Prospectus - High Yield Bonds Issue 2025

SARVODAYA DEVELOPMENT FINANCE PLC

Managers to the Issue

PROSPECTUS

AN INITIAL ISSUE OF UP TO TEN MILLION (10,000,000 ) TIER 2 LISTED RATED UNSECURED SUBORDINATED REDEEMABLE 5 YEAR (2025/2030) HIGH YIELD SUSTAINABLE BONDS OF LKR 100.00 EACH TO RAISE SRI LANKAN RUPEES ONE BILLION (LKR 1,000,000,000/- ) WITH AN OPTION TO ISSUE UP TO A FURTHER TEN MILLION (10,000,000) OF THE SAID BONDS IN THE EVENT OF AN OVERSUBSCRIPTION OF THE INITIAL ISSUE TO RAISE

UP TO A MAXIMUM OF SRI LANKAN RUPEES TWO BILLION ( LKR 2,000,000,000/- ) AT THE DISCRETION OF THE COMPANY BY SARVODAYA DEVELOPMENT FINANCE PLC.

TO BE LISTED ON THE COLOMBO STOCK EXCHANGE

INSTRUMENT RATING "BB" BY LANKA RATING AGENCY

ISSUE IS LIMITED TO "QUALIFIED INVESTORS" ONLY AS DEFINED HEREIN

Issue opens on

08th October 2025

Managers to the Issue

(SUBJECT TO THE COMPLIANCE WITH THE CSE LISTING RULES AT THE TIME OF LISTING)

PROSPECTUS

This Prospectus is dated 26th September 2025

The Colombo Stock Exchange ("CSE") has taken reasonable care to ensure full and fair disclosure of information in this Prospectus. However, the CSE assumes no responsibility for the accuracy of the statements made, opinions expressed, or reports included or omitted statements /undisclosed information in this Prospectus. Moreover, the CSE does not regulate the pricing of the Bonds which is decided solely by the Issuer. Please note that the company is bound by the enforcement rules set out in the CSE Listing Rules (as applicable)

The delivery of this Prospectus shall not under any circumstance constitute a representation or create any implication or suggestion that there has been no material change in the affairs of the Company since the date of this Prospectus. In the event if there would be a material change since the date of this Prospectus, that the Company would make a market announcement.

If you are in doubt regarding the contents of this document or if you require any clarification or advice in this regard, you should consult the Managers to the issue, your stockbroker, lawyer or any other professional advisor.

We advise you to read the contents of the Prospectus carefully prior to investment.

Responsibility for the Content of the Prospectus

This Prospectus has been prepared with available information.

This Prospectus has been prepared by Capital Alliance Partners Limited on behalf of Sarvodaya Development Finance PLC (hereinafter referred to as "SDF" or the "Company").

The Directors of the Company have seen and approved this Prospectus and collectively and individually, accept full responsibility for the accuracy and completeness of the of the information given and confirm that after making all reasonable inquiries and to the best of their knowledge and belief, the information contained herein is true and correct in all material respects and that there are no other material facts, the omission of which would make any statement herein misleading or inaccurate.

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

The Company accepts responsibility for the information contained in this Prospectus. While the Company has taken reasonable care to ensure full and fair disclosure of pertinent information, it does not assume responsibility for any investment decisions made by the Qualified Investors based on the information contained herein. In making such investment decisions, prospective Qualified Investors are advised to read the Prospectus and rely on their own examination and assessment of the Company and the terms of the Bonds issued including the risks associated.

For inquiries, please contact the Managers to the Issue, Capital Alliance Partners Limited.

Registration of the Prospectus

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

• The written consent of the Auditors and Reporting Accountants for the inclusion of their name in the Prospectus as Auditors and Reporting Accountants to the Issue and to the Company.

• The written consent of the Rating Agency for the inclusion of their name in the Prospectus as Rating Agency to the Issue and to the Company.

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

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

• The written consent of the Company Secretary of the Sarvodaya Development Finance PLC for the inclusion of the name in the Prospectus as Company Secretary to the Company.

• The written consent of the Registrars to the Issue for the inclusion of their name in the Prospectus as Registrars to the Issue.

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

• The written consent of the Managers to the Issue for the inclusion of their names in the Prospectus as Managers and Placement Agents to the Issue.

• The written consent of the Independent External Reviewer to the Issue for the inclusion of their name in the Prospectus as Independent External Reviewer to the Issue

• The declaration made and subscribed to, by each of the Directors of the Company herein named as a Director, jointly and severally confirming that each of them have read the provisions of the Companies Act and the CSE Listing Rules relating to the Issue of the Prospectus and that those provisions have been complied with.

The said Auditors and Reporting Accountants to the Issue and to the Company, Trustee to the Issue, Bankers to the Issue, Company Secretary, Managers to the Issue, Registrars to the Issue, Lawyers to the Issue, , Independent External Reviewer to the Issue and Rating Agency have not, before the delivery of a copy of the Prospectus for registration with the Registrar of Companies in Sri Lanka withdrawn such consent.

Submission of the Prospectus to the Securities and Exchange Commission of Sri Lanka

A copy of the Prospectus has been delivered to the Securities and Exchange Commission of Sri Lanka prior in compliance with Section 82(2) of the Securities and Exchange Commission of Sri Lanka Act No.19 of 2021.

Registration of the Prospectus in Jurisdictions Outside of Sri Lanka

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

Representation

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

Investment Considerations

It is important that this Prospectus is read carefully prior to making an investment decision. For information concerning certain risk factors, which should be considered by prospective Qualified Investors, see Section 5.14 "Risks Involved in Investing in the Bonds " of this Prospectus.

Forward Looking Statements

Any statements included in this Prospectus that are not statements of historical fact constitute "Forward Looking Statements". These can be identified by the use of forward looking terms such as "expect", "anticipate", "intend", "may", "plan to", "believe", "could"

and similar terms or variations of such terms. However, these words are not the exclusive means of identifying Forward Looking Statements. As such, all or any statements pertaining to expected financial position, business strategy, plans and prospects of the Company are classified as "Forward Looking Statements".

Such Forward Looking Statements involve known and unknown risks, uncertainties and other factors including but not limited to regulatory changes in the sectors in which the Company operates and its ability to respond to them, the Company's ability to

successfully adapt to technological changes, exposure to market risks, general economic and fiscal policies of Sri Lanka, inflationary pressures, interest rate volatilities, the performance of financial markets both globally and locally, changes in domestic and foreign laws, regulation of taxes and changes in competition in the industry and further uncertainties that may or may not be in the control of the Company.

Such factors may cause actual results, performance and achievements to materially differ from any future results, performance or achievements expressed or implied by Forward Looking Statements herein. Forward Looking Statements are also based on

numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future.

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

Presentation of Currency Information and other Numerical Data

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

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

IMPORTANT

All Qualified Investors should indicate in the application for Bonds, their Central Depository Systems (Private) Limited (CDS) account number.

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

As per the directive of the Securities and Exchange Commission made under Circular No.08/2010 dated 22nd November 2010 and Circular No.13/2010 issued by the CDS dated 30th November 2010, all Bonds are required to be directly deposited in to the CDS. To facilitate compliance with this directive, all Qualified Investors are required to indicate their CDS account number.

In line with this directive, THE BONDS ALLOTTED TO AN QUALIFIED INVESTOR WILL BE DIRECTLY DEPOSITED IN

THE CDS ACCOUNT OF SUCH QUALIFIED INVESTOR, the details of which is indicated in their application form.

If the CDS account number indicated in the application form is found to be inaccurate /incorrect or there is no CDS number indicated, the application will be rejected and no allotments will be made.

The Company may require a Qualified Investor to provide such documentation as is reasonably necessary to satisfy itself that the investor is a Qualified Investor.

PLEASE NOTE THAT BONDS CERTIFICATES WILL NOT BE ISSUED.

Qualified Investors who wish to open a CDS account, may do so through a Trading Participant of the CSE as set out in Annexure III or through any Custodian Bank as set out in Annexure IV of this Prospectus.

