Financial Report 2008/2009

Contents

Page

Chairman’s Review 1

CEO’s Review 2

e-channelling Performance Charts 3

Board of Directors 5

Report of the Directors 6

Report of the Auditors 9

Balance Sheet 10

Income Statement 11

Statement of Changes in Equity 12

Cash Flow Statement 13

Accounting Policies 14

Notes to the Financial Statements 19

Share Information 27

Notice of Annual General Meeting 28

Form of Proxy 29

Name of the Company

e-Channelling PLC

Legal Form

Quoted Public Company incorporated in Sri Lanka in 2000

Ordinary share listed on the Second board of the Colombo Stock Exchange

Directors

Mr.S.S.Bartlett

Mr.N.Weerasekara

Mr.S.N.Seneviratne

Mr.I.Hettiarachchi (Alternate to Mr.N.Weerasekara)

Mr.T.K.D.A.P. Samarasinghe

Mr.P.V.S.N. Jayatissa (Alternate to Mr.T.K.D.A.P. Samarasinghe)

Secretaries and Registers

S.S.P.Corporate Services (Pvt) Limited

No 101, Inner Flower Road,

Colombo 03

Auditors

KPMG Ford, Rhodes, Thornton & Co

Chartered Accountants

32A,Sir Mohamed Macan Markar Mawatha

P.O.Box 186,

Colombo 03

Bankers

Sampath Bank PLC

Seylan Bank PLC

Nations Trust Bank PLC

Hongkong and Shanghai Banking Corporation

Registered Office of the Company

Suncity Towers,

Mezzanine Floor,

18, St Anthony’s Mawatha

Colombo 03

Tel: 011 5300500 Fax :011 4724114

Email: [email protected]

Internet: www.echannelling.com

1

Chairmanʼs Review

I am pleased to provide this message on the recently

concluded year of operation at E-Channelling PLC. The period

2008/09 has been a time for further consolidation in an

extremely difficult business environment where interest rates

and inflation were at record levels.

The company continued its monopoly of the market in the

area of channelling with a majority of the hospitals using

our channelling solution as its primary booking system. This

is indeed significant and bookings via this system increased

by 33% during the year to a record 317,000 bookings and

revenues by a healthy 23% but the company still incurred a

loss of Rs 11.1 million which was similar to the previous period.

This is primarily due to labour and other associated costs

relating to the development of the HospitalNet Solution

(which was previously capitalized until such time the license

revenue started accruing to the company) now being charged

to expenses. Cash and cash equivalents have stabilized

at Rs 41 million with the organization now operationally

sustainable on a month on month basis and not dipping into

this reserve since mid way through the financial year.

The HospitalNet solution which automates the operations of

a hospital has been fully deployed and continues to power

Nawaloka Hospital which is one of the largest in South Asia

handling large volumes of transactions. The company is still

looking to secure its second client for this solution which has

been a challenge in an environment where hospitals have

differed most large scale investment decisions. The company

signed up four new hospitals for the channelling solution and

an additional telecom provider to the 225 network.

I would like to take this opportunity to thank you the

shareholders for keeping faith in the company, Board of

Directors for their continued guidance and support, the CEO

and the team at E-Channelling for their tireless efforts. Our

special thanks and appreciation is due to our valued customers

for choosing E-Channelling as their preferred healthcare

platform and for placing their trust in the company. You have

all contributed in no small measure in ensuring value to the

shareholders and building a company that is well geared to

dominate this industry in the future.

Suresh Bartlett

Colombo

31st July 2009

2

CEOʼs Review

Yet another year of exceptional revenue growth of 23%.

We have signed up more hospitals and more “225” Partners

during the year and many more in the pipeline. Our revenue

per booking has also increased by 22% whilst maintaining

a “fair value” to our customers. However, there is more room

for growth here. We worked relentlessly hard in reducing

the cost of collection, distribution and support to ensure that

the overheads do not rise at the same rate as revenue, which

is a challenge in the current market.

Whilst focusing on growing the revenue we spent a fair

portion of our efforts on questioning and changing how

we did business. Through this we streamlined a number of

poor performing operations and automated them. All of this

achieved high level efficiency and visibility to the business

and saw an end to us tapping into the reserve to manage the

day to day operations.

Significant revenue growth achieved by focusing on profitable channels and streamlining and automating the rest.

Great ROI was achieved on the sales promotional activities

that were carried out during the year where we witnessed

direct increase in network bookings and awareness. We

are also leveraging on the strong relationships we have built

now with our hospitals and telecom partners; pushing the

message forward to the channelling public.

Even with the growth in revenue the Company incurred a

Rs. 11.1 million loss, which was predominantly due to the

rising cost in labour and infrastructure. However, we have

achieved the level of up-time and reliability which has never

been demonstrated in this sector before. The system is truly

available around the clock, especially for the web customer.

The web based booking, i.e. people channelling online has

seen the highest growth of all with a 36% increase.

The HospitalNet is now fully deployed at Nawaloka and

is managing their end to end processes. The challenge has

been to secure more customers for this Enterprise Solution

under the present economic climate. We have successfully

modularised this product and are targetting smaller

hospitals, pharmacies and laboratories. The pipeline for this

is looking strong with this new approach, but the challenge

will be to achieve the level of revenues required to achieve

the break even for this SBU.

My sincere appreciation goes out to the Chairman and the

Board of Directors for their strategic input and direction

given throughout the year. I would like to thank my team; for

their valuable and dedicated contribution especially through

the downsizing that we went through during the year.

Last but not least, I thank all of you, our stakeholders, for your

support, confidence and trust that you have placed in us.

The future is bright.

Ravi Raveendran

Colombo

31st July 2009

3

eChannelling Performance Charts

Revenue generated from fees charged from appointments.

The number of appointments made through our network, i.e. internet, telephone and the pharmacy chains.

Conversion rate is the share of the network based appointments compared to the total number of appointments (which includes appointments made at the hospital channelling counters)

4

Steady and consistent growth in revenue from our primary fee based activities.

Steady growth in appointments year on year.

Profit / (Loss) from the eChannelling operation since launch.

eChannelling Performance Charts

5

Mr. Suresh BartlettChairman / Independent, Non-Executive DirectorMr. Bartlett was appointed to the Board of E-channelling on 25 April 2007.

He is currently National Director of World Vision Lanka, Chairman of Vision Fund Lanka. Mr. Bartlett‘s previous appointments were in international development as Program Director/Chief of Party at The Asia Foundation and Program Director on the ICT4D eSri Lanka World Bank assignments.

