Annual Report as at 31st March 2025

Hela Apparel Holdings PLC | Annual Report 2024/25

CONTENTS 1 2 3 4 5 6

Annual Report 2024/25 | Hela Apparel Holdings PLC 1

ABOUT THIS REPORT

This is the fourth Annual Report of Hela Apparel Holdings PLC published following the Company's listing on the Colombo Stock Exchange in February 2022, and presents an overview of its performance during the financial year ended 31 March 2025. The Report also provides an assessment of the Company's operating landscape, governance practices, risk management, and proactive response to the evolving market dynamics.

SCOPE AND BOUNDARY

This Report covers the operations of Hela Apparel Holdings PLC (hereinafter referred to as "the Company") and its subsidiaries and equity-accounted investees

(hereinafter referred to as "Hela", "the Hela Group" or "the Group") for the period from 1 April 2024 to 31 March

2025.

It provides an overview of the Hela Group's performance, encompassing both financial and non-financial information. It also highlights the Group's core business - delivering sustainable, ethical, and innovative apparel solutions - and showcases its global reach. The Group adopts an annual reporting cycle and there have been no major restatements of financial or non-financial information unless otherwise stated.

The Hela Group is currently organised into two reportable segments, the Private Label Manufacturing Division (hereafter referred to as the "PLMD") and the Brand Licensing Division (hereafter referred to as the "BLD").

Given this operational structure, the non-financial information related to each division is presented separately. In addition, the PLMD ceased manufacturing operations in Ethiopia as of December 2024 and, as such, the non-financial information does include details of this operation unless otherwise stated.

REPORT & CONTENT

The content of this Annual Report has been structured for the purpose of informing stakeholders, including

shareholders, suppliers, employees, and the wider community regarding the performance of the Hela Group in FY 2024/25, along with providing insights into its risk management and corporate governance practices.

To ensure regulatory compliance and clarity on the content presented in the Report, the Financial Statements contained herein have been prepared in accordance with the Sri Lanka Accounting Standards and in compliance with the requirements of the Companies Act No. 07 of 2007 and the Listing Rules of the Colombo Stock Exchange. The Corporate Governance Report is in accordance with the Code of Best Practice

on Corporate Governance issued jointly by the Securities & Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka.

FORWARD-LOOKING STATEMENTS

The report includes forward-looking statements regarding the Hela Group's future performance and prospects. While these statements represent judgements and future expectations at the time of preparing this report, several emerging risks, uncertainties and other important factors beyond the Group's control could materially impact the results. We do not undertake to update or revise these statements publicly in the event of a change of circumstances.

COMBINED ASSURANCE

The Hela Group applies a combined assurance model in its reporting.

The contents of this Report has been reviewed and approved by the relevant business heads, the Group CEO, and the Audit & Risk Committee before seeking the approval of the Board of Directors. The financial statements have been independently audited

by Deloitte Partners. Please refer to pages 80 to 81 for the report of the auditors.

BOARD RESPONSIBILITY

The Board of Directors of Hela acknowledges its responsibility for ensuring the completeness, accuracy and integrity of this Report. The Board confirms that it collectively reviewed the contents of the Report in

conjunction with the assurance reports obtained from internal and external assurance providers, including assessments on risk and internal controls. On this basis, the Board remains satisfied that the Annual Report for FY 2024/25 provides an accurate assessment of the Group's performance for the financial year ended 31 March 2025.This Report was approved by the Board on 5 December 2025.

FEEDBACK

We welcome your comments, suggestions and queries on this Report. Please direct your feedback by email to: investors@helaclothing.com

PDF Format

A concise Annual Report in print form

This report is available in printed form and online at https://www.helaclothing.com/

2 Hela Apparel Holdings PLC | Annual Report 2024/25

ABOUT US

Hela Apparel Holdings PLC is a socially responsible fashion conglomerate headquartered in Sri Lanka, with an expanding international footprint and a steadfast commitment to inclusivity, equity, and climate stability. With over three decades of industry expertise, the Group has evolved to operate across two strategically distinct yet synergistic divisions: the Private Label Manufacturing Division (PLMD), based in Sri Lanka with operations spanning multiple global markets; and the Brand Licensing Division (BLD), headquartered in the United Kingdom and established in January 2024.

Together, the PLMD and BLD position Hela to deliver

comprehensive apparel solutions encompassing design, sourcing, manufacturing, brand management, and distribution. This integrated model enables greater agility, vertical alignment, and an enhanced value proposition for global fashion partners. While the two divisions operate independently with their own commercial structures and teams, strategic collaborations have

unlocked mutual growth opportunities

and deepened partnerships with leading retailers and brand owners.

Hela has been a pioneer in establishing apparel manufacturing operations in Africa, operating six production facilities across Sri Lanka, Kenya, and Egypt, alongside a strong presence in key markets including the UK, European Union, and US. The Group supports

a global workforce of over 12,400 individuals, with a particular emphasis on empowering women and young people in underserved communities.

As a vocal advocate for responsible business, Hela has embedded sustainability throughout its operations.

Flagship community initiatives such as Diriliya and Diridaruwo deliver

long-term socio-economic value, while ongoing investments in renewable energy, waste reduction, and sustainable materials demonstrate

the Group's commitment to climate

resilience.

MISSION

Our mission is to help retailers create responsibly manufactured hero products by offering robust supply chain and brand management solutions that allow them to maintain optimum inventory at the most competitive retail price

PURPOSE

To provide solutions to the stakeholders we serve through the principles of our focused social capital criteria centred on equity, inclusivity, and climate stability

KEY PRINCIPLES ALIGNED WITH HELA'S FOCUS ON SOCIAL CAPITAL

INCLUSIVITY

Hela embraces diversity. We believe that a diverse workforce is a strength, and that each individual adds value to who we are as an organisation.

EQUITY

We believe in creating an environment that focuses on developing the skills and

strengths of all our employees. We continue to work towards bridging the gaps in equity across all aspects of the Company.

CLIMATE STABILITY

As an ethical and sustainable apparel manufacturer, we consider it our responsibility to ensure that our operations have the minimum negative impact on the planet.

Annual Report 2024/25 | Hela Apparel Holdings PLC 3

HELA GROUP AT A GLANCE

The complementary strengths of the Private Label Manufacturing and Brand Licensing Divisions enable the Hela Group to provide comprehensive solutions to the fashion industry, encompassing design, sourcing, manufacturing, marketing, brand management, warehousing, and distribution.

02

Specialised Business Divisions

06

Manufacturing Facilities

12,400+

Employee

Base1

03

Design

Centres

15

Licensed and Owned Brands

05

Products Showrooms

06

Country

Footprint

01

Distribution

Centre

1As of 31 March 2025

OUR GLOBAL PRESENCE

EXECUTIVE REVIEWS

Annual Report 2024/25 | Hela Apparel Holdings PLC 5

CHAIRMAN'S MESSAGE

Dear Shareholders,

In presenting the Annual Report of Hela Apparel Holdings PLC for the financial year ended 31 March 2025, we reflect on a year marked by significant challenges and pivotal transformation. As the global operating environment grows ever more volatile, the steps taken to reshape

the Hela Group during the year place resilience at the heart of its business model and, I believe, position it to deliver long-term value.

RESHAPING RESILIENCE

FY 2024/25 reinforced that global volatility is now the norm, rather than a temporary aberration. With seemingly intractable global conflicts multiplying and the international trading system undergoing significant realignment, there can be little doubt that the world is transitioning to a more multipolar system that will be marked by heightened volatility.

In this context, focusing on short-term resilience in the expectation that operating conditions will return to 'normal' is no longer sufficient. Rather, this transition demands business models that embed resilience in their foundations and position for the long-term trends that will reshape industries. This is the model we are building at Hela, and meaningful progress was made toward this goal during the year.

The most consequential step undertaken was the integration of Focus Brands as the foundation of the Group's Brand Licensing Division (BLD), following its acquisition in January 2024. This has extended the Hela Group's capabilities to brand management and licensing, allowing it to capture a greater portion of the fashion value chain and enhance demand stability.