OFFER AT A GLANCE 6

1. CORPORATE INFORMATION 10

2. RELEVANT PARTIES TO THE ISSUE 11

3. ABBREVIATIONS USED IN THE PROSPECTUS 12

4. GLOSSARY OF TERMS RELATED TO THE ISSUE 13

5. PRINCIPAL FEATURES OF THE BONDS 15

   1. Invitation to Subscribe 15

   2. Subscription List and Closure Date 15

   3. Type of Bonds 16

   4. Objectives of the Issue and Specific Risks Relating to the Objectives 16

   5. Payment of Interest 24

   6. Application of Tax on Interest Payments 24

   7. The Instances and Conditions Upon Which the Entity May Redeem the High Yield

      Corporate Debt Securities Listed on the Exchange 24

   8. Payment of Principal and Interest 25

   9. Trustees to the Issue 25

   10. The Independent External Revievewer 25

   11. Credit Rating 27

   12. Rights and Obligations of Bond Holders 27

   13. Benefits of Investing in the Bonds Issued by the Company 28

   14. Risks Involved in Investing in the High Yield Sustainable Bonds 28

   15. Action Plan to Honour Interest Payments 29

   16. Enforcement Action Applicable for Gss+ Bonds 29

   17. Enforcement Action Applicable for High Yield Bonds 29

   18. Transfer of Bonds 30

   19. Listing 30

   20. Cost of the Issue 30

   21. Brokerage Fee 30

   22. Underwriting 31

   23. Inspection of Documents 31

   24. Prospectus and Application Forms 31

6. APPLICATION PROCEDURE 32

   1. Eligible Applicants 32

   2. How to Apply 32

   3. Number of Bonds to be Subscribed 36

   4. Mode of Payment of the Investment by the Applicants 36

   5. Rejection of Applications 38

   6. Banking of Payments 39

   7. Basis of Allotment of Bonds 39

   8. Refunds 40

   9. CDS Accounts and Secondary Market Trading 40

7. COMPANY INFORMATION 41

   1. Background 41

   2. Financial Year 41

   3. Stated Capital 41

   4. Major Shareholders as at 30th June 2025 42

   5. Details of Other Bonds / Debentures In Issue 42

   6. Particulars of Long-Term Loans and Other Borrowings of the Company 42

   7. Contingent Liabilities and Litigation Against the Company 43

   8. Key Financial Ratios 44

   9. Past Bonds/Debentures Interest Payment Details 44

   10. Taxation 44

   11. Financial Statements & Financial Summary 44

8. BOARD OF DIRECTORS 45

   1. Details of the Directors 45

   2. Board Related Party Transactions Review Committee 45

9. STATUTORY DECLARATIONS 46

10. FINANCIAL INFORMATION 48

    1. Accountants' Report and Five-Year Summary of Financial Statements 48

ANNEX I - COPY OF THE CREDIT RATING REPORT 57

ANNEX II - INDEPENDENT ASSURANCE REPORT BY THE INDEPENDENT EXTERNAL REVIEWER 62

ANNEX III - COLLECTION POINTS 65

ANNEX IV - CUSTODIAN BANKS 68

ANNEX V - FATCA DECLARATION 69

1. CORPORATE INFORMATION

   The Company	Sarvodaya Development Finance Plc
   Legal Form of the Company	Sarvodaya Development Finance PLC 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 Finance Leasing Establishment in terms of Finance Leasing Act No. 56 of 2000 and the Company is listed on the main board of the Colombo Stock Exchange on 14th December 2021.
   Regulatory Licence	The Company operates under the authority of the licence issued by Monetary Board of Central Bank of Sri Lanka. The licence issued is a continuous licence and does not have an expiry date.
   Date of Incorporation	01st January 2010
   Company Registration No.	PQ 00251293
   Issuer Rating	BB+(Stable) by Lanka Rating Agency
   Place of Incorporation	Colombo, Sri Lanka
   Registered/ Business Office	Sarvodaya Development Finance PLC No. 155A, Dr. Danister De Silva Mawatha, Colombo 08, Sri Lanka Tel: 011 5 444 666 Email: info@sdf.lk Website : https://www.sarvodayafinance.lk
   Company Secretary	Mrs. Shiromi Patabendige ACCS Sarvodaya Development Finance PLC No. 155A, Dr. Danister De Silva Mawatha, Colombo 08, Sri Lanka Tel : +94 777135248
   Auditors to the Company	M/s Deloitte Associates Chartered Accountants No. 100, Braybrooke Place, Colombo 02 Tel : +94 112 580 409
   Credit Rating Agency	Lanka Rating Agency 145 Kynsey Road, Colombo 08 Tel : +94 114 500 099
   Board of Directors

   • Mr. Channa de Silva - Chairman Non-Independent/Non-Executive Director

   • Mr. Dhammika Ganegama Independent/ Non-Executive Director

   • Mr. Ramesh Schaffter Non-Independent/Non-Executive Director

   • Mr. Senthi Nandhanan Senthilverl Non-Independent/Non-Executive Director

   • Mr. Amrit CanagaRetna Independent/Non-Executive Director

   • Mrs. Shehara De Silva Independent/ Non-Executive Director

   • Ms. Ramya Suranjani Wickremeratne Independent/ Non-Executive Director

2. RELEVANT PARTIES TO THE ISSUE

   Managers to the Issue	Capital Alliance Partners Limited Level 5, "Millennium House", 46/58, Navam Mawatha, Colombo 02. T: +94 11 2317777 F: +94 11 2317788
   Lawyer to the Issue	Nithya Partners 97 A, Galle Road, Colombo 03. T: +94 11 4712625 F: +94 11 2328817
   Registrar to the Issue	Central Depository Systems (Pvt) Ltd Ground Floor, M & M Center, 341/5, Kotte Road, Rajagiriya. Email: registrars@cse.lk T: +94 112 356 444 Fax : +94 11 2440396
   Bankers to the Issue	Hatton National Bank PLC Maradana Branch 696, 10 Maradana Rd, Colombo 01 Tel: +94 112 673 371
   Trustee to the Issue	National Development Bank PLC Custody and Trustee Services No. 40, Nawam Mawatha, Colombo 2, Sri Lanka T:+94 11 244 8448
   Auditor and Reporting Accountant to the Issue	M/s Deloitte Associates Chartered Accountants No. 100, Braybrooke Place, Colombo 02 Tel : +94 112 580 409
   Independent External Reviewer to the Issue	Accounting Related Assurance Division M/s Deloitte Partners Chartered Accountants No. 100, Braybrooke Place, Colombo 02 Tel : +94 112 580 409
   Rating Agency to the Issue	Lanka Rating Agency 145 Kynsey Road, Colombo 08 Tel : +94 114 500 099
   Company Secretary to the Issue	Mrs. Shiromi Patabendige ACCS Sarvodaya Development Finance PLC No. 155A, Dr. Danister De Silva Mawatha, Colombo 08, Sri Lanka Tel : +94 777135248

3. ABBREVIATIONS USED IN THE PROSPECTUS

   AER	Annual Effective Rate
   ATS	Automated Trading System
   AWPLR	Average Weighted Prime Lending Rate
   CAL	Capital Alliance Partners Limited
   CBSL	Central Bank of Sri Lanka
   CDS	Central Depository Systems (Private) Limited
   CSE	Colombo Stock Exchange
   FY	Financial Year
   SDF	Sarvodaya Development Finance PLC
   LCB	Licensed Commercial Bank
   NIC	National Identity Card
   POA	Power of Attorney
   RGFCA	Resident Guest Foreign Currency Account
   Rs./LKR	Sri Lankan Rupees
   SEC	Securities and Exchange Commission of Sri Lanka
   IIA	Inward Investment Account
   SLIPS	Sri Lanka Interbank Payment System
   USD	US Dollar
   VAT	Value Added Tax
   WHT	Withholding Tax
   YoY	Year on Year
   IIA	Inward Investment Account
   FCBU	Foreign Currency Banking Units
   CEFTS	Common Electronic Fund Transfers Switch
   CBI Standards	Climate Bonds Initiative Standards
   SBF	Sustainable Bond Framework
   GBP	Green Bond Principles 2021 (with June 2022 Appendix 1)
   SBP	Social Bond Principles 2023
   SBG	Sustainability Bond Guidelines 2021
   ICMA	International Capital Markets Association
   SPSD	Strategic Planning & Sustainability Department
   SME	Small and Medium Enterprise
   EU	European Union