Prior to this, Mr. Bartlett worked extensively in the corporate sector in Finance, Banking and Information Technology both locally and overseas - at National Mutual Life and ANZ Banking Group in Melbourne, Australia and Informatics Group in Colombo, Sri Lanka. His expertise and experience is in Business/Finance, Operations and Technology Management, Program and Project Management.

Mr. Bartlett is a Certified Practicing Accountant (CPA - Australia), Chartered Management Accountant (ACMA - UK) and a Chartered Manager (MCMI - UK & AIMM - Australia) and his earlier experience was with KPMG Ford, Rhodes, Thornton & Co. in Finance, Audit and special assignments.

Mr. Nissanka WeerasekeraNon-Independent, Non-Executive DirectorMr. Weerasekera was appointed to the Board of E-channelling on 19 June 2006.

He is the Regional Managing Partner for South and Central Asia, with responsibility for managing Aureos South Asia Fund I, Aureos South Asia Fund LLC the operational activities of the Aureos Central Asia Fund, and the pioneer funds of NDB Venture Investments and Ayojana Fund.

Prior to joining Aureos in November 2003, Mr. Weerasekera was Chief Executive Officer of People’s Venture Investment Company (PVIC) and subsequently Managing Director of Nextventures, which was spun off from PVIC under Nissanka’s leadership. He has 14 years private equity experience in Sri Lanka.

Mr. Weerasekera has also been a Project Manager at the United States Agency for International Development on SME Finance-related projects and has several years’ operational experience in Manufacturing and Finance.

He is a Fellow Member of the Chartered Institute of Management Accountants, UK. He also holds a Masters degree in Economics from the University of Colombo, Sri Lanka and a Bachelor of Science Special degree in Physics

from the University of Peradeniya, Sri Lanka.

Board of Directors

Mr. Indika HettiarachchiNon-Independent, Non-Executive DirectorMr. Hettiarachchi was appointed to the Board of E-channelling on 19 June 2006 and act as the alternate Director toMr. Nissanka Weerasekera.

Mr. Hettiarachchi is an Investment Principal with Aureos Capital and is responsible for investments in Sri Lanka and Bangladesh.

Prior to joining Aureos in 2006, Mr. Hettiarachchi was Manager Research and Business Development (Real Estate/ Property Sector) at John Keells Holdings PLC. He has over 10 years experience in Private Equity/ Venture Capital, Corporate Finance and Property sector.

Mr. Hettiarachchi is a Chartered Financial Analyst (CFA) and holds a Bachelor of Science degree from the University of Wisconsin, USA.

Mr. Satyajit SeneviratneNon-Independent, Non-Executive DirectorMr. Seneviratne was appointed to the Board of E-channelling on 01 August 2007.

Mr. Satyajit Seneviratne is the Head of Business Development at Millennium Information Technologies Limited. A key member of the strategic management team, his responsibilities include sales in emerging and frontier markets and also enhancing the company’s global position and awareness as a leading provider of capital markets automation products. Prior to this, he formed the Global Software Support Division and also the Business Consulting Division within Millennium Information Technologies Limited.

Before joining Millennium Information Technologies Limited, Mr. Seneviratne was employed by Apple Computer Inc., as an Engineering Project Manager. He was responsible for all software deliverables for the Apple Macintosh G3 desktop computer product range. From ’90 – ’96, he served as the long-term computer specialist on the USAID funded Financial Markets Project in Sri Lanka. He was responsible for the initial and subsequent post-trade automation projects of the Colombo Stock Exchange (CSE). He was also involved in producing the Request for Proposals (RFP) and the evaluation of the automated trading system for the CSE.

Mr. Seneviratne began his career as a Programmer Analyst at the U.S. House of Representatives in Washington, D.C. He holds a Master of Science in Computer Engineering from Clemson University, South Carolina, USA and a Bachelor of Science degree in Electrical Engineering from the University of Texas at Austin, USA.

6

Report of the Directors on the Affairs of the Company

The Board of Directors are pleased to present their Report

and the Audited Financial Statements of the Company for

the year ended 31st March 2009. The details set out herein

provide pertinent information required by the Companies

Act, No.7 of 2007, the Colombo Stock Exchange Listing rules

and are guided by recommended best accounting practices.

Review of the Year

The Chairman’s Review describes the Company’s affairs and

mentions important events of the year.

Principal Activity

The principal activity of the Company is to operate an

Internet based electronic commerce business to provide a

booking service for the consultation of doctors and related

medical services.

Auditorʼs Report

The Auditor’s report on the financial statements is given on

page 9.

Financial Statements

The financial statements of the Company are given in pages

10 to 13.

Accounting Policies

The accounting policies adopted in preparation of Financial

Statements are given on pages 14 to 26. There were no

material changes in the Accounting Policies adopted.

Interest Register

The Company maintains an Interest Register and the

particulars of those directors who were directly or indirectly

interested in a contract of the Company are stated there in.

Directorsʼ Interest

None of the directors had a direct or indirect interest in any

contracts or proposed contracts with the Company other

than as disclosed in Note 20 to the Financial Statements as

Related Party Transactions to the Financial Statements.

Mr. T.K.D.A.P. Samarasinghe was also a director of Lanka

Bell Ltd. During the year where Rs. 422,453 was paid for

communication lines to that company.

Directorʼs Remuneration and Other Benefits

Director’s remuneration in respect of the Company for the

financial year ended 31st March 2009 is given in Note 20.2

to the Financial Statements.

Corporate Donations

No donations were made by the Company during the financial

year for charitable or political purposes.

Directors and their Shareholdings

Directors of the Company and their respective shareholdings

as at 31st March 2009 are as follows.

31.03.2009 31.03.2008

Mr. S.S. Bartlett Nil Nil

Mr. T.K.D.A.P. Samarasinghe Nil Nil

Mr. N. Weerasekera Nil Nil

Mr S.N. Seneviratne 66 66

Mr. I. Hettiarachchi Nil Nil

(Alternate to Mr. N. Weerasekera)

Mr. P.V.S.N. Jayatissa Nil Nil

(Alternate to Mr. T.K.D.A.P. Samarasinghe)

Mr. T.W. De Silva resigned from the Board with effect from

1st September 2008. Mr. D.J.P. Fernandopulle Alternate to

Mr. T.W. De Silva ceased to be a Director with effect from

the same date.

Mr. T.K.D.A.P. Samarasinghe resigned from the Board with

effect from 4th June 2009. Mr. P.V.S.N. Jayatissa Alternate

Director to Mr. T.K.D.A.P. Samarasinghe ceased to be a

Director with effect from the same date.

