Annual Report 2024/25

Responsibly

Lanka IOC PLC

ANNUAL REPORT 2024-25

Lanka IOC marks over two decades of strategic contribution to the nation's development. As a vital player in the energy sector, our journey is inextricably linked with Sri Lanka's socio-economic aspirations. From ensuring uninterrupted fuel supply to driving industrial growth and enabling mobility, we have consistently aligned our operations with national priorities. Our investments in infrastructure, digital transformation, and sustainable energy solutions reflect a forward-looking vision - one that supports the country's path to energy security and economic revival. More than a

provider of energy, we are a catalyst for progress. As Sri Lanka navigates a new era of opportunity and resilience, Lanka IOC remains a trusted partner, powering possibilities and progress, with responsibility at the core.

LANKA IOC PLC / ANNU AL REPOR T 2024-25

2 CONTENTS

CHAIRMAN'S MESSAGE

Page 16

"Our social contributions in the form of life-saving healthcare donations to the Government hospitals reflect a broader vision that energy must empower progress in every dimension."

MANAGING DIRECTOR'S REVIEW

Page 19

"Differentiation remained a cornerstone of our strategy, as we continued to anticipate market needs and deliver tailored solutions. During the year, we introduced XP100 premium auto fuels in the island. "

ABOUT THIS REPORT 04

ABOUT US 06

KEY BUSINESS VERTICALS 09

HISTORICAL MILESTONES 10

PERFORMANCE HIGHLIGHTS FOR THE ECONOMIC

DEVELOPMENT OF SRI LANKA 12

FINANCIAL HIGHLIGHTS 14

CHAIRMAN'S MESSAGE 16

MANAGING DIRECTOR'S REVIEW 19

BOARD OF DIRECTORS 22

SENIOR MANAGEMENT 27

OPERATING ENVIRONMENT 29

OUR STRATEGY 32

BEYOND ENERGY - EMPOWERING

A SUSTAINABLE FUTURE 35

COMPREHENSIVE

STAKEHOLDER ANALYSIS 40

MATERIAL MATTERS 44

FINANCIAL CAPITAL 62

MANUFACTURED CAPITAL 68

INTELLECTUAL CAPITAL 72

HUMAN CAPITAL 76

SOCIAL AND RELATIONSHIP

CAPITAL 81

NATURAL CAPITAL 87

CORPORATE GOVERNANCE 92

AUDIT COMMITTEE REPORT 112

REPORT OF THE REMUNERATION COMMITTEE 114

REPORT OF THE RELATED PARTY TRANSACTION REVIEW

COMMITTEE 115

REPORT OF THE RISK

COMMITTEE 116

REPORT OF THE NOMINATIONS

AND GOVERNANCE COMMITTEE 117

RISK MANAGEMENT 119

ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS

CHIEF EXECUTIVE OFFICER'S & CHIEF FINANCIAL OFFICER'S

RESPONSIBILITY STATEMENT 134

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS

OF LANKA IOC PLC 135

STATEMENT OF COMPREHENSIVE

INCOME 138

STATEMENT OF FINANCIAL

POSITION 139

STATEMENT OF CHANGES IN

EQUITY 140

STATEMENT OF CASH FLOWS 141

MATERIAL ACCOUNTING POLICY INFORMATION TO THE

FINANCIAL STATEMENTS 142

NOTES TO THE FINANCIAL

STATEMENTS 156

EXTENTS, LOCATIONS & THE NO. OF BUILDINGS OF LANKA IOC'S

LANDHOLDINGS 178

SHAREHOLDER INFORMATION 181

GRI CONTEXT INDEX 184

HOW WE CREATE VALUE 50

SEGMENT PERFORMANCE

OVERVIEW 52

PERFORMANCE HIGHLIGHTS 60

LANKA IOC PLC / ANNU AL REPOR T 2024-25

3

Responsibly

At Lanka IOC, responsible energy is the backbone of national progress. We empower lives, businesses, and infrastructure through consistent, high-quality fuel solutions. Every initiative we undertake strengthens Sri Lanka's path toward inclusive and sustainable development.

