nawaloka hospitals plc - cse

Nawaloka Hospitals PLC Annual Report 2015/16

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

Tel: +94 112 544 444-56, +94 115 577 111 Fax: +94 112 430 [email protected]

www.nawaloka.com

Nawaloka Hospitals PLC

Annual Report 2015/16

Pioneering Modern HealthcaremjpetPd kUj;Jtj;jpy; Kd;Ndhbahfr; nraw;gLgtu;fs;

2 Nawaloka Hospitals PLC Annual Report 2015/16

Health is our greatest wealth...wdfrda.Hd mrud ,dNd'''

08 10 12 14 16Highlights Milestones About this

ReportChairman/CEO’S Message

Director/General Manager’s Review

18 30 70 103 145Business Model

18 About Nawaloka

18 Organisational Structure

21 Operating Environment

23 Goals and Strategies

24 Stakeholders

28 Materiality and Value Creation

Management Discussion and Analysis

30 Financial Capital

36 Intellectual Capital

40 Investor Capital

42 Customer Capital

54 Employee Capital

64 Business Partner Capital

66 Social and Environmental Capital

Stewardship

70 Board of Directors

74 Senior Management Team

76 Executive Clinical Management Team

78 Corporate Governance

96 Risk Management

102 Awards and Accolades

Financial Reports

104 Annual Report of the Board of Directors

108 Report of the Remuneration Committee

109 Audit Committee Report

111 Board Related Party Transactions Review Committee Report

112 Directors’ Responsibility in Financial Reporting

113 Independent Auditors’ Report

114 Statement of Financial Position

116 StatementofProfitorLossand Other Comprehensive Income

117 Statement of Changes in Equity

118 Cash Flow Statement

119 Notes to the Financial Statements

Annexes

145 Independent Assurance Report

147 GRI Content Index

151 Investor Information

154 Ten Year Statistical Summary

156 Quarterly Statistics

157 Corporate Information

158 Notice of Meeting

Enclosed Form of Proxy

Contents

30 years ago we pioneered the establishment of the first fully-fledged

multi specialty private hospital in Sri Lanka. That pioneering spirit and

the eagerness to push boundaries have been the defining characteristics

of Nawaloka through the years. Today these qualities are well evidenced

by the state-of-the-art medical technologies and inventions – from

CT Scanners to the first ever purpose built, equipped and operated cardiac

care centre and many more.

We see no reason to change this 30-year old entrepreneurial spirit in the

years to come.

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Our Vision“To be the hospital of tomorrow”, to provide quality and safe

healthcare to the people whilst maintaining leadership and

excellence in the healthcare facility.

Our Mission“Healing with feeling” to provide the best quality healthcare in

accordance with international standards to the needy in a cost

effective, timely and professional manner.

Our PurposeWe are committed to achieving and maintaining

a standard of excellence in all we do.

– Excellence in clinical care, service and communication

– Collaboration within our Institution and with others who

share our mission and goal

– Leadership that sets the standards for healthcare today and

innovations of the future

– Accountability to our patients, community and each other for

providing the best services in the most cost-effective way


The architectural plan on this page is that of a hospital built by King Sena II (853-887AD) at Mihintalaya. The plan illustrates a complete hospital complex, with 31 rooms arranged on an elevated platform. These rooms and illustrated areas consist of a consulting room, hot water baths, an outer court, inner verandah courtyard, a shrine room and a room for medicinal baths.

The ruins seen today speak of an advanced medical ‘culture and discipline’ that was far beyond its time in history and attest to a well-developed medical system operating within a ‘hospital’ environment.

fm!rdKsl ñyska;,dj frday,MIHINTALAYA ANCIENT HOSPITAL

Rooms for the patients

Medicinal trough

Shrine room

Refectory

Inner verandah

Court yard^l=á fm<&

^WKq mekA f.h&

^weUreï .,&

^fnfy;A Trej&

^nqÿ f.h&

^odk Yd,dj&

Preparation & Storage of medicine

^fnfy;A .nvdj&

Outer court (Communal space)

Room for hot water baths

^idhkh&

Consulting room

Grinding stone

PLAN OF THE HOSPITAL MONASTERY

Entrance

fm!rdKsl ñyska;,dj frday,MIHINTALAYA ANCIENT HOSPITAL (ARTIST’S IMPRESSION)

This is an artist’s impression of the ancient Mihintalaya hospital complex as it would have appeared in its day.

Many scholars have commented on this historic site-

Professor Arjuna Aluvihare wrote, “The oldest archaeological evidence we have so far of a hospital is in the ruins of Mihintale, where the remains of a hospital built in the 9th Century could still be seen”.

Heinz E. Muller-Dietz in his publication ‘Historia Hospitalium’ of 1975 describes Mihintale hospital as perhaps the oldest in the world.

Ajith Prasanna Kannangara in his study of dermatology, venereology and dermatopathology in different countries, expounded, “A piece of equipment or stamp which is now considered the hallmark for the identification of an ancient hospital in Sri Lanka, is the medicine trough or ‘behethoruwa’”.


HIGHLIGHTS

Group Company

2015/16Rs.

2014/15Rs.

Variance%

2015/16Rs.

2014/15Rs.

Variance%

Income Statement

Revenue 5,860,218,161 4,602,433,640 27 2,833,195,719 2,497,830,914 13

Cost of Services (2,906,572,342) (2,331,583,775) 25 (1,490,055,615) (1,229,903,547) 21

Gross Profit 2,953,645,819 2,270,849,865 30 1,343,140,104 1,267,927,367 6

Other Operating Income 94,495,240 65,199,571 45 86,694,974 152,643,920 (43)

Profit from Operations 637,208,825 352,342,610 81 201,126,820 375,219,106 (46)

Net Profit after Taxation 206,034,228 87,470,836 136 (127,565,499) 89,938,006 (242)

Balance Sheet Data

Shareholders’ Funds 3,994,897,962 3,887,681,839 3 1,466,336,065 1,693,759,266 (13)

Financial Ratios

Gross Profit Ratio (%) 50 49 2 47 51 (7)

Net Profit Ratio (%) 4 2 110 (5) 4 (225)

Return on Capital Employed (%) 5 2 122 (9) 5 (264)

Current Asset Ratio 0.89 1.03 (13) 1.83 1.62 13

Quick Asset Ratio 0.70 0.80 (13) 1.75 1.53 14

Return on Assets (%) 2 1 98 (2) 2 (206)

Debt/Equity Ratio 1.27 0.84 51 3.21 1.78 81

Earnings/(Loss) per Share (Rs.) 0.15 0.06 142 (0.09) 0.06 (242)

Net Assets per Share (Rs.) 2.83 2.76 3 1.04 1.20 (13)

Dividend per Share (Rs.) 0.07 0.06 17 0.07 0.06 17

Interest Cover Ratio (Times) 1.71 1.24 38 0.57 1.35 (58)

Dividend Payout Ratio (%) 46.67 96.68 (52) (77.34) 94.03 (182)

Gross Profit (Rs. Mn)

3,000

2,400

1,800

1,200

600

0 2011/12 2012/13 2013/14 2014/15 2015/16

3.0

2.4

1.8

1.2

0.6

0 2011/12 2012/13 2013/14 2014/15 2015/16

Net Asset per Share (Rs.)

2011/12 2012/13 2013/14 2014/15 2015/16

Net Profit (Rs. Mn)

100

200

300

400

500

0

Revenue (Rs. Mn)

6,000

4,800

3,600

2,400

1,200

0 2011/12 2012/13 2013/14 2014/15 2015/16

9Annual Report 2015/16 Nawaloka Hospitals PLC

Negombo Hospital successfully completed 1st year of operation

Construction of new car park building in progress

Upgraded the Endoscopy with latest technology

Upgraded the Chemotherapy treatment (Cancer Patients) with latest safety procedure

Passed 11,000 heart surgeries with 100% recovery

Cosmetic Centre successfully completed 1st year

Successfully completed over 41,000 Angiogram with PTCA

Achieved 22,000 births in total

Introduced Fibro Scan to quantify liver fibrosis

Passed 16,000 operation theatre surgeries during the year

Bone Marrow transplant 100% recovered 11 patients with 2 Leukaemia patients 1st time in Sri Lanka

15

12

9

6

3

0 2011/12 2012/13 2013/14 2014/15 2015/16

Return on Capital Employed (%)

5,000

4,000

3,000

2,000

1,000

0 2011/12 2012/13 2013/14 2014/15 2015/16

Shareholders Funds (Rs. Mn)’


1985zz Established as the first fully-fledged private hospital in Sri Lanka

zz First Intensive Care Unit in a private hospital

1987zz First CT Scanner in Sri Lanka

1992zz First Mammography Unit in Sri Lanka

1993zz First Minimally Invasive Laparoscopic Surgery in Sri Lanka

1994zz First Cardiac Catheterisation Laboratory in Sri Lanka

zz First Coronary Artery Bypass Surgery Unit in a private hospital

1995zz First MRI Scanner in Sri Lanka

1998zz We are the only Hospital to win the Sri Lankan National Quality Award

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

zz Awarded the ‘Baby Friendly Hospital’ status from the WHO and United Nations Children’s Fund

2005zz Made significant advances in Neuro Surgery and Cardiac Surgery

zz Introduced Laser Eye Surgery

zz Together with our Indian affiliates, introduced a very successful IVF Treatment centre

2006zz Commenced construction of the new building providing modern surgical units

zz Computerising the entire operation of the Hospital

2007zz First to introduce the Flat Panel – Angiography System with state-of-the-art technology

zz First to introduce a Comprehensive Polysomnography System

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

MILESTONES


2008zz First to introduce the Arcadis Orbics Isocentric Digital C-Arm X-Ray system for Orthopedics

zz Introduction of Digital Video Endoscopy System

2009zz First Private Hospital in Sri Lanka with 400 beds

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

zz Installed the most technologically advanced Hemodialysis machine

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

2010zz Introduced 16 slice CT Scanner with all accessories

zz New 4-D Scanner for Radiology and Gynaecology Introduced Ultrasonic Defector

2015zz Commenced Regional Hospital operations in Negombo

zz Introduced Bone Marrow Transplant Unit

zz Installed the most technologically advanced Mammography machine

zz Retained the ‘Gold’ Award in the healthcare sector at the Annual Report Awards 2014 organised by ICASL

zz Only hospital to be recognised at the ACCA Business Awards 2014

zz Initiated the construction of Car Park Building

2016zz Introduction of Fibro Scan to quantify Liver Fibrosis

zz Introduction of Self-Channeling System

zz Installed a new Chemotherapy Machine

zz Only Hospital to be recognised at the ACCA Sustainability Business Awards 2015

zz Retained the ‘Gold’ Award in the healthcare sector at the Annual Report Awards 2015 organised by ICASL

zz Achieved 100% success rate in Bone Marrow Transplants

zz Introduced Gold Standard Acu Pulse, a safe, simple CO2 laser, manufactured in the USA, which is the Industry Standard that delivers outstanding results

2011zz Commissioned first state-of-the-art 3TESLA MRI Scanner in Sri Lanka

zz Awarded ISO 9001:2008 Certification

zz Inaugurated Weight Management Centre

zz Inaugurated Breast Cancer Screening Centre

zz Single Balloon Enteroscope

zz Doppler-Guided Hemorrhoid Artery Ligation and Rectal Anal Repair

2012zz First LIVE Donor LIVER Transplant surgery in Sri Lanka

zz Launch of Life Member Hospitality Card

2013zz Vitro Retinal Eye Surgery

zz Endovenous (Vericose) Laser Treatment - EVLT

zz High Definition (HD) Arthroscopy System

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

2014zz Installed South Asia’s first and world’s fastest, most accurate 640-slice CT scanner

zz Installed a Neuro Navigation System during the year

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

zz Applied for the JCI Accreditation

zz Installed Advanced Lasik Eye Surgical Equipment for Eye Surgery

zz Introduced C-Arm machine for theatre unit


ABOUT THIS REPORT

This is our third consecutive integrated Annual Report which

effectively and coherently communicates how our strategy,

governance, performance and prospects lead to value creation

over time.

Value creation is a two-way process, as the ability of our

business to create sustainable value for itself is also related to

the value it creates for its stakeholders.

To better demonstrate this duality of our value creation

process at Nawaloka, we have seamlessly integrated financial

reporting with sustainability reporting.

Capital Formation

Value creation leads to capital formation. We classify capital

that is owned by Nawaloka as ‘internal’ capital, while capital

that is not owed as ‘external’ capital.

Our internal capital consists of financial capital and

intellectual capital. The financial capital is reported mainly

in our Financial Statements whilst intellectual capital are

intangibles like brand image, corporate culture, integrity

and specialised knowledge.

Our external forms of capital thus centre on key

stakeholders and comprise investor capital, customer capital,

employee capital, business partner capital and social and

environmental capital.

Reporting Period

The Annual Report 2015/16 covers the 12-month period from

1st April 2015 to 31st March 2016 and is consistent with our

usual annual reporting cycle as regards to our financial and

sustainability reporting. The previous Annual Report covered

the period 1st April 2014 to 31st March 2015.

Report Boundary

The boundary of this Report entails the affairs and activities of

Nawaloka Hospitals PLC including those of its three subsidiaries

– New Nawaloka Hospitals (Pvt) Ltd., New Nawaloka Medical

Centre (Pvt) Ltd., Nawaloka Medicare (Pvt) Ltd. and joint

venture – Nawaloka Metropolis Laboratory (Pvt) Ltd.

Compliance

This Report also reflects the Company’s compliance with the

laws and regulations of the Companies Act No. 07 of 2007 and

the subsequent amendments and Listing Rules of the Colombo

Stock Exchange (CSE).

The information contained in this Report is in compliance

with all applicable laws, regulations and standards as well as

guidelines for voluntary disclosures. In particular the Report

adheres to the recommendations and guidelines set out by

the International Financial Reporting Standards (IFRS) and

the Sri Lanka Financial Reporting Standards (SLFRS)/LKAS

applicable for financial periods beginning on or after

1st January 2012. The accounting policies adopted are

detailed in the Financial Statements.

In preparing this Report we have also drawn on the

concepts, principles and guidance of the Global Reporting

Initiatives (GRI) Sustainability Reporting Guidelines G4, the

International Integrated Reporting Framework (December

2013) and the Smart Integrated Reporting MethodologyTM

(September 2013) where applicable.

Compared to the previous reporting periods, there are

no significant changes in the scope and aspect boundaries.

Precautionary Principle

The Company applies the precautionary principle in relation to

social and environmental sustainability. We are highly mindful

of the impacts caused to society and environment by our

actions and take necessary steps to mitigate such risks and the

Company has taken necessary steps to mitigate environmental

risks in operational planning and activities.

Queries

We welcome your comments or questions on this

Annual Report. Please contact –

The Accountant


No. 23, Deshamanya H.K. Dharmadasa Mawatha,

Colombo 00200,

Sri Lanka.

Email Address: [email protected]


‘Beheth Oruwa’ ^fnfy;a Trej& was a medical instrument found in the historic Mihintalaya hospital site. The length of it is 7 feet and the width is 2.5 feet

which is spacious enough for an individual to lie comfortably for treatments as it is carved in the shape of the human body.


CHAIRMAN/CEO’S MESSAGE

AS CHANGE AND CHALLENGE BRING OPPORTUNITY, NAWALOKA REMAINS WELL POSITIONED TO SUCCEED FAR INTO THE FUTURE

Our foresighted aspiration to be ‘The Hospital of Tomorrow’ enables us to provide the most modern cutting edge treatments which go beyond advanced care

Positioned as the people’s hospital, we are transforming the care we provide today and preparing for the future

Nawaloka set the stage for private healthcare service providers to commence operations in our nation

15Annual Report 2015/16 Nawaloka Hospitals PLCChairman/CEO’s Message

Dear Shareholders,

I warmly welcome you to the 27th Annual General Meeting of

Nawaloka Hospitals PLC and present to you the Annual Report

for the financial year 2015/16.

In 1985, Nawaloka Hospital embarked on a transformative

journey that revolutionised the healthcare industry of

Sri Lanka. Established as a centre of excellence in high

technology diagnostic and curative facilities, Nawaloka set the

stage for private healthcare service providers to commence

operations in our nation. The overwhelming response we

received from the people demonstrated a long felt need

for superior healthcare in a pleasant environment. Pursuing

unsurpassed excellence in every aspect – quality, patient

satisfaction, infrastructure, safety and more, we provide access

to most advanced diagnostic and treatment technologies and

expert medical care. Our unwavering commitment to serving

our people is reflected in the new car park building which would

be opened very soon for public patronage. Our foresighted

aspiration to be ‘The Hospital of Tomorrow’ enables us to

provide the most modern cutting edge treatments which go

beyond advanced care.

Positioned as the people’s hospital, we are transforming the

care we provide today and preparing for the future. Even as

Sri Lanka has made noteworthy achievements in health outcomes

compared to other developing countries, we have geared

ourselves to face changes brought on by demographic and

epidemiological transitions. These changes include the increase

in the aging population, rising incidents of non-communicable

diseases and the gaining popularity of medical tourism. The

unwavering commitment towards our patients and community is

evidenced in the pages of this Report. They include our acquisition

and expert use of the most advanced medical technology, and

the innovative procedures that save lives and improve health of

all, in sync with the times. I strongly assure that our Company

delivers exceptional results consistently without compromising

the principles of corporate governance, ethics and sustainability.

This is further reflected in the corporate governance and

sustainability sections of this Report.

As a responsible corporate citizen, our strategies are aligned

with sustainable business practices that balance the needs and

aspirations of a multitude of stakeholders. Even as change and

challenge bring opportunity, Nawaloka remains well positioned

to succeed far into the future. Our success and many other

achievements would not have been possible without the

hard work and dedication of the staff and the consultants of

Nawaloka Hospital. I take great pride in their efforts as they

deliver exemplary care to our patients and families each day.

I deeply appreciate the continued patronage of our customers

and the unwavering confidence and trust placed in us by you;

our valued shareholders.

Jayantha DharmadasaChairman/Chief Executive Officer

25th May 2016

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DIRECTOR/GENERAL MANAGER’S REVIEW

The healthcare landscape is changing rapidly along with the aging and

growing population. The potential impacts of a growing aging population

on Sri Lanka’s healthcare system, workforce and budgets are profound.

As a consequence of increased life expectancy, the Non-communicable

deceases (NCDs) are also on the rise, in particular, cardiovascular

deceases, cancers, asthma, bone deceases and eye deceases, are becoming

widespread and persistent health problems. The Health Ministry estimates

that 25% of the adult population is already suffering from hypertension

and half the population is likely to suffer from diabetes by 2050. However,

due to the rising per capita income over the years, there is also a greater

demand for better treatment procedures in Sri Lanka.

Sri Lanka’s healthcare industry has seen a rapid transformation in the

recent years and we embrace these changes to help people to live healthier

lives. Being an innovator and leader in healthcare is our responsibility as

Sri Lanka’s pioneering private hospital. It is also essential to realize our

vision of becoming ‘The Hospital of Tomorrow’. Futuristic technologies

were introduced by us, as and when the need arose. The milestones which

began from 1985 unravel a fascinating change of events which are detailed

elsewhere in this report. They all underscore our commitment to staying

at the leading edge of medical technology. Coupled with skillful and

compassionate practitioners, we extend a matchless care for even the most

complicated medical conditions.

THE GROUP’S TURNOVER INCREASED BY 27% YEAR ON YEAR

Sri Lanka’s healthcare industry has seen a rapid transformation in therecent years and we embrace these changes to help people to live healthier lives

Our state-of-the-artNawaloka Metropolis laboratory performs an extensive range of diagnostic tests and is equipped to conduct screening procedures as well

With the recent refurbishment andupgrading of technology in the expanded coronary incentive care unit, our heart centre is in par with any international heart centre

The newly established fully equipped 75 bed regionalhospital in Negombo has made a significant contribution toour image and profitability

Benchmarked for quality, Nawaloka Hospitals has gained recognition both locally and internationally as evidenced by the many awards we have won over the years


We established the first-ever purpose built, state-of-the-

art Bone Marrow Transplant Unit in the country. We are the

first hospital to perform a successful transplant for leukaemia,

in addition to bone marrow transplants for thalassaemia

patients. I am happy to state that we have not only pioneered

cutting edge technology but kept up with the advancements

and continually raised the bar of the healthcare industry in

Sri Lanka.

Percentage of individuals over 60 years is expected to

grow at an unprecedented rate. Care of the elderly will be a

challenge for the next few decades. Advancements in the field

of Geriatric Medicine is of paramount importance to our nation.

Hence this year, we developed a specialised unit for the care of

the elderly.

Incidents of cancer have steadily risen in the past few

years to an extent where it has become the second highest

cause of hospital deaths in Sri Lanka which is a significant

burden for the Government. Screening programmes for early

detection of cancers will lead to both better health outcomes

and considerable savings in treatment costs. Our state-of-the-

art Nawaloka Metropolis laboratory performs an extensive

range of diagnostic tests and is equipped to conduct screening

procedures as well.

Along with the growing popularity for wellness and

healthier lifestyles, aspects such as weight management,

aesthetic and cosmetic surgery care needs are gaining

prominence among both males and females. Addressing to this

demand, our state-of-the-art Skin Care and Cosmetic Centre

was established and board certified professionals providing

the best service in par with international standards whilst

maintaining strict confidentiality of patients.

Cardiovascular diseases are the biggest cause of death

in Sri Lanka and has increased to 24% in 2013, according

to the World Bank. Pre-empting this fact, we were the

first private hospital to establish a cardiac catheterisation

laboratory in Sri Lanka, way back in 1994. The success of this

pioneering effort spurred the development of cardiac units

in the private sector. However, we still remain ahead with

our most ultramodern cutting-edge technology, equipment

and experienced staff providing 24 hours service to the heart

patients in this country. The fact that we have performed over

12,000 open heart surgeries and over 20,000 catheterisation

procedures is indeed a remarkable achievement. With the

recent refurbishment and upgrading of technology in the

expanded coronary incentive care unit, our heart centre is

on par with any international heart centre.

Sri Lanka is also fast becoming a global healthcare

destination offering some of the best available medical

treatments. This is evident when considering the increasing

patronage by foreign patients in major city hospitals in the

country. Our nation has a significant competitive advantage

with its highly-skilled and internationally-trained medical

doctors and specialists with extensive knowledge and

experience.

We opened our first fully-fledged regional hospital in

Negombo a year ago. Not only has this facility provided

the people in the region convenient access to world-class

healthcare but is positioned as a medical tourism destination as

it lies within an area of geographic relevance and importance

to tourists. Our aim is to attract high net worth tourists, as an

effective way to draw foreign exchange to our country.

Our performance during the fiscal year 2016 is noteworthy.

The Group’s turnover increased by 27% Year on Year to

Rs. 5,860 Mn largely contributed by increased Admissions,

Investigation services like Laboratory, Radiology and Surgical

services. The newly established fully equipped 75 bed regional

hospital in Negombo has made a significant contribution to

our image and profitability. The strong brand image we have

built over the years, our dedicated team of staff members and

the state-of-the-art technology contributed significantly to the

performance during the year.

The 14 floor building with a multi-storey car park and

specialist centre once completed this year will make Nawaloka

Hospitals the single largest private hospital complex with

900,000 square feet of built-up area. The new building will

have 550 parking spaces, modular channelled consultation

chambers, pharmacy, laboratory, radiology services and

dedicated areas for wellness centres, diabetes and renal

care which will offer exceptional patient comfort and family

centred care.

Looking forward, the citizens of our country need urgent

access to comprehensive medical insurance schemes, which are

currently accessible only to a limited sector of the population.

This will enable better healthcare to be accessible to more

people and to fulfil its growth potential.

In addition, the scarcity of trained professional medical

staff remains a challenge for the industry as a whole. As the

healthcare needs of Sri Lanka grow, matching the demand for

trained medical professionals, and nurses remains an obstacle.

Shortage of skilled workforce is a major hindrance

to healthcare development in Sri Lanka.

Benchmarked for quality, Nawaloka Hospitals has gained

recognition both locally and internationally as evidenced by the

many awards we have won over the years. We are extremely

proud to work with our committed, dedicated and talented

staff of professionals who bring life to our vision and mission.

Finally my deep appreciation goes to our customers,

medical staff, business associates and other stakeholders for

the continued loyalty and trust placed on Nawaloka Hospitals.

Professor Lal ChandrasenaDirector/General Manager

25th May 2016

Director/General Manager’s Review


BUSINESS MODEL

Founded in 1985, Nawaloka Hospitals PLC, is the first fully-fledged private hospital in Sri Lanka

Our own Nurses’ Training School has enabled us to become a key employment generator in the private sector

Our pioneering spirit is reflected in the many ‘firsts’ we have introduced to the healthcare sector in Sri Lanka – from the first CT Scanner to the first fully-fledged Cardio-Thoracic Unit and many others

Our objective is to ensure premium healthcare is accessible to a wider community of people in our country

We mirrored the most reputed hospitals in the region, their expert medical systems and technology platforms

Founded in 1985, Nawaloka Hospitals PLC, is the first fully-fledged private

hospital established in Sri Lanka. Set up under the visionary guidance

of our late Chairman, Deshamanya H.K. Dharmadasa, Nawaloka Hospital

paved the way for the proliferation of a vibrant private sector healthcare

system in Sri Lanka which was then, state dominated.

The Hospital’s ‘reason for being’ is to be a centre of excellence

embracing high technology diagnostic and curative facilities supported

by excellence in leadership. We mirrored the most reputed hospitals in

the region, their expert medical systems and technology platforms. Our

aim was to provide the finest healthcare facilities available in the world to

Sri Lanka and thereby eliminate the need for the people of our nation to

travel abroad to seek specialised medical treatment.

Driven by the vision to be the Hospital of Tomorrow, we have gained

recognition as a centre of excellence and a preferred healthcare institution

in the country. Our pioneering spirit is reflected in the many ‘firsts’ we

have introduced to the healthcare sector in Sri Lanka - from the first CT

Scanner to the first fully-fledged Cardiothoracic Unit and many others. Our

own Nurses’ Training School has enabled us to become a key employment

generator in the private sector.

We are today truly a people’s hospital serving customers from all walks

of life with an ethos that enshrines the ‘healthcare over profit’ philosophy.

Nawaloka Hospitals PLC consists of three subsidiaries – New Nawaloka

Hospitals (Pvt) Ltd., New Nawaloka Medical Centre (Pvt) Ltd., Nawaloka

Medicare (Pvt) Ltd. and one joint venture – Nawaloka Metropolis

Laboratory (Pvt) Ltd. Nawaloka Hospital was listed on the Colombo

Stock Exchange in 2004.

ORGANISATIONAL STRUCTURE


Nawaloka Metropolis Laboratories (Pvt) Ltd.

Nawaloka Medicare (Pvt) Ltd.

New Nawaloka Medical Centre (Pvt) Ltd.

New Nawaloka Hospital (Pvt) Ltd.

Fully Owned Subsidiaries

Joint Venture

ABOUT NAWALOKA


‘Kuti Pela’ ^l=á fm<& was the second section of the hospital consisting of a house of statues with chambers, surrounded by compound in the centre. There

are 27 chambers, all connected with a passage open to the compound in the centre, designed to give both physical and mental wellness to patients.


Sri Lanka remains ahead of its regional peers in terms of health indicators largely due to the Government’s policy of providing free universal healthcare

The private sector adopts the most advanced medical technology in the world

The number of private hospitals registered stood at 241 by end of 2015, with a capacity of

5,883 beds

The total Government expenditure on health had increased to

Rs. 177.8 Bn in 2015

‘Baraniya’ ^nrKsh& was a Persian vase found in the Mihintalaya historic

hospital site. It belongs to 9th century A.D. approximately. This was

used to store medicine.

21Annual Report 2015/16 Nawaloka Hospitals PLCBusiness Model

The Global Economy

Global economic activity remained subdued in 2015 and is

estimated to have grown by 3.1% in 2015, with 1.9% growth for

advanced economies and 4.0% growth for emerging market

and developing economies. Growth in emerging market and

developing economies accounted for over 70% of global

growth, however, declined for the fifth consecutive year.

A modest recovery continued in advanced economies.

The recession in Russia in 2015 was broadly in line

with expectations and conditions worsened in most other

Commonwealth of Independent States (CIS) economies. This

was consequent to the, spillover effects from Russia as well

as the adverse impact of lower oil prices on net oil exporting

countries. Global industrial production, particularly of capital

goods, remained subdued throughout 2015. This weakness was

consistent with depressed investment worldwide-particularly

in energy and mining-as well as the deceleration of China’s

manufacturing activity.

Global growth is projected to remain modest in 2016, at

3.2%, before picking up to 3.5% in 2017. Emerging market and

developing economies will still account for the lion’s share of

world growth in 2016.

The proliferation of chronic diseases, in part, is a

consequence of increased life expectancy which has serious

repercussions in both developed and emerging countries.

Non-Communicable Diseases (NCDs) such as obesity,

cardiovascular diseases, hypertension, and dementia are

becoming persistent. The widespread health problems related

to NCDs in particular will be challenging public health systems

to meet increasing demand for drugs and treatments. The

health sector needs to strengthen its healthcare organisation,

provision and regulation not only to deliver services effectively

and efficiently, but also to provide quality care and guarantee

patient satisfaction.

The Local Economy

The Sri Lankan economy grew by 4.8% in 2015 marginally

lower than the 4.9% growth recorded in 2014. The growth of

the export sector was impacted by slowdown in the growth

of demand in Sri Lanka’s traditional export markets. However,

the strengthening US economy prompted short-term capital

outflows. The lower international commodity prices offset

the impact of these developments to a certain extent during

the year.

The economy benefited by the increased tourist arrivals

and higher spending by tourists. Inflation based on CCPI

(2006/7=100) remained below mid-single levels.

CCPI Annual Average CCPI Year on Year

10

8

6

4

2

0 2011/12 2012/13 2013/14 2014/15 2015/16

Inflation Based on CCPI (%)

The Industry

Sri Lanka remains ahead of its regional peers in terms of

health indicators largely due to the Government’s policy of

providing free universal healthcare. However, the industry faces

numerous challenges such as the increase of NCDs owing to

the ageing population and dietary and lifestyle changes, the

ongoing epidemiological transition, resource constraints and

the need to improve the quality of healthcare facilities.

Recent developments such as the increased demand for

fast food has reduced the demand for organic food exerting a

negative impact on organic farmers. This has led to a reduction

of supply of healthy food in the long run. Additionally,

consumption of fast food leads to unhealthy lifestyles and also

increases the probability of high blood pressure, cholesterol

and cancers.

The increased number of women in the workforce impacts

the society at large. As a result, there has been a rise in the

consumption of convenient foods and children getting less

attention from their parents.

In addition, the continuous use of chemicals in agriculture

has increased the tendency of kidney diseases to an alarming

rate. The Government is moving towards organic products and

carbon neutral products to reverse this trend. There is a high

demand for health-related services as well. However, due to

unaffordability and lack of education, the process of increasing

carbon neutral products is still in progress.

The Private Sector and the Industry

The private sector mainly consisted of a few leading hospital

chains and a large number of small regional players. The

capacity concentration is moderate, with the top five hospitals

accounting for close 45% of the private healthcare sector. Sri

Lanka’s private hospitals are poised for strong growth, with

one of the world’s fastest-growing, ageing populations, rising

incidence of non-communicable diseases (NCDs) and the

increase in per capita income.

The private sector adopts the most advanced medical

technology in the world and its dependence on medical

technology cannot be overstated. The technology of these

medical equipments needs to be upgraded, every three years

on average to keep abreast of the latest medical advances and

also in compliance with best practices.

OPERATING ENVIRONMENT


The majority of pharmacies are privately run and there is

a high degree of bargaining power among pharmaceutical

suppliers. This has posed challenges to the hospital services due

to continuous supplier evaluations and vendor management.

As per the available statistics, more than half of all Out

Patients Department (OPD) patients seek treatment at private

sector healthcare institutions. In addition, a substantial number

of state sector medical personnel are routinely engaged in

some part of part-time private consultancy.

Contribution of Private Hospitals

As per the Central Bank of Sri Lanka, the number of private

hospitals registered with the Private Health Services Regulatory

Council stood at 241 by end 2015, with a capacity of 5,883

beds. The medical tourism market was a key growth driver for

the private sector, especially with the increased tourist arrivals

to Sri Lanka.

Major Policy Changes in the Health Sector in the Year 2015

In 2015, the Government implemented a number of new health

policies to improve the well-being of the general public,

whilst taking measures to enhance the quality of healthcare

services. In this context, a National Policy and Strategy on

Health of young individuals was introduced with the broad

objective of addressing the health issues faced by young

people in the contemporary society. Also, a National Policy

on Alcohol Control was approved by the Ministry of Health

incorporating Government’s obligations under the World

Health Organisation’s (WHO) Global Alcohol Policy Initiative

and the WHO Global Plan to reduce mortality caused by NCDs

by 25% by 2015. To ensure that necessary medical drugs and

devices of high quality are available at affordable prices all over

the country, the Parliament approved the National Medicines

Regulatory Authority Act in March 2015.

Sri Lanka’s Healthcare Sector Performance

The universal healthcare and the robust public health

network across the country has enabled Sri Lanka to make

a noteworthy achievement in health outcomes compared to

other developing countries.

Private Sector – Beds (Nos.)

2014/15 2015/163,500

4,000

4,500

5,000

5,500

6,000

2013/14

Business ModelOperating Environment

Sri Lanka has performed well in areas of child mortality,

maternal mortality, reproductive health and combating

epidemics, such as Malaria. This is evident by the decline in

maternal mortality rate from 92 deaths per 100,000 live births

in 1990 to 30 in 2015. The child mortality rate too has declined

from 21 per 1,000 live births in 1990, to 10 in 2015.

Whilst institutional deliveries have improved to almost

100%, the coverage of Rubella vaccination, Tetanus toxoid and

Venereal Disease Research Laboratory (VDRL) test are nearing

100%, for expectant mothers. In addition, Sri Lanka qualified as

a Malaria-free country as no indigenous cases of Malaria have

been reported for three consecutive years. The number of

Dengue cases dropped drastically to 29,777 in 2015, compared

to 47,502 cases recorded in 2014. The fatality rate also dropped

to 0.17% in 2015, compared to 0.21% in 2014.

NDCs which include cardiovascular diseases, diabetes,

cancer and chronic respiratory diseases are the leading cause

of mortality in Sri Lanka. The Sustainability Development

Goal (SDG) of reducing premature mortality from NCDs by

one-third by 2030 through prevention and treatment and

promoting mental health and well-being has helped set targets

to mitigate the threat posed by these diseases. The strategy

on preventing chronic NCDs includes addressing risk factors,

such as smoking, alcohol, obesity, unhealthy diet and sedentary

lifestyles, especially in adults and adolescents. The main causes

for increasing NCDs in Sri Lanka is the prevalence of smokers,

consuming a higher percentage of saturated fats compared

to unsaturated fats, high daily intake of salt and added sugar,

insufficient consumption of fruits and vegetable-based foods,

poor engagement with regular recreational activities and the

increased usage of alcoholic beverages.

In order to promote the health and well-being of the

population, ‘Healthy Lifestyle Centres’ (HLCs) have been

established across the country to provide primary healthcare

facilities as per the National NCD Policy. Accordingly, there

were 814 HLCs island-wide as at end 2015, which provide

services to check fasting blood sugar, Body Mass Index (BMI),

total cholesterol and blood pressure. To effectively face the

issues emanating from NCDs in the future, it is imperative to

continue the strategic decisions oriented towards population-

based prevention and clinic and hospital-based care policies.

The total Government expenditure on health had

increased to Rs. 177.8 Bn in 2015 compared to Rs. 138.4 Bn

in 2014 reflecting a Year on Year (YoY) increase of 29%. The

Government expenditure on health, increased from 1.35% of

Gross Domestic Product (GDP) to 1.55% of GDP in 2015.

23Annual Report 2015/16 Nawaloka Hospitals PLCBusiness Model Operating Environment

Regional Expansion

The Company is planning to invest further in expanding its

presence by establishing more regional hospitals across the

country. Our objective is to ensure premium healthcare is

accessible to a wider community of people in our country

due to the lack of medical coverage in certain regional areas.

Furthermore, we are establishing hospitals in strategic locations

specialised to provide services in niche segments of healthcare.

Medical Tourism

Medical tourism has gained significant recognition in recent

years and recorded exceptional performance. Accordingly,

Nawaloka achieved significant growth in medical tourism

during the reporting year. There was a steady increase in the

number of foreign patients who sought specialised medical

treatment from the hospital due to affordability and the state-

of-the-art medical technology used in diagnosis and treatment.

Nawaloka Medicare (Pvt) Ltd., our regional hospital

in Negombo is the main hospital that caters towards

medical tourism.

A greater contribution of medical tourism is expected in

deriving future value as we are the only hospital in the South

Asian Region which provides certain treatments with the

latest technology.

The Company is working towards Joint Commission

International Accreditation (JCIA) to improve the presence

of Nawaloka Hospitals in the global arena.

Introduction of New Products and Services

We have introduced many new services during the financial

year in concern, such as the painless and non-invasive fibro

scan, the first bone marrow transplant unit, state-of-the-art

cosmetic unit, upgrades for the neurological units and further

expansions to our laboratory chain.

Our action plan is to embrace continuous advancement in

medical technology which is a significant aspect of our vision

of being the leader of excellence.

GOALS AND STRATEGIES

2015 2014 2013

Government (No.)

Hospitals

(Practicing Western Medicine)

610 601 603

Beds 76,781 76,918 74,636

Primary Healthcare Units 475 484 481

Doctors 19,429 17,903 17,553

Assistant Medical Practitioners 1,017 1,055 1,057

Nurses 32,272 31,964 30,928

Attendants 8,689 8,215 8,091

Doctor Person Ratio (Population Served by a Doctor)

1,079 1,155 1,175

Nurse Person Ratio (Population Served by a Nurse) 650 683 662

Ayurvedic (No.)

Ayurvedic Physicians 22,672 22,422 21,060

Total Government Expenditure on Health (Rs. Bn)

177.8 138.4 119.5

Current Expenditure 140.6 116.2 99.6

Capital Expenditure 37.2 22.3 19.9

Private Sector – Hospitals (Nos.)

2014/15 2015/16200

210

220

230

240

250

2013/14

24 Nawaloka Hospitals PLC Annual Report 2015/16 Business Model

Identifying Stakeholders

Our business is significantly impacted by the flow of relationships and

influence that we share with many important stakeholders. Therefore, we

attach great importance to correct identification and timely engagement

with our key stakeholders who contribute immensely to our value creation

process. The extent of value creation depends not only on our capabilities

but also through the interaction among our stakeholders.

Our stakeholders are individuals or organisations that interact with us

and are significantly affected by our activities, products and services and

whose actions can reasonably affect our ability to successfully implement

our strategies and achieve our objectives.

In this context, our primary stakeholders are investors, customers,

business partners, employees, society and the environment, in which we

operate as well as regulators and Government authorities.

Our service is under the influence of the nature of interaction we share

between our stakeholders. Thus it is important for us to prioritise the

stakeholders based on our own mechanism and ensure their needs are

addressed appropriately towards deriving optimum value.

Engaging with Our Stakeholders

As a responsible entity we communicate with our stakeholders

throughout the year and engaging with them is integrated into our

business decision-making processes. The relationship we foster with them

has a direct impact on our business.

STAKEHOLDERS

Our business is significantly impacted by the flow of relationships and influence that we share with many important stakeholders

As a responsible entity we communicate with our stakeholders throughout the year and engaging with them is integrated into our business decision-making processes

The strategies and processes of Nawaloka Hospital are driven by a set of values it upholds, which enables the hospital to achieve the desired standard of excellence

In formulating our strategic priorities, we consider the full range of topics or aspects that have the potential to impact Nawaloka’s ability to create value over the short, medium and long term

25Annual Report 2015/16 Nawaloka Hospitals PLCBusiness Model

The mode and frequency of engagement vary depending on the stakeholder group and the nature of a specific aspect to be

addressed. These aspects are summarised below:

Stakeholder Strategies Mode ofEngagement

Frequency ofEngagement

Key TopicsDiscussed

Methodologies Employed to Respond

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

Public relationship officer, social media, corporate website and other forms of ATL (Above the Line) and BTL (Below the Line) advertising

Daily Availability of services. The Advantages in terms of pricing, time consumption, quality

Meetings by public relationship officers

Responding to concern raised through Email and letters

Customer support desk

Periodic customer satisfaction survey feedback system

Service excellence of the hospital

Customer counter, Feedback forms

Whenever required Quality of the services received

Customer network Corporate website,Social media

Annually New services/technologies introduced

Customer Complaints Management (ISO Procedure)

Public Relation Officer,Corporate website, Social media

Whenever required Service locations outside NH premises

Employees Human Resource Development

Inbound and Outbound Training

Monthly/Weekly Leadership Skills,Negotiation Skills,Crisis Resolution Skills

Quarterly performance appraisal

Employee engagement Meetings/Workshops Whenever required Operational issues Post meeting feedback

Continuous benefit schemes

Monthly meetings Monthly New procedure introduced

Rewards and recognition Evaluation Quarterly Emails

Grievance handling Grievance Committee Whenever required Customer suggestions and complaints

Memos

Occupational health and safety and employee welfare

Employee forums Monthly Risk involved in work place

Training and awareness

Social events like employee get-together/cricket fiesta

Annually Achieving objectivesTargets vs. achievements

One to one discussion

Operational updates via Emails

Whenever required

Legislation and Regulators

Promote voluntary compliance codes

Submitting reports Whenever required Private healthcare regulatory council

Ongoing dialogue and reviews

Adherence to all mandatory regulations

Filling reports/returns Annually Adherence to environmental regulations

Legal and compliance department

Press releases Whenever required Taxes

Corporate website Whenever required Other mandatory requirement

Stakeholders

26 Nawaloka Hospitals PLC Annual Report 2015/16 Business Model

Stakeholder Strategies Mode ofEngagement

Frequency ofEngagement

Key TopicsDiscussed

Methodologies Employed to Respond

Suppliers Laid down supplier selection policy

Meetings Weekly meetings Prices, New products delivery local time

Ongoing dialogue and Tender Committee meetings

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

News Papers, Emails Tender Committee

Whenever required On time delivery

Quality

Upgrading of equipment

Ethical sourcing practices

Local sourcing and inclusive sourcing policy

Effective dispute resolution mechanism

Site visits Whenever required Services and periodic maintenance

Contractual performance

Society Community development and capacity building

Sponsorships Whenever required Enhancing water and sanitary facilities

Awareness programme

Mainly dialogues and communications through letters and e-communications

Direct communication with the consultants

Education and literacy Participation in public events

Whenever required Promoting health of the schools

Health and nutritional development of society

Press conferencesMedical campaign

Whenever required Enhancing facilities of the general hospitals

Ethical sourcing Call centre Whenever required

Investor Innovation – New package/new test

Annual General Meeting

Annually Governance of the Company

AGM

Annual Reports

MeetingsHigh technology Media both ATL and BTL

Whenever required Advantages of the new machine,time consumption

Annual Report Annually Financial and non-financial performance and improvement of CSR activities

Quarterly Report Quarterly Quarterly financial performance

Announcements to stock exchangePress conferences

Whenever required

Changes and improvement of governance

Whenever required Shareholder benefits

Consultants Modern Technology Individual meetings Whenever required Availability of facilities

Ongoing dialogue

Customer network Consultant forum Monthly basis Time schedules for practice

Service excellence of the hospital

New Technologies available in the global arena

Contribution to the Hospital

Consultant payments

Additional facilities required

Stakeholders


‘Abarum Gala’ ^weUreï .,& was a granite stone used for grinding medicine. This was used to prepare ingredients or substances by crushing and

grinding them into a fine paste or powder. The hardness of granite was adequate to crush the substance and its cohesiveness prevented small particles

of it being mixed with the ingredients.


External Initiatives

Nawaloka Hospital has memberships and affiliations with the

following institutions; through which it maintains external

dialogues-on related aspects of the business:

zz The Private Hospitals Association of Sri Lanka

zz The Sri Lanka-Malaysia Business Council

zz The Institute of Chartered Accountants of Sri Lanka

(Accredited Training Partner)

zz The Association of Accounting Technicians of Sri Lanka

(Accredited Training Partner)

zz Employees Federation of Ceylon

zz Certified Management Accountants of Sri Lanka

zz Institute of Certified Professional Managers of Sri Lanka

Values We Live By

The strategies and processes of Nawaloka Hospital are driven

by a set of values it upholds, which enables the hospital to

achieve the desired standard of excellence.

zz Be a forerunner in setting standards for current paediatric

care and innovations of the future.

zz Always pursue excellence in clinical care, service and

communication.

zz Collaborate within our Institution and with others who share

our mission and goals.

zz Be a pioneer in setting standards for current paediatric care

and innovations of the future.

zz Always be accountable to our patients, the community and

to each other in providing the best service in the most cost

effective manner.

