Prospectus - Listed, Rated, Unsecured, Senior, Redeemable Debenture Issue 2025

HAY LEY S PLC

DEBENTURE ISSUE 2025

JOINT MANAGERS TO THE ISSUE

HAYLEYS GROUP SERVICES (PVT) LTD

The CSE has taken reasonable care to ensure full and fair disclosure of information in this Prospectus. However, the CSE assumes no responsibility for accuracy of the statements made, opinions expressed or reports included in this Prospectus. Moreover, the CSE does not regulate the pricing of the Debentures issued herein. Please note that the company is bound by the enforcement rules set out in the CSE Listing Rules (as applicable).

The delivery of this Prospectus shall not under any circumstance constitute a representation or create any implication or suggestion that there has been no material change in the affairs of the Company since the date of this Prospectus. If there is a material change, such material change will be disclosed to the market.

If you are in doubt regarding the contents of this document or if you require any clarification or advice in this regard, you should consult the Managers to the issue, your Stockbroker, Lawyer or any other Professional Advisor.

This Prospectus has been prepared from information provided by Hayleys PLC (hereinafter referred to as the "Company", "HAYL" or the "Issuer").

Hayleys PLC and its Directors confirm that to the best of their knowledge and belief this Prospectus contains all information regarding the Company and Debentures offered herein which is material; such information is true and accurate in all material aspects and is not misleading in any material respect; any opinions, predictions or intentions expressed in this Prospectus on the part of the Company are honestly held or made and are not misleading in any material respect; this Prospectus contains all material facts and presents them in a clear fashion in all material respects and all proper inquiries have been made to ascertain and to verify the foregoing. The Company accepts responsibility for the information contained in this Prospectus.

No person has been sanctioned to make any representations not contained in this Prospectus in connection with this Offer for Subscription of the Company's Debentures. If such representations are made, they must not be relied upon as having been authorized. Neither the delivery of this Prospectusnor any sale made in the Offering shall, under any circumstances, create an implication that there has not been any change in the facts set forth in this Prospectus or in the affairs of the Company since the date of this Prospectus.

Investors should be informed that the value of investments can vary and that past performance is not necessarily indicative of future performance. In making such investment decisions, prospective investors must rely on their knowledge, examination and assessments on Hayleys PLC and the terms of the Debentures issued (knowledge, perception together with their own examination and assessment on Hayleys PLC and the terms and conditions of the Debentures issued) including risks associated.

The delivery of this Prospectus shall not under any circumstances constitute a representation or create any implication or suggestion, that there has been no material change in the affairs of the Company since the date of this Prospectus.

A copy of this Prospectus has been delivered for registration to the Registrar General of Companies in Sri Lanka in accordance with the Companies Act No. 07 of 2007 (the "Companies Act"). The following documents were attached to the copy of the Prospectus delivered to the Registrar General of Companies in Sri Lanka:

1. The written consent of the Auditors and Reporting Accountants for the inclusion of their name in the Prospectus as Auditors and Reporting Accountants to the Issue and to the Company.

2. The written consent of the Rating Agency for the inclusion of their name in the Prospectus as Rating Agency to the Issue and to the Company.

3. The written consent of the Trustee to the Issue for the inclusion of their name in the Prospectus as Trustee to the Issue.

4. The written consent of the Bankers to the Issue for the inclusion of their name in the Prospectus as Bankers to the Issue.

5. The written consent of the Registrars to the Issue for the inclusion of their name in the Prospectus as Registrars to the Issue.

6. The written consent of the Lawyers to the Issue for the inclusion of their name in the Prospectus as Lawyers to the Issue.

7. The written consent of the Joint Managers to the Issue for the inclusion of their name in the Prospectus as Joint Managers and to the Issue.

8. The written consent of the Joint Placement Agents to the Issue for the inclusion of their name in the Prospectus as Joint Placement Agents to the Issue.

9. The declaration made and subscribed to, by each of the Directors of the Company herein named as a Director, jointly and severally confirming that each of them have read the provisions of the Companies Act and the CSE Listing Rules relating to the Issue of the Prospectus and that those provisions have been complied with.

