Annual Report 31.12.2024

EML Consultants PLC.

ANNUAL REPORT

2024

6/10, Rajamahavihara Road

Pitakotte Tel: + 94 11 5535880 Fax: + 94 112854762

Email: info@emlconsultants.com Website: https://www.emlconsultants.com

EML Consultants PLC

1

1. VISION & MISSION 3

2. ABOUT US 4

3. BUSINESS STRATEGY, PROJECT SCOPE, MAIN BUSINESS SECTORS & CORPORATE VALUES 5

4. CHAIRMAN'S MESSAGE 8

5. MANAGING DIRECTOR'S REVIEW 10

6. BOARD OF DIRECTORS 12

7. SENIOR PROFESSIONALS 15

8. MANAGEMENT DISCUSSION & ANALYSIS, COMPANY PERFORMANCE 18

9. CORPORATE GOVERNANCE PRACTICES

   21

10. HUMAN CAPITAL 23

11. SUSTAINABILITY STRATEGY 25

12. RISK MANAGEMENT REPORT 26

13. AUDIT COMMITTEE REPORT 28

14. RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT 30

15. REMUNERATION COMMITTEE REPORT 31

16. ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY. 32

17. DIRECTORS RESPONSIBILITY STATEMENT

    36

18. INDEPENDENT AUDITORS' REPORT 37

19. STATEMENT OF COMPREHENSIVE INCOME 40

20. STATEMENTS OF FINANCIAL POSITION 41

21. STATEMENT OF CHANGES IN EQUITY 42

22. STATEMENTS OF CASH FLOWS 43

23. NOTES TO THE FINANCIAL STATEMENTS

    44

24. FIVE YEARS FINANCIAL SUMMARY 67

25. SHARE AND OTHER INFORMATION 68

26. CORPORATE INFORMATION 70

27. NOTICE OF MEETING 72

28. FORM OF PROXY 74

EML Consultants PLC

1. ‌VISION & MISSION

   OUR VISION

   To be the leading consultant providing innovative and integrated environmentally

   friendly solutions to national and international clientele.

EML Consultants PLC

1. ‌ABOUT US

   Overview of the Company

   EML Consultants PLC has been providing technical and management consultancy services to the private and public sector in Sri Lanka and across the globe for the past 32 years. While the initial scope of the organization revolved on environmental and natural resource management, over the years we have been able to expand into diverse industries and fields, covering a spectrum of communities. The Company obtains consultants for each project based on the requirements of the specific project, hence following a cost-effective model that enables efficient resource allocation

   and sustainability of operations. EML has entered into several strategic partnerships with a multitude of partner companies to collaborate and provide technical assistance to clients or retain professionals as and when such technical inputs are required. These organizations are listed below;

   • Development Concepts (Private) Limited

   • International Institute for Development Transformation (Private) Limited

   • Sustainability Agenda (Private) Limited

   CORPORATE VALUES

   CONNECTED

   We invest in insight to get to the heart of our customers' challenges.

   We are open and transparent in the way we work.

   COMMITTED

   Deeply involved in building relationships - everything we do is with the long-term in mind.

   Our dedication to quality is the cornerstone of our success - we get every detail right.

   CREATIVE

   We are constantly developing better ways of working.

   If we find a better way of working, we act upon it and proactively share it.

1. ‌BUSINESS STRATEGY, PROJECT SCOPE, MAIN BUSINESS SECTORS & CORPORATE VALUES

   EML Strategy

   Our scope reaches beyond profitability to create lasting value through empowering sustainability across private and public industries. Our contributions to sustainability stem from our knowledge, technical and analytical capacity as well as our access to an extensive pool of professionals and experts in various fields.

   While our main areas of expertise pivot on Environment and Natural Resources Management (ENRM), over the years we have expanded into a multitude of areas, and simultaneously enhanced our scope to cover

   areas such as Urban and Industrial Engineering (UIE), Capacity Building and Human Resources Development (CBH), Monitoring & Evaluation & Social Safeguard (MESS) and Overseas Technical Assistance Projects (OAP).

   Our capacity to effectively deliver value hinges on our straight forward yet effective business model. The ultimate objective of our strategic business approach is to encourage our clients to mobilize the resources and expertise and work towards the larger sustainability goals while pursuing business growth, and create value for all stakeholders along the value chains.

