Audited Financial Statements for the Year Ended 31.03.2025

LANKA ASHOK LEYLAND PLC FINANCIAL STATEMENTS FOR THE YEAR ENDED

31STMARCH 2025

INDEPENDENT AUDITOR'S REPORT

Report on the Audit of the Financial Statements Opinion

We have audited the financial statements of Lanka Ashok Leyland PLC ('be Company"), which comprise the statement of financial position as at 31stMarch 2025, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policies and other explanatory information as set out on pages 10 to 60.

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

Basis for Opinion

We conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs), Our responsibilities under those standards are further described in the Auditor's 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 Lan1‹,a (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 1s sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

1. Carrying Value of Inventories

   Refer to material .accounting policies in Note 3.9 and explanatory note in Note 21 of the financial statements. The Company held inventories which comprised several ditlerant vehicles, generators and spai'e parts with an aggregate carrying value of Rs. 6,753 Mn as at 31" March 2025.

   KPMG, a Sri Lankan partnership and a member firm of the c.P. Jayatilake FCA T.J.S. Rajakarier FCA KPMG global ofganlzatlan of independent member finns Ms. S. Joseph FCA W.K.D.C. Adeyrathne FCA affiliated with KPMO lfrtemational Ltmlt¥d, a private R'M.D.B. Rajapakse FCA Ms. B.K.D.T.N. Rodrigo FCA English company limited by guarantee. All rights reserved. M.N.M. Shameel FCA Ms. C.T.K.N, Parara ACA

   Ms. P.M.K. Sumanasekara FCA R.W.M.0.WS.B. Rathnadiwakara FCA

   W,WJ.C. Perera FCA

   G.A.U. Karunaratne FCA

   R.H. Rajan FCA

   A.M.R.P. Alahakoon ACA

   Principals: S.R.I. Perera FCMA(UK), LLB, Ahomey-at-Law, H.S. Goonswardene ACA, Ms. F.R Ziyard FCMA (UK), FCIT,

   K. Somasundaram ACMA (UK), R. G. H. Raddella ACA, Ms. D Corea Dhamaralne

   
   
   

   Changes in economic sentiment or consumer preferences, demands and the introduction of newer models with the latest design and technologies could result in inventories in hand no longer being sought after or being sold at a discount. Estimating the future demand and the related selling prices of vehicles, generators and spare parts are inherently subjective and uncertain because it involves management estimating the extent of markdown of selling prices necessary to sell the older or slow-moving models in the period subsequent to the reporting date. We identified valuation of inventories as a key audit matter because of the significant judgment exercised by management in determining appropriate carrying value in inventories.

   Our audit procedures included;

   • Obtaining an understanding of and assessing the design, implementation, and operating effectiveness of key controls that management has established to manage inventories including purchases, issuing inventories, and valuation of inventories.

   • Evaluating whether the inventory provisions at the end of the reporting period were determined in a manner consistent with the Company's inventory provision policy by recalculating the inventory provisions based on the percentages and other parameters in the Company's inventory provision policy.

   • Assessing, on a sample basis, whether items in the inventory ageing report were classified within the appropriate ageing category by comparing individual items with the underlying documentation such as goods receipt notes.

   • Enquiring of management about any expected changes in plans for markdowns or disposals of slow moving or obsolete inventories and comparing their representations with actual transactions subsequent to the reporting date and assumptions adopted in determining the inventory provisions.

   • Comparing, on a sample basis, the carrying value of inventories with sales prices subsequent to the end of the reporting period.

   • Attending inventory counts as at the year end to ensure the existence and condition of the inventories as at the reporting date.

2. Recoverability of Rental and Trade Receivables

   Refer to material accounting policies in Note 3.4.1 and explanatory notes in Notes 19 and 22 (Rental receivable from trade debtors & Trade and other receivables) of the financial statements. The carrying value of Rentals receivable from Trade Debtors amounted to Rs. 262 Mn and Trade receivables amounted to Rs. 465 Mn as at 31" March 2025.

   
   
   

   Assessing the allowance for impairment of Rental and Trade Receivables remains one of the most significant judgments made by management. We identified assessing the recovsrability of receivable as a key audit matter because of the significance of rental and trade receivable to the financial statements as a whole and the assessment of the recoverability of trade receivable is inherently subjective and requires significant management judgment in accordance with SLFRS 09, which increases the risk of error or potential management bias.

