Dutch Lady Milk Industries : Laporan Tahunan 2023

60 YEARS OF NOURISHING OUR NATION

Nation building is a collective responsibility that spans across generations. This is in line with our purpose of 'Nourishing Our Nation' since our inception in 1963. As an early Malaysian brand and a leading dairy manufacturer, we have grown in tandem with the country's development whilst embracing her values, people and progress. We have rediscovered and transformed our business over the years to address the nutritional needs of all Malaysians. Our focus remains on positively contributing to the wellbeing of the rakyat of Malaysia. Through the decades, we have continued Nourishing Our Planet and People in Every Stage of Life.

Today, we take pride in who we are and everything that we represent, both, as a business and as a corporate citizen of Malaysia. Our ways of working are aligned with the national MADANI values.

keMampanan	kesejAhteraan	Daya cipta
(Sustainability)	(Prosperity)	(Innovation)
At the core of our purpose is our	In Nourishing Our Nation, we are	We remain committed to improving
social agenda to address the triple	shaping a healthy, productive human	the nutritional value of our products,
burden of	malnutrition	amongst	capital that is critical for prosperity	while also catering to the varied
Malaysians,	while also	managing	and prosperous communities	nutritional needs of Malaysians of
our environmental impact		all ages

hormAt	keyakiNan	Ihsan
(Respect)	(Trust)	(Compassion)
We are respectful of our ecosystem,	We trust in the ability and potential	We believe in inclusive ways of
people, stakeholders and the rule	of our people as well as our business	working, where our people can
of business while continuing to	to continually provide access to safe,	participate and contribute to their
establish credibility and good	quality, Halal, affordable and healthy	personal and professional journey
governance	nutrition	of growth with us

Delivering Goodness,

Spreading Happiness

KEY MILESTONES: 1963-2023

Today, we are more committed than ever as we build our legacy at Bandar Enstek - a new state-of-the-art IR4.0 enabled, Halal manufacturing facility. In 2024, as we transition to double our current capacity, we will be well-positioned to cater to the growing nutritional needs of Malaysians. Our 60 years of trust and commitment has given us a solid platform to foster better innovative efficiencies, boost intergenerational equity to better cultivate a brand synonymous with Malaysia's health and prosperity.

1963

Sweetened Condensed Milk Plant was built and Pacific Milk Industries Bhd was formed

1968

Became first milk company to be listed on local Stock Exchange

1975

Started UHT and Modified Baby Food production. Company's name changed to Dutch Baby Milk Industries

1983

Dutch Lady Milk Industries Berhad (DLMI) partnered with the Ministry of Education for the inaugural School Milk Programme

1988

An adjacent piece of land was acquired to further expand the factory's capacity

DLMI is the first to introduce Formulated Milk Powder for children in Malaysia

1986

Entered pasteurised milk market segmentation

1984

Dutch Baby brand name changed to Dutch Lady

2008

Began production of 0% Fat Drink Yoghurt and Ready To Eat Yoghurt

DLMI established the Dairy Development Programme (DDP) to improve productivity and ensure the sustainability of the dairy industry

2009

Introduction of DLMI logo

2010

FrieslandCampina initiated the Southeast Asia Nutrition Survey (SEANUTS) to gain insight into the nutritional status and dietary intake of children between the ages of 6 months to 12 years in 4 countries including Malaysia

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2013

Celebrated DLMI's 50th Anniversary

DLMI established the Farmer2Farmer Programme (F2F) to help local farmers to improve the sustainability of milk supply

DLMI is the first Company to install a SIG Combiloc Malaysia Sdn. Bhd. (SIG) Aseptic Beverage Filling Machine CFA 124 in Malaysia with speed of 24,000 packs or 1,000 cartons per hour

2012

Launch of Dutch Lady

Chocolate Drink

2011

DLMI relaunched its Growing Up Milk with 5xDHA

DLMI joined FrieslandCampina to celebrate World Milk Day to recognise the importance of milk as part of a healthy and balanced diet

2014

In partnership with the Ministry of Education, DLMI celebrated World School Milk Day for the very first time in Malaysia to highlight the importance of drinking milk among school children

