Annual Report 2024/2025

ANNUAL REPORT

2024 1 2025

SIGIRIYA VILLAGE HOTELS PLC

SIGIRIYA VILLAGE

CORPORATE INFORMATION 1

NOTICE OF MEETING 2

CHAIRMAN'S REVIEW 3

BOARD OF DIRECTORS 4

COMPANY OVERVIEW 5

ANNUAL REPORT OF THE BOARD OF DIRECTORS 6

CORPORATE GOVERNANCE 9

AUDIT COMMITTEE REPORT 31

REPORT OF THE REMUNERATION COMMITTEE 33

REPORT OF THE NOMINATIONS & GOVERNANCE COMMITTEE 34

RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT 37

INDEPENDENT AUDITORS' REPORT 38

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 41

STATEMENT OF FINANCIAL POSITION 42

STATEMENT OF CHANGES IN EQUITY 43

STATEMENT OF CASH FLOWS 44

ACCOUNTING POLICIES 45

NOTES TO THE FINANCIAL STATEMENTS 52

SHARE INFORMATION 73

FIVE YEAR SUMMARY 75

HUMAN RESOURCES 76

GRAPHICAL REVIEW 77

NOTES 78

FORM OF PROXY 79

Sigiriya Village Hotels PLC

A Public Quoted Company with Limited Liability Incorporated in Sri Lanka on 11th September 1978 Under the Companies Ordinance. (Cap. 145) and re-registered on 6th June 2008 under the Companies Act No. 7 of 2007.

PQ 154

53-1/1, Sir Baron Jayatilaka Mawatha, Colombo 01.

The Issued Ordinary Shares of the Company are listed with the Colombo Stock Exchange of Sri Lanka.

S. D. R. Arudpragasam (Chairman)

S. Rajaratnam Amrit Rajaratnam

Anushman Rajaratnam

S. B. Perera

J. E. P. Kehelpannala

Corporate Managers & Secretaries (Pvt) Ltd. 8-5/2, Leyden Bastian Road,

York Arcade Building, Colombo 01.

B. R. De Silva & Company Chartered Accountants

22/4, Vijaya Kumaranathunga Mawatha, Colombo 05

Commercial Bank of Ceylon PLC Sampath Bank PLC

Pan Asia Banking Corporation PLC Standard Chartered Bank

Hatton National Bank PLC National Development Bank Muslim Commercial Bank Ltd

Sigiriya Village

P. O. Box 1, Sigiriya, Sri Lanka Tel-Fax: +94 (0) 66 22 86803-5

E-mail:sigiriyavillagehotel@forthotels.lk Web: https://www.sigiriya-village.com

York Hotel Management Services Ltd 8-1/3, Leyden Bastian Road,

York Arcade Building, Colombo 01.

Tel : 0112381644-5 Fax : 0112381645

E-mail : ressvh@sltnet.lk, marketing@forthotels.lk

Julius & Creasy

371, R. A. de Mel Mawatha, Colombo 03.

Notice is hereby given that the 46th Annual General Meeting of Sigiriya Village Hotels PLC will be held on 15th July 2025 at

11.00 a.m. and conducted as a Virtual Meeting from 8-5/2, Leyden Bastian Road, York Arcade Building, Colombo 01, for the following purposes :

1. To receive and consider the Annual Report of the Board of Directors and the Statements of Accounts for the year ended 31st March 2025 with the Report of the Auditors thereon.

2. To declare a First and Final Dividend of Rs. 3/- per share for the year ended 31st March 2025, as recommended by the Directors.

3. To re-elect as a Director, Mr. Anushman Rajaratnam who retires in accordance with Articles 84 & 85 of the Articles of Association.

4. To re-elect as a Director, Mr. S. B. Perera who was appointed during the year and retires in accordance with Article 91of the Articles of Association

5. To re-elect as a Director, Mr. J. E. P. Kehelpannala who was appointed during the year and retires in accordance with Article 91of the Articles of Association

6. To reappoint as a Director, Mr. S. D. R. Arudpragasam, who is over seventy years of age. Special Notice has been received from a Shareholder of the intention to pass a resolution which is set out in the notes in relation to his reappointment. (see note 6).

7. To authorise the Directors to determine contributions to charities.

8. To reappoint as Auditors, Messrs B.R. De Silva & Co. and to authorise the Directors to determine their remuneration.

9. Special Business

To consider and if thought fit to pass the following Special Resolution to amend the Articles of Association of the Company in compliance with the Listing Rules of the Colombo Stock Exchange:

Special Resolution Resolved -

"That the existing Article 74 (2) be deleted and the following be substituted therefor:

74(2) Notwithstanding anything to the contrary, so long as the shares of the Company are listed on the Colombo Stock Exchange, the Company shall in compliance with the Listing Rules of such Exchange ensure that the total number of Directors on the Board of Directors of the Company at any given time one third or two (whichever is greater) shall be Independent Directors in accordance with and subject to the criteria therefor, in the Listing Rules of the Colombo Stock Exchange.

Any change occurring to this ratio shall be rectified within ninety (90) days from the date of change.

For the purpose of this Article, the term 'Independent Director' shall be as defined and set out in the Listing Rules of the Colombo Stock Exchange above referred to."