4. GLOSSARY OF TERMS RELATED TO THE ISSUE

   Applicant/s	Any person identified as a Qualified Investor who submits an Application Form under this Prospectus.
   Application Form/Application	The application form that constitutes part of this Prospectus through which the Qualified Investors may apply for the bonds in issue
   Board/Board of Directors/ Directors	The Board of Directors of Sarvodaya Development Finance PLC
   Closure Date	The date of closure of the subscription list as set out in Section 5.2 of this Prospectus
   Date of Allotment	The date on which the Bonds will be allotted by the Company to Applicants subscribing thereto
   Date of Redemption	The date on which Redemption of the Bonds will take place as referred to in Section 5.7
   Bonds	All Tier 2 Listed Rated Unsecured Subordinated Redeemable 5-year High Yield Sustainable Bonds to be issued pursuant to this Prospectus
   Entitlement Date	Market Day immediately preceding the respective interest payment date or immediately preceding the date of redemption on which a Bond Holder would need to be recorded as being a Bond Holder on the list of Bond Holders provided by the CDS to the Company in order to qualify for the payment of any interest or any redemption proceeds.
   Interest Payment Date	For Type A Bonds: The dates on which payments of interest shall fall due, which shall be twelve (12) months from the Date of Allotment and every twelve (12) months therefrom from the Date of Allotment until the Date of Redemption and includes the Date of Redemption. For Type B Bonds: The dates on which payments of interest shall fall due, which shall be six (06) months from the Date of Allotment and every six (06) months therefrom from the Date of Allotment until the Date of Redemption and includes the Date of Redemption. Interest would be paid not later than three (03) Working Days from each Interest Payment Date. (Excluding such interest payment date) The final interest payment will be paid together with the Principal Sum within three (03) Working Days from the Date of Redemption.
   Interest Period	Type A Bonds: The Twelve (12) month period from the date immediately succeeding a particular Interest Payment Date and ending on the next Interest Payment Date (inclusive of the aforementioned commencement date and end date) and shall include the period commencing from the Date of Allotment and ending on the first Interest Payment Date (inclusive of the aforementioned commencement date and end date) and the period from the date immediately succeeding the last Interest Payment Date before the Date of Redemption and ending on the date immediately preceding the Date of Redemption (inclusive of the aforementioned commencement date and end date). Type B Bonds: The Six (06) month period from the date immediately succeeding a particular Interest Payment Date and ending on the next Interest Payment Date (inclusive of the aforementioned commencement date and end date) and shall include the period commencing from the Date of Allotment and ending on the first Interest Payment Date (inclusive of the aforementioned commencement date and end date) and the period from the date immediately succeeding the last Interest Payment Date before the Date of Redemption and ending on the date immediately preceding the Date of Redemption (inclusive of the aforementioned commencement date and end date).

   4.0 GLOSSARY OF TERMS RELATED TO THE ISSUE

   Qualified Investors
   Issue	The offer of Bonds to Qualified Investors pursuant to this Prospectus
   Issue Price	LKR 100/- per each Bonds
   Market Day	Any day on which CSE is open for trading
   Non-Resident(s)	Persons resident outside Sri Lanka including country funds, regional funds, investment funds and mutual funds established outside Sri Lanka.
   Par Value	LKR 100/- per each Bond
   Prospectus	This Prospectus dated 26th September 2025
   Redemption	Repayment of the Principal Sum and unpaid and accrued interest (if any) with regard to a Bond to a Bond Holder by the Company
   Registered Address	The address provided by the Bond Holders to the CDS
   Subordinated	Means the claims of the Bondholders shall in the event of winding up of the Company rank after all the claims of depositors and secured and other unsecured creditors of the Company and any preferential claims under any Statutes governing the Company, but shall rank pari passu with other subordinated creditors of the Company and shall rank in priority to and over the claims and rights of the ordinary shareholders of the Company.
   Tier 2	Tier 2 Capital includes qualifying Tier 2 capital instruments, revaluation gains approved by CBSL and general loan loss provision of the Company
   Trustee	National Development Bank PLC
   Trust Deed	Trust Deed dated 19th September 2025 between The Company and the Trustee
   The Company/Issuer/SDF	Sarvodaya Development Finance PLC
   Unsecured	Repayment of the Principal Sum and payment of interest on the Bonds are not secured by a charge on any assets of the Issuer
   Working Day	Any day (other than a Saturday or Sunday or any statutory holiday) on which the banks are open for business in Sri Lanka

   1. A commercial bank licensed by the Central Bank of Sri Lanka in terms of the Banking Act, No. 30 of 1988 (as amended).

   2. A specialized bank licensed by the Central Bank of Sri Lanka in terms of the Banking Act, No.30 of 1988 (as amended).

   3. A mutual fund, pension fund, Employee Provident Fund or any other similar pooled fund.

   4. A venture capital fund/ company and private equity company.

   5. A finance company licensed by the Central Bank of Sri Lanka in terms of the Finance Business Act. No 42 of 2011 (as amended).

   6. A company licensed by the Central Bank of Sri Lanka to carry on finance leasing business under the Finance Leasing Act, No. 56 of 2000 (as amended)

   7. A company licensed by the Insurance Board of Sri Lanka to carry on Insurance business in terms of the Regulation of the Insurance Industry Act, No. 43 of 2000 (as amended)

   8. A corporate (listed or unlisted) which does not fall under the above categories and is incorporated under the Companies Act No.7 of 2007.

   9. An investment trust or investment company

   10. A Non-Resident institutional investor

   11. An individual with an initial investment amount of LKR 5,000,000/-

5. PRINCIPAL FEATURES OF THE BONDS

   1. INVITATION TO SUBSCRIBE

      The Board of Directors of SDF (hereinafter referred to as the "Board") on 30th April 2025 resolved to raise a sum of Rupees One Billion (LKR 1,000,000,000/- ) by an initial issue of up to Ten Million (10,000,000) Tier 2 Listed Rated Unsecured Subordinated Redeemable High Yield Sustainable Bonds, each with a Par Value of LKR 100/- and to raise a further sum of Rupees One Billion (LKR 1,000,000,000/-) by an issue of a further Ten Million (10,000,000) of the said Bonds, in the event of an over subscription of the initial issue.

      As such a maximum amount of Rupees Two Billion (LKR 2,000,000,000) would be raised by the issue of a maximum of Twenty Million (20,000,000) Bonds each with the Par Value of LKR 100/-.

      The Company hereby invites Qualified Investors to make Applications for the Bonds (Type A and Type B) which shall rank equal and pari passu with each other, apart from interest rate, interest period - without any preference or priority of any one over the others (Please refer Sections 5.3, 5.4 and 5.5 for further details regarding the Bonds).

      The claims of the Bonds Holders shall in the event of winding up of the Company rank after all the claims of depositors and secured and other unsecured creditors of the Company and any preferential claims under any Statutes governing the Company, but shall rank pari passu with other subordinated creditors of the Company and shall rank in priority to and over the claims and rights of the ordinary shareholders of the Company.

      It is the intention of the Company to list the Bonds on the Colombo Stock Exchange. The CSE has given its in principle approval for the listing of the Bonds on the CSE. However, the CSE reserves the right to withdraw such approval, in the circumstances set out in Rule 2.3(b) of the Listing Rules of the CSE.

      These Bonds are issued subject to the enforcement actions as per the CSE Listing Rules 7.12.4 (A) (II) (a), (b), (c), (d), (e) and (f) and CSE Listing Rules 7.12.4 (E) (a), (b), (c), (d), (e), (f) and (h) if the Company fails to comply with the continuous listing requirements applicable for these High Yield Sustainable Bonds.

