Kelani Valley Plantations : Annual Report 2023/24

Can

Should

Will

Foster a harmonious coexistence

KELANI VALLEY PLANTATIONS PLC

INTEGRATED ANNUAL REPORT 2023/24

In our pursuit of excellence, there are moments that define our journey. As we come to the end of yet another successful financial year, we embraced these moments with unwavering resolve, united in our commitment to drive positive change and impact the lives of many in the varied spheres of our industry. Guided by our strong sustainability framework, we therefore adopted 3 imperatives that would guide our strategy of fostering a delicate balance between ourselves and the world around us.

We Can: Together, we possessed the collective strength, expertise, and ingenuity to overcome challenges and

seize opportunities, which was empowered by our shared vision and values.

We Should: We remained focused on our commitment to uphold the highest standards of corporate

governance, and to prioritize the well-being of our stakeholders. We seized this opportunity to lead by example,

demonstrating our unwavering commitment to ESG principles and ethical business practices.

We Will: Driven by purpose and guided by our promise to shareholders, employees, and communities, we forged ahead with determination and resilience with a steadfast focus on long-term value creation.

By tapping into the power of "we can, we should, we will"

a mantra that inspires action, fosters collaboration, and empowers the lives and surroundings of many within

our locus of attention, we are confident of fostering a harmonious co-existence that extends into the future.

Contents

Corporate Overview
•	About the Report	4
•	Our Spread	6
•	Corporate Profile	8
•	Milestones	10
•	Awards & Accolades	12
•	Board of Directors	14
•	Corporate Management	18
•	Corporate Management Profile	20
Highlights
•	Financial Highlights	24
•	Horizontal Analysis	26
•	Vertical Analysis	28
• Horizontal and Vertical Analysis	29
•	Non-Financial Highlights	30
•	Chairman's Message	32
•	Managing Director's Review	35

Key Pages

Chairman's	Managing
Message	Director's Review

Can

Should

Will

Foster a harmonious coexistence

Strategy and Focus
•	Strategy and Focus	40
•	Materiality Assessment	45
•	Value Creation	48
• Compliance with Product and
	Service Labelling	50
• Environment, Social & Governance
	ESG Framework	52
• SDG Summary	58

Value	Six Capitals
Creation	Value Creation

32

35

48

70

E S G

Environment, Social

• Governance ESG Framework

52

Business Reviews
•	Sector Review	60
•	Tea	64
•	Rubber	67
Capital Management Reports
• Six Capitals Value Creation	70
•	Financial Capital	72
• Statement of Value Addition and
	distribution - 2023/24	82
•	Manufactured Capital	83
•	Intellectual Capital	88
•	Human Capital	94
•	Social & Relationship Capital	118
•	Natural Capital	128
• Bolstering our Climate Resilience	146

Governance and Risk

• Corporate Governance
• Risk Management
• Annual Report of the Board of Directors on the Affairs of the Company
• Directors' Statement on Internal Controls
• Statement of Directors' Responsibility
• Audit Committee Report
• Related Party Transactions Review Committee Report
• Remuneration Committee Report
• Nominations and Governance Committee Report
• Statement by the Senior Independent Director
• Managing Directors', Chief Executive Officers', and Director Finance's Responsibility Statement

150		Sri Lankan Leopard
177
	The identification name of the male
		leopard in the image recorded on
187		January 2022: "QT"
	140
191				SCAN ME!
192				Annexures
			•	Ten Year Summary	271
193
			•	Investor Information	272
	Financial Reports		•	Independent Assurance Report	274
195		•	GRI Index Table	276
196	•	Financial Calendar	202	•	Consolidated Statement of ESG
	•	Independent Auditors' Report	203		Performances	282
	• Notes to the Consolidated
197	• Statement of Profit or Loss	206
	ESG Statement	283
	• Statement of Comprehensive Income	207
	•	Glossary	288
199	• Statement of Financial Position	208
•	Notes	291
	• Statement of Changes in Equity	210
	•	Corporate Information	293
	• Statement of Cash Flows	211	•	Notice of the Meeting	294
200	• Note to the Financial Statements	213	•	Form of Proxy	295

SDG Full Report

Corporate	Independent	Independent
Governance	Auditors' Report	Assurance Report

150	203	274
SCAN ME!

4	Kelani Valley Plantations PLC		Integrated Annual Report 2023/24	Corporate Overview

About the Report

Welcome to Our

10th

Integrated

Annual

Report

Regulations, Standards and Principles

Narrative Reporting

€ International Framework of the IIRC.

