c. w. mackie plc / annual report 2013-14...c. w. mackie plc / annual report 2013-14 5 the business...

1C. W. MACKIE PLC / ANNUAL REPORT 2013-14

2 C. W. MACKIE PLC / ANNUAL REPORT 2013-14


The business was founded in 1900 by late Mr. C. W. Mackie, a Scotsman, who carried on the enterprise as Merchants and Commission Agents under the name of “C. W. Mackie & Company.”

In 1922, the business was incorporated as a private limited company. In 1946, a consortium of Ceylonese and Indian Businessmen bought over the shares of the Company and converted it to a public company.

The year 1971 marked a significant change when Ceylon Trading Company Limited, the Sri Lanka based subsidiary of Aarhus United A/S of Denmark, bought a part of the Indian shareholding and took over the management of the Company. In late 1994, shares equivalent to 25% of the total shares in the Company were issued to the public so as to broadbase ownership and give the Company greater access to the capital market of Sri Lanka to raise capital funds for its future diversification and expansion. The Company’s shares are quoted on the Colombo Stock Exchange.

January 2010 marked another significant change when the principal shareholders, Aarhus United A/S, Denmark (AU) and Ceylon Trading Company Limited (CTC) divested their entire shareholding of 56.56% of the stated capital of the Company and relinquished control of the affairs of the C.W. Mackie PLC Group of Companies. The AU/CTC shares were acquired by Lankem Ceylon PLC and a connected party, Kotagala Plantations PLC. Lankem Ceylon PLC (Lankem) was established in 1964 in Sri Lanka as a private limited liability company and its shares have been listed on the trading floor of the Colombo Stock Exchange since 1970. The Lankem Group of Companies has a diversified business portfolio which consist of manufacturing (paints, agro/industrial chemicals & bituminous products), distribution of consumer products, rubber and tea plantation management and owning and operating resort hotels. Lankem is a subsidiary of the fully diversified conglomerate, The Colombo Fort Land & Building PLC.

This acquisition by Lankem greatly strengthens the overall management capabilities of C. W. Mackie PLC Group in the conduct of the affairs and enhances business opportunities availing of synergies.

The C. W. Mackie PLC Group presently consists of C. W. Mackie PLC and four subsidiary companies engaged in a diversity of activities such as export of natural rubber and desiccated coconut; rubber-based products for export and sale locally; import, manufacture, distribution and export of branded consumer products including processed tropical fruits; import and distribution of sugar; import and resale of branded marine paints and protective coatings, welding equipment and consumables, refrigeration, air-conditioning components and light engineering products; and motor car rentals to Group Companies.


For the Year

Ended31.03.2014

YearEnded

31.03.2013

Change%

Group revenue Rs. 000's 7,343,741 7,647,208 -4%

Group gross profit Rs. 000's 942,691 834,259 13%

Group net profit Rs. 000's 209,329 163,513 28%

Profit attributed to parent company Rs. 000's 208,316 162,010 29%

Group earnings per share Rs. 5.79 4.50 29%

Dividend per share Rs. 3.00 1.00 200%

Net return on capital employed % 6.16 5.5 11%

Net return on shareholders funds % 12.00 9.87 21%

Group capital expenditure Rs. 000's 47,003 87,827 -46%

Group value added Rs. 000's 1,887,450 1,586,660 19%

Value added per employee Rs. 000's 3,495 2,833 23%

Group foreign exchange earnings Rs. 000's 2,202,900 2,341,302 -6%

Contribution to Government revenue Rs. 000's 1,172,280 963,090 22%

As at 31 March 2014 2013

Current ratio 1: 1.75 1.90

Net asset value per share Rs. 49.03 46.18

Dividend payout ratio % 52% 22%

Market value per share

- at year end Rs. 60.90 67.00

- during the year - Highest Rs. 68.00 80.00

- during the year - Lowest Rs. 55.00 51.70

Number of employees in Group 680 560

Value in Rs. at official exchange rate United States Dollar 131.00 126.75

Pound Sterling 217.40 188.64

Euro 179.65 162.06

DKK 24.09 21.75

Financial Highlights

2013/14 2013/14

Group Revenue (Rs. Mn) Group Profit Before Tax (Rs. Mn)


Group Structure and Principal ActivitiesPARENT COMPANY

C. W. MACKIE PLC

STATED CAPITAL RS. 507,047,000NUMBER OF SHARES ISSUED 35,988,556

SUBSIDIARIES

CEYMAC RUBBER COMPANY LIMITED

. STATED CAPITAL RS. 36,450,000 / NUMBER OF SHARES ISSUED 3,189,375

GROUP INTEREST 98.72%

CEYTRA (PRIVATE) LIMITEDManufacture and export of extruded, moulded and calendered rubber products.

STATED CAPITAL RS. 30,000,000 / NUMBER OF SHARES ISSUED 3,000,000GROUP INTEREST 62.82%

SCAN TOURS AND TRAVELS (PRIVATE) LIMITEDMotor car rentals to Group Companies

STATED CAPITAL RS. 6,000,000 / NUMBER OF SHARES ISSUED 600,000GROUP INTEREST 100%

KELANI VALLEY CANNERIES LIMITED(acquired on 31 March 2014)

Manufacture, export and distribution of a wide range of processed tropical fruits, young coconut/king coconut water and beverage products under “KVC” brand.

STATED CAPITAL RS.5,709,043 / NUMBER OF SHARES ISSUED 34,398,455GROUP INTEREST 88.23%

Export and sale locally of thick pale crepe rubber (TPC), ribbed smoked sheet rubber (RSS) and desiccated coconut. Import and wholesale distribution of sugar to industrial users.

Import and sale of welding equipment and consumables and light engineering products, refrigeration and air-conditioning components and marine paints and protective coatings. Import and wholesale distribution of branded consumer products. Bottling of “Sunquick” range of fruit

squashes and bottling of drinking water under “Scan” brand for domestic distribution.

Manufacture, export and sale locally of technically specified rubber (TSR) and manufacture and export of plantation sole crepe rubber and specialised industrial sole crepe rubber.


For the financial year ended 31 March 2014

Chairman/Chief Executive Officer’s Review

On behalf of the Board of Directors I am pleased to welcome you to the Ninety Second Annual General Meeting of the Company and to present the Annual Report and the Audited Financial Statements of your Company and its subsidiary companies for the financial year ended 31 March 2014.

Group Organisation

The Group’s activities have been divisionalised as follows :

Company Division Activities

C. W. Mackie PLC Commodity Trading Export and sale locally of thick pale crepe rubber (TPC), ribbed smoked sheet rubber (RSS) and desiccated coconut.

Internal Trading Import and wholesale distribution of sugar to industrial users.

Import and sale of welding equipment and consumables and light engineering products, refrigeration and air conditioning components and marine paints and protective coatings.

Wholesale distribution of locally manufactured, imported and branded consumer products.

Manufacturing Bottling of ‘Sunquick’ range of fruit squashes and bottling of drinking water under ‘Scan’ brand for domestic distribution.

Services Group Finance;Group Human Resource Management, MIS and Administration.

Ceymac Rubber Company Limited Manufacturing Manufacture and export and sale locally of technically specified rubber (TSR) and manufacture and export of plantation sole crepe rubber and specialised industrial sole crepe rubber.

Ceytra (Private) Limited Manufacturing Manufacture and export of extruded, moulded and calandered rubber products.

Scan Tours and Travels (Private)Limited

Services Motor car rentals to Group Companies.

Kelani Valley Canneries Limited(acquired on 31.3.2014)

Manufacturing Manufacture for sale and distribution locally as well as export of a range of processed tropical fruits and beverage products under “KVC” brand.

Overall Performance

The consolidated Group profit before tax for the financial year ended 31 March 2014 was Rs.312.5 million and the consolidated Group net profit for the same period was Rs.209.3 million.

Financial Results

Group gross profit

An analysis of the Group’s gross profit is given hereunder :

Group

Year ended31 March 2014

Rs. Million


Rs. Million

C. W. Mackie PLC 850.2 773.3

Ceymac Rubber Company Limited 57.4 15.9

Ceytra (Private) Limited 26.5 33.8

Scan Tours and Travels (Private) Limited 8.6 11.2

942.7 834.2


Group results from operating activities

The Group's results from operating activities for the year under review was Rs.374.6 million.

Group profit before tax

The Group's ordinary activities resulted in a profit before tax of Rs.312.5 million for the financial year ended 31 March 2014 as given hereunder :

Group


Rs. Million


Rs. Million

Results from operating activities 374.6 306.9

Less : Net financing costs (62.1) (58.8)

Profit before taxation 312.5 248.1

Group total comprehensive income

The total comprehensive income of the Group after adjusting for taxation and non-controlling interests for the financial year ended 31 March 2014 was Rs.210.5 million and is shown in the following analysis :

Group


Rs. Million


Rs. Million

Group results from operating activities 374.60 306.90

Less : Net financing costs (62.10) (58.80)

Group profit before taxation 312.50 248.10

Tax expense (103.20) (84.60)

Group profit after taxation 209.30 163.50

Other comprehensive income 2.30 0.60

Group total comprehensive income 211.60 164.10

Non-controlling interests (1.10) (1.60)

Equity holders of the Parent Company 210.50 162.50

Review of OperationsC. W. MACKIE PLC (Parent Company)

The Company’s net revenue in the financial year ended 31 March 2014 was Rs.6,266.8 million. The profit from operating activities was Rs.349.2 million and the profit for the year, after charging income tax of Rs.96.8 million, was Rs.215.5 million.

C. W. MACKIE PLC (Group)

The Group’s consolidated net revenue for the financial year ended 31 March 2014 was Rs.7,343.7 million as compared with Rs.7,647.2 million in 2013. The major contribution towards the consolidated net revenue was from the Company’s internal trading and distribution activities and exports of natural rubber. Revenue from the manufacture for export and sale locally of rubber products from the subsidiary companies showed no growth and remained around 2013 levels.

The results from operating activities was Rs.374.6 million and the net profit for the year, after charging income tax of Rs.103.1 million, was Rs.209.3 million.

The consolidated Group comprehensive income for the year, after charging income tax of Rs.103.2 million, was Rs.211.6 million as compared with Rs.164.1 million in 2013.

Chairman/Chief Executive Officer’s Review (Contd.)


Commodity Trading

Natural Rubber (NR)

In the year under review NR trading was affected by several factors, particularly supply and availability of exportable grades of rubber, global prices, exchange rate variations and the pace of economic recovery in NR consumer countries, all of which combined to impact on demand and the capacity to maintain margins.

During the year under review the Company exported 2.5 million kg. and sold locally 793 m/t of various grades of NR.

73% of Sri Lanka’s NR output is consumed internally in the manufacture of rubber-based products for export and sale locally.

The gross trading profit on the export and sale locally of NR for the year under review was Rs.76.0 million as compared with Rs.67.6 million in 2013.

In addition, the NR trading activity received Rs.36.1 million as income for handling the trading of technically specified rubber (TSR) and sole crepe rubber for Ceymac Rubber Company Limited.

Desiccated Coconut (DC)

The manufacture of desiccated coconut (DC) in Sri Lanka is mainly for export. The availability of DC for export trading is largely determined by the availability of coconuts for processing into DC.

Estimated coconut crop in Sri Lanka was 2.5 billion nuts for the year ended 31 March 2014 as compared with 2.9 billion nuts in 2013. The estimated domestic consumption was 1.8 billion nuts, thus leaving only about 400,000 nuts available for the processing industries of DC and copra for milling coconut oil.

The Company’s export of DC is mainly to the countries of the European Union (EU) and severe competition from the Philippines, Indonesia and Vietnam eroded margins as a result of having to quote low prices merely to maintain business.

During the year under review the Company exported 2.5 million kgs. of DC as compared with 2.3 million kgs. in 2013. The gross trading profit for the year ended 31 March 2014 was Rs.4.4 million (2013-Rs.10.7 million). Spices

In the background of diminishing sales in trading naturalrubber and desiccated coconut, markets for exporting spices (pepper, cloves, nutmeg and cinnamon) are being explored. Exports of spices would add a new revenue stream to the Company’s commodity trading business and has the potential of supplementing earnings from its traditional commodity trading activities.

Internal Trading

Consumer Products

The sales and distribution of Fast Moving Consumer Goods (FMCG) in the food and beverage category is the fastest growing segment of the Group’s business and has the highest potential for growth in the future.

The net turnover of FMCG sales for the year under review was Rs.2.1 billion (2013-Rs.2.1 billion).

The net profit for the year under review was Rs.128.8 million (2013-Rs.125.6 million).

The profit, although only marginally better than the previous year, was achieved under very challenging market conditions.

The principal product in the FMCG category is the “Sunquick” rage of fruit squashes. Sales of Sunquick during the year was 1.9 million litres (2013-2.1 million litres) and contributed 55% of total FMCG sales.

Scan Bottled Water and Scan Jumbo Peanuts also made significant contributions to both sales and profitability in the FMCG category.

It has been observed that the squash/cordial category has been de-growing at about 22% annually in recent times, mainly because of affordability issues and changes in the life styles of consumers. The Company has developed a strategy to mitigate consumer resistance to high prices and is confident of reversing this trend in regard to the Sunquick range of fruit squashes.

In the background of rising cost of imported FMCG products due to high import duties and other fiscal levies, the Company policy on expansion is to introduce more locally manufactured food and beverage products for distribution in the domestic market.

In pursuance of this policy, the Company in March 2014 acquired a major controlling interest in Kelani Valley Canneries Limited, a consumer products business manufacturing a range of food and beverage products out of locally sourced raw materials.

Sugar

The Company supplies sugar mainly to industrial users because this eliminates credit risk and ensures better margins. Dealing in the wholesale trade results in high exposure to credit risks and generally lower margins.

In the background of rising competition which has penetrated into the institutional market as well, the Company has diversified its procurement strategy by sourcing sugar from several suppliers. This has enabled the procurement of sugar at more competitive prices with the resulting advantage of being able to secure higher margins.


The Company has also developed retail sales to the catering and restaurant trade during the year. This business has considerable potential for growth.

Total sales for the year was 17.4 thousand m/t (2013-18.9 thousand m/t) and the net profit was Rs.59.3 million (2013-Rs.21.5 million).

The enhanced profit for the year is the outcome of the new procurement strategy that enabled to secure better margins by purchasing at more competitive prices.

Industrial Products

The Industrial Products segment which is engaged in sales of marine paints and protective coatings, welding products and engineering items and refrigeration and air-conditioning components showed significant growth in both sales and profitability during the year under review.

Several new items, mostly in the machinery category, were introduced during the year and for the first time successfully participated in a tender for the supply of refrigeration components for a dairy industry project in Sri Lanka. This helped improve revenue and profits from sales of refrigeration products.

The net turnover on sales was Rs.507.8 million (2013-Rs.412.4 million) and net profit Rs.78.9 million (2013-Rs.44.5 million). This is the highest ever sales and profits achieved by the Industrial Products activity. Sales of welding products, refrigeration and air-conditioning components and marine paints contributed significantly to the high sales and profit achievement.

The marine paints and protective coatings business which principally supplies the ship repair industry now supply protective coatings to the telecommunication service sector, energy generating and construction projects and is being developed as a supplementary business that is adding value toprofits. Rubber Products Manufacturing

The rubber products manufacturing activities of the Group is carried out by two subsidiary companies, Ceymac Rubber Company Limited and Ceytra (Private) Limited.

CEYMAC RUBBER COMPANY LIMITED(Subsidiary Company)

The Company’s principal activity is the manufacture and sale of technically specified rubber (TSR) and plantation and industrial sole crepe rubber. sole crepe is exclusively exported and TSR is exported as well as sold locally to manufacturers of rubber-based products in Sri Lanka.

The Company produced a poor result in 2012/2013 due to quality issues resulting in the principal buyer of TSR suspendingpurchases pending rectification of the quality issues.

The production line deficiencies that caused some of the quality issues have since been rectified but, owing to continuing low order cover for TSR, the result for the year under review was again a loss. Good margins from the export of sole creperubber and a strong performance from TSR during the fourth quarter of the year under review helped reduce the loss for the year to a much lower level than the previous year.

The net turnover of the Company was Rs.907.3 million (2013-Rs.1.2 billion) on sales of 2.9 million kgs. (2013-3.0 million kgs.).

The Company’s manufacturing and sales operations, combined with its ancillary service activities, resulted in a net loss of Rs.5.6 million (2013-net loss of Rs.56.0 million).

CEYTRA (PRIVATE) LIMITED(Subsidiary Company)

The Company’s principal activity is the manufacture of extruded and moulded products for export. Exports of extruded products (rubber bands) is dependent on a single buyer in Japan and there was a sharp drop in orders from this customer during the year under review because of pricing issues. As a result the extruded section of the Company’s Plant in Horana had to be closed for several days a month for lack of orders during the period.

The Company’s exports of moulded products is also dependent on a limited customer base and the lack of buyers is a major constraint in expanding export sales.

Diversifying into manufacturing rubber-based products that have a local market is being explored, subject to investment outlays that such diversification projects may entail.

The net turnover for the year was Rs.150.5 million (2013-Rs.188.4 million) on sales of 329.2 m/t (2013-375.4 m/t). Sales comprised mainly of exports of moulded products.

The Company’s manufacturing and export operations produced a net profit of Rs.2.9 million (2013-Rs.5.9 million).

SCAN TOURS AND TRAVELS (PRIVATE) LIMITED (Subsidiary Company)

The Company provides motor cars on rental basis to Group companies.

During the year under review, the Parent Company introduced a scheme whereby Managers entitled to the use of a Company maintained car were given the option of using an owned or hired car in return for a monthly car allowance, subject to conditions.