      The instrument rating of these bonds ("BB") is one notch below the entity rating (BB+ (Stable)) due to its subordinate nature and Tier II characteristics.

      The CBSL approval for the issuance and listing of Tier 2 Listed Rated Unsecured Subordinated Redeemable High Yield Sustainable Bonds has been provided via the letter dated 18th June 2025

   2. SUBSCRIPTION LIST AND CLOSURE DATE

      The subscription list for the Tier 2 Listed Rated Unsecured Subordinated Redeemable High Yield Sustainable Bonds pursuant to this Prospectus will open at 9.00 a.m. on 08th October and shall remain open for fourteen (14) market days until closure at 4.30 p.m. on 28th October 2025.

      However, the subscription list will be closed on an earlier date at 4.30 p.m. with notification to the CSE on the occurrence of the following:

      • The maximum of 20,000,000 (Twenty Million) Bonds are fully subscribed; or

      • The Board of Directors of the Company decides to close the Issue upon the initial issue of 10,000,000 (Ten Million) Bonds becoming fully subscribed in terms of this Prospectus.

        In the event the Board of Directors of the Company decides to exercise the option to issue further up to 10,000,000 Bonds (initial issue of 10,000,000 Bonds being fully subscribed) but subsequently decides to close the subscription list upon part of the further issue of 10,000,000 Bonds becoming subscribed, such decision is to be notified to the CSE on the day such decision is made and the subscription list will be closed on the following Market Day at 4.30 pm.

        In the event, the Board of Directors of the Company decides to close the Issue without the full subscription of the initial issue, such decision is to be notified to the CSE on the day such decision is made and the subscription list will be closed on the following Market Day at 4.30 pm.

        Application may be made forthwith in the manner set out under the Procedure for Application in section 6.0 of this Prospectus and will be accepted at any one of the collection points set out in Annexure III of this Prospectus.

        5.0 PRINCIPAL FEATURES OF THE BONDS

   3. TYPE OF BONDS

      The Bond Issue comprises of Bonds of Type A and Type B that will carry rates of interest as described below:

      Type of Bonds

      Tenure

      Type of Interest

      Interest rate (per annum)

      AER (per annum)

      Interest Payment Frequency

      Type A	5 Years	Fixed	12.00%	12.00%	Annual
      Type B	5 Years	Fixed	11.66%	12.00%	Semi-Annual

      Each type of above stated Bonds (Types A and B) which shall rank equal and pari passu with each other, apart from interest rate and interest period without any preference or priority of any one over the others

   4. OBJECTIVES OF THE ISSUE AND SPECIFIC RISKS RELATING TO THE OBJECTIVES

      The Company proposes to utilise the entirety of the funds raised through this Issue for the purpose of achieving the following two main objectives;

      1. Expand the Tier II capital and strengthen the total capital base of the Company

         The Company intends to utilize the entirety of the funds raised through the Bond Issuance to further strengthen capital base of the Company by expanding the Tier 2 Capital. The CBSL approval for the issuance and listing of Tier 2 Listed Rated Unsecured Subordinated Redeemable High Yield Sustainable Bonds has been provided via the letter dated 18th June 2025. The CBSL, in its approval letter, has instructed the Company to notify them upon receipt of the Bond proceeds in order to obtain approval for inclusion under Tier 2 Capital. While the achievement of the above Objective 01 is subject to a second approval, the Company

         does not anticipate any risk of rejection, as the CBSL has already approved the issuance and listing of this Subordinated High Yield Sustainable Bond.

         The company has complied with the CBSL minimum capital adequacy requirement as of 31st March 2025. The Company's decision to further strengthen the Tier 2 Capital Base is to maintain the Total Capital Adequacy Ratio at a satisfactory level to meet the envisaged demand for credit from the private sector from 2025 onwards and to optimize the cost of the capital by capitalizing on the current interest rates.

         The monthly average loan disbursements for the last 3 months are as follows;

         June 2025 (Rs. Million)

         July 2025 (Rs. Million)

         August 2025 (Rs. Million)

         Total (Rs. Million)

         Monthly Average (Rs. Million)

         3,128 2,819 3,016 8,963 2,988

         Current Capital Adequacy Ratios of the Company and the effect of the proposed Bond Issue on the Capital Adequacy Ratios are as follows;

         The Capital Adequacy Requirements (as per the Finance Business Act. (Capital Adequacy Requirements) Direction No. 03 of 2018) as at 31.03.2025

         The level of compliance by the Company as at 31.03.2025

         Capital levels after inclusion of the Bond Issuance Proceeds

         				LKR 1 Bn	LKR 2 Bn
         Tier 1	-	8.50%	20.50%	19.50%	18.50%*
         **Total Capital	-	12.50%	20.60%	24.80%	28.50%

         * In the calculation it's assumed that the Total Risk Weighted Asset increase (loans) is equal to the issue amount.

         ** Total Capital = Tier 1 + Tier 2

      2. Financing projects that fall within the Green and/or Social Eligible Categories outlined in the prospectus, in accordance with the Sustainable Bond Framework of SDF.

      With over 60 years of experience in social development activities, the company plans to allocate 75% of the funds towards socially impactful financing and 25% towards climate impact financing. The company has already financed such initiatives as outlined below, and the new funds will further strengthen its ongoing contribution to social and climate-related financing.

      The Company is required to obtain an Independent Assurance Report of the Sustainable Bond framework from the Independent External Reviewer, confirming its alignment with the ICMA Green Bond Principles (GBP), Social Bond Principles (SBP) and Sustainability Bond Guidelines (SBG) prior to the Sustainable Bond issuance. The Company has obtained the same. The same is provided by Accounting Related Assurance Division of M/s Deloitte Associates Partners. Please refer Annexure II for the certified copy of the Assurance Report.

      Company's Sustainable Bond Framework (the Framework) which states the identified green eligible projects and social eligible projects, adheres to the Green Bond Principles (GBP) Social Bond Principles (SBP), and Sustainability Bond Guidelines (SBG) set by the International Capital Markets Association (ICMA), ensuring transparency and best practices in sustainable finance. Furthermore, the Company is in compliance with the Sri Lanka Green Finance Taxonomy (May 2022) issued by the CBSL.

      The below table outlines a brief overview of the Utilisations of the funds under objective 02.

      Green Eligible Financing Projects

      GBP Category

      Targeted Projects

      Estimated Allocation of the Bond Proceeds

      Renewable Energy a) Rooftop solar energy installation financing

      b) Solar equipment vendor financing

      Clean Transportation c) Purchase of electric vehicle financing

      d) Low carbon transportation infrastructure financing projects, such as electric vehicle (EV) charging centres

      25% of the Bond Proceeds

      (Each GBP category will receive at least 30% of the allocated Bond Proceeds for Green Eligible Financing Projects)

      The funds allocated under above will provide immediate benefits such as Contributes to national electricity generation by replacing fossil fuels, thereby reducing reliance on coal, and significantly lowering air and water pollution. And promoting reduced fossil fuel consumption by encouraging the purchasing of electric vehicles and via supporting the expansion of solar-powered charging infrastructure to support the use of electric vehicles, thus mitigating air pollution.

      1. PRINCIPAL FEATURES OF THE BONDS

         Social Eligible Financing Projects

         SBP Category

         Targeted Projects

         Estimated Allocation of the Bond Proceeds

         Affordable Housing Loans to underserved communities for affordable housing

         projects such as:

         1. Purchase an existing house

         2. Construct a house

         3. Purchase a bare land to construct a house for residential purposes

         4. Complete construction of a partially-built house

         5. Renovate or modify an already constructed house

      Employment Generation Providing SME financing solutions specifically designed

      to support business startup and enhance the capacity development of existing SMEs owned by or serving underserved and marginalized groups, including youth, persons with disabilities, and low-income communities.