Governance, Risk Management

and Operations

www.kvpl.com	€ Laws and regulations of the Companies Act No. 7 of
	2007.

• Listing Rules of the Colombo Stock Exchange (CSE) and subsequent revisions to date.
• Securities and Exchange Commission of Sri Lanka (SEC) Act No. 19 of 2021, including directives and circulars.
• Code of Best Practice on Corporate Governance (2013) jointly advocated by SEC and the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka).
• Code of Best Practice on Corporate Governance (2023) issued by CA Sri Lanka.
• Code of Best Practices on Related Party Transactions (2013) advocated by SEC.

Financial Reporting

• Sri Lanka Accounting Standards (SLFRS/LKAS) issued by CA Sri Lanka.

Sustainability Reporting

• This report has been prepared in accordance with the Global Reporting Initiative (GRI).
• Aligned to United Nations Sustainable Development Goals.
• Operations in conformity with the Principles of the United Nations Global Compact.

• Environmental, Social and Governance (ESG) disclosures through the framework and operations in conformity with the Principles of the United Nations Global Compact.
• Climate first reporting aligning with IFRS S2 standard.

Over View to this report

GRI 2-3

Kelani Valley Plantations PLC presents its 10th Integrated Annual Report in accordance with the International Framework of the International Integrated Reporting Council (IIRC). It presents the economic, social and environmental performance of the entire Group including its subsidiaries for the financial year beginning 1 April 2023 and ending 31 March 2024.

It is also the 10th year of reporting in accordance with Global Reporting Initiatives (GRI) Standards which reflects our commitment to sustainability Reporting guidelines.

Reporting Principles

The Contents included in this Report are deemed useful and relevant to our stakeholders with due regard to their expectations which have been identified through continuous engagement. The information presented aims to provide the Group's stakeholders with a comprehensive understanding of the financial, social and environmental impacts of the Group's operations and business activities in order to facilitate their evaluation of the Group's ability to create sustained value.

Corporate Overview	Integrated Annual Report 2023/24		Kelani Valley Plantations PLC	5

All information, which have been obtained from a range of source within the Group, have been verified for their completeness, balance, comparability, accuracy, reliability timeliness and clarity in accordance with Group's disclosure policies.

GRI 2-4

GHG Emission Data has been re-stated as the scope is expanded and the calculation method is changed and we have identified new material topics and reported accordingly.

Forward Looking Statements

This Annual Report contains certain forward-looking statements which relate to the future performance and results of the operations of the Group. These statements by their nature involve risk and uncertainty as they relate to the future and depend on circumstances which may occur in the future and which may be beyond the control of the Group. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, global and national socio- economic conditions, changes in industry environment, natural environmental conditions, interest rates, credit and the associated risk of lending, merchandise clearance rates, inventory levels, and competitive and regulatory factors. As such, the Company does not undertake to review or revise such forward looking statements.

Assurance

GRI 2-5

The Group uses a combination of internal controls, management assurance, compliance and internal audit reviews to ensure the accuracy of reporting.

In addition to the above, Independent assurance report on EESG performance and GRI Standard, and opinion on the financial statements are provided by external Auditors, Messrs. Ernest & Young, Chartered Accountants, Colombo as set out on pages 274 to 275 and 203 to 205 respectively.

Contact Point

GRI 2-3

Navigation Icons

Capital Icons

Financial	Manufactured	Human
Capital	Capital	Capital

Social &	Intellectual	Natural
Relationship	Capital	Capital
Capital

Stakeholders

Employees Regulators Suppliers

Community		Government	Strategic
									Partners
Shareholders		Customers
				EESG
	E			E			S			G
Economics	Environment	Social	Governance

KVPL welcomes any questions, clarifications and feedback on this report. Please contact [e-mail]

Directors' Statement of Responsibility for this report

The Board believes that this Integrated Annual Report has been prepared in accordance with best practices and appropriately addresses material aspects of KVPL's business and is a fair representation of the integrated performance of the Company.

The Board unanimously approved the 2023/24 Integrated Annual Report 10 May 2024, for release to the shareholders.

