nawaloka hospitals plc

Nawaloka Hospitals PLCAnnual Report 2014/15

Naw

aloka H

osp

itals PL

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nnual Rep

ort 2014/15

Nawaloka Hospitals PLCNo. 23, Deshamanya H. K. Dharmadasa Mawatha, Colombo 2, Sri Lanka.

Tel: +94 112 544 444-56, +94 112 305 051-79 Fax: +94 112 430 393E-mail: [email protected]: www.nawaloka.com

Financial Highlights 8

Operational Highlights 9

Milestones 10

Chairman/CEO’s Message 12

Director/General Manager’s Review 15

Business Model 18

Management Discussion and Analysis

Deriving Value – Internal Capital Formation 28

Delivering Value – External Capital Formation 34

Stewardship

Board of Directors 54

Senior Management Team 59

Executive Clinical Management Team 62

Corporate Governance 64

Risk Management 78

Awards and Accolades 83

Health is our greatest wealth...

COntEntS

Financial Reports

Annual Report of the Board of Directors 87

Report of the Remuneration Committee 91

Audit Committee Report 92

Directors’ Responsibility for Financial Reporting 94

Independent Auditors’ Report 95

Statement of Financial Position 96

Statement of Profit or Loss and Other Comprehensive Income 98

Statement of Changes in Equity 99

Cash Flow Statement 100

Notes to the Financial Statements 101

Annexes

Independent Assurance Report 128

GRI Content Index 130

Investor Information 135

Five Year Statistical Summary 137

Statement of Value Added 138

Quarterly Statistics 139

Corporate Information 140

Notice of Meeting 141

Notes 142

Form of Proxy Enclosed

Life Nawaloka Hospitals has its own unique ethos and viewpoint on the hospital-patient relationship, healthcare, treatment and general health and well-being. Our focus is always on life cherished…life that in its incomparable value, must be nurtured to realise its goals and aspirations to the fullest.

We see ourselves as partners with our customers and patients in the process of caring for life, providing premium health care options vital to it.

It is all about personal care, cutting edge treatment and a speedy return to health for all who pass through our doors.

WE ARE…

Nawaloka Hospitals PLC. Our saga began in 1985, when the vision and foresight of our founding Chairman, the late Deshamanya H K Dharmadasa, led to a foray into the health sector of Sri Lanka with the establishment of Nawaloka Hospital in Colombo. We were the pioneer, privately owned health care establishment to enter the country’s public sector dominated health domain.

Nawaloka Hospital’s passion and goal was to establish a centre of excellence embracing the highest of technological, diagnostic and curative processes built around excellence in leadership. We reasoned that if we could successfully establish a facility that mirrored the prowess and expertise of the most reputed hospitals in the region, Sri Lankans would not need to travel abroad for medical reasons and save million and millions of foreign exchange to the country by providing global health care at the door step.

And so it was that we came to pioneer many ‘firsts’ in the Sri Lankan health sector – the first hospital to introduce CT Scanners in Sri Lanka in 1987; the first private sector hospital to establish a dedicated Cardio-Thoracic Unit and more. We have our own Nurses Training School too.

Whilst striving to be the hospital of tomorrow, Nawaloka also set out to become ‘the people’s hospital’ – serving customers from all walks of life. Nawaloka Hospitals PLC consists of three subsidiaries – New Nawaloka Hospitals (Pvt) Ltd., New Nawaloka Medical Centre (Pvt) Ltd., Nawaloka Medicare (Pvt) Ltd. and one joint venture – Nawaloka Metropolis Laboratory (Pvt) Ltd.

Nawaloka Hospital was listed on the Colombo Stock Exchange in 2004.

OuR ViSiOn To be the Hospital of tomorrow whilst maintaining leadership and excellence in the health care industry.

OuR MiSSiOnTo provide the best health care to the needy in a cost effective, timely and professional manner.

OuR PuRPOSEWe are committed to achieving and maintaining a standard of excellence in all we do.

– Excellence in clinical care, service, and communication.

– Collaboration within our institution and with others who share our mission and goals

– Leadership that sets the standard for health care today and innovations of the future

– Accountability to our patients, community and each other for providing the best services in the most cost-effective way

Nawaloka Hospitals PLC Annual Report 2014/15 7

ABOut tHiS REPORt

The Annual Report in your hands is an integrated one. It builds on the integrated reporting process we introduced for the first time last year. We follow this route because it allows us to communicate more effectively, the interactions and interdependence of the many aspects of our business such as strategy, governance, performance and prospects – in the context of creating value over time.

We have also seamlessly integrated financial reporting with sustainability reporting to better illustrate the duality of our enterprise – namely deriving and delivering value – that leads to internal and external capital formation.

By way of explanation - our internal capital formation is a result of value created by and for Nawaloka. Our external capital formation is a result of financial and non-financial value created by Nawaloka for its stakeholders. Both aspects are relevant as the ability of Nawaloka to create value for itself is linked to the value it creates for others.

the Duality of Value CreationExplaining this key aspect of integrated reporting further, for Nawaloka to create sustainable value for itself it must also create value for its stakeholders. They must accompany one another.

Value creation leads to capital formation, which may be financial, non-financial, internal or external to Nawaloka.

Deriving Value and internal Capital FormationNawaloka derives value through the interaction between its external capital and its own internal capital, over time. Our internal capital consists of financial capital and institutional capital. The former is reported in our Financial Statements, whilst the latter are largely intangibles such as integrity, corporate culture, specialised knowledge and processes, brand image and the like.

Delivering Value and External Capital Formation Nawaloka delivers value, both financial and non-financial to its stakeholders. As stores of value they comprise, investor capital, customer capital, employee capital and social and environmental capital.

Value derived leadsto internal capital

formation

Value delivered leadsto external capital

formation

Delivers Value

Derives Value

Stakeholdersnawaloka

Total Capital of Nawaloka

Structuring this ReportThis report adheres to the recommendations and guidelines that have been set out by the International Financial Reporting Standards (IFRS) and the Sri Lanka Financial Reporting Standards (SLFRS)/LKAS applicable for financial periods beginning on or after 1st January 2012. The accounting policies adopted are described in detail in the Financial Statements.

In preparing this Report we have also been guided by the principles and concepts of the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines G4, the International Integrated Reporting Framework (December 2013) and The Smart Integrated Reporting MethodologyTM (September 2013), where applicable.

Report Boundary and MaterialityIn terms of overall boundary, this Report will detail the affairs and activities of Nawaloka Hospitals PLC including those of its three subsidiaries - New Nawaloka Hospitals (Pvt) Ltd., New Nawaloka Medical Centre (Pvt) Ltd., Nawaloka Medicare (Pvt) Ltd. and joint venture - Nawaloka Metropolis Laboratory (Pvt) Ltd. Our reporting focuses on aspects that are material or important. The materiality determination process is discussed under

Materiality and Value Creation commencing on page 23 and 24, which also reflects the two sides of value creation already mentioned.

ComplianceThis Annual Report 2014/15 covers the period 1st April 2014 to 31st March 2015 and is consistent with our usual annual reporting cycle as regards financial and sustainability matters. The latter is in accordance with GRI G4 guidelines.

This Report also reflects our compliance with the laws and regulations of the Companies Act No. 07 of 2007 and subsequent amendments and Listing Rules of the Colombo Stock Exchange (CSE).

There are no significant changes from the previous reporting periods in the scope and aspects boundaries.

The most recent previous Annual Report covered the 12 month period 1st April 2013 to 31st March 2014.

For comments, suggestions and clarifications regarding this Report, please contact -

The Accountant, Nawaloka Hospitals PLC, No. 23, Deshamanya H.K. Dharmadasa Mawatha, Colombo 02 (Telephone - 011-5-577-106).


FINANCIAL HIGHLIGHTS

Group Company

2014/15

Rs.

2013/14Rs.

(Restated)

Variance

%2014/15

Rs.

2013/14Rs.

(Restated)

Variance

%

Income Statement

Revenue 4,602,433,640 3,993,473,302 15 2,497,830,914 2,112,827,471 18

Cost of services (2,331,583,775) (1,910,510,751) 22 (1,229,903,547) (957,537,962) 28

Gross profit 2,270,849,865 2,082,962,551 9 1,267,927,367 1,155,289,509 10

Other operating income 65,199,571 64,194,796 2 152,643,920 132,467,166 15

Profit from operations 352,342,610 475,165,536 (26) 375,219,106 291,176,935 29

Net profit after taxation 84,277,854 208,953,909 (60) 89,938,006 107,751,965 (17)

Balance Sheet Data

Shareholders’ funds 3,887,681,839 3,902,955,947 (0) 1,693,759,266 1,704,925,830 (1)

Financial Ratios

Gross profit ratio (%) 49 52 (5) 51 55 (7)

Net profit ratio (%) 2 5 (60) 4 5 (29)

Return on capital employed (%) 2 5 (60) 5 6 (16)

Current asset ratio 1.03 1.11 (8) 1.62 1.12 45

Quick asset ratio 0.80 0.85 (6) 1.53 1.01 52

Return on assets (%) 0.01 0.03 (66) 0.02 0.02 (33)

Debt/equity ratio 0.83 0.58 44 1.83 1.20 47

Earnings/(loss) per share (After share split) 0.06 0.15 (60) 0.06 0.08 (17)

Net assets per share (Rs.) (After share split) 2.76 2.77 (0) 1.20 1.21 (1)

Dividend per share (Rs.) 0.06 0.05 20 0.06 0.05 20

Interest cover ratio (Times) 1.27 2.35 (46) 1.35 1.95 (31)

Dividend payout ratio 100.35 33.7 198 94.03 65.41 44


OPERATIONAL HIGHLIGHTS

Negombo hospital commenced operations

Passed 10,000 heart surgeries with 100% recovery

Initiated construction of new car park building

200+ Kidney Transplant Surgeries

Introduced most accurate comprehensive mammography unit

Introduced high technological bonemarrow transplant unit

Passed 12,000 operation theatre surgeries during the year

Achieved 20,000 births during the year

Newly opened cosmetic centre for all skin treatments

Successfully completed over 36,000 angiograms

Opened laboratory branch and collectioncentres in Jaffna District

MILESTONES

1985-1990 1991-2000

y First Cardiac Catheterisation Laboratory in Sri Lanka

y First Coronary Artery Bypass Surgery Unit in a private hospital

y We are the only Hospital to win the Sri Lankan National Quality Award

1987

y Established as the first fully-fledged private hospital in Sri Lanka

y First Intensive Care Unit in a private hospital

y First CT Scanner in Sri Lanka

1985

1998

1995

y First Mammography Unit in Sri Lanka

1992

y First Minimally Invasive Laparoscopic Surgery in Sri Lanka

1993

1994

y First MRI Scanner in Sri Lanka

2000 y We became the only ISO-Certified Hospital in Sri Lanka

y Awarded the ‘BabyFriendly Hospital’ status from the WHO and United Nation Children’s Fund

1985

1994

20001987

1998


Milestones

2001-2010 2011-2015

2005

2010

2011

2006

2008

2012

2007

2009

2013

2014

2015

y First to introduce the Arcadis Orbics Isocentric Digital C-Arm X-Ray system for Orthopedics

y Introduction of Digital Video Endoscopy System

y First LIVE Donor LIVER Transplant surgery in Sri Lanka

y Launch of Life Member Hospitality Card

y Vitro Retinal Eye Surgery

y Endovenous (Vericose) Laser Treatment - EVLT

y High Definition (HD) Arthroscopy System

y Infant, CPAP Ventilation for Paediatric Intensive Care Unit (PICU)

y We installed South Asia’s first and world’s fastest, most accurate 640 slice CT scanner.

y Installed a Neuro Navigation System during the year.

y Certified as a CarbonConscious® hospital, making it Sri Lanka’s FIRST hospital to achieve this distinction.

y Applied for the JCI Accreditation.

y Installed Advanced Lasik Eye Surgical Equipment for Eye Surgery.

y Introduced C-Arm machine for theatre unit.

y Commenced Regional Hospital operations in Negombo.

y Introduced Bone Marrow Transplant Unit.

y Installed the most technologically advanced Mammography machine.

y Retained the ‘Gold’ Award in the health care sector at the Annual Report 2014 organised by ICASL.

y Only hospital to be recognised at the ACCA Business Award 2014.

y Initiated the construction of Car Park Building.

y First Private Hospital in Sri Lanka with 400 beds

y First Private Hospital to introduce ERCP (Endoscopic Retrograde Cholangiopancreatography)

y Installed the most technologically advanced Hemodialysis machine

y First Hospital to introduce ‘LED LAMPS’ in Operating Theatres

y Introduced 16 slice CT Scanner with all accessories

y New 4-D Scanner for Radiology and Gynaecology

y Introduced Ultrasonic Defector

y Commissioned first State-of-the-Art 3TESLA MRI

Scanner in Sri Lanka

y Awarded ISO 9001:2008 Certification

y Inaugurated Weight Management Centre

y Inaugurated Breast Cancer Screening Centre

y Single Balloon Enteroscope

y Doppler-Guided Hemorrhoid Artery Ligation and

Rectal Anal Repair

y We made significant advances in Neuro Surgery and Cardiac Surgery

y We introduced Laser Eye Surgery

y Together with our Indian affiliates, we introduced a very successful IVF treatment Centre

y We commenced construction of the new building providing modern surgical units

y Computerising the entire operation of the hospital

y First to introduce the Flat Panel – Angiography System with state-of-the-art technology

y First to introduce a Comprehensive Polysomnography System

y Introduction of a state-of-the-art Pulmonary testing facility


CHAIRMAN/CEO’S MESSAGE

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Chairman/CEO’s Message

Dear Shareholders,

I take great pleasure in welcoming you to the 26th Annual General Meeting of Nawaloka Hospitals PLC and to place in your hands the Annual Report and Financial Statements of the Company for the financial year 2014/15.

Health care institutions the world over tend to live in the moment – and rightly so. It is the immediacy of a patient requiring medical care and attention that provides our reason for being.

This is the hospital that Nawaloka is striving to become. It also means that in working towards this goal we move ever closer to realising our vision – which is to be ‘The Hospital of Tomorrow’.

As a pioneer private sector health care institution, Nawaloka has already achieved a head start in acquiring and deploying cutting edge technology, equipment and processes as well as building a team of highly skilled professionals and support staff.

Now we are concentrating on marrying these attributes with the environment, ambiance and personal approach to focus on life – for patient and hospital alike.

During the year we began the construction of a multi-storied car park project which is capable of accommodating 550 vehicles. Further, infrastructure will be developed for the relocation of Nawaloka Channel Services, which would include a more spacious and convenient environment.

I would also like to comment on our ready espousal of the highest standards of good governance. We pay great attention to running things ‘the right way’ always and our process of adherence to the highest of morals and ethics is more fully described in the segment on Corporate Governance appearing elsewhere in this report.

With our evolving philosophy of embracing life, we are building the top tier hospital of tomorrow.

I would like to recognise and appreciate the patronage of all our customers, staff and shareholders – the trust and confidence you place in Nawaloka is an invaluable asset we cherish greatly.

Jayantha DharmadasaChairman/Chief Executive Officer

19th May 2015

DUriNg THE yEAr THE

CONSTrUCTiON Of A

MULTi-STOriED CAr

PArK PrOjECT WHiCH

CAN ACCOMMODATE

550 vEHiCLES WAS

COMMENCED fOLLOWED

by AN iNfrASTrUCTUrE

fOr THE rELOCATiON

Of NAWALOKA CHANNEL

SErviCES TO iNTrODUCE

A MOrE SPACiOUS

AND CONvENiENT

ENvirONMENT.


DIRECTOR/GENERAL MANAGER’S REVIEW

NAWALOKA iS ONE Of THE firST PrivATE HOSPiTALS iN THE COUNTry TO ESTAbLiSH A WOrLD CLASS bONE MArrOW TrANSPLANT UNiT AND iNTrODUCE THE WOrLD’S fASTEST AND MOST ACCUrATE 640 SLiCE CT SCANNEr.

The year 2014/15 has also been an eventful year again and we maintained our pioneering position in the health care industry.

Our focus for the year has been mainly on developing and expanding existing infrastructure as well as adding capacity.

During the year under review, Nawaloka established a world class Bone Marrow Transplant Unit, capable of handling even the most advanced procedures. This significant step, is a way forward in our drive to offer advanced treatment options for many disorders.

The hospital recently introduced the world’s fastest and most accurate 640 slice CT Scanner, which is the first CT scanner of its kind in South Asian region. This adds to our long line of firsts, we have introduced to the Private Sector, including the first


Director/General Manager’s Review

iN THE yEAr AHEAD, WE HOPE TO COMPLETE THE

iNfrASTrUCTUrE ENHANCEMENTS, iNvEST CONTiNUOUSLy

iN TECHNOLOgy AND HUMAN rESOUrCES AND LOOK

bEyOND THE ExiSTiNg APPrOACHES TO MEDiCAL CArE.

MRI Scanner, Mammography Unit, Cardiac Catheterisation Laboratory, CT Scanner and Laser Eye Surgery.

Caring for the elderly is another specialty, rapidly receiving attention. We are also mindful of the aspect and a unit is being established now. To address the ever increasing burden of non-communicable diseases, we have added several clinics to our wide spectrum of services.

Another area gaining significant attention in Sri Lanka today is medical tourism. The country is well on track to achieve, ambitious tourist arrival targets with the number of visitors to the island growing rapidly. Nawaloka has long worked towards offering Sri Lankans, world class health care, comparable with the best in the region. In achieving this status, we have positioned Nawaloka optimally to avail ourselves of the opportunities offered by medical tourism.

To this end, Nawaloka Medicare (Pvt) Ltd., our first regional hospital of 75 beds, state-of-the-art facility was opened in Negombo, one of the country’s tourist ‘hot spots’ being in proximity to the country’s main airport at Katunayake.

A detailed description of Nawaloka’s product portfolio is highlighted in a separate section in this report. It only remains for me to

reiterate how such a portfolio truly reflects Nawaloka’s undiminished drive to maintain status as one of Sri Lanka’s most advanced health care institutions, consistently offering premium care. Our constant and determined drive to introduce new techniques and services to the health care sector.

I am pleased to say that the Group’s turnover has significantly grown from Rs. 3,993 Mn to Rs. 4,602 Mn, a 15% increase in the year under review. The expansion of Nawaloka Medicare (Pvt) Ltd. as well as the highly motivated staff and their team work cooperated highly towards this.

It is very heartening to be recognised for our endeavours.

This year, Nawaloka was recognised by the Association of Chartered Certified Accountants (ACCA) with its Award for Sustainability Reporting – a vindication of the time and effort that we have put into making our business strategies, processes and operations truly sustainable.

We were also honored for our excellence in financial reporting at the Institute of Chartered Accountants of Sri Lanka Annual Report Awards 2014, winning the Gold Award of the Health Sector.

In the year ahead, we hope to complete the infrastructure enhancements, invest continuously in technology and human resources which is the lifeblood of modern machine and promote and pursue medical tourism and look beyond the existing approaches to medical care.

The future for medicine and medical care is evolving at great speed. We are in for an exciting journey as we embrace new ways and new thoughts.

We are ever mindful of the fact that as a hospital, we are only as good as the quality and standard of service and medical interventions we offer. Staying ahead is what we owe the public.

In conclusion, I wish to thank all our employees for their commitment and dedication to Nawaloka. I thank also our Customers, Consultants, Business Associates and other Stakeholders for their belief in and loyalty to the Nawaloka brand of health care.

Prof. Lal ChandrasenaDirector/General Manager

19th May 2015


A cherished moment...baby’s first steps. Sharing the love and care that surrounds

mother and baby from birth through moments such as these is a milestone in life.


BUSINESS MODEL

Organisational Structure

nawaloka Hospitals

Nawaloka Metropolis Laboratories (Pvt) Ltd.

Nawaloka Hospitals PLC

New Nawaloka Hospital (Pvt) Ltd.

New Nawaloka Medical Centre

(Pvt) Ltd.

Nawaloka Medicare (Pvt) Ltd.

Fully Owned SubsidiaryFully Owned Subsidiary Fully Owned Subsidiary Joint Venture

Operating Environment

the Global EconomyAn uneven global economic recovery continued to prevail in 2014. The growth forecast for the world’s economy was revised downwards to 3.3% on the back of weaker than expected global activity particularly in the first half of 2014 as well as worsening geopolitical tensions in an ever-increasing number of ‘hot spots’ around the world.

In continuance of the prevailing trend, advanced economies are slowest to grow, with encouraging signs of a slightly more substantial pick-up in the USA and UK. The engines of global economic growth continue to be the newly emerging economies as well as the giants of the East like China and India albeit with minor dips in performance from previous years.

Whilst the past three years have shown shrinkage of growth across all regions, the forecast for 2015 shows most economies recouping lost ground to reach much healthier growth levels.

improved health services among so many other benefits such as management of resources and personnel, financing and administration of the overall health service.

Measures to curb the spread of communicable and non-communicable diseases as well as to address nutritional problems among mothers and children continue to be key priorities for the sector.

The Government of Sri Lanka spends more on health sector development than any other country in the South Asian region. The spend has remained steady at around 5% of total Government expenditure over the recent past.

the Private Sector and the industryPrivate sector support for health care provisioning in Sri Lanka has also grown tremendously in recent years. Several tertiary care private hospitals of international standard have come into being in recent years, with several more to come.

The capacities of these institutions range from highly specialised multi-specialised hospitals to small scale medical centres.

the Local EconomyThe Sri Lankan economy grew by 7.7% in 2014, reflecting increased domestic activity and rising external demand. The conducive macroeconomic policy environment contributed to the strengthening of the growth momentum while global economic conditions continued to improve, particularly in export destinations, which supported domestic economic activity.

Inflation rates remained below 5%.

the industryWith particular relevance to the industry we operate in, Sri Lanka’s stance of providing free health care for all has helped the country remain ahead of its regional peers in respect of health indicators. However, looking to the future, the country faces numerous challenges such as the ongoing demographic and epidemiological transition, resource constraints and the pressing need to improve the quality of service provisioning.

Sri Lanka has in place a Master Health Plan and the implementation of several initiatives under its aegis will ensure the delivery of


Business Model

Large Scale Private

Hospitals

Private Hospitalswith Basic Facilities

Strategic Groups

Government Hospitals with Basic Facilities

Specialised Private and Government

Hospitals

Ayurveda Hospitals

Government General

Hospitals

In addition to hospitals, many other ancillary/associated service entities are operated as private ventures. These include – clinical laboratories, X-ray diagnostic services, physiotherapy and rehabilitation units, ambulance services, home nursing services and centres for the disabled.

The majority of the pharmacies are privately run.

In fact, the majority of all pharmaceuticals are supplied through private sector establishments, whilst to a lesser degree the private sector is also involved in their manufacture.

The supply and maintenance of high tech bio-medical equipment is also mainly the preserve of private sector institutions as is the supply of hospital equipment and furniture.

According to available statistics, more than half of all Out Patients Department (OPD) patients seek treatment at private sector health care institutions, whilst a substantial number of state sector medical personnel are routinely engaged in some form of part time private consultancy.

Salient Features of Health Service

Item 2014 (a) 2013

1. Government (No.) Hospitals (Practicing Western Medicine) 601 603

Beds 76,918 74,636

Primary Health Care Units 484 481

Doctors 17,903 17,553

Assistant Medical Practitioners 1,055 1,057

Nurses 31,964 30,928

Attendants 8,215 8,091

2. Ayurvedic (No.)

Ayurvedic Physicians (b) 21,505 21,060

3. Total Government Expenditure on Health (Rs. Bn) 138.4 119.5

Current Expenditure 116.2 99.6

Capital Expenditure 22.3 19.9

(a) Provisional (b) Registered with the Ayurvedic Medical CouncilSource: Ministry of Health and Indigenous Medicine, Department of Ayurveda, Ministry of Finance, Central Bank of Sri Lanka.


Goals and StrategiesNawaloka is constantly in the process of gearing up to meet the challenges of the future and to continue to create value for its stakeholders. We wish to make special mention of the following strategic initiatives we are pursuing:

Regional ExpansionThe Company is planning to expand its operational footprint by establishing regional hospitals across the country thus making premium health care accessible to more people. Our first such hospital is already operational in Negombo.

We are planning to take this concept further afield to a few other strategic locations, where we will specialise in niche areas of health care.

Medical tourismTourism is booming in Sri Lanka with an unprecedented number of arrivals recorded during the year in review, amounting to a 20% growth over the previous year and a projected arrival rate of 2.5 Mn persons by the year 2016.

This is an area of significance for the health care industry.

Company will strengthen its diagnostic capabilities by investing in medical equipments in future as well.

Nawaloka sees a substantial potential for growth in medical tourism in this scenario and is strategising to avail itself of the opportunities to come.

We are currently in the process of obtaining JCI accreditation, whilst maintaining our ISO credentials and procedures in our hospitals. We are actively looking at transforming our Negombo Regional Hospital into our main location to cater to medical tourism as Negombo is an important location in the sphere of tourism.

Expanding Laboratory ServicesIn line with the expansion strategy of Nawaloka Metropolis Laboratory, we are expecting more medical laboratories and sample collection centres.

In furtherance of these goals and strategies – y Our first regional hospital in Negombo became operational in November 2014.

y ISO accreditation is being consistently maintained.

y Nawaloka Metropolis Laboratory has opened a new branch in Nawala.

Stakeholders

identifying StakeholdersWe are of the view that true value is not created by and/or within Nawaloka alone. The ‘flow’ of relationships and influence that we share with many important stakeholders does impact our business significantly. Thus, Nawaloka attaches great importance to the correct identification and timely engagement of those stakeholders who contribute significantly to our value creation process.

By definition, we regard stakeholders as being those entities or individuals that can reasonably be expected to be significantly affected by the activities, products and services of Nawaloka and whose actions can reasonably be expected to affect the ability of Nawaloka to implement its strategies and achieve its objectives.

Engaging with our StakeholdersWe now present an account of our stakeholder engagement methodology, the issues dealt with and the results achieved:

Stakeholder Strategies Mode ofEngagement

Frequency ofEngagement

Key TopicsDiscussed

Methodologies Employed to Respond

Customers Innovation – New package/New test/New high technology medical treatment

Public relationship officer Annually Availability of Services Meetings by public relationship officerthrough Email and letter replies for theconcern raised

Maintaining customer support desk

Periodic customer satisfaction surveyfeedback system

Service excellence of the hospital

Customer counter Whenever required Quality of the services received

High technology Feedback forms Whenever required Pricing

Customer network Corporate websiteSocial media

Annually New Services/technologies introduced

Complaints resolution Advertisements in media Whenever required Service locations outside NH premises

Maintaining customer privacy

Social media Annually

Touch points Whenever required

Email Whenever required

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Business Model



Key TopicsDiscussed


Employees Development within through training and development

Weekly management meeting

Weekly Strategic issues Meetings

Emails

Memos

Training and awareness

Employee engagement (Senior management team) Operational issues

Continuous benefit schemes Monthly meetings Monthly New procedure introduced

Rewards and recognition Internal circulars Whenever required Social and welfare activities

Grievance handling Grievance committee Whenever required Customer suggestions and complaints

Occupational health and safety and employee welfare

Employee forums Monthly Remuneration

Social events like Employee get together/Cricket fiesta

Annually Achieving objectives

Targets vs achievements

Operational updates via Emails

Whenever required

Legislation and Regulators

Promote voluntary compliance codes

Submitting reports Monthly/whenever required

Private health care statistics

Ongoing dialogue

Adherence to all mandatory regulations

Filling reports/returns Annually Adherence to environmental regulations

Press releases Whenever required Taxes

Corporate website Whenever required

Suppliers Laid down supplier selection policy

Meetings Weekly meetings with medical suppliers

Prices Ongoing dialogue

Tender procedure that optimises the level of competition throughout the supplier selection process

On time delivery

Ethical sourcing practices Quality

Local sourcing and inclusive sourcing policy

Upgrading of equipment

Effective dispute resolution mechanism

Site visits Whenever required Services and periodic maintenance

Contractual performance


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Key TopicsDiscussed


Society Community development and capacity building

Sponsorships Annually Enhancing water and sanitary facilities

Communication and support

Mainly dialogues and communications through letters and e-communications

Direct communication with the consultants

Education and literacy Participation in public events Whenever required Promoting health of the schools

Health and nutritional development of society

Press conferencesMedical campaign

Whenever required Enhancing facilities of the general hospitals

Ethical sourcing Call centre Whenever required

Investor Innovation – New Package/ New Test

Annual General Meeting Annually Financial results

High technology Extraordinary General Meeting

Whenever required Improvement of dividend per share

Annual Report Annually improvement of CSR activities

Quarterly Report Quarterly Business expansions

Announcements to stock exchangePress conferences

Whenever required improvement of services

Improvement of governance

Whenever required Shareholder benefits

Consultants High Technology Individual meetings Whenever required Availability of facilities

Customer network Consultant forum Monthly basis Time schedules for practice

Service excellence of the hospital

New Technologies available in the global arena

Contribution to the Hospital

Consultant payments

Additional facilities required

External initiativesNawaloka has exposure to and contributes to many external dialogues on related aspects of its business and impacts, through a number of memberships and affiliations in the under mentioned bodies –

y The Private Hospitals Association of Sri Lanka

y The Sri Lanka-Malaysia Business Council

y The Institute of Chartered Accountants of Sri Lanka (Accredited Training Partner)

y The Association of Accounting Technicians of Sri Lanka (Accredited Training Partner)

Values We Live By

In order that Nawaloka may achieve and maintain the standards of excellence it desires, we have in place a set of values that underpin and drive all strategy and process:

y Always pursue excellence in clinical care, service and communication.

y Collaborate within our institution and with others who share our mission and goals.

y Lead in the setting of standards for current paediatric care and in innovations of the future.

y Always be accountable to our patients, the community and to each other in providing the best of service in the most cost effective manner.

Materiality and Value CreationAs referred to in the Segment Report Boundary and Materiality on page 07, Nawaloka has identified certain aspects as being material to both itself and its stakeholders.

Material AspectsIn definition, we regard an aspect to be material if it substantively affects Nawaloka’s ability to create value over the short, medium and long term. The relevance and significance of an aspect determines its materiality as high, medium or low. The significance of an aspect relates to the magnitude of its impact as well as the probability of its occurrence.


Business Model

An aspect can be important both from the hospital as well as the stakeholders’ perspective. Thus Nawaloka has developed a two dimensional materiality matrix, which appears below, through which we have mapped the economic, social and environmental aspects considered important and material to both Nawaloka and the stakeholder community.

Materiality Matrix

Impo

rtan

ce to

S

take

hold

ers

Importance to Nawaloka

High

High

Medium

Medium

Low

Low

5, 81, 10, 11, 12, 13, 15, 17, 19, 21, 22, 23, 24, 26, 28, 29

2, 3, 4, 6, 7, 9, 14, 16, 18, 20, 25, 27

No. Aspect Indicators Importance to Nawaloka Importance to Stakeholders

1 Economic Performance G4-EC1 High High

G4-EC3

2 Market Presence G4-EC6 Medium Medium

3 Indirect Economic Impacts G4-EC8 Medium Medium

4 Procurement Practices G4-EC9 Medium Medium

5 Energy G4-EN6 Medium High

6 Water G4-EN8 Medium Medium

7 Emissions G4-EN15 Medium Medium

G4-EN16

G4-EN17

8 Effluents and Waste G4-EN23 Medium High

9 Environmental Grievance Mechanism G4-EN34 Medium Medium

10 Employment G4-LA1 High High

G4-LA2

G4-LA3

11 Labour Management Relations G4-LA4 High High

12 Occupational Health and Safety G4-LA6 High High

G4-LA7

13 Training and Education G4-LA9 High High

G4-LA10

G4-LA11

14 Diversity and Equal Opportunity G4-LA12 Medium Medium

15 Equal Remuneration for Women and Men G4-LA13 High High

16 Labour Practice Grievance Mechanism G4-LA16 Medium Medium

17 Non-Discrimination G4-HR3 High High


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No. Aspect Indicators Importance to Nawaloka Importance to Stakeholders

18 Freedom of Association and Collective Bargaining Power G4-LA4 Medium Medium

19 Child Labour G4-HR5 High High

G4-HR6

20 Human Right Grievance Mechanisms G4-HR12 Medium Medium

21 Local Communities G4-SO1 High High

22 Anti-Corruption G4-SO3 High High

23 Anti-Competitive Behaviour G4-SO7 High High

24 Compliance G4-SO8 High High

25 Supplier Assessment for Impact on Society G4-SO9 Medium Medium

26 Customer Health and Safety G4-PR1 High High

G4-PR2

27 Product and Service Labelling G4-PR5 Medium Medium

28 Marketing Communications G4-PR6 High High

G4-PR7

29 Customer Privacy G4-PR8 High High

Management ApproachWe detail below, Nawaloka’s management of key aspects appearing in our materiality matrix.

Economic Aspects

Economic Performance

We have fine-tuned our health care delivery system into a streamlined operation that generates profitability and reflects favourable patient recovery ratios. Helmed by stalwarts in the national health care sectors, our senior management works closely with the public on several platforms to offer valuable inputs to the formulation of the National Health Policy. This role we are happy to fulfill as the apex private sector heath care organisation in the country.

Market Presence

As we’ve already said, Nawaloka Hospital is the pioneer privately-owned national hospital in the country. We are a purveyor of premium health care in the country and this quality, technical and medical expertise and attention to detail have positioned us a ‘top of mind’ medical institution amongst all Sri Lankans.

Over many years, Nawaloka Hospitals has become one of the key employment generating private sector institutions,

deploying around 2,000 people across its operations. The Hospital’s in-house training facility has trained and skilled hundreds of nursing staff and medical attendants, offering them avenues for new livelihoods, whilst also addressing unemployment in the country.

In imparting the best of health care and services to the many hundreds of patients who seek our services, we are lessening the burden on the national health care system which does not have adequate infrastructure to cater to the health needs of all Sri Lankans.

Environmental Aspects

Energy

As a sector, hospitals and health care facilities account for a disproportionate amount of energy use and emissions. As a 400 + bed hospital, electricity consumption forms a large portion of our operating expenses. Rising utility rates in the country have placed further urgency on the issue of reducing excess energy consumption.

Towards this end, Nawaloka as a policy, constantly seeks to upgrade equipment and technology in order that we remain on the cutting edge of energy efficiency at all times.

Hospitals are open 24 hours a day and have extra commitments on air filtration and circulation, air cooling and waste management. We realise the need for increasing energy efficiency, achieving reduction in energy consumption and deriving energy from renewable sources.

We are very mindful that the Hospital stands to gain significant annualised savings through energy conservation and management.

Effluents and Waste

Knowing fully well the hazards of harmful and/or toxic waste, Nawaloka has in place a comprehensive and safe waste disposal system, constantly upgrading technologies and processes in this vital area.

As a hospital, we are fully aware of our responsibility towards ensuring the safety of our patients, staff and society at large vis-a-vis the disposal of medical waste in a safe and responsible manner without causing harm to humans or the environment.


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Social Aspects

Employment and HR Management

We are an equal opportunity employer and this is reflected in our workforce and further borne out via the disaggregated numbers on the basis of gender. We hire and train when needed; we always recruit employees with skill sets that match our job requirements.

Skill development, training sessions and remuneration levels are all above industry, as we seek always to retain employees helping them build long careers with us. The culture at Nawaloka, whilst being extremely professional, is also that of an extended family. The strong sense of ownership felt by employees flows from the Chairman who mingles freely with the staff and practices a genuine open-door policy for one and all. Longstanding employees have reported that this strong sense of belonging to the institution is what has influenced their career choice to remain with Nawaloka for the long term.

Labour Management Relations

As an organisation committed to decent work principles we ensure workers rights in the workplace are fulfilled and that dialogue is encouraged so that we can fulfill workers’ work-life balance to the fullest extent possible.

Nawaloka’s labour management relations are based on mutual trust between staff and management. The basic concepts of mutual trust between staff and management revolve around the premise that the improvement of the lot of employees is largely realised through the prosperity of the Company. Thus, staff and management will begin this relationship from the shared position that stable employment must to a great extent be one of the ultimate objectives. The Company will continuously strive to improve working conditions whilst employees will co-operate with the Company’s policies in order to promote this mutual prosperity.

Thus, a participative and shared onus rests with both Company and employee to create an environment in which workers can fully utilise their potential and add value both to their lives as well as to the end objectives of the Company.

Occupational Health and Safety

Competencies in occupational health and safety are inbuilt into all our organisational roles. We have comprehensive hazard identification and mitigation plan as well as a streamlined system in place to enable the delivery of secure health across the Company.

Our safety features are embedded in the business processes at every level of the organisation to ensure employees and patients are safe at all times.

As a hospital that handles patients with afflictions ranging from the common cold to life threatening diseases, our staff is often at risk. We have therefore put in place a gamut of occupational safety procedures for staff to adhere to avoid contracting infection. Staff is entitled to discounts on medical treatment. Families of staff members also receive a discount on medical care at the Hospital.

training and Development

Nawaloka’s desire for its people is that they grow and develop in their lives and their jobs building long-standing careers with us.

To this end, we encourage and provide continuous enhancement of their skills, knowledge and expertise. In accordance with laid down policy, we provide cost effective, high quality and competent training and development programmes to achieve these ends.

Nawaloka continues to invest in the training and development of its people. This takes into consideration the Hospital's business needs and long-term goals, staff performance evaluations and succession plans. Our investment in this area cuts across the entire employee base, which in turn supports other aspects such as promoting equal opportunity in the workplace, motivating self-improvement and managing one's career ending process.

Weekly Training Session

Diversity and Equal Opportunity

As has already been stated, Nawaloka is an equal opportunity employer. At the same time we welcome and embrace diversity as we feel it can only strengthen and lend vibrancy to enterprise.

In that vein, the Company practices no bias, whether by gender, religion or any other form, across its key functions of recruitment, remuneration and reward, job opportunities and the like.

Today, Nawaloka’s human resource base includes people from all ethnicities and language groups and from anywhere in the country.

We scrupulously adhere to the regulatory framework that pertains to this issue.

We also ensure fair employment through an emancipated management structure that is cognisant of the ongoing changes in the labour market environment, due to such factors as the globalisation of business and social advancement of women and who can leverage diversity to deliver greater competitiveness.


Equal Remuneration for Men and Women

With our avowed stance against bias of any kind, Nawaloka’s rewards and remuneration regime is based on equal pay for equal value of work. In this regard we are guided by the norms and levels prevailing in the industry, without being restricted in our ability to better them.

The whole process is facilitated by individual performance reviews conducted for all staff, in a completely transparent exercise.

non Discrimination

Nawaloka strictly adheres to a policy of non-discrimination in strategy and action. We do not condone harassment of an individual, be they employee or applicant for recruitment, on grounds of their race, colour, nationality, ethnicity, age, religion, disability, sex, sexual orientation, or any other characteristic.

The parameters of every job are framed with care and completely transparently and professionally without bias or skew.