Focus Brands was formally relaunched as Hela Brands on the first anniversary of the acquisition and has been bolstered by a revitalised management team, new brands licenses, and an optimised operational footprint. While it continues to operate

as a standalone division, our focus is on building synergies with the Private Label Manufacturing Division (PLMD) to unlock enhanced value creation and resilience for the Group. A notable example of this is our successful partnership with Tesco, an established customer of the PLMD, through which two Hela Brands labels,

Peter Werth and Fenchurch, are now being sold across Tesco stores in the UK.

We also embarked on a comprehensive restructuring of the PLMD to embed resilience into its operating model.

This included optimising our global footprint by ceasing manufacturing operations in Ethiopia and divesting two of our six Sri Lankan manufacturing facilities, while streamlining support functions to align costs with the revised structure.

These actions, though difficult - especially

in saying farewell to valued employees

- were essential for ensuring long-term competitiveness and sustainability of both the division and the broader Group.

FINANCIAL PERFORMANCE

While these initiatives lay the foundation for a more resilient future, we acknowledge that the Hela Group's financial performance fell significantly short of expectations in FY 2024/25. Consolidated revenue rose by 18.6% year-on-year to Rs. 83.4 Bn, reflecting the addition of the BLD for a full reporting period. However, operating conditions remained challenging, and the PLMD's restructuring exerted pressure on profitability. As a result, excluding non-cash impairment charges, the Group reported an operating loss of Rs. 15.7 Bn and a post-tax loss of

Rs. 22.9 Bn.

The successful completion of a rights issue raising Rs. 1.6 Bn in October 2024 provided support to the Group's balance sheet. Nevertheless, the full year financial performance has weighed on key ratios. Further measures to strengthen the balance sheet are under discussion, including the restructuring of the Group's existing bank borrowings.

STEADFAST PURPOSE & GOVERNANCE

Despite the year's difficulties, Hela remains firmly committed to its social capital purpose - focused on inclusivity, equity, and climate stability. The validation of our greenhouse gas reduction targets by the Science Based Targets Initiative was a particularly important milestone, reinforcing our role in the fashion industry's transition to net zero. The Group's community empowerment programs also continued

to positively impact our employees and their families, reflecting our unwavering commitment to responsible corporate citizenship.

As the only listed apparel company on the Colombo Stock Exchange (CSE), Hela remains a standard bearer for transparency and corporate governance in the industry. We strived to ensure compliance with the CSE's enhanced corporate governance frameworks during the year, aligning the Group's policies and Board structures accordingly.

The composition of the Board of Directors was also refreshed in FY 2024/25.

Mr. Shlomo Doron, Mr. Shesan Khan, Ms. Trisha Peries, and Mr. Patrick Schleiffer stepped down from their positions following extensive tenures. On

behalf of the Board, I would like to take this opportunity to thank each of them for the invaluable contributions they have made

to the Group. In addition, I am pleased to welcome Mr. Alexander Cockerham,

Mr. Christopher Horn, and Mr. Aruna De Silva Muthumuni, as new Directors appointed in FY 2024/25, who bring vital global expertise in retail and

manufacturing, which will be instrumental as we navigate an evolving landscape.

As part of an initiative aimed at strengthening the integration between the Private Label Manufacturing Division (PLMD) and the Brand Licensing Division (BLD) of the Group in the FY 2025/26, Mr Ray Evans, the CEO of the BLD namely Focus Brands Limited, UK was appointed

to the Board as an Executive Director with effect from 16th September 2025.

In closing, I extend heartfelt thanks to all our employees - past and present - for their unwavering resilience and commitment. I'm equally grateful to my

fellow Board members for their strategic guidance, and to our shareholders for their continued confidence. My sincere appreciation also goes to our customers, suppliers, financiers, bankers, and all other stakeholders who have stood by the Hela Group throughout this transformative year. Together, we are not merely turning a page; we are intentionally reshaping resilience, ensuring that our approach

is strategic, disciplined, and deeply embedded in our operations.

I wish to inform all the shareholders of my intention to retire from the Directorate of Hela Apparel Holdings PLC with effect from 29 December 2025. Hence, I have informed the Company that I will not be seeking re-election at the forthcoming Annual General Meeting.

A. R. Rasiah

Chairman

5 December 2025

6 Hela Apparel Holdings PLC | Annual Report 2024/25

BOARD OF DIRECTORS

Dr. Alastair Alderton

Co-Chairman &

Non-Executive Director

(Resigned w.e.f. 9 September 2025)

RPT NGC RC

Dr. Alastair Alderton has two decades of experience as a transactional lawyer, investment advisor and manager. He currently serves as the Chief Executive Officer of Rianta Capital Limited, an investment advisory firm and fund manager operating out of London and Zurich. In this role, Alastair oversees a global, diverse, and dynamic investment portfolio in private equity, with a significant presence in leading consumer-facing businesses. He provides strategic insights on various board mandates, including prominent companies such as the Australian-based international fashion retail company Forever New and the luxury knitwear brand Chinti & Parker.

In addition to his role as a Non-Executive Director on multiple boards, Dr. Alderton participates on advisory boards and investor committees of various private equity funds. He is a Solicitor of the Senior Courts of England and

Wales, with a decade of transaction and advisory experience at Clifford Chance, and holds a PhD in History from the University of Cambridge.

Appointed to the Board of Hela in 2021, Dr. Alderton's extensive executive experience across a range of companies and sectors

brings a broad perspective to Board discussions. Alastair was appointed as Chairman of Focus Brands Limited in 2024.

Mr. A.R. Rasiah

Chairman & Non-Executive Director

(Appointed w.e.f. 19 November 2018)

(Retiring w.e.f. 29 December 2025)

RPT NGC RC

Mr. A. R. Rasiah possesses over 40 years of experience in finance and commerce. He was a former Chairman of the Sri Lanka Institute of Directors as well as Atlas Axillia (Pvt) Ltd. Beginning his career at Ernst & Young, Mr. Rasiah held directorial positions at Nestle Lanka and acted as Managing Director

on numerous occasions until his retirement from the Group. He has also held senior director roles at Nations Trust Bank PLC and Ceylon Cold Stores PLC. His previous roles include Finance Controller at Almulla Group of Companies in Kuwait and Group Accountant at Mercantile Group of Companies. Mr. Rasiah

is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka (FCA) and a finalist of the Chartered Institute of Management Accountants (UK). He holds a Bachelor of Science Degree from the University of Ceylon (BSc), Associate Membership of Chartered Certified Accountants (ACCA-UK), and Membership of The Institute of Certified Management Accountants in Sri Lanka (CMA).

Currently, Mr. Rasiah serves as Chairman of several subsidiaries of Hela Apparel Holdings PLC and acts as an Alternate Director to the Chairman of Gestetner of Ceylon

PLC. He also serves on the Boards of Fintek Managed Solutions (Pvt) Ltd, Clindata Lanka (Pvt) Ltd and Colombo Fort Land and Buildings PLC. A dedicated sportsman,

Mr. Rasiah represented Sri Lanka in Table Tennis. Since assuming leadership at Hela Apparel Holdings

PLC in 2018, Mr. Rasiah's extensive executive experience across various companies and sectors

has enriched Board decisions. His expertise is highly valued by the Board for promoting robust

standards of corporate governance.

Mr. Dilanka Jinadasa Group CEO & Executive Director

(Appointed w.e.f. 11 October 2018)

Mr. Dilanka Jinadasa was appointed as the Group Chief Executive Officer and Executive Director of Hela Apparel Holdings PLC in 2018, having previously served as the Managing Director of Foundation Garments (Pvt) Ltd. From 2017 to 2021, he also served as a Non-Executive Director of Pan Asia Power PLC, where he played

a pivotal role in expanding its renewable energy portfolio. Dilanka earned his Bachelor's degree in Industrial Economics from the University of Nottingham (UK).

Mr. Jinadasa was part of the leadership team at Hela who transformed the business into an integrated apparel solution provider through the launch of its Brand Licensing Division, Hela Brands, a market leader in design, sourcing, distribution and promotion for sports fashion and lifestyle brands, based in the United Kingdom.