The said Auditors and Reporting Accountants to the Issue, Lawyers to the Issue, Trustee to the Issue, Bankers to the Issue, Joint Managers to the Issue, Joint Placement Agents to the Issue, Registrars to the Issue and Rating Agency to the Issue have not, before the delivery of a copy of the Prospectus for registration with the Registrar General of Companies in Sri Lanka, withdrawn such consent.

This Prospectus has not been registered with any authority outside of Sri Lanka. Non-resident investors may be affected by the laws of the jurisdiction of their residence. Such investors are responsible to comply with the laws relevant to the country of residence and the laws of Sri Lanka, when making the investment.

It is important that this Prospectus is read carefully prior to making an investment decision. For information concerning certain risk factors, which should be considered by prospective investors, see "Risks Related to the Debentures" in Section 5.19 of this Prospectus.

The Debentures are issued solely on the basis of the information contained and representations made in this Prospectus. No dealer, sales person, individual or any other outside party has been authorized to give any information or to make any representation in connection with the Issue other than the information and representations contained in this Prospectus and if given or made such information or representations must not be relied upon as having been authorized by the Company.

Any statements included in this Prospectus that are not statements of historical fact constitute "Forward Looking Statements". These can be identified by the use of forward-looking terms such as "expect", "anticipate", "intend", "may", "plan to", "believe", "could" and similar terms or variations of such terms. However, these words are not the exclusive means of identifying Forward Looking Statements. As such, all or any statements pertaining to expected financial position, business strategy, plans and prospects of the Company are classified as Forward-Looking Statements.

Such Forward Looking Statements involve known and unknown risks, uncertainties and other factors including but not limited to regulatory changes in the sectors in which the Company operates and its ability to respond to them, the Company's ability to successfully adapt to technological changes, exposure to market risks, general economic and fiscal policies of Sri Lanka, inflationary pressures, interest rate volatilities, the performance of financial markets both globally and locally, changes in domestic and foreign laws, regulation of taxes and changes in competition in the industry and further uncertainties that may or may not be in the control of the Company.

Such factors may cause actual results, performance and achievements to materially differ from any future results, performance or achievements expressed or implied by Forward Looking Statements herein. Forward Looking Statements are also based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future.

Given the risks and uncertainties that may cause the Company's actual future results, performance or achievements to materially differ from that expected, expressed or implied by Forward Looking Statements in this Prospectus, investors are advised not to place sole reliance on such statements.

The financial statements of the Company and currency values of economic data or industry data in a local context will be expressed in Sri Lanka Rupees. References in the Prospectus to "LKR", "Rupees" or "Rs." are to the lawful currency of Sri Lanka.

Certain numerical figures in this Prospectus have been subject to rounding adjustments, accordingly numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

All Applicants should indicate in the Application for Debentures, their Central Depository Systems (Private) Limited (CDS) account number.

In the event name, address or NIC number/passport number/company number of the Applicant mentioned in the Application Form differ from the name, address or NIC number/passport number/company number as per the CDS records, the name, address or NIC number/passport number/company number as per the CDS records will prevail and be considered as the name, address or NIC number/passport number/company number of such Applicant. Therefore, Applicants are advised to ensure that the name, address or NIC number/passport number/company number mentioned in the Application Form tally with the name, address or NIC number/passport number/company number given in the CDS account as mentioned in the Application Form.

As per the Directive of the Securities & Exchange Commission of Sri Lanka made under Circular No.08/2010 dated 22ndNovember 2010 and Circular No.13/2010 issued by the CDS dated 30thNovember 2010, all Debentures are required to be directly deposited in to the CDS. To facilitate compliance with this directive, all Applicants are required to indicate their CDS account number.

In line with this directive, THE DEBENTURES ALLOTTED TO AN APPLICANT WILL BE DIRECTLY DEPOSITED IN THE

Debentures will not be allotted to Applicants who have not indicated their CDS account details in the Application Form. Applications which do not specify a CDS account number will be rejected.

