CW Mackie 2017-18

Annual Report 2017/18
Leverage
Powering progress with people and technology
C. W. MACKIE PLC
Table of
Content
2-8 12-27
Our, Vision, Mission & Goals 2 Chairman/Chief Executive Officer’s Review 12
Group Structure and Principal Activities 3 Board of Directors 20
About C.W. Mackie PLC 4 Group Management 22
Historical Note 6 Our Strong Brands 24
Key Milestones 7 Award 27
Financial Highlights 8
30-50 54-75
Management Discussion and Analysis 30 Annual Report of the Board of Directors 54
FMCG 34 Statement of Directors’ Responsibility 58
Manufacturing 38 Corporate Governance 59
Marine Paints 42 Sustainability Report 62
Export Trading 44 Human Capital 65
Sugar Trading 46 Risk Management 69
Refrigeration and Air-Conditioning 48 Report of the Remuneration Committee 71
Industrial Products 50 Report of the Related Party Transactions 72
Report of the Audit Committee 73
77-88 137-Inner back cover

Independent Auditors’ Report 77 Investor Information 137
Statement of Profit or Loss and Other Notice of Meeting 139
Comprehensive Income 82 Form of Proxy 143
Statement of Financial Position 83
Statement of Changes in Equity 84 Corporate Information Inner Back Cover
Statement of Cash Flow 86
Notes to the Financial Statements 88
Why this
Concept
This report’s theme is centred around
C.W. Mackie PLC’s staff who are the
foundation and backbone of the Company
and whose contributions behind-the-scenes
continue to grow in magnitude.
- Copyline Creative Team -
Leverage
Powering progress with people and technology
A legacy of 118 years of unsurpassed excellence and still going strong. Our loyal
workforce who have worked tirelessly to make us one of Sri Lanka’s pioneering
trading house are our pillars of stability. Having believed in us since inception, they
have strategically helped us strengthen our portfolio and expand our operations. As
a forward-thinking company, we have prioritised our investment in and reliance on
state-of-the-art technology. We believe that by leveraging the passion and talent of
our people and harnessing the power of technology, we can continue our trajectory
of expansion for a stronger tomorrow, with the greater good as our focal point.
The primary purpose of C. W. Each company within the CWM
Our Mackie PLC and its subsidiary

companies (CWM Group) is to
Group will accomplish the primary
objective by:
Vision maximise financial returns on

investments in the best interests of
• Achieving financial,
technical and commercial
all its stakeholders whilst fulfilling independence and status as
an obligation to contribute, over the an ongoing, self sustaining,
long term and to the fullest extent viable entity;
• Maintaining market
possible, to greater efficiency and
competitiveness, both
growth of the total economy of the locally and internationally, by
To be recognised as one of the
country. operating in a sound business
top ten trading houses in Sri
manner, producing and selling
Lanka quality products and services
at the lowest possible cost;
• Maintaining financial, technical
and commercial competence
and optimising operating
efficiencies;
• Making the most effective use
Our of manpower for maximum
Mission
productivity;
• Developing and retaining
manpower with appropriate
talent and skills; and
• Business expansion and
diversification involving the
development of profitable
value added products and
services for export, import
substitution and local
consumption by optimizing the
use of existing and potential
strengths and resources
available to the CWM Group.
Our
Goals
2 C. W. MACKIE PLC - Annual Report 2017/18

Group Structure and
Principal Activities
PARENT COMPANY
C. W. MACKIE PLC
Stated Capital: Rs.507,047,487
Number of Shares Issued: 35,988,556
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;
Import and sale of refrigeration and air-conditioning components; Import, sale/distribution
of marine paints and protective coatings; Import, manufacturing and distribution of branded
FMCG products, bottling of drinking water under “Scan” brand for domestic distribution.
SUBSIDIARIES
CEYMAC RUBBER CEYTRA (PRIVATE) KELANI VALLEY SUNQUICK LANKA
COMPANY LIMITED LIMITED CANNERIES LIMITED PROPERTIES
(PRIVATE) LIMITED
Stated Capital: Stated Capital: Stated Capital: Stated Capital:
Rs.36,450,000 Rs.30,000,000 Rs.5,709,043 Rs.601,960,000
Number of Shares Issued: Number of Shares Issued: Number of Shares Issued: Number of Shares Issued:
3,189,375 3,000,000 34,398,455 6,019,610
Group Interest: 98.72% Group Interest: 62.82% Group Interest: 88.34% Group Interest: 51%
Manufacture, export and Manufacture and export of Manufacture, sale and Owns land and buildings
sale locally of technically moulded rubber products. export of a wide range of the Sunquick plant in
specified rubber (TSR) and of processed tropical Horana.
manufacture and export of fruits and vegetables and
plantation sole crepe rubber beverage products under
and specialised industrial “KVC” brand.
sole crepe rubber.
ASSOCIATE
SUNQUICK LANKA
(PRIVATE) LIMITED
Stated Capital:
Rs. 628,244,898
Number of shares issued:
6,282,449
Group Interest: 49%
Bottling of “Sunquick” range

of fruit squashes.
C. W. MACKIE PLC - Annual Report 2017/18 3

About
C.W. Mackie PLC
FMCG MANUFACTURING MARINE PAINTS EXPORT TRADING

Engages in manufacturing, Engages in manufacture, Engages in import, sale/ Engages is export of all
importing, marketing and sale and export of technically distribution of marine paints grades of natural rubber,
distribution of branded FMCG specified rubber (TSR), sole and protective coatings and ribbed smoked sheet (RSS)
products specialising in the crepe and moulded rubber providing technical services in rubber, sole crepe, technically
food and beverage category products marine paint related specified rubber (TSR),
projects desiccated coconut, other
coconut products and spices
C.W. Mackie PLC

SUGAR TRADING REFRIGERATION AND INDUSTRIAL PRODUCTS
Engages in import and AIR-CONDITIONING Engages in import, sale/
wholesale distribution of Engages in import, sale/ distribution and servicing of
sugar to industrial users distribution and services world renowned brands of
of world renowned brands welding, light engineering,
of refrigeration and air- power generation and
conditioning equipment, workshop machinery
components, accessories
and refrigerant gases

Historical
Note
The business was founded in 1900 by (CTC) divested their entire shareholding natural rubber and desiccated coconut;
late Mr. C. W. Mackie, a Scotsman, who of 56.56% of the stated capital of the rubber-based products for export and
carried on the enterprise as Merchants Company and relinquished control sale locally; import, manufacture and
and Commission Agents under the of the affairs of the C.W. Mackie PLC distribution of branded FMCG products;
name of “C. W. Mackie & Company.” Group of Companies. The AU/CTC manufacture for sale and distribution
shares were acquired by Lankem Ceylon locally and export of branded food
In 1922, the business was incorporated PLC and a connected party. Lankem and beverage products; import and
as a private limited company. In 1946, Ceylon PLC (Lankem) was established distribution of sugar and import and
a consortium of Ceylonese and Indian in 1964 in Sri Lanka as a private limited re-sale of branded marine paints and
Businessmen bought over the shares liability company and its shares have protective coatings, welding equipment
of the Company and converted it to a been listed on the trading floor of the and consumables, light engineering
public company. Colombo Stock Exchange since 1970. products, refrigeration and air-
The Lankem Group of Companies has conditioning components.
The year 1971 marked a significant a diversified business portfolio which
change when Ceylon Trading Company consist of manufacturing (paints, agro/
Limited, the Sri Lanka based subsidiary industrial chemicals and bituminous
of Aarhus United A/S of Denmark, products), distribution of consumer
bought a part of the Indian shareholding products, rubber and tea plantation
“ 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 and later converted it to a
public company.
and took over the management of management and owning and operating
the Company. In late 1994, shares resort hotels. Lankem is a subsidiary of
equivalent to 25% of the total shares in the fully diversified conglomerate, The
the Company were issued to the public Colombo Fort Land & Building PLC.
so as to broadbase ownership and
give the Company greater access to This acquisition by Lankem greatly
the capital market of Sri Lanka to raise strengthens the overall management
capital funds for its future diversification capabilities of C. W. Mackie PLC
and expansion. The Company’s shares Group in the conduct of the affairs
are quoted on the Colombo Stock and enhances business opportunities,
Exchange. availing of synergies.
January 2010 marked another significant The C. W. Mackie PLC Group presently
change when the principal shareholders, consists of C. W. Mackie PLC and four
Aarhus United A/S, Denmark (AU) subsidiary companies engaged in a
and Ceylon Trading Company Limited diversity of activities such as export of

Key
Milestones
1900 Founded by late Mr. C.W. Mackie, a Scotsman.

Business as merchants and commission agents
1922
Incorporated as a private limited company.
carried on under the name of “C. W. Mackie &

Company”.
1946 Consortium of Ceylonese and Indian

Businessman buys over shares of the Company
1971
Ceylon Trading Company Limited, local
subsidiary of Aarhus United A/S, Denmark
and converts it to a public company. acquire part of Indian shareholding and takes
over the Management.
1994 Shares equivalent to 25% of the total shares

issued to the public. Shares are quoted on the
2010Aarhus United A/S (AU) and Ceylon Trading
Company Limited (CTC) divest their entire
Colombo Stock Exchange. shareholding of 56.56% of the stated capital
and relinquish control of C.W. Mackie PLC
Group of Companies.
AU/CTC shares acquired by Lankem Ceylon

PLC and a connected party.

Financial
Highlights
Rs. 4.9 Bn Rs. 10 Bn

Group Revenue
Total Assets
Rs. 2.2 Bn Rs. 219.8 Mn

Group Profit After Tax
Shareholders’ Funds
Group Profit Before

Tax Group Revenue
Rs. Mn % Rs. Bn
500 6 10
5
400 8
4
300 6
3
200 4
2
100 1 2
0 0 0
2013/14
2014/15
2015/16
2016/17
2017/18
2013/14
2014/15
2015/16
2016/17
2017/18
Profit Before Tax

Profit Before Tax (%)
Net Assets Per Share Assets Turnover

Rs. Times
70 2.34
2.32
60 2.30
2.28
50
2.26
40 2.24
2.22
30 2.20
2.18
20
2.16
10 2.14
2013/14
2014/15
2015/16
2016/17
2017/18
2013/14
2014/15
2015/16
2016/17
2017/18

For the year ended 31 March 2018 2017 Change
Operating Highlights and Ratios

Group revenue Rs. 000’s 9,973,563 8,837,350 13%
Group gross profit Rs. 000’s 1,164,578 1,282,890 -9%
Group profit before tax Rs. 000’s 306,501 349,068 -12%
Group profit after tax Rs. 000’s 219,816 237,131 -7%
Profit attributed to parent company Rs. 000’s 218,564 236,477 -8%
Group earnings per share Rs. 6.07 6.57 -8%
Dividend per share* Rs. 3.50 3.50 0%
Interest cover ratio No. of times 3.98 5.87 -32%
Net return on capital employed % 16.09 18.54 -13%
Net return on shareholders’ funds % 9.03 11.56 -22%
Earnings per share Rs. 6.07 6.57 -8%
Group foreign exchange earnings Rs. 000’s 1,797,775 1,605,353 12%
Contribution to government revenue Rs. 000’s 2,089,000 1,811,400 15%
Group value added Rs. 000’s 2,978,600 2,672,500 12%
Value added per employee Rs. 000’s 5,377 4,616 17%
Balance Sheet Highlights and Ratios

Total assets Rs. 000’s 4,880,445 4,140,036 22%
Total shareholders’ funds Rs. 000’s 2,211,763 2,138,716 3%
Total debt Rs. 000’s 1,394,335 1,011,969 38%
Current ratio 1: 1.57 1.76 -13%
Net asset value per share Rs. 61.46 59.43 3%
Debt/equity % 63% 47% 33%
Debt/total assets % 29% 24% 13%
Group capital expenditure Rs. 000’s 121,188 262,382 -61%
Market / Shareholder Information

Market value per share
- at year end Rs. 48.60 54.70
- during the year - Highest Rs. 58.00 64.00
- during the year - Lowest Rs. 42.30 47.00
Dividend payout ratio % 58% 53%
Dividend yield % 7% 6%
Price earnings ratio (PER) No. of times 8 8.31
General
Number of employees in Group 554 582
Value in Rs. at official exchange rate United States Dollar 155.60 152.10
Sterling Pound 219.53 192.46
Euro 191.67 163.55
* Cash dividends paid during the year

OPTIMISE
We live to enrich your lifestyle with
innovative and exceptional products that
offer greater satisfaction in everyday use.
Our talented workforce has been trained to
use state-of-the-art technology for greater
efficiency and resource optimisation, from
start to finish.
“It’s a pleasure working at C.W. Mackie
where I have accumulated immense
experience as a food handler, with
expertise in the area of food safety.”
Sudath Sripal Premakumara
C.W. Mackie PLC
(Scan Bottled Drinking Water Plant – Horana)
Chairman/Chief Executive
Officer’s Review
On behalf of the Board of Directors I am pleased to welcome Group Total Comprehensive Income
you to the Ninety Sixth Annual General Meeting of the The total comprehensive income of the Group after adjusting
Company and to present the Annual Report and the Audited for taxation and non-controlling interests for the financial year
Financial Statements of your Company and its subsidiary ended 31 March 2018 was Rs.199.0 million and is shown in the
companies for the financial year ended 31 March 2018. following analysis:
Financial Results Group

Group Gross Profit Year ended Year ended 31
An analysis of the Group’s gross profit is given hereunder: 31 March 2018 March 2017
Rs. Million Rs. Million
Group Group profit from
Year ended Year ended operating activities 423.9 416.4
31 March 2018 31 March 2017 Less : Net financing (96.7) (67.4)
Rs. Million Rs. Million costs
C. W. Mackie PLC 1,051.6 1,165.5 Share of Joint
Ceymac Rubber Venture’s Loss (20.7) -
Company Limited 54.5 62.1 Group profit before
Ceytra (Private) Limited 17.0 16.5 taxation 306.5 349.0
Kelani Valley Canneries Tax expense (86.7) (111.9)
Limited 37.4 39.3 Group profit after taxation 219.8 237.1
Sunquick Lanka Other comprehensive
Properties (Private) income (20.1) 10.1
Limited 1.8 -
Group total
1,164.2 1,283.4 comprehensive income 199.7 247.2
Non-controlling interests (0.7) (0.9)
Group Results From Operating Activities Equity holders of the
The Group’s result from operating activities for the period Parent Company 199.0 246.3
under review was Rs.423.9 million.
Overall Performance
Group Profit Before Tax
C. W. MACKIE PLC (Parent Company)
The Group’s ordinary activities resulted in a net profit before tax
of Rs.306.5 million for the financial year ended 31 March 2018 The Company’s net revenue in the financial year ended 31
as given hereunder: March 2018 was Rs.9,272.3 million. The profit from operating
activities was Rs.450.2 million and the profit for the year, after
Group charging income tax of Rs.84.7 million, was Rs.236.5 million.
Year ended Year ended
C.W. MACKIE PLC (Group)
31 March 2018 31 March 2017
Rs. Million Rs. Million The Group’s consolidated net revenue for the financial year
ended 31 March 2018 was Rs.9,973.6 million as compared
Profit from operating
with Rs.8,837.4 million in 2017. The major contribution towards
activities 423.9 416.4
the consolidated net revenue was from FMCG sales and
Less : Net financing cost (96.7) (67.4) distribution activities of Rs.6,855.9 million an increase of 13.3%
Share of joint as compared with the previous year.
venture’s loss (20.7) -
Profit before taxation 306.5 349.0 The results from operating activities was Rs.423.9 million
and the net profit for the period, after charging income tax of
Rs.86.7 million, was Rs.219.8 million.

“
The consolidated Group comprehensive income for the year,
after charging income tax of Rs.86.7 million, was Rs.199.7
million as compared with Rs.247.2 million in 2017. The internal trading activities
The profit for the year was less than the previous year because of the Group contributed 94%
of subsidiary company losses that included a substantial
provision for impairment in Kelani Valley Canneries Limited that
of the profit for the period with
eroded overall profitability. the FMCG segment, Hempel
Although the global economy experienced a cyclical recovery brand marine paints and
during 2017, with substantial improvements in investment,
manufacturing and trading activities, economic growth in Danfoss brand refrigeration
Sri Lanka did not reflect similar trends in global growth. The
country’s GDP growth was 3.1% in 2017, which is the lowest in and air-conditioning “
components business
a decade. The low growth was largely due to extreme weather
that prevailed during the year and adversely impacted on the
agricultural sector.
contributing the most.
Adverse weather conditions depleted plantation and
food crops in many areas in the country. This resulted in
Government allowing imports of rice and other essential foods The internal trading activities of the Group is the fastest
to meet shortages. This added considerable pressure to the growing segment of the Group business and has the greatest
external account and raised food prices, which increased potential for expansion.
inflation to a monthly average of approximately 7.7%
throughout the year. During the year under review an entirely new range of bakery
products in the FMCG segment and several new products
VAT increases, high interest rates and exchange rate in the refrigeration and air-conditioning category, including
depreciation significantly raised import costs and retail prices compressors and copper tubes were introduced.
of locally manufactured and imported goods during the year.
In the background of the rapid depreciation of the Sri Lanka
Although the depreciation of the rupee favoured exports, the Rupee against the US Dollar and other major currencies and
adverse weather that prevailed for most of the year saw a rising import duties on consumer products, the strategy is to
significant drop in the Company’s exports of natural rubber concentrate on developing new food and beverage products
and desiccated coconut due to reduced output of these out of locally produced raw materials. This policy has been
commodities. consistently pursued in developing and maintaining a product
range at Kelani Valley Canneries Limited (KVC) manufactured
These negative market factors escalated operating costs of the wholly out of local raw materials.
Group and reduced profit margins, resulting in a lower bottom
line growth. Although most operating units produced profits, Fast Moving Consumer Goods (FMCG)
some sectors were unable to perform as well as forecast due The manufacture, sale and distribution of FMCG is the most
to the market conditions that prevailed during the year. profitable segment of the internal trading activities of the
Group. Net turnover was Rs.6.8 billion as compared with Rs.6.0
Internal Trading billion in 2017 and net profit Rs.108.2 million as compared
The internal trading activities of the Group contributed 94% with Rs.185.5 million in 2017. The highest contribution to sales
of the profit for the period with the FMCG segment, Hempel growth was from the Sunquick brand of fruit squashes of
brand marine paints and Danfoss brand refrigeration and air- Rs.1.6 billion. Sunquick is the brand leader with a 70% share of
conditioning components business contributing the most. the fruit squash and cordial market.

Chairman/Chief Executive Officer’s Review (Contd.)
The joint venture with Co-Ro A/S, Denmark for the purpose of Rs.23/- per Kg. to Rs.31/- per Kg. thereby destabilising the
manufacturing, processing and marketing Sunquick products market and wiping out distributor margins to unprofitable
in the form of concentrate and Ready-to-Drink (RTD) products levels.
was operationalised in June 2017. The plant to manufacture
RTD products is under construction and the RTD products The net profit on sugar trading was Rs.14.9 million as
manufactured in Sri Lanka is expected to be launched during compared with Rs.33.4 million in 2017 and reflects the difficult
Q1 of 2019. Meanwhile, the existing Sunquick concentrate market conditions that prevailed throughout the year.
production plant has been expanded and the additional
capacity will be utilised to export Sunquick concentrate Industrial Products
products to regional markets by Q3 of 2018. The activities of the Industrial Products Division has been
scaled down and is now confined only to the import and
In terms of the joint venture agreement, Scan Products Division sale of welding products, light engineering items and energy
of the Company will be the sole distributor of the full range of generating equipment (generators). Machinery items imported
Sunquick products in the Sri Lanka market. As the distributor, at high cost, and sold at low margins have been phased out.
the Company will receive a margin on sales. The target market has also been rationalised and there is
greater focus now on sales to end users in the construction,
In order to carry out day-to-day operational and administrative dairy and sugar industries.
functions, the Company has agreed to provide services to
the joint venture company in the areas of human resources, The traditional market, particularly for welding products,
general factory maintenance, procurement, corporate affairs continue to be the small hardware merchants, where margins
and marketing and brand management at a service fee in are low and collection of sales proceeds slow and often
terms of the provisions of a Service Level Agreement entered difficult. This has resulted in the Company having to recruit
into. to its permanent cadre a fulltime recovery officer and this has
significantly improved the collection of receivables from the
The capacity to manufacture bottled drinking water has been trade. Low margins on sales and high financing costs due to
expanded by the addition of high speed filling and labeling delays in collecting sales proceeds impacted adversely on the
equipment and this has significantly increased output. business and resulted in a net loss of Rs.5.1 million.
Production of Scan brand bottled drinking water for the year
was 10.8 million litres and sales Rs.229.9 million. Action to A series of measures have been introduced to manage
introduce Scan brand bottled water in glass bottles has been stock holding costs, improve debt collection and diversify
initiated and Scan bottled water in 500 ml glass bottles has the customer base and these initiatives are expected restore
been released to selected outlets in the food service and profitability of the industrial products activity.
modern trade (super markets).
Sales for the year was Rs.258.5 million and reflected a drop of
Sugar 12.5% as compared to 2016-2017.
The Company traded 26,200 MT of sugar and achieved a
turnover of Rs.2.9 billion. Sales were largely to industrial users Refrigeration and Air-Conditioning Components
in the confectionary, bakery, fruit juice, dairy and carbonated (R&AC)
drinks category. The R&AC business showed considerable growth in the
year 2017-2018. Sales for the period was Rs.242.6 million as
The Company does not operate in the wholesale trade compared with Rs.145.4 million in 2016-2017 and net profit
because of high credit risk associated with open market increased to Rs.31.0 million as compared with Rs.20.8 million
operations. in 2016-2017.
The Company was able to grow sales by 11.5% in a trading There was a significant improvement in sales of the Danfoss
environment of declining global sugar prices. Frequent range of R&AC products and refrigerant gas, and the
Government intervention in raising the CESS on imports of introduction of compressors and copper tubes to the product
sugar to countervail lower global sugar prices eroded margins range during the year added considerable value to sales
and capacity to maintain profits. During the year under review growth.
the CESS on sugar was increased from Rs.18/- per Kg. to

Condensers imported in knocked-down condition are now In the case of DC, demand for coconuts for domestic
being assembled at the Company’s repair and service facility consumption is making fewer nuts available to the millers of
established to provide after sales services and repair and DC resulting in lower quantities for export.
maintenance of the current range of equipment marketed by
the Company. The Company’s export trading business has been down sized
to be compatible with the national output of NR and DC and
Several more initiatives to expand the R&AC business are the global demand for these commodities. In the past the
being pursued and the prospects of R&AC becoming a major export trading activities was the core business of the Company.
profit centre in the future is most encouraging. This is no longer the position now. In the year under review, the
export trading activities produced a net profit of Rs.26.2 million.
Marine Paints
The marine paints and protective coating business produced Natural Rubber (NR)
another year of impressive sales and profits. Rubber production grew by 5.1% from 79.1 million Kgs.
in 2016 to 83.1 million Kgs. in 2017. This growth in rubber
Revenue was Rs.376.4 million on sales of 269,200 litres and production was achieved amidst unfavourable weather
net profit for the year Rs.78.5 million as compared with Rs.81.2 conditions which resulted in severe floods in traditional rubber
million in 2016-2017. growing areas. A major reason for the low output of NR in
recent years is the acquisition of mature high yielding rubber
The impressive sales and profit achievement is due to strong lands by the Government of Sri Lanka for urban development
sales growth in the ship building and ship repair segment and and industrialisation and the smallholder sector abandoning
supplies to the construction industry where the demand for tapping due to recurring un-remunerative prices.
protective coatings is highly robust.
The total exports of all grades of rubber in 2017 was 17.2
As part of a diversification strategy Hempel brand marine million Kgs. The balance output of 66.0 million Kgs. was
paints and protective coatings are supplied to the consumed by local rubber products manufacturers. It is
telecommunication services sector, hydro-electric power reported that local rubber products manufacturers imported
plants, petroleum storage tanks, highway construction projects 145.0 million Kgs. for the manufacture of valued added
and for refurbishing irrigation infrastructure. This diversification products mostly due to lower prices quoted for imported raw
strategy has helped grow sales in a highly competitive materials. Sri Lanka’s prices for thick pale crepe (TPC), ribbed
marine products market and future growth will largely depend smoked sheet (RSS) rubber grades and technically specified
on diversifying into other segments, where there is ample rubber (TSR) was higher than international prices. This resulted
scope for expansion and by pursuing ship building and in local manufacturers of RSS and TSR operating factories
ship repair projects outside Sri Lanka in collaboration with under capacity.
Hempel Associates. In the year under review, the Hempel
agency in Sri Lanka secured several orders to supply marine The Company’s exports and local sales to domestic rubber
paints to customers outside Sri Lanka introduced by Hempel products manufacturers was 2,999 million Kgs. and realised a
Associates. gross trading profit of Rs.56.1 million.
Export Trading Global prices of NR improved towards the end of 2017 and
The Company’s commodity trading business is now confined the domestic market also experienced a similar trend in prices.
to trading natural rubber (NR) and desiccated coconut (DC). This improved local prices of latex crepe and RSS No.1. The
Trading these commodities is currently severely constrained by average price of latex crepe, the principal grade traded by the
a sharp decline in the availability of NR and DC. Also the global Company, was Rs.327.28 per Kg. This upward trend in prices
demand for these commodities has been weak as international is expected to continue well into 2018.
prices have been much lower than the Sri Lanka prices. In
the recent years the trend has been that 75% of NR output is Desiccated Coconut (DC)
being consumed by local rubber based product manufacturers The total output of coconuts in 2017 is estimated at 2.45 billion
for export and sale locally. The exportable surplus of NR has nuts. It is also estimated that the domestic consumption of
correspondingly diminished. coconuts is about 1.9 billion nuts thus leaving only about 500

“
million nuts for processing into other coconut products. The
amount of nuts available for manufacturing DC is estimated to
be about 235 million nuts. The industrial relations
During the year under review coconut output is estimated to environment in all companies
have dropped by about 18.7% due to poor weather conditions
(drought) that prevailed in the coconut growing areas. This
within the Group was
resulted in the average farm-gate price of a coconut going
upto Rs.62/- per nut and sizeable quantities of other vegetable
stable and employees at all
oils have been imported to supplement availability of coconut levels co-operated with the
oil.
Management in maintaining a “
As a result of the sharp drop in the output of coconuts and
even a sharper increase in the price of coconuts the average sound and stable relationship
in all companies in the Group.
FOB price of DC in 2016-2017 was Rs.460/- per Kg (US$2,960
per MT) and at this level US$ 600-800 higher than other origins.
This significant disparity in price trends adversely impacted on

Sri Lanka’s capacity to generate more DC exports in 2017- The cumulative gross trading profit from the sales of TSR
2018 and total exports of DC was 29,400 MT. and Sole Crepe was insufficient to absorb management and
finance costs and resulted in a net loss for the year of Rs.18.1
The Company exported 1700 MT of DC during the year and million. A sum of Rs.2.4 million of Economic Service Charge
realised a gross trading profit of Rs.21.9 million. (ESC) in respect of prior years could not be claimed because
of the Company’s recurring losses and was settled in 2017.
In the background of low availability of coconuts for processing This increased the cumulative net loss for the year to Rs.20.8
coconut products, the Government of Sri Lanka allowed the million.
import of coconut kernel to help manufacturers of products like
coconut cream and coconut milk, but the sustainability of such Sourcing raw material at competitive prices to manufacture
an initiative would largely depend on the quality of the imported TSR has been a major constraint to secure local and export
raw material. business.
Subsidiary Companies A group of TSR manufacturers have collectively made

Ceymac Rubber Company Limited representations to the Ministry of Plantation Industries to
Low global prices of technically specified rubber (TSR) allow manufacturers to import raw materials duty free from
and high local prices for procuring raw material for TSR other origins on the grounds that it is possible to import raw
manufacture impacted adversely on the Company’s capacity materials from other origins at prices lower than in Sri Lanka.
to secure business for its TSR. This would enable manufacturers to produce TSR at a lower
cost and improve their competitive position.
The average price of TSR of other origins was about US$500-
600 per MT lower than TSR of Sri Lanka origin and because of The proposal is under consideration and in the event the
this significant disparity in price, it was difficult to secure export import of raw materials from other origins is allowed this would
orders and TSR sales during the year was almost entirely to improve the competitiveness of locally manufactured TSR.
local manufacturers of solid tyres.
The total sales of TSR for the year was 1,517 MT and produced Ceytra (Private) Limited
a gross trading profit of Rs.14.9 million. The Company manufactures moulded rubber products for
export and sale locally. Sales for the year was 261.0 MT and
The Company also manufactures and exports sole crepe the net profit Rs.8.0 million.
rubber (Sole Crepe). The exports of Sole Crepe for the year
was 340 MT and realised a gross trading profit of Rs.11.7 The Company’s capacity to manufacture moulded rubber
million. products is limited and the prospects to expand its export

trade is constrained by pricing factors. The Company is, Finance
therefore, concentrating on growing its business by penetrating Bank borrowings is the principal source of funds for financing
the local market where there is considerable demand for the Group’s working capital requirements. The Group also
locally made moulded rubber products in the household and utilises internally generated funds surplus to requirements
automobile parts business. Since 2015, a major distributor and for working capital and to that extent have been drawing less
retailer of moulded rubber products in Sri Lanka is outsourcing funds from banks.
a part of its production needs to the Company and this
business has added considerable value to its operations. The Group does not carry any major long-term debt and capital
expenditure is financed out of the facilities available from the
At present the installed capacity to manufacture moulded banks. The Parent Company incurred substantial capital costs
rubber products is limited. Any expansion of manufacturing in financing the joint venture with Co-Ro A/S, Denmark and the
capacity would depend on the demand for moulded rubber cost of implementing the SAP S/4 HANA computer system.
products.
The financing cost for the year, net of foreign exchange gains,
Kelani Valley Canneries (Private) Limited (KVC) was Rs.96.8 million. During the year on an average the Sri
The Company manufactures a wide range of food and Lanka Rupee depreciated against the US Dollar by 2.5% and
beverage products which is mostly distributed in the local against the Euro by 18.18%. This resulted in foreign exchange
market under the KVC brand. gains on exports but raised costs of imports which was
countervailed to some extent by using export proceeds held in
However, distributing its products in the local market is a resident foreign currency (RFC) account to pay for imports.
constrained due to the high level of competition that prevails
from other F&B brands. The interest rate on bank borrowings on an average was 12.3%
per annum and the interest rates offered by the consortium
In the year under review, the product range has been of banks did not reflect any significant differentials and was
rationalised in line with market needs and potential to yield mostly uniform and consistent.
profit. Also, the Company is undertaking custom packing
for proprietary customers under a fee-based scheme where The Group’s profits are liable to a tax of Rs.86.7 million.
the customer supplies the raw materials and the Company
manufactures the product for a fee. Both strategies are The Parent Company has no carried forward tax losses, but
expected to boost revenue and generate profits. subsidiary companies, Ceymac Rubber Company Limited has
a carried forward tax loss of Rs.114.7 million, Ceytra (Private)
The Company is also pursuing growth through exports, where Limited a carried forward tax loss of Rs.49.0 million and Kelani
there is considerable potential to expand the business. Small Valley Canneries Limited a carried forward tax loss of Rs.270
orders are being exported regularly to Canada, Australia, million.
Japan, Dubai and Germany and several other potential
markets have been identified. Industrial Relations
The industrial relations environment in all companies within
Measures to enhance productivity, improve recipes in line with the Group was stable and employees at all levels co-operated
market requirements, strengthen sales and distribution by with the Management in maintaining a sound and stable
advertising and promotional support are being implemented relationship in all companies in the Group. Only Ceytra (Private)
in a structured manner and is expected to improve the Limited is unionised with a workforce of 35 workmen.
Company’s overall performance and restore profitability.
The Group’s Human Resources function under a Group
The Company has been making continuous losses for several Human Resources Manager is being conducted efficiently with
years and the net loss for this year was Rs.29.8 million. In much focus on ensuring compliance with the labour regulatory
this background the auditors have recommended a provision frame work and in fostering a sound and stable relationship
for impairment of Rs.22.0 million which has been charged to between Management and staff.
the Parent Company’s Statement of Profit or Loss and Other
Comprehensive Income.

