Annual Report 31.03.2024

Legal Status

Printcare PLC was incorporated as a Private Limited Liability Company on 3rd September 1979 under the Companies Ordinance No. 51 of 1938.

It was converted to a Public Limited Liability Company on 21st October 1994.

Board of Directors

Late Merrill J Fernando - Chairman (Deceased on 20.07.2023)

Abbas Esufally - Chairman (Appointed w.e.f. 31.07.2023) K R Ravindran

Ejaz Chatoor

Dayasiri Warnakulasooriya

Anushya Coomaraswamy Vajira Kulatilaka Krishna R Ravindran Steven Mark Enderby

Malik J Fernando (Appointed w.e.f. 31.07.2023)

Registered Office

77, Nungamugoda Road, Kelaniya.

Stock Exchange Listing

Colombo Stock Exchange

Auditors

Messrs. Ernst & Young Chartered Accountants

Lawyers

D.L. & F. De Saram Attorneys-at-Law and Notaries Public

Nithi Murugesu and Associates

Attorneys-at-Law

Secretaries

Managers & Secretaries (Pvt) Limited

No 08, Tickell Road,

Colombo 08

Bankers

National Development Bank PLC

Commercial Bank of Ceylon PLC

Standard Chartered Bank

Hatton National Bank PLC

People's Bank

Nations Trust Bank PLC

Bank of Ceylon

Sampath Bank PLC

Seylan Bank PLC

DFCC Bank PLC

Union Bank of Colombo PLC

Financial

Highlights

Year Ended 31 March

TURNOVER

PROFIT BEFORE TAX

GEARING

MARKET CAPITALISATION

CASH FLOW FROM OPERATIONS

Rs. Mn

2020 4,981

2021 6,020

2022 7,626

2023 14,156

2024 12,885

The fiscal year 2023/24 was notably challenging for your Company, with turnover declining by 9% to Rs. 12.89 billion.

However, it's important to consider this performance within the broader context of the economic environment we faced. While our country experienced stabilization in its macroeconomic fundamentals, fostering growth in the local economy, the appreciation of the Sri Lankan Rupee adversely impacted revenues and margins from our export-oriented business compared to the previous year.

As I anticipated in my last letter, implementing direct and indirect taxes, a part of the International Monetary Fund (IMF) program, negatively affected consumer spending, reducing demand in some key local market segments, including Telecom, Tobacco, and Alcohol. As a service- oriented company, our success is closely linked to that of our customers.

Simultaneously, geopolitical tensions and conflicts in various regions led to supply chain disruptions, sustaining higher inflation rates and continued monetary policy tightening in key markets. Nevertheless, the global economy showed unexpected resilience, achieving an estimated 3.1% growth in 2023, which helped maintain the robustness of your Company's export business throughout the year.

We hope that the winner of the upcoming Presidential elections will continue to advance reforms and adhere to the IMF program. As outlined in the IMF agreement, Sri Lanka has a clear, though narrow, path to consolidation and recovery.

Despite these challenges, Printcare is committed to pursuing growth in the coming years through strategic expansions into new product lines and geographical markets. Key investments in technology and sustainable packaging solutions are expected to drive long-term growth, although we must be prepared for potential startup costs that will necessarily impact profitability initially.

Our strategic investments over recent years are positioning Printcare for sustainable growth. Our focus on expanding sustainable packaging solutions is a major growth driver. We have invested in a new renewable packaging line to provide brands with biodegradable and environmentally friendly alternatives to plastic and metal packaging. This new plant began operations in March this year. Additionally, we have made significant strides in developing new, environmentally friendly materials and coatings for our global clientele. This initiative will become an important growth engine as more brands seek sustainable solutions to preserve the freshness of their products while minimizing their environmental footprint.

Our digital printing operation, which faced setbacks post-COVID, shows signs of recovery. It aims to offer customers rapid prototyping and cost-effective short- run production capabilities, with a renewed focus on the SME segment, which has struggled in recent years.

However, we will scale down our lotteries and phone card business operations. Post-COVID, we have seen a disruption in phone card volumes due to the shift to digital reloading, which gained popularity during the pandemic. Additionally, despite being maybe the best equipped and an exporter of security-printed lottery products, accessing the local lottery market controlled by the government has proven increasingly difficult.

The strong economic growth in India has significantly boosted our operations, and we continue to explore expansion opportunities there through our Indian subsidiary.

