Lanka Milk Food AR 2022-23-1

LANKA MILK FOODS (CWE) PLC | ANNUAL REPORT 2022/23
DAIRY
Contents
Group Overview Governance

Aboaut Us 2 Corporate Governance 50
Vision, Mission, About this Report 3 Enterprise Risk Management 58
Our Range of Products 4 Report of The Audit Committee 62
Financial Highlights 8 Report of The Remuneration Committee 63
Related Party Transaction 64
Leadership Review Committee Report
Annual Report of the Board of Directors 65

Chairman’s Message 12
15 Statement of Directors’ Responsibilities 69
Group Chief Executive Officer’s Message
Board of Directors 18
Financial Statements
Management Discussion & Analysis
Independent Auditor’s Report 72
Value Creation Model 24 Statement of Profit or Loss and Other 76
Shared Growth through 27 Comprehensive Income
Stakeholder Engagement Statement of Financial Position 77
External Environment 29 Statement of Changes In Equity 78
Financial Capital 32 Statement of Cash Flows 80
Social & Relationship Capital 36 Notes to the Financial Statements 82
Human Capital 39
Manufactured Capital 41
Supplementary Information
Intellectual Capital 44
Shareholder and Investor Information 137
Natural Capital 46
Ten Year Summary 139
Notice of Meeting 142
Form of Proxy 143
Lanka Milk Foods (CWE) PLC | Annual Report 2022/23 1
As one of the largest dairy producers and manufacturers in South Asia,

Lanka Milk Foods is proud of the significant progress we have made over
the years, as we transitioned from traditional to state-of-the-art. This year,
we marked several milestones as our new facilities at Ambewela and
Pattipola were commissioned into operation using modern dairy farming
techniques and state-of-the-art equipment.
We have combined tradition with the latest technology and techniques

to take dairy production to new heights of productivity and efficiency. By
combining the deep knowledge gained from years of traditional farming
with new innovations and technology, we have moved into a new era of
dairy in Sri Lanka.
From its inception, the LMF group has embraced the art of dairy – from
being the first to provide mothers with nutritious milk powder for their
family to traditional farming on our pastures using artisanal processing
methods and now to state-of-the-art modern farming, with climate-
controlled milking parlours, feed management, cow tracking and
production monitoring.
As we expand our horizons, we are proud to be pioneers in the industry,

taking dairy from traditional to state-of-the-art.
2 Lanka Milk Foods (CWE) PLC | Annual Report 2022/23
About Us
LANKA MILK FOODS (CWE) PLC

Lanka Milk Foods (CWE) PLC is a leading dairy and beverage company in Sri Lanka with a portfolio of popular brands. We have
provided quality and nutritious products to Sri Lankan consumers for over 50 years, with our flagship brand Lakspray being a
household name. LMF Group also offers other dairy products such as Ambewela, Daily, My Juicee, Red Bull beverage, Happy Cow
cheese, and Dano milk powder. We operate two of the largest dairy farms in the country, Ambewela Farm and Pattipola Farm and
state-of-the-art manufacturing and packaging facilities at Welisara and Ambewela locations. We commenced operations at United
Dairies Lanka (Private) Limited, our newest state-of-the-art dairy farm, one of South Asia’s largest dairy farms.
Year of establishment - 1981
Quoted year in Colombo Stock Exchange - 1983
Business Activity – Packing and distributing

whole milk powder and skimmed milk powder,
importing and distributing energy drinks in local
market
Brands – LAKSPRAY, BLU, DANO
100% 100% 100% 100% 100%
Lanka Dairies (Pvt) Ambewela Products Ambewela Livestock Pattipola Livestock United Dairies Lanka
Limited (Pvt) Limited Company Limited Company Limited (Pvt) Limited
Year of Year of Year of Year of Year of

Establishment Establishment Establishment Establishment Establishment
1996 2006 2001 2001 2018
Brands Brands Brands
AMBEWELA, DAILY, AMBEWELA AMBEWELA
DAILY ACTIV, MY
JUICEE, KIDDOS
* Indo Lanka (Pvt) Limited (Year of Establishment - 2009)- Not in operation

Vision, Mission, About this Report
About this Report

We are committed to the principles of Integrated Reporting, and we aim to improve our
Our
ability to provide readers with a fair and concise assessment of how we create and distribute
value to our stakeholders over time.
Vision 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 2022 to 31st March 2023.
To become the Reporting Scope and Boundary
most desired entity This Annual Report and Financial Statements of Lanka Milk Foods (CWE) PLC (“Lanka Milk
and leader in the Foods” or “Company”) and its subsidiaries Lanka Dairies (Pvt) Ltd, Ambewela Products (Pvt)
Ltd, Pattipola Livestock Company Limited, Ambewela Livestock Company Limited, United
Sri Lankan dairy Dairies Lanka (Pvt) Ltd, Indo Lanka Exports (Pvt) Ltd (collectively referred to as “Group”)
industry present the performance for the financial year ending 31st March 2023.
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.
Reporting Standards and Principles

The Financial Statements have been prepared following the Sri Lanka Accounting Standards
(SLFRS/LKAS) issued by CA Sri Lanka (Sri Lanka Financial Reporting Standards) and comply
with the requirements of the Companies Act No. 7 of 2007 and the Listing Requirements of
the Colombo Stock Exchange and subsequent revisions to date.
Assurance
We adopt various assurance mechanisms and voluntary accreditations to ensure the
Our transparency and reliability of our information. Messrs. KPMG Chartered Accountants
audited the Financial Statements while Messrs. KPMG also provided assurance on the
Mission sustainability reporting.
Feedback
We remain committed to continuously enhancing the quality and readability of our Annual
Report and welcome your suggestions and comments. Our Annual Report reflects our
Provide high-quality ongoing efforts to improve the quality and readability of our communication with our
stakeholders. We value your feedback and suggestions on enhancing our report and making
dairy products to it more informative and engaging.
all, with a focus on Our Annual Report reflects our efforts to improve performance and communicate our
safety and nutrition achievements to our stakeholders. We strive to make it clear, concise and informative for our
readers. We value your feedback and suggestions on how we can enhance the quality and
readability of our report in the future.
Kindly send your feedback to,

Chief Financial Officer
Lanka Milk Foods (CWE) PLC
579/1, Welisara,
Ragama
Email - [email protected]
Our Range of Products
Lakspray Ambewela Ambewela

Dairy Range Set Yoghurt
For over five decades, the creamy The Ambewela brand, renowned In a remarkable journey of culinary
milk flavour of Lakspray has brought for its abundant dairy goodness, innovation, Ambewela Products
happiness and fond memories has firmly established itself as the (Pvt) Ltd introduced Ambewela Set
to the lives of many Sri Lankans. go-to source of dairy nutrition in Sri yogurt to the world in 2009. It is an
With its rich blend of essential milk Lankan households. Nestled amidst 80ml cup renowned for its unrivalled
proteins, vitamins, and minerals, the verdant hills of Sri Lanka’s most flavour, serene colour, velvety
Lakspray offers a nutritious option lush pasturelands, Ambewela Farms texture, and remarkable nutritional
that promotes the well-being brings a stream of creamy milk that profile.
of adults and children. In order embodies unparalleled freshness and
to accommodate the diverse uncompromising quality.
preferences of our customers,
we provide Lakspray in multiple Ambewela Farms stands as a symbol
package sizes ranging from 50g to of prestige and innovation in the
1kg packs. realm of dairy farming. As a dairy
farming complex in Sri Lanka that
uses cutting-edge farming methods,
it always upholds its brand promise
by offering its customers the
healthiest and highest-quality dairy
products.
Ambewela Full Cream Milk and

Ambewela Non-Fat Milk are UHT
processed, and aseptically packaged
in Tetra Brik Aseptic packs with a cap
to satisfy the expectations of today’s
liquid milk consumers. These milk
packs are available in 200ml and
one-litre versions and a pouch pack
of 450ml.
Daily Ambewela Drinking

Daily Activ
Yoghurt
At the dairy facility owned and Daily Activ is a UHT-treated malt In February 2016, Lanka Dairies (Pvt)
operated by Lanka Dairies (Pvt) chocolate food drink available in a Ltd unveiled the 180ml Ambewela
Ltd in Welisara, premium milk from 180ml milk pack filled with natural yoghurt beverage in vanilla
Ambewela farms is used every day to goodness and quality milk from our flavour. The product includes no
produce UHT-treated flavour milk. It farms. With the right combination of preservatives and has a four-month
was the first dairy product packaged taste and nutritional value, Activ has shelf life without refrigeration.
in Tetra Pak in Sri Lanka using aseptic become popular among the youth
and UHT procedures. and is primarily associated with their We offer three flavours within our
activities and aspirations. It is also range of drinking yoghurt bottles:
The product is shelf-stable for six exported to the Maldivian market strawberry, mango-peach, and
months under ambient temperatures and has won the hearts and minds of vanilla, produced by Ambewela
and is free of artificial additives or young Maldivian consumers. Products (Pvt) Ltd.
preservatives. The Daily range of
flavoured milk offers a delightful
assortment of flavours to suit
various palates. Whether one craves
the timeless classics like vanilla
and chocolate or seeks the fruity
freshness of strawberry and banana
or even the unique and enticing
blends of iced coffee and faluda,
Daily has something for everyone.
For those who can’t resist the
indulgent allure of Faluda, a one-
litre take-home pack is available to
satisfy their cravings. The Daily range
is exported to the Maldives and is
mainly popular among the Maldivian
youth.
Our Range of Products
UHT Flavoured Milk Ambewela Kiddos Ambewela Cheese

In 150ml pouch packs, Ambewela Ambewela Kiddos is a 160ml Ambewela Farms caters to diverse
UHT flavoured milk is offered in flavoured milk pack tailor-made customer needs, including the
chocolate and vanilla flavours. to suit the palate of Sri Lankan hospitality sector, with a selection
Additionally, it is a creation of kids, supplemented with essential of four types of cheese. From
Ambewela Products (Pvt) Ltd. vitamins and minerals required conventionally-made cottage
for their growing age. Kiddos is a cheese to Edam, Gouda, and
convenient and nutritious way for Parmesan cheese in various forms
parents to provide their kids with the and flavours, we offer a range of
daily nutritional needs they require at options to suit different preferences.
a reasonable and competitive price. Ambewela Products (Pvt) Ltd
specialises in European-style
cheeses such as Edam and Gouda
blocks, slices and a 100ml Ambewela
Spread Cheese cup tailored for the
hospitality industry. Our 200g pack
of processed cheese is a delicious
and outstanding product, with
exquisite taste.
The cheese made by New Zealand

Farm in Pattipola is produced more
conventionally, and the product is
generally categorised as cottage
cheese. We provide Edam, Gouda
Ambewela Flavoured and Parmesan cheese in ball, block,
Milk grated and shredded versions, as
well as plain cheese and flavoured
Ambewela Flavoured Milk is a cheese such as pepper, cumin, chilli
product of Lanka Dairies (Pvt) and garlic.
Limited. It is available in one-litre and
180ml packs of chocolate and vanilla
flavours.
My Juicee Dano Full Cream Milk Ambewela Goat Milk

Fruit Drink Powder
My Juicee is a refreshing ready-to- Dano Full Cream is the choice for Ambewela Goat Milk is a sterilised,
drink fruit beverage that not only those who value milk and want to ready-to-drink 190ml bottle of
quenches your thirst but also provides get all its advantages! pure goat milk from healthy goats
your daily dietary requirement of raised on our New Zealand farm in
vitamin C. Crafted with care; it is Dano Full Cream Milk is creamy and Pattipola. It offers a rich and creamy
produced and aseptically packed at contains vital nutrients that keep taste, reflecting our commitment to
Lanka Dairies’ state-of-the-art Welisara consumers strong and healthy. It is quality and purity. Enjoy the natural
factory, ensuring utmost hygiene and a product of Arla Foods, Denmark. benefits of goat milk conveniently in
quality. It is available in apple, mango, This milk powder carries an exquisite your daily routine, knowing it comes
mixed fruit and orange variants. rich milky flavour and can be used for from a trusted source. Embrace a
With its refreshing flavours and cooking, baking, and making milk, healthier lifestyle with Ambewela
commitment to quality, it’s a beverage tea and coffee. Goat Milk, a nourishing choice
that can be enjoyed by individuals straight from our farm to you.
of all ages, providing a rejuvenating Introduced to the Sri Lankan market
burst of flavour and a healthy dose of by the LMF Group in February
vitamin C. 2022, Dano Full Cream Milk Powder
has quickly become a trusted and
It is processed using premium quality sought-after choice for discerning
fruit pulps and concentrates sourced consumers. Its unrivalled quality,
locally and internationally in keeping taste, and nutritional profile have
with international standards. My captured the hearts and taste buds of Ambewela Butter
Juicee is available in packs of 180ml individuals seeking a premium milk
Since December 2014, our dairy
to consume while on the move and product. This product is available in
facility in Ambewela has been
as a one-litre take-home family pack. packs of 400g and 1kg packs.
producing Ambewela Butter in
convenient 200g packs, widely
available in supermarkets across
the island. Embrace the exceptional
quality and versatility of Ambewela
butter products, carefully crafted to
bring joy to home and professional
kitchens alike. Discover the
satisfaction that comes from using
Ambewela butter in your culinary
creations.
Financial Highlights
Group Company
2023 2022 Change % 2023 2022 Change %
OPERATIONS
Revenue Rs. '000 14,171,501 9,771,539 45.03 4,072,143 3,423,954 18.93
Gross Profit Rs. '000 1,778,903 1,460,207 21.83 897,834 170,947 425.21
Profit from Operations Rs. '000 1,172,934 677,646 73.09 522,792 (249,161) (309.82)
Profit/(Loss) Before Tax Rs. '000 1,262,422 1,097,589 15.02 1,509,202 463,618 225.53
Profit/(Loss) for the Year Rs. '000 1,189,205 1,064,503 11.71 1,520,907 466,879 225.76
Profit/(Loss) Attributable to Equity Holders Rs. '000 1,189,319 1,065,100 11.66 1,520,907 466,879 225.76
Revenue per Employee Rs. '000 19,574 13,187 48.43 18,098 14,632 23.69
FINANCIAL POSITION
Non-Current Assets Rs. '000 16,982,033 12,949,084 31.14 12,365,536 8,054,562 53.52
Current Assets Rs. '000 4,144,431 3,784,590 9.51 2,070,138 3,188,130 (35.07)
Total Assets Rs. '000 21,126,464 16,733,674 26.25 14,435,674 11,242,692 28.40
Total Equity Rs. '000 14,704,239 11,433,332 28.61 13,190,557 9,598,677 37.42
Non-Current Liabilities Rs. '000 2,934,480 2,301,900 27.48 75,281 69,797 7.86
Current Liabilities Rs. '000 3,487,745 2,998,442 16.32 1,169,836 1,574,218 (25.69)
Net Assets Attributable to Equity Holders Rs. '000 14,704,588 11,433,567 28.61 13,190,557 9,598,677 37.42
RATIOS
Earning per Share Rs. 29.73 26.63 11.64 38.02 11.67 225.79
Dividend per Share Rs. 5.00 7.50 (33.33) 5.00 7.50 (33.33)
Dividend Cover (Times) 5.95 3.55 67.61 7.60 1.56 387.18
Dividend payout Ratio % 16.82 28.17 (40.29) 13.15 64.27 (79.54)
Interest Cover (Times) 1.11 8.56 (87.03) 2.96 (47.73) (106.20)
Net Assets per Share Rs. 367.63 285.85 28.61 329.78 239.98 37.42
Market Value per Share Rs. 140.75 132.75 6.03 140.75 132.75 6.03
Price Earning Ratio (Times) 4.73 4.98 (5.02) 3.70 11.37 (67.46)
Debt/Equity % 43.68 46.36 (5.78) 9.44 17.13 (44.89)
Return on Equity % 8.09 9.32 (13.20) 11.53 4.87 136.76
Return on Total Assets % 5.63 6.37 (11.62) 10.54 4.16 153.37
Gross Profit Ratio % 12.55 14.95 (16.05) 22.05 5.00 341.00
Net Profit/(Loss) Ratio % 8.39 10.90 (23.03) 37.35 13.64 173.83
Current Ratio (Times) 1.19 1.26 (5.56) 1.77 2.02 (12.38)
Liquid Ratio (Times) 0.39 0.77 (49.35) 1.31 1.77 (25.99)
Group Revenue
Rs.14,172 Mn

Liquid milk and other

Powdered milk
Agriculture
Trading
Rs.1,779 Mn 64%
Gross Profit
Liquid Milk Sector
contribution to Group Revenue
Rs. 1,189 Mn
Profit After Tax
Rs. 21,126 Mn 4223

Total cattle -
Total Assets (as of 31st March 2023)
Leadership
STEERING PROGRESS
Chairman’s Message
Dear Valued Stakeholder,

I am delighted to present an overview
of the LMF Group’s performance and
the audited results for the financial year
2022/23. Our performance during this
period has been exceptional, marked by
record-breaking profitability and revenue.
Our ambitious project to increase and
optimise our in-house milk production,
with the implementation of cutting-
edge technology and modern farming
practices, has now been completed. This
is a significant step towards achieving our
long-term vision to support national self-
sufficiency in milk production. The state-
of-the-art facilities now in place enable us
to monitor every aspect of the cow’s well-
being and thereby greatly increase milk
production. These Barns are the largest in
South East Asia in every aspect.
This report details the Group's plans,

strategies and activities that have
been instrumental in driving our
accomplishments during a period
characterised by significant challenges.
Despite the turbulent conditions that
prevailed during the year, the group
remained resilient, as proved by the
results in these pages. We overcame many
obstacles in our path and have emerged
stronger.
Rs. 199.99 Mn
Dividend Payout
Rs. 14,704 Mn
Shareholder Funds
“Our ambitious project to our fresh milk products much more household names in the Maldives.
difficult, as most suppliers demanded Additionally, our ready-to-drink brands
increase and optimise our that all our purchases were made under have made significant strides in the Sri
in-house milk production, confirmed letters of credit, thus adding a Lankan market, with MyJuicee emerging
with the implementation tremendous additional financial burden. as a leading local fruit juice brand
of cutting edge technology known for its superior quality, taste and
Scarcity of essential goods, power outstanding value.
and modern farming and currency shortages and limited
practices, has now been foreign exchange availability added to United Dairies Lanka (Private) Limited -
completed. the problems faced by businesses and Redefining the Art of Dairy Farming
individuals alike. The rampant inflation The Lanka Milk Foods Group is dedicated
that prevailed in the period also caused to expanding its in-house fresh milk
This is a significant step problems although inflation is now production to meet the growing demand
towards achieving our easing. and cater to the preference for fresh milk
long-term vision to support over powdered milk. The Group's farms
Group Performance
national self sufficiency in The Lanka Milk Foods Group enhanced
adhere to rigorous quality standards,
thereby uniquely positioning their
milk production.” its position as the frontrunner in the Sri products to compete in both regional and
Lankan dairy industry, as evidenced by global markets.
Macroeconomic Challenges our continuous growth and achievements.
During the year under review, the Turnover of Rs. 14.17 billion for the The farms have a total herd of over 4400
Sri Lankan economy faced various fiscal year ending on March 31, 2023, animals, Both with the milking cows
challenges and macroeconomic surpasses that of the previous year by Rs. producing an average 32-35 litres per cow.
pressures. These challenges included 4,400 million, which is the highest ever. Ambewela and Pattipola Farm extensions
a severe fuel shortage, scarcity of The Group recorded its highest gross under United Dairies Lanka (Pvt) Ltd are
essential commodities and raw material, profit of Rs. 1,779 million, a substantial now operational, accommodating 2,000
power supply disruptions, and currency improvement compared to the previous cows in advanced climate-controlled
depreciation. The year commenced with year. Moreover, we have recorded a Profit sheds. The state-of-the-art milking
significant pressures placed on the Sri After Tax (PAT) of Rs. 1,189 million, the parlours allow for individual cow tracking,
Lankan Rupee and a shortage of foreign highest ever. efficient milk production monitoring,
exchange. The declaration of bankruptcy and the ability to divert sick cows from
by the government resulted in a massive Rooted in Resilience the milking line. The facility additionally
downgrade of our sovereign ratings, At the heart of our accomplishments lies emphasises the use of sustainable, cost-
which made the import of items such our pristine dairy farms, producing the efficient techniques by utilising a process
as tetra paper and flavours, needed for cleanest milk in the country and boasting to convert slurry into bio-fertiliser and
the highest average milk production in recycling collected rainwater.
Total Assets Sri Lanka, making Ambewela pure fresh
milk the best such product available. The Traditional farming methods are being
21,126
Rs. Mn
24,000 market has embraced our natural cheeses replaced by innovative systems that
16,734
20,000 and butter, which are meticulously crafted prioritise efficiency, animal welfare, and
14,501
13,793
12,954
to meet rigorous international standards environmental sustainability.

16,000
10,613
using the finest milk from our farms. Our

12,000 fresh milk and yoghurt have secured Research and development efforts have
8,000 dominant market shares, renowned for led to the formulation of specialised diets
4,000 their exceptional quality and taste. that enhance herd health, improve milk
quality, and reduce environmental impact,
0
Our Daily and Ambewela flavoured, and thereby improving the productivity and
2020/21
2017/18
2018/19
2019/20
2021/22
2022/23
fresh milk products have also achieved well-being of the cows.

international recognition, becoming
Chairman’s Message
The dairy industry in Sri Lanka holds challenges. As we move forward, we

significant potential for supporting local aspire to make further progress as a
farmers, but it currently fails to meet Group, building upon our achievements
even half of the country's milk demand. and introducing more technology and
To address this, upgrading the industry, innovation.
guaranteeing affordable and high-quality
feed, establishing a fair price mechanism Most of all, my thanks go out to our loyal
for milk and milk products, and increasing customers and dealers. Without their
herd productivity are crucial. However, trust and confidence in our products, our
challenges arise from the rising costs of efforts would be in vain. We prioritise
cattle feed concentrates and insufficient our customers in every aspect of our
domestic maise production, which make operations, and we are truly grateful
it challenging to obtain the required for their unwavering loyalty. We remain
feed, compelling dairy farmers and feed committed to delivering the finest
producers to resort to costly substitutes. products manufactured to the highest
standards of hygiene and supplying the
Outlook best and most nutritious products to the
Our unwavering dedication towards nation.
prioritising the needs of our stakeholders
remains steadfast. As we pursue strategic
growth, enhance product quality, and
strive for national self-sufficiency in milk
production, we do so with their best
interests at heart. We are committed to D H S Jayawardena
implementing necessary safeguards to Chairman
mitigate potential issues that may arise 18th August 2023
and to upholding our well-established
standards of hygiene and safety.
Appreciations
I would like to express my deepest
gratitude to the Board of Directors,
Group CEO, Executive Team, Sales Team,
Farm Management team and Mr. Jaques
Du Plessis our consultant. It is through
their unwavering determination and
commitment that we have achieved these
gratifying results.
I would like to thank our stakeholders for

their unwavering support and confidence
in our endeavours. Your continued loyalty
and trust have been instrumental in
our ability to withstand and overcome
Group Chief Executive

Officer’s Message
Dear Valued Stakeholder,
In the face of formidable challenges
that defined the year 2022/23, I am
pleased to announce that the Lanka
Milk Foods Group demonstrated a
remarkable resilience, and successfully
achieved notable milestones during the
period under review. I am delighted to
report that the LMF Group's revenue
has increased, reaching an outstanding
performance of Rs. 14.17 billion.
Additionally, the Group marked a

commendable increase in gross profits,
recording Rs. 1,779 million, compared
to the Rs. 1,460 million recorded in the
previous year's consolidated accounts
and the Profits after taxes were at Rs 1,189
million.
This impressive growth was largely

attributed by the performance of Lanka
Milk Foods Company, particularly with
respect to the powdered milk segment.
However, it is crucial to acknowledge that
our accomplishments occurred against
the backdrop of a local economic and
forex crisis, which significantly impacted
the country's overall output. Nonetheless,
our inherent ability to navigate these
challenges and capitalise on opportunities
is a testament to the resilience and
ingenuity of our dedicated team.
Rs. 1,189 Mn
Profit After Tax
Rs. 14,172 Mn
Group Revenue

Officer’s Message
“Equipped with robust However, the Company faced Operational Challenges

considerable challenges in sourcing the To maintain a high milk production rate,
infrastructure, a skilled necessary flavours and fruit pulps for Daily it is essential to provide our herd with
workforce, and extensive and MyJuicee range due to the worsened premium-quality cattle feed, which
expertise, the LMF Group is currency situation resulting from the experienced increased costs due to
poised to propel Sri Lanka’s country's economic constraints. LDL's net shortages of specific ingredients and
profit for the year amounted to Rs. 405 fluctuations in foreign exchange rates
dairy industry to new million, compared to the Rs. 528 million that prevailed during the year. Despite
heights.” in the previous year. This was mainly these challenges, each farm is equipped
due to the increase of raw material prices with professional management and cost-
Financial Performance which we had to absorb some of the cost reduction plans that enable the successful
During the year under review, the Group's to maintain a consistent retail price in the navigation of future obstacles.
powdered milk segment which the market.
main contribution came from the brand Unleashing Milk Potential: A Journey of
Lakspray, reported a profit of Rs. 880 Our own farms experienced increased Capacity Enhancement
million, denoting a substantial increase feed costs owing to the escalating cost The completion of the initial construction
from Rs. 269 million recorded in the of feed ingredients, thereby impacting phase of our new dairy farm marked
previous year, supported by a revenue profitability for the current financial year. a significant milestone, allowing us to
growth of 19%. The brand Lakspray will be Further the new facility United Dairies had successfully commence operations. With
further strengthened in the coming year to pay off additional interest cost due to the launch of our farm expansion project,
to make sure that the availability will be high rates, therefore was also impacted we have taken remarkable strides towards
maintain in the market. badly. our goal to reduce the nation’s reliance
on imported milk powder by providing
Lanka Dairies (Pvt) Ltd (LDL) witnessed an Ambewela Products (Pvt) Ltd witnessed a the highest quality locally produced
increase in revenue from the preceding net profit decline from Rs. 297 million to fresh milk. Ambewela farms achieved
year’s Rs. 4.98 billion to reach Rs. 7.6 Rs. 41 million. This decline was primarily an outstanding milestone by producing
billion for the financial year which is a 53% attributed to continuous price increases of nearly 12 million litres of milk in the past
increase. yoghurts. The economic crisis significantly year, marking a remarkable 1.6 million
impacted consumers’ disposable income, litres increase compared to the previous
Renowned as the market leader in fresh leading the middle-income groups to year's output. This strategic shift not only
milk in Sri Lanka, the Ambewela Fresh Milk remove the product from their essential reduced our dependency on foreign
further consolidated its position as the buying lists. Consequently, the yoghurt currency but also positively impacted the
market leader in the 1 Litre segment. Also, market experienced a volume decline of well-being of our citizens and generated
the brand “Daily” has shown significant around 40%. substantial profits for our investors.
improvements in the marketplace with
increased volumes. Despite the challenges, Ambewela cheese Recognised and approved by the Board of
and butter achieved improved results of Investment (BOI), this venture represents
a 30% volume growth, showcasing the one of the most substantial investments
Revenue
popularity for their exquisite taste. in Sri Lanka's history, significantly
14,172
Rs. Mn bolstering the growth and development

16,000
The Group remains committed to of the dairy sector. As Sri Lankans, we can
14,000
enhancing its product offerings in the
9,772
12,000 rightfully take pride in this extraordinary

future. Upholding the highest standards accomplishment, which showcases our
7,597
10,000
6,704
of hygiene, our dairy farms, including dedication to fostering self-sufficiency

5,417
5,386
8,000
6,000 Ambewela and Pattipola Dairy Farms and excellence in the dairy industry.
4,000 (New Zealand Farm) under United Dairies,
2,000 ensure optimal milk production. The milk With unwavering commitment to optimal
0 production operations were shifted to the nutrition and successful pregnancies
United Dairies farm during the financial
2020/21
that meet global benchmarks, we have

2017/18
2018/19
2019/20
2021/22
2022/23
year, and the other two farms were nurtured a thriving and healthy herd
developed as heifer rearing units. at our Ambewela and Pattipola dairy
farms. Our dedication to the well-being Acknowledgements

of our animals are evident through our I express my sincere gratitude to the
provision of the finest quality cattle feed, Chairman and the esteemed Board of
ensuring their peak physical condition. Directors for their invaluable guidance,
This accomplishment is a testament unwavering commitment, and continuous
to the expertise of our highly skilled encouragement. Their visionary leadership
dairy professionals, who lead our herd has played a pivotal role in guiding
management efforts, and the dedication our organisation to garner unmatched
of our committed staff who priorities achievements in the dairy industry. I
animal welfare and the smooth operation deeply appreciate the dedication and
of the farms. With approximately 4,400 tireless efforts of our senior management
animals currently residing in our farms, we team and every member of our staff, who
continue to uphold our commitment to have remained the driving force behind
maintaining the highest standards in dairy our success, particularly during these
farming. turbulent times.
Expanding Horizons, Fueling Growth and In addition, I extend my heartfelt thanks

Innovation to our suppliers and strategic partners,
The Ambewela brand demonstrated an whose collaboration and support are
outstanding performance, achieving a indispensable towards ensuring the
remarkable volume increase during the smooth functioning of our operations.
year. We are dedicated to sustaining this Their unwavering commitment and
success story by continually investing in collaborative spirit have contributed
innovation and launching new products significantly to our collective success.
under this well-established brand, thereby
ensuring its continued growth and market Lastly, I would like to express my deepest
impact. gratitude to our loyal customers, who
are the heart and soul of our business.
Our brand 'Daily' has continued to Your unwavering support and trust in
move from strength to strength, having our brands are truly appreciated. We will
established a loyal customer base in persistently strive to elevate our products,
Sri Lanka as well as in Maldives. With expand our market presence, and solidify
long-term plans and strategic initiatives our position as an industry leader in the
in place, we are committed to elevating Sri Lankan dairy sector.
'Daily' to become a prominent and
influential addition to the Group's Thank you
portfolio, and maximising its potential
by delivering enhanced value to our
customers.
Equipped with robust infrastructure, a

skilled workforce, and extensive expertise, M. Dahanayake
the LMF Group is poised to propel Sri Group Chief Executive Officer
Lanka's dairy industry to new heights. As 18th August 2023
we navigate through an uncertain future,
we are confident in our ability to adapt
and thrive, while delivering unwavering
quality, stringent hygiene standards, and
superior nutrition through a diverse range
of products tailored to meet the evolving
demands of our customers.
Board of Directors
Mr. D. H. S. Jayawardena Mr. C. R. Jansz

Chairman Executive Director
Mr. Harry Jayawardena was elected Company Ltd., Ambewela Products (Pvt) Mr. Jansz is a Director of Stassen Group,
Chairman of Lanka Milk Foods (CWE) Ltd, Indo Lanka Exports (Pvt) Ltd., United Melstacorp Group, Lanka Milk Foods
Plc in October 2008 after serving as the Dairies Lanka (Pvt) Ltd., Bogo Power (Pvt) Group, Distilleries Company of Sri Lanka
Managing Director for nearly 17 years. Ltd., and Bellactive (Pvt) Ltd. & Aitken Spence PLC. He is the Chairman
He is one of the most successful and of Melsta Hospitals Ragama (Pvt) Ltd. and
renowned entrepreneurs in Sri Lanka He is the Managing Director of Stassen Melsta Hospitals Colombo North (Pvt) Ltd.
who steers many successful enterprises in Real Estate Developers (Pvt) Ltd., and
diversified business arenas. serves as a Director on the Boards He has been the Chairman of DFCC Bank
of Melsta Gama (Pvt) Ltd, Hospital and the Sri Lanka Shippers Council.
He is the Founder Director and current Management Melsta (Pvt) Ltd and DCSL
Chairman/Managing Director of the Brewery (Pvt) Ltd., and Aitken Spence Mr. Jansz holds a Diploma in Banking
Stassen Group of Companies – a Aviation (Private) Limited. and Finance from London Metropolitan
diversified group in export and import University, UK. He is a Chevening Scholar
trade. He is also the Chairman of Aitken He is the Honorary Consul General and an UN-ESCAP Certified Training
Spence PLC, Browns Beach Hotels PLC, for Denmark in Sri Lanka and the only Manager on Maritime Transport for
Aitken Spence Hotel Holdings PLC, Aitken Sri Lankan to be honoured with the Shippers.
Spence Hotel Managements Asia (Pvt) prestigious “Knight Cross of Dannebrog”
Ltd., Negombo Beach Resorts (Pvt) Ltd., by Her Majesty Queen Margrethe II of Mr. Jansz specializes in the movement and
Lanka Power Projects (Pvt) Ltd., Milford Denmark, for his significant contribution finance of international trade.
Holdings (Pvt) Ltd., Milford Developers to the Danish arts, sciences and business
(Pvt) Ltd., Milford Exports (Ceylon) (Pvt) life.
Ltd., Ceylon Garden Coir (Pvt) Ltd., C B D
Exports (Pvt) Ltd., Timpex (Pvt) Ltd., Texpro Mr. Jayawardena was awarded the title,
Industries Ltd., Melstacorp PLC., and its “Deshamanya” in recognition of his service
subsidiaries Distilleries Company of Sri to the motherland in year 2005.
Lanka PLC., Periceyl (Pvt) Ltd., Balangoda
Plantations PLC., Lanka Bell Ltd., Bell
Solutions (Pvt) Ltd., Melsta Health (Pvt)
Ltd., Madulsima Plantations PLC., Lanka
Dairies (Pvt) Ltd, Ambewela Livestock
Company Ltd, Pattipola Livestock
Ms. D. S. T. Jayawardena
Executive Director
Ms. Stasshani Jayawardena was appointed of Management, Singapore - Ms. In recognition of her work and
to the Board of Lanka Milk Foods (CWE) on Jayawardena made waves from a young commitment to inspire, she was
19th August 2019. age. Ms. Jayawardena was the youngest recognized at Top 50 Professional & Career
intern to work under US Senator Hilary Women Awards in Sri Lanka with a Gold
She marks several milestones for Aitken Rodham Clinton and the Former US award in the Hotel & Hospitality Sector in
Spence PLC and Aitken Spence Hotel President Bill Clinton in 2003; and was 2017, and in 2020 by Sri Lankan business
Holdings PLC as the youngest Board appointed as the Sri Lankan Ambassador magazine, Echelon, listing her among the
Member, and the first female member for EY NextGen Club from 2017 to 2019. most innovative and influential young
on the Board. Ms. Jayawardena heads leaders who have succeeded in business
the Tourism sector of Aitken Spence Ms. Stasshani Jayawardena was and shaping the future of Sri Lanka.
PLC inclusive of hotels, destination appointed to the Executive Board of The
management and overseas travel. Hotel Association of Sri Lanka (THASL) Ms. Jayawardena became the recipient of
and represents THASL at the Ceylon the Expatriate Contribution Award – Gold
With a career spanning over 10 years Chamber of Commerce Committee since category by Women in Management
at Aitken Spence, she wields a fresh 2019. She is an Executive Committee Maldives. The Professional and Career
perspective in management and leads Member at the International Chamber of Women Awards Maldives 2022 presented
strategic business units across the Group. Commerce in Sri Lanka since 2020 and this award to Ms. Jayawardena for
She leads several key strategic teams as a Steering Committee Member of the her exceptional contributions and
the Chairperson of Aitken Spence Hotel Ceylon Chamber of Commerce Tourism. achievements in the field of Hotel &
Managements (Pvt) Ltd., as a member on She was appointed as Chairperson of Hospitality.
the Board of Directors of Aitken Spence the Employers’ Federation of Ceylon
PLC, Aitken Spence Hotel Holdings PLC, (EFC) Hotels and Tourism Employers Her passion remains in designing the
Stassen Group, Aitken Spence Aviation Group for the financial year 2020/21. Ms. next generation of business with the
(Pvt) Ltd, Western Power Company Jayawardena is also a member of the PWC core values of integrity, sustainability,
(Pvt) Ltd. She was appointed to the NextGen Advisory Board. empowerment, and equal opportunities.
Board of Directors of Melstacorp PLC She believes driving her business
and Distilleries Company of Sri Lanka in Ms. Jayawardena represents the Target decisions by using data and technology.
September 2022. Gender Equality initiative of the UN Global
Compact since 2020 as the Ambassador
A graduate of St. James’ & Lucie Clayton from Aitken Spence PLC. She is also a
College and Keele University in the member of the Austrian Business Circle in
United Kingdom, and Emeritus Institute Sri Lanka.
Board of Directors
Mr. D. S. K. Amarasekera Dr. A. Shakthevale

Independent Non-Executive Director Independent Non-Executive Director
On May 1st, 2008, Mr. Kamantha Dr. Shakthevale was appointed to the (Parliamentary Affairs) to the Minister
Amarasekera was appointed an Board of Lanka Milk Foods (CWE) Plc of Policy Planning and Implementation;
Independent Director to the Lanka as an Independent Director on 01st Member of the Sri Lanka Independent
Milk Foods Board. In addition to being May 2008. He is also a Director on the Finance Commission; President of the
an Attorney-at-Law for the Sri Lankan Boards of United Dairies Lanka (Pvt) Veterinary Council of Sri Lanka and
Supreme Court, Mr. Amarasekera is a Limited, Madulsima Plantations PLC and President of the Senior Veterinary
member of the Institute of Chartered Balangoda Plantations PLC. Surgeons Association of Sri Lanka. He has
Accountants of Sri Lanka. He also holds worked at FAO, UNDP, UNHABITAT, Land
a Business Administration degree from Dr. Shakthevale is a Veterinarian cum O’Lakes, and Oxfam GD. Currently, he is a
the University of Sri Jayawardenapura. He Agricultural Economist with nearly 45 member of the technical committee of All
commenced his career in 1998. years of consulting, agricultural planning, Island Dairy Association and a freelance
project implementation, monitoring, and Consultant in Livestock Development.
Mr. Amarasekera is an eminent Tax policy formulation experience. He has
Consultant and the Senior Tax and Legal served in various positions in developing,
Partner of M/s. Amarasekera & Company, monitoring and administrating numerous
a leading tax consultancy firm in the agricultural sectors. He has experience
country. working in the public (Agriculture,
Livestock, Education and Health sectors)
Mr. Amarasekera is also a Director to the and private sectors, central and provincial
Boards of United Dairies Lanka (Private) ministries, and district levels.
Limited, Balangoda Plantation PLC.,
Madulsima Plantations PLC., Kelani Tyres He served as a Secretary at the Ministry
PLC., Eden Hotel Lanka PLC., Palm Garden of Rehabilitation and Social Service in
Hotels PLC., Ceylon Hotels Corporation North East Provincial Council; Additional
PLC, and Agstar PLC. Serendib Hotels Secretary (Livestock) at the Ministry of
PLC, Dolphin Hotels PLC, Hotel Sigiriya Agriculture and Livestock Development
PLC, Hapugastenne Plantations PLC, for six years; Board Director for MILCO
Udapussellawa Plantations PLC and and NLDB; Project Manager, Millennium
several other subsidiaries of Browns Development Goals Project, funded
Investments Group. by UNDP; Coordinating Secretary
Mr. D. Hasitha. S. Jayawardena

