ENERGY MACKWOODS - Colombo Stock Exchange

MACKWOODS
ENERGY
ANNUAL REPORT OF MACKWOODS ENERGY PLC
FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2012
ENERGIZING THE NATION
Our Vision
“Mackwoods Energy to be the preferred choice and the leader in
providing energy solutions through which the company strives to
enhance shareholder value whilst contributing to the socio
economic development of the country.”
Our Mission
MEL is committed to value creation by fulfilling the needs of trade
and industry and meeting the national energy requirements by
providing competitive and high quality products, services and
renewable energy solutions.
We aim to accomplish this through continuous development of the
existing business and by diversifying into new products, markets
and services and renewable energy projects through optimum
procurement, production and distribution in a sustainable and
environment friendly manner. In doing so, MEL will always be
mindful of the obligations to society, the customers, shareholders
and the employees.
MACKWOODS
ENERGY
COMPLIANCE WITH THE REQUIREMENTS IN THE LISTING
RULES OF THE COLOMBO STOCK EXCHANGE PERTAINING
TO CONTENTS OF ANNUAL REPORTS
This report, being the annual report of the Company for the financial
year ended 31st March 2012 only contains information pertaining to the
Company and the affairs of the Company for the financial year ended
31st March 2012. The shares of the Company were not listed during that
time period. Accordingly, this annual report complies with the Listing
Rules of the Colombo Stock Exchange and contains information as
required thereby to the extent that such information was relevant to the
Company as at 31st March 2012.
MACKWOODS ENERGY PLC
Contents
02
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Corporate Information
03
Chairman's Review
04
Recent Activities & Products
05
Management Team
07
Management Discussion & Analysis
08
Annual Report of the Board of Directors
11
Directors' Profile
14
Independent Auditors’ Report
16
Income Statement
17
Balance Sheet
18
Cash Flow Statement
19
Statement of Changes in Equity
20
Notes to the Accounts
21
Shareholders Information
30
Notice of Meeting
31
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MACKWOODS ENERGY PLC
Chairman's Review
On behalf of the Board of Directors, I warmly welcome you to the Annual General Meeting of the Company,
and have great pleasure in presenting to you the Annual Report and the Audited Accounts of the Company
for the year ended 31st March 2012.
Financial Year 2011/12 was a landmark year for the Company, a year in which the Company achieved
significant growth and invited the public for the first time, to share in the 170-year heritage of the
Mackwoods Group and contribute to national development by participating in the Initial Public Offering
amounting to a 25% stake in the Company.
The year saw the Company achieving an impressive turnover growth of 170% with the main revenue
streams of power generators and engines supplied to the industrial and institutional sectors, service
income and commission income recording substantial growth and achieving a net profit after tax of Rs
82.1M, a fourfold improvement on previous financial year.
Looking ahead, Mackwoods Energy, as a total energy solutions provider, is well positioned to expand on its
proven track record of thermal power generating solutions and to diversify into small hydro-projects and
other renewable energy projects, to meet the rapidly growing energy demands of the post-conflict
renaissance of the Sri Lankan economy.
My sincere thanks to the Board of Directors for the valuable contribution and advice extended. I also would
like to convey my appreciation to the Management Team and employees at all levels, for their hard work
and commitment. In conclusion, I wish to thank you - our valued shareholders, for the confidence placed in
Mackwoods Energy.
Dr. C.N.A. Nonis
Chairman
Colombo 27th August 2012
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MACKWOODS ENERGY PLC
Activities
TRADE EXHIBITION,
MALDIVES
TRADE EXHIBITION, JAFFNA
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MACKWOODS ENERGY PLC
Our products
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MACKWOODS ENERGY PLC
Management Team
BOARD OF DIRECTORS
Dr. Chrisantha Nicholas Anthony Nonis
- Chairman/Non-Executive Director
Mrs. Nirmali Suzanne Moira Samaratunga
- Non-Executive Director
Mr. Francis Lalith Fonseka
- Executive Director
Mr. Arjuna Lasantha Yatawara
- Managing Director/Chief Executive Officer
Mrs. Shelendra Marianne Andrea Nonis Ranaweera - Non-Executive Director
Mr. Shamal Mirisse Liyanage
- Executive Director / General Manager
Mr Lakshman Leelaraja Samarasinghe
- Non–Executive Director
Mr. Lakshman Jayaraj Kumar Hettiaratchi
- Independent Non-Executive Director
Dr. Hasaan Shafeeu
- Independent Non-Executive Director
SENIOR MANAGEMENT
A.L.YATAWARA
- Managing Director / Chief Executive Officer
S.M.LIYANAGE
- Director / General Manager
V.KOLONNE
- Asst General Manager – Engineering
N.PERERA
- Manager Finance
OPERATIONS
MANAGEMENT
P.WIMALARATNE
- Manager Engineering
M.Y.C.CHINTHAKA
- Sales Manager
C.MENDIS
- Product Manager
N.RANASINGHE
- Asst Manager – Administration
G. DE ALWIS
- Asst Product Manager – Support Services
H.B.PRASHANTHI
- Accountant
H.JAYALATH
- Executive Logistics
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MACKWOODS ENERGY PLC
Management Discussion
and Analysis
TURNOVER
The Company achieved a significant growth during the financial year 2011/12, recording a turnover of Rs 266M, an increase of
170% on financial year 2010/11, with the main revenue streams of ex-stock sales, service income and commission income
recording significant increases.
The key strengths of a strong brand name and a track record and its proven business model for quality service and
maintenance contributed to the significant growth of ex-stock sales turnover for the year of Rs 168M (2010/11 : Rs 60M) and
combined service and commission turnover of Rs 97M (2010/11: Rs 38M).