Several Managers entitled to Company maintained cars opted for the own car scheme and as a result several cars surplus to requirements were disposed.

The capital profit from the sale of these cars contributed to the year end result of Rs.11.5 million (2013-Rs.7.6 million).

Chairman/Chief Executive Officer’s Review (Contd.)


KELANI VALLEY CANNERIES LIMITED (Subsidiary Company)

On 31 March 2014 the Parent Company acquired 88.23% of the shareholding of Kelani Valley Canneries Limited (KVC) from CIC Agri Businesses (Private) Limited for a purchase consideration of Rs.126.9 million. KVC has been acquired as a going concern business.

The acquisition was financed entirely out of internally generated funds.

KVC is engaged in the manufacture, export and distribution of a wide range of processed tropical fruits and beverage products under the `KVC' brand. KVC products are principally sold in the local market through a network of stockists/distributors and direct to modern trade outlets.

Several positive synergies in the KVC business have been identified with the Company's food and beverage activities in the FMCG category and the acquisition of a controlling interest in KVC is a reflection of the Company's policy of expanding the FMCG category, currently the fastest growing segment of the Group's business.

Finance

Financing Costs

Bank borrowings is the principal source of funds for financing the Group’s working capital requirements and is securitized only by stocks and receivables. The Group does not carry any major long-term debt and capital expenditure is financed entirely out of internally generated funds.

Interest rates on an average was about 12.5%. Average interest rate for the corresponding period was 15%.

Net financing cost for the year ended 31 March 2014 was Rs.62.1 million (2013-Rs.58.8 million). This is after adjusting a foreign exchange loss of Rs.2.3 million (2013-gain of Rs.24.6 million).

Debtor management and inventory control is a high priority in keeping financing costs down.

Taxation

The Group profit for the year ended 31 March 2014 is liable to a tax of Rs.103.2 million. This is after a deferred tax charge of Rs.3.5 million. Ceymac Rubber Company Limited, which made a loss for the year of Rs.5.6 million has a carried forward tax loss of Rs.82.8 million and Ceytra (Private) Limited, which made a profit of Rs.2.9 million for the year, has a carried forward tax loss of Rs.35.4 million.

The Group has outstanding VAT refunds in respect of prior years. KPMG Tax Advisory Services (KPMG) have been working on an assignment to recover the outstanding VAT refunds of the Parent Company. Considerable progress has been achieved settling a major portion of the refunds due to the Parent Company. A sum of Rs.8 million has been provided as at the reporting date to cover the amounts that KPMG deem may not be recoverable.

Industrial Relations

The industrial relations environment in all companies within the Group was stable and employees at all levels co-operated with the Management in the conduct of the Group’s business affairs.

The Management looks after the employees by providing relief to alleviate hardship resulting from the high cost of living and the employees appreciates the Management’s commitment to ensure their well-being.

Ceytra (Private) Limited is the only company in the Group that is unionised. The industrial relations of Ceytra (Private) Limited is covered by a Collective Agreement renewable every 3 years.

The subsisting Collective Agreement was renewed in January 2014. In the background of the Company’s poor performance in recent years, a substantive revision of the terms, particularly those relating to wage rates and production incentives that has undermined the Company’s capacity to be more competitive, were negotiated favourably with the understandingand co-operation of the union.

Manning levels as at 31 March 2014 are given below :

Company Managerial/Executives

NonExecutives

ManualOperatives

Total

As at 31March 2014

As at 31March 2013

C. W. Mackie PLC

77 132 79 288 293

Ceymac Rubber Company Limited

10 36 108 154 170

Ceytra (Private) Limited

3 9 86 98 97

Kelani Valley Canneries Limited

15 45 80 140 N/A

Group Total 105 222 353 680 560

Dividend

The Directors recommend to the shareholders at the Annual General Meeting a first and final dividend of Rs.3/- per share amounting to Rs.108 million out of the profits for the year ended 31 March 2014 in accordance with the provisions of the Companies Act No.7 of 2007.

The Directors have thereby maintained a consistent dividend distribution in recent years.


Acknowledgements

I am deeply grateful to my colleagues on the Board for their ready counsel and guidance at all times which enables me to conduct the affairs of the Company in the best interests of all stakeholders. The present Board comprises high calibre business leaders and professionals. Their expertise and wide experience collectively adds much value to the deliberations of the Board.

My sincere appreciation to our highly competent and committed management team and staff at every level that has helped achieve the result for the year under very challenging and competitive conditions.

I thank our customers, suppliers, agents, distributors and bankers as well as our shareholders for their continued confidence in our capacity to produce sustainable results both in terms of growth and profitability.

W. T. EllawalaChairman/Chief Executive Officer

Colombo30 May 2014

Chairman/Chief Executive Officer’s Review (Contd.)Outlook

The economy is forecast to grow by 7% in 2014/2015 with all major sectors of the economy - tourism, industries, agriculture and services expected to perform well. The balance of trade is forecast to further improve with strong export growth and lower imports due to import substitution and likely fall in oil prices.

Also, interest rates are expected to drop further and inflation to be maintained at single digit levels. The exchange rate against the US Dollar and the Euro will remain stable at around present levels.

The economic recovery in most countries of the EU, USA, Japan and China is likely to make the external environment for doing business much easier.

In this background, the outlook for the business activities of the CWM Group to produce better results in the ensuing year appears to be encouraging.

The Company’s FMCG sales and distribution activity is expected to grow significantly with the absorption of several new products into distribution channels by the recent acquisition of a controlling interest in Kelani Valley Canneries Limited (KVC).

KVC manufactures a wide range of food and beverage products which will add more value to the existing product portfolio of the Scan Products Division.

The Company’s internal trading activity which is growing is well positioned to produce a strong result with the FMCG segment contributing a major portion of the profit for 2014/2015.

The performance of the commodity trading activities would largely depend on the emerging recovery of the global economy. Natural Rubber (NR) prices have declined to the lowest levels since 2007 and expected to go down to even lower levels in 2014/2015 because of slow off take of global output, particularly by China, the world’s largest consumer of NR. In this background, margins will be under pressure in trading NR.

In the case of the rubber products manufacturing sector,Ceymac Rubber Company Limited is technologically capable of manufacturing TSR upto customer standards, but much would depend on the demand for TSR by local tyre manufacturers as prospects for export orders under the prevailing global pricing scenario appears to be difficult.

The rubber products manufacturing business of Ceytra (Private) Limited will be restructured to manufacture only products for which there is a local and export demand. This would mean closing down product lines for which there is no demand or is not profitable. This would be a challenging task particularly as labour redundancies will be inevitable.


Export Division

Industrial Products Division

Hempel Division

Product Range

Exporter in all grades of natural rubber, including thin and thick pale latex crepe, thick brown crepe, ribbed smoked sheet, white and coloured sole crepe, technically specified rubber (TSR grades) and also specialty grades of natural rubber such as granulated crepe ZOX crepe and also in a position to manufacture any specialty types of natural rubber grades to cater to customers specific requirements.

Coconut export products include desiccated coconut in fine, medium, chips, thread, flakes and toasted grades.

Engages in import, sale and distribution of marine paints and protective coatings for marine paint related solutions and galvanized structures, including telecommunication towers, both in Sri Lanka and Maldives, under the world renowned brand “Hempel”.

Engages in import, sale and service of refrigeration and air-conditioning components; power generation equipment and lighting towers,

workshop machinery and equipment, light engineering equipment; welding equipment and consumables and a range of automobile

engine reconditioning equipment. The Division manages several agencies for sale and service of world renowned brands such as Danfoss

(Denmark), Mosa (Italy), Telwin (Italy), Eutectic, Chosun and Esab. The range of products keep growing with many international brand

names being added.


Scan Products Division

Engages in manufacturing, importing and distribution of branded FMCG products specialising in the food and beverage category which

includes well known local and international brands, such as ‘Sunquick’ fruit squashes, Ovaltine, Star brand Essences & Colourings, Ocean

Fresh Tuna Flakes,‘Kotagala Kahata’ Tea, Mackgrains Sugar, N- Joy brand Coconut Oil, “Scan” branded Bottled Drinking Water, Jumbo

Peanuts, Chillie Paste, Maldive Fish Sambol and Jack Mackerel etc.

Scan Products Division’s state of the art factories for the bottling of ‘Sunquick’ fruit squashes and Scan brand Bottled Drinking Water are

fully automated with zero human touch in the processing line.

We adhere to EU standards and are certified in SLS, accredited with ISO 9001:2008, ISO 22000:2005, HACCP and GMP to maintain

a very high level of quality standards.

Importer and supplier of high quality fine granulated refined white sugar. Division provides outsourcing service to the industrial customers

and has a centrally located warehouse with infrastructure facilities.

Sugar Trading Division

Product Range (Contd.)



A subsidiary of C. W. Mackie PLC. Is a leading manufacturer and exporter of moulded, extruded and calendered rubber products which has been accredited with the Forest Stewardship Council - Chain of Custody (FSC - COC) Certification.

A subsidiary of C.W. Mackie PLC from 31 March 2014 and engages in manufacture, export and distribution of processed tropical fruits,young coconut/king coconut water under the brand name of “KVC” and equipped to offer both thermally sterilized and frozen products. Product range includes “KVC” brand nectar (ready-to-drink), jams, sauces, chutneys, pickels, pastes and spicy products and a range of sweet savoury fruits and vegetables which are invaluable to Catering and Hospitality industry. These products are SLS certified, accredited with ISO 22000:2005, HACCP and GMP to maintain a very high level of quality standards.

A subsidiary of C. W. Mackie PLC. Is a leading manufacturer of technically specified rubber (TSR), sole crepe and specialty rubberproducts.



Board of DirectorsMr. W. T. EllawalaChairman/Chief Excecutive Officer

A Director since 24 November 1995 and Chairman/Chief Executive Officer from 1 July 2002. An Economics Graduate, he worked for Brooke Bond Ceylon Limited, from 1962 to 1987 and was a director of that company for 17 years. Commercial Director, Ceylon Trading Company Limited since 1988 and Managing Director since December 2000. Also holds positions on the Boards of other companies, as a director of Maersk Lanka (Private) Limited and Chairman, Janashakthi Insurance PLC. Currently he is the Chairman of The Sri Lanka Society of Rubber Industry and a past Chairman of The Colombo Rubber Traders’ Association and The Sri Lanka Shippers’ Council. He is an Honorary Member of The Colombo Tea Traders’ Association and President & Trustee of the Singhalese Sports Club. Is a former member of the Committee of the Ceylon Chamber of Commerce and Chairman of its Advisory Council. He was a former Advisor to the Ministry of Ports & Shipping and served as a Consultant on Sea Transport at UN-ESCAP in Bangkok, Thailand.

Ms. C. R. RanasingheCompany Secretary

A Director from 14 June 2002. Is also the Company Secretary. An Attorney-at-Law by profession. With the Group since October 1999 on retirement as a Partner of Messrs. Julius & Creasy, Attorneys-at-Law & Notaries Public. She is also Director-Corporate Affairs and Company Secretary of Ceylon Trading Company Limited.

Deshabandu A. M. de S. JayaratneNon-Executive/Independent Director

A Director from 23 May 2007. He holds a Degree in economics from the University of Southampton in England and is a member of the Institute of Chartered Accountants of England and Wales and Institute of Chartered Accountants of Sri Lanka. He is a former Chairman and Managing Director of Forbes & Walker Limited, Chairman of the Ceylon Chamber of Commerce and Colombo Stock Exchange. Also served as Sri Lanka’s High Commissioner in Singapore. Currently he serves on the Boards of several public companies.

Mr. R. C. Peries Non-Executive Director

A Director from 1 April 2010. Having started his career with Carson Cumberbatch & Co., he then moved to George Steuarts, one of the premier Agency Houses. He has served as Manager of some of the most prestigious rubber properties in the low country and also held senior appointments in the industry and served on the Rubber Research Board Advisory Panel. In 1983 he was appointed the Regional Director of the JEDB Hatton Board and in 1988 he was made Director General of Kegalle-Avissawella Zone of the JEDB. In 1992, after the privatisation of the management of plantations, he joined George Steuart Plantation Management Services as the General Manager of low country rubber estates of Kotagala Plantations. He continued to serve in this position even after the takeover by Lankem Tea & Rubber Plantations (Pvt.) Ltd. (LT&RP) in 1995 as Managing Agents for Kotagala Plantations. He was appointed to the directorate of LT&RP in 2002 and to the Board of Kotagala Plantations PLC (KP) in 2005 and is presently the Chief Executive Officer of LT&RP and KP. He is also a member of the Rubber Research Board and Chairman of Lankaprene Marketing Company Limited. He is presently a member of the Rubber Wages Board and a member of the Ceylon Institute of Planting.

Mr. Anushman RajaratnamNon-Executive Director

A Director from 1 April 2010. He was appointed to the Board of Lankem Ceylon PLC as Deputy Managing Director in 2005 and appointed Managing Director in April 2009. He has spent several years working overseas as a Consultant for a leading accountancy firm. He also serves on the Boards of several subsidiaries of the Lankem Group. He holds a Bachelor of Science in Economics from University of Surrey, UK, CPA Australia and MBA from Massachusetts Institute of Technology, USA.


Mr. S. D. R. ArudpragasamNon-Executive Director A Director from 1 April 2010. He is a Fellow of the Chartered Institute of Management Accountants, London. Having served in many senior financial positions in the mercantile sector, he joined The Colombo Fort Land & Building Group (CFLB) where he is responsible for the Group’s manufacturing and trading sectors. His contribution to the Group counts over 25 years and at present holds positions of Deputy Chairman, Lankem Ceylon PLC and Managing Director of E. B. Creasy & Company PLC, in addition to serving on other Boards of the CFLB Group.

Dr. T. SenthilverlNon-Executive Director

A Director from 3 May 2010. He counts over four decades of active engagement in manufacturing, trading, land development, power and energy sectors, industrial turnkey projections, construction and management. He currently serves on the Boards of several public, public listed and private companies.

Mr. H. D. S. AmarasuriyaNon-Executive/Independent Director

A Director from 22 February 2011. He brings to C. W. Mackie PLC an impressive range of management, industrial, marketing and business skills from his tenure as Chairman of the industrial and retailing conglomerate Singer Group, and his experience on the Boards of such companies as Regnis Lanka and Bata Shoe Company of Ceylon. He also brings with him substantial experience in international management as a former Senior Vice President of Singer Asia Limited, Retail Holdings Limited, USA and Chairman of the Singer Worldwide Business Council. An Accountant by profession, he is a former Chairman of the Employer’s Federation of Ceylon, First President of the Chartered Institute of Marketing-Sri Lanka Region and current Chairman of the Industrial Service Committee-Southern Province of the Ministry of Industries & Commerce. He currently serves on the Boards of several public, public listed and private companies.

Mr. K. T. A. Mangala PereraExecutive Director

A Director from 2 April 2012. He is a graduate from the University of Sri Jayawardenepura with a degree in B.Sc. (Hons.), Marketing Management (Special) Degree and a post graduate diploma in Business & Financial Administration from the Institute of Chartered Accountants Sri Lanka. He possesses more than 14 years experience in branding, marketing and general management functions. A one-time visiting lecturer at the Management Faculty of the University of Sri Jayawardenepura, he is also a fellow member of the Australian Sales and Marketing Association. He currently serves as Executive Director-Internal Trading of C. W. Mackie PLC.

Mr. Alagarajah RajaratnamNon-Executive Director

A Director from 27 June 2012. He serves as Chairman of The Colombo Fort Land & Building PLC (CFLB) and several listed companies within the CFLB Group in addition to holding other Directorships within the Group. Mr. Rajaratnam is a Fellow of the Institute of Chartered Accountants of Sri Lanka.


The Board of Directors have pleasure in presenting their Annual Report on the affairs of the Company together with the audited Financial Statements for the financial year ended 31 March 2014.

Principal ActivitiesThe principal activities of the Company and each of its subsidiary companies are described on page 4.

The Company, in terms of Share Sale and Purchase Agreement dated 31 March 2014, acquired 30,351,222 ordinary shares (88.23%) in Kelani Valley Canneries Limited for a purchase consideration of Rs.126.9 million.

There were no significant changes in the nature of principal activities of the Company and its subsidiaries during the year under review other than the above.

Review of Operations

A detailed review of operations by the Chairman/Chief Executive Officer is given on pages 5 to 10.

Going Concern

The Directors are satisfied that the Company has adequateresources to continue its operations in the foreseeable future. Accordingly, the Financial Statements are prepared based on the going concern concept.

Stated Capital

The stated capital of the Company is Rs.507,047,000/- as at 31 March 2014 represented by 35,988,556 shares.

The entire issued stated capital of the Company consisting of 35,988,556 ordinary shares is listed on the trading floor of the Colombo Stock Exchange.

Finance

Financial ResultsThe significant accounting policies adopted in the preparation of the Financial Statements are given in Note 3.

Group summerised results for the financial year under review are shown in the analysis below:

Year ended 31 March 2014Rs. ‘000

2013Rs. ‘000

Revenue 7,343,741 7,647,208Results from operating activities 374,629 306,936Net financing costs (62,146) (58,836)Profit before taxation 312,483 248,100Income tax expense (103,154) (84,587)Profit for the year 209,329 163,513Non-controlling interests (1,013) (1,503)Profit attributable to equity holders 208,316 162,010

Annual Report of the Board of DirectorsFor the financial year ended 31 March 2014

The Financial Statements of the Company and Group are set out in pages 22 to 64 of the Annual Report.

DividendThe Directors have authorised the distribution of a first and final dividend of Rs.3/- per share for the financial year ended 31 March 2014 for approval by the Shareholders at the Annual General Meeting.

