LOLC FINANCE PLC
FINANCI AI STATEMI‹N0“S
roR THr. vrAo ENI3I‹I) 3lST MAltCIJ 2025
Deloitte.INDEPENDENT AUDITOR'S REPORTTo the Shareholders of LOLC Finance PLC
Report on the Audit of the Financial StatementsDeloitte Partners
100 Brayhronke Place
Colombo 2
Sri Lanka
+?4 11 771 ?646
Fnx: *SP IJ 730 7237
www.deIoitte com
OpinionWu hive audited tlzu financial stateruei is of LOLC Final ce PLC (the Company) which cofriprisu the statcmcf t of financial position as at 31 March 2025, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 31 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 OpinionWe conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs). Our responsibilities under those standards are further described in the Auditor's ResponsibiliDes for the Audit of the Finaiicial Statements secfion of our report. We are independent of the Company in accordance with the Code of Ethics for Professional Accountants issued by the Institute of Chartered Accountants of Sri Lanka (”CA Sri Lanka Code of Ethics”) and we have fulfilled our other ethical responsibilities in accordance with the CA Sri Lanka Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Xey Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most signihcance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit cf tic financial statements as e whole, and in forming our opinion thereon, and we do not provide o separate opinion on these matters.
C S Manoharan FCA, T LJ Jayasinghe FCA. M D B Boyagoda FCA, H A C H Gunarathne FCA, MP M T Gunasekara FCA, N R Gunasekera fiSA, M S J Henry FCA, M M R Hilmy FCA, H P V Lakdeva FCC, K M D R P Manatunga ACA, M M M Manzeer FCA, L A C Tlllekeratne ACA,
D C A J Yapa ACA
Regd Office: P.O. Box 91B, 100 Brayhronke Place, Ca!orriho 02, Sri Lanka. Reg. No.: v7/4179
INDEPENDENT AUDITOR'S REPORTTo the Shareholders of LOLC Finance PLC (Contd)
Report on the Audit of the Financial Statements (Contd)
Key Audit Matters (Contd)
Key audit matter
Allowance for expected credit losses on loans and
advances to customersRefer accounting policy section 2.2.10 impairment losses on financial assets and Notes 8.1,19 and 46.2 to the financial statements.
As at 31 March 2025, total gross amount of rentalS receivable on lease assets, loans and advances, factoring receivable and margin trading receivable amounted to Rs. 305,240,662,250, with a total allowance for impairment of Rs. 7,731,522,493. Total net amount of loans and advances represent 68% of the total assets.
How our audit addressed the Key audit matter
The audit procedures performed to assess the adequacy of the allowance for expected credit losses on loans and advances to customers, included the following:
Obtained understanding, evaluated, and tested the design of key controls in lending and credit risk mifigation process.
Assessed the appropriateness of the criteria used by management to determine whether customer credit exposures show signihcant increase in credit risk or are impaired.
Management's esfimates relafing to credit losses are « Assessed the appropriateness of the design highly subjecfive as a result of the signihcant and imp(ementation of the ECL model, uncertainty and judgement associated with the including the reasonableness of significant estimation of expected future credit losses. The judgements made and assumptions used by complex assumptions in respect of the timing and management which included, cash flow measurement of expected Credit losses (ECL), involved esflmates, discount rates, expected
in this process include: recoveries when defaults occur and M2nagement overlays.
Determination of what constitutes significant
increase in credit risk, and timely allocation of qualifying assets to the appropriate staged in accordance with SLFRS 9.
e Modelling assumptions and data used to develo and run the models that calculate the ECL.
e Judgements involved in the determinafion of the appropriateness of economic factors as forward-looking variables and the future forecasting of these variables.
Appropriateness, completeness and valuation of
Checked the reasonability of the macroeconomic and other forward-looking variables used by management, by comparing those against reliable publicly available information.
Checked the underlying calculations and data on a sample basis for accuracy and completeness; and
management overlays introduced to capture risks • Assessed the adequacy of impairment not identified by the impairment models. related disclosures in the financial
statements.
INDEPENDENT AUDITOR'S REPORTTo the Shareholders of LOLC Finance PLC (Contd)
Report on the Audit of the Financial Statements (Contd)
Key Audit Matters (Contd)
Key audit matter How our audit addressed the Key audit matter
Measurement of provisioning for individually Based on our procedures, we found the significant exposures including the assessment of methodology adopted to be appropriate, and expected future cashflows and the timing of these the estimates and assumptions used in the ECL cashflows, probability weighting of cashflow scenarios model to be reasonable.
and collateral valuations. The impairment of loans and advances to customers using the ECL model was considered as a key audit matter due to:
The complex calculafions with key variables used in fhe ECL model requiring significant management judgment and the use of assurnpñons; and
The magnitude of the reported amounts of loans and advances to customers and the impairment allowances thereof.
Assessment of fair value of land buildings in investment properties and fair value of freehold land, buildings and motor vehicles in property, plant and equipment (PPE)
Refer accounting policy section 2.4 investmentproperty and 2.5 PPE respectively and Notes 7.1, 24
Our audit approach included the following procedures:
» Assessed the competence and independence of the external valuer engaged by the management for the valuations.
and Note 26 respectively to the financial statements. • Checked the completeness and accuracy of
the data provided by management to the valuer.
The Company engaged independent valuers to
determine the fair values of its investment properties • Obtained the valuation reports and as well as freehold land, buildings and motor vehicles evaluated the appropriateness of the
classified under property, plant and equipment. valuation methodology adopted by the
external valuer by comparing with methods generally used in the valuation of similar properties; and
INDEPENDENT AUDITOR'S REPORTTo the Shareholders of LOLC Finance PLC (Contd)
Report on the Audit of the Financial Statements (Contd)
Key Audit Matters (Contd)
Key audit matter
As at 31 March 2025, the investment properfies was carried at a fair value of Rs. 55,029,900,000 and the freehola land, buildings and motor vehicles were carried at an aggregate revalued amount of Rs. 12,926,524,998. The fair value gain on investment properties amounting to Rs.
2,740,806,466 and gains on revaluation of freehold
How our audit addressed the Key audit matter
Evaluated the relevance and reasonableness of the significant assumptions used in the mauations by applying our knowledge and the publicly available informafion on the real estate market such as range of offer prices for real estates of similar nature and location.
land, buildings and motor vehicles amounting to « Assessed the adequacy of the related
Rs. 2,037,975,138 had been recognised in the disclosures made in the financial statements. financial statements for the year ended 31 March
2025. Based on the work performed, we found that the valuation methodology and assumptions used in
The valuation of both investment properties and the determination of fair value of both freehold land, buildings and motor vehicles investment properfies and freehold land,
involved signihcant judgement and were based on buildings and motor vehicles as at 31 March 2025 assumpfions, including prices of comparable to be appropriate and reasonable.
property transactions adjusted for differences in key attributes such as, property size, shape, legal restrictions, access to main roads, the physical condit on uf buildings and depreciated replacement cost per square foot.
