,000,000 (6,255,496,851) (6,814,609,917)
(Increase)/Decrease in Trade and Other Debtors, Deposits and Prepayments 119,680,068 (152,795,245) (391,432,681) (1,202,967,204)
(Increase)/Decrease in Other Financial Assets 681,819,446 621,021,304 467,897,867 (2,536,839,404)
(Increase)/Decrease in Lease Rental Receivable – – (7,026,129,116) (10,557,348,629)
(Increase)/Decrease in Other Non-Financial Assets – – (595,350,220) 395,611,435
Increase/(Decrease) in due to Banks – – (1,190,197,014) 8,864,917,096
Increase/(Decrease) in due to Customers – – 12,544,056,270 7,668,332,234
Increase/(Decrease) in Trade and Other Payables (2,379,190) 5,681,778 434,749,244 (463,141,959)
(Increase)/Decrease in Other Non-Financial Liabilities – – 261,171,433 738,225,623
(Increase)/Decrease in Other Financial Liabilities – – (211,472,248) 137,461,000
(Increase)/Decrease in Inventories (2,584,438,799) (1,397,929,255)
Increase/(Decrease) in Asset Held for Sale – – (7,191,352) (131,352,001)
(Increase)/Decrease in Amounts due from Related Companies (154,213,386) 225,635,527 – –
123
Financial Reports Statement of Cash Flows > VALLIBEL ONE PLC
Company Group
As at 31st March Notes 2018 2017 2018 2017
Rs. Rs. Rs. (Restated)
Rs.
Cash Generated from Operations 2,001,839,698 2,505,649,041 10,498,302,185 8,529,481,421

Retirement Benefits Liabilities Paid 27 – (308,000) (151,969,453) (149,547,483)
Finance Cost Paid 35 (2,652,485) (12,513,137) (1,973,065,973) (1,610,700,651)
Interest Received 36 169,662,658 249,624,131 324,912,059 437,664,240
Taxes Paid (45,255,290) (68,874,630) (2,831,085,164) (3,126,580,746)
Net Cash from/(Used in) Operating Activities 2,123,594,580 2,673,577,403 5,867,093,654 4,080,316,781
Cash Flows from Investing Activities `

Purchase of Property, Plant and Equipment 16.2 (2,481,779) (4,316,819) (5,601,075,726) (6,788,788,131)
Proceeds from Sale of Property, Plant and Equipment – 3,100,000 129,500,356 72,527,641
Increase the Stake of Subsidiaries (515,500,000) (1,473,500,000) – –
Purchase of Intangible Assets 15 – – (25,693,501) (33,612,692)
Cost on Bearer Biological Assets 17 – – (241,550,000) (209,348,000)
Net Change Short-Term Investment – – – (25,157,900)
Net Change of Available-for-Sale Financial Assets (2,167,635,867) – (1,863,607,561) –
Net Change of Fair Value Through Profit or Loss Financial Assets 50,882,003 129,203,750 60,466,572 (2,562,164)
Acquisition of Subsidiary – – – (59,999,000)
Proceeds from leasehold right on mining – – 6,414,000 (7,999,500)
Acquisition of Non-Controlling interest – (827,739,038) (291,037,891) (950,124,189)
Dividend Received 33 – – 18,431,322 583,107,602
Net Cash used in Investing Activities (2,634,735,643) (2,173,252,107) (7,808,152,429) (7,421,956,333)
Cash Flows from Financing Activities

Proceeds from Interest-Bearing Loans and Borrowings 600,000,000 400,000,000 20,400,408,893 7,995,942,966
Repayment of Interest Bearing Loans and Borrowings – – (14,980,763,056) (6,825,535,477)
Capital Grant Received – – – 22,412,000
Dividend Paid (541,471,949) (542,415,638) (1,719,939,928) (1,782,493,723)
Net Cash from Financing Activities 58,528,051 (142,415,638) 3,699,705,909 (589,674,234)
Net Increase/(Decrease) in Cash and Cash Equivalents (452,613,013) 357,909,659 1,758,647,134 (3,931,313,785)
Cash and Cash Equivalents at the beginning of the Year 399,208,103 41,298,444 1,485,247,252 5,416,561,035
Cash and Cash Equivalents at the end of the Year (53,404,910) 399,208,103 3,243,894,386 1,485,247,250
The accounting policies and Notes on pages 124 through 220 form an integral part of these Financial Statements.
124
Notes to the Financial Statements

1. CORPORATE INFORMATION GREENER WATER LTD.
1.1 GENERAL Greener Water Ltd., is an intended hotel operator.
Vallibel One PLC (“Company”) is a public limited liability

company incorporated and domiciled in Sri Lanka. The DELMEGE LIMITED GROUP [FORMERLY KNOWN AS
ordinary shares of the Company are listed on the Colombo LEWIS BROWN & COMPANY (PRIVATE) LIMITED]
Stock Exchange of Sri Lanka. The registered office of the Delmage Ltd., is managing its subsidiaries, carrying out
Company is located at No. 29, West Tower, World Trade investment activities and providing management and
Centre, Echelon Square, Colombo 01. administration services to the companies within the Group.
Subsidiaries of the Group were engaged in the business of
1.2 PRINCIPAL ACTIVITIES AND manufacturing, trading, shipping, logistics, airline and travel,
NATURE OF OPERATIONS and insurance brokering.
A principal activity of the Company is holding investments

In addition to the above investments, Company holds an
in other companies.
investment in the Fortress Resorts PLC which is accounted
as investment in associates.
VALLIBEL ONE PLC
Group holding company manages a portfolio of diversified
1.3 PARENT ENTITY AND ULTIMATE PARENT ENTITY
business holdings.
Vallibel One PLC does not have an identifiable parent
of its own. The Group’s ultimate controlling party is
ROYAL CERAMICS LANKA PLC GROUP
Mr. K D D Perera.
Royal Ceramics Lanka PLC (RCL) is engaged in
manufacturing and marketing of floor and wall tiles.
1.4 CONSOLIDATED FINANCIAL STATEMENTS
Subsidiaries of RCL were engaged in the business of property
The Consolidated Financial Statements of Valiibel One PLC,
holding, manufacturing and marketing of floor and wall tiles,
as at and for the year ended 31st March 2018 encompass
supply of raw material to the ceramic industry, sanitary ware,
the Company, its Subsidiaries (together referred to as the
cartoons and paper sacks for packing, aluminium extrusions,
“Group”) and the Group’s interest in Equity Accounted
agricultural production and providing management services to
Investees (Associates).
the plantation industry.
1.5 DATE OF AUTHORISATION FOR ISSUE

LB FINANCE PLC GROUP
The Consolidated Financial Statements of Vallibel One PLC
LB Finance PLC provides a comprehensive range of financial
and its subsidiaries for the Year ended 31st March 2018 were
services encompassing acceptance of deposits, granting
authorised for issue in accordance with a resolution of the
lease facilities, hire purchases, mortgage loans, gold loans,
directors on 30th May 2018.
personal loans, factoring, margin trading, trade finance
loans, micro-finance and other credit facilities, real estate
development and related services.
125
Financial Reports Notes to the Financial Statements > VALLIBEL ONE PLC
1.6 RESPONSIBILITY FOR FINANCIAL STATEMENTS COMPARATIVE INFORMATION

The responsibility of the Directors in relation to the Financial The presentation and classification of the Financial Statements
Statements is set out in the Statement of Directors’ of the previous years have been amended, where relevant for
Responsibility Report in the Annual Report. better presentation and to be comparable with those of the
current year.
2. BASIS OF PREPARATION
2.3 FOREIGN CURRENCIES
2.1 STATEMENT OF COMPLIANCE
The Group's/Company's Consolidated Financial Statements
The Financial Statements which comprise the Statement are presented in Sri Lankan Rupees, which is also the Parent
of Profit or Loss, Statements of Comprehensive Income, Company's functional currency. For each entity the Group
statements of financial position, statements of changes in determines the functional currency and items included in the
equity and the cash flows statements, together with the Financial Statements of each entity are measured using that
accounting policies and notes (the “Financial Statements”) functional currency.
have been prepared in accordance with Sri Lanka Accounting
Standards (SLFRS/ LKAS) as issued by the Institute of
TRANSACTIONS AND BALANCES
Chartered Accountants of Sri Lanka (CA Sri Lanka) and the
Transactions in foreign currencies are initially recorded by
requirement of the Companies Act No. 07 of 2007.
the Group entities/Company at their respective functional
currency spot rate at the date the transaction first qualifies for
2.2 BASIS OF MEASUREMENT
recognition. Monetary assets and liabilities denominated in
The consolidated Financial Statements have been prepared foreign currencies are retranslated at the functional currency
on a historical cost basis, except for land & buildings, spot rate of exchange ruling at the reporting date.
derivative financial instruments, fair value through profit or loss
financial assets and available for sale financial assets that Differences arising on settlement or translation of monetary
have been measured at fair value. items are recognised in profit or loss.
The carrying values of recognised assets and liabilities that Non-monetary items that are measured in terms of historical
are designated as hedged items in fair value hedges that cost in a foreign currency are translated using the exchange
would otherwise be carried at amortised cost are adjusted rates as at the dates of the initial transactions. Non-monetary
to changes in the fair values attributable to the risks that are items measured at fair value in a foreign currency are
being hedged in effective hedge relationships. translated using the exchange rates at the date when the fair
value is determined. The gain or loss arising on translation of
The Consolidated Financial Statements are presented in non-monetary items measured at fair value is treated in line
Sri Lankan Rupees except when otherwise indicated. with the recognition of gain or loss on change in fair value in
the item.
The Group presents its Statement of Financial Position
broadly in order of liquidity. An analysis regarding recovery
or settlement within 12 months after the reporting date
(current) and more than 12 months after the reporting
date (non–current) is presented in Note 45.
126
VALLIBEL ONE PLC < Notes to the Financial Statements Financial Reports
GROUP COMPANIES Generally, there is a presumption that a majority of voting

The assets and liabilities of foreign operations are translated rights result in control. To support this presumption and when
into Sri Lankan Rupees at the rate of exchange at the the Group has less than a majority of the voting or similar
reporting date and their Statement of Profit or Loss are rights of an investee, the Group considers all relevant facts
translated at exchange rates prevailing at the dates of and circumstances in assessing whether it has power over
the transactions. The exchange differences arising on the an investee, including –
translation are recognised in other comprehensive income. zzThe contractual arrangement with the other vote holders
On disposal of a foreign operation, the component of other of the investee
comprehensive income relating to that particular foreign
zzRights arising from other contractual arrangements
operation is recognised in the Statement of Profit or Loss.
zzThe Group’s voting rights and potential voting rights
2.4 MATERIALITY AND AGGREGATION

The Group reassesses whether or not it controls an investee
Each material class of similar items is presented separately in if facts and circumstances indicate that there are changes to
the Financial Statements. Items of dissimilar nature or function one or more of the three elements of control. Consolidation
are presented separately unless they are immaterial as of a subsidiary begins when the Group obtains control over
permitted by the Sri Lanka Accounting Standard – LKAS 1 – the subsidiary and ceases when the Group loses control of
“Presentation of Financial Statements.” the subsidiary. Assets, liabilities, income and expenses of
a subsidiary acquired or disposed of during the year are
2.5 BASIS OF CONSOLIDATION included in the Consolidated Financial Statements from the
The Consolidated Financial Statements comprise the Financial date the Group gains control until the date the Group ceases
Statements of the Group and its subsidiaries as at 31st March to control the subsidiary.
2018. Subsidiaries as at 31st March 2018 are as follows:
Profit or loss and each component of Other Comprehensive
Company Name Year of Ownership
Incorporation Percentage Income (OCI) are attributed to the equity holders of the Parent
of the Group and to the non-controlling interests, even if this
Royal Ceramics Lanka PLC 1990/91 55.96
results in the non-controlling interests having a deficit balance.
L B Finance PLC 1971/72 66.34
When necessary, adjustments are made to the Financial
Greener Water Ltd. 2010/11 100
Delmege Ltd. 1915/16 62.75
Statements of subsidiaries to bring their accounting policies
into line with the Group’s accounting policies. All intra-group
The Consolidated Financial Statements comprise the financial assets and liabilities, equity, income, expenses and cash
statements of the Group and its subsidiaries as at 31st March flows relating to transactions between members of the Group
2018. Control is achieved when the Group is exposed, or are eliminated in full on consolidation.
has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its A change in the ownership interest of a subsidiary, without a
power over the investee. Specifically, the Group controls an loss of control, is accounted for as an equity transaction.
investee if, and only if, the Group has –
If the Group loses control over a subsidiary, it derecognises
zzPower over the investee (i.e., existing rights that give it the the related assets (including goodwill), liabilities,
current ability to direct the relevant activities of the investee) non-controlling interest and other components of equity
zzExposure, or rights, to variable returns from its involvement while any resultant gain or loss is recognised in profit or
with the investee loss. Any investment retained is recognised at fair value.
zzThe ability to use its power over the investee to affect
its returns
127
2.5.1 BUSINESS COMBINATIONS AND GOODWILL 2.5.2 INVESTMENT IN EQUITY ACCOUNTED INVESTEES
Business combinations are accounted for using the The Group investment in associates is accounted for using the
acquisition method. The cost of an acquisition is measured equity method. An associate is an entity in which the Group
as the aggregate of the consideration transferred, measured has significant influence.
at the acquisition date fair value and the amount of any
non-controlling interest in the acquire. For each business Under the equity method, the investment is initially recognised
combination, the Group elects whether to measure the at cost. The carrying amount of the investment is adjusted
non-controlling interest in the acquire at fair value or at the to recognise changes in the Group's share of net assets of
proportionate share of the acquire at the fair value or at the associate since acquisition date. Goodwill relating to the
proportionate share of the acquiree's identifiable net assets. associate is included in the carrying amount of the investment
and is neither amortised nor individually tested for impairment.
Acquisition-related costs are expensed as incurred and
included in administrative expenses. The Statement of profit or loss reflects the Group's share of
net of tax results of operations of the associates. When there
When the Group acquires a business, it assesses the financial has been a change recognised directly in the equity of the
assets and liabilities assumed for appropriate classification associates, the Group recognises its share of any changes,
and designation in accordance with the contractual terms, when applicable, in the statement of changes in equity.
economic circumstances and pertinent conditions as at the Unrealised gains and losses resulting from transactions
acquisition date. between the Group and the associate are eliminated to the
extent of the interest in the associate.
Goodwill is initially measured at cost, being the excess of
the aggregate of the consideration transferred and the The Group’s share of the profit or loss of an associate is
amount recognised for non-controlling interest over the net shown on the face of the Statement of Comprehensive
identifiable assets acquired and liabilities assumed. If the Income.
fair value of the net assets acquired is in excess of the
aggregate consideration transferred, the gain is recognised Equity method of accounting has been applied for associates
in profit or loss. Financial Statements using their corresponding/matching
12 month financial period. In the case of associates, where
After initial recognition, goodwill is measured at cost less the reporting dates are different to Group reporting dates,
any accumulated impairment losses. For the purpose adjustments are made for any significant transactions or
of impairment testing, goodwill acquired in a business events up to 31st March.
combination is, from the acquisition date, allocated to
each of the Group's cash generating units. After application of the equity method, the Group determines
whether it is necessary to recognise an impairment loss on
Where goodwill has been allocated to a cash-generating unit its investment in its associates. The Group determines at
and part of the operation within that unit is disposed of, the each reporting date whether there is any objective evidence
goodwill associated with the operation disposed of is included that the investment in the associate is impaired. If this is the
in the carrying amount of the operation when determining the case, the Group calculates the amount of impairment as the
gain or loss on disposal of the operation. Goodwill disposed difference between the recoverable amount of the associate
of in this circumstance is measured based on the relative and its carrying value and recognises the amount in “share
values of the operation disposed of and the portion of the of losses of an associate” in the Statement of Profit or Loss.
cash-generating unit retained. Upon loss of significant influence over the associate, the
Group measures and recognises any retained.
128
Investment at its fair value. Any difference between the Financial Statements were prepared. Existing circumstances
carrying amount of the associate upon loss of significant and assumptions about future developments, however, may
influence and the fair value of the retaining investment and change due to market changes or circumstances arising
proceeds from disposal is recognised in profit or loss. beyond the control of the Group. Such changes are reflected
in the assumptions when they occur.
EQUITY ACCOUNTED INVESTEES

The most significant uses of judgements and estimates
– The Fortress Resort PLC are as follows:
I. TAXATION
3. SUMMARY OF SIGNIFICANT ACCOUNTING
The Group is subject to income taxes and other taxes
JUDGEMENTS, ESTIMATES, ASSUMPTIONS
including VAT on financial services. Significant judgement was
AND POLICIES
required to determine the total provision for current, deferred
3.1 SIGNIFICANT ACCOUNTING JUDGEMENTS, and other taxes pending the issue of tax guidelines on the
ESTIMATES, ASSUMPTIONS treatment of the adoption of SLFRS in the Financial Statements
The preparation of Financial Statements requires the and the taxable profit for the purpose of imposition of taxes.
application of certain critical accounting and assumptions Uncertainties exist, with respect to the interpretation of the
relative to the future. Further, it requires Management to applicability of tax laws, at the time of the preparation of
make judgements, estimates and assumptions that affect these Financial Statements.
the reported amounts of revenues, expenses, assets and
liabilities, and the disclosure of contingent liabilities, at the The Group recognised assets and liabilities for current,
end of the reporting period. However, uncertainty about these deferred and other taxes based on estimates of whether
assumptions and estimates could result in outcomes that additional taxes will be due. Where the final tax outcome
require a material adjustment to the carrying amount of the of these matters is different from the amounts that were
asset or liability affected in future periods. initially recorded, such differences will impact the income
and deferred tax amounts in the period in which the
determination is made.
JUDGEMENTS
In the process of applying the Group's accounting policies,
II. IMPAIRMENT LOSSES ON LOANS AND ADVANCES
Management has exercised judgement and estimates
(LEASES, HIRE PURCHASE AND OTHER LOANS)
in determining the amounts recognised in the Financial
Statements. The Group reviews individually significant loans and advances
at each reporting date to assess whether an impairment
ESTIMATES AND ASSUMPTIONS loss should be recorded in the Statement of Comprehensive
Income. In particular, Management’s judgement is required
The key assumptions concerning the future and other key
in the estimation of the amount and timing of future cash
sources of estimation uncertainty at the reporting date, that
flows when determining the impairment loss. These estimates
have a significant risk of causing a material adjustment
are based on assumptions about a number of factors and
to the carrying amounts of assets and liabilities within the
actual results may differ, resulting in future changes to the
next financial year, are described below. The Group-based
impairment allowance.
assumptions and estimates on parameters available when the
129
Loans and advances that have been assessed individually V. USEFUL LIFE-TIME OF THE PROPERTY
and found to be not impaired and all individually insignificant AND EQUIPMENT
loans and advances are then assessed collectively, in groups The Group reviews the residual values, useful lives and
of assets with similar risk characteristics, to determine methods of depreciation of assets at each reporting date.
whether provision should be made due to incurred loss Management estimates these values, rates, methods and
events for which there is objective evidence, but the effects hence they are subject to uncertainty.
of which are not yet evident.
VI. DEFINED BENEFIT PLANS

The collective assessment takes in to account data from the
loan portfolio (such as levels of arrears, credit utilisation, The cost of defined benefit plans are determined using
loan-to-collateral ratios, etc.), and judgements on the effect of actuarial valuations. An actuarial valuation involves
concentrations of risks and economic data (including levels of making various assumptions which may differ from actual
unemployment, inflation, interest rates). developments in the future. These include the determination
of the discount rate, future salary increases, mortality rates
etc. Due to the complexity of the valuation, the underlying
III. IMPAIRMENT OF AVAILABLE-FOR-SALE
assumptions and their long-term nature, a defined benefit
INVESTMENTS
obligation is highly sensitive to changes in these assumptions.
Group reviews its assets classified as available-for-sale All assumptions are reviewed at each reporting date.
investments at each reporting date to assess whether they are
impaired. This requires similar judgement as applied on the In determining the appropriate discount rate, Management
individual assessment of loans and advances. considers the interest rates of Sri Lanka Government Bonds
with extrapolated maturities corresponding to the expected
The Group also records impairment charges on available duration of the defined benefit obligation.
for sale equity investments when there has been a significant
or prolonged decline in the fair value below their cost. The The mortality rate is based on publicly available mortality
determination of what is “significant” or “prolonged” requires tables. Future salary increases are based on expected future
judgement. In making this judgement, the Group evaluates, inflation rates and expected future salary increase rate of the
among other factors, historical share price movements, Group. Actuarial gain/loss arising on the valuation of defined
duration and extent up to which the fair value of an benefit obligation is recognised in the Statement of Other
investment is less than its cost. Comprehensive Income.
IV. DEFERRED TAX ASSETS VII. IMPAIRMENT OF NON-FINANCIAL ASSETS

Deferred tax assets are recognised in respect of tax losses Impairment exists when the carrying value of an asset or cash
to the extent it is probable that future taxable profits will generating unit exceeds its recoverable amount, which is the
be available against which such tax losses can be set off. higher of its fair value less costs to sell and its value in use
Judgement is required to determine the amount of deferred (VIU). The fair value less costs to sell calculation is based
tax assets that can be recognised, based on the likely timing on available data from an active market, in an arm’s length
and level of future taxable profits, together with the future transaction, of similar assets or observable market prices less
tax-planning strategies. incremental costs for disposing of the asset. The value in use
calculation is based on a discounted cash flow model. The
130
cash flows are derived from the budget for the next five years SUBSEQUENT MEASUREMENT
and do not include restructuring activities that the Group is These are costs that are recognised in the carrying amount
not yet committed to or significant future investments that will of an item, if it is probable that the future economic benefits
enhance the asset’s performance of the cash generating unit embodied within that part will flow to the Group and it can be
being tested. reliably measured.
The recoverable amount is most sensitive to the discount DEPRECIATION

rate used for the discounted cash flow model as well as the
Depreciation is calculated using the straight-line method
expected future cash inflows and the growth rate used for
to write down the cost of property and equipment to their
extrapolation purposes.
residual values over their estimated useful lives and full
depreciation is charge for the month of purchase of such
VIII. REVALUATION OF PROPERTY, PLANT property and equipment and no depreciation is charged in
AND EQUIPMENT the month of disposal.
The Group measures land and buildings at revalued
amounts with changes in fair value being recognised other The rates of depreciation based on the estimated useful lives
comprehensive income and in the Statement of Equity. are as follows:
The Group engaged independent valuation specialists to
Category of Asset Period
determine fair value land and buildings. The valuer has used
valuation techniques such as market values and discounted Building 15 – 50 years
cash flow methods where there was lack of comparable Furniture and Fittings 3 – 6.67 years
market data available based on the nature of the property. Equipment 3 – 5 years
Motor Vehicles and Accessories 4 – 8 years
3.2 SIGNIFICANT ACCOUNTING POLICIES Computer Hardware 4 – 5 years
Motor Bike 3 years
3.2.1 STATEMENT OF FINANCIAL POSITION
Mobile Accessories 2 years
(I) PROPERTY, PLANT AND EQUIPMENT Air Condition 5 years
Property, Plant and Equipment are recognised if it is Telephone System 5 years
probable that future economic benefits associated with the Fire Protection Equipment 5 years
asset will flow to the entity and the cost of the asset can be Leasehold Improvement 6.67 years
measured reliably in accordance with LKAS 16 – “Property, Fixtures and Fittings 3 years
Plant and Equipment.” Initially property and equipment are Water Supply Scheme, Electricity Distribution,
measured at cost. Household Items – Heavy 25 – 40 years
Tools and Sundry Inventory and
RECOGNITION AND MEASUREMENTT Household Items – Light 02 years
INITIAL RECOGNITION Factory Equipment, Plant and Machinery,
Property and equipment is stated at cost, excluding the costs Moulds and Communication Equipment 10 – 20 years
of day-to-day servicing, less accumulated depreciation and
accumulated impairment in value. Such cost includes the cost
of replacing part of the equipment when that cost is incurred,
if the recognition criteria are met.
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The asset’s residual values, useful lives and methods of The cost of land preparation, rehabilitation, new planting,
depreciation are reviewed, and adjusted if appropriate, replanting, crop diversifying, inter-planting and fertilising,
at each financial year end. etc., incurred between the time of planting and harvesting
(when the planted area attains maturity), are classified as
REVALUATION immature plantations. These immature plantations are shown
Land and buildings are measured at fair value less at direct costs plus attributable overheads, including
accumulated depreciation on buildings and impairment interest attributable to long-term loans used for financing
losses recognised after the date of the revaluation. Valuations immature plantations.
are performed with sufficient frequency to ensure that the
fair value of a revalued asset does not differ materially from Biological assets are further classified as bearer biological
its carrying amount. Any revaluation surplus is recognised assets and consumable biological assets. Bearer biological
in other comprehensive income and accumulated in equity asset includes tea and rubber trees, those that are not
in the asset revaluation reserve, except to the extent that it intended to be sold or harvested, however used to grow for
reverses a revaluation decrease of the same asset previously harvesting agricultural produce from such biological assets.
recognised in the Statement of Income, in which case Consumable biological assets includes managed timber trees
the increase is recognised in the Statement of Income. A those that are to be sold as biological assets.
revaluation deficit is recognised in the Statement of Income,
except to the extent that it offsets an existing surplus on the The expenditure incurred on bearer biological assets
same asset recognised in the asset revaluation reserve. Cost (Tea and Rubber) fields, which come in to bearing during
of repairs and maintenance are charged to the Statement of the year, has been transferred to mature plantations.
Income during the period in which they are incurred. Expenditure incurred on consumable biological assets is
recorded at cost at initial recognition and thereafter at fair
value at the end of each reporting period.
DERECOGNITION
Property, Plant and Equipment is derecognised on disposal
The entity recognises the biological assets when, and only
or when no future economic benefits are expected from its
when, the entity controls the assets as a result of past event, it
use. Any gain or loss arising on derecognition of the asset
is probable that future economic benefits associated with the
(calculated as the difference between the net disposal
assets will flow to the entity and the fair value or cost of the
proceeds and the carrying amount of the asset) is recognised
assets can be measured reliably.
in “Other operating income” in the Statement of Profit or Loss
in the year the asset is derecognised.
The bearer biological assets are measured at cost
less accumulated depreciation and accumulated
(II) BIOLOGICAL ASSETS impairment losses, if any, in terms of LKAS 16 –
1. BEARER BIOLOGICAL ASSETS AND CONSUMER “Property, Plant and Equipment.”
BIOLOGICAL ASSETS
The managed timber trees are measured on initial recognition
Biological assets are classified in to mature biological assets
and at the end of each reporting period at its fair value
and immature biological assets. Mature biological assets are
less cost to sell in terms of LKAS 41. The cost is treated as
those that have attained harvestable specifications or are able
approximation to fair value of young plants as the impact on
to sustain regular harvests. Immature biological assets are
biological transformation of such plants to price during this
those that have not yet attained harvestable specifications.
period is immaterial.
Tea, rubber, other plantations and nurseries are classified as
biological assets.
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The fair value of timber trees are measured using DCF method 2. INFILLING COST ON BIOLOGICAL ASSETS
taking in to consideration the current market prices of timber, The land development costs incurred in the form of in filling
applied to expected timber content of a tree at the maturity by have been capitalised to the relevant mature field, only if
an independent professional valuer. it increases the expected future benefits from that field,
beyond its pre-infilling performance assessment. Infilling
The main variables in DCF model concerns – costs so capitalised are depreciated over the newly assessed
Variable Description of the Variable
remaining useful economic life of the relevant mature
plantation, or the unexpired lease period, whichever is lower.
Timber Estimate based on physical verification of girth,
content height and considering the growth of the each
Infilling costs that are not capitalised have been charged to
species. Factor all the prevailing statutory
regulations enforced against harvesting of timber the Statement of Comprehensive Income in the year in which
coupled with forestry plan of the Company. they are incurred.
Economic Estimated based on the normal life span of each
useful life species by factoring the forestry plan of the (III) INVESTMENT PROPERTIES
Company.
Properties held for capital appreciation and properties
Selling Estimated based on prevailing Sri Lankan market
price price. Factor all the conditions to be fulfilled in held to earn rental income have been classified as
bringing the trees in to saleable condition. Investment Property.
Planting Estimated costs for the further development of
cost immature arrears are deducted. BASIS OF RECOGNITION
Discount Discount rate reflects the possible variations in the
Investment Property is recognised if it is probable that future
rate Cash flows and the risk related to the biological
assets. economic benefits that are associated with the Investment
Property will flow to the Group and cost of the Investment
Nursery cost includes the cost of direct materials, direct Property can be reliably measured.
labour and an appropriate proportion of directly attributable
overheads, less provision for overgrown plants. MEASUREMENT
INITIAL MEASUREMENT
The gain or loss arising on initial recognition of biological
An Investment Property is measured initially at its cost. The
assets at fair value less cost to sell and from a change in fair
cost of a purchased Investment Property comprises its
value less cost to sell of biological assets are included in the
purchase price and any directly attributable expenditure.
Statement of Profit or Loss for the period in which it arises.
The cost of a self-constructed investment is its cost at the
date when the construction or development is complete.
Permanent impairments to Biological Assets are charged to
the Statement of Profit or Loss in full and reduced to the net
SUBSEQUENT MEASUREMENT
carrying amounts of such asset in the year of occurrence after
ascertaining the loss. 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 fair value.
133
Gains or losses arising from changes in the fair values of AMORTISATION

investment properties are included in the profit or loss in the Amortisation is calculated using the straight–line method
period in which they arise. to write down the cost of intangible assets to their residual
values over their estimated useful lives as follows:
DETAILS OF FAIR VALUE MEASUREMENT IS PRESENTED IN
NOTE 19 The Class of Intangible Assets Useful Life Amortisation Method
(IV) INTANGIBLE ASSETS Computer Software 5 – 15 Years Straight line method