As required by Section 56(2) of the Companies Act No. 7 of 2007 (the Act) the Directors have confirmed that the Company satisfies the solvency test in terms of Section 57 of the Act and have obtained a certificate from the Auditors.

Group Revenue Group revenue was Rs.7,343.7 million during the year under review (2013 - Rs.7,647.2 million).

DonationsThe Directors have approved and made donations of Rs.190,825/- (2013 - Rs.289,154/-) to charities during the year under review.

TaxationThe Company has adopted the accounting policy of makingprovision for deferred taxation. The Company’s liability to income tax has been determined according to the provisions of Inland Revenue Act No.10 of 2006 and subsequent amendments thereto. Details are given in Note 9 to the Financial Statements.

Capital ExpenditureThe Group’s capital expenditure on fixed assets and investments other than investments in subsidiaries during the year under review was Rs.47 million (2013 - Rs.87.8 million).

BorrowingsGroup total borrowing was Rs.985.5 million as at 31 March 2014 (2013 - Rs.750.9 million).

Events After the Reporting Date Subsequent to the reporting date, no circumstances have arisen which would require adjustment to or disclosure in the Financial Statements, other than those disclosed in Note 33.

Board of Directors

The present Directors of the Company are given on page 14 and 15.

During the year under review, Deshabandu A. M. de S. Jayaratne and Mr. H. D. S. Amarasuriya served as Non-Executive/Independent Directors on the Board of the Company.

Deshabandu A. M. de S. Jayaratne is a Director of the ultimate parent company, The Colombo Fort Land and Building PLC and on the Boards of some of its subsidiaries. However, the Board of the Company having taken into consideration all other circumstances listed in the Rules of the Colombo Stock Exchange pertaining to the criteria for defining independence is of the opinion that Deshabandu A. M. de S. Jayaratne is nevertheless independent.


Mr. S. D. R. Arudpragasam retires by rotation in terms of Article 89 of the Articles of Association and being eligible, offers himself for re-election with the unanimous support of the Board of Directors.

As Mr. W. T. Ellawala, Deshabandu A. M. de S. Jayaratne, Mr. R. C. Peries and Mr. Alagarajah Rajaratnam are over the age of 70 years, their appointment as Directors of the Company require the approval of a resolution of the Company in general meeting. Notices dated 19 May 2014 have been received by the Company from shareholders in regard to the resolutions for the approval of their appointment under and in terms of Section 211 of the Companies Act No. 7 of 2007 and this is referred to in the Agenda of the Notice convening the Annual General Meeting on page 69. The appointment of Mr. W. T. Ellawala, Deshabandu A. M. de S. Jayaratne, Mr. R. C. Peries and Mr. Alagarajah Rajaratnam have the unanimous support of the Board of Directors.

As Mr. H. D. S. Amarasuriya has attained 70 years of age, his appointment as a Director of the Company also requires the approval of a resolution of the Company in general meeting. Notice dated 19 May 2014 has been received by the Company from a shareholder in regard to the resolution for the approval of his appointment under and in terms of Section 211 of the Companies Act No. 7 of 2007 and this is referred to in the Agenda of the Notice convening the AnnualGeneral Meeting on page 69. The appointment of Mr. H. D. S. Amarasuriya has the unanimous support of the Board of Directors.

Directors’ Interest in Transactions The Company maintains an Interest Register as required by the Companies Act No. 7 of 2007 (Act).

The Directors of the Company have made the general disclosures provided for in Sections 192, 197 and 200 of the Act. Note 32 to the Financial Statements dealing with related party disclosures include details of their interests in transactions.

None of the Directors of the Company had, directly or indirectly, during the financial year under review any material beneficial interest in any contract to which the Company or any of its subsidiaries was a party or which is or was significant in relation to the Company’s business, other than those disclosed in Note 32 to the Financial Statements and declared at meetings of the Directors.

Details of the remuneration and other benefits received by the Directors are set out in Note 32.2 to the Financial Statements.

The shareholdings of the Directors at the beginning and at the end of the financial year were as follows:

Shareholding as at

31 March 2014

Shareholding as at

1 April 2013

W. T. Ellawala (Chairman/CEO) 500 500

Ms. C. R. Ranasinghe 100 100

A. M. de S. Jayaratne Nil Nil

R. C. Peries Nil Nil

Anushman Rajaratnam Nil Nil

S. D. R. Arudpragasam Nil Nil

Dr. T. Senthilverl 10,765,575 10,765,575

H. D. S. Amarasuriya Nil Nil

K. T. A. Mangala Perera Nil Nil

Alagarajah Rajaratnam Nil Nil

Directors’ Responsibility for Financial Reporting

The Directors are responsible for the preparation of the Financial Statements to reflect a true and fair view of the state of affairs of the Company for the financial year. The Directors are of the opinion that the Financial Statements for the financial year ended 31 March 2014 have been prepared in conformity with the requirements of the Companies Act No.7 of 2007 and the Sri Lanka Accounting Standards and provide the information as required under the Listing Rules of the Colombo Stock Exchange.

Related Party Transactions

There were no transactions entered into by the Company during the year in the ordinary course of business, the value which exceeded 10% of the shareholders’ equity or 5% of the total assets of the Company as at 31 March 2014.

The details of the related party transactions are given in Note 32 on pages 54 to 56 to the Financial Statements.

Statutory PaymentsThe Directors confirm that, to the best of their knowledge, all taxes and duties payable by the Company and all contributions, levies and taxes payable on behalf of and in respect of the employees and all other known statutory dues as at the reporting date have been paid and/or provided.


Auditors

The Auditor’s Report on the Financial Statements for the year under review is given on page 21.

The Financial Statements of the Company for the financial year under review have been audited by KPMG, CharteredAccountants, the retiring Auditors, who being eligible, offer themselves for re-appointment.

The Audit fee for the year amounted to Rs.1.62 million (2013 - Rs.1.47 million) for the Company and Rs.2.63 million (2013 - Rs.2.37 million) for the Group, respectively.

As far as the Directors are aware, the Auditors do not have any relationship (other than that of an Auditor) with the Company or any of its subsidiaries. The Auditors also do not have any interests in the Company or any of its Group Companies.

By Order of the Board

W. T. Ellawala K. T. A. Mangala PereraChairman/CEO Executive Director

Ms. C. R. RanasingheCompany Secretary

Colombo30 May 2014

Corporate GovernanceThe Directors are committed to maintain the highest standards of corporate governance practiced in the interest of stakeholders (notwithstanding that during the year under reviewthe principal shareholders held 88.83% of the issued stated capital of the Company) having regard to the requirements of the Companies Act No.7 of 2007, Securities and Exchange Commission of Sri Lanka and Colombo Stock Exchange and to this end, inter alia, have established internal control systems, including a comprehensive risk identification, measurement andmitigation process which is in place designed to carry on the business of the Company in an orderly manner, to safeguard its assets and secure as far as possible the accuracy and reliability of the records and protect the rights and interests of shareholders and accountable to them for the overall management of the Company. The corporate governance of the Company is reflected in its strong belief in protecting and enhancing stakeholder value in a sustainable manner, supported by a sound system of policies and practices. Prudent internal controls ensure professionalism, integrity and commitment of the Board of Directors, Management and employees.

Remuneration Committee

The following were members of the Remuneration Committee of the Company during the period under review:

A. M. de S. Jayaratne - Non-Executive/Independent Director (Chairman) H. D. S. Amarasuriya - Non-Executive/Independent Director S. D. R. Arudpragasam - Non-Executive Director The Remuneration Committee determines the remuneration levels of Executive Director/s, Group Management/Senior Executives based on a structured methodology in evaluating the performance of the employees annually.

The remuneration policy of the Company is to attract, motivate and retain high quality executive talent by reference to corporate goals and objectives resolved by the Board from time to time.

Audit Committee

The Audit Committee consists of two (2) Non-Executive/ Independent Directors and one (1) Non-Executive Director.

The Audit Committee is satisfied that organisational controls and risk management framework that in place provide reasonable assurance as to the reliability of the Company’s financial reporting, safeguarding of its assets and compliance with statutory requirements, as also the Listing Rules of the Colombo Stock Exchange.

The Audit Committee Report is set out on page 19.

Annual Report of the Board of Directors (Contd.)


Report of the Audit CommitteeThe Audit Committee of the Board of Directors of C. W. Mackie PLC consists of the two (2) Non-Executive/Independent Directors, viz. Deshabandu A. M. de S. Jayaratne (Chairman of the Committee) and Mr. H. D. S. Amarasuriya and Non-Executive Director, Mr. Anushman Rajaratnam. They possess a wide range of financial knowledge, professional skills and business acumen in order to efficiently and effectively carry out their functions. Mr. W. T. Ellawala (Chairman/Chief Executive Officer of the Company) and Mr. A. I. Piyadigama (Chief Financial Officer) attend meetings as ex-officio members. The Company Secretary functions as Secretary to the Audit Committee.

Written Terms of Reference approved by the Board of Directors deal clearly with the authority and duties of the Audit Committee. It is, inter alia, empowered to review the adequacy and effectiveness of internal control systems and business risk identification and review the interim and annual financial statements, particularly by reference to compliance with statutory requirements of Sri Lanka Accounting Standards, Sri Lanka Auditing Standards and the Companies Act No.7 of 2007.

During the financial year ended 31 March 2014 the Audit Committee had four (4) meetings. The Audit Committee, inter alia, reviewed the quarterly and annual financial statements of the Company prior to their release to the Shareholders and the Colombo Stock Exchange. Reports of the proceedings of the Audit Committee meetings are made to the full Board of the Company.

The Audit Committee has met the Company’s External Auditors KPMG, Chartered Accountants, regarding the scope and conduct of the annual audit.

Risks and Controls:

In view of the fact that the Company has adopted a risk based audit approach, the effectiveness of the internal control procedures in place to identify and manage all significant risks are being reviewed by the Audit Committee. A Risk Management Framework (Risk Grid and Risk Register) has been adopted for assessing and measuring all risks. The Audit Committee seeks and obtains the required assurances from the Group Management Committee and Internal Audit on the remedial action in respect of the identified risks in order to maintain the effectiveness of internal control procedures in place.

Accordingly, the Audit Committee is satisfied that organisational controls and the Risk Management Framework in place provide reasonable assurance as to the reliability of the Company’s financial reporting, safeguarding of its assets and compliance with statutory requirements, as also the Listing Rules of the Colombo Stock Exchange.

Having reviewed the performance of the External Auditors, KPMG, Chartered Accountants, the Audit Committee has no reason to doubt their effectiveness and independence.

The Audit Committee recommended to the Board of Directors that KPMG, Chartered Accountants, be re-appointed as Auditors for the financial year ending 31 March 2015 at a remuneration to be determined by the Board, subject to the approval of the Shareholders at the Annual General Meeting.

A. M. de S. JayaratneChairmanBoard of Directors Audit Committee

30 May 2014


Independent Auditors' Report

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Cash Flow Statement

Notes to the Financial Statements

21

22

23

24

26

28

Financial Statements


Opinion - Company

In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31 March2014 and the financial statements give a true and fair view of the financial position of the Company as at 31 March 2014, and of its financial performance and its cash flow for the year then ended in accordance with Sri Lanka Accounting Standards.

Opinion - Group

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Company and its subsidiaries dealt with thereby as at 31 March 2014 and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory Requirements

These financial statements also comply with the requirements of Sections 153(2) to 153(7) of the Companies Act No. 07 of 2007.

Chartered Accountants30 May 2014 Colombo

TO THE SHAREHOLDERS OF C. W. MACKIE PLC

Report on the Financial Statements

We have audited the accompanying financial statements of C. W. Mackie PLC (the “Company”), the consolidated financial statements of the Company and its subsidiaries (the “Group”) as at 31 March 2014 which comprise the statement of financial position as at 31 March 2014, and the statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes set out on pages 22 to 64.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Scope of Audit and Basis of Opinion

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 plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.

Independent Auditors’ Report

KPMG Tel : +94 - 11 542 6426(Chartered Accountants) Fax : +94 - 11 244 587232A, Sir Mohamed Macan Markar Mawatha, +94 - 11 244 6058P. O. Box 186, +94 - 11 254 1249Colombo 00300, +94 - 11 230 7345Sri Lanka. Internet : www.lk.kpmg.com

KPMG, a Sri Lankan Partnership and a member firmof the KPMG network of independent member firmsaffiliated with KPMG International cooperative ("KPMG International"), a Swiss entity.

M.R. Mihular FCA P.Y.S. Perera FCA C.P. Jayatilake FCA T.J.S. Rajakarier FCA W.W.J.C. Perera FCA Ms. S. Joseph ACAMs. S.M.B. Jayasekara ACA W.K.D.C. Abeyrathne ACA S.T.D.L. Perera ACAG.A.U. Karunaratne ACA R.M.D.B. Rajapakse ACA Ms. B.K.D.T.N. Rodrigo ACA

Principals - S.R.I. Perera ACMA, LLB, Attorney-at-Law, H.S. Goonewardene ACA


For the year ended 31 March

Note

Group Company

2014Rs. 000's

2013Rs. 000's

2014Rs. 000's

2013Rs. 000's

Revenue 5 7,343,741 7,647,208 6,266,782 6,279,568

Cost of sales (6,401,050) (6,812,949) (5,368,456) (5,460,226)

Gross profit 942,691 834,259 898,326 819,342 Other operating income 6 95,704 89,817 90,685 95,867

Distribution expenses (325,257) (321,092) (360,744) (343,433)

Administrative expenses (325,588) (296,048) (279,109) (247,883)

Other expenses 7.4 (12,921) - - -

Results from operating activities 7 374,629 306,936 349,158 323,893

Finance income 523 25,318 6,977 37,786

Finance costs (62,669) (84,154) (43,784) (61,405)

Net financing costs 8 (62,146) (58,836) (36,807) (23,619)

Profit before taxation 312,483 248,100 312,351 300,274

Income tax expense 9 (103,154) (84,587) (96,859) (89,912)

Profit for the year 209,329 163,513 215,492 210,362

Other comprehensive income, net of income tax

Actuarial gain on defined benefit plans 2,376 494 2,750 757

Fair value gain/(loss) on available-for-sale investments (21) 101 (21) 101

Other comprehensive income for the year, net of tax 2,355 595 2,729 858

Total comprehensive income for the year 211,684 164,108 218,221 211,220

Profit attributable to:

Equity holders of the parent company 208,316 162,010 215,492 210,362

Non-controlling interests 1,013 1,503 - -

Profit for the year 209,329 163,513 215,492 210,362

Total comprehensive income attributable to:

Equity holders of the parent company 210,513 162,546 218,221 211,220

Non-controlling interests 1,171 1,562 - -

Total comprehensive income for the year 211,684 164,108 218,221 211,220

Basic earnings per share (Rupees) 10 5.79 4.50 5.99 5.85

Dividend per share (Rupees) 11 3.00 1.00 3.00 1.00

Statement of Comprehensive Income

Figures in brackets indicate deductions.

The Financial Statements are to be read in conjunction with the related notes, which form an integral part of the Financial Statements set out on pages 28 to 64.


Statement of Financial Position

The Financial Statements are to be read in conjunction with the related Notes, which form an integral part of the Financial Statements set out on pages 28 to 64. I certify that the Financial Statements have been prepared in compliance with the requirements of the Companies Act No. 7 of 2007.