The valuation of investment properties and freehold land, buildings and motor vehicles were considered a key audit matter due to the significant judgement involved in the estimate of fair values and the significance of these assets to
the financial statements.
INDEPENDENT AUDITOR'S REPORTTo the Shareholders of LOLC Finance PLC (Contd)
Report on the Audit of the Financial Statements (Contd)
Other Matter
The financia! statements of the Company for the year ended 31 March 2.024 worr ar;cfitecI by another firm of
auditors whose report, dated 27 June 2024, expressed an unmodified opinion on those 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. 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 informafion and we do not express any
form of assurance conclusion thereon.
In connecron with our audit of the financial statement5, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other informafion 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 Annual Report of the Company, if we conclude that there is a material ml5Statement therein, we are required to communicate the matter to those charged with governance and take appropriate actions based on the circumstances.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operafions, or has no realisnc alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
INDEPENDENY AUDITOR'S REPORTTo the Shareholders of LOLC Finance PLC (Contd)
Report on the Audit of the Financial Statements (Contd)
Auditor's Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether chic 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 judgement and maintain professional scepficism throughout the audit. We also:
e Idcnfify and assess the risks of material misstatement of the Inancia statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, ancl obtain audit evidence thnt 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 resulnng 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.
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 effecfiveness of the Company's internal control.
o Eva!uate the appropriateness of accounting policies used and the reasonableness of acccunrng estimates and related disclosures made by management.
e 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 condifions 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 event5 OF condifions may cause the Company to cease to continue as a going concern.
Evaluate the overall pre5entation, structure and content of the hnancial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
To the Shareholders of LOLC Finance PLC (Contd)
Report on the Audit of the Financial Statements (Contd)
Auditor's Responsibilities for the Audit of the Financial Statements (Contd)
We communicate with those charged with governance regarding, among other matters, the planned scope nncl timing of the aucfit ance signifier nt nriclft hnclfngs, inclurling any significn nt flehciencies 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 signihcance in the audit of the financial statements of the current period and are therefore the kev audit matters. We describe these matters in our auditor's report unless law or regulation preclucles 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 informaron 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 4084.
27 June 2025
Net gains / hisses) *rom mfl:nd
Not O1J1o*F O@ frill rig, liicoiné
Sundry and othcr operating inccme
6 "’’’’’’’’’“’’’’’2;01l,i27,486’’•
7,395,143,911
50JG1792W02
I otal impairiiient (charge) / rei'ersa1 Tel operating illcoiuc
(I ,625,7 15,1.4.1 )
(2,7fi7, 2, 4)*
(263.002,225) (4,656,710,270) 46,lti6,082,6J3
PcrsonncJ expense.s (6,88%,450,’056)
Depreciation and amortisation (1186J0S,70›)
Other operating expenses (3,034J35,2251
'!’utuI oprr*‹ing cxprnsH 2112 10,98J)
Profit from operatlonx before ’AT on finaitiai sern ices 2J,979,371, 48
”I”axes on financial services Profit from operating activltiés
STATEMENT OF PROFI T OR LOSS AND OTI I ER COMPRE1-INNSl VFD INCOME
Cross inc01rIc
8b,7K.697.g2l
Interest income
_ _
_
Intercst expense
Net inl crest iincome
h’i°0 dfid COtTlK 1>S l0r1 I nC 0jTj*
1.css: Fee and. commission e*y'erise
2,968,?29.844
Act fee anda commission income
{924,675,150) 2,043,fifi4,60J
Share of profit of equity accounted invested | 22.2 | 33,933,61 7 | |
Profit he£oze it›come ta1 expense | 2l;547,495;316 | ||
Income tBx cxpu°nse | 13 | ||
f'rofit f0r'titc pcri0d | 21,5J7,405,316 |
Other comp rehenstvc income
I ferns fhet will ne›'er be fec1asslfled to yroflt nr losn Gains on remeasurcmcnt.oL defined benefit liability Less: Deferred tax effHt on actuarial t;ains
Net actuarial gains on defined benefit plans
27,39S,62J (8,218,687)'
19,176,937
Nel c„hange in Fair value (equity investments Bt FVOCI)
Tofal ol’heads tbat will oever be reclassified to profit or loss
f29,428,973)
(10,252,036)
Total other comprehensive income, oef of t9x
(l0,2s2,036)
Tolal comprebensie income ror tbe period
Baiit earnings per share (Rs.)
21,537,243,280
0.65
Figures in br8ck+Is indicate deductions
The annexed notes to the financial statements on pages 12 through 64 fonn an integral p6rt of these financial stasments.
LOLC I'inancc PLC
STATEMENT OP FINANCIAL POSITION
2Ij24
280,245,48l y,3 ix,368,248
.’./.. I8
I'/.
. *•4@. ...
33,324,963.78f›. 32,2I5,625,IJ57
207,309, l3'?,7s7 Zu. 1.4,82g; 164,560 ”
2I 333,720,y53
2J'/,6J l,‘/62,3'7
T2,990,94G,525
378,327,445
1.4,238,536,S6O I I .‹K2,85J,827
’" 60,7,GJ9 ” *39,182,733
IS
Cesh, and tash atjiiivnienls
riaccmcnts yilh banks.
•i,0l 7,447,042 „
” " " 20 223.7l7J28.979 206,568,22d, l25
.80’ 1.5,fi80 19.7T T,J07,437
rircment benefit o’bligctio/t
1I 752,33S,774 7 j0,fi60,950.
Current uix I abilities
.2.4,536,628,015. 1.7,637,751-273
80
2
7
Olfici fescrrcu 33.1 9,154.2S7;760 b,40r,S25,710 R 6 5.8 3 3
”l”otaI equTly '14!I,fi23.9J8, fi9 J 22,3J9,J‘71,198
Te a y
£'ontingcnt Jobtlltles qnd ron njltments 17 32,96Y.6,63,77fI 3tI,sos,02e,7S‘f
Nel nsset vnluc her shiim „ .x 4.S2 3.'7fi_ 'Ie anj1e•:ed nojcy to jhe fiuartcial slntemcnts uit patjts l2 iliinigh /i4 tom 8n integral part pf ticsc financial staicincijl9',
Certification :
1”hesc tina‹icitIl stoiemznts ha'« been preparcct in compliance with 1ke ru'qiiremcnIs oFlhc Companies Act No. 7 oJ”20L7.
The j3onrd of!Jirc'clors is rnponsiblu* for tit preparation and preszntntion oFihczc financial siaiemcn‹i. Approy
(Fdr.) Krishsn Thllaka‹utic
Uireclor / CEO Cl›uiriuiiu / f'ion 1-scrflI ice Director
LOLC Finance PLC
STATEMENT OF CHANGES lN EQUITY
For the year ended 31st March 2025
Stared Capital Statutory Revaluation Cash ljow 1'’zir:Vutue Fteguletory los:s Merger iteservc itetuinctl ; .:;.Totnl.Equity.
