Teejay Lanka PLC is a public limited company incorporated in Sri Lanka on 12 July 2000, listed on the Main Board of the Colombo Stock Exchange of Sri Lanka on 9 August 2011. The registered office of the Company is located at Block D8-D14, Seethawaka Export Processing Zone, Avissawella. The Company carries on the business of manufacturing and selling of weft knit fabrics.

The Company changed its name to Teejay Lanka PLC with effect from 15 September 2016.

These financial statements have been approved for issue by the Board of Directors on 5 June 2025.

The Company owns 100% of issued stated capital of Teejay Lanka Prints (private) Limited and Teejay Mauritius (private) Limited. Teejay India (private) Limited is a fully owned subsidiary of Teejay Mauritius (private) Limited (Previously known as Ocean Mauritius Limited) and Teejay Mauritius (Private) Limited owns 99% of issued stated capital of Nubian Threads (Private) Limited which was incorporated on 18 November 2024. The Company is the ultimate parent of the Group. The details of subsidiaries are given under Note 18 to these Financial Statements.

These Financial Statements are prepared in accordance with the Sri Lanka Accounting Standards (LKASs/SLFRSs) adopted by the Institute of Chartered Accountants of Sri Lanka. The principal Accounting Policies applied in the preparation of these consolidated Financial Statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The Financial Statements of the Company and the Group have been prepared in accordance with Sri Lanka Accounting Standards, which comprise Sri Lanka Financial Reporting Standards (“SLFRS”s), Sri Lanka Accounting Standards (“LKAS”s), relevant interpretations of the Standing Interpretations Committee (“SIC”) and International Financial Reporting Interpretations Committee (“IFRIC”). These Financial Statements have been prepared under the historical cost convention except for financial assets and financial liabilities which are measured at amortised cost/fair value.

The preparation of Financial Statements in conformity with Sri Lanka Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's and the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Company's and the Group’s financial statements are disclosed in Note 4 to the financial statements.

The financial statements are prepared and presented in United States Dollars (US$), in accordance with and comply with Sri Lanka Accounting Standards. The financial statements are also presented in Sri Lanka Rupee (LKR) for local statutory requirements. The conversion to LKR is performed in accordance with the recommendations made in the Sri Lanka Accounting Standard (LKAS) 21: The Effects of Changes in Foreign Exchange Rates. The procedures followed are as follows:

• (a) Assets and liabilities for each statement of financial position presented (including comparatives) are translated at the closing rate at the date of that statement of financial position.
• (b) Income and expenses for each income statement (including comparatives) are translated at the exchange rates existing at the dates of the transactions or a rate that approximates the actual exchange rates; and
• (c) All resulting exchange differences are recognised in other comprehensive income.

The preparation and the presentation of these Financial Statements are in compliance with the Companies Act No. 07 of 2007.

2.1.1 Going concern

The financial statements are prepared on going concern principles. After making adequate enquiries from management, the Directors are satisfied that the Group and Company have adequate resources to continue their operations in the foreseeable future.

2.2 Changes in accounting policy and disclosures

(a) The Group and the Company have applied the following new and amended SLFRS Accounting Standards that are effective for the first time during the current year, for their annual reporting period commencing on 1 April 2024:

Amendments to LKAS 1 Classification of Liabilities as Current or Non-current

The Group and the Company has adopted the amendments to LKAS 1, published in January 2020, for the first time in the current year.

The amendments affect only the presentation of liabilities as current or non-current in the statement of financial position and not the amount or timing of recognition of any asset, liability, income or expenses, or the information disclosed about those items.

The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

Amendments to LKAS 1 Presentation of Financial Statements – Non-current Liabilities with Covenants

The Group and the Company has adopted the amendments to LKAS 1, published in November 2022, for the first time in the current year.

The amendments specify that only covenants that an entity is required to comply with on or before the end of the reporting period affect the entity’s right to defer settlement of a liability for at least twelve months after the reporting date (and therefore must be considered in assessing the classification of the liability as current or non-current). Such covenants affect whether the right exists at the end of the reporting period, even if compliance with the covenant is assessed only after the reporting date (e.g. a covenant based on the entity’s financial position at the reporting date that is assessed for compliance only after the reporting date).

It also specifies that the right to defer settlement of a liability for at least twelve months after the reporting date is not affected if an entity only has to comply with a covenant after the reporting period. However, if the entity’s right to defer settlement of a liability is subject to the entity complying with covenants within twelve months after the reporting period, an entity discloses information that enables users of financial statements to understand the risk of the liabilities becoming repayable within twelve months after the reporting period. This would include information about the covenants (including the nature of the covenants and when the entity is required to comply with them), the carrying amount of related liabilities and facts and circumstances, if any, that indicate that the entity may have difficulties complying with the covenants.

Amendments to SLFRS 16 Leases – Lease Liability in a Sale and Leaseback

The Group and the Company has adopted the amendments to SLFRS 16 for the first time in the current year.

The amendments to SLFRS 16 add subsequent measurement requirements for sale and leaseback transactions that satisfy the requirements in SLFRS 15 Revenue from Contracts with Customers to be accounted for as a sale. The amendments require the seller-lessee to determine ‘lease payments’ or ‘revised lease payments’ such that the seller-lessee does not recognise a gain or loss that relates to the right of use retained by the seller-lessee, after the commencement date.

The amendments do not affect the gain or loss recognised by the seller-lessee relating to the partial or full termination of a lease. Without these new requirements, a seller-lessee may have recognised a gain on the right of use it retains solely because of a remeasurement of the lease liability (for example, following a lease modification or change in the lease term) applying the general requirements in SLFRS 16. This could have been particularly the case in a leaseback that includes variable lease payments that do not depend on an index or rate.

A seller-lessee applies the amendments retrospectively in accordance with LKAS 8 to sale and leaseback transactions entered into after the date of initial application, which is defined as the beginning of the annual reporting period in which the entity first applied SLFRS 16.

The following new accounting standards and interpretations are issued by IASB but not yet adopted by CA Sri Lanka.

Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability

The amendments specify how to assess whether a currency is exchangeable, and how to determine the exchange rate when it is not.

The amendments state that a currency is exchangeable into another currency when an entity is able to obtain the other currency within a time frame that allows for a normal administrative delay and through a market or exchange mechanism in which an exchange transaction would create enforceable rights and obligations.

An entity assesses whether a currency is exchangeable into another currency at a measurement date and for a specified purpose. If an entity is able to obtain no more than an insignificant amount of the other currency at the measurement date for the specified purpose, the currency is not exchangeable into the other currency.

The assessment of whether a currency is exchangeable into another currency depends on an entity’s ability to obtain the other currency and not on its intention or decision to do so.

When a currency is not exchangeable into another currency at a measurement date, an entity is required to estimate the spot exchange rate at that date. An entity’s objective in estimating the spot exchange rate is to reflect the rate at which an orderly exchange transaction would take place at the measurement date between market participants under prevailing economic conditions.

The amendments do not specify how an entity estimates the spot exchange rate to meet that objective. An entity can use an observable exchange rate without adjustment or another estimation technique.

The amendments are effective for annual reporting periods beginning on or after 1 January 2025, with earlier application permitted. An entity is not permitted to apply the amendments retrospectively. Instead, an entity is required to apply the specific transition provisions included in the amendments.

