Annual Report 2024/2025

SARVODAYA DEVELOPMENT FINANCE PLC ANNUAL REPORT 2024/25

A stronger, more prosperous Sri Lanka begins with a vision one that sees beyond today's challenges to the possibilities of tomorrow. At Sarvodaya Development Finance, we don't just

anticipate the future; we actively shape it, ensuring that progress reaches every corner of the nation.

By integrating financial inclusion with innovation, we empower individuals, businesses, and entire communities to move forward with confidence. From expanding access to finance in rural villages to supporting women-led enterprises and harnessing technology for greater economic participation, we create opportunities that ripple far beyond the present.

With deep connections to 5400 village societies, we understand that true transformation starts at the grassroots and we have built a network that uplifts communities, bridges gaps, and fuels grassroots entrepreneurship. Every loan, every investment, and

every initiative is a step toward a future that is not only envisioned but made real where individuals thrive, businesses flourish, and the nation rises together.

At Sarvodaya Development Finance, the future we foresee is more than a strategy. It is a path we illuminate, a journey we embark on, and a promise we are committed to fulfilling.

Chairman's Message Sustainability Report

Page 19

SDF is committed to fostering inclusive economic growth by empowering rural entrepreneurs,

About Us

Page 42

promoting women in leadership, and aligning its efforts with the Sarvodaya Movement to build a more equitable and sustainable development

model for Sri Lanka. Through these initiatives, SDF strives to drive lasting social transformation, uplift underserved communities, and inspire the next generation of leaders across the nation.

CEO's Review

Page 23

Amidst Sri Lanka's continued economic recovery, characterised by easing inflation, greater macroeconomic stability, and steady interest rates, SDF recorded its strongest financial and operational performance to date. Our total assets surged by an impressive 51.3% to reach LKR 22 billion, positioning us as one of the fastest-growing financial institution in the NBFI sector. This achievement underscores our capacity to turn adversity into opportunity through

a uniquely impactful business model rooted in community development.

• About SDF 4

• About this Report 6

• Our Journey 9

• Value Creation Model 12

• Financial Highlights 14

• Non-Financial Highlights 18

  Leadership

• Chairman's Message 19

• CEO's Review 23

• Board of Directors 28

• Management Team 32

• Regional Managers 38

• Branch Managers 39

  Strategy Review

• Sustainability Report 42

• Materiality 61

• Stakeholder Engagement 71

  Management Discussion & Analysis

• Operating Environment 78

• Financial Capital 85

• Manufactured Capital 101

• Intellectual Capital 105

• Human Capital 109

• Social and Relationship Capital 117

• Natural Capital 123

  Sarvodaya Development Finance PLC

  2 Annual Report 2024/25

  
  
  
  
  
  

  Financial Capital Human Capital

  
  
  
  
  
  

  Page 85 Page 109

  Governance and Risk Management			Supplementary Information
  	129			288
  	140			290
  Affairs of the Company	141		Financial Position	291
  Governance Committee	147		Other Comprehensive Income in USD	292
  				293
  and Remuneration Committee	149			294
  	151			348
  				351
  				354
  Risk Management Committee	157			355
  	162			356
  				357
  Financial Report				358

  • Governance and Compliance

  • Decade at a Glance

  • Report of the Senior Independent Director

  • Quarterly Financial Statements - Income Statement

  • Report of the Board of Directors on the

  • Quarterly Financial Statements - Statement of

  • Report of the Board Nomination and

  • Statement of Profit or Loss and

  • Report of the Board Human Resources

  • Statement of Financial Position in USD

  • Compliance Status of Corporate Governance Principles

  • Report of the Board Audit Committee

  • GRI Content Index with Reference

  • Report of the Related Party Transactions Review Committee155

  • Glossary

  • Report of the Board Integrated

  • List of Abbreviations

  • Theme Song of SDF

  • Integrated Risk Management Report

  • Notes

  • Notice of Meeting

  • Corporate Information

• Chief Executive Officer's and Chief Financial Officer's Responsibility Statement 192

