WHO CHAIRMAN’S GROUP CEO’S OUR OUR COMPLIANCE FINANCIAL SUPPLEMENTARY EXPOLANKA HOLDINGS PLC

WE ARE MESSAGE REVIEW GROUP BUSINESSES REPORT REPORT INFORMATION

Integrated Annual Report 2022/23

1 Sound Capital Structure and Financial Performance

Expolanka Group delivered Liquidity

Times
Dividend cover and price earnings ratio
Times
a stable performance in 3.5 35

FY 2022/23, despite 2.8

2.1
28

21
soft market conditions 1.4 14

impacting global trade and 0.7

0
7

0
the logistics sector. Current ratio Quick assets ratio Dividend cover Price earnings ratio
25
2021/22 2022/23 2021/22 2022/23

FINANCIAL INDICATORS
Profitability Equity Leverage
% Rs.
30 80 %
24 64 80

18 48 60

12 32 40

6 16 20

0 0 0
Gross profit Net profit Return on Return on Net assets Earnings Dividends
margin margin assets sales value per share per share per share -20
Debt to Debt to Debt ratio Gearing
2021/22 2022/23 2021/22 2022/23 equity ratio capital ratio ratio

2021/22 2022/23
 EXPOLANKA HOLDINGS PLC WHO CHAIRMAN’S GROUP CEO’S OUR OUR COMPLIANCE FINANCIAL SUPPLEMENTARY
WE ARE MESSAGE REVIEW GROUP BUSINESSES REPORT REPORT INFORMATION
Integrated Annual Report 2022/23

Sound Capital Structure and Financial Performance

The Group posted a revenue of Rs. 546 Bn., down 21% from With 92% of our Revenue and 73% of our PAT derived from
the previous year. This is a result of a normalization of freight international markets, Expolanka continues to demonstrate
GROUP PERFORMANCE rates and reduction in volumes across both air & ocean the international reach of the business.
• Soft market conditions and subdued trade and freight due to the challenging macro economic environment.
logistics sector PROFITABILITY
The global logistics sector experienced a moderation in
• Performance impacted by currency fluctuation volumes during the year, owing to a downswing in demand. Gross profit margin

• Stable revenue and increased wallet share despite Key factors impacting, included Inventory overstocking by %
challenges retailers and inflationary impact on consumer spending in 20
our primary markets of North America, and macro-economic
• Demonstrated quality of earnings resulting in 16
pressures due to protracted geopolitical tensions
improved cash flow position 12
and uncertainty surrounding the recovery pace of the
• Maintained stable overheads in USD terms global economy. 8

26 • Focused on consolidation with a long-term focus 4

Freight rates that had reached supra-normal levels during
• Funded strategic acquisitions focused on the previous year, primarily due to global supply chain 0
future growth disruptions, normalised during FY 2023; resulting in a direct 2018/19 2019/20 2020/21 2021/22 2022/23

impact on yield and revenue for the Group.

EBIT
TOPLINE PERFORMANCE Despite reduction in value and volumes, the Group’s flagship
business, EFL Global, put up a sterling performance as a Rs. Bn.
Revenue
result of increased wallet-share and volume-share with key 100
Rs. Bn. customers and increase in new strategic accounts with 80
750 strong growth potential.
60
600 As a leading global logistics player, 98.4% of the Group’s 40
450 revenue came from our core business segment, which
20
300 displayed resilience in the face of a global slowdown.
The Group’s leisure business showed notable growth: with 0
150 2018/19 2019/20 2020/21 2021/22 2022/23
an exceptional performance in FY 2023 due to proactive
0
2018/19 2019/20 2020/21 2021/22 2022/23
steps taken to right-size the business and realign the
portfolio. The Group’s investment sector also posted a Driven by smart procurement strategies, close
stable performance during the year under review. relationship-building with partners, a lean operating model,
and efficient operations; the Group posted a Gross Profit of
Rs. 105 Bn., Earnings Before Interest and Tax (EBIT) of
Rs. 39.6 Bn., and a Profit After Tax (PAT) of Rs. 31 Bn. during
the year under review.
 WHO CHAIRMAN’S GROUP CEO’S OUR OUR COMPLIANCE FINANCIAL SUPPLEMENTARY EXPOLANKA HOLDINGS PLC
WE ARE MESSAGE REVIEW GROUP BUSINESSES REPORT REPORT INFORMATION
Integrated Annual Report 2022/23

