Annual Report 2024/2025

ACME PRINTING AND PACKAGING PLC

ANNUAL REPORT 2024 | 2025

ACME Printing and Packaging PLC is writing a bold new narrative. One defined by innovation, transformation, resilience, and forward momentum. From a legacy rooted in quality craftsmanship, we are evolving into a future-ready enterprise driven by knowledge and purpose. This year marks a turning point on smarter systems, eco conscious materials, and the energy of a new generation which are redefining how we print, package, and progress. Powered by SAP integration and the strategic support of the Lankem Group, we are optimizing operations while putting people at the heart of our journey.

As we print the next chapter, it's not just about ink on paper, it's about building a business that's resilient, responsible, and ready for tomorrow.

About Us 3

Vision and Mission 4

Corporate Information 5

Notice of Meeting 6

Board of Directors 7

Chairman's Statement 10

Management Discussion and Analysis 14

Sustainability Review 17

Corporate Governance 18

Enterprise Risk Management 49

Audit Committee Report 51

Related Party Transactions Review Committee Report 53

Remuneration Committee Report 55

Nomination and Governance Committee Report 56

Annual Report of the Board of Directors on

the Affair of the Company 59

Responsibility Statement of Executive Chairman and

Chief Financial Officer 62

Statement of Directors' Responsibilities in

Relation To Financial Statements 63

Senior Independent Director's Report 64

Independent Auditors' Report 66

Statement of Profit or Loss and

Other Comprehensive Income 69

Statement of Financial Position 70

Statement of Changes in Equity 71

Statement of Cash Flows 72

Notes to the Financial Statements 73

5 Year Summary 114

Real Estate Portfolio 115

Shareholders' Information 116

Notes 118

Form of Proxy 119

ANNUAL REPORT 2024 | 25

4 ACME PRINTING AND PACKAGING PLC

Vі 2іON To be the preferred

dynamic provider of flexible packaging solutions.

Mі 22іON

To become the major supplier of packaging material in Sri Lanka and be the leader of our

chosen business through continuous search for Excellence.

ACME Printing and Packaging PLC

A Public Quoted Company with limited liability incorporated Under the provisions of Company Act No. 7 of 2007.

ACME Packaging Solutions (Private) Limited A Fully owned Subsidiary Company with limited liability incorporated Under the provisions of Companies Act No. 7 of 2007.

1. A. Hettiarachchy

2. H. K. P. Jayasuriya

3. S. D. R. Arudpragasam

4. A. Rajaratnam

5. P. S. Goonewardene

6. A. I. Piyadigama

7. K. G. Punchihewa

#98, Sangaraja Mawatha,

Colombo 10.

Tel : +94 11 556 6000

Fax : +94 11 280 7480

E-mail : info@acmelk.com Web : https://www.acmelk.com

Factory & Office - Piliyandala

#318, Gonamaditta Road, Piliyandala, Sri Lanka.

Tel : +94 11 4368468,

: +94 11 4641818

E-mail : info@acmelk.com

Factory & Office - Pannala (Subsidiary)

Katugampola Industrial Estate (West) Makandura, Gonawila, Sri Lanka

Tel : +94 31 2298201-2,

E-mail : solutions@acmelk.com

S S P Corporate Services (Private) Limited 101, Inner Flower Road,

Colombo 03.

KPMG Sri Lanka, Chartered Accountants,

P. O. Box 186,

Colombo 03.

1. National Development Bank PLC

2. Hatton National Bank PLC

3. Sampath Bank PLC

4. Seylan Bank PLC

5. Nations Trust Bank PLC

6. People's Bank

7. Commercial Bank of Ceylon PLC

8. Amana Bank PLC

9. DFCC Bank PLC

Notice is hereby given that the Seventy Sixth Annual General Meeting of ACME Printing and Packaging PLC will be held on 9th September 2025, at 10:00 a.m. and conducted as a Virtual Meeting from 8-5/2, Leyden Bastian Road, York Arcade

Building, Colombo 01 for the purpose of transacting the following items of business:

AGENDA

1. To receive and consider the Audited Financial Statements for the year ended 31st March 2025 together with the Annual Report of the Board of Directors and of the Auditors thereon.

2. To re-elect as a Director

   Mr. K.G. Punchihewa, who retires in terms of Article 91 of the Articles of Association as recommended by the Board of Directors.

3. To re-elect as a Director

   Mr. A.I. Piyadigama, who retires in terms of Article 91 of the Articles of Association as recommended by the Board of Directors.

4. To re-elect as a Director

   Mr. A. Rajaratnam, who retires by rotation in terms of Article 84 and 85 of the Articles of Association as recommended by the Board of Directors.

