Nawaloka Hospitals PLC Annual Report 2012/13 · 2016-09-29 · Nawaloka Hospitals PLC Annual Report 2012/13 Nawaloka Hospitals PLC No. 23, Deshamanya H. K. Dharmadasa Mawatha,Colombo

Nawaloka Hospitals PLC Annual Report 2012/13

Nawaloka Hospitals PLCNo. 23, Deshamanya H. K. Dharmadasa Mawatha,Colombo 02, Sri Lanka.

Tel: (+94 11) 2544444-56, 2305051-79 Fax: (+94 11) 2430393 E-mail [email protected] Web: www.nawaloka.com

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Name of the CompanyNawaloka Hospitals PLC

Company Registration NoPQ 78

Registered OfficeNo. 23, Deshamanya H. K. Dharmadasa Mawatha,(Formerly known as Sri Sugathodaya Mawatha), Colombo – 00200, 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 re-registered under the Companies Act No. 07 of 2007.

Board of Directors1. Mr. H. K. Jayantha Dharmadasa

(Chairman & CEO)2. Mr. Rienzie T. Wijetilleke

(Director / Vice Chairman) 3. Prof. Lal G. Chandrasena

(Director / General Manager)4. Deshabandu Tilak de Zoysa 5. Mr.Tissa Kumara Bandaranayake 6. Dr.Thirugnanasambandar Senthilverl7. Mr. Damian Sunil Abeyratna8. Mr. U. Harshith Dharmadasa9. Mr. A. G. Dharmadasa10. Ms. A. G. Dharmadasa

Secretaries to the CompanyM & A Company Secretaries (Private) Limited,No.28 (Level 2), W A D Ramanayake MawathaColombo – 02

AuditorsKPMG,Chartered Accountants,No. 32A, Sir Mohamed Macan Markar Mawatha,Colombo 3.

Lawyer(s)Mr. H. Chandrakumar de Silva,Attorney-at-Law,No. 7, Hedges Court,Colombo 01000.

Nithi Murugesu & AssociatesAttorneys-at-Law & Notaries Public,No.28 (Level 2), W A D Ramanayake Mawatha, Colombo – 02

BankersHatton National Bank PlcSampath Bank PlcPeoples BankSeylan Bank PlcState Bank of IndiaCommercial BankBank of CeylonDeutsche BankAmana BankDFCC Bank

SubsidiariesNew Nawaloka Hospitals (Private) LimitedNew Nawaloka Medical Centre (Private) Limited

Joint VentureNawaloka Metropolis Laboratories (Pvt) Limited

Vision and Mission 2 Company Profile 2 Key Financial Highlights 3 Our Milestones 4 Financial Highlights 6 Chairman’s /CEO’s Message 10 Operational & Management Review 12 Tribute to Former Chairman 15 Board of Directors 16 Senior Management Team 20 Executive Clinical Management Team 24 Sustainability 28 Independent Limited Assurance Report 53 Corporate Governance 66 Report of the Board of Directors 77 Risk Management 81 Report of the Remuneration Committee 84 Audit Committee Report 85 Directors’ Responsibility for Financial Reporting 90 Independent Auditor’s Report 91 Statement of Financial Position 92 Statement of Comprehensive Income 94 Statement of Changes in Equity 95 Cash Flow Statement 96 Notes to the Financial Statements 98 Investor Information 129 Five Year Statistical Summary 131 Quarterly Statistics 132 Notice of Meeting 134 Form of Proxy 135 Corporate Information Inner Back Cover

Produced by Copyline (Pvt) Ltd Printed by Gunaratne Offset Ltd

The providing of effective and efficient healthcare lies not only in technology, but in the people behind the technology. That is why, this year we celebrate those who have been a part of Nawaloka, seeing it grow and reach new heights in being one of the most state of the art medical providers in the country. Going behind the scenes in discovering what makes us the preferred

choice for all healthcare needs, we present to you, a legacy of care.

A Legacy of CareNawaloka Hospitals PLCAnnual Report 2012/13

2

To provide the best healthcare to the needy in a cost effective, timely and professional manner.

To be the Hospital of tomorrow whilst maintaining leadership and excellence in the healthcare industry

Company Profile

The entry of Nawaloka Hospitals into the state dominated healthcare sector in 1985, saw the private health care system take root in Sri Lanka. The launch of the hospital and the overwhelming response it received from the people demonstrated a long felt need for superior healthcare in a pleasant environment.

Nawaloka was set up to mirror reputed hospitals in the region which offered advanced medical technology and expert medical care, thus eliminating the need for people to travel out of Sri Lanka for specialized medical treatment.

The Hospital was a pioneering initiative, established under the Chairmanship of Late Deshamanya H. K. Dharmadasa, to be a centre of excellence in high technology diagnostic and curative facilities. Driven by the Vision to be the ‘Hospital of Tomorrow’, the medical institution has come to be known as a centre of excellence and a preferred healthcare institution in the country.

In 1988, the hospital introduced the first CT Scanner to Sri Lanka, and thereafter, the first fully fledged Cardio Thoracic Unit in the private sector with the latest technology, Angiography, cardiac theatre and a state-of-the art cardiac intensive care unit. The hospital went on to establish a Nurses Training School for enhanced Nursing Care, and has today become a key employment generator in the private sector. The Hospital became a public listed entity in the Colombo Stock Exchange in year 2004.

Today, Nawaloka Hospitals includes New Nawaloka Hospitals (Pvt) Ltd. and New Nawaloka Medical Centre (Pvt) Ltd., as subsidiaries, and Nawaloka Metropolis Laboratory as a joint venture.

It is the only health care service provider in Sri Lanka to obtain the ISO 9001-2008 quality standard. Additionally, the hospital has also been awarded the National Quality Award, the National Business Excellence Award and the “Baby-Friendly Hospital” status by the World Health Organization and the United Nations Children’s Fund. Best practices adhered to in all areas of management won the hospital the coveted Business Excellence Award (Gold award) from the National Chamber of Commerce of Sri Lanka on several occasions and the Gold Award at the CA Sri Lanka Annual Report Awards in years 2009/10, 2010/11 and 2011/12.

The 400 bed hospital, continues to benchmark against international best practices and constantly enhance and upgrade its facilities to increase customer comfort and convenience. It is widely acknowledged today as a reputable institution, at the forefront of private health care in the country which continues to pioneer medical procedures and technology.

Over the years, Nawaloka Hospitals has sustained transparency, strict compliance and a strong relationship with stakeholders to build an indelible sense of trust and respect. A ‘People’s hospital’, Nawaloka has opened its doors to the economically under privileged since inception, providing much-needed medical services for the poorest of the poor, free of charge. With an emphasis on healthcare over profits, Nawaloka is a unique example of how a private sector entity can successfully integrate service to society with sustainable profits.

A Legacy of CareNawaloka Hospitals PLC

Annual Report 2012/133

Key Financial Highlights

RevenueIncreased by 14%

Gross ProfitIncreased by 17%

Shareholders’ FundsIncreased by 19%

Operating ProfitIncreased by 30%

Earning per shareIncreased by 68%

Net Assets per shareIncreased by 19%


4

Our Milestones

• Established as the first fully fledged private hospital in Sri Lanka

• First intensive care unit in a private hospital

• First Cardiac catheterization Laboratory in Sri Lanka

• First Coronary Artery Bypass Surgery Unit in a private hospital

• We became the only ISO certified Hospital in Sri Lanka

• Awarded the “Baby-friendly Hospital” status from the WHO and United Nation Children’s Fund

• First CT Scanner in Sri Lanka

• First mammography unit in Sri Lanka

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

• We made significant advances in neurosurgery and Cardiac surgery

• We introduced Laser Eye Surgery

• Together with our Indian affiliates, we introduced a very successful IVF treatment center

• First minimally invasive laparoscopic surgery in Sri Lanka

• First MRI Scanner in Sri Lanka



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

• We began the process to send the entire operations of the Hospital by computerizing all our systems

• First to introduce the Arcadis Orbics Isocentric Digital C-arm system for orthopedics

• Introduction of Digital video Endoscopy System

• Introduced 16 slice CT Scanner with all accessories

• New 4-D Scanner for Radiology and Gynecology

• Introduced Ultrasonic defector

• First LIVE donor LIVER Transplant surgery in Sri Lanka

• Launch of life member Hospitality Card

• Vitro Retinal Eye Surgery

• Endovenous (varicose)Laser Treatment - EVLT

• High Definition (HD) Arthroscopy system

• Infant, CPAP Ventilation for Pediatric Incentive Care Unit (PICU)

• First introduce the Flat panel – Angiography system with state of the art technology

• First introduce a Comprehensive Polysomnography system

• Introduction of a state of the art Pulmonary testing facility

• First private Hospital on Sri Lanka with 400 beds

• First private Hospital to introduce ERCP (Endoscopic Retrograde Cholangiopancreatography)

• Installing the most technologically advanced Hemodialysis machine

• First hospital to introduce “LED LAMPS” in operating Theaters

• Commissioned first State-of-Art 3TESLA MRI Scanner in Sri Lanka

• Awarded ISO 9001-2008 certification

• Inaugurated weight Management Centre

• Inaugurated Breast Cancer Screening Center

• Single Balloon Enteroscope

• Doppler-Guided Hemorrhoid Artery ligation and Rectal Anal Repair


6

Financial Highlights

Group Company 2012/13 2011/12 Variance 2012/13 2011/12 Variance Rs Rs % Rs Rs %

Income Statement DataRevenue 4,222,907,733 3,710,878,442 14 2,082,532,459 1,806,857,492 15Cost of Services (2,013,392,367) (1,823,670,511) 10 (988,218,793) (876,040,195) 13Gross Profit 2,209,515,366 1,887,207,931 17 1,094,313,666 930,817,297 18Other Operating Income 44,047,999 30,210,657 46 116,017,261 124,673,860 (7)Profit from operations 596,357,404 459,028,530 30 310,796,698 226,817,202 37Net profit after taxation 454,259,279 270,686,563 68 257,855,395 152,363,098 69

Balance Sheet DataShareholders Fund 3,781,338,350 3,170,442,180 19 1,683,557,137 1,496,177,022 13

Financial RatiosGross Profit Ratio (%) 52.32 50.86 3 52.55 51.52 2Net Profit Ratio(%) 10.76 7.29 47 12.38 8.43 47Return on Capital Employed (%) 12.02 8.54 41 15.32 10.18 50Current Asset Ratio 0.71 0.58 22 0.53 0.57 (7)Quick Asset Ratio 0.48 0.42 14 0.48 0.53 (9)Return on Assets (Rs) 0.08 0.05 60 0.08 0.05 60Debt/ Equity Ratio 0.25 0.28 (11) 0.16 0.20 (20)Earnings/(Loss) per share 0.32 0.19 68 0.18 0.11 64Net Assets Per share (Rs) 2.68 2.25 19 1.20 1.06 13Dividend per share (Rs) 0.05 0.05 - 0.05 0.05 -Interest Cover Ratio (Times) 4.13 4.31 (4) 5.84 7.50 (22)Divident payout Ratio 0.16 0.26 (38) 0.27 0.45 (40)Dividend Yield Ratio 0.02 0.02 - 0.02 0.02 -Market Yield Ratio 0.11 0.06 83 0.06 0.04 50Price Earning Ratio 9.06 16.32 (44) 16.11 28.18 (43)



Net Asset Per Share

0

3.00

2.50

Rs.

2.00

1.50

1.00

0.50

08/0907/08 09/10 10/11 11/12 12/13

Shareholder Funds

0

4,000

Rs. Mn

3,500

3,000

2,500

2,000

1,500

1,000

500

08/0907/08 09/10 10/11 11/12 12/13

Net Profit Margin

(10)

35

30

%

25

20

15

10

5

0

(5)

08/0907/08 09/10 10/11 11/12 12/13

Gross Profit

0

2,500

Rs. Mn

2,000

1,500

1,000

500

08/0907/08 09/10 10/11 11/12 12/13

Return on Capital Employed

(10)

40

35

30

%

25

20

15

10

5

0

(5)

08/0907/08 09/10 10/11 11/12 12/13

Debt/Equity Ratio

0

0.80

0.70

0.60

0.50

0.40

0.30

0.20

0.10

08/0907/08 09/10 10/11 11/12 12/13

Revenue

0

4,500

4,000

Rs. Mn

3,500

3,000

2,500

2,000

1,500

1,000

500

08/0907/08 09/10 10/11 11/12 12/13

Capital Expenditure

0

800

Rs. Mn

700

600

500

400

300

200

100

08/0907/08 09/10 10/11 11/12 12/13

Care and devotion for our patients is what makes us stand out from the rest.

A Legacy of Service


10

Jayantha DharmadasaChairman/CEO

Chairman’s/CEO’s Message

The company will continue to make significant investments in the latest of technology and remain in the forefront of Sri Lanka’s healthcare sector



Dear Shareholder,It is my pleasure to welcome you to the 24th Annual General Meeting of Nawaloka Hospitals PLC and present to you the Annual Report and Audited Financial Statements for the year ended 31st March 2013.

PerformanceThe Company’s revenue grew by a creditable 14% during the year under review, while profits increased significantly by 68% to Rs. Mn. 454 from Rs. Mn. 270 in 2011/12. Gross Profit grew by 17% whilst Operating Profit increased significantly, by 30% to Rs. Mn. 596, from Rs. Mn. 459 the previous year. The Company invested Rs. Mn. 307 during the year to upgrade medical equipment, reflecting its continuing commitment to offer the best and most up-to-date in advanced medical care. The higher contribution from operating theatres, high occupancy levels and the OPD services were the key contributors to profitability during the year. Moreover, successful implementation of several cost management measures, also contributed to this year’s performance.

Outlook & StrategyHaving, recognised the critical role of technology in healthcare since inception, from diagnosis to treatment, for speed, accuracy and sometimes making what is deemed impossible possible; the company will continue to make significant investments in the latest of technology and remain in the forefront of Sri Lanka’s healthcare sector. Towards this end, we would continue to focus on joint ventures and technical collaborations with overseas partners, as our Laboratory and the In Vitrio Fertilisation (IVF) services are functioning remarkably well at present.

Globally recognised accreditations, convey that Sri Lanka’s healthcare is on par with the world’s best, are imperative if Sri Lanka is to attract foreign demand and thus develop its potential as a possible destination for medical tourism. The company is currently in the process of acquiring Joint Commission International (JCI) as an endorsement of the highest standards it is committed to.

Focusing on the inevitable need of infrastructure development we have also planned to establish a multi storied car parking facility along with the modernization of the consultant services to ensure more comfort to our clients.Moreover with the expansion of our day care treatment facilities in keeping with the global trends we strive to bring our legacy of care to more elevation in the times to come.

AcknowledgementsI would like to express my sincere gratitude to my colleagues on the Board for their unstinted support and guidance, and to our management team and the entire team of medical and support staff who have been our ambassadors of care.I also wish to extend my gratitude to all the shareholders for their unwavering trust placed on the company which has unquestionably triggered a remarkable performance. I extend my sincere appreciation to our customers for their loyalty and support, as we look to the year ahead with renewed vigour and inspiration to be the “Hospital of tomorrow, today”.

Jayantha DharmadasaChairman/CEO21st May 2013

Sustainability of our businessThe company is always acutely aware that we are an enterprise engaged in an essential and a critical service, and one often associated with vulnerable times that humans face. It is an age old adage, but a timeless truth nevertheless that “health is one’s greatest wealth”. Thus, the quality of our service and adherence to stringent standards take precedence at the highest level. Despite the sophisticated service and facilities we offer, in keeping with the vision of our founder Chairman, we also take pride

in the fact that the medical care we offer is affordable to people of all strata of society.

We believe that highest standards in Corporate Governance are indispensable to create long-term value to our stakeholders and to grow in a sustainable manner, and must be pursued uncompromisingly. The governance measures and mechanisms are in place at Nawaloka Hospital and the many ways in which we engage with our stakeholders and the measures which help the long term success of our business are discussed in detail in this report, in the Corporate Governance and the Sustainability Reviews respectively.

The Company’s Sustainability report this year, presents its triple bottom line initiatives using principles and methodology of the Global Reporting Initiative (GRI) and this is its first year of reporting according to these guidelines. It is presented as a comprehensive section in this report from pages 28 to 63.


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Operational & Management Review

Professor Lal G. ChandrasenaDirector/General Manager

Our operations are based on conforming to professional ethics and standards. The hospital has always maintained the highest standards in medical practice.



PerformanceNawaloka Hospitals, a pioneer in the industry in Sri Lanka throughout its 28 year presence has always strived to excel in the field of healthcare, identifying and keeping abreast of emerging and evolving health needs of the population.

During the year under review, most service units of the hospital contributed to the growth in profitability. Outpatient counts increased whilst the performance of Consultancy services increased with number of patients increasing by 15%. It is also noteworthy that we continued to have the highest number of visiting consultants per day and continued to provide a comprehensive range of medical services under one roof.

Theatre revenue grew by 14% following significant investments to upgrade the operating complex of 14 theatres. Revenue from the Radiology Unit also increased by 58% thus justifying the investments made to acquire a 3.1 Tesla type MRI unit. Upgrading of the X ray unit to the digital format and the introduction of the Picture Archiving and Communication (PAC) system will enable the integration of all radiology equipment and accessibility from remote locations, thus facilitating comprehensive and faster reporting. The Company also invested in supplementary services such as the laboratories, EEG, EMG and Physiotherapy.

Nawaloka Metropolis Laboratories - the joint venture between Nawaloka Hospitals PLC and Metropolis India, invested in 3 new Laboratories in the peripheries and 120 collecting centres, to expand its service network which currently consists of 17 laboratories and 400 collecting

centres across the island. This being a very competitive segment also saw a revenue growth of 14%.

Outlook & strategySri Lanka is among the fast ageing population in South Asia and those over 60 years is estimated to constitute 21.9% of the population by 2031, as per the World Bank’s Ageing Study. This demographic change, of a significant portion of the population constituting those retired and elderly would emerge as one of the most pressing socio economic issues which the country must begin to address now. Demand for the treatment and care of conditions such as Cataracts, Diabetes, and Osteoporosis and bone fractures are thus likely to see an increase. A rising demand for healthcare and health insurance for the elderly would be key market factors. Presently health insurance plays a negligible role in Sri Lanka and is accessible to a limited percentage of the population. Viable insurance schemes that are accessible to all, is an urgent imperative, especially as it would be a win-win for all stakeholders. It is then that the private healthcare sector can realise its full potential and increase its contribution to reduce the burden of healthcare on the country’s coffers.

Non Communicable Diseases (NCD), a global problem, has reached endemic proportions in the South and South East Asian regions. Diabetes, hypertension, cancers and cardio vascular diseases have been the key contributors to this rise. WHO (World Health Organisation) reports that one in three adults in the region have hypertension brought on by the increased consumption of processed food and

CHANGING LIFE STYLES SPUR A DEMAND FOR AN INCREASING SHARE OF MEDICAL NEEDS TO BE “SERVED AT DOORSTEP”. WE CONTINUED WITH OUR PLANS TO IDENTIFY SUBURBAN AND RURAL LOCATIONS TO ESTABLISH A CHAIN OF MEDIUM SCALE REGIONAL HOSPITALS.

Radiology Unit Income

0

350,000,000

Rs.

300,000,000

250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

09/10 10/11 11/12 12/13


14

salt with increased alcohol use and less physical activity. As a responsible medical care provider we are committed to addressing this problem. And our “Serene Health Centre” offers state of the art facilities to prevent diagnose and treat such conditions.

Changing life styles spur a demand for an increasing share of medical needs to be “served at doorstep”. We continued with our plans to identify suburban and rural locations to establish a chain of medium scale regional hospitals. The first of these hospitals will commence operations in year 2014. The present pace of development of Sri Lanka’s infrastructure such as highways and roads will facilitate our plans to expand our reach to more people in more localities.

Moreover, continuing technical advancements in diagnostics, surgical procedures and equipment result in faster recovery of patients and shorter durations of post surgery hospitalisation, thus requiring the healthcare providers to review their

strategies constantly and diversify their portfolio of services as appropriate.

Our strategies would also look to harness the potential of the electronic and internet platforms, to add more value and increase efficiencies for our customers as well as medical professionals. During the year, the software which enables remote access of patient records via the internet launched previously was further upgraded while we encouraged online payments and the use of online service booking via the Company’s web site. The Hospital Information System (HIS) was further fine tuned to enhance efficiency.

Joint Commission International (JCI) accreditation is an essential requirement for a health care facility to venture into Medical tourism, and Nawaloka Hospital is currently in the process of obtaining this certification.

The company’s competitive edge in medical technology combined with its legacy of care, finds it well poised to harness the opportunities and challenges that lie ahead of us.

Operational & Management Review Contd

Operation Theater Total Income

0

350,000,000

Rs.

300,000,000

250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

09/10 10/11 11/12 12/13

In conclusion, I would like to convey my sincere appreciation to our entire team of employees for their unwavering commitment, passion and care that continues to be a corner stone of the excellence we will always seek. I also extend a very sincere thank you to our customers, business associates and other stakeholders for their support, as we look to the year ahead with much optimism to capitalise on the numerous opportunities that the ever evolving health sector offers.

Professor Lal G. ChandrasenaDirector/General Manager21st May 2013

Our operations are based on conforming to professional ethics and standards. The hospital has always maintained the highest standards in medical practice. We would also like to reiterate our commitment to a sustainable relationship with patients, doctors, employees and society at large. Our sustainability initiatives and engagement with all stake holders are presented in detail in the Sustainability Report section of this report.



Tribute to Former Chairman

Nawaloka is proud to be the pioneer in technologically advanced health care in the country following the legacy of late DeshamanyaH.K. Dharmadasa.


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Board of Directors

Jayantha DharmadasaChairman & C.E.O. - Executive Director

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

Vice Chairman / Senior Independent Non - Executive Director

Ugitha Harshith DharmadasaExecutive Director

Professor Lal Gotabhaya ChandrasenaDirector/General Manager, Executive Directorr

D Sunil Abeyratna - PhD (UH-USA); FCA (SL); FCMA

(SL); FCMA (UK); CMA (Aust)

Independent Non - Executive Director



Anisha Givantha DharmadasaExecutive Director

Ms. Ashani Givanthi DharmadasaExecutive Directress

Tissa K Bandaranayake - FCA, BSc

Independent, Non-Executive DirectorDr. T SenthilverlNon-Executive Director

Deshabandu Tilak de Zoysa - FCMI ( UK ), FPRI (SL)

Senior Independent, Non-Executive Director


18

Board of Directors Contd.

Jayantha DharmadasaChairman & C.E.O.

Mr. Jayantha Dharmadasa has been a Director of the Company since 1985. He is a businessman by profession and counts over 37 years of experience in Executive Management and 27 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 in Sharjah, Sasiri Polysacks (Private) Ltd, Nawaloka Construction Company (Pvt) Ltd, Nawaloka Trading Co. Ltd, Nawaloka ABC Petroleum (Pvt) Ltd, Koala (Pvt) Ltd, New Ashford International (Pvt) Ltd, Concord Ventures Exports Lanka (Pvt) Ltd, Sahas Wear (Pvt) Ltd,New Nawaloka Hospitals (Pvt) Ltd., Nawaloka Medical Centres (Pvt) Ltd. and New Nawaloka Medical Centre (Pvt) Ltd., Nawaloka Metropolis Clinical Laboratories (Pvt) Ltd., Nation Lanka Finance PLC.

Mr Dharmadasa is the honorary consul general for the Consulate-General of the Republic of Singapore. He is Director of Sri Lanka Telecom He is the President of Sri Lanka Cricket and the former Chairman of the National Film Corporation and a past President of the Asian Cricket Council. He is the Chairman of the Outstanding Song Creators’ Association (OSCA) and Cinestar Foundation.

Rienzie Theobald Wijetilleke - FCIB (UK), FIB (Sri Lanka) CCMI (UK)Independent Non- Executive Director

Mr R T Wijetilleke has been a Director of the Company since 2003 and appointed as Vice Chairman on August 2011. He is a Fellow of the Chartered Institute of Bankers United Kingdom.

A 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 the Director of Mahaveli Reach Sunshine Holdings and Director of Ceylon Biscuits.

Mr Wijetilleke is also a Director of several other Public Companies and Past Chairman and Director of the Colombo Stock Exchange.

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 21 years experience in Hospital & Healthcare Administration and Laboratory Sciences. He retired as the foundation Professor of Biochemistry and Clinical Chemistry and Senior Professor, Faculty of Medicine, University of Kelaniya in June 2011 and presently holds the title of Emeritus Professor.

Professor Chandrasena has a Doctorate in Philosophy from the University of Liverpool (U.K), a Bachelor of Science (Hons) from the University of Liverpool (U.K). Fellow of the Institute of Chemistry, Ceylon and is a Chartered Chemist. Fellow, Royal Society of Chemistry (U.K) and Fellow of the National Academy of Sciences of Sri Lanka,Post Doctoral Fellow, Colorado State University, U.S.A. He is also a Fellow member of the Institute of Certifi ed Professional Managers and holds a certifi cate in Hospital Administration from the Indian Institute of Management, Ahamadabad. He is the current President of the Association of Private Hospitals

Sri Lanka. Also member of the Private Health Services Regulatory Council - Ministry of Health. He is a Director of Nawaloka Metropolis Clinical Laboratories (Pvt) Ltd.

Deshabandu Tilak de Zoysa - FCMI ( UK ), FPRI (SL)Senior Independent, Non-Executive Director

Mr Tilak de Zoysa was conferred the title "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. He is the President of the Associated Motorways Group of Companies and the Chairman of Carson Cumberbatch PLC , Amaya Hotels & Resorts - USA, USA Help Age Sri Lanka, Regional Industry Service Committee-Ministry of Industries, Madam Ogawa Trust , Jetwing Zinc Journeys Lanka (Pvt) Ltd and HelpAge International UK Also he is Vice Chairman of Ceat Group of Companies and Orient Insurance Ltd Mr Zoysa is also a director of and Japan Sri Lanka Technical & Cultural Association.

He also serves as a Board Member of and other listed companies such as John Keells PLC.,TAL Lanka Hotels PLC, TAL Hotels & Resorts Ltd, Employers Federation of Ceylon ,Lanka Walltiles PLC, Dutch Lanka Traller Manufactures Ltd-TATA Group, Eastern Merchants PLC, Inoac Polymer Lanka (Pvt) Ltd and Associated Electrical corporation Ltd, Taj Lanka Hotels PLC., Mr. de Zoysa is the Honorary Consul for Croatia and a Past Chairman of the Ceylon Chamber of Commerce, National Chamber of Commerce of Sri Lanka, the Plastics & Rubber Institute Sri Lanka and a Member of the Monetary Board (2003 - 2009).



Tissa K Bandaranayake - FCA, BScIndependent, Non-Executive Director

Mr 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 B.Sc. from the University of Ceylon.

He has 46 years of commercial and professional experience. He was with Ernst & Young, Sri Lanka for 27 years until retirement as a Senior Partner in April 2009, managing a large portfolio of clients-both local and multinational in various industries.

He is a Director of Samson International PLC, Laugfs Gas PLC, Harischandra Mills PLC Renuka Shaw Wallace PLC, Renuka Holdings PLC,Overseas Reality (Ceylon) Plc and Micro Holdings (Pvt) Ltd. Also serves as an Advisor/Consultant to the Board of Directors of Noritake Lanka Porcelain (Pvt) Ltd and the Board Audit Sub-Committee of DFCC Vardhana Bank.

Mr. Bandaranayake was a Past Chairman of the Audit Faculty of the Institute of Chartered Accountants 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 first Chairman of the Quality Assurance Board of Sri Lanka comprising representatives of the private sector and regulatory bodies.

Dr. T SenthilverlNon-Executive Director

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

D Sunil AbeyratnaPhD (UH-USA); FCA (SL); FCMA (SL); FCMA (UK); CMA (Aust)Independent Non - Executive Director

Mr. Abeyratna counts over 40 years of xperience in the fields of Finance and Audit. 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 Certified Management Accountants of Australia and has a Doctorate in Philosophy, from the University of Honolulu USA.

He is a partner of Abeyratna & Co, Chartered Accountants and is an Associate of AGN International Ltd UK, which is the 4th largest independent Accounting Association in the world based in over 100 countries. Mr Abeyratna is the Chairman of West Asia and African Region of AGN. He is a director of AGN International Ltd - United Kingdom; KBSL Information Technologies Ltd, East West Properties PLC, Rosewell Investment (Pvt) Ltd, Eastern Brokers (Pvt) Ltd. He was a Director/CEO Kotagala Plantations PLC and Agarapatana Plantations Ltd.

Ugitha Harshith DharmadasaExecutive Director

Mr. Harshith Dharmadasa has been a Director of the Company since 2000. He has 18 years of experience in Executive Management.

