Annual Report 2024/2025

A Tribute to Mr. Harry Jayawardena

Chairman, Lanka Milk Foods (CWE) PLC

With profound respect and heartfelt gratitude, we pay tribute to our late

Chairman, Deshamanya D.H.S. Jayawardena - a pioneering leader whose foresight and determination shaped not only our company but also

the future of Sri Lanka's dairy industry.

Appointed Chairman of Lanka Milk Foods in 2008, following a 17-year tenure as Managing Director, Mr. Jayawardena brought his strategic insight and uncompromising vision for quality to

the forefront of our operations. He was the architect of Lanka Milk Foods' transformation from a modest dairy operation, into one of Sri Lanka's most

trusted and respected food and beverage companies.

When the Sri Lankan government privatised Lanka Milk Foods in 1991, Mr. Jayawardena seized the chance to enter an industry close to his heart. At the time, LMF was the country's leading packer of full cream milk, but his concerted drive for modernisation and adoption of best practices propelled the company to new heights. Indeed,

his intervention revolutionised the wider industry when he brought the first Tetra Pak machines to Sri Lanka in 1995, introducing UHT milk to consumers. Mr. Jayawardena was also the first to recognise that importing

not only a drain on the country's foreign exchange, but denied consumers the nutritional benefits of drinking fresh milk. This realisation led to the acquisition of the Ambewela farms, which over the past 24 years, have evolved into cutting-edge

facilities, now producing over 66,000 litres of milk daily.

His unwavering focus on hygiene and efficiency established production standards that remain unmatched. From cow to consumer, Ambewela Fresh Milk remains untouched by human hands, ensuring the highest level of hygiene. This same care and quality extend to our renowned range of value-added products - Ambewela Yoghurt, Cheese, and Butter - which enjoy strong demand both locally and internationally. With a proud tradition of producing Gouda, Edam, and Parmesan

cheeses, our facilities at Ambewela continue to set benchmarks in artisanal dairy production, with demand far exceeding current supply.

He believed deeply in the power of local industry and the potential of Sri Lankan enterprise. Through every challenge, Mr. Jayawardena led with clarity and conviction, always placing the long-term growth of

the company - and the well-being of its people - at the forefront. His vision wasn't just about building a successful business;

it was about contributing meaningfully to the nation's development, particularly in areas like nutrition, sustainability, and rural empowerment.

Mr. Jayawardena's entrepreneurial spirit and relentless drive laid the foundation for

everything we have achieved. His leadership cemented our commitment to sustainability, social responsibility, and community wellbeing. His principled mentorship and belief in developing local talent will continue to define and inspire us as we go forward.

As we mourn the loss of a remarkable leader, we also celebrate the enduring legacy he leaves behind. Lanka Milk Foods stands today as a living testament to his foresight, resilience, and passion. We will honour his memory by continuing the journey he began - with the same strength, purpose, and dedication he exemplified

full cream milk powder and packeting it was

every day.

For over 60 years, Lanka Milk Foods has been more than just a household name-we have grown alongside generations, sharing moments of care, comfort, and nourishment. What began as a packing plant for imported milk powder has evolved into Sri Lanka's largest dairy farms, built on a simple premise: to always provide our customers with products of the highest quality.

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Today, we combine tradition with modern technology to deliver dairy products that are safe, fresh, and full of goodness. Each decade encapsulates milestones which demonstrate our steadfast commitment to purity and quality; with trusted brands that Sri Lankans have cherished for generations.

For decades, Daily has been instrumental in shaping the trajectory of sri Lankas dairy sector. As the first to introduce UHT processing and Tetra Packaging to the local market, Daily facilitated the widespread distribution of safe, long-life milk across the nation extending even to remote communities lacking refrigeration infrastructure.This strategic innovation not only enhanced consumer access to high-quality dairy products, but also created significant opportunities for thousands of small-scale retailers.

Manufactured without artificial additlws or preservatives, Daily contlnues to set the

standard for quality and innovation within Sri Lanka's dairy industry.