The implementation of Human Resource Information System The US Dollar and other major currencies are likely to
(HRIS) is in progress. HR information relating to employee depreciate further mainly because of the widening trade deficit
information, performance, management, time and attendance due to high oil prices, which will adversely impact on the cost
and leave management and payroll modules are in various of living and consumer purchasing power.
stages of implementation. When the HRIS is fully operational
all employee information will be easily accessible on the The reinstatement of GSP Plus facility has helped grow
system and pre-formatted reports will be available to assist exports, particularly to European Union countries and the
Management to make strategic decisions on employee related growth in exports seen during 2017 is likely to continue and will
matters. help narrow the trade deficit, currently a major burden on the
balance of payments.
A major objective of the Group Human Relations Policy is to
attract, develop and retain a skilled workforce. To achieve Interest rates, which have risen in 2017-2018, may rise above
that well-structured processes are in place to identify critical prevailing levels unless the current fiscal deficit is contained.
employees and retain them in the long-term. Rising oil prices is likely to trigger a rise in inflation but still likely
to remain at single digit level.
Manning levels as at 31 March 2018 is given below:-
Total
Managerial/ Non Manual As at 31 As at 31
Company Executives Executives Operatives March 2018 March 2017
C. W. Mackie PLC 80 191 64 335 357
Ceymac Rubber Company Limited 7 24 86 117 122
Ceytra (Private) Limited 3 5 30 38 38
Kelani Valley Canneries Limited 11 18 35 64 65
Group Total 101 238 215 554 582
Dividend The main driver of the Company’s profitability has been the
internal trading activities, with the FMCG category contributing
The Directors recommend to the shareholders at the Annual
most to profits. It may be difficult to maintain this trend under
General Meeting a first and final dividend of Rs. 3.50 per share
prevailing market conditions.
amounting to Rs. 125.96 million out of the profits for the year
ended 31 March 2018 in accordance with the provisions of the
The joint venture with Co-Ro A/S, Denmark will add new
Companies Act No.7 of 2007.
Ready-to-Drink (RTD) products under the Sunquick brand
which will be introduced to the Sri Lanka market possibly
Outlook
during Q1 of 2019.
The economy is forecast to grow by 4.5% in 2018-2019. The
balance of payments heavily burdened by foreign debt and The outlook for the Company’s commodity trading activities
repayment and debt servicing costs and a large trade deficit is not at all encouraging. The decline in the output of natural
is likely to further deteriorate due to likely lower receipts from rubber (NR) in recent years and the fact that 75% of the
tourism and expatriate remittances, higher levels of import of country’s NR output is consumed by local rubber products
capital and consumer goods and high oil prices. The position manufacturers for local value addition and export, there is
could further worsen depending on foreign fund infusions by now less NR for export. The export of NR, at one time the
way of foreign direct investment and a higher trade deficit as core business of the Company, has diminished due to the
a result of rising oil prices, the largest single component of lack of foreign demand, low output of NR and high prices as
import expenditure. compared with global prices.
To add to this is the prevailing political instability and policy

uncertainties that are creating a very unpredictable and
challenging environment for doing business.

“
therefore, depends on manufacturing moulded products for
The joint venture with Co-Ro the domestic market. The strategy is to expand this segment
by collaborating with other manufacturers that are compelled
A/S, Denmark will add new to outsource due to cost or capacity constraints.
Ready-to-Drink (RTD) products The domestic market is saturated with numerous brands of
food & beverage (F&B) products and price competition is
under the Sunquick brand overwhelming. This is inhibiting expanding sales profitability.
which will be introduced to “ However, there is considerable potential to export F&B
the Sri Lanka market possibly

products manufactured by Kelani Valley Canneries Limited. The
strategy for expansion is by penetrating the export market and
during Q1 of 2019. grow the business given that there are constraints in relying on
the domestic market.
Acknowledgements
The national output of coconuts significantly declined in I acknowledge sincerely and with deep gratitude the guidance,
2017-2018 due to the drought conditions that prevailed in the direction and cooperation I received from my colleagues on the
coconut growing areas. Board that has enabled me to conduct the Company’s affairs
in the best interest of all stakeholders. The expertise and wide
The crop for 2018-2019 is expected to improve because of the experience of the Board, comprising of high caliber business
prevalence of more favourable weather conditions forecast for leaders and professionals, has added considerable value to
2018-2019. the deliberations of the Board and ensures a proper balance of
executive competency and independent judgment.
However, with the increasing domestic consumption of
coconut, there will be less nuts available to the processors and I wish to express my appreciation to our dedicated and diligent
in this background the DC industry, which is almost entirely management team and to the staff at all levels, who have
an export industry, could expand only if the Government of Sri strived hard to produce a reasonably acceptable result under
Lanka allow the import of fresh coconuts for processing DC for very challenging and competitive conditions.
export.
I thank our valued customers, suppliers, agents, distributors,
The demand for TSR depends on local and international prices. bankers, auditors, business partners, advisors, and all other
Local tyre manufacturers find it more economical to import TSR stakeholders for their continuing and willing support over the
rather than source locally manufactured TSR at higher prices. years.
Import of TSR for local value addition is permitted duty free.
The sustained confidence of our shareholders in our capacity
Locally manufactured TSR is more expensive because of to deliver a reasonable return on their investments is as always
the high prices of raw materials. Unless the Government of acknowledged with much appreciation.
Sri Lanka allow local manufacturers to import raw materials
duty free to manufacture TSR, it will be difficult for locally
manufactured TSR to compete with imported TSR.
W. T. Ellawala
TSR manufacturers have made representations to the Chairman/Chief Executive Officer
Government of Sri Lanka to allow the import of raw materials
duty free to manufacture TSR. The proposal is under Colombo
consideration by the Government of Sri Lanka. 24 May 2018
The outlook to increase the export of moulded rubber products

is constrained by international prices for similar products which
are lower than moulded products from Sri Lanka. The future,

Board of
Directors
Mr. W. T. Ellawala Mr. R. C. Peries
Chairman/Chief Executive Officer Non-Executive Director
A Director since 24 November 1995 and Chairman/Chief A Director from 1 April 2010. Having started his career with
Executive Officer from 1 July 2002. An Economics Graduate, Carson Cumberbatch & Co., he then moved to George
he worked for Brooke Bond Ceylon Limited. from 1962 to 1987 Steuarts, one of the premier Agency Houses. He has served
and was a director of that company for 17 years. Commercial as Manager of some of the most prestigious rubber properties
Director, Ceylon Trading Company Limited since 1988 and in the low country and also held senior appointments in the
Managing Director since December 2000. Currently a director industry and served on the Rubber Research Board Advisory
of Maersk Lanka (Private) Limited, the Chairman of The Sri Panel. In 1983 he was appointed the Regional Director of
Lanka Society of Rubber Industry and a past Chairman of the JEDB Hatton Board and in 1988 he was made Director
The Colombo Rubber Traders’ Association and The Sri Lanka General of Kegalle-Avissawella Zone of the JEDB. In 1992,
Shippers’ Council. He is an Honorary Member of The Colombo after the privatisation of the management of plantations, he
Tea Traders’ Association and President & Trustee of the joined George Steuart Plantation Management Services as the
Singhalese Sports Club. Is a former member of the Committee General Manager of low country rubber estates of Kotagala
of the Ceylon Chamber of Commerce and Chairman of its Plantations. He continued to serve in this position even after
Advisory Council. He was a former Advisor to the Ministry of the takeover by Lankem Tea & Rubber Plantations (Pvt.)
Ports & Shipping and served as a Consultant on Sea Transport Limited (LT&RP) in 1995 as Managing Agents for Kotagala
at UN-ESCAP in Bangkok, Thailand. 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 a Director/Consultant of LT & RP, KP and
Ms. C. R. Ranasinghe Agarapatana Plantations Limited He is also a member of the
Rubber Research Board and a member of the Rubber Wages
Company Secretary
Board. He is a member of the Ceylon Institute of Planting.
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 Mr. Anushman Rajaratnam
& Creasy, Attorneys-at-Law & Notaries Public. She is also Non-Executive Director
Director-Corporate Affairs and Company Secretary of Ceylon
Trading Company Limited. 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. On 1 January 2017,
Deshabandu A. M. de S. Jayaratne upon appointment as the Group Managing Director of the
Colombo Fort Land & Building PLC, he relinquished his duties
Non-Executive/Independent Director
as Managing Director of Lankem Ceylon PLC. He has spent
A Director from 23 May 2007. He holds a Degree in Economics several years working overseas as a Consultant for a leading
from the University of Southampton in England and is a accountancy firm. He also serves on the Boards of several
member of the Institute of Chartered Accountants of England subsidiaries of the Lankem Group. He holds a Bachelor of
and Wales and the Institute of Chartered Accountants of Sri Science in Economics from University of Surrey, UK and MBA
Lanka. He is a former Chairman of Forbes & Walker Limited, from Massachusetts Institute of Technology, USA.
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. S. D. R. Arudpragasam Received the life time award of Excellence from the institute
of Chartered Accountants in 2011 and was selected
Non-Executive Director
CIMA Business Icon for 2013 by the Chartered Institute of
A Director from 1 April 2010. He is a Fellow of the Chartered Management Accountants in 2013.
Institute of Management Accountants, London. He serves as
Chairman of several subsidiaries of The Colombo Fort Land Founder President of the Chartered Institute of Marketing
& Building PLC and holds the position of Deputy Chairman of U.K. (Sri Lanka Region). His contribution to marketing and
The Colombo Fort Land & Building PLC and Lankem Ceylon retail in Asia was recognised by the Asia Retail Congress with
PLC. He also functions as the Managing Director of E.B. the Retail Leadership Award and by the Chartered Institute
Creasy & Company PLC, in addition to serving on the Boards of Marketing U.K. as a visionary Business Leader for his
of other Companies within The Colombo Fort Land & Building invaluable contribution to the marketing profession in initiating
Group. revolutionary changes in consumer markets.
Dr. T. Senthilverl Mr. K. T. A. Mangala Perera

Non-Executive Director Executive Director
A Director from 3 May 2010. He counts over four decades A Director from 2 April 2012. He is a graduate from the
of active engagement in manufacturing, trading, land University of Sri Jayawardenepura with a degree in B.Sc.
development, power and energy sectors, industrial turnkey (Hons.), Marketing Management (Special) Degree and a post
projections, construction and management. He currently graduate diploma in Business & Financial Administration from
serves on the Boards of several public, public listed and the Institute of Chartered Accountants Sri Lanka. He possesses
private companies. more than 19 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
Mr. H. D. S. Amarasuriya
Sales and Marketing Association. He is the immediate past
Non-Executive/Independent Director
President of the Mercantile Volleyball Association of Sri Lanka.
A Director from 22 February 2011. He brings to C. W. He currently serves as Executive Director-Internal Trading of C.
Mackie PLC an impressive range of management, industrial, W. Mackie PLC.
marketing and business skills from his tenure as Chairman
of the industrial and retailing conglomerate Singer Group,
and his experience on the Boards of companies such as Mr. Alagarajah Rajaratnam
Regnis Lanka, National Development Bank PLC and Bata Non-Executive Director
Shoe Company of Ceylon. He also brings with him substantial
experience in international management as a former Senior A Director from 27 June 2012. He serves as Chairman of The
Vice President of Singer Asia Limited, Retail Holdings Limited, Colombo Fort Land & Building PLC (CFLB) and several listed
USA and Chairman of the Singer Worldwide Business Council. companies within the CFLB Group in addition to holding other
An Accountant by profession, he is a former Chairman of Directorships within the Group. Mr. Rajaratnam is a Fellow of
the Employer’s Federation of Ceylon, First President of the the Institute of Chartered Accountants of Sri Lanka.
Chartered Institute of Marketing-Sri Lanka Region. Presently
he serves as Chairman of the Industrial Service Committee-
Southern Province of the Ministry of Industries & Commerce,
Sri Lanka Insurance Corporation Limited and Canwill Holdings
(Pvt.) Limited, the property owning company of Grand Hyatt,
Colombo and serves on the Boards of several public, public
listed and private companies.

Group
Management
E. A. Anura K. Edirisinghe N. Jerome P. Jayasinghe
Chief Operating Officer - Export Division Chief Operating Officer - Sales & Marketing(Scan Products
Division)
Anura is the Chief Operating Officer of the Exports Division and
also a Director of the subsidiary companies, Ceymac Rubber Jerome is the Chief Operating Officer-Sales & Marketing of
Company Limited and Ceytra (Private) Limited. He joined Scan Products Division. He joined the Company in 2010 as
the Company in 1976 as a Management Trainee and over Assistant General Manager-National Sales and presently heads
the years held executive and managerial positions in rubber the sales and distribution activities of Scan Products Division.
trading. Presently he heads the Exports Sector. He has over 43 He has over 25 years of work experience in the field of Brand
years of work experience in the field of Natural Rubber Trading Marketing & Sales Management locally and internationally. He
internationally and in the local market. He holds a certificate in holds a Masters Degree in Business Administration (MBA) from
business studies from Central London College, U.K. and also the Cardiff Metropolitan University, U.K.
Diploma in Business Management from National Institute of
Business Management, Sri Lanka. He is a Fellow Member of
Chartered Management Institute, U.K. and also Full Member of
the Institute of Exports, U.K.
Cosmas M. Ockersz
General Manager - Warehousing
Cosmas as General Manager-Warehousing, overlooks

G. Anura de Silva the warehouses of Scan Products, Industrial Products,
Director/Chief Operating Officer [Ceytra (Private) Limited Refrigeration & Air-Conditioning, Hempel Marine Paints and
and Ceymac Rubber Company Limited] Sugar Division. Joined the Group in 1979 as a Management
Trainee and has held positions during his tenure of service
Anura is a Director and Chief Operating Officer of Ceytra overlooking several divisions. He has over 37 years of
(Private) Limited and Ceymac Rubber Company Limited, experience in the field of Commercial (Imports & Exports),
subsidiary companies. He has over 37 years of experience in Marketing & Sales and Logistics/Warehousing. Cosmas holds
raw rubber and rubber products manufacture. He is a visiting Certificate (Part 1 & 11) in the Chartered Institute of Marketing,
Lecturer at the Plastics & Rubber Institute and National Institute U.K. and Certificate of Personal Management at the Institute of
of Plantation Management. He holds a Diploma in Rubber Polytechnic.
Technology from University of Moratuwa and Licentiate from
Plastics & Rubber Institute (LPRI), U.K.
Raveendra Marambage
General Manager - Treasury
T. A. P. Silva
Chief Operating Officer - Consumer Products Raveendra is General Manager-Finance of Corporate Finance
Manufacturing Division. He joined the Company in 2001 as a Management
Trainee and held several executive and managerial positions
`Taps’ as Chief Operating Officer-Consumer Products in finance, including Internal Auditor. He has over 14 years
Manufacturing overlooks the Company’s Scan Bottling Plant of experience in the field of Audit/Finance. He holds a B.Sc.
and Kelani Valley Canneries Limited, subsidiary company. HRM (Special Degree) from University of Sri Jayawardenepura,
He has over 27 years of experience in the field of FMCG Associate Member of Institute of Chartered Accountants of Sri
manufacturing Sector. He holds a Masters Degree in Business Lanka and Institute of Certified Management Accountants of Sri
Administration (MBA) from the Cardiff Metropolitan University, Lanka.
U.K. and a Bachelor’s Degree in Science (B.Sc. Hons.) from
the University of Colombo.

N. M. Chaminda Nawaratne and managerial positions. She has over 24 years of experience
in the fields of legal and company secretarial practices. She
General Manager - Sugar Division
holds a Master’s Degree in Business Administration (MBA)
Chaminda is the General Manager-Sugar Division. He joined from the University of Colombo and has completed Parts I and
the Company in 1996 as a Management Trainee and has held II of the Chartered Institute of Management Accountants, UK.
several executive and managerial positions during his tenure
of service, presently heading the Sugar Sector. He has over
22 years of experience in the field of exports of commodities Nalin B. Jayasinghe
and import of sugar for sale locally. He holds a Bachelor’s General Manager - Produce Trading
Degree in Science (B.Sc.) from University of Peradeniya,
Diploma in Marketing Management and a Diploma in Personal Nalin joined the Company in 1984 as a Management Trainee
Management from National Institute of Business Management and has held several executive and managerial positions. He
(NIBM) Sri Lanka. has over 34 years of experience in the fields of manufacturing,
logistics, import and export trading. He was a former Chairman
of Coconut Products Traders’ & Manufacturers’ Association.
W. Chinthaka K. Indrapala He has served as a Committee Member of the Sri Lanka
Shippers’ Council, Exporters’ Association of Sri Lanka and
General Manager - Hempel Division
the Asia Pacific Coconut Community. He holds a Diploma in
Chinthaka joined the Company in 1998 as Technical Sales Marketing Management from the National Institute of Business
Executive and currently heads the Hempel Division as General Management (NIBM) Sri Lanka.
Manager. He has over 19 years of experience in the field of
Marine Paints. He holds a Bachelor’s Degree in Science (B.Sc.)
in Chemical Engineering from the University of Moratuwa. He Ms. Chandima Welengoda
also holds qualification of CIP Level-3 certification from the General Manager - Group Finance
National Association of Corrosion Engineers (NACE), USA.
Chandima joined the Company in 2012 as the Manager-
Financial Reporting and has over 12 years of experience
Saketha P. Jayasinghe in the field of Audit, Finance and Banking. She holds a
B.Sc. Accounting (Special Degree) from University of Sri
General Manager - Management Information Systems
Jayawardenepura, Associate Member of Institute of Chartered
Saketha is the General Manager-Management Information Accountants of Sri Lanka and a finalist of Chartered Institute of
Systems of the Company’s Management Information Management Accountants, UK. She has also completed Level
Systems Department. He joined the Company in 1996 as I of the Chartered Financial Analyst Institute, USA.
a Management Trainee and held executive and managerial
positions. Presently heads the Information Technology Sector.
He has 22 years of experience in the field of Information P. Pavalachandran
Technology. He holds a Bachelor’s Degree in Science (B.Sc.) General Manager - Group Financial Services
and Masters of Information Technology from the University of
Colombo. Pavalachandran is the General Manager-Financial Services of
Internal Trading Division and subsidiary companies. He joined
the Company in 2017. He has over 20 years of experience
Ms. R. Priyadarshani Gunasena in the fields of Finance & Planning, Auditing and General
Management. He is an Associate Member of the Institute of
Company Secretary - Subsidiary Companies
Chartered Accountants of Sri Lanka. He holds a Master’s
Priyadarshani is the Company Secretary of the subsidiary Degree in Business Administration (MBA) from the University of
companies and General Manager-Corporate Affairs of Ceylon Wales, UK.
Trading Company Limited. An Attorney-at- Law and Notary
Public by profession. She joined the Company in 1994 as
Legal Intern/Management Trainee and held several executive

Our Strong
Brands
“Sunquick”, a Danish origin multinational fruit squash brand available in

more than 100 countries around the globe. Sunquick’s association with
C. W. Mackie PLC is more than 37 years and today, it is the category
leader in squash and cordial market and enjoys approximately 70%
market share.
“Danfoss” is a world renowned Danish brand in the refrigeration and

air-conditioning industry, products ranging from high quality refrigeration
and air-conditioning equipment, components and accessories; industrial
automation components; compressors and condensing units with
energy savings solutions. C. W. Mackie PLC is the sole authorised
importer/distributor for “Danfoss” brand products in Sri Lanka.
“Hempel” is a world leading trusted Danish brand for paints and

coatings in all related segments in the marine, container, decorative and
protective coatings industry. C. W. Mackie PLC is the sole distributor in
Sri Lanka and in Maldives for “Hempel” brand for over 30 years.
“Scan Jumbo” is another proprietary brand of C. W. Mackie PLC and

leader in its particular category enjoying approximately 65% market
share. Scan Jumbo Peanut is packed under our own label of ‘Scan”. The
peanuts from China are carefully chosen larger in size and the product is
processed and packed under very strict hygienic conditions.
“Scan” Bottled Drinking Water ultra-premium purified drinking water is

one of the premium and the cleanest known bottled water brand in Sri
Lanka. Scan Water is manufactured and bottled at the state-of-the-art
bottling plant in Horana.
Scan Water is certified as ISO 9001:2008 and ISO 22000:2005 besides

SLS. It is also certified by the Ministry of Health for Quality Management
Systems and Food Safety Management Systems, such as HACCP and
GMP.

“Kotagala Kahata” is a fine blend of Ceylon teas with high quality taste,
strength and aroma and packed under our own label. C. W. Mackie PLC
introduced Kotagala Kahata to the Sri Lankan market in 2012 and within
a short span of time, today it has become one of the biggest dust tea
brand in Sri Lanka.
“Mosa” is an Italian brand in the production of machines that

accommodate the needs of the power generation, production and
welding sectors. C. W. Mackie PLC is the sole authorised importer/
distributor for “Mosa” brand products for welding equipment, light
towers and power generators in Sri Lanka.
“Star” brand is owned by International Flavours and Fragrances, USA,

the world’s leading flavour and fragrance creator and market Innovator.
We distribute a range of unique 7 essences and 4 colours for savoury,
sweets, beverage and dairy industries. C. W. Mackie PLC is the local
distributor for “Star” brand for over 20 years.
“Telwin” is an Italian brand pioneer in welding supplies offering a wide

range of quality welding machines and accessories for the welding and
engineering industry. C. W. Mackie PLC is the authorised importer in Sri
Lanka for “Telwin” brand MIG, TIG, manual arc, spot welding equipment,
plasma cutters and battery chargers in Sri Lanka.
“N-Joy” takes pride in being the market leader in white coconut

oil brands in Sri Lanka to be certified by the Sri Lankan Standards
Institution (SLSI). N-Joy does not go through any physical/chemical
refining, bleaching or deodorizing process. C. W. Mackie PLC has been
associated with N-Joy since 2012.

Our Strong Brands (Contd.)
“KVC” is a trusted brand in the manufacture and export industry for

processed tropical fruits and vegetables ranging from jams, sauces,
cordials, nectars, fruit juices, pulps to canned fruits and vegetables to
chutneys, pickles, pastes, creams, brines, sambols and treacle. KVC is
a household brand in Sri Lanka.
“Ocean Fresh” Tuna, another proprietary brand of C. W. Mackie PLC,

comes from Thailand in 5 healthy and delicious varieties namely, Tuna
Chucks in Sunflower Oil, Tuna Chunks in Soybean Oil, Tuna Chunks in
Olive Oil, Fat Free Tuna and Tuna Spread. With the launch of “Ocean
Fresh” brand to the Sri Lankan market, C. W. Mackie PLC was able to
split the traditional canned fish market by up-lifting quality parameters.
“Forest Farm” is another proprietary brand of C. W. Mackie PLC and the

latest addition to the brand portfolio in respect of canned vegetables.
Product range consist of baked beans, kidney beans, button/straw
mushrooms, corn cream, sweet corn, young corn and baby corn
supplied to the HORECA (Hotels, Restaurants and Catering) sector
and modern trade sectors. Forest Farm products are processed under
internationally advanced processing techniques and equipment and
have obtained HACCP Food Safety Management System Certification
and International Food Certification (IFC).
“Delish” is also another newly added proprietary brand to the FMCG

range of products of the Company comprising of jelly crystals, corn flour,
gelatine and icing sugar. Castor sugar is another significant milestone
of the Company’s history where we explore an untouched area in the
FMCG product portfolio in the category of bakery and confectionery
items.
Delish manufacturing and processing plant is located at Industrial

Estate, Horana. Delish jelly crystals follow an internationally accepted
recipe and manufactured adhering to a stringent quality control process.

Award

STRENGTHEN
In the past year, our impressive portfolio has
been further strengthened and expanded
on, with the assistance of our talented team
and state-of-the-art technology. This was
a strategic decision taken on our part to
further our expansion and create greater
value for our stakeholders in the long term.
“Being part of the team at C. W.
Mackie, we’ve grown personally and
as a collective, acquiring the values,
knowledge and expertise that have made
our Company a force to be reckoned
with.”
The C.W. Mackie Team
C.W. Mackie PLC
(Head Office - Colombo)
Management Discussion
and Analysis
Business Overview 31
Sectors:
FMCG 34 / Manufacturing 38 / Marine Paints 42 / Export Trading 44
Sugar Trading 46 / Refrigeration and Air-Conditioning 48 / Industrial Products 50

Management Discussion
and Analysis
“Sustained performance in a volatile year”
C.W. Mackie PLC posted a sustained performance in a Joint Venture

year that could be characterised by economic and political Following the joint venture agreement entered into with
instability, extreme weather conditions, rising raw material Co-Ro A/S, Denmark in February 2017, the manufacturing and
prices and the depreciating Rupee against the US Dollar, which processing activities of the Sunquick range of fruit squash
created a volatile and competitive environment. Despite the concentrates are carried out by Sunquick Lanka (Private)
turbulent conditions, however, the Group was successful in Limited, in which the Company has an interest of 49%. The
leveraging its competitive advantages, capitalising on growth sales and distribution activities of these products are carried
drivers and pursuing operational efficiencies across-the-board, out by the Company from June 2017.
which had positive outcomes in terms of the profitability and
performance of most Sectors. Global and Local Economic Framework
The global economy experienced a cyclical recovery
The Company experienced a satisfactory top-line growth
during 2017, with substantial improvements in investment,
of 13.59% and nearly all Sectors posted profits. The Group
manufacturing activity and trade. The upturn was broad-based,
achieved consolidated net revenue of Rs.9,973.6 million for
and came from favourable financing costs, rising profits and
the financial year 2017/2018, compared with Rs.8,837.4 million
improved business sentiment across most world economies.
achieved in the previous year. Net profit for the year under
IMF forecasts estimate that the world economy would grow
review was Rs.219.8 million.
by 3.7% during the year under review, the fastest pace since
2011 and a substantial improvement over the 2.7% growth in
Business Overview
Gross Domestic Product (GDP) in 2016. A major portion of
The Company’s Internal Trading Sector recorded the best the acceleration in global GDP growth in 2017 was due to an
performance during the year, contributing 87.90% to total increase in investment growth worldwide, which significantly
profits. boosted exports and imports across most economies.
The Internal Trading Sector comprise FMCG, Marine Paints, Despite the substantially improved world growth outlook,
Sugar Trading, Refrigeration and Air-conditioning components however, the strong economic activity was not distributed
as well as Industrial Products. The FMCG and Paints Sectors evenly across countries and regions.
made the highest contribution to growth of 49.15% and 30.30%
respectively. The remaining Sectors made up the balance The volatile fuel prices raised headline inflation in advanced
20.55%. The Internal Trading Sector, the main contributor economies, but wage and core-price inflation remained weak
to growth, recorded Rs.7,505.1 million sales turnover from as inflation remained below the 2% target. Although this raised
enhanced manufacturing, sales and distribution activities. This disposable incomes and spending was low, the weak inflation
was an increase of 15.05%, when compared with the previous is a cause for concern, since deflationary pressures could
year’s figure of Rs.6,523.2 million, which achieved a net profit make it difficult to boost economic growth. Among emerging
of Rs.199.8 million. market economies, headline and core inflation increased
slightly towards the end of the year after declining in early
Coconut, rubber and spice crops are sensitive to the vagaries 2017.
of the weather and the Export Trading and Manufacturing
Sectors suffered a substantially reduced performance during The growth momentum of 2017 is projected to continue in
the year under review due to inclement weather conditions 2018, which should bring with it renewed investor confidence
that prevailed most of the year. The severe price competition and expanded trade. This would usher in a stronger global
in international markets also reduced sales margins. The economy that creates a positive environment for business
depreciation of the Rupee against the US Dollar and several growth and more so, the growth of the private sector, which
European currencies, however, had a positive impact on augurs well for the performance of manufacturing and trading
exports and consequently, on the Company’s bottom-line. The companies like C. W. Mackie PLC.
Rupee depreciated against the Euro by 13.49% and against
the US Dollar by 2.5% during 2017.

Management Discussion and Analysis (Contd.)
“
Growth in the Sri Lankan economy, however, did not emulate
global growth. Sri Lanka posted a GDP growth of 3.1% in 2017
against 4.4% in 2016. This is lower than the growth projected
The Company leveraged
for the year, primarily due to adverse weather taking a toll on
the agricultural sector. The Central Bank’s tight monetary policy
technology to power progress
stance kept core inflation in control, but headline inflation was this year by utilising state-of-
high.
the-art business software that “
The extreme weather that prevailed during most of the year
destroyed agricultural crops as well as staples, and compelled has substantially improved
business operations.
the Government to import staple foods to meet the shortfall.
This added pressure to the external accounts and raised
commodity prices, which increased inflation, which hovered
at a monthly average of approximately 7.7%. This increase
in inflation saw a surge in food inflation as well and reached Strong export growth and a healthy tourism sector were other
double digits with the highest figure of 14.4% reported in reasons for the improved external economic environment.
December 2017. External trade, which performed sluggishly during the past two
years, rebounded during the current year to register double-
Purchasing power was also low during the year as a result of digit growth as at October 2017. This was mainly due to the
the rising inflation, increasing marginally by only 0.7%. This was restoration of the GSP+ facility and the lifting of the ban on
insufficient to raise the demand for commodities, especially for fisheries exports to the EU, which resulted in significantly
non-essential food commodities. Market analysts confirm that expanded earnings from industrial exports.
the FMCG sector is de-growing on consumption alone and
experienced a substantial decline in 2017. A better macro outlook is anticipated in the coming years as
foreign reserves strengthen and FDIs increase as a result of
The impact of taxation was yet another reason for constrictions the Government’s policy to increase foreign participation in the
in purchasing power. The impact of Income tax and VAT country’s economic growth. This should ease interest rates and
increases imposed in the previous year, were felt only in 2017. improve purchasing power which will, consequently, spur the
Per capita income during the year was US$ 4,050. demand for commodities, including non-essential foods.
Traditional commodities like rubber and coconut were also The Government plans to reduce the country’s ratio of
affected by the inclement weather. Scarce supplies of these debt to GDP to 70% by 2020 under the Medium Term Debt
commodities, as well as commodities like spices, resulted Management Strategy, to further increase investor confidence.
in increased raw material prices which reduced quantities Plans are also in the pipeline to strengthen Sri Lanka’s ‘growth
available for export. This escalated production costs and made framework’ to promote private investments. These are all steps
the Company less competitive in the international market. in the right direction to usher in growth and stability in the
forthcoming year.
The year under review commenced with high interest rates,
which gradually declined towards year-end due to deceleration Three-year Road Map
of credit to the private sector, higher liquidity levels, moderate The three-year plan introduced in the preceding financial year
inflation and lower levels of government borrowings. Import for the Company is now in place to enhance the profitability of
expenditure, however, increased during the year due to the all Sectors. The strategy identifies growth drivers, streamlines
depreciation of the Rupee, which somewhat offset the positive operations as well as explores new markets and new business
impact of improving export earnings. opportunities.

Leveraging Technology Sector Overview
The Company leveraged technology to power progress this The reportable Sector revenues for the financial year under
year by utilising state-of-the-art business software that has review compared with the previous financial year are given
substantially improved business operations. The Human below:
Resource Information System (HRIS) was launched during the
year and all HR information and functions are now available 2018
online. Staff have a single point of access to personal and
company information, depending on their level of seniority and FMCG 67%
job functions. Export Trading 18%
Marine Paints, Industrial
Technology advancement have created many opportunities Products, Refrigeration &
to drive efficiency, business value and enhance the way Air-conditioning 9%
people work. The SAP S/4 HANA suite of technology solutions Manufacturing 7%
have empowered our people with the right information at the
right time and at the right speed for operational, tactical and
strategic decision making irrespective of where they are and
what device they carry.
2017
The recently implemented Enterprise Resource Planning
System SAP is a fully-integrated system that ensures FMCG 65%
seamless connectivity between the Company’s many Export Trading 19%
business functions, namely procurement, finance, marketing,
Marine Paints, Industrial
sales and manufacturing as well as with sub-modules of the Products, Refrigeration &
business. Speed and accuracy of real-time information is the Air-conditioning 9%
substantial advantage of the systems, which facilitate speedy Manufacturing 7%
management access to live data necessary for timely decision-
making. This is vital for businesses like C.W. Mackie PLC that
trade on a variety of platforms that require speedy access to
historical information that could be analysed in any number An overview of the Sectors of the Group and a brief outline
of ways and used for forecasting purposes. An important e of the factors that affected their performance during the year
feature of SAP is the data verification screening process that under review is given overleaf.
validates the accuracy of information inputs.
The Sales Force Automation System enables sales personnel

to access sales-related as well as personal performance data
from their mobile devices even while on field. The system is
cost effective because manual processes can be automated
and speeded up for effective planning and implementation.