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

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

Anisha Givantha DharmadasaExecutive Director

Mr. Givantha Dharmadasa has been a Director of the Company since 2000. He has 16 years of experience in Executive Management. He is Director of Concord Ventures Exports Lanka (Pvt) Ltd., New Nawaloka Hospitals (Pvt) Ltd., New Nawaloka Trading (Pvt) Ltd., Nawaloka Construction Co. Ltd. Nawaloka Aviation (Pvt) Ltd., Nawaloka Professional Academy (Pvt) Ltd., New Nawaloka Medical Center (Pvt) Ltd., Taction Services (Pvt) Ltd. , Nawaloka Petroleum (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. She has 12 years of experience in Executive Management. She is a Directress of Nawaloka Professional Academy (Pvt) Ltd., Nawaloka Aviation (Pvt) Ltd.Sasiri Polysacks (Pvt) Ltd and Melvin Wirenail Industries (Pvt) Ltd.


20

Kanishka WarusavitaranaSenior Accountant

Senior Management Team

Ms. Maya WickremageFinancial Controller

Dr. Kantha De SilvaMedical Superintendent

Upatissa MannapperumaSenior Co-ordinating Officer & Maintenance Manager

Indika Prasath BalasuriyaHead of Information Technology

A A WeraniyagodeElectrical & Mechanical Engineer



Anura SamaradiwakaraSenior Co-ordinating Officer

Nalaka NiroshanaManager - Corporate Planning Unit

Sidath KiriellaHead of Marketing

Ms. G WarusavithanaChief Nursing Officer

J M WickremarachchiBiomedical Engineer

M D AriyawansaSenior Co-ordinating Officer


22

Ms. Maya WickremageFinancial Controller

Ms Wickremage qualified as a Chartered Accountant in 1995 and is a Fellow member of the Institute of Chartered Accountants of Sri Lanka and a member of the Certified Professional Managers. She has 14 years Executive experience in Financial Management in reputed private sector organizations. She joined Nawaloka Hospitals PLC in 2004 as the Financial Controller and is responsible to the Management for financial operations of the Hospital and has 18 years experience in the profession.

Dr. Kantha De SilvaMedical Superintendent

Dr Kantha De Silva graduated with MBBS from the Faculty of Medicine (Colombo ) University of Ceylon in 1973. Thereafter, he served as a Senior Medical Officer in both curative and administrative fields in the Department of Health until 1981.

1981 he left to the UK and worked as a Senior medical Officer in the National Health Services (N.H.S) in Orthopedics and Trauma in various parts of England and Wales until 1988.

He returned to the Island at the end of 1988 and worked as a general practitioner until 2008. In 2008 he joined Nawaloka Hospitals as the Medical Superintendent. He has 44 years of experience in the Medical Field.

Senior Management Team Contd.

Upatissa MannapperumaSenior Co-ordinating Officer & Maintenance Manager

Mr 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 has obtained a certificate in hospital Management from Japan Overseas Health Administration Centre, Yokohama in 1995. He functions as the Maintenance Manager overseeing operations of the Engineering Department. He has 28 years experience in the Hospital industry.

M D AriyawansaSenior Co-ordinating Officer

Mr Ariyawansa obtained his Diploma in Business Management of 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 28 years experience in the Hospital industry.

Ms. G WarusavithanaChief Nursing Officer

Graduated as a Staff Nurse from the Nurses Trainning School, Galle. Postgraduate training - 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 Emergencey special training at Royal Hospital Oman. Has over 37 years experience in the State Sector, Overseas and Private sector.

J M WickremarachchiBiomedical Engineer

Mr Wickramarachchi graduated from the University of Moratuwa with a Bachelor of Engineering (Hons) in Electronic and Telecommunications in 1986. He has worked as a Biomedical Engineer in the Ministry of Health, Sri Lanka and the Ministry of Health, Saudi Arabia. He joined Nawaloka Hospitals as the Biomedical Engineer in 1997. He is presently the Head of the Biomedical Engineering Division and has 26 years experience in the profession both in Sri Lanka and overseas.



Indika Prasath BalasuriyaHead of Information Technology

Mr Balasuriya has obtained the MSc in IT - University of KEELE (UK) in 2005, and a member of BCS, CSSL & CPM. He also holds a NIBM Diploma in IT and is a member of ACS. He has over 15 years experience in the field on 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.

A A WeraniyagodeElectrical & Mechanical Engineer

Mr. A A Weraniyagode has obtained a Diploma on Refrigeration & Airconditioning from City & Guilds Institute of London in 1983. He has a work experience of 22 years as a Maintenance Engineer in the Hotel trade in Sri Lanka and overseas. He joined Nawaloka Hospitals in 2009 as the Electrical & Mechanical Engineer.

Kanishka WarusavitaranaSenior Accountant

Mr Warusavitarana has a membership of the Association of Accounting Technicians, Sri Lanka and joined Nawaloka Hospitals as an Internal Auditor in 1988 and was appointed as the Accountant Revenue in 1998 and promoted in the year 2005 as Senior Accountant. He has 8 years experience in a reputed firm of Chartered Accountants and 25 years experience in the Hospital Industry.

Nalaka NiroshanaManager - Corporate Planning Unit

Nalaka Niroshana is an Associate Member of the Chartered Institute of Managment Accountants UK and Associate Member of Chartered Global Managment Accountants and is a graduate from University of Sri Jayawardenapura.He joined Nawaloka Hospitals in the 2011 and has over 5 years executive experience in Diversifi ed Conglomerates in Sri Lanka.

Sidath KiriellaHead of Marketing

With over 18 years experience in the markerting field. Mr.Kiriella has semed in the markerting division of Nawaloka Hospital for 12 years

Anura SamaradiwakaraSenior Co-ordinating Officer

Mr.Samaradiwakara is working as Senior Cordinating Officer of Nawaloka Hospitals since 2003 and he has more than 32 years experience in the service sector.


24

Executive Clinical Management Team

Dr. Sandeep. K. SharmaMD (Anaesthesiology)Consultant Cardiac Anaesthetist and Intensivist

Dr.Maiya GunasekeraMBBS, FRCS (Eng), FICS, FRCS (Ed), MS (Surgery)Consultant Surgeon & Consultant in-charge – Surgery

Dr.V I TennakoonMBBS, MD, FRCP, FRACP, FCCPConsultant Chest Specialist/ Physician & Physician in-charge – Medical Intensive Care Unit

Dr.W A M GunasekeraMB, MRCP(UK), FRCP(Lon), FCCPConsultant Physician & Physician in-charge – In Ward Medical services

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



Dr. Duminda PathiranaMBBS, DCH, MD, MRCP (UK), MRCP, CH (UK)Consultant Paediatrician

Dr. Hemant Digambar WaikarMBBS, MD, DA (ANAE), PDCCConsultant Cardiac Anaesthetist

Dr. Harindu WijesingheMBBS, MD, MRCP (UK)Consultant in Rheumatology, Rehabilitation and Sports Medicine, Consultant In charge Nawaloka Pain Management Centre

Dr. Richard SaldanhaMS, M.Ch, DNBConsultant Cardiothoracic Surgeon

Team work has always been our strength & success, merging

experience with skill to deliver the best to our patients.

A Legacy of Teamwork


28

Sustainability

Our Sustainability PhilosophySustainability is about the importance of taking a longer-term perspective about our business and about the consequences of today’s activities, it is about the importance of living in harmony with all our stakeholders; and it is also about meeting the needs of today without compromising on the ability of future generations to meet theirs.

Since its inception Nawaloka has striven to create value with a focus on a triple bottom line of People, Profits and Planet knowing that sustainability of an entity’s profits ultimately depend on the community and the environment it is part of. As a provider of Healthcare, we are always and acutely aware that being engaged in an essential service that directly impact lives, underscores the need for not just the integration of sustainable practices but a sustainable mindset that permeates the entire organization. Thus, a sustainability strategy and approach for the Company, and initiating action, receives priority at the highest level of the organization.

Nawaloka Hospitals was established in 1985 as a ‘people’s hospital’ and a world class medical institution to provide the nation superior medical care; thus fulfilling a significant void that existed in the country at the time. It was a result of a long term vision. The advanced infrastructure of the hospital has eliminated the need to travel overseas for sophisticated medical procedures and technology. Since inception, the hospital has structured its operations to ensure that it fulfils its economic, environmental and societal responsibilities in a fair and transparent manner. Three decades on, we continue to embody the passion for excellence in health care.

Electricity (06)*

HR & Administration (05)*

Transport (04)*

Unservisable & Unusable Items (03)*

Water (06)*

Purchasing (06)*

Pharmacy/Lab/other services (07)*

Nursing & Utility (05)*

Social Welfare (04)*

Chief Engineer

Director General Manager

Senior Cordinating officer

Senior Cordinating Officer

Chief Engineer

Corporate Planing Manager

Executive Director

Chief Nursing Officer

Executive Director

Efficient use of energy

Human resource development and

administration

On time service

Recycling & wast Mgt.

Best use of water and wast water

Mgt.

Sustainable service

Patient Care

Sustainable Growth (CSR)

NH Steering Committee

Sub: Committee

Head of Sub: committee

Objectives

* Number of Members** Mr. U. Harshith Dharmadasa** Mr. A. G. Dharmadasa

ChairmanDirector/GM

**Two Directors

NH Sustainability Committee

Selecting best Suppliers and

Procure at right price



Our Presence & Volume (2.7)Nawaloka has established a firm foothold in the healthcare industry with precise presence of 27 years. As of 2012, 1.5 millions patients visited the hospital. This demonstrate the trust and confidence placed by our customers on the best medical care and practice by Nawaloka.

Scale of the Organization (2.8)Nawaloka Hospital operates from a strategic location at Union Place, Colombo 02. At present, the hospital product portfolio extends over 1,000 services, featuring more than 400 beds.

Nawaloka employs 2,044 people with a payment of 20% revenue as employment remuneration. In the year 2012/2013, the hospital recorded revenue of Rs. 4.2 billions while in the year 2011/ 2012 the revenue amounts to Rs. 3.7 billions Total assets, total equity and debt recorded as Rs. 5 billions, Rs. 3.7 billions and Rs. 2 billions respectively.

Please refer list of 20 largest shareholders in page 129 under shareholder information of this report.

Significant Changes during the Reporting Period (2.9)During the year under review, there were no significant changes experienced at Nawaloka.

Primary Brands, Products & Services (2.2)Following services are on offer to ensure patient health• Angiography

• O.P.D. Services

• Audiology clinic

• Operating theatres

• C.T. Scanning

• Cardiac Units

• Dementia Clinic

• Ambulatory Blood Pressure Monitor

• Dialysis

• Dental Unit

• DEXA Scanning

• Doppler Scanning

• ETU & Ambulance

• Echo Cardiography

• MRI Scanning

• Ophthalmology Clinic

• Pharmacy

• Physiotherapy & Rehabilitation

• Sleep Study

• ECG / EEG

• Lung Function Test

• Lung / Kidney / Liver Transplants

• Speech Therapy

• Fully Equipped ICUs

• Ultra Sound Scanning

• ENT Tymponoplasty

• Electromyography (EMG)

• Pain Clinic

• Endoscopy

• Exercise ECG

• Haemodialysis Unit

• Holter Monitoring

• Immunization Clinic

• Laboratory

• X ray Facilities

• Home Nursing

• Neo Natal Unit (NNU)

In addition, the hospital offers several specialised centers to provide special consultations and specialised medical care services to the patients.

Specialist Consultations• Diabetic Center

• Serene Health Screening Center

• Fertility Center

• Center for Liver Disease

• Obstetrics & Gynaecology Unit

• Eye Center (LASIK)

• Heart Center

• Paediatric Immunization Unit

• Serene Breast Cancer Screening Unit

• Headache Unit

Maternity Packages• Normal Delivery

• L.S.C.S (Caesarean)

• Abdominal Hysterectomy

• Abdominal Myomectomy

Day Care PackagesSurgical Packages• Laparascopic Cholecystectomy

• Laparascopic Appendicectomy (Open)

• Appendicectomy

• Haemorrhoids

• Circumcision

• TURP

• Laminectomy

• Thoracoscopy Package

• Laser Vericose Package

• Sleep Lab Package

• Enteroscopy

• Arthroscopy


30

Cardiac Packages• CABG Normal

• CABG (High risk without IABP)

• CABG (High risk with IABP)

• Coronary Angiogram

• PTCA

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

Serene Health Screening Center Packages• Preliminary Screen Package (Under 40

Years)

• Classic Screening Package (Under 40 Years)

• Premier Package (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 & Arthritics Package (Over 50 Years)

• Pre Marital Screening Package

• Feminine Package for Teens

• Diabetic Screening Package

• Food Handler’s Check

• Dementia Package

Eye Packages• Vitrectomy Ultrasound Laser System (TPPV)

• Vitrectomy Ultrasound laser System (RP)

• Fluid gas Exchange

• Silicon Oil Removal

• Repeat TPPV

• Squint Correction Surgery

• Keratoplasty Surgery

• Cataract Eye Package (OPD / INWARD)

• Special Laser Cataract Package

• Avesting Eye Injection

Sustainability Contd.

LaboratoriesCollection Centres

Tangalle

Pandura

Piliyandala

Nawaloka Hospitals

Kalutara

Horana Rathnapura

Galle

Kandy

Monaragala

Ampara

Batticoloa

Trincomalee

Vavunia

Jaffna

MawanellaWarakapola

Yakkala




32




ACCOLADES (2.10)

Awarding Body

Awarded For Award Won Category Year

1 ICASL Annual Report Gold Award Health sector 2012

2 NCC (NBEA) Silver Healthcare & related service sector

2012

3 APEA Special achievement 2012


5 NCC NBEA Winner Healthcare & related service sector

2011

6 NCC NBEA Runner up Best tech-savvy company 2011



2010

9 ICASL Annual Report Silver Award Health sector 2009


2009

11 ICASL Annual Report Silver Award Health sector 2007


2007

13 SGS ISO 9001 : 2008 2007

14 SGS ISO 9001 : 2000 2007

15 ICASL Annual Report Certificate of recognition

Service organization 2006

16 NCC NBEA 1sr runner up Other service sector 2006

17 ICASL Annual Report Merit certificate Service organization 2005

18 NCC NBEA Winner Other service sector 2005

19 Nawaloka Group

Best Company Award

Best Company in the Group

Overall 2001

20 SGS SL National Quality Award

Service large category 1998

APEA - Asia Pacific Entrepreneur AwardICASL/CASL - Institute of Chartered Accountants of Sri Lanka

NBEA - National Business Excellence Awards

Nawaloka Successfully retained the “Gold Award” in the Health Care Sector at the Annual Report Awards 2012 organised by the Institute of Chartered Accountants of Sri Lanka.

Parameters of the Report (3.1/3.2/3.3/3.4)Nawaloka reporting takes place on an annual basis, thus the report is being prepared for the period of 1st April 2012 to 31st March 2013. Adhering to the GRI Guidelines and Methodology of Reporting, this is the first Sustainability Report issued by Nawaloka Hospital PLC. The comparative period for the report is year 2011/ 2012. The report and indicators covers all service operations and activities of Nawaloka Hospital. However, certain policies and information encompass the laboratory network of the hospital. Excluding the awards and recognition, all other data are applicable to the reporting period of 1st April 2012 to 30th March 2013.

The Report is subjected to an independent assurance by KPMG, Chartered Accountants. Thus, the report is assessed and rated as a C+.

The Hospital is happy to answer any inquiries, clarifications and/ or comments on any material contained in this Report via our website www.nawaloka.com or by contacting:


34

Accountant,Nawaloka Hospitals PLCNo. 23, Deshamanya H K Dharmadasa Mw,Colombo 02Tel: 011-5-577-106

Process for Defining Report Content (3.5/3.6/3.7/3.8)Nawaloka Hospital operates in the field of healthcare and locates in an urban area in the capital city of Sri Lanka. Hence, we present topics and issues, which have been prioritized in terms of business focus, geographical spread and the profiles of our key stakeholders.

In addition, the Report comprises of environmental and social indicators, which features customers, suppliers and product responsibility. As a service organization in the healthcare sector, health & safety and customer care are key priority areas in the Report. The locations reported on include:

1. Nawaloka Hospitals PLC (Parent Company)

2. New Nawaloka Hospital (Pvt) Ltd (100% Subsidiary of Parent)

3. New Nawaloka Medical Center (Pvt) Ltd (100% Subsidiary of Parent)

4. Nawaloka Metropolis Laboratory (Pvt) Ltd (50:50 JV Company)

Data Measurement & Bases for the Calculations (3.9/3.10/3.11)In comparison to the last financial year, there were no changes in scope, boundary or measurement methods in the Report.

The financial data presented in the Report have been extracted from the Audited Financial Statements where applicable. The accounting policies and estimates are highlighted in pages 98 to 105 under Financial Statements.

In addition, non-financial data, which includes trainings, workshops, welfare activities, etc., have been obtained from internal records. These records are maintained at the Training & Administration Division of the Hospital.

Policy & Current Practice with Regard to Seeking External Assurance for the Report (3.13)As mentioned before, the Report was subjected to external independent assurance by engaging the Chartered Accountants, KPMG. For detailed Independent Assurance Reports, please refer page 91.

The hospital does not have relationship with KPMG apart from their function as an Independent Auditor of financial statements to Nawaloka. Thus, as conforming to our policy, the hospital expects to continue with the practice of seeking independent external assurance for its Sustainability Reports in the future as well.

Governance, Commitment & Engagements (4.1/4.2/4.3)As a service organization, operating in a vulnerable and vital industry as healthcare, Nawaloka has placed paramount importance on the responsibilities and obligations to all stakeholders and to the society at large. The Nawaloka system of governance and management have been designed and created, with the prime objective, to assist in conducting ethical and responsible business practices, with regard to the environmental, social and economic issues.

Nawaloka Management and controls are based on the current principles of corporate governance, which have been stipulated by relevant legislation and regulations. The Corporate Governance Structure & Corporate Governance Compliance appears in the pages 66 to 76 whilst refer page 28 to view the Sustainability Structure of the Hospital.

The Board of Directors (BOD) is the highest governing body. Mr. Jayantha Dharmadasa is the Chairman/CEO and the higher authority of the BOD. The director board comprise of 05 Non-Executive Directors, 04 Independent Non Executive Directors and 05 Executive Directors from various industries acquiring specialised knowledge, expertise and experience. (Refer pages 18 and 19 for profiles of the BOD).




Nawaloka has appointed a Sustainability Committee for better governance of these activities. Regular meetings and recommendations the decision making process are duly reported to the Chairman and General Managing Director. The committee undertakes accountability for economic, environmental and social responsibility of the Hospital. Moreover, the committee has divided in several sub domains, which includes Electricity, Water, Transport, Pharmaceuticals, HR & Administration, Purchasing, Unserviceable & Unusable Items, Nursing & Utility and Social Welfare. (Refer page 79 for Board Sub Committee)

Stakeholder Engagement (4.4)Effective mechanisms are in place for shareholder and employee engagement including interaction with the Board of Directors.

Employee• Weekly management meetings with

representatives of the operational level employees and discussions on budget

• Corporate planning

• Staff motivation programmes by the training division

• ISO workshops ensure conformity standards and awareness

• Target evaluation and feedback meetings

• Nursing training programmes

• Open door policy of the directors encourages and support employees to provide invaluable suggestions and recommendation with the BOD.

Shareholders• Annual General Meeting

• Maintaining shareholder database within the company

• Communication through the electronic medias such as email, web

• Interim financial statement

Conflicts of interest (4.6)Conflicts of interest among members of the Board of Directors are avoided with proper compliance to corporate governance mechanisms (refer corporate governance report in pages 66 to 76). Any member of the Board of Directors, who has an interest on a matter under discussion, is refrained and excluded from participating in the decision making process.

Farther non-executive vice chairman with the non-executive directors ensure the conflict of interest situation are avoided with the assistant and guidance of the Audit Committee and Remuneration Committee. Codes of Conduct and Principles (4.8/4.9)Nawaloka Hospital operates on a framework of well-defined, clearly articulated core values. Aspiring on the values set by the late Chairman, H. K. Dharmadasa, these values, principles and rules define the conduct of its Board of Directors, key management personnel and other staff in all foreseeable situations. Refer page 11 in Chairman’s Review for the Sustainability Mission of Nawaloka Hospital.

These values are implemented through the Sustainability Committee. In addition, there

are 46 members of whom are headed by the Chairman, Director General Manager and 2 Executive Directors regularly.

Furthermore, the Risk Management Report, Corporate Governance Report and the GRI Compliance Summary highlight statements of commitment. Hence, the reports are being externally and independently assured by Chartered Accountants, KPMG.

Commitment to External Initiatives (4.11/4.12/4.13)Especially in a high-risk organization as a service as well as in the healthcare sector, Nawaloka takes great pride in ensuring a consistent process to manage all identified risks successfully. The Hospital features a fully-fledged computerized network with an effective disaster recovery system to ensure data security. Hence, minimises the interruption to daily operations in the event of an impact of disruption or a natural disaster.

The following are some of the measures undertaken to mitigate risks:• The First & Only hospital to be ISO certified

• JCI Accreditation (In progress)

• Features a Disaster Recovery Plan

• Member of Pvt. Hospital Association

• Obtained WHO’s ‘Baby Friendly’ status

• ‘A’ rating by RAM Ratings Lanka

Further company adopt the International G 3.1 guideline as external economic, environmental and social chatter during the year.


36

Stakeholder Engagement (4.14/4.15/4.16/4.17)

Stakeholder Key Topics & Concerns Method / Frequency of Response

Shareholders

Profitability /Dividends Annual General Meeting

Material transactions Brochures ( About the Hospital facilities)

Appointment of Directors Quarterly and Annual Reports

CSR Activities Colombo Stock Exchange announcements

Hospital Facilities available for shareholders Company Website

Customers

Include factors such as helpfulness of the employees Ground floor promotions carried out by Marketing team

Quick turnaround time Public media such as paper advertisement

Range of healthcare services Company Website

Prices of the services and products Online media such as through popular websites

Payment modes such as online payments, E channeling systems SMS

Metropolis Lab Networks Emails

Any promotions available You tube, Face book

Availability of 'Loyalty card and additional services available brochures, Pennant in the hospital floor

Available times of consultants Island wide hoardings

Information are given through our dedicated call centre

Customer feedback form on daily basis

Customer interviews carried out by Public Relations Officers

In the OPD service area and indoor service area

Awareness campaigns carried out at regional levels




Stakeholder Key Topics & Concerns Method / Frequency of Response

Employees

Company strategy Management meeting held on weekly basis with the participation of all senior managers , at which strategic issues are discussed and decisions made

Strategy implementation plans and issues raised Weekly meetings held by the Heads of each division with his team at which operations issues are discussed and decision taken.

Operational issues raised in the work Ad-hoc meetings

Recruitments Exchanging emails, Memos, over the phone discussions

Staff Welfare Employee notice board

Sustainability plans /Implementations and issued highlighted Training programs and brainstorming sessions

Customer feedback Sustainability awareness through stickers, posters, periodic emails

Performance evaluations

Consultants

Availability of facilities Weekly meeting held with consultants

Arranging time space for medical practices Circulars

Operational issues raised Ad-hoc meetings

Suppliers

Prices and delivery time Paper advertisements

Maintaining quality levels Email , Fax,

Supplier registrations Supplier site visit made by internal audit team

Supplier payments Ad-hoc meetings as and when required

Procurement opportunities available

Community

Contribution towards Social Welfare Sponsorship

Social Welfare activities


38


Economic Performance

to all our stakeholder interests, Nawaloka provides assurance of its economic goals and policies, which are aligned in correspondence to sustainable performance and growth.

MonitoringMonitoring is a vital aspect in the Hospital’s economic performance and operations. Annual budgets and controls are monitored through management accountants, appointed at the level of each division. Whilst monitoring the budgets through profitability, explanations are necessitated and obtained, if any, material variances occur. In addition, target achievers are suitably rewarded for invaluable contributions and extraordinary performances.

Management accounts and reports are submitted to Operational Managers. Simultaneously the Board of Directors are kept informed of the performance. Hence reflects in the next decision-making process of formulating appropriate strategies for forthcoming financial quarters and year.

Economic Performance (EC1)Nawaloka takes pride in being a major contributor to the nation’s economy through various means. However, expansions are the main contributions of Nawaloka to the country’s growth. Moreover, investment in employees is the next main contribution to the nation.

This segment reports on how the organization’s economic achievements( Business goals) impacts its stakeholders, which in addition to the shareholders includes the communities and the national economy; as how its economic impacts link to the other stakeholders is an indication of the future sustainability of an enterprise.

Our ApproachNawaloka Hospital economic policy is strategized in to 5 year plans which are well planned and translated in to annual budgets. The comprehensive annual corporate plan and budget sets specific targets and directions for all business divisions and operations in the Hospital. Whilst ensuring the due attention

Employees

Shareholders

Customers

Community

Economy

Envoirnment

Social

Sustainability

Human Rights

Labour Practice and Decent Work

Product/Service Responsibility



2008/09 2009/10 2010/11 2011/12 2012/13 Rs. Rs. Rs. Rs. Rs.

Value AddedRevenue 2,512,350,553 2,884,449,093 3,233,035,096 3,710,878,442 4,222,907,733Less: Cost of Materials & Services Obtained (1,796,780,416) (1,891,184,100) (1,255,320,975) (2,333,546,116) (2,425,893,196)Add: Other Income 10,337,940 19,811,729 38,603,398 30,210,657 44,047,999 725,908,077 1,013,076,722 2,016,317,519 1,407,542,983 1,841,062,536

Distribution Value AddedTo EmployeesSalaries, Wages,Incentive and other benefits 401,366,811 455,788,888 588,633,589 717,949,353 865,042,371Total to Employees 401,366,811 455,788,888 588,633,589 717,949,353 865,042,371

To LendersInterest on Loans & Leases 172,436,362 223,918,142 70,795,460 59,932,975 104,009,192Total Interest on Loans & Leases 172,436,362 223,918,142 70,795,460 59,932,975 104,009,192

To GovernmentTaxation 33,139,115 121,524,870 58,868,305 91,418,057 2,223,487Total Government 33,139,115 121,524,870 58,868,305 91,418,057 2,223,487

To ProvisionResults of Associate Companies 151,525,832 (1,103,301) 2,469,078 - -Impairment Profit/loss 2,273,636 (62,619,170) - - -Revaluation deficit 7,356,665 - - - -Total Provision 161,156,133 (63,722,471) 2,469,078 - -

To Expansion & GrowthExcess on Acquisition - - - - -Depreciation 66,312,247 178,156,171 224,828,956 267,556,035 265,422,430Retained Profit/(Loss) (108,502,591) 97,411,122 1,070,722,131 270,686,563 604,365,056Total Expansion & Growth (42,190,344) 275,567,293 1,295,551,087 538,242,598 869,787,486 725,908,077 1,013,076,722 2,016,317,519 1,407,542,983 1,841,062,536


40


Financial Performance2011/2012 2012/2013

GP ratio 51% 52%NP ratio 7% 11%Net profit after tax (Rs.)

270,686,563 454,259,279

Earnings per share

0.19 0.32

Share price 3.10 2.90Market capitalisation (Rs. million)

4,369 4,088

Impact on climate change for Company performance (EC 2)At present and generally, climate change has not had any direct risk exposures to Nawaloka Hospital. However, the hospital has taken great concerns on the changing patterns in health issues in terms of the spread of chronic diseases and the increase in emergency care due to natural disasters.

Therefore, the hospital identifies natural disaster as a possible area of risk and threat resulting from adverse climate conditions. In addition, certain natural catastrophes such as flash floods, tsunamis, earthquakes and landslides have been highlighted as results of climate change which could have an impact on us.

Furthermore, Nawaloka has therefore evaluated the operational risks involved of such climatic changes and adversities. Thus, the hospital recognises and follows the Risk & Disaster Management Procedure under the leadership of the Disaster Management Committee.

The Disaster Management Committee of Nawaloka undertakes the complete responsibility of the development, implementation and maintenance of Business Continuity Plan (BCP) as per Disaster Recovery Institute International (DRII) and adherence to the BCP Policy. Moreover, the committee has discussed and evaluated the following activities to develop BCP with an aid of an external Consultancy Firm:

• Threats and Risk Identification

• Evaluation of Controls

• Business Impact Assessment

• Business Continuity Strategy Identification

• The goals and responsibilities of the Disaster Management Committee

• Safety to patients, visitors, staff and other stakeholders

• Minimize risks to human resources of the organization.

• Identifying Critical Business Processes and corresponding Recovery Time Objectives

• Provide resources required by the BCP

• A clear and identified organization structure for the execution of the BCP during normal times and emergency periods

• Regularly maintain and verify effectiveness of the plan

• Conduct periodic drills and testing to ensure preparedness in order to execute this plan.

As Nawaloka has evaluated the above activities to develop BCP, the Hospital will also implement actions and measures to monitor and analyse the respective processes and implement necessary actions to achieve planned results.

Distribution Value Added

-20

100

%

80

60

40

20

0

08/09 09/10 10/11 11/12 12/13

Total Expansion & GrowthTotal ProvisionTotal GovernmentTotal Interest on Loan & LeasesTotal Employees

Value Added

0

2,500

Rs. Mn

2,000

1,500

1,000

500

08/09 09/10 10/11 11/12 12/13



Nawaloka Hospital is renowned to be the first and ISO 9001: 2000 certified hospital in the private healthcare sector. Enjoying the accolades as the winner of the National Quality Award & Productivity Award in continuous commitment and emphasis on quality, the Hospital highlights the quality management policy of the organization.