Annual Report 2024/25 | Hela Apparel Holdings PLC 7

Mr. Alexander Cockerham

Non-Executive Director

(Appointed w.e.f. 27 December 2024)

AC RPT NGC

Mr. Alexander Cockerham is a Private Equity professional at Rianta Capital, a specialist fund focusing on retail, FMCG and apparel. In his role he works closely with the portfolio companies to ensure they are well supported and primed for future growth.

Previously, Mr Cockerham was a strategy consultant at PwC specialising in cost structure

optimisation and in delivering longterm operational improvements for private sector organisations. In this role he successfully supported a number of high-profile FTSE 100 companies looking to modernise their operating model as part of a strategic transformation.

Mr. Cockerham's educational background includes a BA in Modern Languages from the University of Oxford as well as a Masters in Management from Manchester Business School.

Mr. Gayan Gunawardana Independent Non-Executive Director

(Appointed w.e.f. 20 February 2019)

AC RPT NGC RC

As an Independent Non-Executive Director appointed to the Board of Hela in 2019, Mr. Gunawardana plays a crucial role in overseeing the Company's financial strategies, risk management and financial reporting. He currently serves

as the Chair of the Audit & Risk Committee, the Related Party Transactions Review Committee, Nominations & Governance Committee, and the Remuneration Committee. He started his career at PwC UK in the financial services audit division, thereafter joining Hela in 2016 as the Manager of Strategic Planning and Corporate Finance. Subsequent to his tenure at Hela, he served as the Chief

Financial Officer of Panasian Power PLC from 2019 to 2022.

With over a 15 years of audit and financial experience,

Mr. Gunawardana brings significant expertise to Board discussions

on financial planning and risk management. He is a member of the Institute of Chartered Accountants in England and Wales (ICAEW) and holds a

Bachelor's degree in Engineering and Business Studies from the University of Warwick. Currently, Gayan holds a senior finance role at a renewable energy IPP with activities in the United Kingdom, Europe and North America.

Mr. Christopher Horn

Non-Executive Director

(Appointed w.e.f. 27 December 2024)

RC

Mr. Christopher Murray Horn is a Chartered Accountant by

profession, and his educational qualifications include a BA (Hons) from the University of Exeter.

Mr. Horn also possess the FCA (Chartered Accountant - Fellowship of the ICAEW).

Mr. Horn has worked at KPMG during 2006-2012, at

Investindustrial between 2012-2015 and at Rianta Capital from 2015 to date.

8 Hela Apparel Holdings PLC | Annual Report 2024/25

BOARD OF DIRECTORS

Mr. Ray Evans

Executive Director

(Appointment w.e.f 16 September 2025)

Mr. Ray Evans is an award winning CEO with a specialism in performance clothing and brand licensing. He has 30+ years' experience in sourcing sports

apparel and building brands to drive market growth and revenues.

Leveraging his entrepreneurial capabilities, negotiation skills and ability to influence international stakeholders, he has built ventures that have enabled the successful licensing of sports and performance clothing brands to production locations worldwide.

Culturally sensitive, he values diversity, talent and inclusion, both inside and outside of the workplace, and has built many successful international teams championing and retaining talent.

Key areas of expertise include identifying consumer insights and designing cross functioning organisational structures, deploying innovative strategies to conceptualise, build and test new marketing and e-commerce initiatives and conducting due diligence strategies to secure

new business and brand licensing categories.

He is particularly experienced in developing successful partnerships with brand owners, distributors, import and export organisations, sports clubs, high street and online retailers and manufacturers to create new brand license strategies and realise brand growth.

In a fast moving and constantly evolving sector where consumer aspirations are increasingly demanding, Mr. Ray's expertise, knowledge and contacts, plus his personal drive and passion set him apart as a much sought after CEO.

Mr. Aruna De Silva Muthumuni Independent Non-Executive Director

(Appointed w.e.f. 27 December 2024)

AC RPT NGC RC

Mr. Aruna De Silva Muthumuni is a seasoned professional with over 25 years of leadership experience

in the global apparel manufacturing industry. Throughout his career,

he has held senior management roles in Sri Lanka, Bangladesh and Singapore, where he has

demonstrated a strong capability to drive business growth, restructure organisations, and establish process-driven operations.

Mr. Muthumuni served as the CEO of Aitken Spence Garments in his last executive role and has held CXO level positions across several apparel manufacturing organisations, both locally and internationally, throughout his

career. His expertise in establishing factories, driving organisational growth, and leading operational excellence are widely regarded as his key strengths.

Mr. Muthumuni completed his primary education at St. Joseph's College, Colombo,

followed by executive education at the University of Moratuwa, the Clothing Industry Training

Institute in Sri Lanka, and the NUS Business School in Singapore.

AC

Audit & Risk Committee

RPT

Related Party Transactions Review Committee

NGC

Nomination & Governance Committee

RC

Remuneration Committee

OPERATIONAL REVIEWS OPERATING ENVIRONMENT

The global fashion industry experienced another challenging year in FY 2024/25 as the anticipated recovery in consumer demand proved sluggish. This was compounded by mounting global tensions and shifting trade policies in major markets. Given their widespread implications, these global realignments are expected to remain a key driver of the operating environment in the coming year.

This section provides an overview of developments in the global apparel market during FY 2024/25, with

a focus on the Hela Group's key

markets (the US, UK and Eurozone), as well as the operating conditions in the countries where the Group's manufacturing facilities are located

(Sri Lanka, Egypt and Kenya). Economic indicators referenced are based on the calendar year unless otherwise specified.

GLOBAL APPAREL MARKET

Demand Environment

Following the post-pandemic slowdown, economic growth among major advanced economies stabilised in FY 2024/25. GDP growth among OECD economies held steady at 1.8% in 2024, the same rate as recorded in the previous year. This was partly driven by a stabilisation

in household consumption growth, with modest pickups recorded in the US, UK and Eurozone. Nonetheless, consumer spending growth remained below the levels recorded in 2022, particularly in the UK and Eurozone.

Real Household Consumption Growth (%y/y)

8

7

6

5

4

While inflation moderated in most major economies during the year, it remained persistently above target. As such, to mitigate the risk of high inflation expectations becoming embedded, central banks proceeded cautiously in reducing their policy interest rates during the course of the FY 2024/25. This kept consumer incomes under pressure and limited the upside in the demand recovery.

Consumer Price Inflation (%)

12

10

8

6

4

2

0

2021 2022 2023 2024 2025

UK Eurozone United States

Top Risks for the Apparel Sector in 2025 (%)

80

70

60

50

40

30

20

10

Consumer

Confidence

Geopolitical

Instability

Economic

Volatility

Inflation

Supply Chain

Disruptions

0

Source: BoF-McKinsey State of Fashion Executive Survey 2025

In this context, major fashion brands were increasingly focused on differentiation and pricing strategy as critical levers for growth and

competitiveness. Approximately 65% of industry executives intended to broaden

3 their product assortments across a

2

1

OECD

Economies

United States

UK

0

2022 2023 2024

Source: OECD

Source: OECD

Eurozone

Heightened political uncertainty presented a further headwind to household spending during the year as it weighed on consumer confidence.

Elections took place across many of the world's largest economies, with changes in government in the US and UK signalling shifts in trade and fiscal policy. Indeed, over 65% of fashion executives surveyed by McKinsey highlighted subdued consumer confidence and geopolitical instability as the biggest risks to the industry in 2025.

wider range of price points in 2025, with

the aim of capturing a more diverse customer base2. Digital innovation also remained a high priority, particularly

in the areas of artificial intelligence, design personalisation and consumer engagement. This underscored

a growing imperative to enhance customer experience and operational efficiency through technology.

Sustainability, once a central strategic pillar for the fashion industry, has seen a relative decline in emphasis. Fewer than 20% of fashion executives

2BoF-McKinsey State of Fashion Executive Survey 2025

identified it as one of their top three risks for growth in 20252, reflecting a reprioritisation towards margin preservation and short-term market

share gains. Nonetheless, the long-term importance of environmental compliance and climate-related regulation is expected to re-emerge as a priority as increasingly stringent global disclosure requirements come into force.

Supply Environment

Global supply chains were similarly buffeted by geopolitical developments throughout FY 2024/25. This renewed the industry's focus on supply chain diversification and resilience, though this process has been complicated

by major changes announced in US trade policy.