The directors of the Company and its subsidiaries anticipate that the application of these amendments may not have an impact on the Group/Company’s financial statements in future periods.

Amendments to IFRS 9 and IFRS 7 – Classification and Measurement of Financial Instruments

These amendments clarify the requirements for the timing of recognition and derecognition of some financial assets and liabilities, with a new exception for some financial liabilities settled through an electronic cash transfer system. These amendments further clarify and add further guidance for assessing whether a financial asset meets the solely payments of principal and interest (SPPI) criterion.

These amendments add new disclosures for certain instruments with contractual terms that can change cash flows (such as some instruments with features linked to the achievement of environment, social and governance (ESG) targets); and make updates to the disclosures for equity instruments designated at Fair Value through Other Comprehensive Income (FVOCI).

The amendments are effective for annual reporting periods beginning on or after 1 January 2026, with earlier application permitted.

The directors of the Company and its subsidiaries anticipate that the application of these amendments may not have an impact on the Group's/Company’s financial statements in future periods.

(b) New and revised SLFRS Accounting Standards in issue but not yet effective and not early adopted in 2024/25:

IFRS 18 Presentation and Disclosures in Financial Statements

IFRS 18 replaces IAS 1, carrying forward many of the requirements in IAS 1 unchanged and complementing them with new requirements. In addition, some IAS 1 paragraphs have been moved to IAS 8 and IFRS 7. Furthermore, the IASB has made minor amendments to IAS 7 and IAS 33 Earnings per Share.

IFRS 18 introduces new requirements to:

• present specified categories and defined subtotals in the statement of profit or loss
• provide disclosures on management-defined performance measures (MPMs) in the notes to the financial statements
• improve aggregation and disaggregation.

An entity is required to apply IFRS 18 for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. The amendments to IAS 7 and IAS 33, as well as the revised IAS 8 and IFRS 7, become effective when an entity applies IFRS 18. IFRS 18 requires retrospective application with specific transition provisions.

The directors of the Company and its subsidiaries anticipates that the application of these amendments may have an impact on the Company's financial statements in future periods. However, the extent of such impact will be determined at the time of adoption.

Annual improvements to IFRS – Volume 11

Annual improvements are limited to changes that either clarify the wording in an Accounting Standard or correct relatively minor unintended consequences, oversights or conflicts between the requirements in the Accounting Standards. The 2024 amendments are to the following standards:

• IFRS 1 First-time Adoption of International Financial Reporting Standards;
• IFRS 7 Financial Instruments: Disclosures and its accompanying Guidance on implementing IFRS 7;
• IFRS 9 Financial Instruments;
• IFRS 10 Consolidated Financial Statements; and
• IAS 7 Statement of Cash Flows

These annual improvements are effective for annual periods beginning on or after 1 January 2026 with earlier application permitted.

The Directors of the Company and its subsidiaries anticipate that the application of these amendments may have an impact on the Group‘s and Company’s financial statements in future periods.

2.3 Consolidation

The Consolidated Financial Statements comprise the financial statements of the Company and its subsidiaries (together referred to as the “Group”).

2.3.1 Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owner of the acquiree and the equity interest issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

Acquisition related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent is accounted for within equity.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred assets. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.3.1.1 Changes in ownership interests in subsidiaries without change of control

Transaction with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

2.3.1.2 Disposal of subsidiaries

When the Group ceases to have control any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the financial asset. In addition, any amount previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

2.3.2 Financial period

All companies in the Group have a common financial year, which ends on 31 March.

2.4 Segment reporting

Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions.

2.5 Foreign currency translation

(a) Functional and presentation currency

The financial statements are prepared and presented in United States Dollars (USD), the currency of the primary economic environment in which the entity and its subsidiaries operate. The Directors of the Company and its subsidiaries are of the opinion that the use of USD as the functional currency provides information about the Company and its subsidiaries that is useful and reflects the economic substance of the underlying events and circumstances relevant to the Company and its subsidiaries as:

• It is the currency mainly influences sales prices for goods and services which are denominated and settled in USD.
• It is the currency mainly influences material costs of providing goods and services, the currency in which such costs are denominated and settled in USD.

Hence the Directors of the Company have decided to use United States Dollars as the functional currency from the date of incorporation.

Financial statements of the Company and the Group are translated to Sri Lanka Rupees for local statutory requirements.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses are presented in the income statement within “net finance income”.

2.6 Property, plant and equipment

All property, plant and equipment is stated at historical cost less depreciation.

(a) Cost

Property, plant and equipment are tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and are expected to be used during more than one year.

All property, plant and equipment are initially recorded at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items and also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

Cost of long term capital projects are carried forward in capital work-in-progress until they are available for use.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate only when it is probable that future economic benefit associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred.

(b) Depreciation

Depreciation is calculated using the straight line method to allocate the cost of each asset, to their residual values over their estimated useful lives commencing from the date of acquisition, date available for use or date of commencement of use. On disposal of assets depreciation is calculated exclusive of the date on which disposal takes place.

The estimated useful lives of property, plant and equipment are as follows:

Buildings constructed on leasehold lands	23 to 50 years
Plant, machinery and equipment installation	10 years
Fixtures, fittings and factory equipment	8 years
Office equipment	5 years
Computer and communication equipment	4 years
Motor vehicles	4 years

Depreciation begins when an item of property, plant and equipment is available for use and will continue until it is derecognised, even if during that period the item is idle.

(c) Borrowing costs

Interest costs on borrowings to finance the construction of qualifying assets are capitalised, during the period of time that is required to complete and prepare the asset for its intended use.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains/(losses) on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of profit or loss.

(d) Impairment of property, plant and equipment

The carrying value of property, plant and equipment is reviewed for impairment either annually or when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount the assets are written down to their recoverable amount. Impairment losses are recognised in the statement of profit or loss.

2.7 Intangible assets

(a) Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If the total of the consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of subsidiary acquired, in the case of bargain purchases, the difference is recognised directly in the statement of profit or loss.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the Cash Generating Unit [CGU], or group of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within equity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(b) Computer software

Computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful life.

Costs associated with maintaining computer software programmed are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the company are recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the software product so that it will be available for use;
• management intends to complete the software product and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated how the software product will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and
• the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Computer software development costs recognised as assets are amortised over their estimated useful lives, which does not exceed four years.

2.8 Investments

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less accumulated impairment losses. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount.

2.9 Impairment of non-financial assets

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.10 Accounting for leases – where the Company is the lessee

The Group and Company leases lands and warehouses.

Contracts may contain both lease and non-lease components. The Group and Company allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable, and
• variable lease payment that are based on an index or a rate.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the Group and Company’s incremental borrowing rate. Lease payments are allocated between principal and finance cost. The finance cost is charged to statement of profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

To determine the incremental borrowing rate, the Group and Company:

• where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received;
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Company, which does not have recent third party financing, and
• makes adjustments specific to the lease, e.g. term, country, currency and security.

'The Group and Company is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

Lease payments are allocated between princ ipal and finance cost. The finance cost is charged to statement of profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs, and
• restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group and Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.

2.11 Financial instruments

2.11.1 Financial Asset

(a) Classification

The Group classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through OCI or through profit or loss), and
• those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

(b) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

(c) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s and Company's business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:

• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at Amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.
• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the statement of profit or loss.
• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.

Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group’s and Company's management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is established.

Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

(d) Impairment of financial assets

The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the Group applies the simplified approach permitted by SLFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

2.11.2 Financial liabilities

2.11.2.1 Classification and initial recognition

Financial liabilities are initially recognised at fair value, net of transaction costs.

The Group and Company classifies its financial liabilities as other financial liabilities, based on the purpose for which the financial liabilities were issued. Other financial liabilities mainly include trade and other payables and borrowings.

2.11.2.2 Subsequent measurement

Financial liabilities are subsequently carried at amortised cost using effective interest method.

2.11.2.3 Derecognition

The Group and Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expired.

2.11.3 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.

2.12 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the Weighted Average Cost (WAC) method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses.

2.13 Trade and other receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

The Group applies the SLFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 March 2025 or 1 April 2024 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward looking information on macroeconomic factors affecting the ability of the customers to settle the receivables and accordingly adjusts the historical loss rates based on expected changes.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of comprehensive income within distribution expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against distribution expenses in the statement of comprehensive income.

2.14 Cash and cash equivalents

For the purposes of the statement of cash flows, cash and cash equivalents comprise cash in hand, deposits held at call with banks, net of bank overdrafts. In the statement of financial position, bank overdrafts are included in borrowings in current liabilities.

2.15 Stated capital

The ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2.16 Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Account payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.17 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of profit or loss over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

2.18 Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they incurred.

2.19 Provisions

Provisions are recognised when the Group has a present legal or constructive obligations as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligation may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

2.20 Employee benefits

(a) Defined benefit plan – Gratuity

A defined benefit plan is a pension plan that is not a defined contribution plan. A defined benefit plan defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The defined benefit plan of the Company and its subsidiary, Teejay Lanka Prints (Private) Limited, comprise the gratuity provided under the Act, No. 12 of 1983. The defined benefit plan of overseas subsidiary, Teejay India (Private) Limited, comprises the gratuity provided under the Act, No. 39 of 1972.

The liability recognised in the statement of financial position in respect of defined pension plans is the present value of the defined benefit obligation at the date of statement of financial position. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using government bonds.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised to equity in other comprehensive income in the period in which they arise.

Past-service costs are recognised immediately in statement of comprehensive income.

The assumptions based on which the results of the actuarial valuation was determined, are included in Note 26 to the financial statements.

(b) Defined contribution plans

For defined contribution plans, such as the Employees' Provident Fund and Employees' Trust Fund, the Company and its local subsidiary contributes 12% and 3% respectively, of the employees' basic or consolidated wage or salary. For defined contribution plan, the Provident Fund, the overseas subsidiary, Teejay India (Private) Limited, contributes 12%, of the employees' basic or consolidated wage or salary. The Group has no further payment obligations once the contributions have been paid. The Group and Company employees are members of these defined contribution plans.

(c) Short term employee benefits

The wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group.

2.21 Current and deferred income tax

The tax expense for the period comprises current and deferred tax.

(a) Current taxes

Tax is recognised in the statement of profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the Company and its subsidiaries operate generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situation in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to tax authorities.

(b) Deferred income taxes

Deferred tax is recognised using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the date of the statement of financial position and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax liabilities are provided on taxable temporary differences arising from investment in subsidiaries, except for deferred income tax liability where the timing of the reversal of temporary difference is controlled by the Group and its probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiary only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.22 Revenue recognition

Goods and services deliverable under contracts with customers are identified as separate performance obligations (‘obligations’) to the extent that the customer can benefit from the goods or services on their own or together with other resources that are readily available to the customer and that the separate goods and services are considered distinct from other goods and services in the agreement. Where individual goods and services do not meet the criteria to be identified as separate obligations they are aggregated with other goods and/or services in the agreement until a separate obligation is identified.

The Group determines the transaction price to which it expects to be entitled to in return for providing the promised obligations to the customer based on the committed contractual amounts, net of sales taxes and discounts. The transaction price is allocated between the identified obligations according to the relative standalone selling prices of the obligations. The standalone selling price of each obligation deliverable in the contract is determined according to the prices that the Group would achieve by selling the same goods and/or services included in the obligation to a similar customer on a standalone basis. Where the Group does not sell equivalent goods or services in similar circumstances on a standalone basis it is necessary to estimate the standalone price. When estimating the standalone price, the Group maximises the use of external input; observing the standalone prices for similar goods and services when sold by third parties or using a cost-plus reasonable margin approach.

Revenue from the sales which included bulk discount is recognised based on the price specified in the contract, net of the estimated rebates. Accumulated experience is used to estimate the rebates and its provision. Rebates are estimated using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur.

Payment of the transaction price is due immediately when the products are delivered and accepted by the customer. It is the Group's policy to sell its products to the end customer with a right of return. Therefore, a refund liability (included in trade and other payables) and a right to the returned goods (included in other current assets) are recognised for the products expected to be returned. Accumulated experience is used to estimate such returns

at the time of sale at a portfolio level (expected value method). Because the number of products returned has been steady for years, it is highly probable that a significant reversal in the cumulative revenue recognised will not occur. The validity of this assumption and the estimated amount of returns are reassessed at each reporting date.

Revenue is recognised when the respective obligations in the contract are delivered to the customer and payment remains probable. The revenue is recognised as follows:

Sale of goods and performance of services.

Sale are recognised upon delivery of products and customer acceptance, if any, or performance of services.

Interest income

Interest income is recognised using the effective interest method.

Royalty income

Royalty income was recognised on an accrual basis.

Other income

Other income is recognised on an accrual basis.

2.23 Expenditure recognition

(a) Operating expenses

The expenses are recognised on an accrual basis. All expenses incurred in the ordinary course of business and in maintaining property, plant and equipment in a state of efficiency is charged against income in arriving at the profit for the period.

(b) Net financing costs

Net financing costs comprise interest payable on borrowings, interest receivable on funds invested, and foreign exchange gains and losses that are recognised in the statement of profit or loss.

All interest and other costs incurred in connection with borrowings except for the acquisition or construction of qualifying assets as noted in 2.18 are expensed as incurred as part of net financing costs.

2.24 Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s shareholders.

2.25 Share based payments

The Company operates a number of equity settled, share based compensation plan, under which the Group receives services from employees as consideration for equity instruments (option) of the Company. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

including any market performance conditions (for example, an entity's share price); and
• including the impact of any non-vesting conditions (for example, the requirement for employees to save or holding shares for a specific period of time).

At the end each reporting period, the Company revises its estimates of the number of options that are expected to vest based on the non market vesting conditions and service conditions. The Company recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity.

In addition, in some circumstances employees may provide services in advance of the grant date and therefore the grant date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.

When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to stated capital.

3.1 Financial risk factors

The Group is exposed to a variety of financial risks. These include foreign exchange risks, credit risks, interest rate risks and liquidity risks. Based on the economic outlook and the Group's exposure to these risks, the Board approves various risk management strategies from time to time. The Group's overall risk management programme focuses on the unpredictability of financial markets and seek to minimise potential adverse effects on the Group's financial performance.