5. To consider and if thought fit to pass the following Ordinary Resolution pertaining to the re-appointment

   of Mr. A. Hettiarachchy, as a Director who is over 70 years of age, in compliance with Section 211 of the Companies Act No.7 of 2007; and whose reappointment is recommended by the Board of Directors

   Ordinary Resolution

   "That the age limit of 70 years referred to in Section 210 of the Companies Act, No.7 of 2007 shall not apply to Mr. Ariyawansa Hettiarachchy, Director who is 76 years of age (having reached 70 years of age on 21st January 2019) and accordingly that Mr. Ariyawansa Hettiarachchy be and is hereby re-

   appointed a Director of the Company in terms of Section 211 of the Companies Act No.7 of 2007".

6. To consider and if thought fit to pass the following Ordinary Resolution pertaining to the re-appointment

   of Mr. S.D.R. Arudpragasam, as a Director who is over 70 years of age, in compliance with Section

   211 of the Companies Act No.7 of 2007; and whose reappointment is recommended by the Board of Directors

   Ordinary Resolution

   "That the age limit of 70 years referred to in Section 210 of the Companies Act, No.7 of 2007 shall not apply to Mr. Sri Dhaman Rajendram Arudpragasam, Director who is 73 years of age (having reached 70 years of age on 16th August 2021) and accordingly that Mr. Sri Dhaman Rajendram Arudpragasam be and is hereby re-appointed a Director of the Company in terms of Section 211 of the Companies Act No.7 of 2007".

7. KPMG Sri Lanka, Chartered Accountants who are deemed to have been re-appointed as Auditors in terms of Section 158 of the Companies Act No. 07 of 2007.

8. To authorize the Board of Directors to determine contributions to charities.

By Order of the Board of Directors of ACME Printing and Packaging PLC

S S P CORPORATE SERVICES (PRIVATE) LIMITED

SECRETARIES

Colombo

14th August 2025

Notes.

1. A shareholder entitled to attend and vote at the above mentioned meeting is entitled to appoint a proxy to attend and vote instead of him/her. Such proxy need not be a Shareholder of the Company.

2. A Form of Proxy is enclosed.

3. The completed Form of Proxy should be deposited at the Registered Office of the Company, No.98,

Sri Sangaraja Mawatha, Colombo 10, not later than 48 hours before the time appointed for the holding of the meeting.

C.Eng, MIEE, MIProdE, MIChemE

Executive Chairman

Mr. Hettiarachchy was appointed to the Board on the 12th January 2022 and as the Executive Chairman on 15th January 2022.

Mr. Hettiarachchy is a Chartered Chemical Engineer. He is Chairman of the Board of ISL Services Limited, Deputy Chairman of Lankem Ceylon PLC. He has served on the Boards of Richard Pieris Finance Ltd, C.W. Mackie PLC, Sri Lanka Institute of Nano Technology, Central Industries PLC, Hayleys PLC and functioned as Managing Director on the Boards of Haycarb PLC, Recogen Limited and Puritas Limited and also served on several other subsidiaries of Haycarb PLC and Hayleys PLC both in Sri Lanka and Overseas.

He was also a Board Member of the National Science Foundation, Coconut Research Institute, Member of the National Nano Committee, Chief of Research and Engineering Systems - Sri Lanka Institute of Nano Technology, and a member of several advisory Boards of the NSF.

FCIM (UK), MBA (WALES)

Executive Director / CEO

Mr. Harith Jayasuriya appointed to the Board on 26th September 2022. He was appointed as Chief Executive Officer of ACME Printing and

Packaging PLC with effect from 7th March 2022 & appointed as a Executive Director with effect from 26th September 2022. He holds a Master of Business Administration from University of Wales and is a Fellow Member of the Chartered Institute of Marketing UK. He has functioned in the capacity of Group Director / Chief Marketing Officer at MAC Holdings Pvt Ltd, Director / Chief Executive Officer MAC Travels Pvt Ltd. He started his career at Coats Thread Lanka Pvt Ltd, a multinational company headquartered in UK. He was a Council Member of the Sri Lanka Australia New Zealand Business Council and

a former President of the Sri Lanka Canada

Business Council. Mr. Jayasuriya's experience spans over 20 years across multiple industries and possess expertise in the fields of Freight & Logistics, Travel & Tourism, Shipping & Aviation, Strategic Planning, Marketing & Sales, General Management and Business Consultancy.

FCMA (UK)

Non-Executive Director

Mr. S. D. R. Arudpragasam was appointed to the Board on 12th January 2022.

Mr. S. D. R. Arudpragasam joined the Board of Lankem Ceylon PLC in 1989, was appointed Deputy Chairman in 1990 and as the Chairman on 1st October 2017. Mr. Arudpragasam whilst being associated with The Colombo Fort Land & Building Group of companies since 1982 and having served on the Board of The Colombo Fort Land & Building PLC (CFLB) since the year 2000 and as Deputy Chairman from 2011 was appointed Chairman CFLB with effect from 1st July 2022. Mr. Arudpragasam also serves as

Chairman of several subsidiaries of The Colombo Fort Land and Building PLC including Chairman/ Managing Director of E.B. Creasy & Company PLC in addition to serving on the Boards of other companies in the CFLB Group. He also functions as a member on several Board Subcommittees of the CFLB Group.