MATERIALITY AND VALUE CREATION

Material Aspects

In formulating our strategic priorities, we consider the full

range of topics or aspects that have the potential to impact

Nawaloka’s ability to create value over the short, medium and

long term. The extent of materiality of the aspect depends on

its relevance and importance. The importance of an aspect

depends on the magnitude of its impact and the probability

of its occurrence.

An aspect can be material from both perspectives; the

hospital and its stakeholders. Therefore, Nawaloka has

developed a two dimensional materiality matrix, which takes

into consideration both perspectives in concern. We have

mapped the economic, social and environmental aspects which

are considered material to both Nawaloka and its stakeholder.

Materiality Matrix

Imp

ort

an

ce

to

Sta

ke

ho

lde

rs

Importance to Nawaloka

Low

Lo

w

Medium

Med

ium

High

Hig

h6, 8

1, 5, 9, 10, 11, 12, 14, 16, 18, 19, 20, 21, 22, 23, 24, 26, 27

2, 3, 4, 7, 13, 15, 17, 25

Business ModelStakeholders


No. Aspect Indicators Importance to Nawaloka

Importance to Stakeholders

1 Economic Performance G4-EC1

G4-EC2

G4-EC3

G4-EC4

High High

2 Market Presence G4-EC6 Medium Medium

3 Indirect Economic Impacts G4-EC8 Medium Medium

4 Procurement Practices G4-EC9 Medium Medium

5 Materials G4-EN1 High High

6 Energy G4-EN6 Medium High

7 Water G4-EN8 Medium Medium

8 Effluents and Waste G4-EN23 Medium High

9 Employment G4-LA1 High High

G4-LA2

G4-LA3

10 Labour Management Relations G4-LA4 High High

11 Occupational Health and Safety G4-LA6 High High

G4-LA7

12 Training and Education G4-LA9 High High

G4-LA10

G4-LA11

13 Diversity and Equal Opportunity G4-LA12 Medium Medium

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

15 Labour Practice Grievance Mechanism G4-LA16 Medium Medium

16 Non-Discrimination G4-HR3 High High

17 Freedom of Association and Collective Bargaining Power G4-HR4 Medium Medium

18 Child Labour G4-HR5 High High

19 Human Right Grievance Mechanisms G4-HR12 High High

20 Local Communities G4-SO1 High High

21 Anti-Corruption G4-SO3 High High

22 Anti-Competitive Behaviour G4-SO7 High High

23 Compliance G4-SO8 High High

24 Customer Health and Safety G4-PR1 High High

G4-PR2

25 Product and Service Labelling G4-PR5 Medium Medium

26 Marketing Communications G4-PR6 High High

G4-PR7

27 Customer Privacy G4-PR8 High High

Business Model Materiality and Value Creation


MANAGEMENT DISCUSSION AND ANALYSIS

Group revenue increased by

27% Year on Year (YoY)

Performed over

16,000surgeries and

550 Coronary Artery Bypass Grafting (CABG) procedures during the year

Total assets of the Group grew by 30% to Rs. 11,198 Mn as at year end

Nawaloka was the first private healthcare service provider to be awarded the ‘Baby Friendly’ status by the World Health Organisation and United Nations Children’s Fund

Economic Performance

Despite the uncertainties and the challenging operating environment,

particularly in the context of the Sri Lankan economy, that prevailed during

the year as detailed in operating environment on page 21, we performed

extremely well during the year, exceeding the expectations we had set for

the year at the beginning. This strong performance is primarily attributed

to the close integration we had with all our operating units, from top tier

managers to lower level staff. We are pleased to record that we have

seen growth across all major operational divisions. Our flexibility to swiftly

respond to various requirements of patients is another critical factor

behind this exceptional performance.

Results of Operations

At the Group level, revenue grew by 27% to Rs. 5,860 Mn compared to

Rs. 4,602 Mn in 2014/2015. This double-digit growth was made possible

as a result of the contribution from new services and new locations such

as Bone Marrow, Cosmetic Centre, Operation Theatre and the regional

hospital in Negombo.

Revenue (Rs. Mn)

6,000

4,800

3,600

2,400

1,200

0 2011/12 2012/13 2013/14 2014/15 2015/16

The mammography unit, LASIK procedure and MRI and CT units made

significant contribution towards investigating and diagnosing ailments

through the provision of well women packages and surgery. The 640-slice

CT scanner aided our cause in excelling in investigations. The success of

Nawaloka is attributed to the strong brand image as the pioneer in modern

healthcare, the immensely dedicated team members and the state-of-the-

art technology.

Radiology Department which consist 3 Tesla MRI Machine, 640-slice

one of the fastest CT machine had contributed to the success of the

Company during the financial year too. The Company has continued

upgrading theatres to Laminar flow to ensure that Nawaloka is in par with

the modern theatre technology.

Revenue Composition

While the inward contribution continued to be the main driver of revenue,

we experienced a shift in the composition of revenue in favour of Outward

Contribution during the reporting period. The OPD Unit made a significant

contribution during the financial year 2015/16, on account of the expansion

in channelling. This is mainly due to the convenience and expediency

services offered with the use of new technology and systems in place.

FINANCIAL CAPITAL


1985

From a single building in Colombo we began our

journey of revolutionising the healthcare industry

of Sri Lanka. Over the years we have expanded

our operations, widened our service offer and

geographical cover to serve a wider population

of our country.

Here’s how we expanded our presence over

the years -

1985 - Nawaloka Hospitals PLC

1995 - New Nawaloka Hospital (Pvt) Ltd.

2007 - New Nawaloka Medical Centre (Pvt) Ltd.

2014 - Nawaloka Medicare (Pvt) Ltd. (Negombo)

2017 - Car Park – Proposed to be completed

Revenue Composition (%)

Inward59

Outward41

The profit from operations had increased substantially

compared to the last year as a result of decrease in cost of

sales, administration and other costs and an increase in other

income. Despite the constraints such as the steady increase

in inflation, the acute shortage of healthcare professionals

and intense competition, Nawaloka recorded a noteworthy

performance in the year under review.

The following control mechanisms were implemented to

ensure efficient cost management:

zz Employee awareness campaigns were implemented through

meetings and circulars to ensure better use of Company

resources.

zz Procurement Managers were placed at key points providing

performance based incentives to ensure aligning cost

efficiency policies with decision-making.

zz Supplier selection policy is revisited to ensure greater

emphasis placed on transparency and cost reduction.

Despite the intense competition in the healthcare sector

in Sri Lanka, Nawaloka Medicare (Pvt) Ltd., recorded a steady

performance during the financial year and made a positive

contribution to the Group being the first regional hospital

located in Negombo.

This indicates the confidence of the public in our services

and motive of providing superior healthcare towards being the

hospital of tomorrow.

Other Operating Income

The gross profit margin of the Group increased by 1% from

49% in year 2014/15 to 50 % in 2015/16. The growth was as a

result of setting challenging targets to each department and

establishing a monitoring mechanism to provide due diligence.

Proportionate to the revenue, all costs including cost of

sales, administration expenditure and staff cost declined.

2011/12 2012/13 2013/14 2014/15 2015/16

Other Operating Income (Rs. Mn)

20

40

60

80

100

0

Management Discussion and Analysis Financial Capital


Financial Position

In terms of financial position, total assets of the Group grew

by 30% to Rs. 11,198 Mn as at 31st March 2016 primarily as a

result of additions to capital work-in-progress on account

of multistoried car park project and investment on medical

equipment funded primarily through borrowings from the

banking sector. Consequently, debt to equity ratio increased

from 0.84 in 2014/15 to 1.27 as at 31st March 2016. With the

profits retained, the Group net assets per share marginally

increased to Rs. 2.86 as at 31st March 2016 compared to

Rs. 2.76 a year ago.

Business Unit Performance

The following section provides a detailed analysis of the

performance and trends of the key departments in Nawaloka

Hospitals PLC.

Surgical Department

This is one of Nawaloka’s most successful departments

that have continually proved itself in generating value.

The department performed over 16,000 surgeries and 550

Coronary Artery Bypass Grafting (CABG) procedures during

the year. The number of surgeries performed during the year

reflects that Nawaloka is the preferred healthcare institution in

the country, especially with the surge in medical tourism.

As in the past, the Surgical Intensive Care Unit (SICU) had

the highest occupancy and attributed to the expansion of

affordable surgical packages and the product mix on offer,

factoring the affordability of the patients. Using this unique

formula, the surgical department excelled in pre/intra/post

operative care, gaining the confidence of visiting surgeons,

prompting a pragmatic shift to major surgical procedures in

liver, neuro and vascular.

The use of the theatres is optimised by a unique

combination of visiting and resident surgeons, while the

24/7 call roster for all major sub-specialties with 24 hour

Anaesthetists’ cover is available. All of these factors

contributed towards maximising the volume of the surgeries.

Operation Theatre Revenue (%)

2014/15 2015/160

30

60

90

120

150

2013/14Base Year -

Radiology and Imaging Sciences

Being the Pioneer in Modern Healthcare Services, we have left

our mark in the aspects of radiology as well.

We introduced our third CT (Computed Tomography)

scanner in 2014. This Toshiba Aquillion ONE VISION CT scanner

is one of the world’s fastest and accurate 640-slice CT scanner

available in South Asia providing the following features:

zz Motion-free imaging with routine 0.275 second scanning

zz Next Generation Quantum Vi detector

zz Transform your diagnosis from morphological to functional

zz Integrated dose – reduction solutions assured

The features of the above novelty ensure that the diagnosis

we perform are accurate and ensures effective decision-making.

Furthermore, we introduced the first state-of-the-art

3 Tesla MRI (Magnetic Resonance Imaging) Scanner in

Sri Lanka in 2011.

As a fully-fledged imaging unit, functioning 24/7, manned

by radiologists and equipped with state-of-the-art technologies

as mentioned above, we have been able to record excellent

performance in this department.

Revenue from CT/MRI/X–RAY Cases (%)

2014/15 2015/160

30

60

90

120

150

2013/14Base Year -

We have recorded a growth of 30% in cases reported in

2015/16 compared to cases in 2014/15.

Lasik Department

The laser-assisted in situ keratomileusis (LASIK) established in

Nawaloka Hospitals PLC is a state-of-the-art solution provider

for disorders such as short sightedness, far sightedness, and

astigmatism.

Taking just 20 minutes to complete, LASIK can most

importantly be provided as an outpatient service which ensures

convenience, affordability and minimal disruption.

We are functioning 24/7 and offer emergency and laser

treatment.

With the help of highly skilled ophthalmologists and nurses

and access to the latest technology, we can provide the

patients the best eye care they deserve.

Management Discussion and AnalysisFinancial Capital


Lasik Cases (%)

2014/15 2015/160

35

70

105

140

175

2013/14Base Year -

During the financial year 2015/16, we have recorded a 30%

growth in cases compared to the year 2013/14 and a 7% growth

in comparison to 2014/15.

Mammography Unit

As the hospital of tomorrow we are constantly on the look

out for possible avenues to ensure maintaining our standards

and hence, we had introduced the world’s most accurate

mammography machine.

With an investment of Rs. 48 Mn., the unit recorded a

robust increase in the number of cases as follows:

Mammography Cases (%)

2014/152013/14Base Year - 2015/160

50

100

150

200

250

As per the above chart, we can confirm that we have

performed exceptionally well as there is a 42% growth from

the year 2014/15 to 2015/16.

Maternity and Paediatric Unit

Nawaloka was the first private healthcare service provider to

be awarded the ‘Baby Friendly’ status by the World Health

Organisation and United Nations Children’s Fund.

The Nawaloka Maternity Unit provides comprehensive

care, from pregnancy through childbirth to after care. Special

seminars were organised for ‘Mothers to be’ which were free

for all expectant mothers.

Our paediatric unit is equipped with the only PICU

(Paediatric Intensive Care Unit) in Sri Lanka and is attended

by the top paediatricians in the country. The Maternity Unit

was refurbished and promoted via an effective advertising

campaign during the year. The Company continues their

maternity and paternity for the normal and caesarean patients

where all costs are fixed.

2013/14Base Year -

Admissions (%)

2014/15 2015/1694

97

100

103

106

109

The Company has performed exceptionally in terms of

admissions in the current year and this reflects the trust

our patients place on us in relevance to our best healthcare

services provided by the most experienced staff.

2013/14Base Year -

Cath Lab Cases (%)

2014/15 2015/160

30

60

90

120

150

Our Cath Lab, the first ever in Sri Lanka demonstrated a

steady growth from years 2014 to 2015. A 12% growth was

realised in the year 2014/15, and another 12% increase in the

year 2015/16.

Management Discussion and Analysis Financial Capital


Value Generated and Distributed

2015/16Rs.

2014/15Rs.

2013/14Rs.

2012/13Rs.

2011/12Rs.

Value Added

Revenue 5,860,218,161 4,602,433,640 3,993,473,302 4,222,907,733 3,710,878,442

Less: Cost of Materials and Services Obtained (3,646,563,430) (2,983,613,751) (2,418,803,334) (2,432,734,726) (2,333,546,116)

Add: Other Income 94,495,240 65,199,571 64,194,796 44,047,999 30,210,655

2,308,149,971 1,684,019,460 1,638,864,764 1,834,221,006 1,407,542,981

Distribution Value Added

To Employees

Salaries, Wages, Incentive and Other Benefits 1,151,309,690 968,758,629 832,696,146 865,042,371 717,949,353

Total Employees 1,151,309,690 968,758,629 832,696,146 865,042,371 717,949,353

To Lenders

Interest on Loans and Leases 372,317,361 285,092,893 202,170,943 104,009,192 59,932,975

Total Interest on Loans and Leases 372,317,361 285,092,893 202,170,943 104,009,192 59,932,975

To Government

Taxation 109,218,200 9,176,683 83,783,780 2,832,483 91,418,057

Total Government 109,218,200 9,176,683 83,783,780 2,832,483 91,418,057

To Provision

Results of Associate Companies – – – – –

Impairment Profit/(Loss) – – – – –

Revaluation Deficit – – – – –

Total Provision – – – – –

To Expansion and Growth

Excess on Acquisition 469,423,205 351,695,092 303,447,828 265,422,430 267,556,033

Depreciation 205,881,515 69,296,227 216,766,067 596,914,530 270,686,563

Retained Profit/(Loss) 675,304,720 420,991,319 520,213,895 862,336,960 538,242,596

Total Expansion and Growth 2,308,149,971 1,684,019,460 1,638,864,764 1,834,221,006 1,407,542,981

Financial Assistance Received from Government

A tax exemption was granted to Nawaloka Medicare (Pvt) Ltd.

for 6 years commencing either from two years of commencing

business or the first year in which profit is reported.

A tax exemption was granted to the new Nawaloka Medical

Centre for 10 years commencing from 2009 to 2019.

Management Discussion and AnalysisFinancial Capital


‘Sayanaya’ ^idhkh& was a chamber close to the gate and located in the first section of the hospital. A clinic generally provides outpatient services.

Patients are examined at the clinic and then sent to the inpatient unit for treatments if required.


Intellectual capital comprises the intangible aspects of our Company.

This non-financial capital which is accounting for an increasingly

significant proportion of the value of our Company includes the corporate

culture, organisational knowledge, business ethics and integrity, brand

equity likewise.

Organisational Knowledge

Nawaloka has a storehouse of knowledge, expertise and professional

excellence with a history spanning over 30 years. It is the pioneering

private, modern healthcare service provider in Sri Lanka, offering premium

healthcare solutions at an affordable price.

We set up the first Cath Lab Heart Unit in Sri Lanka and made an

immense contribution to address heart-related diseases in the country.

Over 12,000 cardiac surgery interventions were performed by our

professional team during the year. Embracing cutting-edge technology,

we introduced the first CT Scanner, MRI Scanner, the latest 640-slice CT

Scanner, 4D Ultra Sound Scanner and the Fibro Scanner to Sri Lanka.

Our Bone Marrow Unit recorded an exemplary performance by

achieving a 100% success rate in all transplants performed. In addition,

we are the only hospital in the country to treat leukaemia related Bone

Marrow Transplants. The newly established Cosmetic Centre and the

Serene Centre showcase our prowess in providing medical solution to

emerging healthcare trends.

The recognition received by Nawaloka from professional institutions

such as The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka),

Association of Chartered Certified Accountants and the Sri Lanka Institute

of Training and Development reflect the calibre of our skilled staff.

Nawaloka became the first ISO–Certified hospital in Sri Lanka in

the year 2000 which speaks volumes of the quality of our systems and

procedures.

Corporate Ethics

Nawaloka is an ethical institution which embraces the highest business

principles and integrity which are deployed across the Organisation.

It is reflected in every aspect of our operation.

The corporate governance section on page 78 to 94 of this Report

details our compliance to various ethical and regulatory regimes,

enactments, codes and control mechanisms. These are reviewed and

updated from time to time to ensure they remain valid and relevant always.

Brand Equity

The Nawaloka brand is 30 years strong and it was built on the ideals of

pioneering spirit, integrity, innovativeness, loyalty, quality, affordability,

customer satisfaction and the fostering of long-term relationships.

As mentioned, our vision is 'to be the hospital of tomorrow’, to provide

quality and safe healthcare to the people whilst maintaining leadership

and excellence in the healthcare industry. Thus we would ensure

achievement of our aspiration by sustained brand equity development.

INTELLECTUAL CAPITAL

Nawaloka has a storehouse of knowledge, expertise and professional excellence with a history spanning over 30 years

Nawaloka is an ethical institution which embraces the highest business principles and integrity which are deployed across the Organisation. It is reflected in every aspect of our operation

The Nawaloka brand is 30 years strong and it was built on the ideals of pioneering spirit, integrity, innovativeness, loyalty, quality, affordability, customer satisfaction and the fostering of long-term relationships



We have undertaken numerous projects during the

reporting year to ensure that our brand equity is geared

towards serving future generations and a majority of those

constitute medical camps, awareness programmes, corporate

sponsorships and other brand building campaigns.

Furthermore, our unique culture is a source of enhancing

our brand equity as a means of being an exceptional employer

and an entity which positively responds to the needs of the

local community and the broader stakeholder categories.

The reporting year under consideration focused mainly on

brand development and enhancing the scope of our market.

Brand Platforms

Nawaloka’s major brand platforms are –

zz Pioneering Spirit

zz Customer Centric Culture

zz Innovative Services

zz Innovative Cutting Edge Technology

zz Highest Successful Clinical Outcomes

zz Reputation of Clinical Staff

zz Ethical Governance Policy

zz Financial Stewardship

zz Cost Effectiveness

zz Strategic Location

IT Capabilities and Developments

Description of the Process Business Impact(High/Medium/Low)

Remarks

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

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

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

High Improved services

Online Final Bill Payment through www.nawaloka.com Hospital Website

High Improved services

Automated OPD Consultation Medium Electronic Medical Record for OPD Patients

Automated ETU Consultation Medium Electronic Medical Record for ETU Patients

Facebook Page and a Group for Nawaloka for Social Network Promotions

High Better social network

Maintenance Agreement with MIT for Sun Servers and Disk Array

High Part of disaster recovery plan

Microsoft Windows Licensing High Adhere ethics of industry

Introduced Fingerprint for Attendance and Register Points

High Improve controls and accurate data

Integrated Consultation of OPD, ETU and IPD medium Much more accurate electronic medical records

Electronic Discharge Summary High Accurate and efficient electronic medical records

Electronic Diagnosis Card High Accurate and efficient electronic medical records

New Discharge Procedure for Patients High Minimise the delay and monitor department-wise discharge time

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

New System Implementation at Negombo High Growth of business

Wi-Fi Facility Medium Improved services

Management Discussion and Analysis Intellectual Capital


Description of the Process Business Impact(High/Medium/Low)

Remarks

New Accounting Software – Tally High Minimise to workload on Final Account preparation

New Call Billing System High Automated call system

New Fibber Backbone Cablings High Zero down time and fasten the Internet LAN

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

New Virus Guard – Eset Smart Security High Secured Local Area Network (LAN)

Heart Centre Website High Market and Promote Hospital Cardiac Centre

OPD System High Streamline hospital outpatient caring process

Maternity Package System High More efficient system for drug request

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

Introducing Privilege Card for Co-operate and Individual Clients In Different Categories Platinum, Gold and Silver

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

Online Appointment Booking through www.nawaloka.com

High Patient convenient, more speedy way to access hospital channel appointments

SMS Campaign High Improve public relations with awareness

Unique Patient Identification Number (UPIN) with Patient Registration

High Much accurately identify the patient and history of the patient

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

Firewall High Data protection

CT/MRI, Di-Com Image Reporting System High Most accurate reporting result

HIS Server Migration High From the legacy infrastructure to a new platform

Oracle Licensing High Compliant with regulations

New Payroll System Medium In-house maintained, easy controlled

New PBX and Call Centre Solution High Improve customer service and revenue

Doctor Find Touch Screens in Lobbies High Better customer service

Hospital Mobile Application High Improve patient’s convenience. Easy access

Intellectual Capital Management Discussion and Analysis


Corporate Culture

As a company recognised for sustainable human resource

management by independent accredited bodies, we are

confident in assuring you that our culture is exceedingly

customer centric and employee friendly.

Our culture is deemed unique as we explore out of the

box strategies to ensure employee satisfaction such as

flexible working arrangements, continuous employee training,

educational reimbursements, sponsoring employees for

seminars to improve skills and capabilities, on site medical care

and so on.

This is embedded deep in our culture as we take pride in

being customer centric and we are always committed towards

being the best employer.

Procurement Policy

The procurement policy of Nawaloka is geared to achieve

cost optimisation and operational excellence through efficient

and standardised procurement procedures. It is formulated

to promote favourable outcomes for the hospital’s economic

performance, the environment and the society.

The following measures are implemented to ensure the

effectiveness of our procurement policy:

zz Assess and continuously monitor supplier agreements to ensure they have the proper licenses to operate.

zz Establish a Standard Operating Procedure (SOP) in procurement and vendor management, communicate the SOP to relevant parties and provide the necessary training to staff.

zz Maintain an updated vendor master file and implement supplier selection criteria.

zz Priorities suppliers with sound environmental and labour policies.

zz Conduct regular audits to assess suppliers according to defined environmental performance.

zz Establish and update standards to measure performance of suppliers in terms of OTD (On Time Delivery), quality, and rejection.

zz Establish clear roles and responsibilities for procurement staff.

zz Train procurement staff to correctly identify and select suppliers who meet the procedures.

zz Review at least three quotations prior to making a purchase decision to ensure an equal opportunity to all suppliers.

zz In addition, the procurement staff are given performance goals, objectives and sustainable procurement aspects for which they are held accountable through their personal development evaluations and assessments.

1987

Constant innovation is the hallmark of Nawaloka

Hospitals. We don’t just keep up with technology,

but we continually introduce, anticipate and build

on advances to ensure our patients receive the

finest care available.

We are committed to be the ‘Hospital of

Tomorrow’. These are some of the ‘Firsts’

we introduced to Sri Lanka -

1987 - First CT Scanner

1995 - First MRI Scanner

2010 - Fully-loaded 16 Slice CT Scanner

2011 - Commissioned the first state-of-the-art

3TESLA MRI Scanner

2014 - South Asia’s first and world’s fastest,

most accurate 640-slice CT Scanner

Intellectual CapitalManagement Discussion and Analysis


The Dividend Policy

Market Activity

2015/16 2014/15

Highest Price (Rs.) 3.90 3.90

Lowest Price (Rs.) 2.90 2.90

Year End Price (Rs.) 3.50 2.90

No. of Share Transactions 2,690 3,853

No. of Shares Traded 372,106,762 38,729,490

Share Turnover (Rs.) 1,463,392,640.00 132,721,899.60

Shares held by public (%) 9.65 12.59

Performance of Nawaloka Share

Ordinary Share Information

Nominal Value Per Share Rs. 1.00

Market Price per Share (Rs.) 31.03.2016 31.12.2015 30.09.2015 30.06.2015 31.03.2015 31.12.2014 30.09.2014 30.06.2014

High 3.7 3.7 3.9 3.2 3.5 3.6 3.9 3.5

Low 3.1 3.0 2.9 2.9 2.9 3 3.2 3.2

Closing 3.5 3.3 3.6 3.1 2.9 3.3 3.7 3.2

Financial Measures

Net Assets per Share 2.83 2.84 2.78 2.8 2.76 2.79 2.76 2.8

Key Financial Indicators – Over Five-Year Period

Group Company

2015/16 2014/15 2013/14 2012/13 2011/12 2015/16 2014/15 2013/14 2012/13 2011/12

Financial Ratios

Return on Capital Employed (%) 5 2.25 5.35 12.02 8.54 (9) 5.31 6.32 15.36 10.18

Current Assets Ratio 0.89 1.03 1.11 0.71 0.58 1.83 1.62 1.12 0.53 0.57

Quick Assets Ratio 0.7 0.80 0.85 0.48 0.42 1.75 1.53 1.01 0.48 0.53

Return on Assets (%) 2 1 3 8 5 (2) 2 2 7 5

Debt/Equity Ratio 1.27 0.84 0.58 0.25 0.28 3.21 1.78 1.20 0.16 0.20

Earnings/(Loss) per Share (Rs.) 0.15 0.06 0.15 0.32 0.19 (0.09) 0.06 0.08 0.18 0.11

Net Assets per Share (Rs.) 2.83 2.76 2.77 2.67 2.25 1.04 1.20 1.21 1.18 1.06

Dividend per Share (Rs.) 0.07 0.06 0.05 0.05 0.05 0.07 0.06 0.05 0.05 0.05

INVESTOR CAPITAL



‘Vaidya Mewalam’ ^ffjoH fuj,u& was made out of metal and was used to prepare medicine.


Other Health ServicesAmbulatory Blood Pressure Monitor Holter Monitor Sleep StudyCarpal Tunnel ReleaseLung Function TestDialysisHaemodialysis unitDEXA ScanningFibro ScanLaboratory services

CUSTOMER CAPITAL

Dementia ClinicRadiology ServicesC.T. Scanning Doppler ScanningMRI ScanningUltra Sound ScanningX Ray FacilitiesMammogram

Specialist Consultations ServicesDiabetic Centre Sleep Lab Serene Health Screening CentreFertility CenterCentre for Liver DiseaseDental Unit Obstetrics and GynaecologyEye Centre (Lasik) Heart Centre Serene Centre for Weight ManagementPaediatric Immunisation Unit Serene Breast Cancer Screening Unit Headache Unit Neo Natal UnitDementia Clinic

Ophthalmology ServicesVitrectomy Ultrasound Laser System (TPPV)Vitrectomy Ultrasound Laser System (RP) Fluid Gas Exchange Silicon Oil RemovalRepeat TPPV Squint Correction Surgery Keratoplasty Surgery Cataract Eye Package (OPD/Inward)Avesting Eye InjectionSpecial Laser Cataract Package

Hospital ServicesOPD Services ConsultationPharmacy Physiotherapy and Rehabilitation Speech Therapy Fully-Equipped ICUs Pain Clinic Immunisation Clinic Home Nursing ETU and Ambulance Service

ENT ServicesAudiology ClinicSpeech TherapyENT TymponoplastyEEG

Cardiac ServicesCABG Normal CABG (High risk without IABP)CABG (High risk with IABP)Coronary Angiogram PTCAAngiography ECHO Cardiography ECG, Exercise ECG

Serene Health Screening Centre ServicesPreliminary Screen package (Under 40 years) Classic Screening Package (Under 40 years)Premier Packages (Under 40 years) Standard Package (Under 40 years) Comprehensive Screening Package (Over 40 years) Cardiac Screening Package Andropause Check (Over 50 years) Screening Package for Senior Citizens (Over 50 years)Joint Pain and Arthritis Package (Over 50 years) Premarital Screening Package Feminine Package for TeensDiabetic Screening Package Food Handler’s Check Dementia Package

Gynaecology ServicesGynaecology – Abdominal Hysterectomy Abdominal MyomectomyGynaecology – L.S.C.SGynaecology – Normal Delivery Maternity PackagesDiagnostic LaparoscopyLaparoscopy and Dye TestLaparoscopy AdhesiolysisLaparoscopy SterilisationLaparoscopy SalpingectomyLaparoscopy CystectomyLaparoscopy Ovarian DrillingOopherectomyAntenatal Exercise ClassesMaternity Awareness Programme

Surgical Services Laparoscopic Cholecystectomy Laparoscopic Appendectomy (Open) Appendectomy Haemorrhoids Circumcision TURPLaminectomy Headache Clinic Thoracoscopy Package Laser Varicose Package Sleep Lab Package Enterscopy Day Care Packages – OPD Surgical PackagesGeneral Surgery – AppendectomyGeneral Surgery – CircumcisionGeneral Surgery – Lap AppendectomyGeneral Surgery – Lap CholecystectomyLung/Kidney/Liver Transplants

Cardiac UnitsEcho Cardiography, ECG/EEG, Exercise ECGAngiography

Dental Unit

Our Products and Services

Nawaloka offers its customers an extensive portfolio of healthcare services which are premium in quality and interventions that

meet a spectrum of healthcare needs of customers with a strong brand identity. These include –

Cosmetic Unit ServicesPhototherapySkin RejuvenationScar RemovalLaser Hair RemovalBody Contouring SurgeryHair TransplantWrinkle Reduction



Niche Market Products

Most of our products are offered to the mass market. However,

certain services such as Cosmetic Centre Services and Geriatric

Care are extended to a niche comprising high income earners.

Nawaloka Metropolis

The only referral laboratory chain in Sri Lanka, Nawaloka

Metropolis is a joint venture between Metropolis India and

Nawaloka Hospitals PLC. The 5000-sq.ft state-of-the-art facility

is attuned with the changing face of the diagnostic market,

and continuously strives to upgrade and facilitate a higher

quality of service to the people it serves. For doctors and

patients across Sri Lanka, Nawaloka Metropolis has become

synonymous with reliability and accuracy. Offering an extensive

range of services, Nawaloka Metropolis remains committed to

innovation and ethical practices.

The lab offers world class quality services in –

zz Immunology/Special Chemistry

zz Microbiology

zz Biochemistry

zz Genetics

zz Histopathology

zz Preventive Health Check-up

zz Home Health Services

zz Clinical Trial Services

1998

Our overarching ambition is to be the very best

in everything we do. Therefore, we continually

strive to achieve a level of clinical and service

excellence that will raise the bar of the healthcare

industry in Sri Lanka. That’s why we work to

exceed the most rigorous standards of quality

and be the Centre of Excellence.

Nawaloka Hospitals is now a benchmark in

healthcare and is no stranger to winning awards.

The impressive list of awards given below is

a testament of the high standards we have

achieved -

1998 - The only Hospital to win the Sri Lankan

National Quality Award

2000 - The ISO-Certified Hospital in Sri Lanka

2011 - Awarded ISO 9001:2008 Certification

2014 - The only Hospital to be recognised at the

ACCA sustainability Award 2014

2014 - Certified as a Carbon Conscious®

Hospital, making Nawaloka Sri Lanka’s

first hospital to achieve this distinction

2015 - The only Hospital to be recognised

at the ACCA Sustainability Business

Award 2015

Customer CapitalManagement Discussion and Analysis


Nawaloka offers its customers an extensive portfolio of healthcare services

As the pioneer of the private healthcare industry in Sri Lanka, our vision is to lead the healthcare industry by delivering superior services aided by most advanced technology and the best care to our patients

The first regional hospital of Nawaloka is a state-of-the art 75 bed hospital in Negombo

We offer laboratory services at the doorstep of the patients to enhance convenience

The first hospital in Sri Lanka to have won the ISO 9001:2008 Sri Lanka Quality Award and National Business Excellence Award

Customer Capital


The state-of-the-art 75 bed hospital in Negombo is a subsidiary of Nawaloka Hospitals PLC. It is the first regional hospital of Nawaloka, in the Gampaha District. The Hospital is equipped with three operating theatres, a technologically advanced Intensive Care Unit and an Emergency Treatment Unit; It offers an extensive range of diagnostic and treatment facilities including CT and Ultrasound scanning, ECG, physiotherapy, and dental screening and treatment services as well as a fully-fledged Dialysis Centre. Nawaloka Medicare (Pvt) Ltd., has made a significant impact on the lives of people in the region by providing them with convenient access to world class healthcare and thereby eliminating the need for people to get medical treatment from hospitals in Colombo for their serious health issues.

We have contributed to achieve the Millennium Development Goals of the country by meeting the healthcare needs of the local communities.

For the 16 months of operations, Nawaloka Medicare has achieved significant milestones -

zzOver 150 visiting medical consultants from different specialties

zzPerformed over 200 successful deliveries

zzA customer base of more than 100 corporate clients

zzCompleted over 2,500 corporate medical screenings

zzPerformed more than 3,000 OPD medical screenings

zzSet up three specialty centres – a fully-fledged orthopaedic surgery facility, an advanced Urology Centre and a state-of-the-art Dialysis Centre

zzOver 2,000 theatre surgeries



Nawaloka Medicare

(Pvt) Ltd.

Achievements for the past 16 months

Over 6,500 Patients

Admitted for Indoor Treatment

Over 90,000 Channel

Appointments

Over 150 Medical Specialists

Visiting the Hospital Covering all Specialities

Successfully Performed more than

2,000 Surgeries including Total

hip replacement, Whipple Surgery and Caesarean

Surgeries

Admissions 2015/16 (%)

200

160

120

80

40

0 Apr15

May15

Jun15

Jul15

Aug15

Sep15

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Channel Appointments 2015/16 (%)

250

200

150

100

50

0 Apr15

May15

Jun15

Jul15

Aug15

Sep15

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Note:All graphs have been drawn as a ratio considering April 2015 as the base month.

Pharmacy Revenue 2015/16 (%)

250

200

150

100

50

0 Apr15

May15

Jun15

Jul15

Aug15

Sep15

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Apr15

May15

Jun15

Jul15

Aug15

Sep15

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Theatre No. of Cases 2015/16 (%)

200

160

120

80

40

0

CT Scan No. of Cases 2015/16 (%)

250

200

150

100

50

0 Apr15

May15

Jun15

Jul15

Aug15

Sep15

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Our Presence

As the trendsetter of the private healthcare industry in Sri

Lanka, our vision is to lead the healthcare industry by delivering

superior services aided by most advanced technology and the

best care to our patients. To make this a reality, we adopt a

bottom up approach to obtain the most relevant and effective

ideas in the market.

We are one of the largest and most sought after employers

in the country. Through continuous training we have achieved

a high staff retention rate and empowered our employees to

perform exceptionally. Therefore, we employ a large number

of skilled employees with diverse exposure and skills.

One of our objectives is to disperse our facilities island-wide

to make them accessible to all citizens. With many medical

centres set up across the island we have lessened the burden

on the national healthcare system to meet the healthcare needs

of all Sri Lankans.



Gampaha

NegomboKegalle

Nuwara Eliya

Ratnapura

Badulla

Kandy

MataleKurunegala

Puttalam

MannarVavuniya

Mullaitivu

Killinochchi

Jaffna

Anuradhapura

Trincomalee

Polonnaruwa

Batticaloa

Ampara

Colombo

Kalutara

Galle Matara Hambantota

Moneragala

Colombo District

Moratuwa

Koralawalla

Ratmalana

Boralesgamuwa

Kalubowila

Mattakkuliya

Athurugiriya

Thalagala Juntion

Thalawatugoda

Mattakkuliya

Mulleriyawa

Thotalanga

Thalwatta

Galle District

Karapitiya

Gintota

Deveta

Morawaka

Mapalagama

Hikkaduwa

Imaduwa

Kotapola

Udugama

Ambalangoda

Ahangama

Deniyaya

Thawalama

Balapitiya

Weligama

Neluwa

Elpitiya

Pitabaddara

Ratnapura District

Avissawella

Minnana

Dala

Thalduwa

Panukarapitiya

Kalawana

Yatiyantota

Eheliyagoda

Hangamuwa

Karawanella

Kiriella

Kuruwita

Ruwanwella

Ingiriya

Dehiowita

Kithulgala

Nivithigala

Hambantota District

Dikwella

Walasgala

Ranna

Beliatta

Gatamanna

Weerakatiya

Kirinda

Embilipitiya

Dondra

Walasmulla

Sooriyawewa

Hakmana

Middeniya

Hambantota

Gandara

Hungama

Ambalantota

Batticaloa District

Kattankudy

Kalmunai

Sainthamaruthu

Nintavur

Sammanthurai

Kokadicholai

Trincomalee District

Eravur

Chenkalady

Santhyveli

Valaichchenai

Pesalai

Ottamavady

Jaffna District

Point Pedro

Nelliyadi

Puttur

Chankanai

Moolai

Kokuvil

Kondavil

Thirunelveli

Pasayur

Main Street

Jaffna Town

Nallur

Thondamanaru

Kalutara District

Bulathsinhala

Raigama

Egaloya

Wadduwa

Agalawatta

Bandaragama

Pimbura

Kalutara

Govinna

Mahavila

Aluthgama

Horana

Eluvila

Dargatown

Pokunuvita

Nagoda

Atalugama

Gorakapola

Mathugama

Millaniya

Horana

Wathara

Gampaha District

Seeduwa

Katunayake

Pitipana

Pohorathota

Kochchikade

Mukalangamuwa

Nawaloka Metropolis Laboratories (Pvt) Ltd.

Customer Capital Management Discussion and Analysis


Customer Growth

The following graph illustrates the total number of patients

who patronised Nawaloka through channelling services

compared monthly over two financial years:

2015/16 2014/2015

Total Channelling (Nos.)

50,000

40,000

30,000

20,000

10,000

0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Web-Based Channelling

This is an illustration of web-based channelling usage over the financial year 2015/16.

Web-Based Channeling 2015/16 (Nos.)

14,500

14,000

13,500

13,000

12,500

12,000 Apr15

May15

Jun15

Jul15

Aug15

Sep15

Oct15

Nov15

Dec15

Jan16

Feb16

Mar16

Base month April 2015 - 100%

Growth in Foreign Customers

We achieved commendable results in our efforts to increase

our foreign customer base by promoting our services in new

markets. As a result, foreign patient admissions increased by

14% compared to the previous financial year.

Nawaloka Cosmetic Unit

We are pleased that our recent strategic expansion into

the Cosmetology Sector in March 2015 has enhanced our

market presence. The Nawaloka Cosmetic Unit offers the

following services:

zz Phototherapy

zz Skin Rejuvenation

zz Scar Removal

zz Laser Hair Removal

zz Body Contouring Surgery

zz Hair Transplant

zz Wrinkle Reduction

All these services are performed under safe and sterile

conditions by Board certified professionals including

consultant dermatologists, plastic surgeons and an

oculoplastic surgeon.

We are proud to be the first private healthcare facility

to provide state-of-the-art FDA approved full body

Phototherapy, CO2 Laser and Diode Laser to Sri Lanka.

For example the Gold Standard Acu Pulse, a safe, simple

CO2 laser, manufactured in USA is the latest Industry

standard that delivers outstanding results. It can be used

for 34 aesthetic indications, more than any other CO2 laser

available in Sri Lanka. It offers a multitude of capabilities

which includes skin rejuvenation, removal of stretch marks,

scar removal and wrinkle reduction thus allowing the

patient to have flawless smooth skin. Furthermore, Gold

Standard Acu Pulse stands out providing quick, painless

and much needed personalised treatments for each

individual.

Our aspiration of being the ‘Hospital of Tomorrow’

had resulted in us committing ourselves to achieving the

latest standard.



Financial Implications and Other Risks and Opportunities Due to Climate Change

Description of Climate Change

Classification (Risk/Opportunity)

Impact (Both Financial and Other)

Management Response

Cost of Response

Increase in medical

tourism as a result

of Sri Lanka being

perceived as a top

tourist destination

Opportunity Increases the revenue

potential that could be

derived from foreign

customers

Enhanced marketing

response to promote

brand image

Investment on

capacity improvement

to cater to the

demand

Marketing and

advertising

expenditure

High capital

expenditure in

expansion

Continuous

improvement in global

standards of medical

technology resulting

in the need to update

medical technology

frequently

Risk May lose the

reputation as the

pioneer in modern

healthcare

Upgrade technology

to match the standards

Inability to recover the

capital expenditure of

high-valued machines

as they are replaced

frequently

Increased foreign

direct investments and

increased emergence

of international

businesses

Opportunity Increases the revenue

potential that could

be derived from local

customers

Emergence of a

market interested in

luxury services

Increased service

opportunities for

new clients

Recruit more staff to

cater to the increased

demand

Ensure new

investments for luxury

services

Enhanced marketing

response to promote

brand image

Investments towards

improving capacities

to cater to demand

Increased staff cost

Increased capital cost

in enhancing luxury

services

Marketing and

advertising

expenditure

High capital

expenditure for

expansion

Staff salary reforms to

increase allowances

Risk May face reputational

risk and legal

implications on failure

to comply

Comply with

reforms to ensure

conformance

Increased staff costs



‘Unu Pangeya’ ^WKq mekaf.h& had been used from ancient times. It is a special type of treatment with leaves of medicinal plants simmered and the body

is exposed to the resulting steam.


Measuring Customer Satisfaction

As the ‘People’s Hospital’ we continually strive to provide a

superior service that enhance customer value. We have priced

our medical products and services affordably and facilitated

patients from all walks of life to receive our expert medical

care without any discrimination. Our customers are the ideal

stakeholders to measure the quality of our service and we value

their feedback immensely. Accordingly, we have designed an

effective mechanism to measure, evaluate and fine tune our

operations to meet their expectations. Several measures were

implemented to monitor customer satisfaction –

zz Nawaloka distributes complaints and suggestion forms to

customers/patients at the time of admission. The completed

responses are collected when the patients are discharged

from the Hospital. This feedback is monitored and committed

to a prompt response. The Marketing Division executes the

needed action.

zz The Mystery Patient System is implemented to continuously

monitor the performance of the employees. This is an

effective mechanism to identify lapses in the service

delivered to the customers and take corrective action.

zz Suggestion boxes were placed in public areas around the

Hospital to encourage and welcome customer suggestions

about services.

zz Active involvement in social network sites to address any

concerns raised by our stakeholders.

Quality

Benchmarked for quality, Nawaloka Hospitals has nurtured

an environment which is healthy and safe and implemented a

quality management system, compliant with ISO 9001:2008

International Standards. It is the first hospital in Sri Lanka to

have won the ISO 9001:2008 Sri Lanka Quality Award and

National Business Excellence Award. The standards have been

maintained to ensure continuity of the certification and the

Hospital is in the process of upgrading to ISO 9001:2015.

A strong Quality Management Programme is in place to

provide patients with efficient access to healthcare, enhance

the departmental clinical and operational quality and thereby

achieve 100% patient satisfaction. Quality related data is

reviewed regularly by the Quality Improvement and Patient

Safety Committee. The Quality Assurance Department

maintains and analyses all data pertaining to patient safety

and infection control to ensure safety of the patients and

staff members.

The Nawaloka Metropolis Laboratory is accredited and

certified for ISO 15189 by Sri Lanka Accreditation Board. These

accreditations have spurred the reliability and accuracy of the

test results, conducted at the laboratory.

Multistoried Car Park

Due to the rapid growth in the scale of our operations, the

need for an organised car park emerged. The Management

took a prompt decision to build a state-of-the-art car park

adjoining the main hospital to address the grievances of

customers, employees and the other stakeholders. A well-

structured car parking facility is a critical success factor for

efficient operations and deliver value to clients.

Having earned the reputation as ‘The Pioneer’ in the

industry, we constantly broaden our horizon by pioneering

and delivering value to the nation. Therefore, we have

ensured this building once completed would be the tallest

steel structure in Sri Lanka.

The 14 floor building includes six floors of car parking

space consisting of 550 parking slots. The remaining floors

will house the new modular concept Channel Section,

Laboratories, 24/7 Pharmacy, Information Counter and a

Physiotherapy Section; each area segregated for patient

comfort and safety and deliver additional services.

This project is expected to derive a high return as there

is a very high demand for parking facilities. Due to the lack

of incentive for a project of this nature, it is difficult to find

investors who would invest. Considering the vast number

of vehicles without parking facilities in the vicinity, we are

confident that the parking facility will be fully utilised.

The project is in the final stage of completion and has

progressed as per the budgeted expenditure and timelines

for the reporting period. We are assured that the project

will progress in a similar manner until completion in the

ensuing financial year.



In addition, the 5S Japanese Concept was implemented

in year 2014 to improve productivity and streamline the

work environment. This 5S concept is followed daily by

the Nawaloka employees in the process of their daily

tasks. Inter-departmental 5S competitions are conducted

annually to motivate staff and sustain the activity.

The Hospital also conducts other quality related training

programmes to improve knowledge, skills and attitudes of

staff. We promoted a work improvement culture to implement

the 5S concept in the Hospital. The 5S concept has effected a

speedy enhancement in the working environment and service

quality by involving all the staff members of the Hospital.

Product and Service Labelling

As a provider of an essential service in the healthcare sector,

Nawaloka conforms to the highest standards to provide

customers comprehensive information pertaining to the service

offered. Therefore, treatments, procedures and interventions

are clearly explained at every patient – hospital touch point.

