Audited Financial statements as of 31.03.2025

JANASHAKTHI FINANCE PLC

(FORMERLY KNOWN AS ORIENT FINANCE PLC) NUGEGODA

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31STMARCH 2025

Tel

Fax

E-mail Website

: +94-11-2421878-79-70

+94-11-2387002-03

: +94-11-2336064

: bdopartners@bdo.lk

: https://www.bdo.lk

“Charter House”

65/2, Sir Chittampalam A Gardiner Mawatha Colombo 02

Sri Lanka

We have audited the Financial Statements of Janashakthi Finance PLC (Formerly known as Orient Finance PLC) (“the Company”), which comprise the statement of financial position as at 31stMarch 2025, and the income statement, statement of other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the Financial Statements, including a summary of material accounting policy information as set out on pages 06 to 67.

In our opinion, the accompanying Financial Statements give a true and fair view of the financial position of the Company as at 31stMarch 2025, and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

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

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

The Company’s gross loans and receivables amount to Rs.23.16 billion as at 31stMarch 2025 (2024: Rs. 16.78 billion) and impairment allowance for the year amounts to Rs.1,111 million as at 31stMarch 2025 (2024: Rs.1,128 million).

The Company measures the impairment of loans and receivables using the expected credit loss (“ECL”) model as per SLFRS 9: Financial Instruments (“SLFRS 9”). The application of this standard requires management to exercise significant judgments in the determination of expected credit losses, including those relating to loans and receivables. Management applies significant judgment in the determination of estimated future cash flows, probabilities of default and forward-looking economic expectations.

Due to the significance of loans and receivables and the significant estimates and judgment involved, the impairment of these loans and receivables was considered to be a key audit matter.

The impairment provision was considered separately on an individual and collective impairment basis.

Partners : Sujeewa Rajapakse FCA, ACCA, FCMA, MBA. Ashane J.W. Jayasekara FCA, FCMA (UK), MBA. H. Sasanka Rathnaweera FCA, ACMA.

F. Sarah Z. Afker FCA, FCMA (UK), CGMA, MCSI (UK). Dinusha C. Rajapakse FCA, LLB (Hons)(Colombo), CTA, Attorney at Law.

Nirosha Vadivel Bsc (Acc.), FCA, ACMA. R. D. Chamika N. Wijesinghe FCA, BBA (Acc.) Sp. H. M. R. Thilina Ranaweera FCA, BBMgt (Acc.) Sp.

BDO Partners, a Sri Lankan Partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

In calculating the impairment provision on a collective basis, statistical models are used. The following inputs to these models require significant management judgment:

• the probability of default (PD)

• the exposure at default (EAD)

• the loss given default (LGD)

• the effective interest rates

  In assessing the loans and receivables on an individual basis, significant judgments, estimates and assumptions have been made by management to:

• determine if the loan or advance is credit impaired

• evaluate the adequacy and recoverability of collateral

• determine the expected cash flows to be collected

• estimate the timing of the future cash flows

  Key areas of significant judgments, estimates and assumptions used by management related to the impact of prevailing macroeconomic conditions in the assessment of the impairment allowance include the following:

• the probable impacts of prevailing macroeconomic situation continuing in the country and related industry responses (e.g. government stimulus packages and debt moratorium relief measures granted by the Company)

• the determination on whether or not customers contracts have been substantially modified due to such stimulus and relief measures granted and related effects on the amount of interest income recognised on affected loans and advances

• forward-looking macroeconomic factors, including developing and incorporating macroeconomic scenarios, given the wide range of potential economic outcomes and probable impact from the prevailing macroeconomic situation that may affect the future expected credit losses

  The disclosures associated with impairment of loans and receivables are set out in the Financial Statements in the following notes:

  • Note 9 – Impairment charges for loans and receivables at amortised cost

  • Note 18 – Loans and receivables at amortised cost

    How our audit addressed the key audit matter

    Our procedures included the following:

• we obtained an understanding of the management process and tested controls over the credit origination, credit monitoring and credit remediation.