Mr. Arudpragasam is a Fellow of the Chartered Institute of Management Accountants (UK).

bOюГd Of dіГEс TOГ2

B0ARD 0F DIRECT0RS

BBA (Aus.), CPA (Aus.), FCMA (SL), FCIM (UK)

Non-Executive Director

Mr. Suren Goonewardene was appointed to the Board on 30th November 2021.

He holds a bachelor's degree in Business Accounting from Monash University Australia, Member of the Certified Practicing Accountants-Australia and is a Fellow Member of the Chartered Institute of Marketing U.K. and Certified Management Accountants of Sri Lanka.

He is the Managing Director of Lankem Ceylon PLC since August 2020.

He has functioned in the capacity of Chairman and Managing Director, Bharti Airtel Lanka Limited, Chief Operating Officer, Dialog Television and Fixed Line Services, Group Managing Director, Lanka Bell Limited and has also served on the Boards of Ceylon Shipping Corporation and the Civil Aviation Authority of Sri Lanka. He was a Council Member of the Employers' Federation of Ceylon and a former Vice President of the Indian Chamber of Commerce in Sri Lanka. He currently serves on the Boards of Associated Motor Finance PLC, First Guardian Equities Limited, Dawi Investment Trust (Private) Limited and ACME Printing and Packaging PLC.

Mr. Goonewardene's experience spans across multiple industries and possess expertise in the fields of Telecommunication, Information Technology, Strategic Planning, Organizational Restructuring, Investment/ Credit Management, Finance, Marketing & Sales, General Management and Business Consultancy.

B.Sc (Hons.), CPA, MBA

Non-Executive Director

Mr. Anushman Rajaratnam was appointed to the Board on 30th November 2021.

Mr. Anushman Rajaratnam joined the Board of Lankem Ceylon PLC in 2005 and served as the Company's Managing Director from 2009 until December 2016. He relinquished that position in December 2016 to take up the role as the Group Managing Director of the Colombo Fort Land & Building PLC (CFLB) in January 2017. In addition, he serves on the Boards of several subsidiary companies and also functions as a member on several Board Subcommittees of the CFLB Group. Prior to joining the CFLB group, he worked overseas for a leading global Accountancy Firm.

He holds a Bachelor of Science degree in Economics from the University of Surrey, UK, CPA Australia and MBA from Massachusetts Institute of Technology USA

FCA, CPA (Aus.)

Independent Non-Executive Director

Mr. Kamal Punchihewa was appointed to the Board of ACME Printing and Packaging PLC on 05th February 2025. He started his career at M/s. B R De Silva & Co. Chartered

Accountants, in 1983 and was appointed as a Partner in 1991.

He moved to the mercantile sector as the Financial Controller of Kotagala Plantations Ltd. under M/s George Steuarts Management Services in 1992 and in 1997 he was promoted as the Group Financial Controller of the George Steuarts Group of Companies and also as the Director Finance of George Steuart Auto Supplies (Pvt) Ltd.

He re-joined the Plantation Sector as the General Manager-Finance of Kahawatte Plantations Ltd. in 2002.

In 2005 he took his first overseas posting as the Financial Controller of PT Agro Bukit Indonesia and later promoted to the key position of Head of Finance - Plantation Operations and Business Support for the entire Indonesian operation of Good Hope Asia Group, which consisted of six Oil Palm Plantation Companies.

Mr. Punchihewa returned to Sri Lanka in 2011 and joined Lankem Tea & Rubber Plantations (Pvt) Ltd. (LT&RP) as the Director/ Deputy CEO, and was appointed, as the CEO of Agarapatana Plantations Ltd. in April 2014. He served on the Board of Agarapatana Plantations Ltd. from 2012 to 2016.

In October 2016 he joined Browns Group as the Group Chief Executive Officer - Plantation Sector in-charge of three Regional Plantation Companies and served as the Chief Executive Officer of Maturata Plantations Ltd in the same Group till July 2020.

He joined Richard Pieris Group as the Chief Financial Officer - Plantation Sector in August 2020 and was promoted as the Chief Executive Officer of Maskeliya Plantations PLC in February 2021 in the same Group, in addition to the post he was holding. He served as the Chief Executive Officer of Maskeliya Plantations PLC until March 2023.

Mr. Punchihewa currently serves as a Director of Plantation Human Development Trust and on the Boards of certain other listed entities of the Colombo Fort Land & Building Group as an Independent Non-Executive Director and also serves on the Boards of several other unlisted entities within the CFLB Group. He also functions as the Chairman/ Member of certain Board Subcommittees of several subsidiary companies of the CFLB Group.

