annual report 2016/2017 - cse...3 on’ally holdings plc annual report 2016/2017 chairman’s review...

Annual Report 2016/2017

VisionBuilding Growth

Mission To build growth by being the most desired business venue in the city. To enhance shareholder value by satisfying our customers with modern facilities and quality service by dedicated professionals.

ON’ALLY HOLDINGS PLC

TABLE OF CONTENTS Page

Corporate Information 1

Notice of Annual General Meeting 2

Chairman’s Review 3

Board of Directors - Profile 4-6

Highlights 7

Annual Report of the Board of Directors on the affairs of the Company 8-12

Audit Committee Report 13

Remuneration Committee Report 14

Related Party Transactions Review Committee Report 15

Statement of the Directors’ Responsibility 16

Report of the Auditors 17

Statement of Comprehensive Income 18

Statement of Financial Position 19

Statement of Changes in Equity 20

Statement of Cash Flows 21

Notes to the Financial Statements 22-48

Six year Review 49

Information to Investors 50

Major Shareholders of the Company 51

Form of Proxy Enclosed

Instruction for Completion of Proxy Enclosed

1 ON’ALLY HOLDINGS PLCAnnual Report 2016/2017

CORPORATE INFORMATION

Directors : Dr.Jagath Munasinghe (Chairman) Mrs. Tharsini Sarveshwaran (Deputy Managing Director) Mr. B. V. Selvanayagam Mr. G. T. Fazleabas Mr. M. I. R. Zahir Mr. A. C. Yahiyakhan Mr. T. A. Akbarally Mr. W. L. D. P. V. Jayawardene Mr. S. S. P. Rathnayake Mr. S. Selvanayagam (Alternate Director to Mr.B.V.Selvanayagam)

Registered Office : Unit 603, 4th Floor, Unity Plaza Building, No.2, Galle Road, Colombo-4 Tel: 011 2501622

Secretaries : P W Corporate Secretarial (Pvt) Ltd., 3/17, Kynsey Road, Colombo 8 Tel: 011 4640360-3

Auditors : Messrs PricewaterhouseCoopers, Chartered Accountants, 100, Braybrooke Place, Colombo 2.

Bankers : Bank of Ceylon

Legal Advisors : D M Swaminathan Associates

2ON’ALLY HOLDINGS PLCAnnual Report 2016/2017

NOTICE OF ANNUAL GENERAL MEETINGNOTICE IS HEREBY GIVEN that the Thirtieth (30th) Annual General Meeting of the Company will be held at Waters Edge, Battaramulla on Saturday, 30th September 2017 at 10.30 a.m. for the following purposes;

1. ROUTINE BUSINESS1.1 To receive and consider the Annual Report of the Board of Directors on the affairs of the Company and

the Statement of Accounts for the year ended 31st March 2017 with the Report of the Auditors thereon.

1.2 To re-elect Mr. Mohamed Imran Rasheed Zahir who retires by rotation in terms of Article 88 of the Articles of Association of the Company, a Director.

1.3 To re-appoint Messrs. PricewaterhouseCoopers, Chartered Accountants, as the Auditors of the Company and to authorize the Directors to fix their remuneration.

1.4 To authorize the Directors to determine donations for the year ending 31st March 2018 and up to the date of the next Annual General Meeting.

2. SPECIAL BUSINESS

2.1 To consider and if thought fit to pass the following Special Resolution:

“ IT IS HEREBY RESOLVED to amend the Articles of Association of the Company,

(a) by the addition of the words “ not being a Director appointed in terms of Articles 80 (A)” to Article 87 (iv) (v), so that the said Articles shall read as follows:-

87 (iv) If [not being a Director appointed in terms of Articles 80 (A)]he be absent from Meetings of the Directors for three months without leave, and the Directors resolve that his office be vacated.

87 (v) If [not being a Director appointed in terms of Articles 80 (A)]he be requested in writing by all his co-Directors to resign,

(b) by the addition of the words “ and the Directors appointed in terms of Articles 80 (A)” to Article 88 (i) , so that the said Article shall read as follows:-

88. Subject to the provisions of Article 80 (A) at each Annual General Meeting

(i) One-third of the Directors for the time being, or if their number is not a multiple of three the number nearest to (but not greater than) one-third shall retire from office. Provided that a Director appointed to the office of Chairman, Managing Director or Joint Managing Director and the Directors appointed in terms of Article 80 (A) shall not, while holding that office or a Director vacating office in terms of 88 (ii), be subject to retirement by rotation or be taken into account in determining the Directors to retire in each year;

By order of the BoardON’ALLY HOLDINGS PLC

P W CORPORATE SECRETARIAL (PVT) LTDSecretaries

10 August 2017Colombo

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, Unit 603, 4th Floor,

Unity Plaza Building, No. 2, Galle Road, Colombo 04 not later than forty seven (47) hours prior to the time appointed for the Meeting.


CHAIRMAN’S REVIEWOn behalf of the Board of Directors of On’ally Holdings PLC, I have great pleasure in welcoming you to the 30th Annual General meeting of the Company and to present the Annual report and the Statement of Accounts for the financial year ended 31st March 2017. I am pleased to announce that we have just completed a challenging year, in a vibrant business environment with remarkable progress made by the Company during the year under review.

Operating Results

By recognizing the responsibility placed on us to ensure the success of our business, the On’ally Holdings PLC was able to sustain a strong growth during the financial year 2016/2017, through registering a profit before tax of Rs. 119.72 Million excluding the gain on revaluation of investment properties of Rs 164 Million. It is a 17 % increase compared to the previous year.

In the year under review, turnover of the company grew by 11.8 % to reach Rs. 139.66 Million, compared with the turnover of Rs. 124.86 Million in 2015/2016. The revision of rentals of existing tenants during the financial year and increased interest rates on investments were the major reasons for this increase in turnover and the profitability.

We are happy to announce that the Directors of the company have approved a final Dividend of Rs. 2.10 per share whilst an Interim Dividend was paid of Rs. 1.10 per share. Therefore, the total Dividend for the year under review was Rs. 3.20 per share, by registering the largest payout to shareholders since the inception of the Company. The total dividend paid to the shareholders of the On’ally Holdings PLC for the year under review was Rs. 54 Million. It is a 5 % increase compared to the previous year.

Our Focus

The Unity Plaza Building, which is the main source of income of On’ally holdings, is situated in a prime location. Its location in Bambalapitiya is such that it has lot of potential to be developed mainly as a high-end office complex. As there is a dearth of good

quality office space in the area my vision is to develop it to its full potential. I am mindful that there are a few challenges that we need to face in doing that. Providing adequate parking space improving the existing vertical accessibility along with facilities for disabled are the main ones. Further, the cost involved for an overall refurbishment would be very high. Yet, I’m sure we will be able to overcome all hurdles and achieve our aim within next year. I’m happy to keep you informed that the Board of Management has been making good contacts with parties those who are still interested in having office space at a higher rent and such occupations will elevate the image of the property, without necessarily breaking away from the recognition that it presently has in computer and IT related businesses.

Dr. Shabbir Hussein Abbas Gulamhusein was a Director of On’ally holdings PLC from 24 March 2003 to 09 June 2017. Although I did not have the opportunity to associate him closely I am aware that he had contributed immensely for the success of the Company. Therefore, I, myself on behalf of the Board of Directors wish to place on record our appreciation for the services rendered by him.

Let me conclude this message by thanking my colleagues on the Board of Directors for their guidance and support exercised during the financial year under review. Also I would like to extend my appreciation to all of our valued share holders, customers, Bankers, Company Secretaries and Auditors for their continued support. I trust that all shareholders will join with me in appreciating the Managing Director, management team and the staff of the On’ ally Holding PLC, for their dedication to achieve the company’s current performance.

Dr. Jagath MunasingheChairman10 August 2017


BOARD OF DIRECTORS

Dr. Jagath Nandana MunasingheChairmanDr Jagath Munasinghe is a Chartered Architect and a Town Planner by profession and the present Chairman of the Urban Development Authority of Sri Lanka, in addition to his duties as the Director General of the National Physical Planning Department.He has obtained Bachelors Degree in Built Environment and Masters Degrees in Architecture and Town Planning from the University of Moratuwa and a Doctorate in Urban Planning and Design from National University of Singapore. He has been a senior academic in the University of Moratuwa since 1999 and a visiting faculty member of the Sabaragamuwa University, University of Sri Jayawardanepura and the Institute of Surveying and Mapping Sri Lanka. He held many responsible positions in the University of Moratuwa, Institute of Town Planners, Sri Lanka Institute of Architects, etc.As a practicing Architect and a Town Planner he has immensely contributed to several national and international development projects and authored several publications.Mr. Priya JayawardeneDirectorMr. Priya Jayawardene currently serves as the Deputy Director General (Finance) of the Urban Development Authority. He has extensive experience in business and finance, both in Sri Lanka and overseas.Mr. Jayawardene was the Head of Finance at the Sri Lanka State Plantations Corporation prior to joining the Fiji Sugar Corporation, Fiji as the Chief Accountant.After completion of his assignment in Fiji, he joined Amrind (Pvt) Ltd, Melbourne, Australia as the Financial Controller. Thereafter he served as Deputy General Manager (Finance) of the Employees Trust Fund Board, Sri Lanka.Mr. Jayawardene then moved to Singapore and joined BT Aero Services Pvt. Ltd as the Chief Financial Officer.Mr. Jayawardene is a Member of the Institute of Chartered Accountants of Sri Lanka and is also a Member of the Chartered Institute of Management Accountants, London.Mr. Sampath Sumedha Pujitha RathnayakeDirectorMr. S. S. P. Rathnayake is the Director General of the Urban Development Authority, an Institution at the forefront of the Sri Lanka’s emerging urban transformation. He is a Chartered Civil Engineer having vast experience in implementation of multi-disciplinary Major Civil Construction Contracts. He has extensive experience in planning facilitating and managing large scale urban development, real estate and infrastructure initiatives in the country.Mr. S. S. P. Rathnayake worked as the Divisional Engineer at the Road Construction and Development Company (Pvt.) Ltd., Planning Engineer at the M/S Hyundai Development & Engineering (Pvt.) Ltd., Senior Project Manager at the International Construction Consortium, and the General Manager at the RR Construction (Pvt.) Ltd. He has graduated from the University of Moratuwa, Bachelor of Science in Engineering (Civil) Hons. with a Second Class Upper Division and also having a Postgraduate Diploma in Highway and Traffic Engineering from the University of Moratuwa.Mr. Brian V SelvanayagamDirectorMr. Brian V Selvanayagam was appointed to the Board of On’ally Holdings PLC on 1st November 2008.He is an Associate Member of the Chartered Institute of Management Accountants (UK), Fellow Member of the Institute of Chartered Accountants of Sri Lanka, Chartered Marketers and Fellow Member of the Chartered Institute of Marketing (UK), Fellow Member of the Certified Management Accountants of Sri Lanka and Chartered Member of the Chartered Institute for Securities & Investment. (UK).He is a member of the Audit & Risk Committee of the Chartered Institute of Marketing (UK) and Chairman of the Chartered Institute of Marketing Sri Lanka, Director of Vision One Private Limited, and Renuka Capital PLC.He counts over 20 years of work experience in fields covering banking, corporate finance and finance, business development and education and has served at Ernst & Young, DFCC Bank, HSBC Sri Lanka and Dunamis Capital PLC.He is also a Justice of the Peace for the whole island.