LANKA IOC PLC / ANNU AL REPOR T 2024-25

4 ABOUT THIS REPORT

Responsibly

ENERGISING

SRI LANKA

Lanka IOC PLC

ANNUAL REPORT 2024/25

Feedback

We welcome your comments on our 10th Integrated Annual Report 2024-25, together with any queries and suggestions for improvement.

Please direct your valuable feedback to:

Company Secretary Lanka IOC PLC

Sri Lanka

E-mail: companysecretary@ lankaioc.com

Welcome to the 10th Edition of the Integrated

Annual Report of

Financial and Statutory Reporting Boundary - 1st April 2024 - 31st March 2025

Integrated reporting allows us to present to you a comprehensive look at the combined approach of our operations. Together, we are working towards our ultimate purpose of creating sustainable value through our business activities.

This latest report sets a new standard in our reporting journey. We have successfully managed to seamlessly integrate our financial data, sustainability initiatives, and governance practices, in a comprehensive manner for our stakeholders to get a broad understanding of the Group's operations and its commitment to sustainable growth. We have raised the bar for reporting excellence, supplementing the Group's unwavering dedication to transparency, innovation, and responsible business practices.

Automotive Fuel and Fuelling Stations

Lubricants

Marine Bunkering

Petrochemicals

Grease

Bitumen

Our Reporting Boundary

Strategic Focus and Future Orientation

Consistency and Comparability

Stakeholders' Responsiveness

Reliability and Completeness

Connectivity of Innovation

Materiality and Conciousness

5

Shareholding Structure

24.88%

Sidebar Summaries

At a Glance

 10th Edition of Lanka IOC PLC's Integrated Annual Report

 Reporting Period: 1st April 2024 - 31st March 2025

 Reporting Cycle: Annual

 Coverage: Financial, Sustainability, and Governance Disclosures

Our Reporting Purpose

"To provide a clear, balanced, and transparent view of how Lanka IOC creates sustainable value for all stakeholders."

Assurance at Every Level

 Internal validation by functional heads

 Audit Committee oversight

 External audit by Messrs. BDO Partners

Our Reporting Frameworks

Aligned with:

 Integrated Reporting Framework (IIRC)

 Global Reporting Initiative (GRI) Standards

 Corporate Governance Codes

 Sustainable Development Goals (SDGs)

 Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of

Sri Lanka

LANKA IOC PLC / ANNU AL REPOR T 2024-25

Public Holding 75.12% Indian Oil Corporation Ltd

Trinco Petroleum Terminals (Pvt) Limited 49%

3/7 Directors

Ceylon Petroleum Storage Terminals Ltd

3/9 Directors

Scope of Report

This Report covers the operations of Lanka IOC PLC for the period from 1st April 2024 to 31st March 2025. The financial and sustainability reporting of the Company is performed under an annual reporting cycle. The financial and non-financial information presented in the narrative report represents the information of the Company.

Materiality of Reported Items

The content of this Report has been carefully selected following a thorough materiality assessment. We have analysed and curated a significant amount of data to narrow the list down to the business, social, environmental and external issues which have the most significant impact on the Company's

ability to generate value. The process for determining material issues is given in this Report.

Assurance Statement Assurance regarding this report is established through a combination of internal governance mechanisms and

external validation processes, reinforcing Lanka IOC PLC's commitment to delivering a reliable, transparent, and comprehensive annual report.

The contents of this report have been carefully reviewed and validated by the respective functional heads to ensure factual accuracy, consistency, and alignment with the strategic objectives of the Company.

Following this internal verification, the Audit Committee of the Board conducts a detailed review, subjecting the report to rigorous examination prior to its submission for final approval by the Board of Directors.

In addition, the Company's Financial Statements have been independently

audited by our External Auditors M/s BDO partners , whose Independent Auditor's Report is presented on page [XX] of this Annual Report.

Lanka IOC PLC remains committed to upholding the highest standards of accountability and transparency in its financial and non-financial disclosures.

Forward-Looking Statements This Annual Report contains forward-looking statements that reflect Lanka IOC PLC's current expectations regarding future business performance, strategic direction, and market conditions. These statements are based on information available at the time of publication and are aligned with the Company's strategic plans and growth aspirations.