PROFITABILITY
The Company achieved a profit before tax of Rs 105M for the financial year (2010/11: Rs 32.6M), a 222% increase on financial
year 2010/11, which translated to a net profit after tax Rs 82.1M (2010/11: Rs 20.2M) a fourfold improvement on last year.
Table 11 -1: Summarised Income Statements
For the Year Ende
d March 31,
All figures in Rs. millions
20 09/10
20 10/11
20 11/12
Revenue
46.53
98.33
26 5 .54
Gross Profit
20.57
46.10
1 33.25
Operating Profit
18.02
34.63
1 06.38
Profit Before Tax
16.37
32.63
1 05.02
Profit After Tax
10.41
20.25
82.13
All figures in Rs.
millions
Table 11-2: Summarised Balance Sheets
As at March 31,
2011/12
0.13
210.52
Total Current Assets
36.84
60.42
521.62
Total Assets
37.00
60.55
732.14
Total Capital and Reserves
11.00
31.24
-
0.01
Total Non-Current Liabilities
|
2010/11
0.16
Total Non-Current Assets
08
2009/10
279.25*
4.51
Total Current Liabilities
26.00
29.22
98.35
Total Equity and Liabilities
37.00
60.55
732.14
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MACKWOODS ENERGY PLC
Management Discussion
and Analysis
KEY FINANCIAL RATIOS
2009/10
21%
208.10
0.95
28%
1.42
Net Profit Margin
Earning per Share
Return on Equity (Times)
Return on Assets
Current Ratio (Times)
2010/11
21%
404.89
0.65
33%
2.07
2011/12
31%
1.91
0.29*
11%
1.74*
* Excluding shares pending allotment
KEY BUSINESS SECTORS
Mackwoods Energy has powered the Sri Lankan economy through the provision of customized power solutions and the following
diagram illustrates the sector diversity of the Company’s business activities during the year.
POWER SECTOR OVERVIEW
The demand for diesel power generators emanates from three main sources. Firstly, as a primary source of power
supply if a connection to the utility power grid is not possible due to unavailability of grid coverage in the area of
operations or the mobile nature of the activity. Secondly, generators may be used as a standby power supply when
the normal source of power is interrupted. Finally, power generators are also used as a parallel source of power in
combination with the grid electricity where the required power needs cannot be met primarily via grid supply. Sri
Lanka’s energy statistics are given below:
Country Data
Population
No. of HHs
Per Capita GDP
20.2 Million
4.7 Million
2300 US$
Electricity Sector
Installed Capacity
Hydro
Thermal
NCRE
3,110
1,180
1,680
250
MW
MW
MW
MW
POWER GENERATION
Power generation in Sri Lanka is primarily driven by hydro and thermal energy sources while mini hydro and wind
energy signifies a marginal contribution to the generation. The installed capacity in year 2011 amounted to 3,110
MW where total electricity generations to the sector for the same period stood at 11,000 GWh in order to meet a
demand of 1,100 MWh.
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MACKWOODS ENERGY PLC
Management Discussion
and Analysis
Figure 1: Power Generation by Source, 2011
Energy Consumption by Sector
Industry
Transport
Domestic & Commercial
25%
26%
49%
Energy Supply by Source
Sector Composition
Industrial
Domestic
Commercial
Religious
Street lighting
36%
39%
23%
1%
1%
Electricity Generation by Source
Electricity Generation
Gross Generation
Hydro
Thermal
NCRE
11,000 GWh
33%
60%
7%
Electrification Level of HHs
Total
National Grid
Off-Grid
Future Demand
Energy Demand
Peak Demand
92%
90%
2%
Estd by 2020
20,000 GWh
4330 MW
Energy Consumption by Sector
As a total energy solutions provider, Mackwoods
Energy is well equipped to meet the rapid growth in
demand for energy in post conflict development
thrust of the country, through its proven track record
as a thermal energy solutions provider and its planned
diversification into small hydro projects in the
plantations and other renewable energy projects such
as solar, wind, bio-gas, etc.
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MACKWOODS ENERGY PLC
Annual Report of the
Board of Directors
The Directors of the Company have pleasure in presenting their Annual Report together with the Audited Financial
Statements of Mackwoods Energy Ltd for the year ended 31st March 2012.
Change of Company’s Name
Mackwoods Energy Ltd. was formerly known as Mackwoods Engineering (Pvt) Ltd. and the name was changed with
effect from 23rd September 2011 to Mackwoods Energy (Pvt) Ltd. and thereafter to Mackwoods Energy Ltd on 5th
December 2011.
(The name of the Company has since changed to Mackwoods Energy PLC following the listing on the Diri Savi Board
of the Colombo Stock Exchange on 25th April 2012).
Parent Enterprise
The Company’s parent undertaking is
Companies.
Mackwoods (Pvt) Ltd, which is a member of the Mackwoods Group of
Principal Activities
The principal activities of the Company are the provision of total energy solutions covering a wide range of
products and services.
Financial Statements
The financial statements of the Company for the year ended 31st March 2012 the Chairman‘s review and the
Management Discussion & Anaalysis reflect the state of affairs of the Company.
Auditors’ Report
The Auditors’ report on the financial statements is given on page 16.
Accounting Policies
The accounting policies adopted in the preparation of the financial statements are given as notes to the financial
statements.
Revenue
The turnover of the Company for the year was Rs 265.54 Mn .
Capital Expenditure
The Company purchased a commercial property at No 35, Madampitiya Road, Modera, Colombo 15 on 30th
September 2011 , from Mackwoods (Pvt) Ltd at a total cost of Rs 205,407,000/-.