BOARD OF DIRECTORS (contd)

Mrs. Tharsini SarveshwaranDeputy Managing DirectorMrs. T Sarveshwaran is a full member of the Association of Business Executives (UK) and she has obtained an Executive Diploma in Accounting and Finance from the Institute of Chartered Accountants of Sri LankaMrs. Sarveshwaran possesses 19 years’ experience in the fields of Accounting and Administration at On’ally Holdings PLC.Mr. Gulamhussein T FazleabasDirectorMr. Gulamhussein Fazleabas is a Chartered Engineer by profession and holds a BS in Civil Engineering from the University of Louisiana in Lafayette (USA) and a MS also in Civil Engineering from the University of North Carolina in Charlotte (USA).He is a Member of the Institute of Engineers Sri Lanka and a licensed Professional Engineer in Louisiana and North Carolina, USA.He has over 30 years private sector design engineering and project management experience in both Sri Lanka and USA and is presently the Chairman/Managing Director of Perigon Lanka Private Limited, a company carrying out Project Management, Structural Engineering and Cost Consultancy Services. Mr. Imran ZahirDirectorMr. Imran Zahir has over 16 years of experience in the Investment and Finance industry, regionally and internationally and a Chartered Management Accountant. He presently functions in the Investment and Finance industry in Sri Lanka and Europe. He is a Director of the Adam Investments Group and several public companies in Sri Lanka, and a Director & Head of Investment of the Orchard Capital Group EU/UK.Mr. Abdul Careem Yahiyakhan [Dip. Sys. Eng, Pg.Dip (India) BA (UK)]DirectorMr. A C Yahiyakhan holds a Bachelor of Arts Degree from the United Kingdom, Post Graduate Diploma in Personnel Management from India and a Diploma in Computer Software Engineering.He is experienced in the fields of administration in computer center management, foreign employment supplier services and was an Advisor to Hon. Mohamed Musthaffa, Deputy Minister of Higher Education in Sri Lanka.He has over 21 years experience in the private sector as a Director and Managing Director both in Sri Lanka and abroad and is presently the Chairman / Managing Director of M R S Group (Hazmea) providing Computer Centres and Foreign employment services.Mr. Tyeabally A AkbarallyDirector

Mr. Tyeabally Akbarally is the Executive Director Akbar Brothers (Private) Limited, Quick Tea (Private) Limited, Falcon Trading (Private) Limited, Land and Building Limited, Flexiprint (Private) Limited and Akbar Pharmaceuticals (Private) Limited.In addition to the above Mr. Akbarally is also Chairman - Amana Takaful Limited and Amana Takaful Maldives Limited and Deputy Chairman of Amana Bank Limited. He also serves as a Member of the advisory panel on Tea sector to the Minister of Plantation Industries.He was Past Chairman of the Colombo Tea traders Association, Spices and Allied products Traders Association and a former Director Sri Lanka Tea Board and former Committee member of the Ceylon Chamber of Commerce.


Mr. Shehan Selvanayagam(Alternate Director to Mr. B V Selvanayagam)

Mr. Shehan Selvanayagam is currently a Director of Loops Solutions (Pvt) Ltd which is a leading Digital Agency in Sri Lanka working with over 45 leading brands in Sri Lanka as well as clients in the Middle East, Europe and AustraliaShehan who hails from an e-commerce background was previously employed at Sri Lankan Airlines handling the online marketing aspects of the Airline, where he was responsible for setting up and running the E-Commerce operation of the airline, from there he joined Nations Trust Bank and was handling the Alternate Channels of Banking within the Bank.He has a Degree in Business Management from the University of Wales, a graduate from the Chartered Institute of Marketing (UK) and holds a Masters in Information Technology from the University of Keele (UK).He regularly conducts seminars on Digital Media for companies as well as functions as a Marketing Consultant for several organizations in Sri Lanka.

BOARD OF DIRECTORS (contd)


HIGHLIGHTS

OPERATING RESULTS 2016/17 2015/16 Increased (Rs.000’) (Rs.000’) (Decreased) %

Turnover 139,670 124,868 11.85

Operating Profit 88,221 86,568 1.91Interest income 31,502 15,451 103.88Fair value gain on investment properties 164,000 378,523 (56.67)

Profit before tax 283,723 480,542 (40.96)Tax 33,146 (150,089) (122.08)

Profit after tax 316,869 330,453 (4.11)Other comprehensive income - net of tax (9) 1,946 (100.48)Profit brought forward 1,402,234 1,120,741 25.12

Profit available for appropriation 1,719,094 1,453,140 18.30Transfer from reserve 1,258 721 74.48Dividends paid (54,252) (51,627) 5.08Forfeited dividend 460 - -

Profit carried forward 1,666,560 1,402,234 18.85

KEY INDICATORS

Earnings per share (Rs) 18.11 18.88 (4.08)Earnings per share(exclusive fair value gain) (Rs) 4.60 5.13 (10.33)Dividend per share (Rs) 3.10 2.95 5.08Net assets per share (Rs) 107.57 92.41 16.41Market price per share as at 31 March (Rs) 45.70 50.20 (8.96)

020406080

100120140160180200220240260280300320340360

Value (Rs Million)

2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017Year

Turnover Profit After Taxtation Dividends

88.7

1

145.

38

36.4

0

98.3

6

105.

39

265.

83

45.5

0

116.

9689

.71

49.0

0

124.

87

139.

67

330.

45

316.

87

51.6

3

54.2

5

65.0

3

42.8

8


ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANYThe Directors of On’ally Holdings PLC have pleasure in presenting their Annual Report with the Audited Financial Statements of the Company for the year ended 31st March 2017.

General

On’ally Holdings PLC is a public limited liability Company which was incorporated under the Companies Ordinance No.51 of 1938 as a public limited company on the 25th June 1982 which obtained the certificate to commence business on 20th August 1982, listed on the Colombo Stock Exchange on 25th April 1991 and re-registered as per the Companies Act, No 7 of 2007 on 13th December 2007 under the new Number PQ 107.

Principal activities of the Company and review of performance during the year

The Company’s principal activities, which remained unchanged during the year, are Property Development / Real Estate.

A review of the business of the Company, its performance during the year and its future prospects

are contained in the Chairman’s Review, which forms and integral part of this Report.

This Report and the Financial Statements reflect the state of affairs of the Company.

Financial Statements

The complete Financial Statements of the Company, duly signed by two Directors on behalf of the Board of Directors and the Auditors are given on pages 18 to 48.

Accounting Policies

The accounting policies adopted by the Company in the preparation of the Financial Statements are given on pages 22 to 33 which are consistent with those of the previous period.

Board of Directors and Relevant Interest in Shares

The Board consists of 9 Directors, comprising of one Executive Director and 8 Non Executive Directors, of whom 4 are Independent.

The Names of the Directors and their relevant interests in shares are given below.

} }Names of Directors Designation No. of

shares As at 31.03.2017

No. of shares As at 31.03.2016

Dr. J N Munasinghe

Mr. B V Selvanayagam

Non Executive Director


Nil

125

Nil

125

Shares held jointly with Mr. S G Selvanayagam & Mrs. L Selvanayagam

937,5001,131,181

937,5001,131,181

Shares held by Mrs. L Selvanayagam

193,556 193,556

Dr. Shabbir Abbas Gulamhusein


Shares held in the following mannerDr. S A Gulamhusein 31,250 31,250Waldock Mackenzie Ltd/Dr. S A Gulamhusein

465,128 463,128

Assetline Leasing Company Ltd./Dr. S A Gulamhusein

1,000768,717

1,000508,590

Sampath Bank PLC/ Dr. S H A Gulamhusein

254,160 1,160

Commercial Bank of Ceylon PLC/Dr. S A Gulamhusein

17,179 12,052

} }


ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

The profiles of all the Directors detailing their areas of expertise, are included on pages 4 to 6 of the Annual Report.

Retirement of Directors

In terms of Article 88 of the Articles of Association of the Company, Mr. M I R Zahir will retire by rotation and being eligible is recommended for re-election.

Changes in the Directorate

Dr. S A Gulamhusein, who served as a Non Executive Director of the Company since May 2003, passed away on 9th June, 2017.

Mr. G Ramanan, Alternate Director to Mr. Imran Zahir resigned on 24th July, 2017.

Independence of Directors

The Independence of the Non Executive Directors was determined according to the Listing Rules of the Colombo Stock Exchange and each of the Directors has declared their independence and submitted signed declarations to that effect.

Declaration of Interests of Directors

The Company maintains an interest Register in terms of the Companies Act No. 7 of 2007 which is deemed to form part of this Annual Report and is available for inspection upon request.

All related party transactions which encompass the transactions of Directors who were directly or indirectly interested in a contract or a related party transaction with the Company during the accounting period is recorded in the Interest Register in compliance with the applicable law.

Names of Directors Designation No. of shares As at 31.03.2017

No. of shares As at 31.03.2016

Mrs. T Sarveshwaran Executive Director 57,316 57,316Mr. G T Fazleabas Independent Non

Executive Director374 374

Mr. M I R Zahir Independent Non Executive Director

Nil Nil

Mr Abdul Careem Yahiyakhan

Mr. Shehan Selvanayagam-(Alternate Director toMr. B V Selvanayagam)

Independent Non Executive Director

Alternate Director

Nil

Nil

Nil

Nil

Mr. T A Akbarally IndependentNon Executive Director

Nil Nil

Mr. G Ramanan-(Alternate Director to Mr.M.I.R.Zahir-Resigned w.e.f. 24.07.2017)

Mr. W L D P V Jayawardene

Mr. S S P Rathnayake

Alternate Director

Non ExecutiveDirector

Non ExecutiveDirector

Nil

Nil

Nil

Nil

Nil

Nil


The Directors have declared their interests in contracts and their relevant interests in shares, at meetings of the Directors.

Remuneration of Directors

The total remuneration paid to the Directors for the financial year was Rs.6,324,480/-

Corporate Governance

The Board of Directors is committed to the highest standards of governance designed to protect the interest of the shareholders while promoting integrity, transparency and accountability. The Board ensures that the Company is in compliance with applicable legal and regulatory requirements including meeting the requirements of the Listing Rules of the Colombo Stock Exchange, The Companies Act No. 7 of 2007 and all other applicable laws and regulations.

Duties of the Board

The Board is responsible for the formulation and implementation of the Company’s short term, medium term and long term strategies. The Board also ensures that the Senior Management team has the requisite skills, expertise and knowledge to implement these strategies.

The Board ensures that all Company decisions are in compliance with laws and regulations of the country and that each decision meets the ethical standards.

The Board through the Audit Committee ensures that the Company follows accounting standards as set out by the Sri Lanka Financial Reporting Standards (SLFRS) and all financial statements are in compliance with financial regulations.

The Board, in addition to keeping all shareholder interests a priority when considering corporate decisions, also keeps the Colombo Stock Exchange and the public informed of all significant decisions.

Delegation of Authority

The Board has delegated the authority of the day to day management of the Company to the Deputy Managing Director who is responsible for delivering services according to the strategic plan, within the policies and budgets approved by the Board.

Delegation to Board Members

The Board has delegated certain functions and duties to sub committees that comprises of Board members. The functions and duties of each subcommittee namely, the Audit Committee, Remuneration Committee and the Related Party Transactions Review Committee are detailed in the respective reports.

The Board is also encouraged to seek independent professional advice when necessary, at the Company’s expense and also have access to the Company Secretary to obtain advice and services as necessary.

Appraisal of Board Performance

The Board is aware that appraising their own performance periodically would enhance the understanding of individual performance of the Board as a whole. However, though there is no formal system in place, the Board members ensure that Board responsibilities are satisfactorily discharged.

Remuneration Committee

The Remuneration Committee comprises of three Non Executive Directors of whom one is Independent;

Mr. S S P Ratnayake (Chairman)Mr. A C YahiyakhanMr. W L D P V Jayawardene

The Remuneration Committee is responsible to ensure that the Company’s remuneration policies are adequate to attract and retain top talent. The aggregated remuneration of the Board of Directors is disclosed in the notes to the financial statements and in this Report.

Audit Committee

The Audit Committee comprises of the four Non Executive Directors of whom three are Independent.

Mr. W L D P V Jayawardene (Chairman)Mr. M I R ZahirMr. A C YahiyakhanMr. T A Akbarally

The Report of the Audit Committee is given separately in the Annual Report detailing the functions and



duties of the Committee and the specific objectives met in the financial year under review.

Related Party Transactions Review Committee

The Related Party Transactions Review Committee comprises of three Independent Non Executive Directors and one Non Executive Director;

Mr. T A Akbarally(Chairman)Mr.A C YahiyakhanMr. G T FazleabasMr. B V Selvanayagam

The Report of the Related Party Transactions Review Committee is given separately in the Annual Report detailing the functions and duties of the Committee.

