Report of the Audit Committee

The Audit Committee comprised four (4) members during the first half of the financial year and consists of Five (5) members during the second half of the financial year. The Committee was chaired by Mr A D B Talwatte up to 1 October 2024 and thereafter Mr R Mihular from 1 October 2024.

Composition

Mr R Mihular (Chairman) – Independent Non-Executive
(Appointed w.e.f. 1 October 2024)

Mr A Talwatte (Chairman/Member) – Independent Non-Executive
(Was the chairman until 1 October 2024 and resigned w.e.f. 31 March 2025)

Mr A Cabraal (Member) – Independent Non-Executive

Mr S Renganathan (Member) – Independent Non-Executive

Mr S Shishoo (Member) – Independent Non-Executive
(Resigned w.e.f. 31 March 2025)

Meetings

The Audit Committee met five (5) times during the year. Attendance of the Committee members at each of these meetings is as follows.

Attendance

Mr R Mihular (Chairman) – Independent Non-Executive
2 of 2 meetings

Mr A D B Talwatte (Chairman/Member) – Independent Non-Executive
5 of 5 meetings

Mr A Cabraal (Member) – Independent Non-Executive
5 of 5 meetings

Mr S Shishoo (Member) – Independent Non-Executive
5 of 5 meetings

Mr S Renganathan (Member) – Independent Non-Executive
5 of 5 meetings

Secretary to the Committee

Corporate Services (Private) Limited (the Company Secretary) functions as the Secretary to the Audit Committee and directly reports to the Board Audit Committee.

Charter of the Committee

The terms of reference of the Board Audit Committee are clearly defined in the Charter. The Charter of the Board Audit Committee approved by the Board is revisited and revised annually with the concurrence of the Board of Directors to ensure that new developments relating to the functions of the Committee are addressed and updated. The Audit Committee Charter was revised to align with the newly introduced listing rules of CSE on Corporate governance, which became effective in phases since 1 October 2023. The updated charter was approved by the Board in May 2025.

The Committee is accountable to the Board and reports on its activities regularly to the Board of Directors. The Committee has unrestricted access to information, cooperation from Management and discretion to invite any Director or Executive Officers to attend its meetings. The functions of the Committee are geared to assist the Board of Directors in its general oversight responsibilities in relation to financial reporting, internal controls, risk management, compliance, internal and external audit. The Composition, roles and functions of the Committee are in accordance with the Listing Rules on Corporate Governance of the Colombo Stock Exchange and the Code of Best practices on Corporate Governance issued by The Institute of Chartered Accountants of Sri Lanka.

Authority

The Committee has the explicit authority to investigate into any matter, full access to information and to obtain external professional advice at the Company’s expense and discretion to invite management and directors to attend its meetings.

Responsibilities of the Audit Committee

The primary objectives of the Audit Committee include:

• Reviewing of the financial information of the Company to ensure the Integrity of the Financial Reporting and compliance with reporting requirements stipulated under the Sri Lanka Accounting Standards, Companies act and other related regulations.
• Ensuring the Company's Financial Statements present a true and fair view
• Review and evaluate company’s risk management framework including the Risk policies adopted and direct on prompt corrective actions to mitigate the effects of specific risks in case such risks are at a point beyond the prudent levels decided by the committee on the basis of the Listed Entity’s policies and regulatory requirements.
• Ensure that the Company adopts and is guided with corporate governance requirements, promote ethical practices and establish confidential reporting procedures for whistleblowing in the best interest of all stakeholders.
• Company’s ability to continue as going concern in the foreseeable future.
• Monitoring Independence and Performance of the External Auditor and Review non-audit services provided by the external auditor. Follow-up with the management on external audit findings and ensure that proper remedial actions are taken as recommended.
• Review the internal audit and investigation reports and ensure the independence of the Internal Audit functions and that it is performed with impartiality, proficiency and due professional care.
• Review the adequacy and effectiveness of the Company’s Internal Controls, Risk Management systems and Governance Processes and assess the controls in place to prevent the leakage of material information to unauthorised persons.

Meetings

The proceedings of the Committee meetings are conducted in accordance with the terms of the Board Audit Committee. The Group Chief Executive Officer, Group Chief Finance Officer, Sector Financial Controllers and Internal Audit and Compliance Officer are regular attendees to the meetings by invitation. The External Auditors attend meetings on invitation to brief the Committee on external audit related and other specific matters.

During the year 2024/25, the Committee held five (5) meetings. Attendance of the members at meetings is set out in the table on page 97 of the Annual Report.

Financial reporting system

In order for the Board to assure the integrity of the Financial Statements of the Company in the lines of significant financial reporting, disclosures, and judgments contained therein, the committee assisted the Board in its oversight responsibility. The assurance is assumed through an independent review of risks, controls and governance processes as well as the Committee has received assurance from the Group Chief Executive Officer and Group Chief Financial Officer of the Company that financial records have been properly maintained, and the financial statements give a true and fair view of the Company’s operations and finances. The Committee quarterly reviews the financial statements and annual financial statements are reviewed in consultation with the external and internal auditors prior to making recommendation to the Board for approval.