The Group’s intangible assets include the value of computer Brand Name 20 Years Straight line method
software, brand name and goodwill on business combination.
An intangible asset is recognised only when its cost can be (V) INVENTORIES
measured reliably and it is probable that the expected future Inventories are valued at lower of cost and net realisable
economic benefits that are attributable to it will flow to the value, after making due allowances for obsolete and slow
Group. moving items. Net realisable value is the price at which
inventories can be sold in the ordinary course of business
Intangible assets acquired separately are measured on initial less the estimated cost of completion and the estimated cost
recognition at cost. Following initial recognition, intangible necessary to make the sale.
assets are carried at cost less any accumulated amortisation
and any accumulated impairment losses. The cost incurred in bringing inventories to its present location
and condition is accounted using the following cost formulae:
USEFUL LIVES OF INTANGIBLE ASSETS
(a) Raw material – At purchase cost on weighted average cost basis,
The useful lives of intangible assets are assessed to be except for, Vallibel Plantation Management Limited and Swisstek
either finite or indefinite. Intangible assets with finite lives are (Ceylon) PLC which is on a first in first out basis.
amortised over the useful economic life. The amortisation (b) Consumable and spares – At purchase cost on weighted average
period and the amortisation method for an intangible asset cost basis.
with a finite useful life are reviewed at least at each financial (c) Finished goods and Work In Progress – at the cost of direct
year–end. Changes in the expected useful life or the expected material, direct labour and appropriated proportion of production
pattern of consumption of future economic benefits embodied overheads based on normal operating capacity.
in the asset are accounted for by changing the amortisation (d) Goods in transit have been valued at cost.
period or method, as appropriate, and they are treated as (e) Trading goods – At Purchase cost on weighted average basis
changes in accounting estimates. The amortisation expense except for Lanka Walltiles group which is on first in first out basis.
on intangible assets with finite lives is recognised in the
Statement of profit or loss in the expense category consistent (VI) IMPAIRMENT OF NON-FINANCIAL ASSETS
with the function of the intangible asset. The Group assesses at each reporting date whether there is
an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is
required, the Group estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or
Cash Generating Unit’s (CGU’s) fair value less costs to sell
and its value in use. Where the carrying amount of an asset or
134
CGU exceeds its recoverable amount, the asset is considered amounts due under the leases, after deduction of unearned
impaired and is written down to its recoverable amount. In charges, are included in “Lease rentals receivables and stock
assessing value in use, the estimated future cash flows are out on hire”. The finance income receivable is recognised
discounted to their present value using a pre-tax discount in “Revenue” over the periods of the leases so as to give a
rate that reflects current market assessments of the time value constant rate of return on the net investment in the leases.
of money and the risks specific to the asset. In determining
fair value less costs to sell, an appropriate valuation model When the Group is a lessee under finance leases, the
is used. These calculations are corroborated by valuation leased assets are capitalised and included in “Property and
multiples, quoted share prices for publicly traded subsidiaries equipment” and the corresponding liability to the lessor is
or other available-fair-value indicators. included in Interest-Bearing Loans and Other Borrowings .
A finance lease and its corresponding liability are recognised
For assets, an assessment is made at each reporting initially at the fair value of the asset or, if lower, the present
date as to whether there is any indication that previously value of the minimum lease payments. Finance charges
recognised impairment losses may no longer exist or may payable are recognised in “Net interest income” over the
have decreased. If such indication exists, the Group estimates period of the lease based on the interest rate implicit in the
the asset’s or CGU’s recoverable amount. A previously lease so as to give a constant rate of interest on the remaining
recognised impairment loss is reversed only if there has been balance of the liability.
a change in the assumptions used to determine the asset’s
recoverable amount since the last impairment OPERATING LEASE
loss was recognised. The reversal is limited so All other leases are classified as operating leases. When
that the carrying amount of the asset does not exceed its acting as lessor, the Group includes the assets subject
recoverable amount, nor exceeds the carrying amount that to operating leases in “Property, Plant and Equipment”
would have been determined, net of depreciation, had no and accounts for them accordingly. Impairment losses
impairment loss been recognised for the asset in prior years. are recognised to the extent that residual values are not
Such reversal is recognised in the Statement of Profit or Loss. fully recoverable and the carrying value of the assets is
thereby impaired.
(VII) FINANCE AND OPERATING LEASES
The determination of whether an arrangement is a lease When the Group is the lessee, leased assets are not
or it contains a lease, is based on the substance of the recognised on the Statement Financial Position. Rentals
arrangement and requires an assessment of whether the payable and receivable under operating leases are
fulfilment of the arrangement is dependent on the use of a accounted for on a straight-line basis over the periods of the
specific asset or assets and the arrangement conveys a right leases and are included in “Other operating expenses” and
to use the asset. “other operating income”, respectively.
FINANCE LEASE BORROWING COSTS

Agreements which transfer to counterparties substantially all Borrowing costs directly attributable to the acquisition,
the risks and rewards incidental to the ownership of assets, construction or production of an asset that necessarily takes
but not necessarily legal title, are classified as finance a substantial period of time to get ready for its intended use
leases. When the Group is a lessor under finance leases the or sale are capitalised as part of the cost of the respective
assets. All other borrowing costs are expensed in the period
they occur. Borrowing costs consist of interest and other costs
that an entity incurs in connection with the borrowing of funds.
135
(VIII) PROVISIONS FUNDING ARRANGEMENTS

Provisions are recognised when the Group has a present The gratuity liability is not externally funded.
obligation (legal or constructive) as a result of a past event,
and it is probable that an outflow of resources embodying (2) DEFINED CONTRIBUTION PLAN
economic benefits will be required to settle the obligation The Group also operates a defined contribution plan. The
and a reliable estimate can be made of the amount of the contribution payable to a defined contribution plan is in
obligation. The expense relating to any provision is presented proportion to the services rendered to the Group by the
in the Statement of Profit or Loss net of any reimbursement. employees and is recorded as an expense under “Personnel
expenses”. Unpaid contributions are recorded as a liability.
(IX) EMPLOYEE BENEFIT OBLIGATIONS
(1) GRATUITY The Group contributes to the following schemes:
All the employees of the Group are eligible for gratuity under – EMPLOYEES’ PROVIDENT FUND
the Payment of Gratuity Act No. 12 of 1983. Employees those The Group and employees contribute 12%-15% and 8%-
who have resigned or whose services are terminated other 10% respectively of the employee’s monthly gross salary
than by retirement are eligible to receive the terminal gratuity (excluding overtime) to the Provident Fund.
under the Payment of Gratuity Act No. 12 of 1983 at the rate
of one-half of the Gross Salary applicable to the last month of – EMPLOYEES’ TRUST FUND
the financial year in which the employment is terminated or The Company contributes 3% of the employee’s monthly
resigned, for each year of completed service, for those who gross salary excluding overtime to the Employees’ Trust Fund
have served in excess of five years. maintained by the Employees’ Trust Fund Board.
The valuation was carried out as at 31st March 2018 by

(IX) NON-CURRENT ASSETS HELD FOR SALE/
qualified actuaries.
DISTRIBUTION TO OWNERS AND DISCONTINUED
OPERATIONS
RECOGNITION OF ACTUARIAL LOSSES/GAINS The Group classifies non-current assets and disposal groups
Company/Group recognise the total actuarial gain and losses as held for sale/distribution to owners if their carrying amounts
that arise in calculating the Company’s/Group’s obligation in will be recovered principally through a sale/distribution rather
respect of the plan in Other Comprehensive Income during than through continuing use. Non-current assets and disposal
the period in which it occurs. groups are measured at the lower of their carrying amount
and fair value less costs to sell. The criteria for held-for-sale
RECOGNITION OF PAST SERVICE COST classification is regarded as met only when the sale is highly
(APPLICABLE ONLY WHEN A PLAN HAS BEEN CHANGED) probable and the asset or disposal group is available for
Past Service Cost are recognised as an expense on a straight immediate sale in its present condition. Management must be
line basis over the average period until the benefits become committed to the sale, which should be expected to qualify
vested. If the benefits have already been vested, immediately for recognition as a completed sale within one year from the
following the instruction of, or changes to the plan, past date of classification. Discontinued operations are excluded
service costs are recognised immediately. from the results of continuing operations and are presented
as a single amount as profit or loss after tax from discontinued
136
operations in the Statement of Profit or Loss. Property, Plant Financial assets held for trading are recorded in the Statement
and Equipment and intangible assets once classified as of Financial Position at fair value. Changes in fair value are
held for sale/distribution to owners are not depreciated or recognised in “Finance income”. Interest and dividend income
amortised. or expense is recorded in finance income or finance cost
according to the terms of the contract, or when the right to the
(X) FINANCIAL ASSETS payment has been established.
FINANCIAL ASSETS – INITIAL RECOGNITION AND

Financial assets at fair value through profit or loss are
SUBSEQUENT MEASUREMENT recorded in the statement of financial position at fair value.
Financial assets within the scope of LKAS 39 are classified Changes in fair value are recorded in “Net gain or loss” on
as Financial Assets held for trading, Loans and Receivables, financial instrument designated at fair value through profit
Lease rentals receivable and stock out on hire, financial or loss. Interest earned or incurred is accrued in “Interest
assets available for sale, financial assets held to maturity and income” using the effective interest rate (EIR), while dividend
other financial assets. income is recorded in “Finance Income” when the right to the
payment has been established.
(1) DATE OF RECOGNITION
All financial assets are initially recognised on the trade (4) HELD-TO-MATURITY FINANCIAL ASSETS
date, i.e., the date that the Group becomes a party to the Held-to-maturity financial investments are financial assets with
contractual provisions of the instrument. This includes fixed or determinable payments and fixed maturities, which
“regular way trades”: purchases or sales of financial assets the Group has the intention and ability to hold to maturity.
that require delivery of assets within the time frame generally Subsequent to initial recognition, held-to-maturity financial
established by regulation or convention in the market place. investments are measured at amortised cost using the
Effective Interest Rate (EIR), less impairment. Amortised cost
(2) INITIAL MEASUREMENT OF FINANCIAL ASSETS is calculated by taking into account any discount or premium
The classification of financial assets at initial recognition on acquisition and fees that are an integral part of the EIR.
depends on their purpose and characteristics and the The amortisation is included in “Interest income” in the
Management’s intention in acquiring them. All financial assets Statement of Profit or Loss. The losses arising from impairment
are measured initially at their fair value plus transaction costs, of such investments are recognised in the Statement of Profit
except in the case of financial assets recorded at fair value or Loss line “Finance Cost”.
through profit or loss.
If the Group were to sell or reclassify more than an
(3) FINANCIAL ASSETS AT FAIR VALUE THROUGH insignificant amount of held to maturity investments before
maturity (other than in certain specific circumstances), the
PROFIT OR LOSS
entire category would be tainted and would have to be
A financial asset is classified as fair value through profit
reclassified as available for sale. Furthermore, the Group
or loss if it is held for trading or is designated at fair value
would be prohibited from classifying any financial asset as
through profit of loss.
held to maturity during the following two years.
137
(5) LOANS, LEASE RENTAL RECEIVABLES, STOCK OUT ON (7) “DAY 1” PROFIT OR LOSS
HIRE AND OTHER FINANCIAL ASSETS When the transaction price differs from the fair value of
This includes the financial assets with fixed or determinable other observable current market transactions in the same
payments that are not quoted in an active market. instrument, or based on a valuation technique whose
variables include only data from observable markets, the
After initial measurement, subsequently is measured at Group immediately recognises the difference between the
amortised cost using the EIR, less allowance for impairment. transaction price and fair value (a “Day 1” profit or loss) in
Amortised cost is calculated by taking into account any “profit or loss”.
discount or premium on acquisition and fees and costs that
are an integral part of the EIR. The amortisation is included (8) RECLASSIFICATION OF FINANCIAL ASSETS
in “Revenue” in the Statement of Profit or Loss. The losses The Group may reclassify financial assets
arising from impairment are recognised in the Statement of (other than those designated at FVTPL)
Profit or Loss in other operating expenses. upon initial recognition, in certain circumstances:
– Out of the “held for trading” category and into the

(6) AVAILABLE-FOR-SALE FINANCIAL ASSETS
“available for sale”, “loans and receivables”, or “held to
Available-for-sale financial assets include equity and debt
maturity” categories.
securities. Equity investments classified as available for sale
are those which are neither classified as held for trading nor – Out of the “available for sale” category and into the
designated at fair value through profit or loss. Debt securities “loans and receivables“, “held for trading category”
in this category are intended to be held for an indefinite or “held-to-maturity”.
period of time and may be sold in response to needs for
liquidity or in response to changes in the market conditions. Reclassifications are recorded at fair value at the date of
The Group has not designated any loans or receivables as reclassification, which becomes the new amortised cost.
available for sale. After initial measurement, available-for- For a financial asset reclassified out of the “available for
sale financial investments are subsequently measured at fair sale” category, any previous gain or loss on that asset that
value. Unrealised gains and losses are recognised directly in has been recognised in equity is amortised to profit or loss
equity in the “Available-for-sale reserve”. When the investment over the remaining life of the investment using the EIR. Any
is disposed of, the cumulative gain or loss previously difference between the new amortised cost and the expected
recognised in equity is recognised in the Statement of Profit or cash flows is also amortised over the remaining life of the
Loss in “Finance Income”. Where the Group holds more than asset using the EIR. If the asset is subsequently determined
one investment in the same security, they are deemed to be to be impaired, then the amount recorded in equity is
disposed of on a first-in first-out basis. Interest earned whilst recycled to the Statement of Profit or Loss.
holding available-for-sale financial investments is reported as
interest income using the EIR.
Dividends earned whilst holding available-for-sale financial

investments are recognised in Statement of Profit or Loss
as Finance Income when the right of the payment has been
established. The losses arising from impairment of such
investments are recognised in the Statement of Profit or
Loss in “Finance Cost” and removed from the “Available-
for-sale reserve”.
138
Out of the “held for trading” category and into the “loans and (9) DERECOGNITION OF FINANCIAL ASSETS
receivables” category if it meets the definition of loans and A financial asset (or, where applicable a part of a financial
receivables and the Group has the intention and ability to hold asset or part of a group of similar financial assets) is
the financial asset for the foreseeable future or until maturity. If derecognised when:
a financial asset is reclassified, and if the Group subsequently
increases its estimates of future cash receipts as a result of zzThe rights to receive cash flows from the asset have expired
increased recoverability of those cash receipts, the effect of
zzThe Group has transferred its rights to receive cash flows
that increase is recognised as an adjustment to the EIR from
from the asset or has assumed an obligation to pay the
the date of the change in estimate.
received cash flows in full without material delay to a third
party under a “pass–through” arrangement; and either:
Reclassification is at the election of Management, and is
determined on an instrument by instrument basis. – The Group has transferred substantially all the risks and
rewards of the asset;
Or
FAIR VALUE OF FINANCIAL INSTRUMENTS
– The Group has neither transferred nor retained
The fair value of financial instruments that are traded in active substantially all the risks, and
markets at each reporting date is determined by reference to rewards of the asset, but has transferred control
quoted market prices or dealer price quotations (bid price for of the asset
long positions and ask price for short positions), without any
deduction for transaction costs. When the Group has transferred its rights to receive cash
flows from an asset or has entered into a pass–through
For financial instruments not traded in an active market, arrangement, and has neither transferred nor retained
the fair value is determined using appropriate valuation substantially all of the risks and rewards of the asset nor
techniques. Such techniques may include: transferred control of the asset, the asset is recognised
zzUsing recent arm’s length market transactions to the extent of the Group’s continuing involvement in the
zzReference to the current fair value of another instrument that asset. In that case, the Group also recognises an associated
is substantially the same liability. The transferred asset and the associated liability are
zzA discounted cash flow analysis or other valuation models measured on a basis that reflects the rights and obligations
that the Group has retained.
An analysis of fair values of financial instruments and further
details as to how they are measured are provided in the Continuing involvement that takes the form of a guarantee
Financial Statements. over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum
amount of consideration that the Group could be required
to repay.
139
(10) IMPAIRMENT OF FINANCIAL ASSETS receivable discounted at the loan’s original effective interest
The Group assesses at each reporting date, whether there rate or the fair value of any collateral adjusted for estimated
is any objective evidence that a financial asset or a group costs to sell. Loss severity/Loss Given Default (LGD) of each
of financial assets is impaired. A financial asset or a group category of impaired receivable is assumed to be a vital factor
of financial assets is deemed to be impaired if, and only if, for the allowance for impairment.
there is objective evidence of impairment as a result of one
or more events that have occurred after the initial recognition The LGD assumptions are based on historical information and
of the asset (an “incurred loss event”) and that loss event (or may not fully reflect losses inherent in the present portfolio.
events) has an impact on the estimated future cash flows of Therefore, we may adjust the estimate to reflect management
the financial asset or the Group of financial assets that can be judgement regarding observable changes in recent economic
reliably estimated. trends and conditions, portfolio composition, and other
relevant factors.
(10.1) ALLOWANCE FOR IMPAIRMENT LOSSES

COLLECTIVELY IMPAIRED RECEIVABLES
ACCOUNTING ESTIMATES
The collective impairment is evaluated primarily using rating
The allowance for credit losses represents our estimate of the
migration matrixes and loss severity models that based on
probable loss on the collection of finance receivables from
historical experience, indicates credit losses have been
customers as of the balance sheet date. The adequacy of
incurred in the portfolio even though the particular accounts
the allowance for credit losses is assessed monthly and the
that are uncollectible cannot be specifically identified. In
assumptions and models used in establishing the allowance
addition to the Loss Given Default (LGD), we make projections
are evaluated regularly. Because credit losses may vary
for Probability of Default (PD) to estimate the collective
substantially over time, estimating credit losses requires a
impairment for receivables. We have used the rating migration
number of assumptions about matters that are uncertain. The
matrixes to compute the PD.
credit losses are attributable to lease, hire purchase, loans
and receivables portfolio.
The rating migrating matrix models are based on the most
recent years of history. Each PD is calculated by dividing
The uncollectible portion of finance receivables are charged
default contracts of each age category by beginning of period
to the provision for impairment when an account is deemed
total contacts of each age category (Cohort method). The loss
to be uncollectible taking into consideration the financial
emergence period is a key assumption within our models and
condition of the customer, borrower, or lessee, the value
represents the average amount of time between when a loss
of the collateral, recourse to guarantors, and other factors.
event first occurs and when it is incurred. This time period
Recoveries on finance receivables previously taken as
starts when the consumer begins to experience financial
impaired are debited to the allowance for credit losses.
difficulty. It is evidenced, typically through observable data
for above average company NPL, historically low collection
INDIVIDUALLY IMPAIRED RECEIVABLES ratio, historically high rental arrears, and unacceptable low
Finance receivables that are more than five months in arrears, level of business volumes which may result in a portfolio
related to repossessed collaterals, subjected to legal action/ level impairment.
ongoing legal action, untraceable or unattainable collaterals,
or are determined to be uncollectible, are identified as
individually impaired. Impairment is estimated based on
the present value of the expected future cash flows of the
140
(10.2) ACCOUNTING POLICY (A) AVAILABLE-FOR-SALE FINANCIAL ASSETS
REVERSALS OF IMPAIRMENT For available for sale financial investments, the Group
If the amount of an impairment loss decreases in a assesses at each reporting date whether there is objective
subsequent period, and the decrease can be related evidence that an investment is impaired. In the case of
objectively to an event occurring after the impairment was debt instruments classified as available for sale, the Group
recognised, the excess is written back by reducing the assesses individually whether there is objective evidence of
financial asset impairment allowance account accordingly. impairment.
The write-back is recognised in the Statement of
Comprehensive Income. However, the amount recorded for impairment is the
cumulative loss measured as the difference between
the amortised cost and the current fair value, less any
WRITE-OFF OF LOANS AND RECEIVABLES
impairment loss on that investment previously recognised
Financial assets and the related impairment allowance
in the “statement of profit or loss”. Future interest income
accounts are normally written off, either partially or in full,
is based on the reduced carrying amount and is accrued
when there is no realistic prospect of recovery. Where
using the rate of interest used to discount the future cash
financial assets are secured, this is generally after receipt of
flows for the purpose of measuring the impairment loss. The
any proceeds from the realisation of security.
interest income is recorded as part of “Interest income”. If,
in a subsequent period, the fair value of a debt instrument
COLLATERAL VALUATION increases and the increase can be objectively related to
The Group seeks to use collateral, where possible, to mitigate a credit event occurring after the impairment loss was
its risks on financial assets. The collateral comes in various recognised in the Statement of Profit or Loss, the impairment
forms such as cash, vehicles, gold, securities, letters of loss is reversed through the Statement of Profit or Loss.
guarantees, real estate, receivables, inventories, other
non-financial assets .The fair value of collateral is generally In the case of equity investments classified as available for
assessed, at a minimum, at inception and based on the sale, objective evidence would also include a “significant” or
guidelines issued by the Central Bank of Sri Lanka. ‘prolonged’ decline in the fair value of the investment below its
cost. Where there is evidence of impairment, the cumulative
To the extent possible, the Group uses active market data loss measured as the difference between the acquisition cost
for valuing financial assets, held as collateral. Non-financial and the current fair value, less any impairment loss on that
collateral, such as real estate, is valued based on data investment previously recognised in the Statement of profit or
provided by third parties such as independent valuers. loss is removed from equity and recognised in the Statement
of Profit or Loss.
COLLATERAL REPOSSESSED
Repossessed collateral will not be taken into books of Impairment losses on equity investments are not reversed
accounts unless the Group has taken those collaterals through the Statement of Profit or Loss; increases in the fair
into its business operations. However such additions from value after impairment are recognised in other
the repossessed collaterals to the business operations are comprehensive income.
not significant.
141
(B) HELD-TO-MATURITY FINANCIAL ASSETS If securities purchased under agreement to resell are
An impairment loss in respect of held-to-maturity financial subsequently sold to third parties, the obligation to return
assets measured at amortised cost is calculated as the the securities is recorded as a short sale within “Financial
difference between its carrying amount and the present liabilities held for trading” and measured at fair value with any
value of estimated future cash flows discounted at the asset’s gains or losses included in “Revenue”.
original EIR and is recognised in profit or loss. Interest on
impaired assets continues to be recognised through the (X) FINANCIAL LIABILITIES
unwinding of discount. When a subsequent event caused
INITIAL RECOGNITION AND MEASUREMENT
the amount of impairment loss to decrease, the decrease in
Financial liabilities within the scope of LKAS 39 are classified
impairment loss is reversed through profit or loss.
as Due to customers (Deposits), Due to Banks, Debt issued
and other borrowed funds and Other Financial Liabilities as
COLLATERAL VALUATION
appropriate. The Group determines the classification of its
The Group seeks to use collateral, where possible, to mitigate financial liabilities at initial recognition.
its risks on financial assets. The collateral comes in various
forms such as cash, securities, letters of credit/guarantees, The Group classifies financial liabilities as other financial
gold, real estate, receivables, and other non-financial liabilities in accordance with the substance of the contractual
assets. The fair value of collateral is generally assessed, at a arrangement and the definitions of financial liabilities.
minimum, at inception and based on the guidelines issued by
the Central Bank of Sri Lanka. The Group recognises financial liabilities in the Statement of
Financial Position when the Group becomes a party to the
Non-financial collateral, such as real estate, is valued based contractual provisions of the financial liability.
on data provided by third parties such as independent valuers
and other independent sources.
OTHER FINANCIAL LIABILITIES
Other financial liabilities including Due to customers
COLLATERAL REPOSSESSED
(Deposits), Due to Banks, Debt issued and other borrowed
The Group’s policy is to determine whether a repossessed funds and Other financial liabilities are initially measured at
asset is best used for its internal operations or should be sold. fair value less transaction cost that are directly attributable to
Assets determined to be useful for the internal operations the acquisition and subsequently measured at amortised cost
are transferred to their relevant asset category at the lower of using the EIR method.
their repossessed value or the carrying value of the original
secured asset. Amortised cost is calculated by taking into account any
discount or premium on the issue and costs that are an
REPURCHASE AGREEMENTS integral part of the EIR.
Securities purchased under agreements to resell at a
specified future date are not derecognised in the Statement of
Financial Position. The consideration paid, including accrued
interest, is recorded in the Statement of Financial Position,
within “Other Financial Assets” reflecting the transaction’s
economic substance as a loan by the Group. The difference
between the purchase and resale prices is recorded in
“Revenue” and is accrued over the life of the agreement
using the EIR.
142
DERECOGNITION OF FINANCIAL LIABILITIES SALE OF GOODS

A financial liability is derecognised when the obligation under Revenue from the sale of goods is recognised when the
the liability is discharged or cancelled or expires. Where an significant risks and rewards of ownership of the goods have
existing financial liability is replaced by another from the same passed to the buyer, usually on delivery of the goods.
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange RENDERING OF SERVICES
or modification is treated as a derecognition of the original Revenue from rendering of services is recognised by
liability and the recognition of a new liability. The difference reference to the stage of completion. Stage of completion is
between the carrying value of the original financial liability and measured by reference to labour hours incurred to date as a
the consideration paid is recognised in profit or loss. percentage of total estimated labour hours for each contract.
When the contract outcome cannot be measured reliably,
OFFSETTING OF FINANCIAL INSTRUMENTS revenue is recognised only to the extent that the expenses
Financial assets and financial liabilities are offset and the net incurred are eligible to be recovered.
amount reported in the Consolidated Statement of Financial
Position if, and only if: INTEREST INCOME AND COMMISSION FEE INCOME
zzThereis a currently enforceable legal right to offset the Interest income and commission fee income from the finance
recognised amounts and, sector is recorded under revenue. Interest expense from
zzThere is an intention to settle on a net basis, or to realise the finance sector is recorded under cost of sales.
assets and settle the liabilities simultaneously.
INTEREST INCOME AND INTEREST EXPENSE
For all financial assets measured at amortised cost, interest-
3.2.2 STATEMENT OF PROFIT OR LOSS
bearing financial assets classified as available for sale and
(I) REVENUE RECOGNITION financial instruments designated at fair value through profit or
Revenue is recognised to the extent that it is probable that loss, interest income or expense is recorded using the EIR.
the economic benefits will flow to the Group/Company and EIR is the rate that exactly discounts estimated future cash
the revenue can be reliably measured, regardless of when payments or receipts through the expected life of the financial
the payment is being made. Revenue is measured at the instrument or a shorter period, where appropriate, to the net
fair value of the consideration received or receivable, taking carrying amount of the financial asset or financial liability.
into account contractually defined terms of payment and
excluding taxes or duty. The Group/Company assesses its The calculation takes into account all contractual terms of
revenue arrangements against specific criteria in order to the financial instrument and includes any fees or incremental
determine if it is acting as principal or agent. The Group/ costs that are directly attributable to the instrument and are
Company has concluded that it is acting as a principal in all of an integral part of the EIR, but not future credit losses. The
its revenue arrangements. The following specific recognition carrying amount of the financial asset or financial liability is
criteria must also be met before revenue is recognised. adjusted if the Company revises its estimates of payments
or receipts. The adjusted carrying amount is calculated
143
based on the original EIR and the change in carrying Dividends

amount is recorded as “Interest income” for financial assets Revenue is recognised when the Group's/Company's right to
and “Interest expense” for financial liabilities. However, receive the payment is established, which is generally when
for a reclassified financial asset for which the Company shareholders approve the dividend.
subsequently increases its estimates of future cash receipts
as a result of increased recoverability of those cash receipts, Rental income
the effect of that increase is recognised as an adjustment to Rental income arising from operating leases on investment
the EIR from the date of the change in estimate. properties is accounted for on a straight-line basis over the
lease term and is included in revenue due to its operating
Once the recorded value of a financial asset or a group nature.
of similar financial assets has been reduced due to an
impairment loss, interest income continues to be recognised Dividends on ordinary shares
using the rate of interest used to discount the future cash Dividends on ordinary shares are recognised as a liability
flows for the purpose of measuring the impairment loss. and deducted from equity when they are approved by the
Company’s shareholders. Interim dividends are deducted
FEE AND COMMISSION INCOME from equity when they are declared and no longer at the
The Group earns fee and commission income from a diverse discretion of the Company. Dividends for the year that are
range of services it provides to its customers. Fee income can approved after the reporting date are disclosed as an event
be divided into the following two categories: after the reporting date.
(A) FEE INCOME EARNED FROM SERVICES THAT ARE

(II) GOVERNMENT GRANTS
PROVIDED OVER A CERTAIN PERIOD OF TIME Government grants are recognised where there is reasonable
Fees earned for the provision of services over a period assurance that the grant will be received and all attached
of time are accrued over that period. These fees include conditions will be complied with. When the grant relates to
commission income and asset management, custody and an expense item, it is recognised as income on a systematic
other management and advisory fees. basis over the periods that the costs, which it is intended to
compensate, are expensed. Where the grant relates to an
asset, it is recognised as income in equal amounts over the
(B) FEE INCOME FROM PROVIDING
expected useful life of the related asset.
TRANSACTION SERVICES
Fees arising from negotiating or participating in the
When the Group/Company receives non-monetary grants,
negotiation of a transaction for a third party, such as the
the asset and the grant are recorded gross at nominal
purchase or sale of business is recognised on completion
amounts and released to profit or loss over the expected
of the underlying transaction. Fees or components of fees
useful life in a pattern of consumption of the benefit of the
that are linked to a certain performance are recognised after
underlying asset by equal annual instalments. When loans or
fulfilling the corresponding criteria.
similar assistance are provided by governments or related
institutions with an interest rate below the current applicable
market rate, the effect of this favourable interest is regarded
as a Government grant.
144
(III) EXPENDITURE RECOGNITION DEFERRED TAX

