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Hem

as Sustainability Report 2014/15

Sustainability Report 2014/ 15

Enriching

Lives

Hemas Sustainability Report 2014/15Scan to view the web version of this report

Our Vision / 2Hemas at a Glance / 4Report Profile, Scope and Boundary / 6The Hemas Sustainability Journey / 7Statement from Chairman / 9Statement from Group Chief Executive / 11The Enriching Lives Plan: Our Sustainability Vision and Framework / 12Identifying and Engaging Our Stakeholders / 16

STAKEHOLDER PERFORMANCEEconomic Value Creation / 22Customers / 24Business Partnerships / 28Employees / 36Community / 44Environment / 52Shareholders / 58GRI Index / 64Group Directory / 66Notes / 70

Contents

Enriching LivesAt Hemas Holdings PLC we want to make social responsibility and sustainability inherent in our everyaction, so that every employee experiences the sense of pride that is the reward of a life well lived. We’re one of Sri Lanka’s oldest and most respected corporates and our progressive attitude and forward thinking strategies are based around the values we represent: passion for our customers, an obsession for performance, a drive towards innovation and most importantly, our concern for people.

We believe that the long term view is the only one that matters; that the creation of sustainable value to all stakeholders is the only way to real success. That’s why our philosophy of sustainability is all-encompassing, measured against the social, environmental and economic impact we have on the world we live in.

‘Abhimana’ is our philosophy of sustainability that describes our vision of a sustainable and co-operative society, of people living and working together. We shall realise our vision by being a responsible corporate citizen, empowering and encouraging our employees and stakeholders and enriching lives through the spirit of Abhimana, in all that we think, believe and do.

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We Will do this by:

Being a national leader in personal care and healthcare solutions.

Investing in growth industries with potential for superior value creation.

Establishing a regional footprint through a team of passionate, capable and empowered people.

Our VisionTo be the best at Enriching LivesThrough Leadership in Wellness, Leisure and Mobility

Our PurposeTo Passionately deliver Outstanding Products and Services thus Enriching the Lives of our Customers and creating Superior Value to our Shareholders.

Hemas Holdings PLC Sustainability Report 2014/15 Hemas at a Glance 4Report Profile, Scope and Boundary 6The Hemas Sustainability Journey 7Statement from Chairman 9Statement from Group Chief Executive Officer 11The Enriching Lives Plan: Our Sustainability Vision and Framework 12

Identifying and Engaging Our Stakeholders 16Stakeholder Performance 20GRI Index 64Group Directory 67Notes 70

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Hemas traces its origins to Hemas (Drugs) Ltd, a company established in 1948 – the same year Ceylon declared its independence from Britain. The company’s evolution has mirrored that of the nation – a resilient and determined trajectory that has conquered much adversity and change.

Sheikh Hasannally Esufally (MBE), Founder of Hemas (Drugs), driven by his interest in medicine and community service, began trading chemical and pharmaceutical products. Being an entrepreneur he together with his sons ventured into many other related businesses, including the manufacturing of colognes and creams in the backyard of his Colombo residence. In 1962, he entered into collaboration with a French multinational, and the backyard project was propelled into a commercial one of much larger scale.

With the nationalization of industries and the sweeping commercial changes of the early 1970s, Hemas entered the promising travel and tourism industry; the open economic policies in the post-1977 era led to Hemas venturing into the business of commodity exports in 1978. Over the next three and a half decades, Hemas underwent rapid expansion and transformation, boldly entering lucrative industries such as FMCG, freight and logistics, hotels, power and energy, apparel manufacture, foods and hospitals; the Group was equally brave in divesting businesses wherever deemed necessary, including its commodities businesses and most recently, its power and energy business.

Operational changes were also made, with group operations restructured in 1993 to organise individual businesses into separate subsidiaries with accountability to the parent company. Hemas Drugs Ltd., was thus renamed Hemas Holdings (Pte) Ltd. In 2003, Hemas Holdings Ltd was listed on the Colombo Stock Exchange, and the family-owned entity became a public one.

Today, Hemas Holdings PLC stands among the leading conglomerates in Sri Lanka, with major interests in FMCG, Healthcare, Transportation, and Leisure. Over 65 years of progress has seen Hemas reach customers in every corner of Sri Lanka.

The entrenched strengths of dedication, drive and teamwork together with deep-rooted family values remains the solid foundation on which the conglomerate continues to grow.

Hemas reveres its moral compass: its values, which are upheld in each member of the Hemas team: Passion for Customer Obsession for Performance Driven by Innovation Concern for People

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Hemas at a Glance

HEALTHCARE

As the largest private sector organisation in the healthcare industry, we work within several key healthcare segments, and are the market leader in distribution of pharmaceuticals in Sri Lanka. We have set the standard within the private sector for the delivery of health and wellness related products and services through our Hospitals, Pharmaceuticals Distribution and Pharmaceuticals Manufacturing businesses.

Hemas Hospital experienced a rapid growth of 34.9% over the previous year.

Hospitals business now accounts for 32 labs and collection centres across the country.

Hemas Pharmaceuticals maintains its market leadership with the share of 21.3% (Source: IMS)

MSJ Industries, a fully owned subsidiary of J. L. Morison, manufactures over 70 generic pharmaceutical formulations which is registered with the Cosmetics, Devices and Drugs Regulatory Authority (CDDA).

The Fast Moving Consumer Goods (FMCG) Sector of Hemas is involved in the manufacture and marketing of Personal care, Personal wash and Home care branded products. Since 2013, the scope of the Sector has been expanded to include the consumer portfolio of our recent acquisition, J. L. Morison Son & Jones (Ceylon) PLC.

Baby Cheramy is the Number 1 baby care brand in the country.

Velvet was awarded ‘Local Brand of the Year’, ‘Product Brand of the Year’ and ‘Brand of the Year’ at the SLIM Brand Excellence Awards 2014.

Our Bangladesh business registered a historic topline growth of 89.7% for 2014/15.

Through our recent acquisition of J. L. Morison Son & Jones (Ceylon) PLC the sector inherited a portfolio of OTC brands that are household names.

Morisons’ Brand was recognised as one of the Top 100 brands listed for 2014/15.

FMCG

Rs 11,895 Million

Rs 13,921 Million

Revenue Revenue

Rs 1,071 Million

Rs 970 Million

Profit after Tax Profit after Tax

Hemas Holdings PLC Hemas at a Glance 4Report Profile, Scope and Boundary 6The Hemas Sustainability Journey 7Statement from Chairman 9Statement from Group Chief Executive Officer 11The Enriching Lives Plan: Our Sustainability Vision and Framework 12


Sustainability Report 2014/15

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Hemas Leisure sector comprises the Serendib Group of Hotels, which includes four award winning properties with a total inventory of 413 rooms, and Diethelm Travels Sri Lanka (DTSL), part of the Diethelm Travel Group, which boasts over half a century of experience in the inbound tour.

Hotels registered a 23.3% growth in revenue during the year under review.

The partnership with Minor Hotel Group has enabled Serendib Leisure to be the only Sri Lankan hotel chain to manage an international brand – AVANI

Total Inventory of 413 luxury rooms managed by Serendib Leisure Management Ltd.

Currently in the process of developing two 5 star properties in partnership with Minor Hotel Group; Anantara Tangalle and Anantara Kalutara.

DTSL, Sri Lanka’s premier Destination Management Company with over 35 years of experience.

LEISuRE TRANSPORTATION

From airline representation to travel services, maritime services and logistics; our distinct and trusted services have enabled us to gain significant share in each of these segments. Our relationships and links with strong global partners and key organisations in the global transportation industry allow us to provide the best in services to our valued customers.

GSA for Emirates Airlines, Malaysia Airlines, Ailitalia, Maldivian Airlines, China Southern Airlines & Druk Air.

Maritime representing FAR shipping lines in Sri Lanka, which is a leading feeder operator to India East coast providing exclusive services to Ports such as Haldia/Vizag and holding over 50% market share in Bangladesh trade lane.

Logistics operations include over 50 prime movers and 65 trailers including 7 car carriers, 6 acre container yards and 140,000 sq feet warehouse facility. Hemas Logistics specializes in Integrated logistics solutions.

Hemas Travels is the 2nd largest travel agency in the country for outbound travel business.

Establishment of a Cargo GSA for Maldivian Airlines in Thailand.

Rs 3,024 Million

Rs 1,518 Million

Revenue Revenue

Rs 318 Million

Rs 404 Million

Profit after Tax Profit after Tax

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Report Profile, Scope and Boundary

Welcome to the first sustainability report published by Hemas Holdings PLC. The information contained herein provide details of the sustainability and corporate citizenship initiatives pertaining to the operations of Hemas Holdings PLC and its subsidiaries in Sri Lanka.

Hemas Holdings PLC is a public limited liability company incorporated in Sri Lanka on 10th December 1948 under the Companies Ordinance No. 51 of 1938 and re-registered under the Companies Act No. 07 of 2007. The ordinary shares of the Company are quoted on the Main Board of the Colombo Stock Exchange since October 2003. The Registered Office of the Company is situated at “Hemas House”, No. 75, Braybrooke Place, Colombo 2.

unless otherwise specified, the information in this report is relevant to the financial year ended as at 31st March 2015. However, in several instances, reference is made to historical information as this is the first sustainability report published by the Hemas Holdings PLC.

The report was prepared with information from internal sources, validated by senior management. The financial information contained herein is extracted from the Hemas Holdings PLC audited accounts and notes to the financial statements for the year ended 31st March 2015, prepared in accordance with the Sri Lanka Accounting Standards and audited by Messrs Ernst and Young.

For additional information and background, this report may be read together with the Hemas Holdings PLC Annual Report for 2014/15 and our website www.hemas.com.

Global Reporting Initiative (GRI)This report has been prepared in accordance with the G4.0 Core Sustainability Reporting Guidelines. The GRI Index can be found on page 62. The report has not been externally assured prior to publication.

CONTACT uSWe welcome you to get in touch with us for further information and to provide your valuable feedback on our sustainability initiatives as well as this report by contacting us at Group Sustainability Division

Hemas House No 75, Braybrooke Place Colombo 02. Email: [email protected]




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The Hemas Sustainability Journey

2002

2011

2013

2007

2011

2014

2010

2012

2015

Piyawara – the Strategic CSR Project is launched in partnership with the Children’s Secretariat of the Ministry of Child Development and Women’s Affairs.

Formal adoption of a holistic Corporate Sustainability approach for Hemas, in partnership with STING Consultants.

Formal stakeholder engagement processes begin in the FMCG and Leisure sectors.

The Hemas Group introduces “Hemas Way” - a code of conduct for employees.

Hemas Pharmaceuticals publishes its first Sustainability Report.

Abhimana is launched with the objective of making Sustainability a lifestyle at Hemas.

A formal stakeholder engagement process is undertaken by Hemas Pharmaceuticals as a pilot programme, in partnership with STING Consultants.

The Group Sustainability Framework is rolled out along with the relevant policies and guidelines.

First Sustainability Report, in line with the GRI G4 reporting framework published by Hemas Holdings PLC.

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Statement from Chairman

Our approach to business is built on the solid foundation of our values; from the very outset, Hemas has inculcated a wholehearted belief in ethical business, steeped in good values and noble principles.

I am very happy to deliver this message for our very first Sustainability report. This report is our first attempt at compiling the many dimensions of responsible business at Hemas and how we go about giving meaning to our Vision of “enriching lives”.

Today, our business touches lives across all socio-economic groups, throughout the island. We help care for those who are sick, provide products to make people feel and look good, and assist with travel and leisure solutions to make the most of life. So, we give meaning to our Vision of “enriching lives” in many ways; be it with the customers we serve, with the community we interact with, our business partners who share our purpose, and of course our employees who are passionate about doing the best we can

Doing business responsibly is a philosophy that has been rooted in the DNA of the company right from its inception. This came about initially through the Founders belief in ethical business and high principles. But, more recently through embedding these values through ‘Abhimana’, our own model to help employees live these values.

The identification of key Sustainability parameters will help focus discussion at Board and Management meetings. The metrics, however, tell only part of the story, and going forward we will continue our efforts to drive the culture of Sustainability to each and every member of the Hemas family.

The Hemas Outreach Foundation has been leading the Group’s efforts to enrich lives through transformative CSR. The impact we have made through the foundation’s flagship project “Piyawara” is a source of immense satisfaction to us, and has far surpassed the achievements we imagined at its launch. The project, now in its thirteenth year, is one of the most successful public-private partnerships of its kind between a corporate entity and the government of Sri Lanka.

These achievements would not have been possible without the passion and commitment of the Hemas Team, and I thank them for their hard work and their shared belief in our cause. Whilst we have achieved much, there is much more that remains to be done, and we will continuously look for ways of embedding sustainability into our business decisions and enriching lives, wherever and whenever we can.

Hussein Esufally Chairman

20th July 2015

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Statement from Group Chief Executive Officer

Today, our strategic path is governed not only by how well we develop growing commercial opportunities but also by listening to and responding to the communities of which we are a part.

Enriching Lives are not just nice words for Hemas; but a statement of our aspiration, in both good times and challenging ones, to positively impact the lives of all stakeholders. It is the philosophy that has driven Hemas from its very beginnings to become the influential and resilient corporate entity it is today.

This report is our first attempt at detailing our sustainability priorities and practices; while it maybe the first time we are reporting on sustainability in this manner, responsibility is by no means a new concept to Hemas. Responsibility has always been integral to how we conduct our business. We have always believed and demonstrated that creating sustainable value for our stakeholders is the only way of achieving enduring success.

We know that, as one of the largest diversified Group operating across Sri Lanka, our considerable footprint necessitates that we prioritise not just our own interests but also those of our external stakeholders in our decision making. Today, our strategic path is governed not only by how well we develop growing commercial opportunities but also by listening to and responding to the communities of which we are a part. In this journey, Hemas looks to always uphold the tenets of ethical business, and we expect the same of those that partner us.

At the heart of our strategy is a vision to make a sustainable difference to the socioeconomic ecosystem within which we operate. In this respect, the most important milestone during the past year was the launch of ‘Abhimana’ throughout the Hemas Group to encourage among our employees the sense of dignity and pride that can only arise from a life responsibly lived. As I told my colleagues then, ‘Abhimana’ now becomes the core of everything we do, be it new product development or the creation of new processes, or the way we treat each other and those around us. It is an extension of the values upon which Hemas was founded, and encapsulates the very essence of the contents of our Sustainability Policies.

Building on the foundation of Abhimana, over the next few years we will focus on measuring and evaluating our sustainability footprint; we have identified the issues that are most material to our business and the sustainability criteria therein will be incorporated into our performance management system over the next financial year, creating a platform that keeps sustainability at the top of the agenda.