We are also excited about our new operations in Kenya. The narrative around Africa is evolving from one focused on "deficits" and "gaps" to one highlighting opportunities, prospects, ventures, and creativity. The continent's rapidly growing youth population and increasing urbanization have driven sustained growth over the past half-century, and are expected to continue doing so. Your Directors believed that this is an opportune moment to expand in Africa, and we

have chosen Kenya as our gateway. Kenya, the third- largest economy in Sub-Saharan Africa, benefits from the African Growth and Opportunity Act (AGOA), which allows duty-free export of over 6,000 products to the USA. We are positioning ourselves well for the future and are prepared to navigate any short-term challenges that may arise.

Last year, I mentioned ongoing discussions with our insurance company regarding claims for damages caused by the fire in our plate-making department. The insurance company's handling of our claim was disappointing, causing damage to our reputation. After pursuing the matter in court, I am pleased to report that the insurance company agreed to settle the claim in total, which they have now done.

I am also pleased to announce that your Company secured twenty four awards for its world-class products at the biennial Sri Lanka Print Excellence Awards and was recognized as the "Master Printer."

Ourloyalandcommittedemployeeshavelongsupported our value-creation process, and I wish to express my gratitude for their dedication and contributions during the year under review. Over the years, we have attracted the best talent in the packaging industry, building a strong team that reflects the diversity of our customers and communities.

Your Company also received a bronze award in the Packaging sector at the Presidential Environmental Awards, recognizing our continued efforts to integrate sustainability into all business operations. This includes energy and water conservation, carbon emissions reduction, responsible waste disposal, employee training and development, and maintaining

a safe working environment. Printcare's commitment to embedding ESG initiatives across all facets of our operations helps drive social impact alongside business performance.

I am also pleased to announce that we have declared Rs. 2.00 per share in dividends making up a value of Rs 171.9 million for the financial year under review.

The Group will continue to follow its dividend policy, which aligns with profit growth while ensuring that the Company maintains sufficient funds to sustain business continuity and fund its strategic investment pipeline.

As always, I am deeply grateful to my fellow Board members for their invaluable guidance and support. I also thank all our esteemed business partners for their collaboration in fostering mutually beneficial relationships.

Finally, I sincerely thank our shareholders for their continued confidence in us.

Abbas N Esufally

Chairman

28 August 2024

Printcare PLC achieved a total revenue of Rs. 12.89Bn, a 9% decrease from the previous year. This decline was primarily attributable to the stronger Rupee during the 2023/24 financial year compared to the 2022/23 financial year, and reduced local market demand from some key segments, including Apparel, Telecom, Tobacco, and Alcohol.

The strengthened Sri Lankan Rupee impacted turnover as the rupee was at a lower level compared to the dollar during the same period in the previous financial year. The margins were also impacted as the inventory values reflected materials procured when the rupee was weaker and subsequently sold after the rupee had appreciated, creating a short-term squeeze in the margins. Other Operating Income, which included exchange gains, was also lower due to the appreciation of the rupee.

We expect margins to rebound next year as higher- value inventories are replaced with new inventory at recent exchange rates.

Finance costs decreased significantly owing to lower interest rates. We were also able to improve working capital levels as the tight post covid global supply chain issues loosened a little during the period under review allowing us to maintain lower levels of stock while still ensuring that our customers were supplied without any interruptions.

The strategic investments we have been making over the last few years will position Printcare for greater growth. However, we must be prepared to absorb the necessary start-up costs, which will initially hamper margins.

Printcare invested in a new renewable packaging plant that would provide brands with biodegradable and more environmentally friendly alternatives to plastic and metal packaging solutions. The plant began operations

this year, and we hope to continue filling its order books over the next few quarters and reach breakeven operations by next year. Sustainable packaging minimizes environmental impact while maintaining its functional requirements. At Printcare, we believe the future lies in sustainable packaging.

In this direction we have also made good progress in our R&D efforts to develop new compostable materials and coatings for our global tea clientele. We believe this will be a new engine of growth over the next few years as more and more brands demand these structures to preserve the freshness of their produce whilst minimizing their impact on the environment.

Our digital printing operation has now started focusing on the SME segment, which has been struggling over the last few years. We have seen some positive signs of growth in the fourth quarter and will continue to focus in this area.