• we evaluated the design, implementation and operating effectiveness of controls over estimation of impairment, which included assessing the level of oversight, review and approval of provision for credit impairment policies and procedures by the Board and management.

• we assessed the appropriateness of the accounting policies and loan impairment methodologies applied, by comparing these to the requirements of SLFRS 9: Financial Instruments, particularly in the light of the deteriorating and extremely volatile economic scenarios caused by prevailing macroeconomic conditions and government responses based on the best available information up to the date of our report.

• we test-checked the underlying calculations and data.

  In addition to the above, we performed the following specific procedures:

  For loans and receivables collectively assessed for impairment:

• we assessed the completeness of the underlying information in loans and receivables used in the impairment calculations by ascertaining that they agree with the details of the Company’s source documents and information in IT systems.

• we assessed the judgments, estimates and assumptions used by the management in the underlying methodology and the management overlays to ascertain that they were reasonable. Our testing included evaluating the reasonableness of forward-looking information used, economic scenarios considered and probability weighting assigned to each of those scenarios. Further, we assessed the reasonableness of the Company’s considerations of the economic uncertainty relating to prevailing macroeconomic situation continuing in the country.

  For loans and receivables individually assessed for impairment:

• we assessed the main criteria used by the management for determining whether an impairment event had occurred.

• where impairment indicators existed, we assessed the reasonableness of management estimated future recoveries including the expected future cash flows, discount rates and the valuation of collaterals held.

• we evaluated the reasonableness of the provisions made with particular focus on the prevailing macroeconomic conditions on elevated risk industries, strategic responsive actions taken, collateral values and the value and timing of future cashflows.

  For loans and advances affected by the government stimulus and debt moratorium relief measures granted:

• we assessed the appropriateness of judgments, reasonableness of calculations and data used to determine whether the customer contracts had been substantially modified or not and to determine the resulting accounting implications; and

• evaluated the reasonableness of the interest income recognised on such affected loans and advances. We also assessed the adequacy of the related financial statement disclosures.

The Company carries out an impairment review of the goodwill and the brand value at least annually or whenever there is an impairment indicator in accordance with Sri Lanka Accounting Standards.

This was considered a matter of significance to our audit due to the materiality of the carrying value of the goodwill and brand value balances which amounted to Rs. 565 million and Rs. 236 million respectively as at 31stMarch 2024 and because the directors’ assessment of impairment involves significant judgment.

Goodwill and brand value were recognised in the Financial Statements, upon the Company (former Bartleet Finance PLC) acquiring and amalgamating the former Orient Finance PLC during the financial year ended 31stMarch 2016.

As per LKAS 36: Impairment of Assets, the Company is required to annually test for impairment of the goodwill and brand. Impairment is assessed by comparing the carrying value of assets against the recoverable amount. The Company determines the recoverable amount of the goodwill and the brand value based on the value in use method, by using the discounted cash flow model. In carrying out its assessment for the purposes of cash flow forecasts, the Company projects future cash flows based on approved budgets. These cash flows are discounted using the applicable discount rates.

Based on the impairment test performed for the goodwill and the brand value as explained above, the Company concluded that both the goodwill and the brand value had not been impaired as at 31stMarch 2025.

The disclosure associated with impairment assessment of the goodwill and the brand value is set out in note 23 to the Financial Statements.

We have tested management’s assessment of the impairment of the goodwill and the brand value as at 31stMarch 2025.

Our work included the following procedures:

• we evaluated management’s competence and level of skills required in developing the assumptions, gathering accurate data and performing assessments.

• we assessed the validity of management’s use of appropriate methods in assessing the impairment for the goodwill and brand value.

• we challenged the key inputs and assumptions the Company has used in assessing the impairment, considering the prevailing macroeconomic conditions in the country and its impact on macroeconomic factors.

• we carried out calculations on the impairment assessment to determine the degree by which the key assumptions would need to change in order to trigger an impairment.

• we tested the appropriateness of the related disclosures provided in the Company’s Financial Statements.