It is important to note that forward-looking statements involve inherent risks and uncertainties. Actual outcomes may differ materially from those anticipated due to various factors, including but not limited to economic conditions, regulatory changes, market dynamics, and unforeseen global or local events.

Readers are therefore advised to exercise caution and avoid placing undue reliance on these statements, as they are not guarantees of future performance. Lanka IOC PLC assumes no obligation to publicly update or revise any forward-looking statements after the date of publication, except as required by law, to reflect changes in circumstances or the occurrence of unanticipated events.

There have been no restatements of information from prior annual reports.

6 ABOUT THIS REPORT

LANKA IOC PLC / ANNU AL REPOR T 2024-25

Risk Management Statement At Lanka IOC PLC, risk management is not viewed as a standalone process, but as

an integral part of responsible business decision-making. Our approach ensures that risks are systematically identified, assessed, monitored, and mitigated across all levels of the organisation, supporting both resilience and sustainable growth.

In an environment marked by continuous economic, regulatory, and geopolitical change, we remain proactive in strengthening our risk framework, which is built around anticipating challenges, protecting value, and enabling long-term

performance. Our Risk Management Policy is embedded into our business operations and reviewed regularly to reflect the evolving risk landscape.

Oversight of risk management is conducted through a structured governance model, where the Board of Directors is ultimately responsible for the Company's risk appetite and risk strategy. The Board is supported

by the Audit Committee and Senior Management, who continuously monitor and assess identified risks, ensuring that controls are robust, effective, and aligned with our corporate objectives.

This dynamic approach enables us to stay resilient in the face of operational, market, financial, regulatory, and environmental risks, and to seize emerging opportunities in a structured and responsible manner.

Target Audience

This report is structured to meet the varied information needs of Lanka IOC PLC's internal and external stakeholders,

comprising employees, customers, suppliers, business partners, regulators, communities, and prospective long-term investors.

The report aims to foster transparency,

strengthen relationships, and drive future growth, by addressing the specific interests and concerns of these stakeholders.

Statement of Reporting Compliance

Lanka IOC PLC is committed to preparing this Annual Report in accordance with the highest standards of accuracy, transparency, and accountability. The Report has been structured to reflect integrated thinking and long-term value creation, aligning with globally accepted reporting principles and frameworks.

Our financial, governance, risk management, and sustainability disclosures are designed to provide a balanced and comprehensive overview of the Company's performance, strategy, and stewardship. This Annual Report has been compiled with due adherence to applicable legal, regulatory, and industry best practice guidelines relevant to financial reporting, corporate governance, and sustainability reporting in Sri Lanka.

A detailed summary of the standards, frameworks, and regulatory guidelines referred to in the preparation of this report is presented in the table below.

Forward-Looking Statement

This report contains forward-looking statements. Actual outcomes may differ due to external and internal factors beyond the Company's control.

LANKA IOC PLC / ANNU AL REPOR T 2024-25

ABOUT US 7

At Lanka IOC PLC (LIOC), we are more than just an energy provider - we are a trusted partner in Sri Lanka's journey towards economic growth, infrastructure development, and energy security.

Vision

A major, integrated energy company, with a strong environment conscience, playing a national role in oil security.

Established in 2002 as a subsidiary of Indian Oil Corporation, LIOC has evolved into a cornerstone of the nation's energy landscape. Today, we are proud to be the biggest private-sector oil company operating a widespread retail network of fuel stations across the island, empowering mobility and commerce through our 267 retail outlets.

Our operations span the full spectrum of petroleum logistics - from the import, storage, and distribution of petroleum products to the blending of world-class lubricants at

our state-of-the-art facility in Trincomalee. With an annual blending capacity of 18,000 tonnes, our lubricant plant supports a growing demand for high-performance products trusted by industries, motorists, and commercial fleets alike.