Contingent Liabilities
Contingent Liabilities are disclosed in Note 24 to the Financial Statements.
Events occurring after the Balance Sheet date
Events after Balance Sheet are disclosed in Note 25 to the Financial Statements.
Financial Results
The net profit after tax of the Company for the financial year ended 31st March 2012 is Rs 82.1Million (2011: Rs.
20.2 million)
Stated Capital
The Stated Capital of the Company as at 31st March 2012 is Rs.205,583,112/- made up of 75,000,000 ordinary
shares.
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MACKWOODS ENERGY PLC
Directors' Profile
Dr.C.N.A.Nonis - Chairman/Non-Executive Director
BSc.(Hons.)(London), MBBS (London), MRCP (UK)
Dr. Nonis was appointed as the Chairman of the Board of MEL in 2005. He is also the Chairman of the Mackwoods Group of
Companies. He qualified in London, with a First Class Honours BSc. from Imperial College of Science, Technology and
Medicine and obtained his M.B.B.S. from the Royal Free Hospital Medical School, University of London, having spent his
electives at Massachusetts General Hospital, Harvard Medical School, Boston, USA. He carried out his postgraduate
training at Royal Brompton, the Hammersmith, and Addenbrooke’s Hospital, Cambridge, and obtained his M.R.C.P. (U.K.).
He is a Member of the Royal College of Physicians, UK, and is a Fellow of the Royal Society of Medicine, London, and a
Member of the Institute of Directors, London.
Dr. Nonis is a Director of Ceylon Hotels Corporation PLC and served as a Director of Sri Lankan Airlines Limited, the Grants
Board of the ICT Agency of Sri Lanka, the Council of the Employers’ Federation of Ceylon; the Advisory Committee on
Peace and Reconciliation of the Ceylon Chamber of Commerce; President of the India Life Sciences Institute – Sri Lanka
Committee and Committee Member - Sri Lanka China Business Council.
He is a Board Member of the International Chamber of Commerce of Sri Lanka; the Country Coordinating Mechanism for Sri
Lanka of the Global Fund; Deputy Chairman of the Royal Commonwealth Society in London; Board member of Ramphal
Institute of Commonwealth Policy Studies, London, Commonwealth Business Council and has been appointed as the Sri
Lankan High Commissioner to the United Kingdom.
Mrs. N.S.M. Samaratunga - Non-Executive Director
FCMA (UK), CGMA
Mrs. Samaratunga was appointed as a Director of MEL in 1988. She is the Co-Chairman and Joint Managing Director of ML.
Mrs. Samaratunga is a Fellow of the Chartered Institute of Management Accountants (UK) and counts over 25 years of
management experience.
She was the first female President of the National Chamber of Commerce of Sri Lanka and the first female President of
Rotary Club of Colombo. Mrs. Samaratunga was the Co-Chair of the Export Cluster of the National Council for Economic
Development, a Member of the Tertiary and Vocational Education Commission and Vice-President of BIMSTEC Forum at
various times. She is a Member of the ICT Grants Commission of the ICT Agency and the EDB Advisory Committee on Spices
and Allied Products.
Mrs. Samaratunga is the Immediate Past Chairperson of the Exporters Association of Sri Lanka, Immediate Past President of
the Sri Lanka - France Business Council, Past President of the Sri Lanka - Poland Business Council all of which operate
under aegis of the Ceylon Chamber of Commerce and Committee Member of the Sri Lanka-Malaysia Business Council. She
is also a Member of the Chamber Committee of the Ceylon Chamber of Commerce and a Trustee of National Agri-Business
Council. Mrs. Samaratunga is also a Member of the Monetary Policy Consultative Committee of the Central Bank of Sri
Lanka.
Mr. Francis Lalith Fonseka – Executive Director
FCA, FCMA (UK), CGMA, MBA (Sri J.)
Mr. Fonseka was appointed as a Director of MEL in 1988. He is the Joint Managing Director of ML. Mr. Fonseka is a Fellow of
the Institute of Chartered Accountants of Sri Lanka, and a Fellow of the Chartered Institute of Management Accountants
(CIMA), UK, and holds an MBA from the University of Sri Jayewardenepura and counts over 25 years of experience in the
fields of finance and business.
He is a Past President of CIMA, Sri Lanka Division, and was a Member of the Developing Nations Committee of the
International Federation of Accountants (IFAC). He has served on the Urgent Issues Task Force of the Institute of Chartered
Accountants of Sri Lanka and was a Member of the Global Markets Committee of CIMA Global.
Mr. Arjuna Lasantha Yatawara – Executive Director (Managing Director/CEO )
MCIM, FAAI, FAMS
Mr. Yatawara was appointed as a Director of MEL in 1990. He is a Director of ML. He is a Chartered Marketer and a Member
of the Chartered Institute of Marketing, UK, and a Fellow of the Academy of Marketing Science, USA.
Mr. Yatawara is a Past President of the Sri Lanka Italy Business Council of the Ceylon Chamber of Commerce and was the
Chairman of the Sri Lanka Delegation for Promotion and Trade and Investments to China, organized by the National
Chamber of Commerce. He is also a past Office Bearer of the Singapore Business Council of the Ceylon Chamber of
Commerce and Past President of the Kiwanis Club of Colombo City, headquartered in USA. He currently serves as the
Country Representative for Kiwanis International.
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Directors' Profile
Mrs. S.M.A.Nonis Ranaweera - Non-Executive Director
LL.B.(Hons.)(London), Barrister-at-Law (Gray's Inn), Attorney-at-Law
Mrs. Nonis Ranaweera was appointed as a Director of MEL in 2010. She is also a Director of Mackwoods (Pvt) Ltd. Mrs.
