Audited Financial Statements for the Period ended 31st March 2026

For the Fifteen Months Period From 01.01.2025 to 31.03.2026

Independent Auditors' Report

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Colombo Dockyard PLC ("the Company") and the consolidated financial statements of the Company and its subsidiaries ("the Group"), which comprise the statement of financial position as at March 31, 2026, and the statement of comprehensive income (or statement of profit and loss and other comprehensive income), statement of

changes in equity and statement of cash flows for the fifteen months then ended, and notes to the financial statements, including material accounting policies and other explanatory information as set out on pages 05 to 60 of this Financial Statements .

In our opinion, the accompanying financial statements of the Company and the Group give a true and fair view of the financial position of the Company and the Group as of March 31, 2026, and of their financial performance and cash flows for the fifteen months then ended in accordance with Sri Lanka Accounting Standards.

Basis for opinion

We conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics for professional Accountants issued by CA Sri Lanka (Code of Ethics), and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Company and the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the Company and the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Colombo Dockyard PLC 1

2 Colombo Dockyard PLC

Other Information

Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and our auditor's report thereon. The annual report is expected to be made available to us after the date of this auditor's report.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Financial Statements.

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's and the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SLAuSs will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SLAuSs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting

  from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company and the Group's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

  Colombo Dockyard PLC 3

  Independent Auditors' Report Contd.
  
  

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the group financial statements. We are

responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.

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 relevant ethical requirements 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, actions taken to eliminate threats or safeguards applied.

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.

KPMG

Colombo, Sri Lanka 30th April 2026

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Statement of Profit or Loss and Other Comprehensive Income

Group Company

01.01.2025 to

01.01.2024 to

01.01.2025 to

01.01.2024 to

The accounting policies and explanatory notes from pages 11 to 60 form an integral part of these Financial Statements. Figures in brackets indicate deductions

Colombo Dockyard PLC 5

Statement of Financial Position

The accounting policies and explanatory notes from pages 11 to 60 form an integral part of these Financial Statements.

These Financial Statements have been prepared in compliance with the requirements of the Companies Act No.7 of 2007.

P.D. Gihan Ravinatha

General Manager (Finance)/Chief Financial Officer

30th April 2026 Colombo, Sri Lanka.

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 of Directors of Colombo Dockyard PLC.

Thimira S. Godakumbura Manori P. Mallikarachchi

Managing Director/CEO Company Secretary

6 Colombo Dockyard PLC

Statement of Changes in Equity

Group

Stated

Retained

Attributable to equity holders of parent

Fair Value

Through Exchange

OCI EqualizationRevaluation

Non-Controlling

Total

Capital

Earnings

Reserve

Reserve

Reserve Total

Interest

equity

(Rs.'000) (Rs.'000) (Rs.'000) (Rs.'000) (Rs.'000) (Rs.'000) (Rs.'000) (Rs.'000)

Colombo Dockyard PLC 7

The accounting policies and explanatory notes on pages 11 to 60 form an integral part of these Financial Statements. (Figures in brackets indicate deductions)

8 Colombo Dockyard PLC

Statement of Cash Flows

Group Company

01.01.2025 to

01.01.2024 to

01.01.2025 to

01.01.2024 to

Colombo Dockyard PLC 9

Group Company

01.01.2025 to

01.01.2024 to

01.01.2025 to

01.01.2024 to

The accounting policies and explanatory notes form an integral part of these Financial Statements. (Figures in brackets indicate deductions.)

10 Colombo Dockyard PLC

Notes to the Financial Statements

1. REPORTING ENTITY

   1. Corporate Information

      Colombo Dockyard PLC is a public limited liability company incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange.

      The company's registered office is situated in Port of Colombo.

   2. Consolidated Financial Statements

      The consolidated financial statements of the Company as at and for the year ended 31st March 2026 comprise the Company and its Subsidiaries (together referred as the "Group").

      The Group provides a variety of services in relation to ship repairs, shipbuilding, heavy engineering, general engineering and supply chain management.

   3. Group Information

      Out of the three subsidiaries within the Group, the company has 100% holding of Dockyard General Engineering Services (Private) Limited (Incorporated in Sri Lanka) and Dockyard Total Solutions (Private) Limited (Incorporated in Sri Lanka) and 51% holding of Ceylon Shipping Agency (Private) Limited (Incorporated in Singapore).

      Out of the three subsidiaries within the Group, the Company holds 100% ownership of Dockyard General Engineering Services (Private) Limited (incorporated in Sri Lanka) and Dockyard Total Solutions (Private) Limited (incorporated in Sri Lanka), and 51% ownership of Ceylon Shipping Agency (Private) Limited (incorporated in Singapore).

      Mazagon Dock Shipbuilders Limited acquired a 51% stake in Colombo Dockyard PLC, following the divestment of shares by Onomichi Dockyard Co. Ltd, Japan, and obtained control of the Group on 19th January 2026. Accordingly, Mazagon Dock Shipbuilders Limited is the Parent Company of the Group as of the Balance Sheet Date.

      All the companies in the Group have a common financial year, which ends on 31st March (2024-31st December).

2. BASIS OF PREPARATION

   1. Statement of Compliance

      The Company has changed its reporting date from 31st December to 31st March to align with the reporting date of the Group, which is 31st March 2026. A market announcement was made on 25th March 2026. Accordingly, the Financial Statements are presented for a period of fifteen months.

      Comparative information is not comparable, as the financial statements for the period ended 31st March 2026 have been prepared for a fifteen-month period."

      The consolidated financial statements of the Group and the separate financial statements of the Company, which comprise the statement of comprehensive income, statement of financial position, statement of changes in equity and statement of cash flows, together with the material accounting policies

      and explanatory notes (the "financial statements"), have been prepared and presented in accordance with the Sri Lanka Accounting Standards comprising Sri Lanka Financial Reporting Standards (SLFRSs), Sri Lanka Accounting Standards (LKASs), Statements of Recommended Practices (SoRPs), Statements of Alternative Treatment (SoATs), and Financial Reporting Guidelines issued by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka). These financial statements further comply with the requirements of the Companies Act No. 07 of 2007.

   2. Responsibility of the Financial Statements

      The board of the Directors is responsible for preparation and presentation of the Financial Statements of the Company and its subsidiaries as per provisions of Companies Act No. 07 of 2007 and the Sri Lanka Accounting Standards (SLFRSs / LKASs).

   3. Basis of Measurement

      The financial statements of the Group and the Company have been prepared on an accrual basis and under the historical cost basis except for the following items in the statement of financial position.

      • Derivative financial instruments measured at fair value

      • Lands, cranes and dry docks on freehold land which are recognised as property plant and equipment which are measured at cost on initial recognition and subsequently carried at fair value.

      • Financial instruments classified as fair value through profit or loss which are measured at fair value.

      • Fair value through other comprehensive income financial assets which are measured at fair value

      • Liability for defined benefit obligation recognized based on actuarial valuation. (LKAS 19)

        Colombo Dockyard PLC 11

        Notes to the Financial Statements Contd.

