Contents Page No. Corporate Information 02 Notice of Meeting 03 Chairman's Report 04 Board of Directors 05 Report of the Directors 06 Corporate Governance 09 Report of the Auditors 11 Income Statement 12 Balance Sheet 13 Statement of Changes in Equity 14 Cash Flow Statement 15 Significant Accounting Policies and Notes to the Financial Statements 16 Shareholder Information 28 10 Year Summary 29 Form of Proxy (Detachable)

Corporate Information 2 POSTAL ADDRESS: C/o RENUKA HOTELS LTD., 328, GALLE ROAD, COLOMBO 3 TELEPHONE : 011 2448968-9 011 2573598 FAX : 011 2574137 DIRECTORS : Mr. R. B. Thambiayah B.A.,F.B.I.M. (Chairman/Managing Director) Mr. Merril J. Fernando Mr. Daya Perera P. C. (Resigned w.e.f. 20 th July 2008) Mrs. N. A. Thambiayah Mrs. M. A. Jayawardena Ms. S. R. Thambiayah Mr. R. S. Tissanayagam Mr. R. F. C. De Livera SECRETARY : Mrs. M. A. Jayawardena F.C.A., F.C.M.A. BANKERS : Hongkong and Shanghai Banking Corporation Standard Chartered Bank AUDITORS : BDO Burah Hathy Chartered Accountants, 65/2, Sir Chittampalam A. Gardiner Mawatha, Colombo 2. REGISTERED OFFICE : 9 th Floor, Renuka Building, 41, Janadhipathi Mawatha, Colombo 1. LEGAL FORM : A Public Quoted Company with Limited Liability (Incorporated in Sri Lanka on 26 th March 1980)

Notice of Meeting 3 Notice is hereby given that the Twenty Eighth Annual General Meeting of CARGO BOAT DEVELOPMENT COMPANY PLC will be held at the Conference Room, Hotel Renuka, 328, Galle Road, Colombo 3, on 29 th September 2008 at 10.00 a.m. Business : 1. To confirm the minutes of the 27 th Annual General Meeting held on 21 st September 2007. 2. To receive and consider the Report of the Directors and the Audited Statement of Accounts for the year ended 31 st March 2008 with the Report of the Auditors thereon. 3. To declare a dividend. 4. To re-elect Mr. Merril J. Fernando as a director of the Company, who retires pursuant to Section 210 of the Companies Act No. 7 of 2007. Pursuant to section 211 of the Companies Act, special notice of the following Ordinary Resolution has been received by the Company from a member of the Company. "That Mr. Merril J. Fernando who has reached the age of the 70 years on 6th May 2000 be re-elected as a Director of the Company and it is hereby declared that the provision of Section 210 of the Companies Act No. 7 of 2007 shall not apply to Mr. Merril J. Fernando." 5. To re-elect Mr. R. S.. Tissanyagam who retires by rotation at the Annual General Meeting in terms of the Articles of Association of the Company as a Director. 6. To re-elect Ms. S. R. Thambiayah who retires by rotation at the Annual General Meeting in terms of the Articles of Association of the Company as a Director. 7. To re-appoint M/s BDO Burah Hathy, Chartered Accountants as Auditors of the Company and authorise the Directors to determine their remuneration. By Order of the Board of Directors of Cargo Boat Development Company PLC M. A. Jayawardena SECRETARY Colombo, 26 th August 2008. Notes: A member entitled to attend and vote at the Meeting is entitled to appoint a Proxy to attend and vote instead of him/her. Such proxy need not be a member of the Company. A Form of Proxy accompanies this Notice. The completed Form of Proxy should be deposited at No. 328, Galle Road, Colombo 3, not later than 48 hours before the time appointed for the Meeting.

Chairman's Report 4 On behalf of the Board of Directors, I have pleasure in welcoming you to the 28 th Annual General Meeting of the Cargo Boat Development Co. PLC. I am also privileged to present to the shareholders the report pertaining to the operations of our Company during the year ended 31st March 2008. Operations: The year 2007/2008 was a satisfactory year for the Company as we were able to maintain full occupancy on all the floors for the entire year. M/s. Julius & Creasy and the other prestigious tenants continued their tenancy throughout the year through extension of leases. The constant and consistent maintenance and upgrading of the building has been continuing which has helped the company to maintain the building in a pristine state and attract prestigious tenants Profits: During the year 2007/2008, the Company was able to record a profit before tax of Rs. 50.3 m. Of this Profit, Interest and non-operating Income contributed of Rs. 31.6 m during the year. Non operating Income consists of Dividends and Profits on share trading. Dividends & Appropriations: I am pleased to inform you that your Directors have recommended a final dividend of Rs. 1/- per share for the year ended 31 st March 2008. Investments: The Company continued to maintain its investment portfolio in outside enterprises, and the cost of such investments increased from Rs. 282.3 m to Rs. 295.6 m at the year end. The market value of the investments showed an increase of 37.9% over cost as at 31.03.2008. Investment Income during the year 2007/2008 recorded a figure of Rs. 25.4 m. Acknowledgements: I thank our Auditors, M/s BDO Burah Hathy for their close co-operation during the year. My thanks are also due to the Directors, the management and staff who have worked excellently during the year with a deep sense of dedication and have come in for praise from the prestigious tenants and others who have business at our building. R. B. THAMBIAYAH CHAIRMAN Colombo, 26 th August 2008.

Board of Directors 5 Mr. R. B. Thambiayah Chairman / Managing Director Educated at the University of Madras, where he received a Degree in Economics, Mr. Thambiayah s early career was in Tourism. He was the President of Colombo City Tourist Hotels Association and Vice- President of the Tourism Hotels Association of Sri Lanka. He is Chairman and Managing Director of several companies in the Renuka Hotels Group and sits on the Board of a number of other companies including NDB Bank and Royal Ceramics Lanka PLC. He is a Fellow of the Chartered Management Institute (UK) Mr. M. J. Fernando Director Mr. Fernando is the founder of the MJF Group of Companies and the global brand DILMAH which relaunched Ceylon Tea successfully. He developed the first ever brand owned in a tea producing country, which is competing successfully with multinational brands to become a respected global brand name. He pioneered value addition to tea at origin, combined with branding and marketing with the objective of retaining in Sri Lanka the profits which are lost to the producer through traders whose blending and packing centers are overseas. He was appointed to the Board on 30.08.93. Mrs. N. A. Thambiayah Director Mrs. Thambiayah is an Advertising & Marketing professional with over 25 years experience. She is a Graduate of the Chartered Institute of Marketing UK. She is an AFS Scholar and was an exchange student in Los Angeles USA. She has been a member of Zonta International Club I Colombo from 1997. She is also a member of SAARC Women s Association, Sri Lanka Chapter from 1998 and was the President of the Association in 2003/2004. She was appointed to the Board on 02.09.96. Mrs. M. A. Jayawardena Director years in various capacities including Group Chief Accountant of the Copperbelt Companies of Anglo American Corporation (Central Africa) Ltd. She was also the Group Financial Controller of EDS Group of Companies overseeing the Accounting and Finance of their regional IT Companies in South Asia prior to joining the Company. She was appointed to the Board on 20.03.04. Ms. S. R. Thambiayah Director Ms. Thambiayah holds a bachelor of Economics (Hons.) degree from the University of Nottingham, UK; and a Master of Management in Hospitality, from Cornell University, USA. She began her career in the hospitality industry in 1999 as a Management Trainee at Hotel Renuka and Renuka City Hotels and is currently General Manager for both hotels. Ms. Thambiayah has also held positions at Nestle Lanka Ltd., and with Expedia Inc. in New York as a Market Manager during her career. She was appointed to the Board on 14.03.05. Mr. R. S. Tissanayagam Director Mr. Tissanayagam, FCA, FCMA, FCPM is the Chairman/Managing Director of Premium Brands Ltd., which is the major shareholder in I D Lanka Limited one of the country s leading companies in the alcoholic beverage industry. With the experience he has gained over a 20 year association with some of the worlds most prestigious Distillers and Vintners, he has a wide knowledge of the business. He is also on the boards of the East India Group of Companies, Quickshaws Ltd., Ceylon Asset Management Co. Ltd., and is a Trustee of Joseph Fraser Memorial Hospital. Mr. Tissanayagam was appointed to the Board on 21.09.05. Mr. Romesh De Livera Director Mr. De Livera is currently the Managing Director of MSC Lanka Ltd. He was appointed to the Board on 21.09.05. Mrs. Jayawardena is a Fellow of the Institute of Chartered Accountants of Sri Lanka and the Chartered Institute of Management Accountants, UK. Mrs. Jayawardena has over 25 years experience in Accounting and Finance both locally and internationally. She worked in Zambia for more than 13

