Annual Report 2024/2025

EQUITY TWO PLC | ANNUAL REPORT 2024/25

Chairman's Statement 1

Management Discussion and Analysis 2

Risk Management 4

Annual Report of the Board of Directors on the affairs of the Company 8

Profiles of the Directors 22

Related Party Transactions Review Committee Report 23

Audit Committee Report 26

Nominations and Governance Committee Report 30

Financial Calendar 35

Independent Auditor's Report 36

Statement of Profit or Loss and Other Comprehensive Income 38

Statement of Financial Position 39

Statement of Changes in Equity 40

Statement of Cash Flows 41

Notes to the Financial Statements 42

Five Year Summary 69

Statement of Value Added 70

Information to Shareholders and Investors 71

Notice of Meeting 73

Form of Proxy 75

This report can be accessed online at https://http://www.carsoncumberbatch.com

I warmly welcome you to the 35th Annual General Meeting of the Company. On behalf of the Board, I present to you the Annual Report and Audited Financial Statements for the financial year ended 31st March 2025.

The year in review witnessed a gradual strengthening of Sri Lanka's macroeconomic environment, with signs of easing inflation and improving external balances offering cautious optimism for continued recovery and stability. However, the commercial real estate sector experienced only modest gains in terms of new tenancies, as it traditionally responds to macroeconomic shifts with a longer-term perspective. Thus, leasing activity reflected a cautious approach as businesses position themselves for stability and potential future growth. As a result, the current market dynamics favour buyers and tenants, who benefit from a wider range of options in a competitive landscape.

The physical transformation of the Colombo city continues to unfold with several large-scale developments reaching completion during the year, along with key infrastructure projects progressing forward, all of which signal a longer-term vision for the city's evolution as a commercial and urban centre. Similarly, despite prevailing economic challenges, the land price index continued its upward trajectory, reflecting a degree of resilience in underlying asset valuations and long-term investor confidence.

Together, these developments underscore a market that, while facing near-term challenges, continues to be shaped by long-horizon expectations and strategic positioning.

During the year under review, your Company recorded an 85% occupancy rate, generating a total revenue of

Rs. 209.3 Mn and a profit before tax of Rs. 376.1 Mn, which is inclusive of a Rs. 211.7 Mn fair value gain in investment properties. An interim dividend of Rs. 4.10 per share were declared and paid for the financial year ended 31st March 2025, translating into a dividend payout of 110% out of the Company's profit after tax adjusted for the above fair value gain on investment properties, and related deferred tax.

The outlook for Sri Lanka's real estate market remains cautiously optimistic, anchored in the gradual recovery of business sentiment and the continued evolution of Colombo's urban landscape. While physical development continues, sustainable demand however, will rely on robust economic recovery and fostering lasting business confidence. Further, the sector's long-term prospects will also be contingent upon its ability to align with market needs.

I would like to take this opportunity to welcome Mr. Saktha Amaratunga who joined the Board in

September 2024. We value the knowledge and experience you bring to the table and wish you a successful journey with us. Also, I would like to thank the out-going Director, Mr. Donald Fernando for his invaluable contributions over the years and wish him every success. In closing, I would like to offer my sincere thanks to our shareholders, valued tenants, regulatory authorities and other stakeholders for their support extended to the Company. Further, I extend my appreciation and best wishes to all our valued staff members for their contributions throughout the year towards the Company's performance.

(Sgd.)

Chairman

Colombo

30th May 2025

Sri Lankan GDP grew by 5% in 2024, a turnaround from two consecutive years of negative growth. Similarly, construction industry posted a growth of 19.4% compared to the contraction of 20.8% recorded last year, as new construction projects started to rollout in response to the improving economic variables.

Accordingly, loans and advances granted to private sector construction activities grew by 5.5% to reach Rs. 1.57 Tn in 2024.

To stimulate economic activity, the Central Bank of Sri Lanka ("CBSL") continued with its accommodative monetary policy stance throughout 2024 by reducing the policy rates by a further 150 bps.

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Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25

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The year 2024 witnessed a notable expansion in Colombo's commercial real estate landscape, marked by the addition of substantial new space that enhanced the city's urban fabric. Despite this physical growth, translating new supply into meaningful market absorption remains an ongoing challenge. Strengthening business confidence and stimulating sustained demand are critical to unlocking the true potential of these developments and supporting the long-term growth trajectory of the sector.

To sustain this momentum and bolster long-term investor confidence, concurrent progress in foundational infrastructure is vital. In this regard, 2024 saw advancements in several strategic initiatives, including the Port Access Elevated Highway, continued work on the Central Expressway, urban development projects, and regulatory infrastructure improvements within the Colombo Port City.

Reflecting renewed market confidence, land prices in Colombo rose by 7.7% in 2024, while commercial property values increased by 9.4%, outperforming the 6.7% growth recorded in the previous year, as per the Central Bank's Land Value Index.

Occupancy levels of our properties increased from 80% of last year to 85%. This occupancy enhancement together with upward adjustments to rental rates contributed to driving the Company's top-line to Rs. 209.3 Mn, marking a 15% increase compared to the

SDFR

SLFR

previous year.