Thus, all personnel responsible for hiring and promoting employees for the development and implementation of Company objectives and activities are charged to support this effort and to respond promptly and appropriately to any concerns that are brought to their attention.

Child Labour/Forced Labour

Nawaloka vehemently disapproves of all forms of exploitation of children and prohibits the employment of anyone under the age of 18 years. As regards forced labour, our job parameters are clearly laid out and agreed upon between employee and Company at every instance. We do not condone unfair and undue enforcement practices when it comes to job execution.

Our policy on Child Labour and Forced Labour extends across our supply chain, where we perform investigative background screening on all suppliers and their networks prior to engaging them in business.

Local Communities

Social development is an ongoing process that has a monumental impact on individuals and the communities they live in. It is a core pursuit of ours to empower these community cells in ways that will enable them to overcome both real and perceived limitations and create sustainable livelihoods for the future.

All our CSR projects are structured in a manner that would convey truly meaningful value to people and communities across the country.

Anti-Corruption/Anti-Competitive Behaviour/Compliance

Nawaloka attaches the highest value to conducting its affairs with complete honesty and integrity and thus we strictly comply with all laws and regulations of the country.

Nawaloka espouses an ethical approach with a well-developed sense of fair play in conducting business vis-a-vis our competitors – we will not condone even a hint of anti-competitive behaviour in our operations.

The Company’s business processes have provision to detect risk or threat in any of these areas to initiate pre-emptive measures should the need arise.

Customer Health and Safety

We are fully aware that our operation as a hospital impacts directly the health and safety of our customers and we therefore comply with every regulation, voluntary code and process that ensures we impart only the best and safest of health care regimes.

Nawaloka is therefore justifiably proud of its zero record of incidents of non-compliance in this regard.

Customer Product and Service Labelling

The Nawaloka ethos dictates that every service that originates from the Hospital is accompanied by extensive information and where applicable is clearly and thoroughly explained at point of patient/customer contact.

Where we retail products of third party origin such as pharmaceuticals, we make every effort to ensure that these products are sourced from highly reputed suppliers who maintain like standards in terms of product information and labelling of their products. Nawaloka’s role in this instance is that of a retailer only.

Again, we have a zero record of any transgression of the relevant regulatory provisions.

Marketing Communications

As a bare minimum, Nawaloka strictly complies with all relevant regulatory frameworks concerning ethical advertising and communication.

Marketing communications in Nawaloka extends beyond compliance and conformity, with our prime objective being to ensure that the messages we communicate are not overstated or exaggerated. In addition, all our communications maintain transparency whilst not subscribing or resorting to any form of racial or gender bias or inappropriate imagery.

Furthermore, Nawaloka strives to reflect the corporate brand image and vision of the Hospital by conforming to the Hospital’s information security policies. There were no incidents of non-compliance with regulations and voluntary codes concerning marketing communications, which includes advertising, promotions and sponsorships during the period under review.

Customer Privacy

As a responsible private hospital in the country we have always upheld the patients’ right to privacy and personal refuge. Nawaloka treats all patient information and records in the strictest of confidence and protection of personal data is accorded the highest priority. Our systems and processes, particularly IT are geared to deliver such protection at all times.

Business Model


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MANAGEMENT DISCUSSION AND ANALYSIS

DERiVinG VALuE – intERnAL CAPitAL FORMAtiOn

The value created by Nawaloka for itself through activities, relationships and linkages leads to the creation of capital that is internal to the Hospital. While what is most visible and quantifiable is financial capital, internal capital also consists of several intangibles that constitute institutional capital.

Financial Capital

Results of OperationsGroup recorded a 15% growth of Rs. 609 Mn to reach a turnover of Rs. 4,602 Mn against Rs. 3,993 Mn last year. The ambitious targets and close monitoring and review process, coupled with the attractive incentive schemes brought about the above growth, a half of which, amounting to Rs. 386 Mn was generated from the Company, while the balance was distributed among the other three subsidiaries.

The 640 slice CT machine beefed-up the radiology department and the recently introduced mammography machine, contributed towards investigations and the well woman packages.

The efforts of a motivated staff were well backed by technology, an aspect that Nawaloka has always stood for.

However the profit from operations decreased by Rs. 123 Mn, partly due to the losses incurred by the new subsidiary and the increases in staff costs and provisions. The acute shortage of health care professionals and the expansion efforts of competitors have intensified the need for higher salaries. Hitherto, centralised operations of Nawaloka Hospitals PLC, got its first regional experience through Nawaloka Medicare (Pvt) Ltd., which with in a period of 06 months, has managed to set foot on the anticipated growth trajectory, in a fiercely competitive local market dominated by a key health care provider. This proves the positive impression and the confidence the public has in the pioneer Nawaloka Hospitals.

The gross profit margin of the group dropped slightly from 52% last year to 49%, due to attractive discounts offered to patients, to remain competitive, while additional depreciation of Rs. 40 Mn, on new medical equipment purchased during the latter part of last year, further impacted the margin.

With the consolidation of newly established Nawaloka Medicare (Pvt) Ltd., staff costs increased by Rs. 36 Mn, which accounts for 4% of the overall increase in the staff cost of 16%.

During the year under review, administration expenses increased by Rs. 91 Mn, which is an increase of 11% over last year and it is mainly due to the operational activities of the Nawaloka Medicare (Pvt) Ltd.

The sharp increase in other operating expenses of Rs. 85 Mn, is mainly due to the provision for doubtful debtors in line with the Company’s policy, although the recoverability is certain, since most of the outstandings are against Government institutions.

The interest cost of the group increased by Rs. 83 Mn as a result of increased borrowings to fund the investing activities of the Group, such as purchase of new equipment and expansions.


Management Discussion and AnalysisDERiVinG VALuE – intERnAL CAPitAL FORMAtiOn

Business unit PerformanceThis section will briefly demonstrate the performance of the key departments of Nawaloka Hospital.

Surgical Department

Surgical Department one of our successive departments that has continually proven itself; our surgical department has performed over 13,000 surgeries for the year under review, including the highest number of heart surgeries of 500, which is the highest among private hospitals.

The Surgical Intensive Care Unit (SICU) has shown highest occupancy since setting up, which is also attributed to the expansion of surgical packages and the product mix of absolute affordability. Using this unique formula, the surgical department excelled in pre/intra/post operative care, gaining the confidence of visiting surgeons, prompting a pragmatic shift to major surgical procedures in liver, neuro and vascular. A unique combination of visiting and resident surgeons optimise the use of the theatres, while the 24/7 call roster for all major sub specialties with 24 hour Anesthetists’ cover is available. All these signaled, significant volume growth in surgical sub specialties over the years.

Base Year 2012/13

Radiology and imaging Sciences

Nawaloka has a fully fledged imaging unit, functioning 24/7, manned by radiologists and is equipped with some of the state-of-the-art imaging equipment, including Magnetic Resonance Imaging (MRI), Computed Tomography (CT) and ultra-sound scans including 4D ultrasound technology.

With the new CT machine, we achieved additional 35% revenue from the Radiology unit and also Nawaloka has introduced 4D ultrasound machines for the Gynaecology unit.

Base Year 2012/13

Lasik Department

The Lasik department is opened 24/7 and offers emergency treatment and laser treatment. A dedicated team of our consultant ophthalmologists, highly trained nurses and access to the most up to date technology are a few of our key resources. In the year under review, new Surgical Packages were introduced to the Lasik department for cataract surgery. e.g: Multi focal lenses treatment.

Base Year 2012/13

Mammography unit By introducing the world’s most accurate Mammography machine, an investment of Rs. 48 Mn to our Serene centre, Nawaloka managed to achieve 37% additional cases compared to 2012/13.

Base Year 2012/13



Maternity and Pediatric unit

Nawaloka is Sri Lanka’s first and only private health care service provider to have earned ‘Baby Friendly’ status from the WHO and the United Nations Children’s Fund.

The Nawaloka Maternity Unit’s care and protection starts from pregnancy, through child birth to aftercare.

Our Paediatric Unit has Sri Lanka’s only PICU (Paediatric Intensive Care Unit) with a team of the country’s top Paediatricians in attendance.

Activities for the year under review included refurbishment of the Maternity Unit and promotion of these facilities via an advertising campaign.

Base Year 2012/13

Base Year 2012/13

Home nursing

A number of initiatives were taken during the year to improve the quality of nursing care

y Providing on the job training with the hospital qualified nursing staff

y Emergency care training

y Forming a separate entity unit for the home nursing and home ambulance services

y Expanding the regional home nursing units

Appointing a dedicated customer relationship officer, to be engaged in the patient feedback evaluation process in order to maintain the quality of home nursing.


institutional CapitalInstitutional capital consists of several non-financial components that are, like financial capital, internal to Nawaloka. These components are a collection of intangibles such as corporate culture and values, business ethics and integrity, brand value, organisational knowledge, systems, processes, intellectual property and the like.

Organisational KnowledgeWith a history spanning 28 years offering premium health care solutions to the nation, Nawaloka Hospital is a storehouse of knowledge, expertise and professional excellence.

Over 10,000 cardiac surgical interventions with an exemplary success rate speaks for the prowess of our professional team aided by cutting edge technology as embodied in our 640 slice CT Scanner, 4D Ultra sound scanner, advanced Lasik machine, bone marrow transplant unit and the minimally invasive laparoscopy machine and more.

The reservoir of knowledge that reposes with highly experienced and professional staff most of whom count long years with the Hospital is an invaluable collective resource.

The ISO 9001-2008 accreditation the Hospital has obtained speaks for the high standards and the quality of our systems and processes.

Business Ethics and integrityAs a highly principled establishment, Nawaloka Hospital fully espouses the highest of business ethics and integrity which we deploy across every facet of enterprise. In our Corporate Governance Report appearing on page 64 of this report as well as in certain other material contained herein, we have detailed the various regulatory regimens, initiatives, codes and control mechanisms that we have in place to ensure we stay on our desired moral course.

These measures are reviewed and upgraded from time to time to ensure they remain valid and in context at all times.

Brand EquityThe Nawaloka brand is built on aspects of Trust, Awareness, Loyalty, Customer Satisfaction and Relationship Commitment.

We want the Nawaloka brand to reflect and be an extension of our Vision – which is to be the Hospital of Tomorrow whilst maintaining leadership and excellence in the industry.

Towards this goal and to keep our branding vibrant and current, we have conducted several promotional and brand building campaigns throughout the year under review.

In the ensuing year, we will also be focussing on brand development strategy.

Brand Platforms

Nawaloka’s leading and most important brand platforms are -

y Customer service

y Clinical outcomes

y Training and research

y Modern technology

y Reputation of medical staff

y Customer - hospital relationships

y Financial stewardship

y Medical facilities on offer

y Strategic location

y Cost efficiency

Promoting Brand identity and Values

During the year in review, we continued to establish and strengthen our brand positioning further through many avenues of promotion and offer of our health service specialities to identified target markets. Some of the major promotional programmes conducted include –

y Discounted surgical and/or medical packages in the areas of health screening for all age groups; heart care; eye care; maternity care; surgical interventions such as laparoscopy; headache management and kidney and liver care.

y Discounts to all patients in commemoration of the Hospital’s 29th Anniversary.

y DEXA and Mammogram promotion to mark Mother’s Day.

y Mammogram promotion to mark World Cancer Day.

y Promoting the awareness and treatment of Osteoporosis.

y A special Father’s Day programme.

y A special Heart Walk in collaboration with the Heart Association to mark World Heart Day and also to celebrate 12,000 cardiac surgical interventions conducted by the Hospital.

y Special Fixed Price packages – for surgery, heart and maternity care.



it Capabilities and Developments

Description of the Process

Business Impact (High/Medium/Low) Remarks

OPD Queue Management System (QMS) High Improved public relations and better patient management

LAB Queue Management System (QMS) High Improved public relations and better patient management

Online Medical and Surgical Package Payment through www.nawaloka.com Hospital web site

High Improved services

Online Final Bill Payment through www.nawaloka.com Hospital web site

High Improved services

Facebook page and a group for Nawaloka for social network promotions

Medium Better social network

Maintenance agreement for Servers and disk array Medium Part of disaster recovery plan

Microsoft windows licensing High Adhere to ethics of industry

Introduced fingerprint for attendance and register points High Improve controls and accurate data

New discharge procedure for patients High Minimise the delay and monitor department-wise discharge time

User ID/Password Registration – New Format High More security and individual responsibilities have been implemented

New Accounting Software High Minimise the workload on Final Account preparation

New Call Billing System High Automated call system

New Fibre Backbone Cablings High Zero down time and speed up the internet LAN

New IT system (ERP Solution) High Better cost and staff controls, greater efficiency and reliability

New Virus Guard – ESET Smart Security High Secured Local Area Network

Heart Centre Web Site Medium Market and Promote Hospital Cardiac Centre

OPD System Medium Streamline hospital outpatient caring process

Maternity Package System Medium More efficient system for drug request

Automated Blue Card High More accurate and efficient system for nurse station to request drugs from utilities

Introducing Privilege Card for Corporate and Individual clients in different categories - Platinum, Gold and Silver.

High This will facilitate clients with a dedicated counter to serve them on top priority basis. And provide them with online service and room reservation

Online appointment booking through www.nawaloka.com Medium Patient Convenience, More speedy way to access hospital channel appointments

SMS Campaign High Improve public relations with awareness



Description of the Process

Business Impact (High/Medium/Low) Remarks

Unique Patient Identification Number (UPIN) with patient registration

High Much accurately identify the patient and history of the patient

Document Management System (DMS) Medium High availability of the scanned documents via network

Fire Wall High Data Protection

CT/MRI, Di-com image reporting system High Most accurate reporting result

Automated OPD consultation Medium Electronic medical record for OPD patients

Automated ETU consultation Medium Electronic medical record for ETU patients

Integrate consultation of OPD, ETU and IPD Medium Much more accurate electronic medical records

Electronic discharge summary High Accurate and efficient electronic medical records

Electronic diagnosis card High Accurate and efficient electronic medical records

New system implementation at Negombo High Growth of business

Wi-Fi Facility Medium Improved services

Corporate Culture

Nawaloka is a company that is well-known for its employee-friendly corporate culture which helps to protect its collective value of patient care. Our culture defines itself as unconventional and offers benefits such as flexible working time on shift basis, Educational reimbursement, free employee training, on-site medical care free-of-charge, accommodation and uniforms which reflect the Hospital’s image.

Nawaloka’s corporate culture has helped it to consistently earn employee satisfaction which is reflected in its low staff turnover. Our culture focuses on and draws from the way people and groups interact with each other, with clients, and different stakeholders.

Nawaloka Hospital strives to be a ‘best place to work’ employer.


Procurement PolicyNawaloka has in place a procurement policy that seeks to deliver cost optimisation as well as operational excellence. It is designed to promote positive outcomes for the hospital’s economy, the environment and society.

We follow these measures in order to upgrade our procurement processes and policy.

y Prioritize suppliers with good environmental behaviour.

y Assess suppliers according to defined environmental parameters.

y Require suppliers to provide data on their stance and activities vis a vis economic, social and environmental criteria.

y Establish a continuous improvement indicator to measure the suppliers’ environmental performance

y Clearly identify procurement staff’s roles and responsibilities.

y Train procurement staff to correctly identify and select suppliers fulfilling our laid down criteria.

In addition, staff handling procurement is provided with performance goals and objectives including aspects of sustainable procurement, for which they are held accountable through their personal development evaluations and assessments.

Through these measures, Nawaloka enhances cost optimisation, efficiency and operational excellence whilst building longevity of relationship with our supplier community who are our valued partners in the Company’s success.



DELiVERinG VALuE – EXtERnAL CAPitAL FORMAtiOn

The value created by Nawaloka for stakeholders through activities, relationships and linkages lead to the formation of capital external to the Company. Whilst this capital resides within our stakeholders, Nawaloka has access to and makes use of this and its own internal capital to drive its business.

In the ensuing reportage, we will focus on Nawaloka’s external capital formation, the material ones being investor capital, customer capital, employee capital, business partner capital and social and environmental capital.

Market Activity

2014/15 2013/14

Highest Price (Rs.) 3.90 3.50

Lowest Price (Rs.) 2.90 2.80

Year End Price (Rs.) 2.90 3.20

No. of Share Transactions 3,853 3,820

No. of Shares Traded 38,729,490 39,396,252

Share Turnover (Rs.) 132,721,899.60 125,032,370.00

Shares held by public (%) 12.59 12.73

Performance of nawaloka Share

Ordinary Share information

Nominal Value per share Rs. 1.00

Market Price per share (Rs.) 31.03.2015 31.12.2014 30.09.2014 30.06.2014 31.03.2014 31.12.2013 30.09.2013 30.06.2013

High 3.50 3.60 3.90 3.50 3.50 3.10 3.10 3.50

Low 2.90 3.00 3.20 3.20 2.80 3.00 2.90 2.80

Closing 2.90 3.30 3.70 3.20 3.20 3.00 3.00 3.10

Financial Measures

Net Assets Per Share 2.76 2.79 2.76 2.80 2.77 2.80 2.76 2.75

Key Financial indicators – Over 5-Year Period

Group Company

2014/15 2013/14 2012/13 2011/12 2010/11 2014/15 2013/14 2012/13 2011/12 2010/11

Financial Ratios

Return on Capital Employed (%) 2.17 5.35 12.02 8.54 36.05 5.31 6.32 15.36 10.18 6.99

Current Assets Ratio 1.03 1.11 0.71 0.58 0.43 1.62 1.12 0.53 0.57 0.61

Quick Assets Ratio 0.80 0.85 0.48 0.42 0.29 1.53 1.01 0.48 0.53 0.57

Return on Assets (%) 0.01 0.03 0.08 0.05 0.24 0.02 0.02 0.07 0.05 0.05

Debt/Equity Ratio 0.83 0.58 0.25 0.28 0.23 1.83 1.20 0.16 0.20 0.20

Earnings/(Loss) Per Share (Rs.) 0.06 0.15 0.32 0.19 0.76 0.06 0.08 0.18 0.11 0.07

Net Assets Per Share (Rs.) 2.76 2.77 2.67 2.25 2.11 1.20 1.21 1.18 1.06 1.00

Dividend Per Share (Rs.) 0.06 0.05 0.05 0.05 – 0.06 0.05 0.05 0.05 –

investor Capital

the Dividend PolicyThe Hospital’s dividend policy focuses on maximising shareholder wealth, market capitalisation, business expansion and maintaining a consistent stream of dividends.

For the year 2014/15 the Hospital paid as interim dividends a sum of Rs. 0.06 per share.


Management Discussion and AnalysisDELiVERinG VALuE – EXtERnAL CAPitAL FORMAtiOn

Serving investorsDuring the year under review, Nawaloka took several significant steps in service to investors -

- An investor information desk was set up to help with investor inquiries

- The investor relations page on our corporate website was upgraded

- The levels of discount offered to investors was increased for OPD and Indoor treatment

- We continued to publish all financial information in advance of applicable deadlines

Customer Capital

Customer GrowthThe chart appearing below tracks patient admissions over a 2 year period, using the level of admissions for 2013/14 as the base for comparison.

Base Year 2013/14

As for admissions, we have tracked the usage of our channelling services over a 4-year period, using 2011/12 levels as the base for comparison.

Base Year 2011/12

We give below a view of web based channeling usage over the period of the financial year 2014/15.



Our Products and ServicesNawaloka offers its customers a complete portfolio of premium quality health care services and interventions that are designed along the lines of unerring customer focus and strong brand identity. These include -

Cardiac UnitsEcho Cardiography, ECG/EEG, Exercise ECGAngiography

Dental Unit

Lung Function TestLung/Kidney/Liver Transplants DialysisHaemodialysis unit

Audiology ClinicENT Tymponoplasty

DEXA Scanning

Carpal Tunnel Release

Serene Health Screening Center PackagesPreliminary Screen Package (Under 40 Years)Classic Screening Package (Under 40 Years)Premier Package (Under 40 Years)Standard Package (Under 40 Years)Comprehensive Screening Package (Over40 Years)Cardiac Screening PackageAndropause Check (Over 50 Years)Screening Package for Senior Citizens (Over50 Years)Joint Pain & Arthritics Package (Over 50Years)Pre Marital Screening PackageFeminine Package for TeensDiabetic Screening PackageFood Handler’s CheckDementia Package

Hospital ServicesO.P.D. ServicesPharmacyPhysiotherapy & RehabilitationSpeech TherapyFully Equipped ICUsPain ClinicImmunisation ClinicHome NursingETU & Ambulance Services

Specialist ConsultationsDiabetic CenterSleep LabSerene Health Screening CenterFertility CenterCenter for Liver DiseaseDental UnitObstetrics & Gynaecology Unit Eye Center (LASIK)Heart CenterSerene Center for Weight ManagementPaediatric Immunisation UnitSerene Breast Cancer Screening UnitHeadache Unit

Radiology ServicesC.T. Scanning Doppler ScanningEcho CardiographyMRI ScanningECG/EEGUltra Sound ScanningX ray Facilities

Laboratory Ambulatory Blood Pressure MonitorSleep StudyHolter Monitoring

Ophthalmology ClinicLASIK CenterEye PackagesVitrectomy Ultrasound Laser System (TPPV) Vitrectomy Ultrasound Laser System (RP)Fluid Gas ExchangeSilicon Oil RemovalRepeat TPPVSquint Correction SurgeryKeratoplasty SurgeryCataract Eye Package (OPD/INWARD)Special Laser Cataract Package Avesting Eye Injection

GynaecologyGynaecology-abdominal hysterectomy myomectomyGynaecology - L.S.C.SGynaecology - Normal DeliveryMaternity PackagesNormal DeliveryL.S.C.S (Caesarean)Abdominal HysterectomyAbdominal MyomectomyFertility Center

Neo Natal Unit

Dementia Clinic

Surgical PackagesLaparascopic CholecystectomyLaparascopic Appendicectomy (Open)Appendicectomy HaemorrhoidsTURPLaminectomyHeadache ClinicThoracoscopy PackageLaser Vericose PackageSleep Lab PackageEnteroscopyDay Care Packages - OPD Surgical PackagesGeneral surgery-appendectomyGeneral surgery-circumcisionGeneral surgery- lap appendectomyGeneral surgery-lap cholecystectomy

Surgical ServicesOperating Theatres Cardiac UnitsAngiographyOphthalmology ClinicFully Equipped ICUsPain Clinic

Cardiac PackagesCABG NormalCABG (High risk without IABP)CABG (High risk with IABP)Coronary AngiogramPTCA



In addition, the Hospital offers several centres to provide special consultations and specialised medical care services to the patients -

Cardiac Packages y CABG Normal

y CABG (High risk without IABP)

y CABG (High risk with IABP)

y Coronary Angiogram

y PTCA

As an initiative to promote good health, Nawaloka has introduced its own Serene Health Center offerings through different packages. Serene Health Screening Center Packages -

y Preliminary Screen Package (Under 40 Years)

y Classic Screening Package (Under 40 Years)

y Premier Package (Under 40 Years)

y Standard Package (Under 40 Years)

y Comprehensive Screening Package (Over 40 Years)

y Cardiac Screening Package

y Andropause Check (Over 50 Years)

y Screening Package for Senior Citizens (Over 50 Years)

y Joint Pain and Arthritics Package (Over 50 Years)

y Pre-Marital Screening Package

y Feminine Package for Teens

y Diabetic Screening Package

y Food Handler’s Check

y Dementia Package

Eye Packages y Vitrectomy Ultrasound Laser System (TPPV)

y Vitrectomy Ultrasound Laser System (RP)

y Fluid Gas Exchange

y Silicon Oil Removal

y Repeat TPPV

y Squint Correction Surgery

y Keratoplasty Surgery

y Cataract Eye Package (OPD/INWARD)

y Special Laser Cataract Package

y Avesting Eye Injection

nawaloka Metropolis Laboratories (Pvt) Ltd.

A joint venture between Nawaloka Hospitals PLC and Metropolis Healthcare Ltd. of India has just closed ten year of operations.This Lab offers a portfolio of state-of-the-art services and procedures including -

- Immunology/Special Chemistry

- Microbiology

- Biochemistry

- Genetics

- Histopathology

- Preventive Health Check up

- Home Health Services

- Clinical Trial Services

A complete floor has been dedicated to phlebotomy (sample accessing area) and the facility handles over 4,800 specialised and routine lab tests.

Nawaloka Metropolis Laboratories is Sri Lanka’s first, stand alone referral laboratory of international stature and quality.

Customer Convenience As a premium health care provider, offering customer convenience at every point in the service chain is of paramount importance to Nawaloka.

Thus we have not been backward in fully deploying new technology where it can serve customers better – our mobile channelling and conventional channels are all enhanced in this way.

Such is the priority status we attach to customer convenience, that we have adopted and applied a ‘no more waiting in line’ philosophy across all our services.

Here are some of our other strengths that reinforce the customer convenience experience -

y Location/Access

Nawaloka is centrally and conveniently located and provides ease of access and egress as well as ample parking facilities for customers.

y Speed of Service

The Hospital is well-laid out and all service areas are clearly sign posted, helping customers to navigate the premises with ease and obtain the services and attention they need with equal ease.

Nawaloka’s service ethic is built upon speed, efficiency and friendliness.

y Wide Scope of Services Offered

The Nawaloka portfolio is an extensive one and the fact that we can provide almost every conceivable medical service and/or intervention is key to customer convenience.

y Reasonable Pricing

It has been one of our guiding principles that Nawaloka would welcome the widest possible cross section of people seeking our services. To give this principle life, Nawaloka has taken great care to build economy and great value for money into its overall pricing structure.

y Environment

The Hospital’s environs and ambiance are clean, bright and uncluttered. They facilitate ease of service imparted by staff who are friendly and interested in the customer’s well-being.



investing in new Service Enhancements

negombo Hospital (nawaloka Medicare Private Ltd.)

Nawaloka Hospitals PLC established its first regional hospital in Negombo, the capital city of Gampaha District which is also considered a prime tourist hub in Sri Lanka.

The new hospital commenced operations in November 2014.

Hospital has been incorporated under the name of Nawaloka Medicare Private Ltd. Consisting of 75 patient beds and 50 rooms including 4 luxury rooms the hospital offers the following facilities - an Emergency Treatment Unit, Inward Patient Care, 24-Hour OPD Consultation, 24-Hour Pharmacy, CT Scanning, X Ray, Mammography, ECHO, ECG, Ultrasound, Haemodialysis Unit, Endoscopy, 24-Hour Nawaloka Metropolis Laboratory and Channel Consultation. Also the Hospital has a fully-equipped Blood Bank, making it the only private hospital in Negombo to provide blood bank services.

The Hospital is outfitted with 3 State-of-the-Art Operating Theatres, Labour Room, Neonatal Unit and Medical & Surgical Intensive Care Units which can be considered to be the best in the Gampaha District.

The Hospital has achieved significant success for the four months of operation it has been, since inception.

Nawaloka Hospital - Negombo

Over 100 Medical Specialists Visiting

the Hospital Covering all Specialities

Over 13,500 Channel

Appointments

Over 1,500 Patients Admitted

for Indoor Treatment

Successfully Performed over 265 Surgeries including

Total hip replacement, Whipple Surgery,

Laparoscopy Surgery and Caesarian

Surgeries

nawaloka Medicare Private LimitedAchievements for the past 4 months

Bone Marrow transplant unit

Nawaloka Hospitals PLC has commissioned a state-of-art the Bone Marrow Transplant (BMT) unit, an investment of Rs. 40 Mn with 3 purposes built self-contained patient units and a self-contained modern cell harvesting and processing laboratory capable of handling even the most advanced Bone Marrow Transplants.

BMT is a life saving treatment regime for a variety of diseases including blood cancers such as Leukaemia, Lymphoma, Myeloma etc., as well as benign disorders such as Aplastic Anaemia and Thalassaemia.

Nawaloka Hospitals has made a special effort to keep the cost of transplant procedures very affordable to a wide cross section of the general public when compared with costs in other countries. We target treatment for the following categories:

transplant for non-malignant conditions

y Aplastic Anaemia

y Thalassaemia Major

transplant for malignant conditions

y Multiple Myeloma

y Non-Hodgkins and Hodgkins Lymphoma

y Acute Myeloid Leukaemia

y Acute Lymphoblastic Leukaemia

y Chronic Myeloid Leukaemia

We have a team consisting of transplant specialists, Hemato-Oncologists, Transfusion Specialists, Physicians, Pathologists and Microbiologists to perform the above procedures. This is the only fully-fleged setup available in Sri Lanka.


Vavuniya

Mannar

AnuradhapuraTrincomalee

Puttalam

Colombo

KalutaraRatnapura

Badulla

Nuwara Eliya

KegalleGampaha

Negambo

Kurunegala

Matale

Polonnaruwa

Kandy

GalleMatara

Hambanthota

Monaragala

Ampara

Batticaloa

Mullaitivu

Kilinochchi

Jaffna

Galle District

KarapitiyaGinthotaDevetaMorawakaMapalagama HikkaduwaImaduwaKotapolaUdugamaAmbalangodaAhangamaDeniyayaThawalama Balapitiya WeligamaNeluwa ElpitiyaPitabaddara

Hambanthota District

DikwellaWalasgalaRannaBeliattaGatamannaWeerakatiyaKirindaEmbilipitiyaDondraWalasmullaSooriyawewaHakmanaMiddeniyaHambantotaGandaraHungamaAmbalanthota

Rathnapura District

Avissawella Minnana DalaThalduwa Panukarapitiya KalawanaYatiyanthota Ehaliyagoda HangamuwaKarawanalla Kiriella KuruwitaRuwanwella Ingiriya DehiowitaKithulgala Nivithigala

Batticaloa District

Kattankudy Kalmmunai Sainthamaruthu Ninthavur SammanthuraiKokadicholai

Trincomalee District

Eravur ChenkaladySanthyveli ValaichenaiPesalai Ottamavady

Colombo District

MoratuwaKoralawallaRathmalanaBoralesgamuwaKalubowilaMattakkuliyaAthurugiriyaThalagala JuntionThalawatugodaMulleriyawaMattakkuliyaThotalangaThalwatta

Gampaha District

SeeduwaKatunayakaPitipanaPohorathotaKottchchikadeMukalangamuwa

Kaluthara District

BulathsinhalaRaigamaEgaloyaWadduwaAgalawatta Bandaragama PimburaKalutharaGovinna MahavilaAluthgama Horana EluvilaDargatown Pokunuvita Nagoda

Atalugama GorakapolaMathugama MillaniyaHoranaWathara

NAWALOKA HOSPITALS PLCColombo 02

Jaffna District

Point Pedro Nelliyadi Puttur Changanai Moolai Kokuvil Kondavil Thirunalveli Pasayur Main Street Jaffna Town Nallur Thondamanaru

NAWALOKA METROPOLIS LABORATORIES (PVT) LTD.

NEW NAWALOKA HOSPITALS (PVT) LTD. Colombo 02

NEW NAWALOKA MEDICAL CENTRE (PVT) LTD.Colombo 02

NAWALOKA MEDICARE (PVT) LTD. Negombo



Customer Service and SatisfactionNawaloka is completely customer focussed in all we do. We value customer sentiment highly. Thus, we have a regime of processes and activity that solicits and measures customer feedback on all relevant areas of our operation. This we regularly evaluate and fine tune our enterprise to ensure that we are meeting expectations of all our stakeholders all the time.

As a ‘People’s Hospital’ we have made a conscious effort not to be deemed an elitist health care institution. Our medical products and services are priced affordably and as a result we have patients from all walks of life receiving expert medical care under our wing, without any discrimination.

Several mechanisms were in place to monitor customer satisfaction in the year 2014/15 -

y Nawaloka distributed complaints and suggestion forms to customers/patients at time of admission. The completed responses were then collected at the time of discharge of the patient. This invaluable feedback is monitored and committed to a prompt response. Relevant action ensued, undertaken by the Marketing Division.

y The Mystery Patient system continues to be active to measure the performance and effectiveness of our employees. Simultaneously, the Mystery Patient assisted in identifying weaknesses and drawbacks in the services offered.

y Suggestion Boxes were placed in public areas around the Hospital to encourage and welcome customer suggestions about our operations.

y Through Company emails.

Product ResponsibilityIn our line of business, the importance of clear, unequivocal communication is paramount. Nawaloka makes no compromises in all communication with stakeholders as regards any aspect of our business – from clear and easily understood service descriptions and interaction between our staff and customers to the clarity of all the processes we adopt in administering the Hospital.

Quality

Nawaloka Hospitals is the only health care service provider in Sri Lanka to have won the ISO 9001-2008 Sri Lanka Quality Award in 1998. In addition, the Company has been awarded the National Quality Award and the National Business Excellence Award. This certification encompasses the entire indoor hospital operation and the required standards have been maintained to ensure the continuation of ISO standard certification.

Our hospital was also awarded Baby-Friendly Hospital status by the World Health Organisation and the United Nations Children’s Fund. Best practices adhered to in all areas of management of provision of services also won the hospital the coveted Business Excellence Award by the National Chamber of Commerce of Sri Lanka in 2008, 2009 and 2010.

The Nawaloka Hospital was rated as the hospital with the highest brand value in Sri Lanka. In addition, Nawaloka Hospitals PLC is recognised among the Top 100 entities by LMD and which is the highest rank among the health care sector companies, outstripping competition by a large margin.

It is the only hospital recognised in leading business magazine, LMD’s ‘Most Respected 2011’.


In addition, Lanka Rating Agency Ltd. (Formerly Ram Ratings Lanka Ltd.) has affirmed Nawaloka Hospitals PLC’s respective long and short-term corporate credit ratings at ‘A’ (with a stable outlook) and ‘P2’.

We see all these awards and accolades as solid affirmation of Nawaloka’s commitment to and consistent delivery of standards that uphold responsibility to the stakeholder at every instance.

Patient Health and SafetyAs an enterprise which is an integral functionary in the health industry, Nawaloka has a well-developed health and safety regime in place that ensures the well-being of patients at every instance. At every step of the chain of caring – patient reception, examination, diagnosis, treatment and intervention, after care and discharge – we offer personnel, services, products and procedures which ensure the highest levels of health and safety.

We are also pleased to record that the Hospital has had no incidents of non-compliance in terms of regulations and voluntary codes concerning patient health and safety.

Emergency Ambulance Services

Nawaloka offers emergency ambulance services via a fleet of fully-equipped ambulances.

24x7 Fully Equipped Ambulance Service



We ensure that the vehicles themselves are in optimum condition and undergo green tests to ensure emission levels are within accepted norms. These ambulances are also maintained at a high level of preparedness and the equipment and treatment facilities on board are up to date and in like readiness.

The drivers and paramedics are also fully-trained in their fields and all of them work towards ensuring patient health and well-being at all times.

We are planning to establish a separate unit for ambulance services. We have invested Rs. 9 Mn for new ambulances during this financial year.

Product and Service LabellingNawaloka as a provider of an essential service, in the health care sector, adheres and conforms to the highest standards to ensure patients are provided with comprehensive information associated with the services provided.

Although we do not retail products per se, all Hospital procedures, treatment regimes and interventions are fully and clearly explained at every point of patient-hospital contact.

Any third party products we use, such as pharmaceuticals, are sourced from reputed and reliable suppliers. However, it must be noted that Nawaloka is only a retailer of such products.

During the year under review there were no incidents of non-compliance with regulations and voluntary codes concerning product and service information labelling.

Marketing CommunicationsNawaloka believes that its Marketing Communication processes must necessarily present the ‘face’ and character of the organisation and the values it stands for

NAWALOKA iS A

COMPLETELy CUSTOMEr

fOCUSED HOSPiTAL

AND vALUE CUSTOMEr

SENTiMENTS HigHLy. AS

A ‘PEOPLE’S HOSPiTAL’

WE HAvE MADE A

CONSCiOUS EffOrT

NOT TO bE DEEMED AN

ELiTiST HEALTH CArE

iNSTiTUTiON.

either directly or subliminally depending on the substance material to be conveyed. It is therefore implicit that such communications conform strictly to regulatory provisos and any other applicable codes of conduct that prevail in the country.

In order to always keep our communications ethical and within the bounds of law and good taste we keep constant tabs on the following activities:

y General Awareness sessions that are conducted

y Continuous medical education and events organised to mark days of special health-related significance

y Check-up camps for public

y TV and Radio advertising

y Printed media

y PR activities

y Sponsorship

Customer PrivacyWe strictly comply with all norms and regulations concerning customer information its storage and use. As a hospital we are required to collect and maintain patient data in some detail. There are several programmes that help us track and secure all such information.

Here are some of them –

y Nawaloka has introduced electronic medical records (EMR) to store the patient’s information.

y Electronic Diagnosis Card system to store information

y Limiting of access to the area storing patients’ information

y Beefing-up security

y Strict enforcement of rules that no information is divulged without patient consent


Employee CapitalHealth care is all about caring for people. Therefore, our employees are required to be of high calibre – professional, qualified in their fields of expertise, imbued with passion, care and integrity for their job and caring for people in equal proportion and so much more.

As we aspire to be an employer of choice, building our human capital is of utmost importance to us. Attracting the best of talent, honing and developing skills and providing an optimum environment for their skills to blossom and grow into long standing relationships with the Hospital as they build lucrative long-term careers are all important aspects of our human resource development agenda.

We believe that the development of human resources requires the handing down of values and perspectives, building structures relating to team member development that ensure a secure flow of qualified personnel. Training is conducted based on employee qualification, as well as specialised training for individual divisions, language training, and special knowledge and skill training.Employee Statistics.


Employee Statistics

Employees as per Gender

Employee Categories Female Male Grand Total

Director 1 4 5

Executive 49 55 104

General 666 332 998

Medical 32 17 49

Nursing 838 111 949

Grand Total 1,586 519 2,105

Employee Categories

Employee Categories

Executive Non-Executive GrandTotalFemale Male Total Female Male Total

Director 1 4 5 – – – 5

Executive 49 55 104 – – – 104

General – – – 666 332 998 998

Medical 32 17 49 – – – 49

Nursing – – – 838 111 949 949

Grand Total 82 76 158 1,504 443 1,947 2,105

Age Group Gender-Wise

Employee Categories

18 - 29 Years 30 - 50 Years More than 51 Years

Grand TotalFemale Male Total Female Male Total Female Male Total

Director – – – 1 2 3 – 2 2 5

Executive 15 9 24 16 32 48 18 14 32 104

General 383 118 501 230 167 397 53 47 100 998

Medical 1 1 2 23 9 32 8 7 15 49

Nursing 394 40 434 367 59 426 77 12 89 949

Grand Total 793 168 961 637 269 906 156 82 238 2,105

Employees as per Service Period

Employee Categories

Less than 10 Years 10-20 Years More than 20 Years

Grand TotalFemale Male Total Female Male Total Female Male Total

Director – – – 1 2 3 – 2 2 5

Executive 40 43 83 4 5 9 5 7 12 104

General 542 258 800 82 53 135 42 21 63 998

Medical 21 11 32 10 4 14 1 2 3 49

Nursing 610 83 693 138 18 156 90 10 100 949

Grand Total 1,213 395 1,608 235 82 317 138 42 180 2,105



Recruitment and Retention

new Employee Recruitments

Employee Categories Female Male Grand Total

Director – – –

Executive 16 18 34

General 161 84 245

Medical 5 5 10

Nursing 163 24 187

Grand Total 345 131 476

Employee Returning to work after Parental Leave

No. of Employees who took Maternity Leave 23

Return to Work Rate 83%

Retention Rate 100%

Employee Benefit RegimeThe Company’s objective is to offer an emolument structure that is fair and equitable to all employees across all grades. In this regard our pay scales conform to the minimum wage levels established in Sri Lanka.