He is a Fellow member of the Institute of Chartered Accountants of Sri Lanka since 1988 (FCA) and a Member of the Certified Public Accountants (CPA) - Australia since 2014.

FCA, CPA (Aus.)

Independent Non-Executive Director

Mr. A.I Piyadigama was appointed to the Board of ACME Printing and Packaging PLC on 05th February 2025

Mr. Asoka Piyadigama is a Fellow Member (FCA) of the Institute of Chartered Accountants of Sri Lanka and a Member of Certified Practicing Accountants (CPA) Australia. He has extensive experience in a range of operational and finance roles, progressing from Manager to Chief Financial Officer, with leading conglomerates such as Carsons Cumberbatch PLC, Lankem Ceylon PLC, and C.W. Mackie PLC, all listed

on the Colombo Stock Exchange. In addition to his corporate experience, He has served as an Audit and Business Advisory Manager at KPMG Sri Lanka and Deloitte Fiji. His career also includes holding key Finance and Business Partnering roles within the Manufacturing and FMCG sectors in Australia. Most recently, he was the Chief Executive Officer at the Institute of Chartered Accountants of Sri Lanka.

chairman's

I am pleased to present to you the Annual Report of the ACME Printing and Packaging PLC for the financial year ending on 31st March 2025.

During the financial year under review, the Group achieved a notable 8.2% year-on-year growth in revenue, with total turnover

increasing to Rs. 1,196 million compared to Rs. 1,106 million in 2023/24. This growth

was primarily driven by the continued demand for our innovative and sustainable flexible packaging solutions from our client portfolio, along with operational efficiencies and enhanced customer engagement across key market segments.

In 2024, Sri Lanka's economy achieved a commendable turnaround from the economic contractions of previous years, with real GDP growing by approximately 5.0%, following a 2.3% decline

in 2023. This rebound was notable across multiple sectors, particularly industry and services.

Sri Lanka remained under the Extended Fund Facility (EFF) with the International Monetary Fund (IMF), completing its second review in mid-2024 and accessing approximately USD 336 million, followed by a third tranche of approximately USD 333 million in

November driven by firm action on fiscal consolidation, strengthened governance, and debt restructuring milestones.

The Central Bank of Sri Lanka (CBSL) continued a cautious easing monetary policy stance. From

November 2024, the CBSL adopted a single Overnight Policy Rate (OPR) of 8%, down from dual-rate levels. Throughout the year, it actively managed liquidity and intervened in the forex market, purchasing over USD

3.0 billion to bolster foreign reserves and stabilize the rupee.

Sri Lanka's export performance strengthened during the year, with total foreign exchange earnings from exports rising to about USD 16.2 billion in 2024.

Merchandise exports accounted for USD 12.7 billion, supported by stronger apparel, tea, and IT service sectors. Foreign currency inflows improved significantly with gross official reserves rising from around USD 5.5 billion by April to approximately USD 6.5 billion by

early 2025. The Sri Lankan rupee appreciated and stabilized against the US Dollar, supported by CBSL interventions and recovering reserves.

The industry once again demonstrated resilience and achieved steady growth during the year under review. The industry was bolstered by rising demand across key sectors including food and beverages, pharmaceuticals, and fast-moving consumer goods. This upward trend reflects a broader shift towards value-added manufacturing and sustainable supply

statement

chain practices, which are increasingly prioritised by global and regional markets.

Notably, the industry's contribution to Sri Lanka's export economy strengthened further, as local manufacturers expanded their presence across international markets. Enhanced product quality, higher levels of compliance with international standards, and the ability

to meet evolving customer requirements have all played a pivotal role in attracting and retaining global clientele. As a result, the sector is increasingly recognised as a significant driver of foreign exchange earnings and national economic growth.

Financial Performance

During the financial year under review, the Group achieved a notable 8.2% year-on-year growth in revenue, with total turnover increasing to Rs. 1,196 million compared to Rs. 1,106 million in 2023/24. This growth was primarily driven by the continued demand

for our innovative and sustainable flexible packaging solutions from our client portfolio, along with operational efficiencies and enhanced customer engagement across key market segments.

Challenges

The industry encountered several operational and strategic challenges that impacted cost structures, competitiveness, and long-term growth initiatives. A key concern was the higher cost of raw materials, predominantly resins and specialty films, which are critical inputs in our manufacturing

process. Global supply chain disruptions and currency fluctuations further compounded these cost pressures, affecting overall profitability. The competitive business landscape also intensified, with increased market

penetration by alternative packaging materials and low-cost imports - most notably within the pharmaceutical sector. These dynamics placed additional pressure on domestic manufacturers to differentiate through better innovation, enhanced efficiency, and greater value-added solutions. Moreover, while there

is an urgent need for technological advancements across the production line to enhance operational efficiency, improve product quality, and meet stringent international standards, the high capital investment required for such upgrades continues to present a significant hurdle. A further structural challenge is the presence of a resin monopoly in the local market, which limits pricing flexibility and bargaining power for manufacturers. Additionally, significant investment in research

and development, while essential for

fostering product innovation and staying competitive, continues to represent a high cost burden with long gestation periods for returns.