(a) Expenses are recognised in the Statement of Profit or Deferred tax is provided using the liability method on
Loss on the basis of a direct association between the cost temporary differences at the financial position date between
incurred and the earning of specific items of income. All the tax bases of assets and liabilities and their carrying
expenditure incurred in the running of the business and in amounts for financial reporting purposes. Deferred tax
maintaining the Property, Plant and Equipment in a state liabilities are recognised for all taxable temporary differences,
of efficiency has been charged to income in arriving at the except:
profit/(loss) for the year. (a) When the deferred tax liability arises from the initial
(b) For the purpose of presentation of Statement of Profit recognition of goodwill or an asset or liability in a
or Loss the Directors are of the opinion that function of transaction that is not a business combination and, at the
expenses method presents fairly the elements of the time of the transaction, affects neither the accounting profit
Group’s performance, and hence such presentation nor taxable profit or loss.
method is adopted. (b) In respect of taxable temporary differences associated
with investments in subsidiaries, associates and interests
(IV) TAXES in joint ventures, when the timing of the reversal of the
CURRENT INCOME TAX temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the
Current tax assets and liabilities consist of amounts expected
foreseeable future.
to be recovered from or paid to the Commissioner General
of Inland Revenue in respect of the current year and any
Deferred tax assets are recognised for all deductible
adjustment to tax payable in respect of prior years. The tax
differences. Carry forward of unused tax credits and unused
rates and tax laws used to compute the amount are those that
tax losses, to the extent that it is probable that taxable profits
are enacted or substantially enacted by the reporting date.
will be available against which the deductible temporary
differences and the carry forward of unused tax credits and
Current income tax relating to items recognised directly in
unused tax losses can be utilised, except:
equity is recognised in equity and not in the Statement of
Profit or Loss. Management periodically evaluates positions (a) When the deferred tax asset relating to the deductible
taken in the tax returns with respect to situations in which temporary difference arises from the initial recognition of
applicable tax regulations are subject to interpretation and an asset or liability in a transaction that is not a business
establishes provisions where appropriate. combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss.
VAT ON FINANCIAL SERVICES (b) In respect of deductible temporary differences associated
VAT on financial services is calculated in accordance with with investments in subsidiaries, associates and interests
VAT Act No. 14 of 2002 and subsequent amendment thereto. in joint ventures, deferred tax assets are recognised
only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary
differences can be utilised.
145
The carrying amount of a deferred tax asset is reviewed expenses that relate to transactions with any of the Group’s
at each financial position date and reduced to the extent other components. All operating segments’ operating results
it is no longer probable that sufficient taxable profit will be are reviewed regularly by the Chairman to make decisions
available to allow all or part of the deferred tax asset to be about resources to be allocated to the segment and assess
utilised. Unrecognised deferred tax assets are reassessed at its performance, and for which discrete financial information is
each reporting date and are recognised to the extent that is available. Segment results that are reported to the Chairman
probable that future taxable profit will allow the deferred tax include items directly attributable to a segment as well as
asset to be recovered. those that can be allocated on a reasonable basis. Segment
capital expenditure is the total cost incurred during the period
Deferred tax assets and liabilities are measured at the tax rate to acquire Property, Plant and Equipment, and intangible
that are expected to apply in the year when the assets are assets other than goodwill.
realised or the liabilities are settled, based on tax rates and
tax laws that have been enacted or subsequently enacted at 3.3.3 STANDARDS ISSUED BUT NOT
the financial position date. YET EFFECTIVE
The following SLFRS have been issued by the Institute of
3.2.3 STATEMENT OF CASH FLOWS Chartered Accountants of Sri Lanka that have an effective
The cash flow statement is prepared using the indirect date in the future and have not been applied in preparing
method, as stipulated in LKAS 7 – “Statement of Cash Flows”. these financial statements. Those SLFRS will have an effect
Cash and cash equivalents comprise cash in hand; cash at on the accounting policies currently adopted by the Company
bank, bank overdrafts and Investments with short maturities and may have an impact on the future Financial Statements.
i.e., three months or less from the date of acquisition are also
treated as cash equivalents. SLFRS 9 – FINANCIAL INSTRUMENTS: CLASSIFICATION
AND MEASUREMENT
3.2.4 ACCOUNTING POLICIES
Sri Lanka Accounting Standard – SLFRS 9 (Financial
The accounting policies set out below have been applied Instruments) replaces the existing guidance in Sri Lanka
consistently to all financial periods presented in these Accounting Standard LKAS 39 “Financial Instruments:
Financial Statements, unless otherwise indicated. Recognition and Measurement”. Sri Lanka Accounting
Standard SLFRS 9 “Financial Instruments” includes revised
3.3 GENERAL guidance on the classification and measurement of financial
instruments, a new expected credit loss model for calculating
3.3.1 EARNINGS PER SHARE
impairment on financial assets, and new general hedge
The Group presents basic earnings per share (EPS) for its accounting requirements. It also carries forward the guidance
ordinary shares. Basic EPS is calculated by dividing the profit on recognition and derecognition of financial instruments
or loss attributable to ordinary shareholders of the Group by from Sri Lanka Accounting Standard LKAS 39 “Financial
the weighted average number of ordinary shares outstanding Instruments: Recognition and Measurement”.
during the period.
Sri Lanka Accounting Standard SLFRS 9 “Financial
3.3.2 SEGMENT REPORTING Instruments” is effective for annual reporting periods
An operating segment is a component of the Group that beginning on or after 1st January 2018, with early
engages in business activities from which it may earn adoption permitted.
revenues and incur expenses, including revenues and
146
Compared to existing accounting requirements, Sri Lanka SRI LANKA ACCOUNTING STANDARD SLFRS 16 “LEASES”
Accounting Standard SLFRS 9 “Financial Instruments” is Sri Lanka Accounting Standard SLFRS 16 – “Leases”
expected to require higher impairments earlier in a debt provides a single lessee accounting model, requiring leases
asset’s life and the recognition of losses on off-balance sheet to recognise assets and liabilities for all leases unless the
facilities. Together this will result in a higher overall balance lease term is 12 months or less or the underlying asset has
sheet impairment requirement. This difference is expected, a low value even though lessor accounting remains similar
on transition to Sri Lanka Accounting Standard SLFRS 9 to current practice. This supersedes: Sri Lanka Accounting
“Financial Instruments”, to be recognised at the time of Standard LKAS 17 – “Leases”, IFRIC 4 determining whether
the implementation. It is anticipated that the impact will be an arrangement contains a Lease, SIC 15 Operating
significant to the Group. Group has calculated the potential Leases - Incentives; and SIC 27 evaluating the substance
impact of the new requirement based on 31st March 2018 of Transactions Involving the Legal form of a Lease. Earlier
figures. The increase in total balance sheet impairment application is permitted for entities that apply Sri Lanka
provision is as follows: Accounting Standard SLFRS 15 – “Revenue from Contracts
with customers”.
As at 31st March 2018 Rs. ’000
Total Expected Loss (SLFRS 9) 754,360 Sri Lanka Accounting Standard SLFRS 16 – “Leases” is
Less – Collective Provision for effective for annual reporting periods beginning on or after
Unimpairment Loans (LKAS 39) 763.030 1st January 2019.
Increase in Total Balance Sheet
Impairment Provision (8.670)
SRI LANKA ACCOUNTING STANDARD SLFRS 15

“REVENUE FROM CONTRACTS WITH CUSTOMERS”
Sri Lanka Accounting Standard SLFRS 15 – “Revenue from
Contracts with Customers” establishes a comprehensive
framework for determining whether, how much and when
revenue is recognised. It replaces existing revenue
recognition guidance, including Sri Lanka Accounting
Standard LKAS 18 – “Revenue”, Sri Lanka Accounting
Standard LKAS 11 – “Construction Contracts” and
IFRIC 13 “Customer Loyalty Programmes”.
Sri Lanka Accounting Standard SLFRS 15 – “Revenue from

Contracts with Customers” is effective for annual reporting
periods beginning on or after 1st January 2018, with early
adoption permitted.
Implementation of the Sri Lanka Accounting Standard SLFRS 15

– “Revenue from Contracts with Customers” is not expected to
have an impact on the Financial Statements.
147
4. FINANCIAL INVESTMENTS
4.1 AVAILABLE FOR SALE – FINANCIAL ASSETS

As at 31st March 2018 2017
Number of Number of
Shares Rs. Shares Rs.
COMPANY
Quoted Investments
Hayleys PLC – – 2,182,584 578,384,760
Waskaduwa Beach Resort PLC – – 31,460,997 94,382,991
Sampath Bank PLC 32,481,024 9,744,307,200 27,840,878 7,210,787,402
Advanced Towards Right Issue – Sampath Bank PLC 7,495,621 1,873,905,000 – –
Unquoted Investments
LB Micro Finance Myanmar Company Limited 3,000 473,994 –
Total 11,618,686,194 7,883,555,153
GROUP
Quoted Investments
Diversified Holding
Hayleys PLC – – 2,182,584 578,384,760
Manufacturing
Blue Diamond Jewellery PLC – – 74 67
Central Industries PLC 8,184 321,631 8,184 360,096
Ceylon Grain Elevators PLC 44 3,146 44 3,324
Dankotuwa Porcelain PLC 32,512 224,333 32,512 195,072
Samson International PLC 5,899 519,702 5,899 583,411
Hotels and Travels

Aitken Spence Hotel Holdings PLC 308 10,318 308 10,842
Hotel Sigiriya PLC 700 43,960 700 68,110
Palm Garden Hotels PLC – – 36 868
Trading
Stores and Supplies
Hunter PLC 10 4,950 10 4,000
Bank, Finance and Insurance

Commercial Bank of Ceylon PLC 275 37,345 275 35,860
Merchant Bank & Finance PLC – – 61 659
Sampath Bank PLC 32,481,029 9,744,308,700 27,840,883 7,210,788,402
Advanced Towards Right Issue – Sampath Bank PLC 7,495,621 1,873,905,000 – –
Seylan Bank PLC 2,538 220,298 2,538 220,806
Softlogic Finance PLC 2,090,000 73,150,000 2,090,000 65,085,986
148
Number of Number of
Beverages, Food and Tobacco

Keells Food Products PLC 500 64,950 500 72,500
Lanka Milk Foods PLC 5,500 869,550 5,500 643,500
Convenience Food (Lanka) PLC 22 9,460 22 6,820
11,693,693,343 7,950,848,072
Credit Information Bureau 1,047 104,700 1,047 104,700
Finance House Association 20,000 200,000 20,000 200,000
304,700 304,700
Unquoted Investments – Impaired

National Asset Management Limited 25,000 1,164,490 25,000 1,044,405
Asian Paints (Pvt) Limited 205,891 2,980,004 205,891 2,980,003
eConsultant Limited 5,000 75,000 5,000 75,000
Total Investments in Non-Quoted Equity Securities 4,219,494 4,099,408
Provision for Financial Assets – Available for Sale (3,361,951) (3,305,003)
Total Carrying Value of Financial Assets – Available for Sale 857,543 794,405
11,694,855,586 7,951,947,177
4.2 FAIR VALUE THROUGH PROFIT OR LOSS – FINANCIAL ASSETS

Number of Number of
COMPANY
Quoted Investments
The Kingsbury PLC – – 3,216,146 49,850,263
Citrus Leisure PLC 8,672,846 65,046,345 8,672,846 60,709,922
Total 65,046,345 110,560,185
GROUP
Quoted Investments
Bank, Finance and Insurance
Softlogic Finance PLC 8 280 8 248
Seylan Bank PLC (Non-Voting) 93,032 5,126,065 93,032 5,088,850
Food Processing
Bairaha Farms PLC 17,600 2,368,960 15,999 2,562,993
149
Number of Number of
Hotels and Travels

Aitken Spence PLC 225,000 11,385,000 225,000 12,645,000
Royal Palms Beach Hotels PLC 4,299 77,382 4,299 94,148
John Keells Hotels PLC 45,009 418,584 45,009 450,090
The Kingsbury PLC – – 3,216,146 49,850,263
Citrus Leisure PLC 11,441,122 85,808,411 11,441,122 80,087,854
Serendib Hotels PLC 16,000 280,000 16,000 369,600
Kalpitiya Beach Resorts PLC 583,393 4,200,430 – –
Diversified Holdings
Browns Investments PLC 522,619 1,411,071 522,619 731,667
Browns Capital PLC 1,161,600 4,181,760 1,161,600 1,369,723
Hayleys PLC 1,222 245,255 1,222 323,830
Healthcare
The Lanka Hospital Corporation PLC 45,519 2,731,140 45,519 2,799,419
Investment Trust
Ascot Holding PLC – – 30,000 690,000
Total 118,234,338 161,264,120
4.3 FAIR VALUE OF FINANCIAL INSTRUMENTS
THE FOLLOWING METHODS AND ASSUMPTIONS WERE USED TO ESTIMATE THE FAIR VALUE:
The following is a description of how fair values are determined for financial instruments that are recorded at fair value using
valuation techniques. These incorporate the Group estimate of assumptions that a market participant would make when
valuing the financial instruments.
Cash and short-term deposits, trade receivables, trade payables and other financial liabilities, long-term variable rate
borrowings approximate at their carrying amounts due to the short-term maturities of these current financial instruments.
Hence the above carrying amounts of Group's financial instruments are reasonable approximation of their fair value.
FINANCIAL ASSETS – FAIR VALUE THROUGH PROFIT OR LOSS

Fair value of quoted equity shares is based on price quotations at the reporting date.
150
FINANCIAL ASSETS – AVAILABLE FOR SALE

Financial Investments – Available-for-Sale, primarily consist of equity securities and Government debt securities are valued
using valuation techniques or pricing models. These assets are valued using models that use observable data. Government
debt securities are valued using yield curves published by the Central Bank of Sri Lanka and fair value of quoted equity shares
is based on price quotations at the reporting date.
DETERMINATION OF FAIR VALUE AND FAIR VALUE HIERARCHY

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques:
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable.
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
As at 31st March 2018, the Group held the following financial instruments carried at fair value in the Statement of Financial Position:
Group
As at 31st March 2018 Level 1 Level 2 Level 3 Total
Rs. Rs. Rs. Rs.
Financial Assets
Financial Assets – Fair Value Through Profit or Loss
Quoted Equities 118,234,338 – – 118,234,338
Unquoted Equities – – – –
Financial Assets – Available for Sale

Quoted Equities 11,693,693,343 – – 11,693,693,343
Unquoted Equities – 1,162,243 – 1,162,243
Total 11,811,927,681 1,162,243 – 11,813,089,924
As at 31st March 2017 Level 1 Level 2 Level 3 Total

Rs. Rs. Rs. Rs.
Financial Assets
Financial Assets – Fair Value Through Profit or Loss
Quoted Equities 161,264,120 – – 161,264,120
Unquoted Equities – – – –
Financial Assets – Available for Sale

Quoted Equities 7,950,848,072 – – 7,950,848,072
Unquoted Equities – 1,099,105 – 1,099,105
Total 8,112,112,192 1,099,105 – 8,113,211,297
151
5. LOANS AND RECEIVABLES

Company
2018 2017
Rs. Rs.
Debentures – 150,000,000
– 150,000,000
Group
2018 2017
Rs. Rs.
Debentures – 150,000,000
Gold Loans 20,139,331,673 16,289,995,717
Real Estate Loans 975,761 1,850,087
Term Loans 13,108,060,213 10,803,432,125
Quick Loans 11,335,694 18,014,843
Margin Trading 20,964,467 31,933,976
Factoring Receivable 537,287,994 338,454,562
Power Drafts 2,734,171,011 2,139,040,576
Vehicle Loans 4,208,804,222 4,391,057,661
40,760,931,035 34,163,779,547
Less: Allowance for Impairment Losses (Note 5.1) (866,654,902) (525,000,265)
(866,654,902) (525,000,265)
Net Loans and Receivables 39,894,276,133 33,638,779,282

5.1 ALLOWANCE FOR IMPAIRMENT LOSSES
Group
2018 2017
Rs. Rs.
5.1.1
As at 1st April 525,000,265 723,963,080
Charge/(Reversal) for the Year 415,853,417 6,289,714
Amounts Written Off (74,211,471) (205,252,529)
Exchange Rate Variance on Foreign Currency Provisions 12,691 –
As at 31st March 866,654,902 525,000,265
152
Group
2018 2017
Rs. Rs.
5.1.2
Individual Impairment 697,504,783 414,698,714
Collective Impairment 169,150,119 110,301,551
Total 866,654,902 525,000,265
Gross Amount of Loans Individually Determined to be Impaired

before Deducting the Individually Assessed Impairment Allowance 1,546,030,359 861,403,549
Gross Amount of Loans Collectively Assessed for the Impairment 39,214,900,676 33,302,375,998
40,760,931,035 34,163,779,547
The recorded loans and receivables that were impaired at 31st March 2018 and 2017 were 3.80% of receivables and 2.09% of
receivables, respectively. Lease Rentals Receivable and Stock Out On Hire that were impaired at 31st March 2018 and 2017 were
5.85% of receivables and 3.08% of receivables, respectively.
Group
2018 2017
Rs. Rs.
5.1.3
Gold Loans 31,089,113 22,490,325
Vehicle Loans 154,251,948 206,971,645
Quick Loans 1,711,274 308,578
Margin Trading 1,497 –
Term Loans 548,616,740 272,380,715
Power Drafts 75,564,495 21,365,805
Factoring Receivable 55,419,835 1,483,197
Total 866,654,902 525,000,265
5.2 TERM LOANS INCLUDE LOANS GRANTED TO COMPANY OFFICERS, THE MOVEMENT OF WHICH IS AS FOLLOWS:
Group
2018 2017
Rs. Rs.
As at 1st April 324,475,203 278,027,891

Add: Loans granted during the year 244,225,337 234,943,717
Less: Repayments during the year (211,758,464) (188,496,405)
As at 31st March 356,942,076 324,475,203
153
5.3 CONTRACTUAL MATURITY ANALYSIS OF LOANS AND RECEIVABLES (COMPANY)

Company
2018 2017
Rs. Rs.
Within one year – 150,000,000

1-5 Years – –
Total – 150,000,000
5.3 CONTRACTUAL MATURITY ANALYSIS OF LOANS AND RECEIVABLES (GROUP)

As at 31st March 2018 Within One Year 1-5 Years Over 5 Years Total
Rs. Rs. Rs. Rs.
Gold Loans 20,139,331,673 – – 20,139,331,673

Vehicle Loans 1,826,854,244 2,332,233,196 49,716,781 4,208,804,221
Medium and Short-Term Loans 3,949,984,966 1,759,006,778 33,911,314 5,742,903,058
Mortgage Loans 1,903,819,857 4,471,592,947 989,744,352 7,365,157,156
Quick Loans 11,310,199 25,495 – 11,335,694
Power Drafts 1,619,246,174 1,114,924,837 – 2,734,171,011
Margin Trading 20,964,467 – – 20,964,467
Factoring Receivable 537,287,994 – – 537,287,994
Real Estate Loans 975,761 – – 975,761
Gross Loans and Receivables 30,009,775,335 9,677,783,253 1,073,372,447 40,760,931,035
Allowance for Impairment Losses (Note 5.1.3) (866,654,902)
Net Loans and Receivables 39,894,276,133
As at 31st March 2017 Within One Year 1-5 Years Over 5 Years Total
Rs. Rs. Rs. Rs.
Debentures – 150,000,000 – 150,000,000

Gold Loans 16,289,995,718 – – 16,289,995,718
Vehicle Loans 1,958,355,779 2,390,736,478 41,965,404 4,391,057,661
Medium and Short-Term Loans 3,477,833,100 915,458,738 – 4,393,291,838
Mortgage Loans 1,537,482,301 3,717,089,547 1,155,568,439 6,410,140,287
Quick Loans 17,354,478 660,364 – 18,014,843
Power Drafts 1,252,113,172 886,927,404 – 2,139,040,576
Margin Trading 31,933,976 – – 31,933,976
Factoring Receivable 318,246,169 20,208,392 – 338,454,561
Real Estate Loans 1,850,087 – – 1,850,087
Gross Loans and Receivables 24,885,164,780 8,081,080,923 1,197,533,843 34,163,779,547
Allowance for Impairment Losses (Note 5.1.3) (525,000,265)
Net Loans and Receivables 33,638,779,282
Loans and receivables are prepayable, so prepayments may cause actual maturities to differ from contractual maturities.
154
6. LEASE RENTALS RECEIVABLE AND STOCK OUT ON HIRE

Group
2018 2017
Rs. Rs.
Gross Rentals Receivables

– Lease Rentals 85,706,798,698 74,521,690,005
– Amounts Receivable from Hirers 455,938,539 1,251,200,053
86,162,737,237 75,772,890,058
Unearned Income (21,662,824,928) (18,301,275,264)
Net Rentals Receivable 64,499,912,309 57,471,614,794
Rentals Received in Advance (9,093,527) (6,925,128)

Allowance for Impairment Losses (Note 6.1) (2,001,133,016) (1,805,301,858)
(2,010,226,543) (1,812,226,986)
Total Net Rentals Receivable [Notes 6.2 (a) and 6.2 (b)] 62,489,685,766 55,659,387,808
6.1 ALLOWANCE FOR IMPAIRMENT LOSSES

Group
2018 2017
Rs. Rs.
At the beginning of the Year 1,805,301,857 1,917,795,205

Charge for the Year 364,808,853 94,016,018
Amounts Written Off (168,977,695) (206,509,365)
At the end of the Year 2,001,133,015 1,805,301,857
Individual Impairment 1,406,863,551 1,347,444,908

Collective Impairment 594,269,465 457,856,950
2,001,133,016 1,805,301,858
Gross Amount of Loans Individually Determined to be Impaired,
before Deducting the Individually Assessed Impairment Allowance 3,771,230,438 1,771,225,253
Gross Amount of Loans Collectively Assessed for the Impairment 60,728,681,871 55,700,389,541
64,499,912,309 57,471,614,794
155
6.2 CONTRACTUAL MATURITY ANALYSIS
(A) AS AT 31ST MARCH 2018

Lease Hire Purchase
Within 1-5 Over Total Within 1-5 Over Total
One Year Years 5 Years One Year Years 5 Years
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Gross Rentals Receivables 35,693,565,329 49,960,849,272 52,384,097 85,706,798,697 415,440,884 40,497,656 – 455,938,540
Unearned Income (10,956,305,785) (10,683,824,539) (4,077,576) (21,644,207,901) (16,643,393) (1,973,634) – (18,617,027)
Net Rentals Receivables 24,737,259,544 39,277,024,733 48,306,521 64,062,590,796 398,797,491 38,524,022 – 437,321,513
Rentals Received in Advance (9,093,527) –

Allowance for Impairment Losses (1,774,407,162) (226,725,854)
Total Net Rentals Receivable 62,279,090,107 210,595,659
Total Net Rentals Receivable
from Lease and Hire Purchase 62,489,685,766
(B) AS AT 31ST MARCH 2017

Gross Rentals Receivables 29,472,322,036 45,032,083,269 17,284,700 74,521,690,005 910,754,275 340,283,039 162,739 1,251,200,053
Unearned Income (8,820,103,119) (9,355,718,906) (1,298,851) (18,177,120,876) (93,573,484) (30,579,692) (1,211) (124,154,387)
Net Rentals Receivables 20,652,218,917 35,676,364,363 15,985,848 56,344,569,129 817,180,791 309,703,347 161,528 1,127,045,666
Rentals Received in Advance (6,925,128) –

Allowance for Impairment Losses (1,523,428,588) (281,873,270)
Total Net Rentals Receivable 54,814,215,413 845,172,395
Total Net Rentals Receivable
from Lease and Hire Purchase 55,659,387,808
6.3 LEASE AND HIRE PURCHASE FACILITIES GRANTED TO COMPANY OFFICERS, THE MOVEMENT OF
WHICH IS AS FOLLOWS:
2018 2017
Rs. Rs.
As at the beginning of the Year 70,832,798 94,924,872

Add: Loans Granted during the Year 47,753,819 38,186,631
Less: Repayments during the Year (54,415,063) (62,278,704)
As at the end of the Year 64,171,554 70,832,798
156
7. OTHER FINANCIAL ASSETS
Company
2018 2017
Rs. Rs.
Investment in Fixed Deposits 718,942,715 1,400,762,161

718,942,715 1,400,762,161
Company
2018 2017
Rs. Rs.
Treasury Bills/Repurchases 3,532,440,589 3,787,538,345

Insurance Premium Receivables 326,627,989 244,385,064
Investment in Fixed Deposits 4,030,864,432 4,344,855,523
Others 28,250,991 9,302,935
7,918,184,001 8,386,081,868
8. TRADE OTHER DEBTORS DEPOSITS AND PREPAYMENTS

Company
2018 2017
Rs. Rs.
Deposits 19,754,482 19,323,970

Interest Receivable 37,971,915 47,426,731
Other Advances 457,775 10,784,152
Other Receivable 8,867,192 134,185,766
67,051,364 211,720,619
Company
2018 2017
Rs. Rs.
Trade Receivables 5,605,611,462 4,967,586,366

Deposits 60,079,191 28,286,847
Other Advances 39,454,775 58,390,152
Interest Receivables 37,971,915 47,426,731
Other Receivables 1,100,485,765 1,350,480,331
6,843,603,108 6,452,170,427
157
9. OTHER NON-FINANCIAL ASSETS

Company
2018 2017
Rs. Rs.
Real Estate Stock – 580,532

Advance for Vehicle Stock 18,574,450 –
Advances and Prepayments 1,669,309,303 1,221,285,540
Gold Stock 1,513,533 5,805,271
Stationery Stock 8,769,407 9,145,209
Sundry Debtors 6,150,904 6,067,520
Prepaid Staff Cost 58,462,746 19,068,108
Receivables and Others 16,598,918 7,588,850
Advance Company Tax Receivable 27,285,000 27,285,000
Other Long Term Receivable 85,511,989 –
1,892,176,250 1,296,826,030
10. INVESTMENT IN SUBSIDIARIES

Effective Holding (%) Number of Shares
2018 2017 2018 2017
Quoted Investments
Royal Ceramics Lanka PLC 55.96 55.96 62,002,600 62,002,600
L B Finance PLC 66.34 66.34 71,681,257 71,681,257
Delmege Limited 62.75 62.75 253,314 253,314
Greener Water Limited 100.00 100.00 2,355,730,010 184,023,000
Cost Market Value

2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Quoted Investments
Royal Ceramics Lanka PLC 9,920,439,510 9,920,439,509 6,535,074,040 7,378,309,400
L B Finance PLC 5,461,361,198 5,461,361,198 8,522,901,457 8,487,060,829
15,381,800,708 15,381,800,707 15,057,975,497 15,865,370,229
Cost Directors Valuation

2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Delmege Limited 1,579,525,326 1,579,525,326 1,579,525,326 1,579,525,326
Greener Water Limited 2,357,063,650 1,841,563,650 2,357,063,650 1,841,563,650
Total 3,936,588,976 3,421,088,976 3,936,588,976 3,421,088,976
Total 19,318,389,684 18,802,889,683 18,994,564,473 19,286,459,205
158
11. INVESTMENT IN ASSOCIATES
11.1 COMPANY
Effective Holding Number of Shares
2018 2017 2018 2017
% %
Quoted Investments
The Fortress Resorts PLC 20.46 20.46 19,977,345 19,977,345
Cost Market Value

2018 2017 2018 2017
Rs. Rs. Rs. Rs.
The Fortress Resorts PLC 405,891,320 405,891,320 209,762,123 259,705,485

405,891,320 405,891,320 209,762,123 259,705,485
11.2 GROUP
The Fortress Total
Resorts PLC
Rs. Rs.
Balance at the 31st March 2016 558,437,660 558,437,660

Investments made during the Year – –
Share of Profit Net of Tax and Dividend 29,629,739 29,629,739
Share of Other Comprehensive Income (228,999) (228,999)
Balance at the 31st March 2017 587,838,400 587,838,400
Share of Profit Net of Tax and Dividend 30,553,422 30,553,422
Balance as at 31st March 2018 618,391,822 618,391,822
11.3 SUMMARISED FINANCIAL INFORMATION OF EQUITY ACCOUNTED INVESTEES HAS NOT BEEN
ADJUSTED FOR GROUP SHARE
11.3.1 STATEMENT OF PROFIT OR LOSS
2018 2017
Rs. Rs.
Revenue 638,705,923 625,422,392

Cost of Sales (222,459,605) (191,738,064)
Income (Includes Other Income, Finance Income) 79,932,474 85,601,212
Expenses (Includes Operating, Administration and Distribution Expenses) (320,041,916) (355,929,736)
Finance Cost (3,124,571) (404,751)
Value Added Tax on Financial Services
Income Tax (32,213,121) (28,086,513)
Profit after Tax 140,799,184 134,864,540
Other Comprehensive Income (242,843) (1,042,324)
159
11.3.2 STATEMENT OF FINANCIAL POSITION

2018 2017
Rs. Rs.
Non-Current Assets 1,375,574,039 1,360,688,970

Current Assets 583,070,613 431,188,549
Non-Current Liabilities 73,067,802 69,598,588
Current Liabilities 130,497,888 107,756,311
Net Assets 1,755,078,961 1,614,522,620
11.3.3 COMMITMENTS AND CONTINGENCIES

2018 2017
Rs. Rs.
Commitments
Operating Lease Commitments 39,389,795 41,626,437
12. DEFERRED TAX ASSETS (LIABILITIES)

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
As at 1st April (2,461,089) (3,006,581) (1,370,507,471) (752,273,568)

Recognised in Profit or Loss 1,015,305 738,730 (986,876,519) (601,750,652)
Recognised in Other Comprehensive Income 165,462 (193,238) (3,019,099,513) (11,590,756)
Deferred Tax on Acquisition of Subsidiaries – – – (4,892,495)
At the end of the Year (1,280,322) (2,461,089) (5,376,483,503) (1,370,507,471)
Deferred Tax Assets – – 14,686,000 340,548,697

Deferred Tax Liabilities (1,280,322) (2,461,089) (5,391,523,503) (1,711,056,168)
(1,280,322) (2,461,089) (5,376,837,503) (1,370,507,471)
12.1 THE CLOSING NET DIFFERED TAX LIABILITY RELATE TO THE FOLLOWING:
Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Property, Plant and Equipment (2,953,543) (3,611,060) (6,771,627,512) (2,571,606,547)

Defined Benefit Obligation 1,673,221 1,149,971 340,719,463 257,731,062
Provisions – – 61,958,387 162,667,222
Unutilised Tax Losses – – 992,112,159 780,700,792
(1,280,322) (2,461,089) (5,376,837,503) (1,370,507,471)
160
13. AMOUNTS DUE FROM RELATED PARTIES

Company Group
2018 2017 2018 2017
Relationship Rs. Rs. Rs. Rs.
Amounts Due From Related Parties Subsidiary 215,624,662 45,334,491 – –

215,624,662 45,334,491 – –
14. INVENTORIES
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Raw Materials – – 3,038,604,008 2,027,139,112

Construction Consumables – – 16,338,829 14,007,906
Spares and Consumables – – 1,818,919,072 1,738,616,776
Non-Harvested Produce on Bearer Biological Assets – – 6,210,000 6,860,000
Work-in-Progress – – 398,581,861 301,076,646
Harvested Crops – – 223,516,000 189,715,000
Seat Covers and Accessories – – 801,500,529 543,717,234
Finished Goods – – 6,424,149,215 5,452,119,323
Goods-in-Transit – – 156,801,263 26,929,980
– – 12,884,620,777 10,300,181,978
Less: Provision for Obsolete and Slow-Moving Inventory – – (332,100,448) (268,397,135)
12,552,520,329 10,031,784,843
161
15. INTANGIBLE ASSETS

Group
Software Brand Name Goodwill Total
Rs. Rs. Rs. Rs.
Cost
As at 31st March 2016 382,007,253 904,891,300 12,315,864,197 13,602,762,750
Acquired during the Year 33,612,692 – 38,172,535 71,785,227
Effect of Change in Exchange Rate – – 116,400 116,400
As at 31st March 2017 415,619,945 904,891,300 12,354,153,132 13,674,664,377
Acquired during the Year 25,693,501 – – 25,693,501
As at 31st March 2018 441,313,446 904,891,300 12,354,153,132 13,700,357,878
Amortisation
As at 31st March 2016 130,580,734 245,074,729 96,524,136 472,179,599
Charge for the Year 38,631,865 45,244,565 – 83,876,430
Impairment of Goodwill – – 71,866,701 71,866,701
As at 31st March 2017 169,212,599 290,319,294 168,390,837 627,922,730
Charge for the Year 41,018,386 45,244,565 – 86,262,951
Impairment of Goodwill – – 2,387,160 2,387,160
Effect of Change in Exchange Rate 14,044 – (67,873) (53,829)
As at 31st March 2018 210,245,029 335,563,859 170,710,124 716,519,012
Net Book Value

Net Book Value as at 31st March 2017 246,407,346 614,572,006 12,185,762,295 13,046,741,647
Net Book Value as at 31st March 2018 231,068,417 569,327,441 12,183,443,008 12,983,838,866
162
15.1 GOODWILL
Goodwill allocated through business combination, has been allocated to four Cash Generating Units (CGU) for impairment
testing as follows:
2018 2017
Rs. Rs.
Royal Ceramic Lanka PLC and its Subsidiaries 7,410,980,811 7,413,300,098