A. I. Piyadigama Chief Financial Officer

The Board of Directors are responsible for preparation and presentation of these Financial Statements. The Financial Statements on pages 22 to 64 were approved by the Board of Directors on 30 May 2014 and were signed in Colombo on 30 May 2014 on its behalf by :

W.T. Ellawala K. T. A. Mangala Perera Director Director

As at 31 March

Group Company

2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

Assets NoteNon-current assets Property, plant and equipment 12.1 / 12.2 832,173 790,406 314,644 318,298 Investment property 12.3 48,050 52,856 48,050 52,856 Investments in subsidiaries 13 - - 612,156 485,282 Available-for-sale investments 14 1,171 1,192 1,171 1,192 Deferred tax asset 27.1 4,885 7,774 - - Total non-current assets 886,279 852,228 976,021 857,628 Current assets

Inventories 15 656,934 536,652 537,985 472,761 Trade and other receivables 16 1,623,929 1,341,517 1,456,292 1,221,619 Other current assets 17 163,823 153,968 122,856 113,980 Held to maturity investments 18 3,010 - - - Cash and cash equivalents 19 66,542 70,106 36,659 57,929 Total current assets 2,514,238 2,102,243 2,153,792 1,866,289 Total assets 3,400,517 2,954,471 3,129,813 2,723,917 Equity and liabilitiesEquityStated capital 20 507,047 507,047 507,047 507,047 Capital reserves 21 8,734 8,734 14,909 14,909 Revenue reserves 22 1,247,551 1,144,983 1,250,270 1,139,994 Available-for-sale reserve 23 1,094 1,115 1,094 1,115 Equity attributable to equity holders of the Parent 1,764,426 1,661,879 1,773,320 1,663,065 Non-controlling interests 46,190 29,817 - - Total equity 1,810,616 1,691,696 1,773,320 1,663,065 LiabilitiesNon-current liabilitiesInterest bearing long term borrowings 24 - - - - Lease payable after one year 25.1 60,506 76,290 3,301 5,512 Retirement benefit obligation 26 45,877 39,236 21,604 22,483 Deferred tax liability 27.1 44,162 43,567 37,396 35,210 Total non-current liabilities 150,545 159,093 62,301 63,205 Current liabilitiesCurrent portion of long term borrowings 24 - - - - Lease payable within one year 25.2 31,316 37,304 2,208 2,845 Interest bearing short term borrowings 28 780,240 521,197 691,240 449,789 Income tax payable 29 43,905 48,797 42,714 46,976 Trade and other payables 30 373,074 287,091 382,332 326,462 Other current liabilities 31 97,391 93,117 90,744 81,028 Bank overdrafts 19 113,430 116,176 84,954 90,547 Total current liabilities 1,439,356 1,103,682 1,294,192 997,647 Total Liabilities 1,589,901 1,262,775 1,356,493 1,060,852 Total equity and liabilities 3,400,517 2,954,471 3,129,813 2,723,917 Net asset value per share (Rupees) 49.03 46.18 49.27 46.21


Statement of Changes in Equity

Group

Attributable to equity holders of the parent Non-controlling

interests

Rs.000's

Totalequity

Rs.000's

Statedcapital

Rs.000's

Capitalreserves

Rs.000's

Available for sale reserve

Rs.000's

Generalreserve

Rs.000's

Retained earnings

Rs.000's

Total

Rs.000's

Balance as at 1 April 2012 507,047 8,734 1,014 7,000 1,011,527 1,535,322 28,397 1,563,719

Total comprehensive income for the year

Profit for the year - - - - 162,010 162,010 1,503 163,513

Other comprehensive income, net of tax - - 101 - 435 536 59 595

Total comprehensive income for the year - - 101 - 162,445 162,546 1,562 164,108

Contributions by and distribu-tions to equity holders

Dividends - - - - (35,989) (35,989) - (35,989)

Purchase of subsidiary shares from non-controlling interests - - - - - - (32) (32)

Subsidiary dividend to non-controlling interests - - - - - - (110) (110)

Total distributions to equity holders - - - - (35,989) (35,989) (142) (36,131)

Balance as at 31 March 2013 507,047 8,734 1,115 7,000 1,137,983 1,661,879 29,817 1,691,696

Balance as at 1 April 2013 507,047 8,734 1,115 7,000 1,137,983 1,661,879 29,817 1,691,696


Profit for the year - - - - 208,316 208,316 1,013 209,329

Other comprehensive income, net of tax - - (21) - 2,218 2,197 158 2,355

Total comprehensive income for the year - - (21) - 210,534 210,513 1,171 211,684

Contributions by and distributions to equity holders

Dividends - - - - (107,966) (107,966) - (107,966)

Acquisition of subsidiary - - - - - - 15,202 15,202

Total distributions to equity holders - - - - (107,966) (107,966) 15,202 (92,764)

Balance as at 31 March 2014 507,047 8,734 1,094 7,000 1,240,551 1,764,426 46,190 1,810,616

For the year ended 31 March 2014


The Financial Statements are to be read in conjunction with the related Notes, which form an integral part of the Financial Statements set out on pages 28 to 64.


Statement of Changes in EquityFor the year ended 31 March 2014

Company

Statedcapital

Rs.000's

Capitalreserves

Rs.000's

Available for sale reserve

Rs.000's

Generalreserve

Rs.000's

Retained earnings

Rs.000's

Total

Rs.000's

Balance as at 1 April 2012 507,047 14,909 1,014 7,000 957,864 1,487,834


Profit for the year - - - - 210,362 210,362

Other comprehensive income, net of tax - - 101 - 757 858

Total comprehensive income for the year - - 101 - 211,119 211,220


Dividends - - - - (35,989) (35,989)

Total distributions to equity holders - - - - (35,989) (35,989)

Balance as at 31 March 2013 507,047 14,909 1,115 7,000 1,132,994 1,663,065

Balance as at 1 April 2013 507,047 14,909 1,115 7,000 1,132,994 1,663,065


Profit for the year - - - - 215,492 215,492

Other comprehensive income, net of tax - - (21) - 2,750 2,729

Total comprehensive income for the year - - (21) - 218,242 218,221


Dividends - - - - (107,966) (107,966)

Total distributions to equity holders - - - - (107,966) (107,966)

Balance as at 31 March 2014 507,047 14,909 1,094 7,000 1,243,270 1,773,320

Figures in brackets indicate deductions. The Financial Statements are to be read in conjunction with the related Notes, which form an integral part of the Financial Statements set out on pages 28 to 64.


For the year ended 31 MarchGroup Company

2014Rs.000's

2013Rs. 000's

2014 Rs. 000's

2013Rs. 000's

Cash flows from operating activities

Profit before taxation 312,483 248,100 312,351 300,274

Adjustments for :

Depreciation of investment property and property, plant and equipment 83,817 83,349 33,035 31,904

Profit on disposal of property, plant and equipment (18,273) (15,866) (3,067) (4,155)

Profit on disposal of long term investments (76) - (76) -

Write-off of available-for-sale investments - 250 - 250

Impairment loss on goodwill 12,921 - - -

Provision for retirement benefit 11,124 10,349 6,276 5,829

Finance income (523) (679) (6,977) (16,117)

Finance costs 60,329 84,154 42,579 61,405

Dividend received from subsidiaries - - - (8,501)

Write-off of expenses capitalised - 1,411 - -

Write back of payables (3,583) - (3,583) -

Provision for slow moving inventories 36,289 30,413 36,039 27,216

Provision for impairment of trade receivables 9,645 3,033 8,710 3,033

Provision for impairment of other receivables 3,462 5,398 1,518 3,560

Operating profit before working capital changes 507,615 449,912 426,805 404,698

Changes in working capital

Change in inventories (135,661) 75,027 (101,263) 3,695

Change in trade and other receivables (231,032) 80,927 (243,383) 37,108

Change in other current assets (6,407) 152,890 (10,394) 147,948

Change in trade and other payables 57,646 (117,031) 59,453 (85,203)

Change in other current liabilities 540 (12,269) 9,716 (10,262)

Cash generated from operating activities 192,701 629,456 140,934 497,984

Interest paid (45,019) (64,710) (41,575) (59,421)

Payments to gratuity fund (5,931) (9,399) (4,405) (5,242)

Income tax/ESC paid (104,562) (144,561) (98,935) (126,305)

Net cash flows from/(used in) operating activities 37,189 410,786 (3,981) 307,016

Cash flows used in investing activities

Purchase of property, plant and equipment (30,100) (63,836) (24,649) (23,050)

Proceeds from disposal of property, plant and equipment 25,062 22,970 3,141 4,351

Proceeds from disposal of long term investments 76 - 76 -

Investment in subsidiaries (Note A and B) (129,444) - (126,874) -

Purchase of subsidiary shares from non-controlling interests - (32) - (32)

Dividend received 2 98 2 8,599

Net cash flows used in investing activities (134,404) (40,800) (148,304) (10,132)

Cash flows from/(used in) financing activities

Long term borrowings repayments - (32,114) - (32,114)

Short term borrowings obtained/(repayments) 259,048 (284,993) 241,453 (281,401)

Lease rental paid (55,206) (62,783) (3,854) (6,579)

Interest received 521 581 6,975 16,019

Dividend paid (107,966) (36,099) (107,966) (35,989)

Net cash flows from/(used in) financing activities 96,397 (415,408) 136,608 (340,064)

Net decrease in cash and cash equivalents (818) (45,422) (15,677) (43,180)

Cash and cash equivalents at beginning of the year (46,070) (648) (32,618) 10,562

Cash and cash equivalents at the end of the year (Note 19) (46,888) (46,070) (48,295) (32,618)

Cash Flow Statement


The Financial Statement are to be read in conjunction with the related Notes, which form a part of the Financial Statements set out on pages 28 to 64.


Note - Acquisition of Kelani Valley Canneries Limited

(A) The Company, in terms of Share Sale and Purchase Agreement dated 31 March 2014, acquired 30,351,222 ordinary shares (88.23%) held by CIC Agri Businesses (Private) Limited in Kelani Valley Canneries Limited for a purchase consideration

of Rs 126.9 million.

The acquisition had the following effects on the Group assets and liabilities:

Rs.000’s

Net cash consideration 126,874

Cash and cash equivalents at the time of acquisition (7,655)

Bank overdraft at the time of acquisition 10,225

Net cash outflow on acquisition of subsidiary 129,444

Rs.000’s

Assets

Property, plant and equipment 80,564

Inventories 20,910

Trade and other receivables 67,934

Held to maturity financial assets 3,010

Cash and cash equivalents 7,655

180,073

Liabilities

Retirement benefit obligation 3,824

Finance lease liability 1,216

Trade and other payables 35,653

Bank overdraft 10,225

(50,918)

Non controlling interest (15,202)

Net assets acquired 113,953

Net cash consideration 126,874

Goodwill on acquisition written off (Note 7.4) 12,921

(B) Analysis of net outflow of cash and cash equivalents in respect of the acquisition of subsidiary:


Notes to the Financial Statements

1. Reporting Entity1.1 Domicile and legal form

C. W. Mackie PLC is a Group incorporated and domiciled in Sri Lanka. The registered office of the Group and principal place of business is located at No.36, D. R. Wijewardena Mawatha, Colombo 10.

The Company, in terms of Share Sale and Purchase Agreement dated 31 March 2014, acquired 30,351,222 ordinary shares (88.23%) held by CIC Agri Businesses (Private) Limited in Kelani Valley Canneries Limited for a purchase consideration of Rs 126.9 Mn.

The C. W. Mackie PLC Group presently consists of C. W. Mackie PLC and four subsidiary companies namely, Ceymac Rubber Company Limited, Ceytra (Private) Limited Scan Tours and Travels (Private) Limited and Kelani Valley Canneries Limited.

1.2 Principal activities and nature of operations

The C. W. Mackie PLC Group is engaged in a diversity of activities such as export of natural rubber and desiccated coconut; rubber-based products for export and sale locally; import, manufacture, distribution and export of branded consumer products including processed tropical fruits; import and distribution of sugar; import and resale of branded marine paints and protective coatings, welding equipment and consumables, refrigeration and air-conditioning components and light engineering products; and motor car rentals to Group Companies.

1.3 Ultimate parent enterprise

The Company is a subsidiary of Lankem Ceylon PLC, whilst its ultimate holding company is The Colombo Fort Land & Building PLC.

2. Basis of Preparation2.1 Statement of compliance

The Financial Statements have been prepared in accordance with the Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka and the Companies Act No. 7 of 2007.

2.2 Basis of measurement

The Financial Statements have been prepared on historical cost basis except where appropriate disclosures are made with regard to fair value under relevant Notes. Assets and liabilities are grouped by nature and in an order that reflect their relative liquidity.

The Financial Statements have been prepared on the assumption that the Group will continue as a going concern for the foreseeable future.

2.3 Functional and presentation currency

The Financial Statements of the Group are presented in Sri Lankan Rupees, which is the Group’s functional currency. All values presented in the Financial Statements are in Sri Lanka Rupees unless otherwise indicated.

2.4 Use of estimates and judgments

The preparation of the Financial Statements in conformity with Sri Lanka Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the Group’s Financial Statements is included in the respective notes.

3. Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these Financial Statements, unless otherwise indicated.

3.1 Basis of consolidation

The Consolidated Financial Statements comprise those of the Company and its subsidiary companies.

3.1.1 Subsidiaries

Subsidiaries are entities controlled by the Company. The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.


3.1.2 Non-controlling interest

The total profits and losses of the subsidiary companies are included in the Consolidated Statement of Comprehensive Income and the proportion of the profit or loss after taxation applicable to outside shareholders of the Group have been shown as non-controlling interest.

All assets and liabilities of the Company and its subsidiaries are included in the Group Statement of Financial Position. The interest of outside shareholders in the net assets employed, represented by the paid up value of shareholders and the respective reserves and retained profits, is stated separately in the Consolidated Statement of Financial Position under the heading “Non-controlling interests”.

3.1.3 Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the Consolidated Financial Statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

3.2 Foreign currency translations

Transactions in foreign currencies are translated to Sri Lanka Rupees at the foreign exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to Sri Lanka Rupees at the foreign exchange rate ruling as at the reporting date.

Non-monetary assets and liabilities which are stated at historical cost denominated in foreign currencies are translated to Sri Lanka Rupees at the exchange rate ruling at the dates of the transactions. Non-monetary assets and liabilities that are stated at fair value, denominated in foreign currencies are translated to Sri Lanka Rupees at the exchange rate ruling at the dates that the fair value were determined. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income.

3.3 Financial instruments

3.3.1 Non-derivative financial assets

The Group’s non-derivative financial assets comprise loans and receivables and available-for-sale financial assets.

The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount is presented in the Statement of Financial Position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group’s non-derivative financial assets comprise loans and receivables and available-for-sale financial assets.

3.3.1.1 Loans and receivables

Loans and receivables comprise trade and other receivables.

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

3.3.1.2 Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any of the previous categories. The Group’s investments in equity securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and are recognised in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in other comprehensive income is transferred to profit or loss.


3.3.1.3 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and bank balances. Bank overdrafts that are repayable on demand which form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the Statement of Cash Flow.

3.3.1.4 Held to maturity

Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity.

3.3.2 Non-derivative financial liabilities

The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The non-derivative financial liabilities of the Group comprise loans and borrowings, finance lease payable, bank overdrafts, trade and other payables.

Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest method.

3.3.3 Stated capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

3.4 Property, plant and equipment

3.4.1 Recognition and measurement

Items of property, plant and equipment are measured at cost or revalued amount less accumulated depreciation

and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self constructed assets include the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use. Expenditure incurred for the purpose of acquiring, extending or improving assets of a permanent nature by means of which is to carry on the business or to increase the earning capacity of its business has been treated as capital expenditure.

The carrying values of property, plant and equipment are reviewed for impairment when there are indications of impairments that the carrying value of the assets may not be recoverable.

3.4.2 Subsequent costs

The cost of replacing of a part of an item of Property, Plant and Equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The cost of the day-to-day servicing of Property, Plant and Equipment are recognised in the Statement of Comprehensive Income as an expense as incurred.

3.4.3 Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of Property, Plant and Equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives for the current and comparative periods are as follows:

Buildings on freehold land 40 yearsBuildings on leasehold land 40 years or period of the lease, whichever is lessPlant, machinery and tools 6 2/3 yearsMotor vehicles 5 yearsFurniture and fittings 6 2/3 yearsComputer and other installations 6 2/3 years

Depreciation of an asset begins when it is available for use, i.e. when it is in the location and condition necessary for

Notes to the Financial Statements (Contd.)


to be capable of operating in the manner intended by the Management. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognised.

3.4.4 Capital work-in-progress

Capital expenses incurred during the period which are not completed as at the reporting date are shown as capital work-in-progress, whilst the capital assets which have been completed during the period and put to use have been transferred to property, plant and equipment, if any.

3.5 Investment property

The land and buildings held to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes are classified as ‘investment properties’ to be accounted on the cost model. However, if there is impairment in value, other than of a temporary nature, the carrying amount is reduced to recognise the decline.

3.6 Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as ‘finance leases’. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

3.7 Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in-first-out and weighted average principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

The Group practises first-in-first-out inventory valuation method for consumer products (FMCG) and weighted average valuation for their inventory categories other than consumer products (FMCG).

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

3.8 Impairment

3.8.1 Financial assets (including derivatives)

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

The Group considers evidence of impairment for receivables at collective level. All receivables with similar risk characteristics are grouped together and collectively assessed for any impairment that has been incurred but not yet identified.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

3.8.2 Non financial assets

The carrying amounts of the Group’s non financial assets, other than inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and indefinite lived intangible assets are tested annually for impairment.

An impairment loss is recognised if the carrying amount of an asset or cash generating unit (CGU) exceeds its recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.


Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs) and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognised.

3.9 Provisions

A provision is recognised in the Statement of Financial Position when the Group has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation.

3.10 Employee benefits

3.10.1 Defined contribution plans

A defined contribution plan is a post employment plan under which an entity pays fixed contribution into a separate entity and will have no legal or constructive obligation to pay a further amount. Obligations for contributions to defined contribution plans are recognised as expense in profit or loss in the period during which services are rendered by employees.

Mercantile Service Provident SocietyThe Group and employees contribute 15% and 10% respectively on the gross salary of each employee to the approved Provident Fund.

Employees Provident Fund The Group and employees contribute 12% and 8% respectively on the gross salary of each employee to the approved Provident Fund.

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

3.10.2 Defined benefit plans

A defined benefit plan is a post employment benefit plan other than a defined contribution plan. The defined benefit plan expense is recognised immediately in profit or loss and the Group recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive income.

Retiring gratuity

The retirement benefit plan adopted is as required under the Payment of Gratuity Act No. 12 of 1983. This item is grouped under ‘retirement benefit obligation’ in the Statement of Financial Position.

Provision for retirement benefit obligation on the employees of the Group is on an actuarial basis using the Projected Unit Credit Method (PUC Method) as recommended by LKAS 19, “Employee Benefits”. The Group continues to use actuarial method under Sri Lanka Accounting Standard 19, “Employee Benefits”.

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

The assumptions based on which the results of actuarial revaluation was determined are included in Note 26 to the Financial Statements.

3.11 Commitments and contingencies

Contingencies are possible assets or obligations that arise from past events and whose existence will be confirmed only by occurrence or non-occurrence of uncertain future events not wholly within the control of the Group.

Contingencies and capital commitments of the Group are disclosed in Note 34 and 35 respectively to the Financial Statements.

3.12 Events after the reporting period

The materiality of the events after the reporting period has been considered and appropriate adjustments and provisions have been made in the financial statements wherever necessary.

3.13 Revenue 3.13.1 Sale of goods

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates.

Revenue is recognized when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing



management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue as the sales are recognized.

3.13.2 Rendering of services

Revenue from rendering of services is recognized in the accounting period in which the services are rendered or performed.