   Key input

Key Partners

Key Strengths

Financing,

implementatio

n, Monitoring Reporting and

Evelauation

International

Consultancy Alliances Industry experts' researchers and professionals

Project Management

Coordinating Policy Integration of resources and institutions

Projet

Appraising

Monitoring

and evaluation

Contribution to

sustainable development goals

Preparing

conceptual and detailed design preparation

Project

Planning

EML Consultants PLC

Renewable

Energy

Livelihood

development

Community

and livelihood development

Water

Supply

Climate

chnage

Road

Transport and Coastal Management

Waste

Disposal

Socio

economic surveys

Conceptual

and Detailed Design

Institutional

Developmen t

SMEs

Renewable

Energy

Community

and livelihood development

Biodiversity

and eco systems

EML Project scope

Main Business Sectors

EML is a technical and management consultancy services provider at its core. At present, we provide our services to both public and private sector institutions and international agencies. We secure projects

through a process of competitive bidding formulated on specific requirements by project owners. Our services can be segmented in six main categories.

Environment and Natural Resources Management

Capacity Building and Livelihood Development Programmes

Urban Planning and Infrastructure Development

Digital Technology

Water Supply and Sanitaion Overseas Assignments

Environment Climate Change and Green Economic Development

EML continued be a leading service provider to the government & private sector for mainstreaming green concepts into development planning. The offered technical services to government and international donor agencies such as UNDP, and ADB to formulate projects that helped to develop more environmentally sustainable projects for the country. The Projects Division of EML has taken keen interest on the preparation of environmental assessments (EIAs) for many development projects including Renewable Energy projects in the country.

Capacity Building and Livelihood Development Programs

EML's involvement in capacity building and livelihood development spans across a multitude of projects related to livelihoods and rural development. Local Government agencies have been one of the focus areas of EML's involvement in the past.

Urban Planning and Infrastructure Development

Water Supply and Sanitation

EML's experience encapsulates all the aspects of the water supply and sanitation sector, including feasibility studies, detailed designs, environmental assessments, and socio-economic analysis. EML was and continues to be a partner in the initial studies, designs and construction work for upgrading / rehabilitation of the entire sewer network of Colombo and adjacent areas, and also in the design and construction of new sewer network in towns, north and south of Colombo.

Overseas Assignments

A significant milestone of EML's journey towards success is our breakthrough into the international arena of consultancy services. EML's overseas footprint not only spans the South Asian Region, but also includes the African continent and the Pacific Islands.

EML's expertise, experience and insights in this sector covers regional and urban planning, preparation of master plans, urban infrastructure, roads and highways, harbor and coastal development. EML has been responsible for preparing Master Plans for the Green City Development, and Central Province Tourism Master Plan. Recent involvement in this sector include the preparation of Green City Master Plans to some of the key provincial cities in the country.

Digital Technology

Having recognized the importance of IT in development, EML Consultants created a unit to coordinate and develop digital capabilities in the company. The division had initial discussion with an overseas digital technology company to enhance its capability to provide IT services with the aim of popularizing Artificial Intelligence (AI), internet of things (IOT) into corporate and government institutions.

1. ‌CHAIRMAN'S MESSAGE

   
   
   "We demonstrated resilience amid the challenging external environment in 2024 and are now well-positioned to capitalize on improving domestic conditions as we work toward returning to our usual business levels."

   Resilience and innovative spirit were the hallmarks of the year 2024, as EML along with the rest of the other businesses attempted to stay afloat in the crisis hit country. In 2022, the country had gone through a severe financial and economic crisis, the impact of which continued in 2024. The inherent challenges of the local and global context in 2024 called for a gear shift in our business approach that pivoted on our fundamental values of integrity and expertise. Signs of economic recovery in 2024 with economic growth turns positive shed light on a better future at the time of presenting this Annual Report and Audited Financial Statements of the Company for the year ended 31st December 2024 on behalf of the Board of Directors.

   Macroeconomic backdrop

   The global economy continued to experience several challenges, though expected to grow over 3% in year 2024

   Meanwhile, the Sri Lankan economy grew by 4.4% in 2024, marking a significant rebound from the 7.3% contraction in 2022 where the economic turbulence hit the country. Inflation remained low, with the Colombo Consumer Price Index turning negative towards the year end.