Given below are the salient features of general benefits enjoyed by all permanent employees of the Company.

y Fixed monthly salary

y Annual bonus – based on the overall performance of the Company

y Incentives

y Travel allowances

y Free medication

y Payment of festival advances

y Hostel/Apartment facilities

y Retirement benefits

y Staff loans at concessionary interest rates

y OPD medical scheme

y Inward medical scheme

y Death donations

y Foreign training

y Staff meals at concessionary rates y Insurance

Please refer notes to the financials on page 116 for more details on employee defined benefit plan obligations.

Occupational Health and SafetyOccupational health and safety competence is inbuilt into all organisational roles in the hospital. We have a comprehensive hazard identification and mitigation plan in place to enable the delivery of a secure health care system. Our safety features are embedded in the business processes at every level of the organisation to ensure employee and patient safety at all times.

training and EducationOur training and education initiatives are employee growth and development oriented. Some of the objectives of these initiatives are –

y Ensuring a safe environment that reduces risk for care recipients and caregivers.

y Adopting quantifiable benchmarks for quality and patient safety.

y Stimulating and demonstrating continuous, sustained improvement through a reliable process.

y Providing Nawaloka, as an accredited hospital, with public recognition of our achievements and commitment to excellence.

y Improving outcomes and patient satisfaction.

y Enhancing efficiency.

y Reducing costs through standardised care.

y Creating a pool of readily available and adequate replacements for personnel who may leave or move up in the Organisation.

y Enhancing the Company’s ability to adopt and use evermore sophisticated technology

y Building a more efficient, effective and highly motivated team which enhances the Company’s competitive position and improves employee morale.

y Ensuring adequate human resource competency for expansion.


training and Development Cost and training Hours

training and Development Expenses and training Hours

YearCost

Rs. Hours

2014/15 21,465,321 2,141

2013/14 19,210,425 1,785

2012/13 14,100,221 1,582

2011/12 13,978,300 1,262


Training Programmes

Training

Hours per

Persons

No. of Participants

Conducted by

Organised

by

Internal/

External/

Foreign

Main

Subject Audience Female Male

Basic Life Support Internal Cardiopulmonary Resuscitation 84 Health Care Workers 178 4 Training Manager HRM

Front Off. Internal Customer Care 36 Front Office 163 15 Training Manager HRM

Safety External Fire 33 All Employees 335 49 External Trainer HRM

Nursing Internal Palliative Care 12 PCN 26 0 Training Manager HRM

CT Scan Foreign CT Scan Manual 24 Radiographers 0 2 External Trainer HRM

Treasury Management External Treasury Management & Imports 8 Accounts Officers 1 1 DFCC Bank Finance

Budget Training External Budget Planning 8 Accountants _ 2 CA Sri Lanka Finance

Infection Prevention Workshop

Foreign Infection Prevention 16 Ms. V.P. Waduge 1 – HRM

221 704 73

Key training Principles

Continuousimprovement

Challenge

Improvement Team Work

Respect forPeople

Respect


Company-Wide training to Support Professional Staff

OJT – On the Job Training

Knowledge Skill Training

Training based on Staff Qualifications

OJTon the Job Training

Advanced Training for Assistant Managers

Orientation Training for Newly Promoted Staff

Advanced Training for Specialists

Orientation Training for Newly Recruited Specialists

SelfDevelopment

Language Training

Focused OJIWith Special

Themes

Soft skill development - could be about educating employees on expectations and Company culture or could focus specially on techniques and scenarios related to the following highly sought after skills.

Communication Skill Time Management Mediation

Interpersonal Skill Self-Management Goal Management

Innovation and Creativity Conflict Resolution Memory Enhancement

Rapport Building Negotiation Skill Anger Management

Leadership People Skill Coping Skill

Emotional Intelligence Decision-Making Train the Trainer

Management Skill Personality Development Interviewing Skill

Motivation Business Etiquette Presentation Skill

Stress Management Attitude and Skill Building Team Building

Business Communication Art of Delegation Assertive Skills

Language Skill Change Management Art of Influence


As a company in the health care services sector we consider performance review to be a critical tool in effective employee development. Nawaloka hospital’s current performance appraisal system, which was established several years ago, helps us build and maintain a target driven culture, a key factor shaping our success as a health care service provider. All permanent employees of the hospital are subject to a quarterly evaluation that has been carefully designed to field a fair and balanced assessment of their performance. The performance measurement mechanism assesses the following factors:

y Key performance indicators

y Maintaining daily attendance and punctuality

y Achievements within the time period

y Team working

y Job knowledge and expertise

y Customer orientation

y Communicational and interpersonal skills

y Planning, administration and organisation

y Creative thinking

y Self-development and growth

y Emotional dimensions of workplace performance

y Improvement and further training

y Potential for growth

y Special contributions towards the betterment of the hospital

Diversity and Equal Opportunity

Nawaloka is an equal opportunity employer and recognises that diversity in terms of ethnicity, gender, race, religion and age can only serve to strengthen the collective human talent of the Company. Whilst such an approach serves to enrich our human capital, our openness to hiring from all localities of the country further serves to strengthen our HR resource pool.


total Workforce by Region and Gender

Province Male Female

Central 31 72

Western 419 1,241

Eastern 5 3

North Central 8 63

North Western 3 15

Sabaragamuwa 8 22

Southern 43 149

Uva 5 21

Northern 2 0

519 1,586

We have an inclusive workforce where gender is concerned and we are constantly working to improve female to male gender ratios in every strata of job categorisation.

the Ratio of Basic Salary of Women to Men by Employee Category

Ratio of Basic Salary Women to Men

Category2014/15

%2013/14

%2012/13

%2011/12

%

Directors 73 67 65 60

Managers and Executives 79 77 65 62

Clerical and Minor Staff 68 60 55 45

Nursing 96 90 84 80

Medical Officer 84 81 83 77

* There are no Female Office Assistants.

Labour Practices and Grievance HandlingNawaloka recognises the importance of providing a fair and transparent procedure for handling grievances where they are managed fairly, sensitively and expeditiously. Nawaloka’s grievance mechanisms have many helpful purposes. We can serve to channel conflict into an institutionalised mechanism for peaceful resolution. We facilitate communication between workers and management regarding problems that arise and enable workers to complain with dignity, knowing that there is a process whereby their submissions are channelled to an impartial decision-maker.

The Company has established some principles to improve the welfare of workers and to foster the development of the business through participation and co-operation between workers and their employer.


y Front line workers have the right to participate in decisions that affect their working lives.

y Workers and management have a mutual interest in the success of Company operations.

y Workers and management share a responsibility to work together to achieve that success.

Our Basic Principles of Personnel Management In order to create a relationship of mutual trust and respect between workers and management, personnel management in the Company, is conducted in accordance with four basic principles.

y Creating a workplace environment where employees can work placing their trust in the Company.

- Stable employment where layoffs and dismissals are not readily made.

There are many examples of diversity at work for the betterment of Nawaloka but one area close to our heart lies in the initiatives we take to help create an enabling and conducive work environment for women.

We strive to make Nawaloka a workplace that will allow women to work and raise their families without neglecting either key functions in their lives. At the same time, we help them build careers with us.

We believe that equality and diversity in the workplace lays the cornerstone for systematic societal change leading to sustainable nationwide development in the long-term.

Equal Remuneration for Men and WomenWe believe that remuneration scales that are transparent and attach true value to people irrespective of gender differences speak volumes for an organisation’s values and human resource ethos.

Here at Nawaloka we have seen how motivating and empowering such a scheme can be.

The concept of work of equal value insists that comparison should not be limited to the content of the work, but that job requirements, such as the level of skill, effort and responsibility, and working conditions be also compared.

WE bELiEvE THAT EqUALiTy AND DivErSiTy iN THE

WOrKPLACE LAyS THE COrNErSTONE fOr SySTEMATiC

SOCiETAL CHANgE LEADiNg TO SUSTAiNAbLE NATiONWiDE

DEvELOPMENT iN THE LONg-TErM.


- Steady maintenance and improvement of working conditions from a medium to long-term perspective

- Delivering fairness and consistency. y Creating a mechanism for promoting constant and voluntary initiatives in continuous improvement.

- Share the management mindset and sense of critical urgency through unequivocal communication.

- Reflect working results in working conditions.

y Fully committed and thorough human resource development.

- Promote personal growth through work

y Promoting teamwork aimed at pursuit of individual roles and optimisation of the entire team.

- Team results and creating a sense of unity

- Through consensus building

Creating a Good Workplace Environment The Company strives to be as inclusive as possible by involving staff in its forward journey. Whilst promoting inter-staff communication, we also offer opportunities for them to offer their ideas and opinions on several aspects of how the Company is run and should develop. We conduct the ‘Nawaloka Nawa Adahas’ programme which optimally captures such staff comment.

Suggestions Received – by Year

Categories 2014/15 2013/14 2012/13

Organisation Oriented 195 176 184

Employee Oriented 280 282 264

Patient Oriented 318 267 249

793 725 697

Adhering to Human RightsNawaloka is fully compliant with the relevant national regulations concerning employees and their interest as a responsible private sector hospital. By doing so, the fundamental


human rights of our employees such as freedom of association and the right to collective bargaining, elimination of all compulsory labour, effective abolition of child labour, elimination of sexual harassment in the workplace and elimination of discrimination with respect to employees are adhered. Also we follow best practices governing aspects such as minimum working age limits, working hours health and safety in our hospital.

non-Discrimination and Child Labour Our basic principle regarding this matter is that individuals below 18 years of age may not work for any of our companies. Our Human Resource Management policy has been formulated and communicated to all employees to prevent child labour. There is also strict adherence to the collective agreements signed with the worker trade unions and close monitoring and supervision of operations by management in this sector. No grievances pertaining to human rights were recorded for the year under review.


Business Partner Capital

BusinessPartners

Visiting Consultants Suppliers


Consultants

We operate a consultant feedback form process and also arrange weekly meetings between consultants and senior management of the Hospital to help address any issue and streamline operations.

Suppliers

We continue to conduct regular supplier audits, which we find are invaluable in streamlining our working relationships with them and also helps the business run smoothly.

Nawaloka has a fairly stringent supplier evaluation process through which an entity must progress before they are brought on board as a regular supplier.

As the diagram above suggests, Nawaloka’s business partners consist mainly of visiting consultants and suppliers.

Visiting consultants make a vital contribution to Nawaloka by providing superior professional inputs to patient care and treatment. Their presence on our team also enhances our standing and the portfolio of services we are able to provide to patients.

We are proud to say that Nawaloka attracts the highest number of visiting consultants of all private sector hospitals in the country.

Our suppliers are also vital to enterprise as they are responsible for the timely provision of goods and services that must meet stringent quality parameters to qualify for Company acceptance. The synergy and co-operation we share with the supplier community helps keep the Company running smoothly.

Growth in the number of Consultants and Suppliers

2014/15 2013/14 2012/13 2011/12

Visiting Consultants 365 314 295 289

Suppliers

Pharmacy 164 147 128 115

General 255 235 226 215

Average Length of Relationships with them

2014/15 2013/14 2012/13 2011/12

Consultant 6 Years 6 years 4 years 3 years

Suppliers

Pharmacy 16 Years 15 years 13 years 13 years

General 9 Years 8 years 6 years 5 years

Some of the initiatives we’ve taken in reference to the visiting consultants as well as supplier communities, during the year under review include the following:


State-of-the-art radiology marries the skilled professional with cutting edge technology

and technique. State-of-the-art radiology aids early detection, diagnosis and treatment

and is integral to an early return to health and well-being...there’s many a heart-warming

story that has returned a young mother to the arms of her young ones...and to life.


Social and Environmental Capital

The SocietyAs a responsible citizen, the Company is ever mindful of the impact its operations exert on local communities and the environment. Such is the symbiotic nature of Hospital, community and environment that nothing short of a win-win-win situation can be contemplated. It is why Nawaloka subscribes fully to the view that the value we create for ourselves is inextricably linked with the value we create for others.

nawaloka and Local CommunitiesSince our inception, social responsibility and corporate accountability have been areas of priority in our operations.

The development of society and empowerment of communities and individuals ensured the sustainable development of the Nation.

Nawaloka has a well targeted and sustained portfolio of CSR activity that well illustrates our view that value earned must be complemented by value delivered. Thus, all our CSR programmes are structured to deliver meaningful value and upliftment of people and communities across the country.

As a given constant, Nawaloka encourages all its staff to be generous with their time, effort and talent in service to the wider community.

‘Nawaloka Sathkara’ – Our CSR EngineThe ‘Nawaloka Sathkara’ Programme is a project of the Nawaloka Hospital focused on providing specialised water filtering systems, water tanks and fittings to schools in rural areas afflicted by chronic kidney disease. As many are aware, this disease prevails due to high fluoride content in ground water whilst also affecting the farming community due to their exposure to inorganic pesticides

and fertilizers. We also provide necessary information that help raise awareness of these problems.

School Water Project

Two schools situated in Mathugama, Kalutara District, the Molkawa Maha Vidyalaya with more than 600 students and Kelinkanda School with more than 800 students, did not have access to clean drinking water.

Through the ‘Nawaloka Sathkara’ programme we have provided them with clean drinking water systems. We have identified a proper catchment area and built a well through which pipe-borne water was provided to schools. We also donated water tanks with 1000 L and 500L capacities to the schools. Nawaloka also built and gifted a new toilet system for student use. These efforts are ongoing.

Opening of the Water and Sanitary upgrade project under ‘Nawaloka Sathkara’

Donations via the ‘Manusath Derana’

Project

Nawaloka teamed up with Derana TV and Derana FM Radio to present the programme ‘Manusath Derana’.

Through this initiative, Nawaloka has donated ten 1,000 L water tanks to people living with water scarcity in the Anuradhapura District.

‘Cardiac Awareness Programme’

We organised programme for post operative care for our surgeries patients. Therefore, We provided free medical check up (Random Blood Sugar, Blood Pressure, BMI, ECG ). As well we organised Cardiologist and Thoracic Surgeon to advise after surgery ‘How patient should care about themselves’. End of the programme Dietitians and Physiotherapsts briefed about dietary and exercise needs. - 50 patients were treated.

Corruption, Anti-Competitive Behaviour, ComplianceThe moral and ethics that govern Nawaloka leave no room for corrupt or anti-competitive behaviour and are ingrained in all systems and processes that constitute our operations.

The checks and balances we have embedded within our operating procedures as well as activities such as Risk Management and Corporate Governance all ensure that Nawaloka treads the right path always.

There was no significant risk related to corruption, nor were there any incidents of corruption reported during the period upon which we report. Nawaloka has not been subjected to any fines or litigation throughout the history of the hospital for non-compliance with regulations pertaining to corruption and/or anti-competitive behaviour.

Society Friendly SuppliersAs a responsible health care provider it is incumbent on the Company to always offer patients and customers ethical and high quality services that are not only medically valid but also do no harm to society and the environment.

Whilst we are fully engaged in this process we are also mindful that our supplier community must also conform to like standards and values in order that the entire supply chain is of one mind and in conformity with relevant regulations.



Our suppliers are selected after strict screening and evaluatory procedures have been satisfied. Their products and services are sought through a completely transparent process, often through open tender, where an equitable and fair selection is made.

For the year under review, Nawaloka has not reported any instance of a negative impact on society arising from supplier behaviour or product.

indirect Economic impactNawaloka Hospitals has proved to be a boon to the people of Sri Lanka. In the 80s, the country did not have a large-sized private sector health care hospital that would offer advanced medical expertise. This resulted in valuable loss of foreign exchange as patients had to travel to large hospitals in the region which could offer superior health care. Nawaloka was the first hospital to offer a luxurious ambiance and matching medical care on par with the best hospitals in the region. More importantly, its facilities were priced affordably, which attracted patients across the economic spectrum. Ever since Nawaloka Hospitals was set up, people could access premium health care within Sri Lanka, thus retaining precious foreign exchange within the country as foreign travel was greatly reduced. Furthermore, each year, the Company spends millions on sourcing raw materials from local businesses, thereby stimulating economic growth in those sectors. By purchasing goods and services from other businesses, we create economic value for society.

The Environment

MaterialsNawaloka is a hospital, focused on providing premium health care services and does not manufacture any line of product or ancillary item it may use. Thus, all our raw materials are outsourced from other companies. We maintain a commitment to source as many materials locally as possible without resorting to expensive foreign imports. The Hospital has built a reliable network of local suppliers,

often imparting our own technical know-how to help them upgrade their manufacturing skills so that they continue to meet our exacting quality standards.

Nawaloka Hospitals engages only with reputed suppliers who are able to match our high quality specifications. Supply chain costs are rising by the day for materials supply and equipment, and we are constantly reviewing opportunities to bring down costs without compromising on quality standards. Please refer to the Value Added Statement appearing on page 137 of this Annual Report.

Energy

Electricity

Nawaloka is a highly energy intensive enterprise. As a 400+ bed facility, electricity consumption forms a large chunk of our operating expenses.

With an electricity bill of Rs. 16 Mn a month and utility rates appreciably high, there is a real urgency within the Company to find ways to cap excessive energy consumption.

Overall, ours is a 24/7 operation and with demands on energy remaining significantly high, we have been consciously reviewing and addressing energy conservation methods across the gamut of our operations.

These are some of the energy management initiatives we run today –

y Energy Leader – Nawaloka has appointed an ‘Energy Leader’ for each high energy consumption unit, with authority to take appropriate action and implement measures to effectively manage energy consumption. Energy leaders are motivated and rewarded for their efforts and results achieved.

y Awareness Campaign – Nawaloka has in place a fully-fledged awareness campaign on energy consumption and saving with the use of Billboards and Public announcements.

y Solar Power – The Hospital invested last year in solar power as a viable pursuit of renewable energy.

y Other installations – In order to reduce the energy consumption in operating theatres during non-operating hours, the Hospital uses variable speed drivers.

y Air conditioning – Split and Window Type air conditions are transferred for chill water for maximum possible energy saving.

y LED lighting employed in certain high energy consuming locations, such as ground floor (Reception and Lobby)

Over the years our electricity consumption efficiency has increased.


Monthly Electricity Consumption against Revenue 2011-15

2014/15Rs.

2013/14Rs.

2012/13Rs.

2011/12Rs.

April 525.68 515.79 517.39 426.13

May 540.37 548.70 506.52 392.08

June 560.20 640.49 585.57 463.86

July 543.30 598.35 622.32 475.06

August 611.00 578.18 556.92 450.30

September 563.75 592.16 562.19 489.09

October 594.89 556.33 543.35 463.51

November 713.76 528.05 561.84 496.36

December 697.81 651.39 608.76 567.71

January 659.54 606.74 635.07 568.91

February 687.27 622.86 553.51 480.81

March 629.18 526.24 495.07 503.82


WaterThe two main sources of water for the Hospital are well and pipe borne water; the latter from the national water supply. The Maintenance Department of the Hospital checks for leaks each week to ensure there is no wastage of water and that there is no disruption to water supply across the Hospital.

We have installed highly efficient equipment to minimise evaporation of water from cooling towers.

These and other energy saving measures have led to real savings in water consumption.

EmissionsCutting emissions is one of the key goals we have set for ourselves during the year under review.

By tracking and reducing our carbon footprint, we can infuse our establishment with as many elements of a green hospital concept as possible.

High energy usage in hospitals is unavoidable, but we apply ourselves to upgrading machinery and systems to make our operations optimally efficient.

Effluents and WasteGiven the nature of its operations, systematic waste disposal is of importance to Nawaloka. In this respect the Hospital employs several measures.

Dual burner incinerators are used to dispose of medical waste without the emission of harmful gases.

A garbage separation system allows our employees to dispose of waste responsibly.

Polythene bags used by the Hospital are manufactured according to strict specifications to aid responsible disposal at the end of their life cycle.

There have been no instances of non-compliance with regulations pertaining to the environment.

total Monthly-wise insulator Details (inclusive Lab/negombo Hospital/Medical Centre Etc.)

Waste Kg. Diesel Ltr. Per L/per Kg

April - 14 2,141 770 2.78

May - 14 4,381 1,577 2.78

June - 14 4,975 1,774 2.80

July - 14 6,050 2,178 2.78

August - 14 7,245 2,601 2.79

September - 14 7,100 2,610 2.72

October - 14 6,925 2,493 2.78

November - 14 7,240 2,607 2.78

December - 14 7,910 2,851 2.77

January - 15 7,325 2,586 2.83

February - 15 6,660 2,404 2.77

March - 15 7,465 2,688 2.78



timely checkups and health screenings pre empt many a

health ‘pitfall’ and keep the body in prime condition.

no unhealthy ‘down time’...just lives lived well. A ‘fine-tuned’

body is a cherished asset of life.


STEWARDSHIP

BOARD OF DiRECtORS

Mr. Jayantha DharmadasaChairman and C.E.O. – Executive Director

Mr. Rienzie Theobald WijetillekeFCIB (UK), FIB (Sri Lanka) CCMI (UK)

independent Non-Executive Director & vice-Chairman

Mr. Jayantha Dharmadasa has been a Director of the Company since 1985.He is a businessman by profession and counts over 38 years of experience in Executive Management and 29 years in the healthcare industry. He is a Fellow Member of the Institute of Certified Professional Managers (FCPM).

He is the Chairman/CEO of Nawaloka Hopitals PLC. He is also the Chairman of Nawaloka Holdings (Pvt) Ltd., Nawaloka Aviation (Pvt) Ltd., Nawaloka Polysacks Sharjah, Sasiri Polysacks (Pvt) Ltd., Nawaloka Construction Company (Pvt) Ltd., Nawaloka Trading Co. Ltd., Nawaloka Petroleum (Pvt) Ltd., Koala (Pvt) Ltd., New Ashford International (Pvt) Ltd., Sahas Wear (Pvt) Ltd., New Nawaloka Hospitals (Pvt) Ltd., Nawaloka Medical Centres (Pvt) Ltd., New Nawaloka Medical Centre (Pvt) Ltd., Nawaloka Medicare (Pvt) Ltd., Nawaloka Metropolis Clinical Laboratories (Pvt) Ltd., Outstanding Song Creators’ Association (OSCA), Cinestar Foundation and Nation Lanka Finance PLC.

Mr. Dharmadasa is the Honorary Consul-General of the Republic of Singapore in Sri Lanka. He was a Director of Sri Lanka Telecom, former President of Sri Lanka Cricket and a Past President of the Asian Cricket Council. He was the former Chairman of the National Film Corporation.

Mr. R.T. Wijetilleke has been a Director of the Company since 2003 and appointed as Vice - Chairman in August 2011. He is a Fellow of the Chartered Institute of Bankers, United Kingdom. And also Fellow of the Institute of Bankers of Sri Lanka and Companion of the Chartered Management Institute UK.

In late 2010, Mr. Wijetilleke completed 50 years as a Practising Banker and in 2011 retired from the position of Chairman, HNB. He is a Director of Mahaveli Reach. He is a past Chairman and Director of the Colombo Stock Exchange.

He is also the settlor and the main trustee of ‘The Rehabilitation of Buddhist Temples Foundation’ (Incorporation) Act No. 17 of 2014.


StewardshipBOARD OF DiRECtORS

Professor Lal Gotabhaya ChandrasenaDirector/general Manager, Executive Director

Deshabandu Tilak de ZoysaFCMI ( UK ), FPRI (SL)

Senior independent, Non-Executive Director

Professor Chandrasena has been a Director of the Company since 2003. He is a Clinical Biochemist by profession and counts 24 years of University Academic Service and 22 years experience in Hospital & Healthcare Administration and Laboratory Sciences. He is the Emeritus Professor of Biochemistry and Clinical Chemistry, Faculty of Medicine, University of Kelaniya.

Professor Chandrasena has a Doctorate in Philosophy from the University of Liverpool (UK), a Bachelor of Science (Hons) from the University of Liverpool (UK). Fellow of the Institute of Chemistry, Ceylon and is a Chartered Chemist. Fellow, Royal Society of Chemistry (UK) and Fellow of the NationalAcademy of Sciences of Sri Lanka, Post Doctoral Fellow, Colorado State University, U.S.A.

He is also a Fellow member of the Institute of Certified Professional Managers and hold a certificate in Hospital Administration from the Indian Institute of Management, Ahamadabad. He is also a Director of Nawaloka Medicare (Pvt) Ltd., Nawaloka Hospitals International (Pvt) Ltd., Nawaloka Metropolis Laboratories (Pvt) Ltd., Nawaloka College of Higher Studies (Pvt) Ltd. and Non-Executive Director of Sri Lanka Insurance Corporation Ltd.

He is presently the President of the Association of Private Hospitals and Nursing Homes, and a member of the Private Health Services Regulatory Council – Ministry of Health.

A well-known figure in the Sri Lankan business community, Mr. Tilak de Zoysa, FCMI (UK), FPRI (SL), Honorary Consul for Croatia and Global Ambassador for HelpAge International, was conferred the title of ‘Deshabandu’ by His Excellency, the President of Sri Lanka in recognition of his services to the country and was the recipient of ‘The Order of the Rising Sun. Gold Rays with Neck Ribbon’ conferred by His Majesty the Emperor of Japan.

In addition to being the Chairman of the Supervisory Board and Advisor to the Al-Futtaim Group of Companies in Sri Lanka, he Chairs Carsons Cumberbatch PLC, Associated CEAT (Pvt) Ltd., Amaya Hotels and Resorts USA (Radisson), AMW Capital Leasing and Finance PLC, Jetwing Zinc Journey Lanka (Pvt) Ltd. and HelpAge Sri Lanka.

He is also the Vice-Chairman of Ceat Kelani Holdings (Pvt) Ltd., Orient Insurance Ltd., and serves on the boards of several listed and private companies which include John Keells PLC, Taj Lanka Hotels PLC, TAL Hotels and Resorts Ltd., Lanka Walltiles PLC, Dutch Lanka Trailer Manufacturers (Tata Group), Associated Electrical Corporation Ltd., Inoac Polymer Lanka (Pvt) Ltd., Cinnovation INC, GVR Lanka (Pvt) Ltd., and Varun Beverages Lanka (Pvt) Ltd. (Pepsi). Mr. Tilak de Zoysa is a past Chairman of the Ceylon Chamber of Commerce, The National Chamber of Commerce of Sri Lanka, HelpAge International (UK) and served as Member of the Monetary Board of Sri Lanka (2003-2009).



Tissa K. BandaranayakeFCA, BSc

independent, Non-Executive Director

Dr. Thirugnanasambandar SenthilverlNon-Executive Director

Mr. Tissa K. Bandaranayake joined the Company as a Director in 2009. He is a Fellow of the Institute of Chartered Accountants of Sri Lanka and graduated with a BSc. from the University of Ceylon.

He has 45 years of commercial and professional experience. He was with Ernst & Young, Sri Lanka for 27 years until retirement as a Senior Partner in April 2009, managing a large portfolio of clients both local and multinational in various industries.

He is a Director of Samson International PLC, Laugfs Gas PLC, Harischandra Mills PLC, Renuka PLC, Renuka Holdings PLC, Overseas Reality (Ceylon) and Micro Holdings (Pvt) Ltd. Also serves as an Advisor/Consultant to the Board of Directors of Noritake Lanka Porcelain (Pvt) Ltd.

Mr. Bandaranayake was past Chairman of the Audit Faculty of the Institute of Chartered Accountants of Sri Lanka and a Past President of the Practising Chartered Accountants Forum.

Mr. Bandaranayake is also a Vice-President of National Stroke Association of Sri Lanka, Member of Rotary International Finance Committee 2013-2016 and Rotary International District Governor for Sri Lanka 1999-2000.

He currently serves as the Chairman of the Quality Assurance Board of Sri Lanka comprising representatives of the private sector and regulators.

Dr. Thirugnanasambandar Senthilverl was appointed to the Board of Directors of Nawaloka Hospitals PLC on 28th February 2012 as a Non-Executive Director. For four decades he has been actively engaged in manufacturing, trading, land development, Health, Power and Energy sectors and industrial turnkey projects. At present, Dr. Senthilverl serves as a Director on the Boards of Amana Takaful Insurance PLC, CT Land Development PLC, C.W. Mackie PLC, Hydro Power Free Lanka PLC, Lanka Ceramics PLC, SMB Leasing PLC, MBSL Savings Bank Ltd., The Finance Company PLC, Vidullanka PLC and Vidul Engineering Ltd.



Mr. D. Sunil AbeyRatnaPhD (UH-USA); FCA (SL); FCMA (SL); FCMA (UK): CMA (Aust)

independent Non-Executive Director

Mr. Ugitha Harshith DharmadasaExecutive Director

Mr. D. Sunil AbeyRatna counts over 40 years of experience in the fields of Finance, Audit and Tax. He is a Fellow of The Institute of Chartered Accountants of Sri Lanka, The Institute of Management Accountants of UK and Certified Management Accountants of Sri Lanka. He is also a Member of the Certified Management Accountants of Australia and has a Doctorate in Philosophy from the University of Honolulu USA.

He is the sole proprietor of AbeyRatna & Company – Chartered Accountants and a Director of AGN International Ltd. UK, which is the 4th largest Independent Accounting Association in the world based in over 108 countries and 478 office locations.

Mr. AbeyRatna is the Chairman of West Asia and African Region of AGN International Ltd.

He is a Director of AGN International Ltd. – UK, KBSL Information Technologies Ltd., East West Properties PLC, Rosewell Investment (Pvt) Ltd., Eastern Brokers (Pvt) Ltd., Carplan Ltd. and KIA Motors (Lanka) Ltd.

He was Director/CEO Kotagala Plantations PLC and Agarapatana Plantations Ltd.

Mr. Harshith Dharmadasa has been a Director of the Company since 2000. He has 20 years of experience in Executive Management.

He is the Chairman of Milllenium Housing Development Ltd., and Managing Director of Ceyoka (Pvt) Ltd., and Koala (Pvt) Ltd.

Mr. H. Dharmadasa is a Director of Nawaloka Trading (Pvt) Ltd., Nawaloka Construction Co. Ltd., Nawaloka Medicare (Pvt) Ltd., Nawaloka Metropolis Clinical Laboratories (Pvt) Ltd., Nation Lanka Finance PLC, Sasiri Polysacks (Pvt) Ltd., Melvin Wirenail Industries (Pvt) Ltd. and Concord Venture Exports Lanka (Pvt) Ltd.



Mr. Anisha Givantha DharmadasaExecutive Director

Ms. Ashani Givanthi DharmadasaExecutive Directress

Mr. Anisha Givantha Dharmadasa has been a Director of the Company since 2000. He has 18 years of experience in Executive Management. A Director of Concord Ventures Exports Lanka (Pvt) Ltd., New Nawaloka Hospitals (Pvt) Ltd., Nawaloka Medicare (Pvt) Ltd., New Nawaloka Trading (Pvt) Ltd., Nawaloka Construction Co. Ltd., Nawaloka Aviation (Pvt) Ltd., Nawaloka Professional Academy (Pvt) Ltd., New Nawaloka Medical Center (Pvt) Ltd., Sikure Security Services (Pvt) Ltd., Nawaloka Petroleum (Pvt) Ltd., Quincy (Pvt) Ltd., Sasiri Polysacks (Pvt) Ltd. and Melvin Wirenail Industries (Pvt) Ltd.

Ms. Givanthi Dharmadasa has been a Directress of the Company since 2003. She has 14 years of experience in Executive Management. She is a Directress of Nawaloka Professional Academy (Pvt) Ltd., Nawaloka Aviation (Pvt) Ltd., Sasiri Polysacks (Pvt) Ltd., Melvin Wirenail Industries (Pvt) Ltd. and Redline (Pvt) Ltd.


Stewardship

SEniOR MAnAGEMEnt tEAM

1

4

7

10

2

5

8

11

3

6

9

12


StewardshipSEniOR MAnAGEMEnt tEAM

1 Mr. C.P. KevitiyagalaHead of Finance

Mr. C.P. Kevitiyagala is an Associate member of The Institute of Chartered Accountants of Sri Lanka and graduated from the University of Sri Jayewardenapura with a BSc. Accountancy degree. He has over 16 years experience in local and foreign Mercantile Sector organisations and joined Nawaloka Hospitals PLC in 2013.

2 Dr. Uthpala Malawara Arachchi Medical Superintendent

Dr. Uthpala Malawara Arachchi graduated with MBBS from Faculty of Medical Sciences, University of Sri Jayawardenepura in 2002.

He holds MSc. in Medical Administration awarded by the Postgraduate Institute of Medicine and a Diploma in Occupational Health and Safety from the University of Colombo. He has served as a Medical Officer-in-Charge in many Government institutions.

From 2007 to 2009, he was attached to the National Health Service, United Kingdom in the field of Medical Administration.

He joined Nawaloka Hospitals as a Medical Superintendent in 2014. He has over 13 years experience in Clinical and Medical Administration.

3 Ms. G WarusavithanaChief nursing Officer

Ms. G. Warusavithana Graduated as a Staff Nurse from the Nurses Training School, Galle. Postgraduated in Post Basic School of Nursing, Colombo. Qualified in Midwifery Diploma in Nursing Administration, Management and Supervision. Maternal and child health international special training in Khon Kaen University - Thailand and Neurosurgery special training in Fujitha University - Japan. Accident and Emergency special training at Royal Hospital - Oman. She has over 39 years experience in the State Sector, Overseas and Private Sector.

4 Mr. Kanishka WarusavitaranaSenior Manager – Operations

Mr. Kanishka Warusavitarana is a member of the Association of Accounting Technicians, Sri Lanka. He joined Nawaloka Hospitals in 1988. He has 8 years experience in a reputed firm of Chartered Accountants and 27 years experience in the Health Care Industry.

5 Mr. Upatissa MannapperumaSenior Co-ordinating Officer and Maintenance Manager

Mr. Upatissa Mannapperuma obtained his National Certificate of Technology from the University of Moratuwa in 1980 and joined Nawaloka Group of Companies, Construction Division, and in 1983, he joined the Maintenance Division of Nawaloka Hospitals. He is certified in Hospital Management from Japan Overseas Health Administration Centre, Yokohama in 1995. He has 30 years experience in the Health Care Industry.

6 Mr. M.D. AriyawansaSenior Co-ordinating Officer

Mr. M.D. Ariyawansa obtained his Diploma in Business Management from the National Institute of Business Management in 1983 and joined Nawaloka Hospitals in 1985 as an Executive Officer and worked in several business units of the hospital. He has obtained a certificate in Hospital Management from Japan Overseas Health Administration Centre, Yokohama in 1999. He is presently the Senior Co-ordinating Officer responsible for Co-ordinating Public Relation functions of the Strategic Business Units. He has 30 years experience in the Health Care Industry.

7 Mr. Indika Prasath BalasuriyaHead of information technology

Mr. I.P. Balasuriya has obtained the MSc. in IT - University of KEELE (UK) in 2005 and a member of BCS, CSSL and CPM. He has also followed NIBM Diploma in IT. He has over 17 years experience in the fields of Project Management, ERP Project Consulting, Application Development, Implementation and User training. He also has work experience with multinational companies. He joined Nawaloka Hospitals in 2008.


StewardshipSEniOR MAnAGEMEnt tEAM

8 Mr. Nalaka NiroshanaManager – Financial and Corporate Planning unit

Mr. Nalaka Niroshana is an Associate Member of the Chartered Institute of Management Accountants - UK and Associate Member of Chartered Global Management Accountants, member of Certified Professional Manager and is a graduate of the University of Sri Jayawardenapura. He joined Nawaloka Hospitals in 2011 and has over 8 years executive experience in diversified conglomerates in Sri Lanka.

9 Mr. Chaminda RupasenaManager – Human Resources/Administration/training

Mr. C. Rupasena is a Holder of BSc. Business Administration (Human Resources Management) Special degree from the University of Sri Jayewardanepura. He is an Attorney-at-Law, Notary Public, Commissioner of Oaths and registered Company Secretary. He is also a holder of a Diploma in Psychological Counselling and possess over 11 years of experience in Human Resources Management.

10 Mr. Lakmal SooriyapperumaHead of Marketing

Mr. Sooriyapperuma has over 17 years experience in Marketing/International Trade and Business Development. He has obtained the Masters in Business Administration from the University of Wales in UK.

11 Mr. Anura SamaradiwakaraCo-ordinating Officer

Mr. Samaradiwakara is working as a Senior Cordinating Officer of Nawaloka Hospitals since 2003 and he has more than 34 years experience in the service sector.

12 Mr. A.A. WeraniyagodeElectrical and Mechanical Engineer

Mr. A.A. Weraniyagode has obtained a Diploma on Refrigeration and Air conditioning from City and Guilds Institute of London in 1983. He has a work experience of 24 years as a Maintenance Engineer in the Hotel Trade in Sri Lanka and overseas. He joined Nawaloka Hospitals 2009 as an Electrical and Mechanical Engineer.


Stewardship

EXECutiVE CLiniCAL MAnAGEMEnt tEAM

Nawaloka Hospitals pioneered the concept of Consultants in charge of major clinical units in the private sector hospitals. Accordingly, the hospital has obtained the services of distinguished professionals in the disciplines of General Medicine, General Surgery, Anesthesiology and Cardiac Surgery. In addition, the hospital enjoys the privilege of the services of distinguished professionals in the disciplines who serves in different management advisory boards such as, medical services, infection and quality control, examination and strategic planning.

Dr. Maiya Gunasekera MBBS, FRCS (Eng), FICS, FRCS (Ed),

MS (Surgery)

Consultant Surgeon and Consultant in-charge – Surgery

Dr. Duminda Pathirana MBBS, DCH, MD, MRCP (UK), MRCP, CH (UK)

Consultant Paediatrician

Dr. Sandeep. K. Sharma MD (Anaesthesiology)

Consultant Cardiac Anaesthetist and intensivist

Dr. V.I. Tennakoon MBBS, MD, FRCP, FRACP, FCCP

Consultant Chest Specialist/Physician and Physician in-charge – Medical intensive Care Unit

Dr. Harindu Wijesinghe MBBS, MD, MRCP (UK)

Consultant in rheumatology, rehabilitation and Sports Medicine, Consultant in-charge Nawaloka Pain Management Centre

Dr. Hemant Digambar Waikar MBBS, MD, DA (ANAE), PDCC

Consultant Cardiac Anaesthetist

Dr. W.A.M. Gunasekera MB, MRCP(UK), FRCP(Lon), FCCP

Consultant Physician and Physician in-charge – in Ward Medical Services

Dr. Richard Saldanha MS, M.Ch, DNB

Consultant Cardiothoracic Surgeon

Dr. Rasika S. WijesundaraMBBS, MD (Anaesthesiology and Intensive Care)

Consultant Anaesthetist and intensivist


there are times when a cherished life needs more intensive medical care. iCu’s

are ‘special caregivers’...they use an optimal combination of people, processes

and procedures to bring healing to all...and often adored grandmothers to beloved

grandchildren...an endearing story of life.