By Order of the Board

CORPORATE MANAGERS & SECRETARIES (PRIVATE) LIMITED.

Secretaries

Colombo

17th June 2025

Notes :

1. A member of the Company who is entitled to attend and vote may appoint a proxy to attend and vote instead of him or her. A proxy need not be a member of the Company.

2. A Form of Proxy is enclosed with this Report.

3. The instrument appointing a proxy must be deposited at the Registered Office of the Company's Secretaries at No.

   8-5/2, Leyden Bastian Road, York Arcade Building, Colombo 01, not less than forty eight hours before the time fixed for the meeting.

4. Members are encouraged to vote by Proxy through the appointment of a member of the Board of Directors to represent them and vote on their behalf. Members are advised to complete the Form of Proxy and their voting preferences on the specified resolutions to be taken up at the Meeting and submit the same to the Company

   Secretaries in accordance with the instructions given on the reverse of the Form of Proxy.

5. Please refer the "Circular to Shareholders" dated 17th June 2025 for further instructions relating to the Annual General Meeting and for joining the Meeting virtually.

6. Special Notice has been received by the Company from a shareholder giving notice of the intention to move the following Resolution as an Ordinary Resolution at the Annual General Meeting.

Resolved -

"that Mr. S. D. R. Arudpragasam who is seventy three years of age, be and is hereby reappointed a Director of the Company and it is further specially declared that the age limit of seventy years referred to in Section 210 of the Companies Act No.07 of 2007 shall not apply to the said Director, Mr. S.D.R. Arudpragasam".

It is with great pride and a deep sense of purpose that I welcome you, on behalf of the Board of Directors, to the 46th Annual General Meeting of Sigiriya Village Hotels PLC. I am pleased to present the Annual Report and Audited Financial Statements for the financial year ended 31st March 2025.

Nestled against the iconic backdrop of the Sigiriya Rock Fortress, Sigiriya Village Hotel has long stood as a sanctuary in Sri Lanka's Cultural Triangle, offering an exceptional blend of heritage, nature, and tranquility. The past year marked

a transformative chapter for the Company one of steady financial recovery, strategic investment, and renewed optimism amidst a resurgent tourism landscape.

Entering 2024, Sri Lanka showed cautious optimism following years of economic turbulence. Encouraging signs of recovery emerged, aided by reforms under the IMF's Extended Fund Facility, stronger foreign reserves, a firmer rupee, and disciplined monetary policy. By year-end, the Average Weighted Prime Lending Rate (AWPLR) had declined to approximately 8.45%, enhancing access to capital and supporting broader economic revitalization.

By early 2025, the national agenda had shifted from stabilization to consolidation, with GDP growth projected between 2.7% and 3.5%. Growth was underpinned by rising tourism revenue, robust export performance, and higher remittances. Nonetheless, the industry continues to face headwinds, including elevated input costs, a shortage of skilled personnel, and intensifying regional competition challenges that demand strategic foresight and adaptability.

Tourism rebounded impressively in 2024, welcoming 2.05 million international visitors a 38% increase over the previous year and the highest since 2019. While coastal destinations led the initial recovery, the Cultural Triangle, including Sigiriya, Anuradhapura, and Polonnaruwa, gained momentum during the peak season from December to April. This resurgence was driven by key initiatives such as the six-month visa-free

program for 35 countries (launched in October 2024), stronger global marketing, improved air connectivity, and the enduring appeal of Sri Lanka's UNESCO World Heritage sites. By August, tourism revenue had surpassed USD 2.17 billion. The outlook for 2025 remains strong, with expected growth in international arrivals of 3%-5%, reinforcing the Cultural Triangle's strategic significance.

Amid this favorable backdrop, Sigiriya Village Hotels PLC delivered a strong operational and financial performance. Revenue rose to LKR 522 million from LKR 302 million the previous year an impressive 73% increase. Pre-tax profit reached LKR 44 million, reversing the previous year's equivalent loss and marking a 200% turnaround.

Our guest profile was diverse and balanced, led by Sri Lankan and expatriate guests (20%), followed by French (15%), Chinese (14%), Japanese (12%), Indian (5%), Italian (4%), British (4%),

Danish (3%), German (3%), and Dutch (2%) visitors.

At the beginning of the financial year, the hotel operated with a reduced inventory of 80 rooms out of a total of 120 rooms. During the year, we invested nearly LKR 70 million to refurbish 20 rooms in the Paddy Cluster, which were completely out of

service, along with another 20 rooms that were in significantly deteriorated condition. These investments mark a key step toward restoring our full operational capacity. In parallel, we also completed a comprehensive upgrade of our original staff facilities as part of our continued focus on employee wellbeing and retention.

Sigiriya Village is more than a hotel; it is an immersive experience that connects guests to the cultural and ecological legacy of Sri Lanka's ancient past. As global travel trends shift toward authentic, sustainable, and experience-led tourism, our location and philosophy uniquely position us to meet these evolving expectations. We are especially well placed to serve niche segments such as heritage, wellness, and nature-based travel.

We recognise the broader industry challenges that persist. The shortage of skilled personnel exacerbated by migration and global talent demand has prompted us to strengthen internal training and forge partnerships with hospitality institutions.