Non- Independent Non-Executive Director
Mr. Hasitha Jayawardena was appointed

to the Board of Lanka Milk Foods (CWE)
Plc on 11th July 2016.
Mr. Jayawardena joined the Stassen Group

in February 2013. He serves as a Director
on the Boards of Stassen Exports (Pvt) Ltd.,
Milford Exports (Ceylon) (Pvt) Ltd., Stassen
International (Pvt) Ltd., Stassen Natural
Foods (Pvt) Ltd., Stassen Foods (Pvt) Ltd.,
Ceylon Garden Coir (Pvt) Ltd., Milford
Developers (Pvt) Ltd., C B D Exports (Pvt)
Ltd., Distilleries Company of Sri Lanka
PLC., Periceyl (Pvt) Ltd., Melstacorp
PLC., Lanka Dairies (Pvt) Ltd., Ambewela
Livestock Company limited., Pattipola
Livestock Company Limited., Ambewela
Products (Pvt) Ltd., United Dairies Lanka
(Pvt) Ltd., Zahra Exports (Pvt) Ltd.,
Balangoda Plantations PLC., Madulsima
Plantations PLC., Mcsen Range (Pvt) Ltd.,
Melsta Gama (Pvt) Ltd., Melsta Health
(Pvt) Ltd., DCSL Brewery (Pvt) Ltd., Melsta
Hospitals Ragama (Pvt) Ltd. and Melsta
Hospitals Colombo North (Pvt) Ltd.
Mr. Jayawardena holds a Bachelor’s

Degree in Business Administration BBA
(Hons) from the University of Kent in the
United Kingdom. He has also worked as
an Intern at the Clinton Global Initiative
programme (CGI) in New York in 2007.
PIONEERING EXCELLENCE

VALUE CREATION MODEL
Our Vision - To become the most desired entity and leader in the Sri Lankan dairy industry
CAPITAL INPUTS VALUE TRANSFORMATION
Shareholder Funds
Rs.14,704 Mn
Borrowings
Financial
Capital Rs. 3,306 Mn
Refer 33
Our Loyal Customers

Our Suppliers
Community Relationships Rearing cattle at our own dairy farms
Social & Relationship
Capital Refer 36
Growing our feed and forages

Skills, Attitudes & Work Ethic of
724 Our own feed mill to formulate cattle feed

above the number
Human
Capital Refer 39
Hygienically collecting milk at our milking
Property Plant & Equipment parlours
Rs. 5,149 Mn Processing milk at our dairy plants located in

Welisara and Ambewela
Capital Work in Progress
Manufactured
Capital
Rs. 82 Mn Distributing our dairy products islandwide
by the company and through distributors
Refer 41
Lakspray Milk powder packing and

Organisational tacit knowledge &
distribution
industry capabilities Our brands
Processes & Systems
Intellectual Refer 44 Manufacturing fruit nectar at our
Capital Welisara plant
Trading segment includes distribution of Happy Cow

Energy consumption cheese, Red Bull energy drink and Dano milk powder
Water consumption
Ecological system
Natural Refer 46
Capital
OUTPUTS OUTCOMES LINKED TO STAKEHOLDER VALUES
Shareholders
Sustainable growth in shareholder returns
Return on equity
8.09 %
Net profit
Rs.1.19 Bn
Earnings per share
Rs. 29.73
Producing quality milk and related dairy products
including fresh milk, non-fat milk, flavoured milk,
yoghurt, variety of cheeses and butter
Refer 32
Customers
Providing quality products to our
consumers
Revenue generated Employees
Rs. 14,172 Mn Safe, conducive and enable working

environment with opportunities for skills and
career development
Refer 39
Government
Contributing to the Government’s tax
Employee benefits revenue and supporting the creation of an
enabling industry environment.
Rs. 1,360 Mn
Business Partners
Sustainable business growth through
rewarding, mutually-beneficial relationships
Communities
Driving meaningful change and
socioeconomic empowerment
Quality products to our Consumers
Delivering Value
Financial Capital
Our
Generating financial returns and Vision
growth for our providers of capital
To become the most desired entity
and leader in the Sri Lankan dairy
industry
Social & Relationship Capital
Transforming lives, providing
employment opportunities and
supply chain
Our
Purpose
Our primary goal is to add value to the dairy
Human Capital
industry by producing high-quality dairy
Securing employment, providing
products. We hope to contribute to the growth
benefits to our employees
of the country’s dairy industry by doing so.
This is accomplished by stimulating business
activities related to adding value to the large
quantities of milk produced, as well as by
Manufactured Capital pursuing related business prospects throughout
Enhancing our capabilities the country where we can apply our capabilities
through improved infrastructure further.
Our
Intellectual Capital Promise
Enhancing our brand value,
improving our technologies,
obtaining specialised knowledge • Earn a reputation for excellent quality products
• Generate respectable profits in our operations
• Set the benchmark in our industry for safe and
trusted quality manufacturing
• Utilise, enhance and safeguard the best
Natural Capital resources we have, to cater the increasing
Safeguarding the natural ecosystem demand
SHARED GROWTH THROUGH STAKEHOLDER ENGAGEMENT
Providers of financial capital
Shareholders, as well as financial Stakeholder Concerns Our Response

institutions such as banks, play • Profitability and performance of the • Corporate Disclosure
a crucial role by providing the entity • Dividends paid for investments
necessary financial capital for our • Proper risk management • Sustainable operations
exponential growth. • Return for the investments and risks • Investing in enhancing capability and
taken technology to develop improved
How we have engaged
• Sustainability and future growth of products
• Announcements made to CSE the business Resources needed to respond
• Annual General Meeting • Supportive business environment
• Group website
• Interim financial statements
• Publication of the Annual Report
Employees
Our workforce forms the cornerstone Stakeholder Concerns Our Response
for attaining operational excellence • Workforce transformation • Providing safe, supportive working
and objectives. conditions
• Competitive remuneration and
How we have engaged benefits packages • Including family-friendly policies
• Staff meetings • Incentives and promotions to suit • Shared values and objectives
• Discussions performance • Effective communication systems
• Training programs • Employment security throughout the organisation
• Recreational activities • Work-life balance Resources needed to respond
• Internal communication methods • Safe working conditions
• Communication boards • Information and communication
• Participation and empowerment
Customers
Our customers expect high-quality Stakeholder Concerns Our Response
products, and the Group works to • Product consistency • Providing nutritious, quality products,
adhere to industry best practices and high in taste
standards. • Products that are healthy and safe
• Re-engineering the sales and operational
How we have engaged • Price, quality, and flavour
planning to make our products available
• Value and fulfillment for money spent and easy to reach
• Corporate Website
• Social Media • Innovation of new products
• Consumer helpline • Foods safety and quality management
Resources needed to respond
SHARED GROWTH THROUGH STAKEHOLDER ENGAGEMENT
Government
National government, local and Stakeholder Concerns Our Response

provincial regulatory bodies • Interactions with city authorities • Compliance with Product and Business
provide us a supportive regulatory Regulations
• Meetings and site inspections
environment through tariffs and
• Press releases • Honouring and following all applicable
duties to stabilise the market
government and international
environment. • Prompt and full payment of taxes
regulations
• Job retention and creation
How we have engaged • Sustainable business practices based on
• Improved workplace safety open communication about results.
• Compliance
• Maintaining a healthy ecosystem Resources needed to respond
• Ethical business conduct
• Financial commitment to the
• Support when required to conduct economy
audits etc.
• Healthy competition among
businesses
Suppliers
We rely on our suppliers and service Stakeholder Concerns Our Response
providers to deliver high-quality, • Continuous expansion of operations • Best procurement practices and prompt
cost-effective goods and services that and relationships via supplier payments
inspire our growth. contacts • Concentrated Supply Chain
How we have engaged • Efficient payment cycles • Equal treatment Ethical sourcing of
• Visits to the Suppliers materials
• Meetings • Sufficient lead times
• Ethical methods of purchasing Resources needed to respond
Community and Environment

We cultivate relationships and Stakeholder Concerns Our Response
serve as a channel for better • Being a socially responsible • Continued commitment to a cleaner
understanding community needs organisation environment
and interests. This enables us to
• Community development • Responsible environmental business
contribute to the transformation,
• Employment opportunities practices and ethical emissions
enterprise development.
• Ethical business conduct • Assistance with social infrastructure
How we have engaged
• Providing graduate and undergraduate
• Advertisements students in agriculture with training
• Press releases opportunities.
• Sustained CSR initiatives Resources needed to respond
EXTERNAL ENVIRONMENT
Global Environment
GDP growth (Annual %)
The year 2022 witnessed a notable slowdown in the global economy, marked by %
a growth of 3.4% compared to the robust 6.1% growth achieved in the previous 10
7.3
8
6.1
5.3
year, 2021. This was primarily due to the rising inflationary pressures experienced 6
4.4
3.5
3.4
worldwide, leading to a widespread cost-of-living crisis, to which Central Banks 4
3
responded via the implementation of contractionary monetary policies. The global 2
0
economic activity was further compounded by the Russia-Ukraine conflict and a -2
resurgence of COVID-19 cases in China, thereby amplifying pre-existing adversity -4
-3.1
prevalent within the global economy. -6
-8
Asia -7.8
-10
The first quarter of 2023 exhibited signs of recovery in some regions, supported by
Gloobal
economy
Emerging and
Developing
Sri Lanka
factors including increased vaccination rates and government stimulus measures.
However, the growth projection for the rest of the year and 2024 remains low, owing
to challenges arising from supply chain disruptions and inflationary pressures, which
continue to pose risks to the economic outlook (World Economic Forum, Chief
Economists Outlook 2023). 2021 2022 2023 EST
Operating Environment Snapshot of the 2022 Socioeconomic Crisis

The year 2022 witnessed a notable
slowdown in the global economy, marked • Low GDP growth over an extended • Shortage of essential goods
by a growth of 3.4% compared to the period • Decreased tax revenue
robust 6.1% growth achieved in the
• Rating downgrades and limited • Unsustainable public debt
previous year, 2021. This was primarily
access to foreign financing
due to the rising inflationary pressures • Rising global food and energy prices
experienced worldwide, leading to • High inflation and destabilized
• Power shortages, fuel and gas scarcity
a widespread cost-of-living crisis, to inflation expectations
• Increased social unrest and political
which Central Banks responded via • Expanded monetary financing
instability
the implementation of contractionary • Near-zero level of usable official
• Ban on non-organic fertiliser imports
monetary policies. The global economic reserves
activity was further compounded • Decline in tourism and remittance
• Significant increase in poverty line
by the Russia-Ukraine conflict and a earnings
adjusted for inflation
resurgence of COVID-19 cases in China, • Exchange rate misalignment
• Liquidity pressures in domestic and
thereby amplifying pre-existing adversity
foreign exchange markets
prevalent within the global economy.
Source: Central Bank of Sri Lanka, Annual Report 2022

Despite the absence of direct pandemic-
related disruptions, Sri Lanka encountered Finance implemented corrective policy measures to stabilise the economy, address fiscal
various challenges during year under imbalances, and combat unsustainable levels of public debt.
review, encompassing wide-ranging
macroeconomic pressures and shortages Sri Lankan Dairy Industry
of fuel and essential commodities. The In 2022, the livestock sector of country encountered significant hurdles due to
country’s external financing position led the prevailing economic crisis, with impacts particularly within the dairy industry,.
to a debt standstill and hindered access to Challenges such as the scarcity and high cost of animal feeds, limited importation of
foreign exchange liquidity. feeds, unavailability of necessary chemical fertilizers for pasture and fodder cultivation,
and difficulties in storage and transportation facilities posed a severe impact across the
Social unrest and political uncertainty entire dairy value chain.
further exacerbated economic turmoil,
resulting in balance of payment pressures, According to estimates from the Department of Census and Statistics (DCS), total
high inflation, and subdued economic national milk production experienced a year-on-year decline of 1.3%, amounting to 506
activity. The Central Bank and Ministry of million litres in 2022 in comparison to the output of 513 million litres recorded in 2021.
Milk production from cows witnessed a similar downward trend, decreasing by 1.5%
Exchange Rate Performance
to reach 419 million litres. Moreover, there was a notable increase in the average cost
During the financial year, Sri Lanka
of milk production from cows during the same period. Despite these challenges, the
experienced a notable trend of
increased demand for liquid milk, coupled with shortages in imported and domestic
increasing foreign currency exchange
milk powder and a significant rise in milk powder prices, led to relatively higher prices
rates. During the period under review,
for locally produced liquid milk in both formal and informal milk markets. As a result, the
highest exchange rate recorded
average farm gate price of a litre of cow milk experienced a substantial increase of 17.3%,
for the US Dollar was in May 2022,
rising from Rs. 98.00 in 2021 to Rs. 115.00 in 2022. (Central Bank Annual Report, 2022).
reaching 377.50 LKR/USD. In contrast,
the lowest rate was observed in
Key Macroeconomic Variables that April 2022, standing at 299.49 LKR/
GDP Growth Rate
affected the group USD. These fluctuations in exchange
GDP Growth %
6 rates reflect the dynamic nature of
In 2022, the Sri Lankan economy 3.5 the foreign currency market and its
4
2.3
experienced a notable contraction, with impact on the country’s economy.

2
a decline of 7.8% in GDP at constant
0
(2015) market prices in contrast to the Exchange Rates
-0.2
-2
3.5% growth recorded in the previous -4
-3.1
USD/LKR
year. -6 390
-4.6
-8 370
2022 -7.8
The agriculture sector contracted -10 350

by 4.6% due to the import ban on
2018
2019
2020
2021
2023 EST
330
chemical fertilisers, supply chain
disruptions, and rising raw material 310
costs. The industry sector experienced a 290
significant contraction of 16.0% owing 270
to the adverse impact on construction and manufacturing activities following the 250
cessation of public sector projects, raw material shortages, and increased input
Apr 22
May 22
Jun 22
Jul 22
Aug2 2
Sep 22
Oct 22
Nov 22
Dec 22
Jan 23
Feb 23
Mar 23
costs. Additionally, the services sector recorded a contraction of 2.0% attributed to
reduced trade, financial services, and real estate activities. These challenges were
further amplified by tighter monetary policies and the energy crisis, which further Buy Rate Sell Rate
augmented the economic pressures faced by the nation.
A number of factors contributed
to the increase in USD TT buying
Inflation According to the IMF, global inflation rates in Sri Lanka. Subsequent to
increased to 8.8% in 2022 due to various the economic crisis, the shortage of
Inflation - NCPI Headline year-on-year factors such as the monetary and fiscal foreign exchange created constraints
% policy response to the pandemic, with respect to imports. Furthermore,
80
commodity shortages, supply chain the Sri Lankan Rupee depreciated
70
60
disruptions, capacity limitations, and the significantly against the USD in the
50 Russia-Ukraine War. recent months, thereby increasing the
40 cost of purchasing USD. The demand
30 In Sri Lanka, headline and core inflation for USD further increased in Sri Lanka
20 also saw a significant rise during the due to individuals striving to protect
10 year. This was attributed to reduced their savings against the depreciation
0 agricultural production, price hikes in of the Sri Lankan Rupee.
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
food, energy, and transport sectors,

currency depreciation, aggregate As at June 28th, 2023, the middle rate
2022/23 2021/22 demand pressures, and vulnerabilities of the USD/LKR spot exchange rate
from global sources. However, inflation stood at Rs. 308.83.
Year-on-year headline inflation, as gradually slowed down in the second
measured by the NCPI, increased to half of the year, as a significant portion
49.2% in March 2023, compared to of the inflation was driven by a one-off
33.8% in April 2022. currency adjustment in the early part of
the financial year.
Key Fiscal Policy Measures Domestic Interest Rates Average Weighted Prime Lending Rate
Implemented during 2022 and During the year 2022, the Central (Monthly average)
early 2023 Bank of Sri Lanka (CBSL) adopted a %
contractionary monetary policy stance 30
• The Surcharge Tax Act, No. 14 of 2022, to address rising inflation, external 25
which was enacted on April 8th, 2022, sector vulnerabilities, and the risk of a 20
imposes a one-time surcharge tax of prolonged economic downturn. This
15
25% on individuals, partnerships, and was reflected in the increase of the
companies whose taxable income 10
Average Weighted Prime Lending Rate
exceeds Rs. 2 billion for the tax (AWPLR) from 9.85% in first week of 5
assessment year starting from April April 2022 to 23.45% in first week of 0
1st, 2020, as calculated under the March 2023 and 21.40% during the
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
provisions of the Inland Revenue Act, week ended 31st March 2023.
No. 24 of 2017.
The CBSL’s objective was to tighten monetary conditions and curb inflationary
• Starting from June 1st, 2022, the Value
pressures in order to maintain stability and promote sustainable economic growth.
Added Tax (VAT) rate on the supply of
goods and services was raised from
Sri Lanka witnessed a rise in interest rates, particularly in the first half of the year,
8% to 12%.
due to factors such as uncertainty in domestic debt restructuring and liquidity
• Commencing from September 1st, shortages. The Central Bank of Sri Lanka responded by increasing the Standing
2022, the Value Added Tax (VAT) rate Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by 700
on the supply of goods and services basis points in April 2022, followed by additional adjustments in July 2022 and
increased from 12% to 15%. March 2023 to align with the IMF’s Extended Fund Facility (EFF) arrangement.
• The Social Security Contribution Levy The Statutory Reserve Ratio remained unchanged at 4% throughout the year.
Act, No. 25 of 2022 was implemented Regulatory measures were additionally implemented to tighten monetary
on October 1st, 2022. It imposes conditions, such as removing maximum interest rates on certain lending products
a 2.5% levy on the turnover of and foreign currency deposits, contributing to inflation containment. Towards
importers, manufacturers, service the end of the fiscal year, improved liquidity was observed as government debt
providers, wholesalers, and retailers financing requirements decreased.
with an annual turnover exceeding Rs.
120 million.
Impact to our operations
• The standard corporate income tax We encountered supply chain challenges due to import restrictions and the exchange
rate has been increased from 24 crisis that prevailed during the year under review. Despite these obstacles, we have
percent to 30 percent, effective from effectively managed to meet our requirements. However, a notable impact was observed
October 1st, 2022. Additionally, the as there was a significant increase in the cost of input materials, particularly in animal
concessionary rates for corporate feeds, veterinary drugs, and other raw and packing materials. This increase in input costs
income tax have been eliminated, also added further pressure to the industry, requiring careful management and adaptation to
effective from October 1st, 2022. ensure the continued operation and fulfillment of market demands.
• Removal of the expenditure relief
of Rs. 1.2 million per annum in the
calculation of taxable income for
personal income tax.
• The tax rates range for personal
income tax was revised from 6 percent
- 18 percent to 6 percent - 36 percent.
• Employers are now mandated to
deduct Advance Personal Income Tax
(APIT) from employees, regardless of
their consent, starting from January
1st, 2023.
Revenue Growth
Financial Capital
14,172
Mn. %
Generating financial returns and 16,000 50
growth for our providers of capital 14,000
9,772
40
12,000
30
7,597
10,000
6,705
8,000 20
5,386
The Group's unwavering focus lies in optimising cost management, proactively 6,000 10
managing working capital, and fostering strategic agility. These endeavours aim 4,000
2,000 0
to nurture the Group's profitability and ensure the preservation of its financial
capital while maximising shareholder value. 0 -10
2018/19
2019/20
2020/21
2021/22
2022/23
Our dedication to sustainable operations drives the delivery of consistent
financial returns in both the short and long term, empowering us to cultivate
resilience and extend positive contributions to our stakeholders and the broader Revenue
Revenue Growth % y-o-y
society.
Highlights
Operating Profit
The LMF Group achieved an unparalleled consolidated revenue of Rs. 14,172 million
for the reporting year against Rs. 9,772 million in the previous year. The achievement Movements in Operating Profit
indicates the management's proactive stance in adapting strategies to tackle challenges
Mn. %
in the operating environment. The Group recorded a net profit of Rs. 1,189 million after 2,800 18
tax, and Rs. 199.99 million was paid as an interim dividend for the financial year. 16
2,400
14
2,000 12
Revenue
Group Revenue Composition
1,173
The LMF Group achieved a consolidated 1,600 10
% 1,200 8
877
revenue growth of 45% to Rs. 14,172
64%
678
63%
70 6
800
511
million for the year under review, 4

60
supported by the liquid milk and 400 2
88
50
agriculture segments. Growth in the liquid 0 0
milk segment replicated the increased 40
2018/19
2019/20
2020/21
2021/22
2022/23
volume growth in the Ambewela market 30

16%
14%
20
13%
share as well as the Maximum Retail Price

12%
9%
9%
(MRP) adjustments Group was compelled 10 Operating Proﬁt

to adopt. Accordingly, the liquid milk 0 Operating Margin
Liquid Milk
and Other
Powdered
Milk
Agriculture
Trading
sector’s contribution to Group revenue

increased by Rs. 4,028 million. At the same
time, the redistribution of Happy Cow
cheese and the Red Bull energy drink
enhanced revenue by Rs. 270 million. 2021/22
2022/23
Rs. 14,172 Mn Rs. 1,173 Mn Rs. 1,189 Mn Rs. 199.99 Mn

Revenue Profit from Profit After Tax Dividend Paid
Operations
The consolidated gross profit for the Group Assets and Asset Composition Shareholder Returns
reporting year increased to Rs. 1,779 The Group continues to record consistent
Rs. %
million, while the gross profit margin asset growth reflecting the ongoing 40 45
recorded a decrease compared to the investment in PPE and other investments. 35 40
previous year. The Group performed well The Group’s total assets as at 31st March 30 35
25 30
at an operating profit level, recording 2023 reported an increase of 26% to 20 25
a growth of Rs. 495 million to Rs. 1,173 reach Rs. 21 billion, with the agriculture 15
10 20
million. The milk powder sector and segment recording a growth of 50% in 15
5
trading sector recorded positive results assets. Total capital expenditure for the 0 10
and served as the main contributors to year amounted to Rs. 4,414 million, mainly -5 5
growth in operating profits. Despite the comprising investments in the new dairy -10 0
2018/19
2019/20
2020/21
2021/22
2022/23
price adjustments, the liquid milk and farm.
other sectors' operating profits decreased
compared to the prior year. The Group’s asset composition remained
relatively unchanged, with non-current EPS
DPS
Profit After Tax assets accounting for 80% of total assets
Dividend Payout Ratio %
The Group’s net finance income decreased as of the end of 31st March 2023.
to Rs. 89 million (2021/22: Rs. 420 million)
due to the increased finance expenses Despite the turbulent operating
Asset Strength environment, the Group's Earnings per
during the year. The interest on long-term
Mn. Share displayed an 12 % increase, rising
6,422
borrowings and overdrafts increased to Rs. 30,000

1,054 million. The improved performance to Rs. 29.73 compared to Rs. 26.63 in
5,300
25,000 the preceding year. During the year,

enabled the Group to record a pre-
3,235
20,000 the Company distributed a first interim

2,541
tax profit of Rs. 1,262 million, thereby

21,126
dividend of Rs. 5.00 per share, resulting

1,760
achieving a 15% growth compared to 15,000

16,733
in a total dividend payout of Rs. 199.99

14,501
last year. The Group’s total annual tax

10,000
12,954
amounted to Rs. 73 million, stemming million.

10,617
from the increased income tax rates. 5,000

0 LMF’s shares traded between the lowest
Resultantly, the bottom-line consolidated
price of Rs. 90.00 and the highest price of
profit after tax improved by 11.7% to Rs.
2018/19
2019/20
2020/21
2021/22
2022/23
Rs.. 175.00. The last traded price on 31st

1,189 million during the year.
March 2023 was Rs. 140.75.
Total Assets
Movements in Profit After Tax Total Liabilities
Mn. %
1,189
1,400 12
Funding Profile
1,065
1,200
The total borrowings demonstrated
1,000 8
842
an increase of 55% to Rs. 3,306 million

800
600 4 (2021/22: Rs.2,129 million), Debt-funded
capacity expansions in recent years have
291
400
led to increased exposure to borrowings.
-127
200 0
0 The total equity amounted to Rs. 14.7
-200 -4 billion (2021/22: Rs. 11.4 million),
accounting for 70% of the total assets.
2018/19
2019/20
2020/21
2021/22
2022/23
Proﬁt After Tax

NP Margin
Company Wise Performance 2022/23
Lanka Milk Foods (CWE) PLC Lanka Dairies (Pvt) Ltd
Lanka Milk Foods (CWE) PLC Lanka Milk Foods (CWE) PLC (LMF) Lanka Dairies (Pvt) Ltd
Revenue and Profit operates within the food and Revenue and Profit
beverages sector, with a primary
7,605
Rs.Mn
Rs.Mn focus on importing, packaging, 8,000
5,000
4,072
marketing, and distributing full cream 7,000

3,424
4,979
4,000 milk powder. In the past year, LMF’s 6,000
3,101
powdered milk segment together 5,000

3,000
3,152
with trading segment achieved an 4,000
1,521
2,000 impressive growth, with profit margins 3,000

rising from Rs. 467 million to Rs. 1,521 2,000
523
1,000
621
561
528
467
405
332
1,000
364
270
293
million and a notable revenue increase

-249
0 of 19%. 0
2020/21 2021/22 2022/23
2020/21 2021/22 2022/23
Revenue Revenue
Profit From Operations Profit From Operations
Profit After Tax Profit After Tax
Founded in 1996 as a wholly owned

Ambewela Products (Private) Limited subsidiary of LMF, Lanka Dairies (Pvt)
Ltd (LDL) specialises in producing and
Ambewela Products (Pvt) Ltd In the fiscal year that ended on March
packaging fresh milk, flavoured milk,
Revenue and Profit 31, 2023, APL achieved a significant
and fruit juices, utilising Tetra Pak ®
increase in revenue with the MRP
Rs.Mn technology.
4,195
4,500 increase in Ambewela Yoghurt,

4,000 reaching Rs. 4,195 million compared
During the financial year that
3,500 to the previous year’s Rs. 2,793 million.
2,793
concluded on March 31, 2023,

3,000 However, the company’s net profits
2,183
2,500 Lanka Dairies (Pvt) Ltd experienced

experienced a decline from the
2,000 outstanding growth with respect to
previous year’s Rs. 336 million to Rs. 41
1,500 its revenue performance, reaching
1,000 million. This drop in profit is primarily
Rs. 7.6 billion compared to the
350
336
306
311
500 attributable to the various challenges

previous year’s Rs. 4.98 billion. As a
94
41
0 faced by the company, particularly in

prominent market leader in fresh
2020/21 2021/22 2022/23 regard to the substantial 237% rise
milk and renowned in Sri Lanka,
in the cost of feed and the increase
Revenue Ambewela Fresh Milk 1 Litre Pack
Profit From Operations in the cost of fuel, raw materials
contributed significantly towards the
Profit After Tax and packaging material in yoghurt
surge in sales. LDL’s profit for the year
production.
Ambewela Products (Private) Limited amounted to Rs. 405 million, marking
(APL) was established in the year 2006 a decrease from the Rs. 528 million
Despite the constraints, the Ambewela
and has fast become renowned among profits earned in the preceding year,
cheese and butter segments displayed
the public for its diverse range of dairy driven by higher expenses for raw and
improved results primarily due to their
products, including Ambewela Set packing materials and increased fuel
reputation for a rich and exquisite
Yoghurt 80 ml, Ambewela flavoured costs.
taste, contributing to their resilience
and fresh milk pouch packs, Ambewela
during challenging times. Looking
cheese, ghee, butter, and frozen fat.
Additionally, APL operates a feed mill to ahead, the Group aims to enhance its
produce feed for their dairy farms while product offerings in the future further.
supplying fresh milk to Lanka Dairies
(Pvt) Ltd.
Ambewela Livestock Company Limited and Pattipola Livestock Company Limited United Dairies Lanka (Private) Limited
Ambewela Livestock Company Limited reaching performances of Rs. 161 United Dairies Lanka (Pvt) Ltd was
Revenue and Profit million and Rs. 495 million, respectively. strategically developed to expand
Rs.Mn These results were primarily due to our herd and meet the anticipated
459
500 the shift in milk production to United surge in fresh milk demand, leading
391
400 Dairies Lanka Company (Private) to a total investment of Rs. 4.8 billion.
Limited. Despite the decline in This ambitious venture includes
300 cutting-edge cattle sheds and state-
performance exhibited during the year,
161
200 of-the-art milking parlours at both

we remain committed to maintaining
the Ambewela Farm and Pattipola
100 the highest standards and strive
38
Farm locations. By prioritising the

11
12
0 towards excellence in milk production

6
cows’ comfort, employing advanced

across all our farms.
-16
-100 dairy management techniques,

2020/21 2021/22 2022/23 offering premium feed, and ensuring
Pattipola Livestock Company Limited specialised veterinary care, the
Revenue company aims to boost its milk output
Profit From Operations Revenue and Profit
by up to 32 litres per cow per day. The
Profit After Tax Rs.Mn
dairy farms primarily raise black and
649
700
At Ambewela Dairy Farm and Pattipola 600 white Friesians and brown and white
495
Dairy Farm (New Zealand Farm), we Ayrshires, European breeds renowned

433
500
maintain the highest standards of 400 for their exceptional milk production,
hygiene to ensure the production of 300 averaging approximately 30 litres per
200 cow per day in Sri Lanka.
114
top-quality milk. During the financial

100
74
24
year, we shifted milk production to the

8
0
3
Qualified veterinary surgeons

United Dairies Farm, developing the -100
-16
currently reside on farms to ensure

Ambewela and Pattipola farms into -200
2020/21 2021/22 2022/23 round-the-clock veterinary care.
efficient heifer-rearing units. This ambitious project is poised to
Revenue significantly contribute to the nation’s
Maintaining the health and well-being Profit From Operations milk industry while generating
of our herd is of utmost importance to Profit After Tax substantial profits. Moreover, it is
ensure we sustain our high milk rate expected to substantially reduce
of production. In order to achieve this Pattipola Livestock Company Ltd, the country’s reliance on importing
objective, we supply the herd with also known as New Zealand Farm, is a powdered milk with the production
premium-quality cattle feed, which popular tourist destination, attracting of high-quality, locally sourced milk.
incurred a significant expense during over 10,000 visitors daily during peak Pattipola farm extension of UDL is
the period under review due to the seasons. Its renowned Ambewela open for visitors of New Zealand
Gouda Cheese and Ambewela Farm to provide a tour of our modern
scarcity of certain feed ingredients and
Cottage Cheese are made from milk milking parlour and premises.
fluctuations in foreign exchange rates.
As a result, the feed costs across all originating from the farm and have
During the year under review, the
farms spiked significantly during the gained popularity among both locals
company achieved a total revenue of
year. However, proficient management and foreign visitors. Additionally, Rs. 2 billion. However, the significant
processes and strategies at each farm the meticulously maintained dairy increase in feed costs and interest
and implementing cost-reduction farms offer valuable educational costs resulted in the company
strategies have positioned us to remain opportunities for agricultural and incurring a loss of Rs. 819 million.
steadfast and effectively tackle future veterinary students from various
challenges. universities, providing hands-on
experiences in the dairy industry Indo Lanka Exports (Private) Limited
The Ambewela Livestock Company and agricultural practices. The farm
and Pattipola Livestock Company takes pride in its dual role as a tourist Indo Lanka Exports (Private) Limited
witnessed declines in revenue attraction and a contributor towards was founded in 2009. At present, the
compared to the preceding year, educational development in the field. company is inactive.
Social & Relationship Capital Enhancing Customer Engagement:

Delivering Quality and Responsibility
Transforming lives, providing Relevant SDGs:
employment opportunities and
supply chain
At Lanka Milk Foods, we deeply value

our customers and therefore consistently
engage with them to gain valuable
insights into their needs and preferences
and obtain feedback in order to identify
any causes for concern, and take any
corrective action where required. Through
these interactions, we continually
enhance our products and services to
not only meet but exceed customer
expectations across the entirety of our
operations. By prioritising personalised
experiences, fostering open lines of
communication, and upholding a
steadfast commitment to quality, we
cultivate enduring trust and loyalty with
Fostering Meaningful Connections Beyond our immediate stakeholders, our esteemed customer base.
At Lanka Milk Foods, we consistently we recognise the significance of actively
seek to nurture strong and meaningful engaging with the wider community. We Quality and product responsibility lie
relationships with our customers, embrace our responsibility as a socially at the forefront of our customer-centric
suppliers, and the wider community. responsible brand by supporting local approach. We understand that our
These partnerships form the bedrock of initiatives, championing sustainable customers expect nothing less than the
our social and relationship capital, playing practices, and investing in community finest quality in terms of the products
a vital role in our success as a people- development programmes, with the they consume, and in this respect we
centric organisation. We understand that overarching purpose of creating a positive remain dedicated towards meeting and
our achievements extend beyond our and lasting impact on the lives of the surpassing industry best practices and
products and operations and are deeply people we serve. By actively contributing standards. Equipped with our state-of-
intertwined with the bonds we cultivate to the well-being of our community, we the-art modern manufacturing facilities,
with those around us. build stronger bonds and create a brighter we possess the requisite capability to
future, together. produce goods that adhere to the highest
Our suppliers play a pivotal role in our quality benchmarks, on par with world-
supply chain, and we therefore foster At Lanka Milk Foods, we firmly believe class dairy standards and practices. Our
collaborative partnerships based on that our social and relationship capital stringent quality control processes and
mutual respect, transparency, and is integral to our identity and long-term comprehensive quality management
shared goals. Working hand in hand prosperity. We are committed to fostering system are aligned with industry
with our suppliers, we ensure a reliable genuine partnerships that drive our guidelines and certified under the ISO
and sustainable flow of high-quality performance, maintain our reputation as 22000 Food Safety Management System
ingredients and materials, which in turn a socially responsible brand, and create since 2018.
enable us to deliver excellence across our shared value for all. By embracing the
wide-ranging product portfolio. Together, power of human connection, we continue By integrating quality and responsibility
we strive for growth, innovation, and to build a sustainable and thriving into every aspect of our operations,
shared success, in order to strengthen the ecosystem that benefits our customers, we ensure that our customers receive
foundation of our supply ecosystem. suppliers, and the communities we serve. products of exceptional quality, safety,
and sustainability. We continuously strive sanitation practices. To maintain hygiene ensures business stability, fosters
to improve our manufacturing processes, and cleanliness, we manage our own sustainable supply chain management,
embracing the latest advancements and laundry, water purification, and janitorial and allows us to achieve our goals in an
innovations in the industry to maintain services. Our farms adhere to international ethical and equitable manner. Together
the highest standards of excellence. cattle rearing practices, specifically with with our suppliers, we strive to uphold
Through our unwavering commitment respect to our Ayrshire and Friesian cows, our commitment to sustainability and
to quality, we not only meet regulatory which are renowned for their high milk excellence throughout our supply chain.
requirements but also venture above production capabilities.
and beyond pre-existing standards Building Sustainable Communities:
to safeguard the well-being of our Professional agriculturalists and Empowering Lives and Fostering Growth
customers. veterinarians closely monitor all aspects
of our herds, commencing from their
Lanka Milk Foods prioritises customer health to their nutrition in order to ensure
satisfaction by actively listening to their ongoing welfare. Our packaging
feedback, fostering strong relationships, facilities are equipped with state-of-the-
and delivering exceptional quality and art systems to ensure optimal hygiene Embracing the belief that a sustainable
responsibility. Our goal is to exceed levels. Furthermore, we take pride in community thrives via the harmonious
customer expectations and become manufacturing products that promote balance of a healthy environment, a
the trusted choice for premium dairy health and wellness, by offering low-fat thriving economy, and a vibrant civic
products. options to cater to the needs of health- life, we are committed to operating in
conscious consumers. By encouraging the a manner that uplifts and empowers
Product Responsibility Systems & right choices within the general public, the local communities that surround us.
Regulations: we aim to combat the rising prevalence Recognising our role as a responsible
of non-communicable diseases and guide entity, we engage closely with community
future generations towards a path of members, supporting their religious,
better nutrition and well-being. cultural, and social activities, and
cultivating long-term relationships.
Building Sustainable Partnerships:
Responsible Supplier Management With a focus on youth education and
development, we have opened our
doors to educate and inspire the next
generation on the importance of nutrition
and well-being. Through educational tours
Consumer Affairs Authority Act No. 9 of and structured programmes, students
2003 As we continue to enhance our from schools and higher education
commitment to responsible sourcing, our institutions gain first-hand knowledge
Food Act No. 26 of 1980 suppliers play a crucial role in our journey of our manufacturing processes, while
towards delivering goods that meet the supporting the government's drive
Food Labelling and Advertising highest standards. We employ a rigorous towards national self-sufficiency in dairy
Regulations of 2005 supplier screening process to ensure the production.
procurement of top-quality raw materials
Nurturing Quality and Responsibility at competitive prices. Beyond quality, we However, our commitment to community
We continue to focus on maintaining also evaluate our suppliers' social and engagement extends beyond education
responsible packaging and labelling in environmental practices, holding them and awareness building. As a socially
accordance with relevant regulations accountable to industry best practices. responsible entity, we further strive to
and consumer protection laws. Our contribute towards social, health, and
dedicated Quality Assurance Division To foster long-term partnerships, we educational causes, with the aim of
ensures comprehensive control over conduct regular site visits and maintain improving the living standards of those
product quality, while upholding high open lines of communication with our residing near our factories. Furthermore,
standards in environmental, hygiene, and suppliers. This proactive engagement our farms serve as agricultural and
dairy universities, providing students

with practical insights into farming and
supporting their studies in agriculture.
As we continue to evolve our community

engagement processes, we take pride in
our reputation as an organisation that
delivers value and service to all segments
of society. Through our continuous
contributions and commitment to
social responsibility, we aim to create
an enduring positive transformation
within our sphere of influence, and
foster sustainable growth within our
communities.
Driving Positive Change: Our Commitment to Community and CSR Practices
Promoting Unity Nourishing Promoting Supporting the

and Inclusivity Young Lives school trips underprivileged
The Company promotes The Company has The Company currently The Company provides
cultural diversity and continued its long- provides complimentary free refreshments and
community engagement standing commitment refreshments and nourishment to residents
by organising events to promoting the nourishment to residents of welfare homes for the
that unite people from health and well-being of welfare homes for the aged and underprivileged,
different backgrounds. As of underprivileged aged and underprivileged, generously donating
part of our commitment schoolchildren by making generous rations of milk
to inclusivity, we distribute providing them with donations of milk powder powder. Additionally,
free milk to devotees of nutritious milk and milk- rations. Moreover, we underprivileged children
all faiths during religious based products. This offer underprivileged are granted free entrance
occasions at various places practice has positively children the opportunity facilities for farm visits,
of worship, fostering unity impacted generations to visit our farms free of allowing them to
and respect in the local of students, ensuring charge, enabling them to experience and learn
community. they receive the essential gain firsthand experience about dairy farming first-
nourishment they need and knowledge on dairy hand.
for their growth and farming.
development.
Human Capital Employee Well-being

and Benefits
Securing employment, providing
benefits to our employees • Compliance with labour
regulations, ensuring a committed
workforce
At Lanka Milk Foods, we are dedicated to create a positive work culture • Emphasis on cleanliness,
that prioritises job satisfaction and fosters continuous improvement. Our productivity, and orderly work
employees lie at the heart of our success, driving us towards reaching environment
our goals and objectives. We take pride in our commitment to diversity • Implementation of occupational
and providing equal opportunities to every employee. Through our health and safety procedures to
structured incentive system and promotions, we recognise and honour the ensure accident-free workplace
achievements of our employees, and deeply appreciate the unwavering • Provision of insurance and
dedication and loyalty of our team extended towards fulfilling our mission. accident coverage for all
employees
2023 2022 • Fair treatment and welfare of
female employees
Male Female Male Female
• Adherence to industry-standard
Executives 89 7 77 6 safety procedures for employee
Non-Executives 405 69 377 74 meals and cleanliness
Casual/Check Roll 105 49 166 41 • Promotion of employee well-
being through indoor recreational
599 125 620 121 activities and support for external
Total 724 741 recreational pursuits
Gender Distribution in Workforce As at March 2023, our total workforce employee guidelines promote equal and
comprised 724 individuals, of which attainable health and hygiene standards.
Female 10% are employed on a contract
125 basis. Currently, the Group maintains We have implemented occupational
19% female representation in our health and safety procedures across
workforce. The majority of our all locations to maintain a year-round
employees are engaged in factory and accident-free work environment.
724
farm work, resulting in a gender ratio Precautionary measures are in place to
of approximately 4:1 (male: female), minimise workplace hazards. Additionally,
attributable to the labour-intensive nature we provide comprehensive insurance and
Male of these roles in our farmlands and factory accident coverage to all employees in
599 operations. accordance with labour standards.
Male
Female
We uphold labour regulations and
Building a Skilled Workforce prioritise the well-being of our female
At Lanka Milk Foods, we have in place a rigorous recruitment process to attract experts employees in our factories and farms.
and skilled workers from various sectors. We prioritise local recruitment, providing Fair treatment and welfare supervision
opportunities for youth in nearby farm and manufacturing areas, especially those are integral to our practices. We adhere
entering the workforce. Through specialised training programmes, we equip our to industry-standard safety protocols for
young workforce with the necessary skills to succeed in permanent positions within employee meals and cleanliness.
the company. Our goal is to nurture the next generation and prepare them for the
professional world by offering clear objectives, industry knowledge, and access to Encouraging healthy lifestyles among
cutting-edge facilities. our employees is of vital importance in
order to drive a productive and content
Employee Well-being workforce. We therefore support mental
At Lanka Milk Foods, we prioritise compliance with labour regulations to ensure a and physical well-being through indoor
dedicated workforce. Cleanliness and hygiene are an imperative, and employees recreational activities, and offer funding
are expected to maintain workplace standards for productivity and orderliness. Our for external recreational pursuits.
Employees enjoy extensive healthcare