International commodity markets were also impacted by geostrategic events, though to a lesser extent as supply conditions for key resources remained favourable. Most notably for

Global Oil & Cotton Prices

150

the apparel and textile sector, global oil and cotton prices averaged 5% and 16% lower, respectively, during FY 2024/25 compared to the previous year.

1.6

Early in the year, the key concern was the continued disruption to shipping routes through the Red Sea as a result of the conflict in the Middle East. Most major shipping lines suspended sailings through the Suez Canal for much of the year. This contributed to a spike in global maritime freight prices, which averaged 88% higher in FY 2024/25 compared to the previous year.

While still below their pandemic-era peak, increased freight prices were

130

110

90

70

50

2021 2022 2023 2024 2025

Oil Price (US$ per Barrel, LHS) Cotton Price (US$ per Pound, RHS)

1.4

1.2

1.0

0.8

0.6

also accompanied by operational

Sources: US Energy Information Administration; Macrotrends

disruptions due to the diversion of ships via the Cape of Good Hope, which significantly extended transit times between Asia and Europe.

Composite Freight Rates (US$ per 40ft. Container)

12,000

10,000

8,000

6,000

4,000

2,000

0

2021 2022 2023 2024 2025

Source: World Contrainer Index, Drewry Supply Chain Advisors

Geopolitical tensions continued to drive shifts in the global sourcing patterns for the fashion sector, accelerating the transition away from a China-centric model to a more distributed, multi-regional sourcing framework. Between 2019 and 2023, the share of apparel and textile imports from China declined by 6 percentage points for the US and 3 percentage points for the European Union, and this trend was expected to have continued in 2024. This reflected both increasing sourcing costs in China, as well as its increasingly strained relationship with major markets.

While other major apparel producers in Asia were expected to be among the key beneficiaries of this shift in global sourcing patterns, significant changes in US trade policy announced immediately after the close of financial year have created a large degree of uncertainty. In April 2025, the new US administration under President Trump announced

'reciprocal' tariffs on almost all trading partners ranging from 10-49% to be levied in addition to existing product-level duties. The implementation of these tariffs was delayed until later

in 2025 to allow time for negotiations between the US and its trading partners. Nonetheless, these events have led global fashion brands to reevaluate their sourcing strategies to ensure their agile positioning.

OPERATING ENVIRONMENT

OPERATING COUNTRY ENVIRONMENT

Economic stability across the Hela Group's manufacturing footprint broadly improved during FY 2024/25, as reform programmes laid the foundations for future growth.

Nonetheless, the significant policy shifts associated with these reforms continued to influence the Group's cost base.

Annual Average Exchange Rate Movements vs. US Dollar (%)

Currency weaker against US Dollar

80

60

40

20

Sri Lanka's economy returned to growth in 2024, demonstrating a strong turnaround from the severe economic crisis experienced in 2022. Presidential and parliamentary elections were held during the year, resulting in a change of government. The new administration committed to maintaining the ongoing economic stabilisation programme and has largely completed the country's external debt restructuring. In this context, the Sri Lankan rupee appreciated by 6.3% against the

OUTLOOK

Looking ahead, demand conditions in the global fashion industry remained resilient in the early part of FY 2025/26. Supply-side factors were also largely benign with global maritime freight prices moderating. However, the outlook has been clouded by the significant realignment underway in global trade policy being led by the US. While the eventual economic impact of these policy changes remains unclear,

the global nature of fashion supply chains means its impact on the sector is likely to be a significant during the year ahead.

US Dollar during FY 2024/25. While Kenya experienced episodes of political volatility and social unrest, the government remained broadly committed to its economic reform agenda. This bolstered investor confidence and the Kenyan Shilling recorded an appreciation of 10.9% against the US Dollar during the year.

0

-20

Sri Lankan Rupee

Egyptian Pound

Kenyan Shilling

In contrast, Egypt undertook a further sharp devaluation of its currency, contributing to a renewed spike in inflation. However, this was part of an IMF-backed effort to liberalise Egypt's foreign exchange regime and was

FY 2022/23 FY 2023/24 FY 2024/25

intended to lay the groundwork for

improved macroeconomic stability in

Source: IMF

the years ahead.

MANAGEMENT DISCUSSION AND ANALYSIS

In FY 2024/25, the Hela Group advanced its transformation agenda amid a challenging global backdrop. The Private Label Manufacturing Division (PLMD) underwent a comprehensive restructuring to enhance agility,

optimise costs, and deepen strategic partnerships, while the Brand Licensing Division (BLD) concentrated on integration and growth following the Focus Brands acquisition. Across both divisions, operations were streamlined, digital capabilities strengthened, and initiatives pursued to diversify revenue streams. Implemented in a difficult market, these measures have reinforced the Group's foundations, improved operational resilience, and positioned Hela to capitalise on emerging opportunities.

The Hela Group recorded consolidated revenue of Rs. 83.4 Bn in FY 2024/25, marking an 18.6% year-on-year increase. This growth was primarily driven by the full-year contribution from the BLD, which added Rs. 27.4 Bn and accounted for 32.9% of Group revenue. This compared to a contribution of Rs.

6 Bn from the BLD in FY 2023/24 (equivalent to 8.2% of Group revenue), following the acquisition of Focus Brands Limited in the final quarter of that year.

Revenue from the PLMD totalled Rs. 55.9 Bn in FY 2024/25,

representing a 13.3% decline compared to the previous year. This drop reflects both the challenging operating environment for the global apparel industry and the appreciation of the Sri Lankan Rupee against

the division's largely US Dollar-denominated income. In US Dollar terms, the PLMD recorded a more moderate revenue contraction of 7.0% year-on-year.

The Group's gross profit rose by 60.9% to Rs. 9.9 Bn during the year, supported by the increase in revenue and a 310-basis point expansion in gross margins to 11.9%. The margin improvement was largely attributable to the structurally higher gross

profit margins of the BLD's brand

management business.

Excluding non-cash impairment charges, the Group recorded a consolidated operating loss of Rs. 6.3 Bn in FY 2024/25, compared to an operating profit of Rs. 1.7 Bn in the prior year. This was primarily due to the PLMD's operating loss of Rs. 6.3 Bn. Although the division achieved

a 22.4% reduction in administrative expenses through cost optimisation measures, this was partly offset by increased distribution costs stemming from supply chain disruptions.

Additionally, FY 2023/24 benefited from a significant one-off gain associated with acquisition of Focus Brands Limited, creating a challenging base for comparison. In contrast, the BLD posted a marginal operating

loss of Rs. 12 Mn for FY 2024/25, reflecting the successful stabilisation of the division post-acquisition.

The Hela Group's profitability in FY 2024/25 was further affected by restructuring efforts initiated within the PLMD during the latter part

of the year. This formed part of a broader turnaround strategy aimed at streamlining operations and

enhancing long-term competitiveness. The key exceptional impacts are outlined below:

• As a prudent step to align asset values with the evolving structure of the PLMD, a non-cash impairment charge on financial assets and goodwill of Rs. 10 Bn was recorded during the year.

• The PLMD's manufacturing footprint was reevaluated with the aim of establishing an agile

  capacity base by reducing directly operated capacity and increasing the use of partnered capacity.

  As a result of this initiative and the particularly challenging

  operating environment in Ethiopia, the PLMD ceased its Ethiopian manufacturing operations in December 2024. The remaining costs attributable to these operations and impairment charges on local assets were recorded as exceptional items in the Group's financial accounts.

• In addition, two of the PLMD's six manufacturing facilities in Sri Lanka and a related warehouse property were identified for

  divestment. While this transaction was announced in June 2025, these assets were classified

  as assets held for sale for the purpose of Group's financial accounts.

• To align the division's cost base with its evolved structure, the PLMD also undertook a rightsizing exercise to optimise functional structures and eliminate inefficiencies from overlapping responsibilities. As a result, the PLMD's employee base was reduced and related employee compensation of Rs. 688 Mn was recorded during the year.

MANAGEMENT DISCUSSION AND ANALYSIS

Net finance expenses of the Hela Group remained elevated during FY 2024/25 at Rs. 4.1 Bn - a marginal 1.3% increase from the previous year - due to the continuation of high global interest rates for much of the year, as major central bank proceeded with reductions in their

benchmark policy rates gradually. The Group's total borrowings (which are primarily denominated in US Dollars) remained largely steady during the year at Rs. 31.4 Bn.