FMCG
Manufacturing
Marine Paints
C. W. Mackie PLC’s Scan Products Division and its
Export Trading subsidiary, Kelani Valley Canneries Limited (KVC),
manufactures, imports, markets and distributes FMCG
products in the food and beverage category.
Sugar Trading
Refrigeration and
Air-Conditioning
Industrial Products

Brand Portfolio
The brand portfolio of Scan Products Division comprise well The Company also took a strategic decision in the previous
reputed local and international brands. Beverages distributed financial year, to enter the Independent Supermarket (ISM)
include Sunquick fruit squashes, Kotagala Kahata Tea and channel as a pilot project, in addition to the four other
Scan Bottled Drinking Water. Other products are Scan Jumbo distribution channels pursued by the Company, namely,
Peanuts, N-Joy Coconut Oil, Star brand Essences and General Trade, Modern Trade, Food Services Sector and
Colourings, Ocean Fresh Tuna, Delish bakery products and Wholesale distribution channels. The new channel brought
Forest Farm canned vegetables, as well as KVC branded significant results during the current financial year.
products range. Many of these products enjoy market
leadership positions in their respective categories. Another growth driver was the hotels, restaurants and catering
(HORECA) Sector. New non-food additions, such as cling
film and aluminium foil wrapping, also had a positive market
response.
Scan Jumbo Peanuts, the pioneer brand in its category has

since inception, maintained the category leadership in its
Sector. During the current year, the brand recorded a 12.23%
volume growth.
Scan Bottled Drinking Water is an ultra-premium purified

drinking water among the best known bottled water brands in
Sri Lanka and recorded a 15.86% volume growth.
New Products
The Sector added several new products to its product
Performance portfolio during the year. These included the BOPF tea bag
Despite the category de-growth in the food and beverage range introduced as a line extension in the Company’s
sector that prevailed during the year, Scan Products Division Kotagala Kahata tea category. The range of canned fruits and
recorded a 12.98% revenue growth for the year under review. vegetables under the brand name Forest Farm last year, was
Sunquick, the principal brand in the Scan products portfolio, also expanded and enjoyed market popularity.
recorded a 10.6% volume de-growth which impacted
significantly on the FMCG Sector bottom-line. The main
reason for the de-growth of Sunquick was the depreciation
of the Rupee against the Euro which resulted in higher cost
of production and cost of sales. In these circumstances,
the Company was compelled to increased its retail prices to
mitigate this impact, which was the main reason for the drop in
the sales volumes of Sunquick.
Results were achieved from the organic growth of certain
products in terms of volume and price increases. The bottom-
line did not grow, however, due to diminished purchasing
power in the market that was caused by a number of
macro-economic factors discussed in the Global and Local
Framework above. These factors hiked raw material prices,
which caused corresponding increases in the costs of
production. The new Delish brand range, besides jelly crystals, corn flour
and icing sugar will extend its product range to include new
additions like custard powder, pudding mixes. Caster sugar
was introduced to commercial buyers.

qualification. It has been an effective strategy for retaining high

achievers in sales and marketing, which is one of the most
competitive professions in the modern business world.
Achievements
The Company’s flagship brand, Sunquick, won the Gold
award for the International Brand of the Year at the SLIM Brand
Excellence Awards 2017. The brand has been the recipient of
the award for four consecutive years and this is the second
time of winning the Gold.
The Scan Bottled Drinking Water segment has designed a

glass water bottle to be launched in the hotel and supermarket
sectors shortly to target the high-end customers. The product
supports the Government policy to dissuade use of plastic
bottles.
Capital Expenditure
Line modifications were carried out in the water bottling plant.
Older machines were replaced with high-capacity machines.
People
Future Strategy
The Sector will focus more on its proprietary brands and on
growing its top-line further. The Company’s well-structured
multi-channel distribution network through its Scan Products
Division will be re-aligned to make it more cost-effective to
facilitate this growth. The Sector will follow a gross profit-
driven approach in terms of regions and Sectors in which Area
Managers and Sales Managers will be defined as profit centres
and made accountable for achieving growth results.
Kelani Valley Canneries Limited (KVC)

Product Portfolio
KVC was established in 1968 to manufacture and export
processed tropical fruits and vegetables. Its products portfolio
ranges from sauces, jams, nectar, chutneys, treacle, fruit
The Sector has a structured plan for training and developing
juices, fruit pulp to canned fruits and vegetables to pickles and
staff. The customised sales training programme, designed and
sambols.
carried out by the Sri Lanka Institute of Marketing (SLIM) will
be continued to further the professional development of the
sales force. The Diploma in Sales Programme was introduced
in 2016 and provides participants with a professional

A Committee was set up during the year to purchase raw
materials at lower prices during seasonal periods. This was
moderately successful and several tropical fruit varieties were
purchased at lower prices, which reduced direct costs.
Capital Expenditure
Introduction of an automatic labelling machine improved the
quality of pasted labels, increased the quantities pasted per
day and reduced labour cost. Labels have been re-designed to
make them more attractive.
Quality Standards
KVC was conferred with organic certification by the Control
Union of The Netherlands, which fortifies KVC with added
strength to sell its products under the ‘organic’ label.
Performance
The drought that prevailed during the year resulted in poor KVC also received ISO 22000:2005 certification for its entire
harvests of seasonal fruits and vegetables. This created product range. Our manufacturing facilities have the GMP,
shortages that pushed up prices and correspondingly HACCP, SLS and ISO 9001:2008 certification as well.
increased KVC’s cost of production. To this was added strong
competition in the local market. These factors negatively Future Strategy
impacted the bottom-line and precluded the Company from
Future strategies include plans to increase export sales, more
achieving its budgeted sales target.
effective management of stock holding costs and raw material
procurement to reduce finance costs, as well as managing
Although General Trade sales increased significantly, the
market returns to increase profitability.
contribution of direct export sales was not up to expected
levels due to strong global competition, especially on the
prices of fruits.
The devaluation of the Rupee increased the cost of production

due to the rise in import prices of raw materials. The price
of tomato paste, for instance, which is imported from China,
increased, as did the prices of pineapple, garlic and ginger.
The processing and packaging business is a labour-intensive

one and KVC has been compelled to bear the brunt of
enhanced costs and scarcity of contract labour due to its
proximity to the Seethawaka Industrial Estate.
KVC’s main strategy this year was to expand General Trade

and Direct Export Sales. A decision was taken to focus on
30 key products and strengthen the supply chain. Steps
were taken to re-evaluate and reduce production cost by
approximately 10% to 15% by re-arranging recipes without
compromising on quality. Product quality was improved by
using sensory evaluations to benchmark with competitor
products.

FMCG
Manufacturing
Ceymac Rubber Company Limited and Ceytra (Private)
Marine Paints Limited are subsidiary companies of C. W. Mackie PLC
and engage in the manufacture of primary and specialty
rubber products and value-added rubber products
Export Trading for the local and export markets. Industries catered
to include pharmaceutical, shoe, solid tyre, non-tyre,
construction, transport and agriculture.
Sugar Trading A decision was taken during the year under review to re-align
both Companies under one management. This strategy was
Refrigeration and successful as the year saw noteworthy improvements in both

Ceymac and Ceytra, in terms of performance, apportionment
Air-Conditioning of overhead costs and effective utilisation of all levels of

employees between the two companies.
Industrial Products

Ceymac Rubber Company Limited (Ceymac) this did not affect the Company’s top-line because the TSR
Types of Rubber Produced manufactured during the year was absorbed by the local solid
tyre manufacturing industry. Local solid tyre manufacturers are
Primary
BOI companies who import the bulk of their TSR raw material
• Technically Specified Rubber (TSR) requirement at much lower prices. The quality of locally
• Plantation Sole Crepe produced TSR supplied to them is on par with the imported
product and complies with all international standards of
manufacturing.
Speciality
• Granulated rubber for the adhesive industry The scarcity of scrap rubber increased the prices of TSR and
compelled Ceymac to operate at less than 40% of installed
• Chemically treated rubber (Zinc Oxide dusted crepes and
capacity. This scarcity was due to low production of Natural
bandage crepes) for the pharmaceutical industry
Rubber (NR) due to reduced extent of rubber plantation and
• Stick cleaners for the mining and woodwork industries low productivity coupled with unfavourable weather conditions.
• Coloured sole crepe for the high-end shoe industry This situation adversely affected the performance of Ceymac.
As a control measure, Ceymac was successful in reducing

losses during the year with measures taken to contain
costs, improve manufacturing processes and adopt
effective strategies on raw material procurement. Available
resources were also utilised effectively, which helped improve
performance.
To mitigate this situation, Ceymac and other TSR producers

took the pioneering step of making representations to the
Ministry of Plantations Industries for permission to import
scrap rubber on a duty free basis. This imported scrap rubber
could be converted into TSR to cater to the demands of BOI
companies in the manufacture of solid tyres, at competitive
prices. If approved, the move will benefit all TSR producers in
the country and bring substantial savings in foreign exchange
from the upgrade of scrap rubber to TSR.
Sole crepe is a premium grade semi-finished product used
to manufacture the soles of high-end chemical- free shoes
and commands a premium price. The manufacturing process
of sole crepe is prolonged and labour intensive. At present,
approximately 1MT of sole crepe is being produced daily with
plantation latex at a substantial labour cost when compared
with the manufacturing process of TSR of which about 10MT
a day is produced in a mechanised process that requires less
labour hours.
Major Export Markets

India, Vietnam, South Africa, Japan, China, Europe and
Canada.
Performance
The global decline in natural rubber prices affected Ceymac’s
ability to secure orders for TSR exports this year too, but

Management Discussion & Analysis (Contd.)
People Future Strategies

The labour force consists mainly of permanent employees The recent advent of more new tyre manufacturing companies
whose retention level with Ceymac is high. Contract labour is to the market provides more opportunities for TSR, which
engaged on a need basis. Ceymac has already accessed.
Labour efficiency was improved during the year by introducing Ceytra (Private) Limited (Ceytra)
continuous improvements in process lines and better utilisation Types of rubber produced
of all levels of employees.
Moulded Rubber Products
Capital Expenditure Ceytra designs and manufacture for export, a wide range of
high-quality value-added natural and synthetic rubber products
Investment on machinery was made during the current financial
for the agricultural, automobile and shipping industries to
year with a view to long-term benefits that ensure the factory
meet specific customer needs. For the local market, a range
operates at optimum capacity with minimal interruptions.
of rubber carpets and mats are manufactured for a leading
Existing machinery was serviced and repaired and new
supermarket chain, the Company has become the main
machinery purchased to replace certain old machinery. These
supplier of these products to the local market.
initiatives have substantially reduced machine breakdown time.
Quality Standards
The manufacturing process of Ceymac is ISO 9001 : 2008
certified and the state-of-the art effluent treatment and
air pollution control system at its Narthupana factory in
Horana, which complies with Central Environmental Authority
Regulation, was upgraded during the year under review to
further reduce adverse environment impacts.
Moreover, the gasifier used in drying process of TSR

manufacturing operates the partial combustion technology
using firewood which is free from gas emissions to the
environment. This method of drying is cost effective and
environmental friendly.

Major Export Markets
France, Sweden and Japan
Performance
Ceytra has achieved a revenue of Rs.83 million during the year
under review, compared with Rs.76 million during the previous
financial year. Profit before tax for the year under review
recorded Rs.9.0 million, compared with Rs.8.6 million in the
previous financial year.
Several cost-saving measures were introduced to effect

improvements. Technology was mainly applied to reduce
production costs without compromising quality. The chemical
composition of certain products was changed using Research
and Development inputs to reduce the duration of cycles and
Future Strategies
modify processes. Production costs, however, increased, due
to the increased cost of imported rubber chemicals, labour The Management is exploring more opportunities for
and shipping, although favourable exchange rates had a expanding the business to new local and international markets.
positive impact on business during the year, in particular, the
depreciation of the Rupee against the Euro since France is the
Ceytra’s main export market.
Quality Standards
Ceytra has a well-deserved reputation for maintaining high
standards of quality in all rubber products manufactured
and has been accredited with the environmentally-friendly
Forest Stewardship Council Chain of Custody (FSC-COC)
Certification, which recognises reclaimed forest-based
materials that can be used as components in FSC-certified
products and projects.
People
The labour force mainly comprises permanent employees
whose retention level is satisfactory. They help maintain
the high standards of quality demanded by the overseas
customers of manufactured rubber products.
Laboratory Testing
The quality of rubber compounds and finished products is
tested in a laboratory set up for the purpose, which follows
stringent quality controls and carries out research and
development activities, headed by a qualified and experienced
Rubber Technologist.

FMCG
Manufacturing
Marine Paints
The Division has been selling and distributing marine
Export Trading paints and protective coatings under international brand

name ‘Hempel’ since 1982.
Sugar Trading
Refrigeration and
Air-Conditioning
Industrial Products

In 2008, the Company was appointed sole distributor in gas storage terminal, as well as for the iconic Colombo Lotus
Sri Lanka and the Maldives. The Division mainly serves the Tower.
shipping industry, as well as the Government, multi-national
and local companies. Sales were diversified recently to supply Hempadur Avantguard Zinc rich Primer which has higher
protective coatings to the telecommunication service sector, resistance against corrosion was a new product range
introduced in the current financial year.
hydro electricity power plants, steel building structures, gas
and petroleum tanks, as well as to improve the durability of
sluice gates of irrigation reservoirs.
Performance
The Division posted a steady performance in the year of review.
Profit before tax was Rs.78.5 million from sales of Rs.376
million achieved from a volume of 269,541 litres.
During the year, a number of dry dockings were carried out

in the Colombo Dockyard for both Hempel Associates orders
and orders secured from local customers. Colombo Dockyard
continued to place orders for new building vessels (Anchor
handling tugs) as well as port cranes, which helped increase
volumes.
Customer Segments
Marine Segment
The marine segment of the Hempel Division offers marine
paint related solutions to vessels dry docking in the Colombo
Dockyard and smaller vessels at other locations in the country.
Anti fouling, which helps reduce fuel consumption and is
suitable for high vessel idling periods, is also used on these
vessels. The Company was successful in arranging supplies of
paints for the day-to-day maintenance of sea going vessels to
keep them free of corrosion and in good condition. High quality
Hempel anti fouling, primers, intermediate coats and various
Container Coating Segment
types of finishing coat paints are also used to ensure that the
vessel is maintained in good condition. The Hempel brand is one of the few products recognised
by international container lines as being a quality paint
Marine paints are essential not only for maintaining the for protecting their containers. About 70% of the paint
cosmetic appearance of vessels, but also for minimising the requirements of container yards in Sri Lanka are supplied by
onset of corrosion and ensuring that the vessel stays in good the Division.
condition. This helps to reduce the costs of maintenance when
dry docking. Technical Services
The Division’s technical services team comprises personnel
The marine segment also provides services to other structures with qualifications up to Level 3 certification of the National
in the marine environment like port cranes, wind turbines, all Association of Corrosion Engineers (NACE), who are
storage tanks as well. competent to provide the necessary inspection and advice to
ensure that paint specifications are followed in all aspects of
Protective Coating Segments the coating process.
Protective Coating Segment of Hempel has years of
Strategies
experience in anti-corrosive coatings for almost any type of
steel structure, which reduces maintenance costs and shut New markets for additional product lines are being explored.
down periods when used regularly. The Division is planning to expand its product range based on
customer needs in the local market. Meanwhile, the Division
Several orders for Ceylon Electricity Board-approved projects will continue to provide high quality paint solutions coupled
were also completed during the year, in addition to product with the technical advice, supervision and timely product
sales for factories, hydropower projects, coal power plants, a delivery that has ensured customer satisfaction over the years.

FMCG
Manufacturing
Marine Paints
The C.W. Mackie Group has been involved since 1900
in its core activity of exporting natural rubber, coconut
Export Trading products and Sri Lankan spices.
Sugar Trading
Refrigeration and
Air-Conditioning
Industrial Products

Product Portfolio Coconut

Primary Rubber Products The prolonged drought that affected the coconut triangle since
All grades of natural rubber (NR), white and coloured sole mid-2017, caused a sharp drop of approximately 18.7% in the
crepe rubber, technically specified rubber (TSR), ribbed quantity of coconuts produced during the year. This shortfall
smoked sheet rubber (RSS) amounted to about 560 million nuts and reduced the quantities
available for export.
Specialty Rubber Products
NR such as granulated crepe rubber and ZOX crepe rubber
Export Industries supplied

Local rubber-based product manufacturers such as solid tyres,
house hold rubber goods, footwear industry
Coconut Products
Desiccated coconut in fine, medium, flakes and toasted
grades. Low- fat coconut products and value- added coconut
products.
Spices
Cinnamon, cloves and black pepper. Spices
The pepper market was uncertain due to unscrupulous
Performance competitor activity in the local market. The situation was
Crepe Rubber and Desiccated coconut achieved their exacerbated by India, the main buyer of Sri Lanka pepper
budgeted targets in value terms, posting gross profits of 101% under the Indo-Sri Lanka Free Trade Agreement (ISFTA),
and 79% respectively, during the year. This was despite the imposing an annual ceiling of 2500 MT on pepper exports.
strong competition in world markets due to substantial price These market movements adversely impacted exports.
differentials.
Markets
Since inroads into new markets were challenging because of Japan, USA, China, India, UK, Europe, Pakistan, Taiwan,
the shortage of material, the Company traded in traditional Canada, South America and South Africa.
markets during the year. New marketing strategies and new
products are being pursued to circumvent this situation. About 20% of rubber is exported in its natural form to countries
such as Japan, Singapore, UK, Europe and USA for use
Rubber in the pharmaceutical and adhesive industries, and the
The extraordinarily high rainfall in rubber growing areas limited balance 80% is sold in the Sri Lankan market to local footwear
the rubber crop and reduced the quantities available for export. manufacturers and other rubber-based industries.
Fluctuations in the quantitites available in the local market The Export Trading Division continues to explore new avenues
increased rubber prices, which restricted trading activities. of business that will keep the Sector profitable.
Standards
International and EU standards in product manufacture and
exports are followed throughout the manufacturing process.
Environmental and social concerns that could arise during
the manufacturing processes are also being addressed
adequately.
People
Production of traditional commodities is a labour-intensive
activity. The Division has had a high rate of employee retention
over the years due to positive relationships with the workers.
Future Strategies
Diversifying to exporting value added products is under
consideration to increase the profitability of the Export Trading
Division.

FMCG
Manufacturing
Marine Paints
The Sugar Trading Division imports and distributes
high-quality fine granulated refined white sugar in bulk to
Export Trading customers in the food and beverage, carbonated drinks,
dairy and bakery industries. It also supplies refined white
sugar in packets to the catering and restaurant sector
and caster sugar to industrial users.
Sugar Trading
Refrigeration and
Air-Conditioning
Industrial Products

Performance Quality Standards

Performance of the sugar industry was unstable during the All sugar imported conforms to the stringent international
year as a result of several macro and micro-economic factors. standards of quality applicable to the sugar manufacturing
Depreciation of the Rupee against the US Dollar increased industries and is free of Genetically Modified Organisms
landed costs and the increase in cess imposed twice by the (GMO) as confirmed by the Non-GMO Certificate of Analysis.
Government also affected the Company’s bottom-line. As
a result, the Company was unable to take advantage of the
reduced sugar prices in the global market and to pass the
price reduction to the consumer.
In November 2017, the Government increased cess on sugar

imports to Rs.31 per kg. The Government also changed the
policy regime by introducing a special tax on the beverage
industry based on the sugar content, to dissuade excessive
sugar consumption in the country. The Company was
compelled to shoulder a component of the increased tax to
cushion its effect on buyers and this constricted profit margins.
As a result of this change in policy, the volumes of sugar sales
reduced as manufacturers changed to sugar substitutes.
The Sector pursued a strategy to increase volumes and

maximise the bottom-line during the year. A pioneering strategy
to function as a logistics provider for sugar importers was also
embarked upon, which is yielding favourable results.
Categories of Imports
Three categories of sugar were imported during the year -
refined sugar from Thailand and Malaysia, non-refined sugar
from Brazil and India and super-refined sugar from Thailand
and Malaysia.
The sugar is stored in a centrally located warehouse that is in

line with the infrastructure specifications of the customers.

FMCG
Manufacturing
C. W. Mackie PLC’s Refrigeration and Air-conditioning
Marine Paints Division (R&AC) engages in import, sale/distribution
of world renowned brands of R&AC equipment,
components, accessories and refrigerant gases.
Export Trading Product Portfolio

Refrigeration and air-conditioning equipment, components,
accessories and refrigerant gases
Sugar Trading Agencies/Distributorships
Authorised importer/distributor and sales/services for:
Refrigeration and • DANFOSS-Denmark : Refrigeration and air conditioning
Air-Conditioning
equipment, components and accessories
• FRASCOLD-Italy : Semi hermatic compressors
• ROLLER GmbH-Germany : Evaporators and condensers
Industrial Products • ICOOL-China : Refrigerant gases and copper tubes

opportunities accessed included entry into the burgeoning

supermarket sector, as well as the expanding dairy sector
which was responding to Government efforts to promote fresh
milk. These sectors required chilling facilities to meet their
growing needs, which the Division was well able to supply.
Diversification within the Sector introduced several component

to the R&AC business. One of the key new initiatives pursued
during the year was entry into the copper tubes business,
which proved lucrative. In a short span of time, the Company
grew to become one of the island’s largest copper tubes
suppliers for the air-conditioning business. An agreement,
based on the indenting model, was reached with a copper
tubes supplier, which provided the Company with considerable
price advantages that were passed on to the consumer, which
spurred demand.
Other diversifications within the category were the supply of

cool room fabrication products and condensing units. The
latter product recorded a healthy bottom-line. The Company
also entered into the business of supplying refrigerant gases
and became the largest and the leading player in the supply
of refrigerant gases in the country, enjoying a market share of
over 40%.
Maintenance and Services

The Division provides after sales services at its fully equipped
workshop in Horana.
The mini assembly plant at the workshop premises assembles

and produces tailor made refrigerator condensing units.
Performance
The strategic decision taken two years ago to segregate the
R&AC Division from the Industrial Products Division paid rich
dividends, both literally and figuratively. The Division posted People
substantial growth during the current financial year, recording
an increase in turnover of over 70% year-over-year and a More investment was made in human capital as well, which
consequent increase in profits of nearly 40% over the previous brought on board a qualified and experienced technical team
year. with industry experience who added substantial value to the
business.
Far-thinking pricing and distribution initiatives have established
the Company as a significant presence in the market. Training given to the R&AC Technical Team at Danfoss
Continued improvements to practices and processes Industries (Pvt) Ltd, India provides solutions to R&AC
introduced during the year were successful in establishing maintenance and repair services.
the Company as a provider of total solutions for the air-
conditioning industry, equipped with the necessary know-how Future Strategy
to meet customised requirements. To further its aim of providing total solutions for the industrial
R&AC business, the Company is pursuing the supply of
The Company was also successful in utilising its many insulation for the copper tubes business to provide a product
advantages, which include its long-standing reputation that will be sold to local consumers.
to make new market ventures profitable. New market

FMCG
Manufacturing
The Industrial Products Division was established in the
Marine Paints 1980s to cater to local market needs, and manages
several agencies in Sri Lanka for renowned global
brands. The Division imports and sells a range of
welding equipment, maintenance welding alloys, chisel
Export Trading bits and hammer drills (light engineering products),
automobile/workshop machinery and equipment.
Sugar Trading The Division is the authorised importer and distributor

and provides aftersales services for a number of brand
names of world repute that include Chosun (Korea),
Refrigeration and EWAC Alloys (India), TELWIN (Italy) and MOSA (Italy).
Air-Conditioning Product Portfolio

Product Category Portfolio
Industrial Products 1. Welding electrodes, rods, wires

2. Welding equipment and accessories
3. Light engineering equipment and accessories
4. Power generators, workshop machinery and equipment

Agencies/Distributorships 4. Power Generators, Workshop Machinery and Equipment

1. Welding Electrodes, Rods, Wires Authorised Importer for Sales and Services for:
Authorised Importer and Distributor for: • MOSA-Italy: Welding generators, light towers and power
• Chosun-Korea: Welding electrodes and wires generators
• Eutectic (EWAC Alloys)-India: Preventive maintenance

welding products
Performance
The Sector posted a sluggish performance during the year
due to a range of macro-economic factors that prevented the
2. Welding Equipment and Accessories
construction industry from performing at anticipated levels.
Authorised Importer for Sales and Services for: The Government’s policy on industrial mining which imposed
• TELWIN-Italy: MIG, TIG, manual arc, spot welding restrictions based on environment concerns posed an
equipment plasma cutters and battery chargers. additional challenge to the industry.
3. Light Engineering Equipment and Accessories As a result, the Sector experienced a series of setbacks
Authorised Importer and Distributor for: during the current financial year. Management of the Sector
was restructured and the sales and distribution will soon be
• Rock drill hammers, tapered rods, chisel bits and button
reorganised to improve profitability.
bits
• High pressure compressor hoses A strategic decision was also taken to move out of heavy
machinery imports due to low profit margins, and focus instead
on general- purpose welding consumables. A reputed brand in
welding electrodes was introduced during the year to give the
Company a competitive advantage in the multipurpose welding
consumer market.
People
The Technical Services team was trained during the year
at Ewac Alloys, India, a leading manufacturer for Eutectic
preventive maintenance welding products, to provide total
solutions to maintenance and repairs in the welding industry.
Future Strategy
Future strategies include identifying untapped market
segments to increase penetration and source opportunities for
expansion.

HARNESS
Our employees envision a future that will
see C. W. Mackie PLC’s productivity and
growth abound with every passing year.
The HR initiatives, training, academic and
welfare programmes and exclusive sports and
recreational activities we provide for them are
crucial to uphold their morale and harness their
fullest potential as they form the backbone of
our success.
“Working for a longstanding, reputed
company like Ceymac has transformed
my life for the better.”
Weerasinghe Nandawathie Silva
Ceymac Rubber Company Limited
(Sole Crepe Section – Narthupana)
Annual Report of the
Board of Directors
For the financial year ended 31 March 2018
The Board of Directors has pleasure in presenting their Annual Going Concern
Report on the affairs of the Company together with the audited The Directors are satisfied that the Company has adequate
Financial Statements for the financial year ended 31 March resources to continue its operations in the foreseeable future.
2018 and the auditor’s report on the Consolidated Financial Accordingly, the Financial Statements are prepared based on
Statements. the going concern concept.
Principal Activities Shares

The principal activities of the Company and each of its Stated Capital
subsidiary and associate companies are described on page
The stated capital of the Company is Rs.507,047,487 as at 31
88.
March 2018 represented by 35,988,556 shares.
Joint Venture between C.W. Mackie PLC and Co-Ro
The entire issued stated capital of the Company consisting of
A/S, Denmark.
35,988,556 ordinary shares is listed on the trading floor of the
The Company on 24 February 2017 entered into a joint venture Colombo Stock Exchange.
agreement with Co-Ro A/S, Denmark (Co-Ro) for the purpose
of manufacturing, processing and marketing Co-Ro’s products The float adjusted market capitalisation of the Company as
in the form of concentrates and ready-to-drink (RTD) products at 31 March 2018 is Rs.193,269,342 and the public holding
marketed under the ‘Sunquick’ brand. percentage is 11.05% represented by 1,982 shareholders.
For purposes of the joint venture, limited liability companies Issue of Shares
named ‘Sunquick Lanka (Private) Limited’ (Company 49% ;
The Company did not make any share issues during the year
Co-Ro 51%) and ‘Sunquick Lanka Properties (Private) Limited’
under review.
(Company 51% ; Co-Ro 49% ) have been established on 3 May
and 2 May 2017 respectively. Further details are provided in the
Share Information
Chairman/CEO’s Review on page 14 of this Annual Report.
Details of share-related information including distribution
There were no significant changes in the nature of principal schedule of number of holders of shares in the Company
activities of the Company and its subsidiaries during the year are given on pages 137 and 138 and information relating to
under review, other than those disclosed in the preceding earnings, dividends and net assets per share is given in the
paragraph. Financial Highlights on page 9.
Review of Operations The twenty largest shareholders of the Company and details of
public holding as at 31 March 2018 are indicated on page 138.
A detailed review of business operations by the Chairman/
Chief Executive Officer is given on pages 12 to 19.
Finance
Future Developments Accounting Policies
The Group intends to continue to pursue a strategy of focusing The Company prepared its Financial Statements according to
on its current business activities and related new business the Sri Lanka Accounting Standards (SLFRS/LKAS). All relevant
avenues. In order to achieve this, the Group will concentrate on applicable standards have been followed in presenting the
enhancing the performance of its FMCG Sector by backward
integration and diversifying the Industrial Products and
Trading Sectors. Further information on future developments
is provided in the Chairman/CEO’s Review and Management
Discussion and Analysis of this Annual Report.

Financial Statements for the year ended 31 March 2018. The Donations
significant accounting policies adopted in the preparation of The Directors have approved and made donations of
the Financial Statements are given in Note 3. Rs.298,805/- (2017 - Rs.316,303/-) to charities during the year
under review.
Financial Results
Group summarised results for the financial year under review Taxation
are shown in the analysis below: The Company has adopted the accounting policy of making
provision for deferred taxation. The Company’s liability to
Year ended 31 March 2018 2017 income tax has been determined according to the provisions
Rs. 000’s Rs. 000’s of Inland Revenue Act No.10 of 2006 and subsequent
Revenue 9,973,563 8,837,350 amendments thereto. Details are given in Note 27 to the
Results from operating 423,926 416,439 Financial Statements.
activities
Net financing costs (96,728) (67,371) Capital Expenditure
(20,697) The Group’s capital expenditure on fixed assets and
Share of Joint Venture’s loss -
investments other than investments in subsidiaries during
Profit before taxation 306,501 349,068
the year under review was Rs.121.2 million (2017 - Rs.262.4
Income tax expense (86,685) (111,937) million).
Profit for the year 219,816 237,131
Non-controlling interests (1,252) (654) Borrowings
Profit attributable to equity Group total borrowing was Rs.1,394.3 million as at 31 March
holders 218,564 236,477 2018 (2017 - Rs.1,012 million).
Events after the Reporting Date

The Financial Statements of the Company and Group are set
Subsequent to the reporting date, no circumstances have
out on pages 82 to 134 of the Annual Report.
arisen which would require adjustment to or disclosure in the
Financial Statements, other than those disclosed in Note 32.
Dividend
The Directors have authorised the distribution of a first and
Board of Directors
final dividend of Rs.3/50 per share for the financial year ended
31 March 2018 for approval by the Shareholders at the Annual The present Directors of the Company are given on pages 20
General Meeting. and 21.
As required by Section 56(2) of the Companies Act No.7 of The Board has made a determination as to the independence
2007 (the Act) the Directors have confirmed that the Company of each non-executive Director and confirms that the required
satisfies the solvency test in terms of Section 57 of the Act and number of non-executive Directors meet the criteria of
have obtained a certificate from the Auditors. independence in terms of Rule 7.10.4 of the Listing Rules.
Reserves Each non-executive Director has submitted a signed and dated

declaration of his independence against the specified criteria
The Group’s total reserves as at 31 March 2018 amounted to
as per the Listing Rules of the Colombo Stock Exchange for
Rs.1,704.7 million (2017 - Rs.1,631.7 million). The movement of
the year under review.
the reserves is given on page 84 under Statement of Changes
in Equity and in Notes 20 and 21 to the Financial Statements.
During the year under review, Deshabandu A. M. de S.
Jayaratne and Mr. H. D. S. Amarasuriya served as non-
Group Revenue executive/independent Directors on the Board of the Company.
Group revenue was Rs.9,973.6 million during the year under
review (2017 - Rs.8,837.4 million). Deshabandu A. M. de S. Jayaratne is a Director of the ultimate
parent company, The Colombo Fort Land and Building

Annual Report of the Board of Directors (Contd.)
For the financial year ended 31 March 2018
PLC and on the Boards of some of its subsidiaries. He was Details of the remuneration and other benefits received by the
appointed to the Board of the Company on 23 May 2007 and Directors are set out in Note 31.2 to the Financial Statements.
has completed over eleven (11) years of continuous service in
his capacity as independent non-executive Director. However, The shareholdings of the Directors at the beginning and at the
the Board of the Company having taken into consideration all end of the financial year were as follows:
other circumstances listed in the Rules of the Colombo Stock
Exchange pertaining to the criteria for defining independence Shareholding Shareholding
is of the unanimous opinion that Deshabandu A. M. de S. as at as at
Jayaratne is nevertheless independent. 31 March 2018 1 April 2017
W. T. Ellawala 500 500
Mr. Alagarajah Rajaratnam retires by rotation in terms of Article (Chairman/CEO)
89 of the Articles of Association and being eligible, offers
Ms. C. R. Ranasinghe 100 100
himself for re-election with the unanimous support of the Board
A. M. de S. Jayaratne Nil Nil
of Directors.
R. C. Peries Nil Nil
As Mr. W. T. Ellawala, Deshabandu A. M. de S. Jayaratne, Anushman Rajaratnam Nil Nil
Mr. R. C. Peries, Mr. Alagarajah Rajaratnam, Mr. H. D. S. S. D. R. Arudpragasam Nil Nil
Amarasuriya and Dr. T. Senthilverl are over the age of 70
Dr. T. Senthilverl 10,765,575 10,765,575
years, their appointment as Directors of the Company require
the approval of a resolution of the Company in general H. D. S. Amarasuriya Nil Nil
meeting. Notices dated 17 May 2018 have been received by K. T. A. Mangala Perera Nil Nil
the Company from shareholders in regard to the resolutions Alagarajah Rajaratnam Nil Nil
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 Directors’ Responsibility for Financial Reporting
General Meeting on page 139 The appointment of Mr. W. T. The Directors responsibility for financial reporting is given on
Ellawala, Deshabandu A. M. de S. Jayaratne, Mr. R. C. Peries, page 58.
Mr. Alagarajah Rajaratnam, Mr. H. D. S. Amarasuriya and
Dr. T. Senthilverl has the unanimous support of the Board of Statutory Payments
Directors. The Directors confirm that, to the best of their knowledge,
all taxes and duties payable by the Company and all
Disclosure of Directors’ Interests contributions, levies and taxes payable on behalf of and in
The Company maintains an Interest Register as required by the respect of the employees and all other known statutory dues
Companies Act No.7 of 2007 (Act). as at the reporting date have been paid and/or provided.
The Directors of the Company have made the general Corporate Governance
disclosures provided for in Sections 192, 197 and 200 of The Directors are committed to maintain the highest standards
the Act. Note 31 to the Financial Statements dealing with of corporate governance. The main corporate governance
related party disclosures include details of their interests in practices of the Company are set out on pages 59 to 61.
transactions.
Property, Plant and Equipment
None of the Directors of the Company had, directly or
Details of property, plant and equipment, additions made
indirectly, during the financial year under review any material
during the year and depreciation thereof for the year under
beneficial interest in any contract to which the Company or any
review are shown in Note 12 to the Financial Statements on
of its subsidiaries was a party or which is or was significant in
pages 102 to 106.
relation to the Company’s business, other than those disclosed
in Note 31 to the Financial Statements and declared at
meetings of the Directors.

