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3 Contents

4 Name of the Company Legal Form Directors Secretaries and Registers Auditors Bankers Registered Office of the Company

5 Chairmanʼs Review

6 CEOʼs Review

7 e-channelling Performance Charts

8 e-channelling Performance Charts

9 Board of Directors Mr. Suresh Bartlett Chairman / Independent, Non-Executive Director Mr. Chandima Hemachandra Non-Independent, Non-Executive Director Mr. Ruwan Silva Non-Independent, Non-Executive Director Mr. Thanuja Weeratne Non-Independent, Non-Executive Director

10 Board of Directors (Contd) MR. P. Kudabalage Non Independent, Non- Executive Director

11 Report of the Directors on the Affairs of the Company Review of the Year Principal Activity Auditorʼs Report Financial Statements Accounting Policies Directorsʼ Interest Directorsʼ Remuneration and Other Benefits Corporate Donations Directors and their Shareholdings Auditors

12 Report of the Directors on the Affairs of the Company (Contd) Dividends Investments Intangible Assets Property, Plant and Equipment Capital Commitments Stated Capital Reserves Events subsequent to the Balance Sheet date Employment Policies Taxation Disclosure as per Colombo Stock Exchange Rule No Shareholding Major Shareholders Statutory Payments

13 Report of the Directors on the Affairs of the Company (Contd) Environment, Health and Safety Corporate Governance Contingent Liabilities Annual General Meeting Post Balance Sheet Events

14 Report of the Auditors INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF E-CHANNELLING PLC Report on the Financial Statements We have audited the accompanying financial statements of E-Channelling PLC(the Company ), which comprise the balance sheet as at March 31, 2010, and 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. 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 policies 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 March 31, 2010 and the financial statements give a true and fair view of the Company s state of affairs as at March 31, 2010 and of 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.However, it should be noted that the Company s net assets are less than half of its stated capital and the Board of Directors have resolved to address the situation as disclosed in note 27 to the financial statements. CHARTERED ACCOUNTANTS Colombo 19th August 2010 KPMG Ford, Rhodes, Thornton & Co, a Sri Lankan Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International cooperative ( KPMG International ), a Swiss entity. A.N. Fernando FCA S. Sirikananathan FCA M.R. Mihular FCA Ms. M.P. Perera FCA P.Y.S. Perera FCA C.P. Jayatilake FCA T.J.S. Rajakarier FCA W.W.J.C. Perera FCA Ms. S. Joseph ACA Ms. S.M.B. Jayasekara ACA W.K.D.C. Abeyrathne ACA S.T.D.L. Perera ACA

15 Balance Sheet AS AT 31ST MARCH Note Rs. Rs. ASSETS Total Non Current Assets Total Current Assets Total Assets 94,391,956 87,102,220 EQUITY 11 Total Equity LIABILITIES 12 Total Non Current Liabilities Total Current Liabilities Total Liabilities Total Equity & Liabilities 94,391,956 87,102,220

16 Income Statement FOR THE YEAR ENDED 31ST MARCH 2010 Note Rs. Rs. Revenue Loss from Operating Activities Profit / (Loss) Before Taxation 22 Profit / (Loss) for the Year Profit / (Loss) per share - Basic 23

17 Statement of Changes in Equity FOR THE YEAR ENDED 31ST MARCH 2010 Stated Retained Total Capital Losses Rs. Rs. Rs. Balance as at 31st March ,516,633 (117,285,944) 70,230,689

18 Cash Flow Statement FOR THE YEAR ENDED 31ST MARCH Cash Flows From Operating Activities Rs. Rs. Adjustments for Cash Flows from/(used in) Investing Activities Cash Flows from/(used in) Financing Activities (Note -A) 309,680 (4,550,198) (Note -A) Cash & Cash Equivalents 309,680 (4,550,198)

19 Notes to the Financial Statements 1 REPORTING ENTITY 2 BASIS OF PREPARATION 2.1 Statement of Compliance 2.2 Approval of Financial Statements by Directors 2.3 Basis of Measurement 2.4 Use of Estimates and Judgements 3 SIGNIFICANT ACCOUNTING POLICIES 3.1 Property, Plant and Equipment (i) Recognition and Measurement

20 Notes to the Financial Statements (Contd) (ii) Subsequent Cost (iii) Depreciation (iv) Leased Assets (v) Impairment of Assets 3.2 Intangible Assets (i) Research and Development

