LUCKY LANKA - Colombo Stock Exchange...01 History of Lucky Milk Drop The history of Lucky Lanka Milk Processing Co. PLC runs back to early 1990s. In 1991 the business of yoghurt started

cd;sfha lsß ujLUCKY LANKA MILK PROCESSING CO. PLCBIBULEWELA, KARAGODA UYANGODA, SRI LANKA

ANNUAL REPORT & ACCOUNTS2 0 1 6 - 2 0 1 7

LUCKY LANKA MILK PROCESSING COMPANY PLC

ANNUAL REPORT & ACCOUNTS

BIBULEWELA, KARAGODA UYANGODA, SRI LANKA

2016 - 2017

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History of Lucky Milk Drop ...................... 01

A brief Insight of the company ................. 01

Lucky Vision ............................................. 02

Lucky Values ............................................. 03

Chairman’s Message ............................... 05

Managing Director’s Message .................. 07

Board of Directors .................................... 08

Senior Management ................................ 10

Corporate Governance ...............................11

New Projects ..............................................18

Affairs of the Company ............................. 21

Independent Auditors’ Report ...................25

Statement of Comprehensive Income...... 27

Statement of Financial Position ............... 28

Statement of Changes in Equity .............. 29

Cash Flow Statement ................................ 30

Notes to the Financial Statements ........... 31

Investors Information ................................ 56

Notice of Meeting ...................................... 60

Form of Proxy ............................................ 61

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History of Lucky Milk DropThe history of Lucky Lanka Milk Processing Co. PLC runs back to early 1990s. In 1991 the business of yoghurt started at ‘Godawa’ a rural village which relates a legend that couples with dairy industry. The legend tells us this remote village in Matara District of Sothern Province has provided the king with milk requirement of his palace. No one could have the least idea of the occurrence of a national level dairy company in the same area thousands years after that. However a courageous young man of his early twenties started a homemade yoghurt enterprise with the help of his four young sisters using excess milk of their own cow. At the first stage nearly a production of 300 cups was done which was taken to the market on a bicycle. The perseverance of these youngsters brought the business up to the present level.

A brief Insight of the company

The company is engaged in processing fresh milk which is collected from the local milk farmers pervasive almost all over the island. The product range comprises of Yoghurt, Curd, Pasteurized milk, Sterilized milk, UHT milk, Flavoured milk, Fruit drink bottles, Drinking yoghurt, Ice cream and Milk toffee. Yoghurt product has been diversified into several types such as Vanilla, Strawberry, Chocolate, Treacle, Fruit jelly and Fresh fruit yoghurt. Lucky brand yoghurt enjoys the privilege of being the one and only Sri Lankan yoghurt with the SLS certification. The quality of the Lucky product is assured from the incoming raw material to the finished product that goes to the consumer through best practices of the quality management system operated and monitored by full qualified Quality Assurance personnel in accordance with ISO 22000 and HACP international standards. We are proud to be the first yoghurt manufacturers who introduced ‘Pro-Boitic’ cultures in yoghurt that enriched with favourable microorganisms to the human body. We possess the most strengthened cold distribution network of the island with more than 140 vehicles cover the whole territory.

LUCKY LANKA MILK PROCESSING COMPANY PLCANNUAL REPORT & ACCOUNTS 2016 -2017

Lucky VisionWe are stepping towards the world of prosperity with Lucky

Lucky Mission2020 Global Lucky

To create reciprocal loyal customers through diversified products & services.

To ensure the healthy life of the people by providing product with high nutritional value to our customers.

To ensure the environmental well- being through sustainable processing techniques.

To become a portrait of the quality in the mind of each individuals to provide certified produces to our customers.

Better work place for employees where their capabilities are maximum utilized.To contribute the development of Gross Domestic Production(GDP)of the country.

A secured entity for its stakeholders from all the aspect.

Lucky Corporate Goals

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Innovativeness - We continuously improve processes, products and ideas, and create more efficient way to satisfy our stakeholders.

Customer Care - Lucky Lanka is dedicated to serve our customers better than any other organization in the industry, and we have passion for customer care.

Team work - Lucky family is a cohesive team that works to achieve our vision.

Responsiveness - Our dedicated, skillful team has the ability to complete tasks on or before the deadlines.

Trustworthiness - This is one of the best values that we posses. We work honestly and our culture highly supports this value.

Results oriented - We are result oriented and motivated by the outcomes.

Democracy - Our policies are equal to each and every one in the organization. From Senior management to minor employees, we follow same rules and regulations within the organization.

Lucky Values


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Chairman’s MessageLucky Lanka is stepping on another challenging year in spite of all external and internal distur-bances that might demotivate any other enterprise of the third world countries. It is true the globalization has broadened our opportunities, techniques, strategies, competency and outlook on our particular fields. As well it has widened our challenges also. We should not forget that all other countries whether developed or developing equally make efforts to gain the maximum benefit of the globalization. Consequently our industries are also affected by the theory of ‘more power more triumphs’. In dairy industry the situation becomes worse since multinational giants have captured the dairy product market of countries like ours. In the past as well as in the present, as a company Lucky has been experiencing this hardship being indif-ferent. Our multinational competitors, with their immense financial power have been ende-vouring to demolish us.

Nevertheless Lucky Lanka Milk Processing Company has been able to keep the head up still for our tremendous effort to be with the conscience and humanity. Our sustained rapport with our stakeholders, backed up by the well qualified trustworthy workforce has provided us with strength and confidence to strive. Each and every time we are confronted by a crucial situation our strategic measures have made the situation favourable acquiring the fullest cooperation of our stakeholders.

Our newest project ‘Kirikatha’ is another strategic methodology we have launched in order to cope with the financially strong competitors’ challenge. Our standardized sales outlets network carried out with outside investors has increased our assets with no direct cost from the mother company. The potential of this project in enhancing the market value of our brand name was deeply considered. We have been able compete in the trade successfully with the minimum cost borne by the company. This project will widely spread out our goodwill in a short time bring an unexpected challenge to our competitors. Hence our confidence, as a company to tackle any of the problematic situations grows up continuously.

In my massage for the annual report of 2016 I should mention my obligations to all our stake-holders who were with us for the past and I would like to invite all of them and new comers to have a strong and confident link to ‘2020 Global Lucky’

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Managing Director’s Message As a company we have been able to review on 2016 satisfactorily in considering our successful performance under unfavorable economic social and weather conditions. Especially the instability of the political arena and weather condition that affected badly for several times was a big challenge during the last year. Turbulent conditions in the society damaged our sales in large scale. In spite of all we have been able to compete successfully in the market and maintain our stability in the industry.

We have safe guard our co-operative values without any failure even under such hardships. As a local enterprise our contribution to the domestic economy is a matter of full satisfaction. While the rural living condition scrambles we could keep our milk farmers in their normal life style by providing them a competitive price and an uninterrupted collection of milk. We have been able to support our people with our CSR activities as usual. I would like to call year 2016 as a challenging year with ‘falling & rising’ even though the company has increased the sales by 18% compared to the last year. The period has tested our business strategy and unity as a team. Our audacity and endurance were scrutinized severely. I am proud to be a leading member in such a courageous team.


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LUCKY LANKA MILK PROCESSING PLCANNUAL REPORT & ACCOUNTS

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01. Chairman - Mr. Lal Keerthi Gunawardhana

Mr. Lal Keerthi Gunawardhana is an Executive Director of Lucky Lanka Milk Processing Co. PLC. since it’s begining. 26 years of entrepreneurial carrier as founder, Chairman of Lucky Lanka Milk Processing PLC, which began as a household business, transformed to be a national level enterprise today. His exposure extend from business management, financial management, analyzing & controlling, marketing, supply chain management, operational management, production management, milk procurement and dairy management including cattle management, auto mobile engineering, electrical and mechanical engineering, dairy machinery up to many other areas relevant to the management of a business. He won the

National Platinum Award as the Best Entrepreneur of the year 2011 from FCCISL.

Mr. Gunawardhana obtained his bachelor's degree in Leadership & Management and Master' s Degree in Business Administration from Manipal University of India specialized in Marketing and Human Resources Management streams and the dissertation on the 'Study on positive

attitudes of Sri Lankan Community'.

Currently Mr. Gunawardhana is reading for Master of Science in Philosophy & LLB

02. Managing Director - Ms. Namali Amarasiri Gunawardhana

Ms.Namali Amarasiri Gunawardhana is an Executive Director of Lucky Lanka Milk Processing Co. PLC. Ms.Namali holds a MBA in Cardiff Metropolitan University, UK & she holds a Higher Diploma in Business Administration from NIBM. She has a thorough knowledge on manufac-turing practices of milk foods. She has undergone several training programs about food safety and GMP. Also she holds Diploma in Computer Science. Her experience in this industry is

more than 26 years.

Board of Directors


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0903. Independent Non ExecutiveDirector - Dr. D. B. S. Chamara Bandara

Mr. Bandara is a fellow member and a prominent personality of the institute of Chartered Accountants of Sri Lanka. He was the founder president of the governing council of Young Chartered Accountants’ Forum of Sri Lanka and currently servicing as a council member of AAT Sri Lanka.

Mr. Bandara holds a MBA from the University of Southern Queensland, Australia and has PhD in the world’s fifth largest private academia, Management and Science University, Malaysia. He is also a fellow member of the Institute of Certified Management Accountants’ of Sri Lanka.

04. Independent Non Executive Director - Mr. S.S.R.D. De Silva Gunasekara

Mr. Roshan Gunasekara is recently joined Independent Non Executive Director of Lucky Lanka Milk Processing Co. PLC. He is the Chief Operating Officer of Asia Asset Finance PLC. He covers all aspects of overall operations of that Company including but not limited to, Business Development & Marketing, Branding & Advertising, Operations Management, Treasury Management & Investment, Credit Policy and Implementation of Procedures Controls.

Mr. Roshan Gunasekara holds a B.Sc. Business Administration (Special) Degree from University of Sri Jayewardenepura and Masters in Business Administration from University of Colombo. He is a member of Association for Overseas Technical Scholarships (AOTS) – Japan. He also visiting lecture at University of Colombo.

05. Non Independent Non Executive Director - Ms. Daisy Amarasiri Gunawardhana

She is well versed and proficient in fiscal matters and also she holds 30 years of experience in finance management, human resource management and marketing in lucky Lanka milk processing as well as in many other organizations in the country . She is also a pioneer of “Kiri katha” outlet chain. She has more than 26 years’ experience in manufacturing milk food.

06. Non Independent Non Executive Director - Ms. Bhadra Amarasiri Gunawardhana

She has more than 23 years’ experience in milk food processing industry. She holds a MBA in Cardiff Metropolitan University, UK & she holds a Higher Diploma in Business Administration from NIBM. She is an expert in supply chain management and stores management


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01. General Manager - Mr.Sumith RanaweeraHe has more than 18 years experience in milk food processing industry and he is responsible for overseeing all administrative functions in the business. He is an expert in project management , suply chain management and financial management.

02. Director Engineering - Mr. Achala GodawitaHe is a Chemical & Process Engineer from university of Moratuwa. He is an associate member of the Institute of Engineers Sri Lanka (IESL). He holds a Master degree in Business Administration. He has pursued Master degree in Sustainable process development from University of Moratuwa. He has more than 11 years’ experience in milk food processing industry. He currently possesses a PhD in Australia.

03. Director Administration - Ms. J. P. N.Wasana KumariShe is an honours degree holder in agriculture. She holds a Master degree In Business studies from university of Colombo. She has more than 11 years’ experience in milk food processing industry. She is the Head of Marketing of the Organization & She is well versed and proficient in Stratergic Marketing Management & Brand Management.

04. Director Production - Ms. Nali SanjeewikaShe has more than 21 years’ experience in milk food processing industry & she holds a Higher Diploma in Computer Science & Technology. She is an expert in research & development activites & production activities.

Senior Management


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Corporate Governance"Corporate Governance" is a generic term that describes the ways in which rights and responsibilities are distributed among the various corporate bodies according to the rules, processes or laws to which they are subject. In practice, corporate governance defines the decision-making systems and structure through which owners directly or indirectly control a company. The Board of Directors of Lucky Lanka Milk Processing Co. PLC is committed to ensure business integrity and professionalism in all its activities. As a part of this commitment, the Board of Directors has proactively encouraged good corporate governance practice within the Company based on a generally accepted policy framework, which emphasizes transparency, control and accountability.

