Chairman’s Message

Dear Valued Stakeholders,

I am pleased to present the Annual Report and Audited Financial Statements of Sunshine Holdings PLC for the fiscal year ended 31 March 2024. I offer a high-level overview of the operating environment and your Company’s performance across our three business verticals. A more comprehensive analysis by our Group’s Chief Executive follows, detailing the performance of each of our business sectors.

After weathering an unprecedented economic crisis last year, Sri Lanka experienced a steady recovery in the 2023-24 financial year, marked by positive shifts in key economic indicators. Inflation stabilized to a single digit by July 2023, dropping to as low as 0.9% by March 2024. The Gross Domestic Product (GDP) increased in the last two quarters of 2023, with growth projected in 2024 and sustained in 2025. The exchange rate remained stable for most part of the year, with the Rupee appreciating notably in the first quarter of 2024. The Average Weighted Prime Lending Rate (AWPLR) decreased from over 28 percent to single digits, enhancing private credit growth. Despite these improvements, purchasing power remains strained due to declining real incomes and increased taxes. However, anticipated reductions in the cost-reflective utility tariffs are expected to have a positive impact. While significant challenges and uncertainties remain, we are optimistic that the current policy trajectory will yield favourable results.

In this challenging environment, we entered the 2023-24 fiscal year with clear focus and determination. All nine of our verticals within the three sectors worked diligently to strengthen operations and consolidate their market presence. The Group achieved a profit after tax of Rs. 6.0 Bn. on a turnover of Rs. 55.5 Bn. during the reporting period. An interim dividend of Rs. 1.00 per share was paid in December 2023, and a final dividend of Rs. 2.00 per share is declared for May 2024, totaling Rs. 3.00 per share for the financial year.

As the theme of this annual report suggests, Sunshine’s story is one of resilience amid profound uncertainty. Leveraging our extensive experience across various sectors, we emerged stronger from a series of crises. This reporting period was no exception, with excellent performance across the healthcare, consumer goods, and agribusiness sectors, despite the continued impact of the country’s worst economic crisis in decades.

The healthcare sector, having endured significant challenges, showed remarkable progress. Our pharmaceutical business, under stringent price controls, achieved a 16% year-on-year growth in 2023-24 despite significant volume drops. Healthguard Infinity, our pharmaceutical distribution business, delivered a strong performance despite increased utility tariffs and fuel prices, and Healthguard, the pharmacy retail chain grew by 19%. The pharmaceutical manufacturing arm Lina doubled its revenue, benefiting from the introduction of metered dose inhalers, and our medical devices business also performed exceptionally well.

The year under review was a blend of promise and pain for the consumer goods sector. Our tea business, covering domestic markets, saw double-digit growth and increased volumes, while the confectionery business struggled to meet revenue targets despite significant progress since the crisis. The Rankahata and Watawala tea brands performed well despite the introduction of value-added tax (VAT) to this sector which was hitherto exempt of VAT. However, the high-end Zesta brand saw some volume declines. The confectionery business faced challenges in expanding its product portfolio, but we are confident of success in the current fiscal year. Sunshine Tea, our export arm, encountered challenges from an appreciating rupee and geopolitical issues, but we remain optimistic about realising new market opportunities being vigorously explored.

As the theme of this annual report suggests, Sunshine’s story is one of resilience amid profound uncertainty. Leveraging our extensive experience across various sectors, we emerged stronger from a series of crises.

In the Agribusiness sector, our dairy business achieved a remarkable turnaround, reaching breakeven with Rs. 1.4 Bn. in revenue, driven by effective cost control and quality improvements. Watawala Plantations, our palm oil segment, remained stable despite low demand and price drops. While the ongoing ban on new oil palm cultivation had no measurable impact during the reporting period, we are hopeful for a lifting of the ban to implement the expansion strategy for this lucrative segment.

A notable event this year was the leadership transition within the Group. On 25 January 2024, Mr Vish Govindasamy, Sunshine’s long-standing Group Managing Director, handed over the leadership reins to Mr Shyam Sathasivam, who was appointed as the Group Chief Executive Officer. We extend our heartfelt thanks to Mr Vish Govindasamy for his visionary leadership over the past 25 years, during which he led the transformation of the Sunshine Group into a highly respected entity with market-leading positions and a strong track record of profitable growth. His continued presence on the Board as the Deputy Chairman ensures that Sunshine will continue to benefit from his vast experience and expertise. Now, under the capable leadership of Mr Shyam Sathasivam, who previously served as the Managing Director of the successful Healthcare and Consumer sectors and brings considerable experience from within the organisation, the Group is poised for further growth and success. We wish Mr Shyam Sathasivam every success in his new role.

The macroeconomic complexities of the 2023-24 period presented significant challenges to your Company. However, through sharp focus and a vision for sustainable growth, we navigated these challenges successfully, setting the standard for growth amid adversities. Supported by timely investments and innovative strategies to address hurdles such as attrition and changing consumer behaviours, your Company completed the year with confidence and renewed optimism for the future. With the economy poised for growth, our stakeholders can rest assured that Sunshine is ready to seize new and promising opportunities.

I extend my sincere gratitude to the Sunshine Team and all our stakeholders for their unwavering support. I also thank my distinguished colleagues on the Board for their wise counsel and steadfast assistance.

Amal Cabraal
Chairman
30 May 2024