Meanwhile, escalating utility costs have driven our focus on energy efficiency, renewable energy solutions, and innovative resource management.

Looking ahead, Sri Lanka's national tourism targets 3 million arrivals and USD 5 billion in revenue by the end of 2025

are both ambitious and achievable. We are committed to contributing meaningfully by aligning our strategy with

the pillars of resilience, sustainability, and innovation. Our priorities remain centered on delivering exceptional guest experiences and creating enduring value for our stakeholders.

I extend my sincere gratitude to Mr. C. P. R. Perera and Mr. A.

R. Rasiah, who resigned from the Board effective 31 December 2024. Their leadership, strategic insight, and unwavering commitment to the organization have been instrumental

in guiding us through significant periods of growth and transformation. On behalf of the Board and the company, I wish them every success in their future endeavours.

At the same time, we are pleased to welcome Mr. S. B. Perera and Mr. J. E. P. Kehelpannala to the Board. They each bring a wealth of experience in finance, operations and governance and I am confident that their expertise will be a valuable asset as we pursue our strategic priorities.

In closing, I extend my heartfelt thanks to our dedicated team members for their unwavering commitment; to our guests and business partners for their trust; to our shareholders for their continued support; and to my fellow Board members for their strategic guidance. It is through this collective strength that Sigiriya Village Hotels PLC moves forward with confidence and ambition.

S.D.R. Arudpragasam

Chairman

17th June 2025

Chairman

Mr. S.D.R. Arudpragasam is a fellow member of the Chartered Institute of Management Accountants (UK). He was appointed to the Board in 1990 and as Chairman in 2013. Further, whilst being associated with The Colombo Fort Land & Building Group of companies since 1982 and having served on the Board of The Colombo Fort Land & Building PLC (CFLB) since the year 2000 and as Deputy Chairman up to end June 2022, was appointed as the Chairman of CFLB with effect from 1st July 2022. He also serves as Chairman of several subsidiaries of CFLB and holds the position of Chairman, Lankem Ceylon PLC and C M Holdings PLC and Chairman/ Managing Director of E.B. Creasy & Company PLC, in addition to holding other Directorships within CFLB Group.

He also functions as a member on several Board Subcommittees of the CFLB Group.

Director

Mr. S. Rajaratnam was appointed to the Board in 2010. He holds a Bachelor of Science Degree in Business Administration from Boston College, U.S.A. and is a member of the Institute of Chartered Accountants in Australia. He has been associated with overseas Companies in the field of Finance and He currently holds the position of Joint Managing Director of E.B. Creasy & Company PLC amongst other Directorships including that of The Colombo Fort Land & Building PLC. He also

functions as a member of several Board Subcommittees of the CFLB Group and in certain other Listed Entities.

Director

Mr. Anushman Rajaratnam was appointed to the Board in April 2019. He is at present the Group Managing Director of The Colombo Fort Land & Building PLC (CFLB). In addition, he serves on the Board of several subsidiary companies and also functions as a member on several Board Subcommittees of the CFLB group. Prior to joining the CFLB Group, he worked oversees for a leading global Accountancy Firm.

He holds a Bachelor of Science degree in Economics from the University of Surrey, UK, CPA Australia and MBA from Massachusetts Institute of Technology, USA.

Director

Mr. Amrit Rajaratnam was appointed to the Board in 2012. He holds a Bachelor's Degree in Law from the University of Nottingham and is a Barrister at Law (Lincoln's Inn). He began his career at the Law Firm Julius & Creasy and later joined Lankem Ceylon PLC. He is also a Director of York Arcade Holdings PLC, Colombo Fort Investments PLC, Colombo Investment Trust PLC and The Colombo Fort Land & Building

PLC amongst other Directorships in The Colombo Fort Land & Building Group.

Director

Mr. Shrihan B. Perera was appointed to the Board on 31st December 2024. He was the Chief Executive Officer of Teejay Group from April 2018 to December 2019. He also served

as the Chief Executive Officer of Brandix Apparel Solutions Limited from January 2010 to March 2018. He was responsible for drawing up and implementing strategies across all business units in the intimate apparel SBUs in Sri Lanka and India. Mr. Perera previously held positions of Group Financial Controller & Treasurer, Group Accounts Manager and Finance Director

at Unilever Sri Lanka while counting overall experience over 30 years both with Engineering and Finance exposure in and amongst competitive conditions and multidimensional challenges. He served as Accounts and Administrative Controller at Al Mulla Group of Companies in Kuwait from January 1991 to December 1995. He has wide exposure in

FMCG, Garment and Textile Manufacture and service industry (overseas).

Mr. Perera currently serves as an Independent Director of Teejay Lanka PLC and its Subsidiaries and on the Boards of Fintrex Finance Limited, C.W. Mackie PLC and on the Boards of certain other listed entities of The Colombo Fort Land & Building Group.

Mr. Perera was appointed as the Chairman of the Board Subcommittees of the Company with effect from 1st January 2025. He is also a Member of the Board Subcommittees of several subsidiary companies of the CFLB Group. He holds a Bachelor of Science Degree in Mechanical Engineering- 2nd Class Upper Honours from the University of Moratuwa and is a Fellow of the Chartered Institute of Management Accountants/ CGMA, UK.