      Women Empowerment Providing Financial services specialized for women

      entrepreneurs and women-led enterprises

      Food Security Improved productivity of small-scale producers through access to affordable leasing for agricultural equipment & machinery

      Socioeconomic Advancement Provide Microfinance loans for village and home-based

      small businesses and income generative cultivation activities, such as tea, cinnamon planting and any other commercial crops for low-income communities

      75% of the Bond Proceeds (Each SBP category will receive at least

      10% of the allocated Bond Proceeds for Social Eligible Financing Projects)

      The proceeds utilised under the social eligible categories of the bond issue will be directed towards extending financing to underserved and marginalized population segments such as daily wage earners, farmers, rural entrepreneurs, and SMEs lacking access to formal financial services. This will enable SDF to support business growth, affordable housing, and income generation-reducing reliance on informal lending mechanisms. With approximately 48% of the Company's customer base comprising women, primarily from rural communities, the bond proceeds will also promote gender equality by empowering female-led enterprises.

      Further, targeted support will be channelled towards micro-businesses in agriculture and low-income areas, fostering financial inclusion and improving livelihoods. This includes improving the productivity of small-scale producers by facilitating access to affordable leasing options for agricultural equipment and machinery. Please note that the Individual project allocation estimation is difficult at the time of the prospectus issuance. However, the fund utilization into each project will be integrated into SDF's annual report, ensuring comprehensive and accessible updates.

      Under the given eligibility criteria stated above, the company will provide financing for new funding requirements and will not include refinancing.

      Sri Lanka Green Finance Taxonomy (May 2022)

      The Green Finance Taxonomy introduced by the Central Bank of Sri Lanka (CBSL) provides a classification system to identify and define environmentally sustainable economic activities. It serves as a guiding framework for financial institutions, investors, and issuers to channel capital towards green projects that support national and global environmental objectives. It also promotes transparency, comparability, and accountability in green financing and aligns with international standards such as those of the EU and the International Capital Market Association (ICMA). This initiative is part of CBSL's broader effort to develop Sri Lanka's sustainable finance ecosystem and mobilize private sector investment towards achieving climate and environmental goals

      ICMA issued Bond Principles Applicable to this Sustainable Bond Issuance

      The ICMA Bond Principles typically refer to the Green Bond Principles (GBP), Social Bond Principles (SBP), and Sustainability Bond Guidelines (SBG) published by the International Capital Market Association (ICMA). These are voluntary frameworks that promote transparency, disclosure, and integrity in the market for sustainable bonds.

      Since the proceeds of this Bond Issuance will be utilised to finance a combination of both Green and Social Projects, this bond issuance is aligned with both the GBP and SBP with the former being especially relevant to underlying Green Projects and the latter to underlying Social Projects while following the Sustainability Bond Guidelines applicable as per ICMA.

      ICMA Principals consists of four core components:

      01. Use of Proceeds	Funds raised must be used exclusively for eligible green, social, or sustainability projects as defined by the issuer.
      02. Project Evaluation and Selection	The issuer should clearly define the criteria and process used to identify and select eligible projects, including sustainability objectives.
      03. Management of Proceeds	The issuer must track and manage the proceeds in a transparent manner, often using a sub-account or equivalent approach to ensure proper allocation.
      04. Reporting	Regular disclosure of the allocation and impact of the proceeds is expected. This includes annual updates and details on the environmental or social benefits of the financed projects.

      The objectives of the Company's Sustainable Bond will be fully dedicated to financing Green Eligible Financing Projects and Social Eligible Financing Projects installations. This allocation aligns with the GBP, SBP and SBG established by the ICMA, as they directly contribute to environmental benefits and/or provide clear social benefits. The process, management, and reporting outlined below are in accordance with the applicable ICMA principles, ensuring transparency and accountability in the allocation of funds towards these eligible Projects.

      Factors Considered or to be Considered in Determining the Eligible Sustainable Projects.

      Based on the use of proceeds, the project must align with at least one of the eligible project categories outlined below and further detailed in the Prospectus under the section titled "Objectives of the Issue";

      1. Green eligible projects and the following qualitative / quantitative indicators may be considered

         1. Estimated kilowatt-hours (kWh) of solar energy generated

         2. Reduction in fossil fuel consumption (e.g., liters/year or emissions offset)

         3. CO2 emissions avoided (measured in metric tons/year)

      2. Social eligible projects and the following qualitative / quantitative indicators may be considered

         1. Income level of the applicant or target beneficiary group

         2. Number of direct and indirect jobs created

         3. Number of farming acres supported or cultivated

         4. Number of women employed or trained through the initiative

         5. Whether the founder or business owner is a woman

         6. Number of youth or marginalized individuals engaged

         7. Support to first-time entrepreneurs or micro-enterprises

      Systems, Procedures, Processes, and Controls of the Applicant Entity

      This section outlines the key systems, operational procedures, internal processes, and control mechanisms implemented by the Applicant Entity to ensure effective governance, regulatory compliance, risk management, and operational efficiency.

      5.0 PRINCIPAL FEATURES OF THE BONDS

      Evaluation and Selection of Green and Social Bond Projects

      SDF has formed a Strategic Planning & Sustainability Department (SPSD) to oversee the selection and evaluation of eligible portfolios under its Sustainable Bond Framework. Comprising four key staff members, SPSD reports to a 10-member Management Sustainability Committee, which includes senior leadership such as the CEO and Head of Strategic Planning (HOSP). This two-tier governance structure ensures a rigorous and accountable selection process, aligned with strategic and technical expertise. The committee also evaluates project compliance with the Sri Lanka Green Finance Taxonomy (May 2022) issued by the CBSL.

      The SPSD will assess each project using specific indicators tailored to its Green or Social category, measuring environmental and social impact to ensure alignment with the Sustainable Bond Framework.

      Key Project Evaluation Steps at Sarvodaya:

      1. Loan Application Submission:

         • The process begins when a customer submits a loan application at a Sarvodaya branch.

      2. Initial Branch-Level Screening:

         • Branch officers conduct a preliminary assessment to check alignment with Sarvodaya's sustainability objectives.

         • Branch officers will use the guidelines provided by the Sustainability Committee to identify eligible products.

      3. Escalation to SPSD:

         • If the project is potentially eligible, the application is forwarded to the Strategic Planning & Sustainability Department (SPSD).

      4. Detailed Evaluation by SPSD:

         • SPSD reviews the proposal against:

         • Eligibility criteria in the Sustainable Bond Framework.

         • Sarvodaya's sustainability priorities.

         • Other relevant internal and external guidelines.

      5. Feasibility Analyses:

         • The SPSD conducts both technical and financial feasibility assessments to ensure the project is viable and impactful.

      6. Compliance Check:

         • The project is reviewed by the Compliance Department of SDF to ensure it complies with the Sri Lanka Green Finance Taxonomy (May 2022) issued by the CBSL

      7. Final Credit Approval:

         • After due diligence, the proposal is submitted for credit approval based on the loan amount:

           1. Senior Manager - Credit for moderate exposures.

           2. Head of Credit for larger exposures.

              Approvals are governed by the Board-approved credit policy.

              Management of Proceeds

              Proceeds from the sustainable bonds will be managed on an aggregate basis through a dedicated bank account. SDF is committed to promptly deploying the proceeds from its sustainable bonds, with full allocation expected within 12 Months of issuance. To ensure adherence to the Sustainable Bond Framework, an independent third-party auditor will conduct an annual external review in accordance with applicable rules and regulations. Unallocated proceeds will be temporarily invested in cash, cash equivalents, or Sri Lanka Government Securities.

              Reporting

              1. Allocation Reporting

                 This report will be integrated to the Company's Annual report to verify that the proceeds received have been allocated to the Eligible Project Categories which would also be published on the listed exchange.

         • Total proceeds allocated

         • Breakdown by portfolio category

         • Geographic distribution of portfolios

           The Company's Annual Report will be available on the SDF website and other relevant platforms.

