Hayleys PLC - Debenture Issue 2013 Part 1v | Hayleys PLC - Debenture Issue 2013 CORPORATE INFORMATION The Company/Issuer Hayleys PLC Legal Status A Public Quoted Company with limited

Prospectus

Financial Advisors and Managers to the Issue

HAYLEYS PLC

(logo)

PROSPECTUS

AN INITIAL ISSUE OF ONE MILLION FIVE HUNDRED THOUSAND (1,500,000) RATED UNSECURED REDEEMABLE DEBENTURES AT THE FACE VALUE OF

LKR 1,000/- EACH TO RAISE SRI LANKA RUPEES ONE BILLION FIVE HUNDRED MILLION (LKR 1,500,000,000/-)

WITH AN OPTION TO ISSUE UPTO A FURTHER FIVE HUNDRED THOUSAND (500,000) OF SAID DEBENTURES TO RAISE UPTO SRI LANKA RUPEES FIVE

HUNDRED MILLION (LKR 500,000,000/-), AT THE DISCRETION OF THE COMPANY IN THE EVENT OF

AN OVERSUBSCRIPTION OF THE INITIAL ISSUE

TO BE LISTED ON THE MAIN BOARD OF THE COLOMBO STOCK EXCHANGE

Rated AA- by RAM Ratings Lanka Limited

ISSUE OPENS ON

2nd July 2013


i | Hayleys PLC - Debenture Issue 2013

This Prospectus is dated 20th June 2013

Responsibility for the Content of the Prospectus

This Prospectus has been prepared from information provided by Hayleys PLC (hereinafter referred to as the “Company”, “HAYL” or the “Issuer”) and from publicly available sources. The Directors of the Company have seen and approved this Prospectus and collectively and individually, accept full responsibility for the accuracy of the information given and confirm that after making all reasonable enquires and to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading or inaccurate.

Where representations regarding the future performance of HAYL have been given in this Prospectus, such representations have been made after due and careful enquiry of the information available to HAYL and making assumptions that are considered to be reasonable at the present point in time in their best judgment.

HAYL accepts responsibility for the information contained in this Prospectus. While the Company has taken reasonable care to ensure full and fair disclosure of information, prospective Investors are advised to carefully read this Prospectus and rely on their own examination and assessment of the Company including the risks involved prior to making any investment decision. FOR ENQUIRIES, PLEASE CONTACT FINANCIAL ADVISORS AND MANAGERS TO THE ISSUE

Registration of the Prospectus

A copy of this Prospectus has been delivered to the Registrar of Companies for registration in compliance with the provisions of Section 40 of the Companies Act No. 7 of 2007 (the “Companies Act). The following are the documents attached to the copy of the Prospectus delivered to the Registrar of Companies for registration pursuant to Section 40 (1) of the Companies Act.

a) The written consent of the Auditors to the Company for the inclusion of their name in the Prospectus

as Auditors to the Company. b) The written consent of the Lawyers to the Issue for the inclusion of their name in the Prospectus as

Lawyers to the Issue. c) The written consent of the Trustee to the Issue for the inclusion of their name in the Prospectus as

Trustee to the Issue. d) The written consent of the Bankers to the Issue for the inclusion of their name in the Prospectus as

Bankers to the Issue. e) The written consent of the Rating Agency to the Company for the inclusion of their name in the

Prospectus as the Rating Agency to the Company.

The delivery of this Prospectus will not under any circumstance constitute a representation or create any implication or suggestion that there has been no material change in the affairs of the Company since the date of this Prospectus.

If you are in doubt regarding the contents of this document, you should consult your stockbroker, bank manager, lawyer or any other professional advisor.

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f) The written consent of the Company Secretary for the inclusion of their name in the Prospectus as

Company Secretary to the Company. g) The written consent of the Financial Advisors and Managers to the Issue for the inclusion of their

name in the Prospectus as Financial Advisors and the Managers to the Issue. h) The written consent of the Registrars to the Issue for the inclusion of their name in the Prospectus as

Registrars to the Issue. i) The declaration made and subscribed to, by each of the Directors of the Company herein named as a

Director, jointly and severally confirming that each of them have read the provisions of the Companies Act and the CSE Listing Rules relating to the Issue of the Prospectus and that those provisions have been complied with.

The said Auditors to the Company, Lawyers to the Issue, Trustee to the Issue, Bankers to the Issue, Rating Agency to the Company, Company Secretary, Financial Advisors and the Managers to the Issue and Registrars to the Issue have not, before the delivery of a copy of the Prospectus for registration with the Registrar General of Companies in Sri Lanka withdrawn such consent. Registration of the Prospectus in Jurisdictions Outside of Sri Lanka

This Prospectus has not been registered with any authority outside of Sri Lanka. Non-Resident investors may be affected by the laws of the jurisdiction of their residence. Such investors are responsible to comply with the laws relevant to the country of residence and the laws of Sri Lanka, when making the investment. Representation

The Debentures are issued solely on the basis of the information contained and representations made in this Prospectus. No dealer, sales person or any other person has been authorised to give any information or to make any representations in connection with the Issue other than the information and representations contained in this Prospectus, and if given or made, such information or representations must not be relied upon as having been authorised by the Company. Forward Looking Statements

Any statements included in this Prospectus that are not statements of historical fact constitute “Forward Looking Statements”. These can be identified by the use of forward looking terms such as “expect”, “anticipate”, “intend”, “may”, “plan to”, “believe”, “could” and similar terms or variations of such terms. However, these words are not the exclusive means of identifying Forward Looking Statements. As such, all or any statements pertaining to expected financial position, business strategy, plans and prospects of the Company are classified as Forward Looking Statements.

Such Forward Looking Statements involve known and unknown risks, uncertainties and other factors including but not limited to regulatory changes in the sectors in which the Company operates and its ability to respond to them, the Company’s ability to successfully adapt to technological changes, exposure to market risks, general economic and fiscal policies of Sri Lanka, inflationary pressures, interest rate volatilities, the performance of financial markets both globally and locally, changes in domestic and foreign laws, regulation of taxes and changes in competition in the industry and further uncertainties that may or may not be in the control of the Company.

iii | Hayleys PLC - Debenture Issue 2013

Such factors may cause actual results, performance and achievements to materially differ from any future results, performance or achievements expressed or implied by Forward Looking Statements herein. Forward Looking Statements are also based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future.

Given the risks and uncertainties that may cause the Company’s actual future results, performance or achievements to materially differ from that expected, expressed or implied by Forward Looking Statements in this Prospectus, investors are advised not to place sole reliance on such statements.

Presentation of Currency Information and Other Numerical Data

The financial statements of the Company and currency values of economic data or industry data in a local context will be expressed in Sri Lanka Rupees. References in the Prospectus to “LKR”, “Rupees” or “Rs.” are to the lawful currency of Sri Lanka.

Certain numerical figures in the Prospectus have been subject to rounding adjustments, accordingly numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

The Colombo Stock Exchange (CSE) has taken reasonable care to ensure full and fair disclosure of information in this Prospectus. However, the CSE assumes no responsibility for accuracy of the statements made, opinions expressed or reports included in this Prospectus. The interest rate, Redemption and other terms and conditions of the Debentures issued herein have been decided by the Company.

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All Applicants should indicate in the Application for Debentures, their Central Depository Systems (Private) Limited (CDS) account number. In the event the name, address or NIC number/passport number/company number of the Applicant mentioned in the Application Form differ from the name, address or NIC number/passport number/company registration number as per the CDS records, the name, address or NIC number/passport number/company number as per the CDS records will prevail and be considered as the name, address or NIC number/passport number/company number of such Applicant. Therefore Applicants are advised to ensure that the name, address or NIC number/passport number/company number mentioned in the Application Form tally with the name, address or NIC number/passport number/company number given in the CDS account as mentioned in the Application Form. As per the Directive of the Securities and Exchange Commission made under Circular No. 08/2010 dated 22nd November 2010 and Circular No. 13/2010 issued by the CDS dated 30th November 2010, all Debentures are required to be directly deposited in to the CDS. To facilitate compliance with this Directive, all Applicants are also required to indicate their CDS account number. In line with this Directive, THE DEBENTURES ALLOTTED TO AN APPLICANT WILL BE DIRECTLY DEPOSITED IN THE CDS ACCOUNT OF SUCH APPLICANT, the details of which are indicated in his/her Application Form. PLEASE NOTE THAT DEBENTURE CERTIFICATES WILL NOT BE ISSUED. Debentures will not be allotted to Applicants who have not indicated their CDS account details in the Application Form. Applications which do not specify a CDS account number will be rejected. Applicants who wish to open a CDS account, may do so through any Member/Trading Member of the CSE as set out in Annexure II or through any Custodian Bank as set out in Annexure III of this Prospectus. If the CDS account number indicated in the Application Form is found to be inaccurate/incorrect or there is no CDS number indicated, the Application will be rejected and no allotment of Debentures will be made.

v | Hayleys PLC - Debenture Issue 2013

CORPORATE INFORMATION

The Company/Issuer Hayleys PLC

Legal Status A Public Quoted Company with limited liability incorporated on 31st May 1952 under the Companies Ordinance No. 51 of 1938. Official listing on the Colombo Stock Exchange obtained in 1953. Re-registered on 4th July 2007 under the Companies Act No. 7 of 2007.

Company Registration No. PQ 22

Place of Incorporation Colombo, Sri Lanka

Registered Address Hayleys PLC No. 400, Deans Road Colombo 10 Tel: +94 11 2 627 000 Fax: +94 11 2 699 299

Company Secretary Hayleys Group Services (Pvt) Ltd No. 400, Deans Road Colombo 10 Tel: +94 11 2 627 650 Fax: +94 11 2 627 645

Rating Agency RAM Ratings Lanka Limited No. 11, Melbourne Avenue Colombo 04 Tel: +94 11 2 553 089 Fax: +94 11 2 553 090

Auditors to the Company Ernst & Young Chartered Accountants No. 201, De Saram Place Colombo 10 Tel: +94 11 2 463 500 Fax: +94 11 2 697 369

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CORPORATE INFORMATION

Board of Directors of Hayleys PLC Mr. A. M. Pandithage - Chairman/Chief Executive Officer Mr. K. D. D. Perera - Deputy Chairman Mr. M. R. Zaheed Mr. J. A. G. Anandarajah (retired on 31st March 2013) Mr. W. D. N. H. Perera Mr. S. C. Ganegoda Mr. H. S. R. Kariyawasan Dr. H. Cabral, PC Dr. K. I. M. Ranasoma Mr. L. T. Samarawickrama Mr. R. P. Pathirana Mr. M. D. S. Goonatilleke Mr. L. R. V. Waidyaratne (appointed with effect from 1st April 2013)

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RELEVANT PARTIES TO THE ISSUE


NDB Investment Bank Limited No. 40, Navam Mawatha Colombo 02 Tel: +94 11 2 300 385 Fax: +94 11 2 300 393

Lawyers to the Issue

F.J. & G. De Saram No. 216, de Saram Place Colombo 10 Tel: +94 11 4 718 200 Fax: +94 11 4 718 220

Registrars to the Issue

P W Corporate Secretarial (Pvt) Ltd No. 3/17, Kynsey Road Colombo 08 Tel: +94 11 4 640 360 Fax: +94 11 4 740 588

Bankers to the Issue

National Development Bank PLC No. 40, Navam Mawatha Colombo 02 Tel: +94 11 2 488 488 Fax: +94 11 2 341 044

Trustee to the Issue

Deutsche Bank AG, Colombo Branch No. 86, Galle Road Colombo 03 Tel: +94 11 4 791 114 Fax: +94 11 2 343 336

Hayleys PLC - Debenture Issue 2013 | viii

LIST OF ABBREVIATIONS

AER Annual Effective Rate

ATS Automated Trading System of the Colombo Stock Exchange

CDS Central Depository Systems (Private) Limited

CSE Colombo Stock Exchange

NIC National Identity Card

POA Power of Attorney

RTGS Real Time Gross Settlements

SEC Securities and Exchange Commission of Sri Lanka

SIA Securities Investment Account

SLIPS Sri Lanka Inter Bank Payment System

ix | Hayleys PLC - Debenture Issue 2013

GLOSSARY OF TERMS RELATED TO THE ISSUE

Applicant Any person who submits an Application Form under this Prospectus

Application Form/Application The application form that constitutes part of this Prospectus through which an Applicants may apply for the Debentures in Issue

Business Day A day (other than a Saturday or Sunday or any statutory holiday) on which licensed commercial banks are open for business in Sri Lanka

Closure Date 19th July 2013 or such earlier date on which;

The maximum of 2,000,000 Debentures are fully subscribed; or Board of Directors of the Company decides to close the Issue upon the initial Issue of 1,500,000 Debentures becoming fully subscribed

Company/HAYL/HAYLEYS/Issuer Hayleys PLC

Date of Allotment The date on which the Debentures will be allotted by the Company to Applicants subscribing thereto

Date of Redemption The date on which Redemption of the Debentures will take place as referred to in Section 1.6 of this Prospectus

Debentures Rated Unsecured Redeemable Debentures to be issued pursuant to this Prospectus

Debenture Holder(s) Any person who is for the time being the holder of the Debentures and includes his/her respective successors in title

Face Value LKR 1,000/- per each Debenture

Final Interest Period The period commencing from the date immediately succeeding the last Interest Payment Date before the Date of Redemption and ending on the date immediately preceding the Date of Redemption (inclusive of the aforementioned commencement date and end date)

First Interest Period The period commencing from the Date of Allotment and ending on the First Interest Payment Date (inclusive of the aforementioned commencement date and end date)

First Interest Payment Date 30th September 2013

Interest Entitlement Date The day immediately preceding the Interest Payment Date

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GLOSSARY OF TERMS RELATED TO THE ISSUE

Interest Payment Date(s) 31st March, 30th June, 30th September and 31st December of each year from the Date of Allotment up to the Date of Redemption. Interest would be paid within three (03) Business Days from each Interest Payment Date