Internal Controls

The Board through delegation to the Audit Committee ensures that the Company maintains a sound system of Internal Controls to safeguard investments and Company assets. Therefore, the Audit Committee conducts a review of the effectiveness of the Company’s system of internal controls.

Company Secretary

The Company Secretary ensures that Board procedures are followed and that applicable rules and regulations are complied with. The Company Secretary also liaises with the CSE on all of the Company’s communications. The Company Secretary is also responsible for informing of the General Meetings to the Shareholders and for accurate recording of proxy voting.

Major Transactions

The Board of Directors is required to act in accordance with section 185 of the Companies Act in regard to ‘major transactions’ as per the said section 185. There were no major transactions entered into by the Company, during the year.

Dividends

A final dividend of Rs. 2.10 per share was approved by the Directors for the year under review and the said dividend would be paid on 24th August 2017.

An interim dividend of Rs 1.10, per share was paid on 10th, January 2017.

Accordingly, the total dividend for the year under review amounts to Rs. 3.20 per share (Rs. 3.10 per share for the year ended 31st March 2016).

Auditors

Messrs. PriceawaterhouseCoopers, Chartered Accountants served as the Auditors during the year under review and being eligible are recommended for re-appointment as the Auditors of the Company, at the Annual General Meeting. The Auditors do not have any other relationship with the Company other than as Auditors of the Company who have also provided certain non audit services.

A total amount of Rs.389,050/-is payable by the Company to the auditors for the year under review, comprising Rs.310,000/- as audit fees and Rs.79,050/- for non audit services. The details of the fee payable to the Auditors have been set out under the Note 7 to the financial statements.

Donations

During the year under review, the Company did not make any donations.

Statutory Payments

The Directors confirm that, to the best of their knowledge, all taxes, duties and levies payable by the company, all contribution, levies and taxes payable on behalf of and in respect of the employees of the company and all other known statutory dues as at the reporting period have been paid or, were relevantly provided for.

Contingent Liabilities

There were no material contingent liabilities as at the reporting period, except as disclosed in Note 26 to financial statements on page 46.

Events occurring after the reporting period

No event has occurred since the reporting date which would require adjustment to, or disclosure in the financial statements, except as disclosed under Note 30 to the financial statements on page 48.



ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANYAmendments to the Articles of Association

The Board resolved to place the Special Resolution set out in the Notice of Meeting under “Special Business” in order to clearly set out the provisions pertaining to the Directors nominated by the Urban Development Authority.

Annual General Meeting

The Annual General Meeting of the Company will be held on Saturday 30th September 2017 at 10.30 a.m. The notice of the Annual General Meeting appears on page 2.

Dr. Jagath MunasingheChairman

Ms. T SarveshwaranDeputy Managing Director

P W Corporate Secretarial (Pvt) Ltd.Secretaries

10 August 2017


AUDIT COMMITTEE REPORT

The composition of the Audit Committee during the year and up to 22nd January, 2017 was as follows;

Mr. Imran Zahir - Chairman-Independent Non Executive DirectorMr. Gulamhussein T. Fazleabas-Independent Non Executive DirectorMr. Abdul Careem Yahiyakhan-Independent Non Executive DirectorMr. Tayebally Akbarally-Independent Non Executive Director

The Audit Committee was reconstituted on 23rd January, 2017 and the Committee now comprise of the following:

Mr. W L D P V Jayawardene - Chairman-Non Executive DirectorMr. Imran Zahir-Independent Non Executive DirectorMr. Abdul Careem Yahiyakhan-Independent Non Executive DirectorMr. Tayebally Akbarally-Independent Non Executive Director

Mr. Jayawardene is a Member of the Institute of Chartered Accountants of Sri Lanka and is also a Member of the Chartered Institute of Management Accountants, London.

The Deputy Managing Director together with the Accountant attend meetings of the Committee by invitation. The External Auditors are requested to be present as and when required.

Financial Reporting

The Committee oversees the Company’s financial reporting on behalf of the Board of Directors as part of its responsibility and have reviewed the Annual Financial Statements and recommended them to the Board prior to their issuance. The management ensures compliance with relevant accounting standards when preparing the Financial Statements.

Compliance with Laws & Regulations

The Committee has reviewed the reports submitted by the management on the state of Compliance with applicable laws and regulations and statutory payment made by the Company and ensured that all requirements are adhered to.

External Auditors

The Committee held meetings with the External Auditors to discuss the nature, scope and the approach of the annual audit. The Committee also held discussions on matters raised on management letters issued by the Auditors. Necessary actions have been taken by the Company in response to the issues raised by the Auditors. The Committee has also reviewed the other services provided by the Auditors to ensure that the independence of the Auditors has not been impaired.

Risk Management

The Committee has held discussions with the Sectional Heads to discuss the policies and practices related to risk management. The Committee has also reviewed different types of risks attached to the Company’s business and its operations during the year under consideration with a view to taking appropriate corrective action.

Re-appointment of Auditors

The Committee has recommended to the Board of Directors that Messrs PricewaterhouseCoopers be re-appointed the Auditors for the year ending 31st March 2018 subject to the approval of the shareholders at the Annual General Meeting. The Audit Committee has also made its recommendations to the Board of Directors on the fees payable to the Auditors for approval by the Board.

W L D P V Jayawardene

Chairman - Audit Committee

10 August 2017


REMUNERATION COMMITTEE REPORT

The Company’s remuneration policy is an indiscriminative policy irrespective of race, religion or gender which has been developed to attract, motivate and retain good qualitative staff to achieve the goals and objectives of the Company.

The composition of the Remuneration Committee during the year and up to 9th June , 2017 was as follows;

Dr. Shabbir A. Gulamhusein (deceased on 9.6.2017) Chairman /Non Executive DirectorMr. Abdul Careem Yahiyakhan Independent Non Executive DirectorMr. W L D P V Jayawardene Independent Non Executive Director

The Remuneration Committee was reconstituted on 3rd July, 2017 and the Committee now comprise of the following members:

Mr. S S P Rathnayake Chairman /Non Executive DirectorMr. Abdul Careem Yahiyakhan Independent Non Executive DirectorMr. W L D P V Jayawardene Independent Non Executive Director

During the year, the Committee carried out the following functions:

* Reviewing the remuneration of the Executive and Non-Executive Directors.

* Evaluating the performance of key positions of the senior management against set goals and determining the basis for revising remuneration and other benefits.

* Recommending the policy governing annual increments to staff.

* Reviewing of salary structure and payment of bonus to the staff.

S S P RathnayakeChairman - Remuneration Committee

10 August 2017


REPORT OF THE RELATED PARTY TRANSACTIONS REVIEW COMMITTEETHE ROLE AND RESPONSIBILITIES

The Related Party Transactions Review Committee (“the Committee”) is tasked with reviewing all Related Party Transactions of the Company and ensuring that it complies with the requirements of the SEC Code of Best Practices on Related Party Transactions (“the Related Party Code”) and other relevant statutes and regulations.

The Committee reviews and pre-approves all proposed non-recurrent Related Party Transactions of the Company. Further, the Committee reviews all recurrent Related Party Transactions on a quarterly basis and annually to ensure compliance with the limits and reporting guidelines specified by the Related Party Code.

RELATED PARTY TRANSACTIONS REVIEW COMMITTEE COMPOSITION

The Committee comprises of three (03) Independent Non-Executive Directors and one(01)Non- Executive Director. The members of the Related Party Transactions Review Committee are ;

Mr. T A Akbarally - Chairman - Independent Non-Executive Director

Mr. G T Fazleabas - Member - Independent Non-Executive Director

Mr. A C Yahiyakhan - Member -Independent Non-Executive Director

Mr. B V Selvanayagam - Member - Non- Executive Director.

KEY ACTIVITIES OF THE RELATED PARTY TRANSACTIONS REVIEW COMMITTEE:

• Review and pre-approve all non-recurrent related party transactions of the Company prior to approval by the Board of Directors.

• Review all related party transactions to ensure that they are in the best interests of the Company.

• Ensure that all reporting requirements of the Related Party Code and other statutes are met.

• Update the Board of Directors on the Related Party Transactions of the Company.

• Assess the adequacy of related party reporting systems along with the advice of the External and Internal Auditors.

• Ensure that all transactions with related parties are in the best interest of all shareholders and adequate transparency is maintained.

• Establish guidelines and policies for the management and reporting of related party transactions.

T. A . AkbarallyChairmanRelated Party Transactions Review Committee

10 August 2017


STATEMENT OF DIRECTORS’ RESPONSIBILITY FOR PREPARATION OF FINANCIAL STATEMENTSThe Directors are required by the Companies Act, No.7 of 2007 to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company as at the end of the financial year and the income and expenditure of the Company for the financial year.

The Directors are also responsible to ensure that the financial statements comply with the regulations made under the Companies Act, which specifies the form and content of financial statements and any other requirements which apply to the Company’s financial statements under any other law.

The Directors ensure that the financial statements presented in this Annual Report have been prepared using appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates and in compliance with the Sri Lanka Accounting Standards (SLFRS and LKAS) issued by the Institute of Chartered Accountants of Sri Lanka, Companies Act, No.7 of 2007 and the Sri Lanka Accounting and Auditing Standards Act No.15 of 1995.

The Directors are responsible for ensuring that the Company keeps sufficient accounting records, which discloses the financial position of the Company with reasonable accuracy, which will enable them to have the financial statements prepared and presented as aforesaid.

They are also responsible for taking measures to safeguard the assets of the Company and in that context to have proper regard to the establishment of appropriate systems of internal control with a view to prevention and detection of fraud and other irregularities.

The Board of Directors is of the opinion that it has discharged its responsibilities as set out above.

The Directors are also confident that the Company has adequate resources to continue in operation and have applied the going concern basis in preparing the financial statements.

By Order of the BoardON’ALLY HOLDINGS PLC

Dr. Jagath Munasinghe Chairman

Tharsini SarveshwaranDeputy Managing Director

10 August 2017Colombo


Independent Auditor’s ReportTo the Shareholders of On’ally Holdings PLCReport on the financial statements

1 We have audited the accompanying financial statements of On’ally Holdings PLC, which comprise the statement of financial position as at 31 March 2017, and the statement of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information as set out in pages 18 to 48.

Management’s Responsibility for the Financial Statements

2 Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

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

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

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

Opinion

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

Report on other Legal and Regulatory Requirements

7 These financial statements also comply with the requirements of Section 151 (2) of the Companies Act, No. 07 of 2007.

10 August 2017COLOMBO CHARTERED ACCOUNTANTS


STATEMENT OF COMPREHENSIVE INCOME

Note Year ended 31 March 2017 2016

Revenue 5 139,669,847 124,868,499

Other operating income 6 21,226,005 22,428,038

Operating expenses 7 (72,674,864) (60,728,339)

Operating profit 88,220,988 86,568,198

Finance income 9 31,502,209 15,451,181

Fair value gain on investment property 15 164,000,000 378,523,032

Profit before tax 283,723,197 480,542,411

Tax 10 33,146,181 (150,089,550)

Profit for the year 316,869,378 330,452,861

Other comprehensive income

Items that will not be reclassified to profit or loss

Actuarial (loss) / gain on remeasurements of

post employment benefit obligations 24 (10,700) 2,358,722

Gains on revaluation of building 13 2,621,386 16,553,685

Tax on other comprehensive income 10 (313,282) (3,309,671)

Total other comprehensive income for the year - net of tax 2,297,404 15,602,736

Total comprehensive income for the year 319,166,782 346,055,597

Earnings per share 11 18.11 18.88

Earnings per share - basic (exclusive of fair value gain) 11 4.60 5.13

The Notes on pages 22 to 48 form an integral part of these financial statements.

Independent Auditor’s report on page 17.