Group Personnel Costs Revenue per Employee
benefits, including a subsidised nutritious
19,574
Rs. Mn 1,360 Rs. 000 lunch and access to company products.
1,600 20,000
1,400 Additionally, they are rewarded with cash
13,187
1,200 15,000 incentives that surpass industry standards,
10,103
1,000 such as monthly sales incentives and
812
9,133
800
7,771
800 10,000 attendance bonuses. Additional benefits
590
490
600 include leave encashment, ex gratia

400 5,000 payments, and significant holiday
200 bonuses. The company further fosters
0 0 a harmonious work environment by
2018/19
2019/20
2020/21
2021/22
2022/23
2018/19
2019/20
2020/21
2021/22
2022/23
providing regular leisure and recreational
opportunities, and nurturing camaraderie
among team members.
Excerpt from Note 8.1 to the Financial Statements - Personnel Costs Work Culture
We emphasise the importance
Personnel Costs Group Company of continuous learning and skill
2023 2022 2023 2022 development, and provide various
Rs.000’s Rs.000’s Rs.000’s Rs.000’s training opportunities to ensure employee
Defined Contribution Plan Costs -EPF and ETF 68,725 54,122 29,585 29,221 competencies and abilities are enhanced,
in order to enable career advancement
Defined Benefit Plan Cost - Retirement 42,054 19,341 15,879 10,379
and opportunities for growth. The
Benefit Obligation
Group is dedicated to investing in
Other Staff Costs 1,248,809 738,576 386,306 352,513 technical, sales, and marketing training
1,359,588 812,039 431,770 392,113 programmes, while fostering a culture of
mentorship led by our experienced senior
Total Numbers of Employees as at Year End 724 741 225 234
management team.
Average cost per employee 1,878 1,096 1,919 1,676
Workplace Health and Safety
Across its operations, the Group
Employee Engagement
prioritises employee safety and well-
Lanka Milk Foods places a strong emphasis on employee engagement and motivation.
being, aiming to foster a hazard-free
The company positively impacts the surrounding communities by providing the local
workplace that is free from incidents
youth with opportunities for employment, growth and progress within a reputed
and injuries. Particularly owing to the
organisation, thereby reducing the need for migration to urban areas. The Group
Group’s machinery and laboratory-based
values its personnel, many of whom hail from rural towns and villages, and offers a
operations, worker health and safety
comprehensive range of employee benefits that promote work-life balance and foster a
are of paramount importance, and
sense of peace and cooperation among the staff.
comprehensive measures are in place
to prevent accidents and mitigate risks.
Employees are trained on safety protocols
and provided with necessary safety gear
to ensure compliance with high levels
of cleanliness and safety standards.
Maintaining cleanliness is a top priority
at all operational levels, thereby ensuring
the quality and safety of our products.
Manufactured Capital Our contribution

Enhancing our capabilities
through improved infrastructure
towards national
infrastructure
Relevant SDGs: and economic
growth expands
in line with the
development of
our manufactured
capital
financial year ended 31 March 2023

reflects the significant investments made
with the sole purpose of building our
physical resource base in order to meet
emerging consumer needs and deliver
an unmatched value proposition to our
stakeholders. Our efforts in this regard
include investments into state-of-the-art
production facilities, advanced machinery,
Lanka Milk Foods manufactured capital goal of national milk production self- and cutting-edge technologies that
comprises its physical resources, which sufficiency. By fostering value-sharing enable us to maintain our position as a
include property, plant and equipment. initiatives within communities, we leader in the industry. The continuous
The Group leverages the efficient drive national growth and solidify our expansion and improvement of our
utilisation of its manufactured capital position in the domestic market. Through manufactured capital have not only
to maintain its leadership position in these efforts, we are actively shaping a bolstered our operational efficiency
terms of innovation and adaptability. sustainable and prosperous future for the but have also contributed towards the
This strategic approach enables us to dairy industry and the entire nation. overall growth and development of the
accelerate the introduction of new dairy sector, thereby fostering economic
products to the market. The capabilities The valuation of our manufactured progress and sustainability.
and capacity developed through our capital at the conclusion of the reviewed
manufactured capital, and reinforced
by advanced technologies, enhance Gross Carrying Value Net Carrying Value
the consumption of resources, thereby As at 31st March 2023 As at 31st March 2023
leading to improved efficiency and (Rs. 000) (Rs. 000)
sustainability. Leasehold Buildings 4,589,736 4,006,202
Plant and Machinery 3,107,494 1,050,717
Furthermore, our contribution towards Equipment, Furniture and Fittings 334,252 44,877
national infrastructure and economic Other Assets 413,585 47,005
growth expands in line with the 8,445,067 5,148,801
development of our manufactured Capital Work in Progress 81,933
capital. With each passing year, we make
5,230,734
significant strides towards achieving our
PPE Composition
1%
1%
20% 1%
77%
Leasehold Buildings
Plant and Machinery
Equipment, Furniture and Fittings
For detailed information on leasehold properties as of March 31, 2023, please refer
Other Assets
to Note 12.1 in the Financial Statements on Property, Plant, and Equipment, which Capital Work in Progress
provides comprehensive details on the specific leasehold properties held by the
company, including their valuation and any relevant disclosures. This detailed overview
of the company's leasehold property portfolio serves as a valuable resource for further As a result of the pack’s paper-based
understanding our assets and their contribution towards the overall financial position of material composition, Tetra Pak® cartons
the organisation. are lightweight, easy to carry, and
100% recyclable. Without the use of
Location Extent Building No of Cost of the preservatives, the aseptic technique
(Hectares) (Square feet) Buildings Building permits the goods within to remain fresh
Welisara 3.275 140,800 3 434,416 for longer. Additionally, the package does
Ambewela 458.47 139 488,757 not require refrigeration until it is opened.
923,173
More than 75% of the weight of a Tetra
Pak® carton is made up of paperboard,
Enhancing Dairy Farm Capacities: United commenced commercial operations
which is in turn formulated using wood.
Dairies Lanka’s Expansion in April 2022, while the Pattipola farm
In order to produce paperboard, all wood
United Dairies Lanka (Pvt) Ltd was became operational in September 2022,
fibre is obtained from forests that have
meticulously constructed with the as per the revised plan.
been independently verified to adhere to
foresight of meeting the growing
sustainable forest management principles.
demand for fresh milk and surpassing Pioneering Sustainable Packaging for a
a total investment of Rs. 4.8 billion. Fresh and Wholesome Dairy Supply
This remarkable venture encompasses The Group continues to uphold its
two state-of-the-art cattle sheds and commitment to deliver safe, hygienic
cutting-edge milking parlours at both and wholesome food items to the
the Ambewela Farm and Pattipola Farm health-focused customer, by working
locations. closely with Tetra Pak®, the world’s
leading food processing and packaging
To ensure the utmost comfort for our solutions company. We are pleased to
herd, we have implemented cutting- hold the distinction of being the first UHT
edge dairy management techniques, manufacturer in Sri Lanka to implement
provided premium feed, and delivered this world-renowned technology.
specialised veterinary care. These
measures are designed to maximise milk
output, targeting a capacity enhancement
of up to 35 litres per cow per day. The
Ambewela cattle farm successfully
President on an observation tour of the Ambewela Farm

Intellectual Capital
Enhancing our brand value, improving
Our intellectual
our technologies, obtaining specialised
knowledge
capital is
a forward-thinking organisation, we are
instrumental
Relevant SDGs:
committed to continuously enhancing
and expanding our intellectual capital.
in shaping
LMF’s investments to enhance our unique
positioning
its intellectual capital span areas
The intellectual capital of an organisation including research and development,
plays a crucial role in driving revenue and innovation, human resources, and
maintaining a competitive advantage.
At Lanka Milk Foods, we recognise the
external partnerships, and are key
towards gaining an edge in an intensely
and
value of our collective understanding
and unmatched expertise, which is
competitive market. It fosters a strong
relationship between the company and capabilities.
derived from our systems, processes, its stakeholders and contributes towards
and knowledge. Our intellectual capital sustainable growth and the creation of
is instrumental in shaping our unique long-term shareholder value through the
positioning and capabilities. Therefore, as strategic alignment of resources.
Harnessing Innovation and Technological

Trusted Brands:
Knowledge & Expertise: Advancement:
Delivering Excellence Advancing through Experience Driving Excellence in Dairy

and Value and Talent Manufacturing
Trusted Brands: Delivering Excellence and Value

Innovation and Technological

Advancement: Driving Excellence in Dairy
Manufacturing
Lanka Milk Foods embraces innovation and
technological advancement as key drivers
of our success. In a bid to remain at the
forefront of the industry and meet evolving
consumer preferences, each of our
plants features a dedicated Research and
Development (R&D) unit equipped with
state-of-the-art laboratory facilities. Our
highly skilled personnel work diligently to
maintain the highest standards of quality,
hygiene, and safety.
At our manufacturing locations in

Welisara and Ambewela, we have
invested in sophisticated manufacturing
technology and the latest machinery to
meet the demands of our UHT packaging
Our Group's renowned brands are the consumer needs amid a rapidly evolving requirements. Additionally, our new dairy
cornerstone of our business, enabling us market. project incorporates cutting-edge dairy
to provide a unique value proposition, technology, including modern cattle sheds
while establishing a solid reputation for As we move forward, our trusted brands with environmental control systems to
trust and quality among our customers will remain at the core of our business enhance the comfort and health of our
and the general public. With a rich history strategy, driving innovation, customer herd, as well as automated slurry removal
spanning over 50 years, our well-known loyalty, and continued success. and floor cleaning systems.
brands such as Lakspray and Ambewela
have captured the hearts of consumers Harnessing Knowledge & Expertise: We have implemented digitally controlled
across the island, offering a diverse range Advancing through Experience and Talent milking parlours that accurately record
of flavourful and wholesome products. As a pioneer in the local dairy industry, each cow's milk quantity and identify
our industry-specific experience and any health issues such as mastitis or
By leveraging the strength of our trusted knowledge span over 50 years. To early lactation. This enables us to divert
brands, we continue to drive growth and safeguard the quality of our products, and collect milk separately, ensuring the
create value, supported by our strategic we recognise the utmost importance of highest quality standards are maintained.
marketing efforts and a commitment to livestock management and their well- Our slurry processing system efficiently
customer satisfaction. Our recent pack being. In view of this, our dairy companies separates the dry matter, which is
design revamp reflects our dedication have taken proactive measures by then utilised as bio-fertilizer for the
towards meeting evolving customer enlisting the expertise of a specialised liquid dispersed over the farm fields.
preferences and delivering a compelling nutritionist. Through their efforts, This mechanism ensures principles of
product portfolio representing quality and we develop the highest standards in sustainability are entrenched into our
wholesome goodness. nutritional feed additives for our cattle. operations.
A dedicated team of resident veterinary
In addition to our successful offerings in surgeons provide constant care and As a Group, we are committed to delivering
flavoured milk under Daily and Ambewela ensure the availability of veterinary the best to our loyal customers by
brands and the popular Ambewela set services at every stage. incorporating technology and innovation
yogurt and My Juicee fruit drinks, we have in a sustainable manner. We understand
expanded our product range with the This unwavering commitment to the importance of remaining relevant and
introduction of Dano instant milk powder knowledge, expertise, and the welfare progressive in an ever-changing market,
and the distribution of Happy Cow cheese. of our livestock drives our continuous and our investment in R&D and advanced
These additions serve to further diversify pursuit of excellence in delivering high- manufacturing processes reflects our
our portfolio and cater to a wide range of quality dairy products to our valued dedication to providing high-quality dairy
customers. products aligned with the needs of the
present and the future.
Nature, with its

Natural Capital intricate workings
Safeguarding the natural ecosystem
and invaluable
ecosystem services,
Relevant SDGs: released into the environment. This is the ultimate
economist. As
mechanism ensures that we actively
safeguard the environment from any
potential instances of pollution that could
arise from our operations. Our dedication
mindful stewards, it is
As a company rooted in natural goodness,
to this practice demonstrates our our responsibility to
protect and preserve
commitment to preserving and protecting
we recognise the significance of our
the environment in which we operate.
surrounding environment, and its
overarching role as the fundamental our natural capital,
enabler of our operations. As custodians
of our farms, we uphold sustainable
ensuring its integrity
dairy farming practices across all our for the prosperity
operations. We acknowledge the
growing consumer awareness regarding and well-being of
sustainable choices, particularly in the
dairy industry, and we embrace this shift
generations to come.
by implementing environmentally-friendly
agricultural techniques, underpinned by waste is managed through a self-burning
our unwavering commitment towards incinerator, while liquid waste undergoes
maintaining international dairy farming treatment at our modern wastewater
practices that prioritise environmental treatment plant. These measures
preservation and long-term sustainability. The Group places a strong emphasis demonstrate our commitment to
on utilising efficient technologies and responsible waste management and our
We strongly believe in the responsible processes to manage waste generated dedication to preserving the environment.
utilisation of natural resources, as during our manufacturing operations.
evidenced by the establishment of a We have implemented responsible The Group is fully committed to
robust water treatment plant, which waste disposal practices, ensuring that complying with all applicable regulations
ensures that all water used in our all waste is handled in accordance with and statutory requirements set forth by
production processes undergoes high-quality standards and criteria before the Central Environment Authority. With
thorough treatment prior to being their release into the environment. Solid respect to our packaging operations,
we prioritise the use of aseptic recycled
packaging material to minimise our
environmental impact. Solid waste
disposal is carried out in a controlled
manner, following best practices in waste
management. At Lanka Dairies (Pvt)
Ltd, our water effluent treatment plant
plays a crucial role in recycling water
for safe reuse within the plant premises
and disposal, promoting environmental
protection and efficient utilisation of
natural resources.
Sustainability is
the pathway to
preserving our
natural capital,
creating a resilient
future, and leaving
a positive legacy for
future generations
As the market leader in the dairy sector, we believe it is our responsibility to demonstrate
Sustainability Practices at our Farms
environmental stewardship across all aspects of our operations. We strive to maximise
opportunities for recycling and renewal, thereby making our operations more
sustainable at every level. At our dairy farm, we prioritise
environmental sustainability and
Dairy farming is a source of pure goodness that future generations should be able to employ wide-ranging practices to
enjoy. We are dedicated to ensuring the long-term sustainability and productivity of our reduce our ecological impact. We have
farms, in order to safeguard this invaluable resource for years to come. implemented a robust fencing system to
protect our farmland from wild animals,
ensuring the safety and productivity
Building a Sustainable Future: Our Commitment to Environmental Stewardship of our crops and livestock. Adequate
garbage bins are strategically placed to
Sustainable Practices at our Factories promote responsible waste disposal and
prevent instances of littering.
The Group prioritises environmental sustainability and has established water Effluent
Vegetation belts along the roadside
Treatment Plants (ETPs) at both our locations to effectively treat and manage liquid
enhance the scenic beauty of our farm
waste. These plants ensure that all water discharged from our operations meets or
while providing habitats for wildlife and
exceeds regulatory standards, minimising any potential impact on the environment. reducing soil erosion. The appropriate
management of the grass cover ensures
Through the implementation of responsible practices for the disposal of solid nutritious grazing, weed control, and soil
waste, such as proper waste segregation and partnering with authorised waste health.
management entities, we ensure that our waste is handled in an environmentally
friendly manner. Our manure production system utilises
cowshed waste, converting it into
Additionally, we actively promote the reuse and recycling within certain areas of valuable organic fertilizer, thereby
our operations, with the intention of reducing our overall environmental footprint minimising waste, and promoting
and contributing to a circular economy. Through these initiatives, we demonstrate soil fertility. In addition to serving as
our commitment towards minimising waste generation, conserving resources, and a valuable resource within the farm,
promoting a sustainable future. the dry matter of the manure is sold
to outside plantations, providing
an additional income stream and
promoting sustainable waste utilization.
Through these initiatives, we strive

to maintain a harmonious balance
between agricultural productivity and
environmental stewardship at our dairy
farms.
Governance
LEADING-EDGE EVOLUTION
Corporate Governance
At Lanka Milk Foods (CWE) PLC, we are committed to upholding the values of responsibility, participation, and transparency in our
corporate governance structure. We believe these principles will provide a solid foundation for our business as we continue to move
forward and deliver exceptional value to all our stakeholders. We are confident that our commitment to these pillars will ensure our
success in the future.
Our governance framework centres around responsibility, participation, and transparency. We take responsibility for our decisions
and prioritise ethical choices that benefit the long-term interests of all stakeholders as we involve our stakeholders and foster
an inclusive, open dialogue and collaboration culture. We believe that this builds trust, enhances accountability, and enables
informed decision-making.
This report describes the company's implementation and compliance with all mandatory provisions of the Companies Act, the
Colombo Stock Exchange Listing Rules (CSE), and the Sri Lanka Securities and Exchange Commission (SEC) Act. It also covers other
provisions and rules applicable to the Group's businesses.
Governance Structure
External Audit Shareholders in General Meeting
Board of Directors
Audit Remuneration RPT Review

Committee Committee Committee

Officer
Internal Framework
External Framework
Articles of Association, Committee charters,
Legislation, regulation, best practices, stock
Board Directives, CEO Instructions,
exchange rules, corporate governance code
Code of Ethics
Chairman and the Board Group Chief Executive Executive

of Directors Officer Management Team
• Offers strategic policy • Leads the Executive • Within the Board’s policy
direction to the Management. framework, formulates
organisation. and supervises the
• Responsible for
execution of plans.
strategy execution and
performance.
Key legal enactments, codes and • Develop the organisational structure for the mission, goals, and policies of the
agreements complied with: enterprise
• Companies Act No. 07 of 2007 • Appoint top managers who can formulate and implement strategies
• Sri Lanka Accounting and Auditing • Be responsive to societal needs
Standards Act No. 15 of 1995
• Improve relationships with stakeholders
• Continued Listing Requirements of the
Colombo Stock Exchange • Screen internal controls, financial penalties, and risk management systems and
processes
• Employees Provident Fund Act
• Periodically review the Company's financial performance and revise financial policies.
• Employees Trust Fund Act
• Payment of Gratuity Act Board Composition
The Board comprises the following Directors.
• Shop and Office Employees Act
Name of the Director Year Appointed Status
• Factories Ordinance
Mr D. H. S. Jayawardena 1991 Executive Chairman
• Wages Board Ordinance Mr C. R. Jansz 1992 Executive Director
• Maternity Benefits Ordinance Mr D. S. K. Amarasekera 2008 Independent Non-Executive Director
• Inland Revenue Act No. 38 of 2000 Dr A. Shakthevale 2008 Independent Non-Executive Director
• Code of Best Practices on Corporate Mr D. Hasitha Stassen 2016 Non- Independent Non-Executive
Governance Jayawardena Director
Ms D. S. T. Jayawardena 2019 Executive Director
• Workmen's Compensation Ordinance
• Industrial Disputes Act
Board Composition Age Composition
• Food Act
The Board of Directors Above 65

Executive Director
The Board of Directors of the Company
Independent Non-Executive Director Between 40 - 65
is accountable for the governance of the
Company in good faith, in a manner that Non- Independent Non-Executive Below 40
protects the rights and interests of the Director
shareholders and all other stakeholders.
The shareholders' role in governance Tenure of Service Gender Composition
is to appoint Directors who adhere to
appropriate corporate governance in the
Company. Above 20 Years Male
Below 10 Years Female
The Key Accountabilities of the Board of
Directors 10 - 20 Years
• Offer strategic guidance and monitor
the implementation of strategies
• Set the values of the corporation and
promote ethical conduct
• Formulate, review, and reassess the
long-term mission, objectives, policies,
and strategies
Board Subcommittees SEC's Code of Best Practice on Related Party Transactions. The Committee comprises
The subcommittees appointed by the two independent non-executive directors and one non-independent non-executive
Board assume the responsibilities for the director.
management of the Group's affairs.
The Related Party Transaction Review Committee report is given on page 64.
Audit Committee
The Audit Committee oversees the Meetings
following areas. The Board Meetings for each subsidiary are held whenever they are required to review
the Company's performance, including the Financial Statements, investment proposals,
• Examining the financial statements for
and any other important matters relating to the Group.
consistency with Sri Lanka Financial
Reporting Standards
Name of the Director Board Audit Remuneration Related Party
• Ensuring that the Companies Act, Meetings Committee Committee Transactions
as well as other applicable financial Review
reporting-related legislation and Committee
procedures, are followed
Mr. D. H. S. Jayawardena 1/1
• Assessing the independence and Mr. C. R. Jansz 1/1
performance of the External Auditors
Mr. D. S. K. Amarasekera 1/1 4/4 4/4 4/4
• Evaluating the sufficiency and efficacy Dr. A. Shakthevale 1/1 4/4 4/4 4/4
of risk management
Mr. D. Hasitha Stassen 1/1 4/4
The Committee comprises two Jayawardena
Independent Non-Executive Directors. Ms. D. S. T. Jayawardena 1/1
Mr. D.S.K. Amarasekera, Member of the
Institute of Chartered Accountants of Sri Company Secretary
Lanka, is appointed as the Chairman of The Company Secretary is qualified to act in accordance with the provisions of the
the Audit Committee. Companies Act No. 7 of 2007 and also functions as the Legal Advisor to the Company.
The Audit Committee Report is given on Non-Executive Directors

page 62. As per the Colombo Stock Exchange listing rules set out in Section 7, Lanka Milk Foods
(CWE) PLC has appointed Mr. D. S. K. Amarasekera and Dr. A. Shakthevale as Independent
Remuneration Committee Non-Executive Directors with effect from 1st May 2008. Mr. D. Hasitha Stassen
The Committee assists the Board in Jayawardena was appointed as a non-executive director on 11th July 2016.
determining a suitable remuneration
package. Two independent non- Independence of Directors
executive directors are appointed to the The Board has determined that two Non-Executive Directors, Mr. D. S. K. Amarasekera
Remuneration Committee. The aggregate and Dr. A. Shakthevale, are “independent” as per the criteria set out in the Listing Rules of
remuneration paid to the Board of the Colombo Stock Exchange. The said Directors have submitted signed declarations in
Directors is declared in Note 8 of the this regard. Detailed resumes of each Director are given in the Board of Directors section
Annual Report. The two independent of this Annual Report, from pages 18 to 21.
non-executive directors are not paid any
remuneration. Mr. D. S. K. Amarasekera is a Director of a company in which a majority of the other
Directors of the Company are also Directors and which holds a significant shareholding
The Remuneration Committee Report is by the Company. However, in view of the fact that he is an Independent Non-Executive
given on page 63. Director of that company, his position as a Director of the other company does not
compromise his independence or objectivity in discharging his functions as a Director
Related Party Transaction Review of the Company. Hence, Mr. D. S. K. Amarasekera is determined by the Board to be an
Committee independent Director.
The Committee ensures, on behalf of Dr. A. Shakthevale is a Director of a company in which a majority of the other Directors
the Board, that the Group's related of the Company are also Directors and which holds a significant shareholding by the
party transactions comply with the Company. However, in view of the fact that he is an Independent Non-Executive Director
of that company, his position as a Director of the other company does not compromise
his independence or objectivity in Internal Controls to continue its customary operations in

discharging his functions as a Director of The Board of Directors is unanimous in the foreseeable future.
the Company. Hence, Dr. A. Shakthevale the view that the Company’s internal
is determined by the Board to be an control within the business for publication Compliance Report
independent Director. purposes provides reasonable assurance The Directors confirm that, to the best
of safeguarding assets, maintaining of their knowledge, all taxes and duties
The Directors’ interests in the affairs of the proper accounting records, and the have been paid by the Company. All
Company are explained on pages 123 to reliability of financial information. contributions, levies, and taxes payable
126. on behalf of the Company’s employees
The Company has an Internal Audit and all other statutory duties as of the
Disclosures Division, which reports to the Audit reporting date have also been paid on
According to the Company’s Policy, all Committee. The Audit Committee submits behalf of the Company.
relevant information is disclosed to the its reports regularly to the Chairman.
shareholders. The Company’s compliance with the
Future Company Assets CSE Listing Rules and Companies’ Act
Financial Statements are prepared in After reviewing the Financial Statements requirements is set out in the following
accordance with the Sri Lanka Accounting and Cash Flow of the Group, the Board pages.
Standards, the Inland Revenue Act, the of Directors is highly confident that the
Company’s Articles of Association, the Group has more than adequate resources
Companies Act, and the CSE Listing Rules.
Section Ref. Requirement Compliance Status Details of Compliance

168 (1) (a) Any change during the accounting period in the nature of Complied Refer Annual Report of the Board
business of the Company or any of its subsidiaries and the of Directors on pages 65 to 68 of
classes of business in which the Company has an interest, this Annual Report.
whether as a shareholder of another company or otherwise
168 (1) (b) Financial Statements of the Company and the Group for the Complied Refer to Financial Statements on
accounting period completed and signed pages 76 to 136 of this Annual
Report.
168 (1) (c ) Auditor's Report on the Financial Statements of the Complied Refer Auditor's Report on
Company and the Group Financial Statements section on
pages 72 to 75 of this Annual
Report.
168 (1) (d) Change of accounting policies during the accounting period Complied Refer Annual Report of the Board
of Directors on pages 65 to 68 of
this Annual Report.
168 (1) (e) Particulars of entries in the Interest Register made during Complied Refer Annual Report of the Board
the accounting period of Directors on pages 65 to 68 of
this Annual Report.
168 (1) (f ) Remuneration and other benefits paid to the Directors Complied Refer Annual Report of the Board
during the accounting period of Directors on pages 65 to 68 of
this Annual Report.
168 (1) (g) The total amount of donations made by the Company and Complied Refer Annual Report of the Board
the Group during the accounting period of Directors on pages 65 to 68 of
this Annual Report.
168 (1) (h) Directorate of the Company and the Group as at the end Complied Refer Annual Report of the Board
of the accounting period, along with the changes that of Directors on pages 65 to 68 of
occurred during the accounting period this Annual Report.
168 (1) (i) Amounts payable to the Auditors as audit fees and fees Complied Refer Annual Report of the Board
payable for other related services provided by them of Directors on pages 65 to 68 of
this Annual Report.
Section Ref. Requirement Compliance Status Details of Compliance

168 (1) (j) Relationship or interest of the Auditors with the Company or Complied Refer Annual Report of the Board
any of its subsidiaries of Directors on pages 65 to 68 of
this Annual Report.
168 (1) (k) The Annual Report of the Board of Directors be signed on Complied Refer Annual Report of the Board
behalf of the Board. of Directors on pages 65 to 68 of
this Annual Report.
Compliance with the continuing listing requirements - Section 7.6 and Section 7.10 on corporate governance rules for listed companies
issued by the Colombo Stock Exchange.
Section Ref. CSE Listing Rule Compliance Details of Compliance

7.6.(i) Names of persons who, during the Complied Refer to Corporate Information section at the end of this
financial year, were Directors of the entity Annual Report
7.6.(ii) Principal activities of the entity and its Complied Refer to Note 31 of the Financial Statements of this Annual
subsidiaries during the year and any Report
changes therein
7.6.(iii) The names and the number of shares held Complied Refer to Investor Information on page 137 of this Annual
by the 20 largest holders of voting and Report
non-voting shares and the percentage of
such shares held.
7.6.(iv) The float-adjusted market capitalization, Complied Refer to Investor Information on page 137 of this Annual
public holding percentage (%), number Report
of public shareholders and under which
option the Listed Entity complies with the
Minimum Public Holding requirement.
7.6.(v) A statement of each Director's holding Complied Refer to Investor Information on page 137 of this Annual
and Chief Executive Officer's holding in Report
shares of the entity at the beginning and
end of each financial year.
7.6.(vi) Information pertaining to material Complied Refer to Risk Management Report on pages 58 to 61 of this
foreseeable risk factors of the Entity Annual Report
7.6.(vii) Details of material issues pertaining to Complied No material issues pertaining to employees and industrial
employees and industrial relations of the relations
Entity.
7.6.(viii) Extents, locations, valuations and the Complied Refer to Note 12 of the Financial Statements of this Annual
number of buildings of the Entity's land Report
holdings and investment properties.
7.6.(ix) The number of shares representing the Complied Refer to Investor Information on page 137 of this Annual
Entity's stated capital. Report
7.6.(x) A distribution schedule of the number of Complied Refer to Investor Information on page 137 of this Annual
holders in each class of equity securities Report
and the percentage of their total holdings
7.6.(xi) Ratios and market price information Complied Refer to Investor Information on page 137 of this Annual
Report
7.6.(xii) Significant changes in the entity's or its Complied Refer to Note 12 of the Financial Statements of this Annual
subsidiaries fixed assets and the market Report
value of the land.
7.6.(xiii) If the entity has raised funds during the N/A The Company had no public issues, rights issues or private
year through a public issue, rights issue placements during the year.
and private placement.

7.6.(xiv) Employee share option/purchase N/A No share options or purchase schemes are available to the
schemes (if any) Company's directors or employees at this time.
7.6.(xv) Corporate Governance Disclosures in Complied Refer Corporate Governance Report on pages 50 to 57 of this
terms of Sections 7.10.3, 7.10.5.c and Annual Report
7.10.6. c.
7.6.(xvi) Related Party Transactions in terms of Complied Refer to Note 35 of the Financial Statements of this Annual
Sections 9 Report
7.10 Compliance
a/b/c. Compliance with Corporate Governance Complied The Group complies with the Corporate Governance Rules, and
Rules any deviations are explained where applicable.
7.10.1 Non-Executive Directors (NED)
a/b/c. At least two members or one-third of the Complied Three of the six Directors are Non-Executive Directors at the
Board, whichever is higher, should be conclusion of the last AGM.
Non-Executive Directors.
7.10.2 Independent Directors
a. Two or one-third of Non-Executive Complied Two out of three Non-Executive Directors are independent.
Directors, whichever is higher, shall be
independent.
b. Each Non-Executive Director is to submit Complied The independence of the Directors has been determined
a signed and dated declaration of their following CSE Listing Rules, and the two Independent Non-
Independence or Non-independence. Executive Directors have submitted signed declarations of
their independence.
Mr D. S. K. Amarasekera is a Director of a company in which a

majority of the other Directors of the Company are Directors
and holds a significant shareholding by the Company.
However, in view of the fact that he is an independent Non-
Executive Director of the company, his position as a Director of
the other company does not compromise his Independence
and objectivity in discharging his functions as a Director of the
Company. Hence, Mr D. S. K. Amarasekera is determined by the
Board to be an independent Director.
Dr A. Shakthevale is a Director of a company in which a

majority of the other Directors of the Company are Directors
and which holds a significant shareholding by the Company.
However, in view of the fact that he is an independent Non-
Executive Director of the company, his position as a Director of
the other company does not compromise his Independence
and objectivity in discharging his functions as a Director of
the Company. Hence, Dr A. Shakthevale is determined by the
Board to be an independent Director.
7.10.3 Disclosure Relating to Directors
a/b. Board shall annually determine the Complied The Board has made an annual determination as to the
independence or otherwise of Non- independence or non-independence of each Non-Executive
Executive Directors. Director based on a declaration made by the Non-Executive
Directors and as per criteria set out by CASE Listing Rules.
c. A brief resume of each Director should be Complied Refer Board of Directors on pages 18-21 of the Annual Report.
included in the Annual Report, including
the area of expertise.

d. Provide a resume of each new Director N/A There were no new appointments during the year.
appointed to the Board along with the
details.
7.10.4 Criteria for Defining Independence
a. to h. Requirements for meeting the criteria to Complied The Independent Non-Executive Directors have met the
be an Independent Director criteria for defining independence as per the Listing rules.
7.10.5 Remuneration Committee
a. 1 The Remuneration Committee shall Complied The Remuneration Committee comprises two Independent,
comprise a minimum of two Independent Non-Executive Directors.
NEDs or a majority of Independent NEDs,
whichever is higher. One NED shall be
appointed as Chairman of the Committee
by the Board of Directors
a. 2 One Non-Executive Director shall be Complied An Independent Non-Executive Director is the Chairman of the
appointed as Chairman of the Committee Committee.
by the Board of Directors.
b. The remuneration Committee shall Complied The Remuneration Committee recommends the remuneration
recommend the remuneration of the CEO of the CEO and the Executive Directors. The Board makes the
and the Executive Directors. final determination after considering such recommendations.
c. 1 Names of Remuneration Committee Complied The composition of the Remuneration Committee is given on
members page 63.
c. 2 Statement of Remuneration Policy Complied Group's Remuneration Policy is given on page 63.
c. 3 Aggregate Remuneration paid to Complied Aggregate remuneration paid to Executive and Non-Executive
Executive and Non-Executive Directors Directors during the year under review appears on Note 8 to
the Financial Statements.
7.10.6 Audit Committee
a. 1 The Audit Committee shall comprise a Complied The Audit Committee comprises two Independent, Non-
minimum of two Independent NEDs or a Executive Directors.
majority of Independent NEDs, whichever
is higher.
a. 2 A Non-Executive Director shall be the Complied The chairman of the Audit Committee is a Non-Executive
Chairman of the committee Director.
a. 3 Chief Executive Officer and Chief Financial Complied Chief Executive Officer and Chief Financial Officer attended the
Officer should attend Audit Committee Audit Committee meetings by invitation.
meetings.
a. 4 The Chairman of the Audit Committee or Complied The Chairman of the Audit Committee is a member of a
one member should be a member of a professional accounting body.
professional accounting body.
b. Functions of the Audit Committee Complied The Audit Committee performs the functions prescribed in
this section of the Audit Committee. The role of the Audit
Committee is given on page 62.
b. 1 Overseeing the preparation, presentation Complied The Audit Committee assists the Board in fulfilling its
and adequacy of disclosures in the responsibility by overseeing the integrity of the financial
financial statements in accordance with statements of the Group.
SLFRS/LKAS
b. 2 Overseeing the compliance with financial Complied The Audit Committee has the overall responsibility to oversee
reporting requirements and information the preparation of financial statements following the laws and
requirements as per laws and regulations regulations of Sri Lanka and also to recommend to the Board
the adoption of best accounting policies.

b. 3 Ensuring the internal controls and risk Complied The Audit Committee assesses the effectiveness of internal
management controls are adequate to controls and risk management.
meet the requirements of the SLFRS/LKAS
b. 4 Assessment of the independence and Complied The Committee assesses the external auditor’s performance
performance of the entity's external and independence.
auditors
b. 5 Make recommendations to the Board Complied The Committee is responsible for the appointment,
pertaining to external auditors reappointments, removal of external auditors, and approval of
remuneration and terms of engagement.
c. 1 Names of the Audit Committee members Complied Refer Audit Committee Report on page 62 of the Annual
shall be disclosed Report.
c. 2 Audit Committee shall make a Complied Refer Audit Committee Report on page 62 of the Annual
determination of the independence of Report.
the external auditors
c. 3 The annual report shall contain a report Complied Refer Audit Committee Report on page 62 of the Annual
by the audit committee, setting out the Report.
manner of compliance by the Entity in
relation to the above, during the period to
which the annual report relates.
Compliance details of Continuing Listing Requirements Section 9 on Related Party Transactions issued by the Colombo Stock Exchange
(CSE)

9.2 Related Party Transactions Review Committee
9.2.2 Composition Complied Related Party Transaction Review Committee consists
of three Directors, of which two are Independent, Non-
Executive Directors; the Chairman of the Committee is an
independent, Non-Executive Director. Refer to page 64.
9.2 Related Party Transactions Review Committee
9.3.2 Disclosures in the Annual Report
a. Non-Recurrent Related Party Complied The company did not have any non-recurrent related party
Transactions transactions requiring immediate disclosure to the Colombo
Stock Exchange.
b. Recurrent Related Party Transactions Complied Lanka Milk Foods (CWE) PLC carries out transactions with
its subsidiaries and other related companies, anticipated to
extend over a period carried out continuously and is in the
ordinary course of the business of the Company.
Details of the aggregate value of related party transactions

as a % of revenue are disclosed in note 35 to the financial
statements.
c. Report of the Related Party Transactions Complied Refer Report by the Related Party Transactions Review
Review Committee Committee on page 64.
d. A declaration by the Board of Directors Complied Refer to the Annual Report of the Board of Directors for an
affirmative statement of compliance of the Board on pages
64-65.
Enterprise Risk Management
MANAGING RISKS AND OPPORTUNITIES