Report of the Directors for the year ended 31 March 2008 6 1. The Directors present herewith the Audited Financial Statements for the year ended 31 st March 2008. 2. Results The results for the year and changes in equity are set out in the income statement and statement of changes in equity on pages 12 and 14 respectively. 3. State of affairs The state of affairs of the Company as at 31 st March 2008 is set out in the balance sheet on page 13. 4. Principal activity The main activity of the Company which remains unchanged since last year, is Property development. 5. Profit appropriations 2008 2007 Profit after tax 39,833,533 68,641,683 Transfer to General Reserve (50,000,000) (50,000,000) (10,166,467) 18,641,683 Retained profit B/F 42,982,541 29,440,876 Profit before appropriations to the shareholders 32,816,074 48,082,559 Dividend paid (15,300,056) (5,100,018) 17,516,018 42,982,541 6. Directors The Directors of the Company are as follows : Mr. R. B. Thambiayah - Chairman/Managing Director Mr. Daya Perera - (resigned w.e.f. 20 th July 2008) Mr. Merril J. Fernando Mrs.N. A. Thambiayah Mrs. M. A. Jayawardena Ms. S. R. Thambiayah Mr. R. S. Tissanayagam Mr. R. F. C. De Livera In accordance with the Articles of Association, Mr. R. S. Tissanayagam and Ms. S. R. Thambiayah retire by rotation and being eligible, offer themselves for re-election. Mr. Merril J. Fernando retires in terms of Section 210 of the Companies Act No. 7 of 2007. Pursuant to section 211 of the Companies Act special notice of the following Ordinary Resolution has been received by the Company from a member of the Company. "That Mr. Merril J. Fernando who has reached the age of 70 years on 6th May 2000 be re-elected as a Director of the Company and it is hereby declared that the provision of Section 210 of the Companies Act No. 7 of 2007 shall not apply to Mr. Merril J. Fernando." Mr. Daya Perera resigned from the Board of Directors on 20 th July 2008. The Board wishes to place on record their appreciation to Mr. Daya Perera for the Services rendered by him during his term of office.

7 Report of the Directors for the year ended 31 March 2008 (Continued) 7. Directors interests in the shares of the Company The interest of the Directors in the shares of the Company at 31st March were as follows : 2008 2007 Number Number Mr. R. B. Thambiayah 3,003 3,003 Mrs. N. A. Thambiayah 1,647 1,647 Mr. Merril J. Fernando 28,600 Nil Mrs. M. A. Jayawardena Nil Nil Ms. S. R. Thambiayah Nil Nil Mr. R. F. C. De Livera Nil Nil Mr. R. S. Tissanayagam Nil Nil 8. Directors interests in contracts and proposed contracts with the Company The Directors of the Company were not directly or indirectly interested in contracts with the Company during the year ended 31 st March 2008 except as stated in Note 26 to the Financial Statements. 9. Dividends The Directors recommend a payment of a dividend of Rs. 1.00 per share for the year ended 31st March 2008, payable after approval by the shareholders. 10. Changes in non current assets The movement in non current assets during the year are set out in Notes 10, 11 and 12 to the financial statements. 11. Substantial Shareholdings At 31 st March 2008, Lancaster Holding Limited, and Renuka Properties Limited, held approximately 30.13%, and 22.11%, respectively of the Company's issued share capital. 12. Post Balance Sheet events (a) As required by Section 56 (2) of the Companies Act No. 07 of 2007, the Board of Directors have confirmed that the Company satisfies the solvency test in accordance with Section 57 of the Companies Act No. 7 of 2007 and will be obtaining a certificate from the auditors, prior to recommending a final dividend of Rs. 1.00 per share amounting to Rs. 10,200,036 of the issued share capital of ordinary shares for the year under review, for approval by the shareholders at the Annual General Meeting to be held on 29th September, 2008. Other than those disclosed in note No. 12 (a) above, no other material events have occurred after the Balance Sheet date which require adjustments or disclosure in the Financial Statements. 13. Auditors A resolution to re-appoint our present auditors, Messrs. BDO Burah Hathy Chartered Accountants, who have indicated their willingness to continue, will be proposed at the Annual General Meeting. BY ORDER OF THE BOARD Colombo, 26 th August 2008. M. A. Jayawardena Secretary

Statement of the Directors' responsibility for the preparation of financial statements 8 The Board of Directors is responsible for preparing and presenting the financial statements, which are set out on pages 12 to 27. As per the provisions of the Companies Act, No. 7 of 2007 the Directors are required to prepare financial statements for each financial year giving a true and fair view of the state of affairs of the Company as at the end of the financial year. In preparing the financial statements, the Directors have selected appropriate accounting policies and applied them in a consistent manner. Such policies are supported by reasonable and prudent judgement and all applicable Accounting Standards have been followed. The Directors are also confident that the Company has adequate resources to continue in operation and have applied the going concern basis in preparing these Financial Statements. Further, the Directors have a responsibility to ensure that the Company maintains sufficient accounting records to disclose, with reasonable accuracy the financial position of the Company and to ensure that the financial statements presented comply with the requirements of the Companies Act, No. 7 of 2007. The Directors have taken reasonable steps to safeguard the assets of the Company and established appropriate internal control systems with a view to preventing and for the detection of fraud and other irregularities. The Directors are confident that they have discharged their responsibility as set out in this statement. They also confirm that to the best of their knowledge all statutory payments payable by the Company as at the balance sheet date have been paid or where relevant, provided for. M. A. Jayawardena Secretary Colombo, 26 th August 2008.