The Board wishes to place on record the Company’s sincere

appreciation for the valuable contribution extended to the

Company by Messrs T.W. De Silva, T.K.D.A.P. Samarasinghe

and P.V.S.N. Jayatissa during their tenure on the Board.

In terms of Article 89 of the Articles of Association of the

Company, Mr. S.N. Seneviratne retires by rotation at the

Annual General Meeting and being eligible offers himself

for re-election.

7


Auditors

The Financial Statements for the year ended 31st March

2009 have been audited by Messrs KPMG Ford, Rhodes,

Thornton & Company, Chartered Accountants, who express

their willingness to continue in office. In accordance with the

Companies Act No.07 of 2007, a resolution relating to their

re-appointment and authorising the Directors to determine

their remuneration will be proposed at the forthcoming

Annual General Meeting.

The Auditor’s Messrs KPMG Ford, Rhodes, Thornton &

Company were paid Rs. 132,000 (2008 – Rs. 110,000) as

audit fees by the Company. In addition they were paid Rs Nil

(2008 – Rs. Nil.) by the Company for non-audit related work.

As far as the Directors are aware, the Auditors do not have

any relationship (other than that of an Auditor) with the

Company other than those disclosed above. The Auditors

also do not have any interest in the Company.

Dividends

The Directors do not recommend the payment of a dividend

for the year ended 31st March 2009.

Investments

Details of investments held by the Company are disclosed in

Note 6 to the Financial Statements.

Intangible Assets

An analysis of the Intangible Assets of the Company,

additions and impairments during the year and amortisation

charged during the year are set out in Note 4 to the Financial

Statements.

Property, Plant and Equipment

An analysis of the property, plant and equipment of the

Company, additions and disposals made during the year and

depreciation charged during the year are set out in Note 2 to

the Financial Statements.

Capital Commitments

There are no material capital commitments that would require

disclosures in the Financial Statements.

Stated Capital

The Stated Capital of the Company is Rs. 187,516,633 There

was no change in the stated capital of the Company during

the year.

Reserves

Retained losses as at 31st March 2009 amount to

Rs. 119,162,012. Movements are shown in the Statement of

Changes in Equity in the Financial Statements.

Events subsequent to the Balance Sheet date

No significant events have occurred since the Balance Sheet

date other than those disclosed in Note 23 to the Financial

Statements.

Employment Policies

The Company identifies Human Resource as one of the most

important factor contributing to the survival and growth of

the Company in the current competitive business environment.

While appreciating and valuing the service of our employees

a greater effort is made to hire the best talent from external

sources to maintain and improve the high quality of the

service.

Taxation

The tax position of the Company is given in Note 18 to the

Financial Statements.

Disclosure as per Colombo Stock Exchange Rule

No.8.7

31.03.09 31.03.08

Market price per share as at 31st March 7.75 15.50

Highest share price during the year 16.00 36.50

Lowest share price during the year 6.50 12.00

Shareholding

The number of registered shareholders of the Company as at

31st March 2009 was 1,243.

Major Shareholders

The twenty largest shareholders of the Company as at 31st

March 2009, together with an analysis are given on page 27.

8


Statutory Payments

The Directors to the best of their knowledge and belief

are satisfied that all statutory payments in relation to the

government and the employees have been made on time.

Environment, Health and Safety

The company policy continues to ensure that all environmental,

health and safety regulations are strictly adhered to minimize

any adverse effect to the environment.

Corporate Governance

The Directors are responsible for the formulation and

implementation of overall business strategies, policies and

for setting standards in the short, medium and long term and

adopting good governance in managing the affairs of the

Company.

Contingent Liabilities

There were no material contingent liabilities outstanding as

at 31st March 2009.

Post Balance Sheet Events

Subsequent to the date of the Balance Sheet no circumstances

have arisen which would require adjustments to the accounts.

Significant post balance sheet events which in the opinion of

the Directors require disclosure are described in Note 23 to

the financial statements.

Annual General Meeting

The Ninth Annual General Meeting of the Company will be

held at the Anthuriam Hall, Hotel Renuka, 328, Galle Road,

Colombo 03 on Wednesday 30th September 2009 at

9.00 a.m.

For and on behalf of the Board of Directors of

E-CHANNELLING PLC

Director Director S S P Corporate Services

(Private) Limited, Secretaries

Date: 31st July 2009

9

Report of the Auditors

INDEPENDENT AUDITORS ̓REPORT

TO THE SHAREHOLDERS OF E-CHANNELLING PLC

Report on the Financial StatementsWe have audited the accompanying financial statements of E-Channelling PLC which comprise the balance sheet as at March 31, 2009, 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.

Managementʼs Responsibility for the Financial StatementsManagement 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 OpinionOur 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.

OpinionIn our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended March 31, 2009 and the financial statements give a true and fair view of the Companyʼs state of affairs as at March 31, 2009 and of its loss and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory RequirementsThese financial statements also comply with the requirements of Section 151(2) of the Companies Act No. 07 of 2007.

CHARTERED ACCOUNTANTSColombo31st July 2009

10

Balance Sheet

AS AT 31ST MARCH 2009 31.03.2009 31.03.2008 Note Rs. Rs.ASSETS Property, Plant & Equipment 2 6,386,278 9,165,054 Leasehold Asset 3 41,417 118,222 Intangible Assets 4 9,817,997 10,893,973 Employees’ Share Ownership Trust (ESOT Fund) 5 3,350,000 3,350,000 Investments 6.1 9,085,187 - Total Non Current Assets 28,680,879 23,527,249 Trade & Other Receivable 7 10,406,177 6,571,221 Short Term Investments 6.2 45,700,000 70,223,063 Cash & Cash Equivalent 2,315,164 242,974 Total Current Assets 58,421,341 77,037,258 Total Assets 87,102,220 100,564,507 EQUITY Stated Capital 8 187,516,633 187,516,633 Retained Loss (119,162,012) (107,999,277) Total Equity 68,354,621 79,517,356 LIABILITIES Retirement Benefit Obligation 9 1,329,432 1,079,900 Lease Creditor 10 - 189,126 Total Non Current Liabilities 1,329,432 1,269,026 Trade & Other Payable 11 9,136,565 7,321,351 Lease Creditor 10 189,126 273,367 Related Party Payable - 9,084,091 Current Tax Payable 12 1,227,114 3,099,316 Bank Overdraft 6,865,362 - Total Current Liabilities 17,418,167 19,778,125 Total Liabilities 18,747,599 21,047,151 Total Equity & Liabilities 87,102,220 100,564,507 The above Balance Sheet is to be read in conjunction with the Accounting Policies and Notes to the financial statements on pages 14 to 26. These financial statements are prepared in compliance with the requirements of the Company’s Act No. 07 of 2007. Malshani ThanthrigeFinance Manager The Board of Directors are responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the board by, Mr S S Bartlett Mr N B Weerasekera Chairman Director

Date: 31st July 2009 Colombo

11

Income Statement

FOR THE YEAR ENDED 31ST MARCH 2009

31.03.2009 31.03.2008 Note Rs. Rs.