Nonis Ranaweera graduated from University College London, University of London with an LLB (Hons) Degree and is a
Barrister-at-Law from the Honourable Society of Gray’s Inn, UK and an Attorney-at-Law.
Mrs. Nonis Ranaweera is a Partner of Julius & Creasy – Attorneys-at-Law, Solicitors and Notaries Public and is attached to
the Corporate Law Department. Mrs. Nonis Ranaweera serves as a Council Member of the Royal Commonwealth Society –
Sri Lanka, a Member of the Zonta Club 1 of Colombo, and also serves as a Trustee of the Sriyani Nonis Charitable Trust.
Mr. L. L. Samarasinghe – Non-Executive Director
Mr. Samarasinghe was appointed as a Director of MEL in December 2011. He is a Director of ML and Deputy Chairman of
Shaw Wallace and Hedges Ltd and a Director of Shaw Wallace Ceylon (Pvt) Ltd. He was the former Managing Director of
Mackwoods (Pvt) Ltd. He has also held the positions of Chairman of the Employers’ Federation of Ceylon, President of the
National Chamber of Commerce, Director of Ceylon Oxygen Ltd. and a Member of the Coconut Development Authority. Mr.
Samarasinghe was a Member of the Inland Revenue Board of Review.
Mr. Lakshman Jayaraj Kumar Hettiaratchi – Non-Executive Independent Director
LLB, FCMA (UK), MBCS, CITP, Attorney-at-Law
Mr. Hettiaratchi was appointed as a Director of MEL in December 2011. He is a Management Consultant, and a Director of
several companies. He is a Member of the Council of University of Moratuwa; Member of the National Education
Commission. Mr. Hettiaratchi was a Director of Sampath Bank PLC and is a Former President of the Organisation of
Professional Associations of Sri Lanka, former President of Chartered Institute of Management Accountants- Sri Lanka
Branch and the former Country Manager of IBM World Trade Corporation, Sri Lanka.
Dr. Hasaan Shafeeu – Non-Executive Independent Director
PhD, MEng (Hons), CEng, MIEE
Dr. Shafeeu was appointed as a Director of MEL in December 2011. He qualified in London with a First Class Honours in
MEng from the University College London, University of London winning the Clinton Prize for the year 1990 for outstanding
performance. He obtained his PhD in Electronic and Electrical Engineering and carried out his Post Doctoral Research in
University College London, University of London.
Dr. Shafeeu presently works as PMTS Product Definition for Maxim Integration Solutions Ltd, a public company based in the
USA and counts over 25 years of wide ranging experience at senior positions in the fields of
telecommunications/engineering, in the UK, USA and the Maldives.
Mr. Shamal Mirisse Liyanage – Executive Director (General Manager)
Exe. Dip in Mktg (Col), MCPM, MIM (SL)
Mr. Liyanage was appointed as a Director of MEL in December 2011. He joined the Mackwoods Group in 1993 and counts
over 15 years of power and energy sector related experience. In addition he has educational and professional experience
in the fields of Marketing, Technology Management and Manufacturing. He was appointed as a General Manager in 2006.
He possesses a Diploma in Marketing from University of Colombo. He is a Member of Institute of Management, Sri Lanka
and a Member of the Institute of Certified Professional Managers.
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MACKWOODS ENERGY PLC
Independent Auditors' Report
WIJEYERATNE & COMPANY
Chartered Accountant
15 Maitland Crescent, Colombo 7
P.O.Box 191, Colombo, Sri Lanka
Phone : (94) 11-2693147/8
2678256/7
5736996/5736933
5736878/5736844
Fax
: (94) 11-2693839
E mail : [email protected]
Web
: www.wijeyeratne.com
TO THE MEMBERS OF MACKWOODS ENERGY LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of Mackwoods Energy Limited, which comprise the balance sheet
as at March 31, 2012, and the income statement, statement of changes in equity and cash flow statement for the year
then ended, and a summary of significant accounting policies and other explanatory notes.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri
Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates
that are reasonable in the circumstances.
Scope of Audit and Basis of Opinion
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance whether the financial statements are free from material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for
the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.
Opinion
In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year
ended March 31, 2012 and the financial statements give a true and fair view of the Company’s state of affairs as at March
31, 2012 and its profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.
Report on other Legal and Regulatory Requirements
These Financial Statements also comply with the requirements of Section 151(2) of the Companies Act No. 07 of 2007.
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MACKWOODS ENERGY PLC
Income Statement
For the year ended 31st March 2012
Note
Year Ended
31.03.2012
Rs.
Year Ended
31.03.2011
Rs.
TURNOVER
4
265,544,322
98,328,503
Cost of Sales
5
(132,297,354)
(52,226,110)
133,246,968
46,102,393
190,645
110,865
133,437,613
46,213,259
(12,976,247)
(14,085,048)
(8,886,739)
(2,701,343)
106,376,318
34,625,176
GROSS PROFIT
Other Income
Distribution Expenses
Administration Expenses
6
7
8
PROFIT FROM OPERATIONS
Finance Cost
9
PROFIT BEFORE TAXATION
TAXATION
10
NET PROFIT FOR THE YEAR
Earning Per Share
11
(1,357,257)
(1,990,209)
105,019,061
32,634,967
(22,891,608)
(12,389,821)
82,127,453
20,245,146
1.91
404.89
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MACKWOODS ENERGY PLC
Notes to the Accounts
1. CORPORATE INFORMATION
1.1 Status of the Company
The company is re-registered under the Companies Act No. 07 of 2007and the registration no is PV 17807 PB. The
registered office of the company is at No. 10, Gnanartha Pradeepa Mawatha, Colombo 8.