When using third party products such as pharmaceuticals,

we ensure they are sourced from reputed and reliable suppliers

who adhere to the quality and information standards.

During the year under review, there were no incidents

of non-compliance with regulations and voluntary codes

concerning marketing communications, including advertising,

promotion and sponsorship by type of outcomes.

Marketing Communications

We believe in portraying the true identity and character of

our organisation in our marketing communication processes.

Therefore, we strictly ensure that all communications uphold

the values we abide by and conform to the regulatory

provisions and any other applicable codes of conduct that

prevail in Sri Lanka.

We keep a close tab on all our communications to ensure

they are ethical and are within the bounds of law and good

taste. Hence, all medical camps for public, TV and radio

advertising, printed media, PR activities and sponsorships are

subject to close scrutiny.

Since our brand image is highly sensitive to matters related

to confidentiality and sensitive data, we conform to the latest

information technology security policies as well.

We have set targets for the Marketing Division which

are linked to the ethics of the organisation. Performance

appraisal is carried out for ethical compliance as well. There

is clear segregation of duties to ensure responsibility and

accountability of the decisions made by the Department. Also,

all decisions taken are reviewed every quarter to identify and

address any disparities.

During the year under review, there were no incidents

of non-compliance with regulations and voluntary codes

concerning marketing communications, including advertising,

promotions and sponsorships.

Sale of Banned or Disputed Products

Nawaloka does not provide services which are banned or

are against the law of the country. We organise awareness

campaigns for the general public on our services and about

the developments in the healthcare industry. In addition, we

provide continuous medical education and organise events

to commemorate days of special significance to health. We

strictly abide by the relevant codes of conduct and regulatory

codes in doing so. There were no incidence of non-compliance

pertaining to the sale of banned or disputed products during

the year in review.

Customer Privacy

As a responsible private hospital in the country, Nawaloka

conforms to the norms and regulations pertaining to customer

information, its storage and use.

Whilst we treat all patient information and records

with strict confidentiality, effective measures have been

implemented to ensure protection of personal data. Our

systems and processes, IT in particular are designed to deliver

such protection at all times.



We are pleased to record that there were no complaints

regarding breach of customer privacy and losses of customer

data during the year under review.

The following measures have been implemented by

Nawaloka to ensure customer privacy.

zz Our organisation culture is designed to ensure customer

privacy.

zz Our clinical staff, nurses and general employees are

continuously given training on ethical behaviour to ensure

confidentiality.

zz Electronic medical records (EMR) to store the patient’s

information.

zz Electronic Diagnosis Card system to store information.

zz Strict enforcement of access controls such as passwords

and biometrics.

Patient Health and Safety

Nawaloka has in place a well-developed health and safety

regime to ensure the well-being of patients at every instance.

We strictly comply with regulations on health and safety, food

and hygiene and all the relevant voluntary codes to avert

any incidents that compromise the safety of our customers.

Prior to introducing a service to the market, we conduct a

comprehensive check to assess its safety. The Internal Audit

Division of Nawaloka conducts periodic checks to identify risk

exposure, assess the impact and provide recommendations to

mitigate.

During the year there were no recorded incidents of

non-compliance pertaining to patient health and safety.

Anti-Corruption/Anti-Competitive Behaviour/Compliance

Corruption exerts a strong negative implication on businesses

and it is a common manifestation in South Asian economies.

To eliminate exposure to corruption, the Risk Management

Committee of Nawaloka Hospitals has put in place a range of

controls. We always ensure that ethical principles and integrity

are maintained in our business operations. Since, competition

helps to develop the industry; we welcome competition and

strictly follow fair business practices in our organisation.

We are pleased to report that there were no incidents

related to the non-compliance of regulations and voluntary

codes concerning health and safety impacts of our services.

Bone Marrow Transplant Unit

We pride in being the only functioning Bone Marrow Unit

that has performed 11 successful bone marrow transplant

surgeries. It is the first and only hospital to treat bone

marrow transplant surgeries related to Leukaemia as

well. We have made a special effort to keep the cost of

transplant procedures affordable to a wider cross section

of the population compared to other countries.



‘Hunugal Abarum Gala’ ^yqKq.,a weUreï .,& was used to grind medicine. It is made of Calcium Carbonate which is of medicinal value. When ingredients

or substances are crushed using this grinder, a small amount of Calcium is also mixed in and is good for the health.


EMPLOYEE CAPITAL

At Nawaloka, we recognise that our employees are our most important

asset. They drive our business. Our success is thus largely attributable to

the knowledge, skills and commitment of this closely knit and motivated

team. We attract best of talent, develop and retain employees of the

highest calibre, who are qualified professionals in their respective fields

of expertise. We nurture a fair and collaborative workplace that promotes

diversity and upholds the highest ethical practices. Healthcare is all about

caring for people, hence it is imperative that our employees also be infused

by passion, care and integrity for their job, extending an exemplary care to

people at all times.

The human resource development agenda is geared to develop our

people by offering a range of personal and professional development

opportunities that enables them to utilise their full potential. We provide

equal opportunities for all employees. In turn, we reward performance.

Our employees have a strong affinity towards the Organisation and

most have been with the Company for long years. As an employer of

choice, our human resource practices have gained recognition. Winning the

Peoples Award 2014/15 for best practice in human resource development

is a testament of this fact.

Our Workforce

At Nawaloka we employed a total of 2,157 persons by year end, with the

composition of gender, age, service period and geographic location, all

reflecting the desired levels of diversity.

Analysis by Region (%)

Central - 5

Western - 79

Eastern - 0

North Central - 3

North Western - 1

Sabaragamuwa - 2

Southern - 9

Uva - 1

Northern - 0

Our success is largely attributable to the knowledge, skills and commitment of this closely knit and motivated team

We employed a total of

2,157 persons by year end

In order to promote mutual trust and promote mutual prosperity, Nawaloka encourages open communication between staff members and management

531 employees were recruited to the Organisation during the year

The reduction in employee turnover is a strong indication of the employee friendly status and the increased value generated for our employees



Analysis by Gender

Employee Category Female Male Grand Total

Director 1 4 5

Executive 52 59 111

General 670 339 1,009

Medical 42 23 65

Nursing 852 115 967

Grand Total 1,617 540 2,157

Analysis by Employee Category

Employee Category

Executive Non-Executive Grand Total

Female Male Total Female Male Total

Director 1 4 5 – – – 5

Executive 52 59 111 – – – 111

General – – – 670 339 1,009 1,009

Medical 42 23 65 – – – 65

Nursing 852 115 967 967

Grand Total 95 86 181 1,522 454 1,976 2,157

Age Analysis

Employee Category 18-29 Years 30-50 Years More than 51 Years Grand Total

Female Male Total Female Male Total Female Male Total

Director – – – 1 2 3 – 2 2 5

Executive 18 10 28 17 35 52 17 14 31 111

General 387 123 510 230 169 399 53 47 100 1,009

Medical 3 1 4 28 13 41 11 9 20 65

Nursing 409 45 454 373 61 434 70 9 79 967

Grand Total 817 179 996 649 280 929 151 81 232 2,157

Female Male

Director Executive General Medical Nursing

Analysis by Gender (Nos.)

0

200

400

600

800

1,000

Female Male

Less than10 Years

10 - 20Years

More than50 Years

Service Analysis (Nos.)

0

300

600

900

1,200

1,500

Employee Capital

Female Male


Analysis by Gender (Nos.)

0

200

400

600

800

1,000

Analysis by Employee Category (Nos.)

0

250

500

750

1,000

1,250




Service Analysis

Employee Category Less than 10 Years 10-20 Years More than 20 Years Grand Total

Female Male Total Female Male Total Female Male Total

Director – – – 1 2 3 – 2 2 5

Executive 42 47 89 5 5 10 5 7 12 111

General 538 257 795 85 57 142 47 25 72 1,009

Medical 30 15 45 11 6 17 1 2 3 65

Nursing 613 87 700 143 16 159 96 12 108 967

Grand Total 1,223 406 1,629 245 86 331 149 48 197 2,157

Recruitment and Retention

To ensure long-term success we review our staff structures at

Nawaloka periodically. We recruits employees based on merit,

such as skills, experience and ability, regardless of age, race,

gender, religion or ethnicity.

Our Human Resources team is actively involved in sourcing

new talent in the market. We also provide career guidance to

the new graduates as a means of our social responsibility.

During the year under review our staff strength increased

by 2.4% from 2,105 to 2,157 persons.

Recruitment by Employee Category and Gender

Employee Category Female Male Grand Total

Director – – –

Executive 19 24 43

General 170 96 266

Medical 10 8 18

Nursing 172 32 204

Total 531

All senior managers of Nawaloka are recruited from within the

country. Senior managers include heads of departments.

Localised recruitments refer to hires from within Sri Lanka.

Significant locations of operations are businesses generating

revenue of over Rs. 1 Bn in the year under review.

Parental Leave

Retention of staff is an important area of focus in maintaining

operational efficiencies.

Our female employees are entitled to maternity leave.

We provide them the opportunity to avail this benefit without

any constraints while also facilitating their return to work.

Our high rates of retention and return to work serves in up

lifting employee morale as well as productivity.

Return to work – 85%

Retention Rate – 100%

Training and Development

Our shared success at Nawaloka is driven by the calibre and

performance of our people. We recognise that it is essential to

equip our employees at all levels to meet the changing needs

in the industry. Training not only enhances the efficiency of

employees but helps to build a motivated and highly engaged

team that enhances the Company’s competitive position.

A range of professional development opportunities

including career development, education, talent management

and leadership programmes are offered to our employees to

realise their career goals.

Employee Capital Management Discussion and Analysis


Knowledge skill training

Training based on staff qualifications

Advance training for

assistant manager staff

qualifications

Self

development

Fo

cu

sed

OJI

wit

h s

pe

cia

l th

em

Language

training

Orientation training for

newly promoted staff

Advance training for

specialists

Orientation training for

newly specialists

OJT

Company-wide training to support professional staff

All training programmes are aligned with the long-term

goals of the Organisation, staff performance appraisals and

career aspirations of employees. Our programmes are of very

high quality; they enhance staff motivation and empower our

employees to effectively discharge their responsibilities.

Investment on Training

Year CostRs.

Hours

2015/16 23,926,176 2,499

2014/15 21,465,321 2,141

2013/14 19,210,425 1,785

2012/13 14,100,221 1,582

2011/12 13,978,300 1,262

2011/12 2012/13 2013/14 2014/15 2015/16

Investment on Training (Rs. Mn)

0

5

10

15

20

25

2011/12 2012/13 2013/14 2014/15 2015/16

Training Hours (Nos.)

0

500

1,000

1,500

2,000

2,500

All training needs are effectively identified through the

staff performance evaluation process. Training provides an

avenue to bridge any gaps identified in the target and actual

performance of employees.

During the year, Nawaloka provided development

opportunities to many categories of employees to

ensure continued employability. They included the senior

management, medical officers, front office staff, sales and

marketing staff, nurses and para-medical staff.

Employee CapitalManagement Discussion and Analysis


Training Programmes Conducted for the Year

Training Programme

Internal/External/Foreign

Main Subject

Training Hours per

Persons

To Whom to Conduct

No. of Participants Conducted by Organised by

Female Male

Basic Life Support Internal Cardiopulmonary Resuscitation

60 Healthcare Workers 178 4 Training Manager HRM

Palliative Care External Elders Nursing Programme

16 Nurses 2 Japanese Elders Nursing Programme

Head of Finance

Lead Auditor Transition Training Programme

External Auditor Transition 16 Auditors 7 9 SGS Lanka (Pvt) Ltd.

Head of Finance

Basic Life Support Internal Cardiopulmonary Resuscitation

84 Healthcare Workers 178 4 Training Manager HRM

National HR Conference

External HR 18 HR Team 4 6 IPM HRM

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

The Game of a CFO – Executive Training

External CFO 16 Head of Finance 1 The Institute of Chartered Accountants of Sri Lanka

Head of Finance

Performance Excellence

External Quality Standard 18 ISO Team 15 17 Sri Lanka Standards Institution

ISO Manager

Overseas Training Foreign Sectorial 32 Secretaries to the Chairman DGM

1 1 Malaysia HRM

Workshop on Energy Efficiency and Energy Saving

External Energy Efficiency and Energy Saving

24 Maintenance Department

2 Chairman Construction Industry Development Authority

HRM

Training Programme Fire Survey and Report

External Fire Survey and Report

9 Lab Staff 18 8 Mr. M.N.P. Harischandra

HRM

IVF Training Foreign IVF 16 Embryologist 1 Indian Company HRM

Safety External Fire 33 All Employees 335 49 External Trainer HRM

Nursing Internal Palliative Care 12 PCN 26 0 Training Manager HRM

Instructional Course External Urology 64 Urology Nurses 8 0 Urology Department HRM

Embryologist Training

Foreign Embryologist 36 Trainee Embryologist

1 India Embryologist Association

HRM

Strategic CFO Training

External Strategic CFO 8 Director and Head of Finance

2 Strategic CFO Association

Chairman

Auditors Conference External Auditing 9 Auditors 1 2 The Institute of Internal Auditors Sri Lanka Chapter

Head of Finance

Nurses Training Internal Nurses Training 1,920 Nurses 93 – NTS NTS

Seminar - Disciplinary Procedure

External Disciplinary Procedure

8 HR Team 1 PRAG Service (Pvt) Ltd.

ISO Manager

Seminar on Supporting the Delivery of Health and Social Care

External Health and Social Care

8 Nurses 12 3 Sri Lanka Accreditation Board

HRM

Infection Prevention Workshop

Foreign Infection Prevention 16 HR and Medical Superintendant

1 HRM

IMEXPO – Sri Lanka

External Import and Export 16 Accountant 1 1 International Chamber of Commerce Sri Lanka

Head of Finance

Pre Congress Workshop on Soft Tissue Management in Trauma

External Soft Tissue Management

24 Surgeons 4 The College of Surgeons of Sri Lanka

HRM

2,499 1,044 130



‘Beheth Gabadawa’ ^fnfy;a .nvdj& was similar to a pharmacy. This is where the preparation and storage of medicine takes place.


Employees are given professional training to equip them

with the required skills to better perform their jobs. These

include aspects such as patient care, health and safety

and resuscitation procedures amongst many. Customised

programmes were offered to the senior management, on

areas such as knowledge management, change management,

and conflict management whilst lower and middle level staff

members were trained on aspects such as negotiation skills

and task management.

Soft Skills Development

Interpersonal Skill Self Management Goal Management

Innovation and Creativity

Conflict Resolution Memory Enhancement

Rapport Building Negotiation Skill Anger Management

Leadership People Skill Coping Skill

Emotional Intelligence Decision-Making Train the trainer

Management Skill Personality Development

Interviewing Skill

Motivation Business Etiquette Presentation Skill

Stress Management Attitude & Skill building Team Building

Business Communication Art of delegation Assertive Skills

Language Skill Change Management Art of influence

Employee Engagement

As an Organisation which ensures higher degree of work ethics

and professionalism, we encourage open communication

between management and employees in order to strengthen

mutual trust and mutual prosperity. This is further supported by

our four basic principles of personnel management.

Creating a workplace environment where employees can work

with their trust in the Company.

zz Stable employment where layoff and dismissals are not readily made.

zz Steadily maintain and improve working conditions from a medium to long-term perspective.

zz Ensure fairness and consistency.

Creating a mechanism for promoting constant and voluntary

initiatives in continue improvement.

zz Share the management mindset and sense of critical urgency through thorough communication.

zz Reflect working results in working conditions.

Fully committed and thorough human resource development.

zz Promote personal growth through work.

Promoting teamwork aimed at pursuit of individual roles

and optimisation of the entire team.

zz Team results and creating a sense of unity

zz Thorough consensuses building and achievement in signal trust

Given below is an analysis of how the organisation

responded to the key topics and concerns raised by employees.

Category % of Employees Evaluated

Male Female

Job related knowledge and skills: 80 89

Quality of work:

(Neatness, Accuracy, Creativeness

and Timely Action)

91 96

Reliability:

(Dependability on him/her)

77 82

Work Attitude:

(Co-operation, Sense of responsibility etc.)

92 96

Leadership:

(Ability to get a job done)

94 97

Inter-Personal Relationship:

(Ability to get on with the staff)

94 94

Public Relations:

(Positive relationship with the customer)

98 99

General Conduct:

(Observation of Rules and Regulations)

94 98

Carrier Development:

(Learning through experience)

91 89

Punctuality:

(Unauthorised leave and

Absenteeism records)

90 93

A Conducive Working Environment

The Company strives to be as inclusive as possible by

involving staff in its forward journey. Whilst promoting

inter-staff communication, we also offer opportunities for

them to offer their ideas and opinions on several aspects

of how the Company is run and should develop. We conduct

the ‘Nawaloka Nawa Adahas’ programme which optimally

captures such staff comments.

Employee welfare is enhanced by improving the working

conditions and promoting a holistic and balanced lifestyle for

employees. As a measure of employee satisfaction Nawaloka

welcomes feedback from employees by providing confidential

channels through which employee feedback and staff

suggestions could be submitted.

Quarterly No. of Ideas No. of Ideas Implemented

1st Quarter 8 3

2nd Quarter 12 4

3rd Quarter 6 2

4th Quarter 10 5



Grievance Handling

An effective mechanism is in place to handle grievances in a transparent, fair, sensitive and expeditious manner. The employee is

able to complain with dignity with the assurance of obtaining a fair resolution from an impartial decision-maker. An institutionalised

mechanism has also been set up for conflict resolution.

The grievances about labour practices filed, addressed and resolved through formal grievance mechanisms are detailed below:

Identified and Filed Grievances Priority Addressed Remarks

1. Employee Accommodation High √ Fully-fledged hostel complex

2. Employee Vehicle Parking High √ Extra parking facilities with shuttle services

3. Staff Meals Moderate √ In-house meals provided to departments at a concessionary rate

4. Long Shifts High √ Short hour shift rotations

Collective Bargaining and Freedom of Association

Nawaloka has, over the years, implemented many enablers

to encourage employee engagement within the Group.

Our policy on freedom of association and collective

bargaining allows formal and informal types of collective

bargaining within the Group. All permanent staff members

are covered by collective bargaining agreements.

Due to the effective transparent policies in place, there were

no incidents of violation of freedom of association of employees

and collective bargaining during the reporting period.

Whistle-blowing Policy

The whistle-blowing policy encourages employees to raise

concerns and bring any violations on human rights to the

notice of the Human Resource Department at an early stage.

Minimum Notice Periods

There were no significant changes in the operations during the

year under review. However the general policies regarding the

operational changes are as follows.

Type of Change Minimum Notice Period

Transfer Immediate or 2 weeks

Termination 1 Month

Retirements 3 Months

Dismissal Immediate

Resignation 1 Month

Remuneration

Periodic surveys are conducted to benchmark our

remuneration levels against the industry, to ensure an equitable

reward system that is also competitive in the market.

The performance-based pay implemented at Nawaloka is

a transparent process that rewards employees based on the

skills, effort, working conditions and the level of responsibility

attached to the job.

BenefitsOfferedtoPermanentEmployees

Nawaloka offers an emolument structure that is fair and

equitable to all employees across all grades. The pay scales

conform to the minimum wage levels established in Sri Lanka.

Given below are the benefits offered to our permanent

employees.

zz Fixed monthly salary, annual bonus-based on the overall

performance of the Company, performance based incentives

and festival advances

zz Travelling allowances, fuel allowances, vehicle allowances,

staff loans at concessionary interest rates, reimbursement

of membership fees

zz Hostel/Apartment facilities

zz Free medication, ODP medical scheme, death donations

and insurance

zz Foreign training

zz Staff meals at concessionary rates and dry ration packs

zz Marriage allowance, a discount of 50% on the hospital bill

for the first baby, scholarships for children of employees

who passed GCE A/Level and O/Levels.

For more details on employee defined benefit plan

obligations, please refer notes to the financials on page 133

of this Annual Report.



Health and Safety

Due to the nature of operations, Nawaloka is exposed to

a significant level of occupational hazards. Therefore, the

Company has designed a hazard identification and mitigation

framework to identify, assess, prioritise and manage risk

exposure to deliver a secure healthcare system.

Before a new service is launched by Nawaloka, it is subject

to a thorough risk assessment. This is an assurance that our

processes are free from risk exposure. Safety features are

embedded in the business process at each level and all staff

members are provided with adequate training to ensure

employee and patient safety.

Analysis of Injuries and Occupational Diseases

Description % from Workforce

Lost Days

Absenteeism Rate from

Workforce

Injuries Male 0.5 17 1.0

Female 1.0 35 2.5

Occupational

Diseases

Male 0.75 12 1.0

Female 2.5 18 1.1

Occupation Major Risk Involved Safety Measurement

Phlebotomist Risk of injuries due

to sharp items

Regular-training and

ISO procedures

Nurses All type of

communicable

diseases

Vaccination/

Infection Control

Department

Doctors All type of

communicable

diseases

Vaccination/

Infection Control

Department

Janitorial staff Risk of germs/

Chemical allergies

Industry accepted

safety practices

Radiology Staff Radiation risk Following atomic

energy authority

guide

Others Depend on the

situation

Regular evaluation

of risk and

preventive actions

The following preventive measures are implemented at

Nawaloka to minimise occupational hazards:

zz Provision of surgical gloves and masks to staff members

zz Provide training on handling medical instruments

zz Training nurses on hygiene factors

zz Setting up triage counters manned by qualified and

experienced nurses to make an initial determination

about the nature and severity of a patient’s illness/injury

zz Adopting special surgical preventive policies

zz Regular supervision by senior medical personnel

zz Overall supervision by Medical Superintendents

zz Regular monitoring by the Medical Risk Management

Committee

Diversity and Equal Opportunity

As an equal opportunity employer, Nawaloka is committed

to hiring, developing and promoting individuals who best

meet the requirements of the Company. We understand that

diversity enrich our human capital and strengthen the collective

human talent of the Organisation.

We treat employees fairly and with respect irrespective

of their ethnicity, gender, race, religion or age. We maintain a

workplace that is free from harassment or discrimination on

any basis. Therefore, all training programmes are developed

based on employees’ strengths and needs, to enable them to

perform to their highest potential. Rewards are based solely

on competencies, performance, contribution and experience

of each staff member. The reduction in employee turnover is

a strong indication of the employee friendly status and the

increased value generated for our employees.

Among the many examples of diversity at Nawaloka,

the initiatives taken to create a conducive and enabling work

environment for women stands out. We strive to facilitate

women to build a career with us by making Nawaloka a

workplace that facilitates women to work and raise their

families as well. We also prioritise localised recruitment

that contributes to sustainable development of the local

communities.



Gender Equity in Remuneration

Our unbiased remuneration policy rewards people irrespective

of their gender differences, which speak volumes about the

organisational values and human resource ethos.

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

Category 2015/16%

2014/15%

2013/14%

2012/13%

2011/12%

Director 75 73 67 65 60

Managers and

Executives 80 79 77 65 62

Clerical and

Minor Staff 70 68 60 55 45

Nursing 97 96 90 84 80

Medical Officer 85 84 81 83 77

Non-Discrimination

We abide by applicable labour laws and adhere to the

regulatory framework pertaining to human resources. During

the year, there were no incidents of discrimination reported in

our Company.

The following measures are implemented at Nawaloka

to facilitate equal opportunity and non-discrimination.

zz A strong value system that ensures every employee is

provided with equal opportunities.

zz A performance driven culture where rewards are based

on merit.

zz Continuous training and rewards for management staff

to effectively implement a zero tolerance policy on

discrimination.

zz A Grievance Management Committee to resolve grievances.

zz A whistle-blower policy to address grievances in a timely and

appropriate manner.

Adhering to Human Rights

Nawaloka fully supports basic principles of human rights

and has implemented a number of practices throughout the

Company to support these principles. These include freedom

of association, right to collective bargaining, elimination of

child labour and sexual harassment. In addition, we follow best

practices on working hours, minimum working age limit and

health and safety measures at the workplace.

We also offer equal opportunities in recruitment,

development and retention of human resources and adhere

to the relevant national regulations concerning employees

and their interests.

Suggestions Received by Year

Category 2015/16 2014/15 2013/14 2012/13

Organisation Oriented 218 195 176 184

Employee Oriented 281 280 282 264

Patient Oriented 326 318 267 249

825 793 725 697

2012/13 2013/14 2014/15 2015/16

Suggestions Received (by Year)

0

70

140

210

280

350

OrganisationOriented

EmployeeOriented

PatientOriented

During the year under review, the security personnel were

trained on human rights policies, relevant to their operations.

Nawaloka being a healthcare Organisation, all operations

have been subject to human rights assessment. The medical

suppliers who entered into a business agreement with

Nawaloka during the year were assessed on their adherence

to human rights principles.

Child Labour

We do not engage children in employment. As a general

practice, person below the age of 18 years are not employed

in any of our companies. The Human Resource Recruitment

Policy has been communicated to all employees to prevent

child labour. We do not engage with business associates and

suppliers who engage child labour in their businesses.

The HR Department has imposed stringent screening

procedures to avert recruitment of individuals below 18 years

to the Organisation. Therefore, documents such as Grama Niladari certificates, police reports, referees reports, character

certificates and educational certificates are scrutinised prior to

recruitment.

No grievances pertaining to human rights were recorded

during the year under review.



BUSINESS PARTNER CAPITAL

As the hospital of tomorrow we ensure that we possess

the best possible solutions in managing Nawaloka’s vendors

and partners.

Nawaloka attracts the highest number of visiting

consultants of all private sector hospitals in the country.

They make an important contribution to the Company by

providing superior professional inputs to patient care and

treatment. Their presence also enhances our standing and the

portfolio of services we provide to the patients. Hence we are

committed to furthering mutual prosperity in establishing,

strengthening and growing our relationships with the

Company’s business partners.

The suppliers are responsible for the timely provision

of goods and services that meet the stringent quality

requirements of our Company. The Hospital’s close

engagement with suppliers helps to keep the enterprise

operating smoothly.

As illustrated in the diagram below, the business partners of

Nawaloka, mainly comprise visiting consultants and suppliers.

Business Partners

Suppliers

Consultants

Consultants

To address issues and streamline operations pertaining to

consultants, we have a feedback form process and arrange

weekly meetings between consultants and senior management.

2015/16 2014/15 2013/14 2012/13 2011/12

Consultants 369 365 314 295 289

Suppliers

Pharmacy 199 164 147 128 115

General 376 255 235 226 215

VisitingConsultants

Suppliers –Pharmacy

Suppliers –General

400

300

200

100

0 2011/12 2012/13 2013/14 2014/15 2015/16

Growth in Consultants and Suppliers (Nos.)

Average Length of Relationships

2015/16 2014/15 2013/14 2012/13 2011/12

Consultant 7 Years 6 Years 6 Years 4 Years 3 Years

Suppliers

Pharmacy 16 Years 16 Years 15 Years 13 Years 13 Years

General 10 Years 9 Years 8 Years 6 Years 5 Years



‘Sethkam Ayudhaya’ ^ie;alï wdhqOh& was a metallic tool that was used in ancient days to perform surgeries.


SOCIAL AND ENVIRONMENTAL CAPITAL

The Society

As the pioneering healthcare institution in the country, Nawaloka

embrace many responsibilities towards the society at large. We ensure

that our organisation conduct business in a responsible manner minimising

the impact on the local community and the environment. We strongly

believe the value we create for ourselves is linked with the value we

create for others.

Nawaloka and Local Communities

Since its inception Nawaloka has prioritised corporate accountability and

social responsibility.

We understand that sustainable national development is achieved by

social development and the empowerment of communities and individuals.

Therefore, Nawaloka has a portfolio of sustainable CSR activities to

deliver a meaningful value and uplift the people and communities across

the country. These are conducted with the participation of the employees

who are encouraged to be generous with their time, effort and talent in

serving the community.

115

110

105

100

95

90 2011/12 2012/13 2013/14 2014/15 2015/16

CSR Project Investment (%)

‘Nawaloka Sathkara’ – Our CSR Engine

‘Nawaloka Sathkara’ is our flagship CSR programme focused on providing

specialised water filtering systems, water tanks and fittings to rural schools

in areas afflicted by chronic kidney disease.

Kidney disease is prevalent due to high fluoride content in ground

water and the exposure of the farming communities to inorganic pesticides

and fertilizers. We organise awareness campaigns to raise awareness of

these problems. These efforts are in keeping with our mission of providing

best healthcare and continually striving to serve the society in the most

effective and professional manner.

Promoting Health through Sanitation Care

Proper sanitation facilities are important for the health and hygiene of

people. During the year in review, we provided sanitation facilities to three

schools, namely, Baduraliya Vidyalaya, Bolluna Vidyalaya and Hedigolla

Vidyalaya which are located in remote areas of Sri Lanka. These schools

were in critical need for proper sanitation facilities and the facilities were

provided and upgraded under the ‘Nawaloka Sathkara’ programme.

Promoting Education Towards a Better Future

Children in certain areas in the Anuradhapura District have poor access to

education. They need the assistance from the Government and external

parties to obtain a proper education. Identifying this need, the ‘Nawaloka

Nawaloka has a portfolio of sustainable CSR activities to deliver a meaningful value and uplift the people and communities across the country

‘Nawaloka Sathkara’ is our flagship CSR programme focused on providing specialised water filtering systems, water tanks and fittings to rural schools in areas afflicted by chronic kidney disease

‘Nawaloka Sathkara’ programme donated stationary and school bags to impoverished children

In order to minimise pollution caused by our operation, we continuously upgrade our equipment to use energy-efficient latest technology



Sathkara’ programme donated stationary and school bags

to 125 children of the Lunuwetiyawea Daham Vidyalaya in

Kebithigollewa, which were sufficient for a whole year.

Nawaloka extended their care towards the community by

continuing to conduct free medical camps in rural and suburb

areas in the country.

Compliance

Healthcare deals with patients. Hence, it is a sensitive area

associated with a high level of risk. Therefore, it is important

to identify the related risks and respond effectively. Nawaloka

has assessed the associated risks in all its operations and taken

appropriate measures to mitigate.

No legal actions were taken against Nawaloka for anti-

competitive behaviour, anti-trust and monopoly practices

during the year in review. Neither were there incidents of

non-compliance with relevant laws and regulations.

Indirect Economic Impact

The entry of Nawaloka Hospitals into the state-dominated

healthcare sector paved the way for the private healthcare

system take root in Sri Lanka. Mirroring reputed hospitals

in the region, Nawaloka offer advanced medical technology

and expert medical care to the people of Sri Lanka. This has

eliminated the need for people to travel out of the country

for specialised medical treatment, resulting in the saving of

substantial foreign currency outflows from Sri Lanka.

Simultaneously, Nawaloka is positioned to reap the benefits

of medical tourism in the nation. As a hospital that offers most

advanced medical technology, and excellent medical care on

par with reputed hospitals in the region at an affordable price,

there is an increased number of foreign nationals who obtain

medical treatment from us. This has become valuable foreign

currency generator for the country.

We make a significant contribution to uplift the nursing

standards in Sri Lanka. The skills and competencies of the

nurses are developed through our Nurses Training School.

Public awareness campaigns are conducted by our expert

panel of consultants on contemporary diseases, possible

precautionary methods and treatment. These are conducted

by way of medical camps and television programmes. Several

medical and awareness camps were conducted during the

year in numerous companies to ensure a hazard free work

environment.

The Environment

We use materials, energy, electricity and water in our

operations and emit waste and other effluents to the

environment. Hence, responsible consumption and disposal

of these aspects are critical to ensure sustainability of our

enterprise and all the stakeholders.

Materials

Nawaloka does not manufacture any line of product or

ancillary items it uses, in the provision of premium healthcare

services. All the required raw materials are sourced from other

companies and most materials are sourced locally without

resorting to expensive foreign imports.

We have built a reliable network of local suppliers. By

imparting technical know-how we help them to upgrade their

manufacturing skills so that they continue to meet our exacting

quality standards. We only engage reputed suppliers who are

able to meet our high quality standards.

Energy

Nawaloka is a high energy intensive company. Since it’s a 24/7

operation, the demand on energy is considerably high. Energy

use results energy waste which could cause pollution if not

disposed in an appropriate manner, either by reusing for a

value adding purpose.

Social and Environmental CapitalManagement Discussion and Analysis


Although healthcare industry causes the least amount of

pollution in comparison to other industries, as a responsible

company, we need to constantly minimise pollution caused

by our operations. In order to achieve this, we continuously

upgrade our equipment to use energy-efficient latest

technology. Inter departmental competitions are organised by

us on efficient management of energy.

Since ours is a 24/7 operation, we have been consciously

reviewing and addressing energy conservation methods across

our operations. Given below are some of the measures adopted

to effectively manage energy consumption.

zz Energy Leader

The Hospital has appointed an ‘Energy Leader’ for each high

energy consumption unit with authority to take appropriate

action and implement effective methods to manage energy

consumptions. They are rewarded for their efforts and the

results.

zz Automatic Damper System

An automatic damper system was installed in the channelling

rooms which resulted in the reduction in the energy cost as

given below:

Monthly Saving by using automatic dampers (102 Nos.)

Total cost without using Dampers - Rs. 3,608,842/-

Total cost with Dampers - Rs. 1,443,535/-

Monthly Savings by using Dampers - Rs. 2,165,305/-

zz Air Conditioners

All the gas, split and window type air conditioners in the

hospital were converted to the chill water system. The monthly

energy use decreased by 14% from Kwz1590 to Kwz1818 as

a result. All the air-conditioning units were set at a constant

minimum of 25oC.

zz Intelligent Automatic System and LED Lighting

Sensor lights and LED bulbs were fixed in certain high energy

consuming locations such as the ground-floor reception and

lobby area.

zz LED TV

All the CRT televisions were replaced with new LED televisions

in the entire Hospital.

In addition, we implemented several other measures

to conserve energy. They include conducting awareness

campaigns and training on conservative energy consumption

for employees, promoting energy conservation through

sign boards and announcements. One such measure was

programming the computers to revert to standby mode in five

minutes. Our new car park building is designed to derive the

maximum benefit from natural light and adopt energy-efficient

building codes. In addition to conducting annual energy audits,

a building management system has been introduced for

efficient control of energy consumption. We plan to introduce

an intelligent automatic system in the ensuing year which

would contribute towards energy conservation.

Electricity

Monthly Electricity Consumption against Revenue 2011-2016

2015/16Rs.

2014/15Rs.

2013/14Rs.

2012/13Rs.

2011/12Rs.

Apr-15 632.02 525.68 515.79 517.39 426.13

May-15 626.74 540.37 548.70 506.52 392.08

Jun-15 683.25 560.20 640.49 585.57 463.86

Jul-15 708.83 543.30 598.35 622.32 475.06

Aug-15 659.21 611.00 578.18 556.92 450.30

Sep-15 716.01 563.75 592.16 562.19 489.09

Oct-15 754.49 594.89 556.33 543.35 463.51

Nov-15 808.54 713.76 528.05 561.84 496.36

Dec-15 848.22 697.81 651.39 608.76 567.71

Jan-16 806.36 659.54 606.74 635.07 568.91

Feb-16 795.10 687.27 622.86 553.51 480.81

Mar-16 716.92 629.18 526.24 495.07 503.82

Water

The water consumption of Nawaloka is very high. Water is

used for a range of activities in its daily operations, including

sanitation, heating, ventilation, air-conditioning, food

preparation, laundry and many others. The two main sources of

water for the Hospital are well and pipe-borne water. The latter

is from the national water supply.

The Hospital has adopted several measures to reduce the

consumption of water.

To generate a behavioural change in employees to conserve

water, charts were displayed in departments tracking monthly

water usage. We raised awareness and displayed notices to

make employees conscious about saving water.

Sensor taps were installed in public areas and solar power

to generate hot water in patient rooms. A sewerage plant was

installed in the Negombo hospital to optimise waste water.

The Maintenance Department checks for leaks each

week to reduce water wastage and we have installed highly

efficient equipment to minimise evaporation of water from

cooling towers.

Emissions

We make a conscious effort to minimise emissions from our

operations. Many green concepts have been adopted in the

Hospital to reduce our carbon footprint.

We also upgrade machinery and systems to make our

operations efficient. In addition, incinerators are used to

dispose of medical waste without the emission of harmful

gases. We are pleased to state that our activities do not result

in the emission of Nitrogen Dioxide or Sulfur Dioxide.

Social and Environmental Capital Management Discussion and Analysis


EffluentsandWaste

Systematic waste disposal is imperative for Nawaloka. Given

the nature of its operations, high amounts of medical waste

get generated daily. Therefore, Nawaloka have installed a

state-of-the-art waste disposal system to dispose waste in a

safe and responsible manner. The Standards Department of the

Hospital continuously engages in upgrading the technology to

minimise waste.

A garbage separation system enables to dispose waste

responsibly. Nawaloka are moving towards a paperless office

environment, which substantially reduces the use of paper.

Using recyclable paper bags, recycling print cartridges also

contribute towards the Company’s efforts of minimising waste.

The employees are regularly trained on safe practices and

the proper handling of hazardous material. Implementing the

‘5S’ concept has contributed towards increasing the efficiency

of Nawaloka’s operations.

The different categories of waste generated by Nawaloka

Hospital are as follows:

Clinical Waste

Potentially dangerous and carry a high risk of infection to the

general public and employees.

Laboratory Waste

Includes chemicals used in the pathological laboratory,

microbial cultures and clinical specimens, slide, culture

dish, needle, syringes, as well as radioactive waste such as

Iodine-125, Iodine-131 etc. These are high in risk as well.

Non-clinical Waste

Includes organic material, paper, polythene or plastic, which

have not been in contact with the body fluid of a patient.

Kitchen Waste

Includes food waste and waste water used for food

preparation. They breed pests and therefore, pose an indirect

potential hazard to employees and patients.

Monthly Insulator Details (Inclusive of the Lab, Negombo Hospital and the Medical Centre)

Waste Kg.

Diesel Ltr.

Per L/per Kg

Apr-15 7,235 2,614 2.77

May-15 7,265 2,616 2.78

Jun-15 7,300 2,652 2.75

Jul-15 7,325 2,640 2.77

Aug-15 7,460 2,688 2.78

Sep-15 7,110 2,562 2.78

Oct-15 7,375 2,658 2.77

Nov-15 7,160 2,580 2.78

Dec-15 7,225 2,601 2.78

Jan-16 7,360 2,652 2.78

Feb-16 7,060 2,544 2.78

Mar-16 7,225 2,601 2.78

Social and Environmental Capital

1993

Nawaloka Hospitals is the nationally recognised

leader in medical care. Embracing medical,

surgical and technological innovations, we offer

breakthrough treatments to our patients. This has

made Nawaloka Hospitals the place to turn to for the

best, most current treatments in Sri Lanka.

Here are some of the ground breaking innovative

treatments we introduced to our nation –

1993 - First Minimally Invasive Laparoscopic

Surgery in Sri Lanka

1994 - First Coronary Artery Bypass Surgery

Unit in a private hospital

2011 - First ever lung transplant in Sri Lanka

2015 - First bone marrow transplant in Sri Lanka



BOARD OF DIRECTORS

STEWARDSHIP

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

Mr. Jayantha Dharmadasa has been a Director of the Company since 1985. He is a businessman by profession and counts over 39 years of experience in Executive Management and 30 years in the healthcare industry. He is a Fellow Member of the Institute of Certified Professional Managers (FCPM).

He is the Chairman/CEO of Nawaloka Hospitals PLC. He is also the Chairman of Nawaloka Holdings (Pvt) Ltd., Nawaloka Aviation (Pvt) Ltd., Nawaloka Polysacks Sharjah., Sasiri Polysacks (Pvt) Ltd., Nawaloka Construction Company (Pvt) Ltd., Nawaloka Trading Co. Ltd., Nawaloka Petroleum (Pvt) Ltd., Koala (Pvt) Ltd.,New Ashford International (Pvt) Ltd., New Nawaloka Hospitals (Pvt) Ltd., Nawaloka Medical Centres (Pvt) Ltd., New Nawaloka Medical Centre (Pvt) Ltd., Nawaloka Medicare (Pvt) Ltd., Nawaloka Metropolis Laboratories (Pvt) Ltd., Outstanding Song Creators’ Association (OSCA), Cinestar Foundation and Nation Lanka Finance PLC., Nawaloka Hospitals International (Pvt) Ltd., Nawaloka Engineering (Pvt) Ltd., International Medical Institute (Pvt) Ltd., Ceyoka (Pvt) Ltd., Nawaloka College of Higher Studies (Pvt) Ltd., East West Marketing (Pvt) Ltd., Nawaloka Steel Industries (Pvt) Ltd., Millennium Housing Development (Pvt) Ltd., Nawaloka Guardian International (Pvt) Ltd., Waves Destinations (Pvt) Ltd., Nawaloka Air Services (Pvt) Ltd., Nawaloka Agri (Pvt) Ltd., Nawaloka MEP Concept (Pvt) Ltd., Ceyoka Overseas (Pvt) Ltd.

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

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

Independent Non-Executive Director and Vice-Chairman

Mr. Rienzie T. Wijetilleke has been a

Director of the Company since 2003 and

appointed as Vice-Chairman in August 2011.

He is a Fellow of the Chartered Institute of

Bankers, United Kingdom and also Fellow

of the Institute of Bankers, Sri Lanka and

Companion of the Chartered Management

Institute, UK.

In late 2010, Mr. Wijetilleke completed

50 years as a Practicing Banker and in 2011

retired from the position of Chairman, HNB.

He is a past chairman and Director of the

Colombo Stock Exchange.

He is also the settlor and the main

trustee of ‘The Rehabilitation of Buddhist

Temples Foundation’ (incorporation) Act

No. 17 of 2014.

Professor Lal Gotabhaya ChandrasenaDirector/General Manager, Executive Director

Professor Chandrasena has been a Director

of the Company since 2003. He is a Clinical

Biochemist by profession and counts

24 years of University Academic Service

and 28 years experience in Hospital and

Healthcare Administration and Laboratory

Sciences. He is the Emeritus Professor

of Biochemistry and Clinical Chemistry,

Faculty of Medicine, University of Kelaniya.

Professor Chandrasena has a Doctorate

in Philosophy from the University of

Liverpool (UK), a Bachelor of Science

(Hons.) from the University of Liverpool

(UK). Fellow of the Institute of Chemistry,

Ceylon and is a Chartered Chemist. Fellow

of Royal Society of Chemistry (UK) and

Fellow of the National Academy of Sciences

of Sri Lanka, Post-Doctoral Fellow, Colorado

State University, USA.

He is also a Fellow Member of

the Institute of Certified Professional

Managers and hold a certificate in Hospital

Administration from the Indian Institute

of Management, Ahmedabad. He is also a

Director of Nawaloka Medicare (Pvt) Ltd.,

Nawaloka Hospitals International (Pvt) Ltd.,

Nawaloka Metropolis Laboratories (Pvt)

Ltd., Nawaloka College of Higher Studies

(Pvt) Ltd. and Non-Executive Director of

Sri Lanka Insurance Corporation Ltd.

He is presently the President of the

Association of Private Hospitals and

Nursing Homes, and a member of the

Private Health Services Regulatory

Council – Ministry of Health.

Stewardship


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

Senior Independent Non-Executive Director

A well-known figure in the Sri Lankan

business community, Tilak de Zoysa,

FCMI (UK) FPRI (SL), Honorary Consul

for Croatia and Global Ambassador for

HelpAge International was conferred the

title of ‘Deshabandu’ by His Excellency

the President of Sri Lanka in recognition

of his services to the country and was the

recipient of ‘The Order of the Rising Sun.

Gold Rays with Neck Ribbon’ conferred by

His Majesty the Emperor of Japan.

In addition to being the Chairman of the

Supervisory Board and Advisor to the

Al-Futtaim Group of Companies in

Sri Lanka, he Chairs Carsons Cumberbatch

PLC, Associated CEAT (Pvt) Ltd., Amaya

Hotels and Resorts USA (Radisson), AMW

Capital Leasing and Finance PLC, Jetwing

Zinc Journey Lanka (Pvt) Ltd. and HelpAge

Sri Lanka, Trinity Steel (Pvt) Ltd., CG Corp

Global Sri Lanka.

He is also the Vice-Chairman of Ceat

Kelani Holdings (Pvt) Ltd., Orient Insurance

Ltd., and serves on the Boards

of several listed and private companies

which include John Keells PLC, Taj Lanka

Hotels PLC, TAL Hotels and Resorts Ltd.,

Lanka Walltiles PLC, Nawaloka Hospitals

PLC, Dutch Lanka Trailer Manufacturers

(Tata Group), Associated Electrical

Corporation Ltd., Inoac Polymer

Lanka (Pvt) Ltd.,Cinnovation INC., GVR

Lanka (Pvt) Ltd. and Varun Beverages

Lanka (Pvt) Ltd. (Pepsi).

Deshabandu Tilak de Zoysa is a

past Chairman of the Ceylon Chamber

of Commerce, the National Chamber

of Commerce of Sri Lanka, HelpAge

International (UK) and served as Member

of the Monetary Board of Sri Lanka

(2003-2009).