Revenue 13 38,484,507 28,330,762

Other Income 14 601,092 -

Administrative Expenses (58,265,491) (43,846,779)

Selling & Distribution Expenses (1,484,513) (5,755,926)

Loss from Operating Activities 15 (20,664,405) (21,271,943)

Financial Income 16 12,347,867 14,471,564

Financial Cost 17 (74,957) (688,749)

Loss Before Taxation (8,391,496) (7,489,128)

Income Tax Expenses 18 (2,771,239) (3,243,902)

Loss for the Year (11,162,735) (10,733,030)

Loss per share - Basic 19 (0.64) (0.62)

The above Income Statement is to be read in conjunction with the Accounting Policies and Notes to the financial statements on

pages 14 to 26.

12

Statement of Changes in Equity


Stated Retained Total Capital Losses Rs. Rs. Rs.

Balance as at 31st March 2007 187,516,633 (97,266,247) 90,250,386

Loss for the year - (10,733,030) (10,733,030)


Loss for the year - (11,162,735) (11,162,735)


The above Statement of Changes in Equity is to be read in conjunction with the Accounting Policies and Notes to the financial

statements on pages 14 to 26.

13

Cash Flow Statement

FOR THE YEAR ENDED 31ST MARCH 2009 31.03.2009 31.03.2008 Rs. Rs.Cash Flows From Operating Activities Loss before Taxation (8,391,496) (7,489,128) Adjustments for Depreciation & Amortization 4,761,779 2,339,499 Profit from Disposal of Assets (185,217) - Amortization of Government Bond 23,063 151,731 Gratuity Provision 1,054,532 760,050 Interest Income (12,347,867) (14,471,564) Interest Expense 74,957 688,749 Operating Loss before Working Capital Changes (15,010,249) (18,020,663)

(Increase) / Decrease in Trade & Other Receivables (952,033) (111,059) Increase/ (Decrease) in Amount Due to Related Parties (9,084,091) 9,084,091 Increase/ (Decrease) in Trade & Other Payables 1,815,214 111,398 Cash used in Operations (23,231,159) (8,936,233)

Income Tax Paid (3,578,371) (2,453,928) Interest Paid (74,957) (688,747) Gratuity Paid (805,000) (375,000) Interest Received 8,307,389 14,468,270 Net Cash Flow from / (used in) Operating Activities (19,382,098) 2,014,362 Cash Flows from / (used in) Investing Activities Acquisition of Property, Plant & Equipment (783,472) (8,132,566) Proceeds from Property, Plant & Equipment 185,217 - Acquisition of Intangible Assets (35,063) (9,600,289) Proceeds from Investments uplifted (net) 15,495,611 11,800,000 Net Cash Flow from / (used) in Investing Activities 14,862,293 (5,932,855) Cash Flows from (Used in) Financing Activities Proceeds from Short Term Borrowings - 10,500,000 Settlement of Short Term Borrowings - (10,500,000) Lease Installments Paid on Finance Lease (273,367) - Net Cash Flows from / (used in) Financing Activities (273,367) - Changes in Cash & Cash Equivalents (4,793,172) (3,918,493)Cash & Cash Equivalents at the beginning of the Period 242,974 4,161,467 Cash & Cash Equivalents at the end of the Period (Note -A) (4,550,198) 242,974 (Note -A) Cash and Cash Equivalents Cash & Cash Equivalents 2,315,164 242,974 Bank Overdraft (6,865,362) - (4,550,198) 242,974 The above Cash Flow Statement is to be read in conjunction with the Accounting Policies and Notes to the financial statements on pages 14 to 26.

14

Accounting Policies

1. GENERAL

1.1 Legal Status and Domicile

E-Channelling PLC is a quoted public company incorporated on the 27th day of July 2000 and domiciled in Sri Lanka.

The Company commenced generating revenue from 24th July 2001. The registered office of the Company is located at

Suncity Towers, Mezzanine Floor, No.18, St. Anthony’s Mawatha, Colombo 3.

The principal activity of the Company is to operate an internet based electronic commerce (e-commerce) business with

the primary objective of providing a channelling service to consult doctors and related medical services.

The financial statements were authorized for issue by the Directors on 31st July 2009

1.2 Statement of Compliance

The financial statements of the Company have been prepared in accordance with the Sri Lanka Accounting Standards

(SLASs) as laid down by the Institute of Chartered Accountants of Sri Lanka, and the requirements of the Companies Act

No.7 of 2007.

1.3 Basis of Measurement

The Financial Statements are presented in Sri Lankan rupees, rounded to the nearest rupee. They are prepared on a

historical cost convention and no adjustment has been made for inflationary factors.

1.4 Use of Estimates and Judgements

The preparation of financial statements in conformity with SLAS requires management to make adjustments, estimates and

assumptions that affects the application of policies and reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that are believed

to be reasonable under the circumstances, the results form the basis of making the judgment about carrying values of

assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the

revision and future periods if the revision affects both current and future periods.

The accounting policies have been consistently applied by the Company and are consistent with those used in previous

years.

1.5 Property, Plant and Equipment

(i) Recognition and Measurement

Property, Plant and Equipment is recorded at cost less accumulated depreciation less accumulate impairment loss

if any. The cost of property, Plant and Equipment is the cost of purchase and any incidental expenses thereon.

Gains and losses and disposal of items of Property, Plant and Equipment are determined by comparing the

proceeds for disposal with the carrying amount of Property, Plant and Equipment and are recognized net within

“other income” in income statement.

15

Accounting Policies (Contd)

(ii) Subsequent Cost

The Company recognizes in the carrying amount of an item of Property, Plant and Equipment. The cost of replacing

part of such an item when that the cost is incurred if it is probable that the future economic benefits embodied with

the item will flow to the company and the cost of the item can be measured reliably. All other costs are recognized

in the Income statement as an expense incurred.