Stewardship

CORPORAtE GOVERnAnCE

Clinical Governance Policy

Purpose of the Clinical Governance StandardsThe Nawaloka Hospitals PLC’s Clinical Governance Standards are designed to assist managers, clinicians, health professionals and users of health services develop and implement clinical governance processes and systems within the Hospital. These Standards will help ensure the delivery of safe and high quality health care to the patients who seek the services of Nawaloka Hospitals PLC. The standards seek to:

y Increase organisational awareness of clinical governance and contribute to the development and implementation of clinical governance systems and processes.

y Assist clinicians and management to embed clinical governance within the organisational culture.

y Assist Nawaloka Hospitals PLC to demonstrate improved accountability for the delivery of safe, high quality health care services through the implementation of clinical governance systems and processes.

Clinical governance is defined as: A framework through which the Hospital is able to continually improve the quality of its services and safeguard high standards of care by creating an environment in which excellence in clinical care will flourish.

There are seven key elements to clinical governance. These are outlined below, along with the mechanisms in use in the Practice to deliver each of the elements and the expectations that are placed on partners and staff at the Practice.

1. Education and training

The Hospital, in order to ensure the appointment and ongoing employment of appropriately skilled and experienced staff and the careful introduction of new procedures, addresses the following two key elements.

Competency Standards: The Hospital must be confident that its staff have adequate skills and experience and are properly trained within their field, in order to undertake the responsibilities of their position within the Hospital. The Hospital’s Management verifies, checks and approves competencies, standards or qualifications. This validation process is in place to validate evidence, thereby giving confidence that the competencies, standards or qualifications are authentic or evidence-based.

Validation processes at the level of the individual include (but are not limited to) the following elements:

- Checking that an individual is registered or accredited;

- Checking that an individual has evidence of continuing professional development;

Continuing Professional Development:Includes ongoing and regular education and research activities linked to the responsibilities and needs of the clinicians employed by the Hospital.

It is the professional duty of all clinical staff to keep their knowledge and skills up to date, and they must therefore engage in regular continuing professional development (CPD). Medical Officers (MOs) and the Nursing Staff should be - engaging in professional support within the

workplace in the context of the Performance Appraisal and Development Plan;

- Utilising education and training opportunities to demonstrate ongoing professional development;

- Engaging in continuous professional development through an accreditation programme;

All clinicians are expected to document their learning for their individual learning portfolios.

Following any external CPD paid for by the Hospital, MOs and nurses are expected to share their learning with colleagues, either formally in clinical or nurse team meetings, or through informal means. It is the

responsibility of each clinician to ensure that any urgent updates are brought to the attention of all colleagues to whom the information is relevant as soon as possible after the learning event.

MOs have a responsibility to support the nursing team through formal teaching sessions as well as through ad hoc advice. The Hospital will arrange a clinical meeting once a month, one of the functions of which is to allow clinicians with specialist knowledge to pass on updates to the rest of the clinical team.

It is recognised that non-clinical staff also need to update their skills regularly in order to support the delivery of high quality medical services.

2. Clinical audit

Clinical audit is the review of clinical performance and the refinement of clinical practice as a result. They can be defined as ‘the systematic measurement and evaluation of the efficiency and effectiveness of organisational systems and processes’. Clinical audits analyse the quality of clinical care outcomes, including the procedures used for diagnosis and treatment, the use of resources and the adequacy of evaluation of clinical outcomes and patient quality of life.

This may refer to:

- The application of the results of formal national or local audits to our patient population and the identification of areas for improvement audits carried out in the Hospital by our clinicians or by external experts.

- the use of case studies to highlight specific issues that are then generalised within our patient population

The monthly clinical meeting provides a forum for the dissemination of the results of audits and the exchange of opinions about how the results can be used to improve clinical practice. These meetings will be held on different days of the week and will be attended by all MOs and members of the nursing team who are able to be rostered


StewardshipCORPORAtE GOVERnAnCE

to attend. Those clinicians not rostered to attend may choose to do so in their own time but in any case it is the responsibility of the clinician presenting a topic to ensure that all colleagues who are not present are made aware of the outcome. When appropriate, the meetings will be attended by the Medical Superintendent or other senior administrative staff to aid the process of dissemination and to ensure that any administrative changes needed to support improvement to proposals are carried through.

The range of topics covered in local audits should meet one of the following key criteria:

- Respond to newly published local pathways

- Respond to newly published national evidence

- Respond to newly available drug or other therapy (if recommended by the relevant Authority)

- Respond to a clinically significant event or substantiated complaint

- Provide a balance across a range of specialties (i.e. clinicians should not all focus on a narrow range of conditions)

- Provide a general update in an area of the clinician’s own expertise

The MS is designated to manage the agenda for clinical meetings, to ensure that the topics selected meet the criteria and provide a balance over a year. It is his/her responsibility to arrange for a clinical evaluation to be presented on any topic that is causing particular concern either locally or more widely.

All papers presented at a clinical meeting should be made available to participants through respective emails. It is the responsibility of the clinician presenting the paper to ensure that this happens.

3. Clinical effectiveness

Clinical effectiveness is about providing the best evidence-based care for the patient, while making good use of available clinical resources. Clinicians in the Hospital are expected to work within formularities, protocols and pathways where these have been developed for specific conditions. This includes;

Clinical standards incorporate clinical guidelines, pathways and local practice protocols. These standards may be set by bodies such as the Sri Lanka Medical Council, which is the authoritative body of the Ministry of Health in setting clinical standards and the Sri Lanka Medical Association.

Clinical indicators are measures or benchmarks that enable the Hospital to compare themselves against similar health services. To facilitate health system improvement clinical indicators must be meaningful and reflect clinical practice standards.

In addition, clinicians are expected to read journals and/or websites regularly to maintain current awareness of best practice. This should include regular scanning national guidelines for changes in recommended practice.

4. Patient and Public involvement - Openness

Processes which are open to public scrutiny, while respecting individual patient and practitioner confidentiality, are an essential part of quality assurance.

The Hospital uses a number of mechanisms to enable patients and other interested parties to be involved in identifying needs and making improvements. These include Patient Bill of Rights.

- Hospital website – promotes regular and ad hoc services, along with information about the staff, the complaints procedure and a comment facility.

- Patient Reference Group – a group representative of the Hospital’s demographic make-up, who are able to devise questions for an annual patient survey and who scrutinise the Hospital’s response to the views expressed by patients.

- Complaints – all patient complaints are managed through the MS and are analysed regularly for learning points and for patterns. Complaints about clinical care are shared immediately with the clinician concerned and those that give rise to clinical learning points are shared more widely at a clinical meeting.

- Suggestions – a suggestion box with forms to complete is available at all times in the waiting area.

The Hospital aims to co-operate at all times in a spirit of openness with other health care providers, local authority organisations, and any organisation with regulatory or watchdog powers.

5. Risk management

Risks - to patient, clinicians, other staff and the organisation as a whole - are managed through a range of policies and protocols, through risk assessment.

This is achieved through the identification and reduction of potential risks and examination of adverse incidents for causative and contributing factors and trends within and across services. To maximise learning opportunities lessons should be shared within the Hospital.

Some aspects of clinical risk management are:

y Incident and adverse event reporting, monitoring and trend analysis: this incorporates activities such as learning from local incidents or patterns of incidents, including near hits and management of serious adverse events and maintaining a risk register and monitoring medico-legal cases.

y Sentinel event reporting, monitoring and clinical investigation: defines the process for identification, reporting and investigating sentinel events in-line with Quality and Patient Safety Committee.

y Risk profile analysis: including the identification, investigation, analysis and evaluation of clinical risks and the selection of the most appropriate method of correcting, eliminating or reducing identifiable risks.



The key policies relating to minimising risk for patients are:

1. Patient Bill of Rights2. Consent Policy3. Infection Control Policy4. Identification of Patients5. Verbal Policy6. High Alert Medication Policy7. Correct Site, Correct Procedure, Correct-

Patient Surgery8. Patient Falls Policy

Risks are minimised through other aspects of clinical governance, especially through attention to education and training, clinical audit and clinical effectiveness.

The Hospital encourages all staff to discuss any incident that has or could have posed a risk or actual harm. The learning from incidents is shared across the whole Hospital and any actions are reviewed until fully implemented. Clinical incidents are referred to a clinical meeting, to enable a detailed discussion in a confidential environment.

6. information management

High quality clinical care depends on high quality information management. This starts with the generation of good patient records and it is the responsibility of every clinician to ensure that the details of their consultations are recorded in a way that:

- is easily understood by colleagues and by the patient if requested

- reflects exactly what takes place in the consultation, including any discussion relating to risk, e.g. consent, offer of a chaperone

- provides clear information about the agreed care plan

- uses codes and templates as agreed within the Hospital, to enable effective searching of patient data

- EMR (Electronic Medical Records) with UPIN. This helps us retrieve patient information on the system with no hassle of paper documents

The Hospital will use patient data for purposes consistent with our Data Protection registration (see Data Protection Policy) and will maintain patient confidentiality at all times when using data for clinical governance purposes. Patient records will be searched to provide evidence for internal audits and case studies and to ensure clinical effectiveness.

7. Human Resources

The Hospital is committed to delivering medical care through a team of fully qualified and suitably experienced clinicians, supported by an adequate administrative resource.

In order to achieve this, the Hospital regularly reviews the skill set of its clinical team, offering development opportunities where appropriate and ensuring that the full range of primary care skills is available at an appropriate level. This means that all clinical staff are encouraged to work within the higher range of their skillset rather than carrying out tasks that could be fulfilled by a less qualified clinician.

When recruiting potential new MOs or nurses, the interview will always include questions designed to demonstrate an awareness of clinical governance principles.

The Hospital operates within a full suite of human resources policies and protocols to ensure that every member of the team, whether clinical or not, is working with the best interests of the patients in mind at all times.

Governance Structure of nawaloka Hospitals PLCOne of the most vital aspects of conducting the business of the hospital is ensuring that it enacts the highest standards of governance. The governance structure of Nawaloka Hospitals PLC is designed to satisfy the legitimate claims of all stakeholders and to fulfill the Hospital’s economic, environmental and social responsibilities in an accountable, sustainable and transparent manner.

The business activities of the Hospital are conducted by adhering to the highest standards which are based on the best contemporary principles and practices whilst conforming to all applicable laws and regulations.

The major external steering instruments on Governance could be identified as follows:

y Companies Act No 7 of 2007,

y Code of best practice on Corporate Governance issued jointly by The Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka.

y Listing rules of the Colombo Stock Exchange.

y The Board of Directors, being the highest governance body of the hospital, ensures alignment of the Hospital’s business strategy to sustainable business performance, while creating value to stakeholders.

The Hospital’s Governance structure portrayed below demonstrates the linkage mechanism that ensures alignment of business strategy and direction through effective engagement and communication with its stakeholders, Board of Directors, Board Sub - committees and Management.



New Nawaloka Hospitals (Pvt) Ltd. (100% sub.)

New Nawaloka Medical Centre (Pvt) Ltd. (100% sub.)

Nawaloka Medicare (Pvt) Ltd. (100% sub.)

Nawaloka Metropolis (50% JV)

nawaloka Hospitals PLC

CG Structure

Shareholders

Board of DirectorsStrategic Planning Committee

Remuneration Committee

Audit Committee

Risk Management Committee

Sustainability Committee

Nomination Committee

Related Party Transaction Review Committee

ED - Executive Director INED - Independent Non-Executive Director DGM - Director/General Manager

Chairman and 03 ED

03 INED

04 INED

DGM and 02 ED

Chairman, DGM and 02 ED

03 INED

03 INED

The Board comprises of 5 Executive Directors including the Chairman, 4 independent Non-Executive Directors and one Non- Executive Director, as shown below, who are well experienced in business and administrative matters in multiple industrial fields in which they have achieved eminence, who contribute effectively for Board discussions and decisions through their ability, experience and specialist knowledge to guide the Hospital to achieve excellence.

Mr. Jayantha Dharmadasa - Executive Director

Mr. Rienzie Wijetilleke - Independent Non-Executive Director

Professor Lal Chandrasena - Executive Director

Deshabandu Tilak de Zoysa - Independent Non-Executive Director

Mr. Tissa Bandaranayake - Independent Non-Executive Director

Dr. T Senthilverl - Non-Executive Director

Mr. Sunil Abeyratna - Independent Non-Executive Director

Mr. Harshith Dharmadasa - Executive Director

Mr. Givantha Dharmadasa - Executive Director

Mrs. Givanthi Dharmadasa - Executive Director

The Hospital has in place a number of mandatory and voluntary Board Subcommittees to fulfill regulatory requirements and for better governance of its activities. These committees meet regularly to consider and discuss matters falling within respective Charters and their recommendations are duly communicated to the Main Board. These Committees consist of Executive and Non-Executive Directors in varying proportions as set out in the above structure.

The main responsibilities of the Board are as follows:

y Formulate the mission and overall business policy and strategy, give directions and establish goals for management, set priorities and standards for the management and the conduct of the business.

y Appoint the Chief Executive Officer, determine the remuneration of senior executives and report to shareholders on their stewardship.

y Ensure that adequate internal controls and highest ethical standards are maintained.

y Report to the shareholders quarterly on the performance of the Hospital.

y Be conscious of the need for the Company to be environmentally friendly by placing emphasis on complying with relevant regulations.

y Establish Clinical Governance procedures and continue to improve same.

y Approve/review Hospital’s annual, quarterly and monthly programs for quality, patient safety and care.

y Establish a mechanism to monitor Hospital’s programs for patient safety, quality and care.

y Review on a monthly basis and act on reports of the patient safety, quality and care.


The Board engages with shareholders and employees in the following ways to communicate relevant information to respective parties.

Shareholders y Annual General Meetings and Extra-Ordinary General Meetings to deliberate on matters which are relevant and of concern to the general membership

y Access to the Board and Company Secretary

y Hospital’s website which is accessible to all stakeholders and the general public

y Interim Reports

Employees y The Board of Directors includes one employee Director namely, the Director/General Manager who bridges the communication gap between the rest of the employees and the Board.

y The Hospitals Board of Directors and Board Subcommittees conduct effective dialogue with the members of the corporate management on matters pertaining to the overall strategic direction of the Hospital.

y Staff is subjected to an annual performance appraisal which is done quarterly. This is a well established process and has become an ideal forum for employees to get engaged in aligning with strategic objectives of the Hospital.

The Board meets on a monthly basis and adhoc meetings are held as and when required. At these meetings, the Board reviews the exposure to key business risk, the strategic direction of the Hospital, targets and budgets, progress made towards achieving those budgets, capital expenditure

programmes, reports on patient safety, quality and care, Sentinel events Monitoring report and Customer/Patient satisfaction report.

The Board has delegated the primary authority to implement policies and achieve the strategic objectives of the Hospital to Chairman/Chief Executive Officer (CEO) and Director/General Manager.

Responsibilities of Director/General Manager are as follows:

y Recommend policies, strategic plans, and budgets to the Board of Directors.

y Hospital’s overall, day-to-day operations.

y Financial Management.

y Quality Management.

y Compliance with applicable laws and regulations.

y Response to any reports from inspecting and regulatory agencies.

y Systems to manage and to control human, financial and other resources.

The Chairman/CEO and the DGM exercise this authority within the policy framework established by the Board and the ethical framework and business practices inherent to the Hospital, in accordance with best practices in dealing with employees, customers, suppliers, consultants and the community at large.

Chairman/CEO and Director/General Manager review in detail the monthly performance, budgets, capital expenditure proposals and business strategies prior to recommending them to the Board.

In addition, monthly presentations and review of operations is conducted by the Senior Management team including the Chairman/CEO and the DGM. This review covers the operations for the current month and the year to date, Clinical audit and review reports, Clinical Indicator reports, Clinical incident monitoring report as well as future projections and the liquidity position of the Company.

Conflict of interestThe Governance Structure of the Hospital ensures that the Directors take all necessary steps to avoid conflict of interest, in their activities with and commitments to, other organisations or related parties. In pursuance of the requirements under the sections 192 and 193 of the Companies Act No. 07 of 2007, the Directors duly disclose the financial accommodations made.



Corporate GovernanceThe Company has adopted the Code of Best Practice on Corporate Governance jointly issued by the Securities & Exchange Commission and the Institute of Chartered Accountants of Sri Lanka.

Adherence to the Corporate Governance practices by the Company is illustrated below:

Corporate Governance PrincipleSEC & ICASL Code Reference

Adoption Status Level of Compliance by the Nawaloka Hospital PLC

A. DiRECtORS

A.1 The Board

The Code require that the Company should be headed by an effective Board which should direct, lead and control the Company

Meetings A.1.1 Adopted The Board met 11 times to discuss the strategic issues spreading within the four quarters.

All agreed that strategic directions and new plans are reviewed after lengthy discussions.

All meetings are called well in advance and Directors are expected to participate at the meetings.

Attendance of the Board of Directors:

Number of Board meetings held during the year 2014/2015 – 11.

Name of DirectorNumber of

Meetings AttendedAttendance

%

Mr. H.K.J. Dharmadasa 9 82

Mr. R.T. Wijetilleke 11 100

Prof. L.G. Chandrasena 9 82

Deshabandu Tilak De Zoysa 11 100

Dr. T. Senthilverl 8 72

Mr. D.S. AbeyRatna 9 82

Mr. T.K. Bandaranayake 11 100

Mr. U.H. Dharmadasa 11 100

Mr. A.G. Dharmadasa 6 52

Ms. A.G. Dharmadasa 6 52

Board’s Responsibilities A.1.2 Adopted The Board has always possessed the skills and knowledge required in managing the business and formulating the strategies.

Non-Executive Directors are always invited to contribute their independent judgment towards the business strategies.

The Board has always maintained a robust risk management system and sound internal control practices in the Company.

Non-Executive Directors regularly analyse whether internal control procedures are practiced well in the business.

Rules and Regulations A.1.3 Adopted The Board collectively and Directors individually have acted in accordance with the laws and regulations of the country which are applicable to the Company as well.

The Company had always taken independent professional advice for it strategic directions whenever required at the Company’s expense.





Company Secretaries A.1.4 Adopted All Directors have direct access to the Company Secretaries which is a Company consisting of a Senior Attorney-at-Law and several Associates who are also Attorneys-at-Law.

The Company Secretaries ensure that the Company is operated within the frame work of the rules and procedures and does the needful coordination.

Further the Board will take necessary assistance from the subcommittees appointed.

Further ensures that the information is being circulated smoothly across the Board including Non-Executive Directors.

Independent Judgment A.1.5 Adopted The Directors are welcome to bring their independent professional judgments towards business decisions.

The Board will create a forum to discuss the suggestions and select the best solution for the Company.

Adequate time and effort A.1.6 Adopted The Chairman and the members dedicate adequate time for their duties. All Board meetings are organised well in advance.

The Company Secretaries ensure that all requested information is delivered to Directors for their independent evaluation.

In addition to the Board meetings, the Directors attend the following subcommittee Meetings:

- Remuneration Committee – Refer Page 91.

- Audit Committee, Related Party Transactions Committee – Refer Page 92.

Training A.1.7 Adopted New Directors are given adequate inductions for their Director role. All Directors have well recognised the need for continuous training and expansion of knowledge and skills required to effectively perform their duties.

A.2 Chairman and Chief Executive Officer

The Code requires clear division of responsibilities of the Chairman and Chief Executive Officer. The position of Chairman and Chief Executive Officer are functioned separately in Nawaloka Hospital PLC

Division of Responsibilities of Chairman and Chief Executive Officer

A.2.1 Adopted Role of the Chairman and Chief Executive Officer is held by one person. Chief Executive Officer’s role includes developing and implementing high-level strategies, and making major corporate decisions.

The Chairman will act as the pivot of communication between the Board of Directors with the shareholders and guide the directions.

A.3 Chairman’s Role

The Code requires the Chairman’s role for good Corporate Governance. The Chairman is responsible for the running of the Board. The Chairman should ensure effective discharge of Board functions.

Role of the Chairman A.3.1 Adopted The Chairman is responsible for leadership of the Board. The Chairman facilitates the effective contribution and performance of all Board members whilst identifying any development needs of the Board. He also ensures that there is sufficient and effective communication with shareholders to understand their issues and concerns.

Further, The Chairman ensures that the adequate balance of power between Executive and Non-Executive Directors.

As the role of Chairman and Chief Executive Officer is not separated, Deshabandu Tilak de Zoysa has been appointed as Senior Independent Director (SID) in compliance with A.2.1.





A.4 Financial Acumen

The Code requires the Board to ensure the availability within it of those with sufficient financial acumen and knowledge to offer guidance on matters of finance.

Availability of Sufficient Financial Acumen

A.4 Adopted The Board is endowed with sufficient financial acumen as three of the Board members have sound financial knowledge and hold fellowships of the respective professional accounting bodies.

A.5 Board Balance

The Code preferred the Board to have a balance of Executive and Non-Executive Directors such that no individual or small group of individuals can dominate the Board’s decision making.

Adequate Number of Non-Executive Directors

A.5.1 Adopted The Board consists of ten Directors out of which five Directors are Non-Executive Directors. This has ensured that no additional powers are vested to an individuals or small group of individuals to dominate the Board.

Adequate Number of Independent Non-Executive Directors

A.5.2 Adopted The Board consists of four Independent Non-Executive Directors out of five Non-Executive Directors.

Independencey of Directors A.5.3 Adopted All four Independent Non-Executive Directors are free from any material relationship with the Company to maintain their level of independence.

Signed Declaration of Independence by the Non-Executive Directors

A.5.4 Adopted All Non-Executive Directors made written submissions to declare in the level of independence.

Declaration in the Annual Report A.5.5 Adopted The Board has determined the Independence and Non-Independence of the Non-Executive Directors based on the declaration and also based on the information available to the Board. No circumstances have arisen for the determination of independence by the Board, beyond the criteria set out in the Code.

The following Non-Executive Directors have been declared as Independent Non-Executive Directors:

- Mr. Rienzie Theobald Wijetilleke

- Mr. Deshabandu Tilak de Zoysa

- Mr. Tissa K. Bandaranayake

- Mr. Damian Sunil AbeyRatna

Senior Independent Director A.5.6 Adopted Deshabandu Tilak de Zoysa has been appointed as the Senior Independent Director (SID), as the role of Chairman and Chief Executive Officer is not separated.

Confidential Discussion with Senior Independent Director

A. 5.7 Adopted Senior Independent Director has made himself available for any material discussion with any of the Directors.

Meeting with Chairman and Non-Executive Directors

A.5.8 Adopted The Chairman meets with the Non-Executive Directors when the need arises.

Recording of Concerns in Board Minutes

A.5.9 Adopted All concerns arisen have been resolved unanimously. Therefore such need did not arise.





A.6 Supply of Information

The Code requires that the Board should be fully-equipped with timely information to discharge their duties.

Timely Information A.6.1 Adopted The Board was fully provided with information required for decision-making from the Management Information System (MIS) by way of proposals. The Board always requests from the Management any further information required.

Board Papers A.6.2 Adopted The Board Papers were sent at least seven days in advance of the Board meetings for initial preparation.

A.7 Appointments to the Board

The Code requires to maintain a transparent procedure for the appointment of new Directors to the Board.

Nomination Committee A.7.1 Adopted The Nomination Committee makes recommendations to the Board for all new appointments. Nomination Committee will consist of the followings.

Assessment of Board Composition A.7.2 Adopted The Board as a whole annually assesses the composition of the Board to ascertain whether combined knowledge and experience of the Board match with the strategic demands faced by the Company. New Board Members will be appointed as and when the need arises.

Disclosure to Shareholders A.7.3 Adopted The Board has disclosed the appointments of new Directors to the Shareholders with the material information.

A.8 Re-Election

The Code requires the Directors to submit themselves for re-election at regular intervals and at least once in every three years.

Appointment of Non-Executive Directors

A.8.1 Adopted Re-election procedure of the Board of Directors has been done as per the Articles of Association of the Company.

Election of the Directors A.8.2 Adopted Directors are appointed at the Annual General Meeting.

A.9 Appraisal of Board Performance

The Code requires the Board to appraise their own performance in order to ensure that the Board responsibilities are satisfactorily discharged.

Appraisal of Board Performance A.9.1 Adopted The Board has annually assessed the Board’s performance including the self-evaluation of individual performance based on the preset criteria.

Appraisal of Self-Performance A.9.2 Adopted Please refer above comment.

Performance Criteria A.9.3 Adopted Please refer above comment.

A.10 Disclosure of Information in Respect of Directors

The Code requires the Shareholders to be kept advised of relevant details in respect of Directors.

Disclosure in Annual Report A.10.1 Adopted Please refer pages 54 to 58 for the profiles of the Directors.

A.11 The Board should be required to evaluate annually the performance of the Chief Executive Officer.

Targets A.11.1 Adopted In each financial year, the Board has set short-term , medium-term and long-term targets in consultation with the Chief Executive Officer along with its objectives.

Evaluation of the Targets A.11.2 Adopted There is an ongoing process of evaluating the performance of the Chief Executive Officer in achieving the set targets.





B. DiRECtORS’ REMunERAtiOn

B.1 Remuneration Procedure

The Code requires companies to establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual Directors.

Remuneration Committee B.1.1 Adopted The Company has established a Remuneration Committee to make recommendation to the Board within the agreed terms of reference for remunerating the Executive Directors.

Composition of the Remuneration Committee

B.1.2 Adopted Remuneration Committee comprises as follows:

B.1.3

Mr. Tilak de Soysa – Independent Non-Executive Director.Mr. Tissa Bandaranayake – Independent Non-Executive Director.

Remuneration of the Non-Executive Directors

B.1.4 Adopted The Board collectively decides the remuneration to the Non-Executive Directors. Non-Executive Directors receive a fee for their presence in the Board as well as in the Committees.

Advice to the Chairman and Chief Executive Officer

B.1.5 Adopted Chairman and the Chief Executive Officer obtain advice from the Remuneration Committee regarding remuneration to the Executive Directors.

B.2 The Level and Make-up of Remuneration

The Code requires to maintain the level of remuneration of both Executive and Non-Executive Directors to satisfy and retain the Directors to run the Company successfully.

Further a proportion of Executive Directors’ remuneration should be structured to link rewards to corporate and individual performance.

Remuneration for Executive Directors B.2.1 Adopted The Company is mindful to payment of an attractive remuneration to the Executive Directors to retain and motivate them. The Remuneration package has been designed to enhance the value of shareholders through achieving the Company’s short-term, medium-term and the long-term objectives.

Comparison Between Similar Companies

B.2.2 Adopted The Remuneration Committee decides the remuneration taking in to consideration of the levels of remuneration paid by the other comparable companies.

Comparison of Remuneration Across the Group

B.2.3 Adopted The Boards’ Human Resources and Remuneration Committee reviews information relating to executive remuneration from time to time to ensure same is on par with the market/industry rates as well as aligned to the strategic objectives of the Company.

Performance Based Remuneration to the Executive Directors

B.2.4 Adopted The Company looks at market rates for the key positions in the Company.

Executive Share Option B.2.5 N/A The Company has not given any share options during this financial year.

Deciding the Performance Related Remuneration

B.2.6 Adopted The Company has taken into consideration the guidelines given in Schedule D in deciding the performance-related remuneration

Early Termination of Director B.2.7 N/A Not applicable to the Board except to the CEO where terms of employment are governed by the contract of service.

Early Termination of Director not Included in the Contract

B.2.8 N/A Refer above comment.

Remuneration to the Non-Executive Director

B.2.9 Adopted Non-Executive Directors receive a fee in line with the market price. No share option scheme has been given to the Non-Executive Directors





B.3 Disclosure of Remuneration

The Code requires a disclosure of the Remuneration policy in the Annual Report

B.3.1 Disclosure of Remuneration

B.3.1

Adopted

The Remuneration Committee is headed by the Non-Executive Director. Please refer the comment on B.1.3 for further information.

Remuneration policy focuses to compensate employees for the services they render to the Company and to retain employees with skills required to effectively manage the operations.

The Committee reviewed the data on the performance of the employees and adequately rewarded and promoted them to retain and motivate them in the employment.

C RELAtiOnS WitH SHAREHOLDERS

C.1 Constructive use of the Annual General Meeting and Conduct of General Meetings.

The Code requires the Board to use the Annual General Meeting to communicate with the Shareholders and encourage their participation.

Use of Proxy Votes C.1.1 Adopted The Company has a mechanism to record the proxy votes and proxy votes lodged on each resolution.

Separate Resolutions C.1.2 Adopted The Company proposes separate resolutions for each item to give the opportunity to shareholders to vote for each separately.

Availability of the Chairmen of Audit, Remuneration and Nomination Committee

C.1.3 Adopted The Company makes available the Chairmen of Audit, Remuneration and Nomination Committee to answer the questions of shareholders.

Notice of Meeting C.1.4 Adopted The Annual Report is sent to each shareholder well in advance for their early preparation for the Annual General Meeting. All questions are answered at the Annual General Meeting.

Procedures of Voting at a General Meeting

C.1.5 Adopted Voting Procedures at the General Meeting have been circulated to the shareholders.

C.2 Communications with Shareholders

Communication Channels C.2.1 Adopted - The Board engages with shareholders in the following ways to communicate relevant information to shareholders

Communication Methodology C.2.2 Adopted - Annual General Meetings and Extraordinary General Meetings to deliberate on matters which are relevant and of concern to the General membership

Implementation C.2.3 Adopted - Access to the board and Company Secretaries

- Hospital's website which is accessible to all stakeholders and general public

- Interim Reports- www.cse.lk

Responsibility of communication C.2.4C.2.5C.2.6

AdoptedThe Board of Directors includes one Employee Director namely, the Director/ General Manager and the company secretaries who bridge the communication gap between the rest of the shareholders and Board

Shareholder Matters C.2.7 Adopted Please refer C.2.4





C.3 Major Transactions

The Code requires to disclose all material transactions to shareholders which would materially alter/vary the Company’s net assets base or in the case of a company with subsidiaries, the consolidated group net asset base.

Major Transactions C.3.1 Adopted All material transactions have been disclosed to the shareholders.

D. ACCOuntABiLitY AnD AuDit

D.1 Financial Reporting

The Board is required to present a balanced and understandable assessment of the Company’s financial position, performance and prospects.

Statutory Reporting

D.1.1

Adopted

The Company has presented the following public reports to disclose information to shareholders as well as to comply with the regulatory and statutory requirements:

- Quarterly Financial Statements

- Annual Report

The Company has strictly complied with the requirements of the Companies Act No. 07 of 2007 and amended hereto. The Financial Statements are prepared based on the International Financial Reporting Standards (IFRS).

Directors’ Report D.1.2 Adopted Refer Pages 87 to 90.

Auditors’ Report D.1.3 Adopted Refer Page 95.


D.1.4 Adopted Refer Page 28.

Declaration by the Board that the Business is a Going Concern

D.1.5 Adopted Refer Page 90.

Summon an Extraordinary General Meeting to Notify Loss of Capital

D.1.6 Adopted Likelihood of such circumstances is remote. If such a situation arises, an Extraordinary General Meeting will be called to inform the Shareholders.

D.2 Internal Controls

The Code requires the Board to maintain a sound system of internal control to safeguard shareholders’ investments and the Company’s assets.

Review of the Internal Control D.2.1 Adopted The Board evaluated the effectiveness of the internal control system in the Company to safeguard Shareholder's investment.

The Board of Directors is satisfied with the presence of the level of internal controls in the business operations.

Need for Internal Audit Function D.2.2 Adopted The Company has an in-house audit function.





D.3 Audit Committee

The Company is required to establish formal and transparent arrangements for considering as to how they should select and apply accounting policies, financial reporting and internal control principles and maintaining an appropriate relationship with Company’s Auditors.

Composition of Audit Committee

D.3.1

Adopted

The Audit Committee is comprised of four Independent Directors -

- Mr. Tissa Kumara Bandaranayake (Chairman) - Independent Non-Executive Director

- Mr. Rienzie T. Wijetilleke – Independent Non-Executive Director

- Mr. Tilak de Zoysa – Independent Non-Executive Director

- Mr. Damian Sunil AbeyRatna – Independent Non-Executive Director

Duties of Audit Committee D.3.2 Adopted The Audit Committee has monitored the independence, effectiveness and objectivity of the Auditors.

Further, the Committee has evaluated the nature of the non-audit services carried out by the Auditors.

Terms of Reference of the Audit Committee

D.3.3

Adopted

The Audit Committee is guided by the Committee Charter which is reviewed annually.The Committee assists the Board for the:

- Preparation, Presentation and Adequacy of Disclosures in the financial statements.

- Compliance with Financial reporting requirements, information requirements of the Companies Act No. 07 of 2007 and other financial reporting related regulations and requirements.

- Ensuring the internal control system of the Company.

- Ability to continue as a going concern in the foreseeable future.

Disclosure D.3.4 Adopted Refer Page 92.

D.4 Code of Business Conduct and Ethics

The Code requires the Company to develop a Code of Ethics for Directors and members of the Senior Management Team.

Code of Business Conduct and Ethics

D.4.1

Adopted

The Company has developed code of Business Conduct and Ethics focusing on the following important areas:

- Conflict of Interest

- Corporate Opportunities

- Confidentially

- Fair dealing

- Protection and proper use of Company’s assets

- Compliance with rules and regulations

- Encouraging the reporting of any illegal or unethical behaviour

Affirmation of the Code of Business Conduct and Ethics

D.4.2 Adopted Refer Chairman’s Report in Page 12.





D.5 Corporate Governance Disclosures

The Directors are required to disclose the extent to which the Company adheres to established principles and practices of good corporate governance.

Disclosure of Corporate Governance D.5.1 Adopted The Report in Pages 64 to 77 addresses this requirement.

E. inStitutiOnAL inVEStORS

E.1 Shareholder Voting

The institutional shareholders are required to make considered use of their votes and should be encouraged to ensure their voting intentions are translated into practice

Dialogues with Shareholders E.1.1 Adopted The Annual General Meeting is used as a forum to have an effective communication with the shareholders.All concerns of the shareholders are minuted and evaluated thereafter.

E.2 Evaluation of Governance Disclosure

The Code requires the Company to encourage Institutional Investors to give due weight to all relevant factors in the Board structure and composition.

F. OtHER inVEStORS

F.1 Investing/Divesting Decision

Individual Shareholders F.1 Adopted Individual shareholders are encouraged to carry out adequate analysis or seek independent advice in investing or divesting decisions.

F.2 Shareholder Voting

Individual Shareholder Voting F.2 Adopted Individual shareholders are encouraged to participate at General Meetings and exercise their voting rights.



Stewardship

RiSK MAnAGEMEnt

1. nawaloka Hospital Risk Management Managing the unexpected is an essential daily concern in high-risk organisations, especially as a service organisation in the health care sector. Consistent and thorough processes are the hallmark of Nawaloka Hospital’s successful risk management programmes.

Adhering to a bottom-up risk management approach, the Hospitals encourages employees at all levels to participate at the risk management process. In addition Nawaloka constantly reviews and updates the risk management process on a, regular basis and thus, believe it to be a common thread, throughout the entire hospital.

Summary of Risk Management

Identified Risk Responding Actions Objectives

Financial Risk : This includes risk related to capital structure and projects invested, asset utilisation etc...

y Timely appropriate decisions on funding, investing & dividend payment.

y Proper management of working capital. Use of compatible concepts in financing and investing.

y Negotiation of favourable credit terms and discounts.

y Appropriate funding strategies.

y Maintain liquidity while maximising profit.

y Appropriate capital structure and gearing.

y Minimise the adverse impacts of changes in financial markets, compliance with covenants.

Operational Risk: Risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events.

y Review and continuously update controls according to the changes in business operations.

y Regularly analyse by cause the deviations and losses and take action to improve systems and controls to prevent recurrence in the future.

y Revise and implement business continuity planning.

y Ensure that effective independent Internal Audits are carried out with objectivity.

y Take timely action on the recommendations given by Internal Audit.

y Eradicate opportunities for misappropriation.

y Reduce wastage and increase cost saving.

y Ensure controls are adequate to curtail business processes and minimise human error and systems and procedural failures

Risk Objectives

Identification & Prioritize Risk

Analyse & Quantify the Risk

Evaluate & Identification of

Solutions

Matching the Solution with the

identified risk

Implementation & Documentation

Monitoring & Control

Communication

Figure1: Nawaloka Hospital Risk Management Process.


StewardshipRiSK MAnAGEMEnt


Clinical Risk: y Create high quality medical and safety standards.

y Identify any potential risk to involved parties and take preventive action.

y The Hospital adhere to international therapist and diagnostic norms to ensure that it comply with WHO standards.

y In addition, ISO Internal /External Audits are carried out to maintain ISO procedures.

y Ensure the provision of a quality service to the patients.

Human Resources Risk: y Proper HR and remuneration policies to be in place.

y Provide training and develop staff skills and knowledge.

y Plan career path progress and succession planning.

y Job rotation and staff training for multiple skills.

y Improve decision-making processes by motivating employees.

y Reduce staff turnover.

y Reduce dependence on individual staff.

y Retain top performers.

Information Technology Risk: y Service level maintenance agreement for hardware and software.

y Security implementation with firewall and virus protection.

y Online and off-line backup procedures for application data storage.

y Mirror Data storage.

y Alternative connections for servers.

y Hardware backup.

y Regular health checks of the systems and networks.

y Error logs and user logs maintenance.

y Ad hoc back up restorations.

y Implementation of disaster recovery plan

y Zero losses of data during a system down time.

y Zero down time of the application servers connectivity

Reputation Risk: y Focus on treating employees, patients, doctors, suppliers, communities and the environment in the optimum way to achieve Company objectives.

y Maintain regular and effective communication with shareholders.

y Maintain constant improvement in the quality of the output of the organisation.

y Maintain a good image among the Company’s stakeholders and ensure its positive impact on business.

Legal & Regulatory Environment Risk: y Non-Compliance with the Laws and Regulations and legal regulatory environment.

y Ensure compliance with laws and regulations with legal advice.

y Minimise claims arising from litigations made by clients by providing proper adequate service.

y Reliability.

y Maintain an accurate patient database.

y Comply with all statutory or regulatory obligations.




Asset Risk Including Information:(Impact on the Company's assets due to theft, natural disaster or human error)

y Appropriate insurance covers for identified risks.

y Back-up of vital machinery and equipment components.

y Restrict access to information and ensure employee awareness of the importance of the confidentiality of patient data.

y Minimise breakdown of equipment and other assets.

y Minimise the cost on information.

y Minimise the loss of assets due to fire and theft.