Applicants who wish to open a CDS account, may do so through a Trading Participants of the CSE as set out in Annexure II or through any Custodian Bank as set out in Annexure III of this Prospectus.

If the CDS account number indicated in the Application Form is found to be inaccurate/incorrect or there is no CDS number indicated, the Application will be rejected and no allotments will be made.

1. CORPORATE INFORMATION 12

2. RELEVANT PARTIES TO THE ISSUE 13

3. ABBREVIATIONS 14

4. GLOSSARY TERMS RELATED TO THE ISSUE 15

5. PRINCIPAL FEATURES OF THE LISTED RATED UNSECURED SENIOR REDEEMABLE DEBENTURES 17

   1. INVITATION TO SUBSCRIBE 17

   2. SUBSCRIPTION LIST 17

   3. TYPE OF DEBENTURES 18

   4. OBJECTIVES OF THE ISSUE AND SPECIFIC RISKS RELATING TO THE OBJECTIVES 18

   5. PAYMENT OF INTEREST 21

   6. APPLICATION OF TAX ON INTEREST PAYMENTS 21

   7. LISTING 21

   8. PAYMENT OF PRINCIPAL AND INTEREST 21

   9. REDEMPTION 22

   10. TRUSTEES TO THE ISSUE 22

   11. COST OF THE ISSUE 23

   12. UNDERWRITING ARRANGEMENTS 23

   13. BROKERAGE FEE 23

   14. RIGHTS AND OBLIGATIONS OF DEBENTURE HOLDERS 23

   15. BENEFITS OF INVESTING IN DEBENTURES OFFERED BY THE COMPANY 24

   16. CREDIT RATING 24

   17. TRANSFER OF DEBENTURES 24

   18. INSPECTION OF DOCUMENTS 25

   19. RISKS INVOLVED IN INVESTING IN THE DEBENTURES 25

6. APPLICATION PROCEDURE 27

   1. ELIGIBLE APPLICANTS 27

   2. HOW TO APPLY 27

   3. PAYMENT OF APPLICATION MONIES 30

   4. REJECTION OF APPLICATIONS 32

   5. BANKING OF PAYMENTS 33

   6. RETURNING OF MONIES OF REJECTED APPLICATIONS 33

   7. ALLOTMENT OF DEBENTURES /BASIS OF ALLOTMENT 33

   8. REFUNDS ON APPLICATIONS 33

   9. SUCCESSFUL APPLICANTS AND CDS LODGMENT 34

   10. DECLARATION TO THE CSE AND SECONDARY MARKET TRADING 34

7. COMPANY INFORMATION 35

   1. OVERVIEW 35

   2. STATED CAPITAL 35

   3. MAJOR SHAREHOLDERS 35

8. FINANCIAL INFORMATION 36

   1. DETAILS OF THE BORROWINGS OF HAYLEYS PLC 36

   2. LITIGATION, DISPUTES AND CONTINGENT LIABILITIES 36

   3. FINANCIAL RATIOS OF HAYLEYS PLC 37

   4. DEBT SERVICING DETAILS OF THE ISSUER 37

   5. ACCOUNTANT'S REPORT AND FIVE-YEAR SUMMARY OF FINANCIAL STATEMENTS 38

9. STATUTORY DECLARATIONS 49

   1. STATUTORY DECLARATION BY THE DIRECTORS 49

   2. STATUTORY DECLARATION BY THE JOINT MANAGERS TO THE ISSUE 50

ANNEXURE I: CREDIT RATING REPORT 51

ANNEXURE II: COLLECTION POINTS 61

ANNEXURE III - CUSTODIAN BANKS 64

1. CORPORATE INFORMATION

   The Company/ Issuer	Hayleys PLC
   Legal Form of the Company	Hayleys PLC is a Listed Company domiciled in Sri Lanka incorporated under The Companies Ordinance, No 51 of 1938. The Company were-registered under the new Companies Act No. 07 of 2007.
   Date of Incorporation	31stof May 1952
   Company Registration No.	PQ 22
   Issuer Rating	"AAA (lka) Stable" by Fitch Ratings Lanka Limited
   Place of Incorporation	Colombo, Sri Lanka
   Registered/Business Office	Hayleys PLC No. 400, Deans Road, Colombo 10. Tel: +94 11 2 627 000
   Company Secretaries	Hayleys Group Services (Private) Limited No. 400, Deans Road, Colombo 10. Tel: +94 11 262 7650