Interest Period The three (03) month period commencing from the date immediately succeeding a particular Interest Payment Date and ending on the next Interest Payment Date (inclusive of the aforementioned commencement date and end date)

Issue The offer of Debentures pursuant to this Prospectus

Issue Price LKR 1,000/- per each Debenture

Market Day Any day on which trading takes place at the CSE

Non- Resident(s) Foreign institutional investors, corporate bodies incorporated outside Sri Lanka, individuals resident outside Sri Lanka and Sri Lankans resident outside Sri Lanka

Principal Sum The product of the number of Debentures allotted and the Face Value

Prospectus This prospectus dated 20th June 2013 issued by HAYL

Redemption Repayment of the Face Value and unpaid and accrued interest (if any) with regard to a Debenture to a Debenture Holder by the Company

Trust Deed Trust deed executed between HAYL and Deutsche Bank AG, Colombo Branch on 14th June 2013

Tax Revision An amendment to or repeal of any law or regulation or provision thereof for the time being in Sri Lanka in terms of which interest income of the Debentures has been exempted from the imposition of income tax (whether by way of withholding or otherwise) under the Inland Revenue Act No. 10 of 2006 (as amended) resulting in such interest income becoming subject to the imposition of income tax (whether by way of a withholding or otherwise) under the Inland Revenue Act No. 10 of 2006

Tax Revision Law The law, regulation, rule, direction or other means by which a Tax Revision is given effect to

Unsecured Repayment of the Principal Sum and payment of interest on the Debentures are not secured by a charge on any assets of HAYL

xi | Hayleys PLC - Debenture Issue 2013

ISSUE AT A GLANCE Issuer Hayleys PLC

Instrument Rated Unsecured Redeemable Debentures

Listing The Debentures will be listed on the Main Board of the CSE

Number of Debentures to be Issued

An initial Issue of One Million Five Hundred Thousand (1,500,000) Rated Unsecured Redeemable Debentures with an option to issue up to a further Five Hundred Thousand (500,000) of said Debentures, at the discretion of the Company, in the event of an oversubscription of the initial Issue

Amount to be Raised Sri Lanka Rupees One Billion and Five Hundred Million (LKR 1,500,000,000/-) with an option to raise further up to Sri Lanka Rupees Five Hundred Million (LKR 500,000,000/-), at the discretion of the Company in the event of an oversubscription of the initial Issue

Company Rating AA- by RAM Ratings Lanka Limited

Issue Rating AA- by RAM Ratings Lanka Limited

Issue Price LKR 1,000/- per each Debenture

Face Value LKR 1,000/- per each Debenture

Details of the Debenture (Fixed Rate)

Interest Rate (per annum)

payable quarterly

AER(per annum)

Redemption(from the Date of

Allotment)

14.25% 15.03% 36 Months (3 Years)

Number of Debentures to be Subscribed

A minimum of One Hundred (100) Debentures (LKR 100,000/-) and in multiples of One Hundred (100) Debentures (LKR 100,000/-) thereafter

Interest Payment Date(s) 31st March, 30th June, 30th September and 31st December of each year from the Date of Allotment up to the Date of Redemption. Interest would be paid within three (03) Business Days from each Interest Payment Date

Mode of Payment of Principal Sum and Interest

By cheque marked “Account Payee Only" or through electronic fund transfer mechanism recognised by the banking system of Sri Lanka such as SLIPS and RTGS

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ISSUE AT A GLANCE Issue Opening Date 2nd July 2013

Closure Date of the Subscription List

19th July 2013 or such earlier date on which;

The maximum of 2,000,000 Debentures are fully subscribed; or Board of Directors of the Company decides to close the Issue upon the initial Issue of 1,500,000 Debentures becoming fully subscribed

Date of Allotment The date on which the Debentures will be allotted by the Company to Applicants subscribing thereto

Basis of Allotment In the event of an over subscription, the Board of Directors will endeavour to decide the basis of allotment of the Debentures as soon as practicable

xiii | Hayleys PLC - Debenture Issue 2013

1.0 PRINCIPAL FEATURES OF THE RATED UNSECURED REDEEMABLE DEBENTURES ...1

1.1 INVITATION TO SUBSCRIBE ..............................................................................................................11.2 SUBSCRIPTION LIST..............................................................................................................................11.3 OBJECTIVES OF THE ISSUE .................................................................................................................21.4 DEBENTURES TO BE ISSUED ..............................................................................................................21.5 INTEREST .................................................................................................................................................21.6 REDEMPTION .........................................................................................................................................31.7 PAYMENT OF PRINCIPAL SUM AND INTEREST ..........................................................................31.8 TRUSTEE TO DEBENTURE HOLDERS ..............................................................................................41.9 RATING OF THE DEBENTURES .........................................................................................................41.10 CONSEQUENCES OF A TAX REVISION ...........................................................................................51.11 RIGHTS AND OBLIGATIONS OF DEBENTURE HOLDERS ..........................................................51.12 BENEFITS OF INVESTING IN DEBENTURES OFFERED BY THE COMPANY ..........................61.13 RISKS INVOLVED IN INVESTING IN THE DEBENTURES ...........................................................61.14 TRANSFER OF DEBENTURES .............................................................................................................71.15 LISTING ....................................................................................................................................................81.16 COST OF THE ISSUE ..............................................................................................................................81.17 BROKERAGE FEE ...................................................................................................................................81.18 UNDERWRITING ...................................................................................................................................8

2.0 PROCEDURE FOR APPLICATION ...................................................................................................9

2.1 INSPECTION OF DOCUMENTS ..........................................................................................................92.2 ELIGIBLE APPLICANTS ........................................................................................................................92.3 HOW TO APPLY ...................................................................................................................................102.4 NUMBER OF DEBENTURES TO BE SUBSCRIBED ........................................................................132.5 MODE OF PAYMENT OF THE INVESTMENT BY THE APPLICANTS .....................................132.6 REJECTION OF APPLICATIONS .......................................................................................................142.7 BANKING OF PAYMENTS .................................................................................................................152.8 BASIS OF ALLOTMENT OF DEBENTURES ....................................................................................152.9 REFUNDS ...............................................................................................................................................152.10 CDS ACCOUNTS AND SECONDARY MARKET TRADING .......................................................16

3.0 THE COMPANY ...................................................................................................................................17

3.1 BACKGROUND OF THE COMPANY ...............................................................................................173.2 CORPORATE PHILOSOPHY ..............................................................................................................183.3 NATURE OF BUSINESS .......................................................................................................................183.4 HAYLEYS INVESTMENT IN SUBSIDIARY/ASSOCIATE COMPANIES AS AT 31ST MARCH 2013 ....................................................................................................................213.5 FUTURE PLANS, RISKS AND ASSUMPTIONS ..............................................................................223.6 SHARES IN ISSUE AND STATED CAPITAL ...................................................................................243.7 MAJOR SHAREHOLDINGS ................................................................................................................243.8 HUMAN RESOURCES .........................................................................................................................253.9 DIVIDEND POLICY ..............................................................................................................................253.10 DEGREE OF DEPENDENCE ON KEY CUSTOMERS AND SUPPLIERS ....................................253.11 TAXATION.............................................................................................................................................263.12 LITIGATION, DISPUTES AND CONTINGENT LIABILITIES ......................................................263.13 DETAILS OF PENALTIES IMPOSED BY REGULATORY AND STATE AUTHORITIES .........263.14 CONTINGENT ASSETS OF THE COMPANY .................................................................................26

TABLE OF CONTENTS

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3.15 DETAILS OF COMMISSIONS PAID ..................................................................................................263.16 DETAILS OF BENEFITS PAID TO PROMOTERS ............................................................................263.17 DETAILS OF MATERIAL CONTRACTS OF THE COMPANY .....................................................263.18 TRANSACTIONS RELATED TO PROPERTY ..................................................................................263.19 CORPORATE GOVERNANCE ...........................................................................................................273.20 PARTICULARS OF DEBT AND LOAN CAPITAL ..........................................................................28

4.0 BOARD OF DIRECTORS ...................................................................................................................29

4.1 DIRECTORS’ STATEMENT .................................................................................................................334.2 DIRECTORS’ INTEREST IN ASSETS .................................................................................................344.3 DIRECTORS’ INTEREST IN CONTRACTS OR ARRANGEMENTS ............................................364.4 DIRECTORS’ EMOLUMENTS ............................................................................................................38

5.0 SENIOR MANAGEMENT PERSONNEL .......................................................................................39

5.1 CHIEF EXECUTIVE OFFICER ............................................................................................................395.2 PROFILES OF THE SENIOR MANAGEMENT ................................................................................395.3 EMOLUMENTS OF THE SENIOR MANAGEMENT ......................................................................42

6.0 STATUTORY DECLARATIONS ......................................................................................................43

6.1 STATUTORY DECLARATIONS BY THE DIRECTORS ..................................................................436.2 STATUTORY DECLARATION BY THE FINANCIAL ADVISORS AND MANAGERS TO THE ISSUE ...............................................................................................................446.3 STATUTORY DECLARATION BY THE COMPANY .....................................................................44

7.0 FINANCIAL INFORMATION ..........................................................................................................45

7.1 ACCOUNTANT’S REPORT AND FIVE YEAR SUMMARY OF FINANCIAL STATEMENTS .......................................................................................................................................457.2 AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2013 ..................................................................................................................................62

ANNEXURE – I COPY OF THE RATING CERTIFICATE ....................................................................183

ANNEXURE – II COLLECTION POINTS ................................................................................................194

ANNEXURE – III CUSTODIAN BANKS .................................................................................................200

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1.0 PRINCIPAL FEATURES OF THE RATED UNSECURED REDEEMABLE DEBENTURES

1.1 INVITATION TO SUBSCRIBE

Board of Directors of Hayleys PLC (hereinafter referred to as the “Board”) by resolutions dated 19th March 2013 and 5th June 2013 resolved to raise a sum of up to Sri Lanka Rupees One Billion and Five Hundred Million (LKR 1,500,000,000/-) by an initial issue of up to One Million and Five Hundred Thousand (1,500,000) Debentures each with a Face Value of LKR 1,000/- and to raise a further sum of up to Sri Lanka Rupees Five Hundred Million (LKR 500,000,000/-) by an issue of up to a further Five Hundred Thousand (500,000) of said Debentures, in the event of an oversubscription of the initial Issue. As such, a maximum amount of Sri Lankan Rupees Two Billion (LKR 2,000,000,000/-) would be raised by the issue of a maximum of Two Million (2,000,000) Debentures each with the Face Value of LKR 1,000/-. The Debentures which will rank equal and pari passu with each other without any preference or priority of any one or more than over the others and the rights of the Debenture Holders with respect to payment of the Principal Sum and accrued interest due thereon upon a winding-up of the Company will rank equal and pari passu with all other unsecured creditors of the Company, but in priority to and over the rights of any preference and ordinary shareholders. It is the intention of the Company to list the Debentures on the Main Board of the CSE. The CSE has given its in-principle approval for the listing of the Debentures on the CSE.

1.2 SUBSCRIPTION LIST

Subject to the provisions contained below, the subscription list for the Debentures will open at 9.30 a.m. on 2nd July 2013 and will remain open for fourteen (14) Market Days including the Issue Opening Date until closure at 4.30 p.m. on 19th July 2013. The invitation for this Issue will be closed on 19th July 2013 or such earlier date at 4.30 p.m. with the notification to the CSE on which;

The maximum of 2,000,000 Debentures are fully subscribed; or Board of Directors of the Company decides to close the Issue upon the initial Issue of 1,500,000

Debentures becoming fully subscribed. Applications can be made forthwith in the manner set out in Section 2.0 and duly completed Application Forms will be accepted at any one of the collection points set out in Annexure II of this Prospectus.

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1.3 OBJECTIVES OF THE ISSUE The proposed Debenture Issue of up to a maximum of LKR 2,000 Million contemplated through this Prospectus will be utilised for the purpose of;

Re-financing part of the short term borrowings; and To restructure the debt portfolio of the Company.

The following short term borrowings will be refinanced by the Issue proceeds.

Amount (LKR)

Average Interest Rate

p.a.

Security (if any)

Short Term Borrowings from Licensed Commercial Banks 800,000,000 16.75% to 17.25% N/A

Commercial Papers 1,200,000,000 16.25% to 17.40% N/A

Total 2,000,000,000

1.4 DEBENTURES TO BE ISSUED

Debentures to be issued consist of only one type of debenture. Details on interest payable and redemption of Principal Sum are morefully described in Sections 1.5 and 1.6 respectively. The Company shall initially issue One Million Five Hundred Thousand (1,500,000) Rated Unsecured Redeemable Debentures with an option to issue up to a further Five Hundred Thousand (500,000) of said Debentures with a Face Value of LKR 1,000/each, at the discretion of the Company, in the event of an oversubscription of the initial Issue. These Debentures will be issued at the Issue Price (i.e. LKR 1,000/- each). As such, a maximum amount of Sri Lankan Rupees Two Billion (LKR 2,000,000,000/-) would be raised by the issue of a maximum of Two Million (2,000,000) Debentures.

1.5 INTEREST The Debentures shall carry a fixed rate of interest of Fourteen decimal Two Five per centum (14.25%) per annum, payable quarterly on the Interest Payment Dates (AER of 15.03% per annum). Interest on the Debentures accruing on a daily basis will be paid quarterly in each year on 31st March, 30th June, 30th September and 31st December from the Date of Allotment until the Date of Redemption on the outstanding Principal Sum. The interest due on the Debentures for a particular Interest Period will be calculated based on the actual number of days in such Interest Period and be paid within three (03) Business Days from the Interest Payment Date on which such Interest Period ends.


The interest due on the Debentures for the First Interest Period will be calculated based on the actual number of days within the First Interest Period and be paid within three (03) Business Days from the First Interest Payment Date. The interest due on the Debentures for the Final Interest Period will be calculated based on the actual number of days within the Final Interest Period and be paid together with the Principal Sum within three (03) Business Days from the date of Redemption. For avoidance of doubt, the Date of Redemption will not be included or taken into account for purposes of calculating the interest due on the Debentures for the Final Interest Period.