Technological Obsolescence Risk:(The impact of changing technology on the Companies operations.)

y Competent bio-medical team to keep up to date abreast with developments in medical equipment and introduce new technology to maintain high technological standards and continuous investment in medical equipment.

y Employ all available highly advanced equipment to provide a better quality service to patients.

Procurement Risk: Includes buying quality products on time.

y Ensure standardised quality.

y Establish relationship with multiple suppliers.

y Negotiate for better prices and discounts.

y Minimise instances of running out of stock.

y Minimise the effect of price increases.

y Quality of pharmaceutical products to be maintained.

Credit Risk: Includes defaults of debtors and other parties who obtain credit from theorganisation

y The Company evaluates the credit worthiness of companies before granting credit and whether they have a good credit policy.

y Timely collections from patients are carried out.

y Reduce debtors’ defaults.

Intellectual Risk: This includes the use of the Company’s brand name by other parties.

y Create brand awareness through sustained advertising and marketing.

y To protect against brand infringement.

Competition Risk: The possibility of fluctuations in revenue caused by changes in market variables and competitors.

y Increase service quality by adopting market developments in the continuously changing environment.

y Good customer relationships.

y Provide better quality at affordable prices.

y Protect and expand market share.

2. Risk Management CommitteeThe Risk Management Committee of Nawaloka Hospitals has been established with a clear and that precise objective to ensure that proper risk management policies and procedures are in place. The committee comprises of 32 members, chaired by Professor Lal Chandrasena who is the Director - General Manager of Nawaloka Hospitals PLC.

The Committee conducts monthly meetings to oversee and approve the risk management, internal compliance and control policies and practices of Nawaloka Hospitals.

3.1 Operational RiskNawaloka has identified operational risks as of the utmost importance due to the nature of the business. Operational risks arise due to failures in the internal processes, people, clinical and IT systems. The committee regularly performs operational risk monitoring activities in order to promptly detect deficiencies in the policies, procedures and processes.

3. RisksNawaloka Hospitals takes bottom up approach, which encourages employees at all levels to contribute and be a part of the risk management process. The risks have been mapped in to various categories prior to implementation of the risk management process. In accordance with the monthly discussions and evaluations of the Risk Matrix, the committee has identified several risks associated with the Nawaloka Hospital. Thus, they have been categorised into the following domains:

y Operational Risk

y Financial Risk

y Legal & Regulatory Environment Risk

y Reputation Risk



3.1.1 internal Process

Nawaloka ensures risk management in operations by maintaining proper internal control systems and initiating prompt response to arising risks. Following are some of the standards in place to ensure that internal process risks have been reduced within a controlled environment.

y Designated Manager, Head of System and Control who monitors and controls the risk and internal controls on a daily basis, assists in identifying failures within the process and takes prompt action to mitigate and reduce the risk.

y Nawaloka Hospital is the only health care service provider in Sri Lanka to obtain the ISO 9001- 2008. Thus it conforms to the ISO procedures and ISO audit standards.

y Audit trails have been conducted by the Internal Audit teams at scheduled times in an appropriate manner. Hence, red flags (if any) are raised proper action has been recommended and implemented.

y Offering precise and clear job responsibilities to employees at each level allow the Hospital to adhere to established standards and follow protocol in a highly vulnerable service organisation. Any deviation will be monitored and immediate action taken. Employees have been reminded of the job expectation periodically and continuous on the job and off the job training has been given.

3.1.2 Clinical

Risks associated with patient care are extremely important as a Hospital. As a service organisation in the health care sector, clinical risk management plays a crucial role in enabling Nawaloka Hospital to identify, contain and manage risks related to patient safety.

y Nawaloka has identified several key elements that influence the degree of clinical risk, namely - staff participation, safety culture, learning from incidents or errors and education and training.

y The Hospital provides a fully-fledged training programme to both doctors and nurses. In addition, the programme encourages to maintain good communication.

y Bio-medical instruments and equipment play a vital role in the upkeep of the hospital as well as the patient; thus, maintaining and replacing the respective technological equipment on time.

y The Hospital ensures to enter service agreements only with established, esteemed and reputed organisations as to abide by Nawaloka’s clinical service policies and procedures.

y Nawaloka serves as an ethical service organisation in terms of drug suppliers. We make sure that the suppliers maintain high quality business standards’ conforms to national and international guidelines together with recognised quality parameters.

3.1.3 People

Management of Human Resources and employee behaviour can become a major source of operational risk to the Hospital. Risks range from the potential of employees for negligence, conflict of interest, fraud, and mismanagement or due to poorly trained employees.

y Staff training is crucial to the successful management of risk exposures resulting from the interaction of humans and medical technology. However, Nawaloka has invested time and money to create an appropriate risk culture, in which employees are aware of operational risk.

y Nawaloka offers and conducts comprehensive training programmes to both in-house staff as well as to external parties (non-core outsourced businesses). Non-core outsourced businesses feature the security, cleaning, maintenance and businesses under service agreements.

y As a measure of monitoring the strengths and weaknesses of the training programs, performance appraisals are conducted every three months. Simultaneously, any ambiguity that highlights likelihood of risks is being analysed, evaluated and revised through action plans.

3.1.4 it System

Complex designed or poorly implemented systems and processes can give rise to operational risks. This may result in the Hospital experiencing a plethora of problems including information security failures, fraud and processing errors. Further, the increase automation and adaptability to advances in technology have the potential to transform risks from minor manual processing errors to key systematic failures.

y Nawaloka Hospitals has converted all manual processes into computerised systems. The Enterprise Resource Planning (ERP) system of Nawaloka is subject to constant updates and upgrades to ensure that risks are minimum. The design and the implementation of the robust HIS platform specifically identifies all business processes and health care related risks.

y The Hospital has taken measures for online and offline backup procedures for application data storage. In addition, certain proper security measures have been installed through firewall and virus protection, thereby ensuring zero losses of data during a system failure.


3.2 Financial Risk Financial risks associated with Nawaloka Hospital are related to capital structure, project investments, asset utilisation, credit quality of debtors and counterparts, thus, enhancing the risk of the Hospital’s ability to earn, raise or access capital. The following provides an outline of the risks involved and measures taken as regards liquidity risk, credit risk and assets risk.

3.2.1 Liquidity Risk

Liquidity risk involves the risk that funds potentially required on short-term basis cannot be redeemed or sold expeditiously. In addition, the risk is associates with the cash in hand and the availability of credit line facilities. Nawaloka has taken stringent measures to minimise the risks in relation to liquidity.

y A dedicated team of experts, headed by the Financial Controller, conducts daily cash flow analysis. The analysis provides a reliable and a, valuable perspective on the Hospitals financial performance. Further, it assists in identifying any shortfalls or surpluses, making smart investment planning decisions and daily cash flow activities. Thus, it improves cash flow control and helps to ensure that cash flow concerns are dealt with effectively

y Imposing a proper debt collection policy circumventing a buildup of bad debts and debtors.

y Establishing proper authorisation levels in order to control expenditures

3.2.2 Credit Risk

Credit Risk occurs through the default of the debtors and other parties who obtain credit from Nawaloka Hospital. The main objective


is to reduce the impact of debtors’ defaults. Following are strict protocols adhered to by the Hospital in managing credit risks and debtors.

y It operates under a sound credit-granting process, which maintains an appropriate credit administration, measurement and monitoring process. In addition, the Hospital evaluates the creditworthiness of the companies prior to the granting of credit. Thus ensuring that, payment is obtained as quickly as possible for such credit.

y The Hospital has established a noteworthy credit policy, which reduces the risk of bad debt, minimise the costs of granting credit and help maintains a good cash flow.

3.2.3 Asset Risk

Asset Risk to an organisation serves as a threat when an organisation’s assets are vulnerable to theft, natural disaster or human error. Implementing precautionary measures helps to control and minimise asset risks.

y Acquiring appropriate insurance covers for identified risks provides a relief to the Hospital under unavoidable circumstances such as breakdown or natural disasters.

y Creating back-up of vital machinery, equipment components as well as documentation helps to reduce the cost of loss of vital information

3.3 Legal Risk Legal risks crop up during periods when organisations have been non-compliant with the laws and regulations. The Company has taken respective measures and appropriate care to ensure that risks are minimised in the legal and regulatory environment. Operating with a clear objective in conforming

to all standards and in compliance with all statutory or regulatory obligations, the following are certain actions derived by the Risk Committee.

y Ensure compliance with laws and regulations with legal advice.

y Minimise claims arising from litigation made by clients by providing proper and adequate services . This highlights reliability and credibility of the Hospital.

3.4 Reputation RiskProminence majorly in any service organisation, reputation risk is a risk related to the credibility of the business. This may be a matter of corporate trust, which has a great influence on damaging the reputation and causing a severe impact on shareholder value. Non-compliance with the risks in the aforesaid domains (operations, finance and legal), will create a significant impact and raise the reputation risk of Nawaloka.

y Nawaloka Hospitals has been well established for the past 28 years. As an esteemed service organisation, understanding the vulnerability of saving lives and importance of medical technology, Nawaloka stands in the forefront of health care in the country.

y Maintaining strong relationships with stakeholders by building confidence and trust, ensuring operational efficiency, financial transparency and conformance to international best practices, Nawaloka Hospital can live up to the vision of maintains its prestigious reputation for many more years to come.


Stewardship

AWARDS AnD ACCOLADES

As one of the leading health care services providers in the country, Nawaloka Hospitals PLC plays a key role in setting industry benchmarks across its services and standards. The table below will show the awards and accolades that the Hospital has received in the years passed by.

Institute Award Description Category Year of Issue

The Institute of Chartered Accountants Sri Lanka (ICASL)

Annual Report Gold Award Health Sector 2014





Annual Report Silver Award Health Sector 2007

Annual Report Silver Award Health Sector 2009

Annual Report Certificate of Recognition Service Organisation 2006

Annual Report Merit Certificate Service Organisation 2005

ACCA SL Sustainability Award Runner-up General Services and Utility Category 2014

Runner-up Leisure and Services Category 2013

Certificate of Recognition 2012

National Institute of Occupational Safety and Health

Occupational Safety and Health

Merit Award Health Sector 2015

Certificate of Award Crowns for Food Hygiene 2013

Crowns for Food Hygiene 2012

National Business Excellence Awards (NBEA)

Silver Health care and Related Service Sector 2012

Runner up Best Tech-Savvy Company 2011

Winner Health care and Related Service Sector 2011




1st Runner up Other Service Sector 2006

Winner Other Service Sector 2005

Asia Pacific Entrepreneurship Award (APEA)

Special Achievement 2012

SGS ISO 9001 : 2000 2007

ISO 9001 : 2008 2007

SL National Quality Award Winner Service Large Category 1998

Nawaloka Group Best Company 2001

Nawaloka Group SL National Quality Award Winner Service Large Category 1998

Only Hospital to be recognised for the ACCA Sustanability Award

Nawaloka successfully retained the ‘Gold’ Award in the Health Care sector at the Annual Report Awards 2014 organised by the ICASL

y The only hospital to win Sri Lankan National Quality Award (1998).

y Became the ISO certified hospital in SL (2000).

y Awarded ‘Baby Friendly Hospital’ status from WHO and United Nations Children’s Fund (2000).


StewardshipAWARDS AnD ACCOLADES

ContentsAnnual Report of the Board of Directors 87Report of the Remuneration Committee 91

Audit Committee Report 92Directors’ Responsibility for Financial Reporting 94

Independent Auditors’ Report 95Statement of Financial Position 96

Statement of Profit or Loss and Other Comprehensive Income 98Statement of Changes in Equity 99

Cash Flow Statement 100Notes to the Financial Statements 101

FINANCIAL REPORTS2014/15

Financial Calendar

2012/2013 2013/2014 2014/2015 2015/2016

1st Quarter Results 31st July 2012 12th August 2013 14th August 2014 August 2015

2nd Quarter Results 7th November 2012 12th November 2013 7th November 2014 November 2015

3rd Quarter Results 14th February 2013 12th February 2014 10th February 2015 February 2016

4th Quarter Results 25th May 2013 30th May 2014 22nd May 2015 May 2016

Annual Report June 2013 June 2014 June 2015 June 2016

Annual General Meeting 28th June 2013 30th June 2014 30th June 2015 30th June 2016


ANNuAL REPORt OF thE BOARD OF DIRECtORS

the Directors have pleasure in presenting to the members, their Report together with the Audited Financial Statements for the year ended 31st March 2015.

the details set out herein provide the pertinent information required by the Companies Act No. 07 of 2007, the Listing Rules of the Colombo Stock Exchange and recommendations in adherence with best accounting practices.

Legal FormNawaloka hospitals PLC is a Public Company with limited liability incorporated in Sri Lanka on 1st July 1982 under the Companies Ordinance 1938 and re-registered under the provisions of the Companies Act No. 07 of 2007 on 7th September 2007, with the Company Re-Registration No. PQ 78. Since 2004 its Shares are quoted on the Colombo Stock Exchange. this information is disclosed as required by Section 168 of the Companies Act No. 07 of 2007, which also requires the following information to be disclosed.

Principal Business ActivitiesNature of the business of the Company and the Group are described below as required by Section 168 (1) (a) of the Companies Act No. 07 of 2007. there has been no material change to the activities of the Company or any of the subsidiaries during the period under review.

Companythe principal activity of the Company is the providing of health care and hospital services.

Subsidiaries

New Nawaloka Hospitals (Pvt) Ltd.this is a Private Company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and re-registered under the New Companies Act No. 07 of 2007. It is also domiciled in Sri Lanka and is a wholly-owned subsidiary of Nawaloka hospitals PLC.

New Nawaloka Medical Centre (Pvt) Ltd.this too is a Private Company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and re-registered under the New Companies Act No. 07 of 2007. It is also domiciled in Sri Lanka and is a wholly-owned subsidiary of Nawaloka hospitals PLC.

Nawaloka Metropolis Laboratories (Pvt) Ltd.this Joint Venture Company was established in the year 2005 along with Metropolis India to provide laboratory services. Nawaloka hospitals PLC holds 50% shares in this Company.

Nawaloka Medicare (Pvt) Ltd.this is a Private Company with limited liability incorporated in Sri Lanka in the year 2013 under the provisions of the Companies Act No. 07 of 2007. It is also domiciled in Sri Lanka and is a wholly-owned subsidiary of Nawaloka hospitals PLC.

Review of Business/Future DevelopmentA review of the business of the Company and the Group and its performance during the year is contained in the Chairman’s Review/Chief Executive Officer’s Performance Review and of the Director/General Manager’s Operational and Management Review on pages 12, 13, 14 and 15 respectively of this Report. these reviews form an integral part of this Report and together with the Financial Statements described in detail of the state of affairs of the Company and the Group.

Financial Statementsthe Financial Statements which include the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Cash Flow Statements and Notes to the Financial Statements are given on pages 96 to 127 and have been prepared in conformity with the Sri Lanka Accounting Standards and the requirements of Section 168 (1) (b) of the Companies Act No. 07 of 2007 and the Listing Rules of the Colombo Stock Exchange.

Auditors’ Reportthe Financial Statements for the period under review were audited by Messrs KPMG (Chartered Accountants) for the year ended 31st March 2015 and the Auditors’ Report issued thereon appears on page 95 of this Annual Report as required by Section 168 (1) (c) of the Companies Act No. 07 of 2007.

Financial Results

Group Company

(All figures in Sri Lanka Rupees)2014/15

Rs.2013/14

Rs.2014/15

Rs.2013/14

Rs.

Profit before taxation 93,454,537 292,737,689 97,821,426 142,209,203

Share of Profit from jointly-control entity 26,204,756 19,743,096 – –

Less: taxation (9,176,683) (83,783,780) (7,883,420) (34,457,238)

Net Profit after taxation 84,277,854 208,953,909 89,938,006 107,751,965

Profit Attributable to Equity holders of the Company 69,296,227 216,766,068 73,403,771 115,344,700

Earnings per Share 0.06 0.15 0.06 0.08


Accounting Policies and Changes During the Yearthe Accounting Policies adopted in the preparation of Financial Statements of the Company and the Group are given on pages 101 to 107 of this Annual Report as required by Section 168 (1) (d) of the Companies Act. there have been no changes in the accounting policies adopted by the Company during the period under review.

Entries in the Interests Registerthe Interests Register is maintained by the Company, as required by Section 168 (1) (e) of the Companies Act No. 07 of 2007.

Directors’ Remuneration and Other BenefitsDirectors’ remuneration and other benefits of Directors are given in Note 25 to the Financial Statements on page 121 as required by Section 168 (1) (f) of the Companies Act No. 07 of 2007.

Donationstotal donations made by the Group during the year amounted to Rs. 7 Mn and is being disclosed as required by Section 168 (1) (g) of the Companies Act No. 07 of 2007 and this expenditure was incurred upon the mandate conferred upon the Board by the shareholders at the last Annual General Meeting.

Shareholders’ FundsAfter the above mentioned appropriation, the total Group Shareholders’ Funds as at 31st March 2015, stood at Rs. 3.8 Bn (Rs. 3.9 Bn). the total Shareholders’ Funds of the Company as at 31st March 2014 stood at Rs. 1.6 Bn (Rs. 1.7 Bn). the movements are shown in the Statement of Changes in Equity.

Annual Report of the Board of Directors

Interim DividendInterim dividend of Rs. 0.06 per share was paid in June 2014, in respect of 2013/14.

Directoratethe Directors, who served on the Board during the financial year are the following and this information is provided as required by Section 168 (1) (h) of the Companies Act No. 07 of 2007:

Name of DirectorExecutive/Non-Executive Status

Status of Independence

Mr. h.K. Jayantha Dharmadasa (Chairman and Chief Executive Officer)

Executive

Mr. Rienzie t. Wijetilleke (Vice-Chairman) Non-Executive Independent

Deshabandu tilak de Zoysa (Senior Independent Director) Non-Executive Independent

Prof. Lal G. Chandrasena (General Manager) Executive

Mr. tissa Kumara Bandaranayake Non-Executive Independent

Mr. u. harshith Dharmadasa Executive

Mr. A.G. Dharmadasa Executive

Ms. A.G. Dharmadasa Executive

Dr. t. Senthilverl Non-Executive

Mr. Damian Sunil AbeyRatna Non-Executive Independent

the qualifications and experience of each of the Directors are given in the individual profiles of the Board of Directors on pages 54 to 58 of the Annual Report.

Appointments and ResignationsNew appointments to the Board are based on the collective decision of the Board. In making new appointments, the Board considers the composition of the Board in order to assess whether they have the right mix of skills, experience and competence in the management of the Company. the information of new appointments and resignations to the Board of Directors of the Company are shown as an integral part of the Report of the Board of Directors, in compliance with Section 168 (1) (h) of the Companies Act No. 07 of 2007.

New Appointmentsthere were in fact no new appointments to the Board during the financial year under review.

Recommendations for Re-electionIn terms of Article 74 of the Articles of Association of the Company, Deshabandu tilak de Zoysa, Mr. A.G. Dharmadasa and Mr. tissa Kumara Bandaranayake who retire from the Board by rotation at the forthcoming Annual General Meeting and being eligible for re-election, offer themselves for re-election.

Additionally, Mr. Rienzie t. Wijetilleke who has attained the age of 75 and being eligible for re-election in terms of Section 211 of the Companies Act No. 07 of 2007 offers himself to be re-appointed as a Director of the Company.


Further, Mr. tissa Kumara Bandaranayake who has attained the age of 72 and being eligible for re-election in terms of Section 211 of the Companies Act No. 07 of 2007 also offers himself to be re-appointed as a Director of the Company.

Independent DirectorsMr. Rienzie t. Wijetilleke, Deshabandu tilak De Zoysa and Mr. tissa Kumara Bandaranayake were appointed as Independent Directors of the Company on 16th October 2003, 16th October 2003 and 27th May 2009 respectively. Whilst Mr. Wijetilleke and Mr. De Zoysa have served on the Board continuously for a period of nine years, the Board Resolved on the 30th November 2012 that despite the said two Independent Directors having served on the Board for a continuous period of nine years that they are yet regarded as Independent Directors in terms of Rule 7.10.4 (read with Sub-Rules [a] to [h]) of the Revised Rules of the Colombo Stock Exchange.

Board Sub-Committeesthe five Board Sub-Committees established by the Board continue to oversee matters relating to policy and governance. A Related Party transactions Review Committee was established to comply with the new Directives issued by the Securities and Exchange Commission to ensure that the interests of shareholders as a whole are taken into account by a listed entity when entering into related party transactions. the composition of the Sub-Committees during the Financial year is as follows:

Board Audit Committee Members

Mr. tissa Kumara Bandaranayake - Chairman (Director)

Mr. Rienzie t. Wijetilleke - Member (Director)

Deshabandu tilak De Zoysa - Member (Director)

Mr. Sunil AbeyRatna - Member (Director)

Remuneration Committee Members

Deshabandu tilak De Zoysa - Chairman (Director)

Mr. tissa Kumara Bandaranayake - Member (Director)Mr. Sunil AbeyRatna - Member (Director)

Strategic Planning Committee Members

Mr. h.K.J. Dharmadasa - Chairman (Director)

Prof. Lal G. Chandrasena - Member (Director)

Mr. u.h. Dharmadasa - Member (Director)

Mr. A.G. Dharmadasa - Member (Director)

Nomination Committee Members

Deshabandu tilak De Zoysa - Chairman (Director)Mr. tissa Kumara Bandaranayake - Member (Director)Mr. Sunil AbeyRatna - Member (Director)

Related Party Transactions Review Committee

Mr. tissa Kumara Bandaranayake - Chairman (Director)Deshabandu tilak De Zoysa - Member (Director)

Mr. Sunil AbeyRatna - Member (Director)

Directors’ MeetingsDetails of meetings which comprise Board meetings, the Board’s Sub-Committee meetings of the Audit Committee, Remuneration Committee and Strategic Planning Committee, Nomination Committee and Related Party transactions Review Committee are dealt with at pages 91, 93 and 69 of this Annual Report.

Directors’ Shareholdingthe aggregate shareholding of the Directors for the year ended 31st March 2015 and the previous year, are as follows:

2015Ordinary

2014Ordinary

Mr. h.K.J. Dharmadasa 462,736,182 460,736,182

Mr. R.t. Wijetilleke 33,332 33,332

Deshabandu tilak de Zoysa 218,000 218,000

Prof. Lal Chandrasena 601,198 601,198

Mr. u.h. Dharmadasa 3,360 3,360

Mr. A.G. Dharmadasa 3,004,026 3,004,026

Ms. A.G. Dharmadasa 5,066,686 5,066,686

Dr. t. Senthilverl 308,108,473 308,108,473

Mr. Damian Sunil AbeyRatna NIL NIL

Mr. t.K. Bandaranayake NIL NIL


Related Party Transactionsthe Directors have also disclosed the transactions if any, that could be classified as Related Party transactions’ in terms of LKAS 24 - ‘Related Party Disclosures’ and thus complied with the CSE Listing Rules. Related Party transactions are given in Notes 12, 22 and 29 to the Financial Statements.

Directors’ Intereststhe Interest Register is maintained by the Company, as per the Companies Act No. 07 of 2007.

Capital ExpenditureDetails of Property, Plant & Equipment and their movements in the Company and the Group during the year, are listed in Note 02 to the accounts on page 108.

Stated Capitalthe Stated Capital of the Company is 1,409,505,596 ordinary shares. there were no changes in the stated capital during the year.


Group Company

Stated Capital2014/15

Rs.2013/14

Rs.2014/15

Rs.2013/14

Rs.

Issued and Fully Paid

At the beginning of the year 1,207,388,876 1,207,388,876 1,207,388,875 1,207,388,876

At the end of the year 1,207,388,876 1,207,388,876 1,207,388,875 1,207,388,876

Share Informationthe composition of shareholders and the information relating to share trading, net assets, market value per share, are given at pages 134 and 34 of this Annual Report.

Major Shareholdersthe 20 largest shareholders of the Company as at 31st March 2015 are given at page 134 of this Annual Report.

Employment Policythe Company’s Employment Policy is totally non-discriminatory, and equality of opportunity for all employees irrespective of ethnic, origin, religion, political opinion, gender or marital status.

the Company applies ‘equal opportunity policy’ in selection, training, development and promotion opportunities ensuring that all decisions are based on merit and qualification.

the Company applies ‘equal opportunity policy’ in selection, training, development and promotion opportunities ensuring that all decisions are based on merit and qualification.

the employees are always encouraged to discuss issues relating to operations and to make suggestions to improve performance.

the number of persons employed by the Group as at 31st March 2015 was 2,110.

Group Revenuethe Revenue of the Group was Rs. 4,602 Mn (2014 – Rs. 3,993 Mn). the analysis thereof is given in Note 23 to the Financial Statements.

Stock Exchange Listingthe Company was listed on the Main Board of the Colombo Stock Exchange in the year 2004.

Going Concernthe Board firmly believes that the Company and its subsidiaries have sufficient resources to continue in operational existence for a very long foreseeable future. therefore, Financial Statements of the Group have been prepared on the principle of a ‘Going Concern’.

Events Occurring after the Reporting Datethere are no significant events that have occurred after the reporting date which would have any material effect on the Company or on the Group that require adjustments to or disclosure in the Financial Statements.

Appointment of AuditorsMessrs KPMG, Chartered Accountants who are willing to continue in office are recommended for re-appointment, at a remuneration to be decided by the Board of Directors.

the fees paid to the Auditors are disclosed in Note 25 to the Financial Statements.

As far as the Directors are aware, the Auditors do not have any relationship (other than that of an Auditor) with the Company or any of its subsidiaries other than those disclosed above. the Auditors also do not have any interest in the Company or its subsidiaries as required by Section 168 (1) (j) of the Companies Act No. 07 of 2007.


For and on behalf of the Board,

Jayantha Dharmadasa Chairman/Chief Executive Officer

Professor Lal Gotabhaya ChandrasenaDirector/General Manager

By Order of the Board,

Sgd.M & A Company Secretaries (Private) Limited

19th May 2015


REPORt OF thE REMuNERAtION COMMIttEE

Formation, Composition and Structurethe Remuneration Committee is a subcommittee, appointed by and responsible to the Board of Directors, consists of three Independent Non-Executive Directors.

1. Deshabandu tilak de Zoysa

Chairman INED

2. Mr. tissa Kumara Bandaranayake

Director INED

3. Mr. Damian Sunil AbeyRatna

Director INED

the Committee meetings held during the financial year subject to the following criteria;

Duties and Responsibilitiesthe RC review and recommend the policy on remuneration of the Executive Staff and the specific remuneration package for the Executive Directors while considering following:

1. Determining the compensation of the Chairman and the BOD, while ensuring that no Director is involved in setting their own remuneration or any other benefit.

2. Establishing transparent procedure to determine remuneration for Executives and Directors. In this context, the Remuneration Committee took into account-

a. Competition

b. Qualification and experience

c. Market information

d. Business performance

In declaring the overall remuneration policy of the Group

3. Recommending corporate management appointments to the Board.

4. Approving remuneration levels at each designation of Senior Management.

5. Maintain competitive and attractive remuneration packages to senior managers and ensure is in par with the industry levels.

6. Recommend promotion of Key Management Personnel to BOD

7. Deciding performance-based remuneration, increments, incentive and bonus with the regular evaluation of performance against targets.

8. Make directions regarding the statutory payments made by the Company on behalf of its employees.

ChallengesIn a highly competitive environment attracting and retaining high calibre Executives is a key challenge faced by the Group.

Evaluation of the Effectiveness of the Committeethe Board reviews and updates the Committee Charter annually. the minutes of meetings and other reports from the Remuneration Committee are submitted to the Board of Directors, and in addition, plans have been initiated for the Non-Committee Members to evaluate the Committee on an annual basis by way of a checklist.

Deshabandu Tilak De ZoysaChairman

19th May 2015


AuDIt COMMIttEE REPORt

In keeping with the Code of Best Practice on Corporate Governance and the requirements of the Securities and Exchange Commission for public limited Companies, Nawaloka hospitals PLC has established an Audit Committee, whose functions, authority and duties have been clearly identified in the Audit Committee Charter. this Charter integrates all the requirements of the Securities and Exchange Commission and Code of Best Practice on Corporate Governance.

the role of the Audit Committee to oversee the financial reporting system of the Company with a view to safeguarding the interests of all the stakeholders and ensuring that it has been extended to its subsidiaries. this includes selecting and applying appropriate Accounting policies for the purpose of Financial reporting, ensuring sound internal control principles and its effective implementation, ensuring the integrity of Financial Statements and maintaining an appropriate independent relationship with the Company’s Auditors.

Formation and Composition of the Committeethe Audit Committee was established by the Board with a formal and transparent arrangement and it comprises of four Independent Non-Executive Directors and one Non-Executive, Non-Independent Director.

the Chairman of the Audit Committee is Mr. tissa. K. Bandaranayake, who is an Independent Non-Executive Director, a fellow member of the Institute of Chartered Accountants of Sri Lanka and a former Senior Partner of Messrs. Ernst and Young, Chartered Accountants with expert knowledge in Accounting and Finance.

Members of the Audit Committee

Name of Director Non-Executive Independent

1. Mr. tissa K. Bandaranayake (Chairman)

2. Mr. Rienzie t. Wijetilleke

3. Deshabandu tilak de Zoysa

4. Mr. S. AbeyRatne

Broad Purpose of the Audit Committeethe Audit Committee assisted the Board in the following manner:

y Ensuring that the preparation and presentation of and adequacy of disclosure in the Financial Statements are in accordance with SLAS and with the requirements of the Companies Act No. 07 of 2007 and other relevant Financial reporting related regulatory requirements.

y Reviewing the appropriateness of the procedures in place for the identification, evaluation and management of business risks whilst seeing that the systems of internal control with regard to all functions are adequate and functioning properly.

y Assessing the Company’s ability to continue as a going concern in the foreseeable future and also in addition, ensuring compliance with Laws and Company policies.

y Overseeing of the independence and performance of the Company’s External Auditors.

Duties and Responsibilities.In brief, the duties and responsibilities performed by the Audit Committee are as follows:

External Audit y Recommending the re-appointment of Messrs. KPMG, Ford, Rhodes thornton & Co., Chartered Accountants, as Auditors of Nawaloka hospitals PLC for the financial year ending 31st March 2015.

y Examine any non-audit work performed by the Auditors and the fees thereon to ensure that their objectivity and independence is not impaired.

y Reviewing the scope and result of the Audit and its effectiveness.

y Discussing with the External Auditors before commencement of the Audit and at the conclusion of the Audit, in relation to Audit plan, key Audit issues and their resolution, management responses and the remuneration of the Auditors.

Compliance with Laws and Regulations and Company Policies

y Reviewing and discussing with the Management and Auditors regarding Quarterly Financial Statements.

y Reviewing the extent of compliance with the laws of the country, governmental regulations, listing rules and established policies of the Company.


Internal Controls and Internal Audit

y Reviewing the Internal Audit function and making recommendations.

y Ensuring that there are satisfactory arrangements for monitoring internal control, in keeping with delegated authorities.

y Establishing mechanisms for the confidential receipt and treatment of complaints alleging fraud received from internal/external sources and pertaining to internal control, accounting or other such matters. this is currently in progress.

y Monitoring the implementation of strategies, plans, as well as the manning of organisation for internal auditing in line with the methodologies promulgated as best practices.

y Setting clear hiring policies for employees or former employees of the Auditors (without impairing audit independence) and other internal controls related to It, hR, Finance, Marketing and Administration etc., and ensuring that these are soundly conceived and effectively administered to seek assurance that the control systems are in place and operating efficiently and are regularly monitored.

Risk Management y Monitoring the policies and practices related to risk management.

y Obtaining statements of business risks; evaluating the severity, the process in place for the management of these risks and persons responsible for the management of risks within specified time frames.

Financial Statements y Ensuring proper standardised updated systems for financial reporting.

y hold of meetings with the head of Finance to ensure the proper controls and segregation of duties to minimise risks.

y Review Company’s Quarterly unaudited and Annual Audited Financial Statements and making recommendations to the Board for their releases.

Adoption of New/Revised Sri Lanka AccountingStandards

y It is mandatory for the company to comply with the requirements of new/revised Sri Lanka Accounting Standards (SLFRS/LKAS) with effect from January 01, 2012 and these standards require some changes to some of the accounting treatments and policies adopted by the Company.

y the Company appointed KPMG IFRS division as Consultants for the implementation of new/revised Sri Lanka Accounting Standards and Board Audit Committee, regularly evaluated the proposals made by them and obtained approval from the Board of Directors for such proposals.

Audit Committee Report

Meetingsthe Audit Committee held four meetings during the year under review. the proceedings of the Audit Committee are regularly reported to the Board of Directors. the attendance of members for these meetings is given below:

Name of Director

Number of Meetings Attended

Attendance Percentage

%

Mr. tissa K. Bandaranayake

4 100

Mr. Rienzie t. Wijetilleke

3 75

Deshabandu tilak de Zoysa

2 50

Mr. D. S. AbeyRatna 4 100

the Committee has provided the Chairman of the Audit Committee with all powers to convene regular meetings with the Financial Controller, Internal Audit, Sectional heads and Company’s External Auditors, separately and periodically.

External Auditorsthe Audit Committee upholds the view that any services which are provided in addition to the scope of the statutory audit provided by Messrs KPMG, Chartered Accountants have not impaired the independence of the Auditors in accordance with the regulations and recommendations of the Institute of Chartered Accountants of Sri Lanka.

Evaluation of the Effectiveness of the Committeethe Board reviews and updates the Committee Charter annually according to the changes in business operations of the organisation. the minutes of meetings and other reports from the Audit Committee are submitted to the Board of Directors and also in addition, plans have been initiated for the Non-Committee Members to evaluate the Committee on an annual basis by way of a checklist.

Mr. Tissa K. BandaranayakeChairman

19th May 2015


DIRECtORS’ RESPONSIBILItY FOR FINANCIAL REPORtING

the responsibility of the Directors in relation to the Financial Statements is set out in the following statement:

the Board of Directors of Nawaloka hospitals PLC are responsible under Section 148 of the Companies Act No. 07 of 2007 for keeping proper accounting records which have been disclosed with reasonable accuracy, at all times, the financial position of the Company and of the Group and to enable them to ensure that the Financial Statements comply with, inter alia the Companies Act No. 07 of 2007.

In preparing these Financial Statements, the Directors of the Company have to comply with the requirements specified in Sections 150 (1), 151 (1), 152 (1) and 153 (1) of the Companies Act No. 07 of 2007. In accordance therewith the Directors of the Company and the Group maintain proper Books of Accounts of all the transactions and prepare Financial Statements that give a true and fair view of the state of affairs of the Company at the date of the Statement of Financial Position and the Profit or Loss for the year ending on that date of the Statement of Financial Position.

Accordingly, the Directors are of the view that:

1. Appropriate accounting policies have been selected and applied in a consistent manner and material departures if any, have been disclosed and explained;

2. All applicable and relevant Accounting Standards have been followed; and

3. they have exercised due and proper judgment and estimates which are reasonable and prudent.

the Financial Statements of the Company and the Group have been certified by the Company’s Chief Financial Officer, the person responsible for its preparation, as required by the Act. Financial Statements of the Company and the Group have been signed by two Directors on 19th May 2015 as required by Sections 150 (1) (c) and 152 (1)(c) of the Companies Act. Accordingly, the Board of Directors wish to confirm that they have complied with all the requirements of the Companies Act No. 07 of 2007 and have also met all the requirements under Section 7 of the Listing Rules of the Colombo Stock Exchange.

the Directors also have taken reasonable steps to safeguard the assets of the Company and to prevent and detect frauds and other irregularities. In this regard, the Directors have instituted an effective and comprehensive system of internal controls and an effective system of monitoring its effectiveness, internal audit being one of them. the Board has been provided additional assurance on the reliability of the Financial Statements through a process of independent and objective reviews conducted by the Audit Committee. the Report of the Audit Committee is at page 92 of this Annual Report.

the Directors are also of the view that the Company has adequate resources to continue in business for the foreseeable future and have applied the ‘Going Concern’ basis in preparing these Financial Statements.

the Directors are confident that they have discharged their responsibility as set out in the statement.

Compliance Reportthe Directors also confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company, all contributions, levies and taxes payable on behalf of and in respect of the Employees of the Company and other known statutory dues as were due and payable by the Company as at the date of the Statement of Financial Position have been paid or where necessary provided for, in arriving at the financial results for the year under review.

By order of the Board,

Sgd.M & A Company Secretaries (Private) Limited

19th May 2015


INDEPENDENt AuDItORS’ REPORt

TO THE SHAREHOLDERS OF NAWALOKA HOSPITALS PLC

Report on the Financial StatementsWe have audited the accompanying Financial Statements of Nawaloka hospitals PLC, (“the Company”), and the Consolidated Financial Statements of the Company and its subsidiaries (“Group”), which comprise the statement of financial position as at 31st March 2015, and the statement of profit or loss and other comprehensive income, statement of changes in equity and, cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information as set out on pages 96 to 127.

Board’s Responsibility for the Financial Statements the Board of Directors (“Board”) is responsible for the preparation of these Financial Statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as Board determines is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur 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 comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance about whether the Financial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Statements. the procedures selected depend on the Auditors’ judgment, including the assessment of the risks of material misstatement of the Financial Statements, whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity’s preparation of the – Financial Statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the Financial Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the Consolidated Financial statements give a true and fair view of the financial position of the Group as at 31st March 2015, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory RequirementsAs required by Section 163 (2) of the Companies Act No. 07 of 2007, we state the following:

(a) the basis of opinion and scope and limitations of the audit are as stated above.

(b) In our opinion:

- we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company,

- the Financial Statements of the Company give a true and fair view of its financial position as at 31st March 2015, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

- the Financial Statements of the Company, and the Group comply with the requirements of Sections 151 and 153 of the Companies Act No. 07 of 2007.

CHARTERED ACCOUNTANTSColombo,

19th May 2015.


Group Company

As at 31st March

Note

2015Rs.

2014Rs.

Restated

2013Rs.

Restated

2015Rs.

2014Rs.