Sound Capital Structure and Financial Performance

The Group’s performance was negatively impacted by ROE vs ROCE Expolanka maintains an optimal capital structure that strikes
currency fluctuations. In particular, appreciation of the a balance between equity and debt. The year under review
%
Sri Lankan Rupee against the US Dollar during the latter saw a growth in Total Equity by 20.3% to reach Rs. 150 Bn.
120
end of the year under review, led to the Group recording
90 Debtor-levels declined more than proportionally during the
a Rs. 2.3 Bn. exchange loss.
year, while efficiency in cashflow was improved significantly;
60
Despite challenging conditions, the GP Margin grew to resulting in settling Rs. 89 Bn. of short-term debt. The
30
19.3% during the year under review, testament to the Group closed FY 2023 with greatly reduced debt liabilities.
strength and continuity of the Group’s long-term strategy, 0 Throughout, we remain committed to proactive and diligent
strength of internal processes, and efficiency of key -30 management of working capital, which is our greatest asset.
investments. 2018/19 2019/20 2020/21 2021/22 2022/23
Culmination of timely and strategic investments during
Return on Equity (ROE) Return on Capital Employed (ROCE)
Overheads the past years have enabled Expolanka to develop
infrastructure, capabilities, and network with a focus on
Rs. Bn. The Group maintained its track record of strong returns continued long-term growth. With the Group’s focus on 27
80 beyond industry averages, with Rs. 15.88 Earnings per strengthening its position as a global logistics powerhouse,
64 Share (EPS), Trailing Twelve Months (TTM) Return on Equity more than 75% of equity and capital were allocated to the
(ROE) of 22.67%, and TTM Return on Capital Employed Logistics business during the year under review.
48
(ROCE) of 16.14% during the period under review.
32 Strength of the Group’s balance sheet coupled with an
16 OPTIMISED CAPITAL STRUCTURE optimised capital structure support Expolanka’s growth
0 ambitions and ensures we deliver exceptional value and the
Total capital employed
2018/19 2019/20 2020/21 2021/22 2022/23 best returns for our shareholders.
Rs. Bn.
While maintaining a 13.42% gearing ratio through to the
Similarly, with overheads pegged to the dollar, on a 250
end of 2022, two large acquisitions completed during the
reporting currency basis, the Group’s overheads grew by 200
last quarter saw a reduction in gearing over time. The Group
63%. However, in real terms, overheads increased by 12%.
150 completed FY 2023 with a gross Gearing Ratio of 17.55%
aligned with the Group’s business model and reduced
100 reflecting key acquisitions and investment into intangibles
volumes experienced during the year under review.
with a long-term focus.
50
The variable nature of the overheads enabled the group
0
to maintain profitability despite reduction in Revenue and
2018/19 2019/20 2020/21 2021/22 2022/23
Gross Profit, thereby mitigating the negative impacts of the
macroeconomic environment.
 EXPOLANKA HOLDINGS PLC WHO CHAIRMAN’S GROUP CEO’S OUR OUR COMPLIANCE FINANCIAL SUPPLEMENTARY
WE ARE MESSAGE REVIEW GROUP BUSINESSES REPORT REPORT INFORMATION
Integrated Annual Report 2022/23

Sound Capital Structure and Financial Performance

EXCEPTIONAL QUALITY OF EARNINGS ROBUST FINANCIAL POSITION

Quality of earnings capacity is paramount to Expolanka’s The Group’s financial position remains strong at the close
long-term sustainability, and was reflected in the strength of of the financial year ending 31 March 2023. The Group’s
the Group’s Balance Sheet; with cash from business seeing Total Assets stand at Rs. 220.9 Bn. Considering our asset-
a significant increase of 1,862% to Rs. 179.4 Bn. light business model, fixed assets share constituted 4.48%,
while current assets including assets for sale, trade, and
The Group completed two large acquisitions during the
other receivables, made up the larger share of 30.9%.
last quarter of the financial year, with majority of the funding
Buoyed by a stable Current Ratio of 2.98, the Group is well
self-financed, further reflecting the strength of its balance
set to take advantage of growth opportunities in the future
sheet and cashflow position.
as global markets rebound.
The Group’s excellent cash balance coupled with
funding from parent Company SG Holdings, enabled
Expolanka to complete two strategic acquisitions as
28 part of investing and financing activities amounting to
approximately Rs. 134.5 Bn.

The Group’s ability to settle debt, deliver strong returns to

shareholders, and make strategic investments, showcases
a strong balance sheet that augurs well for Expolanka’s
future growth and expansion potential.