  Other information

  Management is responsible for the other information. The other information comprises the information included in the Annual Report but does not include the Financial Statements and our Auditor’s Report thereon.

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

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

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

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

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

  Those charged with governance are responsible for overseeing the Company’s financial reporting process.

  Auditor’s Responsibilities for the Audit of the Financial Statements

  Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SLAuSs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

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

• identify and assess the risks of material misstatement of the Financial Statements whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.

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

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

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

• evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with ethical requirements in accordance with the Code of Ethics regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine that those matters were of the most significance in the audit of the Financial Statements of the current period and are, therefore, the key audit matters. We describe these matters in our Auditor’s Report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

As required by Section 163 (2) of the Companies Act No. 07 of 2007, we have obtained all the information and explanations that were required for the audit, and as far as it appears from our examination, proper accounting records have been kept by the Company.

CA Sri Lanka membership number of the engagement partner responsible for signing this independent auditor’s report is 4324.

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Page 6

Janashakth Finance pLE Iformerly known as Oxonr Finance PLCI i”W Company"'i Io a 8uGflc LImIt<'d Company incorpsratetl and uomi< tA in S La• #a u uet The Cmpanies n‹t w. of of ZIJ07. The Company is @gi uvr•r1 gi\1gr me FJiJance Leave Act Nc. id o 200£ and Finale Business w-t No. <* of Zd1 and :s listed In che L otWbiT 5TaX E:,

The registered ofrce oi the en a !s tu‹a erl zt to. 02. De;i P'ace. Cotomoc OF ;nd the bus ness is ca'rad out ac 61, Ohgrmapnfa wwntha. Colombo G7.

Pr1nctpat act4v1tes md Dame o£ o Ations

pr1ncIpa‹ actl '‹cis at we Compa ny comorlse rir.ance team+a, fire purcharny. det'r factorir+g, meQiII@E@n of dgposJts and pawning fgcJd foams t advar ces.

Par end ennty and ultimate pant mtft-y

1.4 btrect#y” respan#1b‹T1ry statement

The Bgard of Oirmors cakes his' responslbll ir/ for he prnparaticn and #r rarlon of che Alamat Stat ements of I:he Company 4s per Thu Qtovl sl g5 if rhc C0mpanles 4« I iv. 07 o£ z007 and r e requirements o£ xc Sr Lanaa Acconnrng standards comprising 5 s anlt LxASs.

1. S

   2.1

   The rinanSta:e=›en i of rhe Company for chc year endec › •“ arch Z025 pre svthorise4 for

   E

   The sratemer o/ flnanñlJl acsltte zs ar 21‘ intarch Z02g, the once s:azemmr, sTaes r of elf cnmpr Wr' lie income, statement of changes -•n quit y @d statement or can not, are the smmary uf mater'at acc-Eng poJcy informa Plan ar'd nt.her expfana£ ry Int arma tion the FJnancat S#atemen£s |’*Financiasltateme-nrs” I of the Compai4y for the par mm e^ad. comply w•ch rtie Int w nka scour ring Standards iSLFRSs.'LMS › as lava dc^ n by the Ins: Jute of Cnartered ^ -rccintants of

   Lab.kb l“CA $r1 Laba- t ar+d the reqs remenEs nf the Companies Act: A. B7 of 7007 and I:he Finance Bwiness s.-t uo. z of zo-1 ana umenrfinerrs £hwero, aha proc'de approgn are disclosures as rerl by the L'rm»g Ries of rhe C+tm0o Sir›c+ Exrfinnge

   Bzs1o of ma¥suramMt

   The FJnan af Sta £emenLs ha» e been prepared nn a fiistoñ cat cost hasis except ror the falling marer!at rems In the statement of f•ncnciat pos'tion:

   J4nt 5NA¥THT FIkIANC E PLC {FORMERLY ENOWN A5 ORIENT FTMNCE PLC ) MATERIAL ACCOUNTING ROLKY TRPORMAYIOIS TO ONE FINANCIAL STATEMENTS

   Page 7

   Reti e• ant b••r••£cs aiiget on

   :.... .... -

   i nves•menr prop+rty: Lark and eu lings

   *0ea"Estate

   z.•

   z.$

   The F nanral StaI ernents are printed in in tankan Rupees, •'nrcn 1s we Compaoy”t factional ciz'rency. All IInancJa informants ptmared in sr Lar+kan Rupee has been r dded to the nearest see a Iw mated other '1se.