Corporate Governance 9 Introduction: Corporate Governance deals with the systems by which companies are led, directed and controlled, the role of the Board of Directors, the frame-work of internal controls and the relationships between the Board of Directors, shareholders and Auditors. The platform on which Corporate Governance principles are structured in Sri Lanka is that the Board of Directors is responsible for the proper Governance of the Company. In that context, the board of Directors of Cargo Boat Development Company PLC, have recognized that their responsibilities include the setting out of the Company's strategic aims, providing the necessary leadership to implement such aims, supervising the management of the business and reporting to the shareholders on their stewardship. Therefore, they strive to discharge such duties collectively. The shareholders' responsibilities cover the appointing of Directors and Auditors and satisfying themselves that the appropriate Governance structures are in place. The Board of Directors The Board of Directors of Cargo Boat Development Company PLC, takes responsibility for the good Corporate Governance of the Company. The Board sets out the Company's strategic focus, and oversees the business and connected affairs of the Company and it also formulates the strategic objectives and policy frame work for the Company. Board composition and Directors Independence as at 31st March 2008. Name of Director Type Shareholding Mr. R. B. Thambiayah Executive Chairman / Managing Director Yes Mr. Merril J. Fernando Independent Non Executive Director Yes Mrs. N. A. Thambiayah Non Executive Director Yes Mrs. M. A. Jayawardena Executive Director No Ms. S. R. Thambiayah Executive Director No Mr. R. S. Tissanayagam Independent Non Executive Director No Mr. R. F. C. De Livera Independent Non Executive Director No One of the Non Executive Directors is categorised as non-independent as his period of service has exceeded the stipulated period. However, the Board of Directors of the Company has taken all other matters into consideration and has decided the said Director to be independent. Audit Committee The Company's Audit Committee consists of 3 non-executive Directors who are Mr. R. S. Tissanayagam (Chairman), Mr. R. F. C. De Livera and Mr. M. J. Fernando. The Internal and External Auditors of the Company have direct access to the Committee, which ensures that their independence is not impaired in any way. The report of the Audit Committee is set out in page 10. Directors responsibility for the preparation of the Financial Statements The Board of Directors accepts the responsibility for the preparation of the financial statements, maintaining adequate records for safeguarding the assets of the Company, and preventing and detecting fraud and/or other irregularities. The Board of Directors also confirm that the applicable Sri Lanka Accounting Standards have been adhered to, subject to any material departures being disclosed and explained in the Notes to the Accounts.

10 Corporate Governance (Contd.) The Board of Directors further confirm that suitable accounting policies consistently applied and supported by reasonable and prudent judgement and estimates, have been applied in the preparation of the financial statements. Compliance Regarding Payments The Board of Directors confirm that all known statutory payments have been paid up to date and that all retirement gratuities have been provided for in the financial statements. At the same time, all management fees and payments made to related parties have been reflected in the financial statements. Internal Control The Board is responsible for ensuring that the Company has adequate and effective internal controls in place. Going Concern The board of Directors is satisfied that the Company is a going concern and has adequate resources to continue in business for the foreseeable future. For this reason, the Company follows the going concern basis when preparing financial statements. AUDIT COMMITTEE REPORT The purpose of the Audit Committee is to assist the Directors fulfil their responsibility with regard to certain aspects of best Corporate Governance practices, namely Audit and Risk Management. The Audit Committee is empowered to review the activities and financial affairs of the Company. The Audit Committee also receives direct reports from the External Auditors on their audit findings and provides a forum for the impartial review of these reports. The Committee also reviews the External Auditor's management letter and examines the actions taken by management in response thereto. The Audit Committee, through independent reviews by the Internal Auditors and the External Auditors, ensures that the internal controls continue to be effective. The Audit Committee thereby provides assurance that control issues, which would have a bearing on the management of enterprise risks, are identified and appropriate and timely action is taken to overcome these. The Audit Committee is satisfied that a strong control environment arising from the effectiveness of organisational structures and compliance with the Company's accounting and operational policies is prevalent within the Company. By their very nature, these controls provide reasonable, but not absolute, assurance that the financial positions of the Company is well managed, and to the extent possible, systems are in place to minimize the impact of identifiable risks. (Sgd.) R. S. Tissanayagam Chairman Audit Committee

11 To the Shareholders of Cargo Boat Development Company PLC Report on the Financial Statements We have audited the accompanying financial statements of Cargo Boat Development Company PLC, which comprise the balance sheet as at 31 st March, 2008, the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 16 to 27. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Scope of Audit and Basis of Opinion Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion. Opinion In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31 st March, 2008 and the financial statements give a true and fair view of the Company s state of affairs as at 31 st March, 2008 and its profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards. Report on Other Legal and Regulatory Requirements These financial statements also comply with the requirements of Section 151(2) of the Companies Act No. 07 of 2007. (Sgd.) BDO Burah Hathy Chartered Accountants 26 th August 2008.

Income Statement For the year ended 31 st March 2008 2007 (all amounts in Sri Lanka Rupees) 12 Notes Revenue 3 32,164,090 25,174,935 Direct Expenses (7,086,137) (13,994,564) GROSS PROFIT 25,077,953 11,180,371 OTHER INCOME 4 30,546,006 70,793,601 Administrative Expenses (5,216,801) (7,641,155) Finance Expenses 5 (109,204) (175,195) PROFIT BEFORE TAX 6 50,297,954 74,157,622 Income Tax Expenses 7 (10,464,421) (5,515,939) PROFIT FOR THE PERIOD 39,833,533 68,641,683 Earnings per share - Basic 8 4 7 Dividend per share 9 1.00 1.50 The significant accounting policies and notes on pages 16 to 27 form an integral part of these financial statements. Figures in brackets indicate deductions. Auditors Report - page 11.

Balance Sheet As at 31 st March 2008 2007 13 (all amounts in Sri Lanka Rupees) Notes ASSETS Non-Current Assets Property, Plant and Equipment 10 927,000 1,119,839 Investment Property 11 36,557,175 37,511,385 Investments 12 310,789,112 298,611,380 Total Non Current Assets 348,273,287 337,242,604 Current Assets Trade and Other Receivables 13 6,417,768 6,030,827 Cash and Cash Equivalents 14 35,747,059 20,313,908 Total Current Assets 42,164,827 26,344,735 TOTAL ASSETS 390,438,114 363,587,339 EQUITY AND LIABILITIES Capital and Reserves Stated Capital 15 119,000,420 119,000,420 General Reserve 218,999,880 168,999,880 Retained Earnings 17,516,018 42,982,541 Total Equity 355,516,318 330,982,841 Non-Current Liabilities Retirement Benefit Obligation 16116,925 92,550 Borrowings 17 2,019,048 Deferred Tax Liabilities 18 10,403,234 10,572,136 Rental Deposits 6,404,720 5,944,960 Total Non Current Liabilities 16,924,879 18,628,694 Current Liabilities Trade and Other Payables 19 6,618,483 5,682,842 Borrowings 2,019,048 2,285,715 Due to Related Parties 20 33 576,468 Current Tax Liabilities 4,683,346 807,944 Bank Overdraft 21 4,676,007 4,622,835 Total Current Liabilities 17,996,917 13,975,804 TOTAL EQUITY AND LIABILITIES 390,438,114 363,587,339 The significant accounting policies and notes on pages 16 to 27 form an integral part of these financial statements. Figures in brackets indicate deductions. These financial statements are in compliance with the requirements of the Companies Act No. 7 of 2007. (Sgd.) Mrs. M. A. Jayawardena - Finance Director The Board of Directors is responsible for the preparation and presentation of these financial statements. Approved and Signed for and on behalf of the Board. (Sgd.) Mr. R. B. Thambiayah - Director (Sgd.) Mr. R. S. Tissanayagam - Director 26 th August, 2008 Auditors Report - page 11.