        Accounting Policies	Note
        Update on the present financial status of the company	Note 38
        Revenue recognition	Note 05
        Revaluation of Property, plant and equipment	Note 11
        Measurement of defined benefit obligation: key actuarial assumptions	Note 26
        Income Tax (current tax and deferred tax)	Note 09
        Fair value of the investment classified through other comprehensive income	Note 16
        Fair value of the investment classified through profit or loss	Note 16

   4. Functional and Presentation Currency

      The consolidated financial statements are prepared in Sri Lankan Rupees which is the Group's functional currency, except for the foreign subsidiary whose functional currency is different as it operates in different economic environment. All financial information presented in Sri Lankan Rupees has been rounded to the nearest thousand, unless stand otherwise.

   5. Going Concern

      In preparing these financial statements, the management has assessed the effect on and the use of going concern basis of preparation giving special attention to highly impacted sectors such as shipbuilding and ship repairs based on available information and the short to medium term economic outlook. The Group has been evaluating the resilience of its businesses, considering a wide range of factors such as expected revenue streams, profitability, cost management initiatives implemented by the Group, working restrictions, travel restrictions, working capital management, capital expenditure, debt repayments, cash reserves and available sources of financing including unutilized facilities and in order to be able to continue business under current global economic conditions.

      Having evaluated the presentations made by the Group of companies on their future outlook, the Directors are satisfied that the Company and its Subsidiaries have adequate resources to continue its operations at least, but not limited to 12 months from the reporting date, to justify adopting the going concern basis in preparing these financial statements.

      The Directors have also assessed the present financial condition of the company and the group when determining the basis of preparing the financial statements for the year ended 31st March 2026. Please refer note 38 for further detailed analysis of going concern.

3. Material Accounting Policies

   3.1.1 Summary of Material Accounting Policies

   Summary of material accounting policies have been disclosed along with the relevant individual notes in the subsequent pages.

   Those accounting policies presented with each note, have been applied consistently by the Group.

   1. Basis of Consolidation

      Business Combinations

      The Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group. In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

      The Group has an option to apply a concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

      The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment.

      Any gain on a bargain purchase is recognized in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

      The Group measures goodwill at the acquisition date as:

      • The fair value of the consideration transferred; plus

      • 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.

      12 Colombo Dockyard PLC

      The consideration transferred does not include amounts related to the settlement of pre-existing relationships.

      Such amounts are generally recognized in profit or loss.

      1. 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 cost less impairment if any, in net recoverable value.

         The Consolidated Financial Statements are prepared to a common financial year end of 31 March.

         Non-Controlling Interests ("NCI")

         NCI are measured at their proportionate share of the acquires identifiable net assets at the acquisition date.

         Changes in the Groups interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

         Loss of Control

         When the Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

         Subsequently at retained interest is accounted for as an equity accounted investee or as an available for sale financial asset depending on the level of influence retained.

      2. Transactions eliminated on consolidation

         Intra-group balances and transactions, and any unrealized income and expenses (except for foreign currency transaction gains or losses) arising from intragroup transactions, are eliminated. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Groups interest in the investee.

         Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

   2. Foreign Currency

      1. Functional Currency and Presentation Currency

         The individual Financial Statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Sri Lankan Rupees, which is also the Company's functional currency.

      2. Foreign Currency Transactions

         In preparing the Financial Statements of the individual entities, transactions in currencies other than the reporting entity's functional currency (foreign currency) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions.

         At each reporting date, monetary assets and liabilities denominated in foreign currencies are translated at the closing rate. Non- monetary items measured at fair value are translated at the rates prevailing on the date when the fair value was determined. Non- monetary items measured at historical cost are translated at the rates prevailing on the date of transaction. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period except for the Group's net investment in foreign operations/ subsidiaries.

         Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences which are recognised in other comprehensive income.

      3. Foreign operations/ Subsidiaries

         The statement of financial position and statement of comprehensive income of overseas subsidiary which is deemed to be foreign operations are translated to Sri Lankan Rupees at the rate of exchange prevailing as at the reporting date and at the average annual rate of exchange for the period respectively.

         The exchange differences arising on the translation are taken directly to other comprehensive income.

         Colombo Dockyard PLC 13

         Notes to the Financial Statements Contd.

      4. Materiality and aggregation

         In compliance with the Sri Lanka Accounting Standard - LKAS 1 - "Presentation of Financial Statements", each material

         class of similar items is presented separately in the Financial Statements. Items of dissimilar nature or functions too are presented separately, unless they are immaterial.

   3. Assets and the Bases of their Valuation

   Assets classified as current assets in the statement of financial position are cash, bank balances and those which are expected to be realized in cash, during the normal operating cycle of the Company's business, or within one year from the reporting date, whichever is shorter. Assets other than current assets are those which the Company intends to hold beyond a period of one year from the reporting date.

   1. Property, Plant & Equipment

      1. Recognition and Measurement

         Property, plant and equipment are recognised if it is probable that future economic benefit associated with the asset will flow to the Group and the cost of the asset can be reliably measured.

         Property, Plant and Equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (Major components) of property, plant and equipment.

      2. Owned Assets

         The cost of an item of property, plant and equipment comprise its acquisition price and any directly attributable costs of bringing the asset to working condition for its intended

         use. The cost of self- constructed assets includes the cost of materials, direct labour, and any other costs directly attributable to bringing the asset to the working condition for its intended use. This also includes cost of dismantling and

         removing the items and restoring in the site on which they are Located and borrowing costs that are directly attributable to the qualifying assets.

      3. Subsequent Costs

         The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the replaced part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized once the new replacement is done.

         The costs of the day to day servicing of property, plant and equipment are recognised in profit or loss as incurred.

      4. Derecognition

         The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. Gains or losses on derecognition are recognised in the profit and loss when the asset is derecognised.

      5. Revaluation

         The Group applies the revaluation model to the entire class of freehold land, Cranes and Drydock in freehold land. A

         revaluation is carried out when there is a substantial difference between the fair value and the carrying amount of the property, and is undertaken by professionally qualified valuers. Group reviews its assets once in three years.

         Increases in the carrying amount on revaluation is recognised in other comprehensive income and accumulated in equity

         in the revaluation reserve, unless it reverses a previous revaluation decrease relating to the same asset, which was previously recognised as an expense. In these circumstances the increase is recognised as income to the extent of the previous write down.

         Decreases in the carrying amount on revaluation that offset previous increases of the same individual asset are charged against revaluation reserve directly in equity. All other decreases are recognised in profit and loss.

         The relevant portion of the revaluation reserve is transferred to retained earnings as the asset is depreciated with the balance being transferred on ultimate disposals.

         14 Colombo Dockyard PLC

      6. Depreciation

         Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is recognised in statement of comprehensive income on a straight line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Land is not depreciated.