3.13.3 Other income

Rental income

Rental income from investment property is recognised in profit or loss on an accrual basis. Rental income is recognised as other income.

3.14 Lease payments

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

3.15 Other expenditure

All expenditure incurred in running of the business and in maintaining the capital assets in a state of efficiency has been charged to Revenue in arriving at the profit for the year.

Expenditure incurred for the purpose of acquiring, expanding or improving assets of a permanent nature by means of which to carry on the business or for the purpose of increasing the earning capacity of the business has been treated as capital expenditure.

Repairs and renewals are charged to Revenue in the year in which the expenditure is incurred.

3.15.1 Finance income and finance costs

Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend income and gains on the disposal of available-for-sale financial assets. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that the Group’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

Finance Costs comprise interest expense on borrowings recognized in profit or loss using the effective interest method.

Foreign currency gains and losses are reported on a net basis.

3.15.2 Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in Equity or in Other Comprehensive Income.

Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit nor loss to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to Income Taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.


3.16 Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components, of which the operating results are reviewed regularly by the Group Management Committee to make decisions about resources allocated to each segment and assess its performance, and for which discrete financial information is available.

3.17 Basic earnings per share

The Group presents basic Earnings Per Share (EPS) data for its Ordinary Shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of Ordinary Shares outstanding during the period.

3.18 Statement of cash flows

The Cash Flows Statement has been prepared using the ‘indirect method’.

Interest paid is classified as operating cash flows, interest received is classified as investing cash flows for the purpose of presenting the Cash Flows Statement

3.19 Related party transactions

Disclosure has been made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating policies/decisions of the other, irrespective of whether a price is charged.

3.20 Comparative information

The comparative information is re-classified wherever necessary to conform with the current year’s presentation in order to provide a better presentation.

4. Effect of Accounting Standards Issued but not yet Effective

The Institute of Chartered Accountants of Sri Lanka has issued the following new Sri Lanka Accounting Standards which will become applicable for financial periods beginning and after the 1 January 2014 and 2015. Accordingly, these Standards have not been applied in preparing these Financial Statements.

4.1 SLFRS 9 - Financial Instruments: Classification and Measurement

The objective of this SLFRS is to establish principles for the financial reporting of financial assets and liabilities that will present relevant and useful information to users of Financial Statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows. SLFRS 9, as issued, reflects the first phase of work on replacement of Sri Lanka Accounting Standards (LKAS 39) - ‘Financial Instruments Recognition andMeasurements’ and applies to classification and measurement of financial assets and liabilities. The application of this standard has been currently deferred by the Chartered Accountants of Sri Lanka consequent to the International Accounting Standards Board’s (IASB) decision, to defer the mandatory effective date of IFRS 9. However SLFRS 9 will be available for early adoption.

4.2 SLFRS 13 - Fair Value Measurement

This SLFRS defines fair value, set out in a single SLFRS framework for measuring fair value and requires disclosures about fair value measurements. This SLFRS will become effective to the Company from 1 January 2014. Early adoption is permitted. This SLFRS shall be applied prospectively as of the beginning of the annual period in which it is initially applied. The disclosure requirements of this SLFRS need not be applied in comparative information provided for periods before initial application of this SLFRS.

4.3 SLFRS 10 - Consolidated Financial Statements

The objective of this SLFRS is to establish principles for the presentation and preparation of Consolidated Financial Statements when an entity controls one or more other entities. SLFRS 10 will become effective from 1 January 2014 for the Group with early adoption permitted. This SLFRS will supersede the requirements relating to Consolidated Financial Statements in LKAS 27 ’Consolidated and Separate Financial Statements’.




Group Company

2014 Rs.000’s

2013 Rs.000's

2014Rs.000’s

2013Rs.000’s

5. Revenue

Gross Revenue 7,653,932 7,948,314 6,570,566 6,573,722

Less: Turnover related taxes (310,191) (301,106) (303,784) (294,154)

Net revenue 7,343,741 7,647,208 6,266,782 6,279,568 Turnover related taxes includes Value Added Tax (VAT) and Nation Building Tax (NBT). 5.1 Operating segments Segment information is presented in respect of the Group's business segments. Business segments are based on the Group's management and internal reporting structure. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than a period of one year. The Group comprises the following main business segments:

Commodity trading Rubber-based products manufacturing Industrial products Consumer goods Other Other Group results mainly comprise vehicle hire income and rent income from investment property.



Group

Business segments CommodityTrading

Rs.000's

Rubber-BasedProducts

ManufacturingRs.000’s

IndustrialProducts

Rs.000's

ConsumerGoods

Rs.000's

Other

Rs.000's

Consolidated

Rs.000’s

Total Revenue 1,932,498 1,120,806 507,850 3,942,370 44,849 7,548,373

Inter-segment revenue (4,026) (42,568) - (115,936) (42,102) (204,632)

Revenue from external customers 1,928,472 1,078,238 507,850 3,826,434 2,747 7,343,741

Segment gross profit/(loss) 151,503 83,863 147,994 589,149 (29,818) 942,691

Operating overheads (102,604) (27,825) (67,225) (344,753) (3,852) (546,259)

Impairment loss on goodwill - - - - - (12,921)

Depreciation (1,528) (19,325) (1,441) (19,108) (42,415) (83,817)

Employee benefits (628) (4,847) (1,255) (2,511) (1,883) (11,124)

Provision for impairment of trade debtors - (935) (267) (8,443) - (9,645)

Other operating income 2,277 1,943 818 6,109 84,557 95,704

Results from operating activities 49,020 32,874 78,624 220,443 6,589 374,629

Finance income 265 150 50 47 11 523

Finance costs (18,384) (10,624) (544) (18,766) (14,351) (62,669)

Profit/(loss) before taxation 30,901 22,400 78,130 201,724 (7,751) 312,483

Income tax expense (9,476) (2,496) (25,071) (55,329) (10,782) (103,154)

Profit/(loss) for the year 21,425 19,904 53,059 146,395 (18,533) 209,329

Total assets 527,534 736,279 282,653 1,631,092 222,959 3,400,517

Total liabilities 345,657 176,655 57,253 754,407 255,929 1,589,901

Capital expenditure 3,703 6,410 1,239 10,768 24,883 47,003

Total depreciation 1,528 19,325 1,441 19,108 42,415 83,817



Business segments CommodityTrading

Rs.000's

Rubber-BasedProducts

ManufacturingRs.000's

IndustrialProducts

Rs.000's

ConsumerGoods

Rs.000's

Other

Rs.000's

Consolidated

Rs.000's

Total Revenue 1,878,493 1,421,688 412,403 4,103,934 48,787 7,865,305

Inter-segment revenue (11,849) (44,947) - (115,262) (46,039) (218,097)

Revenue from external customers 1,866,644 1,376,741 412,403 3,988,672 2,748 7,647,208

Segment gross profit/(loss) 158,078 48,466 121,416 536,989 (30,690) 834,259

Operating overheads (100,779) (40,800) (60,841) (320,844) 2,855 (520,409)

Depreciation (758) (18,077) (524) (18,935) (45,055) (83,349)

Employee benefits (583) (4,520) (1,165) (2,332) (1,749) (10,349)

Provision for impairment of trade debtors - - (1,044) (1,989) - (3,033)

Other operating income 837 619 2,793 8,315 77,253 89,817

Results from operating activities 56,795 (14,312) 60,635 201,204 2,614 306,936

Finance income 20,368 3,238 143 4 1,565 25,318

Finance costs (23,068) (10,904) - (28,523) (21,659) (84,154)

Profit/(loss) before taxation 54,095 (21,978) 60,778 172,685 (17,480) 248,100

Income tax expense (26,744) 7,339 (20,170) (30,827) (14,186) (84,587)

Profit/(loss) for the year 27,352 (14,639) 40,608 141,858 (31,666) 163,513

Total assets 363,244 704,513 226,141 1,435,331 225,242 2,954,471

Total liabilities 269,280 159,910 50,656 568,919 214,010 1,262,775

Capital expenditure 3,693 34,603 4,621 15,098 29,812 87,827

Total depreciation 758 18,077 524 18,935 45,055 83,349


Group



Group Company

2014 Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

6. Other operating income

Sundry income 6,215 10,220 16,402 19,480

Dividend received from subsidiaries - - - 8,501

Profit on disposal of long term investments 76 - 76 -

Profit on disposal of property, plant and equipment 18,273 15,866 3,067 4,155

Rent income 71,140 63,731 71,140 63,731

95,704 89,817 90,685 95,867

7. Results from operating activities

7.1 Results from operations is stated after charging:

Depreciation on

- Property, plant and equipment 79,011 78,598 28,229 27,153

- Investment property 4,806 4,751 4,806 4,751

Directors emoluments 20,470 22,542 18,610 13,777

Personnel expenses (Note 7.3) 248,776 258,107 140,288 138,373

Other expenses (Note 7.4) 12,921 - - -

Auditors remuneration - Audit fees and expenses 2,635 2,375 1,625 1,475

- Non-audit services 1,250 1,417 1,250 1,417

Provision for obsolete inventories 36,289 30,413 36,039 27,216

Provision for impairment of trade receivables 9,645 3,033 8,710 3,033

Provision for impairment of other receivables 3,462 5,398 1,518 3,560

7.2 Results from operations comprise those of the:

Company 349,158 323,893 349,158 323,893

Subsidiary companies 25,471 (16,957) - -

374,629 306,936 349,158 323,893

7.3 Personnel expenses :

Salaries and wages 214,101 222,693 119,654 118,311

Contribution to defined contribution plans (EPF/MSPS/ ETF) 23,551 25,065 14,358 14,233

Contribution to defined benefit plan for gratuity 11,124 10,349 6,276 5,829

248,776 258,107 140,288 138,373

7.4 Other expenses

Impairment loss on goodwill 12,921 - - -

12,921 - - -




Group Company

2014 Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

8. Net financing costs

Interest costs

Interest on other borrowings 45,019 64,710 36,442 54,253

Lease interest 15,310 19,444 1,004 1,984

Interest on inter company balances - - 5,133 5,168

Net foreign exchange loss 2,340 1,205 -

62,669 84,154 43,784 61,405

Interest income

Interest on fixed deposits/savings accounts (521) (581) (371) (313)

Interest from inter company balances - - (6,604) (15,706)

Net foreign exchange gain - (24,639) - (21,669)

Dividend income on available-for-sale investments (2) (98) (2) (98)

(523) (25,318) (6,977) (37,786)

62,146 58,836 36,807 23,619

9. Income tax expense

9.1 Current tax expense

Income tax on current year's profit (Note 9.3) 101,476 90,569 96,628 86,134

Under/(over) provision for previous year (1,806) 982 (1,955) 1,461

99,670 91,551 94,673 87,595

Deferred tax expense

Deferred taxation (Note 27) 3,484 (6,964) 2,186 2,317

3,484 (6,964) 2,186 2,317

103,154 84,587 96,859 89,912

9.2 The Company and subsidiaries are liable for income tax at 12% on taxable profits on non-traditional exports and 28% on other profits in accordance with the provisions of Inland Revenue Act No. 10 of 2006, as amended.



2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

9.3 Reconciliation of accounting profit to income tax:

Profit before income tax 312,483 248,100 312,351 300,274

Less: Other sources of income (14,816) (78,753) (6,977) (78,753)

Aggregate disallowable expenses 199,866 153,748 113,672 63,136

Aggregate allowable expenses (132,748) (129,251) (70,583) (50,092)

Aggregate disallowable income (18,272) (7,546) (3,065) 4,165

Other sources of income 12,593 80,691 6,638 73,677

Total statutory income 359,106 266,989 352,036 312,407

Set off of accumulated tax losses (3,651) (4,669) - -

Assessable income 355,455 262,320 352,036 312,407

Taxable income 355,455 262,320 352,036 312,407

Applicable tax rates:

Income tax @ 28% 99,878 88,539 95,172 85,136

Income tax @ 12% 1,598 2,030 1,456 998

Total income tax on taxable profit 101,476 90,569 96,628 86,134

9.4 Accumulated tax losses

Tax losses at the beginning of the period 96,945 41,421 - -

Adjustment to the tax loss brought forward 10,074 - - -

Loss for the year 14,900 60,193 - -

Acquisition of subsidiary 157,555 - - -

Tax loss set off during the year (3,651) (4,669) - -

Tax losses at the end of the year 275,823 96,945 - -

9.5 Economic service charge

Balance at the beginning of the year 1,907 2,073 - -

Payments made during the year 1,635 9,752 - 8,221

Set off against income tax (899) (9,918) - (8,221)

Balance at the end of the year 2,643 1,907 - -


2014 2013 2014 2013

Net profit attributable to ordinary shareholders (Rs.000’s) 208,316 162,010 215,492 210,362

Weighted average number of ordinary shares 35,988,556 35,988,556 35,988,556 35,988,556

Basic earnings per share (Rupees) 5.79 4.50 5.99 5.85

11. Dividend per share (Rupees)

Gross dividend paid during the year (Rupees) 107,965,668 35,988,556 107,965,668 35,988,556

Weighted average number of ordinary shares 35,988,556 35,988,556 35,988,556 35,988,556

Dividend per share (Rupees) 3.00 1.00 3.00 1.00

10. Basic earnings per share (Rupees)

The calculation of earnings per share is based on the profit for the year attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding during the year as given below, as per the requirements of the Sri Lanka Accounting Standard (LKAS 33) - ‘Earnings per Share’.



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As at 31 MarchGroup Company

2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

Cost

Balance at the beginning of the year 62,344 61,580 62,344 61,580

Additions - 764 - 764

Balance at the end of the year 62,344 62,344 62,344 62,344

Accumulated depreciation


Depreciation charge for the year 4,806 4,751 4,806 4,751


Written down value as at 31 March 48,050 52,856 48,050 52,856

The Company has rented out a part of C. W. Mackie PLC building complex and the value of land and buildings of that portion has been classified as' investment property' and accounted on ‘cost model’ as required by LKAS 40-Investment Property.

As per the valuation carried out on 31 March 2011, by Mr. K. T. D. Tissera, an independent professional Valuer J. P. U. M., Diploma in Valuation (Sri Lanka), F. R. I. C. S.(Eng.), F. I. V. (Sri Lanka), Chartered Valuation Surveyor, fair value of the investment property is Rs.62 million. The properties were valued on an open market value for existing use basis.

Rent income is included in the Statement of Comprehensive Income as:

For the year ended 31 March 2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

Rent income 71,140 63,731 71,140 63,731

Direct operating expenses arising from investment property that generated rental income during the year 21,127 27,658 21,127 27,658

12.3 Investment property

12.4 (i) Fully depreciated property, plant and equipment still in use Group The gross carrying amount of fully depreciated property, plant and equipment still in use as at 31 March 2014 is Rs.253 million.

Company The gross carrying amount of fully depreciated property, plant and equipment still in use as at 31 March 2014 is Rs.118 million.

(ii) Leasehold motor vehicles The Group has taken on lease motor vehicles under a number of finance lease agreements. At the end of the primary period of such leases, the Group has the option to purchase the equipment at a beneficial price.

(iii) Leasehold land and buildings The Group has taken certain land and buildings on lease. In terms of the Grant to the Company dated 22 September 1964 under the Crown Lands Ordinance, premises No.34 and 36, D. R. Wijewardena Mawatha, Colombo 10 has been leased for a period of 60 years, 8 months and 10 days (being the residue of the unexpired term under Indenture of Lease by the Crown dated 10 June 1925 granting the Company a 99 year lease of the premises from the said date). At the time of handing over the possession of the premises, the Company is not entitled to any compensation in respect of the land, buildings or improvements thereon.

(iv) Assets pledged as securities against bank borrowings The Company's freehold property and machinery at Munagama, Horana factory has been pledged as security to Hatton National Bank PLC under primary mortgage in favour of the bank.


Location Extent No of BuildingsLeasehold Land and Buildings

No. 36, D. R. Wijewardena Mawatha, Colombo 10 1A, 2R, 13.86P 4

Investment Property

No. 36, D. R. Wijewardena Mawatha, Colombo 10 52,923 Sq Ft 2

Freehold Land and Building

Sunquick/Scan Water Bottling Plant - Munagama, Horana 3A,3R,4.00P 13

Ceymac Rubber Company Limited - Aramangagolla, Horana 5A,0R,0.45P 11

Ceymac Rubber Company Limited - Thebuwana, Narthupana 5A,1R,10.00P 8

12.5 Property, plant and equipment extent

As at 31 March Group Company

2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

13. Investments in subsidiaries Ceymac Rubber Company Limited - - 424,823 424,823 Ceytra (Private) Limited - - 34,652 34,652 Scan Tours and Travels (Private) Limited - - 25,807 25,807 Kelani Valley Canneries Limited - - 126,874 -

- - 612,156 485,282

Subsidiaries -Unquoted

Principal Activity Holding %

Deemed Cost 31.03.2014

Rs.000’s 31.03.2013

Rs.000’sCeymac Rubber Company Limited

Manufacture, export and sale locally of technically specified rubber and manufacture and export of plantation sole crepe rubber and specialised industrial sole crepe rubber.

98.72% 424,823 424,823

Ceytra (Private) Limited Manufacture and export of extruded, moulded and calendared rubber products.

62.82% 34,652 34,652

Scan Tours and Travels (Private) Limited

Motor car rentals to Group Companies. 100% 25,807 25,807


Manufacture,export and distribution of a wide range of processed tropical fruits, young coconut/king coconut water and beverage products under ‘KVC’ brand.

88.23% 126,874 -


12.6 Capitalisation of borrowing costs

During the year under review, the Group has not capitalised any borrowing costs.