           The Treasury Department and SPSD will periodically report allocation and impact details to the Sustainable Bond Committee and the Board. Any changes to the Sustainable Bond portfolio require clearance from the SPSD. SDF will publicly disclose aggregated use-of-proceeds and impact data annually via its Annual Report, available on the company website and other relevant platforms. The reporting will be done in line with the ICMA 'Harmonised Framework for Impact Reporting for Green Bonds and Harmonised Framework for Impact Reporting for Social Bonds' where applicable.

           1. Impact Reporting:

           This report will be shared exclusively with the investors of the bond, while the annual report will track and highlight the impact generated by the proceeds of the bond, demonstrating how the funds have contributed to the intended goals and outcomes such as;

         • CO2 emissions avoided

         • Estimated kilowatt-hours (kWh) of solar energy generated

         • Reduction in fossil fuel consumption (e.g., liters/year or emissions offset)

         • Number of direct and indirect jobs created

         • Number of farming acres supported or cultivated

         • Number of women employed or trained through the initiatives

         • Number of affordable housing units financed

         • Number of SMEs supported

         • Where appropriate, SDF will include case studies to illustrate the real-world benefits and outcomes of the funded projects, offering a narrative complement to quantitative results.

      Impact reporting will utilize standardized, globally recognized metrics to ensure comparability and transparency. SDF will utilize the Harmonized Framework for Impact Reporting to ensure that metrics align with industry best practices and are consistent with leading sustainability standards.

      Pre Issuance and Post Issuance

      SDF has obtained a Limited Independent Assurance Report from a reputed Independent External Reviewer to confirm alignment of its Sustainable Bond Framework with ICMA Green Bond Principles, Social Bond Principals, Sustainable Bond Guidelines prior to issuance.

      A Post-Issuance Assurance Report will be conducted by Accounting Related Assurance Division of M/s Deloitte Associates Partners (Independent External Reviewer) 12 months after issuance, reviewing internal processes, allocation, and impact reports as well as to confirm alignment of its Sustainable Bond Framework with ICMA Green Bond Principles, Social Bond Principals, Sustainable Bond Guidelines and Green Finance Taxonomy

      Subsequently, annual allocation and impact reports will also be externally reviewed, with abridged versions and external opinions published on SDF's website. This reflects SDF's commitment to sustainable development and long-term stakeholder value.

      5.0 PRINCIPAL FEATURES OF THE BONDS

      General Statements applicable for the Bonds

      It is the understanding of the Company that the entire quantum of funds will be utilized within a period of 12 Months from the date of allotment of the Bonds and in the interim period these funds will be invested in cash and cash equivalents or Government Securities at the current market rates. The current 182-day Treasury bill yield is in the range of 7.80% to 7.90% while the 364-day Treasury bill yield is in the range of 8.00% to 8.05%

      The Company as at the date of this Prospectus has not recognized related parties for the lending of the proceeds of the Issue. However, any potential transaction with related parties will be carried out in compliance with all applicable Statutes, Directions, Regulations, and Section 9 of the CSE Listing Rules including following the due process of RPT Review committee (RPTRC). Please refer to Section 8.2 for Composition of the Related Party Transactions Review Committee as at 31st March 2025.

      Further, in terms of the Articles of Association of the Company shareholder approval is not required for this Bond issue, therefore the Company will not seek the shareholder approval for the Issue as it is not applicable.

      The company has not issued any bonds or debentures previously. Therefore, the Company has no outstanding proceeds of Debentures or Bond Issues towards achieving the objectives of the respective Issues.

      The proposed bond issue does not fall within the definition of a major transaction in terms of Section 185 of the Companies Act No 7 of 2007.

      Sarvodaya Development Finance PLC is licensed under the Finance Business Act No. 42 of 2011 to conduct its primary business, and this license does not have an expiration date.

      Specific risks relating to objectives of the Bond Issue

      Dependence of proceeds of the Issue to achieve the objectives is marginal, as the Company in the ordinary course of business has access to multiple sources of funds such as different types of deposits and borrowings.

      Further, the risk of under subscription of the Bond Issue will be greatly mitigated through appointing experienced managers to the Issue, pre-marketing and building a pipeline of potential Qualified Investors.

      The risk of the Company being unable to utilize the funds to achieve the Objectives of the Issue is minimum as the Company already has demand from their existing clients as well as inquiries from new potential clients for financing such projects. As such, based on Company's past experience and the growth achieved as at date there is no specific risk factor that may lead to non-achievement of expanding the Company's loan portfolio within the specified time line via the proceeds of the Issue up to a maximum of LKR 2 Billion. However, in the highly unlikely event of the Company failing to lend these funds due to an unforeseen reason, these funds would be invested in Government Securities at the current market rates until the use of funds for the purpose of the above said objectives of the issue. If due to some unforeseen reason, these funds are not utilized as proposed, the Company will seek relevant approvals (as applicable) regarding the course of action to be taken. In such an instance SDF will make a prior market announcement through the CSE in this regard.

      The Company may not anticipate specific risks associated with financing above stated projects who have failed to secure all necessary approvals as necessary prerequisites are in place as mentioned in the Evaluation and Selection of Green and Social Bond Projects under Section 5.4 of this Prospectus.

      Utilisation of Bond Proceeds

      The Company undertakes to disclose the progress of the utilization of proceeds in the format outlined below, in all of their future interim and annual financial statements, until funds are fully utilized for the respective objectives stated in the Prospectus.

      Bond Issue proceeds utilization as at dd-mm-yyyy

      No.	Objective as per Prospectus	Amount allocated as per prospectus in LKR	Proposed date of utilization as per prospectus	Amount allocated in LKR (A)	% of total proceeds	Amount utilized in LKR (B)	% of Utilized against allocation (B/A)	Clarification if not fully utilized including where are the funds invested (e.g. whether lent to related party/s etc.).
      01	To improve the capital Adequacy	Initial issue of LKR 1	Upon
      	ratio	Bn and a maximum	allotment,
      		issue of LKR 2 BN	following
      			CBSL's final confirmation	To be disclosed in the Annual Report and the Interim Financial Statements
      			for Tier 2
      			recognition of
      			proceeds.
      02	Green Eligible Financing Projects
      		25% of the Bond
      		Proceeds
      		(Each GBP
      		category will
      		receive at least 30%	12 Months	To be disclosed in the Annual Report and the Interim Financial Statements
      		of the allocated
      		Bond Proceeds
      		for Green Eligible
      		Financing Projects)
      	Social Eligible Financing Projects
      	a) Housing-related purposes include purchasing or constructing a house, buying land for residential construction, completing a partially-built home, or renovating an already constructed house
      	SMEs owned by or serving underserved and marginalized groups, including youth, persons with disabilities, and low-income communities.	75% of the Bond Proceeds (Each SBP category will receive at least 10% of the allocated Bond Proceeds for Social Eligible Financing Projects	12 Months	To be disclosed in the Annual Report and the Interim Financial Statements
      	e) Leasing for agricultural equipment & machinery
      	f) Provide Microfinance loans for loans for village and home-based small businesses and income generative cultivation activities such as tea, cinnamon planting and any other commercial crops for low-income communities

      1. Rooftop solar energy installation financing

      2. Solar equipment vendor financing

      3. Purchase of electric vehicle financing

      4. Low carbon - transportation infrastructure financing projects, such as electric vehicle (EV) charging centres

      1. Providing SME financing solutions specifically designed to support business startup and enhance the capacity development of existing

      2. Providing Financial services specialized for women entrepreneurs and women-led enterprises

      5.0 PRINCIPAL FEATURES OF THE BONDS

      In the event the proceeds raised are fully utilized in terms of the objectives disclosed in the prospectus between two financial periods, the Entity shall disclose such fact in the immediate succeeding Annual Report or the Interim Financial Statement, whichever is published first as per the above template.

      The Company will make immediate disclosures in the instances which are specified under item 34 and 38 of Appendix 8A of Section 8 of the CSE listing Rules. The Company will comply with the requirements stipulated under continuous listing rules of the CSE specifically applicable to the bonds issued under this Prospectus.

