Annual Report of the Board of Directors 1 - 5
The Statement of Directors' Responsibility 6
Independent Auditor's Report 7 - 11
Statement of Profit or Loss 12
Statement of Other Comprehensive Income 13
Statement of Financial Position 14
Statement of Changes in Equity 15
Statement of Cash Flows 16
Notes to the Financial Statements 17 - 84
DIALOG FINANCE PLC Annual Report of the Board of Directors for the year ended 31 December 2025The Board of Directors of Dialog Finance PLC ('the Company') is pleased to present its Annual Report on the State of Affairs of the Company for the year ended 31 December 2025, together with the audited financial statements of the Company.
This report contains the information required in terms of the Companies Act, No. 07 of 2007, Finance Business Act, No. 42 of 2011 and Directions issued there under and the Listing Rules of the Colombo Stock Exchange.
The Company
The Company bearing the registration No. PB 765 PQ, is a public limited liability company incorporated and domiciled in Sri Lanka. The registered office of the Company is located at No. 475, Union Place, Colombo 02 and the principal place of business is located at No. 57, Srimath Anagarika Dharmapala Mawatha, Colombo 03.
The Company was incorporated on 25 November 1981, under the Companies Ordinance (Chapter 145), bearing the name Silvereen Finance Company Limited. The Company changed its name to People's Merchant Finance Company Limited on 30 September 2009 and Capital Alliance Finance Limited on 16 September 2011. The Company was re-registered under the provisions of the Companies Act, No. 07 of 2007 on 21 November 2011 and was accordingly renamed as Capital Alliance Finance PLC. On 22 December 2015, the Company changed its name to Colombo Trust Finance PLC and following the acquisition by Dialog Axiata PLC, the Company changed its name to Dialog Finance PLC on 15 September 2018.
The Company is a Licensed Finance Company under the Finance Business Act, No. 42 of 2011 and the ordinary shares of the Company were listed on the Colombo Stock Exchange ("CSE") on 4 October 2011.
Principal business activities
The Company offers a comprehensive range of financial services which include device financing, Merchant and SME loans, fixed and savings deposits, margin trading facilities, payment services and other financial facilities.
Financial statements
The financial statements of the Company as set out on pages 12 to 84, comprise of the statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows and notes to the financial statements of the Company. They have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRSs & LKASs) laid down by the Institute of Chartered Accountants of Sri Lanka, in compliance with the requirements of the Companies Act, No. 07 of 2007 ("the Companies Act") and the Finance Business Act, No. 42 of 2011.
The aforementioned financial statements for the year ended 31 December 2025 are duly signed by the Chief Executive Officer, Head of Corporate Finance/Budgeting/ALM/Treasury Management and two other Directors of the Company.
Independent auditors' report
The Independent Auditors of the Company are Messrs. Deloitte Partners ("Deloitte"), Chartered Accountants. Deloitte carried out the audit on the financial statements of the Company for the year ended 31 December 2025 and their report on the financial statements, is set out on pages 7 to 11.
Material accounting policies
The significant accounting policies adopted in the preparation of the financial statements are given on pages 17 to 39.
Directors' responsibility for financial reporting
The Directors are responsible for the preparation of the financial statements of the Company to reflect a true and fair view of its state of affairs. The Directors are of the view that these financial statements appearing on pages 12 to 84 have been prepared in conformity with the requirements of the Sri Lanka Accounting Standards, Companies Act, the Finance Business Act, No.42 of 2011 and amendments thereto and the Listing Rules of the Colombo Stock Exchange.
The detailed Statement of Directors' Responsibility for Financial Reporting is set out on page 6.
DIALOG FINANCE PLC Annual Report of the Board of Directors for the year ended 31 December 2025 (Continued)Property, plant and equipment
The details of property, plant & equipment are given on Note 27 to the financial statements.
Capital expenditure
The total capital expenditure made on acquiring property, plant and equipment and intangible assets of the Company amounted to Rs. 186.65Mn (For the year ended 31 December 2024 - Rs. 61.69Mn) and the details are given in Notes 27 and 28 to the financial statements.
Capital commitments
The capital expenditure approved and contracted for, as at the reporting date is given in Note 38 to the financial statements.
Reserves
The aggregate value of reserves and their composition are set out in the Statement of Changes in Equity of the Company on page 15 to the financial statements.
Statutory reserve fund
The statutory reserve fund is a capital reserve which consists of profits transferred as required by section 3 (b)
(ii) of Central Bank Direction No. 1 of 2003.
Stated capital
The Stated Capital of the Company as at 31 December 2025 amounted to Rs. 2,934,582,100 consisting of 117,399,866 ordinary shares (31 December 2024 - Rs. 2,934,582,100 consisting of 117,399,866 ordinary shares).
Shareholdings of the Company
The parent company, Dialog Axiata PLC, held 99.05% of the Ordinary shares in issue of the Company as at 31 December 2025. The main shareholders of the Company and corresponding holding percentages are set out below.
Name of Shareholder
31 December 2025 No. of shares Holding
%
DIALOG FINANCE PLC Annual Report of the Board of Directors for the year ended 31 December 2025 (Continued)1 Dialog Axiata PLC
116,290,376
99.05
2 Hatton National Bank PLC / Dawi Investment Trust (Pvt) Ltd
131,541
0.11
3 GF Capital Global Limited
81,376
0.07
4 J.B. Cocoshell (Pvt) Ltd
44,203
0.04
5 Senkadagala Finance PLC / G.B.R.P.Gunawardana
35,511
0.03
6 Mr. P. Poongunaseelan
34,554
0.03
7 Citizens Development Business Finance PLC / D.M.H.B.Dasanayake
30,000
0.03
8 Commercial Bank of Ceylon PLC / P. Gajendra
27,301
0.02
9 Mr. A.P. Dhammika
27,000
0.02
10 Seylan Bank PLC / S.R. Fernando
26,872
0.02
11 Golden Top Far East Limited
25,000
0.02
12 Mr. R.J.K.I. Ranathunga
24,123
0.02
13 Senkadagala Finance PLC / A.N.S.Bandara
20,959
0.02
14 People's Leasing & Finance PLC / C.D.Kohombanwickramage
19,452
0.02
15 Mr. M.K. Gunawardena / Mr. M.K. Gunawardena (Joint)
16,190
0.01
16 Mr. M.A.T. Raaymakers
16,030
0.01
17 Citizens Development Business Finance PLC / K.D.C. Somalatha and K. Nandasiri
15,980
0.01
18 Senkadagala Finance PLC / A.K.G.Indika
15,100
0.01
19 Mr. P.S.M. Fernando
15,000
0.01
20 Mr. G.D.M. Ranasinghe / Mrs. O.R.K. Ranasinghe (Joint)
14,029
0.01
Others
489,269
0.44
Total
117,399,866
100.00
Stated capital (Continued)
Minimum public holding requirement
The percentage of shares held by the public as at 31 December 2025 was 0.95%, in the hands of 926 public shareholders (31 December 2024 - 0.95% in the hands of 848 public shareholders)
The Company is not compliant with the Minimum Public Holding requirement under section 2 of Rule 7.14.1(b) of the Listing Rules of the Colombo Stock Exchange ("CSE"). Accordingly, the Company was transferred to the Second Board on 10 February 2020.