   Auditors to the Company	Ernst & Young, Chartered Accountants Rotunda Towers, No. 109, Galle Road, Colombo 3. Tel: +94 11 2 463 500
   Credit Rating Agency	Fitch Ratings Lanka Limited 15-02, East Tower, World Trade Centre Colombo 01. Tel: +94 11 2 541 900
   Board of Directors	Mr. A.M. Pandithage Chairman & Chief Executive Mr. K.D.D. Perera Co-Chairman - Non Executive Director Mr. S. C. Ganegoda Executive Director Mr. H.S.R. Kariyawasan Executive Director Mr. L.R.V. Waidyaratne Executive Director Ms. J. Dharmasena Executive Director Mr. R. J. Karunarajah Executive Director Dr. H. Cabral PC Non-Executive Director Mr. M.Y.A. Perera Senior Independent Non-Executive Director Mr. K.D.G. Gunaratne Non-Executive Director Mr. T.A.B. Speldewinde Independent Non-Executive Director Mr. P.Y.S. Perera Independent Non-Executive Director Mr. A.J. Alles Independent Non-Executive Director

2. RELEVANT PARTIES TO THE ISSUE

   Joint Managers to the Issue	Commercial Bank of Ceylon PLC Ground Floor, Hemas Building No 36, Sir Razik Fareed Mawatha, P.O. Box 856, Colombo 01. Tel: +94 11 248 6848
   	Hayleys Group Services (Private) Limited No. 400, Deans Road, Colombo 10. Tel: +94 11 262 7661
   Joint Placement Agents to the Issue	Commercial Bank of Ceylon PLC Ground Floor, Hemas Building No 36, Sir Razik Fareed Mawatha, P.O. Box 856, Colombo 01. Tel: +94 11 248 6848
   	HNB Investment Bank (Pvt) Ltd No. 53, Dharmapala Mawatha, Colombo 03 Tel: +94 11 2 206 206
   Lawyers to the Issue	Heritage Partners 4, Heritage House Malalasekara Pedesa, Colombo 7. Tel: +94 11 7 550 096
   Registrar to the Issue	SSP Corporate Services (Pvt) Ltd 101, Inner Flower Road, Colombo 03, Tel: +94 11 2 573 894
   Bankers to the Issue	Commercial Bank of Ceylon PLC "Commercial House" No.21, Sir Razik Fareed Mawatha, P.O. Box 856, Colombo 01, Sri Lanka. Tel: +94(0)11 2 486 494/6
   Trustee to the Issue	People's Bank Head Office 75, Chittampalam A Gardiner Mawatha, Colombo 2 Tel: +94 11 248 1481
   Auditors and	Ernst & Young, Charted Accountants
   Reporting	Rotunda Towers,
   Accountants to the	No. 109, Galle Road, Colombo 3.
   Issue	Tel: +94 11 2 463 500
   Rating Agency to the	Fitch Ratings Lanka Limited
   Issue	15-02, East Tower,
   	World Trade Centre, Colombo 01.
   	Tel: +94 11 2 541 900

3. ABBREVIATIONS

   AER	Annual Effective Rate
   ATS	Automated Trading System
   AWPLR	Average Weighted Prime Lending Rate
   CBSL	Central Bank of Sri Lanka
   CDS	Central Depository Systems (Private) Limited
   CEFTS	Common Electronic Fund Transfer Switch
   CSE	Colombo Stock Exchange
   FCBU	Foreign Currency Banking Units
   FY	Financial Year
   HAYL	Hayleys PLC
   IIA	Inward Investment Account
   LCB	Licensed Commercial Bank
   NIC	National Identity Card
   POA	Power of Attorney
   RTGS	Real Time Gross Settlement
   Rs./LKR	Sri Lankan Rupees
   SEC	Securities and Exchange Commission of Sri Lanka
   SLIPS	Sri Lanka Interbank Payment System
   USD	US Dollar
   VAT	Value Added Tax
   WHT	Withholding Tax
   YoY	Year on Year