Reserve Reserve Hedgt Reserve t1I0WfillW Eeni ingfi ’ ’ '-' ' '' ' ’ -Reserve Reverse
Note
R.s.
Batunce zs at 01 April 202'3
Pntirtor the period
Other comprehensive income, net of Income tax Remeasuremefrls of defined bnnerii 1 iability Revaluation loss on fair value through OCI investments Totai otser e»rnprcfiensivc income for tbe period
306,993;805,501 5,213i771;358 1,247.187,997 41,014,4fS 331,6g8,639 3.23 ].fi00,379 (262;914.88f,C9) 4fi,664.209i198 -‘J:100,808,22†;91†’J
36. - - -
35.3 (cJ - -
TotslcowpbeDsw*iooomefofiAepenod
Transfer to Statutory Reserve Fund 35.1
Transferred to / (from) regulatory loss allow ce reserve 35.3 (d) Tool tmnssctlons recorded directly in equity
Bilnnte as at 01 April 2024
- 1,077,374,766 -
- I.0?7,5'?4,766 - - - J,?84,623,t ?3.
306i993,805i501 6,291,146,123 I,247;187.997 41,014.495 302,199,666 6,8I 6,123iSSJ (262;9I 4,ss9.s49 64,s6s,ne3,s i 2 " :' 122,345,471,198:-
Total cozopzebeasi«e izicoose For tbe.period
Profit for the period -
Other oornpzcheasive income, oct of ineome tex
Remeaswments of dtfined benefit liability 36
Revaluation gain on property. plont and equi pmeni 35.3 (a) •
- 2,010;6S0, T99 - - - -
Revaluation gain on fair vine through OCI invesonens 35.3 (c) -Totnl other coxnprehe•sive incense For the period -
Tota't compcebeo9 've uieome fbr the period
T ions recorded directly in equity
- 2,010,650,199
— *.0:10.fi50.199
- 45,393788
- 't5,393N88 -
- .43,393,-b8
- 4.393288’::
- 37?92::78 ’... •2.093,36,363‹
ft d to stated ca ital durin ltte ear Trans Statuto Reserve Fund
Reval surplus transferred to retained earnings
34 (262,914.889,649)’
. 5. 1 - l,254,;257.040 -
u n th osal of fixed assets 35.3 (a) Transfe o / from) ru ulaio loss.alIowante reserve 35,3 (d) Transf o retained eamin duri the ear 36
Totnl etions recorded directly i• equi
ac 51 Marcb:2025
- -(9.1,911,123) -
- - - - • (572,244,4 83} - 57*,244,4 83 .. °. : .' .-’ ' ‘ '- !....- .-'
- - 424,641,896 (41.014,495 178,499,439.) - - fi44, I 5S,830 -(262,914;889,649) I JS4;2S7,040 (SI 6,053,01:9) .(4I ,014,495) (178,499i439). (S72,244,4't3) '262.914,889.649' *4,054,396 ’ '. i':' - - :-.’
44,07&91• BS2. 7,545,403,163 2;741;285.J76 - 69,093.Slfi G,z43,8?9,0C9
T ered noies to the financial statcmenu on pages 12 •duough &t form .an integml p8rt If these financial gtatcmenls.
I.f3I.I? I'l14ance PI.C
S"I“ATEMENT OF CASI I FLOWS
fiazh flows from .opct’a‹fng jicti›'it›r's
Nei mark-to-market gé.'*ñ-P.°'”’”°?*“"’““""'"’
%l,S47,J9?,a]7
(3.79U,7US.91.7)
ifdrrvtives- fnmvaironWactS
13,y93,048
( i l,076,302)
(10ñ,dG I .BI 2j
34,?1.1 ,000
Share uf( ro IMoss o£«ssoci8te, nct of tax
In USA St C:K{^ 11s0
£Jptniting profit Lerore. cIin›iges ii o}›crating mets1 linhiiitccs
C'hange in am0unLs'due to / ciue frum ieT8ted partiu's
(strange in fin cial asse(s ai arriort:sr/*cost loans and advances
I ntcre'st paid en deposits.
Benefits pald ofl defined beii*fi1 plans Income tax paid
Nor rash from /{used iii) operating act i*'ities
3 I
32
Lftsb flor’s lr0ny investing ac(ivities
Purchase Of pr0pC ', plant and equipment / jnve5lm'em pfopeit’
Proceeds From sale of property, plant A equipment / inveslment propcrt}’
Purchase of govemnteni securities
Proceeds From sale o1 government securities
Net proceeds from placements with banks Nvt proceeds from investments / debi securities Net prbcer'du From the disposal of 8ssocinte
5, 1.26,324,1 42
11,978,302
Nel rash flows used in in›'esting activities (8, I65.661,3s6)
Cash flows tr0m financing actin ities
Cash f3O9''S ffoIr1 I nteresl ilrtfig b0ttoWin gs Repayment of interest bearing borrowings Proceeds from iasuc / (disposal) of debentures
Repayment oI principal portion of lease liabilities
[ntuest paid on borrowings
Net czsb flows from / (used in) financing etilvlties
decrease in cut and tasb e Cub and cesh ulvalents at the be tnn Cash and cash .ents at lbe en
278)! (l,23i,6s9,7 i4j
66:,669":. , 7,70O,92”6,"3--?3
.?0,382 6,469,266,659
The.annexed notes to the financial statements on pages 12 through 64 Tom an integr4 part of Desc financial Statements
NOTES ’I'O TH FINANCIAL S"f‘A"I“EMENTS
For the yenr ended 31st Slat ch 2025
REPORT1h€I E-QUITY
LOLC Finance Pt.C (Tie Company”) is e quoted publ ic companj w'ith limited iiabiliiy incoijxinisd on 13 Decelnt›er 2001 and domicileii in .Sri 1-ankv The regñtervd office ol’ the Company is at No.l00f 1, Sri Jayewardencpura Maivalha,: Rajagiriya.
The Company has been registered uñth ihe Central and of Sri Imuka as a Finance Corn peny under the provisions of the Finerice Tlusiness Act No. 42 of 2011. The Company has obtained registration from the Securities. an.d Exchange Commission, as s Marital Intermediary io perform the functions of a Mc"giii Provider uudv•r section I9A of the Securitics & Lxchange Commission Act No. 36 of 1987 as amentled by Act Nos. 26 of 1991 & l8 of 2003.
Parent entity and Ultimate Parent Compare*
The Company’s immediate jnrcnt is LOLC Ceylon holdings Limited end ultimate parent nude ing and controlling enlity is LOLC Holdings I'LC, wtich is
1.I.3 Priocipsl .4cti›”itics aod Nature.of Uperatioos
ThePrincipal activities oFthe Company comprised of leasing, loans, ma in tJadinB. mobilization oF puhl ie deposits and alternative financing°. There were no significzn t changes in thc nature oFthc yrincipaT activities oFthc Company during the financial period under red ie\',
J.J.4 Directors' Responsibility.Stetemeiit
The Doard of Oircclors takes the responsibility for the preparatiop and presentation of these Financial Statmcnts as per the provisions of the Companies Act J‘4o.07 o£2007 and the Sri Lanka Accounting Standards.
humber of EmployeesThe staff strength of the Company as:at 31 Marth 2025 was 5,0d.3 (March 2024 — 5,058).