As we seek to grow our businesses and improve the products and services we provide to our customers island wide we will do so in a manner that will include responsible consumption of depleting resources; protection of the environment; an increased awareness of social impact and the infusion of innovation into our business. We are investing substantial resources in to how we manage

each of these aspects. Managing these priorities will enable us to respond meaningfully to the sweeping global challenges that will undeniably impact our company and our economy in the medium term, from the shift of wealth from the West to East to the rapid demographic changes such as urbanisation, growing wealth, changing disease patterns and ageing populations; climate change and pervasive digitization.

We hope this report enables you to gain some insight into our sustainability journey thus far and the broad strategy we have for the future. We are the first to recognise we are not perfect and the path ahead must be one of continuous improvement and committed effort, and in this endeavour, Hemas will always be guided by its vision “to be the best at Enriching Lives”.

Steven Enderby Group Chief Executive Officer

20th July 2015

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The Enriching Lives Plan: Our Sustainability Vision and Framework

At Hemas, it has been a long held belief that creating sustainable value to all our stakeholders is the only way to achieve long-lasting business success; ‘Enriching Lives’ has been a corporate ethos from our very inception and is today, the foundation of everything we do. Our sustainability philosophy is thus based on the overall

impact of our organisation’s operations on the triple bottom line of Environment, Social, and Economic factors.

The Hemas Group’s Sustainability Approach has been a value-driven one, as shown in the diagram below:

SuSTAINABILITY APPROACH

Corporate Values

Defining the role

the company wants to play in

society

Quality of values

Communicating values

Sustainability strategy

HOLISTIC CORPORATE ACCOuNTABILITY - PROCESS FOR A SuSTAINABLE & RESPONSIBLE BuSINESS

Stakeholder Engagement

How the company sets about defining and engaging

with its stakeholders

Identifying stakeholders

Engaging in dialogue

Responding to stakeholder feedback

IdentifyingImpacts, Risks

& Opportunities

The depth of analysis of the

risks and opportunities faced by the company

Identifying impacts

Identifying risks and opportunities

Addressing risks and opportunities

Policy Coverage

Establishes its commitment

and intent regarding implementing accountability

Environmental

Workplace

Human Rights

Social

Communicating policies

Management &

Governance

AccountabilityIncorporated

with management

and good governance

Certified management

systems

Commitment to external charters

Core governance procedures

Sustainability governance procedures

Measurement &

Disclosure

Tracking performance and keeping stakeholders

informed

Measuring sustainabilityperformance

Global standards of reporting

External assurance

This approach has been in practice within the Group for a number of years, as we pursued the goal of becoming a sustainable and responsible business by building upon the core values upheld by our founders. In June 2014, it was formalised with the launch of ‘Abhimana’, an initiative that seeks to incorporate good governance and responsibility into every action, taking Corporate Responsibility to the next level, beyond the standard theoretical guidelines and policies towards a lifestyle,

lived and practiced every day and constantly inculcated through learning, sharing, collaborating and reinforcing.

Abhimana, a Sanskrit word for ‘pride’, was designed to be a reminder of the dignity and pride of a life responsibly lived; the logo is a word cloud (as seen on the cover of this report), which personifies the simple values in life that are taken for granted and serves as a reminder that if one steadfastly lives by these




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values, the sustainability of any organisation is guaranteed. Every employee and stakeholder is encouraged to take ownership of Abhimana, and contribute new ideas and creativity to make a unique environment of practically applied corporate responsibility that ensures that Hemas and its stakeholders always do the right thing.

The pride we thus aim to generate via a culture of responsibility, manifests itself in –

Employees: Proud to work for Hemas

Partners and Stakeholders: Proud to be with Hemas

Communities: Proud to host Hemas

Consumers: Proud to use Hemas products & services

CREATING AWARENESS ABOuT ABHIMANA The launch of Abhimana was followed by a number of activities and activations among employees across the Group to create awareness and appreciation of its underlying principles. 2200 employees were educated through Abhimana workshops, which reached every person working for the ‘Hemas’ brand, including

part time and contract personnel as well as outsourced staff. Activations included events to celebrate diversity and the group wellness initiative launched by Hemas Hospitals (details on page 41).

Abhimana Champions have been appointed at each of the Group’s locations of operation, with responsibility to drive Abhimana initiatives; the structure of the working committee, made up entirely of volunteers, is as shown below:

Head Office Team: 3-4 volunteers

Hemas

Holdings PLC

Champion

Logistics Welisara Team: 4-5 volunteers

Fort Team: 3-4 volunteers

Transportation

Champion

Hendala Team: 4-5 volunteers

Colpetty Team: 3-4 volunteers

Pharmaceuticals

Champion

Galle Team: 4-5 volunteers

Thalwathugoda Team: 4-5 volunteers

Wattala Team: 4-5 volunteers

Hospitals

Champion


Dankotuwa Team: 4-5volunteers

Welisara Team: 4-5volunteers

FMCG

Champion

Kelaniya Team: 4-5 volunteers

Modara Team: 4-5 volunteers

JLM

Champion


DTSL

Champion


N*able

Champion

Group Sustainability Team

ABHIMANA WORKING COMMITTEE

Handing over the Abhimana pledge to Group CEO

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Abhimana Champions

An employee signing the Abhimana pledge

Kalumukalana forest conservation project at Dankotuwa

Annual community medical camp by J. L. Morison



The Enriching Lives Plan: Our Sustainability Vision and Framework


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Values

Results in

Strategic community investment/ philanthropy

Integrated approach

Abhimana

Corporate sustainability

Piyawara programme

Sustainable communities

Integrated sustainability management approach driven centrally by the Group

Central sustainability

team

Stakeholder feedback

Policies and guideline

Central monitoring

system

Periodic reporting by

sectors

Performance analysis

to identify areas for

improvement

Sustainability performance

tied to individual

KPIs

Public disclosure to stakeholders

MANAGING SuSTAINABILITY THROuGH ABHIMANA The launch of Abhimana propelled Hemas to a new stage in its sustainability evolution, where the goal of ‘Enriching Lives’ becomes formally entrenched in the performance narrative of the Group.

The Abhimana values drive the Hemas Group’s integrated sustainability management approach; the approach consists of eight strategic elements which together contribute towards our corporate sustainability, as shown in the diagram below:

In 2014/15, the Group identified 18 key social, environment and economic impacts relevant to the entire Group (material issues on page 16), and established goals that relate to each of the impacts. Over the 2015/16 financial year, scorecards will be implemented Group-wide to monitor and measure progress towards managing the impacts and achieving the set goals. The scorecard will be analysed on a monthly basis; with plans and strategies altered or modified wherever relevant, ensuring that the Group adapts to changes in its internal and external environments.

With the aim of becoming a more responsible corporate with a stronger outlook on sustainability, the goals will be linked to the performance of each Business unit with the respective Sector/Business Head held accountable for their progress, thereby entrenching the ‘Enriching Lives Plan’ in the management agenda.

Picture

An employee promoting Health & Safety at the workplace

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Identifying and Engaging Our Stakeholders

Defining the key stakeholder groups for a diversified holding company such as ours has been a complex process. Over the years, the group’s Sustainability Team has worked with the Senior Management Teams of our businesses to identify the stakeholders considered important by each business and sector. These stakeholders could broadly be categorised as those who can potentially influence our businesses; those who may be affected by our businesses and those who bear legal, operational and financial responsibilities towards our businesses.

These stakeholders were thereafter grouped and rated, based on their overall degree of influence & importance on the business as a whole. The key stakeholder groups thus identified were:

Investors Employees Customers Suppliers & Business Partners The Community The Environment

The Hemas corporate sustainability strategy and initiatives revolve around minimising our impact on these stakeholder groups, and are designed to create value for them wherever possible.

We engage with these stakeholders through multiple channels, including formal stakeholder engagement exercises carried out through our external partner Sting Consultants. The feedback thus obtained is prioritised according to relevance and potential impact: our strategic planning process ensures that we respond to the valid needs and concerns of our stakeholders while swift action is taken where corrective measures are deemed necessary.

The chart below depicts the channels we employ to proactively engage with our key stakeholder group, as well as the topics and concerns we address through our stakeholder engagement mechanisms:

STAKEHOLDER ENGAGEMENT

CuSTOMERS OuR BuSINESSES WORK WITH A CROSS SECTION OF CuSTOMERS FROM BOTH THE INDIVIDuAL AND B2B SEGMENTS

Reasons for Engagement To understand customer needs better To gauge product and service quality To innovate and improve our products and services

Methods of Engagement Customer satisfaction surveys (ongoing) and Annual Engagement SurveyOne on one interaction through customer meetings/progress reviews/visits (ongoing)Customer complaint hotlines/social media/marketing communication (ongoing)Industry exhibitions and trade fairs (ongoing)

Our Commitments Product and service quality, affordability, and safetyEnvironmental and social responsibility Distribution efficiency

EMPLOYEES THE EMPLOYEES WE ENGAGE BELONG TO BOTH THE ExECuTIVE AND NON-ExECuTIVE CADRE AND AT TIMES, ALSO INCLuDES THOSE PROVIDED TO uS BY MANPOWER AGENCIES

Reasons for Engagement To ensure we provide engaging and inspiring work and a safe workplace To create awareness of group strategy, key events, and sustainability To ensure that we remain a preferred employer

Methods of Engagement Weekly and monthly management meetings, emails and newslettersJoint Consultative Committees (ongoing)Performance reviews (bi-annual)Employee Engagement Survey (annual)Team building activities including get-togethers, sports tournaments, talent shows and CSR events (annual)

Our Commitments Open door policy and transparency Training and career development through strategic talent management Occupational Health and Safety




17

SuPPLIERS AND PARTNERS

THE PARTNERS OuR BuSINESSES WORK WITH INCLuDE PRINCIPALS, AGENTS AND SuPPLIERS BOTH IN SRI LANKA AND OVERSEAS

Reasons for Engagement To ensure efficiency of the supply chain To understand the needs/concerns arising out of business relationshipsTo share best practices

Methods of Engagement Regular meetings, reviews and forums (ongoing)Annual registration and procurement committee meetings (annual/quarterly)Industry exhibitions, road shows and trade fairs (ongoing)Emails, reports and other publications, website (ongoing)

Our Commitments Meeting contractual obligations Technical assistance and knowledge transferBuilding long-term partnerships

INVESTORS THE INVESTOR STAKEHOLDER GROuP INCLuDES THE INSTITuTIONAL AND INDIVIDuAL SHAREHOLDERS AS WELL AS THE INVESTOR COMMuNITY CONSISTING OF ANALYSTS, FuND MANAGERS AND LENDING AGENCIES

Reasons for Engagement To provide performance information in a timely and relevant manner To share vision and strategy, and to demonstrate potential To understand needs and concerns of investor community

Methods of Engagement Annual General Meeting/EGMsRoadshows, Investor forums and presentations (annual)Annual report, quarterly reports, CSE disclosures, media releases Website, emails, telephone (ongoing)

Our Commitments Increasing shareholder returns Generate lasting economic value Good governance and transparency

COMMuNITY OuR BuSINESSES WORK CLOSELY WITH THE COMMuNITIES IN THE VICINITY OF THEIR OPERATIONS WHILE AT GROuP LEVEL, WE uNDERTAKE A NATIONWIDE FLAGSHIP COMMuNITY DEVELOPMENT INITIATIVE

Reasons for Engagement To create positive partnerships that accelerate social development To ensure minimal impact on shared resourcesTo facilitate pre-school education in marginalised communities

Methods of Engagement Sourcing from suppliers within the local community (ongoing)Employees recruited from the local vicinity (ongoing)Community forums and awareness programmes (ongoing)Regular meetings with local authorities and community leaders (ongoing)Parent /teacher meetings at Piyawara Pre-schools (monthly)

Our Commitments Extending opportunities that create positive socioeconomic impacts Development of local economy through local hiring and local sourcing Responsible utilisation of shared resources Increasing future national competitiveness through early childhood care and development

18

GOVERNMENT AND REGuLATORS

THIS GROuP INCLuDES MINISTRIES, GOVERNMENT DEPARTMENTS AND INSTITuTIONS AS WELL AS LOCAL AuTHORITIES AND LEGAL/REGuLATORY BODIES

Reasons for Engagement To demonstrate compliance and create awareness To contribute to dialogue on policy To identify needs of local communities

Methods of Engagement Statutory reporting, and correspondence (Monthly/quarterly/annually)Participation in chambers and industry associations (ongoing)Meetings, forums, presentations (ongoing)

Our Commitments Ensure compliance with legal and regulatory requirements Responsible corporate citizenship Positive contribution to national and local economy Public-private partnerships to execute community projects

Hemas Enriching Lives Plan

Supply chain

Community

Goals

Indicators

Achieving Abhimana Principles

Identification of key risk areas

Identification of key impact areas

During the year under review, the Hemas Group undertook an externally moderated exercise to identify the issues that are material to the organisation.

The exercise involved internal teams preparing comprehensive lists of economic, environmental and social risks potentially impacting their businesses. These risks were then rated on their impact to the organisation and stakeholder, and their likelihood of occurrence.

Identifying and Engaging our Stakeholders

IDENTIFYING MATERIAL ASPECTS

Impa

ct o

n or

gani

satio

n

Impa

ct o

n St

akeh

olde

r

Asp

ect

Bou

ndar

y

Labour rights of outsourced/ contract workersOccupational health and safety (including of outsourced/ contract workers)Customer health and safety (product safety)Training and skills developmentDiversityLocal hiringLocal sourcingEmployment creation – vulnerable groupsAdvertising and Promotion – stereotyping and responsible messageBribery and corruptionEnergy useWater useWaste management (operations and product/ packaging waste)Environmental accidentsComplianceStakeholder engagementSupply chain responsibility – labour practices, human rights, environmentCommunity impacts – economic, social, environmental

Goals and indicator scorecards in respect of each of these priorities have been prepared and will be implemented group-wide during the 2nd quarter of 2015/16.