L B Finance PLC 3,966,204,093 3,966,204,093
Greener Water Limited 3,419,869 3,419,869
Delmege Limited and its Subsidiaries 802,838,235 802,838,235
12,183,443,008 12,185,762,295
The recoverable amount of all CGUs have been determine based on the fair value less to cost to sell or the value in use (VIU)
calculation.
KEY ASSUMPTIONS USED IN VIU CALCULATION
GROSS MARGIN
The basis used to determine the value assigned to the budgeted gross margins is the gross margins achieved in the year
preceding the budgeted year adjusted for projected market conditions.
DISCOUNT RATE
The discount rate used is the risk free rate, adjusted by the addition of an appropriate risk premium.
INFLATION
The basis used to determine the value assigned to budgeted cost inflation, is the inflation rate based on projected
economic conditions.
VOLUME GROWTH
Volume growth has been budgeted on a reasonable and realistic basis by taking into account the growth rates of one of four
years immediately subsequent to the budgeted year, based on industry growth rates. Cash flows beyond the five-year period are
extrapolated using 0% growth rate.
163
16. PROPERTY, PLANT AND EQUIPMENT
16.1 COMPANY
Computers Furniture Office Motor Total
& Fittings Equipments Vehicles
Rs. Rs. Rs. Rs. Rs.
Gross Carrying Amounts

Balance as at 31st March 2016 21,189,370 33,227,674 1,634,428 28,214,740 84,266,212
Disposals – – – (3,650,000) (3,650,000)
Additions 2,647,124 1,669,695 – – 4,316,819
Depreciation
Balance as at 31st March 2016 16,652,392 15,683,051 744,372 7,561,205 40,641,022
Disposals – – – (3,406,667) (3,406,667)
Depreciation Charge for the Year 2,063,764 3,319,202 163,443 5,020,505 10,566,913
Net Book Value

As at 31st March 2016 4,536,978 17,544,623 890,056 20,653,535 43,625,191
As at 31st March 2017 5,120,338 15,895,116 726,613 15,389,697 37,131,763
Computers Furniture Office Motor Total

& Fittings Equipment Vehicles
Rs. Rs. Rs. Rs. Rs.
Gross Carrying Amounts

(Disposals)/Adjustments (7,789,602) 3,110,954 995,376 – (3,683,272)
Additions 2,245,714 226,565 9,500 – 2,481,779
Depreciation
(Disposals)/Adjustments (7,001,622) 3,123,709 361,437 – (3,516,476)
Depreciation Charge for the Year 2,297,833 3,489,737 163,681 4,276,364 10,227,615
Net Book Value

As at 31st March 2017 5,120,338 15,895,116 726,613 15,389,697 37,131,763
As at 31st March 2018 4,280,239 12,619,189 1,206,371 11,113,333 29,219,132
164
16.2 GROUP
GROSS CARRYING AMOUNTS
Balance Additions Increase/ Transfers/ Exchange Assets Balance
as at during the (Decrease)/ Disposals Translation Held for As at
01st April 2017 Year Revaluation Difference Sale 31st May 2018
Cost/Valuation
Land and Building 18,150,476,340 2,178,287,334 4,189,753,805 (629,872,326) – (40,431,478) 23,848,213,675
Furniture and Fittings 978,664,346 238,847,896 – (25,102,215) 111,461 (42,440) 1,192,479,048
Equipment 1,486,375,603 261,761,157 – (14,904,223) 339,989 (2,572,058) 1,731,000,468
Fire Protection Equipment 17,446,968 7,044,002 – 158,100 – – 24,649,070
Motor Vehicles and Accessories 815,975,444 140,445,649 – 6,558,805 433,897 (392,000) 963,021,795
Computer Hardware 529,872,496 190,176,821 – (27,907,317) – – 692,142,000
Air Conditioning 222,542,978 38,591,569 – (4,162,866) – – 256,971,681
Telephone System 78,646,509 2,706,617 – (195,500) – – 81,157,626
Leasehold Improvements 838,684,312 100,959,745 – (8,835,900) – – 930,808,157
Fixtures and Fittings 884,573,842 293,842,699 – 199,905,590 – – 1,378,322,131
Water Supply Scheme 392,900,500 24,407,560 – – – – 417,308,060
Electricity Distribution 34,019,243 – – – – – 34,019,243
Tools and Implements 793,041,709 103,317,941 – (17,532,525) 7,620 – 878,834,745
Plant and Machinery – Polishing Plant 12,358,198,369 1,269,947,022 – (21,734,450) – (9,240,119) 13,597,170,822
Moulds 129,351,442 3,382,470 – – – – 132,733,912
Household Item – Light 78,830 – – – – – 78,830
Stores Buildings on Leasehold Land 478,326,630 49,678,658 10,655,287 (61,885,825) 4,687,182 – 481,461,932
Civil Construction 1,301,140,590 – – (1,301,140,590) – – –
39,490,316,151 4,903,397,140 4,200,409,092 (1,906,651,242) 5,580,149 (52,678,095) 46,640,373,195
Assets on Finance Lease

Plant and Machinery 20,184,680 – – – – – 20,184,680
Leasehold Land 14,600,000 – – – – – 14,600,000
Motor Vehicles 20,483,000 – – – – – 20,483,000
Transport and Communication Equipment 58,560,000 – – (5,134,000) – – 53,426,000
113,827,680 – – (5,134,000) – – 108,693,680
Total Value of Depreciable Assets 39,604,143,831 4,903,397,140 4,200,409,092 (1,911,785,242) 5,580,149 46,749,066,876
CAPITAL WORK-IN-PROGRESS
As at Additions Increase/ Transfer Exchange Balance
01.04.2017 during the (Decrease)/ Disposal Translation As at
Year Revaluation Difference 31.03.2018
Capital Work-in-Progress 1,459,727,460 3,753,578,749 – (1,719,747,777) 573,980 3,494,132,412

1,459,727,460 3,753,578,749 – (1,719,747,777) 573,980 3,494,132,412
165
DEPRECIATION
Balance Change for Transfer to Transfers/ Exchange Assets Balance
as at the Year Revaluation Disposals Translation Held for as at
01st April 2017 Reserves Difference Sale 31.03.2018
Building 595,070,713 213,173,138 (418,243,253) (7,645,248) – (15,511,738) 366,843,612

Furniture and Fittings 635,276,732 123,174,389 – (6,425,417) (217,418) (42,440) 751,765,846
Equipment 1,057,347,094 141,631,280 (5,269) (12,714,823) 180,823 (1,615,140) 1,184,823,965
Fire Protection Equipment 14,228,748 1,780,919 5,270 – – – 16,014,937
Motor Vehicles and Accessories 436,665,955 108,328,364 – (12,395,183) 462,311 (392,000) 532,669,447
Computer Hardware 385,784,429 72,492,484 – (7,606,958) 1,570 – 450,671,525
Air Conditioning 131,860,413 31,357,536 – (4,154,743) – – 159,063,206
Telephone System 72,715,969 2,501,799 – (52,133) – – 75,165,635
Leasehold Improvements 451,938,028 107,602,333 (14,267) (275,805) – – 559,250,289
Fixtures and Fittings 290,272,487 75,456,526 – 31,591,725 – – 397,320,738
Water Supply Scheme 265,791,757 22,074,210 – (3,000) – – 287,862,967
Electricity Distribution 10,918,487 1,465,982 – – – – 12,384,469
Tools and Implements 614,119,674 88,448,658 – (17,310,460) 5,736 – 685,263,608
Plant and Machinery 6,464,455,043 736,027,177 – (13,476,567) – (7,513,923) 7,179,491,730
Molds 106,978,769 10,784,485 – – – – 117,763,254
Household Item – Light 59,093 – – – – – 59,093
Stores Buildings on Leasehold Land 69,400,665 66,745,852 (39,967,873) (24,754,330) 1,131,204 – 72,555,518
11,602,884,056 1,803,045,132 (458,225,392) (75,222,942) 1,564,226 (25,075,241) 12,848,969,839
Assets on Finance Lease
Plant and Machinery 8,074,169 4,149,722 – – – – 12,223,891
Leasehold Land 1,948,000 485,329 2,433,329
Transport and
Communication Equipment 41,592,000 5,309,000 – (5,834,000) – – 41,067,000
Motor Vehicle 6,887,048 4,096,600 – – – – 10,983,648
58,501,218 14,040,651 – (5,834,000) – – 66,707,868
Total 11,661,385,274 1,817,085,783 (458,225,392) (81,056,942) 1,564,226 (25,075,241) 12,915,677,707
Net Book Value

As at 31st March 2017 27,942,758,558
As at 31st March 2018 33,833,389,169
Capital Work-in-Progress
As at 31st March 2017 1,459,727,460
As at 31st March 2018 3,494,132,412
166
16.3 CARRYING AMOUNT

As at As at
31st March 2018 31st March 2017
Rs. Rs.
Property, Plant and Equipment 37,327,521,581 29,402,486,018

Immovable JEDB/SLSPC Estate Assets on Finance Leases (Other than Right to Bare Land) (Note 16.4) 47,105,000 54,820,000
Leasehold Right to Bare Land of JEDB/SLSPC Estates (Note 16.5) 105,253,000 109,120,000
37,479,879,581 29,566,426,018
16.4 IMMOVABLE JEDB/SLSPC ESTATE ASSETS ON FINANCE LEASES (OTHER THAN RIGHT TO BARE LAND)
Bearer Biological Assets Permanent Land Buildings Plant and 2018 2017
Mature Plantations Development Cost Machinery
Revaluation
As at 22nd June 1992 214,810,000 4,014,000 47,173,000 6,818,000 272,815,000 272,815,000
At the end of the Year 214,810,000 4,014,000 47,173,000 6,818,000 272,815,000 272,815,000
Amortisation
Opening Balance 161,124,000 3,296,000 46,757,000 6,818,000 217,995,000 208,814,000
During the Period 7,161,000 138,000 416,000 – 7,715,000 9,181,000
Written Down Value

At the end of the Year 46,525,000 580,000 – – 47,105,000 54,820,000
All immovable estate Property, Plant and Equipment under finance leases have been taken into the books of Horana Plantations
PLC retrospective to 22nd June 1992. For this purpose all estate immovable have been revalued at their book values as they
appear in the books of the lessor (JEDB/SLSPC), as the case may be on the day immediately preceding the date of formation
of Horana Plantations PLC.
Investments in Bearer Biological Assets which were immature, at the time of handing over to the Company by way of estate
lease, are shown under Bearer Biological Assets – immature (Revalued as at 22nd June 1992). Further, investments in such
a Bearer Biological Assets (Immature to mature bring them to maturity are shown under Note 17.1 Bearer Biological Assets
(Immature Plantation). When these plantations become mature the additional investment to bring them to maturity will be
moved from the Note 17.1 – Bearer Biological Assets. (Immature Plantations).
167
16.5 LEASEHOLD RIGHT TO BARE LAND OF JEDB/SLSPC ESTATES

2018 2017
Rs. Rs.
Capitalised Value
As at 22nd June 1992 204,931,000 204,931,000
Amortisation
Opening Balance 95,811,000 91,944,000
Charge for the Year 3,867,000 3,867,000
At the end of the Year 99,678,000 95,811,000
Carrying Amount
The leasehold rights to the bare land on all estates (except for Dumbara Estate, which is under an operating lease) have been
taken into the books of Horana Plantations PLC (HPPLC), as at 22nd June 1992, immediately after formation of HPPLC, in terms
of the opinion obtained from the Urgent Issue Task Force (UITF) of The Institute of Chartered Accountants of Sri Lanka. For this
purpose lands have been revalued at Rs. 204.931 Mn, being the value established for these lands by Valuation Specialist,
D R Wickremasinghe just prior to the formation of HPPLC. However, The Institute of Chartered Accountants of Sri Lanka has
withdrawn the UITF ruling with the implementation of SLFRS/LKAS and introduced Statement of Alternative Treatment (SoAT)
on right to use land. As per the SoAT right to use land does not permit further revaluation.
16.6 FAIR VALUE HIERARCHY – NON-FINANCIAL ASSETS

The following properties are revalued and recorded under freehold land and clay mining land. Fair Value measurement disclosure
for revalued land based on unobservable input as follows:
(a) Quoted Price (unadjusted) in active markets for identical assets or liabilities (Level 1).
(b) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is derived from prices) (Level 2).
(c) Input for the assets or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

168
Company Location Extent Valuer Valuation Valuation Details Significant Unobservable Fair Value
Date Input: Measurement
Price per Perch/Acre/Range using Significant
Unobservable Inputs
(Level 3)
Rs. Mn
Royal Ceramics Factory at Ehaliyagoda A50-R1-P34.72 Rs. 56,250 per perch 454,203 Mn
Lanka PLC
Showroom and Cutting Centere A1-R1-P24.75 Rs. 1,528,026 per perch
Land at Kottawa 343,437 Mn
Land at Meegoda Warehouse A2-R3-P31.29 Rs. 255,017 per perch 120,187 Mn
Land at Nawala for Nawala P24.90 Rs. 7,000,000 per perch
New Showroom 174,300 Mn
Land at Nattandiya A10 Rs. 18,750 per perch 30,000 Mn
Mr. A A M Market-based
Land at Kaluthara A4-R3-P8.20 31.03.18 Rs. 15,602 per perch 11,986 Mn
Fathihu evidence
Land at Seeduwa R1-P12.50 Rs. 2,500,000 per perch 131,250 Mn
Land at Narahenpita P17.02 Rs. 7,000,000 per perch 119,140 Mn
Land at Colpitty P19.97 Rs. 15,022,533 per perch 300,000 Mn
Land at Panadura P18.82 Rs. 3,500,000 per perch 65,870 Mn
Land at Dehiwela P14.83 Rs. 7,000,000 per perch 103,810 Mn
Land at Narahenpita R1-P5.32 Rs. 6,430,714 per perch 291,440 Mn
Royal Porcelain Factory Land at Horana A.14 - R.1- P.7.36 Rs. 62,500 per perch 89.088 Mn
(Pvt) Ltd.
Factory Building at Horana 285,168 sq.ft. Rs.1,250 to Rs. 5,000
Mr. A A M Market-based
31.12.17 per sq.ft 142.96 Mn
Fathihu evidence
Warehouse Building at Meegoda 77,467 sq.ft. Rs.3,500 to Rs. 4,000
per sq.ft 566.073 Mn
Rocell Bathware Factory Land at Homagama A1-R2-P19.60 Rs. 150,000 per perch 38.94 Mn
Ltd.
Land at Meegoda A1-R3-P04.10 Mr. A A M Market-based Rs. 200,000 per perch 64.320 Mn
31.03.18
Fathihu evidence
Factory Complex at Homagama 202,003 Sq. ft. Rs. 800/- to 4,500/-
per Sq. ft 632.8955 Mn
LWL Development Agalagedara Village, 48A-03R-17.9P Rs. 4,500,000 per Acre
Limited Divulapitiya, Gampaha Mr. Ranjan J Market-based 219,875
31.03.17
Waradala Village, 4A-01R-15.9P Samarakone evidence Rs.2,500,000 per Acre
Divulapitiya, Gampaha 11,000
Beyond Paradise Agalagedara Village, A48-R03-P17.9
Collection Limited Divulapitiya, Gampaha Mr. Ranjan J Market-based 223,800
31.03.17
Samarakone evidence
House 981.Sq.ft.
Lanka Tiles PLC Land at Ranala 36A-03R-07.35P 557,357
Land at Biyagama 02A-00R-15.93P Mr. Ranjan J Market-based 285,541
31.03.16
Marawila Silica Land 13A-0R-02P Samarakone evidence 35,780
Ball Clay land at Kaluthara 5A-01R-0.83P 52
Uni Dil Packing Land at Narampola road, A9-R0-P17.8 Market-based
Ltd. Moragala, Deketana evidence 102,046
Building and Land Improvement 25,551 sq.ft. Mr. D G Newton 31.03.16 Depreciated
at Narampola road, Replacement cost
Moragala, Deketana 179,254
Uni Dil Packaging Land at Narampola Road, A2-R2-P35 Market based
Solutions Ltd. Moragala, Deketana evidence 26,100
Mr. D G Newton 31.03.16
Building at Narampola Road, 25,551 sq.ft. Depreciated
Moragala, Deketana Replacement cost 46,400
169
Company Location Extent Valuer Valuation Valuation Details Significant Unobservable Fair Value
Date Input: Measurement
Price per Perch/Acre/Range using Significant
Unobservable Inputs
(Level 3)
Rs. Mn
Swisstek Factory Complex, Belummahara, 980 Perches Market-based

(Ceylon) PLC Imbulgoda – Land evidence 600,000
No:334/5, Colombo Road, 20 Perches Market-based
Belummahara, Imbulgoda – Land evidence 6,700
Factory Complex, Belummahara, 54,647 sq.ft. Contractors method
Imbulgoda – Building 75,000
No:334/5, Colombo Road, 1,384 sq.ft. Depreciated
Belummahara, Imbulgoda – Building Mr.K T D Replacement cost 300
31.03.16
Factory Complex, Belummahara, 24,444 sq.ft. Tissera Investment method
Imbulgoda – Tile Stores 63,351
Factory Complex, Belummahara, 4890 sq.ft. Investment method
Imbulgoda –Sales centre 21,122
Factory Complex, Belummahara, 1600 sq.ft. Investment method
Imbulgoda – Open Shed 2,073
Factory Complex, Belummahara, 5,000 sq.ft. Investment method
Imbulgoda – Warehouse 17,278
Swisstek Land at Pahala Dompe, Dompe A08-R02-P20 Market-based
Aluminum Ltd. Mr. T J Tissera 30.03.16 evidence 180,000
Building at Pahala Dompe, Dompe Contractors Method 229,627
Lanka Mining Land at Owala 25A-2R-15P Market-based Rs. 100,000 to
Ceramic PLC evidence Rs. 250,000 per acre 4,809
Land Situated at Owala 1A-1R-02.0P Market-based Rs. 400,000 per acre
evidence 500
Factory Building and Office Building 7038 Sq.ft. Depreciated cost Rs. Nil to Rs. 1,000
at Owala Mine method per sq.ft 5,157
Mining Land at Meetiyagoda 35A-10R-4.33P Mr. P B Market-based Rs. 300,000 to
31.03.16
Kalugalagedera evidence Rs. 1,000,000 per acre 17,051
Mining Land at Dediyawala 50A-0R-05.48P Market-based Rs. 200,000 per acre
evidence 10,007
Land Situated at Meetiyagoda 7A-2R-28P Market-based Rs. 750,000 to
evidence Rs. 1,750,000 per acre 12,931
Factory Building and Office Building 39,512sq.ft. Depreciated cost Rs. 100 to Rs. 500
at Meetiyagoda Mine method per sq.ft. 13,557
Delmege Forsyth No. 101, Vinayalankara Mawatha, 2 A 0 R 14.05 P Mr. H B Manjula 31.03.17 Market-based Rs. 10,000,000 to
and Company Colombo 10 Basnayake evidence Rs. 15,000,000 per perch
Limited 4,328
170
INFORMATION ON THE FREEHOLD LAND AND BUILDINGS – LB FINANCE PLC

Extent Buildings Revalued Amount Net Book Value Revalued Amount Net Book Value
(Perches) (Sq.ft.) (As at 31 March 2018) (As at 31 March 2018) as a % of (As at 31st March 2017)
Net Book Value
(As at 31st March 2018)
Location Rs. '000 Rs. '000 Rs. '000
Kollupitiya
No. 20, Dharmapala Mawatha, Colombo 3 52.82 65,000 1,525,000 906,946 168 919,496
Kollupitiya
No 676, Galle Road, Colombo 3 149.35 51,410 3,733,750 1,964,097 190 1,351,260
Kandy
No. 226, D.S. Senanayaka Street, Kandy 7.05 3,674 61,000 10,466 583 10,527
Kandy
Moragaspitiyawatta Road, Balagolla, Kegalle 110.00 – 43,800 29,919 146 21,544
Kandy
No. 47/10 A, Luwiss Pieris Mawatha,
Buwelikada, Kandy 42.40 – 35,000 34,085 103 33,974
Maradana
No. 104/1, Vipulasena Mawatha, Colombo 10 50.60 – 320,850 44,768 717 43,044
Nuwara Eliya
No. 35/4, Upper Lake Road, Nuwara Eliya 359.00 – 245,000 64,906 377 64,906
Wellawatta
No. 51A, W.A. Silva Mawatha, Colombo 6 14.23 – 156,107 156,107 100 N/A*
Panadura
No. 37, Jayathilake Mawatha, Panadura 42.00 – 104,224 104,224 100 N/A*
Valuation of freehold land and buildings of the Company was carried out as at 31 March 2018 by H B Manjula Basnayaka.
AIV (Sri Lanka), N C T, QS, (COT), incorporated valuer. Investment method, Contractor's Test method and Comparison method
have been used for the valuation.
Freehold land and buildings of the Company are considered under level 3 of fair value hierarchy.

*Freehold land and buildings purchased during the financial year ended 31st March 2018.
17. BIOLOGICAL ASSETS

2018 2017
Rs. Rs.
Bearer Biological Assets (Note 17.1) 2,176,052,000 2,085,018,000

Consumable Biological Assets (Note 17.2) 536,575,000 490,534,000
2,712,627,000 2,575,552,000
171
17.1 BEARER BIOLOGICAL ASSETS

Tea Rubber Oil Palm Diversification Total Total
2018 2017
Immature Plantations
Cost or Valuation:
Opening Balance 146,697,000 375,630,000 58,800,000 56,037,000 637,164,000 717,283,000
Additions 46,264,000 80,000,000 59,724,000 43,076,000 229,064,000 194,708,000
Transfers to Mature (94,324,000) (204,901,000) (53,660,000) (14,456,000) (367,341,000) (274,084,000)
Transferred to Income Statement – – – – – (743,000)
Mature Plantations
Cost or Valuation:
Opening Balance 697,998,000 1,133,145,000 50,219,000 31,226,000 1,912,588,000 1,638,504,000
Transfers from Immature 94,324,000 204,901,000 53,660,000 14,456,000 367,341,000 274,084,000
At the end of the Year 792,322,000 1,338,046,000 103,879,000 45,682,000 2,279,929,000 1,912,588,000
Accumulated Amortisation
Opening Balance 142,666,000 312,165,000 1,520,000 8,383,000 464,734,000 395,600,000
Charge for the Year 40,165,000 92,828,000 2,510,000 2,527,000 138,030,000 69,134,000
Written Down Value 609,491,000 933,053,000 99,849,000 34,772,000 1,677,165,000 1,447,854,000

Total Bearer Biological Assets 708,128,000 1,183,782,000 164,713,000 119,429,000 2,176,052,000 2,085,018,000
These are investments in immature/mature plantations since the formation of Horana Plantations PLC. The lease liability over the
assets (including plantations) taken over by way of estate leases are set out in Notes 16.4 and 16.5. Further investments in the
immature plantations taken over by way of these lease are also shown in the above. When such plantations become mature, the
additional investments since take over to bring them to maturity have been (or will be) moved from immature to mature under this
category as and when field become mature.
172
17.2 CONSUMABLE BIOLOGICAL ASSETS

2018 2017
Rs. Rs.
Immature Plantations
Cost:
At the beginning of the Year 39,339,000 24,699,000
Additions 12,486,000 14,640,000
Mature Plantations
Cost:
Increase/(Decrease) (5,230,000) –
Change in Fair Value Less Costs to Sell 38,785,000 79,761,000
Total Consumable Biological Assets 536,575,000 490,534,000
17.3 BASIS OF VALUATION

Under LKAS 41 the Group has valued its managed plantations at fair value less cost to sell, Managed timber plantations as at
31st March 2018 comprised approximately 304.52 hectares.
Managed trees which are less than three years old are considered to be immature consumable biological assets, amounting
Rs. 51,825 Mn as at 31st March 2018. The cost of immature trees is treated as approximate fair value, particularly on the ground
that little biological transformation has taken place and the impact of the biological transformation on price is not material.
When such plantation become mature, the additional investments since taken over to bring them to maturity are transferred from
immature to mature.
The mature consumable biological assets were valued by Incorporated Valuers Mr. A A M Faithu, FIV, for 2017/18 using Discounted
Cash Flow (DFC) method. In ascertaining the fair value of timber, physical verification was carried covering all the estates.
INFORMATION ABOUT FAIR VALUE MEASUREMENT USING UNOBSERVABLE INPUTS (LEVEL 3)

Unobservable Inputs Range of Unobservable Inputs Relationship of Unobservable Inputs to Fair Value
Discounting Rate 14% - 16% The higher the discount rate, the lesser will be the fair value.

OTHER KEY ASSUMPTION USED IN VALUATION:
– The prices adopted are net of expenditure.
The valuation, as presented in the external valuation model based on the net present value, takes into accounts the long-term
exploitation of the timber plantation. Because of the inherent uncertainty associated with the valuation at fair value of the biological
assets due to the volatility of the variables, their carrying value may differ from their realisation value. The Board of Directors
retains their view that commodity markets are inherently volatile and their long-term price projection are highly unpredictable.
Hence, the sensitivity analysis regarding the selling price and discount rate variation as included in this note allows every investor
to reasonably challenge the financial impact of the assumptions used in the valuation against his own assumptions.
173
The biological assets of the Group are mainly cultivated in leased lands. When measuring the fair value of the biological assets it
was assumed that these concession can and will be renewed at normal circumstances. Timber content expects to be realised in
future and is included in the calculation of the fair value that takes into account the age of the timber plants and not the expiration
date of the lease.
THE GROUP IS EXPOSED TO THE FOLLOWING RISKS RELATING TO ITS TIMBER PLANTATION:
REGULATORY AND ENVIRONMENTAL RISKS

The Group is subject to laws and regulations in Sri Lanka. The Group has established environmental policies and procedures
aimed at compliance with local environmental and other laws. Management performs regular reviews to identify environmental
risks and to ensure that the systems in place are adequate to manage those risks.
SUPPLY AND DEMAND RISKS

The Group is exposed to risks arising from fluctuations in the price and sales volume of timber. When possible the Group manages
this risk by aligning its harvest volume to market supply and demand. Management performs regular industry trend analyses to
ensure that the Group’s pricing structure is in line with the market and to ensure that projected harvest volumes are consistent with
the expected demand.
CLIMATE AND OTHER RISKS

The Group’s timber plantations are exposed to the risk of damage from climatic changes, diseases, forest fires and other natural
forces. The Group has extensive processes in place aimed at monitoring and mitigating those risks, including regular forest health
inspections and industry pest and disease surveys.
SENSITIVITY ANALYSIS
Sensitivity Variation on Sales Price
Net Present Value of the Biological Assets as appearing in the Statement of Financial Position are very sensitive to changes in
the average sales price applied. Simulations made for timber show that an increase or decrease by 10% of the estimated future
selling price has the following effect on the Net Present Value of the Biological Assets.
Managed Timber –10% Base 10%
2017 Rs. Mn 406.076 451.195 496.315

2018 Rs. Mn 445.921 484.750 520.906
SENSITIVITY VARIATION ON DISCOUNT RATE

Net Present Value of the Biological Assets as appearing in the Statement of Financial Position are very sensitive to changes in the
discount rate applied. Simulations made for timber show that an increase or decrease by 1% of the estimated future discount rate
has the following effect on the Net Present Value of the Biological assets.
Managed Timber –1% Base 1%
2017 Rs. Mn 465.507 451.195 437.774

2018 Rs. Mn 497.513 484.750 472.813
174
CAPITALISATION OF BORROWING COST

Borrowing costs amounting to Rs. 59.531 Mn (Rs. 60.013 Mn in 2016/17) directly relating to investment in biological assets
(immature plantations) have been capitalised during the period, at an average borrowing rate of 13.01% (11.92% in 2016/17).