Mr. Tissa K. Bandaranayake FCA, BSc

Senior Independent Non-Executive Director

Mr. Tissa K. Bandaranayake joined the

Company as a Director in 2009. He is

a Fellow of The Institute of Chartered

Accountants of Sri Lanka and graduated

with a BSc from the University of Ceylon.

He has more than 45 years of

commercial and professional experience.

He was with Ernst & Young, Sri Lanka for

27 years until retirement as a Senior Partner

in April 2009, managing a large portfolio

of clients both local and multinational in

various industries.

He is a Director of Brown & Co. PLC,

Samson International PLC, Laugfs Gas PLC,

Harischandra Mills PLC, Renuka Foods PLC,

Renuka Holdings PLC, Overseas Reality

(Ceylon) and Micro Holdings (Pvt) Ltd.

Also serves as an Advisor/Consultant to

the Board of Directors of Noritake Lanka

Porcelain (Pvt) Ltd.

Mr. Bandaranayake was a past Chairman

of the Audit Faculty of The Institute of

Chartered Accountants of Sri Lanka and a

past president of the Practicing Chartered

Accountants Forum.

Mr. Bandaranayake is also a Vice-

President of National Stroke Association of

Sri Lanka, Member of Rotary International

Finance Committee 2013-2016 and Rotary

International District Governor for Sri Lanka

1999-2000.

He currently serves as the Chairman

of the Quality Assurance Board of

Sri Lanka comprising representatives

of the private sector and regulators.

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

Independent Non-Executive Director

Mr. D. Sunil AbeyRatna counts over

40 years of experience in the fields of

Finance, Audit and Tax. He is a Fellow of

The Institute of Chartered Accountants

of Sri Lanka, The Institute of Management

Accountants of UK and Certified

Management Accountants of Sri Lanka.

He is also a Member of the Certified

Management Accountants of Australia and

has a Doctorate in Philosophy from the

University of Honolulu, USA.

He is the sole proprietor of AbeyRatna

& Company – Chartered Accountants and a

Director of AGN International Ltd. UK, which

is the 4th largest Independent Accounting

Association in the World based in over 108

countries and 478 office locations.

He is also a Director of KBSL

Information Technologies Ltd., East West

Properties PLC, Rosewell Investment (Pvt)

Ltd., Eastern Brokers (Pvt) Ltd., Carplan

Ltd. and KIA Motors (Lanka) Ltd., and the

Managing Director of Lankem Tea & Rubber

Plantations (Pvt) Ltd.

Stewardship Board of Directors


Mr. Ugitha Harshith DharmadasaExecutive Director

Mr. Harshith Dharmadasa has been a

Director of the Company since 2000.

He has 21 years of experience in Executive

Management.

He is the Chairman of Millennium

Housing Developers PLC, Managing Director

of Ceyoka (Pvt) Ltd., Nawaloka Trading

(Pvt) Ltd., Nawaloka Agri (Pvt) Ltd., Ceyoka

Engineering (Pvt) Ltd., Nawaloka Mep

Concepts (Pvt) Ltd., Koala (Pvt) Ltd., and

Ceyoka Overseas (Pvt) Ltd.

Mr. H. Dharmadasa is also a Director of

Nawaloka Holdings (Pvt) Ltd., Nawaloka

Hospitals PLC, New Nawaloka Hospitals

(Pvt) Ltd., Nawaloka Hospitals International

(Pvt) Ltd., Nawaloka Engineering (Pvt) Ltd.,

Nawaloka Aviation (Pvt) Ltd., International

Medical Institute (Pvt) Ltd., Nawaloka

College of Higher Studies (Pvt) Ltd., East

West Marketing (Pvt) Ltd., Nawaloka

Petrolium (Pvt) Ltd., Nawaloka Guardian

International (Pvt) Ltd., Nawaloka Air

Services (Pvt) Ltd., Nawaloka Construction

Co. Ltd., Nawaloka Medicare (Pvt) Ltd.,

Nawaloka Metropolis Clinical Laboratories

(Pvt) Ltd., Nation Lanka Finance PLC,

Sasiri Polysacks (Pvt) Ltd., Melvin Wirenail

Industries (Pvt) Ltd., Ceyoka Exports (Pvt)

Ltd. and Concord Ventures Exports

Lanka (Pvt) Ltd.

Mr. Anisha Givantha DharmadasaExecutive Director

Mr. Anisha Dharmadasa has been a Director

of the Company since 2000. He has 19 years

of experience in Executive Management.

Mr. Anisha Dharmadasa is the Chairman

of Sikure Security Services (Pvt) Ltd.,

Director of Nawaloka Medical Centre

(Pvt) Ltd., Ceyoka (Pvt) Ltd., Waves

Destinations (Pvt) Ltd., Nawaloka Holdings

(Pvt) Ltd., Nawaloka Hospitals PLC,

Nawaloka Hospitals International (Pvt)

Ltd., Nawaloka Engineering (Pvt) Ltd.,

International Medical Institute (Pvt) Ltd.,

Nawaloka College of Higher Studies (Pvt)

Ltd., East West Marketing (Private) Ltd.,

Nawaloka Petroleum (Pvt) Ltd., Nawaloka

Guardian International (Pvt) Ltd., Nawaloka

Air Services (Pvt) Ltd., Concord Ventures

Exports Lanka (Pvt) Ltd., Nawaloka

Medicare (Pvt) Ltd., New Nawaloka Trading

(Pvt) Ltd., Nawaloka Trading (Pvt) Ltd.,

Nawaloka Construction Co. Ltd., Nawaloka

Aviation (Pvt) Ltd., Nawaloka Professional

Academy (Pvt) Ltd., Quincy (Pvt) Ltd., Sasiri

Polysacks (Pvt) Ltd., and Melvin Wirenail

Industries (Pvt) Ltd.

Ms. Ashani Givanthi DharmadasaExecutive Directress

Ms. Givanthi Dharmadasa has been a

Directress of the Company since 2003

and has 15 years experience in Executive

Management.

She is a Directress of Nawaloka

Holdings (Pvt)Ltd., Nawaloka Hospitals PLC,

Nawaloka Engineering (Pvt) Ltd., Nawaloka

Medicare (Pvt) Ltd., East West Marketing

(Pvt) Ltd., Nawaloka Guardian International

(Pvt) Ltd., Nawaloka Air Services (Pvt) Ltd.,

Redline Services(Pvt) Ltd., Redline Design

& Printing (Pvt) Ltd. Redline International

(Pvt) Ltd., Nawaloka Professional Academy

(Pvt) Ltd., Nawaloka Aviation (Pvt) Ltd.,

Sasiri Polysacks (Pvt) Ltd. and Melvin

Wirenail Industries (Pvt) Ltd.

StewardshipBoard of Directors


Mr. Victor R. RamananNon-Executive Director

Mr. Victor Ramanan is a BSc Graduate and

holds a Diploma in Software Engineering,

Business Admin. & Sales Techniques (UK).

He is a versatile marketer and

administrator with more than 28 years

of hands on experience working in many

countries including United Kingdom,

Kuwait, Dubai, Bahrain, Germany, France,

USA and Sri Lanka. He has worked in areas

such as IT, HR, Marketing and Business

Development of which more than 17 years

has been in the fields of Oil, Gas and

Logistics sectors.

Presently holds positions as a Director

and Chairman in the under mentioned

companies:

- Adventus Education (Pvt) Ltd. – Chairman

- Nawaloka Hospitals PLC – Director

- Nation Lanka Finance PLC – Director

- Nawaloka College of Higher Studies

(NCHS) – Deputy Chairman

- Millennium Housing Developers PLC –

Non-Executive Director/Deputy Chairman

- Ideal Getaways (Pvt) Ltd. – Director

Mr. Palitha Kumarasinghe PCIndependent Non-Executive Director

Mr. Palitha Kumarasinghe is leading

President’s Counsel specialised in civil

commercial litigations. He was enrolled as

an Attorney-at-Law on 27th September

1982. He had his education at Mahinda

College, Galle and thereafter, entered to

Sri Lanka Law College in 1979. Having

devilled in the Chambers of Mr. Romesh de

Silva, President’s Counsel, Mr. Kumarasinghe

is now in active practise in the District

Court of Colombo, Commercial High Court

of the Western Province and the Superior

Courts. He has an extensive commercial law

practise and he is the Counsel for a large

number of Banks and Finance Houses.

He was a Vice-President and Executive

Committee Member of Bar Association and

Chairman of Various committees inclusive

of National Law Conference, Ethics and

Professional Conduct and Continuing Legal

Education. He was once the President

of Colombo Law Society.

He served in the Public Service

Commission for a period of six years and

was a member of Council Legal Education

(2010-2015) and its Board of Studies,

Chairman of Environment Council (2010-

2013), a member of Advisory Commission

on Intellectual Property (2001-2004).

He also served as the Chairman of

Disciplinary Committee of Sri Lanka Cricket,

since 2012, the Chairman of Legal Advisory

Committee in 2012-2015 and the Chairman

of the Governance Committee (2012).

He is an Independent Non-Executive

Director of Laugfs Gas PLC, since 2012.

Stewardship Board of Directors


Mr. Kanishka WarusavitaranaSenior Manager – Operations

Mr. Kanishka Warusavitarana is a member

of the Association of Accounting

Technicians, Sri Lanka. He joined

Nawaloka Hospitals in 1988. He has

8 years experience in a reputed firm of

Chartered Accountants and 28 years

experience in the Healthcare Industry.

SENIOR MANAGEMENT TEAM

Ms. G. WarusavithanaChief Nursing Officer

Ms. G. Warusavithana Graduated as a

Staff Nurse from the Nurses Training

School, Galle. Postgraduated in

Post-Basic School of Nursing, Colombo.

Qualified in Midwifery Diploma in

Nursing Administration, Management

and Supervision, Maternal and child

health international special training

in Khon Kaen University – Thailand

and Neurosurgery special training in

Fujitha University – Japan, Accident and

Emergency special training at Royal

Hospital – Oman. She Has over 40 years

experience in the State Sector, Overseas

and Private Sector.

Mr. Chaminda RupasenaManager – Human Resources/Administration/Training

Mr. C. Rupasena is a holder of BSc.

Business Administration (Human

Resources Management) Special Degree

at the University of Sri Jayewardenepura.

He is an Attorney-at-Law, Notary Public,

Commissioner of Oaths and registered

Company Secretary. He is also a holder

of Diploma in Psychological Counselling

and possess over 12 years of experience

in Human Resources Management.

Dr. Uthpala Malawara Arachchi Medical Superintendent

Dr. Uthpala Malawara Arachchi

graduated with MBBS from Faculty

of Medical Sciences, University of

Sri Jayewardenepura in 2002.

He holds MSc in Medical

Administration awarded by the

Postgraduate Institute of Medicine and

a Diploma in Occupational Health and

Safety from the University of Colombo.

He has served as a Medical Officer-in-

Charge in many Government institutions.

From 2007 to 2009, he was

attached to the National Health Service,

United Kingdom in the field of Medical

Administration.

He joined Nawaloka Hospitals as a

Medical Superintendent in 2014. He has

over 14 years experience in Clinical and

Medical Administration.

Mr. Indika Prasath BalasuriyaHead of Information Technology

Mr. I.P. Balasuriya has obtained the MSc

in IT – University of KEELE (UK) in 2005

and a member of BCS, CSSL & CPM.

He has also followed NIBM Diploma

in IT. He has over 18 years experience

in the fields of Project Management,

ERP Project Consulting, Application

Development, Implementation and User

Training. He also has working experience

with multinational companies. He joined

Nawaloka Hospitals in 2008.

Stewardship


Mr. Lakmal Sooriyapperuma

Head of Marketing

Mr. Sooriyapperuma has over 18 years

experience in Marketing/International

Trade and Business Development. He

has obtained the Masters in Business

Administration from University of

Wales in UK.

Mr. M.D. AriyawansaSenior Co-ordinating Officer

Mr. M.D. Ariyawansa obtained his

Diploma in Business Management

from the National Institute of Business

Management in 1983 and joined Nawaloka

Hospitals in 1985 as an Executive Officer

and worked in several business units of

the Hospital. He has obtained a Certificate

in Hospital Management from Japan

Overseas Health Administration Centre,

Yokohama in 1999. He is presently the

Senior Co-ordinating Officer responsible

for Co-ordinating Public Relations

functions of the strategic business

units. He has 31 years experience in the

Healthcare Industry.

Mr. Upatissa MannapperumaSenior Co-ordinating Officer and Maintenance Manager

Mr. Upatissa Mannapperuma obtained

his National Certificate of Technology

from the University of Moratuwa in

1980 and joined Nawaloka Group of

Companies, Construction Division and in

1983, he joined the Maintenance Division

of Nawaloka Hospitals. He is certified

in Hospital Management from Japan

Overseas Health Administration Centre,

Yokohama in 1995. He has 31 years

experience in the Healthcare Industry.

Mr. A.A. WeraniyagodeElectrical and Mechanical Engineer

Mr. A.A. Weraniyagode has obtained

a Diploma on Refrigeration & Air-

conditioning from City & Guilds Institute

of London in 1983. He has a work

experience of 25 years as a Maintenance

Engineer in the Hotel Trade in Sri Lanka

and overseas. He joined Nawaloka

Hospitals in 2009 as an Electrical and

Mechanical Engineer.

Mr. Anura SamaradiwakaraSenior Co-ordinating Officer

Mr. Samaradiwakara is working as

Senior Co-ordinating Officer of

Nawaloka Hospitals since 2003 and he

has more than 35 years experience in the

service sector.

Mr. Nalaka NiroshanaHead of Finance and Corporate Planning Unit

Mr. Nalaka Niroshana is an Associate

Member of the Chartered Institute of

Management Accountants – UK and

Associate Member of Chartered Global

Management Accountants, Member

of Certified Professional Manager

and is a Graduate from University

of Sri Jayewardenepura. He joined

Nawaloka Hospitals in 2011 and has

over 9 years executive experience in

Diversified Conglomerates in Sri Lanka.

Stewardship Senior Management Team


EXECUTIVE CLINICAL MANAGEMENT TEAM

Dr. Maiya GunasekeraMBBS, FRCS (Eng), FICS, FRCS (Ed), MS (Surgery)

Consultant SurgeonGeneral Surgery/Gastroenteroscopy/Laparoscopy and Endoscopy Consultant in-charge of Surgical Service

Dr. Hemant Digambar WaikarMBBS, MS, DA (ANAE), PDCC, (Cardiac and Neuroanaesthesia)

Consultant Cardiac Anaesthetist

Dr. Sandeep K. SharmaMD (Anaesthesiology)

Consultant Cardiac Anaesthetist and Intensivist

Dr. V.I. TennekoonMBBS, MD, FRCP, FRACP, FCCP

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

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

Consultant Physician and Physician- in-Charge Ward Medical Services

Stewardship

Dr. A.G. JayakrishnanMS, FRCSI, FRCS (CTh)

Chief Cardiothoracic, Vascular and Transplant Surgeon

Dr. (Mrs.) Roshan Z ZaidMBBS (Cey), MRCOG (UK), DFSRH (UK),

FMAS (Delhi), UK Board Certified

Consultant Obstetrician, Gynaecologist and Laparoscopic Surgeon

Dr. Chandana Kanakaratna Consultant Geriatrician (Geriatric Physician) MBBS (SL), MD (SL), FRCP (LONDON), MSC Geriatric Medicine (UK), Diploma in Geri. Med. (London), Diploma in Geri. Med. (Glasgow)Board Certification in General Medicine (SL) CCT General Medicine (UK), CCT Geriatric Medicine (UK)

Consultant Physician

77Annual Report 2015/16 Nawaloka Hospitals PLCStewardship

Dr. Punsith GunewardeneMBBS (Colombo), MS (Colombo)

Consultant Neurosurgeon

Dr. Duminda PathiranaMBBS (Col), DCH (Col), MD (Col), MRCP (UK), MRCP, CH (UK), FCCP

Consultant Paediatrician

Dr. Harindu WijesingheMBBS, MD, MRCP (UK)

Consultant in Rheumatology, Rehabilitation and Sports Medicine, Consultant-in-Charge Nawaloka Pain Management Centre

Dr. Chandima De Mel M.D.FRCP (Lond), FCCP, M. Phil (Lond),

D. Path

Consultant Physician

Dr. D. Maruthini DeivanayagamMBBS, MS (Col), MRCOG (UK), MD (UK), DGO

Consultant Subspecialist in Reproductive Medicine and Surgery, Consultant Obstetrician and Gynaecologist

Executive Clinical Management Team


Clinical Governance Policy

Purpose of the Clinical Governance Standards

The continuous involvement of the healthcare practices, diseases

and ailments had resulted in the requirement of a unified set of

healthcare standards which are on par with the global context.

Therefore our Hospital designs and continuous updates to

clinical standards, controls and processes in order to provide

superior healthcare services to our customers and to be the

leader in the healthcare profession. Our standards ensure that

our managers, clinicians, health professionals and users of

health services are provided with the following assistance:

zz Develop and implement clinical governance processes and

systems within the Hospital.

zz Increase organisational awareness of clinical governance and

contribute to the development and implementation of clinical

governance systems and processes.

zz Assist clinicians and management to embed clinical

governance within the organisational culture.

zz Assist Nawaloka Hospitals PLC to demonstrate improved

accountability for the delivery of safe, high quality healthcare

services through the implementation of clinical governance

systems and processes.

ClinicalGovernanceisDefinedas:

A framework through which the Hospital is able to continually

improve the quality of its services and safeguard high

standards of care by creating an environment in which

excellence in clinical care will flourish.

There are seven key elements to clinical governance. These

are outlined below, along with the mechanisms in use in the

practice to deliver each of the elements and the expectations

that are placed on partners and staff at the Practice.

Education and Training

Towards ensuring retention of capable, skilled and experienced

staff of our existing workforce and continuously expanding

our Human Resources Personnel, the following actions are

considered:

zz Competency Standards: The Hospital must be confident

that the current staff possess adequate skills; experience

and training related to their field, towards undertaking their

responsibilities of their positions within the Hospital. The

Hospital’s Management verifies and approves competencies,

standards and qualifications. This validation process is

in place to justify that the competencies, standards or

qualifications are authentic or evidence-based.

Validation processes at the level of the individual include (but

are not limited to) the following elements:

zz Verifying that the individual is registered or accredited.

zz Verifying that the individual has evidence of Continuing

Professional Development.

zz Continuing Professional Development: This includes the

ongoing and regular education and research activities linked

to the responsibilities and needs of the clinicians employed

by the Hospital.

It is the professional duty of all clinical staff to ensure active

participation in regular Continuing Professional Development

(CPD) to keep their knowledge updated. Medical Officers

(MOs) and the Nursing Staff should be –

zz Engaging in professional support within the workplace in the

context of the Performance Appraisal and Development Plan.

zz Utilising education and training opportunities to demonstrate

ongoing professional development.

zz Engaging in Continuing Professional Development through

an accreditation programme.

All clinicians are expected to document their learning for the

purpose of individual learning portfolios. Following any external

CPD paid for by the Hospital, MOs and nurses are expected to

share their learning with colleagues, either formally in clinical

or nurse team meetings, documentation or through informal

means. It is the responsibility of each clinician to ensure

that any urgent updates are brought to the attention of all

colleagues to whom the information is relevant immediate after

the learning event.

MOs have a responsibility to support the nursing team

through formal teaching sessions, on the job learning and other

forms of disseminating knowledge. The Hospital will arrange a

clinical meeting each month at which one of the functions is to

allow clinicians with specialised knowledge to share updates

with the rest of the clinical team.

It is recognised that non-clinical staff also need to update

their skills regularly in order to support the delivery of high

quality medical services.

Clinical Audit

Clinical audit is defined as ‘the systematic measurement and

evaluation of the efficiency and effectiveness of organisational

systems and processes’. Clinical audits analyse the quality

of clinical care outcome, including the procedures used

for diagnosis and treatment, the use of resources and the

adequacy of evaluation of clinical outcome and patient quality

of life. This may refer to:

zz The application of the results of independent international

and local audits to our patient population and the

identification of areas of improvement.

zz The use of case studies to highlight specific issues that

are then generalised within our patient population. The

monthly clinical meeting provides a forum for the purpose of

disseminating results of audits and the exchange of opinions

in improving clinical practice.

CORPORATE GOVERNANCE

Stewardship


These meetings will be held on different days of the week and

will be attended by all MOs and members of the nursing team

who are required to be present. Those clinicians who are not

called to attend meetings may choose to do so in their own

time but in any case the responsibility of raising awareness

at the conclusion of the meeting is vested with the clinician

chairing the meeting.

When appropriate, the meetings will be attended by the

Medical Superintendent (MS) or other senior administrative

staff to aid the process of dissemination and to ensure that any

administrative changes needed to support improvement to the

proposals are carried through. The range of topics covered in

local audits should meet one of the following key criteria:

zz Respond to newly-published local pathways

zz Respond to newly-published national evidence

zz Respond to newly-available drug or other therapy

(if recommended by the relevant Authority)

zz Respond to a clinically significant event or

substantiated complaint

zz Provide a balance across a range of specialties (i.e. clinicians

should not at all focus on a narrow range of conditions)

zz Provide a general update in an area of the clinician’s

own expertise

The MS is designated to:

zz Manage the agenda of clinical meetings.

zz To ensure that the areas selected at clinical meetings meet

the criteria of knowledge transfer.

zz To arrange for a clinical evaluation to be presented on

any topic that is causing particular concern either locally

or more widely.

All papers presented at a clinical meeting should be made

available to participants through respective emails. It is the

responsibility of the clinician presenting the paper to ensure

that this is completed.

Clinical Effectiveness

Clinical Effectiveness is about providing the best evidence-

based care for the patient, whilst making good use of available

clinical resources. Clinicians in the Hospital are expected to

work within formalities, protocols and pathways where these

have been developed for specific conditions. These include:

Clinical standards incorporate clinical guidelines, pathways

and local practice protocols. These standards may be set by

bodies such as the Sri Lanka Medical Council, which is the

authoritative body of the Ministry of Health in setting clinical

standards and the Sri Lanka Medical Association.

Clinical indicators are measures or benchmarks that enable

the Hospital to compare them against similar health services.

To facilitate health system improvement clinical indicators must

be meaningful and reflect clinical practice standards.

In addition, clinicians are expected to read journals and/or

websites regularly to maintain current awareness of best

practice. This should include regular scanning of national

guidelines for changes in recommended practice.

Patient and Public Involvement – Openness

Processes which are open to public scrutiny, while respecting

the individual patient and practitioner confidentiality, are an

essential part of quality assurance.

The Hospital uses various mechanisms to enable patients

and other interested parties to be involved in identifying needs

and improvements. These include Patient Bill of Rights.

zz The Hospital website – promotes regular and ad hoc services,

along with information about the staff, the complaints

procedure and a comment facility.

zz Patient Reference Group – Group representatives of the

Hospital’s demographic make-up conducts annual patient

survey and scrutinizes the Hospital’s response to the views

expressed by patients.

zz Complaints – all patient complaints are analysed regularly for

learning points and for patterns. Complaints about clinical

care are shared immediately with the clinician concerned

and those that give rise to clinical learning points are shared

more widely at a clinical meeting.

zz Suggestions – a suggestion box with forms to complete are

available at the waiting area.

The Hospital aims to co-operate at all times in a spirit of

openness with other healthcare providers, local authority

organisations, and any organisation which has an interest in

our operations.

Risk Management

Risks – to patient, clinicians, other staff and the Organisation

as a whole – are managed through a range of policies and

protocols, through risk assessment. This is achieved through

the identification and reduction of potential risks and

examination of adverse incidents for causative and contributing

factors and trends within and across the services. To maximise

learning opportunities lessons should be shared within the

Hospital. Some aspects of clinical risk management are:

zz Incident and adverse event reporting, monitoring and trend

analysis: This incorporates activities such as learning from

local incidents or patterns of incidents, including near hits

and management of serious adverse events and maintaining

a risk register and monitoring medico-legal cases.

Stewardship Corporate Governance


zz Sentinel event reporting, monitoring and clinical

investigation: Defines the process for identification, reporting

and investigating sentinel events in line with Quality and

Patient Safety Committee.

zz Risk profile analysis: including the identification,

investigation, analysis and evaluation of clinical risks and

the selection of the most appropriate method of correcting,

eliminating or reducing identifiable risks.

The key policies relating to minimising risk for patients are:

zz Patient Bill of Rights

zz Consent Policy

zz Infection Control Policy

zz Identification of Patients

zz Verbal Policy

zz High Alert Medication Policy

zz Correct Site, Correct Procedure, Correct Patient Surgery

zz Patient Falls Policy

Risks are minimised through other aspects of clinical

governance, especially due to attention provided to education

and training, clinical audit and clinical effectiveness.

The Hospital encourages all staff to discuss any incident

that has or could pose a risk. The experience from incidents

is shared across the whole Hospital and any actions are

reviewed until fully-implemented. Clinical incidents are referred

to a clinical meeting, to facilitate a detailed discussion in a

confidential environment.

Information Management

High quality clinical care depends on high quality information

management. This starts with the generation of good patient

records and it is the responsibility of every clinician to ensure

that the details of their consultations are recorded in a way

that:

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

requested

- reflects exactly what takes place in the consultation,

including any discussion relating to risk, e.g. consent,

offer of a chaperone

- provides clear information about the agreed care plan

- uses codes and templates as agreed within the Hospital

to enable effective searching of patient data

- EMR (Electronic Medical Records) with UPIN. This helps us

retrieve patient information on the system with no hassle of

paper documents

The Hospital will use patient data for purposes consistent with

our data protection registration (see Data Protection Policy)

and will maintain patient confidentiality at all times when using

data for clinical governance purposes. Patient records will

be searched to provide evidence for internal audits and case

studies and to ensure clinical effectiveness.

Human Resources

The Hospital is committed to delivering medical care through

a team of fully-qualified and suitably-experienced clinicians,

supported by an adequate administrative resource. In order

to achieve this, the Hospital regularly reviews the skill set of

its clinical team, offering development opportunities where

appropriate and ensuring that the full range of primary care

skills is available at an appropriate level. This means that all

clinical staff are encouraged to work within the higher range

of their skill set rather than carrying out tasks that could be

fulfilled by a less qualified clinician. When recruiting potential

new MOs or nurses, the interview will always include questions

designed to demonstrate an awareness of clinical governance

principles. The Hospital operates within a full suite of human

resources policies and protocols to ensure that every member

of the team, whether clinical or not, is working with the best

interests of the patients in mind at all times.

Governance Structure of Nawaloka Hospitals PLC

One of the most vital aspects of conducting the business of

the Hospital is ensuring that it enacts the highest standards

of governance. The governance structure of Nawaloka

Hospitals PLC is designed to satisfy the legitimate claims

of all stakeholders and to fulfil the Hospital’s economic,

environmental and social responsibilities in an accountable,

sustainable and transparent manner.

The business activities of the Hospital are conducted by

adhering to the highest standards which are based on the best

contemporary principles and practices whilst conforming to all

applicable laws and regulations. The major external steering

instruments on Governance could be identified as follows:

zz Companies Act No. 07 of 2007.

zz Code of Best Practice on Corporate Governance issued

jointly by The Institute of Chartered Accountants of

Sri Lanka and the Securities and Exchange Commission of

Sri Lanka.

zz Listing Rules of the Colombo Stock Exchange.

zz The Board of Directors, being the highest governance body

of the Hospital, ensures alignment of the Hospital’s business

strategy to sustainable business performance, whilst creating

value to stakeholders.

The Hospital’s Governance Structure portrayed below

demonstrates the linkage mechanism that ensures alignment of

business strategy and direction through effective engagement

and communication with its stakeholders, Board of Directors,

Board Subcommittees and Management.

StewardshipCorporate Governance


Corporate Governance Structure


Shareholders

Board of Directors(05 ED/05 INED/01 NED)

New Nawaloka Hospitals (Pvt) Ltd. (Fully-owned subsidiary)New Nawaloka Medical Centre (Pvt) Ltd. (Fully-owned subsidiary)Nawaloka Medicare (Pvt) Ltd. (Fully-owned subsidiary)Nawaloka Metropolis Laboratories (Pvt) Ltd. (50% Joint Venture)

Board Subcommittees (Refer page 106).

Audit Committee 04 INEDRemuneration Committee 03 INEDNomination Committee 03 INEDRelated Party Transaction Review Committee 03 INED & DGMRisk Management Committee DGM and 03 EDStrategic Planning Committee Chairman/CEO and 03 ED Sustainability Committee Chairman, DGM and 02 ED

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

The Board comprises five Executive Directors including the

Chairman, five Independent Non-Executive Directors and one

Non-Executive Director, as shown below, who are professional

experts in business and administrative matters in multiple

industrial fields in which they have achieved excellence. Their

contribution is the main driving force in guiding the Hospital to

achieve excellence.

Mr. H.K. Jayantha Dharmadasa

(Chairman/CEO)

- Executive Director

Mr. Rienzie T. Wijetilleke

(Non-Executive Vice-Chairman)

- Independent

Non-Executive Director

Deshabandu Tilak De Zoysa - Senior Independent


Professor Lal Chandrasena

(General Manager)

- Executive Director

Mr. Tissa K. Bandaranayake - Senior Independent


Mr. Ugitha Harshith Dharmadasa - Executive Director

Mr. Anisha Givantha Dharmadasa - Executive Director

Ms. Ashani Givanthi Dharmadasa - Executive Director

Mr. D. Sunil AbeyRatna - Independent


Mr. Palitha Kumarasinghe PC - Independent


Mr. Victor Rajamanner Ramanan - Non-Executive Director

The Hospital has in place a number of mandatory and voluntary

Board Subcommittees to fulfil regulatory requirements and

towards good governance of its activities. These Committees

meet regularly to consider and discuss matters falling within

the respective Charters and their recommendations are duly

communicated to the Main Board. These committees consist

of Executive Directors and Non-Executive Directors in varying

proportions as set out in the above structure.

The main responsibilities of the Board are as follows:

zz Formulate the mission, overall business policy and strategy,

provide directions and establish goals for management,

set priorities and standards for the management and the

conduct of the business.

zz Appoint the Chief Executive Officer, determine the

remuneration of senior executives and report to the

Shareholders on their stewardship.

zz Ensure that adequate internal controls and highest ethical

standards are maintained.

zz Report to the Shareholders quarterly on the performance

of the Hospital.

zz Be conscious of the need for the Company to be

environmentally friendly by placing emphasis on complying

with relevant regulations.

zz Establish Clinical Governance procedures and continue to

improve the same.

zz Approve/review the Hospital’s annual, quarterly and monthly

programmes for the patient safety, quality and care.

zz Establish a mechanism to monitor the Hospital’s programmes

for the patient safety, quality and care.

zz Review on a monthly basis and act on reports of the patient

safety, quality and care.



The Board engages with the Shareholders and employees in the

following ways towards communicating relevant information:

Shareholders

zz Annual General Meetings and Extraordinary General Meetings

to deliberate on matters which are relevant and are of

concern to the general membership.

zz Access to the Board and the Company Secretaries.

zz The Hospital’s website which is accessible to all stakeholders

and the general public.

zz Interim Reports.

Employees

zz The Board of Directors includes one employee Director

namely, the Director/General Manager who bridges the

communication gap between the rest of the employees

and the Board.

zz The Hospital’s Board of Directors and Board subcommittees

conduct effective dialogue with the members of the

corporate management on matters pertaining to the overall

strategic direction of the Hospital.

zz Staff are subjected to are performance appraisal which is

conducted quarterly. This is a well-established process and

has become an ideal forum for employees to engage in

aligning with strategic objectives of the Hospital.

The Board meets on a monthly basis and ad hoc meetings

are held as and when required. At these meetings, the Board

reviews the exposure to key business risk, the strategic

direction of the Hospital, targets and budgets, progress

made towards achieving those budgets, capital expenditure

programmes, reports on patient safety, quality and care,

Sentinel events Monitoring report and Customer/Patient

satisfaction report.

The Board has delegated the primary authority to

implement policies and achieve the strategic objectives of

the Hospital to the Chairman/Chief Executive Officer (CEO)

and the Director/General Manager. The responsibilities of the

Director/General Manager are as follows:

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

zz The Hospital’s overall, day-to-day operations.

zz Financial Management.

zz Quality Management.

zz Compliance with applicable laws and regulations.

zz Respond to any reports from inspection and regulatory agencies.

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

The Chairman/CEO and the DGM exercise this authority within

the policy framework established by the Board and the ethical

framework and business practices inherent to the Hospital,

in accordance with best practices in dealing with employees,

customers, suppliers, consultants and the community at large.

The Chairman/CEO and the Director/General Manager

(DGM) review in detail the monthly performance, budgets,

capital expenditure proposals and business strategies prior

to recommending them to the Board.

In addition, monthly presentations and review of operations

are conducted by the Senior Management team including the

Chairman/CEO and the DGM. This review covers the operations

for the current month and the year to date, Clinical audit

and review reports, clinical indicator reports, clinical incident

monitoring report as well as future projections and the liquidity

position of the Company.

ConflictofInterest

The Governance Structure of the Hospital ensures that the

Directors take all necessary steps to avoid conflict of interest,

in their activities with and commitments to, other organisations

or related parties. In pursuance of the requirements under the

Sections 192 and 193 of the Companies Act No. 07 of 2007, the

Directors duly disclose the financial accommodation made.

The framework of rules and practices by which a Board of

Directors ensures accountability, fairness, and transparency in

a company’s relationship with all its stakeholders (financiers,

customers, management, employees, Government and the

community).

The Corporate Governance framework consists of;

1. Explicit and implicit contracts between the Company and the stakeholders for distribution of responsibilities, rights, and rewards.

2. Procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges and roles.

3. Procedures for proper supervision, control and information flows to serve as a system of checks-and-balances.

Good Corporate Governance is globally accepted as being

fundamental to an organisation’s competitiveness, growth and

sustainability. There is great attention on Boards of Directors to

discharge their duties with high ethical values and accountability

in their commitment to good governance practices. Strong

business ethics, sound policies and procedures, effective and

efficient monitoring systems are considered as ingredients of

good Corporate Governance system.

We, as pioneers in Modern Healthcare industry, strictly adhere

to the following regulatory benchmarks:

1. Companies Act No. 7 of 2007

2. Listing Rules of CSE (Colombo Stock Exchange)

3. The Code of Best Practice on Corporate Governance as published by the SEC (Securities and Exchange Commission) and the ICASL (The Institute of Chartered Accountants of Sri Lanka).

4. Recommendations of the UK Corporate Governance Code as practicable in the context of the nature of business risks and profiles.



Corporate Governance Principle

SEC and ICASL Code Reference

Adoption Status

Level of Compliance by the Nawaloka Hospitals PLC

A. Directors

A.1 The Board

Presence of an effective Board to Direct, Lead and Control the Company.

Meeting A.1.1 Adopted During the financial year 2015/16, there were 11 Board meetings held towards reviewing the contemporary organisational strategy.

Decisions in relevance to the organisation’s strategy were made as and when required.

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

Attendance of the Board of Directors:

Name of Director Number ofMeetings Attended

Attendance

%

Mr. H.K.J. Dharmadasa 11 100

Mr. Rienzie T. Wijetilleke 10 91

Deshabandu Tilak De Zoysa 11 100

Professor Lal Chandrasena 11 100

Mr. Tissa K. Bandaranayake 11 100

Mr. U.H. Dharmadasa 08 73

Mr. A.G. Dharmadasa 08 73

Ms. A.G. Dharmadasa 03 27

Dr. T. Senthilverl

(Resigned w.e.f. 10th March 2016)

07 64

Mr. D. Sunil AbeyRatna 10 91

Mr. Palitha Kumarasinghe PC

(Appointed on 24th March 2016)

01 9

Mr. V.R. Ramanan

(Appointed on 24th March 2016)

01 9

Board Responsibilities A.1.2 Adopted The Board possesses the required skills and qualifications in the following:

1. Setting strategic direction and monitoring its effective implementation.

2. The Non-Executive Directors collaborating with the Executive Directors to evaluate the systems of Risk Management, Internal Control and Compliance.

3. The Management appoints the External Auditors of the Company.

4. The Non-Executive Directors are provided with the opportunity to criticise and question the actions of the Board especially related to the integrity of the financial reporting process.

5. The Non-Executive Directors ensure that the strategies fall under the scope of ethical standards.





Adoption Status


Rules and Regulations A.1.3 Adopted The Board collectively acted in accordance with the rules and regulations of the country which are applicable to the Company.

The following rules and regulations are adhered to in relevance to Corporate Governance by our Company:

1. Companies Act No. 7 of 2007.

2. Listing Rules of CSE (Colombo Stock Exchange).

3. The Code of Best Practice on Corporate Governance as published by the SEC (Securities and Exchange Commission) and the ICASL (The Institute of Chartered Accountants of Sri Lanka).

4. Recommendations of the UK Corporate Governance Code as practicable in the context of the nature of business risks and profiles.

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

The Company Secretaries ensure the effective circulation of information among Executive and Non-Executive Directors.

The Company Secretaries facilitate the Board meetings and the Annual General Meeting.

Independent Judgment A.1.5 Adopted The Directors are welcome to bring their independent professional judgments towards the decision-making process.

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

Adequate time and Effort

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

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

In addition to the Board meetings, the Directors attend to the following Subcommittee meetings:

Audit Committee

Remuneration Committee

Nomination Committee

Related Party Transaction Review Committee

Risk Management Committee

Strategic Planning Committee

Sustainability Committee

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





Adoption Status


A.2TheChairmanandChiefExecutiveOfficer

The code requires clear division of responsibilities of the Chairman and Chief Executive Officer.

Division of responsibilities of the Chairman and Chief Executive Officer

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

The Board unanimously agrees to the role of the Chairman and CEO being handled by one person, due to –

1. Exposure he has in the operations of the relevant Company which makes him the ideal CEO.

2. The superior skills he possesses in mediating communication between the Management and the Shareholders.

The Chairman will act as the main pivot of communication between the Board of Directors and the Shareholders.

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

A.3 Chairman's Role

The Chairman's role for good Corporate Governance

The Chairman is responsible for an effective Board. The Chairman should ensure effective discharge of Board functions.

A.3.1 Adopted The Chairman is responsible for leadership of the Board. The Chairman facilitates the effective contribution and performance of all Board members whilst identifying any development needs of the Board.

He plays the role as a mediator of communication among the Shareholders and Management towards resolving issues of concern.

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

A.4 Financial Acumen

The Board to ensure the availability within it of those with sufficient financial acumen and knowledge to offer guidance on

matters of finance.

Availability of sufficient financial acumen

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





Adoption Status


A.5 Board Balance

It is preferred that the Board has a balance of Executive Directors and Non-Executive Directors such that no individual or small

group of individuals can dominate the Board's decision-making.

Adequate number of Non-Executive Directors

A.5.1 Adopted The Board consists of Eleven Directors out of which Six Directors are Non-Executive Directors. This has ensured that no additional powers are vested by an individual or small group of individuals to dominate the Board. Furthermore, the composition of Non-Executive Directors exceeds the required 1/3 proportion of the Board.

Adequate number of Independent Non-Executive Directors

A.5.2 Adopted The Board consists Five Independent Non-Executive Directors out of Six Non-Executive Directors.

Independency of Directors

A.5.3 Adopted All Five Independent Non-Executive Directors are free from any material relationship with the Company which ensures their independence is not compromised.

Signed declaration of independence by the Non-Executive Directors

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

Declaration in the Annual Report

A.5.5 Adopted The Board has determined the Independence and Non-Independence of the Non-Executive Directors based on the declaration and all other available information.

No circumstances have arisen for the determination of independence by the Board, beyond the criteria set out in the Code.

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


Deshabandu Tilak De Zoysa

Mr. Tissa K. Bandaranayake

Mr. D. Sunil AbeyRatna

Mr. Palitha Kumarasinghe PC

Alternate Director A.5.6 N/A During the course of the year there had not been any appointments of Alternate Directors.

Senior Independent

Director

A.5.7 Adopted Deshabandu Tilak De Zoysa has been appointed as the Senior Independent Director (SID), as the role of the Chairman and Chief Executive Officer is not separated.

Confidential Discussion

with Senior Independent

Director

A.5.8 Adopted The Senior Independent Director has made himself available for any material discussion with any of the Directors.

Meeting with the

Chairman and

Non-Executive Directors

A.5.9 Adopted The Chairman meets with the Non-Executive Directors when the need arises.

Recording of concerns

in Board minutes

A.5.10 Adopted All concerns arisen had been resolved unanimously, resulting in the requirement for recording such concerns in minutes being limited.





Adoption Status


A.6 Supply of Information

The Board should be fully equipped with timely information to discharge their duties.

Timely Information A.6.1 Adopted The Management has provided the Board with the required information to discharge their duties effectively.

Additional information is dispersed by the Management as and when required.

Board Papers A.6.2 Adopted The Board Paper is sent seven days in advance of the Board meeting for initial preparation.

A.7 Appointments to the Board

Presence of a formal and transparent procedure for the appointment of new Directors to the Board.

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

Deshabandu Tilak De Zoysa – Chairman (Senior Independent Non-Executive Director)

Tissa K. Bandaranayake – Member (Senior Independent Non-Executive Director)

Mr. D. Sunil AbeyRatna – Member (Independent Non-Executive Director)

Assessment of Board Composition

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

Disclosure to Shareholders

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

A.8 Re-election

All Directors should be required to submit themselves for re-election at regular intervals and at least once in every three years.

Appointment of Non-Executive Directors

A.8.1 Adopted Re-election procedure of the Board of Directors has been performed

as per the Articles of Association of the Company.

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

A.9 Appraisal of Board Performance

The Board should appraise their own performance in order to ensure that the Board responsibilities are satisfactorily

discharged.

Appraisal of Board

Performance

A.9.1 Adopted The Board’s performance is assessed annually against preset targets

relating to self-evaluation of individual performance and collective

performance of the Board as a whole.

Appraisal of self-

performance

A.9.2 Adopted Please refer above comment. (A.9.1)

Performance criteria A.9.3 Adopted Please refer above comment. (A.9.1)





Adoption Status


A.10 Disclosure of Information in Respect of Directors

The Shareholders are to be kept advised of relevant details in respect of Directors.

Disclosure in

Annual Report

A.10.1 Adopted Please refer pages 70 to 73 for the Profiles of the Directors.

A.11AppraisaloftheChiefExecutiveOfficer

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

Targets A.11.1 Adopted In each financial year, the Board has set short-term, medium-term and

long-term targets with the consultation of the Chief Executive Officer

along with its objectives. This includes financial and

non-financial targets.

Evaluation of the Targets A.11.2 Adopted There is an ongoing process of evaluating the performance of the

Chief Executive Officer in achieving the set targets.

B. Directors' Remuneration

B.1 Remuneration Procedure

Establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration

packages of individual Directors.

Remuneration

Committee

B. 1.1 Adopted The Company has established a Remuneration Committee to make

recommendations to the Board within the agreed terms of reference

for compensating the Executive Directors.

Refer page 108.

Composition of

the Remuneration

Committee

B. 1.2 Adopted The Remuneration Committee comprises the following Non-Executive

Directors:

Refer page 108.

B. 1.3 Adopted Deshabandu Tilak De Zoysa – Chairman

(Senior Independent Non-Executive Director)

Mr. Tissa K. Bandaranayake – Member


Mr. D. Sunil AbeyRatna – Member

(Independent Non-Executive Director)

Remuneration of the


B. 1.4 Adopted The Board collectively decides the remuneration of the Non-Executive

Directors. Non-Executive Directors receive a fee for their presence in

the Board as well as in the Committees.

Advices to the

Chairman and the

Chief Executive Officer

B. 1.5 Adopted The Chairman and the Chief Executive Officer obtain advice from

the Remuneration Committee in relevance to the procedure in

compensating the Executive Directors. The Remuneration Committee

consults the Chairman in relevance to the remuneration of other

Executive Directors and if required access to professional advice from

within and outside the Company.





Adoption Status


B.2 The Level and Make-up of Remuneration

Ensure adequate level of remuneration to retain and motivate the Directors both Executive and Non-Executive to operate the

Company effectively. Further, a proportion of the Executive Directors' remuneration should be structured to link rewards to the

achievement of corporate objectives.

Remuneration for

Executive Directors

B. 2.1 Adopted The Company is mindful of adequate remuneration to the Executive

Directors to retain and motivate them. The Remuneration package

has been designed to enhance the value of the shareholders through

achieving the Company's short-term, medium-term and the long-term

objectives.

Comparison between

similar companies

B. 2.2 Adopted The Remuneration Committee decides the remuneration taking into

consideration the comparative levels of remuneration paid by other

similar companies.

Comparison of

Remuneration

across the Group

B. 2.3 Adopted Consistent reviews are made in relevance to information related to

executive remuneration to ensure that the Company is in par with the

market/industry rates as well as it is aligned to the strategic objectives

of the Company.

Performance-based

remuneration to the

Executive Directors

B. 2.4 Adopted The Company provides compensation which is variable to the

performance of the allocated responsibilities of the Executives.