   Our audit procedures included;

   • Obtaining an understanding of and assessing the design and implementation of management's key internal controls relating to credit control, debt collections and making allowances for doubtful debtors.

   • Reviewing the appropriateness of the provisioning methodology used by management in determining the impairment allowances against the requirements of SLFRS 09.

   • Recomputing management's estimation of the impairment allowance determined based on the expected credit loss method.

   • Obtaining an understanding of the key parameters and assumptions of the expected credit loss model adopted by the management, including historical default data and management's estimated loss rates. Assessing the reasonableness of management's loss allowance estimate by examining the information used by management to form such judgments, including testing the accuracy of the historical default data and evaluating whether the historical loss rates are appropriately adjusted based on current economic conditions and forward looking information.

   • Evaluating management's assumptions for the expected cashflows and the timing of the expected cashflows in the scenario-based probability weighted impairment assessment of individually significant customers.

   • Assessing, on a sample basis, whether items in the debtors ageing report were classified within the appropriate ageing category by comparing individual items in the report with the underlying documentation such as sales invoices.

   • Requesting confirmations from major debtors and/or verifying subsequent settlements as an alternative procedure.

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 statement and our auditor's report thereon. The annual report is expected to be made available to us after the date of this auditor's report.

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

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

When we read the other information in 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 a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

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

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

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

Report on Other Legal and Regulatory Requirements

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

CA Sri Lanka membership number of the engagement partner responsible for signing this independent auditor's report is 2618.

CHARTERED ACCOUNTANTS

Colombo, Sri Lanka 26* May 2025

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the Yeiir Ended 31 !" March

Note

2025

Rs.

2024

Rs.

Total Non Current Assets Current Assets

1,558,227,356 1,341,746,523

Total Non Current Liabilities Current Liabilities

106,142,442 68,836,150

anr

It is certified that the 'nancial Statements have been prepared and presented in compliance with the requirements of the Companies

A O 0

G R Jayalath

Assistant General Manager - Finance Chief Executive Oflicer

The Boa of Directors is responsible for the preparation and presentation of these Financial Statements. p re signed for and on behalf of the Board of' Directors of Lanka Ashok Leyland P ,

A Am ai-asinghe

Cha mon

Coto oi 26" May 2025

.. . . .. ............ ..

D S Weerakkody

Director

Dividend (Note 13.2) - (18,104,215) (18,104,215)

Total Transactions with Owners of the Company - - (17,043,304) (17,043.304)

The Notes annexed form an integral part of these Financial Statements. Figures in brackets indicate deductions.

For the Year Ertded 31 s' March

Cash flows from Operating Activities

Profit Before Tax Adjustment For :

Note

Rs.

2024

Rs.

1,253,152,498

Depreciation of Property, Plant and Equipment Depreciation of Right of Use Assets Amortization of Intangible Assets

Provision for Defined Benefit Plan

Reversal for Impairment of Trade & Other Receivables Reversal of Provision for Inventory

Finance Costs Interest Income

Lease Interest Income

Gain on Sale of Property, Plant and Equipment Charge of Provision for Free Service

Charge of Warranty Provision

Fair Value Gain on Equity Investments Unrealized Foreign Exchange Loss

Operating Profit before Working Capital Changes

Working Capital Changes in

Increase in Inventories

Increase in Trade and Other Receivables Decrease in Amount due from Related Party Increase in Trade and Other Payables

(Decrease) / Increase in Amounts due to Related Party

Cash (Used in) / Generated from Operations

Interest Paid

Employee Benefits Paid by the Employer

17 276,031

27.5 34,567,421

8 (112,767,891)

9.2 8,910,002

6 (20,728,650)

32 7,280,183

9.1 (104,729)

(1,246,744,866)

27.1

141,871,045

9,393,514

276,031

26,251,758

(28,073,853)

(127,013,905)

10,365.364

(53,883,168)

(144,590,886)

(4,638,736)

1,452,592

9,178,575

(12,142)

264,756

(159,159,055)

1,093,993,443

(1,421,875,000)

(259,197,423)

618,439,973

257,925,482

1,322,153,423

517,446,455

1,611,439,898

(3,134,509)

(18,183,715)

Contribution to Plan Asset Payments / Set off of Income Tax

Net Cash (Used in) / Generated from Operating Activities Cash flows from Investing Activities

Interest Received

Proceeds from Sale of Property, Plant and Equipment Acquisition of Property, Plant and Equipment