Consolidated income tax expenses recorded a value of Rs. 1.2 Bn in FY 2024/25, compared to a positive value of Rs. 2.0 Bn in FY 2022/23.

Consequently, the Hela Group recorded an after-tax loss of Rs. 22.9 Bn in FY 2024/25. Profit attributable to equity holders recorded a similar loss of Rs. 22.6 Bn, with the reduced loss attributed to the non-controlling interests in the Group's subsidiaries in Ethiopia and Egypt.

In light of the significant restructuring measures undertaken during the year, the Group's financial performance is anticipated to improve in FY 2025/26. This is expected to be driven by an improvement in the performance

of the PLMD, with further growth generated by the BLD. That said, the global operating environment remains highly challenging, particularly as of

a result of the ongoing shifts in US trade policy and is a key source of uncertainty in the year ahead.

The Hela Group's PLMD remains central to the Group's global operations, delivering end-to-end apparel solutions that span design, development, sourcing,

and manufacturing. With a footprint across South Asia and Africa, PLMD combines ethical manufacturing practices with advanced digital capabilities to meet the evolving demands of leading global brands.

During FY 2024/25, the division undertook a broad transformation agenda aimed at strengthening resilience, optimising operational efficiency, and reinforcing customer confidence. As such, the year was marked by structural consolidation, technology integration, and strengthened collaboration with the BLD.

The PLMD is overseen by the Board of Directors and the Group CEO, with implementation of the division's strategy led by the CEO-PLMD.

All proposed capital investments or divestments undergo a rigorous evaluation process encompassing technical, financial, environmental,

and social considerations to ensure alignment with Hela's broader strategic goals.

GLOBAL MANUFACTURING FOOTPRINT

The PLMD's global manufacturing footprint is structured to provide flexibility and responsiveness to the division's customer. While individual sites specialise in certain product categories, production can be reallocated between facilities through its hybrid manufacturing model, combining owned capacity with strategic partner manufacturing. This ensures adaptability to fluctuating demand and supports fulfilment across a range of products and order sizes. Each manufacturing location maintains rigorous quality controls, including preventive maintenance, weekly process audits, and ongoing operator training. Facilities are equipped with in-house technical training schools to ensure that skill development is integrated into the production model.

In the context of the challenging operating environment faced by the PLMD, the year under review was marked by a renewed focus on building operational resilience

through both capability enhancement and cost rationalisation. As part

of the restructuring of the PLMD, Hela undertook a recalibration of the division's global manufacturing footprint during FY 2024/25, optimising capacity allocation, streamlining asset ownership, and improving factory-level productivity. These actions were undertaken while maintaining the Group's core competencies in design-to-delivery execution.

As part of this transition, manufacturing operations in Ethiopia were ceased in December 2024 due to an increasingly challenging global and domestic operating environment.

Elsewhere, the PLMD reevaluated its manufacturing footprint to build a more agile and resilient capacity

model. This entailed the divestment of certain non-core assets, including the disposal of a warehouse and two of the division's six production facilities in Sri Lanka. In Kenya, the division's manufacturing facility was recalibrated through new local operational agreements, enabling greater flexibility in order fulfilment while ensuring disciplined cost structures and sustained product quality.

Production Floor Space: 73,000 sq.ft.

Annual Production Capacity (SAH): 1,080,000

Production Floor Space: 26,000 sq.ft.

Annual Production Capacity (SAH): 570,000

Production Floor Space: 80,000 sq.ft.

Annual Production Capacity (SAH): 870,000

Production Floor Space: 30,000 sq.ft.

Annual Production Capacity (SAH): 600,000

SRI LANKA

KENYA

Production Floor Space: 215,000 sq.ft.

Annual Production Capacity (SAH): 1,500,000

EGYPT

Production Floor Space: 276,000 sq.ft.

Annual Production Capacity (SAH): 1,120,000

Following these strategic actions, the PLMD retains a competitive manufacturing footprint with six production facilities located across Sri Lanka, Kenya and Egypt. This is expected to be a particular asset for the division in light of the ongoing shifts in global trade policy, allowing it to present a range of manufacturing solutions to its customer. The reduction in the PLMD's owned manufacturing capacity is also not expected to be a constraint on the division's revenue, as it is intended to be supplemented by greater use of partnered capacity.

His Excellency William Samoei Ruto - President of the Republic of Kenya, and Her Excellency Meg

Whitman - U.S. Ambassador for Kenya, alongside other distinguished guests from the government of Kenya and the United States Agency for International Development (USAID), visited Hela's manufacturing facility in Kenya on the 23 April 2024.

MANAGEMENT DISCUSSION AND ANALYSIS

HELA COMPLIANCE AND PRODUCT CERTIFICATIONS

organisations to transition to regenerative farming practices and offers

certification to validate these efforts.

Digital Infrastructure and Innovation

The PLMD's manufacturing operations are underpinned by the division's "Digital Core", which supports both agility and precision across its global footprint. Centred

on the cloud-based SAP S/4HANA Fashion ERP system, this platform seamlessly integrates a range of internal applications, customer-facing solutions, and AI-driven capabilities, enabling enhanced operational insight, improving the accuracy of production planning, and supporting more effective coordination between teams. These systems have strengthened operational control, while supporting more informed,

data-driven decision making that contributes to timely order fulfilment and greater consistency in output.

At the same time, the Group's design teams continue to benefit from advanced 3D design platforms like

V-Stitcher and Browzwear, which allow for virtual prototyping and realtime collaboration with customers.

This has led to reduced sample lead times, improved development accuracy, and deeper engagement

with global brand partners. Together, these digital capabilities are not

only improving productivity, but are also elevating the customer experience and reinforcing Hela's

competitive edge in a rapidly evolving manufacturing landscape.

Compliance and Product Certifications

During FY 2024/25, the division's manufacturing operations maintained compliance with a range of internationally recognised certifications related to social responsibility, environmental stewardship, and product quality and safety. These certifications not only strengthen internal systems and operational rigour but also offer stakeholders clear assurance of the Group's commitment to ethical, sustainable, and high-quality manufacturing practices.

CUSTOMERS AND SUPPLY CHAIN

The PLMD maintains constant, multi-level engagement with its customers, from design to delivery. Regular performance assessments, feedback mechanisms, and collaborative development sessions ensure that the division remains aligned with evolving expectations. Compliance with customer-specific environmental

and social standards remains a critical component of every partnership, while integration with digital systems offer real-time visibility and responsiveness across the supply chain.

Similarly, the PLMD's approach to

supplier engagement prioritises

Hela was proud to be a part of the 'Sourced Sri Lanka Fashion & Textile Trade Show' in London on 17-18 June 2024

partnerships over transactional relationships. It actively supports supplier capability-building, and adherence to the highest standards of environmental and ethical compliance. Strategic regionalisation and rationalisation efforts continue to deepen the division's network of longterm, transparent relationships with vetted suppliers.

Building Strategic Customer

Partnerships

In FY 2024/25, Hela's PLMD

customer engagement strategy evolved in line with the changing needs of the global fashion industry. Retailers and brands continued to face pressure from inflationary cost structures, heightened regulatory scrutiny, and growing consumer demand for environmental and social responsibility. Against this

backdrop, the division's ability to offer

end-to-end solutions from design and product development to ethical sourcing and on-time delivery from multiple global locations remained a key differentiator. The PLMD prioritised stability of its customer relationships and long-term value

creation over aggressive expansion. It was a year that tested resilience rather than enabled growth, and the management focused on reinforcing trust, transparency and strengthening enduring partnerships.

The PLMD's product portfolio

remained centred on three core categories: Intimates, Kidswear, and Sportswear. Europe and North America continued to serve as the division's key demand centres, particularly for high-street and mass-market brands. In response to ongoing volatility in the mid-tier fashion segment, the PLMD refined its commercial strategy to prioritise

high-growth, value-driven areas such as licensed sportswear, supermarket labels, and apparel with strong

ESG credentials. This realignment, combined with PLMD's reach across multiple distribution channels

including supermarkets, e-commerce, and direct-to-consumer platforms strengthened customer access and broadened market presence in a rapidly evolving retail landscape.

