designed to protect Dipped Products PLC - Annual Report 2020/21 Scan to view this report online at: www.dplgroup.com Designed to Protect At DPL we are a renowned entity designed to protect our customers, drive stakeholder values, and sustain the communities and the environment in which we operate. That’s how we forged ahead purposefully with streamlined processes and best practices to redefine our core values and unwavering commitment each year. The year under review proved to be an exceptional one in terms of performance as we continued to preserve a remarkable reputation for innovation, quality and responsible manufacturing practices; demonstrating the best performance in the history of our existence. As we continue to uphold our corporate strengths, and diversify our portfolio to cater to evolving stakeholder needs; we are honing our focus, capabilities, technologies and business to shape our progress, while expanding our capacity to explore new avenues to enrich our offering of protection, trust and care. Dipped Products PLC. We’re designed to protect. 2 DIPPED PRODUCTS PLC PERFORMANCE DPL delivered a year of remarkable growth and profitability to achieve the Group’s highest-ever revenue and profit. The performance reflects the Group’s ability to swiftly increase capacity utilisation over the short-term through re-engineering processes, optimising resources and embracing new ways of working; this in turn enabled DPL to capitalise on the opportunity presented by the surge in demand for gloves. 52% Rs.7.19 Bn Rs.5.83 Bn Growth in revenue supported by Profit-Before-Tax Profit-After-Tax the surge in demand and customer acquisition VALUE TO PEOPLE As a Group with far reaching stakeholder impacts across its value chain, the Group is committed to delivering shared value in its operations. Rs.2.83 Bn Rs.15.56 Bn 1,418 Payments to employees Inject to supply chain partners of which New farmers added to DPL Firstlight 64% are small scale suppliers ANNUAL REPORT 2020/21 3 DPL delivered a year Revenue & PAT of remarkable growth Rs. Bn Rs. Bn and profitability to 50 6 achieve the Group’s highest-ever revenue 5 40 and profit. 4 30 3 20 2 10 1 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Revenue PAT SUSTAINABILITY The Group has embedded social and environmental consciousness into its strategy, processes and daily operations and made significant progress in its sustainability agenda during the year. 93% 5% +80% YoY Reliance on renewable energy Reduction in carbon intensity Sustainable water sourcing through conversion to bio-mass (per pair of gloves) boilers 4 DIPPED PRODUCTS PLC Contents Overview DESIGNED WITH PRECISION Performance 2 Corporate Governance Sustainability 3 Corporate Governance 90 Our Approach to Reporting 6 Related Party Transactions An Extraordinary Year 8 Review Committee Report 113 Performance Highlights 10 Audit Committee Report 114 Milestones 12 Annual Report of the Board of Sustainability as a Game Changer 14 Directors on the Affairs of the Company 116 Chairman and Managing Director’s Message 16 Statement of Directors’ Responsibilities 119 Board of Directors 20 Management Team 24 Way Forward 120 Positioned for Value Creation DESIGNED TO DOMINATE About Us 28 Financial Statements Group Structure 30 Financial Calendar 2020/21 122 Our Approach to Value Creation 31 Independent Auditor’s Report 123 Value Creation Model 32 Statement of Profit or Loss 126 Our Operating Environment 34 Statement of Comprehensive Income 127 Statement of Financial Position 128 Strategy and Resource Allocation Statement of Changes in Equity 129 Stakeholder Value 38 Statement of Cash Flows 132 Material Matters 42 Notes to the Financial Statements 134 An Agile Strategy 46 Measuring Delivery of Our Strategy 47 DESIGNED TO ENRICH Risk Management 50 Annexes Decade at a Glance 192 Performance and Value Creation The Share 194 Operational Review 54 Group Structure 198 Financial Capital 58 Glossary 200 Manufactured Capital 62 GRI Context Index 201 Human Capital 66 Notes 205 Social and Relationship Capital 74 Notice of Meeting 206 Intellectual Capital 80 Form of Proxy 207 Natural Capital 84 Corporate Information IBC ANNUAL REPORT 2020/21 5 VISION To be the preferred and most sought after provider of hand protection wear in the world. Mission DPL strives to be the preferred global hand protection provider. We are committed to the continual improvement of our business processes and systems. We shall comply with environmental and social obligations, meet the aspirations of our employees, suppliers and shareholders and build relationships of trust. 6 | Overview | Positioned for Value Creation | Strategy and Resource Allocation | Performance and Value Creation | DIPPED PRODUCTS PLC Our Approach to Reporting OUR INTEGRATED ANNUAL REPORT Determining material content Our 7th Integrated Annual Report aims to provide a concise and balanced assessment of In line with its parent entity, Hayleys PLC, how Dipped Products PLC generated value to its diverse stakeholders, through directing a DPL reviews its material topics annually holistic strategy that responds effectively to emerging market dynamics. The Report also to ensure relevance and accuracy. The provides relevant information on how the Group was governed, its key risks and strategic materiality assessment follows a 7-part and performance outlook over the medium-to-long term. test (listed below) and the material aspects included in this Report are a combination INTEGRATED REPORTING BOUNDARY of those prescribed by the GRI guidelines and those specific to our industry, value creation model and strategy. The process FINANCIAL REPORTING BOUNDARY for determining material matters is detailed on page 58 of this Report. 7-PART MATERIALITY TEST Financial impact Stakeholder impact Opportunity for innovation Reputation Externalities Subsidiaries engaged Subsidiaries engaged in the Hand Protection in the Plantation Sector Sector Strategic relevance Risk Combined Assurance The Group applies a combined assurance Employees Customers Business Communities Government model in its reporting. In addition to the partners Group’s system of internal controls and internal audit function assurance on the financial statements is provided by Report Profile Messrs. Ernst and Young. For sustainability The Report covers the period from April 1,2020 to March 31,2021. We adopt an reporting, the Group engages in quarterly annual reporting cycle and this Report builds on the previous report covering the reporting to the Hayleys PLC Sustainability twelve months to March 31,2021. The only material re-statement of information Unit, which conducts a review on the involves the computation of the carbon footprint, the description of which is given on accuracy and reliability of the information. page 87 of this Report. ANNUAL REPORT 2020/21 | Corporate Governance | Financial Statements | Annexes | 7 Directors’ Responsibility Reporting improvements DPL’s Board of Directors is ultimately � Adoption of the revisions to the Integrated Reporting Framework published in responsible for ensuring the integrity of January 2021 this Report. We hereby confirm that the � Adoption of the Gender Parity Reporting Framework of CA Sri Lanka 2020/21 Report addresses all relevant material matters and fairly represents the � Increased disclosure of non-financial information pertaining to the Group’s Group’s integrated performance. We also plantation sector confirm that the Report has been prepared � Increased use of connected performance drivers showcasing connectivity in line with the guidance provided in the between financial and non-financial performance Integrated Reporting Framework of the International Integrated Reporting Council. � Demonstrate implications of COVID-19 wherever relevant � Refined and improved the computation of the carbon footprint Signed on behalf of the Board, N A R R S Nanayakkara Director - Finance NAVIGATION ICONS Six capitals Strategic priorities Financial Profitable growth FEEDBACK We are committed to consistently enhancing the readability and relevance of our Annual Report and Manufactured Innovation and digitisation welcome any suggestions you may have in terms of what you would like to see in our next Report. Please direct your feedback to, Human Value Chain and Community Director-Finance Dipped Products PLC 400, Deans Road Colombo 10 Intellectual Customer focus Sri Lanka E-mail: [email protected] Social & Relationship Inspired and dedicated team Natural Climate action 8 | Overview | Positioned for Value Creation | Strategy and Resource Allocation | Performance and Value Creation | DIPPED PRODUCTS PLC An Extraordinary Year 2020/21 IN REVIEW The DPL Group concluded the most successful year in its operating history, achieving record growth and profitability in a year which was undoubtedly one of the most challenging of this generation. The Group’s success during the year was underpinned by its strategic agility and timely interventions over the last few years, which aptly positioned DPL to capture opportunities emerging from the unprecedented operating conditions in 2020/21. � Challenges in securing raw materials due to � Increased capacity utilisation through resource optimization supply chain disruptions and new ways of working � Logistical challenges arising from shipping � Capacity expansions delays and increase in freight rates � Proactive working capital management including increase of � Sharp increase in demand for disposable gloves, stock holding periods which in turn led to an escalation in the price of � Increased