Statement of Changes in Equity For the year ended 31 st March 2008 (all amounts in Sri Lanka Rupees) 14 Stated General Retained Total Capital Reserve Earnings Balance as at 1 st April 2006 119,000,420 118,999,880 29,440,876 267,441,176 Net Profit for the Period 68,641,683 68,641,683 Dividend paid (5,100,018) (5,100,018) Transferred to General Reserve 50,000,000 (50,000,000) Balance as at 31 st March 2007 119,000,420 168,999,880 42,982,541 330,982,841 Balance as at 1 st April 2007 119,000,420 168,999,880 42,982,541 330,982,841 Net Profit for the Period 39,833,533 39,833,533 Dividend paid (15,300,056) (15,300,056) Transferred to General Reserve 50,000,000 (50,000,000) Balance as at 31 st March 2008 119,000,420 218,999,880 17,516,018 355,516,318 The significant accounting policies and notes on pages 16 to 27 form an integral part of these financial statements. Figures in brackets indicate deductions. Auditors Report - page 11.

Cash Flow Statement For the year ended 31 st March 2008 2007 (all amounts in Sri Lanka Rupees) 15 Cash Flows from Operating Activities Net profit before taxation 50,297,954 74,157,622 Adjustments for - Depreciation 1,147,049 1,188,585 - Provision for Retirement Benefit 54,375 24,075 - Interest Income (6,160,975) (7,717,684) - Dividend Income (24,085,354) (13,594,398) - Profit on Sale of Shares (1,339,677) (53,503,214) - Interest Expenses 109,204 175,195 - Provision for fall in value 1,040,000 4,021,695 21,062,576 4,751,876 Operating Profit before Working Capital Changes (Increase) / Decrease in Trade and Other Receivables 1,157,974 1,467,749 Increase / (Decrease) in Rental Deposit 459,760 3,186,400 Increase / (Decrease) in Trade and Other Payables 935,641 1,873,664 2,553,375 6,527,813 23,615,951 11,279,689 Cash Generated from Operations Interest paid (109,204) (175,195) Income tax paid (6,356,309) (2,936,295) Retirement Benefit paid (30,000) (18,900) (6,495,513) (3,130,390) Net Cash Flow from Operating Activities 17,120,438 8,149,299 Cash Flows from Investing Activities Purchase of Property, Plant and Equipment (150,000) Interest Received 4,214,448 7,717,684 Dividends Received 24,085,354 13,594,398 Proceeds from Sale of Shares 2,,112,454 135,357,076 Purchases of Shares (13,990,510) (211,361,270) Net Cash from Investing Activities 16,421,746 (54,842,112) Cash Flow from Financing Activities Repayment of Long Term Borrowings (2,285,714) (2,285,714) Receipts / (Payment) due from Associates (576,435) Dividends Paid (15,300,056) (5,100,018) Net Cash used in Financing Activities (18,162,205) (7,385,732) Net Increase in Cash and Cash Equivalents 15,379,979 (54,078,545) Cash and Cash Equivalent at the beginning of the period 15,691,073 69,769,618 Cash and Cash Equivalents at end of period 31,071,052 15,691,073 At the beginning Balance at Bank 158,350 2,389,773 Bank Overdraft (4,622,835) (10,167,049) Short Term Deposits 20,155,558 77,546,894 15,691,073 69,769,618 At the end Balance at Bank 205,735 158,350 Bank Overdraft (4,676,007) (4,622,835) Short Term Deposits 35,541,324 20,155,558 31,071,052 15,691,073 The significant accounting policies and notes on pages 16 to 27 form an integral part of these financial statements. Figures in brackets indicate deductions. Auditors Report - page 11.

Significant Accounting Policies and Notes to the Financial Statements 16 1. CORPORATE INFORMATION 1.1 General Cargo Boat Development Company PLC is a Public Limited Liability company incorporated and domiciled in Sri Lanka and is listed on the Colombo stock Exchange. The Registered Office of the Company is located at No: 41, Janadhipathi Mawatha, Colombo 1. 1.2 Principal Activities and Nature of Operations During the year, the principal activity of the company was renting out premises. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 GENERAL ACCOUNTING POLICIES 2.1.1 Basis of Preparation These financial statements presented in Sri Lanka Rupees have been prepared under the historical cost basis in accordance with generally accepted accounting principles and the standards laid down by the Institute of Chartered Accountants of Sri Lanka. 2.1.2 Statement of Compliance The Balance Sheet, Statement of Income, Changes in Equity and Cash Flows, together with Accounting Policies and Notes ( Financial Statements ) of the company as at 31 st March 2008, and for the year then ended, comply with the Sri Lanka Accounting Standards. 2.1.3 Going Concern The Directors have made an assessment of the Company s and it s ability to continue as a going concern and they do not intend either to liquidate or to cease trading. 2.1.4 Comparative Information The Accounting Policies have been consistently applied by the Company and are consistent with those of the previous year. The previous year's figures and phrases have been rearranged wherever necessary to conform to the current year s presentation. 2.2 ASSETS & BASES OF THEIR VALUATION 2.2.1 Property, Plant & Equipment a) Cost Property, Plant and Equipment is recorded at cost less accumulated depreciation and less any impairment in value. b) Cost and Valuation All items of Property, Plant and Equipment are initially recorded at cost. Where items of Property, Plant and Equipment are subsequently revalued, the entire class of such assets are revalued. c) Depreciation Provision for depreciation is calculated by using the straight line method on the cost or valuation of all Property, Plant and Equipment, in order to write off such amounts over the estimated useful lives of such assets. Auditors Report - page 11.

17 Significant Accounting Policies and Notes to the Financial Statements (Continued) The principal annual rates used are as follows: Equipment 8.33 % Office Furniture & Fittings 10% Motor Vehicles 20 % Depreciation of assets begins when it is available for use. The asset s residual values, useful lives and methods of depreciation are reviewed and adjusted if appropriate at each financial year. d) Restoration Costs Expenditure incurred on repairs or maintenance of Property, Plant and Equipment in order to restore or maintain the future economic benefits expected from originally assessed standard of performance is recognized as an expense when incurred. e) Derecognition An item of Property, Plant and Equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is calculated as the difference between the net disposal proceeds and the carrying amount. 2.2.2 Impairment of Assets The carrying value of Property, Plant and Equipment is reviewed for impairment either annually or when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount. Impairment losses are recognized in the Income Statement unless it reverses a previous revaluation surplus for the same asset. 2.2.3 Investment Property Investment Property is recognized when and only when it is probable that the future economic benefits associated with the item will flow to the company and the cost of the investment property can be measured reliably. Investment Property, comprising Freehold Land and Buildings, is property held for long term rental or for capital appreciation or both and is not occupied substantially for the supply of goods or services or in administration and is not intended for sale in the ordinary course of business. Investment Property is initially measured at its cost including related transaction costs and is therefore carried at its cost less any accumulated depreciation and any accumulated impairment losses. Provision for depreciation is calculated by using straight line method in order to write off the cost of the investment property over their expected useful lives. Principal annual rate is 2%. 2.2.4 Trade and Other Receivable Trade and Other Receivables are stated at the amounts they are estimated to realize net of provisions for bad and doubtful receivables. Other Receivables and Dues from Related Parties are recognized at cost less provision for bad and doubtful receivables. Auditors Report - page 11.