Supply Chain Resilience

The PLMD's supply chain strategy in FY 2024/25 was focused on four core pillars: customer centricity, operational excellence, cost optimisation, and sustainability. Approximately 99% of the division's raw material purchases during the year related to core items, including fabrics, accessories, and packaging. These were procured across a diverse supplier base

with 200 active partners, including corporates, small and medium enterprises, and local community partners.

To de-risk procurement and reduce

lead times, the PLMD continued to focus on regionalising sourcing with anchor hubs in Sri Lanka and Africa. 68% of raw materials were sourced from the Indian Subcontinent, 7% from Africa and the Middle East, and 24% from the Far East in FY 2024/25. This proved vital in mitigating the risks posed by geopolitical unrest, particularly disruptions to maritime shipping in the Red Sea.

Strategic supplier rationalisation was also undertaken to consolidate volumes with key partners and strengthen upstream risk mitigation

across the supply chain. This included enhancements to supplier selection and onboarding processes, reinforced compliance audits, and measures to improve order execution reliability.

Focus was placed on building innovation pipelines with suppliers at the forefront of regenerative and circular material development, while

ensuring business continuity through streamlined risk management in raw material sourcing. Regular audits, supplier scorecard reviews, and collaborative summits were conducted to align expectations, address performance gaps, and co-develop long-term roadmaps with strategic partners.

MANAGEMENT DISCUSSION AND ANALYSIS

Raw Material Purchases by Item in FY 2024/25 (% of Total)

1%

27%

60%

12%

Trims Packaging Fabric Embellishment

Project M.A.R.S in partnership with the University of Moratuwa, a bold step to reimagine the future of fashion through innovation, responsibility, and purpose

Responsible Sourcing

Responsible raw material sourcing is integral to the PLMD's sustainability vision and meeting the growing demands of its customers. Across

all regions, suppliers were required to adhere to the PLMD's Supplier Code of Conduct and were regularly assessed on labour rights,

environmental standards, and quality performance.

The PLMD upheld a zero-tolerance policy towards non-compliance with its Supplier Code of Conduct during

Innovation Through

Partnerships

The PLMD deepened its focus on collaborative R&D during FY 2024/25, partnering with suppliers to develop breakthrough sustainable fabrics.

Initiatives such as regenerative cotton supply chains in South Asia, bamboo and recycled yarn development

in Turkey and Africa, natural dyed fabric, different textured fabric such as quilted, colour blocks dyeing solutions, and anti-odour innovations using bio-based inputs exemplify how Hela drives impact beyond compliance. These projects not only fulfil client requirements but also

support farmers, reduce landfill waste, and shifts the needle on circularity.

FY 2024/25. Due diligence and traceability mechanisms continued to evolve, integrating real-time monitoring capabilities across select product lines. Supplier development efforts during the year focused on ESG upskilling, digital onboarding, and joint innovation labs. As a result, the division's supplier ecosystem increasingly mirrors the Group's

values and long-term ambition to lead in sustainable apparel solutions.

In FY 2024/25, approximately 60%

of the division's raw materials were

from sustainable or recycled sources,

reflecting growing customer interest in regenerative cotton, organic fibres, and circular alternatives. The PLMD also maintains rigorous chemical stewardship, reducing dependency on harmful substances and replacing them with low-toxicity biological alternatives. All core fabric suppliers were OEKO-TEX certified, while 90% adhered to Zero Discharge of Hazardous Chemicals (ZDHC) and

86% were aligned with Higg FEM 4.0.

Raw Material Innovation Partnerships in FY 2024/25

Hela deepened its commitment to circularity through two key partnerships in FY 2024/25. In Kenya, a strategic agreement with UpTex EA Ltd enabled the collection and recycling of 291 tonnes of textile offcut

waste, achieving 100% diversion from landfill and incineration. UpTex processes include fabric segregation, textile-to-textile rejuvenation, and recycling into alternative products such as blankets and felting, while sustaining employment at their sorting centre. Simultaneously, Hela's 360° partnership with PurFi advanced its use of recycled fibre through textile-to-textile rejuvenation technology. High-quality yarns produced by PurFi are now used by Hela's supply chain partners, reinforcing the Group's commitment to sustainable material sourcing.3

3While these partnerships were successfully implemented in FY 2024/25, the projects are not currently active.

HUMAN CAPITAL

Hela remains committed to creating a workplace culture anchored

in ethics, inclusivity, and high performance; principles that have long defined its identity. As global and local environments remain

in flux, the year under review required a careful balance between maintaining cost discipline and safeguarding employment stability. While the restructuring of the PLMD's operations during the year required difficult decision in relation to the division's employee base,

it continued to prioritise employee well-being, talent development, and organisational resilience.

The PLMD's human capital strategy is governed by the Board of Directors through the Remuneration Committee and implemented by the division's Human Resources Department

(HR) under the Chief People Officer.

The HR structure is built around a shared services model with

decentralised execution through HR and Administrative Managers. The function operates across three pillars: Talent Management & Development, Employee Engagement & Internal Communications, and HR Services Delivery (including Compensation, Benefits and Compliance).

The PLMD's HR policy framework

is periodically reviewed to ensure alignment with evolving socio-economic conditions and

prevailing legal standards across its operations. Any updates are clearly communicated to all employees, with policy awareness reinforced through structured sessions. The division's policies adopt a strict zero-tolerance stance on sexual harassment, child labour, and forced labour, backed by robust mechanisms to protect human rights. Compliance with all key labour regulations across its countries of operation is rigorously maintained through well-established policies and dedicated HR functions at division and location levels.

Employment & Talent Mobility

FY 2024/25 marked a year of organisational recalibration, as the PLMD underwent a strategic rightsizing exercise in response to shifting market demands, and the

Group's transition to a leaner, partner-enabled operating model. These structural changes were critical to improving long-term competitiveness and cost efficiency across the business. While they involved several difficult decisions in relation to the division's employees, Hela remained committed to managing the process responsibly, prioritising compliance, and minimising social disruption wherever possible.

PLMD's most significant workforce-related activity during the year was the formal closure of its manufacturing operations in Ethiopia. This was executed in full alignment with local labour regulations and international best practices, with appropriate compensation, engagement mechanisms, and support provided

to affected employees. In Sri Lanka, plans were initiated during the year to divest from two of

the division's six manufacturing facilities in Sri Lanka, located in Mawathagama and Narammala. This transaction was announced in June 2025 and all employees were offered the opportunity to continue their employment under the new ownership, with no changes in the terms of their employment, no loss of accumulated benefits, and in full compliance with applicable labour laws. This move was part of the broader effort to streamline the

Group's Sri Lankan footprint and drive greater capital efficiency. Executive headcount was also reduced in line with the revised operating structure, following a comprehensive review of central and regional functions.

At the close of the financial year, the PLMD maintained a total workforce of approximately 12,400 employees. While the year presented several operational challenges, the Group's approach to workforce management remained grounded in accountability, and a long-term view of value

creation, ensuring that Hela continues to provide meaningful employment and development opportunities across its global footprint.

18%

Employment by Country (31 March 2025, % of Total)

58%

24%

Egypt Kenya Sri Lanka

Employee Engagement & Well-

being

In light of the restructuring measures undertaken by the PLMD and ongoing economic pressure on employees, the division placed significant emphasis on holistic engagement during FY 2024/25. Celebratory events, internal campaigns, and well-being activities played a vital role in boosting morale and reinforcing a sense of belonging.

Recognition initiatives such as the Hela Hero Spotlight, service milestone celebrations, and 5S productivity awards continued during the year.

Motivational engagement was further driven through workshops, cultural festivals, creative showcases, commemorative events, Children's Day programmes, and blood donation initiatives.

MANAGEMENT DISCUSSION AND ANALYSIS

Employee Engagement Activities

Counselling Sessions and Promoting Mental Health

Hela places strong emphasis on the mental well-being of its employees, recognising it as a

critical pillar of overall organisational health. To this end, the PLMD provides confidential counselling services, offering employees

access to trained professionals for one-on-one sessions through an open-door policy. These services ensure that individual concerns are addressed in a safe, supportive, and professional environment. A key achievement during the year was the significant increase in mental health awareness sessions conducted across all manufacturing locations. These focused on stress management, emotional well-being, and resilience-building strategies. The inclusive and frequent nature of these programmes helped normalise conversations around mental health and equipped

clinically validated mental health screening tool at one facility to support early identification of emotional distress, including anxiety, depression, and general psychological dysfunction.