Market Value of Properties Auditors
Land and buildings of the Group, which is carried at cost, were The Auditor’s Report on the Financial Statements for the year
re-valued by a professionally qualified independent valuer as under review is given on pages 77 to 81.
at 31 March 2016. The Directors are of the opinion that the
carrying value of the land and building are not in excess of the The Financial Statements of the Company for the financial
current market values of such properties. year under review have been audited by KPMG, Chartered
Accountants, the retiring Auditors, who being eligible, offer
Environmental Protection themselves for re-appointment. A resolution to re-appoint them
The Directors to the best of their knowledge and belief are as Auditors and authorise the Directors to determine their
satisfied that the Company has not engaged in any activities remuneration will be proposed at the Annual General Meeting.
which have caused adverse effects on the environment and it
has complied with the relevant environmental regulations. The Audit fees for the year amounted to Rs.2.6 million
(2017 - Rs.2.175 million) for the Company and Rs.4.070 million
Risk Management (2017 - Rs.3.485 million) for the Group, respectively. There
were no fees for non-audit related work for the Company for
The Directors of the Company have reviewed the risk
the year (2017 - Rs.0.828 million). Fees for non-audit related
management structure of the Company and confirm that there
work for the Group was Rs.0.138 million (2017 - Rs.0.138
are no material risk factors foreseeable. The Report on the Risk
million) for the Group.
Management is given on pages 69 and 70.
As far as the Directors are aware, the Auditors do not have any
Ratios and Market Price Information
relationship (other than that of an Auditor) with the Company
Details of ratios and relevant market price information are or any of its subsidiaries. The Auditors also do not have any
disclosed under Financial Highlights on page 9. interests in the Company or any of its subsidiary Companies.
Remuneration Committee
The composition of the Remuneration Committee and their By Order of the Board
Report is given on page 71.
Audit Committee
The composition of the Audit Committee and their Report is
given on page 73. W. T. Ellawala K. T. A. Mangala Perera
Chairman/CEO Executive Director
Related Party Transactions Review Committee
There were no Non-Recurrent Related Party Transactions
where the aggregate value exceeds 10% of the equity or 5% of
Ms. C. R. Ranasinghe
the total assets, whichever is lower or Recurrent Related Party
Company Secretary
Transactions, where the aggregate value exceed 10% of the
gross revenue/income as per the audited Financial Statements
for the year ended 31 March 2018 (Note 31).
Colombo
24 May 2018
The composition of the Related Party Transaction Review
Committee and their Report is given on page 72.

Statement of Directors’
Responsibility
The Directors are responsible for the Company’s overall The Directors are of the view that they have discharged
internal control systems. The Directors confirm that the existing their responsibilities to the extent required as set out in this
internal controls introduced by them, which consists of internal Statement during the year under review.
audit, internal checks and other controls, are designed to give
a reasonable assurance that all assets are safeguarded and By Order of the Board
the transactions are properly authorised and recorded either
to prevent or detect material misstatements and irregularities
within a reasonable time period.
W. T. Ellawala K. T. A. Mangala Perera
The Directors are of the view that the Company and its Chairman/CEO Executive Director
subsidiaries have adequate resources to continue operations
in the foreseeable future and have continued to use the ‘going
concern’ basis in the preparation of the Financial Statements.
The Directors have provided the Auditors, KPMG, Chartered Company Secretary
Accountants, with every opportunity to carry out reviews, tests
and inspections that they consider appropriate and necessary Colombo
to give their audit opinion. The opinion expressed by the 24 May 2018
Auditors appear on page 77 to 81 of this Annual Report.
The Directors are Responsible

• for the preparation of the Annual Report and the Company
and its subsidiaries Financial Statements in accordance
with applicable laws and regulations;
• for the preparation of the Financial Statements of the

Company and its subsidiaries to reflect a true and fair view
of the state of affairs of the Company as at the reporting
date in accordance with SLFRSs and LKASs;
• to comply and provide the information required by the

Companies Act No.7 of 2007 and the Listing Rules of the
Colombo Stock Exchange;
• to ensure the Company maintains sufficient accounting

records to disclose, with reasonable accuracy, the financial
position of the Company and of the its subsidiaries;
• to select suitable accounting polices which are applied in

a consistent manner disclosing and explaining material
departures therefrom, if any.

Corporate
Governance
The Directors are committed to maintain the highest During the year under review, the Board met on five (5)
standards of corporate governance practiced in the interest occasions, the individual attendance by members is given
of stakeholders (notwithstanding that during the year under below:
review the principal shareholders and related parties held
88.95% of the issued stated capital of the Company) having Name of Director Board Meetings
regard to the requirements of the Companies Act No.7 of Attended
2007, Securities and Exchange Commission of Sri Lanka (1 April 2017 to
and Colombo Stock Exchange and to this end, inter alia, 31 March 2018)
have established internal control systems, including a
comprehensive risk identification, measurement and mitigation
Mr. W. T. Ellawala 5/5
process which is in place designed to carry on the business
Ms. C. R. Ranasinghe 5/5
of the Company in an orderly manner, to safeguard its assets
and secure as far as possible the accuracy and reliability of the Deshabandu A. M. de S. Jayaratne 4/5
records and protect the rights and interests of shareholders Mr. R. C. Peries 4/5
and accountable to them for the overall management of Mr. Anushman Rajaratnam 4/5
the Company. The corporate governance of the Company
Mr. S. D. R. Arudpragasam 5/5
is reflected in its strong belief in protecting and enhancing
stakeholder value in a sustainable manner, supported by Dr. T. Senthilverl 2/5
a sound system of policies and practices. Prudent internal Mr. H. D. S. Amarasuriya 4/5
controls ensure professionalism, integrity and commitment of Mr. K. T. A. Mangala Perera 5/5
the Board of Directors, Management and employees.
Mr. Alagarajah Rajaratnam Nil
The Board of Directors

The Board, Composition and Meetings In order to apprise the members of the Board with the
activities carried out by the Group companies, board papers
The Board of Directors of the Company is responsible for the
are submitted in advance with all relevant management
governance practices adopted in all the companies within the
information, including Group performance, new investments,
Group. The Board comprises the Chairman/Chief Executive
capital projects and other issues which require specific
Officer, Company Secretary, Executive Director and seven
attention and approval of the Board. A Statement of Statutory
other Directors.
Compliance is submitted by all the key management personnel
on a quarterly basis to the Board.
The Directors have a wide range of expertise as well as
significant experience and knowledge in the areas of
Chairman/Chief Executive Officer (CEO) and
management, commercial, financial, legal and marketing
Chairman’s Role
enabling them to discharge their governance duties in an
efficient and effective manner. The present Directors and their The Chairman, who is also the Chief Executive Officer,
profiles are given on pages 20 and 21 of the Annual Report. facilitates the effective discharge of functions of the Board and
ensures that the business affairs are directed as per the set
Each Non-Executive Director has submitted a declaration of strategies, goals and objectives of the Group while maintaining
independence/non-independence for the year. The Board interests of the Group’s various stakeholders and promoting
makes a determination annually as to the independence/ non- high standards of governance. The Chairman/CEO is assisted
independence of each Non-Executive Director. by the members of the Board, Chief Financial Officer and the
Group Management Committee in discharging these functions.

Corporate Governance (Contd.)
Financial and Business Acumen Remuneration Committee

The Board comprises professionals and high calibre business The composition of the Remuneration Committee and their
leaders who possess the required knowledge and experience Report is given on page 71 of this Annual Report.
to offer the Board the necessary guidance on matters relating
to finance and business activities. Relationship with Shareholders
The Company has opened up several channels to ensure
Supply of Information sound communication with the shareholders. The Chairman/
The Company has set up procedures to receive timely CEO, the Executive Director and the Company Secretary are
information, including a clear agenda in advance of the available to shareholders in respect of matters relating to them.
meetings. Minutes of all the meetings are properly recorded
and circulated among all Directors. Annual General Meeting
The Company regards the Annual General Meeting as an
Apart from regular meetings of the Board, meetings headed opportunity towards constructively enhancing relationship with
by Chairman/CEO with the Executive Director, Group the shareholders and to this end the following procedures are
Management Committee and Senior Managers are held in followed:
order to discuss day-to-day specific matters. Decisions and
important information of these meetings are conveyed to the • Notice of the Annual General Meeting and related
Board members as and when necessary. documents are sent to shareholders along with the Annual
Report within the specified period.
Appointments to the Board • ummary of procedures governing voting at the Annual
S
The Board, as a whole, decides on the appointments of General Meeting are clearly communicated.
Directors in accordance with the Articles of Association of the
• All the Directors are available to answer queries.
Company and in compliance with rules on governance.
The details of new appointments to the Board (and any other • he Chairman ensures that the relevant Senior Managers,
T
changes) are made available to shareholders by way of prompt External Auditors and Legal Advisors are available at the
announcements to the Colombo Stock Exchange. Annual General Meeting to answer specific queries.
• Separate resolutions are proposed for each item.
Re-election of Directors
In terms of the Articles of Association of the Company, • Proxy votes are counted.
a Director appointed to the Board holds office until the
next Annual General Meeting and seeks re-election by the Release of Information to the Public and Colombo
shareholders at that meeting. The Articles require one Director Stock Exchange
in office (excluding the Chief Executive Officer) to retire at each The Board of Directors, in conjunction with the Audit
Annual General Meeting. The Director to retire is a Director Committee, is responsible in ensuring the accuracy and
who has been longest in office since his last election. A retiring timeliness of published information and in presenting an
Director is eligible for re-election at the Annual General Meeting accurate and balanced assessment of results in the quarterly
by the shareholders. and annual Financial Statements.
Procedures for Directors to obtain independent All other material and price sensitive information about the
professional advice Company as and when necessary is promptly communicated
The Board seeks professional advice as and when and where to the Colombo Stock Exchange and such information is also
necessary from independent external professionals. simultaneously released to the shareholders and employees.
Disclosure of Directors Remuneration

Aggregate remuneration paid to Directors is disclosed in Note
31.2 to the Financial Statements on page 126.

Accountability and Audit Related Party Transactions Review Committee
Financial Reporting The composition of the Related Party Transactions Review
The Company and its Board of Directors consider timely Committee and their Report is given on page 72 of this Annual
publication of its annual and quarterly Financial Statements Report.
as a high priority. These publications include all material
financial and non-financial information, in order to facilitate the Annual Report of the Board of Directors
requirements of existing and potential shareholders. Financial The Annual Report of the Board of Directors on the Affairs of
Statements have been prepared based on the Sri Lanka the Company for the year under review is given on pages 54 to
Accounting Standards (SLFRS/LKAS). 57 of this Annual Report.
After adequate assessment of the Company’s financial

position and resources, the Directors are of the opinion that the
Company is capable of operating in the foreseeable future. In
view of this, the “going concern” principle has been adopted
in the preparation of the Financial Statements. The Auditors’
Report on the Financial Statements for the year under review is
given on pages 77 to 81.
Internal Controls
The Board of Directors takes overall responsibility for the
Company’s internal control system. A separate section
for audit and compliance has been established within the
Corporate Finance Division to review the effectiveness of the
Company’s internal controls in order to ensure reasonable
assurance that assets are safeguarded and all transactions are
properly authorised and recorded.
The Board of Directors has ensured that the financial

reporting system has been designed to provide reasonable
assurance regarding the reliability of financial reporting
and the preparation of Financial Statements for external
purposes which have been carried out in accordance with Sri
Lanka accounting standards and regulatory requirements. A
statement on Directors’ Responsibility for Financial Reporting is
given on page 58.
Audit Committee
The composition of the Audit Committee and their Report is
given on page 73 of this Annual Report.
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 subsidiaries.

Sustainability
Report
C. W. Mackie PLC considers its Corporate Social Responsibility a) Pursuing actions that address social disparities
(CSR) Policies and practices as a core and inseparable b) Establishing practices that do the least harm to the
component of its ongoing business activities to generate environment
profits.
A summary of the Group’s CSR initiatives during the current
As a forward-thinking organisation, the Group realises the financial year follow:
importance of going beyond its reputation for producing
superior products and delivering exceptional service to its Promoting Community Health
customers and other stakeholders, to meet the needs of In its commitment to enhancing the quality of the lives of
communities and mitigate its impact on the environment. As a communities in which its lives and works, three main areas
responsible steward, the Group channels a portion of its profits pursued focus on uplifting the health, well being and spirituality
to protect the planet and enhance the lives of people. of these communities.
The Group understands that introducing sustainable practices Providing communities with costly much-needed medical care
in its business promotes greater engagement among that may be beyond their straitened circumstances has been a
stakeholders. Following ethical practices in all areas of key focus area.
business, motivates employees to work harder and remain with
the Group and encourages discerning customers to choose A community service project “Manusath Derana” was
the Company’s products over the products of its competitors. organised in partnership with Derana TV in Anuradhapura. This
A sustainability focus also inspires investors to commit to a was a medical camp held to identify kidney disease at its early
long-term relationship with the Group. A number of studies stages, since early detection could enable complete recovery.
confirm that organisations that have a genuine commitment to The medical camp identified potential sufferers of kidney
CSR substantially outperform those that do not. disease through a process of scans and other procedures and
directed them to the most appropriate hospital for treatment.
This programme had a high participation.
Business The North Central province has a high incidence of kidney

disease and Anuradhapura has one of the highest incidences
of the disease in the country.
Environment Products
Developing a
Sustainable
Future
People /
Community Innovation
Blueprint for Sustainability

The Group incorporates sustainable business practices to
benefit both the communities and environment so as to gain
a competitive edge by way of enhancing its reputation as an
ethical corporate citizen, which assures long-term business
success.
The Company’s model for corporate sustainability leadership

offers an aspirational, but attainable, strategy that generates
maximum value for all stakeholders by:

The Company continued with its flagship project of maintaining Uplifting the Spiritual Lives of Communities
Ward 32 of the Colombo National Hospital (CNH) this year A project that looks into the facilities of old temples identified
too. A five-year agreement was signed with the CNH for the need of Rajamaha Viharas for dolos maha pahan (lamps).
this purpose and this is the second year of the Company’s Two dolos maha pahan were presented to the temples in
involvement. Ward 32 is a surgical ward that accommodates Pannipitiya and Kottawa during the year.
75 beds and has been completely refurbished by the Company
with new and upgraded facilities. The Kotagala Kahata Dansela was held at Sri Pada (Adams
Peak) during the peak season for climbing the sacred
mountain and was well received by the devotees.
Maintenance of the hospital ward at the Horana Base Hospital

also continued in the year. This is a long-term initiative that
has been carried out for about a decade and is welcomed by Reducing Environment Impacts
patients and hospital authorities.
Waste Management
Supporting the National Game The Group is deeply conscious of the impact of its operations
on the environment and realises the environmental, economic
The Company believes in the importance of sports in
and health consequences of the waste material generated.
creating and establishing a strong sense of national identity,
With this in mind, ways and means of reducing waste from
because sports draws people together in a spirit of unity and
its factories and offices are explored, while identifying
community that transcends barriers of race, religion and caste.
opportunities for using resources more efficiently. This has had
Accordingly, support of the country’s national game, volleyball,
a positive impact on the Group in terms of reduced costs as
was continued this year too. The Company is the main sponsor
well.
of the Mercantile Volleyball Tournament held annually and
presents the coveted championship Sunquick Trophy to the
The Group ensures its factories are compliant with all
winning team.
regulations stipulated by local authorities, including the
Central Environmental Authority. Manufacturing processes
are continuously evaluated to ensure that they do not have an
adverse effect on the environment nor on the people living in
their vicinities. Chemicals and other hazardous components
are stored in sealed warehouses that provide access to
authorised personnel only.
Subsidiary, Ceymac Rubber Company Limited, has over the

years, introduced and upgraded extensive effluent treatment
initiatives at its factory in Narthupana, Horana to mitigate the
adverse environmental impacts of its rubber production.

Sustainability Report Contd.
Industrial waste water generated from the factory’s production Plans for a Sustainable Future
of Technically Specified Rubber (TSR) is diverted to an effluent The Company will continue to explore new ways in which
treatment system and treated. This treated water is then to reduce its environmental footprint and raise the living
discharged into a pond that supports the natural ecosystem standards of communities. These will be innovative methods
into which fish have been introduced to monitor water quality. that create value for all stakeholders. More initiatives that
Regular testing ensures that the quality of the discharged reduce factory effluents will be pursued and more awareness
water is not harmful to the environment and complies with of the importance of sustainable business practices will be
Central Environmental Authority requirements. The scrubber air created among staff.
pollution system that controls air pollution was also repaired
and modified to improve its effectiveness. The entire effluent A goal for the future is to work towards attaining the stringent
treatment plant was upgraded during the year. standards necessary for obtaining the National Green Award
presented by the Central Environmental Authority. This premier
The Ceymac factory holds the Environmental Protection environmental award recognises organisations that introduce
License issued by the Central Environmental Authority. sustainable and innovative green initiatives.
The Group actively promotes waste management and

recycling in its offices as well. Its sustainable materials strategy
focuses on increasing the use of recycled and renewable
materials and reducing or eliminating undesirable materials.
One of the main consumables is paper, and conscious efforts

were made during the year to reduce the amount of paper
used. Staff are advised to use both sides of a sheet of paper
when printing, and to print documents only when absolutely
necessary. Paper management is carried out according to
the 3R concept of reduce-reuse-recycle and used papers are
given for recycling by third parties.

Human
Capital
Overview The Company is proud of its retention ratios, which are
Talent is recognised as being one of the key drivers of well above industry standards, more than 65% of staff have
innovation, growth and the ability of a business to stay completed five (5) years of service.
competitive. In view of this, Company expends considerable
resources to build the best talent strategy that places the most
effective people in the right jobs. Employee Age Analysis
Today, the Group has on board a competent team of Below 35 48%

professional and skilled employees who has driven the Above 35 52%
Group to new heights of excellence. A range of benefits
and incentives have been introduced to ensure their job
satisfaction, personal and professional development as well as
recognise their achievements. This, in turn, has benefitted the
Group in terms of enhanced employee productivity and their
long-term commitment to the Group.
Staff Profile
The Company has a healthy mix of mature, experienced
The Group has a total staff strength of 554 employees in the
staff of over 35 years of age, as well as younger staff below
parent company and its subsidiaries, of which 101 are in the
35 years, who are well equipped with modern technological
Executive cadre and 453 are Non-Executives.
development.
The Group follows the best human capital practices on staff

Employment Type Analysis
engagement, employee relations and people development to
achieve sustainable business performance.
Permanent 95%
Contract 5%
Recruitment
The Group Human Resources Division oversees the selection
process which is structured to match the candidate’s
qualifications and skills with the requirements of the position.
Recruitments are totally based on merit and a transparent non-
discriminatory recruitment policy is maintained at all times.
New recruits are inducted on multiple aspects of the Group,

Approximately 95% of staff are permanent and only a small which include policies and procedures, compliance, divisional
proportion are on contract. procedures and products.
Equal opportunity
Employee Service Analysis The Company is an equal opportunity employer and looks on
diversity and inclusiveness as being a vital strategy for driving
0-4 Years 35% creativity and innovation in the workplace. The Company
5 and More Years 65% accepts diverse perspectives, believing that every employee
is important and that individual differences enhance the work
atmosphere. Every employee is provided with the same
opportunities as his colleague, for promotion, compensation,
benefits and training and women are encouraged to join the
Group.

Human Capital (Contd.)
Training and Development

Developing its talent is central to the Group’s strategy of
expanding resources to meet the dynamic and evolving needs
of customers and other stakeholders. Studies show that
talent development also influences the provision of excellent
customer service, motivates staff, reduces absenteeism
and employee turnover, as well as considerably increases
productivity and efficiency.
Staffs at all levels of the Group are provided with training

opportunities to both upgrade their skills and develop them
personally, which are geared to ensuring that they benchmark
the best talent in the industry.
Custom-made programmes scientifically designed for each Performance Management

category of staff fill identified competency gaps and upgrade The Group has a transparent and structured performance
their knowledge and skills aligned to departmental and management process aligned to business objectives that is
organisational objectives. designed to create a high-performance culture.
The performance management system (PMS) enables the

Group to evaluate and measure employee performance and
provides a number of benefits for both the employees as
well as the organisation. For the business, it helps optimise
productivity by aligning the employee’s job functions
and activities with strategic objectives. For the employee
it discloses the strengths and weaknesses of his/her
performance and identifies areas for personal growth and
progress, which facilitate training that ultimately supports
career planning and a productive future.
The Group has a 180-degree performance evaluation system

of which 60% is based on Key Performance Indicators
(KPI’s) and the balance 40% on competencies. Performance
The Scan Products Division’s Diploma in Professional Selling, evaluation is conducted annually with one-on-one discussions
organised in partnership with the Sri Lanka Institute of between the employee and his/her supervisor. The entire
Marketing (SLIM), is a case in point. This is a professional one- process will gradually be moved to the Human Resource
year course that has been designed to meet the requirements Information System (HRIS) live module.
of the Sales and Marketing team and is part of the retention
strategy for top performing employees. This year, 18 top Employee Recognition System
performers from among the sales teams were rewarded The Group has in place a system of rewards and recognition
with the opportunity to follow this training and obtain the for good performance that is designed to make employees feel
professional qualification that equips them to hold their place valued and appreciated. This promotes a strong performance-
with the best in the industry. based culture within the organisation.
Rewards are based on merit and consider the information

obtained from the performance evaluation of the employee and
other contributions made towards the organisational success.

Performance of the sales team was recognised at an Annual
Sales Conference held at Club Palm Bay, Marawila. Top
performers were rewarded with overseas pleasure trips,
substantial cash rewards and certificates. The event was also
graced by the President of SLIM.
The HRIS will integrate with the SAP system of the Finance
Division in order to promote a fully integrated IT network within
the Group.
Child Labour
Child labour is strictly prohibited throughout the Group, in both
the offices as well as factories. This extends to manual and
semi-skilled work. The Group’s minimum age of recruitment
Human Resource Information System (HRIS) has been maintained at 18 years from inception.
This project, on an initiative of the ultimate parent company
The Colombo Fort Land and Building PLC, planned over the Industrial Relations
past several years, was launched during the current financial The policies and procedures established, maintain harmonious
year and is a highlight of the achievements of the Group relationships between the Management and staff. The Group
Human Resources Division. This is a globally recognised and is committed to upholding and improving relationships with its
sophisticated system that integrates all companies with the workforce, which includes their right to be treated with dignity,
parent company and provides the entire spectrum of human respect and fair play. The Group’s approach to industrial
resources services. Since it is cloud-based, no valuable relations is a top-down one and workers are engaged in open
company hours are lost in downtime. dialogue.
The system enables real-time information that can be The Company and several subsidiaries are members of the
accessed according to the different levels of responsibility Employer’s Federation of Ceylon (EFC) and strictly complies
within the organisation. All employee information is now online, with all applicable statutory laws, regulations, statutory
which enables the Management to utilise this information for obligations, awards, agreements and guidelines.
speedy decision-making. Staff have virtual access to details of
their performance, leave balance and attendance. Processes Promoting the Work-Life balance
like leave applications can also be completed online. The Group believes that it is essential for employees to
Additionally, there is a module that connects all staff with their maintain a healthy balance between their work functions and
colleagues in all clusters of the other companies within the demands and their personal responsibilities and family life.
Group. This access promotes connectivity, builds team spirit
and reduces the gap between the Management and staff at all The Sports Club was re-energised to promote recreation as
levels. well as enhance fellowship and team spirit among the staff
of the entire Group and a number of activities were pursued
during the year.

Human Capital (Contd.)
The annual Sports Day was celebrated at the Bloomfield Recreational Activities
Grounds at which several sports activities were organised. The annual members’ day of the “CWM Sports Club” provided
Staff participated with enthusiasm and friendly rivalry and a another opportunity for staff to gather together. The members
good time was had by all. spent a memorable day at the Navy Club House Hotel in
Uswetakeiyawa on 23 September 2017, playing team games
and spent a memorable day.
The Sports Club organised a team to participate in the

Badminton Tournament of the Mercantile Badminton
Association. Six players from the Company participated in the Future Plans
Singles and Doubles categories of Novices Tournament in
The Group Human Resources Division is gearing human
March 2018.
resources activities to meet the challenges of the dynamic and
evolving work force of the future. The HRIS is a first step in this
The Company has also participated in the tournaments of the
direction.
Mercantile Cricket Association (MCA) for over 25 years and has
been playing in the E division tournament of the MCA in recent
The Division is also committed to further strengthening existing
years.
talent. A structured plan is being designed to equip staff who
are provided with more responsibilities in their work roles, with
the required training in skills and qualifications to enhance their
on-the-job performance.
The Group Human Resources Division will move into the next
level of the HRIS by providing ‘live’ employee information
based on “HR Analytics” to facilitate effective Management
decisions that are essential to meet contemporary business
challenges.

Risk
Management
Overview Risk Factors
Risk Management framework of C. W. Mackie PLC is designed 1. Strategic Risk
to achieve maximum integration of risk management in the Strategic risk relates to the Group’s future business plans
normal business processes. The aim of the risk management and strategies and includes risks associated with the markets
system, inter alia, is to ensure that the extent to which the and industries in which we operate, demand for our products
Company’s strategy and operational objectives are being and services, competitor threats, technology and product
achieved is understood, the Company’s reporting is reliable innovation.
and that it complies with relevant laws and regulations. The
management of the Company is primarily responsible for risk 2. Operational Risk
management, but the Board of Directors, internal auditor and
Operational risk relates to the risk arising from the execution of
the external auditor too play critical roles.
business operations. The Group has established sound internal
control systems in all its operations and continuously reviews
Our Approach to Risk Management
and monitors those procedures to ensure accountability and
Our broadened definition for risk is the potential occurrence transparency in all its operations.
of an external or internal event that may negatively impact
our ability to achieve the Groups’ business objectives. Its The Group faces a number of operational risks on an
significance is measured in terms of impact and likelihood of ongoing basis, including: Stock management; Supply chain
occurrence. management; Key supplier failure and IT security. The Group
is focused on continuously improving its controlling and
Risk Management is considered as one of the important monitoring processes to ensure smooth functioning of all
functions of our Group. The Group reviews and assesses operations.
significant risks on a regular basis. It is important to identify
risks that may prevent a business from realizing its potential 3. Financial Risk
and to manage them in order to minimize adverse effects and
Financial risk relates to our ability to meet financial obligations
maximize positive outcomes.
and mitigate, inter alia, credit risk, liquidity risk including
volatility in foreign currency exchange rates and interest rates
Our risk management process involves identifying, analyzing
and commodity prices.
and evaluating risks and treating such risks by taking steps
to reduce and eliminate the losses which may be faced by
Financial risk covers the broad area of risk and mainly
the Group. As a part of the Risk Management process, at
incorporates credit risk and market risk stemming from
the Group level, the Board of Directors review its strategies,
business operations.
processes, procedures and guidelines on a continuous basis
to effectively identify assess and respond to risks.
3.1 Credit Risk Management
The Company has established comprehensive internal control Credit risks arise due to the non-payment by customers, which
systems and other risk mitigation techniques to ensure can lead to financial losses. Due to the nature of operations
a sustainable return to shareholders on their investment and economic conditions, the Company has provided its
and to meet its obligations to other stakeholders. Our risk customers with fair credit periods to facilitate a smooth flow
infrastructure is designed to identify, evaluate and mitigate in operations. The Company implements proper credit control
risks within each of the following categories: policies, which evaluates customers periodically, structured
approval levels, recovery procedures, obtaining adequate
security via bank guarantees and debt collection policies to
ensure that the Company selects and maintains only reliable
distributors/customers who are able to honor their debts.

Risk Management (Contd.)
3.2 Market Risk Management 4. Legal and Compliance

Market risk refers to the risk arising from the volatilities in Legal and compliance risk relates to changes in the
market forces. The Company faces market risk in the financial Government and regulatory environment, compliance
sphere in terms of the local rates of interest, inflation and requirements with policies and procedures, including those
exchange rate. In order to mitigate these risks, the Company relating to financial reporting, environmental health and safety
monitors and evaluates market forces and implements and intellectual property risks. Government and regulatory risk
adequate controls. is the risk that the Government or its regulatory actions which
will impose additional cost or cause us to change our business
3.2.1 Foreign Exchange Risk models or practices.
The Company operates in a business model where it has
exports and imports. As a result, the Company is exposed 5. Business Risk
to foreign exchange rate fluctuations. The Company mostly New entrants into the markets and the intensification of
uses its export proceeds to settle import bills. By these means competition from existing players in these markets, variation
the Company effectively provides for its foreign exchange in consumer spending patterns and effects of the weather
exposure by minimizing any adverse impact. conditions for certain business segments are the significant
business risks that the Group faces.
3.2.2 Interest Rate Risk
This risk may arise due to potential losses as a result of 6. Human Resource Risk
adverse movement of interest rates. By having a centralized This risk arises as a result of failure to attract, develop and
treasury management system and through appropriate retain a skilled workforce. Well-structured processes are in
financial risk management techniques, the Company has been place to identify critical employees and retain them in the long
able to mitigate losses arising through interest rate fluctuations. run.
3.2.3 Inflation Rate Risk 7. Principal Risk

The Company serves both individuals and institutional This can be defined as loss of principals or business
clients. Upward movements in inflation rates deteriorates the partners due to intense competition and global mergers
purchasing power of customers and will reduce the potential and acquisitions. In order to mitigate this risk, the Company
demand for products and increase the Company’s cost base. maintains relationships with principals or business partners in
The Company closely monitors fluctuations in price levels and a manner that mutually benefits all parties involved. Further,
focuses on the efficient management of its cost base to ensure regular assessment of service levels is done in order to ensure
minimal increase in price to customers. that business partner expectations are met.
3.2.4 Liquidity Risk Governance of Risk Management

Due to the nature of the businesses that the Company Group Management Committee, C. W. Mackie PLC Board
operates in, we need to ensure that working capital cycles and Board Audit Committee work closely to ensure that risk
are properly maintained to ensure that operations are not management complies with the relevant standards and that it
compromised due to the lack of adequate working capital. The is working effectively.
Company implements effective credit control policies to ensure
collection from debtors, maintain proper inventory levels and As an integral part of risk management, the Board Audit
the obligations to its creditors are met on time. Committee overlooks the adequacy and efficiency of internal
controls across the Group through internal audit reports and
compliance statements.

