Keells Food Products : Annual Report Information 2023/24

Keells Food Products PLC

Annual Report 2023/24

Read the Keells Food Products PLC

Annual Report 2023/24

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Our steadfast commitment to being proactive has been a driving factor in our ongoing pursuit of excellence, fostering a reputation for reliability and consolidating our position as the leading presence in our industry.

Navigating through the economic uncertainties of the year that was, we adeptly manoeuvred through numerous challenges with skill and confidence thereby retaining our competitive edge in the market. Through our proactive approach, we prioritised the needs of our consumer, offering them the best products at affordable prices while focusing inwards on operational excellence and continuous improvement.

We remain confident that we will continue to drive growth and create enduring value for our stakeholders with pro-activity as our cornerstone. As we forge ahead, being proactive will remain a central priority, ensuring we are nimble in adapting to change and remain strong to lead the way forward, shaping a future that's prosperous and sustainable and responsive to the evolving needs of our stakeholders.

CONTENTS

OVERVIEW
About Us	3
About our Annual Report	4
The Year at a Glance	7
Financial Highlights	8
Non-Financial Highlights	9
Chairperson's Message	10
Events for the Year	14
Board of Directors	16
Management Team	18
Key Product Categories	19

MANAGEMENT DISCUSSION AND ANALYSIS

Our Business	21
Stakeholder Engagement	28
Material Topics	30
Delivering Our Strategy	32
Financial Capital	34
Manufactured Capital	37
Intellectual Capital	39
Human Capital	42
Social and Relationship Capital	48
Natural Capital	54
GOVERNANCE AND RISK
Corporate Governance	58
Enterprise Risk Management	105
GRI Content Index	115

FINANCIAL INFORMATION
Annual Report of the Board of Directors	.......125
Audit Committee Report	133
Statement of Directors' Responsibility	136
Independent Auditor's Report	137
Income Statement	140
Statement of Comprehensive Income	141
Statement of Financial Position	142
Statement of Cash Flows	143
Statement of Changes In Equity	145
Index to Notes	146
Notes to the Financial Statements	147
Your Share in Detail	200
Ten Year Information at a Glance	202
Key Figures and Ratio	203
Real Estate Portfolio	204
Glossary of Financial Terminology	205
Notes	206
Notice of Meeting	209
Form of Proxy	211
Corporate Information	IBC

READ THE KEELLS FOOD PRODUCTS PLC Annual Report 2023/24https://www.keellsfoods.com/investor-relations/#financial-reports

ABOUT US

Vision

Our passion is to deliver pleasure and nutrition throughout people's lives, through exciting and superior products, whenever and wherever they choose to eat and drink.

Values

Innovation : Changing constantly, re-inventing and evolving

In trying new ideas we win or learn, there is no failure.

Integrity : Doing the right thing always

Transparency is everything, so we just do it right!

Excellence : Constantly raising the bar

We get better every day.

Caring : Fostering a great place to work

We listen, we are thoughtful and we care to make a difference.

Trust : Building strong relationships based on openness and trust

The foundation we work from.

KEELLS FOOD PRODUCTS PLC

Established in 1982, Keells Food Products PLC (KFP) is the pioneer in processed meat manufacturing in Sri Lanka with 42 years of experience. As the market leader in the processed meat industry, KFP is renowned for its quality, backed by stringent quality controls and its range of nutritious, tasty and convenient products developed in house and manufactured using state of the art food processing facilities.

Our product portfolio of 200+ products reach customers through 29,000+ retail outlets and we take extensive measures to ensure the right product is available at the right time at the right price to satisfy customer needs.

ABOUT OUR ANNUAL REPORT

We are pleased to present Keells Food Product PLC's integrated Annual Report for the financial year ended 31st March 2024. This report is presented to provide a concise and balanced overview of our strategy, governance structure and performance in light of emerging opportunities and risks. The report gives our stakeholder groups pertinent information and demonstrates how resources were distributed to create value for their benefit in the short, medium and long term.

Basis of Preparation

Reporting

Entity

Standards and

Principles

Reporting

Concepts

Keells Food Products PLC ("KFP" or "the Company") which operates solely in Sri Lanka and its subsidiary, John Keells Foods India Private Limited, which has operations in India. Collectively these entities are referred to as "the Group."

• Sri Lanka Accounting Standards issued by CA Sri Lanka
• Companies Act No. 7 of 2007
• Framework of the International Integrated Reporting Council
• Sustainability reporting: Prepared with reference to the GRI Universal Standard
• Listing Rules of the Colombo Stock Exchange
• Securities and Exchange Commission of Sri Lanka Act No. 19 of 2021
• ESG Reporting Guidelines issued by the Colombo Stock Exchange
• Code of Best Practice on Corporate Governance issued by Securities and Exchange Commission of Sri Lanka (2017)

Strategic focus : Demonstrates how our activities are guided by clearly defined strategic priorities.

Connectivity	: Use of navigation icons and signposting across Report
Conciseness	: Discussion limited to material factors that are most relevant to stakeholders

Scope and Boundary

This Report covers the operations of the Group for the period from 1st April 2023 to 31st March 2024. The financial and non-financial information presented relates to consolidated information, unless otherwise mentioned. The Group adopts an annual reporting cycle, and this Report builds on the Group's previous report for the financial year ended 31st March 2023.

There were no significant changes to the Group's structure, supply chain or size nor any material restatements of information provided in the previous Annual Report.