Defined Benefit Plan Obligation (EC 3)Organisational defined benefit plan obligation coulld be found in pages 113 to 114 in the financial statements.

Financial Assistant from the Government (EC 04)During the year company has not received any financial assistant from the government. Market PresenceAs a leader in the healthcare sector and as an organization that sets benchmark, Nawaloka provides competitive levels of compensation meeting above the minimum wage requirements to all employees. Remuneration is has neither impact nor any influenced by gender, thus both male and female employees receive equal remuneration and further serving as an equal opportunity employer.

Wages (EC 05)The Company’s policy is to maintain the entry level salary well above the industry regulations and also gender equality in terms of entry level wages.

Suppliers (EC 06)Nawaloka Supplier Base is one of the most important stakeholder group. As of 31st March 2013 the hospital accounts for more than 5,000 suppliers. The supplier base of the hospital is diverse in terms of scale and type as the healthcare sector focuses and ranges from suppliers of pharmaceuticals, medical equipment, suppliers of uniforms, maintenance and groceries to the Kitchen to software producers, service providers of pest control and security.

Nawaloka selects its supplier base by considering and in align with long-term interests and strategies of the Hospital. Quality, Delivery Time, Service Level & Environmental Standards are the main criterion for the evaluation of suppliers. In addition, Nawaloka ensures to make certain that the supplier chain adheres to ethical means of business practices, social standards and human rights that the Hospital adhered and conforms.

Supplier selection and evaluation takes place on a yearly basis. The Hospital places paper advertisements to create awareness and encourage suppliers. In addition, Nawaloka ensures to request reasonable credit periods to make certain adequate cash flow with regard to supplier payments.

Recruitment (EC07)Nawaloka adheres to a strict recruitment process which no opportunity for canvassing. The Hospital also encourages gender equality thus promotes itself as an equal opportunity employer. Greater part of the Hospital employees has been recruited within city limits and suburbs.


42

Environmental Management

This segment reports on how the organization impacted the environment in its pursuant of its economic and social goals and how it strove to minimize its negative impacts and took measures to evaluate and address likely issues of the future. The efforts were driven by a broader objective of

Energy (EN03/04)Whilst operating with clear objectives on environment and social aspects, Nawaloka ensures to make every effort minimise the impact of its operations and activities to the environment. Energy consumption is a vital feature of the Hospital and at present, the total anergy consumption is approximately 6,000,000 KWH. The total energy consumption is an

allocation between the Operation Theatres, Medical Equipments, and Nursing Sections & Others. Nawaloka takes pride to state that amidst business expansions over the years, the Hospital has been able to manage energy effectively and efficiently.

Month Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13

KWH 561,182 656,242 618,691 620,103 595,368 575,420 594,132 559,332 578,745 543,645 513,558

Energy Usage in 2012/2013

0

700,000

KWH

600,000

500,000

400,000

300,000

200,000

100,000

Ap

r

AugJu

n

Oct

Jan

May

Sep

DecJu

l

No

v

Feb

Efficient Usage of Energy (EN 5,6,7)Following are the energy management initiatives adhered by Nawaloka:• Energy Leader – Nawaloka has appointed an ‘Energy Leader’ for each high energy consumption

units. As a leader, the responsibility offers the authority to take implement appropriate actions and measures for effective energy consumption and management. Moreover, effectively managed and efficiently used leaders are awarded for recognition and effort.

• Awareness Campaign – Nawaloka embark on a fully-fledged awareness campaign on energy consumption and saving with the use of Billboards and Public announcements. The awareness campaign was a communication from the Board of Directors to the clerical staff.

• Solar Panel – The Hospital invested on a solar panel during the year under review. The installation was one of the biggest milestones as a green initiative by Nawaloka.

• Other Installations – In order to reduce the energy consumption in the Operation Theatre, during non-operating hours, the hospital installed variable speed drivers.

• Air-conditions – Split & Window Type air-conditions are transferred for chill water for maximum possible energy saving times.


Energy Saving Tips displayed in each computers used.



Water (EN 8, 9, 10)

Month Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13

Units 16,385 20,514 16,536 18,197 19,444 16,408 16,561 19,333 15,235 17,927 14,884 15,055

Nawaloka implemented the following measures to reduce the water consumption during the year under review:

• Utilisation of well water for the purpose of cleaning office and washing vehicles

• Tracking monthly water usage on charts which are displayed for public viewing

• Routine Awareness Generation through discussions and distribution of pamphlets and other literature

Environmental Impacts from Product - Services (EN 26, 27, 30)Nawaloka takes great initiative to ensure the surrounding environment is kept clean and all medical waste is properly discarded. The following are measurements adopted for waste management:

• Dual Burner Incinerator assists in destroying the medical waste in the surrounding environment

• Encourage the employees to practice effective waste management by using a Garbage Separation System

• Poly bags are manufactured under the parameters that are given to create less harm to the environment.

Compliance (EN 28)Nawaloka takes pride to state that there were no fines or non-compliance acts recorded during the year under review for breach of environmental rules and regulations.

Transportation (EN 29)Emissions and pollution in terms of air and noise are limited to the vehicles. The vehicles are utilised for transportation of workforce, as a means of logistics between the Hospital and Laboratory Network & Collection Centers and the ambulances for patient transportation.

Fully equipped on call modern ambulance service

Water Usage in 2012/2013

0

25,000

Units

20,000

15,000

10,000

5,000

Ap

r

AugJu

n

Oct

Jan

May

Sep

DecJu

l

No

v

Mar

Feb


44


Social Dimension of Sustainability

The segment of our report deals with the impacts Nawaloka has on the social systems which it operates. As we forge ahead to achieve our business objectives, we are also aware that that acting fairly and responsibly with the different stakeholder groups and taking a win-win approach committed to enriching the lives of all our stakeholders is the strategy that enables us to sustain the profitability of our enterprise.

Labour Practice & Decent WorkEmploymentLA 1

Employment by category

As at 31 MarchCategory

2011 2012 2013

Directors 10 10 10

Managers & Executives 80 80 85

Clerical & Minor staff 1122 1111 1175

Nursing 661 694 722

Medical officer 50 50 52

Total 1923 1945 2044

Employment by Age

As at 31 MarchAge

2011 2012 2013

Over 50 yrs 184 204 233

40-50 yrs 372 339 330

30-40 yrs 394 434 449

20-30 yrs 931 924 984

19-20 yrs 42 44 48

Below 19 yrs - - -

Total 1923 1945 2044

Employment by service period

As at 31 MarchYears of Service

2011 2012 2013

Over 20 years 153 171 160

10-20 297 322 230

05-10 340 393 323

00-05 1133 1059 1331

Total 1923 1945 2044



Employment by Gender

Gender Male Female Total

2011 411 1512 19232012 415 1530 19452013 457 1587 2044

In terms of Nawaloka expansion, the report highlights an increase in the number of clerical, minor as well as nursing staff over the year under review. Furthermore, the highest proportion of the workforce comprise of employees in the age group of 20- 30 years. Ensuring equal remuneration packages to all employees, the employee turnover at Nawaloka is at a minimum. In addition, referring back to statistics, the report also states the number of female employees is more than four times the number of male employees.

Number of Employees

0

1,800

1,600

1,400

1,200

1,000

800

600

400

200

Male Female

2012/20132011/2012

Rate of Employees Hires (LA 2)

2012/13 2011/12

Company Employees 93% 92%

Hired Employees 7% 8%

Employment Benefits (LA3)Benefits to Full Time Employees

• Fixed month salary

• Over time as entitled

• Incentives

• Bonuses

• Annual increments

• Travelling allowances / Fuel allowances

• Hostels/ Apartments

• Gratuity

• Indoor medical scheme

• Free medication

• Free consultations

• Workman compensation

• Festival advances

• Subscriptions for professional associations

• Staff loans

Occupational Health & Safety (LA 6,7,8,9)As a leading and pioneering healthcare provider in the country, Nawaloka believes that the care for the health of people begins at home. Hence, ensuring good Health & Safety standards is a key focus area of our HR practices. Operating in an atmosphere which requires great attention to cleanliness and hygiene, following are special precautionary measures adhered by Nawaloka.

• HRDivisionfullyengagesandfocusesoncreating a safe and healthy environment for all employees who attend to patient care


46


• Special vaccinations and regular medical checkups have been organized and entitled for all staff who come in contact with patients

• Offers radiation protection for those employees who experience exposure to radiation through the treatment process or medical equipments

• Appointment of an in-house infection control officer, who’s main responsibility is to ensure, maintain and promote a healthy environment for employees

• Protective gear such as gloves, goggles, and frocks and other necessary facilities are provided to all sections and wards in the hospital

• Hand sanitizers are made available in every room

• Promotes a proper waste management environment, thereby ensuring a hygienic atmosphere with no medical waste contamination

In addition, Nawaloka offers the following benefits, to employees with the prime objective of encouraging and creating health awareness of themselves.

• A Medical Insurance Card for all employees to claim bills in case of hospitalization

• An OPD Medical Card to support and enable employees to obtain medicine and health checks for free or charge or at a reasonable cost

• An Instalment payment basis & Staff Discounts to all employees to settle inward credit bills

• Performing Staff Medical Checkups for Kitchen employees twice a year

No major occupational injuries recorded during the year

Expenditure on Staff OPD medical Cards

Year 2011 2012 2013

Total cost

2,596,050.00 2,625,750.00 2,759,400.00

Training & DevelopmentOur Policy (LA 10,11,12)Nawaloka is at all times committed to ensure that its people develop to their utmost and continuous enhancement of their skills, knowledge and expertise to nurture and harness in the Hospital. Our Policy supports the workforce by providing cost effective, quality and competent training and development programs.

2,500,000

2,800,000

Rs.

2,750,000

2,700,000

2,650,000

2,600,000

2,550,000

2011 2012 2013

Our ApproachNawaloka takes on an approach to develop a competent workforce by providing training & development at all levels which exploits the skills required to work effectively, in both personal and professional lives. Training & Development Programs at Nawaloka has become a key drive to ensure its employees practice the organization’s core values of reliability, service excellence, people empowerment to create teamwork and a caring culture.

Training & Development is a responsibility of the Manager Human Resources, one of the key senior authorities at Nawaloka.

• The Training & Development Calendar at Nawaloka begins with the Employee Orientation Programme, which enables and provides an insight to new recruits about the healthcare service industry, its best practices and norms.

• MY TRACK is one of the most invaluable tools of Nawaloka Training Agenda. It is a record book, which has been designed for the who purpose of an updated record of their training experiences and programs entitled.



• Understanding the critical importance of ‘Customer Care’, Nawaloka Training Programs stresses and emphasise much priority on Patient Care. Thereby, the hospital conducts monthly customer care training programs for staff at all levels.

• ‘Path To Excellence’ is a well defined training program which addresses and develop skills for individuals to excel in functional responsibilities. In addition, Nawaloka organized a special workshop for Channelling Center Staff, conducted by Stafford Chan Singapore, to improve performance and efficiency.

• As maintaining the highest standards in food, health and hygiene is vital factor in the healthcare sector. Therefore, Nawaloka conducts a Food Hygiene Program once every three months as a means to ensure

that the high hygiene standards for food and services are being met and maintained.

professional nurse. The program operates under the supervision of teaching staff which comprise of senior nurses, of whom guides and trains the trainee nursing staff. Training is not inclusive at the Nawaloka Hospital but also enabled at certified government run Nurse Training Institutions.

In addition to the various training offered to the employees, the Hospital also conducts continuous professional training.

Nawaloka kitchen was awarded 5 crowns for the food hygiene continuously for the second time by the Indexpo Certification (Pvt.) Ltd.

• Performance Management Programme is a key element of the success of Nawaloka. Therefore, Key Performance Indicators (KPI’s) are shared with all divisions and performance appraisals are conducted at the end of each quarter for all employees of the Hospital. Whilst rewards are attached for high performing divisions as a means of motivation and encouragement, any adverse variance on the achievement of KPI’s is looked into and further training & development programs will be identified and provided.

• The Nawaloka Nursing Training School, operated by Nawaloka was inaugurated in 1985. The school accepts two batches, each on January and September, of first year trainee each year. At any given time, the Training School features about 200 trainee nurses in first, second or final year of study.

Trainees must complete a comprehensive 3 – year training program, approved by the Ministry of Health, to graduate as a

Nursing training programms


48

• Nawaloka Hospital requires the complete registration by the Sri Lanka Medical Council (SLMC) to practice and employ as medical offers at the hospital.

Doctors at Nawaloka are entitled to Continuous Medical Education (CME), which covers a variety of specialties through lectures, seminars, annual sessions in-house and foreign institutions conducted by well qualified local and foreign lecturers from renowned medical colleges.

• The Hospital provides continuous training on Fire Prevention. The training program is featured through practical sessions to all employees, hence supports them on the actions to perform in the event of a fire.

• During the year under review, the HR division conducted over 1000 hours of fire drills with the participation of 250 employees.

• Energy management is another key area of training and development in Nawaloka. Placing significant importance to the future of energy management, carbon footprint and green initiatives of the healthcare sector, Nawaloka conducts various programs to employees at all levels.

• As stated in the Operational Review, the Hospital in the process of obtaining the JCI Accreditation. Assessing the training requirements for JCI accreditation, the Hospital introduced during the year under review. In addition, the Hospital also created a support plan to monitor the effectiveness of the JCI training modules during the year.


• Toastmasters are an on-going, effective program, which enhances skills of speaking and leadership. During the year under review, 20 executive employees completed a Toastmaster’s session.

• Nawaloka continues to organize a myriad of other training programs from time to time as appropriate. ” A Professional course in Advance Cashiering” was a program dedicated and entitled to all cashiering staff at Nawaloka conducted by the Bank of Ceylon.

• The ‘Art of Driving Skills’ training program was conducted by the Traffic Unit Police Division for all who drive, which also included the executive level staff of the Hospital.

Nawaloka Toastmaster Club

Diversity & Equal Opportunity (LA 14)Remuneration is has neither impact nor any influenced by gender, thus both male and female employees receive equal remuneration and further serving as an equal opportunity employer.

Human RightsNon-Discrimination (HR 4)Nawaloka reports of no incidents related to discrimination during the year under review.

Freedom (HR 5)As there is no unconcealed or covert discrimination or discouragement against memberships in any political party or religious organization at individual levels, Nawaloka operations, services or supplier network have not violated the right to exercise freedom of association.

Child Labour & Forced Labour (HR 6)Nawaloka prohibits and express disapproval of all forms of exploitation of children and does not employ anyone under the age of 18 years. Our policy on Child Labour & Forced Labour extends to our supplier base, thus performs investigative background screening on all suppliers and their networks prior to conducting business.



Forced & Compulsory Labour (HR 7)As our policy on Child Labour & Forced Labour, Nawaloka is at the best of knowledge that our suppliers or our operations are not at any significant risk for incidents of forced or compulsory labour.

Security Practices (HR 8)Security has been outsourced by Nawaloka Hospital. However, the security personnel of the hospital are entitled and provided with an orientation and offer required training programs in terms of customer care.

Assessment & Remediation (HR 10/11)Company’s entire operation subject to the human rights reviews, impact assessment and remediation, since its involving patrent care and patrent life. Therefore we are more particular about these factors, further, as tools of evaluation we are using customer feedback forms and PRO officers.

SocietyThis segment of the Report focuses on the impact of Nawaloka on the social system and community in which it operates. Operating to achieve the numerous business objectives and strategies, Nawaloka also understands the obligations and the ethical responsibility towards the different stakeholders. However, it is with great understanding the Hospital commits to a win-win approach to enrich the lives of all out stakeholders to enable a sustainable performance and profitability of our enterprise.

Community (SO 1)As a renowned service organization and envisioning as ‘the hospital of tomorrow’, Nawaloka strives towards a healthy society.

Nawaloka thrives on three major domains in community development. The three main domains focus on creating awareness and educating the public, promoting social welfare and social services to the needy and ensuring the healthcare of the society.

Under the operating year, the Hospital has embarked on various events and programs to meet the prime objective of community development. Nawaloka ascertains a healthy society through a variety of accomplishments during the year 2012.

Public Policy (S0 6)Nawaloka proclaims of no contributions to any political party, political figures or any related institutions with regard to its operations and business practices. The Hospital takes great responsibility in operating as an ethical service organization thus building trust and confidence amongst the nation.

Compliance (S07 /08)Nawaloka Hospital does not record of any non-compliance activities and conformities in terms of laws and regulations for the year under review.

Nawaloka did not enter into any legal actions in terms of anti-competitive behaviour and monopolistic practices with any organization or healthcare institute in the country. Nawaloka ensures ethical means of business conduct and fair trading operations in the healthcare sector, as well as an esteemed service organization in Sri Lanka.

School Rehabilitation Programme - Donation of Computers

Diabetic Day - Free Medical Camp


50

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wruqK jQfha mdrïmrsl foaYSh wdhq¾fõo ffjoH

l%uho fkdkeiS mj;ajdf.k hdu fjkqfjka wjYH

msgqn,h iemhSuhs'

rdcH fiajlhska iòyd fnda fkdjk frda. ksjdrKh

fjkqfjka ffjoH idhkhka .Kkdjlau —ksfrda.S

rdcH fiajhla Wfoid˜ hk uefhka miq.sh jir

mqrdu iuia; ,xld uágfuka rdcH wdh;k

flakao%fldg .ksñka fkdñ,fha mj;ajkakg fhoqKs'

fuysoS wm úiska ishhlg wdikak rdcH wdh;k

m%udKhla wdjrKh lrkq ,enQ w;r mqoa.,sl wxYfha

jHjidhlhska fjkqfjkao fuu jevigyku fjk;a

WoD;hlska mj;ajdf.k hdug wm lghq;= lf<uq'

cd;sl rEmjdysKS ixia:dfõ kq.fijK ldka;d

jevigyk fjkqfjka —kjf,dal iqj yuqj˜

iEu n%yiam;skaod osklu kq.fijK fm%alaIlhska

fjkqfjka wms bosrsm;a lrkafkuq' osjhsfka olaI

úfYaI{ ffjoHjreka .Kkdjlf.a iyNd.S;ajfhka

fkdfhl=;a úIh moaO;Skag wod<j frda. ks¾Kh yd

ksjdrKh ms<snòj ck;dj oekqj;a lsrSu fuu.ska

isoqlrkq ,efí'

.; jQ uq,H jir mqrd—kjf,dal i;aldr˜ m%cd uQ,sl

fiajdj u.ska bgql< fufyhka f,i ,>qfldg

,shd m< lsrSug fkdyels jQj;a wm thska lsysmhla

f.kyer mEfõ bosrs uq,H j¾Ih mqrdu —kjf,dal

i;aldr˜ iqj imsrs foaYhla fjkqfjka lemjQ

l%shdj,shg Yla;sh ,nd .ekSu fjkqfjks'

oYl 03 lg wdikak ld,hla hqoaOfhka mSvd úòs

W;=re m<df;a ifydaor ck;djf.a fi!LH ;;ajh

k.d isgqùug wm lghq;= lf<uq osjhsfka m%uqL;u

mqoa.,sl frday, jYfhka wm ta iòyd il%Sh

odhl;ajhla iemhSu fjkqfjka W;=re m<df;ys

fiajh lrk ffjoHjreka 200lg wdikak ixLHdjla

f;dardf.k Tjqka fjkqfjka tlaosk jevuq¿jla

ixúOdkh lf<uq kùk ffjoH úoHdj yd ffjoH

lafIa;%fha kj ;dlaIKsl fuj,ï ms<snòj fuysoS

ffjoHjreka oekqj;a lrkq ,eìK fuu jevuq¿j

iòyd kjf,dal frday, ksfhdackh lrñka osjhsfka

m%uqL;u ffjoHjreka fukau úfoaYhSh úfYaI{

ffjoHjrekao iyNd.S jQy'’

foaYSh mdrñmrsl wdhq¾fõo ffjoHjreka fjkqfjkao

ngysr ffjoH úoHdfõ wia:s wdY%s; frda. ks¾Kh yd

ksjdrKh uefhka jevuq¿ .Kkdjlau wms

miq.sh uq,H jir ;=<oS mj;ajkq ,enqfjuq’ fuhska

tla jevuq¿jla osjhsfka ckm%shu ffjoHjrfhl=

jk ffjoH yrsoq úfcaisxy uy;df.a m%Odk;ajfhka

kdúkak wdhq¾fõo ffjoH mqyqKq wdh;kfhaoS

meje;ajqKq w;r ;j;a tla jevuq¿jla foaYSh ffjoH

wud;HdxYfha wdrdOkfhka ffjoH iqo¾YKS iur;=x.

uy;añhf.a m%Odk;ajfhka meje;ajqKs’

ñksfil=g fmkSu ,ndoSug hñ fohla l, yelaflakï th udye`.s mqKH lghq;a;la" ta iòyd Tng yels ish¿ foa fkdmudj isÿlrkak

jevigyka .Kkdjlau l%shd;aul lf<uq' ta w;rska

yDo ie;alï 05 la lsisoq uqo,la whlr .ekSulska

f;drj wms isoqlf,uq'

fld<U cd;sl frdayf,a yDo ie;alï l<hq;= frda.S

kdu f,aLKfha isá jeäysá mqoa.,hska fofofkl= yd

fld<U rscafõ wd¾hd <ud frdayf,a yDo ie;alï

frda.S ,ehsia;=fõjQ <uqka ;sfofkl= fjkqfjka fuu

ie;alï id¾:lj isoqlrk ,oS' wo oskfha hym;a

fi!LH ;;ajfhka miqjk fudjqka ish¿ fokd olsk

l, wmf.a uQ,sl mrud¾:h hym;aj wjikaùu

iïnkaOfhka wmg buy;a m%S;shla we;sfõ'


52

Customer Health and Safety (PR 1/2)Nawaloka ensures and maintains high standards on Health & Safety. Emphasising on the importance, the Hospital proudly states zero incidents of non-compliant regulations and voluntary codes concerning the health and safety impact of products and services during their life cycle.

Product and Service Labelling (PR 3/4/5)Nawaloka as a provider of an essential service, in the healthcare sector, adheres and conforms to the highest standards to ensure patients are provided with comprehensive information associated with the services obtained. However, as we do not market products of our own labelling, the sustainable impact on products does not apply directly. Thus, limits the sustainable impact exposure to the pharmaceuticals offered to customers of which, Nawaloka is only a retailer.

As mentioned above, as Nawaloka does not market products of our own labelling, there were zero incidents or non-compliance with regulations and voluntary codes concerning product and service information labelling.

Operating in a highly vulnerable service organization, in the vital industry of healthcare, Nawaloka understands the susceptibility and the associated vulnerabilities faced. Therefore, Nawaloka ensures service excellence and quality of service, to our customers, as one of our core values which has been a cornerstone of our success.

Several mechanisms were in place to monitor customer satisfaction in year 2012:

• Customer Complaints & Suggestions – Nawaloka distributed complaints and suggestion forms to customers/ patients at time of admission, which is collected during the time of discharge. The invaluable feedback is monitored and committed to a prompt response, hence, necessary actions were undertaken by the Marketing Division of Nawaloka.

• Suggestion Boxes were placed in public places to encourage and welcome customer suggestions on Nawaloka operations

• Mystery Shopper system was activated to measure the performance and effectiveness of the employees. Simultaneously, the Mystery Shopper assisted in identifying any weaknesses and drawbacks of services offered.

Marketing Communications (PR 6/7)Nawaloka strictly adheres to ethical standards in advertising. Marketing Communications in Nawaloka extends beyond compliance and conformity, as the prime objective is to strive and ensure the messages communicated are not overstated and exaggerated. In addition, all communications maintains transparency and does not abide or consist of any racial or gender bias or inappropriate imagery. Furthermore, Nawaloka ensures to reflect the corporate brand image and vision of the Hospital by conforming to the Hospital’s information security policies.

There were no incidents of non-compliance with regulations and voluntary codes concerning marketing communications, which includes advertising, promotions and sponsorships during the period under review.

Customer Privacy (PR 8)There were no records relating to the breach of customer privacy

Compliance (PR 9)No penalties/fines for non-compliance with lows and regulation concerning the provision and use of products and services during the year under review.


Nawalok customer loyalty card.



Independent Limited Assurance Report to Nawaloka Hospitals PLC

We were engaged by the Board of Directors of Nawaloka Hospitals PLC (“Company”) to provide limited assurance on the Sustainability Report for the year ended 31st March 2013 (‘the Report’) as set out on pages 28 to 52 of the Annual Report.

Managements’ responsibility and the criteria appliedManagement is responsible for the preparation and presentation of the Report in accordance with the GRI Sustainability Reporting Guidelines as described in page 33 of the Report, and the information and assertions contained within it; for determining the Company’s objectives in respect of sustainable development performance and reporting, including the identification of stakeholders and material issues; and for establishing and maintaining appropriate performance management and internal control systems from which the reported performance information is derived.

Our responsibilities and compliance with SLSAE 3000Our responsibility is to carry out a limited assurance engagement and to express a conclusion based on the work performed. We conducted our engagement in accordance with Sri Lankan Standard on Assurance Engagements SLSAE 3000: Assurance Engagements other than Audits or Reviews of Historical Financial Information, issued by the Institute of Chartered Accountants of Sri Lanka.

That Standard requires that we comply with applicable ethical requirements, including independence requirements, and plan and perform the engagement to obtain limited assurance about whether the Report is free from material misstatement.

Summary of work performedA limited assurance engagement on a sustainability report consists of making inquiries, primarily of persons responsible for the preparation of information presented in the sustainability report, and applying analytical and other evidence gathering procedures, as appropriate. These procedures included:

• Inquiries of management to gain an understanding of the Company’s processes for determining the material issues for it’s key stakeholder groups.

• Interviews with senior management and relevant staff at selected business unit level concerning sustainability strategy and policies for material issues, and the implementation of these across the business.

• Interviews with relevant staff at corporate and business unit level responsible for providing the information in the Report.

• Inquiries about the design and implementation of the systems and methods used to collect and process the information reported, including the aggregation of data into information as presented in the Report.

• Comparing the information presented in the Report to corresponding information in the relevant underlying sources to determine whether all the relevant information contained in such underlying sources has been included in the Report.

• Reading the information presented in the Report to determine whether it is in line with our overall knowledge of, and experience with, the sustainability performance of the Company.

The extent of evidence gathering procedures performed in a limited assurance engagement is less than that for a reasonable assurance engagement, and therefore a lower level of assurance is provided.

Our conclusionBased on the procedures performed, as described above, nothing has come to our attention that causes us to believe that the Sustainability Report of Nawaloka Hospitals PLC for the year ended 31st March 2013, is not presented fairly, in all material respects, in accordance with the GRI Sustainability guidelines as described in page 33 of the Report

CHARTERED ACCOUNTANTSColombo

21 May 2013


54


Applied Not relevant as per C Level Reporting

Index GRI Definition Relevant Section Application Page

1.0 Strategy and Analysis

1.1 Statement from the most senior decision-maker of the organization Chairman's Review 10-11

1.2 Description of key impacts, risks and opportunities Risk Management report 81

2.0 Organizational Profile

2.1 Name of the organization Company Profile 2

2.2 Primary brands, products and/or services Sustainability Report 29

2.3

Operational structure of the organisation, including main divisions, operating companies, subsidiaries and joint ventures

Corporate Governence Structure

66

2.4 Location of organisation’s headquarters Inner Back Cover -

2.5

Number of countries where the organisation operates and names ofcountries with either major operations or that are specifically relevant tothe sustainability issues covered in the Report

Company Profile

2

2.6 Nature of ownership and legal form Report of the Directors 77-80

2.7

Markets served (including geographic breakdown, sectors served and types of customers/beneficiaries)

Sustainability Report

29

2.8 Scale of the reporting organisation Sustainability Report 29

2.9

Significant changes during the reporting period regarding size, structure or ownership


29

2.10 Awards received in the reporting period Sustainability Report 33

3.0 Report Parameters

3.1 Reporting period for information provided Sustainability Report 33

3.2 Date of most recent previous Report Sustainability Report 33

3.3 Reporting cycle Sustainability Report 33

3.4 Contact point for questions regarding the report or its contents Sustainability Report 33

3.5 Process for defining report content Sustainability Report 34

3.6 Boundary of the Report Sustainability Report 34

3.7 Specific limitations on the scope or boundary of the Report Sustainability Report 34

3.8

Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations and other entities that can significantly affect comparability from period to period and/or between organisations


34

Global Reporting Initiatives Index




3.9

Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the Report


34

3.10

Explanation of the effect of any restatements of information provided in earlier Reports


34

3.11

Significant changes from previous reporting periods in the scope, boundary or measurement methods applied in the Report


34

3.12 Table identifying the location of the standard disclosures in the Report Sustainability Report 54-62

3.13

Policy and current practice with regard to seeking external assurance for the Report


34

4.0 Governance, Commitments and Engagement

4.1

Governance structure of the organisation, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight.


34

4.2

Indicate whether the Chair of the highest governance body is also an executive officer.