Enhancing Human Resources

In alignment with the Company's long-term growth strategy and commitment to talent development, a structured approach has been adopted to strengthen and broaden

the human capital base. This approach aims to bring in innovative, forward-thinking talent with the experience and institutional knowledge of the existing workforce, thereby fostering a culture of collaboration, adaptability, and continuous improvement.

One of the key initiatives undertaken was the recruitment of graduates with high potential from leading universities across the country. These individuals were appointed as Management Trainees and underwent comprehensive training programmes designed to provide them with cross-functional

exposure and a holistic understanding of the organisation's operations. Upon successful completion of their training, they were entrusted with significant

responsibilities and assigned measurable Key Performance Indicators (KPIs), thereby positioning them as future leaders within the organisation.

Additionally, the Company has partnered with academic institutions to onboard university students as in-plant trainees across critical departments such as Production, Quality Assurance, and Engineering. These placements not only serve as practical training opportunities for the students but also allow the Company to assess their capabilities in real-world scenarios. High-performing trainees are identified and nurtured

as potential long-term contributors, strengthening the talent pipeline and ensuring sustained organisational excellence.

The global shift towards environmental sustainability has significantly influenced the packaging industry, with increasing emphasis on the adoption of eco conscious solutions. There is a notable rise in awareness and demand for sustainable packaging materials -particularly biodegradable, recyclable, and compostable alternatives - as stakeholders across the value chain, including consumers, regulatory bodies, and business partners, place greater importance on environmental responsibility. Consumer preferences are changing rapidly, with a growing segment actively seeking products that align with sustainable values. This shift is compelling manufacturers and brand owners to adopt greener packaging solutions, not only to meet regulatory compliance but also to maintain market relevance and customer loyalty.

CHAIRMAN'S STATEMENT

Exporters operating in the abovementioned regional markets are faced with a range of challenges that must be managed prudently. Chief among these are increasingly stringent regulatory and quality standards, which necessitate continuous enhancements in production processes, compliance protocols, and certification frameworks. Additionally, logistical complexities such as limited infrastructure, high freight costs, and geopolitical instability in certain territories pose operational constraints that can impact delivery timelines and cost efficiency. Despite these obstacles,

the Company remains committed to

expanding its export footprint through resilient supply chain strategies, investment in quality assurance systems, and customer-focused innovation. These efforts are aimed at positioning the organisation as a preferred partner in international markets, while contributing to the broader national objective

of strengthening Sri Lanka's export economy. Meanwhile, as a responsible company, we will continue to explore and invest in environmentally sustainable packaging technologies, with the aim

of minimizing environmental impact while maintaining product integrity and performance.

I am thankful to all our stakeholders for the continued support given to the Company during this financial year. I am deeply grateful to all our clients for

trusting in our ability to deliver and to our suppliers for helping us meet our clients' expectations. I would like to convey my appreciation to the entire ACME team for their hard work and dedication during the year. I would also like to extend my heartfelt thanks to the Board and the various committees for their invaluable support and guidance during the year.

The trust and belief shown by you all in our vision of becoming the preferred and dynamic flexible packaging provider in the market gives us the strength to forge ahead during these times of uncertainty. Let us all continue to work together and bring about greater successes in the years ahead!.

A. Hettiarachchy

Chairman

Colombo

14th August 2025

The Sri Lankan economy exhibited clear signs of macroeconomic stabilisation and the early stages of recovery during the financial year 2024/25, following

the unprecedented sovereign debt and balance of payments crisis that unfolded in 2022. The reform momentum, combined with disciplined monetary and fiscal policies, created a more conducive environment for growth and investor confidence.

According to the World Bank, real GDP expanded by 4.4% year-over-year in 2024, driven largely by the improved performance of the industrial and services sectors. These gains reflect a broad-based resurgence in domestic economic activity supported by easing inflationary pressures, greater credit availability, and improved global demand conditions.

In March 2025, the International Monetary Fund (IMF) completed the third review of Sri Lanka's Extended Fund Facility (EFF), triggering the release of a USD 334 million tranche, bringing total disbursements under the programme

to USD 1.3 billion. The continuation of the programme reinforces investor confidence and supports fiscal and external sector stability.

The Central Bank of Sri Lanka (CBSL) maintained the Standing Lending Facility Rate at 8.00% to balance inflation expectations while nurturing economic recovery. Concurrently, the CBSL prioritised the accumulation of foreign reserves to enhance external resilience.

Headline inflation, as measured by the Colombo Consumer Price Index (CCPI), moderated significantly, registering 0.9% year-on-year in May 2024. The decline was primarily attributed to stabilising food and energy prices and sound monetary policy implementation in line with the CBSL's medium-term targets.

