COMPOSITION OF THE AUDIT COMMITTEE

The Audit Committee comprises of three Non-Executive Directors where two of them are independent. One of the Independent Directors, functions as the Chairman of Audit Committee and two of the Directors (including the Chairman) have recent and relevant financial management and accounting experience and professional accounting qualifications.

The Members of the Audit Committee are as follows ;

• Mr Shrihan B Perera (Chairman) – (IND/NED)
• Mr William (Bill) C McRaith - (IND/NED)
• Mr Hasitha Premaratne – (NED)

IND/NED – Independent Non-Executive Director
NED – Non-Executive Director
(Refer to Board of Directors for a brief profile of each Director.)

The Committee’s composition met the requirements of the rule 9.13.3 of Listing Rules of the Colombo Stock Exchange.

SECRETARY

Corporate Services (Private) Limited

CHARTER OF THE AUDIT COMMITTEE

The scope of functions and responsibilities of the Audit Committee of Teejay Lanka PLC are governed by the Audit Committee Charter which is in line with the directives of the CA Code of Best Practice on Corporate Governance 2023 issued by the Chartered Institute of Sri Lanka and Section 9.13 of the CSE Listing Rules. The Charter is periodically reviewed and revised with the concurrence of Board of Directors. The terms of reference of the Committee are clearly defined in the Charter of the Audit Committee. The latest revision to the Charter was approved in the month of May 2025.

MEETINGS

The Audit Committee met six times during the year.Invitations are extended to the Company CEO, CFO and the members of the CFT. Other members of the company and external auditors are invited on need basis.

The Audit Committee Chairman conveys the activities of the committee to the Board of Directors by presenting the minutes of the meetings during Board meetings, and verbally when deemed necessary. The Chairperson and Committee members maintained regular communication with the Company’s management through various meetings and correspondence to oversee the auditing and control aspects in the Company. The Chairperson meets the Risk and Control Division to monitor and review the progress on a monthly basis.

ATTENDANCE AT AUDIT COMMITTEE MEETINGS

The Head of Risk and Control Division, Chief Executive Officer, Chief Financial Officer, Cross Functional Team Members, Board of Directors, External Auditors, and relevant Executives of the Company attended the meetings on a need basis.

Director	17 May 2024	04 June 2024	12 August 2024	07 November 2024	07 January 2025	20 February 2025
Mr Shrihan B. Perera
Mr William (Bill) C McRaith
Mr Hasitha Premaratne

ROLE OF THE AUDIT COMMITTEE

The Audit Committee is responsible for overseeing the Company's compliance with Sri Lanka Accounting Standards, all applicable financial reporting requirements, and regulatory obligations. This includes ensuring adherence to the reporting and disclosure requirements under the Colombo Stock Exchange (CSE) Listing Rules, particularly Section 9, as well as the Companies Act No. 07 of 2007, the Securities and Exchange Commission (SEC) Act, and other applicable financial regulations and frameworks.

Audit Committee provide oversight over the preparation and presentation of quarterly and annual financial statements, with a focus on ensuring transparency, reliability, and compliance with accounting principles, statutory requirements, review of key judgements applied in the preparation of the Consolidated Financial Statements, prior to submission to the Board of Directors.

The Audit Committee reviews the adequacy and effectiveness of internal controls, including measures in place to prevent the unauthorised disclosure of material information. It also oversees the processes established to ensure that the Company’s internal control and risk management frameworks are robust and aligned with the requirements of the Sri Lanka Auditing Standards.

The Committee makes appropriate recommendations to the Board on external auditors’ appointment, reappointment, or removal. It also approves the remuneration and terms of engagement.

The Committee also evaluates the independence, objectivity, and overall performance of the internal and external auditors, ensuring that audit activities are conducted without bias and in accordance with professional standards.

The Audit Committee reviews and evaluates the effectiveness of the Company’s risk management processes, with particular focus on the adequacy of the overall control environment and controls implemented in areas of significant risk exposure. This includes oversight of the business continuity planning process to ensure operational resilience in the face of disruptions. The Committee also reviews the Entity’s risk management policies to ensure they remain relevant, comprehensive, and aligned with the regulatory landscape. In instances where specific risks are assessed to exceed acceptable thresholds set by the Committee, prompt corrective action is recommended to mitigate potential impacts in accordance with the Company’s internal policies and applicable regulatory requirements.