34

4.3

For organisations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members.


34

4.4

Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.


35

4.5

Linkage between compensation for members of the highest governance body, senior managers and executives (including departure arrangements), and the organisation’s performance (including social and environmental performance)

Remuneration committee report and Key Mgt. personnel compansatio in the financial statements.

84/122

4.6

Processes in place for the highest governance body to ensure conflicts of interest are avoided


35

4.7

Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organisation’s strategy on economic, environmental and social topics

Corporate Governance Report

66-76

4.8

Internally-developed statements of mission or values, codes of conduct and principles relevant to economic, environmental and social performance and the status of their implementation


35


56



4.9

Procedures of the highest governance body for overseeing the organisation’s identification and management of economic, environmental and social performance, including relevant risks and opportunities and adherence or compliance with internationally agreed standards, codes of conduct and principles


35

4.10

Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental and social performance

Remuneration committee report

84

4.11

Explanation of whether and how the precautionary approach or principle is addressed by the organisation


35

4.12 Externally developed economic, environmental and social charters, principles or other initiatives to which the organisation subscribes or endorses

Sustainability Report 35

4.13

Memberships in associations (such as industry associations) and/ornational/international advocacy organisations in which the organisation


35

4.14 List of stakeholder groups engaged by the organisation. Sustainability Report 36

4.15

Basis for identification and selection of stakeholders with whom toengage.


36

4.16

Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.


36

4.17

Key topics and concerns that have been raised through stakeholder engagement and how the organization has responded to those key topics and concerns, including through its reporting.


36

EC Economic Performance

EC1 Direct economic value generated and distributed Sustainability Report 38

EC2

Financial implications and other risks and opportunities for the organization's activities due to climate change


40

EC3 Coverage of the organization's defined benefit plan obligations Financial Statement 41

EC4 Significant financial assistance received from Governments Sustainability Report 41

Market Presence

EC5

Range of ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation


41




EC6

Policy, practices and proportion of spending on locally-based suppliers at significant locations of operation


41

EC7

Procedures for local hiring and proportion of senior management hired from the local community at locations of significant locations of operation


41

Indirect Economic Impacts

EC8

Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind or pro bono engagement

-

-

EC9

Understanding and describing significant indirect economic impacts, including the extent of impacts

-

-

EN Environmental Management

Materials

EN 1 Materials used by weight or volume - -

EN 2 Percentage of materials used that are recycled input materials - -

Energy

EN 3 Direct energy consumption by primary energy source Sustainability Report 42

EN 4 Indirect energy consumption by primary source Sustainability Report 42

EN 5 Energy saved due to conservation and efficiency improvements Sustainability Report 42

EN 6

Initiatives to provide energy-efficient or renewable energy-based products and services and reductions in energy requirements as a result of these initiatives


42

EN 7 Initiatives to reduce indirect energy consumption and reductions achieved Sustainability Report 42

Water

EN 8 Total water withdrawal by source Sustainability Report 43

EN 9 Water sources significantly affected by withdrawal of water Sustainability Report 43

EN 10 Percentage and total volume of water recycled and reused Sustainability Report 43

Biodiversity

EN 11

Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

-

-

EN 12

Description of significant impacts of activities, products and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas

-

-


58



EN 13 Habitats protected or restored - -

EN 14 Strategies, current action and future plans for managing biodiversity - -

EN 15

Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk

-

-

Emissions, Effluments and waste

EN 16 Total direct and indirect greenhouse gas emissions by weight - -

EN 17 Other relevant indirect greenhouse gas emissions by weight - -

EN 18 Initiatives to reduce greenhouse gas emissions and reductions achieved - -

EN 19 Emissions of ozone-depleting substances by weight - -

EN 20 NO, SO, and other significant air emissions by type and weight - -

EN 21 Total water discharge by quality and destination - -

EN 22 Total weight of waste by type and disposal method - -

EN 23 Total number and volume of significant spills - -

EN 24

Weight of transported, imported, exported or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III and VIII, and percentage of transported waste shipped internationally

-

-

EN 25

Identity, size, protected status and biodiversity value of water bodies and related habitats significantly affected by the reporting organization's discharges of water and runoff

-

-

Products and Service

EN 26

Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation


43

EN 27

Percentage of products sold and their packaging materials that are reclaimed by category


43

Compliance

EN 28

Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations


43

Transport

EN 29

Significant environmental impacts of transporting products and other goods and materials used for the organization's operations and transporting members of the workforce


43




Overall

EN 30 Total environmental protection expenditures and investments by type Sustainability Report 43

Social dimension

LA Labour Practices and Decent work indicators

Employment

LA 1

Total workforce by employment type, employment contract and region broken down by gender


44

LA 2

Total number and rate of employee hires and employee turnover by age group, gender and region


45

LA 3

Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operations


45

LA 15 Return to work and retention rates after parental leave, by gender - -

Labor/Management Relations

LA 4 Percentage of employees covered by collective bargaining agreements - -

LA 5

Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements

-

-

Occupational Health and Safety

LA 6

Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programmes


45

LA 7

Rates of injury, occupational diseases, lost days and absenteeism, and number of work-related fatalities by region and by gender


45

LA 8

Education, training, counseling, prevention of diseases, and risk-control programs in place to assist workforce members, their families or community members regarding serious diseases


45

LA 9 Health and safety topics covered in formal agreements with trade unions Sustainability Report 45

Training and Education

LA 10 Average hours of training per year per employee by gender, and by employee category

Sustainability Report 46

LA 11

Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings


46


60



LA 12

Percentage of employees receiving regular performance and career development reviews by gender


46

Diversity and Equal Opportunity

LA 13

Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership and other indicators of diversity

-

-

LA 14

Ratio of basic salary and remuneration of women to men by employee category by significant locations of operation


48

HR Human Rights

Investment and procurement practices

HR 1

Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening

-

-

HR 2

Percentage of significant suppliers, contractors and other business partners that have undergone human rights screening , and actions taken

-

-

HR 3

Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained

-

-

Non-Discrimination

HR 4 Total number of incidents of discrimination and actions taken Sustainability Report 48

Freedom of Association and Collective Bargaining core

HR 5

Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights


48

Child Labour

HR 6

Operations and significant suppliers identified as having significant risk for incidents of child labour and measures taken to contribute to the effective abolition of child labour


48

Forced and Compulsory Labour

HR 7

Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labour and measures to contribute to the elimination of all forms of forced or compulsory labour


49




Security Practices

HR 8

Percentage of security personnel trained in the organization's policies or procedures concerning aspects of human rights that are relevant to operations


49

Indigenous Rights

HR 9

Total number of incidents of violations involving rights of indigenous people and actions taken

-

-

Assessment

HR 10

Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments.


49

Remediation

HR 11

Number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms


49

SO Society

Community

SO 1

Nature, scope and effectiveness of any programmes and practices that assess and manage the impacts of operations on communities, including entering, operating and exiting


49

Corruption

SO 2 Percentage and total number of business units analysed for risks related to corruption

- -

SO 3

Percentage of employees trained in organization's anti-corruption policies and procedures

-

-

SO 4 Actions taken in response to incidents of corruption - -

Public policy

SO 5

Public policy positions and participation in public policy development and lobbying

-

-

SO 6

Total value of financial and in-kind contributions to political parties, politicians and related institutions by country


49

Anti-Competitive Behavior

SO 7

Total number of legal actions for anti-competitive behavior, anti-trust and monopoly practices and their outcomes


49


62


Compliance

SO 8

Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations


49

PR Products Responsibility

Customer Health and Safety

PR 1

Life cycle stages in which health and safety impacts of products and services are assessed for improvement and percentage of significant products and services categories subject to such procedures


52

PR 2

Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services duringtheir life cycle, by type of outcomes


52

Product and Service Labeling

PR 3

Type of product and service information required by procedures and percentage of significant products and services subject to such information requirements


52

PR 4

Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes


52

PR 5

Practices related to customer satisfaction, including results of surveys measuring customer satisfaction


52

Marketing Communications

PR 6

Programmes for adherence to laws, standards and voluntary codes related to marketing communications, including advertising, promotion and sponsorship


52

PR 7

Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship by type of outcomes


52

Customer Privacy

PR 8

Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data


52

Compliance

PR 9

Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services


52




Report Application Level

Rep

ort E

xter

nally

Ass

ured

Rep

ort E

xter

nally

Ass

ured

Rep

ort E

xter

nally

Ass

ured

Sta

ndar

d D

iscl

osu

res

ProfileDisclosures

Report on:1.12.1-2.103.1-3.8, 3.10-3.124.1-4.4, 4.14-4.15

Report on all criteria listed for Level C plus:1.23.9,3.134.5-4.13, 4.16-4.17

Same as requirement for Level B

Not Required Management ApproachDisclosures for eachIndicator Category

Management ApproachDisclosed for eachIndicator Category

Report fully on a minimum of any 10 Performance Indicators, including at least one from each of: Social, Economic and Environmental.**

Report fully on a minimum of any 20 Performance Indicators, at least one from each of: Economic, Environment, Human Rights, Labour, Society, Product Responsibility.***

Respond on each core and Sector Supplement* Indicator with due regard to the Materiality Principle by either: a) reporting on the indicator or b) explaining the reason for its omission.

Disclosures onManagementApproach

PerformanceIndicators & SectorSupplementPerformance Indicators

* Sector supplement in final version

** Performance Indicators may be selected from any finalised Sector Supplement, but 7 of the 10 must be from the original GRI Guidelines

*** Performance Indicators may be selected from any finalised Sector Supplement, but 14 of the 20 must be from the original GRI Guidelines

We are dedicated to be on the cutting edge of medical

technology.

A Legacy of Innovation


66

Corporate governance refers to the set of processes, policies and laws, a corporation (or company) is required to observe which and is accordingly directed, administered and controlled. Corporate governance also provides for the effective relationship amongst the many stakeholders involved and the goals which a corporation isrequired to achieve, which includes the shareholders, Employees, Customers and Creditors. The Board of Nawaloka Hospitals PLC are conscious of their responsibilities of the accountability, accordingly they periodically review the adequacy and effectiveness of internal controls observed by the company focusing upon financial and Operational compliance and risk management.

The Company understands the level of importance for good governance in their business practices. The Company adopted the Code of Best Practice on Corporate Governance put forth by the Securities & Exchange Commission and the Institute of Chartered Accountants of Sri Lanka, since the said code came into effect.

Adherence to Corporate Governance is illustrated below :-

Corporate Governance

CG Structure

Nawaloka Hospitals PLC

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

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

Metropolis (50% JV)

BOD

Remuneration ComStrategic Planning Com.

Audit Committee Risk Management Com.

Sustainability Com.

03 INED & 01 EDChairman & 03 ED 04 INED DGM & 02 ED Chairman, DGM & 02 ED

Internal Auditors

Share Holders

INED - Independent Non-Executive Directors

NED - Non-Executive Directors



Corporate Governance Principle SEC & ICASL Code reference

Adoption Status

Level of Compliance by Nawaloka Hospitals PLC

A. DIRECTORS

A.1 The Board

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

Meeting

A.1.1

Adopted

The Board met 11 times during the Financial year under review. Strategic issues were discussed and the Management Team were given the necessary directions and guidance within spreading the four quarters.

The Board reviewed the new plans after lengthy discussions.

All meetings are convened well in advance and the participation of the directors at the meetings was very satisfactory. Attendance of the Board of directors at the meetings is as follows.

Number of Board Meetings held during the year 2012/2013

Name of Director Number of Meetings Attended

Attendance %

Mr.H.K.J.Dharmadasa 11 100Mr.R.T.Wijetilleke 11 100Deshabandu Tilak De Zoysa 8 72.7Prof.Lal Chandrasena 10 90.9Mr.U.H.Dharmadasa 10 90.9Mr.T.K.Bandaranayake 10 90.9Mr.A.G.Dharmadasa 9 81.8Ms.A.G.Dharmadasa 3 27.2Dr.T.Senthiverl 9 81.8Mr.Damian Sunil Abeyratna 9 81.8

Board Responsibilities

A.1.2

Adopted

The Board possesses the skills expertise and knowledge required in managing the business and formulating strategies.

Non Executive Directors have contributed their independent judgment towards business strategies.

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

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


68

Corporate Governance Contd.


Adoption Status


Rules & Regulations

A.1.3

Adopted

The Board collectively and the Directors individually have acted in accordance with the laws and regulations of the Country and the applicable Company Law.

The Company had always taken independent professional advice for their strategic directions whenever required at the Company's expense

Company Secretary

A.1.4

Adopted

All Directors have direct access to the Company Secretaries which is a Company headed by an Attorney at Law and a qualified Company Secretary.

The Company Secretaries ensure that the Company is operated within the frame work of the rules and regulations & does the needful co-ordination. Further the Board takes necessary assistance from the Sub Committees appointed.

It further ensures that the information is circulated to the entire Board in advance for their study.

Independent Judgment

A.1.5

Adopted

The Directors exercise their independent professional judgment in business decisions.

The Board creates a forum to discuss the suggestions and adopts 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 ensures that all requested information are delivered to Directors for their independent evaluation.

In addition to the Board meetings, Directors attend the following Sub Committees.

• Remuneration Committee• Audit Committee

Training

A.1.7

Adopted

New Directors are given adequate induction for their role as Directors . All Directors have recognized the need for continuous training and expansion of their knowledge and skills required to effectively perform their duties.




Adoption Status


A.2 Chairman and Chief Executive Officer

The Code requires clear division of responsibilities of the Chairman and the Chief Executive Officer. The functions of the Chairman and the functions of the Chief Executive Officer are kept separate and independent.

Division of Responsibilities of Chairman and Chief Executive Officer

A.2.1

Adopted

The roles of the Chairman and the Chief Executive Officer are held by one person. The Chief Executive Officer's role includes developing and implementing high-level strategies, and making major corporate decisions.

In the role of Chairman, he will act as the main point of communication between the Board of Directors and the shareholders.

In his role as Chief Executive Officer he concentrates on the implementation of high-level strategies and taking major corporate decisions.

A.3 Chairman's role

The Code requires the Chairman to observe good Corporate Governance. The Chairman is responsible in heading the Board. The Chairman should ensure effective discharge of Board functions.

Role of the Chairman

A.3.1

Adopted

The Chairman heads the Board. The Chairman facilitates the effective contribution and performance of all Board members whilst identifying any needs of the Board. He also ensures that there is sufficient and effective communication with shareholders to understand their issues and concerns.

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

A.4 Financial Acumen

The Code requires the Board to ensure the availability within it, 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 equipped with sufficient financial acumen as most of the Board members are well qualified, possess a wealth of experience and have sound financial knowledge and are members of the respective professional accounting bodies.

A.5 Board balance

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

Adequate number of Non Executive Directors

A.5.1 Adopted The Board consists of ten Directors out of which five Directors are Non Executive Directors. This has ensured that no power is vested with individuals or a small group of individuals who may dominate the Board.

Adequate number of Independent Non Executive Directors

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


70



Adoption Status


Independency of directors A.5.3 Adopted All four Independent Non Executive Directors are free from any material relationship with the Company, and also maintain their level of independence.

Signed declaration of independence by the Non Executive Director

A.5.4 Adopted All Non Executive Directors have made written declarations with regard to 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 upon the declaration and based upon the information available to the Board. No circumstances have arisen for the determination of non-independence by the Board, within the criteria set out in the Code.

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

* Rienzie Theobald Wijetilleke* Deshabandu Tilak de Zoysa* Tissa K Bandaranayake* Damian Sunil Abeyratna

Senior Independent Director A.5.6 Adopted Deshabandu Tilak De Zoysa has been appointed as the Senior Independent Director, as the role of the Chairman & Chief Executive Officer is not separated.

Confidential Discussion with Senior Independent Director

A. 5.7 Adopted The Senior Independent Director has made himself available for discussions with any of the Directors relating to any material nature.

Meeting with Chairman and Non Executive Directors

A.5.8 Adopted The Chairman meets with the Non Executive Directors when the need has arisen.

Recording of concerns in Board minutes

A.5.9 Adopted All concerns that arise are resolved amicably. Therefore such need has not arisen

A.6 Supply of Information

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

Timely Information

A.6.1

Adopted

The Board was adequately provided with information required for decision making from the Management information system.

The Board always requests from the Management, any further information required.

Board Papers A.6.2 Adopted The Board Papers are sent at least one week prior to the Board meeting for preparation




Adoption Status


A.7 Appointments to the Board

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

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

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 & experience of the Board matches with the strategic demands faced by the company. New Board Members are appointed as and when the need arises.

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

A.8 Re Election

The Code requires 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 Rotation of the Board of Directors is done as per the Articles of Association of the Company and all Board Members come up for rotation at an Annual General Meeting once every three years.

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

A.9 Appraisal of Board Performance

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

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

Appraisal of self performance A.9.2 Adopted Please refer above comment.

Performance criteria A.9.3 Adopted Please refer above comment.

A.10 Disclosure of Information in Respect of Directors

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

Disclosure in Annual Report A.10.1 Adopted Please refer the Pages 18 to 19 for the profiles of the Directors

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

Targets A.11.1 Adopted In each financial year, the Board has set short term, medium term and long term targets. This is decided in consultation with the Chief Executive Officer.

Evaluation of the targets A.11.2 Adopted The Board of Directors evaluate the performance of the Chief Executive Officer and supervise the targets to be achieved


72



Adoption Status


B. DIRECTOR'S REMUNERATION

B.1 Remuneration Procedure

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

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

Composition of the remuneration Committee

B.1.2 The Remuneration Committee comprises of :-

B.1.3

Mr. Tilak de Zoysa - Independent Non Executive DirectorMr Tissa Bandaranayake - Independent Non Executive DirectorMr. Damian Sunil Abeyratna - Independent Non Executive DirectorProf. Lal G. Chandrasena - Executive Director

Remuneration of the Non Executive Directors

B.1.4 Adopted The Board collectively decides the remuneration to the Non Executive Directors. Non Executive Directors receive a fee for attending Board as well Committees Meetings.

Advices to the Chairman and Chief Executive Officer

B.1.5 Adopted The Chairman and the Chief Executive Officer seek advice from the Remuneration Committee for the remuneration of the Executive Directors

B.2 The Level and Make up of Remuneration

The Code requires to maintain the level of remuneration of both Executive and Non Executive Directors to satisfy and retain the directors to run the company successfully. Further a proportion of the Executive Director’s remuneration should be structured to link rewards to corporate and individual performance

Remuneration for Executive Directors

B.2.1 Adopted The Company is mindful of paying an attractive remuneration to the Executive Directors to retain and motivate them. The remuneration package has been designed to enhance their performance.

Comparison between similar companies

B.2.2 Adopted The Remuneration Committee decides the remuneration taking into consideration the remuneration paid by other companies in the same field of operation.

Comparison of Remuneration across the group

B.2.3 Adopted The Board’s Human Resources and Remuneration Committee reviews information relating to executive pay from time to time to ensure that the same is on par with the market/industry rates.

Performance based remuneration to the Executive Directors

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

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

Deciding the Performance related remuneration

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

Early termination of Director B.2.7 N/A Not applicable to the Board. The CEO’s term of employment is governed by a contract of service.




Adoption Status


Early termination of Director not included in the contract

B.2.8 N/A Refer above comment

Remuneration to the Non Executive Director

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

B.3 Disclosure of Remuneration

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

B.3.1 Disclosure of Remuneration

B.3.1

Adopted

Remuneration Committee is headed by an Executive Director. Please refer the comment on B.1.3 for this information.

Remuneration policy focuses upon compensating employees for the services they provide to the Company and to retain employees with skills required to effectively manage the operations.

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

C. RELATIONS WITH SHAREHOLDERS

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

The Code requires the board to use the Annual General Meeting to communicate with shareholders and encourage their participation

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

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

Availability of the Chairmen of Audit, Remuneration and Nomination Committee

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

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

Procedures of voting at General meeting

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

C.2 Major Transactions

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

Major Transactions C.2.1 Adopted All material transaction have been disclosed to the shareholders


74



Adoption Status


D. ACCOUNTIBILITY & AUDIT

D.1 Financial Reporting

The Board is required to present a balanced and understandable assessment of the company's financial position, performance and prospects

Statutory Reporting

D.1.1

Adopted

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

* Quarterly Financial Statements* Annual Report

The Company has strictly complied with the requirements of the Companies Act No 07 of 2007. The financial statements are prepared based upon the Sri Lanka Accounting Standards.

Director's Report D.1.2 Adopted Refer Pages 77 to 80

Auditor's Report D.1.3 Adopted Refer Page 91

Management Discussion & Analysis

D.1.4 Adopted Refer Pages 12 to 14

Declaration by the Board that the business is a going concern

D.1.5 Adopted Refer Page 80

Summon an Extraordinary General Meeting to notify loss of capital

D.1.6 Adopted Such circumstances have not arisen. If such situation arises an Extraordinary General Meeting will be convened to inform the Shareholders.

D.2 Internal Control

The Code requires the Board to maintain a sound system of internal control to safeguard shareholders' investments and the company's assets

Review of the Internal control

D.2.1

Adopted

The Board evaluated the effectiveness of the internal control system in the Company to safeguard shareholders investment.

The Board of Directors were satisfied of the level of internal controls present in the business operations.

Need for internal audit function D.2.2 Adopted The Company has an in-house audit function




Adoption Status


D.3 Audit Committee

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

Composition of Audit Committee

D.3.1

Adopted

The Audit Committee is comprised of four independent Directors

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

* Mr. Rienzie T Wijetilleke-Independent Non Executive Director

* Deshabandu Tilak de Zoysa –Senior independent Non Executive Director

* Mr.Damian Sunil Abeyratna- Independent Non Executive Director.

Duties of Audit Committee

D.3.2

Adopted

The Audit Committee has monitored the independence and effectiveness of the Auditors, objectively.

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

Terms of Reference of the Audit Committee

D.3.3

Adopted

The Audit Committee is guided by the Committee charter which is reviewed annually.

The committee assists the Board in the following matters.

• Preparation,PresentationandreviewingadequacyofdisclosuresintheFinancialStatements;

* Compliance with financial reporting requirements, information requirements under the Companies Act and other financial reporting related regulations and requirements;

* Ensure adherence to internal control systems of the Company;* Ability to continue as a going concern in the foreseeable future;* Ensuring Independence and reviewing the performance of the Company’s

External Auditors.

Disclosure D.3.4 Adopted Refer pages 85 to 87


76



Adoption Status


D.4 Code of Business Conduct & Ethics

The Code requires the Company to develop a code of ethics for Directors, and members of the Senior Management team

Code of Business conduct and ethics

D.4.1

Adopted

The Company has developed a business conduct and ethics focusing on the following important areas* Conflict of Interest* Corporate Opportunities* Confidentially* Fair dealing* Protection and proper use of Company's assets* Compliance with rules and regulations* Encouraging the reporting of any illegal or unethical behavior

Affirmation to the code and ethics D.4.2 Adopted Refer Chairman’s report at pages 10 to 11

D.5 Corporate Governance Disclosures

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 at pages 66 to 76 addresses this requirement.

E. INSTITUTIONAL SHAREHOLDERS

E.1 Shareholder Voting

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

Dialogue with Shareholders

E.1.1

Adopted

The Annual General Meeting is an adequate forum to have effective communication with the shareholders.

All concerns and suggestions of the Shareholders are minuted and evaluated thereafter.

E.2 Evaluation of Governance Disclosure

The Code requires the company to encourage Institutional Investors to give due weight to all relevant factors in Board Structure and composition

F.OTHER INVESTORS

F.1 Investing/Divesting Decision

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

F.2 Shareholder Voting

Individual Shareholders F.2 Adopted Individual Shareholders are encouraged to participate in General Meetings and exercise their voting rights.



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 2013.

The details set out herein provide the pertinent information required by the Companies Act No. 7 of 2007, the Listing Rules of the Colombo Stock Exchange and recommendations in best accounting practices.

Legal form and DomicleNawaloka Hospitals Plc is a Public Company with limited liability incorporated in Sri Lanka on 1st July 1982 under the Companies Ordinance 1938 and re-registered as per the Companies Act No. 7 of 2007 on 7th September 2007, with the Company Registration No. PQ 78. Its Shares were quoted on the Colombo Stock Exchange in 2004. This information is disclosed as required by Section 168 of the Companies Act No. 7 of 2007, which also requires the following information to be disclosed.

Principal Business ActivitiesNature of the business of the Company and the Group are presented below as required by Section 168 (1) (a) of the Companies Act No. 7 of 2007. There has been no material change to the activities of the Company or any of the subsidiaries during the period under review.

CompanyThe principal activity of the Company continues to be the carrying out of health care and Hospital services.

SubsidiariesNew Nawaloka Hospitals (Private) LimitedThis 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. 7 of 2007. It is domiciled in Sri Lanka and is a wholly owned subsidiary of Nawaloka Hospitals Plc.

New Nawaloka Medical Centre (Private) LimitedThis 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. 7 of 2007. It is also domiciled in Sri Lanka and is a wholly owned subsidiary of Nawaloka Hospitals Plc.

Nawaloka Metropolis Laboratories (Private) LimitedThis Joint Venture Company was established in year 2005 along with Metropolis India to provide laboratory services. Nawaloka Hospitals Plc holds 50% shares in this Company.

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 Director/General Manager’s Operational & Management review at pages 10-11 and 12-14 of this report. These reviews

form an integral part of this report and together with the Financial Statements describes, in detail the state of affairs of the Company and the Group.

Financial StatementsThe Financial Statements which include the Statement of Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity, Cash Flow Statements and Notes to the Financial Statements are given at pages 92 to 128 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. 7 of 2007 and the Listing Rules of the Colombo Stock Exchange.

Auditor’s ReportThe financial statements for the period under review were audited by Messrs KPMG (Chartered Accountants) for the year ended 31st March 2013 and the Independent Auditor’s Report issued thereon appears at page 91 of this Annual Report as required by section 168 (1) (c) of the Companies Act No. 7 of 2007.

Financial Results (All figures in Sri Lanka Rupees)

Group Company2012/2013

Rs.2011/2012

Rs.2012/2013

Rs.2011/2012

Rs.Profit/(Loss) before Taxation 452,035,792 362,104,620 257,314,834 195,356,128Less : Taxation 2,223,487 (91,418,057) 540,562 (42,993,030)Net Profit/(Loss) after Taxation 454,259,279 270,686,563 257,855,395 152,363,098Profit/(Loss) attributable to Equity Holders of the Company

604,365,056 270,686,563 257,855,395 152,363,098

Earnings (Loss) per share 0.32 0.19 0.18 0.11

Adoption of New SLFRS/LKAS, Accounting Policies and Changes During the YearDuring the year Company has adopted the new SLFRS/LKAS and the accounting policies used in preparation of Financial Statements of the Company and the Group are given at pages 98 to 105 of the Annual Report as required by Section 168 (1) (d) of the Companies Act. There has been no change in the accounting policies adopted by the Company and Group during the period under review other than disclosed.

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.


78

Directors Remuneration and other BenefitsDirectors’ remuneration and other benefits of directors are given in note 22 to the Financial Statements at page 122 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. 4,817,542 as required by Section 168 (1) (g) of the Companies Act No. 07 of 2007 in compliance with the authorization conferred upon the Board at the last Annual General Meeting.

Shareholders’ FundAfter the above mentioned appropriation, the total Group shareholders’ funds as at 31st March 2013, stood at Rs. 3,781,338,350 (31st March 2012 – Rs. 3,170,442,180) The total shareholders’ funds of the Company as at 31st March 2013 stood at Rs 1,683,557,137 (31st March 2012 – Rs 1,496,177,022). The movements are shown in the Statement of Changes in Equity.

DividendInterim dividend of cents 05 per share was paid in June 2012.

Information of DirectorsThe 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 & Chief Executive Officer)

Executive

Mr. Rienzie T. Wijetilleke ( Vice Chairman) Non -Executive IndependentDeshabandu Tilak de Zoysa (Senior Independent Director)

Non -Executive Independent

Prof. Lal G. Chandrasena (General Manager) ExecutiveMr.Tissa Kumara Bandaranayake (Senior Independent Director)

Non -Executive Independent

Mr. U. Harshith Dharmadasa ExecutiveMr. A. G. Dharmadasa ExecutiveMs. A. G. Dharmadasa ExecutiveDr. T. Senthilverl Non-ExecutiveMr. Damian Sunil Abeyratna Non-Executive independent

The qualifications and experience of each of the Directors are given in the individual profiles of the Board of Directors at pages 16 to 19 of the Annual Report.

The late Deshamanya H. K. Dharmadasa who was the former Chairman of the Company served as the Chairman of Nawaloka Hospitals Plc for over 25 years. During his tenure as Chairman, the late Deshamanya H. K. Dharmadasa provided valuable services to his Country. He is still remembered as an extremely Honourable Philanthropist who earned enduring respect amongst people of all walks of life. He passed away on 10th August 2011.

Appointments and ResignationsUpon the demise of the late Deshamanya H. K. Dharmadasa on the 10th August 2011, Mr. Jayantha Dharmadasa was appointed as the Chairman of the Company with effect from 18th August 2011.

