Expolanka : Interim Financial Statement period ended 30th June 2022

Dear Shareholder,

I am pleased to share with you the interim financial statements of Expolanka Holdings PLC for the quarter ended 30th June 2022. Backed by strong strategy execution and focus on fundamentals, your company was able to post a Revenue of Rs. 235.1Bn (YoY +146%), a Gross Profit of 36.9Bn (YoY +156%) and a Profit after tax of Rs. 20.1Bn (YoY +220%)

Given its international reach and operating model, your company offers a unique value proposition as a net foreign currency earner, generating over 95% of its revenue from its international operations.

During the period under review, the Sri Lankan rupee continued to depreciate, resulting in an exchange gain of Rs. 6.9Bn whilst helping to increase the Net Asset Value of the company by Rs. 25Bn for the quarter.

Your company was able to deliver an exceptional ROE of 96.16% on a trailing twelve months (TTM) basis as a result of enhanced operating leverage and the efficient asset utilization strategies adopted by the group.

Working capital was an important consideration for the group as efforts continued to be dispensed to enhance collections. The group was able to settle Rs. 25Bn of its borrowings during the quarter, a reflection of the improvement in cash from operating activities. Furthermore, your company declared an interim dividend of Rs. 8.19 per share, which is the highest dividend declared to date.

Logistics Sector

Amidst challenging global market conditions and traditional off peak demand patterns, the logistics sector was able to exhibit the potential of its operating model. A focused execution of strategy enabled the sector to overcome challenges and deliver consistent growth during the quarter under review, resulting in a revenue of Rs. 233.0Bn (YoY+146%), a gross profit of Rs. 36.2Bn (YoY +154%) and a PAT of Rs. 18.8Bn (YoY +183%).

The multi-pronged approach was centered on generating volumes through adopting customer centric strategies, building capacity through sound procurement strategies and supporting business through efficient operational excellence.

The core of the customer centric approach revolved around increasing wallet share from existing accounts and gaining traction with identified new customers. The customer expansion strategy has been well thought out, selective and is a key determinant of growth achieved by the Sector. This approach has enabled the company to service several leading brands across key industry verticals, further augmenting EFL's strength and its brand profile.

The Air Freight product saw volumes tailing off during the quarter, a result of lower demand witnessed across our key markets. EFL origins were nonetheless able to augment the sales efforts by ensuring exceptional service, capacity availability, and transparency.

The Ocean Freight product continued to gain traction and delivered satisfactory growth during the quarter under review. This steady growth is a result of the increased emphasis placed on this segment. A vibrant partner network, increased customer penetration, enhanced competencies helped the ocean freight product maintain its strong momentum.

Whilst focusing primarily on its international freight forwarding business, EFL has been able to enhance its capabilities across domestic logistics portfolio in key locations particularly in the North America market.

The proactive procurement strategy implemented by the group built capacity and stabilized margins. Strengthening existing relationships and building on new carrier relationships took priority for the procurement function.

Global market conditions remained volatile during the period under review. Consumer demand was tempered in our North America market, a result of potential Inflationary impacts, whilst the global energy crisis resulted in increased pressure on oil prices. Extended lock downs in China resulted in reduced supply and further intensified supply chain pressure.

Correction in freight rates were visible across both Air & Ocean Freight as capacity returned to the market, albeit still at elevated levels.

Origins such as Vietnam, India, Indonesia, Thailand and Sri Lanka continued to deliver strong results, reflecting the success of the infrastructure investments made into these markets over the last several years.

Whilst the North American trade lane remained the key driver of business, the European and Intra-Asia businesses remained resilient with stable growth during the quarter.

Leisure Sector

The sector delivered a strong performance for the quarter despite the challenges experienced in the local market. The results reflect the efforts undertaken by the business to re-organize its portfolio, adopting a lean and efficient operating model and leveraging its capabilities as the leading travel brand in Sri Lanka. The Sector delivered a Revenue of Rs. 727Mn (YoY + 379%) and a Profit after Tax of Rs. 233Mn (YoY +736%). Historically, this is the best performance by the sector, with the Corporate Travel portfolio driving the results.

Investment Sector

The Investment Sector remained steadfast recording a revenue of Rs. 1.4Bn (YoY +100%) and a Profit after Tax of Rs. 17.3Bn(YoY +608%) with the main contribution from the export operations. The sector profits includes group dividends of Rs. 16.0Bn. The portfolio strategy of moving into high-margin products with less volatility is driving the growth of the sector. The IT business, too, is gaining ground with improved contributions to the overall performance of the group.

Social Consciousness & Governance

Your company continued to place emphasis on Environmental, Social, and Governance initiatives (E S G) and has adopted several proactive practices which are aligned with its overall strategic objectives.

Expolanka continues to enhance and improve its processes, internal controls and policies with the aim of further improving its overall governance environment. Special attention was placed on employee welfare and wellbeing particularly on the domestic front, as the country and the company adopted to the challenging environment. Several initiatives continued to be undertaken under the Global Goodness banner which is the umbrella arm of the sustainability framework of the group. The business continued to drive its attention towards implementing programs across the UN sustainability goals, green logistics, and women's empowerment initiatives.

Outlook

The global macro environment continued to be volatile with market conditions remaining uncertain. Inflationary fears, geo political tensions, pandemic impacts continue to play a role in global trade, with consumer demand being impacted globally.

Given the uncertain market conditions, the macro environment is expected to evolve, particularly with changing consumer demand patterns, nimble supply chains and increased digitization. As a company, Expo will remain committed to meeting these challenges whilst moving forward to take advantage of opportunities with the single focus of creating value for all our stakeholders.

Hanif Yusoof

Group CEO

29th July 2022

As at

ASSETS Non-current assets Property, plant and equipment Right-of-use assets Intangible assets

Investment in an associate and joint ventures Other financial assets

Deferred income tax assets

Current assets

Inventories

Trade and Other Receivables

Amounts due from related parties

Prepayments and other assets

Other financial assets

Income tax recoverable

Cash and cash equivalents

Total assets

EQUITY AND LIABILITIES Stated capital Reserves

Retained earnings

Equity attributable to equity holders of parent Non-controlling interest

Total equity

Non-current liabilities

Financing and lease payables

Deferred income tax liabilities

Retirement benefit obligation

Current liabilities

Financing and lease payables Trade and other payables (Note 07) Amounts due to related parties Income tax liabilities

Total equity and liabilities

Net asset per share

7,250,231,028 5,750,794,286

12,432,130,398 10,837,147,918

3,810,593,792 3,835,125,688

419,609,004 392,222,671

22,149,95318,925,709

461,410,732 347,788,615

24,396,124,907 21,182,004,887

341,256,630 291,593,049

215,014,455,866 213,042,785,924

81,090,00963,724,751

17,210,505,180 14,258,827,284

270,657,218 225,982,529

6,492,904,273 4,096,562,968

81,151,564,270 43,192,921,348

320,562,433,446 275,172,397,853

344,958,558,353 296,354,402,740

4,097,985,000 4,097,985,000

48,240,629,384 27,986,114,800

95,991,816,791 91,847,724,124

148,330,431,175 123,931,823,924

500,037,360 422,115,702

148,830,468,535 124,353,939,626

18,581,540,748 15,134,573,848

18,582,66918,414,550

1,018,131,362 929,802,260

19,618,254,779 16,082,790,658

67,245,255,056 76,996,999,199

89,668,677,783 64,898,702,056

314,302,15196,861,771

19,281,600,049 13,925,109,430

176,509,835,039 155,917,672,456

344,958,558,353 296,354,402,740

75.8863.39