17.4 THE USEFUL LIVES OF THE ASSETS ARE ESTIMATED AS FOLLOWS:
2018 2017
Years Years
Non-Plantation Assets
Buildings on Freehold Land and Roadway 25, 40 &50 25, 40 & 50
Plant and Machinery 5-20 5-20
Water Supply and Electricity Distribution Scheme 5-25 5-25
Tools, Implements and Furniture and Fittings 2, 4 , 5 &10 2, 4, 5 &10
Transport and Communication Equipment 4 to 12 4 to 12
Unit of Unit of
production production
Clay Mining Land basis basis
Plantation Assets
The Leasehold Rights to JEDB/ SLSPC are Amortised in Equal Amounts Over the Following Years:
Bare Land 53 53
Mature Plantations 30 30
Permanent Land Development Costs 30 30
Buildings 25 25
Plant and Machinery 15 15
Mature Plantation (Re-planting and New Planting)

Mature Plantations (Tea) 33 1/3 33 1/3
Mature Plantations (Rubber) 20 20
Mature Plantations (Coconut) 50 50
Mature Plantations (Cinnamon) 15 15
Mature Plantations (Coffee and Pepper) 4 4
Mature Plantations (Pineapple) 3 3
Mature Plantations (Oil Palm) 20 20
Permanent Land Development Costs 40 40
175
18. LEASEHOLD RIGHT OVER MINING LAND

Group
2018 2017
Rs. Rs.
Cost
Acquisition – 8,000,000
Disposals (8,080,000) –
Accumulated Depreciation
Charge for the Year 3,130,000 –
Disposals (1,666,000) –
Written Down Value 6,536,000 16,080,000
19. INVESTMENT PROPERTY

Group
2018 2017
Rs. Rs.
At the beginning of the year 706,000,000 238,714,000

Prior Year Adjustment – 288,536,000
At the beginning of the Year – as Restated 706,000,000 527,250,000
Transfer from Property Plant and Equipment 459,407,000 –
Depreciation for the period – (690,000)
Change in Fair Value 121,600,000 179,440,000
At the end of the Year 1,287,007,000 706,000,000
LANKA CERAMICS PLC

As at 31st March 2018, the investment property includes land and building at No. 696, 696 1/1, 696 2/1, 696 3/1, 696 4/1,
Kollupitiya Road, Colombo 03 (1R – 1.12 P).
19.1 FAIR VALUE OF INVESTMENT PROPERTY

The fair value of freehold land and buildings were determined by P B Kalugalagedara and Associates an independent
professionally qualified valuer (Valuation report dated 31st March 2018). The basis of valuation is the Direct Capital Comparison
Method using the depreciated value of buildings and current open market value of land.
176
Group
Investor Property Fair Value Measurement Using
Significant Unobservable Inputs
(Level 3)
2018 2017
Rs. Rs.
Date of Valuation 31st March 31st March

Land at Fair Value 740,200,000 617,000,000
Building at Fair Value 87,400,000 89,000,000
Significant Unobservable Input:
Price per Perch 18,000,000 15,000,000
Price per Square Feet 2,000 – 3,900 2,000 – 4,000
Significant increases/(decrease) in estimated price per perch/price per square feet in isolation would result in a significantly
higher/(lower) fair value.
19.2 Rental Income earned from Investment Property by the Group amounted Rs. 36.75 Mn (2017 – Rs. 36.37 Mn).
Direct operating expenses incurred by the Group amounted to Rs. 1.39 Mn (2017 – Rs. 1.86 Mn).
19.3 Rental income receivable under the operating lease agreement of investment property as follows:
Less than Between Over
1 Year 1 Year and 5 Years 5 Years
Rs. Rs. Rs.
2017/18 39,000,000 208,500,000 –

2016/17 36,750,000 147,000,000 73,500,000
20. DUE TO BANKS

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Bank Overdrafts 63,243,199 2,004 4,140,689,804 3,893,509,198

Syndicated Loans and Other Bank Facilities (Note 20.1) – – 21,552,682,279 22,742,879,293
63,243,199 2,004 25,693,372,083 26,636,388,491
20.1 SECURITISED BORROWINGS, SYNDICATED LOANS AND OTHER BANK FACILITIES

As at Loans Interest Repayments As at
01.04.2017 Obtained Recognised Capital Interest 31.03.2018
Syndicated Loans
Syndication 1 201,312,457 – 21,466,592 (70,312,500) (22,267,846) 130,198,703
Syndication 2 2,035,086,564 – 167,222,685 (675,000,000) (168,156,678) 1,359,152,571
Syndication 3 2,883,200,874 – 281,059,796 (660,000,000) (281,989,911) 2,222,270,759
Syndication 4 2,260,744,104 – 300,805,862 (341,250,000) (295,097,287) 1,925,202,679
177
As at Loans Interest Repayments As at

01.04.2017 Obtained Recognised Capital Interest 31.03.2018
Syndication 5 – 1,491,938,469 171,970,123 (100,000,000) (105,471,749) 1,458,436,843

Syndication 6 – 1,984,408,163 3,614,456 – – 1,988,022,619
7,380,343,999 3,476,346,632 946,139,514 (1,846,562,500) (872,983,471) 9,083,284,174
Term Loans
Bank of Ceylon 1 873,948,549 – 63,494,963 (500,000,004) (61,245,775) 376,197,733
Bank of Ceylon 2 4,161,371,590 – 387,215,076 (1,250,000,004) (378,287,671) 2,920,298,991
Commercial Bank 1 1,780,042,506 – 128,480,065 (666,000,000) (129,031,935) 1,113,490,636
Commercial Bank 2 813,720,711 – 75,251,784 (250,000,000) (75,531,678) 563,440,817
Commercial Bank 3 2,003,419,014 – 283,424,760 (333,000,000) (283,517,260) 1,670,326,514
Commercial Bank 4 – 500,000,000 4,410,959 (500,000,000) (4,410,959) –
Commercial Bank 5 – 1,000,000,000 4,997,260 – – 1,004,997,260
Nations Trust Bank 1 402,293,151 – 10,571,849 (400,000,000) (12,865,000) –
Nations Trust Bank 2 1,001,151,109 – 131,430,163 (210,000,000) (131,160,253) 791,421,019
Hatton National Bank 1 1,174,210,873 – 81,282,333 (399,960,000) (83,688,996) 771,844,210
Hatton National Bank 2 1,124,088,617 – 141,406,111 (300,000,000) (140,821,233) 824,673,495
Hatton National Bank 3 – 800,000,000 64,909,726 (140,000,000) (61,302,329) 663,607,397
Union Bank 301,978,703 – 23,946,929 (125,000,004) (23,765,645) 177,159,983
Habib Bank 300,107,260 – 20,216,959 (300,000,000) (20,324,219) –
Public Bank 1 180,286,023 – 18,564,322 (40,000,008) (18,607,785) 140,242,552
Public Bank 2 99,950,142 – 10,659,035 (20,000,004) (10,606,945) 80,002,228
Seylan Bank 945,686,497 – 121,562,066 (250,008,000) (123,543,674) 693,696,889
Standard Chartered Bank 1 200,280,548 – 6,247,671 (200,000,000) (6,528,219) –
Standard Chartered Bank 2 – 250,000,000 15,965,753 (250,000,000) (15,965,753) –
Standard Chartered Bank 3 – 300,000,000 2,958,904 (300,000,000) (2,958,904) –
DFCC Bank – 748,750,000 45,852,725 (78,125,000) (38,479,344) 677,998,381
15,362,535,294 3,598,750,000 1,642,849,413 (6,512,093,024) (1,622,643,577) 12,469,398,105
22,742,879,293 7,075,096,632 2,588,988,927 (8,358,655,524) (2,495,627,048) 21,552,682,279
20.2 CONTRACTUAL MATURITY ANALYSIS OF SYNDICATED LOANS AND OTHER BANK FACILITIES
As at 31st March 2018 Within One Year 1–5 Years Over 5 Years Total
Rs. Rs. Rs. Rs.
Syndicated Loans 2,631,707,700 6,451,576,474 – 9,083,284,174

Term Loans 6,097,049,209 6,372,348,896 – 12,469,398,105
8,728,756,909 12,823,925,370 – 21,552,682,279
178
Rs. Rs. Rs. Rs.
Syndicated Loans 1,787,032,542 5,593,311,458 – 7,380,344,000

Term Loans 5,285,015,068 10,077,520,225 – 15,362,535,293
7,072,047,610 15,670,831,683 – 22,742,879,293
Group don’t have pre-termination options for Syndicated Loans and Other Bank Facilities.
21. DUE TO CUSTOMERS

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Fixed Deposits – – 69,888,343,402 57,888,811,359

Certificates of Deposit – – 100,771,680 153,987,192
Saving Deposit – – 2,956,895,714 2,359,155,975
– – 72,946,010,796 60,401,954,526
21.1 CONTRACTUAL MATURITY ANALYSIS OF CUSTOMER DEPOSITS

Rs. Rs. Rs. Rs.
Fixed Deposits 54,641,273,156 15,247,070,246 – 69,888,343,402

Certificates of Deposit 100,771,680 – – 100,771,680
Savings Deposits 2,955,294,701 1,601,013 – 2,956,895,714
57,697,339,537 15,248,671,259 – 72,946,010,796
Rs. Rs. Rs. Rs.
Fixed Deposits 42,553,415,754 15,335,395,605 – 57,888,811,359

Certificates of Deposit 153,987,192 – – 153,987,192
Savings Deposits 2,359,155,975 – – 2,359,155,975
45,066,558,921 15,335,395,605 – 60,401,954,526
Group have raised fixed deposits with a pre-termination option to the customers, so fixed deposit pre-terminations may cause
actual maturities to differ from contractual maturities.
179
22. INTEREST-BEARING LOANS AND OTHER BORROWINGS

Company
2018 2017
Rs. Rs.
Short-Term-Loan 1,000,000,000 400,000,000

1,000,000,000 400,000,000
Group
2018 2017
Amount Amount Total Amount Amount Total
Repayable Repayable Repayable Repayable
within 1 Year after 1 Year within 1 Year after 1 Year
Finance Leases (Note 22.1) 20,595,967 96,392,942 116,988,909 16,764,887 112,968,779 129,733,666
Bank Loans/Term loans 2,521,691,316 8,132,421,557 10,654,112,873 2,136,517,302 6,730,894,575 8,867,411,877
Short Term Loan 5,937,923,960 – 5,937,923,960 3,755,494,533 – 3,755,494,533
Unsecured Debentures (Note 22.3) 2,163,728,703 2,989,102,808 5,152,831,511 – 2,044,216,323 2,044,216,323
Others 739,530,083 – 739,530,083 1,358,310,693 – 1,358,310,693
11,383,470,029 11,217,917,307 22,601,387,336 7,267,087,416 8,888,079,677 16,155,167,093
22.1 FINANCE LEASES

2018 2017
Rs. Rs.
JEDB/SLSPC Estates (22.1.1) 146,055,000 146,386,000

Other Finance Lease Creditors (22.1.2) 30,149,222 49,782,774
Gross Liability 176,204,222 196,168,774
Exchange Rate Difference 310,777 –
Finance Charges Allocated to Future Periods (59,524,091) (66,435,108)
Net Liability 116,990,908 129,733,666
Payable within 1 Year 20,595,967 16,764,887

Payable within 1 Year before 5 Years 96,392,942 112,968,779
Total 116,988,909 129,733,666
22.1.1 JEDB/SLSPC ESTATES

2018 2017
Rs. Rs.

New Leases Obtained during the Year 14,361,000 13,681,000
Repayments during the Year (14,692,000) (18,909,000)
180
22.1.1.1 The lease rentals have been amended with effect from 22nd June 1996 to an amount substantially higher than the
previous nominal lease rental of Rs. 500 per estate per annum. The basic rental payable under the revised basis is Rs. 5.228 Mn
per annum. This amount is to be inflated annually by the Gross Domestic Product (GDP) deflater in the form of contingent rent.
This lease agreement was further amended on 10th June 2005, freezing the annual lease rental at Rs. 7.472 Mn for a period of
six years commencing from 22nd June 2002. Hence, the GDP Deflator adjustment will be frozen at Rs. 2.244 Mn per annum until
21st June 2008. Accordingly, the Financial Statements have been adjusted, in order to reflect the future net liability in the
following manner:
Future liability on the revised annual lease payment of Rs. 7.472 Mn will continue until 21st June 2008, and thereafter from
22nd June 2008, annual lease payment will remain at Rs. 5.228 Mn, until 21st June 2045. The Net Present Value of this liability
at a 4% discounting rate would result in a liability of Rs. 86.46 Mn.
The net present value as at date is represented by –

2018
Rs.
Gross Liability – Overdue Rental/GDP Deflator (Contingent Rental) 4.90

– 27 Years @ Rs. 5.228 Mn per Annum 141.16
146.05
Less: Interest in Suspense (59.59)
Net Present Value 86.46
The contingent rental charged during the current year to Statement of Profit or Loss amounted to Rs. 14.361 Mn and the
gross liability to make contingent rentals for the remaining 27 years of lease term at the current rate would be estimated to
Rs. 387.747 Mn as at 31st March 2018.
22.1.2 OTHER FINANCIAL LEASE CREDITORS

2018 2017
Rs. Rs.

New Leases Obtained during the Year – 14,029,055
Repayments during the Year (19,633,552) (23,522,777)
Transfer to Discontinued Operations – (851,390)
181
22.2 DETAILS OF THE LONG TERM LOANS
Lender Approved Facility Repayment Terms Security

Rs.
Vallibel One PLC

Standard Chartered Bank Rs. 1,000 Mn One Year (To be paid bi–annually in Mortgage of 5.1 Mn shares of
equal instalments of Rs. 500 Mn) Sampath Bank PC
Royal Ceramics Lanka PLC

Commercial Bank of Ceylon PLC Rs. 175 Mn 48 equal monthly instalments 174.9 Mn in mortgage over
properties at Baddegedaramulla,
Meegoda, No. 101, Nawala Road,
Nawala and No 472, Highlevel
Road, Kottawa
Commercial Bank of Ceylon PLC Rs. 24 Mn 60 equal monthly instalments Primary Mortgage bond for 24 Mn
over the two LP Gas Tanks
Corporate guarantee of Royal
Porcelain (Pvt) Ltd
Commercial Bank of Ceylon PLC Rs. 3.0 Bn 8 years-(first 48 monthly instalment Triparty agreement between the
of Rs. 20 Mn each and subsequent Company/custodian company and
48 monthly instalments of bank over a portfolio of 23,009,036
Rs. 42.5 Mn each shares of Lanka Ceramics PLC and
7,545,422 shares of LB Finance PLC
(Market value as at 15/09/2014 –
Rs. 3,905 Mn)
Commercial Bank of Ceylon PLC Rs. 300 Mn 60 equal monthly instalments Primary mortgage bond over
with six months grace period Land and Building at No. 20,
commencing from April-2014 R A De Mel Mawatha, Colombo 03.
Commercial Bank of Ceylon PLC Rs. 109 Mn 59 equal monthly instalments Corporate guarantee of Royal
of Rs. 1,816,700 each and final Porcelain (Pvt) Ltd.
instalment of Rs. 1,814,700
Commercial Bank of Ceylon PLC Rs. 95 Mn 59 equal monthly instalments Corporate guarantee of Royal
of Rs. 1,585,000 each and final Porcelain (Pvt) Ltd.
Commercial Bank of Ceylon PLC Rs. 200 Mn 59 equal monthly instalments of Additional mortgage bond over the
Rs. 3,335,000 and a final instalment property at Baddegedaramulla,
of Rs. 3,235,000 after a grace Meegoda to be executed
period of 6 months
Commercial Bank of Ceylon PLC Rs. 100 Mn 59 equal monthly instalments of Additional concurrent mortgage
Rs. 1,667,000 and a final instalment bond with HNB bank PLC for
of Rs. 1,647,000 after a grace Rs. 100 Mn over the factory property
period of 6 months at Eheliyagoda to be executed
by the Company. (HNB interet –
Rs. 350.3m our total interest –
AUD 2,407,000/- or equivalent in
LKR and Rs. 100 Mn
182

Rs.
Commercial Bank of Ceylon PLC Rs. 150 Mn 60 equal monthly instalments of Corporate guarantee of Royal
Rs. 2,500,000 after a grace period Porcelain (Pvt) Ltd. Additional
of 6 months mortgage bond for Rs. 110,000,000
Mn over the property bearing
assessment No. 20, R.A De
Mel Mawatha, Kollupitiya to be
executed.
Commercial Bank of Ceylon PLC Rs. 150 Mn 60 equal monthly instalments of Floating primary mortgage bond for
Rs. 2,500,000 after a grace period Rs. 150 Mn to be executed over the
of 6 months property bearing assessment
No. 106, 106/1/1, 106/2/1, 106/3/1,
Galle Road, Dehiwala.
Commercial Bank of Ceylon PLC AUD 2,407,000 59 equal monthly instalments of Floating Primary Concurrent
AUD. 40,100 each and the final mortgage for AUD 2407000 over the
instalment of AUD 41,100 property at Eheliyagoda owned by
the Company to be executed –
(HNB’s interest Rs. 350.3 M)
Commercial Bank of Ceylon PLC Rs. 500 Mn 59 equal monthly instalments of Primary mortgage bond over
Rs. 8,334,000 after a grace period Sacmi machine and other related
of 6 months machinery to be executed.
Commercial Bank of Ceylon PLC Rs.106 Mn 59 equal monthly instalments Simple deposit of 10,633,974 shares
of Rs. 1,766,000 and the final of Swisstek Aluminium Ltd.
Corporate guarantee of Royal
Porcelain (Pvt) Ltd.
Commercial Bank of Ceylon PLC Rs.100 Mn 59 equal monthly instalments Tertiary mortgage bond for
of Rs. 1,666,000 and the final Rs. 100 Mn executed over the
instalment of Rs. 1,706,000 property at R A De Mel Mawatha,
Colombo 03.
DFCC Bank PLC Rs. 292 Mn 60 equal monthly instalment after Land and building bearing
a grace period of 12 months assessment No. 223, Nawala
Road,Narahenpita containing
in extent Ao-Ro-Po5.4 of Royal
Ceramics Lanka PLC (Plan no 3534)
Hatton National Bank PLC Rs. 100 Mn 59 equal monthly instalments Existing primary mortgage bond For
of Rs. 1.67 Mn and the final Rs. 350.3 Mn over factory premises
instalment of Rs. 1.47 Mn at Eheliyagoda and plant and
machinery and everything standing
thereon.
Hatton National Bank PLC Rs. 50 Mn 59 equal monthly instalments of Existing primary mortgage bond For
Rs. 833,400 and a final instalment Rs. 350.3 Mn over factory premises
of Rs. 770,400 after a grace period at Eheliyagoda and plant and
of 6 months machinery and everything standing
thereon.
Hatton National Bank PLC Rs. 23 Mn 59 equal monthly instalments of Corporate guarantee of Royal
Rs. 383,400 and a final instalment Porcelain (Pvt) Ltd.
of Rs. 379,400 after a grace period
of 6 months
183

Rs.
Hatton National Bank PLC Rs. 07 Mn 59 equal monthly instalments Corporate guarantee of
of Rs. 116,700 and a final Royal Porcelain (Pvt) Ltd.
instalment of Rs. 114,700 after
a grace period of 6 months
Hatton National Bank PLC Rs. 14 Mn 59 equal monthly instalments Corporate guarantee of Royal
of Rs. 233,330 and a final Porcelain (Pvt) Ltd.
instalment of Rs. 233,520
Hatton National Bank PLC Rs. 28.5 Mn 60 equal monthly instalments Corporate Guarantee from RPL
of Rs. 475,000
of Rs. 91,600 and a final instalment
of Rs. 95,600
of Rs. 215,000
Hatton National Bank PLC Rs. 130 Mn 59 equal monthly instalments Tripartite agreement between Royal
of Rs. 2.15 Mn each and a final Ceramics Lanka PLC,HNB and
instalment of Rs. 3.15 Mn share brokering company along with
irrevocable power of attorney over
1,000,000 Nos company shares of
Lanka Ceramics PLC
Hatton National Bank PLC Rs. 500 Mn 47 equal monthly instalments Existing primary mortgage bond For
of Rs. 10,400,000 and a final Rs. 350.3 Mn over factory premises
instalment of Rs. 11,200,000 at Eheliyagoda and plant and
machinery and everything standing
thereon (including the existing
building or the buildings which are
to be constructed in the future.
Negative pledge over machinery for
Rs. 233 Mn to be obtained.
Royal Porcelain (Pvt) Ltd.

DFCC Bank PLC Rs. 150 Mn 60 equal monthly instalments with Corporate Guarantee from Royal
Eighteen months grace period Ceramics Lanka PLC
commencing from Oct-2012
Pari-Pasu Concurrent Registered
Primary Floating Mortgage Bond
(between HNB & DFCC) over the
factory premises of RPL in Horana
together with existing machinery
therein.
Commercial Bank of Ceylon PLC Rs. 56 Mn 59 equal monthly instalments Mortgage over line Sorting
with three months grace period Appetizer Machine.
commencing from Dec-2012
Corporate Guarantee from Royal
Ceramics Lanka PLC
184

Rs.
Commercial Bank of Ceylon PLC Rs. 67 Mn 59 equal monthly instalments Mortgage over Tile Printing
with three months grace period Machine.
commencing from February 2013
Corporate Guarantee from
Commercial Bank of Ceylon PLC Rs.48 Mn 60 equal monthly instalments Mortgage over Glazed
with six months grace period Polishing Line.
commencing from April 2014
Commercial Bank of Ceylon PLC Rs. 67 Mn 60 equal monthly instalments Mortgage over Digital Ceramic
with six months grace period Printing Machine.
commencing from June 2014
Commercial Bank of Ceylon PLC Rs. 200 Mn 60 equal monthly instalments Mortgage over warehouse premises
with six months grace period at Meegoda owned by Rocell
commencing from May 2014 Bathware Ltd.
Commercial Bank of Ceylon PLC Rs. 48.56 Mn 60 equal monthly instalments Mortgage over 4 units 4 wheel
commencing from April 2014 Forklifts and 4 units reach trucks.
Commercial Bank of Ceylon PLC Rs. 53 Mn 60 equal monthly instalments Mortgage over the Nano coating
commencing from March 2014 line , Unloading Polishing Machine,
Batching and mill Feeding Machine
and Air Compressor.
Commercial Bank of Ceylon PLC Rs. 37 Mn 59 equal monthly instalments of Primary Mortgage over the
Rs. 615,000 and a final instalment Automatic easy Line Sorting Line.
of Rs. 715,000 following the grace
period of 6 months
Commercial Bank of Ceylon PLC Rs. 28 Mn 59 equal monthly instalments of Corporate Guarantee – RCL
Rs. 466,700 and a final instalment
of Rs. 464,700 commencing from
25th August 2015
Commercial Bank of Ceylon PLC Rs.114 Mn 59 equal monthly instalments Primary mortgage bond over
Land at Marawila to be executed.
Hatton National Bank PLC Rs. 300 Mn 60 equal monthly instalments of Rs. Corporate Guarantee – RCL
5,000,000 plus interest commencing
after a grace period of six months.
Hatton National Bank PLC Rs. 200 Mn 59 equal monthly instalments of Corporate Guarantee – RCL
Rs. 3,33Mn each and final
instalment of Rs. 3.53 Mn plus
interest commencing after a grace
period of six months.
Hatton National Bank PLC Rs. 90 Mn 59 equal monthly instalments Negative Pledge Over Machinery to
be Purchased for Rs.90 Mn
185

Rs.
Rocell Bathware Limited

Hatton National Bank PLC Rs.160 Mn 54 equal monthly instalments Primary Mortgage bond for
Rs. 250 Mn over leasehold land and
building and machinery (excluding
Unimack) at Templeburg Industrial
Estate, Panagoda to be executed.
Corporate guarantee from Royal
Ceramics Lanka PLC
Hatton National Bank PLC Rs.70 Mn 54 instalment with grace period Concurrent Mortgage bond for
of 06 months Rs. 250 Mn over leasehold land and
Estate, Panagoda.
Corporate guarantee from
Hatton National Bank PLC Rs. 20 Mn 64 equal monthly instalment Concurrent Mortgage bond for
Rs. 250 Mn over leasehold land and
Estate, Panagoda.
Corporate guarantee of RCL
Commercial Bank of Ceylon PLC Rs. 25 Mn 53 equal monthly instalment of Primary Mortgage bond over Water
Rs. 462,960 and a final instalment closet casting machine for 25 Mn
of Rs. 463,120
Commercial Bank of Ceylon PLC Rs. 210 Mn 60 equal monthly instalment of Primary Mortgage bond over the
Rs. 3,500,000 with a grace period shuttle Kiln burner machine for
of six months Rs. 210 Mn
Commercial Bank of Ceylon PLC Rs. 57.7 Mn 59 equal monthly instalment of Primary Mortgage bond over Water
Rs. 961,600 and a final instalment Closet casting Machine,stock tank
of Rs. 965,600 propeller dissolver and modification
to the existing glazing cell for
Rs. 57.7 Mn
Commercial Bank of Ceylon PLC Rs. 70 Mn 59 equal monthly instalment of Corporate Guarantee – RCL
Rs. 1,165,000 and a final instalment
of Rs. 1,265,000
Commercial Bank of Ceylon PLC Rs.300 Mn 60 equal monthly instalment of Primary Mortgage bond over Water
Rs. 5,000,000 with a grace period Closet Machine,water treatment
of 6 months plant,Central UPS system for
240 Mn to be executed.
Corporate guarantee of RCL
Pan Asia Bank Rs. 200 Mn 60 equal monthly instalment with Mortgage bond for Rs. 400 Mn of
a grace period of six months force sale value of machinery as per
bank's special valuation
Peoples Bank Rs. 160 Mn 59 equal monthly instalments of Corporate Guarantee – RCL
Rs. 2.7 Mn each and final instalment
of Rs. 7 Mn after a grace period of
six months.
186

Rs.
Rocell (Pty) Ltd.

Commercial Bank of Ceylon PLC AUD 1,175,000 60 equal monthly instalment Corporate Guarantee of Royal
Ceramics Lanka PLC
Lanka Ceramic PLC

Hatton National Bank PLC Rs. 500 Mn 08 annual instalments Mortgage for Rs. 500 Mn over Lanka
Walltiles PLC shares held monthly in
the custodial account with HNB.
Lanka Walltiles PLC

Hatton National Bank PLC Rs. 300 Mn 60 monthly instalments Primary mortgage bond for
Rs. 390 Mn over the project assets
comprising land, building and
machinery at Meepe.
Hatton National Bank PLC USD 1.8 Mn 60 monthly instalments Secondary mortgage bond for
USD 1.8 Mn over the project assets
comprising land, building and
machinery at Meepe.
Commercial Bank of Ceylon PLC Rs. 584 Mn 60 monthly instalments Tripartite agreement for
Rs. 392.8 Mn between Bank,
Lanka Walltiles PLC and the
custodian (Pan Asia Bank) over
7,210,000 share of Lanka Tiles PLC
Commercial Bank of Ceylon PLC Rs. 80 Mn 60 monthly instalments Primary Mortgage bond for
Rs. 80 Mn over the ceramic printer
DFCC Bank Rs. 200 Mn 60 monthly instalments Primary mortgage over movable
machinery at Meepe.
Lanka Tiles PLC

DFCC Bank Rs. 150 Mn 48 monthly instalments A primary mortgage over land,
building and plant and machinery
of Lanka Floortiles PLC at Ranala
amounting to Rs. 300 Mn
DFCC Bank Rs. 287.712 Mn 85 monthly instalments A primary mortgage over land,
(USD 3 Mn) building and plant and machinery
187

Rs.
Uni-Dil Packaging Limited

HSBC USD 310,000 US$ 7,380.95 monthly instalments Mortgage bond for USD 310,000
over Moveable machinery.
HSBC USD 310,000 US$ 7,380.95 monthly instalments Mortgage bond for USD 310,000
over Moveable machinery & vehicle.
Standard Chartered Bank USD 2500 Monthly instalment Mortgage bond for USD 310,000
over Moveable machinery & Vehicle.
Horana Plantations PLC

Hatton National Bank PLC 550 Mn 72 monthly instalments Primary mortgage for 150 Mn over
the leasehold rights of Frocester
Estate.
Indian Bank Rs. 75 Mn 54 monthly instalments Primary mortgage over leasehold
rights of Tillicoultry Estate.
Hatton National Bank PLC Rs. 100 Mn 60 monthly instalments Primary mortgage over leasehold
rights of Alton, Bambarakelly, Eildon
Hall and Gouravilla.
Hatton National Bank PLC Rs. 130.114 Mn 60 monthly instalments Primary mortgage over leasehold
rights of Bambarakelly Estate.
Sri Lanka Tea Board Rs. 33 Mn 48 monthly instalments
Industry Distress Rs. 46.935 Mn
Financing Facility
Replanting of Main Crops Rs. 100 Mn Primary Floating Mortgage for
Rs.120.00 Mn, over the leasehold
rights land and buildings of
Stockholm Estate.
Swisstek (Ceylon) PLC

Bank of Ceylon Rs. 25.817 Mn + 58 monthly instalments Mortgage over immovable property
31.736 Mn at Balummahara, Imbulgoda.
Bank of Ceylon Rs. 170 Mn 54 monthly instalments Mortgage over immovable property
at Balummahara, Imbulgoda.
Commercial Bank Rs. 35 Mn 60 monthly instalments Mortgage over immovable property
at Balummahara, Imbulgoda.
Swisstek Aluminium Limited

DFCC Bank Rs. 290 Mn 78 monthly instalments Primary mortgage over land and
building and machinery of
LKR 500 Mn
Rs. 50 Mn 60 monthly instalments
Rs. 193.032 Mn 60 monthly instalments Movable Machinery.
Hatton National Bank PLC Rs. 80 Mn 48 monthly instalments Simple Receipt
188

Rs.
Vallibel Plantation
Management Limited
Commercial Bank of Ceylon PLC Rs. 144.79 Mn 60 monthly instalments 12,750,000 shares of Horana
Plantation PLC
LB Finance PLC
Syndicated Loans
Syndication 1 Rs. 562.5 Mn 96 months Mortgage over Land and Building.
Syndication 2 Rs. 2,250 Mn 48 months Mortgage over Lease,
Hire Purchase receivables.
Term Loans
Bank of Ceylon 1 Rs. 2,000 Mn 48 months Mortgage over Hire Purchase
receivables.
Bank of Ceylon 2 Rs. 5,000 Mn 48 months Mortgage over Lease,
Commercial Bank 1 Rs. 2,000 Mn 60 months Mortgage over Hire Purchase
receivables.
Commercial Bank 2 Rs. 1,000 Mn 60 months Mortgage over Lease,
Commercial Bank 3 Rs. 2,000 Mn 60 months Mortgage over Lease,
Commercial Bank 4 Rs. 500 Mn 01 month
Commercial Bank 5 Rs. 1,000 Mn 01 month
Nations Trust Bank 1 Rs. 400 Mn 36 months Mortgage over Hire Purchase
receivables.
Nations Trust Bank 2 Rs. 1,000 Mn 36 months Mortgage over Lease,
Hatton National Bank 1 Rs. 2,000 Mn 60 months Mortgage over Hire Purchase
receivables.
Hatton National Bank 2 Rs. 1,200 Mn 48 months Mortgage over Lease,
Hatton National Bank 3 Rs. 800 Mn 40 months Mortgage over Lease,
Union Bank Rs. 500 Mn 48 months Mortgage over Lease,
Habib Bank Rs. 300 Mn 12 months Mortgage over Lease,
189

Rs.
Public Bank 1 Rs. 200 Mn 60 months Mortgage over Lease,

Hire Purchase receivables
Public Bank 2 Rs. 100 Mn 60 months Mortgage over Lease,
Seylan Bank Rs. 1,000 Mn 48 months Mortgage over Lease,
Standard Chartered Bank 1 Rs. 200 Mn 03 months Mortgage over Lease,
DFCC Rs. 750 Mn 48 months Promissory Note
22.3 DEBT INSTRUMENTS ISSUED AND OTHER BORROWED FUNDS

2018 2017
Rs. Rs.
Unsecured Debentures (Note 22.3.1) 5,152,831,507 2,044,216,323

5,152,831,507 2,044,216,323
22.3.1 UNSECURED DEBENTURES

The terms and features of Unsecured Redeemable Subordinated Debentures are as follows:
Category Interest Payable Features Amortised Cost Face Value Interest Rate Issued Date Maturity Date
Rs. Rs.
Type A Monthly Listed 639,496,966 640,140,000 14.00% p.a. 29.11.13 29.11.18

Type B Biannually Listed 783,288,080 757,010,000 14.50% p.a. 29.11.13 29.11.18
Type C Annually Listed 624,519,219 602,850,000 15.00% p.a. 29.11.13 29.11.18
Type A Biannually Listed 1,034,166,545 1,000,000,000 12.75% p.a. 11.12.17 11.12.22
Type B Biannually Listed 2,071,360,697 2,000,000,000 13.25% p.a. 11.12.17 11.12.22
Total 5,152,831,507 5,000,000,000
23. TRADE AND OTHER PAYABLES

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Trade and Other Payables 50,000 – 3,805,712,094 3,393,650,100

Accrued Expenses 2,701,150 3,478,135 1,578,227,049 1,555,375,554
Other Payable 3,255,719 5,327,290 5,163,049 5,327,294
6,006,869 8,855,425 5,389,102,192 4,954,352,948
190
24. OTHER FINANCIAL LIABILITIES

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Insurance Premium Payable – – 632,727,478 555,153,380

Unclaimed Balances – – 529,474,540 549,243,363
Advances collected from Customers – – 473,759,474 731,464,352
Sundry Creditors – – 97,672,430 78,427,352
Deferred Income and Capital Grants – – 151,532,000 153,189,000
Others – – 307,304,480 336,465,203
– – 2,192,470,402 2,403,942,650
25. OTHER NON–FINANCIAL LIABILITIES

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Provisions – – 667,097,356 516,347,905

Others – – 186,067,672 75,645,690
– – 853,165,028 591,993,595
26. DIVIDENDS PAYABLE

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Unclaimed Dividend 9,455,593 7,647,865 208,562,933 113,083,111

9,455,593 7,647,865 208,562,933 113,083,111
27. EMPLOYEE BENEFIT LIABILITIES

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Balance at the beginning of the Year 3,808,881 3,416,899 1,211,122,077 1,192,535,325