The information on new appointments and resignations to and from the Board of Directors of the Company are shown above and forms an integral part of this Report of the Board of Directors in terms of Section 168 (1) (h) of the Companies Act No. 7 of 2007.

Recommendations for Re-electionIn terms of Article 74 of the Articles of Association of the Company, Mr.Jayantha Dharmadasa, Mr. U. H. Dharmadasa and Ms. A. G. Dharmadasa who retire from the Board by rotation at the forth coming Annual General Meeting and being eligible for re-election, offer themselves for re-election.

Additionally, Mr. R.T. Wijetilleke who has attained the age of 73 and Mr. T.K. Bandaranayake who attained the age of 70 being eligible for re-election in terms of Section 211 of the Companies Act No. 7 of 2007 offer themselves to be appointed as Directors of the Company.

Independent DirectorsMr. Rienzie T. Wijetilleke, Deshabandu Tilak De Zoysa and Mr. Tissa Kumara Bandaranayake were appointed Independent Directors of the Company on 16th October 2003, 16th October 2003 and

Report of the Board of Directors Contd.



27th May 2009 respectively. Whilst Mr. Wijetilleke and Mr. De Zoysa have served on the Board continuously for a period of nine years, the Board Resolved on the 30th November 2012 that despite the said two Independent Directors having served on the Board for a continuous period of nine years that they are yet regarded as Independent Directors in terms of Rule 7.10.4 (read with sub-rules [a] to [h] of the revised Rules of the Colombo Stock Exchange.

Board Sub - CommitteesThe three Board Sub-Committees established by the Board continue to provide oversight relating to policy and governance. The composition of the Sub-Committees during the Financial year is as follows:-

• Board Audit Committee Members Mr. Tissa Kumara Bandaranayake - Chairman

(Director) Mr. Rienzie T. Wijetilleke - Director Deshabandu Tilak De Zoysa - Director Mr. Sunil Abeyratna - Director

• Remuneration Committee Members Deshabandu Tilak De Zoysa - Chairman Mr. Tissa Kumara Bandaranayake – Director

Mr. Sunil Abeyratna - Director Prof. Lal G. Chandrasena -Director

• Strategic Planning Committee Members Mr. H. K. Jayantha Dharmadasa - Chairman

(Director) Prof. Lal G. Chandrasena - Director Mr. U. Harshith Dharmadasa - Director Mr. A. G. Dharmadasa - Director

• Sustainability Committee Mr. H. K. Jayantha Dharmadasa - Chairman

(Director) Prof. Lal G. Chandrasena - Director Mr. U. Harshith Dharmadasa - Director Mr. A. G. Dharmadasa - Director

• Risk Management Committee Prof. Lal G. Chandrasena - Director Mr. U. Harshith Dharmadasa - Director Mr. A. G. Dharmadasa - Director

Directors’ MeetingsDetails of meetings which comprise Board meetings, the Board’s Sub-committee meetings of the Audit Committee, Remuneration Committee and Strategic Planning Committee, are dealt with at page 67,84 and 87 of this Annual Report.

Directors’ ShareholdingThe aggregate shareholding of the Directors for the year ended 31st March 2013 and the previous year, is as follows:-

2013 Ordinary 2012 Ordinary

Mr. H.K. J. Dharmadasa 460,736,182 460,736,182Mr. R. T. Wijetilleke 33,332 93,332Deshabandu Tilak de Zoysa 218,000 218,000Prof. Lal Chandrasena 601,198 601,198Mr. U. H. Dharmadasa 3,360 3,360Mr. A. G. Dharmadasa 3,004,026 2,704,026Ms. A. G. Dharmadasa 5,066,686 5,066,686Dr. T. Senthilverl 307,752,304 305,256,954Mr. Damian Sunil Abeyratna NIL NILMr. T. K. Bandaranayake NIL NIL

Related Party transactionsThe Directors have also disclosed the transactions if any, that could be classified as Related Party transactions’ in terms of LKAS 24 “Related Party Disclosures” and also complied with Rule 7.6 (XVI) of the CSE Listing Rules. Related Party Transactions are given in Note 26 to the Financial Statements.

Director’s InterestsThe Interest Register is maintained by the Company, as per the Companies Act No. 07 of 2007.

Capital ExpenditureDetails of Property, Plant & Equipment and their movements in Company and Group during the year are listed in Note 2 to the accounts at pages 106 to 110.


80

Stated CapitalThe Stated Capital of the Company consists of 1,409,505,596 ordinary shares. There was no change in the Stated Capital during the year.

Stated Capital Group Company

2012/2013Rs.

2011/2012Rs.

2012/2013Rs.

2011/2012Rs.

Issued & 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

Share InformationThe composition of Shareholders and the information relating to share trading, net assets, market value per share, are given at pages 129-130 of this Annual Report.

Major ShareholdersThe 20 largest shareholders of the Company as at 31st March 2013 are given at page 129 of this Annual Report.

Employment PolicyThe Company’s Employment Policy is totally non-discriminatory, and equality of opportunity for all employees irrespective of ethnic, origin, religion, political opinion, gender or marital status.

The Company applies ‘equal opportunity policy’ in selection, training, development and promotion opportunities, ensuring that all decisions are based on merit and qualification.

The 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 31.03.2013 was 2,044.

Group RevenueThe Revenue of the Group was Rs. 4,222,907,733 (2012 – Rs. 3,710,878,442). The analysis thereof is given in Note 20 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, its subsidiaries have sufficient resources to continue in operational existence for the foreseeable future. Therefore, financial statements of the Group have been prepared on the principle of a “Going Concerns”.

Report of the Board of Directors Contd.

Events Occurring After The Reporting DateThere are no significant events that have occurred after the reporting date which would have any material effect on the company or on the Group that require adjustments to or disclosure in the Financial Statements.

Appointment of AuditorsMessrs. KPMG (Chartered Accountants) who are willing to continue in office are recommended for re-appointment, at a remuneration to be decided by the Board of Directors.

The fees paid to Auditors are disclosed in Note 22 to the Financial Statements.

As far as the Directors are aware, the Auditors do not have any relationship (Other than the Audit of Financial Statement and Limited Assurance Engagement for Sustainability Report) 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. 7 of 2007.

For and on behalf of the Board

Chairman/Chief Executive Officer

Director/General Manager

By Order of the Board

SgdM & A Company Secretaries (Private) Limited

21st May 2013



Risk Management

1. Nawaloka Hospital Risk ManagementManaging the unexpected is an essential everyday concern in high-risk organizations, especially as a service organization in the healthcare sector. Consistent and thorough processes are the hallmark of Nawaloka Hospital’s successful risk management program.

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

Risk Management Committee - 32 Members

Medical -10 Financial - 04General

Operation - 06IT Steering - 04 Marketing - 04

Legal &Compliance - 04

Clinical risk Credit risk, Financial risk

Procurement risk, Technology risk, Assets risk,Human resources risk, Reputation risk & Operational risk

Information technology risk

Competitors risk

Legal & regulatory environment risk, Intellectual risk

Figure 1: Nawaloka Hospital Risk

Management Process

Risk Objectives

Identification & Prioritize Risk

Evaluate & Identification of

Solutions

Matching the Solution with the

identified risk

Implementation & Documentation

Analyse & Quantify the Risk

Communication

Monitoring & Control

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

The committee conducts monthly meeting to oversee and approve the risk management, internal compliance and control policies and practices of Nawaloka Hospital.

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

• Operational Risk• Financial Risk• Legal & Regulatory Environment Risk• Reputation Risk

3.1. Operational RiskNawaloka has identified operational risks as utmost important due to the nature of the business. Operational risks arise due to failure in the internal process, 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.


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Risk Management Contd.

3.1.1. Internal ProcessNawaloka ensures risk management in operations by maintaining proper internal control system and implementing prompt response to arising risks. Following are some of the standards in place to ensure internal processes risks have been reduced within a controlled environment.

• Designated Manager Head of System & Control who monitor and control the risk and internal controls on a daily basis, assists to identified failures within the process and prompt action to mitigate and reduce the risk.

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

• Audit trails have been conducted by the Internal Audit teams at scheduled times in appropriate manner. Hence, for (if any) red flags raised proper actions have been recommended and implemented.

• Offering precise and clear job responsibilities to employee at each level allows the hospital to adhere to standards and follow protocol in a highly vulnerable service organization. Any deviation will be monitored and immediate action has been taken .Employees have been reminded the job expectation periodically and continuous on the job and off the job training have been given.

3.1.2. ClinicalRisks associated with patient care are extremely important as a hospital . As a service organization in the healthcare sector, clinical risk management plays a crucial role in enabling Nawaloka Hospital to identify, contain and manage risks related to patient safety.

• Nawaloka has identified several key elements that influence the degree of clinical risk, namely - staff participation, safety culture, learning from incidents or errors, and education and training.

• The hospital provides a fully-fledged training program to both doctors and nurses. In addition, the program encourages to maintain good communication.

• Bio-medical instruments and equipments play a vital role in the hospital as well to the patient. Thereby, maintains and replaces the respective technological equipments on time.

• The hospital ensures to sign up service agreements with established, esteemed and reputed organizations only. Hence, abide by Nawaloka’s clinical service policies and procedures.

• Nawaloka serves as an ethical service organization in terms of drug suppliers. We make certain the suppliers practice high quality business standards, conforms to national and international guidelines along with recognised quality parameters.

3.1.3. PeopleManagement human resources and employee behaviour can become a major source of operation risk to the hospital. Risks range from potential of employees for negligence, conflict of interest, fraud, fraud and mismanagement or poorly trained employees.

• 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.

• Nawaloka offers and conducts comprehensive training programs to both in-house staff and external parties (non-core outsourced businesses). Non-core outsourced businesses features the security, cleaning, maintenance and businesses under service agreements.

• As a measure of monitoring the strengths and weaknesses of the training programs, performance appraisals are conducted every 3 months. Simultaneously, any ambiguity that highlights likelihoods of risks is been analysed, evaluated and revised through action plans.

3.1.4. IT SystemComplex designed or poorly implemented systems and processes can give rise to operational risks. This may result in hospital experiencing an array of problems including information security failures, fraud and processing errors. Further, the increase automation and adaptability to advances in technology has the potential to transform risks from minor manual processing errors to key systematic failures.

• Nawaloka Hospital has transformed all manual processes into computerised systems. The Enterprise Resource Planning (ERP) system of Nawaloka which undergoes constant updates and upgrades to ensure risks are minimum. The design and the implementation of the robust HIS platform specifically identifies all business processes and healthcare related risks.

• The hospital has taken measures for online and offline backup procedures for application data storage. In addition, make certain proper security has been



implemented through firewall and virus protection. Therefore, ensures zero losses of data during a system down time.

3.2. Financial RiskFinancial risks associated to Nawaloka Hospital are related to capital structure, project investments, asset utilization, credit quality of debtors and counterparts. Hence, raises the risk of the hospital’s ability to earn, raise or access capital. The following provides a brief of the risks involved and measures taken in liquidity risk, credit risk and asset risk.

3.2.1. Liquidity RiskLiquidity risk involves with the risk that funds potentially required for short term are unable to be redeemed or sold quickly enough. In addition, the risk 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.

• A dedicated team of experts, headed by Financial Controller, conducts daily cash flow analysis. The analysis provides a reliable, valuable perspective on hospital financial performance. Further, it assists to identify any shortfalls or surpluses, making smart investment planning decisions and daily cash flow activities. Thus, improves cash flow control and help ensure that cash flow concerns are dealt with effectively

• Imposing a proper debt collection policy hence prevents a build up of bad debts and debtors.

• Placement of proper authorization levels in order to control expenditures

3.2.2. Credit RiskCredit Risk occurs through the defaults of the debtors and other parties who obtain credit from Nawaloka Hospitals . The main objective is to reduce the impact of debtor’s defaults. Following are strict protocols adhered by the hospital in managing credit risks and debtors.

• It operates under a sound credit-granting process, which maintains an appropriate credit administration, measurement, and monitoring process. In addition, the hospital evaluates the credit worthiness of the companies prior to granting of credit. This enables to ensure that where it is granted, payment is obtained as quickly as possible.

• Hospital has established a noteworthy credit policy, which reduces the risk of bad debt, minimise the costs of granting credit and maintaining a good cash flow.

3.2.3. Asset RiskAsset Risk to an organization serves as a threat when an organization’s assets are vulnerable to theft, natural disaster or human error. By implementing precautionary measures enables to control and minimise asset risks.

• Acquiring appropriate insurance covers for identified risks provides a relief to the hospital in unavoidable circumstances such as breakdown or natural disasters

• Creating back-up of vital machinery, equipment components as well as documentation helps to reduce the cost of loss of information

3.3. Legal Risk Legal risks are raised in periods when the organizations have been non-compliant with the laws and regulations. The company has

taken respective measures and appropriate care to ensure 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, following are certain actions derived by the Risk Committee

• Ensure compliance with laws and regulations with legal advice.

• Minimise claims arising from litigations made by clients by providing proper and adequate services. This highlights reliability and credibility of the hospital.

3.4. Reputation RiskProminence majorly in any service organization, 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 a severe impact on shareholder value.

Non-compliance to the risks in above domains (operations, finance and legal), it will create a significant impact and raise the reputation risk of Nawaloka.

• Nawaloka Hospital has been well established for 28 years. As an esteemed service organization, understanding the vulnerability of saving lives and importance of medical technology, Nawaloka stands in the forefront of healthcare in the country.

• Maintaining strong relationships with stakeholders by building confidence and trust, ensuring operational efficiency, financial transparency and conformance to international best practices, Nawaloka Hospitals can live the vision of managing its prestigious reputation for years to come.


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Report of the Remuneration Committee

Formation, Composition and StructureThe Remuneration Committee is a sub - committee, appointed by and responsible to the Board of Directors, consists of Two Independent Non-Executive Directors and one Executive Director;

01 Deshabandu Tilak De Zoysa Chairman INED

02 Mr. Tissa Kumara Bandaranayake Director INED

03 Mr. S. Abeyratne Director INED

04 Prof. Lal G. Chandrasena Director ED

The Committee meetings held during the financial year subject to the following criteria’s;

Duties and ResponsibilitiesThe RC review and recommendthe 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 involving 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. Competitionb. Qualification and experiencec. Market informationd. Business performance

In declaring the overall remuneration policy of the Group

3. Recommending corporate management appointments to the board.

4. Approving remuneration levels at each designation of senior Management.

5. Maintain competitive and attractive remuneration packages to senior managers and ensure is in par with the industry levels.

6. Recommend promotion of key management personnel to BOD.

7. Deciding performance based remuneration, increments, incentive and Bonus with the regular evaluation of performance against targets.

8. Make direction regarding to the statutory payments made by the company on behalf of its employees.

ChallengesIn a highly competitive environment attracting and retaining high caliber 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.

Signed.Deshabandu Tilak De ZoysaChairman

21st May 2013



Audit Committee Report

In keeping with the Code of Best Practice on Corporate Governance and the requirements of the Securities and Exchange Commission for public limited Companies, Nawaloka Hospitals PLC has established an Audit Committee whose functions, authority and duties have been clearly identified in the Audit Committee Charter. This Charter integrates all the requirements of the Securities and Exchange Commission and Code of Best Practice on Corporate Governance.

The role of the Audit Committee to oversee the financial reporting system of the Company with a view to safeguarding the interests of all the stakeholders and ensuring that it has been extended to its subsidiaries. This includes selecting and applying appropriate Accounting policies for the purpose of Financial reporting, ensuring sound internal control principles and its effective implementation, ensuring the integrity of Financial Statements and maintaining an appropriate independent relationship with the Company’s Auditors.

Formation and Composition of the CommitteeThe Audit Committee was established by the Board with a formal and transparent arrangement and it comprises of four Independent Non-Executive Directors and one Non-Executive, Non-Independent Director.

The Chairman of the Audit Committee is Mr. Tissa. K. Bandaranayake, who is an Independent Non-Executive Director, a fellow member of the Institute of Chartered Accountants of Sri Lanka and a former Senior Partner of Messrs. Ernst and Young, Chartered Accountants with expert knowledge in Accounting and Finance.

Members of the Audit Committee

Name of Director Non Executive Independent

1. Mr. Tissa. K. Bandaranayake (Chairman) √ √

2. Mr. Rienzie T. Wijetilleke √ √

3. Deshabandu. Tilak De Zoysa √ √

4. Mr. S. Abeyratne √ √

Purpose of the Audit CommitteeThe Audit Committee assisted the Board in the following manner:• Ensuring that the preparation and presentation of and adequacy of disclosure in the Financial

Statements are in accordance with SLAS and with the requirements of the Companies Act No 07 of 2007 and other relevant Financial reporting related regulatory requirements.

• 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.

• 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.

• Overseeing of the independence and performance of the Company’s external Auditors.


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Duties and responsibilitiesIn brief, the duties & responsibilities performed by the Audit Committee are as follows:-

External Audit • Recommending the reappointment of Messrs. KPMG, Chartered Accountants, as Auditors of Nawaloka Hospitals PLC for the financial year ending 31 March 2014.

• Examine any non-audit work performed by the Auditors and the fees thereon to ensure that their objectivity and independence is not impaired.

• Reviewing the scope and result of the Audit and its effectiveness.

• 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 & Regulations and Company policies

• Reviewing and discussing with the Management and Auditors regarding Quarterly Financial Statements.

• Reviewing the extent of compliance with the laws of the country, governmental regulations, listing rules and established policies of the Company.

Internal controls and Internal Audit

• Reviewing the Internal Audit function and making recommendations.

• Ensuring that there are satisfactory arrangements for monitoring internal control in keeping with delegated authorities.

• 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.

• Monitoring the implementation of strategies, plans, as well as the manning of organization for internal auditing in line with the methodologies promulgated as best practices.

• Setting clear hiring policies for employees or former employees of the Auditors (without impairing audit independence) and other internal controls related to IT, HR, Finance, Marketing and Administration etc, and ensuring that these are soundly conceived and effectively administered to seek assurance that the control systems are in place, and operating efficiently and are regularly monitored.

Risk Management • Monitoring the policies and practices related to risk management.

• 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 • Ensuring proper standardized updated systems for financial reporting.

• Hold of meetings with the Head of Finance to ensure the proper controls and segregation of duties to minimize risks.

• Review Company’s quarterly unaudited and annual Audited Financial Statements and making recommendations to the Board for their release.

Audit Committee Report Contd.



Adoption of New/Revised Sri Lanka AccountingStandards

• It is mandatory for the company to comply with the requirements of new/revised Sri Lanka Accounting Standards (SLFRS/LKAS) with effect from January 01, 2012 and these standards require some changes to some of the accounting treatments and policies adopted by the company.

• The company appointed KPMG IFRS division as Consultants for the implementation of new/revised Sri Lanka Accounting Standards and Board Audit Committee regularly evaluated the proposals made by them and obtained approval from the Board of Directors for such proposals.

• The transition to the new/revised Accounting Standards and the impact of the same on company’s financial statements have been independently Validated by the External Auditors, KPMG during the year end audit.

MeetingsThe Audit Committee held four meetings during the year under review. The proceedings of the Audit Committee are regularly reported to the Board of Directors. The attendance of members for these meetings is given below:-

Name of Director Number of Meetings Attended Attendance Percentage.

Mr.Tissa . K. Bandaranayake 4 100%

Mr. Rienzie. T.Wijetilleke 3 75%

Mr.D.S.Abeyratna 3 75%

The Committee has provided the Chairman of the Audit Committee with all powers to convene regular meetings with the Financial Controller, Internal Audit, Sectional Heads and Company’s external Auditors, separately and periodically.

External AuditorsThe Audit Committee upholds the view that any services which are provided in addition to the scope of the statutory Audit provided by Messrs KPMG, have not impaired the independence of the Auditors in accordance with the regulations and recommendations of the Institute of Chartered Accountants of Sri Lanka.

Evaluation of the Effectiveness of the CommitteeThe Board reviews and updates the Committee Charter annually according to the changes in business operations of the organization. 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.

Adoption of New SLFRS/LKAS, Accounting Policies and Changes During the YearDuring the year Company has adopted the new SLFRS/LKAS and the accounting policies used in preparation of Financial Statements of the Company and the Group are given at pages 98 to 105 of the Annual Report as required by Section 168 (1) (d) of the Companies Act. There has been no change in the accounting policies adopted by the Company and Group during the period under review other than disclosed.

SignedMr.Tissa . K. BandaranayakeChairmen Audit Committee

21st May 2013

FinancialReports

Directors’ Responsibility for Financial Reporting 90 Independent Auditor’s Report 91 Statement of Financial Position 92 Statement of Comprehensive Income 94 Statement of Changes in Equity 95 Cash Flow Statement 96 Notes to the Financial Statements 98

Financial Calendar

2010/2011 2012/2013

2011/2012 2013/2014

1st quarter results released on 5th August 20102nd quarter results released on 15th November 2010 3rd quarter results released on 8th February 2011 4th quarter results released on 15th May 2011 Annual Report for 2010/11-June 2011Annual General meeting - 28th June 2011

1st quarter results – 31st July 20122nd quarter results -07th November 2012 3rd quarter results – 14th February 2013 4th quarter results - 30th May 2013 Annual Report for 2012/13-June 2013Annual General meeting - 28th June 2013

1st quarter results released on 10th August 20112nd quarter results released on 14th November 2011 3rd quarter results released on 10th February 2012 4th quarter results released on 25th May 2012 Annual Report for 2011/12-June 2012Annual General meeting - 28th June 2012

1st quarter results - August 20132nd quarter results -November 2013 3rd quarter results - February 2014 4th quarter results - May 2014 Annual Report for 2013/14 - June 2014Annual General meeting - June 2014


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Directors’ Responsibility for Financial Reporting

The responsibility of the Directors in relation to the Financial Statements is set out in the following statement.

The Board of Directors of Nawaloka Hospitals PLC are responsible under Section 148 of the Companies Act No. 7 of 2007 for keeping proper accounting records which disclose 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. 7 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. 7 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 Balance Sheet date and the Profit or Loss for the year ending on that Balance Sheet date.

Accordingly, the Directors confirm 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 21st May 2013 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. 7 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 Committee. The Report of the Audit Committee is at pages 85 to 87 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 Balance Sheet date, have been paid or where necessary provided for, in arriving at the financial results for the year under review.

By order of the Board

SignedM & A Company Secretaries (Private) Limited

21st May 2013



Independent Auditor’s 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 (“the Group”), which comprise the statements of financial position as at March 31, 2013, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information set out on pages 92 to 128 of the annual report.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Scope of Audit and Basis of OpinionOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.

Opinion- CompanyIn our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended March 31, 2013 and the financial statements give a true and fair view of the financial position of the Company as

at March 31, 2013, and of its financial performance and its cash flow for the year then ended in accordance with Sri Lanka Accounting Standards.

Opinion-GroupIn our opinion, the consolidated financial statements give a true and fair view of the financial position of the Company and its subsidiaries dealt with thereby as at March 31, 2013, and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory RequirementsThese financial statements also comply with the requirements of Sections 153(2) to 153(7) of the Companies Act No. 07 of 2007.

Chartered Accountants

Colombo.21st May 2013


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Group CompanyAs At 31st March 2013 2012 01.04.2011 2013 2012 01.04.2011 Rs. Rs. Rs. Rs. Rs. Rs.

AssetsNon Current AssetsProperty, Plant and Equipment 2 4,000,580,617 3,703,343,671 3,458,065,196 1,665,510,454 1,450,825,003 1,115,632,729Leasehold Right Over Land 3 233,758,457 236,693,614 239,628,771 51,296,258 52,189,226 53,082,194Investment in Subsidiaries 4 - - - 945,933,056 945,933,056 945,933,056Investment in Equity Accounted Investees 5 - - - - - 14,000,000Investment in Joint Venture 6 - - - 2,500,000 2,500,000 2,500,000Advance for Land 7 827,416,494 765,480,482 703,888,953 - - -Total Non Current Assets 5,061,755,568 4,705,517,767 4,401,582,920 2,665,239,768 2,451,447,285 2,131,147,979

Current AssetsInventories 8 257,825,351 182,159,380 164,318,968 74,824,110 52,600,240 45,495,131Trade and Other Receivables 9 256,492,156 229,400,740 178,117,010 163,898,586 158,975,531 117,505,192Deposits and Advances 121,307,602 135,907,956 100,418,649 86,399,860 107,742,956 51,983,330Current Tax Receivable 18 - - - - 6,365,175 444,855Receivable from Related Parties 10 6,356,063 6,775,211 19,736,244 344,056,102 393,141,441 446,519,565Cash at Banks and in Hand 151,571,655 102,632,849 24,298,372 69,254,611 35,717,876 9,968,644Total Current Assets 793,552,827 656,876,136 486,889,243 738,433,269 754,543,219 671,916,717

Total Assets 5,855,308,395 5,362,393,903 4,888,472,163 3,403,673,037 3,205,990,504 2,803,064,696

Equity and LiabilitiesCapital and ReservesStated Capital 11 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876Revaluation Reserve 12 990,872,361 763,760,190 763,760,190 - - -Retained Earnings 1,583,077,113 1,199,293,114 999,081,831 476,168,261 288,788,146 206,900,328Total Equity 3,781,338,350 3,170,442,180 2,970,230,897 1,683,557,137 1,496,177,022 1,414,289,204

Non Current LiabilitiesEmployee Benifits 13 110,467,298 113,817,121 94,976,998 103,564,313 110,070,203 93,632,020Deferred Tax Liability 14 172,210,905 295,198,826 236,760,074 82,034,566 101,053,179 61,281,837Borrowings falling due after one year 15 532,608,319 504,163,718 314,043,228 152,098,309 182,068,060 136,909,572Finance Leases Payable after one year 16 132,000,000 140,000,000 148,000,000 - - -Total Non Current Liabilities 947,286,522 1,053,179,665 793,780,300 337,697,188 393,191,442 291,823,429

Statement of Financial Position



Group CompanyAs At 31st March 2013 2012 01.04.2011 2013 2012 01.04.2011 Rs. Rs. Rs. Rs. Rs. Rs.

Current LiabilitiesTrade and Other Payables 17 295,317,475 378,265,343 381,639,376 258,933,507 332,993,569 313,088,783Advances and Refundable Deposits 5,247,010 42,137,536 14,210,309 5,247,005 36,380,133 7,863,649Unclaimed Dividends 1,917,647 1,511,036 1,149,105 1,917,647 1,511,025 1,149,105Current Tax Liabilities 18 25,140,764 1,982,491 16,312,847 1,537,498 - -Payable to Related Parties 19 29,342,160 31,707,800 83,902,543 549,383,136 455,685,199 307,472,378Borrowings falling due within one year 15 285,008,149 244,564,853 213,821,527 139,450,029 114,194,864 142,334,858Finance Leases Payable within one year 16 8,000,000 8,000,000 8,000,000 - - -Bank Overdrafts 476,710,318 430,602,999 405,425,259 425,949,890 375,857,250 325,043,290Total Current Liabilities 1,126,683,523 1,138,772,057 1,124,460,966 1,382,418,712 1,316,622,040 1,096,952,063

Total Liabilities 2,073,970,045 2,191,951,722 1,918,241,266 1,720,115,900 1,709,813,482 1,388,775,492

Total Equity and Liabilities 5,855,308,395 5,362,393,903 4,888,472,163 3,403,673,037 3,205,990,504 2,803,064,696

Net Assets Per Share 2.68 2.25 2.11 1.19 1.06 1.00

Notes form an integral part of these Financial Statements.Figures in brackets indicate deduction.

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.

Head of Finance

The Board of Directors is responsible for the preparation and presentation of these Financial Statements.Approved and signed for and on behalf of the Board of Directors;

Chairman/ Chief Executive Officer Director

Colombo21st May 2013


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Statement of Comprehensive Income

Group CompanyFor the Year Ended 31 March 2013 2012 2013 2012 Rs. Rs. Rs. Rs.

Revenue 20 4,222,907,733 3,710,878,442 2,082,532,459 1,806,857,492

Cost of Services (2,013,392,367) (1,823,670,511) (988,218,793) (876,040,195)

Gross Profit 2,209,515,366 1,887,207,931 1,094,313,666 930,817,297

Other Income 21 44,047,999 30,210,657 116,017,261 124,673,860

Staff Costs (865,042,371) (717,949,353) (476,222,141) (435,618,402)

Administrative Expenses (754,615,074) (723,871,776) (389,336,300) (377,621,826)

Other Operating Expenses (37,548,516) (16,568,929) (33,975,788) (15,433,727)

Profit from Operations 22 596,357,404 459,028,530 310,796,698 226,817,202

Finance Costs 23 (144,321,612) (109,523,910) (53,481,864) (30,061,074)Profit / (Loss) on Disposal of Equity Accounted Investee 5.2 - 12,600,000 - (1,400,000)Profit before Tax 452,035,792 362,104,620 257,314,834 195,356,128

Income Tax Expense 24 2,223,487 (91,418,057) 540,562 (42,993,030)

Profit for the year 454,259,279 270,686,563 257,855,395 152,363,098

Other Comprehensive IncomeRevaluation of Property Plant and Equipments 12 155,303,109 - - -

Tax on other comprehensive income 24.2 (5,197,331) - - -

Other comprehensive income/(loss) for the year, net of tax 150,105,778 - - -

Total comprehensive income for the year 604,365,056 270,686,563 257,855,395 152,363,098

Net Profit Attributable to Equity Holders of the Company 604,365,056 270,686,563 257,855,395 152,363,098

Earnings Per Share 25 0.32 0.19 0.18 0.11

Notes form an integral part of these Financial Statements.Figures in brackets indicate deductions.