• Directors' Responsibility Statement 193

  3

  Annual Report 2024/25 Sarvodaya Development Finance PLC

• Independent Assurance Report on the Directors' Statement on Internal Control to the Board of Directors of Sarvodaya

• Form of proxy 359

Sarvodaya Development Finance PLC (SDF) is a publicly listed company incorporated in Sri Lanka under the Companies Act No. 7 of 2007. It is a licensed finance company under the Finance Business Act No. 42 of 2011 and a registered finance leasing establishment in accordance with the Finance Leasing Act No. 56 of 2000. The company was listed on the Colombo Stock Exchange on 14 December 2021. In addition, SDF holds the status of an approved Credit Agency recognized under the Mortgage Act No. 6 of 1949 and the Trust Receipts Ordinance No. 12 of 1947 by the Department of Commerce.

Incorporated in 2010, SDF was founded with a vision deeply rooted in nation-building and community development, inspired by the "grassroots upwards" philosophy of the Sarvodaya Movement. Within a short period of time, SDF has grown to become a leading financial institution, offering innovative and technology enabled financial services through a diverse product portfolio tailored to meet the evolving needs of its customers.

The Sarvodaya Movement, established in 1958, is one of Sri Lanka's oldest and most respected non-governmental organizations, committed to uplifting and empowering rural communities for over six decades. Leveraging Sarvodaya's

strong brand, community trust, and extensive network of village based societies, SDF has effectively expanded its services to reach underserved populations, particularly Micro, Small, and Medium Enterprises (MSMEs) across the island.

A core sector of focus for SDF is agriculture. The company provides targeted financial solutions to support village based customers in enhancing their agri-businesses. These efforts aim to modernize agricultural practices, increase productivity, and improve rural livelihoods contributing to broader economic and social development.

SDF is committed to drive inclusive economic growth by channelling financial resources and support services into sustainable, environmentally responsible business models. In doing so, SDF not only contributes to environmental preservation but also uplifts the quality of life in the communities it serves.

True to its values of sustainable development and responsible finance, SDF delivers value-added services alongside its core financial offerings. These include technical training, financial literacy programs, and market development initiatives designed to support MSMEs capacity building and access to market opportunities.

SDF's excellence in corporate reporting has been recognized with four Gold Awards for its Annual Report at the TAGS Awards organized by the CA Sri Lanka, reflecting the company's strong commitment to Transparency, Accountability, Governance, and Sustainability.

Furthermore, the company continues to leverage its international partnerships to amplify impact. SDF has successfully collaborated with global impact funding agencies and became the recipient of its first impact fund from the European Union. The company is also a recognized member of the Global Alliance for Banking on Values (GABV), further affirming its commitment to purpose driven finance and its globally recognized value proposition.

Our Vision

Our Mission

Our Values

To be a Catalyst in Creating an Economically Progressive Society, Living in Dignity

To Foster Sustainable Development Through the Provision of Ethical Financial Services and Fulfil Expectations of all Stakeholders

Purity in Service Diligent and Caring

Transparent and Honest Passionately Committed

SEEDS Guarantee Ltd

54.6%

Lanka Jathika Sarvodaya Shramadana Sangamaya

Sarvodaya related entities hold 54.6% ownership in SDF, fully dedicating their returns to various social empowerment initiatives aligned with the Sarvodaya philosophy. This unique business model ensures that 54.6% of dividends directly support community development, rather than individual gain. Such a structure highlights the profound societal impact of

1,279

Sarvodaya Shramadana Societies

Other Shareholders

SDF's operations, reflecting the visionary model established by the late

Dr. A.T. Ariyaratne, aimed at awakening and uplifting society as a whole

Inclusive Reach: Serves non-bankable communities through 1,200+ Sarvodaya Shramadana Societies

that invest in and partner with SDF.

Purpose-Driven Ownership: 54% owned by a social development institution, with an equal share of dividends reinvested into community development.