Interest calculation shall be based on an actual number of days in each year.

In order to accommodate the debenture interest cycles in the Automated Trading System of the CSE, the payment of interest for a particular Interest Payment Date will not include Debenture Holders holding Debentures in the CDS as at the last day of the payment cycle but one day prior to the Interest Payment Date (Interest Entitlement Date). Payment of the interest on the Debentures will be made after deducting any taxes and charges thereon (if any) in Sri Lanka Rupees as per the applicable law prevalent at the time of interest payment to the Debenture Holders. As per the Government Budget proposals 2013, it is proposed that interest income from investment made on or after the 1st January 2013 in corporate debt securities (i.e. debentures), quoted in any stock exchange licensed by the SEC are not subject to imposition of income tax.

1.6 REDEMPTION

Redemption of the Debentures will take place on the date on which a period of Thirty Six (36) months from the Date of Allotment expires or if such date on which a period of Thirty Six (36) months from the Date of Allotment expires is not a Market Day, the Market Day immediately succeeding such date (“Date of Redemption”). The Principal Sum and unpaid and accrued interest payable on the Redemption of Debentures will be paid to the Debenture Holders within three (03) Business Days from the Date of Redemption.

These Debentures will not be subject to Redemption by the Company prior to the Date of Redemption other than in the circumstances set out in Section 1.10 and in the Trust Deed.

1.7 PAYMENT OF PRINCIPAL SUM AND INTEREST

The Company will redeem the Debentures on the Date of Redemption as specified in Section 1.6 and the interest payments will be made as specified in Section 1.5. The payment of Principal Sum and interest will be made either by crossed cheque marked “Account Payee Only" dispatched by registered post to the addresses provided by the Debenture Holders to the CDS at the risk of the Debenture Holders or through electronic fund transfer mechanism recognised by the banking system of Sri Lanka to a bank account provided to the CDS by the Applicant, such as SLIPS and RTGS.


However, in the event of the payment is over the maximum amount accommodated through electronic fund transfer mechanism recognized by the banking system of Sri Lanka or if the Debenture Holder has not provided to the CDS accurate and correct details of his bank account for the payment of Principal Sum and interest to the CDS, such payment to the Debenture Holder will be made by way of a cheque and sent by post at the risk of the Debenture Holder. The payment of interest will be made in Sri Lanka Rupees in favour of the Debenture Holders as at the Interest Entitlement Date (in the case of Joint Debenture Holders to the one whose name stands first in the register of Debenture Holders). The payment of Principal Sum and unpaid and accrued interest payable on the Redemption of Debentures will be made in Sri Lanka Rupees in favour of the Debenture Holders as at end of trading on the Market Day immediately preceding the Date of Redemption (in the case of Joint Debenture Holders to the one whose name stands first in the register of Debenture Holders).

1.8 TRUSTEE TO DEBENTURE HOLDERS

Deutsche Bank AG, Colombo Branch has agreed to act as the trustee to the Debenture Holders. The Company has entered into an agreement with the trustee (hereinafter called the "Trust Deed"). Debenture Holders in their Application Forms for subscription will be required to authorise the Trustee to act as their agent in entering into such deeds, writings, and instruments with the Company and to act as the agent and Trustee for the Debenture Holders. The rights and obligations of the trustee are set out in the Trust Deed and the Debentures will be subject to the terms and conditions incorporated in the said Trust Deed. The fee payable to the trustee will be LKR 25,000.00 per month plus statutory levies. There is no conflict of interest with the Company, except that the trustee is one of the banks rendering banking services to the Company

1.9 RATING OF THE DEBENTURES

RAM Ratings Lanka Limited has assigned a credit rating of “AA-” to the Company’s Rated Unsecured Redeemable Debentures contemplated in this Prospectus. An issue rated AA has a strong capacity to meet its financial obligations. The entity is resilient against adverse changes in circumstances, economic conditions and/or operating environments

For long-term ratings, RAM Ratings Lanka Limited applies signs plus (+), flat or minus (-) in each category from AA to C. The sign plus (+) indicates that the issue ranks at the higher end of its generic rating category; the sign flat indicates a mid-ranking; and the sign minus (-) indicates that the issue ranks at the lower end of its generic rating category. A copy of the Rating Certificate is given in Annexure I of this Prospectus.


1.10 CONSEQUENCES OF A TAX REVISION

(a) In the event of a Tax Revision, the interest payable on the Debentures will be revised to such higher rate, that is a rate however that does not exceed an increase of two per centum (2.00%) per annum above the Interest Rate applicable to the Debentures , as may be mutually agreed upon between the Company and the Debenture Holders of an aggregate of at least two third (2/3rd) of the Debentures for the time being outstanding;

(b) In the event the Company and the Debenture Holders do not reach an agreement on a

revision to the interest payable above within thirty (30) calendar days from the effective date of the Tax Revision or the date of enactment or promulgation of the Tax Revision Law, whichever is later, the Company will be required to within thirty (30) calendar days from the expiry of the aforementioned thirty (30) calendar day period, redeem the Debentures, by repaying the Principal Sum on the Debentures together with the interest accrued thereon up to such date.

1.11 RIGHTS AND OBLIGATIONS OF DEBENTURE HOLDERS

(a) Debenture Holders are entitled to the following rights:

Receiving Principal Sum at Redemption and quarterly interest at the rate set out in Sections 1.5 and 1.6 of this Prospectus. In the event of a Tax Revision, receiving interest at such mutually agreed interest rate as set out in Section 1.10. Ranking equal and pari passu with unsecured creditors in the event of liquidation and above the preference shareholders and ordinary shareholders. Calling and attending meetings of Debenture Holders as set out in the Trust Deed.

(b) Debenture Holders do not have the following rights:

Attending and voting at meetings of holders of shares and other debentures Sharing in the profits of the Company Participating in any surplus in the event of liquidation

(c) Each Debenture Holder must ensure that the information in respect of the securities account

maintained with the CDS is up to date and accurate. Each Debenture Holder shall absolve the Company from any responsibility or liability in respect of any error or inaccuracy or absence of necessary changes in the information recorded with the CDS. Provided further that the Debenture Holder shall absolve the CSE and the CDS from any responsibility or liability in respect of any error or inaccuracy or absence of necessary changes in the information recorded with the CDS where such errors or inaccuracies or absence of changes are initiated or are attributable to any act or omission of the Debenture Holders.


1.12 BENEFITS OF INVESTING IN DEBENTURES OFFERED BY THE COMPANY

(a) Provides an opportunity to diversify the investment portfolio of the Investors. (b) Provides investors with a regular cash inflow of quarterly interest payments. (c) Provides investors with an opportunity to invest in Debentures issued by a leading corporate

in Sri Lanka. (d) Being listed on the CSE, the Debentures will have a secondary market, thus providing the

investors with an opportunity to exit at the market price prevailing at the time of divestiture. (e) The Debentures can be used as collateral to obtain credit facilities from banks and financial

institutions. (f) As per the Government Budget proposals 2013, it is proposed that interest income from

investment made on or after the 1st January 2013 in corporate debt securities (i.e. debentures), quoted in any Stock Exchange licensed by the SEC are not subject to imposition of income tax.

1.13 RISKS INVOLVED IN INVESTING IN THE DEBENTURES

Subscribers to the Debentures could be exposed to the following risks:

(a) Interest Rate Risk Provided all other factors are equal, the market price of the Debentures will generally fluctuate in the opposite direction of the market interest rates if there is a change in “market interest rates”. Thus, the interest rate risk could be identified as the reduction in the market price of Debentures resulting from rise in interest rates.

(b) Reinvestment Risk

Interest on Debentures are payable quarterly. An investor may decide to reinvest this interest payment and earn interest from that point onwards. Depending on the prevailing interest rates at the point of reinvestment, the interest rates at which Debenture Holders will reinvest such interest received being higher or lower than the return offered by the Debentures is known as reinvestment risk.

(c) Call Risk

The uncertainty to the debenture investor is that the Company having the option of redeeming the Debentures before the Date of Redemption, thus being called upon to terminate the investment early is known as "Call Risk". However, these Debentures do not carry this risk as call options are not factored into these Debentures. However in a situation of a Tax Revision the Company is obliged to redeem the Debenture if a revision of interest rates cannot be agreed mutually as described in Section 1.9.

(d) Credit Risk

Credit Risk also referred to as default risk. This is the risk that the issuer of a debenture may default, i.e. the Issuer will not be able to pay interest and principal payments on a timely basis. In developed capital markets this risk is gauged in terms of rating assigned by different rating agencies. RAM Ratings Lanka Limited has assigned a National Long-term rating of AA- to these Debentures and will be periodically reviewed.


(e) Liquidity Risk Liquidity risk is associated with the ease with which the Debentures can be sold after the initial placement. In order to reduce the liquidity risk the Company has applied for a listing of these Debentures on the CSE and the CSE has granted its approval for such listing.

(f) Duration Risk

The term duration risk has a special meaning in the context of debentures. Duration is a measure of the price sensitivity of fixed income investments to a change in interest rates. Calculation is based on the price sensitivity of a fixed income security to a prevailing market interest rate change of 100 basis points. The above result for duration is also interpreted as the number of years to repay the price from the different cash flows incurred during the period of the debenture to its redemption. The duration indicator addresses the risk of interest rate fluctuations. The higher the duration, the greater the price volatility or duration risk, while the lower duration risk carries a lower risk.

1.14 TRANSFER OF DEBENTURES

The Debentures shall be transferable and transmittable in the manner set out in the Trust Deed, which is reproduced below.

(a) The Debentures shall be freely transferable and registration of such transfer shall not be subject

to any restriction, save and except to the extent required for compliance with the applicable law. The Debentures shall be transferable through the CDS as long as the Debentures are listed in the CSE. The Company may register without assuming any liability any transfer of Debentures, which are in accordance with the rules and regulations in force for the time being and from time to time as laid down by SEC, CSE and the CDS.

(b) In the case of the death of a Debenture Holder;

(i) the survivor where the deceased was a joint holder; and

(ii) the executors or administrators of the deceased (or where the estate of the deceased is under the administrable value, the heirs of the deceased) where he was the sole or only surviving holder shall be the only persons recognised by the Company as having any title to his Debentures but nothing herein contained shall release the estate of the deceased holder (whether sole or joint) from any liability in respect of any Debentures solely or jointly held by him.

(c) Any person becoming entitled to a Debenture in consequence of bankruptcy or winding up of

any Debenture Holder, upon producing proper evidence that he sustains the character in respect of which he proposes to act or his title as the Board thinks sufficient may in the discretion of the Board be substituted and accordingly registered as a Debenture Holder in respect of such Debenture subject to the applicable laws, rules and regulations of the Company, CDS, SEC and CSE.


1.15 LISTING

An application has been made to the CSE for permission to obtain a listing for the Debentures and the CSE has granted its approval in-principle for the same. It is the intention of the Company to list the Debentures on the Main Board of the Colombo Stock Exchange upon the allotment thereof. The CSE however, assumes no responsibility for the correctness of the statements made or opinions expressed or reports included in this Prospectus. Admission to the official list is not to be taken as an indication of the merits of the Company or of its Debentures.

1.16 COST OF THE ISSUE

The Board of Directors estimates that the total cost of the issue including printing, advertising and other costs connected with the issue will be approximately Rs. 25.086 million. Such costs will be financed by the internally generated funds of the Company

1.17 BROKERAGE FEE

Brokerage fee of One Rupee and Fifty Cents (LKR 1.50/-) per Debenture will be paid in respective of the number of Debentures allotted on Applications bearing the original seal of any bank operating in Sri Lanka or a member/trading member of the CSE or NDB Investment Bank Limited or any other intermediary appointed by the Company involved in the marketing of the Issue.

1.18 UNDERWRITING

This Issue is not underwritten. The offering is not conditional to any minimum amount to be raised through this Issue.


2.0 PROCEDURE FOR APPLICATION

2.1 INSPECTION OF DOCUMENTS

Articles of Association, Auditors’ Reports, Trust Deed and Audited Financial Statements for the five (05) financial years ended 31st March 2013 (i.e. the five (05) financial years immediately preceding the date of this Prospectus) and all other documents referred to in Rule 3.2.16 (a) of the CSE Listing Rules, including material contracts and management agreements entered into by the Company (if any) would be made available for inspection by the public during normal working hours at the registered office of the Company, No. 400, Deans Road, Colombo 10, until the Date of Redemption of the Debenture. The Prospectus, Trust Deed and Articles of Association of the Company will be available on the websites of CSE, www.cse.lk, website of the Company, www.hayleys.com from the date of opening of the subscription list until the Date of Redemption of the Debenture as stipulated in Rule 3.2.16 (b) of the CSE Listing Rules. Furthermore, the copies of the Prospectus and Application Forms will be made available free of charge from the collection points as set out in Annexure II.

2.2 ELIGIBLE APPLICANTS

Applications are invited for the subscription of Debentures from the following categories of Applicants.

(a) Citizens of Sri Lanka, resident in Sri Lanka and above 18 years of age.

(b) Corporate bodies and societies registered/incorporated/established in Sri Lanka and

authorized to invest in Debentures.

(c) Approved provident funds and contributory pension scheme registered/incorporated/established in Sri Lanka and authorized to invest in Debentures. In the case of approved provident funds and approved contributory pension schemes, the Application should be in the name of the trustee/board of management.

(d) Non Residents: Foreign institutional investors, corporate bodies incorporated outside

Sri Lanka, individuals resident outside Sri Lanka and Sri Lankans resident outside Sri Lanka.

(e) Applications will not be accepted from individuals and Sri Lankans residing outside of Sri Lanka who are under the age of 18 years, or in the names of sole proprietorships, partnerships or unincorporated trusts.