B.4SIS OF PR EPA RATION
Statement of compliance
The Financial Statements of the Company have been prepared in accordance. with Sri Lada Accounting Standards (SLFR Ss and LKASs) promulgated by the fnslitute pf Chartered Accountants of Sri Lanka (ICASL) and comply with the requirements .of the Companies Acl. No. 7 of 2007, the Rngulalion of Finanté Business Act No.42 of 201 I Bnd amendments there lo.
These Financia1 Statements incl ude the Following components
- a State ment of Profit or Loss and Other Comprehensive Income providing the information on the financial perform ance oFthe Compan, ror the period un&r review,
a Statement of Financial Position pmviding the infonnation on the financial position of the Company ax.at the period-end;
a Statement of Changes in Equity depicting all changes in shareholders of Changes in Equity and depicting all changes ihe Company;
a Statement of Cash Flows providing the inform..ation to the users, on ltte ability of ltte Company to generate .cash end cash equivalents and the needs of entity to utilize those cash flows; and
Noks to the Financial Statements comprising Accounting Policies and other explanatory information. details of the company's accounting policies are included in Note 2.
Dale ofsuthorlmtion of issue
Tlje Financial Statements weru authorized for issile by the Board of Directors on 27th June 2023,
Basle of measurement
These financial statements have been prepared on a historical cost basis except for the followi maerial items, which are measured on an alternative buis on each reporting date:
Items hleasurement basis
Omivative financial instruments Fair value
Finaflciil assets rgcogttised through profit or ]o4s - measured at fair value. .Faé vglue Financial assets measured at fair value through other comprehensive income Fair value Investment properly Fair value
Land, buildings and motor vehicle Fair value
Retirement be nfit obligation Actuarially valued and recognized at the present value
Nott No.
17
i8 21
26
23
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right tn onset the recognized amounts and there is an intention to settle on s net basis, or to realize the assels aixi settled the liability simultaneously.
No adjustments have been made for inflationary factors affecting the Financial Statements. The Company presents its statement of financial position ie order of liquidity.
Meterlsllty and.aggregation
Each material class of similar items is presented separately. Items of dissimilar nature or function are presented separately unless tbey are immaterial.
Coing concern basii of accounting
The management has formed reasonable judgement that the Company he adequate resonates to continue in bu ' e foreseeable future monitoring is buiineis performance and o›ritinoity by adopting risk mttigation initiatives. Furihemore, mana B ' rial uncertainties that may cast significant doubt upon the company's ability to continñe as .a going concern. Thertfoie, the an ’ Statements c0ufi to prepared on a going concern basis.
The accounting policies have been oonsisfentty applied by the Company and are oonsistent wilh those used in the u4g/g /o ›ve inromation has
not been reclassified or restated.
NOTES TO THE FINANC.1AL STATEMENTS
For the ye.or cnded 31st Starch 2025
!.3
1.4
CEh Aft x L CONTD.
FL NC3’I ONAL AN'D PRESERVATION CURR ENGI’
Items included in the financial stntnments of ihe eonipan} are measured using the currency of the primary economic environment in which the company operates txliz functional cowered). TO.ec financial sulcmenls are piescmtnd in Si lankan Rupees. the Cwrn;mnv's Continual unfi preservation currency.
There was rro change in the coinpbn*s presentation and functional currency during the period under review'.
ali rinartc.iaI information. has heen rounded to the nearest RHpce unless odiewfise speci ficiilly indicet•d.
1 preparation of the financial stalem nLs in confonTiig' with SLFR5s/ LKASs requires moriag0mcn£ to md‹e judgrnena<, csfii ales and assumptions nat affiect rhe *j›glication of accoizn n? policies and thz reported amounts of aspx, !iñfiu iUcs. income sn3 c penses. :ctual results m8s JiJlcr Eni these estimate.
1-ztiniates and underiying assumptions are based on historical experience and various other {actots, incl nding .expectations of future events that are believed Io be reasonable undrr the circumstances, the results which form the basis of ma.king the judgments about the can B ° I •ssetSdflfi fldbillttC2' that 8re Dot readily apparent from other sources.
Liiimate and underlying assumptions .arc reviewed on an ongoing basis. Revisions lo aocopnting estimates are recognir& in the period in which the estimate is revised and in any rulure periods aiTccled. The respective carr)'ing ainounls of assets and liabilities are given in the related Notes io the financial statements.
Infonnation about criiical judgments, estimate and assumptions in appl5'ing accounting polities tbailuvc ihe most significant effect on the amounts recognized
iii lhe Financial Statements is included in the fñllowing nolns:
Critical Accou atlog esLimgte /§udgaseo I
Disclosure reference
Fair value measurement offinanciaT instrumenls / in›'cstmcnt properties / lnnd and buildings
Ftranciaj assets and liability clsssificztton _ Impairment losses on loans and advaztces
Impairment l0ss.cs on avB›lable for fatr yafue through profit or loss
ImpBi rmertt losses on other Besets
Defned bonefjt obligation
Provisions for liabilities.:and contingencies
I.4.5
J:4.6
l,4.7
l.A1 1•air value measurement
A number.of the Company's accounting policies and disclosures require the meaittrernent of fair values, for both financial and non-financialassets arid liabilities,
The Company has ar established contml framework with. respect to the measurement of fair values. This includes a team tlial has overall responsibility for overseeing.all significant fair v.alue measurement; inc]udiflg Level 3 fair values, and reports d;recily to the Gmup CFO. The team rugular}y reviews significant unobservable.inputs and valuation adjustmenls. If third pañy infomlation, such as broker Quotes. or pricing services, is used to measure fair values, then: the team assmses the evidenoe obtained from the third pañies to support the conclusion lhat such vaiuatiiins meet the requirements o.I SLFRS, including the.level in the fair value hierarchy in. which such valuations should 6e classified.
Signil°icant judgements used in valuation and i5sue5 that aTisgs:are reported to litc Company’s Audit Committee.
When measuring the fair vslue of an asset or a liabJity, the Company usei observable market daia as. far as possible. fair values are categorized into different tenets in a fair value hierarchy based on the inputs used in the valuation techniques as. follows.
Levet i: quoted prices (unadjusted) in atlive markets for identical assets or liabilities.
I..evel 7: iaputs other than quoted prices included in Level I that are o6servable for the.assetor liability, eiiher directly (i.e. as prices) or indireclly (i.e derived from prices).
Level 3: iaputs for the asset .or liability that are.cot besed on observable market dats (unobservable inputi).