Sustainable Finance Ethos: Guided by the founder's philosophy, promoting ethical, people-centered financial solutions.

Global Recognition: The only finance company in Sri Lanka to have obtained membership from the Global Alliance for Banking on Values.

About Us Leadership Strategy Review Management Discussion Governance and Risk Supplementary

& Analysis Management Financial Reports Information

We are pleased to present the fourth Integrated Annual Report of Sarvodaya Development Finance PLC (SDF) for the year ended 31 March 2025. This report provides a comprehensive and accurate account of the Company's performance during the year. Its primary purpose is

to meet the information needs of investors, while also addressing the interests of other key stakeholders.

As a socially responsible brand, SDF is committed to promoting greater transparency by reporting on both financial and non-financial performance, including Environmental, Social, and Governance (ESG) impacts. This report continues that commitment by aligning with the Integrated Reporting Framework and the Global Reporting Initiative (GRI) Standards.

The objectives of the SDF Annual Report for 2024-25 are:

1. To disclose our business operations by voluntarily adopting ESG reporting. The GRI Standards have been used to guide us in this respect.

2. To disclose material and critical information regarding our capitals where the Integrated Reporting (IR) Framework 2021 has been used for this purpose.

3. To ensure that the Company maximises its positive impacts while identifying and minimising any negative impact.

The Compliance Framework for this Report

Financial reporting:

1. Sri Lanka Financial Reporting Standards (SLFRSs) and Sri Lanka Accounting Standards (LKASs) issued by the Institute of Chartered Accountants of Sri Lanka.

2. Companies Act No.07 of 2007.

3. Finance Business Act No. 42 of 2011.

Corporate Governance reporting

1. Finance Business Act Direction No.5 of 2021 on Corporate Governance, issued by Central Bank of Sri Lanka

2. Listing Rules of the Colombo Stock Exchange.

3. Code of Best Practice on Corporate Governance 2023, issued by the Institute of Chartered Accountants of Sri Lanka.

4. Securities and Exchange Commission of Sri Lanka Act No. 19 of 2021 and subsequent amendments thereto

5. GRI Standards 2021.

Assurance

1. Sri Lanka Auditing Standards (SLAuSs)

2. Sri Lanka Standard on Assurance Engagements (SLSAE) 3000: Assurance Engagements other than Audits or Review of Historical Financial Information, issued by CA Sri Lanka.

United Nations SDGs

We have voluntarily adopted SDG Reporting Guidelines, in addition to the above statutory reporting guidelines.

2021/22 2022/23 2023/24

2024/25

Recipient of the prestigious Gold Award for Annual Reporting for three consecutive years, affirming our commitment to transparency, accountability, governance and sustainabilty.

6 Sarvodaya Development Finance PLC Annual Report 2024/25

About Us

Leadership

Strategy Review

Management Discussion & Analysis

Governance and Risk Management

Financial Reports

Supplementary Information

Financial Capital

Social & Relationship Capital

Customers

Regulators

Navigation Icons Capital Icons

Manufactured Capital

Intellectual Capital

Stakeholders

Shareholders

Business Partners

Human Capital

Natural Capital

Employees

Rating Agency

All entities in this report are included in the audited financial statements presented in this report. Also discussed about Sarvodaya Movement with regards to the sustainability and its impact

This report covers the 12-month period 1 April 2024 to 31 March 2025 and will be continued as an annual reporting activity.

This report can be downloaded from our website https://http://www. sarvodayafinance.lk, which is also mobile phone enabled, or scan the QR code to be directed to the page.

Please send your feedback on this report to:

Head of Strategic Planning

Sarvodaya Development Finance PLC No: 155/ A, Dr. Danister De Silva Mawatha Colombo 08

Sri Lanka.

Tel: +94 115 444 666

There has been no requirement for restatement of any information from our previous annual report.

The sustainability reporting component of this report has received external assurance from Messrs. Deloitte Associates (Chartered Accountants).

External Assurance Report for sustainability reporting is contained in this report.