(a) Market risk

(i) Foreign exchange risk

The Group is sensitive to the fluctuations in exchange rates and is principally exposed to fluctuations in the value of the United States Dollar (USD) against the Sri Lankan Rupee (LKR) and Indian Rupee (INR). The Company's and its subsidiaries functional currency is USD in which most of the transactions are denominated. Foreign exchange risks arises from local expenses including salaries and wages and, assets and liabilities denominated in Sri Lanka Rupees (LKR) and Indian Rupees (INR). The foreign currency exposure is disclosed under Notes 21, 22, 23, 24 and 25.

At 31 March 2025, if LKR had strengthened by 1% against USD in the financial year, profit before tax would have decreased by LKR 20,777,625 (2024 – LKR 25,206,281). The analysis assumes that all other variables, in particular interest rates, remain constant.

At 31 March 2025, if INR had strengthened by 1% against USD in the financial year, profit before tax would have decreased by LKR 5,955,206 (2024 – LKR 12,011,749). The analysis assumes that all other variables, in particular interest rates, remain constant.

During the year ended 31 March 2025, the Group and Company recorded a net foreign exchange gain of LKR 139,246,917 and LKR 94,310,664 respectively (2024 – in Group an exchange gain of LKR 25,144,243 and in Company an exchange gain of LKR 70,723,530 respectively) on transaction and translation of LKR and INR denominated balances.

Exposure

The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in LKR, Euro, INR and GBP was as follows:

(ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group exposure to the risk of changes in market interest rates relates to primarily to the Company's and its subsidiaries term deposits and bank borrowings. The Group manages its interest rate risk by daily monitoring and managing cash flows, keeping borrowings to a minimum, negotiating favorable rates on borrowings and deposits.

The Group’s main interest rate risk arises from long-term borrowings with variable rates, which expose the group to cash flow interest rate risk. The Group exposure to the risk of changes in market interest rates relates to primarily to the Group's long-term debt obligations with floating interest rates. The Group manages its interest rate risk by monitoring and managing cash flows, keeping borrowings to a minimum, negotiating favorable rates on borrowings and deposits.

(iii) Sensitivity analysis

If interest rates had been higher by 100 basis points and all other variables were held constant, the profit before tax for the year ended 31 March 2025 would have decreased by LKR 177,150,271 of Group and LKR 13,832,371 of Company (2024 – 94,644,572 of Group and LKR 31,884,650 of Company). This is mainly attributable to the Group’s exposure to interest rates on variable rate of interest.

(b) Credit risk

The credit risk arises from cash and cash equivalents and short term deposits with banks and financial institutions, as well as credit exposures to foreign customers, including outstanding receivables and committed transactions.

The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying amounts as described in Notes 21, 22, and 23.

The credit risk of customers are assessed taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal limits approved by management. The compliance with credit limits are monitored regularly by management. There are no significant risk concentration of credit risk through exposure to individual customers.

Credit quality of the financial assets have been disclosed in Note 19.

(c) Liquidity risk

The Group monitor and maintain a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts.

The table below summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted payments.

Group

Company

3.2 Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The capital structure of the Group represents equity attributable to owners of the Group, comprising stated capital and reserves.

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (current and non-current) less cash and cash equivalents. Total capital is calculated as “equity”, as shown in the statement of financial position, plus net debt.

The gearing ratios at 31 March were as follows:

During 2024/2025, the Group’s strategy, which was unchanged from the year ended 31 March 2024, was to maintain the net debts below 30% of the total capital. However, the Group is fully equity funded as of the statement of financial position date.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Company and Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below:

4.1 Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below:

(a) Impairment assessment of goodwill

The Group tests goodwill for impairment annually in accordance with its accounting policy stated in Note 2.7 to the financial statements and whenever events or change in circumstances indicate that this is necessary within the financial year. The recoverable amounts of cash-generating units have been determined based on Value In Use (VIU) calculations. These calculations require the use of estimates and are disclosed in Note 17 to the financial statements.

(b) Defined benefit plan – Gratuity

The present value of the defined benefit plan depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for defined benefit plan include the discount rate. Any changes in these assumptions will impact the carrying amount of defined benefit plan.

The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the defined benefit plan. Other key assumptions for defined benefit plan are based in part on current market conditions. Additional information is disclosed in Note 26.

(c) Estimated useful lives of property, plant and equipment (PPE)

The Company reviews annually the estimated useful lives of PPE based on factors such as business plan and strategies, expected level of usage and future developments. Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned. A reduction in the estimated useful lives of PPE would increase the recorded depreciation charge and decrease the PPE balance.

(d) Impairment of property plant and equipment

The Company reviews property, plant and equipment for impairment in accordance with the Accounting Policy in Note 2.9. The recoverable amount of these assets have been determined based on higher of the assets’ fair value less cost to sell and value in use. These calculations require the use of estimates and judgements.

Management believes that any reasonable possible change in the estimated future cash flows of exporting Montessori products which the recoverable amounts of the Company is based would not cause the Company’s carrying amount to exceed its recoverable amount.

4.2 Critical judgements in applying the entity’s accounting policies

(a) Critical judgements in determining the lease term – SLFRS 16

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

For leases of buildings and motor vehicles, the following factors are normally the most relevant:

• If there are significant penalties to terminate (or not extend), the Group and Company is typically reasonably certain to extend (or not terminate);

• If any leasehold improvements are expected to have a significant remaining value, the Group and Company is typically reasonably certain to extend (or not terminate), and
• Otherwise, the Group and Company considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset;

Most extension options in buildings and motor vehicles leases have not been included in the lease liability, because the Group and Company could replace the assets without significant cost or business disruption.

The lease term is reassessed if an option is actually exercised (or not exercised) or the Group and Company becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(b) Macroeconomic developments and industry specific risk considerations

Sri Lanka has experienced notable macroeconomic challenges since early 2022, including currency depreciation, high inflation, and liquidity constraints, which significantly impacted businesses across sectors. However, as of the reporting date, many of these challenges have been addressed to a considerable extent. Debt restructuring efforts are either completed or in advanced stages, inflation has moderated, and business conditions have shown signs of stabilisation, with day-to-day life returning to a more normal footing.

Despite these improvements, certain residual risks and emerging sector-specific developments continue to impact the Company and its subsidiaries operating in Sri Lanka and India, particularly in the fabric manufacturing and export sector. The key areas considered in preparing these financial statements are summarised below:

Credit risk management

The Group continues to be exposed to credit risk arising from its operating activities and financing activities, including trade receivables, deposits with financial institutions, foreign exchange transactions, and other financial instruments. In accordance with the SLFRS 9 framework, the estimation of Expected Credit Losses (ECL) is carried out based on both current and forward-looking economic conditions. Given the evolving macroeconomic environment, the Group has continued to assess ECL using a range of economic scenarios of varying severity and applies appropriate weightings to reflect a range of possible outcomes. The Group has reviewed the potential impact of the improved but still uncertain economic conditions on key inputs and assumptions used for ECL measurement, in line with available information. These assessments include ongoing reviews of financial assets across customer segments with similar risk characteristics, analysis of updated forward-looking scenarios, and recalibration of historical default rates. Bank balances are maintained with reputable financial institutions with high credit ratings assigned by recognised external agencies, and there has been no history of default. These balances are typically callable on demand, except in cases where regulatory or operational restrictions apply. Based on this, the Group has assessed that credit risk on bank balances is minimal, and the associated expected credit loss is not material to the financial statements.