(all amounts in Sri Lanka Rupees)


STATEMENT OF FINANCIAL POSITION

ASSETS Non-current assetsProperty, plant and equipment 13 48,020,168 47,450,823Intangible assets 14 263,512 328,927Investment property 15 1,845,000,000 1,681,000,000 1,893,283,680 1,728,779,750Current assetsTrade and other receivables 18 19,910,027 15,256,871Short term Investments 19 304,234,834 246,000,000Cash and cash equivalents 20 16,255,872 18,974,225 340,400,733 280,231,096Total assets 2,233,684,413 2,009,010,846

EQUITY AND LIABILITIESCapital and reservesStated capital 21 175,007,700 175,007,700Revaluation reserve 22 41,039,468 39,990,241Retained earnings 1,666,559,600 1,402,234,497 1,882,606,768 1,617,232,438Non-current liabilitiesTrade and other payables 23 33,830,160 56,308,176Retirement benefit obligations 24 6,364,432 5,460,526Deferred income tax 25 226,028,423 300,696,433 266,223,015 362,465,135Current liabilitiesTrade and other payables 23 55,390,354 26,961,997Income tax payables 29,464,276 2,351,276 84,854,630 29,313,273Total liabilities 351,077,645 391,778,408Total equity and liabilities 2,233,684,413 2,009,010,846

(all amounts in Sri Lanka Rupees)

Note As at 31 March 2017 2016

The Board of Directors is responsible for the preparation and presentation of these financial statements. These financial statements were authorized for issue by Board of Directors on 02 August 2017.

The Notes on pages 22 to 48 form an integral part of these financial statementsIndependent Auditor’s report on page 17.

Chairman Deputy Managing Director02 August 2017 02 August 2017

I certify that these financial statements have been prepared in compliance with the requirements of the Companies Act, No. 07 of 2007.

Accountant02 August 2017


STATEMENT OF CHANGES IN EQUITY(all amounts in Sri Lanka Rupees)

Note Stated Revaluation Retained Total capital reserve earnings

Balance at 1 April 2015 175,007,700 27,054,828 1,120,741,585 1,322,804,113

Profit for the year - - 330,452,861 330,452,861

Other comprehensive income for the year - 13,656,790 1,945,946 15,602,736

Total comprehensive income for the year - 13,656,790 332,398,807 346,055,597

Depreciation transfer 22 - (721,377) 721,377 -

Dividends paid - 2015 12 - - (32,376,425) (32,376,425) - 2016 12 - - (19,250,847) (19,250,847)

Total transactions with owners, recognised directly in equity - (721,377) (50,905,895) (51,627,272)

Balance at 31 March 2016 175,007,700 39,990,241 1,402,234,497 1,617,232,438

Balance at 1 April 2016 175,007,700 39,990,241 1,402,234,497 1,617,232,438

Profit for the year - - 316,869,378 316,869,378

Other comprehensive - 2,306,820 (9,416) 2,297,404income for the year

Total comprehensive income for the year - 2,306,820 316,859,962 319,166,782

Depreciation transfer 22 - (1,257,593) 1,257,593 -

Dividends paid - 2016 12 - - (35,001,540) (35,001,540) - 2017 12 - - (19,250,847) (19,250,847)

Forfieted dividend - - 459,935 459,935

Total transactions with owners, recognised directly in equity - (1,257,593) (52,534,859) (53,792,452)

Balance at 31 March 2017 175,007,700 41,039,468 1,666,559,600 1,882,606,768

The Notes on pages 22 to 48 form an integral part of these financial statements.Independent Auditor’s report on page 17.


STATEMENT OF CASH FLOWS(all amounts in Sri Lanka Rupees)

Year ended 31 March Note 2017 2016

Cash flows from operating activities

Cash generated from operations 28 97,361,786 93,875,494

Interest received 26,793,608 15,266,727

Tax paid (14,722,111) (11,890,142)

Retirement benefit obligations paid 24 (112,350) (418,400)Net cash generated from operating activities 109,320,933 96,833,679

Cash flows from investing activities

Purchase of property, plant and equipment 13 (12,000) (339,120)

Purchase of intangible assets 14 - (374,240)

Upgrading expenses of investment property 15 - (4,322,672)

Net investments in fixed deposits (58,234,834) (48,369,301)Net cash used in investing activities (58,246,834) (53,405,333)

Cash flows from financing activities

Dividends paid 12 (54,252,387) (51,627,272)

Forfeited dividend 459,935 -Net cash used in financing activities (53,792,452) (51,627,272)

Decrease in cash and cash equivalents (2,718,353) (8,198,926)

Movement in cash and cash equivalents

At beginning of the year 18,974,225 27,173,151

Decrease (2,718,353) (8,198,926)At end of the year 20 16,255,872 18,974,225

The Notes on pages 22 to 48 form an integral part of these financial statements.Independent Auditors’ report on page 17.


NOTES TO THE FINANCIAL STATEMENTS(In the notes all amounts are shown in Sri Lanka Rupees unless otherwise stated)

1 General information

The Company is a public limited liability Company which was incorporated under the Companies Ordinance No.51 of 1938 as a public limited Company on the 25th June 1982, which obtained the certificate to commence business on 25 th August 1982. The Company listed on the Colombo Stock Exchange on 25th April 1991 and re - registered as per the Companies Act, No7 of 2007 on 13th December 2007 under the new number PQ 107. The registered office of the Company is situated at Unit 603, 4th Floor, No. 02, Galle Road, Colombo 4.

The principal activity of the Company is property development / real estate.

2 Summary of significant accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below.

2.1 Basis of preparation

The financial statements of the Company have been prepared in accordance with Sri Lanka Accounting Standards, which comprise Sri Lanka Financial Reporting Standards (“SLFRS”s), Sri Lanka Accounting Standards (“LKAS”s), relevant interpretations of the Standing Interpretations Committee (“SIC”) and International Financial Reporting Interpretations Committee (“IFRIC”). These financial statements have been prepared under the historical cost convention except for financial assets and liabilities which are measured at fair value. The preparation of financial statements in conformity with Sri Lanka Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the Company’s financial statements are disclosed in note 4 to the financial statements.

(a) New accounting standards, amendments and interpretations adopted in 2016

The following amendments to the Sri

Lanka Accounting Standards that are relevant for the preparation of the financial statements have been adopted by the Company for the first time with effect from financial year beginning on 1 April 2016.

(i) LKAS 16, ‘Property, Plant and Equipment’ and LKAS 38, ‘Intangible Assets’, clarify that a revenue-based method of depreciation is generally not appropriate.

LKAS 38 Intangible Assets now includes a rebuttable presumption that the amortisation of intangible assets based on revenue is inappropriate. This presumption can be overcome if either

· The intangible asset is expressed as a measure of revenue (ie where a measure of revenue is the limiting factor on the value that can be derived from the asset), or

· It can be shown that revenue and the consumption of economic benefits generated by the asset are highly correlated.

(ii) LKAS 19, ‘Employee Benefits’, clarify that when determining the discount rate for post-employment benefit obligations, it is the currency that the liabilities are denominated in that is important and not the country where they arise.

(iii) LKAS 34, ‘Interim Financial Reporting’, clarify what is meant by the reference in the standard to ‘information disclosed elsewhere in the interim financial report’ and adds a requirement to cross-reference from the interim financial statements to the location of that information.

(iv) LKAS 1, ‘Presentation of Financial Statements’, amendments is made in the context of the IASB’s Disclosure Initiative, which explores how financial statement disclosures can be improved. LKAS 1 provide clarifications on a number of issues, including: materiality, disaggregation and subtotals, notes to the financial statements and OCI arising from investments accounted for under the equity method. According to the


NOTES TO THE FINANCIAL STATEMENTS (contd.)

transitional provisions, the disclosures in LKAS 8 regarding the adoption of new standards/accounting policies are not required for these amendments.

(b) New accounting standards, amendments and interpretations issued but not yet adopted

The following new standards and amendments to standards had been issued but were not mandatory for annual reporting periods ending 31 March 2017.

(i) Amendments to LKAS 7 ‘Statement of Cash Flows – Disclosure Initiative’ introduce an additional disclosure on changes in liabilities arising from financing activities. The amendments to the standard are effective for accounting periods beginning on or after 1 January 2017.

(ii) Amendments to LKAS 12 ‘Income Taxes - Recognition of Deferred Tax Assets for Unrealised Losses’ (effective from 1 January 2017) clarify the requirements for recognising deferred tax assets on unrealised losses arising from deductible temporary difference on asset carried at fair value. In addition, in evaluating whether an entity will have sufficient taxable profits in future periods against which deductible temporary differences can be utilised, the amendments require an entity to compare the deductible temporary differences with future taxable profits that excludes tax deductions resulting from the reversal of those temporary differences. The amendments to the standard are effective for accounting periods beginning on or after 1 January 2017.

(iii) SLFRS 9 ‘Financial Instruments’, retains but simplifies the mixed measurement model in LKAS 39 ‘Financial Instruments: Recognition and Measurement’ and establishes a single model that has only three primary classification categories for financial assets: amortised cost, fair value through profit or loss and fair value through Other Comprehensive Income (“OCI”) for certain financial assets that are debt instruments.

Classification of debt assets will be driven by the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. All other debt and equity instruments, including investments in complex debt instruments and equity investments, must be recognised at fair value. All fair value movements on financial assets are taken through the profit or loss, except for equity investments that are not held for trading, which may be recorded in the profit or loss or in reserves without subsequent recycling to the profit or loss.

For financial liabilities, the standard retains most of the LKAS 39 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in OCI rather than the profit or loss, unless this creates an accounting mismatch.

The new hedge accounting rules align hedge accounting more closely with common risk management practices. As a general rule, it will be easier to apply hedge accounting going forward. Further, SLFRS 9 introduces a new expected credit losses model on impairment for all financial assets that replaces the incurred loss impairment model used in LKAS 39. The expected credit losses model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised.

SLFRS 9 also introduces expanded disclosure requirements and a change in presentation .The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted.



(iv) SLFRS 15 ‘Revenue from contracts with customers’ replaces LKAS 18 ‘Revenue’ and LKAS 11 ‘Construction contracts’ and related interpretations. The core principle in SLFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Revenue is recognised when a customer obtains control of goods or services, i.e. when the customer has the ability to direct the use of and obtain the benefits from the goods or services.

A new five-step process is applied before revenue can be recognised:

- Identify contracts with customers

- Identify the separate performance obligations

- Determine the transaction price of the contract;

- Allocate the transaction price to each of the separate performance obligations; and

- Recognise the revenue as each performance obligation is satisfied.

Key provisions of the new standard are as follows:

- Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the contract price must generally be allocated to the separate elements.

- If the consideration varies (such as for incentives, rebates, performance fees, royalties, success of an outcome etc), minimum amounts of revenue must be recognised if they are not at significant risk of reversal.

- The point at which revenue is able to be recognised may shift: some revenue which is currently recognised at a point in time at the end of a contract

may have to be recognised over the contract term and vice versa.

- There are new specific rules on licenses, warranties, non-refundable upfront fees, and consignment arrangements, to name a few.

- As with any new standard, there are also increased disclosures.

The standard is effective for accounting periods beginning on or after 1 January 2018. Entities will have a choice of full retrospective application, or prospective application with additional disclosures and earlier application is permitted.

(v) SLFRS 16, ‘Leases’ supersedes LKAS 17 ‘Leases’ and the related interpretations. Under SLFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

SLFRS 16 eliminates the classification of leases by the lessee as either finance leases (on balance sheet) or operating leases (off balance sheet). SLFRS 16 requires a lessee to recognise a “right-of-use” of the underlying asset and a lease liability reflecting future lease payments for most leases. The right-of-use asset is depreciated in accordance with the principle in LKAS 16 ‘Property, Plant and Equipment’ and the lease liability is accreted over time with interest expense recognised in the income statement.

For lessors, SLFRS 16 retains most of the requirements in LKAS 17. Lessors continue to classify all leases as either operating leases or finance leases and account for them differently.

The standard is effective for accounting periods beginning on or after 1 January 2019. Early adoption is permitted if SLFRS 15 ‘Revenue from Contracts with Customers’ has also been applied.