FY 2024-25 Performance Snapshot

Revenue : Rs. 276.29 Bn

Operating Income : Rs. 9.35 Bn

Net Profit : Rs. 11.15 Bn

Dividend Payout : Rs. 2.67 Bn for shareholder returns

Our Mission

We have strategically invested in the future of Sri Lanka's energy ecosystem. We currently hold a 33.33% share in Ceylon Petroleum Storage Terminals Limited (CPSTL), enabling access to oil terminals and reinforcing our commitment to nationwide energy reliability. Our strength in logistics is further amplified by our bunkering presence

at the ports of Colombo, Trincomalee and Galle, where we currently command a 30% market share in marine fuel supply.

Financially, we have demonstrated resilience and robust performance. In FY 2024-25, we recorded a revenue of Rs. 276.29 Bn, an operating income of Rs. 9.35 Bn, and a net income of Rs. 11.15 Bn. These results are a testament to our strategic foresight, operational efficiency, and unwavering focus on stakeholder value.

LANKA IOC PLC / ANNU AL REPOR T 2024-25

8 ABOUT US

Key Highlights (Fast Facts)

Established

2002

Retail outlets

267

island-wide

Lubricant Blending Plant Capacity

18,000 MT per year

Shareholding Subsidiary of Indian Oil Corporation (Fortune 500)

Bunkering Market Share

30% in Sri Lanka

Tank Farm (China Bay)

15 tanks revitalised

Employees

152 staff

Partner in CPSTL Access to 13 storage terminals

Our Purpose

"To energise Sri Lanka with reliable, sustainable, and world-class petroleum solutions that power lives, drive business, and build national resilience."

A key asset in our infrastructure portfolio is the historic China Bay Tank Farm, a legacy of World War II comprising 99 massive storage tanks. We've revitalised 15 of these tanks to date which were given for 50-year lease and are poised to scale operations in response to growing market demand. This site is not

only symbolic of our heritage but stands as a beacon of our future ambition.

Did You Know?

 The China Bay Tank Farm was built by the British during WWII and is one of the largest such complexes in Asia.

 We supply marine fuel to Colombo, Trincomalee and Galle ports, playing a key role in regional trade logistics.

Backed by the strength and legacy of Indian Oil Corporation - one of the world's largest and most respected energy companies -LIOC is driven by a purpose greater than profit. We are here to fuel progress, to power livelihoods, and to deliver reliable, responsible energy solutions for every Sri Lankan.

As we look to the future, we remain committed to sustainability, innovation, and inclusive growth. Together with our partners, our people, and our communities, Lanka

IOC is building an energy-secure tomorrow -with passion, precision, and purpose.

What Sets Us Apart

KEY BUSINESS VERTICALS

LANKA IOC PLC / ANNU AL REPOR T 2024-25

9

Automotive Fuels

Positioning

Possess a market share of 21%. Auto fuels are distributed through retail fuel outlets. A range of premium and branded fuels have also been introduced to ensure fuel efficiency and engine performance.

Petrochemicals

Positioning

A segment which the Company has embarked on with much potential and introduced the 'Propel' brand of petrochemicals.

Bunkering

Positioning

Market leader in bunkering serving local and foreign vessels from the Colombo, Trincomalee and Galle ports.

Lubricants

Positioning

The second market player in the lubricants sector. The SERVO brand of lubricants are used

for automotive, marine and industrial applications.

Bitumen

Positioning

We are in the Bitumen business and sell Bitumen for industrial and road construction purposes.

We also export Bitumen to neighbouring countries.

Grease

Positioning

Sri Lanka's 1st Grease plant with 3,000 MT capacity, which will serve the country's entire grease requirement.

LANKA IOC PLC / ANNU AL REPOR T 2024-25

10 HISTORICAL MILESTONES

2024-2025

Introduced XP 100, a premium 100 octane petrol

Four new grades of lubricants launched

Started marketing a wide variety of Petrochemical Products

2023-2024

Renewed retail license for another 20 years

Commissioned 250th Retail Outlet

Agreement with Ceypetco for marketing of SERVO lubricants at Ceypetco retail outlets

2022-2023

Commissioned of first-ever Grease Manufacturing Plant in Sri Lanka

Highest ever revenue of Rs. 281 Bn and Profit After Tax of Rs. 37.69 Bn

First-ever LSD supply at Trincomalee

2013-2014

65% increase in Net Profit from Rs. 2.91 Bn in FY 2012-13 to Rs. 4.81 Bn in FY 2013-14

2014-2015

Lanka IOC assigned Highest Credit Rating - AAA rating by Lanka Rating Agency

2015-2016

Commenced bunkering operations from June 2015 at Trincomalee Port

Prestigious ISO 9001-2015 accredited to Lube Blending Plant at Trincomalee

2011-2012

Launch of Euro III Grade Petrol

Maiden first Dividend of Rs. 1 per share distributed

Commissioned 150th Servo Shop

2010-2011

Commissioned the first grassroot Retail Outlet

Operations & Accounting shifted to ERP [SAP] system

Commissioned the 150th Retail Outlet

2009-2010

The Turnover of the Company reached 50 Bn

Started sales of Bitumen

11

2021-2022

Signing of long pending Trincomalee Lease deed and Modalities agreement with GoSL and CPC to lease of 14 tanks in the Lower Tank Farm (LTF) for 50 years

Formation of Joint Venture Company, Trinco Petroleum Terminalling Pvt Ltd.

A JV between the CPC (51%) and the LIOC (49%) for development & utilization of 61 Tanks at of Upper Tanks Farm

2020-2021

Introduced new product - Wet Brake Oil SERVO MTRAC 30 introduced for first time in Sri Lanka for farmers

2019-2020

LANKA IOC PLC / ANNU AL REPOR T 2024-25

First physical bunker supplier to import the IMO 2020 compliant Low Sulphur Fuel Oil (LSFO) at Trincomalee

2016-2017

Commissioned the 200th Retail Outlet. Awarded '8th largest company' in

Sri Lanka for 2015-16 by LMD magazine

2017-2018

"Overall Gold Award Winner" of National Business of Excellence Awards 2017 which is held by the National Chamber of Commerce of Sri Lanka and seven other category awards.

2018-2019

First Bitumen Export

Lanka IOC shares included in S&P Sri Lanka 20 Index

2007-2008

Commissioned the Lube Blending Plant at Trincomalee

Started Bunker Operations in Colombo Port

2004-2005

Obtained the listing status in the Colombo Stock Exchange and became Lanka IOC PLC

2002-2003

Lanka IOC (Pvt) Limited incorporated

Agreements signed with the Board of Investment of Sri Lanka (BOI)

Commenced product sales from Lanka IOC fuel stations

12 PERFORMANCE HIGHLIGHTS FOR THE

The Values by Which We Operate to Create Value

In order to make a valuable contribution to society through our business, we operate based on these values which are also critical to our overall strategy.

Honesty

Integrity

Respect for people

Safety

Sustainability

We are committed to doing our business in an ethical and transparent way. Our products are reliable, and as such, many people and businesses place their trust in us.

Even with the many challenges we face with changing economic policies and pressure from competitors, we remain firmly committed to supporting the economy of the nation through our strong commitment to being a reliable energy partner.

LIOC has been resolute and steadfast in its dedication to fulfill the fuel and petroleum needs of the country.

How We Contributed to the Economy in the Year Under Review

We set ourselves goals that would help us align our actions to support sustainable and ongoing value creation.

LANKA IOC PLC / ANNU AL REPOR T 2024-25

ECONOMIC DEVELOPMENT OF SRI LANKA

13

Revenue Generation and Foreign Exchange Earnings

Employment Opportunities

The Company's sales of petroleum products generate substantial revenue, and a larger portion of this revenue is from the auto fuel segment.

LANKA IOC PLC / ANNU AL REPOR T 2024-25

 The demand for auto fuel remains consistently high at any time of the year.

 A high percentage of Sri Lanka's transportation relies on fossil fuels.

 Our ever-expanding distribution network and retail outlets across the country ensure that quality automotive fuels are available everywhere.

 Consistently meet the needs of individual consumers, commercial vehicles and industries. Expanded our market presence to neighboring countries.

 Exported bitumen to Nepal despite the domestic consumption of bitumen being at a standstill.

 This helped to contribute to earn export income.

 At a time when local industries were facing restrictions, we provided stability to the country's economic situation by earning foreign exchange through exports.

Our unfailing commitment to making a difference means that we are also focused on providing employment to the communities we operate in.

 Providing direct and indirect employment opportunities.

 Seeking out skilled and competent employees for our service stations, distribution centers, and retail outlets.

 Employing thousands of individuals across various job categories which helps to positively grow the country's development indices.

Tax Payments LIOC adheres to tax regulations in Sri Lanka and fulfills its tax obligations to the Sri Lankan government.

 Dutiful payments of various taxes, such as corporate income tax, value-added tax (VAT), and other applicable levies.

 Significantly contributing to the government's revenue streams as part of a commitment to being a responsible corporate citizen

 Directly supporting the economic growth and development of Sri Lanka

Investments in Infrastructure

Corporate Social Responsibility (CSR) Initiatives

267 Nos

No of Fuel Stations

Stability and Resilience

These investments were aimed at enhancing the country's energy infrastructure, and contributing to the efficient supply and distribution of petroleum products.

 Expanding the availability of fuel stations across the country.

 Developing essential infrastructure such as storage facilities, distribution networks, and fuel stations.

 Offering wider availability means more convenience.

Contributions to social welfare and community development to be connected to a fundamental aspect of our values.

 Adopting the Sustainable Development Goals (SDGs) outlined by the United Nations into our strategic plan.

 Planning our CSR activities in line with the SDGs to increase their significance and impact and also to focus on more meaningful and impactful CSR projects.

 We plan to support projects that have the potential to benefit a significantly larger cross-section of the community.

Rs. 1.2 Bn

Contribution to Employees - Salaries

and Wages

USD 203.13 Mn

Foreign Exchange Revenue

Rs. 105.64 Bn

Contribution to the Nation as Taxes and Levies

Awards and Achievements

TAGS Award 2025 -

Siver Award (Power and Energy)

8th position in LMD

Top 100

Best IR in CMA 2024 (Energy sector)

Rs. 863 Mn

Investment in Infrastructure Development

150+ Nos

Number of Direct Employment Opportunities

Despite the many challenges posed by regulations and the constriction of the economy, we have been successful in maintaining uninterrupted service to all our stakeholders.

1,750 kWp

Solar Energy at Fuel Stations

-25

LANKA IOC PLC / ANNU AL REPOR T 2024-25

15

Revenue Vs Gross Profit

Rs. mn

300,000

%

25

250,000

20

200,000

15

150,000

10

100,000

50,000

5

0 2021 2022 2023

2024 2025

0

• Revenue  Gross Profit

Gross profit (%)

Operating Results

Rs. Mn

2024-25

2023-24

2022-23

2021-22

2020-21

0 10000 20000 30000 40000 50000 60000

• NPBT  Operating Profit  Gross Profi

Earning Ratio

%

20

15

10

5

0 2021 2022 2023 2024 2025

Gross Profit

Operating Profit

NPBT

Current Vs Non Current Assets

Rs. Mn

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0 2021 2022 2023 2024 2025

• Non-current assets

• Current assets

Solvancy Ratio

%

120

Times

50

100

40

80

30

60

20

40

20

10

0 2021 2022

2023 2024 2025

0

• Interest cover  Debt/Equity

Debt/Total Assets

Dividends

Rs. Mn

3,000

2,500

2,000

1,500

1,000

500

0 2021 2022 2023 2024 2025

Market Cap Vs Enterprice Value

Rs. Mn

100,000

80,000

60,000

40,000

20,000

0 2021 2022 2023 2024 2025

• Market Capitalisation

• Enterprise Value

PB Vs PE

Times

12

10

8

6

4

2

0 2021 2022 2023 2024 2025

PE

PB

Investor Ratio

Rs.

200

Times

14

12

150

10

8

100

6

50

4

2

0 2021 2022

2023 2024 2025

0

• EPS  NAPS

PE

LANKA IOC PLC / ANNU AL REPOR T 2024-25

16 CHAIRMAN'S MESSAGE

As Lanka IOC commemorates 23 years of service in Sri Lanka, it is with great pride and gratitude that I reflect on our journey, defined by partnership, resilience, and a shared commitment to progress.

Over two decades of operations have embedded us deeply within the rhythms of the nation. We have been a trusted partner

Underpinned by its diversified strategy, prudent operational management, and customer-focused innovation, your Company delivered a top line of Rs. 276.29 Bn and a bottom line of Rs.

11.15 Bn.

in the nation's development, ensuring energy security, investing in infrastructure, and driving innovation to meet the evolving needs of our people. This enduring presence reflects our strategic vision to be a long-term partner in Sri Lanka's growth story.

Strategic Context and Economic Landscape

The global energy sector in 2024 continued to evolve under the weight of complex and often competing pressures from geopolitical instability and the intensifying global commitment to decarbonization. Volatility in crude oil prices kept energy markets on edge, while growing investor and regulatory focus on sustainability accelerated the global transition towards cleaner energy alternatives. This era of transformation demands agility, resilience and foresight from energy companies.

Most large economies are actively developing and implementing energy transition roadmaps by promoting investments in renewable energy, biofuels, green hydrogen, and Natural Gas, alongside policy support for electric mobility and infrastructure modernization.

In Sri Lanka too, the government's focus on diversifying the national energy mix, including solar, wind, and LNG, has opened a strategic window for long-term investment and collaboration. Amidst these shifting dynamics, your Company has remained a constant and dependable force deeply aligned with national needs. Your Company has maintained an uninterrupted energy supply and contributed to critical infrastructure development. We remain

committed to powering the journey reliably, responsibly, and with resilience that mirrors the spirit of the nation itself.

Strategy Amidst Dynamic Conditions

In an environment marked by a more liberalized petroleum sector, the competitive dynamics of our industry have become increasingly fluid. New entrants and changing pricing frameworks have redefined the rules of engagement. Yet through these challenges, Lanka IOC has remained a pillar of stability. In FY 2024-25, Lanka IOC delivered a resilient performance with an overall volume growth of 25%. Underpinned by its diversified strategy, prudent operational management, and customer-focused innovation, your

17

Company delivered a top line of Rs.

276.29 Bn and a bottom line of Rs. 11.15 Bn. Compression of gross margins due to successive retail price reductions in the auto fuel segment led to a 20% decline in profit after tax during FY 2024-25 vis-à-vis FY 2023-

24. However, your Company maintained a healthy financial performance during the year through disciplined cost controls. The strength of our diversified portfolio, spanning lubricants, bunkering, petrochemicals, and bitumen, provided stability and incremental revenue streams, helping offset volatility in core segments. These strategic initiatives collectively ensured that Lanka IOC remained profitable, agile, and well-positioned for sustainable growth in a dynamic energy landscape.

Our long-term investment in Sri Lanka's energy security through robust infrastructure and well-maintained facilities enabled us to serve consistently and efficiently. Lanka IOC introduced XP100 premium fuels on the island in 2024. This 100 Octane fuel provides faster acceleration and smoother drivability, particularly for high-end luxury cars and bikes. To improve customer re-filling experience, the Company is investing in improving the look and feel of its retail network through initiatives like installing new-age dispensing pumps, automation, LED lights, etc. The Company has expanded its reach by opening new retail outlets, especially in areas where fuel outlets are not available in the nearby vicinity. We have added 15 new fuel retail outlets during FY 2024-25. Through automation, digital payment and loyalty solutions, and strategic partnerships, we are committed to enhancing operational efficiency and delivering a seamless, future-ready customer experience, solidifying our presence in the evolving retail fuel landscape.

The Company's petrochemical volumes increased more than fourfold during FY 2024-

25. This was possible due to the multifaceted approach it took to reaching out to potential customers and introducing new grades of petrochemical products based on customer requirements. Your Company is focused on developing this new line of business.

Leveraging Synergies

Lanka IOC leverages a strong strategic advantage through its parentage. This includes access to formulations and R&D capabilities, cost efficiencies from global bulk procurement, and integration of world-class systems. Additionally, Lanka IOC benefits from adherence to rigorous quality and safety standards, reinforcing its position as a trusted and forward-looking energy provider in Sri Lanka. This affiliation ensures that we uphold the highest benchmarks of safety, reliability, and sustainability.