14. Available-for-sale investments


2014Rs.000’s

2013Rs.000’s

2014Rs.000’s

2013Rs.000’s

No. of Shares

Cost Rs.000’s

Quoted investments - at market value Trans Asia Hotels PLC 400 1 32 28 32 28 Hotel Sigiriya PLC 14,000 65 1,092 1,106 1,092 1,106 Colombo Dockyard PLC 269 2 47 58 47 58

68 1,171 1,192 1,171 1,192

15. Inventories Raw materials and consumables 127,169 100,240 76,040 73,168 Work-in-progress 3,826 2,620 - - Finished goods 575,847 454,139 481,157 414,998

706,842 556,999 557,197 488,166 Less: Provision for slow moving inventories (Note 15.1) (49,908) (20,347) (19,212) (15,405)

656,934 536,652 537,985 472,761

15.1 Provision for slow moving inventories Balance at the beginning of the year 20,347 21,705 15,405 19,960 Acquisition of subsidiary 25,504 - - - Provision made during the year 36,289 30,413 36,039 27,216 Write-off during the year (32,232) (31,771) (32,232) (31,771) Balance at the end of the year 49,908 20,347 19,212 15,405

Inventories mentioned above are stated at the lower of cost and net realisable value. Inventories amounting to Rs.557 million (2013–Rs.488 million) have been pledged as security for short term loans and overdraft facilities obtained from banks (Note 28.2)



2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

16. Trade and other receivables

Trade receivables from related parties (Note 16.1) 398 505 116,727 99,633

Trade receivables (Note 16.2) 1,534,017 1,288,356 1,261,388 1,077,243

Deposits 10,261 9,882 9,123 9,155

Loans to employees (Note 16.4) 9,508 6,946 401 24

Other receivables 69,745 35,828 68,653 35,564

1,623,929 1,341,517 1,456,292 1,221,619

16.1 Trade receivable from related parties:

Ceymac Rubber Company Limited - - 111,789 96,578

Ceytra (Private) Limited - - - 2,297

Scan Tours and Travels (Private) Limited - - - 253

Kelani Valley Canneries Limited - 4,530 -

Ceylon Trading Company Limited 230 434 240 434

E. B. Creasy & Company PLC 168 71 168 71

398 505 116,727 99,633

The Company recognises interest on the amount due from subsidiary companies based on the monthly average outstanding balance at the rate of 10.5% per annum (2013-13.5%).

16.2 Trade receivables:

Trade receivables - Local sales 1,311,544 1,106,405 1,052,105 999,970

- Export sales 282,990 199,360 233,983 94,682

1,594,534 1,305,765 1,286,088 1,094,652

Less : Provision for impairment loss (Note 16.3) (60,517) (17,409) (24,700) (17,409)

1,534,017 1,288,356 1,261,388 1,077,243

Trade Debtors amounting to Rs.1,286 million (2013 – Rs.1,094 million) have been pledged as security for short term loans and overdraft facilities obtained from banks (Note 28.2).

16.3 Provision for impairment loss:



Provision made during the year 9,645 3,033 8,710 3,033

Write-off during the year (1,419) (1,215) (1,419) (1,215)


16.4 Loans to employees:

Balance at the beginning of the year 6,946 8,482 24 1,817

Acquisition of subsidiary 878 - - -

Loans granted during the year 16,147 13,632 6,985 5,612

23,971 22,114 7,009 7,429

Recovered during the year (14,463) (15,168) (6,608) (7,405)

Balance at the end of the year 9,508 6,946 401 24

Loans to employees represent short term staff loans and staff advances, where repayment terms are less than 12 months.




2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

17. Other current assets

Payments in advance 101,517 74,213 100,822 72,984

Tax refunds due/Economic service charge 12,687 22,664 3,145 20,581

VAT/NBT receivable 52,269 52,569 21,583 21,172

Prepayments 10,077 17,803 4,557 5,803

Other receivables 4,016 - 827 -

180,566 167,249 130,934 120,540

Less : Provision for receivables (Note17.1) (16,743) (13,281) (8,078) (6,560)

163,823 153,968 122,856 113,980

17.1 Provision for receivables


Provision made during the year 3,462 5,398 1,518 3,560

Reversal due to recoveries - (6,248) - -


18. Held to maturity investments

Fixed deposits 3,010 - - -

3,010 - - -

19. Cash and cash equivalents

Bank balances 65,797 69,535 36,089 57,428

Cash in hand 745 571 570 501

66,542 70,106 36,659 57,929

Bank overdraft 113,430 116,176 84,954 90,547

Cash and cash equivalents for cash flow purpose (46,888) (46,070) (48,295) (32,618)

20. Stated capital

Ordinary shares (No. of shares-35,988,556) 507,047 507,047 507,047 507,047

507,047 507,047 507,047 507,047

21. Capital reserves*

Adjustment due to merger of subsidiary - - 14,909 14,909

Export development grant reserve 8,734 8,734 - -

8,734 8,734 14,909 14,909

22. Revenue reserves*

General reserves 7,000 7,000 7,000 7,000

Retained earnings 1,240,551 1,137,983 1,243,270 1,132,994

1,247,551 1,144,983 1,250,270 1,139,994

* Capital reserves and general reserves represent the amounts set aside by the Directors for future expansion and to meet any contingencies.


As at 31 March

Group Company

2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

23. Available-for-sale reserve

Change in fair value of available-for-sale investments 1,094 1,115 1,094 1,115

1,094 1,115 1,094 1,115

24. Interest bearing long term borrowings

Balance at the beginning of the year - 32,114 - 32,114

Obtained during the year - - - -

Paid during the year - (32,114) - (32,114)

Balance at the end of the year - - - -

24.1 With the disposal of shareholding of The Industrialisation Fund for Developing Countries (IFU) in the Company in February 2010, AAK Group Treasury (AAK), having disposed of its entire holding in January 2010, in keeping with an undertaking to IFU that until the loan has been fully paid it will not divest its interest in the Company, AAK took over the remaining portion of the loan from IFU on the same terms and conditions of the restructured repayment plan of 2005. The balance portion of the long term loan owed by the Company to IFU was transferred to AAK in August 2010.

Remaining balance of the IFU loan amounting to Rs.32.1 million (DKK 1.3 million) was paid in full in December 2012, together with interest.

As at 31 March

Group Company

2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

25. Finance lease liability


Obtained during the year 24,031 35,086 - 5,035


Early settlement discounts (603) (876) - -

VAT in suspense clearance (241) (241) (241) (241)

Paid during the year (55,206) (62,783) (3,854) (6,579)


Interest in suspense (21,713) (30,572) (1,481) (2,728)

Capital outstanding at the end of the year 91,822 113,594 5,509 8,357

25.1 Payable after one year less than five years

Lease rental payable 70,970 96,129 4,021 6,990

Interest in suspense (10,464) (19,839) (720) (1,478)

60,506 76,290 3,301 5,512

25.2 Payable within one year

Lease rental payable 42,566 48,037 2,969 4,095

Interest in suspense (11,250) (10,733) (761) (1,250)

31,316 37,304 2,208 2,845




2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

26. Retirement benefit obligation

Present value of defined benefit obligation (Note 26.2) 85,220 80,601 50,505 46,844

Fair value of plan assets (Note 26.3) (43,208) (43,162) (31,454) (26,052)

Unrecognised actuarial gain/(loss) (Note 26.4) - - - -

42,012 37,439 19,051 20,792

Arrears payable to the CWM Staff Non-Contributory Gratuity Fund (Note 26.5) 3,865 1,797 2,553 1,691

45,877 39,236 21,604 22,483

The contributions of the Company and its subsidiaries (Ceymac Rubber Company Limited and Ceytra (Private) Limited) to the defined benefit plan are determined by a formula stated in the Indenture establishing the CWM Group Staff Non-Contributory Gratuity Fund (Gratuity Fund).

As required by the Sri Lanka Accounting Standard 19 (LKAS 19) - ‘Employee Benefits’, the Fund was actuarially valued by Mr. Piyal S. Goonetilleke, Fellow of the Society of Actuaries (USA), Member of American Academy of Actuaries, Consulting Actuary of Messrs. Piyal S. Goonetilleke and Associates, as at 31 March 2014 and the appropriate adjustments have been effected in the Financial Statements.


2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

26.1 Plan assets consist of the following:

Treasury bills 37,737 39,574 27,397 23,744

Balance with Group Companies 3,871 1,804 2,830 1,083

Others 1,600 1,784 1,227 1,225

43,208 43,162 31,454 26,052

26.2 Movement in present value of defined benefit obligations



Current service cost 6,720 5,533 4,038 3,325

Interest cost 8,060 8,563 4,684 4,462

Benefits paid by the plan (12,181) (13,788) (2,943) (2,194)

Actuarial (gain)/loss (1,804) 191 (2,118) (42)


26.3 Movement in fair value of plan assets


Contribution paid into gratuity fund 7,999 7,581 5,267 4,807

Benefits paid by the gratuity fund (12,181) (13,788) (2,943) (2,194)

Expected return on plan assets 3,656 3,747 2,446 1,958

Actuarial (gain)/loss 572 685 632 715


26.4 Unrecognised actuarial (gain)/loss

Balance at the beginning of the year - - - -

Actuarial (gain)/loss for year - obligation (1,804) 191 (2,118) (42)

Actuarial (gain)/loss for year - plan assets (572) (685) (632) (715)

Actuarial (gain)/loss recognised during the year 2,376 494 2,750 757

Balance at the end of the year - - - -


As at 31 March

Group Company

2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

26.5 Arrears payable to the CWM Staff Non-Contributory Gratuity Fund


Contribution for the year 7,999 7,581 5,267 4,807

Paid to the fund (5,931) (9,399) (4,405) (5,242)


26.6 Amount recognised in the Statement of Comprehensive Income

Recognised in profit or loss

Current service cost 6,720 5,533 4,038 3,325

Interest cost 8,060 8,563 4,684 4,462

Expected return on plan assets (3,656) (3,747) (2,446) (1,958)

11,124 10,349 6,276 5,829

Recognised in the other comprehensive income

Recognition of actuarial gain (2,376) (494) (2,750) (757)

Total amount recognised in the Statement of Comprehensive Income 8,748 9,855 3,526 5,072

26.7 Actuarial assumptions

Discount rate 10.50% 10% 10.50% 10%

Expected return on plan assets 10.50% 10% 10.50% 10%

Future salary increases 12% 12% 12% 12%

Retirement age:

Management staff 60 years 60 years 60 years 60 years

Allied staff 60 years 60 years 60 years 60 years

Other staff 55 years 55 years 55 years 55 years

26.8 Sensitivity of assumptions employed in actuarial valuation

The following table demonstrates the sensitivity to a reasonably possible change in the key assumptions employed with all other variables held constant in the employment benefit liability measurement.

The sensitivity of the total Comprehensive Income and Statement of Financial Position is the effect of the assumed changes in discount rate and salary increment rate on to total Comprehensive Income and employment benefit obligation for the year.

As at 31 March 2014Sensitivity effect on

Total Comprehensive Income increase/

(reduction)

Employment benefit increase/

(reduction) in theliability

Group Rs.000's

Company Rs.000's

Group Rs.000's

Company Rs.000's

Decrease in discount rate (1%) (7,987) (5,001) 7,987 5,001

Increase in discount rate (1%) 6,917 4,311 (6,917) (4,311)

Decrease in salary escalation rate (1%) 8,244 4,945 (8,244) (4,945)

Increase in salary escalation rate (1%) (9,342) (5,654) 9,342 5,654




2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

27. Deferred taxation


(Charge)/reversal for the year 3,484 (6,964) 2,186 2,317


27.1 Deferred tax asset (4,885) (7,774) - -

Deferred tax liability 44,162 43,567 37,396 35,210

39,277 35,793 37,396 35,210

27.2 The effective tax rate of 28% (2013-28%), 17% (2013-15%), 13% (2013-19%) and 28% (2013-28%) were applied respectively by the Company and subsidiaries: Ceymac Rubber Company Limited, Ceytra (Private) Limited and Scan Tours and Travels (Private) Limited, for calculation of deferred tax asset/liability for the current year.

27.3 The deferred tax asset/ liability recognised on temporary differences is as follows:

As at 31 March 2014 2013

Group Temporarydifferences

Rs.000's

TaxEffect

Rs.000's

Temporarydifferences

Rs.000's

TaxEffect

Rs.000's

On property, plant and equipment 295,524 67,334 276,139 60,752

On retirement gratuity (45,877) (9,369) (39,236) (8,950)

On tax losses carried forward (118,268) (18,688) (96,945) (16,009)

131,379 39,277 139,958 35,793

Company

2014 2013


Rs.000's

TaxEffect

Rs.000's


Rs.000's

TaxEffect

Rs.000's

On property, plant and equipment 155,162 43,445 148,233 41,505

On retirement gratuity (21,604) (6,049) (22,483) (6,295)

133,558 37,396 125,750 35,210

27.4 Deferred tax asset - Kelani Valley Canneries Limited

Kelani Valley Canneries Limited has not recognised the deferred tax asset amounting to Rs.39 million for the year ended 31 March 2014, as the Management was of the view that the asset will not be crystallised in the foreseeable future.

The unrecognised deferred tax asset on temporary differences is as follows:

As at 31 March 2014


Rs.000's

Tax effect

Rs.000's

On property, plant and equipment 21,915 6,136

On retirement gratuity (3,825) (1,071)

On tax losses carried forward (157,555) (44,116)

(139,465) (39,051)



2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

28. Interest bearing short term borrowings

Short term money market loans 780,240 521,197 691,240 449,789

780,240 521,197 691,240 449,789

28.1 Sources of finance

Hatton National Bank PLC 229,039 271,443 140,039 200,035

Commercial Bank of Ceylon PLC 118,000 86,500 118,000 86,500

NDB Bank PLC 343,201 73,254 343,201 73,254

Standard Chartered Bank PLC 90,000 90,000 90,000 90,000

780,240 521,197 691,240 449,789

28.2 Assets pledged as securities against short term borrowings

Lending Institution Facility Obtained Assets Pledged Interest Rate

C. W. Mackie PLC

Hatton National Bank PLC For financing of exports, imports and working capital requirements

Primary and secondary mortgage over stocks and book debts.

Registered primary floating mortgage over land, building and machinery at the Munagama, Horana factory

Available money market rates

Commercial Bank of Ceylon PLC

For financing of exports, imports and working capital requirements

Primary and secondary mortgage over stocks and book debts


NDB Bank PLC For financing of exports, imports and working capital requirements

Primary and secondary mortgage over stocks and book debts


Standard Chartered Bank PLC For financing of exports, imports and working capital requirements

Primary mortgage over stocks and book debts



Hatton National Bank PLC To finance the manufacture and export of rubber and for working capital requirements

Registered primary floating mortgage over stocks and book debts

Corporate guarantee of C. W. Mackie PLC Rs.99 million





2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000’s

29. Income tax payable


Add:

Income tax provision for the year 101,476 90,569 96,628 86,134

Under/(over) provision in respect of previous year (1,806) 982 (1,955) 1,461

Less:

Income Tax/ESC Payments during the year (104,562) (144,561) (98,935) (126,305)

Balance at the end of the period 43,905 48,797 42,714 46,976

30. Trade and other payables

Trade payables to related parties (Note 30.1) 1,978 9,722 67,646 59,109

Other trade payables 277,202 196,017 240,179 192,400

Dividends payable 3,486 2,717 3,486 2,717

Accruals 34,982 32,955 27,184 29,797

Other payables 55,426 45,680 43,837 42,439

373,074 287,091 382,332 326,462

30.1 Trade payables to related parties:

Scan Tours and Travels (Private) Limited - - 38,842 3,849

Ceytra (Private) Limited - - 26,826 17,974

Ceymac Rubber Company Limited - - - 27,564

Lankem Tea and Rubber Plantations (Private) Limited 22 9,722 22 9722

Union Commodities (Private) Limited 1,956 1,956 -

1,978 9,722 67,646 59,109

The Company recognises interest on the amount due from subsidiary companies based on the monthly average outstanding balance at the rate of 10.5% per annum (2013-13.5%).

31. Other current liabilities

VAT/NBT payables 31,180 15,630 26,985 15,469

Provisions 65,944 68,357 63,492 63,576

Other payables 267 9,130 267 1,983

97,391 93,117 90,744 81,028


32. Related party disclosures

32.1 Related party transactions 32.1.1 Transactions with subsidiary companies

Name of the Related Party Relationship Nature of the Transaction Amounts (Paid) / Received

For the year ended 31 March 2014Rs.

2013Rs.

Ceymac Rubber Company Limited Subsidiary Interest on current account balance 6,604,549 15,705,979

Service fees 6,600,000 6,560,000

Directors: Dividend received - 8,501,355

Mr. W. T. Ellawala,

Mr. E. A. A. K. Edirisinghe,

Mr. A. I. Piyadigama

Corporate guarantee of C. W. Mackie PLC for packing credit/short term loans and export bill discounting facilities of Rs.99.0 million to Hatton National Bank PLC

Scan Tours and Travels (Private) Limited Subsidiary Interest on current account balance (2,961,124) 1,294,867

Vehicle hire charges (44,002,966) (45,481,898)

Directors:

Mr. W. T. Ellawala,

Ms. C. R. Ranasinghe,


Mr. K. T. A. Mangala Perera

Ceytra (Private) Limited Subsidiary Interest on current account balance (2,180,327) 3,393,198

Service fees 3,600,000 2,700,000

Directors: Inter company purchases 4,025,720 11,848,650

Mr. W. T. Ellawala,


Mr. A. I. Piyadigama,

Mr. G. A. de Silva

Corporate guarantee of C. W. Mackie PLC for packing credit/short term loans and export bill discounting facilities of Rs.8.0 million to Hatton National Bank PLC.