A. M. Pandithage	Roshan Rajadurai PhD, D.Sc.
Chairman	Managing Director
Date: 10 May 2024

IUCN Red List Threat Category Colour Code

Global Conservation Status

Least Concern (LC)	Near threatened (NT)
Vulnerable (VU)	Endangered (EN)
Critically Endangered (CR)

National Conservation Status

Least Concern (LC)	Near threatened (NT)
Vulnerable (VU)	Endangered (EN)
Critically Endangered (CR)

Species Status and Distribution

Endemic

Native

Migrant

Photo Credit :Sampath de A Goonatilake@IUCN in Sri Lanka, The Wilderness & Wildlife Conservation Trust

6	Kelani Valley Plantations PLC		Integrated Annual Report 2023/24	Corporate Overview

Our Spread

	Estate		Planting				Extent (Ha)				No. of		Elevation				Crop
			District										Factories		(ft)		Kgs'000		Kgs'000
					Tea		Rubber		Other		Total						Tea		Rubber
	Pedro		N'Eliya		515		-		153		668		1		6,237		555		-
	Nuwaraeliya		N'Eliya		178		-		114		292		1		5,999		249		-
	Glassaugh		N'Eliya		160		-		68		228		1		5,074		280		-
	Uda Radella		N'Eliya		157		-		71		228		1		5,328		200		-
	Edinburgh		N'Eliya		132		-		47		179		1		5,075		157		-
	Oliphant		N'Eliya		193		-		171		364		1		6,440		173		-
	Ingestre		N'Eliya		506		-		324		830		1		4,723		591		-
	Fordyce		N'Eliya		226		-		177		403		1		4,599		250		-
	Annfield		N'Eliya		213		-		161		375		1		4,297		322		-
	Tillyrie		N'Eliya		162		-		172		334		1		4,264		233		-
	Invery		N'Eliya		124		-		182		306		1		4,310		190		-
	Robgill		N'Eliya		172		-		128		300		1		4,500		253		-
	Battalgalla		N'Eliya		141		-		120		261		1		4,300		167		-
	Halgolla		Kegalle		222		-		975		1,196		1		3,478		110		-
	Ederapolla		Kegalle		10		391		266		667		1		338		7		289
	Kitulgala		Kegalle		37		-		545		582		-		1,003		29		-
	Kalupahana		Kegalle		54		158		301		512		-		1,500		30		135
	Kelani		Kegalle		27		174		148		349		1		300		31		121
	Dewalakanda		Kegalle		-		416		301		717		2		502		-		244
	Panawatte		Kegalle		6		638		370		1,014		1		1,000		3		384
	Urumiwella		Kegalle		3		330		377		710		1		800		5		170
	Kiriporuwa		Kegalle		23		342		221		587		2		805		15		164
	Lavant		Kegalle		-		283		286		569		1		800		-		180
	Ganapalla		Kegalle		-		252		238		490		-		1,000		-		115
	We Oya /		Kegalle		22		526		418		967		-		1,000		8		266
	Polatagama
	Total				3,283		3,510		6,335		13,128		23				3,859		2,070

Distribution of Land 2023/24	Distribution of Land 2022/23	Crop Kg'000
		25%			25%
						35%
48%			47%
							65%
		27%			28%
Tea	Rubber	Other	Tea	Rubber	Other	Tea	Rubber

Corporate Overview	Integrated Annual Report 2023/24		Kelani Valley Plantations PLC	7

Total Hectares Managed	Crop Kg'000
13,128 Ha	Tea	- 3,859
Tea	3,283 Ha - 25%	Rubber - 2,070
Rubber	3,510 Ha - 27%
Other	6,335 Ha - 48%

Sabaragamuwa

Province

Kegalle District

Lavant

Ganapalla
Ederapolla	Kitulgala
Kalupahana
We Oya /	Halgolle
Polatagama

Central

Province

Nuwara Eliya District

Dewalakanda
Kiriporuwa	Urumiwella	Battalgalla
Kelani	Panawatte	Nuwaraeliya	Pedro
		Uda Radella	Oliphant
		Fordyce

Edinburgh

Glassaugh

Crop - Extent

Annfield

Ha
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Tea	Rubber	Other
Mature	Immature

Ingestre

Robgill

Invery

Mature		Immature
7,174 Ha	1,218 Ha
Tea	3,263 Ha	Tea	20 Ha
Rubber	3,030 Ha	Rubber	480 Ha
Other	882 Ha	Other	718 Ha

8	Kelani Valley Plantations PLC		Integrated Annual Report 2023/24	Corporate Overview

Corporate Profile

GRI 2-1

Kelani Valley Plantations PLC (KVPL) was incorporated as a Regional Plantation Company in June 1992 and was listed on the main board of the Colombo Stock Exchange in 1996.