Amount Charged for the Year 1,118,908 1,048,428 126,431,325 104,960,524
Interest Cost 457,066 341,690 138,842,326 125,388,250
Actuarial Gain/Loss 590,936 (690,136) 154,280,242 (62,214,539)
(Payments)/Transfers Made during the Year – (308,000) (151,969,453) (149,547,483)
Balance at the end of the Year 5,975,791 3,808,881 1,478,706,517 1,211,122,077
191
An actuarial valuation of the gratuity of subsidiary companies was carried out as at 31st March 2018 and 2017 by a firm of
professional actuaries. The valuation method used by the actuary to value the Fund is the "Projected Unit Credit Method",
recommended by LKAS 19.
2018 2017
Actuarial Assumptions
Discount Rate (%) 10-13 10-13
Future Salary Increase (%) 10-12.5 10-12.5
Staff Turnover (%) 8-25 8-25
Retirement Age (Years) 55-60 55-60
28. STATED CAPITAL

2018 2017
Number of Number of
Voting Shares Rs. Voting Shares Rs.
Balance as at the beginning of the Year 1,086,559,353 27,163,983,720 1,086,559,353 27,163,983,720

Balance as at the end of the Year 1,086,559,353 27,163,983,720 1,086,559,353 27,163,983,720
29. RESERVES
29.1 RESERVES – COMPANY

Retained Available-for- Total Retained Available-for- Total
Profits/(Losses) Sale Reserve Profits/(Losses) Sale Reserve
2018 2018 2018 2017 2017 2017
At the beginning of the Year 1,459,286,188 400,218,207 1,859,504,395 762,296,122 (351,118,193) 411,177,929
Profit for the Year 1,154,849,171 – 1,154,849,171 1,239,772,844 – 1,239,772,844
Other Comprehensive Income (425,474) 1,567,952,949 1,567,527,475 496,898 751,336,400 751,833,298
Reclassification of AFS Loss to Profit or Loss – 147,163,699 147,163,699 – – –
Dividend Paid (543,279,677) – (543,279,677) (543,279,677) – (543,279,677)
At the end of the Year 2,070,430,209 2,115,334,855 4,185,765,063 1,459,286,188 400,218,207 1,859,504,394
192
29.2 RESERVES – GROUP

Capital Reserves Other Component of Equity
Treasury Reserve Available for Sale Foreign Currency Revaluation
Shares Fund Reserve Translation Reserve
Rs. Rs. Rs. Rs. Rs.
Balance as at 31st March 2016 (44,111,716) 1,433,306,024 (996,971,504) 6,057,273 1,143,873,117
Prior Year Adjustment – – – – –

Balance as at 1st April 2016 (Restated) (44,111,716) 1,433,306,024 (996,971,504) 6,057,273 1,143,873,117
Profit for the Year – – – – –

Realisation of Revaluation Reserve – Transfer in – – – – –
Realisation of Actuarial loss – Transfer in – – – – –
Share of other comprehensive income of
equity accounted investees – – 23,693,446 (261,414) –
by the Investment in Associate to Retained Earnings – – 654,012,009 (5,543,745) –
Realisation of Revaluation Reserve – Transfer out – – – – (202,635,276)
Realisation of Actuarial Loss – Transfer out – – – – –
Revaluation – – – – 1,255,448,944
Exchange difference on translation of foreign operations – – – 1,545,930 –
Net Gain/(Loss) on Available for sale – – 733,756,196 – –
Actuarial Gain or loss – – – – –
Total Other Comprehensive Income – – 1,411,461,651 (4,259,229) 1,052,813,668
Dividend Write Back – – – – –

Transfer – 783,640,862 – – –
Effect of Change in Holding – – – – –
Dividend Paid – – – – –
Balance as at 31st March 2017 (Restated) (44,111,716) 2,216,946,886 414,490,147 1,798,044 2,196,686,785
193
Revenue Reserve
General Retained Actuarial Hedge Reserves
Reserve Earnings Gain/(Loss) Reserve
Reserve
Rs. Rs. Rs. Rs. Rs.
578,449,249 8,839,684,930 (32,983,859) (125,718) 10,927,177,795
– 129,656,654 – – 129,656,654
578,449,249 8,969,341,584 (32,983,859) (125,718) 11,056,834,450
– 640,203,634 – – 640,203,634
– 202,635,276 – – 202,635,276
– (39,734,253) – – (39,734,253)
– – – – 23,432,032
– – – 125,718 648,593,981
– – – (202,635,276)
– – 39,734,253 – 39,734,253
– – – – 1,255,448,944
– – – – 1,545,930
– – – – 733,756,196
– – 5,827,378 – 5,827,378
– – 45,561,631 125,718 2,505,703,438
– 15,010,056 – – 15,010,056
– (783,640,862) – – –
– 580,215,569 – – 580,215,569
– (543,279,677) – – (543,279,677)
578,449,249 9,040,751,328 12,577,772 – 14,417,588,493
194
Capital Reserves Other Component of Equity

Treasury Reserve Available for Sale Foreign Currency Revaluation
Shares Fund Reserve Translation Reserve
Rs. Rs. Rs. Rs. Rs.
Balance as at 1st April 2017 (44,111,716) 2,216,946,886 414,490,147 1,798,044 2,196,686,785
Profit for the Year – – – – –

Through Retained Earning – – 147,163,699 – –
Revaluation – – – – 1,655,026,911
Exchange difference on Translation of Foreign Operations – – 5,275,295 –
Net Gain/(Loss) on Available-for-sale – – 1,573,017,461 – –
Actuarial Gain or Loss – – – – –
Total Other Comprehensive Income – – 1,720,181,160 5,275,295 1,655,026,911
Dividend Write back of Unclaimed Dividend – – – – –

Transfer – 850,144,268 – – –
Acquisition of NCI – – – – –
Dividend Paid – – – – –
Balance as at 31 March 2018 (44,111,716) 3,067,091,154 2,134,671,307 7,073,339 3,851,713,696

195
Revenue Reserve
General Retained Actuarial Hedge Reserves
Reserve Earnings Gain/(Loss) Reserve
Reserve
Rs. Rs. Rs. Rs. Rs.
578,449,249 9,040,751,328 12,577,772 – 14,417,588,494
– 3,609,109,440 – – 3,609,109,440
– – – – 147,163,699
– – – – 1,655,026,911
– – – – 5,275,295
– – – – 1,573,017,461
– – (70,241,785) – (70,241,785)
– – (70,241,785) – 3,310,241,581
– 4,231,479 – – 4,231,479
– (850,144,268) – – –
– (71,421,836) – – (71,421,836)
– (542,818,972) – – (542,818,972)
578,449,249 11,189,707,171 (57,664,013) – 20,726,930,186
196
30. PRINCIPLE SUBSIDIARIES WITH NON-CONTROLLING INTERESTS

Summarised financial information in respect of Vallibel One PLC’s subsidiaries that have non-controlling interest, reflecting
amounts before inter-company eliminations, is set out below:
Royal Ceramics L B Finance PLC Delmege Ltd.
Lanka PLC
Rs. Rs. Rs.
Non-Controlling Interests in % 44.04 33.66 37.25

Accumulated Balance of Non-Controlling Interest 8,894,286,957 458,951 204,940,841
Summarised Statement of Profit or Loss for the Year ended 31st March 2018
Revenue 29,090,447,197 23,395,887,243 7,028,582,750
Cost of Sales (18,157,798,701) (11,498,459,769) (5,197,320,910)

Administrative Expenses (1,595,010,141) (5,068,165,350) (642,104,448)
Finance Cost (1,363,379,741) – (549,334,812)
Finance Income 131,574,147 – 84,349,605
Profit before Tax 5,373,095,327 6,472,021,083 52,248,478
Income Tax (1,501,195,990) (2,226,968,696) (50,782,429)
Profit after Tax 3,871,899,337 4,245,052,387 1,466,049
Loss from Discontinuing Operations (20,848,383) – (19,824,760)
Profit from Continuing Operations
Attributable to Owners 2,880,385,325 4,245,068,898 (356,053)
Attributable to Non-Controlling Interests 970,665,629 (17,012) (18,002,658)
Total Comprehensive Income 4,342,626,125 4,223,938,871 (1,190,879,222)
Dividend paid to Non-Controlling Interests (414,913,226) – –
Summarised Statement of Financial Position as at 31st March 2018

Current Assets 17,812,780,827 13,704,773,753 4,548,602,141
Non-Current Assets 35,353,800,106 107,118,672,562 4,522,385,796
Current Liabilities 13,592,943,967 4,537,630,998 3,552,391,903
Non-Current Liabilities 10,357,913,087 100,936,880,358 3,255,893,394
Total Equity Attributable to:
Equity Holders of Parent 20,321,436,922 10,234,439,756 2,106,973,892
Non-Controlling Interests 8,894,286,957 458,951 204,940,841
Summarised Statements of cash flows for the year ended 31st March 2018
Operating Cash Flows 1,610,922,143 3,088,391,407 198,291,616
Investing Cash Flows (3,531,607,807) (777,004,794) (22,375,691)
Financing Cash Flows 724,453,205 533,735,544 382,519,949
Net Increase/(Decrease) in Cash and Cash Equivalents (1,196,232,459) 2,845,122,157 558,435,874
197
31. CASH AND CASH EQUIVALENTS IN THE STATEMENT OF CASH FLOWS

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Cash in Hand and at Bank 9,838,289 399,210,107 3,913,838,700 3,005,721,808

Short-Term Bank Deposits – – 251,439,225 1,310,270,325
Treasury Bill Repurchase Agreement – – 3,219,306,265 1,062,764,315
9,838,289 399,210,107 7,384,584,190 5,378,756,448
Bank Overdrafts (Note 22) (63,243,199) (2,004) (4,140,689,804) (3,893,509,198)
Cash and Cash Equivalents at the end of the Period (53,404,910) 399,208,103 3,243,894,386 1,485,247,250
32. INCOME
Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Summary
Manufacturing Sector – – 29,054,864,879 26,412,846,431
Financial Services Sector – – 24,900,187,781 19,119,127,665
Sale of Goods – – 6,486,930,290 6,941,591,938
Rendering of Services – – 526,878,763 462,835,513
– – 60,968,861,713 52,936,401,547

33. DIVIDEND INCOME

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Income from Investment in Related Parties 1,221,111,519 2,020,304,582 18,431,322 472,890,776

Income from Other Investments – – – 435,038
1,221,111,519 2,020,304,582 18,431,322 473,325,814

198
34. OTHER OPERATING INCOME

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Profit on Sale of Property, Plant and Equipment – 2,856,667 17,676,580 20,861,037

Real Estate Income (net of cost) – – 3,290,961 200,102,541
Commission Income – – 27,938,375 26,839,810
Reversal of Debtors Impairment – – – 5,623,000
Rent-income – – 36,750,000 25,875,000
Change in Fair Value of Consumable Biological Assets – – 44,995,000 89,187,000
Change in fair value of Investment Property – – 121,600,000 179,440,000
Amortisation of Capital and Revenue Grants – – 6,274,000 4,760,000
Sundry Income 157,613,991 45,359,221 315,028,855 169,237,875
Profit on Disposal of Investment – – 1,453,491 –
157,613,991 48,215,887 575,007,262 721,926,263
35. FINANCE COST

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Interest on Loans 1,963,001 10,715,097 754,558,744 677,702,693

Interest on Bank Overdrafts 220,118 3,471,792 1,194,423,647 975,905,517
Interest on Finance Leases – – 17,151,180 16,713,039
RTS International and Trade Card Charged – – 6,932,402 739,571
Net Loss on Financial Assets at Fair Value Through Profit or Loss – – 1,510,083 230,831
Less: Capitalisation of Borrowing Costs on Immature Plantations – – (59,531,000) (60,013,000)
2,183,119 14,186,890 1,915,045,056 1,611,278,651
36. FINANCE INCOME

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Exchange Gain 84,639 1,235,250 41,023,252 12,363,217

Interest Income 159,572,904 238,110,503 324,912,059 438,346,810
Appreciation in Market Value of Quoted Shares – – 10,671,699 1,483,271
Realised Gain on Disposal of AFS Investment 5,368,162 3,413,677 5,368,162 3,413,677
165,025,705 242,759,430 381,975,173 455,606,975
199
37. INCOME TAX EXPENSE

The major components of income tax expense for the year ended 31st March are as follows:
INCOME STATEMENT
Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Current Income Tax

Current Income Tax Charge (Note 37.1) 62,793,691 66,670,941 2,803,991,023 2,607,675,155
WHT on Dividend – – 91,888,675 –
Share of Associate Company Income Tax – – – 520,424,001
Under/(Over) Provision of Current Taxes in Respect of Prior Years (5,986,296) – 25,853,124 31,871,824
Unrecoverable ESC 18,205,219 –
Deferred Income Tax

Deferred Tax Charge/(Reversal) (1,015,305) (738,730) 986,876,519 601,750,652
Income Tax Expense Reported in the Income Statement 55,792,090 65,932,211 3,926,814,560 3,761,721,632
Consolidated Statements of Other Comprehensive Income

Deferred tax – – – –
Income Tax on Revaluation of Buildings – – 2,982,850,999 –
Income Tax on Actuarial Gain/(Loss) 165,462 (193,238) 36,248,514 11,590,756
165,462 (193,238) 3,019,099,513 11,590,756
200
37.1 RECONCILIATION BETWEEN TAX CHARGE AND THE PRODUCT OF ACCOUNTING PROFIT
Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Accounting Profit ( PBT) 1,357,804,959 1,305,705,055 10,737,001,581 8,390,936,312

Exempt Profit – – (2,434,296,214) (1,214,641,917)
Non-deductible Expenses 5,429,325 714,599,527 35,654,989,520 31,269,803,582
Deductible Expenses (1,298,544,005) (2,020,304,582) (37,669,508,402) (33,278,590,280)

Aggregate Allowable Income – – – –
Tax losses Utilised – – (161,262,390) (508,426,668)
Interest Income 159,572,904 238,110,503 258,282,639 493,190,399
Rent Income – – 5,491,020 25,875,000
Qualifying Payment Relief – – (91,488,000) (432,367,882)
Non-deductible Expenses 224,263,183 238,110,503 6,299,209,754 4,745,778,546
Income Tax on Profit of the local sales @ 28% 62,793,691 66,670,941 2,628,605,372 2,413,050,215
Income Tax on Profit of the local sales @ 20% – – 25,568,084 20,266,000
Income Tax on Profit of the local sales @ 15% – – 16,458,913 50,715,289
Income Tax on Profit of the export sales @ 12% – – 27,699,287 21,815,655
Dividend Tax @ 10% – – 105,659,367 101,827,996
62,793,691 66,670,941 2,803,991,023 2,607,675,155
38. PROFIT FROM OPERATION STATED AFTER THE FOLLOWING EXPENSES

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Directors’ Fees 11,192,244 13,335,455 79,839,532 57,446,281

Auditors’ Remuneration (Fees and Expenses) 1,433,062 1,646,760 23,277,464 20,051,305
Depreciation 10,227,613 10,566,913 1,820,215,783 1,602,438,577
Amortisation – – 232,007,951 83,876,430
Employee Benefits Including the following:
Other Staff Costs 54,454,909 38,810,994 6,828,855,950 6,293,446,302
Defined Benefit Plan Costs – Gratuity 1,575,974 1,390,118 265,273,651 230,348,774
Defined Contribution Plan Costs – EPF & ETF 6,643,216 4,940,353 642,447,888 614,913,766
Gain/(Loss) on Translation of Foreign Currency – – (17,753,424) 9,901,096
Donation – 328,033 – 328,033
201
39. EARNINGS PER SHARE

Basic Earnings Per Share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year.
The following reflects the Income and Share Data used in the Basic Earnings Per Share Computation:
Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Amounts Used as the Numerators:

Net Profit Attributable to Ordinary Shareholders of the Parent for
Basic Earnings Per Share 1,154,849,171 1,239,772,844 6,769,513,878 4,433,664,985
2018 2017 2018 2017

Number Number Number Number
Number of Ordinary Shares Used as Denominators for

Basic Earnings Per Share
Weighted Average Number of Ordinary Shares in Issue Applicable
to Basic Earnings Per Share 1,086,559,353 1,086,559,353 1,086,559,353 1,086,559,353

2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Weighted Average Number of Ordinary Shares for Basic Earnings

per Share Effect of Dilution: 1,086,559,353 1,086,559,353 1,086,559,353 1,086,559,353
Weighted Average Number of Ordinary Shares Adjusted for
the Effect of Dilution 1,086,559,353 1,086,559,353 1,086,559,353 1,086,559,353
To calculate the earnings per share amounts for discontinued operation the weighted average number of ordinary shares for both
the basic and diluted amounts is as per the table above. The Following table provides the profit/(loss) amount used:
Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Net Profit Attributable to Ordinary Equity Holders of the Parent from

Continuing Operations 1,154,849,171 1,239,772,844 3,649,782,583 835,753,330
Profit/(Loss) Attributable to Ordinary Equity Holders of the Parent from
Discontinued Operations – – (40,673,143) (195,549,696)
Net Profit Attributable to Ordinary Equity Holders of the Parent for
Basic Earnings 1,154,849,171 1,239,772,844 3,609,109,440 640,203,634
Net Profit Attributable to Ordinary Equity Holders of the Parent
Adjusted for the Effect of Dilution 1,154,849,171 1,239,772,844 3,609,109,440 640,203,634
2018 2017 2018 2017

Rs. Rs. Rs. Rs.
Basic/Diluted Earnings Per Share 1.06 1.14 3.32 0.59
Basic/Diluted Earnings Per Share for Continuing Operations 1.06 1.14 3.32 0.59
202
40. CHANGE IN ACCOUNTING POLICY

The Group has changed its Accounting Policy in relation to Accounting for Investment Property by changing from cost model to
fair value model according to LKAS 40. Retrospective adjustments have been made according to LKAS 8 "Accounting Policies,
Changes in Accounting Estimates & Errors" to reflect the change in accounting policy in the Financial Statements.
The fair value of freehold land and buildings were determined by P B Kalugalagedara and Associates an independent
professionally qualified valuer (Valuation report dated 31 March 2018). The basis of valuation is the Direct Capital Comparison
Method using the depreciated value of buildings and Current Open Market Value of land.
The Total effect to the Financial Statements of the Group is summarised below:
Previously Adjustment Restated

Reported Amount Amount Amount
Rs. Rs. Rs.

Investment Property
Balance as at 1st April 2016 238,714,000 288,536,000 527,250,000
Balance as at 1st April 2017 238,024,000 467,976,000 706,000,000
Retained Earnings
Balance as at 1st April 2016 8,839,684,930 129,656,655 8,969,341,584
Non-Controlling Interest
Statement of Profit or Loss

For the year ended 31st March 2017
Other Operating Income 542,486,263 179,440,000 721,926,263
Statement of Cash Flows

For the year ended 31st March 2017 – – –
Profit before Tax 8,211,496,313 179,440,000 8,390,936,313
Adjustments for Non-cash items

Change in fair value of investment property – (179,440,000) (179,440,000)
203
41. DISCONTINUED OPERATIONS
DELMEGE COIR (PRIVATE) LIMITED

On 12th February 2018, the Board of Directors of Delmege Limited took a decision to cease the operations of Delmege Coir
(Private) Limited and to dispose of the assets thereof. Further, the Company is available for immediate sale in its current condition
and the actions to complete the sale were initiated. Delmege Forsyth & Co. (Exports) Ltd. owns 60% and ESNA Exports (Pvt) Ltd.
owns 40% of Delmege Coir (Private) Limited and both shareholders are incorporated in Sri Lanka. It was engaged in the business
of manufacturing and export of Coir. The results of Delmege Coir (Private) Limited for the year is presented below:
EVER PAINT AND CHEMICAL INDUSTRIES (PRIVATE) LIMITED ("EPCI")

On 25th July 2016, the Board of Directors of Royal Ceramics Lanka PLC took a decision to cease the operations of Ever Paint
and Chemical Industries (Private) Limited ("EPCI") and to dispose of the assets thereof. EPCI is a fully-owned Subsidiary of Royal
Ceramics Lanka PLC and it was engaged in the business of manufacturing and marketing of paints and allied products. With EPCI
being classified as discontinued operations the paint and allied products segment is no longer presented in the segment note.
The results of EPCI for the year is presented below:
Delmege Coir (Private) Limited Ever Paint and Chemical Industries
(Private) Limited ("EPCI")
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Revenue 93,707,290 123,953,551 2,355,780 24,814,745

Cost of Sales (89,470,727) (109,233,995) (12,905,648) (35,159,348)
Gross Profit 4,236,564 14,719,556 (10,549,868) (10,344,603)
Finance Income 1,059,571 1,166,018 – –
Other Income and Gains 614,365 – 3,682,929 12,480,219
Selling and Distribution Costs (2,840,731) (1,196,410) (7,343,182) (29,199,525)
Administrative Expenses (17,257,975) (15,329,732) (5,499,304) (12,378,507)
Other Operating Expenses – – 2,324,203 (131,480,477)
Finance Cost (5,636,554) (3,391,716) (3,463,161) (24,626,803)
Loss for the year from discontinued operations (19,824,760) (4,032,284) (20,848,383) (195,549,696)
Loss from discontinued operations (Group) for the year ended
31st March 2018 (40,673,143)

204
The major classes of assets and liabilities is classified as held for sale as at the end of the year:
(Private) Limited
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Assets
Property, Plant and Equipment 27,602,853 – 45,282,742 75,143,049
Inventories 10,819,959 – 18,560,494 37,000,685
Trade and Other Receivables 9,966,148 – 15,822,452 25,016,112
Cash and Cash Equivalents 696,347 – 5,582,029 655,424
Assets – Held for Sale 49,085,307 – 85,247,716 137,815,270
Current Liabilities
Trade and Other Payables (10,546,814) – (7,873,907) (14,442,267)
Interest-Bearing Loans & Borrowings – – – (121,501,969)
Retirement Benefit Liability – – (401,757) (1,999,488)
Liabilities Directly Associated with the Assets – Held for Sale (10,546,814) – (8,275,664) (137,943,724)
Net Assets Directly Associated with Disposal Group 38,538,493 – 76,972,052 (128,454)
The net cash flows incurred by Delmege Coir (Private) Limited and Ever Paint and Chemical Industries (Private) Limited are
as follows:
(Private) Limited
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Operating 15,140,464 6,848,325 91,142,429 108,427,402

Investing (1,512,998) (8,787,417) 35,286,143 2,461,459
Financing – – (120,879,837) (27,650,537)
Net Cash (Outflow)/Inflow 13,627,467 (1,939,091) 5,548,736 83,238,324
205

(Private) Limited
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Earnings Per Share

Basic, Profit/(Loss) for the Year from Discontinued Operations (5.66) (1.15) (1.04) (1.77)
ASSET HELD FOR SALE – PROPERTY, PLANT AND EQUIPMENT

The Management has decided on 2016/17 year to dispose of the fixed assets having net book value of Rs. 10,673,599.39 thereof.
These assets are available for immediate sale in its current condition. The actions to complete the sale were initiated and expected
to be completed within one year from the reporting date. Therefore, the said fixed assets are classified as a non-current assets
held for sale as at the reporting date.
GROUP
2018 2017
Rs. Rs.
Assets
Delmege Coir (Private) Limited 49,085,307 –
Ever Paint and Chemical Industries (Private) Limited 85,247,716 137,815,270
Delmege Interior Deco (Pvt) Ltd. 10,673,599 –
145,006,622 137,815,270
Liabilities
Delmege Coir (Private) Limited (10,546,814) –
Ever Paint and Chemical Industries (Private) Limited (8,275,664) (137,943,724)
(18,822,478) (137,943,724)
206
42. SEGMENT INFORMATION
42.1 OPERATING SEGMENT INFORMATION

Lifestyle Sector Finance Sector Alluminium Sector
2018 2017 2018 2017 2018 2017
Income Statement
Sales to External Customers 22,936,228,135 21,453,763,828 24,900,784,219 19,119,853,287 3,340,583,000 2,825,101,760
Intra Group Revenue 11,592,767 12,353,351 – – – (692,760)
Total Revenue 22,947,820,902 21,466,117,178 24,900,784,219 19,119,853,287 3,340,583,000 2,824,409,000
Results
Gross Profit 9,916,166,978 9,807,406,743 13,401,728,000 11,002,257,550 1,013,412,000 942,078,000
Dividend Income 475,696 435,038 – 3,666,267 – –
Other Operating Income 250,727,321 470,680,811 146,152,000 246,158,673 5,569,000 4,388,000
Administrative Expenses (1,322,029,575) (1,365,522,397) (2,766,420,000) (2,659,027,343) (164,718,000) (155,290,000)
Distribution Expenses (3,889,316,690) (3,323,223,880) – – (398,456,000) (338,526,000)
Loss from the difference between the
Fair Value of the Retained Interest
and the Carrying Value of the
Investment in Associate – – – (2,468,642,404) – –
Other Operating Expenses (155,979,742) (58,258,373) (2,969,751,000) (1,687,919,835) – –
Gold Loans auction losses – – (2,995,000) (2,200,719) – –
Results from Operating Activities 4,800,043,988 5,531,517,942 7,808,714,000 4,434,292,189 455,807,000 452,650,000
Finance Cost (1,111,995,855) (878,305,415) – (578,000) (116,621,000) (88,008,000)

Finance Income 164,222,877 172,657,181 – – – –
Net Finance Cost (947,772,978) (705,648,234) – (578,000) (116,621,000) (88,008,000)
Share of Results of Equity
Accounted Investees – – 651,345,595 – –
Reclassification of the Gain/Loss
recognised in OCI through
Retained Earnings – – – (648,593,981) – –
Operating Profit before
Value Added Tax 3,852,271,010 4,825,869,708 7,808,714,000 4,436,465,803 339,186,000 364,642,000
Value Added Tax on Financial Services – – (1,336,693,020) (1,027,100,778) – –
Profit/(Loss) before Tax 3,852,271,010 4,825,869,708 6,472,020,980 3,409,365,025 339,186,000 364,642,000
Tax Expense (1,242,411,245) (1,158,836,743) (2,226,969,000) (2,166,931,296) (84,978,000) (38,981,000)
Profit for the Year from Continuing
Operations 2,609,859,765 3,667,032,965 4,245,051,980 1,242,433,728 254,208,000 325,661,000
Profit/(Loss) after tax for the Year from
Discontinued Operations – – – – – –
Profit/Loss for the Year 2,609,859,765 3,667,032,965 4,245,051,980 1,242,433,728 254,208,000 325,661,000
207
Plantation Sector Leisure Sector Consumer Sector

2018 2017 2018 2017 2018 2017
2,214,283,704 1,945,860,931 – – 4,387,209,169 4,815,959,050

34,178,296 1,417,069 – – – –
2,248,462,000 1,947,278,000 – – 4,387,209,169 4,815,959,050
202,098,000 115,650,095 – – 905,992,112 981,876,168

– – – – – –
51,563,012 43,940,000 – – 25,028,949 23,192,208
(112,290,000) (94,436,000) (45,681,778) (46,511,766) (205,381,415) (140,761,250)
– – – – (496,626,755) (473,671,345)
– – – – – –
– – – – – –
– – – – – –
141,371,012 65,154,095 (45,681,778) (46,511,766) 229,012,891 390,635,782
– – – – – –
(91,607,000) (96,868,000) (147,380) (155,143) (510,139,429) (351,654,452)
– 129,000 1,025,716 1,261,153 90,038,550 8,479,755
(91,607,000) (96,739,000) 878,336 1,106,010 (420,100,879) (343,174,697)
– – 30,553,421 35,804,374 – –
– – – – – –
49,764,012 (31,584,905) (14,250,021) (9,601,382) (191,087,988) 47,461,084

– – – – – –
49,764,012 (31,584,905) (14,250,021) (9,601,382) (191,087,988) 47,461,084
(13,271,000) (2,063,000) (186,680) (6,400,831) (7,775,531) (12,067,832)
36,493,012 (33,647,905) 14,436,701 (16,002,213) (198,863,519) 35,393,252
– – – – – –
36,493,012 (33,647,905) (14,436,701) (16,002,213) (198,863,519) 35,393,252
208
Investment Sector Other Sector Total Segments

2018 2017 2018 2017 2018 2017
Income Statement
Sales to External Customers – – 3,195,365,684 2,778,627,067 60,974,453,911 52,939,165,923
Intra Group Revenue – – 458,776,769 484,894,980 504,547,832 497,972,640
Total Revenue – – 3,654,142,453 3,263,522,047 61,479,001,743 53,437,138,563
Results
Gross Profit – – 732,683,208 899,447,201 26,172,080,298 23,748,715,758
Dividend Income 1,221,111,519 2,020,304,582 6,217,112 536,900 1,227,804,327 2,024,942,787
Other Operating Income 157,613,991 48,215,887 472,765,934 142,868,619 1,109,420,207 979,444,199
Administrative Expenses (183,596,340) (162,505,542) (624,294,561) (571,007,386) (5,424,411,669) (5,195,061,684)
Distribution Expenses – – (162,807,753) (164,741,950) (4,947,207,198) (4,300,163,175)
Loss from the difference between the
Fair Value of the Retained Interest and
the Carrying Value of the Investment
in Associate – (828,882,412) – – – (3,297,524,816)
Other Operating Expenses (166,798) – – – (3,125,897,540) (1,746,178,208)
Gold Loans Auction Losses – – – – (2,995,010) (2,200,719)
Results from Operating Activities 1,194,962,372 1,077,132,515 424,563,940 307,103,384 15,008,793,415 12,211,974,141
– – – – – –
Finance Cost (2,183,119) (14,186,890) (223,052,342) (210,491,706) (2,055,746,125) (1,640,247,606)
Finance Income 165,025,705 242,759,430 101,996,241 34,594,728 522,309,089 459,881,247
Net Finance Cost 162,842,586 228,572,540 (121,056,101) (175,896,978) (1,533,437,036) (1,180,366,359)
Share of Results of Equity
Accounted Investees – – – 30,553,421 687,149,968
Reclassification of the Gain/Loss
recognised in OCI through
Retained Earnings (147,163,699) – – – (147,163,699) (648,593,981)
Operating Profit Before
Value Added Tax 1,210,641,259 1,305,705,055 303,507,839 131,206,406 13,358,746,101 11,070,163,769
Value Added Tax on Financial Services – – – – (1,336,693,020) (1,027,100,778)
Profit/(Loss) before tax 1,210,641,259 1,305,705,055 303,507,839 131,206,406 12,022,053,081 10,043,062,991
Tax Expense (55,792,090) (65,932,211) (97,260,165) (70,989,056) (3,728,643,711) (3,522,201,970)
Profit for the Year from
Continuing Operations 1,154,849,169 1,239,772,844 206,247,674 60,217,350 8,293,409,370 6,520,861,021
Profit/(Loss) after Tax for the Year
from Discontinued Operations – – – – – –
Profit/Loss for the Year 1,154,849,169 1,239,772,844 206,247,674 60,217,350 8,293,409,370 6,520,861,021
209
Eliminations / Adjustments Group