Net Cash Flows Generated from Investing Activities

Net Cash Flows Used in Financing Activities

Net (Decrease)/ Increase in Cash & Cash Equivalents Net Cash & Cash Equivalents at the beginning of the year

27.3

31

13.2

(144,668,178)

4,283,410

(200,000,000)

(20,150,357)

(54,312,645)

(788,459,951)

(147,107,165)

(106,612,878)

(275,038,267)

1,336,401,631

191,484,169

10,125,000

(80,395,047)

121,214,122

(23,514,550)

(18,104,215)

(41,618,765)

1,415,996,988

(25,922,389)

Net Cash & Cash Equivalents at the end of the year

Bank Overdrafts

The Notes annexed form an integral part of these Financial Statements. Figures in brackets indicate deductions.

1.390,074,399

1,441,114,057

(51,039,458)

1,390,074,599

1. REPORTING ENTITY

   1. Domicile & Legal Form

      Lanka Ashok Leyland PLC ("the Company") is a Quoted Public Limited Liability Company incorporated and domiciled in Sri Lanka under the provision of Companies Act, No. 17 of 1982 and re-registered under the New Companies Act, No. 07 of 2007. The registered office of the Company is located at Panagoda, Homagama.

   2. Principal Activities and Nature of Operations

      The Company is involved in import and assemble of Semi-Knocked-Down (SKD) chassis, fabricate bodies, import and marketing of Ashok Leyland buses, trucks, truck chassis, spare parts, power generators and let vehicles on hire. The Company also carries out repairs and restoration of commercial vehicles.

      There were no significant changes in the nature of principal activities of the Company during the financial year under review.

      The number of employees at the end of the year was 274 (2024 - 250).

   3. Ultimate Holding Company

      The Company was incorporated in 1982 as a joint venture between the Government of Sri Lanka and Ashok Leyland Limited - India. As at the reporting date, 41.77% of the share capital is held by Lanka Leyland (Private) Limited, a fully state-owned entity and 27.85% of the share capital held by Ashok Leyland Limited

      - India.

   4. Financial Year

      The Company's financial year ends on 31st March.

2. BASIS OF PREPARATION
   1. Statement of Compliance

      The Financial Statements of the Company have been prepared and presented in accordance with Sri Lanka Accounting Standards (referred "SLFRS/LKAS"), laid down by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka). These Financial Statements, except for information on cash flows, have been prepared following the accrual basis of accounting.

      These SLFRSs and LKASs are available at the website of CA Sri Lanka - https://www.casrilanka.com. These Financial Statements include the following components:

      • Statement of Profit or Loss and Other Comprehensive Income providing the information on the financial performance of the Company for the year under review.

      • Statement of Financial Position providing the information on the financial position of the Company as at the year-end.

      • Statement of Changes in Equity depicting all changes in shareholders' funds during the year under review of the Company.

      • Statement of Cash Flows providing the information to the users, on the ability of the Company to generate cash and cash equivalents and utilization of those cash flows.

      • Notes to the Financial Statements comprising Accounting Policies and other explanatory information.

   2. Statement of Presentation

      The Financial Statements of the Company have been presented in compliance with the requirements of the Companies Act No. 07 of 2007 and provide appropriate disclosures as required by the Listing Rules of the Colombo Stock Exchange (CSE).

   3. Responsibility for Financial Statements

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

   4. Approval of Financial statements

      The Financial Statements of the Company for the year ended 31st March 2025 were approved and authorised for issue by the Board of Directors on 26th May 2025.

   5. Basis of Measurement

      The Financial Statements have been prepared on the historical cost basis and applied consistently with no adjustments being made for inflationary factors affecting the Financial Statements, except for the following material items in the statement of financial position.

      Item	Basis of Measurement
      Retirement Benefit Obligation	Measured at its present value, based on an actuarial valuation as explained in Note 27. The accounting policy is described in Note 3.11.2.
      Equity Instruments	Measured at its fair value in Note 18.1. The accounting policy is described in Note 3.3.2.
      Lease Liability and Right-of-use Asset	Measured at its present value of the lease payments. The accounting policy is described in Note 3.15.

   6. Functional and Presentation Currency

      The Company's Financial Statements are presented in Sri Lankan Rupees, which is the Company's functional and presentation currency and no level of rounding have been used in presenting amounts in the Financial Statements, otherwise indicated.

   7. Materiality and Aggregation

      Each material class of similar items is presented separately in the Financial Statements. Items of dissimilar nature or function are presented separately unless they are immaterial as permitted by the Sri Lanka Accounting Standard - LKAS 01 on 'Presentation of Financial Statements' and amendments to the LKAS 1 on 'Disclosure Initiative'.