[fthe inputs. «sod to measure the fair value of ut asset of a liability Call into different levels ofkc rsir vslue hierarchy. them the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Note 22 - Investment property;
Note 23 - Property, plant arid equipment; and Notb 2.2 & 2.2.4 — Financial instruments;
1.4.2 Financial a isels and liability classification
Ttu Company's accowlting policies provide scope for aiiets arid liabilities to be designated at inception into different accounting categories in certain
In classifyijjg financial assets and liabilities, the Company applies the «xtuirements ofSLF-RS 9. FinBnciSl marjoging rLe assets aTtd whe1er fhe contmctual cash flows represent solely payments of pruzcip.BI
measured at amortized oost, fair value through other comprehensive income (FVOCI), or fair value tkro pro or loss (FVTPLj.
the business model For financial sssets are
Financial assets held for trading or managed oe .a fair value basis are classified as r vTPL, as describe e 2.2.1(b). Financ‘ so that the Company intads end is able to hold a comectconaactu‹T caslt flows, and which steel the SPPI criterion, are classifi . m as ui SLFRS 9,
NOTES TO THE FINANCIAL STATEMENTS
I.4.3
The Company reviews its individually significenl loans and advance at each reporting dnte to assess whether an impaimjenl Joss. should he pros'ided for in the Siatement of Profjt. iir Loss and Other fiomprehensive Income. In particular, manageinenl's judgment is required in the estimation of the amount and tim ing of future cash flou'5 when delennining the impairment low. These estimaes art based on ais«mptions et›out e number of factors and actual resin may difter, rcsuitiag in futurt changes to the sllowarce made.
Loans and advances that haye been assessed individually and found not to be impaired and all individtiaily insignificant lnans and advances in then assssscd collectively, by categoi iziog them into. groups of assets with similar risk characteristics, to determine whether a provision shovld be made due to incurred loss events for z'hich there is objective evidence, hit tlje effects of which are not yet evident. The coiloclive assessment inkes account of data from file loan portfolio and judgment on the effect rif crincentrations of risks 'find emnomic data.
The policy on impairment loss on loans and edvancm ii disciosed in more detail in Note 2 2. I0.
1.4.4 Impairment Iowa on available for fair vsliie through profit or loss
Yde Coin pany revieJ s in dtbt securities classified as fair vaiuc through profit. or loss at eac}i reponiny da:c to asstss whether they are impaired. This requires siirnlar jud3nia as uppi .efi in the ›:idi›'idu-i a„ess:scar of loans and ad› ance;. 'he ('onipariy also rcc rJ; irn paimient charges on equity' investments classified as fair yalue through profit or loss when .there has buen a significant or prolonged dcl ine in the fair value t›elow their cost, The determination of what is 'significant’ or ‘prolonged decline' in fair value beton' their cost requlres judgment, In King thls judgment, the Company evaluates, among other facion, historical price movements and duration and extent to which the fair value of an investment js less lhan its cost
Ue impaimient loss on fair va1ue through profit or isss is disclosed in Note 2 2. l0
1..4.5
Impairment losses on other asseis
Th•• Company classifies terta jn debt and equitl' securities as fair value through profit ur loss (FVTPL). These instruments are measured at fair s'alue at each reporting dam, and any gains or losses arising fmm changes in fair value are. recognized directly in profit or loss, Accordingly. no srparai« impairment assessment is perfomaed, as expected credit losses or value declines are reflected through fart value changes.
Specific Accounting Policies on impainrten! of non-financial assets are diScu85ed in Note 16.
1.4.S Defined be•rR t obligetlon
The coit of the defined benefit plans is delenined using an actuarial valuation. The actuarial valuation involves drinking assumptions at›out discount rates, future salary increases, mortality rstes and future peuion increases. Due to the long-term natuu of these plans, .such estimates are subject ts significant uncertainty. Refer Note 2.7.3 for the accounting policy and assumptions used.
t.4.7 ProvlSioos f0r liabilities and confingeacies
The Company receives legal c]aims against it in the normal course of business, Management has made judgments as to the likelihood of any claim succeeding in tndLiyg provisions The time of coixluding legal claimi is unctrtsin, u is the amount ot possible oumow of economic ber›efis. Timing and cost ultimately depend on the due process jn the respective legal jurisdictions.
NO3“ES TO THE FIN ANCI AL STATEMENTS
For the i cm ended 31st March 2025
I-cases
lmpaitmrni - non-financial ass«is
Employee bonefih
New accountine standards issled hit not yet elTccti›'e as at rsportin°m date
2.*2
Fair vBlue measurement
2.21
Operating Segments
2.20
2. I9
Cash now statements
Related Party 7ransactions
2.18
Provisions
2.8
2.?
2.6
Property plant and equipment
2.5
1nvesiment property
*.4
*.3
I'oreign currency transactions
Z. I
tecoun King yolicv
I nder
£''oreigo currency transactions
Sri Lankan rupee is tins functional cutTency of the Company. Transactions in foreign currencies are trans1atcd into the knctional currency of the Company at Ihe spot exchange reles at the date of the uansactions. Monetary assets and liabilities 4ertominated in foreign cuTTencics Bt Lhe reporting date aTe reoanslBtsd to the Functional currency at the spot exchange rate at that date. Tile foreign currency gain or loss on monetary items is the difEcrencs bst een amortized cast in the functional currency at the beginning of th.° per iod, adjusted for effective interest and payments during tic period, and the amortized cost in foreign currency trenslsled st tTte spot exchange rgte at the end oFtfie period,
Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated to ihe. functional currency ai the spoi exchange rate a1 the datt that the fair value was determined. Non-monetary items that are measured based on historical cosi in a foreign currency ara translated us "B lhe spoi exchange rute at the date of the tmnsaction.
foreign .currency differences arising on retrsnslation are generally recogniztd in profit or loss. However, foreign cturncy differences arising from the retranslation of the available-for-sa]e eQuity instruments (except on impairment in which case foreign currency differences that have been recognized in other comprehensive income src reclassified to pmfit or loss) are recognized in other comprehensive income.
MAS ER1AL ACCOUNTING POLICIES - RECOGNITION OF ASSETS AND LIABILITIES
2.2
2.2.1
2.2.1
The Company initially recognizes loans end meivables and deposits with othct financial institutions on the date that they are originated. All other financial assets are recognized iaiti&ly on the trade dete at which the Company becomes a party to iht contractual provisions of the instrument.
The classification of financial instruments et iniciat recognition depends on Lheir cesh flow characteristics axd busiacss model for msn8ging tftc instrument. AI1 financial instzumenfs are measured initially at their fair value plus transaction costs that Bre directly attributable to acquisition or is9ue of such financial instrument, except in tile. case of financier 4sseo at Weir value through profit or lass es per the Sri Lanka Financial Red:orting Standard - SLhRS 09 on ’Financial Instruments'.
Transaction cost in relation to financial asseLs Bt lair value through profif or loss aTe dealt witlt through the statement orprofii or lass
’Day 1'profi or lv on stqf loan betow market rate
When the tnnsatlion prite differs from the fair value of other observable current market tiaiuactions in the same instnimeni or Rd on a valuation technique. whose varia6les include only data from observable markets, the Core pany recognises. the difference between the transaction price and Unit veloe (a ' Day I ' profit or loss) in ‘Interest Income and Personnel Expenses’.