Despite being an exporter of security-printed lottery products, supplying the local lottery market controlled by the government has proven increasingly difficult. Price, quality, and service alone seem insufficient in this business, prompting us to consider exiting this segment. Additionally, we have seen volume drops in scratch cards for phone cards in the post-COVID period, with telephone operators encouraging consumers to move to digital loading.

In addition to the above mentioned growth strategies, Printcare continue to innovate towards higher value-added segments, expand in promising global geographies, focus on enhancing operationalefficiencies at all its plants and implement stringent cost reduction measures in order to improve profitability levels.

Mr. A.N.Esufally

Chairman

Mr. A.N.Esufally is a Fellow of both the Institute of Chartered Accountants of England & Wales and the Institute of Chartered Accountants of Sri Lanka. He is an all Island Justice of the Peace and is the Hon. Consul- General of the Kingdom of Bhutan in Sri Lanka.

He has experience in business of over 40 years in Sri Lanka and overseas and has been in the forefront of the leisure industry in Sri Lanka. He is a Director of Hemas Holdings PLC and Mahaweli Reach Hotels Plc and several other unlisted companies.

Mr. K. R. Ravindran

Managing Director

Mr. K.R. Ravindran, Co-Founder and CEO of Printcare PLC, has over 40 years of experience in the printing and packaging industry. He is a graduate in Commerce from Loyola College, formerly University of Madras, India. He also serves as a Director in all of the group companies as well as other companies and charitable trusts and Foundations both in Sri Lanka and overseas.

In 2015/16, Mr. Ravindran served as the global head of the Chicago headquartered 117 year old Rotary International, one of the world's largest service organizations. He is the only Sri Lankan and the tenth Asian to have ever been elected to this prestigious office in 2015-16. He also served as the Chairman of the Board of Trustees of the multibillion dollar Rotary Foundation in 2020-21.

Mr. E. Chatoor

Non-Executive Director

Mr. Ejaz Chatoor has been a member of Printcare PLC Board as a Non-Executive Director since 1994. He is the Managing Director of Saboor Chatoor (Private) Limited, a leading exporter of spices and other agricultural products from Sri Lanka. He has over 40 years of management experience in the export trade and holds a BSc degree in Business Administration from the University of Southern California and a MBA from the University of California, Los Angeles.

He has been recognized by the Sri Lanka Association of Printers with the signature Lifetime Achievement Award and was conferred with the title of Sri Lanka Sikhamani (Jewel of Sri Lanka) by the Government of Sri Lanka. A postage stamp was released by the government in his honor and with his visage.

Mr. D. Warnakulasooriya

Non-Executive Director

Mr. Dayasiri Warnakulasooriya is the Chairman and Managing Director of the Midaya Group of Companies. The Midaya Group has accumulated several honours since its inception in 1968, including the Presidential Export Award, the National Exporters Association Exporters' Award, the National Productivity Award Certificate of Merit and several categories of the Entrepreneur of the year award, certification in ISO 9001- 2015.

He is also a recipient of the "The Order of the Sacred Treasure, Gold Rays with Rosette" an honour bestowed upon him by the Emperor of Japan (awarded in the year 1996).

Mr Warnakulasooriya also serves in the following roles:

• Past President of the Sri Lanka Ceramics Council.
• Senior Vice Patron of JASTECA (Japan Sri Lanka Technical and Cultural Association).
• Past Chairman of the Board of Trustees of the Sasakawa Memorial Sri Lanka Japan Cultural Centre Trust.
• President - Japanese Language Education Association of Sri Lanka.
• Immediate Past President - National Council for Child and Youth Welfare.
• Committee Member of the Friends of the Accident Service (National Hospital).
• Committee Member of the Lanka Japan Business Cooperation Committee.

Past President (85th) of the Rotary Club of Colombo.

Ms. A. Coomaraswamy

Independent Non - Executive Director

A Fellow of the Chartered Institute of Management Accountants UK and the Institute of Chartered Accountants of Sri Lanka, she was the Group Finance Director of John Keells Holdings from 1994 to 2002. She subsequently held the positions of Advisor to the Ministry of Finance, Chairperson of the Public Utilities Commission and as a member of the Public Enterprise Reform Commission. She currently serves as an Independent Non Executive Director on the Board of CT CLSA Securities (Pvt) Limited and on the Board of Directors of Law and Society Trust and of Women and Media Collective.