Executive Share Option

Schemes

B. 2.5 N/A The Company has not offered any share option schemes during the

financial year under review.

Deciding the

Performance-related

remuneration

B. 2.6 Adopted The Company has taken into consideration the guidelines given in

Schedule D in decisions pertaining to performance remuneration

related.

Early termination

of Director

B. 2.7 N/A Not applicable to the Board except to the CEO whose terms of

employment are governed by the contract of service.

Early termination of

Director not included

in the contract

B. 2.8 N/A Refer above comment.

Remuneration to the


B. 2.9 Adopted Non-Executive Directors receive a fee in line with the market price.

No share option scheme has been offered to the Non-Executive

Directors.

B.3 Disclosure of Remuneration

Disclosure of the Remuneration policy in the Annual Report.

Disclosure of

Remuneration

B. 3.1 Adopted The Remuneration Committee is headed by a Non-Executive Director.

Please refer to the comment on B.1.3 for further information. Refer

page 108 also.

Remuneration policy focuses on the compensation to employees for

the services provided and to retain employees with skills required to

effectively manage the operations.





Adoption Status


C. Relations with Shareholders

C.1 Constructive Use and Conduct of General Meetings

The Board to use the Annual General Meeting to communicate with the shareholders and encourage their participation.

Use of Proxy votes C.1.1 Adopted The Company has a mechanism to record the Proxy votes and proxy

votes lodged for each resolution.

Separate Resolutions C.1.2 Adopted The Company proposes separate resolutions for each substantial item

towards providing shareholders the opportunity to cast their votes

separately in relevance to the above items.

Availability of the

Chairman of Audit,

Remuneration and

Nomination Committees

C.1.3 Adopted The Chairman of Audit, Remuneration and Nomination Committees are

made available by the Company to clarify any queries, especially

at the time of the AGM.

Refer page 106 – Board Subcommittees.

Notice of Meeting C.1.4 Adopted The Annual Report is sent to each shareholder well in advance for their

early preparation for the Annual General Meeting.

All queries are clarified at the Annual General Meeting.

Procedures of voting

at a General Meeting

C.1.5 Adopted Voting procedures at the General Meeting have been communicated to

the shareholders.

C.2 Communications with Shareholders

The Board should implement effective communication with the shareholders.

Communication

Channels

C.2.1 Adopted The Board engages with the shareholders in the following ways to

communicate relevant information.

Communication

Methodology

C.2.2 Adopted Annual General Meetings and Extraordinary General Meetings to

address matters which are relevant and of concern to the General

Membership.

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

- The Hospital's website which is accessible to all stakeholders

and the general public.

- Interim Reports – www.cse.lk

Responsibility of

communication

C.2.4

C.2.5

C.2.6

Adopted The Board of Directors includes one Employee Director namely,

the Director General Manager and the Company Secretaries to

bridge the communication gap between the rest of the shareholders

and the Board.

Shareholder Matters C.2.7 Adopted Please refer C. 2.4

C.3 Major Transactions

Disclosure of all material transactions to the shareholders which would materially alter/vary the Company's net assets base or in

the case of a company with subsidiaries, the consolidated Group net assets base.

Shareholder Matters C.3.1 Adopted All material transactions have been disclosed to the shareholders.





Adoption Status


D. Accountability and Audit

D.1 Financial Reporting

To present a balanced and understandable assessment of the Company's financial position, performance and prospects.

Statutory Reporting D.1.1 Adopted Adhering to the statutory and legal requirements, the Company has

published the following reports to disclose relevant information to the

stakeholders:

- Quarterly Financial Statements

- Annual Reports

The Company has strictly complied with the requirements of the

Companies Act No. 07 of 2007 and amended hereto. The Financial

Statements are prepared based on the International Financial

Reporting Standards (IFRS).

Directors’ Report D.1.2 Adopted Refer pages 104 to 107.

Auditors’ Report D.1.3 Adopted Refer page 113.

Management

Discussion and Analysis

D.1.4 Adopted Refer pages 30 to 69.

Declaration by the

Board that the business

is a going concern

D.1.5 Adopted Refer page 107 and 112.

Summon an

Extraordinary General

Meeting to notify loss

of capital

D.1.6 Adopted Likelihood of such circumstances is remote; if such a situation arises

an Extraordinary General Meeting would be summoned to inform the

shareholders.

D.2 Internal Controls

The Board should maintain a sound system of internal controls to safeguard the Shareholders’ investments and the Company

assets.

Review of the Internal

Control System

D.2.1 Adopted The Board continuously evaluates the effectiveness of the internal

control system in the Company to safeguard the shareholder

investment.

The Board of Directors is satisfied with the presence of the level of

internal controls in business operations.

Refer page 110 – Internal Controls & Internal Audit.

Need for Internal

Audit Function

D.2.2 Adopted An in-house Internal Audit functions in the Company.

Regular Reviews

of Internal Controls

D.2.3 Adopted Our Internal Audit Function carries out regular reviews, spot audits to

identify the effectiveness of the internal controls established.





Adoption Status


D.3 Audit Committee

The Board is required to establish formal and transparent arrangements for considering as to how they should select and

apply accounting policies, financial reporting and internal control principles and maintaining appropriate relationship with the

Company's Auditors.

Composition of

Audit Committee

D.3.1 Adopted The Audit Committee is comprised of four Independent

Non-Executive Directors:

Mr. Tissa K. Bandaranayake – Chairman


Mr. Rienzie T. Wijetilleke – Member


Deshabandu Tilak De Zoysa – Member


Mr. D. Sunil AbeyRatna – Member


Duties of Audit

Committee

D.3.2 Adopted The Audit Committee continuously evaluates the independence,

effectiveness and objectivity of the Auditors.

Further, the Committee evaluates the nature of the non-audit services

carried out by the Auditors.

Terms of Reference

of the Audit Committee

D.3.3 Adopted The Audit Committee is guided by the Committee Charter which is

reviewed annually.

The Committee assists the Board to oversee the following aspects:

- Preparation, Presentation and Adequacy of Disclosures in the

Financial Statements.

- Compliance with financial reporting requirements, information

requirements of the Companies Act No. 07 of 2007 and other

financial reporting related regulations and requirements.

- Ensuring that the Internal Control System of the Company is

effective.

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

- Assessing the independence and performance of the Company’s

External Auditors.

Disclosure D.3.4 Adopted Refer pages 109 to 111.





Adoption Status


D.4 Code of Business Conduct and Ethics –

The Company to develop a Code of Ethics for Directors and members of the Senior Management team and promptly disclose if

there are any waivers of the Code for Directors and others.

Code of Business

Conduct and Ethics

D.4.1 Adopted The Company has developed a Code of Business Conduct and Ethics

focusing on the following important areas:

- Integrity

- Objectivity

- Professional competence and due care

- Confidentiality

- Fair dealing

- Encouraging the reporting of any illegal or unethical behaviour

- Conflict of interest

- Bribery and corruption

- Entertainment and gifts

- Integrity of Financial Statements

- Corporate opportunities

- Protection and proper use of the Company assets

- Compliance with rules and regulations

All our Directors and Senior Executives have declared their

commitment to operate in adherence to these principles.

Affirmation of the Code

of Business Conduct and

Ethics (Report by the

Chairman affirming that

there were no incidents

involving the breach

of mentioned ethical

policies)

D.4.2 Adopted Refer the Chairman's Report in pages 14 to 15.

D.5 Corporate Governance Disclosures

The Directors are required to disclose the extent to which the Company adheres to established principles and practices of Good

Corporate Governance.

Disclosure of

Corporate Governance

D.5.1 Adopted The Report in pages 78 to 94 provides a detailed disclosure on our

Corporate Governance practices.





Adoption Status


E. Institutional Investors

E.1 Shareholder Voting

The institutional shareholders are required to make considered use of their votes and should be encouraged to ensure that their

voting intentions are translated into practice.

Dialogue with the

Shareholders

E.1.1 Adopted - The Annual General Meeting provides a platform for effective

communication with the shareholders.

- All concerns of the shareholders are recorded in the minutes of the

meeting and addressed thereafter.

- The Board reviews the minutes of the meetings and ensures that the

shareholders’ issues are resolved systematically.

E.2 Evaluation of Governance Disclosure

The Company should encourage Institutional Investors to provide due diligence to all relevant factors in the Board Structure

and Composition.

F. Other Investors

F.1 Investing/Divesting Decision

Individual Shareholders F.1 Adopted Individual shareholders are encouraged to carry out adequate analysis

or seek out independent advice for matters related to investing/

divesting decisions.

F.2 Shareholder Voting

Individual

Shareholder Voting

F.2 Adopted Individual shareholders are encouraged to participate at General

Meetings and exercise their voting rights.



‘Savikala Abarum Gala’ ^iúl< weUreï .,& was another type of grinding stone which is fixed to the ground at the centre and can be rotated. It is used to

grind herbal foliage for the extraction of juice.


Managing the unexpected is an essential daily

concern in high-risk organisations, especially

for service organisations in the healthcare

sector such as ours. Consistent and thorough

processes are the hallmark of Nawaloka

Hospital’s successful risk management process.

Adhering to a bottom-up risk management

approach, the Hospital encourages employees

at all levels to participate in the risk

management process. In addition, Nawaloka

constantly reviews and updates the risk

management process on a regular basis and

thus, believes it to be a common thread,

throughout the entire Hospital.

Monitoring & Control

Identification & Prioritising Risk

CommunicationAnalysing &

Quantifying Risk

Implementation & Documentation

Evaluation & Identification of Solutions

Risk Objectives

Matching Solution with the

Identified risk

RISK MANAGEMENT

Summary of Risk Management

Identified Risk Responding Actions Objectives

Financial Risk:

This includes risks related

to capital structure,

projects invested, asset

utilisation etc.

zz Timely appropriate decisions on funding,

investing and dividend payment.

zz Proper management of working capital.

Use of compatible concepts in financing

and investing.

zz Negotiation of favourable credit terms

and discounts.

zz Appropriate funding strategies.

zz Maintain liquidity while

maximising profit.

zz Appropriate capital structure

and gearing.

zz Minimise the adverse impact

of changes in financial market.

zz Compliance with covenants.

Operational Risk:

Risk of direct and indirect

losses resulting from

inadequate or failed

internal processes, people

and systems or from

external events.

zz Review and continuously update

controls according to the changes in

business operations.

zz Regularly analyse by cause the deviations

and losses and take action to improve

systems and controls to prevent

recurrence in the future.

zz Revise and implement business

continuity planning.

zz Ensure that effective independent internal

audits are carried out with objectivity.

zz Take timely action on the

recommendation given by internal audit.

zz Eradicate opportunities for

misappropriation.

zz Reduce wastage and increase

cost saving.

zz Ensure controls are adequate to

curtail business processes, minimise

human error beside systems and

procedural failures.

Stewardship



Clinical Risk: zz Create and maintain high quality medical

and safety standards.

zz Identify any potential risk to involved

parties and take preventive action.

zz The Hospital adheres to international

therapist and diagnostic norms to ensure

that it complies with WHO standards.

zz In addition, ISO internal/external

audits are carried out to maintain

ISO procedures.

zz Ensure the provision of a quality service

to the patients.

Human Resources Risk: zz Proper HR and remuneration policies

to be in place.

zz Provide training and develop staff

skills and knowledge.

zz Plan career path progress and

succession planning.

zz Job rotation and staff training for

multiple skills.

zz Improve decision-making processes

by motivating employees.

zz Reduce staff turnover.

zz Reduce dependence on individual staff.

zz Retain top performers.

Information

Technology Risk:

zz Service level maintenance agreement

for hardware and software.

zz Security implementation with firewall

and virus protection.

zz Online and offline backup procedures

for application data storage.

zz Mirror data storage.

zz Alternative connections for servers.

zz Hardware backup.

zz Regular health checks of the systems

and networks.

zz Error logs and user logs maintenance.

zz Ad hoc backup restorations.

zz Implementation of disaster recovery plan.

zz Zero losses of data during a system

down time.

zz Zero down time of the application

servers connectivity.

Reputation Risk: zz Focus on treating employees, patients,

doctors, suppliers, communities and

the environment in the optimum way to

achieve Company objectives.

zz Maintain regular and effective

communication with shareholders.

zz Maintain constant improvement in the

quality of the output of the Company.

zz Maintain a good image among the

Company’s stakeholders and ensure its

positive impact on business.

Stewardship Risk Management



Legal and Regulatory

Environment Risk:

zz Ensure compliance with laws and

regulations with legal advice.

zz Minimise claims arising from litigations

initiated by clients by providing proper

and adequate service.

zz Reliability.

zz Maintain an accurate patient data base.

zz Comply with all statutory or

regulatory obligations.

Asset Risk Including

Information:

Impact on the Company’s

assets due to theft, natural

disaster or human error

zz Appropriate insurance covers for

identified risks.

zz Backup of vital machinery and equipment

components.

zz Restrict access to information and ensure

employee awareness of the importance

of the confidentiality of patient data.

zz Minimise breakdown of equipment

and other assets.

zz Minimise the cost on information.

zz Minimise the loss of assets due

to fire and theft.

Technological

Obsolescence Risk:

The impact of changing

technology on the

Company’s operations.

zz Competent biomedical team to keep

abreast with developments in medical

equipment and introduce new technology

to maintain high technological standards

and continuous investment in medical

equipment.

zz Employ all available highly advanced

equipment to provide a better quality

service to patients.

Procurement Risk:

Includes buying quality

products on time.

zz Ensure standardised quality.

zz Establish relationship with

multiple suppliers.

zz Negotiate for better prices and discounts.

zz Minimise instances of running

out of stock.

zz Minimise the effect of price increases.

zz Quality of pharmaceutical products to

be maintained.

Credit Risk:

Includes defaults of

debtors and other parties

who obtain credit from

the Hospital.

zz The Company evaluates the credit

worthiness of companies before granting

credit and whether they have a good

credit policy.

zz Timely collections from patients are

carried out.

zz Reduce debtors’ defaults.

Intellectual Risk:

This includes the use of the

Company’s brand name by

other parties.

zz Create brand awareness through

sustained advertising and marketing.

zz To protect against brand infringement.

StewardshipRisk Management



Competition Risk:

The possibility of

fluctuation in revenue

caused by changes in

market variables and

competitors.

zz Increase service quality by adopting

market developments in the continuously

changing environment.

zz Good customer relationships.

zz Provide better quality at affordable

prices.

zz Protect and expand market share.

Board of Directors/Audit Committee

Senior Management/Risk Committee

First Line

Second Line

Third Line

Operational Management

Control of RiskConfirmation of

ControlOverview of Control

Risk Management Internal Audit

The first line of defense

comprises of a sound

internal control system

which creates employees

accountable for the risks

accepted during the

course of business.

This level consists of risk

management, compliance

and other supporting

functions such as

finance, security, quality

assurance and human

resource management.

This level consists of

internal and external

audit which provides an

independent assurance to

the Board over the first

and second lines

of defense.


Risk Management Committee

The Risk Management Committee of Nawaloka Hospital has

been established with a clear and that precise objective to

ensure that proper risk management policies and procedures

are in place. The Committee comprises 32 members, chaired by

Professor Lal Chandrasena who is Director/General Manager of

Nawaloka Hospitals PLC.

Board Members of the Risk Management Committee

Professor Lal Chandrasena – Chairman (DGM/ED)

Mr. U. Harshith Dharmadasa – Member (ED)

Mr. A.G. Dharmadasa – Member (ED)

Ms. A.G. Dharmadasa – Member (ED)

The Committee conducts monthly meetings to oversee and

approve the risk management, internal compliance and control

policies and practices of the Company.

Three Lines of Defense

The Company deploys a ‘three lines of defense’ governance

model which facilitates accountability and transparency

through clear identification and segregation of roles as

given below:


zz Nawaloka has identified several key elements that influence

the degree of clinical risk, namely – staff participation, safety

culture, learning from incidents or errors, education

and training.

zz The Hospital provides a fully-fledged training programme

to both doctors and nurses. In addition, the programme

encourages maintaining good communication.

zz Biomedical instruments and equipment play a vital role in

the upkeep of the Hospital as well as the patients; thus,

maintaining and replacing the respective technological

equipment on time.

zz The Hospital ensures to enter into service agreements only

with established, esteemed and reputed organisations

so as to abide by Nawaloka’s clinical service policies and

procedures.

zz Nawaloka serves as an ethical service organisation in terms

of drug suppliers. We make sure that the suppliers maintain

high quality business standards, conforms to national and

international guidelines together with recognised quality

parameters.

People

Management of human resources and employee behaviour

can become a major source of operational risk to the Hospital.

Risks range from the potential employee negligence, conflict

of interest, fraud and mismanagement or due to poorly trained

employees.

zz Staff training is crucial to the successful management of

risk exposures resulting from the interaction of humans and

medical technology. However, Nawaloka has invested time

and money to create an appropriate risk culture, in which

employees are aware of operational risk.

zz Nawaloka offers and conducts comprehensive training

programmes to both in-house staff as well as to external

parties (non-core outsourced businesses). Non-core

outsourced businesses feature the security, cleaning,

maintenance and businesses under service agreements.

zz As a measure of monitoring the strengths and weaknesses

of the training programmes, performance appraisals

are conducted every three months. Simultaneously, any

ambiguity that highlights likelihood of risks is being analysed,

evaluated and revised through action plans.

IT System

Complex-designed or poorly implemented systems and

processes can give rise to operational risks. This may result

in the Hospital experiencing a plethora of problems including

information security failures, fraud and processing errors.

Further, the increased automation and adaptability to advances

in technology have the potential to transform risks from minor

manual processing errors to key systematic failures.

zz Nawaloka has converted all manual processes into

computerised systems. The Enterprise Resource Planning

(ERP) system of Nawaloka is subjected to constant updates

Risks

Nawaloka takes bottom-up approach, which encourages

employees at all levels to contribute and be a part of the risk

management process. The risks have been mapped into various

categories prior to implementation of the risk management

process. In accordance with the monthly discussions and

evaluations of the Risk Matrix, the Committee has identified

several risks associated with Nawaloka. Thus, they have been

categorised into the following domains:

zz Operational Risk

zz Financial Risk

zz Legal and Regulatory Environment Risk

zz Reputation Risk

Operational Risk

Nawaloka has identified operational risks as of the utmost

importance due to the nature of the business. Operational risks

arise due to failure in the internal processes, people, clinical and

IT system. The Committee regularly performs operational risk

monitoring activities in order to promptly detect deficiencies in

the policies, procedures and processes.

Internal Process

Nawaloka ensures risk management in operations by

maintaining proper internal control systems initiating prompt

response to arising risks. Following are some of the standards

in place to ensure that internal process risks have been reduced

within a controlled environment:

zz Designated Manager, Head of System and Control who

monitors and controls the risk and internal controls on a daily

basis, assists in identifying failures within the processes and

takes prompt action to mitigate and reduce the risk.

zz Nawaloka is the first healthcare services provider in Sri Lanka

to obtain the ISO 9001:2008. Thus, it conforms to the ISO

procedures and ISO audit standards.

zz Audit trails have been conducted by the Internal Audit teams

at scheduled times in an appropriate manner. Hence, red

flags (if any) are raised and proper action are recommended

and implemented.

zz Offering precise and clear job responsibilities to employees

at each level allow the Hospital to adhere to established

standards and follow protocol in a highly vulnerable service

industry. Any deviation will be monitored and immediate

action taken. Employees have been reminded of the job

expectation periodically and continuous on-the-job and

off-the-job training is provided.

Clinical

Risks associated with patient care are extremely important

for a hospital. As a service organisation in the healthcare

sector, clinical risk management plays a crucial role in enabling

Nawaloka to identify, contain and manage risks related to

patient safety.

StewardshipRisk Management


and upgrades to ensure that risks are minimised. The

design and the implementation of the robust HIS platform

specifically identifies all business processes and healthcare-

related risks.

zz The Hospital has taken measures for online and offline

backup procedures for application data storage. In addition,

certain proper security measures have been installed through

firewall and virus protection, thereby ensuring zero losses of

data during a system failure.

Financial Risk

Financial risks associated with Nawaloka are related to capital

structure, project investments, asset utilisation, credit quality

of debtors and counterparts. Thus, enhancing the risk of the

Hospital’s ability to earn, raise or access capital. The following

provides an outline of the risks involved and measures taken as

regards liquidity risk, credit risk and assets risk.

Liquidity Risk

Liquidity risk involves the risk that funds potentially required

on short-term basis cannot be sourced or sold expeditiously.

In addition, the risks associates with the cash on hand and the

availability of credit line facilities. Nawaloka has taken stringent

measures to minimise the risks in relation to liquidity.

zz A dedicated team of experts, headed by the Financial

Controller, conducts daily cash flow analysis. The analysis

provides a reliable and a valuable perspective on the

Hospital’s financial performance. Further, it assists in

identifying any shortfalls or surpluses, making smart

investment planning decisions and daily cash flow activities.

Thus, it improves cash flow control and helps to ensure that

cash flow concerns are dealt with effectively.

zz Imposing a proper debt collection policy circumventing a

build up of bad debts and debtors.

zz Establishing proper authorisation levels in order to control

expenditures.

Credit Risk

Credit risk occurs through the default of the debtors and other

parties who obtain credit from Nawaloka. The main objective

is to reduce the impact of debtors’ defaults. Following strict

protocols are adhered to by the Hospital in managing credit

risks and debtors.

zz It operates under a sound credit-granting process, which

maintains an appropriate credit evaluation administration,

measurement and monitoring process. In addition, the

Hospital evaluates the creditworthiness of the companies

prior to the granting of credit, thus ensuring that, payment is

obtained as quickly as possible for such credit.

zz The Hospital has established a noteworthy credit policy,

which reduces the risk of bad debt, minimise the costs of

granting credit and help maintain a good cash flow.

Asset Risk

Asset risk to an organisation is a threat when an organisation’s

assets are vulnerable to theft, natural disaster or human error.

Implementing precautionary measures helps control and

minimise asset risks.

zz Acquiring appropriate insurance covers for identified

risks provides a relief to the Hospital under unavoidable

circumstances such as breakdown or natural disasters.

zz Creating backup of vital machinery, equipment components

as well as documentation helps to reduce the cost of loss of

vital information.

Legal Risk

Legal risks crop up during periods when the organisations

have been non-compliant with the laws and regulations. The

Company has taken respective measures and appropriate care

to ensure that risks are minimised in the legal and regulatory

environment. Operating with a clear objective in conforming to

all standards and in compliance with all statutory or regulatory

obligations, the following are specific actions taken by the Risk

Management Committee:

zz Ensure compliance with laws and regulations with legal

advice.

zz Minimise claims arising from litigations initiated by clients

by providing proper and adequate services. This highlights

reliability and credibility of the Hospital.

Reputation Risk

Prominent in any service organisation, reputation risk is a risk

related to the credibility of the business. This may be a matter

of corporate trust, which has a great influence on damaging

the reputation and causing a severe impact on shareholder

value. Non-compliance with the risks in the aforesaid domains

(operations, finance and legal), will create a significant impact

and raise the reputation risk of Nawaloka.

zz Nawaloka Hospital has been well established for the past

30 years. As an esteemed service organisation,

understanding the vulnerability of saving lives and

importance of medical technology, Nawaloka stands in the

forefront of healthcare in the country.

zz Maintaining strong relationships with stakeholders by

building confidence and trust, ensuring operational

efficiency, financial transparency and conformance to

international best practices, Nawaloka Hospital can live up

to the vision of maintaining its prestigious reputation for

generations to come.



AWARDS AND ACCOLADES

Institute Award Description Category Year of Issue

Sri Lanka Institute of Training and Development

People Development Award (PDA)

Best Practicing Human Resources Development Silver Award

Health Sector 2015

The Institute of Chartered Accountants Sri Lanka (ICASL)

Annual Report Gold Award Health Sector 2015Annual Report Gold Award Health Sector 2014Annual Report Gold Award Health Sector 2013Annual Report Gold Award Health Sector 2012Annual Report Gold Award Health Sector 2011Annual Report Gold Award Health Sector 2010Annual Report Silver Award Health Sector 2007Annual Report Silver Award Health Sector 2009Annual Report Certificate of Recognition Service Organisation 2006Annual Report Merit Certificate Service Organisation 2005

ACCA SL Sustainability Award Runner-up General Services and Utility Category 2015Runner-up General Services and Utility Category 2014Runner-up Leisure and Services Category 2013Certificate of Recognition 2012

National Institute of Occupational Safety and Health

Occupational Safety and Health

Merit Award Health Sector 2015

Certificate of Award 5 Crowns for Food Hygiene 20155 Crowns for Food Hygiene 20145 Crowns for Food Hygiene 20135 Crowns for Food Hygiene 2012

National Business Excellence Awards (NBEA)

Silver Health care and Related Service Sector 2012Runner-up Best Tech-Savvy Company 2011Winner Health care and Related Service Sector 2011Winner Health care and Related Service Sector 2010Winner Health care and Related Service Sector 2009Winner Health care and Related Service Sector 20071st Runner-up Other Service Sector 2006Winner Other Service Sector 2005

Asia Pacific Entrepreneurship Award (APEA)

Special Achievement 2012

SGS ISO 9001 : 2000 2007ISO 9001 : 2008 2007SL National Quality Award Winner Service Large Category 1998

Nawaloka Group Best Company 2001

Nawaloka Group SL National Quality Award Winner Service Large Category 1998

Stewardship


FINANCIAL REPORTS

2015/16

104 Annual Report of the Board of Directors108 Report of the Remuneration Committee109 Audit Committee Report111 Board Related Party Transactions Review Committee Report112 Directors’ Responsibility in Financial Reporting113 Independent Auditors’ Report114 Statement of Financial Position116 Statement of Profit or Loss and Other Comprehensive Income117 Statement of Changes in Equity118 Cash Flow Statement119 Notes to the Financial Statements

Financial Calendar

2013/2014 2014/2015 2015/2016 2016/2017

1st Quarter Results 12th August 2013 14th August 2014 14th August 2015 August 2016

2nd Quarter Results 12th November 2013 7th November 2014 15th November 2015 November 2016

3rd Quarter Results 12th February 2014 10th February 2015 15th February 2016 February 2017

4th Quarter Results 30th May 2014 22nd May 2015 30th May 2016 May 2017

Annual Report June 2014 June 2015 June 2016 June 2017

Annual General Meeting 30th June 2014 30th June 2015 30th June 2016 30th June 2017

Financial Reports104 Nawaloka Hospitals PLC Annual Report 2015/16

ANNUAL REPORT OF THE BOARD OF DIRECTORS

The Directors have pleasure in presenting to the members, their Report together with the Audited Financial Statements for the year ended 31st March 2016

The details set out herein provide the pertinent information required under the Companies Act No. 07 of 2007, the Listing Rules of the Colombo Stock Exchange and recommendations in adherence with best accounting practices.

Legal FormNawaloka Hospitals PLC is a public company with limited liability incorporated in Sri Lanka on 1st July 1982 under the Companies Ordinance No. 51 of 1938 and re-registered under the provisions of the Companies Act No. 07 of 2007 on 07th September 2007, with the Company Re-Registration No. PQ 78. Since 2004 its shares are quoted on the Colombo Stock Exchange. This information is disclosed as required by Section 168 of the Companies Act No. 07 of 2007, which also requires the following information to be disclosed.

Principal Business ActivitiesNature of the business of the Company and the Group are described below as required by Section 168 (1) (a) of the Companies Act No. 07 of 2007. There has been no material change to the activities of the Company or any of it’s subsidiaries during the period under review.

CompanyThe principal activity of the Company is the providing of healthcare and hospital services.

SubsidiariesNew Nawaloka Hospitals (Pvt) Ltd.This is a private company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and re-registered under the new Companies Act No. 07 of 2007. It is also domiciled in Sri Lanka and is a wholly-owned subsidiary of Nawaloka Hospitals PLC.

New Nawaloka Medical Centre (Pvt) Ltd.This too is a private company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and re-registered under the new Companies Act No. 07 of 2007. It is also domiciled in Sri Lanka and is a wholly-owned subsidiary of Nawaloka Hospitals PLC.

Nawaloka Metropolis Laboratories (Pvt) Ltd.This joint venture company was established in the year 2005 along with Metropolis India to provide laboratory services. Nawaloka Hospitals PLC holds 50% shares in this Company.

Nawaloka Medicare (Pvt) Ltd.This is a private company with limited liability incorporated in Sri Lanka in the year 2014 under the provisions of the Companies Act No. 07 of 2007. It is also domiciled in Sri Lanka and is a wholly-owned subsidiary of Nawaloka Hospitals PLC.

Review of Business/Future DevelopmentA review of the business of the Company and the Group and its performance during the year is contained in the Chairman’s review/ Chief Executive Officer’s Performance Review and of the Director/General Manager’s Operational & Management review at pages 14, 15, 16 and 17 respectively of this Report. These reviews form an integral part of this Report and together with the Financial Statements described in detail of the state of affairs of the Company and the Group.

Financial StatementsThe Financial Statements which include the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Cash Flow Statements and Notes to the Financial Statements are given on pages 114 to 144 and have been prepared in conformity with the Sri Lanka Accounting Standards and the requirements of Section 168 (1) (b) of the Companies Act No. 07 of 2007 and the Listing Rules of the Colombo Stock Exchange.

Auditors’ ReportThe Financial Statements for the period under review were audited by Messrs KPMG (Chartered Accountants) for the year ended 31st March 2016 and the Independent Auditor’s Report issued thereon appears at page 113 of this Annual Report as required by Section 168 (1) (c) of the Companies Act No. 07 of 2007.

Financial Results

Group Company

(All figures in Sri Lankan Rupees) 2015/16Rs.

2014/15Rs.

2015/16Rs.

2014/15Rs.

Profit before Taxation 315,252,428 96,647,519 (154,169,093) 97,821,426

Less: Taxation (109,218,200) (9,176,683) 26,603,594 (7,883,420)

Net Profit after Taxation 206,034,228 87,470,836 (127,565,499) 89,938,006

Profit attributable to Equity Holders of the Company 205,881,515 69,296,227 (128,757,809) 73,403,771

Earnings per share 0.15 0.06 (0.09) 0.06

Financial Reports 105Annual Report 2015/16 Nawaloka Hospitals PLCAnnual Report of the Board of Directors

Accounting Policies and Changes During the YearThe accounting policies adopted in the preparation of Financial Statements of the Company and the Group are given on pages 119 to 126 of this Annual Report as required by Section 168 (1) (d) of the Companies Act No. 07 of 2007. There have been no changes in the accounting policies adopted by the Company during the period under review other than the depreciation rates.

Entries in the Interests RegisterThe interests register is maintained by the Company, as required by Section 168 (1) (e) of the Companies Act No. 07 of 2007.

Directors’ Remuneration and Other BenefitsDirectors’ remuneration and other benefits of Directors are given at Note 24 to the Financial Statements on page 138 as required by Section 168 (1) (f) of the Companies Act No. 07 of 2007.

DonationsTotal donations made by the Group during the year amounted to Rs. 4,480,289/- and is being disclosed as required by Section 168 (1) (g) of the Companies Act No. 07 of 2007 and this expenditure was incurred upon the mandate conferred upon the Board by the shareholders at the last Annual General Meeting.

Shareholders’ FundsAfter the above mentioned appropriation, the total Group Shareholders’ Funds as at 31st March 2016, stood at Rs. 3,994,897,962/-. The total Shareholders’ Funds of the Company as at 31st March 2015 stood at Rs. 3,887,681,839/-. The movements are shown in the Statement of Changes in Equity.

Interim DividendInterim dividend of Rs. 0.07 per share was paid in July 2015.

DirectorateThe Directors, who served on the Board during the financial year are the following and this information is provided as required by Section 168 (1) (h) of the Companies Act No. 07 of 2007.

Name of Director Executive/Non-Executive Status

Status of Independence

Mr. H.K. Jayantha Dharmadasa (Chairman and Chief Executive Officer) Executive

Mr. Rienzie T. Wijetilleke (Non-Executive Vice-Chairman) Non-Executive Independent

Deshabandu Tilak de Zoysa (Senior Independent Director) Non-Executive Independent

Professor Lal Chandrasena (General Manager) Executive

Mr. Tissa K. Bandaranayake (Senior Independent Director) Non-Executive Independent

Mr. U. Harshith Dharmadasa Executive

Mr. A.G. Dharmadasa Executive

Ms. A.G. Dharmadasa Executive

Dr. T. Senthilverl (resigned w.e.f. 10th March 2016) Non-Executive

Mr. D. Sunil AbeyRatna Non-Executive Independent

Mr. Palitha Kumarasinghe PC (Appointed on 24th March 2016) Non-Executive Independent

Mr. V.R. Ramanan (Appointed on 24th March 2016) Non-Executive

The qualifications and experience of each of the Directors are given in the individual profiles of the Board of Directors on pages 70 to 73 of the Annual Report.

Appointments and ResignationsNew appointments to the Board are based on the collective decision of the Board. In making new appointments, the Board considers the composition of the Board in order to assess whether they have the right mix of skills, experience and competence in the management of the Company.

The information of new appointments and resignations to the Board of Directors of the Company are shown as an integral part of the Annual Report of the Board of Directors, in compliance with Section 168 (1) (h) of the Companies Act No. 07 of 2007.

New AppointmentsThere were in fact two new appointments to the Board during the financial year under review.

Mr. Palitha Kumarasinghe PC (Appointed on 24th March 2016)

Mr. V.R. Ramanan (Appointed on 24th March 2016)

Recommendations for Re-electionIn terms of Article 74 of the Articles of Association of the Company, Mr. U.H. Dharmadasa, Ms. A.G. Dharmadasa and

Mr. D. Sunil AbeyRatna who retire from the Board by rotation at the forthcoming Annual General Meeting and being eligible for re-election, offer themselves for re-election.

Additionally, Mr. Rienzie T. Wijetilleke who has attained the age of 76 and being eligible for re-election in terms of Section 211 of the Companies Act No. 07 of 2007 offers himself to be reappointed as a Director of the Company.

Mr. Tissa K. Bandaranayake who has attained the age of 73 and being eligible for re-election in terms of Section 211 of the Companies Act No. 07 of 2007 offers himself to be reappointed as a Director of the Company.

Further, Professor Lal Chandrasena who has attained the age of 70 and being eligible for re-election in terms of Section 211 of the Companies Act No. 07 of 2007 offers himself to be reappointed as a Director of the Company.

Mr. Palitha Kumarasinghe PC who retires in terms of Article 81 of the Articles of Association of the Company, offers himself to be reappointed as a Director of the Company.

Mr. V.R. Ramanan who retires in terms of Article 81 of the Articles of Association of the Company, offers himself to be reappointed as a Director of the Company.

Financial Reports106 Nawaloka Hospitals PLC Annual Report 2015/16 Annual Report of the Board of Directors

Independent DirectorsMr. Rienzie T. Wijetilleke, Deshabandu Tilak De Zoysa who were appointed as Independent Directors of the Company on 16th October 2013 have served on the Board continuously for a period of nine years, the Board resolved on 30th November 2012 as required by Rule 7.10.3 (b) that despite the said two Independent Directors serving on the Board for more than nine years they are yet regarded as Independent Directors in terms of Rule 7.10.4 (read with sub - rules [a] to [h] of the Revised Rules of the Colombo Stock Exchange.

Further, Mr. Tissa K. Bandaranayake, Mr. D. Sunil AbeyRatna and Mr. Palitha Kumarasinghe PC were appointed as Independent Directors of the Company on 27th May 2009, 28th February 2012 and 24th March 2016 respectively.

Board SubcommitteesThe Board Sub-Committees established by the Board continue to oversee matters relating to policy and governance. A Related Party Transactions Review Committee was established to comply with the new directives issued by the Securities and Exchange Commission to ensure that the interests of shareholders as a whole are taken into account by a listed entity when entering into related party transactions. The composition of the Subcommittees during the Financial year is as follows:

Board Audit Committee Members

Mr. Tissa K. Bandaranayake – Chairman (INED)

Mr. Rienzie T. Wijetilleke – Member (INED)

Deshabandu Tilak De Zoysa – Member (INED)

Mr. D. Sunil AbeyRatna – Member (INED)

Remuneration Committee Members

Deshabandu Tilak De Zoysa – Chairman (INED)

Mr. Tissa K. Bandaranayake – Member (INED)


Nomination Committee Members

Deshabandu Tilak De Zoysa – Chairman (INED)

Mr. Tissa K. Bandaranayake – Member (INED)


Related Party Transactions Review Committee Members

Mr. Tissa K. Bandaranayake – Chairman (INED)

Deshabandu Tilak De Zoysa – Member (INED)


Professor Lal Chandrasena – Member (ED)

Board Members of the Risk Management Committee

Professor Lal Chandrasena – Chairman (DGM/ED)



Ms. A.G. Dharmadasa – Member (ED)

Strategic Planning Committee Members

Mr. H.K. Jayantha Dharmadasa – Chairman/CEO




Sustainability Committee Members

Mr. H.K. Jayantha Dharmadasa – Chairman/CEO




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

Directors’ MeetingsDetails of meetings which comprise Board meetings, the Board’s Subcommittee meetings of the Audit Committee, Remuneration Committee, Strategic Planning Committee, Nomination Committee, Related Party Transactions Review Committee and Risk Management Committee are dealt with on pages 83, 99, 108,110 and 111 of this Annual Report.

Directors’ ShareholdingThe aggregate shareholding of the Directors for the year ended 31st March 2016 and the previous year, are as follows:

2015/16Ordinary

2014/15Ordinary

Mr. H.K.J. Dharmadasa 462,736,182 462,736,182

Mr. Rienzie T. Wijetilleke 33,332 33,332

Deshabandu Tilak De Zoysa 218,000 218,000

Professor Lal Chandrasena 601,198 601,198

Mr. U.H. Dharmadasa 3,360 3,360

Mr. A.G. Dharmadasa 3,004,026 3,004,026

Ms. A.G. Dharmadasa 5,066,686 5,066,686

Mr. D. Sunil AbeyRatna NIL NIL

Mr. Tissa K. Bandaranayake NIL NIL

Mr. V.R. Ramanan 3,400,000 NIL

Mr. Palitha Kumarasinghe PC NIL NIL

Financial Reports 107Annual Report 2015/16 Nawaloka Hospitals PLCAnnual Report of the Board of Directors

Related Party TransactionsThe Directors have also disclosed the transactions if any, that could be classified as Related Party Transactions’ in terms of LKAS 24 – ‘Related Party Disclosures’ and thus complied with the CSE Listing Rules. Related Party Transactions are given in Note 28 to the Financial Statements.

Directors’ InterestsThe Interests Register is maintained by the Company, as per the Companies Act No. 07 of 2007.

Capital ExpenditureDetails of Property, Plant & Equipment and their movements in the Company and the Group during the year, are listed in Note 02 to the accounts at pages 127 and 128.

Stated CapitalThe stated capital of the Company is 1,409,505,596 ordinary shares. There were no changes in the Stated Capital during the year.

Group Company

Stated Capital 2015/16Rs.

2014/15Rs.

2015/16Rs.

2014/15Rs.

Issued and Fully Paid

At the beginning of the year 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876

At the end of the year 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876

Appointment of AuditorsMessrs KPMG (Chartered Accountants) who are willing to continue in office are recommended for reappointment, at a remuneration to be decided by the Board of Directors.

The fees paid to the Auditors are disclosed in Note 24 to the Financial Statements.

As far as the Directors are aware, the Auditors do not have any relationship (other than that of an Auditor) with the Company or any of its subsidiaries other than those disclosed above. The Auditors also do not have any interest in the Company or its subsidiaries as required by Section 168 (1) (j) of the Companies Act No. 07 of 2007.

For and on behalf of the Board,

Jayantha Dharmadasa Chairman/Chief Executive Officer

Professor Lal ChandrasenaDirector/General Manager

By Order of the Board,

Sgd.M & A Company Secretaries (Private) Limited

25th May 2016

Share InformationThe composition of shareholders and the information relating to share trading, net assets, market value per share, are given on pages 151, 152, 153 and 156 of this Annual Report.

Major ShareholdersThe 20 largest shareholders of the Company as at 31st March 2016 are given on page 153 of this Annual Report.

Employment PolicyThe Company’s Employment Policy is totally non-discriminatory, and equality of opportunity The Company’s Employment Policy is totally non-discriminatory, and equality of opportunity for all employees irrespective of ethnic, origin, religion, political opinion, gender or marital status.

The Company applies ‘equal opportunity policy’ in selection, training, development and promotion opportunities, ensuring that all decisions are based on merit and qualification.

The employees are always encouraged to discuss issues relating to operations and to make suggestions to improve performance.

The number of persons employed by the Group as at 31st March 2016 was 2,157.

Group RevenueThe Revenue of the Group was Rs. 5,860 Mn (2015 – Rs. 4,602 Mn). The analysis thereof is given in Note 22 to the Financial Statements.

Stock Exchange ListingThe Company was listed on the Main Board of the Colombo Stock Exchange in the year 2004.

Going ConcernThe Board firmly believes that the Company and its subsidiaries have sufficient resources to continue in operational existence for a very long foreseeable future. Therefore, Financial Statements of the Group have been prepared on the principle of a ‘Going Concern’.

Events Occurring after the Reporting DateThere are no significant events that have occurred after the Reporting date which would have any material effect on the Company or on the Group that require adjustments to or disclosure in the Financial Statements, except as qualified by the Auditors.


REMUNERATION COMMITTEE REPORT

Formation, Composition and StructureThe Remuneration Committee is a Subcommittee, appointed by and responsible to the Board of Directors, consists of three Independent Non-Executive Directors.

Deshabandu Tilak De Zoysa – Chairman (Independent Non-Executive Director)

Mr. Tissa K. Bandaranayake – Member (Independent Non-Executive Director)


The Committee meetings held during the financial year subject to the following criteria’s:

Duties and ResponsibilitiesThe RC review and recommend the policy on remuneration of the Executive Staff and the Specific remuneration package for the Executive Directors while considering following:

1. Determining the compensation of the Chairman and the BOD, while ensuring that no Director is involved in setting their own remuneration or any other benefit.

2. Establishing transparent procedure to determine remuneration for Executives and Directors.

In this context, the Remuneration Committee took into account:

a. Competition

b. Qualification and experience

c. Market information

d. Business performance

In declaring the overall remuneration policy of the Group.

3. Recommending corporate management appointments to the Board.

4. Approving remuneration levels at each designation of senior management.

5. Maintain competitive and attractive remuneration packages to senior managers and ensure that it is in par with the industry levels.

6. Recommend promotion of Key Management Personnel to BOD.

7. Deciding performance based remuneration, increments, incentive and bonus with the regular evaluation of performance against targets.

8. Make direction regarding to the statutory payments made by the Company on behalf of its employees.

ChallengesIn a highly competitive environment attracting and retaining high calibre executives is a key challenge faced by the Group.

Evaluation of the Effectiveness of the CommitteeThe Board reviews and updates the Committee Charter annually. The minutes of meetings and other reports from the Remuneration Committee are submitted to the Board of Directors, and in addition, plans have been initiated for the Non-Committee members to evaluate the Committee on an annual basis by way of a checklist.

Deshabandu Tilak De ZoysaChairman

25th May 2016

Financial Reports 109Annual Report 2015/16 Nawaloka Hospitals PLC

AUDIT COMMITTEE REPORT

In keeping with the Code of Best Practice on Corporate Governance and the requirements of the Securities and Exchange Commission for public limited companies, Nawaloka Hospitals PLC has established an Audit Committee whose functions, authority and duties have been clearly identified in the Audit Committee Charter. This Charter integrates all the requirements of the Securities and Exchange Commission and Code of Best Practice on Corporate Governance.

The role of the Audit Committee is to oversee the financial reporting system of the Company with a view to safeguarding the interests of all the stakeholders and ensuring that it has been extended to its subsidiaries. This includes selecting and applying appropriate accounting policies for the purpose of financial reporting, ensuring sound internal control principles and its effective implementation, ensuring the integrity of Financial Statements and maintaining an appropriate independent relationship with the Company’s Auditors.

Formation and Composition of the CommitteeThe Audit Committee was established by the Board with a formal and transparent arrangement and it comprises four Independent Non-Executive Directors.

The Chairman of the Audit Committee is Mr. Tissa K. Bandaranayake, who is an Independent Non-Executive Director, a fellow member of The Institute of Chartered Accountants of Sri Lanka and a former Senior Partner of Messrs Ernst & Young, Chartered Accountants with expert knowledge in Accounting and Finance.

Member of the Audit Committee

Name of Director Non-Executive Independent

Mr. Tissa K. Bandaranayake – Chairman



Mr. D. Sunil AbeyRatna

Broad Purpose of the Audit CommitteeThe Audit Committee assisted the Board in the following manner:

zz Ensuring that the preparation, presentation and adequacy of disclosure in the Financial Statements are in accordance with LKAS/SLFRS and with the requirements of the Companies Act No. 07 of 2007 and other relevant Financial reporting related regulatory requirements.

zz Reviewing the appropriateness of the procedures in place for the identification, evaluation and management of business risks whilst seeing that the systems of internal control with regard to all functions are adequate and functioning properly.

zz Assessing the Company’s ability to continue as a going concern in the foreseeable future and also in addition, ensuring compliance with Laws and Company policies.

zz Overseeing of the independence and performance of the Company’s External Auditors.