Equitable treatment to shareholders
The Company has at all times ensured that all shareholders treated equitably.
Board of Directors
The Board of Directors of the Company comprise of 7 Directors (31 December 2024 - 7) with wide financial and commercial knowledge and experience.
The classification of Directors into Executive (ED), Non-Executive (NED), Independent (IND) and Non-Independent Directors (NID) is given against the names as per Listing Rules and Corporate Governance Rules of the CSE and the Finance Business Act Direction No 05 of 2021 and subsequent amendments thereto issued by the Central Bank of Sri Lanka.
The Directors of the Company as at 31 December 2025 were;
Name Classification
(NED/NID/ED)
Remarks (Appointed date, change of directorate to chairman etc)
Ms. Renuka Fernando (Chairperson) NID/NED 22 May 2020
Mr. Supun Weerasinghe NID/NED 09 November 2017
Ms. Lim Li San NID/NED 11 October 2024
Mr.Shivan Kanag-Isvaran IND/NED 05 March 2025
Mr.Uditha Chinthana Jayasinghe IND/NED 11 April 2025
Mr. Alexander Lowback IND/NED 11 October 2024
Mr. Nazeem Mohamed NID/ED 24 June 2022
Board subcommittees
The Board, while assuming the overall responsibility and accountability for the management oversight of the Company, has also appointed Board Sub Committees to ensure that the activities of the Company are conducted with the highest ethical standards and the best interest of its stakeholders at all times. The Board has formed many sub committees including the following:
Board Audit Committee
Nominations and Governance Committee
Remuneration Committee
Board Integrated Risk Management Committee
Related Party Transactions Review Committee
Board Credit Committee
Directors' interest in contracts and proposed contracts
Directors of the Company have made necessary declarations of their interest in contracts or proposed contracts, in terms of the Section 192(1) and 192(2) of the Companies Act. These interests have been recorded in the interest register which is available for inspection in terms of the Companies Act. The Directors have no direct or indirect interest in a contract or a proposed contract with the Company other than those disclosed.
Directors' interest in shares of the Company
None of the Directors and their close family members directly held any shares in the Company as at 31 December 2025. (As at 31 December 2024 - Nil).
DIALOG FINANCE PLC Annual Report of the Board of Directors for the year ended 31 December 2025 (Continued)Directors' remuneration
The details of Directors' emoluments and other benefits paid in respect of the Company during the year under review are given in Note 41 to the financial statements.
Related party transactions
The Directors have disclosed transactions if, any that could be classified as related party transactions in terms of Sri Lanka Accounting Standards - LKAS 24 (Related Party Disclosure) which is adopted in the preparation of the financial statements. The details of all related party transactions carried out during the period are disclosed in Note 41 to the financial statements.
The Directors declare that the Company is in compliance with Section 9 of the Listing Rules of the Colombo Stock Exchange pertaining to Related Party Transactions during the financial year ended 31st March 2024 and that such transactions with the Company if any, have been disclosed while abstaining from voting on any matters of material interest.
Outstanding litigation
In the opinion of the Directors and in consultation with the Company lawyers, there were no pending litigations against the Company as at 31 December 2025 which would have a material impact on the reported financial results, or future operations, of the Company.
Statutory payments
The Directors, to the best of their knowledge and having made adequate inquiries from management, confirm that all taxes, duties, levies and statutory payments payable by the Company on behalf of and in respect of the employees of the Company as at the date of the statement of financial position have been duly paid, or where relevant, have been provided for, except as disclosed in Note 38 to the financial statements.
Risk management and internal controls
Internal controls
The Directors of the Company have taken reasonable steps to safeguard the financial operations of the Company to prevent and detect fraud and any other irregularities. For this purpose, the Directors consider that the system of internal controls is appropriately designed for identifying, recording, evaluating and managing the significant risks faced by the Company throughout the period and it is being regularly reviewed by the Board of Directors. The Directors further confirm that this is an on - going process to identify, evaluate and manage significant business risk.
Corporate governance and compliance with laws and regulations
The Directors of the Company are committed towards maintaining an effective Corporate Governance Framework and implementing processes with respect to the management and operations of the Company in order to develop and nurture sustainable growth and long-term relationships with key stakeholders. The Directors confirm that the Company is compliant with Section 7.10 of the Listing Rules of the CSE and the Directions on Corporate Governance issued by the Central Bank of Sri Lanka (CBSL).
The Company has not engaged in any activity that contravenes any applicable law or regulation, and to the best of the knowledge of the Directors the Company has been in compliance with all prudential requirements, regulations and laws.
Environmental protection
The Company makes every endeavour to comply with the relevant environmental laws, regulations and best practices applicable in the country. After making adequate inquiries from the management, the Directors are satisfied that the Company operates in a manner that minimises the detrimental effects on the environment and provides products and services that have a beneficial effect on customers and the communities within which the Company operates.
To the best of the knowledge of the Board of Directors, the Company has not engaged in any activity which is harmful or hazardous to the environment and complies with the relevant environmental laws and regulations.
Donations
The Company has not made any donations during the year ended 31 December 2025. (For the year ended 31 December 2024 - Nil).
Page 5
DIALOG FINANCE PLC
Annual Report of the Board of Directors for the year ended 31 December 2025 (Continued)
Taxation
Provision for taxation has been computed in accordance with income tax legislations and applicable tax rates are given in Note 15 to the financial statements.
Dividends
The Directors have not recommended a dividend for the year ended 31 December 2025. (For the year ended 31 December 2024 - Nil).
Going concern
The Directors after making necessary inquiries and reviews including reviews of the budget for the ensuing year, capital expenditure requirements, future prospects and risks and cash flows are satisfied that the Company has adequate resources to continue operations into the foreseeable future. Accordingly, the going concern basis is adopted in preparing the financial statements of the Company.
Auditors
The Independent Auditors of the Company during the year were Messrs. Deloitte Partners, Chartered Accountants.