(iii) Depreciation

Depreciation is charged to the Income Statement on a straight line basis to write off the cost of the assets over the

estimated useful lives of items of Property, Plant and Equipment. Depreciation is provided proportionately in the

month of purchase and in the month of disposal of the asset.

Estimated useful lives for the current and comparative periods are as follows.

Computer Equipment 2 Years

Computer Servers 5 Years

Furniture & Fittings 4 Years

Office Equipment 2 Years

Motor Vehicle 3 Years

Leased Asset 2 Years

(iv) Leased Assets

Lease assets in terms of which the Company assumes substantially all the risks and rewards of ownership are

classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower

of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset

is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and the leased assets are not recognized on the Company’s Balance Sheet.

Lease payments are recognized as an expense in the Income Statement on a straight line basis over the term of the

lease.

(v) Impairment of Assets

The non-financial asset is considered to be impaired if objective evidence indicates that one or more events have

had a negative effect on the estimated future cash flows of that asset.

The carrying amount of the company assets are reviewed at each balance sheet date to determine whether

there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

An impairment loss is recognized whenever the carrying amount of the asset exceeds its recoverable amount.

Impairment losses are recognized in the income statement.

1.6 Intangible Assets

(i) Research and Development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge

and understanding, is recognised in profit or loss when incurred.

Development activities involve a plan or design for the production of new or substantially improved products

and processes. Development expenditure is capitalized only if development cost can be measured reliably,

16


the product or process is technically and commercially feasible, future economic benefits are probable, and

the company intends to and has sufficient resources to complete development and to use or sell the asset.

The expenditure capitalized includes the cost of materials, direct labour and overhead costs that are directly

attributable to preparing the asset for its intended use. Other development expenditure is recognized in profit or

loss as incurred.

Capitalized development expenditure is measured at cost less accumulated amortisation and accumulated

impairment losses.

(ii) License Fees

Licenses acquired by the Company are measured at cost less accumulated amortization and accumulated

impairment losses.

(iii) Subsequent Expenditure

Subsequent Expenditure is capitalised only when it increase the future economic benefits embodied in the specific

asset to which it relates. All other expenditure is recognised in the Income Statement as incurred.

(iv) Amortization

Amortization is recognised in the Income Statement on a straight line basis over the estimated useful lives of

intangible assets, from the date that they are available for use. The estimated useful lives for the current and

comparative periods are as follows.

License Fee 3 Years

Hospital Net 10 Years

1.7 Investments

Investments in Treasury Bonds

Investments in treasury bonds held for maturity are reflected at the value of bonds purchased and the discount / premium

accrued thereon. Discount received / premium paid is taken to the Income Statement on a straight line basis.

1.8 Trade and Other Receivables

Trade receivables are stated at the amounts they are estimated to realise net of provisions for bad and doubtful

receivables.

1.9 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.

1.10 Employee Benefits

(i) Defined Contribution Plans Employee Provident Fund & Employees Trust Fund

Employees are eligible for Employees’ Provident Fund Contributions and Employees’ Trust Fund Contributions in

line with the respective statutes and regulations. The Company contributes 15% and 3% of gross emoluments of

employees to Employees’ Provident Fund and Employees’ Trust Fund respectively.

17


(ii) Retirement Benefits Obligations – Gratuity

Provision has been made for retirement gratuities from the first year of service for all employees in conformity

with the SLAS 16. However under the Payment of Gratuity Act, No. 12 of 1983, the liability to an employee arises

only on completion of 5 years of continued service.

The gratuity liability is not externally funded nor is actuarially valued. The Gratuity Liability is valued using the

Gratuity Formula Method as allowed by Sri Lanka Accounting Standards 16- Employee benefits.

(iii) Liabilities and Provisions

A provision is recognized in the Balance Sheet when the Company has a legal or constructive obligation as a result

of past events and it is probable that an outflow of economic benefits will be required to settle the obligations,

and a reliable estimate of the amount can be made.

1.11 Revenue Recognition

Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery

of the consideration is probable, the associated costs and possible return of goods can be estimated reliably and the

amount of revenue can be measured reliably.

Revenue is measured at the fair value of the consideration received or receivable net of trade discounts or sales taxes.

The following specific criteria are used for purpose of recognition of revenue.

(i) Rendering of Services

Revenue from rendering of services is recognised in the accounting period in which the services are rendered

(ii) Interest Income

Interest Income is recognized on an accrual basis.

1.12 Expenditure Recognition

Expenses are recognised in the income statement on the basis of a direct association between the cost incurred and the

earning of specific items of income. All 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 / (loss) for the year.

For the purpose of presentation of Income Statement the directors are of the opinion that the nature of expenses method

present fairly the elements of the Company’s performance, and hence such presentation method is adopted.

(i) Borrowing Costs

Borrowing costs are recognized as an expense in the period which they are incurred.

(ii) Interest Costs

Interest Costs are recognized as an expense in the period which they are incurred.

1.13 Income Tax Expense

(i) Current Taxes

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

statements and computed in accordance with the provisions of the Inland Revenue Act No. 10 of 2006 and its

amendments thereto.

18


(ii) Deferred Taxation

Deferred tax is recognized using the balance sheet liability method, providing for temporary differences between

the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation

purposes. The amount of deferred tax is provided based on the expected manner of realization or settlement of

the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet

date.

The principal temporary differences arise from depreciation on Property, Plant and Equipment, tax losses carried

forward and provisions for defined benefit obligations. Deferred tax assets relating to the carried forward of unused

tax losses are recognised to the extent that it is probable that future taxable profit will be available against which

the unused tax losses can be utilized.

Deferred tax assets are reviewed at balance sheet date and are reduced to the extent that it is no longer probable

that the related tax benefit will be realized.

1.14 Cash Flow Statement

Cash Flow Statements have been prepared using the indirect method in accordance with Sri Lanka Accounting Standards

9 – Cash Flow Statements. For the purpose of Cash Flow Statement, cash and cash equivalents consist of cash in hand and

deposits in banks, net of outstanding bank overdrafts. Investments with short maturities i.e. three months or less from the

date of acquition are also treated as cash equivalents.

1.15 Commitments and Contingencies

Contingencies are possible assets or obligations that arise from an event and would be confirmed only on the occurrence

of uncertain future events, which are beyond the Company’s control.

1.16 Comparative Figures

The accounting policies have been consistently applied by the Company and are consistent with those used in the

previous year. Comparative information is reclassified where necessary in order to provide a more appropriate basis

for comparison and disclosed in the note 24 to the financial statements.