1.2 Change of Company's Name
Mackwoods Energy Limited was formerly known as Mackwoods Engineering (Private) Limited, and the name was
changed with effect from 23rd September 2011and thereafter to Mackwoods Energy Limited on 5th of December
2011.
1.3 Parent and ultimate parent
The Company's parent undertaking is Mackwoods (Pvt) Ltd, which is incorporated in Sri Lanka and which in the
opinion of the Directors is the Company's ultimate parent undertaking and controlling party.
1.4 Principal Activities of the Company
The principal activity of the Company is the provision of total energy solutions providing a wide range of products
and services.
1.5 Date of Authorization for Issue
The financial statements of Mackwoods Energy Limited for the year ended 31st March 2012 were authorised for
issue in accordance with resolution of Board of Directors on 27th August 2012.
1.6 Change in Accounting Policies
The accounting policies have been consistently applied by the company and are consistent with those used in the
previous year.
2. BASIS OF PREPARATION
The Financial Statements of the Company have been prepared on the historical cost basis.
2.1. Statement of Compliance
Financial Statements have been prepared in accordance with the Sri Lanka Accounting Standards, issued by the
Institute of Chartered Accountants of Sri Lanka and the requirements of the Companies Act No 07 of 2007.
2.2 Basis of Measurement
The Financial Statements of the Company have been prepared on the historical cost basis and presented in Sri
Lanka Rupees.
2.3.Statement on Reclassification
The Accounting Policies have been consistently applied by the Company and are consistent with those used in the
previous year. Certain comparative amounts have been reclassified to conform to the current year's presentation.
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Notes to the Accounts
2.4. Key Estimates, Assumptions and Judgments
The preparation of Financial Statements in conformity with SLAS requires management to make judgments,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from those judgmental decisions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the Accounting Estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of
the revision and future periods if the revision affects current and future periods.
2.5. Going Concern
The Directors have made an assessment of the Company's ability to continue as a going concern and they do not
intend either to liquidate or to cease trading.
3. SIGNIFICANT ACCOUNTING POLICIES
3.1. Revenue Recognition
Revenue is recognized to the extend that it is probable that the economic benefits will flow to the company and
the revenue and associated costs incurred or to be incurred can be reliably measured. Ex Stock Revenue is
measured at the fair value of the consideration received or receivable net of trade discounts and sales taxes.
Service and Commission income is recognized on an accrual basis. Commission income on account of direct indent
business previously shown under other income has been reclassified under revenue and the comparative figures
adjusted accordingly. Interest income is recognized as the interest accrues unless collectability is in doubt.
3.1.1. Investments
Initial Recognition
Cost of Investment includes purchase cost and acquisition charges such as brokerages, fees, duties and bank
regulatory fees.
Measurements
Current Investments
Current Investments are carried at the lower of costs and market value.
Long Term Investments
Long Term Investments are stated at cost. Carrying amounts are reduced to recognise a decline other than
temporarily, determined for each investment individually. These reductions for other than temporarily declines in
carrying amounts are charged to income statement.
Other Investments
Treasury Bills and other mark-up bearing securities held for resale in the near future to benefit from short term
market movements are accounted for at cost plus relevant proportion of the discounts or premiums.
3.2. Trade and Other Receivables
Trade and Other Receivables have been stated at the amounts estimated to be realised.
3.3. Liabilities and Provisions
All known liabilities have been accounted for in preparing the Financial Statements.
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Notes to the Accounts
3.4. Profit and Loss Account
All expenses in running of the business and in maintaining the capital assets in a state of efficiency have been
charged to revenue in arriving at the Profit for the year.
3.5. Inventories
Inventories are stated at the lower of the cost and net realizable value. Cost is generally determined by reference
to weighted average cost. Net realizable value is the estimated net selling price in the ordinary course of business.
3.6. Taxation
3.6.1 Current Taxation
Provision for taxation has been made on the basis of the profit for the year as adjusted for taxation purpose in
accordance with the provisions of the Inland Revenue Act No. 10 of 2006.
3.6.2. Deferred Taxation
Deferred Taxation has been provided on the liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of
goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profits, and differences relating to investment in subsidiaries, jointly
controlled entities and associates to the extent that they probably will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the balance sheet date.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available
against which the temporary differences can be utilized.
The carrying amount of deferred income tax is reviewed at each balance sheet date and reduced to the extent that
is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax
asset to be utilised.
3.7 Property Plant And Equipment
The property, plant and equipment have been stated at cost or valuation less accumulated depreciation. Where an
item of property, plant and equipment comprises major components having different useful life, they are accounted
for as separate items of property, plant and equipment.
The cost of property, plant and equipment is the cost of purchase or construction together with any expenses
incurred in bringing the assets to its working condition for its intended use.
Expenditure incurred for the purpose of acquiring, extending or improving asset of a permanent nature by means of
which to carry on the business or for the purpose of increasing the earning capacity of the business have been
treated as capital expenditure.
Depreciation is charged on all property, plant and equipment on a straight line basis so as to write -off the
cost/valuation over the estimated useful life of the these assets.
Their principal annual rates of depreciation used are as follows;
Depreciation Rate %
Buildings
Office Equipment
Motor Vehicle
2
25
25
A N N U A L R E P O RT 2 0 1 1 / 2 0 1 2 | 2 3
MACKWOODS ENERGY PLC
Notes to the Accounts
3.8. Future Changes In Accounting Policies
Effects of Sri Lanka Accounting Standard issued but not yet effective.
a) The following standards have been issued by the Institute Chartered Accountants in Sri Lanka.