Duties and ResponsibilitiesIn brief, the duties and responsibilities performed by the Audit Committee are as follows:

External Audit zz Recommending the reappointment of Messrs KPMG, Chartered Accountants, as Auditors of Nawaloka Hospitals PLC for the financial year ended 31st March 2017.

zz Examine any non-audit work performed by the Auditors and the fees thereon to ensure that their objectivity and independence is not impaired.

zz Reviewing the scope and result of the audit and its effectiveness.

zz Discussing with the External Auditors before commencement of the audit and at the conclusion of the audit, in relation to audit plan, key audit issues and their resolution, management responses and the remuneration of the Auditors.

Compliance with Laws and Regulations and Company policies

zz Reviewing the Quarterly Financial Statements and discussing with the Management.

zz Reviewing the extent of compliance with the laws of the country, governmental regulations, listing rules and established policies of the Company.

Financial Reports110 Nawaloka Hospitals PLC Annual Report 2015/16 Audit Committee Report

Internal controls and internal audit zz Reviewing the internal audit function and making recommendations.

zz Ensuring that there are satisfactory arrangements for monitoring internal control in keeping with delegated authorities.

zz Establishing mechanisms for the confidential receipt and treatment of complaints alleging fraud received from internal/external sources and pertaining to internal control, accounting or other such matters. This is currently in progress.

zz Monitoring the implementation of strategies, plans, as well as the manning of organisation for internal auditing in line with the methodologies promulgated as best practices.

zz Ensuring that if and when employees or former employees of the Auditors are hired the established regulatory requirements are followed, so that audit independence is not impaired. Also implementing other internal controls related to IT, HR, Finance, Marketing and Administration etc, as required and ensuring that these are soundly conceived and effectively administered to seek assurance that the control systems are in place, and operating efficiently and are regularly monitored.

Risk Management zz Monitoring the policies and practices related to risk management.

zz Obtaining statements of business risks; evaluating the severity, the process in place for the management of these risks and persons responsible for the management of risks within specified time frames.

Financial Statements zz Ensuring proper standardised updated systems for financial reporting.

zz Holding of meetings with the Head of Finance to ensure the proper controls and segregation of duties to minimise risks.

zz Reviewing Company’s quarterly unaudited and annually Audited Financial Statements and making recommendations to the Board for their releases.

MeetingsThe Audit Committee held four meetings during the year under review. The proceedings of the Audit Committee are regularly reported to the Board of Directors. The attendance of members at these meetings is given below:

Name of Director No. of Meetings Attended

Attendance Percentage

%

Mr. Tissa K. Bandaranayake

4 100

Mr. Rienzie T. Wijetilleke 3 75


3 75

Mr. D. Sunil AbeyRatna 4 100

The Committee has provided the Chairman of the Audit Committee with all powers to convene regular meetings with the Financial Controller, Internal Audit, Sectional Heads and Company’s External Auditors, separately and periodically.

Evaluation of the Effectiveness of the CommitteeThe Board reviews and updates the Committee Charter annually according to the changes in the business environment and operations of the organisation. The minutes of meetings and other reports from the Audit Committee are submitted to the Board of Directors, and also in addition, plans have been initiated for the non-committee members to evaluate the Committee on an annual basis by way of a checklist.

Mr. Tissa K. BandaranayakeChairman

25th May 2016


BOARD RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT

Composition of the CommitteeThe Board appointed Related Party Transactions Review Committee (BRPTRC), comprising one Executive Director and three Independent Non-Executive Directors, as stipulated by the Code of Best Practices on Related Party Transactions, issued by the Colombo Stock Exchange (CSE). The (BRPTRC) as at the end of the year was comprised the following members:

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


Mr. Palitha Kumarasinghe PC – Member (Independent Non-Executive Director)

Professor Lal Chandrasena – Member (Executive Director)

Terms of Reference of the Committee

The BRPTRC was formed by the Board at the end of 2014, to assist the Board in reviewing all Related Party Transactions (RPT) carried out by the Group, by adopting the Code of Best Practice on Related Party Transactions, as issued by the CSE, which is mandatory from 1st January 2016.

The mandate of the Committee includes inter alia the following:zz Developing and recommending for adoption by the Board of Directors of the Company and its related parties, a RPT policy consistent with that proposed by the CSE.

zz Updating the Board of Directors on the RPT of each of the related parties of the Group.

zz Making immediate market disclosures on applicable RPT, as required by Section 9 of the Continuing Listing requirements of the CSE.

zz Making appropriate disclosures on RPT in the Annual Report, as required by Section 9 of the Continuing Listing Requirements of the CSE.

The Committee will schedule quarterly meetings to review and report to the Board, on matters involving RPT falling under its Terms of Reference.

Activities in 2015/16

A committee meeting was held and all related party transactions occurred during the financial year 2015/16 was reviewed and the Committee is in the opinion that the transactions are on normal commercial terms, and are not prejudicial to the interests of the entity and its minority shareholders. Proceedings of the Committee meetings were regularly reported to the Board of Directors.

Mr. Tissa K. BandaranayakeChairman

25th May 2016


DIRECTORS’ RESPONSIBILITY IN FINANCIAL REPORTING

The responsibility of the Directors in relation to the Financial Statements is set out in the following statement.

The Board of Directors of Nawaloka Hospitals PLC are responsible under Section 148 of the Companies Act No. 07 of 2007 for keeping proper accounting records which have been disclosed with reasonable accuracy, at all times, the financial position of the Company and of the Group and to enable them to ensure that the Financial Statements comply with, inter alia the Companies Act No. 07 of 2007.

In preparing these Financial Statements, the Directors of the Company have to comply with the requirements specified in Sections 150 (1), 151 (1), 152 (1) and 153 (1) of the Companies Act No. 07 of 2007. In accordance therewith the Directors of the Company and the Group maintain proper Books of Accounts of all the transactions and prepare Financial Statements that give a true and fair view of the state of affairs of the Company at the date of the Statement of Financial Position and the profit or loss for the year ending on that date of the Statement of Financial Position.

Accordingly, the Directors are of the view that -

1. Appropriate accounting policies have been selected and applied in a consistent manner and material departures if any, have been disclosed and explained;

2. All applicable and relevant Accounting Standards have been followed; and

3. They have exercised due and proper judgment and estimates which are reasonable and prudent.

The Financial Statements of the Company and the Group have been certified by the Company’s Chief Financial Officer, the person responsible for its preparation, as required by the Act. Financial Statements of the Company and the Group have been signed by two Directors on 25th May 2016 as required by Sections 150 (1) (c) and 152 (1) (c) of the Companies Act. Accordingly, the Board of Directors wish to confirm that they have complied with all the requirements of the Companies Act No. 07 of 2007 and have also met all the requirements under Section 7 of the Listing Rules of the Colombo Stock Exchange.

The Directors also have taken reasonable steps to safeguard the assets of the Company and to prevent and detect frauds and other irregularities. In this regard, the Directors have instituted an effective and comprehensive system of internal controls and an effective system of monitoring its effectiveness, internal audit being one of them. The Board has been provided additional assurance on the reliability of the Financial Statements through a process of independent and objective reviews conducted by the Audit Committee. The Report of the Audit Committee is on pages 109 to 110 of this Annual Report.

The Directors are also of the view that the Company has adequate resources to continue in business for the foreseeable future and have applied the ‘Going Concern’ basis in preparing these Financial Statements.

The Directors are confident that they have discharged their responsibility as set out in the statement.

Compliance ReportThe Directors also confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company, all contributions, levies and taxes payable on behalf of and in respect of the Employees of the Company and other known statutory dues as were due and payable by the Company as at the date of the Statement of Financial Position have been paid or where necessary provided for, in arriving at the financial results for the year under review.

Further, all documents required by the Companies Act No. 07 of 2007 to be filed with Registrar of Companies have been duly filed and compliance has been made with all the other legal requirements in connection with the said Companies Act and all dividend cheques have been dispatched by the due date.


Sgd.M & A Company Secretaries (Private) Limited

25th May 2016


INDEPENDENT AUDITORS’ REPORT

TO THE SHAREHOLDERS OF NAWALOKA HOSPITALS PLC

Report on the Financial StatementsWe have audited the accompanying Financial Statements of Nawaloka Hospitals PLC, (“the Company”), and the Consolidated Financial Statements of the Company and its subsidiaries (“Group”), which comprise the statement of financial position as at 31st March 2016, and the statement of profit or loss and other comprehensive income, statement of changes in equity and, cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information as set out on pages 114 to 144.

Board’s Responsibility for the Financial Statements The Board of Directors (“Board”) is responsible for the preparation of these Financial Statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as Board determines is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance about whether the Financial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Statements. The procedures selected depend on the Auditors’ judgment, including the assessment of the risks of material misstatement of the Financial Statements, whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity’s preparation of the Financial Statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the Financial Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the Consolidated Financial statements give a true and fair view of the financial position of the Group as at 31st March 2016, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory RequirementsAs required by Section 163 (2) of the Companies Act No. 07 of 2007, we state the following:

(a) The basis of opinion and scope and limitations of the audit are as stated above.

(b) In our opinion:

- we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company,

- The Financial Statements of the Company give a true and fair view of its financial position as at 31st March 2016, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

- The Financial Statements of the Company, and the Group comply with the requirements of Sections 151 and 153 of the Companies Act No. 07 of 2007.

CHARTERED ACCOUNTANTSColombo,

25th May 2016.


Group Company

As at 31st MarchNote

2016Rs.

2015Rs.

2016Rs.

2015Rs.

Assets

Non-current assets

Property, plant & equipment 2 8,009,872,280 5,842,254,219 2,428,987,577 2,453,512,945

Leasehold Right Over Land 3 224,975,452 227,910,976 48,617,196 49,510,203

Investment property 4 – – 192,417,100 192,417,100

Investment in subsidiaries 5 – – 2,016,985,376 1,245,933,056

Equity accounted investee 6 118,230,763 90,241,313 2,500,000 2,500,000

Advance for land 7 952,343,085 952,343,085 – –

Total non-current assets 9,305,421,580 7,112,749,593 4,689,507,249 3,943,873,304

Current assets

Inventories 8 409,117,083 335,763,359 144,130,234 114,650,320

Trade and other receivables 9 519,018,172 428,373,535 319,919,013 265,300,017

Deposits and advances 10 192,351,662 144,112,688 124,249,177 112,077,389

Receivable from related parties 11 204,079,352 160,381,424 2,272,862,092 1,434,884,270

Short-term investments 427,886,374 415,601,334 321,319,481 39,011,945

Cash and cash equivalents 135,605,771 48,988,035 99,298,780 34,538,792

Total current assets 1,888,058,414 1,533,220,375 3,281,778,777 2,000,462,733

Total assets 11,193,479,994 8,645,969,968 7,971,286,026 5,944,336,037

Equity and Liabilities

Capital and reserves

Stated capital 12 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876

Revaluation reserve 13 990,872,361 990,872,361 – –

Retained earnings 1,796,636,725 1,689,420,602 258,947,189 486,370,390

Total equity 3,994,897,962 3,887,681,839 1,466,336,065 1,693,759,266

Non-current liabilities

Debentures 14 1,484,104,507 1,480,047,383 1,484,104,507 1,480,047,383

Employee benefits 15 184,237,790 170,953,704 166,252,434 158,673,474

Deferred tax liabilities 16 305,060,480 227,899,587 92,347,774 119,113,956

Borrowings falling due after one year 17 3,002,368,366 1,269,045,093 2,970,442,441 1,260,255,153

Finance leases payable after one year 18 108,000,000 116,000,000 – –

Total non-current liabilities 5,083,771,143 3,263,945,767 4,713,147,156 3,018,089,966

STATEMENT OF FINANCIAL POSITION

Financial Reports 115Annual Report 2015/16 Nawaloka Hospitals PLCStatement of Financial Position

Group Company

As at 31st MarchNote

2016Rs.

2015Rs.

2016Rs.

2015Rs.

Current liabilities

Trade creditors and other payables 19 486,959,763 473,368,248 424,381,781 424,320,318

Unclaimed dividends 2,721,515 2,610,056 2,721,515 2,610,056

Current tax liabilities 20 24,765,638 2,250,608 – –

Payable to related companies 21 15,595,918 13,849,554 8,747,060 8,491,106

Borrowings falling due within one year 17 594,325,684 351,370,388 545,401,924 311,369,588

Finance leases payable within one year 18 8,000,000 8,000,000 – –

Bank overdrafts 982,442,371 642,893,508 810,550,525 485,695,737

Total current liabilities 2,114,810,889 1,494,342,362 1,791,802,805 1,232,486,805

Total liabilities 7,198,582,032 4,758,288,129 6,504,949,961 4,250,576,771

Total equity and liabilities 11,193,479,994 8,645,969,968 7,971,286,026 5,944,336,037

Net assets per share 2.83 2.76 1.04 1.20

Notes form an integral part of these Financial Statements.

Figures in brackets indicate deductions.

It is certified that the Financial Statements have been prepared and presented in compliance with the requirements of the

Companies Act No. 07 of 2007.

Mr. Nalaka NiroshanaHead of Finance

The Board of Directors is responsible for the preparation and presentation of these Financial Statements.

Approved and signed for and on behalf of the Board of Directors;

Mr. Jayantha Dharmadasa Professor Lal ChandrasenaChairman/Chief Executive Officer Director

Colombo25th May 2016


STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Group Company

For the year ended 31st MarchNote

2016Rs.

2015Rs.

2016Rs.

2015Rs.

Revenue 22 5,860,218,161 4,602,433,640 2,833,195,719 2,497,830,914

Cost of services (2,906,572,342) (2,331,583,775) (1,490,055,615) (1,229,903,547)

Gross profit 2,953,645,819 2,270,849,865 1,343,140,104 1,267,927,367

Other income 23 94,495,240 65,199,571 86,694,974 152,643,920

Staff cost (1,151,309,690) (968,758,629) (544,111,104) (477,481,620)

Administrative expenses (1,089,179,752) (916,087,291) (567,391,842) (497,222,102)

Other operating expenses (170,442,792) (98,860,906) (117,205,312) (70,648,459)

Profit from operations 24 637,208,825 352,342,610 201,126,820 375,219,106

Finance cost 25 (372,317,361) (285,092,829) (355,295,913) (277,397,680)

Share of profits of equity accounted investee, net of tax 50,360,964 29,397,738 – –

Profit/(loss) before tax 315,252,428 96,647,519 (154,169,093) 97,821,426

Tax expense 26 (109,218,200) (9,176,683) 26,603,594 (7,883,420)

Profit/(loss) for the year 206,034,228 87,470,836 (127,565,499) 89,938,006

Other comprehensive income

Defined benefits plan actuarial losses 15.3 (309,060) (17,481,666) (1,354,898) (18,820,799)

Deferred tax impact on defined benefits plan actuarial losses 16.4 27,860 2,500,039 162,588 2,286,564

Equity accounted investee’s share of OCI 128,487 (3,192,982) – –

Other comprehensive income/(loss) for the year, net of tax (152,713) (18,174,609) (1,192,310) (16,534,235)

Total comprehensive income/(loss) for the year 205,881,515 69,296,227 (128,757,809) 73,403,771

Net profit/(loss) attributable to equity holders of the Company 205,881,515 69,296,227 (128,757,809) 73,403,771

Earnings/(loss) per share 27 0.15 0.06 (0.09) 0.06




STATEMENT OF CHANGES IN EQUITY

For the year ended 31st March 2016 Stated CapitalRs.

Revaluation Reserve Rs.

Retained Earnings Rs.

Total Equity Rs.

Group

Balance as at 01st April 2014 1,207,388,876 990,872,361 1,704,694,711 3,902,955,948

Profit for the year – – 87,470,836 87,470,836

Other comprehensive income – – (18,174,609) (18,174,609)

Transaction with the owners of the Company

Dividends paid – – (84,570,336) (84,570,336)

Balance as at 31st March 2015 1,207,388,876 990,872,361 1,689,420,602 3,887,681,839


Other comprehensive income – – (152,713) (152,713)


Dividends paid – – (98,665,392) (98,665,392)

Balance as at 31st March 2016 1,207,388,876 990,872,361 1,796,636,725 3,994,897,962

Company

Balance as at 01st April 2014 1,207,388,876 – 497,536,954 1,704,925,830




Dividends paid – – (84,570,336) (84,570,335)

Balance as at 31st March 2015 1,207,388,876 – 486,370,390 1,693,759,266

Loss for the year – – (127,565,499) (127,565,499)



Dividends paid – – (98,665,392) (98,665,392)

Balance as at 31st March 2016 1,207,388,876 – 258,947,189 1,466,336,065




CASH FLOW STATEMENT

Group Company

For the year ended 31st MarchNote

2016Rs.

2015Rs.

2016Rs.

2015Rs.

Cash flows from operating activities

Profit/(Loss) before tax 315,252,428 96,647,519 (154,169,093) 97,821,426

Adjustments for:

Depreciation and amortisation 2/3 479,732,756 397,776,647 326,152,985 300,670,179

Finance cost 25 372,317,361 285,092,829 355,295,913 277,397,680

Interest income 23 (30,384,641) (31,311,710) (13,734,180) (13,047,638)

Share of profit of equity accounted investee net of tax (50,360,964) (29,397,738) – –

Provision for employee benefits 15.2 33,427,021 26,235,983 25,530,843 22,473,388

Provision for bad and doubtful debts 24 3,272,625 9,114,875 8,006,844 7,376,592

Provision for deemed interest tax 24 26,668,154 – 26,668,154 –

Provision for slow moving inventories 8 2,000,000 – 2,000,000 –

Profit on disposal of property, plant & equipment 23 (7,006,687) (5,589,564) (7,006,687) (5,589,564)

Dividend income – – (22,500,000) (109,770,335)

Impairment for other receivable balances 24 42,758,125 54,244,933 41,528,139 39,101,201

Operating profit before working capital changes 1,187,676,178 802,813,774 587,772,918 616,432,929

Changes in working capital

Increase in inventories (75,353,724) (29,413,830) (31,479,914) 2,068,129

Increase/decrease in debtors, deposits and advances (176,328,559) (206,080,084) (107,739,965) (91,865,890)

Increase/decrease in related party balances (50,537,364) (157,547,002) (1,617,359,990) (1,107,077,221)

Decrease in creditors and other payables (13,076,639) 27,482,268 (26,606,691) (5,427,820)

(315,296,286) (365,558,648) (1,783,186,560) (1,202,302,802)

Cash generated from operating activities 872,379,892 437,255,126 (1,195,413,642) (585,869,873)

Interest paid (368,260,237) (281,536,637) (351,238,789) (273,841,489)

Gratuity paid 15.1 (20,451,995) (17,385,483) (19,306,781) (17,045,448)

Current tax paid 20 (9,514,418) (17,585,304) – –

Net cash generated from/(used in) operating activities 474,153,242 120,747,702 (1,565,959,212) (876,756,810)

Cash flows from investing activities

Purchase of property, plant & equipment 2 (2,639,234,088) (1,917,055,176) (293,727,923) (653,617,450)

Purchase of investment property 4 – – – (192,417,100)

Investment in subsidiary 5 – – – (300,000,000)

Investment in land 7 – (68,789,654) – –

Interest received 28,360,063 31,311,710 2,287,350 13,047,638

During the year investment (10,260,462) (32,430,344) (270,860,706) 247,592,487

Dividend received 22,500,000 24,999,999 22,500,000 109,770,335

Expenses incurred on related parties – 471,956,698 – 471,956,698

Proceeds from disposal of property, plant & equipment 1,825,482 58,046,338 – 58,046,338

Net cash used in investing activities (2,596,809,005) (1,431,960,429) (539,801,279) (245,621,054)

Cash flows from financing activities

Proceeds from long-term borrowings and leases 17 2,828,645,181 1,390,867,211 2,697,409,436 1,252,076,271

Repayments of long-term borrowings and leases 17/18 (860,366,612) (298,508,344) (753,189,812) (200,508,144)

Dividends paid (98,553,933) (84,570,336) (98,553,933) (84,570,335)

Net cash generated from financing activities 1,869,724,636 1,007,788,531 1,845,665,691 966,997,792

Net increase/(decrease) in cash and cash equivalents during the year (252,931,127) (303,424,197) (260,094,800) (155,380,072)

Cash and cash equivalents at the beginning of the year (593,905,473) (290,481,276) (451,156,945) (295,776,873)

Cash and cash equivalents at the end of the year (846,836,600) (593,905,473) (711,251,745) (451,156,945)

Analysis of cash and cash equivalents at the end of the year

Cash at bank and in hand 135,605,771 48,988,035 99,298,780 34,538,792

Bank overdraft (982,442,371) (642,893,508) (810,550,525) (485,695,737)

(846,836,600) (593,905,473) (711,251,745) (451,156,945)




NOTES TO THE FINANCIAL STATEMENTS

1.1 Reporting Entity1.1.1 Legal Form

a. Nawaloka Hospitals PLC (‘Company’) is a quoted public company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and re-registered under the new Companies Act No. 07 of 2007. The Company does not have an identifiable parent of its own. The registered office and the principal place of business of the Company is located at No. 23, Deshamanya H.K. Dharmadasa Mawatha, Colombo 02.

b. New Nawaloka Hospitals (Pvt) Ltd., is a private company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and re-registered under the new Companies Act No. 07 of 2007. The Ultimate Parent of the Company is Nawaloka Hospitals PLC.

c. New Nawaloka Medical Centre (Pvt) Ltd., is a private company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and re-registered under the new Companies Act No. 07 of 2007. The Ultimate Parent of the Company is Nawaloka Hospitals PLC.

d. Nawaloka Metropolis Laboratories (Pvt) Ltd. is a private company with limited liability incorporated in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and re-registered under the new Companies Act No. 07 of 2007, which is also a 50:50 joint venture investment between Nawaloka Hospitals PLC and Metropolis Health Services (India) Private Ltd.

e. Nawaloka Medicare (Pvt) Ltd. is a limited liability company incorporated in Sri Lanka under the Companies Act No. 07 of 2007 (Registration No. PV 93186) and the Board of Investment Law No. 04 of 1978. It is having its registered office at No. 23, Deshamanya H.K Dharmadasa Mawatha, Colombo 02. The Ultimate Parent of the Company is Nawaloka Hospitals PLC.

The ‘Company’, in the Financial Statements, refers to Nawaloka Hospitals PLC and ‘Group’ refers to the Company and all its subsidiaries and joint venture, whose Financial Statements have been consolidated.

1.1.2 Total Number of Employees

Company 1,052 (2015 – 1,002)

Group 2,157 (2015 - 2,105)

1.1.3 Principal Activities and Nature of Operations

The principal activities of the Company and the Group is to provide health and laboratory services. There were no significant changes in the nature of principal activities of the Company and the Group during the financial year under review.

1.2 Basis of Preparation1.2.1 Statement of Compliance

The Financial Statements of the Company and the Group comprise the Statement of Financial Position, Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Cash Flows together with the Notes to the Financial Statements.

The Consolidated Financial Statements have been prepared in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) laid down by The Institute of Chartered Accountants of Sri Lanka and the requirements of Companies Act No. 07 of 2007.

These Consolidated Financial Statements were authorised for issue by the Board of Directors on 25th May 2016.

1.2.2 Responsibility for Financial Statements

The Board of Directors of the Company is responsible for the preparation and presentation of the Financial Statements for the Group and the Company according to the requirements of Companies Act No. 07 of 2007 and SLFRSs and LKASs.

1.2.3 Going Concern

The management has made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, the management is not aware of any material uncertainties that may cast significant doubt upon the Group’s/Company’s ability to continue as

a going concern. Therefore, the Financial Statements continue to be prepared on a going concern basis.

Basis of Measurement

The Consolidated Financial Statements have been prepared on the historical cost basis and applied consistently with no adjustments being made for inflationary factors affecting the Financial Statements, except for the following material items in the Statement of Financial Position:

zz Non-derivative financial instruments classified as ‘Loans and receivables’ and ‘other financial liabilities’ measured at amortised cost;

zz Buildings on leasehold lands are measured at fair value;

zz Defined benefit obligations are measured at its present value, based on an actuarial valuation as explained in Note 15.

These Financial Statements have been prepared on the basis that the Company and the Group would continue as a going concern for the foreseeable future.

1.2.4 Functional and Presentation Currency

Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entities operate (‘the functional currency’). The Consolidated Financial Statements are presented in Sri Lankan Rupees, which is the Company’s functional and presentation currency. All financial information presented in Rupees has been rounded to the nearest Rupee.

1.2.5 Materiality and Aggregation

Each material class of similar item is presented separately in the Financial Statements. Items of dissimilar nature or function are presented separately, unless they are immaterial as permitted by the LKAS 1 – ‘Presentation of Financial Statements’.

1.2.6 Comparative Information

The Financial Statements for the comparative periods comprise results for the 12 month periods from 1st April 2014 to 31st March 2015. In this circumstance, the comparative

Financial Reports120 Nawaloka Hospitals PLC Annual Report 2015/16 Notes to the Financial Statements

information for the Statement of Financial Position, Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Cash Flow Statement and related notes are comparable with the current period.

The previous year figures and phrases have been rearranged wherever necessary to conform with current year’s presentation.

1.2.7 Significant Accounting Judgments, Estimates and Assumptions

The preparation of the Consolidated Financial Statements inconformity with SLFRS/LKAS requires management to make judgments, estimates and assumptions that affect the application of Accounting Policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the Consolidated Financial Statements is included in the following notes;

Assessment of Impairment – Key Assumptions Used in Discounted Cash Flow Projections

The Company and Group assesses at each Reporting Date whether there is objective evidence that an asset or portfolio of assets is impaired. The recoverable amount of an asset or cash-generating unit (CGU) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to present value using appropriate discount rates that reflects the current market assessments of the time value of money and risks specific to the asset.

Useful Life Time of the Property, Plant & Equipment

The Group reviews the residual values, useful lives and methods of depreciation of property, plant & equipment at each Reporting Date.

Judgment of the management is exercised in the estimation of these values, rates, methods and so, they are subject to uncertainty.

Deferred Taxation – Utilisation of Tax Losses

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the level of future taxable profits together with future tax planning strategies.

Defined Benefit Plan

The assessment of the liability of defined benefit obligations involves a significant element of assumptions; including discount rates, future salary increases, mortality rates and future pension increases and due to the long-term nature of these plans, such estimates are subject to uncertainty.

Current Taxation

Current tax liabilities are provided for in the Financial Statements applying the relevant tax statutes and regulations which the management believes reflect the actual liability. There can be instances where the stand taken by the Company and Group on transactions is contested by revenue authorities. Any additional costs on account of these issues are accounted for as a tax expense at the point the liability is confirmed on any Group entity.

Significant Accounting Policies

The Accounting Policies set out below have been applied consistently to all periods presented in these Consolidated Financial Statements and have been applied consistently by the Group’s entities.

1.3 Basis of Consolidation1.3.1 Business Combinations

Business combinations are accounted for using the acquisition method as at the acquisition date-i.e. when control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.

The Group measures goodwill at the acquisition date as:

zz The fair value of the consideration transferred; plus

zz The recognised amount of any non-controlling interests in the acquire; plus

zz If the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquire; less

zz The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in the profit or loss. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

1.3.2 Non-Controlling Interests

For each business combination, the Group elects to measure any non-controlling interests in the acquire either:

zz at fair value; or

zz At their proportionate share of the acquirer’s identifiable net assets, which are generally at fair value.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary.

Financial Reports 121Annual Report 2015/16 Nawaloka Hospitals PLCNotes to the Financial Statements

1.3.3 Subsidiaries

Subsidiaries are those enterprises controlled by the Group. The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases.

Adjustments required to the accounting policies of subsidiaries have been changed whereever necessary to align them with the policies adopted by the Group.

In the Company’s Financial Statements investments in subsidiaries are carried at cost less impairment if any in net recoverable value.

The consolidated accounts are prepared to a common financial year end of 31st March.

1.3.4 Loss of Control

On the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost.

Subsequently that retained interest is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

1.3.5 Transactions Eliminated on Consolidation

Intra-group balances and transactions are eliminated in preparing the Consolidated Financial Statements.

1.3.6 Joint Ventures

Joint ventures are those entities over whose activities that the Group has joint control established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

The result of the joint venture, Nawaloka Metropolis Laboratories (Pvt) Ltd., in which the Company has a 50% holding has been accounted for using the equity method.

They are initially recognised at cost, which includes transaction costs, subsequent to initial recognition, the Consolidated Financial Statements include the Group’s share of the Profit & Loss and other comprehensive income of equity accounted investees, until the date on which significant influence or joint control ceases.

1.4 Foreign Currency TranslationThe Financial Statements of the Group are presented in Sri Lankan Rupees, which is the functional and presentation currency of the Group. Recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the date of Statement of Financial Position. Non-monetary items that are measured in terms of historical cost in foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value denominated in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Foreign Currency differences arising on retranslation are generally recognised in profit or loss.

1.5 Financial Instruments Non-Derivative Financial AssetsThe Company and Group initially recognises loans and receivables on the date that they are originated. All other financial assets are recognised initially on the trade date, which is the date that the Company and the Group becomes a party to the contractual provisions of the instrument.

The Company and the Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the Company and the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position when, and only when, the Company and the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.The Company and the Group only holds financial assets that are categorised into the ‘loans and receivables’ classification.

Loans and Receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise cash and cash equivalents and trade and other receivables.

Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances, placement in Government Securities and placements in repurchase agreements with maturities of three months or less from the acquisition date that are subject to on insignificant risk of changes in their fair value and are used by the Company and the Group in the Management of its short-term commitments.

1.6 Non-Derivative Financial LiabilitiesThe Company and Group initially recognises subordinated liabilities on the date, which is the date that the Company and the Group becomes a party to the contractual provisions of the instrument.

The Company and Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

The Company and Group classifies non-derivative financial liabilities into the ‘other financial liabilities’ category. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial


recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise loans and borrowings, refundable rental and other deposits, bank overdrafts and trade and other payables.

Bank overdrafts that are repayable on demand and form an integral part of the Company’s and the Group’s cash management are included as a component of cash and cash equivalents for the statement of cash flows.

Stated CapitalOrdinary SharesOrdinary shares are classified as equity. Costs attributable to the issue of ordinary shares are recognised as an expense.

1.7 Assets and Bases of Their Valuation

1.7.1 Property, Plant & Equipment - Owned Assets

1.7.1.1 All items of Property, Plant & Equipment are initially recorded at cost. Where items of Property, Plant & Equipment are subsequently revalued, the entire class of such assets is revalued. Revaluations are made with sufficient regularity to ensure that their carrying amounts do not differ materially from their fair values at the Reporting Date. Revaluation of Property, Plant & Equipment are undertaken by professionally qualified valuers.

Subsequent to the initial recognition of the asset at cost, the revalued Property, Plant & Equipment are carried at revalued amounts less accumulated depreciation thereon and accumulated impairment losses. Revaluation of Property, Plant & Equipment are undertaken by professionally-qualified valuers.

Revaluation model is applied for buildings on leasehold land by the Company and the Board has decided to revalue the said buildings every 3-5 years thereafter to comply with requirement of Revaluation Model under the Sri Lanka Accounting Standard (LKAS) 16 – ‘Property, Plant & Equipment’.

Property, Plant & Equipment other than the buildings on leasehold land are recorded at cost less accumulated depreciation and accumulated impairment losses, in accordance with the ‘Cost Model’ as set out in LKAS 16 – ‘Property, Plant & Equipment’.

1.7.1.2 The cost of an item of Property, Plant & Equipment comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use.

1.7.1.3 Expenditure incurred for the purpose of acquiring, extending or improving assets of a permanent nature by means of which to carry on the business or to increase the earning of the business has been treated as capital expenditure.

1.7.1.4 Depreciation is provided on the straight-line method at the following rates per annum, so as to write-off the cost or revaluation of the assets over its effective useful life:

1.7.1.5 The useful life, depreciating methods and residual values are assessed annually or in an earlier date where any circumstance indicates such assessment is required.

Category Rate

Leasehold Property Over the lease period

Buildings Leasehold Land Over 60 years

Fixtures and Fittings 10%

Plant and Machinery 20%

Hospital Equipment 10%

Medical Equipment 10%

Motor Vehicles 20%

Furniture and Fittings 10%

Computer Equipment 25%

Depreciation is provided from the date of available for use up to the date of disposal.

1.7.2 Property, Plant & Equipment - Leased Assets

Property, Plant & Equipment on finance leases, which effectively transfer to the Company substantially all risks and benefits incidental to ownership of the leased items, are capitalised and disclosed as finance leases at their cash price and depreciated over the period the Group is expected to benefit from the use of the leased assets.

The corresponding principal amount payable to the lessor is shown as a liability. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve balance of the liability. The interest payable over the period of the lease is transferred to an interest in suspense account. The interest element of the rental obligations pertaining to each financial year is charged to the Statement of Comprehensive Income over the period of lease. The cost of improvements to leasehold property is capitalised, disclosed as leasehold improvements and depreciated over the unexpired period of the lease or the estimated useful life of the improvements, whichever is shorter.

1.7.3 Leasehold Right Over Land

Leasehold right over land are amortised over the lease term in accordance with the pattern of benefits provided.

1.7.4 Investment Property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost. When the use of a property changes such that it is reclassified as property, plant and equipment, its carrying value at the date of reclassification becomes its cost for subsequent accounting.

1.7.5 Investments

1.7.5.1 Long-Term Investments

In the Parent Company’s Financial Statements, the investments in unquoted subsidiaries and joint venture are carried at cost. The Carrying amounts of long-term investments are reduced to recognise a decline which is considered other than temporary, in the value of investments, determined on an individual investment basis. In the Company’s Financial Statements, investments in subsidiaries and joint ventures have been accounted for at cost, net of any impairment losses which are charged to the Statement of Comprehensive Income.

Notes to the Financial Statements


1.7.6 Inventories

Inventories have been valued at lower of cost and net realisable value after making due allowance for obsolete items. The First-In First-Out (FIFO) basis is adopted to arrive at the cost of inventories.

1.7.7 Impairment

i. Non-Derivative Financial Assets

Financial assets classified as ‘loans and receivables’ are assessed at each Reporting Date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and that loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Company and the Group on terms that the Company and the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security.

Financial Assets Measured at Amortised CostThe Company and the Group considers evidence of impairment for financial assets measured at amortised cost (loans and receivables and held-to-maturity financial assets) on specific assets. Accordingly, all individually significant assets are assessed for specific impairment. An impairment loss in respect of financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables or held-to-maturity investment securities. Interest on the impaired asset continues to be recognised. When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

ii. Non-Financial Assets

The carrying amounts of the Company’s and the Group’s non-financial assets, other than inventories are reviewed at each Reporting Date to determine such indication exists, and then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or cash-generating unit (CGU) exceeds its recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the asset or CGU. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated to reduce the carrying amounts of the assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

1.8 Liabilities and Provisions

1.8.1 Liabilities

1.8.1.1 Liabilities classified as Current Liabilities in the Statement of Financial Position are those, which will fall due for payment on demand or within one year from the Reporting Date.

1.8.1.2 Liabilities classified as Non-Current Liabilities in the Statement of Financial Position are those, which will fall due for payment after one year from the Reporting Date.

1.8.2 Provisions

Provisions are recognised when the Company has a legal or constructive obligation as a result of past events and it is probable that an outflow of economic benefits will be required to settle the obligation.

1.8.3 Employee Benefits

1.8.3.1 Defined Benefit Plan – Employee Benefits

The liability recognised in the Statement of Financial Position in respect of defined benefit plan is the present value of the defined benefit obligation at the Reporting Date. Benefits falling due more than 12 months after the Reporting Date are discounted to present value. The defined benefit obligation is calculated annually by Independent Actuaries using Projected Unit Credit (PUC) method as recommended by LKAS 19 – ‘Employee Benefits’.

Actuarial gains and losses in the period in which they occur have been recognised in the Statement of Other Comprehensive Income.

The assumptions based on which the results of the actuarial valuation was determined, are included in Note 15 to the Financial Statements.

Gratuity liability was computed from the first year of service for all employees in conformity with Sri Lanka Accounting Standard (LKAS) 19 – ‘Employee Benefits’.

However, under the Payments of Gratuity Act No. 12 of 1983, the liability to an employee arises only on completion of five years of continued service.

The Company is liable to pay gratuity in terms of the relevant statute.

The Gratuity liability is not externally funded.

Defined Contribution PlanEmployees’ Provident Fund and Employees’ Trust Fund is a post-employment benefit plan under which an entity pays fixed contribution into a separate entity and will have no legal or constructive obligation to pay further amounts. All the employees who are eligible for Employees’ Provident Fund and Employees’ Trust Fund are covered by relevant contribution funds in line with the respective statutes. Employer’s contribution to the defined contribution plans are recognised as an expense in the Statement of Comprehensive Income when incurred.



1.9 Statement of Comprehensive Income

1.9.1 Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Accordingly, hospital and pharmaceutical revenue is recognised at the point of delivering the service. However, the professional fees of medical specialists which are collected by the Group do not form part of revenue are excluded from the revenue.

1.9.2 Other Income

Other income comprises gain on disposal of Property, Plant & Equipment, dividend income, interest income and rental income. Net gains and losses of a revenue nature resulting from the disposal of Property, Plant & Equipment have been accounted for in the Statement of Comprehensive Income. Dividend income is recognised in the Statement of Comprehensive Income on the date that the Company’s and the Group’s right to receive payment is established, which in the case of quoted securities is normally thee x-dividend date. Interest income and rental income are accounted on accrued basis in the Statement of Comprehensive Income.

1.9.3 Expenditure

All expenditure incurred in the running of the business and in maintaining the Property, Plant & Equipment in a state of efficiency has been charged to revenue in arriving at the profit/loss for the year.

1.9.4 Borrowing Costs

Borrowing costs are recognised as an expense in the period in which they are incurred, except to the extent where borrowing costs are directly attributable to the acquisition, construction or production of Property, Plant & Equipment, that takes a substantial period of time to get ready for its intended use or sale and are capitalised as part of that asset during the period of construction/development.

1.9.5 Income Tax Expenses1.9.5.1 Current Taxation

Company’s tax expense is made up with current taxation and deferred tax gain or loss during the year. Provision for taxation is based

on the profit for the year adjusted for taxation purposes in accordance with the provisions of the Inland Revenue Act No. 10 of 2006, as amended by subsequent legislation.

a. The Company is liable for income tax at the rate of 12% (2014/15 – 12%) on the taxable profits.

b. New Nawaloka Hospitals (Pvt) Ltd. is liable for income tax at the rate of 12% on the taxable profits (2014/15 – 2% based on its turnover).

c. New Nawaloka Medical Centre (Pvt) Ltd. is exempt from income tax for a period of ten years commencing from year of assessment 2008/09 in terms of the agreement entered into with the Board of Investment (BOI) of Sri Lanka.

d. Nawaloka Metropolis Laboratories (Pvt) Ltd. (‘Joint Venture’), is liable for taxation at the rate of 12% (2014/15 – 12%).

e. Nawaloka Medicare (Pvt) Ltd. is exempt from income tax for a period of six year started from where profit making financial year or after loss-making two years whichever is earlier.

f. Income on other sources is liable for taxation at the rate of 28% (2014/15 – 28%).

1.9.5.2 Deferred Tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for:

zz temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

zz temporary differences related to investments in subsidiaries, associates and jointly controlled entities to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Company and the Group expects, at the end of the Reporting Period,

to recover or settle the carrying amount of its assets and liabilities. For investment property that is measured at fair value, the resumption that the carrying amount of the investment property will be recovered through sale has not been rebutted.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the Reporting Date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each Reporting Date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised, based on the level of future taxable profit forecasts and tax planning strategies.

1.9.5.3 Tax Exposures

In determining the amount of current and deferred tax, the Company and the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Company to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.

1.9.5.4 Withholding Tax on Dividends

Distributed by Subsidiaries and Joint Venture CompanyDividend distributed out of taxable profit of the subsidiaries and joint venture company attracts a 10% deduction at source and is not



available for set off against the tax liability of the Company. Accordingly, the withholding tax deducted at source is added to the tax expense of the subsidiary companies and joint venture company in the Group Financial Statements as a consolidation adjustment.

1.10 Contingent Liabilities and Contingent AssetsA contingent liability is a possible obligation that arises from paste vents whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company and the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company and the Group does not recognise a contingent liability but discloses its existence in the Financial Statements. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company and the Group. The Company and the Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain. In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assume dare measured initially at their fair value at the acquisition date, irrespective of the extent of any minority interest.

1.11 Related Party TransactionsDisclosure has been made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating policies/decisions of the other, irrespective of whether a price is charged.

1.12 Events after the Reporting DateEvents after the Reporting Date are those events favorable and unfavorable that occur between the Reporting Date and the date when the Financial Statements are authorised for issue.

All material and important events which occur after the Reporting Date have been considered and disclosed in Note 32.

1.13 Earnings Per ShareThe Company and the Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

1.14 Dividends on Ordinary SharesDividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Company’s shareholders. Interim dividends are deducted from equity when they are declared and are no longer at the discretion of the Company.

1.15 PresentationAssets and liabilities are grouped by nature and listed in an order that reflects their relative liquidity and maturity pattern.Where appropriate, the significant accounting policies are disclosed in the succeeding notes.

(a) Offsetting Income and Expenses

Income and expenses are not offset unless required or permitted by accounting standards.

(b) Offsetting Assets and Liabilities

Assets and liabilities are offset and the net amount reported in the Statement of Financial Position only where there is;

zz a current enforceable legal right to offset the asset and the liability; and

zz an intention to settle the liability simultaneously

1.16 Segmental InformationA segment is a distinguishable component of an enterprise that is engaged in either providing products or services (Business segment) or in providing products or services within a particular economic environment (Geographical segment), which is subject to risk and rewards that are different from those of other segments. However, there are no distinguishable components to be identified as segments for the Group.

1.17 Cash Flow Statement

1.17.1 The Cash Flow Statement has been prepared using the indirect method in accordance with Sri Lanka Accounting Standard (LKAS) 7 – ‘Statement of Cash Flows’. Cash and cash equivalents consist of cash in hand and at banks and short-term highly liquid investments, readily convertible to loan amounts net of outstanding bank overdrafts.

1.17.2 Interest paid is classified as operating cash flows, while interest received is classified as investing cash flows, for the purpose of presentation of the Cash Flow Statement, reported based on the indirect method.

1.18 Determination of Fair ValuesA number of the Company’s and the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. When measuring the fair value of an asset or liability the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

zz Level 1– Quoted prices (Unadjusted) in active markets for identifiable assets and liabilities.

zz Level 2 – Inputs other than quoted prices included in Level 1 that are observable from the asset or liability either directly (as Prices) or indirectly (derived prices).

zz Level 3 – Inputs from the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.



(a) Property, Plant & Equipment

The fair value of Property, Plant & Equipment recognised as a result of a business combination is the estimated amount for which property could be exchanged on the acquisition date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably. The fair value of items of plant, equipment, fixtures and fittings is based on the market approach and cost approaches using quoted market prices for similar items when available and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence.

(b) Inventories

The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories.

(c) Trade and Other Receivables

The fair values of trade and other receivables, excluding construction work-in-progress, are estimated at the present value of future cash flows, discounted at the market rate of interest at the measurement date. Short-term receivables with no stated interest rate are measured at the original invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition and, for disclosure purposes, at each annual Reporting Date.

(d) Other Non-Derivative Financial Liabilities

Other non-derivative financial liabilities are measured at fair value, at initial recognition and for disclosure purposes, at each Reporting Date. Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the measurement date.

For finance leases the market rate of interest is determined with reference to similar lease agreements.

(e) Contingent Consideration

The fair value of contingent consideration arising in a business combination is calculated using the income approach based on the expected payment amounts and their associated probabilities. When appropriate, it is discounted to present value.

1.19 New Accounting Standards Issued But Not Effective as at Reporting DateThe Institute of Chartered Accountants of Sri Lanka has issued the following new Sri Lanka Accounting Standards which will become applicable for financial periods beginning on or after 1st January 2018. Accordingly, the Group has not applied the following new standards in preparing these Consolidated Financial Statements.

SLFRS 9 – Financial Instruments

SLFRS 9 – ‘Financial Instruments’ replaces the existing guidance in LKAS 39 – ‘Financial Instruments: Recognition and Measurement’. SLFRS 9 includes revised guidance on the classification and measurement of financial instruments including a new expected credit loss model for calculating impairment on financial assets.

SLFRS 9 is effective for annual period beginning on or after 1st January 2018 with early adoption permitted.

SLFRS 15 – Revenue Recognition from Customer Contracts

SLFRS 15 – ‘Revenue from Contracts with Customers’ establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance LKAS 18 – ‘Revenue’ – LKAS 11 – ‘Construction Contracts’. SLFRS 15 is effective for annual reporting period beginning on or after 1st January 2018, with early adoption permitted.