In cases where fair value is determined using data which is not observable, the difference between the transaction pri del i'a1ue is only recognised in the profit or loss when the inputs become observablei or when the instrument is derec ised. Thg ’Da @yi jq e of loans granted to employees at concessionary rates under uniformly applicable schemes is deferred and amortised usiri ec “’ terest t ver the tzmaining service period of the employees or tenure of the loan whichever is shorter.
LOLC Finance PLC
NOTES TO THE FINANCIAL STATEMENTS
Ivor the seur ended 31st Miirch 2025
2.
2.2. J
2,2.I
fb} C”Jassificaticut af finaoc›a! assets
The CompzJjy classifi s rton-dcri'vativo financial assets intn lhe FnJIo\ing caegorics!
fair value throu@ other comprehensive° income (FVOC:1), Bird fair value through profit or lnss (fi YTPL).
{c) Subsequent roeasureme‹it of'finxnciaI as»eLs
The subsequent measurement of financial asseB depends on Their c)assification.
The Company makes an asses›meni of ihc objeyiive of a business mm^eI in which itn assel is held becaiise ihis best reflects the way the business is managed end informs-inn is presided to menuzrmcnt, The information. considered incl udcs:
z'hefher management's strateg r ia on earning contractual interest revc•nue, maintaining a pattictilu interest tain' pinfiia, marching the dorati‹in or ilie financial asses to th- duration of the liabilities Lai are finding those assets or m‹alising cash flows through the sale of the assets;
bow the performance of the portfolio is evaluated and reported to the management;
the frequen,iy,. volume and timing of scans in pi ior petiiidi, the rvusoiis for such sales arid *ts e,.xpecfationx aliouf future sale* activity and lion casii flo,'s
are rua1is.d.
Assessriient of whether tontractusl cub flows are solely pa›'ments of principal and interest (SPPI lest)
The Cotnpan}' assesses the contractual terms of financial assets to identify w'hetbet they meet the SPPI lest of its classification process. In asseising htthcr ihe contractual cash flows are solely payments of principal and interest on principal amount outstanding the Company considers the conf:nctual terms of the
¥ai the.purposes or ihis assessmeai,
“principal” is defined Be tone fair value of ltte financial asset on initial recognition end may change over the life of the financial asset tforexample,. if thert arc repayments of jxincipal or amortisation o(lhc prcmiumfdistount).
*Interest” is defined as consideration for the time value of money and for the credit tick associated w'ith the principal amount ouistandmg during a particular pitied ottime.and for other hasit lending risks and costs; us z'e.11 as profit margin.
Oased op abpvg p$9 irtentg, subsequent measurement of financial assc•ls ar0 classified as follows. Am0.rtised cast
Financial assets wiih fixed or determinable payments that are nof quotad in an active market. Such asscts are recognized initially at fair value plus any direcr]y
attributable transaction costs. SubseqMent to initial rec‹tgnition measured at amortized cast usink the elTective interest method, less any impaiment losses.
This includes cash and cash equiva[ents, deposits with banks and othti financier institutions,.investmtnu in Standing Ikposit Facilities (REPO.'s), lease receivables, advances and other loans granted, factoring receivables,. amount due from related pañies and other receivables.
Csrh and cerh equlval«nlxCash and cash equivalents comprise cash balances an4 call deposits witfi maturities of lhree monlbs or less from the acquéition date that are subject to ari insignificant risk of changes in their f8ir value, and are .used by the Company in the management of in short-term commitments.
Jtenf•6 rwefvo6/e pn leased assets
When the Company is the. ]essor in a lease agreement that transfers substantially all of:the rislts and Iowards incidental to.ownership of the.assel t0 the lessee,. rhe armngsmeat is classifed es a finarm frs and « receivable eg st to the net investment in the tease is recognized.Amounts receivable «ver finance leases are included under “Rentals receivable on leaged assets”. Leasing balances are stated in the slatemer t of financial position aRer deduction
»r i»:iiel teatals received, unearned lease income and the. provision for impairment losses.
Advances and otlfer loans to customers compriud of revolving loans and loitrs with fixed installment
Loazts tp customers.are reflected in tile Sutcment oFFin8nciaJ Position at amounts disbutzs‹t less repayments and provision for intpaiment losses.
Pirtancial guarantees are contracts that require tile Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to mate payment when due in accordance with the terms ct e debt irutrument. The Company in its normai course of the business issues guarantees on behalf of the depositors, holding the deposit as collateral.
Financial assoc nf/afr valuelhruugh other comprehexclve incowe (FVOCI)
Instruments are measured at FVOCI, if they are held within 6 business model whose objective is to. hold for colleclion of contractual cash flows and tor selling financial assets, where the asset’.s cesh flows represent payments that are solely paymenls of principal and interest on piincipai outstanding. This compi ixes equity securities and debt secwiiies, Fair value is used for all equity i0smiments, grid tort may be used aS a fair value estimate only in limited cases, All other investments are measured at fair valve after initial recognition,
All rnanci& assets other than those classified at amortized cost or FVOCJ aTs classified as measured at FVTP through prort or loss include financial assets that a e keld For tradlg or managed and whose pcrfonnance is evaustc4 on a r e basis es they eit held io collect contractuñ cssh nows nor tefd bath to collect contractual cask flows and ro setl firianriel users and finan at designated upon inl ct r rtiori at ftir value through profit or loss; Financial assea are designated at air value lbro.ugh profit or loss if the comp m ages sinh investment and kes purchase and sale decisions based on their fair value in aco0rdance with the company's investment strategy, Amibuta tion coiti.are ’ in iiatement of profit or loss as incurred.
LOW.C Finance III.,C
NOTES TO THE FINANCIA L S’FA’I’EMENTS
2.
financial assets and fi usritial liu biliLies contd.
2.2.t tion-deris'alive financial linbllil Yes
Financial asse*c at fn'ir value through profi nnci loss are caTtied in Pte statcrr›ca of finBnc aJ passion 8t fair value lvilh changes in fair value re‹ogniz.cd in Lhe statement of pmfit or Inss. Financia1 asssls Bt fair value through prufit or loss comprises nf quolcd equity instr\nJents and unit trusts unlcss othcnwse haY< bcsrt classified 8s amortized cosl.
L-n6’rest incorric ‹s r=mgn/sA in profit or loss usir›e /he e/Tz'crivo ink+rush mot.bed. Di›'idend income is rccognJsrd in profit or loss H'fien the C'oinpazv tx roJnes cnti tlurl to I1je dividend. Impairment lnsses arc recognised in profit or loss. Othcr fair value changes, ulh0r thnn impairment lofis5S. MB recn¿nised in CIC1 and presentetl in the Fair vslu0 reserve viLhin equity. When the investmenf is sued. the ga in or loss accu mutated in egCity is reclassified to profit or loss.