Accentuate the positive, eliminate the negative
The LMF Group adopts a risk and opportunity strategy that recognizes the complex interplay between potential challenges and
benefits. The Group views risk management as a tool to reduce the negative impacts of internal and external factors and enhance the
value-creation process for achieving long-term operational sustainability.
Lanka Milk Foods (CWE) PLC and its subsidiaries are committed to achieving our goals by managing risks effectively. We have
integrated risk management into our everyday business operations, leveraging the best capabilities of our organization.
GOVERNANCE AND RISK MANAGEMENT PROCESS
Operational Managers and Executives
Operational managers, executives, and supervisors play a crucial role in identifying risks associated with the company’s day-to-
day operations.
CEO, Management Team
The identified risks are promptly communicated to the Group management team, CEO, and executive committee.
Subsequently, these risks are evaluated based on their likelihood and potential impact.
Board of Directors and Audit Committee
The Board of Directors assumes the ultimate responsibility for risk management and authorizes the identified risks. They
ensure that all potential hazards are carefully evaluated and addressed to mitigate any adverse effects on the company.
Risk management is an ongoing and dynamic process that aims to identify, assess, and mitigate potential threats and opportunities
that may affect our objectives and performance. This involves communication and collaboration with stakeholders, as well as
continuous examination and monitoring of the internal and external environment. The procedure is integrated into our business and
policy operations and comprises the following steps: establishing the context, identifying the risks, analysing the risks, evaluating the
risks, treating the risks, and reviewing and reporting the results.
Risk Risk Risk Risk

Identification Analysis Response Plan Monitoring and Control
The following are the highlights of the key hazards faced and identified as potential, as well as the approaches used by LMF Group to
mitigate and manage such risks.
Inflationary Milk Price and Financial Competitive Risk Compliance, Investment

Pressures Volume Volatility Risks and Brand Image Regulatory and Legal Risk
Risks
Health and Safety Stakeholder Technology Quality Environmental

of our people Relationships Risk and Cyber Risk Concerns
Vulnerabilities
Principal Risk Indicators Potential Impact Risk Mitigation Strategies

Inflationary Pressures
• Consumer and Business Expectations • Increased cost of living/wage rate • Price adjustments
• Commodity Prices pressure • Diversification of Suppliers
• Increasing inflation rates - Consumer Price • Reduced purchasing power • Cost control
Index (CPI) • Decreased savings and increased • Efficiency improvements
borrowings
• Increasing Feed costs • Focus on Value-added Products
• Decreasing Gross profit margins
• Increasing COGS
• Overall impact on profitability
• Pressure on MRP
Financial Risks
• The arrangement of capital in the • High cost of imports • Committed facilities cover expected borrowings
company • Impact on financial position and maintain a healthy gearing ratio.
• Projections of cash inflows and outflows • Cash management • Improved banking facilities with competitive
• Assessment of current and quick ratios rates.
• Limitation on imported raw
• Impact of changes in exchange rates material and packaging material • Strategic management of supplier payments,
including advance payments and favourable
• Evaluation of the gearing ratio • Meeting obligations
exchange rates.
• Consideration of fluctuations in interest • Profitability of business
• Monitoring of exchange exposures and adjusting
rates
payment/receipt timing.
• The limited availability of foreign currency
• Balanced approach to short-term vs. long-term
reserves in the country.
borrowings and fixed vs. floating rate borrowings,
with effective negotiation with bankers.
• Regular liquidity evaluations to ensure sufficient
resources for operations, financing, and
investments.
Health and Safety of our people
• Backlog of work • Administration costs • Adherence to Government and Health Ministry
• Employee Absenteeism Rate • Backlog of work guidelines at all our locations
• Hinder the supply of goods • Upon entering, all staff and guests are subjected
to temperature checks.
• Quality of products Reputation
• Face masks are required in all of our facilities and
• Workforce health
PPE is provided to staff where needed.
Enterprise Risk Management

Milk Price and Volume Volatility and Related
• Yield per cow • Increasing milk prices and • Increasing the number of milking cows and the
• Cost per Litre changes in volume directly amount of milk produced per cow daily to increase
impact the organisation’s our farm’s milk output.
• Price per Litre
revenue and profitability. • A consistent supply of raw milk for the production
• Rising feed costs
lines is ensured by increasing overall dairy
production.
Competitive Risk and Brand Image
• Sales volumes • Turnover and sales volumes • Product portfolio redevelopment and innovation
• Market presence • Reputation • Investing in the growth of brands
• Market share • Overall profitability • Assuring product quality and focusing on worldwide
• Inventory turnover rate trends such as healthy living and the usage of liquid
milk
• Assuring that our prices are reasonable.
Compliance, Regulatory and Legal Risks
• Cycle time to resolve compliance, • Financial loss • A complete compliance checklist is checked
regulatory and legal matters • Reputational loss regularly.
• Number of compliance-related matters • Time and administration efforts • If an agreement is breached, the Company consults
dealing with such matters with internal and external legal professionals to limit
• Number of litigations and cycle time to the risk.
resolve them • Financial risk, interest rate risk
• Management evaluates regulatory changes regularly
• Effect of Investment on
• Total external and internal expenses on and assesses the impact of new regulations on the
business growth
solving legal and litigation matters business.
• Effect on cash flow
• Interest rate fluctuations • To mitigate such vulnerabilities, preventive steps are
conducted by adhering to all necessary legislation
and regulatory matters.
• The infrastructure investments made by the
organization are carefully evaluated and chosen for
the long-term benefits they provide.
Stakeholder Relationships
• Customer complaints and their • Inventory and supply chain • Addressing customer feedback and complaints
satisfaction management regularly
• Shortages of raw materials • Market presence in B2B and • Effective communication and being supportive of the
B2C development and expansion of supplier sources
• Customer retention • Reviewing supplier deliverables and performance
• Production hindrances • Rewarding loyal customers
• Revenues and profitability • Supplier partnerships are being strengthened.
Technology Risk and Cyber Vulnerabilities

• Technology malfunctions • Delays in tasks • Information security is maintained by assigning
• Disruptions to business different levels of access permissions to
• Suspicious email communications
operations personnel based on their operational needs and
• Theft or loss of devices responsibilities.
• Loss of sensitive data
• Spam and malware threats • Regular cloud-based system backups and software
updates are performed to enhance security.
• Malicious cyber-attacks
• To protect against viruses and unauthorised access,
• Password breaches the company installs up-to-date anti-spyware and
anti-virus software, implements firewalls and other
security measures, and utilises passwords.

Quality Risk
• Customer satisfaction • Impact on reputation • Employees at all levels of production receive
• Product complains • Repeated purchases proper training and awareness about quality
processes and output.
• Social proof of quality • Total turnover and profitability
• Maintaining the internationally recognized ISO
22000:2018-Food Safety Management System
• Quality control is also implemented across the
supply chain.
• Revision of raw and powdered milk quality
control and testing techniques following local
and international standards
• Testing was conducted to check the presence
of aflatoxins and harmful chemicals in feed and
related supplies
• To accomplish the quality goals, product and
process improvements are developed and
reviewed regularly.
Environmental Concerns
• Waste disposal • Reducing quality water supplies • Acquiring relevant licenses.
• Water supplies • Reduction in crops • Adopting more sustainable dairy farming
• Air pollution • Health effects and birth defects practices
• Conducting Initial Environmental Evaluations
(IEE) and integrating Environmental Impact
Assessments (EIA) by Central Environment
Authority (CEA) into our projects and complying
with National Environmental Act etc.
• Reusing and recycling
• Safe chemical handling
• Sustainable agriculture approaches are being
prioritised.
• Waste management and eco-friendly waste
disposal
Report of the
Audit Committee
The Audit Committee designated by and responsible to the Board of Directors comprises Internal Audit
two Independent Non-Executive Directors in line with the Listing Rules of the Colombo The Committee assessed the
Stock Exchange. Mr D S K Amarasekera, a member of the Institute of Chartered findings and recommendations of
Accountants of Sri Lanka, an Attorney-at-Law of the Supreme Courts of Sri Lanka, and an the Internal Audit Division, as well
Independent Non-Executive Director, functions as the Chairman of the Audit Committee. as management's responses, and
monitored the implementation of these
The other member of the Audit Committee is Dr A. Shakthevale, an Independent Non-
recommendations in order to strengthen
Executive Director.
the overall control environment. The
Committee also assessed the effectiveness
A brief profile of each member is presented on pages 18-21 of this report under the of the internal audit plan and determined
section of the Board of Directors. that it was designed to provide
reasonable assurance regarding the
Objectives of Work Financial Statements.
The roles, scope, and activities of the Audit Committee are consistent with the provisions
of the Code of Best Practice on Corporate Governance, which was formulated jointly External Audit
by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered The Audit Committee is convinced that
Accountants of Sri Lanka. The Committee assists the Board in the execution of its the External Auditors' independence has
responsibilities and oversees financial reporting, internal audits, internal controls, and not been compromised by any event or
external audits. service that has resulted in a conflict of
interest. The level of audit and non-audit
The Audit Committee's powers and responsibilities are governed by the Audit fees received by the External Auditors
has been carefully considered, and
Committee Charter, which has been adopted and accepted by the Board. The Charter
confirmation has been received from
complies with the Corporate Governance Rules, as outlined in section 7.10.6 of the
the External Auditors that they meet the
Colombo Stock Exchange's Listing Rules. independence criteria outlined in the
Institute of Chartered Accountants of Sri
Committee Meetings Lanka's Code of Ethics.
The Audit Committee met four times during the year under review and the attendance
of the committee members is given below. The Audit Committee has evaluated
the External Auditors' performance
Name 07/07/2022 09/11/2022 09/02/2022 23/05/2023 and discussed it with the Company's
senior management. The Committee has
Mr. D S K Amarasekera ü ü ü ü
recommended to the Board that KPMG
Dr. A Shakthevale ü ü ü ü be re-appointed as the External Auditors
of Lanka Milk Foods (CWE) PLC for the
External Audit Representatives and Chief Financial Officer, Mr. W A Dharmathilaka and financial year ending March 31, 2024,
Deputy Finance Manager, Mr, I. A. De Alwis attended the meetings by invitation and subject to shareholder approval at the
briefed the committee on related matters. Annual General Meeting.
The role of the Committee Conclusion

The Board Audit Committee operates in a way to protect the interests of shareholders The Audit Committee is confident that the
company's accounting rules, operational
and stakeholders by ensuring the Company's compliance with financial reporting
controls, and risk management systems
standards and legal obligations including those set by the Institute of the Chartered
provide reasonable assurance that
Accountants of Sri Lanka, the Companies Act No.07 of 2007, the Sri Lanka Accounting the company's affairs are managed in
and Auditing Standards, and the Continuing Listing Rules of the Colombo Stock line with its policies and that its assets
Exchange. are appropriately accounted for and
adequately safeguarded. The Committee
The committee oversees the preparation and presentation of financial statements, is furthermore satisfied that the group's
ensures adequacy of disclosures, establishes internal controls, evaluates risk internal and external auditors performed
management strategies, monitors auditors' performance and independence, and well and were independent throughout
recommends external auditors. Additionally, the committee ensures the Company's the financial year under review.
compliance with legal and regulatory standards, promoting transparency and
accountability.
Overall, it actively upholds good governance practices and safeguards the integrity of D S K Amarasekera
the financial reporting process. Chairman - Audit Committee
18th August 2023
Report of the
Remuneration Committee
The Remuneration Committee, which is appointed by and responsible to the Board of
Directors, comprises of two Independent Non-Executive Directors in compliance with
section 7.10.5 of the listing rules of the Colombo Stock Exchange. Mr. D.S.K. Amarasekera,
a member of the Institute of Chartered Accountants of Sri Lanka and an Attorney-at-Law
of the Supreme Courts of Sri Lanka, an Independent Non-Executive Director, acts as the
Chairman of the Committee. The other member of the Committee is Dr. A. Shakthevale,
an Independent Non-Executive Director. Brief profiles of each member are presented on
pages 18-21 of this report.
The Remuneration Committee is governed by the Remuneration Committee

Charter, which sets out its roles and responsibilities. The Committee is responsible
for determining the remuneration policy of the key management personnel of the
Company and all employees. This includes setting the overall level of remuneration,
as well as the specific components of remuneration, such as base salary, bonus, and
benefits. The Committee also reviews and approves the remuneration of individual
executives and employees, and ensures that the remuneration policy is aligned with the
Company's overall objectives.
Committee Meetings
The Remuneration Committee met four times during the year. The meetings were
attended by members of the Committee, including the Group Chief Financial Officer
and Deputy Finance Manager, who were invited to attend. The Committee discussed
a variety of topics, including the remuneration policy for key management personnel,
the performance of individual executives, and the overall remuneration strategy for the
Company.
Name 07/07/2022 09/11/2022 09/02/2022 23/05/2023

Dr. A Shakthevale ü ü ü ü
The Remuneration Policy

The Group remuneration policy is to attract, motivate, and retain the best professional
and management talent for the Company. It also aims to motivate and encourage
employees to perform at the highest possible level. A formal and transparent procedure
is followed to determine the remuneration packages.
The Remuneration Committee reviewed the Group remuneration policy, which remained
unchanged during the reporting year ended 31 March 2023. The Committee also studied
the present remuneration package for employees, discussed the prevailing economic
crisis and strategies for retaining farm expert employees, reviewed the human resource
policies, the process of annual increments, and made recommendations to the Board of
Directors.
D S K Amarasekera
Chairman – Remuneration Committee
18th August 2023
Related Party Transaction Review

Committee Report
Purpose of the Committee
The purpose of the Committee, as stated in Appendix 9A of the CSE Listing Rules, is to
review all related party transactions, except those specified in Rule 9.5. The review can
take place either before the transaction is entered into, or, if the transaction is expressly
stated to be conditional on such review, prior to the transaction's completion.
Composition of the Committee

The Related Party Transaction Review Committee (RPTRC) is responsible to the Board
of Directors and is composed of two Independent Non-Executive Directors (INEDs) and
one Non-Independent Non-Executive Director (NINED). The Chairman of the RPTRC is
Mr. D.S.K. Amarasekera, a member of the Institute of Chartered Accountants of Sri Lanka
and an Attorney-at-Law of the Supreme Courts of Sri Lanka. The other members of the
Committee are Dr. A. Shakthevale, INED, and Mr. D. Hasitha S. Jayawardena, NINED.
A brief profile of each member of the Related Party Transaction Review Committee
(RPTRC) is given on pages 18-21 of this report.
Committee Meetings
As required by the applicable rules/regulations, the Committee analysed the
transactions for the financial year, and a mechanism was put in place to make future
compliance easier.
During the reporting year, the Related Party Transactions Review Committee met four
times, and the attendance of committee members is listed in the table below.
Name 30/06/2022 30/09/2022 29/12/2022 30/03/2023

Dr. A Shakthevale ü ü ü ü
Mr. D Hasitha S Jayawardena ü ü ü ü
Attendance by Invitation
Mr. W A Dharmathilaka, Chief Financial Officer, was invited to the sessions and informed
the committee on pertinent topics.
Disclosure
Related party transactions are disclosed to stakeholders through the Company's financial
statements in accordance with current practice and to comply with the rules set forth
in Appendix 9A of the CSE Listing Rules. The Committee established its functions with a
view of further strengthening the internal procedures and policies with the requirements
thereof and relevant disclosures are made in a timely and detailed manner.
Declaration
A declaration by the Board of Directors on compliance with the rule pertaining to the
related party transactions appears on the report of Board of Directors on pages 66-68 of
this report.
D S K Amerasekera
Chairman
Related Party Transactions Review Committee
18th August 2023
Annual Report of the Board of Directors
The Board of Directors of Lanka Milk SUMMARY OF THE INCOME STATEMENT OF THE COMPANY AND GROUP
Foods (CWE) PLC is pleased to present Financial Statements and Auditors’ Report
the Company's and Group's 41st Annual The Financial Statements of the Company and the Group for the year ended 31st March
Report and Audited Financial Statements 2023 were prepared following SLFRSs/LKASs, the Accounting Standards issued by
for the financial year ending March 31, 2023. The Institute of Chartered Accountants of Sri Lanka. The Audited Financial Statements
The information provided here fulfils the approved by the Board of Directors on 18th August 2023 are provided on pages 76 to
requirements of the Companies Act No. 07 of 136. The Auditor’s Report on the Financial Statements of the Company and the Group is
2007, the Colombo Stock Exchange's Listing set out on pages 72 to 75.
Rules, and best reporting practices.
Summary of Statement of Profit and Loss and Other Comprehensive Income
The Company was founded on November 12, For the year ended 31st March 2023 2022
1981, as a Public Limited Liability Company, Rs.000’s Rs.000’s
and it was listed on the Colombo Stock
Exchange in 1983 as Lanka Milk Foods Net profit/loss before tax 1,262,422 1,097,589
(CWE) PLC. The Cooperative Wholesale Provision for taxation, including deferred tax (73,217) (33,086)
Establishment controlled the Company until Net profit/loss after tax 1,189,205 1,064,503
it was privatised in 1991. In compliance with
Other comprehensive income 2,381,687 (697,180)
the provisions of the Companies Act No. 07 of
2007, the Company underwent re-registration Total comprehensive income 3,570,892 367,323
and obtained a fresh Company number, PQ The amount attributable to minority interest 114 597
142, on the 16th of April, 2008.
Total comprehensive income attributable to the 3,571,006 367,920
shareholders
Principal Activities
The Group is in the business of manufacturing, Balance brought forward from the previous year 10,433,617 10,265,687
importing, exporting, packing, marketing and Dividend paid (299,985) (199,990)
distributing powdered milk, dairy and dairy
Amount available for appropriations 13,704,638 10,433,617
allied products, fruit juice, rearing cattle and
goats to produce milk and trading carbonated Stated Capital 999,950 999,950
canned beverages. Balance attributable to shareholders at the end of the year 14,704,588 11,433,567
Performance Review Group Revenue and Profits credit of the Company, for reporting year
A review of the financial and operational The group revenue for the reporting year amounted to Rs. 11.7 million (2021/22 - Rs.
performance, comments on the financial ended 31st March 2023 was Rs. 14,172 3.3 million). Tax expenses of the Group
results, future strategies and prospects are million (2021/22 - Rs. 9,772 million). Lanka and Company are elaborated in Note 9 to
shown in the Management Review section Milk Foods (CWE) PLC, the Company the financial statements.
and Management Discussion section of this recorded Rs. 4,072 million for the financial
report. year (2021/22 - Rs. 3,424 million). Dividends (Interim)
In respect of the year ended 31st March
Refer to Note 14, Investment in Subsidiaries The profit after tax of the Group was Rs. 2023, the Directors have declared and
and Note 31, Principal Subsidiaries Details 1,189 million (2021/22- Rs. 1,065 million). paid an interim dividend of Rs. 5 per share.
of Subsidiaries for more information. A The Company reported a profit after tax of
segmental analysis of the activities of the Rs. 1,521 million (2021/22- Rs. 467 million). SUMMARY OF THE STATEMENT
Group is given in Note 34 to the Financial The segmental profits are disclosed in OF FINANCIAL POSITION OF THE
Statements. Note 34 to the Financial Statements. COMPANY AND GROUP
Stated Capital
Accounting Policies and Changes During the Donations The stated capital of the Company is Rs.
Year During the year donations amounting to 999,950,000 and it consists of 39,998,000
The accounting policies adopted in the Rs. 10,000 were made by the Group. Ordinary Shares. There was no change in
preparation of the financial statements are the stated capital during the year.
following Sri Lanka Accounting Standards Taxation
and are presented on pages 84-96. There have The income tax expense of the Group, Reserves
been no changes in the accounting policies including the deferred tax charge for the The total Group Reserves as of 31st
adopted by the Group during the year. reporting year amounted to Rs. 73 million March 2023 amounted to Rs. 13.7
(2021/22 - Rs. 33 million). The deferred tax billion (2021/22 – Rs. 10.4 billion). The
movements of reserves during the period Information on the Board of Directors

are given under the Statement of Changes Directorate
in Equity on pages 78 to 79. The Directors of Lanka Milk Foods (CWE) PLC who served during the year are given
below.
Property, Plant & Equipment
Details and movements of Property, Plant Name of Director Status
and Equipment owned by the Company Mr. D. H. S. Jayawardena Executive Chairman
are given in Note 12 to the Financial
Mr C. R. Jansz Executive Director
Statements on page 101.
Mr. D. S. K Amarasekara Independent Non-Executive Director
Land Holdings Dr A. Shakthevale Independent Non-Executive Director
Details of leasehold land owned by
Mr D. Hasitha. S. Jayawardena Non-Independent Non-Executive Director
the Company are given in Note 30 to
Financial Statements on page 118. Ms. D. S. T. Jayawardena Executive Director
Investments Brief profiles of the Directors as of 31st March 2023; appear on pages 18-21 of this report.
Details of quoted and unquoted
investments made by the Company as of Directors’ Shareholdings
31st March 2023 are given in Note 15 to The Directors' shareholdings in the Company were as follows:
the Financial Statements on page 106.
For the year ended 31st March As at As at
31st March 31st March
Contingent Liabilities
2023 2022
Except as disclosed in Note 32 to the
Financial Statements on page 121, there Mr. D H S Jayawardena Nil Nil
were no material contingent liabilities as Mr. C. R. Jansz Nil Nil
of the reporting date.
Mr. D. S. K Amarasekera Nil Nil
Events after the Reporting Period Dr. A. Shakthevale Nil Nil

There have been no events after the Mr. D. Hasitha Stassen Jayawardena Nil Nil
reporting period, which would have
Ms. D. S. T. Jayawardena 2934 2934
any material effect on the Group or the
Company other than those disclosed in
Interests Register
Note 33 to the Financial Statements
The Company maintains an Interests Register conforming to the provisions of the
Companies Act No. 07 of 2007. All related party transactions, with the Company during
Going Concern
the accounting period, are recorded in the Interest Register following the applicable
The Board has examined the current and
rules and regulations of the relevant Regulatory Authorities.
prospective implications of COVID-19
on the Group Companies, as well as
The relevant interests of Directors in the Company's shares as of March 31, 2023, are
the appropriateness of using the going
recorded in the Interest Register, and details are provided in this Report under Directors'
concern basis, in determining the basis
Shareholding.
for preparing the financial statements
for the year ended 31st March 2023. The
Directors’ Remuneration
Board is satisfied that the Company and
The remuneration of the Directors is given in Note 08 on page 98 of the consolidated
the subsidiaries have adequate resources
financial statements.
to continue their operations in the
foreseeable future. Directors’ Responsibility for Financial Reporting
The Directors are responsible for the preparation of the Financial Statements of the
Company to reflect a true and fair view of the state of its affairs.
Related Party Disclosures Share Information Internal Controls

Transactions with entities that are An Ordinary share of the Company (LMF. The Board of Directors has taken adequate
controlled, jointly controlled or N0000) was quoted on the Colombo Stock steps to ensure the implementation of
significantly influenced by key managerial Exchange at Rs. 140.75 as of 31st March an effective and comprehensive system
personnel or their close members of 2023 (2021/22 - Rs. 132.75). During the of internal controls covering aspects of
family or shareholders who have either year the share price fluctuated between financial, operational and compliance
control, significant influence or joint Rs. 99.00 and Rs. 175.00. controls within the group.
control over the entity are set out in
Note 35 to the Financial Statements. The Information concerning earnings, Environmental Protection
Directors confirm that transactions with dividends, net assets and market value per The Company has not engaged in
Related Parties in terms of the Sri Lanka share is given in the Ten-Year Summary on any activity that was detrimental to
Accounting Standard LKAS 24- Related pages 139 to 140 of this report. the environment and has been in due
Party Disclosures have been detailed compliance with all applicable laws and
in Note 35 to the Financial Statements, Auditors regulations of the country to the best of
as well as that the requirements as per The Financial Statements have been its ability.
the listing rules of the Colombo Stock audited by Messrs KPMG Chartered
Exchange have been complied with. Accountants who served as the Auditors Corporate Governance
during the year under review. The The Company aspires to adhere to the
Employees Auditors have expressed their willingness best practices in Corporate Governance
The number of persons employed by the to continue in office. A resolution to re- and the applicable Governance Rules
Company as of 31st March 2023 was 225 appoint the Auditors and to authorise the of the Colombo Stock Exchange. The
(234 as of 31st March 2022) and by Group Directors to determine their remuneration Corporate Governance practices are
724 (741 as of 31st March 2022). will be proposed at the Annual General presented on pages 50 -57.
Meeting.
Employment Policies The Board of Directors confirm that the
The Company promotes a culture of The details of fees paid to the Auditors for Company is compliant with section 7.10 of
teamwork, integrity and dedication and the Company and its subsidiaries are set the Listing Rules of the CSE.
remuneration linked to performance out in Note 08 to the Financial Statements.
through annual appraisals of both The Auditors do not have any interest in Board sub-committees include an Audit
quantitative and qualitative performance the Company other than as Auditors. Committee, Remuneration Committee,
of all employees. There were no significant and Related Party Transaction Review
material issues on employees and Statutory Payments Committee with Directors who possess
industrial relations of the entity during the The Directors confirm that, to the best the requisite qualifications and
year under review. of their knowledge, all taxes, duties and experience.
levies payable by the Company and
Other Information contributions, levies and taxes payable on Audit Committee
Shareholder Information behalf of and in respect of the employees Mr. D. S. K Amarasekara - Chairman
Information on the twenty largest of the Company and all other known Dr A. Shakthevale
shareholders of the Company, the statutory dues as were due and payable
distribution of shareholding, percentage by the Company as at the reporting Related Party Transaction Review
of shares held by the public, and market date, have been paid or, where relevant, Committee
values per share as per the requirements provided for.
Mr. D. S. K Amarasekara - Chairman
of the Listing Rules of the Colombo Stock
Risk Management
Dr A. Shakthevale
Exchange are given on pages 137-138
under Investor Information. The Risk Management processes currently Mr D. Hasitha. S. Jayawardena
practised by the Company to identify and
There were 4652, registered shareholders, manage potential risks are given on pages Remuneration Committee
holding ordinary voting shares at the 58-61 and 126 to 133. Mr. D. S. K Amarasekara - Chairman
year-end. (2021/22 - 4787) Dr A. Shakthevale
Annual General Meeting

The 41st Annual General Meeting of the Company will be held at Lanka Milk Foods (CWE)
PLC as a virtual/hybrid meeting on Tuesday, 12th of September 2023 at 10.00 a.m. The
Notice of Meeting appears on page 142 of the report.
This Annual Report is signed for and on behalf of the Board of Directors by:
Mr D. H. S. Jayawardena Mr C. R. Jansz
Chairman Director
Ms H. K. Bulathwatte
Company Secretary
18th August 2023

Statement of Directors’ Responsibilities
The Directors are responsible under Companies Act No. 7 of 2007, and have
sections of the Companies Act No. 7 of obtained a certificate from the auditors,
2007 (“The Companies Act”), to ensure prior to declaring all dividend.
compliance with the requirements set out
therein to prepare Financial Statements The Directors are of the view that they
for each financial year giving a true and have discharged their responsibilities as
fair view of the state of affairs of the set out in this statement.
Company and the Group as at the end of
the financial year and of the profit & loss The Directors certify that, to the best of
of the Company and the Group for the their knowledge, all statutory payments
financial year. related to the government and the
employees that were due in respect of
The Board of Directors accepts the the company and its subsidiaries have
responsibility for the integrity and been either paid or sufficiently provided
objectivity of the Financial Statements for in the financial statements as of the
presented. The Directors confirm that reporting date.
proper accounting records and policies
have been maintained in the preparation On behalf of the Board of Directors
of the Financial Statements which have
been prepared and presented following
the Sri Lanka Accounting and Auditing
Standards Act No. 15 of 1995 and comply
with the requirements in the Companies Ms H. K. Bulathwatte
Act No.7 of 2007 and the Listing Rules Company Secretary
of the Colombo Stock Exchange.
Additionally, the Directors confirm that 18th August 2023
the Financial Statements have been
prepared on an ongoing basis and are of
the view that sufficient funds and other
resources are available within the Group
to continue its operations, which in the
long run will enable the Company to
facilitate planned future expansions and
capital commitments.
The Directors have established sufficient

internal control systems and taken the
necessary precautions to protect the
Group's assets to prevent and identify
fraud and other irregularities. The External
Auditors were provided with all the
necessary information and explanations
to enable them to form their opinion on
the Company's financial statements.
As required by Section 56 (2) of the

Companies Act No. 7 of 2007, the Board
of Directors have confirmed that the
Company, based on the information
available, satisfies the solvency test
immediately after the distribution,
in accordance with Section 57 of the
Financial Statements
ESTEEMED VALUE
Independent Auditor’s Report
TO THE SHAREHOLDERS OF LANKA MILK FOODS (CWE) PLC Basis for Opinion
Report on the Audit of the Financial Statements We conducted our audit in accordance with Sri Lanka Auditing
Standards (SLAuSs). Our responsibilities under those standards
Opinion
are further described in the Auditor’s Responsibilities for the
We have audited the financial statements of Lanka Milk Foods Audit of the Financial Statements section of our report. We are
(CWE) PLC (“the Company”) and the consolidated financial independent of the Group in accordance with the Code of Ethics
statements of the Company and its subsidiaries (“the Group”), issued by CA Sri Lanka (Code of Ethics), and we have fulfilled
which comprise the statement of financial position as at 31st our other ethical responsibilities in accordance with the Code of
March 2023, and the statements of profit or loss and other Ethics. We believe that the audit evidence we have obtained is
comprehensive income, statement of changes in equity and sufficient and appropriate to provide a basis for our opinion.
statement of cash flows for the year then ended, and notes to
the financial statements, including a summary of significant Key Audit Matters
accounting policies and other explanatory information as set out
Key audit matters are those matters that, in our professional
on pages 76 to 136.
judgment, were of most significance in our audit of the Company
financial statements and the consolidated financial statements
In our opinion, the accompanying financial statements of the
of the current period. These matters were addressed in the
Company and the Group give a true and fair view of the financial
context of our audit of the Company financial statements and
position of the Company and the Group as at 31st March 2023,
the consolidated financial statements as a whole, and in forming
and of their financial performance and cash flows for the year
our opinion thereon, and we do not provide a separate opinion
then ended in accordance with Sri Lanka Accounting Standards.
on these matters.
Measurement of Biological Assets

Refer the Note 16 to the consolidated financial statements
Risk Description Our response
The group’s Livestock biological assets comprise of goats, • Understanding management’s process for collecting the
rabbits and dairy cattle, which are further categorized into information to support the key assumptions and inputs
calves, heifers, milking cows, dry cows and culled animals. adopted in the valuation of biological assets and assessing
the information based on our knowledge of the Group and
The Group’s Livestock , which are measured at fair value less other audit procedures performed.
cost to sell, was Rs.2,003.5 Mn, as at 31 March 2023, with a gain
arising from changes in fair value less costs to sell of biological • Assessing the design, implementation and operating
assets for the year ended 31 March 2023 recorded in the effectiveness of the management’s key controls over the
Statement of Profit or Loss and Other Comprehensive Income classification of dairy cattle into calves, heifers, milking cows,
of Rs. 929.6 Mn. Management has used a valuation method dry cows and culled animals.
developed based on past information, assumptions, market
prices of livestock of similar age, weight, pregnancy, lactations
and milk production.
Measurement of Biological Assets

Refer the Note 16 to the consolidated financial statements
The calculation of the fair value of biological assets involves • Assessing the methodologies adopted in the valuation of
a significant degree of judgement, particularly in respect of biological assets with reference to the requirements of the
market prices for calves, heifers, goats and rabbits estimated prevailing accounting standards.
culling rates, and raw milk market prices. Consequently, we
• On a sample basis, assessing the input data used in the
have determined the measurement of biological assets to be a
valuations of biological assets, including breeding costs, milk
key audit matter because the valuation is dependent on certain
production volumes and culling rates, based on available
key assumptions, which require the exercise of significant
historical data.
judgement and are subject to an inherent risk of error or
potential management bias. • Evaluating the adequacy of the disclosure in Financial
Statements, including disclosures of key assumptions,
judgments and sensitivities.
Revenue Recognition – Group

Refer to notes 05 to the consolidated financial statements
The Group’s revenue comprises only the revenue from contracts • Obtaining an understanding of and assessing the
with customers. Revenue from contract with customers design, implementation and operating effectiveness of
generates primarily from importing, packaging and distribution management’s key internal controls in relation to revenue
of milk allied products. recognition from sales transactions.
• Testing the operating effectiveness of key IT application
The Group has recorded Rs.14,171.5 Mn as Group revenue as for
controls over revenue, in addition to evaluating the integrity
the year ended 31st March 2023.
of the general IT control environment with the assistance of
IT specialists.
Revenue is measured based on the consideration specified in a
contract with a customer. The Group recognizes revenue when • Comparing, on a sample basis, specific revenue transactions
it transfers control over a good or services to a contract. recorded before and after the financial year end date with
the underlying goods delivery notes and/or invoices to
We identified revenue recognition as a key audit matter because assess whether the related revenue had been recognised in
of its significance to the consolidated financial statements, the correct financial period.
Consideration of Revenue as a key financial performance
• Performed inquiries of management and appropriate
measure and increase of revenue of 45% when compared with
analytical procedures over revenue transactions
the last financial year.
throughout the financial year to understand and assess the
reasonableness of the reported revenues;
• We performed test of details on revenue transactions
throughout the financial year and evaluated the
appropriateness of recognised revenue and its timing.
• Comparing revenue transactions recorded during the current
year, on a sample basis, with invoices, underlying goods
delivery and acceptance notes, where appropriate, to assess
whether the related revenue was recognised in accordance
with the Group’s revenue recognition accounting policies.
Independent Auditor’s Report
Other Information As part of an audit in accordance with SLAuSs, we exercise

Management is responsible for the other information. The other professional judgment and maintain professional skepticism
information comprises the information included in the annual throughout the audit. We also:
report, but does not include the financial statements and our
• Identify and assess the risks of material misstatement of the
auditor’s report thereon.
financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
Our opinion on the financial statements does not cover the
obtain audit evidence that is sufficient and appropriate to
other information and we do not express any form of assurance provide a basis for our opinion. The risk of not detecting a
conclusion thereon. material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion,
In connection with our audit of the financial statements, our forgery, intentional omissions, misrepresentations, or the
responsibility is to read the other information and, in doing so, override of internal control.
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the • Obtain an understanding of internal control relevant to the
audit or otherwise appears to be materially misstated. audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an
Responsibilities of Management and Those Charged with opinion on the effectiveness of the Company and the Group’s
Governance for the Financial Statements internal control.
Management is responsible for the preparation of financial • Evaluate the appropriateness of accounting policies used
statements that give a true and fair view in accordance with Sri and the reasonableness of accounting estimates and related
Lanka Accounting Standards, and for such internal control as disclosures made by management.
management determines is necessary to enable the preparation
of financial statements that are free from material misstatement, • Conclude on the appropriateness of management’s use of
whether due to fraud or error. the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
In preparing the financial statements, management is exists related to events or conditions that may cast significant
responsible for assessing the Company and the Group’s ability to doubt on the Company and the Group’s ability to continue as
a going concern. If we conclude that a material uncertainty
continue as a going concern, disclosing, as applicable, matters
exists, we are required to draw attention in our auditor’s
related to going concern and using the going concern basis
report to the related disclosures in the financial statements
of accounting unless management either intends to liquidate or, if such disclosures are inadequate, to modify our opinion.
the Company and the Group or to cease operations, or has no Our conclusions are based on the audit evidence obtained up
realistic alternative but to do so. to the date of our auditor’s report. However, future events or
conditions may cause the Company and the Group to cease
Those charged with governance are responsible for overseeing to continue as a going concern.
the Company’s and the Group’s financial reporting process.
• Evaluate the overall presentation, structure and content
Auditor’s Responsibilities for the Audit of the Financial of the financial statements, including the disclosures, and
Statements whether the financial statements represent the underlying
transactions and events in a manner that achieves fair
Our objectives are to obtain reasonable assurance about
presentation.
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to • Obtain sufficient appropriate audit evidence regarding the
issue an auditor’s report that includes our opinion. Reasonable financial information of the entities or business activities
assurance is a high level of assurance, but is not a guarantee that within the Group to express an opinion on the consolidated
an audit conducted in accordance with SLAuSs will always detect financial statements. We are responsible for the direction,
a material misstatement when it exists. Misstatements can arise supervision and performance of the group audit. We
from fraud or error and are considered material if, individually or remain solely responsible for our audit opinion.
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
We communicate with those charged with governance

regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during
our audit.
We also provide those charged with governance with a

statement that we have complied with ethical requirements in
accordance with the Code of Ethics regarding independence,
and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with

governance, we determine those matters that were of most
significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements

As required by section 163 (2) of the Companies Act No. 07 of
2007, we have obtained all the information and explanations
that were required for the audit and, as far as appears from our
examination, proper accounting records have been kept by the
Company.
CA Sri Lanka membership number of the engagement partner

responsible for signing this independent auditor’s report is 2599
CHARTERED ACCOUNTANTS
Colombo, Sri Lanka
18th August 2023

Statement of Profit or Loss and Other

Comprehensive Income
Group Company
For the Year Ended 31 March 2023 2022 2023 2022
Note Rs.000's Rs.000's Rs.000's Rs.000's
Revenue 5 14,171,501 9,771,539 4,072,143 3,423,954
Cost of Sales (12,392,598) (8,311,332) (3,174,309) (3,253,007)
Gross Profit 1,778,903 1,460,207 897,834 170,947
Other Operating Income 6 1,039,127 363,815 106,066 13,535
Administrative Expenses (1,032,070) (620,162) (310,855) (265,910)
Distribution Expenses (514,582) (380,706) (141,477) (112,875)
Other Operating Expenses (98,444) (145,508) (28,776) (54,858)
Profit from Operations 1,172,934 677,646 522,792 (249,161)
Finance Income 7.1 1,192,621 929,084 1,210,114 1,140,255
Finance Expense 7.2 (1,103,133) (509,141) (223,704) (427,476)
Net Finance Expense 7 89,488 419,943 986,410 712,779
Profit Before Taxation 8 1,262,422 1,097,589 1,509,202 463,618
Income Tax Expense 9 (73,217) (33,086) 11,705 3,261
Profit for the Year 1,189,205 1,064,503 1,520,907 466,879
Other Comprehensive Income

Items that will never be reclassified to profit or loss
Net Change in Fair Value of Equity Securities - at FVOCI 2,365,423 (723,799) 2,365,423 (723,799)
Actuarial Gain/(Loss) on Defined Benefit Obligation 18,384 33,090 7,908 25,387
Tax on Other Comprehensive Income / (Expense) (2,120) (6,471) (2,373) (4,570)
Other Comprehensive Income / (Expense) for the Year 2,381,687 (697,180) 2,370,958 (702,982)
Total Comprehensive Income / (Expense) 3,570,892 367,323 3,891,865 (236,103)
Profit Attributable to :
Owners of the Company 1,189,319 1,065,100 1,520,907 466,879
Non Controlling Interest (114) (597) - -
Profit for the Year 1,189,205 1,064,503 1,520,907 466,879
Total Comprehensive Income Attributable to