Liquidity management

The impact of the economic environment on the Group’s liquidity and funding risk profile continues to be closely monitored by management. In response to market conditions, the Group has regularly recalibrated stress testing scenarios to assess potential impacts on its liquidity position. Over the years, the Group renegotiated inventory purchase arrangements and improved payment terms with key vendors. Additionally, it divested selected financial assets to generate liquidity and selectively drew down on available credit facilities to maintain an adequate liquidity buffer. As a result of these proactive measures, the Group maintained a stable liquidity position throughout the year and reported a positive net current asset position as at the date of the statement of financial position.

Foreign exchange exposure

As the functional currency of the Company and its subsidiaries is the United States Dollar (USD), the Group’s revenue and the majority of its input costs related to exports are naturally aligned with its reporting currency, reducing direct foreign exchange risk on core operations. However, the Group remains exposed to currency fluctuations on certain transactions and balances denominated in other currencies particularly those denominated in Sri Lankan Rupees (LKR) and Indian Rupees (INR), including local operating expenses, employee costs, statutory payments, and certain working capital items. While the exchange rates of the LKR and INR have shown relative stability during the financial year against USD, ongoing monitoring and evaluation of currency exposures continue to form part of the Group’s financial risk management framework. Where appropriate, natural hedging and operational adjustments are employed to minimise the impact of exchange rate volatility on the Group’s financial position and performance.

Inflationary impact and cost management

Although headline inflation has significantly declined compared to the peak levels observed during the height of the economic crisis, certain input costs remain elevated. The Group has continued to implement cost efficiency measures across its operations and regularly reviews pricing strategies to manage pressure on margins. These initiatives are part of the Group’s broader focus on maintaining financial resilience amidst an evolving cost environment.

Supply chain and raw material management

The Group remains attentive to global supply chain conditions that may affect the availability and cost of raw materials. While overall conditions have stabilised in comparison to prior periods, challenges remain in certain product categories, including extended lead times and price volatility. The Group continues to manage its procurement strategy proactively to avoid disruption and ensure production continuity.

Capital and funding access

The Group has maintained access to adequate credit facilities through its established relationships with the financial institutions. The cost of borrowing has stabilised particularly following adjustments to the monetary policy environment in Sri Lanka. The Group actively monitors its capital structure and maintains flexibility to meet funding requirements as they arise.

Going concern

The Group and the Company have assessed all available information, including the improvement in macroeconomic conditions, internal forecasts, and financing arrangements, and have not identified any material uncertainties that may cast significant doubt on their ability to continue as a going concern. Accordingly, the financial statements have been prepared on a going concern basis.

(a) Description of segments and principal activities

Management examines the Group's performance both from a product and geographic perspective and has identified two reportable segments of its business:

1: Textile manufacturing – Sri Lanka and India:

The business of manufacturing and selling of weft knit fabrics to export and to indirect export are included in the textile manufacturing.

2: Fabric printing – Sri Lanka:

Rotary screen printing of knitted and woven fabrics to export and to indirect export are included in the fabric printing.

Management uses a measure of adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) to assess the performance of the operating segments. Information about segment revenue is disclosed in Note 6.

(b) Adjusted EBITDA

Adjusted EBITDA excludes discontinued operations and the effects of significant items of income and expenditure which may have an impact on the quality of earnings arising from an isolated or non-recurring event. It also excludes the effects of equity settled share based payments. Interest income and finance costs are not allocated to segments as this type of activity is driven by the central treasury function which manages the cash position of the Group.

Adjusted EBITDA reconciles to operating profit before income tax as follows:

(c) Segment assets

Segment assets are measured in the same way as in the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset.

The Group’s deferred tax assets are not considered to be segment assets.

(d) Segment liabilities

Segment liabilities are measured in the same way as in the financial statements. These liabilities are allocated based on the operations of the segment.

The Group’s deferred tax liabilities are not considered to be segment liabilities.

(e) Non-current assets additions

Segment non-current assets are measured in the same way as in the financial statements. These assets are allocated based on the operations of the segment.

The Group and the Company derives following types of revenue:

(a) Segment revenue

Sales between segments are eliminated on consolidation. The revenue from external parties is measured in the same way as in the statement of profit or loss.

(b) Recognising revenue from major business activities

Textile sector

Timing of recognition:

The Group manufactures and sells of weft knit fabrics to foreign markets as well as to the local exporters. Sales are recognised at the point of fulfilling the performance obligations.

Measurement of revenue:

The fabrics are sold to the customers with a right to return faulty products. Revenue from sales is based on the transaction price specified in the sales contracts allocated to the performance obligations. No element of financing is deemed present as the sales are made with a credit term of 30 - 60 days, which is consistent with market practice.

Printing sector

Timing of recognition:

The Group prints rotary screen of knitted and woven fabrics to foreign markets as well as to the local exporters. Sales are recognised at the point of fulfilling the performance obligations.

Measurement of revenue:

The printed fabrics are sold to the customers with a right to return faulty products. Revenue from sales is based on the transaction price specified in the sales contracts allocated to the performance obligations. No element of financing is deemed present as the sales are made with a credit term of 30 - 60 days, which is consistent with market practice.

Further information about material accounting policies are provided in Note 2.22.

(a) Other income primarily comprises proceeds from the sale of scrap materials, including cardboard and polythene.

The following items have been charged/(credited) in arriving at operating profit.

The tax on the Group's and Company's profit before tax differs from the theoretical amount that would arise using the basic tax rate applicable to profits of the Group and Company as follows:

Group tax expense is based on the taxable profit of individual companies within the Group. At present the tax laws of Sri Lanka do not provide for group taxation.

All the companies within the Group are liable for income tax as per the provisions of tax laws enacted in respective countries tax jurisdictions.

Provision for income tax for the year ended 31 March 2025 in respect of Teejay Lanka PLC Company and Teejay Lanka Prints (Private) Limited, a subsidiary of the Company, has been made in the financial statements, in terms of the changes to the Inland Revenue Act No. 24 of 2017, as passed in parliament on 09 December 2022. The Company and its subsidiary in Sri Lanka are liable for income tax at a rate of 30%.

Teejay India (Private) Limited is a unit established in Special Economic Zone in Andhra Pradesh, India and eligible for deduction of hundred percent of profits and gains derived for a period of five consecutive assessment years beginning with the assessment year in which the Company commenced its operations and fifty percent of profits and gains derived for the next five consecutive assessment years. Further, following these concessions, the Company is eligible for the deduction of fifty percent of profits generated from export revenue for five consecutive years provided fulfilment of certain conditions.

The first five years of the concession period commenced in 2009 and expired in 2013 and the second five years of the concession period commenced in 2014 and expired in 2018. After that Company enjoyed a tax concession of fifty percent of profits generated from export revenue for five consecutive years commenced in 2019 and expired in 2023. The Company is currently liable for income tax at a rate of 34.944%.

Teejay Mauritius (Private) Limited is liable for income tax at a rate of 15%.As at 31 March 2025, the company had accumulated tax losses of LKR 77,815,334 (2024 - LKR 140,312,935) available for set off against future taxable income and hence was not liable for tax for the year ended 31 March 2025.

Further information about deferred tax is provided in Note 27.

(a) Basic

Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year:

(c) Weighted average number of shares used as the denominator

(a) The Company declared and paid final dividends of LKR 541,093,304 representing LKR 0.75 per share on 05 June 2024 for the year ended 31 March 2024.