The Group is assessing the potential impact on its Consolidated Financial Statements resulting from the above standards.



2. Property, Plant & Equipment2.1 Group

FreeholdLand

Rs.

BuildingsConstructed

on LeaseholdLand

Rs.

Work-in-Progress

Rs.

Fixture andFittings

Rs.

Plant andMachinery

Rs.

MotorVehicles

Rs.

HospitalEquipment

Rs.

MedicalEquipment

Rs.

ComputerEquipment

Rs.

Furniture andFittings

Rs.

Total

Rs.

Balance as at 01st April 2014 42,188,000 2,644,392,467 1,000,576 254,036,428 54,001,945 264,919,376 273,329,654 2,986,823,915 96,544,443 60,078,507 6,677,315,311

Additions 192,417,100 694,915,637 49,395,728 103,035,721 49,567,259 53,331,742 120,122,651 574,031,683 42,955,019 37,282,636 1,917,055,176

Disposal – – – – – (15,153,382) – (80,472,624) – – (95,626,006)

Balance as at 31st March 2015 234,605,100 3,339,308,104 50,396,304 357,072,149 103,569,204 303,097,736 393,452,305 3,480,382,974 139,499,462 97,361,143 8,498,744,481

Additions – 102,951,698 2,150,580,057 54,232,632 146,619 54,198,946 17,202,830 235,322,679 22,943,727 14,154,900 2,651,734,088

Disposal – – – – – (14,231,332) (461,490) – – – (14,692,822)

Balance as at 31st March 2016 234,605,100 3,442,259,802 2,200,976,361 411,304,781 103,715,823 343,065,350 410,193,645 3,715,705,653 162,443,189 111,516,043 11,135,785,747

Accumulated depreciation

Balance as at 1st April 2014 – 160,433,610 – 149,683,700 54,001,945 163,896,421 140,206,098 1,550,860,102 61,803,136 23,910,158 2,304,795,170

Charge for the year – 39,043,157 – 20,728,259 3,373,290 52,452,316 24,544,636 230,306,238 16,398,617 8,017,811 394,864,324

Disposals – – – – – (9,977,946) – (33,191,286) – – (43,169,232)

Balance as at 31st March 2015

199,476,767 – 170,411,959 57,375,235 206,370,791 164,750,734 1,747,975,054 78,201,753 31,927,969 2,656,490,262

Charge for the year – 77,133,018 1,069,598 34,587,111 8,947,341 30,382,039 29,695,960 257,169,546 24,000,433 13,812,186 476,797,232

Disposals – – – – – (7,316,790) (57,237) – – – (7,374,027)

Balance as at 31st March 2016 – 276,609,785 1,069,598 204,999,070 66,322,576 229,436,040 194,389,457 2,005,144,600 102,202,186 45,740,155 3,125,913,467

Written down value

As at 31st March 2016 234,605,100 3,165,650,017 2,199,906,763 206,305,711 37,393,247 113,629,310 215,804,188 1,710,561,053 60,241,003 65,775,888 8,009,872,280

As at 31st March 2015 234,605,100 3,139,831,337 50,396,304 186,660,190 46,193,969 96,726,945 228,701,571 1,732,407,920 61,297,709 65,433,174 5,842,254,219

2.1.1 The buildings constructed on leasehold lands of the Group were revalued at Rs. 2,598.6 Mn. by Mr. P.B. Kalugalagedara, Chartered Valuer in March 2013 and the value of these assets has been reflected in the Financial Statements at the revalued amounts.

2.1.2 Freehold Land reflects a land extent of 20.2 perches situated at No. 15, Nelson Lane, Kollupitiya, Colombo 03 and a land extent of 1019.1 perches situated at No. 169, Colombo Road, Negombo.

2.1.3 Details of fully depreciated assets in Property, Plant & Equipment are as follows;

Group Company

For the year ended 31st March 2016Rs.

2015Rs.

2016Rs.

2015Rs.

Buildings constructed on leasehold land – – – –

Fixture and fittings 76,991,488 76,991,488 15,794,731 15,794,731

Plant and machinery 54,001,945 54,001,945 11,332,408 11,332,408

Motor vehicles 149,126,149 149,126,149 110,363,907 110,363,907

Hospital equipment 79,570,688 79,570,688 53,892,194 53,892,194

Medical equipment 937,380,304 887,738,283 221,366,527 211,963,814

Computer equipment 46,236,973 43,431,654 28,692,203 25,886,884

Furniture and fittings 8,029,881 5,754,751 7,064,782 4,789,652

1,351,337,428 1,296,614,958 448,506,752 434,023,590

2.1.4 There were no restrictions to the title of Property, Plant & Equipment of the Group as at Reporting Date.



2.2 Company

Freehold Land

Rs.

Work-in-Progress

Rs.

Buildings Constructed

on Leasehold Land

Rs.

Fixture and Fittings

Rs.

Plant and Machinery

Rs.

Motor Vehicles

Rs.

Hospital Equipment

Rs.

Medical Equipment

Rs.

Computer Equipment

Rs.

Furniture andFittings

Rs.

Total

Rs.

Balance as at 1st April 2014 42,188,000 – 455,031,912 122,050,869 11,332,408 206,598,996 195,648,619 2,067,378,344 78,189,306 52,332,458 3,230,750,912

Additions – – 130,679,750 48,259,174 – 48,861,792 62,419,779 331,192,730 16,823,809 15,380,416 653,617,450

Disposal – – – – – (15,153,382) – (80,472,624) – – (95,626,006)

Balance as at 31st March 2015 42,188,000 – 585,711,662 170,310,043 11,332,408 240,307,406 258,068,398 2,318,098,450 95,013,115 67,712,874 3,788,742,356

Additions – 61,403,714 17,399,709 24,907,050 – 34,175,940 12,422,420 133,504,885 17,446,319 4,967,886 306,227,923

Disposal – – – – – (12,438,332) – – – – (12,438,332)

Balance as at 31st March 2016 42,188,000 61,403,714 603,111,371 195,217,093 11,332,408 262,045,014 270,490,818 2,451,603,335 112,459,434 72,680,760 4,082,531,947

Accumulated Depreciation

Balance as at 1st April 2014 – – 26,479,016 46,429,910 11,332,408 110,416,302 88,158,194 731,957,539 44,102,858 19,745,246 1,078,621,473

Charge for the year – – 6,997,592 13,407,679 – 49,226,750 17,644,208 192,793,820 14,191,598 5,515,523 299,777,170

Disposal – – – – – (9,977,946) – (33,191,286) – – (43,169,232)

Balance as at 31st March 2015 – – 33,476,608 59,837,589 11,332,408 149,665,106 105,802,402 891,560,073 58,294,456 25,260,769 1,335,229,411

Charge for the year – – 18,574,088 21,274,233 – 26,267,603 19,563,705 214,845,566 17,483,335 7,251,448 325,259,978

Disposal – – – – – (6,945,019) – – – – (6,945,019)

Balance as at 31st March 2016 – – 52,050,696 81,111,822 11,332,408 168,987,690 125,366,107 1,106,405,639 75,777,791 32,512,217 1,653,544,370

Net Book Value

As at 31st March 2016 42,188,000 61,403,714 551,060,675 114,105,271 – 93,057,324 145,124,711 1,345,197,696 36,681,643 40,168,543 2,428,987,577

As at 31st March 2015 42,188,000 – 552,235,054 110,472,454 – 90,642,300 152,265,996 1,426,538,377 36,718,659 42,452,105 2,453,512,945

2.2.1 The buildings constructed on leasehold lands of the Company were revalued by Mr. P.B. Kalugalagedara, Chartered Valuer in March 2013.

2.2.2 Freehold land with a land extent of 20.2 perches is situated at No. 15, Nelson Lane, Kollupitiya, Colombo 03.

2.2.3 Leasehold period for the three companies is 99 years and remaining leasehold periods as at 31st March 2016 are as follows:

Nawaloka Hospitals PLC 55 years

New Nawaloka Hospitals (Pvt) Ltd. 76 years

New Nawaloka Medical Centre (Pvt) Ltd. 87 years

2.2.4 There were no restrictions to the title of Property, Plant & Equipment of the Company, as at the Reporting Date.

2.3 The leasehold properties with a land extent of 511.80 perches are located in No. 23, Deshamanya H.K. Dharmadasa Mawatha, Colombo 02.



3. Leasehold Right Over Land

Group Company

As at 31st March 2016Rs.

2015Rs.

2016Rs.

2015Rs.

Balance as at beginning of the year 227,910,976 230,823,300 49,510,203 50,403,212

Amortisation for the year (2,935,524) (2,912,324) (893,007) (893,009)

Balance as at the end of the year 224,975,452 227,910,976 48,617,196 49,510,203

4. Investment Property – – 192,417,100 192,417,100

– – 192,417,100 192,417,100

4.1 Investment property reflects a land leased out to Nawaloka Medicare (Pvt) Ltd. by Nawaloka Hospitals PLC on 99-year lease agreement. Nawaloka Medicare (Pvt) Ltd. commenced its operations during 2014/15.

4.2 The Company has earned rental income of Rs. 1,816,152/- for the year ended 31st March 2016. (2015 – Rs. 587,120/-)

4.3 During the year, Director’s valuation was carried out for the investment properties and market value has not been changed materially over the year.

4.4 No items of investment properties of the Company were pledged as security as at the Reporting Date.

4.5 There were no restrictions to the title of the investment properties of the Company as at the Reporting Date.

4.6 Investment property reflects a land extent of 1,019.1 perches situated at No. 169, Colombo Road, Negombo.

5. Investment in Subsidiaries

Group Company

As at 31st March Holding%

2016Rs.

2015Rs.

2016Rs.

2015Rs.

New Nawaloka Hospitals (Pvt) Ltd. 100 – – 245,933,056 245,933,056

Nawaloka Medicare (Pvt) Ltd. 100 – – 1,071,052,320 300,000,000

New Nawaloka Medical Centre (Pvt) Ltd. 100 – – 700,000,000 700,000,000

– – 2,016,985,376 1,245,933,056

6. Equity Accounted Investee – Group

As at 31st March Holding%

2016Rs.

2015Rs.

Investment in Joint Venture – Nawaloka Metropolis Laboratories (Pvt) Ltd. 50 118,230,763 90,241,313

Equity Accounted Investee – Company

Investment in Joint Venture – Nawaloka Metropolis Laboratories (Pvt) Ltd. 50 2,500,000 2,500,000

250,000 Ordinary Shares



Nawaloka Metropolis Laboratories (Pvt) Ltd. is a joint venture company between Nawaloka Hospitals PLC and Metropolis Health Services (India) (Pvt) Ltd. a company incorporated in India. Nawaloka Metropolis Laboratories (Pvt) Ltd. was incorporated to provide laboratory services in Sri Lanka. The summarised financial information of the Group’s investment in Nawaloka Metropolis Laboratories (Pvt) Ltd. is given below:

6.1 Share of the Joint Venture’s Statement of Financial Position

Group


2015Rs.

Non-current assets 60,500,956 69,577,464

Current assets 117,282,100 104,297,476

Non-current liabilities (11,861,134) (11,476,877)

Current liabilities (47,691,159) (72,156,750)

Net assets 118,230,763 90,241,313

6.2 Share of Joint Venture’s Revenue and ProfitRevenue 368,583,777 324,011,505

Cost of services (153,899,026) (138,507,042)

Gross profit 214,684,751 185,504,463

Other income 3,441,807 1,045,251

Expenses (157,201,306) (153,030,721)

Profit before tax 60,925,252 33,518,993

Income tax expenses (10,564,288) (4,121,255)

Profit for the year 50,360,964 29,397,738

Other comprehensive income 128,487 (3,192,982)

Total comprehensive income for the year 50,489,451 26,204,756

Dividend (22,500,000) (12,500,000)

27,989,451 13,704,756

6.3 SLFRS 11 replaces LKAS 31 – ‘Interest in Joint Ventures’ and SIC on Jointly Controlled Entities (JCEs) and non-monetary contributions by ventures. SLFRS 11 removes the option to account for JCEs using proportionate consolidation. Instead JCEs that need the definition of a joint venture must be accounted for using equity method of accounting.

The application of the above standard had an impact on the financial position of the Group. This was due to the proportionate consolidating of the joint venture being changed to equity accounting. The Group has applied the equity method of accounting in the Financial Year of 2014/15.

7. Advance for Land

Group Company


2015Rs.

2016Rs.

2015Rs.

952,343,085 952,343,085 – –

This represents a payment of Rs. 952,343,085/- by New Nawaloka Hospitals (Pvt) Ltd. to Nawaloka Construction Company (Pvt) Ltd. which is a related party due to common Directorship, to purchase a land.

This land was originally meant for the establishment of a private medical training institution, but due to the delay in obtaining the necessary approval, the management is now in the process of exploring alternative ways for the property.



Group Company


2015Rs.

2016Rs.

2015Rs.

8. InventoriesPharmaceutical items 396,204,933 323,268,846 140,407,087 108,995,263

General stocks 14,912,150 12,494,513 5,723,147 5,655,057

Provision for slow moving inventories (2,000,000) – (2,000,000) –

409,117,083 335,763,359 144,130,234 114,650,320

9. Trade and Other ReceivablesTrade receivables 465,020,367 352,128,366 289,833,552 231,981,482

Provision for bad and doubtful debts (46,168,101) (42,295,476) (39,387,355) (30,780,511)

418,852,266 309,832,890 250,446,197 201,200,971

ESC recoverable 46,394,997 56,018,804 37,277,411 49,881,774

Other debtors 53,770,909 62,521,841 32,195,405 14,217,272

519,018,172 428,373,535 319,919,013 265,300,017

10. Deposits and Advances Import control 77,333,650 25,725,038 17,408,157 3,294,863

Staff loans 3,919,393 3,088,179 2,554,200 1,660,293

Pre-payments 46,867,947 61,964,567 46,867,947 57,798,564

Other deposit and advances 64,230,672 53,334,904 57,418,873 49,323,669

192,351,662 144,112,688 124,249,177 112,077,389

11. Receivables from Related PartiesAlcobronz (Pvt) Ltd. 5,000,000 – – –

Battaramulla Medical Centre – 2,236,943 1,054,365 2,236,943

Dehiwala Medical Centre 10,651 3,150 10,651 3,150

East West Marketing (Pvt) Ltd. 20,731,658 – 1,119,377 –

Kandana Medical Centre 117,965 185,068 117,965 185,068

Kiribathgoda Medical Centre 2,364,551 2,879,310 5,358,496 2,879,310

Karapitiya Medical Centre 5,832,570 – 5,832,570 –

Panadura Medical Centre 10,353,330 – 10,353,330 –

Sasiri Polysacks (Pvt) Ltd. 3,400,000 – 3,400,000 –

Kottawa Medical Centre 499,164 – 508,859 –

Moratuwa Medical Centre 2,797 – 2,797 –

Mount Lavinia Medical Centre – – 403,259 –

Nawaloka Aviation (Pvt) Ltd. 621,932 414,358 621,932 414,358

Nawaloka College of Higher Studies 64,793,701 64,793,700 64,793,701 64,793,700

Nawaloka Construction Company (Pvt) Ltd. 29,181,230 27,494,860 12,207,543 9,707,543

Nawaloka Medicare (Pvt) Ltd. – – 17,770,108 699,206,107

Nawaloka Guardian International (Pvt) Ltd. 1,806,750 – 1,806,750 –

Nawaloka Polysacks (Pvt) Ltd. 22,429,200 26,429,200 22,429,200 26,429,200

New Nawaloka Hospitals (Pvt) Ltd. – – 245,810,857 167,275,655

New Nawaloka Medical Centre (Pvt) Ltd. – – 1,842,326,479 425,808,401

Wattala Medical Centre 75,000 – 75,000 –

Nawaloka Hospitals Internationals (Pvt) Ltd. 36,858,853 35,944,835 36,858,853 35,944,835

204,079,352 160,381,424 2,272,862,092 1,434,884,270



Group Company


2015Rs.

2016Rs.

2015Rs.

12. Stated Capital 1,409,505,596 ordinary shares 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876

13. Revaluation Reserve Balance as at 01st April 990,872,361 990,872,361 – –

Revaluation during the year – – – –

Balance as at 31st March 990,872,361 990,872,361 – –

The revaluation reserve relates to revaluation of buildings on leasehold lands and represents the fair value changes of the buildings on leasehold lands as at the date of revaluation.

Group Company


2015Rs.

2016Rs.

2015Rs.

14. Debentures 1,484,104,507 1,480,047,383 1,484,104,507 1,480,047,383

During the financial year 2013/14, the Company has issued 15 Mn rated unsecured redeemable debentures at a par value of Rs. 100/- and its allocation is as follows:

Class Issue Coupon Rate

%

Listing Status

Interest Payable Frequency

Issued Date

Maturity Date

Quantity

Nos.

Consideration Received

Rs.

Value as at 31st March

2016Rs.

ComparativeGovernmentBonds Rates

%

Yield to Maturity

%

A Public 14.15 Listed Quarterly 9/30/2013 9/30/2018 10,427,900 1,042,790,000 1,032,512,184 8.65 11.09

B Public 14.15 Listed Quarterly 9/30/2013 9/30/2019 2,696,000 269,600,000 266,514,564 11.17 13.33

D Public 14.35 Listed Quarterly 9/30/2013 9/30/2021 1,645,500 164,550,000 162,346,275 11.55 11.96

E Public 14.40 Listed Quarterly 9/30/2013 9/30/2022 120,000 12,000,000 11,831,829 11.77 12.14

F Public 14.45 Listed Quarterly 9/30/2013 9/30/2023 110,600 11,060,000 10,899,655 11.80 12.47

15,000,000 1,500,000,000 1,484,104,507

14.1 Market Summary

Class HighestRs.

Lowest Rs.

Last TradedRs.

Traded Quantity

Last Traded Date

A – – – – –

B 111.80 – 111.80 1,000,000 16/11/2015

D – – – – –

E – – – – –

F – – – – –

14.2 Purpose of the IssuePurpose of the debenture issue was to repay high interest cost borrowings and finance the construction of a building including car park facilities, channelling, Outpatients Department and Indoor admission facilities.

14.3 Credit RatingsICRA (Lanka) Ltd., has reaffirmed Nawaloka Hospitals PLC’s long and short-term corporate credit ratings as SLA – (Stable) which is read as [SL] A minus (Stable).



Group Company

2016Rs.

2015Rs.

2016Rs.

2015Rs.

15. Employee Benefits The amount recognised in the Statement of Financial Position

Present value of defined benefit obligations 184,237,790 170,953,704 166,252,434 158,673,474

15.1 Movement in the Present Value of Defined Benefit Obligations (PV DBO) Liability for defined benefit obligation at 1st April 170,953,704 144,621,538 158,673,474 134,424,735

Current service cost (Note 15.2) 17,186,421 11,412,094 10,456,863 8,262,450

Interest cost (Note 15.2) 16,240,600 14,823,889 15,073,980 14,210,938

Actuarial (Gain)/Losses on PV DBO (Note 15.3) 309,060 17,481,666 1,354,898 18,820,799

Payments made (20,451,995) (17,385,483) (19,306,781) (17,045,448)

Liability for defined benefit obligation at 31st March 184,237,790 170,953,704 166,252,434 158,673,474

15.2 Amount Recognised in Income Statement Company service cost 17,186,421 11,412,094 10,456,863 8,262,450

Interest cost 16,240,600 14,823,889 15,073,980 14,210,938

33,427,021 26,235,983 25,530,843 22,473,388

15.3 Amounts Recognised in Other Comprehensive IncomeActuarial losses recognised during the year 309,060 17,481,666 1,354,898 18,820,799

15.4 Employee Benefits as at 31st March 2016 is calculated based on an actuarial valuation carried out by Mr. Piyal Gunathilaka, a qualified Actuary.

As recommended by the Sri Lanka Accounting Standard (LKAS) 19 – ‘Employee Benefits’ the Projected Unit Credit (PUC) method has been used in this valuation.

15.5 Actuarial Assumptions

For the year ended 31st March 2016 2015

Retirement age 55 Years 55 Years

Discount rate 11.00% 9.50%

Salary increment rate 8% 8%

15.6 Sensitivity AnalysisReasonably possible changes at the Reporting Date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below:

Group Company


2015Rs.

2016Rs.

2015Rs.

1% Increase in discount rate 175,998,868 163,779,249 160,094,126 152,795,905

1% decrease in discount rate 190,361,468 177,144,652 172,964,081 165,079,157

1% increase in salary increment rate 190,152,570 176,950,258 172,778,065 164,901,621

1% decrease in salary increment rate 176,074,128 163,849,284 160,159,514 152,858,312

15.7 The above provision is not externally funded.



Group Company


2015Rs.

2016Rs.

2015Rs.

16. Deferred Tax LiabilityDeferred tax liability (Other) 305,060,480 171,569,526 92,347,774 119,113,956

Deferred tax liability (Revaluation reserve) – 56,330,061 – –

305,060,480 227,899,587 92,347,774 119,113,956

Balance as at 1st April 227,899,587 216,762,224 119,113,956 113,517,100

Originating/(Reversal) during the year (Note 16.2) 77,160,893 11,137,363 (26,766,182) 5,596,856

Balance as at 31st March 305,060,480 227,899,587 92,347,774 119,113,956

16.1 Deferred Tax Provision as at the Year end is Made up as Follows:Deferred Tax Provision from

Temporary differences of PPE 414,670,547 303,679,460 199,927,963 187,722,702

Temporary differences of retirement provision on gratuity (21,980,170) (19,886,910) (19,950,292) (19,040,817)

Tax loss carried forward (87,629,897) (55,892,963) (87,629,897) (49,567,929)

305,060,480 227,899,587 92,347,774 119,113,956

16.2 Originating during the Year Statement of other comprehensive income (Note 16.4) (27,860) (2,500,039) (162,588) (2,286,564)

Statement of comprehensive income (Note 16.3) 77,188,753 13,637,402 (26,603,594) 7,883,420

77,160,893 11,137,363 (26,766,182) 5,596,856

16.3 Amount Recognised in Comprehensive Income Originating during the year 77,188,753 13,637,402 (26,603,594) 7,883,420

77,188,753 13,637,402 (26,603,594) 7,883,420

16.4 Amount Recognised in Other Comprehensive Income Deferred tax Impact on defined benefits plan actuarial losses (27,860) (2,500,039) (162,588) (2,286,564)

(27,860) (2,500,039) (162,588) (2,286,564)

16.5 Deferred tax has been computed using a tax rate of 12% (2014/15 - 12%).

17. Borrowings DFCC Bank loan 410,149,446 442,683,700 410,149,446 442,683,700

BOC 304,704,983 379,365,571 304,704,983 379,365,571

Commercial Bank 994,894,896 – 988,572,636 –

Sampath Bank PLC 1,628,417,300 681,980,100 1,628,417,300 681,980,100

Nations Lanka PLC 59,000,000 67,595,370 59,000,000 67,595,370

Hatton National Bank loans 199,527,425 48,790,740 125,000,000 –

3,596,694,050 1,620,415,481 3,515,844,365 1,571,624,741

Borrowings falling due within one year (594,325,684) (351,370,388) (545,401,924) (311,369,588)

Borrowings falling due after one year 3,002,368,366 1,269,045,093 2,970,442,441 1,260,255,153

17.1 Borrowings Opening balance as at 1st of April 1,620,415,481 520,056,614 1,571,624,741 520,056,614

Loans obtained during the year 2,828,645,181 1,390,867,211 2,697,409,436 1,252,076,271

Loans paid during the year (852,366,612) (290,508,344) (753,189,812) (200,508,144)

Closing balance as at 31st March 3,596,694,050 1,620,415,481 3,515,844,365 1,571,624,741



17.2 Details of loans obtained by the Group are set out below:

Financial Institution

Repayment Terms

Principal

Rs.

InterestRate

%

Security AnnualRepayment

Rs.

Balance as at 31.03.2016

Rs.

Long-Term Loan


DFCC Bank 59 equal monthly instalments of Rs. 7,503,114/-

450,000,000 AWPLR+1.25 Primary concurrent mortgage over leasehold rights of the land and building situated at Sir James Peiris Mawatha and Sugathodaya Mawatha owned by Nawaloka Hospitals PLC and New Nawaloka Hospitals (Pvt) Ltd.

Joint and several Guarantees of Directors Mr. H.K.J. Dharmadasa, Mr. Ugitha Harshith Dharmadasa and Mr. Anisha Givantha Dharmadasa.

82,534,254.00 360,149,446.00

DFCC Bank 60 equal monthly instalments of Rs. 1,666,667/-

100,000,000 AWPLR+1.25 Primary concurrent mortgage over leasehold rights of the land and building situated at Sir James Peiris Mawatha and Sugathodaya Mawatha owned by Nawaloka Hospitals PLC and New Nawaloka Hospitals (Pvt) Ltd.

Joint and several Guarantees of Directors – Mr. H.K.J. Dharmadasa, Mr. Ugitha Harshith Dharmadasa and Mr. Anisha Givantha Dharmadasa.

– 50,000,000.00

Bank of Ceylon To be repaid in 60 equal monthly Instalments

363,000,000 AWPLR+0.5 Joint and several Guarantees of Directors – Mr. H.K.J. Dharmadasa, Mr. Ugitha Harshith Dharmadasa and Mr. Anisha Givantha Dharmadasa.

61,060,584.00 169,531,339.00

Bank of Ceylon 60 equal monthly instalments of Rs. 3,166,667/-

190,000,000 AWPLR+0.5 Joint and several Guarantees of Directors – Mr. H.K.J. Dharmadasa, Mr. Ugitha Harshith Dharmadasa and Mr. Anisha Givantha Dharmadasa.

38,000,004.00 135,173,643.77

Sampath Bank 60 equal monthly instalments of Rs. 9,166,667/-

550,000,000 AWPLR+0.5 Loan Agreement for Rs. 550,000,000/-, Corporate Guarantee of Nawaloka Construction Company (Pvt) Ltd. for Rs. 550,000,000/-.

– 550,000,000.00


1,000,000,000 AWPLR+0.5 Loan Agreement for Rs. 1,000,000,000/-.

Assignment over credit card receivables for Rs. 1,000,000,000/- including the receivables of the existing hospital operations and the car park, channelling centre and new rooms of the proposed building complex. Corporate Guarantee of the New Nawaloka Hospitals (Pvt) Ltd. for Rs. 1 Bn.

– 1,000,000,000.00

Sampath Bank 36 equal monthly instalments of Rs. 1,083,300

39,000,000 AWPLR+0.5 Loan Agreement for Rs. 39,000,000/-

Primary Mortgage Bond over machinery for Rs. 39,000,000/-

Undertaking to mortgage over Machinery.

12,999,600.00 18,417,300.00


500,000,000 AWPLR+0.5 Loan Agreement for Rs. 500,000,000/- – 60,000,000.00




Repayment Terms

Principal

Rs.

InterestRate

%

Security AnnualRepayment

Rs.

Balance as at 31.03.2016

Rs.

Commercial Bank

First 24 months Rs. 12,500,000, Next 35 months 19,400,000 and Final Rs. 21,000,000 instalments

1,000,000,000 AWPLR+0.5 Primary mortgage Bond over debit and credit card sales for Rs. 1,200,000,000/- to be executed over the card sales of the total hospital operations, Corporate Guarantee from New Nawaloka Hospitals (Pvt) Ltd. for Rs. 500,000,000/- to be signed by the Directors of the Company, Corporate Guarantee from New Nawaloka Medical Centre (Pvt) Ltd. for Rs. 500,000,000/- to be signed by the Directors of the Company, General Terms and Conditions relating to Term Loan for Rs. 1,000,000,000/- to be signed by the Directors of the Company.

– 988,572,636.00

Hatton National Bank

Monthly rollover basis 50,000,000 AWPLR+1 Money Market loan – 50,000,000.00


Monthly rollover basis 75,000,000 AWPLR+1 Money Market loan – 75,000,000.00

New Nawaloka Hospitals (Pvt) Ltd.


60 equal monthly instalments of Rs. 3,333,400

200,000,000 AWPLR+1 Join and Several Guarantee of H.K.J. Dharmadasa, U.H. Dharmadasa and A.G. Dharmadasa.

Existing Primary Concurrent Mortgage Bond for Rs. 390.0 Mn (HNB – Rs. 260.0 Mn, Seylan – Rs. 130.0 Mn) over Leasehold Nawaloka Hospitals premises.

96,000,800.00 51,203,425.00


48 equal monthly instalments of Rs. 416,000/-

20,000,000 AWPLR+1 Join and Several Guarantee of H.K.J. Dharmadasa, U.H. Dharmadasa and A.G. Dharmadasa.

Existing Primary Concurrent Mortgage Bond for Rs. 390.0 Mn (HNB – Rs. 260.0 Mn, Seylan – Rs. 130.0 Mn) over Leasehold land of Nawaloka Hospitals premises.

2,496,000.00 17,504,000.00


48 equal monthly instalments of Rs. 136,000/-

6,500,000 AWPLR+1 Existing Primary Concurrent Mortgage Bond for Rs. 390.0 Mn (HNB – Rs. 260.0 Mn, Seylan – Rs. 130.0 Mn) over Leasehold Nawaloka Hospitals premises.

680,000.00 5,820,000.00



Bank Over Draft


Closing Balance as at 31st March 2016

Rs.

Principal

Rs.

InterestRate

%

Security


Hatton National Bank (249,324,750) 200,000,000 AWPLR+1 Corporate Guarantee of New Nawaloka Hospitals (Pvt) Ltd. for Rs. 75 Mn.

DFCC Bank (89,217,979) 90,000,000 AWPLR+0.75 Joint & several Guarantees of Directors – Mr. H.K.J. Dharmadasa, Mr. Ugitha Harshith Dharmadasa and Mr. Anisha Givantha Dharmadasa

Sampath Bank 1,499,172 50,000,000 AWPLR+1 Bank overdrafts Agreement for Rs. 50,000,000/-.

Join and Several Guarantee of H.K.J. Dharmadasa, U.H. Dharmadasa and G.A. Dharmadasa – Directors of the Company for Rs. 50,000,000/-.

New Nawaloka Hospitals (Pvt) Ltd.

Hatton National Bank (88,967,841) 100,000,000 AWPLR+1 Existing Primary Concurrent Mortgage Bond for Rs. 390 Mn (HNB – Rs. 260 Mn, Seylan – Rs. 130 Mn) Over Leasehold Nawaloka Hospital Premises.

Group Company


2015Rs.

2016Rs.

2015Rs.

18. Finance Leases Finance lease liability 116,000,000 124,000,000 – –

Finance leases payable within one year (8,000,000) (8,000,000) – –

Finance leases payable after one year 108,000,000 116,000,000 – –

Finance leases payable between 1 to 5 years 40,000,000 40,000,000 – –

Finance leases payable more than five years 68,000,000 76,000,000 – –

108,000,000 116,000,000 – –

18.1 Finance Leases Opening balance as at 1st April 124,000,000 132,000,000 – –

Lease paid during the year (8,000,000) (8,000,000) – –

Closing balance as at 31st March 116,000,000 124,000,000 – –

19. Trade Creditors and Other PayablesTrade payables 334,144,474 363,785,188 328,819,183 358,113,299

Doctors payable 1,718,808 2,362,905 1,718,808 2,362,905

Other payables 151,096,481 107,220,155 93,843,790 63,844,114

486,959,763 473,368,248 424,381,781 424,320,318

20. Income Tax PayableBalance as at 1st April 2,250,608 24,304,885 – –

Under/(Over) provision during prior year (990,683) (25,662,263) – –

Provision for the year 33,020,131 21,193,290 – –

Income tax paid during the year (9,514,418) (17,585,304) – –

Balance as at 31st March 24,765,638 2,250,608 – –



Group Company


2015Rs.

2016Rs.

2015Rs.

21. Payable to Related PartiesNawaloka Construction Co. (Pvt) Ltd. – 813,630 – –

Nawaloka Metropolis Laboratories (Pvt) Ltd. 14,725,333 12,601,805 8,747,060 8,056,987

Battaramulla Medical Centre 209,014 – – –

Mount Lavinia Medical Centre 661,571 434,119 – 434,119

15,595,918 13,849,554 8,747,060 8,491,106

Group Company

For the year ended at 31st March 2016Rs.

2015Rs.

2016Rs.

2015Rs.

22. RevenueHospital revenue 3,907,597,012 3,162,539,922 1,845,366,168 1,821,182,146

Pharmacy revenue 1,952,621,149 1,439,893,718 987,829,551 676,648,768

5,860,218,161 4,602,433,640 2,833,195,719 2,497,830,914

23. Other IncomeDividend income – – 22,500,000 109,770,335

Savings interest – 20,343 – 20,343

Interest on fixed deposits 30,384,641 31,311,710 13,734,180 13,027,295

Profit on sale of property, plant & equipment 7,006,687 5,589,564 7,006,687 5,589,564

Sundry income 50,800,087 22,905,323 37,150,282 18,182,695

Rent 6,303,825 5,372,631 6,303,825 6,053,688

94,495,240 65,199,571 86,694,974 152,643,920

24. Profit from OperationsThe operating profit has been arrived after charging all expenses including the following:

Emoluments paid to Directors 45,590,061 41,400,675 45,590,061 41,400,675

Auditors’ remuneration – Audit services 2,020,000 1,819,000 705,000 635,000

Depreciation and amortisation 479,732,756 397,776,647 326,152,985 300,670,179

Staff costs 992,907,444 838,604,192 462,458,524 404,831,075

Employees’ Provident Fund 93,534,592 82,674,032 44,891,706 40,141,726

Employees’ Trust Fund 23,390,181 20,668,507 11,230,031 10,035,431

Charge/(Reversal) of provision for bad debts 3,272,625 9,114,875 8,006,844 7,376,592

Provision for employee benefits 33,427,021 26,235,983 25,530,843 22,473,388

Charity and donation 4,480,289 7,082,114 4,283,789 6,715,114

Impairment for other receivable balances 42,758,125 54,244,933 41,528,139 39,101,201

Exchange loss on foreign currency – 7,830,431 – –

Provision for slow moving inventories 2,000,000 – 2,000,000 –

Provision for Deemed Int. Tax 26,668,154 – 26,668,154 –



Group Company

For the year ended at 31st March 2016Rs.

2015Rs.

2016Rs.

2015Rs.

25. Finance CostsOverdraft interest 37,848,420 24,041,066 26,030,496 19,143,926

Debenture interest 216,727,641 216,198,471 216,727,641 216,198,471

Lease and loan interest 111,704,749 42,618,062 106,868,737 40,383,815

Bank charges 6,036,551 2,235,230 5,669,039 1,671,468

372,317,361 285,092,829 355,295,913 277,397,680

26. Income Tax Expenses Income tax on current year profit (Note 26.1) 33,020,131 20,273,290 – –

Under/(over) provision during prior year (990,684) (25,654,009) – –

(Reversal from)/transfer to deferred taxation (Note 16.3) 77,188,753 13,637,402 (26,603,594) 7,883,420

Dividend tax on inter-company dividend – 920,000 – –

109,218,200 9,176,683 (26,603,594) 7,883,420

26.1 Reconciliation of Accounting Profit and Taxable Profit Profit/(loss) before tax 315,252,428 96,647,519 (154,169,093) 97,821,426

Other comprehensive income (loss) for the year (309,060) (20,674,648) (1,354,898) (18,820,799)

Total comprehensive income 314,943,368 75,972,871 (155,523,991) 79,000,627

Inter-company dividend – 84,770,335 – –

Aggregate expenses disallowed for tax 496,985,267 498,759,885 416,158,577 412,123,712

Aggregate income not liable for tax (48,512,436) (109,770,335) (43,240,867) (109,770,335)

Aggregate deductible expenses for tax (516,234,025) (506,201,970) (466,781,873) (493,320,056)

Adjustments for tax losses 254,195,117 116,532,725 254,195,117 116,532,725

Profit exempt from tax (251,197,109) (29,216,388) – –

Tax loss utilised during the year (4,806,963) (4,566,673) (4,806,963) (4,566,673)

Taxable income for the year 245,373,219 126,280,450 – –

Income tax 12 % 25,753,816 15,153,654 – –

Income tax 28% 7,266,315 5,119,636 – –

33,020,131 20,273,290 – –

26.2 Reconciliation of Tax Losses Tax losses brought forward 423,964,479 311,998,427 423,964,479 311,998,427

Tax loss utilised during the year (4,806,963) (4,566,673) (4,806,963) (4,566,673)

Loss for the year of assessment 254,195,117 116,532,725 254,195,117 116,532,725

Tax loss carried forward 673,352,633 423,964,479 673,352,633 423,964,479

27. Earnings/(Loss) Per ShareThe Company’s earnings/(loss) per share is based on the profit/(loss) attributable to the ordinary shareholders and the weighted average number of ordinary shares outstanding during the year.

Group Company

For the year ended 31st March 2016 2015 2016 2015

Profit/(loss) for the year (Rs.) 206,034,228 87,470,836 (127,565,499) 89,938,006

Weighted average number of ordinary shares in issue during the year 1,409,505,596 1,409,505,596 1,409,505,596 1,409,505,596

Earnings/(loss) per share (Rs.) 0.15 0.06 (0.09) 0.06



28. Related Party TransactionsThe Company carries out transactions in the ordinary course of its business with parties who are defined as related parties in Sri Lanka Accounting Standard (LKAS) 24 – ‘Related Party Disclosures’, the details of which are reported below. The pricing applicable to such transactions is based on the assessment of risk and pricing model of the Company and is comparable with what is applied to transactions between the Company and its unrelated customers.

28.1 Transactions with Subsidiaries – Company

Name of the Company New Nawaloka Hospitals (Pvt) Ltd.

New Nawaloka Medical Centre (Pvt) Ltd.


Shareholding 100% 100% 100%

2016Rs. ’000

2015Rs. ’000

2016Rs. ’000

2015Rs. ’000

2016Rs.

2015Rs.

Opening balance due (to)/from subsidiaries 167,276 (5,675) 425,808 352,980 699,207 471,957

Share issue – – – – (771,052) (300,000)

Provision of services 328,380 (522,102) 302,382 (224,681) (2,183) 86,147

Cost of pharmaceutical and general stores items 723,410 658,800 419,861 215,705 77,505 163,816

Drugs income transferred (121,830) (124,567) – – – –

Fund transfer (851,425) 160,820 694,275 81,804 14,293 277,287

Closing balance due (to)/from subsidiaries 245,811 167,276 1,842,326 425,808 17,770 699,207

Directors Mr. H.K.J. Dharmadasa Mr. H.K.J. Dharmadasa Mr. H.K.J. Dharmadasa

Mr. H.K.U.H. Dharmadasa Mr. H.K.U.H. Dharmadasa Mr. H.K.U.H. Dharmadasa

Mr. A.G. Dharmadasa Mrs. C.S. Dharmadasa Mr. A.G. Dharmadasa

Ms. A.G. Dharmadasa

Transactions with subsidiaries are carried out in the ordinary course of the business.

28.2 Transactions with Equity Accounted Investees – Company

Name of the Company Nawaloka Metropolis Laboratories (Pvt) Ltd.

Shareholding 50%

2016Rs. ’000

2015Rs. ’000

Opening balance due (to)/from equity accounted investees 8,057 (52,269)

Dividend received (22,500) (25,000)

Provision of services (21,610) 2,081

Joint venture company collection transfer (355,061) (278,174)

Transfer revenue 399,861 361,419

Closing balance due (to)/from equity accounted investees 8,747 8,057

Transactions with jointly controlled entities are carried out in the ordinary course of the business. Outstanding current account balances at year end are unsecured, interest free and settlement occurs in cash.



28.3 Key Management PersonnelAccording to Sri Lanka Accounting Standard (LKAS) 24 – ‘Related Party Disclosures’, Key Management Personnel, are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Board of Directors (including Executive and Non-Executive Directors) of Nawaloka Hospitals PLC have been classified as Key Management Personnel of the Company.

Group Company

2016Rs. ’000

2015Rs. ’000

2016Rs. ’000

2015Rs. ’000

28.3.1 Compensation of Key Management Personnel

Short-term employee benefits 45,590 41,401 45,590 41,401

Post employment benefits – – – –

Other long-term benefits – – – –

Termination benefits – – – –

Share based payments – – – –

45,590 41,401 45,590 41,401

28.4 Transactions with Other Related Entities – Company

Name of the Company Relationships Year Opening Balance Due (to)/from

Rs. ’000

Rendering of Services/

Sale of Goods

Rs. ’000

Receiving of Services/

Purchase of Goods

Rs. ’000

Fund Transfer

Rs. ’000

Closing Balance

due (to)/from

Rs. ’000

Nawaloka Construction Company (Pvt) Ltd. Common Directorship 2016 9,708 – – 2,500 12,208

2015 9,396 – – 312 9,708

Nawaloka Aviation (Pvt) Ltd. Common Directorship 2016 414 1,659 (1,451) 622

2015 138 1,652 – (1,376) 414

Nawaloka Medical Centre (Pvt) Ltd. Common Directorship 2016 4,870 19,066 – (10,572) 13,364

2015 5,782 16,311 – (17,223) 4,870

Nawaloka Hospitals Internationals (Pvt) Ltd. Common Directorship 2016 35,945 2,676 (1,762) 36,859

2015 – 14,947 – 20,998 35,945

Nawaloka College of Higher Studies Common Directorship 2016 64,794 – – – 64,794

2015 – – – 64,794 64,794

East West Marketing (Pvt) Ltd. Common Directorship 2016 – – (6,723) 7,842 1,119

2015 – – – – –

Nawaloka Polysacks Sharjah U.A.E Common Directorship 2016 26,429 – – (4,000) 22,429

2015 – – – 26,429 26,429

Sasiri Polysacks (Pvt) Ltd. Common Directorship 2016 – – – 3,400 3,400

2015 – – – – –

Koala (Pvt) Ltd. Common Directorship 2016 (3,515) (38,983) 40,861 (1,637)

2015 (2,539) – (44,619) 43,643 (3,515)

Ceyoka ( Pvt) Ltd. Common Directorship 2016 (36,653) – (202,797) 197,859 (41,591)

2015 (31,316) – (135,988) 130,651 (36,653)

Ceyoka Engineering ( Pvt) Ltd. Common Directorship 2016 – – (5,767) 5,349 (418)

2015 – – – – –

Sikure Security Services (Pvt) Ltd. Common Directorship 2016 (1,100) 49 (17,607) 16,218 (2,440)

2015 (1,611) – (15,441) 15,952 (1,100)

Nation Lanka Finance PLC Common Directorship 2016 67,595 – – (8,595) 59,000

2015 137,000 – – (69,405) 67,595

Nawaloka Petroleum (Pvt) Ltd. Common Directorship 2016 – – (240) 240 –

2015 – – (387) 387 –

Sampath Bank PLC Affiliate of Significant Shareholder

2016 (681,980) – – (946,437) (1,628,417)

2015 – – – (681,980) (681,980)

The amount payable to Nation Lanka Finance PLC is the remaining balance of the loan taken to acquire the investment property (Note 4) in 2014/15. Outstanding current account balances at year end are unsecured, interest free and settlement occurs in cash.



28.5 Non-Recurrent Related Party Transactions

Name of the Company Relationship Transaction value Entered During

2015/16 Rs.

Transaction as a %

of Equity

Transaction as a % of Total Assets

Terms and Conditions

Rationale for Entering into the

Transaction

New Nawaloka Medical Centre (Pvt) Ltd. Subsidiary 1,088,524,407 64% 18% Note 28.5.1 Note 28.5.1

Nawaloka Medicare (Pvt) Ltd. Subsidiary 771,052,320 46% 13% Note 28.5.2 Note 28.5.2

28.5.1 New Nawaloka Medical Centre (Pvt) Ltd. is a fully owned subsidiary of the Company which is located next to the Company and operated as a single business unit under Nawaloka Hospitals brand name. Nawaloka Hospitals assist the construction of multi storied building with car park facilities, Channelling, Outpatient Department and Indoor admission facilities adjoining the existing hospital building of the subsidiary. Construction of new car park would benefit to the subsidiary as well as the Company through allowing more patients to access to the Company and its subsidiary. Repayment of the investment would occur after commencing the operations of the car park building. Nawaloka Hospitals PLC charges AWPLR+1% for the funds transferred.

28.5.2 Nawaloka Medicare (Pvt) Ltd., fully-owned subsidiary of the Company has been restructured their balance sheet through issuing 77,105,232 shares to the Company by setting of the payable amount to its Parent Company.

28.6 Recurrent Related Party TransactionsThere were no other recurrent related party transactions which in aggregate value exceeds 10% of the consolidated revenue

of the Company according to 31st March 2016 audited Financial Statements, except the transactions between New Nawaloka Hospitals (Pvt) Ltd. and New Nawaloka Medical Centre (Pvt) Ltd. which are fully-owned subsidiaries of the Company. The two subsidiaries are situated in the same premises and operate under the Nawaloka Hospitals brand name with the Company and therefore revenue and the expenses could occur mutually. However, the net transactions value does not exceed the 10% of the consolidated revenue of the Company.