(f) “Individuals resident outside Sri Lanka” will have the same meaning as in the notice

published under the Exchange Control Act in Gazette no. 15007 dated 21st April 1972.


2.3 HOW TO APPLY

The terms and conditions applicable to the Applicants are as follows;

(a) Applications should be made on the Application Forms, which accompany and constitute a part of this Prospectus (exact size photocopies of Application Forms will also be accepted). Care must be taken to follow the instructions given herein and in the Application Form. Applicants using photocopies are requested to refer the Prospectus which is available for inspection with the Registrar to the Issue and also issued free of charge by the persons listed in Annexure II in this Prospectus. The Application Form can also be downloaded from the website of CSE, www.cse.lk, the website of the Company, www.hayleys.com and the website of Financial Advisors and Managers to the Issue, www.ndbib.com from the date of opening of the subscription list until the Closure Date. The Prospectus will be made available and can be downloaded from the website of CSE, www.cse.lk and the website of Company, www.hayleys.com from the date of opening of the subscription list until the Date of Redemption of the Debentures and from the website of Financial Advisors and Managers to the Issue, www.ndbib.com from the date of opening of the subscription list until the Closure Date.

Applications which do not strictly conform to instructions and the other conditions set out herein or which are incomplete or illegible may be rejected.

(b) An applicant can apply under one Application Form only. If an applicant has applied under

more than one Application Form it will be construed as multiple Applications. An applicant of a joint Application, applying through another Application Form is also deemed to have made multiple Applications and the Company reserves the right to reject such multiple Applications or suspected multiple Applications.

(c) If the ownership of the Debentures is desired in the name of one Applicant, full details should

be given only under the heading SOLE/FIRST APPLICANT in the Application Form. In the case of joint Applicants, the signatures and particulars in respect of all Applicants must be given under the relevant headings in the Application Form.

(d) An Applicant of a joint Application will not be eligible to apply through a separate Application

Form either individually or jointly. Such Applicants are also deemed to have made multiple Applications and will be rejected. In the case of joint Applications, the refunds (if any), interest payment and the Redemption will be remitted in favour of the first Applicant as identified in the Application Form. The Company shall not be bound to register more than three (03) natural persons as joint holders of any Debentures (except in the case of executors, administrators or heirs of a deceased member).


Joint Applicants should note that all parties should either be residents of Sri Lanka or Non-Residents.

(e) Applications by companies, corporate bodies, societies, approved provident funds, trust funds

and approved contributory pension schemes registered/incorporated/established in Sri Lanka should have obtained necessary internal approvals as provided by their internal approval procedures at the time of applying for the Debentures and should be made under their common seal or in any other manner as provided by their articles of association or such other constitutional documents of such Applicant or as per the statutes governing them. In the case of approved provident funds, trust funds and approved contributory pension schemes, the Applications should be in the name of the trustee/board of management.

(f) All Applicants should indicate in the Application for Debentures, their CDS account number.

In the event the name, address or NIC number/passport number/company number of the Applicant mentioned in the Application Form differ from the name, address or NIC number/passport number/company number as per the CDS records, the name, address or NIC number/passport number/company number as per the CDS records will prevail and be considered as the name, address or NIC number/passport number/company number of such Applicant. Therefore Applicants are advised to ensure that the name, address or NIC number/passport number/company number mentioned in the Application Form tally with the name, address or NIC number/passport number/company number given in the CDS account as mentioned in the Application Form.

Application Forms stating third party CDS accounts, instead of Applicants’ own CDS account numbers, except in the case of margin trading, will be rejected.

(g) Applicants who wish to apply through their margin trading accounts should submit the Application Forms in the name of the ‘Margin Provider/Applicant’s name” signed by the margin provider, requesting a direct deposit of the Debentures to the Applicant’s margin trading account in CDS. The margin provider should indicate the relevant CDS account number relating to the margin trading account in the Application Form. A photocopy of the margin trading agreement must be submitted along with the Application. Margin providers can apply under their own name and such Applications will not be construed as multiple Applications.

(h) Application Forms may be signed by third party on behalf of the Applicant(s) provided that

such person holds the Power of Attorney (POA) of the Applicant(s). A copy of such POA certified by a Notary Public as “True Copy” should be attached with the Application Form. Original of the POA should not be attached.

(i) Funds for the investments in Debentures and the payment for Debentures by Non-Residents

should be made only out of funds received as inward remittances or available to the credit of “Securities Investment Account” (SIA) of the foreign investor opened and maintained in a licensed commercial bank in Sri Lanka in accordance with directions given by the Controller of Exchange in that regard to commercial banks.


An endorsement by way of a letter by the licensed commercial bank in Sri Lanka in which the Applicant maintains the SIA, should be attached to the Application Form to the effect that such payment through bank draft/bank guarantee/RTGS has been made out of the funds available in the SIA.

(j) Non-Residents should have obtained necessary internal approvals as provided by their internal approval procedures at the time of applying for the Debentures and may be affected by the laws of the jurisdiction of their residence. If the Non-Resident Applicants wish to apply for the Debentures, it is their responsibility to comply with the laws relevant to the jurisdiction of their residence and of Sri Lanka.

Application Forms properly filled in accordance with the instructions thereof together with the remittance for the full amount payable on Application should be enclosed in an envelope marked “HAYLEYS PLC – DEBENTURE ISSUE 2013” on the top left hand corner in capital letters and dispatched by post or courier or delivered by hand to Registrars to the Issue or the collection points mentioned in Annexure II.

Applications sent by post or courier or delivered to any collection point set out in Annexure II should reach the office of the Registrars to the Issue at least by 4.30 p.m. on the following Business Day immediately upon the Closure Date. Applications received after the said period will be rejected even though they have been delivered to any of the said collection points prior to the Closure Date or carry a postmark dated prior to the Closure Date. Applications delivered by hand to the Registrars to the Issue after the Closure Date of the Issue will also be rejected.

Please note that Applicant information such as full name, address, National Identity Card (NIC) number/passport number/ company number and residency will be downloaded from the database of CDS, based on the CDS account number indicated in the Application Form. Such information will take precedence over information provided in the Application Form. Care must be taken to follow the instructions on the reverse of the Application Form. Applications that do not strictly conform to such instructions and additional conditions set out hereunder or which are illegible may be rejected. PLEASE NOTE THAT ALLOTMENT OF DEBENTURES WILL ONLY BE MADE IF THE APPLICANT HAS A VALID CDS ACCOUNT AT THE TIME OF SUBMISSION OF APPLICATION. Please note that upon the allotment of Debentures under this issue, the allotted Debentures would be credited to the Applicant’s CDS account so indicated. Hence, Debenture Certificates shall not be issued.


2.4 NUMBER OF DEBENTURES TO BE SUBSCRIBED

A minimum of One Hundred (100) Debentures (LKR 100,000/-) and in multiples of One Hundred (100) Debentures (LKR 100,000/-) thereafter.

2.5 MODE OF PAYMENT OF THE INVESTMENT BY THE APPLICANTS

(a) Payment in full for the total value of Debentures applied for should be made separately in respect of each Application either by cheque/s, bank draft/s, bank guarantee drawn upon any licensed commercial bank operating in Sri Lanka or RTGS transfer directed through any licensed commercial bank operating in Sri Lanka, as the case may be, subject to (b) below.

(b) Payments for Applications for values above and inclusive of Sri Lanka Rupees One Hundred

Million (LKR 100,000,000/-) should be supported by either a; (i) bank guarantee issued by a licensed commercial bank; or

(ii) multiple bank drafts/cheques drawn upon any licensed commercial bank operating in Sri Lanka, each of which should be for a value less than LKR 100,000,000/-; or

(iii) RTGS transfer with value on the Issue opening date.

Multiple cheques or RTGS transfers will not be accepted for Application value below LKR 100,000,000/-

(c) Cheque or bank draft should be made payable to “HAYLEYS PLC – DEBENTURE ISSUE

2013” and crossed "Account Payee Only", and must be honoured on the first presentation.

(d) In case of bank guarantees, such bank guarantees should be issued by any licensed commercial bank in Sri Lanka in favour of “HAYLEYS PLC – DEBENTURE ISSUE 2013” in a manner acceptable to the Company, and be valid for a minimum of one (01) month from the Issue Opening Date (i.e. 2nd July 2013).

(e) Applicants are advised to ensure that sufficient funds are available in order to honour the bank

guarantees, inclusive of charges when called upon to do so by the Registrars to the Issue. It is advisable that the Applicants discuss with their respective bankers the matters with regard to the issuance of bank guarantees and all charges involved. All expenses with regard to such bank guarantees should be borne by the Applicants.

(f) In case of RTGS transfers (only for Application values above and inclusive of Sri Lanka

Rupees One Hundred Million (LKR 100,000,000/-), such transfers should be made to the credit of “HAYLEYS PLC – DEBENTURE ISSUE 2013” bearing the account number 101000251028 at National Development Bank PLC with value on Issue Opening Date (i.e. the funds to be made available to the above account on the date of opening the Issue).


The Applicant should obtain a confirmation from the Applicant’s bank, to the effect that arrangements have been made to transfer payment in full for the total value of Debentures applied for to the credit of “HAYLEYS PLC – DEBENTURE ISSUE 2013” bearing the account number 101000251028 at National Development Bank PLC with value on the date of opening the Issue (i.e. the funds to be made available to the above account on the date of opening the Issue) and should be attached to the Application Form. For such RTGS transfers, an interest at the rate of ten per centum (10%) per annum will be paid from the date of such transfer up to the Date of Allotment. If any transfers are effected prior to the date of opening the Issue, no interest will be paid for the period prior to the opening of the Issue. No interest will be paid if the RTGS transfers are not realised before the end of Issue Closing Date.

(g) Cash will not be accepted.

(h) Payment for the Debentures by Non- Residents should be made through a “Securities

Investment Account” (SIA) maintained with any licensed commercial bank in Sri Lanka in accordance with directions given by the Controller of Exchange in that be regard to commercial banks.

(i) The amount payable should be calculated by multiplying the number of Debentures applied

for by the Face Value (LKR 1,000/-). If there is a discrepancy in the amount payable and the amount specified in the cheque/bank draft or bank guarantee, the Application will be rejected.

(j) In the event that cheques are not realised prior to the date of deciding the basis of allotment,

the monies will be refunded and no allotment of Debentures will be made. Cheques must be honoured on first presentation for the Application to be valid.

(k) All cheques/bank drafts received in respect of the Applications for Debentures will be banked

commencing from the Business Day immediately following the Closure Date.

2.6 REJECTION OF APPLICATIONS

Application Forms and the accompanying cheques/bank drafts/bank guarantees or RTGS transfers, which are illegible or incomplete in any way and/or not in accordance with the terms, conditions and instructions, set out in this Prospectus and in the Application Form will be rejected at the sole discretion of HAYL. Applications from individuals and Sri Lankans residing outside of Sri Lanka who are under the age of 18 years or in the names of sole proprietorships, partnerships, unincorporated trusts will also be rejected. Any Application Form, which does not state a valid CDS account number will be rejected. More than one Applications submitted by an Applicant will not be accepted and the Company reserves the right to reject such multiple Applications or suspected multiple Applications.


Any Application Form with more than three (03) natural persons as joint Applicants will be rejected. Applications delivered by hand to the Registrars to the Issue after the subscription list is closed will be rejected. Applications received by post or courier after 4.30 p.m. on the Business Day immediately following the Closure Date, will also be rejected even if they carry a post mark dated prior to the Closure Date. Applications delivered to any place mentioned in Annexure II should also reach the office of the Registrars to the Issue at least by 4.30 p.m. on the Business Day immediately following the Closure Date. Applications received after the said duration will be rejected even though they have been delivered to any of the said collection points prior to the Closure Date. In the event that cheques are not realised prior to the date of deciding the basis of allotment and realised after such date, the monies will be refunded and no allotment of Debentures will be made. Cheques must be honoured on first presentation for the Application to be valid. In the event cheques are dishonoured/returned on first presentation, such Applications will be rejected.

2.7 BANKING OF PAYMENTS

All cheques or bank drafts or bank guarantees received in respect of Applications will not be banked or called on until the Business Day immediately after the Closure Date as set out in Section 1.2, in terms of the CSE Listing Rules.

2.8 BASIS OF ALLOTMENT OF DEBENTURES In the event of an over subscription, the Board of Directors of the Company will endeavour to decide the basis of allotment as soon as practicable so as to ensure compliance with the CSE Listing Rules and the number of Debentures to be issued will be in accordance with the basis of allotment . Upon the allotments being decided, an announcement will be made to the CSE. The Company reserves the right to refuse any Application or to accept any Application in part only, without assigning any reason thereto. A written confirmation informing successful Applicants on their allotment of Debentures will be dispatched within ten (10) Market Days from the Closure Date as required by the CSE.

2.9 REFUNDS

Monies will be refunded where; an Application is rejected for reasons given in Section 2.6 the Application is accepted only in part.

If the Applicant has provided accurate and complete details of his bank account in the Application, the Bankers to the Issue will make refund payments up to and inclusive of Rupees Five Million (LKR 5,000,000/-) to the bank account specified by the Applicant, through cheques or SLIPS and a payment advice will be sent.


In the event of refunds over Rupees Five Million (LKR 5,000,000/-) or if the Applicant has not provided accurate and correct details of his bank account in the Application or if the Applicant has not provided details of the bank account in the Application Form, the bank will make such refund payment to the Applicant by way of a cheque and sent by post at the risk of the Applicant. In the case of joint Application, the cheques will be drawn in favour of the Applicant’s name appearing first in the Application Form. Applicants can obtain details on bank and branch codes required for providing instructions on SLIPS transfers at the following website; http://www.lankaclear.com/products_and_services/sl_interbank_payment_system_guideline.php Refunds on Applications rejected or partly allotted Debentures would be made within ten (10) Market Days excluding the Closure Date. Applicants would be entitled to receive interest at the rate of last quoted Average Weighted Prime Lending Rate (AWPLR) published immediately preceding week by the Central Bank of Sri Lanka or any other authority (in the event that the Central Bank of Sri Lanka ceases to publish the AWPLR) plus five per centum (5.00%) for the delayed period on any refunds not made within this period.