The audit fees to the Auditors Messrs. Deloitte Partners for the year ended 31 December 2025 amounted to Rs. 2,027,000 (For the year ended 31 December 2024 - Rs. 1,843,000). In addition to the above, Rs. 1,318,028 was payable for the year ended 31 December 2025 (For the year ended 31 December 2024 - Rs. 1,171,000) for other permitted services.
Based on the declaration provided by Messrs. Deloitte Partners, and as far as the Directors are aware, the Independent Auditors do not have any relationship or interest with the Company that would impair their independence and objectivity.
Messrs. Deloitte Partners have expressed their willingness to continue as the Independent Auditors of the Company and a resolution proposing their re-appointment, as Auditors will be proposed at the forthcoming Annual General Meeting.
Employment policy
The Company believes that its potential rests on the skilled & competent workforce in the rapidly changing environment. As at 31 December 2025, the number of employees on the payroll of the Company was 215 (31 December 2024 - 169).
Modem Human Resources Management practices are adopted respesting each and every individual and providing equitable opportunities for career advancement for all employees. The Company complies with its policy of non-discrimination in terms of gender, race or religion in the matter of employment.
Fair Treatment to Stakeholders
The Board of Directors declare that the Company has taken necessary measures to ensure the fair and equitable treatment of all stakeholders, including its shareholders and depositors.
Events aher the reporting periodNo circumstances have arisen since the Statement of Financial Position date which would require adjustments to, or disclosure in the financial statements other than those disclosed in Note 39 to the financial statements.
By order of the Board
Colombo
Date: 06 February 2026
Director " % Director " Sec etary" " " ""*
DIALOG FINANCE PLC
The Statement of Directors' ResponsibilityThe responsibility of Directors in relation to the financial statements of Dialog Finance PLC (°the Company") is set out in the following statements. The responsibility of the Independent Auditor in relation to the financial statements prepared in accordance with the Companies Act, No.07 of 2007 ("the Companies Acf'), is set out in the Independent Auditor's Report on pages 7 to 11.
The financial statements comprise of the following:
the statement of financial position, which presents a true and fair view of the state of affairs of the Company as at 31 December 2025,
the statement of profit or loss and other comprehensive income, which present a true and fair view of the profit or loss and other comprehensive income of the Company for the year ended 31 December 2025;
Statement of changes in equity, Statement of cash flow and Notes to the financial statements.
In preparing these financial statements the Directors are required to ensure that:
Appropriate accounting policies have been selected and applied in consistent manner and material departures, if any, have been disclosed and explained.
All applicable accounting standards, as relevant, have been followed.
Reasonable and prudent judgements and estimates have been made so that the form and substance of transactions are properly reflected.
Information required by the Companies Act, Finance Business Act No. 42 of 2011 and the Continuing Listing Rules of the Colombo Stock Exchange has been disclosed.
The Directors are satisfied that the Company has adequate resources to continue in operation and justify applying going concern principle in the preparation of the financial statements.
The financial statements of the Company have been certified by Head of Corporate Finance/Budgeting/ALM/Treasury Management, the officer responsible for the preparation and the Chief Executive Officer and have been signed by two Directors on 06 February 2026 in conformity with the requirements of the Companies Act.
The Directors are also responsible for taking reasonable steps to safeguard the assets of the Company and in this regard to give proper consideration to the establishment of appropriate internal control systems with a view of preventing and detecting fraud and other irregularities.
Compliance ReportThe Directors confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company, all contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and all other known statutory dues as were due and payable by the Company as at the date of the statement of financial position have been paid, or where relevant provided for, except as disclosed in Note 38 to the Financial Statements covering contingent liabilities.
The Directors are of the view that they have discharged their responsibilities as set out in this statement. By Order of the Board
Ms.Nipuni Fernando Company Secretary
06 February 2026
Deloitte Partners
100 Braybrooke Place Colombo 2
Sri Lanka
Tel: +94 11 771 9700,
+94 11 771 9838
Fax: +94 11 230 7237
https://www.deIoitte.com
INDEPENDENT AUDITOR'S REPORT
TO THE SHAREHOLDERS OF DIALOG FINANCE PLC REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of Dialog Finance PLC (the Company) which comprise the statement of financial position as at 31 December 2025, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 31 December 2025, and of its financial performance and its cash flows for the year 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 Responsibilitiesfor the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethicsfor Professional Accountants issued by the Institute of Chartered Accountants of Sri Lanka ("CA Sri Lanka Code of Ethics") and we have fulfilled our other ethical responsibilities in accordance with the CA Sri Lanka 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 financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
C S Manoharan FCA, T U Jayasinghe FCA, M D B Boyagoda FCA, H A C H Gunarathne FCA, M P M T Gunasekara *CA, N R Gunasekera FCA, M S J Henry FCA, M M R Hilmy FCA, H P V Lakdeva FCA, K M D R P Manatunga ACA, M M M Manzeer FCA, L A C Tillekeratne ACA,
D C A J Yapa ACA
Regd. Office: P.O. Box 918, 100 Braybrooke Place, Colombo 02, Sri Lanka. Reg. No.: w/4179
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Dialog Finance PLC (Contd)
Key audit matter | How our audit addressed the Key audit matter |
mpairment of loans and advances Refer to the accounting policy Section 5.3: Impairment 3f financial assets and Notes 10 and 22 to the financial statements. 4s at 31 December 2025, total gross amount of loans and advances amounted to LKR 9,702 million, with a Total allowance for impairment of LKR 543 million. Total net amount of loans and advances contribute 77% to the total assets. Management assesses whether the credit risk of loans and advances to customers have increased significantly since their initial recognition and applies a three-stage impairment model to calculate their Expected Credit Loss ("ECL"). ECL is calculated on °ither an individual basis or a collective basis. Collective impairment is calculated incorporating key parameters, including probability of default, loss given default, exposure at default and discount rates. ndividual impairment is determined using discounted cash flows. The impairment of loans and advances using the ECL model was considered as a key audit matter due to fact Fs Such as:
| The audit procedures performed to assess the adequacy of the impairment allowance for credit losses on loans and advances to customers in line with SLFRS 9 adopted, included the following:
disclosures. |
Report on the Audit of the Financial Statements (Contd) Key Audit Matters (Contd)
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Dialog Finance PLC (Contd)
Report on the Audit of the Financial Statements (Contd) 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 will 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 financial statements or our knowledge obtained in the audit, or otherwise appeared to be materially misstated.
When we read the Annual Report of the Company, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions based on the circumstances.
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 Company'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 Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company'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.