CONTENTS

1. About Our Report

2. About Us

3. Group Structure

10 Milestones of Our Dairy Journey

12 Financial Highlights

16 Chairman's Message

18 Group Chief Executive Officer's Message

21 Board of Directors

24 Corporate Management Team

27 Value Creation Model

30 Shared Growth through Stakeholder Engagement

34 Our Commitment to ESG and Sustainability

36 External Environment

39 Financial Capital

44 Human Capital

48 Manufactured Capital

50 Intellectual Capital

52 Social and Relationship Capital

59 Natural Capital

63 Corporate Governance

83 Enterprise Risk Management

90 Report of the Senior Independent Director

91 Report of the Nominations and Governance Committee

93 Report of the Remuneration Committee

94 Report of the Related Party Transaction Review Committee

95 Report of the Audit Committee

97 Annual Report of the Board of Directors

101 Statement of Directors' Responsibilities

104 Independent Auditor's Report

108 Statement of Profit or Loss and Other Comprehensive Income

109 Statement of Financial Position

110 Statement of Changes in Equity

112 Statement of Cash Flows

114 Notes to the Financial Statements

163 Shareholder and Investor Information

166 Ten Year Summary

1. Notice of Meeting

2. Form of Proxy

IBC Corporate Information

ABOUT OUR REPORT

We are committed to the principles of Integrated Reporting, and we aim to improve our ability to provide readers with a fair and concise assessment of how we create and distribute value to our stakeholders over time.

In addition to the relevant financial reporting standards, statutory requirements and sustainability reporting guidelines, the Annual Report aims to fulfil our stakeholders' information requirements and expectations, providing a transparent overview of our overall performance from 01st April 2024 to 31st March 2025.

Our Annual Report reflects our efforts to

This Annual Report and Financial Statements of Lanka Milk Foods (CWE) PLC ("Lanka Milk Foods" or "Company") and its subsidiaries Lanka Dairies Ltd, Ambewela Products (Pvt) Ltd, Pattipola Livestock Company Limited, Ambewela Livestock Company Limited, United Dairies Lanka (Pvt) Ltd, Indo Lanka Exports (Pvt) Ltd (collectively referred to as "Group") present the performance for the financial year ending 31st March 2025.

Unless otherwise stated, the financial and non-financial information presented in the narrative report represents all entities. Compared to the previous year, there have been no significant changes to the organisation or its supply chain.

of 2007 and the Listing Requirements of the Colombo Stock Exchange and subsequent revisions to date.

This report includes forward-looking statements based on available information, helping assess the Group's prospects. These statements are highly uncertain due to the unpredictable economic outlook.

The outcomes relate to uncontrollable future events that could impact the Group's value creation. Readers should make their own judgments using the latest information. All forward-looking statements are provided without liability to the Board or report preparers.

Assurance on Financial Statements has been provided by Messrs. KPMG Chartered Accountants and their report is set out on pages 104 to 107.

We remain committed to continuously enhancing the quality and readability of our Annual Report and welcome your suggestions and comments.

improve performance and communicate our achievements to our stakeholders. We strive to make it clear, concise and informative for our readers. We value your feedback. Your suggestions will help us improve the quality, readability, and information value of future reports. Please send your feedback to,

Chief Financial Officer

Lanka Milk Foods (CWE) PLC 579/1, Negombo Road, Welisara, Ragama

Email - finance@lmfgroup.lk

Tel - 011-5222600 Ext: 103

Connect with us on our official social media channels to engage with our real-time updates and become part of our journey.

https://www.lmfgroup.lk/ reports/

Navigating Our Report

CAPITALS

STAKEHOLDERS

Financial Capital

Human Capital

Manufactured Capital

Customers

Employees

Investors

Intellectual Capital

Social & Relationship Capital

Natural Capital

Suppliers

Government

Community

ABOUT US

Our Vision

To become the most desired entity and leader in the Sri Lankan dairy industry

Our Mission

Provide high-quality dairy products to all, with a focus on safety and nutrition

Our Values Excellence Innovation Quality Sustainability

Consumer Satisfaction

LMF Group has established itself as a pioneer in Sri Lanka's dairy industry, embarking on a

remarkable journey of excellence and building a profound legacy. Our unwavering commitment extends beyond providing

Sri Lankan consumers with high-quality, nutritious dairy products and encompasses a dedication to responsible cattle care, sustainable practices, and fostering the continued growth of Sri Lanka's dairy production for a brighter future.