High Medium Low Internal External




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Hemas Hospital staff at the Abhimana launch

Employees creating awareness on Abhimana values

‘Athwela’ - FMCG Abhimana initiative

Community engagement through the drought relief programme in Polonnauwa

20

STAKEHOLDER PERFORMANCE




21

Rs. 38 bnMARKet CAPitAlisAtioN

Rs. 32 bnReVeNUe

65 yeARsiN bUsiNess

leGACy oF oVeR

Rs. 34.4 bntotAl Assets

the Winner of top Community Care Company in Asia 2014

totAl eMPloyees

4,332

22

Economic Value Creation


Identifying and Engaging Our Stakeholders 16Stakeholder Performance 20

Economic Value Creation 22GRI Index 64Group Directory 67Notes 70


23

GROuP VALuE ADDITION AND DISTRIBuTION FROM CONTINuING OPERATIONS

For the year ended 31 March FMCG Healthcare Leisure Transportation Others* Group

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) (Rs. ‘000)

Value Generated

Revenue 11,895,065 9,544,591 13,920,681 12,064,199 3,024,409 2,678,665 1,517,730 1,307,733 2,139,068 1,664,093 32,496,953 27,259,281

Share of result of joint

ventures/associates - - - - 24,519 54,954 110,264 (39,397) - - 134,783 15,557

Other investment income 40,334 58,561 8,806 15,794 9,628 9,153 27,850 35,800 96,804 107,616 183,422 226,924

Profit on sale of assets &

other income 125,207 38,789 52,259 75,166 54,960 73,429 10,810 58,068 21,428 389,022 264,665 634,474

Valuation gain from

investment properties - - - - - - - - 281,624 729,269 281,624 729,269

12,060,606 9,641,941 13,981,746 12,155,159 3,113,516 2,816,201 1,666,654 1,362,204 2,538,924 2,890,000 33,361,447 28,865,505

Value Distributed

Operating overheads 9,810,780 7,884,600 11,479,048 10,087,103 2,244,081 1,998,120 780,548 544,450 1,940,286 1,691,409 26,254,743 22,205,682

Employee wages & benefits 1,032,036 835,111 1,097,797 953,344 454,000 406,117 396,342 304,839 566,884 442,321 3,547,059 2,941,732

Payments to providers of funds 1,717 6,078 196,455 238,947 61,730 63,183 24,396 29,880 772,569 578,982 1,056,867 917,070

Payments to government 142,572 87,188 237,315 189,753 63,480 65,916 60,430 56,055 200,403 70,761 704,200 469,673

Community investments 2,808 1,289 885 2,101 166 2,890 485 202 702 470 5,047 6,951

10,989,913 8,814,266 13,011,500 11,471,247 2,823,457 2,536,226 1,262,201 935,426 3,480,844 2,783,943 31,567,916 26,541,108

Value Retained for Expansion

and Growth

Depreciation 157,033 115,448 275,607 243,607 163,783 131,120 72,839 51,318 131,745 119,042 801,007 660,535

Amortization 551 30,322 11,994 9,282 1,950 2,616 671 262 12,270 3,465 27,436 45,947

Profit after dividends 913,109 681,905 682,645 431,023 124,326 146,239 330,943 375,198 (1,085,935) (16,450) 965,088 1,617,915

1,070,693 827,675 970,246 683,912 290,059 279,975 404,453 426,778 (941,920) 106,057 1,793,531 2,324,397

* Inclusive of the following Companies: Hemas Holdings PLC, Vishwa BPO, N*able

24

Customers



Customers 24GRI Index 64Group Directory 67Notes 70


25

As a company firmly rooted in ethics and integrity, Hemas considers responsibility towards our customers paramount. The diverse businesses within the Group cater to an equally diverse set of clientele, ranging from consumers of affordable mass market products, tourists seeking exotic experiences and patients looking for dependable healthcare to companies seeking technology solutions and B to B clientele looking for partners in the highly competitive transportation industry.

The challenge for Hemas is catering to the wide and varied needs and concerns of its multiple customer groups by providing the highest quality products and services within the parameters of responsibility, efficiency and health and safety. We have instituted many initiatives across our sectors that promote product responsibility and customer satisfaction, some of which are described in the following pages.

PRODuCT RESPONSIBILITY Across the Group, product responsibility is given the highest priority.

In our FMCG operations, health and safety take precedence from the product design stage, ensuring compliance with stringent cosmetics and drugs regulations. Material Safety Data Sheets (MSDS) and Technical Data Sheet (TDS) are maintained for each and every raw material that goes into our products, which are manufactured under processes that are ISO 9001 and OHSAS 18001 certified. Dermatological tests are carried out on critical products wherever necessary.

Hemas Pharmaceuticals extends its product responsibility from the point of sourcing principals to the delivery to patient. Pharma sources only from global pharmaceutical, surgical and diagnostic companies, and represent only Principals and products of the highest quality, safety and efficacy. Further we ensure that we maintain the quality, safety and efficacy of the products we handle throughout the value chain until it reaches the customers. The Hotels Sector practices high standards of food safety, including the close monitoring of cold room temperatures and temperatures of served food items as well as ensuring the proper packaging and storage of food. Every single employee that handles food is also required to avail himself of twice-yearly health checks.

Diethelm Travel conducts periodic inspections to ensure guest health and safety; these include inspection of vehicles, safety checks of hotels and excursion sites. They also ensure all vehicles are properly insured and their drivers and guides have the relevant licenses.

Hemas Travels (Pvt) Ltd., provide solutions for all travel and related services under one roof. Our affiliations with global

partners enable us to offer superior products and services while adopting global best practices in delivering the best solutions to our customers. We deliver value at every step of the travel programme applying our industry-leading insight and technology to enable greater choice, security and endeavouring to reduce costs without compromising our quality or level of service, whilst remaining competitive.

Hemas Hospitals displayed its responsibility to deliver good clinical care by reaching out to an external review system through Australian Council Health Standards International and successfully obtaining an International hospital accreditation in 2010. Hospital clinical laboratories are awarded with ISO 15189 standards and hospitals are certified with OHSAS ISO18001 for occupational health and safety standards. The Hospital quality management system ensures good clinical outcomes, responsible waste management, energy conservation activities, safety of patients, visitors and staff as well as a system for incident and complaints management.

‘PATIENT FIRST’ COMMITMENT AT HOSPITALS Operating a chain of hospitals located at Galle, Wattala and Thalawathugoda allows us the unique opportunity of providing affordable private sector healthcare services to patients outside of Colombo city. During the year, all three hospitals unrolled a “Patient First” programme to enhance customer service and patient care. The positive response from patients and their demand for enhanced services led to the Wattala hospital expanding its ETu capacity and introducing a fertility centre during the year. The hospital also expanded its surgical offering by adding capabilities to carry out procedures such as Artharascopy, ACL, Scooping and Bone graft, Osteo clurtoma Latral Fermoval, KT, TuRP and Cystoscopy. The Hemas Southern Hospital in Galle expanded its wound care clinic and introduced orthopaedic surgeries during the year. Hemas Capital Hospital in Thalawathugoda offer a Home Care Service built around patient comfort and convenience. The care system starts as soon

26

as patients dial the dedicated number. Certified health officers who answer the call will access the requirements and dispatch the relevant care team. Hemas home care service providers offer a unique service aided by superior technology and an automated process. The home care service offers Physiotherapy, Sample collection and Out Patient (OPD) general.

The Hospitals also operate an outer lab chain consisting of laboratories, collections centres and mini labs which provide easily accessible laboratory, accurate testing for communities in the vicinity of our hospitals. It has a proven track record of over six years for strict adherence to international standards and benchmarks. During the year, it has widened its spread steadily and rapidly up to 34 branches with a strong presence in Western province, Southern province, Central province, uva province, North Western province and North Central province.

Main Labs Hemas Collection Centres

Mini Labs

Wattala Akurana Nawalapitiya

Ragama Karapitiya Kuliyapitiya

Gampaha Ankumbura Welimada

Chilaw Ja-ela

Kurunagala Bandarawela

Warakapola Paragahadeniya

Badulla Wennappuwa

Kandy Kotahena

Tangalle Kaduwela

Avissawella Jayawardanapura

Anuradhapura Karapitiya

Ambalangoda

Galle

Norris Canal

Kalubowila

Thalawathugoda

Customers

PRODuCT LABELLING The products within our FMCG portfolio, 90% carry ingredient labels while 100% carry the date of manufacture and expiry. At J. L. Morison’s, 100% of Over-the-Counter (OTC) and pharmaceutical products manufactured at our plant list the Active Pharmaceutical Ingredients (APIs) on the label, carton and product information leaflet.

The products distributed by Hemas Pharmaceuticals follow strict labelling guidelines, and products carry a clear and comprehensive label as well as manufacture and expiry information. While some products don’t carry disposal information on the label, it is mentioned on the information leaflets which are included with the products. Further manufacturers as well as regulators lay out guidelines for safe disposal, which we strictly follow.

MEASuRING AND MONITORING CuSTOMER SATISFACTION Our businesses strive to understand and respond to customer needs on a proactive, meaningful basis; the FMCG sector undertakes engagement surveys from time to time to identify needs and concerns of customers; furthermore, customers have access to a consumer care hotline to address any concerns.

Picture

We have instituted many initiatives across our sectors that promote product responsibility and customer satisfaction...



Customers 24GRI Index 64Group Directory 67Notes 70


27

JLM’s Over-the-Counter (OTC) category includes well known pharmaceutical brands such as Morison’s Lacto Calamine, Morison’s Gripe Mixture and Valmelix Cough Syrup. The company conducts extensive consumer research for each of these brands to understand the needs, perceptions and concerns of the consumers. The methodologies used include qualitative research through focus groups and quantitative research through surveys island-wide. Additionally, JLM engaged with Key Opinion Leaders (KOLs) in the segment, such as mid-wives, to understand their concerns and opinions.

Group Hotels have installed a Guest Satisfaction Survey (GSS) software to manage guests feedback; it works by sending guests an email three days after their stay, to solicit an opinion of their experience. A printed GSS is also provided in all rooms and the information collected therein is analysed and reviewed, with corrective action taken where relevant. The Hotels also closely monitor online review sites such as Tripadvisor, to learn about guest experiences and any concerns raised.

Diethelm Travel works with a network of agents/tour operators, where client needs and concerns are directed to them and in turn they quote for the products and services. Diethelm Travel’s efforts in building an effective partnership with agents/tour operators include familiarisation tours so they may experience the accommodation, transportation and the destination as a whole. Such tours provide an opportunity for agents/tour operators to raise concerns and provide feedback on the quality of the products and services they offer.

N*able works in close consultation with its customers; in fact, monthly meetings to review customers complaints is a key

performance indicator for the company. For large projects, N*able conducts weekly meetings with customers to mitigate the possible escalation of issues. An annual customer satisfaction survey is carried out and the information is reviewed with a view to taking corrective action where required.

Hospitals use customer feedback surveys as a regular input for its continuous improvement of services. Patient satisfaction index and incident occurrence is used as clinical performance indicators and incorporated as KPI’s of management team. To encourage our consumers to share their feedback with us, the hospitals conduct a raffle draw among those who submit their written feedback.

28

Business Partnerships



Business Partnerships 28GRI Index 64Group Directory 67Notes 70


29

Distributor

Sustainable business partnerships form an important element of our responsible approach to business and are a driving force in our success. As a conglomerate with diverse interests, our business collaborations span the entire gamut from domestic suppliers of goods and third party service providers to international principals and joint venture partners.

PROCuREMENT POLICY All companies within the Hemas Group are governed by a Group Procurement Policy, which has been in place since August 2013. The policy sets out the guidelines and responsibilities of each user department in ensuring the best interests of the Group are maintained during procurement. Purchases of goods and services above pre-determined limits also require the approval of the Procurement Committee, a four member committee with senior management representation.

RESPONSIBLE SuPPLY CHAINS Our supply chains are as vast and diverse as our businesses; from the farmer who sells his produce to our hotels to the large global diagnostic equipment manufacturer who supplies cutting edge equipment to our hospitals, we apply the same principles of fairness and transparency in our dealings with them. In return, we expect our suppliers to share in our philosophy of responsible business, and high standards of ethics and integrity. The products, services and raw materials we procure are subject to a stringent screening and selection process in order to ensure that their quality matches our expectations.

Our diverse businesses have very different characteristics and accordingly, each entity’s supply chain is specifically adapted to its features. We have outlined here a few examples of the types of supply chains represented in some of our primary sectors.

FMCG The Hemas FMCG sector’s supply chain vision envisages ‘reliable supply with assured quality through efficient operations by great people’. As a company that manufactures and distributes some of the country’s favourite brands of personal care items, maintaining an uninterrupted, quality-assured supply chain is critical to the business.

Supplier

Material

Warehouse

Manufacturing

Finished goods warehouse

Retailer

Customer

Distribute

Local

Raw material

Raw material

International

Finished goods

Finished goods

Distributor

The FMCG sector has identified seven supply chain strategic priorities, which it closely monitors and pursues through various mechanisms. These are; Ensure availability Assure quality Optimise cost and cash Build capacity and capability Protect people and environment Grow organisational potential Guarantee compliance

30

The supply chain at J. L. Morison is focused on adding value in the process of moving products from suppliers to customers; the company achieves this through efficient internal processes, automation, firm relationships with suppliers, developing the communication and distribution channels, and ensuring compliance to offer customers a trusted product.

As a conglomerate with diverse interests, our business collaborations span the entire gamut from domestic suppliers of goods and third party service providers to international principals and joint venture partners.


PharmaciesSales

Distributors Goods Delivery

PrincipalsPrivate

Institutions

Warehouse

Credit

Principals

Government Institutions

Collecting Dues

Supply of Finished Goods Inventory

Invoicing Goods

GeneratingDemand

Obtaining Orders

PHARMACEuTICALSHemas Pharmaceuticals, which imports and distributes pharmaceutical products from principals, illustrates its supply chain as shown below:

TRANSPORTATION The transportation sector and its service-based operations involve a different nature of supply chain management. The sector’s approach is to work cohesively and safely when offering the use of its services to its clients and to influence wherever possible to promote good practice and raise awareness, not only among suppliers and their employees but also others along its value chain.

The sector’s customers include multinational shipping lines, importers, exporters, manufacturing organisations, freight forwarding entities and local industries, all requiring efficiency in terms of cost and reliable logistics services. Hemas’ approach to logistics is a process driven approach with efficient resource utilisation and priority given to the health and safety of stakeholders. The sector’s supply chain includes many third





31

party vendors including customs house agents, trucking partners, project consultants, manpower agents, component suppliers and others. A careful screening and selection process ensures the competence and compliance of the vendors in terms of capability and health and safety.

Internally, the Business Development Team and Operations Team ensure the optimisation of the supply chain activities by working together in partnership with external parties to make a positive impact on the economy.

As intermediaries between customers and tourism service providers, Hemas Travels brings together a variety of travel related services to form a complete holiday or business package, which is then marketed directly to customers. They book flights, cruises, rental cars, hotels and tour packages which are provided by a supply chain of subcontracted companies

LEISuRE An example of leisure sector supply chain management comes from Diethelm Travel Sri Lanka (DTSL), which serves as a Destination Management Company (DMC) that plays the role of an intermediary between agents/tour operators and suppliers. DTSL operation involves responding to client requests by liaising with suppliers to provide them the requested products and services. This in turn is sold by Diethelm Travel’s agents/tour operators to their respective clients.

The multiple suppliers within the Diethelm supply chain provide various elements of tourism products. These include accommodation providers like hotels, apartments and camp sites, transport providers like domestic/international airlines, various vehicles such as coaches, micro vans, mini vans, cars and if needed public transport including three-wheelers. DTSL also provide guide services including site guides, national guides and

chauffeur guides. Finally their product range also include safari jeep operators, shopping and restaurants as well as visa services through the embassies.