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Dialog Finance PLC (Contd)
Report on the Audit of the Financial Statements (Contd)
Auditor's Responsibilities for the Audit of the Financial Statements (Contd)
As part of an audit in accordance with SLAuSs, we exercise professional judgement and maintain professional scepticism 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's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 Company'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 Company 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.
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.
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Dialog Finance PLC (Contd)
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 6355.
c c "''** DELOITTEPARTNERS
ChateredAcountants Colombo
06 February 2026
DIALOG FINANCE PLC
Statement of Profit or Loss
(all amounts in Sri Lanka Rupees thousands)
Note Year ended 31 December | |||
2025 | 2024 | ||
Interest income | 6.1 | 1,742,461 | 1,038,173 |
Less: Interest expense | 6.2 | (404,973) (259,932) | |
Net interest income | 6 | 1,337,488 778,241 | |
Fee and commission income | 7.1 | 1,370,959 586,450 | |
Less: Fee and commission expenses | 7.2 | (452,313) (235,641) | |
Net fee and commission income | 7 | 918,646 350,809 | |
Net gains from trading | 8 | 750 759 | |
Other operating income | 9 | 109,507 15,658 | |
Total operating income | 2,366,391 1,145,467 | ||
Less: Allowance for expected credit losses | 10 | (307,851) (114,248) | |
Net operating income | 2,058,540 | 1,031,219 | |
Less: Operating expenses | |||
Personnel expenses | 11 | (496,030) | (337,319) |
Depreciation and amortisation | 12 | (89,093) | (62,890) |
Other expenses 13 (1,035,906) (586,961) | |||
Operating profit before taxes on financial services | 437,511 | 44,049 | |
Less: Taxes on financial services | 14 | (156,068) | (59,984) |
Profit / (Loss) before tax for the year | 281,443 | (15,935) | |
Income tax expense | 15 | (121,716) | (25,148) |
Profit / (Loss) for the year | 159,727 | (41,083) | |
Basic / diluted (loss) / profit per share for losses attributable to the ordinary equity holders of the Company (Rs.) | 16.1 | 1.36 | (0.35) |
The notes on pages 17 to 84 form an integral part of these financial statements.
DIALOG FINANCE PLCStatement of Other Comprehensive Income (all amounts in Sri Lanka Rupees thousands)
Year ended 31 December
2025 | 2024 | |
Profit / (Loss) for the year | 159,727 | (41,083) |
Other comprehensive income | ||
Items that will not be reclassified to profit or loss: - Changes in the fair value of equity investments at fair value through other comprehensive income (Note 23) | 147 | 173 |
- Remeasurement of defined benefit obligations (Note 32.1 a) | 596 | (1,265) |
- Deferred tax effect on other comprehensive income (Note 15.1) | (525) | 353 |
Other comprehensive income, net of tax | 218 | (739) |
Total comprehensive income / (loss) for the year, net of tax | 159,945 | (41,822) |
The notes on pages 17 to 84 form an integral part of these financial statements
DIALOG FINANCE PLC
Statement of Financial Position
(all amounQ in Sri Lanka Rupees thousands)
Note As at 31 December
ASSETS | 2025 | 2024 | |
Cash and cash equivalents | 18 | 602,236 | 252,167 |
Placements with financial Institutions | 19 | 161,800 | 168,488 |
Securities purchased under repurchase agreements | 20 | 625,521 | 509,924 |
Financial assets at fair value through profit or loss | 21 | 3,976 | 257,224 |
Financial assets at amortised cost - loans and advances | 22 | 9,158,595 | 5,171,335 |
Financial assets at fair value through other comprehensive income | 23 | 2,505 | 2,358 |
Financial investments at amortised cost | 24 | 400,714 | 387,959 |
Other assets | 25 | 496,161 | 249,528 |
Current tax receivable Right-of-use assets | 26 | 92,624 | 6,255 36,308 |
Property, plant and equipment | 27 | 58,115 | 53,518 |
Intangible assets | 28 | 303,626 | 197,337 |
Deferred tax asset 29 45,994 92,698 | |||
Total assets | 11,951,867 7,385,099 | ||
LIABILITIES | |||
Financial liabilities at amortised cost - due to customers | 30 | 5,896,562 4,044,853 | |
Financial liabilities at amortised cost - due to banks | 31 | 2,109,980 100,296 | |
Lease liabilities | 26 | 97,457 40,286 | |
Retirement benefit obligations | 32 | 14,241 11,759 | |
Current tax payable | 69,283 | - | |
Other liabilities | 33 | 1,001,456 584,962 | |
Total liabilities | 9,188,979 4,782,156 | ||
EQUITY | |||
Stated capital | 34 | 2,934,582 2,934,582 | |
Statutory reserve Fair value through other comprehensive income | 35 36 | 24,674 3,102 | 16,688 3,301 |
Accumulated losses | 36 | (199,470) (351,628) | |
Total equity | 2,762,888 2,602,943 | ||
Total equity and liabilities | 11,951,867 7,385,099 | ||
Net asset per share (Rs.) | 16.4 | 23.53 | 22.17 |
Commitments and contingencies | 38 | 112,842 | 458,542 |
We certify that these Financial Statements have been presented in compliance with the requirements of the Companies Act, No. 07 of 2007.
Head orporate Finance, Budgeting, ALM and Treasury Management
06 February 2026
Chief Executive Officer 06 February 2026
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.
.....
Director
06 February 2026
........................ ......
'' Director
06 February 202
The notes on pages 17 to 84 form an integral part of these financial statements
DIALOG FINANCE PLCStatement of Changes in Equity
(all amounts in Sri Lanka Rupees thousands)
Note Stated capital
Statutory reserve
Retained earnings/ (accumulated
losses)
Fair value through
OCI
reserve
Total
2,934,582 | 16,688 | (309,659) | 3,154 | 2,644,765 |
- | - | (41,083) | - | (41,083) |
- | - | (886) | 147 | (739) |
- | - | (41,969) | 147 | (41,822) |
2,934,582 | 16,688 | (351,628) | 3,301 | 2,602,943 |
Balance at 1 January 2024
Loss for the year
Other comprehensive income, net of tax
Total comprehensive income for the year
Balance at 31 December 2024
Balance at 1 January 2025 2,934,582 16,688 (351,628) 3,301 2,602,943
- - | - - | 159,727 417 | - (199) | 159,727 218 | |
- | - | 160,144 | (199) | 159,945 | |
35 | - | 7,986 | (7,986) | - - | |
2,934,582 | 24,674 | (199,470) | 3,102 | 2,762,888 |
Profit for the year
Other comprehensive income, net of tax
Total comprehensive income for the year
Transferred to statutory reserve
Balance at 31 December 2025
The notes on pages 17 to 84 form an integral part of these financial statements.
