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To the Members of Sri Lanka Telecom Limited

We have audited the balance sheet of Sri Lanka Telecom Limited as at 31 December 1999, the consolidated balance sheet of the Company and its Subsidiary as at that date, and the related statements of income and cash flows for the year then ended, together with the accounting policies and notes thereon appearing on pages 4 to 28.

Respective Responsibilities of Directors and Auditors

The Directors are responsible for preparing and presenting these financial statements in accordance with the Sri Lanka Accounting Standards. Our responsibility is to express an opinion on these financial statements, based on our audit.

Basis of Audit

Except as discussed in paragraph 4 below, we conducted our audit in accordance with Sri Lanka Auditing Standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the said financial statements, assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall presentation of the financial statements and determining whether the said financial statements are prepared and presented in accordance with Sri Lanka Accounting Standards. We therefore believe that our audit provides a reasonable basis for our opinion.

Limitation of Scope

Information relating to the age of amounts due in respect of telephony services provided to Government departments and other Governmental institutions, and confirmation of those balances, were not available. Further, these debts had not been settled by 31 October 1997 as specified in the shareholders agreement. We are therefore unable to state whether Rs. 281 million shown as a receivable from the Government is fairly stated.

Opinion

In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to satisfy ourselves as to the matter referred to in paragraph 4, the said balance sheet and the related statements of income and cash flows and the accounting policies and notes thereto, have been prepared and presented in accordance with Sri Lanka Accounting Standards, provide the information required by the Companies Act, No. 17 of 1982 and give a true and fair view of the Company’s state of affairs as at 31 December 1999 and the results of its operations and its cash flows for the year then ended.

 

 

In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to satisfy ourselves as to the matter referred to in paragraph 4, the consolidated balance sheet and statements of income and cash flows and the accounting policies and notes thereto have been properly prepared and presented in accordance with the Companies Act, No. 17 of 1982 and the Sri Lanka Accounting Standards, and give a true and fair view of the state of affairs as at 31 December 1999 and the results of its operations and its cash flows for the year then ended of the Company and its Subsidiary dealt with thereby, so far as concerns the members of the Company.

Directors’ Interests in Contracts

According to the information made available to us, the Directors of the Company were not directly or indirectly interested in contracts with the Company during the year ended 31 December 1999 except as stated in note 26 to the financial statements.

Emphasis of Matter

Without qualifying our opinion, we draw attention to note 8(f) to the financial statements. As disclosed in that note, the Company does not insure its property, plant & equipment and does not take insurance policies on other insurable risks. The amount set aside to meet any future uninsured loss is Rs. 62 million at the balance sheet date. These financial statements have been prepared on a going concern basis on the assumption that a substantial loss in excess of the amount provided would not arise.

Without qualifying our opinion, we also draw your attention to notes 25 and 28 to the financial statements. Two parties have made claims against SLTL amounting to Rs. 587 million on account of loss of profit resulting from the stay order secured by SLTL. After the balance sheet date, an internet service provider has filed action against the Company, claiming Rs. 1,500 million as damages for defamation arising out of an advertisement placed by the Company. The ultimate outcome of these matters cannot presently be determined and no provision for any liability that may result has been made in the financial statements.

Sgd.
PricewaterhouseCoopers
21 June 2000

 

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