Investors

Sarvodaya Shramadana Societies (SSS) Members

ESG

Assurance is provided for the information for the period April 1 April 2024 to 31 March 2025 with reference to the GRI Standards 2021, with:

• Reasonable assurance on the information on financial

  E S G

  performance

• Limited assurance on other information, prepared in

Environment

Social

Governance

accordance with the GRI Standards 2021.

Relationship with assurance provider is, as an independent assurance engagement, as defined by the Sri Lankan Standard on Assurance Engagements

Scan for Digital Version

Annual Report 2024/25

Sarvodaya Development Finance PLC 7

About Us

Leadership

Strategy Review

Management Discussion & Analysis

Governance and Risk Management

Financial Reports

Supplementary Information

About this Report

Organisational Details

GRI 2-1

A Public Quoted Company incorporated in Sri Lanka under the Companies Act No. 7 of 2007. A Licensed Finance Company under the Finance Business Act No. 42 of 2011. A registered Financed Leasing Establishment in terms of Finance Leasing Act No. 56 of 2000. The Company was admitted to the official List of the Colombo Stock Exchange on 14 December 2021.

No. 155/A, Dr. Danister De Silva Mawatha, Colombo 08, Sri Lanka Sri Lanka

1. Activities, value chain and other business relationships

   GRI 2-6

   Sector(s) in which the company is active	SDF is active in the non-bank financial services sector as a licensed finance company. The principal activities of the Company consist of lending and accepting deposits. Our lending activities extend to:
   Relevant business relationships
   Significant changes compared to the previous reporting period	There are no significant changes to SDF's business activities and business relationships compared to the previous financial year.

   • Granting Microfinance Loans  Society Bulk Loans

   • SME Loans  Gold Loans

   • Leasing  Other credit facilities and related services.

   • Housing Loans Please refer to the Social Capital chapter for a full list of our products.

   • SDF works with Sarvodaya Shramadana Societies as a lending channel to rural communities, and to attract customer deposits.

   • We have agreements with the below companies to supply agricultural equipment for our customers under lease agreements.

     • DIMO

     • Hayleys Agriculture

     • Browns Agri Solutions (Pvt) Ltd.

   • SDF contracted with EDFI Management Company, Belgium for an impact fund for sustainable agriculture funded by the European Union.

   
   
   

   Statement of Responsibility

   The Board of Directors of Sarvodaya Development Finance PLC (SDF) takes full responsibility for the integrity and completeness of this Integrated Annual Report for the FY 2024-25. In addition to describing our value creation process and the status of our capitals during the reporting period, we have also used the GRI Standards to guide us in identifying the most material topics

   for disclosure and to describe our stakeholder engagement process, and our plans and strategies. To the best of our knowledge this report complies with the IR Framework 2021.

   In addition, we provide the following statements:

   • Directors' Responsibility for Financial Reporting

   • Directors' Statement on Internal Control over Financial Reporting

   • Chief Executive Officer's and Chief Financial Officer's Responsibility Statement

   • Independent Assurance Report to the Board of Directors of Sarvodaya Development Finance PLC

     In addition, the financial statements presented in this report have received assurance from our External Auditors, Messrs. Deloitte Associates (Chartered Accountants).

     Channa de Silva Dhammika Ganegama

     Chairman Senior Director 28 May 2025

     8 Sarvodaya Development Finance PLC Annual Report 2024/25

     Our Journey 2010

   • Registered as a public limited company by the name of Deshodaya Development Finance Company Limited

     2013

   • Received the financial licence from the Central Bank of

     Sri Lanka to commence finance business

     2014

   • Acquired the assets and liabilities of the microfinance division of the parent company

     2015

   • Acquired 75.54% of George Steuart Finance PLC under the Central Bank's Consolidation Programme

   • Changed the company name to Sarvodaya Development Finance Ltd

   • Enhanced the share capital by LKR 340 Mn and received a certificate of compliance from CA Sri Lanka for our Annual Report 2015

     2016

   • Introduced a fully-integrated, centralised and a real-time core-banking system for all our business operations.