Report of the
Remuneration Committee
The Remuneration Committee of the Board of Directors of
C. W. Mackie PLC consists of the two (2) Independent/Non-
Executive Directors, viz. Deshabandu A. M. de S. Jayaratne
(Chairman of the Committee) and Mr. H. D. S. Amarasuriya
and Non-Executive Director, Mr. S. D. R. Arudpragasam.
Mr. W. T. Ellawala (Chairman/Chief Executive Officer of the
Company) also participates by invitation and assists by
providing relevant information during deliberations of the
Committee. The Company Secretary functions as Secretary to
the Remuneration Committee.
Written Terms of Reference approved by the Board of Directors

deal clearly with the authority and duties of the Remuneration
Committee.
The Remuneration Committee determines and recommends

to the Board the remuneration levels of Executive Director/s,
Group Management/Senior Executives based on a structured
methodology in evaluating their performance annually. It is
ensured that the remuneration at each level of management is
competitive and based on performance, they are rewarded in a
fair manner.
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.
Proceedings of the Remuneration Committee Meetings are

circulated to the full Board of the Company.
A. M. de S. Jayaratne
Chairman
Board of Directors Remuneration Committee
24 May 2018

Report of the Related Party Transactions
Review Committee
The Related Party Transactions Review Committee of the Proceedings of the Related Party Transactions Review
Board of Directors of C. W. Mackie PLC consists of the two Committee Meetings are circulated to the full Board of the
(2) Independent/Non-Executive Directors, viz. Mr. H. D. S. Company.
Amarasuriya (Chairman of the Committee) and Deshabandu
A. M. de S. Jayaratne and Mr. W. T. Ellawala (Chairman/Chief There were no Non-Recurrent Related Party Transactions
Executive Officer of the Company) and Mr. K. T. A. Mangala where the aggregate value exceeds 10% of the equity or 5% of
Perera, Executive Director. The Company Secretary functions the total assets, whichever is lower or Recurrent Related Party
as Secretary to the Committee. Transactions, where the aggregate value exceed 10% of the
gross revenue/income as per the audited financial statements
Written terms of reference approved by the Board of Directors for the year ended 31 March 2018.
deal clearly with the authority and duties of the Related Party
Transaction Review Committee. The purpose of the Committee
is to provide independent review and oversight of all proposed
Related Party Transactions, other than those exempt, as may
be defined from time to time under the Listing Rules of the H. D. S. Amarasuriya
Colombo Stock Exchange (CSE Rules). Chairman
Board of Directors Related Party Transactions Review
The Committee has adopted the Related Party Transactions Committee
policy set out in the terms of reference, prepared in
accordance with the rules pertaining to Related Party 24 May 2018
Transactions set out in Section 9 of the CSE Rules, which is the
Company’s policy governing the review, approval and oversight
of Related Party Transactions with the intention of providing
guidance and direction on Related Party Transactions. Policy
objectives are:
(i) To ensure that every Related Party Transaction is

conducted in a manner that will protect the Company
from conflict of interest which may arise between the
Company and its Related Parties; and
(ii) To ensure proper review, approval and disclosure of

transactions between the Company and any Related Party
in compliance with legal and regulatory requirements.
The Committee was set up as per the directive of the Securities

and Exchange Commission of Sri Lanka of 12 December 2013
and is constituted as required by the CSE Rules on Related
Party Transactions. The Committee, upon becoming mandatory
with effect from 1 January 2016, has met quarterly and
discussed, inter alia, the nature of the transactions that should
be approved by the Committee as stipulated by the CSE Rules.
The Committee also has taken steps to review and strengthen
the existing process of identifying related parties, capturing
Related Party Transactions and reporting on such transactions
as required by the CSE Rules and obtained appropriate
professional and expert advise in the discharge of its functions.

Report of the
Audit Committee
The Audit Committee of the Board of Directors of C. W. to maintain the effectiveness of internal control procedures in
Mackie PLC consists of the two (2) Independent/Non- place.
Executive Directors, viz. Deshabandu A. M. de S. Jayaratne
(Chairman of the Committee), Mr. H. D. S. Amarasuriya and Accordingly, the Audit Committee is satisfied that
Non-Executive Director, Mr. Anushman Rajaratnam. Their wide organisational controls and the Risk Management Framework
range of financial knowledge, professional skills and business in place provide a reasonable assurance as to the reliability
acumen enable their functions to be carried out efficiently of the Company’s financial reporting, safeguarding of its
and effectively. Mr. W. T. Ellawala (Chairman/Chief Executive assets and compliance with statutory requirements, as well
Officer of the Company) and Chief Financial Officer (up to as compliance with the Listing Rules of the Colombo Stock
19 September 2017) and General Manager-Group Finance/ Exchange.
General Manager-Group Financial Services attend meetings as
ex-officio members. The External Auditors, KPMG, Chartered The adequacy of the internal audit plans and scope for the
Accountants, attend meetings on invitation. Other officials of Group was reviewed by the Committee. Reports issued
the Company and the Internal Auditor, a leading professional by the Internal Auditors on the operations of the Company
firm of Chartered Accountants to which the internal audit and its subsidiaries were reviewed and discussed with the
function has been outsourced, attend meetings on a need Management.
basis. The Company Secretary functions as Secretary to the
Audit Committee. External Audit
The Audit Committee has discussed with the External Auditors
During the financial year ended 31 March 2018 the Audit the scope and conduct of the annual audit.
Committee had four (4) meetings. The minutes of the Audit
Committee meetings are circulated to the full Board of the Before the conclusion of the audit, the Committee met with the
Company. External Auditors to discuss all audit issues and to agree on
their treatment.
Role of the Committee
Written Terms of Reference approved by the Board of The Audit Committee has reviewed the Management Letter
Directors deal clearly with the authority and duties of the Audit issued by the External Auditors and is satisfied as to the follow
Committee. It is, inter alia, empowered to review the adequacy up action as necessary in respect thereof by the Management.
and effectiveness of the internal control and risk management
systems of the Group and its compliance with legal and Having reviewed the performance of the External Auditors, the
regulatory requirements; the adequacy and performance of the Audit Committee has no reason to doubt their effectiveness
Internal Audit function and the External Auditors qualifications, and independence. A confirmation has been received
performance and independence. from the External Auditors as to their compliance with the
`independence’ guidance as given in the Code of Professional
Financial Reporting Conduct and Ethics by the Institute of Chartered Accountants
The Audit Committee, inter alia, reviewed and discussed the of Sri Lanka.
quarterly and annual financial statements of the Group with the
Management, particularly with reference to compliance with The Audit Committee after evaluating the effectiveness of
statutory requirements of Sri Lanka Accounting Standards, the independent performance of the External Auditors, has
Companies Act No.7 of 2007 and the Listing Rules of the recommended to the Board of Directors that KPMG, Chartered
Colombo Stock Exchange and recommended to the Board Accountants, be re-appointed Auditors for the financial year
they approve the same prior to their release to the Colombo ending 31 March 2019 at a remuneration to be determined by
Stock Exchange and Shareholders. the Board, subject to the approval of the Shareholders at the
Annual General Meeting.
Internal Audit, Risks and Control
In view of the fact that the Company has adopted a risk based
approach, the effectiveness of the internal control procedures
in place to identify and manage all significant risks are being
A. M. de S. Jayaratne
reviewed by the Audit Committee. A Risk Management
Chairman
Framework assesses and measures all risks. The Audit
Committee seeks and obtains the required assurances from
Board of Directors Audit Committee
the Group Management Committee and the Internal Auditors
on the remedial action in respect of the identified risks in order
24 May 2018

STABILITY
Our stability is a testament of our
employees’ admirable work ethic and
motivation to excel. It is with great pride that
we acknowledge their unwavering loyalty
and trust in us. They are undoubtedly our
greatest asset and the key drivers of our
growth and profitability.
“I’ve been a proud employee of
C. W. Mackie for the past 9 years. Job
satisfaction aside, my family’s quality of
life too has drastically improved and for
that, I am grateful.”
Ranasinghe Arachchige Gamini Mahinda
C.W. Mackie PLC
( Rubber Warehouse - Mattakkuliya)
Financial
Statements
Independent Auditors’ Report 77 / Statement of Profit or Loss and Other Comprehensive Income 82
Statement of Changes in Equity 84 / Statement of Cash Flow 86 / Notes to the Financial Statements 88

Independent Auditors’
Report
TO THE SHAREHOLDERS OF C.W. MACKIE PLC

Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of C.W. Mackie PLC (the “Company”), and the consolidated financial statements of the
Company and its subsidiaries (the “Group”), which comprise the statement of financial position as at 31 March 2018, and the
statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and
notes to the financial statements, including a summary of significant accounting policies set out on pages 82 to 134.
In our opinion, the accompanying financial statements of the Company and the Group give a true and fair view of the financial
position of the Company and the Group as at 31 March 2018, and of their financial performance and cash flows for the year then
ended in accordance with Sri Lanka Accounting Standards.
Basis for Opinion

We conducted our audit in accordance with Sri Lanka Auditing Standards (“SLAuSs”). Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of the Group in accordance with the Code of Ethics issued by CA Sri Lanka (Code of Ethics), and we have fulfilled
our other ethical responsibilities in accordance with the code of Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Company
financial statements and the consolidated financial statements of the current period. These matters were addressed in the context
of our audit of the Company financial statements and the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.

Revenue Recognition
Refer to the accounting policies in “Note 3.15.1 to the Financial Statements: Revenue – sale of goods”, “Note 5 to the Financial
Statements: Revenue”
The key audit matter Our responses

There is a risk concerning Our audit procedures included;
inappropriate revenue
recognition when the risk and • Assessing the effectiveness of key internal controls regarding the recognition of revenue
rewards of the products have such as matching a sample of sales invoices recognized to sales orders and dispatch
not yet passed to the customer notes.
and the revenue is recognized. • Testing, on a sample basis, whether specific revenue transactions around the year end
As such there is a risk that had been recognized in the appropriate period on the basis of the terms of sale within
particular terms of sale may not the associated contracts, such as whether shipping terms had been met, goods received
be met and, as a result, revenue notes completed and, or, customer acceptance of the product received.
may be recognized in the • Assessing whether there was any evidence of management bias by forming an
incorrect period. Consequently expectation of the current year revenue profile, with reference to historical trends, and
this is one of the key areas our comparing to actual.
audit was focused on. • Testing a sample of credit notes issued after the year end and challenged those that were
not recorded by obtaining evidence and rationale for significant reversals.
• Checking if managements’ policies for revenue recognition continued to be robust and
applied consistently during the year.
Carrying Value of Inventories
Refer to the accounting policies in “Note 3.9 to the Financial Statements: Inventories”, “Note 14 to the Financial Statements:
Inventories”
As shown in Note 14 the Our audit procedures included;
Group holds inventory of
Rs.784,225,000/- (2017: Testing the design and implementation of the Group’s key controls relating to the
Rs.909,787,000/-). As discussed assessment of inventory valuation and inventory provisioning.
on page 85, management
judgment is applied to the cost of Testing, on a sample basis, we have performed the following :
inventories in order to accurately • Agreeing the cost of raw materials to third party supplier invoices;
reflect the manufacturing costs • For work in progress and finished goods, we obtained the bill of material and tested the
incurred in bringing them to their underlying costs within each stock item. We challenged the key assumptions concerning
current condition and physical overhead absorption by assessing the appropriateness of costs included in the
location. This primarily relates to calculation;
the assessment of direct labour • Assessing the overheads absorbed to determine whether they were allowable under
costs incurred, manufacturing LKAS 2 and appropriately recognized.
overheads to be absorbed and • We agreed the estimated overheads to actual overheads incurred in the year to assess
other relevant production costs. whether they were materially different;
• Checked the parameters and system accuracy of weighted average cost (WAC)
A risk surrounding the carrying
calculated with the assistance of information risk management specialist.
value of inventory when
• Assessing the net realisable value (NRV) on a sample basis of stock items by agreeing
compared to the net realizable
their subsequent sales price to customer invoices to ensure that the items were being
value as a result of inadequate
provisioning has also been held at the lower of cost and NRV;
identified. Establishing a • Gaining an understanding of the movements in the inventory for the year and assess the
provision for slow-moving, scale of the provision for non-moving and slow moving inventory.
obsolete and damaged • Where manual adjustments have been made to the provision, we have understood these
inventory involves estimates and by gaining supporting documentation.
judgments, taking into account • Assessing whether the group’s policies had been consistently applied and the adequacy
forecast sales and historical of the Group’s disclosures in respect of the judgment and estimation made in respect of
usage information. inventory provisioning.

Impairment of investment in subsidiary
Refer to the accounting policies in “Note 3.10.1 to the Financial Statements: Impairment of Financial assets”, “Note 13 to the
Financial Statements: Investments in subsidiaries”
There is a risk concern with the Our audit procedures included
recoverability of the investment
in subsidiary amounting to • · Assessing the valuation method used and evaluating the key assumptions used by
Rs.893,507,000/- as at 31st management such as revenue growth rate, gross margins and the discount rates with the
March 2018. As the calculation help of valuation specialist.
of recoverable amount of the • · The key assumptions were evaluated by assessing the reasonableness of
management’s forecasts.
subsidiary deals with significant
• · Assessed the adequacy of disclosures in relation to fair value of impairment.
forecasts and assumptions.
As such the recoverability of
investment in subsidiary has
been held as an area of audit
focus.
Recoverability of Trade Receivables
Refer to the accounting policies in “Note 3.3.1.1 to the Financial Statements: Loans and receivables”, “Note 15.2 to the
Financial Statements: Trade receivables”
There is a risk concerning with Our audit procedures included;
the trade receivables amounting • Testing the design and operating effectiveness of the Group’s key controls over the
to Rs.2,129,375,000/- as at 31 receivables collection processes, including the Group’s credit control processes, over
March 2018, which comprised aged receivables and customer credit approvals.
of a high volume of individual • Call debtor confirmations for a sample of balances and compared the amount against
balances, of which a number the year-end ledger balances.
are material to the financial • Testing a sample of customer balances, we compared the amount of cash received after
statements. These factors, the year-end against the year-end ledger balances.
together with the potential for • Testing the adequacy of the Group’s provisions against trade receivables by critically
customer insolvency, result in a assessing the assumptions made by the Group in determining the level of provision for
risk over the recoverability of the each category of aged debt, with reference to the profile of aged debts at the reporting
Group’s trade receivables. date compared with equivalent data observed subsequent to and at prior year ends
along with an assessment of the level of post reporting date cash receipts.
• Assessing the adequacy of the Group’s disclosures about the degree of estimation
involved in arriving at the provisions for the impairment of receivables.
• Assessing whether there was any evidence of management bias by forming an
expectation of the current year revenue profile, with reference to historical trends, and
comparing to actual. (Noted)
Other Information In connection with our audit of the financial statements, our
Management is responsible for the other information. The other responsibility is to read the other information and, in doing
information comprises the information included in the annual so, consider whether the other information is materially
report, but does not include the financial statements and our inconsistent with the financial statements or our knowledge
auditor’s report thereon. obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we
Our opinion on the financial statements does not cover the conclude that there is a material misstatement of this other
other information and we do not express any form of assurance information; we are required to report that fact. We have
conclusion thereon. nothing to report in this regard.

Responsibilities of Management and Those • Obtain an understanding of internal control relevant to
Charged with Governance for the Financial the audit in order to design audit procedures that are
Statements appropriate in the circumstances, but not for the purpose of
Management is responsible for the preparation of financial expressing an opinion on the effectiveness of the Group’s
statements that give a true and fair view in accordance with internal control.
Sri Lanka Accounting Standards, and for such internal control • Evaluate the appropriateness of accounting policies used
as management determines is necessary to enable the and the reasonableness of accounting estimates and
preparation of financial statements that are free from material related disclosures made by management.
misstatement, whether due to fraud or error. • Conclude on the appropriateness of management’s use of
the going concern basis of accounting and, based on the
In preparing the financial statements, management is audit evidence obtained, whether a material uncertainty
responsible for assessing the Group’s ability to continue as exists related to events or conditions that may cast
a going concern, disclosing, as applicable, matters related significant doubt on the Group’s ability to continue as a
to going concern and using the going concern basis of going concern. If we conclude that a material uncertainty
accounting unless management either intends to liquidate the exists, we are required to draw attention in our auditor’s
Group or to cease operations, or has no realistic alternative but report to the related disclosures in the financial statements
to do so. or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained
Those charged with governance are responsible for overseeing up to the date of our auditor’s report. However, future events
the Company’s and the Group’s financial reporting process. or conditions may cause the Group to cease to continue as
a going concern.
Auditor’s Responsibilities for the Audit of the • Evaluate the overall presentation, structure and content
Financial Statements of the consolidated financial statements, including the
disclosures, and whether the financial statements represent
Our objectives are to obtain reasonable assurance about
the underlying transactions and events in a manner that
whether the consolidated financial statements as a whole are
achieves fair presentation.
free from material misstatement, whether due to fraud or error,
• Obtain sufficient appropriate audit evidence regarding the
and to issue an auditor’s report that includes our opinion.
financial information of the entities or business activities
Reasonable assurance is a high level of assurance, but is
within the Group to express an opinion on the consolidated
not a guarantee that an audit conducted in accordance with
financial statements. We are responsible for the direction,
SLAuSs will always detect a material misstatement when it
supervision and performance of the Group audit. We remain
exists. Misstatements can arise from fraud or error and are
solely responsible for our audit opinion.
considered material if, individually or in the aggregate, they
• We communicate with those charged with governance
could reasonably be expected to influence the economic
regarding, among other matters, the planned scope and
decisions of users taken on the basis of these financial
timing of the audit and significant audit findings, including
statements.
any significant deficiencies in internal control that we identify
during our audit.
As part of an audit in accordance with SLAuSs, we exercise
• We also provide those charged with governance
professional judgment and maintain professional skepticism
with a statement that we have complied with ethical
throughout the audit. We also:
requirements in accordance with the Code of Ethics
regarding independence, and to communicate with them
• Identify and assess the risks of material misstatement of the
all relationships and other matters that may reasonably
consolidated financial statements, whether due to fraud or
be thought to bear on our independence, and where
error, design and perform audit procedures responsive to
applicable, related safeguards.
those risks and obtain audit evidence that is sufficient and
• From the matters communicated with those charged with
appropriate to provide a basis for our opinion. The risk of
governance, we determine those matters that were of most
not detecting a material misstatement resulting from fraud is
significance in the audit of the financial statements of the
higher than for one resulting from error, as fraud may involve
current period and are therefore the key audit matters. We
collusion, forgery, intentional omissions, misrepresentations
describe these matters in our auditor’s report unless law or
or the override of internal control.

regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because
the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such
communication.
Report on Other Legal and Regulatory

Requirements
As required by section 163 (2) of the Companies Act No. 07 of
2007, we have obtained all the information and explanations
that were required for the audit and, as far as appears from our
examination, proper accounting records have been kept by the
Company.
CA Sri Lanka membership number of the engagement partner

responsible for signing this independent auditor’s report is
3707.
CHARTERED ACCOUNTANTS
Colombo, Sri Lanka
24 May 2018

Statement of Profit or Loss and
Other Comprehensive Income
Group Company
For the year ended 31 March 2018 2017 2018 2017
Note Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s
Revenue 5 9,973,563 8,837,350 9,272,290 8,162,754

Cost of sales (8,808,985) (7,554,460) (8,220,644) (6,997,246)
Gross profit 1,164,578 1,282,890 1,051,646 1,165,508
Other operating income 6 278,343 132,042 303,897 160,206
Distribution expenses (549,994) (552,773) (504,002) (513,742)
Administrative expenses (469,001) (445,720) (401,337) (380,290)
Results from operating activities 7 423,926 416,439 450,204 431,682
Finance income 9,746 3,561 3,066 3,653
Finance costs (106,474) (70,932) (89,403) (57,469)
Net financing costs 8 (96,728) (67,371) (86,337) (53,816)
Impairment of investments in subsidiary - - (21,989) -
Share of joint venture’s loss (20,697) - (20,697) -
Profit before taxation 306,501 349,068 321,181 377,866
Income tax expense 9 (86,685) (111,937) (84,726) (112,737)
Profit for the year 219,816 237,131 236,455 265,129
Other comprehensive income/(expense) net of income tax
Actuarial gain/(loss) on defined benefit plans (20,141) 10,056 (15,224) 6,399

Other comprehensive income/(expense)
for the year, net of tax (20,141) 10,056 (15,224) 6,399
Total comprehensive income for the year 199,675 247,187 221,231 271,528
Profit attributable to:

Equity holders of the parent 218,564 236,477 236,455 265,129
Non-controlling interests 1,252 654 - -
Profit for the year 219,816 237,131 236,455 265,129
Total comprehensive income attributable to:

Equity holders of the parent 199,007 246,209 221,231 271,528
Non-controlling interests 668 978 - -
Total comprehensive income for the year 199,675 247,187 221,231 271,528
Basic earnings per share (Rupees) 10 6.07 6.57 6.57 7.37

Dividend per share (Rupees) 11 3.50 3.50 3.50 3.50
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 88 to 134.

Statement of
Financial Position
Group Company
As at 31 March 2018 2017 2018 2017
Note Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Assets
Non-current assets
Property, plant and equipment 12.1 / 12.2 770,317 728,255 359,224 311,988
Investment property 12.3 264,098 33,578 28,779 33,578
Intangible assets 12.4 27,406 40,866 27,406 40,866
Investments in subsidiaries 13 - - 871,518 586,507
Investments in joint venture 13.1 287,143 - 287,143 -
Deferred tax asset 27.1 9,395 9,395 - -
Total non-current assets 1,358,359 812,094 1,574,070 972,939
Current assets
Inventories 14 764,220 895,496 677,228 804,576
Trade and other receivables 15 2,459,244 2,136,222 2,235,645 1,948,447
Held to maturity investments 16 - - - -
Cash and cash equivalents 17 298,622 88,268 66,852 83,294
3,522,086 3,119,986 2,979,725 2,836,317
Assets held for sale 18 - 207,956 - 207,956
Total current assets 3,522,086 3,327,942 2,979,725 3,044,273
Total assets 4,880,445 4,140,036 4,553,795 4,017,212
Equity and liabilities

Equity
Stated capital 19 507,047 507,047 507,047 507,047
Capital reserves 20 8,734 8,734 14,909 14,909
Revenue reserves 21 1,695,982 1,622,935 1,858,103 1,762,832
Equity attributable to equity holders of the parent 2,211,763 2,138,716 2,380,059 2,284,788
Non-controlling interests 22 324,269 29,009 - -
Total equity 2,536,032 2,167,725 2,380,059 2,284,788
Liabilities
Non-current liabilities
Long term borrowings 23.2 2,669 3,525 - -
Lease payable after one year 24.1 1,032 - - -
Retirement benefit obligation 25 64,206 42,465 32,078 17,454
Deferred income/revenue 26.1 325 400 - -
Deferred tax liability 27.1 30,459 31,649 27,395 29,008
Total non-current liabilities 98,691 78,039 59,473 46,462
Current liabilities
Deferred income/revenue 26.1 75 75 - -
Current portion of long term borrowings 23.2 1,376 1,376 - -
Lease payable within one year 24.2 205 - - -
Interest bearing short term borrowings 28 1,262,784 930,629 1,121,801 792,629
Income tax payable 29 37,053 68,641 35,903 67,531
Trade and other payables 30 817,960 817,112 855,487 777,656
Bank overdrafts 17 126,269 76,439 101,072 48,146
Total current liabilities 2,245,722 1,894,272 2,114,263 1,685,962
Total liabilities 2,344,413 1,972,311 2,173,736 1,732,424
Total equity and liabilities 4,880,445 4,140,036 4,553,795 4,017,212
Net asset value per share (Rupees) 61.46 59.43 66.13 63.49
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 88 to
134.
I certify that the Financial Statements have been prepared in compliance with the requirements of the Companies Act No.7 of 2007.
P. Pavalachandran
General Manager - Group Financial Services
The Board of Directors is responsible for preparation and presentation of these Financial Statements.
The Financial Statements on pages 82 to 134 were approved by the Board of Directors and were signed in Colombo on 24 May 2018 on its behalf by :
W.T. Ellawala K. T. A. Mangala Perera

Director Director

Statement of Changes in Equity
For the year ended 31 March

Attributable to equity holders of the parent company Non-
Group Stated Capital General Retained Total controlling Total
capital reserves reserve earnings interests
Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Balance as at 1 April 2016 507,047 8,734 7,000 1,495,686 2,018,467 28,031 2,046,498
Total comprehensive income
for the year
Profit for the year - - - 236,477 236,477 654 237,131
Other comprehensive
income, net of tax - - - 9,732 9,732 324 10,056
Total comprehensive
income for the year - - - 246,209 246,209 978 247,187
Contributions by and
distributions to equity holders
Dividends - - - (125,960) (125,960) - (125,960)
Total distributions to equity holders - - - (125,960) (125,960) - (125,960)
Balance as at 31 March 2017 507,047 8,734 7,000 1,615,935 2,138,716 29,009 2,167,725
Balance as at 1 April 2017 507,047 8,734 7,000 1,615,935 2,138,716 29,009 2,167,725
Total comprehensive income for the year
Profit for the year - - - 218,564 218,564 1,252 219,816
Other comprehensive expense,
net of tax - - - (19,557) (19,557) (584) (20,141)
Total comprehensive income for the year - - - 199,007 199,007 668 199,675
Contributions by and
distributions to equity holders
Dividends - - - (125,960) (125,960) - (125,960)
Total distributions to equity holders - - - (125,960) (125,960) - (125,960)
Subsidiary dividend to NCI - - - - - (368) (368)
Acquisition of non controlling interest - - - - - 294,960 294,960
Balance as at 31 March 2018 507,047 8,734 7,000 1,688,982 2,211,763 324,269 2,536,032

Company Stated Capital

General
Retained Total
capital
reserves reserve
earnings
Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Balance as at 1 April 2016 507,047 14,909 7,000 1,610,264 2,139,220

Profit for the year - - - 265,129 265,129
Other comprehensive income, net of tax - - - 6,399 6,399
Total comprehensive income for the year - - - 271,528 271,528
Contributions by and distributions to equity holders
Dividends - - - (125,960) (125,960)

Total distributions to equity holders - - - (125,960) (125,960)
Balance as at 31 March 2017 507,047 14,909 7,000 1,755,832 2,284,788
Balance as at 1 April 2017 507,047 14,909 7,000 1,755,832 2,284,788
Profit for the year - - - 236,455 236,455
Other comprehensive expense, net of tax - - - (15,224) (15,224)
Total comprehensive income for the year - - - 221,231 221,231
Contributions by and distributions to equity holders

Dividends - - - (125,960) (125,960)
Total distributions to equity holders - - - (125,960) (125,960)
Balance as at 31 March 2018 507,047 14,909 7,000 1,851,103 2,380,059

Statement of Cash Flow
Group Company
Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s
Cash flows from operating activities

Profit before taxation 306,501 349,068 321,181 377,866
Adjustments for :
Depreciation and amortisation of investment property,
intangible assets and property, plant and equipment 115,059 99,562 86,475 74,105
Profit on disposal of property, plant and equipment (20,500) (15,115) (18,563) (13,749)
Profit on disposal of available for sale assets (141,693) - (141,693) -
Provision for retirement benefit obligation 12,280 13,973 7,747 8,453
Finance income (5,591) (876) (1,262) (1,100)
Income from investments (622) - (622) -
Finance costs 105,805 70,932 88,796 57,469
Provision for compensation under
voluntary retirement scheme - 4,875 - 2,750
Unrealised profit on inventory (528) (1,596) - -
Provision for impairment in subsidiary - - 21,989 -
Provision for share of loss of joint venture 20,697 - 20,697 -
Provision for slow moving inventories 7,977 6,289 6,082 4,409
Provision for market returns 442 9,463 442 8,443
Provision for impairment of trade receivables 9,551 7,169 9,026 6,749
Provision for impairment of held to maturity investments - 360 - -
Provision/(reversal) impairment of other receivables - (1,652) - -
Operating profit before working capital changes 409,378 542,452 400,295 525,395
Changes in working capital

Change in inventories (50,101) (11,392) (52,664) (69,459)
Change in trade and other receivables (412,177) (277,676) (264,371) (195,210)
Change in trade and other payables 89,737 263,170 52,925 269,691
Change in deferred income/revenue - 475 - -
Cash generated from operating activities 36,837 517,029 136,185 530,417
Interest paid (105,744) (70,932) (88,796) (57,469)

Payments to gratuity fund (8,348) (10,548) (8,348) (8,117)
Gratuity paid (2,332) (754) - -
Compensation paid under voluntary retirement scheme - (4,875) - (2,750)
Income tax/economic service charge paid (127,936) (107,730) (125,357) (107,729)
Net cash flows from/(used in) operating activities (207,523) 322,190 (86,316) 354,352

Group Company
Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s
Cash flows from investing activities

Purchase of property, plant and equipment (121,188) (262,382) (79,301) (250,309)
Proceeds from disposal of property, plant and equipment 19,816 22,739 17,723 16,034
Proceeds from issue of shares during the year 294,960 - - -
Acquisition of joint venture (36,570) - (36,570) -
Acquisition of subsidiary - - (90,000) -
Dividend received 622 - 622 -
Net cash flows from (used in) investing activities 157,640 (239,643) (187,526) (234,275)
Cash flows from financing activities

Long term borrowings/(repayments) (856) 2,269 - -
Short term borrowings 332,155 130,629 329,172 107,629
Lease rental paid (155) - - -
Interest received 5,591 876 1,262 1,100
Dividend paid (126,328) (125,960) (125,960) (125,960)
Net cash flows from/(used in) financing activities 210,407 7,814 204,474 (17,231)
Net changes in cash and cash equivalents 160,524 90,361 (69,368) 102,846
Cash and cash equivalents at beginning of the year 11,829 (78,532) 35,148 (67,698)
Cash and cash equivalents at the end of the year (Note 17) 172,353 11,829 (34,220) 35,148
The Financial Statements are to be read in conjunction with the related notes, which form a part of the Financial Statements set
out on pages 88 to 134.

Notes to the Financial Statements
1. Reporting Entity 2.3 Functional and presentation currency

1.1 Domicile and legal form The Financial Statements of the Group are presented in Sri
C.W. Mackie PLC is a Group incorporated and domiciled in Sri Lankan Rupees, which is the Group’s functional currency. All
Lanka. The registered office of the Group and principal place values presented in the Financial Statements are in Sri Lankan
of business is located at No.36, D.R. Wijewardena Mawatha, Rupees unless otherwise indicated.
Colombo 10.
2.4 Use of estimates and judgments
The C.W. Mackie PLC Group presently consists of C. W. The preparation of the Financial Statements in conformity with
Mackie PLC and four subsidiary companies namely, Ceymac Sri Lanka Accounting Standards requires management to
Rubber Company Limited, Ceytra (Private) Limited, Kelani make judgments, estimates and assumptions that affect the
Valley Canneries Limited and Sunquick Lanka Properties application of accounting policies and the reported amounts
(Private) Limited. of assets, liabilities, income and expenses. Actual results may
differ from these estimates.
1.2 Principal activities and nature of operations
The C. W. Mackie PLC Group is engaged in a diversity of Estimates and underlying assumptions are reviewed on
activities such as export of natural rubber and desiccated an ongoing basis. Revisions to accounting estimates are
coconut; rubber-based products for export and sale locally; recognised in the period in which the estimates are revised and
import, manufacture, distribution and export of branded in any future periods affected.
consumer products including processed tropical fruits; import
and distribution of sugar; import and resale of branded marine Information about critical judgments in applying accounting
paints and protective coatings, welding equipment and policies that have the most significant effect on the amounts
consumables, refrigeration and air-conditioning components recognised in the Group’s Financial Statements is included in
and light engineering products and rental income by lease out the respective notes.
of properties.
1.3 Ultimate parent enterprise 3. Significant Accounting Policies

The Company is a subsidiary of Lankem Ceylon PLC, whilst Group has consistently applied the accounting policies set out
its ultimate holding company is The Colombo Fort Land & below to all periods presented in these Consolidated Financial
Building Company PLC. Statements.
3.1 Basis of consolidation

2. Basis of Preparation The Consolidated Financial Statements comprise those of the
2.1 Statement of compliance Company and its subsidiary companies.
The Financial Statements have been prepared in accordance
with the Sri Lanka Accounting Standards issued by the Institute 3.1.1 Subsidiaries
of Chartered Accountants of Sri Lanka and the Companies Act Subsidiaries are entities controlled by the Company. The
No.7 of 2007. Financial Statements of subsidiaries are included in the
consolidated Financial Statements from the date that control
2.2 Basis of measurement commences until the date that control ceases. The accounting
The Financial Statements have been prepared on historical policies of subsidiaries have been changed when necessary to
cost basis except where appropriate disclosures are made with align them with the policies adopted by the Group.
regard to fair value under relevant notes. Assets and liabilities
are grouped by nature and in an order that reflect their relative 3.1.2 Non-controlling interest
liquidity. The Financial Statements have been prepared on the The total profits and losses of the subsidiary companies are
assumption that the Group will continue as a going concern for included in the Consolidated Statement of Comprehensive
the foreseeable future. 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 The income statement reflects the Group’s share of the results
are included in the Group Statement of Financial Position. The of operations of the equity accounted investees. When there
interest of outside shareholders in the net assets employed, is a change recognised directly in the equity of the entity, the
represented by the paid up value of shareholders and the Group recognizes its share of any changes, when applicable,
respective reserves and retained profits, is stated separately in the statement of changes in equity. Unrealised gains and
in the Consolidated Statement of Financial Position under the losses resulting from transactions between the Group and the
heading “Non-controlling interests”. equity-accounted investees are eliminated to the extent of the
interest in the equity-accounted investees. The Group’s share
3.1.3 Transactions eliminated on consolidation of profit or loss of equity accounted investees is shown on the
Intra-group balances and transactions, and any unrealised face of the income statement and represents profits or loss
income and expenses arising from intra-group transactions, after tax of the entity and the non-controlling interests in the
are eliminated in preparing the Consolidated Financial subsidiaries of the equity-accounted investees.
Statements. Unrealised gains arising from transactions
with equity accounted investees are eliminated against the Adjustments are made if necessary, to the financial statements
investment to the extent of the Group’s interest in the investee. of the equity accounted investees to bring the accounting
Unrealised losses are eliminated in the same way as unrealised policies in line with those of the Group. After application of the
gains, but only to the extent that there is no evidence of equity method, the Group determines whether it is necessary
impairment. to recognize on impairment loss on its investment in its
equity accounted investee. The Group determines at each
3.1.4 Consolidation of entities with different accounting reporting date whether there is any objective evidence that the
periods investment in the equity accounted investee is impaired. If this
is the case, the Group calculates the amount of impairment as
The Financial Statements of all entities in the Group other than
the difference between the recoverable amount of the equity-
Sunquick Lanka Property (Private) Limited are prepared for
accounted investees and its carrying value and recognises the
a common fnancial year, which ends on 31 March. Sunquick
amount in ‘share of losses of an equity accounted investee’ in
Lanka Property (Private) Limited with a 31 December fnancial
the income statement.
year end prepares for consolidation purpose, additional
fnancial information as of the same date as the fnancial
Upon loss of significant influence over the associate or the
statements of the parent.
joint control over the joint venture, the Group measures
and recognises any retained investment at its fair value.
3.1.5 Investments in equity accounted investees
Any difference between the carrying amount of the equity
Joint ventures are arrangements in which the Group has joint accounted investee disposed and the fair value of the retaining
control and have rights to the net assets of the arrangement. investment and the proceeds from disposal is recognised in
The group has Joint Control in a venture when there is the income statement.
contractually agreed sharing of control of the venture and the
decisions about the relevant activities of the venture require the Summarised financial Information in respect of subsidiaries
unanimous consent of the parties sharing control. that have non-controlling interests that are material to the
reporting entity (i.e., the Group) is disclosed separately when
Joint ventures are treated as equity accounted investees and applicable.
are accounted for using the equity method.
3.2 Foreign currency translations
Under the equity method Investments in equity-accounted
investees are recognised initially at cost, which includes Transactions in foreign currencies are translated to Sri Lanka
transaction costs. The carrying amount of the investment is Rupees at the foreign exchange rate prevailing at the date of
adjusted at each reporting date to recognise changes in the the transaction. Monetary assets and liabilities denominated
Group’s share of net assets of the equity-accounted investees in foreign currencies are translated to Sri Lanka Rupees at the
arising since the acquisition date. Goodwill relating to the foreign exchange rate ruling as at the reporting date.
equity-accounted investees is included in the carrying amount
of the investment. Dividends declared by the equity accounted
investees are recognised against the equity value of the
Group’s investment.

Notes to the Financial Statements (Contd.)
Non-monetary assets and liabilities which are stated at investments in equity securities are classified as available-for-
historical cost denominated in foreign currencies are translated sale financial assets. Subsequent to initial recognition, they
to Sri Lanka Rupees at the exchange rate ruling at the dates are measured at fair value and changes therein, other than
of the transactions. Non-monetary assets and liabilities that impairment losses and are recognised in other comprehensive
are stated at fair value, denominated in foreign currencies are income and presented within equity in the fair value reserve.
translated to Sri Lanka Rupees at the exchange rate ruling When an investment is derecognised, the cumulative gain or
at the dates that the fair value were determined. Foreign loss in Other Comprehensive Income is transferred to profit or
exchange differences arising on translation are recognised in loss.
the Statement of Comprehensive Income.
3.3.1.3 Cash and cash equivalents
3.3 Financial instruments Cash and cash equivalents comprise cash in hand and short
3.3.1 Non-derivative financial assets term deposits with original maturity of three months or less.
The Group’s non-derivative financial assets comprise loans For purpose of cash flow bank overdrafts that are repayable
and receivables and available-for-sale financial assets. on demand and form an intergral part of the Group’s cash
management are included as components of cash and cash
The Group initially recognises loans and receivables and equivalents.
deposits on the date that they are originated. All other financial
assets (including assets designated at fair value through profit 3.3.1.4 Held to maturity
or loss) are recognised initially on the trade date at which the Held to maturity investments are non-derivative financial assets
Group becomes a party to the contractual provisions of the with fixed or determinable payments and fixed maturity that an
instrument. entity has the positive intention and ability to hold to maturity.
The Group derecognises a financial asset when the contractual 3.3.2 Non-derivative financial liabilities
rights to the cash flows from the asset expire, or it transfers
The Group initially recognises debt securities issued and
the rights to receive the contractual cash flows on the financial
subordinated liabilities on the date that they are originated. All
asset in a transaction in which substantially all the risks and
other financial liabilities (including liabilities designated at fair
rewards of ownership of the financial asset are transferred. Any
value through profit or loss) are recognised initially on the trade
interest in transferred financial assets that is created or retained
date at which the Group becomes a party to the contractual
by the Group is recognised as a separate asset or liability.
provisions of the instrument. The Group derecognises
a financial liability when its contractual obligations are
Financial assets and liabilities are offset and the net amount
discharged or cancelled or expire.
is presented in the Statement of Financial Position when, and
only when, the Group has a legal right to offset the amounts
Financial assets and liabilities are offset and the net amount
and intends either to settle on a net basis or to realise the asset
presented in the Statement of Financial Position when, and
and settle the liability simultaneously.
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
3.3.1.1 Loans and receivables and settle the liability simultaneously.
Loans and receivables comprise trade and other receivables.
The non-derivative financial liabilities of the Group comprise
Loans and receivables are financial assets with fixed or loans and borrowings, finance lease payable, bank overdrafts,
determinable payments that are not quoted in an active trade and other payables.
market. Such assets are recognised initially at fair value plus
any directly attributable transaction costs. Subsequent to initial Such financial liabilities are recognised initially at fair value plus
recognition loans and receivables are measured at amortised any directly attributable transaction costs. Subsequent to initial
cost using the effective interest method, less any impairment recognition these financial liabilities are measured at amortised
losses. cost using the effective interest method.
3.3.1.2 Available-for-sale financial assets 3.3.3 Stated capital

Available-for-sale financial assets are non-derivative financial Ordinary shares are classified as equity. Incremental costs
assets that are designated as available for- sale and that are directly attributable to the issue of ordinary shares are
not classified in any of the previous categories. The Group’s recognised as a deduction from equity, net of any tax effects.

3.4 Property, plant and equipment Buildings on freehold land 40 years
3.4.1 Recognition and measurement Buildings on leasehold land 40 years or period of the
lease, whichever is less
Items of property, plant and equipment are measured at
Plant, machinery and tools 6 2/3 years
cost revalued amount less accumulated depreciation and
Motor vehicles 5 years
accumulated impairment losses. Cost includes expenditure
Furniture and fittings 6 2/3 years
that is directly attributable to the acquisition of the asset. The
Factory, office and lab equipment 2-5 years
cost of self constructed assets include the cost of materials
Computer and other installations 5 years
and direct labour, any other costs directly attributable to
bringing the assets to a working condition for their intended
Depreciation of an asset begins when it is available for use,
use.
i.e. when it is in the location and condition necessary for it
to be capable of operating in the manner intended by the
Expenditure incurred for the purpose of acquiring, extending or
Management. Depreciation of an asset ceases at the earlier
improving assets of a permanent nature by means of which is
of the date that the asset is classified as held for sale and the
to carry on the business or to increase the earning capacity of
date that the asset is derecognised.
its business has been treated as capital expenditure.
3.4.5 Capital work in progress
The carrying values of property, plant and equipment are
reviewed for impairment when there are indications of Capital expenses incurred during the period which are not
impairments that the carrying value of the assets may not be completed as at the reporting date are shown as capital
recoverable. work-in-progress, whilst the capital assets which have been
completed during the period and put to use have been
3.4.2 Subsequent costs transferred to property, plant and equipment if any.
The cost of replacing of a part of an item of property, plant and
3.5 Investment property
equipment is recognised in the carrying amount of the item
if it is probable that the future economic benefits embodied The land and buildings held to earn rental income or for
within the part will flow to the Group, and its cost can be capital appreciation or for both, but not for sale in the ordinary
measured reliably. The carrying amount of the replaced part is course of business, use in the production or supply of goods
derecognised. The cost of the day-to-day servicing of property, or services or for administrative purposes are classified as
plant and equipment are recognised in the Statement of ‘investment properties’ to be accounted on the cost model.
Comprehensive Income as an expense as incurred. However, if there is impairment in value, other than of a
temporary nature, the carrying amount is reduced to recognise
3.4.3 Derecognition the decline.
Items of property, plant and equipment are derecognised
3.6 Intangible assets
upon replacement,disposal or when no future economic
benefits are expected from its use. Any gain or loss arising on Software acquired by the Group is stated at cost less
derecognition of the asset is included in the income statement accumulated amortisation and accumulated impairment
in the year the asset is derecognised. losses.
3.4.4 Depreciation 3.6.1 Subsequent expenditure

Depreciation is calculated over the depreciable amount, which Subsequent expenditure on software assets is capitalised only
is the cost of an asset, or other amount substituted for cost, when it increases the future economic benefits embodied in
less its residual value. the specific asset to which it relates. All other expenditure is
expensed as incurred.
Depreciation is recognised in profit or loss on a straight-line
basis over the estimated useful lives of each part of an item of 3.6.2 Amortisation
property, plant and equipment, since this most closely reflects Amortisation is recognised in profit or loss on a straight-line
the expected pattern of consumption of the future economic basis over the estimated useful life of the software, from the
benefits embodied in the asset. date that it is available-for-use since this most closely reflects
the expected pattern of consumption of the future economic
The estimated useful lives for the current and comparative benefits embodied in the asset. The estimated useful life of
periods are as follows: software is as follows:

Computer software and licenses 4-5 years 3.10 Impairment

3.10.1 Financial assets (including derivatives)
3.7 Assets held for sale
A financial asset not carried at fair value through profit or loss
Non-current assets, or disposal groups comprising assets and is assessed at each reporting date to determine whether there
liabilities, are classified as held-for-sale if it is highly probable is objective evidence that it is impaired. A financial asset is
that they will be recovered primarily through sale rather than impaired if objective evidence indicates that a loss event has
through continuing use. occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash
Such assets, or disposal groups, are generally measured at flows of that asset that can be estimated reliably.
the lower of their carrying amount and fair value less costs to
sell. Any impairment loss on a disposal group is allocated first The Group considers evidence of impairment for receivables at
to goodwill, and then to the remaining assets and liabilities on collective level. All receivables with similar risk characteristics
a pro rata basis, except that no loss is allocated to inventories, are grouped together and collectively assessed for any
financial assets, deferred tax assets, employee benefit assets, impairment that has been incurred but not yet identified.
investment property or biological assets, which continue to be
measured in accordance with the Group’s other accounting An impairment loss in respect of a financial asset measured
policies. Impairment losses on initial classification as held-for- at amortised cost is calculated as the difference between its
sale or held-for-distribution and subsequent gains and losses carrying amount and the present value of the estimated future
on remeasurement are recognised in profit or loss. cash flows discounted at the asset’s original effective interest
rate.
Once classified as held-for-sale, intangible assets and
property, plant and equipment are no longer amortised or Losses are recognised in profit or loss and reflected in
depreciated, and any equity-accounted investee is no longer an allowance account against receivables. Interest on the
equity accounted. impaired asset continues to be recognised through the
unwinding of the discount. When a subsequent event causes
3.8 Leased assets the amount of impairment loss to decrease, the decrease in
Leases in terms of which the Group assumes substantially all impairment loss is reversed through profit or loss.
the risks and rewards of ownership are classified as ‘finance
leases. Upon initial recognition the leased asset is measured 3.10.2 Non financial assets
at an amount equal to the lower of its fair value and the present The carrying amounts of the Group’s non financial assets,
value of the minimum lease payments. Subsequent to initial other than inventories, are reviewed at each reporting date to
recognition, the asset is accounted for in accordance with the determine whether there is any indication of impairment. If any
accounting policy applicable to that asset. such indication exists, then the asset’s recoverable amount is
estimated. Goodwill and indefinite lived intangible assets are
3.9 Inventories tested annually for impairment.
Inventories are measured at the lower of cost and net
realisable value. The cost of inventories is based on the An impairment loss is recognised if the carrying amount of an
weighted average principle, and includes expenditure incurred asset or cash generating unit (CGU) exceeds its recoverable
in acquiring the inventories, production or conversion costs amount.
and other costs incurred in bringing them to their existing
location and condition. In the case of manufactured inventories The recoverable amount of an asset or CGU is the greater of
and work in progress, cost includes an appropriate share of its value in use and its fair value less costs to sell. In assessing
production overheads based on normal operating capacity. value in use, the estimated future cash flows are discounted
Goods in transit are determined based on actual cost. to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
Net realisable value is the estimated selling price in the and the risks specific to the asset or CGU. For the purpose
ordinary course of business, less the estimated costs of of impairment testing assets are grouped together into the
completion and selling expenses. 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 Retiring gratuity
losses recognised in respect of CGUs are allocated first The retirement benefit plan adopted is as required under the
to reduce the carrying amount of any goodwill allocated to Payment of Gratuity Act No.12 of 1983. This item is grouped
the CGU (group of CGUs) and then to reduce the carrying under ‘retirement benefit obligation’ in the Statement of
amounts of the other assets in the CGU (group of CGUs) on a Financial Position.
pro rata basis.
Provision for retirement benefit obligation on the employees
An impairment loss in respect of goodwill is not reversed. For of the Group is on an actuarial basis using the Projected Unit
other assets, an impairment loss is reversed only to the extent Credit Method (PUC Method) as recommended by LKAS 19,
that the asset’s carrying amount does not exceed the carrying “Employee Benefits”. The Group continues to use actuarial
amount that would have been determined, net of depreciation method under Sri Lanka Accounting Standard 19, “Employee
or amortisation, if no impairment loss had been recognised. Benefits”.
3.11 Provisions However, under the Payment of Gratuity Act No.12 of 1983, the
A provision is recognised in the Statement of Financial Position liability to an employee arises only on completion of 5 years of
when the Group has a legal or constructive obligation as a continued service.
result of a past event and it is probable that an outflow of
economic benefits will be required to settle the obligation. The assumptions based on which the results of actuarial
revaluation was determined are included in Note 25 to the
3.12 Employee benefits Financial Statements.
3.12.1 Defined contribution plans
3.13 Commitments and contingencies
A defined contribution plan is a post employment plan under
Contingencies are possible assets or obligations that arise
which an entity pays fixed contribution into a separate entity
from past events and whose existence will be confirmed only
and will have no legal or constructive obligation to pay a further
by occurrence or non-occurrence of uncertain future events not
amount. Obligations for contributions to defined contribution
wholly within the control of the Group.
plans are recognised as expense in profit or loss in the period
during which services are rendered by employees.
Contingencies and capital commitments of the Group are
disclosed in Note 33 and 34 respectively to the Financial
Mercantile Service Provident Society
Statements.
The Group and executive staff contribute 15% and 10%
respectively and the Group and clerical staff (other than
3.14 Events after the reporting period
Scan Division of C. W. Mackie PLC) contribute 12% and 8%
respectively on the gross salary of each employee to the The materiality of the events after the reporting period has been
approved Provident Fund. considered and appropriate adjustments and provisions have
been made in the Financial Statements wherever necessary.
Employees Provident Fund
The Group and employees contribute 12% and 8% respectively 3.15 Revenue
on the gross salary of each employee to the approved 3.15.1 Sale of goods
Provident Fund. Revenue from the sale of goods in the course of ordinary
activities is measured at the fair value of the consideration
Employees Trust Fund received or receivable, net of returns, trade discounts and
The Group contributes 3% of the gross salary of each volume rebates.
employee to the Employees’ Trust Fund.
Revenue is recognised when persuasive evidence exists,
3.12.2 Defined benefit plans usually in the form of an executed sales agreement, that
A defined benefit plan is a post employment benefit plan other the significant risks and rewards of ownership have been
than a defined contribution plan. The defined benefit plan transferred to the buyer, recovery of the consideration is
expense is recognised immediately in profit or loss and the probable, the associated costs and possible return of goods
Group recognises all actuarial gains and losses arising from can be estimated reliably, there is no continuing management
defined benefit plans in other comprehensive income. 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 3.18.1 Finance income and finance costs
can be measured reliably, then the discount is recognised as a Finance income comprises interest income on funds invested
reduction of revenue as the sales are recognised. (including available-for-sale financial assets), dividend income
and gains on the disposal of available-for-sale financial
3.15.2 Rendering of services assets. Interest income is recognised as it accrues in profit or
Revenue from rendering of services is recognised in the loss, using the effective interest method. Dividend income is
accounting period in which the services are rendered or recognised in profit or loss on the date that the Group’s right
performed. to receive payment is established, which in the case of quoted
securities is the ex-dividend date.
3.15.3 Other income
Lease rental income Finance Costs comprise interest expense on borrowings
Rental income from investment property is recognised in profit recognised in profit or loss using the effective interest method.
or loss on an straight line basis over the term of the agreement.
Rental income is recognised as other income. Foreign currency gains and losses are reported on a net basis.
3.16 Lease payments 3.18.2 Income tax

Minimum lease payments made under finance leases are Income tax expense comprises current and deferred tax.
apportioned between the finance expense and the reduction Current tax and deferred tax are recognised in profit or loss
of the outstanding liability. The finance expense is allocated to except to the extent that it relates to a business combination, or
each period during the lease term so as to produce a constant items recognised directly in Equity or in Other Comprehensive
periodic rate of interest on the remaining balance of the liability. Income.
3.17 Government grants Current tax

Current tax is the expected tax payable or receivable on the
Other government grants are initially recognised as deferred
taxable income or loss for the year, using tax rates enacted
income at fair value if there is reasonable assurance that they
or substantively enacted at the reporting date, and any
will be received and the Group will comply with the conditions
adjustment to tax payable in respect of previous years.
associated with the grant; they are then recognised in profit or
loss as other income on a systematic basis over the useful life
Deferred tax
of the asset. Grants that compensate the Group for expenses
Deferred tax is recognised in respect of temporary differences
incurred are recognised in profit or loss on a systematic basis
between the carrying amounts of assets and liabilities for
in the periods in which the expenses are recognised.
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for the following
3.18 Other expenditure
temporary differences on the initial recognition of assets or
All expenditure incurred in running of the business and in liabilities in a transaction that is not a business combination
maintaining the capital assets in a state of efficiency has been and that affects neither accounting nor taxable profit nor loss
charged to the profit or loss for the year. to the extent that it is probable that they will not reverse in the
foreseeable future. Deferred tax is measured at the tax rates
Expenditure incurred for the purpose of acquiring, expanding that are expected to be applied to temporary differences when
or improving assets of a permanent nature by means of which they reverse, based on the laws that have been enacted or
to carry on the business or for the purpose of increasing the substantively enacted by the reporting date.
earning capacity of the business has been treated as capital
expenditure. Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and
Repairs and renewals are charged to revenue in the year in they relate to income taxes levied by the same tax authority
which the expenditure is incurred. 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 4 Effect of accounting standards issued but
credits and deductible temporary differences, to the extent that not yet effective
it is probable that future taxable profits will be available against
The Institute of Chartered Accountants of Sri Lanka has issued
which they can be utilised. Deferred tax assets are reviewed at
the following new Sri Lanka Accounting Standards which will
each reporting date and are reduced to the extent that it is no
become applicable for financial periods beginning and after
longer probable that the related tax benefit will be realised.
1 January 2018. Accordingly, these Standards have not been
applied in preparing these Financial Statements.
3.19 Segment reporting
An operating segment is a component of the Group that 4.1 SLFRS 9 - Financial instruments: classification and
engages in business activities from which it may earn revenues measurement
and incur expenses, including revenues and expenses
SLFRS 9, issued in 2014, replaces the existing guidance in
that relate to transactions with any of the Group’s other
LKAS 39 Financial Instruments: Recognition and Measurement.
components, of which the operating results are reviewed
SLFRS 9 includes revised guidance on the classification
regularly by the Group Management Committee to make
and measurement of financial instruments, including a new
decisions about resources allocated to each segment and
expected credit loss model for calculating impairment on
assess its performance, and for which discrete financial
financial assets, and the new general hedge accounting
information is available.
requirements. It also carries forward the guidance on
recognition and derecognition of financial instruments from
3.20 Basic earnings per share
LKAS 39. SLFRS - 9 is effective from financial period beginning
The Group presents basic Earnings Per Share (EPS) data on or after 1 January 2018.
for its Ordinary Shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the The Group is assessing the potential impact on its
Group by the weighted average number of Ordinary Shares consolidated financial statements resulting from the application
outstanding during the period. of SLFRS 9.
3.21 Statement of cash flows 4.2 SLFRS 15 Revenue from contracts with customers
The Statement of Cash Flows has been prepared using the SLFRS 15 establishes a comprehensive framework for
“indirect method”. determining whether, how much and when revenue is
recognised. It replaces existing revenue recognition guidance,
Interest paid is classified as operating cash flows, interest including LKAS 18 Revenue, LKAS 11 Construction Contracts
received is classified as financing cash flows for the purpose of and IFRIC 13 Customer Loyalty Programmes.
presenting the Statement of Cash Flows.
SLFRS 15 is effective for annual reporting periods beginning on
3.22 Related party transactions or after 1 January 2018, with early adoption permitted.
Disclosure has been made in respect of the transactions in
which one party has the ability to control or exercise significant The Group is assessing the potential impact on its
influence over the financial and operating policies/decisions of consolidated financial statements resulting from the application
the other, irrespective of whether a price is charged. of SLFRS 15.
3.23 Comparative information 4.3 SLFRS 16 Leases

The comparative information is re-classified wherever SLFRS 16 sets out the principles for the recognition,
necessary to conform with the current year’s presentation in measurement, presentation and disclosures of leases for both
order to provide a better presentation. parties to a lease contract. SLFRS 16 is effective for annual
reporting period beginning on or after 1 January 2019, with
early adoption permitted. The Group is assessing the potential
impact on its financial statements resulting from the application
of SLFRS 16.

Group Company
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
5. Revenue
Gross revenue 10,556,732 9,391,812 9,850,832 8,677,387
Less: Turnover related taxes (583,169) (554,462) (578,542) (514,633)
Net revenue 9,973,563 8,837,350 9,272,290 8,162,754
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.
The Group comprises the following main business segments:
- Commodity trading
Export and local sale of all grades of natural rubber, thick pale crepe rubber (TPC), ribbed smoked sheet rubber (RSS) and
desiccated coconut and non traditional spices.
- Rubber based products manufacturing

Manufacture of technically specified rubber (TSR),plantation sole crepe rubber, specialised industrial sole crepe rubber and
moulded rubber products.
- Industrial products
Import and sale of welding equipment and consumables and light engineering products, refrigeration and air-conditioning
components and marine paints and protective coatings.
- Consumer goods
Manufacture and trading of FMCG products.
- Other
Other Group results mainly comprise vehicle hire income and rent income from investment properties.

For the year ended 31 March 2018
Group
Business segments Commodity Rubber Based Industrial Consumer Other Consolidated
Trading Products Products Goods
Manufacturing
Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Total revenue 1,797,775 683,784 877,514 6,855,926 1,751 10,216,750

Inter-segment revenue (840) (19,982) (84) (222,281) - (243,187)
Revenue from external customers 1,796,935 663,802 877,430 6,633,645 1,751 9,973,563
Segment gross profit 115,035 67,478 227,465 752,849 1,751 1,164,578
Operating overheads (77,614) (52,782) (72,437) (551,409) (188,877) (943,119)

Depreciation and amortisation (5,587) (2,958) (6,325) (18,244) (46,033) (79,147)
Contribution to
defined benefit plan for gratuity - (720) - (4,239) (3,441) (8,400)
Provision for impairment of trade debtors - (173) (7,383) (1,470) - (9,026)
Other operating income 226 3,112 8,572 99,026 167,407 278,343
Results from operating activities 32,060 13,957 149,892 276,513 (69,193) 403,229
Finance income
(including foreign exchange loss) 6,853 2,373 41 (3,877) 4,356 9,746
Finance costs (45) (5,939) (1) (16,369) (84,120) (106,474)
Profit/(loss) before taxation 38,868 10,391 149,932 256,267 (148,957) 306,501
Income tax expense (5,746) (1,109) (24,657) (40,259) (14,915) (86,685)
Profit/(loss) for the year 33,122 9,282 125,275 216,008 (163,872) 219,816
Total assets 485,468 521,341 809,220 1,725,781 1,338,635 4,880,445

Total liabilities 140,685 130,364 351,807 798,056 923,501 2,344,413
Capital expenditure 166 6,696 12,249 37,055 65,023 121,188
Total depreciation 5,587 21,775 7,063 34,601 46,033 115,059
2017/18
%
100
80 35
61 Commodity Trading
60
17 Rubber Based Product Manufacturing
40 11 Industrial Product
10
46 Consumer Goods
20
3 27 Other
0 6
(16)
(20)
Segment Profit
Reportable
Segment
Reportable
Before Tax
Assets

For the year ended 31 March 2017

Group
Business segments Commodity Rubber Based Industrial Consumer Other Consolidated
Trading Products Products Goods
Total revenue 1,639,484 635,626 844,935 6,079,875 - 9,199,920

Inter-segment revenue (562) (11,916) (68) (350,024) - (362,570)
Revenue from external customers 1,638,922 623,710 844,867 5,729,851 - 8,837,350
Segment gross profit 126,368 79,710 212,979 863,833 - 1,282,890
Operating overheads (107,507) (42,459) (81,626) (638,553) (2,769) (872,914)

Depreciation and amortisation (5,669) (19,758) (4,174) (28,250) (41,711) (99,562)
Contribution to
defined benefit plan for gratuity (1,267) (4,615) (1,691) (3,864) (2,536) (13,973)
Provision for impairment of
trade debtors - - (4,614) (2,555) - (7,169)
Provision for compensation under VRS - (2,125) - (2,750) - (4,875)
Other operating income 617 2,764 6,196 11,370 111,095 132,042
Results from operating activities 12,542 13,517 127,070 199,231 64,079 416,439
Finance income
(including foreign exchange loss) 2,768 198 1,169 (344) (230) 3,561
Finance costs (4,599) (4,512) (15) (17,463) (44,343) (70,932)
Profit before taxation 10,711 9,203 128,224 181,424 19,506 349,068
Income tax expense (8,350) 865 (28,600) (58,205) (17,647) (111,937)
Profit for the year 2,361 10,068 99,624 123,219 1,859 237,131
Total assets 430,837 563,672 537,349 2,228,019 380,159 4,140,036

Total liabilities 83,134 138,270 127,242 799,791 823,874 1,972,311
Capital expenditure 6,292 9,681 10,477 87,491 148,441 262,382
Total depreciation 5,669 19,758 4,174 28,250 41,711 99,562
2016/17
%
100
6 10
80
Commodity Trading
60 52 51 Rubber Based Product Manufacturing

Industrial Product
40 Consumer Goods
36 14
Other
20 14
3
3 11
0
Reportable
Segment Profit
Segment
Assets
Reportable
Before Tax

Group Company
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
6. Other operating income

Sundry income 16,744 17,891 14,698 15,912
Profit on disposal of property, plant and equipment 162,224 15,115 160,287 13,749
Government grants 75 25 - -
Service fee 1,160 - 13,160 12,000
Export handling fee - - 17,871 19,534
Rent income 98,140 99,011 97,881 99,011
278,343 132,042 303,897 160,206
7. Results from operating activities

7.1 Results from operations is stated after charging:
Depreciation on
- Property, plant and equipment 96,610 86,317 68,856 60,860
- Investment property 4,799 4,799 4,799 4,799
- Intangible assets 12,820 8,446 12,820 8,446
Directors’ emoluments (Note 31.2) 28,301 25,918 25,792 23,710
Personnel expenses (Note 7.3) 349,236 319,240 208,100 193,103
Auditors’ remuneration - Audit fees 4,635 3,485 2,600 2,175
- Non-audit services 138 828 - 828
- Audit related fee and expenses 408 389 112 389
Other auditors’ remuneration - Internal audit fees 1,548 1,496 1,051 988
Compensation paid under voluntary retirement scheme - 4,875 - 2,750
Provision for market returns 460 8,443 220 8,443
Provision for obsolete inventories (Note 14.1) 7,977 6,289 6,082 4,409
Provision for impairment of trade receivables (Note 15.3) 9,551 7,169 9,026 6,749
Provision for impairment of held to
maturity investments (Note 16.1) - 360 - -
Provision for impairment of other receivables (Note 15.5.1) - (1,652) - -
7.2 Results from operations comprise those of the:

Company 450,204 431,682 450,204 431,682
Subsidiary companies (26,278) (15,243) - -
423,926 416,439 450,204 431,682
7.3 Personnel expenses :

Salaries and wages 298,176 269,183 172,685 158,525
Contribution to defined contribution plans (EPF/MSPS/ ETF) 38,435 36,084 27,668 26,125
Contribution to defined benefit plan for gratuity (Note 25.6) 12,625 13,973 7,748 8,453
349,236 319,240 208,101 193,103

Group Company
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
8. Net financing costs

Interest cost
Interest on other borrowings 106,412 70,932 89,403 57,345
Lease interest 62 - - -
Interest on inter company balances - - - 124
106,474 70,932 89,403 57,469
Interest income
Interest on fixed deposits/ savings accounts (5,591) (876) (607) (417)
Interest from inter company balances - - (655) (683)
Net foreign exchange gain (4,155) (2,685) (1,804) (2,553)
(9,746) (3,561) (3,066) (3,653)
96,728 67,371 86,337 53,816
9. Income tax expense

9.1 Current tax expense
Income tax on current year’s profit (Note 9.3) 92,015 120,483 90,479 119,372
Under/(over) provision for previous year (4,140) 33 (4,140) 33
87,875 120,516 86,339 119,405
Deferred tax expense

Deferred taxation (Note 27) (1,190) (8,579) (1,613) (6,668)
(1,190) (8,579) (1,613) (6,668)
86,685 111,937 84,726 112,737
9.2 The Company and subsidiaries are liable for income tax at the rate of 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.

Group Company
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
9.3 Reconciliation of accounting profit to income tax :

Profit before income tax 306,501 349,068 321,181 377,866
Less: Other sources of income (3,865) (2,114) (1,261) (1,100)
Aggregate disallowable expenses 272,671 223,633 250,013 172,913
Aggregate allowable expenses (95,105) (148,838) (76,168) (91,297)
Aggregate disallowable income (162,224) (15,115) (160,287) (13,749)
Other sources of income 3,865 2,035 1,261 1,100
Total statutory income 321,843 408,669 334,738 445,733
Tax losses set-off (4,428) (2,216) - -
Assessable income 317,415 406,453 334,738 445,733
Taxable income 317,415 406,453 334,738 445,733
Applicable tax rates:
Income tax @ 28% 88,725 116,379 88,081 115,298
Income tax @ 12% 3,290 4,104 2,398 4,074
Income tax on current year’s profit 92,015 120,483 90,479 119,372
9.4 Accumulated tax losses

Tax losses at the beginning of the year 404,059 366,404 - -
Adjustment to the tax loss brought forward - (3,454) - -
Loss for the year 12,820 43,325 - -
Tax loss set off during the year (4,428) (2,216) - -
Tax losses at the end of the period 412,451 404,059 - -
9.5 Economic service charge

Balance at the beginning of the year 22,079 9,919 11,884 -
Payments made during the year 47,564 29,557 45,299 26,448
Set off against income tax (37,973) (14,564) (37,909) (14,564)
Write-off during the year (1,280) (2,833) - -
Balance at the end of the year 30,390 22,079 19,274 11,884
10. Basic earnings per share (Rupees)

The calculation of the earnings per share is based on the profit for the year attributable to ordinary shareholders divided by
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”.
Group Company
Net profit attributable to ordinary shareholders (Rs.’000) 218,564 236,477 236,455 265,129
Weighted average number of ordinary shares 35,988,556 35,988,556 35,988,556 35,988,556
Earnings per share (Rupees) 6.07 6.57 6.57 7.37
11. Dividend per share (Rupees)

Gross dividend for the year (Rupees) 125,959,946 125,959,946 125,959,946 125,959,946
Weighted average number of ordinary shares 35,988,556 35,988,556 35,988,556 35,988,556
Dividend per share (Rupees) 3.50 3.50 3.50 3.50

12. Property, Plant and Equipment
12.1 Property, plant and equipment - Group
102
As at 31 March
Buildings Freehold Freehold Plant, Computer Office, Freehold Furniture Leasehold Capital Total Total
on Leasehold Land Buildings Machinery and other Factory Motor and Motor Work in
Land and Installations and Lab Vehicles Fittings Vehicles Progress 2018 2017
Tools Equipments
Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Cost
Balance at the beginning of the year 38,419 257,500 217,694 299,184 70,770 25,512 235,521 39,111 - - 1,183,711 1,347,692
Adjustments for (write-off)/write-back - - 2 - (3,609) 3 1 (1) - - (3,604) -
Additions during the year - - 5,364 9,135 3,369 2,729 64,344 3,898 2,145 10,437 101,421 221,067
Disposals during the year - - - (4,801) (968) (138) (33,930) (1,303) - - (41,140) (32,502)
Assets held for sale - 39,468 587 3,005 409 463 15,037 - - - 58,969 (352,548)
Balance at the end of the year 38,419 296,968 223,647 306,523 69,971 28,569 280,973 41,705 2,145 10,437 1,299,357 1,183,709
Accumulated depreciation
Balance at the beginning of the year 17,730 - 32,847 199,279 33,726 17,473 133,422 20,977 - - 455,454 538,607
Adjustments for write-off/(write-back) 3 - 2,335 984 (4,773) 520 893 - - - (38) -
Depreciation charge for the year 2,956 - 8,396 27,835 10,548 2,324 39,601 4,808 142 - 96,610 86,317
Disposals during the year - - - (4,801) (820) (111) (33,628) (835) - - (40,195) (24,878)
Assets held for sale - - 28 2,723 327 419 13,712 - - - 17,209 (144,592)
Balance at the end of the year 20,689 - 43,606 226,020 39,008 20,625 154,000 24,950 142 - 529,040 455,454
Written down value

As at 31 March 2018 17,730 296,968 180,041 80,503 30,963 7,944 126,973 16,755 2,003 10,437 770,317
As at 31 March 2017 20,689 257,500 184,847 99,905 37,044 8,039 102,099 18,132 - - 728,255
Capital Expenditure
2017/18 2016/17
Commodity Trading 1% Commodity Trading 2%

Rubber Based Product Rubber Based Product
Manufacturing 6% Manufacturing 4%
Industrial Product 10% Industrial Product 4%
Consumer Goods 30% Consumer Goods 33%
Other 53% Other 57%
C. W. MACKIE PLC - Annual Report 2017/18

12.2 Property, plant and equipment - Company
As at 31 March
Buildings Freehold Freehold Plant, Computer Office, Freehold Furniture Leasehold Capital Total Total
on Leasehold Land Buildings Machinery and other Factory Motor and Motor Work in
Land and Installations and Lab Vehicles Fittings Vehicles Progress 2018 2017
Tools Equipments
Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Cost
Balance at the beginning of the year 38,419 43,500 35,772 112,454 60,622 25,512 206,134 32,925 - - 555,338 718,692
Adjustments for (write-off)/write-back - - 2 - (3,609) 3 1 (1) - - (3,604) -
Additions during the year - - 5,364 5,787 3,236 2,729 58,042 3,527 - - 78,685 208,994
Disposals during the year - - - - (429) (138) (29,193) (1,303) - - (31,063) (19,802)
Assets held for sale - 39,468 587 3,005 409 463 15,037 - - - 58,969 (352,548)
Balance at the end of the year 38,419 82,968 41,725 121,246 60,229 28,569 250,021 35,148 - - 658,325 555,336
C. W. MACKIE PLC - Annual Report 2017/18

Balance at the beginning of the year 17,730 - 3,931 46,533 26,414 17,473 113,530 17,737 - - 243,348 344,597
Adjustments for depreciation of
write-off/(write-back) 3 - 2,335 984 (4,773) 520 893 - - - (38) -
Depreciation charge for the year 2,956 - 1,343 11,951 9,721 2,324 36,538 4,023 - - 68,856 60,860
Disposals during the year - - - - (421) (111) (28,907) (835) - - (30,274) (17,517)
Assets held for sale - - 28 2,723 327 419 13,712 - - - 17,209 (144,592)
Balance at the end of the year 20,689 - 7,637 62,191 31,268 20,625 135,766 20,925 - - 299,101 243,348
Written down value :

As at 31 March 2018 17,730 82,968 34,088 59,056 28,961 7,944 114,255 14,223 - - 359,224
As at 31 March 2017 20,689 43,500 31,841 65,921 34,208 8,039 92,604 15,186 - - 311,988
103
Group Company
2018 2017 2018 2017
As at 31 March Rs.000’s Rs.000’s Rs.000’s Rs.000’s
12.3 Investment property

Cost
Balance at the beginning of the year 62,344 62,344 62,344 62,344
Additions 236,150 - - -
Depreciation charge for the year 5,630 4,799 4,799 4,799
Written down value as at 31 March 264,098 33,578 28,779 33,578
The Company has rented out a part of C. W. Mackie PLC building complex and 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 2016, 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 as
at 31 March 2016 is Rs.49 million. These properties were valued on an open market value for existing use basis.
Rent income and opearting expenses are included in the Statement of Profit or Loss and other Comprehensive Income as follows:

Rent income 98,140 99,011 97,881 99,011
Direct operating expenses arising from investment property
that generated rental income during the year 19,839 19,839 19,839 19,839
12.4 Intangible assets

Software purchased
Cost
Adjustments for write-back 3,608 - 3,608 -
Additions 615 41,315 615 41,315
Accumulated amortisation
Adjustments for write-off 4,863 - 4,863 -
Amortisation for the year 12,820 8,446 12,820 8,446
Written down value as at 31 March 27,406 40,866 27,406 40,866

12.5 (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 2018 is Rs.251
million (2017-Rs.351 million)
Company
The gross carrying amount of fully depreciated property, plant and equipment still in use as at 31 March 2018 is Rs.140
million (2017-Rs.243 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.
C.W. Mackie PLC has surrendered the aforesaid lease of the premises No. 34 and 36, D.R. Wijewardena Mawatha,
Colombo 10 to the Divisional Secretary, at his request, on the understanding that the terms, conditions and covenants
contained in the lease will continue to be in force in respect of the said premises during the tenure of the lease, for the
purpose of vesting the land in the Urban Development Authority (UDA) to thereafter enable the UDA to allocate the
said land, together with an adjoining land, to the Company for the purpose of a contemplated development by the
Company on the amalgamated lands, pursuant to the Government’s re-development plan for the Beira Lake along D.R.
Wijewardena Mawatha.
(iv) Assets pledged as securities against bank borrowings

Details of assets pledged are disclosed in Note 23.3 and 28.2
12.6 Property, plant and equipment extent

Location Extent No of Buildings
Leasehold 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

Scan Water Bottling Plant - Munagama, Horana 3A,0R,5.21P 4
Sunquick Plant - Sunquick Lanka Properties (Private) Limited - Munagama, Horana 2A,3R,33.07P 8
Ceymac Rubber Company Limited - Aramangolla, Horana 5A,0R,0.45P 11
Ceymac Rubber Company Limited - Thebuwana, Narthupana 5A,1R,10.00P 8
Kelani Valley Canneries Limited - Kaluaggala, Hanwella 2A,0R, 35.00P 7

12.7 Capitalisation of borrowing costs

During the year under review, the Group has not capitalised any borrowing costs.
12.8 Significant changes in the Company’s or its subsidiaries’ fixed assets and the market value of land
There are no significant changes in the Company’s or its subsidiaries’ fixed assets and the market value of land when compared
to the book value as at 31 March 2018.
12.9 Capital work-in progress

The capital work-in progress balance represents the cost incurred by Sunquick Lanka Property (Private) Limited on the project to
improve the production capacity of the factory rented out to Sunquick Lanka (Private) Limited under the supervision of the Co-Ro
A/S. Accordingly, the Company has capitalized the improvements made to land and buildings in the design stage of the project as
at the year end.
Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
13. Investments in subsidiaries

Ceymac Rubber Company Limited - - 424,823 424,823
Ceytra (Private) Limited - - 34,652 34,652
Sunquick Lanka Properties (Private) Limited 307,000 -
- - 766,475 459,475
Kelani Valley Canneries Limited - - 127,032 127,032
Less: Provision for impairment loss - (21,989) -
- 105,043 127,032
- - 871,518 586,507
13.1 Investments in joint venture

Sunquick Lanka (Private) Limited
13.1.1 The Company has 49% interest in Sunquick Lanka (Private) Limited, a joint venture formed for the purpose of
manufacturing, processing and marketing Co-Ro’s products in the form of concentrates and ready to drink (RTD) products
marketed under ’Sunquick’ brand. The factory premises located at Horana.
13.1.2 The Group’s interest in Sunquick Lanka (Private) Limited is accounted for using the equity method in the Consolidated
Financial Statements. Summarised financial information of the joint venture and reconciliation with the carrying amount of the
investment in the Financial Statements are set out below.

Group Company
2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Summarized Statement of Profit or Loss

Revenue 1,041,722 - - -
Operating expenses (136,991) - - -
Finance income 1,967 - - -
Finance cost (10,065) - - -
Loss for the year (42,238) - - -
Group’s share of loss for the year (20,697) - - -
Summarized Statement of Financial Position

Non current assets 240,747 - - -
Current assets 888,751 - - -
Non current liabilities 4,669 - - -
Current liabilities 538,823 - - -
Equity 586,007 - - -
Group’s carrying amount of the investments 287,143 - - -
Equity Reconciliation
Carrying value as at 1st April - - - -
Investment made during the year 307,840 - 307,840 -
Share of loss (20,697) - (20,697) -
Carrying value as at 31st March 287,143 - 287,143 -
Deemed Cost
Principal Activity Holding % 31.03.2018 31.03.2017
Rs.000’s Rs.000’s
Ceymac Rubber Manufacture, export and sale locally of technically 98.72% 424,823 424,823
Company Limited specified rubber and manufacture and export
of plantation sole crepe rubber and specialised
industrial sole crepe rubber.
Ceytra (Private) Limited Manufacture and export of moulded rubber 62.82% 34,652 34,652
products. Place of business is in Horana.
Kelani Valley Canneries Manufacture, for sale and distribution locally as 88.34% 127,032 127,032
Limited well as exporting of a wide range of processed
tropical fruits, young coconut/king coconut water
and beverage products under ‘KVC’ brand. Place of
business is in Hanwella.
Sunquick Lanka The principal activities of the company is to own the 51.00% 307,000 -
Properties (Private) production site and the production facilities and to
Limited lease out these facilities to Sunquick Lanka (Private)
Limited pursuant to the lease agreement. Place of
business is in Horana.

Group Company
2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
14. Inventories
Raw materials 20,292 141,031 1,615 118,122
Work-in-progress 10,604 17,079 - -
Finished goods 710,981 632,173 667,106 598,978
Goods-in-transit 108 27,256 108 27,256
Other consumables 42,240 92,248 23,947 71,109
784,225 909,787 692,776 815,465
Less: Provision for slow moving inventories - (Note 14.1) (20,005) (14,291) (15,548) (10,889)
764,220 895,496 677,228 804,576
14.1 Provision for slow moving inventories

Provision made during the year 7,977 6,289 6,082 4,409
Write-off during the year (2,263) (7,602) (1,423) (1,295)
Inventories mentioned above are stated at the lower of cost and net realisable value. Inventories amounting to Rs.693 million
(2017 - Rs.815 million) have been pledged as security for short term loans and overdraft facilities obtained from banks (Note 28.2)
Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
15. Trade and other receivables

Trade receivables from related parties (Note 15.1) 529 662 6,120 6,048
Trade receivables (Note 15.2) 2,093,297 1,849,568 1,938,387 1,694,669
Deposits 8,127 7,958 7,180 7,111
Loans to employees Note 15.4) 19,656 18,125 7,103 7,497
Other receivables (Note 15.5) 337,635 259,909 276,855 233,122
2,459,244 2,136,222 2,235,645 1,948,447
15.1 Trade receivable from related parties :

Ceymac Rubber Company Limited - - 2,951 3,323
Ceytra (Private) Limited - - 2,640 2,063
Ceylon Trading Company Limited - 397 - 397
E.B.Creasy & Company PLC 237 107 237 107
York Hotel Management Services Limited 111 75 111 75
Beruwala Resorts Limited 181 46 181 46
Lanka Special Steel Limited - 37 - 37
529 662 6,120 6,048
The Company recognises interest on the amount due from subsidiary companies based on the monthly average outstanding at
the rate of 12% per annum, (2017:12%).

Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
15.2 Trade receivables:

Trade receivables - Local sales 1,930,176 1,693,739 1,815,261 1,573,055
- Export sales 199,199 187,137 157,086 151,317
2,129,375 1,880,876 1,972,347 1,724,372
Less : Provision for impairment loss (Note 15.3) (36,078) (31,308) (33,960) (29,703)
2,093,297 1,849,568 1,938,387 1,694,669
Trade debtors amounting to Rs.1,972 million (2017-Rs.1,724 million) have been pledged as security for short term loans and
overdraft facilities obtained from banks (Note 28.2).
15.3 Provision for impairment loss :

Provision made during the year 9,551 7,169 9,026 6,749
Write-off during the year (4,781) (1,200) (4,769) (4)
15.4 Loans to employees :

Loans granted during the year 17,399 14,781 7,978 9,535
35,524 30,354 15,475 16,858
Recovered during the year (15,868) (12,229) (8,372) (9,361)
Loans to employees represent short term staff loans and staff advances, where repayment terms are less than 12 months.

Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
15.5 Other receivables

Payments in advance 179,236 124,845 154,666 113,187
Economic service charge (Note 9.5) 30,390 22,079 19,271 11,884
VAT receivable 32,619 32,619 15,777 15,777
With-holding tax receivable 62 - 62 -
Prepayments 25,764 6,320 2,403 2,616
Other receivables 92,985 97,467 92,251 97,236
361,056 283,330 284,433 240,700
Less : Provision for other receivables (Note 15.5.1) (23,421) (23,421) (7,578) (7,578)
337,635 259,909 276,855 233,122
15.5.1 Provision for other receivables

Provision/(reversal) made during the year - (1,652) - -
Written off during the year - (10,837) - -
16. Held to maturity investments

Fixed deposits 360 360 - -
Less : Provision for impairment loss (Note 16.1) (360) (360) - -
- - - -
16.1 Provision for impairment loss :

Balance at the beginning of the year 360 360 - -
Provision made during the year - - - -
Balance at the end of the year 360 360 - -
17. Cash and cash equivalents

Bank balances 196,997 86,716 65,502 81,926
Cash in hand 1,625 1,552 1,350 1,368
Short term deposit 100,000 - - -
298,622 88,268 66,852 83,294
Bank overdraft 126,269 76,439 101,072 48,146
Cash and cash equivalents for cash flow purpose 172,353 11,829 (34,220) 35,148

18. Assets held for sale
C.W Mackie PLC and Co-Ro A/S from Denmark has entered joint venture agreement on 24 February 2017, with the purpose
of manufacturing, processing and marketing Co-Ro’s products in the form of concentrates and ready to drink (RTD) products
marketed under ’Sunquick’ brand.
Accordingly, assets relating to “Sunquick” factory is presented as assets held for sale as at end of March 2017. Sale of assets
were completed during the year ended 31 March 2018 resulting a net profit of Rs.142 million which is included under other
operating income in the statement of profit or loss and other comprehensive income.
As at 31 March 2017 assets held for sale stated at cost and comprised the following assets;
Cost Accumulated Written Down
Depreciation Value
(Rs.000’s) (Rs.000’s) (Rs.000’s)
Freehold land 139,499 - 139,499

Buildings on freehold land 77,211 13,596 63,615
Plant and machinery 114,354 111,418 2,936
Freehold motor vehicles 15,278 14,758 520
Factory equipments 4,603 3,397 1,206
Office equipments 200 200 -
Lab equipments 394 394 -
Computers 1,009 829 180
352,548 144,592 207,956
Cumulative income or expenses included in OCI

There are no cumulative income or expenses included in OCI relating to the disposal Group.
Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
19. Stated capital

Ordinary shares (No. of shares 35,988,556) 507,047 507,047 507,047 507,047
20. 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

Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
21. Revenue reserves*

General reserve 7,000 7,000 7,000 7,000
Retained earnings 1,688,982 1,615,935 1,851,103 1,755,832
1,695,982 1,622,935 1,858,103 1,762,832
* Capital reserves and general reserve represent the amounts set aside by the Directors for future expansion and to meet any
contingencies.
22. Non-controlling interests

Non- controlling interest (NCI) in subsidiaries.
The following table summarises the information relating to each of the Group’s subsidiaries that has a material NCI, before any
intra - group eliminations.
Ceytra (Private) Limited Other Non - Material NCI Total

2018 2017 2018 2017 2018 2017
Rs. 000’ Rs. 000’ Rs. 000’ Rs. 000’ Rs. 000’ Rs. 000’
NCI percentage (%) 37.18% 37.18% - - - -

Total assets 67,355 58,310 695,424 705,530 762,779 763,840
Total liabilities 13,152 9,828 325,661 281,427 338,813 291,255
Net assets 54,203 48,482 369,763 424,103 423,966 472,585
Carrying amount of NCI 20,153 18,026 304,116 10,983 324,269 29,009
Revenue 83,020 76,265 830,903 801,955 913,923 878,220

Profit/(loss) after tax 7,919 7,563 (46,451) (33,965) (38,532) (26,402)
Total comprehensive income 6,711 8,164 (46,585) (30,909) (39,875) (22,745)
Profit/(loss) allocated to NCI 2,495 3,035 (1,826) (2,057) 669 978
Cash flows from/(used in)

operating activities (5,747) (1,109) (121,241) (32,643) (126,988) (33,752)
investing activities 4,554 4,968 351,344 (9,631) 355,898 (4,663)
financing activities,
before dividend to NCI (990) 659 1,972 25,269 982 25,928
Cash flows from financing activities (990) 659 1,972 25,269 982 25,928
Net increase in cash and
cash equivalents (2,183) 4,518 232,076 (17,005) 229,893 (12,487)

Group Company
As at 31st March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
23. Loans and borrowings

Balance at the beginning of the year 4,901 2,632 - -
Obtained during the year 520 3,000 - -
Repayments during the year (1,376) (731) - -
Balance at the end of the year 4,045 4,901 - -
23.1 Sources of finance

Commercial Bank of Ceylon PLC 4,045 4,901 - -
4,045 4,901 - -
23.2 Maturity analysis

Payable after one year but less than five years 2,669 3,525 - -
Payable within one year 1,376 1,376 - -
23.3 Assets pledged as securities against long term borrowings
Lending Institution Facility Obtained Assets Pledged Interest Rate
Kelani Valley Canneries Limited For financing of long term capital Mortgage bond over the machinery AWPLR + 3%
Commercial Bank of Ceylon PLC requirements valued Rs.3 million at Kaluaggala,
Hanwella
24. Finance lease liability

Balance at the beginning of the year - - - -
Lease obtained during the year 1,854 - - -
Early settlement discounts - - - -
Repayments during the year (155) - - -
Balance at the end of the year 1,699 - - -
Interest in suspense (463) - - -
Capital outstanding at the end of the year 1,236 - - -
24.1 Payable after one year

Lease rental payable 1,329 - - -
1,032 - - -
24.2 Payable within one year

Lease rental payable 371 - - -
205 - - -

Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
25. Retirement benefit obligation

Present value of defined benefit obligation (Note 25.2) 107,924 85,365 74,755 58,868
Fair value of plan assets (Note 25.3) (43,712) (42,894) (42,677) (41,414)
Unrecognised actuarial gain/(loss) (Note 25.4) - - - -
64,212 42,471 32,078 17,454
Arrears payable to the CWM Staff Non-Contributory

Gratuity Fund (Note 25.5) (6) (6) - -
64,206 42,465 32,078 17,454
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.
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 2018 and the appropriate adjustments have been effected in the
Financial Statements.
Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
25.1 Plan assets consist of the following:

Treasury bills 37,128 36,024 36,249 35,025
Cash 5,527 5,930 5,396 5,515
Others 1,057 940 1,032 874
43,712 42,894 42,677 41,414
25.2 Movement in present value of defined benefit obligations

Current service cost 6,772 8,152 4,745 5,535
Interest cost 10,488 9,762 7,461 6,625
Benefits paid by the plan (13,821) (9,517) (10,614) (5,557)
Actuarial gain/(loss) 19,120 (11,776) 14,295 (7,962)
25.3 Movement in fair value of plan assets

Contribution paid into gratuity fund 10,982 10,548 8,348 8,117
Benefits paid by the gratuity fund (13,778) (8,763) (10,614) (5,557)
Expected return on plan assets 4,635 3,941 4,458 3,707
Actuarial loss (1,021) (1,720) (929) (1,563)

Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
25.4 Unrecognised actuarial (gain)/loss

Balance at the beginning of the year - - - -
Actuarial gain/(loss) for year - obligation 19,120 (11,776) 14,295 (7,962)
Actuarial gain/(loss) for year - plan assets 1,021 1,720 929 1,563
Actuarial gain/(loss) recognised during the year (20,141) 10,056 (15,224) 6,399
Balance at the end of the year - - - -
25.5 Arrears payable to the

CWM Staff Non-Contributory Gratuity Fund
Balance at the beginning of the year (6) (6) - -
Contribution for the year 10,982 10,548 8,348 8,117
Paid to the fund (10,982) (10,548) (8,348) (8,117)
Balance at the end of the year (6) (6) - -
25.6 Amount recognised in the

Statement of Comprehensive Income
Recognised in profit or loss
Current service cost 6,772 8,152 4,745 5,535
Interest cost 10,488 9,762 7,461 6,625
Expected return on plan assets (4,635) (3,941) (4,458) (3,707)
12,625 13,973 7,748 8,453
Recognised in the other comprehensive income

Recognition of actuarial gain/(loss) 20,141 (10,056) 15,224 (6,399)
Total amount recognised in the Statement of
Profit or Loss and Other Comprehensive Income 32,766 3,917 22,972 2,054
25.7 Actuarial assumptions

Discount rate 11.00% 12.50% 11.00% 12.50%
Expected return on plan assets 12.50% 12.50% 12.50% 12.50%
Future salary increases 12.00% 12.00% 12.00% 12.00%
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
25.8 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.

Sensitivity effect on
As at 31 March Total Employment benefit
Comprehensive Income increase/(reduction)
increase/(reduction) in the liability
Group Company Group Company
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Decrease in discount rate (1%) (10,724) (7,213) 10,724 7,213

Increase in discount rate (1%) 9,201 6,175 (9,201) (6,175)
Decrease in salary escalation (1%) 8,961 6,002 (8,961) (6,002)

Increase in salary escalation (1%) (10,223) (6,860) 10,223 6,860
Decrease in discount rate (1%) (8,120) (5,630) 8,120 5,630

Increase in discount rate (1%) 7,445 4,880 (7,445) (4,880)
Decrease in salary escalation (1%) 8,749 5,812 (8,749) (5,812)
Increase in salary escalation (1%) (9,635) (6,613) 9,635 6,613
Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
26. Deferred income/revenue

Government grant 400 475 - -
400 475 - -
26.1 Maturity analysis

Non-current 325 400 - -
Current 75 75 - -
Kelani Valley Canneries Limited (KVC) has been awarded a government grant in December 2016 from Industrial Development
Board of Ceylon, amounted to Rs.500,000 for the acquisition of fully automated jam cup filing machine which was total cost
of Rs.1.3 million. The grant was received under the scheme with the aim of facilitating Micro Small and Medium Enterprises’s
(MSME) engaged in food based products by supporting them with funds needed to acquire new technology or purchase modern
machinery to enhance the quality or productivity of their production. The government grant recognised as deferred income is
being amortised over the useful life of the machinery.
In accordance with the term of the grant KVC shall complete all the activities connected with the aforesaid project on or before 31
October 2016 and shall start the production with above machinery and company shall not sell, assign, pledge, mortgage, gift, let
and rent the machinery for the period of five years from the date of purchase of machinery.

Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
27. Deferred taxation

Charge for the year (1,190) (8,579) (1,613) (6,668)
27.1 Deferred tax asset (9,395) (9,395) - -

Deferred tax liability 30,459 31,649 27,395 29,008
21,064 22,254 27,395 29,008
27.2 The effective tax rate of 27% (2017-27%), 22% (2017-27.6%) and 7% (2017-nil) were applied respectively by the Company
and Subsidiaries: Ceymac Rubber Company Limited and Ceytra (Private) Limited, for calculation of deferred tax asset/liability as
at the reporting date.
27.3 The deferred tax asset/liability recognised on temporary differences are as follows :
As at 31 March 2018 2017
Temporary Tax Temporary Tax
Group differences effect differences effect
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
On property, plant and equipment 245,633 39,773 293,430 70,778

On retirement gratuity (64,207) (5,478) (42,465) (10,422)
On tax losses carried forward (157,719) (28,968) (159,088) (38,102)
23,707 5,327 91,877 22,254
Company
105,365 27,395 107,437 29,008

27.4 Unrecognised deferred tax assets

Current year recognision of deferred tax asset - Ceytra Limited
Deferred tax asset have not been recognised in respect of the current year, because it is not probable that future taxable profit will
be available against which the Company can use the benefits therefrom.
The deferred tax asset on temporary differences are as follows :

2018 2017
Temporary Temporary Temporary Temporary
differences differences differences differences
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
On property, plant and equipment 374 26 798 215

On retirement gratuity (4,487) (308) (3,040) (819)
(53,078) (3,646) (55,615) (14,984)
Deferred tax asset amounting to Rs.3.6 million was not recognised in the current year with an effective rate of 27%.
Deferred tax asset - Kelani Valley Canneries Limited

Kelani Valley Canneries Limited has not recognised the deferred tax asset amounting to Rs.64 million (2017-Rs.64 million) for the
year ended 31 March 2018, as the management was of the view that the asset will not be crystallized in the foreseeable future.
The deferred tax asset on temporary differences are as follows :

2018 2017
Temporary Temporary Temporary Temporary
differences differences differences differences
Rs.000’s Rs.000’s Rs.000’s Rs.000’s

(229,083) (64,143) (230,448) (64,525)
Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
28. Interest bearing short term borrowings

Short term money market loans 1,262,784 930,629 1,121,801 792,629
1,262,784 930,629 1,121,801 792,629
28.1 Sources of finance

Hatton National Bank PLC 333,983 398,000 265,000 325,000
Commercial Bank of Ceylon PLC 367,000 271,500 295,000 206,500
NDB Bank PLC 316,801 - 316,801 -
Standard Chartered Bank 245,000 261,129 245,000 261,129
1,262,784 930,629 1,121,801 792,629

28.2 Assets pledged as securities against short term borrowings
Lending Institution Facility Obtained Asset Pledged Interest Rate

C.W.Mackie PLC
Hatton National Bank PLC For financing of exports, Primary and secondary concurrent mortgage Available
imports and working capital over stocks and book debts money market
requirements rates
Commercial Bank of Ceylon For financing of exports, Primary and secondary concurrent mortgage Available
PLC imports and working capital over stocks and book debts money market
requirements rates
NDB Bank PLC For financing of exports, Primary and secondary concurrent mortgage Available
requirements rates
Standard Chartered Bank For financing of exports, Primary and secondary concurrent mortgage Available
requirements rates
Ceymac Rubber Company Limited
Hatton National Bank PLC To finance the manufacture Registered primary floating mortgage over Available
and export of Rubber and for stocks and book debts money market
working capital requirements rates
Kelani Valley Canneries Limited
Commercial Bank of Ceylon For financing of working Lien over savings account, registered Available
PLC capital requirements floating tertiary to seventh mortgage bond money market
over the property, plant and machinery at rates
Kaluaggala, Hanwella
Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
29. Income tax payable

Add:
Income tax provision for the year 92,015 120,471 90,479 119,372
Under/(over) provision in respect of previous year (4,140) 33 (4,140) 33
Less:
Income Tax/ESC Payments during the year (119,451) (107,730) (117,967) (107,729)
Balance at the end of the period 35,053 68,629 35,903 67,531

Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
30. Trade and other payables

Trade payables to related parties (Note 30.1) 256,327 53,674 369,346 71,862
Other trade payables 309,072 499,952 254,098 466,943
Dividends payable 6,510 5,887 6,510 5,712
Accruals 44,897 40,707 39,402 32,168
Pre-paid advances 40,463 47,582 40,463 44,759
Sundry creditors 911 5,040 911 5,040
VAT and NBT Payables 14,237 11,947 11,173 7,847
Other provisions 136,192 143,521 130,653 140,640
Other payables 9,351 8,802 2,931 2,685
817,960 817,112 855,487 777,656
30.1 Trade payables to related parties:

Colombo Fort Group Services (Private) Limited 676 1,481 676 1,484
Kelani Valley Canneries Limited - - 2,491 18,722
Union Commodities (Private) Limited 33,161 51,632 33,509 51,632
Ceylon Tapes (Private) Limited - 144 - -
J F Packaging (Private) Limited - 61 - -
Carplan Limited 14 27 14 27
Colonial Motors (Ceylon) Limited 123 - 123 -
Sunquick Lanka (Private) Limited 202,788 - 312,968 -
Kiffs (Private) Limited 19,565 - 19,565 -
Lankem Ceylon PLC - 329 - -
256,327 53,674 369,346 71,862
The Company recognises interest on the amount due from subsidiary companies based on the monthly average outstanding at
the rate of 12% per annum, (2017:12%).

31. Related party disclosures
31.1
Related party transactions
The Company’s related parties include key management personnel, close family members of key management personnel
and entities which are controlled, jointly controlled or significantly influenced for which significant voting power is held by key
management personnel or their close family members.
C. W. Mackie Group of Companies carried out transactions during the year under review in the ordinary course of business with
the related entities under terms and conditions equivalent to those that prevail in arm’s length transactions, unless otherwise
stated.
31.1.1 Transactions with subsidiary companies
Name of the Related Party Relationship Nature of the Transaction Amounts (Paid)/Received
For the year ended 31 March 2018 2017

Rs.000's Rs.000's
Ceymac Rubber Company Limited Subsidiary Interest on current account balance 367 198
Inter company sales (6,933) -
Service fees 7,592 7,440
Director: Export handling fee 18,235 19,534
Mr. W. T. Ellawala Fund transfers - (32,132)
Expense reimbursements 4,124 14,310
Rental paid (1,624) (1,057)
Inter company settlements (22,133) (6,943)
Corporate guarantee of C.W. Mackie PLC for packing credit/short loans and export bill discounting facilities of Rs.99 million to
Hatton National Bank PLC.
Ceytra (Private) Limited Subsidiary Interest on current account balance 83 83

Service fees 2,939 2,880
Inter company sales 32 32
Director : Inter company settlements (7,114) 2,690
Mr. W. T. Ellawala, Expense reimbursements 4,637 (4,637)
Corporate guarantee of C.W. Mackie PLC for packing credit/short term loans and export bill discounting facilities of Rs.8 million to
Hatton National Bank PLC.