The Sri Lankan Rupee (LKR) appreciated steadily against the US Dollar (USD), strengthening from LKR 324.80 in January to LKR 289.87 by December 2024, with the annual average settling at LKR 301.98 per USD. This appreciation reflects improved external sector inflows, reduced demand for foreign currency, and renewed policy credibility anchored by the IMF programme.

The Sri Lankan printing and flexible packaging industry is positioned for sustainable growth, underpinned by continuous innovation and an increasing shift toward environmentally responsible practices. While evolving regulatory frameworks and rising environmental concerns pose certain challenges, they also open avenues for transformation and competitiveness. By adopting

eco-friendly materials, enhancing production efficiency, and aligning with global sustainability benchmarks, the industry is well placed to capture emerging opportunities and expand its presence in international markets. This strategic transition not only supports environmental stewardship but also strengthens Sri Lanka's reputation as a reliable and future-ready packaging solutions provider.

Revenue

During the financial year 2024/25, the Company reported a revenue of LKR 868 million, reflecting a modest decline of 2% compared to the previous year, largely due to subdued domestic market demand. In contrast, Group revenue increased by 8%, reaching LKR 1,196 million, supported by higher sales volumes in the subsidiary company.

Gross Profit

Gross profit at the Company level stood at LKR 19 million, while the Group reported LKR 50 million, resulting in gross profit margins of 2% and 3%, respectively. These figures mark a decline from the prior year's gross margins of 6% at both Company

and Group levels. The reduction in profitability is primarily attributable to a significant increase in the cost of raw materials, which could not be fully

passed on to customers. Despite these pressures, the Group remains focused on cost optimisation and improving operational efficiency to protect margins in the future.

Current Assets

As at 31st March 2025, current assets totalled LKR 880 million, reflecting a 12% year-on-year decline. This was primarily due to enhanced inventory utilisation and improved working capital efficiency. The composition of current assets included LKR 564 million in amounts due from related companies, LKR 171 million in accounts receivable, and LKR 132 million in inventories. The reduction underscores the Company's continued focus on optimising asset utilisation and strengthening liquidity through disciplined financial and operational management.

Non-current Liabilities

As at 31st March 2025, the Company's non-current liabilities amounted to LKR 296 million, reflecting a 9% increase from LKR 272 million in the previous year. This rise was primarily attributable to expanded financing arrangements and higher deferred tax implications.

The key components included LKR 97 million in long-term borrowings and LKR 181 million in deferred tax obligations. The increase aligns with the Company's capital structure strategy to support future growth and manage long-term fiscal responsibilities prudently.

Current liabilities

As at 31st March 2025, current liabilities stood at LKR 1,377 million, reflecting a 12% increase compared to the previous year. This increase was mainly driven

by increased working capital needs in response to operational losses during the financial year. The key components included LKR 1,138 million in short-term borrowings and LKR 166 million in trade and other payables.

New Product Development (NPD)

During the year under review, the Company launched a strategically driven New Product Development (NPD) initiative to diversify its product portfolio and address evolving customer and market demands. Through

effective cross-functional collaboration, informed by robust market research and technological innovation, the project advanced through critical phases including concept validation, prototyping, and initial performance testing. This initiative underscores the Company's commitment to continuous improvement and customer-centric innovation, while strengthening its competitive positioning and long-term growth potential across both domestic and international markets.

Introduction of Pre-Production Meetings (PPM)

In line with our continuous improvement initiatives, the Company implemented

a formalised Pre-Production Meeting (PPM) framework during the year to strengthen cross-functional alignment and production preparedness. This structured approach brings together key departments such as Sales,

Production, Quality Assurance, Planning, and Procurement to collaboratively review product specifications, delivery timelines, and risk mitigation strategies.

The introduction of PPMs has led to a measurable reduction in production errors, improved first-pass yield, and

enhanced responsiveness to customer requirements, thereby reinforcing operational efficiency, product quality, and interdepartmental accountability across the organisation.

Introduction of Product Appraisal Meetings

In line with our commitment to quality and continuous improvement, the Company implemented a new initiative

- Product Appraisal Meetings (PAM) - to systematically evaluate first bulk of the product performance. These meetings bring together cross-functional teams from R&D, quality, sales, planning and production to review product outcomes against initial objectives, market reception, and operational performance. The insights gained have helped us identify enhancement opportunities, strengthen product reliability, ensure the customer's expected quality level, and refine future development strategies. The Product Appraisal Meeting has become an integral part of our product life cycle management, reinforcing a culture of accountability, innovation, and customer satisfaction.

Ink GSM Reduction Project and Its Role in Sustainability

As part of our ongoing commitment to environmental responsibility, the Company launched the Ink GSM Reduction Project to minimize ink consumption across our printing

operations. By optimizing print designs, calibrating machines more precisely, and adopting lower-GSM ink formulations without compromising quality, we have significantly reduced material usage

and waste generation. This initiative contributes to lower production costs and supports our broader sustainability goals by reducing our

carbon footprint and chemical impact on the environment. The project reflects our proactive approach to sustainable manufacturing and underscores our dedication to balancing operational efficiency with ecological stewardship.