   Market interest rates continued to decline, reaching stability in the financial sector. Tourism income continued to flow with a significant increase in arrivals whilst the foreign remittances too reflected positive contribution to enhance the foreign currency reserves. Amid these improvements, the Exchange rates also stabilized towards the latter part of 2024.

   EML Performance

   During the year under review, EML's total revenue amounted to LKR 116.6 Mn reflecting a growth of 29.5% compared with the previous year. While project values and durations are the factors that lead to revenue fluctuations in our operations, the volatile macroeconomic factors also contribute to varied revenues.

   In 2024, the new project initiations were at a moderate level in the country due to the lack of investment particularly from the government sector and the international donor agencies. Private sector projects were picking up slowly as the construction related activities witnessed a modest resumption.

   However, the limited opportunities in the project development environment caused EML securing only 7 projects in the year 2024.

   Our 30 years of experience, insights and expertise assisted us at this critical juncture to manage resources effectively and efficiently, to secure

   Despite the increase in revenue, lower gross profit margin which stood at 32% in year 2024 compared to that of 41% in year 2023, led the net losses to be hovering around the same levels as last year. Competitive nature of the industry forced EML to settle for lower profit margins as a measure of securing new projects.

   Meanwhile, we veered our focus on analyzing the evolving market trends as well as new requirements that arose with the change in the global landscape triggered by the geopolitical and social upheavals.

   Growth opportunities

   While economic, social and political stability are vital to commence development projects and attract private sector projects to have a sustainable project pipeline, the absence of such an environment will complicate our growth aspirations. We remain hopeful that the country will regain stability in time. We expect the global donor agencies to launch new projects, especially to support the struggling communities to uplift their livelihood and support the rural areas and small and medium businesses which could capitalize on new opportunities.

   Meanwhile, we will continue to explore opportunities for growth in the current climate and build and nurture relationships with the government and private sector institutions to pursue viable growth. We will also continue to improve our services to potential and existing customer organizations through process improvement, innovation and knowledge acquisition.

   In the long-term, EML plans on exploring growth opportunities beyond the borders of Sri Lanka. As a long-established brand in Sri Lanka with a strong track record of successfully completing over 500 projects, we believe that we will have a

   better chance of securing businesses especially in the South Asian region.

   Acknowledgments

   The year 2024 became yet another challenging period not only for EML but also for the entire nation. As such, I am grateful to the unwavering support and inspiring guidance extended to me by our Board of Directors as well as the Senior Staff. Our employees remained committed to achieving organizational plans during the year and beyond, amidst a complex and difficult period. I would like to express my sincere gratitude to each and every one of them. I would also like to extend my gratitude to our consultants and professionals for their valuable services and input. Let us steer ahead undaunted by challenges to create sustainable value.

   
   
   

   Karunasena Hettiarachchi

   Chairman

   27th May 2025

   
   
   
2. ‌MANAGING DIRECTOR's REVIEW "We are confident that the improving economic conditions will support our efforts to regain business volumes and enhance our performance."

   It is my privilege and pleasure to present you the fourth Annual Report of our Company since the listing in the CSE. The year 2024 has been a challenging period for Consultancy services with the economic crisis affecting the development process and the financial sector of the country. Needless to say, this had an impact on national development and it continues to hamper the progress of all projects with a significant impact on the consultancy services sector. After going through a tough year in 2023, the year 2024 began with the same challenges in our way as the government was taking measures to overcome its worst economic challenges (as per IMF). The embargo on construction projects continued and as a result, consultancy opportunities on the development of roads, water, and construction works remained minimal. However, Sri Lankan economy began to show recovery where interest rates stabilized whilst the Rupee appreciated against the USD and settled down below 300. Most importantly, the positive GDP growth continued with IMF and the World Bank projecting a positive outlook for Sri Lanka beyond 2024. New project initiatives remained modest whereas the project initiations from donor agencies which is a key segment for EML had not gathered momentum during the year. The Company had limited opportunities to capitalize on, hence the number of projects secured remained low. Despite this challenging environment, EML continued to work on ongoing projects and secure new projects to increase revenues.

   Financial Results

   The company posted a revenue of Rs. 116.6 Mn which has increased year by year by 29.5%, caused due to securing new projects and revenue derived from existing projects. However, the achieved GP was Rs. 36.9 Mn which is similar to that of previous year. The GP margin has dropped to 32% from 41% reported in year 2023 caused due to competitive pricing for the projects. Due to the reduction in GP margin, EML ended the financial year with a net loss of Rs. 8.1 Mn. The overhead costs have declined modestly and the net positive finance income declined by 45% due to reduced bank interest on deposits. Recognizing the challenging times, internal cost management was also reviewed, and steps were taken to effectively manage the overheads.