   Pr tetlon of Flnancel Starementy

   The assets and IIaGl fltles of the Company printed In Ju statement of f nanc*at posI o• are grow by narole and ilsrta in Bn ordct r a rcftwzs tr•e›r telatwn liquidity ano maturity pattern. w arI;ustment: have hem made ft Innar pnary razors affecting the £'nanc at sha ementa. faaturly analysts Is pr nrnd In Note 57 a tho l•Inane ial STateme-nts.

   Materiafzy md aggro

   in compliance w'rh Lhxs 01 on -9resmrat o of Flnencsa Srar nos-, each material <>•«s of slmlTai irems is I+resented separately In tne Financlaf S{a•m.ents. items qf a dlsslm liar nate+e gr funccigug

   Fvnca assets and financial iabitit let nre orfser and he net amount regeed n ‹ha statemmt oT financial posJtr a+ily wfin here i: 4egatty an enforceable right ro orrser the recogn ted amounts and there s an Intent lean to settte on a new badly, or to realise the asset and settle tf+e tt#bit1ty simultaneously. Incurne and expenses arP not off ser In rfie in•-Anne stazemenr unless r Io required or pwrnittM by any ac rout ng ‹tankard 0y •nteteretarIon, and as specfiratty rhxose4 n th'e nores ro

   Comparative nforftjatW

   Eomparat Jve InFormarlon Jnclurfing quant Ita tJve, narrative and descnptive n1o‹sa ion ‹5 disclosed in tWQeu of Lh0 grid g0i'I0d In lJ•ie FIntany1a1 5taTemenLs in orDer E9 enhaKJ• th0 Un0Pr ST0n• I4I4g if rue current penod's F•nWctat Sratemen Is aria ro enhuce roe In er •per*ar• comparab I ty. one preswtatoo and classf!irariqn gf tne Financial Sta temeots of the previous year are amended. wh'zre relevant ror better preseota£ton and ro be co-para6Te w1th rhcse of the current year.

   GaJn$ concern

   The ii rectors have mnrb• an ag@gaent pf the Company's abiT lty tn cont1 'ue as a guing concern ana at e sail fieiJ rhal |t i4a5 j • reborn cv ro conIInc In bush+•+eSs for the fees 0e Fut ure. The asWsment Look info nonsiderat:lan on the ex1st1ng and potent iat ImpIlcarlolls aI Hz nconom1c and otHr erwironmmrat facto+s on b-usineYa operations and performance pf the Cgrngans under votarlie and urertain envronineitai Da-c growos . Tne Boar a 5 not awal e o any rnarenai uncerta inries tfia may cast sfgnJf! can£ aouot Upon the Comgany's abiIJty to cont nue as e young concern. ThweFore, z e

   '+ATERAL ACCOUNTING POLKY UI FOP¥iATI0N TO T HE FINAf•IC1AL 5TATEMEnI T5

   1. Slgrj ifjcan £ at counHng judgments , esttmares and assu mptons

      True fireoaraLion of rlnanciat sta u•mm 4 in ca/orm• y wi t h sr' +an*z 4ccoun ng Standards tc+‹AS and srrRs •cuuii re5 'rar•.cgemenF tr mnke ju0smwrs, esi-imares an0 assumptlrtns r I arfaT rfic apdf Jrac-on or a ccount:'ng pof ielet arid are r uQor red zmu•untu ef asset s. IJabir it Jes, inrome and xr›e • . Me uaI tesul › may differ Frgrn thee j•Sri mates.