Traveller AgentTour

operator

Hotel

Excursions

Transfers

LOCAL PuRCHASINGCompanies across the Hemas Group prioritise local purchasing (purchased from vendors in Sri Lanka) wherever our business model permits. With the exception of our Pharma unit, which serves as a local distributor of pharmaceutical products procured overseas, group companies have spent the following percentages of their procurement budgets on locally sourced goods and services during the year:

FMCG 35%Pharmaceuticals 1% Hotels 39%N*able 40%Hospitals 99%Diethelm Travels 99% Hemas Holdings 95%

32

It must be noted that our hotels have established strong relationships with suppliers in the vicinity of their operations for the procurement of their fresh food supplies. Of the hotels, Hotel Sigiriya purchases 17% of its products and services locally, while at AVANI Bentota this figure amounts to 26% and 40% at AVANI Kalutara while 74% of Club Hotel Dolphin’s vegetables, fruit and meat requirement is purchased locally.

The hotels place high emphasis on maintaining and managing positive relationships with suppliers, and conduct regular supplier engagements to ensure the optimisation of the procurement process as well as to address concerns. Among the long term

Growing with Dolphin 13 years ago, young Nalin Danushka began patrolling the beaches outside Club Hotel Dolphin, selling his wares, including arts, crafts and sarees, to guests of the Hotel. Over the years, his business has expanded from a small shop on the beach to a store named ASDA today.

Now 31, Nalin’s business has diversified to include gems and jewellery, and he now provides employment to five others from the vicinity. Displaying a strong spirit of entrepreneurship, Nalin has also ventured into organizing tours for guests by boat, tuk tuk taxi and semi luxury vans.

Today, Nalin is a key figure of the Kammala community, taking the lead in many of the social and religious events in the neighbourhood. His success is inextricably linked to Club Hotel Dolphin, and stories such as his are a source of much pride to Hemas.


Picture

Mr. Nalin Danushka at his store in Waikkal

suppliers to the hotels are u.R Wijeratne and Narada of Dambulla, who for over ten years have supplied Hotel Sigiriya with vegetables and fruit respectively. Similarly, AVANI Bentota and AVANI Kalutara have established long term relationships with their fresh fish and meat suppliers. Club Hotel Dolphin is a good example of a community economy built around the hotel; the neighbouring community operates boutiques, transport services and tour services that cater to the hotel’s guests. Many of these individuals have grown with the hotel, and it has been heartening to note the upliftment of their quality of life and their ability to strengthen their local economies by generating more employment opportunities (See boxed story).

Our partnerships with global entities demonstrate the Hemas Group’s capability of building businesses with large players, wining their respect and collaboration.





33

SHARING BEST PRACTICES While driving efficient resource utilisation within the supply chain, all our companies are encouraged to share best practices and know-how to help build capacities and promote sustainable business among suppliers, especially SME and Micro businesses. For example, the Hemas Transportation sector works cohesively to raise awareness and influence health and safety practices not only among its suppliers and their employees but also others along the value chain. Health and safety briefings always take precedence prior to the sector’s operations with 3rd party vendors while the business development teams prioritise health and safety concerns when planning operations and logistics solutions.

Similarly, Hemas Pharmaceuticals supports the pharmacies within its partner network by educating owners and employees on the guidelines to be followed such as proper storage and handling of products and expired items. Further the company conducts a programme for pharmacy owners and employees on how to run a pharmacy efficiently.

The FMCG sector works in partnership with its local suppliers in its drive to introduce innovation throughout the supply chain; from the small suppliers from remote villages who provide the herbs used in our hair oils to the commercial packaging suppliers we work with, we believe that there is much to be learnt from mutual experiences.

KNOWLEDGE TRANSFER THROuGH COLLABORATION Our partnerships with global entities demonstrate the Hemas Group’s capability of building businesses with large players, winning their respect and collaboration. One of the finest examples of this is the partnership between our leisure company Serendib Hotels PLC and the Minor Hotel Group, which operates over 120 hotels across the world with an inventory of over 16000 rooms. Our hotels use the best practices and standards of Minor Hotels and selected members of our team are provided opportunities to train within the Minor network.

34


Hemas Pharmaceuticals

J. L. Morison Son and Jones

As Sri Lanka’s Pharmaceuticals market leader with a heritage of six decades, Hemas prides itself on being one of the most streamlined and modernized organisations in the nation’s pharmaceutical industry, with advanced sales and distribution operations. The operations are engineered to be ultra-efficient in delivering business partners with timely solutions in order to provide Sri Lankans with the world’s most trusted brands of pharmaceutical, surgical and diagnostic products

J. L. Morison Son & Jones (Ceylon) PLC (JLM) is a fully Sri Lankan owned company with seven decades of experience in the country. JLM aims to offer wellness and a better quality of life to Sri Lankans through the provision of trusted pharmaceutical and OTC products that are efficacious and of high quality at an affordable cost. As one of the oldest and largest pharmaceutical manufacturers in Sri Lanka, JLM takes pride in providing for the healthcare needs of the private and public sector.

In addition to manufacturing high quality pharmaceutical and OTC products, JLM also imports and distributes internationally renowned healthcare, consumer and agro brands via an island-wide distribution network.





35

Diethelm Travels Sri Lanka

N*able

N*able is in the business of connecting: from the network level to the application level. With the internet of things shaping everyday lives by providing intelligent solutions to make life better, the company considers its role an important cog in shaping a connected, intelligent and efficient future. In doing so, N*able works with global partners who are leaders in building platforms for effective business.

Diethelm Travel Sri Lanka is one of the leading Destination Management Companies in Sri Lanka with over 38 years of experience. We are committed in providing quality and customized Sri Lanka travel experiences for individual travellers and groups. The company strives to look for new ways of improving its offering while remaining committed to cater to evolving needs and expectations of customers and partners ranging from Asia to Europe. To achieve its ambitions, Diethelm works with a solid network of business partners.

36

Employees



Employees 36GRI Index 64Group Directory 67Notes 70


37

The Hemas culture places utmost importance on our employees. It is imperative to our journey that we build a team of talent that has the right combination of skills, attitude and fulfilment in order to drive the company’s future aspirations.

The human resource management strategies in place are thus geared to ensure that the right people are recruited; that they are well trained and their skills developed; that they are rewarded and recognised for their contributions; that their rights are protected and that ultimately, they thrive at Hemas.

TOTAL NuMBER OF EMPLOYEES BY EMPLOYMENT GRADE

Staff FMCG Healthcare Leisure Transportation Other Hemas Group

Grade M F T M F T M F T M F T M F T M F T

Grade 1 294 22 316 871 664 1,535 703 55 758 298 4 302 21 9 30 2,187 754 2,941

Grade 2 40 16 56 117 273 390 54 29 83 27 55 82 38 20 58 276 393 669

Grade 3 21 5 26 15 30 45 17 9 26 25 36 61 21 11 32 99 91 190

Grade 4 26 14 40 42 12 54 18 7 25 14 11 25 21 9 30 121 53 174

Grade 5 22 5 27 84 4 88 28 4 32 10 4 14 31 12 43 175 29 204

Grade 6 7 6 13 6 1 7 8 2 10 6 1 7 13 3 16 40 13 53

Grade 7 8 2 10 6 6 12 3 1 4 3 2 5 5 5 10 25 16 41

Grade 8 2 1 3 6 0 6 5 2 7 4 0 4 4 1 5 21 4 25

Grade 9 5 1 6 3 3 6 5 0 5 3 2 5 4 0 4 20 6 26

Grade 10 0 1 0 1 0 0 0 0 0 0 1 0 1 2 0 2

Grade 11 1 0 1 1 0 1 1 0 1 0 1 1 0 0 0 3 1 4

Grade 12 0 0 0 0 0 0 0 0 0 0 0 0 2 0 2 2 0 2

Grade 13 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 1 0 1

Total No of employees

426 72 498 1,152 993 2,145 842 109 951 390 116 506 162 70 232 2,972 1,360 4,332

TOTAL NuMBER OF EMPLOYEES

FMCG Healthcare Leisure Transportation Other Hemas Group

M F T M F T M F T M F T M F T M F T

i) Total no. of permanent

employees422 71 493 1,103 867 1,970 556 65 621 213 114 327 153 61 214 2,447 1,178 3,625

ii) Total no. of employees

on contract4 1 5 49 126 175 288 42 330 177 2 179 9 9 18 527 180 707

Total no. of employees 426 72 498 1,152 993 2,145 844 107 951 390 116 506 162 70 232 2,974 1,358 4,332

Total no. of personnel from

manpower agencies331 154 485 16 9 25 14 2 16 0 0 0 0 0 0 361 165 526

Total Cadre of Hemas Group, by Gender

0 500 1,000 1,500 2,000 2,50005001,0001,5002,0002,500

Total no. of permanent employees

Total no. of employees on contract

Total no. of manpower agency personnel

Male Female

FMCGHealthcare

Leisure

TransportationOther

no.

Total Number of Employees, by Gender - (Hemas Group)*

68.65%

31.35%

MaleFemale

* Number excludes manpower agency personnel

38

Resignations 2014/15 by sector

0 100 200 300 400 5000100200300400500

20-30 yrs

31-40 yrs

41-50 yrs

50+

Male Female

FMCGHealthcare

Leisure

TransportationOther

20-30 years31-40 years41-50 years50+ years

66.67%

20.64%

7.15%5.54%

Resignations 2014/15(Hemas Group)

Employees

TOTAL CADRE BY AGE GROuP

FMCG Healthcare Leisure Transportation Other Hemas Group


20-30 yrs 433 175 608 477 620 1,097 340 47 387 155 57 212 45 25 70 1,450 924 2,374

31-40 yrs 221 36 257 421 231 652 247 29 276 168 36 204 81 27 108 1,138 359 1,497

41-50 yrs 89 12 101 183 94 277 201 27 228 45 15 60 28 12 40 546 160 706

50+ 14 3 17 87 57 144 70 6 76 22 8 30 8 6 14 201 80 281

Total 757 226 983 1,168 1,002 2,170 858 109 967 390 116 506 162 70 232 3,335 1,523 4,858

Total Cadre by Age Group & Gender

0 300 600 900 1,200 1,50003006009001,2001,500

20-30 yrs

31-40 yrs

41-50 yrs

50+

Male Female

FMCGHealthcare

Leisure

TransportationOther

no.

Total Cadre by Age Group -(Hemas Group)


48.86%

30.81%

14.53%5.8%

ATTRITION 2014/15

New hires 2014/15 by sector

0 100 200 300 400 5000100200300400500

20-30 yrs

31-40 yrs

41-50 yrs

50+

Male Female

FMCGHealthcare

Leisure

TransportationOther

no.


68.70%

22.70%

6.50%2.10%

New hires 2014/15 (Hemas Group)

We practice a zero-tolerance approach to any form of discrimination based on gender, ethnicity, religion, age, sexual preference or disability.





39

Resignations FMCG Healthcare Leisure Transportation Other Hemas Group


20-30 yrs 28 6 34 116 205 321 91 22 113 161 13 174 15 5 20 411 251 662

31-40 yrs 17 8 25 77 9 86 53 10 63 17 4 21 9 1 10 173 32 205

41-50 yrs 5 5 10 25 8 33 19 1 20 6 0 6 0 2 2 55 16 71

50+ 3 1 4 21 16 37 7 1 8 2 0 2 2 2 4 35 20 55

Total 53 20 73 239 238 477 170 34 204 186 17 203 26 10 36 674 319 993

THE HEMAS WAY Employees of Hemas are governed by an employee code of conduct named the “Hemas Way”, which provides direction as to the personal commitments expected of an employee. The Hemas Way is the basis upon which day to day business must be conducted and sets forth the expectations of employees when dealing with the company, customers, suppliers, colleagues, competitors and the broader community. It is designed to ensure that each employee lives by the Hemas Values by upholding the highest levels of business ethics and personal integrity.

Each employee is expected to declare his commitment to the Hemas Way and their compliance with all policies and guidelines that are in force within the Group, including policies such as the Sexual Harassment Policy, Media Policy, IT Policy, Whistle Blowing Policy, Workplace Policy, Human Rights Policy, Social Responsibility Policy, Sustainability Policy and Environment Policy.

HOW WE MANAGE HuMAN RESOuRCES Human Resource management takes place centrally at the Holding Company level and at Strategic Business unit (SBu) level with policy, guidelines and process formulation focussed at the centre and their operational implementation and adoption by employees effected at SBu level.

Group HR, headed by a Human Resource Director, takes the lead in shaping Group HR strategy in line with the Hemas Vision. The strategy is then cascaded to SBu level, where HR is managed with a high degree of independence under the supervision of the respective Managing Directors and HR Heads, who hold joint responsibility.

Hemas TalentManagement

Energize & Engage

Nurture Leadership

Within

Simplify & Add Value

Attract the Best

ENHANCED CAPABILITY OF HR

TEAM

HR SAVVY LEADERS

LEADERSHIP & TALENT DRIVEN

CuLTuRE

A six year HR Strategy is in place for the period 2014-2020 in pursuit of our goal of being among the top ten most sought after employers in Sri Lanka, in line with the HR Vision “To be respected as the employer of choice in Sri Lanka”. As depicted above, the Talent Management Strategy addresses the four pillars of HR excellence – energise and engage employees with the vision; attract the best by building the Hemas brand among potential job seekers through smart recruitment strategies; nurture leadership within through deliberate efforts to develop a pipeline of future leaders; and simplify and add value through better processes. The Group has identified three aspects that are pre-requisites if we are to implement the four pillars – these are the enhanced capability of the HR team; HR savvy leaders at SBu level, and a leadership and talent driven culture.

New Hires FMCG Healthcare Leisure Transportation Other Hemas Group


20-30 yrs 40 7 47 192 303 495 99 22 121 93 16 109 13 9 31 437 357 803

31-40 yrs 8 1 9 83 52 135 52 4 56 48 4 52 1 2 13 192 63 265

41-50 yrs 3 0 3 14 16 30 16 2 18 20 3 23 1 0 2 54 21 76

50+ 0 0 0 8 8 16 5 0 5 4 0 4 0 0 0 17 8 25

Total 51 8 59 297 379 676 172 28 200 165 23 188 15 11 46 700 449 1,169

TALENT MANAGEMENT STRATEGY

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DIVERSITY AND EQuAL OPPORTuNITY While Hemas is conscious about promoting diversity in our workforce, our recruitments are based strictly on merit, with no deliberate selection based on diversity criteria. Within Hemas, we practice a zero-tolerance approach to any form of discrimination based on gender, ethnicity, religion, age, sexual preference or disability. Notably, there is no discrepancy in the basic salary and remuneration offered to men and women; salaries and packages are determined according to the existing salary bands for each grade of employment and are offered to new recruits on merit and to existing employees on performance.