   Business Overview

   Being a year of sustenance in the market, we managed to secure 7 new projects which is however, well below the par considering the capabilities of the Company.

   With our integrated approach, we supported our customers in their needs, during the turbulent economic conditions while providing most services uninterrupted and offering innovative solutions.

   In 2025, we will continue to focus on growing our consultancy business, by expanding our products and services to areas where there is greater potential. We have expanded our services to include Consultancies on Artificial Intelligence and, in this regard, we have made arrangements to enter into a partnership with an Australian

   based company to represent their products and services in Sri Lanka.

   In addition, the company has made significant advancement towards developing renewable energy sector, green financing and climate resilience improvement which are believed to be well financed in future. As a measure of showcasing the service, in December 2024 the Company commenced the process to obtain ISO 9001-2015 standard (Quality Management Systems) & ISO 14001-2015 standard (Environmental Management Systems). To further enhance the focus on business development. A new CEO recruitment is planned for year 2025.Our approach in 2025 will focus on growing sectors such as Tourism investment while special effort will be taken towards soliciting opportunities with Port City investments. In this regard new agreement has been reached with a major investor on Port City developments to promote Mixed development.

   All in all, the past year has been noteworthy in many ways. New tools and methods developed during the pandemic helped EML to carry out its work uninterruptedly.

   I sincerely believe that EML has much more to offer over the next several years as we surge ahead with our growth plans. We will continue

   our journey focusing on developing our infrastructure, further strengthening our competencies to expand into new markets, developing our tools, attracting the right resources with the aim of delivering strong, sustainable returns to all our stakeholders.

   Gratitude

   Let me also take this opportunity to thank our entire leadership team headed by our Chairman, and our employees who have worked tirelessly under difficult conditions. I am immensely proud of the way they have taken the challenges in these unprecedented circumstances.

   Lastly but not least, I like to place on record my gratitude to all shareholders who purchased and retained shares of EML Consultants PLC during the past year. I am equally grateful for the ongoing support we receive from our clients as well as our business partners.

   
   
   

   K.A.K. Jayatilake Managing Director

   27th May 2025

3. ‌BOARD OF DIRECTORS
   
   
   

   Eng. Karunasena Hettiarachchi -Chairman

   Non-Executive Non-Independent Director

   A chartered Civil Engineer by profession, Mr. Hettiarachchi Graduated in Civil Engineering with Honors and worked with Central Engineering Consultancy Bureau for a short period of time and joined the Department of Irrigation. Served nearly 20 years and retired prematurely in 1995 as a Class I officer of the Sri Lanka Engineering Service. During this period, he was seconded to the International Water Management Institute (IWMI) as a Research Associate and conducted research on irrigation management for 4 years.

   He is a Fellow of the Institution of Engineers Sri Lanka, and holds a Master of Engineering Degree from the Catholic University of Leuven of Belgium. Mr. Hettiarachchi is also a Chartered Environmental Professional and a Member of Institute of Environment Professionals, and also a Fellow Member of Institute of Management of Sri Lanka.

   He held many positions in the top level management at various globally reputed organizations and projects such as (Nippon Koei Ltd of Japan), Project Director of Clean Settlement Project (World Bank Funded) and Urban Development and Low-Income Housing Project (Asian Development Bank funded) and then joined the Japan Bank for International Cooperation (JBIC) as the Senior Project Specialist, where he worked for 11 years. While working with JBIC, he was

   appointed as the Chairman of Geological Surveys and Mines Bureau (2 years) and later functioned as Chairman of Sri Lanka Foreign Employment Bureau (2 years), Central Environment Authority (3 years), Sri Lanka Land Reclamation and Development Corporation (3 years) and National Water Supply and Drainage Board (5 Years).

   In 2015, He was appointed as the Secretary to the Ministry of Urban Development and Water Supply and later appointed as the Secretary to the Ministry of Defense. Afterwards, He was posted as the Ambassador to Germany and also accredited to Switzerland, Croatia, Macedonia and Montenegro.