Source: CBSL Annual Economic Review - 2024

The country continued to enjoy low single-digit levels of inflation following a temporary increase in early parts of 2024 owing

to a restructured VAT system. In terms of the performance of the domestic currency, the Sri Lankan Rupee continued to strengthen through 2024, appreciating by 10% against the US Dollar to reach Rs. 292.58 by the end of the year.

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FY 23 FY 24 FY 25

The Company witnessed a 29% rise in direct costs in the financial year, predominantly driven by escalations in staff-related expenditure, and maintenance costs. Consequently, the Company achieved a gross profit of Rs. 127.9 Mn, which is an 8% increase compared to the prior year.

Based on the property valuation conducted at the end of the period, the investment properties of the Company recorded a fair valuation gain of Rs. 211.7 Mn, in comparison to the Rs. 191.7 Mn gain reported in the prior year.

Accordingly, the Company achieved an operating profit of

Rs. 323.2 Mn, a 10% increase from the previous year. Furthermore, the Company recorded a 11% increase in net finance income, reaching Rs. 52.9 Mn, largely influenced by the increase in deposit base.

Deferred taxation increased by 10% from last year to Rs. 64.1 Mn, primarily due to the increase in fair value gain on investment properties compared to last year. Accordingly, the Company achieved a profit after tax of Rs. 262.8 Mn for the financial year, reflecting a 11% growth compared to the prior year. Excluding the fair valuation gain and related deferred tax, the Company achieved a profit after tax of Rs. 115.5 Mn.

The Company declared and paid a total dividend of Rs. 4.10 per share for the financial year ended 31st March 2025, translating into a dividend pay-out ratio of 110% on the Company's profit after tax adjusted for above fair value gain on investment properties, and related deferred tax.

With steady progress in urban infrastructure and a measured return of corporate activity, Colombo's commercial real estate market is gradually advancing toward long-term growth and enhanced stability. As the economy gets back to growth,

our investment properties are well-positioned to capitalise on emerging opportunities and deliver sustained value to stakeholders.

Managers 30th May 2025

A key element of any business is risk management, which offers a reasonable level of assurance by identifying and controlling situations, events, or other factors that, even in the unlikely event that a risky event does occur, will lessen its substantial impact on the accomplishment of organisational goals.

For all risk management tasks, enterprise risk management, or ERM, offers a standard procedure and vocabulary. Its

primary goals are to increase proactive threat and opportunity management as well as risk awareness.

In implementing the business plan, the Company has incorporated enterprise risk management to its business activities. This risk management process supports;

• Corporate governance

• Quality of business planning

• Audit planning

• Project planning and implementation

• Building confidence of various stakeholder groups

Risk management also ensures that the relevant internal control systems are in place and provides assurance to the Management/ Board of Directors that processes are robust and are working effectively.

Treat & Assign

Establish Context

Assess & prioritise

Identify Risks

Analysis

The Risk Management Governance Structure includes a reporting framework within the organisation and to the Board of Directors, thereby allowing Directors to perform their supervisory responsibilities for better Corporate Governance.

We are of the view that Risk Management is one of the driving factors of operational sustainability and have identified the risk profiles as follows. The principal risks thus identified are considered and reviewed at various stages within our business process continuously.

Risk Management

The Board of Directors of Equity Two PLC ("the Company") has pleasure in presenting to the Shareholders their Report together with the Audited Financial Statements for the year ended 31st March 2025.

The details set out herein provide the pertinent information required by the Companies Act, No. 07 of 2007, Listing Rules of the Colombo Stock Exchange and are guided by recommended best Accounting Practices.

The Annual Report was approved by the Board of Directors on 30th May 2025.

1. GENERAL

   Equity Two PLC is a public quoted company with limited liability incorporated in Sri Lanka in 1990.

2. THE PRINCIPAL ACTIVITY OF THE COMPANY

   The principal activity of the Company is letting of office premises for commercial purposes.

   There were no significant changes in nature of the principal activity of the Company during the financial year under review.

3. REVIEW OF OPERATIONS AND FUTURE DEVELOPMENTS

   The Chairman's Statement and Management Discussion & Analysis on pages 01 to 03 provide an overall assessment of the business performance of the Company and its future developments.

   These reports together with the audited financial statements reflect the state of affairs of the Company.

4. FINANCIAL STATEMENTS

   The financial statements of the Company which comprise the Statement of Profit or Loss and other Comprehensive Income, Statement of Financial Position, Statement of Cash Flows, Statement of Changes in Equity and Notes

   to the financial statements for the year ended 31st March 2025 are set out on pages 38 to 68.

   These financial statements comply with the requirements of the Companies Act, No. 07 of 2007.

   1. Revenue

      Detailed analysis of the revenue of the Company is set out in Note 11 to the Financial Statements.