2018

Introduced 16 products under the Healthy Choice Logo (HCL) initiative by the Ministry of Health

2019

A year of innovation: Launch of +Protein, Kurma, Juicy Milk Strawberry & Orange and RM1 pack

DLMI collaborated with YB Ahmad Fahmi bin Mohamed Fadzil to launch the "Program Cakna Susu" to address the issue of malnutrition amongst the urban poor in the Lembah Pantai constituency

DLMI purchased the fastest Aseptic 1 litre Beverage Filling Machine CFA 312 in Malaysia from SIG with the capability of 12,000 packs or 1,000 cartons per hour

2021

DLMI signed a Memorandum of Collaboration (MoC) with the Department of Veterinary Services Malaysia (DVS)

Site visit by Negeri Sembilan Chief Minister at DLMI's under construction facility at Bandar Enstek

DLMI celebrated FrieslandCampina's 150th Anniversary

2020

Acquired 32.59 acres of industrial land in Bandar Enstek for RM59.79 million

Improved recipes with the latest revised requirements under the Healthy Choice Logo standard and refreshed new pack designs

Launch of Dutch Lady MaxGro and Juicy Milk

Pomegranate

2022

Appointed Seremban Engineering Berhad (SEB) as the main contractor to build DLMI@Enstek

Launch of Juicy Milk Lychee, Vanilla & Cookies & Cream 180ml and Signature Dutch Lady Can

The results of the second South East Asian Nutrition Surveys (SEANUTS II) were announced and highlighted the triple burden of malnutrition amongst Malaysian children

2023

Celebrated DLMI's 60th Anniversary

A Global Reorganisation to Shape a Fit-for- Purpose, Responsible (creating value), Resilient (preserving value) and Rewarding (enhancing value) Business - preparing DLMI to become a robust and future-ready organisation

Optimisation of DLMI's dairy product operations with milk powder products being sourced from Frisian Flag Indonesia and within the FrieslandCampina network

The Legacy

Continues…

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INSIDE

THIS REPORT

• OVERVIEW

006 About this Report

008 Value Creation @ DLMI

009 Stakeholder Engagement & Material Matters

013 Our Integrated Approach to Value Creation

017 How We Define Capitals

1. Our Value Creation Business Model

1. Overview of DLMI

021 Corporate Structure & DLMI Shareholdings

021 Our Presence

• KEY HIGHLIGHTS 2023

1. Performance Highlights

1. Awards & Recognition

Managing

Director's

Report

pg 032

Sustainability Statement

pg 054

• MANAGEMENT DISCUSSION & ANALYSIS

A. STRATEGIC REVIEW

1. Chairperson's Perspective

1. Managing Director's Report

1. Finance Director's Analysis
   044 5-Year Financial Summary

1. 045 Value Added Statement & Value Distributed

2. MARKET & PRODUCT REVIEW 046 Economic Landscape & Outlook 050 Key Risks & Mitigation Action 052 Our Products & Winning Brands
3. EES&G REVIEW

054 Sustainability Statement 066 Better Nutrition 072 Better Sourcing 074 Better Climate

078 Better Packaging

080 Better People

096 Better Society

102 Better Governance

105 Sustainability Performance Report

• DLMI LEADERSHIP

1. Corporate Information
2. Board at a Glance
3. Profiles of Directors & Company Secretary

119 Management Team Profiles

• CORPORATE GOVERNANCE

122 Corporate Governance Overview Statement

123 Principle A - Board Leadership & Effectiveness

139 Principle B - Effective Audit & Risk Management

142 Principle C - Integrity in Corporate Reporting and Meaningful Relationships with Stakeholders

144 Audit & Risk Committee Report

152 Statement of Risk Management & Internal Control

• FINANCIAL STATEMENTS

160 Director's Report

1. Statement of Financial Position
2. Statement of Profit or Loss & Other Comprehensive Income
3. Statement of Changes in Equity
4. Statement of Cash Flows
5. Notes to the Financial Statements