18 Significant Accounting Policies and Notes to the Financial Statements (Continued) 2.2.5 Cash and Cash Equivalents Cash and Cash Equivalents are defined as Cash in Hand, Demand Deposits and Short term highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. For the purpose of Cash Flow Statement, Cash & Cash Equivalent consists of Cash in Hand and Deposits in Banks net of Outstanding Bank Overdrafts. Investment with Short Term Maturities i.e. three months or less from the date of acquisitions are also treated as cash equivalents. The Cash Flow Statements are reported based on the Indirect method. 2.2.6 Investments Current Investments Current Investments are stated at cost. Long Term Investment Long Term Investments are shown at cost and in the case of marketable securities, the Investments are shown at the lower of cost and market value determined on a Portfolio basis. However, provision is made on an individual basis where, in the opinion of the Directors, there is a permanent diminution in value. Where there has been a permanent diminution in the value of an Investment, it is recognized as an expense when the diminution is identified. 2.3 LIABILITIES & PROVISIONS 2.3.1 Liabilities Liabilities stated under Current Liabilities in the Balance Sheet are those expected to fall due within one year from the Balance Sheet date. Items stated as Long Term Liabilities are those expected to fall due after one year from the Balance Sheet date. Trade and Other Payables Trade Creditors and Other Payables are stated at their book values. 2.3.2 Provisions Provisions are recognized when the company has a present obligations (legal & constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. 2.3.2.1 Retirement Benefit Obligations 2.3.2.1.1 Defined Benefit Plans Gratuity Provision has been made for Retirement Gratuities,in conformity with SLAS 16 / Gratuity Act No.12 of 1983. The liability is not externally funded nor is it actuarially valued. 2.3.2.1.2 Defined Contribution Plans EPF& ETF Employees are eligible for Employees Provident Fund Contributions and Employees Trust Fund Contributions in line with respective statutes and regulations. The company contributes 12% and 3% of gross emoluments of employees to the Employees Provident Fund and to the Employees Trust Fund respectively Auditors Report - page 11.

19 Significant Accounting Policies and Notes to the Financial Statements (Continued) 2.3.2.2 Taxation 2.4 INCOME STATEMENT a) Current Taxes Current Income Tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Commissioner General of Inland Revenue. 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 provision of the Inland Revenue Act No. 10 of 2006. b) Deferred Taxation 2.4.1 Revenue Recognition a) Rental Income Deferred Income Tax is provided in full using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Tax rates applicable at the Balance Sheet date are used to determine deferred income tax. Rental Income is recognized on an accrual basis. b) Interest Interest Income is recognized as the interest accrued on a time basis unless collectibility is in doubt. c) Dividend Dividend Income is recognized when the shareholder s right to receive payment has been established. 2.4.2 Expenditure Recognition a) Expenses are recognized in the Income Statement on the basis of a direct association between the cost incurred and the earning of specific items of income. All the expenditure incurred in the running of the business and in maintaining the Property, Plant and Equipment in a state of efficiency has been charged to income in arriving at the profit for the year. b) For the purpose of presentation of the Income Statement the Directors are of the opinion that function of expenses method presents fairly the elements of the company s performance and hence such presentation method is adopted. 2.5 OFF BALANCE SHEET AND INCOME STATEMENT ITEMS 2.5.1 Events Occurring after the Balance Sheet Date All material events occurring after the balance sheet date have been considered and where necessary adjustments to or disclosures have been made in the respective notes to the accounts. 2.5.2 Contingencies & Unrecognized Contractual Commitments Contingencies are possible assets or obligation that arise from past events and would be confirmed only on the occurrence or non occurrence of uncertain future events, which are beyond the company s control. Auditors Report - page 11.

20 Significant Accounting Policies and Notes to the Financial Statements (Continued) (All amounts in Sri Lanka Rupees) Year ended 31st March 2008 2007 3. REVENUE Rental Income 32,164,090 25,174,935 4. OTHER INCOME Interest Income 6,160,975 7,717,684 Profit on Sale of Shares 1,339,677 53,503,214 Dividend Income 24,085,354 13,594,398 Provision for fall in value of Quoted Investment (1,040,000) (4,021,695) 5. FINANCE EXPENSES Auditors Report - page 11. 30,546,006 70,793,601 Loan Interest 98,568 167,132 Overdraft Interest 10,636 8,063 109,204 175,195 6. PROFIT BEFORE TAX Profit Before Tax is stated after charging all Expenses including the following Directors' Emoluments 90,000 90,000 Auditor's Remuneration 42,500 30,000 Depreciation on Property, Plant and Equipment 192,839 234,375 Defined Benefit Cost-Gratuity 54,375 24,075 Charity and Donation 5,000 30,000 Legal Expenses and Professional Fee 1,178,342 698,952 Depreciation on Investment Property 954,210 954,210 7. INCOME TAX EXPENSE Current Income Tax Provision 9,427,874 4,279,552 Deemed Dividend Tax 1,205,449 Deferred Tax (168,902) 1,236,387 7.1. RECONCILIATION BETWEEN CURRENT TAX EXPENSE AND THE PRODUCT OF ACCOUNTING PROFIT 10,464,421 5,515,939 Profit from Operations 50,297,954 74,157,622 Income Tax Expense Calculated at 35% 17,604,284 25,955,168 Tax Effect of Revenue that is Exempt from Taxation (8,898,761) (23,484,164) Tax Effect of Expenses that are Deductible in Determining Taxable Profit (157,242) (153,357) Tax Effect of Expenses that are Non Deductible in Determining Taxable Profit 786,158 1,842,554 Tax Effect of Notional Tax on Treasury Bill Interest 76,979 Tax Effect of SRL on Income Tax 93,435 42,372 Income Tax Expense Recognised in Income Statement 9,427,874 4,279,552

21 Significant Accounting Policies and Notes to the Financial Statements (Continued) (All amounts in Sri Lanka Rupees) Year ended 31st March 2008 2007 8. EARNING PER SHARE The basic earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Amounts used as Numerator Profit Attributable to Ordinary Shareholders 39,833,533 68,641,683 Number of Ordinary Shares used as Denominator Weighted average Number of Ordinary Shares in Issue 10,200,036 10,200,036 9. DIVIDEND PER SHARE 4 7 As required by Section 56(2) of the companies Act No. 07 of 2007, the Board of Directors have confirmed that the company satisfies the Solvency test in accordance with section 57 of the companies Act 07 of 2007 and will be obtaining a certificate from the Auditors, prior to recommending a final dividend of Rs. 1/- per share amounting to Rs. 10,200,036/- for the year under review, for approval by the shareholders at the Annual General Meeting to be held on 29 th September, 2008. Auditors' Report - page 11.

22 Significant Accounting Policies and Notes to the Financial Statements (Continued) (All amounts in Sri Lanka Rupees) 10. PROPERTY, PLANT AND EQUIPMENT PlantMotor Furniture Total and Vehicles and other EquipmentEquipment Cost/Valuation Balance as at 1 st April 2007 13,046,608 668,390 578,571 14,293,569 Additions Balance as at 31 st March 2008 13,046,608 668,390 578,571 14,293,569 Accumulated Depreciation Balance as at 1 st April 2007 (12,611,481) (133,678) (428,571) (13,173,730) Charge for the Year (44,161) (133,678) (15,000) (192,839) Balance as at 31 st March 2008 (12,655,642) (267,356) (443,571) (13,366,569) Written Down Value Balance as at 31 st March 2008 390,966 401,034 135,000 927,000 Balance as at 31 st March 2007 435,127 534,712 150,000 1,119,839 11. INVESTMENT PROPERTY Cost as at Accumulated Carrying Depreciation Carrying 31.03.2007 Depreciation Value as at For the Value as at as at 31.03.2007 31.03.2007 Year 31.03.2008 Property at No. 41, Janadhipathi Mawatha, Colombo 1 50,457,38612,946,001 37,511,385 954,210 36,557,175 Carrying value of the Freehold Land and Building amounting to Rs. 36,557,175/- has been recognised as Investment Property as per SLAS 40 from the year 2006/2007 onward. The Cost of the Freehold land is Rs. 2,746,866. Freehold land and building has been offered as security for the long term bank borrowings. 12. INVESTMENTS As at 31 st March 2008 2007 Investments in listed shares (Note 12.1) 290,489,112 278,311,380 Investments in unlisted shares (Note 12.2) 300,000 300,000 Other Investment (Note 12.3) 20,000,000 20,000,000 310,789,112 298,611,380 Auditors' Report - page 11.