Director

Mr. Jayantissa Kehelpannala was appointed to the Board on 31st December 2024. He counts over 40 years of experience in the Leisure Sector in Destination Management Business and Hoteliering in the John Kells Group. He was the former Executive Vice President of John Keells Group and the former Senior Vice President of Cinnamon Hotels and Resorts, overseeing the entire operation of Cinnamon properties

in Maldives and the Cinnamon Group expansion. He has served on many of the Boards of John Keells leisure sector in Sri Lanka and in Maldives. He was a Board member of John Keells Hotels PLC until his retirement in December 2022. He was responsible for expansion/refurbishment of John Keells Hotels in Sri Lanka and in Maldives. He is a past President

of the Hotels Association of Sri Lanka, Past Chairman of the Hotel Sector Group of the Employers Federation and past Chairman of Sri Lanka Maldives Business Council of the Ceylon Chamber of Commerce. He also served on the Board of Rainforest Eco Lodge, Deniyaya, an industry driven project. He also represented the Hotel Sector in the Ceylon Chamber Committee. He also functions as a member on several Board Subcommittees of the CFLB Group.

The financial year 2024/2025 marked a pivotal chapter for Sigiriya Village Hotels PLC-one characterised by resilience, recovery, and renewed momentum. Operating within a dynamic and competitive hospitality landscape, we successfully navigated ongoing economic challenges and evolving consumer behaviours to deliver strong results. Our steadfast commitment to operational excellence and guest satisfaction has reinforced our position as a preferred hotel at the forefront of the Cultural Triangle.

We achieved a notable turnaround in financial performance during the year under review. Revenue rose sharply to LKR 522 million, reflecting a 73% increase from LKR 302 million in the previous year. This strong growth was driven by higher occupancy rates, optimised pricing, and enhanced service delivery. Significantly, we recorded a pre-tax profit of LKR

44 million, a complete reversal from the pre-tax loss of LKR 44 million in the prior year. This 200% swing in profitability

underscores the success of our cost management, operational efficiency, and revenue optimisation strategies.

In May 2024, we embarked on a rebranding strategy, transitioning from Colombo Fort Hotels to Fort Resorts. The original brand name was inspired by our parent company, Colombo Fort Land and Building. However, as we operate three well-established resorts, Sigiriya Village, The Palms, Beruwala, and Club Palm Bay, Marawila, we felt that the term Colombo Fort Hotels conveyed an impression of city-based properties. In contrast, Fort Resorts more accurately reflects the character and positioning of our portfolio.

Aligned with our strategic focus on service excellence, we have invested in initiatives to enhance guest experiences and improve operational effectiveness. Key among these was the enhancement of human capital through comprehensive

staff training programs designed to foster high-quality service standards. We also undertook upgrades to our infrastructure and amenities to meet the evolving expectations of our guests. These efforts translated into higher guest satisfaction scores and improved efficiency across all departments.

The hospitality industry continues to evolve, shaped by changing traveller expectations, increasing digital integration, and a growing emphasis on experiential and sustainable tourism. While the market remains volatile, our outlook remains cautiously optimistic. We recognise that adaptability, data-driven strategies, and responsiveness to emerging trends will be essential in navigating the future. Consequently, we remain committed to real-time monitoring of macroeconomic and industry developments, ensuring continued agility and competitiveness.

We remain vigilant to both external and internal risks that could impact performance. Key concerns include demand fluctuations resulting from global and regional economic shifts, potential regulatory changes, and increasing industry competition.

To mitigate these risks, we have reinforced our risk management framework through scenario planning, strengthened internal controls, and ongoing compliance monitoring, ensuring business continuity and safeguarding long-term value creation.

The 2024/2025 financial year was marked by transformation, resilience, and achievement. We are proud of the progress we have made, particularly in restoring profitability, strengthening operations, and enhancing the guest experience. These accomplishments reflect the dedication of our employees,

the loyalty of our guests, and the unwavering support of our stakeholders. As we look ahead, we remain committed to delivering excellence, embracing innovation, and driving sustainable growth across all aspects of our operations.

The Board of Directors of Sigiriya Village Hotels PLC present their Report on the affairs of the Company together with the Audited Financial Statements for the year ended

31st March 2025.

The details set out herein provide the pertinent information required by the Companies Act No. 7 of 2007, and the Colombo Stock Exchange Listing Rules and are guided by recommended best practices.

The principal activity of the Company is to carry on the business of a Tourist Hotel. The Chairman's Review together with the Financial Statements reflect the state of affairs of the Company.

The Directors to the best of their knowledge and belief confirm that the Company has not engaged in any activities that contravene laws and regulations and further confirm that the company does not have any material non-compliance pertaining to law or regulation imposed by the Government or any regulatory authority in the jurisdiction where the Entity operates.

The Financial Statements of the Company are given on pages 41 to 44.

The Auditors' Report on the Financial Statements is given on pages 38 to 40.

The Accounting Policies adopted in the preparation of the Financial Statements are given on pages 45 to 51. The Company prepared its Financial Statements in accordance with Sri Lanka Financial Reporting Standards issued by the Institute of Chartered Accountants of Sri Lanka.