RECRuITMENT AND SELECTION Recruitment and selection is based on a person’s suitability for the role conceived both in terms of knowledge, skills and experience, and their fit with the role requirement and Hemas culture. The recruitment process has been an early adopter of innovative techniques of attracting the right talent, especially in addressing the Millennial Generation. Recent recruitment strategies have included gamification of the application process for the management trainee programme. The Group has also sought the infusion of digitally-savvy young blood by recruiting a group of ‘Digital Innovators’ who are charged with permeating a

5% 5%1%

89%

Diversity at Hemas (Hemas Group sta� breakdown by race)

Sinhala

Tamil

Muslim

Others

digitally-ready culture and leading transformational IT initiatives across the Group. The exciting selection process for the ‘Digital Innovator’ involved the prospective candidates solving business problems online.

TRAINING AND DEVELOPMENTTraining and development is a vital aspect of human resource management at Hemas and is undertaken at both SBu level and at Group level. The selection of training courses is influenced by the performance appraisal system which enables SBus to identify skill gaps that need addressing. Respective SBus implement training calendars that include both technical competency building and soft skills development programmes. The training programmes thus cover aspects such as personal effectiveness, emotional intelligence and mindfulness as well as health and safety in addition to imparting the skills necessary to perform the work roles effectively.

At Group level, we have established the Hemas Academy, which implements the management development programmes for high performers across the group, creating a critical leadership pipeline. Furthermore, the company extends financial assistance to employees pursuing advanced academic and professional studies.

Employees on an Outbound Training programme

At Hemas, we understand that listening to our employees and responding to their concerns helps us to create high performance teams.




Employees


41

Given below are the total training hours at each sector for the year ended 31st March 2015 –

Sector Training Hours

FMCG 12,252Healthcare 21,151Leisure 19,705Transportation 6,608 Other 7,697Total for Group 67,413

PERFORMANCE MANAGEMENT100% of our confirmed employees receive performance and career development reviews twice a year, with a mid-year review taking place in September each year followed by an year end review at the end of our financial year. It is compulsory that all members of the cadre who are in confirmed employment participate in the performance review process, with final feedback conducted between the employee and his/her supervisor in the presence of a neutral party.

The year-end appraisal results in employees being issued a ranking based on their performance against set objectives, as well as in a career discussion and a goal setting exercise for the following year. A system of forced ranking has been in place since 2005 for all employees above Junior Executive grade; greater transparency is brought to the proceedings through the entire leadership team of Hemas participating in the rankings and careers discussions in order to reach a collective, fair decision.

SuCCESSION PLANNING A formal succession planning model is in place within the company, and has been applied at Business Head level at all units. Two to three personnel have been identified at each business to be groomed to take on the role of Business Head in future. Over the next few years, the succession chain will be extended lower within each SBu.

The Group is also working towards building a leadership pipeline at middle management level through a programme that seeks to equip future leaders with leadership competencies through training and knowledge enhancement as well as mentoring. It is envisaged that the programme will be launched in the near future in affiliation with a foreign resource to manage the programme.

EMPLOYEE ENGAGEMENT At Hemas, we understand that listening to our employees and responding to their concerns helps us to create high performance teams. Engagement and talent management are considered the top-most priorities at SBu level, and are always at the top of the agenda during business head’s meetings with the CEO. Thus we pursue formal and informal engagement mechanisms in order to ensure we respond swiftly to employee concerns.

Most recently, a comprehensive employee engagement survey was conducted in June and July 2014 by global human resources consultants AON Hewitt, covering the entire Group cadre other than those on hotel floors. This included focus group meetings to address the issues raised and to unearth the underlying concerns. Results of this engagement exercise were published in September 2014.

COLLECTIVE BARGAINING At Hemas, we recognise a worker’s right to collective bargaining. Currently we work closely with four unions (3 in resort hotels and one in J. L. Morisons & Co). The FMCG sector has in place two Joint Consultative Committees, one specific to the manufacturing work environment and the other on the Finished Good Stores work environment. Appointment to the committee is through nomination by the employees themselves. The JCCs meet with the management team on a monthly basis to discuss issues that may arise and possible interventions. The three hospitals have also formed JCCs of a format similar to the FMCG Company. J. L. Morisons & Co has a collective agreement with its union, which includes 40% of its non executive cadre.

GRIEVANCE HANDLING The open door policy practiced at Hemas ensures that employees have the freedom to approach their supervisors and superiors at any time, to raise their concerns. While this policy promotes the early settlement of many concerns, a formal mechanism is in place for the escalation of grievances. This involves a step by step process, whereby an employee may escalate a grievance from his own supervisor, to the supervisor’s superior and then to the Managing Director of each SBu and/or Group HR.

Each and every employee can submit his grievance and have it examined in an appropriate manner without any prejudice whatsoever to him.

FMCG staff at the Annual Theme party

42

Employees

Our approach to the health of employees goes well beyond meeting compliance in health and safety expectations.

a view to engaging employees and their families to develop and sustain healthy behaviours thereby enabling them to improve their overall quality of life (Please refer box story). We also conducted awareness on communicable diseases such as HIV/AIDS to ensure that our employees are empowered with the knowledge to both protect themselves and to deal fairly with those affected.

Emergency response is a vital element of the Group’s health and safety efforts; a group-wide risk management team overlooks potential hazards and ensures a high degree of readiness in dealing with potential disasters. At each location of operation, Health and Safety teams are appointed with cross functional representation; they are tasked with identifying potential risks and suggesting mitigating measures, while also being equipped to deal with emergencies. This includes volunteer fire teams trained to take charge in the event of a fire. Regular fire drills are conducted for all employees and records maintained. Employees also receive training in administering first aid and CPR at the workplace.

The Hotels sector conducts annual ‘Group Mystery Audits’ on health and safety aspects, with the findings circulated among management for necessary corrective action. Furthermore, all hotels are also subjected to a health and safety audit by the state’s Public Health Inspectors twice a year.

If the grievance is against/involves a person within the process, the employee may decide to skip that person and go to the next level. The Human Resources department may be consulted at any stage of the above process with or without keeping the superiors informed.

EMPLOYEE HEALTH AND SAFETY Our approach to the health of employees goes well beyond meeting compliance in health and safety expectations. While our locations of operation and our factories and hospitals in particular, are in full compliance with health and safety requirements, and have obtained international accreditations and certifications, the company has gone beyond compliance to proactively promote healthy living among employees. Thus during the year, Hemas Hospitals conducted a landmark group-wide health and wellbeing campaign, as an Abhimana initiative. The programme addressed non-communicable diseases, with

GRIEVANCE HANDLING PROCESS

Grievant & MD/CEO of the company

Grievant & relevant director

Grievant & department head

Grievant & immediate supervisor

Step 4

Step 3

Step 2

Step 1





43

Abhimana Health and Wellbeing ProgrammeThe “Employee Wellness Programme” promotes healthy living by adopting a model that promotes wellness behaviour instead of disease prevention. The project was designed to promote healthy behaviours by detecting and reversing unhealthy behaviours among workers who are seemingly in good health.

The project was considered timely given the vast demographic and epidemiological transitions taking place in Sri Lanka with the exponential rise of non-communicable diseases such as diabetes, heart and lung disease and cancer, together with unhealthy lifestyles and widespread addiction to smoking, alcohol and substance abuse.

At the outset, the wellness programme set out to tackle issues relating to diabetes, hypertension and heart disease and thus, the monitoring parameters were fasting blood sugar, cholesterol and Body Mass Index (BMI). Expert advice was obtained from the World Health Organisation (WHO) at the planning stage to compile national and global statistics which provided the benchmarks.The first stage of the project’s rollout involved

sensitisation of employees through awareness sessions on NCDs and the importance of screening; 17 such sessions were held covering all the Group’s locations of operation. All employees were encouraged to participate voluntarily in the programme, with the cost borne entirely by the company.

1259 employees participated in the screening programme and it was found that 57% of participants did not engage in regular physical activity while 33% reported BMIs of 25 or higher. Many participants also found out that they were either prone to or at high risk of NCDs with the values of cholesterol, blood sugar and blood pressure well above the ideal ranges.

Consequent to the findings, the Group formulated a series of interventions, including the promotion of physical activity; continuous support to improve dietary habits; periodic testing to improve monitoring and the provision of healthy snacks and meals at work. Related activities included establishing gymnasiums, aerobics and yoga classes at the workplace, obtaining the services of a dietician for employees to consult, issuing educational material on controlling BMI and lipids, demonstration of healthy cooking and improving the food available at the cafeteria, providing treadmills and pedometers for use at the workplace, and the introduction of regular wellness screening.

As an extension of the wellness project, the Group also marked World Diabetes Day by serving kola kenda (herbal porridge), kurakkan roti (finger millet bread) and tea sans sugar to create awareness of diabetes prevention through dietary control. Furthermore, activities being planned for the second stage include helping employees identify the warning signs for heart attacks, strokes, and diabetic complications as well as the provision of facilities for employees to obtain daily readings of their blood sugar and blood pressure levels, in order to ensure better monitoring.

44

Community



Community 44GRI Index 64Group Directory 67Notes 70


45

The Hemas ethos of “Enriching Lives” influences the Group’s philosophy towards the community in everything we do, we consider the interests of the community at large and make every effort to minimise our impact on those around us.

Our responsibility to the community has been led by the Hemas Group’s flagship project ‘Piyawara’, a project that has grown in stature and impact in the Early Childhood Care and Development (ECCD) space to now impact the lives of over 3000 children throughout Sri Lanka, every day.

PIYAWARA The Hemas ‘Piyawara’ project focuses on early childhood care and development, penetrating the segment by facilitating pre-school education for children aged 3 to 5 years, from marginalised communities. With the mission “to nurture young children with good care in order to provide a solid foundation of a life long journey”, Piyawara focuses on several key aspects within the framework of early childhood development:

1 Improving infrastructure development : adding model pre-schools to the national network or upgrading existing schools to meet minimum standards

2 Parental awareness programmes3 Pre-school teacher training programmes4 Recreational facilities for children5 Empowering children with special needs6 Working towards eradicating child abuse in partnership with

Sri Lanka Police7 Emergency intervention during national disasters

Piyawara project initiatives are developed with the long term strategy of increasing national competitiveness by meeting the economic, social and environmental needs of marginalised families in Sri Lanka, whilst addressing national issues and needs of the present from time to time without compromising the ability of future generations to meet their own needs.

Piyawara is aligned with Millennium Development Goal 2 - “Achieve universal Primary Education” by laying the foundation for successful primary education while also being aligned with the policy of the government of Sri Lanka to set up child friendly pre-schools of a high standard island-wide. The activities undertaken during the project also address human rights and children’s rights, by creating awareness of child abuse and the need for child protection. The long term social impact of the project is the creation of a generation of Sri Lankans who have had a solid foundation to their lives in a nurturing and safe environment.

THE START OF OuR JOuRNEY In 2002, the Hemas Group was keen to focus its social responsibility efforts towards a single significant issue which we could engage in the long term, in order to maximise impact. We approached the Ministry of Social Welfare, which encouraged Hemas to focus on Early Childhood Care and Development in Sri Lanka.

The Ministry’s initial task for Hemas was to help upgrade existing pre-schools in 10 districts to model pre-schools within two years. This was successfully undertaken from 2002 to 2004, along with ancillary activities such as teacher training and parental awareness, community involvement, medical clinics, and television programmes.

At the end of 2004, the Boxing Day tsunami ravaged Sri Lanka’s coastline, leaving carnage in its wake and evicting survivors from their homes and communities into makeshift camps. Through Piyawara, the Hemas Group and our partners rose to make an impact where it mattered, setting up 29 temporary pre-schools in makeshift camps around the country, including in the war zones of the North and East. Our response in rising to the challenges immediately following the tsunami made Piyawara come of age.

In the decade that followed the Tsunami, Piyawara has been endorsed as one of the best examples in Sri Lanka of addressing national issues through a successful public-private partnership. Our strategic partner is the Children’s Secretariat of the Ministry of Child Development and Women’s Affairs while we partner with government authorities such as the Local Councils, Pradeshiya Sabhas, Municipal Councils and in remote regions the Rural Development Authorities in managing the schools once they are built. The local authorities ensure that the schools are staffed by qualified teachers and that routine maintenance is carried out. All Piyawara pre-schools are registered with the respective Divisional Secretariats.

Piyawara is managed by the Hemas Outreach Foundation, registered as an approved charity in Sri Lanka. The Foundation is funded through donations from companies within the Hemas Group as well as its overseas business partners, in Europe and Germany in particular. The Hemas Outreach Foundation is managed by a board of independent trustees appointed by Hemas Holdings PLC and audited by Ernst & Young, while its administration is undertaken by Hemas employees on a voluntary basis.

46

Community

Anuradhapura

Polonnaruwa

SigiriyaKandalama

KandyPeradeniya

NuwaraEliya

BandarawelaRatnapura

PinnawelaNegombo

Colombo

Bentota

Hikkaduwa

Dambulla

PIYAWARA PRE-SCHOOLS IN SRI LANKA....

enriching lives ofover 3000 childrenover 100 teachers

Galle

Kitulgala

1. Wadduwa2. Kalutara3. Bentota4. Balapitiya5. Ambalangoda6. Hikkaduwa7. Rathgama8. Galle 19. Galle II10. Habaraduwa11. Tissamaharama12 Weligama13. Matara 114. Matara II15. Tangalle16. Hungama17. Hambantota 118. Hambantota 2 19. Gampaha20. Matale21. Polonnaruwa22. Anuradhapura

23. Dankotuwa24. Kurunegala25. Badulla26. Ratnapura27. Jaffna 128. Jaffna II29. Kalmunei30. Ismailpuram31. Navadanweli32. Kantale33. Ambalnagar34. Kilinochchi35. Mullaitivu Silawathi36. Mullaitivu Teetakarei37. Mullaitivu Kepapilaru38. Boossa39. Welioya40. Monaragala, Malhawa





47

Tissamaharama Piyawara Model Pre-school

Students at ‘Ape pataunata Piyawarak’ Special School in Hambantota

Student at play area in Kantale Piyawara Pre-school

Teachers and students at Panadura Piyawara Pre-school

48

THE PIYAWARA IMPACT A pre-school is by nature a place that generates much goodwill, given the critical role it plays in the lives of the youngest members of a community. The Piyawara pre-schools play a strong role within the communities in which they operate as the community itself is encouraged to play an active role in the maintenance of the schools. In some areas, the Piyawara pre-schools are often used as maternal and childcare centres, and become a place that integrates government officials from the administrative departments and Ministries of Health, Child Care with the community.

The parent-teacher associations at the Piyawara schools function with high levels of responsibility, ownership and accountability and are considered models that are followed by other districts. The line ministry even takes its foreign delegates to visit the Piyawara Pre-schools to gain first-hand knowledge of a successful example of social integration through a pre-school.

In terms of social impact, the Piyawara pre-schools ensure that marginalised children in each pre-school receive structured learning at a critical development stage, which they would otherwise have to forego. The children are provided the best of facilities and benefit from an activity based learning method. The schools also encourage environmental awareness among children and parents and teach children the appreciation of nature by encouraging them to plant trees.