Sri Lanka Accounting Standard 44 financial instrument, presentation (SLAS44)
Sri Lanka Accounting Standard 45 financial instrument recognition and measurement (SLAS45)
Sri Lanka Accounting Standard 39 share base payment (SLAS39)
The effective date of SLAS44, 45 and 39 was changed during the year to be effective for the financial period
beginning on or after 01st January 2012. These three standards have been amended and forms a part of the new set
of financial reporting standards mentioned under note (b) below.
b) Following the convergence of Sri Lanka Accounting Standards with the International Financial Reporting
Standards, the Council of the Institute of Chartered Accountants of Sri Lanka has adopted a new set of financial
reporting standards that would apply for financial periods beginning on or after 01 January 2012. The application
of these financial reporting standards is substantially different to the prevailing standards.
3.9. Retirement Benefit Obligations
3.9.1. Defined Contribution Plan ETF and EPF.
A defined contribution plan is post employment benefit plan under which and entity faces fixed contributions into a
separate entity and will have legal or constructive obligation to pay future amounts. Employees who are eligible
for EPF and ETF contributions are covered by relevant contributions funds in line with effective status and
regulations.
3.9.2. Gratuity
The Liability recognized in the Balance Sheet is the Present Value of the Defined Benefit Obligation at the Balance
Sheet Date using the Gratuity Formula in Appendix E of the Sri Lanka Accounting Standard 16 - Employees Benefit
(Revised 2006), which is based on the Projected Unit Credit Methods as discussed in the said Standard.
However as per the payment of the Gratuity Act No. 12 of 1983, the liability to an employee arises on completion
of 5 years of continued service. The Gratuity liability is neither externally funded nor actuarially valued.
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A N N U A L R E P O RT 2 0 1 1 / 2 0 1 2
MACKWOODS ENERGY PLC
Notes to the Accounts
31.03.2012
Rs.
31.03.2011
Rs.
168,398,614
97,145,708
60,039,131
38,289,372
265,544,322
98,328,503
19,440,675
23,220,228
4. TURNOVER
Sales - Ex. Stock
Service Income & Commission Income
5. COST OF SALES
Opening Stock
Inventory write off
Purchases
(6,055)
28,749
127,101,204
48,446,557
146,535,824
71,695,534
Less: Closing Stock
(14,238,470)
(19,469,424)
Cost of Sales
132,297,354
52,226,110
185,600
5,045
190,645
83,292
27,573
110,865
7,065,126
1,309,556
4,178,176
1,980,844
1,911,772
178,341
166,621
1,621,120
974,405
116,168
70,198
253,321
723,711
1,313,627
12,976,247
8,886,739
Warehousing Expenses
Depreciation
60,000
308,224
2,068,009
1,233,935
40,000
152,465
1,632,246
Shared Services
9,600,000
243,950
6. OTHER INCOME
Interest Income
Other Income
7. DISTRIBUTION COST
Staff Salaries
Travelling
Sales Promotion & Advertising
Communication
Entertainment Expenses
Nation Building Tax
Other Selling Expenses
8. ADMINISTRATIVE EXPENSES
Audit Fees
Printing & Stationery
Vehicle Maintenance & Repairs
Other Administration Expenses
259,753
47,418
-
555,127
585,263
14,085,048
2,701,343
9. FINANCE COST
Lease Interest
Lease Charges
Bank Charges
Interest Expenses
360,714
22,903
428,538
545,102
1,357,257
37,652
179,639
1,772,918
1,990,209
A N N U A L R E P O RT 2 0 1 1 / 2 0 1 2 | 2 5
MACKWOODS ENERGY PLC
Notes to the Accounts
12. PROPERTY PLANT AND EQUIPMENT
Cost
Tools & Computer Furniture
Land &
Building Equipment Equipment & Fittings
Rs.
Rs.
Rs.
Rs.
Leased
Motor Car
Rs.
Balance
at 01.04.2011
Office
Equipment
Rs.
Total
Rs.
-
-
209,673
-
-
-
209,673
Additions
5,945,000
205,407,000
-
89,980
32,037
146,194
211,620,211
Balances
at 31.03.2012
5,945,000
205,407,000
209,673
89,980
32,037
146,194
211,829,884
-
-
75,974
-
-
-
75,974
Charge for the Year
990,840
164,155
52,418
6,666
4,005
15,851
1,233,935
Balances
at 31.03.2012
990,840
164,155
128,392
6,666
4,005
15,851
1,309,909
Balance
at 31.03.2012
4,954,160
205,242,845
81,281
83,314
28,032
130,343
210,519,975
Balance
at 31.03.2011
-
-
133,699
-
-
-
133,699
Accumulated Depreciation
Balance at 01.04.2011
Net Book Value
Note:
The company purchased a commercial property at No 35, Madampitiya Road, Modera, Colombo 15 on 30th September
2011 from Mackwoods (Pvt) Ltd and these land and Building are shown at total cost of Rs.205,407,000/=
31.03.2012
Rs.
31.03.2011
Rs.
5,194,844
9,504,150
9,043,627
14,238,471
9,936,525
19,440,675
118,650,358
21,051,966
3,478,945
740,692
14,083
55,818
4,457,982
277,206
2,591,364
-
122,939,896
28,378,518
13. INVENTORY
Generators & Equipments
Spares & Accessories
14. TRADE AND OTHER RECEIVABLES
Trade Debtors
Sundry Advances
ESC Receivables
WHT Receivables
Prepayment
A N N U A L R E P O RT 2 0 1 1 / 2 0 1 2 | 2 7
MACKWOODS ENERGY PLC
Notes to the Accounts
31.03.2012
Rs.