Owners of the Company 3,571,006 367,920 3,891,865 (236,103)
Non controlling Interest (114) (597) - -
Total Comprehensive Income for the Year 3,570,892 367,323 3,891,865 (236,103)
Figures in brackets indicate deductions.
Earnings Per Share 10
Basic Earnings Per Share 10.1 29.73 26.63 38.02 11.67
Diluted Earnings Per Share 10.2 29.73 26.63 38.02 11.67
The Financial Statements are to be read in conjunction with related notes, which form a part of the Financial Statements of the Group
set out in pages 82 to 136.
Statement of Financial Position
Group Company
As at 31 March 2023 2022 2023 2022
Assets
Non Current Assets
Property, Plant and Equipment 12 5,230,734 4,497,497 109,008 125,751
Intangible Assets 13 2,990 - 2,990 -
Investment in Subsidiaries 14 - - 3,015,000 1,065,000
Other Investments 15.1 9,218,177 6,852,754 9,218,177 6,852,754
Biological Assets 16.1 2,003,533 1,279,229 - -
Deferred Tax Asset 24 20,082 10,750 20,082 10,750
Right of Use Assets 30.1 506,517 308,854 279 307
Total Non Current Assets 16,982,033 12,949,084 12,365,536 8,054,562
Current Assets
Inventories 17 2,787,191 1,486,956 532,944 398,066
Biological Assets 16.2 66,047 40,772 - -
Other Investments 15.2 162,302 153,778 162,302 153,778
Trade Receivables 18 938,334 787,959 102,438 194,871
Other Receivables 19 105,783 68,705 21,524 25,369
Amounts Due from Related Parties 20 28,809 24,721 1,219,147 1,404,537
Income Tax Receivables 8,689 8,820 9,036 9,167
Cash and Cash Equivalents 21 47,276 1,212,879 22,747 1,002,342
Total Current Assets 4,144,431 3,784,590 2,070,138 3,188,130
Total Assets 21,126,464 16,733,674 14,435,674 11,242,692
Equity and Liabilities

Equity
Stated Capital 22 999,950 999,950 999,950 999,950
Capital Reserves 105,116 105,116 105,116 105,116
Fair Value through Other Comprehensive Income Reserve 8,647,091 6,281,668 8,647,091 6,281,668
Revenue Reserves 4,952,431 4,046,833 3,438,400 2,211,943
Total Equity attributable to Equity Holders of the Company 14,704,588 11,433,567 13,190,557 9,598,677
Non Controlling Interests (349) (235) - -
Total Equity 14,704,239 11,433,332 13,190,557 9,598,677
Liabilities
Non Current Liabilities
Loans and Borrowings 26 2,156,251 1,753,646 - -
Lease Liability 30.2 550,587 319,814 312 290
Deferred Tax Liability 24 67,934 87,030 -
Retirement Benefit Obligations 25 159,708 141,410 74,969 69,507
Total Non Current Liabilities 2,934,480 2,301,900 75,281 69,797
Current Liabilities
Trade and Other Payables 27 830,946 1,518,264 121,898 1,182,122
Amounts Due to Related Parties 28 95,048 175,187 90,743 169,346
Income Tax Payable 17,280 35,857 - -
Loans and Borrowings 26 1,150,000 375,000 775,000 -
Short Term Borrowings 250,000 - - -
Lease Liability 30.2 37,913 34,376 20 60
Bank Overdraft 21 1,106,558 859,758 182,175 222,690
Total Current Liabilities 3,487,745 2,998,442 1,169,836 1,574,218
Total Liabilities 6,422,225 5,300,342 1,245,117 1,644,015
Total Equity and Liabilities 21,126,464 16,733,674 14,435,674 11,242,692
The Financial Statements are to be read in conjunction with the related notes, which form a part of the Financial Statements of the Group set out on pages
82 to 136.
I certify that the financial statements have been prepared in compliance with the requirements of the Companies Act No. 7 of 2007.
W.A.Dharmathilaka
Group Chief Financial Officer
The Board of Directors is responsible for the preparation and presentation of these Financial Statements.
Approved and signed for and on behalf of the Board;
D.H.S. Jayawardena C.R.Jansz

Director Director
18th August 2023
Colombo
Statement of Changes In Equity
For the Year Ended 31 March Attributable to Equity Holders of the Company
Group Stated Revaluation Dairy FVOCI Retained Total Non- Total
Capital Reserve Development Reserve Earnings Controlling Equity
Project Interest
Reserve
Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's
Balance as at 1st April 2021 999,950 105,116 110,000 7,005,467 3,045,104 11,265,637 362 11,265,999
Total Comprehensive Income
Profit for the year - - - - 1,065,100 1,065,100 (597) 1,064,503

Net change in Financial instrument - - - (723,799) - (723,799) - (723,799)
measured at FVOCI
Actuarial Gain on Retirement Benefit - - - - 33,090 33,090 - 33,090
Obligations
Tax on Other Comprehensive Income (6,471) (6,471) - (6,471)
Total Comprehensive income - - - (723,799) 1,091,719 367,920 (597) 367,323
Dividend Paid - - - - (199,990) (199,990) - (199,990)

Balance as at 31st March 2022 999,950 105,116 110,000 6,281,668 3,936,833 11,433,567 (235) 11,433,332
Balance as at 1st April 2022 999,950 105,116 110,000 6,281,668 3,936,833 11,433,567 (235) 11,433,332
Profit for the year - - - - 1,189,319 1,189,319 (114) 1,189,205
Net change in Financial instrument - - - 2,365,423 2,365,423 - 2,365,423
measured at FVOCI
Actuarial Gain on Retirement Benefit - - - - 18,384 18,384 - 18,384
Obligations
Tax on Other Comprehensive Income (2,120) (2,120) - (2,120)
Total Comprehensive income - - - 2,365,423 1,205,583 3,571,006 (114) 3,570,892
Dividend Paid - - - - (299,985) (299,985) - (299,985)
Balance as at 31st March 2023 999,950 105,116 110,000 8,647,091 4,842,431 14,704,588 (349) 14,704,239
The Financial Statements are to be read in conjunction with related notes, which form a part of the Financial Statements of the
Group set out in pages 82 to 136.
For the Year Ended 31 March Stated Revaluation Dairy FVOCI Retained Total
Company Capital Reserve Development Reserve Earnings Equity
Project
Reserve
Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's
Balance as at 1st April 2021 999,950 105,116 110,000 7,005,467 1,814,237 10,034,770
Profit for the year - - - - 466,879 466,879

Net change in Financial instrument measured at FVOCI - - - (723,799) - (723,799)
Actuarial Gain on Retirement Benefit Obligations - - - - 25,387 25,387
Tax on Other Comprehensive Income (4,570) (4,570)
Total Comprehensive income - - - (723,799) 487,696 (236,103)
Dividend Paid - - - - (199,990) (199,990)
Balance as at 31st March 2022 999,950 105,116 110,000 6,281,668 2,101,943 9,598,677
Balance as at 1st April 2022 999,950 105,116 110,000 6,281,668 2,101,943 9,598,677
Profit for the year - - - - 1,520,907 1,520,907
Net change in Financial instrument measured at FVOCI - - - 2,365,423 - 2,365,423
Actuarial Gain on Retirement Benefit Obligations - - - - 7,908 7,908
Tax on Other Comprehensive Income (2,373) (2,373)
Total Comprehensive income - - - 2,365,423 1,526,442 3,891,865
Dividend Paid - - - - (299,985) (299,985)
Balance as at 31st March 2023 999,950 105,116 110,000 8,647,091 3,328,400 13,190,557
The Financial Statements are to be read in conjunction with related notes, which form a part of the Financial Statements of the
Group set out in pages 82 to 136.
Statement of Cash Flows
Group Company
Cash Flow from Operating Activities
Profit Before Tax 1,262,422 1,097,589 1,509,202 463,618
Adjustments for;
Depreciation on Property, Plant and Equipment 12.1/12.2 346,517 208,892 18,457 19,024
Amortisation of Right to Use of Asset 30.1 14,140 9,898 28 28
Changes in Fair Value of held for Trading Investments 7.1/ 7.2 (2,476) 47,166 (2,476) 47,166
Provision of Impairment for Amounts due from Related - - (38,260) 54,857
Companies
Amortisation of Intangible Assets 13 747 - 747 -
ESC Written-off - 20,313 - 11,155
Provision / (Reversal) of Impairment of Trade Receivables 18.1 21,014 (270) (2,815) 310
Provision on Impairment of Other Receivables 19 (6,357) 6,357 (6,357) 6,357
Gain on Disposal of Property, Plant and Equipment 6 (1,150) (2,900) (1,150) (2,900)
Loss on Translation of Foreign Currency 7.2 40,106 382,788 47,200 375,090
Provision for Retirement Benefit Obligation 25 42,054 19,341 15,879 10,379
Provision for Obsolete Inventories 17.1 (367) 4,142 (1,944) 3,000
Change in Fair Gain of Biological Assets 16.1 (929,568) (327,742) - -
Loss/ (Gain) on Disposal of Biological Assets 6 27,470 (7,008) - -
Lease Rental Income 6 (6,058) (5,500) - -
Dividend Income 6 (1,163,351) (910,558) (1,163,351) (1,110,558)
Interest Income 7.1 (17,850) (18,526) (44,287) (29,697)
Interest Expense on Lease Liability 7.2 62,340 44,289 49 52
Interest Expense 7.2 991,743 34,898 176,455 5,168
Operating Profit/(loss) before Working Capital Changes 681,376 603,169 507,377 (146,951)
(Increase) in Inventories (1,299,868) (284,106) (132,934) 38,475

(Increase)/Decrease in Trade and other Receivables (202,108) (129,737) 105,450 54,954
(Increase)/Decrease in Amounts due from Related Companies (4,088) 274 223,650 (731,194)
Increase/ (Decrease) in Amounts due to Related Companies (80,139) 11,097 (78,603) 29,780
Increase/(Decrease) in Trade and Other Payables (727,297) 786,268 (1,107,293) 711,516
Cash Flows (Used in) Generated from Operations (1,632,124) 986,965 (482,353) (43,420)
Interest Paid (991,743) (34,898) (176,455) (5,168)

Income Tax Paid (122,342) (101,678) - -
Retiring Gratuity Paid 25 (5,372) (6,813) (2,509) (1,638)
Net Cash Flows (Used in) / Generated from Operations (2,751,581) 843,575 (661,317) (50,226)
Group Company
Cash Flow from Investing Activities
Interest Received 7.1 17,850 18,526 44,287 29,697
Dividend Received 1,157,303 906,616 1,157,303 1,106,616
Acquisition of Intangible Assets 13 (3,737) - (3,737) -
Acquisition of Biological Assets 16.2 (25,275) (40,772) - -
Income from Lease Hold Premises 6,058 5,500 - -
Proceeds from Disposal of Property, Plant and Equipment 1,150 3,626 1,150 2,900
Proceeds from Sale of Biological Assets 177,794 205,331 - -
Additional Investment in Subsidiaries - - (1,950,000) -
Purchase and Construction of Property, Plant and Equipment 12.1 (1,079,754) (1,656,650) (1,714) (1,492)
Net Cash Flows (Used in) / Generated from Investing Activities 251,389 (557,823) (752,711) 1,137,721
Cash Flow from Financing Activities

Repayment of Borrowings During the Year 26 (1,531,250) (693,750) (1,250,000) (600,000)
Lease Payment made during the Year 30.2 (39,831) (36,853) (67) (67)
Loan Obtained during the Year 26 2,958,855 1,275,892 2,025,000 300,000
Dividend Paid (299,985) (199,990) (299,985) (199,990)
Net Cash Flows Generated from/(used in) Financing Activities 1,087,789 345,299 474,948 (500,057)
Net (Decrease) /Increase in Cash and Cash Equivalents (1,412,403) 631,051 (939,080) 587,438
Cash and Cash Equivalents at the Beginning of the Year 353,126 (277,926) 779,657 192,219
Cash and Cash Equivalents at the End of the Year (Note 21) (1,059,277) 353,126 (159,423) 779,657
Note A
Analysis of Cash and Cash Equivalents at the End of the Year
Cash and Cash Equivalents 47,281 1,212,884 22,752 1,002,347
Bank Overdraft (1,106,558) (859,758) (182,175) (222,690)
(1,059,277) 353,126 (159,423) 779,657
The Financial Statements are to be read in conjunction with related notes, which form a part of the Financial Statements of the Group set
out in pages 82 to 136.
Notes to the Financial Statements
1. CORPORATE INFORMATION • Statement of Changes in Equity depicting all changes

1.1 Reporting Entity in shareholders’ funds during the year under review of
the Company and the Group.
Lanka Milk Foods (CWE) PLC (“the Company”) is a quoted
public limited liability company incorporated and
• Statement of Cash Flows providing the information
domiciled in Sri Lanka. The Company has been registered
to the users, on the ability of the Company and the
under the Companies Act No. 17 of 1982 and re-
Group to generate cash and cash equivalents and
registered under the Companies Act No. 07 of 2007. The
utilization of those cash flows.
registered office of the Company is located at No 579/1,
Welisara, Ragama.
• Notes to the Financial Statements comprising
accounting policies and other explanatory
The Consolidated Financial Statements of Lanka Milk
information.
Foods (CWE) PLC as at and for the year ended 31 March
2023 comprise of the financial information of the
2.2 Directors Responsibility for Financial Statements
Company and its subsidiaries (together referred to as the
“Group” and individually as “Group entities”). The Board of Directors of the Company is responsible
for the preparation and presentation of Consolidated
1.1 Principal Activities And Nature Of Operations Financial Statements as per the provisions of the
Companies Act No. 07 of 2007 and Sri Lanka Accounting
The principal activity of the Company is importing,
Standards (SLFRSs/ LKASs).
packaging and distribution of milk allied products.
Description of the nature of the operation and principal
2.3 Approval of Financial Statements
activities of the subsidiaries are given in Note 31 to the
Financial Statements. The Consolidated Financial Statements of the Company
and the Group for the year ended 31 March 2023 were
There were no significant changes in the nature of the approved and authorized for issue by the Board of
principal business activities of the Companies in the Directors in accordance with Resolution of the Directors
Group during the financial year. on 18th August 2023.
The Company does not have an identifiable parent of its 2.4 Basis of Measurement
own. The Company is the ultimate parent of the Group. The Consolidated Financial Statements have been
prepared on the historical cost basis except for the
2. BASIS OF PREPARATION following material items, which are measured on an
2.1 Statement of Compliance alternative basis on each reporting date.
The Consolidated Financial Statements of the Group i. Fair Value Through Fair value
and Financial Statements of the Company, have been Other Comprehensive
prepared and presented in accordance with the Sri Lanka Income (FVOCI) (Note 15.1)
Accounting Standards (SLFRSs and LKASs), laid down by
the Institute of Chartered Accountants of Sri Lanka (CA Sri ii. Defined Benefit Obligation Actuarially valued
Lanka) and the requirements of the Companies Act No. 7 (Note 25) and recognized at
of 2007 and provide appropriate disclosures as required present value of the
by the Listing Rules of the Colombo Stock Exchange defined benefit
(CSE). obligation.
These Financial Statements include the following iii. Biological assets (Note 16) Fair value less costs to
components: sell
• Statement of Profit or Loss and Other Comprehensive

iv. Fair Value Through Fair value
Income providing information on the Financial
Profit or Loss (FVTPL)
Performance of the Company and the Group for the
(Note 15.2)
year under review.
No adjustments have been made for inflationary factors
• Statement of Financial Position providing the
affecting the Financial Statements.
information on the Financial Position of the Company
and the Group as at the year end.
2.5 Functional and Presentation Currency 2.7.2 Assumption

Items included in the Financial Statements are measured Information about assumptions and estimation
using the currency of the primary economic environment uncertainties that have a significant risk of resulting in a
in which the entities operate (‘the functional currency’). material adjustment in the year ending 31 March 2023 is
The Financial Statements are presented in Sri Lankan included in the following notes:
Rupees, which is the Group’s functional and presentation
Note 16 – Valuation of biological assets.
currency. All amounts have been rounded to the nearest
thousand, unless otherwise indicated.
Note 17 – Provision for inventory;
2.6 Materiality and Aggregation

Note 25 – Retirement Benefit Obligations; key
Each material class of similar item is presented separately actuarial assumptions; and
in the Financial Statements. Items of dissimilar nature
or function are presented separately unless they are Note 32 – Provisions and contingencies; key
immaterial. assumptions about likelihood and
magnitude of an outflow of resources.
2.7 Use of Judgements and Estimations
In preparing these Financial Statements, management 2.8 Going Concern
has made judgements, estimates and assumptions The Group’s management has made an assessment of
that affect the application of policies and the reported its ability to continue as a going concern and is satisfied
amounts of assets and liabilities, income and expenses. that it has the resources to continue in business for
Actual results may differ from these estimates. a foreseeable future. Furthermore, management is
not aware of any material uncertainties that may cast
The estimates and associated assumptions are based on significant doubt upon the Group’s ability to continue
historical experience and various other factors that are as a going concern. Therefore, the Financial Statements
believed to be reasonable under the circumstances, the continue to be prepared on the going concern basis.
results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not 2.9 Current Versus Non-Current Classification
readily apparent from other sources. The Group presents assets and liabilities in the Statement
of Financial Position based on current / non-current
The estimates and underlying assumptions are reviewed
classification. An asset is current when it is expected
on an ongoing basis. Revisions to accounting estimates
to be realized or intended to be sold or consumed in
are recognized prospectively.
the normal operating cycle and held primarily for the
purpose of trading or expected to be realized within
2.7.1 Judgements
twelve months after the reporting period or is cash or
Information about judgements made in applying cash equivalents unless restricted from being exchanged
accounting policies that have the most significant effects or used to settle a liability for at least twelve months after
on the amounts recognised in the Financial Statements is the reporting period.
included in the following notes:
Note 16 – Biological Assets; All other assets are classified as non-current assets.
Note 24 – Deferred Tax Assets; availability of A liability is current when it is expected to be settled
future taxable profit against which Tax in the normal operating cycle and is held primarily for
losses carried forward can be used; the purpose of trading and is due to be settled within
twelve months after the reporting period or there is no
Note 18 – Impairment loss; key assumptions unconditional right to defer the settlement of the liability
underlying recoverable amounts; and for at least twelve months after the reporting date.
Note 30 – Lease Term: whether the Group is All other liabilities are classified as non-current liabilities.
reasonably certain to exercise
extension options.
2.10 Offsetting entirety in the same level of the fair value hierarchy as
Financial assets and financial liabilities are offset and the lowest level input that is significant to the entire
the net amount reported in the Statement of Financial measurement.
Position, only when there is a legally enforceable right to
offset the recognized amounts and there is an intention Fair values have been determined for measurement and
to settle on a net basis or to realize the assets and settle disclosure purposes based on the following methods.
the liabilities simultaneously. Income and expenses are Where applicable, further information about the
not offset in the Statement Profit or Loss, unless required assumptions made in determining fair value is disclosed
or permitted by Sri Lanka Accounting Standards and in the notes specific to that asset or liability.
as specifically disclosed in the significant accounting
policies of the Company and the Group. 3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out from Note 3.1 onwards
2.11 Determination of Fair Values have been applied consistently for all periods presented
‘Fair value’ is the price that would be received to sell in the financial statements by the Company and the
an asset or paid to transfer a liability in an orderly Group.
transaction between market participants at the
measurement date in the principal or, in its absence, 3.1 Basis of Consolidation
the most advantageous market to which the Group has 3.1.1 Business Combinations
access at that date. The Group accounts for business combinations using the
acquisition method when the acquired set of activities
The fair value of a liability reflects its non-performance and assets meets the definition of a business and control
risk. Several of the Group’s accounting policies and is transferred to the Group. In determining whether
disclosures require the determination of fair value, for a particular set of activities and assets is a business,
both financial and non-financial assets and liabilities. the Group assesses whether the set of assets and
activities acquired includes, at a minimum, an input and
When measuring fair value of an asset or liability, the substantive process and whether the acquired set has the
Group uses observable market data as far as possible. ability to produce outputs.
Fair values are categorized into different levels in a fair
value hierarchy based on the inputs used in the valuation The Group has an option to apply a ‘concentration test’
techniques. that permits a simplified assessment of whether an
acquired set of activities and assets is not a business. The
Level 1: optional concentration test is met if substantially all of
inputs are unadjusted quoted prices in active markets for the fair value of the gross assets acquired is concentrated
identical assets or liabilities. in a single identifiable asset or group of similar
identifiable assets.
Level 2:
inputs are inputs other than quoted prices included
The consideration transferred in the acquisition is
within Level 1 that are observable for the asset or liability
generally measured at fair value, as are the identifiable
either directly (i.e. as prices) or indirectly (i.e. derived from
net assets acquired. Any goodwill that arises is tested
prices).
annually for impairment. Any gain on a bargain purchase
is recognized in profit or loss immediately. Transaction
Level 3:
costs are expensed as incurred, except if related to the
inputs are inputs that are not based on observable
issue of debt or equity securities.
market data (unobservable inputs).
The Group measures goodwill at the acquisition date as:

If inputs used to measure the fair value of an asset or
liability fall into different levels of the fair value hierarchy, • The fair value of the consideration transferred; plus
then the fair value measurement is categorized in its
• The recognized amount of any non – controlling
interests in the acquiree; plus
• If the business combination is achieved in stages, the fair value of the pre- existing equity interest in the acquiree; less
• The net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts
are generally recognized in profit or loss.
3.1.2 Subsidiaries
Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity if it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The
Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date on which control
commences until the date when control ceases.
In the Company’s Financial Statements, investments in subsidiaries are carried at cost less impairment if any, in net recoverable
value.
The details of subsidiaries principal activities and domicile as follows,
Company Principal Activities Domicile
Lanka Dairies (Private) Limited Fresh milk, flavoured milk and fruit juices are produced and packed in Sri Lanka
Tetra Pak packaging.
Ambewela Products (Private) Limited Manufacturing and selling of fresh milk and milk related products. Sri Lanka
Ambewela Livestock Company Limited Rearing of cattle to produce and sale of Cow milk. Sri Lanka
Pattipola Livestock Company Limited Rearing of cattle to produce and sale of Cow milk. Sri Lanka
United Dairies Lanka (Private) Limited Rearing of cattle to produce and sale of Cow milk. Sri Lanka
Indo Lanka Exports (Private)Limited Manufacturing and exporting Fruit Juices, currently not in operation. Sri Lanka
The Consolidated Financial Statements are prepared to a Subsequently at retained interest is accounted for as
common financial year end of 31 March. an equity accounted investee or as an available for
sale financial asset depending on the level of influence
3.1.3 Non-Controlling Interests (“NCI”) retained.
NCI are measured at their proportionate share of the
acquiree’s identifiable net assets at the acquisition date. 3.1.5 Transactions Eliminated on Consolidation
Intra-group balances and transactions, and any
Changes in the Group’s interest in a subsidiary that do unrealized income and expenses (except for foreign
not result in a loss of control are accounted for as equity currency transaction gains or losses) arising from
transactions. intragroup transactions, are eliminated. Unrealized gains
arising from transactions with equity accounted investees
3.1.4 Loss of Control are eliminated against the investment to the extent of
When the Group loses control over a subsidiary, it the Group’s interest in the investee.
derecognizes the assets and liabilities of the subsidiary,
and any related NCI and other components of equity. Any Unrealized losses are eliminated in the same way as
resulting gain or loss is recognized in profit or loss. Any unrealized gains, but only to the extent that there is no
interest retained in the former subsidiary is measured at evidence of impairment.
fair value when control is lost.
3.2 Foreign Currency Transactions 3.3.1.1.4 De-recognition

Transactions in foreign currencies are translated into the An item of property, plant and equipment is
respective functional currencies of the Group companies derecognized upon disposal or when no future economic
at the exchange rates at the dates of the transactions. benefits are expected from its use or disposal. Any gain
or loss arising on derecognizing of the asset (calculated
Monetary assets and liabilities denominated in foreign as the difference between the net disposal proceeds
currencies are translated into the functional currency at and the carrying amount of the asset) is included in
the exchange rate at the reporting date. Non-monetary the statement of profit or loss in the year the asset is
assets and liabilities that are measured at fair value in derecognized.
a foreign currency are translated into the functional
currency at the exchange rate when the fair value was 3.3.1.1.5 Depreciation
determinated. Foreign currency differences are generally Depreciation is calculated to write off the cost of items
recognized in profit or loss. Non-monetary items that are of property, plant and equipment less their estimated
measured based on historical cost in a foreign currency residual values using straight line method over their
are not translated. estimated useful lives, and is generally recognized in
profit or loss. This most closely reflects the expected
3.3 Statement of Financial Position pattern of consumption of the future economic benefits
3.3.1 Property, Plant and Equipment embodied in the asset.
3.3.1.1 Freehold Assets Recognition
Depreciation of an asset begins when it is available for
3.3.1.1.1 Recognition
use and ceases at the earlier of the date that the asset is
Property, plant & equipment are tangible items that are classified as held for sale and the date that the asset is
held for servicing, or for administrative purposes and derecognized.
are expected to be used during more than one period.
Property, Plant & Equipment are recognized if it is Leased assets are depreciated over the shorter of the
probable that future economic benefits associated with lease term or the useful lives unless it is reasonably
the assets will flow to the Group and cost of the asset can certain that the Group will obtain ownership by the end
be reliably measured. of the lease term.
3.3.1.1.2 Measurement Significant components of individual assets are assessed

Items of property, plant and equipment are stated at cost and if a component has a useful life that is different
less accumulated depreciation and impairment losses. from the remainder of that asset, that component
The cost of property, plant and equipment comprises is depreciated separately. The estimated useful lives
its purchase price and any directly attributable costs of of property, plant and equipment for current and
bringing the asset to working condition for its intended comparative periods are as follows.
use. This also includes costs of dismantling and removing Class of Assets Useful Lifetime
the items and restoring the site on which they are
Plant and Machinery 10 years
located. Where parts of an item of property, plant and
equipment have different useful lives, they are accounted Laboratory Equipment 10 years
for as separate items of property plant and equipment. Factory Equipment 10 years
Purchased software that is integral to the functionality Canteen Equipment 10 years

of the related equipment is capitalized as part of that Office Equipment 5 years
equipment.
Fire Fighting Equipment 5 years
3.3.1.1.3 Subsequent Cost Furniture and Fittings 5 years

Subsequent costs are included in the asset’s carrying Fixtures 5 years
amount or recognized as a separate asset, as appropriate, Computers 5 years
only when it is probable that future economic benefit
associated with the item will flow to the Group and the Motor Vehicles 5 years
cost of the item can be measured reliably. The cost of the Milk Collection Equipment 5 years
day-to-day servicing of property, plant and equipment
Motor Roads and Others 5 years
are recognized in the profit or loss.
Buildings on leasehold land are depreciated over the use asset is initially measured at cost, which comprises
unexpired period of lease. Depreciation methods, useful the initial amount of the lease liability adjusted for any
lives and residual values are reviewed at each reporting lease payments made at or before the commencement
date and adjusted if appropriate. date, plus any initial direct costs incurred and an estimate
of costs to dismantle and remove any improvements
3.3.1.1.6 Capital Work-In-Progress made to branches or office premises.
Capital work-in-progress is stated at cost. These are
expenses of a capital nature directly incurred in the The right-of-use asset is subsequently depreciated using
construction of buildings, major plant and machinery, the straight-line method from the commencement date
awaiting capitalization. to the end of the lease term. In addition, the right-of-use
asset is periodically reduced by impairment losses, if any,
3.3.1.2 Impairment of Non-Financial Assets and adjusted for certain re-measurements of the lease
liability.
The carrying amounts of the Group’s non-financial
assets are reviewed at each reporting date to determine
The lease liability is initially measured at the present
whether there is any indication of impairment. If any such
value of the lease payments that are not paid at the
indication exists, then the asset’s recoverable amount is
commencement date, discounted using the interest
estimated.
rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate.
An impairment loss is recognized if the carrying
Generally, the Group uses its incremental borrowing rate
amount of an asset or its cash-generating unit exceeds
as the discount rate.
its recoverable amount. A cash generating unit is the
smallest identifiable asset group that generates cash
The Group determines its incremental borrowing rate by
flows that are largely independent from other assets and
analysing its borrowings from various external sources
groups.
and makes certain adjustments to reflect the terms of the
lease and type of asset leased.
The recoverable amount of an asset or cash generating
unit is the greater of its value in use and its fair value
Lease payments included in the measurement of the
less costs to sell. In assessing value in use, the estimated
lease liability comprise the following:
future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market - fixed payments, including in-substance fixed
assessments of the time value of money and the risks payments;
specific to the asset.
- variable lease payments that depend on an index or a
rate, initially measured using the index or rate as at the
An impairment loss is recognized in profit or loss.
commencement date;
3.3.2 Leases - amounts expected to be payable under a residual
At inception of a contract, the Group assesses whether a value guarantee; and
contract is, or contains, a lease. A contract is, or contains,
- the exercise price under a purchase option that
a lease if the contract conveys the right to control the use
the Group is reasonably certain to exercise, lease
of an identified asset for a period of time in exchange for
payments in an optional renewal period if the Group
consideration. To assess whether a contract conveys the
is reasonably certain to exercise an extension option,
right to control the use of an identified asset, the Group
and penalties for early termination of a lease unless
uses the definition of a lease in SLFRS 16. This definition is
the Group is reasonably certain not to terminate early.
applicable for leases entered after 1st April 2019.
The lease liability is measured at amortised cost using
3.3.2.1 As a Lessee
the effective interest method. It is re-measured when
At commencement or on modification of a contract there is a change in future lease payments arising from
that contains a lease component, the Group allocates a change in an index or rate, if there is a change in the
consideration in the contract to each lease component Group's estimate of the amount expected to be payable
on the basis of its relative standalone price. under a residual value guarantee, if the Group changes
its assessment of whether it will exercise a purchase,
The Group recognises a right-of-use asset and a lease extension or termination option or if there is a revised
liability at the lease commencement date. The right-of- in-substance fixed lease payment.
When the lease liability is re-measured in this way, a which are raised or grown by the Group for the purposes
corresponding adjustment is made to the carrying of producing raw milk.
amount of the right-of-use asset or is recorded in profit or
loss if the carrying amount of the right-of-use asset has Biological assets are measured at the end of the year at
been reduced to zero. their fair values less costs to sell. Any resultant gain or
loss arising on initial recognition and from changes in fair
3.3.2.2 Short Term Leases and Leases of Low-Value Assets value less costs to sell is charged to the profit or loss for
The Group has elected not to recognise right-of-use the period in which the gain or loss arises.
assets and lease liabilities for leases of low-value assets
and short-term leases. The Group recognises the lease Fair value of biological assets has been calculated using
payments associated with these leases as an expense on discounted cash flows. The livestock of similar age,
a straight-line basis over the lease term. weight, pregnancy, lactations, milk production and
relevant costs have been considered in the fair value
3.3.2.3 As a Lessor calculation.
When the Group acts as a lessor, it determines at lease
Farming costs such as feeding, labour costs, pasture
inception whether the lease is a finance lease or an
maintenance, veterinary services are expensed as
operating lease.
incurred. The cost of purchase of cattle are capitalized as
part of livestock.
To classify each lease, the Group makes an overall
assessment of whether the lease transfers substantially
Non perennial crops have been valued at cost since the
all of the risks and rewards incidental to ownership of
cost is approximate to fair value, due to little biological
the underlying asset. If this is the case, then the lease is a
transformation has taken place since initial cost incurred.
finance lease; if not, then it is an operating lease. As part
of this assessment, the Group considers certain indicators
3.3.5 Financial Instruments
such as whether the lease is for the major part of the
economic life of the asset. A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
The Group applies the derecognition and impairment equity instrument of another entity.
requirements in SLFRS 9 to the net investment in the
3.3.5.1 Recognition and Initial Measurement
lease. The Group further regularly reviews estimated
unguaranteed residual values used in calculating the Trade receivables and debt securities issued are initially
gross investment in the lease. recognised when they are originated. All other financial
assets and financial liabilities are initially recognised
3.3.3 Inventories when the Group becomes a party to the contractual
provisions of the instrument.
Inventories are measured at the lower of cost and net
realizable value. Net realizable value is the estimated
A financial asset (unless it is a trade receivable without
selling price in the ordinary course of business, less the
a significant financing component) or financial liability
estimated cost of completion and selling expenses.
is initially measured at fair value plus, for an item not at
FVTPL, transaction costs that are directly attributable
The cost of milk powder inventories is based on weighted
to its acquisition or issue. A trade receivable without a
average principle and cost of packing material and
significant financing component is initially measured at
engineering spares are based on first in first out (FIFO)
the transaction price.
method and includes expenditure incurred in acquiring
the inventories and bringing them to their existing
3.3.5.2 Classification and Subsequent Measurement
location and condition. In the case of manufactured
inventories and work in progress, cost includes an Financial Assets
appropriate share of overheads based on normal On initial recognition, a financial asset is classified as
operating capacity. measured at: amortised cost; FVOCI – debt investment;
FVOCI – equity investment; or FVTPL.
3.3.4 Biological Assets
Biological assets comprise male cows and dairy cows Financial assets are not reclassified subsequent to their
which are divided into calves, heifers and milking cows, initial recognition unless the Group changes its business
model for managing financial assets, in which case all
affected financial assets are reclassified on the first day liabilities or expected cash outflows or realising cash
of the first reporting period following the change in the flows through the sale of the assets;
business model.
• how the performance of the portfolio is evaluated and
reported to the Group’s management;
A financial asset is measured at amortised cost if it meets
both of the following conditions and is not designated as • the risks that affect the performance of the business
at FVTPL: model (and the financial assets held within that
business model) and how those risks are managed;
• it is held within a business model whose objective is to
hold assets to collect contractual cash flows; and • how managers of the business are compensated – e.g.
whether compensation is based on the fair value of
• Its contractual terms give rise on specified dates to
the assets managed or the contractual cash flows
cash flows that are solely payments of principal and
collected; and
interest on the principal amount outstanding.
• the frequency, volume and timing of sales of financial
A debt investment is measured at FVOCI if it meets both assets in prior periods, the reasons for such sales and
of the following conditions and is not designated as at expectations about future sales activity.
FVTPL:
Transfers of financial assets to third parties in transactions
• it is held within a business model whose objective is
that do not qualify for derecognition are not considered
achieved by both collecting contractual cash flows
sales for this purpose, consistent with the Group’s
and selling financial assets; and
continuing recognition of the assets.
• its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and Financial assets that are held for trading or are managed
interest on the principal amount outstanding. and whose performance is evaluated on a fair value basis
are measured at FVTPL.
On initial recognition of an equity investment that is
not held for trading, the Group may irrevocably elect Financial assets – assessment whether contractual cash
to present subsequent changes in the investment’s flows are solely payments of principal and interest.
fair value in OCI. This election is made on an For the purposes of this assessment, ‘principal’ is
investment‑by‑investment basis. defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the
All financial assets not classified as measured at time value of money and for the credit risk associated
amortised cost or FVOCI as described above are with the principal amount outstanding during a
measured at FVTPL. This includes all derivative financial particular period of time and for other basic lending risks
assets. On initial recognition, the Company and the and costs (e.g. liquidity risk and administrative costs), as
Group may irrevocably designate a financial asset that well as a profit margin.
otherwise meets the requirements to be measured
at amortised cost or at FVOCI as at FVTPL if doing In assessing whether the contractual cash flows are
so eliminates or significantly reduces an accounting solely payments of principal and interest, the Group
mismatch that would otherwise arise. considers the contractual terms of the instrument. This
includes assessing whether the financial asset contains a
Financial Assets – Business Model Assessment contractual term that could change the timing or amount
The Group makes an assessment of the objective of of contractual cash flows such that it would not meet
the business model in which a financial asset is held at this condition. In making this assessment, the Group
a portfolio level because this best reflects the way the considers:
business is managed and information is provided to
• contingent events that would change the amount or
management. The information considered includes:
timing of cash flows;
• the stated policies and objectives for the portfolio
• terms that may adjust the contractual coupon rate,
and the operation of those policies in practice. These
including variable‑rate features; prepayment and
include whether management’s strategy focuses on
extension features; and
earning contractual interest income, maintaining a
particular interest rate profile, matching the duration • terms that limit the Group’s claim to cash flows from
of the financial assets to the duration of any related specified assets (e.g. non‑recourse features).
A prepayment feature is consistent with the solely 3.3.5.3 Derecognition

payments of principal and interest criterion if the Financial Assets
prepayment amount substantially represents unpaid The Group derecognises a financial asset when the
amounts of principal and interest on the principal contractual rights to the cash flows from the financial
amount outstanding, which may include reasonable asset expire, or it transfers the rights to receive the
additional compensation for early termination of the contractual cash flows in a transaction in which
contract. substantially all of the risks and rewards of ownership of
the financial asset are transferred or in which the Group
Additionally, for a financial asset acquired at a discount
neither transfers nor retains substantially all of the risks
or premium to its contractual par amount, a feature
and rewards of ownership and it does not retain control
that permits or requires prepayment at an amount that
of the financial asset.
substantially represents the contractual par amount plus
accrued (but unpaid) contractual interest (which may also The Group enters into transactions whereby it transfers
include reasonable additional compensation for early assets recognised in its statement of financial position,
termination) is treated as consistent with this criterion if but retains either all or substantially all of the risks and
the fair value of the prepayment feature is insignificant at rewards of the transferred assets. In these cases, the
initial recognition. transferred assets are not derecognised.
Financial Assets – Subsequent Measurement and Gains
3.3.5.4 Financial Liabilities
and Losses
The Group derecognises a financial liability when its
Financial Assets at These assets are subsequently
contractual obligations are discharged or cancelled, or
FVTPL measured at fair value. Net gains
expire. The Group also derecognises a financial liability
and losses, including any interest or
dividend income, are recognised in when its terms are modified and the cash flows of the
profit or loss. modified liability are substantially different, in which case
Financial Assets at These assets are subsequently a new financial liability based on the modified terms is
Amortised Cost measured at amortised cost using recognised at fair value.
the effective interest method.
The amortised cost is reduced by 3.3.5.5 Offsetting
impairment losses. Interest income, Financial assets and financial liabilities are offset and
foreign exchange gains and losses the net amount presented in the statement of financial
and impairment are recognised position when, and only when, the Group currently has
in profit or loss. Any gain or loss
a legally enforceable right to set off the amounts and it
on derecognition is recognised in
intends either to settle them on a net basis or to realise
profit or loss.
the asset and settle the liability simultaneously.
Debt Investments These assets are subsequently
at FVOCI measured at fair value. Interest
3.3.5.6 Impairment of Financial Assets
income calculated using the
effective interest method, foreign Financial instruments and contract assets
exchange gains and losses and
impairment are recognised in The Group recognises loss allowances for ECLs on:
profit or loss. Other net gains and
• financial assets measured at amortised cost;
losses are recognised in OCI. On
derecognition, gains and losses • debt investments measured at FVOCI; and
accumulated in OCI are reclassified
to profit or loss. • contract assets.
Equity These assets are subsequently The Group measures loss allowances at an amount equal
Investments at measured at fair value. Dividends to lifetime ECLs, except for the following, which are
FVOCI are recognised as income in profit
measured at 12‑month ECLs:
or loss unless the dividend clearly
represents a recovery of part of the • debt securities that are determined to have low credit
cost of the investment. Other net risk at the reporting date; and other debt securities
gains and losses are recognised in and bank balances for which credit risk (i.e. the risk of
OCI and are never reclassified to default occurring over the expected life of the financial
profit or loss. instrument) has not increased significantly since initial
recognition.
Loss allowances for trade receivables and contract assets For debt securities at FVOCI, the loss allowance is charged
are always measured at an amount equal to lifetime ECLs. to profit or loss and is recognised in OCI.
When determining whether the credit risk of a financial Write-off

asset has increased significantly since initial recognition The gross carrying amount of a financial asset is written
and when estimating ECLs, the Group considers off when the Group has no reasonable expectations of
reasonable and supportable information that is relevant recovering a financial asset in its entirety or a portion
and available without undue cost or effort. This includes thereof. For individual customers, the Group has a policy
both quantitative and qualitative information and of writing off the gross carrying amount when the
analysis, based on the Group’s historical experience financial asset is 365 days past due based on historical
and informed credit assessment and including experience of recoveries of similar assets. For corporate
forward‑looking information. customers, the Group individually makes an assessment
with respect to the timing and amount of write‑off
The Group considers a financial asset to be in default based on whether there is a reasonable expectation of
when: recovery. The Group expects no significant recovery from
the amount written off. However, financial assets that are
• the borrower is unlikely to pay its credit obligations written off could still be subject to enforcement activities
to the Group in full, without recourse by the Group to in order to comply with the Group’s procedures for
actions such as realising security (if any is held); or recovery of amounts due.
The Group considers a debt security to have low credit 3.3.6 Stated Capital
risk when its credit risk rating is equivalent to the globally Ordinary Shares
understood definition of ‘investment grade’. The Group
Ordinary shares are classified as equity. Incremental costs
considers this to be Baa3 or higher per Moody’s or BBB‑
directly attributable to the issue of ordinary shares and
or higher per Fitch/S&P.
share options are recognized as a deduction from equity,
Lifetime ECLs are the ECLs that result from all possible net of any tax effects.
default events over the expected life of a financial
3.3.7 Employee Benefits
instrument.
a. Defined Contribution Plans
12‑month ECLs are the portion of ECLs that result from Defined contribution plan is a post employment
default events that are possible within the 12 months benefit plan under which contributions are made
after the reporting date (or a shorter period if the into a separate fund and the entity will have no legal
expected life of the instrument is less than 12 months). or constructive obligation to pay further amounts.
Obligations for contributions to defined contribution
The maximum period considered when estimating ECLs plan are recognized as an employee benefit expense in
is the maximum contractual period over which the Group profit or loss in the periods during services is rendered
is exposed to credit risk. by employees. Prepaid contributions are recognized as
an asset to the extent that a cash refund or a reduction in
Measurement of ECLs future payment is available.
ECLs are a probability‑weighted estimate of credit losses.
Credit losses are measured as the present value of all cash Employees’ Provident Fund (EPF):
shortfalls (i.e. the difference between the cash flows due The Group entities and employees contribute 12% and
to the entity in accordance with the contract and the cash 10% respectively on the basic salary of each employee to
flows that the Group expects to receive). the above mentioned fund.
ECLs are discounted at the effective interest rate of the Employees’ Trust Fund (ETF):
financial asset. The Group entities contributes 3% of the basic salary of
each employee to the Employees’ Trust Fund.
Presentation of Allowance for ECL in the Statement of
Financial Position
Loss allowances for financial assets measured at
amortised cost are deducted from the gross carrying
amount of the assets.
b. Defined Benefit Plans the occurrence or non-occurrence of one or more