Board of Directors and Its RoleThe Board of Directors as of 31 March 2017 has Six members, two executive and four non-executives. Two non executive directors out of four non executive directors are considered as independent in terms of the listing rules laid down by the Colombo Stock Exchange and have submitted annual independence declarations. The directors act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of Lucky Lanka Milk Processing Co. PLC. They are well aware of your Company's activities and give direction for long-term strategy, seeking and contributing views and opinions on strategic options proposed by the senior management of the Company. The directors also ensure that the company is compliant with the provisions of the Companies Act No. 07 of 2007.

The board meets quarterly basis and has timely access to information needed to effectively discharge its duties. Directors receive a comprehensive package of relevant and timely information on all issues prior to each meeting , thus providing them with the opportunity to make effective contributions to the decisions of the board.

Such meetings are attended by both the executive as well as the non executive board members and are headed by the Chairman. At these meetings the board reviews;

- Monthly performance of the Company against the budget- Formulation, monitoring and implementation of sound business strategies, internal controls and risk management procedures that are in place and monitor their effectiveness and initiate changes where required- Secure effective information, control and audit systems- Compliance with legal/ethical standards

Composition of the Board

Non Executive, Independent Directors- Dr. D.B.S. Chamara Bandara- Mr. S.S.R.D. De Silva Gunasekara

Executive Directors- Mr. Lal Keerthi Gunawardhana (Chairman)- Ms. Namali Amarasiri Gunawardhana (Managing Director)

Non Executive, Non Independent DirectorsMs. B.A. GunawardhanaMs. D.A. Gunawardhana

At present, there are six directors on the board, whose profiles are given on page 08 in this Annual Report. All the directors have the necessary skills and experience to direct and lead the Company.

Directors' Interest and ResponsibilitiesThe directors of the Company have made the general disclosures provided for in Section 199(2) of the Companies Act No.07 of 2007 and have been duly entered in the interest register of the Company.The directors are required by relevant statutory provision to prepare Financial Statements for each financial year, which gives a true and fair view of the state of affairs of the company for that period. In preparing the Financial Statements, appropriate accounting policies have been selected and applied consistently and reasonably and prudent judgments and estimates have been made. The applicable Sri Lanka Accounting Standards have been followed and explained in the notes to the financial statements.

The directors are responsible for ensuring that the Company keeps s sufficient accounting records to disclose with reasonable accuracy of the financial position of the Company and to ensure that the Company's Financial Statements comply with the provisions of the Companies Act. No. 07 of 2007, the Sri Lanka Accounting Standards and the Listing Rules of the Colombo Stock Exchange.

The directors are also responsible to ensure that reasonable measures are taken to safeguard the assets of the Company at all times. In this context, they have established appropriate systems of internal controls with a view to preventing and detecting of frauds and other irregularities.

In preparing accounts, the directors continue to adopt the going concern basis. The directors after reviewing the Company's budget and borrowing facilities are of the view that the Company has adequate resources to continue in operation.

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Compliance with Legal RequirementsThe board is conscious of its responsibilities to the shareholders, the government and the society in which it operates and is unequivocally committed to upholding ethical behavior in conducting its business. The Board of Directors requires that Financial Statements are prepared in accordance with the Sri Lanka Accounting Standards and the requirements of the Colombo Stock Exchange.

Relationship with ShareholdersLucky Lanka Milk Processing Co. PLC aims to ensure that shareholders have access to relevant, up-to-date and consistent financial and non-financial information pertaining to the company. The Annual Report and quarterly Financial Statements provide the shareholders as well as prospective investors with the required information to assess the company's past performance and analyse its future prospects.

Corporate Governance Requirements under the Listing Rules of Colombo Stock ExchangeSection 7 of the Listing Rules of the Colombo Stock Exchange requires all Listed Companies to include in their Annual Reports an affirmative statement relating to compliance with the Corporate Governance Rules specified in that section. The table in page 14 contains the required affirmative statement in that regards.

Company SecretaryThe Company secretary is qualified to act in this role as per the provisions of the Companies Act No. 07 of 2007

Internal and External AuditorsThe Company's Internal Audit function has been outsourced and reports are submitted by the Internal Auditor. The management decides on the areas that need to be audited by the Internal Auditor for a given period.The External Auditors are appointed by the shareholders at the Annual General Meeting and are responsible to give their opinion on the Financial Statements prepared by the company.

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History of Lucky Milk DropThe history of Lucky Lanka Milk Processing Co. PLC runs back to early 1990s. In 1991 the business of yoghurt started at ‘Godawa’ a rural village which relates a legend that couples with dairy industry. The legend tells us this remote village in Matara District of Sothern Province has provided the king with milk requirement of his palace. No one could have the least idea of the occurrence of a national level dairy company in the same area thousands years after that. However a courageous young man of his early twenties started a homemade yoghurt enterprise with the help of his four young sisters using excess milk of their own cow. At the first stage nearly a production of 300 cups was done which was taken to the market on a bicycle. The perseverance of these youngsters brought the business up to the present level.

A brief Insight of the company

The company is engaged in processing fresh milk which is collected from the local milk farmers pervasive almost all over the island. The product range comprises of Yoghurt, Curd, Pasteurized milk, Sterilized milk, UHT milk, Flavoured milk, Fruit drink bottles, Drinking yoghurt, Ice cream and Milk toffee. Yoghurt product has been diversified into several types such as Vanilla, Strawberry, Chocolate, Treacle, Fruit jelly and Fresh fruit yoghurt. Lucky brand yoghurt enjoys the privilege of being the one and only Sri Lankan yoghurt with the SLS certification. The quality of the Lucky product is assured from the incoming raw material to the finished product that goes to the consumer through best practices of the quality management system operated and monitored by full qualified Quality Assurance personnel in accordance with ISO 22000 and HACP international standards. We are proud to be the first yoghurt manufacturers who introduced ‘Pro-Boitic’ cultures in yoghurt that enriched with favourable microorganisms to the human body. We possess the most strengthened cold distribution network of the island with more than 140 vehicles cover the whole territory.

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Rule Requirement

Company Remarks

Status

7.10.1 Non-Executive At least one third of the total number of Complied

There are four non executive directors in the board

Directors directors should be non-executive directors

7.10.2a Independent Two or one third of non-executive directors, Complied

Two non-executive Directors whichever is higher should be Independent directors are independent.

7.10.2b Independent

Each non-executive director should submit a Submitted the independent

declaration of independence/non-independence Complied

Directors declarations accordingly.

in the prescribed format

Names of independent directors should be

7.10.3c Disclosure Complied Please refer page 09 disclosed in the Annual Report relating to Directors 7.10.3c Disclosure A brief resume of each director should be included in

the Annual Report including the areas of expertise Complied Please refer page 08,09

relating to Directors

7.10.5 Remuneration A listed Company shall have a Remuneration Committee Committee Complied Please refer page 16

7.10.5a Composition

The Remuneration Committee shall comprise of non-executive directors a majority of whom will be of Remuneration independent Complied Please refer page 16 Committee 7.10.5b Functions The Remuneration Committee shall recommend the remuneration of Chairman and Complied Please refer page 16

of Remuneration

Executive Directors

Committee

7.10.6 Audit Committee The Company shall have an Audit Committee

Names of the members of Audit Committee are set out in Pages 17

Complied

7.10.6a Composition The Audit Committee ;

of Audit Committee * Shall comprise of non-executive directors a Complied majority of whom will be independent. * One non-executive director shall be appointed

Complied

as the Chairman of the committee * Managing Director and the Chief Financial Officer should attend Audit Committee Meetings Complied * The Chairman of the Audit Committee or one

member should be a member of a professional accounting body Complied

7.10.6b Audit The Audit Committee ;

Complied

Should be as outlined in the Section 7.10.6b of the Please refer pages 17

Committee functions

listing rules

7.10.6c Disclosure The Annual Report should set out; in the Annual a) Names of directors comprising the Audit Committee Report relating to b) The Audit Committee shall make a determination Please refer Audit Committee of the independence of the Auditors and disclose the Complied pages 17 basis for such determination c) The Annual Report shall contain a Report of the Audit Committee setting out the manner of compliance of the functions

Please refer pages 17




Risk ManagementRisk managementRisk Management process is implemented in order to understand, evaluate and address the inherited risks for the company to maximize the chance of objectives being achieved while ensuring its sustainability. As it is impossible to mitigate these risks completely, an effective process of this management is required to exploit the opportunities bring and allowing Compa-ny to be aware of possibilities. Hence the following identified risks are major to company's performance and position and are included in the risk management procedure.

Supply Chain ManagementConstant supply of high quality materials, efficient and effective manufacturing and the timely distribution of products is a must for the success of the Company.

Further the cost of raw materials represents the largest portion of manufacturing cost of the Company's product; hence the quality of the product is of paramount importance. The Compa-ny is inevitably exposed to the risk of contaminated raw materials accidently or maliciously throughout the supply chain or product defects which occur due to human error or an equip-ment failure.

In order to mitigate and minimize these problems, the Company has developed contingency plans of having strong relationship with its key suppliers to control quality by periodical reviews to ensure that they meet the rigorous testing and acceptance procedure.

Market RiskLoss of market share or market leadership in relevant segments due to intense competition, new entrants, changes in customer attitude and economic conditions are treated as identifi-able market risk.

Successful customer relationships are vital to our business and continual growth. Maintaining a strong relationship with our customers is necessary for our brand to be well presented and available for purchase all time. Further, great customer satisfaction and the confidence in our products lead to build brand loyalty.

A Well maintained quality assurance department always works according to the procedures and standards to deliver the best to the customer, it will also ensure continuous focus on inno-vation, regular monitoring of consumer trends, enhance productivity or efficiency to improve price competitiveness, Also Monitor market data, the competitor prices and always strive to give the best price to our customers and strengthen market position of our brand. Combination of these strategies minimizes the market risk to a considerable level.


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Regulatory and Legal RisksPotential losses arising due to violation of or non-conformance with laws, rules, regulation, prescribed practices, internal policies and procedures or ethical standards are included as regulatory and legal risks. The company is governed by Various laws and regulations including Companies Act, Inland Revenue Act, SEC regulations, and CSE rules.

Failure to comply with laws and regulations could expose Company to civil criminal action leading to damages, fines and criminal sanctions against our employees with possible conse-quences to our reputation. And also changes to laws and regulations could have a material impact on the cost of doing business.

Therefore we have implemented strong risk management processes to monitor and comply with all laws and regulations applicable to the company. Management of the Company always coordinates with company lawyers and secretaries to ensure compliance.

Internal audits also carried out to mitigate the possible risks of not complying with relevant standards.

Financial and Liquidity RisksThe responsibility of the management of the financial risks through continuous monitoring along with financial risk has reduced exposure to credit risk and external financing is very low. Also the liquidity risks, the risk of being unable to fund the business by maintaining adequate cash flows. Cash flows are reviewed continuously and strong relationship are being maintained with financial institutions. The financial indicators and the regular items on the board agenda and emerging trends of both local and global are also taken as ways of managing financialrisk.

Human ResourcesThe Company places strong emphasis on retaining key talent through its employee engage-ments and talent management strategies including performance evaluation, career guidance, training and development. The Company is aware that the lack of skills and competence in staff could result in the ability of the company to grow and sustain its performance in the face competition in the market and may also lead to lower productivity and increased costs. The structured and relevant training and development programs are designed to mitigate all risks related to Human Resources.

Remuneration committeeThe remuneration committee comprises of Mr.S.S.R.D. De Silva Gunasekara, Dr D B S Chamara Bandara and Mrs D A Gunawardena as at date. This committee recommends the remuneration payable to Executive Directors and sets guidelines for the remuneration of the Senior Management of the Company. The Board makes the final determination having considered the recommendations of this committee and the performance of the Senior Management Dr D B S Chamara Bandara is the Chairman of the committee.The main objective of the remuneration policy of the Company is to retain, attracted the required human resources in order to sustain its operations, and to rewards their performance.