The impact of SLFRS 9 ‘Financial Instruments’, SLFRS 15 ‘Revenue from Contracts with Customers’ and SLFRS



16 ‘Leases’ are still being assessed. Apart from SLFRS 9, SLFRS 15 and SLFRS 16, the adoptions of amendments to published standards are not expected to have a material impact to the financial statements of the Company and the Group.

There are no other standards or IFRIC interpretations that are not yet effective that would be expected to have a material impact to the Group.

2.2 Foreign currencies

(a) Functional and presentation currency

Items included in the financial statements of the Company is measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Sri Lankan Rupees, which is the Company’s functional and presentation currency.

2.3 Property, plant and equipment

2.3.1 Recognition and measurement

Property, plant and equipment are recognised if it is probable that future economic benefits associated with the assets will flow to the Company and the cost of the asset can be measured reliably. All property, plant and equipment are initially recorded at cost. The cost includes expenditure that is directly attributable to the acquisition of assets. Buildings are subsequently shown at market value, based on the valuation done by an external independent valuer, less subsequent depreciation for such property. Valuations are performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. The self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.

Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income and shown as other reserves in shareholders’ equity. Decreases that offset previous increases of the same asset are charged in other comprehensive income and debited against other reserves directly in equity; all other decreases are charged to the income statement. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to the income statement, and depreciation based on the asset’s original cost is transferred from ‘other reserves’ to ‘retained earnings’.

2.3.2 Subsequent costs

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

2.3.3 Derecognition

The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. When revalued assets are sold, the amounts included in other reserves are transferred to retained earnings.

2.3.4 Depreciation

Depreciation is calculated on the straight-line method to write off the cost of each asset to their residual values over their estimated useful lives.

Depreciation of an asset begins when it is available for use and ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is discontinued.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued



amounts to their residual values over their estimated useful lives, as follows:

Buildings 8 - 25 years Machinery 4 - 12 years Office equipment and tools 4 years Furniture and fittings 4 years Motor vehicles 4 years

These assets’ residual values and useful lives are reviewed and adjusted if appropriate. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

2.4 Investment property

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property.

Investment property is measured initially at its cost, including related transaction costs. After initial recognition, investment property is carried at fair value, based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset, determined annually by the Board of Directors. The fair value of investment property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions.

Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property replaced, the carrying amount of the replaced part is derecognised.

Changes in fair values are recognised in the Statement of comprehensive income. Investment properties are derecognized when they have been disposed. Any gain or loss arising from a change in fair value or from the retirement or disposal of an investment property is recognised in the Statement of Comprehensive income. Rental income from investment property is accounted for as described in note 2.20 (a).

When an item of property, plant and equipment is transferred to investment property following a change in its use, any differences between the carrying amount and the fair value of the item arising at the date of transfer is recognised directly in equity if it is a gain. Upon disposal of the item, the gain is transferred to retained earnings. Any loss arising in this manner is recognized immediately in the Statement of comprehensive income.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment and its fair value at the date of reclassification becomes its cost for subsequent accounting purposes. Investment property that is being redeveloped for continued future use as investment property continues to be measured at fair value and is not reclassified as property, plant and equipment during the redevelopment.

2.5 Impairment of non-financial assets

Assets that have an indefinite useful life or assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash flows (cash generating units).

2.6 Financial assets

2.6.1 Classification

The Company classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, available for sale and held to maturity. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. At the reporting date there were no financial assets at fair value through profit or loss and available for sale investments.



(a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The Company’s financial assets consist of loans and receivables. Financial assets recognised in the statement of financial position as trade and other receivables, investments in fixed deposits with maturity of more than three months and less than twelve months are classified as loans and receivables. They are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment.

2.6.2 Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade-date, i.e. the date on which the Company commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

2.7 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously

2.8 Impairment of financial assets

Assets carried at amortised cost

The Company assesses at the end of each reporting period whether there is an objective evidence that financial assets are impaired. A financial asset is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact

on the estimated future cash flows of the financial asset that can be reliably estimated.

Evidence of impairment may include indications that the debtors or group of debtors are experiencing significant financial difficulty, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the income statement.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the income statement.

2.9 Financial liabilities

The Company’s financial liabilities consist of trade and other payables. Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

All financial liabilities are recognised initially at their fair values and subsequently measured at amortised cost, using the effective interest method, unless the effect of discounting would be insignificant, in which case they are stated at cost.

2.10 Inventories

Inventories are stated at the lower of cost or net realisable value. Cost is determined by the



first-in, first- out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.11 Trade receivables

Trade receivables mainly consist of rental amounts due from customers in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.12 Cash and cash equivalents

In the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held with banks for the purpose of meeting short-term cash commitments. In the statement of financial position, bank overdrafts are shown within borrowings in current liabilities.

2.13 Share capital

Ordinary shares are classified as equity. Dividend distributed to the Company’s shareholders is recognised as a liability in the period in which the dividends are approved by the Company’s directors as empowered by the Articles of Association of the Company.

2.14 Trade payables

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Company obtains deposits from tenants as a guarantee for returning the property at the end of the lease term in a specified good condition amounting to rental payments for a period of 6 months. Such deposits are treated as financial liabilities in accordance with LKAS 39 - ‘Financial instruments Recognition and Measurement’, and they are initially recognised at fair value. The deposit is subsequently measured at amortised cost.

2.15 Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

2.16 Current income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the Statement of Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the country where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions here appropriate on the basis of amounts expected to be paid to the tax authorities.

2.17 Deferred income tax

Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is



determined using tax rates (and laws) that have been enacted or substantially enacted by the end of reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.18 Employee benefits

2.18.1 Defined contribution plans

Defined contribution plan is a post employment plan under which an entity pays fixed contribution into a separate entity and will have no legal or constructive obligation to pay a further amount. Obligations for contributions to defined contribution plans are recognised as an expense in the income statement as and when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(i) Employees’ Provident Fund contributions

All employees of the Company are members of the Employees’ Provident Fund to which the Company contributes 15% of the salary of each employee.

(ii) Employees’ Trust Fund contributions

The Company contributes 3% of the salary of each employee to the Employees’ Trust Fund.

2.18.2 Defined benefit plans - Gratuity

Defined benefit plans define an amount of benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The Company has adopted a defined benefit plan as required under the Payment of Gratuity Act No. 12 of 1983 for all eligible employees.

The liability recognised in the statement of financial position in respect of defined benefit plans is the present value of the defined benefit obligation as at the date of the Statement of financial position. The defined benefit obligation is calculated annually by the Company using the projected unit credit method prescribed in LKAS 19 - ‘Employee Benefits’. The present value of the defined benefit obligation is determined by discounting the estimated future cash flows using the interest rates of Government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.

The current service cost of the defined benefit plan, recognised in the Statement of income in employee benefit expense, except where included in the cost of an asset, reflects the increase in the defined benefit resulting from employee service in the current year, benefits changes, curtailments and settlements.

Past service costs are recognised immediately in the Statement of income.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligations. This cost is included in employee benefit expense in the Statement of income.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise.

Under the Payment of Gratuity Act No.12 of 1983, the liability to an employee arises only on completion of 5 years of continued service.

2.19 Segment information

Management has determined renting of investment property as one whole operating segment, and accordingly these financial statements do not provide information by segment.



2.20 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents an amount receivable for goods supplied, services performed and stated net of discounts, taxes and levies. The Company recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity and when specific criteria have been met for Company’s activities as described below:

(a) Rental income

Rental income earned from commercial units rented to tenants are recognised on an accrual basis.

(b) Other income

Other income is recognised on an accrual basis.

2.21 Interest income

Interest income is recognised using the effective interest method.

2.22 Dividend

Dividends are recognised when they become legally payable. Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s directors as empowered by the Articles of Association of the Company. If the dividends are declared after the reporting period but before the financial statements are authorised for issue, the dividends are not recognised as a liability at the end of the reporting period. The details of dividends are detailed in Note 12.

2.23 Comparatives

Where necessary, comparative figures have been adjusted to conform with change in presentation in the current year.

“Cash held for the purpose of meeting short-term cash commitments considered as cash and cash equivalent. Cash deposits are for investment purpose have been reclassified as short term investments. Current year short term investments are Rs 304,234,834 (2016

-Rs 246,000,000). Accordingly comparatives changed in the cash flow statement and Note 20 to the financial statements.

2.24 Intangible assets

Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the company are recognised as intangible assets when the following criteria are met:

- It is technically feasible to complete the software product so that it will be available for use;

- Management intends to complete the software product and use or sell it;

- There is an ability to use or sell the software product.

- It can be demonstrated how the software product will generate probable future economic benefits;

- Adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

- The expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

3 Financial Risk Management

3.1 Financial risks factors

The Company’s activities expose it to a variety of financial risks; market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The risk management



function within the Company is carried out in respect of financial risks. Financial risks are risks arising from financial instruments to which the Company is exposed during or at the end of the reporting period. Financial risk comprises market risk arising from interest rate risk, credit risk and liquidity risk. The primary objectives of the financial risk management function are to establish risk limits, and then ensure that exposure to risks stays within these limits.

The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance. The Board of Directors involve in the risk management and provides the principles for overall risk management covering specific areas, such as interest rate risk, credit risk and investing excess liquidity.

3.1.1 Market risks

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company’s market risks arise only from the open positions in interest-bearing assets, to the extent that these are exposed to general and specific market movements.

Management sets limits on the exposure to interest rate risk that may be accepted, which are monitored on a monthly basis. However, the use of this approach does not prevent losses outside of these limits in the event of more significant market movements.

Sensitivities to interest risks included below are based on a change in one factor while holding all other factors constant. In practice, this is unlikely to occur, and changes in some of the factors may be correlated.

(i) Foreign exchange risk

The Company has no exposure to foreign exchange risk as it does not hold any foreign currency denominated assets or liabilities.

(ii) Price risk

The Company has no exposure to price risk as it does not hold any equity securities or commodities.

(iii) Cash flow and fair value interest rate risk

As the Company’s interest-bearing assets generate significant amounts of interest, changes in market interest rates have significant direct effect on the Company’s income. The Company’s interest rate risk principally arises from the fixed interest bearing investments in fixed deposits.

The Company does not have any interest bearing borrowings.

3.1.2 Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company has significant concentrations of credit risk in relation to the receivables from tenants. Credit risk arises from cash and cash equivalents and fixed deposits held at banks and trade receivables, including rental receivables. Credit risk arising from the rent receivables is subject to monthly review and also to minimise the exposure to risk of default, a refundable deposit is taken at the award of the contract. The Company has policies in place to ensure that rental contracts are entered into only with tenants with an appropriate credit history, and the Company monitors the credit quality of receivables on an ongoing basis. Cash balances are held and investments in fixed deposits are agreed only with financial institutions with a credit rating’s of “BB+” or better. The credit quality is further analysed in Note 17.

3.1.3 Liquidity risks

Prudent liquidity risk management implies maintaining sufficient cash to meet the financial commitments. The table below analyses the company’s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.



The maturity analysis of financial liabilities at 31 March 2017 and 2016 are as follows:

At 31 March 2017 From 1 Less than month to From 3 to 12 1 month 3 months months 1 to 2 years 2 to 5 yearsRental deposits - - 47,116,158 33,830,160 -Trade and otherpayables [excludingstatutory liabilities] 3,314,625 - 2,991,801 - - 3,314,625 - 50,107,959 33,830,160 -

At 31 March 2016 From 1 Less than month to From 3 to 12 1 month 3 months months 1 to 2 years 2 to 5 yearsRental deposits - - 19,272,353 56,308,176 -Trade and otherpayables [excludingstatutory liabilities] 2,697,593 - 3,481,142 - - 2,697,593 - 22,753,495 56,308,176 -

3.1.4 Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

Consistent with others in the industry, the

company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non current borrowings’ as shown in the statement of financial position) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the statement of financial position plus net debt.

The Company was operated as a non geared company in the financial year 2016 and 2017.

31 March 2017 2016

Total borrowings - -Less - investments in short term investments [Note 19] (304,234,834) (246,000,000)Less - cash and cash equivalents [Note 20] (16,255,872) (18,974,225)Net debt - -Total equity 1,882,606,768 1,617,232,438Total capital 1,882,606,768 1,617,232,438Gearing ratio - -



3 Financial Risk Management (contd)

3.2 Fair value estimation

Financial instruments carried at fair value, by valuation method. The different levels are de-fined as follows:

(a) Quoted prices (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) “Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).”