A defined benefit plan is a post employment benefit uncertain future events not wholly within the control
plan other than a defined contribution plan. The Group’s of the entity; or
net obligation in respect of defined benefit plans is b) a present obligation that arises from past events but is
calculated separately for each plan by estimating the not recognized because:
amount of future benefit that employees have earned in
return for their service in the current and prior periods; I. it is not probable that an outflow of resources
that benefit is discounted to determine its present value. embodying economic benefits will be required to
settle the obligation; or
Provision for gratuity on the employees of the Group II. the amount of the obligation cannot be measured
are based on actuarial valuation as recommended by Sri with sufficient reliability.
Lanka Accounting Standard No.19 ‘Employee Benefits’
(LKAS - 19). The actuarial valuation was carried out by A contingent asset is a possible asset that arises from past
professionally qualified firm of actuaries, as at 31 March events and whose existence will be confirmed only by the
2023. The valuation method used by the actuary is occurrence or non-occurrence of one or more uncertain
“Projected Unit Credit Method”. The Group recognizes future events not wholly within the control of the entity.
any actuarial gains & losses arising from defined benefit All the contingent liabilities are disclosed, as notes to the
plan immediately in Other Comprehensive Income and Financial Statements unless the outflow of resources is
all expenses related to defined benefit plan in personnel made contingent assets if exits are disclosed when inflow
expenses in the Statement of Profit or Loss and Other of economic benefit is probable.
Comprehensive Income.
All the contingent liabilities are disclosed, as Notes to the
When the benefits of a plan are changed or when a Financial Statements unless the outflow of resources is
plan is curtailed, the resulting change in benefits that made contingent assets if exits are disclosed when inflow
relates to past service or the gain or loss on curtailment of economic benefit is probable.
is recognized immediately in profit or loss. The Company
3.3.9 Commitments
recognizes gain or losses on the settlement of a defined
plan when the settlement occurs. All material commitments as at the reporting date
have been identified and disclosed in the Notes to the
The Group provide for gratuity under the payment of Financial Statements.
Gratuity Act No. 12 of 1983. Provision for gratuity has
been made for employees who have completed 5 year of 3.3.10 Fair Value Measurement
services with the Group. Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
The liability is not externally funded. transaction between market participants at the
measurement date. When available, the Group measures
c. Short Term Benefits the fair value of an instrument using quoted prices in an
Short-term employee benefit obligations are measured active market for that instrument. A market is regarded as
on an undiscounted basis and are expensed as the active if quoted prices are readily and regularly available
related service is provided. and represent actual and regularly occurring market
transactions on an arm’s length basis. If a market for a
3.3.8 Provisions, Contingent Assets and Contingent Liabilities financial instrument is not active, the Group establishes
Provisions are recognized, if as a result of a past event, fair value using a valuation technique.
the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an 3.4 Statement of Profit or Loss and Other Comprehensive
outflow of economic benefits will be required to settle Income
the obligation. 3.4.1 Revenue Recognition
Revenue is measured based on consideration specified
A Contingent Liability is: in a contract with a customer and excludes amounts
a) a possible obligation that arises from past events collected on behalf of third parties. The Group recognises
and whose existence will be confirmed only by
revenue when it transfers control over a good or service – relate directly to an existing contract or specific
to a customer. Revenue is presented net of Value Added anticipated contract;
Tax (VAT), rebates and discounts and after eliminating
– generate or enhance resources that will be used to
intra-group sales
satisfy performance obligations in the future; and
3.4.1.1 SLFRS 15- Revenue from Contracts with Customers – are expected to be recovered.
A. Revenue Streams The cost of fulfilling a contract will be amortized over the
The Group’s revenue comprises only the revenue from contract period on a systematic basis.
contracts with customers. Revenue from contract
with customers generates primarily from importing, B.ii Contract Liabilities
packaging and distribution of milk allied products. The Group recognize a contract liability for the deferred
revenue on the material right provided for the customers
B. Contract Balances in the future events.
B.i Contract Assets
The contract liability shall be realized on the basis of
a. Cost to Obtain Contract realizing the material right or on a systematic basis
accordingly.
The Group capitalizes incremental costs to obtain a
contract with a customer for the assets with more than
C. Performance Obligations and Revenue Recognition
one year amortization period and if it expects to recover Policies
those costs. The Costs that will be incurred regardless
Revenue is measured based on the consideration
of whether the contract is obtained – including costs
specified in a contract with a customer. The Group
that are incremental to trying to obtain a contract,
recognizes revenue when it transfers control over a good
are expensed as they are incurred. The cost to obtain
or services to a contract.
contract will be amortized over the contract period on a
systematic basis.
The following table provides information about the
nature and timing of the satisfaction of performance
b. Cost of Fulfilling a Contract
obligations in contracts with customers, including
The Group capitalizes the costs incurred in fulfilling a significant payment terms, and the related revenue
contract with a customer for which are not in the scope recognition policies.
of other guidance and only if the fulfillment costs meet
the following criteria:
Type of product / Nature and timing of satisfaction of performance obligations, Revenue recognition under
service including significant payment terms SLFRS 15
Sales of milk allied The Group sells products through their distributors in several Revenue from milk sales are
products locations. The goods are realized when the goods are transported recognized at the dispatch point.
out, and the invoice is raised afterwards.
Export Revenue If the export is on FOB (Free On Board) terms, the performance Revenue is recognized once the
obligation is satisfied when the goods are cleared at the port of performance obligations are
shipment and the documents of title are delivered to buyer (or fulfilled based on the trade terms.
handed over to the local bank).
If the export is on CIF (Cost, Insurance and Freight) terms, the

Group delivers the goods to the port of shipment, providing
export clearance while arranging and paying for the carriage and
insurance. Hence performance obligation is satisfied on delivery
to the buyer or transfer of the documents of title to the goods,
whichever is later.
Sale of Farm The Group sells products through their distributors in several Revenue from farm product sales
Products locations. The performance obligation is satisfied when the are recognized at the dispatch
goods are transported out, and the invoice is raised afterwards. point.
3.4.1.2 Other Revenue Borrowing costs that are not directly attributable to the
3.4.1.2.1 Dividend Income acquisition, construction or production of a qualifying
asset are recognized in profit or loss using the effective
Dividend income from investments is recognized when
interest rate method.
the shareholder’s right to receive payment has been
established.
Foreign currency gains or losses and gain or loss on
changes in fair value of financial assets held for trading
3.4.1.2.2 Rent Income
are reported on a net basis as either finance income or
Rental Income is recognized in profit or loss as it accrues. finance expense depending on whether foreign currency
movements and market prices are in a net gain or net loss
3.4.2 Other Operating Income
position.
Gains and losses on the disposal of investments held by
the Group have been accounted for in the Statement of 3.4.5 Income Tax Expense
Profit or Loss.
Income tax expense comprises current and deferred tax.
Income tax expense is recognized in profit or loss except
Gains and losses on the disposal of property, plant &
to the extent that it relates to a business combination, or
equipment are determined by comparing the net sales
items recognized directly in equity, or in OCI.
proceeds with carrying amount. These are included in
profit or loss.
The Group has determined that interest and penalties
related to income taxes, including uncertain tax
Gain or loss arising from changes in fair value of
treatments, do not meet the definition of income taxes,
biological assets is dealt in the Statement of Profit or Loss.
and therefore accounted for them under LKAS 37
Provisions, Contingent Liabilities and Contingent Assets.
3.4.3 Borrowing Cost
Borrowing costs are recognized as an expense in the a. Current Tax Expense
period in which they are incurred, except to the extent
Current tax expenses for the current and comparative
where borrowing costs that are directly attributable
periods are measured at the amount paid or expected
to the acquisition, construction or production of a
to be payable to the Commissioner General of Inland
qualifying asset that takes a substantial period of time to
Revenue on taxable income for the respective year of
get ready for its intended use or sale is capitalized as part
assessment computed in accordance with the provisions
of that asset.
of the Inland Revenue Act, No. 24 of 2017 as amended by
subsequent legislation enacted or substantively enacted
Borrowing costs that are not capitalized are recognized
by the reporting date.
as expenses in the period which they are incurred and
charged to the Statement of Profit or Loss.
b. Deferred Tax
The amounts of the borrowing costs which are eligible for Deferred tax is recognized in respect of temporary
capitalization are determined in accordance with the in differences between the carrying amounts of assets
LKAS 23 – ‘Borrowing Costs’. and liabilities for financial reporting purposes and the
amounts used for taxation purposes.
3.4.4 Finance Income and Expense
A deferred tax assets are recognized only to the extent
Finance income comprises interest income on fixed
that it is probable that future taxable profits will be
deposits, interest on amounts due from related
available against which the assets can be utilized.
companies and gain on translation of foreign currency.
Deferred tax assets are reviewed at each reporting
Interest income is recognized as it accrues in the profit or
date and are reduced to the extent that it is no longer
loss, using the effective interest method.
probable that the related tax benefit will be realized
Finance cost comprise interest expenses on borrowings,
Unrecognized deferred tax assets are reassessed at each
interest on overdraft and gain or loss on changes in fair
reporting date and recognized to the extent that it has
value of financial assets held for trading.
become probable that future taxable profits will be
available against which they can be used.
Deferred tax is measured at the tax rates that are - LKAS 7 ‘Statement of Cash Flows.’ Cash and cash
expected to be applied to temporary differences when equivalents comprise short term, highly liquid
they reverse, using tax rates enacted or substantively investments that are readily convertible to known
enacted at the reporting date. amounts of cash and are subject to an insignificant risk of
changes in value.
Deferred tax assets and liabilities are offset only if certain
criteria are met. 4 NEW AND AMENDED STANDARDS ISSUED BUT NOT
EFFECTIVE AS AT THE REPORTING DATE.
3.4.6 Earnings per Share (EPS) The Institute of Chartered Accountants of Sri Lanka
The Group presents basic and diluted Earnings per has issued a number of new amendments to Sri Lanka
Share (EPS) for its ordinary shares. Basic EPS is calculated Accounting Standards (SLFRSs/ LKASs) that are effective
by dividing the profit or loss attributable to ordinary for annual periods beginning after the current financial
shareholders of the Group by the weighted average year. Accordingly, the Group has not early adopted them
number of ordinary shares outstanding during the in preparing these financial statements.
period.
The following amended standards are not expected
Diluted EPS is determined by adjusting the profit or loss to have a significant impact on the Group’s financial
attributable to ordinary shareholders and the weighted statements.
average number of ordinary shares outstanding for the
effects of all dilutive potential ordinary shares. Classification of liabilities as current or non-current
(Amendments to LKAS 01)
3.4.7 Segment Reporting The amendment aims to clarify the requirements on
A segment is a distinguishable component of the Group determining whether a liability is current or non-current
that is engaged either in providing related products or and apply for annual reporting periods beginning on or
services (business segment) or in providing products after 1 January 2023.
or services within a particular economic environment
(geographical segment), which is subject to risks and The amendments in classification of liabilities as current
rewards that are different from those of other segments. or non-current (Amendments to LKAS 01) affect only the
presentation of liabilities in the statement of financial
The activities of the segments are described in Note 34 to position not the amount or timing of recognition of any
the Financial Statements. asset, liability income or expenses or the information that
entities disclose about those item.
3.4.8 Related Party Transactions
Deferred tax related to assets and liabilities arising from a
Disclosure has been made in respect of the transactions
single transaction. (Amendments to LKAS 12)
in which one party has the ability to control or exercise
significant influence over the financial and operating The amendments narrow the scope of the initial
policies/decisions of the other, irrespective of whether a recognition exemption to exclude transactions that give
price is being charged. rise to equal and offsetting temporary differences – e.g.
leases and decommissioning liabilities. The amendments
3.4.9 Comparative Information apply for annual reporting periods beginning on or
after 1 January 2023. For leases and decommissioning
The Group accounting policies have been consistently
liabilities, the associated deferred tax asset and liabilities
applied by the Group and are consistent with those of the
will need to be recognised from the beginning of
previous year’s figures and phrases which have been re-
the earliest comparative period presented, with any
arranged wherever necessary to conform to the current
cumulative effect recognised as an adjustment to
presentation.
retained earnings or other components of equity at that
date. For all other transactions, the amendments apply to
3.4.10 Statement of Cash Flows
transactions that occur after the beginning of the earliest
The Statement of Cash Flows has been prepared period presented.
using the ‘Indirect Method’ of preparing cash flows in
accordance with the Sri Lanka Accounting Standard
Disclosure of Accounting Policies (Amendment to LKAS 1)

IFRS Practice Statement 2
Amendments to LKAS 1 - Presentation of Financial
Statements; intends to help companies provide useful
accounting policy disclosures. Key amendments to
LKAS 1 includes requiring companies to disclose their
material accounting policies rather than their significant
accounting policies, clarifying that accounting policies
related to immaterial transactions, other events or
conditions are themselves immaterial and as such need
not be disclosed; and clarifying that not all accounting
policies that relate to material transactions, other events
or conditions are themselves material to a company’s
Definition of Accounting Estimates (Amendments to

LKAS 8)
Distinguishing between accounting policies and
accounting estimates is important because changes in
accounting policies are generally applied retrospectively,
while changes in accounting estimates are applied
prospectively. The approach taken can therefore affect
both the reported results and trends between periods.
Amendments to IAS 8 - Accounting Policies, Changes
in Accounting Estimates and Errors will clarify how
companies should distinguish changes in accounting
policies from changes in accounting estimates, with a
primary focus on the definition of and clarifications on
accounting estimates.
Group Company
Rs.000's Rs.000's Rs.000's Rs.000's
5 REVENUE
Gross Revenue 14,171,501 9,771,539 4,072,143 3,423,954
14,171,501 9,771,539 4,072,143 3,423,954
6 OTHER OPERATING INCOME

Gain on Disposal of Property, Plant and Equipment 1,150 2,900 1,150 2,900
Insurance Claims 990 - 990 -
Gain on Disposal of Biological Assets (27,470) 7,008 - -
Change in Fair Value of Biological Assets 929,568 327,742 - -
Reversal of Related Party Payable Balance - - 38,261 -
Sundry Income 1,592 7,208 77 635
Reversal of Inventory Provision 2,968 848 1,944 -
Storage Income 10,000 10,000 10,000 10,000
Other Income 135,285 2,029 50,829 -
Lease Rental Income 6,058 5,500 - -
Reversal of / (Charge for) Provision for Impairment of Trade (21,014) 580 2,815 -
Receivable
1,039,127 363,815 106,066 13,535
7 NET FINANCE EXPENSE

7.1 Finance Income
Dividend Income 1,163,351 910,558 1,163,351 1,110,558
Interest on Fixed Deposits 16,751 17,839 15,825 13,878
Interest on Loans and Receivables 1,099 605 848 439
Interest from Trade Receivables - 82 - -
Gain on Changes in Equity Securities at FVTPL 2,476 - 2,476 -
Gain on Translation of Foreign Currency 8,944 - - -
Interest on Amount due from Related Companies - - 27,614 15,380
1,192,621 929,084 1,210,114 1,140,255
7.2 Finance Expense

Interest on Bank Overdraft (248,934) (30,579) (42,768) (849)
Interest on Lease Liability (62,340) (44,289) (49) (52)
Interest on Long Term Borrowings (742,809) (4,180) (133,687) (4,180)
Interest on Trade Receivables - (139) - (139)
Loss on Changes in Equity Securities at FVTPL - (47,166) - (47,166)
Loss on Translation of Foreign Currency (49,050) (382,788) (47,200) (375,090)
(1,103,133) (509,141) (223,704) (427,476)
Net Finance Expense 89,488 419,943 986,410 712,779

Group Company
Rs.000's Rs.000's Rs.000's Rs.000's
8 PROFIT BEFORE TAXATION
Directors' Emoluments 1,500 1,500 1,500 1,500
Auditors' Remuneration
- Audit Services 6,620 6,018 3,989 3,626
- Audit Related services 1,028 1,206 1,028 641
Non Audit Services Fees 1,072 1,073 381 405
Depreciation on Property, Plant and Equipment 346,517 208,892 18,457 19,024
Amortisation of Right of Use Assets 14,140 9,898 28 28
Provision (Reversal) for Impairment Loss on Trade 21,014 (270) (2,815) 310
Receivables
Management Fees 5,000 1,000 5,000 1,000
Provision for Obsolete Inventory (367) 4,142 (1,944) 3,000
Personnel Costs (Note 8.1) 1,359,588 812,039 431,770 392,113
8.1 Personnel Costs

Defined Contribution Plan Costs - EPF and ETF 68,725 54,122 29,585 29,221
Defined Benefit Plan Cost - Retirement Benefit Obligation 42,054 19,341 15,879 10,379
Other Staff Costs 1,248,809 738,576 386,306 352,513
1,359,588 812,039 431,770 392,113
Total Number of Employees as at Year End 724 741 225 234
9 INCOME TAX
Current Tax Expense
Income Tax for the year (Note 9.1.1) 105,011 103,830 - -
Under/(Over) Provision of Income Tax (1,246) - - -
103,765 103,830 - -
Deferred Tax Expense

Deferred Tax Charge /(Credit) for the Year (Note 24) (270,026) (70,744) (4,538) (3,261)
Impact on Deferred Tax from Rate Change 239,478 - (7,167) -
(30,548) (70,744) (11,705) (3,261)
Total Income Tax Expense 73,217 33,086 (11,705) (3,261)

Effective Tax Rate (%)-including Deferred Tax 6% 3% - -
Effective Tax Rate (%)-excluding Deferred Tax 8% 9% - -
9 INCOME TAX (CONTINUED)

a) The profits and income of Lanka Milk Foods (CWE) PLC is liable for income tax at the first 6 months rate 18% & second 6 months
rate 30% (2022-18%) in terms of the Provisions of the Inland Revenue Act No.24 of 2017 and subsequent amendments thereto.
b) In terms of the provisions of Inland Revenue Act No.24 of 2017 and subsequent amendments thereto, the profits and income
of Lanka Dairies (Private) Limited, that generated from agro processing are taxed at the first 6 months rate of 14% & second 6
moths rate 30% , manufacturing income taxed at the first 6 months rate 18% & second 6 months rate 30% ,other income are
liable for income tax at the first 6 months rate 24% & second 6 months rate 30%. (2022-24%) and Indo Lanka Exports (Private)
Limited is taxed at the first 6 month rate 14% & second 6 months rates 30%. (2022- 14%)
c) The profits and income of Ambewela Livestock Company Limited , Pattipola Livestock Company Limited and United Dairies
Lanka (Private) Limited is exempt for income tax in terms of the Provisions of the Inland Revenue Act No.24 of 2017. (2022 -
Exempt)
Group Company
Rs.000's Rs.000's Rs.000's Rs.000's
9.1 Numerical Reconciliation of Accounting Profit to Income
Tax Expense
Profit before Income Tax Expenses 1,262,422 1,097,589 1,509,202 463,618
Consolidation Adjustments 38,320 145,514 - -
1,300,742 1,243,103 1,509,202 463,618
Disallowable Expenses 543,191 474,024 (6,405) 153,081

Tax Deductible Expenses (1,984,062) (299,406) (13,435) (12,231)
Tax Exempt Income (2,847,266) (1,497,727) (1,208,787) (1,147,865)
Gain/Loss Asset Disposal/Sale of Livestock 1,278,618 304,061 - -
Business Income (1,708,777) 224,054 280,575 (543,398)
9.1.1 Business Income 915,320 823,500 280,575 -

Business (Loss)/ Income exempted (2,583,646) 187,541 - -
Business Loss (40,451) (786,987) - (543,398)
(1,708,777) 224,054 280,575 (543,398)
Business Profit 915,320 823,500 280,575 -

Non Business Income 139,904 315,594 139,155 311,638
Tax Loss Claimed During the Year (419,730) (405,567) (419,730) (311,638)
Taxable Income 635,494 733,527 - -
Income tax @ 24% 112 949 - -

Income tax @ 18% 5,098 3,335 - -
Income tax @ 14% 71,936 99,546 - -
Income tax @ 30% 27,865 - - -
105,011 103,830 - -
9 INCOME TAX (CONTINUED)

Group Company
Rs.000's Rs.000's Rs.000's Rs.000's
9.2 Accumulated Tax Losses
Tax Loss Brought Forward 2,588,947 2,207,686 1,008,063 776,303
Adjustments Related to Prior Years (725,653) (159) (4,694) -
Loss for the Year 40,451 786,987 - 543,398
Tax Loss Claimed During the Year (419,730) (405,567) (419,730) (311,638)
Tax Loss Carried Forward 1,484,015 2,588,947 583,639 1,008,063
10 EARNINGS PER SHARE

10.1 Basic Earnings Per Share
The calculation of basic earnings per share is based on the profit after tax attributable to ordinary shareholders divided by the
weighted average number of ordinary shares outstanding during the year.
Group Company
Profit Attributable to Ordinary Shareholders (Rs.'000) 1,189,319 1,065,100 1,520,907 466,879
Weighted Average Number of Ordinary Shares ('000) 39,998 39,998 39,998 39,998
Basic Earnings Per Share (Rs.) 29.73 26.63 38.02 11.67
10.2 Diluted Earnings Per Share

There were no potential dilutive ordinary shares outstanding at any time during the year. Therefore, diluted earning per share is
same as Basic earnings per share.
11 DIVIDENDS PER SHARE

Group Company
Dividend per share (Rs.) 5.00 7.50 5.00 7.50
*The Directors have recommended a Interim Dividend payment of Rs. 5.00 per share for the year ended 31st March 2023
In compliance with Sri Lanka Accounting Standard LKAS 10 - Events after the reporting period, the Interim Dividend
recommended is not recognised as a liability in the financial statements as at 31st March 2023.
12 PROPERTY, PLANT AND EQUIPMENT

12.1 Group
As at Additions/ Disposals/ As at As at
01/04/2022 Transfers Transfers 31/03/2023 31/03/2022
Rs.000’s Rs.000’s Rs.000's Rs.000’s Rs.000’s
Cost /Deemed Cost
Leasehold Buildings 912,574 3,677,162 - 4,589,736 912,574
Plant and Machinery 2,454,348 653,146 - 3,107,494 2,454,348
Laboratory Equipment 11,775 205 - 11,980 11,775
Factory Equipment 275,736 4,056 - 279,792 275,736
Canteen Equipment 8,804 736 - 9,540 8,804
Office Equipment 11,138 4,088 - 15,226 11,138
Fire Fighting Equipment 4,255 - - 4,255 4,255
Furniture and Fittings 13,084 355 - 13,439 13,084
Fixtures 20 - - 20 20
Computers 35,957 11,956 - 47,913 35,957
Motor Vehicles 266,462 29,779 (915) 295,326 266,462
Milk Collection Equipment 3,318 - - 3,318 3,318
Motor Roads and Others 67,028 - - 67,028 67,028
4,064,499 4,381,483 (915) 8,445,067 4,064,499
Capital Work in Progress 3,383,662 32,674 (3,334,403) 81,933 3,383,662

7,448,161 4,414,157 (3,335,318) 8,527,000 7,448,161
As at Charge for Disposals/ As at As at

01/04/2022 the Year Transfers 31/03/2023 31/03/2022
Rs.000’s Rs.000’s Rs.000's Rs.000’s Rs.000’s
Accumulated Depreciation
Leasehold Buildings 486,188 97,346 - 583,534 486,188
Plant and Machinery 1,838,858 217,919 - 2,056,777 1,838,858
Factory Equipment 239,694 8,926 - 248,620 239,694
Office Equipment 10,447 587 - 11,034 10,447
Fixtures 10 - - 10 10
Computers 24,771 5,422 - 30,193 24,771
Motor Vehicles 255,156 14,192 (915) 268,433 255,156
Milk Collection Equipment 3,318 - - 3,318 3,318
Motor Roads and Others 63,838 798 - 64,636 63,838
2,950,664 346,517 (915) 3,296,266 2,950,664
Written Down Value 4,497,497 5,230,734 4,497,497

12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

12.1 Group (Continued)
As at 31 March 2023 2022
Rs.000's Rs.000's
Written Down Value
Leasehold Buildings 4,006,202 426,386
Plant and Machinery 1,050,717 615,490
Laboratory Equipment 3,823 3,853
Factory Equipment 31,172 36,042
Canteen Equipment 4,399 4,306
Office Equipment 4,192 691
Fire Fighting Equipment - -
Furniture and Fittings 1,281 1,375
Fixtures 10 10
Computers 17,720 11,186
Motor Vehicles 26,893 11,306
Milk Collection Equipment - -
Motor Roads and Others 2,392 3,190
5,148,801 1,113,835
Capital Work in Progress 81,933 3,383,662
5,230,734 4,497,497
(a) The cost of fully depreciated property, plant and equipment as at the reporting date are as follows;
As at 31 March 2023 2022
Rs.000's Rs.000's
Lanka Milk Foods (CWE) PLC 308,595 298,063
Lanka Dairies (Private) Limited 193,742 191,181
Ambewela Livestock Company Limited 124,191 108,646
Pattipola Livestock Company Limited 85,054 80,750
Ambewela Products (Private) Limited 756,074 730,103
1,467,656 1,408,743
(b) The Company carried out a valuation of buildings during the financial year ended 31st March 1990 in order to incorporate the
value of buildings prior to privatization of the Company. The corresponding increase in the carrying amount was credited to
revaluation reserve. The resulting carrying amount has been deemed to be the cost of buildings which have been subsequently
measured at cost less accumulated depreciation and accumulated impairment losses.
(c) The lease hold rights of land and buildings and immovable plant and machinery amounting to Rs.900 Mn. have been pledged
as security against letter of credit facility obtained from Hatton National Bank PLC.
(d) During the year, United Dairies Lanka (Private) Limited has capitalised borrowing cost amounting to Rs. 207 Mn (2022 - Rs.-nil)
relating to constructing Property,Plant and Equipments.
(e) Capital work-in progress includes,

As at 31 March 2023 2022
Rs.000's Rs.000's
Building Construction 81,933 2,735,438
Milking Parlour Machines - 648,224
81,933 3,383,662

12.1 Group (Continued)
(f ) The details of buildings on leasehold lands as at 31 March 2023 are as follows
Name of Premises and address Extent Building No of Cost of the Accumulated Written
(Hectares) (Square feet) Buildings Building Depreciation down value
Rs.000’s Rs.000’s Rs.000’s
Welisara 3.275 140,800 3 434,416 328,313 106,103
Ambewela 458.47 - 139 488,757 184,885 303,872
923,173 513,198 409,975
12.2 Company
As at Additions/ Disposals/ As at As at
01/04/2022 Transfers Transfers 31/03/2023 31/03/2022
Rs.000’s Rs.000’s Rs.000's Rs.000's Rs.000's
Cost /Deemed Cost
Leasehold Buildings 358,951 - - 358,951 358,951
Plant and Machinery 199,318 169 - 199,487 199,318
Laboratory Equipment 2,863 - - 2,863 2,863
Factory Equipment 9,656 552 - 10,208 9,656
Furniture and Fittings 4,178 - - 4,178 4,178
Computers 26,609 - - 26,609 26,609
Motor Vehicles 118,685 - (915) 117,770 118,685
741,968 1,714 (915) 742,767 741,968
As at Charge for Disposals/ As at As at

01/04/2022 the Year Transfers 31/03/2023 31/03/2022
Rs.000’s Rs.000’s Rs.000's Rs.000's Rs.000's
Accumulated Depreciation
Leasehold Buildings 273,462 8,548 - 282,010 273,462
Plant and Machinery 176,772 4,177 - 180,949 176,772
Factory Equipment 9,197 135 - 9,332 9,197
Computers 18,170 3,212 - 21,382 18,170
Motor Vehicles 114,700 1,630 (915) 115,415 114,700
616,217 18,457 (915) 633,759 616,217
Written Down Value 125,751 109,008 125,751


12.2 Company (Continued)
As at 31 March 2023 2022

Rs.000's Rs.000's
Written Down Value
Leasehold Buildings 76,941 85,489
Plant and Machinery 18,538 22,546
Laboratory Equipment 12 14
Factory Equipment 876 459
Canteen Equipment 4,398 4,305
Office Equipment 564 363
Fire Fighting Equipment - -
Furniture Fittings 97 151
Computers 5,227 8,439
Motor Vehicles 2,355 3,985
109,008 125,751
(b) There were no borrowing costs capitalised on interest-bearing loans and borrowings and lease liabilities by the Company on
qualifying assets during the financial years 2022/23 and 2021/22.
(c) Property Plant and Equipment as at 31st March 2023 includes fully depreciated assets having a gross carrying amount (cost) of
Rs. 308.6 million that are still in use (2021/22 - Rs. 298.1 million).
13 INTANGIBLE ASSETS
Group Company
Rs.000's Rs.000's Rs.000's Rs.000's
Cost
Opening Balance - - - -
Additions 3,737 - 3,737 -
Disposals - - - -
Closing Balance 3,737 - 3,737 -
Cost
Opening Balance - - - -
Charge for the year 747 - 747 -
Disposals - - - -
Closing Balance 747 - 747 -
Carrying Value 2,990 - 2,990 -

Software developed for marketing staff-Sales Automation System which will be amortized for 5 years
14 INVESTMENT IN SUBSIDIARIES
Company
2023 2022
As at 31 March Holding No. of Cost No. of Cost
Percentage Shares Rs.000’s Shares Rs.000’s
Lanka Dairies (Private) Limited 100% 500,000 5,000 500,000 5,000
Ambewela Livestock Company Limited 100% 3,000,000 51,137 3,000,000 51,137
Pattipola Livestock Company Limited 100% 1,000,000 46,815 1,000,000 46,815
Ambewela Products (Private) Limited 100% 1,000,000 1,010,000 1,000,000 1,010,000
United Dairies Lanka (Private) Limited 100% 200,000,000 2,000,000 5,000,000 50,000
Indo Lanka Exports (Private) Limited 51% 306,000 30,600 306,000 30,600
3,143,552 1,193,552
Less : Provision for Impairment of Investments (128,552) (128,552)
3,015,000 1,065,000
14.1 Provision for Impairment of Investments

As at 31 March 2023 2022
Rs.000's Rs.000's
Balance as at 1st April 128,552 128,552
Charge for the year - -
Balance As at 31 March 128,552 128,552
14.1.1 The Company has made provision for impairment of Rs. 128,552,000/- (2022-Rs. 128,552,000) on the investment in subsidiaries
as at 31 March 2023 due to the adverse business environment in which the subsidiary companies are operated. This has
resulted in continuous operating losses and negative operating cash flows in subsidiary companies and adjusted net asset basis
has been considered as the recoverable amount for the calculation of provision for impairment as at the each reporting date.
The breakup of the impairment provision is as follows;
As at 31 March 2023 2022

Rs.000's Rs.000's
Ambewela Livestock Company Limited (51,137) (51,137)
Pattipola Livestock Company Limited (46,815) (46,815)
Indo Lanka Exports (Private) Limited (30,600) (30,600)
(128,552) (128,552)
15 INVESTMENT IN SHARES
As at 31 March 2023 2022
Rs.000's Rs.000's
Equity Securities – at FVOCI (Note 15.1) 9,218,177 6,852,754
Equity Securities – mandatorily at FVTPL (Note 15.2) 162,302 153,778
2023 2022
No. of Fair Value No. of Fair Value
As at 31 March
Shares Rs.000’s Shares Rs.000’s
15.1 Equity Securities – at FVOCI
Group/Company
Distilleries Company of Sri Lanka PLC 44,991,407 881,832 44,991,407 611,883
Melstacorp PLC 151,846,000 8,336,345 151,846,000 6,240,871
9,218,177 6,852,754
The Group/Company designated the equity securities shown above as at FVOCI because these investments represent that the
Group/Company intends to hold for the long term for strategic purposes.
15.1.1 Net change in fair value gain/ (loss) in equity securities - at FVOCI during the year was Rs. 2,365,423 ( 2021/22 - loss
Rs. 723,799,264)
15.1.2 The value of shares pledged by the Group/ Company as securities for facilities obtained from banks amounted to Rs. 8336 Mn
(2022 - Rs.6,241 Mn).
15.1.3 No strategic investments were disposed of during 2023/2022, and there were no transfer of any cumulative gain or loss within
equity relating to these investment.
2023 2022
No. of Fair Value No. of Fair Value
As at 31 March
Shares Rs.000’s Shares Rs.000’s
15.2 Equity Securities – at FVTPL
Group/Company
Browns Beach Hotels PLC 1,251,558 15,144 1,251,558 11,264
Colombo Dockyard PLC 219,948 14,077 219,948 16,122
Commercial Bank of Sri Lanka PLC - Voting 2,092,470 133,081 2,015,823 126,392
162,302 153,778
16 BIOLOGICAL ASSETS
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
16.1 Livestock
Balance as at the Beginning 1,279,229 1,121,110 - -
Changes in Fair Value during the Year 929,568 327,742 - -
Disposals during the Year (205,264) (169,623) - -
Balance as at the End 2,003,533 1,279,229 - -
16.2 Non Perennial Crops - At Cost

Balance as at the Beginning 40,772 28,700 - -
Additions during the Year 25,275 40,772 - -
Disposals during the Year - (28,700) - -
Balance as at the end 66,047 40,772 - -
The Group has used the following significant criteria in determining the fair value of the biological assets as at 31 March 2023.
Milk Production 18 - 27 litres
Lactations 1 - 4 lactation
Discount Rate 24.54%
Market Price of Milk Rs.265 per litre
Weight, Pregnancy and Age also considered when determining the Fair Value of Biological Assets.
16.3 Measurement of Fair Values

a) Fair Value Hierarchy
The fair value measurements of the standing livestock have been categorized as Level 3 in the valuation hierarchy.
b) Level 3 Fair Values
The break down of the total gains / (losses) in respect of Level 3 fair values is shown below.
Group Company
As at 31 March 2023 2022 2023 2022
Group Rs.000's Rs.000's Rs.000's Rs.000's
Gain included in other income
Change in Fair Value (Realized) (27,470) 7,008 - -
Change in Fair Value (Unrealized) (Note 16.1) 929,568 327,742 - -
902,098 334,750 - -
16.4 Valuation Techniques Used

Type Valuation Technique
Livestock comprises cattle characterised as Discounted Cash Flow:
commercial or breeders
Fair value of biological assets has been calculated using discounted cash flows.
The livestock of similar age, weight, pregnancy, lactations, milk production and
relevant costs have been considered in the fair value calculation.
16 BIOLOGICAL ASSETS (CONTINUED)

16.5 Sensitivity Analysis
Sensitivity Variation on Selling Price
Values as appearing in the Statement of Financial Position are sensitive to sales price changes with regard to the average price
applied. Simulations made for livestock show that an increase or a decrease by 10% of the estimated future selling price has the
following effect on the net present value of biological assets.
As at 31 March -10% 2023 + 10%
Group Rs.000's Rs.000's Rs.000's
Livestock 428,019 2,003,533 3,579,721
Total 428,019 2,003,533 3,579,721
Sensitivity Variation on Average Animal Weight

Values as appearing in the Statement of Financial Position are sensitive to average animal weight changes. Simulations made for
livestock show that an increase or a decrease by 10kg of average animal weight has the following effect on the net present value of
biological assets.
As at 31 March -10kg 2023 +10kg
Livestock 1,982,569 2,003,533 2,005,485