HOW PIYAWARA OPERATES The Piyawara pre-schools are operated under strict standards and are also governed by government regulations related to pre-schools. Over and above the minimum compliance however, we have strived to make the Piyawara pre-schools a model in pre-school education, and the government has acknowledged that Piyawara pre-schools are now considered the standard.

The model developed in partnership with our strategic partners, is of an inclusive pre-school that promotes social integration and uplifts living standards. From the architecture and design of the schools, to their operation and the learning they impart, social compliance is a primary influencing factor.

The Hemas Group builds each school and works in partnership with the government authorities to initiate teacher training and parental awareness and serves as a meaningful stakeholder in each pre-school’s progress. The parent-teacher associations are empowered with the awareness and skills to generate their own funds to maintain schools through special concerts, sales, thereby encouraging them to think entrepreneurially.

The learning curriculum in Piyawara schools follows the standard introduced by the government, thus promoting activity based learning and not reading and writing at a young age, which could be detrimental to their future development.

The teaching cadre of the pre-schools, comprising of teachers and assistant teachers is created from within the community of each pre-school. By doing so, we have been able to nurture the skills of the communities in these marginalised locations and have successfully developed people with strong teaching and leadership skills. This has been most apparent in our post-Tsunami efforts and camps for the displaced such as the Menik Farm village, where women identified from among the displaced persons were trained to serve as pre-school teachers.

The teacher training programmes held annually for Piyawara pre-school teachers boosts their skills by giving them an opportunity to engage with other Piyawara pre-school teachers from island-wide and to learn new teaching techniques, as a result facilitating value co-creation in the interest of the local communities they serve.

It is also important to note that Piyawara pre-schools have been designed and built in an environmentally friendly manner while students are taught to appreciate their environments from an early age. As model pre-schools, the Piyawara schools must be maintained in a child-friendly manner; as such, environmentally friendly practices such as using bins for waste and preventing water wastage are encouraged. The Piyawara community pre-schools are also designed and built to function with daylight, i.e. without electricity to achieve better energy efficiency. The pre-school infrastructure helps to improve visual comfort for the young students whilst allowing natural ventilation into the building. In addition tube wells are being built for sanitation purposes.

ENGAGING OuR BuSINESS PARTNERS We have engaged our business partners from overseas as well as our distributors and sales representatives locally in the Hemas Piyawara Project. The overseas business partners, especially

Piyawara Teacher Training Programme

Community





49

Community pre-school in Mullaitivu

Children playing at the Kurunegala Piyawara pre-school

Pre-school Children at Ambalnagar

Pre-school Children at Mullaitivu

50

inbound tourism partners such as DerTouristik in Germany, donate funds towards the project. The local supply chain gets involved in ground-level activities at project sites that are close to their regions of operation. Similarly, our business partners in the inbound travel industry also carry out a social tourism programme by accommodating tourist visits to the model pre-schools already located in the tour itinerary, thereby encouraging foreign/individual funding to the foundation.

OVERCOMING CHALLENGES IN WAR AFFECTED AREAS As a public-private partnership, Piyawara has been able to overcome many of the bureaucratic and administrative challenges faced by similar projects in Sri Lanka. Perhaps the greatest challenge we have faced in our journey has been entering the war affected areas during the war years, when the LTTE denied us permission to build pre-schools in areas under their control.

The circumstances of the North and East during thirty years of war meant that many companies were forced to forego addressing their CSR efforts towards the minority community of the region. At the height of the civil war from 2002 - 2009, Piyawara was one of the earliest CSR projects to enter the war zones, following extensive discussions and negotiations with the rebels. Today, the school we first built amid restrictions has been developed into a popular model pre-school in the Nallur Municipal Council.

In a mission to support internally displaced people following the end of the war, Piyawara pre-schools and play areas were set up in all seven zones of Menik farm fostering approximately 11,000 young children, who were temporarily housed at the Menik Farm (March 2009 to March 2011). Furthermore, seven more Piyawara pre-schools were built in the North (2011 to 2014) to uplift the standards of livelihoods of the people returned or resettled since the end of the war.

Furthermore, during the construction of such pre-schools, we have promoted harmony among the community and the security forces, by engaging the forces to build the pre-schools. This has helped change each group’s perceptions towards the other, thereby promoting mutual respect and understanding of the cultural values of all.

ENSuRING PROJECT CONTINuITY Positive engagement with stakeholders, especially with the local communities drives the continuity of the project. At local level, the Piyawara pre-schools, once built, are handed over to the local government authorities, which manage the teaching staff as well as general maintenance. We set up Parent Teachers’ Associations at all schools to create a sense of belonging and continue to monitor them. We also ensure the quality of teaching by providing teacher training.

At national level, the Project has now become entrenched in the ECCD framework of the country, as a model that is considered the benchmark. The recognition thus received has enabled us to expand the scope of the project and also to influence policy making in relation to ECCD in Sri Lanka. Hemas is now represented on the National ECCD Policy Body and the National Body on Provincial ECCD Committees. During disasters, Hemas sits on the main bodies of the Ministry of Child Development. The Executive Director of Hemas Outreach has also been appointed as a Director of the National Child Protection Authority.

THE WAY FORWARD Establish more community pre-schools in rural areas of Sri

Lanka to address national needs.

Focus on more parental awareness programmes to curtail child abuse and how to keep children safe from cyber crimes.

Training caregivers and emphasis on identifying children with learning disabilities and refer them to professionals for early intervention.

We are looking at developing a national centre for children with learning disabilities. A feasibility study is being conducted in the coming year to assess the situation and need.

THE BIG HEART PROJECT The Big Heart Project was launched in 2012, to mark the 50th anniversary of our flagship brand Baby Cheramy. In partnership with the Ministry of Child Development and Women’s Affairs, the Big Heart Project seeks to ameliorate the effects of poverty on a child’s right to education. The project is now managed by the Hemas Outreach Foundation and today has 219 children on board.

Community





51

The Big Heart project came about following shocking statistics from the Department of Probation and Child Services, revealing that approx. 40,000 children were at risk of dropping out of formal education due to extreme poverty. The Nana Diriya programme initiated by the Department of Probation and Child Services raises funds for these children; however the task was too great for a single entity.

Big Heart thus targets children who are most at risk by funding the first five years of their essential schooling (Grades 1–5) through the Nana Diriya Education Aid Programme. Children supported by the Big Heart project receive a monthly sum of Rs. 2,000/- deposited into their bank savings book, through standing order. Of these funds, Rs. 1,500/- is used for the child’s monthly expenses and it is compulsory that the balance Rs. 500/- is saved. At the end of every school term, the Ministry sends the Hemas Outreach Foundation a progress report on the child’s performance, enabling us to measure and monitor the success of the project.

SECTOR INITIATIVES At sector level, companies also engage with communities in the vicinity of their operations in multiple ways, including providing jobs to the local community, working with local suppliers, assisting in the socioeconomic needs of each respective neighbourhood, and working with community leaders and state agencies to address key impacts to the community. Such engagement enables our businesses to integrate better with the communities in which they operate, making them true stakeholders in their development narrative while our employees develop an appreciation of the need to be responsible in all they do.

GRASSROOTS ACTIVATIONS AT J. L. MORISONJLM’s flagship brand Morison’s Gripe Mixture engaged with communities across the country by organising educational programmes for pregnant and new mothers in partnership with doctors, nurses and mid-wives. We collaborated with the Mid-wives Association on many events, participating in national and regional health promotion events.

In an attempt to improve social etiquette and respect for pregnant mothers, we partnered with the Department of Transport to sticker over 20,000 buses with a tri-lingual message encouraging able citizens to give up their seats to pregnant mothers. This initiative was met with positive feedback from the community.

SuPPORTING COMMuNITIES AROuND OuR HOTELS By nature, the operation of a hotel leads to the creation of an ecosystem centred around the property and this has indeed been the case at all four of the hotels we operate, in Waikkal, Bentota, Kalutara and Sigiriya. Each hotel thus undertakes many engagement initiatives within their respective communities.

One of the primary ways in which we make an impact is by hiring from the local community; this enables us to support the rural economies and to uplift the living standards of those

around us. Hotels also try to source products and services from the community, ranging from fruit, vegetable and seafood, to hiring builders and machinery to using guides and taxis from the neighbourhood.

The hotels also provide community infrastructure for example, Hotel Dolphin in Waikkal has provided the village a Community Centre with recreational facilities while Avani Bentota maintains the Geoffrey Bawa-designed Bentota Railway Station. AVANI Bentota has also undertaken the construction of a “Dharma Shalawa” at the udakotuwa Temple - Bentota , at an estimated cost of Rs. 2.9 million.

Hotel Sigiriya has taken the lead in community integration and promotes an excursion called “The village lunch” which provides a mode of income for local families in the village of Diyakepilla. The hotel maintains two wards at the Sigriya hospital and also maintains a herb garden within the Diyakepilla school while for both educational and medicinal purposes. Hotel Sigiriya conducts an annual campaign to clean the surroundings of the Sigiriya Rock Fortress; similarly, our beach resorts conduct regular beach clean-up programmes, with the support of beach operators.

The Club Hotel Dolphin recently initiated a series of awareness programmes on protecting children from sexual exploitation. It also sponsors sports events in the neighbouring village while also conducting quarterly vaccination and sterilisation programme for stray dogs and cats in the neighbourhood.

Hemas Hospitals conduct community education programmes with the participation of medical professionals along with interactive sessions with the public. These events are attended by hundreds of locals who have benefited with knowledge and concessionary screening packages which has made preventive health more affordable.

Mosquito control project carried out by Thalawathugoda Hospital staff

52

Environment



Environment 52GRI Index 64Group Directory 67Notes 70


53

The Hemas Group’s Green Pledge promises that “We take responsibility; as individuals and collectively as part of the Hemas Group to minimise harmful practices and embrace emerging trends, that will help us leave a more gentle environmental footprint”. Stemming from the pledge, each employee and business unit is committed to managing environmental impacts through multiple measures that are constantly reviewed and improved to ensure maximum effectiveness.

The Group’s Environmental Policy dictates our Green Business ethos, and is mandated to operations across all sectors. While environmental systems at some of our locations of operations are of greater maturity than others, it is a source of great satisfaction that we have been able to instil a strong sense of environmental responsibility across the Group.

All of our operating units monitor and report on their environmental footprint in terms of energy, water and waste. The table below details our performance in these respects during the year, in comparison with figures for the year before:

Location of operation

Year Direct energy consumption (kWh)

Water withdrawal (ltr )

Hemas ManufacturingDankotuwa

2013/14 2,494,750.00 29,987,489.00

2014/15 3,051,075.00 35,792,000.00

Hemas Manufacturing Welisara

2013/14 308,202.00 5,465,250.00

2014/15 219,519.00 6,717,000.00

Hemas Hospital Wattala

2013/14 1,766,421.00 34,063,000.00

2014/15 1,819,012.00 40,234,000.00

Hemas Hospital Thalawathugoda

2013/14 1,474,736.00 13,380,000.00

2014/15 1,542,326.00 15,384,000.00

Hemas Southern Hospital - Galle

2013/14 548,771.00 12,664,000.00

2014/15 575,623.00 12,135,000.00

J. L. Morison Kelaniya

2013/14 307,809 3,781,000.00

2014/15 292,501 4,005,000.00

J. L. MorisonMSJI Modara

2013/14 675,151 9,365,000.00

2014/15 690,099 9,115,000.00

Hemas Pharmaceuticals, Galle road, Colombo 3

2013/14 192,880.00 1,909,000.00

2014/15 184,640.00 1,578,000.00

Hemas Pharmaceuticals Lower Bagathale road, Colombo 03

2013/14 87,632.00 644,000.00

2014/15 77,717.00 614,000.00

Location of operation

Year Direct energy consumption (kWh)

Water withdrawal (ltr )

Hemas Pharmaceuticals, Hendala, Wattala

2013/14 109,698.00 815,000.00

2014/15 183,073.00 940,000.00

Hotel Sigiriya * 2013/14 486,627.00 18,000,000.00

2014/15 553,606.00 31,482,000.00

AVANI Bentota 2013/14 1,370,730.00 38,578,000.00

2014/15 1,500,490.00 35,236,000.00

AVANI Kalutara 2013/14 1,870,341.00 27,856,000.00

2014/15 2,179,435.00 30,706,000.00

Club Hotel Dolphin, Waikkal *

2013/14 1,441,825.00 32,241,000.00

2014/15 2,809,546.00 83,614,000.00

Hemas Logistics Welisara

2013/14 93,237.25 3,437,830.00

2014/15 288,464.06 5,995,920.00

Hemas Logistics Kelaniya/ Wattala

2013/1 31,498.00 4,493,000.00

2014/15 40,847.00 4,010,000.00

Hemas Logistics Hambantota

2013/14 800.00 168,000.00

2014/15 1,134.00 738,000.00

Hemas House 2013/14 1,338,745.00 18,652,500.00

2014/15 1,299,736.00 10,673,100.00

Hemas Fort 2013/14 303,964.00 3,411,000.00

2014/15 335,756.00 4,037,000.00

Total - Hemas Group

2013/14 14,903,817.25 258,911,069.00

2014/15 17,644,599.06 333,006,020.00

* A notable difference in energy and water consumption between 2013/14 and 2014/15 is due to the following:

Club Hotel Dolphin was partially closed for renovation in 2013 for six months. Only 50 rooms operated during the period

In Hotel Sigiriya 40 rooms were closed for renovation in 2013 for six months

Direct energy consumption (kWh).

14,9

03,8

17.2

5

17,6

44,5

99.0

6

Environmental Indicators - Hemas Group

2013/14 2014/15

258,

911,

069.

00

333,

006,

020.

00

2013/14 2014/15

Water withdrawal (ltr ).

54

HEMAS GREEN CLuB The Hemas Green Club, a voluntary environmental conservation group, was established at Hemas in 2013 with the objective of inspiring and engaging employees to think green. The Club membership has expanded to 87 including 16 honorary members, who are tasked with playing a changemaker role in bringing about behavioural change among their colleagues.

The Green Club launched a string of initiatives in 2013 to increase environmental awareness and reduce the Group’s carbon footprint; these included ground initiatives, internal e-based campaigns and quarterly forums featuring guest speakers with a passion for conservation.

OBJECTIVE OF GREEN CLuB INITIATIVES1 To reduce our carbon footprint through new innovations.

2 To build environmental awareness among our employees and introduce best practices

3 To make a visible behavioural change in our employees towards mother nature.

4 To build team spirit among the Group for a common cause – “Protect Mother Nature”

5 To comply and complement the Group environmental policy

6 To bring back the simplicity of life that we have abandoned over the years.

Listed below are some of the Club’s main initiatives during the year:

Establishing a plant nursery at Dankotuwa factory and Plant Distribution. under the theme for this project is ‘Give back to nature for what nature has given you’, Green club members, distributed 615 mahagony, ma dam (berry), and Kohomba seedlings and 4000 jack seedlings, which were grown at the Dankutowa plant nursery. The seedlings were distributed free to Hemas employees and to the people of Wayamba Province through the mobile plant nursery unit at the Divisional Secretariat, Wennappuwa.