         The estimated useful lives and depreciation rates are as follows:

         Company - Colombo Dockyard PLC

         Asset Category	Useful Life (Years)	Depreciation Rate (%)
         Dry-docks in freehold land	40	2.5%
         Dry-docks in leasehold land	25 - 50	4% - 2%
         Buildings	20 - 25	5% - 4%
         Roadways	10	10%
         Plant, Machinery & Equipment	10-25	10%-4%
         Electrical Installations	10	10%
         Furniture, Fittings & Office Equipment	6.6	15%
         Motor Vehicles	5	20%
         Boats & Launches	6.6	15%
         Inventory Items	6.6	15%
         Loose Tools	2	50%

         Group - Dockyard General Engineering Services (Private) Limited

         Asset Category	Useful Life (Years)	Depreciation Rate (%)
         Buildings	10	10%
         Plant & Machinery	10	10%
         Motor Vehicles	4	25%
         Furniture, Fittings & Office Equipment	6.6	15%
         Loose Tools	6.6	15%
         Office and Computer Equipment	4	25%

         Dockyard Total Solutions (Private) Limited

         Asset Category	Useful Life (Years)	Depreciation Rate (%)
         Office Equipment	6.6	15%
         Computer Equipment	5	20%
         Inventory Others	5	20%

         Ceylon Shipping Agency (Private) Limited

         Asset Category	Useful Life (Years)	Depreciation Rate (%)
         Office Equipment	10	10%
         Computers	3	33%
         Furniture and Fittings	10	10%
         Office Renovation	5	20%

         Depreciation of an asset begins when it is ready for use whereas depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognised.

         Depreciation method, useful lives and residual values are reviewed at each financial year end and adjusted prospectively, when appropriate, if any.

   2. Investment property

      Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of the business, use in the production or supply of goods or services or administrative purposes.

      Investment properties are initially measured at its cost including related transaction costs and subsequently measure at cost.

      Investment properties are derecognized when disposed or permanently withdrawn from use because no future economic benefits are expected. Any gains or losses on retirement

      or disposal is recognized in the profit or loss in the year of retirement or disposal.

   3. Intangible Assets

      An Intangible Asset is recognised if it is probable that economic benefits are attributable to the assets will flow to the entity and cost of the assets can be measured reliably. Intangible assets that are acquired by the Group/Company are measured at cost less accumulated amortisation and accumulated impairment losses, if any.

      1. Software

         Cost incurred for computer software, which are not internally related to associate hardware, which can be clearly identified, reliably measured and its probable that they will lead to future economic benefits, are included in the statement of financial position under the category of intangible assets.

         Colombo Dockyard PLC 15

         Notes to the Financial Statements Contd.

      2. Subsequent Expenditure

         Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.

      3. Amortisation

         Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Amortisation is recognised in the profit or loss on a straight line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives and amortization rates are as follows:

         Asset Category	Useful Life (Years)	Amortization Rate (%)
         Computer Software	03	33%

         Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted prospectively, where necessary.

   4. Right to use assets

      1. Basis of recognition

         The Group applies Sri Lanka Accounting Standard SLFRS 16 "Leases" in accounting for all lease hold rights except for leases due to expire during the financial year and leases on which implications to the financial statements are not considered to be material. The Group uses its judgment

         to determine whether an operating lease contract qualifies for recognition of right-of-use assets. The Group applies judgements in evaluating the level of certainty whether the option of renewing the lease exits or otherwise. That is, it considers all relevant factors that create an economic benefit for it to exercise either the renewal or termination.

      2. Basis of measurement

         The Group recognises right-of-use assets at the date of commencement of the lease, which is the present value of future lease payments to be made over the lease term. Right-of- Use assets are measured at cost less any accumulated

         amortization and impairment losses and adjusted for any

         re-measurement of lease liabilities. The cost of the right-of-use assets includes the amount of lease liabilities recognised, initial direct cost incurred, and lease payments made at or before the commencement date less any lease incentives received. Right of use assets are amortised on the straight line basis over the lease term.

   5. Inventories

      Inventories are measured at the lower of cost and net realisable value. The cost of inventories is comprised of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

      Net Realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sales. The cost of the inventories is assigned by using specific identification of their individual costs and first-in-first out formulas.

      Inventory items shipped, but not received by the Company as at the reporting date are treated as goods- in transit. In such situations, estimates are made for unpaid bills in order to value goods-in transit.

   6. Cash & Cash Equivalents

   Cash and cash equivalents comprise cash balances, call deposits, demand deposits and short term highly liquid investments which are readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Bank overdrafts that are repayable on demand are included as a component of cash and cash equivalents for the purpose of the cash flow statement.

   1. Financial Instruments

      1. Recognition and initial measurement

         Trade receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.

         16 Colombo Dockyard PLC

         A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is

         initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

      2. Classification and subsequent measurement Financial assets

         On initial recognition, a financial asset is classified as measured at amortised cost; FVOCI - debt investment; FVOCI

         - equity investment; or FVTPL.

         Financial assets are not reclassified subsequent to their 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 of the first reporting period following the change in the business model.

         A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

         • it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

         • its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount of outstanding.

           On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present

           subsequent changes in the investment's fair value in OCI. This election is made on an investment- by- investment basis.

           All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at fair value.

           Financial assets - Business model assessment:

           The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

         • the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management's strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

         • how the performance of the portfolio is evaluated and reported to the Group's management;

         • the risks that affect the performance of the business model, (and the financial assets held within that business model) and how those risks are managed;

         • how managers of the business are compensated - eg., whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

         • the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

           Transfers of financial assets to third parties in transactions that do not qualify for de recognition are not considered sales for this purpose, consistent with the Group's continuing recognition of the assets. Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

           Financial Assets-Assessment whether contractual cash flows are solely payments of principal and interest: For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (eg. liquidity risk and administrative costs), as well as a profit margin.

           In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

         • contingent events that would change the amount or timing of cash flows;

         • terms that may adjust the contractual coupon rate, including variable-rate features;

         • prepayment and extension features; and

         • terms that limit the Group's claim to cash flows from specified assets (eg., non-recourse features).

           Colombo Dockyard PLC 17

           Notes to the Financial Statements Contd.

           A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract.

           Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued

           (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

           Financial assets - Subsequent measurement and gains and Losses

           Financial assets at FVTPL	These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
           Financial assets at amortised cost	These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
           Equity investments at FVOCI	These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

           Financial liabilities - Classification, subsequent measurement and gains and losses

           Financial liabilities are classified as measured at amortised cost or FVTPL. Other financial liabilities are subsequently measured at amortised cost using the effective interest method.

           Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

      3. Derecognition Financial Assets

         The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and reward of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

         The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.

         Financial Liabilities

         The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in case a new financial liability based on the modified terms is recognised at fair value.

         On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration

         paid (including any non- cash assets transferred or liabilities assumed) is recognised in profit or loss.