Bio-Compostable Product Design Project and Its Impact on Sustainability

In alignment with our long-term sustainability vision, the Company initiated the Bio-Compostable Product Design Project aimed at reducing environmental impact through innovation in material selection and product lifecycle design. By developing packaging and product components that are fully compostable under natural conditions, we are actively addressing the global challenge of plastic waste and supporting the transition to a circular economy. This project not

only demonstrates our commitment

to eco-friendly manufacturing but also positions us as a responsible industry leader driving sustainable change. The adoption of bio-compostable alternatives underscores our dedication to minimizing landfill waste and promoting greener consumer choices.

MANAGEMENT DISCUSSI0N AND ANALYSIS

Employee Training and Lean Culture Development

As part of our ongoing commitment to operational excellence, the Company prioritized employee training and engagement in lean manufacturing practices during the year. Through structured workshops, continuous improvement programs, and cross-functional collaboration, we empowered our teams to embrace a lean culture focused on waste reduction, process efficiency, and value creation. This initiative has not only enhanced productivity on the shop floor but also fostered a mindset of accountability, problem-solving, and proactive innovation at all levels of the organization.

Embedding lean principles into our

daily operations supports our long-term goals of agility, customer satisfaction, and sustainable growth in the highly competitive flexible packaging industry.

Work-Life Balance

The Company is committed to fostering a supportive work environment that promotes a healthy work-life balance for all employees. Recognising that employee well-being directly influences productivity and engagement, we

have implemented flexible work arrangements, including remote work options and adjustable working hours. These initiatives enable our staff to effectively manage both personal

and professional responsibilities. By encouraging a culture of balance and trust, we aim to reduce stress, enhance morale, and support the

overall mental and physical well-being of our workforce, contributing to a more resilient and motivated organisation.

Pirith ceremony

Professional Development Opportunities

The ACME Group remains committed to fostering a culture of continuous learning and professional growth. A range of development opportunities including training programmes, skills workshops, and structured mentorship initiatives

are made available to employees at all levels. These initiatives are designed to enhance individual competencies, support career advancement, and promote job satisfaction. By investing in the development of its workforce, the Group strengthens employee engagement, improves organisational capability, and builds a resilient, future-ready talent pool.

Motivation of Human Capital

ACME recognises that a motivated workforce is fundamental to achieving organisational excellence. To foster engagement and enhance performance, the Company has implemented a range of incentive programmes designed

to reward achievement, promote job satisfaction, and encourage continuous improvement. These initiatives include performance-based rewards, recognition schemes, and career advancement opportunities. By actively investing in the motivation of its human capital, ACME strengthens employee commitment, drives productivity, and supports a high-performance culture aligned with the Company's strategic objectives.

Training Program to enhance the productivity on the shop floor

New year celebrations

First Aid Training

Fire training from factory and office staff

Eye Camp for staff and family members

ACME Printing and Packaging operates in a highly competitive market landscape comprising over 15 major industry players. Therefore, it is imperative to innovate and adopt sustainable packaging solutions on a regular basis. As an organization committed to responsible growth, we recognize the urgent need to address environmental challenges while responding to an evolving local economy, shifting market expectations and various stakeholder demands.

Our sustainability agenda places a strong emphasis on the development and promotion of eco-friendly packaging alternatives that reduce environmental impact throughout the product lifecycle. This includes prioritizing materials that are recyclable, biodegradable, or compostable, and integrating sustainability criteria into our product design and sourcing strategies.

By actively advancing sustainable packaging, we not only contribute to the reduction of plastic waste and carbon emissions, but also align our operations with global sustainability frameworks and consumer preferences for ethically produced goods. These initiatives are central to our broader Environmental, Social, and Governance (ESG) commitments and demonstrate our role as a responsible industry leader. Through continued investment in sustainable innovation, we aim to create long-term value for our shareholders while contributing to an environmentally conscious packaging economy.

The Company's commitment to maintaining and continuously improving its quality and safety standards has been consistently demonstrated through its long-standing pursuit of internationally recognized certifications. Since initially achieving ISO certification in the year 2000, the Company has systematically advanced its compliance frameworks to align with evolving global benchmarks. As of today, we are proud to hold multiple prestigious certifications, including ISO 9001:2015 (Quality Management System), ISO 22000:2018 (Food Safety Management System), FSMS, QMS, and FSSC 22000 Version 5.1.

In line with our long-term sustainability vision, the Company has undertaken a strategic initiative to invest in the research, development, and implementation of compostable packaging solutions. This forward-looking project exemplifies our firm commitment to environmental stewardship and innovation by actively seeking alternatives to conventional plastic-based materials that pose long-term ecological risks.