29. Changes in ClassificationTo facilitate comparison, relevant balances pertaining to the previous year, have been reclassified to conform to current year’s classification and presentation.

30. Capital CommitmentsNawaloka Hospitals construct a multistoried building with car park facilities, Channelling, Outpatients Department and Indoor Admission facilities adjoining the existing hospital building of the subsidiary and Rs. 1,249,234,452/- those to be invested. There were no material capital commitments existed as at 31st March 2016 other than disclosed above.

31. Contingent LiabilitiesThere were no material contingent liabilities existed as at 31st March 2016.

32. Events after the Reporting DateThere are no events that have occurred after the Reporting Date, which would require adjustments to, or disclosure in the Financial Statements.

33. Directors’ ResponsibilitiesThe Board of Directors is responsible for the preparation and presentation of these Financial Statements according to the Sri Lanka Accounting Standards and Companies Act No. 07 of 2007.

34. Accounting Classifications and Fair ValuesThe Group do not designate any of its financial assets/liabilities at fair value, so, a classification between fair value hierarchy do not apply.



34.1 Fair Values vs. Carrying Amounts

31st March 2016 Fair Value Through

Profit or LossRs.

Held-to-Maturity

Rs.


Rs.

Available-for-Sale

Rs.

Other Financial Liabilities

Rs.

Total Carrying Amount

Rs.

Fair Value

Rs.

Cash and cash equivalents – – 563,492,145 – – 563,492,145 563,492,145

Trade and other receivables – – 519,018,172 – – 519,018,172 519,018,172

– – 1,082,510,317 – – 1,082,510,317 1,082,510,317

Debentures – – – – 1,484,104,507 1,484,104,507 1,484,104,507

Borrowings – – – – 3,596,694,050 3,596,694,050 3,596,694,050

Finance Leases – – – – 116,000,000 116,000,000 116,000,000

Trade and other payables – – – – 486,959,763 486,959,763 486,959,763

– – – – 5,683,758,320 5,683,758,320 5,683,758,320

31st March 2015 Fair Value Through Profit or Loss

Rs.

Held-to-Maturity

Rs.


Rs.

Available-for-Sale

Rs.

Other Financial Liabilities

Rs.

Total Carrying Amount

Rs.

Fair Value

Rs.

Cash and cash equivalents – – 453,619,833 – – 453,619,833 453,619,833

Trade and other receivables – – 439,343,071 – – 439,343,071 439,343,071

– – 892,962,904 – – 892,962,904 892,962,904

Debentures – – – – 1,480,047,383 1,480,047,383 1,480,047,383

Borrowings – – – – 1,620,415,481 1,620,415,481 1,620,415,481

Finance Leases – – – – 124,000,000 124,000,000 124,000,000

Trade and other payables – – – – 473,368,248 473,368,248 473,368,248

– – – – 3,697,831,112 3,697,831,112 3,697,831,112

35. Financial InstrumentsFinancial Risk Management

Overview

The Group has exposure to the following risks arising from financial instruments:zz Credit risk

zz Liquidity risk

zz Market risk

This note of presents information about the Group’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Groups’ management of capital.

Risk Management FrameworkThe Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.

The Group’s risk management policies are established to identify and analyse the risk faced by the Group, to set appropriate risk limits and controls and to monitor risk and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Group Audit Committee monitors the process through which business risks are identified for action by the management and for the Board’s attention, monitors the effectiveness of the Company’s internal controls. The Audit Committee is assisted in its role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of controls and procedures, the results of which are reported to the Audit Committee.

Credit RiskCredit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment securities.



Exposure to Credit Risk

The carrying amount of the financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the Reporting Date was as follows:

Description 2016Rs.

2015Rs.

Trade debtors and other receivables 519,018,172 428,373,535

Short-term Investment 427,886,374 415,601,334

Cash and cash equivalents (846,836,600) (593,905,473)

Total 100,067,946 250,069,396

Trade and Other Receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the management also considers the demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main component of this allowance area specific loss component that relates to individually significant exposures and a collective loss component established for Groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payments statistics for similar financial assets.

Impairment Losses

Trade and other receivable at the Reporting Date was neither past due nor impaired.

Liquidity RiskLiquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group maintains the level of its cash and cash equivalents at an amount in excess of expected cash outflows on financial liabilities (other than trade payables) over the succeeding 60 days. The Group also monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables. In addition, the Group maintains Rs. 415 Mn overdraft facility that is unsecured. Interest would be payable at market rate.

The disclosure shows net cash flow amounts for derivatives that are net cash settled and gross cash inflow and outflow amount for derivatives that have simultaneous gross cash settlement. It is not expected that cash flows included in the maturity analysis would occur significantly earlier or at significantly different amount.

Market RiskMarket risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising its returns.

Currency Risk

The Group is exposed to currency risk on receipts, payments and borrowings that are denominated in a currency other than Sri Lankan Rupees.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company’s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

Interest Rate Risk

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss and the Company does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the Reporting Date would not affect profit or loss.

Capital Management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain development of the business. Capital consists of ordinary shares, retained earnings and revaluation reserve of the Company. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Company’s net debt to adjusted equity ratio at the Reporting Date was as follows:

2016Rs.

2015Rs.

Total liabilities 7,198,582,032 4,758,288,129

Less: cash and cash equivalents 563,492,145 464,589,369

Net debt 6,635,089,887 4,293,698,760

Total equity 3,994,897,962 3,887,681,839

Net debt to equity ratio 1.66 1.04


36. Segmental Analysis

District

TotalRs. ’000

ColomboRs. ’000

GampahaRs. ’000

Revenue 5,384,753,416 475,464,745 5,860,218,161

Profit for the year 189,835,689 16,198,539 206,034,228

Total assets 10,075,482,636 1,117,997,358 11,193,479,994

Total liabilities 7,097,290,142 101,291,890 7,198,582,032

Based on geographical analysis.


INDEPENDENT ASSURANCE REPORT

ANNEXES

We have been engaged by the directors of Nawaloka Hospitals PLC (“the Company”) to provide reasonable assurance and limited assurance in respect of the Assured Sustainability Parameters as identified below for the year ended 31 March 2016. The Assured Sustainability Parameters are included in the Nawaloka Hospitals PLC’s annual report for the year ended 31 March 2016 (the “Report”).

The Reasonable Assurance Sustainability Parameters covered by our reasonable assurance engagement are:

Assured Sustainability Parameters Sustainability Report Page

Highlights (Financial Performance) 8

The Limited Assurance Sustainability Parameters covered by our limited assurance engagement are:

Limited Assurance Sustainability Parameters

Sustainability Report Page

Highlights (Non-Financial

Performance)

9

Stakeholder Relationships 24-26

Information provided on following stakeholder groups

Financial Capital and Intellectual Capital 30 - 39

Investor Capital 40

Customer Capital 42 - 52

Employee Capital 54 - 63

Business Partner Capital 64

Social and Environmental Capital 66 - 69

Our conclusions: Our conclusion has been formed on the basis of, and is subject to, the matters outlined in this report.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusions.

Reasonable Assurance Sustainability Parameters

In our opinion, the Reasonable Assurance Sustainability Parameters, as defined above, for the year ended 31st March 2016 are, in all material respects, are prepared and presented in accordance with the Global Reporting Initiative (GRI) G4 Content Index Guidelines. Limited Assurance Sustainability Parameters

Based on the limited assurance procedures performed and the evidence obtained, as described below, nothing has come to our attention that causes us to believe that the Limited Assurance Sustainability Parameters, as defined above, for the year ended 31st March 2016, have not in all material respects, been prepared and presented in accordance with the GRI G4 Content Index Guidelines.

Management’s Responsibility Management are responsible for the preparation and presentation of the Reasonable Assurance Sustainability Parameters and the Limited Assurance Sustainability Parameters in accordance with the GRI G4 Content Index Guidelines.

These responsibilities include establishing such internal controls as management determines are necessary to enable the preparation of the Reasonable Assurance Sustainability Parameters and the Limited Assurance Sustainability Parameters that are free from material misstatement whether due to fraud or error.

Management is responsible for preventing and detecting fraud and for identifying and ensuring that the Company complies with laws and regulations applicable to its activities.

Management is also responsible for ensuring that staff involved with the preparation and presentation of the description and Report are properly trained, information systems are properly updated and that any changes in reporting encompass all significant business units.

Our Responsibility Our responsibility is to express a reasonable assurance conclusion on the Company’s preparation and presentation of the Reasonable Assurance Sustainability Parameters and a limited assurance conclusion on the preparation and presentation of the Limited Assurance Sustainability Parameters included in the Report, as defined above.

We conducted our assurance engagement in accordance with Sri Lanka Standard on Assurance Engagements SLSAE 3000: Assurance Engagements other than Audits or Reviews of Historical Financial Information (SLSAE 3000) issued by the Institute of Chartered Accountants of Sri Lanka.

The Firm applies Sri Lanka Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

We have complied with the independence and other ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of Sri Lanka, which is founded on fundamental principles of integrity, objectivity,

Annexes146 Nawaloka Hospitals PLC Annual Report 2015/16 Independent Assurance Report

professional competence and due care, confidentiality and professional behaviour.

SLSAE 3000 requires that we plan and perform the engagement to obtain reasonable assurance about whether the Reasonable Assurance Sustainability Parameters are free from material misstatement and limited assurance about whether the Limited Assurance Sustainability Parameters are free from material misstatement.

Reasonable assurance over Reasonable Assurance Sustainability Parameters

The procedures selected in our reasonable assurance engagement depend on our judgment, including the assessment of the risks of material misstatement of the Reasonable Assurance Sustainability Parameters whether due to fraud or error.

In making those risk assessments, we have considered internal control relevant to the preparation and presentation of the Reasonable Assurance Sustainability Parameters in order to design assurance procedures that are appropriate in the circumstances, but not for the purposes of expressing a conclusion as to the effectiveness of the Company’s internal control over the preparation and presentation of the Report.

Our engagement also included assessing the appropriateness of the Reasonable Assurance Sustainability Parameters, the suitability of the criteria, being the GRI G4 Content Index Guidelines, used by the Company in preparing and presenting the Reasonable Assurance Sustainability Parameters within the Sustainability Report, obtaining an understanding of the compilation of the financial and non-financial information to the sources from which it was obtained, evaluating the reasonableness of estimates made by the Company, and re-computation of the calculations of the Reasonable Assurance Sustainability Parameters.

Limited assurance on the Assured Sustainability Parameters

Our limited assurance engagement on the Limited Assurance Sustainability Parameters consisted of making enquiries, primarily of persons responsible for the preparation of the Limited Assurance Sustainability Parameters, and applying analytical and other procedures, as appropriate. These procedures included:

y Interviews with senior management and relevant staff at corporate and selected site level concerning sustainability strategy and policies for material issues, and the implementation of these across the business;

y Enquiries of management to gain an understanding of the Company’s processes for determining material issues for the Company’s key stakeholder groups;

y Enquiries of relevant staff at corporate and selected site level responsible for the preparation of the Limited Assurance Sustainability Parameters;

y Enquiries about the design and implementation of the systems and methods used to collect and report the Limited Assurance Sustainability Parameters, including the aggregation of the reported information;

y Comparing the Limited Assurance Sustainability Parameters to relevant underlying sources on a sample basis to determine whether all the relevant information has been appropriately included in the Report;

y Reading the Limited Assurance Sustainability Parameters presented in the Report to determine whether they are in line with our overall knowledge of, and experience with, the sustainability performance of the Company;

y Reading the remainder of the Report to determine whether there are any material misstatements of fact or material inconsistencies based on our understanding obtained as part of our assurance engagement.

The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement, and consequently the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained has a reasonable assurance engagement been performed. Accordingly, we do not express a reasonable assurance conclusion on the Limited Assurance Sustainability Parameters.

Purpose of Our Report In accordance with the terms of our engagement, this assurance report has been prepared for the Company for the purpose of assisting the Directors in determining whether the Company’s Reasonable and Limited Assurance Sustainability Parameters are prepared and presented in accordance with the GRI G4 Content Index Guidelines and for no other purpose or in any other context.

Restriction of Use of Our Report Our report should not be regarded as suitable to be used or relied on by any party wishing to acquire rights against us other than the Company, for any purpose or in any other context. Any party other than the Company who obtains access to our report or a copy thereof and chooses to rely on our report (or any part thereof) will do so at its own risk. To the fullest extent permitted by law, we accept or assume no responsibility and deny any liability to any party other than the Company for our work, for this independent assurance report, or for the conclusions we have reached.

Chartered Accountants Colombo

25th May 2016

Annexes 147Annual Report 2015/16 Nawaloka Hospitals PLC

General Standard Disclosures

GRIIndicator

Description Page Number/Explanations External Assurance

Strategy and Analysis

G4-1 Statement from the Chairman 15

Organisation Profile

G4-3 Name of the Organisation 157

G4-4 Primary Brands, Products and/or Services 42

G4-5 Location of Organisation’s Head Quarters 157

G4-6 Number of countries where the Organisation operates and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the Report

119

G4-7 Nature of ownership and legal form 157

G4-8 Markets served 46

G4-9 Scale of the Reporting Organisation 12

G4-10 Total workforce by employment type, employment contract and region broken down by gender 54

G4-11 Percentage of employees covered by collective bargaining agreements 61

G4-12 Organisation’s supply chain 64

G4-13 Significant changes during the reporting period regarding size, structure or ownership None

G4-14 Explanation of whether and how the precautionary approach or principle is addressed by the organisation

12 and 100

G4-15 Externally developed economic, environmental and social charters and principles or other initiatives to which the organisation subscribes or endorses

28

G4-16 Memberships in associations and/or national/international advocacy organisations 28

Identified Material Aspects and Boundaries

G4-17 Organisation’s entities covered by the report 18

G4-18 Process for Defining Report Content 12

G4-19 Material Aspects identified for Report Content 28 and 29

G4-20 Aspect Boundary for identified Material Aspects within the organisation 12

G4-21 Aspect Boundary for identified Material Aspects outside the organisation 12

G4-22 Explanation of the effect of any restatement of information provided in earlier reports and the reason for such restatement

12

G4-23 Significant changes from previous reporting periods in the Scope, Aspect boundaries in the Report

12

Stakeholder Engagement

G4-24 List of stakeholder groups engaged by the Organisation 24

G4-25 Basis for identification and selection of stakeholders with whom to engage 24

G4-26 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group

25 and 26

G4-27 Key topics and concerns raised through stakeholder engagements and how the Organisation responded to them

25 and 26

Report Profile

G4-28 Reporting period 12

G4-29 Date of most recent previous report 12

G4-30 Reporting cycle 12

G4-31 Contact point for questions regarding the Report or its Contents 12

G4-32 Compliance with GRI G4 Guidelines, GRI Content Index and the External Assurance Report 147

G4-33 Policy and current practice with regard to seeking external assurance for the Report 145 - 146

Governance

G4-34 Governance Structure of the Organisation, including committees under the highest governance body responsible for decision-making on economic, environment and social impacts

81

GRI CONTENT INDEX

Annexes148 Nawaloka Hospitals PLC Annual Report 2015/16

General Standard Disclosures

GRIIndicator

Description Page Number/Explanations External Assurance

Ethics and Integrity

G4-56 The values, principles, standards and norms of behaviour 36

Specific Standard Disclosures

DMA and Indicators

Material Aspects Page Number/Explanations External Assurance

Category: Economic

Material Aspect: Economic Performance

G4 - DMA 34

G4 - EC1 Direct economic value generated, distributed and retained 34

G4 - EC2 Financial implications and other risks and opportunities for the organisation’s activities due to climate change

48

G4 - EC3 Coverage of the organisation’s defined plan obligations 123

G4 - EC4 Financial assistance received from Government 34

Material Aspect: Market Presence

G4 - DMA 56

G4 - EC6 Proportion of senior management hired from the local community at significant locations of operation

56

Material Aspect: Indirect Economic Impact

G4 - DMA 67

G4 - EC8 Significant indirect economic impacts, including the extent of impacts 67

Material Aspect: Procurement Practices

G4 - DMA 39

G4 - EC9 Proportion of spending on local suppliers at significant locations of Operations 39

Category: Environment

Material Aspect: Materials

G4 - DMA 67

G4 - EN1 Materials used by weight or volume 67

Material Aspect: Energy

G4 - DMA 67

G4 - EN6 Reduction of energy consumption 68

Material Aspect: Water

G4 - DMA 68

G4 - EN8 Total water withdrawal by source 68

Material Aspect: Emissions

G4 - DMA 68

Material Aspect: Effluents and Waste

G4 - DMA 69

G4 - EN23 Total weight of waste by type and disposal method 69

GRI Content Index



DMA and Indicators


Category: Social

Sub-Category: Labour Practices and Decent WorkMaterial Aspect: Employment

G4 - DMA 54

G4 - LA1 Total number and rate of new employee hires and employee turnover by age group, gender and region

56

G4 - LA2 Benefits provided to full-time employees that are not provided to temporary or part-time employees by significant locations of operation

61

G4-LA3 Return to work and retention rates after parental leave by gender 56

Material Aspect: Labour/Management Relations

G4 - DMA 61

G4 - LA4 Minimum notice periods regarding operational changes, including whether it is specified in collective agreements

61

Material Aspect: Occupational Health and Safety

G4 - DMA 62

G4 - LA6 Type of injury and rates of injury, occupational disease, lost days, and absenteeism, and total number of work related fatalities, by region and by gender

62

G4 - LA7 With high incidence or high risk of diseases related to their occupation 62

Material Aspect: Training and Education

G4 - DMA 56

G4 - LA9 Average hours of training per year per employee by gender and by employee category 58

G4 - LA10 Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings

58

G4 - LA11 Percentage of employees receiving regular performance and career development reviews by gender and employee category

57

Material Aspect: Diversity and Equal Opportunity

G4 - DMA 62

G4 - LA12 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership and other indicators of diversity

55

Material Aspect: Equal Remuneration for Women and Men

G4 - DMA 61

G4 - LA13 Ratio of basic salary and remuneration of women to men by employee category by significant locations of operation

63

Material Aspect: Labour Practices and Grievance Mechanisms

G4 - DMA 61

G4 - LA16 Number of grievances about labour practices filed, addressed and resolved through formal grievance mechanisms

61

Sub-Category: Human Rights

Material Aspect: Non-Discrimination

G4 - DMA 63

G4 - HR3 Total number of incidents of discrimination and corrective actions taken 63

Material Aspect: Freedom of Association and Collective Bargaining

G4 - DMA 61

G4 - HR4 Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk and measures taken to support these rights

61

GRI Content Index



DMA and Indicators


Material Aspect: Child Labour

G4 - DMA 63

G4 - HR5 Operations and suppliers identified as having significant risk for incidents of child labour and measures taken to contribute to the effective abolition of child labour

63

Material Aspect: Human Rights Grievance Mechanisms

G4 - DMA 61

G4 - HR12 Number of grievances about human rights impacts filed, addressed and resolved through formal grievance mechanisms

61

Sub-Category: Society

Material Aspect: Local Communities

G4 - DMA 66

G4 - SO1 Percentage of operations with implemented local community engagement, impact assessments and development programmes

66

Material Aspect: Anti-Corruption

G4 - DMA 52

G4 - SO3 Total number and percentage of operations assessed for risks related to corruption and the significant risks identified

52

Material Aspect: Anti-competitive Behaviour

G4 - DMA 52

G4 - SO7 Total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes

52

Material Aspect: Compliance

G4 - DMA 67

G4 - SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations

None

Sub-Category: Product Responsibility

Material Aspect: Customer Health and Safety

G4 - DMA 52

G4 - PR1 Percentage of significant product and service categories for which health and safety impacts are assessed for improvement

52

G4 - PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services

52

Material Aspect: Product and Service Labelling

G4 - DMA 51

G4 - PR5 Results of surveys measuring customer satisfaction 50

Material Aspect: Marketing Communications

G4 - DMA 51

G4 - PR6 Sale of banned or disputed products 51

G4 - PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship by type of outcomes

51

Material Aspect: Customer Privacy

G4 - DMA 51

G4 - PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data

51

GRI Content Index


Top 20 Shareholders as at 31st March 2016

Name NIC/Company Reg. No.

Number of Shares

%

1. Mr. H.K.J. Dharmadasa 483122195V 462,736,182 32.83

2. Nawaloka Construction Company (Private) Ltd. 3836L 441,778,880 31.34

3. Mr. K.D.D. Perera 673632793V 344,566,068 24.45

4. Employees Provident Fund 2214L 9,567,443 0.68

5. Miss. A.G. Dharmadasa 795872094V 5,066,686 0.36

6. Mrs P. Nanayakkara 787902197V 5,066,666 0.36

7. MR. D.M. Rajapaksa 473192462V 4,496,400 0.32

8. Bank of Ceylon A/C Ceybank Unit Trust 543L 4,241,898 0.30

9. Merchant Bank of Sri Lanka Ltd. A/C No. 1 254L 3,800,000 0.27

10. Mr. V.R. Ramanan 660661026V 3,400,000 0.24

11. Mr. A.G. Dharmadasa 771671446V 3,004,000 0.21

12. Nawaloka Developments (Pvt) Ltd. 3181L 2,814,932 0.20

13. Mrs C.S. Dharmadasa 545520016V 2,581,866 0.18

14. Mr. K.S. Warusavitarana 602370461V 2,500,066 0.18

15. Mr. U.H. Palihakkara 430160460V 2,384,498 0.17

16. Mrs. P. Ganeshan 467131273V 2,200,000 0.16

17. Mr. L. Hettiarachchi 390310919V 2,087,000 0.15

18. Mr. H.A. Pieris 330950099V 2,028,883 0.14

19. Mrs. N.H. Abdul Husein 427692353V 1,947,900 0.14

20. Tranz Dominion, L.L.C. 6130F 1,712,067 0.12

Total Shares 1,307,981,435 92.80

Balance 101,524,161 7.20

Total No. of Shares 1,409,505,596 100.00

Range of Shareholders

As at 31st March 2016 No. of Shareholders No. of Shares % of Shareholding

1 - 500 2,127 334,393 29.84

501 - 5,000 2,655 5,989,456 37.24

5,001 - 10,000 820 6,255,582 11.50

10,001 - 20,000 616 9,469,296 8.64

20,001 - 30,000 305 8,067,889 4.28

30,001 - 40,000 151 5,321,012 2.12

40,001 - 50,000 99 4,704,384 1.39

50,001 - 100,000 167 12,811,209 2.34

100,001 - 1,000,000 165 43,268,002 2.31

1,000,001 & above 24 1,313,284,373 0.34

Total 7,129 1,409,505,596 100.00

INVESTOR INFORMATION


Composition of Shareholders

No. of Shareholders as at 31.03.2016

Total Holding

% No. of Shareholders as at 31.03.2015

Total Holding

%

Category

Institutional Shareholders 87 459,279,117 1.22 63 492,039,933 0.85

Individual Shareholders 7,042 950,226,479 98.78 7,326 917,465,663 99.15

Total 7,129 1,409,505,596 100.00 7,389 1,409,505,596 100.00

Non-Resident Shareholders 14 733,432 0.20 6 315,898 0.08

Resident Shareholders 7,115 1,408,772,164 99.80 7,383 1,409,189,698 99.92

Total 7,129 1,409,505,596 100.00 7,389 1,409,505,596 100.00

Directors Shareholding as at 31st March 2016

Name No. of Shares

Mr. H.K.J. Dharmadasa 462,736,182

Mr. Rienzie T. Wijetilleke 33,332

Deshabandu Tilak de Zoysa 218,000

Professor Lal Chandrasena 601,198

Mr. U.H. Dharmadasa 3,360

Mr. A.G. Dharmadasa 3,004,026

Ms. A.G. Dharmadasa 5,066,686

Mr. D. Sunil AbeyRatna NIL

Mr. Tissa K. Bandaranayake NIL

Mr. Victor Rajamanner Ramanan 3,400,000

Mr. Palitha Kumarasinghe PC NIL

Investor Information


Shares held by the Public as at 31st March 2016

In calculating the shares held by the Public as at 31st March 2016, Shares held by the Directors, their Spouses, shares held by Nawaloka Construction Company (Pvt) Ltd., Nawaloka Developments (Private) Ltd., Shares held jointly by Mr. H.K.J. Dharmadasa/Seylan Bank PLC and shares held by Mr. Victor R. Ramanan and the holders of 10% and more than 10% have been excluded:

Name of the Shareholder (Other than Public) No. of Shares

Mr. H.K.J. Dharmadasa 462,736,182

Mr. Rienzie T. Wijetilleke 33,332

Deshabandu Tilak de Zoysa 218,000

Professor Lal Chandrasena 601,198

Mr. U.H. Dharmadasa 3,360

Mr. A.G. Dharmadasa 3,004,026

Ms. A.G. Dharmadasa 5,066,686

Mrs. C.S. Dharmadasa 2,581,866

Mrs. Prithiva Nanayakkara 5,066,666

Chandula Lasith Perera 13,332

Nawaloka Construction Company (Pvt) Ltd. 441,778,880

Nawaloka Developments (Pvt) Ltd. 2,814,932

Mr. H.K.U. Dharmadasa 532

Mrs. S.D. Chandrasena 48,000

Estate of Late Deshamanya H.K. Dharmadasa 0

Mr. Victor R. Ramanan 3,400,000

Mr. Palitha Kumarasinghe PC 0

Mr. K.D.D. Perera 344,566,068

Seylan Bank PLC/Thirugnanasambandar Senthilverl 1,553,253

Total No. of Shares (other than public) 1,273,486,313

% 90.35

Shares held by Public 136,019,283

% 9.65

Total No. of Shares 1,409,505,596

Number of Public Shareholders 7,112

Investor Information


TEN YEAR STATISTICAL SUMMARY

2015/16 2014/15 2013/14 (Restated)

2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07

GroupIncome Statement DataRevenue 5,860,218,161 4,602,433,640 3,993,473,302 4,222,907,733 3,710,878,442 3,233,035,096 2,884,449,093 2,512,350,553 2,244,462,718 1,986,705,514

Cost of services (2,906,572,342) (2,331,583,775) (1,910,510,751) (2,013,392,367) (1,823,670,511) (1,645,969,580) (1,442,227,937) (1,306,238,370) (1,230,247,634) (1,088,274,165)

Gross profit 2,953,645,819 2,270,849,865 2,082,962,551 2,209,515,366 1,887,207,931 1,587,065,516 1,442,221,156 1,206,112,183 1,014,215,084 898,431,350

Other operating income 94,495,240 65,199,571 64,194,796 44,047,999 30,210,657 38,603,398 19,811,729 10,337,940 8,121,944 9,977,215

Profit from operations 637,208,825 352,342,610 475,165,536 599,414,193 459,028,530 324,001,074 415,343,605 294,511,336 270,011,694 223,534,421

Net profit after taxation 206,034,228 87,470,836 208,953,909 452,260,028 270,686,563 1,070,722,130 97,411,122 (108,502,591) (46,557,898) (113,423,742)

Balance Sheet DataShareholders’ funds 3,994,897,962 3,887,681,839 3,902,955,947 3,756,665,160 3,170,442,180 2,970,230,897 1,903,329,941 1,963,001,143 1,309,669,677 1,405,560,269

Financial RatiosGross profit ratio (%) 50 49 52 52 51 49 50 48 45 45

Net profit ratio (%) 4 2 5 11 7 33 3 (4) (2) (6)

Increase in revenue (%) 27 15 -5 14 15 12 15 12 13 19

Return on capital employed (%) 5 2 5 12 9 36 5 (6) (4) (8)

Current asset ratio (%) 0.89 1.03 1.11 0.71 0.58 0.43 0.74 0.62 0.79 1.10

Quick asset ratio (%) 0.70 0.80 0.85 0.48 0.42 0.29 0.63 0.51 0.68 0.95

Return on assets (%) 2 1 3 8 5 24 2 (3) (2) (4)

Debt/equity ratio (%) 1.27 0.84 0.58 0.25 0.28 0.23 0.63 0.60 0.66 0.54

Earnings/(loss) per share (Rs.) 0.15 0.06 0.15 0.32 0.19 0.76 0.14 (0.15) (0.07) (0.16)

Net assets per share (Rs.) 2.83 2.76 2.77 2.67 2.25 2.11 2.70 2.79 1.86 1.99

Dividend per share (Rs.) 0.07 0.06 0.05 0.05 0.05 – – – 0.07 0.05

CompanyIncome Statement DataRevenue 2,833,195,719 2,497,830,914 2,112,827,471 2,082,532,459 1,806,857,492 1,608,036,836 1,459,181,099 1,607,719,271 1,482,115,865 1,411,181,700

Cost of services (1,490,055,615) (1,229,903,547) (957,537,962) (988,218,793) (876,040,195) (767,116,507) (747,982,289) (837,431,514) (820,592,033) (830,801,032)

Gross profit 1,343,140,104 1,267,927,367 1,155,289,509 1,094,313,666 930,817,297 840,920,329 711,198,810 770,287,757 661,523,832 580,380,668



Net profit after taxation (127,565,499) 89,938,006 107,751,965 254,942,375 152,363,098 98,822,914 19,315,469 8,694,800 17,939,751 1,460,228



Net profit ratio (%) (5) 4 5 12 8 6 1 1 1 0

Increase in revenue (%) 13 18 1 15 12 10 (13) (4) (11) 12

Return on capital employed (%) (9) 5 6 15 10 7 1 1 1 0



Return on assets (%) (2) 2 2 7 5 5 1 0 1 0


Earnings/(loss) per share (Rs.) (0.09) 0.06 0.08 0.18 0.11 0.07 0.03 0.01 0.03 0.00

Net assets per share (Rs.) 1.04 1.20 1.21 1.18 1.06 1 1.92 1.89 1.89 1.93



2015/16 2014/15 2013/14 (Restated)

2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07

GroupIncome Statement DataRevenue 5,860,218,161 4,602,433,640 3,993,473,302 4,222,907,733 3,710,878,442 3,233,035,096 2,884,449,093 2,512,350,553 2,244,462,718 1,986,705,514

Cost of services (2,906,572,342) (2,331,583,775) (1,910,510,751) (2,013,392,367) (1,823,670,511) (1,645,969,580) (1,442,227,937) (1,306,238,370) (1,230,247,634) (1,088,274,165)

Gross profit 2,953,645,819 2,270,849,865 2,082,962,551 2,209,515,366 1,887,207,931 1,587,065,516 1,442,221,156 1,206,112,183 1,014,215,084 898,431,350



Net profit after taxation 206,034,228 87,470,836 208,953,909 452,260,028 270,686,563 1,070,722,130 97,411,122 (108,502,591) (46,557,898) (113,423,742)



Net profit ratio (%) 4 2 5 11 7 33 3 (4) (2) (6)

Increase in revenue (%) 27 15 -5 14 15 12 15 12 13 19

Return on capital employed (%) 5 2 5 12 9 36 5 (6) (4) (8)



Return on assets (%) 2 1 3 8 5 24 2 (3) (2) (4)


Earnings/(loss) per share (Rs.) 0.15 0.06 0.15 0.32 0.19 0.76 0.14 (0.15) (0.07) (0.16)

Net assets per share (Rs.) 2.83 2.76 2.77 2.67 2.25 2.11 2.70 2.79 1.86 1.99


CompanyIncome Statement DataRevenue 2,833,195,719 2,497,830,914 2,112,827,471 2,082,532,459 1,806,857,492 1,608,036,836 1,459,181,099 1,607,719,271 1,482,115,865 1,411,181,700

Cost of services (1,490,055,615) (1,229,903,547) (957,537,962) (988,218,793) (876,040,195) (767,116,507) (747,982,289) (837,431,514) (820,592,033) (830,801,032)

Gross profit 1,343,140,104 1,267,927,367 1,155,289,509 1,094,313,666 930,817,297 840,920,329 711,198,810 770,287,757 661,523,832 580,380,668



Net profit after taxation (127,565,499) 89,938,006 107,751,965 254,942,375 152,363,098 98,822,914 19,315,469 8,694,800 17,939,751 1,460,228



Net profit ratio (%) (5) 4 5 12 8 6 1 1 1 0

Increase in revenue (%) 13 18 1 15 12 10 (13) (4) (11) 12

Return on capital employed (%) (9) 5 6 15 10 7 1 1 1 0



Return on assets (%) (2) 2 2 7 5 5 1 0 1 0


Earnings/(loss) per share (Rs.) (0.09) 0.06 0.08 0.18 0.11 0.07 0.03 0.01 0.03 0.00

Net assets per share (Rs.) 1.04 1.20 1.21 1.18 1.06 1 1.92 1.89 1.89 1.93



(Rs. ’000)

Balance Sheet Data

2015/16 2014/15

As at 31.03.2016 31.12.2015 30.09.2015 30.06.2015 31.03.2015 31.12.2014 30.09.2014 30.06.2014

Total non-current assets 9,305,422 8,074,725 7,473,547 7,256,086 7,112,749 6,959,439 6,582,910 6,485,291

Shareholders’ funds 3,994,898 4,007,520 3,912,429 3,945,092 3,887,682 3,938,060 3,891,867 3,949,609

Income Statement Data

For the three months ended Total 31.03.2016 31.12.2015 30.09.2015 30.06.2015 Total 31.03.2015 31.12.2014 30.09.2014 30.06.2014

Revenue 5,860,218 1,473,316 1,575,942 1,448,821 1,362,139 4,602,434 1,222,277 1,214,044 1,108,272 1,057,841

Gross profit 2,953,646 743,900 789,191 732,248 688,307 2,270,850 598,484 613,495 543,717 515,154

Net Profit before tax 315,252 15,436 135,903 90,003 73,910 96,648 (31,029) 52,193 28,557 46,927

Ordinary Share Information

Nominal Value per Share Rs. 1.00

Market Price per Share (Rs.) 31.03.2016 31.12.2015 30.09.2015 30.06.2015 31.03.2015 31.12.2014 30.09.2014 30.06.2014

High 3.70 3.70 3.90 3.20 3.50 3.60 3.90 3.50

Low 3.10 3.00 2.90 2.90 2.90 3.00 3.20 3.20

Closing 3.50 3.30 3.60 3.10 2.90 3.30 3.70 3.20

Financial Measures

31.03.2016 31.12.2015 30.09.2015 30.06.2015 31.03.2015 31.12.2014 30.09.2014 30.06.2014

Return on shareholders’ funds (%)

0.39 3.39 2.30 1.87 -0.80 1.33 0.73 1.19

Net assets per share (Rs.) 2.83 2.84 2.78 2.80 2.76 2.79 2.76 2.80

QUARTERLY STATISTICS

Net (Rs. Mn)Profit Before Tax

0

30

60

90

120

150

Dec 15 Mar 16Sep 15Jun 15

Revenue (Rs. Mn)

0

350

700

1,050

1,400

1,750


Marke (Rs.)t Price Per Share

1.50

2.00

2.50

3.00

3.50

4.00


HighestPrice

ClosingPrice

LowestPrice


CORPORATE INFORMATION

Name of the Company


Company Registration No.PQ 78

Registered OfficeNo. 23, Deshamanya H.K. Dharmadasa Mawatha, Colombo 00 200, Sri Lanka.

Telephone(+94 11) 2544444-56, 2305051-79

Telefax(+94 11) 2430393

E-mail/[email protected], www.nawaloka.com

Legal FormQuoted Public Company with limited liability incorporated in Sri Lanka under the Companies Ordinance 1938 and reregistered under the Companies Act No. 07 of 2007.

Board of Directors1. Mr. H.K. Jayantha Dharmadasa (Chairman & CEO)2. Mr. Rienzie T. Wijetilleke (Vice-Chairman)3. Professor Lal Chandrasena (Director/General Manager)4. Deshabandu Tilak de Zoysa 5. Mr. Tissa K. Bandaranayake 6. Mr. U.H. Dharmadasa7. Mr. A.G. Dharmadasa8. Ms. A.G. Dharmadasa9. Mr. D. Sunil AbeyRatna 10. Mr. Palitha Kumarasinghe PC11. Mr. V. Ramanan

Secretaries to the CompanyM & A Company Secretaries (Private) Limited, No. 28 (Level 2), W.A.D. Ramanayake Mawatha, Colombo 00 200.

AuditorsKPMG,Chartered Accountants,No. 32A, Sir Mohamed Macan Markar Mawatha,Colombo 00 300.

Lawyer(s)Nithi Murugesu & Associates Attorneys-at-Law & Notaries Public, No. 28 (Level 2), W.A.D. Ramanayake Mawatha, Colombo 00 200.

Mr. H. Chandrakumar de Silva Attorney-at-Law, No. 7, Hedges Court, Colombo 00 100.

Bankers

Hatton National Bank PLCSampath Bank PLCCommercial Bank of Ceylon PLCBank of CeylonDeutsche BankDFCC Bank PLC

SubsidiariesNew Nawaloka Hospitals (Pvt) Ltd.New Nawaloka Medical Centre (Pvt) Ltd.Nawaloka Medicare (Pvt) Ltd.

Joint VentureNawaloka Metropolis Laboratories (Pvt) Ltd.


NOTICE OF MEETING

Notice is hereby given that the 27th Annual General Meeting of NAWALOKA HOSPITALS PLC will be held at the Cinema hall of the ‘BMICH’ (Bandaranaike Memorial International Conference Hall) at Bauddhaloka Mawatha, Colombo on Thursday 30th June 2016, at 10.30 a.m. for the following purposes:

Agenda1. To receive and consider the Report of the Board of Directors on the Affairs of the Company and the Financial Statements for the year ended

31st March 2016, together with the Report of Auditors thereon;

2. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/reappoint Mr. Rienzie T. Wijetilleke (who is currently 76 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in Section 210 of the said Act, shall not apply to him and subject to his rotation;

3. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/reappoint Mr. Tissa K. Bandaranayake (who is currently 73 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in Section 210 of the said Act, shall not apply to him and subject to his rotation;

4. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/reappoint Professor Lal Chandrasena (who is currently 70 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in Section 210 of the said Act, shall not apply to him and subject to his rotation;

5. To re-elect Directors as follows:

(a) Re-elect, as a Director, in terms of Article 74, Mr. U.H. Dharmadasa who retires by rotation and offers himself for re-election;

(b) Re-elect, as a Director, in terms of Article 74, Ms. A.G. Dharmadasa who retires by rotation and offers himself for re-election;

(c) Re-elect, as a Director, in terms of Article 74, Mr. D. Sunil AbeyRatna who retires by rotation and offers himself for re-election;

(d) Re-elect, as a Director, in terms of Article 81, Mr. Palitha Kumarasinghe PC who retires by rotation and offers himself for re-election;

(e) Re-elect, as a Director, in terms of Article 81, Mr. V.R. Ramanan who retires by rotation and offers himself for re-election.

6. To authorise the Board of Directors to determine and make donations to charities;

7. To reappoint Messrs KPMG (Chartered Accountants) as Auditors of the Company and authorise the Board of Directors to determine their remuneration; and

8. To transact any other business of which due notice has been given.


Sgd.

M & A Company Secretaries (Pvt) Ltd.Company Secretaries

25th May 2016

Notes1. A member is entitled to appoint a proxy to attend and vote instead of him/herself. A proxy need not be a member of the Company. A Form of Proxy

accompanies this Notice.

2. The completed Form of Proxy must be deposited at the Registered Office, No. 23, Deshamanya H.K. Dharmadasa Mawatha, Colombo 02, Sri Lanka, not later than 10.30 a.m. on 28th June 2016 (Forty-Eight hours prior to the meeting).

3. A person representing a Corporation is required to carry a certified copy of the Resolution authorising him/her to act as the Representative of the Corporation. A Representative need not be a member.

4. A person representing a shareholder as the Attorney (Power of Attorney) is required to carry the original or a certified copy of the said Power of Attorney.

5. The Transfer Books of the Company will be kept open.

Annual Report 2015/16 Nawaloka Hospitals PLC

FORM OF PROXY

I/We …………………………………………………………………………………………… (NIC/PP No.) …………………………………………………

of ……………………………………………………………………………………………………………………………………………………………………

being a member/members of NAWALOKA HOSPITALS PLC hereby appoint:

Mr. H.K.J. Dharmadasa or failing himMr. Rienzie T. Wijetilleke or failing him

Professor Lal Chandrasena or failing him

Deshabandu Tilak de Zoysa or failing him

Mr. Tissa K. Bandaranayake or failing him

Mr. U.H. Dharmadasa or failing him

Mr. A.G. Dharmadasa or failing him

Ms. A.G. Dharmadasa or failing her

Mr. D. Sunil AbeyRatna or failing him

Mr. Palitha Kumarasinghe PC or failing him

Mr. Victor Rajamanner Ramanan or failing him

as *my/our Proxy to ** …………………………………………… (NIC/ PP No.) ……………………………… vote as indicated hereunder for me*/us on my*/our behalf at the Annual General Meeting of the Company to be held on Thursday 30th June 2016 at 10.30 a.m. at the Cinema hall of the ‘BMICH’ (Bandaranaike Memorial International Conference Hall) at Bauddhaloka Mawatha, Colombo and at any adjournment thereof and at every poll which may be taken in consequence thereof.

For Against

i. To receive and consider the Report of the Board of Directors on the Affairs of the Company and the Financial Statement for the year ended 31st March 2016, together with the Report of Auditors thereon;

ii. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/reappoint Mr. Rienzie T. Wijetilleke (who is currently 76 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in Section 210 of the said Act, shall not apply to him and subject to his rotation;

iii. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/reappoint Mr. Tissa K. Bandaranayake (who is currently 73 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in section 210 of the said Act, shall not apply to him and subject to his rotation;

iv. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/reappoint Professor Lal Chandrasena (who is currently 70 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in Section 210 of the said Act, shall not apply to him and subject to his rotation;

v. To re-elect Directors as follows:a. Re-elect, as a Director, in terms of Article 74, Mr. U.H. Dharmadasa who retires by rotation and offers himself for re-election;

b. Re-elect, as a Director, in terms of Article 74, Ms. A.G. Dharmadasa who retires by rotation and offers himself for re-election;

c. Re-elect, as a Director, in terms of Article 74, Mr. D. Sunil AbeyRatna who retires by rotation and offers himself for re-election;

d. Re-elect, as a Director, in terms of Article 81, Mr. Palitha Kumarasinghe PC who retires by rotation and offers himself for re-election;

e. Re-elect as a Director, in terms of Article 81, Mr. V.R. Ramanan who retires by rotation and offers himself for re-election.

vi. To authorise the Board of Directors to determine and make donations to charities;

vii. To reappoint Messrs KPMG (Chartered Accountants) as Auditors of the Company and authorise the Board of Directors to determine their remuneration; and

viii. To transact any other business of which due Notice has been given.

In witness*my/our hands this …………… day of ……………… Two Thousand and Sixteen.

……………………………………… Signature of Shareholder/sNote:a *Please delete the inappropriate words.b **If you wish your Proxy to speak at the meeting you should interpolate the words ‘Speak and’ in the place indicated with and initial such interpolation.


Instructions as to Completion1. In terms of Article 40 (a) of the Articles of Association of the Company: The instrument appointing a proxy shall be in writing and -

1. in the case of an individual, shall be signed by the appointer or his Attorney (if signed by the Attorney of the Company reserves the right to request to be furnished with a copy of the said Power of Attorney); and

2. in the case of a corporation or company shall be either under its common seal or seal or signed by its Attorney or by an Officer on behalf of the Company.

The Company may, but shall not be bound to, furnish evidence of the authority of any such Attorney or Officer. A proxy need not be a member of the Company.

2. Kindly perfect the Form of Proxy by filling it legibly with your full name and address and it must be signed at the space provided. Please fill in the date of signature and indicate with an ‘X’ in the space provided, as to how your proxy is to vote on each resolution. If no indication is given, the proxy, in his/her discretion may vote as he/she thinks fit.

3. In terms of Article 52 of the Articles of Association of the Company in the case of joint-holding of a share, the Senior tenders a vote, whether in person or by proxy or by Attorney or by representative and that vote shall be accepted to the exclusion of the votes of the other joint-holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members in respect of the joint-holding.

4. In case of a Joint-holding only one member or his duly appointed proxy may attend.

5. To be valid, the completed Form of Proxy should be deposited at the Registered Office of the Company situated at No. 23, Deshamanya H.K. Dharmadasa Mawatha, Colombo 02 not later than 48 hours of the date and time appointed for the meeting.

Form of Proxy

This Nawaloka Hospitals PLC annual report has been produced by Smart Media The Annual Report Company, a certified carbon neutral organisation. Additionally, the greenhouse gas emissions resulting from activities outsourced by Smart Media in the production of this annual report, including the usage of paper and printing, are offset through verified sources.

This Nawaloka Hospitals PLC annual report has been prepared using the Smart Integrated Reporting MethodologyTM of Smart Media The Annual Report Company.


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

Tel: +94 112 544 444-56, +94 115 577 111 Fax: +94 112 430 [email protected]

www.nawaloka.com

nawaloka hospitals plc - cse

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