DIALOG FINANCE PLCStatement of Cash Flows
(all amounts in Sri Lanka Rupees thousands)
Note Year ended 31 December | |||
2025 | 2024 | ||
Cash flows from operating activities | |||
Profit /(Loss) before income tax | 281,443 | (15,935) | |
Adjustment for, | |||
Interest expenses | 6.2 | 404,973 | 259,932 |
Gain on disposal of property, plant and equipment | 9 | (71,153) | - |
Impairment charges and other losses | 10 | 307,851 | 114,248 |
Provision for retirement benefits obligation | 11 | 4,713 | 3,969 |
Depreciation of property plant and equipment | 12 | 19,859 | 14,097 |
Depreciation of right-of-use assets | 12 | 28,174 | 14,472 |
Amortisation of intangible assets | 12 | 41,060 | 34,321 |
Interest on lease liabilities | 26.2 | 6,864 | 2,609 |
Net gains on financial assets at fair value through profit or loss | 8 | (750) | (759) |
Cash generated from operations before changes in operating assets and liabilities | 1,023,034 | 426,954 | |
Increase in loans and advances | 22 | (4,295,111) | (2,242,813) |
Increase in other assets | 25 | (246,633) | (181,404) |
Increase in amounts due to customers | 30 | 1,851,709 | 1,428,087 |
Increase in other liabilities | 33 | 416,494 | 456,792 |
Cash used in operations | (1,250,507) | (112,384) | |
Interest paid | (410,941) | (348,715) | |
Retirement benefits paid | 32.1 | (1,636) | (2,607) |
Net cash generated used in operating activities | (1,663,084) | (463,706) | |
Cash flows from investing activities | |||
Acquisition of property plant and equipment and intangible assets | 27/28 | (186,653) | (61,690) |
Proceeds from sale of property plant and equipment | 27 | 86,000 | - |
Net investment in treasury bills | 24 | (12,755) | 862,062 |
Net placements with financial institutions | 19 | 6,688 | (55,099) |
Net investment in unit trust | 21.2 | 253,998 | 865,746 |
Net cash flows from securities purchased under repurchased agreement | 20 | (115,597) | (510,114) |
Net cash generated from investing activities | 31,681 | 1,100,905 | |
Cash flows from financing activities | |||
Net proceeds from bank borrowings | 31 | 2,009,684 | (401,821) |
Repayment of lease liabilities | 26.3 | (27,319) | (11,811) |
Net cash used in financing activities | 1,982,365 | (413,632) | |
Net increase in cash and cash equivalents | 350,962 | 223,567 | |
Cash and cash equivalents at the beginning of the year | 311,570 | 88,003 | |
Cash and cash equivalents at the end of the year | 662,532 | 311,570 | |
Analysis of cash and cash equivalents at the end of the year | |||
Cash and bank balances | 18 | 602,321 | 252,249 |
Placements with financial institutions (less than 90 days) | 19 | 60,211 | 59,321 |
662,532 | 311,570 | ||
Less: Impairment provision | (123) | (116) | |
Cash and cash equivalents at the end of the year | 662,409 | 311,454 | |
The notes on pages 17 to 84 form an integral part of these financial statements.
DIALOG FINANCE PLCNotes to the Financial Statements
(all amounts in the notes are in Sri Lanka Rupees thousands unless otherwise stated)
Corporate information
General
Dialog Finance PLC ('the Company'), is a public limited liability company incorporated and domiciled in Sri Lanka, incorporated under the Companies Ordinance (Chapter 145), and was re-registered with the Registrar General of Companies as per the requirements of the Companies Act No. 07 of 2007. It is a Licensed Finance Company under the Finance Business Act No. 42 of 2011 and amendments thereto.
The Company is listed on the Colombo Stock Exchange since 4 October 2011.
The registered office of the Company is located at No. 475, Union Place, Colombo 02. The principal place of business is located at No. 57, Srimath Anagarika Dharmapala Mawatha, Colombo 03.
Principal activities
The Company offers a comprehensive range of financial services which include device financing, merchant and SME loans, fixed and savings deposits, margin trading facilities, payment services and other financial facilities.
Parent entity and ultimate parent entity
The Company's immediate parent is Dialog Axiata PLC and the Company's ultimate parent undertaking and
controlling party is Axiata Group Berhad, a company incorporated in Malaysia.
Number of employees
The staff strength of the Company as at 31 December 2025 is 215 (31 December 2024 - 169).
Approval of financial statements by Directors
The financial statements of the Company, for the year ended 31 December 2025, were authorised for issue by the Board of Directors on 06 February 2026. The Directors have the power to amend and reissue the financial statements.
Basis of preparation
Statement of compliance
The financial statements of the Company, which comprise of the statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows and notes to the financial statements are prepared in accordance with the Sri Lanka Accounting Standards (LKASs and SLFRSs) laid down by the Institute of Chartered Accountants of Sri Lanka, and in compliance with the requirements of the Companies Act, No. 7 of 2007, and provide appropriate disclosures as required by the Central Bank of Sri Lanka and Listing Rules of the Colombo Stock Exchange.
Responsibility for financial statements
The Board of Directors is responsible for the preparation and presentation of the financial statements of the Company as per the provisions of the Companies Act No. 07 of 2007, the Sri Lanka Accounting Standards and provide appropriate disclosures as required by the Central Bank of Sri Lanka and the listing rules of the Colombo Stock Exchange. The responsibility of the Directors in relation to the financial statements is set out in detail in the statement of Directors' responsibility report in the annual report.
Basis of measurement
The financial statements have been prepared on a historical cost basis, except for following material items in the statement of financial position;
Financial assets at fair value through other comprehensive income [Note 23];
Financial assets at fair value through profit or loss [Note 21];
Liabilities for defined benefit obligations are recognised at the present value of defined benefit obligation based on actuarial valuation [Note 32].
DIALOG FINANCE PLCNotes to the Financial Statements (Continued)
2 Basis of preparation (Continued)
Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). Financial statements are presented in Sri Lanka Rupees, which is the Company's functional and presentation currency.
Presentation of financial statements
The assets and liabilities of the Company presented in the statement of financial position are grouped by nature and listed in order that reflects their relative liquidity and maturity pattern. No adjustments have been made for inflationary factors affecting the financial statements. An analysis on recovery or settlement within 12 months after the reporting date (current) and more than 12 months after the reporting date (non - current) is presented in Note 44.
The amounts in the financial statements have been rounded-off to the nearest rupees thousands, except where
otherwise indicated as permitted by LKAS 1 "Presentation of Financial Statements".