ASSEtS

Non-current assets

Property, plant & equipment 2 5,649,837,119 4,372,520,141 3,952,245,387 2,453,512,945 2,152,129,439

Leasehold right over land 3 227,910,976 230,823,300 233,758,457 49,510,203 50,403,212

Investment property 4 192,417,100 – – 192,417,100 –

Investments in subsidiaries 5 – – – 1,245,933,056 945,933,056

Receivables from related companies 6 – 471,956,698 – – 471,956,698

Equity accounted investee 7 90,241,313 89,036,556 85,293,461 2,500,000 2,500,000

Advance for land 8 952,343,085 883,553,431 827,416,494 – –

Total non-current assets 7,112,749,593 6,047,890,126 5,098,713,799 3,943,873,304 3,622,922,405

Current assets

Inventories 9 335,763,359 306,349,529 241,020,206 114,650,320 116,718,449

trade and other receivables 10 439,343,071 336,975,810 235,134,616 265,831,550 235,317,195

Deposits and advances 11 144,112,688 112,732,809 110,722,037 112,077,389 106,168,532

Receivables from related parties 12 160,381,424 32,289,183 6,356,063 1,434,884,270 368,295,632

Cash and cash equivalents 48,988,035 133,497,783 38,977,902 34,538,792 40,543,490

Short-term Investment 404,631,798 372,201,454 108,665,592 38,480,412 286,072,899

Total current assets 1,533,220,375 1,294,046,568 740,876,416 2,000,462,733 1,153,116,197

Total assets 8,645,969,968 7,341,936,694 5,839,590,215 5,944,336,037 4,776,038,602

EQuItY AND LIABILItIES

Capital and reserves

Stated capital 13 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876

Revaluation reserve 14 990,872,361 990,872,361 990,872,361 – –

Retained earnings 1,689,420,602 1,704,694,711 1,558,403,923 486,370,390 497,536,954

Total equity 3,887,681,839 3,902,955,948 3,756,665,160 1,693,759,266 1,704,925,830

Non-current liabilities

Debentures 15 1,480,047,383 1,476,491,192 – 1,480,047,383 1,476,491,192

Employee benefits 16 170,953,704 144,621,539 137,854,661 158,673,474 134,424,735

Deferred tax liability 17 227,899,587 216,762,225 165,186,636 119,113,956 113,517,100

Borrowings falling due after one year 18 1,269,045,093 315,812,887 531,331,327 1,260,255,153 315,812,887

Finance leases payable after one year 19 116,000,000 124,000,000 132,000,000 – –

Total non-current liabilities 3,263,945,767 2,277,687,843 966,372,624 3,018,089,966 2,040,245,914

StAtEMENt OF FINANCIAL POSItION


Statement of Financial Position

Group Company

As at 31st March

Note

2015Rs.

2014Rs.

Restated

2013Rs.

Restated

2015Rs.

2014Rs.

Current liabilities

trade creditors and other payables 20 473,368,248 445,880,127 280,618,905 424,320,318 429,742,285

Advances and refundable deposits – – 5,247,010 – –

unclaimed dividends 2,610,056 2,615,909 1,917,647 2,610,056 2,615,909

Current tax liability 21 2,250,608 24,304,885 24,099,255 – –

Payable to related companies 22 13,849,554 52,269,200 43,902,427 8,491,106 57,944,573

Borrowings falling due within one year 18 351,370,388 204,243,727 285,008,149 311,369,588 204,243,727

Finance leases payable within one year 19 8,000,000 8,000,000 8,000,000 – –

Bank overdrafts 642,893,508 423,979,056 467,759,038 485,695,737 336,320,364

Total current liabilities 1,494,342,362 1,161,292,904 1,116,552,431 1,232,486,805 1,030,866,858

Total liabilities 4,758,288,129 3,438,980,747 2,082,925,055 4,250,576,771 3,071,112,772

Total equity and liabilities 8,645,969,968 7,341,936,694 5,839,590,215 5,944,336,037 4,776,038,602

Net assets per share 2.76 2.77 2.67 1.20 1.21

Notes form an integral part of these Financial Statements.

Figures in brackets indicate deductions.

It is certified that the Financial Statements have been prepared and presented in compliance with the requirements of the

Companies Act No. 07 of 2007.

Mr. C.P. Kevitiyagala head of Finance

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 of Directors;

Mr. Jayantha Dharmadasa Professor Lal Gotabhaya ChandrasenaChairman/Chief Executive Officer Director

Colombo19th May 2015


StAtEMENt OF PROFIt OR LOSS AND OthER COMPREhENSIVE INCOME

Group Company

For the year ended 31st March

Note

2015Rs.

2014Rs.

Restated

2015Rs.

2014Rs.

Revenue 23 4,602,433,640 3,993,473,302 2,497,830,914 2,112,827,471

Cost of services (2,331,583,775) (1,910,510,751) (1,229,903,547) (957,537,962)

Gross profit 2,270,849,865 2,082,962,551 1,267,927,367 1,155,289,509

Other income 24 65,199,571 64,194,796 152,643,920 132,467,166

Staff cost (968,758,629) (832,696,146) (477,481,620) (488,208,417)

Administrative expenses (916,087,291) (825,586,276) (497,222,102) (495,505,414)

Other operating expenses (98,860,906) (13,709,389) (70,648,459) (12,865,909)

Profit from operations 25 352,342,610 475,165,536 375,219,106 291,176,935

Finance cost 26 (285,092,829) (202,170,943) (277,397,680) (148,967,732)

Share of profits of Equity Accounted Investee net of tax 26,204,756 19,743,096 – –

Profit before tax 93,454,537 292,737,689 97,821,426 142,209,203

Income tax 27 (9,176,683) (83,783,780) (7,883,420) (34,457,238)

Profit for the year 84,277,854 208,953,909 89,938,006 107,751,965

Other comprehensive income

Defined benefits plan actuarial gain/(losses) 16.3 (17,481,666) 8,877,453 (18,820,799) 8,628,108

Deferred tax Impact on defined benefits plan actuarial (gain)/losses

17.5 2,500,039 (1,065,294) 2,286,564 (1,035,373)

Other comprehensive income for the year, net of tax

(14,981,627) 7,812,159 (16,534,235) 7,592,735

Total comprehensive income for the year 69,296,227 216,766,068 73,403,771 115,344,700

Net profit attributable to equity holders of the company

69,296,227 216,766,068 73,403,771 115,344,700

Earnings per share 28 0.06 0.15 0.06 0.08




StAtEMENt OF ChANGES IN EQuItY

For the year ended 31st March 2015 Stated Capital

Rs.

Revaluation Reserve

Rs.

Retained Earnings

Rs.

total Equity

Rs.

GROUP

Balance as at 1st April 2013 1,207,388,876 990,872,361 1,558,403,923 3,756,665,160

Profit for the year – – 208,953,909 208,953,909

total other comprehensive income – – 7,812,159 7,812,159

Transaction with owners of the Company

Dividend paid – – (70,475,280) (70,475,280)

Balance as at 31st March 2014 1,207,388,876 990,872,361 1,704,694,711 3,902,955,948


Other comprehensive income – – (14,981,627) (14,981,627)

Dividend paid – – (84,570,335) (84,570,335)

Balance as at 31st March 2015 1,207,388,876 990,872,361 1,689,420,602 3,887,681,839

COMPANY

Balance as at 01st April 2013 1,207,388,876 – 452,667,534 1,660,056,410


total other comprehensive income – – 7,592,735 7,592,735

Transaction with owners of the Company

Dividend paid – – (70,475,280) (70,475,280)

Balance as at 31st March 2014 1,207,388,876 – 497,536,954 1,704,925,830


Other comprehensive income – – (16,534,235) (16,534,235)

Dividend paid – – (84,570,335) (84,570,335)

Balance as at 31st March 2015 1,207,388,876 – 486,370,390 1,693,759,266




CASh FLOW StAtEMENt

Group Company

For the year ended 31st MarchNote

2015Rs

2014Rs

2015Rs

2014Rs

Cash flows from operating activities

Profit before tax 93,454,537 292,737,689 97,821,426 142,209,203

Adjustments for -

Depreciation and amortisation 2 397,776,647 306,382,985 300,670,180 226,848,655

Finance cost 26 285,092,829 202,170,943 277,397,680 148,967,732

Interest income 24 (31,311,710) (34,573,304) (13,027,295) (22,777,987)

Share of profit from jointly controlled entity (26,204,756) (19,743,096) – –

Provision for employee benefits 16.2 26,235,983 29,393,626 22,473,388 26,224,526

Provision for bad and doubtful debts 10 9,114,875 (974,853) 7,376,592 13,892,008

Profit on disposal of property, plant & equipment (5,589,564) – (5,589,564) –

Impairment for other receivable balances 54,244,933 28,676,402 39,101,201 27,584,030

Operating profit before working capital changes 802,813,774 804,070,392 726,223,607 562,948,167

Changes in working capital

Increase in inventories (29,413,830) (65,329,323) 2,068,129 (41,894,339)

(Increase)/decrease in debtors, deposits and advances (197,115,200) (131,553,514) (82,901,005) (132,663,316)

(Increase)/decrease in related party balances (166,511,887) (17,566,347) (1,116,042,105) (515,678,091)

Decrease in creditors and other payables 27,482,268 160,712,477 (5,427,820) 165,561,769

(365,558,650) (53,736,707) (1,202,302,801) (524,673,977)

Cash generated from operating activities 437,255,124 750,333,685 (476,079,194) 38,274,190

Interest paid 26 (281,536,637) (202,170,947) (273,841,489) (148,967,732)

Gratuity paid 16.1 (17,385,483) (13,749,295) (17,045,448) (13,784,295)

Current tax paid 21 (17,585,304) (33,067,855) – (2,000,003)

Net cash generated from/(used in) operating activities 120,747,700 501,345,588 (766,966,131) (126,477,840)

Cash flows from investing activities

Purchase of property, plant & equipment 2 (1,724,638,076) (723,722,582) (653,617,450) (712,574,593)

Purchase of investment property (192,417,100) – (192,417,100) –

Investment in subsidiary – – (300,000,000) –

Investment in land 8 (68,789,654) (56,136,937) – –

Expenses incurred on related parties 6 471,956,698 (471,956,698) 471,956,698 (334,956,698)

Proceeds from disposal of property, plant & equipment 58,046,338 – 58,046,338 –

Net cash used in investing activities (1,455,841,793) (1,251,816,217) (616,031,514) (1,047,531,291)

Cash flows from financing activities

Proceeds from long-term debentures 15 – 1,476,491,192 – 1,476,491,192

Proceeds from long-term borrowings and leases 18.1 1,390,867,211 551,725,129 1,252,076,271 414,725,129

Repayments of long-term borrowings and leases 18.1 (298,508,344) (856,007,991) (200,508,144) (323,216,854)

Interest received 24 31,311,710 34,573,304 13,027,295 22,777,987

Dividends paid (84,570,335) (70,475,280) (84,570,335) (69,777,018)

Dividend Received 24,999,999 16,000,001 – –

Net cash generated from financing activities 1,064,100,241 1,152,306,355 980,025,087 1,521,000,436

Net (decrease)/increase in cash and cash equivalents during the year (270,993,853) 401,835,726 (402,972,559) 346,991,304

Cash and cash equivalents at the beginning of the year 81,720,178 (320,115,545) (9,703,974) (356,695,279)

Cash and cash equivalents at the end of the year (189,273,675) 81,720,181 (412,676,533) (9,703,975)

Analysis of cash and cash equivalents at the end of the year

Cash and cash equivalents 48,988,035 133,497,783 34,538,792 40,543,490

Short-term Investment 404,631,798 372,201,454 38,480,412 286,072,899

Bank overdraft (642,893,508) (423,979,056) (485,695,737) (336,320,364)

(189,273,675) 81,720,181 (412,676,533) (9,703,975)




NOtES tO thE FINANCIAL StAtEMENtS

1.1 Reporting Entity

1.1.1 Legal Form

a. Nawaloka hospitals PLC (‘Company’) is a quoted public company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and reregistered under the new Companies Act No. 07 of 2007. the Company does not have an identifiable parent of its own.

b. New Nawaloka hospitals (Pvt) Ltd., is a fully owned subsidiary of Nawaloka hospitals PLC. this Company is a private company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and reregistered under the new Companies Act No. 07 of 2007. the ultimate Parent of the Company is Nawaloka hospitals PLC.

c. New Nawaloka Medical Centre (Pvt) Ltd., is a fully owned subsidiary of Nawaloka hospitals PLC. this Company is a private company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and reregistered under the new Companies Act No. 07 of 2007. the ultimate Parent of the Company is Nawaloka hospitals PLC.

d. Nawaloka Metropolis Laboratories (Pvt) Ltd. is a private company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and re-registered under the new Companies Act No. 07 of 2007, which is also a 50:50 Joint venture investment between Nawaloka hospitals PLC and Metropolis health Services (India) Private Ltd.

e. Nawaloka Medicare (Pvt) Ltd. is a fully owned subsidiary of Nawaloka hospitals PLC. this Company is a limited liability company incorporated in Sri Lanka under the companies Act No. 07 of 2007 (Registration No: PV 93186) and the Board of Investment Law No. 04 of 1978. It is having its registered office at No. 23, Deshamanya h.K Dharmadasa Mawatha, Colombo 02. the ultimate Parent of the Company is Nawaloka hospitals PLC.

the ‘Company’, in the Financial Statement, refers to Nawaloka hospitals PLC and ‘Group’ refers to the Company and all its subsidiaries and joint venture, whose Financial Statements have been consolidated.

1.1.2 Total Number of Employees

Company 1,002 (2013/14 - 998)

Group 2,105 (2013/14 - 2,076)

1.1.3 Principle Activities and Nature of Operations

the principal activity of the Company and the Group is to provide health and laboratory services. there were no significant changes in the nature of principal activities of the Company and the Group during the financial year under review.

1.2 Basis of Preparation

1.2.1 Statement of Compliance

the Financial Statements of the Company and the Group comprise the Statement of Financial Position, Statement of Profit or Loss and other Comprehensive Income, Statement of Changes in Equity and Cash Flows together with the Notes to the Financial Statements.

the Consolidated Financial Statements have been prepared in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) laid down by the Institute of Chartered Accountants of Sri Lanka and the requirements of Companies Act No. 07 of 2007.

these Consolidated Financial Statements were authorised for issue by the Board of Directors on 19th May 2015.

1.2.2 Basis of Measurement

the Consolidated Financial Statements have been prepared on the historical cost basis and applied consistently with no adjustments being made for inflationary factors affecting the Financial Statements, except for the following material items in the Statement of Financial Position:

y Non-derivative financial instruments classified as ‘Loans and receivables’ and ‘Other financial liabilities’ measured at amortised cost;

y Buildings on leasehold lands are measured at fair value;

y Defined benefit obligations are measured at its present value, based on an actuarial valuation as explained in Note 16.

these Financial Statements have been prepared on the basis that the Company and the Group would continue as a going concern for the foreseeable future.

1.2.3 Functional and Presentation Currency

these Consolidated Financial Statements are presented in Sri Lankan Rupees, which is the Company’s functional currency. All financial information presented in Rupees has been rounded to the nearest Rupee.

1.2.4 Comparative Information

the Financial Statements for the comparative periods comprise results for the 12 month periods from 1st April 2013 to 31st March 2014. In this circumstance, the comparative information for the Statement of Financial Position, Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Cash Flow Statement and related notes are comparable with the current period.

the previous year figures and phrases have been rearranged wherever necessary to conform to current year’s presentation.

1.2.5 Significant accounting Judgments, Estimates and Assumptions

the preparation of the Consolidated Financial Statements in conformity with SLFRS/LKAS requires management to make judgments, estimates and assumptions that affect the application of Accounting Policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the Consolidated Financial Statements is included in the following notes:

Assessment of Impairment - Key

Assumptions Used in Discounted

Cash Flow Projections

the Company and Group assesses at each reporting date whether there is objective evidence that an asset or portfolio of assets is impaired. the recoverable amount of an


Notes to the Financial Statements

asset or cash-generating unit (CGu) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to present value using appropriate discount rates that reflects the current market assessments of the time value of money and risks specific to the asset.

Deferred Taxation - Utilisation

of Tax Losses

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the level of future taxable profits together with future tax planning strategies.

Defined Benefit Plans

the assessment of the liability of defined benefit obligations involves a significant element of assumptions; including discount rates, future salary increases, mortality rates and future pension increases and due to the long-term nature of these plans, such estimates are subject to uncertainty.

Current Taxation

Current tax liabilities are provided for in the Financial Statements applying the relevant tax statutes and regulations which the management believes reflect the actual liability. there can be instances where the stand taken by the Company and Group on transactions is contested by revenue authorities. Any additional costs on account of these issues are accounted for as a tax expense at the point the liability is confirmed on any Group entity.

1.2.6 Materiality and Aggregation

Each material class of similar items is presented in aggregate in the Financial Statements. Items of dissimilar nature or function are presented separately unless they are immaterial.

Significant Accounting Policies

the accounting policies set out below have been applied consistently to all periods presented in these Consolidated Financial Statements, unless otherwise indicated.

Changes in Accounting Policies

Except for the changes below, the Group has consistently applied the accounting policies as set out in this Note to all periods presented in these Consolidated Financial Statements.

the Group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1st April 2014.

1. SLFRS 10 Consolidated Financial Statements

2. SLFRS 11 Joint Arrangements3. SLFRS 12 Disclosure of Interests in Other

Entities4. SLFRS 13 Fair Value Measurement

the nature and the effects of the changes are explained below.

Subsidiaries, Including

Structured Entities

As a result of SLFRS 10, the Group has changed its accounting policy for determining whether it has control over and consequently whether it consolidates other entities. SLFRS 10 introduces a new control model that focuses on whether the Group has power over an investee, exposure or rights to variable returns from its involvement with the investee and the ability to use its power to affect those returns.

In accordance with the transitional provisions of SLFRS 10, the Group reassessed its control conclusions as of 1st April 2014. the change did not have any impact on the Group’s Financial Statements.

Joint Arrangements

As a result of SLFRS 11, the Group has applied the equity method of accounting, as set out in Note 1.3 (vi).

Interests in Other Entities

As a result of SLFRS 12, the Group has expanded disclosures about its interests in subsidiaries.

Fair Value Measurement

In accordance with the transitional provisions of SLFRS 13, the Group has applied the newIn accordance with the transitional provisions of SLFRS 13, the Group has applied the new

definition of fair value, as set out in Note 1.13 prospectively. the change had no significant impact on the measurements of the Group’s assets and liabilities, but the group has included new disclosures in the financial statements, which are required under SLFRS 13.

these new disclosure requirements are not included in the comparative information. however, to the extent that disclosures were required by other standards before the effective date of SLFRS 13, the Group has provided the relevant comparative disclosures under those standards.

1.3 Basis of Consolidation

i. Business Combinations

Business combinations are accounted for using the acquisition method as at the acquisition date - i.e. when control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.

the Group measures goodwill at the acquisition date as: y the fair value of the consideration

transferred; plus

y the recognised amount of any non-controlling interests in the acquire; plus

y if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquire; less

y the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in Profit or Loss.

the consideration transferred does not include amounts related to the settlement of pre existing relationships. Such amounts are generally recognised in Profit or Loss.

transactions costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is measured at fair


value at the acquisition date. If the contingent consideration is classified as equity, then it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

ii. Non-Controlling Interests

For each business combination, the Group elects to measure any non-controlling interests in the acquiree either:

y at fair value; or

y at their proportionate share of the acquiree’s identifiable net assets, which are generally at fair value.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary.

iii. Subsidiaries

Subsidiaries are entities controlled by the Group. the Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases.

Adjustments required to the accounting policies of subsidiaries have been changed where ever necessary to align them with the policies adopted by the Group.

In the Company’s Financial Statements, investments in subsidiaries are carried at cost less impairment if any, in net recoverable value.

the consolidated financial statements are prepared to a common financial year end of 31st March.

iv. Loss of control

On the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in Profit or Loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost.

Subsequently that retained interest is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

v. Transactions Eliminated on Consolidation

Intra-group balances and transactions are eliminated in preparing the Consolidated Financial Statements.

vi. Investments in Joint Ventures

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

the results of the Joint Venture, Nawaloka Metropolis Laboratories (Pvt) Ltd, in which the Company has a 50% holding has been accounted for using the equity method.

they are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the Consolidated Financial Statements include the Group’s share of the Profit & Loss and Other Comprehensive Income of equity-accounted investees, until the date on which significant influence or joint control ceases.

1.4 Foreign Currency Translationthe Financial Statements of the Group are presented in Sri Lankan Rupees, which is the functional and presentation currency of the Group. Recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the date of Statement of Financial Position.

Non-monetary items that are measured in terms of historical cost in foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value denominated in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Foreign currency differences arising on retranslation are generally recognised in Profit or Loss.


1.4.1 Financial Instruments

i. Financial Assets

Initial Recognitionthe Company and the Group initially recognises loans and receivables on the date that they are originated. All other financial assets are recognised initially on the trade date, which is the date that the Company and the Group becomes a party to the contractual provisions of the instrument.

the Company and the Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the Company and the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position when, and only when, the Company and the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

the Company and the Group only holds financial assets that are categorised in to the ‘loans and receivables’ classification.

Loans and ReceivablesLoans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Cash and Cash EquivalentsCash and cash equivalents comprise cash balances, placement in Government Securities and placements in repurchase agreements with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value and are used by the Company and the Group in the management of its short-term commitments.


ii. Financial Liabilities

the Company and the Group initially recognises subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the transaction date, which is the date that the Company and the Group becomes a party to the contractual provisions of the instrument.

the Company and the Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

the Company and the Group classifies no derivative financial liabilities into the ‘other financial liabilities’ category. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise debentures, loans and borrowings, other deposits, bank overdrafts and trade and other payables.

Bank overdrafts that are repayable on demand and form an integral part of the Company’s and the Group’s cash management are included as a component of cash and cash equivalents for the Statement of Cash Flows.

Stated CapitalOrdinary SharesOrdinary shares are classified as equity. Costs attributable to the issue of ordinary shares are recognised as an expense.

1.5 Assets and Bases of Their Valuation

1.5.1 Property, Plant & Equipment - Owned Assets

1.5.1.1 Property, Plant & Equipment are stated at cost or valuation less accumulated depreciation and any accumulated impairment losses where items of Property, Plant & Equipment are subsequently revalued, any increase in the carrying amount are credited to revaluation reserve through Other Comprehensive Income. Decreases that offset previous increases of the same asset are charged against the revaluation reserve directly in equity. Any excess and all other

decreases are charged to the Profit or Loss. Revaluation of Property, Plant & Equipment are undertaken by professionally-qualified valuers.

Revaluation model is applied for buildings owned by the Company and the Board has decided to revalue the said buildings every 3-5 years thereafter to comply with requirement of Revaluation Model under the Sri Lanka Accounting Standard 16 ‘Property, Plant & Equipment’.

Property, Plant & Equipment other than the buildings on leasehold land are recorded at cost less accumulated depreciation and accumulated impairment losses, in accordance with the ‘Cost Model’ as set out in LKAS 16 - ‘Property, Plant & Equipment’.

1.5.1.2 the cost of an item of Property, Plant & Equipment comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use.

1.5.1.3 Expenditure incurred for the purpose of acquiring, extending or improving assets of a permanent nature by means of which to carry on the business or to increase the earning of the business has been treated as capital expenditure.

1.5.1.4 Depreciation is provided on the straight-line method at the following rates per annum, so as to write-off the cost or revaluation of the assets over its effective useful life:

1.5.1.5 the useful life, depreciating methods and residual values are assessed annually or in an earlier date where any circumstance indicates such assessment is required.

Category Rate

Leasehold Property Over the lease period

Buildings Leasehold Land Over the lease period

Fixtures and Fittings 10%

Plant and Machinery 20%

hospital Equipment 10%

Medical Equipment 10%

Motor Vehicles 20%

Furniture and Fittings 10%

Computer Equipment 25%


Depreciation is provided from the date of available for use up to the date of disposal.

1.5.2 Property, Plant & Equipment - Leased Assets

Property, Plant & Equipment on finance leases, which effectively transfer to the Company substantially all the risk and benefits incidental to ownership of the leased items, are capitalised and disclosed as finance leases at their cash price and depreciated over the period the Group is expected to benefit from the use of the leased assets.

the corresponding principal amount payable to the lessor is shown as a liability. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve balance of the liability. the interest payable over the period of the lease is transferred to an interest in suspense account. the interest element of the rental obligations pertaining to each financial year is charged to Profit or Loss over the period of lease. the cost of improvements to leasehold property is capitalised, disclosed as leasehold improvements and depreciated over the unexpired period of the lease or the estimated useful life of the improvements, whichever is shorter.

1.5.3 Leasehold Right Over Land

Leasehold right over land are amortised over the lease term in accordance with the pattern of benefits provided.

1.5.4 Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary


course of business, use in the production or supply of goods or services or for administrative purposes.

Investment property is measured at cost. When the use of a property changes such that it is reclassified as Property, plant & equipment, its carrying value at the date of reclassification becomes its cost for subsequent accounting.

1.5.5 Investments

1.5.5.1 Long-Term Investments

In the Parent Company’s Financial Statements, the investments in unquoted subsidiaries and joint venture are carried at cost. the Carrying amounts of long-term investments are reduced to recognise a decline which is considered other than temporary, in the value of investments, determined on an individual investment basis. In the Company’s Financial Statements, investments in subsidiaries and joint ventures have been accounted for at cost, net of any impairment losses which are charged to the Profit or Loss.

1.5.6 Inventories

Inventories have been valued at lower of cost and net realisable value after making due allowance for obsolete items. the First-In-First-Out (FIFO) basis is adopted to arrive at the cost of inventories.

1.5.7 Impairment

i. Non-Derivative Financial Assets

Financial assets classified as ‘loans and receivables’ are assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Company and the Group on terms that the Company and the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers,

economic conditions that correlate with defaults or the disappearance of an active market for a security.

Financial Assets Measured at Amortised Costthe Company and the Group considers evidence of impairment for financial assets measured at amortised cost (loans and receivables and held-to-maturity financial assets) on specific assets. Accordingly, all individually significant assets are assessed for specific impairment. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in Profit or Loss and reflected in an allowance account against loans and receivables or held-to-maturity investment securities. Interest on the impaired asset continues to be recognised. When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through Profit or Loss.

ii. Non-Financial Assets

the carrying amounts of the Company’s and the Group’s non-financial assets, other than inventories are reviewed at each reporting date to determine such indication exists and then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or cash-generating unit (CGu) exceeds its recoverable amount.

the recoverable amount of an asset or CGu is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the asset or CGu. For impairment testing,assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGus.

Impairment losses are recognised in Profit or Loss. Impairment losses recognised in respect of CGus are allocated to reduce the carrying amounts of the assets in the CGu (group of CGus) on a pro rata basis.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

1.6 Liabilities and Provisions

1.6.1 Liabilities

1.6.1.1 Liabilities classified as Current Liabilities in the Statement of Financial Position are those, which will fall due for payment on demand or within one year from the reporting date.

1.6.1.2 Liabilities classified as Non-Current Liabilities in the Statement of Financial Position are those, which will fall due for payment after one year from the reporting date.

1.6.2 Provisions

Provisions are recognised 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 obligation.

1.6.3 Employee Benefits

1.6.3.1 Defined Benefit Plan -

Employee Benefits

the liability recognised in the Statement of Financial Position in respect of defined benefit plan is the present value of the defined benefit obligation at the reporting date. Benefits falling due more than 12 months after the reporting date are discounted to present value. the defined benefit obligation is calculated annually by Independent Actuaries using Projected unit Credit (PuC) method as recommended by LKAS 19 - ‘Employee Benefits’.

Actuarial gains and losses in the period in which they occur have been recognised in the Statement of Other Comprehensive Income.

the assumptions based on which the results of the actuarial valuation was determined, are included in Note 16 to the Financial Statements.



Gratuity liability was computed from the first year of service for all employees in conformity with Sri Lanka Accounting Standards 19 - ‘Employee Benefit’.

however, under the Payment of Gratuity Act No. 12 of 1983, the liability to an employee arises only on completion of five years of continued service.

the Company is liable to pay gratuity in terms of the relevant statute.

the Gratuity liability is not externally funded.

Defined Contribution PlanEmployees’ Provident Fund and Employees’ trust Fund is a post-employment benefit plan under which an entity pays fixed contribution into a separate entity and will have no legal or constructive obligation to pay further amounts.

All the employees who are eligible for Employees’ Provident Fund and Employees’ trust Fund are covered by relevant contribution funds in line with the respective statutes. Employer’s contribution to the defined contribution plans are recognised as an expense in Profit or Loss when incurred.

1.7.1 Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Accordingly, hospital and pharmaceutical revenue is recognised at the point of delivering the service. however, the professional fees of medical specialists which are collected by the Group do not form part of revenue are excluded from the revenue.

1.7.2 Other Income

Other income comprises gain on disposal of Property, Plant & Equipment, dividend income, interest income and rental income. Net gains and losses of a revenue nature resulting from the disposal of Property, Plant & Equipment have been accounted for in Profit or loss. Dividend income is recognised in Profit or Loss on the date that the Company’s and the Group’s right to receive payment is established, which in the case of quoted securities is normally the ex-dividend date. Interest income and rental income are accounted on accrued basis in Profit or Loss.

1.7.3 Expenditure

All expenditure incurred in the running of the business and in maintaining the Property, Plant & Equipment in a state of efficiency has been charged to revenue in arriving at the profit/loss for the year.

1.7.4 Borrowing Costs

Borrowing costs are recognised as an expense in the period in which they are incurred, except to the extent where borrowing costs are directly attributable to the acquisition, construction or production of Property, Plant & Equipment, that takes a substantial period of time to get ready for its intended use or sale and are capitalised as part of that asset during the period of construction/development.

1.7.5 Income Tax Expenses

1.7.5.1 Current Taxation

Company’s tax expense is made up with current taxation and deferred tax gain or loss during the year. Provision for taxation is based on the profit for the year adjusted for taxation purposes in accordance with the provisions of the Inland Revenue Act No. 10 of 2006, as amended by subsequent legislation.

a. the Company is liable for income tax at the rate of 12% (2013/14 -12%) on the taxable profits.

b. New Nawaloka hospitals (Pvt) Ltd. is liable for income tax at the rate of 12% on the taxable profits (2013/14 - 2% based on its turnover).

c. New Nawaloka Medical Centre (Pvt) Ltd. is exempt from income tax for a period of ten years commencing from year of assessment 2008/09 in terms of the agreement entered into with the Board of Investment (BOI) of Sri Lanka.

d. Nawaloka Metropolis Laboratories (Pvt) Ltd. (‘Joint Venture’), is liable for taxation at the rate of 12% (2013/14 - 12%).

e. Nawaloka Medicare (Pvt) Ltd. is exempt from income tax for a period of six year starting from profit making Financial year or after loss making 2 years whichever is earlier.

f. Income on other sources is liable for taxation at the rate of 28% (2013/14 - 28%).

1.7.5.2 Deferred Tax

Deferred taxation is provided 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 provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted by the reporting date. Deferred tax liabilities are not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit nor differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax assets, including those related to temporary tax effects of income tax losses and credits available to be carried forward are recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax relating to items recognised directly in equity is recognised in equity.

1.7.5.3 Withholding Tax on Dividends

Distributed by Subsidiaries and Joint Venture Company

Dividend distributed out of taxable profit of the subsidiaries and Joint Venture Company attracts a 10% deduction at source and is not available for set off against the tax liability of the Company. thus, the withholding tax deducted at source is added to the tax expense of the Subsidiary Companies and Joint Venture Company in the Group Financial Statements as a consolidation adjustment.

1.8 Contingent Liabilities and Contingent AssetsA contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future



events beyond the control of the Company and the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. the Company and the Group does not recognise a contingent liability but discloses its existence in the Financial Statements. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company and the Group. the Company and the Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain. In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assumed are measured initially at their fair value at the acquisition date, irrespective of the extent of any minority interest.

1.9 Events after the Reporting DateAll material and important events which occur after the reporting date have been considered and disclosed in Note 33.

1.10 Segmental InformationA segment is a distinguishable component of an enterprise that is engaged in either providing products or services (Business segment) or in providing products or services within a particular economic environment (Geographical segment), which is subject to risk and rewards that are different from those of other segments. however, there are no distinguishable components to be identified as segments for the Group.

1.11 Cash Flow Statement1.11.1 the Cash Flow Statement has been prepared using the indirect method in accordance with Sri Lanka Accounting Standard LKAS 7 - Statement of Cash Flows. Cash and cash equivalents consist of cash in hand and at banks and short-term highly liquid investments, readily convertible to loan amounts net of outstanding bank overdrafts.

1.11.2 Interest paid is classified as operating cash flows, while interest received is classified as investing cash flows, for the purpose of presentation of the Cash Flow Statement, reported based on the Indirect Method.

1.12 Directors’ Responsibility Statementthe Board of Directors is responsible for the preparation and presentation of Financial Statements.

1.13 Determination of Fair ValuesA number of the Company’s and the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

y Level 1 – Quoted prices (unadjusted) in active markets for identifiable assets and liabilities

y Level 2 – Inputs other than quoted prices included in Level 1 that are observable from the asset or liability either directly (as prices) or indirectly (derived prices)

y Level 3 – Inputs from the asset or liability that are not based on observable market data (unobservable inputs)

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.


1. NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE

the Institute of Chartered Accountants of Sri Lanka has issued the following new Sri Lanka Accounting Standard, which will become applicable for financial periods beginning on or after 1st January 2017. Accordingly, the Group has not applied the following new standards in preparing these Consolidated Financial Statements.

SLFRS 9 – Financial Instruments

SLFRS 9 - “Financial Instruments” replaces the existing guidance in LKAS 39 – Financial Instruments: Recognition and Measurement. SLFRS 9 includes revised guidance on the classification and measurement of financial instruments including a new expected credit loss model for calculating impairment on financial assets.

SLFRS 9 is effective for annual period beginning on or after 1st January 2018, with early adoption permitted.

SLFRS 15 – Revenue Recognition

from Customer Contracts

SLFRS 15 - 'Revenue from Contracts with Customers’ establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance LKAS 18 Revenue, LKAS 11 Construction Contracts.

SLFRS 15 is effective for annual reporting period beginning on or after 1st January 2017, with early adoption permitted.the Group is assessing the potential impact on its Consolidated Financial Statements resulting from the above standards.


2. Property, Plant and Equipment

2.1 Group

Freehold Land

Rs.

Buildings Constructed

on Leasehold Land

Rs.

Work-In- Progress

Rs.

Fixture & Fittings

Rs.

Plant & Machinery

Rs.

Motor Vehicles

Rs.

hospital Equipment

Rs.

Medical Equipment

Rs.

Computer Equipment

Rs.

Furniture Fittings

Rs.

total

Rs.

Cost/Valuation

Balance as at 1st April 2012 – 2,410,604,285 – 212,635,556 54,001,945 239,767,146 214,372,356 2,181,832,846 58,726,865 39,887,067 5,411,828,066

Additions 42,188,000 32,788,677 – 16,178,101 – 311,040 19,619,431 289,332,505 13,632,842 13,138,817 427,189,413

Revaluation – 155,303,109 – – – – – – – – 155,303,109

Disposal – – – – – (40,727,860) – – – – (40,727,860)

Balance as at 31st March 2013 42,188,000 2,598,696,071 – 228,813,657 54,001,945 199,350,326 233,991,787 2,471,165,351 72,359,706 53,025,885 5,953,592,728

Additions – 45,696,395 1,000,576 25,222,771 – 65,569,050 39,337,867 515,658,563 24,184,737 7,052,622 723,722,582

Balance as at 31st March 2014 42,188,000 2,644,392,466 1,000,576 254,036,427 54,001,945 264,919,376 273,329,654 2,986,823,915 96,544,443 60,078,507 6,677,315,309

Additions – 694,915,637 49,395,728 103,035,721 49,567,259 53,331,742 120,122,651 574,031,683 42,955,019 37,282,636 1,724,638,076

Disposal – – – – – (15,153,382) – (80,472,624) – – (95,626,006)

Balance as at 31st March 2015 42,188,000 3,339,308,103 50,396,304 357,072,148 103,569,204 303,097,736 393,452,305 3,480,382,974 139,499,462 97,361,143 8,306,327,379

Accumulated Depreciation

Balance as at 1st April 2012 – 94,058,387 – 115,594,320 38,434,034 121,167,705 109,108,022 1,210,415,653 40,279,763 12,928,773 1,741,986,656

Charge for the year – 31,623,387 – 16,575,074 15,567,911 36,222,866 14,142,245 159,094,059 8,027,260 5,174,771 286,427,574

transfers – – – – – (27,066,890) – – – – (27,066,890)

Balance as at 31st March 2013 – 125,681,774 – 132,169,394 54,001,945 130,323,681 123,250,267 1,369,509,712 48,307,023 18,103,544 2,001,347,339

Charge for the year – 34,751,834 – 17,514,306 – 33,572,740 16,955,831 181,350,390 13,496,112 5,806,614 303,447,828


Charge for the year 39,043,157 – 20,728,259 3,373,290 52,452,316 24,544,636 230,306,238 16,398,617 8,017,811 394,864,323

transfers/ Disposals – – – – – (9,977,946) – (33,191,286) – – (43,169,232)


Written Down Value

As at 31st March 2015 42,188,000 3,139,831,338 50,396,304 186,660,190 46,193,969 96,726,944 228,701,571 1,732,407,920 61,297,709 65,433,174 5,649,837,119

As at 31st March 2014 42,188,000 2,483,958,858 1,000,576 104,352,728 – 101,022,955 133,123,556 1,435,963,813 34,741,308 36,168,348 4,372,520,141

As at 31st March 2013 42,188,000 2,473,014,297 – 96,644,263 – 69,026,645 110,741,519 1,101,655,639 24,052,683 34,922,341 3,952,245,387

2.1 (a) the buildings constructed on leasehold lands of the Group were revalued at Rs. 2,598.6 Mn by Mr. P. B. Kalugalagedara, Chartered Valuer in March 2013 and the value of these assets has been reflected in the Financial Statements at the revalued amounts.



2.2 Company

Freehold Land

Rs.

Buildings Constructed on Leasehold Land

Rs.

Fixture & Fittings

Rs.

Plant & Machinery

Rs.

Motor Vehicles

Rs.

hospital Equipment

Rs.

Medical Equipment

Rs.

Computer Equipment

Rs.

Furniture Fittings

Rs.

total

Rs.

Cost/Valuation

Balance as at 1st April 2013 42,188,000 409,335,517 96,828,099 11,332,408 141,029,946 157,954,910 1,559,412,666 54,814,937 45,279,836 2,518,176,319

Additions – 45,696,395 25,222,770 – 65,569,050 37,693,709 507,965,678 23,374,369 7,052,622 712,574,593

Balance as at 31st March 2014 42,188,000 455,031,912 122,050,869 11,332,408 206,598,996 195,648,619 2,067,378,344 78,189,306 52,332,458 3,230,750,912

Additions – 130,679,750 48,259,174 – 48,861,792 62,419,779 331,192,730 16,823,809 15,380,416 653,617,450

Disposal – – – – (15,153,382) – (80,472,624) – – (95,626,006)

Balance as at 31st March 2015 42,188,000 585,711,662 170,310,043 11,332,408 240,307,406 258,068,398 2,318,098,450 95,013,115 67,712,874 3,788,742,356

Accumulated Depreciation

Balance as at 1st April 2013 – 20,540,218 34,953,926 11,332,408 79,075,998 76,010,156 583,177,466 32,921,566 14,654,126 852,665,864

Charge for the year – 5,938,798 11,475,984 – 31,340,304 12,148,038 148,780,073 11,181,292 5,091,120 225,955,609

Balance as at 31st March 2014 – 26,479,016 46,429,910 11,332,408 110,416,302 88,158,195 731,957,539 44,102,858 19,745,246 1,078,621,474

Charge for the year – 6,997,592 13,407,679 – 49,226,750 17,644,207 192,793,820 14,191,598 5,515,523 299,777,169

Disposal – – – – (9,977,946) – (33,191,286) – – (43,169,232)

Balance as at 31st March 2015 – 33,476,608 59,837,589 11,332,408 149,665,106 105,802,402 891,560,073 58,294,456 25,260,769 1,335,229,411

Net Book Value

As at 31st March 2015 42,188,000 552,235,054 110,472,454 – 90,642,300 152,265,996 1,426,538,377 36,718,659 42,452,105 2,453,512,945

As at 31st March 2014 42,188,000 428,552,896 75,620,959 – 96,182,694 107,490,425 1,335,420,805 34,086,448 32,587,212 2,152,129,439

the buildings constructed on leasehold lands of the Company were revalued by Mr. P. B. Kalugalagedara, Chartered Valuer in March 2013.