Significant Accounting Policies and Notes to the Financial Statements (Continued) (All amounts in Sri Lanka Rupees) 12. INVESTMENTS (Continued) 12.1. Investments in Listed Companies 2007/2008 2006/2007 Company No. ofcost Market No. ofcost Market shares value shares value Banks, Finance and Insurance Commercial Bank of Ceylon Ltd. (V) 230,766 22,919,450 32,307,240 128,750 16,802,600 27,681,250 Commercial Bank of Ceylon Ltd. (N/V) 54 1,190 4,374 32 605 3,488 HDFC Bank 5,700 1,254,000 682,575 5,700 1,254,000 923,400 National Development Bank Ltd. 75 7,465 12,450 75 7,465 14,925 Nations Trust Bank Ltd. 5,453 171,280 162,227 90 1,205 3,060 Seylan Merchant Bank Ltd. 66 925 413 66 925 462 The Finance Company Ltd. 9,936 515,200 625,968 9,936 515,200 476,928 Union Assurance Ltd. 37 718 2,109 25 718 2,088 Vanik Incorporation Ltd. 3,407 135,437 5,792 3,407 135,437 5,451 25,005,665 33,803,148 18,718,155 29,111,052 Beverages, Food and Tobacco Ceylon Tobacco Company Ltd. 5,000 137,416 313,750 5,000 137,416 315,000 Coco Lanka Ltd. 83,100 600,019 1,932,075 177,600 1,283,1743,241,200 Lanka Milk Foods Ltd. 150,000 900,000 6,975,000 150,000 900,000 5,925,000 Lion Brewery Ceylon Ltd. 5,000 525,000 300,000 5,000 525,000 312,500 2,162,435 9,520,825 2,845,590 9,793,700 Hotels and Travels Aitken Spence Hotels Ltd. 29,699 1,012,260 2,680,335 29,699 1,012,260 2,078,930 Renuka City Hotels Ltd. 455,440 6,447,920 44,633,120 449,240 5,821,720 46,271,720 Royal Palms Beach Hotels Ltd. 137,500 1,290,000 5,500,000 137,500 1,290,000 5,421,250 8,750,180 52,813,455 8,123,980 53,771,900 Land and property C T Land Development Ltd. 3,550 21,870 63,900 3,550 21,870 60,350 Manufacturing ACL Cables Ltd. 15,624106,945 718,704 7,812 106,945 1,124,928 Sierra Cables Ltd. 550,000 1,130,000 990,000 550,000 1,130,000 1,100,000 Blue Diamonds Ltd. 2,029 33,581 5,478 2,029 33,581 5,681 Caltex Ltd. 1,020,000 83,360,000 99,960,000 1,020,000 83,360,000 86,700,000 Ceylon Grain Elevators Ltd. 21,100 439,550 247,925 21,100 439,550 300,675 Kelani Tyres Ltd. 960 20,800 23,040 960 20,800 22,080 85,090,876 101,945,147 85,090,876 89,253,364 Diversified Aitken Spence & Company Ltd. 66 7,260 28,380 66 7,260 25,080 Hayleys Ltd. 729,665 89,721,612 71,324,754 689,065 85,562,812 97,847,230 John Keells Holdings Ltd. 48,444 5,755,732 5,789,058 24,889 3,215,732 3,857,795 95,484,604 77,142,192 88,785,804 101,730,105 Footwear and Textiles Veyangoda Textile Mills Ltd. 5,000 90,000 Trading suspended 5,000 90,000 Trading suspended Trading Singer (Sri Lanka) Ltd. 2,146 50,377 122,859 5,963 140,000 444,244 Plantations Balangoda Plantations Ltd. 100 2,000 3,500 100 2,000 1,400 Kegalle Plantations Ltd. 5,500 66,000 330,000 5,500 66,000 231,000 Kelani Valley Plantations Ltd. 76,900 941,625 5,209,975 76,900 941,625 4,306,400 1,009,625 5,543,475 1,009,625 4,538,800 Telecommunication Dialog Telecom 98,000 1,948,000 1,641,500 80,000 1,570,000 2,040,000 Sri Lanka Telecom Ltd. 2,550,000 54,936,700 105,187,500 2,550,000 54,936,700 94,350,000 56,884,700 106,829,000 56,506,700 96,390,000 Health Care Ceylon Hospitals Limited (Durdens) 232,900 10,852,975 13,508,200 232,900 10,852,975 13,100,625 Power and Energy Vallibel Power Erathna Ltd. 1,125,000 3,000,000 2,700,000 1,125,000 3,000,000 2,025,000 Lanka IOC Limited 170,000 7,147,500 3,740,000 170,000 7,147,500 5,100,000 10,147,500 6,440,000 10,147,500 7,125,000 Total Investements in Listed Companies 295,550,807 407,732,201 282,333,075 405,319,140 Less : Provision for fall in Value (5,061,695) (4,021,695) 290,489,112 278,311,380 12.2. Investments in Unlisted Companies Indo Lankan Steels Ltd. 10,000 300,000 10,000 300,000 12.3. Other Investments National Assets Management Ltd. 20,000,000 20,000,000 310,789,112 298,611,380 23 Auditors' Report - page 11.

24 Cargo Boat Development Company PLC Significant Accounting Policies and Notes to the Financial Statements (Continued) (All amounts in Sri Lanka Rupees) As at 31 st March 2008 2007 13. RECEIVABLES AND PREPAYMENTS Trade Receivables 2,209,739 4,979,008 Prepayments 1,417,729 844,517 Other Receivables 2,790,300 207,302 6,417,768 6,030,827 14. CASH AND CASH EQUIVALENTS Short Term Investments 35,541,324 20,155,558 Cash at Bank and in Hand 205,735 158,350 35,747,059 20,313,908 Short Term Investments consist of Treasury Bills, Repurchase Agreements and Call Deposits. The weighted average effective interest rate on short term investments is 19.07% (2007-11.55%) 15. STATED CAPITAL Description Number of Shares - Ordinary Shares 10,200,036 10,200,036 Value - Ordinary Shares 119,000,420 119,000,420 With the enactment of the companies Act No. 07 of 2007 applicable with effect from 03rd May, 2007 the concept of authorized capital and par value is no longer applicable. Therefore comparative figures have been restated accordingly. The amount received by the company in respect of the issue of the shares are referred to as stated capital. 16. DEFINED BENEFIT OBLIGATIONS Balance at the beginning of the year 92,550 87,375 Charge for the year (Note 6) 54,375 24,075 Payments made during the year (30,000) (18,900) Balance at the end of the year 116,925 92,550 This provision is not externally funded, nor has it been actuarially valued. 17. BORROWINGS Balance as at 01.04.2007 4,304,762 6,590,476 Settlement during the year (2,285,714) (2,285,714) 2,019,048 4,304,762 Current maturity portion (2,019,048) (2,285,714) 2,019,048 18. DEFERRED TAX Deferred taxes are calculated on all temporary differences under the liability method using a principal tax rate of 35%. (2007-35%). The movement in the deferred tax account is as follows : Balance at beginning of the year 10,572,136 9,335,749 Release for the year (168,902) 1,236,387 Balance at the end of the year 10,403,234 10,572,136 Auditors' Report - page 11.