2.10 CDS ACCOUNTS AND SECONDARY MARKET TRADING

Debentures allotted will be directly deposited to the respective CDS accounts given in the Application Forms before the expiry of eighteen (18) Market Days, from the Closure Date. A written confirmation of the credit will be sent to the Applicant within two (02) Market Days of crediting the CDS account, by ordinary post to the address provided by each Applicant. The Company will submit to the CSE a 'Declaration' on direct upload to CDS on the Market Day immediately following the day on which the Investors’ CDS accounts are credited with the Debentures. Trading of Debentures on the secondary market will commence on or before the third (3rd) Market Day from the receipt of the Declaration by the CSE as per the CSE Listing Rules.


3.0 THE COMPANY

3.1 BACKGROUND OF THE COMPANY

Hayleys PLC is one of Sri Lanka’s most diversified business conglomerates. A history spanning over 135 years, Hayleys was founded by Mr. Chas P Hayley, a British gentlemen who made a voyage to Sri Lanka in 1878. From humble beginnings as a fibre trading house, today Hayleys has grown into a US $ 550 Million enterprise. The Company became a public company in 1952. Hayleys is a Sri Lankan multi-national with an international presence having marketing offices in Netherlands, Italy, UK, USA, Australia, Japan, and manufacturing facilities in Thailand and Indonesia, and a trading facility in India. The business interests of HAYL spans across 12 defined sectors of enterprise, under the broader segments of Global Markets and Manufacturing, Agriculture, Plantation and Tea Exports, Transportation and Logistics, Leisure and Aviation, Consumer Products, Power and Energy, Investments and Services. The HAYL operates as the holding company of a large number of quoted and unquoted subsidiaries in Sri Lanka as well as overseas (HAYL Group). The Company is having a substantial export portfolio which accounts for 63% of the Group Revenue. The European continent is the main overseas market for the Group followed by United States of America which accounts for 17% and 11% of the Group Revenue respectively in the financial year 2012/2013. Its contribution to the country’s economy is noteworthy, having a share of 3.17% Sri Lanka’s export income, and has the finest tea and rubber plantations accounting to 4.5% of tea and 2.2% of the rubber production in the country (Hayleys PLC, Annual Report 2012/13). HAYL Group enjoys dominance locally and internationally in several of its key businesses. The purification business of HAYL Group is the world’s largest producer of coconut-shell-based activated carbon which accounts for approximately 17% of the global production (Hayleys PLC, Annual Report 2012/13). HAYL Group accounts for 5% of the global market share in natural and synthetic latex-based domestic and industrial gloves (Hayleys PLC, Annual Report 2012/13). HAYL is also very strong in the transportation and logistic business, representing leading shipping/freight forwarding agencies and state-of- the-art third party logistic facilities. The plantation segment which employs majority of the workforce at HAYL Group also contributes significantly towards uplifting the lifestyles of its workers and the community. HAYL Group was adjudged as Sri Lanka’s Best Corporate Citizen during 2004, 2005, 2006 and 2010 by the Ceylon Chamber of Commerce.


3.2 CORPORATE PHILOSOPHY

Vision “To be Sri Lanka’s Corporate Inspiration at all times” Mission “Delivering superior shareholder value by unleashing the full potential of our people and achieving leadership in all our domestic and global businesses”. Values

Integrity - ethical and transparent in all our dealings. Enduring Customer value- enhancing experiences for every customer, from the rural farmer to the global consumer. A Will to Win - exhibiting the will to win, that which is important to Hayleys and its shareholders. Respect for People - treating everyone with respect and dignity, providing for the development of our people and rewarding them for good performance. Good Citizenship - caring for the communities in which we work, actively supporting their growth and being environmentally responsible in all we do. Teamwork - working with each other and with our parents across boundaries, to make things happen. Accountability - holding ourselves responsible to deliver what we promise.

3.3 NATURE OF BUSINESS HAYL carries on business in a wide range of segments through its subsidiaries and other group companies. The Business portfolio of HAYL is as follows:-

Global Markets and Manufacturing

Hand Protection

The Hand Protection sector manufactures latex gloves for household, industrial and medical uses under Dipped Products PLC (DPL) and its subsidiaries. DPL is a global leader in hand protection solutions and its products are distributed in 70 countries, most of which are in Europe and America. Its capability to develop innovative products that meet the hand protection requirements in any industry coupled with its ethical business practices positions the Company as a unique player in the global glove industry. The gloves are internationally renowned for quality and value, offering a comprehensive range of products that caters to a variety of applications and one of the first gloves to be certified under Fair Trade.


Fibre The product range of Fibre sector includes coir and rubber based floor mats, industrial and household brushware, twisted fibre, bedding and cushioning as well as horticultural and erosion control products such as geo textiles, stitch blankets, coir pots, poles, weed control mats and coir fibre pith.

Purification Haycarb, with an annual manufacturing capacity of 27,000 MT manufactures high quality standard and tailor-made activated carbon granular, fines, powders and pellets for a wide spectrum of applications. In addition, Haycarb Group offers a range of value added services including Activated Carbon Regeneration as a key business segment through its Thailand operation. Its subsidiary, Puritas (Pvt) Ltd., has significant presence in the design, build and operation of turnkey, raw and waste water treatment plants in Sri Lanka and Maldives.

Textiles Hayleys MGT Knitting Mills PLC is a BOI approved subsidiary of HAYL manufacturing weft knitted fabrics. The company supplies to world renowned brands such as M&S, Decathlon, NEXT, Intimissimi, George, Nike and Tesco.

Construction Material

Alumex Group is Sri Lanka’s foremost Aluminium Extrusion manufacturer with sound industry expertise spanning two and half decades. Alumex’s product portfolio offers a wide range of innovative high quality extrusions in over 700 designs and covers a broad spectrum of products for fabrication of windows (Sliding, Casement, Top Hung, Pivoted, Tilt, Fixed), Curtain Rails, Sky Lights, Tubes, Pipes, Partitions Shop fronts and a range of hardware items.

Agriculture Agriculture The Agriculture sector offers a wide range of agricultural inputs and value-added agri products for the domestic and global markets. The sector is also becoming a major producer of tissue culture plantlets in Sri Lanka and is already producing fruits, flowering, foliage and forestry plantlets for local as well as export markets. Other export products include processed fruits and vegetables, flower seeds, vegetable seeds, plant splits, cut flowers and young plants.

Plantations & Tea Marketing

The Plantations sector consists of mainly two regional plantation companies, Kelani Valley Plantations PLC and Talawakelle Tea Estates PLC. The companies together own and manage 44 Tea and Rubber estates, with a total extent of nearly 19,500 hectares. The sector also includes Mabroc Teas (Pvt) Ltd., a leading tea exporter from Sri Lanka supplying a wide range of value added teas to over 50 countries.


Transportation & Logistics

Hayleys Advantis has been the pioneer in the local shipping and freight forwarding agency business with over 50 years of expertise in the transportation and logistics sector in Sri Lanka. The Group today controls a truly international network offering: integrated end-to-end logistics solutions for clients, from packing personal effects to involvement in national infrastructural projects to the global movement of cargo. HAYL represent some of the worlds foremost shipping lines and international freight forwarders.

Consumer Products

Consumer Products focuses on bringing world renowned brands to Sri Lanka. Representing a wide and diverse portfolio of products, the Company is the Sole Distributor for reputed brands such as Proctor & Gamble, Philips Lighting, Fujifilm and Blue Cross Pharmaceuticals.

Leisure & Aviation

‘Hayleys Leisure Holdings’ is the investment vehicle in the ownership and management of Hotel Services ( Ceylon) PLC (The Kingsbury) and the Amaya Leisure Chain, making Hayleys among the top 5 leisure operators in the country having a room inventory of over 500. Hayleys Aviation’ represents international airlines (Oman Airways/ Indian Air Express/ British Airways etc.) as their General Sales Agent (GSA) in Sri Lanka and the Maldives and offers flight handling supervision at the Bandaranaike International Airport. ‘Hayleys Travels and Tours’ is an IATA accredited travel agency which provides ticketing, hotel reservations, visa assistance and other travel formalities. ‘Hayleys Tours’ is a destination management company which represents several renowned tour operators. It specialises in inbound tour management services and MICE (Meetings, Incentives, Conferences and Exhibitions).

Power & Energy/Industry Inputs

The Industry Inputs sector is a key player in the supply of raw materials and auxiliaries to Sri Lankan manufacturers. A significant part of its business lies in the supply of dyes and chemicals to the textile industry mainly as exports to the region. The sector is also engaged in supplying and supporting diesel power generating units and electronic systems and also provides medical imaging equipment and related consumables for the healthcare industry. In these fields of activity the sector represents some renowned principals. Power and Energy sub-sector is mainly engaged in renewable energy generation, supplying to the national electricity grid. It consists of wind, hydro and biomass based power plants. The renewable energy portfolio of Hayleys comprises 5 MW of Mini hydro power plants and 10 MW wind power plant in Kalpitiya.


3.4 HAYLEYS INVESTMENT IN SUBSIDIARY/ASSOCIATE COMPANIES AS AT 31ST MARCH 2013

Shareholding %

Number of Shares

Quoted InvestmentsHaycarb PLC 68 20,125,103Hayleys Fibre PLC (Former Hayleys Exports PLC) 65 5,200,000Dipped Products PLC 42 24,902,073Hayleys MGT Knitting Mills PLC 79 119,683,817Amaya Leisure PLC 40 19,366,234Hotel Services (Ceylon) PLC 38 66,762,690 Unquoted InvestmentsHayleys Photoprint Ltd 100 6Haylex BV 100 1,000Chas P Hayley & Co. (Pvt) Ltd 99.9 999,920Ravi Industries Ltd 86 10,773,750Hayleys Group Services (Pvt) Ltd 100 10,000Hayleys Electronics Ltd 98 951,855Dean Foster (Pvt) Ltd 49 5,882,351Hayleys Advantis Ltd 93 33,643,877Volanka Exports Ltd 4 118,050Sunfrost (Pvt) Ltd 5 423,300Rileys (Pvt) Ltd 6 2,500,000X I L Industries Ltd 99 2,662,601Volanka (Pvt) Ltd 62 6,440Toyo Cushion Lanka (Pvt) Ltd. 18 1,215,126Hayleys Produce Marketing Ltd. 100 250,000Carbotels (Pvt) Ltd. 75 27,578,770HJS Condiments Ltd 9 1,129,741Hayleys Agro Products (now known as Hayleys Agriculture Holdings Ltd) 97 18,848,176Hayleys Consumer Products Ltd 99 19,349,008Hayleys Industrial Solutions (Pvt) Ltd 100 38,748,400Hayleys Business Solutions International (Pvt) Ltd 100 15,000,000Hayleys Leisure Holdings (Pvt) Ltd 100 2,000,000Alutec Anodising & Machine Tools (Pvt) Ltd (now known as Alumex Limited) 60 1,200,010Nirmalapura Wind Power (Pvt) Ltd 30 29,900,000Quality Seed Company (Pvt) Ltd 74 1,878,000

Investment in equity accounted investees as at 31st March 2013

Investee Shareholding % Number of Shares

World Call Telecommunications 26 2,700,000


3.5 FUTURE PLANS, RISKS AND ASSUMPTIONS

Future Plans of the Company

Hayleys PLC is an investment company which adopts the following guidelines/strategies when considering an investment. (i) Controlling stake and management control over all its investments

(ii) Ensure the Company has a balanced portfolio of investments in terms of Risk Return Growth

With the end of the war in 2009, a number of new opportunities arose in the Sri Lankan economy, particularly in sectors such as tourism, renewable energy, agriculture and construction. With a view to gaining exposure to these sectors, HAYL made a number of acquisitions between 2010 and 2012. Major acquisitions include Hotel Services (Ceylon) PLC (former Ceylon Continental Hotel, which underwent a US $ 20 Mn refurbishment and rebranded as “The Kingsbury”), Amaya Leisure PLC, Talawakelle Tea Estates PLC , Mabroc Teas and Alumex which is the market leader in Aluminium extrusions in Sri Lanka. In addition, HAYL went into new forays, by investing in a 10 MW wind power project in Kalpitiya. In the recent past, HAYL has been in a phase of consolidation as the returns to these investments materialise and make a meaningful contribution to the bottom line. Going forward, HAYL will look to expand its existing areas of businesses through further product and market development and continuing to move up the value chain in its activities. HAYL remains positive on the renewable energy sector and continues to expand its portfolio in hydropower and wind power as and when opportunities arise. Hayleys Advantis has successfully provided logistical support services to oil exploration efforts by Cairns in North West Sri Lanka and will continue to explore opportunities in this sector leveraging the expertise that has been developed in this sector. There have been significant returns in the agricultural sector in the post war era and HAYL will continue to enhance its presence across the value chain in this sector whilst simultaneously exploring opportunities for geographical diversification in order to mitigate risk from natural hazards. HAYL continues to invest heavily in research and development, enabling group companies to enhance their product portfolio and develop products with higher margins. Sectors such as purification and hand protection have been able to develop high value products within their portfolios and all group companies will continue to do so going forward. Export companies within HAYL have also been focusing on enhancing exposure to emerging markets in order to diversify and spread risk. There has been success in this endeavour as HAYL exports to emerging economies in Asia and Latin America have grown in recent years. During the last financial year, export turnover to Asia (excluding Sri Lanka) increased by 86% to Rs.7.2 Billion. Group companies will continue to invest in marketing in order to enhance penetration of new markets.