Our flagship brand, Lakspray, has been a household name synonymous with trust and quality over 6 decades. Lanka Milk Foods' broader portfolio, including beloved brands like Ambewela, Daily, and My Juicee, further strengthens our commitment to providing

a diverse and refreshing range of dairy and beverage options for Sri Lankans. We also partner with Red Bull and Happy Cow cheese, solidifying our position as a leader in Sri Lanka's dairy landscape.

We operate two of Sri Lanka's largest dairy farms, Ambewela and Pattipola, which showcase our dedication to animal welfare and sustainable practices. Our recent expansion with United Dairies Lanka has created one of South Asia's largest dairy complexes-a state-of-the-art facility housing 4,000 cows across two farms. This underscores our commitment to advancing Sri Lanka's dairy production and shaping the industry's future.

Driven by a commitment to excellence, innovation, and quality, we are dedicated to our customers and our nation. Our focus on sustainability is a promise to future generations, ensuring that we grow responsibly. Above all, our purpose is to deliver nourishment that enriches lives.

Looking ahead, we will continue to foster a culture of progress and well-being within

our company and the communities we serve. We remain dedicated to creating a brighter, healthier future for Sri Lanka.

GROUP STRUCTURE

Year of establishment - 1981 (Sri Lanka) Quoted year in Colombo Stock Exchange - 1983

Year of establishment - 1996 (Sri Lanka)

Year of establishment - 2009 (Sri Lanka) Not in operation

Year of establishment

2006

(Sri Lanka)

100%

Year of establishment/ Acquisition

2001

(Sri Lanka)

100%

Year of establishment/ Acquisition

2001

(Sri Lanka)

100%

Year of establishment 2018

(Sri Lanka)

100%

MILESTONES OF OUR DAIRY JOURNEY

1981-1983

Lanka Milk Foods was incorporated in year 1981. The Company was Listed on the Colombo Stock Exchange, and production commenced in year 1983.

1991

Privatisation of Company (Lanka Milk Foods)

1996

Established Lanka Dairies Limited pioneering TetraPak technology in Sri Lanka.

Launching a

new manufacturing facility.

1999-2001

Expanded Lanka Dairies production capacity.

Introduced flavoured milk and fruit nectar.

2014

Upgraded calving technology at Ambewela farms.

2013

Further expanded Lanka Dairies production capacity.

2018

Obtained ISO 22000:2005 food safety certification Established United Dairies Lanka (UDL) Invested LKR

5.6 billion in expanding dairy facilities.

2019

Commenced construction of UDL project.

2020

Achieved annual milk production of 10 million litres.

2021

Marked Lanka Dairies' 25th anniversary.

Upgraded to ISO 22000:2018 food safety standard

2022

Initiated milking operations at UDL Ambewela farm.

2001

Acquired Ambewela and New Zealand Farms, establishing livestock companies and launching Ambewela Fresh Milk.

2004

Obtaining ISO 9001:2000

2006

Established Ambewela Products (Pvt) Ltd.

2007

Lakspray brand was honoured with Superbrands.

2009

Introduced Ambewela Yoghurt.

2010

Upgraded milk processing facilities. Commenced exports to Maldives. Obtained ISO 9001:2008 certification.

2023

Expanded milking operations to UDL farm.

Reached 15 million litres annual milk production.

Restructured the group for operational efficiency.

2024

Achieved annual milk production of 16.5 million litres.