1.17 Directors Responsibility Statement

The Board of Directors takes the responsibility for preparation of these Financial Statements.

1.18 Segment Reporting

A segment is a distinguishable component of the company that is engaged in either providing product or services (business

segment), or in providing product or services within a particular economic environment (geographical segment), which is

subject to risks and rewards that are different from those of other segments.

Management believes that it is not practical to provide segment costs and expenses and consequently segment profits and

losses, since a realistic allocation cannot be made. The fixed assets used in the Company’s business are not identifiable

to any particular reportable segment and can be used interchangeably among segments. Consequently Management

believes that it is not practical to provide segmental disclosures relating to total assets since a realistic analysis among

the various operating segments is not possible.

19

Notes to the Financial Statements


2 Property, Plant & Equipment

Computer Computer Furniture & Office Motor Total

Equipment Servers Fittings Equipment Vehicles

Cost Rs. Rs. Rs. Rs. Rs. Rs.

As at the beginning of the year 37,685,399 - 1,223,185 1,316,390 236,000 40,460,974

Additions 134,500 181,967 - 467,005 - 783,472

Transfers (27,023,787) 27,023,787 - - - -

Disposals (247,200) (78,337) (53,862) (75,750) (455,149)

As at the end of the year 10,548,912 27,205,754 1,144,848 1,729,533 160,250 40,789,297

Accumulated Depreciation

As at the beginning of the year 29,405,118 - 718,733 992,011 180,058 31,295,920

Charge for the year 1,676,753 1,252,288 194,588 410,061 28,558 3,562,248

Transfers (20,888,413) 20,888,413 - - - -

Disposals (247,200) - (78,337) (53,862) (75,750) (455,149)

As at the end of the year 9,946,258 22,140,701 834,985 1,348,210 132,866 34,403,019

Carrying Amount

As at 31st March 2009 602,654 5,065,053 309,864 381,323 27,384 6,386,278

As at 31st March 2008 8,280,281 - 504,452 324,379 55,942 9,165,054

Plant and equipment includes fully depreciated assets in use at the balance sheet date, the cost of which at 31st March

2009 amounted to Rs. 31,356,295 (2008 - Rs. 28,715,132).

3 Leasehold Asset

Laptop Total

Cost Rs. Rs.

As at the beginning of the year 140,000 140,000

Additions - -

As at the end of the year 140,000 140,000

Accumulated Depreciation

As at the beginning of the year 21,778 21,778

Charge for the year 76,805 76,805

As at the end of the year 98,583 98,583

Carrying Amount

As at 31st March 2009 41,417

As at 31st March 2008 118,222

20

Notes to the Financial Statements (Contd)


4 Intangible Assets

License Fee Hospital Net 31.03.2009 31.03.2008

Cost Rs. Rs. Rs. Rs.

As at the beginning of the year 122,800 10,804,943 10,927,743 1,327,454

Additions 46,750 - 46,750 9,600,289

As at the end of the year 169,550 10,804,943 10,974,493 10,927,743

Accumulated Amortization

As at the beginning of the year 33,770 - 33,770 33,770

Amortization for the year 42,232 1,080,494 1,122,726 -

As at the end of the year 76,002 1,080,494 1,156,496 33,770

Carrying Amount 93,548 9,724,449 9,817,997 10,893,973

Company has entered into an agreement with Nawaloka Hospital PLC on 7th September 2005 to develop a healthcare

management system called Hospital Net. This was capitalized end of March 2008 by the Company.

31.03.2009 31.03.2008

Rs. Rs.

5 Employeesʼ Share Ownership Trust (ESOT Fund)

Balance as at the beginning of the year 3,350,000 3,350,000

Loan settled during the year - -

Balance as at the end of the year 3,350,000 3,350,000

During the year ended March 31, 2002 the Company set up an Employee Share Ownership Trust to issue Ordinary Shares

of the Company to it’s employees. The Trust loan was created by the allocation of 350,000 ordinary shares issued at the

par value (Rs. 10) and Rs. 15,000 shares has been settled during the year ended March 31, 2006.

The scheme was set up for the employees of the Company including any director holding a salaried employment or officer in

the Company. Shares shall be allotted to participants only at the end of the probation period unless the Board of Directors

shall otherwise determine.

Dividend and other income on these shares would be paid to the Company by the Trust in order to settle the loan.

No shares were allotted to employees during the financial year 2008/2009.

21



31.03.2009 31.03.2008

Rs. Rs.

6 Investments

6.1 Long Term Investment

Investment in Treasury Bond (Interest Rate 15.5%) 9,085,187 -

(20.01.2009-01.08.2010)

9,085,187 -

6.2 Short Term Investment

Investment in Government Bond (Interest Rate 9.5%) - 10,023,063

Fixed Deposits 21,000,000 -

Repurchase of Treasury Bonds - 22,500,000

Commercial Papers 24,700,000 37,700,000

45,700,000 70,223,063

7 Trade & Other Receivables

Trade Receivables 1,494,018 516,206

Advance & Prepayments 2,457,715 2,369,792

WHT & Tax Receivables 1,373,104 1,329,586

Interest Receivable 3,291,480 460,667

Refundable Deposits 1,789,860 1,894,970

10,406,177 6,571,221

8 Stated Capital

Stated Capital 187,516,633 187,516,633

No. of Shares 17,337,345 17,337,345

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote

per individual present at meetings of the shareholders or one vote per share in case of a poll. All shares are ranked equally

with regard to the Company’s residual assets.

9 Retirement Benefit Obligations

Balance at the beginning of the year 1,079,900 694,850

Provision for the Year 1,054,532 760,050

Paid during the Year (805,000) (375,000)

Balance at the end of the year 1,329,432 1,079,900

22



9 Retirement Benefit Obligations (Contd)

The retirement benefit plan entitle, a retired employee to receive payment equal to 1/2 of final salary multiplied by the

number of completed years of service.

The retirement benefit plan valuation is carried out based on Gratuity Formula Method in accordance with SLAS 16.

Principal assumption as at the balance sheet date are as follows;

Discount Rate at 31st March 2009 12%

Future salary increase 5%

31.03.2009 31.03.2008

Rs. Rs.