The Company classifies non-derivative financia1 liabilities into Ihe other Ftnutcial liabilities category. Such financial liabilities are recognized inilially at fair
'aI«c lsss at}' clirectl}’ 8tfrihutablc trznsBction costs. Subscqui'nt to initial rr oijJtitinn, these financial 1iat ilities nre me6tured at annrIi7cd cost using the ed.mti’c i:'tcrc i n”!ok oJ.
Uther financ iaf liabilities comprise o£bank ci erdrafis, interesf bearing borroviags, customer deposits, rrade p¿ya6Ie5, accruals & oihvr yifiyab/cs and amounts due to related parties:
pank overdrafis
Bank overdrafts Hut are repayable t›n demand end form an integral pen of the Company's cash management are included as a component of cash and cash
‹p«i•›i ms row the purpose or the statement of cash flows.
Deposits and brink boriowiiigc - cfnssJlcd as other finciieJzJ llnbi/iires carried at amartlfeit cost
Deposits and bank borro\’ings are the CoMlgnny's sources nf debt binding.
j'he Company classifies capital instrumenls as financial mobilities or equity iestrutncnts in accordance wiih the subslance of the c0nlractual terms of ltte instniments. SiibSeqitent to initiai recognition deposits and baRk borrowings are measured at their amortized cosl using the effective interest method.
Dcri›'pIi’es 1elrt for t'isk inaitagenlen I purposes mil bedge accounting
Derivstives held for risk management purposes include all derivative Besets and liabilities that are not classified as trading assets or liabilities. U0rivetives held for r‹sk management purposes are measured at fBir value in the statement of financial position. O0rlystyes 8rs recognized as asects when their fair value 1s positive and as liablllties when their fair V8IU8 IS negative.
The Company designates certain derivatives held for risk management as hedging instruments in qualifying hedging relationships. Oh initial designation of the hedge, ihc Company formally documents the relationship between the hedging instrumen(s) and hedged itnm(s), including the. risk management objective and siretegy in undertakinBthe had.Be, tngefher smith lhe method that will be used to assesi the eUectiveness of the hedging relationship. The Company makes an assessment, both ut inception of the hedge relationship and on an ongoing bas›s. of v.hether lhe hedging instrument(s) i(are) expected toñ highly
effective in offsetting the changes in the cash flows of the respective hedB• item(s) during the period for which the hedge is designated, and whether the actual resolu of each hedge are within a range of 80— I 25%.
”J”hese hedging relationships 8re discussed below',
When a derivative is designated as the hedging instrument in a hedge of the change in hir value of a recognised asset or liability or a firm commitment that could affect profit or loss, changes in the fair value of the derivative are recognised immediately in profit or loss together with changes ia the fair value of the ledged item that are etttibotable to the hadged risk (in ltte same line item in the statement of profit or loss and OCI as the hedged item).
If the hedging derivative expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for fair valoe hedge accounting or the hedge designation is revoked, then hedge accounting is discontinued prospectively.
Any adjustment up to the point of discontinuation to a hedge4 item for which the effective interest method is used is amortised to pmtit or loss as part of the recalculated effective interest rate of the item over its remaining life.
The Company does not have any fair vzTue kedges
When a derivative is desig«stcd es ke hodg ng instrument in a hedge of the variability in cash flows attributable to a particu1ar risk associated with a recognised asset or liability thai could gffeci profit or loss, the effective portion of changes in the fair value of the derivative is recognised in OCI and presented in the hedging reserve within equity. Any ineffective portion of changes in the fair valu8 of the derivative is recognised immediately in profit or loss. The amount recognised in OCI is reclassified io profit or loss ss a IeclassiFtcation adjustment in tfie same period as the hedgod cath flows alTcct profit or loss, and in the same line item in the statement of profit or losg and OCC.
If the hedging derivative expires or is sold, terminated or exercised, or the e no longer meets the critrJ for cash flo»' hedge 8ccpunfing, or the hedge designation is revoked, them hedge accounting is disconltnued prospectively.
IIL Net Investment hedges
WTjen 8 derivetive instrument or s non-derivative financial liability is designated as the hedging instru g f n I inye8trnen in e foreign operation, the effective portion of changes in the fair value of the hedging instrument ivrecognited i [ ’ ’ nEXi -i0/th9”'t station reserve w'ilhin equity. Any ineffective poriioa of the changes in the fair valut of the derivative is recognised immed' ely’ pmfit or loss. The b min ecognised in Ofil is reclassified to profit or lo4s as a reclassification adjustmenl on disposal of the foreign operation.
The Company does not bava any net investment hedges.
NO"FES TO THE FINANCI A L SJ“A3 EMENTS
hiiT.F!k IAI.. CCOI TJ €i T'O!.,{r-I 9 CO ”l”n.
2.3.3 (a) Uthcr noc-trading derim atiiES
]F a deri ati’r' is not field for tradilJr'. and is nol dcsienetcd :'n a qualifyirie hedge rclaionslip. lhetl all clan°mes ill its fair vaIie zre recognised immcdialcl;' in profit nr loss as a component of other income.
Reclassific 8tion nf fiosncial gssett and iiab.ilities
As yr SLFkS 9, Fir‹sncia1 asses are nut reclassified sit,icn! to tier initial recognition, e:fic•p•' end only in i*a ohjoctivc t›f thz husines3 mo4e! For niaJ›egi'ng such financial zss%ls v'hic1i hiss' inc.Iude the acqrii*iltot. d:sposa! or termination ofa bti.«ii'ess line
financial I.iahiTities aré n0t reclassi fiexJ aS sJch roclassifications are not permitted by SI.URL 9.
D•rttognitioii of finunciul assets arid financint liabiiit:a Finanrial assets
Un derecognition of a financial e$set, the dinerence betv'esn Lha carrying amount of fhc Bsset (or fhu carrying nnJo int allocated IO the portion of the asset
lransr•«›,.and the sum of,
(i) Tbs consideration received (including any. nets' assc•t obtained less any new liability assumed) and
ti il *ny cumulative g3in or loss that hud been recoenized in other comprehensive income is recognized in profii or loss.
Finaociql liabiiities
The Cor«yany darecog nyzs a find.Ic ial 1iability when its corimchJ.°1 nbTigktionS Pro discharged or cancelled or expim.
hlodification of financial assets and Financial liabilities
Flodification of financial assets
IFth0 terms of a financial 8sset 8te modified, the Company evaluates whether the cash flo\’3 of the modi fied asset are Substantially' 'dilTe'rent. [£ IJe cash flow's ore substantially dilTerent, then the contractual rights to cash flovs from tke onginal financial asset .are degmed to hsve expired. In this c8se, the original financial asseE i8 derecognised gnd a n0w financial asset is recognised Bt Weir value.