         Offsetting

         Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

         Determination of Fair Values

         A number of Group's accounting policies and disclosures require the determination of fair values for both financial and non- financial assets and liabilities.

         The Group recognise transfers between levels of fair value hierarchy of the end of the reporting period during which the change has occurred.

         Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

         18 Colombo Dockyard PLC

         When measuring fair value of an asset or liability, the Group uses observable market data as for as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques.

         Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

         Level2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices).

         Level 3 inputs are inputs that are not based on observable market data (unobservable inputs)

         If input used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

         Fair values have been determined for measurement and disclosure purposes based on the following methods.

         Where applicable further information about the assumptions made in determing fair value is disclosed in the notes specific to that asset or liability.

      4. Impairment policy

      Non-derivative financial asset's Financial instruments and contract assets

      Loss allowances for trade receivables are always measured at an amount equal to lifetime Expected Credit Loss (ECL).

      When determining whether the credit risk of a financial asset has increased significantly since initial recognition and

      when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment and including forward- looking information.

      The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 365 days past due.

      The Group considers a financial asset to be in default when:

      • the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Company to actions such as realising security (if any is held); or

      • the financial asset is more than 180 days past due.

        Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

        12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

        The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

        Measurement of ECLs

        ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

        ECLs are discounted at the effective interest rate of the financial asset.

        Credit-impaired financial assets

        At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit- impaired. A financial asset is 'credit- impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

        Evidence that a financial asset is credit- impaired includes the following observable data:

      • significant financial difficulty of the borrower or issuer;

      • a breach of contract such as a default or being more than 180 days past due;

      • the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;

      • it is probable that the borrower will enter bankruptcy or other financial reorganisation; or

      • the disappearance of an active market tor a security because of financial difficulties.

      Colombo Dockyard PLC 19

      Notes to the Financial Statements Contd.

      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.

      Write-off

      The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing off the gross carrying amount when the financial asset is 180 days past due based on historical experience of recoveries of similar assets. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures to recovery of amounts due.

      Impairment Policy: Non-financial assets

      The carrying amounts of the Group's non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.

      The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets.

      An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss.

      An impairment loss in respect of other assets, recognised in prior periods is assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

      An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

   2. Post-Employment Benefits

      Defined Benefit Plan Company

      The liability recognised in the statement of financial position is the present value of the defined benefit obligation at the

      reporting date, with the advice of an actuary, using the Projected Unit Credit (PUC) method. Any actuarial gains or losses arise immediately recognise in other comprehensive income.

      "When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefits that relates to

      past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gain or losses on the settlement of a defined plan when the settlement occurs.

      Local Subsidiary

      The liability recognised in the statement of financial position is the present value of the defined benefit obligation at the reporting date, according to the formula method, using the Projected Unit Credit (PUC) method. Any gain or losses are recognised in profit or loss when incurred.

      Foreign Subsidiary

      Provisions are made in the financial, statements in accordance with the respective legislative enactments in force, in the country of incorporation.

      1. Defined Contribution Plans - Employees' Provident Fund and Employees' Trust Fund

         All employees who are eligible for Employees' Provident Fund Contributions and Employees' trust Fund Contributions are covered by relevant contributions funds in line with the relevant statutes. Employer's contributions to the defined

         contribution plans are recognised as an expense in statement of comprehensive income when incurred.

         20 Colombo Dockyard PLC

   3. Provisions

      A provision is recognised if, as a result of a past event the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefit will be required to settle the obligation.

      All known provisions have been accounted for in preparing the financial statements.

      1. Provision for Warranty

         Provision for warranty jobs is made for all construction contracts based on the contractual and projects estimated figures. However, warranty provision for Ship repair services is made based on historical experiences. The estimates are revised annually.

      2. Provision for Slow Moving Stocks

         Provision for slow moving stocks are made when the Company/Group identify the impairment in inventory through its regular assessments.

   4. Income Statement

      1. Revenue

         The Group revenue represents revenue from shipbuilding, ship repairing, heavy engineering and material sales to customers outside the Group.

         1. Revenue Recognition

            Revenue represents the amounts derived from the construction contracts, sale of goods and provision of services, which fall within the Group's ordinary activities net of trade discounts and turnover-related taxes.

            Revenue from contracts with customers is recognised when control of the goods or services is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. Timing of transferring the goods and services to the customer is determined based on judgments taking into the consideration of the nature of the goods and services that offers to the customers.

            The following specific criteria are used for the purpose of recognition of revenue.

            Construction contracts

            Revenue from construction related contracts are recognised upon satisfaction of a performance obligation agreed in the contract. At contract inception, the

            Group determines whether it satisfies the performance obligation over time or at a point in time.

            The revenue recognition occurs at a point in time when control of the asset is transferred to the customer. For each performance obligation satisfied over time, the Group

            recognises the revenue over time by measuring the progress towards complete satisfaction of that performance obligation.

            The progress is assessed based on surveys of work performed. When the outcome of construction contract can not be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss.

            Sale of goods

            The revenue recognition occurs at a point in time when control of the asset is transferred to the customer, generally, on delivery of the goods. Sales are measured at the fair value of the consideration received or receivable excluding amounts collected on behalf of third parties (e.g. Sales taxes) and variable consideration (e.g. discounts and rebates).

            Rendering of services

            Revenue from rendering of services is recognised in the Statement of Profit or Loss when each performance obligations are satisfied by transferring promised service to the customer.

            Other Income

            Revenue from dividends is recognised when the group's right to receive the payment is established.

            Profits or losses from disposal of property, plant and equipment recognised having deducted from proceeds on disposal, the carrying value of the assets and the related expenses.

            Foreign currency gains and losses are reported on a net basis.

            Income from scrap sales are recognised when the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods Rental, income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease term. Other income is recognised on an accrual basis.

            Colombo Dockyard PLC 21

            Notes to the Financial Statements Contd.

      2. Expenditure Recognition

         1. Operating Expenses

            All expenses incurred in day to day operations of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to the income statement in arriving at the profit or loss for the year. Provisions have also been made for impairment of financial assets, slow moving stocks, all known liabilities and depreciation on property, plant and equipment.

         2. Warranty Claims/Provisions

            Costs incurred by the Group under the terms of warranty entered with the customers are charged to the profit

            or loss only if the actual cost incurred is more than the provision already made.

            Borrowing Costs

            Borrowing costs directly attributable to acquisition, construction or production of assets that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period

            they occur. Borrowing costs consist of interest and other costs that Group incurs in connection with the borrowing of funds.

      3. Net Finance Income/ (Expenses)

         Finance income comprises of interest income on funds invested and staff loans, and change in the fair value

         of financial assets at fair value through profit or loss.Interest income is recognised as it accrues, using the effective interest method.

         Finance costs comprises of interest expenses on borrowings (which are not capitalized under LKAS - 23 'Borrowing Costs'), unwinding of the discount on provisions, changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognized on financial assets (Other than trade receivables). Interest expenses are recognised in profit or loss using the effective interest method.