21 Notes to the Financial Statements (Contd) (ii) License Fees (iii) Subsequent Expenditure (iv) Amortization 3.3 Investments (i) Investments in treasury bonds 3.4 Trade and Other Receivables 3.5 Cash and Cash Equivalents 3.6 Employee Benefits (i) Defined Contribution Plans Employeeʼs Provident Fund & Employees Trust Fund (ii) Retirement Benefits Obligations Gratuity

22 Notes to the Financial Statements (Contd) (iii) Liabilities and Provisions 3.7 Revenue Recognition (i) Rendering of Services (ii) Interest Income 3.8 Expenditure Recognition (i) Borrowing Costs (ii) Interest Costs 3.9 Income Tax Expense (i) Current Taxes (ii) Deferred Taxation

23 Notes to the Financial Statements (Contd) 3.10 Cash Flow Statement 3.11 Commitments and Contingencies 3.12 Comparative Figures 3.13 Directors Responsibility Statement 3.14 Segment Reporting 4. NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE AS AT BALANCE SHEET DATE

24 Notes to the Financial Statements (Contd) FOR THE YEAR ENDED 31ST MARCH Property, Plant and Equipment Computer Computer Furniture and Office Motor Total Equipment Servers Fittings Equipment Vehicles Cost Rs. Rs. Rs. Rs. Rs. Rs. Accumulated Depreciation Carrying Amount As at 31st March ,805 4,315, , ,033-4,938,990 6 Leasehold Asset Laptop Total Cost Rs. Rs. Accumulated Depreciation Carrying Amount As at 31st March 2010

25 Notes to the Financial Statements (Contd) FOR THE YEAR ENDED 31ST MARCH Intangible Assets License Fee Hospital Net Cost Rs. Rs Rs. Rs. Accumulated Amortization Carrying Amount 8,680,986 9,817,997 8 Employeesʼ Share Ownership Trust (ESOT Fund) Rs. Rs. 3,350,000 3,350,000

26 Notes to the Financial Statements (Contd) FOR THE YEAR ENDED 31ST MARCH Rs. Rs. 9 Investments 9.1 Long Term Investment 5,743,822 9,085, Short Term Investment 58,075,737 45,700, Trade & Other Receivables 10,925,380 10,406, Stated Capital 12 Retirement Benefit Obligations 1,894,679 1,329,432

27 Notes to the Financial Statements (Contd) FOR THE YEAR ENDED 31ST MARCH Retirement Benefit Obligations (Contd) Rs. Rs. 13 Lease Creditors - 189, Trade & Other Payables 19,255,058 9,136, Related Party Payables 31, Current Tax Payable 612,995 1,227, Revenue 50,524,306 38,484,507

28 Notes to the Financial Statements (Contd) FOR THE YEAR ENDED 31ST MARCH Rs. Rs. 18 Other Operating Income 1,663, , The loss from operations was arrived after charging the following. 20 Financial Income 9,478,818 12,347, Financial Cost 9,417,778 12,272, Income Tax Expenses 2,336,769 2,771,239

29 Notes to the Financial Statements (Contd) FOR THE YEAR ENDED 31ST MARCH Income Tax Expenses (Contd) Rs. Rs. Reconciliation between the accounting loss and tax expenses 2,336,769 2,771, Deferred Tax 44,845,075 44,807,201

30 Notes to the Financial Statements (Contd) FOR THE YEAR ENDED 31ST MARCH Profit/(Loss) Per Share - Basic Rs. Rs. 24 Transactions with Related Parties 24.1Transactions with Related Entities Company Name of Director Relationship Nature of Transactions 24.2 Transactions with Key Management Personnel Rs. Rs. 25 Commitments & Contingencies

31 Notes to the Financial Statements (Contd) FOR THE YEAR ENDED 31ST MARCH Number of Employees 27 Events Occurring After The Balance Sheet Date 28 Comparative Information 29 Directors Responsibility

32 Share Information ANALYSIS OF SHAREHOLDERS ACCORDING TO THE NUMBER OF SHARES AS AT RESIDENT NON RESIDENT TOTAL Shareholdings Number of No. of Shares Percentage (%) Number of No. of Shares Percentage (%) Number of No. of Shares Percentage (%) Shareholders Shareholders Shareholders Categories of Shareholders No. of Shareholders No. of Shares LIST OF 20 MAJOR SHAREHOLDERS BASED ON THE SHAREHOLDINGS AS AT NAME SHAREHOLDINGS PERCENTAGE (%)

33 Notice of Annual General Meeting AGENDA Note:

34 Notes

35 Form of Proxy Note :

36 Instructions to Completion of Form of Proxy Note:

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