25 Significant Accounting Policies and Notes to the Financial Statements (Continued) (All amounts in Sri Lanka Rupees) As at 31 st March 2008 2007 19. TRADE AND OTHER PAYABLES Rent Received in Advance 4,989,200 4,989,200 Accrued Expenses 1,629,283 693,642 6,618,483 5,682,842 20. AMOUNTS DUE TO RELATED PARTIES Lancaster Holdings Ltd. 33 Renuka City Hotels PLC 97,033 Renuka Hotels Ltd. 79,435 Renuka Properties Ltd. 400,000 33 576,468 21. BANK OVERDRAFT Standard Chartered Bank 4,676,007 4,622,835 22. UNRECOGNISED CONTRACTUAL COMMITMENTS There were no commitments and contingencies existing as at 31st March, 2008 23. CONTINGENT LIABILITIES AND CONTINGENT ASSETS There were no contingent liabilities and contingent assets as at 31 st March 2008. 24. ASSETS PLEDGED The following assets have been pledged as security for liabilities. Nature of Assets Nature of liabilities 2008 2007 Investment Property Bank Loan - BOC 2,019,048 4,304,762 No. 41 Janadhipathi Mawatha, Colombo 01. 25. EVENTS OCCURING AFTER THE BALANCE SHEET DATE a) As Required by Section 56 (2) of the Companies Act No. 07 of 2007, the Board of Directors have confirmed that the company satisfies the solvency test in accordance with Section 57 of the companies Act No. 7 of 2007 and will be obtaining a certificate from the Auditors, prior to recommending a final dividend of Rs. 1/- per share amounting to Rs. 10,200,036/- for the year under review, for approval by the shareholders at the Annual General Meeting to be held on 29th September 2008. Other than those disclosed in No 25 (a) above, there have been no other material events occurred after the Balance Sheet date which require adjustments or disclosure in the Financial Statements. Auditors' Report - page 11.

26 Significant Accounting Policies and Notes to the Financial Statements (Continued) (All amounts in Sri Lanka Rupees) 26. RELATED PARTY TRANSACTIONS 26.1 Trading Transactions Mr. R. B. Thambiayah, Mrs. N. A. Thambiayah, Mr. M. J. Fernando and Ms. S. R. Thambiayah, Directors of the Company are also Directors of Renuka Hotels Limited. Mr. R. B. Thambiayah, Mrs. N. A. Thambiayah, and Ms. S. R. Thambiayah Directors of the Company are also Directors of Renuka City Hotels PLC, Crescent Launderers and Dry Cleaners (Private) Limited, Lancaster Holdings Limited, Renuka Properties Limited, Renuka Consultants and Services Limited, and Portfolio Management Services (Private) Limited. Mr. R. B. Thambiayah and Mrs. N. A. Thambiayah Directors of the Company are also Directors of Amalgamated Theatres (Pvt) Limited. Mr. R. B. Thambiayah, Director of the Company is also a Director of Ceylon Carriers (Travel Services) Limited, Royal Ceramics Lanka Limited, Royal Porcelain (Private) Limited and National Development Bank Limited. Mrs. M. A. Jayawardena, Director of the Company is also a Director of Renuka City Hotels PLC., Crescent Launderers and Dry Cleaners (Private) Limited and Amalgamated Theatres (Pvt) Limited. Mr. R. S. Tissanayagam, Director of the Company is also a Director of Premium Brands Limited, East India Co (Private) Limited, I D Lanka Limited, East India Warehousing (Private) Limited, East India Investment Co (Private) Limited, East India Asset Management Co. Limited, Quickshaws Limited, Quickshaws Travels Limited, Quickshaws Tours Limited and Renuka City Hotels PLC. Mr. R. F. C. De Livera, Director of the Company is also a Director of MSC Lanka (Pvt) Limited. The Company uses the office and administrative facilities of Renuka Hotels Limited free of charge. Part of the accounting and administration functions of the Company are also performed by staff attached to Renuka Hotels Limited for which no charge is made. The following transactions were carried out with related parties. Short term loans received from: As at 31 st March 2008 2007 Renuka City Hotels Limited 100,000 Renuka Hotels Ltd. 230,000 69,508 Renuka Properties Ltd. 400,000 Payables to related companies: 230,000 569,508 Lancaster Holdings Ltd. 33 Renuka Properties Ltd. 400,000 Renuka Hotel Ltd. 79,435 Renuka City Hotels Ltd. 97,033 33 576,468 Auditors' Report - page 11.

27 Significant Accounting Policies and Notes to the Financial Statements (Continued) (All amounts in Sri Lanka Rupees) 26.2 Transactions with Key Management Personnel The remuneration of directors and other members of key management during the year was as follows. Year ended 31 st March 2008 2007 Short Term Benefits 150,000 150,000 27. COMPARATIVE INFORMATION Comparative figures have been re-classified where necessary in line with the presentation requirements for the current year. Auditors' Report - page 11.

Shareholder Information 28. Shareholder Analysis as at 31 st March 2008 28 No. of Shareholders No. of Shares Total Shareholdings Number Percentage holding shares 1,008 001-1,000 368,122 3.65 317 1,001-5,000 782,234 7.82 60 5,001-10,000 440,544 3.80 4610,001-50,000 926,826 8.29 3 50,001-100,000 180,300 3.38 3 100,001-500,000 526,145 4.70 500,001-1,000,000 3 Over - 1,000,000 6,975,865 68.36 1,440 10,200,036 100.00 29. Twenty Largest Shareholders as at 31 st March 2008 Name of Shareholders No. of Shares % No. of Shares % as at 31.03.08 Holding as at 31.03.07 Holding Lancaster Holdings Ltd. 3,073,524 30.13 3,073,524 30.13 Renuka Properties Ltd. 2,256,241 22.11 2,256,242 22.11 Taprobane Fund Management (Private) Ltd. 1,646,100 16.13 1,646,100 16.13 Waldock Mackenzie Ltd. / Mr. H.M.S. Abdulhussein 220,4362.16 Merrill J. Fernando & Sons (Pvt) Ltd. 169,998 1.66 169,998 1.67 Amalgamated Theatres Ltd. 135,711 1.33 135,711 1.33 Mr. Dickowita Kankanamage Weeratunga 61,100 0.59 Mr. Rohith Udalagama 60,000 0.58 Dr. Thirugnanasambandar Senthilverl 59,200 0.58 Mrs. Pushpa Narhari Bhatt 50,000 0.49 50,000 0.49 J. B. Cocoshell (Private) Limited 40,700 0.39 Mr. Don Manuwelge Anil Alwis 39,800 0.39 Miss. Rukaiya Husseinally Abdulhussein 36,000 0.35 Mr. William Ryan Herbert Perera 33,792 0.33 23.792 0.23 Mr. Ginthotage Renuka Sri De Silva 30,500 0.29 30,500 0.30 Mr. Merrill Joseph Fernando 28,600 0.28 Dr. Ahamed Hosney Cader 28,000 0.27 Mr. Balasubramaniam Prithiviraj / 26,000 0.25 Mrs. Prithiviraj Mehala Mr. Mushtaq Mohamed Fuad 25,800 0.25 Mrs. Sheryll Bess Therese Jinasena 25,536 0.25 25,5360.25 Total 8,047,038 78.81 7,411,403 72.64 30. Public Holding The percentage of shares held by the Public as at 31st March 2008 is 29.73% (2007 30.01%). 31. Market value of shares 2007/2008 2006/2007 Highest value during the period 26.00 27.50 Lowest value during the period 20.00 22.00 Value as at 31st March 23.25 24.50