Total 1,982,569 2,003,533 2,005,485
Sensitivity Variation on Discount Rate

Values as appearing in the Statement of Financial Position are sensitive to change in discount rate. Simulations made for
livestock show that an increase or a decrease by 1% of discount rate has the following effect on the net present value of
biological assets.
As at 31 March -1% 2023 + 1%
Livestock 2,099,768 2,003,533 1,904,880

Total 2,099,768 2,003,533 1,904,880
There were no biological assets pledged by the Group as security for facilities obtained from banks (2021/22 - nil).
There were no borrowing cost capitalised under biological assets on interest-bearing loans and borrowings and lease liabilities
by the Group during the financial years 2023/22 and 2022/21.
17 INVENTORIES
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Raw Materials and Consumables 2,324,087 1,346,845 207,114 347,690

Finished Goods 109,448 156,672 1,328 70,139
Working in Progress 13,884 5,845 - -
Goods in Transit 393,773 31,962 342,841 520
2,841,192 1,541,324 551,283 418,349
Provision for Obsolete Inventories (Note 17.1) (54,001) (54,368) (18,339) (20,283)
2,787,191 1,486,956 532,944 398,066
17.1 Provision for Obsolete Inventories

Balance as at 1st April 54,368 50,226 20,283 17,283
Charge/(Reversal) for the Year (367) 4,142 (1,944) 3,000
Balance As at 31st March 54,001 54,368 18,339 20,283
18 TRADE RECEIVABLES
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Trade Receivables 1,033,297 861,908 143,574 238,822

Provision for Impairment Loss (Note 18.1) (94,963) (73,949) (41,136) (43,951)
938,334 787,959 102,438 194,871
18.1 Provision for Impairment Loss

Balance as at 1st April 73,949 74,219 43,951 43,641
Charge / (Reversal) for the Year 21,014 (270) (2,815) 310
Balance As at 31st March 94,963 73,949 41,136 43,951
19 OTHER RECEIVABLES
Deposits and Prepayments 60,127 46,338 1,710 4,537
Provision for Impairment - (3,560) - -
60,127 42,778 1,710 4,537
Insurance Receivables 881 - - -
Other Taxes Recoverable (Note 19.1) 1,935 22,430 916 21,134
Sundry Receivables 9,859 1,311 8,385 454
Staff Loans and Advances 36,638 8,642 10,513 5,601
Provision for Other Receivables (3,657) (6,454) - (6,357)
105,783 68,705 21,524 25,369
19.1 Other Taxes Recoverable

With holding Tax 1,019 1,019 - -
Nation Building Tax 6,357 6,357 6,357 6,357
Value Added Tax 916 15,054 916 14,777
8,292 22,430 7,273 21,134
Provision for NBT Recoverable (6,357) - (6,357) -
1,935 22,430 916 21,134
20 AMOUNT DUE FROM RELATED PARTIES

Lanka Dairies (Private) Limited - - 17,744 35,844
Stassen Exports (Private) Limited 25,628 17,958 712 1,602
Stassen Foods (Private) Limited 1,120 1,565 1,120 1,565
Ambewela Products (Private) Limited - - 53,011 223,187
Ambewela Livestock Company Limited - - 467,984 310,838
Aitken Spence PLC 2,004 4,602 1,722 2,983
Maudulsima Plantation PLC - 68 - 68
Balangoda Plantation - 750 - 750
Browns Beach Hotels PLC 279 - 279 -
United Dairies Lanka (Private) Limited - - 798,407 1,000,000
Indo Lanka Exports (Private) Limited - - 659 621
Pattipola Livestock Company Limited - - 159,055 146,885
29,031 24,943 1,500,693 1,724,343
Provision for Impairment (Note 20.1) (222) (222) (281,546) (319,806)
28,809 24,721 1,219,147 1,404,537
The Company charged interest based on market rates (AWPLR) against short term loans provided to related parties.
20 AMOUNT DUE FROM RELATED COMPANIES (CONTINUED)

20.1 Provision for Impairment Losses
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Balance as at 1st April 222 222 319,806 264,949
Charge / (Reversal) for the year - - (38,260) 54,857
Balance As at 31st March 222 222 281,546 319,806
20.2 Provision for Impairment Losses

Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Ambewela Livestock Company Limited - - 219,883 219,883
Pattipola Livestock Company Limited - - 19,500 19,500
Lanka Dairies (Private) Limited - - 7 154
Ambewela Products (Private) Limited - - 195 763
Indo Lanka Exports (Private) Limited - - 284 284
United Dairies Lanka (Private) Limited - - 41,455 79,000
Other Related Parties 222 222 222 222
222 222 281,546 319,806
21 CASH AND CASH EQUIVALENTS

Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Cash at Bank 31,241 1,198,212 10,044 990,187

Cash in Hand 5,001 3,948 1,669 1,436
Fixed Deposit 11,039 10,724 11,039 10,724
Expected Credit loss (5) (5) (5) (5)
47,276 1,212,879 22,747 1,002,342
Bank Overdraft (1,106,558) (859,758) (182,175) (222,690)
Cash and cash equivalents for the purpose of cash flow (1,059,282) 353,121 (159,428) 779,652
statement
21.1 Security Details over Bank Over Draft Facilities

Name of the Company Bank Facility Nature of Assets Pledged
Value (Rs.
Mn)
HNB 550 Investment in quoted shares of Melstacorp PLC

HSBC 10 Inventories and Trade Receivables
Lanka Dairies (Private) Limited HNB 300 Corporate guarantor from Lanka Milk Foods(CWE) PLC
Ambewela Products (Private) Limited HNB 200 Corporate guarantor from Lanka Milk Foods(CWE) PLC
HNB -Wattala 40
Ambewela Livestock Company Limited Corporate guarantor from Lanka Milk Foods(CWE) PLC
HNB -Nuwara Eliya 10
HNB -Wattala 90
Pattipola Livestock Company Limited Corporate guarantor from Lanka Milk Foods(CWE) PLC
HNB -Nuwara Eliya 10
22 STATED CAPITAL
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
39,998,000 Ordinary Shares 999,950 999,950 999,950 999,950
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
individual present at meetings of the shareholders or one vote per share in the case of a poll.
23 RESERVES
23.1 Capital reserve on revaluation of property
The capital reserve on revaluation of property represents difference between the revalued amount and the carrying value of
Property, Plant and Equipment at the date of revaluation. The revaluation was carried out during the financial year ended 31st
March 1990 in order to incorporate the value of the buildings on leasehold land prior to the privatization of the company. The
revalued amounts of Property plant and equipment were considered as deemed cost at the date of acquisition.
23.2 Revenue Reserves

Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Dairy Development Project Reserve 110,000 110,000 110,000 110,000

Retained Earnings 4,842,431 3,936,833 3,328,400 2,101,943
4,952,431 4,046,833 3,438,400 2,211,943
Dairy Development Project Reserve

The dairy development project reserve relates to amount set aside out of retained earnings for the development of dairy project.
Retained Earnings
This represents the undistributed earnings held by the Group and the Company to be used in the Group’s and the Company’s
operations. This could be used to absorb future possible losses or dividends payable.
24 NET DEFERRED TAX ASSETS / (LIABILITIES)

Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Balance as at the Beginning (76,280) (140,553) 10,750 12,059

Recognised in the Profit or Loss
Amounts Reversed / (Charged) during the Year 270,026 70,744 4,538 3,261
Impact From Changes in Tax Rate (239,478) - 7,167 -
Recognised in the Other Comprehensive Income
Amounts Reversed / (Charged) during the Year (2,120) (6,471) (2,373) (4,570)
Balance as at the End (47,852) (76,280) 20,082 10,750
24.1 The amounts shown in the statement of financial position represents the followings;
Group
As at 31 March 2023 2022
Deferred tax Deferred tax Net deferred Deferred tax Deferred tax Net deferred
assets liabilities tax assets/ assets liabilities tax assets /
(liabilities) (liabilities)
Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Lanka Milk Foods (CWE) PLC 40,350 (20,268) 20,082 24,081 (13,331) 10,750
Net Deferred Tax Assets 20,082 10,750
Lanka Dairies (Private) Limited 15,908 (63,853) (47,945) 5,458 (45,658) (40,200)
Ambewela Products (Private) Limited 51,248 (71,237) (19,989) 28,309 (75,139) (46,830)
Net Deferred Tax Liabilities (67,934) (87,030)
107,506 (155,358) (47,852) 57,848 (134,128) (76,280)
Company
As at 31 March 2023 2022
Deferred tax Deferred tax Net deferred Deferred tax Deferred tax Net deferred
assets liabilities tax assets/ assets liabilities tax assets /
(liabilities) (liabilities)
Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Lanka Milk Foods (CWE) PLC 40,350 (20,268) 20,082 24,081 (13,331) 10,750
Net Deferred Tax Assets 40,350 (20,268) 20,082 24,081 (13,331) 10,750
24 NET DEFERRED TAX ASSETS / (LIABILITIES) (CONTINUED)

24.2 Reconciliation of Net Deferred Tax Liabilities - Group
The reconciliation to tax effect arising from the temporary differences related to carrying amounts of assets and liabilities of the
Statement of Financial Position is Follows:
As at 31 March 2023 2022
Temporary Tax Effect Temporary Tax Effect
Differences Differences
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Deferred tax liabilities On :

On Property, Plant and Equipment (621,814) (152,403) (707,042) (101,949)
On Biological Assets (14,774) (2,955) (229,852) (32,179)
(636,588) (155,358) (936,894) (134,128)
Deferred tax assets On :

On Retirement Benefit Obligations 116,693 33,413 102,484 17,128
On Net Lease Liability 14,248 2,855 9,058 1,270
On Inventory Provision 28,716 8,565 30,521 5,085
On Trade Debtor Provision 72,679 20,388 51,663 8,991
Unused Tax Losses 211,426 42,285 181,243 25,374
443,762 107,506 374,969 57,848
(192,826) (47,852) (561,925) (76,280)
Reconciliation of Net Deferred Tax Liabilities -Company

Deferred tax liabilities On :
On Property, Plant and Equipment (67,560) (20,268) (74,060) (13,331)
(67,560) (20,268) (74,060) (13,331)
Deferred tax assets On :

On Retirement Benefit Obligations 74,969 22,491 69,507 12,511
On Net Lease Liability 53 16 43 8
On Inventory Provision 18,339 5,502 20,283 3,651
On Trade Debtor Provision 41,136 12,341 43,950 7,911
134,497 40,350 133,783 24,081
66,937 20,082 59,723 10,750


24.3 Movement of Net Deferred Tax Liabilities - Group
As at (Charged) / As at As at (Charged) / As at
01 April 2022 Credit in March 2023 01 April 2021 Credit in 31 March 2022
P&L OCI P&L OCI
Rs. 000's Rs. 000's Rs. 000's Rs. 000's Rs. 000's Rs. 000's Rs. 000's Rs. 000's
Property, Plant and (101,949) (50,454) - (152,403) (129,757) 27,808 - (101,949)

Equipment
Biological Assets (32,179) 29,224 - (2,955) (48,581) 16,402 - (32,179)
Employee Benefits 17,128 18,405 (2,120) 33,413 22,646 953 (6,471) 17,128
Unused Tax Losses 25,374 16,911 - 42,285 - 25,374 - 25,374
Inventory 5,085 3,480 - 8,565 4,288 797 - 5,085
Provision
Trade Debtor 8,991 11,397 - 20,388 9,017 (26) - 8,991
Provision
Other Receivable - - - - 497 (497) - -
Provision
Lease Liability 1,270 1,585 - 2,855 1,337 (67) - 1,270
(76,280) 30,548 (2,120) (47,852) (140,553) 70,744 (6,471) (76,280)
Movement of Net Deferred Tax Assets - Company

As at (Charged) / As at 31 As at (Charged) / As at
01 April 2022 Credit in March 2023 01 April 2021 Credit in 31 March 2022
P&L OCI P&L OCI
Rs. 000's Rs. 000's Rs. 000's Rs. 000's Rs. 000's Rs. 000's Rs. 000's Rs. 000's
Property, Plant and (13,331) (6,937) - (20,268) (14,420) 1,089 - (13,331)

Equipment
Employee Benefits 12,511 12,353 (2,373) 22,491 15,508 1,573 (4,570) 12,511
Unused Tax Losses - - - - - - - -
Inventory 3,651 1,851 - 5,502 3,111 540 - 3,651
Provision
Trade Debtor 7,911 4,430 - 12,341 7,855 56 - 7,911
Provision
On Lease Liability 8 8 - 16 5 3 - 8
10,750 11,705 (2,373) 20,082 12,059 3,261 (4,570) 10,750

24.4 The Company has not been recognized deferred tax assets of Rs. 175,091,700- as at 31 March 2023 (31 March 2022 - Rs.
181,451,169/-), arising on unused tax losses of Rs. 583,639,000/- (31 March 2022 - Rs. 1,008,062,053) , since there is an
uncertainty that future taxable profit will be available against which the Company can utilize the benefit there from.
Group / Company Deductible Unrecognized

Temporary Deferred Tax
Difference Assets
Rs. Rs.
Lanka Milk Foods (CWE) PLC 583,639,000 175,091,700

583,639,000 175,091,700
24.5 Deferred tax assets and liabilities shall be measured based on the tax rates that have been enacted or substantially enacted by
the end of the reporting period. In accordance with the Inland Revenue Act No 24 of 2017, the Group has used following tax
rates in assessing the deferred tax asset/liability for the current financial year.
Group / Company Tax Rate (%)

2023 2022
Lanka Milk Foods (CWE) PLC 30% 18%
Lanka Dairies (Private) Limited 30% 14%
Ambewela Livestock Company Limited Exempt Exempt
Pattipola Livestock Company Limited Exempt Exempt
Ambewela Products (Private) Limited (Note A) 20% 14%
United Dairies Lanka (Private) Limited Exempt Exempt
NOTE A
Ambewela Products (Private) Limited will be liable at tax at the rate of 20% after the tax holiday period (Y/A 2022/23) as per
the agreement entered with Board of Investment of Sri Lanka. Accordingly, 20% tax rate has used in assessing the deferred tax
asset/ liability for the current financial year.
25 RETIREMENT BENEFIT OBLIGATIONS

Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Balance as at the Beginning 141,410 161,972 69,507 86,153

Interest Cost 20,150 7,639 9,731 6,117
Current Service Cost 21,904 13,510 6,148 5,548
Past Service Cost - (1,808) - (1,286)
Actuarial (Gain)/Loss (18,384) (33,090) (7,908) (25,387)
Payments during the Year (5,372) (6,813) (2,509) (1,638)
Balance as at the End 159,708 141,410 74,969 69,507
25 RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)

25.1 The total amount charged to Statement of Profit or Loss and Other Comprehensive Income in respect of Retirement Benefit
Obligations made up as follows;
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Interest cost 20,150 7,639 9,731 6,117
Current Service Cost 21,904 13,510 6,148 5,548
Past Service Cost - (1,808) - (1,286)
Expense recognized in Profit or Loss 42,054 19,341 15,879 10,379
Actuarial (Gain) / Loss (18,384) (33,090) (7,908) (25,387)

Expense recognized in Other Comprehensive Income (18,384) (33,090) (7,908) (25,387)
The retirement benefit obligations of the Group is based on the actuarial valuation carried out by Actuarial and Management
Consultants (Private) Limited, a firm of professional actuaries as at 31 March 2023.
LKAS 19 - Employee Benefit requires the use of actuarial techniques to make a reliable estimate of the amount of retirement
benefit using the Projected Unit Credit Method in order to determine the present value of the retirement benefit obligation
as at the reporting date. The following key assumptions were made in computing the retirement gratuity obligation as at the
reporting date.
As at 31 March, 2023 2022
i.) Discount Rate 20% 14%

ii.) Annual Salary Increment Rate 10% 10%
iii) Retirement Age 60 years 60 years
iv) Staff Turnover Rate 8%-15% 6%-18%
Weight average duration of define benefit obligation (Year) = 3.6 (2023)
The calculation of the retirement benefit obligation is sensitive to the assumptions set out above. The following table
summarizes how the impact on the defined benefit obligation at the end of the reporting period would have increased/
(decreased) as a result of a change in the respective assumptions by one percent.
Group Company
Defined Benefit Obligation Defined Benefit Obligation
One percentage One percentage One percentage One percentage
point increase point decrease point increase point increase
Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Effect on the Discounting Rate (6,416) 7,100 (2,197) 2,381

Effect on the Salary Escalation Rate 7,337 (6,722) 2,575 (2,407)
In the absence of a deep market in long-term bonds in Sri Lanka, a long-term interest rate of 20% p.a. (2021/2022 – 14%
p.a.) has been used to discount future retirement benefit liabilities. As per the guidelines issued by the Institute of Chartered
Accountants of Sri Lanka, the discount rates has been adjusted to remove the risk from the market interest rate in arriving at the
discount rate for the purpose of valuing Employee benefit obligations as per LKAS 19.
26 LOANS AND BORROWINGS

Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Term Loans - Secured

Balance as at Beginning 2,128,646 1,546,504 - 300,000
Loans Obtained during the Year 2,708,855 1,275,892 2,025,000 300,000
4,837,501 2,822,396 2,025,000 600,000
Repayments during the Year (1,531,250) (693,750) (1,250,000) (600,000)
Balance as at End 3,306,251 2,128,646 775,000 -
Amount Payable within one Year 1,150,000 375,000 775,000 -

Amount Payable after one Year 2,156,251 1,753,646 - -
3,306,251 2,128,646 775,000 -
26.1 Terms and Conditions of the loan obtained by the Group/ Company
Financial Institution Purpose Assets Pledged Interest Rate
Hatton National Bank PLC Company operations Investment in quoted shares of Melstacorp AWPLR
PLC
Commercial Bank of Ceylon PLC To part finance the new farm Corporate guarantee provided by Lanka Milk AWPLR + 0.5
project at Ambewela Foods (CWE) PLC
27 TRADE AND OTHER PAYABLES

Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Trade and Other Payables 639,447 345,740 92,443 74,599

Accrued Expenses 153,275 65,588 3,358 1,224
Outstanding Letters of Credit - 1,100,612 - 1,100,612
Unclaimed Dividend 7,681 3,928 7,681 3,928
Other Taxes Payable (Note 27.1 ) 30,543 2,396 18,416 1,759
830,946 1,518,264 121,898 1,182,122
27.1 Other Taxes Payable

Value Added Tax 13,096 684 13,096 684
APIT 6,663 1,645 2,216 1,019
Stamp Duty 469 67 37 56
SSCL 10,315 - 3,067 -
30,543 2,396 18,416 1,759
28 AMOUNTS DUE TO RELATED PARTIES

Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Stassen Exports (Private) Limited 91,399 169,797 89,294 168,543

Aitken Spence PLC 703 2,992 703 296
Aitken Spence Cargo (Private) Limited 2,079 - - -
Distilleries Company of Sri Lanka PLC 482 1,867 472 15
Maudulsima Plantation PLC 266 492 266 492
Lanka Bell Limited 93 13 8 -
Browns Beach Hotels PLC 26 26 - -
95,048 175,187 90,743 169,346
29 COMMITMENTS
29.1 Capital Commitments
There are no other material capital commitments at the Group and the Company as at the reporting date except for the
following commitments disclosed below of a subsidiary, United Dairies Lanka (Private) Limited:
Group
As at 31 March 2023 2022
Rs. Mn Rs. Mn
Capital commitments approved and contracted 129,892 3,373
30 LEASES
The Group / the Company leases building premises for operating activities. Lease payments are made based on pre- agreed rate
which are specified in the respective lease contracts.
The value of the right-of-use assets is presented as a separate line item in the Statement of Financial Position and the
correspondent lease liability has presented under ‘Current liabilities and Non current liabilities’ in the Statement of Financial
Position as at 31 March 2023.
Further, the amortisation charge on right-of-use asset is presented as a separate line item under ‘Depreciation & Amortization’
and the interest cost on lease liability is presented as a component of the finance cost of the Group/Company in the Statement
of Profit or Loss for the year ended 31st March 2023.
30 LEASES (CONTINUED)
30.1 The carrying amounts of right-of-use assets recognised and its movements during the year:
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Cost
Balance as at Beginning 342,413 307,049 391 391
Remeasurement 211,803 35,364 - -
Balance as at End 554,216 342,413 391 391
Accumulated Amortisation
Charge for the Year 14,140 9,898 28 28
Balance as at End 47,699 33,559 112 84
Net Book Value as at 31 March 2023 506,517 308,854 279 307
30.2 The carrying amounts of lease liability (included under current and non current liabilities) and its movements during the
year:
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's

Remeasurement Adjustment 211,801 35,364 - -
Accretion of Interest 62,340 44,289 49 52
Payments (39,831) (36,853) (67) (67)
Balance as at End 588,500 354,190 332 350
Current 37,913 34,376 20 60

Non- current 550,587 319,814 312 290
Balance as at 31 March 588,500 354,190 332 350
30.3 Maturity analysis - Contractual Undiscounted Cash Flows

Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Less than One Year 39,831 40,784 67 67

One to Five Years 203,920 203,920 335 335
More than Five Years 1,256,244 1,296,075 938 335
Total Undiscounted Liabilities as at 31 March 1,499,995 1,540,779 1,340 737
30.4 Amounts Recognised in Statement of Profit or Loss

Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Leases under SLFRS 16

Depreciation of Right-of-use assets 14,140 9,898 28 28
Interest Expense on Lease Liabilities 62,340 44,289 49 52
76,480 54,187 77 80
30.5 Amounts Recognised in Statement of Cash Flows

Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Total Cash Outflow for Leases (39,831) (36,853) (67) (67)

(39,831) (36,853) (67) (67)
31. PRINCIPAL SUBSIDIARIES

Company Principal Activities Domicile Class of Group Non-
shares held Interest controlling
Interest
Lanka Dairies (Private) Limited Packing and selling of UHT products, Ordinary 100% -
“Daily”,”Ambewela Farm Fresh Milk” and fruit
juice.
Ambewela Livestock Company Rearing of cattle to produce and sale of cow Ordinary 100% -
Limited milk and agricultural development of the
farm.
Pattipola Livestock Company Rearing cattle, goats, rabbits to produce Ordinary 100% -
Limited and sell milk and milk allied products such
as natural cheeses, goat milk and meat and
agricultural development of the farm.
Ambewela Products (Private) Rearing of cattle to produce and sale of cow Ordinary 100% -
Limited milk, processing and packaging of processed
fat and liquid milk and milk allied products
such as yoghurt.
Indo Lanka Exports (Private) Manufacturing and exporting fruit juices. Ordinary 51% 49%
Limited
United Dairies Lanka (Private) Rearing milking cows to produce and sale of Ordinary 100% -
Limited cow milk
32. CONTINGENT LIABILITIES

There are no significant contingent liabilities as at the reporting date, which require adjustments to or disclosures in the
Financial Statements except for the following.
The Company has provided corporate guarantees to the following companies for the financial facilities obtained by those
companies.
Name of the company Name of the Bank Amount of the Guarantee

Rs. Mn
Lanka Dairies (Private) Limited Hatton National Bank 425

Ambewela Products (Private) Limited Hatton National Bank 250
Ambewela Livestock Company Limited Hatton National Bank 60
Pattipola Livestock Company Limited Hatton National Bank 110
United Dairies Lanka (Pvt) Limited Commercial Bank of Ceylon 3000
The Directors do not expect any claim on these guarantees. Accordingly, no provision has been made in the Financial
Statements.
33 EVENTS OCCURRING AFTER THE REPORTING DATE

There are no other material events occurring after the reporting date that require adjustment to or disclosure in the Financial
Statements other than the following.
The Board of Directors has recommended a Interim Dividend of Rs. 5.00 per share amounting to Rs.199,990,000 for the year
ended 31 March 2023.
34. SEGMENTAL REPORTING
122
Reportable segment Operations

Powdered Milk Importing, packaging and distribution of milk allied products
Liquid Milk and Others Operating Chain of Packing and selling of UHT products, “Daily ,”Ambewela Farm Fresh Milk” and fruit juice.
Agriculture Rearing of cattle to produce and sale of cow milk and agricultural development of the farm.
Trading Distribution of Happy Cow Cheese, Red Bull and Blue Energy Drink.
Powdered Milk Trading Liquid Milk and Others Agriculture Elimination Group
As at 31 March 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's Rs.000's
Total Revenue 2,357,891 1,979,541 1,714,252 1,444,413 11,800,034 7,771,941 2,660,390 1,108,178 (4,361,066) (2,532,534) 14,171,501 9,771,539
Profit or Loss from Operation 302,712 (144,051) 220,080 (105,110) 654,510 930,573 33,952 (58,252) (38,320) 54,486 1,172,934 677,646
Financing Income/(Cost) 571,161 412,089 415,249 300,690 (123,864) (30,602) (773,058) (62,234) - (200,000) 89,488 419,943
Income Tax Expenses 6,778 1,885 4,927 1,376 (84,922) (36,347) - - - - (73,217) (33,086)
Profit/(Loss) for the Year 880,651 269,923 640,256 196,956 445,724 863,624 (739,106) (120,486) (38,320) (145,514) 1,189,205 1,064,503
Segment Asset 8,358,683 6,499,904 6,076,991 4,742,788 4,899,876 3,970,115 7,933,859 5,275,502 (6,142,945) (3,754,635) 21,126,464 16,733,674
Segment Liabilities 720,960 950,479 524,157 693,536 1,420,278 934,502 7,111,632 5,676,637 (3,354,802) (2,954,812) 6,422,225 5,300,342
Segment Net Assets 7,637,723 5,549,425 5,552,834 4,049,252 3,479,598 3,035,613 822,227 (401,135) (2,788,143) (799,823) 14,704,239 11,433,332
Segment Capital Expenditure 992 863 722 629 32,301 73,646 4,380,142 1,667,849 - - 4,414,157 1,742,987
Depreciation on Property, 10,687 10,999 7,770 8,025 181,472 177,144 146,588 12,724 - - 346,517 208,892
Plant and equipment

Lanka Milk Foods (CWE) PLC | Annual Report 2022/23
35. RELATED PARTY DISCLOSURES

The Lanka Milk Foods (CWE) Group and the Company carries out transactions in the ordinary course of business with parties
who are defined as related parties as per Sri Lanka Accounting Standard-LKAS 24 Related Party Disclosures. Transactions and
outstanding balances between the companies within the Group and related parties are given in note no. 35.1 - 35.5.
35.1 Transactions with Subsidiary Companies

Amount
2023 2022
Name of the Company Name of Common Directors Nature of Transaction Rs. Rs.
Lanka Dairies (Private) Limited. Mr.D.H.S.Jayawardena Sale of Goods & Other 501,910,857 519,660,619
Mr.C.R.Jansz Settlement of Goods Sales 538,485,000 491,367,340
Mr.D.Hasitha S.Jayawardena Expense Reimbursement - 672,974
Ms.D.S.T. Jayawardena Material Purchase 15,134,917 1,370,693
Settlement for Material Transfer 15,134,917
Dividend Income Received - 100,000,000
Service Rendered & Others 4,235,280
Bank Guarantees Provided 425,000,000 425,000,000
Ambewela Livestock Mr.D.H.S.Jayawardena Expenses Reimbursement 167,044 133,531
Company Limited Mr.C.R.Jansz Sale of Goods & Other 4,637,881 5,937,211
Mr.D.Hasitha S.Jayawardena Settlement of Goods Sales 5,673,240 5,101,922
Ms.D.S.T. Jayawardena Fund Transfers 158,000,000 500,000
Pattipola Livestock Mr.D.H.S.Jayawardena Expenses Reimbursement 169,619 91,044
Company Limited Mr.C.R.Jansz Sale of Goods & Other 4,390,858 1,873,474
Mr.D.Hasitha S.Jayawardena Settlement of Goods Sales 4,390,858 1,877,422
Ms.D.S.T. Jayawardena Purchases of Goods - 21,448
Settlement of Goods Purchases - 23,898
Fund Transfers 12,000,000
Ambewela Products Mr.D.H.S.Jayawardena Sale of Goods & Other 236,049,999 153,475,048
(Private) Limited Mr.C.R.Jansz Expense Reimbursement 21,793,760 1,291,670
Mr.D.Hasitha S.Jayawardena Settlement of Goods & Other Sales 242,258,209 136,572,090
Ms.D.S.T. Jayawardena Granted Short Term Loan 380,000,000 150,000,000
Charged Short Term Loan Interest 27,613,748 15,380,233
Received Loan Interest Settlement 28,375,009 14,722,644
Settlement of Short Term Loan 580,000,000 50,000,000
Fund Transfers 15,000,000 -
Dividend Income Received - 100,000,000
35. RELATED PARTY DISCLOSURES (CONTINUED)

35.1 Transactions with Subsidiary Companies
Amount
2023 2022
Indo Lanka Exports Mr.D.H.S.Jayawardena Expense Reimbursement 37,879 336,461
(Private) Limited Mr.C.R.Jansz - -
United Dairies Lanka Mr.D.H.S.Jayawardena Paid Investment on Share Capital 1,950,000,000 -
(Private) Limited Mr.C.R.Jansz Expenses Reimbursement 2,316,932 -
Mr.D S K Amarasekara Fund Transfers 1,750,723,976 589,000,000
Dr.A Shakthevale Bank Guarantees Provided 3,000,000,000 3,900,000,000
Mr.D.Hasitha S.Jayawardena
Ms.D.S.T. Jayawardena
Aggregate Value of Non Recurrent Related Party Lanka Dairies (Private) Limited 425,000,000 425,000,000
Transactions
United Dairies Lanka (Private) Limited 4,750,723,976 4,489,000,000
Aggregate Value of Non Recurrent Transaction as a % of Equity Lanka Dairies (Private) Limited 3% 4%
United Dairies Lanka (Private) Limited 36% 47%
Aggregate Value of Non Recurrent Transaction as a % of Total Assets Lanka Dairies (Private) Limited 3% 4%
United Dairies Lanka (Private) Limited 33% 40%
35.2 Transaction with Other Related Companies:
Amount
2023 2022
Milford Exports Mr.D.H.S.Jayawardena Management Fee 5,000,000 1,000,000

(Ceylon) (Private) Limited Mr.D.Hasitha S.Jayawardena Directors' Fee 1,500,000 1,500,000
Mr.C.R.Jansz Related Party Settlement 6,500,000 2,500,000
Ms.D.S.T. Jayawardena Dividend Paid 100,699,050 67,132,700
Stassen Exports (Private) Mr.D.H.S.Jayawardena Reimbursement Expenses 10,837,439 6,888,205
Limited Mr.D.Hasitha S.Jayawardena Services Obtained & Others 17,560,294 20,809,367
Ms.D.S.T. Jayawardena Sale of Goods 57,096,230 18,005,330
Mr.C.R.Jansz Purchase Happy Cow & Energy Drinks 827,951,591 1,427,635,057
Services Rendered and Others 10,800,000 10,800,000
Related Party Settlement 80,072,672 33,225,796
Settlement of Purchases & Other 924,760,990 1,418,788,381
Distilleries Company of Mr.D.H.S.Jayawardena Sale of Milk Foods & Energy Drinks 18,178,560 9,438,954
Sri Lanka PLC Mr.C.R.Jansz Dividend Income Received 123,051,498 70,186,595
Mr.D.Hasitha S.Jayawardena Services Obtained & Others 471,500 839,500
Ms.D.S.T. Jayawardena Related Party Settlement 18,178,560 17,753,647
Settlement of Services Obtained 15,000 854,500

35.2 Transaction with Other Related Companies:
Amount
2023 2022
Aitken Spence PLC Mr.D.H.S.Jayawardena Sale of Goods 14,847,523 10,030,662
Ms.D.S.T. Jayawardena Settlement of Goods Sales 15,539,340 8,674,314
Mr.C.R.Jansz Services Obtained & Others 10,659,836 12,354,349
Related Party Settlement 8,939,214 12,307,786
Madulsima Plantations PLC Mr.D.H.S.Jayawardena Sale of Goods 583,555 477,050
Mr.D S K Amarasekara Services Obtained & Others 588,850 1,869,540
Mr.D.Hasitha S.Jayawardena Settlement of Goods Sales 583,555 408,948
Dr.A Shakthevale Related Party Settlement 1,047,100 1,786,690
Mr.C.R.Jansz
Lanka Bell Limited Mr.D.H.S.Jayawardena Telephone Charges 633,650 316,313
Mr.C.R.Jansz Related Party Settlement 544,254 335,658
Melstacrop PLC Mr.D.H.S.Jayawardena Dividend Paid 96,270,555 33,578,920
Mr.C.R.Jansz Dividend Income Received 1,024,960,500 827,560,700
Ms.D.S.T. Jayawardena
Browns Beach Hotels PLC Mr.D.H.S.Jayawardena Sale of Milk Foods & Energy Drinks 2,389,831 1,349,533
Ms.D.S.T. Jayawardena Settlement of Goods Sales 2,837,960 974,906
Balangoda Plantations PLC Mr.D.H.S.Jayawardena Services Provided & Other 346,205 1,052,417
Mr.C.R.Jansz Settlement of Service Rended 346,205 1,712,199
Dr.A Shakthevale
Mr.D S K Amarasekara
Splendor Media (Private) Limited Ms.D.S.T. Jayawardena Services Obtained & Others 3,274,514 51,300
Related Party Settlement 3,153,764 51,300
Sale of Goods 43,056 45,216
Settlement of Goods Sales 43,056 17,208
Aggregate Value of Recurrent Related Party Transactions during Stassen Exports (Private) Limited 924,245,554 1,484,137,959
the Year
Aggregate Value of Recurrent Related Party Transactions Stassen Exports (Private) Limited 7% 15%
as a % of Revenue
35.3 Terms and conditions of transactions with related party
Transactions with related parties are carried out in the ordinary course of business. The pricing applicable to related party
transactions is based on the assessment of risk and pricing model of the Company and is comparable with that is applicable to
transactions between the company and its unrelated customers.
Transactions with related parties were made on the basis of the price lists in force with non-related parties (at Arm’s Length).
Outstanding balances with related parties other than balances relating to investment related transactions as at the reporting
date are unsecured. Settlement will take place in cash. Such outstanding balances have been included under respective assets
and liabilities. No expense has been recognised in the current year or prior year for bad or doubtful debts in respect of amounts
owed by related parties.
35.4 Recurrent Related Party Transactions

There were instances where aggregated recurrent related party transactions exceeded 10% of the consolidated revenue of
the Group which required the disclosure in Financial Statements as per Section 9 of the Listing Requirements of the Colombo
Stock Exchange. Accordingly, the required disclosure is given in Note 35 to the Financial Statements. There were no other
recurrent related party transactions which exceeded the threshold stipulated in section 9 of the listing requirements, other than
individual transaction disclosed in the note 35.2 to the Financial Statements.

35.5 Transactions with Key Management Personnel
Key Management Personnel (KMP) are defined as those persons having authority and responsibility for planning, directing and
controlling the activities of the company. Such KMPs include the Board of Directors of the Group.
a) Loans to Directors
There are no loans have been granted to the Directors of the Company.
b) Key Management Personnel Compensation
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Short-Term Employee Benefits 1,500 1,500 1,500 1,500

1,500 1,500 1,500 1,500
c) Other Transactions with Key Management Personnel

There were no other transactions with key management personnel during the year.
36 FINANCIAL RISK MANAGEMENT

Overview
The Group has exposure to the following risks from its use of financial instruments.
▪ Credit risk
▪ Liquidity risk
▪ Market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and
processes for measuring and managing risks, and the Group’s management of capital. Further, quantitative disclosures are
included throughout these consolidated Financial Statements.
Risk Management Framework

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management
framework.
36. FINANCIAL RISK MANAGEMENT (CONTINUED)

36.1 Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers and investment securities.
Exposure to Credit Risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
reporting date was as follows;
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Trade Receivables 1,033,297 861,908 143,574 238,822

Other Receivables (Note a.) 106,624 56,289 20,608 10,592
Amounts Due from Related Parties 29,031 24,943 1,500,693 1,724,343
Cash and Cash Equivalents (Note b.) 42,280 1,208,935 21,083 1,000,911
1,211,232 2,152,075 1,685,958 2,974,668
Note a.
The other assets exclude advances, deposits and prepayments balance as at each year end.
Note b.
Cash in Hand Balance has been excluded
36.1.1 Trade and Other Receivables and Contract Asset

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
Management also considers the demographics of the Group’s customer base, including the country in which customers
operate, as these factors may have an influence on credit risk. However, geographically there is no concentration of credit risk.
The Group has established a credit policy under which each new customer is analyzed individually for creditworthiness before
the Group’s standard payment and delivery terms and conditions are offered.
36. FINANCIAL RISK MANAGEMENT (CONTINUED)

36.1.2 Expected Credit Loss
The Group allocates each exposure to a credit risk grade based on data that is determined to be predictive of the risk of loss
(including but not limited to external ratings, audited financial statements, management accounts and cash flow projections
and available press information about customers) and applying experienced credit judgement.
Exposures within each credit risk grade are segmented by geographic region and industry classification and an ECL rate is
calculated for each segment based on delinquency status and actual credit loss experience over the past seven years. These
rates are multiplied by scalar factors to reflect differences between economic conditions during the period over which the
historical data has been collected, current conditions and the Group’s view of economic conditions over the expected lives of
the receivables.
The following table provides information about the exposure to credit risk and ECLs for trade receivables for customers as at 31
March 2023.
As at 31 March 2023 Weighted Average Gross Carrying Impairment Loss Credit

Group Loss Rate Amount Allowance Impaired
Rs.000’s Rs.000’s
Past due 0-60 days 2.12% 867,552 (18,434) No

Past due 60-180 days 5.39% 94,076 (5,066) No
Past due 180-365 days 75.74% 849 (643) No
More than one year 100.00% 70,820 (70,820) Yes
1,033,297 (94,963)
As at 31 March 2023 Weighted Average Gross Carrying Impairment Loss Credit

Company Loss Rate Amount Allowance Impaired
Rs.000’s Rs.000’s
Past due 0-60 days 0.00% 102,438 - No

Past due 60-180 days - - - -
Past due 180-365 days - - - -
More than one year 100.00% 41,136 (41,136) Yes
143,574 (41,136)
Loss rates are based on actual credit loss experience over the past seven years. These rates are multiplied by scalar factors to
reflect differences between economic conditions during the period over which the historical data has been collected, current
conditions and the Group’s view of economic conditions over the expected lives of the receivables.
Movement in the loss allowance for impairment of trade receivables
The movement in the allowance for impairment in respect of trade receivables and contract assets during the year was as follows.
As at 31 March 2023 2022

Rs.000's Rs.000's
Balance at 1st April 73,949 74,219
Provision for the year 21,014 (270)
Balance at 31st March 94,963 73,949
36 FINANCIAL RISK MANAGEMENT (CONTINUED)

36.1 Credit Risk (Continued)
36.1.3 Investments
The Group limits its exposure to credit risk by investing only in liquid securities which are listed in Colombo stock exchange.
36.1.4 Cash and Cash Equivalents

The Group has a number of bank deposits in Sri Lankan rupees as at 31 March 2023. These deposits have been placed in several
banks in order to minimise the credit risk. In order to further minimise the credit risk, the Group’s exposure and credit ratings of
banks are regularly monitored and a diversified investment portfolio is maintained.
2023
Group Company
As at 31 March Rs.'000 Rating % Rs.'000 Rating %
Fitch ratings Rs.'000 of Total Rs.'000 of Total
A(lka) 30,984 73.28% 9,995 47.41%

AAA(lka) 145 0.34% 49 0.23%
A-(lka) 112 0.26% - 0.00%
BBB+ 11,039 26.12% 11,039 52.36%
42,280 100.00% 21,083 100.00%
36.1.5 Guarantees
The Group’s policy is to provide corporate guarantees to it’s subsidiaries. Following represents all the corporate guarantees
provided by the parent to it’s subsidiaries as at the reporting date (Refer Note 32)
Name of the Company Name of the Bank Amount of the Guarantee

Rs.Mn
Lanka Dairies (Private) Limited Hatton National Bank 425

Ambewela Products (Private) Limited Hatton National Bank 250
Ambewela Livestock Company Limited Hatton National Bank 60
Pattipola Livestock Company Limited Hatton National Bank 110
United Dairies Lanka (Private) Limited Commercial Bank 3000

36.2 Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group’s reputation.
The following are the contractual maturities of financial liabilities.