This initiative is intended to be progressively rolled out across all sites in FY 2025/26.

The PLMD plans to further scale counselling services and introduce monthly thematic campaigns

covering topics such as burnout prevention, work-life balance, and emotional self-care. Managers will also receive targeted training to create psychologically safe environments and respond effectively to team well-being.

Feedback gathered from sessions will be used to tailor future interventions and maintain meaningful, ongoing engagement with mental health.

employees with practical tools to manage day-to-day challenges. In addition, the division piloted a

In honour of World Mental Health Day, Hela's team of counsellors hosted a series of impactful awareness and creative therapy sessions across our manufacturing facilities and head office

Occupational Health and Safety

Hela is committed to ensuring a safe, healthy, and supportive work environment for all employees, underpinned by rigorous adherence to occupational safety protocols.

The PLMD's Employee Health and Safety (EHS) practices are aligned with applicable local and regional regulations and adhere to globally recognised standards, including WRAP and SEDEX certifications, along with specific customer requirements.

During FY 2024/25, oversight of social compliance across all Group operations was managed by a central compliance team, supported by Compliance Point Persons (CPPs) stationed at each manufacturing facility. These CPPs are responsible for convening monthly EHS Committees at their respective sites. Comprising cross-departmental representatives, the committees are tasked with identifying, addressing, and communicating workplace

safety concerns, thereby ensuring the timely resolution of potential hazards. The CPPs along with the central compliance team are

trained professionally on identifying hazards, conducting occupational risk assessments, and identifying

adequate proactive, preventive control measures to safeguard the employees' occupational safety at work.

Comprehensive EHS trainings were conducted across all locations, covering a wide spectrum of topics such as bloodborne pathogens, working at heights, ergonomics, machinery operation and maintenance, electrical safety, and fire prevention.

These efforts aim to instil a culture of safety awareness and responsibility across the organisation.

MANAGEMENT DISCUSSION AND ANALYSIS

The Group's EHS framework is structured around the following critical focus areas:

Emergency Preparedness and Equipment

Training and Awareness

Certificates and Licenses Contractor EHS Management

Personal Protective Equipment Factory Conditions

Equipment and Machinery Safety EHS Committees

Electrical Safety Water and Sanitation Programmes

Personnel Safety Kitchen and Canteen Management

Chemical Management Medical Room Operations

Maintenance Safety Traffic and Vehicle Management

Storage Tanks (Above Ground and Below Ground)

Dormitory Standards

Risk Assessment

Key Workplace Hazards Under Monitoring

Performance Management and

Training

Investing in its people remained a top strategic priority for the PLMD in FY 2024/25, as the Group continued to advance its transformation agenda and long-term growth ambitions.

Beyond enabling employees to perform in their current roles, the PLMD's learning, and development agenda is geared towards unlocking individual potential, strengthening talent pipelines, and facilitating sustainable career progression. Amidst a challenging period of organisational restructure, executive training needs were identified and reviewed primarily through the performance management system, where employee performance and career development plans were evaluated regularly.

During the year under review,

Hela revamped its performance management framework by piloting a revised architecture for selected key roles at departmental level, in anticipation of the organisational restructuring necessitated by prevailing industry challenges. This included annual goal alignment, transparent review mechanisms, and improved KPI tracking features, designed to support performance transformation and foster accountability across the organisation. For non-executive employees, training was typically

'Ignite: The First Step Toward Great Leadership' training session for our first-time managers

Partnering with the International Labour Organisation on the GET Ahead (Gender and Entrepreneurship Together) programme designed to bridge gender barriers and uplift the business skills and knowledge of 20 young entrepreneurs in Sri Lanka

processes. All major operational changes are communicated, and collective agreements are

observed in accordance with legal and ethical standards. Employee Councils comprise cross-functional representatives and actively encourage female participation to promote inclusivity and balanced representation

Hela was a part of the Kenya2Equal (K2E)

organised based on site-level needs. Segment-specific technical training remained a priority, especially within production environments. Integrated trainers continued to provide ongoing mentorship to sewing machine operators and other line-level staff.

A series of mandatory training programmes were also conducted across the division, addressing compliance, safety, leadership, and operational excellence.

Learning and development initiatives were centrally coordinated by PLMD HR and implemented in partnership with country-level HR teams. In total, the division delivered 220,000+ hours of training across its operations during FY 2024/25.

project launched on the 30 May 2024

Industrial Relations & Employee

Rights

Hela continues to uphold the fundamental right to freedom of association and maintains a policy of open and constructive dialogue with union representatives across its operational regions. At non-unionised sites, Employee Councils operate as effective platforms for employees to raise concerns and contribute to decision-making

Throughout FY 2024/25, employee

relations across the Group remained underpinned by a collaborative approach to workforce engagement. In Kenya, the Group maintained strong and positive relationships with recognised trade unions representing employees at its manufacturing facilities. Employee Councils at the division's manufacturing facilities in Sri Lanka and Egypt also continued to serve as vital channels for enhancing economic opportunity, ensuring employee voices are heard, and fostering social integration across the Group's operations.

MANAGEMENT DISCUSSION AND ANALYSIS

COMMUNITY EMPOWERMENT

At Hela, social capital is not an abstract concept; it is an active force embedded in the Group's culture and operations. The PLMD's commitment to community empowerment is brought to life through strategic initiatives that uplift lives, bridge opportunity gaps, and enable its employees and their families to aspire beyond immediate livelihoods. Through flagship programmes such as Diriliya, Diridaruwo, and RISE, the

division reinforces its role as a change agent in the communities where it operates, offering tangible pathways for economic empowerment, educational advancement, and sustainable career progression.

Amidst the challenging operating environment in FY 2024/25, the PLMD continued to implement these critical community empowerment initiatives. Key highlights during the year included over 100 participants graduating from IT and English course provided under the Diridaruwo Initiative and delivered in partnership with NIBM. In addition, the globally recognised RISE (Reimagining Industry to Support Equality) initiative was initiated within the division, with 19 internal participants undertaking the 'Train the Trainer' programme.

Further details of the key initiatives implemented during the year are provided on the subsequent pages.

Hela was honoured with the Tesco Award for Communities at the Tesco Indian

Sub-Continent Supplier conference in Bangalore, in recognition of the Group's outstanding social impact across multiple communities

In February 2025, Hela was invited to present its Gender Best Practices and Social Capital initiatives at the Tesco Supplier Conference for Pakistan and Sri Lanka

The Annual Social Capital Awards Ceremony was held in July 2024 at the Mawathagama Divisional Secretariat, celebrating the outstanding contributions of team members and project leads from Diriliya, Diridaruwo, and PACE initiatives across all Sri Lankan manufacturing locations

Diriliya

Transforming Mindsets and

Empowering Entrepreneurs

Introduced in 2021, Diriliya was conceived to ignite an entrepreneurial spirit among

PLMD employees and to develop critical business and vocational skills beyond the factory floor.

The initiative supports the holistic

transformation of employees, from skilled workers into independent income generators and community influencers.

Purpose: To enhance the economic resilience of employees by redefining the role of apparel workers in society, as empowered individuals, creators of value,

and respected contributors to the economy. The initiative also aims to foster meaningful connections between employees and leadership by creating shared purpose.

Over 20,000 training hours have been delivered to date across key domains such as operations management, finance, quality assurance, legal compliance,

marketing, and leadership. Complementary vocational programmes include skill-building in dressmaking, pottery, tailoring, and creative crafts, unlocking new channels of income generation and financial independence.

The programme has gone beyond training by actively connecting participants to market access.

Product fairs were held at the PLMD's manufacturing facilities in Sri Lanka, providing participants with opportunities to generate direct sales, secure orders, and gain exposure to real-world entrepreneurial environments.