20. LEASE OBLIGATION
31.03.2011
Rs.
Alliance Finance PLC
Obligation under Finance Leasing
The obligation is secured by Car which is leased out under the
lease agreement and is payable in 60 equal monthly installments from August 2011
Lease Obtained
8,650,356
-
(1,153,381)
-
7,496,975
-
Less: Interest in Suspense
(2,344,642)
5,152,333
-
Less: Lease payable within one year
(1,189,000)
-
3,963,333
-
Less: Repayment during the year
21. TRADE & OTHER PAYABLES
Trade Creditors
Accrued Expenses
Turnover Tax Payable
ESC Payable
VAT Payable
Audit Fees & tax Computation Payable
NBT Payable
Reimbursements
Other Payable
IPO Expenses
Provision for Bonus
31.03.2012
Rs.
2,851,103
9,111,072
705,786
145,135
18,767,991
74,000
542,979
1,245
34,083,961
98,800
66,382,072
31.03.2011
Rs.
4,547,440
2,017,752
705,786
418,740
3,303,836
114,000
310,046
271,503
2,225
11,691,328
22. RELATED PARTY TRANSACTIONS
Dr. C.N.A. Nonis, Mrs. N.S.M. Samaratunga, Mr. F.L. Fonseka, Mr. A.L. Yatawara, Mr.L.L.Samarasinghe and Mrs.
S.M.A. Nonis Ranaweera Directors of the Company are also Directors of Mackwoods (Pvt) Ltd, to whom the
company has provided goods and services during the year.These transactions have been carried out in the
ordinary course of business on commercial terms and conditions.
Further, Mackwoods (Pvt) Ltd, has provided management and other services to Mackwoods Energy Ltd.
Significant inter company transactions with Mackwoods (Pvt) Ltd.are given below.
All figures in Rs.
Investment in Shares
Inter company Payments
Maintenance Services
Purchase of Assets Including Stamp Duty and Legal Charges
Purchase of Stocks
Interest on Inter Company Account Balance
Dividend Paid
Shared Expenses
31st March 2012
205,083,102
87,979,026
2,741,760
(205,407,000)
(113,361,702)
(2,582,969)
(2,200,044)
(9,600,000)
Dr. C.N.A. Nonis, Mrs. N.S.M. Samaratunga, Mr. F.L. Fonseka, Mr.L.L.Samarasinghe and Mrs.S.M.A.Nonis
Ranaweera are also Directors of Agalwatte Plantations PLC to whom the company has provided goods and
services during the year. These transactions have been carried out in the ordinary course of business on
commercial terms and conditions.
Dr. C.N.A. Nonis, Mr. F.L. Fonseka, and Mrs.S.M.A.Nonis Ranaweera are also Directors of Taprospa Resorts (Pvt)
Ltd. to whom the company has provided goods and services during the year. These transactions have been
carried out in the ordinary course of business on commercial terms and conditions.
A N N U A L R E P O RT 2 0 1 1 / 2 0 1 2 | 2 9
MACKWOODS ENERGY PLC
Notes to the Accounts
23. TRANSACTIONS WITH KEY MANAGEMENT
Key Management Personnel are those having authority and responsibility for planning, directing and controlling
the activities of the entity. Accordingly, the Board of Director (Including senior Management) has been
classified as Key Management Personnel of the company.
The company has not paid fees to Directors during the Year ended 31 March 2012. Part of the remuneration of
the CEO, and key management personnel were paid by the other companies of the Mackwoods Group and the
company's expenditure on account of this, amounted to Rs. 2,601,960/=. There are no material transactions
with the Key Management Personnel of the company.
24. CONTINGENT LIABILITIES
There were no material contingent liabilities outstanding as at Balance Sheet Date.
25. POST BALANCE SHEET EVENTS
There have been no material events occurring after the Balance Sheet date which require adjustments to or
disclosure in the financial statements except that the Company has successfully completed an Initial public
Offer to raise Rs 350Million by way of an offer for subscription of 25,000,000 Ordinary Voting Shares at Rs.14/=
per Share and obtained a listing on the Diri Savi Board of the Colombo Stock Exchange on 25th April 2012.
Following the listing the name of the company changed to Mackwoods Energy PLC.
Shareholders Information
SHAREHOLDERS AS AT 31ST MARCH 2012
Name
83.9051
2. Dr.Chrisantha Nicholas Anthony Nonis
3,018,707
4.0250
3. Mrs. Nirmali Suzanne Moira Samaratunga
3,017,500
4.0233
4. Mr. Francis Lalith Fonseka
3,017,500
4.0233
5. Mr. Arjuna Lasantha Yatawara
3,017,500
4.0233
75,000,000
100.000
Total
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Percentage of
Shareholding (%)
62,928,793
1. Mackwoods (Private) Limited
30
No. of Shares
A N N U A L R E P O RT 2 0 1 1 / 2 0 1 2
MACKWOODS ENERGY PLC
Notice of Meeting
NOTICE IS HEREBY GIVEN that the Annual General Meeting (AGM) of MACKWOODS ENERGY PLC (“the Company”)will
be held at ‘Sasakawa Memorial Hall” No. 04, 22nd Lane, Colombo 03 on Friday, 28th September 2012 at 4.00
p.m. for the following purposes:
01. To receive and consider the Annual Report of the Board together with the Financial Statements of the Company
for the financial year ended 31st March 2012 together with the report of the Auditors thereon
02. To consider, and if thought fit, pass the following resolution as an ordinary resolution for the re-appointment of
Mr. L.L.Samarasinghe.