Statement of Changes in Equity

For the Year Ended 31 March 2013 Stated Revaluation Retained Total Capital Reserve Earnings Equity Rs. Rs. Rs. Rs.

GroupBalance as at 01 April 2011 1,207,388,876 763,760,190 999,081,831 2,970,230,897

Profit for the year - - 270,686,563 270,686,563

Transactions with owners of the company , recognized directly in equityDividend Paid - - (70,475,280) (70,475,280)Balance as at 31 March 2012 1,207,388,876 763,760,190 1,199,293,114 3,170,442,180


Other comprehensive income/(loss) for the year - 150,105,778 - 150,105,778

Transactions with owners of the company , recognized directly in equityDividend Paid - - (70,475,280) (70,475,280)

Reversal of Deferred Tax Due to decrease in Tax Rate - 77,006,393 - 77,006,393

Balance as at 31 March 2013 1,207,388,876 990,872,361 1,583,077,113 3,781,338,350

CompanyBalance as at 01 April 2011 1,207,388,876 - 206,900,328 1,414,289,204

Profit for the year 2011/12 - - 152,363,098 152,363,098

Transactions with owners of the company , recognized directly in equityDividend Paid during the year - - (70,475,280) (70,475,280)

Balance as at 31 March 2012 1,207,388,876 - 288,788,146 1,496,177,022


Transactions with owners of the company , recognized directly in equityDividend Paid - - (70,475,280) (70,475,280)

Balance as at 31 March 2013 1,207,388,876 - 476,168,261 1,683,557,137



96

Cash Flow Statement


Cash flows from Operating ActivitiesProfit before Taxation 452,035,792 362,104,620 257,314,834 195,356,128

Adjustments for :Depreciation & Amortisation 295,481,605 277,126,192 193,079,445 155,131,276Finance Cost 144,321,612 109,523,910 53,481,864 30,061,074Interest Income (12,666,164) (474,820) (3,206,698) (148,956)Provision for Retiring Gratuity 33,033,699 29,967,601 29,744,270 27,549,878Provision for Bad & Doubtful Debts 16,844,705 (2,855,707) 14,141,543 (1,407,673)Profit on Sale of Shares in Associate - (12,600,000) - 1,400,000Profit on disposal of Property, Plant & Equipment (3,727,838) (947,616) (3,727,838) -Operating Profit before Working Capital Changes 925,323,411 761,844,180 540,827,420 407,941,727

Changes in Working Capital Increase in Inventories (75,665,972) (17,840,413) (22,223,870) (7,105,109)Increase in Debtors, Deposits & Advances (29,335,765) (83,917,330) 20,755,985 (95,822,293)Increase/Decrease in Related Party Balances (1,946,492) (39,233,710) 142,783,276 201,590,946Decrease in Creditors & Other Payables (119,431,785) 24,915,127 (123,264,622) 48,783,191 (226,380,014) (116,076,326) 18,050,768 147,446,735

Cash Generated from Operating Activities 698,943,398 645,767,854 558,878,189 555,388,461Interest Paid (144,321,612) (109,523,910) (53,481,864) (30,061,074)Gratuity Paid (36,383,522) (11,127,478) (36,250,160) (11,111,695)Income Tax Paid (25,797,098) (47,309,661) (10,574,812) (9,142,008)Net cash Generated from Operating Activities 492,441,165 477,806,805 458,571,353 505,073,684

Cash flows from Investing ActivitiesPurchase of Property, Plant & Equipment (448,152,446) (519,469,510) (420,544,090) (489,430,583)Investment in Land (61,936,012) (61,591,529) - -Net Proceeds from Sale of Shares - 12,600,000 - 12,600,000Proceeds from Disposal of Property, Plant & Equipment 17,400,000 947,616 17,400,000 -Net cash Used in Investing Activities (492,688,458) (567,513,423) (403,144,090) (476,830,583)




Cash flows from Financing ActivitiesLong Term Borrowings and Leases Obtain During the Year 348,593,867 439,363,768 126,593,867 117,561,768Repayments of Long Term Borrowings and Leases (287,705,971) (226,499,953) (131,308,452) (100,543,274)Interest Received 12,666,164 474,820 3,206,698 148,956Dividends Paid (70,475,280) (70,475,280) (70,475,280) (70,475,280)Net cash (Used in) / Generated from Financing Activities 3,078,780 142,863,355 (71,983,167) (53,307,830)

Net Increase/(Decrease) inCash & Cash equivalents during the year 2,831,487 53,156,737 (16,555,906) (25,064,728)Cash & Cash equivalents at the beginning of the year (327,970,150) (381,126,887) (340,139,374) (315,074,646)Cash and Cash equivalents at the end of the year (325,138,663) (327,970,150) (356,695,279) (340,139,374)Analysis of Cash and Cash equivalents at the end of the yearCash at Bank & in Hand 151,571,655 102,632,849 69,254,611 35,717,876Bank Overdraft (476,710,318) (430,602,999) (425,949,890) (375,857,250) (325,138,663) (327,970,150) (356,695,279) (340,139,374)



98

Notes to the Financial Statements

1.1 Reporting Entity1.1.1 Domicile and Legal Forma). 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 7 of 2007. The Company does not have an identifiable parent of its own.

b). New Nawaloka Hospitals (Pvt) Limited 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 7 of 2007. The ultimate parent of the company is Nawaloka Hospitals PLC.

c). New Nawaloka Medical Centre (Pvt) Limited 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 7 of 2007. The ultimate parent of the company is Nawaloka Hospitals PLC.

d). Nawaloka Metropolis Laboratories (Pvt) Limited 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 7 of 2007, which a 50:50 Joint venture investment between Nawaloka Hospitals PLC and Metropolis Health Services (India) Private Limited.

The “Company”, in the Financial Statement, refers to Nawaloka Hospitals PLC and “Group” refers to the Company and all its subsidiaries and joint venture, whose financial statements have been consolidated.

1.1.2 Total Number of employees

Company 952 (2012 – 1,184)

Group 2,044 (2012 – 1,945)

1.1.3 Principle Activities and Nature of Operations

The principle activity of the Company and the group is to provide health and laboratory services. There were no significant changes in the nature of principal activities of the Company and the Group during the financial year under review.

1.2 Basis of Preparation1.2.1 Statement of ComplianceThe Consolidated Financial Statements of Nawaloka Hospitals PLC and it’s subsidiaries have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRSs / LKASs) laid down by the Institute of Chartered Accountants of Sri Lanka (ICASL) and requirements of the Companies Act No. 7 of 2007.

These are the Group’s first consolidated financial statements which have been prepared in accordance with SLFRSs / LKASs and SLFRS - 1 First-time Adoption of Sri Lanka Accounting Standards have been applied.

An explanation how the transition has effected the reported financial position, financial performance of the company / group is provided in note no 32.

The Financial Statements of the Group, which comprise the Statement of Financial Position, and the Statements of Comprehensive Income, Other Comprehensive Income, Changes in Equity and Cash Flows together with Accounting Policies and Notes to the Financial Statements have been prepared in accordance with Sri Lanka Accounting Standards applicable for periods beginning on or after 1 January 2012.

For all periods up to and including the 12 month period ended 31 March 2012, the Group prepared its financial statements in accordance with the previous Sri Lanka Accounting Standards (SLAS). These financial statements for the year ended 31 March 2013 are the first the Group has prepared in accordance with new Sri Lanka Accounting Standards as applicable for periods beginning on or after 1 January 2012 (SLFRS/LKAS).

The financial statements were approved by the Board of Directors on 21st May 2013.

1.2.2 Basis of MeasurementThe Financial Statements of the Group, which comprise the Statement of Financial Position, and the Statements of Comprehensive Income, Other Comprehensive Income, Changes in Equity and Cash Flows have been prepared on the basis that the group and company are going concerns and The financial statements have been prepared on a historical cost basis, except for following:

• Buildingsonleaseholdland• Definedbenefitobligations

1.2.3 Functional and presentation currencyThese consolidated financial statements are presented in Sri Lankan rupees, which is Company’s functional currency. All financial information presented in rupees has been rounded to the nearest rupee.

1.2.4 Comparative InformationThe Financial Statements for the comparative periods comprise results for the twelve month periods from 1 April 2010 to 31 March 2011 and 1 April 2011 to 31 March 2012. In this circumstance, the comparative information for the Statement of Financial Position, Statement of Comprehensive income, Statement of Other Comprehensive



Income, Statement of Changes in Equity and Cash Flow Statement and related notes are comparable with the current period.

1.2.5 Significant accounting Judgments, Estimates and Assumptions

The preparation of Financial Statements in conformity with LKAS/SLFRS requires management to make judgments, estimates and assumption that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and the disclosure of contingent liabilities. However, uncertainty about these assumptions and estimates could results in outcomes that require material adjustment to the carrying amounts of the assets or liabilities affected in future periods.

1.2.5.1 Going concernThe companies’ 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, management is not aware of any material uncertainties that may cast significant doubt upon the companies’ ability to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis.

1.2.5.2 Deferred taxDeferred tax are recognised in respect of tax profits to the extent that it is probable that future taxable losses will be available against which the profit can be utilised. Judgement is required to determine the amount of deferred tax liabilities that can be recognised, based upon the likely timing and level of future taxable profits, together with future tax planning strategies.

1.2.5.3 Defined Benefit PlanThe cost of the defined benefit pension plan is determined using an actuarial valuation. The actuarial valuation involves making assumptions on discount rates, future salary increases, mortality rates and future pension increases. All assumptions are reviewed at each reporting date. Due to the long–term nature of these plans, such estimates are subject to significant uncertainty. See Note 13 for the assumptions used.

1.2.5.4 Materiality and aggregationEach material class of similar items is presented in aggregate in the Financial Statements. Items of dissimilar nature or function are presented separately unless they are immaterial.

Significant Accounting PoliciesThe 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 entities.

1.3. Basis of ConsolidationThe consolidated financial statements are prepared on the historical cost basis and unless otherwise stated the accounting policies have been consistently applied by the Group enterprises. Intra group balances and transactions, and any unrealized gains arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Acquisitions on or after 1 January 2012For acquisitions on or after 1 January 2012, the Group measures goodwill as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally

fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date.

Acquisitions prior to 1 January 2012As part of its transition to SLFRSs, the Group elected not to restate those business combinations that occurred on or before 1 January 2012. In respect of acquisitions prior to 1 January 2012, goodwill represents the amount recognised under the Group’s previous Sri Lanka Accounting Standards.

1.3.1 SubsidiariesSubsidiaries are those enterprises controlled by the Company. Control exists when the company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases. The consolidated accounts are prepared to a common financial year end of 31st March.

1.3.2 Joint VenturesEnterprises in which the group has joint control over the financial and operating policies are termed joint ventures. The Group's interest in jointly controlled entities is accounted for on a proportionate consolidate basis. The Group's share of the assets and liabilities of the entities are included in the consolidated balance sheet and the Group's share of their profits and losses are included in the statement of comprehensive income.


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Notes to the Financial Statements Contd.

1.4 Foreign Currency TranslationThe Financial Statements of the Group are presented in Sri Lanka Rupees, which is the functional and presentation currency of the Group. Transactions in foreign currencies are initially 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 Statement of Financial Position date. All differences are taken to the Statement of Comprehensive Income. 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 in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

1.5 Assets and Bases of their Valuation1.5.1 Property, Plant and Equipment-Owned

assets1.5.1.1 Property, Plant, and Equipment are stated at cost or valuation less accumulated depreciation and any accumulated impairment losses where items of Property, Plant and Equipment are subsequently revalued, any increase in the carrying amount are credited to revaluation reserve through other comprehensive income Decreases that off set previous increases of the same asset are charged against the revaluation reserve directly in equity. Any excess and all other decreases are charged to the statement of comprehensive income. Revaluation of Property, Plant and Equipment are undertaken by professionally qualified valuers.

Revaluation model is applied for Buildings owned by the company and the Board has decided to revalue the said Building every 3-5 years thereafter

to comply with requirement of Revaluation Model under the Sri Lanka Accounting Standard 16 “Property Plant and Equipment".

Property, plant and equipment other than the Buildings on leasehold land are recorded at cost less accumulated depreciation and impairment losses, in accordance with the "Cost Model" as set out in LKAS 16 - "Property, Plant and Equipment".

1.5.1.2 The cost of an item of Property, Plant and Equipment comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use.

1.5.1.3 Expenditure incurred for the purpose of acquiring, extending or improving assets of a permanent nature by means of which to carry on the business or to increase the earning of the business has been treated as capital expenditure.

1.5.1.4 Depreciation is provided on the straight line method at the following rates per annum, so as to write-off the cost or revaluation of the assets over its effective useful life:

1.5.1.5 The useful life, depreciating methods and residual values are assessed annually or in an earlier date where any circumstance indicates such assessment is required.

RateApplicable

Rate up to2011

Leasehold Property Over the lease period

Over the lease period

Buildings leasehold land



Fixtures & Fittings 10% 5%

Plant & Machinery 20% 10%

RateApplicable

Rate up to2011

Hospital Equipments

10% 10%

Medical Equipments

10% 10%

Motor Vehicles 20% 20%

Furniture and Fittings

10% 5%

Computer Equipments

25% 15%

Depreciation is provided from the date of purchase up to the date of disposal.

1.5.2 Property, Plant and Equipment-Leased assets

Property, plant and equipment on finance leases, which effectively transfer to the Company substantially all the risk and benefits incidental to ownership of the leased items, are capitalised and disclosed as finance leases at their cash price and depreciated over the period the Group is expected to benefit from the use of the leased assets.

The corresponding principal amount payable to the lessor is shown as a liability. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the outstanding 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.

1.5.3 Leasehold Right over LandLeasehold right over land are amortized over the lease term in accordance with the pattern of benefits provided.

1.5.4 Investments1.5.4.1 Long Term InvestmentsIn 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 recognize 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.

1.5.5 InventoriesInventories have been valued at lower of cost and net realizable value after making due allowing for obsolete items. The First in First out (FIFO) basis is adopted to arrive at the cost of inventories.

1.5.6 Financial Instrumentsi) Financial AssetsInitial RecognitionThe Company and the Group initially recognises loans and receivables on the date that they are originated. All other financial assets are recognised initially on the trade date, which is the date that the Company and the Group becomes a party to the contractual provisions of the instrument.

The Company and the Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the Company and the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company and the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

The Company and the Group only holds financial assets, that are categorized in to the ‘loans and receivables’ classification.

Loans and receivablesLoans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses.

Loans and receivables comprise cash and cash equivalents, and trade and other receivables.

ii) Financial liabilitiesThe Company and the Group initially recognises subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the transaction date, which is the date that the Company and the Group becomes a party to the contractual provisions of the instrument.

The Company and the Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

The Company and the 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, 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.


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1.5.7 Impairment(i) Non-derivative financial assetsFinancial assets classified as ‘loans and receivables’ are assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Company and the Group on terms that the Company and the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security.

Financial assets measured at amortised costThe Company and the Group considers evidence of impairment for financial assets measured at amortised cost (loans and receivables and held-to-maturity financial assets) on specific assets. Accordingly, all individually significant assets are assessed for specific impairment.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables or held-to-maturity investment

securities. Interest on the impaired asset continues to be recognised. When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

(ii) Non-financial assetsThe carrying amounts of the Company’s and the Group’s non-financial assets, other than inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, 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 time value of money and the risks specific to 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.

1.5.8 Cash and Cash EquivalentsCash and Cash Equivalents are defined as cash-in-hand, deposits held at call with the banks net of bank overdraft, short term highly liquid investments, and readily convertible loan amounts subject to insignificant risk of changes in value.

For the purpose of the cash flow statement, cash and cash equivalents comprise of cash in hand, deposits held in banks and investments in money market instruments, net of short-term loans and bank overdrafts.

1.5.9 Borrowing CostsBorrowing 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 and 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.

1.6. Liabilities and Provisions1.6.1 Liabilities1.6.1.1 Liabilities classified as Current Liabilities in the statement of financial position are those, which will fall due for payment on demand or within one year from the reporting date.



1.6.1.2 Liabilities classified as Non Current Liabilities in the statement of financial position are those, which will fall due for payment after one year from the reporting date.

1.6.2 ProvisionsProvisions are recognised when the Company has a legal or constructive obligation as a result of past events and it is probable that an outflow of economic benefits will be required to settle the obligation.

1.6.3 Employee Benefits1.6.3.1 Defined Benefit Plan - GratuityA defined benefit plan is a post employment benefit plan other than a defined contribution plan. The Group is liable to pay gratuity in terms of the Payment of Gratuity Act No 12 of 1983.Gratuity liability was computed from the first year of service for all employees in conformity with Sri Lanka Accounting Standards 19 - Employee Benefit. However, under the Payment of Gratuity Act No. 12 of 1983, the liability to an employee arises only on completion of five years of continual service.

The liability recognized 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 Method (PUC) as recommended by LKAS-19, (Employees benefits).

The assumptions based on which the results of the actuarial valuation was determined, are included in Note 13 to the financial statements.

1.6.3.2 Defined Contribution Plan – Employees’ Provident Fund and Employees’ Trust Fund

A defined contribution plan 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 recognized as an expense in the statement of comprehensive income when incurred.

1.7 Statement of Comprehensive Income1.7.1 Revenue RecognitionRevenue is recognized 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 recognized at the point of delivering the service. However, the professional fees of medical specialists which are collected by the Group do not form part of revenue are excluded from the revenue.

1.7.2 Other IncomeOther Income Comprises Gain on disposal of property, plant and equipments, 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 the ex-dividend date.

Interest Income and rental income are accounted on accrued basis in the Statement of Comprehensive income.

1.7.3 ExpenditureAll expenditure incurred in the running of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to revenue in arriving at the profit/Loss for the year.

1.7.4 Income Tax Expenses1.7.4.1 Current TaxationCompany’s tax expense are 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% (2011/12 -28%) on the taxable profits.

b) New Nawaloka Hospitals (Pvt) Limited is taxed at 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 in to with the Board of Investment (BOI) of Sri Lanka.


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d) Nawaloka Metropolis Laboratories (Pvt) Limited (“Joint Venture”) is liable for taxation at the rate of 12% (2011/12-28%).

e) Income on other sources is liable for taxation at the rate of 28% (2011/12 -28%).

1.7.4.2 Deferred TaxDeferred taxation is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted by the reporting date.

Deferred tax liabilities are not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects both accounting nor taxable profit and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.

Deferred tax assets, including those related to temporary tax effects of income tax losses and credits available to be carried forward are recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax relating to items recognised directly in equity is recognised in equity.

1.7.4.3 Withholding Tax on Dividends Distributed by Subsidiaries and Joint Venture Company

Dividend distributed out of taxable profit of the Subsidiaries and Joint Venture Company attracts a 10% deduction at source and is not available for set off against the tax liability of the Company. Thus, the withholding tax deducted at source is added to the tax expense of the Subsidiary companies and Joint Venture Company in the Group financial statements as a consolidation adjustment.

1.8. Contingent Liabilities and Contingent Assets

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company and the Group or a present obligation that is not recognized 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 recognized because it cannot be measured reliably. The Company and the Group does not recognize 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 recognize contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain. In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assumed are measured initially at their fair value at the acquisition date, irrespective of the extent of any minority interest.



1.9. Events after the reporting dateAll material and important events which occur after the reporting date have been considered and disclosed in Note No. 30.

1.10. Segmental InformationA segment is a distinguishable component of an enterprise that is engaged in either providing products or services (Business segment) or in providing products or services within a particular economic environment (Geographical segment), which is subject to risk and rewards that are different from those of other segments.

However, there are no distinguishable components to be identified as segments for the Group.

1.11. Cash Flow Statement1.10.1 The Cash Flow Statement has been prepared using the indirect method in accordance with Sri Lanka Accounting Standard 7 - Cash Flow Statements. 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.

1.10.2 Interest paid is classified as operating cash flows, while interest received is classified as investing cash flows, for the purpose of presentation of the Cash Flow Statement, reported based on the indirect method.

1.12. Directors' Responsibility StatementThe Board of Directors is responsible for the preparation and presentation of Financial Statements.


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2. Property, Plant and EquipmentGROUP Buildings Leasehold Freehold Constructed on Work In Fixture & Plant & Motor Leasehold Hospital Medical Medical Computer Furniture Land Leasehold Land Progress Fittings Machinery Vehicles Vehicles Equipment Equipment Equipment Equipment Fittings Total Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Cost / ValuationsBalance as at 01/04/2011 - 2,402,364,285 - 204,314,364 54,001,945 219,535,114 4,200,000 176,402,782 1,727,894,839 67,282,122 50,367,834 36,014,647 4,942,377,932Additions - 8,240,000 - 9,641,049 - 26,663,810 - 39,353,661 416,113,757 - 12,066,555 7,390,678 519,469,510Transfers - - - - - 4,200,000 (4,200,000) - 67,282,122 (67,282,122) - - -Disposal - - - - - (6,635,000) - - - - - - (6,635,000)Balance as at 31/03/2012 - 2,410,604,285 - 213,955,413 54,001,945 243,763,924 - 215,756,443 2,211,290,718 - 62,434,389 43,405,325 5,455,212,442

Balance as at 01/04/2012 - 2,410,604,285 - 213,955,413 54,001,945 243,763,924 - 215,756,443 2,211,290,718 - 62,434,389 43,405,325 5,455,212,442Additions 42,188,000 32,788,677 112,336 16,908,915 - 1,031,165 - 20,900,148 306,507,171 - 14,331,117 13,384,918 448,152,446Revaluation - 155,303,109 - - - - - - - - - - 155,303,109Transfers - - - - - - - - - - - - Disposal - - - - - (40,796,180) - - - - - - (40,796,180)Balance as at 31/03/2013 42,188,000 2,598,696,071 112,336 230,864,327 54,001,945 203,998,909 - 236,656,591 2,517,797,889 - 76,765,506 56,790,243 6,017,871,817

Accumulated DepreciationBalance as at 01/04/2011 - 62,798,103 - 85,324,925 22,823,333 89,629,447 4,200,000 97,460,340 1,039,555,442 43,164,480 31,369,128 7,987,538 1,484,312,736Charge for the year - 31,260,284 - 30,570,904 15,610,700 35,279,997 - 11,893,707 132,543,277 - 11,060,482 5,971,684 274,191,035Transfers - - - - - 4,200,000 (4,200,000) - 43,164,480 (43,164,480) - - -Disposals - - - - - (6,635,000) - - - - - - (6,635,000)Balance as at 31/03/2012 - 94,058,387 - 115,895,829 38,434,033 122,474,444 - 109,354,047 1,215,263,199 - 42,429,610 13,959,222 1,751,868,771

Balance as at 01/04/2012 - 94,058,387 - 115,895,829 38,434,033 122,474,444 - 109,354,047 1,215,263,199 - 42,429,610 13,959,222 1,751,868,770Charge for the year - 31,623,387 - 16,750,604 15,567,911 36,938,820 - 14,353,775 162,935,114 - 8,738,646 5,643,788 292,552,044Transfers - - - - - (27,129,614) - - - - - - (27,129,614)Disposals - - - - - - - - - - - - -Balance as at 31/03/2013 - 125,681,774 - 132,646,433 54,001,944 132,283,650 - 123,707,822 1,378,198,312 - 51,168,255 19,603,009 2,017,291,200

Written Down ValueAs at 31/03/2013 42,188,000 2,473,014,297 112,336 98,217,895 - 71,715,259 - 112,948,769 1,139,599,577 - 25,597,250 37,187,234 4,000,580,617

As at 31/03/2012 - 2,316,545,898 - 98,059,584 15,567,912 121,289,480 - 106,402,396 996,027,519 - 20,004,780 29,446,103 3,703,343,671

As at 01/04/2011 - 2,339,566,182 - 118,989,439 31,178,612 129,905,667 - 78,942,442 688,339,397 24,117,642 18,998,706 28,027,109 3,458,065,196

Notes to the Financial Statements Contd.As At 31St March 2013

2.1 (a) The buildings constructed on leasehold lands of the group were revalued at Rs. 2598.6 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. Property, Plant and EquipmentGROUP Buildings Leasehold Freehold Constructed on Work In Fixture & Plant & Motor Leasehold Hospital Medical Medical Computer Furniture Land Leasehold Land Progress Fittings Machinery Vehicles Vehicles Equipment Equipment Equipment Equipment Fittings Total Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Cost / ValuationsBalance as at 01/04/2011 - 2,402,364,285 - 204,314,364 54,001,945 219,535,114 4,200,000 176,402,782 1,727,894,839 67,282,122 50,367,834 36,014,647 4,942,377,932Additions - 8,240,000 - 9,641,049 - 26,663,810 - 39,353,661 416,113,757 - 12,066,555 7,390,678 519,469,510Transfers - - - - - 4,200,000 (4,200,000) - 67,282,122 (67,282,122) - - -Disposal - - - - - (6,635,000) - - - - - - (6,635,000)Balance as at 31/03/2012 - 2,410,604,285 - 213,955,413 54,001,945 243,763,924 - 215,756,443 2,211,290,718 - 62,434,389 43,405,325 5,455,212,442

Balance as at 01/04/2012 - 2,410,604,285 - 213,955,413 54,001,945 243,763,924 - 215,756,443 2,211,290,718 - 62,434,389 43,405,325 5,455,212,442Additions 42,188,000 32,788,677 112,336 16,908,915 - 1,031,165 - 20,900,148 306,507,171 - 14,331,117 13,384,918 448,152,446Revaluation - 155,303,109 - - - - - - - - - - 155,303,109Transfers - - - - - - - - - - - - Disposal - - - - - (40,796,180) - - - - - - (40,796,180)Balance as at 31/03/2013 42,188,000 2,598,696,071 112,336 230,864,327 54,001,945 203,998,909 - 236,656,591 2,517,797,889 - 76,765,506 56,790,243 6,017,871,817

Accumulated DepreciationBalance as at 01/04/2011 - 62,798,103 - 85,324,925 22,823,333 89,629,447 4,200,000 97,460,340 1,039,555,442 43,164,480 31,369,128 7,987,538 1,484,312,736Charge for the year - 31,260,284 - 30,570,904 15,610,700 35,279,997 - 11,893,707 132,543,277 - 11,060,482 5,971,684 274,191,035Transfers - - - - - 4,200,000 (4,200,000) - 43,164,480 (43,164,480) - - -Disposals - - - - - (6,635,000) - - - - - - (6,635,000)Balance as at 31/03/2012 - 94,058,387 - 115,895,829 38,434,033 122,474,444 - 109,354,047 1,215,263,199 - 42,429,610 13,959,222 1,751,868,771

Balance as at 01/04/2012 - 94,058,387 - 115,895,829 38,434,033 122,474,444 - 109,354,047 1,215,263,199 - 42,429,610 13,959,222 1,751,868,770Charge for the year - 31,623,387 - 16,750,604 15,567,911 36,938,820 - 14,353,775 162,935,114 - 8,738,646 5,643,788 292,552,044Transfers - - - - - (27,129,614) - - - - - - (27,129,614)Disposals - - - - - - - - - - - - -Balance as at 31/03/2013 - 125,681,774 - 132,646,433 54,001,944 132,283,650 - 123,707,822 1,378,198,312 - 51,168,255 19,603,009 2,017,291,200

Written Down ValueAs at 31/03/2013 42,188,000 2,473,014,297 112,336 98,217,895 - 71,715,259 - 112,948,769 1,139,599,577 - 25,597,250 37,187,234 4,000,580,617

As at 31/03/2012 - 2,316,545,898 - 98,059,584 15,567,912 121,289,480 - 106,402,396 996,027,519 - 20,004,780 29,446,103 3,703,343,671

As at 01/04/2011 - 2,339,566,182 - 118,989,439 31,178,612 129,905,667 - 78,942,442 688,339,397 24,117,642 18,998,706 28,027,109 3,458,065,196


108

2. Property, Plant and Equipment2.2 Company

Buildings Freehold Constructed on Fixture & Plant & Motor Leasehold Hospital Medical Computer Furniture Land Leasehold Land Fittings Machinery Vehicles Vehicles Equipment Equipment Equipment Fittings Total Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Cost / ValuationsBalance as at 01/04/2011 - 374,952,163 71,292,507 11,332,408 161,665,406 4,200,000 99,677,263 870,511,752 30,087,803 25,346,844 1,649,066,145Additions - 8,240,000 9,357,491 - 15,718,000 - 38,658,216 399,568,409 11,094,292 6,794,175 489,430,583Transfers - - - - 4,200,000 (4,200,000) - - - - -Disposal - - - - - - - - - - -Balance as at 31/03/2012 - 383,192,163 80,649,998 11,332,408 181,583,406 - 138,335,479 1,270,080,161 41,182,095 32,141,019 2,138,496,728

Balance as at 01/04/2012 - 383,192,163 80,649,998 11,332,408 181,583,406 - 138,335,479 1,270,080,161 41,182,095 32,141,019 2,138,496,729Additions 42,188,000 26,143,354 16,178,101 - 311,040 - 19,619,431 289,332,505 13,632,842 13,138,817 420,544,090Disposal - - - - (40,864,500) - - - - - (40,864,500)Balance as at 31/03/2013 42,188,000 409,335,517 96,828,099 11,332,408 141,029,946 - 157,954,910 1,559,412,666 54,814,937 45,279,836 2,518,176,319

Accumulated DepreciationBalance as at 01/04/2011 - 10,024,658 17,159,320 11,289,618 43,319,433 4,200,000 60,879,414 360,810,071 19,924,052 5,826,851 533,433,417Charge for the year - 5,076,229 8,342,073 42,790 26,200,336 - 6,035,863 96,897,582 7,132,279 4,511,156 154,238,308Transfers - - - - 4,200,000 (4,200,000) - - - - -Balance as at 31/03/2012 - 15,100,887 25,501,393 11,332,408 73,719,769 - 66,915,277 457,707,653 27,056,331 10,338,007 687,671,725

Balance as at 01/04/2012 - 15,100,887 25,501,393 11,332,408 73,719,769 - 66,915,277 457,707,653 27,056,331 10,338,007 687,671,725Charge for the year - 5,439,331 9,452,533 - 32,548,567 - 9,094,879 125,469,813 5,865,235 4,316,119 192,186,477Disposal - - - - (27,192,338) - - - - - (27,192,338)Balance as at 31/03/2013 - 20,540,218 34,953,926 11,332,408 79,075,998 - 76,010,156 583,177,466 32,921,566 14,654,126 852,665,864

Net Book ValueAs at 31/03/2013 42,188,000 388,795,299 61,874,173 - 61,953,948 - 81,944,754 976,235,200 21,893,370 30,625,710 1,665,510,454

As at 31/03/2012 - 368,091,276 55,148,605 - 107,863,637 - 71,420,202 812,372,508 14,125,764 21,803,012 1,450,825,003

As at 01/04/2011 - 364,927,505 54,133,187 42,790 118,345,973 - 38,797,849 509,701,681 10,163,751 19,519,993 1,115,632,729


The buildings constructed on leasehold lands of the company were revalued By Mr. P. B Kalugalagedara, Chartered valuer in March 2013 and value of these assets has not been changed.