      4. Taxation

         As per Sri Lanka Accounting Standard - LKAS 12 on 'Income taxes', tax expense/ (reversal) is the aggregate amount included in determination of profit or loss for the period in respect of current and deferred taxes. Therefore, it consists of current and deferred tax. Income tax expense/ (reversal) is recognised in the comprehensive income except to the extent

         it relates to items recognised directly in equity or in Other Comprehensive Income. The Group recognises liabilities for anticipated taxes, based on estimates of taxable income, where the final tax outcome of these matters may differ from the amounts that were initially recorded. Such differences will be adjusted in the current year's income tax charge and/ deferred tax assets/liabilities as appropriate in the period in which such determination is made.

         The Group has determined that interest and penalties related to income taxes, including uncertain tax treatments, do not meet the definition of income taxes, and therefore accounted for them under LKAS 37 Provisions, Contingent Liabilities and Contingent Assets.

         1. Current Taxes

            Current Income tax liabilities (assets) for the current and prior periods are measured at the amount expected to be (recovered from) or paid to the Commissioner General of

            Inland Revenue. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

            The provision for income tax on Sri Lankan operation is based on the elements of income and expenditures reported in the Financial Statements and computed in accordance with the provisions of the Inland Revenue Act.

            Income tax has been provided on overseas operations in accordance with the relevant statutes in force in the countries in which operations are carried out.

            The relevant details are disclosed in the respective notes to the Financial Statements. (Note 09 and 29)

            Transfer Pricing

            As prescribed in the Inland Revenue Act No. 24 of 2017 and the Gazette notifications issued on transfer pricing, companies in the Group have complied with the arm's length principles relating to transfer pricing.

         2. Deferred Taxation

            Deferred taxation is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

            22 Colombo Dockyard PLC

            Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences and carry forward of unused tax losses/credits can be utilized.

            The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

            Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted as at the reporting date.

            Transfer Pricing

            As prescribed in the Inland Revenue Act No. 24 of 2017 and the Gazette notifications issued on transfer pricing, companies in the Group have complied with the arm's length principles relating to transfer pricing.

   5. Segmental Information

      An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses

      that relate to transactions with any of the Group's other components, whose operating results are reviewed regularly by the Group management committee (being the chief operating decision-maker) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

      Inter-segment transfers are based on fair market prices where the arm's length basis in manner similar to transaction with third parties is adopted. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

      The relevant details are disclosed in the respective notes to the Financial Statements.

   6. Related Party Transactions

      Disclosure has been made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating policies/decisions of the other, irrespective of whether a price has being charged or not.

      The relevant details are disclosed in the respective notes to the Financial Statements.

   7. Cash Flow Statement

      The Cash Flow Statement has been prepared using the 'indirect method' in accordance with Sri Lanka Accounting Standard - LKAS 7 on 'Statement of Cash Flows'. Cash and cash equivalents comprise cash in hand, cash at bank and short term investments that are readily convertible to known amount of cash and subject to an insignificant risk of change in value.

      Interest received and dividends received are classified as investing cash flows, while dividend paid is classified as financing cash flows and interest paid is classified under the operating cash flows for the purpose of presentation of Cash Flow Statement.

      Bank overdrafts and short term borrowings that are repayable on demand and forming an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the Statement of Cash Flows.

   8. Earnings Per Share

      Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of shares outstanding during the period.

   9. Events Occurring After the Reporting Period

   Events after the reporting period are those events favorable and unfavorable that occurs between the end of the reporting period and the date when the financial statements are authorised for issue.

   The materiality of the events occurring after the reporting period is considered and appropriate adjustments to or disclosures are made in the Financial Statements, where necessary.

   Colombo Dockyard PLC 23

   Notes to the Financial Statements Contd.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

   The preparation of financial statements in conformity with SLFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

   Estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results which form the basis of making the judgments about the carrying amount of assets and liabilities that are not readily apparent from other sources.

   Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

   recognised in the period in which the estimates are revised and in any future periods affected.

   Information about assumptions and estimates uncertainties that have a significant risk of resulting in a material adjustment in the financial statements are included in the table below:

   Critical accounting estimate/ judgement	Disclosure Reference
   	Note	Page
   Income tax expense	9	29 -31
   Property, plant and equipment	11	33 - 37
   Intangible assets	13	38
   Deferred tax assets / liabilities	17	41
   Employee benefits	26	45 - 47
   Fair value measurement of financial asset at FVOCI	16.1	40
   Fair value measurement of financial asset at FTPL	16.2	40
   Provision for warranty claims	27.1	48

   1. Sri Lanka Accounting Standards not yet effective as at 31st March 2026

      The Institute of Chartered Accountants of Sri Lanka has issued a number of new amendments to Sri Lanka Accounting Standards (SLFRSs/ LKASs) that are effective for annual periods beginning after the current financial year. Accordingly, the Group has not early adopted them in preparing these financial statements.

      The following amended standards are not expected to have a significant impact on the Group's financial statements.

      SLFRS S1 General requirements for disclosure of sustainability related financial information and SLFRS S2 Climate-related disclosures

      • SLFRS S1 General Requirements for Disclosure of Sustainability related Financial Information requires an entity to disclose information about its sustainability-related risks and opportunities that is useful to primary users of general-purpose financial reports in making decisions relating to providing resources to the entity.

      • SLFRS S2 Climate-related Disclosures is to requires an entity to disclose information about its climate-related risks and opportunities that is useful to primary users of general-purpose financial reports in making decisions relating to providing resources to the entity.

      • These standards will become effective for the Group and the Company from 1 January 2026. No financial impact is expected on the Group and the Company except for additional disclosures.

Sri Lanka Accounting Standard - SLFRS 18 on "Presentation and Disclosure in Financial Statements" (SLFRS 18)

SLFRS 18 is a new accounting standard for presentation and disclosure in Financial Statements with effect from January 01, 2027. SLFRS 18 will replace the Sri Lanka Accounting Standard - LKAS 1 on "Presentation of Financial Statements" and applies to the Group effective from January 01, 2027. The new accounting standard introduces the following key new requirements.

Entities are required to classify all income and expenses into five categories in the Statement of Profit or Loss, namely operating, investing, financing, discontinued operations and income tax categories. Entities are also required to present a newly defined operating profit sub totals. Entities' net profit will not change.

Management - defined Performance Measures (MPMs) are disclosed in a single note in the Financial Statements.

In addition, all entities are required to use the operating profit subtotals as the starting point for the Statement of Cashflows when presenting operating cashflows under indirect method.

24 Colombo Dockyard PLC

The Group is still in the process of assessing the impact of the new accounting standards, particularly with respect to the structure of the Group's Income Statement, the Statement of Cashflows and the additional disclosures required for MPMs. The Group is also assessing the impact on how information is grouped in the Financial Statements including items currently labelled as 'other'.