KVPL is a subsidiary of Dipped Products PLC, a leading global manufacturer of hand protection wear. The company oversees

KVPL Corporate Profile

Watch our corporate video here.

25 estates spread across three distinct agro-climatic regions, covering a total of 13,128 hectares. These estates are engaged in the cultivation of various crops including Tea, Rubber, Coconut, Cinnamon, Coffee, and Agroforestry.

Kelani Valley Plantations PLC (KVPL) has achieved significant certifications for its tea production, underscoring its commitment to quality, safety, and sustainability. All KVPL's black tea factories are ISO 22000:2018 certified, ensuring adherence to rigorous food safety management standards. Tea plantations and smallholders associated with the Kelani Tea factory are certified with Rainforest Alliance certification, reflecting their dedication to sustainable agricultural practices and environmental stewardship.

Furthermore, KVPL is certified under Eco Label Sri Lanka and its membership in the Ethical Tea Partnership (ETP) confirm the company's commitment to good agricultural and manufacturing practices with stringent adherence to environmental best practices. These certifications signify a responsible approach to enhancing ethical business practices, ensuring worker safety, health, and preserving biodiversity within the plantations.

In the year under review, KVPL also obtained ISO 45001:2018 standard certification for Management Systems of Occupational Health and Safety (OHS) for its Ingestre Black Tea processing center.

In addition to the manufacture of Black Tea, Kelani Valley Plantations PLC also produces Green Tea at its Glassaugh factory. KVPL enhances its brand value through its three Tea Centres: the Pedro Estate Ethical Tea Boutique in Nuwara Eliya, the 'Tea Train' at Edinburgh Estate in Nanu Oya, and the 'Planters Grove' at Dewalakanda Estate in Dehiowita. These Tea Centres contribute significantly to KVPL's brand value as a leading Tea manufacturer in the country.

The rubber plantations are also endorsed by Forest Stewardship Council (FSC) Certification and Organic Rubber certifications (USDA/NOP & EU) while products of Sole Crepe, Centrifuge Latex and Crepe Rubber are certified with FSC chain of custody certification whilst the Centrifuged factory is Global Organic Latex Standard (GOLS) certified. Furthermore, the Company has Fair Rubber Certification for two of our rubber plantations which have processing centers, which allows to improve the working and living conditions of estate workers through Fair Rubber Premium. All ten of our rubber estates certified with Sustainability Framework certification a multipurpose framework which is used for verification of forest and farm management.

Mabroc Teas (Pvt) Ltd., our tea marketing company, has a reach of over 50 countries. Together with KVPL, it became a signatory to the UN Global Compact, a member of the UNGC Charter and launched the unique Single Origin Tea from select garden marks. It was recognised as 'The First Ethical Tea Brand of the World' for honouring the four main principles of UNGC; Human Rights, Labour Standards, Environment and Anti- Corruption.

KVPL's a unique multi-dimensional initiative branded as "A Home for Every Plantation Worker" was launched in 2006 with the aim of uplifting the quality of life of our people in all aspects. The initiative was also featured at the UNGC Network Conference in Mexico in 2017 for its design and approach to social uplifting of estate communities.

Pursuing a strategy of diversification into other complementary business models, Kelani Valley Plantations PLC (KVPL) ventured into renewable power generation with the launch of Kalupahana Power Company (Pvt) Ltd. in 2003, which generates 1 MW of Hydro Power. Additionally, the company operates a solar power plant with a capacity of 165 kWP at Dewalakanda Estate since September 2018. Solar system implementations

are also in progress at Panawatta and Ingestre Estates, further expanding KVPL's commitment to renewable energy.

It has also ventured into the leisure sector with the incorporation of Kelani Valley Resorts (Pvt) Ltd. in 2017; to harness the lush landscape of the Tea plantations. The Oliphant Bungalow Luxury boutique resort in Nuwara Eliya KVPL's maiden venture is surrounded by lush Tea plantations and has expanded KVPL's portfolio into the leisure sector.

"Kelani Valley Plantations PLC's relentless pursuit of excellence and internationally recognized accreditations are evident in its operational practices and numerous commitments to ethical business management." The company's current position in the industry is a testament to its spirit of innovation and the commitment demonstrated by its 7,783 strong team, led by a cohesive management team.