   
   
   

   Mr. K. A. K. Jayatilake -Managing Director

   Executive Director

   Mr. Avanthi Jayatilake is one of the accomplished professionals in the sphere of Environment Management. He started his career as a Research Officer in Rubber Research Institute of Sri Lanka and later joined the Sri Lanka Administrative Service in 1980 and served in many important positions in government agencies including the Ministry of Plan Implementation, Central Environmental Authority and Ministry of Environment. In 1991 he was recruited by the United States Agency for International Development (USAID), as the Program Management Specialist and was later appointed as the Mission Environmental Officer to look after the environmental aspects of all projects supported by the USAID in Sri Lanka and Maldives.

   In addition, he has also served as an Advisor

   to several Ministries in the past governments

   on related matters. Mr. Jayatilake has served as the Team Leader for large number of Environmental Impact Assessment Reports and served as the Environmental Specialist for several major projects designed and implemented in other countries as well. Previously, Mr. Jayatilake has also served as a Directorand Chairman of the Board of Property Development PLC, a company quoted on the Colombo Stock Exchange and as the Chairman of Maganeguma Consultancy and Project Management Services.

   He holds a M.Sc. in Environmental Management from the University of Tasmania - Australia.

   
   
   

   Mr. Thilak Hewawasam

   - Non-Executive Non-Independent Director

   A Regional Development Planner by profession, Mr. Hewawasam has a wealth of experience serving in both the public sector and private sector institutions. His services in the state sector includes the tenure as Chairman, Central Environmental Authority, which is the apex body responsible for the formulation and implementation of environmental regulations.

   He has also been involved in different national level projects and has held key positions such as National Project Director for the Water Supply & Sanitation Project (CWSSP), 1992- 1997 Ministry of Housing - Sri Lanka, Director - Clean Settlement Program (CSP) funded by World Bank, Project Director

   - ADB funded Rural Water Supply Pilot Project in the District of Monaragala and Coordinator- Greater Colombo Urban Community Sanitation Program (1994-1996). From 2006-2010, he was the Senior Water and Sanitation Advisor for the USAID Asia (Eco-Asia) Program. His international experience includes involvement in community development projects launched by USAD and

   World Bank in many countries in the South Asian Region, West Asia and Central Africa.

   Mr. Hewawasam holds a M.Sc. (Econ) in Regional Dev. Planning from University of Wales, Post Graduate Diploma in Sociology -Land Settlement & Development from University of Colombo, Post Graduate Certificate in Public Administration, SLIDA and BA(Sp.) 2nd Class (Hons) in Geography from the University of Ceylon, Peradeniya. He is also a Member of Sri Lanka Administrative Service (SLAS) and Member of Institute of Environmental Professionals, Sri Lanka.

   
   
   

   Mr. H. N. J.

   Chandrasekera

   -Non-Executive Independent Director

   Mr. Jayaraja Chandrasekera is a senior banking professional who has held Senior Corporate Management positions in one of Sri Lanka's leading private commercial banks, Hatton National Bank PLC, with a career spanning over 35 years. He has handled Banking and Bancassurance related responsibilities during his long tenure in the Financial Services Industry. He has also served in the Boards of National Savings Bank and Pan Asia Banking Corporation PLC since 2015 to 2020.

   He holds an MBA from the University of

   Sunderland UK, and a Postgraduate Diploma in Strategic Management. He is also a member of the Association of Professional Bankers, Sri Lanka and has undergone extensive training in banking, leadership, and management both locally and at prestigious overseas institutions such as Mount Eliza Business Faculty, Melbourne University- Australia, National University of Singapore, Lloyds Bank TSB-UK, Development Bank of Philippines and

   Association for Overseas Technical Scholarship - Japan.

   
   
   

   Mr. K.P.P.H.

   Mihiripenna Non-Executive

   Independent Director

   Mr. Mihiripenna is a well-experienced finance professional with a long track record in the fields of accounting and finance, holding key positions in several companies in Sri Lanka. He also possesses ample experience in corporate management as a member of Boards of different entities, both in private and state sector.

   Starting his career at Ernst & Young back in 1985, Mr. Mihiripenna has moved to hold key positions, including Finance Controller and Vice President - Finance in private and public listed companies. These companies include Muller & Phipps Ceylon PLC, Ceylon Beverage Holdings PLC (formerly Ceylon Brewery), Yashoda Group of companies and Ruhunu Cement Company Limited.

   Mr. Mihiripenna is currently a senior partner of Keerthi Mihiripenna & Co., a firm of Chartered Accountants. He currently serves as the Chairman/Managing Director of Harvest Business Consultants (Private) Limited and Berkley Insurance Brokers (Private) Limited and also the Chairman of Berkley Associate (Private) Limited. Previously, he held the positions of Deputy Chairman and Chairman of Milco (Private) Limited from February 2015 to May 2018 and also from February 2019 to January 2020.

   Further, he has been in the Management Board of Samurdhi Bank.

   Mr. Mihiripenna is a Fellow Member of the Institute of Chartered Accountants of Sri

   Lanka, Institute of Certified Management Accountants of Sri Lanka and Association of Accounting Technicians of Sri Lanka. He also holds a B. Com (Special) Degree from the University of Sri Jayewardenepura. He has been an Associate Member from the inception (2005) of Sri Lanka Institute of Directors.

4. ‌SENIOR PROFESSIONALS

   Management Team - External Consultants

   
   
   

   Dr. S.M. F. Marikar -

   Senior Consultant

   Dr. Marikar is a leading specialist in Sri Lanka in the statistical design and conduct of surveys and processing of quantitative data and qualitative information. He counts over

   20 years of experience in government departments as the Director Planning and is well conversant with the functioning mechanism of the state sector.

   During his career, he has spearheaded design and conduct of over twenty socio-economic surveys including design of questionnaires, implementation, monitoring and evaluation. He also has served as the Senior Consultant in the Study on Impact Assessment of the rural community resulting from the development of a major infrastructure project in Southern Sri Lanka. He has been the 'Senior Project Economist' for the ADB funded mission Sri Lanka Agricultural Rehabilitation Project, which was aimed at the assessment of the achievement of social and economic objectives via agriculture development.

   Dr. Marikar is a Ph.D holder in Natural Resource Economics from the Colorado State University - USA and has a Master's degree in Agricultural Economics from Stanford University, California - USA. He also holds a B.Sc. Agriculture (Second Upper) degree from the University of Ceylon.

   Dr. S. Manitha Weerasuriya - Senior Consultant

   
   
   

   Dr. Manitha Weerasuriya has extensive experience in project management and governance related training and capacity building projects conducted through the USAID funded TALG and GUGSA programs since 2004. He is the Managing Director of the International Institute for Development Transformation, IIDT, and CEO of Nikini Automation Systems (Pvt) Ltd (Sri Lanka). He was Lecturer at the City University of New York and served as the Assistant Soil Chemist at the Rubber Research Institute of Sri Lanka.

   Dr. Weerasuriya obtained his Ph.D. on Environmental Biology and Master of Philosophy Degree in Biology from the City University of New York. He has also obtained his Masters in Botany and B.Sc. in Agriculture from the University of Peradeniya, Sri Lanka. He has received several Awards, Fellowships and Grants during the academic career.

   
   
   

   Mr. K H Muthukuda Arachchi - Senior Consultant

   Mr. Muthukuda Arachchi is a veteran in t h e Environmental and Natural Resources Management fields, having served in government Institutions including Central

   Environmental Authority and National Water Supply & Drainage Board in his career expanding over 30 years. He has held senior positions at different departments in the CEA including Director and Deputy Director positions. He has also served in different committees and Boards of Ministries including Ministry of Industry & Commerce and Ministry of Local Government and Provincial Councils.

   He has undergone foreign training relating to various aspects of Environmental Management in many Asian Countries as well as in Europe.

   Mr. Muthukuda Arachchi holds a Bachelor of Science (B.Sc.) - Biological Science Degree from the University of Sri Jayewardenepura and a Master of Science (M.Sc.) Degree on Forestry and Environment from the University of Sri Jayewardenepura.

   Management Team-In House

   
   
   

   The leadership team of the Company is responsible to ensure that the affairs of EML are carried out in a manner that would achieve the desired objectives for the best interests of the Company and its shareholders.

   Mr. K.A.K. Jayatilake Managing Director

   Please refer Section No.6. of this Annual Report for Managing Director's profile.

   
   
   

   Mr. A Rajaratnam General Manger - Projects

   Mr. A Rajaratnam has 30 years' experience in the Environmental Sector. He has a track record of 11 years in EML Consultants PLC, in various positions in Project Management and Consulting. Prior to joining EML, he had worked for the Central Environmental Authority for 15 years in various capacities in the Pollution Control Division. He also served as a Project Management Specialist, and Deputy Project Director in the North East Coastal Community Development Project in the Eastern Province, implemented by the Ministry of Nation Building which was funded by the Asian Development Bank.