Free hold land is situated at No 15, Nelson Lane, Kollupitiya, Colombo 03.



2. Property, Plant and Equipment2.2 Company

Buildings Freehold Constructed on Fixture & Plant & Motor Leasehold Hospital Medical Computer Furniture Land Leasehold Land Fittings Machinery Vehicles Vehicles Equipment Equipment Equipment Fittings Total Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Cost / ValuationsBalance as at 01/04/2011 - 374,952,163 71,292,507 11,332,408 161,665,406 4,200,000 99,677,263 870,511,752 30,087,803 25,346,844 1,649,066,145Additions - 8,240,000 9,357,491 - 15,718,000 - 38,658,216 399,568,409 11,094,292 6,794,175 489,430,583Transfers - - - - 4,200,000 (4,200,000) - - - - -Disposal - - - - - - - - - - -Balance as at 31/03/2012 - 383,192,163 80,649,998 11,332,408 181,583,406 - 138,335,479 1,270,080,161 41,182,095 32,141,019 2,138,496,728

Balance as at 01/04/2012 - 383,192,163 80,649,998 11,332,408 181,583,406 - 138,335,479 1,270,080,161 41,182,095 32,141,019 2,138,496,729Additions 42,188,000 26,143,354 16,178,101 - 311,040 - 19,619,431 289,332,505 13,632,842 13,138,817 420,544,090Disposal - - - - (40,864,500) - - - - - (40,864,500)Balance as at 31/03/2013 42,188,000 409,335,517 96,828,099 11,332,408 141,029,946 - 157,954,910 1,559,412,666 54,814,937 45,279,836 2,518,176,319

Accumulated DepreciationBalance as at 01/04/2011 - 10,024,658 17,159,320 11,289,618 43,319,433 4,200,000 60,879,414 360,810,071 19,924,052 5,826,851 533,433,417Charge for the year - 5,076,229 8,342,073 42,790 26,200,336 - 6,035,863 96,897,582 7,132,279 4,511,156 154,238,308Transfers - - - - 4,200,000 (4,200,000) - - - - -Balance as at 31/03/2012 - 15,100,887 25,501,393 11,332,408 73,719,769 - 66,915,277 457,707,653 27,056,331 10,338,007 687,671,725

Balance as at 01/04/2012 - 15,100,887 25,501,393 11,332,408 73,719,769 - 66,915,277 457,707,653 27,056,331 10,338,007 687,671,725Charge for the year - 5,439,331 9,452,533 - 32,548,567 - 9,094,879 125,469,813 5,865,235 4,316,119 192,186,477Disposal - - - - (27,192,338) - - - - - (27,192,338)Balance as at 31/03/2013 - 20,540,218 34,953,926 11,332,408 79,075,998 - 76,010,156 583,177,466 32,921,566 14,654,126 852,665,864

Net Book ValueAs at 31/03/2013 42,188,000 388,795,299 61,874,173 - 61,953,948 - 81,944,754 976,235,200 21,893,370 30,625,710 1,665,510,454

As at 31/03/2012 - 368,091,276 55,148,605 - 107,863,637 - 71,420,202 812,372,508 14,125,764 21,803,012 1,450,825,003

As at 01/04/2011 - 364,927,505 54,133,187 42,790 118,345,973 - 38,797,849 509,701,681 10,163,751 19,519,993 1,115,632,729


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2.32.3.(a) GroupHad the Leasehold assets not been revalued, their carrying value would have been as follows ;

Depreciation if Cumulative net assets were carrying Cost carried at cost amount Rs. Rs. Rs.

Building on lease hold land 1,067,456,121 458,641,710 608,814,411

2.3.(b) CompanyHad the Leasehold assets not been revalued, their carrying value would have been as follows;

Depreciation if Cumulative net assets were carrying Cost carried at cost amount Rs. Rs. Rs.

Building on lease hold land 298,957,692 110,377,822 188,579,870

3. Leasehold Right over Land

Group Company 31.03.2013 31.03.2012 01.04.2011 31.03.2013 31.03.2012 01.04.2011 Rs. Rs. Rs. Rs. Rs. Rs.

Balance as at beginning of the year 236,693,614 239,628,771 242,563,927 52,189,226 53,082,194 53,975,161Amortisation for the year (2,935,157) (2,935,157) (2,935,156) (892,968) (892,968) (892,967)Balance as at the end of the year 233,758,457 236,693,614 239,628,771 51,296,258 52,189,226 53,082,194

4. Investment in SubsidiariesNew Nawaloka Hospitals (Pvt) Ltd - - - 245,933,056 245,933,056 245,933,056New Nawaloka Medical Centre (Pvt) Ltd - - - 700,000,000 700,000,000 700,000,000- - - - 945,933,056 945,933,056 945,933,056




5. Investment in Equity Accounted Investees

Group Company 31.03.2013 31.03.2012 01.04.2011 31.03.2013 31.03.2012 01.04.2011 % Holding Rs. Rs. Rs. Rs. Rs. Rs.

Ruhunu Hospitals (Pvt) Ltd. 36.15% - - 14,000,000 - - 14,000,000(140,000 Ordinary Shares)Group share of Equity Account Investees - - (2,901,746) - - -Good will - - (8,629,176) -Current year's share of Loss - - (2,469,078) - - - - - - - - 14,000,000

5.2Profit on Disposal of SharesNet Proceeds Received from sale of Rhunu Hospital Shares - 12,600,000 - - 12,600,000 -Carrying Value of Investment as at 01 April - - - - (14,000,000) -Profit / (Loss) on Sale of Rhunu Hospital Shares - 12,600,000 - - (1,400,000) -

Ruhunu Hospital (Pvt) Limited shaers have been sold during the year 2011/12 at a price of Rs.12,600,000/=

6. Investment in Joint Venture


Nawaloka Metropolis Laboratories (Pvt) Ltd.250,000 Ordinary Shares - - - 2,500,000 2,500,000 2,500,000

Nawaloka Metropolis Laboratories (Pvt) Limited is a joint venture company between Nawaloka Hospitals PLC and Metropolis Health Services (India) Private Limited a company incorporated in India. Nawaloka Metropolis Laboratories (Pvt) Ltd was incorporated to provide laboratory services in Sri Lanka. The Consolidated Financial Statements of the Company includes 50% of the financial results of the Joint Venture Company.

7. Advance for LandTo purchase a Land for which a part payment of Rs.827,416,494/= (31.03.2012 Rs.765,480,482/=, 01.04.2011 Rs. 703,888,953/=) was paid to Nawaloka Construction Company (Pvt) Limited by new Nawaloka Hospitals (Pvt) Ltd which is a Related Party due to common directorship. There is a further balance of Rs.15,029,159/= (2011/12 Rs.76,965,171/=) to be paid to complete the purchase consideration.

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


112


8. InventoriesPharmaceuticals Items 232,028,431 149,706,443 140,658,180 69,878,633 45,812,847 40,329,633General Stocks 8,991,776 12,340,716 9,391,814 4,945,477 6,787,393 5,165,498Reagents Stocks 16,805,144 20,698,139 14,268,974 - - -Write off of Slow Moving and Obsolete Stocks - (140,346) - - - -Provision for Slow Moving and Obsolete Stocks - (445,571) - - - - 257,825,351 182,159,380 164,318,968 74,824,110 52,600,240 45,495,131

9. Trade and Other ReceivablesTrade Receivables 180,691,897 181,653,556 186,019,777 121,171,017 128,013,756 124,107,541Provision for Bad and Doubtful Debts (34,155,454) (27,544,384) (30,400,091) (24,511,911) (19,673,554) (21,081,227) 146,536,443 154,109,172 155,619,686 96,659,106 108,340,202 103,026,314ESC Recoverable 50,520,437 40,800,925 - 45,404,775 36,891,531 -Other Debtors 59,435,276 34,490,643 22,497,324 21,834,705 13,743,798 14,478,878 256,492,156 229,400,740 178,117,010 163,898,586 158,975,531 117,505,192

10. Receivables from Related PartiesNawakrama (Pvt) Limited - 629,370 629,370 - 629,370 629,370Nawaloka Construction Company Ltd. - 1,990,611 1,990,611 - 1,990,611 1,990,611Nawaloka Industries (Pvt) Ltd. - - 10,019,134 - - 1,563,497New Nawaloka Medical Centre (Pvt) Ltd. - - - 337,700,039 388,048,921 436,921,649Nawaloka Aviation (Pvt) Ltd 1,580,012 2,026,925 1,803,974 1,580,012 344,234 121,283Ruhunu Hospitals (Pvt) Ltd - - 2,779,515 - - 2,779,515Nawaloka Medical Centre (Pvt) Ltd - 2,128,305 2,513,640 - 2,128,305 2,513,640Baththaramulla Medical Centre 960,017 - - 960,017 - -Dehiwala Medical Centre 32110 - - 32,110 - -Moratuwa Medical centre 19,110 - - 19,110 - -Kiribathgoda Medical Centre 1,996,042 - - 1,996,042 - -Kottawa Medical Center 1,554,053 - - 1,554,053 - -Kandana Medical Centre 214,719 - - 214,719 - - 6,356,063 6,775,211 19,736,244 344,056,102 393,141,441 446,519,565

11. Stated Capital1,409,505,596 Ordinary Shares 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876





12. Revaluation ReserveBalance as at 01 April 763,760,190 763,760,190 732,343,725 - - -Revaluation during the year 155,303,109 - - - - -Deferred Tax impact on Income Tax Rate Change (14.2) 77,006,393 - 31,416,465 - - -Deferred Tax impact on Revaluation (14.3) (5,197,331) - - - - -Balance as at 31 March 990,872,361 763,760,190 763,760,190 - - -

13. Employee BenefitsBalance as at 01 April 113,817,121 94,976,998 86,427,275 110,070,203 93,632,020 85,737,277Charge for the year 33,033,699 29,967,601 18,485,576 29,744,270 27,549,878 17,830,596Payments made during the year (36,383,522) (11,127,478) (9,935,853) (36,250,160) (11,111,695) (9,935,853)Balance as at 31 March 110,467,298 113,817,121 94,976,998 103,564,313 110,070,203 93,632,020

The Amount recognised in the Balance sheet are as FollowsPresent Value of Unfunded obligations 136,705,450 139,698,882 98,784,203 128,097,812 134,397,450 97,082,261Present Value of Funded obligations - - - - - -Total Present Value of obligations 136,705,450 139,698,882 98,784,203 128,097,812 134,397,450 97,082,261Fair Value of Plan assets - - - - - -Present value of net obligations 136,705,450 139,698,882 98,784,203 128,097,812 134,397,450 97,082,261Unrecognised actuarial (gains)/losses (26,238,152) (25,881,761) (3,807,205) (24,533,499) (24,327,247) (3,450,241)Recognised liability for defined benefit obligations 110,467,298 113,817,121 94,976,998 103,564,313 110,070,203 93,632,020

The Gratuity liability is based on the actuarial valuation carried out by Mr. Piyal S Goonetilleke (Fellow of the society of actuaries) Actuary, on 31 March 2013.

The Key Assumptions used by the actuary include the following;

i) Discount Rate (the rate of interest used to discount the future cash flows in order to determine the present value) 11% (2011/12-12.5%)

ii) Rate of future Salary Increase 10%iii Retirement Age 55 Years

iv) The Company will continue as a going concern


114


13.1 Movement in the present value of defined benefit obligations

Liability for defined benefit obligation at 1st April 113,817,121 94,976,998 86,427,275 110,070,203 93,632,020 85,737,277Actuarial Losses 282,882 403,628 31,362 - - -Recognition of Actuarial Experience 2,773,836 4,406,264 51,961 2,721,875 4,354,303 -Benefit paid by the Plan (36,383,522) (11,127,478) (9,935,853) (36,250,160) (11,111,695) (9,935,853)Current Service Costs 11,124,109 10,123,875 7,628,195 9,086,857 8,669,272 7,225,198Interest Cost 18,852,873 15,033,834 10,774,058 17,935,538 14,526,303 10,605,398Liability for Defined Benefit Obligation at 31st March 110,467,298 113,817,121 94,976,998 103,564,313 110,070,203 93,632,020

13.2 Amount Recognised in the Income StatementCurrent Service Costs 11,124,109 10,123,875 7,628,195 9,086,857 8,669,272 7,225,198Interest on Obligation 18,852,873 15,033,834 10,774,058 17,935,538 14,526,303 10,605,398Actuarial Losses 282,882 403,628 31,362 - - -Recognition of Transition Liability/ Asset 2,773,836 4,406,264 51,961 2,721,875 4,354,303 - 33,033,699 29,967,601 18,485,576 29,744,270 27,549,878 17,830,596


14. Deferred Tax LiabilityDeferred tax liability (Other) 118,354,108 169,532,967 111,094,215 82,034,566 101,053,179 61,281,837Deferred tax liability (Revaluation Reserve) 53,856,797 125,665,859 125,665,859 - - - 172,210,905 295,198,826 236,760,074 82,034,566 101,053,179 61,281,837

Balance as at 01 April 295,198,826 236,760,074 248,129,951 101,053,179 61,281,837 52,058,486Originating during the year (Note 14.3) 102,985,515 58,438,752 48,425,684 90,360,807 39,771,342 24,543,810Impact on rate decrease (Note 14.2) (225,973,436) - (59,795,561) (109,379,421) - (15,320,459)Balance as at 31 March 172,210,905 295,198,826 236,760,074 82,034,566 101,053,179 61,281,837





14.1 Deferred tax Provision as at the year end is made up as follows,

Deferred tax Provision fromTemporary Differences of Property Plant and Equipments 189,085,458 334,925,106 271,865,658 98,466,513 139,861,012 93,401,546Temporary Differences of Retirement Benefit Obligation (12,391,952) (8,104,767) (26,593,559) (12,125,942) (7,598,377) (26,216,965)Temporary Differences of Provision on Bad & Doubtful Debts (4,482,602) (31,621,513) (8,512,025) (4,306,006) (31,209,456) (5,902,744) 172,210,905 295,198,826 236,760,074 82,034,566 101,053,179 61,281,837

14.2 Deferred tax Impact On Tax Rate Change as at the year end is made up as follows,

Statement of Changes in Equity 77,006,393 - 31,416,465 - - -Statement of Comprehensive Income (Note 14.4) 148,967,043 - 28,379,096 109,379,421 - 15,320,459 225,973,436 - 59,795,561 109,379,421 - 15,320,459

14.3 Originating during the yearStatement of Other Comprehensive Income (Note 24.2) 5,197,331 - - - - -Statement of Comprehensive Income (Note 14.4) 97,788,183 58,438,752 48,425,684 90,360,807 39,771,342 24,543,810 102,985,515 58,438,752 48,425,684 90,360,807 39,771,342 24,543,810

14.4 Amount Recognised in Comprehensive Income

Group Company 2012/13 2011/12 2012/13 2011/12 Rs. Rs. Rs. Rs.

Deferred Tax Impact on Rate Change (Note 14.2) (148,967,043) - (109,379,421) -Originating During the Year (Note 14.3) 97,788,183 58,438,752 90,360,807 39,771,342Amount Recognised in Comprehensive Income (Note 24) (51,178,860) 58,438,752 (19,018,613) 39,771,342

Impact Due to Corporate Income Tax ChangeThe Corporate Income Tax has been reduced to 12% commencing from beginning of year of assessment 2012/2013. Accordingly deferred tax assets and deferred tax liabilities have been computed based on 12% in Nawaloka Hospitals PLC. ( 2011/12 - 28%)


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15. BorrowingsAmana Investment 58,429,544 80,858,173 56,990,700 58,429,544 80,858,173 56,990,700DFCC Bank Loan 63,565,463 136,909,573 222,253,730 63,565,463 136,909,573 222,253,730BOC 169,553,331 78,495,178 - 169,553,331 78,495,178 -Seylan Bank Loan 61,349,148 86,666,667 114,833,333 - - -Hatton National Bank Loans 463,441,990 364,521,988 132,510,000 - - -Metropolis Health Services (India) Pvt Ltd. 1,276,992 1,276,992 1,276,992 - - - 817,616,468 748,728,571 527,864,755 291,548,338 296,262,924 279,244,430Borrowings falling due within one year (285,008,149) (244,564,853) (213,821,527) (139,450,029) (114,194,864) (142,334,858)Borrowings falling due after one year 532,608,319 504,163,718 314,043,228 152,098,309 182,068,060 136,909,572

15.1 BorrowingsOpening Balance as at 1st April 748,728,572 527,864,755 939,513,652 296,262,924 279,244,430 307,597,873Loans Obtained During the Year 348,593,867 439,363,768 371,478,918 126,593,867 117,561,768 58,648,918Loans Paid During the Year (279,705,971) (218,499,952) (783,127,815) (131,308,452) (100,543,274) (87,002,361)Closing Balance as at 31st March 817,616,468 748,728,571 527,864,755 291,548,338 296,262,924 279,244,430




15.2 Details of Loans obtained by the Group are set out below15.2.1 Long Term Loan

Nawaloka Hospitals PLC

Financial Institution

Repayment Terms Principal InterestRate

Security Annual Repayment

Rs.

Balance as at31.03.13

Rs.

DFCC BANK 60 equal monthly installments of Rs 1,333,334

80,000,000 11.00% A Primary mortgage over one Angiography unit and accessories, to be kept at 23, Sri Saugatodaya Mawatha, Colombo 02.

A Joint and Several Personal guarantee from Mr. Hewa Komanage Jayantha Dharmadasa and Mr Anisha Givantha Dharmadasa.

3,999,962 -

DFCC BANK 60 equal monthly installments of Rs 5,778,679

346,720,734 15.50% A sum of Rs 300,000,000/= by a Primary mortgage over all shares of New Nawaloka Medical Centre Private Limited to the Value of Rs.300,000,000/= held by the shareholders.

A sum of Rs.50,000,000/-by an assignment of 80,000,000 Ordinary shares of Nawaloka Hospitals PLC held by Nawaloka Construction Company Limited together with a joint and Several Personal Guarantee from Mr. H K J Dharmadasa and Mr. Anisha Givantha Dharmadasa.

69,344,148 63,565,463

AMANA BANK To be repaid in equal monthly installments

96,057,290 14.00% Primary legal mortgage over the machineries for the total value of the repayment obligation over the Medical Equipments to be imported and financed through Amana Bank.

Corporate Guarantees for Rs.132 Mn from each company of M/s.New Nawaloka Hospital (Pvt) Ltd. and M/s New Nawaloka Medical Center (Pvt) Ltd.

22,428,628 58,429,544

BANK OF CEYLON

60 equal monthly installments of Rs.1,607,143/= with 4 months grace period

78,495,178 AWPLR+1.5% Joint & several Guarantees of Director-Mr H.K.Jayantha Dharmadasa, Mr Ugith HarshithDharmadasa and Mr Anisha Givantha Dharmadasa.

19,285,716.00

70,714,284

BANK OF CEYLON

48 equal monthly installments of Rs.2,708,333/=

115,089,045 AWPLR+1.5% Joint & several Guarantees of Director-Mr H.K.Jayantha Dharmadasa,Mr Ugith HarshithDharmadasa and Mr Anisha Givantha Dharmadasa.

16,249,998.00

98,839,047


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Rs.


Rs.

New Nawaloka Hospitals (Pvt) Ltd.

SEYLAN BANK To be repaid in equal monthly installments of Rs 2.16 Mn

130,000,000 17% Primary Concurrent mortgage with HNB over land & buildings of Nawaloka Hospitals Ltd for Rs. 390 Mn.

25,317,519 61,349,148

HNB To be repaid in 48 equal monthly installments of Rs 2.16 Mn each

130,000,000 AWPLR+1.5% Primary Concurrent mortgage with HNB over land & building of Nawaloka Hospitals Ltd for Rs. 390 Mn. HNB portion-Rs. 260 Mn and SBK potion-Rs. 130 Mn.

25,920,000 58,720,000



4,550,000 -



4,562,000 -


40,000,000 AWPLR+1.5% Primary Concurrent mortgage with HNB over land & building of Nawaloka Hospitals Ltd for Rs. 390 Mn.HNB portion-Rs. 260 Mn and SBK potion-Rs. 130 Mn.

20,040,000 4,930,000


60,000,000 AWPLR+1.5% Existing Primary Concurrent Mortgage Bond for Rs.390 Mn (HNB Rs.260 Mn, Seylan-Rs 130 Mn) over Leasehold Nawaloka Hospital Premises.

30,000,000 10,000,000


148,000,000 AWPLR+1.5% Primary Floating Mortgage Bond for Rs.148 Mn over the "Tesla" MRI Scanner.

24,672,000.00

123,328,000

HNB To be repaid in 71 equal monthly installments of Rs 803,000/= each

57,800,000 AWPLR+1.5% Existing Primary Concurrent Mortgage over leasehold Nawaloka Hospital premises for Rs.390 Mn with Seylan Bank.(HNB Share Rs.260 Mn).

9,636,000.00 48,164,000

HNB To be repaid in 60 equal monthly installments of Rs.1,216,670/= each

73,000,000 AWPLR+1.5% Existing Primary Concurrent Mortgage Bond for Rs.390.0 Mn (HNB-Rs.260.0 Mn,Seylan- Rs 130.0 Mn) over leasehold Nawaloka Hospital premises.

1,216,670 71,783,330







Rs.


Rs.

HNB To be repaid in 60 equal monthly installments of Rs.1,050,000/= each

63,000,000 1% above FDrate

Letter of Set-off and lien over fixed deposit totaling to Rs.70.0 Mn.

1,050,000 61,950,000

HNB To be repaid in 60 equal monthly installmentsof Rs.1,433,340/= each

86,000,000 AWPLR+1.5% Demand promissory Note for Rs.86.0 Mn 1,433,340 84,566,660

Bank Over Draft

Nawaloka Hospitals PLC Closing Balance Principal Interest Rate

HNB 20,563,600 25,000,000 AWPLR +1.5% Corporate Guarantee of new Nawaloka Hospitals (Pvt) Limited for Rs. 250,000,000.

STATE BANK OF INDIA 125,849,689 125,000,000 AWPLR +1.5% Mortgage of 65,565,290 shares of Nawaloka Hospitals Limited.

SAMPATH BANK 49,212,613 50,000,000 16.00% Overdraft Agreement for Rs.50,000,000/=.Joint & Several Guarantee of H K J Dharmadasa U H Dharmadasa & A G Dharmadasa - Directors of the Company for Rs.50,000,000/=.

New Nawaloka Hospitals (Pvt) Limited

HNB 44,350,858 50,000,000 AWPLR+1.5% Existing Primary Concurrent Mortgage Bond for Rs.390 Mn (HNB Rs.260 Mn, Seylan- Rs 130 Mn) Over Leasehold Nawaloka Hospitals premises.


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16. Finance LeasesFinance Lease Liability 140,000,000 148,000,000 156,000,000 - - - 140,000,000 148,000,000 156,000,000 - - -Finance Leases Payables within one year (8,000,000) (8,000,000) (8,000,000) - -Finance Leases Payables after one year 132,000,000 140,000,000 148,000,000 - - -

16.1 Finance LeasesOpening Balance as at 1st April 148,000,000 156,000,000 169,013,754 - - 5,013,754Lease Paid During the Year (8,000,000) (8,000,000) (13,013,754) - - (5,013,754)Closing Balance as at 31st March 140,000,000 148,000,000 156,000,000 - - -

17 Trade and Other PayablesTrade Payables 246,034,563 262,155,533 241,162,208 210,862,497 240,761,738 216,254,327Doctors Fees Payable 18,637,332 62,365,621 84,480,768 10,076,482 43,400,300 55,769,592Other Payables 30,645,581 53,744,189 55,996,400 37,994,528 48,831,531 41,064,864 295,317,475 378,265,343 381,639,376 258,933,507 332,993,569 313,088,783

18. Current Tax LiabilityBalance as at 1 April 1,982,491 16,312,847 18,087,669 (6,365,175) (444,855) 4,787,859Provision for the year 48,955,371 29,174,760 34,635,502 18,477,485 21,688 7,398,430Income Tax paid during the year (25,797,098) (13,246,867) (17,968,294) (10,574,812) (93,889) (58,706)Prior year ESC payment - (30,258,249) (18,442,030) - (5,848,119) (12,572,438)Balance as at 31 March 25,140,764 1,982,491 16,312,847 1,537,498 (6,365,175) (444,855)





19. Payable to Related PartiesNew Nawaloka Hospitals (Pvt) Ltd - - - 506,299,267 407,004,176 159,264,255Nawaloka Construction (Pvt) Limited 1,418,087 813,630 813,630 604,457 - -Nawaloka Metropolis Laboratories (Pvt) Ltd. 21,239,706 30,341,839 65,353,355 42,479,412 48,362,847 130,706,710New Ashford (Pvt) Limited - 234,155 234,155 - - -Chairman's Current Account - 318,176 17,501,403 - 318,176 17,501,413Kottawa Medical Centre 4,928 - - - - -Metropolis Healthcare Ltd 1,710,330 - - - - -Lister Metropolis Laboratory 4,969,109 - - - - - 29,342,160 31,707,800 83,902,543 549,383,136 455,685,199 307,472,378

Group Company 31.03.2013 31.03.2012 31.03.2013 31.03.2012 Rs. Rs. Rs. Rs.

20. RevenueHospital Revenue 2,979,482,603 2,627,653,476 1,540,488,289 1,351,865,124Pharmacy Revenue 1,243,425,130 1,083,224,966 542,044,170 454,992,368 4,222,907,733 3,710,878,442 2,082,532,459 1,806,857,492

21. Other IncomeDividend Income - - 87,000,000 104,250,003Savings Interest 722,387 474,820 75,249 148,956Interest on fixed deposits 11,943,777 - 3,131,449 -Profit on sale of Property, Plant and Equipment 3,727,838 947,616 3,727,838 -Sundry Income 22,559,806 24,579,444 17,103,596 16,066,124Rent 4,979,129 4,208,778 4,979,129 4,208,778Foreign Currency gain 115,062 - - - 44,047,999 30,210,657 116,017,261 124,673,860


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22. Profit from OperationsThe operating profit has been arrived after charging all expenses including the following.