Audit Committee Report

Composition of the Audit CommitteeThe Audit Committee, appointed by and responsible to the Board of Directors, comprises two Non-Executive Directors, both of whom are independent. The Committee is made up of members who bring their varied expertise and knowledge to effectively carry out their duties. Members of the Committee are;

Dr. D.B.S.Chamara Bandara - FCMA, FCA – Chairman, Independent Non – Executive DirectorMr .S.S.R.D. De Silva Gunasekara - Independent - Non – Executive DirectorMrs. B.A.Gunawardhane - Non executive Director

Objectives and Role of the Audit CommitteeThe main objective of the Audit Committee is to assist the Board of Directors to perform its dutieseffectively and efficiently. Accordingly, the objectives of the Audit Committee can be described in detailas follows:• Oversee the financial reporting process and determine that the financial reports present accurate, complete and timely financial information.• Monitor the effectiveness of the Company’s risk management processes and the internal control system.• To assess the independence of the External Auditor and monitor the performance of Internal and External Auditors.• To recommend to the Board the appointment of External Auditors.• To examine related party transactions are carried on an arms’ length basis.

Summary of ActivitiesFinancial ReportingThe Committee reviewed the Financial Reporting System to determine the accuracy and timeliness of the Financial Statements published. The Committee also reviewed the interim and year-end Financial Statements prior to publication, in order to determine that the statutory requirements have been complied with and the Company’s Accounting Policies have been consistently applied.

Internal AuditThe Committee recommended regular conduct of internal audits and monitored the effectiveness of the Internal audit functions and the implementation of the recommendations made by Internal Audit.

External AuditThe Committee reviewed the status of their independence.

ConclusionHaving reviewed the External and internal Audit reports the committee is in the conclusion that the adequacy and effectiveness of the internal controls which have been designed to provide a reasonable but not absolute assurance to Directors is satisfactory, and the assets of the company are safeguarded.Yet, certain improvements to the internal controls recommended by the Internal Auditors are being executed. The business performance is regularly reviewed and financial position is monitored. However, the committee is in the opinion that the Governors in charge should take necessary steps to improve the financial position of the company.

The Audit Committee determined that Messrs Ernst & Young are independent on the basis that they do not participate in any management activity of the company and do not provide any non-audit services to the company and recommended to the Board of Directors that Messrs Ernst & Young be reappointed as statutory Auditors for the financial year ending 31st March 2018, subject to approval by the Shareholders at the forthcoming Annual General Meeting.

Sgd.Audit CommitteeColombo. 17th August 2017

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New Projects“ KIRI KATHA “ The Latest Value Added Concept of Lucky Lanka

Milk is converted into numerous products in this modern world in which the nutrition, hygiene and taste are highly considered. We Lucky Lanka always inclined to add more value to our products. As a result of constant new entries of the ‘Giants’ to the conventional yoghurt market, the competition has gone up unprecedentedly. In order to face this challenge we have already innovated new value added products such as Choghurt, Jelly yoghurt, drinking yoghurt and so on. We have realized only the product diversification is not enough to cope with the competitive market conditions, especially under the pressure given by the unethical and unusual price off of new comers to the industry. Consequently the retail sector has been enjoying the biggest part of the profit while the manufacturers’ profit margin reduces day by day. The modern trade bargaining is also not in a favourable condition. Lucky Lanka Milk Processing Co PLC has planned this new modified project ‘Kiri Katha’ with the hope of facing all these challenges. We have launched an island wide project to introduce exclusive sales outlets only for lucky branded products. Kiri Katha is the latest value added concept to opti-mize our margins.

These newly open sales outlets are collaborations. The company deals with individual or co-operative investors to open a standardized sales outlet that suits to the today’s competitive market. The standardization is done according to four fixed categories. These outlets are prepared paying an extreme attention to their external appearance. The sales team is given a


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special training on customer care and selling chilled dairy products, as well as maintaining the restaurant. This new project has increased the company’s profit margin due to increasing quantity wise sale and avoiding of unnecessary price off.

The specialty of this project is, it reflects much more than these financial matters. The enthu-siasm our investors show in this venture is promising. We believe it is a certain kind of criteria to measure our goodwill as a local enterprise. As well it shows out our nation’s attitude towards local companies. Such a big number of outlets are to be established all over the coun-try. Only Lucky branded products are sold in these where the biggest part of the investment is done by the franchised share holder. The company has made arrangements to issue fresh milk for the consumers at these outlets minimizing their inconvenience in finding fresh milk in there surrounding. This becomes another national mission as it helps the country to save our foreign exchange by reducing import of powder milk. Additionally this service helps to up lift the health of our nation. Mean-while these outlets will be able to establish a good market for the harvest of country’s dairy farmers. Through this project we can offer a competitive price for raw milk that favours the farmers.

As this outlet network spreads our brand name we have gained an extra marketing value to our products. With the time this will strengthen our potential in all aspects. Consumers become more familiar with the Lucky brand name enabling the company to face the unethical threats via an extremely ethical and costless propaganda.

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Kiri KathaMini

Ice Cream Parlour

Kiri Katha

Kiri KathaPlus

Categories

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Annual Report of the Board of Director on the Affairs of the Company

The Directors are pleased to submit their report together with the Audited Accounts of the Com-pany, for the year ended 31st March 2017, to be presented at the Annual General Meeting of the Company.

Review of the YearChairman’s review on page No. 05 describes the Company’s affairs and mentions important events that occurred during the year, and up to the date of this report. This reports together with the audited financial statements reflect the state of the affairs of the Company.

Principal Activities / Core BusinessThe principle activity of the Company is to carry on the business of milk processing to produce, distribute, import and export of all kinds of milk related products..

Financial StatementsThe financial statements prepared in compli-ance with the requirements of Section 151 of the Companies Act No 7 of 2007 are given on page No. 23 in this annual report.

Independent Auditor’s ReportThe Auditor’s Report on the financial statements is given on page No.25 in this report.

Accounting PoliciesThe Accounting Policies adopted in preparation of the financial statements is given on page No. 31. There were no changes in Accounting Policies adopted by the Company during the year under review.

Financial Results / Profit and AppropriationsProperty, Plant & EquipmentDuring the year under review the Company invested a sum of Rs. 184,542,949/- (2016 – Rs. 95,697,974/-) in property, plant & equipment of which Rs. 82,819,826/- is in machinery & equip-ment, Rs. 2,528,215/- is in Computer and other equipment and Rs. 92,200/- is in Furniture and fixtures.

Information relating to movement in Property, Plant & Equipment during the year is disclosed under Note 13 to the financial statement.

Market Value of Freehold LandThe freehold land is revalued on a routine basis by an independent qualified valuer. The most recent revaluation was carried out as at 31/03/2013 .

Directors’ ResponsibilitiesThe Statement of the Directors’ Responsibilities is given on page No. 13 of this report.

Corporate GovernanceThe Company has compiled with the corporate governance rules laid down under the listing rules of the Colombo Stock Exchange, and is given on page No. 11

ReservesThe Reserves and Accumulated Profits as at 31st March 2017 amount to Rs ( 93,314,592 /-) vs Rs. (18,913,190 /-) as at 31st March 2016. The break-up and the movement are shown in the State-ment of Changes in Equity in the financial state-ments.


22

Stated CapitalAs per the terms of the Companies Act No. 7 of 2007, the stated capital of the Company was Rs. 596,056,822/- as at 31st March 2017 and was unchanged during the year.

Interests RegisterDetails of the transactions with Director-related entities are disclosed in Note 24 to the financial statements on page No. 50, and have been declared at the Board meeting, pursuant to Section 192 (2) of the Companies Act No. 7 of 2007.

Share Information and Substantial ShareholdingsThe earnings per share is given in Financial Statement on page No. 44 of this Annual Report.

DirectorsThe Directors of the Company as at 31st March 2017 and their brief profiles are given on page No. 08 in this report.

Directors’ ShareholdingThe interest of the Directors in the shares of the Company as at 31st March were as follows;

No. of Ordinary Shares As at 31.03.2017

Mr. L K A Gunawardhana 93,785,730

Ms. B A Gunawardhana 13,302,910

Ms. D A Gunawardhana 13,302,825

Ms. N A Gunawardhana 13,302,825

Independence of DirectorsIn accordance with Rule 7.10.2 of Colombo Stock Exchange Rules on Corporate Governance (‘CSECG Rules’), Dr. D. B. Sunil Chamara Banda-ra and Mr.S.S.R.D. De Silva Gunasekara who are Non-Executive Directors of the Company, have submitted a signed and dated declaration to the Board of their Independence.

AuditorsThe resolutions to appoint the present Auditors, Messrs. Ernst & Young Chartered Accountant, who have expressed their willingness to contin-ue in office, will be proposed at the Annual General Meeting.

As far as the Directors are aware, the Auditors do not have any relationship on interest in the Company.

The Audit committee reviews the appointment of the Auditor, its effectiveness and its relationship with the Company including the level of audit and non-audit fees paid to the Auditor. Details on the work on the Audit Committee are set out in the Audit Committee Report.

Notice of MeetingThe Annual General Meeting will be held at Hemalie Reception Hall, Galle Road, Walgama, Matara on 29th September 2017 at 10.00 am.

The Notice of the Annual General Meeting appears on page No. 60

For and on behalf of the Board.

(Sgd.) Director

(Sgd.) Director

(Sgd.) Managers & Secretaries (Pvt) Ltd) Secretaries

Lucky Lanka Milk Procesing Company PLC. 11th September 2017 Bibulewela Karagoda Uyangoda

Financial Statements

25

KHRC/ICK/AD INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF LUCKY LANKA MILK PROCESSING COMPANY PLC Report on the Financial Statements We have audited the accompanying financial statements of Lucky Lanka Milk Processing Company PLC, (“the Company”), which comprise the statement of financial position as at 31 March 2017, and the statement of comprehensive income, statement of changes in equity and, statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Board’s Responsibility for the Financial Statements The Board of Directors (“Board”) is responsible for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards and for such internal controls as Board 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 Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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 internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31 March 2017, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

(Contd..2/)

26


-2-

Report on other legal and regulatory requirements As required by Section 163(2) of the Companies Act No. 7 of 2007, we state the following: a) The basis of opinion and Scope and Limitations of the audit are as stated above. b) In our opinion:

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

- the financial statements of the Company, comply with the requirements of Section 151 of the

Companies Act No of 2007. 31 July 2017 Matara

Sgd.

27


Lucky Lanka Milk Processing Company PLCSTATEMENT OF COMPREHENSIVE INCOMEYear ended 31 March 2017

Notes 2017 2016Rs. Rs.

Revenue 6 1,175,174,964 995,245,984Cost of sales (737,475,316) (622,121,527)Gross profit 437,699,648 373,124,457

Other operating income 7 8,763,092 2,479,735Administrative expenses (132,831,297) (89,255,375)Selling and distribution expenses (327,040,155) (268,904,549)Results from operating activities (13,408,712) 17,444,269

Finance costs 8 (58,293,253) (41,811,054)Finance income 9 3,382,305 2,364,851Net finance cost (54,910,948) (39,446,203)

Loss before taxation 10 (68,319,660) (22,001,934)

Income tax expense 11 (4,600,654) (2,923,083)

Loss for the Year (72,920,313) (24,925,017)

Other Comprehensive income / (Expenses)

Actuarial gains/(losses) on employee benefit liability 22 (1,804,404) (1,428,738)

Income tax effect on other comprehensive income 323,314 151,402

Other Comprehensive income for the year, net of tax (1,481,090) (1,277,335)

Total comprehensive income for the year, net of tax (74,401,403) (26,202,352)

Losses per share 12 (0.36) (0.12)

The accounting policies and notes as set out in pages 07 to 31 form an integral part of these financial statements.