Kelani Valley Canneries Limited Subsidiary Inter company purchases 8,587,950 -

Directors:

Mr. K. T. A. Mangala Perera*,

Mr. Anushman Rajaratnam*,

Ms. C. R. Ranasinghe*

32.1.2 Transactions with other related companies

Ceylon Trading Company Limited Affiliate Rent income 2,100,000 2,100,000

Secretarial and legal fees (11,636,244) (7,463,885)

Directors: Management fees overheads (15,034,941) (12,285,603)

Mr. W. T. Ellawala,

Ms. C. R. Ranasinghe

Maersk Lanka (Private) Limited Affiliate Rent income 18,263,972 16,820,578

Recovery of overheads 11,438,218 12,410,407

Director:

Mr. W. T. Ellawala



Name of the Related Party Relationship Nature of the Transaction Amounts (Paid) / Received

For the year ended 31 March 2014Rs.

2013Rs.

Kotagala Plantations PLC Common directors Purchase of rubber through commodity brokers at the auction 117,607,875 99,320,350

Directors:

Mr. R. C. Peries,

Mr. S. D. R. Arudpragasam

Lankem Tea & Rubber Plantations (Private) Limited

Common directors Purchase of tea

(28,957,126) (101,601,308)

Directors:

Mr. A. Rajaratnam,

Mr. S. D. R. Arudpragasam,

Mr. Anushman Rajaratnam

Union Commodities (Private) Limited Common directors Purchase of tea

(36,168,187) -

Directors:

Mr. A. Rajaratnam,


Lankem Ceylon PLC Common directors Short term fund transfers

(64,000,000) (25,000,000)

Directors:

Mr. A. Rajaratnam,

Mr. S. D. R. Arudpragasam,


E. B. Creasy & Company PLC Common directors Sales of sugar and Scan branded products 115,118 115,118

Directors:

Mr. A. Rajaratnam ,

Mr. S. D. R. Arudpragasam

C. W. Mackie Group Staff Non-Contributory Gratuity Fund

Defined benefit plan Amount paid to gratuity fund

(4,404,856)

(5,241,870)

Amount paid by gratuity fund to employees 2,943,125 2,194,300

* Mr. K. T. A. Mangala Perera, Mr. Anushman Rajaratnam, Ms. C. R. Ranasinghe - Appointed on 31 March 2014

Janashakthi Insurance PLC Common director Insurance premium paid 4,612,950 6,604,694

Director/Chairman:

Mr. W. T. Ellawala

There were no transactions entered into by the Company during the year in the ordinary course of business, the value which exceeded 10% of the shareholders’ equity or 5% of the total assets of the Company as at 31 March 2014.


32.2 Compensation of key management personnel

Key management personnel include members of the Board of Directors of the Company and Subsidiaries.


2014Rs.000's

2013Rs.000's

2014Rs.000's

2013Rs.000's

Short-term employee benefits 20,470 19,985 18,610 13,777

Termination benefits - 2,557 - -

Total compensation paid to key management personnel 20,470 22,542 18,610 13,777

33. Events after the reporting date

The Directors of C. W. Mackie PLC have recommended the payment of a first and final dividend of Rs.3/- per ordinary share amounting to Rs.107,965,668/- for the year ended 31 March 2014 for approval by the shareholders at the Annual General Meeting to be held on 27 June 2014. In accordance with Sri Lanka Accounting Standard 10 (LKAS 10)- ‘Events after the Reporting Period’, this proposed dividend has not been recognised as a liability as at 31 March 2014.

Subsequent to the reporting date, no other circumstances have arisen that would require adjustment to or disclosure in the Financial Statements other than as disclosed above.

34. Contingent liabilities

The following contingent liabilities exist as at the reporting date on account of the letters of comfort and guarantees given by the Company:

Outstanding as at 31 March 2014 (Rs. Mn)

2013 (Rs. Mn)

Letters of comfort and guarantees provided on behalf of the subsidiaries

Ceymac Rubber Company Limited 99 99

Ceytra (Private) Limited 8 8

Total 107 107

Outstanding short term loan facility


Total 89 71

These corporate guarantees have been provided for Hatton National Bank PLC on behalf of the subsidiary companies Ceymac Rubber Company Limited and Ceytra (Private) Limited, for short term loan facilities, where repayment terms are less than 12 months.

There are no material contingent liabilities outstanding as at the reporting date other than those disclosed above which requireadjustments to or disclosures in Financial Statements.

35. Capital commitments

There are no material capital commitments as at the reporting date.

36. Comparative figures

Comparative figures have been reclassified to conform to the current year presentation.



As at 31 March

Carrying amount

Group Company

2014Rs.000’s

2013Rs.000’s

2014Rs.000’s

2013Rs.000’s

Trade receivables from related parties 398 505 116,727 99,633

Trade receivables 1,534,017 1,288,356 1,261,388 1,077,243

Deposits 10,261 9,882 9,123 9,155

Loans to employees 9,508 6,946 401 24


Held to maturity investments 3,010 - - -

Balances with banks 65,797 69,535 36,089 57,428

Total 1,692,736 1,411,052 1,492,381 1,279,047

Trade and other receivables

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

However, the Management also considers the demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk. However, geographically there is no concentration of credit risk.

37. Financial risk management

The Board of Directors have overall responsibility for the establishment and oversight of the risk management framework, including policies and procedures. In discharging its governance responsibility it operates through two key committees - the Group Management Committee and the Board of Directors Audit Committee. Risk management framework is reviewed regularly to reflect changes.

The Company has exposure to the following risks from its use of financial instruments:

Credit risk (Note 37.1)

Liquidity risk (Note 37.2)

Market risk (Note 37.3)

Operational risk (Note 37.4)

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

37.1 Credit risk

Credit risk is the risk of financial loss to the Company if a customer fails to meet its contractual obligations and arises principally from the Company’s receivables from customers.

Exposure to credit risk


Impairment losses

The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance is a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

The aging of trade receivables at the reporting date was as follows:

Group

As at 31 March 2014 2013

Gross BalanceRs.000’s

ImpairmentRs.000’s



Past due 0-30 days 1,117,853 - 916,016 3,743

Past due 31-90 days 324,622 3,404 322,806 2,734

Past due 91-365 days 99,928 6,982 59,507 3,496

More than one year 52,131 50,131 7,436 7,436

Total 1,594,534 60,517 1,305,765 17,409

Company

As at 31 March 2014 31 March 2013





Past due 0-30 days 925,229 - 784,990 3,743

Past due 31-90 days 271,547 2,447 249,196 2,734

Past due 91-365 days 69,779 4,720 53,030 3,496

More than one year 19,533 17,533 7,436 7,436

Total 1,286,088 24,700 1,094,652 17,409

The Company holds collateral against some long outstanding customers in the form of bank guarantees and they have been considered when assessing impairment loss.

The maximum exposure to credit risk for trade receivables as at the reporting date by geographic was as follows:

As at 31 March

Carrying amount

Group Company

2014Rs.000’s

2013Rs.000’s

2014Rs.000’s

2013Rs.000’s

Domestic 1,230,283 1,088,997 1,007,681 982,561

Asian region 112,433 93,483 84,603 16,130

European region 176,818 89,850 157,366 75,566

African region - 1,858 - -

Latin American region - 2,986 - 2,986

Northern American region 14,483 11,182 11,738 -

Total 1,534,017 1,288,356 1,261,388 1,077,243



Available-for-sale investments

Sector wise analysis of available-for-sale equity securities:

As at Sector

Group Company

31 March 2014 31 March 2014

Cost

Rs.000’s

Market Value

Rs.000’s

% Cost

Rs.000’s

Market Value

Rs.000’s

%

Hotels and travels 66 1,124 96% 66 1,124 96%

Construction and engineering 2 47 4% 2 47 4%

Total 68 1,171 100% 68 1,171 100%

As at Sector

31 March 2013 31 March 2013

Cost

Rs.000’s

Market Value

Rs.000’s

% Cost

Rs.000’s

Market Value

Rs.000’s

%

Hotels and travels 66 1,134 95% 66 1,134 95%

Construction and engineering 2 58 5% 2 58 5%

Total 68 1,192 100% 68 1,192 100%

Held to maturity investments

The Group has invested Rs.3.01 million on fixed deposits as at 31 March 2014 which represent its maximum credit exposure on these assets.

Cash and cash equivalents

The Group and Company held cash and cash equivalents of Rs.66.5 million (2013 - Rs.70.1 million) and Rs.36.6 million (2013 - Rs.57.9 million) retrospectively at 31 March 2014 which represent its maximum credit exposure on these assets.

Guarantees

The Group’s policy is to provide financial guarantees only to wholly-owned subsidiaries. These corporate guarantees have been provided for Hatton National Bank PLC on behalf of the subsidiaries' short term loan facilities where repayment terms are less than 12 months.

Outstanding as at 31 March 2014 Rs. Mn.

2013 Rs. Mn.

Letters of comfort and guarantees provided on behalf of the subsidiaries


Ceytra (Private) Limited 8 8

Total 107 107

Outstanding short term loan facility


Total 89 71


37.2 Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

As at 31 March 2014, Group has unutilsed bank facilities amounting to Rs.333 million representing 32% of the total bank facilities from the principal bankers, i.e. Hatton National Bank PLC, Commercial Bank of Ceylon PLC, NDB Bank PLC and Standard Chartered Bank PLC.

The following are the contractual maturities of financial liabilities:

Group

As at 31 March2014 2013

Carrying amountRs.000’s

0-12 months

Rs.000’s

More than1 year

Rs.000’s


0-12 months

Rs.000’s

More than1 year

Rs.000’s

Financial liabilities (Non derivatives)

Interest bearing short term borrowings 780,240 780,240 - 521,197 521,197 -

Finance lease liability 91,822 31,316 60,506 113,594 37,304 76,290

Trade and other payable 371,096 371,096 - 277,369 277,369 -

Trade payables to related parties 1,978 1,978 - 9,722 9,722 -

Bank overdraft 113,430 113,430 - 116,176 116,176 -

Total 1,358,566 1,298,060 60,506 1,038,058 961,768 76,290

Company

As at 31 March2014 2013


0-12 months

Rs.000’s

More than1 year

Rs.000’s


0-12 months

Rs.000’s

More than1 year

Rs.000’s

Financial liabilities (Non derivatives)

Interest bearing short term borrowings 691,240 691,240 - 449,789 449,789 -

Interest bearing long term borrowings - - - - - -

Finance lease liability 5,509 2,208 3,301 8,357 2,845 5,512

Trade and other payable 314,686 314,686 - 267,353 267,353 -

Trade payables to related parties 67,646 67,646 - 59,109 59,109 -

Bank overdraft 84,954 84,954 - 90,547 90,547 -

Total 1,164,035 1,160,734 3,301 875,155 869,643 5,512

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.



37.3 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than Sri Lankan Rupees (LKR), The foreign currencies in which the set transactions primarily denominated are United Stated Dollars (USD) and Euro.

Exposure to currency risk

The Group’s exposure to foreign currency risk was as follows based on notional amounts:

Group

As at 31 March 2014 2013

USD Euro USD Euro

Short term borrowings - - (563,373) -

Trade and other payables (198,438) (481,968) (124,807) (458,552)

Trade and other receivables 2,099,487 63,300 1,260,549 156,850

Cash and cash equivalents 278,300 15,731 984,321 1,725

Gross statement of financial position exposure 2,179,349 (402,937) 1,556,690 (299,977)

Company

As at 31 March 2014 2013

USD Euro USD Euro

Trade and other payables (198,438) (481,968) (124,807) (458,552)

Trade and other receivables 1,865,551 63,300 638,317 85,000

Cash and cash equivalents 163,311 15,731 895,078 805

Gross statement of financial position exposure 1,830,424 (402,937) 1,408,588 (372,747)

The following significant exchange rates were applicable during the year:

Average rate Reporting date spot rate

2014Rs.

2013Rs.

2014Rs.

2013Rs.

USD 130.11 129.66 131.00 126.75

Euro 174.31 166.63 179.65 162.06

37.3.1 Currency risk


37.3.2 Interest rate risk

The Group’s objective is to maintain an efficient operational interest cost structure to minimise the adverse effects of fluctuating interest rates.

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

As at 31 March

Carrying amount

Group Company

2014Rs.000’s

2013Rs.000’s

2014Rs.000’s

2013Rs.000’s

Fixed rate instruments

Financial assets

Related party receivables - subsidiaries - - 111,789 99,128

Financial liabilities

Related party payables - subsidiaries - - (65,668) (49,387)

- - 46,121 49,741

Variable rate instruments

Financial assets

RFC deposits 39,348 50,539 24,199 39,025

Fixed deposit 3,010 - - -

Bank overdrafts (113,430) (116,176) (84,954) (90,547)

Short term money market borrowings (780,240) (521,197) (691,240) (449,789)

(851,312) (586,834) (751,995) (501,311)

Sensitivity Analysis

A strengthening or weakening of the LKR, as indicated below, against the USD and Euro at 31 March 2014 would have increased/ (decreased) the equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant.

Strengthening Weakening

Profit or Loss Rs.000’s

Profit or Loss Rs.000’s

Group

As at 31 March 2014

USD (10% movement) (28,549) 28,549

Euro (10% movement) 7,239 (7,239)

As at 31 March 2013

USD (10% movement) (19,731) 19,731

Euro (10% movement) 4,861 (4,861)

Company

As at 31 March 2014

USD (10% movement) (23,979) 23,979

Euro (10% movement) 7,239 (7,239)

As at 31 March 2013

USD (10% movement) (17,854) 17,854

Euro (10% movement) 6,041 (6,041)



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


2014Rs.000’s

2013Rs.000’s

2014Rs.000’s

2013Rs.000’s

Total liabilities 1,589,901 1,262,775 1,356,493 1,060,852

Less:

Cash and cash equivalents (66,542) (70,106) (36,659) (57,929)

Net debts 1,523,359 1,192,669 1,319,834 1,002,923

Total equity 1,764,426 1,661,879 1,773,320 1,663,065

Net debt to equity ratio 0.86 0.72 0.74 0.60

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

37.4 Operational risk

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

The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.

37.5 Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as result from operating activities divided by total shareholders’ equity, excluding no controlling interests. The Board of Directors also monitors the level of dividends to ordinary shareholders.

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. Accordingly, major part of the borrowings comprise short term money market loans and bank overdrafts with variable interest rates being used only to manage the working capital requirements of the day-to-day operations of the Group.

Sensitivity analysis for variable rate instruments

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the profit before tax:

As at 31 March 2014 2014Profit or Loss

Rs.000’s

2013Profit or Loss

Rs.000’s

Group

Variable rate instruments (1% decrease) 8,543 5,868

Variable rate instruments (1% increase) (8,543) (5,868)

Company

Variable rate instruments (1% decrease) 7,520 5,013

Variable rate instruments (1% increase) (7,520) (5,013)


37.6 Accounting classification and fair value

Fair value vs the carrying amount

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

Group

As at 31 March 2014 2013

Carrying amountRs. 000's

Fair valueRs. 000's

Carrying amountRs. 000’s

Fair valueRs. 000's

Assets

Trade receivables from subsidiaries 398 398 505 505


Deposits 10,261 10,261 9,882 9,882

Loans to employees 9,508 9,508 6,946 6,946


Held to maturity financial assets 3,010 3,010 - -


1,692,736 1,692,736 1,411,052 1,411,052

Liabilities

Interest bearing short term borrowings 780,240 780,240 521,197 521,197

Finance lease liability 91,822 91,822 113,594 113,594

Trade and other payable 371,096 371,096 277,369 277,369

Trade payables to related parties 1,978 1,978 9,722 9,722

Bank overdraft 113,430 113,430 116,176 116,176

1,358,566 1,358,566 1,038,058 1,038,058

Company

As at 31 March 2014 2013


Fair valueRs. 000's


Fair valueRs. 000's

Assets

Trade receivables from subsidiaries 116,727 116,727 99,633 99,633


Deposits 9,123 9,123 9,155 9,155

Loans to employees 401 401 24 24



1,492,381 1,492,381 1,279,047 1,279,047

Liabilities

Interest bearing short term borrowings 691,240 691,240 449,789 449,789

Finance lease liability 5,509 5,509 8,357 8,357

Trade and other payable 314,686 314,686 267,353 267,353

Trade payables to related parties 67,646 67,646 59,109 59,109

Bank overdraft 84,954 84,954 90,547 90,547

1,164,035 1,164,035 875,155 875,155



Year 31 December 31 March

2004Rs.000’s

2005Rs.000’s

2006Rs.000’s

2007Rs.000’s

2008Rs.000’s

2009Rs.000’s

2011Rs.000’s

2012Rs.000’s

2013Rs.000’s

2014Rs.000’s

OPERATING RESULTS

Revenue 2,435,190 2,565,339 4,326,909 4,409,163 5,322,668 4,622,730 9,317,046 9,703,084 7,647,208 7,343,741

Results from operating activities

162,898 122,073 260,466 222,492 149,945 282,895 415,428 588,635 306,936 374,629

Net financing costs (56,433) (21,243) (81,295) (91,552) (100,472) (97,336) (64,987) (77,604) (58,836) (62,146)

Other operating expenses - - - (23,803) (51) - - - - -

Profit before taxation 106,465 100,830 179,171 107,137 49,422 184,959 350,441 511,031 248,100 312,483

Tax expense (37,139) (40,245) (35,682) 10,748 (3,297) (66,286) (94,232) (115,972) (84,587) (103,154)

Profit after tax 69,326 60,585 143,489 117,885 46,125 118,673 256,209 395,059 163,513 209,329