			John Keells	External
Integrated			Stakeholders
Financial	Keells Food	Foods India
Reporting
Reporting	Products PLC	(Private) Limited
Boundary	Opportunities
		(Subsidiary)
			and Risks

	KFP adopts a combined assurance model in ensuring the integrity of the financial and non-
	financial information presented in this Report. Internal assurance on the Financial Statements
	and the relevant internal controls are provided by the Internal Audit function and the Audit
Assurance	Committee while external assurance is provided by Messrs. Ernst & Young. Meanwhile, the
accuracy of the Company's non-financial information is assessed by the John Keells Group
	Sustainability Unit. We have not sought external assurance on our sustainability reporting.

4 Keells Food Products PLC

FEEDBACK

We are committed to consistently enhancing the readability and relevance of our reporting and we welcome your suggestions and comments on our Annual Report. Please direct your feedback to,

Ms. Nelindra Fernando

Director/ Chief Financial Officer

Keells Food Products PLC

E-mail: [e-mail]

CONNECTIVITY OF INFORMATION

CAPITALS

STAKEHOLDERS

STRATEGY

Financial Capital

Consumers

Sustainable Growth

Manufactured Capital	Investors	Quality and Innovation
Intellectual Capital	Employees	Accountability
Human Capital	Business Partners	Empowered Team
Social & Relationship	Government &	Strengthen Channel
Capital	Regulators
and Supply Chain

Natural Capital

Communities

STATEMENT OF BOARD RESPONSIBILITY

The Board of Directors is ultimately responsible for ensuring the integrity of this Report. The Board hereby confirm that the 2023/24 Annual Report addresses all relevant material matters and fairly represents the Group's integrated performance, and we also confirm that the Report has been prepared in line with the guidance set out in the Integrated Reporting (IR) Framework.

The Report is approved and authorised for publication.

Signed on behalf of the Board,

Krishan Balendra

Chairperson

20th May 2024

Annual Report 2023/24

5

ASSERTI E

OVERVIEW

The Year at a Glance 7 I Financial Highlights 8 I Non-Financial Highlights 9 I Chairperson's Message 10 I Events for the Year 14 I Board of Directors 16 I Management Team 18 I Key Product Categories 19

THE YEAR AT A GLANCE

FACTORS IMPACTING OUR PERFORMANCE IN 2023/24

SUSTAINABLE GROWTH		QUALITY AND INNOVATION
Adapt sales strategy for on-the-go consumers,		Increased focus on R&D to expand product
target "Happy Channels" such as events, sustain		portfolio, expand shelf-stable options to minimise
leadership in Modern Trade and General Trade,		energy costs and launch new products (NPDs) for
leverage tourism through HoReCa channel and		wider meal solutions and market share growth.
boost online sales.

EMPOWERED TEAM		OPERATIONAL EFFICIENCY
Build a talent magnet with strong employer		Modernisee Pannala plant equipment to minimise
branding, invest in development for individual		downtime, implement proactive maintenance for
excellence, cultivate a supportive climate		efficient energy use and overhaul logistics with
for business excellence and fuel emotional		data-logged fleet for real-time temperature control.
engagement for optimal performance.

STRENGTHEN CHANNEL AND SUPPLY CHAIN

Diversify primary material suppliers, streamline logistics for faster deliveries and implement pre- planned ordering for distributors to optimise resource allocation and inventory.

Annual Report 2023/24

7

FINANCIAL HIGHLIGHTS

FINANCIAL PERFORMANCE		2024	2023	YOY change
Revenue	Rs.'000	5,798,813	6,444,270	(10%)
Gross Profit	Rs.'000	1,276,881	1,386,323	(8%)
Operating Profit	Rs.'000	(137,186)	230,477	(160%)
Profit	Before Tax	Rs.'000	(289,937)	69,115	(519%)
Profit	After Tax	Rs.'000	(218,271)	13,945	(1,665%)
EBITDA*	Rs.'000	102,257	457,020	(78%)
FINANCIAL POSITION		2024	2023	YOY change
Current Assets	Rs.'000	1,947,065	2,275,413	(14%)
Total Assets	Rs.'000	3,961,880	4,302,695	(8%)
Total Debt	Rs.'000	1,074,431	1,230,059	(13%)
Shareholders' Funds	Rs.'000	1,863,261	2,108,276	(12%)
Debt / Equity	%	57.66	58.34	(0.68)
Debt / Total Assets	%	27.12	28.59	(1.47)
WORKING CAPITAL MANAGEMENT		2024	2023	YOY change
Inventory	Days	72	86	(14)
Receivable	Days	58	51	7
Payable	Days	24	19	5
Working Capital Cycle	Days	106	118	(12)
Current Asset Ratio	Times	1.13	1.27	(0.14)
Quick Assets Ratio	Times	0.61	0.60	0.01
PROFITABILITY RATIOS		2024	2023	YOY change
Operating Profit Margin	%	(2.37)	3.58	(5.95)
Return on Assets	%	(5.28)	0.36	(5.64)
Return on Equity	%	(10.99)	0.65	(11.64)
Return on Capital Employed	%	(4.36)	7.84	(12.20)
INVESTOR RATIOS		2024	2023	YOY change
Earnings per Share	Rs.	(8.56)	0.55	(9.11)
Net Assets per Share	Rs.	73.07	82.68	(9.61)
Dividend per Share	Rs.	0.50	2.00	(1.50)
Market Price Per Share as at 31st March	Rs.	147.00	160.00	(13.00)
Market Capitalization as at 31st March	Rs.'000	3,748,500	4,080,000	(8%)
Price Earning Ratio	Times	(17.17)	290.91	(308.08)
Cash Earnings per Share	Rs.	1.96	8.16	(6.20)

*EBITDA - Earnings Before Interest, Tax, Depreciation and Amortization. Note that EBITDA includes interest income but excludes exchange gains or losses.

8 Keells Food Products PLC