Product fairs were held across Hela facilities

The Diriliya initiative has supported the creation of over 1,000 entrepreneurs, with more than 80 new ventures developed in the past year alone. With women comprising 80% of participants, the programme has played a vital role in advancing female economic empowerment.

One-on-one consultations were conducted with Diriliya members across all manufacturing sites, while 25 participants were selected to follow the Global Techno-Entrepreneurship course offered by NIBM, equipping them with

advanced skills and digital business knowledge.

One-on-one consultations conducted with Diriliya members across manufacturing sites

MANAGEMENT DISCUSSION AND ANALYSIS

Diridaruwo

Nurturing Potential and Securing Futures

Founded in 2022, Diridaruwo reflects Hela's deep commitment to the long-term welfare of its employees by directly investing in the next generation, the children of its workforce. This scholarship and

educational empowerment initiative ensures that promising students from underserved backgrounds receive the resources, support, and exposure they need to succeed.

Purpose: To unlock the full potential of young scholars by providing equitable access to education, building critical skills, and empowering the next

generation to break cycles of poverty and aspire towards meaningful careers.

Funded through a strategic partnership between Hela and Tesco and administered by Berendina, a reputed Sri Lankan non-governmental organisation, Diridaruwo provides financial assistance for both secondary and undergraduate education. However, the programme is far more than

a scholarship fund; it includes a robust ecosystem of support, from structured English and IT training to soft skills development and career planning workshops. A centralised digital database is used to monitor scholar performance, identify individual development needs,

and ensure each student receives tailored support to stay aligned with their academic and career goals. To date, the programme has directly created over 50 employment opportunities.

Over 900 students have been supported with scholarships across secondary and tertiary education through the initiative. In partnership with NIBM, 100 participants were recognised during FY 2024/25 for successfully completing IT and English language courses at both certificate and advanced levels.

Career exposure is also a key focus. Over 90 recipients of the Diridaruwo Scholarship benefited from career guidance and soft skills training conducted by Berendina during the year, helping to build confidence and workplace readiness. The programme also facilitated 30 virtual mentoring sessions with prominent industry leaders, offering students first-hand insights and inspiration from across the professional landscape. To

further strengthen support systems, parental awareness and guidance sessions were held at various Sri Lankan locations, ensuring families play an active role in their children's educational journeys.

One-on-one consultations conducted with Diriliya members across manufacturing sites

Berendina and Hela teamed up to host a career guidance session for 22 recipients of the Diridaruwo Scholarship who had recently completed their Advanced Level examinations. The session, led by professionals from both the Government sector and NAITA

40 Diridaruwo scholars took part in a Soft Skills Training & Career Guidance Programme. With the expertise of career counselling professionals provided by Berendina

RISE

Advancing Gender Equality through Training and Empowerment

Hela reinforced its commitment to gender equality through active engagement in the RISE (Reimagining Industry to Support Equality) programme, an international initiative aimed at advancing gender equity within the garment, footwear,

and home textile supply chains.

The programme focuses on

empowering women in the workplace, embedding gender-responsive practices into business operations, and fostering systemic change by enhancing women's agency, shifting gender norms, and strengthening capacity in

areas such as financial literacy and sexual and reproductive health.

In January 2024, Hela was selected

to participate in the RISE Training Specialist Programme, designed to build the capabilities of training professionals across the industry. The initiative places particular emphasis on the development of soft skills essential to cultivating inclusive and equitable work

environments. Hela commenced

its internal training journey by equipping selected employees with the necessary competencies to drive the programme forward. A comprehensive and interactive seven-day "Train the Trainer" programme was conducted between July and August 2024, engaging 19 participants from across the PLMD. The initiative represents a significant milestone in mainstreaming gender equality and fostering inclusive leadership within Hela. Awareness sessions were also held to introduce the RISE programme and reinforce its strategic importance.

ENVIRONMENTAL STEWARDSHIP

The PLMD's approach to environmental sustainability reflects a deep-rooted belief that business success and environmental responsibility are inextricably linked. Building on its legacy of ethical practices, the division remains steadfast in embedding sustainability across every aspect of its operations. Hela's "Only One Earth" philosophy guides its strategic efforts, as the division acknowledge the critical role it plays in protecting the environment, mitigating climate impact, and advancing the fashion industry's transition to net zero.

In FY 2024/25, global fashion supply chains experienced renewed scrutiny, as regulatory shifts and heightened consumer awareness drove greater demand for transparency, ethical sourcing, and climate accountability. Against this backdrop, Hela reinforced the PLMD's environmental sustainability framework, aligning operations with global best practices. The division's sustainability strategy is built around four key pillars: energy and emissions management, water

conservation, circularity in production, and responsible waste handling.

These initiatives are underpinned by the United Nations Sustainable Development Goals (SDGs), with

particular emphasis on SDG 6 (Clean Water and Sanitation), 7 (Affordable and Clean Energy), 12 (Responsible Consumption and Production), and 13 (Climate Action).

Environmental Management Framework

The PLMD continues to align its environmental performance with internationally recognised best practices, adhering to a number of global standards and certifications. In FY 2024/25, the PLMD's Higg FEM scores averaged over 87% across

its operations, and ISO 14064:2018 certification was maintained for the fourth consecutive year, reflecting the division's consistent commitment to emissions tracking and environmental stewardship. In addition to this, the division complies with mandatory environmental standards in its countries of operation and those

outlined in its contractual obligations with global clients. These benchmarks form the foundation of the division's approach to environmental sustainability and monitoring.

The PLMD's sustainability agenda is spearheaded by a dedicated Sustainability Team and is overseen by the Head of Sustainability, who provides regular updates to the

division's management and briefs the Board of Directors on key priorities under the "Only One Earth" strategy. This top-down commitment is complemented by the appointment

of sustainability champions at each manufacturing site, ensuring on-ground ownership and consistent implementation of key initiatives.

A unified and systematic approach to environmental resource management is enabled through Hela's fully integrated Environmental Management System (EMS).

The EMS embeds measurable performance indicators across key pillars such as energy, water, waste, and emissions enabling targeted

MANAGEMENT DISCUSSION AND ANALYSIS

action to enhance resource efficiency and reduce environmental impact. Environmental data is centrally monitored through Hela's internally developed Eco-Tracker system, which captures and consolidates site-specific metrics including energy consumption, water use, and waste generation. This data is regularly reviewed through performance dashboards made available to the leadership team. In instances where critical observations arise, detailed reports are submitted

to the Audit and Risk Committee and subsequently presented to the Board by the Head of Sustainability, ensuring transparency and accountability in environmental management.

Global Best Practices

Regulatory Framework Applicable to the Group

Environmental Frameworks Adhered to by the PLMD

Energy Management

As an apparel manufacturer, energy consumption remains a critical area of environmental impact. In FY 2024/25, 1.4% of Group-wide emissions originated from Scope 1 sources, including stationary combustion and mobile fuel use. In this context, the PLMD continued to implement a comprehensive energy management strategy that integrates operational efficiency improvements, investments in renewable energy, and employee awareness campaigns. Key initiatives included LED retrofitting, optimised boiler operations using pre-heating technology, replacing diesel boilers with biomass alternatives, and introducing electric buggies for internal transport.

Additionally, solar panels installed across five locations supplied 1,364 MWh of clean energy

annually. Factory layouts have been reconfigured to maximise natural lighting, and water-cooling systems were adopted in place of conventional air conditioning units. As a result, total energy consumption reduced

by 2% during the year, while the PLMD's energy consumption per unit of production declined by 27%, reflecting the collective efforts across the organisation.

The PLMD aims to reduce energy consumption to 1 kWh per standard hour by 2026. Plans are also in place to implement carbon footprint mapping at product level to enhance emissions tracking and reporting accuracy.

Management of Renewable

Energy

Since 2017, the PLMD has made sustained investments in renewable energy as part of its long-term commitment to environmental stewardship. These efforts have included the deployment of both solar and biomass energy solutions across its operational footprint.

During FY 2024/25, the Group generated 1,364 MWh of electricity through rooftop solar installations across five of its locations in

Sri Lanka. Furthermore, three manufacturing facilities have transitioned from diesel to biomass boilers, reinforcing the Division's strategic ambition to expand the share of renewable energy within its energy mix and reduce its reliance on fossil fuels.