   5. PAYMENT OF INTEREST

      The interest payments in respect of the Bond options will be as follows:

      Type of Bonds

      Tenure

      Type of Interest

      Interest rate (per annum)

      AER (per annum)

      Interest Payment Frequency

      Type A	5 Years	Fixed	12.00%	12.00%	Annual
      Type B	5 Years	Fixed	11.66%	12.00%	Semi-Annual

      The interest rates have been determined giving consideration to the Company's rating as Issuer, the instrument rating, regulatory limitations, market conditions and features of the instruments.

      Interest on the Bonds accruing on a daily basis will be paid annually for Type A Bonds and semi-annually for Type B Bonds as applicable from the Date of Allotment until the Date of Redemption on the outstanding Principal Sum.

      The interest due on the Bonds for a particular Interest Period will be calculated based on the actual number of days (irrespective of holidays) in such Interest Period (actual/actual) and will be paid not later than three [03] Working Days from each Interest Payment Date.

      In order to accommodate the bond interest cycles in the CDS System of the CSE, the payment of interest on a particular Interest Payment Date will include Bond Holders holding Bond in the CDS as of the Entitlement Date.

   6. APPLICATION OF TAX ON INTEREST PAYMENTS

      Interest on the Bonds will be paid after deducting any taxes and charges thereon (if any) as per the applicable laws prevalent at the time of interest payment to the Bond Holders.

      Qualified Investors are advised to obtain clarifications in this regard from their tax advisors.

   7. THE INSTANCES AND CONDITIONS UPON WHICH THE ENTITY MAY REDEEM THE HIGH YIELD CORPORATE DEBT SECURITIES LISTED ON THE EXCHANGE

      Redemption of the Bonds will take place on the respective Date of Redemption as described in accordance with the provisions of the Trust Deed. The Principal Sum and unpaid and accrued interest (if any) payable on the Redemption of Bonds will be paid not later than three (03) Working Days from the Date of Redemption.

      If the Date of Redemption falls on a day which is not a Market Day, then the Date of Redemption shall be the immediately succeeding Market Day and Interest shall be paid for each calendar day up to the date immediately preceding such Market Day

      Tier 2 Listed Rated Unsecured Subordinated Redeemable High Yield Sustainable Bonds issued under the prospectus do not have a "convertible option". Furthermore, these Bonds are not subject to an early redemption or maturity for any reason whatsoever except due to the occurrence of an Event of Default contemplated in Clause 10 of the Trust Deed. Bonds shall become immediately payable at the option of the Trustee on the occurrence of event of default as specified in Clause 10 and Enforcement Procedures in Clause 12 of the trust deed. This bond is not collateralized by any asset of the company. Please refer section 5.14 risks involved to investing in the bonds.

      On the date of maturity/redemption of the Bonds, the Company shall in accordance with the provisions contained in the Trust Deed pay to the Bonds Holders the principal sum of the Bonds which ought to be redeemed and interest (if any) remaining unpaid up to the date of maturity/redemption of the Bonds.

   8. PAYMENT OF PRINCIPAL AND INTEREST

      Payment of principal and interest will be made after deducting taxes at source, (if applicable) in Sri Lankan Rupees to the registered Bond Holders only as of the Entitlement Date. In the case of joint Bond Holders, the payment of Principal Sum and interest will be made to the one whose name stands first in the register of Bond Holders on the date of payment.

      In the event accurate bank account details are provided to the CDS by the Bond Holders, the payment of principal sum and interest shall be made to Bond holders through an electronic fund transfer mechanism recognized by the banking system of Sri Lanka such as RTGS (arranged only at the expense of the Qualified Investor) or SLIPS. RTGS transfers however shall be accommodated only for amounts over and above the maximum value of Rupees Five Million that can be accommodated via SLIPS transfers.

      If the Bond holder has not provided to the CDS accurate and correct details of his/her/its/their bank account/s for the payment of principal sum and interest, such payment to the Bond holder will be posted to the address registered with the CDS through registered post to the Bond holder, by crossed cheques marked "Account Payee Only". For all Bond Interest payable will be made only by cheques within three (3) market days from the end of each period.

      In the event of there being any delay in the redemption of the High Yield Sustainable Bonds or the payment of interest thereon due to a default by the Company, the Company shall pay default interest at the Rate of Interest plus Two per centum (2%) per annum from the Date of Redemption or the Interest Payment Date as the case may be. ( As per Clause 4.1 (a) (vi) of the Trust Deed)

      It is the responsibility of the Non-Resident and Foreign Qualified Investors to ensure that their IIA through which they invest for Bonds is recorded correctly against the records in CDS to dispatch their principal payment and Bond interest payments.

   9. TRUSTEES TO THE ISSUE

      The Company has entered into an agreement with National Development Bank PLC, who will act as Trustee to the Issue and who is in compliance with the requirements Rule 2.2.1 (n) (ii), (iii) (iv) and (v) of the CSE Listing Rules. Bond Holders in their Application Forms for subscription will be required to authorize the Trustee, to act as the agent in entering into such deeds, writings and instruments with the Company and to act as the Agent and Trustee for the Bond Holders.

      The rights and obligations of the Trustee are set out in the Trust Deed and the Bonds will be subject to the terms and conditions incorporated in the said Trust Deed.

      The fee payable to the Trustee will be Sri Lankan Rupees Four Hundred and Eighty Thousand (LKR 480,000 -) per annum plus statutory levies until the maturity of the Bonds. Trustee/its directors have no conflict of interest with the Company, except that the Trustee is one of the Bank's rendering banking related services to the Company.

   10. THE INDEPENDENT EXTERNAL REVIEVEWER

       The Company has appointed Deloitte Associates Sri Lanka as the Independent External Reviewer for the issuance. The Independent External Reviewer has agreed to provide an Independent Assurance Report (Annexure II) for Sarvodaya Development Finance

       PLC's Sustainable Bond Framework, in accordance with the Voluntary Process Guidelines issued by the International Capital Market Association (ICMA). The Independent External Reviewer (Accounting Related Assurance Division, M/s Deloitte Associates Partners) has no conflict of interest with the Company and remains fully independent until the Sustainable Bonds reach maturity.

       Key Personnel involved in the Independent External Reviewer Report:

       • Malinda Boyagoda, Sri Lanka Assurance Leader - Deloitte

         1. PRINCIPAL FEATURES OF THE BONDS

            Experience of the Independent External Reviewer:

            Deloitte Associates, as part of the global Deloitte network, has extensive experience in providing limited assurance engagements as an Independent External Reviewer for Green Bond, Social Bond and Sustainability Bond frameworks. This includes engagements aligned with internationally recognized principles issued by the International Capital Market Association (ICMA), the Loan Market Association (LMA), Asia Pacific Loan Market Association (APLMA), and Loan Syndications and Trading Association (LSTA). Notable past engagements include:

            • Alliance Finance PLC (2024): Provided limited assurance on the alignment of a green bond issuance with the ICMA Green Bond Principles (GBP) 2021, focused on solar energy projects.

            • A Leading Listed Company in Renewable Energy (2025): Acted as the Independent External Reviewer for a green bond aligned with ICMA GBP 2021, supporting hydropower and solar energy projects.

            • Fraser Logistics and Commercial Trust (2021): Delivered independent assurance for a sustainability bond issuance aligned with the ICMA GBP 2021, Sustainability Bond Guidelines (SBG) 2021, Sustainability-Linked Bond Principles (SLBP) 2020, and the LMA/ APLMA/ LSTA Green Loan Principles (GLP) 2021 and Sustainability Linked Loan Principles (SLLP) 2021. The bond financed green real estate and commercial buildings.

            • Fraser Centrepoint Trust (2021): Assured a sustainability bond against the ICMA GBP 2021 and SBG 2021, and GLP 2021, supporting green real estate initiatives.

            • Frasers Property Australia Pty Ltd and Frasers Property Industrial Australia Pty Ltd (2021): Provided external verification for a sustainability bond framework consistent with ICMA GBP 2021, SBG 2021, SLBP 2020, and LMA/ APLMA/ LSTA GLP and SLLP (2021), targeting green building projects.