Risks Attached to Future Plans

Cost and Availability of Capital

The recent debt funded acquisitions that have taken place, a rise in domestic interest rates and access to capital remains a key constraint for further expansion. Whilst the Central Bank has further eased policy rates in the first half of 2013 in order to support economic growth, the outlook suggests that domestic interest rates will not see a significant decline in the near term. A number of strategies have been deployed in order to mitigate such risks including tapping into non-bank capital market sources and off-shore financing with appropriate hedging policies.

Exchange Rates and Inflation

Interest rates and other macroeconomic variables also play an important role for the Group’s subsidiaries. The management of the Sri Lankan Rupee has implications for both export companies and import companies. The recent shift in policy to a more flexible exchange rate creates a more sustainable macroeconomic environment for the Group. Rupee overvaluation in the past has often been parallel to domestic inflation, hampering all companies in the Group. However in recent times inflation management has been much improved and the Central Bank is now committed to entrenching inflation at mid to low single digit levels.

Global Economic Health

Having significant export turnover, the health of the global economy is an important determinant of achieving financial and other targets. Since 2008, the global economy has faced significant stress and in an environment of continued de-leveraging in advanced economies, the prospects for robust export growth are inhibited. However, during the last few years, the Group has expedited its ventures into emerging markets in order to mitigate this risk. Efforts have been taken to explore opportunities to enhance export penetration in Latin America, the Middle East, Africa and the rest of Asia. The Group has also taken cognizance of the fact that with the end of the war in Sri Lanka, there has been a paradigm shift in domestic growth prospects, and the Group has accordingly made strategic investments in sectors best positioned to take advantage of this growth.

Access to Raw Materials

Another important longer term issue is access to affordable raw materials. Manufacturing companies within the Group rely on raw materials such as latex (rubber), coconut shells and coconut fibre, cotton and aluminium. Access to latex and coconut is often contingent on weather, and in recent years, weather patterns have been increasingly unpredictable. In view of these risks, the Group’s manufacturing entities have widened their raw material supply bases by diversification of manufacturing locations to countries such as Thailand and Indonesia. Haycarb and Dipped Products have set up manufacturing entities in Thailand and Indonesia where coconut shells and latex are in greater abundance.

Access to Labour

As Sri Lanka’s economy continues to grow and per capita incomes increase, access to affordable labour is also an emerging challenge. In order to mitigate this risk, Group companies continue to invest in technology and process improvements to achieve less labour intensive, efficient operations. Furthermore, diversification of manufacturing operations to countries such as Thailand and Indonesia have enabled more labour intensive operations to be carried out in those countries whilst more value added operations are conducted in Sri Lanka.


3.6 SHARES IN ISSUE AND STATED CAPITAL

As at 31st March 2013, the stated capital of the Company is Sri Lanka Rupees One Billion Five Hundred and Seventy Five Million (LKR 1,575,000,000/-).

The total number of shares issued by the Company as at 31st March 2013 is Seventy Five Million Ordinary Shares (75,000,000).

3.7 MAJOR SHAREHOLDINGS

TEN LARGEST SHAREHOLDERS OF THE COMPANY AS AT 31ST MARCH 2013

Name of the Shareholder No. of Shares as at 31st March 2013

Shareholding (%)

1 Mr. K. D. D. Perera 30,699,599 40.93

SBL/ Mr. K. D. D. Perera 3,400,000 4.53 2 Trustees of the D.S.Jayasundera Trust 8,698,017 11.60 3 Trustees of the Hayleys PLC - Employees Share Trust 6,855,735 9.14 4 Lanka Orix Leasing Company PLC 2,434,148 3.25 5 Vallibel One PLC 2,182,584 2.91 6 Employees Provident Fund 1,819,473 2.43 7 Hayleys Group Services(Private) Ltd No. 02 A/C 1,117,090 1.49 8 Mrs. M. L. Johnpulle (Deceased) 907,165 1.21 9 Mr. G. M. Spittel (Deceased) 568,197 0.76

10 Mrs. R. N. Ponnambalam 540,315 0.72 59,222,323 78.96

Other 3291 Shareholders 15,777,677 21.04

Total 75,000,000 100.00


3.8 HUMAN RESOURCES Human Resources of HAYL as at 31st March 2013

Human Resources of Hayleys Group as at 31st March 2013

Executives and Senior Management 2,573

Clerical and Supervisory 3,194

Manual Grade 30,972

Total 36,739

The Ceylon Mercantile, Industrial & General Workers’ Union is the only labour union operating within the Company, and HAYL does not have any significant agreements entered into with the labour unions.

3.9 DIVIDEND POLICY The Board of Directors adopts a policy of declaring dividends to the shareholders based on several factors - Company’s earnings, capital requirements, and the country’s underlying overall macro financial conditions. Details of dividends paid during the three financial years immediately preceding the date of this Prospectus have been stated under Section 7.1 of the Prospectus.

3.10 DEGREE OF DEPENDENCE ON KEY CUSTOMERS AND SUPPLIERS

The Company is not significantly dependent on any single customer or supplier for its requirements.

Directors (including Non-Executive Directors) 12

Manager (General Managers/Managers/Assistant Managers) 37

Executives (Senior Executive/Executive/Staff Assistants) 67

Clerical, Supervisory Staff and Manual Staff 33

Total 149


3.11 TAXATION

The Company is not enjoying any tax exemptions as at the date of the Prospectus.

3.12 LITIGATION, DISPUTES AND CONTINGENT LIABILITIES

There are no litigations against the Company as at 31st March 2013. There are no contingent liabilities as at 31st March 2013 which would affect current or future profits of the company

3.13 DETAILS OF PENALTIES IMPOSED BY REGULATORY AND STATE AUTHORITIES As at 31st March 2013, there are no material penalties imposed by Regulatory and State Authorities on the Company.

3.14 CONTINGENT ASSETS OF THE COMPANY

The Company does not have any contingent assets as at 31st March 2013.

3.15 DETAILS OF COMMISSIONS PAID

No commission or benefits were payable, paid, given or intended to be paid or given in the two years preceding for subscribing or agreeing to subscribe or procuring or agreeing to procure or agreeing to promote, subscriptions for any shares or debentures of the Company.

3.16 DETAILS OF BENEFITS PAID TO PROMOTERS No benefit has been paid or given by the Company within the two years preceding the Issue and there are no benefits intended to be paid or given to any promoter.

3.17 DETAILS OF MATERIAL CONTRACTS OF THE COMPANY The Company has not entered into any material contracts, as defined in the Sri Lanka Company Act No. 7 of 2007, as at 31st March 2013 other than those contracts entered into in the ordinary course of business.

3.18 TRANSACTIONS RELATED TO PROPERTY There are no transactions relating to property that have taken place within the two preceding years in which any vendor of the property to the Company or any person who is or was at the time of the transaction, a director or proposed director of the Company who had any interest, direct or indirect.


3.19 CORPORATE GOVERNANCE

At Hayleys PLC, Corporate Governance is the catalyst responsible for business practices, which ensures positive workplace management, marketplace responsibility, environmental stewardship, community engagement, and sustained financial performance. INDEPENDENT DIRECTORS Dr. H. Cabral, PC Mr. R. P. Pathirana Mr. M. D. S. Goonatilleke For active execution of the Corporate Governance practices, HAYL has established three sub committees which include the Nomination Committee, Remuneration Committee and Audit Committee. NOMINATION COMMITTEE Nomination Committee makes recommendations to the Board on all new Board appointments. Nomination Committee of HAYL consists of the following Directors. Mr. A. M. Pandithage (Chairman/Chief Executive) – ChairmanMr. K. D. D. Perera (Deputy Chairman/Non Executive Director) Mr. W. D. N. H. Perera (Non-Executive Director) Dr. H. Cabral, PC (Independent Non-Executive Director) REMUNERATION COMMITTEE The Remuneration Committee decides on the remuneration of the Chairman/Chief Executive and the Executive Directors and sets guidelines for the remuneration of the management staff within the Group. The Chairman/Chief Executive is not a member of this committee. The Remuneration Committee consists of following Non- Executive Directors. Dr. H. Cabral, PC (Independent Non-Executive Director) - Chairman Mr. K. D. D. Perera (Deputy Chairman/Non-Executive Director) Mr. W. D. N. H. Perera (Non-Executive Director) Mr. M. D. S. Goonatilleke (Independent Non-Executive Director) Mr. R. P. Pathirana (Independent Non-Executive Director) AUDIT COMMITTEE The Code requires the Board to establish formal and transparent arrangements for considering how they should select and apply accounting policies, financial reporting and internal control principles and maintaining an appropriate relationship with the external auditors. The Audit Committee helps the Group achieve a balance between conformance and performance.


The Audit Committee consists of following Non-Executive Directors. Mr. M. D. S. Goonatilleke (Independent Non-Executive Director) - ChairmanMr. W. D. N. H. Perera (Non-Executive Director) Dr. H. Cabral, PC (Independent Non-Executive Director) Mr. R. P. Pathirana (Independent Non-Executive Director)

3.20 PARTICULARS OF DEBT AND LOAN CAPITAL Particulars of Long Term Loans, Other Borrowings and Liabilities

Rs. '000Balance as at the beginning of the year ( 1st April 2012) 4,126,164Debentures issued during the year -Movements in long term loans, other borrowings and liabilities 1,927,804Balance as at 31st March 2013 6,053,969

Borrowings made by the Company as at 31st March 2013

Rs. '000Term Loan 1,386,667Debentures -Other (Commercial Papers) 4,667,302Total 6,053,969

Details of Other Debentures Issued The Company does not have any debentures outstanding as at 31st March 2013.

Convertible Debt Securities The Company does not have convertible debt securities in issue as at 31st March 2013.

Gearing/Debt Ratios

2011 2012 2013

Debt/ Equity 56% 60% 74% Interest Cover (times) 2.4 3.6 1.4 Net Debt/ EBITDA 4.50 2.81 4.89


4.0 BOARD OF DIRECTORS The Directors of HAYL as at the date of the Prospectus are given below.

Mr. Abeyakumar Mohan Pandithage Chairman/Chief Executive Officer/Executive Director

No.119, Kynsey Road, Colombo 8 Mr. Pandithage joined Hayleys Group in 1969. He has been the Chairman and Chief Executive of Hayleys PLC since July 2009. He is the Honorary Consul of United Mexican States (Mexico) to Sri Lanka. Mr. Pandithage is a Fellow of the Chartered Institute of Logistics & Transport and a Member of the Presidential Committee on Maritime Matters. He is also a Committee Member of the Ceylon Chamber of Commerce, Council Member of the Employers’ Federation of Ceylon and a Member of the Monetary Policy Consultative Committee of the Central Bank of Sri Lanka. He serves as a Board Director of Diesel & Motor Engineering Co. Ltd, The Delmege Group and of Sri Lanka Port Management & Consultancy Services Limited.

Mr. Kulappuarachchige Don Dammika Perera Deputy Chairman/Non Executive Director

70/3, Ward Place, Colombo 7

Mr. Dammika Perera was appointed to the Board in 2008. He is a quintessential strategist and business specialist with 24 years of business experience. He is the Secretary to the Ministry of Transport, Sri Lanka and a well-known prominent entrepreneur and investor whose business interests include hydropower generation, manufacturing, hospitality, entertainment and banking & finance. He serves as the Chairman of Sampath Bank PLC, Vallibel One PLC, Vallibel Finance PLC, Vallibel Power Erathna PLC, The Fortress Resorts PLC, Delmege Limited (formerly known as Lewis Brown & Company (Pvt) Limited) and Greener Water Ltd. He is the Deputy Chairman of HAYLEYS, Royal Ceramics Lanka PLC and LB Finance PLC. He also serves on the Boards of Amaya Leisure PLC, Haycarb PLC, Hayleys MGT Knitting Mills PLC, Hotel Services (Ceylon) PLC, Dipped Products PLC, Orit Apparels Lanka (Pvt) Limited, Nirmalapura Wind Power Pvt Ltd, Alutec Anodising & Machine Tools (Private) Ltd (now known as Alumex Limited) and Sri Lanka Insurance Corporation Ltd. He is a Member of the Board of Directors of Strategic Enterprise Management Agency (SEMA). Mr. Mohamed Rizvi Zaheed Executive Director No.20/66, Fairfield Gardens, Colombo 8 Mr. Zaheed joined Hayleys Group in 1981. He was appointed to the Group Management Committee in 2001 and appointed to the Board in August 2004. He holds a BA (Hons.) Degree from the University of Kelaniya and a MBA Degree from the University of Colombo. Mr. Zaheed is a member of the Agri Cluster of the National Council for Economic Development and represents HAYLEYS on the Board of Sri Lanka Institute of Nanotechnology (NANCO).


He also serves on the National Committee on Biotechnology of the National Science Foundation and is a member of the University Grants Commission Standing Committee on Agriculture and Livestock. He is a council member of the Sri Lanka Council for Agricultural Policy Research (CARP) and member of the main committee of the Ceylon Chamber of Commerce while having served as Vice-Chairman of the Imports Section, Ceylon Chamber of Commerce. He is responsible for the Agriculture sector. Mr. Johnpillai Alfred Guyomer Anandarajah (retired on 31st March 2013) Executive Director 66 B/7, Sri Maha Vihara Road, Dehiwela Mr. Anandarajah joined DPL in 1980. Director of DPL since 1989. He was appointed to the Hayleys Group Management Committee in 2001 and to the Board in January 2007. He holds a B.Sc. (Hons.) Degree in Chemistry from the University of Peradeniya and is a Member of the Board of Management, Industrial Technology Institute, Sri Lanka. He is responsible for the Plantations Sector including Mabroc Teas (Pvt) Ltd. and the Textile Sector.