4. GLOSSARY TERMS RELATED TO THE ISSUE

   Applicant/s	Any investor who submits an Application Form under this Prospectus
   Application Form/Application	The Application Form that constitutes part of this Prospectus through which the investors may apply for the Debentures in issue
   AWPLR	Average Weighted Prime Lending Rate
   Board/Board of Directors/Directors	The Board of Directors of Hayleys PLC
   Closure Date	The Date of Closure of the Subscription List as set out in Section 5.2 of this Prospectus
   Date of Allotment	The date on which the Debentures will be allotted by the Company to Applicants subscribing hereto
   Date of Redemption	The date on which Redemption of the Debentures will take place as referred to in Section 5.9.
   Debentures	Listed Rated Unsecured Senior Redeemable Debentures to be issued pursuant to this Prospectus
   Debenture Holder(s)	Any person who is for the time being the holder of the Debentures and includes his/her respective successors in title
   Entitlement Date	The Market day immediately preceding the Interest Payment Date or Date of Redemption on which a Debenture Holder would need to be recorded as being a Debenture Holder on the list of Debenture Holders provided by the CDS to the Company in order to qualify for payment of any interest or any redemption proceeds.
   Interest Determination Date	The Date of Allotment in respect of the first Interest Period and the market date immediately prior to the first date of each Interest Period in respect of each subsequent Interest Period
   Interest Payment Date	The dates on which the payments of interest in respect of the Debentures shall fall due which shall be six (06) months from the Date of Allotment and every six (06) months therefrom of each year from the Date of Allotment until the Date of Redemption and includes the Date of Redemption. Interest Payments will be made no later than three (03) Market Days from the due date of interest (Excluding such due date of interest).
   Interest Period	The six (06) month period from the date immediately succeeding a particular Interest Payment Date and ending on the next Interest Payment Date (inclusive of the aforementioned commencement date and end date) and shall include the period commencing from the Date of Allotment and ending on the first Interest Payment Date (inclusive of the aforementioned commencement date and end date) and the period from the date immediately succeeding the last Interest Payment Date before the Date of Redemption and ending on the date immediately preceding the Date of Redemption (inclusive of the aforementioned commencement date and end date).
   Issue	The offer of Debentures pursuant to this Prospectus
   Issue Price	Rupees One Hundred (LKR 100/-) per each Debenture
   Local Time	Sri Lanka Time (UTC+05:30)
   Market Day	Any day on which trading takes place at the CSE
   Non-Resident(s)	Persons resident outside Sri Lanka including global funds, regional funds, country funds, investment funds and mutual funds established outside Sri Lanka

   One Year Treasury Bill Rate	The simple average of the 364 days Treasury Bill auction rates (net of tax) of the four preceding weeks immediately prior to an Interest Determination Date as published by the Central Bank of Sri Lanka
   Prospectus	This Prospectus dated 25thApril 2025
   Redemption	The repayment of Principal at maturity together with any interest accruing up to that time.
   Senior	In relation to the Debentures, senior means the claims of the Debenture Holders shall in the event of winding up of the Company rank after all the claims of secured creditors and preferential claims under any Statutes governing the Company but pari passu to the claims of unsecured creditors of the Company and shall rank in priority to and over any subordinated debt of the Company and the ordinary and preference shareholder/s of the Company.
   Trustee	Peoples Bank
   Trust Deed	Trust Deed dated 23rdApril 2025 between Hayleys PLC and the Trustee.
   The Company/ Issuer/HAYL	Hayleys PLC
   Unsecured	Repayment of the Principal Sum and payment of interest on the Debentures are not secured by a charge on any assets of the Issuer.
   Working Day	A day (other than a Saturday or Sunday or any statutory holiday) on which licensed commercial banks are open for business in Sri Lanka