FINANCIAL REPORTING

The Audit Committee reviewed the financial reporting system adopted by the group in the preparation of its quarterly and annual financial statements to ensure that an accurate and effective financial reporting process is in place, consistent with the accounting policies and methods adopted and their compliance with the Sri Lanka Financial Reporting Standards (SLFRSs/LKASs), applicable regulatory requirements, the appropriateness, key judgments made in preparation of financial statements and changes in accounting policies and material matters.

Each quarter, the CFO through the CEO presents the confirmed quarterly financials for the Audit Committee review and approval prior to publishing the figures in the CSE. Through this review the Audit Committee obtain assurance from the Chief Executive Officer and Chief Financial Officer confirming that the financial records have been properly maintained and that the financial statements present a true and fair view of the financial position and performance of the Company and the Group.

During the quarterly financial review, Committee provided their comments for company’s earnings press releases, earnings guidance provided to analysts and rating agencies. The Committee obtained independent input from the External Auditors on the impact of any new Sri Lanka Accounting Standards that came into effect for the year under review and obtained satisfactory assurance that the necessary initiatives were taken to enable the Company to comply with the new standards.

RISK MANAGEMENT AND INTERNAL CONTROLS

Audit Committee facilitates and monitors Enterprise Risk Management process, the formulation of a Risk Based Audit Plan and the implementation of the same. The committee reviewed the key risks identified in Risks Models of all three entities including Sustainability-Related Risks and Opportunities (SSRO) developed at the beginning of the year together with the remedial actions. Thereafter it continued to review the changes to the risk profile presented each quarter and the implementation of the remedial actions at the Audit Committee meeting. The Audit Committee continued to monitor the Fire Risk Mitigation plans of the Group. Audit Committee engaged in reviewing and assessing the Company’s system of internal controls for detecting accounting and financial reporting errors and misappropriation of assets, legal violations, and non-compliance with the corporate code of conduct. The COSO Enterprise Risk Reporting Process is presently being implemented within the Group.

The company undertook a comprehensive update of the Risk Registers for its operations in Bangladesh, Egypt, and Indonesia during the year. This exercise involved the identification of emerging risks, reassessment of existing risk exposures, and the implementation of appropriate mitigation strategies. These updates reinforce Company’s commitment to maintaining a robust risk management framework and ensuring effective control environments across its key operational regions.

The Audit Committee also ensures the adequacy and the effectiveness of the internal control environment and the risk management system, monitoring of compliance with the standards, laws both financial and non-financial, regulations and performance of the Risk and Control function of the Organisation.

Formal assurances were obtained from the CEO and other key management personnel of the Company regarding the adequacy and effectiveness of the Entity's risk management and internal control systems and the controls over prevention of leakage of material information to unauthorised persons.

The Positive Assurance Framework confirmations obtained from the Senior Management monthly provide assurance regarding the efficacy and status of the internal control systems and risk management systems. Self-assurance on compliance with applicable laws and regulations is obtained via quarterly compliance statements submitted by the respective divisions.

The Committee also exercised oversight over the Company’s governance initiatives undertaken during the year, ensuring alignment with the requirements of the Personal Data Protection Act No. 09 of 2022, the Anti-Corruption Act No. 09 of 2023, and in preparation for the draft Cyber Security Act requirements. The Company continued obtaining services of the external consultant to review and strengthen the ESG Management Framework and to align with IFRS S1, S2 and IFRS, Scope 3 compliance.

INTERNAL AUDITS

Internal audits of the Company are carried out by the Group Risk and Control Division and the Head of Risk and Control submitted the findings of the audits to the Audit Committee. Its primary role is to evaluate and enhance the effectiveness of risk management, internal controls, and governance processes across the Group.

Internal audit assurance is achieved through a systematic and disciplined approach, involving risk-based audit planning that focuses on areas of significant risk and strategic importance. The Internal Audit team conducts regular audits across key operational and financial functions, including compliance reviews, process assessments, and control testing. The function also performed follow-up reviews to ensure timely implementation of audit recommendations.

The Audit Committee regularly reviews the scope, findings, and outcomes of the internal audits, and monitors management’s responsiveness to audit issues. Through this continuous assurance process, the Internal Audit function plays a vital role in strengthening the Group’s internal control environment and supporting sustainable business performance.