Mr. Sarath Clement Ganegoda Executive Director

28, Campbell Place, Dehiwela Mr. Ganegoda rejoined HAYLEYS in March 2007. He was appointed to the Group Management Committee in July 2007 and was appointed to the Board in September 2009. He is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka and Member, Institute of Certified Management Accountants of Australia. He holds an MBA from the Postgraduate Institute of Management, University of Sri Jayewardenepura. He has worked for HAYLEYS and Diesel & Motor Engineering Co. between 1987 and 2002, ultimately as an Executive Director of the latter. Subsequently held several senior management positions in large private sector entities in Sri Lanka and overseas. He is responsible for the Strategic Business Development Unit and Consumer Sector. Mr. Hegodagamage Senarath Rajitha Kariyawasan Executive Director

390E, Old Kottawa Road, Udahamulla, Nugegoda Mr. Kariyawasan joined Hayleys Group in January 2010. Appointed to the Group Management Committee in February 2010. He was appointed to the Board in June 2010. He holds a B.Sc. Eng. (Electronics and Telecommunications) from the University of Moratuwa, Sri Lanka and is a Fellow Member (FCMA) of the CIMA, UK. He is also a Six Sigma (Continuous Improvement Methodology) Black Belt, certified by the Motorola University, Malaysia. Before joining HAYLEYS, he held the position of Director/General Manager of Ansell Lanka (Pvt) Ltd and served as the Chairman of the Manufacturing Association of Export Processing Zone, Biyagama. He is responsible for the Purification Products sector.


Dr. Koruwage Indrakeerthi Mahesha Ranasoma Executive Director 18/18, Sirivimal Uyana, Nawala Road, Nawala, Rajagiriya Dr. Ranasoma joined in August 2010 as an Executive Director and took over as Managing Director of DPL from April 2011. He was appointed to Hayleys Group Management Committee in January and to the Board on 1st April, 2011. He was a Former Country Chairman/Managing Director of Shell Gas Lanka Limited and Shell Terminal Lanka Limited. He holds a First Class Honours Degree in Engineering from the University of Peradeniya, a Doctorate from Cambridge University, UK and a MBA with Distinction from Wales University, UK. He is responsible for the Hand Protection Sector. He is also a Director of Kelani Valley Plantations PLC and Talawakele Tea Estates PLC. Dr. Harsha Cabral, PC Independent Non-Executive Director 114/8, Horton Place, Colombo 7 Dr. Harsha Cabral is a President’s Counsel with twenty-five years experience in the field of Company Law, Intellectual Property Law, International Trade Law and Commercial Arbitration. He holds a Doctorate in Corporate Law from the University of Canberra, Australia. He is a member of the Law Commission of Sri Lanka, a member of the Advisory Commission on Company Law in Sri Lanka, member of the Council of the University of Colombo, a member of the Board of Studies of the Council of Legal Education and a member of the Academic Board of Studies of the Institute of Chartered Accountants of Sri Lanka. He is one of the architects of the new Companies Act of Sri Lanka. He serves as an Independent Non-Executive Director on the Boards of DIMO PLC, Union Bank PLC, Tokyo Cement PLC, Richard Pieris Distributors Ltd., Lanka ORIX Finance PLC, Tokyo Super Cement Co. (Lanka) Ltd. and Fuji Cement Co., Commercial Leasing & Finance Ltd. Tokyo Power (Lanka) Ltd. and Hambana Petrochemicals Ltd. He serves on several Audit Committees, Nomination Committees and Remuneration Committees, chairing some of them. Dr. Cabral is the author of several books on Corporate Law and Intellectual Property Law. Mr. Wannakawattawaduge Don Nimal Hemasiri Perera Non-Executive Director No. 10/11C, Walawwatta Place, Galpotta Road, Nawala Mr. Nimal Perera was appointed to the Board in July 2009. He counts for over 30 years experience in Finance, Capital Market Operations, Manufacturing, Marketing and Management Services. He is the Managing Director of Royal Ceramics Lanka PLC, Executive Deputy Chairman of Vallibel One PLC, Chairman of Pan Asia Banking Corporation PLC, Don Wilbert Capital Ltd, N Sports (Pvt) Ltd and N Capital (Pvt) Ltd and a Director of Amaya Leisure PLC, LB Finance PLC, Vallibel Finance PLC, Haycarb PLC, Hotel Services (Ceylon) PLC and Talawakele Tea Estates PLC and an Alternate Director in Vallibel Power Erathna PLC.


Mr. Lalin Tusith Samarawickrama Executive Director 184/2, Lake Drive, Colombo 8 Mr. Samarawickrama was appointed to the board and the Group Management Committee in June 2011. He is an internationally qualified Hotelier having gained most of his Management experience in UK, working for large international hotel chains over a long period of time. He was the first Sri Lankan Manager to be appointed by the Beaufort International Chain of Hotels to run the first seaside boutique resort. He is a member of the Institute of Hospitality, UK (formerly HCIMA) and of the Royal Society of Health, London. He has several years of experience in the trade, having specialised in hotel designs and development. He has been responsible for the careful planning and execution of Amaya Resorts & Spas refurbishment and rehabilitation programmes. He is also a Director of The Fortress Resorts PLC, Hunas Falls Hotels PLC, Hotel Services (Ceylon) PLC, Royal Ceramics Lanka PLC and Kelani Valley Plantation PLC. Mr. Ranil Prasad Pathirana Independent Non-Executive Director 40/28, Lake Gardens, Lake Drive, Rajagiriya Mr. Pathirana was apponinted to the board in June 2011. He is the Finance Director of Hirdaramani Group and is a Director of Hirdaramani Apparel Holdings pvt Ltd, Hirdaramani Leisure Holdings Pvt Ltd and Hirdaramani Investments Holding Pvt Ltd which are the holding companies of the group. He is also a Director of Star Packaging (Pvt) Ltd and Windforce (Pvt) Ltd and a Non-Executive Director of HAYLEYS, Sampath Bank PLC, Alumex Group and Nirmalapura Wind Power (Pvt) Limited. Mr. Mestiyage Don Saddhamangala Goonatilleke Independent Non-Executive Director 38/A, Waragoda Estate, Kelaniya Mr. Goonatilleke was appointed to the board in June 2011. He is finance professional with over 25 years of post-qualification experience. He has held senior managerial positions in leading Public, Multinational and private companies during his career. He is an Associate Member of the Institute of Chartered Management Accountants (U.K.), passed finalist of Institute of Chartered Accountants (Sri Lanka) and has a Post Graduate Diploma in Management from PIM of University of Sri Jayewardenepura. Currently, he serves as a Group Executive Director of DSL Group of Companies, and Independent Director of Colombo Land Development Company PLC, Pan Asia Banking Corporation PLC, Royal Ceramics PLC and Vallibel Finance PLC.


Mr. Lokukankanange Ruwan Viraj Waidyaratne Executive Director 76, Dharmapala Mawatha, Colombo 7 Mr. Waidyaratne was appointed to the board in April 2013. He joined Hayleys Advantis Group in 1985. He was appointed a Director to a subsidiary company in 1996 and a Director of Hayleys Advantis Limited in July 2002, he was appointed as the Deputy Managing Director of Hayleys Advantis Group in January 2010 and went on to be appointed to the Hayleys Group Management Committee in February 2011. He was appointed as the Managing Director of Hayleys Advantis Limited in April 2011. He is a former Chairman of the Sri Lanka Freight Forwarders Association (SLFFA) and currently functions as a member of the Advisory Council of the Association. He was appointed as a Member of the Steering Committee on Ports, Shipping, Aviation and Logistics affiliated to the Ceylon Chamber of Commerce in September 2011. He holds an MBA from the Edith Cowan University of Western Australia.

4.1 DIRECTORS’ STATEMENT

Neither the Chairman nor any Director of the Company has been or is involved in the following events:

A petition under any bankruptcy laws filed against such person or any partnership in which he was a partner or any corporation of which he was an executive officer; Convicted for fraud, misappropriation or breach of trust or any other similar offence which the CSE considers a disqualification.


4.2 DIRECTORS’ INTEREST IN ASSETS Succeeding 2 years Company has no plans to acquire/dispose/lease any assets with Director’s interest during the 2 years succeeding the Issue. Preceding 2 years Acquisition of Assets Acquisition of Hayleys PLC shares by Mr. K. D. D. Perera, a Director of Hayleys PLC and the parties acting in concert with him.

On 1st September 2011, the following additional ordinary shares were acquired by Mr. K.D.D. Perera along with the parties acting in concert in Hayleys PLC.

Name of Shareholder (Purchaser)

Number of Shares

Shareholding

(%)

Price per Share

Seller

Mr. K. D. D. Perera 2,922,413 3.896 Rs.380/- Dean Foster (Pvt) Ltd

Mr. K. D. D. Perera 3,536,159 4.714 Rs.380/- Dipped Products PLC

Mr. K. D. D. Perera 232,737 0.310 Rs.380/- Toyo Cusion Lanka (Pvt) Ltd

Mr. K. D. D. Perera 183,275 0.244 Rs.380/- Volanka Exports Ltd

Total 6,874,584 9.164

Mr. K. D. D. Perera has acquired 14,513,594 ordinary shares at a total consideration of Rs. 5,476,673,892.00 during the last two years in Hayleys PLC including the abovementioned shares. He triggered the Company Take-over and Mergers Code 1995 (as amended in 2003) in terms of Rule 31(1) (b) on 27th January 2011 and 1st September 2011 as a result of the above transactions. A further 240,000 ordinary shares at Rs.300/- per share were acquired by Mr. K. D. D. Perera on the 18th of January 2013.


Acquisition of 51% of the equity stake of Amaya Leisure PLC by Hayleys PLC and its subsidiaries on 1st September 2011 from Mr. K. D. D. Perera, a Director of Hayleys PLC Name of Shareholder (Purchaser)

Number of Shares

Shareholding (%)

Price per Share

Seller

Hayleys PLC 12,785,861 26.62 Rs.107/- Mr. K. D. D. Perera

Dean foster (Pvt) Ltd 10,252,300 21.34 Rs.107/- Mr. K. D. D. Perera

Toyo Cushion Lanka (Pvt) Ltd

816,400 1.70 Rs.107/- Mr. K. D. D. Perera

Volanka Exports Ltd 642,900 1.34 Rs.107/- Mr. K. D. D. Perera

Total 24,497,461 51.00

A further 6,580,353 (13.70%) ordinary shares of Amaya Leisure PLC were acquired through the mandatory offer made to the existing shareholders by Hayleys PLC and parties acting in concert. Disposal of Assets Hayleys PLC disposed 33.33% of its shareholdings in Hayleys Plantation Services (Pvt) Ltd to DPL Plantations (Pvt) Ltd on 1st September 2011. DPL Plantations (Pvt) Ltd is a fully owned subsidiary of Dipped Products PLC which is a Hayleys Group Company. Leased Assets

Name of the Director

(Lessor) Address Lessee Monthly

Rental (LKR)

Effective Period

Mr. A. M Panditage 11/3, Sri Sunandarama Rd. Kalubowila, Dehiwela Hayleys PLC

5,000/- Till Sep 12

Mr. A. M Panditage 119, Kynsey Road, Colombo 08 Hayleys PLC

5,000/- With effect from Oct 12

Mr. S. C. Ganegoda 28, Campbell Place, Dehiwela Hayleys PLC

2,500/- With effect from Oct 09

Mr. J. A. G. Anandarajah (retired on 31st March 2013)

66B/7, Sri Maha Vihara Road, Dehiwela Hayleys PLC 2,826/-

Period is limited to 01/04/2011 -31/03/2013

Note: From October 2012 onwards the rent is paid to Kynsey Road Bungalow. Till September 2012 rent was paid to 11/3, Sri Sunandarama Road Bungalow.


4.3 DIRECTORS’ INTEREST IN CONTRACTS OR ARRANGEMENTS Directors’ interest in shares of the Company

Name of Director Shareholding as at 31st March 2013

Share Transactions Completed Within the Two Preceding

Years Mr. A. M. Pandithage 2,338 - Mr. M. R. Zaheed 1,487 - Mr. J. A. G. Anandarajah (retired on 31st March 2013)

- -

Mr. K. D. D. Perera – 30,699,599 SBL/ Mr.K. D. D. Perera -3,400,000 LB Finance PLC – 1,666 Vallibel One PLC – 2,182,584

Total Holding of Mr. K. D. D. Perera

36,283,849

Refer 4.2 above

Mr. W. D. N. H. Perera 11 - Mr. Sarath Clement Ganegoda 2,000 - Mr. H. S. R. Kariyawasan - - Dr. H. Cabral - - Dr. K. I. M. Ranasoma 751 - Walldock Mackenzie Ltd/Mr. L. T Samarawickrama

43,500 -

Mr. R. P. Pathirana 2,000 - Mr. M. D. S. Goonatilleke 2,500 -

Directors’ shareholdings in subsidiary companies within the Hayleys Group as at 31st March 2013

Name of Director Name of Subsidiary Number of Shares Held

Direct Indirect

Mr. A. M. Pandithage

Haycarb PLC 2,379 -

Hayleys Advantis LTD 525,274 -

Hayleys Fibre PLC 320 -

Mr. M. R. Zaheed

Hayleys Consumer Products Limited

34,344 -

Hayleys Agriculture Holdings Limited

75,140 -

Mr. J. A. G. Anandarajah (retired on 31st March 2013)

Dipped Products PLC 219,474

-


Mr. K. D. D. Perera

Amaya Leisure PLC 447,661 Hayleys PLC-19,366,234

Hotel Services (Ceylon) PLC - Hayleys PLC- 66,762,690

Valibel One PLC-679,901

Hayleys MGT Knitting Mills PLC

3,000 Hayleys PLC-119,683,817

Haycarb PLC - Hayleys PLC-20,125,103

Dipped Products PLC 1,000 - Talawakelle Tea �states PLC 1,000 -

Hunas Falls Hotels PLC

- Carbotels Limited - 2,824,820

Amaya Leisure PLC - 899,000

Mr. W. D. N. H. Perera Amaya Leisure PLC 96 -

Mr. S. C. Ganegoda

Hunas Falls Hotels PLC 87,415 - Haycarb PLC 1,815 - Hayleys Fibre PLC 608 -

Mr. H. S. R. Kariyawasan Haycarb PLC 15,500 (joint Holding)

-

Hotels Services (Ceylon) PLC 22,000 (joint Holding)

-

Amaya Leisure PLC 1,396(individual

1,618 (joint Holding)

Name of Director Name of Subsidiary Number of Shares Held

Direct Indirect

Dr. H. Cabral

None - -

Dr. K. I. M. Ranasoma

Dipped Products PLC 300 -

Hotel Services (Ceylon) PLC

500 -

Kelani Valley Plantations PLC

300 -

Talawakelle Tea �states PLC

500 -

Mr. L. T. Samarawickrama

Amaya Leisure PLC 4,463,217 �lles (Pvt) Ltd – 439,272

The Beach Resorts Ltd 01 -


Mr. R. P. Pathirana Haycarb PLC

2,300 -

Hotel Services (Ceylon) PLC

1,200 -

Hayleys MGT Knitting Mills PLC

2,500 -

Amaya Leisure PLC 1,508 -

Mr. M. D. S. Goonatilleke

Talawakelle Tea �states PLC

7,300

-

Amaya Leisure PLC 24,900 -

Kelani Valley Plantations PLC 17,900

4.4 DIRECTORS’ EMO��MENTS

The aggregate emoluments including bonus payments made to the Directors (including the Chairman/C�O) for the financial year ended 31st March 2013 was LKR 143.0 Million. The aggregate emoluments including bonus payable to the Directors (including the Chairman/C�O) for the financial year ended 31st March 2014 is estimated at LKR 186.0 Million.