29 Cargo Boat Development Company PLC 10 Years Summary Year ended 31 st March 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 PERFORMANCE Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Turnover 32,164,090 25,174,935 9,937,971 7,473,112 7,519,242 6,408,624 13,997,886 17,893,758 18,166,895 17,945,589 Profit Before Tax 50,297,954 74,157,622 45,999,325 21,120,397 26,687,805 21,267,614 23,199,501 17,210,518 14,159,104 13,014,954 Taxation Current Year (10,464,421) (5,515,939) (916,915) (1,838,010) (732,328) (1,882,259) (6,787,108) (4,608,795) (7,285,208) (1,500,000) Profit after Tax 39,833,533 68,641,683 45,082,410 19,282,387 25,955,477 19,385,355 16,412,393 12,601,723 6,873,896 11,514,954 Unappropriated Profits Brought Forward 42,982,541 29,440,876 14,358,466 16,776,085 12,520,617 13,135,262 6,722,869 4,121,146 7,247,250 5,732,296 Amount Available for Appropriation 82,816,074 98,082,559 59,440,276 36,058,472 38,476,094 32,520,617 23,135,262 16,722,869 14,121,146 17,247,250 Dividend (15,300,056) (5,100,018) Nil (1,700,006) (1,700,006) (1,700,009) Nil Nil Nil Nil Transfer to General Reserve (50,000,000) (50,000,000) (30,000,000) (20,000,000) (20,000,000) (20,000,000) (10,000,000) (10,000,000) (10,000,000) (10,000,000) Retained Profits Carried forward 17,516,018 42,982,541 29,440,876 14,358,466 16,776,085 12,520,617 13,135,262 6,722,869 4,121,146 7,247,250 CAPITAL STRUCTURE Share Capital and Reserves : Stated Capital 119,000,420 119,000,420 119,000,420 34,000,120 34,000,120 34,000,120 34,000,120 34,000,120 34,000,120 34,000,120 Revenue Reserves 17,516,018 42,982,541 29,440,876 14,358,466 16,776,085 12,520,617 13,135,262 6,722,869 4,121,146 7,247,250 General Reserve 218,999,880 168,999,880 118,999,880 123,000,000 103,000,000 83,000,000 63,000,000 53,000,000 43,000,000 33,000,000 355,516,318 330,982,841 267,441,176 171,358,586 153,776,205 129,520,737 110,135,382 93,722,989 81,121,266 74,247,370 Assets Less Liabilities : Current Assets 42,164,827 26,344,735 87,970,556 19,998,795 30,112,530 64,382,420 21,742,114 9,452,476 34,158,534 37,771,479 Current Liabilities (17,996,917) (13,975,804) (16,838,410) (7,896,575) (3,572,538) (2,625,842) (9,476,571) (8,680,668) (6,464,539) (8,131,645) Net Current Assets 24,167,910 12,368,931 71,132,146 12,102,220 26,539,992 61,756,578 12,265,543 771,808 27,693,995 29,639,834 Fixed Assets and Investments 348,273,287 337,242,604 212,795,476 178,853,723 149,345,906 92,021,072 121,081,825 118,022,034 80,166,993 65,696,040 372,441,197 349,611,535 283,927,622 190,955,943 175,885,898 153,777,650 133,347,368 118,793,842 107,860,988 95,335,874 Long Term Liabilities (16,924,879) (18,628,694) (16,486,446) (19,597,357) (22,109,693) (24,256,913) (23,211,986) (25,070,853) (26,739,722) (21,088,504) 355,516,318 330,982,841 267,441,176 171,358,586 153,776,205 129,520,737 110,135,382 93,722,989 81,121,266 74,247,370 RATIOS AND STATISTICS Earnings Per Share (Rs.) 3.91 6.78 6.63 5.67 7.63 5.70 3.71 2.02 3.39 4.63 Dividend Per Share (Rs.) 1.00 1.50 0.50 Nil 0.50 0.50 Nil Nil Nil Nil Net Assets Per Share at Year End (Rs.) 34.85 32.50 26.22 50.39 45.23 38.12 27.56 23.86 21.84 18.45 Market Value Per Share (Rs.) 23.25 24.50 28.00 46.25 20.00 14.75 11.00 12.00 10.00 8.00

Notes

Form of Proxy ANNUAL GENERAL MEETING I/We... of... a Member/Members of Cargo Boat Development PLC hereby appoint : R. B. Thambiayah of Colombo (or failing him) Merril J. Fernando of Colombo (or failing him) Mrs. N. A. Thambiayah of Colombo (or failing her) Mrs. M. A. Jayawardena of Colombo (or failing her) Ms. S. R. Thambiayah of Colombo (or failing her) Mr. R. S. Tissanayagam of Colombo (or failing him) Mr. R. F. C. De Livera of Colombo (or failing him)... of.........as *my/our proxy to vote on *my / our behalf at the Annual General Meeting of the Company to be held on 29 th September 2008 and at any adjournment thereof and at every poll which may be taken in consequence of the aforesaid meeting. FOR AGAINST 1. To receive and consider the Report of the Directors and the Audited Statement of Accounts for the year ended 31 st March 2008 with the Report of the Auditors thereon. 2. To declare a dividend proposed by the Directors. 3. To re-elect Mr. Merril J. Fernando who retires pursuant to Section 210 of the Companies Act No. 7 of 2007. 4. To re-elect Mr. R.S. Tissanayagam who retires by rotation in terms of the Articles of Association of the Company as a Director. 5. To re-elect Ms. S. R. Thambiayah who retires by rotation in terms of the Articles of Association of the Company as a Director. 6. To re-appoint M/s BDO Burah Hathy, Chartered Accountants as Auditors of the Company. Signed this... day of... 2008 *NOTE :... Signature 1. * Please delete the inappropriate words. 2. Instructions as to completion are noted on the reverse hereof. 3. If you wish your proxy to speak at the meeting you should interpolate the words "and to speak" immediately after the words "to vote"

INSTRUCTIONS AS TO COMPLETION 1. Kindly perfect the form of Proxy after filling in legibly your name and address by signing in the space provided. Please fill in the date of signature. 2. If you wish to appoint a person other than the Directors as your proxy, please insert the relevant details in the space provided overleaf. 3. In terms of Article 82 of the Articles of Association of the Company: (i) (ii) in the case of an individual shall be signed by the appointer or by his attorney; and in the case of a Corporation shall be either under its common seal or signed by its attorney or by an officer on behalf of the Corporation 4. In terms of Article 77 of the Articles of Association of the Company: In the case of joint-holders of a share the senior who tenders a vote, whether in person or by proxy or by attorney or by representatives shall be accepted to the exclusion of the votes of the other joint-holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members in respect of the joint holding. 5. To be valid the completed form of proxy should be deposited at the Registered Office of the Company situated at No. 328, Galle Road, Colombo 3 not less than forty eight (48) hours before the appointed time for the meeting.