2018 2017 2018 2017
Rs. Rs. Rs. Rs.
(5,592,198) (2,764,376) 60,968,861,713 52,936,401,547

(504,547,832) (497,972,641) – –
(510,140,030) (500,737,017) 60,968,861,713 52,936,401,547
(11,700,898) (17,942,735) 26,160,379,400 23,730,773,022

(1,209,373,005) (1,551,616,973) 18,431,322 473,325,814
(534,412,945) (257,517,936) 575,007,262 721,926,263
349,213,291 163,939,406 (5,075,198,378) (5,031,122,279)
160,840,258 103,826,891 (4,786,366,939) (4,196,336,284)
– – – (3,297,524,816)
(39,985,355) (117,510,014) (3,165,882,895) (1,863,688,222)
– – (2,995,010) (2,200,719)
(1,285,418,654) (1,676,821,362) 13,723,374,762 10,535,152,779
– – – –
140,701,069 28,968,955 (1,915,045,056) (1,611,278,651)
(140,333,914) (4,274,272) 381,975,172 455,606,975
367,155 24,694,683 (1,533,069,883) (1,155,671,676)
– 30,553,421 687,149,968
– – (147,163,699) (648,593,981)
(1,285,051,499) (1,652,126,678) 12,073,694,601 9,418,037,091

– – (1,336,693,020) (1,027,100,778)
(1,285,051,499) (1,652,126,678) 10,737,001,581 8,390,936,312
(198,170,849) (239,519,664) (3,926,814,560) (3,761,721,632)
(1,483,222,348) (1,891,646,342) 6,810,187,021 4,629,214,680
(40,673,143) (195,549,696) (40,673,143) (195,549,696)

(1,523,895,491) (2,087,196,038) 6,769,513,879 4,433,664,985
210

Lifestyle Sector Finance Sector Alluminium Sector
2018 2017 2018 2017 2018 2017
Assets and Liabilities

Segment Assets 41,523,929,438 38,960,047,537 120,820,780,000 102,763,035,094 3,298,891,000 2,712,829,000
Total Assets 41,523,929,438 38,960,047,537 120,820,780,000 102,763,035,094 3,298,891,000 2,712,829,000
Segment Liabilities 21,884,525,583 16,441,373,633 105,471,884,000 90,253,355,524 2,600,456,000 1,569,242,000

Total Liabilities 21,884,525,583 16,441,373,633 105,471,884,000 90,253,355,524 2,600,456,000 1,569,242,000
Other Segment Information

Total Cost Incurred during the period to
Acquire Property, Plant and Equipment 2,866,287,316 2,761,873,805 1,537,334,911 1,809,158,000 489,727,000 289,484,000
Intangible Assets – – 17,565,600 31,513,184
Depreciation and Amortisation 1,069,368,723 1,019,252,545 384,234,473 343,218,000 62,468,000 64,187,000
Provisions for Employment
Benefit Liability 117,691,861 96,000,134 92,496,990 41,550,496 4,000,000 3,523,000
Investment Sector Other Sector Total Segments

2018 2017 2018 2017 2018 2017
Assets and Liabilities

Segment Assets 32,452,908,811 29,452,325,125 9,782,465,579 9,156,842,751 218,748,359,023 191,811,605,950
Total Assets 32,452,908,811 29,452,325,125 9,782,465,579 9,156,842,751 218,748,359,023 191,811,605,950
Segment Liabilities 1,103,160,030 428,837,015 4,601,298,065 2,804,012,091 142,976,298,391 118,199,345,724

Total Liabilities 1,103,160,030 428,837,015 4,601,298,065 2,804,012,091 142,976,298,391 118,199,345,724
Other Segment Information

Total Cost Incurred during the period to
Acquire Property, Plant and Equipment 2,481,779 4,316,819 40,140,234 686,286,774 5,611,772,726 6,787,318,201
Intangible Assets – 1,408,860 18,974,460 36,957,659
Depreciation and Amortisation 10,227,613 105,668,913 118,647,012 96,196,098 1,821,071,794 1,773,609,151
Provisions for Employment
Benefit Liability 1,575,974 1,390,118 20,912,506 14,283,938 315,860,034 234,110,632
211
Plantation Sector Leisure Sector Consumer Sector

2018 2017 2018 2017 2018 2017
3,347,599,000 3,966,100,000 4,690,297,432 1,746,602,446 2,831,487,763 3,053,823,996

3,347,599,000 3,966,100,000 4,690,297,432 1,746,602,446 2,831,487,763 3,053,823,996
2,308,928,000 2,258,207,000 584,853,306 61,735,892 4,421,193,407 4,382,582,570

2,308,928,000 2,258,207,000 584,853,306 61,735,892 4,421,193,407 4,382,582,570
15,556,000 11,673,000 650,838,140 1,215,593,478 9,407,346 8,932,325

924,922 – 4,519,553
157,666,000 132,615,000 6,513,889 4,881,707 11,946,084 7,589,888
74,718,000 73,291,000 674,481 667,697 3,790,222 3,404,249
Elimination/Adjustments Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
(12,575,495,486) (15,761,662,492) 206,172,863,537 176,049,943,458

(12,575,495,486) (15,761,662,492) 206,172,863,537 176,049,943,458
(5,265,888,182) (2,661,672,917) 137,710,410,209 115,537,672,807

(5,265,888,182) (2,661,672,917) 137,710,410,209 115,537,672,807
(10,697,000) 1,469,930 5,601,075,726 6,788,788,131

45,244,565 221,885,025 36,957,659
63,625,000 7,807,857 2052,223,734 1,781,417,008
– 658,520 241,142,034 234,769,152

212

2018 2017
Rs. Rs.
Reconciliation of Net Profit for the year

Segment Net Profit for the year 8,293,409,368 6,520,861,021
Loss after Tax for the year from Discontinued Operations (40,673,143) (195,549,696)
Intercompany Dividend Income-Elimination (1,209,373,005) (1,551,616,973)
Dividend Tax on Intercompany Dividend Income (198,170,849) (239,520,103)
Deferred Tax Effect on Associate Undistributable Profit – 7,308,645
Inter/Intra – Segment Elimination (75,678,494) (107,817,909)
Group Net Profit For the Year 6,769,513,879 4,433,664,985
Reconciliation of Assets
Segment Assets 218,748,359,023 191,811,605,950
Assets of Discontinued Operations 134,333,023 137,815,270
Investment in Subsidiaries (Elimination) (19,318,389,684) (18,802,889,684)
Investment in Associate (Elimination) – 3,474,665,489
Intercompany Balance (Elimination) (5,205,442,414) (3,216,411,925)
Financial Assets – Fair Value Through PNL (Elimination) (26,924,513) (22,488,441)
Financial Assets – AFS (Elimination) (2,121,839) (6,206,277,700)
Intangible Assets (Elimination) 11,720,055,010 11,765,299,664
Reclassification of share of Sampath Accumulated profit to AFS – (9,141,943,638)
Reclassification of Sampath AFS in to Profit/(Loss) – 6,158,126,958
Share of Associate companies accumulated profit net of dividend received 122,994,931 92,441,515
Group Assets 206,172,863,537 176,049,943,458
Reconciliation of Liabilities
Segment Liabilities 142,976,298,391 118,199,345,724
Liabilities of Discontinued Operations (18,822,478) 137,943,723
Deferred tax effect on Associate Undistributed Profit – (6,662,805)
Intercompany Balance (Eliminations) (5,247,065,704) (2,792,953,835)
Group Liability 137,710,410,209 115,537,672,807
213
43. COMMITMENTS AND CONTINGENCIES
43.1 CONTINGENT LIABILITIES

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Cases Pending Against the Company (Values Claimed) – – – 139,323,571

Guarantees issued to Banks and other Institutions – – 6,500,000 17,460,000
Import LC and Ordinary Guarantees – – 38,068,918 58,370,688
Total – – 44,568,918 215,154,259
(a) Royal Ceramics Lanka PLC and its Subsidiaries

Companies with in the Group issued corporate guarantees in favour of Royal Ceramics Lanka PLC ,Royal Porcelain (Pvt) Ltd.,
Rocell Bathware Ltd. and Ever Paint and Chemical Industries (Private) Limited. guaranteeing loans, interest and other charges
of the loans.
Further, Commercial Bank of Ceylon PLC has offered a combined letter of guarantee facility for the above mentioned
companies amounting to Rs. 100 Mn and at the reporting date total guaranteed value is Rs. 20.5 Mn.
(b) Lanka Ceramic PLC

As at the reporting date, the Lanka Ceramic PLC has received assessments issued by the Department of Labour in respect
of Surcharge on Employees' Provident Fund Contribution totalling Rs.1,823,098.72 for the period commencing 2000/January
to 2015/March. The Company has appealed against the assessments. However Company has made the provision amounting
Rs. 423,518.59 in the Financial Statement.
(c) Lanka Walltiles PLC

As at the reporting date, the Lanka Walltiles PLC has received assessments issued by the Department of Inland Revenue
in respect of income tax, value added tax and economic service charge totalling Rs. 46,988,405 for the year of assessment
2008/09, 2009/10. The Company has appealed against the assessments in the appeal hearing branch. The Directors believe,
based on the information currently available, the ultimate resolution of such assessment is not likely to have a material adverse
effect on the Company. Accordingly no provision for liability has been made in these Financial Statements.
(d) Horana Plantations PLC

Horana Plantations PLC, Several cases and disputes are pending against the Company in Labour Tribunal and Courts.
All these cases are being vigorously contested/prosecuted and our lawyers have advised that an evaluation of the likelihood
of an unfavourable outcome and the amount or range of potential loss cannot be quantified or commented upon at this stage.
Capital grant received from the Ceylon Electricity Board (CEB) for stand-by power generators is subject to a condition of
minimum usage of CEB power as against the generator power. A liability will arise only if the above condition is not fulfilled.
(e) L B Finance PLC, Delmege Group and its Subsidiaries

The above companies have contingent liabilities in respect of legal claims arising in the ordinary course of business. Based
on the information currently available in, the opinion of the Board the ultimate resolution of litigation are not likely to have a
material impact on the Group.
214
43.2 COMMITMENTS
Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Contracted but not Provided for – – 349,660,668 699,162,714

Unutilised Facilities – – 1,217,412,000 918,304,812
– – 1,567,072,668 1,617,467,526
44. RELATED PARTY DISCLOSURES
TRANSACTIONS WITH KEY MANAGERIAL PERSONS.

The Key Managerial Personnel of the Company are the members of its Board of Directors. Following transactions are entered
between the Company and its Key Managerial Personnel and their close family members.

44.1 COMPENSATION TO KEY MANAGERIAL PERSONNEL
Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Nature of Transaction
Short Term Employment Benefits 11,192,244 13,335,455 605,665,086 616,783,032
Post Employment Benefits – – 42,441,360 39,970,169
44.2 OTHER TRANSACTIONS WITH KEY MANAGERIAL PERSONNEL

Company Group
2018 2017 2018 2017
Rs. Rs. Rs. Rs.
Fixed Deposits Accepted during the Year – – 221,261,000 518,401,000
Dividend Paid on Shareholding – – 4,232,000 4,024,000
Interest Expense on Fixed Deposits – – 53,643,000 46,475,000
Rental Paid – – 8,098,800 7,848,800
Sales – – 160,160 4,429,230
Transport Charges – – 1,191,154 1,338,100
Sale of Equity Shares 894,918,675 894,918,675
Transactions with entities that are controlled, jointly controlled or significantly influenced by Key Managerial Personnel or their
close members of the family, or shareholders who have either control, significant influences or joint control over entity.

215
44.3 TRANSACTIONS WITH OTHER RELATED COMPANIES

Transactions with related parties other than disclosed above Note 42.2.
Company
2018 2017
Rs. Rs.
Other Interest Income 159,572,904 220,167,771
Dividend Income 17,816,646 15,634,062
Investments in Fixed Deposits 3,410,725,886 3,879,389,925
Withdrawal of Fixed Deposits 4,092,545,334 3,854,232,025
Withdrawal of Debentures 150,000,000 225,000,000
Balances with other Related Companies

As at 31st March
Investment in Debentures – 150,000,000
Investment in Fixed Deposit 718,942,715 1,400,762,161
718,942,715 1,550,762,161
44.4 TRANSACTION WITH RELATED ENTITIES

Company
Subsidiaries 2018 2017

Rs. Rs.
Withdrawal of Fixed Deposits – 646,179,204
Fund Transfers 154,213,386 26,073,645
Net Investment through Equity Shares 515,500,000 1,473,500,000
Sale of Equity Shares – 129,203,750
Interest Received – 17,942,735
Dividend Income Received 1,203,295,102 1,411,964,560
Technical Fees Received 157,613,993 45,359,221
Balances with Subsidiaries Company

Rs. Rs.
Receivable Balances 215,624,661 45,334,492

215,624,661 45,334,492
216
45. CURRENT AND NON-CURRENT ANALYSIS OF ASSETS AND LIABILITIES

The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or
settled.
2018 2017
Within After Total Within After Total
12 Months 12 Months 12 Months 12 Months
Assets
Cash at Bank 7,384,584,189 – 7,384,584,189 5,378,756,448 – 5,378,756,448
Fair Value Through P&L – Financial
Investment 118,234,337 – 118,234,337 161,264,120 – 161,264,120
Loans and Receivables 30,009,775,334 9,884,500,798 39,894,276,132 24,885,164,780 8,753,614,501 33,638,779,281
Lease Rentals receivables and Stock
out on hire 25,136,057,035 37,353,628,733 62,489,685,768 21,469,399,707 34,189,988,101 55,659,387,808
Available for Sales – Financial
Investment 11,694,855,586 – 11,694,855,586 7,951,947,177 – 7,951,947,177
Other Financial Assets 7,918,184,001 – 7,918,184,001 8,386,081,868 – 8,386,081,868
Trade and Other Debtors, Deposits and
Prepayments 6,843,603,108 – 6,843,603,108 6,452,170,427 – 6,452,170,427
Other Non-Financial Assets 1,892,176,250 – 1,892,176,250 1,296,826,031 – 1,296,826,031
Investment Associate – 618,391,822 618,391,822 – 587,838,401 587,838,401
Deferred Tax Assets – 14,686,000 14,686,000 – 340,548,697 340,548,697
Income Tax Recoverable 136,770,945 – 136,770,945 115,943,422 – 115,943,422
Inventories 12,552,520,329 – 12,552,520,329 10,031,784,843 – 10,031,784,843
Intangible Assets – 12,983,838,866 12,983,838,866 – 13,046,741,647 13,046,741,647
Property, Plant and Equipment – 37,479,879,581 37,479,879,581 – 29,566,426,018 29,566,426,018
Biological Assets – 2,712,627,000 2,712,627,000 – 2,575,552,000 2,575,552,000
Investment Property – 1,287,007,000 1,287,007,000 706,000,000 – 706,000,000
Mining Lands – 6,536,000 6,536,000 – 16,080,000 16,080,000
Asset Held for Sale 145,006,622 – 145,006,622 137,815,270 – 137,815,270
Total Assets 103,831,767,737 102,341,095,800 206,172,863,537 86,973,154,093 89,076,789,365 176,049,943,458
LIABILITIES
Due to Banks 8,728,756,909 16,964,615,174 25,693,372,083 10,965,556,808 15,670,831,683 26,636,388,491
Due to Customers 57,697,339,537 15,248,671,259 72,946,010,796 45,066,558,921 15,335,395,605 60,401,954,526
Interest-Bearing Loans and Borrowings 11,383,470,024 11,217,917,309 22,601,387,333 7,267,087,415 8,888,079,677 16,155,167,092
Trade and Other Payables 5,389,102,192 – 5,389,102,192 4,954,352,948 – 4,954,352,948
Other Non-Financial Liabilities 853,165,028 – 853,165,028 2,403,942,650 – 2,403,942,650
Other Financial Liabilities 2,192,470,402 – 2,192,470,402 591,993,595 – 591,993,595
Dividend Payable 208,562,933 – 208,562,933 113,083,111 – 113,083,111
Retirement Benefit Liability – 1,478,706,517 1,478,706,517 1,211,122,077 1,211,122,077
Income Tax Liabilities 937,286,941 – 937,286,941 1,220,668,421 1,220,668,421
Deferred Tax Liabilities – 5,391,523,503 5,391,523,503 – 1,711,056,168 1,711,056,168
Deferred Income and Capital Grants – – – – – –
Liabilities Directly Associated with the
Assets classified as Held-for-sale – 18,822,478 18,822,478 – 137,943,727 137,943,727
Total Liabilities 87,390,153,969 50,320,256,240 137,710,410,209 72,583,243,871 42,954,428,937 115,537,672,807
217
46. ASSETS PLEDGED

The following assets have been pledged as security for liabilities other than that is disclosed under Note 22.2:
Nature of Assets Nature of Liability Carrying Amount Carrying Amount Included Under
Pledged Pledged
2018 2017
Rs. Rs.
Lease Rental Receivables Loans, Overdrafts and 26,511,882,242 38,474,785,606 Lease Rentals Receivables
and Stock out on Hire Syndicated Loan and Stock out on hire
Freehold Building Syndicated Loans 130,198,703 4,530,062,457 Property, Plant & Equipment
Deposits Overdraft Facility and Guarantees 71,688,074 71,288,074 Investment
Inventory and Debtors Overdraft Facility and Term Loan NDB 19,575,000 19,575,000 Inventory and Receivables
Land and Building Loan Facility and Corporate Guarantee 56,712,948 56,712,948 Property, Plant & Equipment
Land and Building LC/Import Loan, Overdraft, Term 7,328,750,000 – Property, Plant & Equipment
Loan & Bank Guarantee
Fixed Deposit Overdraft, LC, Import Finance, 107,221,152 107,221,152 Cash and Bank
Short-term Loan and Guarantee Facilities
Stocks and Book Debtors Overdraft, LC, Import Finance, 3,266,443,156 3,266,443,156 Inventories & Trade and
Short-term Loan and Guarantee Facilities Other Receivables
37,492,471,275 46,526,088,393
47. FINANCIAL RISK MANAGEMENT OBJECTIVES Credit risk constitutes the Group’s largest risk exposure
AND POLICIES category. This can be broadly categorised into two types;
The Group has exposure to the following risk from financial default and concentration risk.
Instruments:
DEFAULT RISK
1. Credit risk The risk of the potential financial loss resulting from the failure
2. Liquidity risk of customer or counterparty to meet its debt or contractual
3. Market risk obligations and arises principally from the Group’s loans and
advances to customers.
There are no other circumstances have arisen subsequent
to the reporting date which would require adjustment to or
CONCENTRATION RISK
disclosure in the Financial statements.
The credit exposure being concentrated as a result of
1. CREDIT RISK excessive build-up of exposure to a single counterparty,
industry, product, geographical location or insufficient
Credit risk is the risk that a counterparty will not meet its
diversification.
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk
SETTLEMENT RISK
from its operating activities (primarily for trade receivables) and
Settlement risk is the risk of loss arising from trading/
from its financing activities, including deposits with banks.
investment activities when there is a mutual undertaking

to deliver on a progressive basis.
218
COMMODITY PRICE RISK – GOLD LOAN 2. LIQUIDITY RISK

Commodity risk refers to the uncertainties of future market Liquidity risk refers to the possibility of Group not having
values and of the size of the future income, caused by sufficient cash to meet its payment obligations. This arises
the fluctuation in the prices of commodities. Given the primarily due to mismatches in the maturity profile of Group’s
significance of the Gold Loans to Company’s overall loan assets and liabilities. Adequate liquidity is critical to meet the
book, sharp fluctuations to the gold prices could have an Group’s financial commitment and to accommodate additional
adverse impact to earnings. Gold price risk could arise from funding needs of the growing business volumes.
either of adverse movements in the world prices, exchange
rates, basis risk between local and world prices. The Group’s primary objective in liquidity risk management
is to ensure adequate funding for its businesses throughout
The Group currently manages the credit risk of lendings market cycles, including periods of financial stress. To
against gold by adopting following two strategies; achieve this objective the asset and liability management
committee (ALCO) analyses and monitors liquidity risk,
zz Quickerrepricing cycle: Group as a strategy grants for maintains an adequate margin of safety in liquid assets.
shorted periods allowing it to reprice its cost promptly. As well the Group’s objective is to maintain a balance
zzFrequent revisions to Loan-to-Value (LTV) ratio: Company between continuity of funding and flexibility through the use
practices a process of revising advance offered per of bank overdrafts, bank loans and finance leases The Group
sovereign to reflect market value fluctuations to maintain assessed the concentration of risk with respect to refinancing
the desired loan to value ratio. its debt and concluded it to be low. Access to sources of
funding is sufficiently available and debt maturing within
12 months can be rolled over with existing lenders.
TRADE RECEIVABLES
Customer credit risk is managed by each business unit 3. MARKET RISK

subject to the Group’s established policy, procedures Market risk is the risk that the fair value of future cash flows
and control relating to customer credit risk management. of a financial instrument will fluctuate because of changes
Individual credit limits are defined in accordance with the in market prices. Market prices comprise four types of risk:
prior experience with the customers. Outstanding customer interest rate risk, currency risk, commodity price risk and
receivables are regularly monitored. The requirement credit other price risk such as equity price risk. Financial instruments
limits are defined in accordance with the prior experience affected by market risk include loans and borrowings, equity
with the customers. Outstanding customer receivables are investments classified as fair value through profit or loss
regularly monitored. financial assets, equity investments classified as available for
sale financial assets.
The requirement for an impairment is analysed at each
reporting date on an individual basis for major clients. 4. FOREIGN CURRENCY RISK
Additionally, a large number of minor receivables are grouped Foreign currency risk is the risk that the changes in future
into homogenous groups and assessed for impairment cash flows because of changes in foreign exchange rates.
collectively. The calculation is based on actual incurred The Group’s exposure to the risk of changes in foreign
historical data. The maximum exposure to credit risk at the exchange rates relates primarily to the Group’s operating
reporting date is the carrying value of each class of financial activities (when revenue or expense is denominated in a
assets disclosed in Statement of Financial Position. The Group different currency from the Group’s functional currency).
hold collateral/bank guarantee as security when it necessary.
The Group evaluates the concentration of risk with respect 5. INTEREST RATE RISK
to trade receivables as low, as its customers are located in Interest rate risk is a key constitute of the market risk exposure
several jurisdictions and industries and operate in largely of the Group due to adverse and unanticipated movements in
independent markets. future interest rate which arises from core business activities;
granting of credit facilities, accepting deposits and issuing
debt instruments.

219
Due to the nature of operations of the business segment of The following table demonstrates the impact on net interest
the Group, the impact of interest rate risk is mainly on the income to a reasonably possible change in interest rates
earnings of the financing segment rather than the market based on the assumption that a rate sensitive asset surplus
value of portfolios. Several factors give rise to interest rate would be subjected to reinvestment risk whereas a rate
risk; among these are term structure risk, which arises due to sensitive asset deficit would be subjected to funding risk.
the mismatches in the maturities of assets and liabilities; basis
risk which is the threat to income arises due to differences in
NET INTEREST INCOME (NII) SENSITIVITY BY INTEREST
the bases of interest rates.
RATE CHANGE
Excessive movements in market interest rate could result in 2018 2017
severe volatility to Group’s net revenue and net margin. The

Annual Impact + 100 BPS (15,113,659) (8,696,490)
Group’s exposure to interest rate risk is primarily associated
- 100 BPS 15,113,659 8,696,490
with factors such as:
zzReprising risk arising from a fixed rate borrowing CAPITAL MANAGEMENT
portfolio where reprising frequency is different to that
The primary objective of the Group’s capital management is
of the lending portfolio.
to ensure that it maintains a healthy capital ratios in order to
zzYield
curve risk arising from unanticipated shifts of the support its business and maximise shareholder value. The
market yield curve. Group manages its capital structure and makes adjustments
to it in light of changes in economic conditions.
Interest rate risk is managed principally through minimising

interest rate sensitive asset liability gaps. In order to ensure
The Group monitors capital using a gearing ratio, which is net
interest rate margin and spreads are maintained, the Group
debt divided by total capital plus debt. The Group includes
conducts periodic reviews and reprices its assets accordingly. within debt, interest bearing loans and borrowings, Due to
customers and Due to Banks (Long Term).

2018 2017
Rs. Rs.
Interest-bearing Loans and borrowings (Note 22) 22,601,387,336 16,155,167,093

Due to customers (Note 21) 72,946,010,796 60,401,954,526
Due to Banks – Long-Term loan (Note 20) 25,693,372,083 26,636,388,491
Total Debt 121,240,770,215 103,193,510,110

Equity 47,890,913,906 41,581,572,213
NCI 20,571,539,422 18,930,698,437
68,462,453,329 60,512,270,651
Total Capital 189,703,223,544 163,705,780,761

Gearing Ratio 64% 63%
220
47.1 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES BY REMAINING CONTRACTUAL MATURITIES

An analysis of the LB Finance PLC’s assets employed and total liabilities at the year-end, based on the remaining respective
contractual maturity dates/recovery cycle as at the reporting date are given below:
There are no other circumstances have arisen subsequent to the reporting date which would require adjustment to or disclosure in
the Financial Statements.
On Demand Less than 3-12 Months 1-5 Years Over 5 Years Total
3 Months
Financial Assets
Cash and Bank Balances 2,655,069,054 3,236,437,003 – – – 5,891,506,057
Financial Investments – Held for Trading 9,682,695 – – – – 9,682,695
Loans and Receivables 7,217,139,805 15,526,673,711 10,268,926,885 13,875,895,712 1,455,282,985 48,343,919,097
Lease Rentals Receivable and Stock out on Hire 3,378,192,715 8,714,342,942 23,994,138,144 50,284,195,635 52,463,701 86,423,333,137
Financial Investments – Available for Sale 121,623,521 – – – – 121,623,521
Other Financial Assets 360,723,215 1,154,024,897 5,550,806,093 – – 7,065,554,205
Total Financial Assets 13,742,431,005 28,631,478,554 39,813,871,122 64,160,091,346 1,507,746,686 147,855,618,713
Financial Liabilities
Due to Banks 1,285,355,777 3,291,948,959 7,149,075,027 15,652,842,458 – 27,379,222,221
Due to Customers 2,958,302,234 25,467,832,101 33,215,379,202 18,675,362,825 – 80,316,876,361
Debt Instruments Issued and Other
Borrowed Funds – 272,487,975 2,362,319,280 4,570,000,000 – 7,204,807,255
Other Financial Liabilities 1,761,418,092 – – – – 1,761,418,092
Total Financial Liabilities 6,005,076,103 29,032,269,035 42,726,773,508 38,898,205,283 – 116,662,323,930
Total Net Financial Assets/(Liabilities) 7,737,354,902 (400,790,481) (2,912,902,386) 25,261,886,063 1,507,746,686 31,193,294,783
48. EVENTS AFTER THE REPORTING DATE
ROYAL CERAMICS LANKA PLC

Subject to the approval of the shareholders at the Annual General Meeting, Directors recommended payment of a final dividend
of Rs. 2/- per share for the year ended 31st March 2018 on 24th May 2018.
SAMPATH BANK PLC

Sampath Bank has announced a rights issue of shares closer to the end of the financial year 2017/18. Company has carrying an
Available For Sale (AFS) investment in Sampath Bank as at the Statement of Financial Position date and funds advanced towards
the purchase of rights amounting in to Rs. 1,873,905,000 are included in Note 4.1 to the Financial Statements. On 23rd April 2018
the above rights were allotted by the issuer and accordingly, investment in Sampath Bank shares (AFS) increased by 7,495,621
subsequent to the year end. Further Sampath Bank announced a scrip dividend and thereby investment in Sampath Bank further,
enhanced by 2,026,387 shares on 10th May 2018.
Other than the above there have been no material events occurring after the balance sheet date that require adjustment or
disclosure in the Financial Statements.
Annexes
222 223 224
Five Year Group Shareholder
Summary – Value Added Information
Company Statement
226 232 233

Subsidiary/ Glossary Notice of
Associate of Financial Annual
Companies of Terms General
Vallibel One PLC Meeting
222
VALLIBEL ONE PLC Annexes
FIVE-YEAR SUMMARY – COMPANY
2018 2017 2016 2015 2014

Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000
Statement of Income
Dividend Income 1,221,112 2,020,305 808,134 632,402 353,110
Other Income 322,640 290,975 206,195 446,762 299,963
Profit/(Loss) before Tax 1,210,641 1,305,705 720,859 893,375 508,029
Tax Reversal/(Expenses) (55,792) (65,932) (56,660) (134,234) (48,258)
Profit/(Loss) after Tax 1,154,849 1,239,773 664,199 759,141 459,772

Stated Capital 27,163,984 27,163,984 27,163,984 27,163,984 27,163,984
Reserves 4,185,765 1,859,504 411,178 566,048 126,322
Shareholders’ Fund 31,349,749 29,023,488 27,575,162 27,730,032 27,290,306
Assets 32,452,909 29,452,325 27,599,276 27,750,947 27,304,665
Liabilities 1,103,160 428,837 24,115 20,915 14,359
Ratios and Statistics

Ordinary Dividends 543,280 543,280 543,280 434,624 760,592
Dividend per Share 0.50 0.50 0.50 0.40 0.70
Dividend Payout Ratio (%) 47 44 82 57 167
Earnings per Share 1.06 1.14 0.61 0.70 0.42
Market Value per Share (Year-End) 17.20 17.50 17.80 20.30 17.00
Net Assets per Share 28.85 26.71 25.38 25.52 25.12
Earnings and Market Capitalisation

Net Assets per Share and Market Value
(Rs.) (Rs. Bn) (Rs.)
30 1.50 250 22
28 1.20 230 20
26 0.90 210 18
24 0.60 190 16
22 0.30 170 14
20 0 150 12
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Net Assets per Share (LHS) Market Capitalisation (Rs. Bn)

Earnings per Share (RHS) Market Value per Share (Rs.)
223
Annexes VALLIBEL ONE PLC
GROUP VALUE ADDED STATEMENT
2018 2017
Restated
Rs. ’000 Rs. ’000
Gross Turnover 65,051,665 56,204,076

Finance and Other Income 975,414 1,650,859
Share of Associate Company’s Profit 30,553 441,053
Adjustments Pertaining to the Reclassification in Investment in Associates
to Available-for-Sale Financial Asset – (3,945,849)
66,057,632 54,350,140
Less: Cost of Material and Services bought in (38,941,846) (30,702,844)
27,115,786 23,647,296
2018 2017
Rs. ’000 % Rs. ’000 %
Employees 7,736,577 29 7,138,709 30

Government of Sri Lanka 10,076,190 37 8,900,196 37
Shareholders 1,719,940 6 1,782,494 8
Lenders of Capital 1,973,066 7 1,671,061 7
Retained for Future as Depreciation 1,820,216 7 1,602,439 7
Retained Profit 3,789,797 14 2,552,397 11
27,115,786 100 23,647,296 100
Value Addition
14% 29% 11% 30%
7% 7%
2018 2017
7% 7%
6% 37% 8% 37%
Employees Government of Sri Lanka Shareholders Lenders of Capital