Sri Lanka Accounting Standard - SLFRS 19 on "Subsidiaries without Public Accountability" (SLFRS 19)

SLFRS 19 is a new accounting standard for subsidiaries to apply the recognition, measurement, and presentation requirements of full SLFRS Standards while applying a reduced set of disclosure requirements in Financial Statements with effect from January 01, 2027. The Group does not expect this will result in a material impact on its Consolidated Financial Statements.

Colombo Dockyard PLC 25

26 Colombo Dockyard PLC

5.2 Geographical segment revenue

Colombo Dockyard PLC 27

Group Company

01.01.2025 to 01.01.2024 to 01.01.2025 to 01.01.2024 to

28 Colombo Dockyard PLC

1. PROFIT BEFORE TAX

   Group Company

   01.01.2025 to

   01.01.2024 to

   01.01.2025 to

   01.01.2024 to

   	31.03.2026 (Rs.'000)	31.12.2024 (Rs.'000)	31.03.2026 (Rs.'000)	31.12.2024 (Rs.'000)
   Is stated after charging all expenses / (reversals)
   including the following;
   Directors' emoluments	51,648	24,625	48,399	21,890
   Auditors remuneration - on statutory audit	10,657	8,191	5,400	4,065
   Audit related services	-	-	-	-
   Business promotion expenses	100,600	94,834	91,247	85,269
   Depreciation on property, plant & equipment	892,509	630,500	780,623	550,515
   Amortization of intangible assets	3,905	14,551	3,565	13,749
   Donations	-	-	-	-
   Bad debt written-off	-	-	-	-
   Impairment loss on property, plant and equipment	-	-	-	-
   Provision for/(reversal of) - Bad and doubtful debts	(65,201)	61,222	(81,346)	61,006
   - Obsolete and slow moving stocks	67,545	55,983	49,011	50,703
   - Warranty claims	76,667	20,314	8,437	22,828
   Staff related cost - Salaries and wages	8,450,263	6,418,372	8,060,497	6,112,827
   - Defined benefit plan cost - gratuity	284,272	228,008	267,537	216,932
   - Defined contribution plan cost - EPF	369,128	315,045	346,087	278,651
   ETF	92,282	78,762	86,522	69,663
   Amortization of pre-paid staff cost	47,596	39,877	47,569	39,825

2. INCOME TAX EXPENSE

   Group Company

   01.01.2025 to

   01.01.2024 to

   01.01.2025 to

   01.01.2024 to

   	31.03.2026 (Rs.'000)	31.12.2024 (Rs.'000)	31.03.2026 (Rs.'000)	31.12.2024 (Rs.'000)
   On the current years profit (Note 9.2)	35,666	-	35,666	-
   Under/(over) provision in previous year	16,093	(22,507)	-	-
   Deferred taxation (Note 17.2)	(5,748)	(2,136,964)	17,105	(2,136,711)
   Total tax expense on profit / (loss)	46,011	(2,159,471)	52,771	(2,136,711)

   Colombo Dockyard PLC 29

   Notes to the Financial Statements Contd.

   1. Taxation on profits

      1. Income tax in Sri Lanka Company

         As per the Inland Revenue Act No. 24 of 2017 the Company is liable to pay income tax at following rates:

         Business income	30%
         Investment income	30%
         Deduction of tax losses against total statutory income	100%
         Tax losses - carrying forward	6 years

         Group

         Dockyard General Engineering Services (Pvt) Ltd.

         As per the Inland Revenue Act, the Company is liable to pay income tax at 30% on it's taxable profits.

         Dockyard Total Solutions (Pvt) Ltd.

         As per the Inland Revenue Act, the Company is liable to pay income tax at 30% on it's taxable profits.

      2. Income tax on overseas operations

      Ceylon Shipping Agency (Pte) Ltd., Singapore is liable for taxation at the rate of 17% on its taxable profit and provision has been made in the accounts accordingly.

   2. Reconciliation between current tax expense and the accounting profit

      Group Company

      01.01.2025 to 01.01.2024 to 01.01.2025 to 01.01.2024 to

      	31.03.2026 (Rs.'000)	31.12.2024 (Rs.'000)	31.03.2026 (Rs.'000)	31.12.2024 (Rs.'000)
      Profit / (loss) before tax	(2,645,442)	(4,902,368)	(2,578,409)	(4,894,115)
      Impact of allowable and disallowable expenses	(1,070,374)	(5,122,728)	(989,933)	(5,067,396)
      Tax loss utilized during the year	-	-	-	-
      Statutory profit/(loss) from business	(3,715,816)	(10,025,096)	(3,568,342)	(9,961,511)
      Statutory profit/(loss) from Colombo Dockyard PLC	(3,568,342)	(9,961,511)	-	-
      Statutory profit/(loss) from Dockyard General Engineering Services (Pvt) Ltd	107,287	(5,805)	-	-
      Statutory profit/(loss) from Dockyard Total Solutions (Pvt) Ltd.	(115,083)	(53,577)	-	-
      Statutory profit/(loss) from Ceylon Shipping Agency (Ate) Ltd	(139,678)	(4,203)	-	-
      Taxable income/(Loss)	(3,715,816)	(10,025,096)	-	-
      Tax at the rate of 15%	35,666	-	35,666	-
      Tax at the rate of 17%	-	-	-	-
      Tax at the rate of 30%	-	-	-	-
      Provision for taxation on current year profit	35,666	-	35,666	-

      30 Colombo Dockyard PLC

   3. Deferred taxation

      Company

      The deferred tax liability is arrived at by applying the effective income tax rate of 30% applicable for the year of assessment 2025/2026 to the temporary difference as at 31 March 2026.

      Subsidiaries

      Dockyard General Engineering Services (Pvt) Ltd.

      The deferred tax asset is arrived at by applying the income tax rate of 30% to the temporary differences of Dockyard General Engineering Services (Pvt.) Ltd. as at 31 March 2026.

      Dockyard Total Solutions (Pvt) Ltd.

      The deferred tax asset is arrived at by applying the income tax rate of 30% to the temporary differences of Dockyard Total Solutions (Pvt) Ltd.. as at 31 March 2026.

      Ceylon Shipping Agency (Pte) Ltd.

      The deferred tax liability is arrived at by applying the income tax rate of 17% to the temporary differences of Ceylon Shipping Agency (Pte) Ltd. as at 31 March 2026.

   4. Tax losses carried forward

      As per section 19 of the Inland Revenue Act No.24 of 2017, any unclaimed tax losses incurred during the year could be carried forward for a further six years. Companies in the Group have evaluated the recoverability of unclaimed losses through taxable profit forcasts and deferred tax assets have been recognized accordingly. Deferred tax assets recognized on tax losses would be reviewed at each reporting date based on the taxable profit forecast and would be reduced to the extent of recoverable amount.