Further, special emphasis was given on the following aspects when reviewing the financial statements;

• Adequacy and effectiveness of the internal control system including information system controls and financial reporting process in place to provide reasonable assurance on accuracy and reliability of information reported.
• Consistency of the adopted accounting policies and practices and underlying assumptions for estimates and judgments.
• Compliance with Sri Lanka Accounting standards (SLFRS/ LKAS) as well as new accounting standards that came into effect during the year.
• Significant accounting decisions, disclosure of complex or unusual transactions and reporting issues together with management actions taken to resolve them.
• Tax advisory reviews, assessments and compliance with other regulatory requirements.

The Report of the Audit Committee to the Board of Directors of Sunshine Holdings PLC

The management of Sunshine Holdings PLC is responsible for internal control and financial reporting, including the preparation of consolidated Financial Statements. Independent auditors are responsible for auditing these statements in accordance with auditing standards to ensure they fairly represent the Company's operations and financial position. The Audit Committee oversees and monitors these processes, and annually recommends to the Board an independent accounting firm to serve as the Company's external auditors.

To fulfill its obligations the Audit Committee carried out the following activities

• Reviewed and discussed the consolidated Financial Statements for the financial year ended 31 March 2025 with management and the independent auditors
• Ensured the consolidated Financial Statements comply with Sri Lanka Financial Reporting Standards and accurately represent the Company's operations and financial position
• Coordinated with the Risk Committee to review procedures for identifying and managing business risks
• Assessed the operational effectiveness of internal controls
• Discussed and reviewed information system security measures implemented by management
• Reviewed compliance reports from Senior Management to monitor adherence to laws and regulations
• Evaluated the Company's ability to continue as a going concern based on the audited Financial Statements
• Reviewed and discussed annual and quarterly Financial Statements prior to their release, ensuring compliance with Sri Lanka Financial Reporting Standards and the Companies Act, No. 7 of 2007
• Examined internal audit reports and external audit findings to support the integrity of reported results
• Reviewed procedures established by management for regulatory compliance
• Recommended to the Board the approval of non-audit services to be granted to the external auditors
• Obtained a confirmation of independence from the external auditors and recommended KPMG Chartered Accountants as the independent auditors to audit and report on the annual consolidated Financial Statements

External auditor

The Committee is satisfied that the independence of the external auditors, KPMG, has not been compromised by any events or services that could create a conflict of interest. The nature of services provided by the auditors and the level of audit and non-audit fees from Sunshine Holdings PLC and its subsidiaries were carefully considered. The Committee reviewed the arrangements made by the auditors to maintain their independence, receiving confirmation of compliance with the independence guidelines outlined in the Code of Ethics of the Institute of Chartered Accountants of Sri Lanka, the Companies Act No. 7 of 2007 and amended CSE listing rules. The Committee also met with the external auditors without management present prior to the finalisation of the Financial Statements. The Committee maintains its independence from both the external and internal auditors of the Company and the Group.

Internal audit

The Committee monitors the effectiveness of internal audit function by reviewing the adequacy of the audit coverage, functions and resources of the internal audit department and ensures that the department has necessary authority to carry out its audits. It also ensures the independence of the Audit Function by appraising the activities it audited and that those were performed with impartiality, proficiency and due professional care.

The Committee approves the audit plan and methodology formulated by the Outsourced Internal Auditor (M/s. Ernst & Young) and reviews its progress of implementation regularly. In addition to the outsourced internal audit function, the Committee also oversees the activities of the in-house Internal Audit and Compliance Officer, ensuring alignment with the overall audit strategy, monitoring compliance with internal policies and regulatory requirements, and facilitating coordination between internal and external audit efforts. Performance of the internal audit function is quarterly appraised by the Committee against the Audit Plan and set key performance indicators. During the year special emphasis was given to enhance the scope of internal audit work in the areas of governance, emerging risks and controls, and information systems security. Committee reviewed several information security policies for implementation and reviewed application system with the assistance of external consultants and presentations were made by the respective audit firm in this regard.

Significant findings of Internal Audits and other Assignments with recommendations to the management are considered and appropriate acclamations have been issued by the Committee. Further the progress of follow-up actions on internal and external audit recommendations are monitored on a regular basis.

Conclusion

The Committee believes that adequate controls and procedures are in place to provide reasonable assurance that the Company's assets are safeguarded and that the reported financial results present a true and fair view. The Audit Committee concurs that the adoption of the going concern premise in the preparation of the Financial Statements is appropriate. The Audit Committee recommended to the Board of Directors that the Financial Statements as submitted be approved.

An independent evaluation of the effectiveness of the Committee was carried out by the Board during the year. Considering the overall conduct of the Committee and its contribution to the overall performance of the Company, the Committee has been rated as effective.

R Mihular
Chairman
Audit Committee

28 May 2025