The Directors have made general disclosures as provided for in Section 192(2) of the Companies Act No. 07 of 2007.

These have been entered in the Interest Register which is maintained by the Company. The Company carries out

transactions in the ordinary course of business with entities in which a Director of the Company is a Director and the said transactions are disclosed in Note 34 'Related Party Transactions', on pages 65 to 67.

The Directors have no direct or indirect interest in any other contract or proposed contract with the Company.

During the financial year the Company has not entered into any contracts in which the Directors have had a material interest. Neither the Directors nor their close family members have had any material business relationship with other Directors.

Directors of the Company who have an interest in the shares of the Company are required to disclose their shareholdings and any acquisitions/ disposals to the Board in compliance with Section 200 of the Companies Act No. 7 of 2007.

Details Pertaining to Directors direct shareholdings are set out Below:

Name of Director As at 31.03.2025 As at 31.03.2024

Mr. Amrit Rajaratnam 23,000 23,000

Key Management Personnel Compensation in respect of the Company for the financial year 2024/2025 is detailed in Note

34.3 to the Financial Statements on page 65.

Details pertaining to corporate donations made by the Company during the financial year 2024/2025 are given in Note 07 to the Financial Statements on page 53.

The names of the Directors who held office during the financial year are given below. Brief profiles of the Directors who are Currently in office appear on page 04.

Mr. S. D. R. Arudpragasam - Non Executive Director (Chairman)

Mr. C. P. R. Perera - Independent Non Executive Director (Deputy Chairman) (Resigned w.e.f. 31.12.2024)

Mr. S. Rajaratnam - Non Executive Director Mr. Amrit Rajaratnam - Non Executive Director

Mr. A. R. Rasiah - Independent Non Executive Director (Resigned w.e.f. 31.12.2024)

Mr. Anushman Rajaratnam - Non Executive Director

Mr. E.P.A. Cooray - Independent Non Executive Director (Deceased on 23.04.2024)

Mr. S. B. Perera - Independent Non Executive Director (Appointed w.e.f. 31.12.2024)

Mr. J. E. P. Kehelpannala - Independent Non Executive Director (Appointed w.e.f. 31.12.2024)

Mr. E. P. A Cooray who served as an Independent Non Executive Director expired on 23.04.2024.

Mr. A. R. Rasiah Independent Non Executive Director and Mr. C. P. R. Perera Independent Non Executive Director who served in the capacity of Deputy Chairman resigned from the Board of Directors as at the close of business on 31st December 2024.

In terms of Articles 84 & 85 of the Articles of Association Mr. Anushman Rajaratnam retires by rotation and being eligible offers himself for re-election.

Mr. S. B. Perera who was appointed to the Board on 31st December 2024 retires in terms of Article 91 of the Articles of Association and being eligible offers himself for re-election.

Mr. J. E. P. Kehelpannala who was appointed to the Board on 31st December 2024 retires in terms of Article 91 of the Articles of Association and being eligible offers himself for re-election.

Mr. S. D. R. Arudpragasam, Director, being over seventy years of age retires and offers himself for reappointment under and by virtue of a Special Notice received from a shareholder of the Company which is referred to in the Notice of Meeting.

The Corporate Governance principals adhered by the Company are given on page 09 to 30.

The Financial Statements of the Company for the year have been audited by Messrs B. R. De Silva & Company, the retiring Auditors who have expressed their willingness to continue as Auditors of the Company and are recommended for reappointment. A resolution to reappoint them and to authorise the Directors to determine their remuneration will be proposed at the Annual General Meeting.

The Auditors, Messrs. B. R.De Silva & Co. were paid

Rs. 1,000,000/- (2023/2024 - Rs. 900,000/-) as audit fees & fees for audit related services by the Company during the year under review. In addition, they were paid Rs. 139,150/-(2023/2024 - Rs. 126,500/-) by the Company for non audit related work which consisted mainly of tax related work.

As far as the Directors are aware the Auditors do not have any relationship (other than that of an Auditor) with the Company. The Auditors do not have any other interests in the Company.

The revenue of the Company for the year was Rs. 522.2 Mn. (2023/2024 - Rs. 302.8 Mn)

The Company made a Net Profit before Tax of Rs. 44.2 Mn. against the net loss of Rs. 43.1 Mn in the previous year. The detailed results are given in the Statement of Profit or Loss and other Comprehensive Income on page 41.

The Board of Directors have recommended a First and Final Dividend of Rs. 3.00 per share for the year ended 31.03.2025 for the approval of the shareholders at the Annual General Meeting to be held on 15th July 2025. The Directors have confirmed that the Company satisfies the solvency test requirement under section 56 of the Companies Act No. 7 of 2007 for the Dividend proposed. A solvency certificate has been sought from the Auditors in respect of the aforesaid dividend.

The capital expenditure during the year amounted to Rs.11,732,527/- (2023/2024 - Rs. 1,314,108/-). Information

relating to movement in Property, Plant & Equipment are given in Note 10 to the Financial Statements on page 54.