            • Frasers Property Treasury Pte Ltd (2022): Delivered assurance on a green bond aligned with ICMA GBP 2021 and GLP 2021, focusing on green real estate developments in Singapore.

            • Confidential Client (2022): Conducted limited assurance on a green bond framework including evaluation of use and reporting of proceeds, and project evaluation and selection process for green transport (leasing) projects

              In addition, the broader Deloitte global network has provided external verification and sustainability bond assurance services for major international clients, including:

            • KB Financial Group (2020) - Sustainability bond aligned with SBG 2018 (Social & Green projects).

            • Hyundai Capital (2020) - Green bond supporting green vehicle initiatives.

            • KB Kookmin Card (2020) - Sustainability bond aligned with GBP 2018, SBP 2018, and SBG 2018 (loan portfolios).

            • SpareBank 1 Boligkreditt (2019) - Green bond aligned with GBP 2018, financing green buildings.

            • Swedbank (2019) - Green bond aligned with GBP 2017, supporting green buildings and renewable energy projects.

              These engagements demonstrate Deloitte's deep expertise, technical capabilities, and global alignment in conducting independent verification of green and sustainability bond frameworks across a wide range of sectors and geographies.

              Scope of the Review

              Deloitte has been engaged by Sarvodaya Development Finance PLC to perform a limited assurance engagement on the alignment of its Sustainability Bond Framework with the following International Capital Market Association (ICMA) guidelines:

            • Social Bond Principles (2023)

            • Green Bond Principles (2021)

            • Sustainability Bond Guidelines (2021)

              The objective of Deloitte's engagement is to assess whether the Sustainability Bond Framework developed by Sarvodaya Development Finance PLC is aligned with the four core components set out in the above ICMA principles, namely:

            • Use of Proceeds

            • Process for Project Evaluation and Selection

            • Management of Proceeds

            • Reporting

         This limited assurance engagement is conducted in accordance with Sri Lanka Standard on Assurance Engagements (SLSAE) 3000, as the applicable standard for external assurance of sustainability bonds. Deloitte's Sustainability team brings the required expertise, knowledge, and experience in providing assurance services on sustainable finance instruments and their alignment with globally accepted frameworks.

   11. CREDIT RATING

       Lanka Rating Agency has assigned an Initial rating of "BB(Stable)" to the Company's Tier 2 Listed Rated Unsecured Subordinated Redeemable High Yield Sustainable Bonds from the report dated 12th June 2025. The rating report issued by Lanka Rating Agency is set out in Annexure I of this Prospectus.

       "BB" rating denotes a Moderate risk. Possibility of credit risk developing. There is a possibility of credit risk developing, particularly as a result of adverse economic or business changes over time; however, business or financial alternatives may be available to allow financial commitments to be met.

       Source: https://lra.com.lk/wp-content/uploads/2024/10/Final_LRA_M_Debt-Instrument_Aug_24.pdf

       However, it's noteworthy to mention that Sarvodaya Development Finance PLC entity rating was upgraded from BB (Stable) to BB+(Stable) by Lanka Rating Agency with effective from 11th April 2025.

       Source: https://http://165.22.107.238/wizlanka/public/finalPr/188

       The Board of Directors will undertake to keep the Trustee of the Bond Issue and CSE informed on any change to the credit rating of the Bonds as soon as the Company / any of the Directors are aware of any changes to the ratings.

   12. RIGHTS AND OBLIGATIONS OF BOND HOLDERS

       1. Bond holders are entitled to the following rights

          • Receive the interest on the Interest Payment Dates at the interest rates set out in Section 5.5 of this Prospectus and the Principal Sum on the Date of Redemption as set out in Section 5.7 and 5.8 of this Prospectus, subject to the provisions contained in this Prospectus and the Trust Deed.

          • To Call, receive notice, attend, and vote at the meetings of the Bond holders in accordance with the provisions contained in the Trust Deed pertaining to this Bond issue.

          • Receive a copy of the Annual Report within 5 months from the financial year end at the same time and in the same manner as an ordinary shareholder would receive the same. Annual Report will be sent to Bond Holders in CD form, unless a specific request for a hard copy is received by the Company.

          • In the event of liquidation, Tier 2 Listed Rated Unsecured Subordinated Redeemable High Yield Sustainable Bonds will rank above the ordinary voting shareholders of the Company

          • The other rights of the holders of these Bonds are set out in the Trust Deed.

          • In the event of any Bond Holder dissenting to the resolution/s passed at the meeting of the Bond Holders referred to in Listing Rule 7.12.4 (A) (II) (c) (iiI), the Company shall pay the maturity proceeds relating to the High Yield Sustainable Bonds held by such dissenting Bond Holders within seven (07) Market Days from the meeting of the Bond Holders.

            5.0 PRINCIPAL FEATURES OF THE BONDS

       2. Bond holders are NOT entitled to the following rights

          • Attending and voting at meetings of holders of shares and other types of bonds.

          • Sharing in the profits of the Company

          • Participating in any surplus in the event of liquidation

          • Calling for redemption before maturity, subject to the provisions stated in the Trust Deed.

       3. Obligations of the Bond Holders

       • Each Bond Holder must ensure that the information in respect of the securities account maintained with the CDS is up to date and accurate. Each Bond Holder shall absolve the Company from any responsibility or liability in respect of any error or inaccuracy

       or absence of necessary changes in the information recorded with the CDS. Provided further that the Bond Holder shall absolve the CSE and the CDS from any responsibility or liability in respect of any error or inaccuracy or absence of necessary changes in the information recorded with the CDS where such errors or inaccuracies or absence of changes are attributable to any act or omission of the Bond Holders.

   13. BENEFITS OF INVESTING IN THE BONDS ISSUED BY THE COMPANY

       • Provides an opportunity to diversify the investment portfolio of the Qualified Investor.

       • Provides the Qualified Investor with a regular cash inflow of interest payments.

       • Provides the Qualified Investor with an opportunity to invest in Bonds issued by a leading Company in Sri Lanka

       • Being listed on the CSE, the Bonds will have a secondary market subject to secondary market trading of these Bonds, thus providing the Qualified Investor with an opportunity to exit at the market price prevailing at the time of divestiture subject to market conditions.

       • The Bonds may be used as collateral to obtain credit facilities from banks and financial institutions with the exception of the issuing Company, subject to the policies of those institutions.

       • The Sustainable Bonds issued under this prospectus are specifically earmarked to finance projects that have positive environmental and social impacts. This allows investors to align their investments with their values, supporting sustainable initiatives while potentially enhancing their reputation as socially responsible investors.

   14. RISKS INVOLVED IN INVESTING IN THE HIGH YIELD SUSTAINABLE BONDS

Subscribers to the Bonds could be exposed to the following risks.

1. Interest Rate Risk

   Provided all other factors are equal, the market price of the Bonds will generally fluctuate in the opposite direction to the fluctuation in market interest rates. Thus, the interest rate risk could be identified as the reduction in the market price of Bonds resulting from a rise in interest rates.

2. Reinvestment Risk

   Interests on the Bonds are payable annually for Type A and Semi Annually for Type B. A Qualified Investor may decide to reinvest this interest payment and earn interest from that point onwards. Depending on the prevailing interest rates at the point of reinvestment, the risk of returns generated by Bond Holders by reinvesting such interest received being higher or lower than the return offered by the Bonds is known as reinvestment risk.

3. Duration Risk

   Duration is a measure of the price sensitivity of fixed income investments to a change in interest rates based on the time to maturity of principal and coupon payments. The higher the duration, the greater the price volatility or duration risk, while a lower duration carries a lower risk.

4. Credit Risk

Credit risk is also referred to as default risk. This is the risk that the issuer of a bond may default, i.e. the issuer will not be able to pay interest and principal payments on a timely basis. This risk is gauged in terms of rating assigned by different rating agencies. Lanka Rating Agency as assigned an initial rating of 'BB (Stable)' from the report dated 12th June 2025 to these Bonds and will be periodically reviewing the same.