Materiality and aggregation
In compliance with LKAS 01 '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 present separately, unless they are immaterial.
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liability simultaneously. Income and expenses are not offset in the income statement unless required or permitted by an accounting standard.
Statement of cash flows
The cash flow statement has been prepared using the indirect method of preparing cash flows in accordance with LKAS 7 'Statement of Cash Flows', whereby operating, investing and financial activities have been separately recognised.
Cash and cash equivalents comprise short term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
The cash and cash equivalents include cash in-hand, balances with banks and short-term deposits with banks (less than 3 months).
Significant accounting judgments, estimates and assumptions
In preparing the financial statements of the Company in conformity with SLFRSs and LKASs, the management has made judgements, estimates and assumptions which 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 reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.
Significant areas of critical judgements, assumptions and estimation uncertainty, in applying Accounting Policies that have most significant effects on the amounts recognised in the Financial Statements of the Company are as follows:
Going concern
The Directors have made an assessment of the Company's ability to continue a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern and does not intend either to liquidate or to cease operations. Therefore, the financial statements continue to be prepared on a going concern basis.
DIALOG FINANCE PLCNotes to the Financial Statements (Continued)
3 Significant accounting judgments, estimates and assumptions (Continued)
Impairment losses on loans and advances
The measurement of impairment losses under SLFRS 9 'financial instruments' across all categories of financial assets require judgement, in particular, the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a number of factors, changes in which can result in different levels of allowances.
The Company's expected credit loss (ECL) calculations are output of complex models with a number of underlying assumptions regarding the choice of variable inputs and their independencies. The elements of the ECL models that are considered accounting judgements and estimates include,
The Company's criteria for assessing if there has been a significant increase in credit risk and so allowances for financial assets should be measured on a lifetime expected credit loss (LTECL) basis and the qualitative assessment.
The segmentation of financial assets of their fair values when their ECL is assessed on a collective basis.
Development of ECLs, models including various formulas and choice of inputs, such as multiple economic scenarios and collateral values and the effect on the probability of default (PDs), Exposure at Default (EADs) and loss given default (LGDs).
Fair value of financial instruments
The determination of fair value of financial assets and financial liabilities recorded on the statement of financial position for which there is no observable market price are determined using a variety of valuation techniques that includes the use of mathematical models. The valuation of financial instrument is described in Note 37 to the financial statements. The Company measures fair value using the fair value hierarchy that reflects the significance of input used in making measurements. The fair value hierarchy is also given in Note 37.3 to the financial statements.
Financial assets and financial liabilities classification
The Company's accounting policies provide scope for assets and liabilities to be classified, at the inception into
different accounting categories. The classification of financial instrument is disclosed in Note 17.
Taxation
Income taxes
Judgment is involved in determining the Company's provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognise liabilities for tax matters based on estimates of whether additional taxes will be due. If the final outcome of these tax matters results in a difference in the amounts initially recognised, such differences will impact the income tax and/or deferred income tax provisions in the period in which such determination is made.
Deferred income tax assets
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which temporary differences can be utilised. This involves judgment regarding future financial performance of a particular entity in which the deferred income tax asset has been recognised.
Defined benefit obligation
The present value of the defined benefit plan depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost / (income) for defined benefit plan include the discount rate, future salary increase rate, mortality rate, withdrawal and disability rates and retirement age. Any changes in these assumptions will impact the carrying amount of defined benefit plan. The Company determine the appropriate discount rate at the end of each financial reporting period. This is the interest rate that should be used to determine the present value of estimated future cash outflows, expected to be required to settle the defined benefit plan. In determining the appropriate discount rate, the Company considers the interest yield of long-term Government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related defined benefit plan. Other key assumptions for defined benefit plan are based in part on current market conditions as disclosed in Note 32 to the financial statements.
DIALOG FINANCE PLCNotes to the Financial Statements (Continued)
3 Significant accounting judgments, estimates and assumptions (Continued)
Estimated useful lives of property, plant and equipment (PPE) and intangible assets
The Company reviews annually the estimated useful lives of PPE and intangible assets based on factors such as business plan and strategies, expected level of usage and future technological developments. Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned. A reduction in the estimated useful lives of PPE and intangible assets would increase the recorded depreciation charge and decrease the carrying value of PPE and intangible assets.
Commitment and Contingent Liabilities
Determination of the treatment of contingent liabilities in the financial statements is based on the management's view of the expected outcome of the applicable contingency. The Company consults with legal counsel on matters related to litigation and other experts both within and outside the Company with respect to matters in the ordinary course of business.
Changes in accounting policies
New standards and amendments - applicable after 1 January 2025
The Company has applied the following amendments for the first time for their reporting period commencing 1 January 2025:
(a) Amendments to LKAS 21 The Effects of Changes in Foreign Exchange Rates - Lack of Exchangeability
The amendments specify how to assess whether a currency is exchangeable, and how to determine the exchange rate when it is not.
The amendments state that a currency is exchangeable into another currency when an entity is able to obtain the other currency within a time frame that allows for a normal administrative delay and through a market or exchange mechanism in which an exchange transaction would create enforceable rights and obligations.
An entity assesses whether a currency is exchangeable into another currency at a measurement date and for a specified purpose. If an entity is able to obtain no more than an insignificant amount of the other currency at the measurement date for the specified purpose, the currency is not exchangeable into the other currency.
The assessment of whether a currency is exchangeable into another currency depends on an entity's ability to
obtain the other currency and not on its intention or decision to do so.
When a currency is not exchangeable into another currency at a measurement date, an entity is required to estimate the spot exchange rate at that date. An entity's objective in estimating the spot exchange rate is to reflect the rate at which an orderly exchange transaction would take place at the measurement date between market participants under prevailing economic conditions.
The amendments do not specify how an entity estimates the spot exchange rate to meet that objective. An entity can use an observable exchange rate without adjustment or another estimation technique.
New standards, amendments and interpretations issued but not yet adopted in 2025 by the Company
The Company has not applied the following new and revised accounting standards that have been issued but are not yet effective for annual reporting period ending 31 December 2025.
Amendments to SLFRS 9 and SLFRS 7 - Classification and Measurement of Financial Instruments
These amendments clarify the requirements for the timing of recognition and derecognition of some financial assets and liabilities, with a new exception for some financial liabilities settled through an electronic cash transfer system. These amendments further clarify and add further guidance for assessing whether a financial asset meets the solely payments of principal and interest (SPPI) criterion.