   Mr. Rajaratnam is a Charted Environmentalist and holds a Master's degree in Environmental Science from the University of Colombo. He has also attended several international and local trainings. He also participated in several technical committees during his tenure at CEA.

   
   
   

   Dr. Pradeepa Serasinghe Proposal Advisor/ Consultant

   Dr. Pradeepa Serasinghe is a vastly experienced professional with a proven track record in the fields of Public Management, Business Administration, Human Resource Management, Human Resource Development, Event Management, Governance and Heritage Management.

   During her career that extends over thirty years as an officer in the Sri Lanka Administrative Service, Dr. Serasinghe has served as the Director of Women's Bureau of Sri Lanka, the Secretary to the National Education Commission, Director General of Sri Lanka Institution of Development Administration (SLIDA) and as the Director General of the Department of Archaeology. Her major Involvements include positions held as Additional Secretary to the Ministry of Cultural Affairs and as Additional Secretary to the Ministry of Public Administration and Home Affairs.

   Dr. Serasinghe holds a BSc degree from the University of Peradeniya, BA (Hons.) degree in Mass Communication from the University of Sri Jayewardenepura, MBA degree from the University of Birmingham, UK and PhD degree from the Post Graduate Institute of Archaeology, University of Kelaniya.

   She also has extensive training in areas such as Capacity Building, Governance, Project Management, Gender Mainstreaming, Public Policy, and Human Resource Management from several agencies around the world.

   Mr. Indika Dias Head of Finance

   
   
   

   Mr. Indika Dias started his career as an Audit Trainee and completed 4 years audit training, then he joined Ceylinco Homes Group as an Accountant and had the opportunity to actively involve in many remarkable projects. After completion of 11 years of successful service he joined as Chief Accountant of Seven Seas Computers- Dubai Company and its subsidiaries in Sri Lanka.

   After completion of 3 years, he joined Apurva Natvar parikh Group in India as an Accounts and Admin Manager and completed 3 years. Later he joined EML as a Group Finance Manager in 2017. He has overseas experience in Dubai, Singapore and India. He has a wide knowledge on import and export processes, procurement and corporate & personal Taxation and possesses the Customs wharf certificate. Mr. Indika Dias is a Final level candidate of CA Sri Lanka and a Member of AAT. He is currently reading for his MBA from Rajarata University.

5. ‌MANAGEMENT DISCUSSION & ANALYSIS, COMPANY PERFORMANCE

Global context

Company performance overview

Global economy shown resilience after a slowdown prevailed since 2020. Yet, many challenges to overcome in particularly political front, global trade etc. The International Monetary Fund (IMF) projects global growth at 3.2% in 2024, with a slight increase to 3.3% in 2025. This stability is attributed to resilient services sectors, despite persistent inflationary pressures.

Even though there are growth prospects, geopolitical tension has been a primary challenge for many regions. Russia-Ukraine war, tension in middle eastern region affected the global trade significantly. Trade wars between the west and east is another challenge where supply chains are facing disruptions. Year 2024 also saw a significant negative impact due to extreme weather conditions. Climate changes have been a critical factor which will continue to impact human activities around the world.

The Economic backdrop of Sri Lanka

EML entered year 2024 with the mere hope that economy would recover from its worst decline. Debt restructuring measures supported by IMF, rigid macro-economic policies helped the country to step towards recovery slowly but steadily. GDP growth hung over 4% during the year. Both Inflation and Interest rates stabilized at a reasonable level. Private credit started to grow slowly with the environment changing positively for businesses. Foreign remittances and increase in tourism arrivals assisted to ensure USD inflows to stabilize the exchange rate by the end of 2024.

EML's key business activities include Environment and Natural Resources Management (ENR), Capacity Building and Human Resources Development (CBH) Programs, Urban and Industrial Engineering (UIE) Services and Special Projects Management, Capacity Building and Human Resources Development (CBH) Program and much more. EML Consultants PLC generate cash flows through the provision of technical and management consultancy services. The Company engages in specialized service segment where both the public and private sector institutions seek our services. Over 30 years in the industry, EML has served thousands of clients by providing consultancy services covering a wide spectrum of sectors.