Each month, the Chairman of the Audit Committee has a one-on-one session with the Head of Risk and Control on the following matters:

• Progress of the internal audit plan
• Discuss the significant findings of the current audits and provide feedback on further review if required
• Access to information to conduct the audits
• Availability of adequate resources to conduct audits

The Audit Committee, through its ongoing oversight and regular engagement with the Group Risk and Control Team, is satisfied that the succession planning undertaken by Management for the Head of Group Risk and Control was effective. The designated successor assumed the role seamlessly following the mid-year resignation of the incumbent, ensuring continuity in leadership of the Group’s Risk and Control function and risk oversight.

EXTERNAL AUDITS

Written assurance was obtained from the external auditors approved by the SEC, confirming that they are and have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

Audit Committee meets the External Auditors each year for audit planning meeting where the scope of engagement is reviewed and post-audit to review the Management Letter and External Audit Report on the Audited Financial Statements for the year. This year, the planning meeting took place on 7 January 2025 and the final review meeting took place on 2 June 2025. There were no significant issues during the year under review. An independent firm of Accountants were engaged to conduct a special inventory review with full coverage of all inventory categories. The Audit Committee reviewed the results of the annual stock verification which was conducted at the end of the financial year which the Company undertakes every year.

The Audit Committee has reviewed the other services provided by the External Auditors to the Company to ensure that their independence and objectivity as External Auditors has not been impaired and evaluated the independence of the External Auditors based on their declaration of Independence which includes the number of years the assigned partner engages with the Company continuously and any disclosures on relationships with or interest in the Company or its subsidiaries and their compliance with the independence guidance given in the Code of Ethics of the Institute of Chartered Accountants of Sri Lanka. A partner rotation of the External Auditors takes place once in seven years and the next rotation of partner is due in 2026/27.

The fees for audit services and the non-audit services were reviewed and provided direct access to the Chairman of Audit Committee to discuss audit findings.

APPOINTMENT OF EXTERNAL AUDITORS

The Audit Committee recommended the Board to continue with Messrs Deloitte as the External Auditor for the Company. The Audit Committee has recommended to the Board of Directors that Messrs Deloitte continued as External Auditors for the financial year ending 31 March 2025 and that the re-appointment be included in the agenda of the Annual General Meeting.

ETHICS & GOOD GOVERNANCE

Integrity being a key pillar of our value system, Teejay aspires to do things the right way. Ethical and legal dealings are core principles for a sustainable business. Awareness of the Code of ethics emphasise on upholding ethical values of the Directors, top management, and staff members. The supplier code of conduct extends the Company’s values and expectations in ethical business conduct to the suppliers that we deal with. The Whistle-Blower Policy guarantees anonymity of the Whistle-Blowers, Chairman of the Audit Committee is the independent direct reporting channel, and they are encouraged to report any violations of the code of conduct, anti-corruption policy and anti-harassment policy without the risk of reprisal. All appropriate procedures are in place to conduct independent investigations into incidents reported. A quarterly summary of the incidents reported and the current status is presented to the Audit Committee Chairman. Audit Committee Chairman is the nominated third party independent whistle blower reporting channel. There are no pending incidents reported during the financial year 2024/2025.

EVALUATION OF THE COMMITTEE

The effectiveness of the Committee shall be evaluated annually by each member of the Committee. The outcome of the evaluation was presented to the Board, and it was determined that the Committee was effective.

CONCLUSION

The Audit Committee is satisfied that the internal controls and Enterprise Risk Management processes in place to assess and manage risks are adequate. It is of the view that the internal controls and procedures in place provide a reasonable assurance that the assets of the Company are safeguarded, and the Financial Statements of the Company are compiled using reliable information. The Committee is also satisfied that the Company is in a position to continue as a going concern. The Audit Committee obtained assurance from the Management that the Company has complied with the revised Corporate Governance Rules under Section 9 introduced by Colombo Stock Exchange (CSE) within the implementation timelines. The Audit Committee has observed that based on the compliance reporting, the Company has complied with standards, laws and regulations during the period 2024-25 under review.

 

Mr Shrihan B Perera
FCMA (UK), CGMA, B.Sc M.Eng UOM
Chairman of the Audit Committee

5 June 2025