Looking ahead, the world is actively pivoting toward a low-carbon future with focused investments in renewable energy, green fuels, and sustainability-led transformation. As Lanka IOC charts its course forward, it will gradually move toward this evolving vision, ensuring it remains competitive, future-ready, and aligned with both local priorities and global energy trends. The parent company's collaborations for cleaner energy solutions will be accessible to Lanka IOC, helping Lanka IOC make a gradual transition to the energy bouquet of the future.

A Commitment to Sustainability Our presence in Sri Lanka extends beyond the forecourts. Our social contributions in the form of life-saving healthcare donations to Government hospitals reflect a broader vision that energy must empower progress in every dimension. We are also reducing freshwater consumption through rainwater harvesting at the storage terminal. We are upgrading firefighting facilities at the terminal for the safety of operations and to take care of the environment. We are setting up electric vehicle charging based on emerging trends in mobility and have taken up large-scale solarization at our Retail outlets to promote sustainability. By focusing on environmental stewardship, social responsibility, and governance, we continue to align our efforts with global sustainability standards, ensuring that Lanka IOC meets the present needs and contributes to a greener, more sustainable future for future generations.

"As Sri Lanka rebuilds and looks ahead, we remain committed to powering that journey reliably, responsibly, and with resilience that mirrors the spirit of the nation itself."

LANKA IOC PLC / ANNU AL REPOR T 2024-25

Recognitions that Inspire Us

Lanka IOC has been honoured with top awards at CMA Excellence in Integrated Reporting and at the TAGS Awards. These prestigious recognitions underscore our unwavering commitment to transparency, accountability, and excellence in corporate reporting. These accolades inspire us to uphold the highest standards of disclosure and reflect our dedication to building trust with stakeholders and driving responsible business practices.

Governance

During the year, two esteemed Non-Executive Independent Directors, Prof. Lakshman R Watawala and Mr. Amitha Gooneratne, who are acclaimed for their knowledge and experience in their respective fields, retired from the Board after serving with distinction for more than a decade. We extend our sincere gratitude to them for their invaluable contributions, strategic guidance, and unwavering commitment to the progress of the Company.

We are pleased to welcome two new Directors to the Board, Mr. H. Manil A. Jayesinghe and Mr. S Renganathan, each bringing a wealth of experience and deep expertise across key governance and business strategy areas. Their insights will undoubtedly strengthen our leadership and support Lanka IOC's continued growth and transformation journey.

18 CHAIRMAN'S MESSAGE

LANKA IOC PLC / ANNU AL REPOR T 2024-25

Heralding a Promising Future

The recent decline in crude oil prices, driven by global turmoil, has led to successive reductions in retail petroleum product prices, making energy more affordable and stimulating demand growth. With the expansion of Colombo Port's capacity, we foresee a surge in bunker fuel demand.

Sri Lanka's stable policy environment provides a solid foundation for attracting Foreign Direct Investment (FDI) and achieving sustainable growth. The policy continuity is conducive to fostering long-term demand for energy and ensuring that Lanka IOC remains a key player in Sri Lanka's evolving energy landscape.

Appreciation

I sincerely thank my fellow Board members for their steadfast support, strategic foresight, and unwavering commitment to governance excellence. Their advice has been instrumental in steering Lanka IOC through a dynamic operating landscape and shaping our long-term vision.

To the entire Lanka IOC team, I offer my heartfelt appreciation. Your daily efforts bring our vision to life and enable us to deliver value to our stakeholders. I also thank our loyal customers for their continued trust and patronage. You remain at the heart of everything we do, and we are committed to serving you better every day.

I also want to express my profound appreciation to our shareholders for their continued trust and confidence in Lanka IOC.

"Our social contributions in the form of life-saving healthcare donations to the Government hospitals reflect a broader vision that energy must empower progress in every dimension."

I extend my heartfelt gratitude to the Government of Sri Lanka, our stakeholders and business partners. With your continued support, we will carry this legacy forward in a stronger, smarter, and more sustainable manner.

Mr. Satish Kumar Vaduguri

Chairman