1. Statement by Directors

1. Statutory Declaration
2. Independent Auditors' Report

• ADDITIONAL INFORMATION

205 Analysis of Shareholdings

1. Recurrent Related Party Transactions of a Revenue or Trading Nature
2. Notice of Annual General Meeting

• Proxy Form

ANNUAL GENERAL MEETING

61	st	10:00 a.m.
28 May 2024
	Tuesday,

DUTCH LADY MILK INDUSTRIES BERHAD • INTEGRATED ANNUAL REPORT 2023

ABOUT

THIS REPORT

OUR PURPOSE

At Dutch Lady Milk Industries Berhad (DLMI), we strive to fulfil

our purpose of Nourishing Our Planet and People in Every

Stage of Life. All our efforts are focused on channeling the right combination of resources to deliver quality, affordable and healthy nutrition to the people of Malaysia. In Nourishing Our Nation, we are positively contributing to the wellbeing of Malaysians, making them stronger to overcome the triple burden of malnutrition. In the long-term, we aim to create a positive impact on our Planet and People via our business model, strategy and purpose.

INTEGRATED THINKING

In setting the right context for our stakeholders on our performance, we strive to promote a better understanding of the interactions and inter-relationships between various aspects of business and performance. From economic and political landscape to extraneous factors such as climate change, malnutrition, and aging population; from international affairs and foreign exchange fluctuations to local market dynamics; from diversity of people to fight for talent and succession planning; from learning and development to growth; from near-term returns to long-term resilience - there is merit in analysing the interdependencies among these and factors that could potentially have financial and non-financial implications.

The insights therefrom help us identify and focus on our material matters. The material matters included and discussed in this Integrated Report are determined based on our stakeholders' expectations, real and potential risks associated with both internal and external factors of our business, and most importantly, the strategic direction set by the Board of Directors in fulfilling our purpose.

REPORTING INTEGRITY

The information in the Annual Report is presented by the respective functional teams with utmost care to maintain the integrity of the narratives to the best possible extent. The key sections of the report have been reviewed by our external auditor, PwC. In particular, the Statement on Risk Management and Internal Control ("SORMIC") for the financial year ended 31 December 2022 is reviewed by PwC for the purposes of expressing a conclusion whether the SORMIC is prepared, in all material respects, in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers.

The Audited Financial Statements, SORMIC and Audit & Risk Committee report are then reviewed and approved by the Audit & Risk Committee for recommendation to the Board of Directors. These reports, together with the other reports for inclusion in the Annual Report are then reviewed and approved by the Board of Directors.

The contents of this report have been reviewed by independent auditors:

Activity	Review
	Body
Consolidated Financial Statements Audit	PwC
SORMIC	PwC
Audit & Risk Committee Report	PwC
5 Year Financial Summary	PwC

INTEGRATED REPORTING PROCESS

Reporting Frameworks

We are on a journey to align our Integrated Report with the following local and international statutory and reporting frameworks:

• International Integrated Reporting Framework*
• Bursa Malaysia Main Market Listing Requirements (MMLR)
• Companies Act 2016
• Malaysian Code on Corporate Governance (MCCG) by Securities Commission Malaysia
• Malaysian Financial Reporting Standards (MFRS)
• Financial Services Act 2013
• Task Force on Climate-Related Financial Disclosures (TCFD)*
• IFRS S1 and S2*

Please note that the structure and format of this report has been planned to support:

• Our 3-year journey starting 2022 to improve quality of reporting and enhance the level of compliance to Framework
• Our 4-year journey starting 2024 on alignment with Taskforce on Climate-Related Financial Disclosures (TCFD) in line with Bursa's sustainability reporting requirements and IFRS S1 and S2.

DLMI'S INTEGRATED ANNUAL REPORT 2023

Scope and Boundary

DLMI's Integrated Report 2023 covers our financial and non-financial performance for the period of 1 January 2023 to 31 December 2023, unless stated otherwise. This reporting boundary covers all our operations and activities in Malaysia. Our intention through this report is to provide our stakeholders a complete, fair and balanced assessment of our financial and non-financial performance; near-term to long-term strategic priorities, material matters, and key risks and opportunities - all of which catalyse our efforts to create value for our multiple stakeholders.

Refer to pages 009-012 of this report.

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