(b) The Company declared and paid an interim dividend of LKR 541,093,304 representing LKR 0.75 per share on 18 February 2025 for the year ended 31 March 2025.

(c) Further, the Board of Directors recommended to propose the payment of LKR 1,154,332,381 representing LKR 1.60 per share as final dividend to the shareholders of the Company for the year ended 31 March 2025 subject to obtaining the approval of the Shareholders at the forthcoming Annual General Meeting.

(a) Property, plant and equipment of the Group and the Company include fully depreciated assets still in use, the cost of which as at 31 March 2025 amounted to LKR 24,838,651,256 and LKR 11,903,186,043 respectively (2024 Group – LKR 19,140,052,995 and Company – LKR 11,172,436,624).

(b) The Company has constructed nine buildings on four plots of lands leased from the Board of Investment of Sri Lanka at Seethawaka International Industrial Park. The remaining lease periods as of 31 March 2025 are 26,10,13 and 13 years respectively. The subsidiary company, Teejay Lanka Prints (Private) Limited, has constructed two buildings on two plots of lands leased from the Board of Investment of Sri Lanka at Seethawaka International Industrial Park. The remaining lease periods as of 31 March 2025 are 8 and 26 years respectively. The sub-subsidiary company, Teejay India (Private) Limited, has constructed a building on a land sub leased at Brandix India Apparel City park. The remaining lease period as of 31 March 2025 is 20 years.

(c) Depreciation expense of Group of LKR 2,717,229,620 (2024 – LKR 2,876,452,373) and LKR 109,470,009 (2024 – LKR 134,228,481) has been charged to cost of goods sold and administrative expenses respectively. Depreciation expense of the Company of LKR 1,196,219,749 (2024 – LKR 1,211,434,234) and LKR 58,801,428 (2024 – LKR 72,204,907) has been charged to cost of goods sold and administrative expenses respectively.

(d) Teejay India (Private) Limited has mortgaged the assets related to the expansion project as security for the loan obtained (Note 25).

This note provides information for leases where the Group/Company is the lessee.

(a) Amounts recognised in the statement of financial position

The statement of financial position shows the following amounts relating to leases:

Right-of-use assets

(b) Amounts recognised in the statement of profit or loss

The statement of profit or loss shows the following amounts relating to leases:

Depreciation charge of right-of-use assets

(c) The total cash outflows for leases of Group and Company for the financial year ended 31 March 2025 were LKR 124,347,071 (2024 – LKR 142,164,422) and LKR 62,490,184 (2024 – LKR 81,782,786) respectively.

(d) The carrying amounts of lease liabilities are denominated in following currencies:

(a) Capital work in progress of Group and Company as of 31 March 2025 mainly comprises of Knitting machines amounting to LKR 136,558,789 and cost incurred on roof replacement amounting to LKR 58,371,066.

(a) Amortisation charge amounting to LKR 199,152,922 (2024 Group – LKR 145,302,777) and LKR 143,506,631 (2024 Company – LKR 104,804,913) relating to the computer software of Group and the Company respectively are included in cost of sales.

(b) Impairment tests for goodwill

Management reviews the business performance based on geography and type of business. Goodwill is monitored by management at the level of the operating segments identified in Note 5.

Summary of the goodwill allocation is presented below.

The recoverable amount of all CGUs has been determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a five year period. Cash flows beyond the five- year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long term average growth rate for the business in which the CGU operates.

For each of the CGUs with significant amount of goodwill the key assumptions, long term growth rate and discount rate used in the value-in-use calculations are as follows.

• Sales volume is the average annual growth rate over the five-year forecast period. It is based on current industry trends and includes long term inflation forecasts for each company in which each business segment operates.
• Gross margin is the average margin as a percentage of revenue over the five-year forecast period. It is based on current sales margin levels and sales mix, with adjustments made to reflect the expected future price rises in key raw materials.

Other operating costs are the fixed costs of the CGUs, which do not vary significantly with sales volumes or prices. Management forecasts these cost based on the current structure of the business, adjusting for inflationary increases and these do not reflect any future restructuring or cost saving measures. The amounts disclosed above are the average operating cost for the five year forecast period.

Annual capital expenditure is the expected cash costs of each segment for five-year forecast period.

Significant estimate: key assumptions used for value in use calculations

The Group tests whether goodwill has suffered any impairment on an annual basis. For the 2025 and 2024 reporting periods, the recoverable amount of the cash-generating units (CGUs) was determined based on value in use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period.

Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. These growth rates are consistent with forecasts included in industry in which each CGU operates.

The following table sets out the key assumptions for those CGUs that have significant goodwill allocated to them:

	Teejay Lanka Prints (Private) Limited LKR ‘000	Teejay Mauritius (Private) Limited (Previously known as Ocean Mauritius Limited) LKR ‘000
2025
Sales volume (% annual growth rate)	10	10
Budgeted gross margin (%)	15	13
Annual capital expenditure	233.6 Mn.	525.7 Mn.
Long-term growth rate (%)	0.5	0.5
Pre-tax discount rate (%)	18.28	8.94
2024
Sales volume (% annual growth rate)	2	25
Budgeted gross margin (%)	10	12
Annual capital expenditure	Nil	325 Mn.
Long-term growth rate (%)	2	2
Pre-tax discount rate (%)	24.7	9.45

Management has determined the values assigned to each of the above key assumptions as follows:

Assumption	Approach used to determining values
Sales volume	Average annual growth rate over the five-year forecast period; based on past performance and management’s expectations of market development.
Sales price	Average annual growth rate over the five-year forecast period; based on current industry trends and including long-term inflation forecasts for each territory. Average annual growth rate over the five-year forecast period; based on current industry trends and including long-term inflation forecasts for each territory.
Budgeted gross margin	Based on past performance and management’s expectations for the future.
Other operating costs	Fixed costs of the CGUs, which do not vary significantly with sales volumes or prices. Management forecasts these costs based on the current structure of the business, adjusting for inflationary increases but not reflecting any future restructurings or cost-saving measures. The amounts disclosed above are the average operating costs for the five-year forecast period.
Annual capital expenditure	Expected cash costs in the CGUs. This is based on the historical experience of management, and the planned refurbishment expenditure. No incremental revenue or cost savings are assumed in the value in use model as a result of this expenditure.
Long-term growth rate	This is the weighted average growth rate used to extrapolate cash flows beyond the budget period. The rates are consistent with forecasts included in specific industry. weighted average growth rate used to extrapolate cash flows beyond the budget period. The rates are consistent with forecasts included in specific industry.
Pre-tax discount rates	Reflect specific risks relating to the relevant segments and the countries in which they operate.

(a) Details of the company incorporated in Sri Lanka, in which the Company had control are set out below:

(b) Details of the companies incorporated outside Sri Lanka (domiciled in India, Mauritius and Egypt), in which the Group/Company had control directly/indirectly are set out below:

(a) Nubian Threads (Private) Limited was incorporated on 18 November 2024.

(a) Financial assets – at am ortised cost

Due to the short-term nature of the financial assets, their fair value is considered to be the same as their amortised cost.

(b) Financial liabilities – at amortised cost

Due to the short-term nature of the current financial liabilities, their carrying amount is considered to be the same as their amortised cost.

For the borrowings, the fair values are not materially different from their carrying amounts, since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short-term nature.