      Pair *alue 4f fInanca Instrument*

      where toe Fa ir aI ues pr fnanc'at •“>•rend for.ancat liabitiries recorded in he statemcr'rof financial position cannot be derived from a come markeLe, Thoy are detennlned plug a variety of •au+arIori Loch mlul t hA I I0Ctq je' t hg u'ie g f mm hen atra mooi•ts. Tric ii Guts to Those mcdets are deri red frgm oosW'aDte maWrt data here passable. but If this is not ava itaQte, judgment I required to estabt Jsh

      act siues.

      Ces»ftcaton or flnuctai t•••'•and I to‹T1tes

      1. per StFR s, ‹f›e signi f'can t account ing policies of tne Company pzovlde scope fu I flnanca ••••i•to be cassrf ied and s.ubseqi+enty measured In ro di'Fferent c cegoriw. namelY, a Amort ised Caer, Fa*r Val ue tjnrough Order Compr ct l»cme 1FWD 1i s riñ fair Vatue Throwgn Profit pr Loss FWPL f baies pn iPip fn4 lowJng rrl Ier a:

         • I he en tity's b+is inns mace: for managing Ine financ ia‹ assets as set ot ut In e z.1.a. i.

         • I he gon trac rual cash flow chara• Ien Trñ- Y gf he I ranc ial essers as scL out n ate 1.1. z. z.

           I-pairment tosses on finan6aI aspts

           The measurement of impairment losses nder SLFR8 9 aa ii categories of f nanc at asset raqujr s

           pid-gmznr. In paryJcufitr. thr nstJmz Mon ef the a mount and I:imng ef fstag rash fl ow-I and cattaler al

           *atves wnen determ ip Ing 4mpaJrmen{ uses, Thee esrtmaTes are back' on I he assept Jong abut 4

           numGer of factors and the actual resul is may diFFer. ‹esiJtt1ng in I iJrijrg changesrro ¥r allowance.

           lmparat of g 1TT Md bran d name

           Impairment exJsts when the carrylp va Iue of goodwltt and grand name exceeds ir recc reraffie amount , which Is the hlg her of IIs faJr val ue less costs c' drsgosnt ar+d irS value n w. The Compa ny hns adopted value n use vtu› me‹hud ror lapa itm••.nt aasess n r and viu ratculat ion •t tiasei1 on e fl*scouint:ed cash her t0C F| mode. The cash II owe are derived f• m tr'e Dur4ger fof The new r I lve years ynU u» a i •‹late resTrwtur ing m rn i ies t la t tne Co h pa•w « not ¥er co•nm itted to or s'gnifi c ant fuIturo imet mwuU I het w1\ enhance the petforroance of the Cc•mpany , Thy ieroveraole 4mounT is sen si I we to the di s.count +aLe iused for the OCF rnooes »s wetf aS Why e ecrod fu ture cash- in flows and rhe grow h Iat e usen ror e trapol n m purpose›. Inc kg assumptions used to de•erm me roe recoverable amount of goortwi II and brand name are d isrneed aM fi rrTfier expla'.nod In Mute 7 to the

           Page 9

           o•‹»+d ee +r't obnyau•n•

           the cost o‹ the def ned bcneti r pens ion plan ir deTcr mined using an ac uariai •aua 'on. rrie • ti••nal afua• on mol as making various assumptonr determining the discount n tes. futw-e satary increases, 'mr +t t x rat es etc, Due to Lhe 4rmg• term rtat ure of These pa ns. such est fmaFes as shy er-il to sI$nif wails ncmzain y. Ail a pt ions are r ev ewed a eacfi regan n'g dare.

      2. n de c imi• •ny rise app oprate d'i:'-ount r at e, mana$emmt nmi•1et y me nteres reit oz s• Lanka

   de£ineo oene£irs obttgat nn.

   The mnrzaT it's a te is based on pubIi‹y z va'table mortatity tabtes. flutuie salary Increases are based on

   grated felt ure inffatJou rates and the expected future sa lary Inrreaw rate pf the Compaiy.

