Colombo, Sri Lanka – 31 August 2026 – Mercantile Shipping Company PLC (CSE: MSCL) today announced the release of its Annual Report for the financial year ended 31st March 2026. The report unveils a significant financial turnaround for the company, moving from a loss in the previous year to a substantial profit, primarily driven by a strategic change in its accounting policy for investment properties.
For the financial year 2025/26, Mercantile Shipping PLC recorded a remarkable profit before tax of Rs. 448.8 million, a dramatic improvement compared to the loss of Rs. 0.5 million reported in the preceding year. This translated into a net profit of Rs. 312.98 million for the period, a stark contrast to the net loss of Rs. 1.04 million in FY 2024/25. The company’s Basic Earnings Per Share (EPS) soared to Rs. 110.01 from a negative Rs. 0.37 in the prior year, while Net Assets Per Share climbed to Rs. 137.00 from Rs. 27.04.
Strategic Accounting Shift Boosts Asset Valuation
The pivotal factor behind this financial resurgence is the company’s decision to change its accounting policy for investment properties. Effective from 31st March 2026, Mercantile Shipping PLC transitioned from the cost model to the fair value model, in accordance with LKAS 40 Investment Property. This change resulted in a substantial fair value gain of Rs. 447.7 million, which was recognized in the Statement of Profit or Loss for the year.
Consequently, the total carrying value of the company’s investment properties saw a significant increase from approximately Rs. 32 million (under the previous cost model) to Rs. 479.8 million as at 31st March 2026. The Board of Directors stated that this shift would “better represent the value of the Company to its stakeholders.”
Operational Focus and Future Outlook
In his Chairman’s Review, Mr. H.A.R.K. Wickramatileka reiterated that the company ceased its main shipping operations in December 2019 following the sale of its vessels. Since then, MSCL has been concentrating on restructuring and repositioning its operations for long-term sustainability. Currently, the primary sources of income are derived from two investment properties and interest income from term deposits, providing a stable revenue stream sufficient for basic operational needs.
Mercantile Shipping PLC is actively exploring new opportunities and working towards finding new investors with a view to diversifying its business. Further progress on this front is anticipated later in the year. The Chairman also provided an update on the insurance claim receivable for the Mercs Hendela vessel, noting that the matter remains pending before the Appeal Court of Chennai.
45th Annual General Meeting Scheduled
The 45th Annual General Meeting (AGM) of Mercantile Shipping Company PLC will be held virtually via Microsoft Teams Audio/Video on 22nd September 2026 at 2:00 p.m. Shareholders are required to complete a pre-registration form to ensure participation. The agenda for the AGM includes the reception and consideration of the Annual Report, re-election of directors retiring by rotation, re-appointment of directors under Section 211 of the Companies Act (including several who are above the age limit, with a special declaration), and the re-appointment of Ernst & Young as auditors.
Corporate Governance and Board
The company confirmed its compliance with the corporate governance rules laid down under Section 9 of the Listing Rules of the Colombo Stock Exchange. The Annual Report details the composition and activities of its key committees, including the Audit Committee, Remuneration Committee, and Related Party Transactions Review Committee. Several long-serving directors, including Captain K.J. Kriwat, Mr. M.S.P. Gunawardena, Mr. P.A. Nandasena, and Mr. H.A.R.K. Wickramatileka, are eligible and have offered themselves for re-appointment, with explicit declarations that the age limit referred to in Section 210 of the Companies Act shall not apply to them.
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