     Rationalised the branch network by re-branding and relocating branches

     2017

   • Introduced Western Union for money transfers

   • Introduced mCash for loan collection

   • Diversified business strategy from micro finance, to assets-backed lending by introducing leasing and SME loans

     2018

   • Joined LankaClear and connected to over 4,000 ATMs through LankaPay platform

   • Received a Silver Award from CA Sri Lanka for our Annual Report

     2019

   • Shifted the Head Office to Colombo for greater visibility and brand positioning

   • Installed our first ATM

   • Commenced digital content marketing

     2020

   • Received Gold Award from CA Sri Lanka for our Annual Report

   • Achieved a milestone profit target of LKR 100 Mn

   • Introduced smart PoS machines to facilitate customers loan installment and utility bill payments

   • Introduced new integrated workflow management system

     2021

   • Awarded the Fastest Growing Development Finance Company in Sri Lanka 2021 by the Global Banking and Finance Review - UK.

     Annual Report 2024/25 Sarvodaya Development Finance PLC

   • Raised new share capital of LKR 806 Mn from private placement

     2022

   • Raised LKR 1 Bn from IPO on 23 November 2021 and listed on the Main Board of

     the Colombo Stock Exchange on 14

     December 2021

   • Converted 21 customer service centers in to branches

   • Staff strengths over 500

   • Introduced ESG (GRI Standards) to the Annual Report

   • Introduced Common Electronic Fund Transfer Switch

     2023

   • Received Gold Award from CA Sri Lanka TAGS Awards 2022

   • Upgraded the credit rating to BB stable

     2024

   • Received Gold Award from CA Sri Lanka TAGS award 2023 for the 3rd time and 2nd consecutive year.

   • Opened 5 new branches

     2025

     • Achieved a higher total asset growth, recording a 51.3% annual increase

     • Won the Gold Award forth time for the Annual Report from CA Sri Lanka TAGS Awards 2024

     • Received permanent membership from Global Aliance

for Banking Values(GABV)

9

Customer Name :-

Jayathissa Chithrangani Ekanayake

Eastern Province

Ampara District, Panama

About Us

Leadership

Strategy Review

Management Discussion & Analysis

Governance and Risk Management

Financial Reports

Supplementary Information

Financial Capital

Shareholders Funds Rs. 3,944 Mn Borrowing Rs. 3,005 Mn

Deposits Rs. 7,492 Mn

Manufactured Capital

Property, plant and equipment Rs. 478 Mn Number of Branches 56

Number of ATM 6

Intellectual Capital

Invest on ICT systems Rs. 63. 1 Mn

INPUTS

Human Capital

Number of employees 547

Investment in training and development Rs. 6.3 Mn

Natural Capital

Energy consumption 2026 GJ Water consumption 17.02 ML

Green lending portfolio 3,656,000 LKR Carbon footprint 445.34 mt CO2-e

Social and Relationship Capital

Total customer base 167,310

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Cost Stream Interest expenses Personnel cost Administration Cost Depreciation cost Amortization

12 Sarvodaya Development Finance PLC Annual Report 2024/25

About Us

Leadership

Strategy Review

Management Discussion & Analysis

Governance and Risk Management

Financial Reports

Supplementary Information

Vision, Mission and Values

Macro Environment

Business Ethics, Code of Conduct

Micro Environment

Risk Management

Internal Environment

Corporate Governance, Internal Audit

VALUE CREATION AND OUTPUT

OUTCOME

IMPACT

Financial Capital

Profit after tax LKR 474 Mn Return on Equity 12.61% Erning Per Share LKR 3.17

Refer page: 85

Manufactured Capital

Upgraded facilities of 3 Branches Number of ATM 7

Property, plant and equipment LKR 568 Mn

Refer page: 101

Intellectual Capital

Invest on ICT systems Rs. 63. 1 Mn

Refer page: 105

Human Capital

Total training hours 16,284

New Recruitment 318 employees

Employee Benefits and Remuneration LKR 689 Mn

Female Emplyement 46.1 % Employees Rewarded 11.5 Mn

Refer page: 109

Social and Relationship Capital

Increased foreign funding by USD 3Mn

Total custmer base 165.401

New product disbursement LKR 19,618 Mn

Refer page: 117

Natural Capital

Energy consumption 2529 GJ Water consumption 8.23 ML

Green lending portfolio 5,658,000 LKR

Carbon footprint 506.15 mt CO2 -e

Shareholders

Provide impact investment Opportunities

Return on investments

Future focused resource allocation

Customers

Access to innovative financial products and services

Competitive rates and fees Customer Awareness

Employees

Skill enhancement, career progression

Competitive compensation and benefits

Rewarding and recognition

Spiritual development with Sarvodaya Concept

Regulators

Stable Financial System Consumer Protection Governance and Control

Economic impact

Grow and develop rural economies

Develop export industries

Enhance national GDP

Social impact

Narrow the urban-rural divide

Unify communities (Through trade networks)

Improve health and sanitation and other social services

Governance

Create a self-governing, Grama Swaraj

Business Partners

Reliable Service Delivery

Shared commitment to responsible practices.

Operational Efficiency through streamlined processes

Sarvodaya Shramadana Societies (SSS) Members

Opportunity to invest impact business model

Annual Report 2024/25

Sarvodaya Development Finance PLC 13

About Us

Leadership

Strategy Review

Management Discussion & Analysis

Governance and Risk Management

Financial Reports

Supplementary Information

Total Assets

Profit After Tax

11.1

11.6

14.8

22.5

183.4

215.5

221.6

249.6

473.8

LKR Mn LKR Mn

4.3

4.8

6.3

7.4

8.2

9.0

46.1

(34.5)

92.2

41.2

101.7

2016

2017

2018 2019 2020 2021 2022 2023 2024

2025

2016

2017

2018 2019 2020 2021 2022 2023 2024

2025

14 Sarvodaya Development Finance PLC Annual Report 2024/25

About Us

Leadership

Strategy Review

Management Discussion & Analysis

Governance and Risk Management

Financial Reports

Supplementary Information

Interest Income

Profit After Tax

Loan Book

LKR Mn

4,500

4,000

3,500

3,000

2,500

2,000

1,500

500

0

LKR 961.8 Mn

31%

LKR Mn

500

450

400

350

300

250

200

150

100

50

0

LKR 224.2 Mn

90%

LKR Mn

25,000

20,000

15,000

10,000

5,000

0

LKR 6,608 Mn

53%

2021

2022

2023 2024

2025

2021

2022

2023 2024

2025

2021

2022

2023 2024

2025

Total Assets

Deposits

Cost to Income

LKR Mn 25,000

20,000

15,000

10,000

5,000

LKR 7,644 Mn

51%

LKR Mn 12,000

10,000

8,000

6,000

4,000

2,000

%

LKR 2,341 Mn 70

31% 60

50

40

30

20

10

14%

0

2021

2022

2023 2024

2025

0

2021

2022

2023 2024

2025

0

2021

2022

2023 2024

2025

Return on Equity (ROE)

Gross NPA Ratio

Net Assets Per Share

% 14

12

10

8

6

4

2

0

2021

2022

2023 2024

77%

2025

% 16

14

12

10

8

6

4

2

0

2021

2022

2023 2024

44%

2025

LKR 30

25

20

15

10

5

0

2021

2022

2023 2024

10%

2025

Annual Report 2024/25

Sarvodaya Development Finance PLC 15

Customer Name :-

S P K Jayarathne

Central Province

Nuwara Eliya District, Liyanwala

About Us

Leadership

Strategy Review

Management Discussion & Analysis

Governance and Risk Management

Financial Reports

Supplementary Information

Finance Capital

Manufacture Capital

Social & Relationship Capital

Human Capital

Natural Capital

18 Sarvodaya Development Finance PLC Annual Report 2024/25