Freehold land with a land extent of 20.2 perches is situated at No. 15, Nelson Lane, Kollupitiya, Colombo 3.

Leasehold period for the 3 companies is 99 years and remaining leasehold periods as at 31st March 2015 are as follows:

Nawaloka hospitals PLC 69 years

New Nawaloka hospitals (Pvt) Ltd. 77 years

New Nawaloka Medical Centre (Pvt) Ltd. 88 years

2.3 (a) Group

had the leasehold assets not been revalued, their carrying value would have been as follows:

Net Book Valueas at 01.04.2014

Rs.

Depreciation if Assets were Carried at Cost

Rs.

Cumulative Net Carrying Amount

Rs.

Buildings on leasehold land 152,172,701 152,172,701 –

2.3 (b) Company

had the leasehold assets not been revalued, their carrying value would have been as follows:

Net Book Valueas at 01.04.2014

Rs.

Depreciation if Assets were Carried at Cost

Rs.

Cumulative Net Carrying Amount

Rs.

Buildings on leasehold land 78,202,048 78,202,048 –

the leasehold properties with a land extent of 511.80 perches are located in No. 23, Deshamanya h.K. Dharmadasa Mawatha, Colombo 2.



Group Company

As at 31st March 2015Rs.

2014Rs.

2013Rs.

2015Rs.

2014Rs.

3. Leasehold Right Over Land

Balance as at beginning of the year 230,823,300 233,758,457 236,693,614 50,403,212 51,296,258

Amortisation for the year (2,912,324) (2,935,157) (2,935,157) (893,009) (893,046)

Balance as at the end of the year 227,910,976 230,823,300 233,758,457 49,510,203 50,403,212

4. Investment Property 192,417,100 – – 192,417,100 –

192,417,100 – – 192,417,100 –

4.1 Investment property reflects lands in Negombo leased out to Nawaloka Medicare (Pvt) Ltd. by Nawaloka hospitals PLC on a 99 year lease agreement. Nawaloka Medicare (Pvt) Ltd. commenced its operations during the year.

4.2 the Group and the Company has earned rental income of Rs. 681,057/- and Rs. 587,119.50 for the year ended 31st March 2015 respectively.

4.3 During the year, Director’s valuation was carried out for the investment properties and market value of the investment property has not changed materially over the year.

Group Company


2014Rs.

2013Rs.

2015Rs.

2014Rs.

5. Investment in Subsidiaries

New Nawaloka hospitals (Pvt) Ltd. – – – 245,933,056 245,933,056

Nawaloka Medicare (Pvt) Ltd. – – – 300,000,000 –

New Nawaloka Medical Centre (Pvt) Ltd. – – – 700,000,000 700,000,000

– – – 1,245,933,056 945,933,056

6. Investments in Related CompaniesNawaloka Medicare (Pvt) Ltd. – 471,956,698 – – 471,956,698

– 471,956,698 – – 471,956,698



As at 31st March holding%

2015Rs.

2014Rs.

2013Rs.

7. Equity Accounted Investee – Group Investment In Joint Venture - Nawaloka Metropolis Laboratories (Pvt) Ltd. 50 90,241,313 89,036,556 85,293,461

Equity Accounted Investee - Company

Investment In Joint Venture - Nawaloka Metropolis Laboratories (Pvt) Ltd. 250,000 Ordinary Shares 50 2,500,000 2,500,000

Nawaloka Metropolis Laboratories (Pvt) Ltd. is a joint venture company between Nawaloka hospitals PLC and Metropolis health Services (India) Private Ltd. a company incorporated in India. Nawaloka Metropolis Laboratories (Pvt) Ltd. was incorporated to provide laboratory services in Sri Lanka. the summarised financial information of the Group’s investment in Nawaloka Metropolis Laboraties (Pvt) Ltd. is given below:

Group


2014Rs.

2013Rs.

7.1 Share of the Joint Venture’s Statement of Financial PositionNon-current assets 69,577,464 74,181,721 48,335,231

Current assets 104,297,476 69,446,693 73,916,116

Non-current liabilities (11,476,877) (7,493,518) (5,587,087)

Current liabilities (72,156,750) (47,098,340) (31,370,798)

Net assets 90,241,313 89,036,556 85,293,461

7.2 Share of Joint Venture’s Revenue and ProfitRevenue 324,011,505 305,637,160 280,149,181

Cost of services (138,507,042) (140,262,985) (131,820,070)

Gross profit 185,504,463 165,374,175 148,329,111

Other income 1,045,251 507,013 390,410

Expenses (153,030,722) (142,916,490) (114,733,852)

Profit before tax 33,518,992 22,964,698 33,985,668

Income tax expenses (4,121,255) (3,283,374) (1,929,693)

Profit for the year 29,397,737 19,681,324 32,055,975

Other Comprehensive Income (3,192,982) 61,771 (133,638)

total comprehensive income for the year 26,204,756 19,743,095 31,922,337

Dividend (12,500,000) (16,000,000) (25,000,000)

13,704,756 3,743,095 6,922,337

7.3 SLFRS 11 replaces LKAS 31 Interests in joint ventures and SIC on jointly controlled Entities (JCEs) and non-monetary contributions by ventures. SLFRS 11 removes the option to account for JCEs using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using equity method of Accounting.

the application of this new standard has an impact on the financial position of the group. this is due to the proportionate consolidating of the joint venture being changed to equity accounting. the Group has applied the equity method of accounting and restated the comparative periods.



the following table summarises the impact on the Group’s Financial Statements:

7.3 Statement of Financial Position

Note

31st March 2014 as Previously

MentionedRs.

Adjustment

Rs.

31st March 2014as Restated

Rs.

31st March 2013 as Previously

MentionedRs.

Adjustment

Rs.

31st March 2013as Restated

Rs.

ASSETS

Non-current assets

Property, plant & equipment 2 4,446,701,860 74,181,720 4,372,520,141 4,000,580,617 48,335,230 3,952,245,387

Leasehold right over land 3 230,823,300 – 230,823,300 233,758,457 – 233,758,457

Investment property 4 – – – – – –

Investments in subsidiaries 5 – – – – – –

Investments for related companies 6 471,956,698 – 471,956,698 – – –

Equity accounted investee 7 – (89,036,556) 89,036,556 – (85,293,461) 85,293,461

Advance for land 8 883,553,431 – 883,553,431 827,416,494 – 827,416,494

Total non-current assets 6,033,035,289 (14,854,836) 6,047,890,126 5,061,755,568 (36,958,231) 5,098,713,799

Current assets

Inventories 9 319,445,599 13,096,070 306,349,529 257,825,351 16,805,145 241,020,206

trade and other receivables 10 352,255,463 15,279,653 336,975,810 256,492,156 21,357,540 235,134,616

Deposits and advances 11 118,352,550 5,619,741 112,732,809 121,307,602 10,585,565 110,722,037

Receivables from related parties 12 32,289,183 – 32,289,183 6,356,063 – 6,356,063

Cash and cash equivalents 515,022,992 381,525,210 133,497,783 151,571,655 112,593,753 38,977,902

Short-term investment – (372,201,454) 372,201,454 – (108,665,592) 108,665,592

Total current assets 1,337,365,787 43,319,221 1,294,046,568 793,552,827 52,676,410 740,876,416

Total assets 7,370,401,076 28,464,385 7,341,936,694 5,855,308,395 15,718,179 5,839,590,215

EQUITY AND LIABILITIES

Capital and reserves

Stated capital 13 1,207,388,876 – 1,207,388,876 1,207,388,876 – 1,207,388,876

Revaluation reserve 14 990,872,361 – 990,872,361 990,872,361 – 990,872,361

Retained earnings 1,704,694,711 – 1,704,694,711 1,558,403,923 – 1,558,403,923

Total equity 3,902,955,947 – 3,902,955,948 3,756,665,160 – 3,756,665,160

Non-current liabilities

Debentures 15 1,476,491,192 – 1,476,491,192 – – –

Employee benefits 16 146,531,392 1,909,855 144,621,539 139,486,973 1,632,313 137,854,661

Deferred tax liability 17 221,075,975 4,313,750 216,762,225 167,864,420 2,677,784 165,186,636

Borrowings falling due after one year 18 317,089,879 1,276,992 315,812,887 532,608,319 1,276,992 531,331,327

Finance leases payable after one year 19 124,000,000 – 124,000,000 132,000,000 – 132,000,000

Total non-current liabilities 2,285,188,438 7,500,597 2,277,687,843 971,959,712 5,587,089 966,372,624

Current liabilities

trade creditors and other payables 20 463,964,586 18,084,463 445,880,127 295,317,475 14,698,571 280,618,905

Advances and refundable deposits – – – 5,247,010 – 5,247,010

unclaimed dividends 2,615,909 – 2,615,909 1,917,647 – 1,917,647

Current tax liability 21 24,398,243 93,358 24,304,885 25,140,764 1,041,508 24,099,255

Payable to related companies 22 43,425,474 (8,843,726) 52,269,200 29,342,160 (14,560,267) 43,902,427

Borrowings falling due within one year 18 204,243,727 – 204,243,727 285,008,149 – 285,008,149

Finance leases payable within one year 19 8,000,000 – 8,000,000 8,000,000 – 8,000,000

Bank overdrafts 435,608,752 11,629,694 423,979,056 476,710,318 8,951,279 467,759,038

Total current liabilities 1,182,256,691 20,963,789 1,161,292,904 1,126,683,523 10,131,091 1,116,552,431

Total liabilities 3,467,445,129 28,464,386 3,438,980,747 2,098,643,235 15,718,180 2,082,925,055

Total equity and liabilities 7,370,401,079 28,464,387 7,341,936,694 5,855,308,395 15,718,180 5,839,590,215




7.4 Statement of Profit and Loss or Other Comprehensive Income

For the year ended 31st March 2014 As Previously

ReportedRs.

Adjustment

Rs.

31st March 2014(Restated)

Rs.

Revenue 4,299,110,462 305,637,161 3,993,473,302

Cost of services (2,050,773,736) (140,262,985) (1,910,510,751)

Gross profit 2,248,336,726 165,374,175 2,082,962,551

Other income 64,701,809 507,013 64,194,796

Staff cost (902,164,912) (69,468,766) (832,696,146)

Administrative expenses (889,119,224) (63,532,948) (825,586,276)

Other operating expenses (23,496,466) (9,787,077) (13,709,389)

Profit from operations 498,257,933 23,092,397 475,165,536

Finance cost (202,298,642) (127,699) (202,170,943)

Share of profit from jointly-controlled entity – (19,743,096) 19,743,096

Profit before tax 295,959,291 (3,221,602) 292,737,689

Income tax (87,067,154) (3,283,373) (83,783,780)

Profit for the year 208,892,137 (61,771) 208,953,909

Other comprehensive income

Defined benefits plan actuarial gain/(losses) 8,947,648 70,195 8,877,453

Deferred tax Impact on defined benefits plan actuarial (gain)/losses (1,073,718) (8,423) (1,065,294)

Other comprehensive (loss)/income for the year, net of tax 7,873,930 61,771 7,812,159

Total comprehensive income for the year 216,766,067 – 216,766,068

Net profit attributable to equity holders of the company 216,766,067 – 216,766,068

Group Company


2014Rs.

2013Rs.

2015Rs.

2014Rs.

8. Advance for Land 952,343,085 883,553,431 827,416,494 – –

An advance of Rs. 952,343,085/- (2013/14 - Rs. 883,553,431/-) was paid by New Nawaloka hospitals (Pvt) Ltd. to Nawaloka Construction (Pvt) Ltd. which is a Related Party due to common Directorship.

this land was originally meant for the establishment of a Private Medical training Institution, but due to the delay in obtaining the necessary approval, the management is now in the process of exploring alternative ways for the property.

Group Company


2014Rs.

2013Rs.

2015Rs.

2014Rs.

9. InventoriesPharmaceutical Items 323,268,846 292,196,220 232,028,430 108,995,263 109,228,210

General stocks 12,494,513 13,618,617 8,991,776 5,655,057 7,490,239

Reagent stocks – 534,692 – – –

335,763,359 306,349,529 241,020,206 114,650,320 116,718,449


Group Company


2014Rs.

2013Rs.

2015Rs.

2014Rs.

10. Trade and Other Receivablestrade receivables 352,128,366 272,202,699 159,334,357 231,981,482 180,138,551

Provision for bad and doubtful debts (42,295,476) (33,180,601) (34,155,454) (30,780,511) (23,403,919)

309,832,890 239,022,098 125,178,903 201,200,971 156,734,632

ESC recoverable 56,018,804 54,133,610 50,520,437 49,881,774 48,094,259

Other debtors 73,491,377 43,820,102 59,435,276 14,748,805 30,488,304

439,343,071 336,975,810 235,134,616 265,831,550 235,317,195

11. Deposits and Advances Import control 25,725,038 17,221,150 55,621,708 3,294,863 14,421,472

Staff loans 3,088,179 2,967,506 2,751,861 1,660,293 1,544,373

Prepayments 61,964,567 36,210,675 43,671,467 57,798,564 28,249,465

Other deposit and advances 53,334,904 56,333,478 8,677,001 49,323,669 61,953,222

144,112,688 112,732,809 110,722,037 112,077,389 106,168,532

12. Receivables from Related PartiesNawaloka Construction Company Ltd. 27,494,860 26,369,230 – 9,707,543 9,395,543

New Nawaloka Medical Centre (Pvt) Ltd. – – – 425,808,401 352,980,136

Nawaloka Polysacks (Pvt) Ltd. 26,429,200 – – 26,429,200 –

Nawaloka Aviation (Pvt) Ltd. 414,358 138,393 1,580,012 414,358 138,393

Nawaloka Medicare (Pvt) Ltd. – – – 699,206,107 –

New Nawaloka hospitals (Pvt) Ltd. – – – 167,275,655 –

Battaramulla Medical Centre 2,236,943 1,795,429 960,017 2,236,943 1,795,429

Dehiwala Medical Centre 3,150 24,885 32,110 3,150 24,885

Mount Lavinia Medical Centre – 41,795 – – 41,795

Moratuwa Medical centre – 20,645 19,110 – 20,645

Nawaloka College of higher Studies 64,793,700 – – 64,793,700 –

Kiribathgoda Medical Centre 2,879,310 3,293,556 1,996,042 2,879,310 3,293,556

Kottawa Medical Centre – 28,306 1,554,053 – 28,306

Kandana Medical Centre 185,068 576,944 214,719 185,068 576,944

Overseas Medical Centre 35,944,835 – – 35,944,835 –

160,381,424 32,289,183 6,356,063 1,434,884,270 368,295,632

13. Stated Capital 1,409,505,596 Ordinary Shares 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876

14. Revaluation Reserve Balance as at 1st April 990,872,361 990,872,361 763,760,190 – –

Revaluation during the year – – 155,303,109 – –

Deferred tax impact on income tax rate change

– – 77,006,393 – –

Deferred tax impact on revaluation (Note 17.5) – – (5,197,331) – –

Balance as at 31st March 990,872,361 990,872,361 990,872,361 – –

the Revaluation Reserve relates to the revaluation of buildings on Leasehold land.



Group Company


2014Rs.

2013Rs.

2015Rs.

2014Rs.

15. Debentures 1,480,047,383 1,476,491,192 – 1,480,047,383 1,476,491,192

During the financial year 2013/14, the company has issued 15 Mn Rated unsecured Redeemable Debentures at a par value of Rs. 100 and its allocation is as follows:

Class Issue Coupon Rate %

Listing Status

Interest Payable Frequency

Issued Date

Maturity Date

Quantity

Nos.

Consideration Received

Rs.

Value as at 31st March 2015

Rs.

ComparativeGovernmentBonds Rates

%

Yield to Maturity

%

A Public 14.15 Listed Quarterly 9/30/2013 9/30/2018 10,427,900 1,042,790,000 1,029,349,034 7.96 11.09

B Public 14.15 Listed Quarterly 9/30/2013 9/30/2019 2,696,000 269,600,000 265,896,595 8.15 11.37

D Public 14.35 Listed Quarterly 9/30/2013 9/30/2021 1,645,500 164,550,000 162,105,015 9.40 11.96

E Public 14.40 Listed Quarterly 9/30/2013 9/30/2022 120,000 12,000,000 11,817,535 9.17 12.14

F Public 14.45 Listed Quarterly 9/30/2013 9/30/2023 110,600 11,060,000 10,879,204 9.73 12.47

15,000,000 1,500,000,000 1,480,047,383

15.1 Market Summary

Class highestRs.

Lowest Rs.

Last tradedRs.

traded Quantity Last Traded Date

A – – – – –

B 115.76 – 115.76 1,700,000 11/06/2014

D – – – – –

E – – – – –

F – – – – –

15.2 Purpose of the IssuePurpose of the debenture issue is for funding the construction of multistoried building with car park facilities, Channeling, Outpatient Department and Indoor admission facilities adjoining the existing hospital building and to restructure the balance sheet by refinancing the existing loans.

15.3 Credit RatingsRAM Ratings (Lanka) Ltd., has reaffirmed Nawaloka hospitals PLC’s long and short-term corporate credit ratings at A* and P2** respectively.

Notea. the long-term rating of A reflects: * An adequate capacity to meet its long-term financial obligations

b. the short-term rating of P2 reflects: ** An adequate capacity to meet its short-term financial obligations



Group Company

2015Rs.

2014Rs.

2013Rs.

2015Rs.

2014Rs.

16. Employee Benefits the Amount recognised in the Statement of Financial Position

Present Value of defined benefit obligations 170,953,704 144,621,539 137,854,661 158,673,474 134,424,735

16.1 Movement in the Present Value of Defined Benefit Obligations (PV DBO) Liability for defined benefit obligation at 1st April 144,621,538 137,854,661 138,567,628 134,424,735 130,612,612

Current service cost (Note 16.2) 11,412,094 14,050,060 10,744,346 8,262,450 11,857,139

Interest cost (Note 16.2) 14,823,889 15,343,566 18,598,216 14,210,938 14,367,387

Actuarial (Gain)/Losses on PV DBO (Note 16.4) 17,481,666 (8,877,453) 6,194,632 18,820,799 (8,628,108)

Payments made (17,385,483) (13,749,295) (36,250,161) (17,045,448) (13,784,295)

Liability for defined benefit obligation at 31st March 170,953,704 144,621,539 137,854,661 158,673,474 134,424,735

16.2 Amount Recognised in Income Statement Company service cost 11,412,094 14,050,060 10,744,346 8,262,450 11,857,139

Interest cost 14,823,889 15,343,566 18,598,216 14,210,938 14,367,387

26,235,983 29,393,626 29,342,562 22,473,388 26,224,526

16.3 Amounts Recognised in Other Comprehensive IncomeActuarial gains/(losses) recognised during the year (17,481,666) 8,877,453 (6,194,632) (18,820,799) 8,628,108

16.4 Employee Benefits as at 31st March 2015, is calculated based on an actuarial valuation carried out by Mr. Piyal Gunathilaka, a qualified Actuary. As recommended by the Sri Lanka Accounting Standard ( LKAS-19), ‘Employee Benefits’ the projected unit Credit (PuC) method has been used in this valuation.

16.5 Actuarial Assumptions

For the year ended 31st March 2015 2014 2013

Retirement age 55 Years 55 Years 55 Years

Discount rate 9.50% 10% 11%

Salary Increment rate 8% 8% 10%

Group Company


2014Rs.

2013Rs.

2015Rs.

2014Rs.

17. Deferred Tax LiabilityDeferred tax liability (Other) 171,569,526 162,905,428 111,329,839 119,113,956 113,517,100

Deferred tax liability (Revaluation Reserve) 56,330,061 53,856,797 53,856,797 – –

227,899,587 216,762,225 165,186,636 119,113,956 113,517,100

Balance as at 1st April 216,762,225 165,186,636 286,675,478 113,517,100 78,486,994

Originating during the year (Note 17.3) 11,137,363 51,575,589 104,484,594 5,596,856 35,030,106

Impact on rate decrease – – (225,973,436) – –

Balance as at 31st March 227,899,587 216,762,225 165,186,636 119,113,956 113,517,100



Group Company


2014Rs.

2013Rs.

2015Rs.

2014Rs.

17.1 Deferred tax Provision as at the year end is Made up as Follows,Deferred tax Provision from

temporary differences of PPE 303,679,460 192,561,282 186,211,797 187,722,702 142,178,520

temporary differences of retirement provision on gratuity (19,886,910) (17,125,402) (16,542,559) (19,040,817) (16,130,968)

temporary differences of provision on bad & doubtful debts – – (4,482,602) – –

tax loss carried forward (55,892,963) (12,530,452) – (49,567,929) (12,530,452)

Revaluation reserve – 53,856,797 – – –

227,899,587 216,762,225 165,186,636 119,113,956 113,517,100

17.2 Statement of Comprehensive Income – – 148,967,043 – –

– – 225,973,436 – –

17.3 Originating during the year Statement of other comprehensive income (2,500,039) 1,065,294 4,453,975 (2,286,564) 1,035,373

Statement of comprehensive income 13,637,402 50,510,295 100,030,619 7,883,420 33,994,733

11,137,363 51,575,589 104,484,594 5,596,856 35,030,106

17.4 Amount Recognised in Comprehensive Income Deferred tax impact on rate change – – (148,967,043) – –

Originating during the year (Note 17.3) 13,637,402 50,510,295 100,030,619 7,883,420 33,994,733

13,637,402 50,510,295 (48,936,424) 7,883,420 33,994,733

17.5 Amount Recognised in Other Comprehensive Income Deferred tax Impact on building revaluation – – 5,197,331 – –

Deferred tax Impact on defined benefits plan actuarial (gain)/losses (Note 17.3)

(2,500,039) 1,065,294 (743,356) (2,286,564) 1,035,373

(2,500,039) 1,065,294 4,453,975 (2,286,564) 1,035,373

18. Borrowings Amana Investment – – 58,429,544 – –

DFCC Bank loan 442,683,700 127,199,510 63,565,463 442,683,700 127,199,510

BOC 379,365,571 255,857,104 169,533,331 379,365,571 255,857,104

Seylan Bank loan – – 61,349,148 – –

Sampath Bank 681,980,100 – – 681,980,100 –

Nations Lanka PLC 67,595,370 137,000,000 – 67,595,370 137,000,000

hatton National Bank loans 48,790,740 – 463,461,990 – –

1,620,415,481 520,056,614 816,339,476 1,571,624,741 520,056,614

Borrowings falling due within one year (351,370,388) (204,243,727) (285,008,149) (311,369,588) (204,243,727)

Borrowings falling due after one year 1,269,045,093 315,812,887 531,331,327 1,260,255,153 315,812,887



Group Company


2014Rs.

2013Rs.

2015Rs.

2014Rs.

18.1 BorrowingsOpening balance as at 1st of April 520,056,614 816,339,476 747,451,579 520,056,614 291,548,339

Loans obtained during the year 1,390,867,211 551,725,129 348,593,868 1,252,076,271 551,725,129

Loans paid during the year (290,508,344) (848,007,991) (279,705,971) (200,508,144) (323,216,854)

Closing balance as at 31st March 1,620,415,481 520,056,614 816,339,476 1,571,624,741 520,056,614

18.2 Details of Loans obtained by the Group are set out below:

Financial Institution

Repayment terms

PrincipalRs.

InterestRate

%

Security AnnualRepayment

Rs.

Balance as at 31.03.2015

Rs.

Long-Term LoanNawaloka Hospitals PLC

DFCC Bank 59 equal monthly installments of Rs. 7,503,114

450,000,000 AWPLR+0.25% Primary concurrent mortgage over leasehold rights of the land and building situated at Sir James Peiris Mawatha and Sugathodaya Mawatha owned by Nawaloka hospitals PLC and New Nawaloka hospitals (Pvt) Ltd.

Joint & several Guarantees of Directors - Mr. h.K.J. Dharmadasa, Mr. ugitha harshith Dharmadasa and Mr. Anisha Givantha Dharmadasa

7,316,300 442,683,700

Bank of Ceylon to be repaid 60 equal monthly Installments

363,000,000 AWPLR+0.5% Joint & several Guarantees of Directors - Mr. h.K.J. Dharmadasa, Mr. ugitha harshith Dharmadasa and Mr. Anisha Givantha Dharmadasa

57,949,181 230,591,923

Bank of Ceylon 60 equal monthly installments of Rs. 3,166,667

190,000,000 AWPLR+0.5% Joint & several Guarantees of Directors - Mr. h.K.J. Dharmadasa, Mr. ugitha harshith Dharmadasa and Mr. Anisha Givantha Dharmadasa.

8,254,933 148,773,648

Bank of Ceylon Monthly rollover basis 50,000,000 8.00% Joint & several Guarantees of Directors - Mr. h.K.J. Dharmadasa, Mr. ugitha harshith Dharmadasa and Mr. Anisha Givantha Dharmadasa.

– –

Sampath Bank 60 equal monthly installments of Rs. 9,166,667

550,000,000 AWPLR Join & Several Guarantee of ugitha harshith Dharmadasa & Anisha Givantha Dharmadasa the Directors of Company for Rs. 550,000,000/-

Loan Agreement for Rs. 550,000,000/-

– 550,000,000


1,000,000,000 AWPLR Loan Agreement for Rs. 1,000,000,000/-

Assignment over credit card receivables for Rs. 1,000,000,000/- including the receivables of the existing hospital operations and the car park,channelling centre and new rooms of the proposed building complex. Corporate Guarantee of the New Nawaloka hospitals (Pvt) Ltd. for Rs. 1 Bn.

– 100,563,200




Repayment terms

PrincipalRs.

InterestRate

%

Security AnnualRepayment

Rs.

Balance as at 31.03.2015

Rs.


39,000,000 AWPLR Loan Agreement for Rs. 39,000,000/-

Primary Mortgage Bond over machinery for Rs. 39,000,000/-

undertaking to mortgage over Machinery.

7,583,100 31,416,900

New Nawaloka Hospitals (Pvt) Ltd.

hatton National Bank

60 equal monthly installments of Rs. 3,333,400

200,000,000 AWPLR Joint & Several Guarantee of h.K.J. Dharmadasa, u.h. Dharmadasa & A.G. Dharmadasa.

10,000,200 48,790,740

hatton National Bank

Monthly rollover basis 80,000,000 8.00% Existing Primary Concurrent Mortgage Bond for Rs. 390.0 Mn (hNB - Rs. 260.0 Mn, Seylan - Rs. 130.0 Mn) over leasehold land of Nawaloka hospitals premises.

80,000,000 –

Bank Over Draft


Closing Balance as at 31st March 2015

Rs.

Principal

Rs.

InterestRate

%

Security

Nawaloka Hospitals PLC

hatton National Bank (105,811,852) 75,000,000 AWPLR Corporate Guarantee of New Nawaloka hospitals (Pvt) Ltd. for Rs. 75 Mn.

DFCC Bank (86,848,678) 90,000,000 AWPLR + 0.75% Joint & several Guarantees of Directors - Mr. h.K.J. Dharmadasa, Mr. ugitha harshith Dharmadasa and Mr. Anisha Givantha Dharmadasa

Sampath Bank (44,306,756) 50,000,000 AWPLR + 1% Overdraft Agreement for Rs.50,000,000/-.

Joint & Several Guarantees of Mr. h.K.J. Dharmadasa, u.h. Dharmadasa & G A Dharmadasa - Directors of the Company for Rs. 50,000,000/-.

New Nawaloka Hospitals (Pvt) Ltd.

hatton National Bank (58,949,125) 100,000,000 AWPLR Existing Primary Concurrent Mortgage Bond for Rs. 390 Mn. (hNB - Rs. 260 Mn., Seylan - Rs. 130 Mn.) Over Leasehold land of Nawaloka hospital premises.

Group Company


2014Rs.

2013Rs.

2015Rs.

2014Rs.

19. Finance Leases Finance lease liability 124,000,000 132,000,000 140,000,000 – –

Finance leases payables within one year (8,000,000) (8,000,000) (8,000,000) – –

Finance leases payables after one year 116,000,000 124,000,000 132,000,000 – –

Finance leases payables between 1 to 5 years 40,000,000 40,000,000 40,000,000 – –

Finance leases payables more than five years 76,000,000 84,000,000 92,000,000 – –

116,000,000 124,000,000 132,000,000 – –



Group Company


2014Rs.

2013Rs.

2015Rs.

2014Rs.

19.1 Finance Leases Opening balance as at 1st April 132,000,000 140,000,000 148,000,000 – –

Lease paid during the year (8,000,000) (8,000,000) (8,000,000) – –

Closing balance as at 31st March 124,000,000 132,000,000 140,000,000 – –

20. Trade and Other Payablestrade payables 363,785,188 355,691,092 235,127,970 358,113,299 354,506,811

Doctors payable 2,362,905 30,091,711 18,637,332 2,362,905 19,091,358

Other payables 107,220,155 60,097,324 26,853,603 63,844,114 56,144,116

473,368,248 445,880,127 280,618,905 424,320,318 429,742,285

21. Income Tax PayableBalance as at 1st April 24,304,885 24,099,255 (360,923) – 1,537,498

under/(Over) provision during prior year (25,662,263) (1,537,498) – – (1,537,498)

Provision for the year 21,193,290 32,820,749 45,976,104 – –

Income tax paid during the year (17,585,304) (31,077,622) (21,515,926) – –

Balance as at 31st March 2,250,608 24,304,885 24,099,255 – –

Group Company

2015Rs.

2014Rs.

2013Rs.

2015Rs.

2014Rs.

22. Payable to Related PartiesNew Nawaloka hospitals (Pvt) Ltd. – – – – 5,675,277

Nawaloka Construction (Pvt) Ltd. 813,630 – 1,418,087 – –

Nawaloka Metropolis Laboratories (Pvt) Ltd. 12,601,805 52,269,200 42,479,412 8,056,987 52,269,296

Kottawa Medical Centre – – 4,928 – –

Mount Lavinia Medical Centre 434,119 – – 434,119 –

13,849,554 52,269,200 43,902,427 8,491,106 57,944,573

Group Company

For the year ended 31st March 2015Rs.

2014Rs.

2015Rs.

2014Rs.

23. Revenuehospital revenue 3,162,539,922 2,706,378,567 1,821,182,146 1,538,904,261

Pharmacy revenue 1,439,893,718 1,287,094,735 676,648,768 573,923,210

4,602,433,640 3,993,473,302 2,497,830,914 2,112,827,471



Group Company


2014Rs.

2015Rs.

2014Rs.

24. Other IncomeDividend income – 109,770,335 89,250,005

Savings interest 20,343 – 20,343 –

Interest on fixed deposits 31,311,710 34,573,304 13,027,295 22,777,987

Profit on sale of property, plant & equipment 5,589,564 – 5,589,564 –

Sundry income 22,905,323 24,598,674 18,182,695 15,416,356

Rent 5,372,631 5,022,818 6,053,688 5,022,818

65,199,571 64,194,796 152,643,920 132,467,166

25. Profit from Operationsthe operating profit has been arrived after charging all expenses including the following:

Emoluments paid to Directors 34,946,961 41,498,045 34,696,961 40,024,212

Auditor’s remuneration – audit services 1,819,000 1,380,000 635,000 565,000

Depreciation and amortisation 397,776,649 306,382,985 300,670,179 226,848,655

Staff Costs 838,604,192 736,872,557 404,831,075 408,225,366

Employees’ Provident Fund 82,674,032 76,658,810 40,141,726 43,446,722

Employees’ trust Fund 20,668,507 19,164,779 10,035,431 10,861,679

Charge/(Reversal) of provision for bad debts 9,114,875 (974,853) 7,376,592 (1,107,992)

Provision for employee benefits 26,235,983 29,393,626 22,473,388 26,224,526

Charity and donation 7,082,114 5,400,859 6,715,114 5,379,099

Impairment provisions - Other 54,244,933 28,676,402 39,101,201 27,584,030

Exchange loss on foreign currency 7,830,431 – – –

26. Finance CostsOverdraft interest 24,041,066 36,598,648 19,143,926 24,087,367

Debenture interest 216,198,471 107,919,565 216,198,471 107,919,565

Lease and loan interest 42,618,062 57,652,730 40,383,815 16,960,800

Bank charges 2,235,230 – 1,671,468 –

285,092,829 202,170,943 277,397,680 148,967,732

27. Income Tax Expenses Income tax on current year profit (Note 27.1) 20,273,290 32,820,749 – –

under/(Over) provision during prior year (25,654,009) (1,537,498) – (1,537,498)

(Reversal from)/transfer to deferred taxation (Note 17.4) 13,637,402 50,500,526 7,883,420 33,994,733

Dividend tax on inter company dividend 920,000 2,000,003 – 2,000,003

9,176,683 83,783,780 7,883,420 34,457,238



Group Company


2014Rs.

2015Rs.

2014Rs.

27.1 Reconciliation of Accounting Profit and Taxable Profit Profit/(Loss) before tax 93,454,537 292,737,689 97,821,426 142,209,203

Other comprehensive income (loss) for the year (17,481,666) 8,877,453 (18,820,799) 8,628,108

total comprehensive income 75,972,871 301,615,142 79,000,627 150,837,311

Profit/(Loss) tax based turnover – (129,394,545) – –

Inter company dividend 84,770,335 87,250,002 – –

Aggregate expenses disallowed for tax 498,759,885 299,244,221 412,123,712 296,180,701

Aggregate income not liable for tax (109,770,335) (110,027,987) (109,770,335) (110,027,987)

Aggregate deductible expenses for tax (603,192,223) (536,219074) (590,310,309) (543,524,277)

Adjustments for tax losses 208,956,305 206,534,252 208,956,305 206,534,252

(Profit)/Loss exempt from tax (29,216,388) (89,982,336) – –

taxable income for the year 126,280,450 29,019,675 – –

Income tax 12 % 15,153,654 3,482,361 – –

Income tax @ 28% 5,119,636 4,441,939 – –

Income tax based on 2% of turnover – 24,896,449 – –

20,273,290 32,820,749 – –

27.2 Reconciliation of Tax Losses tax Losses brought forward 311,998,427 104,568,301 311,998,427 104,568,301

tax Loss utilised during the year (4,559,553) (7,972,295) (4,559,553) (7,972,295)

Loss for the year of assessment 105,627,203 215,402,421 105,627,203 215,402,421

tax loss carried forward 413,066,077 311,998,427 413,066,077 311,998,427

28. Earnings Per Sharethe Company’s earnings per share is based on the profit attributable to the ordinary shareholders and the weighted average number of ordinary shares outstanding during the year.

Group Company

For the year ended 31st March 2015 2014 2015 2014

Profit for the year (Rs.) 84,277,854 208,953,909 89,938,006 107,751,965

Weighted average number of ordinary shares in issue during the year 1,409,505,596 1,409,505,596 1,409,505,596 1,409,505,596

Earnings per share (Rs.) 0.06 0.15 0.06 0.08



29. Related Party Transactionsthe Company carries out transactions in the ordinary course of its business with parties who are defined as related parties in Sri Lanka Accounting Standard 24 ‘Related Party Disclosures’, the details of which are reported below. the pricing applicable to such transactions is based on the assessment of risk and pricing model of the Company and is comparable with what is applied to transactions between the Company and its unrelated customers.

29.1 Transactions with Subsidiaries - Company

Name of the Company Name of Director Nature of transaction Amount Paid/(Received)

2014/15Rs. Mn

2013/14Rs. Mn

New Nawaloka hospitals (Pvt) Ltd. Mr. h.K.J. Dharmadasa Provision of services (522.10) 712.69

Mr. h.K.u.h. Dharmadasa Cost of pharmaceutical and general stores items

658.80 553.68

Mr. A.G. Dharmadasa Drugs income transferred (124.57) (155.94)

Fund transfer 160.82 (610.71)

New Nawaloka Medical Centre (Pvt) Ltd. Mr. h.K.J. Dharmadasa Provision of services (224.68) 78.13

Mr. A.G. Dharmadasa Cost of pharmaceutical and general stores items 215.71 241.21

Mrs. C.S. Dharmadasa Drugs income transferred – (3.71)


Nawaloka Medicare (Pvt) Ltd. Mr. h.K.J. Dharmadasa Provision of services (78.13) 29.93

Mr. A.G. Dharmadasa Cost of pharmaceutical and general stores items

(241.21) 256.21

Mr. h.K.u.h. Dharmadasa Drugs income transferred 3.71 (16.54)


Date of Transactions

the transactions have been recorded on daily or monthly basis throughout the year.

Rationale of the Transaction

New Nawaloka hospitals (Pvt) Ltd. and New Nawaloka Medical Centre (Pvt) Ltd. are fully-owned Subsidiaries of Nawaloka hospitals PLC.

29.2 Transactions with Joint Venture Company – Company

Name of the Company Name of the Director Nature of transaction Amount Paid/(Received)

2014/15Rs. Mn

2013/14Rs. Mn

Nawaloka Metropolis Laboratories (Pvt) Ltd. Mr. h.K.J. Dharmadasa Provision of services (2.08) 83.28

Prof. Lal Chandrasena Joint Venture Company collection transfer 386.59 342.64

Mr. h.K.u.h. Dharmadasa transfer revenue (340.30) (435.67)

Date of Transactions

the transactions have been recorded on daily or monthly basis throughout the year.

Rationale of the Transactions

Nawaloka Metropolis Laboratories (Pvt) Ltd. is a joint venture of the Nawaloka hospitals PLC and principal activity of the Company is to provide laboratory services.



29.3 Transactions with Other Related Companies – Group

Name of the Company Name of the Director Nature of transaction Amount Paid/(Received)

2014/15Rs. Mn

2013/14Rs. Mn

Nawaloka Construction Company (Pvt) Ltd.

Mr. h.K.J. Dharmadasa Advance paid to land (68.79) (56.13)

Mr. h.K.u.h. Dharmadasa

Mr. A.G. Dharmadasa

this note should be read in conjunction with Note 12, Note 18.2 and Note 22 receivable from related parties, mortgage details and payable to related parties respectively.