Recycling CFL bulbs in partnership with private recycling plants The Club has collected and handed over 11,486 CFL and fluorescent bulbs to be recycled and reused. Collection of used CFL bulbs is carried out every quarter, encouraging all staff to hand over bulbs to the appointed e-waste representative from each sector. The project creates awareness on environmental consequences and the negative impact of improper disposal of CFL bulbs.

Recycling E-waste in partnership with ‘Think Green’ Hemas signed an agreement with Think Green (Pvt) Ltd to collect electronic waste, including computer related equipment, personal use electronic devices, and telecommunication equipment.

Environment

E-waste boxes are provided to all the Group’s locations and during the reporting period, approx. 159 Kg of e-waste was collected and handed over to ‘Think Green’ company.

Segregation of garbage at staff cafeteria for future compost project To mark World Environment Day 2014, the Club launched a food waste management programme at the Hemas House Cafeteria. The project adopts a simple form of processing to decompose and recycle food waste to generate soil conditioner or organic fertiliser.

The Club also undertook events such as an excursion to the Kanneliya tropical rainforest and a beach clean up initiative on the Wellawatta beach, with the help of volunteers from across the group, including the senior leadership.

In December 2014, the Club organised a photographic exhibition for nature lovers within the Group; the overwhelming response of over 1000 applications demonstrated the talent of our team. The Green Club has also generated much enthusiasm by organizing workshops and awareness sessions on topics of environmental interest, open to those who are keen to take part. The speakers and resource people at these sessions are prominent environmentalists with a passion for conservation.

With water scarcity, depleting natural resources, and climate change becoming real threats to the future as we know it, the Green Club’s attention is now focused on innovative ways of lowering the consumption of water and energy to reduce Hemas’ carbon footprint.

We are firm in our belief that enterprises must incorporate environmental sustainability into their business and functional plans, and have, through the Green Club, demonstrated the power of effective voluntarism in addressing this critical aspect.

Hemas Green Club Awareness session





55

SIMPLE SOLuTIONS TO SAVE WATER One of the earliest Green Club initiatives has been the modification of the flushing mechanism in the men’s toilets at Hemas House. Club members found that urinals operated on auto flush mechanisms which were flushing at pre-set intervals throughout the day. The observations along with suggestions to mitigate the issues were brought to the notice of Hemas Developments, which overlooks the management of Hemas House. In return the Hemas Developments Management took measures in June 2014 to install sensor and manual flush valves in men’s toilets, leading to conservation of water and the reduction of water bills by 40% – 50%, as shown in the graph below:

At Hemas House, awareness creation has also led to a marginal drop of 39000 kWh in electricity usage year on year, with tenants taking steps to reduce their consumption, including by shutting down air conditioners by 5 pm on working days. The building uses minimal levels of incandescent lighting and the building’s capacitor bank contributed towards saving electricity and preventing any spikes which may damage equipment.

A manmade biodiversity zoneThe primary production facility of our FMCG sector is our factory situated on nine acres in Dankotuwa, about an hour’s drive away from our headquarters in Colombo. The factory, opened in 2008 and employing over 400 personnel, now houses production lines for ten of our FMCG brands as well as a well equipped Research and Development unit.

While serving as the hub of our manufacturing operations, the Dankotuwa factory has also taken the lead in environmental responsibility and is pursuing the vision of becoming a herbal garden and biodiversity zone by introducing medicinal plants and rare trees throughout the property. As part of the project, all potted plants within the factory premises have been replaced with medicinal plants belonging to 199 varieties, some of them endemic to Sri Lanka. Staff at the factory are educated about a new plant every week, with information such as their medicinal value and ideal climatic conditions.

Extending support to the environment in the vicinity of the factory, we also support the Divisional Secretariat of the area by providing nearly 4000 jack saplings to restore an area where soil removal had resulted in erosion. The factory also works with the Department of Wildlife in the conservation of the Kalamukalana Nature Reserve nearby.

The production process at the factory results in zero landfill all waste is carefully segregated with glass and paper recycled and other waste products sent to Geocycle for co-processing. 100% of waste water is treated and reused for irrigation and will soon also be diverted towards use in cisterns. The factory thus does not release any hazardous effluents.

So what’s next in the ambitious Greening agenda at Dankotuwa? At the factory, they are excited about the possibilities and are keen to pursue solar energy, rain water and daylight harvesting, product lifecycle management and biodegradable packaging.

Water Consumption at Hemas House

500

1000

1500

2000

AprM

ay Jun JulAug

Sep OctNov Dec Jan Fe

bM

ar AprM

ay Jun JulAug

Sep OctNov Dec Jan Fe

bM

ar

2013/14

System modified

2014/15

Water withdrawal (000’ltr )

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ENVIRONMENTAL BEST PRACTICES AT HOTELS All of the Group’s Hotels have adopted minimum standards in energy and water conservation, and practice measures such as key card systems to switch off room air conditioners; switch off schedules for lighting in public areas; changing lighting to CFL/LED, water heating through solar panels and installing water-saving cisterns. Guests are encouraged to join the water conservation effort by opting to reuse their linen. The concept of “reduce, reuse, recycle” is enforced across our operations in order to minimise waste; the waste generated through our operations is managed by segregating and disposing responsibly and waste water is treated for reuse in gardening.

HOSPITAL WASTE HANDLED WITH CARE Handling hospital waste requires extra care, and at Hemas Hospitals we follow internationally accepted standards of waste disposal in compliance with the requirements of the Central Environmental Authority (CEA). Each Hemas hospital operates its own waste water treatment plant, with the water quality checked regularly to ensure compliance. In fact, the tertiary treatment plant at Hemas Hospital in Thalawatugoda is considered one of the best plants of its kind in the country.

The hospitals handle and disposes of used chemicals according to the internationally accepted standards set by the Australian

Gamini’s Organic Garden at the Welisara WarehouseOrganic gardening is Gamini Ratnayaka’s passion and Gamini Ratnayaka works at the Welisara Warehouse where he grows seasonal vegetables in its backyard.

Council of Hospital Standards Institution (ACHSI). The solid waste generated through each hospital is segregated into clinical waste, sharp waste, wet garbage and dry garbage; clinical and sharp waste are disposed of according to the ACHSI standards; the Hospital chain obtains the services of a CEA approved company to dispose of clinical and sharp waste. Dry and wet garbage are disposed of through the respective municipal councils. In a key energy saving initiative, Hemas Hospital in Wattala installed a 150 kW solar PV system in January 2015 which has led to an electricity saving of 75000 kWh (units) over the ensuing 5 months.

REDuCING EMISSIONS AND FOSSIL FuEL uSE The Transportation sector focuses on reducing emissions and the use of fossil fuel through initiatives such as preventive maintenance of trucks to reduce carbon emissions and installing GPS Monitoring devices on vehicles to monitor fuel consumption. used tyres are rebuilt in order to ensure multiple usage. At the sector’s yards, waste water treatment plants ensure that polluted water is treated before release.

GOOD PRACTICES ACROSS THE GROuP Companies across the Group also practice paper recycling and are encouraged to dispose of e-waste in an environmentally friendly manner.

He is a firm believer that Mother Nature herself provides fertiliser without damaging our now fragile eco-system. Gamini finds time to read Sinhala newspaper articles which promotes organic gardening and experiments with them. The organic garden at Welisara uses compost as fertilizer while Kohomba leaves are used as a pesticide to control weeds and keep away insects and other diseases. Gamini says “cabbage grows best in the full sun. The soil should be fertile, moist and well-drained, preferably mixed in with compost or composted manure before planting. These days we have egg-plant (brinjal) and ladies fingers (okra) as it is the season.” He says it is a tough task to control weeds and retain moisture. His passion for farming makes him work in the garden after office hours. The crops are used for staff meals at the canteen and if there is anything in excess the staff shares it. “I feel very happy because it is all consumed by all of us and I know it is safe”. His great innovative thinking to use Kohomba leaves instead of chemical pesticides and the enthusiasm in cultivation, sends us a strong message. There is so much to learn from Gamini.

Environment





57

Green Club Members at Kanneliya excursion

Chairman at the annual Hemas Green Club photography exhibition

Wellawatta beach clean-up by Green Club Members

Hotels Garbage Segregation Programme

58

Shareholders



Shareholders 58GRI Index 64Group Directory 67Notes 70


59

As a public company, the ultimate purpose of our business is to ensure that we remain a good investment for the shareholders and a company they consider worthy of being associated with. Delivering sustainable value to our shareholders is not limited to superior financial performance; it is also important that their investment is safeguarded through visionary strategies that propel the company to greater success, stringent governance and prudent risk management processes, and a commitment to being a good corporate citizen.

The financial highlights for the year ended 31st March 2015

Operating Results 2015 2014 % change

Group Revenue (Rs. ‘000) 32,496,953 27,259,281 19.2

Operating Profit (Rs. ‘000) 3,371,176 3,484,215 -3.2

Profit Before Taxation (Rs. ‘000) 3,094,939 3,192,344 -3.1

Profit After Taxation (Rs. ‘000) 2,390,739 2,722,671 -12.2

Profit Attributable to the Parent (Rs. ‘000) 1,927,051 2,409,276 -20.0

Gross Dividend Paid (Rs. ‘000) 629,800 429,409 46.7

Cash From Operations (Rs. ‘000) 3,329,052 2,686,659 23.9

Financial Position

Total Assets (Rs. ‘000) 34,438,320 32,126,629 7.2Equity Attributable to Equity Holders of the Parent (Rs. ‘000)

15,658,976 14,300,524 9.5

No. of Shares (No. ‘000) 515,291 515,291 0.0

Gearing (%) 26.9% 25.9% 3.8

Shareholder Information

Return on Equity (%) 12.9% 18.2% -29.4

Earnings per Share (Rs.) 3.74 4.68 -20.0

Dividend per Share (Rs.) 1.10 0.75 46.7

Dividend Payout (%) 29.4% 16.0% 83.4

Net Assets per Share (Rs.) 30.39 27.75 9.5

Market Capitalisation (Rs. ‘000) 37,976,919 19,426,456 95.5

Price Earnings Ratio (Times) 17.46 7.46 134.1

Market Price as at 31st March (Rs.) 73.70 37.70 95.5

At Hemas, we make no compromises on sound financial management of the businesses and ensure that stringent internal controls help maintain a system of checks and balances within the organisation.

60

PRuDENT FINANCIAL MANAGEMENT At Hemas, we make no compromises on sound financial management of the businesses and ensure that stringent internal controls help maintain a system of checks and balances within the organisation. We strive for constant gains in efficiency and productivity through multiple mechanisms including performance-based recognition schemes and the use of automation and technology to improve the way we work.

CORPORATE GOVERNANCE Hemas Holdings PLC and its subsidiaries have in place a robust enterprise risk management and governance mechanisms that ensure the prudent management of the businesses, in turn ensuring that investors’ interests take precedence at all time.

The Board of Directors of Hemas Holdings PLC consists of eleven members, of whom three serve as executive directors, three as non executive directors, and five others as independent directors. The Chairman Mr. Husein Esufally serves in a non-executive capacity while executive director Mr. Steven Enderby serves as Chief Executive Officer. Board Committees in place include an Audit Committee, a Remuneration Committee, and a Governance and Nominations committee.

All matters relevant to the effective operation of the company is reviewed by the board at appropriate intervals. This includes the consideration of matters relating to sustainability and corporate responsibility, as part of its review of the Group’s strategy and key priorities in line with the Year 2020 Vision.

For a comprehensive report of Corporate Governance and Risk Management at Hemas, please refer the Hemas Holdings PLC Annual Report 2014/15 or scan the code below to access our Annual Report online.

INNOVATING FOR FuTuRE GROWTH Building a better business for the future necessitates positioning ourselves to respond meaningfully to the megatrends taking place globally in areas such as demographics, climate change and resource scarcity, urbanisation and the shift in economic power bases from the West to the East. While preparing our strategies to combat and optimise on each of these areas, as a Group we are excited most about the fifth trend – that of technological disruption due to the pervasive digitization sweeping the world. Innovation has thus become a mantra within Hemas, influencing every aspect of our businesses (See boxed story).

Innovation - The Way Forward for HemasAt Hemas, we believe that innovation should be at the core of everything we do, driving our desire to push beyond the boundaries of our businesses. Innovation, we believe, will deliver a sustainable competitive advantage, new revenue lines or cost savings, make our processes more efficient and build capabilities in novel technologies. This thrust will support the Group’s aggressive growth strategy and vision 2020.

OPEN INNOVATIONA vital part of our strategy is to harness open innovation by tapping into external sources for Research and Development to fast-track the Group’s growth strategies for the years ahead. As a step in this initiative, we have entered into R&D partnerships with the Faculty of Science of the University of Colombo, the Sri Lanka Institute of Nanotechnology (SLINTEC) and the Industrial Technology Institute (ITI) whereby Hemas will focus on developing innovative products to meet ever-changing consumer demands.

Additionally, we are focused on harnessing the capabilities of talented inventors and entrepreneurs in Sri Lanka who cater to within the areas of wellness, leisure and mobility. As a key step of this initiative, Hemas has entered into a partnership with the Sri Lanka Inventors Commission to work closely with their top inventors.

The focus on supporting entrepreneurship is in line with the government mandate and is to encourage local entrepreneurs and inventors to reach their maximum potential. In order to leverage on the vast talent base, Slingshot a start- up incubator programme was developed by Hemas with the objective of providing entrepreneurs the opportunity to pitch inventions and business concepts that may fit with the Group’s business interests and growth strategy.

INNOVATION CULTURE WITHINIn addition to reaching out to external sources and networks, we are also focused on harnessing our extensive knowledge base within our employees and have several innovation initiatives to encourage and foster innovation at Group level and at individual business units. Innovation teams have been formed around specific projects, which have SBU level or group wide impact.

Shareholders





61

AWARDS AND CERTIFICATIONS The Hemas Group has been the recipient of multiple accolades in its chosen areas of business over the years, an endorsement of the standards we strive for in our businesses. In our pursuit of excellence, we have also instituted internationally accepted qualified certification systems within our businesses, wherever relevant. Given below are the awards and certifications received during the period under review:

Hemas Holdings PLC Awarded Best Community Care Company in Asia and Best CSR Campaign in Asia – Singapore 2014 JASTECA Gold Award for CSR 2014 Rated No 3rd amongst Sri Lanka’s leading 15 conglomerate brands by

LMD brands annual 2015 edition. Ranked amongst the Top 20 Most Respected Companies in Sri Lanka – LMD 2014

FMCG ISO 9001 ISO 18001 OHSAS 18001 certified Good Manufacturing Practice Certificate (GMP) SLS Certificate Brand Excellence Awards – Velvet Brand Product Brand of the Year - Velvet Brand Local Brand of the Year - Velvet Brand

Healthcare Hospitals ACHSI, ISO 15189, OHSAS, ISO 9001 Runners up in Business Excellence Awards - Health Sector 2014 Best Hospital in Southern Province (private sector) 2014 - Provincial Directorate in Health

Hemas Pharmaceuticals Category Award Winner - Rewards & Recognition of HRM Awards 2014/15.