The compostable packaging project encompasses the careful sourcing of certified biodegradable raw materials, refinement of manufacturing processes to maximize efficiency and reduce carbon footprint, and rigorous testing to ensure the final products meet or exceed both customer expectations and internationally recognized environmental performance standards.

This initiative not only aligns with global movements toward sustainable production but also positions the Company as a leader in the flexible packaging industry. By advancing packaging technologies that are designed to break down naturally without releasing harmful residues into the environment, we are actively contributing to the development of a circular economy. Moreover, it strengthens our operational resilience by future-proofing our product portfolio against today's increasingly strict environmental regulations

and shifting consumer preferences. Through these efforts, we reaffirm our dedication to sustainability, innovation, and long-term value creation for all stakeholders.

Ink GSM Reduction Project

As part of its ongoing operational efficiency and sustainability initiatives, the Company intends to launch an Ink GSM Reduction Project aimed at optimizing ink usage across its printing processes. This project focuses on reducing the grams per square meter (GSM) of ink applied without compromising print quality or brand integrity. By adopting advanced ink management techniques and refining print parameters, we expect to minimize material waste, achieve significant cost savings, and reduce environmental impact.

2ustainability Гeview

Corporate Governance at ACME means creating value to shareholders whilst promoting a culture of ethical behaviour and practice. ACME is committed to maintaining the highest standard of ethical values and professionalism in

all its activities. The Group provides all the market participants and regulatory authorities with timely, accurate, complete and reliable information of the Company while continuing to regulate and improve its corporate governance structure. Further an important element of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the cost of principal agent problem. Corporate governance covers a very wide range of issues and disciplines from company

secretarial and legal, through to business

strategy, executive and non-executive management and investor relations, to accounting and information systems and remuneration.

In 2023, the Colombo Stock Exchange issued the Listing Rule 9 on Corporate Governance which all listed entities need to comply with in stages and to be fully complied by 1st October 2024. Additionally, the Institute of Chartered Accountants issued a revised Code of

Best Practice on Corporate Governance in December 2023. The Board reviewed the Listing Rule 9 and is adopting

a phased approach to compliance in line with the transition provisions.

Compliance with the revised Code will be reviewed in 2024.

The primary role of the Board is to protect and enhance long-term

shareholder value. It sets the overall strategy for the Group and supervises executive management. It also ensures that good corporate governance policies and practices are implemented within the Group. In the course of discharging its duties, the Board acts in good faith, with due diligence and care, and in the best interests of the company and its shareholders.

The Board consisted of 07 Directors out of which 05 were non-executive directors. The names and profiles of the Directors are given in pages 07 to 09 of this annual report. They possess the skill, experience and knowledge, to set the directions and oversee the operations of the company. The Board has determined that the Independent Non-Executive Directors, satisfy the criteria for Independent set out in

the Listing Rules and annually each Non-Executive Director declares his independence/ non independence i.e compliance with the relevant statutory regulations.

The Chairman meets with the Independent Non-Executive Directors as and when necessary.

ߥ Ensuring the implementation of an effective internal control system and risk management system.

ߥ Ensuring Compliance with Highest Ethical and Legal Standards.

ߥ Approval of the Annual and Interim Financial Statements prior to publication.

ߥ Providing direction and guidance to the Company in the formulation of its strategies and in the pursuance of its operational and financial goals.

ߥ Monitoring systems of governance and compliance.

ߥ Approving major acquisitions, disposals and capital expenditure.

ߥ Approving annual budgets and strategic plans.

ߥ Reviewing the statutory and SEC governance rules and ensuring compliance.

ߥ Formulating proposals for dividend and bonus distributions, and for the increase or reduction of capital.

ߥ Exercising other powers, functions and duties as conferred by the Company's articles of association.

There is a clear demarcation of the responsibilities between our Executive Chairman and our Chief Executive Officer. The functions performed by each are distinct and separated, ensuring the balance of power and authority within the organization that no person has unfettered powers of decision making implementation.

Our Chairman is responsible for providing leadership and preserving order at Board Meetings and the good corporate governance of our group whilst facilitating the effective discharge of Board functions and business strategies. He is responsible for;

ߥ Ensuring the Board adheres to procedures and the relevant statutes whilst being in complete control of the affairs of the Company,

ߥ Ensuring that its obligations to the various stakeholders and regulatory bodies are met,

ߥ Encouraging effective participation by both Executive and Non-Executive Directors on matters taken up for consideration and,

ߥ Ensuring that shareholders are given adequate opportunity to make observations, express their views

and seek clarifications at meetings of shareholders.

ߥ Day to day management of the Group's business operations, with the support of the Executive Directors and the senior management team.

ߥ Revision and implementation of the Company's strategies and policies,

ߥ Maintaining a close working relationship with the Chairman and being a sounding board for the Chairman as and when necessary,