Other Comprehensive Income not to be Reclassified to Profit or Loss in Subsequent Periods

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Lucky Lanka Milk Processing Company PLCSTATEMENT OF FINANCIAL POSITIONAs at 31 March 2017

Notes 2017 2016ASSETS Rs. Rs.Non-Current assetsProperty, plant and equipment 13 855,687,128 737,175,700 Intangible assets 13.5 860,260 729,969 Total non current assets 856,547,388 737,905,669

Current assetsInventories 15 84,942,390 94,065,457 Trade receivables 16 202,000,268 184,657,355 Amounts due from related parties 24 8,073,927 7,153,312 Other current assets 17 18,737,008 35,240,508 Cash and bank balances 18 110,886,450 83,545,321 Total current assets 424,640,043 404,661,953 Total assets 1,281,187,431 1,142,567,622

EQUITY AND LIABILITIESEquity attributable to equity holders Stated capital 19 596,056,822 596,056,823 Retained earnings 20 (93,314,592) (18,913,190) Total equity 502,742,230 577,143,633

Non-current liabilitiesInterest bearing borrowings 21 230,890,724 163,940,073 Retirement benefit obligation 22 11,306,409 7,518,900 Deferred tax liability 14 25,488,918 21,827,158 Total Non-current liabilities 267,686,050 193,286,131

Current liabilitiesInterest bearing borrowings 21 308,560,844 211,602,466 Trade and other payables 23 163,234,354 122,040,846 Income tax liabilities 25 1,333,617 1,073,639 Other current liabilities 26 37,630,335 37,420,908 Total current liabilities 510,759,150 372,137,858 Total equity and liabilities 1,281,187,431 1,142,567,622

Net Assets Value per Share 19.1 2.51 2.90

Chief Financial Officer

The Board of directors is responsible for the preparation and presentation of these financial statements.

Director Director


31 July 2017Matara

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

[Sgd]

[Sgd] [Sgd]

29


Lucky Lanka Milk Processing Company PLCSTATEMENT OF CHANGES IN EQUITY

Stated Retained TotalCapital Earnings

Rs. Rs. Rs.

Balance as at 31 March 2015 596,056,822 7,289,161 603,345,984

Loss for the year - (24,925,017) (24,925,017)

Other comprehensive income - (1,277,335) (1,277,335)

Balance as at 31 March 2016 596,056,822 (18,913,190) 577,143,633

Loss for the year - (72,920,313) (72,920,313)

Other comprehensive income - (1,481,090) (1,481,090)

Balance as at 31 March 2017 596,056,822 (93,314,593) 502,742,230


Year ended 31 March 2017

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Lucky Lanka Milk Processing Company PLC STATEMENT OF CASH FLOWS

0

Notes 2017 2016Rs. Rs.

Cash flows from / (used in) operating activities

Loss before taxation (68,319,660) (22,001,934)

Adjustments for:Finance costs 8 58,293,253 41,811,054Depreciation of property, plant and equipment 13.2 62,150,507 50,102,517Amortization 186,375Provision for Employee Benefit Liability 22 2,621,104 1,363,701Provision for slow moving stock 490,835Impairement of debtors 12,967,234 1,680,242Profit on disposal of property, plant and equipment (7,394,487) -

Operating profit before working capital changes 60,995,162 72,639,039

Increase/(Decrease) in inventories 15 8,632,232 (47,169,187)Increase in trade and other receivables 16 (17,342,913) (2,021,753)Increase amounts due from related parties 24 (920,615) (3,238,129)Decrease in other current assets 17 16,503,500 11,898,506Increase in trade and other payables 23 41,193,508 24,708,499Decrease in dues to related parties 24 - (61,511)Decrease in other current liabilities 26 209,428 (3,421,061)

Cash generated from operations 109,270,301 53,334,403

Finance costs paid (58,293,253) (41,811,054)Gratuity paid 22 (638,000) (456,750)Income tax paid 25 - (430,403)

Net cash from / (used in) operating activities 50,339,048 10,636,196

Cash flows from / (used in) investing activitiesAcquisition of property, plant and equipment 13.1 (120,535,579) (96,443,474)Disposal proceeds of property, plant and equipment 11,275,498 2,050,000

Net cash flows from / (used in) investing activities (109,260,080) (94,393,474)

Cash flows from / (used in) financing activitiesProceeds from long term borrowings 21 109,143,619 197,370,050Repayment of long term borrowings 21 (57,466,281) (118,984,294)Repayment short term borrowings 21 - 13,808,251Finance lease obtained during the period - -Principle payment under finance lease liability 21 (21,064,940) 12,096,423

Net cash flows from / (used in) financing activities 30,612,398 104,290,429

Net increase in cash and cash equivalents (28,308,634) 20,533,151

Cash and cash equivalents at the beginning of the year (23,341,528) (43,874,678)Cash and cash equivalents at the end of the year 18 (51,650,163) (23,341,528)


31


Lucky Lanka Milk Processing Company PLCNOTES TO THE FINANCIAL STATEMENTSYear ended 31 March 2017

1. CORPORATE INFORMATION

1.1 General

Lucky Lanka Milk Processing Company PLC (the Company) is a Company incorporated and domiciled in Sri Lanka.The registered office of the Company and the principal place of business is located at Bibulawela, Karagoda – Uyangada, Kamburupitiya.

1.2 Principal Activities and Nature of Operations

The Principal activity of the company, which is engaged in the process of collection of locally produced fresh milk from rural village farmers and process yoghurt and other milk products and distribute island wide underthe brand name ‘LUCKY’, remained unchanged.

1.3 Date of Authorization Issue

The Financial statements for the year ended 31 March 2017were authorized for issue by the directors on 31July 2017.

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2. BASIS OF PREPARATION

The Financial Statements of the Company have been prepared in accordance with Sri Lanka Accounting Standards comprising SLFRS and LKAS (hereafter SLFRS’), as issued by The Institute of Chartered Accountants of Sri Lanka.

2.1 Statement of Compliance

The financial statements of the Company comprise the statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows together with accounting policies and notes thereto have been prepared in accordance with Sri Lanka Accounting Standards (commonly referred as “SLFRS”) laid down by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and also comply with the requirements of Companies Act No 7 of 2007.

2.2 Basis of Measurement

The financial statements have been prepared on an accrual basis and under the historical cost basis except for defined benefit obligations are measured at its present value, based on an actuarial valuation. The Directors have made an assessments of the company’s ability to continue as going concern in the foreseeable future and they do not foresee a need for liquidation or cessation of trading.

2.3 Going Concern

The Company’s management has made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the company’s ability to continue as a going concern and they do not intend either to liquidate or to cease operations of the Company. Therefore, the Financial Statements continue to be prepared on the going concern basis.

2.4 Presentation and Functional Currency

The financial statements are presented in Sri Lankan Rupees (Rs.), the Company's functional and presentation currency, which is the primary economic environment in which the Company operates.

2.5 Materiality and Aggregation

In compliance with Sri Lanka Accounting Standard - LKAS 01, (Presentation of Financial Statements), each material class of similar items is presented separately in the Financial Statements. Items of dissimilar nature or functions too are presented separately unless they are immaterial.

Financial assets and financial liabilities are offset and the net amount reported in the Statement of Financial Position only when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liability simultaneously. Income and expenses are not offset in the Statement of comprehensive income unless required or permitted by an Accounting Standard.

2.6 Comparative Information

The presentation and classification of the financial statements of the previous years have been amended, where relevant for better presentation and to be comparable with those of the current year.

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3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the financial statements of the Company require the management to make judgments, estimates and assumptions, which may affect the amounts of income, expenditure, assets , liabilities and the disclosure of contingent liabilities, at the end of the reporting period. In the process of applying the company’saccounting policies, the key assumptions made relating to the future and the sources of estimation at the reporting date together with the related judgments that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

3.1 Note 13-Useful lives of Property, Plant & Equipment

The Company reviews the assets’ residual values, useful lives and methods of depreciation at each reporting date. Judgment by the management is exercised in the estimation of these values, rates, methods. In connection with the residual value of motor vehicle under fleet, Company uses the experience of recent pattern of consumption and renewal of its fleet, together with advice from experts internal or external on residual values.

3.2 Note 16-Impairment Losses on Trade and Other Receivables

Trade and other receivables that have been assessed individually and found not to be impaired and all individually insignificant receivables are then assessed collectively, in groups of assets with similar risk characteristics, to determine whether provision should be made due to incurred loss events for which there is objective evidence, but the effects of which are not yet evident. The collective assessment takes account of data from the receivable portfolio (such as levels of arrears, credit utilisation, etc.), and judgements on the effect of concentrations of risks and economic data (including levels of unemployment, real estate prices indices, country risk and the performance of different individual groups).

3.3 Note 11-Taxes

The Company is subject to income taxes and other taxes including NBT. Significant judgement was required to determine the total provision for current, deferred and other taxes on the treatment of the adoption of SLFRS and transfer pricing in the financial statements and the taxable profit for the purpose of imposition of taxes. Uncertainties exist, with respect to the interpretation of the applicability of tax laws, at the time of the preparation of theses financial statements.

The Company recognised assets and liabilities for current, deferred and other taxes on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income, deferred and tax amounts in the period in which the determination is made.

3.4 Note 22-Defined benefit plan

The Defined benefit obligation and the related charge for the year are determined using actuarial valuations. The actuarial valuations involve making assumptions about discount rates, future salary increases, mortality rates etc. Due to the long term nature of such obligations these estimates are subject to significant uncertainty. All assumptions are reviewed at each reporting period.

3.5 Note 13.5-Useful –lives of intangible assets

The Company reviews the residual values, useful lives and methods of amortization of assets as at each reporting date. Judgment by the management is exercised in the estimation of these values, rates, methods and hence they are subject to uncertainty.

AuditorsThe resolutions to appoint the present Auditors, Messrs. Ernst & Young Chartered Accountant, who have expressed their willingness to contin-ue in office, will be proposed at the Annual General Meeting.

As far as the Directors are aware, the Auditors do not have any relationship on interest in the Company.

The Audit committee reviews the appointment of the Auditor, its effectiveness and its relationship with the Company including the level of audit and non-audit fees paid to the Auditor. Details on the work on the Audit Committee are set out in the Audit Committee Report.

Notice of MeetingThe Annual General Meeting will be held at Hemalie Reception Hall, Galle Road, Walgama, Matara on 29th September 2017 at 10.00 am.

The Notice of the Annual General Meeting appears on page No. 60

For and on behalf of the Board.

(Sgd.) Director

(Sgd.) Director

(Sgd.) Managers & Secretaries (Pvt) Ltd) Secretaries

Lucky Lanka Milk Procesing Company PLC. 11th September 2017 Bibulewela Karagoda Uyangoda

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3.6 Note 15-Provision for Slow moving inventories:

A provision for slow moving inventories is recognized based on the best estimates available to management on their future usability. Management uses present conditions and historical information as the basis to determine the future usability and recoverability, actual future losses on inventories could vary from the provision made in these financial statements.

4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4.1. Property Plant and Equipment

Cost

Property, plant and equipment are stated at cost less any subsequent accumulated depreciation and any subsequent accumulated impairment losses. All items of property, plant and equipment are initially recorded at cost.

The cost of property, plant and equipment is the cost of acquisition or construction together with any expenses incurred in bringing the asset to its condition for its intended use.

Depreciation

Depreciation is charged to income statement so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method.

Useful Life- time

The Company reviews the residual values, useful lives and method of depreciation of assets at each reporting date. Management estimatethese values, rates, Methods and hence they are subject to uncertainty.

De-recognition

Items of property, plant and equipment are de-recognised upon disposal or when no future economic benefits are expected from its use. Gain or loss arising on de-recognition of an item of property, plant and equipment is determined as the difference between the sales proceed and the carrying amount of the asset and is recognized in the income statement.

The estimated useful life of assets is as follows:

Assets Years %Buildings 20-10 5-10Plant and Machinery 25-05 4-20Office Equipment 25-03 4-33 1/3Furniture and Fittings 10-03 10-33 1/3Computer Equipment 04-02 25-50Motor Vehicles 12-05 8 1/3-20Refrigerators 10-05 10-20Promotion item 4 25Motor tricycle 5 20

The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each financial year end

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4.2 Intangible Assets

Basis of Recognition

An Intangible Asset is recognized if it is probable that future economic benefits that are attributable to the assets will flow to the entity and the cost of the assets can be measured reliably.

Basis of Measurement

Intangible assets acquired separately are measured as initial recognition at cost. Following initial recognition intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. The useful life of intangible assets is assessed to be either finite or indefinite. Intangible assets with finite useful life are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the method for an intangible asset with a finite useful life is reviewed at least at each financial year end. Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level.

Subsequent Expenditure

Subsequent expenditure on intangible assets is capitalized only when it increases the future economic benefits embodied these assets. All other expenditure is expensed when incurred.