   2. Financial results and appropriations

      An abridgement of the financial performance of the Company is presented in the table below:

      (In Sri Lankan Rupees thousands) For the year ended 31st March	2025	2024
      Profit for the year	262,848	237,695
      Other comprehensive income/ (expense) for the year	(307)	(655)
      Total comprehensive income for the year	262,541	237,040
      Retained earnings as at the beginning of the year	573,958	485,340
      Retained earnings before appropriations / adjustments	836,499	722,380
      Forfeited dividends	262	173
      Dividends paid	(15,500)	(15,500)
      Transfer to fair value adjustment reserve	(147,392)	(133,095)
      Retained earnings as at the end of the year	673,869	573,958

   3. Significant accounting policies

      The significant accounting policies adopted in the preparation of these financial statements are given on pages 42 to 50.

   4. Investment properties

      The Company has recognised the carrying value of investment properties held to earn rental income and for capital appreciation in the Statement of Financial Position at 'fair value' in accordance with Sri Lanka Accounting Standards (LKAS 40) - 'Investment Property'.

      A professional valuation was performed as at 31st March 2025 by Mr. S. Sivaskantha, F. I. V (Sri Lanka) of Perera Sivaskantha and Company, incorporated Valuers. The details of the movements in fair value of investment properties of the Company during the year and their carrying value as at 31st March 2025 are presented in Note 17 to the financial statements.

   5. Capital expenditure

      The details of capital expenditure of the Company is given in Notes 17 and 29 to the financial statements.

   6. Reserves

      The movements of total reserves of the Company are set out in the Statement of Changes in Equity and Note 22 to the financial statements.

5. STATEMENT OF DIRECTORS' RESPONSIBILITIES

The responsibilities of the Directors, in relation to the Financial Statements are detailed in the following paragraphs, whilst the responsibilities of the Auditors are set out in the Independent Auditors' Report.

According to the Companies Act, No. 07 of 2007 and the Sri Lanka Accounting and Auditing Standards Act, No. 15 of 1995, the Directors are required to prepare financial

statements for each financial year, giving a true and fair view of the state of affairs of the Company as at the end of the financial year and of the performance for the said period.

The financial statements comprise of inter alia:

• a Statement of Financial Position, which presents a true and fair view of the state of affairs of the Company as at the end of the financial year;

• a Statement of Profit or Loss and Other Comprehensive Income of the Company, which presents a true and fair view of the financial performance of the Company for the financial year.

  In preparing these financial statements, the Directors are required to ensure that:

• appropriate accounting policies have been selected and applied consistently, while material departures, if any, have been disclosed and explained;

• all applicable Accounting Standards have been complied with;

• reasonable and prudent judgments and estimates have been made; and

• provides the information required by and otherwise comply with the Companies Act No. 07 of 2007 and the Listing Rules of the Colombo Stock Exchange.

  The Directors are responsible for ensuring that the Company maintains sufficient accounting records to disclose with reasonable accuracy, the financial position of the Company in order to ensure that its Financial Statements have been prepared and presented in accordance with Sri Lanka Accounting and Auditing Standards Act, No. 15 of 1995 and meet with the requirements of the Companies Act, No. 07 of 2007.

  They are also responsible for taking reasonable measures to safeguard the assets of the Company and in this regard to give proper consideration to the establishment and effective operation of appropriate systems of internal control with a view to prevent, detect and rectify fraud and other irregularities.

  These financial statements have been prepared on a going concern basis since the Directors are of the view that the Company has adequate resources to continue in operation in the foreseeable future from the date of approving these financial statements.

  The Directors are also of the view that they have discharged their responsibilities as set out in this statement.

  The Directors confirm that to the best of their knowledge,

• All taxes, duties and levies payable to the statutory bodies.

• All contributions levies and taxes payable on behalf of and in respect of the employees, and,

• All other known statutory dues that were due and payable

By the Company as at the reporting date have been paid, or where relevant provided for in these financial statements.

Annual Report of the Board of Directors on the affairs of the Company

1. OUTSTANDING LITIGATION

   There is no litigation currently pending against the Company.

2. INTERESTS REGISTER

   The Company maintains the Interests Register conforming to the provisions of the Companies Act, No.07 of 2007.

   All Directors have made declarations as provided for in Section 192(2) of the Companies Act aforesaid.

   The relevant details as required by the Companies Act, No. 07 of 2007 have been entered in the Interests Register during the year under review.

   The Interests Register is available for inspection as required under the Companies Act, No. 07 of 2007.

   1. Remuneration of Directors

      Directors' remuneration for the financial year ended 31st March 2025 is given in Note 13 to the financial statements.

   2. Directors' Interest in Contracts and Shares Directors' interests in contracts of the Company are disclosed in Note 32 to these financial statements and have been

      declared at meetings of the Directors. The Directors have

      had no direct or indirect interest in any other contracts or proposed contracts in relation to the business of the Company, while they had the following interests in the

      ordinary shares of the Company as shown in the table below:

      Directors	No. of shares as at
      	31st March 2025	31st March 2024
      Mr. E. H. Wijenaike	-	-
      Mr. K. C. N. Fernando	3,600	3,600
      Mr. A. P. Weeratunge	-	-
      Mr. P. D. D. Fernando (Resigned as Director w.e.f. 25th September 2024)	-	-
      Mr. S. Marimuthu	550	550
      Mr. A. S. Amaratunga (Appointed as Director w.e.f. 25th September 2024)	-	-

3. DIRECTORS

   The names of the Directors who served during the period are given under Corporate Information provided in the inner back cover of the Annual Report.

   1. Changes in the Directorate

      Mr. P. D. D. Fernando, Non-Executive/Independent Director of the Company resigned from the Board of Directors of the Company w.e.f. 25th September 2024.

      Mr. A. S. Amaratunga was appointed as a Non-Executive/ Independent Director of the Company with effect from 25th September 2024.

      Considering the 'Criteria for determining independence' provided under Rule 9.8.3, Mr. E. H. Wijenaike, who was a Non-Executive/Independent Director of the Company was designated as a Non-Executive Director of the Company with effect from 25th September 2024.

   2. Appointment of Directors who are over 70 years of age

      Mr. K.C.N. Fernando who was over 70 years of age was re-appointed as a Director of the Company in terms of Section 210 of the Companies Act, No.07 of 2007 at the Annual General Meeting (AGM) held on 27th June 2024 for a further period of one year commencing from the conclusion of the said AGM. i.e. till 26th June 2025.

      Mr. E. H. Wijenaike - Non-Executive Director reached the age of 70 years on 15/08/2024.

      The Nominations and Governance Committee noted that Messrs. K. C. N. Fernando and E. H. Wijenaike are fit and proper based on the Fit and Proper Assessment Criteria in terms of Rule 9.7.3 of the Listing Rules and based on the recommendation of the Nominations and Governance Committee and the Board, it is recommended that Messrs. K. C.N. Fernando and E. H. Wijenaike who are

      over 70 years of age be reappointed as Directors of the Company for a further period of one year from the

      conclusion of the Annual General Meeting and that the age limit stipulated in Section 210 of the Companies Act, No.07 of 2007 shall not be applicable to them.

   3. Director to retire by rotation

      In terms of Articles 72, 73 and 74 of the Articles of Association of the Company, Mr. S. Marimuthu retires by rotation and being eligible offers himself for re- election.

      The Nominations and Governance Committee noted that Mr. S. Marimuthu is fit and proper based on the Fit and Proper Assessment Criteria in terms of Rule 9.7.3 of the Listing Rules and has recommended to re-elect

      Mr. S. Marimuthu to the Board at the Annual General Meeting to be held on 26th June 2025.

   4. Re-election of newly appointed Director, since the last AGM

      In terms of Rule 9.11.5 (ii) of the Listing Rules of the Colombo Stock Exchange, the Nominations and Governance Committee recommended the re-election of Mr. A.S. Amaratunga who was appointed to the Board since the last Annual General Meeting. Further, in terms of Rule 9.7.2 of the Listing Rules of the Colombo Stock Exchange the Board has ensured that

      Mr. A.S. Amaratunga is fit and proper based on the 'Fit and Proper Criteria' stipulated in the Listing Rules.

      Accordingly, in terms of Article 68 of the Articles of Association of the Company, shareholder approval is sought to re-elect Mr. A.S. Amaratunga at the Annual General Meeting to be held on Thursday, 26th June 2025.

4. CORPORATE GOVERNANCE

   The Board has ensured that the Company has complied with the Corporate Governance Rules as per the Listing Rules of the Colombo Stock Exchange (CSE).

   1. Board of Directors

      The following Directors held office during the period under review and their brief profiles are given on page 22 of the Annual Report.

      Director	Executive / Independent Non-Executive
      Mr. E. H. Wijenaike - Chairman	Independent Non-Executive (until 25th September 2024) Non-Executive w.e.f.25th September 2024
      Mr. K.C.N. Fernando	Executive
      Mr. A.P. Weeratunge	Non-Executive
      Mr. A. S. Amaratunga (Appointed w.e.f. 25th September 2024)	Independent Non-Executive
      Mr. S. Marimuthu	Independent Non-Executive
      Mr. P. D. D. Fernando (Resigned w.e.f. 25th September 2024)	Independent Non-Executive

   2. Statement on Directors' Fitness and Propriety The Company obtained an annual declaration from the Directors as per Rule 9.7.3 and 9.7.4 of the Listing Rules of

      the Colombo Stock Exchange (CSE) confirming that they

      have continuously satisfied the specified Fit and Proper

      Assessment Criteria set out in the Rules during the financial year and as at the reporting date. Therefore, no Director was identified as a person who has failed to fulfil the required assessment criteria during the year under review.

      The Nominations and Governance Committee reviewed and evaluated the fitness and propriety of the Directors of the Company based on the Fit and Proper Assessment Criteria declarations, confirms that all Directors of the Company as at the reporting date, satisfies the Fit and

      Proper Assessment Criteria stipulated in the Listing Rules of the Colombo Stock Exchange.

   3. Statement on Directors' Independence

      Each of the Independent Directors of the Company have submitted a signed declaration on Independence/ Non-Independence as per Rule 9.8.5 of the Listing

      Rules of the Colombo Stock Exchange (CSE). The said declarations were tabled at a Board Meeting of the Board of Directors of the Company held on 22nd May 2025,

      in order to enable the Board of Directors to determine the Independence/Non-Independence of each of the Independent Directors, in terms of Rule 9.8.3 of the Listing Rules of the CSE.