5.0 SENIOR MANAGEMENT PERSONNEL

5.1 CHIEF EXECUTIVE OFFICER

Mr. Abeyakumar Mohan Pandithage

Please find details of Mr. Pandithage under Section 4.0.

The Chief Executive Officer of the Company has not been or is involved in the following events:

A petition under any bankruptcy laws filed against such person or any partnership in which he was a partner or any corporation of which he was an executive officer; Convicted for fraud, misappropriation or breach of trust or any other similar offence which the CSE considers a disqualification.

5.2 PROFILES OF THE SENIOR MANAGEMENT

Mr. A. M. Pandithage, Mr. M. R. Zaheed, Mr. J. A. G. Anandarajah (retired on 31st March 2013), Mr. S. C. Ganegoda, Mr. H. S. R. Kariyawasan, Dr. K. I. M. Ranasoma, Mr. L. T. Samarawickrama and Mr. L. R .V. Waidyaratne are members of the Senior Management and their profiles appear under Section 4.0.

Mr. M. M. M. De Silva

Mr. De Silva joined HAYL in 1983 as an Accountant. Appointed to the Group Management Committee in 2001 taking over the functions of the CFO of the Group. In 2003 he took over the present responsibility as the Managing Director of Hayleys Industrial Solutions Ltd and he has also been overlooking the Fibre Sector and Talawekelle Tea Estates Ltd during 2006-2011. He is a science graduate from University of Ceylon, Peradeniya and hold a Diploma in Business Management from University of Jayawardenapura. He is also a Fellow of the Institute of Chartered Accountants of Sri Lanka and an Associate of the Chartered Institute of Management Accountants, UK. Has responsibility for the Industry Inputs sector which serves the many manufacturing companies in Sri Lanka, the supply medical equipment for diagnosis and Power and Energy Sector which primarily supply electricity generated by wind and hydro projects to National Grid.

Mr. H. C. S. Mendis

Mr. Mendis joined HAYL in 1983. Appointed to the Group Management Committee in 2001. Holds a B.Sc. (Hons.) Degree from the University of Colombo. Fellow, Chartered Institute of Management Accountants, UK. Member, Chartered Institute of Marketing, UK and a Chartered Marketer. Currently based in the UK and has responsibility for the marketing network of the Fibre Sector in UK and Europe.


Mr. G. K. Seneviratne (retired on 8th April 2013)

He joined DPL Plantations in 1992 and appointed to its Board in 1995. Director of DPL since 1998. Appointed to the Group Management Committee in 2007. He has served as Chief Executive/Managing Director of Kelani Valley Plantations. Past Chairman of the Planters' Association of Ceylon and former Director, Sri Lanka Tea Board, Rubber Research Board, Plantations Trust Board and the Tea Association of Sri Lanka. He is a Director of Talawakelle Tea Estates PLC.

Mr. R. Rajadurai

Mr. Rajadurai was appointed as the Managing Director of Kelani Valley Plantations PLC and Talawakelle Tea Estates PLC from 1st January 2013. Appointed to the Hayleys Group Management Committee on 4th January 2013. Mr. Rajadurai served as the Chief Executive Officer/Director of Kahawatte Plantations PLC. He has nearly 30 years of management experience in the plantation sector. During his career in the plantation industry he has held several senior positions with Janatha Estates Development Board, Kahawatte Plantations PLC including that of Estate Group Manager of Kelani Valley Plantations PLC.

He possesses a B. Sc in Plantation management from the University of Wayamba and Masters Degree in Business Administration (MBA) from Postgraduate Institute of Agriculture, University of Peradeniya

Mr. S. P. Dissanayake

Mr. Dissanayake joined HAYL in July 2007. Appointed to the Group Management Committee in the same month. He is a graduate in Hotel Management. He was awarded the Life Time Gold Award in 2011 and Honorary Membership in 2004 by the Institute of Personnel Management, in recognition of his contribution to Human Resources activities in Sri Lanka. He is a non Executive Director of Hotel Services (Ceylon) PLC, Director of Hayleys Group Services (Pvt) Ltd and Director of Hayleys Foundation (Guarantee) Ltd. He is also the Co-Patron of the Hayleys Group Toastmasters Club and Vice Patron of Hayleys Group Recreation Club. Prior to joining HAYL, he held several senior management positions in large private sector entities in Sri Lanka and abroad in Human Resources Management and previously in Hotel Management. He has held significant honorary and advisory positions in Human Resources and the Hotel industry. He is a former President and currently Advisor of the Hotel School Graduates Association and a former Member of the Hotel Classification Committee of Sri Lanka Tourism Development Authority. He is a member of the Ceylon Chamber of Commerce Steering Committee for HR and Education and is also a Steering Committee Member of the Lanka Business Coalition (LBCH) for prevention of AIDS. He is the Sector Head for Group Human Resources, Corporate Communications/ Sustainability and Group Security at HAYLEYS.

Mr. S. J. Wijesinghe

Mr. Wijesinghe joined HAYL in October 2008 as CEO of Civaro International. He was appointed as the Head of the Leisure and Aviation sector in 2009 and was appointed to the Group Management Committee in 2011. He holds an MBA from the University of Leicester (UK) and is a Member of the Chartered Institute of Marketing (UK). He holds over 20 years experience in the Aviation industry with the National Carrier Sri Lankan Airlines. Prior to joining HAYL, he was the Head of Worldwide Cargo at Sri Lankan Airlines responsible for the entire air freight business sector of the organisation.


He also held several senior positions for the airline including management positions in Europe, Middle East and Far East and the Head Office in Colombo. He possesses over 5 years experience in the Hotel industry having served as the Director, Marketing and Sales at The Lanka Oberoi.

Mr. G. M. P. De Silva

Mr. De Silva joined HAYL in May 2011, and was appointed to the Group Management Committee in June 2011 and appointed as Managing Director of all fibre sector companies in August 2011. A Fellow of the Chartered Institute of Management Accountants (UK) and a Green Belt in Six sigma and holds a Graduate certificate in Human Resource Management from TAFE (NSW) Australia. Before joining HAYL, he held the position of Director Finance at the office of Aboriginal and Torres Strait Islander Health, Department of Health, Australia. Prior to that, he was the Vice President – Personal Healthcare Operations of Ansell Inc, based in Thailand with responsibilities for Thailand, India and South Africa. He also served as Director/CEO of Coirtex Limited, Lanka Walltiles and Ansell Lanka before proceeding to Australia.

Dr. A. Sivagananathan

Dr. Sivagananathan joined HAYL in January 2011 as the Managing Director of HAYLEYS Business Process Outsourcing and Shared Services sector. He has overall responsibility for Hayleys Group Information Technology Services. Appointed to Hayleys Group Management Committee in June 2011. Prior to joining HAYL, held a senior management position in a BPO company listed in the NYSE and overlooked operations across Chennai and Sri Lanka. He holds an Honours Degree in Civil Engineering from University of London, MBA from Cranfield University (UK), Doctorate from USA and is a Fellow Member of the Chartered Institute of Management Accountants (FCMA-UK) and CGMA. He is a board member of CIMA Sri Lanka and SLASSCOM Sri Lanka.

Mr. R. Goonetilleke

He joined Hayleys MGT Knitting Mills PLC on the 1st March 2013 as its Managing Director. He was appointed to the Hayleys Group Management Committee on the 8th March 2013. Mr.Goonetilleke holds a Degree in Mechanical Engineering from the University of Portsmouth, United Kingdom. He has served as Director, Brandix X’pressions Ltd and CLT Apparels (India) Pvt Ltd, fully owned subsidiaries of Brandix Lanka Ltd. He has also served as Managing Director/CEO of Textured Jersey Lanka (Pvt) Ltd, a subsidiary of Brandix Lanka Ltd, MD/CEO of Linea Clothing (Pvt) Ltd, a subsidiary of MAS Holdings Ltd and as CEO of Elpitiya Plantations Ltd.

Mr. L. D. E. A. De Silva

Mr. De Silva joined HAYL in November 2011 as Group Chief Financial Officer. He was appointed to Hayleys Group Management Committee in January 2012. Prior to joining HAYL he had served Delmege Forsyth as Group Finance Director and progressed to the position of Group Chief Executive Officer. He counts over 20 years of experience in numerous industries and is a Member of the Chartered Institute of Management Accountants (UK), Institute of Chartered Accountants of Sri Lanka, Certified Management Accountant of Sri Lanka, Certified Management Accountants of Australia and Certified Practicing Accountants of Australia.


5.3 EMOLUMENTS OF THE SENIOR MANAGEMENT

During the financial year ended 31st March 2013, part of the remuneration of the senior management (excluding the CEO) personnel were paid by the other companies of the Hayleys Group, and HAYL’s expenditure on this account amounted to LKR 23.22 Million.

The estimated aggregate remuneration to be paid by HAYL during the financial year ended 31st March 2014, to the senior management (excluding the CEO) of HAYL is expected to be approximately LKR 24.96 Million.


6.0 STATUTORY DECLARATIONS

6.1 STATUTORY DECLARATIONS BY THE DIRECTORS

We, the undersigned who are named herein as Directors of Hayleys PLC hereby declare and confirm that this Prospectus has been seen and approved by us and we collectively and individually accept full responsibility for the accuracy of the information given and confirm that provisions of the CSE Listing Rules and of the Companies Act No. 7 of 2007 and any amendments to it from time to time relating to the issue of the Prospectus have been complied with and that after making all reasonable enquiries and to the best of our knowledge and belief, there are no other facts the omission of which would make any statement herein misleading or inaccurate. Where representations regarding the future performance of the Company have been given in the Prospectus, such representations have been made after due and careful enquiry of the information available to the Company and making assumptions that are considered to be reasonable at the present point in time in our best judgment.

Name of Director Designation Date Place Signature

Mr. Abeyakumar Mohan Pandithage

Chairman/ Chief Executive Officer

19th June 2013 Colombo Sgd.

Mr. Kulappuarachchige Don Dammika Perera

Deputy Chairman 19th June 2013 Colombo Sgd.

Mr. Mohamed Rizvi Zaheed Director 19th June 2013 Colombo Sgd.

Mr. Wannakawattawaduge Don Nimal Hemasiri Perera

Director 19th June 2013 Colombo Sgd.

Mr. Sarath Clement Ganegoda Director 19th June 2013 Colombo Sgd. Mr. Hegodagamage Senarath Rajitha Kariyawasan


Dr. Harsha Cabral Director 19th June 2013 Colombo Sgd. Dr. Koruwage Indrakeerthi Mahesha Ranasoma


Mr. Lalin Tusith Samarawickrama Director 19th June 2013 Colombo Sgd.

Mr. Ranil Prasad Pathirana Director 19th June 2013 Colombo Sgd.

Mr. Mestiyage Don Saddhamangala Goonatilleke


Mr. Lokukankanange Ruwan Viraj Waidyaratne



6.2 STATUTORY DECLARATION BY THE FINANCIAL ADVISORS AND MANAGERS TO THE ISSUE

We, NDB Investment Bank Limited, of No. 40, Navam Mawatha, Colombo 02 being the Financial Advisors and Managers to the Issue of Hayleys PLC hereby declare and confirm that to the best of our knowledge and belief based on the information provided to us by the Company, the Prospectus constitutes full and true disclosure of all material facts about the issue and Hayleys PLC.

The Common Seal of, NDB Investment Bank Limited affixed on the 19th day of June 2013 at Colombo in the presence of two Directors.

Sgd. Sgd. Director Director

6.3 STATUTORY DECLARATION BY THE COMPANY

An application has been made to the CSE for permission to deal in and for a listing for Debentures issued by the Company and those Debentures which are the subject of this Issue.

Such permission will be granted when Debentures are listed on the CSE. The CSE assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports included in this Prospectus. Listing on the CSE is not to be taken as an indication of the merits of the Company or of the Debentures issued.

The Common Seal of Hayleys PLC affixed on this 19th day of June 2013 at Colombo in the presence of two Directors.

Sgd. Sgd. Director Director


7.0 FINANCIAL INFORMATION

7.1 ACCOUNTANT’S REPORT AND FIVE YEAR SUMMARY OF FINANCIAL STATEMENTS



7.1 ACCOUNTANT’S REPORT AND FIVE YEAR SUMMARY OF FINANCIAL STATEMENTS Contd.






















Documents

Hayleys PLC - Debenture Issue 2013 Part 1v | Hayleys PLC - Debenture Issue 2013 CORPORATE INFORMATION The Company/Issuer Hayleys PLC Legal Status A Public Quoted Company with limited