DIALOG FINANCE PLCNotes to the Financial Statements (Continued)
4 Changes in accounting policies (Continued)
4.2 New standards, amendments and interpretations issued but not yet adopted in 2025 by the Company (Continued)
These amendments add new disclosures for certain instruments with contractual terms that can change cash flows (such as some instruments with features linked to the achievement of environment, social and governance (ESG) targets); and make updates to the disclosures for equity instruments designated at Fair Value through Other Comprehensive Income (FVOCI).
The amendments are effective for annual reporting periods beginning on or after 1 January 2026, with earlier application permitted.
The Company anticipate that the application of these amendments may have have an impact on the Company's financial statements in future periods.
SLFRS 18 Presentation and Disclosures in Financial Statements
SLFRS 18 replaces LKAS 1, carrying forward many of the requirements in LKAS 1 unchanged and complementing them with new requirements. In addition, some LKAS 1 paragraphs have been moved to LKAS 8 and SLFRS 7. Furthermore, the IASB has made minor amendments to LKAS 7 and LKAS 33 Earnings per Share.
SLFRS 18 introduces new requirements to:
present specified categories and defined subtotals in the statement of profit or loss
provide disclosures on management-defined performance measures (MPMs) in the notes to the financial statements
improve aggregation and disaggregation.
An entity is required to apply SLFRS 18 for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. The amendments to LKAS 7 and LKAS 33, as well as the revised LKAS 8 and SLFRS 7, become effective when an entity applies SLFRS 18. SLFRS 18 requires retrospective application with specific transition provisions.
The Company anticipate that the application of these amendments may have an impact on the Company's
financial statements in future periods.
SLFRS 19 Subsidiaries without Public Accountability: Disclosures
SLFRS 19 permits an eligible subsidiary to provide reduced disclosures when applying SLFRS Accounting Standards in its financial statements.
A subsidiary is eligible for the reduced disclosures if it does not have public accountability and its ultimate or any intermediate parent produces consolidated financial statements available for public use that comply with SLFRS Accounting Standards. SLFRS 19 is optional for subsidiaries that are eligible and sets out the disclosure requirements for subsidiaries that elect to apply it.
An entity is only permitted to apply SLFRS 19 if, at the end of the reporting period:
it is a subsidiary (this includes an intermediate parent)
it does not have public accountability, and
its ultimate or any intermediate parent produces consolidated financial statements available for public use that comply with SLFRS Accounting Standards.
Eligible entities can apply SLFRS 19 in their consolidated, separate or individual financial statements. An eligible intermediate parent that does not apply SLFRS 19 in its consolidated financial statement may do so in its separate financial statements. The new standard is effective for reporting periods beginning on or after 1 January 2027 with earlier application permitted.
The directors of the company do not anticipate that SLFRS 19 will be applied for purposes of the Company's
financial statements.
DIALOG FINANCE PLCNotes to the Financial Statements (Continued)
4 Changes in accounting policies (Continued)
4.2 New standards, amendments and interpretations issued but not yet adopted in 2025 by the Company (Continued)
Annual improvements to IFRS - Volume 11
Annual improvements are limited to changes that either clarify the wording in an Accounting Standard or correct relatively minor unintended consequences, oversights or conflicts between the requirements in the Accounting Standards. The 2024 amendments are to the following standards:
SLFRS 1 First-time Adoption of International Financial Reporting Standards;
SLFRS 7 Financial Instruments: Disclosures and its accompanying Guidance on implementing SLFRS 7; SLFRS 9 Financial Instruments;
SLFRS 10 Consolidated Financial Statements; and LKAS 7 Statement of Cash Flows.
These annual improvements are effective for annual periods beginning on or after 1 January 2026 with earlier application permitted.
The Company anticipate that the application of these amendments may have an impact on the Company's
financial statements in future periods.
Contracts Referencing Nature-dependent Electricity - Amendments to SLFRS 9 and SLFRS 7
The amendments apply only to contracts that reference nature-dependent electricity; the amendments:
Clarify the application of the 'own-use' requirements for in-scope contracts
Amend the designation requirements for a hedged item in a cash flow hedging relationship for in-scope contracts
Add new disclosure requirements to enable investors to understand the effect of these contracts on
a company's financial performance and cash flows
The amendments will take effect for annual reporting periods starting on or after 1 January 2026. Early adoption is allowed, but it must be disclosed. The amendments concerning the own-use exception are to be applied retrospectively, while the hedge accounting amendments should be applied prospectively to new hedging relationships designated from the initial application date. Additionally, the SLFRS 7 disclosure amendments must be implemented alongside the SLFRS 9 amendments. If an entity does not restate comparative information, it cannot present comparative disclosures.
The directors of the company anticipate that the application of these improvements may not have an impact on
the group's/company's consolidated financial statements in future periods.
Amendment to LKAS 21 - Translation to a Hyperinflationary Presentation Currency
These narrow-scope amendments specify the translation procedures for an entity whose presentation currency is that of a hyperinflationary economy. The entity applies the amendments if:
its functional currency is that of a non-hyperinflationary economy and it is translating its results and financial position into the currency of a hyperinflationary economy; or
it is translating into the currency of a hyperinflationary economy the results and financial position of a foreign operation whose functional currency is that of a non-hyperinflationary economy.
The amendments aim to improve the usefulness of the resulting information in a cost-effective manner. Developed in response to stakeholder feedback, these amendments are expected to reduce diversity in practice and provide a clearer basis for reporting in a hyperinflationary currency.
The amendments are effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted.
The directors of the company anticipate that the application of these improvements may not have an impact on
the group's/company's consolidated financial statements in future periods.
DIALOG FINANCE PLCNotes to the Financial Statements (Continued)
Summary of material accounting policies
The accounting policies set out below have been consistently applied the accounting policies to all periods presented in these financial statements.
Financial instruments - initial recognition, classification and subsequent measurement
Date of recognition
All financial assets and liabilities are initially recognised when and only when the company becomes a party to the contractual provisions of the instrument. This includes "regular way trades": purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the marketplace.
Initial measurement of financial instruments
The classification of financial instruments at initial recognition depends on their contractual terms and the business model for managing the instruments. Financial instruments are initially measured at their fair value plus or minus in the cost of financial asset not at fair value through profit and loss (FVTPL), the transaction costs that are directly attributable to the acquisition of the financial assets. Transaction cost of financial assets at FVTPL are expended in the profit and loss.
Classification and subsequent measurement of financial assets
The Company classifies its financial assets in the following measurement categories;
Amortised cost,
Fair value through other comprehensive income (FVOCI) or
Fair value through profit or loss. (FVTPL).
Financial assets at amortised cost:
The Company only measures loans, receivables, and other financial investments, at amortised cost if both of the following conditions are met:
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows,
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal.