2025

Lakspray proudly marked 60 years

Achieved annual milk production of 20.8 million litres

FINANCIAL HIGHLIGHTS

* Ratios have been adjusted Based on post -Sub division of 10 Shares for every Ordinary Share held in 2023.

14,172

29,772

Rs. Mn 20,000

9,772

14,501

16,734

21,126

15,000

7,597

10,000

5,000

2020/21

2021/22

2022/23

2023/24

2020/21

0

Revenue Growth

16,704

18,947

Rs. Mn 2,500

2,000

1,500

1,000

500

2024/25

0

Profit Before Tax

2,293

2,147

Rs. Mn 40,000

1,098

1,262

30,000

834

20,000

10,000

2020/21

2021/22

2022/23

2023/24

2024/25

0

Total Assets

Rs.18,947Mn

Group Revenue

A 13% increase from last year

Rs.72.27

Net Assets Per Share

A 32.6% increase from last year

Rs.38,276 Mn

Total Assets

A 28.6% increase from last year

Rs. 2,829Mn

Gross Profit

A 6% increase from last year

25.10 %

Dividend Payout Ratio

A 120.6% increase from last year

Rs.1,005Mn

Profit After Tax

The Group's tax expense, inclusive of deferred tax, rose to Rs. 1,141 million from Rs. 77.9 million in the prior year.

4663

Total Cattle

As of 31st March 2025

Rs.20.8 Mn

Total Farm Milk Production

A 26% growth from previous year

2021/22

2022/23

2023/24

2024/25

38,276

The figures presented above reflect the consolidated performance of the Group.

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LEADERSHIP

CHAIRMAN'S MESSAGE

WHICH SAW US ACHIEVE THE HIGHEST EVER REVENUE

Dear Shareholders,

C R JANSZ

Chairman

LANKA MILK FOODS GROUP HAS REINFORCED ITS POSITION AS

LEADER IN THE SRI LANKAN DAIRY INDUSTRY, AS EVIDENCED BY THE CONTINUOUS TOP LINE GROWTH

For over sixty years, Lanka Milk Foods has stood as a symbol of trust, consistency, and quality in the hearts of Sri Lankan families. From our beginnings as a pioneer in dairy to becoming the country's largest and most technologically advanced dairy producer, every milestone in our journey has been underpinned by a single unwavering value: quality.

At the heart of LMF's evolution is a deep commitment to excellence. Our legacy began with Lakspray, the first packed milk powder introduced to the Sri Lankan market, ensuring generations of mothers could access safe, hygienic, and nutritious milk

for their families. Sourced from the finest dairy farms and held to the highest global standards, Lakspray quickly became a household name-and remains so today.

In keeping with our pioneering spirit, we were the first in Sri Lanka to introduce UHT processing and Tetra Pak technology through our Daily brand, nearly three decades ago. This innovation provided shelf-stable milk products to consumers across the island, even in areas without refrigeration-bringing both convenience

and nutrition to every corner of the country. Daily continues to evolve with vibrant flavoured options, always made with the finest milk without preservatives.

Our visionary Chairman Deshmanya Harry Jayawardena realised that importing powdered milk was not the best solution for Sri Lankans. Such imports made a vast impact on our resources with a high out flow of foreign exchange, and placed Sri Lankan consumers at a disadvantage when customers in other countries were free to access fresh milk.

Two state owned farms were put up for lease in 2001. Lanka Milk Foods was the highest bidder and secured the lease rights to these farms. With fresh infusion of capital, rapid development of the farms to the most modern state of the art facilities not just in Sri Lanka, but in South Asia was

accomplished in just over 20 years. At these farms nestled in the pristine highlands, milk is collected untouched by human hands- from Friesian and Ayrshire cattle bred through world-class artificial insemination techniques. Every drop is tested in state-

of-the-art labs to ensure microbiological safety and nutritional integrity. The result is Ambewela Fresh Milk, Sri Lanka's No 1 which lives up to its promise: It doesn't get any better.