Group
As at 31 March 2023
Contractual Cash Flows
Carrying Total 0-2 months 2-6 months 6-12 More than 1
amount months year
Rs.000's Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Financial Liabilities (Non Derivatives)

Trade and Other Payables 647,128 647,128 647,128 - - -
Amounts Due to Related Parties 95,048 95,048 95,048 - - -
Interest Bearing Loans and Borrowings 3,306,251 4,973,495 - 1,589,167 753,703 2,630,625
Lease Liabilities 588,500 1,499,995 39,764 67 1,460,164
Bank Overdraft 1,106,558 1,106,558 1,012,629 78,536 15,393 -
5,743,485 8,322,224 1,754,805 1,707,467 769,163 4,090,789
Company
As at 31 March 2023
Contractual Cash Flows
Carrying Total 0-2 months 2-6 months 6-12 More than 1
amount months year
Rs.000's Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s
Financial Liabilities (Non Derivatives)

Trade and Other Payables 100,124 100,124 100,124 - - -
Amounts Due to Related parties 90,743 90,743 90,743
Interest Bearing Loans and Borrowings 775,000 835,464 - 835,464 - -
Lease Liabilities 332 1,340 67 1,273
Bank Overdraft 182,175 182,175 182,175
1,148,374 1,209,846 373,042 835,464 67 1,273
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different
amounts.

36.3 Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimizing the return.
36.3.1 Currency Risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than Sri
Lankan Rupees (LKR), The foreign currencies in which the set transactions primarily denominated are United Stated Dollars
(USD) and Euro.
36.3.1.1 Exposure to Currency Risk

The Group’s exposure to foreign currency risk was as follows based on notional amounts;
Group
As at 31 March Currency 2023 2022
Trade and Other Receivables USD 164,385 (93,166)

Trade and Other Payables USD (5,019) 3,160,512
Trade and Other Payables EUR - 485,098
Gross Statement of Financial Position Exposure 159,366 3,552,444
Company
As at 31 March Currency 2023 2022
Trade and Other Payables USD - 3,100,900

Trade and Other Payables EUR - 485,098
Gross Statement of Financial Position Exposure - 3,585,998
The following significant exchange rates were applicable during the year;
Average rate Reporting date spot rate

As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
USD 358.05 205.10 327.28 299.00

EUR 373.28 239.05 357.10 335.99

36.3 Market risk (Continued)
36.3.1.2 Sensitivity Analysis
A strengthening of the LKR, as indicated below, against the USD/ EUR at 31st March 2023 would have increased/ (decreased)
the equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances
that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other
variables, in particular interest rates, remain constant.
31st March 2023 Strengthening Weakening
Profit or Loss Equity Profit or Loss Equity
Rs. 000 Rs. 000 Rs. 000 Rs. 000
31 March 2023
USD (15% movement) (7,824) (7,824) 7,824 7,824
EUR (15% movement) - - - -
31st March 2022

USD (15% movement) (137,570) (137,570) 137,570 137,570
EUR (15% movement) (24,448) (24,448) 149,133 149,133
36.3.2 Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-
term debt obligations with floating interest rates.
The Group is exposed to interest rate risk for loans obtained from Hatton National Bank and Commercial Bank. However,
management monitors the sensitivities on regular basis and ensure risks are managed on a timely manner.
At the reporting date, the Group’s interest-bearing financial instruments were as follows;
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Variable Rate Instruments

Financial Liabilities
Interest Bearing Loans and Borrowings 3,306,251 2,128,646 775,000 -
Bank Overdraft 1,106,558 859,758 182,175 222,690
4,412,809 2,988,404 957,175 222,690
Sensitivity Analysis
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held
constant, of the Group’s and the Company’s profit before tax (through the impact on floating rate borrowings).
Group Company
As at 31 March 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
+100 basis points (44,128) - (9,572) -

-100 basis points 44,128 - 9,572 -
+800 basis points - (3,736) - (278)

-800 basis points - 3,736 - 278

36.4 Operational Risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes,
personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those
arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise
from all of the Group’s operations.
The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the
Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
36.5 Equity Price Risk

Values as appearing in the Statement of Financial Position are sensitive to quoted price of the investment. Simulations made
for available for sale investments and financial assets held for trading that an increase and decrease of Rs.10 has the following
effect on the fair value of available for sale investments.
AS AT 31 MARCH 2023 -10% 2023 + 10%

Group/Company Rs. Rs. Rs.
Rs.000's Rs.000's Rs.000's
Financial Assets Measured at FVTOCI 8,296,359 9,218,177 10,139,995

Financial Assets Measured at FVTPL 146,071 162,302 178,532
8,442,430 9,380,479 10,318,527
36.6 Capital Management

The Group’s debt to adjusted capital ratio at the end of the reporting period was as follows;
Group Company
AS AT 31 MARCH 2023 2023 2022 2023 2022
Rs.000's Rs.000's Rs.000's Rs.000's
Total Liabilities 6,422,225 5,300,342 1,245,117 1,644,015

Less:
Cash and Cash Equivalents (47,276) (1,212,879) (22,747) (1,002,342)
Net Debts 6,374,949 4,087,463 1,222,370 641,673
Total Equity 14,704,239 11,433,332 13,190,557 9,598,677
Net Debt to Equity Ratio 0.43 0.36 0.09 0.07
There were no changes in the Group’s approach to capital management during the year and the Group is not subject to
externally imposed capital requirements.
37 FAIR VALUE MEASUREMENT

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in
making the measurements.
Level 1 : Quoted market price (unadjusted) in an active market for an identical instrument.
Level 2 : Valuation techniques based on observable inputs.
Level 3 : Valuation techniques using significant unobservable inputs
37.1 Financial Instruments Carried at Fair Value and Valuation Bases

The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in the fair
value hierarchy into which the fair value measurement is categorized.
AS AT 31 MARCH 2023 Group/Company

Level 1 Level 2 Level 3 Total
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Financial Assets Measured at FVTOCI 9,218,177 - - 9,218,177

Financial Assets Measured at FVTPL 162,302 - - 162,302
9,380,479 - - 9,380,479
AS AT 31 MARCH 2022 Group/Company

Level 1 Level 2 Level 3 Total
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Financial Assets Measured at FVTOCI 6,852,754 - - 6,852,754

Financial Assets Measured at FVTPL 153,778 - - 153,778
7,006,532 - - 7,006,532
37.2 Fair value of Financial Instruments carried at amortized cost

The following table summarizes the carrying amounts and the Company’s estimate of fair values of those financial assets and
liabilities not presented on the Company/Group’s Statement of Financial Position at fair value.
As at 31 March 2023 Group Company

Carrying Amount Fair Value Carrying Amount Fair Value
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Assets
Cash and Cash Equivalents 47,276 47,276 22,747 22,747
Trade and Other Receivables 1,042,182 1,042,182 123,046 123,046
Amounts Due from Related Companies 28,809 28,809 1,219,147 1,219,147
Liabilities
Bank Overdraft 1,106,558 1,106,558 182,175 182,175
Trade and Other Payables 800,403 800,403 103,482 103,482
Amounts Due to Related Parties 95,048 95,048 90,743 90,743
Lease Liabilities 588,500 588,500 332 332
Loans and Borrowings 3,306,251 3,306,251 775,000 775,000
37 FAIR VALUE MEASUREMENT (CONTINUED)

Cash and Cash Equivalents
The carrying amount of the cash and cash equivalents and balances with banks approximate the fair value as theses are short
term in nature.
Trade and Other Receivables/Amount Due from Related Parties

Trade and other receivables are expected to be settled within one year from the reporting date and hence the discounting
impact would be immaterial. Therefore carrying amount approximate the fair value as at the reporting date.
Trade and Other Payables/Amount Due to Related Parties

Trade and other payables are expected to be settled within one year from the reporting date and hence the discounting impact
would be immaterial. Therefore carrying amount approximate the fair value as at the reporting date.
Loans and Borrowings/Bank Overdraft

Long term borrowings are repriced either monthly, quarterly or semi annually in line with the changes in the market rates.
Hence carrying value of these borrowings approximate the fair value. Other borrowings are short term in nature and hence
carrying value approximate the fair value.
38 ACCOUNTING CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES AS AT THE REPORTING DATE

Group
Financial liabilities Classification
Amortised Cost Fair Value Through Fair Value Through
Profit or Loss Other Comprehensive
Rs.000’s Rs.000’s Rs.000’s
Trade and Other Receivables 1,042,182 - -

Amount Due from Related Parties 28,809 - -
Cash and Cash Equivalent 47,276 - -
Financial Assets Measured at FVTOCI - - 9,218,177
Financial Assets Measured at FVTPL - 162,302 -

Fair Value Through Amortized Cos
Profit or Loss
Rs.000’s Rs.000’s
Trade and Other Payables - 800,403

Interest Bearing Borrowings - 3,306,251
Amounts Due to Related Parties - 95,048
Bank Overdraft - 1,106,558
Lease Liabilities - 588,500
39 ACCOUNTING CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES AS AT THE REPORTING DATE (CONTINUED)
Company
Financial Instrument Classification
Amortised Cost Fair Value Through Fair Value Through
Profit or Loss Other Comprehensive
Investments Income Investments
Rs.000’s Rs.000’s Rs.000’s
Trade and Other Receivables 123,046 - -

Amount Due from Related Parties 1,219,147 - -
Cash and Cash Equipment's 22,747 - -
Financial Assets Measured at FVTOCI - 9,218,177
Financial Assets Measured at FVTPL - 162,302 -

Fair Value Through Amortized Cost
Profit or Loss
Investments
Rs.000’s Rs.000’s
Trade and Other Payables - 103,482

Amounts Due to Related Parties - 90,743
Loans and Borrowings - 775,000
Bank Overdraft - 182,175
Lease Liabilities - 332
40 COMPARATIVE INFORMATION
The accounting policies have been consistently applied by the Group and are consistent with those used in the previous year.
The presentation and classification of the financial statements of the previous period, have been adjusted, where relevant, for
better presentation.
Shareholder and Investor Information
1 STOCK EXCHANGE LISTING

The issued ordinary shares of the Company are listed with Colombo Stock Exchange
Date of listing Colombo Stock Exchange (CSE)-01.01.1983
Abbreviation in Colombo Stock Exchange (CSE)-”LMF.N.”
Ticker symbol - LMF - N0000
ISIN - LK0112N00009
Stated Capital No.of Ordinary Shares -39,998,000
2 COMPOSITION ORDINARY SHAREHOLDERS

Category No of Share Total Shares Percentage No of Share Total Shares Percentage
Holders 31/03/2023 (%) Holders 31/03/2022 (%)
31/03/2023 31/03/2023 31/03/2022 31/03/2022
1-1000 3,707 806,466 2.02 3,783 844,399 2.11
1001-10000 772 2,640,499 6.60 833 2,926,998 7.32
10001-100000 154 4,297,558 10.74 152 4,064,414 10.16
100001-1000000 20 5,990,863 14.98 16 4,820,062 12.05
1,000,001 & Over 2 26,262,614 65.66 3 27,342,127 68.36
Total 4,655 39,998,000 100.00 4,787 39,998,000 100.00
3 ANALYSIS OF ORDINARY SHARES

Category No of Share Total Shares Percentage No of Share Total Shares Percentage
Holders 31/03/2023 (%) Holders 31/03/2022 (%)
31/03/2023 31/03/2023 31/03/2022 31/03/2022
Individuals -Local 4,330 7,816,415 19.54 4,403 7,492,615 18.73
Individuals - Overseas 44 546,321 1.37 44 368,310 0.92
Companies - Local 279 31,354,112 78.39 337 31,541,437 78.86
Companies - Overseas 2 281,152 0.70 3 595,638 1.49
Total 4,655 39,998,000 100.00 4,787 39,998,000 100.00
4 DIRECTORS’ AND CEO’S SHAREHOLDINGS

The Directors’ and CEO’S shareholdings in the Company were as follows.
Company
As at 31 March 2023 2022
Name of the Directors and CEO No Of Shares No Of Shares
Mr. D. H. S. Jayawardena Nil Nil
Mr. C. R. Jansz Nil Nil
Mr. D. S. K. Amarasekera Nil Nil
Dr. A. Shakthevale Nil Nil
Mr. D. Hasitha Stassen Jayawardena Nil Nil
Ms. D. S. T Jayawardena 2934 2934
Mr. M. Dahanayake (CEO) Nil Nil
5 VALUE PER SHARE

Company
2022/23 2021/22
Rs. Rs.
Earnings Rs. 38.02 11.67
Dividend Rs. 5.00 7.50
Net Assets Rs. 329.78 239.98
Shareholder and Investor Information
6 MARKET VALUE PER SHARE

Company
2022/23 2021/22
Rs. Rs.
Highest Price during the Year Rs. 175.00 295.00
Lowest Price during the Year Rs. 99.00 130.00
Value as at Last Trading Date Rs. 140.75 132.75
7 TWENTY FIVE MAJOR SHARE HOLDERS

As at 31 March 2023 As at 31 March 2022
NAME No of Shares % On Total NAME No of % On Total
Issued Shares Issued
Capital Capital
1 Milford Exports (Ceylon) (Pvt) Limited 13,426,540 33.57 Milford Exports (Ceylon) (Pvt) Limited 13,426,540 33.57
2 Melstacorp PLC 12,836,074 32.09 Melstacorp PLC 12,836,074 32.09
3 Senkadagala Finance PLC 750,398 1.88 Seylan Bank PLC/Arrc Capital (Pvt) Ltd 1,079,513 2.70
4 Employees Trust Fund Board 575,787 1.44 Employees Trust Fund Board 575,787 1.44
5 Vasudevan Saraswathi 513,007 1.28 Vasudevan Saraswathi 513,007 1.28
6 Hatton National Bank PLC-Senfin Growth Fund 509,073 1.27 E.W. Balasuriya & Co. (Pvt) Ltd 457,547 1.14
7 E.W. Balasuriya & Co. (Pvt) Ltd 457,547 1.14 Rukaiya Husseinally Abdulhussein 410,000 1.03
8 Yusuf Husseinally Abdulhussein 392,295 0.98 Yusuf Husseinally Abdulhussein 397,637 0.99
9 Rukaiya Husseinally Abdulhussein 383,000 0.96 Amana Bank Plc/Hi-Line Trading Pvt Ltd 371,533 0.93
10 Amana Bank PLC/Hi-Line Trading Pvt Ltd 371,533 0.93 Pershing LLC S/A Averbach Grauson & Co. 299,531 0.75
11 Commercial Bank Of Ceylon PLC A/C No. 04 250,000 0.63 Hatton National Bank PLC-Senfin Growth Fund 285,589 0.71
12 Hallsville Trading Group Inc. 249,221 0.62 Commercial Bank Of Ceylon PLC A/C No. 04 250,000 0.63
13 People'S Leasing & Finance PLC/Mr.H.M. 200,000 0.50 Hallsville Trading Group Inc. 249,221 0.62
Abdulhussein
14 Husseinally Mohsinally Abdulhussein 196,534 0.49 Husseinally Mohsinally Abdulhussein 217,660 0.54
15 Mark Anthony Theodoor Raaymakers 194,993 0.49 People'S Leasing & Finance Plc/Mr.H.M. 200,000 0.50
Abdulhussein
16 Radhakrishnan Maheswaran 155,929 0.39 Dinesh Nagendra Sellamuttu 183,502 0.46
17 Meenambigai Priyadarshini Radhakrishnan 150,000 0.38 Manickam Vallipuram Theagarajah 140,933 0.35
18 Andal Radhakrishnan 143,959 0.36 Mark Anthony Theodoor Raaymakers 135,493 0.34
19 Manickam Vallipuram Theagarajah 140,933 0.35 Gulamhussein Moshinally Abdulhussein 132,622 0.33
20 Gulamhussein Moshinally Abdulhussein 132,622 0.33 Meenambigai Priyadarshini Radhakrishnan 95,337 0.24
21 Kalin Holdings (Pvt) Ltd 122,284 0.31 Andal Radhakrishnan 94,468 0.24
22 Dinesh Nagendra Sellamuttu 101,748 0.25 Sakuvi Investment Trust (Private) Limited 92,000 0.23
23 Damian Amal Cabraal 100,000 0.25 Arunasalam Sithampalam 91,160 0.23
24 Mohamed Siddeek Mohamed Ali 95,688 0.24 Essajee Carimjee Insurance Brokers (Pvt) Ltd 90,000 0.23
25 Sakuvi Investment Trust (Private) Limited 92,000 0.23 Commercial Bank Of Ceylon PLC/ 80,000 0.20
H.M.Dawoodbhoy
Sub Total 32,541,165 81.36 Sub Total 32,705,154 81.77
Other Shareholders 7,456,835 18.64 Other Shareholders 7,292,846 18.23
Grand Total 39,998,000 100.00 Grand Total 39,998,000 100.00
8 PUBLIC SHAREHOLDINGS
2023.03.31 2022.03.31
Number of Shares held by Public 13,731,313 13,731,313
Numbers of Public Shareholders 4652 4784
Percentge of Shares held by Public 34.33% 34.33%
Float Adjusted Market Capitalisation (Rs.000) 1,932,682 1,822,832
Company Complies with Minimum Public Holdings Requirement Under option 5 as set out in the listing rules 7.13.1
Ten Year Summary
Group - Rs.000 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
OPERATING RESULT
Revenue 14,171,501 9,771,539 7,597,192 6,703,854 5,385,534 5,416,547 5,250,208 5,048,510 3,952,277 4,571,997
Gross Profit 1,778,903 1,460,207 1,077,218 663,230 487,442 938,579 789,861 733,442 310,735 472,593
Profit /(Loss)before Tax 1,262,422 1,097,589 833,946 400,368 (44,712) 631,766 548,704 119,483 (33,302) 26,524
Taxation (73,217 ) (33,086) 7,818 (109,705) (81,915) (51,235) (6,748) 1,114 31,571 21,903
Profit/(Loss) after Tax 1,189,205 1,064,503 841,764 290,663 (126,627) 580,531 541,956 120,597 (1,731) 48,427
Profit/(Loss)Attributable to 1,189,319 1,065,100 841,842 301,252 (126,312) 580,784 542,179 126,988 2,885 61,059
Equity Holder
Dividends 199,990 299,985 199,990 99,995 49,998 99,995 99,995 49,998 49,998 -
STATEMENT OF FINANCIAL
POSITION
Property,Plant and Equipment 5,230,734 4,497,497 3,050,465 2,026,997 1,287,633 1,473,279 1,564,886 1,584,723 1,789,252 1,962,797
Short-term Investment 162,302 153,778 197,002 209,061 209,839 270,283 244,838 247,029 305,929 236,453
Current Assets 4,144,431 3,784,590 2,457,575 2,257,454 2,448,635 2,195,399 1,838,876 1,790,653 1,968,720 1,611,624
Total Assets 21,126,464 16,733,674 14,501,150 12,954,243 10,617,378 13,793,479 12,958,922 11,656,394 13,306,902 11,587,053
Total Equity 14,704,239 11,433,332 11,265,999 10,412,933 8,856,988 12,470,426 11,811,602 10,158,993 11,394,013 9,993,200
Non Current Liabilities 2,934,480 2,301,900 1,799,149 971,784 476,154 494,501 514,450 556,378 594,848 622,506
Current Liabilities 3,487,745 2,998,442 1,436,002 1,569,526 1,284,236 828,552 632,870 941,023 1,318,041 971,347
RATIOS
Earnings per shares(Rs) 29.73 26.63 21.05 7.53 (3.16) 14.52 13.56 3.17 0.07 1.53
Dividend per shares (Rs) 5.00 7.50 5.00 2.50 1.25 2.50 2.50 1.25 1.25 -
Dividend cover (Times) 5.95 3.55 4.21 3.01 (2.53) 5.81 5.42 2.54 0.06 -
Dividend payout Ratio % 16.82 28.17 23.75 33.20 (39.58) 17.22 18.44 39.43 1,785.71 -
Price earning ratio (Times) 4.73 4.98 7.14 9.83 (34.81) 10.89 8.63 36.12 2,000.00 70.16
Total assets to equity (Times) 1.44 1.46 1.29 1.24 1.20 1.11 1.10 1.15 1.17 1.16
Net assets per Share (Rs) 367.63 285.85 281.66 260.33 221.16 311.49 295.01 253.69 284.41 249.27
Market Value per share 140.75 132.75 150.25 74.00 110.00 158.10 117.00 114.50 140.00 107.10
(as at 31st March)
Return on equity (%) 8.09 9.32 7.47 2.89 (1.43) 4.66 4.59 1.19 (0.02) 0.48
Return on Total Assets (%) 5.63 6.37 5.80 2.24 (1.19) 4.21 4.18 1.04 (0.02) 0.42
Gross Profit Ratio (%) 12.55 14.95 14.18 9.89 9.05 17.33 15.04 14.53 7.87 10.34
Net Profit/(Loss) Ratio (%) 8.39 10.90 11.08 4.34 (2.35 ) 10.72 10.32 2.39 (0.05) 1.06
Current Ratio (Times) 1.19 1.26 1.71 1.44 1.91 2.65 2.91 1.90 1.49 1.66
Liquidity Ratio (Times) 0.39 0.77 0.87 0.79 0.80 1.31 1.61 1.02 0.71 0.84
Ten Year Summary
Company - Rs.000 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
OPERATING RESULT
Revenue 4,072,143 3,423,954 3,101,450 3,030,915 1,922,137 1,840,687 2,053,427 2,394,015 1,957,046 2,446,113
Gross Profit 897,834 170,947 120,289 156,610 26,721 100,936 154,936 222,274 63,033 171,232
Profit /(Loss)before Tax 1,509,202 463,618 307,486 182,385 115,405 278,346 216,919 (37,470) 22,029 14,062
Taxation 11,705 3,261 (14,436) (52,449) (13,922) (1,945) 16,925 20,014 46,264 29,957
Profit/(Loss) after Tax 1,520,907 466,879 293,050 129,936 101,483 276,401 233,844 (17,456) 68,293 44,019
Dividends 199,990 299,985 199,990 99,995 49,998 99,995 99,995 49,998 49,998 -
STATEMENT OF FINANCIAL
POSITION
Property,Plant and Equipment 109,008 125,751 143,283 136,964 136,226 143,342 162,710 186,883 214,959 235,513
Short-term Investment 162,302 153,778 197,002 209,061 209,839 270,283 244,838 247,029 305,929 236,453
Current Assets 2,070,138 3,188,130 1,895,777 1,549,565 1,608,901 1,582,904 1,784,555 1,567,493 2,038,196 1,762,864
Total Assets 14,435,674 11,242,692 10,693,007 10,213,076 9,015,246 12,077,838 11,780,962 10,405,826 12,192,882 10,471,571
Total Equity 13,190,557 9,598,677 10,034,770 9,716,254 8,319,369 11,701,440 11,344,714 10,000,059 11,370,598 9,882,818
Non Current Liabilities 75,281 69,797 86,459 63,695 58,007 62,227 51,429 44,765 38,826 30,028
Current Liabilities 1,169,836 1,574,218 571,778 433,127 637,870 314,171 384,819 361,002 783,458 558,725
RATIOS
Earnings per shares(Rs) 38.02 11.67 7.33 3.25 2.54 6.91 5.85 (0.44) 1.71 1.10
Dividend per shares (Rs) 5.00 7.50 5.00 2.50 1.25 2.50 2.50 1.25 1.25 -
Dividend cover (Times) 7.60 1.56 1.47 1.30 2.03 2.76 2.34 (0.35) 1.37 -
Dividend payout Ratio % 13.15 64.27 68.21 76.92 49.27 36.18 42.74 (35.20) 73.10 -
Price earning ratio (Times) 3.70 11.37 20.50 22.78 43.30 22.88 20.01 (260.22) 81.87 97.32
Total assets to equity (Times) 1.09 1.17 1.07 1.05 1.08 1.03 1.04 1.04 1.07 1.06
Net assets per Share (Rs) 329.78 239.98 250.88 242.92 207.99 292.55 283.63 250.01 284.28 247.08
Market Value per share (as at 140.75 132.75 150.25 74.00 110.00 158.10 117.00 114.50 140.00 107.10
31st March)
Return on equity (%) 11.53 4.87 2.92 1.34 1.22 2.37 2.06 (0.18) 0.61 0.45
Return on Total Assets (%) 10.54 4.16 2.74 1.27 1.12 2.29 1.98 (0.18) 0.56 0.42
Gross Profit Ratio (%) 22.05 5.00 3.88 5.17 1.39 5.48 7.55 9.29 3.22 7
Net Profit/(Loss) Ratio (%) 37.35 13.64 9.45 4.28 5.28 15.02 11.39 (0.73) 3.49 1.8
Current Ratio (Times) 1.77 2.02 3.32 3.58 2.52 5.04 4.64 4.34 2.6 3.16
Liquidity Ratio (Times) 1.31 1.77 2.55 2.75 1.49 3.45 3.95 3.4 1.81 2.53
Notes
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Notice of Meeting
Notice is hereby given that the Forty-First (41st) Annual General *NOTE:
Meeting of Lanka Milk Foods (CWE) PLC* will be held as a virtual 01. The 41st Annual General Meeting of Lanka Milk Foods (CWE) PLC will
meeting at Lanka Milk Foods (CWE) PLC, Welisara, Ragama on be a virtual meeting held by participants joining in person or by proxy
Tuesday, the 12th September 2023 at 10.00 a.m., for the following through audio or audiovisual means in the manner specified below.
purposes.
i. Attendance of the Chairman and the Board of Directors
1. To receive and consider the Report of the Directors, the Financial The Chairman, members of the Board of Directors, certain Key
Statements of the Company for the year ended 31st March 2023 with Management Personnel, the Company Secretary and the External
the Auditors’ Report thereon. Auditors will be available on the virtual platform on Tuesday, 12th
September 2023 at 10.00 a.m.
2. To re-elect Ms. Stasshani Jayawardena who retires by rotation at the
Annual General Meeting in terms of Article No.94 of the Articles of ii. Shareholder participation
Association, as a Director of the Company. a) The shareholders are encouraged to appoint a Director of the
Company as their proxy to represent them at the meeting.
3. To re-elect Mr. D.H.S. Jayawardena, who is over the age of 70 years and
who retires in terms of sections 210 and 211 of the Companies Act b) The shareholders may also appoint any other persons other than a
No. 7 of 2007 as a Director of the Company by passing the following Director of the Company as their proxy and the proxy so appointed
Resolution. shall participate at the meeting through audio or audiovisual means
only.
“That Mr. D.H.S. Jayawardena who attained the age of 70 on 17th
August 2012 be and is hereby re-elected as a Director of the Company c) The shareholders who wish to participate in the meeting will be able
and it is hereby declared that the age limit of 70 years referred to in to join the meeting through audio or audiovisual means only. To
section 210 of the Companies Act No.7 of 2007 shall not apply to the facilitate this process, the shareholders are required to furnish their
said Mr. D.H.S. Jayawardena.” details by perfecting Annexure II to the Circular to Shareholders and
forwarding the same to reach the Company Secretary via e-mail to
4. To re-elect Dr. A. Shakthevale who is over the age of 70 years and [email protected] or facsimile on +94112956266 or by post to
who retires in terms of sections 210 and 211 of the Companies Act the registered address of the Company No. 579/1, Welisara, Ragama,
No. 7 of 2007 as a Director of the Company by passing the following not less than five (05) days before the date of the meeting so that
Resolution. the meeting login information could be forwarded to the e-mail
addresses so provided. The Circular to Shareholders will be posted to
“That Dr. A. Shakthevale who attained the age of 70 on 04th September all the shareholders along with the Notice of Meeting and the Form
2012 be and is hereby re-elected as a Director of the Company and it of Proxy.
is hereby declared that the age limit of 70 years referred to in section
210 of the Companies Act No.7 of 2007 shall not apply to the said Dr. A. d) To facilitate the appointment of proxies, the Form of Proxy is
Shakthevale.” attached hereto and the duly completed Forms of Proxy should be
sent to reach the Company Secretary via e-mail to [email protected]
5. To re-appoint Messrs. KPMG, (Chartered Accountants) as the Auditors or facsimile on +94112956266 or by post to registered address of the
for the ensuing year and to authorize the Directors to determine their Company No. 579/1, Welisara, Ragama, not less than forty-eight (48)
remuneration. hours before the time fixed for the meeting.
6. To authorize the Directors to determine payments for the year 2024, for iii. Shareholders’ queries
charitable and other purposes, as set out in the Company’s Donations The shareholders are hereby advised that if they wish to raise any
Act (Cap 147). queries, such queries should be sent to reach the Company Secretary,
via e-mail to [email protected] or facsimile at +94112956266 or by
By Order of the Board post to the registered address of the Company No. 579/1, Welisara,
Ragama, not less than five (5) days before the date of the meeting. This
is to enable the Company Secretary to compile the queries and forward
same to the attention of the Board of Directors so that such queries
could be addressed at the meeting.
02. Annual report online access

Ms. H. K. Bulathwatte The Annual Report of the Company for the year 2022/2023 will be
Company Secretary available for perusal on the website at www.lmfgroup.lk and on the
Lanka Milk Foods (CWE) PLC Colombo Stock Exchange website at www.cse.lk.
18th August 2023

Form of Proxy
LANKA MILK FOODS (CWE) PLC

I/We ……………………………………………………………………………………………………………………………………………of
……………………………………………………………………………………………………………………………………………………
being a shareholder/s of the above Company, hereby appoint ………………………………………………………………………………
…………………………………………………………… of……………………………………………………………………………………
………………………………………………………… (whom failing)
Don Harold Stassen Jayawardena, (whom failing)

Cedric Royle Jansz, (whom failing)
Don Stasshani Therese Jayawardena, (whom failing)
Don Soshan Kamantha Amarasekera, (whom failing)
Shakthevale Arinesarajah, (whom failing)
Don Hasitha Stassen Jayawardena,
as my/our proxy to represent me/us, to speak and to vote on my/our behalf at the Forty-First (41st) Annual General Meeting of
the Company to be held on the 12th September 2023, and at any adjournment thereof and at every poll which may be taken in
consequence thereof.
Resolution For Against
1 To re-elect Ms. Stasshani Jayawardena, who retires in terms of Article No.94 of the Articles of
Association of the Company
2 To re-elect Mr. D. H .S. Jayawardena, who retires in terms of sections 210 and 211 of the
Companies Act No. 7 of 2007
3 To re-elect Dr. A. Shakthevale, who retires in terms of sections 210 and 211 of the
Companies Act No. 7 of 2007
4 To re-appoint Auditors and to authorise the Directors to determine their remuneration
5 To authorise the Directors to determine payments for charitable and other purposes in
terms of the Company's Donation Act. (Cap 147)
Signed this ................................... day of September Two Thousand Twenty Three
...............................................
Shareholder’s Signature/(s)
............................................... ...............................................
Shareholder’s NIC/ Folio No. Proxyholder’s NIC
Form of Proxy
Notes:
(a) In terms of Article 72 of the Article of Association of the Company:-
The instrument appointing a proxy shall be in writing and,
(i) In the case of an individual shall be signed by the appointer or by his Attorney; and
(ii) In the case of a Corporation shall be either under its common seal or signed by its Attorney or an officer on behalf of the
corporation.
The Company may, but shall not be bound to, require evidence of the authority of any such Attorney or Officer. A proxy need
not be a member of the Company.
In terms of Article 73 of the Article of Association of the Company:-
The Instrument appointing a proxy shall be lodged, and the Power of Attorney (if any) under which it is signed or a copy
certified by a Notary thereof shall if required to be deposited for inspection, at the office in each case not less than forty-
eight (48) hours before the time appointed for holding the meeting or adjourned meeting, or in the case of a poll before the
time appointed for the taking of the poll at which the person named in the instrument proposed to vote, and in default, the
instrument of proxy shall not be treated as valid.
In terms of Article 67 of the Article of Association of the Company:-
In the case of joint-holders of a share the senior who tenders a vote, whether in person or by proxy or Attorney or by a
representative, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall
be determined by the order in which the names stand in the register of members in respect of the joint-holding.
The first joint-holder thereby has the power to sign the proxy without the concurrence of the other joint-holding.
(b) The full name and the registered address of the shareholder appointing the proxy should be legibly entered in the Form of Proxy.
(c) In the case of non-resident shareholders, the stamping can be attended to on the return of the signed Form of Proxy to Sri Lanka.
(d) For the completed Form of Proxy to be valid it should be deposited with the Company Secretary, Lanka Milk Foods (CWE) PLC at
the registered office of the company at Welisara, Ragama, not later than 48 hrs before the time appointed for the holding of the
meeting.
(e) Every alteration or addition to the Form of Proxy must be duly authenticated by the full signature of the shareholder signing
the Form of Proxy. Such signature should as far as possible be placed in proximity to the alteration or addition intend to be
authenticated.
Please provide the following details (mandatory):

NIC/PP/Company Registration No. of the Shareholder/s : ……………………………………………………………
……………………………………………………………
Folio No. : ……………………………………………………………
E-mail Address of the Shareholder/(s) or Proxyholder

(Other than a Director appointed as proxy) : ……………………………………………………………
Contact No. (Mobile) : ……………………………………………………………
Contact No. (Fixed Line) : ……………………………………………………………

Corporate Information
Name of the Company Lanka Milk Foods (CWE) PLC
Legal Form A Public Company with Limited Liability under the provisions of
Companies Act No. 7 of 2007, Quoted in the Colombo Stock Exchange in January 1983
Company Registration Number PQ 142
Date of Incorporation 12th November 1981
Accounting Year End 31st March
Registered Office 579/1, Welisara, Ragama,

Sri Lanka
Board of Directors Mr. D. H. S. Jayawardena - Executive Chairman

Mr. C. R. Jansz - Executive Director
Ms. D. S. T. Jayawardena - Executive Director
Mr. D. S. K. Amarasekera - Independent Non-Executive Director
Dr. A. Shakthevale - Independent Non-Executive Director
Mr. D. Hasitha. S. Jayawardena - Non-Independent Non-Executive Director
Group Chief Executive Officer Mr. M. C. Dahanayake
Company Secretary Ms. H. K. Bulathwatte
Auditors Messrs. KPMG (Chartered Accountants)

32A, Sir Mohamed Macan Markar Mawatha
P O Box 186
Colombo 3, Sri Lanka.
Subsidiary Companies Lanka Dairies (Private) Limited

Ambewela Livestock Company Limited
Pattipola Livestock Company Limited
Ambewela Products (Private) Limited
United Dairies Lanka (Private) Limited
Indo Lanka Exports (Private) Limited
Bankers Hatton National Bank PLC

Commercial Bank of Ceylon PLC
DFCC Bank PLC
Hong Kong & Shanghai Banking Corporation Ltd
Bank of Ceylon
Standard Charterd Bank
Contact Details 579/1, Welisara, Ragama, Sri Lanka

Tel: +9411 2956263-5, +9411 5222600
Fax: +9411 2956266
Email: [email protected]
Website: www.lmfgroup.lk
Designed & produced by
Digital Plates & Printing by Aitken Spence Printing &

Packaging (Pvt) Ltd
579/1, Welisara, Ragama, Sri Lanka
Tel : +9411 2956263-5, +9411 5222600
Fax : +9411 2956266
Web : www.lmfgroup.lk
Email : [email protected]

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LANKA MILK FOODS (CWE) PLC | ANNUAL REPORT 2022/23

Group Overview Governance

Annual Report of the Board of Directors 65

As one of the largest dairy producers and manufacturers in South Asia,

We have combined tradition with the latest technology and techniques

As we expand our horizons, we are proud to be pioneers in the industry,

LANKA MILK FOODS (CWE) PLC

Year of establishment - 1981

Quoted year in Colombo Stock Exchange - 1983

Business Activity – Packing and distributing

Brands – LAKSPRAY, BLU, DANO

100% 100% 100% 100% 100%

Year of Year of Year of Year of Year of

* Indo Lanka (Pvt) Limited (Year of Establishment - 2009)- Not in operation

Vision, Mission, About this Report

About this Report

Reporting Standards and Principles

Mission sustainability reporting.

Kindly send your feedback to,

Our Range of Products

Lakspray Ambewela Ambewela

Ambewela Full Cream Milk and

Daily Ambewela Drinking

Our Range of Products

UHT Flavoured Milk Ambewela Kiddos Ambewela Cheese

The cheese made by New Zealand

My Juicee Dano Full Cream Milk Ambewela Goat Milk

Liquid milk and other

Rs. 21,126 Mn 4223

Dear Valued Stakeholder,

This report details the Group's plans,

to meet rigorous international standards environmental sustainability.

using the finest milk from our farms. Our

fresh milk products have also achieved well-being of the cows.

The dairy industry in Sri Lanka holds challenges. As we move forward, we

I would like to thank our stakeholders for

Group Chief Executive

Additionally, the Group marked a

This impressive growth was largely

Group Chief Executive

“Equipped with robust However, the Company faced Operational Challenges

Rs. Mn bolstering the growth and development

12,000 rightfully take pride in this extraordinary

of hygiene, our dairy farms, including dedication to fostering self-sufficiency

that meet global benchmarks, we have

farms. Our dedication to the well-being Acknowledgements

Expanding Horizons, Fueling Growth and In addition, I extend my heartfelt thanks

Equipped with robust infrastructure, a

Mr. D. H. S. Jayawardena Mr. C. R. Jansz

Mr. D. S. K. Amarasekera Dr. A. Shakthevale

Mr. D. Hasitha. S. Jayawardena

Mr. Hasitha Jayawardena was appointed

Mr. Jayawardena joined the Stassen Group

Mr. Jayawardena holds a Bachelor’s

Management Discussion & Analysis

Management Discussion & Analysis

CAPITAL INPUTS VALUE TRANSFORMATION

Our Loyal Customers

Growing our feed and forages

724 Our own feed mill to formulate cattle feed