Retained Profit Retained for Future as Depreciation
224
SHAREHOLDER INFORMATION
1. GENERAL
Stated Capital: Rs. 27,163,983,720 represented by 1,086,559,353 ordinary shares.
2. STOCK EXCHANGE LISTING

Vallibel One PLC is a public quoted company, the ordinary shares of which are listed on the Diri Savi Board of the Colombo
Stock Exchange. The date of listing was 8th July 2011.
3. PUBLIC HOLDING
Shares held by the public as at 31st March 2018 was 19.32% comprising of 11,063 shareholders.
4. DISTRIBUTION OF SHAREHOLDERS AS AT 31ST MARCH 2018

No. of Holders No. of Shares %
1 1,000 8,273 2,388,645 0.22

1,001 10,000 2,169 6,044,556 0.56
10,001 100,000 503 17,760,542 1.63
100,001 1,000,000 105 31,190,202 2.87
Over 1,000,000 25 1,029,175,408 94.72
11,075 1,086,559,353 100.00
5. ANALYSIS OF SHAREHOLDERS AS AT 31ST MARCH 2018

No. of Holders No. of Shares %
Local Individuals 10,688 734,978,068 67.64

Local Institutions 333 342,373,449 31.51
Foreign Individuals 47 4,137,231 0.38
Foreign Institutions 7 5,070,605 0.47
11,075 1,086,559,353 100.00
6. DIRECTORS’ AND CEO’S SHAREHOLDING AS AT 31ST MARCH 2018

No. of Shares %
Mr. K D D Perera 689,726,471 63.48

Mr. S H Amarasekera
Shares held in the following manner

Pan Asia Banking Corporation PLC/Mr. S H Amarasekera 1,000,000 0.09
Mr. J A S S Adhihetty 100,000 0.01
Mrs. K Fernando 800,000 0.07
Mr. R N Asirwatham 800 0.00
Mrs. Y Bhaskaran (CEO) Nil Nil

225
Annexes Shareholder Information > VALLIBEL ONE PLC
7. TWENTY MAJOR SHAREHOLDERS

31st March 2018 31st March 2017
No. of Shares % No. of Shares %
1. Mr. K D D Perera 689,726,471 63.478 689,726,471 63.478

2. Employees’ Provident Fund 101,549,200 9.346 101,549,200 9.346
3. Vallibel Investments (Pvt) Limited 91,966,451 8.464 91,966,451 8.464
4. Vallibel Leisure (Private) Limited 91,929,063 8.461 91,929,063 8.461
5. Bank of Ceylon A/c Ceybank Unit Trust 14,435,414 1.329 10,211,380 0.940
6. Mercantile Investments and Finance PLC 5,176,000 0.476 5,176,000 0.476
7. National Savings Bank 3,143,693 0.289 3,143,693 0.289
8. Mellon Bank N A – UPS Group Trust 2,800,000 0.258 2,800,000 0.258
9. Hatton National Bank PLC/Sanka Ramoorthy Nadaraj Kumar 2,779,538 0.256 1,661,632 0.153
10. Bank of Ceylon No. 1 Account 2,427,704 0.223 2,427,704 0.223
11. Merrill J Fernando & Sons (Pvt) Limited 2,299,000 0.212 2,299,000 0.212
12. Mr. K D A Perera 2,079,039 0.191 2,079,039 0.191
13. Mr. H R S Wijeratne 2,069,000 0.190 2,069,000 0.190
14. Mr. A M Weerasinghe 2,000,000 0.184 2,000,000 0.184
15. Wickramaratnes (Pvt) Limited 1,865,000 0.172 1,865,000 0.172
16. Employees’ Trust Fund Board 1,722,140 0.158 1,722,140 0.158
17. Prof M T A Furkhan 1,672,000 0.154 1,672,000 0.154
18. Mr. A Sithampalam 1,567,000 0.144 1,567,000 0.144
19. Bartleet Asset Management (Pvt) Ltd. 1,314,000 0.121 1,314,000 0.121
20. Mr. U F Strunk 1,215,095 0.112 963,526 0.089
1,023,735,808 94.219 1,018,142,299 93.703
Others 62,823,545 5.781 68,417,054 6.297
Total 1,086,559,353 100.000 1,086,559,353 100.000
8. MARKET PRICE PER SHARE

2017/18 2016/17
Market Price per Share Date Price Date Price
Highest during the Year 12.03.2018 Rs. 25.00 12.05.2016 Rs. 23.00
Lowest during the Year 18.01.2018 Rs. 17.00 20.03.2017 Rs. 16.20
As at end of the Year Rs.17.20 Rs. 17.50
2017/18 2016/17
No. of Transactions 9,435 6,735

No. of Shares Traded 19,718,581 14,364,423
Value of Shares Traded (Rs.) 415,031,657.40 294,691,047.20
9. NET ASSETS PER SHARE

Net assets per share of the Company is Rs. 28.85 (2017 – Rs. 26.71)
226
SUBSIDIARY/ASSOCIATE
COMPANIES OF VALLIBEL ONE PLC
Name of Company Company Situation of Relationship to Directors who held Office as at 31st March 2018
Registration No. Registered Office Vallibel One PLC
Subsidiary/Associate
Royal Ceramics Lanka PLC PQ 125 No. 20, Subsidiary Mr. K D D Perera
R A De Mel Mawatha, Mr. A M Weerasinghe
Colombo 3 Mr. M Y A Perera
Mr. T G Thoradeniya (Also functions as the
Alternate Director to Mr. K D D Perera)
Mr. L T Samarawickrama
Mr. G A R D Prasanna
Mr. R N Asirwatham
Mr. S H Amarasekera
Ms. N R Thambiayah
Mr. L N De S Wijeyeratne
Royal Porcelain PV 3290 No. 20, Subsidiary Mr. A M Weerasinghe

(Private) Limited R A De Mel Mawatha, Mr. M Y A Perera
Colombo 3 Mr. T G Thoradeniya
Mr. R N Asirwatham
Mr. H Somashantha
Mr. M W R N Somaratne
Rocell Bathware Limited PB 425 No. 20, Subsidiary Mr. A M Weerasinghe

R A De Mel Mawatha, Mr. M Y A Perera
Mr. R N Asirwatham
Mr. D J Silva
Royal Ceramics Distributors PV 2524 No. 20, Subsidiary Mr. A M Weerasinghe

(Private) Limited R A De Mel Mawatha, Mr. T G Thoradeniya
Colombo 3 Mr. G A R D Prasanna
Mr. K D H Perera
Rocell Ceramics Limited PB 220 No. 20, Subsidiary Mr. A M Weerasinghe

R A De Mel Mawatha, Mr. T G Thoradeniya
Colombo 3
Ever Paint and Chemical PV 2211 No. 20, Subsidiary Mr. A M Weerasinghe
Industries (Private) Limited R A De Mel Mawatha, Mr. H Somashantha
Colombo 3 Mr. M W R N Somaratna
Mr. J K A Sirinatha
Mr. D B Gamalath
Lanka Ceramic PLC PQ 157 No. 20, Subsidiary Mr. K D D Perera

R A De Mel Mawatha, Mr. A M Weerasinghe
Colombo 3 Mr. J A P M Jayasekara
Dr. S Selliah
Mr. T G Thoradeniya
Mr. K D G Gunaratne
Ms. A M L Page
Mr. D J Silva
Mr. G A R D Prasanna [Alternate Director to
Mr. K D D Perera (Resigned w.e.f. 17th May 2018)]
227
Annexes SUBSIDIARY/ASSOCIATE COMPANIES OF VALLIBEL ONE PLC > VALLIBEL ONE PLC
Lanka Walltiles PLC PQ 55 No. 215, Subsidiary Mr. K D D Perera

Nawala Road, Mr. A M Weerasinghe
Narahenpita, Mr. J A P M Jayasekara
Colombo 5 Dr. S Selliah
Mr. T G Thoradeniya
Mr. K D G Gunaratne
Ms. A M L Page
Mr. M W R N Somaratne
Mr. J D N Kekulawala
Lanka Tiles PLC PQ 129 No. 215, Subsidiary Mr. K D D Perera

Nawala Road, Mr. A M Weerasinghe
Colombo 5 Dr. S Selliah
Mr. T G Thoradeniya
Mr. K D G Gunaratne
Ms. A M L Page
(Alternate Director to Mr. K D D Perera)
Swisstek (Ceylon) PLC PQ 155 No. 215, Subsidiary Mr. A M Weerasinghe

Nawala Road, Mr. J A P M Jayasekara
Narahenpita, Dr. S Selliah
Colombo 5 Mr. J K A Sirinatha
Mr. A S Mahendra
Mr. K D G Gunaratne
Swisstek Aluminium Limited PB 3277 No. 76/7, Subsidiary Mr. A M Weerasinghe

Pahala Dompe, Mr. J A P M Jayasekara
Dompe Dr. S Selliah
Mr. T G Thoradeniya
Mr. A S Mahendra
Mr. B T T Roche
Swisstek Development PV 129622 No. 215, Nawala Road, Subsidiary Mr. K D A Perera
(Pvt) Limited Narahenpita, Colombo 5 Mr. J A P M Jayasekara
Vallibel Plantation PB 1030 No. 20, Subsidiary Mr. A M Pandithage

Management Limited R A De Mel Mawatha, Mr. W G R Rajadurai
Mr. J M Kariapperuma
Mr. N T Bogahalande
Horana Plantations PLC PQ 126 No. 400, Subsidiary Mr. K D D Perera

Deans Road, Mr. A M Pandithage
Colombo 10 Mr. L J A Fernando
Mr. A N Wickremasinghe
Mr. K D H Perera
Mr. W G R Rajadurai
Mr. S C Ganegoda
Mr. K D G Gunaratne
Mr. N T Bogahalande
(Alternate Director to Mr. K D H Perera)
228
VALLIBEL ONE PLC < SUBSIDIARY/ASSOCIATE COMPANIES OF VALLIBEL ONE PLC Annexes
Uni-Dil Packaging Limited PB 544 Kosgahalanda, Subsidiary Mr. A M Pandithage

Kosgahawatta, Katulanda, Mr. J A P M Jayasekara
Narampola Road, Mr. D B Gamalath
Moragala, Mr. T G Thoradeniya
Dekatana Mr. H Somashantha
Mr. N T Bogahalande
Uni-Dil Packaging PV 7976 PB Narampola Road, Subsidiary Mr. A M Pandithage

Solutions Limited Moragala, Mr. J A P M Jayasekara
Dekatana Mr. D B Gamalath
Beyond Paradise PB 4706 No. 215, Subsidiary Mr. M H Jamaldeen

Collection Limited Nawala Road, Mr. K D H Perera
Colombo 5
L W L Development PV 111856 No. 215, Subsidiary Mr. K D A Perera

(Pvt) Limited Nawala Road, Mr. J A P M Jayasekara
Narahenpita,
Colombo 5
L T L Development PV 129638 No. 215, Subsidiary Mr. K D A Perera

(Pvt) Limited Nawala Road, Mr. J A P M Jayasekara
Narahenpita,
Colombo 5
Rocell (Pty) Limited Incorporated No. 1392, Dandenong Subsidiary Mr. T G Thoradeniya
in Australia Road, Oakleigh, Mr. H Y N Perera
601612284 VIC 3166
Australia
Nilano Garments PV 14277 No.10, Subsidiary Mr. A N Seneviratne

(Private) Limited R A De Mel Mawatha, Ms. K N Suraweera
Colombo 3 Mr. N T Bogahalande
Ms. W S B Gamage
Mr. B K G S M Rodrigo
Mr. H Somashantha
Lanka Tiles Company No. 196A1 Subsidiary Mr. A M Weerasinghe

(Private) Limited incorporated in Anekal Taluk Mr. J A P M Jayasekara
India Bomman Sandra Industrial Mr. P K Singhvi
U 26999 Area Mr. F Singhvi
KA 2017 PTC Bangalore 560099
102730 India
L B Finance PLC PQ 156 No. 275/75, Subsidiary Ms. S Jayasekara

Prof. Stanley Wijesundera Mr. K D D Perera
Mawatha, Mr. J A S S Adhihetty
Colombo 7 Mr. T Hewage
Mr. N Udage
Mr. B D A Perera
Ms. Y Bhaskaran
Ms. A K Gunawardhana
Mr. R S Yatawara
Mr. M A J W Jayasekara
229
L B Microfinance Myanmar Company Myawaddy Bank Luxury Subsidiary Mr. K D D Perera

Company Limited incorporated in Complex 4th Floor, Apt 401 Mr. J A S S Adhihetty
Myanmar 844 FC Bo Gyoke Road cnr Wa Mr. N Udage
of 2016/17 (YGN) Dan Street Lanmadaw Mr. B D A Perera
Township Yangon, Mr. R S Yatawara
Myanmar Mr. Dulan R G de Silva
Greener Water Ltd. PB 3837 Level 29, Subsidiary Mr. T G Thoradeniya

West Tower, Mr. K D A Perera
World Trade Centre, Mr. K D H Perera
Echelon Square, Mr. J A S S Adhihetty
Colombo 1
Delmege Ltd. PV 6351 PB No.101, Subsidiary Mr. K D D Perera

Vinayalankara Mawatha, Mr. A M Pandithage
Ms. K Fernando
Mr. S H Amarasekera
Mr. S Wilson
Ms. Y Bhaskaran
Mr. D J Silva
Delmege Forsyth & PB 294 No. 101, Subsidiary Mr. N S L Fernando

Co. Limited Vinayalankara Mawatha, Mr. M R K Dias
Colombo 10
Delmege Forsyth & Co. PV 9833 No. 101, Subsidiary Mr. A M Pandithage
(Exports) (Pvt) Limited Vinayalankara Mawatha, Mr. T R Mendis
Colombo 10 Mr. H Somashantha
Delmege Coir (Pvt) Limited PV 1489 No. 101, Subsidiary Mr. A M Pandithage
Vinayalankara Mawatha, Mr. N T Bogahalande
Colombo 10 Mr. H Somashantha
Mr. M R K Dias
Mr. K N P Kularatne
L B Management PV 3012 No. 101, Subsidiary Mr. N T Bogahalande

Services (Pvt) Limited Vinayalankara Mawatha, Mr. J K A Sirinatha
Colombo 10
Delmege Forsyth & Co. PB 272 No. 101, Subsidiary Mr. A M Pandithage
(Shipping) Limited Vinayalankara Mawatha, Mr. H Somashantha
Mr. N S L Fernando
Mr. M R K Dias
Mr. S N Wickremasooriya
Delmege Freight PV 3571 No. 101, Subsidiary Mr. A M Pandithage

Services (Pvt) Limited Vinayalankara Mawatha, Mr. J K A Sirinatha
Mr. N S L Fernando
Mr. M R K Dias
230
VALLIBEL ONE PLC < SUBSIDIARY/ASSOCIATE COMPANIES OF VALLIBEL ONE PLC Annexes
Lewis Shipping PV 18008 No. 101, Subsidiary Mr. A M Pandithage

(Pvt) Limited Vinayalankara Mawatha, Mr. H Somashantha
Colombo 10 Mr. N S L Fernando
Mr. M R K Dias
Delmege Air PV 3373 No. 101, Subsidiary Mr. H Somashantha

Services (Pvt) Limited Vinayalankara Mawatha, Mr. G A R D Prasanna
Colombo 10 Mr. R R B De Silva
Mr. N S L Fernando
Mr. M R K Dias
Delmege Aviation Services PV 99520 No. 101, Subsidiary Mr. G A R D Prasanna

(Pvt) Limited Vinayalankara Mawatha, Mr. R R B De Silva
Mr. M R K Dias
Lewis Brown Air Services PV 16022 No. 101, Subsidiary Mr. A M Pandithage
(Pvt) Limited Vinayalankara Mawatha, Mr. L R V Waidyaratne
Mr. N S L Fernando
Mr. M R K Dias
Mr. R R B De Silva
Delair Travels (Pvt) Limited PV 3830 No. 101, Subsidiary Mr. D E Silva
Vinayalankara Mawatha, Mr. H Somashantha
Mr. M R K Dias
Grip Delmege (Pvt) Limited PV 3439 No. 101, Subsidiary Mr. N S L Fernando
Vinayalankara Mawatha, Mr. M R K Dias
Colombo 10
Grip Nordic (Pvt) Limited PV 2565 No. 125/26, Subsidiary Mr. N S L Fernando
Sri Bodhiraja Mawatha, Mr. S E Hjerpbakk
Mattegoda Mr. K C Wijesinhe
Mr. M R K Dias
Delmege Insurance PV 3273 No. 101, Subsidiary Mr. S C Ganegoda

Brokers (Pvt) Limited Vinayalankara Mawatha, Mr. H Somashantha
Mr. M R K Dias
Delmege Risk PV 75927 No. 101, Subsidiary Mr. S C Ganegoda

Solutions (Pvt) Limited Vinayalankara Mawatha, Mr. M R K Dias
Colombo 10
Delmege Airline Services PV 108869 No. 101, Subsidiary Mrs. Y Bhaskaran

(Private) Limited Vinayalankara Mawatha, Mr. R R B De Silva
Mr. M R K Dias
Delmege Aero Services PV 121497 No.101, Subsidiary Mr. Y D Y Gopalakrishnan

(Private) Limited Vinayalankara Mawatha, Mr. R R B De Silva
231
Delmege Electronics PV 214330 No.101, Subsidiary Mr. N S L Fernando

(Private) Limited Vinayalankara Mawatha, Mr. M R K Dias
Colombo 10
Delmege Financial PV 3398 No.101, Subsidiary Mr. N S L Fernando

Services (Private) Limited Vinayalankara Mawatha, Mr. M R K Dias
Colombo 10
Delmege General Equipment PV 3550 No.101, Subsidiary Mr. N S L Fernando

(Private) Vinayalankara Mawatha, Mr. M R K Dias
Limited Colombo 10
The Fortress Resorts PLC PQ 207 No. 101, Associate Mr. K D D Perera
Vinayalankara Mawatha, Mr. K D H Perera
Colombo 10 Mr. J A S S Adhihetty
Mr. W A C J Wickramasinhe
Mr. Merrill Joseph Fernando
Mr. Malik Joseph Fernando
Mr. S Senaratne
Mr. L N De S Wijeyeratne
Mr. Denesh Eric Silva
Mr. Jan Peter Van Twest
Mr. C V Cabraal
Mr. H Somashantha
(Alternate Director to Mr. L T Samarawickrama)
Ms. A A K Amarasinghe
232
GLOSSARY OF FINANCIAL TERMS

Accrual Basis Dividend Payout Key Management Personnel (KMP)
Recording revenue and expenses in the period in Dividend per share as a percentage of the earnings KMP are those persons having authority and
which they are earned or incurred regardless of per share. responsibility for planning, directing and controlling
whether cash is received or disbursed in that period. the activities of the entity, directly or indirectly,
Dividend Yield including any Director (whether executive or
Actuarial Gains and Losses Dividend per share as a percentage of the market otherwise) of that entity.
Effects of difference between the previous actuarial price. A measure of return on investment.
assumptions and what has actually occurred and Market Capitalisation
the effects of changes in actuarial assumptions. Earnings per Share Number of shares in issue multiplied by the market
Profits attributable to ordinary Shareholders divided value of a share at the reported date.
Amortisation by the number of ordinary shares in issue and
The systematic allocation of the depreciable amount ranking for dividend. Net Assets per Share
of an intangible asset over its useful life. Total equity attributable to equity holders divided by
EBIT the weighted average number of ordinary shares in
Available for Sale Earnings before interest and tax. issue. A basis of share valuation.
Non-derivative financial asset that are designated as
available for sale or are not classified as loans and Effect on Changes in Holding Non-Controlling Interest
receivable, held-to-maturity investment or financial Financial effect in the non-controlling interest and Equity in subsidiary not attributable, directly or
assets at fair value though profit and loss. reserves due to changes in the holding percentages indirectly, to a parent.
Biological Asset Effective Tax Rate Other Comprehensive Income

A living animal or plant. Income tax expense divided by profit before tax. Items of income and expenses that are not
recognised in profit or loss as required or permitted
Capital Employed Equity by other SLFRSs.
Shareholders’ funds plus non-controlling interests The values of an asset after all the liabilities or
and interest-bearing borrowings. debts have been paid. Related Parties
A related party is a person or entity that is related to
Capital Reserves Equity Accounted investees the entity that is preparing its Financial Statements.
Reserves identified for specific purposes and A method of accounting by which an equity
considered not of the entity, directly or indirectly, investment is initially recorded at cost and Return on Capital employed
including any Director (whether Executive or subsequently adjusted to reflect the investor’s Profit before tax and net finance cost divided by
otherwise) of that entity available for distribution share of the net assets of the associate (investee). average capital employed.
of that entity available for distribution.
Fair Value Revenue Reserves
Cash Equivalents The price that would be received to sell an asset Reserves considered as being available for
Liquid investments with original maturity periods or paid to transfer a liability in an orderly distributions and investments.
of three months or less. transaction between market participants
at the measurement date. Segments
Contingent Liability Constituent business units grouped in terms
A possible obligation that arises from past events Fair Value through Profit and Loss of similarity of operations and location.
and whose existence will be confirmed only by A financial asset/liability acquired/incurred principally
the occurrence or non-occurrence of one or more for the purpose of selling or repurchasing it in the Shareholders’ Funds
uncertain future events not wholly within the control near term. Total of issued and fully-paid up capital and
of the entity. reserves.
Financial Asset
Current Ratio Any asset that is cash, an equity instrument of Value Addition
Current assets divided by current liabilities. another entity or a Contractual right to receive The quantum of wealth generated by the activities
A measure of liquidity. cash or another financial asset from another entity. of the Group measured as the difference between
turnover and the cost of materials and services
Current Service Cost Financial Instrument bought in.
Is the increase in the present value of the defined Any contract that gives rise to a financial asset of
benefit obligation resulting from employee service one entity and a financial liability or equity to another Working Capital
in the current period. entity. Liability or equity to another entity. Capital required to financing day-to-day operations,
computed as the excess of current assets over
Deferred Taxation Financial Liability current liabilities.
The tax effect of timing differences deferred to/from Any liability that is a contractual obligation to deliver
other periods, which would only qualify for inclusion cash or another financial asset to another entity.
on a tax return at a future date.
Proportion of total interest-bearing borrowings to
Dividend Cover capital employed.
Profit attributable to ordinary shareholders divided
by dividend. Measures the number of times dividend
is covered by distributable profit.
233
Annexes VALLIBEL ONE PLC
NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Eighth (08th) Annual General Meeting of the Company will be held at The Victorian,
The Kingsbury Hotel, No. 48, Janadhipathi Mawatha, Colombo 01 on 29th June 2018 at 3.00 pm for the following purposes.
1. To receive and consider the Annual Report of the Board of Directors on the affairs of the Company and its Subsidiaries
and the Statement of Accounts for the year ended 31st March 2018 with the Report of the Auditors thereon.
2. To re-elect as a Director, Mrs. Kimarli Fernando who retires by rotation in terms of Articles 87 and 88 of the Articles
of Association of the Company.
3 To pass the ordinary resolution set out below to re-appoint Mr. R N Asirwatham who is 75 years of age, as a Director of
the Company;
“IT IS HEREBY RESOLVED THAT the age limit stipulated in Section 210 of the Companies Act No. 07 of 2007 shall not apply
to Mr. R N Asirwatham who is 75 years of age and that he be and is hereby re-appointed a Director of the Company.”
4. To re-appoint Messrs Ernst and Young, Chartered Accountants, as the Auditors of the Company and to authorise the
Directors to fix their remuneration.
5. To authorise the Directors to determine donations for the year ending 31st March 2019 and up to the date of the next
Annual General Meeting.
By Order of the Board,
VALLIBEL ONE PLC

P W CORPORATE SECRETARIAL (PVT) LTD.
Director/Secretaries
30th May 2018

Colombo
Notes
1. A Shareholder entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote on behalf of him/her.
2. A proxy need not be a Shareholder of the Company.
3. The Form of Proxy is enclosed for this purpose.
4. The completed Form of Proxy must be deposited at the Registered Office of the Company, Level 29, West Tower, World Trade Centre, Echelon Square,
Colombo 1 not later than 47 hours before the time appointed for the Meeting.
VALLIBEL ONE PLC
FORM OF PROXY
I/We* ............................................................................................................................................... (NIC No. ......................................)
of ........................................................................................................................................................................ being a shareholder/
shareholders of VALLIBEL ONE PLC hereby appoint ...........................................................................................................................
(NIC No. .........................................................) of..................................................................................................... (or failing him).
Mr. K D D Perera of Colombo or failing him*

Mr. S H Amarasekera of Colombo or failing him*
Mr. J A S S Adhihetty of Colombo or failing him*
Mrs. K Fernando of Colombo or failing her*
Mr. R N Asirwatham of Colombo
as my/our* proxy to represent and speak and vote as indicated hereunder for me/us* and on my/our* behalf at the Eighth (8th)
Annual General Meeting of the Company to be held on 29th June 2018 and at every poll which may be taken in consequence of
the aforesaid meeting and at any adjournment thereof.
For Against
1. To re-elect Mrs. Kimarli Fernando as a Director in terms of Articles 87 and 88 of the Articles
of Association of the Company.
2. To pass the ordinary resolution set out under item 3 of the Notice of Meeting for the
re-appointment of Mr. R N Asirwatham as a Director.
3. To re-appoint Messrs Ernst & Young, Chartered Accountants, as Auditors of the Company
and to authorise the Directors to determine their remuneration.
4. To authorise the Directors to determine donations for the year ending 31st March 2019
and up to the date of the next Annual General Meeting.
Signed this …………...........................…. day of ……….........................…. Two Thousand and Eighteen.
*Please delete as appropriate.

………....................…………………
Signature of Shareholder/s
Notes:
1. A Proxy need not be a shareholder of the Company.
2. Instructions as to completion appear overleaf.

VALLIBEL ONE PLC < Form of proxy
INSTRUCTIONS FOR COMPLETION

1. The full name, National Identity Card number and the registered address of the shareholder appointing the Proxy and the
relevant details of the Proxy should be legibly entered in the Form of Proxy which should be duly signed and dated.
2. The completed Proxy should be deposited at the Registered Office of the Company, Level 29, West Tower, World Trade Centre,
Echelon Square, Colombo 1, not later than 47 hours before the time appointed for the meeting.
3. The Proxy shall –
(a) In the case of an individual be signed by the shareholder or by his attorney, and if signed by an attorney, a notarially
certified copy of the Power of Attorney should be attached to the completed Proxy if it has not already been registered
with the Company.
(b) In the case of a company or corporate/statutory body either be under its Common Seal or signed by its Attorney or by
an Officer on behalf of the Company or corporate/statutory body in accordance with its Articles of Association or the
Constitution or the Statute. (as applicable)
4. Please indicate with a “X” how the Proxy should vote on each resolution. If no indication is given, the Proxy in his discretion
will vote as he thinks fit.
CORPORATE INFORMATION
NAME OF COMPANY REGISTERED OFFICE

Vallibel One PLC Level 29, West Tower,
World Trade Centre,
LEGAL FORM Echelon Square,
Colombo 1.
A public Quoted Company with limited
Telephone: 011 244 5577
liability incorporated under the provisions
Fax: 011 244 5500
of the Companies Act No. 07 of 2007
Email: info@vallibel.com
Web: www.vallibelone.com
DATE OF INCORPORATION
09th June 2010 COMPANY SECRETARIES
P W Corporate Secretarial (Pvt) Ltd.
COMPANY REGISTRATION NUMBER
No. 3/17, Kynsey Road,
PB 3831 PQ Colombo 8.
Telephone: 011 464 0360
NATURE OF THE BUSINESS Fax: 011 474 0588
Diversified holding company E-mail: pwcs@pwcs.lk
AUDITORS
BOARD OF DIRECTORS
Ernst & Young
Mr. K D D Perera
Chartered Accountants
(Chairman/Managing Director)
No. 201, De Saram Place,
Mr. S H Amarasekera Colombo 10.
Mr. J A S S Adhihetty
Mrs. K Fernando
BANKERS
Mr. R N Asirwatham
Hatton National Bank PLC
Pan Asia Banking Corporation PLC
Sampath Bank PLC
Standard Charted Bank Limited
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2017/18

Achieve uniqueness To run healthy core businesses,

The Vallibel One PLC 2017/18 Annual Report

About Our Report 5 Delivering Value 70-90 Annexes 221-230

Board of Directors 16-17 Governance 91-107

A tree bearing fruit symbolises energy, prosperity

Vallibel One has grown branches as we

zzDisclosure of comprehensive qualitative

Guiding Principles and Assurance

Integrated Report Annual Financial Statements Corporate Governance Sustainability

We welcome your comments or

We drive innovation through

Our Impact on the Sri Lankan Economy

Government Taxes Paid Market Capitalisation of

Total Number Export Revenue of

Investment in Community Programmes and Initiatives Rs. 102 Mn

Our Business Sectors

National Long-Term Rating at “A-(lka)”; Outlook Stable

National Long-Term Rating for subordinated debt at

Contribution to Group Contribution to Group

Total Liabilities Total Liabilities

Total Assets Total Assets

(%) 0 1.2 2.4 3.6 4.8 6.0 (%) 0 10 20 30 40 50

ISO 9001 QMS certification to all Rubber factories

Best Luxury Boutique Spa – Country Winner,

Listed among Top Hotels in Sri Lanka

Best Small Hotel in Sri Lanka (2016/2017) Awarded by

CONDÉ NAST JOHANSENSA – global collection

Investments & Others

This sector represents Vallibel One PLC’s investments and

Among the CIMA-LMD Top 100 companies

2010 2010/11 2011 2011/12

2012/13 2013/14 2015/16

Performance Financial Capital Highlights

2017/18 2016/17 Change

Earnings Highlights and Ratios

Financial Position Highlights and Ratios

Operational and Non-Financial Highlights

Property, plant and equipment Capital expenditure Manufacturing capacity

Rs. 37,480 Mn Rs. 5,611 Mn 12.7 Mn sqm of tiles per annum

Social and Relationship Capital

Customers Suppliers and Business Partners Community Engagement

Standing from Left

Seated from Left

MR. DHAMMIKA PERERA MR. SUMITH ADHIHETTY MR. RAJAN ASIRWATHAM

profitability. Downside risks include supply Vallibel One commenced an initiative to

Further, Net assets per share

As Vallibel One grows via acquisition of

Sector Review Acknowledgements

Aluminium Sector Plantations Sector

PAT Rs. 0.2 Bn PAT Rs. 0.03 Bn

Leisure Sector Consumer Sector 30th May 2018

PAT (Rs. 0.02 Bn) PAT (Rs. 0.2 Bn)

Investments and Others

PAT Rs. 1.3 Bn

Creating Value for Our Stakeholders

Capital Inputs Value Added to Our Business Verticals

Financial Capital Lifestyle Leisure Investments

Wooden and Insurance