If the cash flows of the modified asset carried at amortised cost are not substantially different, then the modification does not tesult in derecognition oF the fincncisl asset. In this case, ltte Contpzny' rccalctlatcs tftc. gross ca 'ing siro.unt of the financial asset and recognises tile amount arising From adjusting the yross carTyi'ng amount as a modi fication gain or loss in profit or loss. If such a modification is carried out because of financial difficulties of the borrower, then the gain or loss is presented together with impainnent lasses measured using pre modification into est tate. In othef cases, it is pres nted as interest income.
hood ification or financial liabilities
Where an existing financial liabiliiy is replaced by another from the same lender on substantially diftérent terms .or tht tens of as existing liability are substantially modified, such gn exchange or modification is treated as a derecognition of the original liability and ltte recognif ion of a new liability. In this case, a new financial 1iabilii based on the modified terms is recognised at fart value. The difference betweerr the carrying amount of the financial liability extinguished and the new financial 1iabilily with modified terms is recognised in profit or loss.
2.2. 7 OfmHing of itnsneJal Instruments
Financial assets and financial liabilities are nffset and the net amount reported in the statement or financial position if, and only if, there
Income and exynses are presented on a net basis only wtten permitted under SLFRSs, or for gains and losses arising from a group of similar transfittions such
2.2.8 Amortized cost roeasureoleqt
be amortized cost of a tinBucial asset or liabiity is the amount at which the financia1 asset or liahility is measured at initial recognition, minus repayments, plus or minus the cumulative amortization using the effective interest meihod .of any difference between the initial amount recognized and the maturity amount. minus arp reduction for impairment.
Z2.9 Fslr value measurement
Fair value is Lhe pr›ce thBt would be received to sell an .asset or paid to trBTisfer a liability in an orderly Transaction I:market participants at ttte measurement dato.
Determination of Weir value
The tair value of financial instruments that are traded in an active market at each reporting date is determined by reference to quoted market prices or dealef plies quotations, without any dcduction for transaction costs.
for financial instniments not traded in an active market, the fair vulue is determined using appropriate valualion techniques. Such techniques may include using recent arm's length market transactions, reference to the current fair value of another instrument that is substantially the same, i discounted cash flow analysis or other valuation m0dels.
NOTES TO THE FHANC:IAL S3“ATEMENTS
i“or the year ended 31st Miirch 2(J25
t.
Us'en itH of the exjJcrted credit loss (ECI..) prinriylct
SLFRS '? out] incs a "ihrec-slag.-.” mode] for img8irmedt based un change's iii cr di1 rjuel ip’.since initial cognition.
Stage I ! A financial asset that is not originall}' credit-impaired on initial rccognition is c1assificfl in Stage T. fin8ncia1 instTum•nIS in Stage I have lheir T'C'L measured Bt an amounr cqeat to the proportion of li%t›nc exacted cmd it losscs (J.TEFL) that resill Iron default earls possib1-• H'ñt!:in next I* months (i.*kt ECL).
fit.age 2: if a significant increase in rrcdit risk (EUR) sinos origination it identified,. it is moved to St8gc. 2 Bnct the Company records.an a11ovancc for LTLtL.
i Otl‘ e. to ii is defined as credit impz:'I an* 5efa:ilt.
’flit kt• jtifigemciils and assulnpiion a‹iopted in zddiessing ltte reqs.iremcnts of SLFRS 9 am discussed below:
2.2.IO
I ni pnirnicn i 'c0ntd.
Sig nificani inc rease in credit ri.str
When detcrminlng w'1ieihy the risL of detach on a financial i nstiument has increased significanlly sture initial recognition, the Company considers reasonable and supportable information that is relevant and available. Based on that, matiagcmcni has decided ihat an exposure to have significantly increased cmd it rjsk when contr8cloal payments ore ••ii mer are more than 30 days past due and lost to take p1acu• after 9.0 days in accordance w'ith tht rebuituble presvimption ii SLF RS 9.
Ind Ivldtinlly sigiiificent inipai rinent assessment and loans which are not impaired indis ideally
Company' will individually assess all significant customer exposures to idcnti5' whether thert are any indicators of impairment. Loans uath objective .vidcrxe of Incurred loss.•s are classified as State o. Loans ubicb tire ipdivitiiialiy significatit but not itnoaired will be assessed collectively for inn imperil under ejther Slave 1 ur StRgr 2.. bitstd on fhe.Bho›'c sp ified criteria In idenify heth.er fhere ha›'e bun a significant credit deterinr3tiort s'nce origination.
While establishing.significant credit deterioration, Company will consider the following criteria:
Other changes in the rates or terms of 4n existing finBncisl instrument tftat would be significantly djlTerent if,the instrument was newly uriginatcxl
- Significant changes jn external market iTidicBtors of credit risk For e particular financial instrument or similar financia1 instrument
Otker Infonnation related to ITB borro\'er; such as changes in the price of a borro\’ r's dcbt/cquity instrument
rxisting or forecast adverse changes in business, financia{ or economic conditions that ore expected to cnuse a significant change in lbe borrower's abitlty lo meet it'g obligation
An actual or expected significant change in tic operating results of the borrower in relation to aciunlfexpocted det line in revenue, increase in operating risk, working capital deficiency, d«reaie in aseel quality, increase in gearing and 1iquidify management problems
Significant increase in credit risk on other financial instniments of the same borrower
An aciual or expected significant adverse..change in the regulatory, economic or technological environment of the borrower that resuits in a significant chttngc in the borrower's ability to meel the debt obligation
Grouping Financial. Assets âlessurefi on a Collective ltasis
Ax explained above, Company calculates ECL either on a collective or individual basis. Asset classes where Company caIcmates ECL on an individual basis includes all individually significant assets which t›otong to stage 3. All assets which belong to stage. 1 and 2 will be assessed colleciiveiy ror Impairment. Company groups smaller homogeneeus exposures based on a combination of internal and. external characteristics such as product type, customer type, days past dug etc.
Calculation of ECL
The Company calculates ECL based on 3 probability weighted scenarios to measure expected cash shortfalls, discounted at an approximaiion to the Effective
Interest Rate (EfR).
A cash shortfall is the difference between the cash I ows that are dut to an entity in accordance with the contract and the cash flows that the entity expects to
4‘he mmbanics of the ECL calculation are outlined below and the ke} elements ate as follows:
Probability of Default (PD): PD is an estimate of the likelihood of default over a given time horizon. A default may only happen at a certain titne over the assessed period, if the facility has not been previously derecognised.and is.Hill in t@ portfolio.
Exposure at Default (EAD): EAD is the estimate of the exposure at a future default date, taking in to account expelled changes in the exposure after the reporting date. including repayments oL the principle and interest, whether scheduled by contract or otherwise and expelled draw downs on committed
Lass Glven Default (LOD). LCiD is an estimate of the loss aris'8B.Where a default occurs at a given lime calculated based on historical recovery data. It is usually expressed as a % of the BAD.
When estimating ECL, Company considers 3 scenarios (base case, best case and worst case). Each of these scenarios are associamt with different loss rate.
-or all products, Company considers the maximum period over which the credit losses am determined is the contractual life of a financial instrument.
Forward Looking Information
Company relies oa broad range of qualitative/quantitative forward-looking information as economic inputs such as the following in its ECL model.
GDP growtt
Inflation
Unemployment
Exchange rates
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