De-recognition

Intangible assets are de-recognized on disposal or when no future economic benefits are expected from its use. The gain or loss arising from de-recognition of intangible assets are measured as difference between the net disposal proceeds and the carrying amount of the asset.

Amortization

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expenses on intangible assets with finite lives are recognised in the Statement of comprehensive Income.

The useful lives and the amortization methods of intangible assets with finite lives are as follows:

The class of the class of intangible assets : Computer softwareUseful life : 4 yearsAmortization Method : Straight line method

4.3 Employee Benefit Liability

The employee benefit liability of the Company is based on the actuarial valuation carried out by Independent actuarial specialist. The actuarial valuations involve making assumptions about discount rates and future salary increases. Considering the complexity of the valuation, the underlying assumptions and its long term nature, the defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Details of the key assumptions used in the estimates are contained in Note 22.

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4.4 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company, and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and Nation Building Taxes.

The following specific criteria are used for recognition of revenue:

Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods.

Gains and losses

Net gains and losses of a revenue nature arising from the disposal of property, plant and equipment and other non-current assets, including investments, are accounted for in the income statement, after deducting from the proceeds on disposal, the carrying amount of such assets and the related selling expenses.

Gains and losses arising from activities incidental to the main revenue generating activities and those arising from a group of similar transactions, which are not material are aggregated, reported and presented on a net basis.

Other income

Other income is recognised on an accrual basis.

4.5 Expenditure recognition

Expenses are recognised in the income statement on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to the statement of comprehensive income

For the purpose of presentation of the income statement, the “function of expenses” method has been adopted, on the basis that it presents fairly the elements of the company’s performance.

4.6 Borrowing Cost

Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds.

4.7 Taxation

Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

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Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax assets are recognized for all deductible temporary differences, and unused tax credits and tax losses carried forward, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the unused tax credits and tax losses carried forward can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the year when the asset is realized or liability is settled, based on the tax rates and tax laws that have been enacted or substantively enacted as at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxable entity and the same taxation authority.

Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

• Where the sales tax incurred on a purchase of a assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

4.8 FinancialInstruments — Initial Recognition and Subsequent Measurement

i) Financial assets

Initial recognition and measurement

Financial assets within the scope of LKAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs.

The Company’s financial assets include cash and bank balances , trade and other receivables and amount due from related parties.

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Subsequent measurement

The subsequent measurement of financial assets of the Company depends on their classification as follows:

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. The losses arising from impairment are recognised in the income statement in finance costs.

Derecognition

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

• The rights to receive cash flows from the asset have expired

• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement;and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of theasset nor transferred control of it, the asset is recognised to the extent of the Company’s continuing involvement in it.

In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

ii) Impairment of financial assets

The Company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, 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.

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Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the income statement. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Company. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the income statement.

iii) Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of LKAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, carried at amortised cost. This includes directly attributable transaction costs.

The Company’s financial liabilities include trade and other payables, bank overdrafts, loans and borrowings.

Subsequent measurement

The subsequent measurement of financial liabilities of the Company depends on their classification as follows:

Loans and borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the income statement.

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4.9 Leases

4.9.1 Finance Leases – where the Company is the Lessee

Property, Plant & Equipment on finance leases, which effectively transfer to the Company substantially all risks and benefits incidental to ownership of the leased item are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Capitalized leased assets are disclosed as Property, Plant & Equipment and depreciated consistently with that of owned assets, as described under Property, Plant & Equipment.

The corresponding principal amount payable to the lessor, together with the finance cost payable over the period of the lease is shown as a liability. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant periodic rate of finance cost on the remaining balance of the liability.

The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements and depreciated over the unexpired period of the lease or the estimated useful lives of the improvements, whichever is shorter.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

4.9.2 Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability

• In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

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All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable for the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

4.10 Inventories

Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price less estimated costs of completion and the estimated costs necessary to make the sale.

4.11 Cash and Cash Equivalents

Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less.

For the purpose of the cash flow statement, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.

4.12 Defined Benefit Plan - Gratuity

The employee benefit liability of the Company is based on the actuarial valuation carried out by Independent actuarial specialist in the current financial year. The actuarial valuations involve making assumptions about discount rates and future salary increases. Considering the complexity of the valuation, the underlying assumptions and its long term nature, the defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Details of the key assumptions used in the estimates are contained in Note 22.

4.13 Defined Contribution Plan - Employees' Provident Fund and Employees' Trust Fund

Employees are eligible for Employees’ Provident Fund contributions and Employees’ Trust Fund contributions in line with respective statutes and regulations. The companies contribute the defined percentages of gross emoluments of employees to an approved Employees’ Provident Fund and to the Employees’ Trust Fund respectively, which are externally funded.

4.14 Provisions, Contingent Assets and Contingent Liabilities

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the

42



reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

All contingent liabilities are disclosed as a note to the financial statements unless the outflow of resources is remote.

Contingent assets are disclosed, where inflow of economic benefit is probable.

5. STANDARDS ISSUED BUT NOT YET EFFECTIVE

The following SLFRS have been issued by the Institute of Chartered Accountants of Sri Lanka that have an effective date in the future and have not been applied in preparing these Financial Statements. Those SLFRS will have an effect on the accounting policies currently adopted by the Company and may have an impact on the future Financial Statements.

a) SLFRS 9-Financial Instruments: Classification and Measurement

SLFRS 9, as issued reflects the first phase of work on replacement of LKAS 39 and applies to classificationand measurement of financial assets and liabilities. The Company will quantify the effect in due course.

This standard was originally effective for annual periods commencing on or after 01 January 2015. However effective date has been deferred subsequently.

The Company will adopt these standards when they become effective. Pending the completion of detailed review, the financial impact is not reasonably estimable as at the date of publication of these Financial Statements.

b) SLFRS 15- Revenue from Contracts with Customers

SLFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including Sri Lanka Accounting Standard ( LKAS 1-) – “ Revenue”, Sri Lanka Accounting Standard (LKAS 11) – “ Construction Contracts” and IFRIC 13 – “ Customer Loyalty Programmer”. This standard is effective for the annual periods beginning on or after 01 January 2017.

The Company will adopt these standards when they become effective. Pending the completion of detailed review, the financial impact is not reasonable estimable as at the date of publication of these Financial Statements.

c) SLFRS 16- Leases

SLFRS 16 provides a single lessee accounting model, requiring leases to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value even though lessor accounting remains similar to current practice. This supersedes: LKAS 17 Leases, IFRIC 4 determining whether an arrangement contains a Lease, SIC 15 Operating Leases- Incentives; and SIC 27 evaluating the substance of Transactions Involving the Legal form of a Lease. Earlier application is permitted for entities that apply SLFRS 15 Revenue from Contracts with customers. SLFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019. The impact on the implementation of the above Standard has not been quantified yet.

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2017 20166. REVENUE Rs. Rs.

Sales of yogurt, fresh milk and other products 1,193,810,523 1,014,470,075Nation building tax (18,635,559) (19,224,091)

1,175,174,964 995,245,984

7. OTHER OPERATING INCOME

Profit on disposal of property, plant and equipment 7,394,487 753,500Sundry income 1,368,605 1,726,235

8,763,092 2,479,735

8. FINANCE COSTS

Over draft interest 16,344,338 12,463,757Loan interest 26,196,341 17,010,371Bank charges 1,601,754 1,158,156Lease interest & charges 5,698,374 7,973,623Factoring charges 8,452,446 3,205,147

58,293,253 41,811,054

9. FINANCE INCOME

Interest income 3,382,305 2,364,851Total finance income 3,382,305 2,364,851

10. LOSS BEFORE TAX

The following items have been recognized as expenses in determining profit before tax:

Remuneration to executive directors 700,000 368,315Auditors' remuneration & expenses 518,428 348,662Defined benefit plan Cost - Gratuity ( included in employee benefits ) 2,621,104 1,363,701Staff expenses 210,704,564 159,112,431Depreciation of property, plant and equipment 62,150,507 52,129,854Amortization of intangible assets 186,375 15,531

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11. INCOME TAX EXPENSEThe major components of income tax expense for the year ended 31 March are as follows:

2017 2016Rs. Rs.

Current income taxCurrent tax expense on ordinary activities for the year (Note 11.1) 615,580 430,403

Deferred income taxDeferred taxation charge 3,985,074 2,492,680Income Tax Expense reported in the Statement of Profit or Loss 4,600,654 2,923,083

11.1 Reconciliation between Current Tax Expense/(Income) and the Product of Accounting Profit.

2017 2016Rs. Rs.

Accounting profit before tax (68,319,660) (22,001,934)Aggregate disallowed expenses 90,510,453 64,661,181Aggregate allowable expenses (109,966,975) (61,412,663)Loss From Business (87,776,181) (18,753,415)

Taxable income from other sources 2,198,498 1,537,153Taxable Profit 2,198,498 1,537,153

Concessionary tax rate 10% 10%Normal tax rate 28% 28%

Income tax expense 615,580 430,403

12. LOSS PER SHARE

12.1

12.2 The following reflects the income and share data used in the Basic Earnings Per Share computation:

2017 2016Amounts Used as the Numerator: Rs. Rs.

Net Profit/(Loss) Attributable to Ordinary Shareholders for Basic Earnings Per Share (72,920,313) (24,925,017)

Numbers of Ordinary Shares Used as the Denominator:

200,028,410 200,028,410

Basic Loss Per Share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

Weighted Average Number of Ordinary Shares in Issue Applicable to Earnings Per Share

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of authorization of these financial statements.

Lucky Lanka Milk Processing PLC;is subject to a concessionary tax rate of 10% under the section 48 (A) of (10% in 2014/2015).Inland Revenue Act No.10 of 2006 and subsequent amendments there to.

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13. PROPERTY, PLANT AND EQUIPMENT

13.1 Gross Carrying Amount Balance Additions Transferred Disposal Balance As at

31.03.2016 During the year

During the year

During the year

As at 31.03.2017

Rs. Rs. Rs. Rs. Rs.Free holdLand 188,077,221 - - - 188,077,221Buildings 85,504,746 142,950 2,257,775 - 87,905,470Plant and machinery 274,162,615 3,631,681 118,058,648 - 395,852,944Furniture and fittings 5,001,781 92,200 - - 5,093,981Office equipment 11,991,795 68,237 - - 12,060,032Computer equipment 16,394,609 2,528,215 - - 18,922,824Refrigerators 2,696,413 1,464,885 - - 4,161,298Motor vehicles 62,866,100 - - (7,000,000) 55,866,100Motor tricycle 4,975,000 - - (275,000) 4,700,000Water treatment plant 3,500,000 - 10,378,736 - 13,878,736Promotion items 4,747,483 - - - 4,747,483

659,917,762 7,928,168 130,695,160 (7,275,000) 791,266,090

Lease HoldPlant machinery and equipment 32,462,361 - - - 32,462,361Refrigerators 13,577,723 - - - 13,577,723Motor vehicles 72,121,034 64,184,000 - (1,500,000) 134,805,034

118,161,118 64,184,000 - (1,500,000) 180,845,118Work in progressBuildings 38,928,004 33,242,636 (2,257,775) - 69,912,865Plant and machinery 49,249,240 79,188,145 (128,437,385) - -

88,177,244 112,430,781 (130,695,160) - 69,912,865

Total Cost 866,256,124 184,542,949 - (8,775,000) 1,042,024,073

13.2 Accumulated Depreciation Balance Charge Transferred Disposal BalanceAs at

31.03.2016During

the yearDuring

the yearDuring

the yearAs at

31.03.2017Rs. Rs. Rs. Rs. Rs.

Free holdBuildings 12,822,489 4,272,889 - - 17,095,378Plant and machinery 51,437,240 21,166,573 - - 72,603,813Furniture and fittings 1,177,660 552,773 - - 1,730,433Office equipment 2,655,784 990,970 - - 3,646,754Computer equipment 5,704,038 4,590,672 - - 10,294,710Refrigerators 673,699 407,871 - - 1,081,570Motor vehicles 26,672,311 15,197,587 (4,162,741) 37,707,157Motor tricycle 3,552,084 550,424 - (165,152) 3,937,356Water treatment plant 525,000 251,774 - - 776,774Promotion items 1,186,871 1,186,871 - - 2,373,742

106,407,176 49,168,404 - (4,327,893) 151,247,688

Lease HoldPlant machinery and equipment 5,347,149 2,424,462 - - 7,771,611Refrigerators 4,073,317 1,300,439 - - 5,373,756Motor vehicles 13,252,784 9,257,202 (566,096) 21,943,890

22,673,250 12,982,103 - (566,096) 35,089,257

129,080,426 62,150,507 - (4,893,989) 186,336,945

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13. PROPERTY, PLANT AND EQUIPMENT (Contd..)2017 2016

13.3 Net Book Value Rs. Rs.

Under free hold assetsLand 188,077,221 188,077,221 Buildings 70,810,092 72,682,257 Plant and machinery 323,249,131 222,725,375 Furniture and fittings 3,363,548 3,824,121 Office equipment 8,413,279 9,336,011 Computer equipment 8,628,114 10,690,572 Refrigerators 3,079,728 2,022,714 Motor vehicles 18,158,943 36,193,789 Motor tricycle 762,644 1,422,916 Water treatment Plant 13,101,962 2,975,000 Promotion item 2,373,742 3,560,612

640,018,402 553,510,589 Under lease hold assetsPlant machinery and equipment 24,690,750 27,115,212 Refrigerators 8,203,967 9,504,406 Motor vehicles 112,861,144 58,868,250

145,755,861 95,487,868 Under work in progressBuildings 69,912,865 38,928,004 Plant and machinery - 49,249,240

69,912,865 88,177,244 855,687,128 737,175,700

13.4

Loan RateCommercial Bank of Ceylon PLC AWPLR+2.5%Cargills Bank Ltd 11.75%Central Finance PLC 17%Asia Asset Finance PLC 12.52%

13.5 Intangible Assets Balance Balance As at

31.03.2017 As at

31.03.2016 Rs. Rs.

CostBalance as at 01.04 745,500 - Additions 316,666 745,500 Disposal - - Balance as at 31.03 1,062,166 745,500

AmotizationBalance as at 01.04 15,531 - Charge for the year 186,375 15,531 Balance as at 31.03 201,906 15,531

Net Book Value 860,260 729,969

During the financial year the Company acquired Property, Plant and Equipment to the aggregate value of Rs.177,002,190/- (2016 - Rs.96,443,474/-).of which Rs.64,184,000/- (2016 - Rs.35,190,000/-) was acquired by means of finance leases. Cash payments amounting to Rs.120,535,579/- (2016 - Rs.61,253,474/-) were made during the year for purchase of Property, Plant and Equipment.The amount of borrowing costs capitalised during the year ended 31 March 2017 was Rs.7,540,759/- (2016 - NIL/-). The rate used for capitalising the borrowing cost was as follows

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14. DEFERRED TAX LIABILITY

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

Deferred Tax Assets / (Liabilities)Retirement Benefit Liability 932,330 609,016 - - 323,314 151,402 Capital Allowances for Tax Purposes (27,935,080) (22,436,174) (5,498,905) (2,492,680) - - Impairment of Trade Debtors 1,464,748 - 1,464,748 - - - Provision for Slow Moving Stock 49,084 - 49,084 - - - Net Deferred Tax Assets / (Liabilities) (25,488,918) (21,827,158) Deferred Tax Income / (Expense) (3,985,074) (2,492,680) 323,314 151,402

14.1

15. INVENTORIES 2017 2016Rs. Rs.

Raw materials 57,706,188 48,858,699 Work in progress - 17,181 Finished goods 23,378,482 41,048,929 Consumables and spares 4,348,555 4,140,649

85,433,225 94,065,457 Less: Provision for Slow moving stock (490,835) -

84,942,390 94,065,457

16. TRADE RECEIVABLES 2017 2016Rs. Rs.

Trade debtors 215,658,258 169,585,909 Other trade receivables 989,486 16,751,688 Less: Provision for bad & doubtful debts (14,647,476) (1,680,242)

202,000,268 184,657,355

The age analysis of the trade receivables is as follows:As at 31 March

Up to 30 days 101,666,581 138,725,521 31 to 60 days 77,452,488 35,035,315 61 to 90 days 13,868,767 5,037,589 91 to 120 days 8,395,620 4,426,059 121 to 150 days 1,202,650 1,138,455 151 to 180 days 934,057 685,415 Over 180 13,127,582 1,289,244

216,647,744 186,337,597

17. OTHER CURRENT ASSETS

Prepayments, advances and non cash receivables 18,737,008 35,240,508 Total other current assets 18,737,008 35,240,508

18. CASH AND CASH EQUIVALENTS

Favorable BalancesCash and bank balances 110,886,450 83,545,321 Unfavorable BalancesBank overdrafts (162,536,613) (106,886,849) Total cash and cash equivalents (51,650,163) (23,341,528)

Financial positionStatement of

Profit or LossStatement of Statement of Other

Comprehensive Income

The Company has not recognised a deferred tax asset on accumulated tax losses amounting to Rs.116,468,604/- (2015 - Rs.81,501,031/- ), since it is notprobable that future taxable profits will be available within a foreseeable future.

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19. STATED CAPITAL Number of Value of Number of Value ofshares shares shares shares

Fully paid ordinary shares Rs. Rs.

At the beginning of the year 200,028,410 596,056,823 200,028,410 596,056,823 Share issue - - - - At the end of the year 200,028,410 596,056,823 200,028,410 596,056,823

As at 31 March 2017 2016 Rs. Rs.

19.1 Net Assets Value per Share 2.5 2.9

2017 201620. RETAINED EARNINGS Rs. Rs.

Balance as at beginning of the year (18,913,189) 7,289,163 Loss for the year (72,920,313) (24,925,017) Other comprehensive income (1,481,090) (1,277,335) Balance as at end of the year (93,314,592) (18,913,190)

21. INTERST BEARING BORROWINGS2017 2016

As at 31st March Current Non Current Total TotalRs. Rs. Rs. Rs.

23,573,229 78,342,612 101,915,841 45,333,915 122,451,003 152,548,111 274,999,114 223,321,776

Bank overdraft 162,536,613 - 162,536,613 106,886,849 308,560,845 230,890,724 539,451,569 375,542,540

21.1 Finance leases & hire purchasesBalance Addition Repayment Balance

as at during the during the as atName of the Financial Institute 31.03.2016 Year Year 31.03.2017

Rs. Rs. Rs. Rs.

Nation Trust Bank PLC 4,065,707 73,898,785 (1,387,975) 76,576,518 Central Finance Company PLC 3,256,428 - (1,303,093) 1,953,335 Lanka Orix Leasing Company PLC - - - - Asia Assets Finance PLC 641,785 4,486,697 (762,130) 4,366,351 Mercantile Investment PLC 1,981,552 12,239,460 (2,309,552) 11,911,460 Commercial Bank of Ceylon PLC 21,304,651 11,904,167 (6,386,544) 26,822,274 DFCC Bank PLC 3,265,899 - (3,265,899) - Hatton National Bank PLC 3,330,157 - (937,577) 2,392,580 Seylan Bank PLC 16,542,496 - (4,712,170) 11,830,326 Less - Interest in suspense (9,054,761) (30,088,109) 5,205,866 (33,937,004) Net Lease Liability 45,333,914 102,529,109 (21,365,797) 101,915,841

Finance leases & hire purchases (Note 21.1)Interest bearing loans (Note 21.2)

20162017

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21. INTERST BEARING BORROWINGS (Contd..)

21.2 Interest Bearing Loans Balance Loan obtained Loan payment Balanceas at during the during the as at

31.03.2016 year year 31.03.2017Bank/Institution Rs. Rs. Rs. Rs.

Union Bank PLC 82,913,495 27,526,606 (18,067,101) 92,373,000 Commercial Bank of Ceylon PLC 72,074,967 40,200,000 (19,155,247) 93,119,720 Mercantile Investment PLC 3,435,707 - (2,157,173) 1,278,534 Asia Assets Finance PLC (346,129) 10,000,000 (6,993,895) 2,659,975 National Development Bank PLC 43,192,050 11,417,013 - 54,609,063 AMW Capital Finance PLC 2,051,687 - (2,051,687) - Cargills Bank Ltd 20,000,000 - (4,000,000) 16,000,000 Soft Logic Finance PLC - 5,000,000 - 5,000,000 Central Finance PLC - 15,000,000 (5,041,177) 9,958,823

223,321,776 109,143,619 (57,466,281) 274,999,114

21.3 Terms and conditions attached to interest bearing loans

22. RETIREMENT BENEFIT OBLIGATION 2017 2016Rs. Rs.

Employee Benefits - GratuityAt beginning of the year 7,518,900 5,183,212 Net Benefit Expense (Note 22.1) 4,425,508 2,792,438

11,944,408 7,975,650

Payments during the year (638,000) (456,750) At end of the year 11,306,408 7,518,900

22.1. Net Benefit Expense

Included in Statement of Comprehensive IncomeInterest Cost 827,079 570,153 Current Service Cost 1,794,025 793,548

2,621,104 1,363,701 Included in Other Comprehensive IncomeActuarial Loss on Obligations 1,804,404 1,428,738

1,804,404 1,428,738

Net Benefit Expense 4,425,508 2,792,438

Major bank loans are obtained under floating interest rates which depends on the market AWPLR which is decided at the time of disbursement and the other loans are obtained under fixed interest rates.

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22. EMPLOYEE BENEFITS (Contd..)

22.2

2017 2016Method of Actuarial Valuation:

Discount Rate 11 11Salary Increase 10 10Retirement Age 60 Years 60 Years

Staff turn over

30% for age up to 54 and

thereafter zero

30% for age up to 54 and

thereafter zero

Mortality TableA 67/70

Mortality Table A 67/70

Mortality Table

22.2 Sensitivity

Increase Decrease Increase DecreaseDiscount rate (1% movement) 2,459,499 (2,023,432) 7,446,924 (7,593,085) Future salary growth (1% movement) (1,964,228) 2,519,423 (7,575,369) 7,463,251

2017 201623. TRADE AND OTHER PAYABLES Rs. Rs.

Trade payables 129,287,255 100,090,532 Accrued expenses 24,951,201 16,298,153 Advances and deposits 8,995,898 5,652,160

163,234,354 122,040,846

24. RELATED PARTY TRANSACTIONS

24.1 Compensation to Key Management Personnel

2017 2016Rs. Rs.

Short term employment benefits 10,780,000 10,080,000 10,780,000 10,080,000

All KMPs are eligible for Post-Employment Benefit Plan company is using.

24.2 Amounts due from related parties

Parties RelationshipAmounts due from Directors (Related Party) 4,707,649 5,140,474 Lucky Lanka Auto (Private) Limited (Related Company) 1,033,898 850,215 LDB Investment (Related Company) 1,000,652 1,162,623 Lucky Lanka Printers Company Limited (Related Company) 1,331,728 -

8,073,927 7,153,312

The Company carries out transactions with KMPs & their close family members in the ordinary course of its business on an armslength basis at commercial rates.

Related party includes KMPs defined as those persons having authority and responsibility for planning directing and controlling theactivities for the Company. Such KMPs include the board of directors of the Company (inclusive of executive and non executivedirectors ).

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant,would have affected the defined benefit obligation by the amounts shown below.

31 March 2017 31 March 2016

Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide anapproximation of the sensitivity of the assumptions shown.

The Company carries out transactions in the ordinary course of its business with parties who are defined as related parties in SriLanka Accounting Standard (LKAS) 24 - "Related Party Disclosures". Transactions with related parties were made on the basis of theprice lists in force with non-related parties. Outstanding balances with related parties as at the reporting date are unsecured andinterest free. Settlement will take place in cash. Such outstanding balances have been included under respective assets and liabilities.Details of related party transactions are reported below :

Messrs. Actuarial & Management Consultants (Pvt) Ltd, Actuaries, carried out an actuarial valuation of the defined benefit plan - gratuity on 31 March 2017. Appropriate and compatible assumptions were used in determining the cost of retirement benefits. The principal assumptions used as at 31.03.2017 and 31.03.2016 are as follows:

Projected Unit Credit method

Projected Unit Credit method

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24. RELATED PARTY TRANSACTIONS (Contd…)

24.3 Transactions with related parties 2017 2016Rs. Rs.

Lucky Lanka Printers Pvt LtdRendering / (Receiving) of Services 1,209,051 1,079,424 Payment made/(Received) during the year (2,540,778) 1,229,351

Key management personnel(Purchases) / Sales of Property, Plant & Equipment 467,987 - Fund tranferd/ received 100,000 136,650

25. INCOME TAX LIABILITIES 2017 2016Rs. Rs.

At the beginning of the year 1,073,639 1,073,639 Provision for the year 615,580 430,403 Less - Tax credit

WHT (355,602) (203,595) Payments made diuring the period - (226,808)

At the end of the year 1,333,616 1,073,639

26. OTHER CURRENT LIABILITIES

Other tax payable 37,630,335 37,220,408 Other payable - 200,500

37,630,335 37,420,908

27. COMMITMENT AND CONTINGENCIES

There were no material capital commitments approved by the Board of Directors as at reporting date.The Company does not have significant contingencies as at the reporting date

28. EVENTS OCCURRING AFTER THE REPORTING PERIOD

29. COMPARATIVE INFORMATION

Accounting Policy

As disclosed previous

year

Adjustment Company current

presantation

Statement of Financial Position

Current liabilitiesInterest bearing borrowings 227,516,840 (15,914,373) 211,602,466 Trade and other payables 106,126,471 15,914,373 122,040,844

The above reclassification did not have any impact on comprehensive income, earnings per share, operating, investing and financing cash flows for the year ended 31 March 2016.

The accounting policies have been consistently applied by the Company with those of the previous financial year inaccordance with the Sri Lanka Accounting Standard - LKAS 01 on ‘Presentation of Financial Statements’. Comparativeinformation is reclassified wherever necessary to comply with the current presentation. The presentation and classificationof the following items in these financial statements are amended to ensure the comparability with the current year.

Subsequent to the reporting date, no circumstances have arisen which would require adjustment to or disclosure in thefinancial statements.

52



30. ASSETS PLEDGED

The Following assets have been pledged as security for liabilities as at the reporting date.

Nature of assets Nature of liability 2017 2016Rs Rs

Lien Savings Account in the name of M/S Lucky Lanka Milk Processing Limited S/A No: 71104007942

Commercial Bank PLC - Interest bearing loans and borrowings. 21,662,939 14,329,417

PMB No.9847 dated 05.05.2011 for the property at Piniliyadda,Pitakatuwana, Kamburupitiya

Commercial Bank PLC - Interest bearing loans and borrowings.

TMB No 13 dated 12.09.2012 for the property at Batakolayamulla,Karagoda - Uyangada, Kamburupitiya

Commercial Bank PLC - Interest bearing loans and borrowings.

PMB No.15120 dated 23.08.2012 and SMB No. 15354 dated 15354 dated 04.09.2013 for the property at Batakolayamulla,Karagoda - Uyangada, Kamburupitiya

Permanent overdraft of Commercial Bank PLC 258,887,313 260,759,478

PMB No.11170 dated 04.09.2013 for the property at Batakolayamulla,Karagoda - Uyangada, Kamburupitiya Temporary Overdraft of Commercial Bank PLC

PMB No.7959 dated 11.06.2014 for the property depicted as Lot A in survey No.5458 at Karagoda,Uyangoda Village,Kamburupitiya

Interest bearing loans and borrowings - Union Bank PLC

Interest bearing A/C and balance held under lien to the bank Overdraft of Union Bank PLC 48,633 48,633

Lease Hold VehicleInterest bearing loans and borrowings - Nation Trust Bank PLC

Lease Hold VehicleInterest bearing loans and borrowings - Mercantile Investment Finance Ltd

Lease Hold VehicleInterest bearing loans and borrowings - Asia Assets Finance Ltd 112,861,144 58,868,250

Lease Hold Vehicle Interest bearing loans and borrowings - HNB Bank PLC

Lease Hold VehicleInterest bearing loans and borrowings - Commercial Bank PLC

Value of assets

53



31. RISK MANAGEMENT

31.1 Credit risk

31.1.1 Credit risk exposure

Notes Cash in hand and at bank

Trade and other receivables

Amounts due from related

parties

Total % of allocation

Rs. Rs. Rs. Rs. Rs.

Trade and receivables 16 - 202,000,268 - 202,000,268 62.94%Amounts due from related parties 24.2 - - 8,073,927 8,073,927 2.52%Cash and bank balances 18 110,886,450 - - 110,886,450 34.55%Total credit risk exposure 110,886,450 202,000,268 8,073,927 320,960,645 100.00%

Total equity risk exposure 110,886,450 202,000,268 8,073,927 320,960,645

Notes Cash in hand and at bank

Trade and other receivables

Amounts due from related

parties

Total % of allocation

Rs. Rs. Rs. Rs. Rs. Trade receivables 16. - 184,657,355 - 184,657,355 67.06%

Amounts due from related parties 24.2 - - 7,153,312 7,153,312 2.60%Cash and bank balances 18. 83,545,321 - - 83,545,321 30.34%Total credit risk exposure 83,545,321 184,657,355 7,153,312 275,355,988 100.00%Total equity risk exposure 83,545,321 184,657,355 7,153,312 275,355,988

Neither Past due nor Impaired

Past due but not Impaired

Individually Impaired

As at 31st March 2017

Financial Assets Rs. Rs. Rs. Rs.Trade receivables 177,424,509 39,223,235 - 216,647,744 Amounts due from related parties 8,073,927 - - 8,073,927 Cash and bank balances 110,886,450 - - 110,886,450 Total Credit Exposure 296,384,886 39,223,235 - 335,608,121

Neither Past due nor Impaired

Past due but not Impaired

Individually Impaired

As at 31st March 2016

Financial Assets Rs. Rs. Rs. Rs.Trade receivables 173,760,835 12,576,762 - 186,337,597 Amounts due from related parties 7,153,312 - - 7,153,312 Cash and bank balances 83,545,321 - - 83,545,321 Total Credit Exposure 264,459,468 12,576,762 - 277,036,230

operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions andother financial instruments. With respect to credit risk arising from the other financial assets of the company, such as cash and cashequivalents and short term investments, the company’s exposure to credit risk arises from default of the counterparty. The company managesits operations to avoid any excessive concentration of counterparty risk and the company takes all reasonable steps to ensure the counterpartiesfulfil their obligations.

The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying amounts (withoutconsideration of collateral, if available).Following table shows the maximum risk positions.

Risk means being exposed to the possibilities of negative outcomes. In highly volatile competitive market, carrying out business transaction isalways associated with risk. It is a responsibility of Board of Directors, senior management and the members of the staff to take all precautionsin order to avoid or mitigate risk while accepting a pre-determined level of risk in preparing and operating the business activities of theCompany. Here the Risk Management is a continuous process followed by a set of principles, procedures and guidelines approved by theBoard of Directors.

In Risk Management Policy, it is based on the best practices for identification, evaluation and planning the risks and taking appropriatemeasures to control it in a cost-effective manner in order to ensure that risks are either eliminated or reduced to an acceptable level. It takes aholistic look at risks both from the downside and the upside. Risk is categorized by identifying the similarities faced in the different levels ofoperations of the Company. The associated risk of existing and future business plans can be categorized under Financial risk, Credit risk,Market risk, Liquidity risk, Business or operational risk, Interest rate risk, IT risk, Legal risk etc.

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financialloss. The company is exposed to credit risk from its The company trades only with recognized, creditworthy third parties. It is the company’spolicy that all clients who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances aremonitored on an ongoing basis with the result that the company’s exposure to bad debts is not significant.

2016

2017

54



31. RISK MANAGEMENT (Contd..)

31.2 Liquidity Risk

31.2.1Net (debt)/cash 2017 2016

Cash in hand and at bank 110,886,450 83,545,321

Total liquid assets 110,886,450 83,545,321

Short term borrowings 308,560,844 227,516,840 Long term borrowings 230,890,724 163,940,073 Bank overdraft 162,536,613 106,886,849 Total liabilities 701,988,181 498,343,762

Net (debt)/cash (591,101,731) (414,798,441)

31.2.2Liquidity risk managementMaturity analysis

The table below summarizes the maturity profile of the Company’s financial liabilities at 31 March 2017 based on contractual undiscounted payments.

Company Within 1 year Between 1-2 years

Between 2-3 years

Between 3-4 years

Between 4-5 years

More than 5 years Total

Rs. Rs. Rs. Rs. Rs. Rs. Rs.Interest bearing borrowings 308,560,845 62,686,500 56,672,604 38,069,045 68,025,075 5,437,500 539,451,569 Trade and other payables 163,234,354 - - - - - 163,234,354

471,795,199 62,686,500 56,672,604 38,069,045 68,025,075 5,437,500 702,685,922

Company Within 1 year Between 1-2 years

Between 2-3 years

Between 3-4 years

Between 4-5 years

More than 5 years

Total

Rs. Rs. Rs. Rs. Rs. Rs. Rs.Interest bearing borrowings 150,945,514 37,815,906 25,755,329 24,625,075 11,738,402 - 375,542,540 Trade and other payables 61,063,479 20,354,493 - - - - 122,040,846

212,008,993 58,170,399 25,755,329 24,625,075 11,738,402 - 497,583,385 31.3 Market risk

Market prices comprise four types of risk:* Interest rate risk

* Interest Rate Sensitivity

The Company’s profit before tax is affected through the impact on floating rate borrowings as follows.

Years Increase/Decrease in Basis

Points

Company Effect on

Profit Before 2016 +/-100 +/- 861,9122017 +/-100 +/- 842,790

* Currency risk

The Company’s policy is to hold cash and undrawn committed facilities at a level sufficient to ensure that the Company has available funds to meetits medium term capital and funding obligations, including organic growth and acquisition activities, and to meet any unforeseen obligations and

The Company monitors its risk to a shortage of funds using a daily cash management process. This process considers the maturity of both theCompany’s financial investments and financial assets (e.g. accounts receivable, other financial assets) and projected cash flows from operations.The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of multiple sources of fundingincluding bank loans and overdrafts.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings.

The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing thereturn.

The table below summarizes the maturity profile of the Company’s financial liabilities at 31 March 2016 based on contractual undiscountedpayments.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interestrates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligationswith floating interest rates.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of

55



32. CAPITAL MANAGEMENT

33. FAIR VALUE OF FINACIAL INSTURMENTS

Carrying Amount 2017 2016Financial assets Rs. Rs.Trade receivables 202,000,268 184,657,355 Amounts due from related parties 8,073,927 7,153,312 Cash and bank balances 110,886,450 83,545,321

320,960,645 275,355,988 Financial liabilitiesInterest bearing borrowings 539,451,568 375,542,540 Trade and other payables 163,234,354 122,040,846

702,685,922 497,583,385

The primary objective of the Company’s capital management is to ensure that it maintains healthy capital ratios in order to support itsbusiness and maximise shareholder value. The Company manages its capital structure and makes adjustments to it, in light, of changes ineconomic conditions. No changes were made in the objectives, policies or processes during the year ended 31 March 2017 and 2016.Capital comprises Stated capital, Retained earnings. They measured at Rs. 502,742,230 as at 31 March 2017 (2016: Rs. 577,143,631).

The following financial instruments not measured at fair value are financial instruments for which their carrying amounts are a reasonable approximation of fair value, because for example, they are short - term in nature or repriced to current market rates frequently.