The details of the above conditions are outlined below.
Business model assessment
The Company determines its business model at the level that best reflect how it manages groups of financial assets to achieve its business objective.
The Company's business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:
How the performance of the business model and the financial assets held within that business model
are evaluated and reported to the entity's key management personnel.
The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed.
How managers of the business are compensated (for example, whether the compensation is based on the fair values of the assets managed or on the contractual cash flows collected)
The expected frequency, value and timing of sales are also important aspects of the Company's
assessment
DIALOG FINANCE PLCNotes to the Financial Statements (Continued)
Summary of material accounting policies (Continued)
Financial instruments - initial recognition, classification and subsequent measurement (Continued)
Classification and subsequent measurement of financial assets (Continued)
Financial assets at amortised cost (Continued)
The business model assessment is based on reasonably expected scenarios without taking "worst case" or "stress case" scenarios into account. If cash flows after initial recognition are realised in a way that is different from the Company's original expectations, the Company does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased financial assets going forward.
The SPPI test
As a second step of its classification process, the Company assesses the contractual terms of the financial assets to identify whether they meet the SPPI test.
For the purpose of this test,
'Principal' is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset (for example, if there are repayments of principal or amortisation of the premium / discount).
'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, as well as profit margin.
The most significant elements of interest within a lending arrangement are typically the consideration for the time value of money and credit risk. To make the SPPI assessment, the Company applies judgement and considers relevant factors such as the currency in which the financial asset is denominated, and the period for which the interest rate is set.
In contrast, contractual terms of that introduce a more than de minimise exposure to risks or volatility in the contractual cash flows that are unrelated to a basic lending arrangement do not give rise to contractual cash flows that are solely payments of principal and interest on the amount outstanding. In such cases, the financial asset is required to be measured at FVTPL.
Financial assets at FVOCI
Upon initial recognition, the Company occasionally elects to classify irrevocably some of its equity investments as equity instruments at FVOCI when they meet the definition of equity under LKAS 32 'Financial Instruments: Presentation' and are not held for trading. Such classification is determined on an instrument-by instrument basis.
Gains and losses on these equity instruments are never recycled to profit. Dividends are recognised in profit or loss as other operating income when the right of the payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the instrument, in which case, such gains are recorded in OCI. Equity instruments at FVOCI are not subject to an impairment assessment.
Currently, the Company has recorded its non- quoted equity investments FVOCI at fair value. The details of equity instruments at FVOCI are given in Note 23 to the financial statements.
Financial assets at fair value through profit or loss
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss.
Currently, the Company has recorded its quoted equity investments at fair value through profit or loss. The details of quoted equity instruments are given in Note 21 to the financial statements.
DIALOG FINANCE PLCNotes to the Financial Statements (Continued)
Summary of material accounting policies (Continued)
Financial instruments - initial recognition, classification and subsequent measurement (Continued)
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in liabilities in the statement of financial position.
Details of cash and cash equivalents are given in Note 18 to the financial statements.
Classification and subsequent measurement of financial liabilities
Financial instruments issued by the Company, that are not designated at fair value through profit or loss, are classified as liabilities under 'Due to customers (Deposits from customers) and other borrowings', where the substance of the contractual arrangement results in the Company having an obligation either to deliver cash or another financial asset to the holder, or to satisfy the obligation other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of own equity shares.
After initial measurement, debt issued, and other borrowings are subsequently measured at amortised cost using the Effective intertest rate (EIR). Amortised cost is calculated by taking into account any discount or premium on the issue and costs that are an integral part of the EIR.
Reclassifications of financial assets and financial liabilities
The Company does not reclassify its financial assets subsequent to their initial recognition, apart from the exceptional circumstances in which the Company acquires, disposes of, or terminates a business line. Classification of financial liabilities is changed where the business model is changed. The Company did not reclassify any of its financial assets or liabilities in for the financial year ended 31 December 2025.
Derecognition of financial assets and financial liabilities
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when the rights to receive cash flows from the financial asset have expired. The Company also derecognises the financial asset if it has both transferred the financial asset and the transfer qualifies for derecognition.
The Company has transferred the financial asset, if and only if, either:
the Company has transferred its contractual rights to receive cash flows from the financial asset or,
it retains the rights to cash flows but has assumed an obligation to pay the received cash flows in full without
material delay to a third party under a 'pass-through' arrangement.
Pass-through arrangements are transactions whereby the Company retains the contractual rights to receive the cash flows of a financial asset (the 'original asset'), but assumes a contractual obligation to pay those cash flows to one or more entities (the 'eventual recipients'), when all of the following three conditions are met:
The Company has no obligation to pay amounts to the eventual recipients unless it has collected equivalent amounts from the original asset, excluding short-term advances with the right to full recovery of the amount lent plus accrued interest at market rates.
The Company cannot sell or pledge the original asset other than as security to the eventual recipients
The Company has to remit any cash flows it collects on behalf of the eventual recipients without material delay. In addition, the Company is not entitled to reinvest such cash flows, except for investments in cash or cash equivalents including interest earned, during the period between the collection date and the date of required remittance to the eventual recipients.
Notes to the Financial Statements (Continued)
Summary of material accounting policies (Continued)
Financial instruments - initial recognition, classification and subsequent measurement (Continued)
Derecognition of financial assets and financial liabilities (Continued)
Derecognition of financial assets (Continued)
A transfer only qualifies for derecognition if either:
The Company has transferred substantially all the risks and rewards of the asset or,
The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
The Company considers control to be transferred if and only if, the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without imposing additional restrictions on the transfer.
On derecognition of a financial asset other than an equity instrument designated as fair value through other comprehensive income, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.
When the Company has neither transferred nor retained substantially all the risks and rewards and has retained control of the asset, the asset continues to be recognised only to the extent of the Company's continuing involvement, in which case, the Company also recognises as associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration the Company could be required to pay.
If continuing involvement takes the form of a written or purchased option (or both) on the transferred asset, the continuing involvement is measured at the value the Company would be required to pay upon repurchase. In the case of a written put option on an asset that is measured at fair value, the extent of the entity's continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference between the carrying value of the original financial liability and the consideration paid is recognised in profit or loss.
DIALOG FINANCE PLCNotes to the Financial Statements (Continued)
5 Summary of material accounting policies (Continued)
Determination of fair value
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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
in the principal market for the asset or liability, or
in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - The fair value of financial instruments traded in active markets (such as publicly traded equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1.
Level 2 - The fair value of financial instruments that are not traded in an active market (for example, over-the-counter securities) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3 - If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The disclosure of fair value of financial instruments is disclosed in Note 37 to the financial statements.
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