The total reserves of the Company as at 31st March 2025 amounted to Rs. 363Mn. (2023/2024 - Rs. 52 Mn).

The movements are shown in the Statement of Changes in Equity in the Financial Statements.

In compliance with the Companies Act No. 7 of 2007, the Financial Statements reflect the Stated Capital of the Company. The stated capital is the total of all amounts

received by the Company in respect of the issue of shares. The Stated Capital of the Company as at 31st March 2025 was Rs. 363,722,215/- represented by 9,000,000 issued and fully paid Ordinary Shares.

The provision for income tax is based on the elements of income and expenditure as reported in the Financial

Statements and computed in accordance with the provisions of the Inland Revenue Act No. 24 of 2017 and amendments subsequently by Inland Revenue (Amendment) Act No 10 of 2021 and (Amendment) Act No 45 of 2022 thereto. Relevant details have been disclosed in Note 8 to these Financial Statements.

During the financial year there were no recurrent or non-recurrent related party transactions which exceeded the disclosure thresholds mentioned in Section 9.14 of the Colombo Stock Exchange Listing Rules.

The Related Party Transactions presented in the financial statements are disclosed in Note 34 on pages 65 to 67.

The Company has complied with the requirements of the Listing Rules on Related Party Transactions.

ANNUAL REPORT OF THE BOARD OF DIRECTORS

Information relating to earnings, dividend, net assets are given on page 75 market value per share and share trading is given on page 73.

No circumstances have arisen since the date of the Statement of Financial Position that would require adjustments to or disclosure in the Financial Statements other than the those disclosed in Note 32 on page 64.

Capital expenditure commitments and contingent liabilities as at the date of the Statement of Financial Position have been disclosed in the respective notes to the Financial Statements.

The Company's recruitment and employment policy is non-discriminatory. The number of persons employed by the Company at the year end was 144 (2024-128).

There are no material issues pertaining to staff or industrial relations arising from the year under review.

It is the Company's policy to endeavour to ensure equitable treatment to its shareholders.

The Directors to the best of their knowledge and belief, are satisfied that all statutory payments due to the Government have been made or where relevant, provided for.

The Company's business activities can have direct and indirect effects on the environment. It is the Company's policy to minimise any adverse effects its activities have on the environment and promote cooperation and compliance with the relevant authorities and regulations. We confirm that the Company has not undertaken any activities which have caused or are likely to cause detriment to the environment.

The Directors acknowledge their responsibility for the Company's internal control system, risk management, and compliance with applicable laws, rules and regulations and have obtained reasonable assurance of their effectiveness and their successful adherence. The Internal Control system is designed to give assurance regarding the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information generated. However, any system can ensure only reasonable, and not absolute assurance that errors and irregularities are either prevented or detected within a reasonable period of time.

The Board is satisfied with the effectiveness of the system of internal control for the period up to the date of signing the Financial Statements.

The Company does not have any material litigations that are pending other than those disclose in Note 33 to the Financial Statements in this Annual Report.

The Directors have adopted the going concern basis in preparing the Financial Statements.

For and on behalf of the Board

Amrit Rajaratnam Anushman Rajaratnam

Director Director

By Order of the Board

Corporate Managers & Secretaries (Private) Limited.

Secretaries

Colombo

17th June 2025

Corporate Governance is the mechanism by which Companies are managed and directed with the objective of balancing and attaining the corporate objectives, the alignment of corporate behavior within the expectations of the law and society and the accountability to shareholders and the responsibility to other recognized stakeholders.

We present below the Corporate Governance practices adopted and practiced by Sigiriya Village Hotels PLC in accordance with the rules on Corporate Governance set out in the Colombo Stock Exchange Listing Rules.

The Board currently comprises of six Directors. The Directors including the Chairman are all Non-Executive Directors of whom two are Independent. The Directors are professionals who have a wealth of experience and knowledge to offer in the fields of Hospitality Management, Marketing, Finance, and Legal.

This enables individual Directors to make a significant contribution towards the Board's decision making process more effective which ultimately facilitates sustainable value creation for shareholders and the stakeholders of the Company.

Mr. S.D.R. Arudpragasam - Chairman - Non Executive

Mr. C.P.R. Perera - Deputy Chairman Independent Non Executive (Resigned w.e.f. 31.12.2024)

Mr. S. Rajaratnam - Non Executive Mr. Amrit Rajaratnam - Non Executive

Mr. E.P.A. Cooray - Independent Non Executive (Deceased on 23.04.2024)

Mr. A.R. Rasiah - Independent Non Executive (Resigned w.e.f. 31.12.2024)

Mr. Anushman Rajaratnam - Non Executive

Mr. S. B. Perera - Independent Non Executive (Appointed w.e.f. 31.12.2024)

Mr. J. E. P. Kehelpannala - Independent Non Executive (Appointed w.e.f. 31.12.2024)

to the Board. The names of Directors determined to be "Independent" are set out in the Annual Report.

Despite Mr. C.P.R Perera and Mr. A.R. Rasiah being over seventy years of age, these Independent Directors having served on the Boards of certain companies which have significant shareholdings in another and also having served on the Boards of some companies of which majority of the Directors serve on the Board of another, within the CFLB Group of companies and having served on the Board of the Listed Entity and on the Boards of certain subsidiaries of CFLB for a period exceeding nine years, the Board having considered the fact that the said Directors are Independent of management and having taken into consideration all other circumstances listed in the Rules pertaining to the Criteria for Defining Independence was of the view that the said Directors are nevertheless Independent, and accordingly Mr.

C.P.R. Perera and Mr. A.R. Rasiah, who were thus determined

to be nevertheless independent served as Independent Non-Executive Directors until the close of business on 31st December 2024.

Mr. S.B. Perera and Mr. J. E. P. Kehelpannala who were appointed to the Board as Independent Non-Executive Directors meets the criteria for defining independence as set out in Listing Rule 9.8.3 of the Colombo Stock Exchange and were determined to be independent by the Board.

The Board met six times during the year under review. In addition to Board Meetings, matters are referred to the Board and decided by Resolutions in Writing. Further York Hotel Management Services Limited the Managing Agents of the Company meet regularly to review progress, discuss operational issues and also focus on the achievement of the medium- and long-term objectives of the Company.

The number of Meetings of the Board and the individual attendance by members is shown below.

Total number of Meetings held : 6

Name of Director Directorship Status Board

Meetings Attended

Independent Directors on the Board have declared that they

Mr. S.D.R. Arudpragasam Chairman -

Non-Executive

6/6

are independent of management and free of any business or other relationship that could materially interfere with or

could reasonably be perceived to materially interfere with the

Mr. C.P.R. Perera (Resigned w.e.f. 31.12.2024)

Deputy Chairman -Independent

Non-Executive

4/4

exercise of their unfettered and independent judgements.

Mr. S. Rajaratnam Non Executive 4/6

All Independent Non Executive Directors have submitted

Mr. E.P.A. Cooray

Independent

Not

signed and dated declarations of their independence or non

(Deceased on 23.04.2024)Non-Executive

applicable

independence to the Board.

Mr. Amrit Rajaratnam Non Executive 4/6

The Board makes a determination annually as to the independence or non-independence of each Independent Non-Executive Director based on such declarations made on the defined criteria and other information available

Mr. A.R. Rasiah (Resigned w.e.f. 31.12.2024)

Independent Non Executive

4/4

Name of Director Directorship Status Board

Meetings Attended

The Directors are from varied business and professional backgrounds. Their expertise enables them to exercise

Mr. Anushman Rajaratnam

Non Executive 5/6

independent judgment and their views carry substantial weight in decision making. The Board includes four finance

Mr. S. B. Perera (Appointed w.e.f. 31/12/2024)

Mr. J.E.P. Kehelpannala (Appointed w.e.f.

31/12/2024)

Independent Non Executive

Independent Non Executive

2/2

2/2

Professionals who possess the necessary knowledge to offer guidance on matters of finance.

The details pertaining to the names of the companies (in Sri Lanka) in which the Directors serve as a Director or key management personnel is present on pages 25 to 30.

The Board is responsible for:

⯀ Determining the strategic direction of the Company and also setting the corporate values.

⯀ Implementation and monitoring of business strategy of the Company.

⯀ Ensuring of an effective internal control system and a proactive risk management system.

⯀ Ensuring compliance with ethical, legal, health, environment and safety standards.

⯀ Approval of Interim and Annual Financial Statements.

⯀ Approval of budgets, corporate plans, major capital investments, divestments and acquisitions.

⯀ Approval of any issue of equity and debt securities of the Company.

⯀ Any other matter which is important to ensure that the Company conducts its business in the best interest of all stakeholders.

⯀ Ensuring compliance with the company policies.

The Directors have made themselves aware of applicable laws, rules and regulations and are aware of changes, particularly to the Listing Rules and applicable Capital Market Provisions.

The Chairman is a Non-Executive Director and is responsible for steering the Board to preserve order and to facilitate the effective discharge of Board functions. He conducts Board proceedings in a manner which always ensures the following:

⯀ The effective participation of Directors.

⯀ Encourages an effective contribution from Directors within their respective capabilities, for the benefit of the Company.

⯀ Ascertains the views of Directors on issues under consideration.

The Board is in complete control of the Company's affairs and is alert to its obligation to all shareholders and other stakeholders.

The Directors may seek advice from Corporate Managers and Secretaries (Pvt) Ltd., who are qualified to act as Secretaries as per the provisions of the Companies Act No. 7 of 2007.

Advice is also sought from independent external professionals whenever the Board deems it necessary.

The Directors are provided with an Agenda, Minutes and relevant Board Papers prior to Board Meetings. Minutes of all the Meetings are properly recorded and circulated amongst the Directors.

There is a formal and transparent procedure for the appointment of new Directors to the Board, which is in accordance with the recommendations made by the Nomination and Governance Committee, in consultation with the Chairman and in compliance with the provisions of the Articles of Association of the Company, the policies adopted by the Company and the Rules on Corporate Governance.

The Board as a whole annually assesses th Board composition to ascertain whether the combined knowledge and experience of the Board matches the strategic demands facing the Company.

The findings of such assessments are taken into account when new Board appointments are considered and when incumbent Directors come up for re-election. Upon the appointment of a new Director to the Board, the Company makes the required disclosures of such Director to the shareholders by making announcements to the Colombo Stock Exchange.

The Nomination and Governance Committee Report is set out on pages 34 to 36 of this Report.

In terms of the Articles of Association a Director appointed by the Board holds office until the next Annual General Meeting, at which he seeks re-election by the Shareholders. The Articles require that one -third of the Directors in office (excluding

the office of Chairman, Chief Executives, Managing Director or Joint Managing Director and any other Executive Office) to retire at each Annual General Meeting. The Directors to retire are those who have been longest in office since their last election. Retiring Directors are eligible for re-election by the shareholders.

The Company's fit and proper assessment for Directors is in line with the guidelines set out in the Listing Rules and include criteria on honesty, integrity and reputation, competence

and capability and financial soundness. The Chairman and the Directors satisfy the fit and proper assessment criteria

stipulated in the Listing Rules of the Colombo Stock Exchange.

All the members of the Board are Non-Executives to whom Directors' fees are paid.

The Remuneration Committee Report is set out on page 33 of this Report.

The Board considers the Annual General Meeting / General Meetings an opportunity to communicate with Shareholders and encourage their participation. Questions raised by the Shareholders over the content of the Annual Report as well as other matters pertaining to the Company, are answered and an appropriate dialogue is maintained with them.

The policy on relations with Shareholders and Investors is available on the Company's website https://sigiriya-village.com where the contact persons are also provided. Major issues and concerns are informed to board by the senior management and the corporate secretaries.

There have been no transactions during the year under review which falls within the definition of 'Major Transactions' as set out in the Companies Act.

The Board of Directors considers the timely publication of its Annual and Quarterly Financial Statements as a high

priority. These publications include financial and non-financial information in order to facilitate the requirements of the existing and potential shareholders. The Financial Statements are prepared in accordance with the Sri Lanka Accounting Standards.

The Annual Report of the Board of Directors is given on pages 06 to 08 in this Report. The Auditors' Report on the Financial statements is given on pages 38 to 40 of the Report.

The Board is conscious of its responsibility to the shareholders, the Government and the Society in which it operates and is unequivocally committed to upholding ethical behaviour in conducting its business. The Board strives

to ensure that the Company complies with the laws and regulations of the Country.

The Board of Directors is responsible for the Company's system of internal controls and for reviewing its effectiveness. The system is designed to safeguard assets against unauthorized use or disposal and to ensure proper records are maintained.

It includes all controls including financial, operational and compliance controls and risk management. However, any system can ensure only reasonable and not absolute assurance that errors and irregularities are prevented or detected within a reasonable timeframe.

The Board of Directors have ensured that the financial reporting system has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Financial Statements for external purposes which have been carried in accordance with Sri Lanka Accounting Standards and Regulatory requirements.

The Company's compliance status with the Colombo Stock Exchange Listing Rules on Corporate Governance is disclosed on pages 13 to 24.

The Company has established a comprehensive suite of Corporate Policies that align with the Listing Rules of the Colombo Stock Exchange (CSE) and reflect the Company's commitment to ethical governance, transparency and sustainable business practices. These policies encompass key areas such as:

⯀ Matters relating to the Board of Directors.

⯀ Board Committees.

⯀ Corporate Governance, Nominations and Re-election.

⯀ Remuneration.

⯀ Internal Code of Business Conduct and Ethics.

⯀ Risk Management and Internal Controls.

⯀ Relations with shareholders and investors.

⯀ Environmental, Social and Governance (ESG) sustainability.

⯀ Control and Management of Company Assets and

Shareholder Investments.

⯀ Corporate Disclosures.

⯀ Whistleblowing.

⯀ Anti-Bribery and Corruption.

These policies are publicly accessible on the Company's website at https://www.sigiriya-village.com

The Audit Committee Report is set out on page 31 of this Report.

The Related Party Transactions are disclosed in Note 34.5 on pages 66 to 67

The Related Party Transactions Review Committee Report is set out on page 37 of this Report.

The Board of Directors has the overall responsibility for establishing and overseeing of the Company's risk

management framework. The risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and

to monitor risk and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive environment in which all employees understand their roles and responsibilities.

The Audit Committee oversees how the management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

Rule Adherence

Compliance with the following requirements and such requirements shall also be incorporated into the Articles of Association

1. Alternate Directors shall only be appointed in exceptional circumstances and for a maximum period of one (1) year from the date of appointment.

2. If an Alternate Director is appointed for a Non-Executive Director such alternate should not be an executive Director.

3. If an Alternate Director is appointed by an Independent Director, the person so appointed should meet the criteria of independence The Nominations and

   Governance Committee shall review and determine that the person nominated as the alternate would qualify as an Independent Director before such appointment is made.

4. Immediate Market Announcement regarding the appointment of an Alternate Director

5. Attendance of Alternate Director to be counted for the purpose of quorum at Board and Board Committee meetings.

1. Failure to disclose new appointments or changes to the Board of Directors

2. Failure to disclose changes to the composition of Board Committees in terms of Rule 9.10.3 (ii)

Not Applicable

Rule Adherence

Nomination & Governance Committee Report and contents to be incorporated

-Sections (a)-(m)

Complied