5. PRINCIPAL FEATURES OF THE LISTED RATED UNSECURED SENIOR REDEEMABLE DEBENTURES
   1. INVITATION TO SUBSCRIBE

      The Board of Directors of Hayleys PLC (hereinafter referred to as the "Board") by resolutions dated 23rdDecember 2024 and 6thMarch 2025 resolved to raise a sum of up to Rupees Five Billion (LKR 5,000,000,000/-) by an initial Issue of up to Fifty Million (50,000,000) Debentures each with a Par Value of Sri Lankan Rupees One Hundred (LKR 100/-) and to raise a further sum of Rupees Two Billion (LKR 2,000,000,000/-) by an issue of further Twenty Million (20,000,000) Debentures, in the event of an over subscription of the initial Issue.

      As such a maximum amount of Rupees Seven Billion (LKR 7,000,000,000/-) would be raised by the issue of a maximum of Seventy Million (70,000,000) Debentures each with the Par Value of Sri Lankan Rupees One Hundred (LKR 100/-).

      Hayleys invites Applications for Debentures which will rank equal and pari passu with each other without any preference or priority of any one or more than over the others except for the Rate of Interest, Date of Redemption and Type of interest as more fully described in Section 5.5 of this Prospectus. The claims of the Debenture Holders shall in the event of winding up of the Company rank after all the claims of secured creditors and preferential claims under any Statutes governing the Company but pari passu to the claims of unsecured creditors of the Company and shall rank in priority to and over any subordinated debt of the Company and the claims and rights of the preference and ordinary shareholder/s of the Company.

      The Debentures do not carry an option to be converted to ordinary shares or any other type of security.

      It is the intention of the Company to list the Debentures on the CSE. The CSE has given its in-principle approval for the listing of the Debentures on the CSE. However, CSE reserves the right to withdraw such approval, in the circumstances set out in Rule 2.3 of the Listing Rules of the CSE.

   2. SUBSCRIPTION LIST

      The subscription list for the Listed, Rated, Unsecured, Senior and Redeemable Debentures pursuant to this Prospectus will open at 9.00 a.m. on 05thMay 2025 and shall remain open for Fourteen (14) Market Days until closure at 4.30 p.m. on 26thMay 2025.

      However, the subscription list will be closed on an earlier date at 4.30 p.m. with notification to the CSE on the occurrence of the following:

      • The maximum of Seventy Million (70,000,000) Debentures being fully subscribed; or

      • The Board of Directors of the Company decides to close the Issue upon the initial Issue of Fifty Million (50,000,000) Debentures becoming fully subscribed.

        In the event the Board of Directors of the Company decides to exercise the option to issue further up to Twenty Million (20,000,000) Debentures [having subscribed the initial Issue of Fifty Million (50,000,000) Debentures] but subsequently decides to close the subscription list upon part of the further Issue of Twenty Million (20,000,000) Debentures becoming subscribed, such decision is to be notified to the CSE on the day such decision is made and the subscription list will be closed on the following Market Day at 4.30 p.m.

        In the event the Board of Directors of the Company decides to close the Debenture Issue without the full subscription of the initial Issue of Fifty Million (50,000,000) Debentures, such decision is to be notified to the

        CSE on the day such decision is made and the subscription list will be closed on the following Market Day at 4.30 p.m.

        Applications may however be made forthwith in the manner set out in Section 6.0 of this Prospectus and accordingly, duly completed Application Forms will be accepted by Joint Managers and Joint Placement Agents to the Issue, Registrars to the Issue or by any Trading Participants firm of the CSE as set out in the Collection Points of Annexure II of this Prospectus.

        Applications sent by post or courier or delivered to any collection point set out in Annexure II of this Prospectus will be accepted in terms of Section 6.3.

   3. TYPE OF DEBENTURES

      The Issue consists of three types of Debentures, i.e. Debentures with fixed and floating coupon rates each with a par value of Rupees One Hundred (LKR 100/-).