29.4 Transactions with Key Management PersonnelAccording to Sri Lanka Accounting Standard 24 ‘Related Party Disclosures’, Key Management personnel, are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Board of Directors (Including executive and Non-Executive Directors) have been classified as Key Management Personnel of the Company.

the details of the compensation paid to Key Management Personnel are disclosed in Note 25 to the Financial Statements.

30. Changes in Classificationto facilitate comparison, relevant balances pertaining to the previous year, have been reclassified to conform to current year’s classification and presentation.

31. Capital Commitmentsthere are no material capital commitments as at the reporting date.

32. Contingent Liabilitiesthere are no material contingent liabilities as at the reporting date which require adjustment to or disclosure in the Financial Statements other than following:

Claims for damages have been made by the plaintiff by an appeal against the judgment entered in case numbers WP/hCCA/COL/181-2010(F) in the high Court of the Civil Appeal. Based on the information and current status of the above cases, the Company is not in a position to quantify the potential financial impact if any, as at the reporting date but the Management does not expect any significant outflow to arise from these cases.

33. Events Occurring after the Reporting Datethere are no events that have occurred after the reporting date, which would require adjustments to, or disclosure in the Financial Statements.

34. Directors’ Responsibilitiesthe Board of Directors is responsible for the preparation and presentation of these Financial Statements according to the Sri Lanka Accounting Standards and Companies Act No. 07 of 2007.




35. Accounting Classifications and Fair Valuesthe Group do not designate any of its financial assets/liabilities at fair value, hence a classification between fair value hierarchy do not apply.

35.1 Fair Values vs. Carrying Amounts

31st March 2015Fair Value through

Profit or Lossheld-to-Maturity Loans and

ReceivablesAvailable-for-Sale Other Financial

Liabilitiestotal Carrying

AmountFair Value

Cash and cash equivalents – – 453,619,833 – – 453,619,833 453,619,833

trade and other receivables – – 439,343,071 – – 439,343,071 439,343,071

– – 892,962,904 – – 892,962,904 892,962,904

Refundable rental and other deposits – – – – – – –

trade and other payables – – – – 473,368,248 473,368,248 473,368,248

– – – – 473,368,248 473,368,248 473,368,248

31st March 2014Fair Value through

Profit or Lossheld-to-Maturity Loans and

ReceivablesAvailable-for-Sale Other Financial

Liabilitiestotal Carrying

AmountFair Value

Cash and cash equivalents – – 505,699,237 – – 505,699,237 505,699,237

trade and other receivables – – 336,975,810 – – 336,975,810 336,975,810

– – 842,675,047 – – 842,675,047 842,675,047

Refundable rental and other deposits – – – – – – –

trade and other payables – – – – 445,880,127 445,880,127 445,880,127

– – – – 445,880,127 445,880,127 445,880,127

36. Financial Instruments

Financial Risk Management

Overview

the Group has exposure to the following risks arising from financial instruments: y Credit risk

y Liquidity risk

y Market risk

this note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital.

Risk Management Frameworkthe Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.

the Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. the Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

the Group Audit Committee monitors the process through which business risks are identified for action by management and for the Board’s attention and monitors the effectiveness of the Company’s internal controls. the Group Audit Committee is assisted in its role by internal audit. Internal audit undertakes both regular and ad hoc reviews of controls and procedures, the results of which are reported to the Audit Committee.


36.1 Credit RiskCredit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment securities.

36.1.1 Exposure to Credit Riskthe carrying amount of financial assets represents the maximum credit exposure. the maximum exposure to credit risk at the reporting date was as follows:

Description 2015

Rs.2014

Rs.

trade debtors & other receivables 439,343,071 336,975,810

Cash & cash equivalents (189,273,675) 81,720,181

total 250,069,396 418,695,991

36.1.2 Trade and Other Receivables

the Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. however, management also considers the demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk.

the Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. the main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. the collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

36.1.3 Impairment Losses

trade and other receivables at the reporting date was neither past due nor impaired.

36.2 Liquidity RiskLiquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. the Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

the Group maintains the level of its cash and cash equivalents at an amount in excess of expected cash outflows on financial liabilities (other than trade payables) over the succeeding 60 days. the Group also monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables. In addition, the Group maintains Rs. 215 Mn overdraft facility that is unsecured. Interest would be payable at the market rate.

the disclosure shows net cash flow amounts for derivatives that are net cash settled and gross cash inflow and outflow amounts for derivatives that have simultaneous gross cash settlement. It is not expected that the cash flows included in the maturity analysis would occur significantly earlier or at significantly different amount.

36.3 Market RiskMarket risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. the objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.



36.3.1 Currency Risk

the Group is exposed to currency risk on receipts, payments and borrowings that are denominated in a currency other than Sri Lankan Rupees. In respect of other monetary assets and liabilities denominated in foreign currencies, the Group’s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

36.3.2 Interest Rate Risk

the Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. therefore a change in interest rates at the reporting date would not affect profit or loss.

36.3.3 Capital Management

the Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of ordinary shares, retained earnings and revaluation reserve of the Group. the Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

the Group’s net debt to adjusted equity ratio at the reporting date was as follows:

2015Rs.

2014Rs.

total liabilities 4,758,288,129 3,438,980,747

Less: Cash & Bank 453,619,833 505,699,236

Net debt 4,304,688,269 2,933,281,511

total equity 3,887,681,839 3,902,955,948

Net debt to equity ratio 1.1 0.76

37. Segmental Analysis

District

Colombo Gampaha Total

Revenue 4,509,356,578 93,077,062 4,602,433,640

Profit for the year 154,525,050 (70, 247,196) 84,277,854

total assets 7,611,361,972 1,034,607,996 8,645,969,968

total liabilities 3,953,211,636 805,076,493 4,758,288,129

Based on Geographical Separation



Independent AssurAnce report

Annexes

Independent Assurance report to nawaloka Hospitals pLc on the elements of sustainability reporting in the Integrated Annual report for the year ended 31st March 2015

IntroductionWe were engaged by the Board of Directors of nawaloka Hospitals PLC (“Company”) to provide assurance on the following elements of the sustainability Reporting in the Integrated Annual Report for the year ended 31st March 2015 of nawaloka Hospitals PLC (“Report”).

y Reasonable assurance on the data on Financial Performance, as reported on page 08 of this Report.

y Limited assurance on the information provided on the following stakeholder groups as detailed below:

stakeholder Disclosures Integrated Report Page

Investors 34 to 35

Customers 35 to 41

employees 42 to 47

Business partners 48

social and environment 50 to 52

our conclusions(a) data on financial performance:

In our opinion, the data on financial performance, as reported on page 08 of the Integrated Annual Report 2015 are properly derived from the Financial statements of the Company for the year ended 31st March 2015.

(b) sustainability performance indicators and stakeholder disclosures:

Based on the limited assurance procedures performed, as described below, nothing has come to our attention that causes us to believe that the information provided on the stakeholder groups as described in the pages set out above, have not in all material respects, been prepared and presented in accordance with the sustainability Reporting Guidelines as described on page 07 of this Report.

Managements’ responsibility Management is responsible for the preparation and presentation of the Report in accordance with the Global Reporting Initiative (GRI) G4 Principles for Defining Report Content and Quality. These responsibilities includes the identification of stakeholders and material aspects and for establishing such internal controls as management determines are necessary to enable the preparation of the reported performance information and other information in the report that are free from material misstatement whether due to fraud or error.

our responsibilities and compliance with sLsAe 3000Our responsibility is to carry out a reasonable and limited assurance engagement and to express a conclusion based on the work performed. We conducted our engagement in accordance with sri Lanka standard on Assurance engagements sLsAe 3000: Assurance engagements other than Audits or Reviews of Historical Financial Information, issued by The Institute of Chartered Accountants of sri Lanka.

That standard requires that we comply with applicable ethical requirements, including independence requirements, and plan and perform the engagement to obtain reasonable and limited assurance about whether the Report is free from material misstatement.

summary of Work performed

Financial data

A reasonable assurance engagement on Financial Performance reported on page 08 of this Report involves verification that they were properly derived from Audited Financial statements of the Company for the year ended 31st March 2015.

sustainability performance Indicators

Our limited assurance engagement on the sustainability performance indicators included in the Report consisted of making enquiries, primarily of persons responsible for the management, monitoring and preparation of the sustainability indicators presented in the Report, and applying analytical and other evidence gathering procedures, as appropriate. These procedures included:

- Interviews with senior management and relevant staff at corporate and selected site level concerning sustainability strategy and policies for material issues, and the implementation of these across the business;

- enquiries of management to gain an understanding of Company’s processes for determining material issues for Company’s key stakeholder groups;

- enquiries of relevant staff at corporate level responsible for the preparation of the Report


- enquiries about the design and implementation of the systems and methods used to collect and report the information, including the aggregation of the reported information;

- Comparing the information presented in the Report to relevant underlying sources on a sample basis to determine whether all the relevant information has been appropriately included in the Report;

- Reading the sustainability Performance Indicators presented within the Report to determine whether they are in line with our overall knowledge of, and experience with, the sustainability performance of Company;

- Reading the remainder of the sections relation to sustainability included in the Report to determine whether there are any material misstatements of fact or material inconsistencies based on our understanding obtained as part of our assurance engagement.

A limited assurance engagement is substantially less in scope than a reasonable assurance engagement or an audit conducted in accordance with sri Lanka standards on Auditing and Assurance engagements and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit or a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance conclusion on the sustainability performance indicators.

use of this reportOur Assurance report is made solely to nawaloka Hospitals PLC in accordance with the terms of our engagement. Our work has been undertaken so that we might state to nawaloka Hospitals PLC those matters we have been engaged to state in this Assurance report and for no other purpose. We do not accept or assume responsibility to anyone other than nawaloka Hospitals PLC for our work, for this Assurance Report, or for the conclusions we have reached.

CHARTERED ACCOUNTANTSColombo

19th May 2015

AnnexesAnnexesIndependent AssurAnce report


General standard disclosures

GRIIndicator Description Page number/explanations

external Assurance

strategy and Analysis

G4-1 statement from the Chairman 12

organisation profile

G4-3 name of the Organisation Inner back cover

G4-4 Primary Brands, Products and/or services 36

G4-5 Location of Organisation’s Head Quarters Inner back cover

G4-6 number of countries where the Organisation operates and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the Report 7

G4-7 nature of ownership and legal form Inner back cover

G4-8 Markets served 39

G4-9 scale of the Reporting Organisation 7, 42

G4-10 Total workforce by employment type, employment contract and region broken down by gender 42

G4-11 Percentage of employees covered by collective bargaining agreements 47

G4-12 Organisation’s supply chain 33

G4-13 significant changes during the reporting period regarding size, structure or ownership 7

G4-14 explanation of whether and how the precautionary approach or principle is addressed by the organisation 82

G4-15 externally developed economic, environmental and social charters and principles or other initiatives to which the organisation subscribes or endorses 22

G4-16 Memberships in associations and/or national/international advocacy organisations 22

Identified Material Aspects and Boundaries

G4-17 Organisation’s entities covered by the report 7

G4-18 Process for Defining Report Content 7

G4-19 Material Aspects identified for Report Content 23 & 24

G4-20 Aspect Boundary for identified Material Aspects within the organisation 7

G4-21 Aspect Boundary for identified Material Aspects outside the organisation 7

G4-22 explanation of the effect of any restatement of information provided in earlier reports and the reason for such restatement 7

G4-23 significant changes from previous reporting periods in the scope, Aspect boundaries in the Report 7

stakeholder engagement

G4-24 List of stakeholder groups engaged by the Organisation 20 - 22

G4-25 Basis for identification and selection of stakeholders with whom to engage 20

G4-26 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group 20 - 22

G4-27 Key topics and concerns raised through stakeholder engagements and how the Organisation responded to them 20 - 22

GrI content Index

AnnexesAnnexesGrI content Index


General standard disclosures

GRIIndicator Description Page number/explanations

external Assurance

report profile

G4-28 Reporting period 7

G4-29 Date of most recent previous report 7

G4-30 Reporting cycle 7

G4-31 Contact point for questions regarding the Report or its Contents 7

G4-32 Compliance with GRI G4 Guidelines, GRI Content Index and the external Assurance Report 127 - 132

G4-33 Policy and current practice with regard to seeking external assurance for the Report 128 -129

Governance

G4-34 Governance structure of the Organisation, including committees under the highest governance body responsible for decision-making on economic, environment and social impacts 67

ethics and Integrity

G4-56 The values, principles, standards and norms of behaviour 31

specific standard disclosures

DMA and Indicators Material Aspects Page number/explanations

external Assurance

category: economic

Material Aspect: economic performance

G4 - DMA 24

G4 - eC1 Direct economic value generated, distributed and retained

G4eC3 Coverage of the organisation’s defined plan obligations 102

Material Aspect: Market presence

G4 - DMA 24

G4 - eC6 Proportion of senior management hired from the local community at significant locations of operation 24

Material Aspect: Indirect economic Impact

G4 - DMA 24

G4 - eC8 significant indirect economic impacts, including the extent of impacts 52

Material Aspect: procurement practices

G4 - DMA 33

G4 - eC9 Proportion of spending on local suppliers at significant locations of Operations 33






external Assurance

category: environment

Material Aspect: energy

G4 - DMA 24

G4 - en6 Reduction of energy consumption 51

Material Aspect: Water

G4 - DMA 24

G4 - en8 Total water withdrawal by source 52

Material Aspect: emissions

G4 - DMA 52

Material Aspect: effluents and Waste

G4 - DMA 24

G4 - en23 Total weight of waste by type and disposal method 52

category: social

sub-category: Labour practices and decent Work

Material Aspect: employment

G4 - DMA 25

G4 - LA1 Total number and rate of new employee hires and employee turnover by age group, gender and region 43

G4 - LA2 Benefits provided to full-time employees that are not provided to temporary or part-time employees by significant locations of operation 43

G4-LA3 Return to work and retention rates after parental leave by gender 43

Material Aspect: Labour/Management relations

G4 - DMA 25

G4 - LA4 Minimum notice periods regarding operational changes, including whether it is specified in collective agreements 45

Material Aspect: occupational Health and safety

G4 - DMA 25

G4 - LA6 Type of injury and rates of injury, occupational disease, lost days, and absenteeism, and total number of work related fatalities, by region and by gender 43

G4 - LA7 With high incidence or high risk of diseases related to their occupation 43

Material Aspect: training and education

G4 - DMA 25

G4 - LA9 Average hours of training per year per employee by gender and by employee category 43 and 44

G4 - LA10 Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings 43 and 44

G4 - LA11 Percentage of employees receiving regular performance and career development reviews by gender and employee category 43 and 44





external Assurance

Material Aspect: diversity and equal opportunity

G4 - DMA 25

G4 - LA12 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership and other indicators of diversity 45

Material Aspect: equal remuneration for Women and Men

G4 - DMA 25

G4-LA13 Ratio of basic salary and remuneration of women to men by employee category by significant locations of operation 46

Material Aspect: Labour practices and Grievance Mechanisms

G4 - DMA 25

G4-LA16 number of grievances about labour practices filed, addressed and resolved through formal grievance mechanisms 46

sub-category: Human rights

Material Aspect: non-discrimination

G4 - DMA 26

G4-HR3 Total number of incidents of discrimination and corrective actions taken 47

Material Aspect: Freedom of Association and collective Bargaining

G4 - DMA 26

G4-HR4 Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk and measures taken to support these rights 45

Material Aspect: child Labour

G4 - DMA 26

G4-HR5 Operations and suppliers identified as having significant risk for incidents of child labour and measures taken to contribute to the effective abolition of child labour 47

Material Aspect: Human rights Grievance Mechanisms

G4 - DMA 26

G4-HR12 number of grievances about human rights impacts filed, addressed and resolved through formal grievance mechanisms 47




external Assurance

sub-category: society

Material Aspect: Local communities

G4 - DMA 26

G4-sO1 Percentage of operations with implemented local community engagement, impact assessments and development programmes 50

Material Aspect: Anti-corruption

G4 - DMA 26

G4-sO3 Total number and percentage of operations assessed for risks related to corruption and the significant risks identified 50

Material Aspect: Anti-competitive Behaviour

G4 - DMA 26

G4-sO7 Total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes 50

Material Aspect: compliance

G4 - DMA 26

G4-sO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations 50

sub-category: product responsibility

Material Aspect: customer Health and safety

G4 - DMA 26

G4-PR1 Percentage of significant product and service categories for which health and safety impacts are assessed for improvement 40

G4-PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services 40

Material Aspect: product and service Labelling

G4 - DMA 26

G4-PR5 Results of surveys measuring customer satisfaction 40 and 41

Material Aspect: Marketing communications

G4 - DMA 26

G4-PR6 sale of banned or disputed products 41

G4-PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship by type of outcomes 41

Material Aspect: customer privacy

G4 - DMA 26

G4-PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data 41



Annexes

top 20 shareholders as at 31st March 2015

name of the shareholder (Other than Public) number of shares %

1. Mr. H. K. J. Dharmadasa 462,736,182 32.83

2. nawaloka Construction Company (Private) Limited 441,778,880 31.34

3. Dr. T. senthilverl 308,108,473 21.86

4. national savings Bank 17,789,400 1.26

5. employees’ Provident Fund 14,004,838 0.99

6. Ms. A.G. Dharmadasa 5,066,686 0.36

7. Mrs. P. nanayakkara 5,066,666 0.36

8. Mr. D.M. Rajapakse 4,496,400 0.32

9. Merchant Bank of sri Lanka Ltd. A/C no. 1 4,481,290 0.32

10. Bank of Ceylon A/C Ceybank Unit Trust 4,241,998 0.30

11. Mr. V.R. Ramanan 3,400,000 0.24

12. Mr. H.A. Pieris 3,082,200 0.22

13. Mr. A.G. Dharmadasa 3,004,026 0.21

14. nawaloka Developments (Pvt) Ltd. 2,814,932 0.20

15. Mrs. C.s. Dharmadasa 2,581,866 0.18

16. Mr. K.s. Warusavitarana 2,500,066 0.18

17. Mrs. n.H. Abdul Husein 2,205,000 0.16

18. Mr. U.H. Palihakkara 2,349,180 0.17

19. Mrs. P. Ganeshan 2,000,000 0.14

20. Tranz Dominion, L.L.C. 1,712,067 0.12

Total shares 1,293,420,150 91.76

Balance 116,085,446 8.24

Total no. of shares 1,409,505,596 100.00

Investor InForMAtIon


range of shareholders

As at 31st March 2015

no. of shareholders

no. of shares

1 - 500 2,030 332,600

501 - 5,000 2,776 6,301,513

5,001 - 10,000 885 6,774,714

10,001 - 20,000 653 10,071,460

20,001 - 30,000 331 8,730,329

30,001 - 40,000 168 5,956,659

40,001 - 50,000 122 5,816,494

50,001 - 100,000 212 16,114,514

100,001 - 1,000,000 186 50,136,407

1,000,001 & above 26 1,299,270,906

total 7,389 1,409,505,596

composition of shareholders

no. of shareholders as at 31.03.2015

total Holding %

no. of shareholders as at 31.03.2014

Total Holding %

Category

Institutional shareholders 63 492,039,933 34.91 56 481,057,207 34.13

Individual shareholders 7,326 917,465,663 65.09 7,514 928,448,389 65.87

total 7,389 1,409,505,596 100 7,570 1,409,505,596 100

Resident shareholders 7,376 1,409,002,730 99.98 7,544 1,408,323,566 99.92

non-Resident shareholders 13 502,866 0.02 26 1,182,030 0.08

total 7,389 1,409,505,596 100.00 7,570 1,409,505,596 100.00

AnnexesAnnexesInvestor InForMAtIon


FIve YeAr stAtIstIcAL suMMArY

2014/15 2013/14(Restated)

2012/13 2011/12 2010/11

Group

Income statement

Revenue 4,602,433,640 3,993,473,302 4,222,907,733 3,710,878,442 3,233,035,096

Cost of services (2,331,583,775) (1,910,510,751) (2,013,392,367) (1,823,670,511) (1,645,969,580)

Gross profit 2,270,849,865 2,082,962,551 2,209,515,366 1,887,207,931 1,587,065,516

Other operating income 65,199,571 64,194,796 44,047,999 30,210,657 38,603,398

Profit from operations 352,342,610 475,165,536 599,414,193 459,028,530 324,001,074

net profit after taxation 84,277,854 208,953,909 452,260,028 270,686,563 1,070,722,130

Balance sheet data

shareholders’ funds 3,887,681,839 3,902,955,948 3,756,665,160 3,170,442,180 2,970,230,897

Financial ratios

Gross profit ratio (%) 49 52 52 51 49

net profit ratio (%) 2 5 11 7 33

Increase in revenue (%) 15 (5) 14 15 12

Return on capital employed (%) 2 5 12 9 36

Current asset ratio (%) 1.03 1.11 0.71 0.58 0.43

Quick asset ratio (%) 0.80 0.85 0.48 0.42 0.29

Return on assets (Rs.) 0.01 0.03 0.08 0.05 0.24

Debt/equity ratio (%) 0.83 0.58 0.25 0.28 0.23

earnings/(loss) per share (After share split) 0.06 0.15 0.32 0.19 0.76

net assets per share (Rs.) (After share split) 2.76 2.77 2.67 2.25 2.11

Dividend per share (Rs.) 0.06 0.05 0.05 0.05 –

company

Income statement

Revenue 2,497,830,914 2,112,827,471 2,082,532,459 1,806,857,492 1,608,036,836

Cost of services (1,229,903,547) (957,537,962) (988,218,793) (876,040,195) (767,116,507)

Gross profit 1,267,927,367 1,155,289,509 1,094,313,666 930,817,297 840,920,329

Other operating income 152,643,920 132,467,166 116,017,261 124,673,860 72,280,970

Profit from operations 375,219,106 291,176,935 313,518,573 226,817,202 147,845,400

net profit after taxation 89,938,006 107,751,965 254,942,375 152,363,098 98,822,914

Balance sheet data

shareholders’ funds 1,693,759,266 1,704,925,830 1,660,056,411 1,496,177,022 1,414,289,204

Financial ratios

Gross profit ratio (%) 51 55 53 52 52

net profit ratio (%) 4 5 12 8 6

Increase in revenue (%) 18 1 15 12 10

Return on capital employed (%) 5 6 15 10 7

Current asset ratio 1.62 1.12 0.53 0.57 0.61

Quick asset ratio 1.53 1.01 0.48 0.53 0.57

Return on assets (Rs.) 0.02 0.02 0.07 0.05 0.05

Debt/equity ratio 1.83 1.20 0.16 0.2 0.2

earnings/(Loss) per share (After share split) 0.06 0.08 0.18 0.11 0.07

net assets per share (Rs.) (After share split) 1.20 1.21 1.18 1.06 1

Dividend per share (Rs.) 0.06 0.05 0.05 0.05 –

Annexes


stAteMent oF vALue Added

2014/15rs.

2013/14Rs.

2012/13Rs.

2011/12Rs.

2010/11Rs.

value Added

revenue 4,602,433,640 3,993,473,302 4,222,907,733 3,710,878,442 3,233,035,096

Less: Cost of materials and services obtained (2,983,613,688) (2,418,803,334) (2,432,734,726) (2,333,546,116) (1,255,320,975)

Add: Other income 65,199,571 64,194,796 44,047,999 30,210,655 38,603,398

1,684,019,523 1,638,864,764 1,834,221,006 1,407,542,981 2,016,317,519

distribution value Added

to employees

salaries, wages, incentive and other benefits 968,758,629 832,696,146 865,042,371 717,949,353 588,633,589

Total employees 968,758,629 832,696,146 865,042,371 717,949,353 588,633,589

to Lenders

Interest on loans and leases 285,092,893 202,170,943 104,009,192 59,932,975 70,795,460

Total interest on loans and leases 285,092,893 202,170,943 104,009,192 59,932,975 70,795,460

to Government

Taxation 9,176,683 83,783,780 2,832,483 91,418,057 58,868,305

Total Government 9,176,683 83,783,780 2,832,483 91,418,057 58,868,305

to provision

Results of associate companies – – – – 2,469,078

Impairment profit/loss – – – – –

Revaluation deficit – – – – –

Total provision – – – – 2,469,078

to expansion and Growth

excess on acquisition

Depreciation 351,695,091 303,447,828 265,422,430 267,556,033 224,828,956

Retained profit/(loss) 69,296,227 216,766,067 596,914,530 270,686,563 1,070,722,131

Total expansion and growth 420,991,318 520,213,895 862,336,960 538,242,596 1,295,551,087

1,684,019,523 1,638,864,764 1,834,221,006 1,407,542,981 2,016,317,519

Annexes


Financial position(Rs. ’000)

2014/15 2013/14

As at 31.03.2015 31.12.2014 30.09.2014 30.06.2014 31.03.2014 31.12.2013 30.09.2013 30.06.2013

Fixed Assets 7,112,749 6,959,439 6,582,910 6,485,291 6,047,890 5,417,150 5,332,171 5,169,368

shareholder’ Funds 3,887,682 3,938,060 3,891,867 3,949,609 3,902,955 3,946,750 3,885,505 3,881,377

Income statement data

For the three months ended Total 31.03.2015 31.12.2014 30.09.2014 30.06.2014 Total 31.03.2014 31.12.2013 30.09.2013 30.06.2013

Revenue 4,602,434 1,222,277 1,214,044 1,108,272 1,057,841 3,993,473 1,088,668 976,793 1,003,255 1,004,757

Gross profit 2,270,850 598,484 613,495 543,717 515,154 2,082,963 552,039 492,709 504,408 533,807

net profit before tax 93,455 (34,222) 52,193 28,557 46,927 292,737 42,691 61,632 78,235 110,179

ordinary share Information

nominal value per share is Re. 1.00

Market price per share (Rs.) 31.03.2015 31.12.2014 30.09.2014 30.06.2014 31.03.2014 31.12.2013 30.09.2013 30.06.2013

High 3.50 3.60 3.90 3.50 3.50 3.10 3.10 3.50

Low 2.90 3.00 3.20 3.20 2.80 3.00 2.90 2.80

Closing 2.90 3.30 3.70 3.20 2.20 3.00 3.00 3.20

Financial Measures

31.03.2015 31.12.2014 30.09.2014 30.06.2014 31.03.2014 31.12.2013 30.09.2013 30.06.2013

net assets per share 2.76 2.79 2.76 2.80 2.77 2.80 2.76 2.75

QuArterLY stAtIstIcs

Annexes


corporAte InForMAtIon

name of the companynawaloka Hospitals PLC

company registration no.PQ 78

registered officeno. 23, Deshamanya H. K. Dharmadasa Mawatha, Colombo 00 200, sri Lanka.

Telephone(+94 11) 2544444-56, 2305051-79

Telefax(+94 11) 2430393

E-mail/[email protected], www.nawaloka.com

Legal FormQuoted Public Company with limited liability incorporated in sri Lanka under the Companies Ordinance 1938 and reregistered under the Companies Act no. 07 of 2007.

Board of directors1. Mr. H.K. Jayantha Dharmadasa (Chairman & CeO)2. Mr. Rienzie T. Wijetilleke (Vice-Chairman)3. Prof. Lal G. Chandrasena (Director/General Manager)4. Deshabandu Tilak de Zoysa 5. Mr. Tissa Kumara Bandaranayake 6. Mr. U.H. Dharmadasa7. Mr. A.G. Dharmadasa8. Ms. A.G. Dharmadasa9. Dr. T. senthilverl10. Mr. D.s. AbeyRatna

secretaries to the companyM & A Company secretaries (Private) Limited, no. 28 (Level 2), W.A.D. Ramanayake Mawatha, Colombo 00 200.

AuditorsKPMG Ford, Rhodes, Thornton & Co.,Chartered Accountants,no. 32A, sir Mohamed Macan Markar Mawatha,Colombo 00 300.

Lawyer(s)Nithi Murugesu & Associates Attorneys-at-Law & notaries Public, no. 28 (Level 2), W.A.D. Ramanayake Mawatha, Colombo 00 200.

Mr. H. Chandrakumar de Silva Attorney-at-Law, no. 7, Hedges Court, Colombo 01000.

BankersHatton national Bank PLCsampath Bank PLCseylan Bank PLCstate Bank of IndiaCommercial Bank of Ceylon PLCBank of CeylonDeutsche Bank PLCAmana Bank PLCDFCC Bank PLC

subsidiariesnew nawaloka Hospitals (Pvt) Ltd.new nawaloka Medical Centre (Pvt) Ltd.nawaloka Medicare (Pvt) Ltd.

Joint venturenawaloka Metropolis Laboratories (Pvt) Ltd.


notIce oF MeetInG

notice is hereby given that the 26th Annual General Meeting of nAWALOKA HOsPITALs PLC will be held at the Committee Room of the “BMICH” (Bandaranaike Memorial International Conference Hall) at Bauddhaloka Mawatha, Colombo 07 on Tuesday the 30th day of June 2015, at 10.30 a.m. for the following purposes:

Agenda1. To receive and consider the Report of the Board of Directors on the affairs of the Company and the Financial statement for the year ended 31st

March 2015, together with the Report of Auditors thereon;

2. To resolve in terms of section 211 of the Companies Act no. 07 of 2007 to appoint/re-appoint Mr. R. T. Wijetilleke (who is currently 75 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in section 210 of the said Act, shall not apply to him and subject to his rotation;

3. To resolve in terms of section 211 of the Companies Act no. 07 of 2007 to appoint/re-appoint Mr. T.K. Bandaranayake (who is currently 72 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in section 210 of the said Act, shall not apply to him and subject to his rotation;

4. To re-elect Directors as follows:

a. Re-elect, as a Director, in terms of Article 74, Deshabandu Tilak de Zoysa who retires by rotation and offers himself for re-election;

b. Re-elect, as a Director, in terms of Article 74, Mr. A.G. Dharmadasa who retires by rotation and offers himself for re-election;

c. Re-elect, as a Director, in terms of Article 74, Mr. T.K. Bandaranayake who retires by rotation and offers himself for re-election;

5. To authorise the Board of Directors to determine and make donations to charities;

6. To re-appoint Messrs. KPMG (Chartered Accountants) as Auditors of the Company and authorise the Board of Directors to determine their remuneration; and

7. To transact any other business of which due notice has been given.

By Order of the Board

M & A company secretaries (pvt) Ltd.Company Secretaries

19th May 2015

Notes

1. A member is entitled to appoint a proxy to attend and vote instead of him/herself. A proxy need not be a member of the Company. A Form of Proxy accompanies this notice.

2. The completed form of proxy must be deposited at the Registered Office, No. 23, Deshamanya H. K. Dharmadasa Mawatha, Colombo 02, Sri Lanka, not later than 10.30 a.m on 28th June 2015 (Forty-Eight hours prior to the meeting).

3. A person representing a Corporation is required to carry a certified copy of the Resolution authorizing him/her to act as the Representative of the Corporation. A representative need not be a member.

4. A person representing a shareholder as the Attorney (Power of Attorney) is required to carry the original or a certified copy of the said Power of Attorney.

5. The Transfer books of the Company will be kept open.


notes

Nawaloka Hospitals PLC Annual Report 2014/15

ForM oF proxY

I/We …………………………………………………………………………………………… (nIC/PP no.) …………………………………………………

of ……………………………………………………………………………………………………………………………………………………………………

being a member/members of nAWALOKA HOsPITALs PLC hereby appoint-

Mr. H.K.J. Dharmadasa or failing him

Mr. R.T. Wijetilleke or failing him

Deshabandu Tilak de Zoysa or failing him

Prof. L.G. Chandrasena or failing him

Mr. T.K. Bandaranayake or failing him

Mr. U.H. Dharmadasa or failing him

Mr. A.G. Dharmadasa or failing him

Ms. A.G. Dharmadasa or failing her

Dr. T. senthilverl or failing him

Mr. D. sunil AbeyRatna or failing him

……………………………………… (nIC/ PP no.) …………………………… as *my /our Proxy to ** vote as indicated hereunder for me*/us

on my*/our behalf at the Annual General Meeting of the Company to be held on Tuesday the 30th day of June 2015 at 10.30 a.m. at the

Committee room of the ‘BMICH’ (Bandaranaike Memorial International Conference Hall) at Bauddhaloka Mawatha, Colombo 7 and at

any adjournment thereof and at every poll which may be taken in consequence thereof.For Against

i. To receive and consider the Report of the Board of Directors and the Financial statements for the year ended 31st March 2015 together with the Report of Auditors thereon.

ii. To appoint Mr. R.T. Wijetilleke on to the Board of Directors until the next AGM notwithstanding him having attained the age of 70

iii. To appoint Mr. T. K. Bandaranayake on to the Board of Directors until the next AGM notwithstanding him having attained the age of 70

iv. To re-elect directors :-a. To re-elect Deshabandu Tilak de Zoysa who retires by rotation and who comes up for re-election.

b. To re-elect Mr. A.G. Dharmadasa who retires by rotation and who comes up for re-election.

c. To re-elect Mr. T. K. Bandaranayake who retires by rotation and who comes up for re-election.

v. To authorise the Directors to determine and make donations.

vi. To re-appoint KPMG (Chartered Accountants) as Auditors and to authorise the Directors to determine their remuneration.

vii. To transact any other business of which due notice has been given

In witness*my/our hands this …………… day of ……………… Two Thousand and Fifteen.

……………………………………… signature of shareholder/s

Note:a * Please delete the inappropriate words.b ** If you wish your Proxy to speak at the meeting you should interpolate the words ‘Speak and’ in the place indicated with and initial such interpolation.


Instructions as to completion1. In terms of Articles 40 (a) of the Articles of Association of the Company: The instrument appointing a proxy shall be in writing and-

1. in the case of an individual, shall be signed by the appointer or his Attorney (if signed by the Attorney the Company reserves the right to request to be furnished with a copy of the said Power of Attorney); and

2. in the case of a corporation or company shall be either under its common seal or seal or signed by its Attorney or by an Officer on behalf of the Company.

The Company may, but shall not be bound to, furnish evidence of the authority of any such Attorney or Officer. A proxy need not be a member of the Company.

2. Kindly perfect the Form of Proxy by filling it legibly with your full name and address and it must be signed at the space provided. Please fill in the date of signature and indicate with an “x” in the space provided, as to how your proxy is to vote on each resolution. If no indication is given, the proxy, in his/her discretion may vote as he/she thinks fit.

3. In terms of Article 52 of the Articles of Association of the Company in the case of joint-holding of a share, the senior tenders a vote, whether in person or by proxy or by Attorney or by representative and that vote 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.

4. In case of a Joint holding only one member or his duly appointed proxy may attend.

5. To be valid, the completed Form of Proxy should be deposited at the Registered Office of the Company situated at no. 23, Deshamanya H. K. Dharmadasa Mawatha, Colombo - 02 not later than 48 hours of the date and time appointed for the meeting.

ForM oF proxY


cIrcuLAr to sHAreHoLders

Dear shareholder,

suBMIssIon oF AnnuAL report to sHAreHoLdersWe are pleased to enclose herewith the Annual Report of nawaloka Hospitals PLC in CD-ROM format as per Rule 7.5 of the revised Listing Rules of the Colombo stock exchange (the “Cse”). The said Rules are set out on the reverse of this Circular for the information of the shareholders.

If a printed copy of the Annual Report is required, the shareholder could make a written request to the Company for same. Upon such request, the Company will send a printed copy of the Annual Report to the requesting shareholder, within eight Market days (8 Market days) of receipt of such request.

If therefore you wish to receive the Annual Report in a printed form in addition to the CD-ROM, kindly complete and forward the attached Request Form to reach the company on or before …………………………… We wish to appraise you of the fact that if the Company has not received any written notification from a shareholder by the said date, the Company is not obliged to provide a printed copy of the Annual Report to the shareholder.

If you have any queries relating to the use of the CD-ROM you may contact the following persons on any working day between 9.00 a.m and 4.00 p.m.:

names Contact numbers e-mail

nalaka niroshana 0777 360175 [email protected]

Thenuka Dissanayake 0778 439271 [email protected]

Kasun Mihiranga 0779 603366 [email protected]

email: [email protected](Website: www.nawaloka.com)

By order of the Board

M & A company secretaries (private) Ltd.

19th May 2015


cIrcuLAr to sHAreHoLders

tHe current reQuIreMents set out In tHe LIstInG ruLes (ruLe 7.5) oF tHe coLoMBo stocK excHAnGe reLAtInG to tHe suBMIssIon oF AnnuAL reports to sHAreHoLders Is As FoLLoWs; A listed Company which issues to its shareholders its Annual Reports in a CD-ROM is required in terms of the said Listing Rules to comply with the following:

1. To provide a printed copy of the Annual Report to a shareholder, upon such shareholder making a written request and to designate a person to attend to the shareholders’ requests in this regard;

2. To ensure that a printed copy of the Annual Report is forwarded to the shareholder requesting the same, within eight Market Days from the date of receipt of the said request;

3. To designate a person/s to answer queries of shareholders relating to the use of the CD-ROM, in which the Annual Report is contained.

4. To issue, together with the CD-ROM, a note to the shareholders containing the following statement/information:

y That the Company will forward a printed copy of the Annual Report to the shareholder requesting the same, within eight (8) Market days from the date of receipt of such written request;

y The Company’s website and e-mail address, name/s and contact number/s of designated person/s attending to the shareholders’ requests and queries; and

y A request Form to enable the shareholder to request for a printed copy of the Annual Report, with the particulars of the Company’s facsimile number & mailing address.


ForM oF reQuest

The Financial Controller,nawaloka Hospitals PLC,no. 23, Deshamanya H.K. Dharmadasa Mawatha,Colombo – 00200.

Dear sir/Madam,

nAWALoKA HospItALs pLc

reQuest For A prInted copY oF tHe AnnuAL report – 2014/15.

With reference to the Circular to shareholders dated ………………… 2015, I/ we hereby request you to forward to me/us a printed copy of the Annual Report of nawaloka Hospitals PLC for the year 2014/15, in addition to the said Report being issued to me/us in a CD-ROM.

My/Our details are as follows:

Full name of shareholder(s)

shareholder(s) nIC/Passport/Company Registration no.

Address

Contact number & e-mail

Date: ……………, 2015 …………………………………… signature

Please Note:

1. The Form of Request should be filled in legibly, signed and dated;2. The completed Form should be mailed to the above-mentioned address on or before ……………………2015 ;3. In the event of joint shareholding, the Form may be executed by the registered Principal shareholder; and4. In the event the shareholder being a Company, the Form may be executed under the (common) seal of the Company or by a duly

authorised representative.

Mailing address:

The Financial Controller,C/o. nawaloka Hospitals Plc.no. 23, Deshamanya H.K. Dharmadasa Mawatha,Colombo – 00200.

Facsimile number[+94 11] 2430393


Naw

aloka H

osp

itals PL

CA

nnual Rep

ort 2014/15

Nawaloka Hospitals PLCNo. 23, Deshamanya H. K. Dharmadasa Mawatha, Colombo 2, Sri Lanka.

Tel: +94 112 544 444-56, +94 112 305 051-79 Fax: +94 112 430 393E-mail: [email protected]: www.nawaloka.com

nawaloka hospitals plc

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