During the year 2024, EML secured 7 new projects whilst 13 projects were ongoing which had commenced in previous years. Some of the key projects handled during the year included a Project for Capacity Building for Field Officers of Community Participation in Community Water Supply Scheme Management in Sri Lanka (JICA Project), Agriculture Sector Modernization Project (ASMP) by Ministry of Agriculture, Livestock, Lands, and Irrigation, Sri Lanka, Developing Sustainable integrated Solid Waste Management (ISWM)and Circular Economy in the Uva and Northern Provinces in Sri Lanka Project and Avifaunal Study for Mannar Wind Power Project.

Significantly low project initiations from the government sector and donor agencies have led to an overall drop in new business volumes for EML as well. Competition in the industry in terms of low pricing strategies also affects adversely on EML as a premier service provider.

Financial Review Revenue

Compared to year 2023, EML has been able to increase the topline in FY 2024 by 29% with the continuing projects and new projects secured. A notable revenue has been generated from 3 projects exceeding LKR 10 Mn each in FY 2024.

Revenue (LKR Mn.) and Revenue

200.0

133.7

110.5

Growth

132.5

20% 90.1

-17%

100%

116.6

29%

0%

-32%

0.0

-100%

2,020

2,021 2,022

Revenue

2,023 2,024

Revenue Growth

Direct Costs

The direct costs associated with the revenues predominantly consist of consultancy fees to professional consultants retained for every project and other costs such as transport, accommodation etc. that directly relate to projects. During the year under review, direct costs increased by 48% compared to FY 2023. This increase is higher than the revenue growth of FY 2024 which is a result of increase in cost elements such as consultancy fees, travelling expenses etc. Competitive pricing to secure projects has resulted in lower growth in revenues though the Company had to incur the corresponding costs at the market rates.

Overhead Expenses

During the year under review, administration expenses increased by only 1.4% compared to FY 2023. There has been no major recruitment during the year and also strict cost control measures. Apart from the administrative expenses, other losses have also reduced with the lower exchange losses and gain from disposal of motor vehicles during the year. Both the finance cost and finance income has dropped with the reduced market interest rates in FY 2024 particularly in 2H of the year.

Profitability

During the year under review, the gross profit margin has declined notably from 41% of last FY to 32%. This decline is due to the squeezed

margins quoted for projects in a competitive environment as a measure of securing projects. As a result, the gross profit for FY 2024 remains around the same level of last FY.

Loss before interest and tax has reduced with the reduction in other losses in Fy 2024 whilst the administrative expenses remained without a significant change compared to FY 2023. Net loss margin stood at 6% compared to 8.5% in FY 2023.

80.0%

60.0%

40.0%

20.0%

0.0%

-20.0%

-40.0%

Profitability

2019

2020

2021

2022 2023

GP Margin EBIT Margin

Financial position

As a professional service provider, EML's operations are highly dependent on human capital in terms of professional consultancy services. As such, we are not an assets driven company.

Therefore, generally EML's assets are represented by current assets in the form of receivables and liquid assets such as bank deposits and cash. In the Financial Year 2024, EML has not made any material investments on the property, plant and equipment. At the same time non-current assets base also not reflecting major fluctuations other than the 322% increase in Trade and other receivables With this increase, cash and cash equivalent balance has also dropped by 31% in FY 2024 reflecting a tightened working capital position.

On the non-current liabilities aspect, deferred tax liabilities have gone up by LKR 20 Mn with the deferred tax recognized on revaluation reserve. At the same time, short term Loans and borrowings and Trade payables have increased by LKR 7.4 Mn and LKR 9.1 Mn respectively.

Apart from the above-mentioned variations, there were no major fluctuations in other assets and liabilities of the Company.

EML SWOT ANALYSIS

Strengths

Weaknesses

Opportunities

Threats

FUTURE OUTLOOK

The prevailing macro-economic conditions are less conducive and have slowed down the country's growth. However, Consultancy is a business that can make the best use of a situation as the multi-lateral and bilateral donors become more active with greater project opportunities to help the country recover during the difficult period. Hence, we expect a rebouncing of donor interest with the stronger strategic alliances especially with the Asian and European countries. Such flow of technical

assistance is expected to increase the demand

for EML's consultancy services.

Meanwhile, we will continue to intensify focus on our strategic drivers such as reducing direct cost and enhancing partnerships to navigate the troubled waters.