10 Lease Creditors

Lease Creditors payable within one year 203,189 348,324

Interest in suspense (14,063) (74,957)

189,126 273,367

Lease Creditors payable after one year - 203,189

Interest in suspense - (14,063)

- 189,126

11 Trade & Other Payables

Trade Payables 5,938,412 3,605,148

Other Creditors & Accrued Expenses 3,198,153 3,716,203

9,136,565 7,321,351

12 Current Tax Payable

Balance at the beginning of the year 3,099,316 2,686,318

Provision for the year 2,771,239 3,243,902

WHT credit set-off during the year (1,065,070) (376,976)

Income tax paid (3,578,371) (2,453,928)

Balance at the end of the year 1,227,114 3,099,316

13 REVENUE

Revenue from Portals 29,207,371 25,162,431

Software Providing Income 7,483,758 3,085,413

Call Charges Income 1,793,378 82,918

38,484,507 28,330,762

23



31.03.2009 31.03.2008

Rs. Rs.

14 Other Operating Income

Sale of Fixed Assets 185,217 -

Software Development (Others) 415,875 -

601,092 -

15 The loss from operations was arrived after charging the following.

Depreciation & Amortization 4,761,779 2,339,499

Salary Related Expenses 19,211,194 9,812,769

EPF 2,213,933 1,351,801

ETF 442,787 276,122

Audit Fee 132,000 110,000

Gratuity Provision 1,054,532 760,050

Penalties & Surcharges 120,750 -

Legal Expenses 121,351 199,500

16 Financial Income

Interest Income 12,347,867 14,471,564 12,347,867 14,471,564

17 Financial Cost

Reverse REPO Interest - 641,121

Lease Interest 74,957 47,628

74,957 688,749

Net Financial Income 12,272,910 13,782,817

18 Income Tax Expenses

Current taxation 2,771,239 3,243,902

24



18 Income Tax Expenses (Contd)

The corporate income tax rate of eChannelling PLC is 35%. The full benefit of capital allowances arising in terms of section

25 of the Inland Revenue Act No. 10 of 2006 and amendments there to have been taken into account to determine taxation

for the year. The provision has been made in these Financial Statements on the taxable income arising from the interest

income of the Company. (The carried forward tax losses of the company up to 2008/2009 amounts to Rs. 131,298,382

(2007/2008 -Rs. 114,201,211)

31.03.2009 31.03.2008

Rs. Rs.

Reconciliation between the accounting loss and tax expenses

Accounting loss (8,391,496) 7,489,128)

Deductible expenses (19,190,857) (20,907,692)

Non deductible expenses 7,363,761 6,063,882 Statutory losses from the business (20,218,592) (22,332,938)

Statutory Income- Income from other sources 12,451,935 14,577,120

Loss claimed (35% of statutory Income) (4,358,177) (5,101,992) Taxable Income 8,093,758 9,475,128

Applicable tax rate 35% 35% Tax on taxable income 2,832,815 3,316,295

SRL @ 1.5% 42,492 33,163

Tax Credits (104,068) (105,556) Current tax expense 2,771,239 3,243,902

18.1 Deferred Tax

Deductible Temporary differences as follows:

Tax Losses 131,298,382 114,201,211

Retirement Benefit 1,329,432 1,079,900

Property Plant & Equipments - 3,440,974 132,627,814 118,722,085

Taxable Temporary Differences

Property Plant & Equipments (4,607,240) - Total Deductible Temporary Differences 128,020,574 118,722,085

Tax Rate 35% 35%

Unrecognized Deferred Tax Asset 44,807,201 41,552,730

No provision has been made in respect of deferred taxation as the Company has incurred tax losses and the temporary

differences are not expected to reverse on the above components and it is not probable that future taxable profit will

be available against which the Company can utilize the benefits there from, in the near future.

25



19 Loss Per Share - Basic

The basic loss per share is calculated based on the loss attributable to ordinary shareholders divided by weighted

average number of ordinary shares as at the balance sheet date .

31.03.2009 31.03.2008

Loss for the current year (Rs.) (11,162,735) (10,733,030)

Weighted average No of ordinary shares 17,447,345 17,447,345

Loss Per Share (Rs.) (0.64) (0.62)

20 Transactions with Related Parties

20.1 Transactions with Related Entities

Company Name of Director Relationship Nature of Transactions

Millennium Information Mr. S. N. Seneviratne Director related Settlement of the last year outstanding

Technologies Limited Mr. N. B. Weerasekara and 19% for purchase of Computer Hardware

Mr. I. Hettiarachchi Shareholder disclosed in last year accounts. -

Rs. 9,084,091

Payment for the purchase of software

system & SCSI card - Rs. 1,506,080

20.2 Transactions with Key Management Personnel

Key management personnel comprises the Directors of the Company having authority and responsibility for

planning, directing, and controlling the activities of the Company.

31.03.2009 31.03.2008

Rs. Rs.

Short term employee benefits 1,333,889 1,334,667

Post employment benefits Nil Nil

21 Commitments & Contingencies

There are no material contingent liabilities & capital expenditure commitments as at the balance sheet date other than

those disclosed below.

31.03.2009 31.03.2008

Rs. Rs.

Operating Lease

Total future minimum lease payments on operating lease are as follows:

Payable within one year 1,723,128 1,723,128

Payable within one to five years 2,584,692 4,307,820

}

26


22 Number of Employees

The number of employees of the company as at 31 st March 2009 amounted to 42 (2007/08-66).

23 Events Occurring After The Balance Sheet Date

Subsequent to the balance sheet date, no circumstances have arisen which would require adjustment to or disclosure in the

Financial Statements.

24 Comparative Information

The accounting policies have been consistently applied by the Company.

Comparative figures have been re-classified by the management, to conform to the current year’s presentation as

follows;

As per audited accounts

previously stated Re-classified

24.1 Lease creditors 462,493 -

Within one year - 273,367

More than one year - 189,126

25 Directors Responsibility

The Board of Directors take responsibility for the preparation and presentation of these financial statements.