(c) Credit quality of financial assets

The credit quality of financial assets that are neither past due nor impaired and past due but not impaired can be assessed by historical information about counterparty default rates of trade and related party receivables or external credit rating with reference to financial institutions:

Trade receivables and amount due from related parties:

Counterparties without external credit rating:

Group 1 – customers/related parties (less than 3 months).

Group 2 – customers/related parties (more than 3 months) with no defaults in the past.

Group 3 – customers/related parties (more than 6 months) with some defaults in the past. All defaults were fully recovered.

Cash and cash equivalents:

Other financial assets

Inventories are stated after a provision for impairment of inventories and the total movement on the provision is as follows:

(a) Impairment of trade receivables

The Group/Company apply the SLFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.

The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 March 2025 or 1 April 2024 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables and accordingly adjusts the historical loss rates based on expected changes.

On that basis, the loss allowance as at 31 March 2025 and 1 April 2024 was determined as follows for trade receivables:

The closing loss allowances for trade receivables as at 31 March reconcile to the opening loss allowances as follows:

Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group/Company and a failure to make contractual payments for a period of greater than 60 days from the due date.

(b) The carrying amounts of trade and other receivables are denominated in following currencies:

(c) The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group/Company does not hold any collateral as security.

(d) Other receivables of the Group mainly consist of advances to suppliers of LKR 286,033,497 (2024 – LKR 462,153,926) and refundable deposits of LKR 188,872,615 (2024 – LKR 224,656,209). Other receivables of the Company mainly consist of advances to suppliers amounting to LKR 172,934,063 (2024 – 343,853,106) and refundable deposits amounting to LKR 20,853,214 (2024 – LKR 16,846,076).

(e) The other classes within trade and other receivables do not contain impaired assets.

(f) Due to the short-term nature of the other current receivables, their carrying amount is considered to be the same as their fair value. For the majority of the non-current receivables, the fair values are also not significantly different from their carrying amounts.

(g) Advances to subcontractors entirely consist of an amount of LKR 627,859,374 (2024 – LKR 625,842,000) granted by the Company to Lumiere Textiles (Private) Limited in line with the service agreement entered on 29 March 2022 covering a period of 5 years and the subsequent addendum dated on 18 September 2023 thereon made to the original service agreement. The advance granted is for the purpose of being utilised in rendering the services by the subcontractor in conversion of greige to finished fabric.

The movement in the other financial assets during the year is as follows:

Other financial assets

(a) The weighted average effective interest rate of the Group on short term deposits (USD) was 5.45% – 6.32% (year ended 31 March 2024 – 6.4% – 11%). The weighted average effective interest rate of the Company on short term deposits (USD) was 5.53% – 6.32% (year ended 31 March 2024 – 6.4% – 9.1%).

(b) The carrying amounts of other financial assets are denominated in following currencies:

For the purpose of the statement of cash flows, the year end cash and cash equivalents comprise the following:

(a) The cash and cash equivalents are denominated in following currencies:

(a) Accrued expenses of the Group mainly consist accrued employee bonus of LKR 497,375,933 (2024 – LKR 313,076,161), air freight expenses of LKR 332,288,915 (2024 – LKR 284,196,288) and bulk discount of LKR 340,128,950 (2024 – LKR 346,619,656). Accrued expenses of the Company mainly consist of accrued employee bonus of LKR 298,818,277 (2024 – LKR 299,014,368), air freight expenses of LKR 175,279,851 (2024 – LKR 106,160,332) and bulk discount of LKR 263,542,647 (2024 – LKR 323,388,439).

(b) Statutory payables of the Group mainly consist of EPF payable of LKR 60,030,315 (2024 – LKR 53,580,220), ETF payable of LKR 5,126,413 (2024 – LKR 6,998,978) and PAYE payable of LKR 45,871,054 (2024 – LKR 22,710,476). Statutory payables of the Company mainly consist of PAYE payable of LKR 43,427,596 (2024 – LKR 15,525,898), EPF payable of LKR 30,908,600 (2024 – LKR 26,405,612) and ETF payable of LKR 4,636,319 (2024 – LKR 3,960,827).

(c) The carrying amounts of trade and other payables are denominated in following currencies:

(d) The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature.

(a) The maturity of non-current borrowings is as follows:

The loan of USD 15 Mn consists of a loan obtained by Teejay India (Private) Limited, a sub subsidiary of the Company, from the Standard Chartered Bank in relation to the expansion project. The loan has a grace period which was ended in 2024 November and repayment was commenced November 2024 with a repayment period 03 years and final payment due in February 2028. Teejay India (Private) Limited has mortgaged the assets related to the expansion project as a security for the loan obtained.

(b) The interest rate exposure of the borrowings of the Group are as follows:

(d) Weighted average effective interest rates:

(d) The bank overdrafts of the Company as at 31 March 2025 and 2024 represent book overdrawn situations amounting to LKR 3,682,126 and LKR 14,755,426 respectively.

(e) Teejay India (Private) Limited bank borrowings are secured by the letter of comfort given by Teejay Lanka PLC and mortgaged the assets related to the expansion project as a security for the loan obtained. All other bank borrowings are on a clean basis.

(f) The exposure of the Group’s/Company’s borrowings to interest rate changes and the contractual repricing dates at the end of the reporting period are as follows:

(g) The carrying amounts of borrowings are denominated in following currencies:

(h) For the majority of the borrowings, the fair values are not materially different from their carrying amounts, since either:

• the interest payable on those borrowings is close to current market rates, or
• the borrowings are of a short-term nature.

GRI 201-3

(a) The movement in the defined benefit obligation over the year is as follows:

(b) The amounts recognised in the statements of profit or loss are as follows:

As stated in paragraph 2.20 (a) under summary of material accounting policies, an actuarial valuation of Teejay Lanka PLC and Teejay Lanka Prints (Private) Limited, subsidiary of the Company, was carried out by an independent actuary, Messrs. Piyal S Goonetilleke and Associates, using the Projected Unit Credit method to calculate the liability for gratuity as at 31 March 2025. An actuarial valuation of the Teejay India (Private) Limited defined benefit obligations was carried out by an independent firm, KP Actuaries and Consultants, using the Projected Unit Credit method to calculate the liability for gratuity as at 31 March 2025. The provision for gratuity is not externally funded.

(c) The principal actuarial assumptions used in the calculation were as follows:

In addition to the above, demographic assumptions such as mortality, disability and retirement age were considered for the actuarial valuation. GA 1983 Mortality Table was taken as the basis for the mortality assumption.

(d) The sensitivity of the gratuity to changes in the weighted principal assumptions is:

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the retirement benefit obligations to significant actuarial assumptions the same method (present value of the retirement benefit obligations calculated with the projected unit credit method at the end of the reporting period) has been applied.

(e) Maturity profile of the retirement benefit obligations:

The weighted average duration of the defined benefit obligation of Group and Company is 15 years. The expected maturity analysis of undiscounted retirement obligation:

Deferred tax liabilities/(assets) of the Group are calculated on all temporary differences and deductible temporary differences  under the liability method using tax rates of 2025 30%-34.94% (2024 – 30%-34%).