Rs.000's Rs.000's
Kelani Valley Canneries Limited Subsidiary Inter company purchases (178,719) (157,750)
Inter company sales 36,648 48,199
Director : Expense reimbursements 17,347 6,446
Mr. W. T. Ellawala Net settlements 138,984 91,103
Dr. T. Senthilverl Service fee 1,971 1,680
Mr. K. T. A. Mangala Perera
Mr. Anushman Rajaratnam
Corporate guarantee of C.W.Mackie PLC for short term loans of Rs.90 million to Commercial Bank of Ceylon PLC.
Sunquick Lanka Properties (Private)

Limited Subsidiary Assets transfers 217,000 -
Net settlements 90,000 -
Director : Investment related transaction (307,000) -
Mr. W. T. Ellawala
Mr. K. T. A. Mangala Perera
31.1.2 Transactions with other related companies
Sunquick Lanka (Private) Limited Jointly Inter company purchases (1,146,081) -

Directors : controlled Inter company sales 147,516 -
Mr. W. T. Ellawala entity Expense reimbursements 221,038 -
Mr. K. T. A. Mangala Perera Net settlements 608,719 -
Assets transfers 271,270 -
Investment related transaction (307,840) -
Services rendered 2,591 -
Ceylon Trading Company Limited Affiliate Rent income 2,100 2,100

Inter company sales 17 -
Directors : Expense reimbursements 819 -
Mr. W. T. Ellawala Secretarial and legal fees (18,287) (16,211)
Ms. C. R. Ranasinghe Management fees/overheads (15,932) (16,377)
Net settlements 30,886 30,823


Rs.000's Rs.000's
Maersk Lanka (Private) Limited Affiliate Recovery of overheads - 150
Director :
Mr. W. T. Ellawala
Kotagala Plantations PLC Common Purchase of rubber through - 88,548

Directors : directors commodity
Mr. R. C. Peries brokers at the auction
Mr. S. D. R. Arudpragasam
Mr. A. Rajaratnam
Colombo Fort Group Services Common Services received 11,010 9,193

(Private) Limited directors Net settlements (11,815) (7,712)
Directors :
Union Commodities (Private) Limited Common Inter company purchases (280,160) (221,478)
Directors : directors Inter company sales 757 156
Mr. S. D. R. Arudpragasam Net settlements 297,873 189,876
Lankem Ceylon PLC Common Inter company purchases (427) (1,709)

Directors : directors Net settlements 756 2,027
Mr. A. Rajaratnam
E. B. Creasy & Company PLC Common SAP Expense reimbursements (4,358) (3,566)
Directors : directors Inter company sales 240 673
Mr. A. Rajaratnam Net settlements 4,249 2,874
Carplan Limited Common Inter company purchases (27) (672)

directors Services received (94) -
Directors : Net settlements 134 824
Mr. A. Rajaratnam


Rs.000's Rs.000's
C. W. Mackie Group Staff Non- Defined

Contributory Gratuity Fund benefit plan Amount paid to gratuity fund (10,614) (8,117)
Amount paid by gratuity fund to
employees 8,349 5,557
Lanka Special Steel Limited Common Inter company sales - 37

directors Net settlements (37) -
Directors :
Mr. A. Rajaratnam
York Hotel Management Services

Limited Common Inter company sales 70 62
Director : directors Net settlements (34) (13)
Mr. A. Rajaratnam
Marawila Resorts PLC Common Inter company sales - 556

Directors : directors Net settlements - (1,312)
Mr. A. Rajaratnam
Beruwala Resorts Limited Common Inter company sales 956 95

Directors : directors Net settlements (821) (49)
Mr. A. Rajaratnam ,
Creasy Foods Limited Common Inter company sales - 15,225

Directors : directors Net settlements - (22,505)
Mr. A. Rajaratnam
J F Packaging (Private) Limited Common Inter company purchases (897) -

Directors : directors Net settlements 958 -
Mr. A. Rajaratnam


Rs.000's Rs.000's
Colonial Motors (Ceylon) Limited Common Inter company purchases (10,134) -

Directors : directors Services received (314) -
Mr. A. Rajaratnam Net settlements 10,325 -
Kiffs (Private) Limited Common Inter company purchases (80,122) -

Directors : directors Net settlements 60,557 -
Mr. A. Rajaratnam
Ceylon Tapes (Private) Limited Common Inter company purchases (196) -

Directors : directors Net settlements 340 -
Mr. A. Rajaratnam

Group Company
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
31.2 Compensation of key management personnel

Key management personnel include members of the
Board of Directors of the Company and its subsidiaries.
Short-term employee benefits 28,301 25,918 25,792 23,710

Total compensation paid to key management personnel 28,301 25,918 25,792 23,710
32. Events after the reporting date

Dividend
The Directors of C. W. Mackie PLC have recommended the payment of a first and final dividend of Rs.3.50 per ordinary share
amounting to Rs.125,959,946/- for the year ended 31 March 2018 for approval by the shareholders at the Annual General Meeting
to be held on 28 June 2018. In accordance with the 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 2018.
Subsequent to the reporting date no circumstances have arisen that would require adjustment to or disclosure in the Financial
Statements other than as disclosed above.
33. 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 2018 2017

Rs.Mn Rs.Mn
Letters of comfort and guarantees provided on behalf of the subsidiaries

Ceymac Rubber Company Limited 99 99
Ceytra (Private) Limited 8 8
Kelani Valley Canneries Limited 90 90
Total 197 197
Outstanding short term loan facility 2018 2017

Rs.Mn Rs.Mn

Total 141 137
These corporate guarantees have been provided for Hatton National Bank PLC and Commercial Bank of Ceylon PLC on behalf
of the subsidiary companies Ceymac Rubber Company Limited, Ceytra (Private) Limited and Kelani Valley Canneries 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 as disclosed above which require
adjustments to or disclosures in Financial Statements.

34. Capital Commitments
There are no material capital commitments as at the reporting date.
35. Comparative Figures

Comparative figures have been reclassified to conform to the current year presentation.
36. Financial risk management

The Board of Directors has 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 (GMC) and the Board 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 36.1)
• Liquidity risk (Note 36.2)
• Market risk (Note 36.3)
• Operational risk (Note 36.4)
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 Company’s management of capital.
36.1 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

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
reporting date was as follows:
Carrying amount
Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Trade receivables from related parties 529 662 6,120 6,048

Trade receivables 2,093,297 1,849,568 1,938,387 1,694,669
Deposits 8,127 7,958 7,180 7,111
Loans to employees 19,656 18,125 7,103 7,497
Other receivables 337,635 259,909 276,855 233,122
Balances with banks 196,997 86,716 65,502 81,926
Total 2,656,241 2,222,938 2,301,147 2,030,373
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.

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 are 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:

As at 31 March 2018 2017
Gross balance Impairment Gross balance Impairment
Group Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Past due 0-30 days 1,213,937 - 1,718,558 -

Past due 31-90 days 566,934 - 75,233 1,752
Past due 91-365 days 313,142 187 67,991 9,800
More than one year 35,891 35,891 19,756 19,756
Total 2,129,904 36,078 1,881,538 31,308
Company
Past due 0-30 days 1,029,138 - 1,576,558 -
Past due 31-90 days 564,165 - 73,517 1,752
Past due 91-365 days 315,032 3,828 61,639 9,246
More than one year 30,132 30,132 18,705 18,705
Total 1,978,467 33,960 1,730,419 29,703
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 net trade receivables as at the reporting date by geographic was as follow:
Carrying amount
Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Domestic 1,912,221 1,627,491 1,804,876 1,508,411

Asian region 29,860 85,805 12,651 66,187
European region 137,510 80,516 122,659 74,166
African region 14,235 11,051 4,321 1,797
Latin American region - 17,531 - 17,531
Northern American region - 27,174 - 26,577
Total 2,093,826 1,849,568 1,944,507 1,694,669
Held to maturity investments

The Group has invested Rs.0.36 million on fixed deposits as at 31 March 2016 and fully provided for impairment for the financial
year ended 31 March 2017.

Cash and cash equivalents
The Group and Company held cash and cash equivalents of Rs.298.6 million (2017-Rs.88.3 million) and Rs.66.5 million (2017-
Rs.83.3 million) retrospectively at 31 March 2018 which represent its maximum credit exposure on these assets.
Guarantees
The Group’s policy is to provide financial guarantees only to subsidiaries. These corporate guarantees have been provided for
Hatton National Bank PLC and Commercial Bank of Ceylon PLC on behalf of the subsidiaries’ short term loan facilities, where
repayment terms are less than 12 months.
Outstanding as at 31 March 2018 2017

Rs.Mn Rs.Mn
Letters of comfort and guarantees provided on behalf of the subsidiaries

Ceytra (Private) Limited 8 8
Total 197 197
Outstanding short term loan facility 2018 2017

Rs.Mn Rs.Mn

Total 137 137
36.2 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 2018, Group has unutilised banking facilities amounting to Rs.222 million (2017-Rs.373 million) representing 13%
(2017-27%) of the total bank facilities from the consortium of banks, i.e Hatton National Bank PLC, Commercial Bank of Ceylon
PLC, NDB Bank PLC and Standard Chartered Bank.
The following are the contractual maturities of financial liabilities:

As at 31 March 2018 2017

Carrying 0-12 months More than Carrying 0-12 months More than
amount 1 year amount 1 year
Group
Financial liabilities (non derivatives)
Long term borrowings 4,045 1,376 2,669 4,901 1,376 3,525

Interest bearing short term borrowings 1,262,784 1,262,784 - 930,629 930,629 -
Trade and other payable 561,633 561,633 - 763,438 763,438 -
Trade payables to related parties 256,327 256,327 - 53,674 53,674 -
Bank overdraft 126,269 126,269 - 76,439 76,439 -
Total 2,211,058 2,208,389 2,669 1,829,081 1,825,556 3,525
Company
Interest bearing short term borrowings 1,121,801 1,121,801 - 792,629 792,629 -
Trade and other payable 486,141 486,141 - 705,794 705,794 -
Trade payables to related parties 369,346 369,346 - 71,862 71,862 -
Bank overdraft 101,072 101,072 - 48,146 48,146 -
Total 2,078,360 2,078,360 - 1,618,431 1,618,431 -
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different
amounts.
36.3 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.
36.3.1 Currency risk

The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than Sri Lankan Rupees
(LKR), The foreign currencies in which the set transactions primarily denominated are United State Dollars (USD) and Euro.
Exposure to currency risk

The Group’s exposure to foreign currency risk based on notional amounts was as follows:
As at 31 March 2018 2017

USD Euro USD Euro
Group
Trade and other payables (154,113) (67,683) (271,362) (1,132,315)
Trade and other receivables 1,152,450 99,759 976,232 224,824
Cash and cash equivalents 136,251 15,008 488,535 9,838
Gross statement of financial position exposure 1,134,588 47,084 1,193,405 (897,653)
Company
Trade and other payables (154,113) (67,683) (271,362) (1,132,315)
Trade and other receivables 929,840 55,910 776,378 190,980
Gross statement of financial position exposure 788,507 2,302 986,756 (931,616)

The following significant exchange rates were applicable during the year:
Average rate Reporting date spot rate

2018 2017 2018 2017
Rs. Rs. Rs. Rs.
USD 153.51 147.29 155.60 152.10

Euro 172.58 161.60 191.67 163.55
Sensitivity Analysis
A strengthening or weakening of the LKR, as indicated below, against the USD and Euro at 31 March 2018 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 profit or loss
Rs.000’s Rs.000’s
Group
As at 31 March 2018
USD (10% movement) 17,654 (17,654)
Euro (10% movement) 902 (902)
As at 31 March 2017
USD (10% movement) (18,152) 18,152
Euro (10% movement) 14,681 (14,681)
Company
As at 31 March 2018
USD (10% movement) 12,269 (12,269)
Euro (10% movement) 44 (44)
As at 31 March 2017
USD (10% movement) (15,009) 15,009
Euro (10% movement) 15,237 (15,237)

36.3.2 Interest rate risk

At the reporting date, the Company’s interest-bearing financial instruments were as follow:
Carrying amount
Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Fixed rate instruments

Financial assets
Related party receivables - subsidiaries - - 5,591 5,386
Financial liabilities
Related party payables - subsidiaries - - (2,491) (18,722)
- - 3,100 (13,336)
Variable rate instruments

Financial assets
RFC deposits 24,077 75,915 4,686 74,862
Fixed deposits - - - -
Financial liabilities
Long term borrowings (4,045) (4,901) - -
Bank overdrafts (126,269) (76,439) (101,072) (48,146)
Short term money market borrowings (1,262,784) (930,629) (1,121,801) (792,629)
(1,369,021) (936,054) (1,218,187) (765,913)
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 2018 2017

Profit or Loss Profit or Loss
Rs.000’s Rs.000’s
Group
Variable rate instruments (1% decrease) 13,690 9,361
Variable rate instruments (1% increase) (13,690) (9,361)
Company
Variable rate instruments (1% decrease) 12,182 7,659
Variable rate instruments (1% increase) (12,182) (7,659)

36.4 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 behavior. 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.
36.5 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.
The Group’s debt to adjusted capital ratio at the end of the reporting period was as follows:
Group Company
As at 31 March 2018 2017 2018 2017
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Total liabilities 2,344,413 1,972,311 2,173,736 1,732,424

Less:
Cash and cash equivalents (298,622) (88,268) (66,852) (83,294)
Net debts 2,045,791 1,884,043 2,106,884 1,649,130
Total equity 2,211,763 2,138,716 2,380,059 2,284,788
Net debt to equity ratio 0.92 0.88 0.89 0.72
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.
36.6 Fair values of financial instruments

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making
the measurements.
Level I: Quoted market price (unadjusted) in an active market for an identical instrument.
Level II: Valuation techniques based on observable inputs, either directly – i.e. as prices or indirectly – i.e. derived from prices.
This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for
identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant
inputs are directly or indirectly observable from market data.

Level III: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s
valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant
unobservable adjustments or assumptions are required to reflect differences between the instruments.
Fair values of financial instruments which are not carried at fair value on the Statement of Financial Position.
The table below shows a comparison of the carrying amounts, as reported on the Statement of Financial Position, and fair values
of financial assets and liabilities carried at amortised cost.
2018 2017
As at 31 March Carrying Fair value Carrying Fair value
amount amount
Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s
Group
Assets
Trade receivables from related parties 529 529 662 662
Trade receivables and other receivable 2,458,715 2,458,715 2,135,560 2,135,560
2,757,866 2,757,866 2,224,490 2,224,490
Liabilities
Interest bearing long term borrowings 4,045 4,045 4,901 4,901
Interest bearing short term borrowings 1,262,784 1,262,784 930,629 930,629
Trade payables to related parties 256,327 256,327 53,674 53,674
Trade and other payable 561,633 561,633 763,438 763,438
Bank overdraft 126,269 126,269 76,439 76,439
2,211,058 2,211,058 1,829,081 1,829,081
Company
Assets
Trade receivables from related parties 6,120 6,120 6,048 6,048
Trade receivables and other receivable 2,229,525 2,229,525 1,942,399 1,942,399
2,302,497 2,302,497 2,031,741 2,031,741
Liabilities
Interest bearing short term borrowings 1,121,801 1,121,801 792,629 792,629
Trade payables to related parties 369,346 369,346 71,862 71,862
Trade and other payable 486,141 486,141 705,794 705,794
Bank overdraft 101,072 101,072 48,146 48,146
2,078,360 2,078,360 1,618,431 1,618,431

Ten Year
Historical Summary
31 December 31 March
Year 2008 2009 2011 2012 2013 2014 2015 2016 2017 2018
(Rs.’000) (Rs.’000) (Rs.’000) (Rs.’000) (Rs.’000) (Rs.’000) (Rs.’000) (Rs.’000) (Rs.’000) (Rs.’000)
OPERATING RESULTS
Revenue 5,322,668 4,622,730 9,317,046 9,703,084 7,647,208 7,343,741 7,618,108 7,859,633 8,837,350 9,973,563
Results from operating activities 149,945 282,895 415,428 588,635 306,936 374,629 326,484 409,788 416,439 423,926
Net financing costs (100,472) (97,936) (64,987) (77,604) (58,836) (62,146) (52,711) (7,865) (67,371) (96,728)
Other operating expenses (51) - - - - - - - - -
Profit before taxation 49,422 184,959 350,441 511,031 248,100 312,483 273,773 401,923 349,068 306,329
Income tax expense (3,297) (66,286) (94,232) (115,972) (84,587) (103,154) (94,318) (123,401) (111,937) (86,685)
Profit after tax 46,125 118,673 256,209 395,059 163,513 209,329 179,455 278,522 237,131 219,816
Non-controlling interests (702) (11,820) (1,592) (2,296) (1,503) (1,013) 10,244 6,729 (654) (1,252)
Profit for the year 45,423 106,853 254,617 392,763 162,010 208,316 189,699 285,251 236,477 218,564
FINANCIAL POSITION
Assets
Non-current assets 761,223 746,698 785,969 853,776 852,228 886,279 880,463 864,854 812,094 1,358,359
Current assets 1,176,989 1,149,967 2,227,319 2,427,909 2,102,243 2,514,238 2,302,690 2,801,463 3,327,942 3,522,086
Total assets 1,938,212 1,896,665 3,013,288 3,281,685 2,954,471 3,400,517 3,183,153 3,666,317 4,140,036 4,880,445
Equity and liabilities
Equity
Stated capital 507,047 507,047 507,047 507,047 507,047 507,047 507,047 507,047 507,047 507,047
Capital reserves 458,809 444,359 8,734 8,734 8,734 8,734 8,734 8,734 8,734 8,734
Revenue reserves (69,714) 24,598 706,808 1,018,527 1,144,983 1,247,551 1,320,112 1,502,686 1,622,935 1,695,982
Available-for-sale reserve - - 1,172 1,014 1,115 1,094 1,236 - - -
Equity attributable to equity
holders of the company 896,142 976,004 1,223,761 1,535,322 1,661,879 1,764,426 1,837,129 2,018,467 2,138,716 2,211,763
Non-controlling interests 14,133 25,953 26,620 28,397 29,817 46,190 34,615 28,031 29,009 324,269
Total equity 910,275 1,001,957 1,250,381 1,563,719 1,691,696 1,810,616 1,871,744 2,046,498 2,167,725 2,536,032
Non-current liabilities 166,460 183,678 205,572 185,157 159,093 150,545 122,473 92,038 78,039 98,692
Current liabilities 861,477 711,030 1,557,335 1,532,809 1,103,682 1,439,356 1,188,936 1,527,781 1,894,272 2,245,722
Total equity and liabilities 1,938,212 1,896,665 3,013,288 3,281,685 2,954,471 3,400,517 3,183,153 3,666,317 4,140,036 4,880,445
RATIOS
Basic earnings per share (Rupees) 1.26 2.97 7.07 10.66 4.50 5.79 5.27 7.93 6.57 6.07
Revenue growth rate (%) 20.7 (13.2) 101.5 4.1 (21) (4.0) 3.7 3.0 12.4 12.9
Net profit ratio (%) 0.9 2.3 2.7 4.0 2.1 2.8 2.5 3.6 2.7 2.2
Current ratio (1:) 1.37 1.62 1.43 1.58 1.90 1.75 1.94 1.84 1.76 1.56
Net asset per share (Rupees) 24.90 27.12 34.00 42.66 46.18 49.03 51.05 56.09 59.43 61.46
Net return on capital employed (%) 13.9 23.9 28.5 33.7 16.6 19.1 16.4 19.2 18.5 16.1
Dividends per share (Rupees) 0.75 1.00 1.00 2.00 1.00 3.00 3.00 3.00 3.50 3.50
Dividend payout ratio (%) 59 34 14 19 22 52 57 38 53 58

Consolidated Statement of Value Added
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) periods. 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:

Rs. Mn Rs. Mn
Value added
Sales made to external customers 9,973.6 8,837.4
Less: material and services bought in from outside (7,274.1) (6,296.9)
2,699.5 2,540.5
Add: other income/expenses (net) 278.3 132.0
Total value added available for distribution 2,977.8 2,672.5
2018 % 2017 %
Rs. Mn Rs. Mn
Distribution of value added

To employees
-Wages, salaries and benefits 348.9 11.7 319.2 11.9
Taxation to government
-Import duties and VAT/NBT 1,934.0 1,619.8
-Export duties 13.0 41.5
-Income tax 86.6 120.5
-Economic service charge 50.0 2,089.0 70.0 29.6 1,811.4 67.8
To lenders
-Interest 105.8 3.6 70.1 2.6
Providers of equity capital

-Dividends 126.0 4.2 126.0 4.7
Retained in business
-Depreciation on fixed assets 114.2 99.6
-Retained earnings 199.0 308.9 10.5 246.2 345.8 12.9
Total value added distributed 2,978.6 100.0 2,672.5 100.0
No. of employees in Group 554 582
Value added per employee ( Rs’ 000) 5,377 4,592
2018 2017
Salaries 12% Salaries 12%

Taxation 70% Taxation 68%
Interest 4% Interest 3%
Dividend 4% Dividend 5%
Retained Earnings 10% Retained Earnings 13%

Investor
Information
Financial Calendar
Ninety Fifth Annual General Meeting - 28 June 2017
Interim Reports
First Quarterly Report
3 months to 30 June 2017 - 14 August 2017
Second Quarterly Report

6 months to 30 September 2017 - 8 November 2017
Third Quarterly Report

9 months to 31 December 2017 - 6 February 2018
Fourth Quarterly Report

12 months to 31 March 2018 - 23 May 2018
Annual Report - Financial Year 2018 - 24 May 2018
Ninety Sixth Annual General Meeting - 28 June 2018
Distribution Schedule of Shareholders

31 March 2018 31 March 2017
Holdings (Shares) No. of Total Holdings No. of Total Holdings
Holders Shares % Holders Shares %
1 - 1,000 1,710 356,619 0.99 1,706 358,187 0.99

1,001 - 10,000 230 784,219 2.17 226 750,978 2.09
10,001 - 100,000 43 1,363,186 3.79 42 1,542,083 4.28
100,001 - 1,000,000 8 2,802,146 7.79 7 2,654,922 7.38
Over - 1,000,000 5 30,682,386 85.26 5 30,682,386 85.26
1,996 35,988,556 100 1,986 35,988,556 100

Investor Information (Contd.)
Twenty Largest Shareholders

As at 31 March 2018 2017
Name of Shareholder No. of Shares % No. of Shares %
(Voting) (Voting)

1 National Development Bank PLC/Lankem Ceylon PLC 16,000,000 44.46 16,000,000 44.46
2 Seylan Bank PLC/Dr. T. Senthilverl 8,983,000 24.96 8,983,000 24.96
3 Lankem Ceylon PLC 2,137,526 5.94 2,137,526 5.94
4 Sampath Bank PLC/Dr. T. Senthilverl 1,782,575 4.95 1,782,575 4.95
5 Pan Asia Banking Corporation PLC/Lankem Ceylon PLC 1,779,285 4.94 1,779,285 4.94
6 Acuity Partners (Private) Limited/
Union Investment (Private) Limited 950,000 2.64 950,000 2.64
7 Amana Bank PLC 906,788 2.52 896,437 2.49
8 Corporate Holdings (Private) Limited Account No. 1 225,802 0.63 225,802 0.63
9 Mr. P. P. Anandarajah 155,100 0.43 155,100 0.43
10 Mr. M. A. Lukmanjee 155,000 0.43 155,000 0.43
11 People’s Leasing and Finance PLC/Mr. L. P. Hapangama 154,716 0.43 132,843 0.37
12 Employees Provident Fund 139,740 0.39 139,740 0.39
13 Harnam Holdings SDN BHD 115,000 0.32 100,000 0.28
14 Ms. N. Harnam 100,000 0.28 100,000 0.28
15 Sir F. I. Rahimtoola 90,000 0.25 90,000 0.25
16 Seylan Bank PLC/Mr. L.C.R. Pathirana 60,408 0.17 60,397 0.17
17 Mr. Z. G. Carimjee 60,200 0.17 60,200 0.17
18 HSBC International Nominees Limited-SSBT-Deustche Bank 60,018 0.17 60,018 0.17
19 Union Investments (Private) Limited 60,000 0.17 60,000 0.17
20 Oakley Investments (Private) Limited 53,239 0.15 53,239 0.15
Categories of Shareholders
As at 31 March 2018 2017
Categories No. of Share Total No. of Share Total
Holders Holding % Holders Holding %
Individuals 1,897 2,986,069 8.30 1,878 2,040,743 5.67

Institutions 99 33,002,487 91.70 108 33,947,813 94.33
1,996 35,988,556 100.00 1,986 35,988,556 100.00
Public 1,982 3,976,529 11.05 1,979 5,305,170 14.74

Notice of
Meeting
NOTICE IS HEREBY GIVEN that the Ninety Sixth Annual General Meeting of C. W. Mackie PLC will be held at Level 6, Public
Forum, The Institute of Chartered Accountants of Sri Lanka, 30A, Malalasekera Mawatha (Longdon Place), Colombo 7 on
Thursday, 28 June 2018 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
2018 with the Report of the Auditors thereon.
2. To declare a Dividend as recommended by the Directors.
3. To approve the re-appointment of Mr. Alagarajah Rajaratnam, who retires by rotation in terms of Article 89 of the Articles of
Association and 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.*
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. H. D. S. Amarasuriya, 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 Dr. T. Senthilverl, 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.******
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
Director/Company Secretary
Colombo
24 May 2018

Notice of Meeting (Contd.)
Note:
* A Notice dated 17 May 2018 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 retires by rotation in terms of Article 89 of the Articles of Association and who is
seventy six 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 17 May 2018 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 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 eighty one 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 17 May 2018 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 seventy eight 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 17 May 2018 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
“That Mr. Ranjit Crisantha Peries who is seventy seven 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 17 May 2018 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. Amarsuriya
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 is seventy four 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. H. D. S. Amarasuriya .”
****** A Notice dated 17 May 2018 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 Dr. T. Senthilverl as a
“That Dr. Thirugnanasambandar Senthilverl who is seventy two 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 Dr. Thirugnanasambandar Senthilverl.”

(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 26 June 2018.

Notes

Notes

Form of
Proxy
I/We…..……………………………………..………………………………………………….…….…….….......................................…….........…of
….…………………………...………………………………………………....……...........................................……being a member/members of
C.W. Mackie PLC hereby appoint…………………………………………………………………………..............................................…....……of
…………………………………………………………………….............................................................................................….or failing him/her
William Tissa Ellawala or failing him

Camani Renuka Ranasinghe or failing her
Ajit Mahendra de Silva Jayaratne or failing him
Ranjit Crisantha Peries or failing him
Anushman Rajaratnam or failing him
Sri Dhaman Rajendram Arudpragasam or failing him
Thirugnanasambandar Senthilverl or failing him
Hemaka Devapriya Senarath Amarasuriya or failing him
Karawa 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 Sixth Annual General
Meeting of the Company to be held on Thursday, 28 June 2018 and at any adjournment thereof and at every poll which may be taken in
consequence thereof :
For Against
1. To receive and consider the Annual Report of the Board of Directors and Financial Statements for the year
ended 31 March 2018 with the Report of the Auditors thereon.
2. To declare a Dividend as recommended by the Directors.
3. To approve the re-appointment of Mr. Alagarajah Rajaratnam, who retires by rotation in terms of Article 89
of the Articles of Association, and 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.
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
7. To approve the re-appointment of Mr. Mr. H. D. S. Amarasuriya, 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 Dr. T. Senthilverl, who is over 70 years of age, under and in terms of Section
9. To authorise the Directors to determine and make donations.
10. To re-appoint KPMG, CharteredAccountants, as Auditors to the Company and authorise the Directors to
determine their remuneration.
Signed this ……………….day of ………………………2018.
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 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 26 June 2018
being 48 hours before the time appointed for the holding of the
Meeting.

Corporate
Information
Name of Company Group Management Committee
C. W. Mackie PLC W. T. Ellawala
Chairman/Chief Executive Officer
Company Registration Number
PQ 47 Director/Company Secretary
Legal Form K. T. A. Mangala Perera

Executive Director - Internal Trading
A public company with limited liability incorporated in Sri Lanka
in February 1922. Shares of the Company are listed on the E. A. A. K. Edirisinghe
trading floor of the Colombo Stock Exchange. Chief Operating Officer - Export Division
B. A. F. G. Suares (Upto 19 September 2017)
Directors Chief Financial Officer
W. T. Ellawala (Chairman/Chief Executive Officer)
Ms. C. R. Ranasinghe G. A. de Silva
A. M. de S. Jayaratne Director/Chief Operating Officer
R. C. Peries Ceytra (Private) Limited and
Anushman Rajaratnam Ceymac Rubber Company Limited
S. D. R. Arudpragasam T. A. P. Silva
Dr. T. Senthilverl Chief Operating Officer - Consumer Products Manufacturing
H. D. S. Amarasuriya
C. M. Ockersz
K. T. A. Mangala Perera
General Manager - Warehousing
Alagarajah Rajaratnam
N. J. P. Jayasinghe
Company Secretary Chief Operating Officer - Sales & Marketing
Ms. C. R. Ranasinghe (Scan Products Division)
L. M. Raveendra
Registered Office and Corporate Head Office General Manager - Group Treasury
No. 36, D.R. Wijewardena Mawatha, Colombo 10
Ms. Chandima Welengoda
Telephone: 2423554 - 62
General Manager - Group Finance (from 31 August 2017)
Fax: 2440228
E-mail: info@cwmackie.com P. Pavalachandran
Website:www.cwmackie.com General Manager - Group Financial Services (from 1 October
2017)
Auditors
KPMG
Chartered Accountants
Principal Bankers
Hatton National Bank PLC
Commercial Bank of Ceylon PLC
NDB Bank PLC
Standard Chartered Bank PLC
Legal Advisors
Julius & Creasy Concept & Designed by
Attorneys-at-Law, Solicitors & Notaries Public
Printed by Printel (Pvt) Ltd

C. W. Mackie PLC
No. 36, D. R. Wijewardena Mawatha
Colombo 10
Sri Lanka.
www.cwmackie.com

CW Mackie 2017-18

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Annual Report 2017/18

77-88 137-Inner back cover

Our Mackie PLC and its subsidiary

Vision maximise financial returns on

2 C. W. MACKIE PLC - Annual Report 2017/18

Bottling of “Sunquick” range

C. W. MACKIE PLC - Annual Report 2017/18 3

FMCG MANUFACTURING MARINE PAINTS EXPORT TRADING

C.W. Mackie PLC

4 C. W. MACKIE PLC - Annual Report 2017/18

C. W. MACKIE PLC - Annual Report 2017/18 5

“ The business was founded in 1900 by

6 C. W. MACKIE PLC - Annual Report 2017/18

1900 Founded by late Mr. C.W. Mackie, a Scotsman.

carried on under the name of “C. W. Mackie &

1946 Consortium of Ceylonese and Indian

1994 Shares equivalent to 25% of the total shares

AU/CTC shares acquired by Lankem Ceylon

C. W. MACKIE PLC - Annual Report 2017/18 7

Rs. 4.9 Bn Rs. 10 Bn

Rs. 2.2 Bn Rs. 219.8 Mn

Group Profit Before

Profit Before Tax

Net Assets Per Share Assets Turnover

8 C. W. MACKIE PLC - Annual Report 2017/18

Operating Highlights and Ratios

Balance Sheet Highlights and Ratios

Market / Shareholder Information

* Cash dividends paid during the year

C. W. MACKIE PLC - Annual Report 2017/18 9

Financial Results Group

12 C. W. MACKIE PLC - Annual Report 2017/18

C. W. MACKIE PLC - Annual Report 2017/18 13

14 C. W. MACKIE PLC - Annual Report 2017/18

C. W. MACKIE PLC - Annual Report 2017/18 15

This significant disparity in price trends adversely impacted on

Subsidiary Companies A group of TSR manufacturers have collectively made

16 C. W. MACKIE PLC - Annual Report 2017/18

C. W. MACKIE PLC - Annual Report 2017/18 17

To add to this is the prevailing political instability and policy

18 C. W. MACKIE PLC - Annual Report 2017/18

which will be introduced to “ However, there is considerable potential to export F&B

the Sri Lanka market possibly

The outlook to increase the export of moulded rubber products

C. W. MACKIE PLC - Annual Report 2017/18 19

20 C. W. MACKIE PLC - Annual Report 2017/18

Dr. T. Senthilverl Mr. K. T. A. Mangala Perera

C. W. MACKIE PLC - Annual Report 2017/18 21

Cosmas as General Manager-Warehousing, overlooks

22 C. W. MACKIE PLC - Annual Report 2017/18

C. W. MACKIE PLC - Annual Report 2017/18 23

“Sunquick”, a Danish origin multinational fruit squash brand available in

“Danfoss” is a world renowned Danish brand in the refrigeration and

“Hempel” is a world leading trusted Danish brand for paints and

“Scan Jumbo” is another proprietary brand of C. W. Mackie PLC and

“Scan” Bottled Drinking Water ultra-premium purified drinking water is

Scan Water is certified as ISO 9001:2008 and ISO 22000:2005 besides

24 C. W. MACKIE PLC - Annual Report 2017/18

“Mosa” is an Italian brand in the production of machines that

“Star” brand is owned by International Flavours and Fragrances, USA,