      Type of Debentures	Type of Interest	Tenure	Interest Rate (Per annum)	Annual Effective Rate (AER)	Interest Payment frequency
      Type A	Fixed Rate	3 years	10.50% p.a.	10.77% p.a.	Semi- annually
      Type B	Fixed Rate	5 years	11.15% p.a.	11.46% p.a.	Semi- annually

      Type C

      Floating Rate

      5 years

      One year Treasury Bill Rate + 2.00% p.a. [with a floor of 8.50%

      p.a. and a cap of 12.50% p.a.]

      N/A Semi- annually

      The maximum amount to be raised through Debentures of Type A, B and C will not exceed LKR 7,000 Million and the amounts to be raised through each Type of Debentures will depend on the Applications received for each Type of Debenture. As authorized by the Board of Directors of the Company via the board resolution dated 23rdDecember 2024, in the event of an oversubscription, the basis of allotment will be decided by Hayleys Group Services (Private) Limited (led by Strategic Business Development Unit of the Company). The amount allotted for each Type of the Debenture will be subsequently disclosed through a market announcement.

   4. OBJECTIVES OF THE ISSUE AND SPECIFIC RISKS RELATING TO THE OBJECTIVES

The funds generated from the Debenture Issue will be utilized for the refinancing of short-term debt facilities of the Company with medium term funds immediately upon the allotment of the Debentures and receipt of the funds by the Company. .

These short-term debt facilities include short term loans and overdrafts obtained from banks for working capital purposes. By settling these short-term obligations and refinancing the same via medium term funds, the Company will be able to minimize its reliance on financial institutions for the financing of the working capital requirements while mitigating interest rate risk and liquidity risk due to market volatilities. The gearing ratio of the Company prior to the Issue was 0.73x as of 31stDecember 2024. This is expected to remain unchanged following the Debenture Issue.

The Company is not required to obtain any approvals for the Issue and the objectives of the issue from any regulator other than the CSE.

The Company will utilize LKR 5,000 million raised through the initial Issue of the Debenture to settle short-term debt facilities to the value of LKR 5,000 million. These short-term debt facilities are continuously drawn down on a monthly/quarterly/bi-annual recurring basis to finance the working capital needs of the Company and the interest rates applicable are based on the prevailing market interest rates at the time of renewing the facilities. The said facilities can be settled at the discretion of the Company at any time without any penalty charges. The Company will identify the particular facilities for settlement at the time of settlement considering the quantum of the facilities involved, the terms and conditions offered by the banks, the maturity pattern of the facilities and the requirement to free-up facilities to meet future funding requirements.

The short-term debt facilities (of the Company) as of 31stDecember 2024 amounts to LKR 9,021 million and of which LKR 5,000 Million will be settled through the funds raised via the initial Issue of the Debentures. Accordingly, outstanding short term debt facilities obtained for working capital purposes post the abovementioned settlement will be LKR 4,021 million.

The Company intends to utilize the funds raised through the oversubscription option of LKR 2,000 million (if exercised) to settle short term debt facilities to the value of LKR 2,000 million from the remaining pool of over LKR 4,021 million outstanding short term debt facilities mentioned above. The specific obligations to be settled through the proceeds from the oversubscription option will be selected based on the interest rates of these facilities at the time of settlement and the due date. These facilities can be settled at any time at the discretion of the Company without any penalty charges.

The Company will not be settling any related party debt from the proceeds of the Debenture Issue.

In the event that this Debenture Issue is under subscribed, the Company will prioritize refinancing the abovementioned debt facilities based on the obtained date and applicable interest rates related to particular facilities. Accordingly, the higher interest paying facility/s would be prioritized to be repaid to the extent of the funds raised from this Debenture Issue

All the above-mentioned settlement of debt facilities will be affected by the Company immediately upon the allotment of the Debentures and receipt of the funds by the Company.

The breakdown of the total short-term and long-term loans of the Company as per the Unaudited Interim Financials of 31stDecember 2024 are given below:

The short-term debt facilities mentioned above include facilities obtained from multiple lenders and this comprises of multiple facilities obtained from a single lender as well. However, identifying the specific date of obtaining each short-term debt facility is not practical considering the fact that these facilities are continuously drawn down and settled on a monthly/quarterly/bi-annual on a recurring basis.