4 Critical Accounting Estimates and judgments

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.

4.1 Investment property

The fair value of investment properties is determined by using valuation techniques. Further details of the judgements and assumptions made are disclosed in Note 15.

The valuation was determined principally using discounted cash flow projections based on estimates of future cash flows, supported by the terms of any existing lease and other contracts and by external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows. The future rental rates were estimated depending on the actual location, type and quality of the properties, and taking into account market data and projections at the valuation date.

Investment properties do not include the investment properties under construction or development and no such estimations were made.

4.2 Income taxes

The Company is subject to income taxes in Sri Lanka. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

4.3 Defined benefit obligations

The present value of the pension obligations depends on a number of factors that are determined on the projected unit credit method using a number of assumptions. The assumption used in determining the net cost (income) for pensions include the discount rate. Any change in this assumption will impact the carrying amount of pension obligations.

The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Company considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

Other key assumptions for pension obligations are based in part on current market conditions. Additional information is disclosed in Note 24.



5 Revenue Revenue solely consists of rental income and is shown net of taxes.

6 Other operating income

Year ended 31 March 2017 2016

Rental on hoardings and sign boards 8,574,450 9,364,850 Electricity fee 1,835,840 1,547,630 Other miscellaneous income 1,957,950 2,730,083 Maintenance services 420,000 385,000 Service charges 8,437,765 8,400,475 21,226,005 22,428,038

7 Operating expenses by nature

The following items have been charged in arriving at operating profit:

Year ended 31 March 2017 2016 Directors’ emoluments [Note 29 (iv)] 6,324,480 5,892,045 Depreciation on property, plant and equipment [Note 13] 2,064,041 1,526,596 Amortisation on intangible assets [Note 14] 65,415 45,313 Auditors’ remuneration - Audit fee 310,000 295,800 - Certification fee 79,050 76,500 Electricity charges 8,706,692 7,795,138 Janitorial services 8,752,620 7,648,316 Management fees [Note 29 (ii)] 1,224,480 1,224,480 Repairs and maintenance expenditure - Investment property 14,225,995 6,428,354 - Building and office equipment 636,303 164,095 Security services 6,394,447 5,260,070 Staff costs [Note 8] 14,817,825 15,548,360 Other expenses 9,073,516 8,823,272 Total 72,674,864 60,728,339

8 Employee salaries and benefit expenses Year ended 31 March 2017 2016 Salaries and wages 10,141,085 9,921,566 Staff Bonus 2,038,800 2,866,549 Defined contribution plan 1,632,384 1,618,726 Defined benefit obligation [Note 24] 1,005,556 1,141,519 14,817,825 15,548,360 Average number of persons employed during the year: 20 21

Hire of premises income classified as revenue and comparatives also changed accordingly.



9 Finance income

Year ended 31 March 2017 2016 Interest income 31,502,209 15,451,181

Interest income consists of interest on investments made in short term fixed deposits made in the course of the business of the Company out of:

(a) rent deposits held by the Company which are payable on the termination of tenancy; and

(b) balance profits after distribution of dividends invested for the future maintenance and development of the assets of the Company.

10 Income tax expense

According to Section 59 B (1), item 33 of the Fifth schedule to the Inland Revenue (Amendment) Act No. 22 of 2011, the Company is liable to pay income tax at the rate of 12% based on lower turnover threshold.

The charge for income tax recognised in Statement of income consists of: Year ended 31 March 2017 2016 Current tax Current tax on profits for the year 14,499,247 11,070,394 Deferred tax recognised in the statement of income [Note 25] (74,981,292) 139,019,156 Income tax for prior years [Refer “a” below] 27,335,864 - Taxes included in income for the year (33,146,181) 150,089,550 Deferred tax recognised in other comprehensive income [Note 25] 313,282 3,309,671 Total tax charge (32,832,899) 153,399,221

Tax is calculated using tax rates enacted for the year of assessment. The profits are taxed at a principle rate of 12%. (2016-12%)

a) The Company has made a provision for the Income tax for prior years charging income tax at 28% on the interest income and penalty based on the assessment raised by the Department of Inland Revenue which are under appeal. (Disclosed as contingent liability in previous annual report ) Provision for income tax for prior years consists of Rs. 18,223,909 for income tax on the interest income and Rs. 9,111,955 for penalty charges thereon.

Reconciliation between current tax expenses and the accounting profit:

Year ended 31 March 2017 2016 Profit before tax 283,723,197 480,542,411 Tax calculated - on profit and income at a tax rate of 12 % (2016 - 12%) 34,046,784 57,665,089 34,046,784 57,665,089 Income not subject to tax (19,680,000) - Expenses not deductible for tax purposes (435) (8,686) Impact due to the change tax rates (20,176,666) 92,433,147 Income tax for prior years (27,335,864) - Deferred tax recognised in other comprehensive income [Note 25] 313,282 3,309,671 Total tax charge (32,832,899) 153,399,221



11 Earnings per share

Basic earnings per share is calculated by dividing the net profit attributable to the shareholders of the company by the weighted average number of shares in issue during the year.

Year ended 31 March 2017 2016 Net profit attributable to shareholders 316,869,378 330,452,861 Weighted average number of shares in issue 17,500,770 17,500,770 Earnings per share (Rs) 18.11 18.88 Earnings per share (Rs - exclusive of fair value gain) 4.60 5.13

12 Dividends

Calculation of dividend per share

Year ended 31 March 2017 2016 Interim dividend [Refer “a” below] 19,250,847 19,250,847 Final dividend [Refer “b” below] 35,001,540 32,376,425 54,252,387 51,627,272 Number of ordinary shares 17,500,770 17,500,770

Dividend per share 3.10 2.95

a) The Directors paid an interim dividend of Rs 1.10 per share amounting to Rs 19,250,847 for the year ended 31 March 2017 (interim dividend of Rs 1.10 per share amounting to Rs 19,250,847 was paid for the year ended 31 March 2016 during that period).

b) During the year the Directors paid a final dividend of Rs 2.00 per share amounting to Rs 35,001,540 in respect of 2016 (the final dividend paid during the year ended 31 March 2016 amounting to Rs 32,376,425 at Rs 1.85 per share was in respect of 2015).

c) The Directors have approved a final dividend of Rs 2.10 per share amounting to Rs 36,751,617 for the year ended 31 March 2017 on 2 August 2017.



13

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13 Property, plant and equipment (contd)

(ii) If the building was stated on the historical cost basis, the amounts would be as follows:

As at 31 March 2017 2016 Cost 12,544,615 12,544,615 Accumulated depreciation (6,787,023) (6,286,484) 5,757,592 6,258,131

14 Intangible assets

Software Total Licence At 1 April 2016 Opening net book amount - - Additions 374,240 374,240 Amortisation (45,313) (45,313) Closing net book amount 328,927 328,927

At 31 March 2016 Cost 374,240 374,240 Accumulated amortisation (45,313) (45,313) Closing net book amount 328,927 328,927

At 31 March 2017 Opening net book amount 328,927 328,927 Amortisation (65,415) (65,415) Closing net book amount 263,512 263,512

At 31 March 2017 Cost 374,240 374,240 Accumulated amortisation (110,728) (110,728) Closing net book amount 263,512 263,512

Intangible assets consists of software licenses for accounting software, payroll processing software and the office package.Such assets are amortised on a straight line basis over their useful life of 4 years. There is no scrap sale value at the end of useful life of the asset.


15 Investment property

As at 31 March 2017 2016 At beginning of year 1,681,000,000 1,298,154,296 Upgrading expenses - 4,322,672 Change in fair value during the year 164,000,000 378,523,032 At 31 March 1,845,000,000 1,681,000,000

As per LKAS 40 - ‘Investment Property’, the Directors have adopted the fair value model for accounting for investment property as at 1 April 2005.


Based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset, fair value is determined annually by the Board of Directors. For the investment property, the current use equates to the highest and best use. As per the directors assessment , the investment property was revalued for Rs 1,845,000,000 as at 31 March 2017 (2016 - Rs 1,681,000,000) and the resulting gain was recognised in the statement of income.

At each financial year end the finance department: - verifies all major inputs to the independent valuation report; - assesses property valuation movements when compared to the prior year valuation report; - holds discussions with the independent valuer.

Valuation methods underlying management’s estimation of fair value For the investment property in the location with a total carrying value of 1,845,000,000 (2016 - Rs

1,681,000,000), the valuation was determined using discounted cash flow (“DCF”) projections based on significant unobservable inputs. These inputs include:

Future rental cash inflows Based on the actual location, type and quality of the properties and supported by the terms of any existing

lease, other contracts or external evidence such as current market rents for similar properties;

Estimated vacancy rates Based on current and expected future market conditions after expiry of any current lease;

Maintenance costs Including necessary investments to maintain functionality of the property for its expected useful life;

Capitalisation rates Based on actual location, size and quality of the properties and taking into account market data at the

valuation date;

The investment property of the Company is the Unity Plaza building situated at No. 02, Galle Road, Colombo 4.

The floor area of the Unity Plaza building (excluding Bank of Ceylon premises) is in the extent of 130,985 Sq.ft. Rentable space is limited to Sq. ft. 79,084

Land extent (excluding Bank of Ceylon premises) is 78.56 perches.

Income earned from investment property Total rent income earned by the Company from the investment property during the year was Rs 139,669,847

(2016 - Rs 124,868,499).

Expenses incurred on investment property Total repair and maintenance expenses incurred on the investment property was Rs 14,225,995 (2016 - Rs

6,428,354).

Information about fair value measurements using significant unobservable inputs (Level 3) for 2016 are as follows:

Valuation technique - Investment method Capitalisation rate - 5.5 % Maintenance cost - 40 % Estimated vacancy rate - 10 % Length of leases in place - 2 years Rent per Sq. ft. - Rs 2,055

15 Investment property (contd)



Present value of Change in the investment property assumption Increase in Decrease in assumption assumption

Capitalisation rate 0.5% 174,720,000 (145,280,000) Sales price 5% 87,264,000 (87,264,000) Maintenance cost 10% 290,880,000 (290,880,000) Estimated vacancy rate 5% - (93,136,029)

15 Investment property (contd)

Sensitivity analysis

In order to illustrate the significance of the capitalisation rate assumed in this valuation as at 31 March 2017, a sensitivity analysis was carried out assuming the following capitalisation rates :

16 Fair value mesurement

Assets and liabilities not carried at fair value but for which fair value is disclosed are as follows: The following table analyses within the fair value hierarchy the Group’s assets and liabilities (by class) not

measured at fair value at 31 March 2017 but for which fair value is disclosed.

The assets and liabilities included in the above table are carried at amortised cost; their carrying values are a reasonable approximation of fair value.

Trade receivables include the contractual amounts for settlement of trades and other obligations due to the Company. Trade and other payables and Borrowings represent contract amounts and obligations due by the Company.

