COLOMBO, 31 August 2026 – Lankem Developments PLC (CSE: LDEV) has released its Annual Report for the financial year ended 31st March 2026, outlining a period of adaptive growth amidst Sri Lanka’s ongoing economic recovery. The announcement, made on 28th August 2026, highlights the Group’s sustained efforts in its core sectors of Tea and Hydro Power, alongside robust corporate governance practices.
Resilient Financial Performance Despite Profit Contraction
For the fiscal year 2025/26, Lankem Developments PLC reported a consolidated revenue of Rs. 7,436 million, a modest increase from Rs. 7,285 million in the previous year. However, the Group experienced a notable contraction in profitability, with Gross Profit declining to Rs. 640 million from Rs. 1,377 million in the prior year. This reduction was primarily attributed to increased production costs and significant margin pressures.
Consequently, Profit Before Taxation (PBT) stood at Rs. 481 million, down from Rs. 1,119 million, and Profit After Taxation (PAT) was recorded at Rs. 325 million, compared to Rs. 730 million in the preceding year. Despite these challenges, the Group successfully maintained profitability, underscoring the resilience of its business model and disciplined financial management.
Segmental Highlights: Tea Sector Faces Cost Pressures, Hydro Power Records Growth
Tea Operations: Sustained Revenue, Mounting Costs
The Tea sector remained Lankem Developments PLC’s primary revenue driver, generating Rs. 7,355 million, an increase from Rs. 7,218 million in 2025. However, this growth was overshadowed by considerable pressure on profitability. Gross profit for the Tea sector amounted to Rs. 536 million, a significant drop from Rs. 1,300 million in the previous year.
This decline was largely due to escalating production costs, lower agricultural output, and a substantial 15% wage increase implemented in January 2026, following a 35% hike in September 2024. Overall tea production saw a 2% decline to 6.2 million kilograms, primarily impacted by unfavourable weather conditions. The Group emphasized its focus on operational efficiency, prudent cost management, and strengthening customer relationships to mitigate these impacts.
Hydro Power Operations: Steady Contribution and Increased Generation
In contrast, the Hydro Power sector delivered another year of steady and valuable contribution to the Group’s diversified portfolio. Revenue in this segment increased to Rs. 80 million, up from Rs. 67 million, with Gross Profit rising to Rs. 51 million from Rs. 38 million. Profit before taxation also improved to Rs. 54 million, compared to Rs. 53 million in the previous year.
Electricity generation surged by approximately 20% to 5.55 million kWh, driven by favourable hydrological conditions and ongoing investments in plant reliability and operational efficiency. The Group remains well-positioned to leverage the accelerating transition towards renewable energy in Sri Lanka.
Strategic Financial and Governance Initiatives
Lankem Developments PLC successfully completed a Rights Issue during the fiscal year, issuing 40,000,000 ordinary shares at Rs. 15/- per share. This initiative, which closed on 10th April 2025 and was fully subscribed, raised Rs. 600 million, earmarked for settling Related Party dues, further investment in subsidiary Agarapatana Plantations PLC, and future working capital requirements. Following this, the Company’s Stated Capital now stands at Rs. 2,158,005,620/-, represented by 160,000,000 Ordinary Shares.
In line with its commitment to robust corporate governance, the Group announced that Agarapatana Plantations PLC initiated the implementation of the Sri Lanka Sustainability Disclosure Standards, signifying an important step towards enhancing sustainability and climate-related reporting.
The Board of Directors also approved an Interim Dividend of Rs. 0.60 per share for the year ended 31st March 2026, which was paid on 16th February 2026, demonstrating confidence in the Company’s solvency.
Notice of Annual General Meeting (AGM)
Shareholders are invited to the Fifty First Annual General Meeting of Lankem Developments PLC, scheduled for 25th September 2026, at 11:15 a.m., to be conducted as a Virtual Meeting. Key resolutions at the AGM include:
- Receiving and considering the Annual Report and Audited Financial Statements for the year ended 31st March 2026.
- Re-electing Mr. M. Kowdu K. Mohideen as a Director.
- Considering the reappointment of Mr. S.D.R. Arudpragasam and Mr. S.S. Poholiyadde as Directors, both over seventy years of age, following Special Notices received from a shareholder.
- Reappointing KPMG as Auditors and authorizing the Directors to determine their remuneration.
Outlook: Sustained Focus on Efficiency and Growth
Looking ahead to 2026/27, Lankem Developments PLC maintains a cautiously positive outlook, acknowledging the ongoing external and domestic risks. The Group plans to continue investing in sustainable agricultural practices and climate adaptation initiatives for its Tea operations, while maximizing performance and maintaining disciplined control over costs in its Hydro Power segment. The emphasis will remain on enhancing operational efficiency, prudent resource utilization, and exploring opportunities for innovation and growth across both sectors to build long-term value.
Source: Read original document