Leisure Hotel Sigiriya Holiday Check – Recommendation Certificate- 2014 Booking.com – Award of Excellence 2014 Tripadvisor- Certificate of Excellence 2014 Travel Life Gold – 2013/2015 Tripadvisor – “Hall of Fame”- 2015 (For being an Excellent hotel in Tripadvisor for

2011/ 2012/ 2013/ 2014/ 2015) The Hotels Association of Sri Lanka – Greening Awards 2014 – Certificate of Merit

AVANI Bentota Resort & Spa World Luxury Hotel Awards 2014 – Winner Luxury Beach Resort – Indian Ocean Booking.com 2014 Award of Excellence 8.0 /10 ISO 22000-2005 & HACCP certified from 2014 Travelife Gold Award 2014/2015 The Hotels Association of Sri Lanka – Greening Awards 2014 – Certificate of Merit

AVANI Kalutara Resort Travelife Gold Award 2014/2015 Switch Asia Green Award- Merit award 2014 Booking.com 2014 Award of excellence Holiday Check – Top hotels 2014 Tripadviro – Certificate of Excellence – 2014 /2015 The Hotels Association of Sri Lanka – Greening Awards 2014 – Certificate of Merit

62

Leisure Club Hotel Dolphin Travelife Gold 2014 / 2015 Crown for Food Hygiene (05 Crowns) Travellers’ Choice Award Winner 2015 HolidayCheck Award Winner 2015 - The hotel is one of the most popular hotels worldwide

(Holidaycheck is an independent online review site) Certificate of Excellence 2015 Tripadvisor ‘Hall of Fame’ of Five-time Certificate of Excellence Winners The Hotels Association of Sri Lanka – Greening Awards 2014 – Certificate of Merit

Diethelm Diethelm Travel Group Awards 2014 Best Travel Agency Indochina

Transportation Gold Award for year 2014 - Korean Air Silver Award For Cathay Pacific Airlines – 2013/14 Top Agent Merit Award - 2013/2014 - Singapore Airlines Top Agents Award Malaysian Airlines - 2013/14 Outstanding Achievement 2014 - united Airlines Inc.

New Businesses N*able ISO 9001:2008 Certification Client Value Innovation Award 2015 – Awarded by IBM Cisco world cup challenge

Vishwa ISO/IEC 270001:2005

Shareholders





63

MEMBERSHIPS As a prominent member of Sri Lanka’s corporate sector and a leader in the industries we operate in, we as a company and individuals have involved ourselves in many industry associations, business councils and chambers. Our memberships allow us to influence policy, and to exchange knowledge on industry best practices while also promoting our sustainability ethos among like-minded companies. Some of the memberships we hold are –

Hemas Holdings PLC Ceylon Chamber of CommerceEmployers Federation of CeylonMercantile Service Provident Society (MSPS)Youth Business Sri Lanka (YBSL)Tourist Hotels Association of Sri Lanka (THASL)Swiss Business Circle, Sri LankaAmerican Chamber of Commerce, Sri LankaNational Committee on Early Childhood Care and Development, Ministry of Child AffairsNational Child Protection Authority (NCPA)

FMCG Cosmetic Manufactures Association Sri LankaAssociation of HR Professionals Sri Lanka

Healthcare Sri Lanka Chamber of Pharmaceutical Industry (SLCPI)Pharma Promoters AssociationCeylon Chamber of Commerce- Import SectionPrivate Hospitals Association

Leisure Travel Trade Sports ClubThe Pacific Asia Travel Association Bentota Beruwala Hotel AssociationNegombo Hotel Association Cultural Triangle Hotel Association Ceylon Tourism ClusterSri Lanka Association of Inbound Tour Operators (SLAITO) The Hotels Association of Sri Lanka

Transportation International Air Transport Association (IATA)Ceylon Association of Ships Agents (CASA) Sri Lanka Association of Vessel Operators (SLAVO)Economic, Fiscal and Policy Planning Committee Member - The Ceylon Chamber of Commerce Travel Agents Association of Sri Lanka Airline Partners Joint Council (APJC)SKAL International ColomboSri Lanka Malaysia Business CouncilTravel Trade Sports ClubSri Lanka Association of Airline Representatives

64

GENERAL STANDARD DISCLOSURES

General Standard Disclosures

Page Number (or Link)Information related to Standard Disclosures required by the ‘in accordance’ options may already be included in other reports prepared by the organisation. In these circumstances, the organisation may elect to add a specific reference to where the relevant information can be found.

External AssuranceIndicate if the Standard Disclosure has been externally assured.

If yes, include the page reference for the External Assurance Statement in the report.

STRATEGY AND ANALYSISG4-1 9-11ORGANISATIONAL PROFILEG4-3 Hemas Holdings PLC G4-4 4-5, 34-35G4-5 75, Braybrooke Place, Colombo 02G4-6 Sri Lanka

G4-7Quoted public company with limited liability, quoted on the Colombo Stock Exchange

G4-8 4-5G4-9 21, 23, 37,59G4-10 37-39G4-11 41G4-12 29-31

G4-13The Group's interests in the power segment were disposed in 2014/15

G4-14 53G4-15 ILO charter G4-16 63IDENTIFIED MATERIAL ASPECTS AND BOUNDARIESG4-17 66-69G4-18 18G4-19 18G4-20 18G4-21 18G4-22 No restatementG4-23 6STAKEHOLDER ENGAGEMENTG4-24 16-18G4-25 16-18G4-26 16-18G4-27 16-18REPORT PROFILEG4-28 6G4-29 6G4-30 6G4-31 6G4-32 64G4-33 Not externally assured GOVERNANCEG4-34 58, Hemas Holdings PLC Annual Report p46ETHICS AND INTEGRITYG4-56 12-15

GRI Index

CuSTOM CONTENT INDEx - ‘IN ACCORDANCE’ COREThis Content Index provides an overview of the G4 Standard Disclosures based on the selections made.




65

sPeCiFiC stANdARd disClosURes

DMA and Indicators

Page Number (or Link)Information related to Standard Disclosures required by the ‘in accordance’ options may already be included in other reports prepared by the organisation. In these circumstances, the organisation may elect to add a specific reference to where the relevant information can be found.

Identified Omission(s)In exceptional cases, if it is not possible to disclose certain required information, identify the information that has been omitted.

Reason(s) for Omission(s)In exceptional cases, if it is not possible to disclose certain required information, provide the reason for omission.

Explanation for Omission(s)In exceptional cases, if it is not possible to disclose certain required information, explain the reasons why the information has been omitted.

External AssuranceIndicate if the Standard Disclosure has been externally assured.

If yes, include the page reference for the External Assurance Statement in the report.

CATEGORY: ECONOMICMATERIAL ASPECT: ECONOMIC PERFORMANCEG4-DMA 59G4-EC1 23MATERIAL ASPECT: PROCUREMENT PRACTICESG4-DMA 29G4-EC9 29-33

CATEGORY: ENVIRONMENTALMATERIAL ASPECT: ENERGYG4-DMA 53G4-EN3 53G4-EN6 53MATERIAL ASPECT: WATERG4-DMA 53G4-EN8 53

CATEGORY: SOCIALSUB-CATEGORY: LABOR PRACTICES AND DECENT WORK

MATERIAL ASPECT: EMPLOYMENTG4-DMA 38-39G4-LA1 38-39MATERIAL ASPECT: TRAINING AND EDUCATIONG4-DMA 40-41G4-LA9 41G4-LA10 40G4-LA11 41MATERIAL ASPECT: DIVERSITY AND EQUAL OPPORTUNITYG4-DMA 40G4-LA12 38-40MATERIAL ASPECT: EQUAL REMUNERATION FOR WOMEN AND MENG4-DMA 40G4-LA13 40

SUB-CATEGORY: SOCIETYMATERIAL ASPECT: LOCAL COMMUNITIESG4-DMA 13, 15G4-SO1 45-51

66

as at 31 March 2015

Name / Principal Place of Business Relationship Effective Holding

Principal Activities

FMCG sector

Hemas Manufacturing (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Manufacture of FMCG Products

Hemas Marketing (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Trading & Distribution of FMCG Products

Hemas Trading (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Import and sale of Food Products

Hemas Consumer Brands (Pvt) Ltd.Rupayan Center, 6th Floor, 72, Mohakhali C-A, Dhaka-1212

Subsidiary 100% Trading of FMCG Products

unicorn Investment (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Research and Development Services

J. L. Morison Son & Jones (Ceylon)PLCNo:620, Biyagama Road, Pethiyagoda, Kelaniya.

Subsidiary 89% Importing and Distribution of Consumer Products

Hemas Pharmaceuticals (Pvt) Ltd.No:36, Hemas Building, Sir Razeek Fareed Mawatha, Colombo 01

Subsidiary 100% Distribution of Pharmaceutical Products

Hemas Surgical & Diagnostics (Pvt) Ltd.No:36, Hemas Building, Sir Razeek Fareed Mawatha, Colombo 01

Subsidiary 100% Distribution of Healthcare Products

Hemas Hospitals (Pvt) Ltd.No 389, Negombo Road, Wattala.

Subsidiary 83% Hospital Services

Hemas Southern Hospitals (Pvt) Ltd.No.10, Wakwella Road, Galle, Sri Lanka.


Hemas Capital Hospital (Pvt) Ltd.No. 647, Pannipitiya Road, Thalawatugoda.


Hemas South Colombo Hospitals (Pvt) Ltd. No. 75, Braybrooke Place, Colombo 02.


Hemas Clinical Research Services (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Support Services of Clinical Trials

J. L. Morison Son & Jones (Ceylon) PLCNo:620, Biyagama Road, Pethiyagoda, Kelaniya.

Subsidiary 89% Importing and Distribution of Pharmaceuticals and Medical Aid

M S J Industries (Ceylon) (Pvt) Ltd.P.O BOx 430, 126 Aluthmawatha Road, Colombo 15

Subsidiary 89% Manufacturing and Trading Pharmaceuticals

Group Directory




67



LEISuRE

Leisure Asia Investments Ltd. Subsidiary 100% Investment Holding Company

Serendib Hotels PLCNo. 75, Braybrooke Place, Colombo 02.

Subsidiary 55% Operating a Tourist Hotel and Investment Holding Company

Hotel Sigiriya PLCNo. 75, Braybrooke Place, Colombo 02.

Subsidiary 34% Operating a Tourist Hotel

Dolphin Hotels PLCNo. 75, Braybrooke Place, Colombo 02.


Miami Beach Hotel Ltd.No. 75, Braybrooke Place, Colombo 02.


Serendib Leisure Management Ltd.No. 75, Braybrooke Place, Colombo 02.


Jada Resort (Pvt) LtdNo. 40, St Sebastian’s Road, Katukurunda, Kalutara.

Associates 20% Operating a Tourist Hotel

Diethelm Travel Lanka (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 60% Destination Management Services

Diethelm Travel The Maldives (Pvt) Ltd.4th Floor, Henvery Megama Sikka Golhi, Male, Republic Of Maldives


Hemtours (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.


Conventions Asia (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Event Management

Mowbray Hotels Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 89% Hotel Property

PH Resort (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Joint Venture 50% Hotel Property

TRANSPORTATION

Forbes Air Services (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% GSA Emirates Airline

Hemas Air Services (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% GSA Malaysian Airline

Hemas Travels (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Travel Agent

Hemas Aviation (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Airline Representation

Exchange & Finance Investment (Pvt) Ltd.No:36, Hemas Building, Sir Razeek Fareed Mawatha, Colombo 01


68

Group Directory



Discover the World Marketing (Pvt) LtdNo:36, Hemas Building, Sir Razeek Fareed Mawatha, Colombo 01


Far Shipping Lanka (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Shipping Agents

Far Shipping Agency Lanka (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Joint Venture 60% Shipping Agents

Hemas Transportation (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Shipping Agents

HIF Logistics (Pvt) Ltd Joint Venture 49% Freight Forwarders

ACx International (Pvt) LtdNo.151/6, Kirula road, Colombo 5

Joint Venture 49% Courier Services

H & M Shipping (Pvt) Ltd No:36, Hemas Building, Sir Razeek Fareed Mawatha, Colombo 01

Joint Venture 50% Crew Boat Servicing

Hemas Maritime (Pvt) LtdNo:36, Hemas Building, Sir Razeek Fareed Mawatha, Colombo 01

Subsidiary 100% Break Bulk Casual Callers & Cargo Handling

Hemas Logistics (Pvt) LtdNo. 75, Braybrooke Place, Colombo 02.

Subsidiary 57% General Carries & Warehousing

Hemas Integrated Logistics (Pvt) LtdNo. 75, Braybrooke Place, Colombo 02.

Subsidiary 57% General Carries & Warehousing

OTHER

Hemas Corporate Services (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Corporate Secretaries

Hemas Developments (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Property Development

Vishwa BPO (Pvt) Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Financial & Accounting Services

Peace Haven Resorts Ltd.No. 75, Braybrooke Place, Colombo 02.

Subsidiary 100% Hotel Property

N-able (Pvt) Ltd.No:36, Hemas Building, Sir Razeek Fareed Mawatha, Colombo 01

Subsidiary 100% Enabling Information & Technology Solutions

N-able Global (Pte) Ltd.No: 51, Goldhill Plaza, #07-10/11, Singapore

Subsidiary 100% Enabling Information & Technology Solutions

J. L. Morison Son & Jones (Ceylon) PLCNo: 620, Biyagama Road, Pethiyagoda, Kelaniya

Subsidiary 89% Importing and Distribution of Agro chemicals




69



M S J Promotional ServicesNo: 620, Biyagama Road, Pethiyagoda, Kelaniya

Subsidiary 89% Promotional Activities

M S J Cargos (Ceylon) (Pvt) Ltd.No: 620, Biyagama Road, Pethiyagoda, Kelaniya

Subsidiary 89% Wharf Clearing Activities

M S J Hotels (Ceylon) (Pvt) Ltd.No: 620, Biyagama Road, Pethiyagoda, Kelaniya

Subsidiary 89% Hotel Industry

M S J Foods (Ceylon) (Pvt) Ltd.No: 620, Biyagama Road, Pethiyagoda, Kelaniya

Subsidiary 89% Food and Beverage

M S J Tours (Ceylon) (Pvt) Ltd.No: 620, Biyagama Road, Pethiyagoda, Kelaniya

Subsidiary 89% Transport Service

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Notes




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Notes




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as Sustainability Report 2014/15

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