As at 31 March 2017 Level 1 Level 2 Level 3 Total

Assets Trade receivables - 19,910,027 - 19,910,027 Cash and cash equivalents 16,255,872 - - 16,255,872 Total 16,255,872 19,910,027 - 36,165,899

Liabilities Trade and other payables - 89,220,514 - 89,220,514 Total - 89,220,514 - 89,220,514

As at 31 March 2016 Level 1 Level 2 Level 3 Total

Assets Trade receivables - 15,256,871 - 15,256,871 Cash and cash equivalents 18,974,225 - - 18,974,225 Total 18,974,225 15,256,871 - 34,231,096

Liabilities Trade and other payables - 83,270,173 - 83,270,173 Total - 83,270,173 - 83,270,173



In accordance with the LKAS 39 - ‘Financial Instruments Recognition and Measurement’ financial liabilities have been classified as follows:

As at 31 March 2017 2016 Liabilities as per statement of financial position Other financial liabilities at amortised cost Trade and other payables (excluding non financial liabilities) 87,252,744 81,759,264 Total other financial liabilities at amortised cost 87,252,744 81,759,264 Total financial liabilities 87,252,744 81,759,264 Credit quality of financial assets The credit quality of financial assets that are neither past due nor impaired can be assessed by reference

to external credit ratings (if available) or to historical information about counterparty default rates;

(i) Cash at bank As at 31 March Rating 2017 2016 Counterparties with external credit rating (Fitch Ratings)

Cash at bank Bank of Ceylon AA + 16,230,872 18,949,225 Total 16,230,872 18,949,225

Shor term investment

Bank of Ceylon AA + 169,500,000 - Nations Trust Bank PLC A 20,843,939 181,500,000 Union Bank PLC BB+ 113,890,896 62,000,000

Risk free - 2,500,000 Total 304,234,835 246,000,000 Total short term investments and cash at bank 320,465,707 264,949,225

17 Financial instruments by category

In accordance with the LKAS 39 - ‘Financial Instruments Recognition and Measurement’, financial assets have been classified as follows:

As at 31 March 2017 2016 Assets as per statement of financial position Loans and receivables Trade and other receivables 15,416,075 8,477,357 (excluding prepayments and deposits) Investment in fixed deposits [Note 19] 304,234,834 246,000,000 Cash and cash equivalents [Note 20] 16,255,872 18,974,225 Total loans and receivables 335,906,781 273,451,582 Total financial assets 335,906,781 273,451,582



17 Financial instruments by category (contd)

(ii) Trade receivable

As at 31 March Counterparties with external credit rating 2017 2016 New customers and related parties 106,753 365,403 Existing customers with no defaults in the past 4,396,199 2,217,175 4,502,952 2,582,578

As at 31 March 2017 2016 - Upto 30 days 3,007,114 2,226,144 - 30 to 90 days overdue 1,495,838 356,434 Total past due but not impaired 4,502,952 2,582,578

Above related to a number of independent customers for whom there is no recent history of credit default and the total trade receivables were fully performing

18 Trade and other receivables

As at 31 March 2017 2016 Trade receivables 4,502,952 2,582,578 Other receivables and deposits [Note (i) below] 13,969,122 8,113,547 Prepayments [Note (ii) below] 1,437,953 4,560,746 19,910,027 15,256,871

(i) Other receivables mainly consist of WHT receivable of Rs 957,642 (2016 - 433,992),Service deposits for services of Rs 2,445,874 (2016 - Rs 2,218,768) service charge receivable of Rs 338,676 (2016 - 635,588), interest receivable on fixed deposits of Rs 8,569,282 (2015 - Rs 3,902,108 ) and Bank Guarantee of Rs. 521,924 (2016- Nil)

(ii) Pre - payments and accrued income mainly comprise insurance pre-paid expenses of Rs 849,305 (2016 - Rs 62,193),pre-paid membership / listing fee Rs 90,853 (2016 - Rs 89,277), prepaid Maintenance fees Rs 233,341 (Rs 154,791), Pre-paid rates and taxes Rs 264,454 (2016 - Rs 462,321).

As of 31 March 2017, trade receivables of Rs 4,502,952 were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The age analysis of theses trade receivables is as follows;



19 Short term Investments

As at 31 March 2017 2016 Short term investments - More than 3 months maturity 68,279,666 - - 3 months or less maturity 235,955,168 246,000,000 304,234,834 246,000,000

20 Cash and cash equivalents

As at 31 March 2017 2016 Cash at bank and in hand 16,255,872 18,974,225 16,255,872 18,974,225

For the purposes of the cash flow statement, the year end cash and cash equivalents comprise above.

21 Stated capital

Number of Value shares (Rs) At 1 April 2016 17,500,770 175,007,700 At 31 March 2017 17,500,770 175,007,700

22 Revaluation reserve

As at 31 March 2017 2016 At beginning of year 39,990,241 27,054,828 Revaluation surplus 2,621,386 16,553,685 Deferred tax on revaluation (314,566) (2,896,895) Depreciation transfer (1,257,593) (721,377) At end of year 41,039,468 39,990,241



23 Trade and other payables

As at 31 March 2017 2016 Non-current Rental deposits payable to outside parties [Note (i) below] 32,794,440 55,837,836 Rental deposit payable to related parties [Note 29 (iii)] 1,035,720 470,340 33,830,160 56,308,176 Current Rental deposits payable to outside parties [Note (i) below] 46,442,808 18,236,633 Rental deposit payable to related party [Note 29 (iii)] 673,350 1,035,720 Other payable [Note (ii) below] 4,338,128 3,685,926 Accruals and provisions [Note (iii) below] 3,936,068 4,003,718 55,390,354 26,961,997 89,220,514 83,270,173

(i) As per rent agreements, the Company obtains rental deposits of 6 months as security. Based on the remaining agreement period as at the date of the statement of financial position, rental deposits are classified as current liabilities if deposits are due within one year or less. If not they are presented as non-current liabilities.

(ii) Other payables mainly consist of Value Added Tax (VAT) payable of Rs 2,332,435 (2016 - Rs 1,686,335), Nations Building Tax (NBT) Payable of Rs 270,606 (2016 - 259,255) and unclaimed dividend payable of Rs 1,564,277 ( 2016 - Rs 1,637,135).

(iii) Accruals and provisions mainly consist of janitorial, electricity and security service payable of Rs 2,086,166 (2016 - Rs 2,015,506), professional fees payable of Rs 280,031 (2016 - Rs 286,779) and audit fee payable - Rs 310,000 (2016 - Rs - 295,800).

24 Retirement benefit obligations

The amounts recognised in the statement of financial position are determined as follows:

As at 31 March 2017 2016 Present value of unfunded obligation 6,364,432 5,460,526 Liability in the statement of financial position 6,364,432 5,460,526

At beginning of year 5,460,526 7,096,129 Current service cost 311,975 286,798 Interest cost 693,581 854,721 Actuarial loss / (gain) 10,700 (2,358,722) Benefits paid (112,350) (418,400) At the end of the year 6,364,432 5,460,526



24 Retirement benefit obligations (contd)

Present value of defined Change in the benefit obligation assumption Increase in Decrease in assumption assumption

Discount rate per annum 1% Decreased by Increased by 5.28% 5.69% Annual Salary increment rate 1% Increased by Decreased by 5.90% 5.56%

Year ended 31 March 2017 2016 Current service cost 311,975 286,798 Interest cost 693,581 854,721 Total included in the staff costs [Note 8 ] 1,005,556 1,141,519

Actuarial gain on post employment benefit obligation 10,700 (2,358,722) Total recognised in the comprehensive income 1,016,256 (1,217,203)

The following assumptions and data were used in valuing the defined benefit obligation by the actuarial valuer:

Year ended 31 March 2017 2016 Discount rate 12.89% 12.92% Future salary increases 8.00% 8.00% Staff turn over rate 8.00% 7.00% Retiring age 60 years 60 years

Sensitivity analysis

In order to illustrate the significance of the salary / wage escalation rate and the discount rate assumed in this valuation as at 31 March 2017, a sensitivity analysis was carried out for all employees assuming the following salary/wage escalation rate and discount rate.

The amounts recognised in statement of comprehensive income are as follows:



25 Deferred income tax Deferred income taxes are calculated on all temporary differences under the liability method using a

principal tax rate of 12% (2016 - 17.5%). The movement in deferred income tax account is as follows:

As at 31 March 2017 2016 At beginning of year 300,696,433 158,367,606 Recognised in the statement of income[Note 10] (74,981,292) 139,019,156 Recognised in the statement of other comprehensive income [Note 10] 313,282 3,309,671 At the end of the year 226,028,423 300,696,433

Deferred tax is calculated on temporary differences between carrying value of fixed assets and tax written down value of such assets, as analysed by each taxable activity.

The reconciliation of tax effect arising from the timing differences related to carrying amounts of assets and liabilities of the statement of financial position is as follows

Deferred Deferred Net tax tax deferred asset liability tax Property plant and equipment - (5,745,992) (5,745,992) Investment property - (221,046,163) (221,046,163) Defined benefit obligations 763,732 - 763,732 Asset / (liability) as at 31 March 2017 763,732 (226,792,155) (226,028,423)

Deferred Deferred Net tax tax deferred asset liability tax Property plant and equipment - (8,287,551) (8,287,551) Investment property - (293,364,474) (293,364,474) Defined benefit obligations 955,592 - 955,592 Asset / (liability) as at 31 March 2016 955,592 (301,652,025) (300,696,433)

26 Contingencies

The Company has contingencies in respect of the following:

(a) A former employee of the Company has filed a complaint in the Department of Labour alleging, inter alia, that the Company had failed to implement the Order of the Labour Tribunal case which was concluded in 2005. The Commissioner of Labour has referred this matter to an arbitrator to be resolved by arbitration. The arbitration proceeding have not been concluded.

It is not anticipated that any material liability will arise from the above legal claim.



27 Commitments

(a) Capital commitments

As per the service agreement entered into with Jones Lang Lasalle Property Consultants (India) Private Limited for obtaining the services of Retail Advisory for Unity Plaza subsequent to the year end, the commitment to pay professional fees of US Dollar 15,000 and out of pocket expenses US Dollar 3,757 during the remaining service period.

(b) Financial commitments

The Company pays management fees of Rs 1,224,480 annually for the services rendered by the Urban Development Authority (“UDA”). UDA reserves the right to revise the management fees.

28 Cash generated from operations Reconciliation of profit before tax to cash generated from operations:

Year ended 31 March 2017 2016 Profit before tax 283,723,197 480,542,411 Adjustments for: Depreciation [Note 13] 2,064,041 1,526,596 Amortisation [Note 14] 65,415 45,313 Interest income [Note 9] (31,502,209) (15,451,181) Fair value gain [Note 15] (164,000,000) (378,523,032) Loss on disposal of property, plant and equipment - - Movement in rental deposits - non current portion [Note 23] (22,478,016) 31,826,874

Changes in working capital:

- inventory - 8,883 - trade and other receivables 55,445 (5,322,883) - trade and other payables 28,428,357 (21,919,006) Retirement benefit obligation [Note 24] 1,005,556 1,141,519 97,361,786 93,875,494

29 Related party transactions

Urban Development Authority and Ceylon and Foreign Trades PLC had shareholding of 48% and 23% respectively of the Company, during the year and as at the date of the statement of financial position.

Mr J N Munasinghe, Mr. S S P Rathnayake and Mr. Priya Jayawardene who are the directors of the Company were Chairman, Director General and Deputy Director General (Finance) of the Urban Development Authority as at the date of Statement of financial position.

Late Dr S A Gulamhusein, Former Director and Shareholder of the Company is also the former Chairman of Ceylon and Foreign Trades PLC with whom no transactions had been entered into by the Company during the year.

The Company has a lease agreement with Network Communications (Private) Limited which occupies premises rented by the Company. Dr. A. A shabbir, son of Late Dr S A Gulamhusein is a Director of Network Communications (Private) Limited.



29 Related party transactions (contd)

The Company has carried out the following transactions during the year with related parties:

Year ended 31 March

a) Rendering of Services 2017 2016

(i) Rent and service charge income received from Network Communications (Private) Limited 3,611,235 3,219,375

The Company has a lease agreement with Network Communications (Private) Limited which occupies premises rented by the Company.

Year ended 31 March

b) Purchase of Services 2017 2016

(ii) Management fees paid to Urban Development Authority [Note 27 (b)] 1,224,480 1,224,480

Outstanding balances arising from above transactions;(iii) Rental deposit payable to Network Communications (Private) Limited [Note 23] - Current 673,550 1,035,720 - Non-current 1,035,720 470,340 1,709,270 1,506,060

Transactions with related parties disclosed above were made on terms equivalent to those that prevailed in arm’s length transactions

The Directors have disclosed the nature of their interests in contracts and proposed contracts with the company at meetings of Directors.

(iv) Key management compensation Key management includes directors (executive and non executive). The compensation paid or payable

to key management for employee services is shown below

Year ended 31 March 2017 2016 Salaries and other short-term employee benefits 6,324,480 5,892,045 6,324,480 5,892,045

30 Events after the reporting period

The following events have occurred after the reporting period;

(i) Changes in composition of the Board of Directors

- Dr S A Gulamhusein who served as a Non Executive of the Company passed away on 09 June 2017.