56


1 DISTRIBUTION OF SHAREHOLDING AS AT 31 MARCH 2017

NO.OF HOLDERS

TOTAL HOLDINGS %

NO.OF HOLDERS

TOTAL HOLDINGS %

NO.OF HOLDERS

TOTAL HOLDINGS %

1000 SHARES 483 275,647 1.15 1 1 0.00 484 275,648 1.15 1001 To 10000 SHARES 490 2,201,962 9.17 2 7,000 0.03 492 2,208,962 9.17

10001 To 100000 SHARES 201 7,365,326 30.69 1 20,000 0.08 202 7,385,326 30.69 100001 To 1000000 SHARES 35 9,095,912 37.90 3 1,249,010 5.20 38 10,344,922 37.90 1E+06 To 1000000 SHARES 2 3,785,142 15.77 0 - - 2 3,785,142 15.77

OVER 10000001 SHARES 0 - - 0 - - 0 - -

TOTAL 1,211 22,723,989 94.68 7 1,276,011 5.32 1,218 24,000,000 100.00

2 ANALYSIS OF SHAREHOLDERS AS AT 31 MARCH 2017

CLASS OF MEMBER NO. OF NO. OF

HOLDERS SHARES

INDIVIDUAL 1,173 17,994,452

COMPANY 45 6,005,548

TOTAL 1,218 24,000,000

3 DIRECTORS SHAREHOLDING AS AT 31 MARCH 2017

NAME OF DIRECTORS NO OF SHARES

MR.L.K.A.GUNAWARDHANA NIL

MRS.B.A.GUNAWARDHANA NIL

MRS.DAISY A.GUNAWARDHANA NIL

MRS.N.A.GUNAWARDHANA NIL

MR.D.B.S.CHAMARA BANDARA NIL

4 PUBLIC SHAREHOLDING AS AT 31 MARCH 2017

Issued Share CapitalDirectors of the entity & their close family members - 0%Public Share Holding 100%

No of Public Holdings 1,218

24,000,000

24,000,000

01 To

RESIDENT NON RESIDENT TOTALSHAREHOLDERS SHAREHOLDERS SHAREHOLDERS

Lucky Lanka Milk Processing Company PLCINVESTORS INFORMATION - NON VOTING

57


5 Share Price Movements for the Period

Period from 01.04.2016 Period from 01.04.2015 to 31.03.2017 to 31.03.2016

HIGHEST VALUE PER SHARE (Rs) 2.80 2.50

LOWEST VALUE PER SHARE (Rs) 1.00 1.00

LAST TRADED PRICE (Rs) 1.10 1.30

LAST TRADED DATE 31.03.2017 31.03.2016

NUMBER OF TRADE 2145 1956

NUMBER OF SHARE TRADE 12,436,395 10,296,517

VALUE SHARES TRADED (Rs) 22,910,742.50 20,769,500.40

6 TOP 20 SHARE HOLDER LIST AS AT 31ST MARCH 2017

Serial Name Shares %1 MR. WEERATHUNGA ARACHCHIGE SAMPATH PALITHA DE SARAM/ 1,985,142 8.27 2 BANK OF CEYLON A/C CEYBANK UNIT TRUST 1,800,000 7.50 3 MR. KISHORE SHASHI NIKHIL HIRDARAMANI 800,000 3.33 4 COLOMBO TRUST FINANCE PLC/H.L.V.L. NEESKSHANA 779,997 3.25 5 TRANZ DOMINION,L.L.C. 699,900 2.92 6 MR.MOHAMED NAZEEK ZAVAHIR 649,499 2.71 7 TOTAL MEDIA DIRECTION PVT LTD 561,832 2.34 8 REV. KARAVILAKOTUWE DHAMMATHILAKA 507,913 2.12 9 MR.MALWALA ACHARIGE DHANASIRI PEIRIS 461,160 1.92

10 MR. MOHAMED HANIF ASLAM KAMIL 385,413 1.61 11 MRS. JASBINDERJIT KAUR PIARA SINGH 349,110 1.45 12 MR. VIDANA GAMAGE WAPPULA NISHANTHA 339,300 1.41 13 MRS. SUKUMALI MAHESIKA WANNAKUWATTE 300,000 1.25 14 DEE SANDA HOLDINGS PVT LTD 300,000 1.25 15 MRS. YAHATHUGODA SUMANAKANTHI 289,021 1.20 16 MR. ALUTH GEDARA PIYASENA/'456460020VN' 269,874 1.12 17 MR. MOHAMED YEHIYA MOHAMED SHAMRAZ 263,038 1.10 18 MR. DON SISIRA KUMARA BALASURIYA 250,000 1.04 19 MR.IQBAL HUSSEIN JAFFERJEE 205,000 0.85 20 MRS. WADIYA PATHIRANNEHELAGE NILMINI MADUWANTHI JAYAWEERA 201,282 0.84

Total Shares : 24,000,000 11,397,481

Lucky Lanka Milk Processing Company PLCINVESTORS INFORMATION - NON VOTING ( Contd...)

58


1 DISTRIBUTION OF SHAREHOLDING AS AT 31MARCH 2017

RESIDENT NON RESIDENT TOTAL

NO.OF HOLDERS

TOTAL HOLDINGS %

NO.OF HOLDERS

TOTAL HOLDINGS %

NO.OF HOLDERS

TOTAL HOLDINGS %

1000 SHARES 645 364,619 0.21 2 1,300 0.00 647 365,919 0.21 1001 To 10000 SHARES 507 2,226,460 1.26 1 5,000 0.00 508 2,231,460 1.27

10001 To 100000 SHARES 125 3,623,972 2.06 0 - - 125 3,623,972 2.06 100001 To 1000000 SHARES 11 4,612,905 2.62 1 850,000 0.48 12 5,462,905 3.10

1000001 To 1000000 SHARES 8 30,649,864 17.41 0 - - 8 30,649,864 17.41 OVER 10000001 SHARES 4 133,694,290 75.95 0 - - 4 133,694,290 75.95

- TOTAL 1,300 175,172,110 99.51 4 856,300 0.49 1,304 176,028,410 100.00

2 ANALYSIS OF SHAREHOLDERS AS AT 31MARCH 2017

CLASS OF MEMBER NO. OF NO. OF

HOLDERS SHARES

INDIVIDUAL 166,126,851

COMPANY 9,901,559

TOTAL 176,028,410

3 DIRECTORS SHAREHOLDING AS AT 31 MARCH 2017

NAME OF DIRECTORS NO OF SHARES

MR.L.K.A.GUNAWARDHANA 93,785,730

MRS.B.A.GUNAWARDHANA 13,302,910

MRS.DAISY A.GUNAWARDHANA 13,302,825

MRS.N.A.GUNAWARDHANA 13,302,825

MR.D.B.S.CHAMARA BANDARA NIL

4 PUBLIC SHAREHOLDING AS AT 31 MARCH 2017

Issued Share Capital 176,028,410 Directors of the entity & their close family members 133,694,290 75.95%Public Share Holding 42,334,120 24.05%

No of PublicHoldings 1300

1,276

28

1,304

01 To

SHAREHOLDERS SHAREHOLDERS SHAREHOLDERS

Lucky Lanka Milk Processing Company PLCINVESTORS INFORMATION - VOTING

59-


Lucky Lanka Milk Processing Company PLCINVESTORS INFORMATION - VOTING ( Contd...)

5 Share Price Movements for the Period

Period from 01.04.2016 Period from 01.04.2015 to 31.03.2017 to 31.03.2016

HIGHEST VALUE PER SHARE (Rs) 4.50 5.50

LOWEST VALUE PER SHARE (Rs) 1.70 2.10

LAST TRADED PRICE (Rs) 1.80 2.80

LAST TRADED DATE 31.03.2017 31.03.2016

NUMBER OF TRADE 1324 1612

NUMBER OF SHARE TRADE 4,419,785 2,311,424

VALUE SHARES TRADED (Rs) 15,424,291.00 9,162,986.00

6 TOP 20 SHARE HOLDER LIST AS AT 31ST MARCH 2017

Serial Name Shares %1 MR. LAL KEERTHI AMARASIRI GUNAWARDHANE 93,785,730 53.282 MRS. BHADRA AMARASIRI GUNAWARDANA 13,302,910 7.563 MRS. NAMALI AMARASIRI GUNAWARDHANA 13,302,825 7.564 MRS. DESI AMARASIRI GUNAWARDHANA 13,302,825 7.565 MRS. NALLAPERUMA ARACHCHIGE NALI SANJEEWIKA 6,421,000 3.656 MR. DIKMADU SUNIL GODAGE 6,215,328 3.537 GOH FAMILY INVESTMENT HOLDINGS LANKA PVT LTD 5,000,000 2.848 MRS. LIYANARACHCHI KANKANAMGE SRIYAWATHI 3,000,000 1.709 MRS. NIDHOSHANI WASANA KUMARI JAYAWARNA PATABANDIGE 2,790,951 1.5910 MERCHANT BANK OF SRI LANKA LTD A/C NO 1 2,657,487 1.5111 MR.WEERATHUNGA ARACHCHIGE SAMPATH PALITHA DE SARAM 2,415,268 1.3712 MR. SUMITH ROHANA RANAWEERA 2,149,830 1.2213 BANK OF CEYLON NO. 1 ACCOUNT 1,000,000 0.5714 MS. DIVITHURE GAMAGE SAMEERA PRASANGI 1,000,000 0.5715 MR. KHALIFA MATTAR ABDUL RAHAMAN KHALFAN ALMUHAIRI 850,000 0.4816 TIONG WOON CRANE & TRANSPORT LANKA (PVT) LTD 750,000 0.4317 MR. SARATH RANJITH BODA HANNADIGE 500,000 0.2818 MR. JOSEPH SURESH ADRIAN PERERA/'676152296VN' 300,000 0.1719 MR. BOPE KANKANAMGE PATHMASIRI 250,645 0.1420 MR. MANU ASHUBODHA DE SILVA 200,000 0.11

169,194,799 Total Shares : 176,028,410

60

NOTICE OF MEETING

Notice is hereby given that the Annual General Meeting of Lucky Lanka Milk Processing Company PLC will be held at Hemalie Reception Hall,Galle Road, Walgama,Matara on 29th September 2017 at 10.00 a.m. for the following purposes.

1. To receive and consider the statement of Accounts for the year ended 31st March 2017 with the Annual Report of the Board of Directors and Auditors thereon.

2. To re-elect Ms. Bhadra Amarasiri Gunawardhana who retires by rotation in terms of Article 81, of the Articles of Association of the Company, and being eligible offers himself for re-election. 3. To appoint Mr. Siyambalapitige Simon Roshan Dinesh De Silva Gunasekera who was appointed subsequent to the last Annual General Meeting as a Director of the Company in terms of Article 88 of the Articles of Association of the Company.

4. To re-appoint the Auditors Messer. Ernst & Young and authorize the Board of Direc-tors to determine their remuneration

5. To authorise the Board of Directors to determine payments for charitable and other purposes for the year 2017/2018.

By Order of the BoardLUCKY LANKA MILK PROCESSING CO. PLCMANAGERS & SECRETARIES (PRIVATE) LIMITED

Sgd:Mrs.C SalgadoSecretaries11th September 2017


61

LUCKY LANKA MILK PROCESSING COMPANY PLC

FORM OF PROXY

I / we ………………………………………………………………………………………..............................................

of …………………………………………………………………………………………................................................

being a member/members of Lucky Lanka Milk Processing Company PLC hereby appoint ;

…………………………………………………………………………………………….................................................

of …………………………………………………………………………………………................................................

…………………………………………………………………………..........................................……or failing him

Mr. Lal Keerthi Amarasiri Gunawardhana or failing him

Ms. Bhadra Amarasiri Gunawardhana or failing him

Ms. Daisy Amarasiri Gunawardhana or failing him

Ms. Namali Amarasiri Gunawardhana or failing him

Mr. Siyambalapitige Simon Roshan Dinesh De Silva Gunasekera or failing him

Dr. Dingiri Bandage Sunil Chamara Bandara or failing him

………………………………………………………………………………………………...............................................

as my / our proxy to represent me / us and *vote for me / us on my / our behalf at the Annual General Meeting of the Company to be held on ……………… 2017 and at any adjournment thereof and at every poll which may be taken in consequence thereof

Signed this …………………… day of ……………………. 2017

……………………………..

Signature of Shareholder

Note: Instructions to complete are noted on the following page

62

INSTRUCTIONS AS TO COMPLETIONKindly perfect, the Form of Proxy, by filling in legibly your full name and address, signing in space provided, and filling in the signature.

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

In case of a Company / Corporation, the Proxy must be under its common seal which should be affixed and attested in the manner prescribed by its Articles of Association.

The completed Form of Proxy should be deposited at the registered office of the Company Bibulewela,Karagoda, Uyangoda not less than forty eight (48) hours before the time appointed for the holding of the meeting.

LUCKY LANKAMILK PROCESSING CO. PLC

Head office: Bibulewela, Karagoda Uyangoda, Sri LankaTel. 0094 41 229 26 52 | 0094 41 229 30 31

Fax: 0094 41 229 28 31www.luckylanka.com

Documents

LUCKY LANKA - Colombo Stock Exchange...01 History of Lucky Milk Drop The history of Lucky Lanka Milk Processing Co. PLC runs back to early 1990s. In 1991 the business of yoghurt started