Emoluments of the Directors 49,154,198 35,120,050 36,876,157 30,956,050Auditor's Remuneration - Audit Services 1,512,000 1,095,000 607,000 448,000Depreciation & Amortisation 295,481,605 277,126,192 193,079,445 155,131,276Staff Costs 739,272,745 715,073,619 397,518,737 389,432,169EPF 74,221,707 60,803,787 39,162,188 36,863,003ETF 18,514,230 15,308,937 9,796,947 9,323,227Charge/( Reversal) of Provision for Bad Debts 16,844,705 (2,855,707) 14,141,543 (1,407,673)Charity and Donation 4,817,542 3,972,264 4,813,422 3,972,264

23. Finance CostsOverdraft Interest 40,184,721 49,463,236 26,140,549 19,941,516Interest on Lease - 18,487,289 - -DFCC Loan Interest 14,414,720 1,355,722 85,259 1,355,722Seylan Loan Interest 12,296,161 12,656,509 - -BOC 18,835,478 1,343,976 18,835,478 1,343,976HNB Loans' Interest 50,042,255 18,669,619 - -Amana Investment Ltd Loan 8,420,578 7,419,860 8,420,578 7,419,860Loan- Metropolis Health Service (India) 127,699 127,699 - - 144,321,612 109,523,910 53,481,864 30,061,074



Group company 2012/13 2011/12 2012/13 2011/12 Rs. Rs. Rs. Rs.

24. Income Tax ExpensesIncome Tax on Current Year Profit (Note 24.1) 48,955,371 29,779,305 - 21,688(Under)/Over provision during Prior Year (3,249,998) - 15,228,051 -(Reversal from)/transfer to Deferred Taxation (Note No 14.4) (51,178,860) 58,438,752 (19,018,613) 39,771,342Dividend Tax on Inter Company Dividend 3,250,000 3,200,000 3,250,000 3,200,000 (2,223,487) 91,418,057 (540,562) 42,993,030

24.1 Reconciliation of Accounting Profit and Taxable ProfitProfit/(Loss) before Tax 452,035,792 362,104,620 257,314,834 195,356,128Other comprehensive income/(loss) for the year 150,105,778 - - -Total Comprehensive income before Tax 602,141,570 362,104,620 257,314,834 195,356,128Profit/(Loss) taxed based on turnover (145,486,089) (157,413,629) - -Profit On Sale of Shares - (12,600,000) - 1,400,000Aggregate expenses Disallowed for Tax 258,300,921 220,053,558 251,539,580 214,548,497Inter Company Dividend 87,000,000 104,250,003 - -Aggregate Income not liable for Tax (90,206,700) (104,173,959) (90,206,700) (104,173,959)Aggregate Income liable for Tax - 2,254,154 - 77,457Aggregate deductible expenses for Tax (471,787,082) (372,463,488) (456,057,599) (361,949,333)Adjustments for Tax losses 37,409,885 54,818,667 37,409,885 54,818,667(Profit) / Loss exempt from tax (98,783,880) (65,536,185) - -Taxable Income for the year 178,588,625 31,293,741 - 77,457

Income Tax 12% 21,430,635 - - -Income Tax @ 28% 3,296,925 8,762,247 - 21,688Income Tax based on 2% of Turnover 24,227,811 21,017,058 - - 48,955,371 29,779,305 - 21,688

24.2 Tax on Other Comprehensive IncomeDeferred Tax Impact on Revaluation of Property Plant and Equipments (Note 14.3) 5,197,331 - - -


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25. Earnings Per ShareThe Company’s earnings per share is based on the profit attributable to the ordinary shareholders and the weighted average number of ordinary shares outstanding during the year.


Profit attributable to the Ordinary Shareholders 454,259,279 270,686,563 257,855,395 152,363,098Weighted Average number of Ordinary Shares in issue during the year 1,409,505,596 1,409,505,596 1,409,505,596 1,409,505,596

Earnings per Share 0.32 0.19 0.18 0.11

26. Related Party TransactionsThe Company carries out transactions in the ordinary course of its business with parties who are defined as related parties in Sri Lanka Accounting Standard 24 "Related Party disclosures, the details of which are reported below. The pricing applicable to such transactions is based on the assessment of risk and pricing model of the company and is comparable with what is applied to transactions between the company and its unrelated customers.

26.1 Transactions with Subsidiaries - Company

Name of the Company Name of the Director Nature of Transaction Amount Paid/(Received) 2012/13 2011/12 Rs Mn. Rs Mn.

New Nawaloka Hospitals (Pvt) Limited Mr.H.K.Jayantha Dharmadasa Provision of Services 264.37 103.81 Mr. H.K.U. Harshith Dharmadasa Cost of Pharmaceutical & Mr. A Givantha Dharmadasa General stores items 539.72 451.43 Drugs income Transferred (135.44) (124.63) Fund Transfer (767.96) 678.98

New Nawaloka Medical Centre (Pvt) Limited Mr.H.K.Jayantha Dharmadasa Provision of Services 29.93 18.50 Mr. A Givantha Dharmadasa Cost of Pharmaceutical & Mrs. C.S. Dharmadasa General stores items 256.21 228.50 Drugs income Transferred (16.54) (22.50) Fund Transfer (319.95) 273.14

Date of TransactionsThe transactions have been recorded on daily or monthly basis throughout the year.

Rationale of the TransactionNew Nawaloka Hospitals (Pvt) Limited and New Nawaloka Medical Centre (Pvt) Limited are fully owned subsidiaries of Nawaloka Hospitals PLC.




26.2 Transactions with Joint Venture Company - Company


Nawaloka Metropolis Laboratories (Pvt) Ltd. Mr.H.K.Jayantha Dharmadasa Provision of Services 122.89 79.51 Prof. Lal Chandrasena JV Co. collection Transfer 361.11 357.20 Mr. H.K.U. Harshith Dharmadasa Transfer Revenue (435.00) (386.64)

Date of TransactionsThe transactions have been recorded on daily or monthly basis through out the year.

Rational of the TransactionsNawaloka Metropolis Laboratories (Pvt) Ltd. Is a joint venture of the Nawaloka Hospitals PLC and principal activities of the company is to provide Laboratory Services.

26.3 Transactions with other Related Companies - Group


Nawaloka Construction Company (Pvt) Limited Mr.H.K.Jayantha Dharmadasa Advance paid to Land (61.93) (61.59) Mr. H.K.U. Harshith Dharmadasa Mr. A Givantha Dharmadasa

Advance payment to land, further details are given in Note 07.

DFCC Bank Mr. Tissa Bandaranayake Payment of Interest (14.41) (19.84) (Up to 03.01.2013) Loan Repayment (73.34) (85.34)

Koala (Pvt) Ltd Mr.H.K.Jayantha Dharmadasa Provision of Services (43.3) (12.30) Mr. H.K.U. Harshith Dharmadasa

Ceyoka (Pvt) Ltd Mr.H.K.Jayantha Dharmadasa Provision of Services (66.11) (69.29) Mr. H.K.U. Harshith Dharmadasa

This note should be read in conjunction with note 10, note 15.2 and note 19 receivable from related parties, mortgage details and payable to related parties respectively

26.4 Transactions with Key Management PersonnelAccording to Sri Lanka Accounting Standard 24 "Related Party Disclosures", Key Management personnel, are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Board of Directors (including executive and non-executive Directors) have been classified as Key Management Personnel of the Company.

The details of the compensation paid to Key Management Personal are disclosed in Note 22 to the Financial Statements.


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27. Changes in ClassificationTo facilitate comparison, relevant balances pertaining to the previous year, have been re-classified to conform to current year’s classification and presentation.

28. Capital CommitmentsThere are no material capital commitments as at the reporting date other than the matter detailed in Note No.07

29. Contingent LiabilitiesThere are no material Contingent Liabilities as at the Balance Sheet date which require adjustment to or disclosure in the Financial Statements other than the following:

• Claimsfordamageshavebeenmadebypatients in case No.36347 , No.41441 and No.DMR/3972-10 at the District Court, Colombo.

• Magisterialinquestisinprogressunder(Magistrate’s Court case No: B/256/13) at this stage.

Based on the above information and current status of the above Cases, the Company is not in a position to quantify the potential financial impact if any, as at the reporting date but the Management does not expect any significant outflow to arise from these cases.

30. Events occurring after the Reporting Date

There are no events that have occurred after the reporting date, which would require adjustments to, or disclosure in the Financial Statements.

31. Directors ResponsibilitiesThe Board of Directors is responsible for the preparation and presentation of these financial Statements according to the Sri Lanka Accounting Standards and Company's Act No 07 of 2007.

32. Explanation of transition to SLFRS/ LKAS

As stated in note 1.2.1 these are the Company’s first financial statements prepared in accordance with SLFRS/ LKAS.The accounting policies set out in note 1.2.1 have been applied in preparing the financial statements for the year ended 31 March 2013, the comparative information presented in these financial statements for the year ended 31 March 2012 and in the preparation of an opening SLFRS statement of financial position at 1 April 2011.

There were no adjustments to the opening balances compared to the amounts reported previously in financial statements prepared in accordance with SLASs.

33. Financial instrumentsFinancial risk managementOverview

The Group has exposure to the following risks arising from financial instruments• Creditrisk• Liquidityrisk• Marketrisk.

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital.

Risk management frameworkThe Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Group Audit Committee monitors the process through which business risks are identified for action by management and for the Board’s attention and monitors the effectiveness of the Company’s internal controls. The Group Audit Committee is assisted in its role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of controls and procedures, the results of which are reported to the Audit Committee.

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 riskThe carrying amount of financial assets represents the maximum credit exposure. The maximumexposure to credit risk at the reporting date was as follows.

Description 2013 2012

Trade Debtors & other receivables 256,492,156 229,400,740

Cash & cash equivalents (325,138,663) (327,970,150)

Total (68,646,507) (98,569,410)

Trade and other receivablesThe Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

Impairment lossesTrade and other receivables at the reporting date was neither past due nor impaired.

The Group believes that the unimpaired amounts that are past due by less than six months which amounting to Rs.110,368,160 are still collectible, based on historic payment behavior and extensive analysis of customer credit risk.

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 LKR 250 million overdraft facility that is unsecured. Interest would be payable at the market rate.

The disclosure shows net cash flow amounts for derivatives that are net cash settled and gross cash inflow and outflow amounts for derivatives that have simultaneous gross cash settlement.It is not expected that the cash flows included in the maturity analysis would occur significantly earlier or at significantly different amount.

Market riskMarket risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Currency riskThe Group is exposed to currency risk on receipts, payments and borrowings that are denominated in a currency other than Sri Lankan Rupees.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Group’s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

Interest rate riskThe Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss.


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Capital managementThe Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of ordinary shares, retained earnings and revaluation reserve of the Group. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Group’s net debt to adjusted equity ratio at the reporting date was as follows.

LKR 000 2013 2012

Total Liabilities 2,073,970,045 2,191,951,722

Less:Cash & Bank 151,571,655 102,632,849

Net debt 1,922,398,390 2,089,318,873

Total Equity 3,781,338,350 3,170,442,180

Net debt to equity ratio 0.50 0.66




01. Twenty Largest Shareholders

As at 31st March 2013 2012No. Share Holders Name No. Of Shares % No. Of Shares %

1 MR. H.K.J. DHARMADASA 460,736,182 32.69% 460,736,182 32.69%2 NAWALOKA CONSTRUCTION COMPANY LIMITED 441,778,880 31.34% 441,778,880 31.34%3 DR. T. SENTHILVERL 307,752,304 21.83% 305,256,954 21.66%4 NATIONAL SAVINGS BANK 17,789,400 1.26% 17,789,400 1.26%5 MISS AG DHARMADASA 5,066,686 0.36% 5,066,686 0.36%6 MRS P NANAYAKKARA 5,066,666 0.36% 5,066,666 0.36%7 MR. D.M. RAJAPAKSE 4,496,400 0.32% 4,496,400 0.32%8 MR. V.R. RAMANAN 3,400,000 0.24% 3,400,000 0.24%9 MR. A.G. DHARMADASA 3,004,026 0.21% 2,704,026 0.19%10 MRS. N.H. ABDUL HUSEIN 2,924,247 0.21% 2,324,066 0.16%11 NAWALOKA DEVELOPMENTS (PVT) LTD 2,814,932 0.2% 2,814,932 0.20%12 SEYLAN BANK PLC. - A/C NO. 3 2,675,000 0.19% 4,000,000 0.28%13 MR.H A PIERIS 2,557,200 0.18%14 MRS C S DHARMADASA 2,542,666 0.18% 2,542,666 0.18%15 MR. K.S. WARUSAVITARANA 2,500,066 0.18% 2,500,066 0.18%16 MR. U. H. PALIHAKKARA 2,125,165 0.15% 1,656,766 0.12%17 CEYLEASE FINANCIAL SERVIES LIMITED 2,000,000 0.14% 2,000,000 0.14%18 MRS. P. GANESHAN 2,000,000 0.14% 2,000,000 0.14%19 BANK OF CEYLON A/C CEYBANK UNIT TRUST 1,877,670 0.13% 1,838,700 0.13%20 PEOPLES BANK 1,760,915 0.12%

Total 1,274,868,405 90.45% 1,267,972,390 89.96%Balance held by 8,057 Shareholders (2011/12-8,301) 134,637,191 9.55% 141,533,206 10.04%Total No. of shares 1,409,505,596 100% 1,409,505,596 100%

02. Range of Shareholders

As at 31st March 2013 2012 No. of Share No. of Shares % of Share No. of Share No. of Shares % of Share Holders Holders Holders Holders

1 - 500 2047 348,241 0.02 1987 355,486 0.02501 - 5,000 3071 7,125,957 0.51 3279 7,643,218 0.545,001 - 10,000 983 7,561,584 0.54 1017 7,903,539 0.5610,001 - 20,000 752 11,683,628 0.83 799 12,446,251 0.8820,001 - 30,000 373 9,816,972 0.70 382 10,048,260 0.7230,001 - 40,000 200 7,115,503 0.50 206 7,313,722 0.5240,001 - 50,000 146 6,915,553 0.49 153 7,236,356 0.5250,001 - 100,000 238 18,211,326 1.29 252 19,297,344 1.37100,001 - 1,000,000 219 58,580,860 4.16 215 56,944,694 4.041,000,001 & above 28 1,282,145,972 90.97 31 1,280,316,726 90.83Total 8057 1,409,505,596 100 8321 1,409,505,596 100

Investor Information


130

03. Composition of Shareholders

As at 31st March 2013 2012Category No. of Total % No. of Total % Shareholders Holding Shareholders Holding

Institutional Shareholders 76 482,229,053 34.21 145 1,004,866,259 71.30Individual Shareholders 7981 927,276,543 65.79 8176 404,639,337 28.70Total 8057 1,409,505,596 100 8321 1,409,505,596 100

Resident Shareholders 8030 1023664 0.07 8296 1,408,323,566 99.92Non-resident Shareholders 27 1408481932 99.93 25 1,182,030 0.08Total 8057 1,409,505,596 100 8321 1,409,505,596 100

04. Market Activity

2012/2013 2011/2012

Highest Price (Rs.) 3.70 4.90Lowest Price (Rs.) 2.60 2.90Year End Price (Rs.) 2.90 3.10

No. of Shares Traded 7,850,572 12,760,894No. of Share Transactions 795 1,323Share Turnover (Rs.) 23,783,454 42,275,266Shares held by public 12.76% 12.95%

Investor Information Contd.



Five Year Statistical Summary

Group Company

2012/13 2011/12 2010/11 2009/10 2008/09 2012/13 2011/12 2010/11 2009/10 2008/09

Rs Rs Rs Rs Rs Rs Rs Rs Rs Rs

Income Statement Data

Revenue 4,222,907,733 3,710,878,442 3,233,035,096 2,884,449,093 2,512,350,553 2,082,532,459 1,806,857,492 1,608,036,836 1,459,181,099 1,607,719,271

Cost of Services (2,013,392,367) (1,823,670,511) (1,645,969,580) 1,442,227,937 (1,306,238,370) (988,218,793) (876,040,195) (767,116,507) (747,982,289) (837,431,514)

Gross Profit 2,209,515,366 1,887,207,931 1,587,065,516 1,442,221,156 1,206,112,183 1,094,313,666 930,817,297 840,920,329 711,198,810 770,287,757

Other Operating Income 44,047,999 30,210,657 38,603,398 19,811,729 10,337,940 116,017,261 124,673,860 72,280,970 19,388,776 9,247,622

Profit from operations 596,357,404 459,028,530 324,001,074 415,343,605 294,511,337 310,796,698 226,817,202 147,845,400 115,917,282 81,389,336

Net profit after taxation 454,259,279 270,686,563 1,070,722,130 97,411,122 (108,502,591) 257,855,395 152,363,098 98,822,914 19,315,469 8,694,800

Balance Sheet Data

Shareholders Fund 3,781,338,350 3,170,442,180 2,970,230,897 1,903,249,516 1,963,001,144 1,683,557,137 1,496,177,022 1,414,289,204 1,350,703,926 1,331,388,457

Financial Ratios

Gross Profit Ratio (%) 52.32 50.86 49.09 50.00 48.01 52.55 51.52 52.29 48.74 47.91

Net Profit Ratio(%) 10.76 7.29 33.12 3.38 (4.32) 12.38 8.43 6.15 1.32 0.54

Increase in Renenue(%) 13.80 14.78 12.09 14.81 11.94 15.26 12.36 10.20 -9.24 8.47

Return on Capital Employed (%) 12.02 8.54 36.05 5.12 (5.53) 15.32 10.18 6.99 1.43 0.65

Current Asset Ratio 0.71 0.58 0.43 0.74 0.62 0.53 0.57 0.61 0.92 1.03

Quick Asset Ratio 0.48 0.42 0.29 0.63 0.51 0.48 0.53 0.57 0.89 1.00

Return on assets (Rs) 0.08 0.05 0.24 0.03 (0.03) 0.08 0.05 0.05 0.01 0.01

Debt/ Equity Ratio 0.25 0.28 0.23 0.58 0.69 0.16 0.20 0.20 0.23 0.31

Earnings/(Loss) per share

(After share split) 0.32 0.19 0.76 0.07 (0.15) 0.18 0.11 0.07 0.01 0.01

Net Assets Per share (Rs)

(After share split) 2.68 2.25 2.11 1.35 2.79 1.20 1.06 1.00 0.96 1.89

Dividend per share (Rs) 0.05 0.05 - 0.05 0 0.05 0.05 - 0.05 0

Five Year Summary

(500,000,000)

4,500,000,000

4,000,000,000

Rs.

3,500,000,000

3,000,000,000

2,500,000,000

2,000,000,000

1,500,000,000

1,000,000,000

500,000,000

0

08/09 09/10 10/11 11/12 12/13

Revenue Cost of ServicesGross ProfitNet profit after taxation


132

Quarterly Statistics

Balance Sheet Data

2012/13 2011/12As at 31.03.2013 31.12.2012 30.09.2012 30.06.2012 31.03.2012 31.12.2011 30.09.2011 30.06.2011

Fixed Assets 5,061,756 4,898,342 4,874,062 4,778,079 3,940,038 3,899,990 3,922,971 3,695,525Shareholders Fund 3,781,338 3,583,473 3,421,135 3,268,487 3,170,442 3,077,268 2,978,417 2,972,411

Income Statement Data

For the three months ended Total 31.03.2013 31.12.2012 30.09.2012 30.06.2012 Total 31.03.2012 31.12.2011 30.09.2011 30.06.2011

Revenue 4,222,908 982,934 1,069,041 1,114,031 1,056,902 3,710,878 992,866 973,137 939,746 805,129Gross Profit 2,209,515 517,889 563,470 597,067 531,089 1,887,208 564,691 479,140 476,722 366,655Net Profit Before Tax 452,035 53,487 125,499 162,362 110,687 362,150 98,250 119,059 127,916 16,880

Ordinary Share InformationNominal Value per share Rs. 1.00

Market Price per share (Rs.) 31.03.2013 31.12.2012 30.09.2012 30.06.2012 31.03.2012 31.12.2011 30.09.2011 30.06.2011

High 3.20 3.70 3.50 3.20 4.10 4.20 4.90 4.30Low 2.90 2.90 2.70 2.60 2.90 3.40 3.50 3.80Closing 2.90 3.00 3.40 3.00 3.10 3.90 4.10 4.00

Financial Measures

31.03.2013 31.12.2012 30.09.2012 30.06.2012 31.03.2012 31.12.2011 30.09.2011 30.06.2011

Return on Shareholders Fund (%) 1.41 3.50 4.75 3.39 3.10 3.87 4.29 0.57Net Asset Per Share 2.68 2.54 2.43 2.32 2.25 2.18 2.11 2.11



Revenue 2012-13

31.03.201231.12.201130.09.201130.06.2011

23%

25%

26%

25%

Revenue 2011-12

31.03.201231.12.201130.09.201130.06.2011

27%

26%

25%

22%

Market Price Per Share 2012/13

0

4.00

Rs.

3.50

3.00

2.50

2.00

1.50

1.00

0.50

4 Qtr 3 Qtr 2 Qtr 1 Qtr

HighLowClosing

Net Profit Before Tax

0

180,000

Rs. ’000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

4 Qtr 3 Qtr 2 Qtr 1 Qtr


134

Notice of Meeting

Notice is hereby given that the 24th Annual General Meeting of NAWALOKA HOSPITALS PLC will be held at the Park Premier Banquet Hall of the Excel World at No. 338, T.B. Jayah Mawatha, Colombo 10 on Friday the 28th day of June 2013, at 10.00 a.m. for the following purposes :-

Agenda1. To receive and consider the Report of the Board of Directors on the affairs of the Company and the Financial Statement for the year ended 31st March 2013,

together with the Report of Auditors thereon;

2. To resolve in terms of Section 211 of the Companies Act No. 7 of 2007 to appoint/ re-appoint Mr. R. T. Wijetilleke (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;

3. To resolve in terms of Section 211 of the Companies Act No. 7 of 2007 to appoint/ re-appoint Mr. T.K. Bandaranayake (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;

4. To re-elect Directors as follows:-

(a) Re-elect, as a Director, in terms of Article 74, Mr. H. K. J. Dharmadasa who retires by rotation and offers himself for re-election;

(b) Re-elect, as a Director, in terms of Article 74, Mr. U. H. Dharmadasa who retires by rotation and offers himself for re-election;

(c) Re-elect, as a Director, in terms of Article 74, Ms. A. G. Dharmadasa who retires by rotation and offers himself for re-election;

5. To authorise the Board of Directors to determine and make donations to charities;

6. To re-appoint Messrs. KPMG (Chartered Accountants) as Auditors of the company and authorise the Board of Directors to determine their remuneration; and

7. To transact any other business of which due notice has been given.

By Order of the Board

SignedM & A COMPANY SECRETARIES (PRIVATE) LIMITEDCompany Secretaries

30th May 2013

Notes(1) A member is entitled to appoint a proxy to attend and vote instead of him/herself. A proxy need not be a member of the Company. A form of proxy accompanies

this notice.

(2) The completed form of proxy must be deposited at the Registered Office, No. 23, Deshamanya H. K. Dharmadasa Mawatha, Colombo 02, Sri Lanka, not later than 10.00 a.m on 26th June 2013 (Forty Eight hours prior to the meeting).

(3) A person representing a Corporation is required to carry a certified copy of the Resolution authorizing him/ her to act as the Representative of the Corporation. A representative need not be a member.

(4) A person representing a shareholder as the Attorney (Power of Attorney) is required to carry the original or a certified copy of the said Power of Attorney.

(5) The Transfer books of the Company will be kept open.



Form of Proxy

I/We ……………....................................................................................................................................................................................................................................

of ..........................................................................................................................................................................................................................................................being a member/members of NAWALOKA HOSPITALS PLC hereby appoint :

Mr. H. K. J. Dharmadasa or failing himMr. R.T. Wijetilleke or failing himDeshabandu Tilak de Zoysa or failing himProf. L. G. Chandrasena or failing himMr. Tissa Kumara Bandaranayake or failing himMr. U.H. Dharmadasa or failing himMr. A.G. Dharmadasa or failing himMs. A.G. Dharmadasa or failing herDr. T. Senthilverl or failing himMr. D. Sunil Abeyratna or failing him

as *my /our Proxy to **........................................................................................... vote as indicated hereunder for me* /us on my* /our behalf at the Annual General Meeting of the Company to be held on the 28th day of June 2013 at 10.00 a.m. at the Park Premier Banquet Hall of the Excel World at No. 338, T.B. Jayah Mawatha, Colombo 10 and at any adjournment thereof and at every poll which may be taken in consequence thereof.

For Against

(i) To receive and consider the Report of the Board of Directors and the Financial Statements for the year ended 31st March 2013 together with the Report of Auditors thereon.

(ii) To appoint Mr. R.T. Wijetilleke on to the board of Directors until the next AGM notwithstanding him having attained the age of 70

(iii) To appoint Mr. T.K. Bandaranayake on to the board of Directors until the next AGM notwithstanding him having attained the age of 70

(iv) To re-elect directors :-

(a) To re-elect Mr. H. K. J. Dharmadasa who retires by rotation and who comes up for re-election.

(b) To re-elect Mr. U. H. Dharmadasa who retires by rotation and who comes up for re-election.

(c) To re-elect Ms. A. G. Dharmadasa who retires by rotation and who comes up for re-election.

(v) To authorize the Directors to determine and make donations.

(vi) To re-appoint KPMG (Chartered Accountants) as Auditors and to authorize the Directors to determine their remuneration.

(vii) To transact any other business of which due notice has been given

In witness*my/our hands this ................................ day of ................................ Two Thousand and Thirteen

Signature of Shareholder/s

Note:(a) * Please delete the inappropriate words.(b) ** If you wish your Proxy to speak at the meeting you should interpolate the words "Speak and" in the place indicated with and initial such interpolation.


136

Form of Proxy Contd.

Instrucitons as to Completion1. In terms of Articles 40(a) of the Articles of Association of the Company:- The instrument appointing a proxy shall be in writing and

i. in the case of an individual, shall be signed by the appointer or his Attorney (if signed by the Attorney the Company reserves the right to request to be furnished with a copy of the said Power of Attorney); and

ii in the case of a corporation or company shall be either under its common 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.

Name of the CompanyNawaloka Hospitals PLC

Company Registration NoPQ 78

Registered OfficeNo. 23, Deshamanya H. K. Dharmadasa Mawatha,(Formerly known as Sri Sugathodaya Mawatha), Colombo – 00200, 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 re-registered under the Companies Act No. 07 of 2007.

Board of Directors1. Mr. H. K. Jayantha Dharmadasa

(Chairman & CEO)2. Mr. Rienzie T. Wijetilleke

(Director / Vice Chairman) 3. Prof. Lal G. Chandrasena

(Director / General Manager)4. Deshabandu Tilak de Zoysa 5. Mr.Tissa Kumara Bandaranayake 6. Dr.Thirugnanasambandar Senthilverl7. Mr. Damian Sunil Abeyratna8. Mr. U. Harshith Dharmadasa9. Mr. A. G. Dharmadasa10. Ms. A. G. Dharmadasa

Secretaries to the CompanyM & A Company Secretaries (Private) Limited,No.28 (Level 2), W A D Ramanayake MawathaColombo – 02

AuditorsKPMG,Chartered Accountants,No. 32A, Sir Mohamed Macan Markar Mawatha,Colombo 3.

Lawyer(s)Mr. H. Chandrakumar de Silva,Attorney-at-Law,No. 7, Hedges Court,Colombo 01000.

Nithi Murugesu & AssociatesAttorneys-at-Law & Notaries Public,No.28 (Level 2), W A D Ramanayake Mawatha, Colombo – 02

BankersHatton National Bank PlcSampath Bank PlcPeoples BankSeylan Bank PlcState Bank of IndiaCommercial BankBank of CeylonDeutsche BankAmana BankDFCC Bank

SubsidiariesNew Nawaloka Hospitals (Private) LimitedNew Nawaloka Medical Centre (Private) Limited

Joint VentureNawaloka Metropolis Laboratories (Pvt) Limited

Vision and Mission 2 Company Profile 2 Key Financial Highlights 3 Our Milestones 4 Financial Highlights 6 Chairman’s /CEO’s Message 10 Operational & Management Review 12 Tribute to Former Chairman 15 Board of Directors 16 Senior Management Team 20 Executive Clinical Management Team 24 Sustainability 28 Independent Limited Assurance Report 53 Corporate Governance 66 Report of the Board of Directors 77 Risk Management 81 Report of the Remuneration Committee 84 Audit Committee Report 85 Directors’ Responsibility for Financial Reporting 90 Independent Auditor’s Report 91 Statement of Financial Position 92 Statement of Comprehensive Income 94 Statement of Changes in Equity 95 Cash Flow Statement 96 Notes to the Financial Statements 98 Investor Information 129 Five Year Statistical Summary 131 Quarterly Statistics 132 Notice of Meeting 134 Form of Proxy 135 Corporate Information Inner Back Cover

Produced by Copyline (Pvt) Ltd Printed by Gunaratne Offset Ltd

Nawaloka Hospitals PLC Annual Report 2012/13

Nawaloka Hospitals PLCNo. 23, Deshamanya H. K. Dharmadasa Mawatha,Colombo 02, Sri Lanka.

Tel: (+94 11) 2544444-56, 2305051-79 Fax: (+94 11) 2430393 E-mail [email protected] Web: www.nawaloka.com

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Nawaloka Hospitals PLC Annual Report 2012/13 · 2016-09-29 · Nawaloka Hospitals PLC Annual Report 2012/13 Nawaloka Hospitals PLC No. 23, Deshamanya H. K. Dharmadasa Mawatha,Colombo