   4. Directors' Attendance at the Board Meetings

      The Board met 4 times as at the reporting date and the attendance is given below;

      Director	Meetings Attended
      Mr. E. H. Wijenaike - Chairman	4/4
      Mr. A.P. Weeratunge	4/4
      Mr. K.C.N. Fernando	4/4
      Mr. A. S. Amaratunga (Appointed w.e.f. 25th September 2024)	3/3
      Mr. S. Marimuthu	4/4
      Mr. P. D. D. Fernando (Resigned w.e.f. 25th September 2024)	1/1

   5. Board Evaluation

      Each Director individually appraises the Board's performance to ensure discharging its responsibilities satisfactorily. This process takes into account and evaluates all aspects in relation to Board responsibilities.

      Independent observations made by the Directors are collated and addressed by the Nominations and Governance Committee of the Company and

      recommended as relevant to the Board of Directors for consideration.

   6. Board Sub Committees

      In accordance with Rule 9.3.1 of the Colombo Stock Exchange, the Company established its own

      Sub-Committees effective from 25th September 2024. Each Sub-Committee operates under the oversight of its respective Chair and functions in alignment with its approved Committee Charter.

      1. Audit Committee

         In compliance with Rule 9.3 of the Colombo Stock Exchange, the Company formed the Audit Committee with effect from 25th September 2024 and the Audit Committee Report is given on page 26 to 29 of this Annual Report.

      2. Remuneration Committee

         Committee composition

         Equity One Limited (EQIT) is the Parent Company of the Company, and Carson Cumberbatch PLC (CCPLC) is, in turn, the Parent Company of EQIT. In accordance with the Listing Rules of the Colombo Stock Exchange (CSE) prior to the amendments to Rule 9.3.1 effective from 01st October 2024, each listed entity was not required to maintain a separate Remuneration Committee.

         Accordingly, the Remuneration Committee of CCPLC functioned as the Remuneration Committee of the Company until 25th September 2024 and comprised of the following members:

         Member	Independent Non-Executive / Non-Executive
         Mr. T. de Zoysa (Chairman)	Independent Non-Executive Director of CCPLC
         Mr. R. Theagarajah	Independent Non-Executive Director of CCPLC
         Mr. W. M. R. S. Dias	Independent Non-Executive Director of CCPLC
         Mr. D. C. R. Gunawardena	Non-Executive Director of CCPLC

         Following the regulatory amendment, effective 01st October 2024, which mandates that each listed entity must establish and maintain its own Remuneration Committee, the Remuneration Committee of CCPLC ceased to function as the Remuneration Committee of Equity Two PLC with effect from 25th September 2024.

         In terms of Rule 9.12 of the Listing Rules of the Colombo Stock Exchange (CSE), the Remuneration Committee of Equity Two PLC was formed w.e.f. 25th September 2024.

         As at the reporting date, the Remuneration Committee consists of the following Members:

         Member	Independent Non-Executive / Non-Executive
         Mr. S. Marimuthu (Chairman)	Independent Non-Executive
         Mr. A. S. Amaratunga	Independent Non-Executive
         Mr. A. P. Weeratunge	Non-Executive

         Meeting attendance

         From 01st April 2024 to 25th September 2024, the Carson Cumberbatch PLC Remuneration Committee which functioned as the Remuneration Committee of the Company until 25th September 2024 did not meet.

         From 25th September 2024 until the reporting date, the Equity Two PLC Remuneration Committee met three times (3). The attendance of the Equity Two PLC

         Committee Members at these meetings were as follows:

         Member	Independent Non-Executive / Non-Executive	Attendance
         Mr. S. Marimuthu (Chairman)	Independent Non-Executive	3/3
         Mr. A. S. Amaratunga	Independent Non-Executive	3/3
         Mr. A. P. Weeratunge	Non-Executive	3/3

         Remuneration Policy Statement

         Equity Two PLC has implemented a formal Remuneration Policy to ensure transparent and equitable compensation. The policy applies to Executive Directors, Non-Executive Directors, and Chief Executive Officers (CEOs). For the purposes of this policy, "remuneration" encompasses

         both cash and non-cash benefits received by these individuals. The Remuneration Committee, comprising Non-Executive and Independent Directors, is responsible for overseeing the implementation and periodic review of this policy. No Director shall participate in decisions regarding their own remuneration. The policy is reviewed annually, with adjustments recommended by the Committee as deemed necessary.

         The aggregate remuneration of the Executive and Non-Executive Directors

         The aggregate remuneration of the Executive and

         Non-Executive Directors for the year ended 31st March 2025 was Rs.1,200,000/- .

      3. Nominations and Governance Committee

         In compliance with Rule 9.3 of the Colombo Stock Exchange, the Company formed the Nominations and Governance Committee with effect from 25th September 2024 and the Nominations and Governance Committee Report is given on page 30 to 34 of this Annual Report.

      4. Related Party Transactions Review Committee In compliance with Rule 9.3 of the Colombo Stock Exchange, the Company formed the Related Party

         Transactions Review Committee with effect from 25th

         September 2024 and the Related Party Transactions Review Committee Report is given on page 23 to 25 of this Annual Report.

         Declaration

         The Directors have made self-declarations for the purpose of identifying parties related to them. The said declarations were noted at the Related Party Transactions Review Committee Meetings.

         The Company is in compliance with Rule 9.14 of the Listing Rules of the Colombo Stock Exchange pertaining to Related Party Transactions during the financial year.

   7. Policies

      In accordance with Rule 9.2.1 of the Colombo Stock Exchange, the Company established and maintains the following policies and was published on the Carson Cumberbatch PLC group website https://www.carsoncumberbatch.com w.e.f. 01st October 2024.

      1. Policy on the matters relating to the Board of Directors

      2. Policy on Board Committees

      3. Policy on Corporate Governance, Nominations and Re-election

      4. Policy on Remuneration

      5. Policy on Internal Code of Business conduct and Ethics for all Directors and employees, including policies on trading in the Entity's listed securities

      6. Policy on Risk management and Internal controls

      7. Policy on Relations with Shareholders and Investors

      8. Policy on Environmental, Social and Governance Sustainability

      9. Policy on Control and Management of Company Assets and Shareholder Investments

      10. Policy on Corporate Disclosures

      11. Policy on Whistleblowing

      12. Policy on Anti-Bribery and Corruption

      Annual Report of the Board of Directors on the affairs of the Company

      Compliance with the Section 9 of Listing Rules of the Colombo Stock Exchange on Corporate Governance as at date

      Rule No.	Subject	Criteria	Compliance Status	Details
      9.1.3	Applicability of Corporate Governance Rules	All Listed Entities shall publish a statement confirming the extent of compliance with the Corporate Governance Rules set out herein, in the Annual Report of the Entity	Compliant	Please refer to point 9 of the Annual Report of the Board of Directors.
      9.2	Policies	Policies	Compliant	The Company has established and maintains required policies with effect from 01st October 2024, and which have been disclosed under the Company website. Please refer to page 13 of the Annual Report of the Board of Directors.
      9.3	Board Committees	Board Committees	Compliant	Please refer to Note 9.6.1 to 9.6.4 of the Annual Report of the Board of Directors. The Company has established its own Audit Committee, Remuneration Committee, Nominations & Governance Committee and Related Party Transactions Review Committee w.e.f. 25th September 2024 as per Section 9.3.1 of the Listing Rules of the Colombo Stock Exchange.
      9.4.1	Adherence to principles of democracy in the adoption of meeting procedures and the conduct of all General Meetings with shareholders	Listed Entities shall maintain records of all resolutions and information pertaining to its adoption	Compliant	The Company Secretaries maintain records of all resolutions and requisite information.
      9.4.2	Communication and relations with shareholders and investors	Communication and relations with shareholders and investors	Compliant	The Company has established and maintains a policy on Shareholder Communication and Relations with effect from 01st October 2024 and has been published on Carson Cumberbatch PLC Group's website. The contact person is mentioned. The policy includes a process whereby Directors are informed of major issues and concerns of shareholders. Please refer to page 13 of the Annual Report of the Board of Directors.
      9.5	Policy on matters relating to the Board of Directors	Policy on matters relating to the Board of Directors	Compliant	The Company has established and maintains Policy on the matters relating to the Board of Directors with effect from 01st October 2024 which addresses the requirements in Rules 9.5.1 and 9.5.2, and same has been published in Carson Cumberbatch PLC Group's website.

      Rule No.	Subject	Criteria	Compliance Status	Details
      9.6.1	Chairperson and CEO	The Chairperson of every Listed Entity shall be a Non-Executive Director and the positions of the Chairperson and CEO shall not be held by the same individual.	Compliant	Chairman is a Non-Executive Director
      9.6.2	Chairperson and CEO	Where the Chairperson of a Listed Entity is an Executive Director and/or the positions of the Chairperson and CEO are held by the same individual, such Entity shall make a Market Announcement	Not Applicable	Chairman is a Non- Executive Director and the positions of the Chairperson and CEO are not held by the same individual.
      9.6.3 and 9.6.4	The Requirement for a Senior Independent Director (SID)	SID to be appointed in the following instances; The positions of the Chairperson and CEO are held by the same individual. The Chairperson is an Executive Director. The Chairperson and CEO are Close Family Members or Related Parties.	Not Applicable	Chairman is a Non-Executive Director, the positions of the Chairperson and CEO are not held by the same individual and the Chairman and CEO are not Close Family Members or Related Parties.
      9.7	Fitness of Directors and CEO	Fitness of Directors and CEO	Compliant	The Company obtained an annual declaration from the Directors confirming that they have continuously satisfied the specified Fit and Proper Assessment Criteria. All Directors met the fit and proper assessment criteria stipulated in the Listing Rules of the CSE.
      9.8.1	Board Composition	The Board of Directors of a Listed Entity shall, at a minimum, consist of five (05) Directors.	Compliant	The Board comprises of 05 Directors.
      9.8.2/9.8.3 and 9.8.5	Independent Directors	Minimum no. of Independent Directors/ Criteria for defining independence and declaration & disclosures relating to Directors	Compliant	Please refer Note 9.1 of the Annual Report of the Board of Directors.
      9.9	Alternate Director	Alternate Director	Compliant	No Alternate Directors were appointed to the Board throughout the reporting period.
      9.10.4.(a) and 9.10.4(b)	Disclosure relating to Directors	Company shall publish a brief resume in the Annual Report including expertise in relevant functional areas of each Director	Compliant	Please refer the Profile of the Directors on page 22.
      9.10.4(c)	Disclosure relating to Directors	Whether either the Director or Close Family Members has any material business relationships with other Directors of the Listed Entity	Compliant	As at the conclusion of the last AGM and throughout the financial year, none of the Directors or Close Family Members have had any material business relationship with other directors of the Company.
      9.10.4.(d) /9.10.4.(e)/ 9.10.4.(f )/ 9.10.4.(g) and 9.10.4.(h)	Disclosure relating to Directors	Disclosure relating to Directors	Compliant	Please refer to point 9.1 and 9.8 of the Annual Report of the Board of Directors.

      Annual Report of the Board of Directors on the affairs of the Company

      Rule No.	Subject	Criteria	Compliance Status	Details
      9.11	Nominations and Governance Committee	Nominations and Governance Committee	Compliant	In compliance with Rule 9.3 of the Colombo Stock Exchange, the Company formed the Nominations and Governance Committee with effect from 25th September 2024 and the Nominations and Governance Committee Report is given on page 30 to 34 of this Annual Report.
      9.12	Remuneration Committee	Remuneration Committee	Compliant	In compliance with Rule 9.3 of the Colombo Stock Exchange, the Company formed the Remuneration Committee with effect from 25th September 2024 and the Remuneration Committee Report is given on page 12 to 13 of this Annual Report.
      9.13	Audit Committee	Audit Committee	Compliant	In compliance with Rule 9.3 of the Colombo Stock Exchange, the Company formed the Audit Committee with effect from 25th September 2024 and the Audit Committee Report is given on page 26 to 29 of this Annual Report.
      9.14	Related Party Transactions Review Committee	Related Party Transactions Review Committee	Compliant	In compliance with Rule 9.3 of the Colombo Stock Exchange, the Company formed the Related Party Transactions Review Committee with effect from 25th September 2024 and the Related Party Transactions Review Committee Report is given on page 23 to 25 of this Annual Report.
      9.17(i)	Additional Disclosures	Board of Directors should declare all material interests in contracts involving in the Entity and whether they have refrained from voting on matters in which they were materially interested	Compliant	Directors declared at a board meeting that they have no material interests in contracts involving in the Company and there were no matters in which they were materially interested.
      9.17(ii)	Additional Disclosures	Board of Directors should conduct a review of the internal controls covering financial, operational and compliance controls and risk management and have obtained reasonable assurance of their effectiveness and successful adherence therewith	Compliant	The Board, having reviewed the system of internal controls covering financial, operational and compliance controls and risk management, is satisfied with the Company's adherence to and effectiveness of these controls for the period up to the date of signing the Financial Statements.
      9.17(iii)	Additional Disclosures	Board of Directors should make arrangements to make themselves aware of applicable laws, rules and regulations and are aware of changes particularly to Listing Rules and applicable capital market provisions	Compliant	The Board of Directors have declared that the Company and the Board of Directors have complied with applicable laws, rules and regulations and also are aware of changes particularly to the Listing Rules of the Colombo Stock Exchange including the new rules on Corporate Governance initially issued in October 2023 and all other applicable capital market provisions.
      9.17(iv)	Additional Disclosures	Board of Directors should disclose relevant areas of any material non-compliance with law or regulation and any fines, which are material, imposed by any government or regulatory authority in any jurisdiction where the Entity has operations	Compliant	The Board of Directors have no disclosures to be made of any material non-compliance with law or regulation and any fines, which are material, imposed by any government or regulatory authority in any jurisdiction where the Company has operations.

   8. Disclosures relating to the Directors as per Section 9.10.4 (e) of the Listing Rules of Colombo Stock Exchange Equity One Limited is the immediate Parent Company of Equity Two PLC. Carson Cumberbatch PLC is the Parent Company of Equity One Limited and Bukit Darah PLC is the Ultimate Parent and Controlling Entity of Equity One Limited.

      Name of the Director	Name of the Company, functioning capacity, Listed/Unlisted
      Mr. E.H. Wijenaike (Total No. of Directorships - 05)	Carson Cumberbatch PLC Group of companies; He is a Non-Executive Director and Key Management Personnel in the mentioned Listed Company - Equity Two PLC He holds a directorship in another Unlisted Company within the Carson Cumberbatch PLC Group.
      	Other companies; He is a Non-Executive Director and Key Management Personnel in the mentioned Listed Companies - Central Industries PLC and Central Finance Company PLC He is a Director and Key Management Personnel in the mentioned Unlisted Company - Dehigama Hotels Company Limited
      Mr. A.P. Weeratunge (Total No. of Directorships - 09)	Carson Cumberbatch PLC Group of companies; He is a Non-Executive Director and Key Management Personnel in the mentioned Listed Companies - Equity Two PLC, Ceylon Investment PLC, Ceylon Guardian Investment Trust PLC He holds directorships in other Unlisted Companies within the Carson Cumberbatch PLC Group.
      Mr. K.C.N. Fernando (Total No. of Directorships - 04)	Carson Cumberbatch PLC Group of companies; He is an Executive Director and Key Management Personnel in the mentioned Listed Company-Equity Two PLC He holds directorships in other Unlisted Companies within the Carson Cumberbatch PLC Group.
      Mr. A. S. Amaratunga (Total No. of Directorships - 09) (Total No. of Companies within the Carson Cumberbatch PLC Group where Mr. A. S. Amaratunga is a Key Management Personnel but not a Director - 10)	Carson Cumberbatch PLC Group of companies; He is a Non-Executive Independent Director and Key Management Personnel in the mentioned Listed Companies - Equity Two PLC, Ceylon Beverage Holdings PLC, Bukit Darah PLC, Carson Cumberbatch PLC, Lion Brewery (Ceylon) PLC, Ceylon Guardian Investment Trust PLC, Ceylon Investment PLC and Pegasus Hotels of Ceylon PLC.
      	Other companies; He is a Director and Key Management Personnel in the mentioned Unlisted Companies - SAARA LABs (Pvt) Ltd
      Mr. S. Marimuthu (Total No. of Directorships - 06)	Carson Cumberbatch PLC Group of companies; He is a Non-Executive Independent Director and Key Management Personnel in the mentioned Listed Companies - Equity Two PLC and Pegasus Hotels of Ceylon PLC He holds a directorship in another Unlisted Company within the Carson Cumberbatch PLC Group.
      	Other companies; He is Non-Executive Independent Director and Key Management Personnel in the mentioned Listed Company - Industrial Asphalts (Ceylon) PLC He is a Director and Key Management Personnel in the mentioned Unlisted Companies -Knightsbridge Technologies (Pvt) Ltd and Silverfalls (Pvt) Limited

      Annual Report of the Board of Directors on the affairs of the Company

5. INDEPENDENT AUDITORS

   Company's Auditors during the year under review were Messrs. KPMG, Chartered Accountants.

   Audit fees for the Company for the year ended 31st March 2025 was Rs. 346,500/- (2024- Rs. 315,000/-). Fees

   paid to auditors on audit related services are given in Note 13 to the financial statements.

   The retiring Auditors have expressed their willingness to continue in office. A resolution to re-appoint them as auditors of the Company and authorising the Directors to fix their remuneration will be proposed at the forthcoming Annual General Meeting.

   The Audit Committee reviewed the appointment of the Auditors, its effectiveness and its relationship with the Company including the level of audit and non-audit fees paid to the Auditors.

   1. Auditors' relationship or any interest with the Company

      The Directors are satisfied that, based on written representations made by the Independent Auditors to the Board, the Auditors do not have any interest with the Company that would impair their independence.

   2. Independent Auditors' Report

      The Independent Auditors' Report on the financial statements is given on pages 36 to 37 of the Annual Report.

6. SIGNIFICANT EVENTS DURING THE YEAR

   There were no significant events during the year.

7. INTERNAL CONTROL AND RISK MANAGEMENT

   The ultimate responsibility to establish, monitor and review a company-wide internal control system rests with the Board of Directors. The intensity, depth and the tolerance limits for each components of the internal control system would be based on the weight of the elements of risk imposed on the sustenance of the business by the respective area of operation. Whilst

   a strong internal control system would mitigate the crystallisation of risk elements to a greater extent, employment of external support structures would also be necessary based on the risk assessments made thereon.

   Effective maintenance of internal controls and risk indication and mitigation is handed down to the

   respective members of senior management within the guidelines of benchmark policies, procedures and authority limits clearly laid down.

   Group internal Audit, whose scope of scrutiny is entirely driven by grading of the risk involved, will be monitoring and providing feedback to the Management and the Audit Committee. Regular submission of compliance and internal solvency certificates vouched by the Heads of the respective divisions as a mandatory agenda

   item keeps the Directors abreast of the position of the Company's resource base and governance requirements.

   This allows the Board to have total control of the fulfillment of governance requirements by providing opportunity to take timely preventive action in case of potential deterioration of status quo. A comprehensive description of the risk management strategies of the Company are given on pages 04 to 07 in the Annual Report.

8. HUMAN RESOURCES

   The Company continue to invest in human capital development and implement effective human resource practices and policies to develop and build an efficient and effective workforce aligned around business priorities and to ensure that its employees are developing the skills and knowledge required for the future success of the Company and the Group.

   The number of persons employed by the Company as at 31st March 2025 was 08 (2024- 09).

9. EQUITABLE TREATMENT TO SHAREHOLDERS

The Company ensures that the rights of all shareholders are preserved and has established procedures to ensure the fair and equitable treatment of all shareholders, also, an array of measures is also in place to ensure that shareholder views are identified and fully considered.

The Company communicates with the shareholders through the following means of communication:

1 Annual General Meeting (AGM) and Extraordinary General Meetings (EGM).

The Annual General Meeting provides shareholders with the opportunity to share their views and to meet the Board, including the Chairman of the Board committees and Key Management Personnel. Further Company's external auditors are also present at the Annual General Meeting.