   Z .8.6 useful wonomc hves of property. plant and equipment

   useful ecmom ie lives of property. panc and equipment are estimated aa dsctosed n uote z.‹. x to

2. 4.7 8LFR5 T 6 - Leases

frie Cmpany deme+mines the ease term ay ir•e non-‹anceilabe Ter rn o‹ to lease. rogerNrr vt n any periods revered by an option to extend the lease If It Is reasonably Certain re ae exerrisec, o ny neruiss ‹over ed be an opt ion tg terminal e the leave. i £ it s reasona0y celia In nc£ To be exercl sod. The Company can cover at team canFt art that mctude the extens ion and £@mi at.gn motions. The Company nnpTles jug$meor in m'a mating whet no t iy reamaoly certaln whether of •+oT ro exer+;1se tñ,e egrJnn ro renew or retm1nate me lease. Tear i s, it ‹onsioeg all rel Ovent iiacrors sha c•eare an ccor'om ‹ Incentive for ir to e•erc se cimet me rmrwat or reiminatJc+i opiion, 4tte‹ to commenCemenr date. rhe Comp+nny reaswsses me tease Term lf fNye Is g sgr+lfcant ovens g+ cfiange in clrrumst ances tfiat is w1tMn Its control that affei-Is ›rs atjifIry to exercise o+ not fa ever Mse tf e Option zn iciew a T' termini re {e. g., cor'isTrucz•on of s1gni fJcan£ feasehol g mptoement* 0r

+'$ni/ ie ant cv+tom nation of roe ieased ayset›.

Z.8. 7. 2 Estmet Ing zh+ n0temeNtd I DOt'8o *+4rg t'4U

As Inn jam pany I- annot rear|itv determine I he Int eres! rate mpltci I in W l•a e, iI uses its ncremenrat bortovng rate |*IBR" I to measure the lease liable Ities. The iBR i tbe ale of inre•sr char 0* Company would has ra pav ro borfow ver a rm luar term. and with a 51mIta r secunty, t rie iurns necesrany •o obLain an asYet of a aimiar «atue t the nght- gf- u•ie asser In a smta errnomic envi i ñnrr em, The IBR , t rie eii¿re, re/Tec s *yhat The Cc•r•pa ny "wwI d have to pay" ’ , w hich tequirp ost Irr.at oi- when no observable ratos arc avaltabl n j or when they need to ae adjusted to reiter:t t'e tess and condtrions of tf+e lease) . The ComparYy estma ie: the ie9 using oo ww abie Input w hen

nail able arid is requi red ie make cettai n ei'i›tr•›pecltir saJu iments.

7. 9 Changes In Account ing Polfcles

The Company has conssien ly copt ice he accou ing pot ic•m a at periods presented in •hese

Fina ial Srat+•ments , e¥cegt fnr the changes arising out of amen Im@ tS to #ccnnT ny Standards as

2. z a Ch anges to air eady eslst1ng accotmtJng standar de

^'e €nrrrrny Applied cert non stanczrfls and amendments fn/ u e i• I i ime. which are erfectve for

z. I o. Pe• accounrtr•g standards, ammdmenzs ana lntegetat s Issued but not yet eyfeczxe

?he inst ute of Chartered 4ccoun‹anTs of 8n Lanka has s•we the fottAmg iew Sri Lanka Mcount ing Standards which •'itI become apps caol e to financial periods beginning pn pr afre 81.1 January 7d? â' or aI a later date.

no ancl amended standarrts char are .issued but are ngt yeT e4!ecT^ve ar t+ie date of issucnr g pz I hese FJnancJa 1.5 Larement s are oiurl used below .

The accounting pot ches set out below r'axe been app\ed cons1stenty ro aft perfi de prewteo n Th'ese Finanr+at Statements or tne Cmpany ntess othemt it is ndcaTed.

1. Pnanc1aI Nstruments - InIttat recognufon, claMM«atJon and suasequerrt measurement Dare of recognt•n

   Th» Company inlLiatly I aoynses oaris as advances, degoacs and subordlnatéd tiabtiies. etc., or

   the data QN wl frh t d W ofi$inAD•b. Atf OtPiOr !*I48 'CIII *h5tTwfhWU Ill luring rest •Wgy punc hasos and salet 04 rlnanclal assz• › are recognised on thr trade date. whch ty the oare w units the Cnmpany becnma a party o the mntractuat pre stone oi r#e Instrument.

   Inltial measurement oy Wancit Instruments

   cheracrer ¥oc ano the buz ness mode! for manag ng me lnarrummcs. Refer Hate 3. .3 and i. i .‹ fof further det:aIts on ctassiFJcat Jon of ffnanc*af nsrr mS.

   Trarrsacron rosts In re4a tion to rnanca1 assets and fnanciat I ablll ales at fair vats hrcugh prorlt or

   Trade receivables that do not h'as s sign fIcan Amazing component are measured at tteiz transact ie+n price ar mldial r ocogui£ion as defined i« erms 4^i.

   Wen Lhe falr vats of fJnancJa Instruments texreRt trade recelvabes tha t do not have a a gnJflzant Tinanclr g componwt | at mlLiaf rer.agm I Ian g|ffy t z am he rraruacton pr1ce. the Comparry 0CL0UnT 5 ROI Th0 OOY 4 Qf’0f'f 0• tc'SS. aS dWnbzd bel ow:

   Page 1 ¥

   ' 5 based or a valuation technique usIng ony the i+ guts observable in market transacc! or. II e Crmipany recogn lse¥ one dzf/erence Ee rem he r ansacriori p•ce arid faJr value In net gaJnS '' Insses | I rom rrnd1ng, In I:hose rases , where the fair value 1s basgd pn m0lfs fg+ wnicfi some nputs arc nnt ooservabic. me d frerrve between r#e ransac rm arid e and the fair vatue is rjefe+rec| and Is only r ecrtgnised In profit or loss when the Jngwte Jerome gbservabl e, or when ih r

   ir.st rument is der ecognilaed.

   Clas*ficarlqn and subsequwt meas'ureme+it of fInao•• •••

   U per SLFA s IJ”'e C smparry cl assJf'ea aII o‹ i rt TinauJal asseLs fi••w c+i tbe business model fur

   managing to assets and the assets” ‹ontractual terms meass ed ar one of the foow ng:

   • amott ion r ost

   • fair v alum {| uugh otne cmd ehens+ ve income IFVTOEI.i

   • Fair value through prod It or loss IFVTPL t

     me 5 ihsequent measuremeur of finanrial arse to dmends on tnet classi head en.

     8uyneu model aoeswettt

     The Compan'y makes an assessment o/ the objecri e gf a Asinesy model n whIcn an asset Is fiNd at a po‹ •' at io cvrt and n0T atvzscd on lrtttiumm£• by• Insuument basJs beca'use shh best rejects to may •he fnJsiness is m anaged ar+d Jnfc-rma tion is provided to mnnagmmr.

   • tne stated polic e« and obj eat v@ fpr I he pprtfc'I|o ano t ne operas ion of £hcuz' policies In pr aclIce. ii pan •›cuIaf. Whc£[ier management’s s£rate$y focuses on earning cgnt ract uat ntere:T I nue, ma Inta n1ng a par Tcua I Ime rest ra te pr ofiie, matching the duration of the f ingric u1

     a frets to to diJratJon of the IiahitT es tnaT arc I und›ng tree aaser er eat›sng casfi flow

     tfirnugn th e sa Ie of tne asset s•

   • now managers oT th+' business are compensated • e. g. 'herher comp••roa ion iS aseu un the afr

     value of che a e s manager or che ‹ont act'. at cash ftows câI1ected• and

   • rIe frequency, •otwe are tim ng oJ saies In polar perlod and he reacts for such sales and ira expect a t tons afar fJrure sales act lxry. However. nfotmac'on about sales acrimtv is not crmsi der nd in isotaT ion, but as part of an oveia II asnssment of figw the Cpmgaiy' s y:ared onIeru• e for managing t he I nanma asw I s achieved ano a ' tax i low ar e realised.