Non-controlling interests (2,685) 1,507 (3,505) (7,469) (702) (11,820) (1,592) (2,296) (1,503) (1,013)

Profit for the year 66,641 62,092 139,984 110,415 45,423 106,853 254,617 392,763 162,010 208,316

FINANCIAL POSITION

Assets

Non-current assets 421,563 434,160 456,453 688,416 761,223 746,698 785,969 853,776 852,228 886,279

Current assets 787,245 840,083 1,214,775 1,120,507 1,176,989 1,149,967 2,227,319 2,427,909 2,102,243 2,514,238

Total assets 1,208,808 1,274,243 1,671,228 1,808,923 1,938,212 1,896,665 3,013,288 3,281,685 2,954,471 3,400,517

Equity and liabilities

Equity

Share capital 359,886 359,886 359,886 - - - - - - -

Share pemium 161,440 161,440 161,440 - - - - - - -

Stated capital - - - 507,047 507,047 507,047 507,047 507,047 507,047 507,047

Capital reserves 305,193 305,193 297,297 473,349 458,809 444,359 8,734 8,734 8,734 8,734

Revenue reserves (404,673) (342,581) (213,673) (110,519) (69,714) 24,598 706,808 1,018,527 1,144,983 1,247,551

Available-for-sale reserve - - - - - - 1,172 1,014 1,115 1,094

Equity attributable to equity holders of the Company

421,846 483,938 604,950 869,877 896,142 976,004 1,223,761 1,535,322 1,661,879 1,764,426

Non-controlling interests 4,353 3,280 5,078 13,431 14,133 25,953 26,620 28,397 29,817 46,190

Total equity 426,199 487,218 610,028 883,308 910,275 1,001,957 1,250,381 1,563,719 1,691,696 1,810,616

Non-current liabilities 276,927 258,878 270,351 223,157 166,460 183,678 205,572 185,157 159,093 150,545

Current liabilities 505,682 528,147 790,849 702,458 861,477 711,030 1,557,335 1,532,809 1,103,682 1,439,356

Total equity and liabilities 1,208,808 1,274,243 1,671,228 1,808,923 1,938,212 1,896,665 3,013,288 3,281,685 2,954,471 3,400,517

RATIOS

Basic earnings per share (Rupees)

1.85 1.73 3.89 3.07 1.26 2.97 7.07 10.66 4.50 5.79

Revenue growth rate (%) 37.8% 5.3% 68.7% 1.9% 20.7% -13.2% 101.5% 4.1% -21.2% -4.0%

Net profit ratio (%) 2.7% 2.4% 3.2% 2.5% 0.9% 2.3% 2.7% 4.0% 2.1% 2.8%

Current ratio (1:) 1.56 1.59 1.54 1.60 1.37 1.62 1.43 1.58 1.90 1.75

Net asset per share (Rupees) 11.72 13.45 16.81 24.17 24.90 27.12 34.00 42.66 46.18 49.03

Net return on capital employed (%)

5.7% 4.8% 8.6% 6.5% 2.4% 6.3% 8.5% 12.0% 5.5% 6.2%

Dividends per share (Rupees) - 0.50 1.00 0.75 0.75 1.00 1.00 2.00 1.00 3.00

Dividend payout ratio (%) 0% 29% 26% 24% 59% 34% 14% 19% 22% 52%

Ten Year Historical Summary


Organisations utilise raw materials and other inputs to create a saleable product. The difference between the sales income and the cost of bought-in-materials and services is generally regarded as the value added by the organisation. Value added, therefore, denotes the contribution made to the nation’s economy by the efforts of employers and employees, i.e. the wealth created by an organisation’s activities.

The following statement shows the contribution made to the Sri Lankan economy by C.W.Mackie PLC and its subsidiary companies and their employees during the last two (2) years. This total value added was distributed to the employees, the Government of the Democratic Socialist Republic of Sri Lanka, lenders and providers of capital, with a part being retained for use within the Group:

For the year ended 31 March 2014Rs. million

2013Rs. million

Value added

Sales made to external customers 7,343.7 7,647.2

Less: material and services brought in from outside (5,551.9) (6,150.4)

1,791.8 1,496.8

Add : other income/expenses (net) 95.7 89.8

Total value added available for distribution 1,887.5 1,586.6

% %

Distribution

To employees as wages, salaries and benefits 253.1 13.4 258.1 16.3

Taxation to Government

-import duties and VAT/NBT 1,014.1 795.4

-export duties 56.9 66.6

-income tax 99.7 91.6

-Economic Service Charge 1.6 1,172.3 62.1 9.7 963.0 60.7

To lenders

-interest 59.8 3.2 83.6 5.3

Providers of equity capital

-dividends 108.0 5.7 36.0 2.2

Retained in business

-depreciation on fixed assets 83.8 83.3

-retained earnings 210.5 294.3 15.6 162.5 245.9 15.5

Total value added distributed 1,887.5 100.0 1,586.6 100.0

No. of employees in Group* 540 560

Value added per employee ( Rs.000) 3,495 2,833 * Excluding KVC employees

Distribution of Value Addition

Consolidated Statement of Value Added


Financial Calendar

Ninety First Annual General Meeting - 27 June 2013

Interim Reports

First Quarterly Report 3 months to 30 June 2013 - 8 August 2013

Second Quarterly Report 6 months to 30 September 2013 - 8 November 2013

Third Quarterly Report 9 months to 31 December 2013 - 7 February 2014

Fourth Quarterly Report 12 months to 31 March 2014 - 12 May 2014

Annual Report - Financial Year 2014 - 30 May 2014

Ninety Second Annual General Meeting - 27 June 2014

Holdings (Shares)31 March 2014 31 March 2013

No. ofHolders

Total Shares

Holdings%

No. ofHolders

Total Shares

Holdings%

1 - 1,000 1,691 363,795 1.01 1,719 378,573 1.05

1,001 - 10,000 225 741,943 2.06 233 785,742 2.18

10,001 - 100,000 34 1,055,264 2.93 38 1,114,615 3.10

100,001 - 1,000,000 9 1,857,311 5.16 9 1,739,383 4.83

Over - 1,000,000 3 31,970,243 88.84 3 31,970,243 88.84

1,962 35,988,556 100.00 2,002 35,988,556 100.00

Investor Information

Distribution Schedule of Shareholders


Twenty Largest Shareholders as at 31 March 2014

Name of Shareholder

31 March 2014 31 March 2013

No. of Shares (Voting)

%No. of Shares

(Voting)%

1 Lankem Ceylon PLC 12,267,526 34.09 12,267,526 34.09

2 Seylan Bank PLC/ Dr. T. Senthilverl 10,765,575 29.91 10,765,575 29.91

3 Kotagala Plantations PLC 7,157,857 19.89 7,157,857 19.89

4 Pan Asia Banking Corporation PLC/ Lankem Ceylon PLC 1,779,285 4.94 1,779,285 4.94

5 Amana Bank Limited 730.570 2.03 648,256 1.80

6 Mr. P. Anandarajah 155,100 0.43 160,200 0.45

7 Mr. M. A. Lukmanjee 155,000 0.43 155,000 0.43

8 Navara Capital Limited 147,100 0.41 145,000 0.40

9 Employees Provident Fund 139,740 0.39 89,700 0.25

10 Nuwara Eliya Property Developers (Private) Limited 138,900 0.39 138,900 0.39

11 Mr. T. L. M. Imtiaz 135,901 0.38 135,901 0.38

12 Mr. M. Radhakrishnan (deceased) 130,000 0.36 130,000 0.36

13 Mr. H. N. De Silva 125,000 0.35 125,000 0.35

14 Sir F. I. Rahimtoola 90,000 0.25 90,000 0.25

15 Mr. M. M. M. Mizver 76,326 0.21 81,364 0.23

16 Mr. C. R. D. Fernando 65,558 0.18 65,558 0.18

17 Dr. M. A. M. Arafath Akram 58,220 0.16 500 0.00

18 Mr. Z. G. Carimjee 57,000 0.16 57,000 0.16

19 Mr. R. A. Rishard 54,100 0.15 54,100 0.15

20 Andaradeniya Estate (Private) Limited 50,000 0.14 50,000 0.14

Investor Information (Contd.)

Categories of Shareholders

Categories

31 March 2014 31 March 2013

No. ofHolders

ShareHolding

Total %

No. ofHolders

ShareHolding

Total %

Individuals 1,883 2,546,526 7.08 1,923 2,646,468 7.35

Institutions 79 33,442,030 92.92 79 33,342,088 92.65

1,962 35,988,556 100.00 2,002 35,988,556 100.00

Public 1,959 4,018,313 11.17 1,999 4,018,313 11.17


Notice of Meeting

NOTICE IS HEREBY GIVEN that the Ninety Second Annual General Meeting of C. W. Mackie PLC will be held in the Auditorium, Sri Lanka Foundation Institute, 100, Independence Square, Colombo 7 on Friday, 27 June 2014 at 2.30 p .m. for the following purposes :

1. To receive and consider the Annual Report of the Board of Directors and Financial Statements for the year ended 31 March 2014 with the Report of the Auditors thereon.

2. To declare a Dividend as recommended by the Directors.

3. To re-elect Mr. S. D. R. Arudpragasam, who retires by rotation in terms of Article 89 of the Articles of Association, as a Director of the Company.

4. To approve the re-appointment of Mr. W. T. Ellawala, who is over 70 years of age, under and in terms of Section 211 of the Companies Act No. 7 of 2007 as a Director of the Company*.

5. To approve the re-appointment of Deshabandu A. M. de S. Jayaratne, who is over 70 years of age, under and in terms of Section 211 of the Companies Act No. 7 of 2007 as a Director of the Company**.

6. To approve the re-appointment of Mr. R. C. Peries, who is over 70 years of age, under and in terms of Section 211 of the Companies Act No. 7 of 2007 as a Director of the Company***.

7. To approve the re-appointment of Mr. Alagarajah Rajaratnam, who is over 70 years of age, under and in terms of Section 211 of the Companies Act No. 7 of 2007 as a Director of the Company****.

8. To approve the re-appointment of Mr. H. D. S. Amarasuriya, who has attained 70 years of age, under and in terms of Section 211 of the Companies Act No. 7 of 2007 as a Director of the Company*****.

9. To authorise the Directors to determine and make donations.

10. To re-appoint KPMG, Chartered Accountants, as Auditors to the Company and authorise the Directors to determine their remuneration.

By Order of the Board

Ms. C. R. RanasingheDirector/Company Secretary

Colombo30 May 2014


Note:

* A Notice dated 19 May 2014 has been received by the Company from a shareholder of the Company giving notice of intention to move the undernoted resolution, with regard to the approval of the

re-appointment of Mr. W. T. Ellawala as a Director of the Company under and in terms of Section 211 of the Companies Act No. 7 of 2007:

“That Mr. William Tissa Ellawala who is over 70 years of age be and is hereby re-appointed a Director of the Company and it is further specially declared that the age limit of 70 years referred to in Section 210 of the Companies Act No. 7 of 2007 shall not apply to the said Mr. William Tissa Ellawala.”

** A Notice dated 19 May 2014 has been received by the Company from a shareholder of the Company giving notice of intention to move the undernoted resolution, with regard to the approval of the

re-appointment of Deshabandu A. M. de S. Jayaratne as a Director of the Company under and in terms of Section 211 of the Companies Act No. 7 of 2007:

“That Deshabandu Ajit Mahendra de Silva Jayaratne who is over 70 years of age be and is hereby re-appointed a Director of the Company and it is further specially declared that the age limit of 70

years referred to in Section 210 of the Companies Act No. 7 of 2007 shall not apply to the said Deshabandu Ajit Mahendra de Silva Jayaratne.”

*** A Notice dated 19 May 2014 has been received by the Company from a shareholder of the Company giving notice of intention to move the undernoted resolution, with regard to the approval of the

re-appointment of Mr. R. C. Peries as a Director of the Company under and in terms of Section 211 of the Companies Act No. 7 of 2007:

“That Ranjit Crisantha Peries who is over 70 years of age be and is hereby re-appointed a Director of the Company and it is further specially declared that the age limit of 70 years referred to in Section 210 of the Companies Act No. 7 of 2007 shall not apply to the said Mr. Ranjit Crisantha Peries.”

**** A Notice dated 19 May 2014 has been received by the Company from a shareholder of the Company giving notice of intention to move the undernoted resolution, with regard to the approval of the re-appointment of Mr. Alagarajah Rajaratnam as a Director of the Company under and in terms of Section 211 of the Companies Act No. 7 of 2007:

“That Mr. Alagarajah Rajaratnam who is over 70 years of age be and is hereby re-appointed a Director of the Company and it is further specially declared that the age limit of 70 years referred to in Section 210 of the Companies Act No. 7 of 2007 shall not apply to the said Mr. Alagarajah Rajaratnam.”

***** A Notice dated 19 May 2014 has been received by the Company from a shareholder of the Company giving notice of intention to move the undernoted resolution, with regard to the approval of the

re-appointment of Mr. H. D. S. Amarasuriya as a Director of the Company under and in terms of Section 211 of the Companies Act No. 7 of 2007:

“That Mr. Hemaka Devapriya Senarath Amarasuriya who has attained 70 years of age be and is hereby re-appointed a Director of the Company and it is further specially declared that the age limit of 70 years referred to in Section 210 of the Companies Act No. 7 of 2007 shall not apply to the said Mr. Hemaka Devapriya Senarath Amarasuriya.”

(i) A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a Proxy to

attend and vote on his behalf.

(ii) A Proxy need not be a member of the Company.

(iii) A Form of Proxy is enclosed for this purpose.

(iv) The instrument appointing the Proxy must be deposited at the Registered Office of the Company, No. 36, D. R. Wijewardena Mawatha, Colombo 10 before 2.30 p.m. on 25 June 2014.

Notice of Meeting (Contd.)


Notes


I/We…..……………………………………...………………………………………………….…….…….…….......................................……of……………...………………………………………………....…….................................................…......…being a member/members of C.W. Mackie PLC hereby appoint……………………………………………………………………………….........................................…of.......................................………………………………………......................................................……………….or failing him/her

William Tissa Ellawala or failing himCamani Renuka Ranasinghe or failing herAjit Mahendra de Silva Jayaratne or failing himRanjit Crisantha Peries or failing him Anushman Rajaratnam or failing himSri Dhaman Rajendram Arudpragasam or failing himThirugnanasambandar Senthilverl or failing him Hemaka Devapriya Senarath Amarasuriya or failing himKarawa Thanthrige Aruna Mangala Perera or failing him Alagarajah Rajaratnam

as my/our Proxy to represent me/us and speak and vote on my/our behalf as indicated below at the Ninety Second Annual GeneralMeeting of the Company to be held on Friday, 27 June 2014 and at any adjournment thereof and at every poll which may be taken in consequence thereof :

1. To receive and consider the Annual Report of the Board of Directors and Financial Statements for the year ended 31 March 2014 with the Report of the Auditors thereon. 2. To declare a Dividend as recommended by the Directors.

3. To re-elect Mr. S. D. R. Arudpragasam, who retires by rotation in terms of Article 89 of the Articles of Association, as a Director of the Company. 4. To approve the re-appointment of Mr. W. T. Ellawala, who is over 70 years of age, under and in terms of Section 211 of the Companies Act No. 7 of 2007 as a Director of the Company. 5. To approve the re-appointment of Deshabandu A. M. de S. Jayaratne, who is over 70 years of age, under and in terms of Section 211 of the Companies Act No. 7 of 2007 as a Director of the Company.

6. To approve the re-appointment of Mr. R. C. Peries, who is over 70 years of age, under and in terms of Section 211 of the Companies Act No. 7 of 2007 as a Director of the Company.

7. To approve the re-appointment of Mr. Alagarajah Rajaratnam, who is over 70 years of age, under and in terms of Section 211 of the Companies Act No. 7 of 2007 as a Director of the Company.

8. To approve the re-appointment of Mr. H. D. S. Amarasuriya, who has attained 70 years of age, under and in terms of Section 211 of the Companies Act No. 7 of 2007 as a Director of the Company.

9. To authorise the Directors to determine and make donations. 10. To re-appoint KPMG, Chartered Accountants, as Auditors to the Company and authorise the Directors to determine their remuneration.

Signed this ……………….day of ………………………2014.

…………………………………...Signature of Member/s

NOTE:(1) The Proxyholder may vote as he thinks fit on any other resolution, of which due notice has been given, brought before the

Meeting.(2) A Proxyholder need not be a member of the Company.(3) Instructions for completion of the Proxy are contained overleaf.

Form of Proxy

AgainstFor


Form of Proxy (Contd.)

INSTRUCTIONS FOR COMPLETION OF PROXY

1. Please perfect the Form of Proxy overleaf by signing in the space provided and filling in legibly your full name, address and other required details.

2. If you wish to appoint a person other than the Directors named overleaf as your Proxy,

please insert legibly the relevant details in the space provided overleaf and initial against this entry.

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

4. If the member is a company or body corporate, the Form of Proxy should be executed under its common seal in accordance with its Articles of Association or Constitution.

5. Please indicate with an `X’ in the space provided how your Proxy is to vote on each resolution. If there is any doubt as to how the vote is to be exercised by the Proxyholder, by reason of the manner in which the Form of Proxy has been completed, the Proxyholder will vote as he thinks fit.

6. The completed Form of Proxy should be deposited at the Registered Office of the Company at No.36, D. R. Wijewardena Mawatha, Colombo 10 not later than 2.30 p.m. on 25 June 2014 being 48 hours before the time appointed for the holding of the Meeting.

c. w. mackie plc / annual report 2013-14...c. w. mackie plc / annual report 2013-14 5 the business...

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