   8. Use of Judgments and Estimates

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

      i i

      Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

      1. Judgements

         Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the following notes.

         Note 3.16 & 5- revenue recognition: whether revenue from contracts with customers are recognized over time or at a point in time.

      2. Assumptions and Estimation Uncertainties

         Information about assumptions and estimation uncertainties as at 31" March 2025 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes.

         1. Useful Lifetime of Property, Plant and Equipment and Intangible Assets

            Note 3.6/ 3.7 & 15/ 17: The Company reviews the residual values, useful lives and methods of depreciation of Property, Plant and Equipment at each reporting date. Judgment of the management is exercised in the estimation of these values, rates, methods and hence they are subject to uncertainty.

         2. Deferred Taxation

            Note 3.22.2 & 20: Deferred Tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred Tax Liabilities are recognized for taxable temporary differences and for deferred tax assets, availability of future taxable profits against which deductible temporary differences can be utilized is assessed periodically.

         3. Defined Benefit Plans

            Note 3.11.2 & 27: The cost of the defined benefit obligation is determined using an actuarial valuation. The actuarial valuation involves making assumptions about discount rates, future salary increases, and mortality rates, etc. Due to the long-term nature of this obligation, such estimates are subject to significant uncertainty.

         4. Provisions for Obsolete and Slow-Moving Items

            Note 3.9 & 21: Management's judgment is used in the estimation of the amount and percentages of slow-moving items when determining the provisions for obsolete and slow-moving items. These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the provision made.

         5. Impairment Losses on Trade Receivables and Rental Receivable from Trade Debtors

            Note 3.4, 19 & 22: The Company reviews its individually significant receivables at each reporting date to assess whether an impairment loss should be recorded in the profit or loss. In particular, management's judgment is required in the estimation of the amount and timing of future cash flows when determining the impairment loss. These estimates are based on assumptions about a number of factors and actual results may differ.

            If impairment is not required based on the individual assessment all such individually significant balances are then assessed collectively, in groups of assets with similar risk characteristics. The Company measures loss allowances using the Expected Credit Loss (ECL).

            When estimating ECL, Company determines whether the credit risk of a financial asset has increased significantly since initial recognition. For this the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company's historical experience, informed credit assessment and including forward-looking information.

   9. Going Concern

      The Directors have made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future and do not foresee a need for liquidation or cessation of trading. Furthermore, the Management is not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern. Therefore, the Financial Statements of the Company continue to be prepared on a going concern basis.

3. MATERIAL ACCOUNTING POLICIES

   The accounting policies as set out below have been applied consistently to all periods presented in these Financial Statements of the Company unless otherwise indicated.

   1. Foreign Currency Transactions

      Transactions in foreign currencies are translated to the functional currency applying exchange rates prevailing at the dates of the transactions.

      Monetary assets and liabilities denominated in foreign currencies are translated at the closing rate of the functional currency prevailing at the reporting date. Foreign currency differences are generally recognised in profit or loss.

      
      
      
   2. Current versus non-current Classification

      The Company presents Assets and Liabilities in Statement of Financial Position based on current / non-current classification.

      An asset as current when it is:

      • Expected to be realized or intended to sell or consume in normal operating cycle

      • Held primarily for the purpose of trading

      • Expected to be realized within twelve months after the reporting period, or

      • Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

        All other assets are classified as non-current. A liability is current when:

      • It is expected to be settled in normal operating cycle

      • It is held primarily for the purpose of trading

      • It is due to be settled within twelve months after the reporting period, or

      • It does not have an unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

      The Company classifies all other liabilities as non-current. Employee Benefit and Lease Liability not payable within 12 months are classified as non-current liabilities.

   3. Financial Instruments
      1. Recognition and Initial Measurement

         A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity instrument of another entity.

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

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

      2. Classification and Subsequent Measurement

         On initial recognition, financial assets are classified as Amortised Cost, FVOCI - Debt Investment, FVOCI

         - Equity Investment or FVTPL.

         Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

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

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

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

         Financial asset measured at amortised cost comprises trade and other receivables, rental receivable from trade debtors, investment in treasury bills, repo investments, fixed deposits, debentures and refundable security deposit.

         On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment-by-investment basis.

         All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

         FVTPL comprises investments in equity shares.

         Financial Assets - Business Model Assessment

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

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

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

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

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

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

           Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company's continuing recognition of the assets.

           Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

           Financial Assets - Assessment whether Contractual Cash Flows for Solely Payments of Principal and Interest

           For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

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

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

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

         • prepayment and extension features; and

         terms that limit the Company's claim to cash flows from specified assets (e.g. non-recourse features).

         A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

         Financial Assets - Subsequent Measurement and Gains and Losses Financial Assets at FVTPL

         These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit OT lOsS.

         Financial Assets at Amortised Cost

         These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

         3.3.3. Reclassification

         Financial assets are not reclassified subsequent to their initial recognition, except and only in those rare circumstances when the Company changes its objective of the business model for managing such financial assets.

         Financial Liabilities are not reclassified as such reclassifications are not permitted by SLFRS 9.

         3.3.4 Derecognition Financial Assets

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

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

         Financial Liabilities

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

         On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

   4. Impairment

      1. Non-Derivative Financial Assets Financial Instruments

         The Company recognises loss allowances for ECLs on financial assets measured at amortised cost.

         The Company measures loss allowances at an amount equal to lifetime ECLs. Loss allowances for trade receivables are always measured at an amount equal to lifetime ECLs.

         When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company's historical experience and informed credit assessment and including forward-looking information.

         The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 180 days past due.

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

         Measurement of ECLs

         ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls. ECLs are discounted at the effective interest rate of the financial asset.

         Credit-Impaired Financial Assets

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

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

         • significant financial difficulty of the debtor;

         • a breach of contract such as a default or being more than 365 days past due;

         • adverse changes in the payment status of the debtor;

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

         Presentation of Allowance for ECL in the Statement of Financial Position

         Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

         Financial Assets Measured at Amortized Cost

         The Company considers evidence of impairment for financial assets measured at amortized cost (rental and trade receivables) on specific assets, accordingly all individually significant assets are assessed for specific impairment.

         The Company considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment.

         In assessing collective impairment, the Company uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management's judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends.

         An impairment loss is calculated as the difference between an asset's carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, then the previously recognized impairment loss is reversed through profit or loss.

      2. Non-Financial Assets

         The carrying amounts of the Company's non-financial assets, other than deferred tax and inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset or cash generating unit (CGU) exceeds its recoverable amount. Impairment losses are recognized in the statement of profit or loss.

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

   5. Stated Capital Ordinary Shares

      Ordinary shares are classified as equity. Costs attributable to the issue of ordinary shares are recognized as an expense.

   6. Property, Plant & Equipment

      Property, Plant and Equipment are recognized if it is probable that future economic benefits associated with the asset will flow to the Company and cost of the asset can be measured reliably.

      1. Cost

         All Property, Plant and Equipment are initially recorded at cost and subsequently stated at historical cost less depreciation and any impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located.

         Expenditure incurred to replace a component of an item of Property, Plant and Equipment that is accounted for separately, including major inspection and overhaul expenditure, is capitalized. Other subsequent expenditure is capitalized only if it is probable that the future economic benefits embodied in the item of Property, Plant and Equipment will flow to the Company and its cost can

         be measured rel iably. The costs of the day-to-day servicing of Property, Plant and Equipment are recognized in the profit or loss as incurred.

      2. Depreciation

         Depreciation is calculated to systematically reduce the cost of items of Property, Plant and Equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognized in profit or loss.

         The Company provides depreciation from the date the assets are available for use whereas depreciation of asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognized, at the following rates on a straight line basis over the periods appropriate to the estimated useful lives of the different types of assets.

         Freehold Factory & Building	2.5%
         Machinery & Equipment	5%
         Factory Equipment	5%
         Data Processing Equipment	25%
         Office Equipment	10%
         Furniture & Fittings	10%
         Motor Vehicles	20%
         Plant & Machinery and Equipment - Assy Line	20%
         Tools and Equipment - Factory	25%
         Freehold land is not depreciated.

         All assets carrying amounts are written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

         Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

      3. Derecognition

         An item of Property, Plant and Equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized net within other income in profit or loss.

      4. Capital Work-In-Progress

      Capital expenses incurred during the year which are not completed as at the reporting date are shown as Capital Work-In-Progress, whilst the capital assets which have been completed during the year and put to use have been transferred to Property, Plant & Equipment.

   7. Intangible Assets

a) Cost

Intangible assets wholly consists of cost of computer software acquired by the Company and have finite useful life. Intangible assets are measured at cost less accumulated amortization and impairment losses.