     The business model assessmeu£ is basec| on reasnnablY wperted scenafJos wirhrn lid Ing 'wnrst case' or ”stress <are’ DCsaroS Jn1o account. If cash flows a fter fnJtJa4 reccgn t ion are real iseg +n a

     ••a tnat iy dfFerent Frgm rfn• Cpmpony’5 @g nan ex9ectar!ons, to Company dues not change t •e class ifi ation of tf z remaining fJnanqJaT asso zero •n tna- Ous mess m0de, Du IiEor parades. such Jnfotma£ion when asserf ng newly criginaTed of new I y purqFgsed financial asstr ggJng fon••af d.

     Assessment af whether cuts aczua cash flows at e solely the pay-en u of pttn cpal ana Interest

     AT a seccnd step of Its =1assff ica1Jon process, the Company assesses I he cut rart nas term5 of I maize iaJ arets I a icennfy meet ner they meet tw sPri rem.

     re he purpose* o/ tnis assesymen‹. "pnnc+pal" 1s ce ined aa rf›e fair •aluc of arc I inane a assor

     on Inc eat •ecognnon and may tz ange c'ver he 1fe oz the finar<lal asset Iror cxampl e, f there are

     r epaymenU of prJrrc Ipad or amot risarisn of to pr emJum '’d1scount i.

     “In Ler osi " ‹s def Ine0 a comi dna fun fcr the rtmn value of money and fgr t@ ct edit r1/ ascii a ed ws we pri ncipaf omnnt out susnd n# ar*ng e pa I rlcutat period o/ tJme and for other gas•r fending ni sks and costs , as eel I as the profJi ma rgin.

     In contrast , ccntracTMt trrms whet Int roduce a more than deminimis1ng expnxvre to izsks a* vol prI iry in the contractual gash blog tfinr are unrelated rg a basi c leM‹ng arrangmm I do mit glue rlsn to conTracTuat cash ftc'ws th or are sotely tfie payments of prtncJpaf and Int ere$T on txt pt'ncpaf arnguint outstand ing. In »ch can. the fina ncint asser is I rquJf o4 o a measured ar

     FY?PL .

     I= assessi ny whenher the contra chat cosh' fits a e sofety the payment s of grl nCipa| a nd Inrzr est 0n pr inripal amoiJn t mrs:anding, #c Conpa ny considers rue contractual terms or the nttiumer'r. Th-s Inches assessing whether the financial asset conratn sw-h a cent ractuaj term Cha I could change the ttmlng 0r amend of conT•acTuat can zie •s brat It mold not meet h s cgnditén. In making rh+' ass••s¿men I , tn e Compa n'/ crmiders me fotlgTng

     • I-ontJngent ex'ents that wsul d cha nge tfie .a mourn{ ang tJnJ ir+g gf Cash F| we

     • le•e‹agefeatures

       < pr epa /men£ and extens'on terms

     • I erms tnat htmlI tfie Compnr+y’s eta im ie ‹ash ftoa s arm specti'led syc‹

     • features tha{ modify Cgn5i derariof me tame vatwe 0f moor

       F lnscla acsers meawred ar amortlW eozt

       A f!nancfaf asset is measured a• amort iseg ccst if if met•'s bo i 0f Use f4IIuwlrtg ‹onCltlc+is and i nor d¥1gnaTed as at KPL

     • tre asset Jâ neid wit hin a bus ness mcdv who ajecT ve 1s To role' assets to crntect contracrua i

cash flows

¥ zr'r cm ract'wt Terrn5 QJ Lhc Iona next asset g he rJse on specJti ed dates rn calm f 5 Cha t a ie ally tN+• payment of prJn cIpa and 1nreres t on the prIr'r.Isa i 8M Jnt OuSta nding.

FJna ncJa4 assets rrieasur ed a I amort Jsed cost are gY en in nudes 7, . 7. 7. ro 3, 1. 3.°I.4 below ,

purchase

Lczns and advances to customers met iJe toans and advances. ant ieaw• ano niI r

eect•i vabi*s ill tic Company.

oe a Is of "Loans and advances to rustome*s" are gin in Not e 18.