Ordinary Resolution
IT IS HEREBY RESOLVED that Mr.L. L. Samarasinghe who reached the age of 78 years in November 2011 be
appointed a Director of the Company in terms of Section 211 or the Companies Act No. 7 of 2007, for a term
that ends on the earlier of a date that is one year from the date of appointment or at the conclusion of the
Annual General Meeting following this Annual General Meeting at which the appointment if any, takes place
and it is further resolved that the age limit referred to in Section 210 of the said Companies Act shall not apply
to Mr. L. L. Samarasinghe.
03. To re-appoint M/s. Wijeyeratne & Co., Chartered Accountants as the Auditors of the Company to hold office
until the conclusion of the next Annual General Meeting of the Company at a remuneration to be agreed with
by the Board of Directors and to audit the Financial Statements of the Company for the accounting period
ending 31st March 2013.
04. To authorize the Directors to determine contributions to charities.
By Order of the Board
Mackwoods (Private) Limited
Secretaries,
Mackwoods Energy PLC
Colombo .
27th day of August 2012
Note:
Any shareholder entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and
vote/speak in his /her stead and a form of proxy is sent herewith for this purpose. A proxy need not be a
member of the company.
A completed form of proxy must be deposited at the Registered Office of the Company at No. 10, Gnanartha
Pradeepa Mawatha, Colombo 08 not less than 48 hours before the time appointed for the holding of the
meeting.
A N N U A L R E P O RT 2 0 1 1 / 2 0 1 2 | 3 1
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Form of Proxy
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MACKWOODS ENERGY PLC
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I/We...................................................................... of..........................................................
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being member/s of the MACKWOODS ENERGY PLC hereby appoint,
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Dr. C. N. A. Nonis or failing him
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Mrs. N.S. M. Samaratunga or failing her
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Mr. F. L. Fonseka or failing him
Mr. A. L. Yatawara or failing him
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Mrs. S. M. A. Nonis Ranaweera
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Mr. L. L. Samarasinghe or failing him
Mr. L. J. K. Hettiaratchi or failing him
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or failing her
Dr. H. Shafeeu or failing him
Mr. S. M. Liyanage
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.................................................................as my/our proxy to speak and vote for me/us and on my/our
behalf at the Annual General Meeting of the Company to be held on Friday the 28th day of September 2012,
at 4 pm and any adjournment thereof and at every poll which may be taken at such meeting.
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As witness my/our hand this................................. day of ....................................2012.
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...............................
Signature
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Note: Delete what is inapplicable.
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Instruction as to completion
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(1)
The instrument appointing a proxy may be in writing under the hands of the appointer or of his Attorney
duly authorized in writing under the hands of the appointer or of its attorney duly authorized in writing
or if such Appointer is a corporation under its common seal or the hand of its Attorney or duly
authorized person.
(2)
The instrument appointing a proxy and the power of Attorney or other authority, if any, under which it
is signed or notarially certified copy of the Power of Authority or other authority will have to be
deposited at the Registered Office of the Company not less than 48 hours before the time appointed for
the holding of the meeting.
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Notes
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TM
Mackwoods was established in 1841 by Captain William Mackwood, and has the distinction of being the
second oldest mercantile establishment in Sri Lanka, and a part of Sri Lanka’s heritage. Mackwoods is
one of the oldest member of the Ceylon Chamber of Commerce & Industry, since 1847, and functioned
primarily as an Agency House, Insurance House and Trading company which rapidly build up a global
network of partners and principals. Mackwoods was acquired in 1956 by the late Mr. N.S.O. Mendis,
the father of Mrs. Sriyani Nonis. Mr. N.S.O. Mendis was a visionary entrepreneur who diversified the
Groups interests, and combined it with a strong element of social philanthropy. This vision was
pursued and fulfilled by Mrs. Sriyani Nonis, who at the same time expanded and further diversified
the business group.
Today, Mackwoods is a conglomerate of over twenty companies engaged in key sectors of the Sri
Lankan economy. It provides employment to over 8,000 individuals, has a land base of 27,000 acres.
Over its 170 years history it has built up an International network of partners at all levels of
stratification. Its core business sectors are Healthcare (Medical Equipment; Scientific and Lab
Equipment and Pharmaceuticals); Agribusiness and Plantations (27,000 Acres of Tea, Rubber, and Palm
Oil); Industry, Manufacturing; Engineering & Power Generation; Import /Export trading; ICT Education
and Software Development; Hotels and Leisure Sector; Infrastructure and Real Estate development;
Insurance Broking; and Stock Broking.
Mackwoods Energy PLC is a member of the Mackwoods Group of Companies and part of the Group’s
rich heritage of over 170 years. Building upon the solid foundation of its parent company, MEL has
grown to be a trusted provider of a wide array of energy solutions, with many products and services
being offered to cater to the diverse energy needs of its customers. MEL’s strength in the power
solutions business was achieved over the last decade by catering to the increasing demand for both
primary and secondary power generation. The advent of peace in 2009 accompanied by the strong
growth in the economy and the emerging potential presented by the far reaching national
infrastructure development programme, led to MEL repositioning itself as a total energy solutions
provider of an extensive array of products and services including the development of hydropower and
renewable energy projects.
The Mackwoods Group continues to forge ahead in the 21st Century and its theme "Tradition with
Vision" exemplifies the driving force, which has enabled the business to survive the many vicissitudes
since its founding over 170 years ago. A Company with a great tradition in the past, meeting the
future with vision and confidence, pursuing a strategy of diversification led growth, fiscal prudence,
and constant innovation, as it continues to strive for excellence.
Designed &
Produced by: