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

The Directors are pleased to present their report and the Audited Financial Statements of the Company, Sri Lanka Telecom PLC, and the Group for the financial year 2025.

Formation

Sri Lanka Telecom (“SLT”) was established by an Incorporation Order made under Section 2 of the State Industrial Corporations Act No. 49 of 1957 and published in the Extraordinary Gazette No. 596/11 of 6 February 1990. Subsequently, by order of the Minister of Posts and Telecommunications (“the Minister”) on 24 July 1991 under Section 23 of the Sri Lanka Telecommunications Act No. 25 of 1991 and published in the Gazette No. 675 of 9 August 1991, all properties, rights, and liabilities (other than those excluded by the agreement entered into between the Minister and SLT as per subsection 2 of Section 23 of the Sri Lanka Telecommunications Act) to which the Department of Telecommunications (“DoT”) was entitled or subject to immediately before the transfer date of 1 September 1991 were vested with SLT.

SLT was converted to a public limited company on 25 September 1996, under the Conversion of Public Corporations or Government Owned Business Undertakings into Public Companies Act No. 23 of 1987, vide Extraordinary Gazette No. 942/7 dated 25 September 1996 and the shares were listed on the Colombo Stock Exchange (“CSE”) in January 2003.

SLT was re-registered under the Companies Act No. 07 of 2007 as Sri Lanka Telecom PLC on 4 June 2007.

Principal Group Activities and Business Review

The Group offers a comprehensive portfolio of telecommunication services across Sri Lanka, with its core operations being in domestic and international fixed and mobile information and communication technology (ICT) operations. Additionally, the Group provides, inter alia, fixed and wireless broadband services, Internet Protocol Television (IPTV), data centre and cloud services, digital products, International Direct Dialling (IDD) services, mobile money, maritime transmission, and value-added services.

Details of the Company’s interest in subsidiaries/joint ventures and their business activities during the financial year 2025 are presented below.

Name of the subsidiary/associate company	Business activity
Mobitel (Pvt) Ltd.	Mobile telecommunication services
eChannelling PLC	Digital lifestyle solutions for healthcare and other industries
Mobit Technologies (Pvt) Ltd.	Ceased operations
Sri Lanka Telecom (Services) Ltd.	Total network solutions, IPTV support services, directory information, and digital services
SLT Human Capital Solutions (Pvt) Ltd.	Ceased operations
Galle Submarine Cable Depot (Pvt) Ltd	Repair and maintenance of submarine telecommunication cable systems to third parties
Xyntac Singapore Pte. Ltd	Wired telecommunication network operations in Singapore

A detailed review of the Company’s activities, the development of its businesses, and an indication of likely future prospects are given in the section Management Discussion and Analysis.

Board of Directors

In terms of section 168 (1) (h) of the Companies Act No. 07 of 2007 and the Listing Rules of CSE, the names of persons who held the office as Directors of the Company during the financial year ended 31 December 2025 are given below:

Name of Director	Position
Dr Mothilal de Silva	Chairman/INED
Mr Chan Chee Beng	NED
Mr Suren Amarasekera	INED
Mr Niel Unamboowe, PC	INED
Mr Chandrasiri Kalupahana	INED
Mr T M Thilakarathne	INED
Mr Dilip Silva	NED	Appointed w.e.f. 31 January 2025 and resigned w.e.f. 5 October 2025
Mr V U Kumar	NED	Resigned w.e.f. 11 May 2025
Mr Lawrence Paratz	NED	Ceased to be a Director w.e.f. 14 May 2025 in terms of Section 210 of the Companies Act
Mr Nihal Fonseka	INED	Appointed w.e.f. 26 June 2025
Mr A N Hapugala	NED	Appointed w.e.f. 13 November 2025
Mr Ragavendra Madhav	INED	Appointed w.e.f. 13 November 2025

NED – Non-Executive Director

INED – Independent Non-Executive Director

Brief profiles of the Directors are presented in the Board of Directors section of the Annual Report.

Appointment and Re-election of Directors

The Companies Act No. 7 of 2007 and the Articles of Association (“AoA”) of the Company regulate the appointment and removal of Directors.

As per the AoA of the Company, the Directors are authorised to appoint any person as a Director either to fill a casual vacancy or as an additional Director provided that the total number of Directors does not exceed the maximum number of Directors specified in the AoA. The Directors appointed during the year will hold office only until the next Annual General Meeting (“AGM”) and will offer themselves for re-election by the shareholders.

In addition, one-third of the Directors (or the number nearest to one-third) retire by rotation at each AGM and offer themselves for re-appointment by the shareholders.

Messrs. A N Hapugala and Ragavendra Madhav, who were appointed to the Board since the previous AGM, offer themselves for re-appointment in accordance with Article 97 of the AoA of the Company.

Mr T M Thilakarathne, who has been the longest in office since the last re-election, retires by rotation in terms of Articles 91 and 92 of the AoA of the Company and is eligible to offer himself for re-election.

In terms of Section 210 of the Companies Act No. 7 of 2007 and Companies (Amendment) Act No. 12 of 2025, Directors over the age of 70 years vacate office at the conclusion of the AGM and are eligible for re-appointment by the shareholders. Ordinary Resolutions will be placed before the shareholders for the re-appointment of Dr Mothilal de Silva, Mr Chan Chee Beng, and Mr Nihal Fonseka in terms of Section 211 of the Companies Act No. 7 of 2007, notwithstanding the age limit of 70 years stipulated by Section 210 of the Act.

Notices have been received from the two major shareholders, Secretary to the Treasury and the Global Telecommunications Holdings N.V., with 50.23% and 44.98% shareholding in the Company, respectively, nominating Dr Mothilal de Silva, Mr Chan Chee Beng, and Mr Nihal Fonseka, who are over 70 years of age, to the Board.

Directors of Subsidiaries and Associate Companies

The names of the Directors of SLT who held the office of Director in the subsidiaries during the financial year 2025 are given below:

Mobitel (Pvt) Ltd.

Dr Mothilal de Silva

Mr Chan Chee Beng

Mr Lawrence Paratz (Ceased to be a Director w.e.f. 14 June 2025 in terms of Section 210 of the Companies Act)

Mr Suren Amarasekera

Mr Niel Unamboowe, PC

Mr T M Thilakarathne

Mr Nihal Fonseka
(Appointed w.e.f. 23 September 2025)

Mr Ragavendra Madhav
(Appointed w.e.f. 13 November 2025)

Mr A N Hapugala
(Appointed w.e.f. 13 November 2025)

eChannelling PLC

Dr Mothilal de Silva

Mr Lawrence Paratz
(Ceased to be a Director w.e.f. 14 May 2025 in terms of Section 210 of the Companies Act and re-appointed as a Director w.e.f. 26 June 2025 in terms of section 211 of the Companies Act)

Mr Chandrasiri Kalupahana

Mr Chan Chee Beng
(Appointed w.e.f. 14 May 2025)

Sri Lanka Telecom (Services) Ltd.

Dr Mothilal de Silva

Mr T M Thilakarathne

Mr Lawrence Paratz (Ceased to be a Director w.e.f. 24 May 2025 in terms of Section 210 of the Companies Act)

Mr Suren Amarasekera
(Appointed w.e.f. 3 December 2025)

SLT Human Capital Solutions (Pvt) Ltd. (operation ceased and under liquidation)

Dr Mothilal de Silva

Mr T M Thilakarathne

Mobit Technologies (Pvt) Ltd. (operation ceased)

Dr Mothilal de Silva

Mr Lawrence Paratz

Galle Submarine Cable Depot (Pvt) Ltd. (An Associate Company)

Dr Mothilal de Silva

Mr Lawrence Paratz

Board Subcommittees

In terms of Section 186 of the Companies Act, the AoA of the Company, and the CSE Listing Rules, the following mandatory and voluntary subcommittees have been appointed by the Board to provide a detailed focus on particular issues and to assist the Board in decision-making.

• Audit Committee (AC)
• Nomination and Governance Committee (N&GC)
• Remuneration Committee (RC)
• Related Party Transactions Review Committee (RPTRC)
• Group Senior Tender Governance Committee (GSTGC)
• Technology Subcommittee (TSC)

Information relating to subcommittees is given in the section Governance on page 162.

Independent Advice

The Board has a procedure that permits Directors to seek independent professional advice at the Company’s expense. All Directors also have access to the advice and services of the Company Secretary and his nominated delegate.

Directors’ and Officers’ Liability Insurance and Indemnity

SLT maintains insurance cover for Directors, Officers, and employees who hold positions of managerial supervision in SLT and its subsidiaries. This is intended to provide protection against defence costs, civil damages, and in some circumstances, civil fines and penalties (provided they are insurable), following an action brought against them in their personal capacity.

As permitted by SLT’s AoA, and to the extent permitted by law, the Group indemnifies each of its directors and other officers against certain liabilities that may be incurred as a result of their positions within the Group. Indemnity was in force throughout the tenure of each director during the last financial year and remains in force.

Interest Register and Directors’ Interest in Contracts with the Company

An Interest Register is maintained by the Company as per the requirement of the Companies Act No. 7 of 2007. The Directors have made necessary declarations as provided in Section 192 (2) of the aforesaid Companies Act. The Interest Register is available for inspection by shareholders or their authorised representatives, as required by Section 119 (1) (d) of the Companies Act No. 7 of 2007.

The Company carries out transactions in the ordinary course of business at commercial rates with entities in which a Director of the Company is the Chairman or Director of such entities or holds substantial interest in such entities.

The Directors have no direct or indirect interests in any contract or proposed contract with the Company for the year ended 31 December 2025, other than those disclosed in Note 38 to the Financial Statements.

The Directors have declared all material interest in contracts involving the Company and have refrained from voting on matters in which they have a material interest.

Related Party Transactions

Transactions, if any, that could be classified as Related Party Transactions in terms of LKAS 24 ‘Related Party Disclosures’ are disclosed in Note 38 to the Financial Statements.

Related party transactions of the Company during the financial year have been reviewed by the Related Party Transactions Review Committee (RPTRC) and are in compliance with Section 9.14 of the CSE Listing Rules.

Non-Recurrent Related Party Transactions

There were no non-recurrent related party transactions where the aggregate value exceeded 10% of the equity or 5% of the total assets of the Company, whichever is lower, during the year ended 31 December 2025, which would have required specific disclosures in the Annual Report as required by the CSE Listing Rule 9.14.8 (1).

Recurrent Related Party Transactions

There were no recurrent related party transactions, of which the aggregate value exceeded 10% of the consolidated revenue of the Group during the year ended 31 December 2025 as per the audited accounts, which would have required additional disclosures in the Annual Report, as required by the CSE Listing Rule 9.14.8 (2).

Risk Management and Internal Control

The Board is responsible for reviewing the Group’s systems of risk management and internal control each year, and for ensuring their effectiveness, including in respect of relevant assurance activities. These systems are designed to manage, rather than eliminate, risks that may prevent achieving business objectives and delivering the Company’s strategy.

SLT has created a framework by incorporating its own best practices to address industry-specific challenges. Risks are categorised as strategic, external, and internal, and a risk map is developed accordingly.

Risk management and internal controls are reviewed by the Audit Committee (AC) as a permanent agenda item. The Risk Officer liaises with each risk owner and identifies the risks as high, medium, or low, and reports the outcomes to the AC. High risks, including the action taken to mitigate the risks, are deliberated by the AC, which escalates them to the Board for further deliberations and directions.

Internal Audit conducts audits in line with its annual audit plan and reports the findings to the AC. The internal audit team is required to present the findings of the internal audit to the Chief Executive Officer (CEO) and the management before reporting these details to the AC. The AC conducts its review and may direct a forensic audit to be conducted to identify the wrongdoers, if the issue is high risk and persistent.

The framework was designed primarily based on ISO 31000 (2018), which serves as a foundational standard. The material key controls will be the main focus of an integrated assurance plan, which will involve second-line assurance teams and Internal Audit assessing the design and operational effectiveness of SLT’s defined control activities.

More information on our Group risk management framework can be found in the Enterprise Risk Management section on pages 188 to 189.

Sustainability Reporting

SLT is conscious of the direct and indirect impacts of its business activities on the environment. The Group endeavours to minimise the adverse effects on the environment and ensure sustainable continuity of our natural resources.

SLT has a well-defined Environmental, Social, and Governance (ESG) policy, which is the foundation for effectively managing an organisation's sustainability goals, risks, and stakeholder expectations. This policy acts as a structured framework that translates high-level sustainability ambitions into actionable, measurable, and transparent corporate practices.

Accordingly, an ESG Steering Committee has been established at management level to enhance integration with the Enterprise Risk Management framework, while supporting the Company’s sustainability strategy, managing ESG risks, and ensuring alignment with global standards and local regulatory requirements, reinforcing SLT Group’s commitment to long-term value creation and responsible business practices.

Directors’ Statement on Internal Control over Financial Reporting

The Board of Directors acknowledges its responsibility for the design, implementation, and effectiveness of the Company’s internal control system. The aforesaid framework provides reasonable assurance regarding the reliability of financial reporting and compliance with regulations. The Board, assisted by the Audit Committee, ensures ongoing identification and management of significant risks.

The Audit Committee oversees internal control issues, working with internal and external auditors, while Internal Audit regularly tests controls and reports directly to the Committee. Management implements Board-approved policies and procedures.

Based on its review, the Board confirms that the internal control system is effective in ensuring reliable financial reporting and compliance with regulatory requirements.

Legal Proceedings

The Group is involved in various legal proceedings, including actual or threatened litigation and government or regulatory investigations. Details of legal and regulatory proceedings to which the Group is party are disclosed in Note 37 to the Financial Statements.

Apart from the information disclosed in Note 37 to the Financial Statements, the Group does not believe that there are currently any legal proceedings, or government or regulatory investigations that may have a material adverse impact on the operations or financial condition of the Group. In respect of each of the claims described in Note 37, the nature and progression of such proceedings and investigations can make it difficult to predict the impact they will have on the Group.

Directors’ and Chief Executive Officer’s Shareholding

The Directors did not hold shares in the Company or its subsidiaries during the financial year under review.

The shareholding of Mr Janaka Abeysinghe, former CEO (up to 5 September 2025), is given below:

	Number of shares
	1 January 2025	5 September 2025
Mr Janaka Abeysinghe former Chief Executive Officer	1,824	1,824

Remuneration and Other Benefits of Directors

The remuneration and other benefits received by the Directors are disclosed in Note 38 to the Financial Statements on page 238 as required by Section 168 (1) (f) of the Companies Act.

Shares and Debentures

Stated Capital

The Stated Capital of the Company as at 31 December 2025 was LKR 18,048,600,000 divided into 1,804,860,000 ordinary shares.
There were no changes to the issued capital of the Company during the year under review.

Details of the Company’s Stated Capital are disclosed in Note 33 to the Financial Statements.

Beneficial Ownership

The following shareholders held more than 10% of the issued shares as at 31 December 2025.

Secretary to the Treasury (Government of Sri Lanka)	50.23%
Global Telecommunications Holdings N.V. of Netherlands	44.98%

In terms of Section 130A of the Companies Act, the Company maintains a Register of Beneficial Owners as stated in the Act.

Voting Rights

Ordinary shareholders are entitled to receive notice and to attend and speak at any General Meeting of the Company. A shareholder entitled to attend and vote at a General Meeting may appoint a proxy to attend and vote in his place. A proxy need not be a shareholder of the Company.

Every shareholder present in person or by proxy (or in the case of a corporation, by a duly authorised representative) shall have one vote on a show of hands and one vote for every share held on a poll.

Debentures

In April 2018, the Company issued 70,000,000 Senior Unsecured Redeemable Rated 10-Year (2018/2028) Debentures as indicated below:

Type of debentures	Interest rate (per annum)	Number of debentures issued
Type A	12.75% payable annually	20,760,000
Type B	12.75% payable semi-annually	49,240,000

Minimum Public Holding Requirement

Given that the two controlling shareholders and other government-connected institutions are considered “non-public”, the public free float has reduced to 4.79% of the shareholding. The shares of SLT were transferred to the Second Board with effect from 29 October 2021.

In view of the current situation, the Board of Directors has explored various options available to increase the public float, such as private placement and secondary public share offerings, in consultation with the two major shareholders in order to comply with minimum public holding requirements of Section 7.13 of the CSE Listing Rules.

Financial Statements

The Financial Statements of the Group and the Company have been prepared in accordance with the Sri Lanka Financial Reporting Standards/Sri Lanka Accounting Standards (SLFRS/LKAS) issued by The Institute of Chartered Accountants of Sri Lanka and comply with the requirements of the Companies Act No. 7 of 2007.

The significant accounting policies adopted by the Company and its subsidiaries in preparing the Financial Statements are disclosed in Note 3 to the Financial Statements. These policies and applicable estimation techniques have been reviewed by the Directors, who have confirmed them to be appropriate for the preparation of the consolidated Financial Statements for 2025.

The Financial Statements for the year ended 31 December 2025, certified by the Chief Financial Officer and signed by two Directors, are presented on page 207 of this Annual Report.

A statement by the Directors of their responsibilities for preparing the Financial Statements is included in the Statement of Directors’ Responsibilities on page 198, while the Independent Auditors’ Report is presented on pages 200 to 204 of this Annual Report.

Financial Results and Appropriations

	2025		2024
	Company LKR Mn.	Group LKR Mn.	Company LKR Mn.	Group LKR Mn.
Revenue	72,980	114,176	71,309	111,148
Profit/(Loss)	6,245	10,014	2,113	3,120
Retained earnings	57,565	82,454	51,893	73,002

The results of the Company and the Group are presented in the Income Statement on page 205 of this Annual Report.

The movement of reserves is presented in the Statement of Changes in Equity on pages 208 to 209 of this Annual Report.

Dividends

The Directors recommend the payment of a first and final dividend of LKR 0.75 per share for the financial year ended 31 December 2025, subject to applicable taxes and payable as follows to the shareholders registered as at 22 June 2026 (in 2024, a dividend of LKR 0.25 per share was declared).

• Dividend payments will be directly deposited to the bank accounts registered with the Company on 26 June 2026.
• Dividend cheques will be posted to shareholders who have not registered bank accounts with the Company by 10 July 2026.

As required by Section 56(2) of the Companies Act No. 07 of 2007, the Directors have signed a certificate stating that, in their opinion and based on information available, the Company satisfies the Solvency Test immediately after the distribution is made and has obtained a certificate from the Auditors in terms of Section 57 of the Companies Act.

Property, Plant, and Equipment

The movements in property, plant, and equipment during the year are set out in Note 14 to the Financial Statements. The current status of the value of properties is disclosed on pages 243 to 246.

Auditors

In terms of Article 154 of the Constitution of the Democratic Socialist Republic of Sri Lanka and the National Audit Act, the financial statements of the Company and subsidiaries for the financial year 2025 has been audited by the Auditor General.

Similarly, in terms of Article 154(4) of the Constitution of the Democratic Socialist Republic of Sri Lanka, M/s Ernst and Young Chartered Accountants, has been appointed to assist the Auditor General in performing the audit of the Financial Statements of SLT.

Fees paid to the Auditors are disclosed in Note 7 to the Financial Statements on page 238 As far as the Directors are aware, the Auditors do not have any interest in the Company or its Group companies.

The audit fees and fees for non-audit services incurred are given below:

	2025 LKR Mn.	2024 LKR Mn.
Audit fees	15	15
Fees for non-audit services	7	3

Statutory Payments and Compliance with Laws and Regulations

The Directors confirm that, to the best of their knowledge (a) all taxes, duties, and levies payable by the Company and its subsidiaries; (b) all contributions, levies, and taxes payable on behalf of and in respect of the employees of the Company and its subsidiaries; and (c) all other known statutory dues that were due and payable by the Company and its subsidiaries as at the reporting date have been paid or, where relevant, provided for in the Financial Statements.

The Company has also ensured that it complied with the applicable laws and regulations, including the CSE Listing Rules, except with regard to the requirement of the minimum public holding as set out in Section 7.13 of the Listing Rules.

SLT is compliant with the rules and licence conditions of the Telecommunications Regulatory Commission of Sri Lanka (TRCSL). In addition, SLT is required to adhere to the guidelines issued by the Public Enterprises under the Ministry of Finance and the Ministry of Digital Economy, since the Government of Sri Lanka holds more than 50% of the Company through the Secretary to the Treasury. However, SLT, as a listed entity operating in a competitive business environment, adopts its own policies to suit its business operations, while also making maximum effort to comply with State regulations.

Environmental Protection

After making adequate enquiries from management, the Directors are satisfied that the Company and its subsidiaries operate in a manner that minimises the detrimental effects on the environment and provide products and services that are beneficial to customers and the communities within which the Group operates.

Employment Policies

The employment policies of SLT cover issues such as diversity, employee well-being, and equal opportunities. The Company takes its responsibility towards persons with physical disabilities seriously and does not discriminate against any employee or prospective employee based on physical disability. Employees who become disabled during their service at SLT will be retained in employment, wherever possible, and provided with rehabilitation and training.

The Group companies operate within a framework of Human Resource policies, practices, and regulations appropriate to their respective market sectors. Policies and procedures for recruitment, training, career development, and the Code of Ethics for Employees promote equality of opportunity regardless of gender, sexual orientation, age, marital status, disability, race, religion or other beliefs, and ethnic or national origin. The aim is to foster a culture in which all employees have the opportunity to develop fully according to their individual abilities and the needs of the Group.

The number of persons employed by SLT and the Group is disclosed in Note 7.1 to the Financial Statements on page 238 as stated elsewhere.

Key Updates for 2025

The process of liquidation of SLT Property Management was completed on 22 April 2025.

Mr Imantha Wijekoon was appointed as the CEO (interim) in place of Mr Janaka Abeysinghe, who retired in September 2025. The Board appointed Mr Riyaaz Rasheed as the CEO. He assumed duties on 1 January 2026.

Post-Balance Sheet Events

Except for matters disclosed in Note 41 to the Financial Statements, there are no material events as at the date of the Auditors’ Report that require adjustments to, or disclosure in, the Financial Statements.

Going Concern

The Directors have reviewed the Company’s business plans and are satisfied that the Company has adequate resources to continue its operations in the foreseeable future, thereby justifying the adoption of the going concern basis in preparing the Financial Statements.

Corporate Governance

The Corporate Governance requirements stipulated under the CSE Listing Rules have been adhered to by the Company and details are provided in the Governance Report on pages 162 to 177.

Annual General Meeting (AGM)

The AGM of the Company will be held as a virtual meeting 19 June 2026 at 10.00am. The Notice of the Annual General Meeting appears on page 301 of the Annual Report.

Acknowledgement of the Content of the Report

As required by Section 168(1) (k) of the Companies Act No. 07 of 2007, the Board of Directors hereby acknowledges the contents of this Annual Report.

By order of the Board of
Sri Lanka Telecom PLC

14 May 2026
Colombo