Mr. G. Ramanan Alternate Director to Mr. Imran Zahir resigned on 24 July 2017.

(ii) The Directors have approved a final dividend of Rs 2.10 per share amounting to Rs 36,751,617 for the year ended 31 March 2017 on 2 August 2017.

No other events have occurred except to the above since the date of the statement of financial position, which require adjustment to, or disclosure in, the financial statements.


SIX YEAR REVIEW

Year ended 31 March 2012 2013 2014 2015 2016 2017 Rs. Rs. Rs. Rs. Rs. Rs.OPERATING RESULTS

Turnover 88,705,349 98,356,729 105,387,820 116,957,020 124,868,499 139,669,847

Operating profit 56,022,537 62,233,131 66,894,611 82,843,759 86,568,198 88,220,988Interest income 7,047,351 15,995,112 21,970,169 15,014,931 15,451,181 31,502,209Loss on disposal of fixed assets Nil (6,554,000) Nil Nil Nil NilFair value gain on investment properties 100,558,461 Nil 235,489,597 3,640,563 378,523,032 164,000,000

Profit before Tax 163,628,349 71,674,243 324,354,377 101,499,253 480,542,411 283,723,197Tax (18,246,647) (6,647,736) (58,527,468) (11,793,721) (150,089,550) 33,146,181

Profit after tax 145,381,702 65,026,507 265,826,909 89,705,532 330,452,861 316,869,378Other comprehensive income -net of tax 107,637 450,292 (1,468,637) 345,241 1,945,946 (9,416)Profit brought forward 758,103,146 833,846,923 857,981,597 1,077,295,912 1,120,741,585 1,402,234,497Profit available for appropriation 903,592,485 899,323,722 1,122,339,869 1,167,346,685 1,453,140,392 1,719,094,459Transfer (to)/from reserves 3,147,794 1,534,761 458,045 2,397,056 721,377 1,257,593Capitalization of Reserves and related direct cost (36,491,754) Nil Nil Nil Nil NilDividends paid (36,401,602) (42,876,886) (45,502,002) (49,002,156) (51,627,272) (54,252,387)Forfeited dividend - - - - - 459,935Profit carried forward 833,846,923 857,981,597 1,077,295,912 1,120,741,585 1,402,234,497 1,666,559,600

ASSETS

Non-current assetsProperty, plant & equipment 25,832,687 24,277,479 32,682,708 32,084,614 47,450,823 48,020,168Intangible assets Nil Nil Nil Nil 328,927 263,512Investment properties 1,050,917,229 1,053,115,654 1,294,406,443 1,298,154,296 1,681,000,000 1,845,000,000Current assets 121,653,220 147,492,948 184,880,488 234,562,267 280,231,096 340,400,733

Total assets 1,198,403,136 1,224,886,081 1,511,969,639 1,564,801,177 2,009,010,846 2,233,684,413

EQUITY AND LIABILITIES

Capital & reservesStated capital 175,007,700 175,007,700 175,007,700 175,007,700 175,007,700 175,007,700Revaluation reserve 20,824,064 19,289,303 27,882,263 27,054,828 39,990,241 41,039,468Retained earnings 833,846,923 857,981,597 1,077,295,912 1,120,741,585 1,402,234,497 1,666,559,600Non - current liabilities 144,518,264 133,723,178 200,075,212 189,945,037 362,465,135 266,223,015current liabilities 24,206,185 38,884,303 31,708,552 52,052,027 29,313,273 84,854,630Total equity & liabilities 1,198,403,136 1,224,886,081 1,511,969,639 1,564,801,177 2,009,010,846 2,233,684,413

KEY INDICATORS

Earnings per share 8.31 3.72 15.19 5.13 18.88 18.11Earnings per share(exclusive fair value gain) 2.56 3.72 4.58 4.98 5.13 4.60Dividend per share 2.35 2.45 2.60 2.80 2.95 3.10Net Assets per share 58.84 60.13 73.15 75.59 92.41 107.57Market price per share 59.00 48.00 46.20 64.00 50.20 45.70

OTHERS

Number of shareholders 841 809 801 808 868 869Dividend cover (Times) 3.53 1.52 5.84 1.83 6.40 5.84Dividend cover((Times)exclusive of fair value gain)) 1.09 1.52 1.76 1.78 1.74 1.48Dividend pay out ratio 0.28 0.66 0.17 0.55 0.16 0.17Dividend pay out ratio (exclusive of fair value gain) 0.92 0.66 0.57 0.56 0.58 0.67


INFORMATION TO INVESTORS

DISTRIBUTION OF SHAREHOLDINGS AS AT 31ST MARCH 2017

From To No. of Holders No. of Shares % 1 - 1,000 715 104,402 0.60 1,001 - 10,000 120 343,388 1.96 10,001 - 100,000 26 772,494 4.41 100,001 - 1,000,000 5 2,729,669 15.60 Over 1,000,000 3 13,550,817 77.43 869 17,500,770 100.00

ANALYSIS OF SHAREHOLDERS AS AT 31ST MARCH 2017

Category No. of Shareholders No. of Shares % Local Individuals 799 4,049,947 23.14 Local Institutions 63 13,400,957 76.57 Foreign Individuals 6 9,866 0.06 Foreign Institutions 1 40,000 0.23 Total 869 17,500,770 100.00

31.03.2017 31.03.2016 Rs. Rs.Market price per shareHighest during the period Rs. 64.80 (19/05/2016) Rs. 76.00 (12/06/2015)Lowest during the period Rs. 45.10 (01/02/2017) Rs. 50.00 (15/03/2015)As at end of the period 45.70 50.20

PUBLIC HOLDING

The percentage of shares held by the public as at 31st March 2017 is 18.58% comprising of 855 shareholders.

PER SHARE DATA AS AT 31 MARCH

2017 2016Earnings per share (Rs) 18.11 18.88Earnings per share(exclusive fair value gain) (Rs) 4.60 5.13Dividend per share (Rs) 3.10* 2.95**Net assets per share (Rs) 107.57 92.41Market price per share as at 31 March (Rs) 45.70 50.20

* Final dividend of Rs 2.00 per share paid for the year ended 31/03/2016 and interim dividend of Rs 1.10 per share paid for the year ended 31/03/2017.

** Final dividend of Rs 1.85 per share paid for the year ended 31/03/2015 and interim dividend of Rs 1.10 per share paid for the year ended 31/03/2016.


MAJOR SHAREHOLDERS OF THE COMPANY

Name As at 31/03/2017 As at 31/03/2016 No. of Shares (%) No. of Shares (%)

1 Urban Development Authority 8,333,332 47.617 8,333,332 47.617 2 Pan Asia Banking Corporation PLC/ Ceylon and Foreign Trades PLC 3,074,450 17.568 2,799,450 15.996 3 Mr. O Gulamhusein (Deceased) 2,143,035 12.245 2,143,035 12.245 4 Mr.B V Selvanayagam, Mr. S G Selvanayagam & Mrs. L Selvanayagam 937,500 5.357 937,500 5.357 5 Commercial Bank of Ceylon PLC/ Ceylon and Foreign Trades PLC 879,325 5.024 1,405,475 8.031 6 Waldock Mackenzie Ltd/ Mr S A Gulamhusein 465,128 Commercial Bank of Ceylon PLC/ Dr. S A Gulamhusein 17,179 768,717 4.392 508,590 2.906 Dr. S H A Gulamhusein 31,250 Assetline Leasing Company Ltd/ Dr.S A Gulamhusein 1,000 Sampath Bank PLC/ Dr. S A Gulamhusein 254,160 7 Mrs. L Selvanayagam 193,556 1.106 193,556 1.106 8 Majestic Investments (Pvt) Ltd 79,768 0.456 79,768 0.456 9 Nanayakkara Management Services (Private) Limited 69,371 0.396 69,371 0.396 10 Mr.W R H Perera 63,843 0.365 63,843 0.365 11 Mrs. T Sarveshwaran 57,316 0.328 57,316 0.328 12 Merrill J Fernando & Sons (Pvt) Limited 49,040 0.280 49,040 0.280 13 Miss N C Cooray 41,665 0.238 14 Asha Financial Services Limited/ Mr. C N Pakianathan 40,046 0.229 38,871 0.222 15 Tranz Dominion,L L C 40,000 0.229 40,000 0.229 16 Dee Sanda Holdings Pvt Limited 35,840 0.205 35,840 0.205 17 Mr. K Gnanenthiran 31,250 0.179 31,250 0.179 18 Mr. A A Noordeen 27,375 0.156 27,375 0.156 19 Anwarnet (Private) Limited 24,783 0.142 23,783 0.136 20 Mr. K S A Ramchandani 21,750 0.124 21,750 0.124 16,911,962 96.636 16,859,145 96.334 588,808 3.364 641,625 3.666 17,500,770 100.000 17,500,770 100.000

}

Signed this ………….....…. day of ……….....……. Two Thousand and Seventeen

*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 are noted on the reverse hereof.

FORM OF PROXY

I/We..………………………………………………………………………(NIC No. ……………………) of .………………………………………………………………………………………………….. being a Shareholder/Shareholders of ON’ALLY HOLDINGS PLC hereby appoint .........…………………………………………………………………………………………………………………………………………………………………………………………………(NIC No.…………………………….) of ….…..………………………………………………………………………………………………(or failing him/her).

Dr. J Munasinghe or failing him* Mrs.T Sarveshwaran or failing her * Mr. G T Fazleabas or failing him* Mr. B V Selvanayagam or failing him* Mr. M I R Zahir or failing him* Mr. A C Yahiyakhan or failing him* Mr. T A Akbarally or failing him* Mr. S S P Rathnayake or failing him* Mr. W L D P V Jayawardene

as my/our* proxy to represent and speak and vote for me/us* and on my/our* behalf at the Thirtieth (30th) Annual General Meeting of the Company to be held on 30th September 2017 at 10.30 a.m. and at any adjournment thereof and every poll which may be taken in consequence of the aforesaid meeting.

I/We,* the undersigned, hereby authorize my/our proxy to speak and vote for me/us* and on my /our* behalf in accordance with the preference as indicated below;

1 ROUTINE BUSINESS For Against

1.1 To receive and consider the Annual Report of the Board of Directors on the affairs of the Company and the Statement of Accounts for the year ended 31st March 2017 with the Report of the Auditors thereon.

1.2 To re-elect Mr. M I R Zahir who retires by rotation in terms of Article 88 of the Articles of Association of the Company, as a Director.

1.3 To re-appoint Messrs PricewaterhouseCoopers, Chartered Accountants, as Auditors of the Company and to authorize the Directors to fix their remuneration.

1.4 To authorize the Directors to determine donations for the year ending 31st March 2018 and up to the date of the next Annual General Meeting.

2. SPECIAL BUSINESS

2.1 To pass the Special Resolution as set out in Item 2.1 of the Notice of Meeting to amend the Articles of Association of the Company.

ON’ALLY HOLDINGS PLC

FORM OF PROXY (contd.)

INSTRUCTIONS FOR COMPLETION

1. Kindly perfect the Form of Proxy by filling in legibly your full name address and the National Identity Card number and signing in the space provided and filling in the date of signature.

2. The completed Form of Proxy should be deposited at the Registered Office of the Company, Unit 603, 4th Floor, Unity Plaza Building, No. 2, Galle Road, Colombo 04 not later than forty seven (47) hours prior to the time appointed for the Meeting.

3. If you wish to appoint a person other than the Chairman or a Director of the Company as your Proxy, please insert the relevant details in the space provided (above the names of the Board of Directors) on the Proxy Form.

4. If the Form of Proxy is signed by an Attorney, the relative Power of Attorney should accompany the Form of Proxy for registration if such Power of Attorney has not already been registered with the Company.

5. If the appointer is a Company / Incorporated body this Form must be executed in accordance with the Articles of Association / Statute.

Annual Report 2016/2017

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