27

Share Information

ANALYSIS OF SHAREHOLDERS ACCORDING TO THE NUMBER OF SHARES AS AT 31.03.2009

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

1 to 1,000 Shares 738 313,190 1.80 2 666 - 740 313,856 1.80

1001 to 5,000 Shares 345 921,176 5.28 3 7,418 0.04 348 928,594 5.32

5,001 to 10,000 Shares 79 584,231 3.35 0 - - 79 584,231 3.35

10,001 to 50,000 Shares 51 975,399 5.59 1 12,200 0.07 52 987,599 5.66

50,001 to 100,000 Shares 8 509,066 2.92 1 89,633 0.51 9 598,699 3.43

100,001 to 500,000 Shares 9 2,107,300 12.08 0 - - 9 2,107,300 12.08

500,001 to 1,000,000 Shares 2 1,544,700 8.85 0 - - 2 1,544,700 8.85

Over 1,000,000 Shares 4 10,382,366 59.51 0 - - 4 10,382,366 59.51

1,236 17,337,428 99.38 7 109,917 0.62 1,243 17,447,345 100

Categories of Shareholders No. of Shareholders No. of Shares

Individual 1,210 5,211,774

Institutional 33 12,235,571

1,243 17,447,345

LIST OF 20 MAJOR SHAREHOLDERS BASED ON THE SHAREHOLDINGS AS AT 31.03.2009

NAME SHAREHOLDINGS PERCENTAGE (%)

MILLENNIUM INFORMATION TECHNOLOGIES LIMITED 3,470,000 19.89

SRI LANKA INSURANCE CORPORATION LTD. - GENERAL FUND 2,866,666 16.43

AYOJANA FUND (PRIVATE)LIMITED 2,800,000 16.05

SRI LANKA INSURANCE CORPORATION LTD. - LIFE FUND 1,245,700 7.14

DFCC BANK A/C 1 877,100 5.03

MR. RUWANPATHIRANA 667,600 3.83

COMMERCIAL BANK OF CEYLON PLC A/C NO. 02 425,000 2.44

MR. PERERA 408,100 2.34

MR. GOONEWARDENA 335,000 1.92

DPMC FINANCIAL SERVICES (PVT) LTD. ACCOUNT NO. 01 242,000 1.39

AYIAN TECHNOLOGIES (PRIVATE) LIMITED 180,000 1.03

MR. KANDEGEDARA 165,100 0.95

MRS. JAYASINGHE 120,100 0.69

MR. RATHNAYAKA 120,000 0.69

MR. SENARATNE 112,000 0.64

MR. MUNASINGHE 89,633 0.51

MR. THIYAGARAJAH 82,000 0.47

MR. JAYAKUMAR 69,400 0.40

MR. WEERASINGHE 64,266 0.37

MR. MORAHELA 62,800 0.36

28

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Ninth Annual General Meeting of the E-Channelling PLC will be held at the Anthuriam Hall,

Hotel Renuka, 328, Galle Road, Colombo 03 on Wednesday 30th September 2009 at 9.00 a.m. for the purpose:

AGENDA

1. To receive and consider the Report of the Directors on the State of Affairs of the Company and the Statement of Accounts

for the year ended 31st March 2009, with the Report of the Auditors thereon.

2. To re-elect Mr. S.N. Seneviratne a Director who retires by rotation at the Annual General Meeting in terms of Article 89 of

the Articles of Association of the Company.

3. To re-appoint Messrs KPMG Ford, Rhodes, Thornton and Company, Chartered Accountants as Auditors of the Company

and to authorise the Directors to determine their remuneration.

4. To authorise the Directors to determine contributions to charities for 2009.

ORDER OF THE BOARD OF DIRECTORS OF

E-CHANNELLING PLC

S S P CORPORATE SERVICES (PRIVATE) LIMITED

SECRETARIES

Date: 31st July 2009

Note:

(a) A member who is unable to attend and vote at the above mentioned meeting is entitled to appoint a Proxy to attend and

vote in his or her place. A proxy need not be a member of the Company. A Form of Proxy accompanies this Notice.

(b) A Form of Proxy is annexed to this notice.

(c) The completed Form of Proxy should be deposited at the Registered Office of the Company, Suncity Towers, Mezzanine

Floor, No.18, St. Anthony’s Mawatha, Colombo 03 not later than 48 hours before the time appointed for the holding of the

meeting.

29

Form of Proxy

I /We ...................................................................of ............................................................................................................. being a member/s of the above Company,

hereby appoint ................................................................................................................... of ............................................................................................................. or failing him.

Mr. Samuel Sureshkumar Bartlett of Colombo or failing him

Mr. Nissanka Bandara Weerasekera of Colombo or failing him

Mr. Satyajit Nilkamal Seneviratne of Colombo or failing him

as my/our proxy to represent me/us and vote on my/our behalf at the Ninth Annual General Meeting of the Company

to be held on Wednesday 30th September 2009 and at any adjournment thereof and at every poll which may be taken in

consequence of the aforesaid meeting and to VOTE as indicated below:

FOR AGAINST

1. To receive and consider the Report of the Directors on the

State of Affairs of the Company and the Statement of

Accounts for the year ended 31st March 2009, with the Report

of the Auditors thereon.

2. To re-elect Mr. S.N. Seneviratne a Director who retires by rotation

at the Annual General Meeting in terms of Article 89 of the

Articles of Association of the Company.

3. To re-appoint Messrs KPMG Ford, Rhodes, Thornton and

Company, Chartered Accountants as Auditors of the Company

and to authorise the Directors to determine their remuneration.

4. To authorise the Directors to determine contributions to charities

for 2009.

Signed this .................................................................................................... day of .........................................................................................Two Thousand and Nine.

Signature: ........................................................................................

Note : Please delete the inappropriate words.

1. Instructions for completion of form of proxy are noted on the reverse

2. A proxy need not be a member of the Company

3. Please mark “X” in appropriate cages, to indicate your instructions as to voting

30

Instructions to Completion of Form of Proxy

1. Kindly perfect the Form of Proxy by filling in legibly your full name and address, your instructions as to voting, by signing in

the space provided and filling in the date of signature.

2. Please indicate with a ‘X’ in the cages provided how your proxy is to vote on the Resolutions. If no indication is given the

Proxy in his/her discretion may vote as he/she thinks fit.

3. The completed Form of Proxy should be deposited at the Registered Office of the Company at Suncity Towers, Mezzanine

Floor, No.18, St. Anthony’s Mawatha, Colombo 03, at least 48 hours before the time appointed for holding of the Meeting.

4. If the form of proxy is signed by an attorney, the relative power of attorney should accompany the completed form of proxy

for registration, if such power of attorney has not already been registered with the Company.

Note:

If the shareholder is a Company or body corporate, Section 138 of the Companies Act No. 07 of 2007 applies to Corporate

Shareholders of E-Channelling PLC. Section 138 provides for representation of Companies at meetings of other Companies.

A Corporation, whether a Company within the meaning of this act or not, may where it is a member of another Corporation,

being a Company within the meaning of this Act, by resolution of its Directors or other governing body authorise such person

as it thinks fit to act as its representative at any meeting of the Company. A person authorised as aforesaid shall be entitled

to exercise the same power on behalf of the Corporation which it represents as that Corporation could exercise if it were an

individual shareholder.

Financial Report 2008/2009

Documents

Transcript of Financial Report 2008/2009