      As per the Inland Revenue Act No 24 of 2017 Group Company

      	31.03.2026 (Rs'000)	31.12.2024 (Rs'000)	31.03.2026 (Rs'000)	31.12.2024 (Rs'000)
      Balance at the beginning of the Year	26,235,068	22,833,098	26,171,482	22,833,098
      Tax lossess set-off agaist the current year profits	-	-	-	-
      Tax Loss expired during the year	(3,936,101)	(6,623,126)	(3,903,433)	(6,623,126)
      Tax lossess incurred during the year	3,715,816	10,025,096	3,568,342	9,961,511
      Balance at the end of the year	26,014,783	26,235,068	25,836,391	26,171,483

      Group Company

      	31.03.2026 (Rs'000)	31.12.2024 (Rs'000)	31.03.2026 (Rs'000)	31.12.2024 (Rs'000)
      Tax lossess recognised for the deffered tax purpose	16,035,303	14,873,066	16,035,303	14,873,066
      Deferred tax asset recognised on tax lossess	4,810,591	4,461,920	4,810,591	4,461,920

      Colombo Dockyard PLC 31

      Notes to the Financial Statements Contd.
3. EARNINGS/(LOSS) PER SHARE

   1. Earnings/(loss) per share

      The calculation of the earnings/(loss) per share has been derived by dividing profit/(loss) attributable to equity shareholders of Company/Group by the weighted average number of ordinary shares in issue during the year and calculated as follows:

      Group Company

      01.01.2025 to

      01.01.2024 to

      01.01.2025 to

      01.01.2024 to

      	31.03.2026 (Rs.'000)	31.12.2024 (Rs.'000)	31.03.2026 (Rs.'000)	31.12.2024 (Rs.'000)
      Amount used as the numerator Profit/(loss) for the period (Rs. '000)	(2,920,728)	(2,742,897)	(2,631,180)	(2,757,404)
      Less : Non controlling interest (Rs. '000)	11,442	1,258	-	-
      Profit attributable to equity shareholders of Colombo Dockyard PLC (Rs. '000)	(2,909,286)	(2,741,639)	(2,631,180)	(2,757,404)
      Number of ordinary shares used as the denominator Number of ordinary shares	255,914,506	230,585,492	255,914,506	230,585,492
      Earnings/(loss) per share based on weighted average number of shares in Rs (2024 Restated)	(11.34)	(11.89)	(10.25)	(11.96)

      32 Colombo Dockyard PLC

4. PROPERTY, PLANT AND EQUIPMENT

   1. Group

      Drydocks

      Plant,

      FREEHOLD

      Plant,

      Office

      As at 31 March,

      In Lease

      hold

      Drydocks In Free

      Road

      Machinery (Dock Side

      Machinery

      &

      Electrical

      Equipment, Motor Inventory Furniture &

      Loose

      Boats &

      Capital Work In

      Land hold Land Land

      ways Building

      Cranes)

      Equipment Installation Vehicles

      Items

      Fittings

      Tools

      Launches Progress Total

      33

      Colombo Dockyard PLC

      COST Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

      Balance as at 01 January 2025	99,132	6,592,000	8,782,499	20,046	2,243,025	2,433,460	5,448,304	397,972	252,451	144,760	779,970	400,474	6,494	180,600	27,781,187
      Additions during the year	-	-	-	-	-	-	272,129	-	94,206	3,185	41,295	35,474	-	397,633	843,922
      Transfers/adjustments during the year	-	-	-	-	187,634	-	173,124	-	-	1,167	-	-	-	(361,925)	-
      Revaluation	-	-	-	-	-	-	-	-	-	-	-	-	- - -
      Disposals during the year	-	-	-	-	-	-	(10,965)	-	(2,107)	-	(10,693)	(5,194)	- - (28,959)
      Exchange gain /loss	-	-	-	-	-	-	-	-	-	-	982	-	- - 982
      Balance as at 31 March 2026	99,132	6,592,000	8,782,499	20,046	2,430,659	2,433,460	5,882,592	397,972	344,550	149,112	811,554	430,754	6,494 216,308 28,597,133
      ACCUMULATED DEPRECIATION
      Balance as at 01 January 2025	33,223	68,890	-	14,149	1,061,953	50,635	4,023,750	333,116	249,771	112,360	564,809	379,364	6,494 - 6,898,515
      Charge for the year	2,470	206,000	-	773	98,348	150,993	301,294	13,068	2,021	10,446	80,972	26,124	- - 892,509
      Transfer/adjustments during the year	-	-	-	-	-	-	-	-	-	-	-	-	- - -
      Disposals	-	-	-	-	-	-	(10,635)	-	(2,107)	-	(10,669)	(5,086)	- - (28,497)
      Exchange gain/loss	-	-	-	-	-	-	-	-	-	-	951	-	- - 951
      Balance as at 31 March 2026	35,693	274,890	-	14,922	1,160,301	201,628	4,314,409	346,184	249,685	122,806	636,063	400,402	6,494 - 7,763,478
      Balance as at 01 January 2025	-	-	-	-	-	-	2,327	-	-	-	136	10	- - 2,473
      Impairment loss for the year	-	-	-	-	-	-	-	-	-	-	-	-	- - -
      Balance as at 31 March 2026	-	-	-	-	-	-	2,327	-	-	-	136	10	- - 2,473
      CARRYING AMOUNT
      As at 31 March 2026	63,439	6,317,110	8,782,499	5,124	1,270,358	2,231,832	1,565,856	51,788	94,865	26,306	175,355	30,342	- 216,308 20,831,182
      As at 31 December 2024	65,909	6,523,110	8,782,499	5,897	1,181,072	2,382,825	1,422,227	64,856	2,680	32,400	215,025	21,099	- 180,600 20,880,199

      Notes to the Financial Statements Contd.

      34

      11. PROPERTY, PLANT AND EQUIPMENT (CONTD.)

   2. Company

      Colombo Dockyard PLC

      Period : Ending 31st March 2026 Subject : Property Plant & Equipements

      Colombo Dockyard PLC

      Drydocks

      Plant,

      FREEHOLD

      Plant,

      Office

      In Lease

      hold

      Drydocks In Free

      Road

      Machinery (Dock Side

      Machinery

      &

      Electrical

      Equipment, Motor Inventory Furniture &

      Loose

      Boats &

      Capital Work In

      Description

      Land hold Land Land

      ways Building

      Cranes)

      Equipment Installation Vehicles

      Items

      Fittings

      Tools

      Launches Progress Total

      COST	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000	Rs.'000
      Balance as at 1st January 2025 99,132		6,592,000	8,060,999	20,046	1,804,734	2,433,460	5,099,479	397,972	190,160	144,691	664,059	266,841 6,495 126,411 25,906,480
      Additions during the year -		-	-	-	-	-	261,525	-	94,206	3,185	35,460	4,156 - 269,130 667,662
      Revaluation -		-	-	-	-	-	-	-	-	-	-	- - - -
      Transfers/adjustments during the year -		-	-	-	71,031	-	120,300	-	-	1,167	-	- - (192,498) -
      Disposals during the year -		-	-	-	-	-	(8,083)	-	(2,107)	-	(10,255)	- - (20,446)
      Balance as at 31st March 2026 99,132		6,592,000	8,060,999	20,046	1,875,765	2,433,460	5,473,221	397,972	282,259	149,043	689,264	270,997 6,495 203,043 26,553,696
      ACCUMULATED DEPRECIATION Balance as at 1st January 2025 33,223		68,890	-	14,149	981,542	50,635	3,818,894	333,116	187,704	112,321	486,717	261,209 6,495 - 6,354,895
      Charge for the year 2,470		206,000	-	773	70,234	150,993	254,538	13,068	1,927	10,429	63,658	6,533 - - 780,623
      Transfer / Adjustment -		-	-	-	-	-	-	-	-	-	-	- - - -
      Disposals -		-	-	-	-	-	(8,083)	-	(2,107)	-	(10,255)	- - - (20,445)
      Balance as at 31st March 2026 35,693		274,892	-	14,920	1,051,777	201,627	4,065,349	346,184	187,526	122,750	540,119	267,740 6,495 - 7,115,073
      CARRYING AMOUNT
      Balance as at 31st March 2026 63,438		6,317,108	8,060,998	5,126	823,989	2,231,833	1,407,878	51,788	94,730	26,290	149,144	3,258 - 203,041 19,438,624
      Balance as at 31st December 2024 65,909		6,523,110	8,060,999	5,897	823,192	2,382,825	1,280,585	64,856	2,456	32,370	177,342	5,632 - 126,411 19,551,585

      (Group / Company) Notes:

      1. No property plant and equipment have been pledged as security for liabilities and also there are no restrictions on titles.

      2. There is no temporally idle property plant and equipment as at the reporting date.

      3. The Capital work in progress of the group and company includes the capital expenses incurred during the year for capital assets which are not completed as at the balance sheet date.

      11. PROPERTY, PLANT AND EQUIPMENT (CONTD.)

   3. Valuation of Land, Dry docks in freehold Land and Dockside Cranes

The lands of the Group have been revalued by an independent chartered valuation firm, Siri Nissanka Associates (Pvt) Ltd, as at 31 December 2023.

The Dry docks in free hold Land and Dockside Cranes of the Company have been revalued by an independent chartered valuation firm, Priyantha Withanarachchi Associates (Pvt) Ltd, as at 31 December 2024.

Valuation details of the lands of the Group are as follows

Dry docks in Freehold Land

35

Colombo Dockyard PLC

Cranes

36

1. PROPERTY, PLANT AND EQUIPMENT (CONTD.)

   1. Valuation of Land, Dry docks in freehold Land and Dockside Cranes

      Colombo Dockyard PLC

      Cranes

      Name	Crane Capacity	Country of Origin	Model	Valuation technique	Age (Years)	Condition	Bearing Capacity (Main Hoist)	Bearing Capacity (Aux Hoist)	Fair value LKR Mn	Correlation to Fair Value
      Dock Crane (25T RM1201 007 000)	25 Tons	Germany	N/A	Depreciated Cost Replacement (DCR) Method	42	Operational Status is Satisfactory	25T to 15m radius, 20T to 30m radius	5T to 17.8m-35m	47.5	Positive
      Tower Crane (RM 1201 010 004T)	4 Tons	India	Topkit -E1 13B	Depreciated Cost Replacement (DCR) Method	28	Operational Status is Satisfactory	4T at 17.9m, 2T at 31.8m, 1.52T at 40m, 1.3T at 45m	N/A	6.71	Positive
      Tower Crane (RM 1201 008 000 12T)	12 Tons	Singapore	MC310 K12	Depreciated Cost Replacement (DCR) Method	5	Operational Status is Satisfactory	SWL 12T	N/A	14.25	Positive
      Dock Crane (RM 1201- 009-000 6T)	6 Tons	Not Available	Not Available	Depreciated Cost Replacement (DCR) Method	63	Operational Status is Satisfactory	6T	N/A	2.1	Positive
      Dock Crane (10T D3)	10 Tons	United Kingdom	Rodley Leeds	Depreciated Cost Replacement (DCR) Method	63	Operational Status is Satisfactory	10T (Radius 50 feet)	3T (Radius 56 ft 9 in)	7.5	Positive

      Lands

      Location	Extent	No of Buildings	Valuation technique	Estimated price per perch (LKR)	Fair value LKR Mn	Correlation to Fair Value
      Lot No.01 in plan No.LS/P/223 at Colombo Dockyard PLC, Port of Colombo, Colombo 15	852.5 P	02	Open market value basis	8,800,000	7,500	Positive
      Land in Plan No.562	37.99 P	01	Open market value basis	3,500,000	133	Positive
      Lot A in Plan No.1347 dated 6th June 1981 at Colombo 15	89.62 P	01	Open market value basis	4,250,000	380	Positive
      Lot No is plan No. 3347 at No. 2, Srimath Bandaranayaka Mawatha, Colombo 12	7.15 P	01	Open market value basis	10,000,000	71.5	Positive
      Lot No. 3B in plan No. 2579 at Colombo 15	12.69 P	01	Open market value basis	3,750,000	48	Positive
      Lot No.01 in Plan No. 250 at Colombo 14	103.75 P	02	Open market value basis	6,300,000	650	Positive

      Note: The valuation techniques applied for land valuation is Open Market Value Basis, Which under the level 03 fairvalue hierarchy

   2. Gross carrying amount of fully depreciated property, plant and equipment.

Group Company

Group Company

31.03.2026 31.12.2024 31.03.2026 31.12.2024 (Rs.'000) (Rs.'000) (Rs.'000) (Rs.'000)

Land rented to Dockyard General Engineering Services (Pvt) Ltd. - - 2,865 2,865

Land depicted as Lot No.01 in Plan No.250 at Mahawatte, Colombo 14, which is leased to Dockyard General Engineering Services (Pvt.) Limited, has been revalued by an independent Chartered Valuation firm, Siri Nissanka Associates (Pvt.) Ltd., as at 31 December 2023. Valuation details of the land is as follows,

Colombo Dockyard PLC 37

1. INTANGIBLE ASSETS

   Group Company

   	31.03.2026 (Rs.'000)	31.12.2024 (Rs.'000)	31.03.2026 (Rs.'000)	31.12.2024 (Rs.'000)
   Cost Balance at the beginning of the year	141,656	141,385	135,546	135,546
   Additions during the year	14,739	271	14,739	-
   Balance at the end of the year	156,395	141,656	150,285	135,546
   Amortization Balance at the beginning of the year	138,712	124,161	133,017	119,268
   Charge for the year	3,905	14,551	3,565	13,749
   Balance at the end of the year	142,617	138,712	136,582	133,017
   Carrying amount	13,778	2,944	13,703	2,529

2. RIGHT-OF-USE ASSETS

   1. Assets held under lease have been recognised as right-of-use assets under SLFRS 16.

Group Company

38 Colombo Dockyard PLC