A summary of deferred tax (assets)/liabilities of the Group and Company are as follows:

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The offset amounts are as follows:

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Group

Company

Deferred tax liabilities amounting to LKR 472,518,600 for the Group and LKR 176,162,100 for the Company, attributable to right-of-use assets, are presented net of the related deferred tax assets on corresponding lease liabilities, which amounted to LKR 24,455,049 for the Group and LKR 6,179,117 for the Company. These net amounts are included within the deferred tax liabilities arising from accelerated tax depreciation on property, plant, and equipment.

Other than those disclosed below, there were no material contingent liabilities against the Group outstanding as at the financial position date.

(a) Teejay India (Private) Limited, a fully owned subsidiary of Teejay Lanka PLC, which is incorporated in India, has been issued with tax assessments by the Department of Income Tax in India disputing that the comparable and methods applied by the subsidiary to determine arm's length principles were not in line with the Transfer Pricing Regulations enacted in India. These tax assessments represent the additional total income proposed by the Tax Authority to the total income of the Company and not the tax impact of these assessments. The tax impact is estimated to be LKR 1,577,717,161. The Company has appealed against these assessments in the Disputed Resolution Panel/Income Tax Appellate Tribunal (ITAT).

(b) During the year ended 31 March 2023, Teejay Lanka PLC has been issued with tax assessments by the Department of Inland Revenue of Sri Lanka to a value of LKR 274,676,271 applicable for the year of assessment 2018/19 disputing that the Company is not eligible for the concessionary rate of 14% applicable for indirect/deemed exports. Further, the Department of Inland of Revenue of Sri Lanka disputed that deemed interest income required to be recognised in relation to the other receivables from the related parties as of 31 March 2019. The Company has appealed against these assessments in the Tax Appeal Commission. Management has submitted the written appeal on 13 June 2023 and currently at Tax Appeal Commission.

During the year ended 31 March 2024, Teejay Lanka PLC has been issued with tax assessments by the Department of Inland Revenue of Sri Lanka to a value of LKR 616,802,522 applicable for the year of assessment 2019/20 disputing that the Company is not eligible for the concessionary rate of 14% applicable for indirect/deemed exports. Further, the Department of Inland of Revenue of Sri Lanka disputed that deemed interest income required to be recognised in relation to the other receivable from the related parties as of 31 March 2020. The Company has requested for an administrative Review made under Section 139(1) of the Inland Revenue Act No 24 of 2017 and decision on the request for an administrative review has not yet been confirmed by the Commissioner General of Inland Revenue.

Capital commitments

Capital expenditure contracted at the end of the reporting period, but not yet incurred is as follows:

(a) The Company has provided letters of financial support to Teejay India (Private) Limited expressing its commitment to extend financial assistance as and when required. Note 25 (e).

Operating commitments

There were no material operating commitments outstanding as at the statement of financial position date.

Financial commitments

There were no material financial commitments outstanding as at the statement of financial position date.

(a) All issued shares are fully paid.

(b) For the purpose of calculation of basic earnings per share, the weighted average number of shares have been considered based on the date of issue of shares.

(c) Ordinary shares have a par value of LKR 37.60 Ordinary shareholders entitle to participate in dividends, and to share in the proceeds of winding up the Company in proportion to the number of and amounts paid on the shares held.

(d) On a show of hands every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to one vote, and on a poll each share is entitled to one vote.

(e) Information relating to the share based payments, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in Note 33.

The exchange equalisation reserve are the statement of financial position date represents all exchange differences resulting from the translation of assets, liabilities, income, expenses and equity items as explained in Note 2.1 to the accounting policies.

The Employee Share Option Scheme established in 2015 (“ESOS”) is designed to provide long-term incentives for executive directors and executive management personnel to deliver long-term shareholder returns. Under the plan, allocation of share options to eligible employees will be based on criteria determined by the board of directors. Participation in the plan is at the board's discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.

The amount of share options that will be granted from and out of the maximum number of shares authorised to be granted as share options under the ESOS will be determined from time to time by the Board of Directors. In this regard, the Board may consider the Company's total return to shareholders, including share price growth, dividends and capital returns, ranking within a peer group of companies that are listed on the Colombo Stock Exchange over an identified period of time.

The exercise price of options is based on the volume weighted average price at which the Company's shares are traded on the Colombo Stock Exchange, taking into consideration all share transactions of such shares during the thirty Market days immediately preceding the date on which share options are granted to eligible employees under the ESOS.

When a share option is exercised, each option is convertible into one ordinary share.

Set out below are summaries of options granted under the plan:

(a) Fair value of share options granted

The fair value of the options amounting to LKR 4,976,396 (2024 – LKR 28,199,575) was recognised as an employee benefits expenses and credited to reserve.

The fair value at the grant date is independently determined using the Black Scholes Model that takes into account the exercise price, the term of the option, the impact of dilution (where material), the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk free interest rate for the term of the option and the correlations and volatilities of the peer group companies.

(b) expenses arising from share-based payment transactions:

(b) As at 31 March 2025, a total of 25,507,905 shares have been issued to eligible employees under the ESOS out of the maximum number of 27,090,851 shares authorised to be granted as share options under the ESOS. Out of the said shares issued under the ESOS, 4,717,763 shares were issued to eligible employees in the financial year 2024/2025 (i.e., in June 2024), upon eligible employees exercising their rights to purchase share options under grant 7 made under the ESOS in July 2023. The exercise price per share, of these shares were LKR 29.81. No share options were granted under the ESOS during the financial year 2024/2025. As at 31 March 2025, a balance of 1,582,946 shares are available to be granted to eligible employees, as share options under the ESOS, as may be determined by the Board.

The directors of the Company hereby declare that the Company has not, directly or indirectly, provided funds for the ESOS.

Reconciliation of profit before tax to cash generated from operations:

The Directors of the Company are also Directors of following companies with which the Company had transactions in the ordinary course of business during the year.

	Ajit Damon Gunewardene	Mohamed Ashroff Omar	Hasitha Premaratne	Shrihan Blaise Perera	William Charles McRaith	Kit Vai Tou	Masaru Okutomi
Pacific Textiles Limited	–	–	–	–	–
Brandix Lanka (Private) Limited	–			–	–	–	–
Brandix Apparel (Private) Limited	–			–	–	–	–
Teejay Lanka Prints (Private) Limited	–		–		–	–	–
Teejay India (Private) Limited	–				–	–	–
Teejay Mauritius (Private) Limited	–				–	–	–
Fortude (Private) Limited	–		–	–	–	–	–
Brandix Apparel Solutions (Private) Limited	–			–	–	–	–
Brandix India Apparel City (Private) Limited	–			–	–	–	–
Adhishtan Investments India (Private) Limited	–		–	–	–	–	–
BrandM Apparel Haiti Limited	–		–	–	–	–	–
Brandix Apparel India (Private) Limited	–			–	–	–	–
Inqube Global (Private) Limited	–			–	–	–	–
Digital Mobility Solutions Lanka (Private) Limited		–	–	–	–	–	–
Brandix Intimate India (Private) Limited	–		–	–	–	–	–
Brandix Intimate Apparel Limited	–			–	–	–	–
Brandix Apparel India (Private) Limited	–			–	–	–	–
Brandix Casuallwear Bangladesh Limited	–		–	–	–	–	–
Clover Global Private Limited	–		–	–	–	–	–

The Directors of the Company are also Directors of following companies with which the Company had transactions in the ordinary course of business during the year.

(i) Sale of goods and services: