halt hälsa hls là it - colombo stock exchangenawaloka metropolis laboratories (pvt) ltd....

Na

wa

lok

a H

osp

itals P

LC

An

nu

al R

ep

ort 2

016

/17

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

Tel: +94 115 577 111, +94 112 304 444-56 Fax: +94 112 430 393www.nawaloka.com

Health

ZdrowieOsasun

SaúdeSanoZdravljeTendûrûstîEgészség

SundhedVeselība

Heilsa

Saћћa Kesihatan

Salute

CaafimaadkaZdravie

Terveys

Sănătate

Kalusugan

GesondheetZdravie3дрaвљe

Дeн соолук

3дaрoўe ΥγείαSog'lik

TervisLafiya

Kasehatan

ImpiloLechyd

UtanoFahasalamana

3дрaвje

HauoraShëndetësor

SağlamlιqДен сooлyқ

BopheloSoifua Maloloina AfyaЭpγγл Μэнд

Salud

Helse SlàinteHälsa

Caлoмaти

fi!LH

Nawaloka Hospitals PLC Annual Report 2016/17

- A Rich Heritage


- A Rich HeritageKesihatan

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

04 About this Report

05 About Nawaloka

06 Year at a Glance

08 Milestones

10 Chairman/CEO’s Message

12 Director/General Manager’s Review

16 Business Model

16 Our Business Model

18 Operating Environment

22 Goals and Strategies

24 Stakeholders

27 Materiality and Value Creation

32 Management Discussion and Analysis

32 Financial Capital

36 Intellectual Capital

39 Investor Capital

44 Customer Capital

58 Employee Capital

76 Business Partner Capital

79 Social and Environmental Capital

91 Awards and Accolades

94 Stewardship

94 Board of Directors

98 Senior Management Team

100 Executive Clinical Management Team

104 Corporate Governance

124 Risk Management

132 Annual Report of the Board of Directors

138 Remuneration Committee Report

139 Audit Committee Report

142 Board Related Party Transactions Review Committee Report

143 Directors’ Responsibility in Financial Reporting

144 Senior Independent Director’s Statement

145 Financial Reports

146 Independent Auditors’ Report

147 Statement of Financial Position

149 Statement of Profit or Loss and Other Comprehensive Income

150 Statement of Changes in Equity

151 Cash Flow Statement

152 Notes to the Financial Statements

191 Annexes

191 Independent Assurance Report

193 GRI Content Index

196 Ten Year Statistical Summary

198 Quarterly Statistics

199 Corporate Information

200 Notice of Meeting

Enclosed Form of Proxy

Contents


Health – A Rich Heritage

Nawaloka is an entity of the times...and yet we are an entity of ‘times before’, absorbing and applying the learning and processes that have come down the ages and that have informed modern healthcare.

We believe that Good Health goes beyond the mere absence of disease or infirmity. Our remit goes far beyond ‘prescription and pill’ to helping people live life at optimum levels of physical and mental well-being.

Today we are a leading hospital; we are Sri Lanka’s first private hospital embodying the rich heritage of health; we were pioneers...and we have led several pioneering initiatives in the healthcare firmament of Sri Lanka.


ABOUT THIS REPORT

This is our fifth consecutive integrated Annual Report.

The Report includes financial and non-financial

information related to the Nawaloka Hospitals

PLC’s main businesses, key functions and strategic

investments. It communicates material information

which relates our strategy, governance, performance

and sustainability which lead to value creation over

time, in a more effective and coherent manner.

Value creation is a two-way process, as the

ability of our business to create sustainable value

for itself is also related to the value it creates for

its stakeholders. To better demonstrate this duality

of our value creation process at Nawaloka, we

have seamlessly integrated financial reporting with

sustainability reporting.

Reporting Period

The Annual Report 2016/17 covers the 12-month period

from 1st April 2016 to 31st March 2017 and is consistent

with our usual annual reporting cycle as regards to

our financial and sustainability reporting. The previous

annual report covered the period from 1st April 2015 to

31st March 2016.

Report Boundary

The boundary of this Report entails the affairs and

activities of Nawaloka Hospitals PLC including those

of its three subsidiaries – New Nawaloka Hospitals

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

Nawaloka Medicare (Pvt) Ltd. and joint venture –

Nawaloka Metropolis Laboratories (Pvt) Ltd.

Compliance

This Report also reflects the Company’s compliance

with the laws and regulations of the Companies Act

No. 07 of 2007 and the subsequent amendments and

Listing Rules of the Colombo Stock Exchange (CSE).

The information contained in this Report is

in compliance with all applicable laws, regulations

and standards as well as guidelines for voluntary

disclosures. In particular the Report adheres to the

recommendations and guidelines set out by the

International Financial Reporting Standards (IFRS) and

the Sri Lanka Accounting Standards (SLFRS/LKAS)

applicable for financial periods beginning on or after

1st January 2012. The accounting policies adopted are

detailed in the Financial Statements.

In preparing this Report we have also drawn

on the concepts, principles and guidance of the

Global Reporting Initiatives (GRI) Sustainability

Reporting Guidelines G4, the International Integrated

Reporting Framework (December 2013) and the

Smart Integrated Reporting MethodologyTM

(September 2013) where applicable.

Compared to the previous reporting periods,

there are no significant changes in the scope and

aspect boundaries and there were no restatements

of information provided in previous reports.

Precautionary Principle

The Company applies the precautionary principle in

relation to social and environmental sustainability. We

are highly mindful of the impacts caused to society

and environment by our actions and take necessary

steps to mitigate such risks and the Company has taken

necessary steps to mitigate environmental risks in

operational planning and activities.

Queries

We welcome your comments or questions on this

Annual Report. Please contact –

The Accountant

Nawaloka Hospitals PLC

No. 23, Deshamanya H K Dharmadasa Mawatha,

Colombo 00200

Sri Lanka.

Email: [email protected]

Nawaloka Hospitals PLC Annual Report 2016/17 5

ABOUT NAWALOKA

From its humble beginnings in 1985, Nawaloka

Hospitals PLC today have gained the reputation as

a centre of excellence and a preferred healthcare

institution in the country. Nawaloka Hospitals was

established by our visionary, founder-Chairman,

late Deshamanya H K Dharmadasa on the founding

philosophy of Arogya Parama Laba or good health

is the supreme wealth. At its inception, we were the

first fully-fledged private hospital in Sri Lanka. Our

pioneering spirit is evident since we paved the way for

the proliferation of a vibrant private sector healthcare

system in Sri Lanka which was then, state dominated.

Over the last 31 years, we have made a passionate

commitment to healing and discovering with one

purpose in mind: improving the health and well-being

of the Nation and its people.

We serve customers from every segment

of society. The Hospital was founded on the

customer-centric principle that everyone deserves

to have access to quality healthcare. We strive to

uphold this founding principle by removing financial

barriers that prevent people from seeking the best

healthcare. Our world-class healthcare and services

are affordable.

We are also committed to serve our patients’

evolving needs. True to our vision ‘To be the Hospital

of Tomorrow’, we build for the future, from facilities

and infrastructure, to introducing new models of care

that improve our patients’ experience in the healthcare

system. Since our inception we have spearheaded the

Nation’s private healthcare industry. Throughout our

31-year old history, we have become the first of many

innovative, groundbreaking initiatives: We were the

first to introduce CT Scanners in Sri Lanka in 1987,

we were the first private sector hospital to establish

a dedicated Cardiothoracic Unit and we instituted

our very own Nurses Training School.

Nawaloka Hospitals PLC consists of three

subsidiaries – New Nawaloka Hospitals (Pvt) Ltd.,

New Nawaloka Medical Centre (Pvt) Ltd., Nawaloka

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

Metropolis Laboratories (Pvt) Ltd. Nawaloka Hospitals

was listed on the Colombo Stock Exchange in 2004.


Nawaloka Metropolis Laboratories

(Pvt) Ltd.

Joint VentureFully Owned Subsidiaries

Nawaloka Medicare (Pvt) Ltd.

New Nawaloka Medical Centre

(Pvt) Ltd.

New Nawaloka Hospitals (Pvt) Ltd.

Our Vision‘To be the Hospital of Tomorrow’, to provide quality and safe healthcare to the people whilst maintaining leadership and excellence in the healthcare facility.

Our Mission‘Healing with Feeling’ to provide the best quality healthcare in accordance with international standards to the needy in a cost effective, timely and professional manner.

Our PurposeWe are committed to achieving and maintaining a standard of excellence in all we do.

– Excellence in clinical care, service and communication

– Collaboration within our Institution and with others who share our mission and goal

– Leadership that sets the standards for healthcare today and innovations of the future

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


YEAR AT A GLANCE

Group Company

2016/17Rs.

2015/16Rs.

Variance%

2016/17Rs.

2015/16Rs.

Variance%

Income Statement

Revenue 6,299,910,436 5,860,218,161 8 2,568,162,863 2,833,195,719 (9)

Cost of services (2,997,276,079) (2,906,572,342) 3 (1,359,482,350) (1,490,055,615) (9)

Gross profit 3,302,634,357 2,953,645,819 12 1,208,680,513 1,343,140,104 (10)

Other operating income 129,152,153 94,495,240 37 212,984,776 86,694,974 146

Profit from operations 712,836,728 637,208,825 12 30,910,656 201,126,820 (85)

Net profit after taxation 240,874,683 206,034,228 17 (436,680,842) (127,565,499) (242)

Balance Sheet Data

Shareholders’ funds 4,434,605,437 3,994,897,962 11 974,254,815 1,466,336,065 (34)

Financial Ratios

Gross profit ratio(%) 52 50 4 47 47 0

Net profit ratio(%) 4 4 0 (17) (5) (240)

Return on capital employed(%) 5.43 5.16 5 (45) (9) (400)

Current asset ratio 0.83 0.89 (11) 1.30 1.83 (29)

Quick asset ratio 0.73 0.70 (1) 1.24 1.75 (29)

Return on assets (Rs.) 0.02 0.02 0 (0.05) (0.02) (150)

Earnings/(loss) per share (Rs.)

(After share split)

0.17 0.15 13 (0.31) (0.09) (244)

Net assets per share (Rs.) (After share split) 3.15 2.83 11 0.69 1.04 (34)

Dividend per share (Rs.) 0.08 0.07 14 0.08 0.07 14

Net Profit (Rs. Mn)

500

375

250

125

0

2012/13 2015/162014/152013/14 2016/17

Gross Profit (Rs. Mn)

4,000

3,000

2,000

1,000

0

2012/13 2015/162014/152013/14 2016/17

Return on Capital Employed (%)

16

12

8

4

0

2012/13 2015/162014/152013/14 2016/17

Shareholders' Funds (Rs. Mn)

5,000

3,750

2,500

1,250

0

2012/13 2015/162014/152013/14 2016/17

Financial Capital Employee Capital

Social & Environmental Capital

Rs. 6,300 MnRevenue

(2015/16 – Rs. 5,860 Mn)

52%Gross Profit Margin

(2015/16 – 50%)

Rs. 0.17Earnings Per Share

(2015/16 – Rs. 0.15)

Customer Capital

13,329No. of Facebook Likes during the Year

34 Sec.Average time taken to answer a call

144,181Average No. of call received per month

Business Partner Capital

54No. of Foreign Suppliers (2015/16 – 43)

756No. of Local Suppliers

(2015/16 – 532)

503No. of Consultants(2015/16 – 369)

50%Employee Engagement

(No. of ideas implemented/No. of ideas collected) (2015/16 – 39%)

4 Hrs. 12 Mins.Employee Development

(Training hours per employee) (2015/16 – 1 Hr. 9 Mins.)

2,363No. of Employees

(2015/16 – 2,157)

Rs. 2.1 MnInvestment in School

Development Projects(2015/16 – Rs. 1.4 Mn)

12No. of Medical Camps

(2015/16 – 10)

26No. of Awareness Programmes

(2015/16 – 21)



MILESTONES

1985-1990 2001-2010

1991-2000

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

• First Intensive Care Unit in a private hospital

1987• First CT Scanner in Sri Lanka

2005• We made significant advances in Neuro Surgery and Cardiac Surgery

• We introduced Laser Eye Surgery

• Together with our Indian affiliates, we introduced a very successful IVF Treatment Centre

2006• We commenced construction of the new building providing modern surgical units

• Computerising the entire operation of the hospital

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

• First to introduce a Comprehensive Polysomnography System

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

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

• Introduction of Digital Video Endoscopy System

2009• First Private Hospital in Sri Lanka with 400 beds

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

• Installed the most technologically advanced Hemodialysis machine

• First Hospital to introduce ‘LED Lamps’ in Operating Theatres

2010• Introduced 16 slice CT Scanner with all accessories

• New 4D Scanner for Radiology and Gynaecology

• Introduced Ultrasonic Defector

1992• First Mammography Unit in Sri Lanka

1993• First Minimally Invasive Laparoscopic Surgery in Sri Lanka

1994• First Cardiac Catheterisation Laboratory in Sri Lanka

• First Coronary Artery Bypass Surgery Unit in a private hospital

1995• First MRI Scanner in Sri Lanka

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

2000• 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

2011-2017

2015• Commenced Regional Hospital operations in Negombo

• Introduced Bone Marrow Transplant Unit

• Installed the most technologically advanced mammography machine

• Retained the ‘Gold’ Award in the healthcare sector at the Annual Report 2014 organised by CA Sri Lanka

• Only hospital to be recognised at the ACCA Business Award 2014

• Initiated the construction of Car Park Building

2016• Introduction of Fibro Scan to quantify Liver Fibrosis

• Introduction of Self-Channelling Kiosk

• Installed a new Chemotherapy Machine

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

• Retained the ‘Gold’ Award in the healthcare sector at the Annual Report Awards 2015 organised by CA Sri Lanka

• Achieved 100% success rate in Bone Marrow Transplants

• Introduced Gold Standard Acu Pulse, a safe, simple CO

2 laser

2017• Introduced Non-Invasive Fat Burner Machine

• Introduced ENT Console Unit

• Gold Winner at the ACCA Sustainability Reporting Awards 2016 – General Services (Utilities) category

• Retained the Gold Award in the healthcare sector at the Annual Reports Awards 2016 – Organised by CA Sri Lanka (6th Time)

• Introduced X-Ray Orthopantogram Unit for Dental

• Awarded ISO 9001:2015 Certification

• National Productivity Award – Special Commendation

• Upgraded the Cath-Lab with latest technology

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

• Awarded ISO 9001:2008 Certification

• Inaugurated Weight Management Centre

• Inaugurated Breast Cancer Screening Centre

• Single Balloon Enteroscope

• Doppler-Guided Hemorrhoid Artery Ligation and Rectal Anal Repair

2012• First Live Donor Liver Transplant surgery in Sri Lanka

• Launch of Life Member Hospitality Card

2013• Vitro Retinal Eye Surgery

• Endovenous (Vericose) Laser Treatment – EVLT

• High Definition (HD) Arthroscopy System

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

2014• We installed South Asia’s first and world’s fastest, most accurate 640 slice CT Scanner

• Installed a Neuro Navigation System during the year

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

• Applied for the JCI Accreditation

• Installed Advanced Lasik Eye Surgical Equipment for Eye Surgery

• Introduced C-Arm machine for theatre unit


CHAIRMAN/CEO’S MESSAGE

Our patient-centric hospitals pursue excellence in all aspects providing access to world class healthcare

Dear Shareholders,

I take the greatest pleasure in welcoming you to the

28th Annual General Meeting of Nawaloka Hospitals

PLC and to present to you the Annual Report for the

financial year 2016/17.

Sri Lanka can boast of an ancient medical

culture and a discipline that was far beyond its

time. As the first fully-fledged private hospital of

the island, we have continued our ancient pioneering

tradition. It is embedded in our vision ‘To be the

Hospital of Tomorrow’.

For over three decades we have been inspired

by Nawaloka Hospital’s founding philosophy of Arogya

Parama Laba or ‘good health is the supreme wealth’.

Without good health, we know that life stands on a

brittle foundation. Therefore, we seek to not only to

heal with feeling but also to educate the public about

the importance of preventive health providing services

that are aimed at early detection and diagnosis.

Our patient-centric hospitals pursue excellence

in all aspects providing access to world class

healthcare, the latest technology and state-of-the-art

medical equipment that are constantly updated,

infrastructure, and specialised medical expertise in

diverse fields.

With the objective of expanding our horizons

and to cater to regional customers and niche markets,

Nawaloka Negombo Hospital was established. I am

happy to report that Nawaloka Negombo is at present

a thriving, well-respected establishment in the region

providing healthcare not just to the affluent but to all

segments of society.

The construction of the Car Park Building and

Specialist Centre for Nawaloka Hospitals in Colombo is

another feat that we can be proud of. The multi-storey

car park with 550 car parking facilities and specialist

centre will make Nawaloka Hospitals the single largest

private hospital complex offering exceptional patient

comfort, family-centred care and an easily accessible

platform for all healthcare needs.

Nawaloka Hospitals PLC Annual Report 2016/17 11Chairman/CEO’s Message

iNdm;s;=udf.a m‚jqvh

ys;j;a fldgiaysñhks"

kjf,dal fydiamsÜ,aia mSt,aiS ys 28 jk jd¾Isl uyd iNdjg meñ‚ Tn ieu

idorfhka ms<s.ksñka" 2016$17 uQ,H j¾Ih i|yd jk jd¾Isl jd¾;dj Tn fj;

msßkukafka buy;a i;=áks'

bmer‚ Y%S ,xldj i;=j mej;s" ÈhqKq ffjoH úoHd;aul úkh iy

ffjoH úoHdj ;=<ska fmdaIKh jQ wm ixialD;sh ms<sn|j Y%S ,dxlsl wms wdvïnr

fjuq' Èjhsfka m%:u wx.iïmQ¾K fm!oa.,sl frday, jYfhka" wmf.a bmer‚

mqfrda.dó iïm%odhka tf,iskau wdrlaId lr.ekSug wms l%shdlr we;af;uq'

zfyg Èkfha frday, njg m;aùuZ hk wmf.a ±lau ;=< th .eíù we;'

zwdfrda.Hd mrud ,dNdZ ke;fyd;a zksfrda.Slu W;=ïu ,dNh fõZ

hkak mokï lr.;a kjf,dal frdayf,a o¾Ykh u`.ska miq.sh oYl ;=kl

ld,h ;=< wms ksrka;rfhka mkakrh ,nd .;af;uq' hym;a fi!LHfhka

f;drjqj fyd;a" wmf.a Èúh wia:djr njg m;ajk nj wms ljqre;a

okakd neúka wms Tn iqjm;a lsÍfï ye`.Sfuka hq;=j muKla fkdj frda.

j<lajd.ekSfï jeo.;alu ms<snòjo ck;dj ±kqj;a lsÍfï wfmalaIdfjka

hq;=j frda. l,a we;sj y`ÿkd.ekSu iy ksjerÈ frda. úksYaph b,lal

lr.ksñka wms ck;djg fiajd i,ikafkuq'

frda.shd flakaølr.;a wmf.a frday,a iuQyh fi!LH lafIa;%fha ishü

wxYhkays úYsIag;dj ,`.dlr .ekSug W;aiqlj l%shdlrk w;r f,dj fydòu

fi!LH i;aldr fiajd" kùk;u ;dlaIKh ffjoH WmlrK" há;, myiqlï

iy úúO lafIa;%hkays ksmqK;dj iys; ffjoH úfYaI{hka fj; m%fõYh wms

Tng i,id fokafkuq'

wmf.a fiajdj ;jÿrg;a mq¿,a lrñka" ó.uqj m%foaYfha kjf,dal

ó.uqj frday, ia:dms; lrk ,§' kjf,dal ó.uqj frday, fïjk úg iS>%

ÈhqKqjla w;alrf.k ;sfnk nj;a" tu m%foaYfha fjfik iEu ;,hlgu wh;a

ck;dj fj; tlfia fi!LH fiajd i,ik wdh;khla njg m;aj we;'

fuu j¾Ifha § fld<U kjf,dal frdayf,a r:.d, iy úfYaI{

i;aldr uOHia:dkh bÈlsÍu wNsudkh okjk ;j;a tla iqúfYaIS l¾;jHhls'

jdyk 550la .d,a lsÍfï myiqlï iys; r:.d, iy úfYaI{ i;aldr

uOHia:dkh kjf,dal frday,a iuQyhg w¨;ska tlaùu u`.ska Tnf.a ishü

fi!LH wjYH;d iòyd myiqfjka m%fõYùfï wjldY Tng i,id fok

úYd,;u fm!oa.,sl frday,a ixlS¾Kh njg kjf,dal frday, m;aù we;'

fm!oa.,sl frday,a lafIa;%fha bÈßfhkau miqjk wmf.a ia:djr;ajh"

miq.sh jir .Kkdj uq¿,af,a wm Èkd.;a wfkalúO f.!rj iïudk ;=<ska

ikd: jk w;r ACCA ;srir jHdmdr iïudk m%odk W;aijfha § we.hSug

,lajQ tlu frday, jqfha wm frday,hs' miq.sh jir myl ld,h mqrdu fukau

miq.sh jif¾§;a jd¾Isl jd¾;d iïudk m%odk W;aijfha § o fi!LH i;aldr

lafIa;%fha ziaj¾KZ iïudkh /l.ekSug wms iu;a jqfkuq'

2016$17 uQ,H j¾Ih ;=< wm iud.u remsh,a ì,shk 6'3 l wdodhula

bmhQ w;r th miq.sh j¾Ih iu`. iei§fï§ 8] l j¾Okhla fmkajñka Y=oaO

,dNh remsh,a ñ,shk 241 f,i jd¾;d úh'

wjika jYfhka" wmf.a ys;j;a fiajd,dNSka fj; wdo¾Yj;a i;aldrl

fiajdjka i,id §u fjkqfjka fiajhg lemjQ wOHlaI uKav,hg" úfYaI{

ffjoHjrekag" l<ukdldß;ajhg iy fiajl msßig udf.a yomsß lD;{;dj

msßkuñ' f.jqKq jir 31 uq¿,af,a wm flfrys wñ, úYajdih ;nd l%shdl<

wmf.a ishü fiajd,dNSka iy fldgiaysñhka fj; wmf.a f.!rjdor ia;+;sh

msßkeóug o uu fuh wjia:djla lr .ksñ'

zfi!LHh¦ iu!êu;a WreuhZ hk f;audj hgf;a iïmdÈ; wmf.a fuu

jd¾Isl jd¾;dj w;S;h" j¾;udkh yd wkd.;h hd flfrk md,ula jeksh'

tu`.ska udkj b;sydih mqrdjg fi!LH i;aldrl fiajdjkayS isÿ jQ w;sYh

jeo.;a ixj¾Okhka t<solajd we;'

zfyg Èkfha frday, njg m;aùuZ hk wmf.a ±lau idlaId;a lr.ekSu

ms‚i fi!LH i;aldr lafIa;%fha wm i;= w.kd Wreuh .fõIKh lsÍug wms

iefjdu tlafjuq'

chka; O¾uodi

iNdm;s$m%Odk úOdhl ks,Odß

2017 uehs 25

Our numerous accolades acquired over the

years have cemented our position as a leader in this

private healthcare sector. We were the only Hospital

to be recognised at the ACCA Sustainability Business

Awards 2015. We retained the ‘Gold’ Award in the

healthcare sector at the Annual Report Awards 2015

over last five (05) years.

During the year 2016/17 the Company generated

a revenue of Rs. 6.3 Bn which is a growth of 8%

compared to last year and a net profit of Rs. 241 Mn.

In conclusion I would like to extend my heartfelt

gratitude to our Board of Directors, consultants, the

Management and employees in delivering exemplary

care to our dear customers. I would also like to take

this opportunity to thank all our customers and

shareholders for placing their confidence and valued

trust in our establishment.

Now I would like to invite you to glimpse into

our Annual Report which has captured our journey

during the reporting period of 2016/17. As you will

witness, our Annual Report under the theme ‘Health;

a Rich Heritage’, bridges the past, the present and

the future. It showcases landmark developments in

healthcare in human history.

Let us explore together the rich legacy of

healthcare in order to create a vision of ‘To be the

Hospital of Tomorrow’.

Jayantha Dharmadasa

Chairman/Chief Executive Officer

25th May 2017


DIRECTOR/GENERAL MANAGER’S REVIEW

Healthcare services worldwide are burdened with

escalating costs and rising demands with a range of

factors like population growth, high life expectancy

and other demographic changes. The world population

is expected to increase by one Billion by 2025. Of that

Billion, 300 Million will be people aged 65 or older. As

such, unprecedented demand for additional healthcare

services and innovations is bound to continue for a long

time in the future.

According to the Global Burden of Disease

Study (GBD) published in the most recent issue of The

Lancet, Sri Lanka has been ranked at 73 along, with our

neighbours’ of the SAARC countries – with only Maldives

ranking at 76. This ranking emphasises on the indices as

Healthcare access, quality index and mortality rates.

Even the World Health Organisation has

commended Sri Lanka, for its healthcare sector offering

one of the highest quality healthcare systems in South

Asia at surprisingly low cost.

For Sri Lanka, Non-Communicable Diseases

(NCD’s) will be one of the key challenges of the

Healthcare sector. To take up this challenge, we had

to establish well-designed screening programmes for

early diagnosis.

The new building with a multi-storey car park and specialist centre once completed this year will make Nawaloka Hospitals the single largest private hospital complex with 900,000 square feet of built-up area.

Whilst providing due attention to innovative

technologies, Nawaloka Hospitals have Non-Communicable

Diseases as a primary area for the future.

In the Non-Communicable Diseases programme,

Molecular Biology techniques are beginning to take

a very promising role in the early detection of life

threatening diseases and conditions like Cancers,

Diabetes and Cardiovascular Diseases. Therefore,

Nawaloka Hospitals have made plans to upgrade the

Molecular Biology Laboratory to International standards.

Laboratory investigations form an important

aspect for prevention, diagnosis and treatment of

many diseases and conditions. In order to provide

the best facilities and to share global best practices

in diagnostics, we have established a Joint Venture

Partnership with Green Cross Laboratories (Nawaloka –

Green Cross Laboratories) of South Korea, an

internationally-renowned laboratory, genomic

diagnostics and manufacturing facilities for vaccines,

pharmaceuticals and medicinal products. This

partnership will place Nawaloka Hospitals ahead in

screening and early detection in the Non-Communicable

Diseases arena.

Nawaloka Hospitals PLC Annual Report 2016/17 13Director/General Manager’s Review

Our hospital-wide systematic approach to

enhancing screening services and ensuring regular

assessments have delivered improved outcomes like

reducing treatment costs and hospitalisation rates,

minimising avoidable or inappropriate interventions

and enabling minimally invasive procedures that reduce

operating-room time, length or stay and rehabilitation

Diagnostic Radiology has been in the forefront

of technological development of Nawaloka Hospital.

Sri Lanka’s first CT/MRI scanners and Angiography

Units were established in Nawaloka Hospitals way back

in the 1990’s and we have upgraded them to the latest

International standards with the world’s fastest 640 Slice

CT scanner, capable of performing Cardiac Angiograms

and 3 Tesla MRI scanner and Digital X-ray machines.

The hospital is in the process of modernisation of

the Radiology Department which will accommodate all

Radiology equipment in one location such as, the CT/MRI

Scanners, 3 X-ray units, 4D Ultra Sound Scanners, Fibro

Scanner, Orthopantomograms (OPG’s) which provide

a panoramic view of the mouth, teeth and bones of the

upper and lower jaws and the Mammography equipment.

The hospital will install the second MRI machine

during this year and the interventional Biplane

Radiography machine to overcome the enhanced

demand for our services. The Catheterisation Laboratory

has just been upgraded to the latest version which will

give the interventional Cardiologists the best facilities.

In our vision to be ‘the hospital of tomorrow’,

we have introduced to Sri Lanka yet another latest

technological advancement in healthcare: PACS (Picture

Archiving and Communication System) which provide

technology for the short and long-term storage,

retrieval, management, distribution and presentation of

all Radiological images and information management.

These improvements and innovations will

undoubtedly make Nawaloka Radiology Department

the best in this country.

In a healthcare market such as Sri Lankan, it

is pivotal that state and private sector find meeting

points for bipartisanship and collaborative care. Being

the first fully-fledged Private Hospital in Sri Lanka

operating for the last 31 years, Nawaloka Hospitals

PLC have established a healthy relationship with the

Sri Lankan Government.

In this respect, the Government has proposed

to the private sector hospitals to lessen the burden on

State Health Care to help the needy patients through a

Public-Private Partnership (PPP) programme.

Nawaloka Hospitals will soon engage in assisting

patients with Cardiovascular, Cataract and Orthopaedic

surgeries under the PPP as an initial step.

In keeping with the concept of mind, body and

soul, whilst providing facilities of health screening,

physiotherapy, skin care, pain management, mother

and baby, non-communicable disease clinics, and a

fully-fledged laboratory forms the basis of our latest

addition – ‘Premier – Wellness Centre’ in Colombo 07.

The new 14-floor wing with a multi-storey car

park and specialist centre once completed this year

will make Nawaloka Hospitals the single largest private

hospital complex with 900,000 square feet of built-up

area. The new building will have 550 parking spaces,

modular channelled consultation chambers, pharmacy,

laboratory, radiology services and dedicated areas for

wellness centres, diabetes and renal care which will offer

exceptional patient comfort and family centered care.

Benchmarked for quality, Nawaloka Hospitals

has gained recognition both locally and internationally

as evidenced by the many awards we have won over

the years. We are extremely proud to work with our

committed, dedicated and talented staff of professionals

who bring life to our vision and mission.

Finally, my deep appreciation goes to our

customers, medical staff, business associates and other

stakeholders for the continued loyalty and trust placed

on Nawaloka Hospitals.

Vidya Jyothi Professor Lal Gotabhaya Chandrasena

Director/General Manager

25th May 2017


460 BC

Birth of Hippocrates, the Greek father of medicine begins the scientific study of medicine

Every birth is important. When Nawaloka was born as the first, fully-fledged, multi-speciality private hospital in Sri Lanka, it created history in the medical annals of this country. Today, with an optimal blend of medical acumen and capability, technology, infrastructure and personnel, we are one of Sri Lanka’s premier healthcare institutions.

Existing Building Complex with 400 beds in year 2016.

Nawaloka Hospital premises in year 1985.


BUSINESS MODEL

Nawaloka Hospitals PLC, over the past 31 years, has strived to create a lasting value for its key stakeholders.

Our business model integrates our vision ‘To be the Hospital of Tomorrow’. Furthermore, we pursue our mission

of ‘Healing with Feeling’ and provide quality healthcare to people whilst retaining our leadership in the industry.

Our business model transforms various capitals to create value over time. Capital which is owned by the business

is ‘Internal’ capital, while capital that is not owned is ‘External’ capital. Our internal capital formation is a result

OUR BUSINESS MODEL

Customer Capital• Growth in the

No. of channel appointments 11%

• Total No. of

– Surgeries performed 19,121

– CT Scan 10,547

– MRI Scan 15,317

• Customer loyalty

Financial Capital• Growth in profitability 8%

• ROCE 5.43%

• Quick asset ratio 0.73

Intellectual Capital• Service delivery

• Effective systems & processes

• New system implementation Rs. 23 Mn

• Brand reputation

Investor Capital• Dividend per share Rs. 0.08

• Return on assets Rs. 0.02

• Market price of share Rs. 4.70

Employee Capital• Workforce 2,363

• Employee satisfaction ratio 90%

• Training hours per employee – 4 Hrs. 12 Mins.

• Training programmes conducted – 126

Business Partner Capital• Strong supplier base

• Continuously growing consultants relationship

Social and Environmental Capital• Investment in community –

Rs. 6 Mn

• Reductions in energy intensity by 3%

• Certifications & standards; ISO 9001:2015, ISO 15189 SLAB Accreditation

• Reduction in material usage by 7%

• Water reused percentage in Nawaloka Medicare is 22%

Intellectual Capital• Process development

• Service enhancements

Investor Capital• Shareholders’ funds

• Investor relations

Customer Capital• Service points

• Products and services

• Service standards

• Internal processes

• Online services

Employee Capital• Diversity

• Knowledge

• Experience

• Promotions

• Salaries and other benefits

• Recognition and rewards

• Training

Business Partner Capital• Consultants

• Suppliers

• Strategic alliances

Social and Environmental Capital• Community development

activities

• Energy, emissions, waste and water management

• Compliance

• Material management

Op

era

ting

Envir

onm

ent

INPUTS

OUTPUTS/ OUTCOMES

Financial Capital• Revenue

• Profitability

• Working capital management

• Capital structure

Corporate Social Responsibility

Corporate Governance

Risk Management

Our VisionMissionValues

OurStrategic Direction

OurBusiness

Operations

Nawaloka Hospitals PLC Annual Report 2016/17 17Our Business Model Business Model

of value created by Nawaloka Hospitals PLC itself and comprises financial/monetised and intellectual capital.

The financial capital is reported mainly in our Financial Statements whilst intellectual capital are intangibles like

brand image, corporate culture, integrity and specialised knowledge. Our external forms of capital focus on key

stakeholders and comprises investors, customers, employees, business partners, society and the environment.

OUR BUSINESS MODEL

Customer Capital• Growth in the

No. of channel appointments 11%

• Total No. of

– Surgeries performed 19,121

– CT Scan 10,547

– MRI Scan 15,317

• Customer loyalty

Financial Capital• Growth in profitability 8%

• ROCE 5.43%

• Quick asset ratio 0.73

Intellectual Capital• Service delivery

• Effective systems & processes

• New system implementation Rs. 23 Mn

• Brand reputation

Investor Capital• Dividend per share Rs. 0.08

• Return on assets Rs. 0.02

• Market price of share Rs. 4.70

Employee Capital• Workforce 2,363

• Employee satisfaction ratio 90%

• Training hours per employee – 4 Hrs. 12 Mins.

• Training programmes conducted – 126

Business Partner Capital• Strong supplier base

• Continuously growing consultants relationship

Social and Environmental Capital• Investment in community –

Rs. 6 Mn

• Reductions in energy intensity by 3%

• Certifications & standards; ISO 9001:2015, ISO 15189 SLAB Accreditation

• Reduction in material usage by 7%

• Water reused percentage in Nawaloka Medicare is 22%

Intellectual Capital• Process development

• Service enhancements

Investor Capital• Shareholders’ funds

• Investor relations

Customer Capital• Service points

• Products and services

• Service standards

• Internal processes

• Online services

Employee Capital• Diversity

• Knowledge

• Experience

• Promotions

• Salaries and other benefits

• Recognition and rewards

• Training

Business Partner Capital• Consultants

• Suppliers

• Strategic alliances

Social and Environmental Capital• Community development

activities

• Energy, emissions, waste and water management

• Compliance

• Material management

Op

era

ting

Envir

onm

ent

INPUTS

OUTPUTS/ OUTCOMES

Financial Capital• Revenue

• Profitability

• Working capital management

• Capital structure

Corporate Social Responsibility


Risk Management

Our VisionMissionValues

OurStrategic Direction

OurBusiness

Operations


OPERATING ENVIRONMENT

The Global Economy

Uncertainty about future policies has increased due

to the geopolitical climate of 2016 which saw the

‘Brexit’: British referendum on the European Union and

Donald Trump elected President in the US Presidential

Election. The Sterling pound hit all time lows in 2016

following the EU referendum.

The global economy accelerated in the final

quarter of 2016 mainly due to improved conditions in

emerging market economies and advanced economies.

The main impetus behind this surge in activity is an

increase in private and public sector investment.

Recent data showing Chinese imports increasing by

20% highlight this boom in outlays.

The Chinese economy grew by 6.7% and is

expected to slow down in 2017 to 6.6%. Developing

nations grew by 4.1% in 2016. They are predicted

markedly improve to expand at 4.5% clip in 2017 and

4.8% in 2018.

The International Monetary Fund (IMF) forecast

a growth rate in 2017 of 3.5%, compared with 3.1%

in 2016. Stronger activity, expectations of more

robust global demand, reduced deflationary

pressures, and optimistic financial markets are

all upside developments.

The Sri Lankan Economy

Navigating through a volatile global economic

environment in the first half of the year, Sri Lankan

economy grew at a moderate rate of 3.9%. Total

growth in 2016 was lower than the projected

minimum of 5% and below 2015's rate of 4.8%.

This growth was mainly buoyed by expansion in

industry and services related activities amidst the

contraction recorded in Agriculture.

Some increase in the unemployment rate

was observed in the second quarter of 2016. The

unemployment rate during the first half of 2016 was

4.4% in comparison to 4.6% in the first half of the

previous year.

Business Model

In 2017, the Chinese economy is projected to

slow down. Together with this, the economic conditions

of Sri Lanka’s major trading partners, including India,

Japan, Russia and the Middle East, will also have a

significant influence on the domestic economy.

The momentum is expected to remain in 2017

with Sri Lanka’s economy expected to expand

5.5-6.0% in 2017, up from an estimated 4.5-5.0%.

The Sri Lankan Healthcare Sector

The Sri Lankan healthcare system delivers what is

widely recognised as some of the highest-quality care

in South Asia. As per the provisional data, there was

one qualified doctor for every 1,036 persons and one

nurse for every 652 persons in state hospitals by end

2016. Further, as at end 2016, there were 598 hospitals

with 3.6 beds for every 1,000 persons in the state

health sector.

The total Government expenditure on health

had increased to Rs. 186.1 Bn in 2016 compared to

Rs. 177.8 Bn in 2015 reflecting a Year on Year (YoY)

increase of 4.67%. The Government expenditure

on health, increased from 1.55% of Gross Domestic

Product (GDP) to 1.6% of GDP in 2016.

In 2016, World Health Organisation (WHO),

declared Sri Lanka as a Malaria free country (For three

years there wasn’t a single indigenous Malaria case

reported), in addition as a country that has eliminated

Lymphatic Filariasis in 2016.

The Government continued to improve health

sector infrastructure in 2016, a modern cancer ward

complex was added to the National Institute of Cancer,

an ambulatory care centre was developed and an

out-patient department complex at Kalutara General

Hospital and many more other projects.

Nawaloka Hospitals PLC Annual Report 2016/17 19Operating Environment Business Model

Sri Lanka has been quite successful in eliminating

certain communicable diseases. Yet the country still

struggles with other diseases like Dengue. Altogether,

in 2016, there were 55,150 reported cases of the

disease in Sri Lanka, out of which there were over

70 deaths. The increase in the number of Dengue

cases in 2016 can be mainly attributed to extreme

environmental and weather conditions that prevailed

during the year.

Non-Communicable Diseases (NCDs) are the

biggest challenge to the nation and its health sector.

The lack of a streamlined screening process where

patients are regularly tested which can lead to early

detection is one of the major issues of the sector.

The National Policy on Chronic NCD Prevention

focuses on four major shared modifiable risk factors

that potentially cause NCDs: smoking, alcohol, obesity,

and unhealthy diet and sedentary lifestyles. In 2016,

pictorial warnings covering 80% of the cigarette

packet and compulsory colour coding of beverages to

include their sugar level were introduced as measures

to combat NCDs.

Public Sector

2016 (a) 2015

Government (No.)

Hospitals (Practicing Western Medicine) 598 (b) 610

Primary Medical Care Units 487 (b) 475

Assistant Medical Practitioners 1,011 1,017

Ayurvedic (No.)

Ayurvedic Physicians (C) 23,082 22,672

Total Government Expenditure

on Health (Rs. Bn) 186.1 177.8

Recurrent Expenditure 155.4 140.6

Capital Expenditure 30.7 37.2

(a) Provisional

(b) 12 divisional hospitals have been demoted to

primary medical care units

(c) Registered with the ayurvedic medical council

Sources: Ministry of Health, Nutrition and Indigenous Medicine Department of Ayurveda, Ministry of Finance

Private Sector

Sri Lankan health system is of a mixed nature where

the private sector playing an important role. Currently,

around 95% of inpatient care and 50% of outpatient

care is provided by the public system, while the

private sector accounts for the remaining 5% and

50%, respectively. The private sector is concentrated

primarily in Colombo and other urban areas in the

highly populated Western Province, and is made up

of local chains and a handful of regional corporations.

With increased demand for healthcare and screening

for NCDs, the private sector plays a critically important

role in providing healthcare services in the country.

The private sector adopts the state-of-the-art

medical technology in the world which has to be

updated at least every three years to keep up with the

latest medical advances in the world and to comply

with best practices.

During the period under review, the private

sector participation in healthcare service delivery

continued to expand. By end 2016, there were 225

private hospitals, with a total bed capacity of 6,330,

administering western medicine. In addition, there

were 22 Ayurvedic private hospitals with a total of 326

beds. As at end 2016, there were 26 private medical

ambulance services, 146 full-time private dental

surgeries, 521 full-time general practices/dispensaries/

medical clinics, 24 full-time medical specialist

practices, 967 medical laboratories and 502 medical

centres/screening centres/day-care medical centres/

channel consultations registered under the MOH.

In 2016, the MOH, in collaboration with the

Private Health Services Regulatory Council and the

National Apprentice and Industrial Training Authority

(NAITA), initiated the conduct of refresher/gap filling

courses for nurses and dental surgery assistants, who

are currently employed at private hospitals, medical

centres and dental surgery practices.

Private sector providers are in the early stages

of exploring a variety of potentially high-growth

areas of investment, including medical tourism and

pharmaceutical manufacturing.

Nawaloka Hospitals PLC Annual Report 2016/1720 Operating EnvironmentBusiness Model

SWOT Analysis

SWOT Analysis for Nawaloka

Hospitals PLC

Strengths• Over 30 years of inimitable industrial experience

• Largest private healthcare provider in the country with the highest number of consultants

• Reputation for being the pioneer in modern healthcare

• Qualified and trained panel of elite nurses

• Expert panel of Board of Directors and Senior Managers who are highly capable of strategic planning

• Over 20% of market dominance in the private healthcare industry

• Fully functioning Nurses Training School

• Sound financial stability with SLA – (Stable) credit ratings in both short term and long term

• Sound financial performance: with a revenue growth of 8%.

• Consistent award and recognition achiever by means of receiving the Gold Award for sustainability from CA Sri Lanka for six consecutive times, the National Business Excellence Award and many more

• Situated in a strategic location

• Latest technology on a par with international standards

• Multi-purpose hospital with availability of wide range of services

Weaknesses• Lack of parking facilities

• Lack of modular concept in channelling section

• High maintenance cost

Opportunities• Medical Tourism

• Ability to expand medical coverage by building regional hospitals

• Entry to pharmaceutical distribution chain

• New medical centre establishment

• Hospital Management contracts

• Partnering with international hospitals to provide superior services

• Increased demand for wellness and healthier lifestyles which leads to weight management, aesthetic and cosmetic surgery

Threats• New market entrances by new competitors

• Barriers to recruit permanent consultants

• Barriers to recruit foreign medical consultants

• Imposition of taxes on hospital services

• Lack of consistency in interest rates

• Competition among leading players

• High outflow of experienced medical consultants to foreign countries

Nawaloka Hospitals PLC Annual Report 2016/17 21Business Model

Comparison of Key

Performance Indicators

Industry – 76,829


471

Industry – 20,458


745

Industry – 8,268


207

Industry – 32,499


741

DoctorsBeds

NursesPatient Care Assistants

Note: Industry statistics includes Government hospitals.

* Total number of doctors includes medical consultants and medical officers.

Operating Environment

Nawaloka Hospitals PLC Annual Report 2016/1722 Business Model

GOALS AND STRATEGIES

Regional Expansion

Given the fact that most private hospitals are situated

in the urban centres of the country, we planned on

investing further to expand the presence of Nawaloka

Hospitals PLC to regional areas. With the objectives

of offering premium healthcare that is accessible and

to provide specialised service to niche segments of

healthcare, we opened a branch of Nawaloka Hospital

in Negombo. We are proud to announce that our

Negombo branch has been a huge success offering

cutting-edge medical services through expertly trained

personnel and the latest technology and facilities.

We have also planned to introduce a Premium

Centre at the heart of Colombo which will provide

luxury medical services while catering to high-income

level population.

Medical Tourism

In 2016, there were over two million tourist arrivals

to Sri Lanka, a growth of 14% from 2015. Sri Lanka

is currently in the midst of a tourism growth spurt

and has garnered a reputation as an attractive value

destination for foreign tourists and investors alike.

Sri Lanka is also known for high-quality, low-cost

services. The country’s bid to become a centre

for health and wellness is supported by improved

connectivity and infrastructure.

Revenues from medical tourism worldwide

grew by 14% in 2015 to reach $563 Bn, according

to the Global Wellness Institute. In the Asia-Pacific

region alone $111 Bn was spent.

Nawaloka Hospitals PLC has recognised the

opportunities that medical tourism brings. In 2016/17

period Nawaloka Hospitals PLC accommodated 1,005

foreign patients.

We have already taken the necessary steps

to consolidate our position as a leading provider of

healthcare to foreigners. To this end, we have setup

strong relationships among foreign tourists and

foreign insurance companies. We provide affordable

Medical Packages for foreign countries and possess a

dedicated staff for Maldives and Seychelles. We have

introduced luxury elderly care focused on tourists

and continue to invest in state-of-the-art medical

instruments. We will continue to improve our Negombo

branch which was opened to cater to the niche market

segment of medical tourism.

Our Negombo branch has been a huge success offering cutting-edge

medical services through expertly trained personnel and the latest technology

ukd mqyqKqj ,;a jD;a;Shfõ§ka fukau kùk ;dlaIKho Wmfhda.S lr .ksñka ó.uqj

frday, ,nd fokq ,nk úYsIag ffjoH fiajd myiqlï ksidfjka tu YdLdj o b;d id¾:l;ajhg m;a ù we;

In 2016/17 we introduced a non-invasive Fat Burner Machine for Cosmetic Unit and

invested in an ENT Consol System

2016$17 j¾Ifha § wm úiska rEm,djkH tallhg fïo oyk hka;%h y`ÿkajd ÿka w;r wei"

lk" kdih mÍlaId lsÍfï hka;%hla i`oyd o wdfhdackh lrk ,§

In 2016/17 Nawaloka Hospitals PLC accommodated 1,005 foreign patients

2016$17 j¾Ifha kjf,dal frday,a iuQyfha úfoaYSh frda.Ska 1"005 la fkajdislj m%;sldr ,nd we;

Nawaloka Hospitals PLC Annual Report 2016/17 23Goals and Strategies Business Model

Introduction of New Products and Services

Over the last year, numerous new products and service

were introduced to offer the best service to our

clients. Last year we have introduced a non-invasive

Fat Burner Machine for Cosmetic Unit and invested

in an ENT Consol Unit. Further additions were made

to our Blood Bank Services with Direct Coombs Tests

and Red Cell Antibody Screening Tests. We also

invested in a modern dental X-ray Orthopantogram

unit. Throughout the year we have further expanded

our already extensive chain of laboratories around the

island. We have introduced luxury elderly-care unit.

We have also improved our patient satisfaction.

Our action plan is to embrace continuous

advancement in medical technology which is a

significant aspect of our vision of being the leader

of excellence.

ENT Console with Endoscopy SystemFat Burner 3D Lipo Non invasive machine

Herophilus studies the nervous system

280 BC

Nawaloka Hospitals PLC Annual Report 2016/1724 Business Model

New Car Park Building

Due to the rapid expansion of the scale of our

operations in the last three decades and to address

a timely grievance of our customers, employees

and other stakeholders, Nawaloka Hospitals PLC’s

Management approved the construction of a multi-

storey car park building adjacent to the Main Hospital.

The 14-storied building includes six floors of car

parking space consisting of 550 parking slots. The

remaining floors will house the new modular concept

Channel Section, Laboratories, 24/7 Pharmacy,

Information Counter and a Physiotherapy Section; each

area segregated for patient comfort and safety and

deliver additional services.

The project is in the final stage of completion

and has progressed as per the budgeted expenditure

and timeline for the reporting period. We are assured

that the project will progress in a similar manner

until completion in the ensuing financial year. Once

completed this would be the tallest steel structure

in Sri Lanka displaying yet another of our pioneering

initiatives in the industry and our commitment to

improve customer experience.

Multi storied car park with accommodation for 550 vehicles

STAKEHOLDERS

Stakeholders can be defined as any person or group

of people who have a significant interest in services

provided or who will be affected by any planned

changes. As the provider of acute healthcare to local

people, our activities are naturally of interest to a

wide range of individuals, groups and organisations.

All of these people are our stakeholders. They are

individuals or organisations that interact with us and

are significantly affected by our activities, products

and services and whose actions can reasonably affect

our ability to successfully implement our strategies and

achieve our objectives. Our primary stakeholders are

investors, customers, business partners, employees,

society and the environment, in which we operate as

well as regulators and Government authorities.

Engaging with Our Stakeholders

Effective stakeholder engagement requires strong and

enduring relationship between Nawaloka Hospitals

PLC and our key stakeholders. We firmly believe

in building sustainable relationships with people,

community and environment that are affected by

what we do. It relies on our commitment to listen and

communicate openly and honestly with stakeholders.

We have benefited from their involvement and have

identified areas for further development. We will work

towards ensuring wherever possible, there are no

surprises – through ongoing communication with our

stakeholders, a proactive approach and timely sharing

of emerging issues. We at Nawaloka Hospitals PLC

strive to foster an environment that welcomes and

engages stakeholders, creating a stronger sense of

joint ownership of the process.

Nawaloka Hospitals PLC Annual Report 2016/17 25Stakeholders Business Model

The mode and frequency of engagement vary depending on the stakeholder group and the nature

of a specific aspect to be addressed. These aspects are summarised below:

Stakeholder Strategies Method ofEngagement

Frequency ofEngagement

Key Topics and Concerns Raised

How the Organisation Responded to such Topics and Concerns

Customers Innovation – New packages/ new tests/ new high technology medical treatment

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

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

Meetings by public relationship officers

Responding to concern raised through Email and letters

Customer support desk

Periodic customer satisfaction survey feedback system

Service excellence of the hospital

Customer counter, Feedback forms

Whenever required Quality of the services received

Customer network Social media Annually New services/technologies introduced

Customer Complaints Management (ISO Procedure)

Public Relation Officer,Corporate website, Social media, Call Centre

Whenever required Service locations outside NH premises

Employees Human Resource Development

Inbound and Outbound Training

Monthly/Weekly Leadership skills,Negotiation skills,Crisis resolution skills

Quarterly performance appraisal

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

Continuous benefit schemes

Monthly meetings Monthly New procedure introduced

Rewards and recognition Evaluation Quarterly Emails

Grievance handling Grievance Committee Whenever required Employee suggestions and complaints

Memos

Occupational health and safety and employee welfare

Employee forums Monthly Risk involved in work-place

Training and awareness

Social events like employee get-together/cricket fiesta

Annually Achieving objectivesTargets vs. achievements

One to one discussion

Operational updates via E-mails

Whenever required

Legislation and Regulators

Promote voluntary compliance codes

Submitting reports Whenever required Private healthcare regulatory council

Ongoing dialogue and reviews

Adherence to all mandatory regulations

Filling reports/returns Annually Adherence to environmental regulations

Legal and Compliance Department

Press releases Whenever required Taxes

Corporate website Whenever required Other mandatory requirement

Nawaloka Hospitals PLC Annual Report 2016/1726 StakeholdersBusiness Model

Stakeholder Strategies Method ofEngagement

Frequency ofEngagement

Key Topics and Concerns Raised

How the Organisation Responded to such Topics and Concerns

Suppliers Laid down supplier selection policy

Meetings Weekly meetings Prices, new products delivery local time

Ongoing dialogue and tender committee meetings

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

News papers, Emails tender committee

Whenever required On time delivery

Quality upgrading of equipment

Ethical sourcing practices

Local sourcing and inclusive sourcing policy

Effective disputeresolution mechanism news papers, E-mailstender committee

Site visits Whenever required Services and periodic maintenance

Contractual performance

Society Community development and capacity building

Sponsorships Whenever required Enhancing water and sanitary facilities

Awareness programme

Mainly dialogues and communications through letters and e-communications

Direct communication with the consultants

Education and literacy Participation in public events

Whenever required Promoting health of the schools

Health and nutritional development of society

Press conferencesMedical campaign

Whenever required Enhancing facilities of the General Hospitals

Ethical sourcing Call centre Whenever required

Investors Innovation – New package/new test

Annual General Meeting

Annually Governance of the Company

AGM

Annual Reports

MeetingsHigh technology Media both ATL and BTL

Whenever required Advantages of the new machine,time consumption

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

Quarterly Report Quarterly Quarterly financial performanceAnnouncements to

stock exchangeWhenever required

Press conferences Whenever required Changes and improvement of governance Shareholder benefits

Consultants Modern Technology Individual meetings Whenever required Availability of facilities

Ongoing dialogue

Customer network Consultant forum Monthly basis Time schedules for practice

Service excellence of the hospital

New Technologies available in the global arena

Contribution to the Hospital

Consultant payments

Additional facilities required

Nawaloka Hospitals PLC Annual Report 2016/17 27Business Model

MATERIALITY AND VALUE CREATION

Significance to Nawaloka

Sig

nifi

cance

to

Sta

keho

lders

Medium High Very High

Med

ium

Hig

hV

ery

Hig

h

3, 4, 5, 6, 267, 10, 11, 15, 17, 18, 20, 22, 23

1, 8, 19, 21, 25

24

2, 13, 14, 169, 12

Materiality Matrix

Material Aspects

Aspect Significance

Indicators To Nawaloka To Stakeholder

Economic

1. Economic Performance G4-EC1

V H

G4-EC3

G4-EC4

Environmental

2. Materials G4-EN1 H H

3. Energy G4-EN3

H VG4-EN6

4. Water G4-EN9 H V

5. Emissions G4-EN15

H V

G4-EN16

G4-EN19

6. Effluents and waste G4-EN23 H V

7. Compliance G4-EN29 V V

We identify material issues which could impact

positively or negatively on Nawaloka Hospital PLC’s

ability to create and sustain value over the short,

medium and long term.

These material issues are reviewed annually by

the Board and Management in formulating strategic

priorities where all relevant internal, industry and

macroeconomic factors are evaluated.

An aspect can be material from both

perspectives; the Hospital and its stakeholders.

Therefore, Nawaloka has developed a two dimensional

materiality matrix, which takes into consideration both

perspectives. We have mapped the economic, social

and environmental aspects which are considered

material to both Nawaloka and its stakeholder.

Management Approach

The management’s approach to the above

material aspects are covered under the relevant

stakeholder capitals.

Nawaloka Hospitals PLC Annual Report 2016/1728 Materiality and Value CreationBusiness Model

Aspect Significance

Indicators To Nawaloka To Stakeholder

Social

Labour practices and decent work

8. Employment G4-LA1

V H

G4-LA2

G4-LA3

9. Labour/Management relations G4-LA4 M H

10. Occupational Health and Safety G4-LA6 V V

G4-LA7

11. Training and education G4-LA9 V V

G4-LA10

G4-LA11

12. Diversity and equal opportunity G4-LA12 M H

13. Equal remuneration for Women and Men G4-LA13 H H

14. Labour Practices Grievance Mechanisms G4-LA16 H H

Human Rights

15. Non-discrimination G4-HR3 V V

16. Freedom of association and collective bargaining G4-HR4 H H

17. Child labour G4-HR5 V V

18. Human Rights Grievance Mechanisms G4-HR12 V V

Society

19. Local Communities G4-SO1 V H

20. Anti-corruption G4-SO3 V V

21. Anti-competitive behaviour G4-SO7 V H

22. Compliance G4-SO8 V V

Product Responsibility

23. Customer Health and Safety G4-PR1 V V

G4-PR2

24. Customer satisfaction surveys G4-PR5 V M

25. Marketing Communications G4-PR6 V H

G4-PR7

26. Customer Privacy G4-PR8 H V

V – Very High H – High M – Medium

Nawaloka Hospitals PLC Annual Report 2016/17 29Business ModelMateriality and Value Creation

Serving Customers Better

Pharmaceutical Service

24-hours facilities

Home, Health and Care Facilities

Home Nursing

Home Physical/Occupational Therapy

Speciality Care 500+ specialised consultant

Surgery

Meals

Cardiology

Skilled Nursing

700+ well Trained Nurse Care

Palliative Care

Continue Training Programmes for all Level

of Staff

Geriatric Care

Transportation

Car Park Facility

Oncology

Health Literacy

Social Determinants

Phrenology

Gynaecology

Pain Management

Transplant

Cosmetic

24-Hour O.P.D. Service

24-Hour ETU Facility

24-Hour Ambulance Service

Supportive Staff

Clean Hygienic Service

Care Facilities

24-Hour Laboratory Service

400+ Hospital Beds

(Inc. Nawaloka Neg.)

Investment on Cutting Edge Technology

24-Hour Dedicated Calling Centre Assistance


1249

Roger Bacon invents spectacles

Nawaloka is honoured to play a pivotal role in enhancing the ‘Vision of man’ – we mean the eyesight of all. Just one aspect of what we offer – the Excimer Laser process, which renders eyesight correcting facilities that allow the patient to ditch spectacles or contact lenses...forever!

Performing a Lasik Surgery using latest technology


Aspect Measure 2016/17 2015/16 2014/15

Revenue Turnover (Rs. Mn) 6,300 5,860 4,602

Profitability Gross Profit Margin (%) 52 50 49

Net Profit Margin (%) 4 4 2

Working Capital Management Current ratio (times) at the end 0.83 0.89 1.03

Quick asset ratio (times) at the end 0.73 0.70 0.80

Capital Structure Debt/Equity (%) at the end 1.37 1.27 0.84

Interest Cover (times) 1.63 1.71 1.24

Results of Operations

In 2016/17 Nawaloka Hospitals recorded a turnover of

Rs. 6,300 Mn which was an increase of 8% (Rs. 439 Mn)

over the previous year’s figure of Rs. 5,860 Mn.

This growth is mainly due to the increase of Cath

Lab cases, Theatre Surgeries, Radiology tests etc.

There is a continuous growth as shown by

Nawaloka Medicare (Pvt) Ltd., this year. Furthermore

the acquisition of new machinery during the year,

contributed to the increase in revenue.

They are:

zz Fat Burner Non-Invasive Service at Cosmetic Unit.

zz Dental X-ray OPG etc.

zz ENT Console

zz High Definition Video Endoscopy System

Revenue (Rs. Mn)

7,000

5,250

3,500

1,750

0

2012/13 2015/162014/152013/14 2016/17

FINANCIAL CAPITAL

Revenue Composition (%)

Inward60

OPD40

60% of the Hospital revenue was generated

through in-house patient whilst 40% was generated

from outpatient department.

Other Operating Income

The Gross Profit Margin of the Group increased by

4% from 50% in year 2015/16 to 52% in year 2016/17.

Reasons for the growth in other income; were

providing challenging targets to each department and

monitoring mechanism to provide due diligence.

Other Operating Income (Rs. Mn)

140

105

70

35

0

2012/13 2015/162014/152013/14 2016/17

MANAGEMENT DISCUSSION AND ANALYSIS

Leonardo da Vinci dissects corpses

1489

Nawaloka Hospitals PLC Annual Report 2016/17 33Financial Capital Management Discussion and Analysis

Financial Position

The Group’s total assets increased by 28% over the

previous year’s figure of Rs. 11,193 Mn to Rs. 14,348 Mn.

The main contributory factor was the purchase of new

equipment such as ENT Console, Digital Dental X-ray

and FAT Burner primarily through borrowings from

bank sector.

As a result debt to equity ratio increased by 8%

to 1.37 as at 31st March 2017 compared with 1.27 as at

31st March 2016.

Performance of Business Units

Details of the performance of some of our key

departments are given below:

Surgical Department

Operating theatre revenue grew by 24% when

compared to lost year 2015/16.

Nawaloka has performed more than 18,400

surgeries during the year and 627 number of Coronary

Bypass Grafting (CABG) in addition.

Operation Theatre Revenue (Rs. Mn)

140

105

70

35

0

2015/162014/15 2016/17Base Year –

The Surgical Intensive Care Unit (SICU) has

shown its highest occupancy since the inception,

which can be attributed to the expansion of

surgical packages and the product mix of absolute

affordability. Using this unique formula, the Surgical

Department excelled in pre/intra/post operative

care, gaining the confidence of visiting surgeons

and prompting a pragmatic shift to major surgical

procedures in the liver, neuro and vascular areas.

A unique combination of visiting and resident

surgeons helps to optimise the use of theatres while

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

24-hour anesthetists cover is available.

All of these factors contributed towards

maximising the volume of the surgeries.

Radiology and Imaging Science

Nawaloka boasts of the best image processing facilities

in the Radiology field of any healthcare provider in

the country. The number of successfully performed

cases has shown a steady growth and was 92,000

during the year.

Compared with base year 2014/15 it has increased

the number of cases handled by 13% and successfully

done more than 92,000 cases during the year utilising

3 TESLA MRI Scanner, 640 slice CT Scanner and five

ultrasound machines in Radiology Department.

CT/MRI/X-RAY Cases (%)

120

90

60

30

0

2015/162014/15 2016/17Base Year –

Revenue has increased by 13% over the base

year 2014/15.

Channelling

Channelling volume has also increased significantly

over the last three years with an increase of 2% in

2016/17 over the figure in 2015/16. The total number

of channels during the year was 574,957.

Channelling (%)

120

90

60

30

0

2015/162014/15 2016/17Base Year –


Mammography Unit

The Mammography Unit handled a total of 2,500 cases

in 2016/17. The unit recorded a 2% increase in the

number of cases when compared with year 2015/16.

Mammography Cases (%)

140

105

70

35

0

2015/162014/15 2016/17Base Year –

Physiotherapy

Physiotherapy has been one of our most successful

departments where the number of cases increased by

26% over year of 2015/16. The total number of cases

handled during the year was 74,000.

Physiotherapy Cases (%)

160

120

80

40

0

2015/162014/15 2016/17Base Year –

Shock Wave Therapy Treatment in Physiotherapy Unit

Financial CapitalManagement Discussion and Analysis

In 2016/17 Nawaloka Hospitals recorded a turnover of Rs. 6,300 Mn which was an

increase of 8% over the previous year

2016$17 j¾Ifha § wm frday, remsh,a ñ,shk 6"300 l wdodhula jd¾;d lr we;s w;r fuh fmr uQ,H

j¾Ihg idfmalaIj 8] j¾Okhls

The Surgical Intensive Care unit (SICU) has shown its highest occupancy

since the inception

Y,H oeä i;aldr tallh tod fuod ;=< jd¾;d jQ jeäu fkajdisl frda.Ska .Kk

fuu jif¾ jd¾;d ù we;


Value Generated and Distributed

2016/17Rs.

2015/16Rs.

2014/15Rs.

2013/14Rs.

2012/13Rs.

Value Added

Revenue 6,299,910,436 5,860,218,161 4,602,433,640 3,993,473,302 4,222,907,733

Less: Cost of Materials and Services Obtained 3,526,074,553 (3,646,563,430) (2,983,613,751) (2,418,803,334) (2,432,734,726)

Add: Other Income 129,152,153 94,495,240 65,199,571 64,194,796 44,047,999

2,902,988,036 2,308,149,971 1,684,019,460 1,638,864,764 1,834,221,006

Distribution Value Added

To Employees

Salaries, Wages, Incentives and Other Benefits 1,299,957,507 1,151,309,690 968,758,629 832,696,146 865,042,371

Total Employees 1,299,957,507 1,151,309,690 968,758,629 832,696,146 865,042,371

To Lenders

Interest on Loans and Leases 451,644,537 372,317,361 285,092,829 202,170,943 104,009,192

Total Interest on Loans and Leases 451,644,537 372,317,361 285,092,829 202,170,943 104,009,192

To Government

Taxation 61,280,520 109,218,200 9,176,683 83,783,780 2,832,483

Total Government 61,280,520 109,218,200 9,176,683 83,783,780 2,832,483

To Provision

Results of Associate Companies – – – – –

Impairment Profit/(Loss) – – – – –

Revaluation Deficit – – – – –

Total Provision – – – – –

To Expansion and Growth

Depreciation 537,296,651 469,423,205 351,695,092 303,447,828 265,422,430

Retained Profit/(Loss) 552,808,820 205,881,515 69,296,227 216,766,067 596,914,530

Total Expansion and Growth 1,090,105,472 675,304,720 420,991,319 520,213,895 862,336,960

Total Value Generated and Distributed 2,902,9988,036 2,308,149,971 1,684,019,460 1,638,864,764 1,834,221,006

Financial Assistance Received from Government

A tax exemption was granted to Nawaloka Medicare

(Pvt) Ltd., for six years commencing either from two

years of commencing business or the first year in

which profit is reported. A tax exemption was granted

to the New Nawaloka Medical Centre for 10 years

commencing from 2009.

Financial Capital Management Discussion and Analysis

Total Value Generated and Distributed (Rs. Mn)

4,000

3,000

2,000

1,000

0

2012/13 2015/162014/152013/14 2016/17

Zacharias Janssen invents the microscope

1590


Intellectual capital is the intangible assets of a

company. Such assets, while not precisely quantifiable

and as such, do not appear on the balance sheet,

nevertheless contribute to the success and value of

the Company. It includes things such as systems and

procedures, information technology, organisational

culture, ethics, values, organisational knowledge and

brand value.

Nawaloka, over the period of its existence,

has built up a tremendous store of organisational

knowledge. We have also attained a level of

professionalism and expertise second to none in the

field. We have also stayed abreast of technological

developments and are equipped with state-of-the-art

bio medical instruments. Our staff are also competent

and well trained to operate them so as to derive the

maximum benefits. Among our achievements have

been introducing the CT Scanner, MRI Scanner, the

latest 640-slice CT Scanner, 4D Ultra Sound Scanner

and the Fibro Scanner to Sri Lanka.

A recent development has been the

establishment of a Cosmetic Unit which is drawing

a large number of customers. The Nawaloka Skin

Care Unit also carries out the most advanced laser

care treatments.

INTELLECTUAL CAPITAL

Brand Equity and Brand Platforms

At Nawaloka, we have always aspired to provide the

highest possible standard of service to our clients

and we have also always been completely ethical in

our conduct. This, together with the competence,

dedication and loyalty of our staff have inspired trust

and contributed to our brand image.

To elaborate on the specific factors and

strengths that have contributed to building our

brand value, some of them are our pioneering spirit;

the customer centricity which is inbuilt into our

services; our innovative services; our apprentice

training programme; our high clinical success rate; the

reputation of our medical staff; ethical governance

policy and cost effectiveness.

IT Capabilities and Developments

We have achieved a very high degree of automation

in all procedures from patient admission to billing and

discharge. Comprehensive details of our IT processes

and their impacts are given below:

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

VPN for connecting branch hospitals High High availability of systems, minimum down time

Pharmacy Queue Management System High Improve service , better patient management

Digital Prescription Pad for channel consultations High Accurate electronic medical records with history

Face Scanners for attendance recording Medium Easy controlled, accurate information.

Asset Management System Medium Accurate information

Management Dashboard

(Qlik view data visualisation tool)

High Better decision-making with summarised information,

Business intelligence

Paperless online automations (HIS) High Reduce cost and improve accuracy

Smiley Face touch screen High Improve better customer service

PAC system for Radiology Department High Better customer service with accurate reporting

and less time

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

management

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

management

Online Medical and Surgical package payment

through www.nawaloka.com Hospital website High Improved services

Online Final Bill Payment through

www.nawaloka.com

New Hospital website High Improved services

Management Discussion and Analysis


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

Automated OPD Consultation Medium Electronic Medical Record for OPD Patients

Automated ETU Consultation Medium Electronic Medical Record for ETU Patients

Face book page and a group for Nawaloka

for social network promotions High Better social network

Microsoft windows licensing High Adhere ethics of industry

Introduced fingerprint for attendance

and register points. High Improve controls and accurate data

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

Electronic Discharge summary High Accurate and efficient electronic medical records

Electronic Diagnosis Card High Accurate and efficient electronic medical records

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

discharge time

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

been implemented

New system implementation at Negombo High Growth of business

Wi-Fi facility Medium Improved services

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

New Call Billing System High Automated call system

New Fiber Backbone Cablings High Zero down time and fasten the internet LAN

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

and reliability

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

Heart Centre Web Site High Market and Promote Hospital Cardiac Centre

OPD System High Streamline hospital outpatient caring process

Maternity Package System High More efficient system for drug request

Automated Blue Card High More accurate and efficient system for nurse station

to request drugs from utilities

Introducing Privilege Card for Cooperate and

Individual clients in different categories.

Platinum, Gold and Silver

High This will facilitate clients with a dedicated counter to

serve them on top priority basis. And provide them

with online service and room reservation

Online appointment booking through

www.nawaloka.com

High Patient convenient, more speedy way to access

hospital channel appointments

SMS Campaign High Improve public relation with awareness

Unique Patient Identification Number (UPIN)

with patient registration

High Much accurately identify the patient and history

of the patient

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

via network

Fire Wall High Data Protection

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

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

Oracle Licensing High Compliant with regulations

New Payroll System Medium In-house maintained. Easy controlled

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

Doctors search touch screen kiosks in Lobbies High Better customer service

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

Intellectual Capital Management Discussion and Analysis


Corporate Culture

To deliver the best services to our customers, it is

essential that our employees are trained, motivated

and well-rewarded, not only financially but in other

ways as well. We provide our staff with a conducive

working environment, training not only geared to their

current duties but also to enable them to progress in

their careers and a range of benefits. The quality of our

human resource management has been confirmed by

accolades from accredited bodies.

Some of the steps we have taken to provide our

employees with a great working experience include

flexible working hours, educational reimbursements,

accommodation, uniforms and sponsorship for

seminars.

Procurement Policy

The overall objective of our procurement policy is to

ensure that all necessary materials, equipment and

services are available when needed to facilitate smooth

functioning of operations while optimising costs.

To this end, we have put in place standardised and

efficient procurement procedures. This includes clearly

defined criteria to evaluate suppliers.

The following are some of the measures we have

adopted to streamline our procurement policy:

zz Maintain an updated vendor master file and

implement supplier selection criteria.

zz Assess and continuously monitor supplier

agreements to ensure they have proper licenses

to operate.

zz Clearly identify procurement staff’s roles and

responsibilities and ensure that they are

adequately trained.

zz Assess suppliers according to defined environmental

parameters and conduct regular audits to keep

their standing updated.

zz Give priority to suppliers with sound environmental

and labour policies.

zz Review at least three quotations prior to making

a purchase decision to ensure an equal opportunity

to all suppliers.

zz In addition, the procurement staff are given

performance goals, objectives and sustainable

procurement aspects for which they are held

accountable through their personal development

evaluations and assessments.

Intellectual CapitalManagement Discussion and Analysis

Over the years Nawaloka has built up a tremendous store of organisational

knowledge. Nawaloka has attained a level of professionalism and expertise second

to none in the field. A recent development has been the establishment of a Cosmetic

Unit which is drawing a large number of customers

kjf,dal frday, jir .Kkdjla mqrd w;s úYsIag wdh;ksl oekqï iïNdrhla f.dvk.d f.k we;s

w;r wka lsisfjl=g fkdfofjks jD;a;Suh oekqula yd ksmqK;djla ,`.d lrf.k we;' rEm,djkH tallfha isÿlr w;s oejeka; wdfhdackh;a ksid fiajd,dNSka

úYd, ixLHdjla ta lrd wdl¾IKh ù we;

1628

William Harvey publishes an anatomical study of the motion of the heart and of the blood in animals which forms the basis for future research on blood vessels.


Over the last 31 years, we have nurtured quality

relationships with our investors. Through the

interaction of various forms of financial and

non-financial capital, we create value for the Company

and in turn deliver value to our key stakeholders.

INVESTOR CAPITAL

Our relationship with our investors is one of mutual

confidence and accountability. We keep our investors

well-informed, while conducting business in a

transparent way.

Ordinary Share Information

Market Price per Share (Rs.) 31.03.2017 31.12.2016 30.9.2016 30.06.2016 31.03.2016 31.12.2015 30.09.2015 30.06.2015

High 4.70 4.80 4.80 5.00 3.70 3.70 3.90 3.20

Low 4.20 4.30 4.00 3.40 3.10 3.00 2.90 2.90

Closing 4.70 4.50 4.60 4.10 3.50 3.30 3.60 3.10

Nominal Value per Share Rs. 1.00.

Market Activity

2016/17 2015/16

Highest Price (Rs.) 5.00 3.90

Lowest Price (Rs.) 3.40 2.90

Year end price (Rs.) 4.70 3.50

No. of Share Transactions 3,774 2,690

No. of Shares Traded 50,507,539 372,106,762

Share Turnover (Rs.) 222,227,787 1,463,392,640

Shares held by Public 34.21 9.65

Key Financial Activity over Five Years

Group Company

2016/17 2015/16 2014/15 2013/14 2012/13 2016/17 2015/16 2014/15 2013/14 2012/13

Financial Ratios

Return on Capital Employed (%) 5.43 5.16 2.25 5.35 12.02 (45) (9) 5.31 6.32 15.36

Current Assets Ratio 0.83 0.89 1.03 1.11 0.71 1.30 1.83 1.62 1.12 0.53

Quick Assets Ratio 0.73 0.7 0.80 0.85 0.48 1.24 1.75 1.53 1.01 0.48

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

Debt/Equity Ratio 1.37 1.27 0.84 0.58 0.25 4.80 3.21 1.78 1.20 0.16

Earnings/(Loss) per Share (Rs.) 0.17 0.15 0.06 0.15 0.32 (0.31) (0.09) 0.06 0.08 0.18

Net Assets per Share (Rs.) 3.15 2.83 2.76 2.77 2.67 0.69 1.04 1.20 1.21 1.18

Dividend per Share (Rs.) 0.08 0.07 0.06 0.05 0.05 0.08 0.07 0.06 0.05 0.05



Top 20 Shareholders of Nawaloka Hospitals PLC as at 31st March 2017

Name Number of Shares

%

1. Mr. H K J Dharmadasa 462,736,182 32.83

2. Nawaloka Construction Company (Pvt) Ltd. 441,778,880 31.34

3. Mr. K D D Perera 370,062,674 26.25

4. Mr. C K Atapattu 7,036,719 0.50

5. Employees’ Provident Fund 6,186,379 0.44

6. Ms. A G Dharmadasa 5,066,686 0.36

7. Mrs. P Nanayakkara 5,066,666 0.36

8. Mr. D M Rajapaksa 4,496,389 0.32

9. Mr. V R Ramanan 3,400,000 0.24

10. Mr. A G Dharmadasa 3,004,026 0.21

11. Nawaloka Developments (Pvt) Ltd. 2,814,932 0.20

12. Mrs. C S Dharmadasa 2,581,866 0.18

13. Mr. K S Warusavitarana 2,500,066 0.18

14. Mr. U H Palihakkara 2,463,512 0.17

15. Mr. L Hettiarachchi 2,240,000 0.16

16. Tranz Dominion, L.L.C. 1,719,990 0.12

17. Mrs. N H Abdul Hussein 1,450,500 0.10

18. Ranatunga Motors (Pvt) Ltd. 1,337,598 0.09

19. Mr. V K L Sugumar 1,099,998 0.08

20. Elgin Investments Ltd. 1,000,000 0.07

Total Shares 1,328,043,063 94.22

Balance 81,462,533 5.78

Total No. of Shares 1,409,505,596 100

Range of Shareholders

As at 31st March 2017 No. of Shareholders No. of Shares % of Shareholding

1 – 500 2,163 328,599 32.28

501 – 5,000 2,456 5,455,377 36.66

5,001 – 10,000 731 5,548,095 10.91

10,001 – 20,000 559 8,529,847 8.34

20,001 – 30,000 275 7,272,344 4.11

30,001 – 40,000 139 4,899,827 2.07

40,001 – 50,000 70 3,321,447 1.05

50,001 – 100,000 149 11,315,347 2.22

100,001 – 1,000,000 138 35,791,650 2.06

1,000,001 & above 19 1,327,043,063 0.30

Total 6,699 1,409,505,596 100

Investor CapitalManagement Discussion and Analysis


Composition of Shareholders

No. of Shareholders as at 31.03.2017

Total Holding

% No. of Shareholders as at 31.03.2016

Total Holding

%

Category

Institutional shareholders 51 399,084,646 28.31 87 459,279,117 1.22

Individual shareholders 6,648 1,010,420,950 71.69 7,042 950,226,479 98.78

Total 6,699 1,409,505,596 100 7,129 1,409,505,596 100.00

Non-resident shareholders 19 1,972,334 0.14 14 733,432 0.20

Resident shareholders 6,680 1,407,533,262 99.86 7,115 1,408,772,164 99.80

Total 6,699 1,409,505,596 100.00 7,129 1,409,505,596 100.00

Directors Shareholding as at 31st March 2017

Name No. of Shares

Mr. H K J Dharmadasa 462,736,182

Mr. Rienzie T Wijetilleke 33,332

Deshabandu Tilak de Zoysa 218,000

Prof. Lal Chandrasena 601,198

Mr. U H Dharmadasa 3,360

Mr. A G Dharmadasa 3,004,026

Ms. A G Dharmadasa 5,066,686

Mr. Damian Sunil AbeyRatna –

Mr. Tissa K Bandaranayake –

Mr. Victor Rajamanner Ramanan 3,400,000

Mr. Palitha Mendis Kumarasinghe, PC –

Shares held by the Public as at 31st March 2017

In calculating the shares held by the public as at

31st March 2017, shares held by the Directors, their

spouses, shares held by Nawaloka Construction

Company (Pvt) Ltd, Nawaloka Developments (Pvt)

Ltd., shares held jointly by Mr. H K J Dharmadasa/

Seylan Bank PLC and shares held by Mr. Victor R

Ramanan and the holders of 10% and more than 10%

shares have been excluded. Consideration is also

given to significant influence over operations in

any exclusions.

Name of the Shareholder (Other than Public) No. of Shares

Mr. H K J Dharmadasa 462,736,182

Mr. Rienzie T Wijetilleke 33,332

Deshabandu Tilak de Zoysa 218,000

Prof. Lal Chandrasena 601,198

Mr. U H Dharmadasa 3,360

Mr. A G Dharmadasa 3,004,026

Ms. A G Dharmadasa 5,066,686

Mrs. C S Dharmadasa 2,581,866

Mrs. Prithiva Nanayakkara 5,066,666

Chandula Lasith Perera 13,332

Nawaloka Construction Company

(Pvt) Ltd. 441,778,880

Nawaloka Developments (Pvt) Ltd. 2,814,932

Mr. H K U Dharmadasa 532

Mrs. S D Chandrasena 48,000

Estate of Late Deshamanya

H K Dharmadasa –

Mr. Victor R Ramanan 3,400,000

Mr. Palitha M Kumarasinghe PC –

Seylan Bank PLC/Thirugnanasambandar

Senthilverl –

Total number of shares held by –

other than public 927,366,992

Percentage 65.79%

Shares held by public 482,138,604

Percentage 34.21%

1,409,505,596

Number of public shareholders 6,685

Sir Christopher Wren experiments with canine

blood transfusions

1656

Investor Capital Management Discussion and Analysis


1670

Anton van Leeuwenhoek discovers blood cells

Timely and accurate. If we had to choose two words that embody the essence of Nawaloka’s laboratory services, it would be these. Every one of the people who work in our laboratories knows the value of a timely report and its accuracy in preemption and treatment of disease. It's why, we have one of the best laboratories in the island.

Use of latest Microbiology techniques for accurate diagnostics


Positive feedbacks on customer surveys

No. of Facebook likes in year 2016/17

Average time taken to answer a call

Average No. of calls received per month

13,32996.22% 34 Sec. 144,181

CUSTOMER CAPITAL

Age Analysis of Customers during the Year 2016/17 (%)

More than 80 years2.95%

36 to 50 years23.78%

Below 66.17%

6 to 18 years6.44%

19 to 35 years20.99%

67 to 80 years13.83%

51 to 66 years25.84%

Geographical Segmentation of Customers (%)

Eastern1.4%

North Central4.7%

Central15.4%

Western42.2%

Southern22.1%

North Western8.1%

Sabaragamuwa5.0%

Uva0.9%

Northern0.2%

Patient Admissions (Nos. '000)

32

24

16

8

0

2015/162014/152013/14 2016/17

Connecting with customers enables growth in

any industry, but it is quintessential in healthcare.

Customers seek healthcare when they are in their most

vulnerable state. How a healthcare professional, nurse,

doctor, receptionist, or other workers, interacts with

our customers, can have a profound impact on their

care experience.

Over the past 31 years, Nawaloka Hospitals PLC

have upheld our founding mission of ‘Healing with

Feeling’. Over the years, we have created meaningful

connections with our range of customers who hail from

all segments of the Sri Lankan society and even from

abroad. We have built these meaningful connections

over time by consistently providing a world-class

healthcare experience to our customers.

As mentioned in the sections above, Nawaloka

Hospitals PLC is a pioneer providing state-of-the-art,

innovative medical technology since our inception.

We have many ‘firsts’ under our belt. Our advanced

theatres, comfortable patient facilities, and extensive

modernisation and facility upgrades are aimed at

improving customer value. We will continue to

spearhead the private healthcare of the island in the

future as we have done in the past.

We recognise that just as our customers are

diverse, their expectations are also varied. Therefore,

providing exemplary customer service is challenging.

Health concerns often cause a great deal of anxiety

among patients and their family members. Therefore,

we continuously improve our efforts to meet the

changing needs of our customers. Our trained,

dynamic, highly-skilled healthcare professionals deliver

outstanding service, while being mindful about each

customer’s unique set of circumstances and make an

effort to understand what they are experiencing and

treat them with empathy to make them as comfortable

as possible.



Monthly Analysis of Patient Admissions – 2016/17 (Nos.)

3,000

2,250

1,500

750

0

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

Monthly Analysis of Channel Appointments –

2016/17 (Nos. '000)

60

45

30

15

0


Foreign Patient Admissions (Nos.)

1,400

1,050

700

350

0

2012/13 2015/162014/152013/14 2016/17

Customer Capital Management Discussion and Analysis

Over the past 31 years, we have created meaningful connections with our range

of customers who hail from all segments of the Sri Lankan society by consistently

providing a world-class healthcare experience and upholding our founding

mission of ‘Healing with Feeling’

YS% ,dxlSh iudcfha ish¨u me;slvhka Tiafia wm wdh;kh iu. jir 31 la uq`:,af,a f.dvk.d .;a m%n, mdßfNda.sl iïnkaO;djhg fya;= jQfha wmf.a fufyjr jQ zohdfjka iqjhZ uq,a lrf.k ,ndÿka

cd;Hka;r uÜgfï fi!LH fiajdjhs

Nawaloka Hospitals PLC is the first hospital in Sri Lanka to have won the ISO 9001:2008

Sri Lanka Quality Award and National Business Excellence Award

Y%S ,xldfõ m%:u jrg ISO 9001:2008 ;;a;aj iy;slh iy cd;sl jHdmdr úYsIag;aj iïudkfhka

kjf,dal frday, msÿï ,nhs

We are proud to be the first private healthcare facility to provide state-of-the-art FDA approved full body Phototherapy,

CO Laser and Diode Laser to Sri Lanka

kùk;u ffjoH fiajd iemhSfï wruqKska ,xldfõ m<uq jrg wdydr yd T!IO wêldß wkque;sh iys; f*dfgda f;rms hka;%h yd f,ai¾ hka;% kjf,dal

frday, y`ÿkajd § we;


Our Core Business

We have identified and integrated five core business

sectors in creating value. Our business model is geared

to generate revenue from the following sectors:

1. Channelling

2. Lab

3. Theatre

4. Radiology

5. Pharmacy

1. Channelling

Our channelling services are conducted by expert

consultants belonging to every medical specialty

capable of providing diagnosis from minor illnesses

to major emergencies. Our extensive network of

consultants in every field makes it convenient for our

customers to select the ideal, desired choice. The total

revenue recorded from channelling and consultancy

was Rs. 356.8 Mn in 2016.

2. Lab

We provide professional laboratory diagnostic

services for patients in our care. Our labs use the

latest techniques and equipment to provide patients

with fast, accurate test results. Nawaloka has a great

reputation for providing reliable lab reports over the

years. The laboratory services also impact the revenue

of Nawaloka Hospitals PLC. This year we recorded an

income of Rs. 365.8 Mn.

3. Theatres

Nawaloka Hospitals PLC possesses twelve operating

theatres with dedicated theatres for advanced

surgeries. They are equipped with the latest

technology and our surgeries are performed by

experienced, experts in the field. We have carried out

numerous successful surgeries over the years and our

operating theatre complex is the largest in the private

healthcare sector of the country.

In 2016/17 we generated Rs. 206 Mn from

our theatre surgeries. As a percentage it forms a

significant portion of our total revenue.

4. Radiology

As the pioneer we have the most innovative and

state-of-the-art Radiology Unit in the field.

We have invested heavily in improving the

Radiology Unit over the last few years. The Unit has

acquired the latest 640-slice CT Scanner. It is planned

to invest in a brand new 1.5 TESLA MRI scanner during

the next year in addition to the existing 3 TESLA MRI

scanner. In 2016, our Radiology Unit contributed Rs.

584.1 Mn to our total revenue.

5. Pharmacy

We have three pharmacies in our Hospital premises

providing a complete range of inpatient and outpatient

pharmacy services. Our pharmacies are open 24 hours

and maintain a safe, efficient system for dispensing

medications. They also provide drug information on the

selection and dosage to the patients and collaborate

with the medical team to provide the best service

available to our customers. The pharmacy department

recorded an income of Rs. 2,057 Mn in 2016.

Pharmacy at Nawaloka Hospital


Our Products and ServicesNawaloka offers its customers an extensive portfolio of healthcare services, which are premium in quality and

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

Other Health ServicesAmbulatory Blood Pressure Monitor Holter Monitor Sleep StudyCarpal Tunnel ReleaseLung Function TestDialysisHaemodialysis unitDEXA ScanningFibro ScanLaboratory services Dental Orthopantogram X-rayLateral Cephalometry X-rayAnterior Cephalimetry X-rayDirect Coombs TestRed Cell Antibody Screening Test

Dementia Clinic

Radiology ServicesC.T. Scanning Doppler ScanningMRI ScanningUltra Sound ScanningX Ray FacilitiesMammogram

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

Ophthalmology ServicesVitrectomy Ultrasound Laser System (TPPV)

Vitrectomy Ultrasound Laser System (RP)

Fluid Gas Exchange

Silicon Oil Removal

Repeat TPPV

Squint Correction Surgery

Keratoplasty Surgery

Cataract Eye Package (OPD/Inward)

Avesting Eye Injection

Special Laser Cataract Package

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

ENT ServicesAudiology Clinic

Speech Therapy

ENT Tymponoplasty

EEG

Free Field Test

Examination under

Microscope Ear

(EUM)

Rigid Nasal

Endoscope (RNE)

Cardiac ServicesCABG Normal

CABG (High risk without IABP)

CABG (High risk with IABP)

Coronary Angiogram

PTCA

Angiography

ECHO Cardiography

ECG, Exercise ECG

Serene Health Screening Centre ServicesPreliminary Screen Package (Under 40 years) Classic Screening Package (Under 40 years)Premier Packages (Under 40 years) Standard Package (Under 40 years) Comprehensive Screening Package (Over 40 years) Cardiac Screening Package Andropause Check (Over 50 years) Screening Package for Senior Citizens (Over 50 years)Joint Pain and Arthritis Package (Over 50 years) Premarital Screening Package Feminine Package for TeensDiabetic Screening Package Food Handler’s Check Dementia PackageScreening Package for Teens Known Diabetics (Annual/Quarterly/Monthly Checkups)Obesity PackageNeuropathy Screening

Gynaecology ServicesGynaecology – Abdominal Hysterectomy

Abdominal Myomectomy

Gynaecology – L.S.C.S

Gynaecology – Normal Delivery

Maternity Packages

Diagnostic Laparoscopy

Laparoscopy and Dye Test

Laparoscopy Adhesiolysis

Laparoscopy Sterilisation

Laparoscopy Salpingectomy

Laparoscopy Cystectomy

Laparoscopy Ovarian Drilling

Oopherectomy

Antenatal Exercise Classes

Maternity Awareness Programme

Surgical Services Laparoscopic Cholecystectomy

Laparoscopic Appendectomy (Open)

Appendectomy

Haemorrhoids

Circumcision

TURP

Laminectomy

Headache Clinic

Thoracoscopy Package

Laser Varicose Package

Sleep Lab Package

Enterscopy

Day Care Packages – OPD Surgical Packages

General Surgery – Appendectomy

General Surgery – Circumcision

General Surgery – Lap Appendectomy

General Surgery – Lap Cholecystectomy

Lung/Kidney/Liver Transplants

Cardiac UnitsEcho Cardiography, ECG/EEG,

Exercise ECG

Angiography

Dental Unit

Cosmetic Unit ServicesPhototherapy

Skin Rejuvenation

Scar Removal

Laser Hair Removal

Body Contouring Surgery

Hair Transplant

Wrinkle Reduction

Bone Marrow Transplant Unit

Nawaloka Hospitals PLC 2016/17 47Customer Capital Management Discussion and Analysis


New Products Launched and Product Re-Launches

Cosmetic Unit Services

Fat Burner (Cavitation, Cryotherapy, Radio Frequency)

Dental Unit

Dental Digital X-Ray (Orthopantogram, Lateral Cephalometry, Anterior Cephalometry)

ENT Services

Free Field Test

Examination under Microscope Ear (EUM)

Rigid Nasal Endoscope (RNE)

Other Services

Direct Coombs Test

Red Cell Antibody Screening Test

Nawaloka Cosmetic Unit

The Nawaloka Cosmetic Unit offers services performed

under safe and sterile conditions by Board certified

professionals, including consultant dermatologists,

plastic surgeons and an oculoplastic surgeons.

Here is a list of services offered by the

Cosmetic Unit:

zz Phototherapy

zz Skin Rejuvenation

zz Scar Removal

zz Laser Hair Removal

zz Body Contouring Surgery

zz Hair Transplant

zz Wrinkle Reduction

We are proud to be the first private healthcare

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

body Phototherapy, CO Laser and Diode Laser to

Sri Lanka. For example, the Gold Standard Acu Pulse,

a safe, simple CO laser, manufactured in USA, is the

latest Industry standard that delivers outstanding

results. It can be used for 34 aesthetic indications,

more than any other CO laser available in Sri Lanka. It

offers a multitude of capabilities, which includes skin

rejuvenation, removal of stretch marks, scar removal

and wrinkle reduction thus allowing the patient to have

flawless smooth skin. Furthermore, Gold Standard Acu

Pulse stands out providing quick, painless and much

needed personalised treatments for each individual.

Given the changing lifestyles and dietary habits,

obesity has become a prevalent condition in Sri Lanka.

The Ceylon Medical Journal estimates the prevalence

of obesity as being 20% in males and a staggering

36.5% in females in Sri Lanka. To address this issue,

Nawaloka Hospital’s Skincare and Cosmetic Centre

announced the introduction of 3D-lipo treatment, a

multi-platform technology which offers a powerful

non-surgical alternative to liposuction with the

addition of skin tightening and cellulite reduction

modalities. In this context, 3D-lipo treatment is a safe,

convenient and an affordable method to achieving a

healthier body shape. The 3D-lipo system gives clients

several options and combinations to target and treat

stubborn fat areas and cellulite. These non-invasive

treatments will help clients achieve positive results

when combined with a healthy lifestyle.



Customer Touch Points

Customers have access to us through our extensive branch and laboratories network across Sri Lanka. With many

medical centres set up across the island, we have lessened the burden on the national healthcare system to meet

the healthcare needs of all Sri Lankans.

Gampaha

NegomboKegalle

Nuwara Eliya

Ratnapura

Badulla

Kandy

MataleKurunegala

Puttalam

MannarVavuniya

Mullaitivu

Killinochchi

Jaffna

Anuradhapura

Trincomalee

Polonnaruwa

Batticaloa

Ampara

Colombo

Kalutara

Galle Matara Hambantota

Moneragala

Colombo DistrictMoratuwaKoralawallaRatmalanaBoralesgamuwaKalubowilaMattakkuliyaAthurugiriyaThalagala JuntionThalawatugodaMattakkuliyaMulleriyawaThotalangaThalwatta

Galle DistrictKarapitiyaGintotaDevetaMorawakaMapalagama HikkaduwaImaduwaKotapolaUdugamaAmbalangodaAhangamaDeniyayaThawalama Balapitiya WeligamaNeluwa ElpitiyaPitabaddara

Ratnapura DistrictAvissawellaMinnanaDalaThalduwaPanukarapitiyaKalawanaYatiyantotaEheliyagodaHangamuwaKarawanellaKiriellaKuruwitaRuwanwellaIngiriyaDehiowitaKithulgalaNivithigala

Hambantota DistrictDikwellaWalasgalaRannaBeliattaGatamannaWeerakatiyaKirindaEmbilipitiyaDondraWalasmullaSooriyawewaHakmanaMiddeniyaHambantotaGandaraHungamaAmbalantota

Batticaloa DistrictKattankudy KalmunaiSainthamaruthu Nintavur SammanthuraiKokadicholai

Trincomalee DistrictEravur ChenkaladySanthyveli ValaichchenaiPesalai Ottamavady

Jaffna DistrictPoint PedroNelliyadiPutturChankanaiMoolaiKokuvilKondavilThirunelveliPasayurMain StreetJaffna TownNallurThondamanaru

Kalutara DistrictBulathsinhalaRaigamaEgaloyaWadduwaAgalawatta Bandaragama PimburaKalutaraGovinnaMahavilaAluthgamaHoranaEluvilaDargatownPokunuvitaNagodaAtalugamaGorakapolaMathugamaMillaniyaHoranaWathara

Gampaha DistrictSeeduwaKatunayakePitipanaPohorathotaKochchikadeMukalangamuwa

Nawaloka Laboratories



New Initiatives to Improve Customer Satisfaction

During 2016, Nawaloka Hospitals PLC introduced new

initiatives to improve customer, satisfaction and value.

Introduction of Multimedia Contact Centre Application

To further enhance the quality of service provided

by our Call Centre, we acquired a multimedia contact

centre application from ‘Aastra Solidus eCare’ with the

world's best data platform ‘MiVoice MX-ONE’.

Aastra Solidus eCare™ Multimedia Contact

Center supports three groups of applications: Agent

Applications, Management and Administration

Applications and Self-Service Applications. MX-ONE

is a complete SIP-based communications system with

the underlying architecture for unifying services like

instant messaging, presence, voice, video conferencing

and collaboration. The MX-ONE is built upon an

open design, allowing for flexible and future-proof

deployment.

The same wide range of services and features

are available from on-premise or in the cloud

deployments of the MX-ONE solution. The key

features are:

– SIP-based multimedia platform

– Scalable from 100 to 500,000 users

– Flexible licensing: A la carte or feature-based

– On-premise or cloud-based deployment options

– 64-bit architecture with native support for IPv6

– Complete range of fixed and mobile enduser

devices

– Single point of entry for system management

Call Centre

Average time taken to answer a call –

34 Sec.

Calls answered within 34 Sec. –

90%

No. of customer service calls handled in 2016/17 –

1,730,167

Average call handling time –

1 Min.


We are committed to constantly develop, refine and validate measures for improving

the quality of our healthcare

fi!LH fiajfha .=Kd;aul nj by< kexùu i`oyd wjYH mshjr ksrka;rfhka hdj;ald,Skj yd

j¾Okh lsÍug lghq;= iïmdokh lsÍu i`oyd kjf,dal frday, lemù isà

Nawaloka performed a total of 19,121 surgeries in 2016/17

2016$17 jif¾ id¾:l Y,Hl¾u 19"121 la isÿlsÍug kjf,dal frday, iu;a ù we;

The Nawaloka Laboratory is accredited and certified for ISO 15189 by Sri Lanka

Accreditation Board

Y%S ,xld m%ñ;s uKav,h m%odkh lrkq ,nk ISO 15189 iy;slfhka kjf,dal frday,a

ridhkd.drh msÿï ,nd we;


Total Calls Handled through the Call Centre –

2016/17 (Nos. '000)

160

120

80

40

0


Channel Appointments made through the Call Centre –

2016/17 (Nos. '000)

12

9

6

3

0


PACS (Picture Archiving and Communication System)/ iFlexmed Workstation

As healthcare information becomes more digitised,

critical diagnostic tools are adapted the world over

to improve patient care decisions, while reducing

errors and increasing overall efficiency. PACS have

replaced the old methods involved in medical imaging,

which once included film archives that took up space

and were slow to share. Nawaloka Hospitals PLC

introduced PACS and the iFlexmed Workstation, which

are aimed at improving the efficiency of the Radiology

Unit.

iFlexmed Workstation delivers efficient

workflow in which users can configure image layout,

intelligent hanging protocols and presentations. It

features a timeline, which will display the patient’s

medical history with a single click of a button. Multiple

mammography studies can be reviewed quickly with

ease. PACS is accessibility from computers in the

Hospital or handheld devices, which are password

protected.

PACS is an important tool for digitising,

archiving and transmission of the image in a

cost-effective way. It is expected to make the

Radiology Unit more efficient, reduce operating costs

and improve communication among physicians.

Customer Surveys and Satisfaction

We recognise that understanding the needs and wants

of our customers is important for providing excellent

service. The most effective way to understand our

customers is through their feedback. Accordingly, we

have designed an effective mechanism to measure,

evaluate and fine-tune our operations to meet their

expectations. Here are some of the measures that were

implemented to monitor customer satisfaction:

zz We have recently introduced the SMILE customer

feedback application, where customers are able to

give their feedback through a click on a tab. The

customer feedback tabs are located at customer

touch points such as cashiers, channel counters, etc.

zz We are also active in social media sites to address

any concerns raised by our customers. Our

customers can reach us through our facebook page.

zz Regular visits are conducted to the inward patient

rooms by a PRO (Public Relationship Officer).

Customer complaints and suggestions regarding

the quality of the service can be directed to these

officers.

Quality

Attention to quality is essential to the success of

our establishment. We are committed to constantly

develop, refine and validate measures for improving

the quality of our healthcare. To this end, we have

implemented international standards. Nawaloka

Hospitals PLC is the first hospital in Sri Lanka to have

won the ISO 9001:2008 Sri Lanka Quality Award and

National Business Excellence Award. The standards

have been maintained to ensure continuity of the

certification. We are pleased to inform that we have

won the ISO 9001:2015 Certification during this year.

We have also received a special commendation from

the National Productivity Award 2015.

Quality related data is reviewed regularly by the

Quality Improvement and Patient Safety Committee.

We have an effective Quality Management Programme

in place to achieve customer satisfaction. The Quality

Assurance Department maintains and analyses all data

pertaining to patient safety and infection control to

ensure safety of the patients and staff members.

The Nawaloka Laboratory is accredited and

certified for ISO 15189 by Sri Lanka Accreditation Board.


Nawaloka Hospitals PLC Annual Report 2016/1752 Customer Capital Management Discussion and Analysis

Thoracic

53

Laparoscopic Surgeries

420

Eye Surgeries

4,609

Oral and Maxillofacial Surgery

102

Neuro Surgeries

461

ENT Surgeries

380

Cardiac Surgeries

627

Kidney Transplant

24

Urology Surgeries

725

Total No. of Surgeries done at Nawaloka in 2016/17

19,121

Plastic Surgeries

909

Orthopaedic Surgeries

1,419

Vascular Surgeries

1,017

Peadiatric Surgeries

222

Gynaecology Surgeries

1,805

General Surgeries

6,348


Product Responsibility

Product and Service Information and Labelling

Nawaloka conforms to the highest standards to

provide customers comprehensive information

pertaining to the service offered. We provide

information and consumer protection to our

customers, when using products and services and

through our explanations, they have perfect knowledge

of their nature, their use and their warranty.

We promise to build a healthy Nation through our gamut of quality services offered to people of all walks of life.

When using third party products such as

pharmaceuticals, we ensure they are sourced from

reputed and reliable suppliers who adhere to the

quality and information standards.

During the year under review, there were

no incidents of non-compliance with regulations

and voluntary codes concerning marketing

communications, including advertising, promotion

and sponsorship by type of outcomes.



Marketing Communications

Marketing communications are actions taken by an

organisation in the form of messages targeted to

internal and external audiences. We ensure that the

true identity and character of our Organisation are

portrayed in our marketing communications process.

We also conform to the regulatory requirements

and the applicable codes of conduct in all our

communications.

All our communications, like medical camps for

public, TV and radio advertising, printed media, PR

activities and sponsorships are carefully monitored by

our Marketing Division and other relevant departments

to ensure that they are ethical and within the bounds

of laws and good taste. There is also a system of

accountability that is set up to ensure responsibility.

The decisions that are taken are reviewed every

quarter to identify and address any disparities.

During the year under review, there were

no incidents of non-compliance with regulations

and voluntary codes concerning marketing

communications, including advertising, promotions

and sponsorships.

Sale of Banned and Disrupted Products

We take product safety and state restrictions very

seriously. Nawaloka Hospitals PLC does not provide

services or products which are against the laws of the

country. We strictly abide by the relevant codes of

conduct and regulatory codes in doing so. There were

no incidents of non-compliance pertaining to the sale of

banned or disputed products during the year in review.

Standards used for Patients Health and Safety

There is no doubt that patient safety represents one of

the most important aspects of healthcare quality. We

abide by strict standards when it comes to the health

and safety of our patients. We focus on prevention

against any harm or danger to patients, while they

are receiving healthcare, whether this harm is due to

medical errors or infections resulting at the healthcare

facilities. We strictly comply with regulations on

health and safety, food and hygiene and all the

relevant voluntary codes to avert any incidents that

compromise the safety of our customers.

We conduct a comprehensive assessment before

introducing a service to the market. The Internal Audit

Division of Nawaloka conducts periodic checks to

identify risk exposure, assess the impact and provide

recommendations to mitigate.

We are currently in the posses of getting our

hospital certify for occupational health and safety.

During the year, there were no recorded

incidents of non-compliance pertaining to patient

health and safety.

We are working towards OHSAS 18001:

Occupational Health and Safety Assesment Series

certification to improve the presence of Nawaloka

Hospitals in the global arena.

Maintaining Customer Privacy

We realise the importance of ensuring strong privacy

protection to maintaining our customers trust in us

and these protections are especially important with

very sensitive health information such as mental health.

Nawaloka Hospitals PLC conforms to the norms are

regulations pertaining to customer information, its

storage and use.

Our systems and processes, IT in particular are

designed to deliver protection at all times.

We are pleased to record that there were no

complaints regarding breach of customer privacy and

losses of customer data during the year under review.



The following measures have been implemented by Nawaloka to ensure customer privacy:

Maintaining customer privacy

Our clinical staff, nurses and general employees are continuously given training on ethical behaviour to ensure confidentiality

Our Organisational culture is designed to ensure customer

privacy

Strict enforcement of access controls such as

passwords and biometrics

Electronic Diagnosis Card system to

store information

Electronic Medical Records (EMR) to store the patient’s information


Anti-corruption/Anti-competitive behaviour/Compliance

At Nawaloka, we have realised that strengthening

good governance and preventing corruption in

healthcare are universal challenges. Corruption exerts

a strong negative implication on businesses. To

eliminate exposure to corruption, the Risk Management

Committee of Nawaloka Hospitals has put in place a

range of controls.

We always ensure that ethical principles and

integrity are maintained in our business operations

and we have formulated a framework for effective

corruption prevention and control.

We are pleased to report that there were no

incidents related to the non-compliance of regulations

and voluntary codes concerning anti-corruption

and compliance.


1763

Claudius Aymand performs the first successful appendectomy

No compromise. Our surgical regime is state of the art. From infrastructure to personnel, procedure and process, every aspect is ‘cutting edge’. And from surgeon to orderly and everyone in between, our premium operating theatres are ‘home’, where during the year, they accomplished over 19,000 surgical procedures.

Theatre Complex with latest technology to perform advanced neuro surgeries


Aspect Measure 2016/17 2015/16 2014/15

Employee Strength Number of Employees 2363 2157 2105

Employee Engagement Number of ideas implemented/

Number of ideas collected 50% 39% 29%

Age Distribution Percentage of Employees below 30 (%) 43% 46% 45%

Gender Distribution Female Employees as a percentage

of Total Employees (%) 73% 75% 75%

Employee Development Training hour per Employee 4 Hrs. 12 Mins. 1 Hrs. 9 Mins. 1 Hrs. 4 Mins.

Remuneration per Employee Remuneration per Employee 29,044.82 28,926.21 28,068.26

The unique working culture that has persisted for the

past 31 years at Nawaloka Hospitals PLC is aimed at

realising our vision ‘To be the Hospital of Tomorrow’.

Our close-knit team of employees consists dynamic,

diverse, compassionate and motivated group of

individuals who epitomise the notion of ‘Healing

with Feeling’.

People come to Nawaloka because of our

31-year old legacy of providing exemplary care which

has been infused to our working culture. Our team

continues this legacy by extending exemplary care to

people at all times. We recruit qualified professionals

EMPLOYEE CAPITAL

in their respective fields with the required expertise

and provide them with competent training to grow and

develop with the Company.

Nawaloka Hospitals PLC is a equal opportunity

employer and is committed to providing for a diverse

work environment which is free of harassment or

discrimination based on gender, race, ethnicity,

sex, religion or disability. We nurture a fair and

collaborative workplace that promotes diversity and

upholds the highest ethical practices while providing

a safe, healthy, risk-free environment. Our employees

have a decisive affinity towards the Company and

most have been with the Company for long years.

Basic principles of personnel management

Creating a conducive workplace environment

Promoting team work

Creating a mechanism for promoting constant and voluntary initiatives

Human resource development



Workforce Profile

At Nawaloka Hospitals PLC there exists a diverse,

inclusive workforce at every level of the Company.

We believe that it is diversity that ultimately lead to

success in the corporate world. We are fortunate to

reap the myriad benefits of our diverse workforce with

a broader range of ideas which has created a cohesive,

collaborative work environment at Nawaloka.

Our team comprises a total of 2,363 employees

by year end with expected diversities of gender, age,

service period and geographic location that gives us a

competitive advantage.

Number of Employees (Nos.)

2,400

1,800

1,200

600

0

2016/172012/13 2013/14 2014/15 2015/16

During the year there was and increase of our

wrokforce as result of our business expansion.

Employee Capital Management Discussion and Analysis

We nurture a fair and collaborative workplace that promotes diversity

and upholds the highest ethical practices while providing a safe, healthy,

risk-free environment

idOdrKj" iduQyslj" iodpdr iïmkakj fukau wjodkï rys;j ld¾hhka isÿ l< yels jev mrsirhla wm wdh;kh ks¾udKh lr we;

During the year under review our staff strength increased by 9.5% including the

Negombo Hospital staff

wm wdh;kh ;=< jD;a;Shfõ§ka 9'5] la fmr jirg idfmalaIj j¾Okh ù we;

The Nawaloka team comprises total of 2,363 employees by year end with

expected diversities giving us a competitive advantage

wm fj; mj;sk idfmalaI jdishla jkafka fuu uQ,H jir wjidk jk jsg fiajlhka 2'363 la mqyqKq lr Tjqka jD;a;Sh uÜgfuka

by< m%ñ;shlg m;a lsÍuh

Edward Jenner develops the process of vaccination for smallpox, the first vaccine for any disease

1796


Age Analysis (Nos.)

1,200 0300600 300900 600 1,200900

Female Male

Age Analysis Grade and Gender

Category

18-20 years 21-30 years 31-40 years 41-50 years 51-55 years 56 years and aboveGrand TotalF M T F M T F M T F M T F M T F M T

Director – – – – – – 1 1 2 – 1 1 – – – – 2 2 5

Executive – 1 1 11 21 32 12 19 31 7 17 24 6 2 8 9 16 25 121

General 88 34 122 509 180 689 172 107 279 113 94 207 31 34 65 38 33 71 1433

Medical – – – 4 4 8 9 9 18 13 8 21 3 3 6 5 5 10 63

Nursing 11 3 14 291 15 306 178 3 181 116 8 124 56 7 63 52 1 53 741

Total 99 38 137 815 220 1035 372 139 511 249 128 377 96 46 142 104 57 161 2363

Service Analysis (Nos.)

1,000 0250500 250750 500 1,000750

Female Male

Service Analysis Grade and Gender

Category

0 - 5 years 6 - 10 years 11 - 15 years 16 - 20 years 21 years and aboveGrand TotalF M T F M T F M T F M T F M T

Director – – – – – – – – – 1 2 3 – 2 2 5

Executive 28 63 91 5 4 9 5 3 8 1 1 2 6 5 11 121

General 718 344 1062 114 46 160 53 36 89 24 21 45 44 35 79 1435

Medical 17 21 38 6 3 9 4 3 7 4 – 4 1 2 3 61

Nursing 394 33 427 147 2 149 53 – 53 33 1 34 77 1 78 741

Total 1157 461 1618 272 55 327 115 42 157 63 25 88 128 45 173 2363



Total No. of Employees

2,363

Male628

Female1,73573% 27%

73% of our total employees are female, while more than 50% of total employees at Nawaloka represent the

age group of 18-30 years.

Analysis by Grade, Category and Gender

Category

Executive Non-Executive

Female MaleGrand TotalFemale Male Total Female Male Total

Director 1 4 5 – – – 1 4 5

Executive 45 76 121 – – – 45 76 121

General – – – 953 482 1,435 953 482 1,435

Medical 32 29 61 – – – 32 29 61

Nursing 2 – 2 702 37 739 704 37 741

Total 80 109 189 1,655 519 2,174 1,735 628 2,363

Northern4%

Central5%

Uva4%

Western65%

North Western

6%

Eastern1%

Southern8%

Sabaragamuwa4%

North Central

3%

Analysis by Region (Nos.)



Team Performance

Productivity of Nawaloka team over the last five years

can be demonstrated statistically in relation to the

increase of revenue over the last five years. Employee

productivity and performance has consistently

improved in terms of revenue per employee.

Revenue Per Employee (Rs. Mn)

3.00

2.25

1.50

0.75

0

2012/13 2015/162014/152013/14 2016/17

Employee Recruitment

With numerous successes that we have enjoyed over

the last three decades which can be attributed to our

dynamic workforce, there comes the responsibility to

identify, train and retain even more talented people.

That is why we consider employment recruitment

and selection efforts as paramount to the long-term

success of our business.

Nawaloka Human Resources team reviews staff

requirements periodically. If there are vacancies that

needs to be filled, the recruitment process begins.

A series of interviews is conducted to determine

the merit of an applicant, then the HR team makes

a final decision based on the recommendation of

the interview board. We do not distinguish between

age, race, gender, religion or ethnicity or any other

discriminating marker in our recruitment process. Our

HR team is actively involved in sourcing new talent in

the market. We also provide career guidance to the

new graduates as a means of our social responsibility.

During the year under review our staff strength

increased by 9.5% from 2,157 to 2,363 people including

Negombo Hospital staff. All senior managers at

Nawaloka are recruited from within the country.

Recruitment by Grade

Employee Category Female Male Grand Total

Director – – –

Executive 13 21 34

General 209 149 358

Medical 5 18 23

Nursing 145 15 160

Grand Total 372 203 575

Employee Recruitment by Age

300

225

150

75

0

Male Female

18-20

Years

51- 55

Years

21-30

Years

41-50

Years

31-40

Years

56 Years

and

Above


Sir Humphry Davy discovers the anaesthetic properties of

nitrous oxide

1800


Training and Development

At Nawaloka Hospitals PLC, we strive to drive our

team to reach their full potential by developing

skills and competencies through a wide array of

career progression and professional development

opportunities. We recognise that training not only

enhances the efficiency of employees but helps to

build a motivated and highly engaged team who

contributes to the Company’s competitive position.

Furthermore, we continuously upgrade our state-

of-the-art equipment which requires our team to be

trained regularly.

Cardiopulmonary Resuscitation (CPR) training for Nawaloka staff

Knowledge Skill TrainingTraining Based on staff

QualificationsOn-The-Job Training

Advance training for Assistant Manager Staff qualification

Orientation training for newly promoted staff

Advance training for specialists

Orientation training for newly specialists

Self Development

Language Training

Soft Skill Development

Focused On-The-Job Training with special themes



The training at Nawaloka includes work-based

learning, shadowing, mentoring, reflective practice.

The numerous training programmes are aimed at

enhancing various skills to stay up-to-date on patient

care, healthcare trends, treatments and techniques.

Through our appraisal system, department-level

forums, we first identify the areas that need more

focus. Periodical performance evaluations help in

identifying what is required.

Training is conducted at an individual level as

well as at departmental level.

In 2016, a total of 10,046 hours of general

training with a total of 3,356 participants were

recorded. A clear growth from 2,499 hours in 2015.

The significant increase of training hours is due to the

establishment of Nawaloka Negombo Hospital and the

introduction of diversified training programmes by

Nawaloka Hospitals PLC. We invested Rs. 11.5 Mn for

employee training during 2016/17.

There are training programmes that are aimed

at developing soft skills of our employees. These

programmes focus on interpersonal skill development,

innovation and creativity, increasing motivation, change,

goal and anger management, conflict resolution,

interviewing skills, improving decision-making and

negotiation skills and stress management.

There are specific programmes that are focused

on developing language skills of our employees.

Fire drill training at Nawaloka Hospitals premises

There were many challenges that were

faced when introducing and conducting training

development programmes, like limited time and

resources and dealing with different employees

with diverse requirements. Despite these challenges

Nawaloka Hospitals PLC continued to encourage and

facilitate continuous professional development of our

employees in 2016. Regular performance evaluations

help identify knowledge/skill gaps so they can be

addressed with training.

Capping Ceremony – Nawaloka Nurses Training School


Rene Laennec invents the stethoscope

1816


Training Programmes conducted during the year

Training Programme

Target Group

No. of Participants Hours per

Person

Venue Facilitator/Conductor Internal/External/Foreign

Female Male

BLS/CPR All 62 11 511 Training Room Training Manager Internal

ECG 6 1 49 Training Room Training Manager Internal

Nursing 43 7 350 Training Room Training Manager Internal

PCA 67 12 558 Training Room Training Manager Internal

BLS/Pro CPR Nursing 35 6 287 Negombo Training Manager Internal

Cannulation Nurses 14 2 32 Training Room Cannulation Consultant External

Cardiac Intervention All 95 17 112 Auditorium Consultant Cardiologist Internal

Cath Lab 4 1 15 Cath Lab Training Manager External

Cosmetic Awareness Reception 10 2 24 Training Room Cosmetic Consultant Internal

CPR Pro Nursing 60 11 497 Negombo Training Manager Internal

All 9 2 77 Training Room Training Manager Internal

Customer Care NTS 117 21 485 Auditorium Training Manager Internal

Front Office 14 2 64 Training Room Training Manager Internal

Customer Relations All 146 26 424 Auditorium Training Manager Internal

Kitchen 44 8 135 Training Room Training Manager Internal

Nursing 78 14 304 Training Room Training Manager Internal

PCA 35 6 82 Training Room Training Manager Internal

Dietitian All 10 2 24 Training Room Training Manager Internal

English Language Front Office 283 50 666 Training Room English Lecturer External

All 530 93 1,246 Training Room English Lecturer External

Fire Training All 98 17 230 Hospital Premises Trainer External

Geriatric All 31 5 72 Auditorium Geriastrion Consultant Internal

Geriatric Awareness Front Office 14 2 32 Auditorium Geriastrion Consultant Internal

Geriatric Service All 9 1 30 Auditorium Geriastrion Consultant Internal

Grooming NTS 57 10 201 Auditorium Oriflame External

Hand Hygiene All 72 13 85 Auditorium Trainer External

Health Products All 36 6 42 Auditorium Ceyoka External

Infection Control All 43 8 92 Training Room Training Manager Internal

IT Nursing 52 9 122 Auditorium Network Administrator Internal

Mental Health FA Nursing 31 5 72 Training Room Consultant Internal

Management Brain

Metastasis

All 69 12 81 Auditorium Consultant External

New Hire Orientation All 264 47 1,312 Auditorium Training Manager Internal

Nutrition All 72 13 170 Auditorium Trainer Internal

Oxygen Safe Handling Nurses 21 4 75 Training Room Trainer External

Palliative Care All 23 4 54 Training Room Palliative Care Consultant Internal

Clinicians 18 3 21 Training Room Palliative Care Consultant Internal

Doctors 33 6 78 Training Room Palliative Care Consultant External

Nursing 167 30 994 Training Room Palliative Care Consultant Internal

Phlebotomy Nurses 22 4 52 Training Room Trainer External

Professional Develop Nursing 9 2 77 Training Room Training Manager Internal

Project Management Snr. Mngt. 22 4 52 Auditorium Project Manager External

Service Mantras Nursing 12 2 112 Auditorium Trainer External

Surgical Theatre Maintenance 5 1 24 Theatre Training Manager External

Urology All 10 2 24 Training Room Training Manager External

Total 2,852 504 10,046



Training Hours ('000)

12

9

6

3

0

2012/13 2015/162014/152013/14 2016/17

A training session for nursing staff

Employee Retention

The healthcare industry, when compared to others,

records a high turnover rate. Research has found that

healthcare workers begin to think about leaving 180

days into their job, and half of them leave after the first

year. Therefore, we consider staff retention to be of

paramount importance.

Employee turnover is challenging in healthcare,

which is a service-intensive industry where the

employees have a direct impact on the quality of

patient care. The costs of employee turnover include

recruiting, hiring, and training, and even extend to

organisational productivity. We at Nawaloka Hospitals

PLC have taken necessary steps to reduce employee

turnover and have introduced strategies that are

geared towards employee retention.

Retention is incorporated into our methodical

recruitment process where we focus on hiring

the right people with whom we can build long-

term relationships. We also strive to attract the

new generation of workers, while retaining the

experienced older generation, to maintain staffing

levels. Our retention efforts begin from day one

with our new recruits by providing them with a

competitive remuneration and benefits package, and

a proper induction programme in order for them to

be comfortable and be familiarised with our working

culture and environment within a short period of time.

Recognising we engage our employees with

our Company and its operations. We have invested

in training programmes to facilitate growth and

continuous professional development. The ongoing

training provides our team with opportunities to

enhance their skills and enable advancement within

Nawaloka Hospitals PLC. We have implemented

self-development programmes, in-house and off-site

training programmes, seminars and conferences.

We constantly recognise the achievements of

our employees and reward them for their excellence.

We have introduced a new bonus programme based

on performance. Furthermore, we measure the

satisfaction, wants and needs of our employees by

regular surveys and feedback.

Employee Engagement

Studies have proven that engaged employees are

more committed, satisfied and less inclined to leave.

Within the health sector, strong employee engagement

has been linked with significant improvements in

patient care and satisfaction. Thus, we have made

employee engagement a highest priority. Employee

engagement is based on trust, integrity, two way

commitment and communication between an

organisation and its members.



Employee Satisfaction Survey Results 2016 (%)

60

45

30

15

0

2016 2015

Strongly

Satisfied

DissatisfiedNeutralSatisfied Strongly

Dissatisfied

This survey proves that 90% of the employees

are strongly satisfied, satisfied or neutral.

Employees Performance Evaluation

The performance of the employees are evaluated

at each quarter and marks are allocated accordingly

under particular categories.

Yearly Employee Performance Evaluation Summary

Category Employees Evaluated (%)

Male Female

Job related knowledge and skills 82 82

Quality of Work (Neatness, Accuracy, Creativeness and Timely Action) 82 82

Reliability (Dependability on him/her) 81 82

Work attitude (Co-operation, Sense of Responsibility etc.) 81 82

Leadership (Ability to get a job done) 81 81

Interpersonal Relationship (Ability to get on with the Staff 82 82

Public Relations (Positive relationship with customer) 82 82

General Conduct (Observation of Rules and Regulations) 81 82

Carrier Development (Learning through experience) 81 81

Punctuality (Unauthorised Leave and Absenteeism Records) 82 82


James Blundell performs the first successful transfusion of human blood

1818

A distribution of dry rations to Nawaloka staff


Nawaloka ‘Best Employee’

Through a performance evaluation process, we identify

training requirement for each level of employees. At

Nawaloka we conduct a ‘Best Employee’ selection

programme annually to encourage employee

engagement and to reward those who have

contributed with excellent service.

Awarded for the Best Suggestion 2016


We select a ‘Best Employee’ from the following

categories: Medical Officers, Executive Staff, Nursing

Sisters, Nursing Staff, Para Medical Staff, Maintenance/

Kitchen & Dietary/House Keeping/Transport, Patient

Care Assistant/Office Assistants/Other Assistants

Sections, Clerical and Office Staff, Reception/Public

Relations/Cashier/Internal Security, Clinic Assistant’/

Training Nurses and Other Division.

The ‘Best Employees’ receive certificates and

awards, their details are published on the website.

They are also considered for promotions and salary

increments.

We follow the following criteria in the selection

process for the ‘Best Employee’:

zz Selected from permanent employees who have

obtained the highest marks from the 4th Quarter

Evaluations.

zz A prior evaluation is conducted by the Head of the

Department.

zz From 100 marks, 50% for average four quarters

performance evaluation and other 50% for other

criteria considered.

zz The final step of the process is an evaluation from

the judging panel ending with the final interview.

Best Employee Criteria

All confirmed permanent employees

Judge Board EvaluationFace-to-Face Interview with

Judges as final step

From 100 marks, 50% for average four quarters

performance evaluation and other 50% for other criteria

considered

Highest mark from Evaluation in 4th Quarter

Prior Evaluation from Head of the Department


Nawaloka Benefits

Social Development Activities

Cash Benefits

Recreation and Entertainment Benefits

Parental Leave

As per the Shop and Office Act, female employees are

entitled to parental (maternity) leave.

At Nawaloka, we employ 1,735 female employees.

Our female employees are entitled to maternity leave

and benefits without any constraints and we facilitate

their return to work. We offer the same or an alternate

position without any prejudice to their job security,

remuneration or career path upon return.

In 2016, 59 employees took parental leave out

of which 54 employees returned to work at the end of

the period. The number of employees who returned

to work after parental leave ended, who were still

employed twelve months after their return to work is

35.The return to work and retention rates of employees

in 2016 stands at an impressive 92%.

Benefits and Rewards

At Nawaloka Hospitals PLC we provide optional,

non-wage compensation in the form of benefits to

our employees. We recognise that taking care of our

employees in this highly competitive sector leads to

loyalty and retention. At Nawaloka benefits come in

the form of cash benefits, recreation and entertainment

benefits and social and development activities. These

benefits are enjoyed by all grades. We strive to


improve employee welfare by improving the working

conditions and promoting a holistic and balanced

lifestyle for employees.

Benefits PermanentEmployees

ContractEmployees

Guaranteed Cash and Allowance

Fuel/Travelling Allowance Applicable Applicable

Variable Pay

Performance Bonus Applicable Applicable

Sales Incentives

Overtime Applicable Applicable

Reimbursable Expense

Subscriptions

(Professional and Club)

Applicable Not

applicable

Other Perquisites

Medical Insurance Scheme Applicable Applicable

Leave Applicable Applicable

Executive Club Applicable Applicable

Subsidised Loan Benefits

Sundry Loan Applicable Not

applicable

Retrials

EPF/ETF/Gratuity Applicable Applicable

Nawaloka Hospitals PLC Annual Report 2016/1770 Employee Capital Management Discussion and Analysis

Cash Benefits

zz Fixed monthly salary, annual bonuses on the overall

performance of the Company, performance based

incentives and festival advances.

zz Travelling allowances, fuel allowances, vehicle

allowances, staff loans at concessionary interest

rates and reimbursement of membership fees.

zz Employee-defined benefit plans

zz Marriage allowance

zz 50% discount on hospital bills for the 1st delivery

zz Scholarships for children of employees who passed

GCE O/L, GCE A/L and entered university

Recreation and Entertainment Benefits

zz Annual trip

zz Staff meals at cost and dry ration packs

zz Foreign training

zz Weekly refreshment for employees

zz Zumba training for employees for making

a healthy life

Social Development Activities

zz Book donations

zz Flood donations

zz Dry ration distribution

zz Hostel/apartment facilities and free uniforms

zz Free medication, OPD Medical Scheme, death

donations and General insurance Scheme

Number of Employees Admitted under the General

Insurance Scheme

Year No. of Employees Admitted

2012/2013 506

2013/2014 498

2014/2015 622

2015/2016 622

2016/2017 541

Number of Death Donations (Welfare Fund)

Year No. of Donations

2015/2016 12

2016/2017 27

zz Health and safety

A Medical Card is issued for every employee who

completes six months of service. An employee can

use Hospital services using the medical card. The

table given below shows the number of employees

that have used the medical and the cost incurred by

Nawaloka Hospitals PLC.

Free Medication Entitlement

Year Staff Drug Issued Value

(Rs.)

No. of Staff who used

Yellow cards

2014/2015 4,218,957.29 1,856

2015/2016 4,963,301.00 1,689

2016/2017 3,892,470.55 1,657


Remuneration

Our transparent remuneration policy depends on

the employee contributions and performance. As

mentioned in the sections above, we offer competitive,

attractive remuneration packages based on skill,

experience, working conditions, level of responsibility,

and qualifications.

Average Basic Salary (%)

Male

Female

0 20 40 60 80

Executive General Medical NursingDirector

Collective Bargaining and Freedom of Association

Freedom of Association is inextricably linked with

the right to bargain and the right to organise. It is a

way for workers and employers to reach agreements

on issues affecting work. At Nawaloka, our policy for

collective bargaining and the freedom of association

focuses on encouraging employment engagement.

All permanent staff members deal with collective

bargaining agreements.

Due to the effective transparent policies in

place, there were no incidents of violation of freedom

of association of employees and collective bargaining

during the reporting period.


Through our transparent remuneration policy, we offer competitive, attractive

packages based on skill, experience, working conditions, level of responsibility

and qualifications

olaI;djh" w;aoelSu" /lshd iajNdjh" j.lSï iy.; nj yd iqÿiqlï u; mokï jQQ úksúoNdjfhka hq;= wmf.a jegqma m%;sm;a;sh ;=<ska b;du;a wdl¾IŒh

yd ;r`.ldÍ mdßf;daIsl kjf,dal frday, ish fiajl msßig ,nd oS we;

We strive to incorporate the suggestions and ideas of our employees in our

governance and practices

wm wdh;kfha md,k lghq;= i`oyd wm fiajl msßif.a woyia yd fhdackd ksrka;rfhka

,nd.kq ,efí

We provide optional, non-wage compensation in the form of benefits to our

employees

wm úiska fõ;khg wu;rj wdl¾IŒh §ukd yd myiqlï wm fiajlhska i`oyd ,nd fokafkuq


Employers Association Workers Association

Collective Bargaining

Freedom of Association


Minimum Notice Period Regarding Changes in Operations

There were no significant changes in operations during

the year under review. However the general policies

regarding operational changes are as follows:

Type of Change Minimum Notice Period

Transfer Immediate or 2 weeks

Terminations 1 Month

Retirements 3 Months

Dismissal Immediate

Resignation 1 Month

A Conducive Working Environment

Creating a positive work environment where

employees feel appreciated and cared for, can help

keep employees happy and productive. Employee

engagement, a sense of accomplishment and meaning,

and honest communication are the building blocks.

We strive to incorporate the suggestions and ideas of

our employees in governance. Last year, under ‘This is

my Hospital’ programme we gave the opportunity to

our employees to present ideas of which some were

utilised to operate the business in an effective manner.

Quarterly No. of Ideas No. of Ideas Implemented

1st Quarter 5 3

2nd Quarter 2 1

3rd Quarter 3 1

4th Quarter 4 2

14 7

Health and Safety

Nawaloka is exposed to a significant level of

occupational hazards. Therefore, the Company has

designed a hazard identification and mitigation

framework to identify, assess, prioritise and manage

risk exposure to deliver a secure healthcare system.


In 2016, Nawaloka Hospitals PLC continued its

progressive and proactive approach to safety, health,

well-being and injury management. At Nawaloka, we

deliver secure healthcare system by following the

model below:

Hazard Identification

Mitigation Framework to Identify Risks

Risk Assessment

Prioritise and Manage Risk

When a new service is launched, it goes through

the above model and ensures that there is no risk

exposure to our staff or patients. Our employees are

provided with the necessary training to avoid health

and safety hazards.

Analysis of Injuries and Occupational Diseases

Description % from Workforce

Lost Days

Absenteeism Rate from

Workforce

Injuries Male 0.16 1 0%

Female 0.17 III 0.3%

Minor Incidents

Male Female Total

Non-Communicable

– Fall 2 4 6

– Injuries caused by

medical instruments 0 1 1

– Injuries caused by sharp

instruments 1 – 1

– Needle Prick 1 10 11

– Burn due to hot water – 1 1

Communicable

– Chicken Pox – 1 1

21


Nawaloka Hospitals PLC understands the need to address grievances promptly and as close as possible to the point of origin without disruption to patient/client care

frda.Skaf.a iqrlaIs;Ndjhg n,mEï fkdjk whqßka frdayf,ys we;s úh yels fiajl

.eg`: ishqï f,i úi`oSug wjYH nj wm wjfndaO lrf.k we;

As an equal opportunity employer Nawaloka Hospitals PLC takes the

measures towards non-discrimination within the Company

ieug iu;ek w.hk fiajdfhdaclhl= jYfhka kjf,dal frday, iudkd;au;djh by<

kexùug wjYH ish¨q mshjr f.k we;


The following preventive measures are implemented at

Nawaloka to minimise occupational hazards:

zz Provision of surgical gloves and masks to staff

members

zz Providing training on handling medical instruments

zz Training nurses on hygiene factors

zz Setting up triage counters manned by qualified

and experienced nurses to make an initial

determination about the nature and severity of

a patient’s illness/injury

zz Adopting special surgical prevention policies

zz Regular supervision by senior medical personnel

zz Overall supervision by Medical Superintendent

zz Regular monitoring by the Medical Risk Management

Committee

Employee Grievance Handling

Grievances arise when employee expectations are not

fulfilled by the management which leads to feelings of

discontentment and disappointment. Grievances can

arise when an employee is not satisfied with terms and

conditions of employment, working environment or

working relationships. Unattended grievances result

in frustration, dissatisfaction, low productivity, lack of

interest in work, absenteeism etc. Nawaloka Hospitals

PLC understands the need to address grievances

promptly and as close as possible to the point of origin

without disruption to patient/client care.

We are committed to handle the grievance in

a fair and equitable manner. Our process includes

quick action and acknowledging the legitimacy of the

grievance. We then gather facts, examine the causes

and resolve it. Here are some of the grievances that

were raised during the reporting period:

Identified & Filed Grievances

Priority Addressed Remarks

Welfare Fund High Implemented

Welfare Fund for all

employees under

three schemes

Changing

Rooms & Locker

Facilities

High Arranged spaces as

changing rooms and

lockers

Whistle Blowing Policy

The whistle blowing policy encourages employees

to raise concerns and bring any violations on

human rights to the notice of the Human Resource

Department at an early stage.

Diversity and Equal Opportunity

As an inclusive, equal opportunity employer with

a diverse workforce we do not discriminate on

the grounds of sex, marital status, race, colour,

creed, religion, physical disability, mental health,

learning difficulty, age or sexual orientation. We are

committed to providing all our employees with equal

opportunities and fair treatment. It is everyone's right,

whether you are an employee, a patient or a member

of the public, to be treated as an individual and treated

with respect.

Gender Equity in Remuneration

Our transparent remuneration process offers our people

an equitable remuneration structure irrespective of

gender differences. Our remuneration packages are

position based. We have implemented an “Unbiased

Remuneration Policy” at Nawaloka Hospitals PLC.

Non-Discrimination

As an equal opportunity employer Nawaloka

Hospitals PLC takes the following measures towards

non-discrimination:

zz We have cultivated a strong value system in our

employees and they are provided with equal

opportunity.

zz We have a performance driven culture where

rewards are based on merit.

zz We have conducted training of the management

staff to effectively implement a zero tolerance of

discrimination.

zz There is a Grievance Management Committee set-up

to resolve employee grievances.

zz Our whistle–blower policy addresses grievances in a

timely and appropriate manner.



Adhering to Human Rights

Human Rights cover a broad spectrum of topics: from

civil and political freedoms, to economic, social and

cultural rights. At its very essence, it is about the rights

and freedoms of individuals based on human dignity.

Nawaloka Hospitals PLC supports basic principals

of human rights in the workplace which includes

freedom of association, right to collective bargaining,

elimination of child labour and sexual harassment. In

addition, we follow best practices on working hours,

minimum working age limit and health and safety

measures at the workplace.


Nawaloka Principles for Human Rights

Right to Collective Bargaining

Freedom of Association

Elimination of Child Labour

Sexual Harassment

Working Hours

Minimum Age Limit (18 years)

Health & Safety

Child Labour

We do not engage children in employment. As a

general practice, persons below the age of 18 years

are not employed in any of our companies. The Human

Resource Recruitment Policy has been communicated

to all employees to prevent child labour. We do

not engage with business associates and suppliers

who engage child labour in their businesses. The

HR Department has imposed stringent screening

procedures to avert recruitment of individuals below

18 years to the Company. Therefore, documents

such as Grama Niladari certificates, police reports,

referees reports, character certificates and educational

certificates are scrutinised prior to recruitment.

No grievances pertaining to human rights were

recorded during the year under review.

Elizabeth Blackwell is the first woman to gain a medical degree from Geneva Medical College in New York

1849


BUSINESS PARTNER CAPITAL

Aspect Measure 2016/17 2015/16 2014/15

Business Partner Profile No. of consultant 503 369 365

No. of local suppliers (pharmacy and general) 756 532 410

No. of foreign suppliers (pharmacy and general) 54 43 09

Relationship with Business

Partners

No. of new suppliers registered

(pharmacy & general) during the year 235 156 37

Nawaloka Hospitals PLC makes partnerships with those

who understand its organisational framework, culture,

core values and share our vision ‘To be the Hospital

of Tomorrow’. The business partnerships that we

have established over the years tend to be amicable,

long-term and mutually beneficial.

We attract the highest number of visiting

consultants of all private sector hospitals in the

country who are respected professionals within the

healthcare community. They make an important

contribution to the Company by providing superior

professional inputs to patient care and treatment.

We have also built successful, long-standing

relationships with general and pharmaceutical

suppliers (local and international) who engage in

ethical, sustainable business practices.

Business Partners

Consultants Suppliers

Composition of Business Partners

Aspect 2016/17

Consultant 503

Suppliers Pharmacy 310

Suppliers General 500

Growth in Consultants and Suppliers (Nos.)

600

450

300

150

0

Consultants Suppliers Pharmacy Suppliers General

2012/13 2015/162014/152013/14 2016/17



Through Self Evaluation

Though Communicating Business Partners

Evaluating Business Partners

Fitting to Strategical

Background

Business Partners Expectation

Start Building Relationships

Conflict Management

Delivery of Expectations

Business Partner Capital

Technological and Knowledge Excellence

Technological excellence and innovation is vital to

deliver improved, accessible, convenient healthcare

to the public. Nawaloka Hospitals PLC recognises

that we can benefit greatly from ongoing innovations

in diagnostic technology, pharmaceuticals, surgical

procedures, and medical devices to provide timely,

patient-centred care. Over the years Nawaloka

has made partnerships with businesses which are

technologically accomplished.

Knowledge excellence is just as vital to

healthcare. We have partnered with accomplished

professionals and the leading consultants from the

field of medicine to deliver a dynamic service.

Ethical Business Appreciates Ethical Business Partners

Nawaloka Hospitals PLC is an ethical business entity

that expects its business partners to have a similar

outlook. Their business partners are ethical, comply

with all the regulatory and legal requirements and

upholds its corporate values.

We ensure that our business partners, especially

consultants, are not professionally negligent since they

are dealing with the lives of patients who seek our

care. Our partners are environmentally friendly and

supports the community and they are usually keen to

engage in environmental protection activities.

Managing Expectations

Nawaloka Hospitals PLC ascertains the expectations

of its partners at different points in their relationship.

Regular periodic feedback system is set-up to obtain

feedback from the partners, especially consultants,

which ensures that they are meeting their partners

expectations.

They have a ‘Weekly Feedback Form Process’

between consultants and the Senior Management to

address issues pertaining to our consultants and to

further strengthen the relationships.

Business Partner Capital Management Discussion and Analysis


Grievance Management in the Supply Chain

One of the key requirements of an organisation

providing healthcare is strong, uninterrupted supply

chain. Various grievances and conflicts can lead to

the disruptions in the supply chain. Thus, Nawaloka

Hospitals PLC addresses all grievances at an early stage.

To minimise the occurrence of grievances in the supply

chain, the Hospital have set-up a focused feedback

system. Furthermore, there is regular, productive

communications with its business partners to avoid any

conflicts and grievances.

Local Suppliers

Nawaloka Hospitals PLC understands that local

economic participation contributes to the long-term

development of the community. In our commitment

to uplift the local economy, we prioritise in selecting

local suppliers as our business partners. Helping local

companies to grow is embedded in our business

strategies. While it stimulates local enterprises, it also

leads to lower logistics and labour costs. Our desire to

establish and maintain enduring partnership with local

suppliers have resulted in a diverse supply base.

External Initiatives

Nawaloka Hospitals PLC has memberships and

affiliations with the following institutions in the country

to maintain external dialogue on related aspects of the

business and the healthcare industry:

zz The Private Hospitals Association of Sri Lanka

zz The Sri Lanka-Malaysia Business Council

zz The Institute of Chartered Accountants of Sri Lanka

(Accredited Training Partner)

zz The Association of Accounting Technicians of

Sri Lanka (Accredited Training Partner)

zz Employers’ Federation of Ceylon

zz Certified Management Accountants of Sri Lanka

zz Institute of Certified Professional Managers of Sri Lanka

Business Partner Capital Management Discussion and Analysis

Charles Gabriel Pravaz and Alexander Wood developed the syringe

1853


SOCIAL AND ENVIRONMENTAL CAPITAL

Society

Aspect Measure 2016/17 2015/16 2014/15

Corporate social responsibility No. of school development projects 5 3 3

Investment in school development project (Rs.) 2.1 Mn 1.4 Mn 1.1 Mn

No. of medical camps 12 10 7

No. of awareness programmes 26 21 18

Investments in the community Charity and donations (Rs.) 3.9 Mn 3.6 Mn 3.2 Mn

No. of job opportunities created 206 52 29

ExpectationsPositive Impact on

Society

Compliant & Corporative Citizen

1. Social & Infrastructure Development

2. Livelihood Quality Development of Society

Statutory Requirement Compliance

Non-Statutory Requirement Compliance

Ethical, Responsible and Sustainable Business

Our value creation concept behoves us to make a

positive impact on the environment and the society

every year. To achieve this we carry out or promote

activities that uplift people not only economically and

physically but spiritually as well.

CSR Projects

As the pioneer and leading private healthcare provider

in the country there are social obligations which

Nawaloka is expected to fulfil. We conducted a large

number of social and environmental projects during

the year to fulfil these obligations.

CSR

Environment Conservation

Charity and Donations

Awareness Programmes

Medical Camps

Drinking Water and Sanitary Facilities

Spiritual Development

Support for Education



‘Nawaloka Sathkara’ is the yacht which is guiding us

to extend such a social service to the helpless needy

communities who are among us.

Environment Conservation

Plants were distributed in certain selected schools to

be planted by the children in the school premises. The

children were assigned the responsibility of caring

for the trees till they are fully grown. We thereby

attempted to instil the ‘Habit of planting’ in their minds.

We intend that they will develop at a young age, a

spirit of caring for nature and love for the environment.

We will do the follow with schools every year.

Plantation of trees at A/Kimbulawewa Ananda Viduhala -

Thanthirimalaya

Drinking Water and Sanitary Facilities

Chronic Kidney Disease continues to be a serious public

health issue in Anuaradhapura area. In order to address

this serious health hazard, during the year ‘Nawaloka Sathkara’ facilitated the clean water and proper sanitary

facilities for following five deprived rural schools

located in Anuradhapura District and carried out

respective construction and renovation works.

This is an ongoing effort done over 30 schools

around the country under ‘Nawaloka Sathkara’ Programme.

– A/Kimbulwewa Ananda Viduhala – Thanthirimalaya

zz Construction of new two lavatories

zz Construction of a water tank

– A/Thambiyawa Dharmapala Viduhala –

Thanthirimalaya

zz Renovation of eight lavatories

zz Supply and installation of two water filters

– A/Ashoka Vidyalaya – Elayapaththuwa

zz Construction of a “Budda Madura”

zz Renovation of lavatories

– A/Sirisangabo Viduhala – Elayapaththuwa

zz Renovation of lavatories

zz Supply and installation of water filters

– A/Athdathkalla Rahula Vidyalaya – Pemaduwa

zz Construction of two lavatories

Drinking water facility for Thambiyawa Dharmapala

Viduhala, Thanthirimale

The schools were selected, not based on hearsay,

but after actually observing their real situation. We

verified for ourselves that the sanitary facilities and the

infrastructures of these schools were much below the

accepted standard. We supported the improvements in

facilities by way of a monetary contribution.

Social and Environmental Capital Management Discussion and Analysis


The students were provided with drinking water

which had been lacking over a long period. Providing a

child with a glass of drinking water at school refreshes

him and enables him to study with a relaxed mindset

till the end of the day.

Free Medical Camp at Pannala by Nawaloka Medicare

Spiritual Development

Nawaloka constructed two ‘Budda Madura’s at

A/Thambiyawa Dharmapala Viduhala, Thanthirimalaya

and A/Ashoka Vidyalaya, Elayapaththuwa.

During the Vesak programme in 2016 a bhath

dansala, ice cream dansala a drama and a bhakthi geetha, vesak thorana occasion were also conducted.

Charity and Donations

zz Monthly financial contributions to Crippled Children’s

Aid Association of Sri Lanka

zz Financial contributions for cancer patients – Trail 2016

zz Financial contributions for flood victims

zz Stationery items for 300 poor students

zz Provision of water bottles to National Stroke

Association of Sri Lanka for walk on World Stroke

Day 2017

zz Financial contributions to Children’s Day Programme

at Colombo Public Library

zz Financial contributions to ‘Purana Dumbara Viharaya’

zz Financial contributions to White Cane Day 2016 of

Sri Lanka Federation of The Visually Handicapped

zz Sponsorship for Poson Festival of Sri Lanka Welfare

of The Blind Women

zz Sponsorship for Chest Clinic National Programme

zz Financial contributions to White Cane Day 2017 of

Sri Lanka Welfare Organisation of Visually Impaired

Women

zz Distribution of pair of spectacles to ‘Welikada Prison’

zz Alms giving for ‘Gamini Matha’ Elders Home

Medical Campaigns and Social Awareness Programmes

During the year we commenced several programmes

to promote awareness of medical issues as well

as some medical campaigns. These activities were

conducted in numerous parts of the island and with an

intention to uplift the health standards of our people.

There are many in our society who cannot afford

to spend for medical checkups. There are others who

are discouraged from obtaining the service from state

hospitals due to the waiting time. It is to these groups

that our programmes cater.

Taking all these factors into consideration

Nawaloka decided to implement the following medical

campaigns and social awareness programmes for the

betterment of the people.

Free Medical Camp held at the Kelaniya Raja Maha Viharaya



Awareness Programme

No. of Participants (LHS)

No. of Awareness Programmes (RHS)

Awareness Programmes (No.)

2,400

1,800

1,200

600

0

28

21

14

7

0

2015/162014/15 2016/17

Medical Campaigns

No. of Medical Camps (RHS)

No. of Participants (LHS)

Medical Camps (No.)

4,400

3,300

2,200

1,100

0

16

12

8

4

0

2015/162014/15 2016/17

Indirect Economic Impact

Nawaloka’s entry into the hitherto state-dominated

healthcare system opened the door for the private

sector to play a major role in healthcare provision

in Sri Lanka. Nawaloka is well-positioned to provide

advanced medical technology and expert medical care

to its patients. This has also brought economic benefits

to the country as a whole by eliminating outflows of

foreign exchange by people travelling overseas for

medical treatment.


Furthermore we were able to generate inflows

of foreign currency by way of medical tourism. Since

our medical technology and medical care are on a par

with reputed hospitals in the region, we are drawing an

increasing number of foreign nationals.

We are also giving a helping hand to uplift the

nursing standards in Sri Lanka in general through our

nurses training school.

Awareness of medical issues among the general

public is a important factor in improving the health

of the population. Our consultants conduct public

awareness campaigns on many health issues including

contemporary diseases, precautionary methods and

treatment. These are disseminated through medical

camps and television programmes. Programmes were

also conducted in several companies to ensure a

hazard free work environment.

Compliance

Healthcare, dealing with human patients, is a

highly sensitive area carrying a high degree of risk.

Therefore it is imperative for the Hospital to carry out

comprehensive risk assessment and take precautionary

measures. There were no instances of legal action

being taken against the Hospital for anti-competitive

behaviour, anti-trust and monopoly practices during

the year in review. Neither were there instances of

non-compliance with laws and regulations.

Louis Pasteur identifies germs as cause of disease

1857


The Environment

Aspect Measure 2016/17 2015/16 2014/15

Energy Management Total energy consumption 7,988,953.00 7,415,890.86 7,427,163.46

Energy intensity 706.64 726.11 607.14

Water Management Total water consumption 216,776.00 169,171.00 198,635.00

Water consumption per employee 91.74 78.43 94.36

Water recycled at Negombo (STP) Total water reused as a percentage of total

water consumption (Neg) 22% – –

Waste Management Total wastage 102,735.00 87,160.00 78,317.00

Total insulator disposal per litre (on Average) 2.58 2.78 2.78

Material Management Total linen order quantity 1,460.00 3,550.00 8,240.00

Total linen expense per patient 481.27 520.85 572.15

We consider it our social responsibility to carefully

monitor our impact on the environment to minimise

our carbon footprint; we also consider it our

responsibility to make a positive impact on the natural

eco system. This includes taking into account a gamut

of factors such as materials, energy, electricity, water

and waste disposal.

Materials

Nawaloka does not manufacture any products it uses

or any ancillary items. We source all our materials from

reputed suppliers who can satisfy our expectations of

quality. We do not merely purchase from our suppliers.

We help them network and obtain the expertise which

will help them upgrade their manufacturing skills and

use or reuse materials to increase productivity and

reduce environmental impact.

Total Weight or Volume of Materials used During the Financial Year

Type of Material Category Quantity

2016/17 2015/16

A4 Stationery 3,496 4,741

CR Books Stationery 4,633 4,794

Demai Paper Stationery 106,368 128,563

Files Stationery 1,613 7,427

Photocopy Papers Stationery 86 97

Plastic Grocery 347 353

Polythene Grocery 74 51

Garbage bags Grocery 57,482 49,207

Empty bottles Grocery 1,817 2,489

Shopping bags Food Items 17,804 10,779

Matress cover Linen 1 7

Rubber Gloves Miscellaneous 4 30

Measuring Cups Plastic Patient Items 231 250

Blade Patient Items 692 935

Managing Our Inputs

We recognise that to preserve a habitable planet for

future generations and ensure the sustainability of

our own Organisation we need to manage consumption

and eliminate waste. The key steps we followed are

given below:

1. Practise continuous process improvement and

implement a total quality management system

to reduce material costs. Follow standardised

procedures and systems which help to maximise

efficiency of use of each material.

Eg: Purchasing/Inventory Control System.



2. Use 3R concept (Reduce, Reuse and Recycle)

and green programmes to reduce wastage and

material costs.

3. Reuse of rough papers to prepare the internal

reports.

Major Change

All fabrics consume resources when being produced.

Natural fibers such as cotton or linen need water

and land to grow the related crops. Manufacture

of synthetic fabrics as nylon, rayon and polyester

consumes oil. Wherever possible we reuse discarded

linen items for other purposes after sterilisation.

Discarded linen is reused for following:

zz Dusters for NTS

zz Discarded linen is used for various purposes by

following departments

zz For painting

zz Plumbing

zz AC Department

zz Transport

zz Used for maintenance departments for cleaning

activities

zz Replace two large bins for soil linen and reduce the

bins used in each room.

No. of Bins

Unit Price

Total

Small Bins Usage (2015/16) 588 1,200 705,600

Large Bins Usage (2016/17) 56 6,500 364,000

Saving 341,600

Patient room Linen orders for last 3 years:

Item

2016/17 2015/16 2014/15

Quantity Unit Price (Rs.)

Total Quantity Unit Price (Rs.)

Total Quantity Unit Price (Rs.)

Total

Bed Sheet 550 1,425 783,750 1,830 1,425 2,607,750 1,486 1,425 2,117,556

Draw Sheet 225 990 222,750 1,240 990 1,227,600 750 990 742,500

Pillow Case 460 325 149,500 1,590 325 516,750 1,829 325 594,425

Bath Towel 130 990 128,700 635 990 628,650 655 990 648,450

Total cost for the year 1,284,700 4,980,750 4,102,925

Saving from reuse of discarded linen Rs. 3,696,050/-

Energy

Nawaloka Hospital, which has been in the forefront of

private healthcare in Sri Lanka for over three decades,

is a high energy intensive Company.

24 Hour Operation

The fact that hospitals function 24X7 is an important

reason why they incur such high energy consumption.

Some of the measures by which energy can be saved,

consumption can be restricted and efficiency can be

enhanced are given below:

i. Our new car park building is designed to derive

the maximum benefit from natural light and adopt

energy-efficient building codes.

ii. Installing sensor lights, LED bulbs in certain high

energy consuming locations.

e.g. – Ground Floor, reception and lobby area

iii. Replacing old bulbs with new LED bulbs.

iv. Using natural daylight whenever possible by using

sky lights.

v. Using motion sensors and timers for outdoor and

indoor security lights, instead of leaving a light

burning all night.

vi. Switching lights off when not in use and not

connecting multiple lights on a single switch/

socket (announcement is made every morning

after the National Anthem).

vii. Replacing normal taps with flush with sensor in

addition to sensor taps in public toilets.



viii. New energy saving by using lighting roster during

the night time. (one electrician goes round the

hospital daily and notes down places where lights

and fans are not used and maintains a roster

accordingly).

ix. The programming of all computers to revert to

standby mode within five minutes.

x. Chilled water system with pumps controlled with

variable speed drivers to save pumping energy.

xi. Equipping AHUs (Air Handling Units) with

variable speed drives, enabling optimum energy

consumption at all running times.

xii. Doubling the cooling arrangement in AHUs in

Operation Theatres and ICUs i.e., providing units

using chilled water coils, so that during chiller

tripping, the normal units can continue with

power supplied by the generator. This will ensure

continuous availability of air conditioning even

when there is power tripping.

xiii. Hot water recirculation pumps which optimises

the power consumption and usage.

xiv. Installing VRF system and Inverter control air

conditioners in new car park building, reducing

energy consumption.

xv. By setting air conditioning units at a constant

minimum of 25oC, energy consumption can be

reduced significantly.

xvi. Laundry machines operating time scheduled to

off peak hours.

xvii. New stocking system installed at main stores will

increase efficiency.

xviii. Implementing preventive maintenance activities

of biomedical, maintenance, electrical and other

required equipment to improve efficiency and

enhance overall effectiveness of the equipment.


Electricity

Energy consumption is high in hospitals since

thousands of employees, patients and visitors occupy

the buildings daily.

Monthly Electricity Consumption

against Revenue 2015/17 (Rs./kwh)

900

675

450

225

0


2016/17 2015/16

Water Management

We are very conscious of the fact that properly treated

water and air can have a significant impact on the

health, safety and comfort of our patients and staff.

Moreover, fresh air, comfortable room temperatures,

and safe water can all enhance the Nawaloka image.

Hospitals are typically water intensive –

using water for sanitation, heating, ventilation,

air conditioning, food service, laundry and

miscellaneous purposes.

Our two main sources of water are,

zz Well and pipe borne water system

zz Water from the national water supply

Measures to reduce water consumption:

zz Using sockets for maintaining tap pressure.

zz Reducing water flow in patient room wash basins by

fixing an additional filter. Damaged lines in old water

distribution are checked and pipe lines are changed

to reduce water leakage. During renovation all the

water lines are fixed with new pipes.

zz Started to fix water meters for high usage areas for

proper monitoring and management.

zz Insulation done for the chilled water line to reduce

the loss in cooling.

zz Charts are displayed tracking the monthly

water consumption, to motivate employees to

conserve water.


Monthly Water Consumption

against Revenue 2015-2017 (Rs./M )3

50,000

37,500

25,000

12,500

0


2016/17 2015/16

Compared to the year 2015/16 water

consumption against revenue has reduced, but in

February and March 2017 water consumption was high

compared to last year. This is mainly due to increase in

admissions, due to expediting construction of new car

park building in the latter part of the year.

Effluents and Waste

Hospital wastes pose a significant threat to the health

and environment. Nawaloka uses a safety/waste

disposable system. Human contact with medical waste

can be harmful and toxic, and therefore we have put

in place a comprehensive safe waste disposal system

and keep upgrading technologies in this area.

As a Hospital, we hold the onus of ensuring the

safety of our staff and the society at large by putting

in place procedures to dispose medical waste in a safe

manner without any harmful effects. We have a strong

autoclave system to reuse such medical items which

will facilitate reducing medical wastage.

Disposal

Safe disposal of waste (Eg: Incineration of Hospital and Lab Waste)

Reduce

Minimise the amount of waste produced (Eg: streamline ordering system and reduce kitchen waste, Electricity, Water, reduce use of paper for paperless environment, Clinical waste)

Reuse

Use materials more than once (Eg: A4 papers are used again as rough sheets, use of discarded linen after sterilisation,

Refilling printer cartridges, use pharmaceutical medicine boxes to stack record room documents)

Recycle/Compost

Use materials to make new products(Eg: Water management system [Neg STP], discarded timber is reused to reform usable tables instead of destroying)

The different types of waste generated by

Nawaloka are as follows:

zz Clinical waste – potentially dangerous and carries

a high risk of infection to the general public and

employees.

zz Laboratory waste – includes chemicals used in

the pathological laboratory, microbial cultures

and clinical specimens, slide, culture dish, needle,

syringes, as well as radioactive waste such as

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

zz Non-clinical waste – includes organic material, paper,

polythene or plastic, which have not been in contact

with the body fluid of a patient.

zz Kitchen waste – includes food waste and waste

water used for food preparation. They breed pests

and therefore, pose an indirect potential hazard to

employees and patients.

The following improvements and changes were

made within last year:

zz Acquiring the new ‘Dual Burner Incinerator’ costing

upto Rs. 3,900,000/-.



zz Acquiring a new ‘Digital washing machine’. Compared

with conventional washing machines used for the last

20 years, the new machines are faster and use less

energy. They also have the facility of setting time

schedules and this reduces man power usage. Laundry

performance has increased due to this.

The table below shows the amount of chemicals,

electricity, gas, water and expense for overtime hours

incurred during the years for one piece of cloth used

by a patient. Therefore over the years rupee cost per

piece has reduced by a significant value.

Year 2016/17Rs.

2015/16Rs.

2014/15Rs.

2013/14Rs.

Chemicals 3,251,207.00 4,130,208.98 4,021,262.12 3,858,638.78

Electricity 4,487,767.00 5,078,738.00 5,382,025.00 5,625,142.00

Gas 5,983,950.00 5,951,271.00 6,027,000.00 6,134,575.00

Water 602,906.00 838,770.00 852,778.00 1,126,818.00

Overtime 183,117.37 39,941.59 4,316.40 177,193.63

Total 14,508,947.37 16,038,929.57 16,287,381.52 16,922,367.41

No. of pieces 1,647,600.00 1,725,094.00 1,493,829.00 1,391,953.00

Occupancy 30,147.00 30,794.00 28,467.00 28,690

Rupee value per piece 8.81 9.3 10.9 12.16

Emissions

The Central Environment Protection License is

maintained and emission levels are maintained within

the prescribed limits.

Monthly Insulator Details (Inclusive of the Lab,

Negombo Hospital and Medical Centre).

Item 2016/17 2015/16 2014/15

Waste (Kg) Diesel (Ltr) Per L/Per Kg Waste (Kg) Diesel (Ltr) Per L/Per Kg Waste (Kg) Diesel (Ltr) Per L/Per Kg

April 7,260 2,616 2.78 7,235 2,614 2.77 5,061 1,822 2.78

May 7,210 2,598 2.78 7,265 2,616 2.78 4,381 1,580 2.77

June 7,175 2,586 2.77 7,360 2,652 2.75 4,975 1,791 2.78

July 7,660 2,760 2.78 7,325 2,640 2.77 6,050 2,178 2.78

August 9,130 3,560 2.56 7,460 2,688 2.78 7,225 2,601 2.78

September 8,800 3,520 2.50 7,110 2,562 2.78 7,100 2,556 2.78

October 10,400 4,160 2.50 7,375 2,658 2.77 6,925 2,493 2.78

November 8,900 3,560 2.50 7,160 2,580 2.78 7,240 2,607 2.78

December 8,950 3,580 2.50 7,225 2,601 2.78 7,910 2,848 2.78

January 9,050 3,620 2.50 7,360 2,652 2.78 7,325 2,640 2.77

February 8,300 3,320 2.50 7,060 2,544 2.78 6,660 2,398 2.78

March 9,900 3,960 2.50 7,225 2,601 2.78 7,465 2,688 2.78



Waste Management

Given the nature of Nawaloka’s operations the volume

of medical waste generated daily is high. This makes

systematic waste generation imperative. The Hospital

has put in place a state-of-the-art waste disposal

system to ensure safe and effective waste disposal.

The waste disposal technology is being continuously

improved by the Standards Department to minimise

waste. Staff are also being regularly trained on safe

materials handling practices especially the proper

handling of hazardous materials.

The 3R concept (Reduce, Reuse and Recycle)

and green programmes have been introduced to

reduce wastage and material cost.

A garbage separation system ensures

responsible disposal of waste. Usage of paper is

being minimised by moving towards a paperless

office environment. Waste is also being minimised

through recycling printer cartridges. The efficiency of

operations has been increased through implementing

the ‘5S’ concept.

Quality Environment – 5S PLEDGEWe shall continuously maintain a high standard of QE (5S) practice at our workplace, through teamwork and self-discipline. In doing so, we shall achieve:

– Improved productivity – Consistent high quality products and services – Timely delivery – Reduced cost – Safe working environment


We are very conscious of the fact that properly treated water and air can have a

significant impact on the health, safety and comfort of our patients and staff

wm ksrka;rfhka wjOdkh fhduq lrkafka msßisÿ jd;h yd c,h ,nd§u u.ska frda.Skaf.a fi!LH wdrlaIdj yd iqjmyiqj by< kexùu ms‚ihs

The waste disposal technology is being continuously improved by the Standards

Department to minimise waste

wm wdh;kfha m%ñ;s wxYh u.ska li, neyer lsrSfï ;dlaIKh wLKavj j¾Okh lsÍu

ksid wmøjH wju lr.ekSug iu;aj we;

During the year we commenced several programmes to promote awareness of medical issues in numerous parts

of the island

fuu jir ;=< wm wdh;kh úiska ffjoH .eg`: i`oyd oekqj;a lsÍfï jevuq`: rg mqrd mj;ajd we;

Joseph Lister develops the use of antiseptic surgical

methods and publishes Antiseptic Principle of the

practice of surgery

1867


Road to 5S Implementation

Plan

Phase 1

Do

Phase 2

Check

Phase 3

Act

Phase 4

Pre

para

tio

n

Seiri–SortingSorting out wanted items from unwanted items. Therefore we first form Work Improvement Team (WIT) at each department to plan, implement and monitor 5S activities.

Set in OrderPut the selected wanted items in order for better work efficiency. All items in the hospital are arranged according to alphabetical order.

ShineAfter removing unwanted items and determining best storage location for remaining items, here focus mainly on cleanliness. Hospital has a separate cleaning department for this.

StandardiseAll activities related to work utilised and implemented during 5S are standardised and recorded, and communicated via emails, presentations etc.

SustainIn this step hospital do conduct regular training programmes for employees regarding 5S activities.

Self-Assessment & 5S Certification

Continual Improvement


Colour coded bins are provided as per the

national colour codes to segregate waste. Working

towards a paperless office environment we:

zz Reduce paper usage and wastage as far as possible

zz Discourage printing emails

zz Internal Reports

zz Recycle printer cartridges

zz Train nurses and provide email facility to Nurses

Station

zz Regularly train employees on safe practices and the

proper handling of hazardous material

zz Implemented 5S concept and maintain a proper

working environment

zz Train the workforce – providing training and

education on 5S for the whole workforce

Nawaloka Hospitals PLC Annual Report 2016/1790 Social and Environmental Capital Management Discussion and Analysis

zz Have a proper 5S programme defining where

our Organisation wants to go. Clearly defined

performance targets set and monitored.

zz Allocate resources and share gains with all

employees

zz Provide special health benefits to employees and has

created infection free environment to enhance the

productivity of employees.

zz Green initiatives and environmental friendly

initiatives – Garbage separating system (food/paper/

plastic and polythene/glass)

zz Awarded special commendation at the National

Productivity Awards 2015.

Effect on Biodiversity

zz Sewage/Waste Water Treatment Plant (STP):

Sewage water treatment is the process of removing

contaminants from waste water.

Waste water composition refers to the amount

of physical, chemical and biological waste in the

water. We have introduced the technology to purify

waste water to produce environmentally safe pure

water. Negombo hospital is equipped with a Sewage

Treatment Plant. The investment on which was

Rs. 20,000,000/-. The monthly water treating capacity

is 1,000,000 litres.

Year 2016/17 2015/16

Main Building (M3) 16,844 15,845

Lab (M3) 2,706 2,584

Total (M3) 19,550 18,429

Total Litters 19,550,000 18,429,000

Reused Liters 4,299,750 –

Reused percentage 22% –

Compliance with Environmental Regulations

Use of TQM System (ISO 9001:2015, ISO 15189 SLAB

Accreditation) to S5 System/Continuous process

improvement of systems to improve efficiencies and

reduce overhead cost.

The students were provided with drinking water which had been lacking

over a long period

oS¾> ld,hla uq`:,af,a msßisÿ mdkSh c, w¾nqofhka mSvd ú`È mdi,a ore mrmqr i`oyd

wjYH msßisÿ meka myiqj i,id §ug kjf,dal frday, l%shdlrkq ,enQ j.hs

We consider it our social responsibility to carefully monitor our impact on the environment to minimise our

carbon footprint

iajNdúl mßirhg uqodyßk wys;lr ldnka m%udKhka wju lsÍu;a" tajd ukd f,i wëlaIKh lsÍu;a kjf,dal frdayf,a m%uqL;u ld¾hNdrhhs

Awareness of medical issues among the general public is a important factor in improving the health of the population

fmdÿ ckhdf.a tÈfkod cSú;fha uqK.efik fi!LH .eg`: úi`§ug;a tajd ms<sn`o fmr oekqj;a lsÍu;a

kjf,dal frdayf,a jeo.;a ld¾hhla fõ


AWARDS AND ACCOLADES


ACCA Sustainability Reporting Awards 2016

Nawaloka Hospitals was awarded a Winner in the General Services and Utilities category at the ACCA Sustainability Reporting Awards 2016, organised by the Association of Chartered Certified Accountants (ACCA) Sri Lanka. The ACCA Sustainability Reporting Awards aim to reward Sri Lanka’s most transparent, accountable and responsible corporates. The awards are judged based on global criteria developed by the ACCA which is the Global Reporting Initiative (GRI) Guidelines for Sustainability Reporting. Nawaloka Hospitals was awarded Runner-up in the same category in the last two years.

CA Sri Lanka Annual Report Awards 2016

Nawaloka Hospitals won the Gold Award in the Healthcare category at the 52nd Annual Report Awards, organised by The Institute of Chartered Accountants of Sri Lanka. This is the sixth consecutive Gold Award won by Nawaloka Hospitals.

Special Commendation on National Productivity Awards

Nawaloka Hospitals received a Special Commendation at the National Productivity Awards organised by National Productivity Secretariat. This was received as an appreciation for developing organisational productivity.


1883

Mother of Nursing Florence Nightingale

An avowed key ingredient in the healing process is great nursing care. Nawaloka is proud of its nursing staff. Empathy, compassion and warmth complement professional excellence – it’s a combination that cannot fail. The Hospital runs its own comprehensive Nurses Training Centre. Now, we are looking further afield – offering Home Nursing services as well.

Nursing Staff with 30-years of experience


STEWARDSHIP

BOARD OF DIRECTORS

Mr. Jayantha Dharmadasa has been a Director of the Company since 1985. He is a businessman by profession and counts over 40 years of experience in Executive Management and 31 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, Nawaloka Aviation (Pvt) Ltd., Nawaloka Polysacks Sharjah, Sasiri Polysacks (Pvt) Ltd., Nawaloka Construction Company (Pvt) Ltd., Nawaloka Petroleum (Pvt) Ltd., Koala (Pvt) Ltd., New Ashford International (Pvt) Ltd., Nawaloka Medical Centre (Pvt) Ltd., Nawaloka Green Cross Laboratories (Pvt) Ltd., Nawaloka Engineering Co. (Pvt) Ltd., Nawaloka Agri (Pvt) Ltd., Nation Lanka Finance PLC., Ceyoka (Pvt) Ltd., Nawaloka College of Higher Studies (Pvt) Ltd., East West Marketing (Pvt) Ltd., Nawaloka Steel Industries (Pvt) Ltd., Millennium Housing Developers PLC, Alcobronze (Pvt) Ltd. and JDC Graphic Systems (Pvt) Ltd.

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

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

In late 2010 Mr. Wijetilleke completed 50 years as a Practicing Banker and in 2011 retired from the position of Chairman, HNB. He is a past Chairman and Director of the Colombo Stock Exchange. He is also the settlor and the main trustee of ‘The Rehabilitation of Buddhist Temples Foundation’ (Incorporation) Act No. 17 of 2014.

Professor 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 29 years experience in Hospital and Healthcare Administration and Laboratory Sciences. He is an Emeritus Professor of Biochemistry and Clinical Chemistry, Faculty of Medicine, University of Kelaniya. Professor Chandrasena has a Doctorate in Philosophy from the University of Liverpool (UK) and a Bachelor of Science (Hons) from the University of Liverpool (UK). He is a Fellow of the Institute of Chemistry, Ceylon and is a Chartered Chemist, Fellow of Royal Society of Chemistry (UK), Fellow of the National Academy of Sciences of Sri Lanka and Post Doctoral Fellow, Colorado State University, U.S.A.

He is also a Fellow member of the Institute of Certified Professional Managers and holds a certificate in Hospital Administration from the Indian Institute of Management, Ahamadabad. He is also a Director of Nawaloka Hospitals International (Pvt) Ltd., International Medical Institute (Pvt) Ltd., Nawaloka College of Higher Studies (Pvt) Ltd., Nawaloka Guardian International (Pvt) Ltd., Nawaloka Hospitals Research and Education Foundation, Nawaloka – Green Cross Laboratories (Pvt) Ltd., and a Non-Executive Director of Sri Lanka Insurance Corporation Ltd.

He is presently the President of the Association of Private Hospitals and Nursing Homes, and a Member of the Private Health Services Regulatory Council – Ministry of Health. He was also appointed the President of the Association for Clinical Biochemistry, Sri Lanka.

Mr. Jayantha Dharmadasa

Chairman & CEO – Executive Director

Mr. Rienzie Theobald Wijetilleke

FCIB (UK), FIB (Sri Lanka) CCMI (UK)

Independent Non-Executive Director and Vice-Chairman

Vidya Jyothi Professor Lal Gotabhaya Chandrasena

Director/General Manager, Executive Director

Nawaloka Hospitals PLC Annual Report 2016/17 95StewardshipBoard of Directors

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

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

He is also the Vice-Chairman of Ceat Kelani Holdings (Pvt) Ltd., Orient Insurance Ltd. and serves on the Boards of several listed and private companies which include John Keells PLC, Taj Lanka Hotels PLC, TAL Hotels and Resorts Ltd., Lanka Walltiles PLC, Nawaloka Hospitals PLC, Associated Electrical Corporation Ltd., Inoac Polymer Lanka (Pvt) Ltd., Cinnovation INC, GVR Lanka (Pvt) Ltd. and Varun Beverages Lanka (Pvt) Ltd., (Pepsi).

Deshabandu Tilak de Zoysa is a past Chairman of the Ceylon Chamber of Commerce, The National Chamber of Commerce of Sri Lanka, HelpAge International (UK) and served as Member of the Monetary Board of Sri Lanka (2003-2009).

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

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

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

Mr. Bandaranayake was a past Chairman of the Audit Faculty of The Institute of Chartered Accountants of Sri Lanka and a past president of the practicing Chartered Accountants’ Forum. He was also a Vice-President of National Stroke Association of Sri Lanka, Member of Rotary International Finance Committee 2013-2016 and Rotary International District Governor for Sri Lanka 1999-2000.

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

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

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

He is also a Director of KBSL Information Technologies Ltd., East West Properties PLC, Rosewell Investment (Pvt) Ltd., Carplan Ltd., KIA Motors (Lanka) Ltd., Agarapatana Plantation (Pvt) Ltd. and Kotagala Plantation PLC and the Managing Director of Lankem Tea and Rubber Plantations (Pvt) Ltd.

Deshabandu Tilak de Zoysa

FCMI (UK), FPRI (SL)

Senior Independent, Non-Executive Director

Mr. Tissa K BandaranayakeFCA, BSc

Senior Independent Non-Executive Director

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

Independent Non-Executive Director

Nawaloka Hospitals PLC Annual Report 2016/1796 Stewardship Board of Directors

Mr. Harshith Dharmadasa has been a Director of the Company since 2000. He has 22 years of experience in Executive Management.

He is the Chairman of Milllenium Housing Developers PLC. He is also the Managing Director of Ceyoka (Pvt) Ltd., Nawaloka Trading (Pvt) Ltd., Nawaloka Agri (Pvt) Ltd., Ceyoka Engineering (Pvt) Ltd., Nawaloka Mep Concepts (Pvt) Ltd., Koala (Pvt) Ltd., East West Marketing (Pvt) Ltd., Nawaloka Steel Industries (Pvt) Ltd. and Nawaloka Construction Company (Pvt) Ltd.

Mr. H. Dharmadasa is also a Director of Nawaloka Holdings (Pvt) Ltd., Nawaloka Hospitals PLC., Nawaloka College of Higher Studies (Pvt) Ltd., Nawaloka Guardian International (Pvt) Ltd., Nawaloka Medicare (Pvt) Ltd., Nation Lanka Finance PLC., and JDC Printing Technologies (Pvt) Ltd.

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

Mr. Anisha Dharmadasa is a Director of Nawaloka Medical Centre (Pvt) Ltd., Waves Destinations (Pvt) Ltd., Nawaloka Holdings (Pvt) Ltd., Nawaloka Hospitals PLC, New Ashford International (Pvt) Ltd., Nawaloka Engineering (Pvt) Ltd., International Medical Institute (Pvt) Ltd., Nawaloka Petroleum (Pvt) Ltd., Nawaloka Guardian International (Pvt) Ltd., Nawaloka Medicare (Pvt) Ltd., Nawaloka Construction Company (Pvt) Ltd., Quincy (Pvt) Ltd., Sasiri Polysacks (Pvt) Ltd, Nawaloka Green Cross Laboratories (Pvt) Ltd., JDC Printing Technologies (Pvt) Ltd., JDC Graphics Systems (Pvt) Ltd., Unifold (Pvt) Ltd., JDC Inks & Chemicals (Pvt) Ltd. and Nawaloka Institute of Healthcare (Pvt) Ltd.

Mr. A G Dharmadasa is also the Chairman of Sikure Security Services (Pvt) Ltd. and Nixon Distribution Services (Pvt) Ltd.

Ms. Givanthi Dharmadasa has been a Directress of the Company since 2003 and has 16 years of experience in Executive Management.

She is a Directress of Nawaloka Holdings (Pvt) Ltd., Nawaloka Hospitals PLC, Nawaloka Medicare (Pvt) Ltd., Nawaloka Air Services (Pvt) Ltd., Nawaloka Aviation (Pvt) Ltd, Redline Services (Pvt) Ltd., Redline Design & Printing (Pvt) Ltd., Redline International (Pvt) Ltd., Alcobronz (Pvt) Ltd., Nawaloka Green Cross Laboratories (Pvt) Ltd., Nawaloka Hospital Research & Education Foundation, JDC Printing Technologies (Pvt) Ltd., JDC Graphics Systems (Pvt) Ltd., Unifold (Pvt) Ltd., JDC Inks & Chemicals (Pvt) Ltd., Nawaloka Professional Academy (Pvt) Ltd., and Nawaloka Institute of Healthcare (Pvt) Ltd.

Mr. Ugitha Harshith Dharmadasa

Executive Director

Mr. Anisha Givantha Dharmadasa

Executive Director

Ms. Ashani Givanthi Dharmadasa

Executive Directress

Nawaloka Hospitals PLC Annual Report 2016/17 97StewardshipBoard of Directors

Mr. P Kumarasinghe is a leading President’s Counsel specialised in civil commercial litigations. He was enrolled as an Attorney at Law on 27th September 1982. He had his education at Mahinda College, Galle and thereafter entered into Sri Lanka Law College in 1979. Having devilled in the Chambers of Mr. Romesh de Silva, President’s Counsel, Mr. Kumarasinghe is now in active practise in the District Court of Colombo, Commercial High Court of the Western Province and the Superior Courts. He has an extensive commercial law practise and he is the Counsel for a large number of banks and finance houses.

He was a Vice-President and Executive Committee Member of the Bar Association and Chairman of various committees inclusive of National Law Conference, Ethics & Professional Conduct and Continuing Legal Education. He was once the President of Colombo Law Society.

He served in the Public Service Commission for a period of six years and was a Member of Council Legal Education (2010-2015) and its Board of Studies, Chairman of Environment Council (2010-2013) and Member of Advisory Commission on Intellectual Property (2001-2004).

He also served as the Chairman of Disciplinary Committee of Sri Lanka Cricket, since 2012, the Chairman of Legal Advisory Committee 2012-2015 and the Chairman of the Governance Committee (2012).

He is an Independent Non-Executive Director of Laugfs Gas PLC, since 2012.

Mr. V Ramanan is a Sri Lankan born British national residing in London. Being educated in Sri Lanka and the UK, Victor is a BSc Graduate and holds a Diploma in Software Engineering, Business Administration & Sales Techniques (UK).

He is a versatile marketer and administrator with more than 30 years of hands on experience working in many countries including United Kingdom, Kuwait, Dubai, Baharain, Germany, France, USA and Sri Lanka. He has worked in areas such as IT, HR, Marketing and Business Development for more than 17 years of which has been in the fields of Oil, Gas and Logistics sectors.

Mr. Ramanan is the Chairman of Adventus Education (Pvt) Ltd., Deputy Chairman at Nawaloka College of Higher Studies (Pvt) Ltd., (NCHS) and Millennium Housing Developers PLC. He is also a Director at Nawaloka Hospitals PLC, Nation Lanka Finance PLC and Ideal Getaways (Pvt) Ltd.

Mr. Palitha Kumarasinghe PC


Mr. Victor R. Ramanan

Non-Executive Director

First contact lenses developed

1887

Nawaloka Hospitals PLC Annual Report 2016/1798 Stewardship

SENIOR MANAGEMENT TEAM

Dr. Uthpala Malawara Arachchi graduated with MBBS from Faculty of Medical Sciences, University of Sri Jayawardenepura in 2002. He holds a MSc in Medical Administration awarded by the Postgraduate Institute of Medicine and a Diploma in Occupational Health and Safety from the University of Colombo. He has served as a Medical Officer-in-Charge in many Government institutions. From 2007 to 2009, he was attached to the National Health Service, United Kingdom in the field of Medical Administration. He joined Nawaloka Hospitals as a Medical Superintendent in 2014. He has over 15 years of experience in Clinical and Medical Administration. He is an Occupation Heath and Safety Physician for many corporates.

Ms. G Warusavithana graduated as a Staff Nurse from the Nurses Training School, Galle and postgraduated in Post Basic School of Nursing, Colombo. She is qualified with a Midwifery Diploma in Nursing Administration - Management and Supervision, Maternal and Child Health International special training in Khon Kaen University-Thailand, Neurosurgery special training in Fujitha University-Japan and Accident and Emergency special training at Royal Hospital-Oman. She has over 41 years of experience in the state sector, overseas and private sector.

Mr Warusavitarana is a Member of the Association of Accounting Technicians, Sri Lanka. He joined Nawaloka Hospitals in 1988. He has eight-years of experience in a reputed firm of Chartered Accountants and 29 years experience in the healthcare industry.

Dr. Uthpala Malawara Arachchi

Medical Superintendent

Ms. G Warusavithana

Chief Nursing Officer

Mr. Kanishka Warusavitarana

Senior Manager – Operations

Mr. I P Balasuriya has obtained a MSc in IT from the University of KEELE (UK) in 2005, and is a Member of BCS, CSSL and CPM. He has also followed the NIBM Diploma in IT. He has over 19 years of experience in the fields of Project Management, ERP Project Consulting, Application Development, Implementation and User Training. He has working experience with multinational companies as well. He joined Nawaloka Hospitals in 2008.

Mr. C Rupasena is a holder of BSc in Business Administration (Human Resources Management) Special Degree from the University of Sri Jayewardenepura. He is an Attorney-at-Law, Notary Public, Commissioner for Oaths and is a Registered Company Secretary. He also holds a Diploma in Psychological Counselling and has over 13 years of experience in Human Resources Management.

Mr. Indika Prasath Balasuriya

Head of Information Technology

Mr. Chaminda Rupasena

Head of Human Resources

Nawaloka Hospitals PLC Annual Report 2016/17 99StewardshipSenior Management Team

Mr. Nalaka Niroshana is an Associate Member of the Chartered Institute of Management Accountants – UK, an Associate Member of Chartered Global Management Accountants and a Member of Certified Professional Managers. He is a graduate from the University of Sri Jayawardenepura. He joined Nawaloka Hospitals in 2011 and has over 10 years of executive experience in diversified conglomerates in Sri Lanka.

Mr. U Mannapperuma obtained his National Certificate of Technology from the University of Moratuwa in 1980 and joined Nawaloka Group of Companies, Construction Division. In 1983 he joined the Maintenance Division of Nawaloka Hospitals. He is certified in Hospital Management from Japan Overseas Health Administration Centre, Yokohama in 1995. He has 32 years of experience in the healthcare industry.

Mr. M D Ariyawansa obtained his Diploma in Business Management from the National Institute of Business Management in 1983. He joined Nawaloka Hospitals in 1985 as an Executive Officer and worked in several business units at 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 32 years of experience in the healthcare industry.

Mr. Nalaka Niroshana

Head of Finance and Corporate Planning

Mr. Upatissa Mannapperuma

Senior Co-ordinating Officer and Maintenance Manager

Mr. M D Ariyawansa

Senior Co-ordinating Officer

Mr. A Samaradiwakara is working as Senior Co-ordinating Officer at Nawaloka Hospitals since 2003 and he has more than 36 years of experience in the service sector.

Mr. K S B Ekanayake holds a Diploma in Electrical Engineering from the University of Moratuwa. He has work experience of over 12 years as an electrical engineer. He joined Nawaloka Hospitals in 2016 as an Electrical and Mechanical Engineer.

Mr. L Sooriyapperuma has over 19 years of experience in Marketing/International Trade. He has obtained a Master’s in Business Administration from University of Wales in UK.

Mr. Anura Samaradiwakara

Senior Co-ordinating Officer

Mr. K S B Ekanayake

Electrical and Mechanical Engineer

Mr. Lakmal Sooriyapperuma

Head of Marketing


EXECUTIVE CLINICAL MANAGEMENT TEAM

Dr. Maiya GunasekeraMBBS, FRCS (Eng), FICS,FRCS (Ed), MS (Surgery), FIAGES, FCS (Sri Lanka)

Consultant Surgeon General Surgery/Gastroenteroscopy/Laparoscopy and EndoscopyConsultant in-charge of Surgical service

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

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

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

Consultant Physician and Physician in-charge Ward Medical Services

Dr. Sandeep K SharmaMD (Anaesthesiology)

Consultant Cardiac Anaesthetist and Intensivist

Dr. Hemant Digambar WaikarMBBS, MD, DA (ANAE), PDCC (CARDIAC AND NEUROANAESTHESIA)

Consultant Cardiac Anaesthetist

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

Chief Cardiothoracic,Vascular and Transplant Surgeon

Dr. (Mrs) Roshan Zeirideen ZaidMBBS (Cey), MRCOG (UK), DFSRH (UK), CCT (UK), FMAS (Ind), DMAS (IND)

Resident Consultant Obstetrician, Gynaecologist and Laparoscopic Surgeon

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

Consultant Physician Consultant Geriatrician (Geriatric Physician)

Nawaloka Hospitals PLC Annual Report 2016/17 101StewardshipExecutive Clinical Management Team

Dr. Harindu WijesingheMBBS, MD, MRCP (UK)

Consultant Rheumatologist Specialist in Sports Medicine

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

Consultant Physician

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

Consultant Neurosurgeon

Dr. (Mrs) D MaruthiniMBBS, DGO, MS (COL), MRCOG (UK), MD (UK)

Consultant Subspecialist in Reproductive Medicine and Surgery Consultant Obstetrician and Gynaecologist

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

Consultant Paediatrician


1895

Wilhelm Conrad Röntgen discovers X rays

We are honoured to be able to claim yet another milestone in medical history in this country. Nawaloka was the first private hospital to introduce CT Scanning as well as MRI in Sri Lanka. Today, we offer the latest in the field of radiology, including PAC, the most advanced reporting system in the industry.

640 slices CT Scanner performing a CT Angiogram

Nawaloka Hospitals PLC Annual Report 2016/17104 Stewardship Corporate Governance

CORPORATE GOVERNANCE

Clinical Governance PolicyPurpose of the Clinical Governance Standards

The requirement of a consolidated set of healthcare

standards which is aligned with the global context

arose as a result of continuous involvement of the

healthcare practices, diseases and ailments.

Nawaloka Hospitals continuously keeps its

controls and processes up to date with the clinical

standards in order to provide superior healthcare

services to its customers and thereby being a leader in

the healthcare profession.

The standards followed at Nawaloka Hospitals

ensures that our managers, clinicians, health

professionals and users of health services are provided

with the following assistance:

zz Develop and implement clinical governance

processes and systems within the Hospital.

zz Increase organisational awareness of clinical

governance and contribute to the development and

implementation of clinical governance systems and

processes.

zz Assist clinicians and management to embed clinical

governance within the organisational culture.

zz Assist Nawaloka Hospitals PLC to demonstrate

improved accountability for the delivery of safe,

high quality healthcare services through the

implementation of clinical governance systems and

processes.

Clinical Governance is defined as:

This is a framework through which the Hospital is

accountable for continuous improvement of the quality

of its services and safeguarding high standards of care

by creating an environment in which excellence in

clinical care will flourish.

Clinical Governance consists of seven key

elements. These are discussed below, along with the

mechanisms in use to deliver each of the elements and

the expectations that are placed on partners and staff.

1. Education and Training

In ensuring the retention of capable, skilled and

experienced staff in our workforce and to continuously

expand our Human Resource Personnel, we follow:

zz Competency Standards: The Hospital must be

confident that the current staff possesses adequate

skills, experience and training related to their fields

and is capable of undertaking the responsibilities

assigned to their positions.

The Hospital’s Management verifies and

approves competencies, standards and qualifications.

This validation process is in place to justify that the

competencies, standards or qualifications are authentic

or evidence-based.

Validation processes at individual levels include

(but are not limited to) the following elements:

zz Verifying that the individual is registered with or

accredited by the relevant bodies.

zz Verifying that the individual has evidence of

Continuing Professional Development (CPD).

zz Continuing Professional Development: This includes

the ongoing and regular education and research

activities linked to the responsibilities and needs of

the clinicians employed by the Hospital.

Active participation in regular Continuing

Professional Development is a professional duty of all

clinical staff. This is to ensure that their knowledge is

up to date.

Medical Officers (MOs) and the Nursing Staff

should:

zz Engage in professional support within the workplace

in the context of the Performance Appraisal and

Development Plan.

zz Utilise education and training opportunities to

demonstrate ongoing professional development.

zz Engage in Continuing Professional Development

through an accreditation programme.

Nawaloka Hospitals PLC Annual Report 2016/17 105StewardshipCorporate Governance

Following any learning event, all clinicians are

expected to document their learning for individual

learning purposes. Medical Officers and nurses are

expected to share their learning with their colleagues,

formally through clinical, nurse team meetings or

documentation or through other informal means,

after participating in any external CPD paid for by

the Hospital. Immediately after a learning event, each

clinician is responsible for bringing urgent updates to

the attention of all colleagues to whom the information

is relevant.

MO’s are responsible or supporting the nursing

team through formal teaching sessions, on the job

learning and other forms of disseminating knowledge.

A clinical meeting is arranged every month where

clinicians with specialised knowledge share updates

with the rest of the clinical team.

In order to deliver high quality medical services,

the support of non-clinical staff is essential. Therefore

regular update of their skills has also been recognised

as a need.

2. Clinical Audit

This is ‘the systematic measurement and evaluation

of the efficiency and effectiveness of organisational

systems and processes’. These audits analyse the

quality of clinical care outcome, including the

procedures used for diagnosis and treatment; the use

of resources and the adequacy of evaluation of clinical

outcome and the quality of life of patients. This may

refer to:

zz The application of the results of independent

international and local audits to our patient

population and the identification of areas of

improvement.

zz The use of case studies to highlight specific

issues that are then generalised within our patient

population. The monthly clinical meeting provides

a forum for the purpose of disseminating results of

audits and the exchange of opinions in improving

clinical practice.

Monthly meetings are held on different days of

the week where all MOs and members of the nursing

team are required to be present. Clinicians who are

not called for meetings may choose to attend when

they wish to. However in any case the responsibility of

raising awareness at the conclusion of the meeting is

vested with the clinician chairing the meeting.

Medical Superintendent (MS) or other senior

administrative staff attend meetings when required,

to aid the process of dissemination and to ensure

that any administrative changes needed to support

improvement to the proposals are carried through. The

range of topics covered in local audits should meet

one of the following key criteria:

zz Respond to newly-published local pathways

zz Respond to newly-published national evidence

zz Respond to newly-available drug or other therapy

(if recommended by the relevant Authority)

zz Respond to a clinically significant event or

substantiated complaint

zz Provide a balance across a range of specialties

(i.e. clinicians should not at all focus on a narrow

range of conditions)

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

own expertise

The Medical Superintendent is designated to:

zz Manage the agenda of clinical meetings.

zz To ensure that the areas selected at clinical meetings

meet the criteria of knowledge transfer.

zz To arrange for a clinical evaluation to be presented

on any topic that is causing particular concern either

locally or more widely.

All papers presented at a clinical meetings

should be made available to participants through their

respective emails. It is the responsibility of the clinician

presenting the paper to ensure that this is done.

Felix Hoffman develops aspirin

1899

Nawaloka Hospitals PLC Annual Report 2016/17106 Corporate GovernanceStewardship

3. Clinical Effectiveness

Providing the best evidence-based care for the patient,

whilst making good use of available clinical resources

is Clinical Effectiveness. Clinicians in the Hospital

are expected to work within formalities, protocols

and pathways where these have been developed for

specific conditions:

These conditions include:

zz Clinical standards incorporate clinical guidelines,

pathways and local practice protocols. These

standards may be set by bodies such as the Sri Lanka

Medical Council, which is the authoritative body of

the Ministry of Health in setting clinical standards

and the Sri Lanka Medical Association.

zz Clinical indicators are measures or benchmarks

that enable the Hospital to compare them against

similar health services. To facilitate health system

improvement clinical indicators must be meaningful

and reflect clinical practice standards.

Apart from the above, clinicians are expected

to read journals and/or websites regularly to maintain

current awareness of best practice. This should include

regular scanning of national guidelines for changes in

recommended practice.

4. Patient and Public Involvement – Openness

Processes open to public scrutiny, while respecting the

individual patient and practitioner confidentiality, are

an essential part of quality assurance.

The Hospital uses various mechanisms to enable

patients and other interested parties to be involved

in identifying needs and improvements. These include

Patient’s Bill of Rights.

zz The Hospital website – promotes regular and ad hoc

services, along with information about the staff, the

complaints procedure and a comment facility.

zz Patient Reference Group – Group representatives

of the Hospital’s demographic make-up conducts

annual patient survey and scrutinises the Hospital’s

response to the views expressed by patients.

zz Complaints – all patient complaints are analysed

regularly for learning points and for patterns.

Complaints about clinical care are shared

immediately with the clinician concerned and those

that give rise to clinical learning points are shared

more widely at a clinical meeting.

zz Suggestions – a suggestion box with forms to

complete are available at the waiting area.

The Hospital aims to co-operate at all times in

a spirit of openness with other healthcare providers,

local authority organisations, and any organisation

which has an interest in our operations.

5. Risk Management

Risks are assessed and managed through a range of

policies and protocols. These are risks common to

patients, clinicians, other staff and the Organisation

as a whole. This is done through the identification

and reduction of potential risks and examination

of adverse incidents for causative and contributing

factors and trends within and across the services. To

maximise learning opportunities lessons should be

shared within the Hospital. Some aspects of clinical

risk management are:

zz Reporting, monitoring and trend analysis of incidents

and adverse events: This incorporates activities

such as learning from local incidents or patterns

of incidents, including near hits and management

of serious adverse events and maintaining a risk

register and monitoring medico-legal cases.

zz Sentinel event reporting, monitoring and clinical

investigation: Defines the process for identification,

reporting and investigating sentinel events in line

with Quality and Patient Safety Committee.

zz Analysis of risk profile: including the identification,

investigation, analysis and evaluation of clinical risks

and the selection of the most appropriate method of

correcting, eliminating or reducing identifiable risks.

The key policies relating to minimising risk for

patients are:

zz Patient’s Bill of Rights

zz Consent Policy

zz Infection Control Policy

zz Identification of Patients

zz Verbal Policy

zz High Alert Medication Policy

zz Correct Site, Correct Procedure, Correct Patient

Surgery

zz Patient Falls Policy

Nawaloka Hospitals PLC Annual Report 2016/17 107Corporate Governance Stewardship

Aspects of clinical governance such as providing

attention to education and training, clinical audit and

clinical effectiveness help to minimise risks.

All staff is encouraged to discuss any incident

that has or could pose a risk. The experience gained

through incidents is shared across the Hospital and

actions are reviewed and followed-up until fully-

implemented. Clinical incidents are referred to a

clinical meeting, to facilitate a detailed discussion in a

confidential environment.

6. Information Management

Effective and efficient information management

results in high quality clinical care. The start of this is

maintenance of good records of patients.

It is the responsibility of every clinician to ensure

that the details of their consultations are recorded in a

way that:

– is easily understood by colleagues and by the

patient, if requested

– reflects exactly what takes place in the consultation,

including any discussion relating to risk, e.g.

consent, offer of a chaperone

– provides clear information about the agreed

care plan

– uses codes and templates as agreed within

the Hospital to enable effective searching of

patient data

– EMR (Electronic Medical Records) with UPIN. This

helps us retrieve patient information on the system

with no hassle of paper documents

The Hospital will use patient data for purposes

consistent with our data protection registration (see

Data Protection Policy available at page 54) and will

maintain patient confidentiality at all times when using

data for clinical governance purposes. Patient records

will be searched to provide evidence for internal audits

and case studies and to ensure clinical effectiveness.

7. Human Resources

In its commitment to delivering medical care, the

Hospital nurtures a team of fully-qualified and suitably-

experienced clinicians and a supportive administrative

staff. Regular reviews are conducted for the clinical

team to ensure that the full range of primary care skills

is available at appropriate levels and development

opportunities are offered as necessary. All clinical

staff are encouraged to work within the highest range

of their skill set and not just carry out tasks which

could be fulfilled by a less qualified clinician. When

recruiting potential new MOs or nurses, the interview

will always include questions designed to demonstrate

an awareness of clinical governance principles. The

Hospital operates within a full suite of human resources

policies and protocols to ensure that every member of

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

best interests of the patients in mind at all times.

Karl Landsteiner introduces the system to classify blood into A, B, AB and O groups

1901

Nawaloka Hospitals PLC Annual Report 2016/17108 Corporate GovernanceStewardship

Governance Structure of Nawaloka Hospitals PLCCorporate governance is the framework of rules

and practices by which a Board of Directors

ensures accountability, fairness, and transparency

in a company’s relationship with all its stakeholders

(financiers, customers, management, employees,

Government and the community).

The Corporate Governance framework

consists of;

1. Explicit and implicit contracts between the

Company and the stakeholders for distribution of

responsibilities, rights, and rewards.

2. Procedures for reconciling the sometimes

conflicting interests of stakeholders in accordance

with their duties, privileges and roles.

3. Procedures for proper supervision, control and

information flows to serve as a system of checks-

and-balances.

Good Corporate Governance is globally

accepted as being fundamental to an organisation’s

competitiveness, growth and sustainability. There is

great attention on Boards of Directors to discharge

their duties with high ethical values and accountability

in their commitment to good governance practices.

Strong business ethics, sound policies and procedures,

effective and efficient monitoring systems are

considered as ingredients of good corporate

governance system.

It is vital that the Hospital conducts its business

within the highest standards of corporate governance.

The governance structure of Nawaloka Hospitals

PLC is designed to satisfy the legitimate claims of

all stakeholders and to fulfil the Hospital’s economic,

environmental and social responsibilities in an

accountable, sustainable and transparent manner.

The business activities of the Hospital are

conducted by adhering to the highest standards which

are based on the best contemporary principles and

practices whilst conforming to all applicable laws and

regulations. The major external steering instruments on

Governance could be identified as follows:

zz Companies Act No. 07 of 2007.

zz Code of Best Practice on Corporate Governance

issued jointly by The Institute of Chartered

Accountants of Sri Lanka and the Securities and

Exchange Commission of Sri Lanka.

zz Listing Rules of the Colombo Stock Exchange.

zz Sri Lanka Accounting and Auditing Standards Act

No. 15 of 1995.

zz The Board of Directors, being the highest

governance body of the Hospital, ensures alignment

of the Hospital’s business strategy to sustainable

business performance, whilst creating value to

stakeholders.

The Hospital’s Governance Structure portrayed

above (Refer page 110) demonstrates the linkage

mechanism that ensures alignment of business

strategy and direction through effective engagement

and communication with its stakeholders, Board of

Directors, Board Subcommittees and Management.

The Board comprises five Executive Directors

including the Chairman, five Independent Non-

Executive Directors and one Non-Executive Director,

as shown below, who are professional experts in

business and administrative matters in multiple

industrial fields in which they have achieved

excellence. Their contribution is the main driving force

in guiding the Hospital to achieve excellence.

Mr. H K Jayantha Dharmadasa

(Chairman/CEO) Executive Director

Mr. Rienzie T Wijetilleke

(Non-Executive Vice-Chairman)


Deshabandu Tilak De Zoysa


Professor Lal Chandrasena

(General Manager) Executive Director

Mr. Tissa K Bandaranayake


Dr. Paul Dudley White pioneers the use of the Electrocardiograph – ECG

1913


Mr. Ugitha Harshith Dharmadasa

Executive Director


Executive Director

Ms. Ashani Givanthi Dharmadasa

Executive Director

Mr. D Sunil AbeyRatna




Mr. Victor Rajamanner Ramanan

Non-Executive Director

The Hospital has in place a number of

mandatory and voluntary Board Subcommittees

to fulfil regulatory requirements and ensure good

governance of its activities. These Committees meet

regularly to consider and discuss matters falling within

their respective Charters and their recommendations

are duly communicated to the Main Board. These

Committees consist of Executive Directors and

Non-Executive Directors in varying proportions as set

out above.

The main responsibilities of the Board are as follows:

zz Formulate the mission, overall business policy and

strategy, provide directions and establish goals for

the Management, set priorities and standards for the

Management and the conduct of the business.

zz Appoint the Chief Executive Officer, determine the

remuneration of senior executives and report to the

shareholders on their stewardship.

zz Ensure that adequate internal controls and the

highest ethical standards are maintained.

zz Report to the shareholders quarterly on the

performance of the Hospital.

zz Be conscious of the commitment for the Hospital to

be environmentally friendly by placing emphasis on

complying with relevant regulations.

zz Establish clinical governance procedures and

continue to improve the same.

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

monthly programmes for the patient safety, quality

and care.

zz Establish a mechanism to monitor the Hospital’s

programmes for the patient safety, quality and care.

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

patient safety, quality and care.

Given below are the ways and means of the

Board engaging with the shareholders and employees

in order to communicate relevant information to them:

Shareholders

zz Annual General Meeting and Extraordinary General

Meetings to deliberate on matters which are relevant

and are of concern to the general membership.

zz Access to the Board and the Company Secretaries.

zz The Hospital’s website which is accessible to all

stakeholders and the general public.

zz Interim reports on financial performance.

Employees

zz The Board of Directors includes one employee

Director namely Vidya Jyothi Professor Lal

Gotabhaya Chandrasena the Director/General

Manager who bridges the communication gap

between the rest of the employees and the Board.

zz The Hospital’s Board of Directors and Board

subcommittees conduct effective dialogue with the

members of the Corporate Management on matters

pertaining to the overall strategic direction of the

Hospital.

zz Staff is subjected to performance appraisal which

is conducted quarterly. This is a well-established

process and has become an ideal forum for

employees to engage in aligning with strategic

objectives of the Hospital.

The Board meets on a monthly basis and ad

hoc meetings are held as and when required. At these

meetings, the Board reviews the exposure to key

business risk, the strategic direction of the Hospital,

targets and budgets, progress made towards achieving

those budgets, capital expenditure programmes,

reports on patient safety, quality and care, Sentinel

Events Monitoring Report and Customer/Patient

Satisfaction Report.

Nawaloka Hospitals PLC Annual Report 2016/17110 Stewardship Corporate Governance

The Board has delegated the primary authority

to implement policies and achieve the strategic

objectives of the Hospital to the Chairman/Chief

Executive Officer (CEO) and the Director/General

Manager. The responsibilities of the Director/General

Manager are as follows:

zz Recommend policies, strategic plans, and budgets to

the Board of Directors.

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

zz Financial Management.

zz Quality Management.

zz Compliance with applicable laws and regulations.

zz Respond to any reports from inspection and

regulatory agencies.

zz Systems to manage and to control human, financial

and other resources.

The Chairman/CEO and the Director/General

Manager exercise this authority within the policy

framework established by the Board and the ethical

framework and business practices inherent to the

Hospital, in accordance with best practices in dealing

with employees, customers, suppliers, consultants and

the community at large.

The Chairman/CEO and the Director/General

Manager (Director/General Manager) review in

detail the monthly performance, budgets, capital

expenditure proposals and business strategies prior to

recommending them to the Board.

In addition, monthly presentations and review of

operations are conducted by the Senior Management

team including the Chairman/CEO and the Director/

General Manager. This review covers the operations for

the current month and the year to date, clinical audit

and review reports, clinical indicator reports, clinical

incident monitoring report as well as future projections

and the liquidity position of the Company.

Conflict of Interest

The Governance Structure of the Hospital ensures that

the Directors take all necessary steps to avoid conflict

of interest, in their activities with and commitments

to, other organisations or related parties. In pursuance

of the requirements under the Sections 192 and 193 of

the Companies Act No. 07 of 2007, the Directors duly

disclose the financial accommodation made.

We, as pioneers in Modern Healthcare Industry,

strictly adhere to the relevant regulatory benchmarks

and confirm compliance with the following during

the year:

1. Companies Act No. 07 of 2007

2. The Code of Best Practice on Corporate

Governance issued jointly by The Institute of

Chartered Accountants of Sri Lanka and the

Securities and Exchange Commission of Sri Lanka.

3. Sri Lanka Accounting and Auditing Standards Act

No. 15 of 1995.

4. Listing Rules of the Colombo Stock Exchange

5. Recommendations of the UK Corporate Governance

Code as practicable in the context of the nature of

business risks and profiles.

Nawaloka Hospital PLC

Stareholders

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

Corporate Governance Structure

New Nawaloka Hospital (Pvt) Ltd.

New Nawaloka Mediacal Centre (Pvt) Ltd.


Nawaloka Metropolis Labortories (Pvt) Ltd.

Board Subcommittees (Refer page 135)

Fully-owned Subsidiary

50% joint Venture

Nawaloka Hospitals PLC Annual Report 2016/17 111Stewardship

Corporate Governance Principle

SEC and CA Sri Lanka Code Reference

Adoption Status

Level of Compliance by the Nawaloka Hospitals PLC

A. Directors

A.1 The Board

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

Meeting A.1.1 Adopted During the financial year 2016/17, there were 11 Board meetings held

towards reviewing the contemporary organisational strategy.

Decisions in relevance to the Organisation’s strategy were made as and

when required.

All meetings are called well in advance and Directors are expected to

participate at the meetings.

Attendance of the Board of Directors:

Name of Director Number ofMeetings Attended

Attendance

%

Mr. H K J Dharmadasa 9 90

Mr. Rienzie T Wijetilleke 9 90

Deshabandu Tilak de Zoysa 8 80

Vidya Jyothi Prof. Lal Chandrasena 9 90

Mr. Tissa K Bandaranayake 9 90

Mr. U H Dharmadasa 10 100

Mr. A G Dharmadasa 8 80

Ms. A G Dharmadasa 8 80

Mr. D Sunil AbeyRatna 9 90

Mr. Palitha Kumarasinghe, PC 9 90

Mr. Victor R Ramanan 9 90

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

the following:

zz Setting strategic direction and monitoring its effective

implementation.

zz The Non-Executive Directors collaborating with the Executive

Directors to evaluate the systems of risk management, internal

control and compliance.

zz The Management appoints the External Auditors of the Company.

zz The Non-Executive Directors are provided with the opportunity

to criticise and question the actions of the Board especially

related to the integrity of the financial reporting process.

zz The Non-Executive Directors ensure that the strategies

fall under the scope of ethical standards.





Adoption Status


Rules and Regulations A.1.3 Adopted The Board collectively acted in accordance with the rules and

regulations of the country which are applicable to the Company.

The following rules and regulations are adhered to in relevance to

Corporate Governance by the Company:

zz Companies Act No. 07 of 2007.

zz Listing Rules of CSE (Colombo Stock Exchange).

zz The Code of Best Practice on Corporate Governance as published

by the SEC (Securities and Exchange Commission of Sri Lanka)

and The Institute of Chartered Accountants of Sri Lanka the

CA Sri Lanka.

zz Recommendations of the UK Corporate Governance Code

as practicable in the context of the nature of business risks

and profiles.

Company Secretaries A.1.4 Adopted All Directors have direct access to the Company Secretaries which

is a firm consisting of members from Attorneys-at-Law and qualified

Company Secretaries comprising a Senior Attorney-at-Law and several

Associates who are also Attorneys-at-Law.

The Company Secretaries ensure the effective circulation of information

among Executive and Non-Executive Directors.

The Company Secretaries facilitate the Board meetings and the Annual

General Meeting.

Independent Judgment A.1.5 Adopted The Directors are welcome to bring their independent professional

judgments towards the decision-making process.

The Board will create a forum to discuss the suggestions and select the

best solution for the Company.

Adequate time

and Effort

A.1.6 Adopted The Chairman and the members dedicate adequate time for

their duties.

All Board meetings are organised well in advance. The Company

Secretaries ensure that all requested information is delivered to the

Directors for their independent judgment.

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

Subcommittee meetings:

zz Audit Committee

zz Remuneration Committee

zz Nomination Committee

zz Related Party Transaction Review Committee

zz Risk Management Committee

zz Strategic Planning Committee

zz Sustainability Committee

Training A.1.7 Adopted New Directors are provided with adequate inductions and grooming

for their Director roles. All Directors have well recognised the need for

continuous training and expansion of knowledge and skills required to

effectively perform their duties.

Stewardship Corporate Governance




Adoption Status


A.2 The Chairman and Chief Executive Officer

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

Division of

responsibilities of the

Chairman and Chief

Executive Officer

A.2.1 Adopted Role of the Chairman and Chief Executive Officer is held by one and

the same person. The Chief Executive Officer's role includes developing

and implementing high-level strategies and implementing major

corporate decisions.

The Board unanimously agrees to the role of the Chairman and CEO

being handled by one person, due to –

1. Exposure he has in the operations of the relevant Company

which makes him the ideal CEO.

2. The superior skills he possesses in mediating communication

between the Management and the shareholders.

The Chairman will act as the main pivot of communication between the

Board of Directors and the shareholders.

As the role of the Chairman and Chief Executive Officer is not

separated. Deshabandu Tilak De Zoysa has been appointed as Senior

Independent Director (SID) in compliance with A.2.1.

A.3 Chairman's Role

The Chairman's role for good Corporate Governance.

The Chairman is

responsible for an

effective Board. The

Chairman should ensure

effective discharge of

Board functions.

A.3.1 Adopted The Chairman is responsible for leadership of the Board. The Chairman

facilitates the effective contribution and performance of all Board

members whilst identifying any development needs of the Board.

He plays the role as a mediator of communication among the

shareholders and the Management towards resolving issues of concern.

Further, the Chairman ensures that the balance of power between

Executive Directors and Non-Executive Directors is adequate.

A.4 Financial Acumen

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

matters of finance.

Availability of sufficient

financial acumen

A.4 Adopted The Board is consistently endowed with sufficient financial acumen as

three of the Board members have sound financial knowledge and hold

fellowships of respective professional accounting bodies.

StewardshipCorporate Governance

Insulin first used to treat diabetes.

1922




Adoption Status


A.5 Board Balance

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

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

Adequate number

of Non-Executive

Directors

A.5.1 Adopted The Board consists of eleven Directors out of which six Directors are

Non-Executive Directors. This has ensured that no additional powers

are vested by an individual or small group of individuals to dominate

the Board. Furthermore, the composition of Non-Executive Directors

exceeds the required 1/3 proportion of the Board.

Adequate number

of Independent

Non-Executive Directors

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

out of six Non-Executive Directors.

Independency

of Directors

A.5.3 Adopted All five Independent Non-Executive Directors are free from any material

relationship with the Company which ensures their independence is not

compromised.

Signed declaration of

independence by the


A.5.4 Adopted All Non-Executive Directors have made written submissions to declare

their level of independence.

Declaration in the

Annual Report

A.5.5 Adopted The Board has determined the Independence and Non-Independence

of the Non-Executive Directors based on the declaration and all other

available information.

No circumstances have arisen for the determination of independence

by the Board, beyond the criteria set out in the Code.

The following Non-Executive Directors have been declared as

the Independent Non-Executive Directors:






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

Alternate Directors.

Senior Independent

Director

A.5.7 Adopted Deshabandu Tilak De Zoysa has been appointed as the Senior

Independent Director (SID), as the role of the Chairman and

Chief Executive Officer is not separated.


Sir Alexander Fleming discovers penicillin

1928




Adoption Status


Confidential Discussion

with Senior Independent

Director

A.5.8 Adopted The Senior Independent Director has made himself available for any

material discussion with any of the Directors.

Meeting with the

Chairman and


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

arises.

Recording of concerns

in Board minutes

A.5.10 Adopted All concerns arisen had been resolved unanimously, resulting in the

requirement for recording such concerns in minutes being limited.

A.6 Supply of Information

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

Timely Information A.6.1 Adopted The Management has provided the Board with the required information

to discharge their duties effectively.

Additional information is dispersed by the Management as

and when required.

Board Papers A.6.2 Adopted The Board paper is sent seven days in advance of the Board meeting

for initial preparation.

A.7 Appointments to the Board

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

Nomination Committee A.7.1 Adopted The Nomination Committee makes recommendations to the Board

for all new appointments. The Nomination Committee will consist

of the following:

Deshabandu Tilak De Zoysa – Chairman

(Senior Independent Non-Executive Director)

Mr. Tissa K Bandaranayake – Member


Mr. D Sunil AbeyRatna – Member

(Independent Non-Executive Director)

Assessment of

Board Composition

A.7.2 Adopted The Board as a whole annually assesses the composition of the Board

to ascertain whether combined knowledge and experience of the Board

match with the strategic demands faced by the Company.

New Board Members will be appointed as and when the need arises.

Disclosure to

Shareholders

A.7.3 Adopted The Board has disclosed the appointments of new Directors

to the shareholders with the material information.





Adoption Status


A.8 Re-election

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

Appointment of


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

per the Articles of Association of the Company.

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

A.9 Appraisal of Board Performance

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

discharged.

Appraisal of Board

Performance

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

relating to self-evaluation of individual performance and collective

performance of the Board as a whole.

Appraisal of self-

performance

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

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

A.10 Disclosure of Information in Respect of Directors

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

Disclosure in

Annual Report

A.10.1 Adopted Please refer pages 94 to 97 for the profiles of the Directors.

A.11 Appraisal of the Chief Executive Officer

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

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

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

Officer along with its objectives. This includes financial and

non-financial targets.

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

of the Chief Executive Officer in achieving the set targets.


Dr. Karl Theodore Dussik publishes the first paper on medical ultrasonics –

ultrasound

1942




Adoption Status


B. Directors' Remuneration

B.1 Remuneration Procedure

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

packages of individual Directors.

Remuneration

Committee

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

recommendations to the Board within the agreed Terms of Reference

for compensating the Executive Directors.

Refer page 138.

Composition of

the Remuneration

Committee

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

Directors:

Refer page 138.

B. 1.3 Adopted Deshabandu Tilak De Zoysa – Chairman


Mr. Tissa K Bandaranayake – Member




Remuneration of the


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

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

the Board as well as in the Committees.

Advices to the

Chairman and the

Chief Executive Officer

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

the Remuneration Committee in relevance to the procedure in

compensating the Executive Directors. The Remuneration Committee

consults the Chairman in relevance to the remuneration of other

Executive Directors and if required access to professional advice from

within and outside the Company.

B.2 The Level and Make-up of Remuneration

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

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

achievement of corporate objectives.

Remuneration for

Executive Directors

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

Directors to retain and motivate them. The Remuneration package

has been designed to enhance the value of the shareholders through

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

objectives.

Comparison between

similar companies

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

consideration the comparative levels of remuneration paid by other

similar companies.





Adoption Status


Comparison of

remuneration

across the Group

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

executive remuneration to ensure that the Company is on a par with

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

objectives of the Company.

Performance-based

remuneration to the

Executive Directors

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

performance of the allocated responsibilities of the Executives.

Executive Share Option

Schemes

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

financial year under review.

Deciding the

performance-related

remuneration

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

in Schedule D in decisions pertaining to performance remuneration

related.

Early termination

of Director

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

employment are governed by the contract of service.

Early termination of

Director not included

in the contract

B. 2.8 N/A Refer above comment.

Remuneration to the


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

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

Directors.

B.3 Disclosure of Remuneration

Disclosure of the Remuneration policy in the Annual Report.

Disclosure of

Remuneration

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

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

page 138.

Remuneration policy focuses on the compensation to employees for

the services provided and to retain employees with skills required to

effectively manage the operations.


First vaccine developed for influenza

1945

John Hopps invented the first cardiac pacemaker

1950




Adoption Status


C. Relations with Shareholders

C.1 Constructive Use and Conduct of General Meetings

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

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

votes lodged for each resolution.

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

towards providing shareholders the opportunity to cast their votes

separately in relevance to the above items.

Availability of the

Chairmen of Audit,

Remuneration and

Nomination Committees

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

made available by the Company to clarify any queries, especially at the

time of the Annual General Meeting.

Refer page 135 – Board Subcommittees.

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

their early preparation for the Annual General Meeting.

All queries are clarified at the Annual General Meeting.

Procedures of voting

at General Meetings

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

to the shareholders.

C.2 Communications with Shareholders

The Board should implement effective communication with the shareholders.

Communication

Channels

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

communicate relevant information.

Communication

Methodology

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

address matters which are relevant and of concern to the General

Membership.

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

– The Hospital's website which is accessible to all stakeholders and

the general public.

– Interim Reports – www.cse.lk

Responsibility of

communication

C.2.4

C.2.5

C.2.6

Adopted The Board of Directors includes one Employee Director namely,

the Director General Manager and the Company Secretaries to

bridge the communication gap between the rest of the shareholders

and the Board.

Shareholder Matters C.2.7 Adopted Please refer C. 2.4





Adoption Status


C.3 Major Transactions

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

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

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

D. Accountability and Audit

D.1 Financial Reporting

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

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

published the following reports to disclose relevant information to

the stakeholders:

– Quarterly Financial Statements

– Annual Reports

The Company has strictly complied with the requirements of the

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

Statements are prepared based on the International Financial Reporting

Standards (IFRS).

Directors’ Report D.1.2 Adopted Refer pages 132 to 137.

Auditors’ Report D.1.3 Adopted Refer page 146.

Management

Discussion and Analysis

D.1.4 Adopted Refer pages 32 to 90.

Declaration by the

Board that the business

is a going concern

D.1.5 Adopted Refer page 136 and 143.

Summon an

Extraordinary General

Meetings to notify loss

of capital

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

an Extraordinary General Meetings would be summoned to inform

the shareholders.

D.2 Internal Controls

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

assets.

Review of the Internal

Control System

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

control system in the Company to safeguard the shareholder

investment.

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

internal controls in business operations.

Refer page 141 – Internal Controls and Internal Audit.





Adoption Status


Need for Internal

Audit Function

D.2.2 Adopted An in-house internal audit functions in the Company.

Regular Reviews

of Internal Controls

D.2.3 Adopted Our internal audit function carries out regular reviews, spot audits to

identify the effectiveness of the internal controls established.

D.3 Audit Committee

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

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

Company's Auditors.

Composition of

Audit Committee

D.3.1 Adopted The Audit Committee comprised four Independent

Non-Executive Directors:

Mr. Tissa K Bandaranayake – Chairman


Mr. Rienzie T Wijetilleke – Member


Deshabandu Tilak De Zoysa – Member




Duties of Audit

Committee

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

effectiveness and objectivity of the Auditors.

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

carried out by the Auditors.

Terms of Reference

of the Audit Committee

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

reviewed annually.

The Committee assists the Board to oversee the following aspects:

– Preparation, presentation and adequacy of disclosures in

the Financial Statements.

– Compliance with financial reporting requirements, information

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

financial reporting related regulations and requirements.

– Ensuring that the Internal Control System of the Company

is effective.

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

– Assessing the independence and performance of the Company’s

External Auditors.

Disclosure D.3.4 Adopted Refer pages 139 to 142.





Adoption Status


D.4 Code of Business Conduct and Ethics –

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

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

Code of Business

Conduct and Ethics

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

focusing on the following important areas:

– Integrity

– Objectivity

– Professional competence and due care

– Confidentiality

– Fair dealing

– Encouraging the reporting of any illegal or unethical behaviour

– Conflict of interest

– Bribery and corruption

– Entertainment and gifts

– Integrity of Financial Statements

– Corporate opportunities

– Protection and proper use of the Company assets

– Compliance with rules and regulations

All our Directors and Senior Executives have declared their

commitment to operate in adherence to these principles.

Affirmation of the Code

of Business Conduct and

Ethics (Report by the

Chairman affirming that

there were no incidents

involving the breach

of mentioned ethical

policies)

D.4.2 Adopted Refer the Chairman's Report in pages 10 to 11.

D.5 Corporate Governance Disclosures

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

Corporate Governance.

Disclosure of


D.5.1 Adopted The Report in pages 104 to 123 provides a detailed disclosure on our

Corporate Governance practices.


Paul Zoll develops the first cardiac pacemaker

Jonas Salk develops the first polio vaccine Rosalind Franklin uses X-ray diffraction

to study the structure of DNA

1952




Adoption Status


E. Institutional Investors

E.1 Shareholder Voting

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

voting intentions are translated into practice.

Dialogue with the

Shareholders

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

communication with the shareholders.

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

the meeting and addressed thereafter.

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

the shareholders’ issues are resolved systematically.

E.2 Evaluation of Governance Disclosure

The Company should encourage institutional investors to provide due diligence to all relevant factors in the Board Structure

and Composition.

F. Other Investors

F.1 Investing/Divesting Decision

Individual Shareholders F.1 Adopted Individual shareholders are encouraged to carry out adequate analysis

or seek out independent advice for matters related to investing/

divesting decisions.

F.2 Shareholder Voting

Individual

Shareholder Voting

F.2 Adopted Individual shareholders are encouraged to participate at General

Meetings and exercise their voting rights.

Gertrude Elion patented a leukemia-fighting drug Dr. Joseph E. Murray performs the first kidney transplant

1954


RISK MANAGEMENT

Given the nature of services provided, organisations

in the healthcare sector are exposed to a multitude

of risks. Apart from conventional risks such as credit

and market, operational risks arising from diagnostic

errors, surgical mishaps, medication issues, hazardous

conditions, privacy breaches etc. may lead to losses

and liabilities. Given the disastrous consequences of

such situations if they were to occur, highest priority

needs to be accorded to identify and manage such

risks with a formal organisational framework of

consistent and thorough systems and processes.

Identifying and managing such unexpected

situations is an essential daily concern of Nawaloka

Hospitals. Consistent and thorough processes are

the hallmark of our successful risk management

framework.

Adhering to a bottom-up risk management

approach, the Hospital encourages employees at all

levels to participate in the risk management process.

In addition, Nawaloka constantly reviews and updates

the risk management process on a regular basis and

thus, believes it to be a common thread, throughout

the entire Hospital.

Financial Risk

Human Resources RiskCredit Risk

Information Technology Risk

Procurement Risk

Reputation RiskTechnological

Obsolescence Risk

Asset RiskLegal and Regulatory

Environment Risk

Clinical RiskIntellectual

Property Risk

Operational RiskCompetition Risk

Types of Risks

1955

Jonas Salk develops the first polio vaccine


Risk Management Initiatives

Identified Risk Responding Actions Objectives

Financial Risk:

This includes risks related to

funding structure, projects

invested, asset utilisation etc.

zz Timely and appropriate decisions on funding, investing and dividend payments.

zz Efficient working capital management.

zz Use of compatible concepts in financing and investing.

zz Negotiation of favourable credit terms and discounts.

zz Appropriate funding strategies.

zz Optimising trade-off between liquidity and profitability

zz Achieving appropriate funding structure and gearing.

zz Minimising the adverse impacts of changing financial market conditions.

zz Compliance with covenants.

Operational Risk:

Risk of direct and indirect

losses resulting from

inadequate or failed

internal processes, people and

systems or from

external events.

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

zz Regularly analyse causes for the deviations and losses and take action to improve systems and controls to prevent recurrence in the future.

zz Revise and implement business continuity planning.

zz Carrying out effective and objective independent internal audits.

zz Timely implementation of recommendations given by internal audit.

zz Eliminating opportunities for misappropriation.

zz Cost containment and reducing wastage.

zz Ensure controls are adequate to curtail business processes, minimise human error beside systems and procedural failures.

Clinical Risk: zz Create and maintain high quality medical and safety standards.

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

zz Adhere to international therapist and diagnostic norms to ensure compliance with WHO standards.

zz Carrying out ISO internal/external audits to maintain ISO procedures.

zz Ensuring the provision of a quality service to the patients.

Risk Management Stewardship

Thomas Fogarty invented the balloon embolectomy catheter

1963



Human Resources Risk: zz Putting proper HR and remuneration policies in place.

zz Providing training and developing staff skills and knowledge.

zz Planning career path progress and succession planning.

zz Job rotation and staff training for multiple skills.

zz Improving decision-making processes by motivating employees.

zz Reducing staff turnover.

zz Reducing over dependence on individual staff members.

zz Retaining top performers.

Information Technology Risk: zz Entering into service level maintenance agreements for hardware and software.

zz Implementation of firewalls and virus protection.

zz Online and offline backup procedures for application data storage.

zz Mirror data storage.

zz Alternative connections for servers.

zz Hardware backup.

zz Regular health checks of the systems and networks.

zz Error logs and user logs maintenance.

zz Ad hoc backup restorations.

zz Implementation of disaster recovery plan.

zz Zero loss of data during a system down time.

zz Zero down time of the application servers connectivity.

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

zz Maintain regular and effective communication with shareholders.

zz Maintain constant improvement in the quality of the output of the Company.

zz Maintaining a good image among the Company’s stakeholders and ensuring its positive impact on business.

Legal and Regulatory

Environment Risk:zz Ensure compliance with all applicable laws and regulations

zz Obtain legal advice where necessary.

zz Minimise claims arising from litigations initiated by clients by providing proper and adequate service.

zz Reliability.

zz Maintain an accurate patient data base.

zz Compliance with all applicable statutory or regulatory obligations.

Risk ManagementStewardship

Nawaloka Hospitals PLC Annual Report 2016/17 127StewardshipRisk Management


Asset Risk Including

Information:

Impact on the Company’s

assets due to theft, natural

disaster or human error

zz Appropriate insurance covers for identified risks.

zz Backup of vital machinery and equipment components.

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

zz Minimising breakdown of equipment and other assets.

zz Minimising the cost of information.

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

Technological

Obsolescence Risk:

The impact of changing

technology on the Company’s

operations.

zz Competent biomedical team to keep abreast with developments in medical equipment and introduce new technology to maintain high technological standards and continuous investment in medical equipment.

zz Deploying all available highly advanced equipment to provide a better quality service to patients.

Procurement Risk:

Includes buying quality

products on time.

zz Ensure standardised quality.

zz Establish relationships with multiple suppliers.

zz Negotiate for better prices and discounts.

zz Minimising instances of running out of stock.

zz Minimising the effect of price increases.

zz Maintaining quality of pharmaceutical products.

Credit Risk:

Includes defaults by debtors

and other parties who obtain

credit from the Hospital.

zz Evaluate the creditworthiness and credit policies of companies before granting credit.

zz Carrying out timely collections from patients.

zz Reducing defaults by debtors and minimising impact on results of operations.

Intellectual Property Risk:

This includes the use of the

Company’s brand name by

other parties.

zz Create brand awareness through sustained advertising and marketing.

zz Being vigilant on the use of our brand and image by unscrupulous parties

zz Protecting our brand against possible infringements.

zz Eliminating potential damage to our reputation

zz Eliminating adverse impacts on our financial performance

Competition Risk:

The possibility of fluctuation in

revenue caused by changes in

market variables and actions of

competitors.

zz Enhance service quality by adapting to market developments in the dynamic operating environment.

zz Maintain excellent customer relationships.

zz Provide better quality at affordable prices.

zz Protecting and expanding market share.

zz Improving financial performance


Risk Management Committee

The Risk Management Committee of Nawaloka Hospital

has been established with a clear mandate with the

objective of ensuring that proper risk management

policies and procedures are in place. The Committee

comprises 32 members and is chaired by Professor Lal

Chandrasena who is the Director/General Manager of

Nawaloka Hospitals PLC.

Board Members of the Risk Management Committee

Professor Lal Chandrasena – Chairman (DGM/ED)

Mr. U Harshith Dharmadasa – Member (ED)

Mr. A G Dharmadasa – Member (ED)

Ms. A G Dharmadasa – Member (ED)

The Committee conducts monthly meetings

to oversee and approve risk management, internal

compliance and control policies and practices of

the Company.

Three Lines of Defence

The Company has deployed the ‘Three lines of defence’

governance model which facilitates accountability

and transparency through clear identification and

segregation of roles as given below:

Risk

As the economy becomes more complex and

concerns grow about reducing liability, organisations

find themselves confronting an increasing array of

risks that can significantly impact their businesses.

Given the nature of the business, risk management

in healthcare is paramount to establish a safe

environment for patients and employees. Nawaloka

Hospitals PLC makes an organised effort to identify,

assess and reduce risks to patients, visitors, staff and

organisational assets. Nawaloka has a systematic

and collaborative risk management policy in place

for ensuring accountability and embedding risk

management in all sectors of the organisation to

identify, analyse, evaluate, monitor, control and reduce

potential risks.

In accordance with the monthly discussions

and evaluation of the risk matrix, the Nawaloka Risk

Management Committee has identified several risks

associated with Nawaloka. They have been categorised

into the following broader domains:

zz Operational Risk

zz Financial Risk

zz Legal and Regulatory Environment Risk

zz Reputational Risk

Operational Risk

Nawaloka Hospitals PLC considers the Management

and the mitigation of operational risk as an integral

part of our robust risk management strategy.

Operational risks arise due to failure in the internal

processes, people, clinical and IT system. The

Committee regularly performs operational risk

monitoring activities in order to promptly detect

deficiencies in the policies, procedures and processes.

Internal Process

Nawaloka ensures risk management in its operations

by maintaining proper internal control systems

initiating prompt response to evolving risks. Following

are some of the standards in place to ensure that

internal process risks have been reduced within a

controlled environment:

zz Designated Manager, Head of System and Control

who monitors and controls the risk and internal

controls on a daily basis, assists in identifying failures

within the processes and takes prompt action to

mitigate and reduce risk.

zz Nawaloka is the first healthcare services provider

in Sri Lanka to obtain the ISO 9001:2008. Thus,

it conforms to the ISO procedures and ISO audit

standards.

zz Audit trails are checked by the internal audit teams

at scheduled times in an appropriate manner. Hence,

red flags (if any) are raised and proper action are

recommended and implemented.

Risk ManagementStewardship


zz Offering precise and clear job responsibilities

to employees at each level allows the Hospital

to adhere to established standards and follow

protocol in a highly vulnerable service industry. Any

deviation will be monitored and immediate action

taken. Employees have been reminded of the job

expectation periodically and continuous on-the-job

and off-the-job training is provided.

Clinical

Nawaloka’s proactive risk management and patient

safety activities continues to reduce risks associated

with patient care. Clinical risk management is designed

to support the mission of the hospital of ‘Healing with

Feeling’ as it pertains to clinical risk and patient safety.

zz Nawaloka has identified several key elements that

influence the degree of clinical risk, namely – staff

participation, safety culture, learning from incidents

or errors, education and training.

zz The Hospital provides a fully-fledged training

programme to both doctors and nurses. In addition,

the programme encourages maintaining good

communication.

zz Biomedical instruments and equipment play a

vital role in the upkeep of the Hospital as well

as the patients; hence, Hospital has a systematic

programme to maintain and replace the respective

technological equipment on time.

zz The Hospital ensures that it enters into service

agreements only with established, esteemed and

reputed organisations so as to abide by Nawaloka’s

clinical service policies and procedures.

zz Nawaloka serves as an ethical service organisation

in terms of drug suppliers. We make sure that the

suppliers maintain high quality business standards,

conforms to national and international guidelines

together with recognised quality parameters.

People

Operational risks to the hospital may arise from

potential employee negligence, conflict of interest,

fraud and mismanagement or due to poorly trained

employees. While Nawaloka ensures the safety and

welfare of the employees, our risk management policy

is directed towards, so far as reasonably practicable,

to minimise the risks that may arise from employees.

This is mainly achieved through the varied training

programmes that our employees undergo which are

aimed specifically at reducing risk.

zz Staff training is crucial to the successful management

of risk exposures arising from the interaction

between humans and medical technology. However,

Nawaloka has invested time and money to create

an appropriate risk culture, in which employees are

aware of operational risk.

zz Nawaloka offers and conducts comprehensive

training programmes to both in-house staff as well as

to external parties (non-core outsourced businesses).

Non-core outsourced businesses include security,

cleaning, maintenance and businesses under service

agreements.

zz As a measure of monitoring the success and further

strengthening the training programmes, performance

appraisals are conducted every three months.

Simultaneously, any ambiguity that highlights

likelihood of risks is being analysed, evaluated and

revised through action plans.

StewardshipRisk Management

First vaccine developed for mumps Dr. Christiaan Barnard performs the first human heart transplant

1967

Nawaloka Hospitals PLC Annual Report 2016/17130 Stewardship Risk Management

IT System

Path-breaking developments in technology within

the last decade have taken healthcare to the next

level. However, the increasing use of technology has

also introduced new levels of complexity and threats

such as: security breaches, system failures, malicious

attacks, IT fraud and a plethora of other issues.

Nawaloka Hospitals PLC is aware of the risks that may

arise from IT matters and we have taken necessary

steps to reduce risk.

zz Nawaloka has converted all manual processes into

computerised systems. The Enterprise Resource

Planning (ERP) system of Nawaloka is subjected to

constant updates and upgrades to ensure that risks

are minimised. The design and the implementation

of the robust HIS platform specifically identifies all

business processes and healthcare-related risks.

zz The Hospital has taken measures for online and

offline backup procedures for application data

storage. In addition, certain proper security measures

have been installed through firewalls and virus

protection, thereby ensuring zero losses of data

during a system failure.

Financial Risk

Financial management is important to any industry, but

healthcare is particularly challenging because of the

pace the industry changes. Financial risks associated

with Nawaloka are related to funding structure, project

investments, asset utilisation, credit quality of debtors

and counterparts. Proper management of such risks

enhances the Hospital’s ability to earn, raise or access

capital. The following provides an outline of the risks

involved and measures taken as regards liquidity risk,

credit risk and assets risk.

Liquidity Risk

Liquidity risk involves the risk that funds potentially

required on a short-term basis cannot be sourced or

secured expeditiously. In addition, the risks are also

associated with the cash on hand and the availability

of credit line facilities. Nawaloka has taken stringent

measures to minimise the risks in relation to liquidity.

zz A dedicated team of experts, headed by the Financial

Controller, conducts daily cash flow analysis. The

analysis provides a reliable and valuable perspective

on the Hospital’s financial performance. Further,

it assists in identifying any shortfalls or surpluses,

making smart investment planning decisions and

daily cash flow activities. Thus, it improves cash flow

control and helps to ensure that cash flow concerns

are dealt with effectively.

zz Imposing a proper debt collection policy

circumventing a build up of debtors, bad debts and

consequent provisioning.

zz Establishing proper authorisation levels in order to

control expenditures.

Credit Risk

Managing credit risk is always a complex challenge –

one that becomes even more complex against a

backdrop of market volatility and evolving regulatory

guidelines. Nawaloka’s main objective is to reduce the

impact of debtor defaults. We follow strict protocols in

the management of risk and debtors.

zz It operates under a sound credit-granting process,

which maintains an appropriate credit evaluation,

administration, measurement and monitoring

process. In addition, the Hospital evaluates the

creditworthiness of the companies prior to the

granting of credit, thus ensuring that, payment is

obtained as quickly as possible for such credit.

zz The Hospital has established an efficient credit

policy, which reduces the risk of bad debt, minimises

the costs of granting credit and helps maintain a

good cash flow.

Nawaloka Hospitals PLC Annual Report 2016/17 131StewardshipRisk Management

Asset Risk

Asset risk to an organisation is a threat when an

organisation’s assets are vulnerable to theft, natural

disaster or human error. Implementing precautionary

measures helps control and minimise asset risks.

zz Acquiring appropriate insurance covers for identified

risks provides a relief to the Hospital under

unavoidable circumstances such as breakdowns or

natural disasters.

zz Creating backup of vital machinery, equipment

components as well as documentation helps to

reduce the cost of loss of vital information.

Legal and Regulatory Environment Risk

Healthcare is one of the most heavily regulated

industries. Regulatory scrutiny is intense, and

non-compliance with the applicable laws and

regulations will lead to legal risks and may even impact

the reputation of the Organisation. Complying with

environmental regulations is also vital, since proper

medical waste disposal and hygiene and sanitation

standards have to be diligently followed. Nawaloka

has taken necessary measures and appropriate

care to ensure that risks are minimised in the legal

and regulatory environment. Operating with a clear

objective in conforming to all standards and in

compliance with all statutory or regulatory obligations,

the following are specific actions taken by the Risk

Management Committee:

zz Ensure compliance with all applicable laws and

regulations while obtaining legal advice whenever

necessary.

zz Minimise claims arising from litigation initiated by

clients by providing services of the highest standard.

This highlights reliability and credibility of

the Hospital.

Reputational Risk

A well-executed stakeholder engagement strategy

can minimise reputational risk, and result in positive

perceptions of and trust in an organisation, which can

produce value for and have a positive economic impact

on that organisation. We have taken the necessary

precautions to avoid reputational risk.

zz Nawaloka Hospital has been well-established for the

past 30 years. As an esteemed service Organisation,

understanding the vulnerability of saving lives and

importance of medical technology, Nawaloka stands

in the forefront of healthcare in the country.

zz Maintaining strong relationships with stakeholders by

building confidence and trust, ensuring operational

efficiency, financial transparency and conformance

to international best practices, Nawaloka Hospital

can live up to the vision of maintaining its prestigious

reputation for generations to come.

First vaccine developed for chicken pox

1974


The Directors have pleasure in presenting to

the members, their Report together with the

Audited Financial Statements for the year ended

31st March 2017.

The details set out herein provide the pertinent

information required under the Companies Act No. 07

of 2007, the Listing Rules of the Colombo Stock

Exchange and recommendations in adherence with

best accounting practices.

Legal Form

Nawaloka Hospitals PLC is a public company with

limited liability incorporated in Sri Lanka on 1st July 1982

under the Companies Ordinance No. 51 of 1938 and

re-registered under the provisions of the Companies

Act No. 07 of 2007 on 7th September 2007, with the

Company re-registration No. PQ 78. Since 2004 its

shares are quoted in the Colombo Stock Exchange. This

information is disclosed as required by Section 168 of

the Companies Act No. 07 of 2007, which also requires

the following information to be disclosed.

Principal Business Activities

Nature of the business of the Company and the Group

are described below as required by Section 168 (1) (a)

of the Companies Act No. 07 of 2007. There has been

no material change to the activities of the Company or

any of its subsidiaries during the period under review.

Company

The principal activity of the Company is providing of

healthcare and hospital services.

Subsidiaries


This is a private company with limited liability

incorporated in Sri Lanka under the provisions of

the Companies Act No. 17 of 1982 and re-registered

under the new Companies Act No. 07 of 2007. It is

also domiciled in Sri Lanka and is a wholly-owned

subsidiary of Nawaloka Hospitals PLC.

ANNUAL REPORT OF THE BOARD OF DIRECTORS

New Nawaloka Medical Centre (Pvt) Ltd.

This too, is a private company with limited liability

incorporated in Sri Lanka under the provisions of

the Companies Act No. 17 of 1982 and re-registered

under the new Companies Act No. 07 of 2007. It is

also domiciled in Sri Lanka and is a wholly-owned


Nawaloka Metropolis Laboratories (Pvt) Ltd.

This joint venture company was established in the year

2005 along with Metropolis India to provide laboratory

services. Nawaloka Hospitals PLC holds 50% shares in

this company.

This joint venture has come to an end on

31st March 2017.


This is a private company with limited liability

incorporated in Sri Lanka in the year 2014 under the

provisions of the Companies Act No. 07 of 2007. It

is also domiciled in Sri Lanka and is a wholly owned


Review of Business/Future Development

A review of the business of the Company and

the Group and its performance during the year is

contained in the Chairman’s Review/Chief Executive

Officer’s Performance Review and of the Director/

General Manager’s Operational and Management

Review on pages 10, 11, 12 and 13 respectively of this

Report. These reviews form an integral part of this

report and together with the Financial Statements

described in detail of the state of affairs of the

Company and the Group.

Financial Statements

The Financial Statements which include the Statement

of Profit or Loss and Other Comprehensive Income,

Statement of Financial Position, Statement of Changes

in Equity, Cash Flow Statements and Notes to the

Financial Statements are given on pages 147 to 190 and

have been prepared in conformity with the Sri Lanka

Accounting Standards and the requirements of Section

168 (1) (b) of the Companies Act No. 07 of 2007 and

the Listing Rules of the Colombo Stock Exchange.

Nawaloka Hospitals PLC Annual Report 2016/17 133StewardshipAnnual Report of the Board of Directors

Auditors’ Report

The Financial Statements for the period under

review were audited by Messrs KPMG (Chartered

Accountants) for the year ended 31st March 2017

and the Independent Auditor’s Report issued thereon

appears on page 146 of this Annual Report as required

by Section 168 (1) (c) of the Companies Act No. 07

of 2007.

Financial Results

(All figures in Sri Lankan Rupees) Group Company

2016/17Rs.

2015/16Rs.

2016/17Rs.

2015/16Rs.

Profit before taxation 302,155,203 315,252,428 (397,596,642) (154,169,093)

Less: Taxation (61,280,520) (109,218,200) (39,084,200) 26,603,594

Net profit after taxation 240,874,684 206,034,228 (436,680,842) (127,565,499)

Profit attributable to equity holders of the company 552,808,820 205,881,515 (378,979,907) (128,757,809)

Earnings per share 0.17 0.15 (0.31) (0.09)

Accounting Policies and Changes During the Year

The Accounting Policies adopted in the preparation of

Financial Statements of the Company and the Group

are given on pages 152 to 164 of this Annual Report as

required by Section 168 (1) (d) of the Companies Act

No. 07 of 2007. There have been no changes in

the accounting policies adopted by the Company

during the period under review other than the

depreciation rates.

Entries in the Interests Register

The Interests Register is maintained by the Company,

as required by Section 168 (1) (e) of the Companies

Act No. 07 of 2007.

Directors’ Remuneration and Other Benefits

Directors’ remuneration and other benefits of Directors

are given in Note 26 to the Financial Statements on

page 182 as required by Section 168 (1) (f) of the

Companies Act No. 07 of 2007.

Donations

Total donations made by the Group during the year

amounted to Rs. 4,893,415 and is being disclosed as

required by Section 168 (1) (g) of the Companies Act

No. 07 of 2007 and this expenditure was incurred

upon the mandate conferred upon the Board by the

shareholders at the last Annual General Meeting.

Shareholders’ Funds

After the above mentioned appropriation, the total

Group shareholders’ funds as at 31st March 2017,

stood at Rs. 4,434,605,437 The total shareholders’ Funds

of the Company as at 31st March 2016 stood at

Rs. 3,994,897,962/-. The movements are shown in the

Statement of Changes in Equity.

Interim Dividend

Interim dividend of Rs. 0.08 per share was paid in

July 2016.

Directorate

The 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


Nawaloka Hospitals PLC Annual Report 2016/17134 Stewardship Annual Report of the Board of Directors

Name of Director Executive/Non-Executive Status

Status of Independence

Mr. H K Jayantha Dharmadasa

(Chairman and Chief Executive Officer) Executive –


(Non-Executive Vice-Chairman) Non-Executive Independent


(Senior Independent Director) Non-Executive Independent

Vidya Jyothi Prof. Lal Chandrasena

(General Manager) Executive –


(Senior Independent Director) Non-Executive Independent

Mr. U Harshith Dharmadasa Executive –

Mr. A G Dharmadasa Executive –

Ms. A G Dharmadasa Executive –

Mr. D Sunil AbeyRatna Non-Executive Independent

Mr. Palitha Kumarasinghe, PC Non-Executive Independent

Mr. V R Ramanan Non-Executive

The qualifications and experience of each of the

Directors are given in the individual profiles of

the Board of Directors on pages 94 to 97 of the

Annual Report.

Appointments and Resignations

New appointments to the Board are based on the

collective decision of the Board. In making new

appointments, the Board considers the composition

of the Board in order to assess whether they have the

right mix of skills, experience and competence in the

management of the Company.

The information of new appointments and

resignations to the Board of Directors of the Company

are shown as an integral part of the Annual Report of

the Board of Directors, in compliance with Section 168

(1) (h) of the Companies Act No. 07 of 2007.

New Appointments

There were in fact no new appointments to the Board

during the financial year under review.

Recommendations for Re-election

In terms of Article 74 of the Articles of Association

of the Company, Mr. H K Jayantha Dharmadasa,

Mr. Rienzie T Wijetilleke and Vidya Jyothi Professor

Lal Chandrasena who retire from the Board by rotation

at the forthcoming Annual General Meeting and being

eligible for re-election, offer themselves for re-election.

Additionally, Mr. Rienzie T Wijetilleke who has

attained the age of 77 years and being eligible for

re-election in terms of Section 211 of the Companies

Act No. 07 of 2007 offers himself to be re-appointed

as a Director of the Company.

Further, Vidya Jyothi Professor Lal Chandrasena

who has attained the age of 71 years and being

eligible for re-election in terms of Section 211 of the

Companies Act No. 07 of 2007 also offers himself to

be re-appointed as a Director of the Company.

Furthermore, Deshabandu Tilak De Zoysa

who has attained the age of 70 years and being

eligible for re-election in terms of Section 211 of the

Companies Act No. 07 of 2007 also offers himself to

be re-appointed as a Director of the Company.

Moreover, Mr. Tissa K Bandaranayake who has

attained the age of 74 years and being eligible for

re-election in terms of Section 211 of the Companies

Act No. 07 of 2007 also offers himself to be

re-appointed as a Director of the Company.


Independent Directors

Mr. Rienzie T Wijetilleke and Deshabandu Tilak De

Zoysa who were appointed as Independent Directors

of the Company on 16th October 2013, have served on

the Board continuously for a period of nine years, the

Board Resolved on the 30th November 2012 as required

by Rule 7.10.3 (b) that despite the said two Independent

Directors serving on the Board for more than nine years

they are yet regarded as Independent Directors in terms

of Rule 7.10.4 (read with sub-rules [a] to [h]) of the

Revised Rules of the Colombo Stock Exchange.

Further, Mr. Tissa K Bandaranayake, Mr. D

Sunil AbeyRatna and Mr. Palitha Kumarasinghe, PC

were appointed as the Independent Directors of the

Company on 27th May 2009, 28th February 2012 and

24th March 2016 respectively.

Board Subcommittees

The three Board Subcommittees established by the

Board continue to oversee matters relating to policy

and governance. A Related Party Transactions Review

Committee was established to comply with the new

directives issued by the Securities and Exchange

Commission of Sri Lanka to ensure that the interests

of shareholders as a whole are taken into account

by a listed entity when entering into related party

transactions. The composition of the Subcommittees

during the financial year are as follows:

Board Audit Committee Members

Mr. Tissa K Bandaranayake – Chairman (INED)

Mr. Rienzie T Wijetilleke – Member (INED)

Deshabandu Tilak De Zoysa – Member (INED)

Mr. D Sunil AbeyRatna – Member (INED)

Remuneration Committee Members

Deshabandu Tilak De Zoysa – Chairman (INED)

Mr. Tissa K Bandaranayake – Member (INED)


Nomination Committee Members

Deshabandu Tilak De Zoysa – Chairman (INED)

Mr. Tissa K Bandaranayake – Member (INED)

Mr. D Sunil AbeyRatna Member (INED)

Related Party Transactions Review Committee Members

Mr. Tissa K Bandaranayake – Chairman (INED)

Deshabandu Tilak De Zoysa – Member (INED)


Vidya Jyothi Prof. Lal Chandrasena – Member (ED)

Mr. Palitha Kumarasinghe, PC (INED)

Board Members of the Risk Management Committee

Vidya Jyothi Prof. Lal Chandrasena –

Chairman (DGM/ED)



Ms. A G Dharmadasa – Member (ED)

Strategic Planning Committee Members

Mr. H K Jayantha Dharmadasa – Chairman/CEO




Sustainability Committee Members

Mr. H K Jayantha Dharmadasa – Chairman/CEO




DGM – Director General Manager

ED – Executive Director

INED – Independent Non-Executive Director

Directors’ Meetings

Details of meetings which comprise Board meetings,

the Board’s Subcommittee meetings of the Audit

Committee, Remuneration Committee, Strategic

Planning Committee, Nomination Committee, Related

Party Transactions Review Committee and Risk

Management Committee are dealt with on pages 111,

128, 138, 141 and 142 of this Annual Report.

Nawaloka Hospitals PLC Annual Report 2016/17136 Stewardship Annual Report of the Board of Directors

Directors’ Shareholding

The aggregate shareholding of the Directors for the

year ended 31st March 2017 and the previous year, are

as follows:

2016/17Ordinary

2015/16Ordinary

Mr. H K J Dharmadasa 462,736,182 462,736,182

Mr. Rienzie T Wijetilleke 33,332 33,332

Deshabandu Tilak de Zoysa 218,000 218,000

Vidya Jyothi Prof. Lal Chandrasena 601,198 601,198

Mr. U H Dharmadasa 3,360 3,360

Mr. A G Dharmadasa 3,004,026 3,004,026

Ms. A G Dharmadasa 5,066,686 5,066,686

Mr. D Sunil AbeyRatna NIL NIL

Mr. Tissa K Bandaranayake NIL NIL

Mr. V R Ramanan 3,400,000 3,400,000

Mr. Palitha Kumarasinghe, PC NIL NIL

Related Party Transactions

The Directors have also disclosed the transactions

if any, that could be classified as ‘Related Party

Transactions’ in terms of LKAS 24 - ‘Related Party

Disclosures’ and thus complied with the CSE Listing

Rules. Related Party Transactions are given in Note 30

to the Financial Statements.

Directors’ Interests

The Interests Register is maintained by the Company

as per the Companies Act No. 07 of 2007.

Capital Expenditure

Details of Property, Plant & Equipment and their

movements in the Company and the Group during the

year, are listed in Note 2 to the Financial Statements

on at pages 165 and 166.

Stated Capital

The Stated Capital of the Company is 1,409,505,596

ordinary shares. There were no changes in the Stated

Capital during the year.

Stated Capital Group Company

2016/17Rs.

2015/16Rs.

2016/17Rs.

2015/16Rs.

Issued and fully paid

At the beginning of the year 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876

At the end of the year 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876

Share Information

The composition of shareholders and the information

relating to share trading, net assets and market value

per share are given on pages 39, 40 and 41 of this

Annual Report.

Major Shareholders

The 20 largest shareholders of the Company as

at 31st March 2017 are given on page 41 of this

Annual Report.

Employment Policy

The Company’s employment policy is totally

non-discriminatory and equality of opportunity for

all employees irrespective of ethnic, origin, religion,

political opinion, gender or marital status.

The Company applies ‘equal opportunity policy’

in selection, training, development and promotion

opportunities, ensuring that all decisions are based on

merit and qualification.


The employees are always encouraged to discuss

issues relating to operations and to make suggestions

to improve performance.

The number of persons employed by the Group

as at 31st March 2017 was 2,363.

Group Revenue

The revenue of the Group was Rs. 6,300 Mn (2016 –

Rs. 5,860 Mn). The analysis thereof is given in Note 24

to the Financial Statements.

Stock Exchange Listing

The Company was listed on the Main Board of the

Colombo Stock Exchange in the year 2004.

Going Concern

The Board firmly believes that the Company and its

subsidiaries have sufficient resources to continue

in operational existence for a very long foreseeable

future. Therefore, Financial Statements of the Group

have been prepared on the principle of a ‘Going

Concern’.

Events Occurring after the Reporting Date

There are no other 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, other than disclosed in Note 34.

Appointment of Auditors

Messrs KPMG (Chartered Accountants) who are

willing to continue in office are recommended for

re-appointment, at a remuneration to be decided by

the Board of Directors.

The fees paid to the Auditors are disclosed in

Note 26 to the Financial Statements.

As far as the Directors are aware, the Auditors

do not have any relationship (other than that of an

auditor) with the Company or any of its subsidiaries

other than those disclosed above. The Auditors

also do not have any interest in the Company or its

subsidiaries as required by Section 168 (1) (j) of the


For and on behalf of the Board,

Jayantha Dharmadasa

Chairman/Chief Executive Officer

Vidya Jyothi Prof. Lal Chandrasena

Director/General Manager

By Order of the Board,

Sgd.

M & A Company Secretaries (Private) Limited

25th May 2017

Robert S Ledley invents CAT-Scans

1975


Formation, Composition and Structure

The Remuneration Committee is a Subcommittee,

appointed by and responsible to the Board of Directors,

consists of three Independent Non-Executive Directors.

Name of Director Non-Executive Independent

Deshabandu Tilak De Zoysa –

Chairman



The Committee meetings held during the

financial year are subject to the following criteria:

Duties and Responsibilities

The Remuneration Committee review and recommend

the policy on remuneration of the Executive Staff and

the specific remuneration package for the Executive

Directors while considering the following:

1. Determining the compensation of the Chairman

and the Board of Directors, while ensuring that

no Director is involved in setting their own

remuneration or any other benefit.

2. Establishing transparent procedure to determine

remuneration for Executives and Directors.

In this context, the Remuneration Committee took

into account:

a. Competition;

b. Qualifications and experience;

c. Market information; and

d. Business performance

in declaring the overall remuneration policy of

the Group.

REMUNERATION COMMITTEE REPORT

3. Recommending Corporate Management

appointments to the Board.

4. Approving remuneration levels at each designation

of Senior Management.

5. Maintain competitive and attractive remuneration

packages to Senior Managers and ensure that it is

on a par with the industry levels.

6. Recommend promotion of Key Management

Personnel to the Board of Directors.

7. Deciding performance based on 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.

Challenges

In a highly competitive environment attracting and

retaining high calibre executives are key challenges

faced by the Group.

Evaluation of the Effectiveness of the Committee

The Board reviews and update 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.


Chairman

25th May 2017


AUDIT COMMITTEE REPORT

In keeping with the Code of Best Practice on Corporate

Governance and the requirements of the Securities and

Exchange Commission of Sri Lanka for public limited

companies, Nawaloka Hospitals PLC has established an

Audit Committee whose functions, authority and duties

have been clearly identified in the Audit Committee

Charter. This Charter integrates all the requirements of

the Securities and Exchange Commission and Code of

Best Practice on Corporate Governance.

The role of the Audit Committee is to oversee

the financial reporting system of the Company

with a view to safeguard 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 Committee

The Audit Committee was established by the Board

with a formal and transparent arrangement and it

comprises four Independent Non-Executive Directors.

The Chairman of the Audit Committee is

Mr. Tissa K Bandaranayake, who is an Independent

Non-Executive Director, a fellow member of The

Institute of Chartered Accountants of Sri Lanka and

a former Senior Partner of Messrs Ernst & Young,

Chartered Accountants with expert knowledge in

accounting and finance.

Members of the Audit Committee



Chairman




Broad Purpose of the Audit Committee

The Audit Committee assisted the Board in the

following manner:

zz Ensuring that the preparation, presentation and

adequacy of disclosure in the Financial Statements

are in accordance with SLFRS/LKAS and with the

requirement of the Companies Act No. 07 of 2007

and other relevant financial reporting related to

regulatory requirements.

zz Reviewing the appropriateness of the procedure

in place for the identification, evaluation and

management of business risks whilst seeing that

the systems of internal control with regard to all

functions are adequate and functioning properly.

zz Assessing the Company’s ability to continue as a

going concern in the foreseeable future and also

in addition, ensuring compliance with laws and

Company policies.

zz Overseeing of the independence and performance

of the Company’s External Auditors.

First test-tube baby is born First vaccine developed

for meningitis.

1978

Nawaloka Hospitals PLC Annual Report 2016/17140 Stewardship Audit Committee Report

Duties and Responsibilities

In brief, the duties and responsibilities performed by the Audit Committee are as follows:

External Audit zz Recommending the re-appointment of Messrs KPMG, Chartered Accountants, as

Auditors of Nawaloka Hospitals PLC for the financial year ending 31st March 2018.

zz Examine any non-audit work performed by the Auditors and the fees thereon to ensure

that their objectivity and independence is not impaired.

zz Reviewing the scope and result of the audit and its effectiveness.

zz Discussing with the External Auditors before commencement of the audit and at the

conclusion of the audit, in relation to audit plan, key audit issues and their resolution,

management responses and the remuneration of the Auditors.

Compliance with Laws

and Regulations

and Company policies

zz Reviewing the Quarterly Financial Statements and discussing with the Management.

zz Reviewing the extent of compliance with the laws of the country, governmental

regulations, listing rules and established policies of the Company.

Internal controls and

internal auditzz Reviewing the internal audit function and making recommendations.

zz Ensuring that there are satisfactory arrangements for monitoring internal control in

keeping with delegated authorities.

zz Establishing mechanisms for the confidential receipt and treatment of complaints

alleging fraud received from internal/external sources and pertaining to internal

control, accounting or other such matters. This is currently in progress.

zz Monitoring the implementation of strategies, plans, as well as the meaning of

organisation for internal auditing in line with the methodologies promulgated as best

practices.

zz Ensuring that if and when employees or former employees of the Auditors are hired

the established regulatory requirements are followed, so that audit independence is

not impaired. Also implementing other internal controls related to IT, HR, Finance,

Marketing and Administration etc., as required and ensuring that these are soundly

conceived and effectively administered to seek assurance that the control systems are

in place, and operating efficiently and are regularly monitored.

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

zz Obtaining statements of business risks, evaluating the severity, the process in place for

the management of these risks and persons responsible for the management of risks

within specified time frames.

Financial Statements zz Ensuring proper standardised updated systems for financial reporting.

zz Holding of meetings with the Head of Finance to ensure the proper controls and

segregation of duties to minimise risks.

zz Reviewing Company’s quarterly unaudited and annually Audited Financial Statements

and making recommendations to the Board for their releases.

Nawaloka Hospitals PLC Annual Report 2016/17 141StewardshipAudit Committee Report

Meetings

The Audit Committee held four meetings during the year under

review. The proceedings of the Audit Committee are regularly

reported to the Board of Directors. The attendance of members

at these meetings is given below:

Name of Director

No. of Meetings

Attended

Attendance Percentage

%

Mr. Tissa K Banadaranayake 4 100

Mr. Rienzie T Wijetilleke 4 100

Deshabandu Tilak de Zoysa 4 100

Mr. D Sunil AbeyRatne 3 75

The Committee has provided the Chairman

of the Audit Committee with all powers to convene

regular meetings with the Head of Finance, Internal

Auditor, Sectional Heads and Company’s External

Auditors, separately and periodically.

Evaluation of the Effectiveness of the Committee

The Board reviews and updates the Committee Charter

annually according to the charges in the business

environment and operations of the Organisation. The

minutes of meetings and other reports from the Audit

Committee are submitted to the Board of Directors,

and also in addition, plans have been initiated for the

non-committee members to evaluate the Committee

on an annual basis by way of a checklist.


Chairman

25th May 2017

Willem J. Kolff invented the artificial kidney dialysis machine

1985


Composition of the Committee

The Board appointed Related Party Transactions

Review Committee (BRPTRC), comprising one

Executive Director and three Independent

Non-Executive Directors, as stipulated by the Code of

Best Practice on Related Party Transactions, issued by

the Colombo Stock Exchange (CSE). The BRPTRC as at

the end of the year comprised the following members:



Chairman

Deshabandu Tilak de Zoysa –

Member


Mr. Palitha Kumarasinghe, PC –

Member

Vidya Jyothi Prof. Lal

Chandrasena – Member – –

Terms of Reference of the Committee

The BRPTRC was formed by the Board at the end

of 2014, to assist the Board in reviewing all Related

Party Transactions (RPT) carried out by the Group, by

adopting the Code of Best Practice on Related Party

Transactions, as issued by the CSE, which is mandatory

from 1st January 2016.

The mandate of the Committee includes inter alia the following:

zz Ensuring that the Company has identified and

recorded the list of its related parties, consistent

with the definition of related parties as detailed in

the CSE Regulations.

zz Updating the Board of Directors on the RPT of each

of the related parties of the Group.

zz Making immediate market disclosures on applicable

RPT, as required by Section 9 of the Continuing

Listing requirements of the CSE.

zz Making appropriate disclosures on RPT in the Annual

Report, as required by Section 9 of the Continuing

Listing Requirements of the CSE.

BOARD RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT

The Committee scheduled quarterly meetings to

review and report to the Board, on matters involving

RPT falling under its Terms of Reference.

All related party transactions which took place

during the financial year 2016/17 were reviewed by

the members of the Committee at the Committee

meetings held on 15.5.2017 06.02.2017, 7.11.2016 and

29.09.2016 and the Committee is of the opinion that

the transactions are on normal commercial terms,

and are not prejudicial to the interests of the entity

including its minority shareholders. Proceedings of the

Committee meetings were regularly reported to the

Board of Directors.

The Members of the Committee were of the

opinion that no Related Party Transaction had

exceeded the limits prescribed in the Listing Rule

Section 9. Thus shareholder approval by way of a

Special Resolution was not required.


Chairman

25th May 2017

Dolly the sheep becomes the first clone

1996


DIRECTORS’ RESPONSIBILITY IN FINANCIAL REPORTING

The responsibility of the Directors in relation to

the Financial Statements is set out in the following

statement.

The Board of Directors of Nawaloka Hospitals

PLC are responsible under Section 148 of the

Companies Act No. 07 of 2007 for keeping proper

accounting records which have been disclosed with

reasonable accuracy, at all times, the financial position

of the Company and of the Group and to enable them

to ensure that the Financial Statements comply with,

inter alia the Companies Act No. 07 of 2007.

In preparing these Financial Statements, the

Directors of the Company have to comply with the

requirements specified in Sections 150 (1), 151 (1), 152

(1) and 153 (1) of the Companies Act No. 07 of 2007.

In accordance therewith the Directors of the Company

and the Group maintain proper Books of Accounts of

all the transactions and prepare Financial Statements

that give a true and fair view of the state of affairs of

the Company at the date of the Statement of Financial

Position and the Profit or Loss for the year ending on

that date of the Statement of Financial Position.

Accordingly, the Directors are of the view that:

1. Appropriate accounting policies have been

selected and applied in a consistent manner and

material departures if any, have been disclosed and

explained;

2. All applicable and relevant Accounting Standards

have been followed; and

3. They have exercised due and proper judgment and

estimates which are reasonable and prudent.

The Financial Statements of the Company and

the Group have been certified by the Company’s

Chief Financial Officer, the person responsible for

its preparation, as required by the Act. Financial

Statements of the Company and the Group have

been signed by two Directors on 25th May 2017 as

required by Sections 150 (1) (c) and 152 (1) (c) of the

Companies Act. Accordingly, the Board of Directors

wish to confirm that they have complied with all the

requirements of the Companies Act No. 07 of 2007

and have also met all the requirements under Section 7

of the Listing Rules of the Colombo Stock Exchange.

The Directors also have taken reasonable

steps to safeguard the assets of the Company and to

prevent and detect frauds and other irregularities. In

this regard, the Directors have instituted an effective

and comprehensive system of internal controls and

an effective system of monitoring its effectiveness,

internal audit being one of them. The Board has been

provided additional assurance on the reliability of the

Financial Statements through a process of independent

and objective reviews conducted by the Audit

Committee. The Report of the Audit Committee is on

page 139 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 Report

The Directors also confirm that to the best of their

knowledge, all taxes, duties and levies payable by the

Company, all contributions, levies and taxes payable

on behalf of and in respect of the employees of the

Company and other known statutory dues as were

due and payable by the Company as at the date of

the Statement of Financial Position have been paid

or where necessary provided for, in arriving at the

financial results for the year under review.

Further, all documents required by the

Companies Act No. 07 of 2007 to be filed with

Registrar of Companies have been duly filed and

compliance has been made with all the other legal

requirements in connection with the said Companies

Act and all dividend and cheques have been

dispatched by the due date.


Sgd.

M & A Company Secretaries (Private) Limited

25th May 2017


SENIOR INDEPENDENT DIRECTOR’S STATEMENT

The Securities and Exchange Commission and The

institute of Chartered Accountants of Sri Lanka have

put out the Code of Best Practice on Corporate

Governance 2013 (the Code) and recommends

that a Senior independent Director (SlD) who is a

Non-Executive Officer of the Company, be appointed

in the event the Chairman and the Chief Executive

Officer is the same person of the Board. This has been

observed in the Company as the Chairman is the CEO

as well.

As a member of the Audit Committee and the

Related Party Transactions Review Committee I have

also been entrusted with the additional task, as a

Senior independent Non-Executive Director, to make

my services available for advice and guidance to the

Board including to the Chairman and to the External

and Internal Auditors of the Company so that at all

times the principles of Good Governance is observed.


Senior Independent Director

25th May 2017

145Financial ReportsNotes to the Financial StatementsNawaloka Hospitals PLC Annual Report 2016/17

FINANCIAL REPORTS

2016/17146 Independent Auditors’ Report

147 Statement of Financial Position

149 Statement of Profit or Loss and Other Comprehensive Income

150 Statement of Changes in Equity

151 Cash Flow Statement

152 Notes to the Financial Statements

Financial Calendar

2014/2015 2015/2016 2016/2017 2017/2018

1st Quarter Results 14th August 2014 14th August 2015 15th August 2016 August 2017

2nd Quarter Results 7th November 2014 15th November 2015 11th November 2016 November 2017

3rd Quarter Results 10th February 2015 15th February 2016 14 February 2017 February 2018

4th Quarter Results 22nd May 2015 30th May 2016 30th May 2017 May 2018

Annual Report June 2015 June 2016 June 2017 June 2018

Annual General Meeting 30th June 2015 30th June 2016 30th June 2017 30th June 2018

146 Financial Reports Nawaloka Hospitals PLC Annual Report 2016/17

INDEPENDENT AUDITORS’ REPORT

M.R. Mihular FCA P.Y.S. Perera FCA C.P. Jayatilake FCA

T.J.S. Rajakarier FCA W.W.J.C. Perera FCA Ms. S. Joseph FCA

Ms. S.M.B. Jayasekara ACA W.K.D.C. Abeyrathne FCA S.T.D.L. Perera FCA

G.A.U. Karunaratne FCA R.M.D.B. Rajapakse FCA Ms. B.K.D.T.N. Rodrigo FCA

R.H. Rajan ACA

Principals - S.R.I. Perera FCMA (UK), LLB, Attorney-at-Law, H.S. Goonewardene ACA

Ms. C.T.K.N. Perera ACMA (UK)

KPMG, a Sri Lankan partnership and a member firm

of the KPMG network of independent member firms

affiliated with KPMG International Cooperative

(”KPMG International”), a Swiss entity.

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 statement of financial position as at March 31, 2017, the statement of profit or loss and other comprehensive income, statement of changes in equity and cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information as set out on pages 147 to 190.

Board’s Responsibility for the Financial StatementsThe Board of Directors (“Board”) is responsible for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the Auditors’ judegment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at March 31, 2017, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka

Accounting Standards.

Report on Other Legal and Regulatory RequirementsAs required by section 163 (2) of the Companies Act No. 07 of 2007, we state the following:

(a) The basis of opinion and scope and limitations of the audit are as stated above.

(b) In our opinion:

zz We have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company,

zz The financial statements of the Company give a true and fair view of its financial position as at March 31, 2017, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

zz The financial statements of the Company, and the Group comply with the requirements of sections 151 and 153 of the


CHARTERED ACCOUNTANTS

Colombo

25th May 2017

147Financial ReportsNawaloka Hospitals PLC Annual Report 2016/17

STATEMENT OF FINANCIAL POSITION

Group Company

As at 31st MarchNote

2016/17Rs.

2015/16Rs.

2016/17Rs.

2015/16Rs.

Assets

Non-current assets

Property, plant & equipment 2 10,956,260,542 8,009,872,280 2,463,426,034 2,428,987,577

Leasehold right over land 3 221,999,161 224,975,452 47,707,431 48,617,196

Investment property 4 – – 192,417,100 192,417,100

Investment in subsidiaries 5 – – 2,016,985,376 2,016,985,376

Equity accounted investees 6 – 118,230,763 – 2,500,000

Advance for land 7 – 952,343,085 – –

Total non-current assets 11,178,259,703 9,305,421,580 4,720,535,941 4,689,507,249

Current assets

Inventories 8 392,274,375 409,117,083 177,733,926 144,130,234

Trade and other receivables 9 704,668,480 519,018,172 415,210,841 319,919,013

Deposits and advances 10 152,417,824 192,351,662 120,614,299 124,249,177

Receivable from related parties 11 644,775,455 204,079,352 2,420,674,454 2,272,862,092

Short-term investments 12 994,669,945 427,886,374 810,427,387 321,319,481

Cash and cash equivalents 144,348,684 135,605,771 119,151,979 99,298,780

3,033,154,763 1,888,058,414 4,063,812,886 3,281,778,777

Assets classified as held for sale 13 136,693,775 – 2,500,000 –

Total assets 14,348,108,241 11,193,479,994 8,786,848,827 7,971,286,026

Equity and Liabilities

Capital and reserves

Stated capital 14 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876

Revaluation reserve 15 1,291,462,692 990,872,361 47,112,401 –

Retained earnings/Accumulated losses 1,935,753,869 1,796,636,725 (280,246,462) 258,947,189

Total equity 4,434,605,437 3,994,897,962 974,254,815 1,466,336,065

Non-current liabilities

Debentures 16 1,488,820,927 1,484,104,507 1,488,820,927 1,484,104,507

Employee benefits 17 185,742,508 184,237,790 161,288,200 166,252,434

Deferred tax liabilities 18 394,786,163 305,060,480 139,300,283 92,347,774

Borrowings falling due after one year 19 3,920,477,024 3,002,368,366 2,885,919,684 2,970,442,441

Finance leases payable after one year 20 100,000,000 108,000,000 – –

Total non-current liabilities 6,089,826,622 5,083,771,143 4,675,329,094 4,713,147,156

148 Financial Reports Nawaloka Hospitals PLC Annual Report 2016/17Statement of Financial Position

Group Company

As at 31st MarchNote

2016/17Rs.

2015/16Rs.

2016/17Rs.

2015/16Rs.

Current liabilities

Trade creditors and other payables 21 804,741,707 486,959,763 728,394,386 424,381,781

Unclaimed dividends 3,429,123 2,721,515 3,429,123 2,721,515

Current tax liabilities 22 16,310,706 24,765,638 – –

Payable to related companies 23 218,121,349 15,595,918 204,248,265 8,747,060

Borrowings falling due within one year 19 1,585,642,845 594,325,684 1,193,521,260 545,401,924

Finance leases payable within one year 20 8,000,000 8,000,000 – –

Bank overdrafts 1,187,430,452 982,442,371 1,007,671,884 810,550,525

Total current liabilities 3,823,676,182 2,114,810,889 3,137,264,918 1,791,802,805

Total liabilities 9,913,502,804 7,198,582,032 7,812,594,012 6,504,949,961

Total equity and liabilities 14,348,108,241 11,193,479,994 8,786,848,827 7,971,286,026

Net assets per share 3.15 2.83 0.69 1.04

Notes form an integral part of these Financial Statements.

Figures in brackets indicate deductions.

It is certified that the Financial Statements have been prepared and presented in compliance with the

requirements of the Companies Act No. 07 of 2007.

Mr. Nalaka Niroshana

Head of Finance

The Board of Directors is responsible for the preparation and presentation of these Financial Statements.

Approved and signed for and on behalf of the Board of Directors;

Mr. Jayantha Dharmadasa Vidya Jyothi Professor Lal Chandrasena

Chairman/Chief Executive Officer Director

Colombo

25th May 2017


STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Group Company

For the year ended 31st MarchNote

2016/17Rs.

2015/16Rs.

2016/17Rs.

2015/16Rs.

Revenue 24 6,299,910,436 5,860,218,161 2,568,162,863 2,833,195,719

Cost of services (2,997,276,079) (2,906,572,342) (1,359,482,350) (1,490,055,615)

Gross profit 3,302,634,357 2,953,645,819 1,208,680,513 1,343,140,104

Other income 25 129,152,153 94,495,240 212,984,776 86,694,974

Staff cost (1,299,957,507) (1,151,309,690) (612,960,707) (544,111,104)

Administrative expenses (1,282,339,261) (1,089,179,752) (668,654,180) (567,391,842)

Other operating expenses (136,653,014) (170,442,792) (109,139,746) (117,205,312)

Profit from operations 26 712,836,728 637,208,825 30,910,656 201,126,820

Finance cost 27 (451,644,537) (372,317,361) (428,507,298) (355,295,913)

Share of profits of equity accounted investee,

net of tax 6.3 40,963,012 50,360,964 – –

Profit/(loss) before tax 302,155,203 315,252,428 (397,596,642) (154,169,093)

Tax expense 28 (61,280,520) (109,218,200) (39,084,200) 26,603,594

Profit/(loss) for the year 240,874,683 206,034,228 (436,680,842) (127,565,499)

Other comprehensive income

Actuarial gain/(loss) from valuation of defined

benefit plan 17.3 12,896,688 (309,060) 12,032,425 (1,354,898)

Revaluation of property, plant & equipment 15 341,579,922 – 53,536,819 –

Deferred tax impact on defined benefits plan

actuarial (gain)/losses 18.4 (1,552,882) 27,860 (1,443,891) 162,588

Deferred tax Impact on revaluation reserve 18.4 (40,989,591) – (6,424,418) –

Equity accounted investee’s share of OCI – 128,487 – –

Other comprehensive income/(loss) for the year,

net of tax 311,934,137 (152,713) 57,700,935 (1,192,310)

Total comprehensive income/(loss) for the year 552,808,820 205,881,515 (378,979,907) (128,757,809)

Net profit/(loss) attributable to equity holders of the Company 552,808,820 205,881,515 (378,979,907) (128,757,809)

Earnings/(loss) per share 290.17 0.15 (0.31) (0.09)



150 Financial Reports Nawaloka Hospitals PLC Annual Report 2016/17

STATEMENT OF CHANGES IN EQUITY

For the year ended 31st March 2017 Stated Capital

Rs.

Revaluation

Reserve

Rs.

Retained Earnings/

Accumulated

Losses

Rs.

Total Equity

Rs.

Group

Balance as at 1st April 2015 1,207,388,876 990,872,361 1,689,420,602 3,887,681,839

Profit for the year – – 206,034,228 206,034,228

Other comprehensive income – – (152,713) (152,713)

Transaction with the owners of the Company

Dividends paid – – (98,665,392) (98,665,392)

Balance as at 31st March 2016 1,207,388,876 990,872,361 1,796,636,725 3,994,897,962

Profit for the year – – 240,874,683 240,874,683

Other comprehensive income – 341,579,922 11,343,806 352,923,728

Deferred tax impact on revaluation – (40,989,591) – (40,989,591)


Dividends paid – – (113,101,345) (113,101,345)

Balance as at 31st March 2017 1,207,388,876 1,291,462,692 1,935,753,869 4,434,605,437

Company

Balance as at 1st April 2015 1,207,388,876 – 486,370,390 1,693,759,266

Loss for the year – – (127,565,499) (127,565,499)

Other comprehensive income – – (1,192,310) (1,192,310)


Dividends paid – – (98,665,392) (98,665,392)

Balance as at 31st March 2016 1,207,388,876 – 258,947,189 1,466,336,065

Loss for the year – – (436,680,842) (436,680,842)

Other comprehensive income – 53,536,819 10,588,534 64,125,353

Deferred tax impact on revaluation – (6,424,418) – (6,424,418)


Dividends paid – – (113,101,343) (113,101,343)

Balance as at 31st March 2017 1,207,388,876 47,112,401 (280,246,462) 974,254,815




CASH FLOW STATEMENT

Group Company

For the year ended 31st MarchNote

2016/17Rs.

2015/16Rs.

2016/17Rs.

2015/16Rs.

Cash flows from operating activities

Profit/(Loss) before tax 302,155,203 315,252,428 (397,596,642) (154,169,093)

Adjustments for:

Depreciation and amortisation 26 540,272,942 479,732,756 344,323,559 326,152,985

Finance cost 27 451,644,537 372,317,361 428,507,298 355,295,913

Interest income 25 (58,776,371) (30,384,641) (43,775,648) (13,734,180)

Share of profit of equity accounted investee net of tax 6.3 (40,963,012) (50,360,964) – –

Provision for employee benefits 17.2 38,783,188 33,427,021 28,830,776 25,530,843

Provision for bad and doubtful debts 26 1,756,074 3,272,625 1,756,074 8,006,844

Provision for doubtful related party receivable 26 21,738,120 – 21,738,120

Provision for deemed interest tax 26,668,154 26,668,154 26,668,154 26,668,154

Provision for slow moving inventories 8 1,330,269 2,000,000 1,330,269 2,000,000

Profit on disposal of property, plant & equipment 25 – (7,006,687) – (7,006,687)

Dividend income 25 – – (113,100,000) (22,500,000)

Impairment for other receivable balances 26 – 42,758,125 – 41,528,139

Impairment for equity accounted investee classified as assets held for sale 26 22,500,000 – – –

Operating profit before working capital changes 1,307,109,104 1,187,676,178 298,681,958 587,772,918

Changes in working capital

(Increase)/decrease in inventories 15,512,438 (75,353,724) (34,933,961) (31,479,914)

Decrease in debtors, deposits and advances (117,752,024) (176,328,559) (68,570,418) (107,739,965)

Increase/decrease in related party balances 192,434,293 (50,537,364) 25,950,723 (1,617,359,990)

(Decrease)/Increase in creditors and other payables 291,821,403 (13,076,639) 278,052,060 (26,606,691)

382,016,111 (315,296,286) 200,498,404 (1,783,186,560)

Cash Generated from/(used in) operating activities 1,689,125,245 872,379,892 499,180,362 (1,195,413,642)

Interest paid (446,928,117) (368,260,237) (423,790,878) (351,238,789)

Gratuity paid 17.1 (24,381,787) (20,451,995) (21,762,585) (19,306,781)

Current tax paid 22 (22,552,242) (9,514,418) – –

Net cash generated from/(used in) operating activities 1,195,263,069 474,153,242 53,626,899 (1,565,959,212)

Cash flows from/(used in) investing activities

Purchase of property, plant & equipment 2 (3,142,104,991) (2,639,234,088) (324,315,431) (293,727,923)

Proceeds from investment in land 7 500,000,000 – – –

Interest received 29,055,852 28,360,063 18,933,043 2,287,350

Investment in short-term deposits 12 (566,783,571) (10,260,462) (489,107,906) (270,860,706)

Dividend received 25 – 22,500,000 113,100,000 22,500,000

Proceeds from disposal of property, plant & equipment – 1,825,482 – –

Net cash (used in)/generating from investing activities (3,179,832,710) (2,596,809,005) 681,390,294 (539,801,279)

Cash flows from/(used in) financing activities

Proceeds from long-term borrowings and leases 19.1 2,704,448,256 2,828,645,181 1,311,994,217 2,697,409,436

Repayments of long-term borrowings and leases 19.1 (803,022,438) (860,366,612) (748,397,638) (753,189,812)

Dividends paid (113,101,345) (98,553,933) (113,101,343) (98,553,933)

Net cash generated from financing activities 1,788,324,473 1,869,724,636 450,495,236 1,845,665,691

Net decrease in cash and cash equivalents during the year (196,245,168) (252,931,127) (177,268,159) (260,094,800)

Cash and cash equivalents at the beginning of the year (846,836,600) (593,905,473) (711,251,745) (451,156,945)

Cash and cash equivalents at the end of the year (1,043,081,768) (846,836,600) (888,519,904) (711,251,745)

Analysis of cash and cash equivalents at the end of the year

Cash at bank and in hand 144,348,684 135,605,771 119,151,979 99,298,780

Bank overdraft (1,187,430,452) (982,442,371) (1,007,671,883) (810,550,525)

(1,043,081,768) (846,836,600) (888,519,904) (711,251,745)



152 Financial Reports Notes to the Financial Statements Nawaloka Hospitals PLC Annual Report 2016/17

NOTES TO THE FINANCIAL STATEMENTS

1.1 Reporting Entity

1.1.1 Legal Form

a. Nawaloka Hospitals PLC (‘Company’) is a quoted

public company with limited liability incorporated

in Sri Lanka under the provisions of the Companies

Act No. 17 of 1982 and re-registered under the

new Companies Act No. 07 of 2007. The Company

does not have an identifiable parent of its own. The

registered office and the principal place of business

of the Company is located at No. 23, Deshamanya

H K Dharmadasa Mawatha, Colombo 02.

b. New Nawaloka Hospitals (Pvt) Ltd., is a private

company with limited liability incorporated in Sri

Lanka under the provisions of the Companies Act

No. 17 of 1982 and re-registered under the new

Companies Act No. 07 of 2007. The Ultimate Parent

of the Company is Nawaloka Hospitals PLC.

c. New Nawaloka Medical Centre (Pvt) Ltd., is a

private company with limited liability incorporated


Act No. 17 of 1982 and re-registered under the new

Companies Act No. 07 of 2007. The Ultimate Parent

of the Company is Nawaloka Hospitals PLC.

d. Nawaloka Metropolis Laboratories (Pvt) Ltd. is a

private company with limited liability incorporated


Act No. 17 of 1982 and re-registered under the new

Companies Act No. 07 of 2007, which is also a

50:50 Joint venture investment between Nawaloka

Hospitals PLC and Metropolis Health Services (India)

(Pvt) Ltd. Please refer Note 6 and 13 for more details.

e. Nawaloka Medicare (Pvt) Ltd. is a limited liability

company incorporated in Sri Lanka under the

companies Act No. 07 of 2007 (Registration

No: PV 93186) and the Board of Investment Law

No. 04 of 1978. It is having its registered office at

No. 23, Deshamanya H K Dharmadasa Mawatha,

Colombo 02.

The ‘Company’, in the Financial Statement, refers

to Nawaloka Hospitals PLC and ‘Group’ refers to the

Company and all its subsidiaries and joint venture,

whose Financial Statements have been consolidated.

1.1.2 Total Number of Employees

Company 1,100 (2016 – 1,052)

Group 2,363 (2016 – 2,157)

1.1.3 Principle Activities and Nature of Operations

The principal activity of the Company and the Group

is to provide health and laboratory services. There

were no significant changes in the nature of principal

activities of the Company and the Group during the

financial year under review.

1.2 Basis of Preparation

1.2.1 Statement of Compliance

The Financial Statements of the Company and the

Group comprise the Statement of Financial Position,

Statement of Profit or loss and other Comprehensive

Income, Statement of Changes in Equity and Cash Flows

together with the Notes to the Financial Statements.

The Consolidated Financial Statements

have been prepared in accordance with Sri Lanka

Accounting Standards (SLFRS/LKAS) laid down by The

Institute of Chartered Accountants of Sri Lanka and the

requirements of Companies Act No. 07 of 2007.

These Consolidated Financial Statements were

authorised for issue by the Board of Directors on

25th May 2017.

1.2.2 Responsibility for Financial Statements

The Board of Directors of the Company is responsible

for the preparation and presentation of the Financial

Statements for the Group and the Company as in the

requirements of Companies Act No. 07 of 2007 and

SLFRSs and LKASs.

1.2.3 Going Concern

The management has made an assessment of its ability

to continue as a going concern and is satisfied that

it has the resources to continue in business for the

foreseeable future. Furthermore, the management

is not aware of any material uncertainties that may

cast significant doubt upon the Group’s/Company’s

ability to continue as a going concern. Therefore, the

Financial Statements continue to be prepared on a

going concern basis.

Basis of MeasurementThe Consolidated Financial Statements have been

prepared on the historical cost basis and applied

consistently with no adjustments being made for

inflationary factors affecting the Financial Statements,


except for the following material items in the

Statement of Financial Position:

zz Non-derivative financial instruments classified as

‘Loans and receivables’ and ‘other financial liabilities’

measured at amortised cost;

zz Buildings on leasehold lands are measured at

fair value;

zz Defined benefit obligations are measured at its

present value, based on an actuarial valuation as

explained in Note 17.

These Financial Statements have been prepared

on the basis that the Company and the Group would

continue as a going concern for the foreseeable future.

1.2.4 Functional and Presentation Currency

Items included in the Financial Statements of each

of the Group’s entities are measured using the

currency of the primary economic environment in

which the entities operate (‘the functional currency’).

The Consolidated Financial Statements are presented

in Sri Lankan Rupees, which is the Company’s

functional and presentation currency. All financial

information presented in Rupees has been rounded

to the nearest Rupee.

1.2.5 Materiality and Aggregation

Each material class of similar item is presented

separately in the Financial Statements. Items of

dissimilar nature or function are presented separately,

unless they are immaterial as permitted by the LKAS 1

on ‘Presentation of Financial Statements’.

1.2.6 Comparative Information

The Financial Statements for the comparative periods

comprise results for the 12 month periods from

1st April 2016 to 31st March 2017. In this circumstance,

the comparative information for the Statement of

Financial Position, Statement of Profit or Loss and

other Comprehensive Income, Statement of Changes in

Equity and Cash Flow Statement and related notes are

comparable with the current period.

The previous year figures and phrases have been

rearranged wherever necessary to conform with the

current year’s presentation.

1.2.7 Significant Accounting Judgements, Estimates and Assumptions

The preparation of the Consolidated Financial

Statements in conformity with SLFRS/LKAS requires

management to make judgements, estimates and

assumptions that affect the application of Accounting

Policies and the reported amounts of assets, liabilities,

income and expenses. Actual results may differ from

these estimates.

Estimates and underlying assumptions are

reviewed on an ongoing basis. Revisions to accounting

estimates are recognised in the period in which the

estimates are revised and in any future periods affected.

Information about critical judgements in

applying accounting policies that have the most

significant effect on the amounts recognised in the

Consolidated Financial Statements is included in the

following notes:

Assessment of Impairment – Key Assumptions Used in Discounted Cash Flow ProjectionsThe Company and Group assesses at each reporting

date whether there is objective evidence that an asset

or portfolio of assets is impaired. The recoverable

amount of an asset or cash-generating unit (CGU) is

the greater of its value in use and its fair value less

costs to sell. In assessing value in use, the estimated

future cash flows are discounted to present value using

appropriate discount rates that reflects the current

market assessments of the time value of money and

risks specific to the asset.

Useful Life time of the Property, Plant & EquipmentThe Group reviews the residual values, useful lives and

methods of depreciation of Property, Plant & Equipment

at each reporting date. Judgement of the management

is exercised in the estimation of these values, rates,

methods and hence they are subject to uncertainty.

Deferred Taxation – Utilisation of Tax LossesDeferred tax assets are recognised for all unused tax

losses to the extent that it is probable that taxable

profit will be available against which the losses can

be utilised. Management judgement is required to

determine the amount of deferred tax assets that can

be recognised, based upon the level of future taxable

profits together with future tax planning strategies.


Defined Benefit PlansThe assessment of the liability of defined benefit

obligations involves a significant element of

assumptions; including discount rates, future salary

increases, mortality rates and future pension increases

and due to the long-term nature of these plans, such

estimates are subject to uncertainty.

Current TaxationCurrent tax liabilities are provided for in the Financial

Statements applying the relevant tax statutes and

regulations, which the management believes reflect the

actual liability. There can be instances where the stand

taken by the Company and Group on transactions is

contested by revenue authorities. Any additional costs

on account of these issues are accounted for as a tax

expense at the point the liability is confirmed on any

Group entity.

Significant Accounting 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 Consolidation

1.3.1 Business Combinations

Business combinations are accounted for using the

acquisition method as at the acquisition date – i.e.,

when control is transferred to the Group. Control is the

power to govern the financial and operating policies of

an entity so as to obtain benefits from its activities. In

assessing control, the Group takes in to consideration,

potential voting rights that are currently exercisable.

The Group measures goodwill at the acquisition

date as:

zz The fair value of the consideration transferred plus

zz The recognised mount of any non-controlling

interests in the acquire; plus

zz If the business combination is achieved in stages,

the fair value of the pre existing equity interest in

the acquire less

zz The net recognised amount (generally fair value) of the

identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase

gain is recognisd immediately in the profit or loss.

The consideration transferred does not include

amounts related to the settlement of pre-existing

relationships. Such amounts are generally recognised

in profit or loss.

Transaction costs, other than those associated

with the issue of debt or equity securities, that

the Group incurs in connection with a business

combination are expensed as incurred. Any contingent

consideration payable is measured at fair value at

the acquisition date. If the contingent consideration

is classified as equity, then it is not remeasured and

settlement is accounted for within equity. Otherwise,

subsequent changes in the fair value of the contingent

consideration are recognised in profit or loss.

1.3.2 Non-Controlling Interests

For each business combination, the Group elects

to measure any non-controlling interest in the

acquire either:

zz At fair value; or

zz At their proportionate share of the acquire’s

identifiable net assets, which are generally at

fair value.

Changes in the Group’s interest in a subsidiary

that do not result in a loss of control are accounted

for as transactions with owners in their capacity as

owners. Adjustments to non-controlling interests are

based on a proportionate amount of the net assets of

the subsidiary.

1.3.3 Subsidiaries

Subsidiaries are those enterprises controlled by the

Group. The Financial Statements of subsidiaries are

included in the Consolidated Financial Statements from

the date that control commences until the date that

control ceases.

Adjustments required to the accounting policies

of subsidiaries have been changed where ever

necessary to align them with the policies adopted by

the Group.


In the Company’s Financial Statements

investments in subsidiaries are carried at cost less

impairment if any in net recoverable value.

The consolidated accounts are prepared to a

common financial year end of 31st March.

1.3.4 Loss of Control

On the loss of control, the Group derecognises

the assets and liabilities of the subsidiary, any

non-controlling interests and the other components of

equity related to the subsidiary. Any surplus or deficit

arising on the loss of control is recognised in profit or

loss. If the Group retains any interest in the previous

subsidiary, then such interest is measured at fair value

at the date that control is lost.

Subsequently that retained interest is accounted

for as an equity-accounted investee or as an

available-for-sale financial asset, depending on the

level of influence retained.

1.3.5 Transactions Eliminated on Consolidation

Intra-group balances and transactions are eliminated in

preparing the Consolidated Financial Statements.

1.3.6 Joint Ventures

Joint ventures are those entities over whose activities

that the Group has joint control established by

contractual agreement and requiring unanimous

consent for strategic financial and operating decisions.

They are initially recognised at cost, which

includes transaction costs, subsequent to initial

recognition, the Consolidated Financial Statements

include the Group’s share of the profit & Loss and

other comprehensive income of equity accounted

investees, until the date on which significant influence

or joint control ceases.

The result of the joint venture, Nawaloka

Metropolis Laboratories (Pvt) Ltd. (MLPL) in which the

Company has a 50% holding, has been accounted for

using the equity method.

As explained in Note 13 to the Financial

Statements, investment in MLPL has been classified as

Assets held for sale at the year end.

1.4 Foreign Currency Translation

The Financial Statements of the Group are presented

in Sri Lankan Rupees, which is the functional and

presentation currency of the Group. Recorded at

the functional currency rate ruling at the date of

the transaction. Monetary assets and liabilities

denominated in foreign currencies are retranslated at

the functional currency rate of exchange ruling at the

date of Statement of Financial Position.

Non-monetary items that are measured in terms

of historical cost in foreign currency are translated

using the exchange rates as at the dates of the initial

transactions. Non-monetary items measured at fair

value denominated in a foreign currency are translated

using the exchange rates at the date when the fair

value was determined.

Foreign Currency differences arising on

retranslation are generally recognised in profit or loss.

1.5 Financial Instruments

Non-Derivative Financial Assets

The Company and Group initially recognises loans and

receivables on the date that they are originated. All

other financial assets are recognised initially on the

trade date, which is the date that the Company and the

Group becomes a party to the contractual provisions

of the instrument.

The Company and the Group derecognises a

financial asset when the contractual rights to the cash

flows from the asset expire or it transfers the rights to

receive the contractual cash flows in a transaction in

which substantially all risks and rewards of ownership

of the financial asset are transferred. Any interest in

such transferred financial assets that is created or

retained by the Company and the Group is recognised

as a separate asset or liability.

Financial assets and liabilities are offset and the

net amount presented in the statement of financial

position when, and only when, the Company and the

Group has a legal right to offset the amounts and

intends either to settle them on a net basis or to realise

the asset and settle the liability simultaneously.

The Company and the Group only holds financial

assets that are categorised in to the ‘loans and

receivables’ classification.


Loans and Receivables

Loans and receivables are financial assets with fixed

or determinable payments that are not quoted in an

active market. Such assets are recognised initially at

fair value plus any directly attributable transaction

costs. Subsequent to initial recognition, loans and

receivables are measured at amortised cost using the

effective interest method, less any impairment losses.

Loans and receivables comprise cash and cash

equivalents and trade and other receivables.

Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances,

placement in Government securities and placements

in repurchase agreements with maturities of three

months or less from the acquisition date that are

subject to on insignificant risk of changes in their fair

value and are used by the Company and the Group in

the management of its short-term commitments.

1.6 Non-Derivative Financial Liabilities

The Company and Group initially recognises

subordinated liabilities on the date, which is the date

that the Company and the Group becomes a party to

the contractual provisions of the instrument.

The Company and Group derecognises a

financial liability when its contractual obligations are

discharged, cancelled or expire.

The Company and Group classifies

non-derivative financial liabilities into the ‘other

financial liabilities’ category. Such financial liabilities

are recognised initially at fair value less any directly

attributable transaction costs. Subsequent to initial

recognition, these financial liabilities are measured at

amortised cost using the effective interest method.

Other financial liabilities comprise loans and

borrowings, refundable rental and other deposits,

bank overdrafts and trade and other payables.

Bank overdrafts that are repayable on demand

and form an integral part of the Company’s and

the Group’s cash management are included as a

component of cash and cash equivalents for the

statement of cash flows.

Stated Capital

Ordinary SharesOrdinary shares are classified as equity. Costs

attributable to the issue of ordinary shares are

recognised as an expense.

1.7 Assets and Bases of Their Valuation

1.7.1 Property, Plant & Equipment-Owned Assets

1.7.1.1 All items of Property, Plant & Equipment are

initially recorded at cost. Where items of Property,

Plant & Equipment are subsequently revalued, the

entire class of such assets is revalued. Revaluations

are made with sufficient regularity to ensure that

their carrying amounts do not differ materially from

their fair values at the reporting date. Revaluation

of Property, Plant & Equipment are undertaken by

professionally qualified valuers.

Subsequent to the initial recognition of the asset

at cost, the revalued Property, Plant & Equipment

are carried at revalued amounts less accumulated

depreciation thereon and accumulated impairment

losses. Revaluation of Property, Plant & Equipment are

undertaken by professionally qualified valuers.

Revaluation model is applied for buildings on

leasehold land by the Company and the Board has

decided to revalue the said buildings every 3-5 years

thereafter to comply with requirement of Revaluation

Model under the Sri Lanka Accounting Standard 16

‘Property, Plant & Equipment’.

Property, Plant & Equipment, other than the

buildings on lease hold and are recorded at cost

less accumulated depreciation and accumulated

impairment losses, in accordance with the ‘Cost Model’

as set out in LKAS 16 - ‘Property, Plant & Equipment’.

1.7.1.2 The cost of an item of Property, Plant &

Equipment comprises its purchase price and any

directly attributable costs of bringing the asset to

working condition for its intended use.

1.7.1.3 Expenditure incurred for the purpose of

acquiring, extending or improving assets of a

permanent nature by means of which to carry on the

business or to increase the earning of the business has

been treated as capital expenditure.


1.7.1.4 Depreciation is provided on the straight-line

method at the following rates per annum, so as to

write-off the cost or revaluation of the assets over its

effective useful life:

1.7.1.5 The useful life, depreciating methods and

residual values are assessed annually or in an

earlier date where any circumstance indicates such

assessment is required.

Category Rate

Leasehold property Over the lease period

Buildings leasehold land Over 60 years

Fixtures and fittings 10%

Plant and machinery 20%

Hospital equipment 10%

Medical equipment 10%

Motor vehicles 20%

Furniture and fittings 10%

Computer equipment 25%

Depreciation is provided from the date of

available for use up to the date of disposal.

1.7.2 Property, Plant & Equipment – Leased Assets

Property, Plant & Equipment on finance leases, which

effectively transfer to the Company substantially all

the risk and benefits incidental to ownership of the

leased items, are capitalised and disclosed as finance

leases at their cash price and depreciated over the

period the Group is expected to benefit from the use

of the leased assets.

The corresponding principal amount payable

to the lessor is shown as a liability. Lease payments

are apportioned between the finance charges and

reduction of the lease liability so as to achieve balance

of the liability. The interest payable over the period

of the lease is transferred to an interest in suspense

account. The interest element of the rental obligations

pertaining to each financial year is charged to the

Statement of Comprehensive Income over the period

of lease. The cost of improvements to leasehold

property is capitalised, disclosed as leasehold

improvements and depreciated over the unexpired

period of the lease or the estimated useful life of the

improvements, whichever is shorter.

1.7.3 Leasehold Right Over Land

Leasehold right over land are amortised over the lease

term in accordance with the pattern of benefits provided.

1.7.4 Investment Property

Investment property is property held either earn rental

income or for capital appreciation or for both, but

not for sale in the ordinary course of business, use in

the production or supply of goods or services or for

administrative purposes.

Investment property is measured at cost.

When the use of a property changes such that it is

reclassified as Property, Plant & Equipment, its carrying

value at the date of reclassification becomes its cost

for subsequent accounting.

1.7.5 Investments

1.7.5.1 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 recognise a decline which

is considered other than temporary, in the value of

investments, determined on an individual investment

basis. In the Company’s Financial Statements,

investments in subsidiaries and joint ventures have

been accounted for at cost, net of any impairment

losses which are charged to the Statement of

Comprehensive Income.

1.7.6 Inventories

Inventories have been valued at lower of cost and

net realisable value after making due allowance for

obsolete items. The First-In First-Out (FIFO) basis is

adopted to arrive at the cost of inventories.

1.7.7 Impairment

i. Non-Derivative Financial 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 Cost

The Company and the Group consider 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

such indication exists and then the asset’s recoverable

amount is estimated. An impairment loss is recognised

if the carrying amount of an asset or cash-generating

unit (CGU) exceeds its recoverable amount.

The recoverable amount of an asset or CGU is the

greater of its value in use and its fair value less costs

to sell. In assessing value in use, the estimated future

cash flows are discounted to their present value using

a pre-tax discount rate that reflects current market

assessments of the asset or CGU. For impairment

testing, assets are grouped together into the smallest

group of assets that generates cash inflows from

continuing use that are largely independent of the cash

inflows of other assets or CGUs.

Impairment losses are recognised in profit or loss.

Impairment losses recognised in respect of CGUs are

allocated to reduce the carrying amounts of the assets

in the CGU (group of CGUs) on a proportion basis.

An impairment loss is reversed only to the extent

that the asset’s carrying amount does not exceed the

carrying amount that would have been determined, net

of depreciation or amortisation, if no impairment loss

had been recognised.

1.8 Assets Held for Sale

Non-current assets or disposal groups comprising

assets and liabilities are classified as held for sale, if it

is highly probable that they will be recovered primarily

through sale rather than through continuing use.

Such assets or disposal groups are generally

measured at the lower of their caring amount and

fair value less cost for sale. Any impairment loss on a

disposal groups is allocated first to good will and then

to the remaining assets and liabilities on a pro rata

basis, except that no loss is allocated to inventories,

financial assets, deferred tax assets, employee benefit

assets, investment property or biological assets,

which continue to be measured in accordance with

the Group’s other accounting policies. Impairment

losses on initial classification as held for sale or held

for distribution and subsequent gains or losses on

remeasurement are recognised in profit or loss.

Once classified as held for sale, intangible

assets and Property, Plant & Equipment are no longer

amortised or depreciated, and equity accounted

investee is no longer equity accounted.

1.9 Liabilities and Provisions

1.9.1 Liabilities

1.9.1.1 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.

1.9.1.2 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.


1.9.2 Provisions

Provisions are recognised when the Company has a

legal or constructive obligation as a result of past

events and it is probable that an outflow of economic

benefits will be required to settle the obligation.

1.9.3 Employee Benefits

1.9.3.1 Defined Benefit Plan – Employee BenefitsThe liability recognised in the Statement of Financial

Position in respect of defined benefit plan is the

present value of the defined benefit obligation at

the reporting date. Benefits falling due more than

12 months after the reporting date are discounted

to present value. The defined benefit obligation is

calculated annually by Independent Actuaries using

Projected Unit Credit (PUC) method as recommended

by LKAS 19 – ‘Employee Benefits’.

Actuarial gains and losses in the period in which

they occur have been recognised in the Statement of

Other Comprehensive Income.

The assumptions based on which the results of

the actuarial valuation was determined, are included in

Note 17 to the Financial Statements.

Gratuity liability was computed from the first year

of service for all employees in conformity with Sri Lanka

Accounting Standards 19 - ‘Employee Benefit’.

However, under the Payment of Gratuity Act

No. 12 of 1983, the liability to an employee arises only

on completion of five years of continued service.

The Company is liable to pay gratuity in terms

of the relevant statute.

The Gratuity liability is not externally funded.

Defined Contribution Plan

Employees’ Provident Fund and Employees’ Trust

Fund is a post-employment benefit plan under which

an entity pays fixed contribution into a separate entity

and will have no legal or constructive obligation to pay

further amounts.

All the employees who are eligible for

Employees’ Provident Fund and Employees’ Trust Fund

are covered by relevant contribution funds in line with

the respective statutes. Employer’s contribution to

the defined contribution plans are recognised as an

expense in the Statement of Comprehensive Income

when incurred.

1.10 Statement of Comprehensive Income

1.10.1 Revenue Recognition

Revenue is recognised to the extent that it is probable

that the economic benefits will flow to the Group and

the revenue can be reliably measured. Accordingly,

hospital and pharmaceutical revenue is recognised

at the point of delivering the service. However, the

professional fees of medical specialists which are

collected by the Group do not form part of revenue

are excluded from the revenue.

1.10.2 Other Income

Other income comprises gain on disposal of Property,

Plant & Equipment, dividend income, interest income

and rental income. Net gains and losses of a revenue

nature resulting from the disposal of Property, Plant &

Equipment have been accounted for in the Statement of

Comprehensive Income. Dividend income is recognised

in the Statement of Comprehensive Income on the date

that the Company’s and the Group’s right to receive

payment is established, which in the case of quoted

securities is normally the ex-dividend date. Interest

income and rental income are accounted on accrued

basis in the Statement of Comprehensive Income.

1.10.3 Expenditure

All expenditure incurred in the running of the business

and in maintaining the Property, Plant & Equipment in

a state of efficiency has been charged to revenue in

arriving at the profit/loss for the year.

1.10.4 Borrowing Costs

Borrowing costs are recognised as an expense in the

period in which they are incurred, except to the extent

where borrowing costs are directly attributable to the

acquisition, construction or production of Property,

Plant & Equipment, that takes a substantial period of

time to get ready for its intended use or sale and are

capitalised as part of that asset during the period of

construction/development.


1.10.5 Income Tax Expenses

1.10.5.1 Current TaxationThe Company’s tax expense is made up with current

taxation and deferred tax gain or loss during the year.

Provision for taxation is based on the profit for the

year adjusted for taxation purposes in accordance

with the provisions of the Inland Revenue Act No. 10

of 2006, as amended by subsequent legislation.

a. The Company is liable for income tax at the rate of

12% (2015/16 – 12%) on the taxable profits.

b. New Nawaloka Hospitals (Pvt) Ltd. is liable for

income tax at the rate of 12% on the taxable profits

(2015/16 – 2% based on its turnover).

c. New Nawaloka Medical Centre (Pvt) Ltd. is

exempt from income tax for a period of ten years

commencing from year of assessment 2008/09 in

terms of the agreement entered into with the Board

of Investment (BOI) of Sri Lanka.

d. Nawaloka Metropolis Laboratories (Pvt) Ltd.

(‘Joint Venture’), is liable for taxation at the rate

of 12% (2015/16 – 12%).

e. Nawaloka Medicare (Pvt) Ltd. is exempt from

income tax for a period of six year started from

where profit making Financial year or after loss

making 2 years whichever is earlier.

f. Income on other sources is liable for taxation at the

rate of 28% (2015/16 – 28%).

1.10.5.2 Deferred TaxDeferred tax is recognised in respect of temporary

differences between the carrying amounts of assets

and liabilities for financial reporting purposes and the

amounts used for taxation purposes.

Deferred tax is not recognised for:

zz temporary differences on the initial recognition

of assets or liabilities in a transaction that is not

a business combination and that affects neither

accounting nor taxable profit or loss;

zz temporary differences related to investments in

subsidiaries, associates and jointly controlled entities

to the extent that the Group is able to control the

timing of the reversal of the temporary differences

and it is probable that they will not reverse in the

foreseeable future; and

The measurement of deferred tax reflects the tax

consequences that would follow the manner in which

the Company and the Group expects, at the end of

the reporting period, to recover or settle the carrying

amount of its assets and liabilities. For investment

property that is measured at fair value, the resumption

that the carrying amount of the investment property

will be recovered through sale has not been rebutted.

Deferred tax is measured at the tax rates that

are expected to be applied to temporary differences

when they reverse, using tax rates enacted or

substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if

there is a legally enforceable right to offset current

tax liabilities and assets and they relate to taxes levied

by the same tax authority on the same taxable entity,

or on different tax entities, but they intend to settle

current tax liabilities and assets on a net basis or their

tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused

tax losses, tax credits and deductible temporary

differences to the extent that it is probable that future

taxable profits will be available against which they can

be utilised. Deferred tax assets are reviewed at each

reporting date and are reduced to the extent that it

is no longer probable that the related tax benefit will

be realised, based on the level of future taxable profit

forecasts and tax planning strategies.

1.10.5.3 Tax ExposuresIn determining the amount of current and deferred

tax, the Company and the Group takes into account

the impact of uncertain tax positions and whether

additional taxes and interest may be due. This

assessment relies on estimates and assumptions and

may involve a series of judgements about future

events. New information may become available

that causes the Company to change its judgement

regarding the adequacy of existing tax liabilities; such

changes to tax liabilities will impact tax expense in the

period that such a determination is made.


1.10.5.4 Withholding Tax on DividendsDistributed 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 setoff

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.

1.11 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 recognised because it is not

probable that an outflow of resources will be required

to settle the obligation. A contingent liability also

arises in extremely rare cases where there is a liability

that cannot be recognised because it cannot be

measured reliably. The Company and the Group does

not recognise a contingent liability but discloses its

existence in the Financial Statements. A contingent

asset is a possible asset that arises from past events

whose existence will be confirmed by the occurrence

or non-occurrence of one or more uncertain future

events beyond the control of the Company and

the Group. The Company and the Group does not

recognise contingent assets but discloses its existence

where inflows of economic benefits are probable, but

not virtually certain. In the acquisition of subsidiaries

by the Group under business combinations, contingent

liabilities assume dare measured initially at their fair

value at the acquisition date, irrespective of the extent

of any minority interest.

1.12 Related Party Transactions

Disclosure has been made in respect of the

transactions in which one party has the ability to

control or exercise significant influence over the

financial and operating policies/decisions of the other,

irrespective of whether a price is charged.

1.13 Events after the Reporting Date

Events after the reporting date are those events

favourable and unfavourable that occur between

the reporting date and the date when the Financial

Statements are authorised for issue.

All material and important events which occur

after the reporting date have been considered and

disclosed in Note 34.

1.14 Earnings Per Share

The Company and the Group presents basic earnings

per share (EPS) data for its ordinary shares. Basic

EPS is calculated by dividing the profit or loss

attributable to ordinary shareholders of the Company

by the weighted average number of ordinary shares

outstanding during the period.

1.15 Dividends on Ordinary Shares

Dividends on ordinary shares are recognised as a

liability and deducted from equity when they are

approved by the Company’s shareholders. Interim

dividends are deducted from equity when they are

declared and are no longer at the discretion of the

Company.

1.16 Presentation

Assets and liabilities are grouped by nature and listed

in an order that reflects their relative liquidity and

maturity pattern.

Where appropriate, the significant accounting

policies are disclosed in the succeeding notes.

(a) Offsetting Income and Expenses

Income and expenses are not offset unless required

or permitted by accounting standards.

(b) Offsetting Assets and Liabilities

Assets and liabilities are offset and the net amount

reported in the statement of financial position only

where there is;

zz a current enforceable legal right to offset the asset

and the liability; and

zz an intention to settle the liability simultaneously


1.17 Segmental Information

A 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.

Segment Revenues

For the year ended 31 March 2017Rs.

2016Rs.

Colombo 5,644,670,048 5,384,753,416

Gampaha 655,240,388 475,464,745

Total net revenue 6,299,910,436 5,860,218,161

Segment Profits/(Losses)

For the year ended 31 March 2016/17Rs.

2015/16Rs.

Colombo 226,764,135 248,692,924

Gampaha 57,028,056 16,198,540

283,792,191 264,891,464

Share of profit of

equity – Accounted

investees (Net of tax) 40,963,012 50,360,964

Profit before Income

tax expense 302,255,203 315,252,428

Tax expense (61,280,520) (109,218,200)

Profit/(loss) for the year 240,874,683 206,034,228

1.18 Cash Flow Statement

1.18.1 The Cash Flow Statement has been prepared

using the indirect method in accordance with Sri

Lanka Accounting Standard LKAS 7 – Statement of

Cash Flows. Cash and cash equivalents consist of cash

in hand and at banks and short-term highly liquid

investments, readily convertible to loan amounts net of

outstanding bank overdrafts.

1.18.2 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.

Geographical Segments, Based on the Location of Assets

Colombo Gampaha Group Total

As at 31st March 2017 2016 2017 2016 2017 2016

Segment non-current assets 10,107,199,094 8,293,806,895 1,071,060,609 1,011,614,686 11,178,259,703 9,305,421,580

Segment current assets 3,003,212,406 1,781,873,672 166,636,132 106,184,741 3,169,848,538 1,888,058,414

Total assets 13,110,411,500 10,075,680,567 1,237,696,741 1,117,799,427 14,348,108,241 11,193,479,994

Segment equity 3,361,494,432 2,978,390,422 1,073,111,006 1,016,507,540 4,434,605,437 3,994,897,962

Segment non-current liabilities 6,063,089,629 5,078,678,141 26,736,993 5,093,002 6,089,826,622 5,083,771,143

Segment current liabilities 3,685,827,440 2,018,612,004 137,848,742 96,198,885 3,823,676,182 2,114,810,889

Total liabilities 13,110,411,500 10,075,680,567 1,2337,696,741 1,117,799,427 14,348,108,241 11,193,479,994


1.19 Determination of Fair Values

A number of the Company’s and the Group’s

accounting policies and disclosures require the

determination of fair value, for both financial and

non-financial assets and liabilities. Fair values have

been determined for measurement and/or disclosure

purposes based on the following methods. Where

applicable, further information about the assumptions

made in determining fair values is disclosed in the

notes specific to that asset or liability. When measuring

the fair value of an asset or liability the Group uses

market observable data as far as possible. Fair values

are categorised into different levels in a fair value

hierarchy based on the inputs used in the valuation

techniques as follows:

zz Level 1 – Quoted prices (Unadjusted) in active

markets for identifiable assets and liabilities.

zz Level 2 – Inputs other than quoted prices included in

level 1 that are observable from the asset or liability

either directly (as Prices) or indirectly (derived prices)

zz Level 3 – Inputs from the asset or liability that

are not based on observable market data

(unobservable inputs)

If the inputs used to measure the fair value of

an asset or a liability might be categorised in different

levels of the fair value hierarchy, then the fair value

measurement is categorised in its entirety in the same

level of the fair value hierarchy as the lowest level

input that is significant to the entire measurement.

(a) Property, Plant & Equipment

The fair value of Property, Plant & Equipment

recognised as a result of a business combination

is the estimated amount for which property could

be exchanged on the acquisition date between a

willing buyer and a willing seller in an arm’s length

transaction after proper marketing wherein the

parties had each acted knowledgeably. The fair value

of items of plant, equipment, fixtures and fittings is

based on the market approach and cost approaches

using quoted market prices for similar items when

available and depreciated replacement cost when

appropriate. Depreciated replacement cost reflects

adjustments for physical deterioration as well as

functional and economic obsolescence.

(b) Inventories

The fair value of inventories acquired in a business

combination is determined based on the estimated

selling price in the ordinary course of business less

the estimated costs of completion and sale and a

reasonable profit margin based on the effort required

to complete and sell the inventories.

(c) Trade and Other Receivables

The fair values of trade and other receivables,

excluding construction work in progress, are estimated

at the present value of future cash flows, discounted at

the market rate of interest at the measurement date.

Short-term receivables with no stated interest rate are

measured at the original invoice amount if the effect of

discounting is immaterial. Fair value is determined at

initial recognition and, for disclosure purposes, at each

annual reporting date.

(d) Other Non-Derivative Financial Liabilities

Other non-derivative financial liabilities are measured

at fair value, at initial recognition and for disclosure

purposes, at each reporting date. Fair value is

calculated based on the present value of future

principal and interest cash flows, discounted at the

market rate of interest at the measurement date.

For finance leases the market rate of interest is

determined with reference to similar lease agreements.

(e) Contingent Consideration

The fair value of contingent consideration, arising in a

business combination is calculated using the income

approach based on the expected payment amounts

and their associated probabilities. When appropriate,

it is discounted to present value.

1.20 New Accounting Standards Issued but not Effective as at Reporting Date

The Institute of Chartered Accountants of Sri Lanka

has issued the following new Sri Lanka Accounting

Standard which will become applicable for financial

periods beginning on or after 1st January 2018.

Accordingly, the Group has not applied the following

new standards in preparing these Consolidated

Financial Statements.


SLFRS 9 – Financial Instruments

SLFRS 9 – ‘Financial Instruments’ replaces the

existing guidance in LKAS 39 – Financial Instruments:

Recognition and Measurement. SLFRS 9 includes

revised guidance on the classification and

measurement of financial instruments, including a new

expected credit loss model for calculating impairment

on financial assets.

SLFRS 9 is effective for annual period

beginning on or after 1st January 2018 with early

adoption permitted.

The Group is assessing the potential impact on

its Financial Statements resulting from the application

of SLFRS 9.

SLFRS 15 – Revenue Recognition from Customer Contracts

SLFRS 15 ‘Revenue from Contracts with Customers’SLFRS 15 establishes a single comprehensive model

for entities to use in accounting for revenue arising

from contracts with customers. The standard will

supersede the current revenue recognition guidance

including LKAS 18 ‘Revenue’ and LKAS 11 ‘Construction

Contracts’ and the related Interpretations when they

become effective.

The core principle of SLFRS 15 is that an entity

should recognise revenue to depict the transfer of

promised goods or services to customers in an amount

that reflects the consideration to which the entity

expects to be entitled in exchange for those goods or

services. Specifically, the Standard introduces a 5-step

approach to revenue recognition.

zz Step 1: Identify the contract(s) with a customer

zz Step 2: Identify the performance obligations in

the contract

zz Step 3: Determine the transaction price

zz Step 4: Allocate the transaction price to the

performance obligations in the contract

zz Step 5: Recognise revenue when (or as) the entity

satisfies a performance obligation

Under SLFRS 15, an entity recognises revenue

when (or as) a performance obligation is satisfied,

i.e. when ‘control’ of the goods or services underlying

the particular performance obligation is transferred

to the customer. Far more prescriptive guidance has

been added in SLFRS 15 to deal with specific scenarios.

Furthermore, extensive disclosures are required by

SLFRS 15.

The Directors of the Group and of the Company

anticipate that the application of SLFRS 15 in the future

may have a moderate impact on the amounts reported

and disclosures made in these financial statements.

However, it is not practicable to provide a reasonable

estimate of the effect of SLFRS 15 until the Group and

the Company complete a detailed review.

The Group plans to apply the cumulative effect

method when transitioning to the new standard

without restating the comparative period amounts.

SLFRS 15 is effective for annual period beginning

on or after 1st January 2018 with early adoption

permitted.

The Group is assessing the potential impact on

its Financial Statements resulting from the application

of SLFRS 15.

SLFRS 16 – ‘Leases’

SLFRS 16 eliminates the current dual accounting model

for lessees which distinguishes between On-Balance

Sheet finance leases and Off-Balance Sheet operating

leases. Instead there will be a single On-Balance Sheet

accounting model that is similar to current finance

lease accounting.

SLFRS 16 is effective for annual Reporting

periods beginning on or after January 01, 2019. The

Group is assessing the potential impact on its Financial

Statements resulting from the application of SLFRS 16.


2. Property, Plant & Equipment

2.1 Group

Cost Valuation

FreeholdLand

Rs.

Buildings Constructed on Freehold

LandRs.

BuildingsConstructed

on LeaseholdLand

Rs.

Work in Progress

Rs.

Fixture andFittings

Rs.

Plant andMachinery

Rs.

MotorVehicles

Rs.

HospitalEquipment

Rs.

MedicalEquipment

Rs.

ComputerEquipment

Rs.

Furniture and

Fittings

Rs.

Total

Rs.

Balance as at

1st April 2015 234,605,100 561,640,192 2,777,667,912 50,396,304 357,072,149 103,569,204 303,097,736 393,452,305 3,480,382,974 139,499,462 97,361,143 8,498,744,481

Additions: – 47,841,533 55,110,165 2,150,580,057 54,232,632 146,619 54,198,946 17,202,830 235,322,679 22,943,727 14,154,900 2,651,734,088

Disposal – – – – – – (14,231,332) (461,490) – – – (14,692,822)

Balance as at

31st March 2016 234,605,100 609,481,725 2,832,778,077 2,200,976,361 411,304,781 103,715,823 343,065,350 410,193,645 3,715,705,653 162,443,189 111,516,043 11,135,785,747

Additions 17,487,650 22,780,817 48,108,133 2,302,615,270 44,078,330 13,241,532 143,334,642 84,906,228 424,568,843 24,341,678 16,641,868 3,142,104,991

Revaluation – – 341,579,422 – – – – – – – – 341,579,922

Disposal – – – – – – – – – – – –

Balance as at

31st March 2017 252,092,750 632,262,542 3,222,466,132 4,503,591,631 455,383,111 116,957,355 486,399,992 495,099,873 4,140,274,496 186,784,867 128,157,911 14,619,470,660

Accumulated

depreciation

Balance as at

1st April 2015 – 3,185,144 196,291,623 – 170,411,959 57,375,235 206,370,791 164,750,734 1,747,975,054 78,201,753 31,927,969 2,656,490,262

Charge for

the year – 10,114,515 67,018,504 1,069,598 34,587,111 8,947,341 30,382,039 29,695,960 257,169,546 24,000,433 13,812,186 476,797,233

Disposals – – – – – – (7,316,790) (57,237) – – – (7,374,027)

Balance as at

31st March 2016 – 13,299,659 263,310,127 1,069,598 204,999,070 66,322,576 229,436,040 194,389,457 2,005,144,600 102,202,186 45,740,155 3,125,913,468

Charge for

the year – 10,814,970 73,361,138 – 32,128,883 9,732,105 44,385,325 41,451,570 285,173,828 26,262,613 14,296,346 537,296,651

Disposals – – – – – – – – – – – –

Balance as at

31st March 2017 – 10,814,970 336,361,138 1,069,598 237,127,953 76,054,681 273,821,365 235,841,027 2,290,318,428 128,464,799 60,036,501 3,663,210,118

Written down

value

As at 31st

March 2017 252,092,750 621,447,573 2,886,104,994 4,502,522,033 218,255,158 40,902,674 212,578,627 259,258,846 1,849,956,068 58,320,068 68,121,411 10,956,260,542

As at 31st

March 2016 234,605,100 596,182,067 2,569,467,950 2,199,906,763 206,305,711 37,393,247 113,629,310 215,804,188 1,710,561,053 60,241,003 65,775,888 8,009,872,280

2.1.1 The buildings constructed on leasehold lands of the Group were revalued at Rs. 2,886 Mn by

Mr. P B Kalugalagedara, Chartered Valuer in 31st March 2017 using Market Approach and the value of these

assets has been reflected in the Financial Statements at the revalued amounts.

2.1.2 Freehold Land reflects a land extent of 20.2 perches situated at No. 15, Nelson Lane, Kollupitiya,

Colombo 03 and a land extent of 1,019.1 perches situated at No. 169, Colombo Road, Negombo.


2.1.4 Details of fully depreciated assets in Property, Plant & Equipment are as follows:

Group Company

As at 31st March2016/17

Rs.2015/16

Rs.2016/17

Rs.2015/16

Rs.

Buildings constructed on leasehold land – – – –

Fixture and fittings 82,348,791 76,991,488 2,064,875 94,016

Plant and machinery 62,678,495 54,001,945 13,564,726 11,332,408

Motor vehicles 154,126,887 149,126,149 125,458,325 110,363,907

Hospital equipment 82,564,782 79,570,688 54,622,546 53,892,194

Medical equipment 1,057,835,421 937,380,304 265,845,234 221,366,527

Computer equipment 50,364,785 46,236,973 31,658,792 28,692,203

Furniture and fittings 11,064,879 8,029,881 9,264,475 7,064,782

1,500,984,040 1,351,337,428 502,478,973 432,806,037

2.2 Company

Freehold Land

Rs.

Work in Progress

Rs.

Building Constructed

on Leasehold Land

Rs.

Fixture and Fittings

Rs.

Plant and Machinery

Rs.

Motor Vehicles

Rs.

Hospital Equipment

Rs.

Medical Equipment

Rs.

Computer Equipment

Rs.

Furniture and

Fittings

Rs.

Total

Rs.

Balance as at 1st April 2015 42,188,000 – 585,711,662 170,310,043 11,332,408 240,307,406 258,068,398 2,318,098,450 95,013,115 67,712,874 3,788,742,356

Additions – 61,403,714 17,399,709 24,907,050 – 34,175,940 12,422,420 133,504,885 17,446,319 4,967,886 306,227,923

Disposal – – – – – (12,438,332) – – – – (12,438,332)

Balance as at 31st March 2016 42,188,000 61,403,714 603,111,371 195,217,093 11,332,408 262,045,014 270,490,818 2,451,603,335 112,459,434 72,680,760 4,082,531,947

Additions – 38,579,364 31,855,252 5,780,085 – 138,054,641 51,724,105 45,407,658 9,775,576 3,138,750 324,315,431

Revaluation – – 53,536,819 – – – – – – – 53,536,819

Disposal – – – – – – – – – – –

Balance as at 31st March 2017 42,188,000 99,983,078 688,503,442 200,997,178 11,332,408 400,099,655 322,214,923 2,497,010,993 122,235,010 75,819,510 4,460,384,197

Accumulated Depreciation

Balance as at 1st April 2015 – – 33,476,608 59,837,589 11,332,408 149,665,106 105,802,402 891,560,073 58,294,456 25,260,769 1,335,229,411

Charge for the year – – 18,574,088 21,274,233 – 26,267,603 19,563,705 214,845,566 17,483,335 7,251,448 325,259,978

Disposal – – – – – (6,945,019) – – – – (6,945,019)

Balance as at 31st March 2016 – – 52,050,696 81,111,822 11,332,408 168,987,690 125,366,107 1,106,405,639 75,777,791 32,512,217 1,653,544,370

Charge for the year – – 20,026,508 17,541,624 – 39,585,169 29,636,013 212,655,137 17,537,483 6,431,861 343,413,793

Disposal – – – – – – – – – – –

Balance as at 31st March 2017 – – 72,077,204 98,653,446 11,332,408 208,572,859 155,002,120 1,319,060,776 93,315,273 38,944,077 1,996,958,163

Net Book Value

As at 31st March 2017 42,188,000 99,983,078 616,426,238 102,343,732 – 191,526,796 167,212,803 1,177,950,217 28,919,737 36,875,433 2,463,426,034

As at 31st March 2016 42,188,000 61,403,714 551,060,675 114,105,271 – 93,057,324 145,124,711 1,345,197,696 36,681,643 40,168,543 2,428,987,577


2.2.1 The buildings constructed on leasehold lands of the Company were revalued by Mr. P B Kalugalagedara,

Chartered Valuer in 31st March 2017, using Market Approach and the value of these Assets has been reflected in

the Financial Statements at the revalued amounts.

2.2.2 Freehold land with a land extent of 20.2 perches is situated at No. 15, Nelson Lane, Kollupitiya, Colombo 03.

2.2.3 Leasehold period for the three companies is 99 years and remaining leasehold periods as at 31st March

2017 are as follows:

Nawaloka Hospitals PLC 54 years

New Nawaloka Hospitals (Pvt) Ltd. 75 years

New Nawaloka Medical Centre (Pvt) Ltd. 86 years

2.3 The leasehold properties with a land extent of 511.80 perches are located in No. 23, Deshamanya H K

Dharmadasa Mawatha, Colombo 02.

3. Leasehold Right Over Land

Group Company

As at 31st March 2016/17Rs.

2015/16Rs.

2016/17Rs.

2015/16Rs.

Balance as at beginning of the year 224,975,452 227,910,976 48,617,196 49,510,203

Amortisation for the year (2,976,291) (2,935,524) (909,765) (893,007)

Balance as at the end of the year 221,999,161 224,975,452 47,707,431 48,617,196

4. Investment Property

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

Investment property – – 192,417,100 192,417,100

– – 192,417,100 192,417,100

4.1 Investment property reflects lands in leased out to Nawaloka Medicare (Pvt) Ltd. by Nawaloka Hospitals PLC

on a 99-year lease agreement. Nawaloka Medicare (Pvt) Ltd. commenced its operations during 2014/15.

Investment property reflects a land extent of 1,019.1 perches situated at No. 169, Colombo Road, Negombo.

4.2 The Company has earned rental income of Rs. 1,917,410/- for the year ended 31st March 2017.

(2016 – Rs. 1,917,410/-)

4.3 During the year, Director’s valuation was carried out for the investment properties and market value at the

investment property has not changed materially over the year.

4.4 No items of investment properties of the Company were pledged as security for liability as at the reporting date.


4.5 There were no restrictions to the title of the investment properties of the Company as at the reporting date.

5. Investment in Subsidiaries

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

New Nawaloka Hospitals (Pvt) Ltd. – – 245,933,056 245,933,056

Nawaloka Medicare (Pvt) Ltd. – – 1,071,052,320 1,071,052,320

New Nawaloka Medical Centre (Pvt) Ltd. – – 700,000,000 700,000,000

– – 2,016,985,376 2,016,985,376

6. Equity Accounted Investee – Group

As at 31st March Holding %

2016/17Rs.

2015/16Rs.

Equity accounted investee – Group

Investment in joint venture – Nawaloka Metropolis Laboratories (Pvt) Ltd. (Note 6.1) 50 – 118,230,763

Equity Accounted Investee – Company

Investment in joint venture – Nawaloka Metropolis Laboratories (Pvt) Ltd. (Note 6.1) 50 – 2,500,000

250,000 Ordinary Shares

6.1 Nawaloka Metropolis Laboratories (Pvt) Ltd., is a joint venture company between Nawaloka Hospitals PLC and

Metropolis Health Services (India) (Pvt) Ltd., a company incorporated in India. Nawaloka Metropolis Laboratories

(Pvt) Ltd. was incorporated to provide laboratory services in Sri Lanka.

Nawaloka Hospitals PLC signed a Memorandum of understanding (MOU) with Metropolis Healthcare Ltd.,

(JV Partner) on 31st March 2017 to dispose 250,000 ordinary shares (50% holding) of Nawaloka Metropolis

Laboratories (Pvt) Ltd., held by Nawaloka Hospitals PLC to Nawaloka Metropolis Laboratories (Pvt) Ltd. for

a consideration of Rs. 136,693,775. Accordingly Share of net assets of equity-accounted investees has been

classified as assets held for sale under Note 13.

6.2 Share of the Joint Venture’s Statement of Financial Position

Group


2015/16Rs.

Non-current assets – 60,500,956

Current assets – 117,282,100

Non-current liabilities – (11,861,134)

Current liabilities – (47,691,159)

Net assets – 118,230,763


Group


2015/16Rs.

6.3 Share of Joint Venture’s Revenue and ProfitRevenue 339,769,327 368,583,777

Cost of services (138,634,603) (153,899,026)

Gross profit 201,134,724 214,684,751

Other income 2,016,179 3,441,807

Expenses (152,371,521) (157,201,306)

Profit before tax 51,574,502 60,925,252

Income tax expenses (9,816,370) (10,564,288)

Profit for the year 40,963,012 50,360,964

Other comprehensive income – 128,487

40,963,012 50,489,451

Dividend – (22,500,000)

40,963,012 27,989,451

7. Advance for Land

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

Advance for land – 952,343,085 – –

This represents a payment of Rs. 952,343,085/- paid by New Nawaloka Hospitals (Pvt) Ltd. to Nawaloka

Construction Company (Pvt) Ltd. which is a related party due to common Directorship to buy a land in Wattala.

The land was sold by the Nawaloka Construction (Pvt) Ltd., during the year and a amount of

Rs. 500,000,000/- has been paid back to New Nawaloka Hospitals (Pvt) Ltd. Further balance Rs. 452,343,085/-

is due to be settled of the receivable amount has been transferred to Related Party receivable balance from

Nawaloka Constructions (Pvt) Ltd.


Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

8. InventoriesPharmaceutical items 377,406,217 396,204,933 174,455,155 140,407,087

General stocks 18,198,427 14,912,150 6,609,040 5,723,147

Provision for slow-moving inventories (3,330,269) (2,000,000) (3,330,269) (2,000,000)

392,274,375 409,117,083 177,733,926 144,130,234

9. Trade and Other ReceivablesTrade receivables 645,592,369 465,020,367 384,992,389 289,833,552

Provision for bad and doubtful debts (47,924,175) (46,168,101) (41,143,428) (39,387,355)

597,668,194 418,852,266 343,848,961 250,446,197

ESC recoverable 51,272,284 46,394,997 29,009,049 37,277,411

Other debtors 55,728,002 53,770,909 42,352,831 32,195,405

704,668,480 519,018,172 415,210,841 319,919,013

10. Deposits and Advances Import control 1,429,365 77,333,650 937,594 17,408,157

Staff loans 16,242,191 3,919,393 17,015,784 2,554,200

Pre-payments 33,716,605 46,867,947 33,716,605 46,867,947

Other deposit and advances 101,029,663 64,230,672 68,944,316 57,418,873

152,417,824 192,351,662 120,614,299 124,249,177

11. Receivables from Related PartiesAlcobronz (Pvt) Ltd. – 5,000,000 – –

Battaramulla Medical Centre 323,860 – 1,831,048 1,054,365

Dehiwala Medical Centre 10,848 10,651 10,847 10,651

East West Marketing (Pvt) Ltd. 21,130,502 20,731,658 1,518,220 1,119,377

Ja-Ela Medical Centre 189,936 – 189,936 –

Kandana Medical Centre 223,157 117,965 223,157 117,965

Kiribathgoda Medical Centre 4,734,256 2,364,551 8,252,397 5,358,496

Karapitiya Medical Centre 9,789,063 5,832,570 9,789,064 5,832,570

Panadura Medical Centre 44,310,391 10,353,330 44,310,391 10,353,330

Sasiri Polysacks (Pvt) Ltd. 3,400,000 3,400,000 3,400,000 3,400,000

Kottawa Medical Centre 1,024,808 499,164 1,042,136 508,859

Moratuwa Medical Centre 3,190 2,797 3,190 2,797

Mount Lavinia Medical Centre 403,848 – 403,848 403,259

Nawaloka Aviation (Pvt) Ltd. 150,000 621,932 150,000 621,932

Nawaloka College of Higher Studies 71,693,700 64,793,701 71,693,700 64,793,701

Nawaloka Construction Company (Pvt) Ltd. 483,784,789 29,181,230 12,207,543 12,207,543


Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

Nawaloka Medicare (Pvt) Ltd. – – 8,436,210 17,770,108

Nawaloka Guardian International (Pvt) Ltd. – 1,806,750 – 1,806,750

Sarjah Polysacks (Pvt) Ltd. 22,429,200 22,429,200 22,429,200 22,429,200

New Nawaloka Hospitals (Pvt) Ltd. – – 413,177,741 245,810,857

New Nawaloka Medical Centre (Pvt) Ltd. – – 1,840,431,921 1,842,326,479

Wattala Medical Centre – 75,000 – 75,000

Overseas Medial Centre – 36,858,853 – 36,858,853

Nawaloka Care (Pvt) Ltd. 2,278,353 – 2,278,353 –

Nawaloka Premier Centre 633,674 – 633,674 –

644,775,455 204,079,352 2,442,412,574 2,272,862,092

Provision for doubtful Receivables (21,738,120) – (21,738,120) –

666,513,575 204,079,352 2,420,674,454 2,272,862,092

12. Short-Term Investments – Fixed Deposits Hatton National Bank PLC 474,669,945 427,886,374 335,427,387 321,319,481

DFCC Bank PLC 225,000,000 – 225,000,000 –

Commercial Bank PLC 295,000,000 – 250,000,000 –

994,669,945 427,886,374 810,427,387 321,319,481

13. Assets Held for SaleShare of net assets of equity accounted investees

classified as held for sale 159,193,775 – 2,500,000 –

(-) Provision for impairment (Note 13.1) (22,500,000) –

136,693,775 – 2,500,000 –

13.1 Provision for ImpairmentImpairment charge for the year 22,500,000 – – –

22,500,000 – – –

Nawaloka Hospitals PLC signed a Memorandum of understanding (MOU) with Metropolis Healthcare Ltd.

(JV Partner) on 31st March 2017 to dispose 250,000 ordinary shares of Nawaloka Metropolis Laboratories (Pvt)

Ltd. held by Nawaloka Hospitals PLC to Nawaloka Metropolis Laboratories (Pvt) Ltd. for a consideration of

Rs. 136,693,775.

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

14. Stated Capital 1,409,505,596 ordinary shares 1,207,388,876 1,207,388,876 1,207,388,876 1,207,388,876


Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

15. Revaluation ReserveBalance as at 1st April 990,872,361 990,872,361 – –

Revaluation during the year 341,579,922 – 53,536,819 –

Deferred tax impact on revaluation gain (40,989,591) – (6,424,418) –

Balance as at 31st March 1,291,462,692 990,872,361 47,112,401 –

16. Debentures

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

Debentures 1,488,820,927 1,484,104,507 1,488,820,927 1,484,104,507

During the financial year 2013/14, the Company has issued 15 Mn rated unsecured redeemable debentures at a par value of

Rs. 100/- and its allocation is as follows:

Class Issue Coupon Rate

%

Listing Status

Interest Payable Frequency

Issued Date

Maturity Date

Quantity

Nos.

Consideration Received

Rs.

Value as at 31st March

2017Rs.

ComparativeGovernmentBonds Rates

%

Yield to Maturity

%

A Public 14.15 Listed Quarterly 9.30.2013 9.30.2018 10,427,900 1,042,790,000 1,036,186,759 8.65 11.09

B Public 14.15 Listed Quarterly 9.30.2013 9.30.2019 2,696,000 269,600,000 267,244,661 11.17 13.33

D Public 14.35 Listed Quarterly 9.30.2013 9.30.2021 1,645,500 164,550,000 162,628,539 11.55 11.96

E Public 14.40 Listed Quarterly 9.30.2013 9.30.2022 120,000 12,000,000 11,848,596 11.77 12.14

F Public 14.45 Listed Quarterly 9.30.2013 9.30.2023 110,600 11,060,000 10,912,373 11.80 12.47

15,000,000 1,500,000,000 1,488,820,927

16.1 Market Summary

Class HighestRs.

Lowest Rs.

Last TradedRs.

Traded Quantity

Last Traded Date

A – – – – –

B 111.80 111.80 111.80 1,000,000 16.11.2015

D – – – – –

E – – – – –

F – – – – –

16.2 Purpose of the Issue

Purpose of the debenture issue is for funding the construction of a multi storied building with car park facilities,

Channelling, Out Patient Department and Indoor admission facilities adjoining the existing hospital building and to

restructure the balance sheet by re-financing the existing loans.


16.3 Credit Ratings

ICRA Lanka Ltd., has affirmed Nawaloka Hospitals PLC’s long and short-term corporate credit ratings as

SLA-(Stable) which is read as [SL] A(-).

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

17. Employee Benefits The amount recognised in the Statement of Financial Position

Present value of defined benefit obligations 185,742,508 184,237,790 161,288,200 166,252,434

17.1 Movement in the Present Value of Defined Benefit Obligations (PV DBO) Liability for defined benefit obligation at 1st April 184,237,790 170,953,704 166,252,434 158,673,474

Current service cost (Note 17.2) 18,634,699 17,186,421 10,543,008 10,456,863

Interest cost (Note 17.2) 20,148,489 16,240,600 18,287,768 15,073,980

Actuarial (gain)/losses on PV DBO (Note 17.3) (12,896,688) 309,060 (12,032,425) 1,354,898

Payments made (24,381,782) (20,451,995) (21,762,585) (19,306,781)

Liability for defined benefit obligation at 31st March 185,742,508 184,237,790 161,288,200 166,252,434

17.2 Amount Recognised in Income Statement Company service cost 18,634,699 17,186,421 10,543,008 10,456,863

Interest cost 20,148,489 16,240,600 18,287,768 15,073,980

38,783,188 33,427,021 28,830,776 25,530,843

17.3 Amounts Recognised in Other Comprehensive IncomeActuarial (gain)/losses recognised during the year (12,896,688) 309,060 (12,032,425) 1,354,898

17.4 Employee Benefits as at 31st March 2017 is calculated based on an actuarial valuation carried out by

Mr. Piyal Gunathilaka, a qualified actuary.

As recommended by the Sri Lanka Accounting Standard (LKAS) 19 – ‘Employee Benefits’ the Projected Unit

Credit (PUC) method has been used in this valuation.

17.5 Actuarial Assumptions

As at 31st March 2016/17 2015/16

Retirement age 55 Years 55 Years

Discount rate 12.00% 11.00%

Salary increment rate 8% 8%


17.6 Sensitivity Analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other

assumptions constant, would have affected the defined benefit obligation by the amounts shown below:

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

1% Increase in discount rate 213,364,749 175,998,868 160,094,126 160,094,126

1% decrease in discount rate 200,636,376 190,361,468 172,964,081 172,964,081

1% increase in salary increment rate 199,623,705 190,152,570 172,778,065 172,778,065

1% decrease in salary increment rate 214,344,715 176,074,128 160,159,514 160,159,514

17.7 The above provision is not externally funded.

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

18. Deferred Tax LiabilityDeferred tax liability (Other) 353,796,572 305,060,480 132,875,865 92,347,774

Deferred tax liability (Revaluation reserve) 40,989,591 - 6,424,418 -

394,786,163 305,060,480 139,300,283 92,347,774

Balance as at 1st April 305,060,480 227,899,587 92,347,774 119,113,956

Originating/(Reversal) during the year 89,725,683 77,160,893 46,952,509 (26,766,182)

Balance as at 31st March 394,786,163 305,060,480 139,300,283 92,347,774

18.1 Deferred Tax Provision as at the Year end is Made up as follows:Deferred tax provision from

Temporary differences of Property, Plant & Equipment 450,309,816 414,670,547 226,725,271 199,927,963

Temporary differences of retirement provision on gratuity (22,018,423) (21,980,170) (19,354,584) (19,950,292)

Tax loss carried forward (74,494,822) (87,629,897) (74,494,822) (87,629,897)

Revaluation reserve 40,989,591 - 6,424,418 –

394,786,163 305,060,480 139,300,283 92,347,774

18.2 Originating during the Year Statement of other comprehensive income (Note 18.4) 42,542,473 (27,860) 7,868,309 (162,588)

Statement of comprehensive income (Note 18.3) 47,183,210 77,188,753 39,084,200 (26,603,594)

89,725,683 77,160,893 46,952,509 (26,766,182)

18.3 Amount Recognised in Comprehensive Income Originating during the year 47,183,210 77,188,753 39,084,200 (26,603,594)

47,183,210 77,188,753 39,084,200 (26,603,594)


Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

18.4 Amount Recognised in Other Comprehensive Income Deferred tax impact on defined benefits plan actuarial (gain)/losses 1,552,882 (27,860) 1,443,891 (162,588)

Deferred tax impact on revaluation reserve 40,989,591 – 6,424,418 –

42,542,473 (27,860) 7,868,309 (162,588)

18.5 Unrecognised Deferred Tax Assets

Deferred tax assets have not been recognised in respect of the following items, because it is not probable that

future taxable profit will be available against which the Group can use the benefits therefrom.

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

Tax losses 448,927,096 53,871,252 448,927,096 53,871,252

448,927,096 53,871,252 448,927,096 53,871,252

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

19. Borrowings DFCC Bank loan 313,445,406 410,149,446 313,445,406 410,149,446

BOC 682,144,395 304,704,983 682,144,395 304,704,983

Commercial Bank 1,141,706,143 994,894,896 1,107,929,843 988,572,636

Sampath Bank PLC 1,848,201,300 1,628,417,300 1,848,201,300 1,628,417,300

Nations Lanka PLC 41,000,000 59,000,000 41,000,000 59,000,000

Hatton National Bank loans 1,479,622,625 199,527,425 86,720,000 125,000,000

5,506,119,869 3,596,694,050 4,079,440,944 3,515,844,365

Borrowings falling due within one year (1,585,642,845) (594,325,684) (1,193,521,260) (545,401,924)

Borrowings falling due after one year 3,920,477,024 3,002,368,366 2,885,919,684 2,970,442,441

19.1 Borrowings Opening balance as at 1st April 3,596,694,050 1,620,415,481 3,515,844,365 1,571,624,741

Loans obtained during the year 2,704,448,257 2,828,645,181 1,311,994,217 2,697,409,436

Loans paid during the year (795,022,438) (852,366,612) (748,397,638) (753,189,812)

Closing balance as at 31st March 5,506,119,869 3,596,694,050 4,079,440,944 3,515,844,365


19.2 Details of loans obtained by the Group are set out below:

Financial Institution

Repayment Terms

Principal

Rs.

InterestRate

%

Security AnnualRepayment

Rs.

Balance as at 31.03.2017

Rs.

Long-term Loan Nawaloka Hospitals PLC

DFCC Bank 59 equal

monthly

installments of

Rs. 7,503,114/-

450,000,000 AWPLR+1.25% Primary concurrent mortgage

over leasehold rights of the land

and building situated at Sir James

Peiris Mawatha and Sugathodaya

Mawatha owned by Nawaloka

Hospitals PLC and New Nawaloka

Hospitals (Pvt) Ltd.

Joint and several guarantees of

Directors – Mr. H K J Dharmadasa,

Mr. Ugitha Harshith Dharmadasa and


90,037,368 270,112,078

DFCC Bank 60 equal

monthly

installments of

Rs. 1,666,667/-

100,000,000 AWPLR+1.25% Primary concurrent mortgage

over leasehold rights of the land

and building situated at Sir James

Peiris Mawatha and Sugathodaya

Mawatha owned by Nawaloka

Hospitals PLC and New Nawaloka

Hospitals (Pvt) Ltd.




Mr. Anisha Givantha Dharmadasa.

6,666,672 43,333,328

Bank of

Ceylon

To be repaid

60 equal

installments

363,000,000 AWPLR+0.5% Joint and several guarantees of




61,060,584 108,470,755

Bank of

Ceylon

60 equal

monthly

installments of

Rs. 3,166,667/-

190,000,000 AWPLR+0.5% Joint and several guarantees of




38,000,004 105,673,640

Sampath

Bank

60 equal

monthly

installments of

Rs. 9,166,667/-

550,000,000 AWPLR+1% Loan agreement for

Rs. 550,000,000/-, corporate

guarantee of Nawaloka Construction

Company (Pvt) Ltd. for

Rs. 550,000,000/-

110,000,400 439,999,600



Repayment Terms

Principal

Rs.

InterestRate

%


Rs.


Rs.

Sampath

Bank

72 equal

monthly

installments of

Rs. 13,888,889/-

1,000,000,000 AWPLR+1% Loan agreement for

Rs. 1,000,000,000/-

Assignment over credit card

receivables for Rs. 1,000,000,000/-

including the Assignment over

credit card receivables for

Rs. 1,000,000,000/- including

the receivables of the existing

hospital operations and the car

park,channelling centre and

new rooms of the proposed

building complex.

Corporate guarantee of the


for Rs. 1 Bn

97,216,000 902,784,000

Sampath

Bank

36 equal

monthly

installments of

Rs. 1,083,300/-

39,000,000 AWPLR+1% Loan agreement for

Rs. 39,000,000/- Primary

Mortgage Bond over machinery

for Rs. 39,000,000/-

Undertaking to mortgage

over Machinery.

12,999,600 5,417,700

Sampath

Bank

72 equal

monthly

installments of

Rs. 6,994,500/-

500,000,000 AWPLR+1% Loan Agreement for

Rs. 500,000,000/-

Assignment over credit card

receivables for Rs. 1,000,000,000/-

and Rs. 500,000,000/- including

the receivables of the existing

Hospital Operations and the car

park,channeling centre and new

rooms of the New Building Complex.

– 500,000,000



Repayment Terms

Principal

Rs.

InterestRate

%


Rs.


Rs.

Commercial

Bank

First 24 months

Rs. 12,500,000,

Next 35 months

19,400,000

& Final

Rs. 21,000,000

installments

1,200,000,000 AWPLR+1% Primary mortgage Bond over

debit and credit card sales

for Rs. 1,200,000,000/- to be

executed over the card sales of

the total hospital operations,

corporate guarantee from New

Nawaloka Hospitals (Pvt) Ltd. for

Rs. 500,000,000/- to be signed

by the Directors of the Company,

corporate guarantee from New

Nawaloka Medical Centre (Pvt)

Ltd. for Rs. 500,000,000/- to

be singed by the directors of the

Company, General Terms and

Conditions relating to Term Loan for

Rs. 1,000,000,000/- to be signed by

the Directors of the Company.

16,137,010 1,107,929,843

HNB Monthly rollover

basis

50,000,000 AWPLR+1% Money market loan 50,000,000 –

HNB Monthly rollover

basis

75,000,000 AWPLR+1% Money market loan 75,000,000 –

HNB Short-Term Loan 260,000,000 FD rate+1.5% Lien over fixed deposit

No. 003300082684 for Rs. 292.0 Mn

of the Company.

173,280,000 86,720,000

Bank of

Ceylon

Money Market

Loan

1,000,000,000 AWPLR (Monthly

review)





– 468,000,000


HNB 60 equal

monthly

installments of

Rs. 3,333,400

200,000,000 AWPLR+1.25% Join and Several guarantee

of Mr. H K J Dharmadasa,

Mr. U H Dharmadasa and

Mr. A G Dharmadasa.

Existing Primary Concurrent

Mortgage Bond for Rs. 390.0 Mn

(HNB – Rs. 260.0 Mn, Seylan

Rs. 130.0 Mn) over leasehold

Nawaloka Hospitals premises.

40,000,800 11,202,625



Repayment Terms

Principal

Rs.

InterestRate

%


Rs.


Rs.

HNB 48 equal

monthly

installments of

Rs. 416,000/-

20,000,000 AWPLR+1.25% Join and Several guarantee

of Mr. H K J Dharmadasa,

Mr. U H Dharmadasa and

Mr. A G Dharmadasa.

Existing Primary Concurrent

Mortgage Bond for

Rs. 390.0 Mn (HNB – Rs. 260.0 Mn,

Seylan Rs. 130.0 Mn) over leasehold


4,992,000 12,512,000

HNB 48 equal

monthly

installments of

Rs. 136,000/-

6,500,000 AWPLR+1.25% Existing Primary Concurrent

Mortgage Bond for

Rs. 390.0 Mn (HNB – Rs. 260.0 Mn,

Seylan Rs. 130.0 Mn) over leasehold


1,632,000 4,188,000


HNB 59 equal

monthly

installments of

Rs. 16,660,000/-

1,000,000,000 AWPLR+1.25% Corporate guarantee of Nawaloka

Hospitals for Rs. 1,000.0 Mn

corporate guarantee of New

Nawaloka Hospitals (Pvt) Ltd.

for Rs. 1,000.0 Mn

– 1,000,000,000

HNB To be settled

in full out of

the proposed

term Loan of

Rs. 1.0 Bn

200,000,000 AWPLR+2% Board resolution – 200,000,000

HNB To be settled

in full out of

the proposed

term Loan of

Rs. 1.0 Bn

80,000,000 AWPLR+1.75% Clean – 80,000,000

HNB To be settled in

full out of the

proposed term

Loan of

Rs. 1.0 Bn

85,000,000 AWPLR+1.75% Clean – 85,000,000.00


Bank Over Draft

Nawaloka Hospitals PLC Closing Balance as at 31.03.2017

Rs.

Principal

Rs.

InterestRate

%

Hatton National Bank (500,004,279) 410,000,000 AWPLR+1.5% Corporate guarantee of New Nawaloka Hospitals

(Pvt) Ltd. for Rs. 75 Mn.

DFCC Bank (88,875,523) 90,000,000 AWPLR+0.75% Joint and several guarantees of Directors –

Mr. H K J Dharmadasa, Mr. Ugitha Harshith

Dharmadasa and Mr. Anisha Givantha Dharmadasa

Sampath Bank (38,851,342) 50,000,000 AWPLR+1.5% Overdraft Agreement for Rs. 50,000,000/-.

Joint and Several Guarantee of

Mr. H K J Dharmadasa, Mr. U H Dharmadasa

and Mr. A G Dharmadasa – Directors of the

Company for Rs. 50,000,000/-.


Hatton National Bank (90,200,217) 100,000,000 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.

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

20. Finance Leases Finance lease liability 108,000,000 116,000,000 – –

Finance leases payable within one year (8,000,000) (8,000,000) – –

Finance leases payable after one year 100,000,000 108,000,000 – –

Finance leases payable between 1 to 5 years 40,000,000 40,000,000 – –

Finance leases payable more than five years 60,000,000 68,000,000 – –

100,000,000 108,000,000 – –

20.1 Finance Leases Opening balance as at 1st April 116,000,000 124,000,000 – –

Lease paid during the year (8,000,000) (8,000,000) – –

Closing balance as at 31st March 108,000,000 116,000,000 – –


Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

21. Trade Creditors and Other PayablesTrade payables 662,703,759 334,144,474 638,023,073 328,819,183

Doctors payable 1,507,284 1,718,808 1,507,284 1,718,808

Other payables 140,530,664 151,096,481 88,864,029 93,843,790

804,741,707 486,959,763 728,394,387 424,381,781

22. Current Tax LiabilitiesBalance as at 1st April 24,765,638 2,250,608 – –

Under/(Over) provision during prior year (4,583,423) (990,683) – –

Provision for the year (Note 28.1) 18,680,733 33,020,131 – –

Income tax paid during the year (22,552,242) (9,514,418) – –

Balance as at 31st March 16,310,706 24,765,638 – –

23. Payable to Related PartiesNawaloka Metropolis Laboratories (Pvt) Ltd. 202,866,585 14,725,333 192,011,548 8,747,060

Battaramulla Medical Centre – 209,014 – –

Mount Lavinia Medical Centre 2,491,914 661,571 – –

Nawaloka Aviation (Pvt) Ltd. 526,134 – – –

Nawaloka Guardian International (Pvt) Ltd. 12,236,716 – 12,236,716 –

218,121,349 15,595,918 204,248,265 8,747,060

Group Company

For the Year ended at 31st March 2016/17Rs.

2015/16Rs.

2016/17Rs.

2015/16Rs.

24. RevenueHospital revenue 4,243,305,086 3,907,597,012 1,556,503,541 1,845,366,168

Pharmacy revenue 2,056,605,350 1,952,621,149 1,011,659,322 987,829,551

6,299,910,436 5,860,218,161 2,568,162,863 2,833,195,719

Group


2015/16Rs.

24.1 Geographic Segment AnalysisColombo 5,644,670,048 5,384,753,436

Gampaha 655,240,388 475,464,745

6,299,910,436 5,860,218,161


Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

25. Other IncomeDividend income – – 113,100,000 22,500,000

Interest on fixed deposits 58,776,371 30,384,641 43,775,648 13,734,180

Profit on sale of Property, Plant & Equipment – 7,006,687 – 7,006,687

Sundry income 64,463,269 50,800,087 50,746,615 37,150,282

Rent 5,912,513 6,303,825 5,362,513 6,303,825

129,152,153 94,495,240 212,984,776 86,694,974

26. Profit from OperationsEmoluments paid to Directors 80,774,760 76,820,061 80,774,760 76,820,061

Auditors’ remuneration – Audit services 2,220,000 2,020,000 775,000 705,000

Depreciation and amortisation 540,272,942 479,732,756 344,323,559 326,152,985

Staff costs 1,182,222,763 992,907,444 541,234,720 462,458,524

Employees' Provident Fund 94,187,446 93,534,592 49,850,207 44,891,706

Employees' Trust Fund 23,547,298 23,390,181 12,462,552 11,230,031

Charge/(Reversal) of provision for bad debts 1,756,074 3,272,625 1,756,074 8,006,844

Provision for employee benefits 25,886,500 32,974,736 16,798,351 25,530,843

Provision for doubtful related party receivable 21,738,120 – 21,738,120 –

Provision for slow moving inventory 1,330,269 2,000,000 1,330,269 2,000,000

Charity and donation 4,832,416 4,480,289 4,832,416 4,283,789

Impairment for other receivable balance – 42,758,125 – 41,528,139

Impairment for equity accounted investee classified

as assets held for sale 22,500,000 – – –

Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

27. Finance CostsOverdraft interest 66,382,907 37,848,420 53,962,155 26,030,496

Debenture interest 217,358,700 216,727,641 217,358,700 216,727,641

Lease and loan interest 166,105,857 111,704,749 156,059,730 106,868,737

Bank charges 1,797,073 6,036,551 1,126,714 5,669,039

451,644,537 372,317,361 428,507,298 355,295,913

28. Income Tax Expenses Income tax on current year profit (Note 28.1) 18,680,733 33,020,131 – –

Under/(over) provision during prior year (4,583,423) (990,684) – –

(Reversal from)/transfer to deferred taxation (Note 18.3) 47,183,210 77,188,753 39,084,200 (26,603,594)

61,280,520 109,218,200 39,084,200 (26,603,594)


Group Company


2015/16Rs.

2016/17Rs.

2015/16Rs.

28.1 Reconciliation of Accounting Profit and Taxable Profit Profit/(loss) before tax 302,155,203 315,252,428 (397,596,642) (154,169,093)

Inter company dividend – – (113,100,000) –

Aggregate expenses disallowed for tax 666,803,113 497,294,327 509,316,316 414,803,679

Aggregate Income not liable for tax (59,223,342) (48,512,436) (28,454,171) (43,240,867)

Aggregate deductible expenses for tax (646,694,379) (516,234,025) (355,599,245) (466,781,873)

Adjustments for tax losses 400,755,219 254,195,117 400,755,219 254,195,117

(Profit)/loss exempt from tax (526,095,447) 251,197,109 – –

Tax loss utilised during the year (15,321,477) (4,806,963) (15,321,477) (4,806,963)

Taxable income for the year 122,378,888 245,991,339 – –

Income tax 12 % 14,685,467 25,753,816 – –

Income tax @ 28% (12,926,966 * 28%) 3,995,267 7,266,315 – –

18,680,733 33,020,131 – –

28.2 Reconciliation of Tax Losses Tax losses brought forward 673,352,633 423,964,479 673,352,633 423,964,479

Tax loss utilised during the year (15,321,477) (4,806,963) (15,321,477) (4,806,963)

Loss for the year of assessment 400,755,219 254,195,117 400,755,219 254,195,117

Tax loss carried forward 1,058,786,375 673,352,633 1,058,786,375 673,352,633

29. Earnings/(Loss) per ShareThe Company’s earnings/(loss) per share is based on the profit/(loss) attributable to the ordinary shareholders

and the weighted average number of ordinary shares outstanding during the year.

Group Company

For the year ended 31st March 2016/17 2015/16 2016/17 2015/16

Profit/(loss) for the year (Rs.) 240,874,683 206,034,228 (436,680,842) (127,565,499)

Weighted average number of ordinary shares

in issue during the year 1,409,505,596 1,409,505,596 1,409,505,596 1,409,505,596

Earnings/(loss) per share (Rs.) 0.17 0.15 (0.31) (0.09)


30. Related Party TransactionsThe Company carries out transactions in the ordinary course of its business with parties who are defined as

related parties in Sri Lanka Accounting Standard (LKAS) 24 – ‘Related Party Disclosures’, the details of which

are reported below. The pricing applicable to such transactions is based on the assessment of risk and pricing

model of the Company and is comparable with what is applied to transactions between the Company and its

unrelated customers.

30.1 Transactions with Subsidiaries – Company

Name of the Company New Nawaloka Hospitals (Pvt) Ltd.



Shareholding 100% 100% 100%

2016/17Rs. ’000

2015/16Rs. ’000

2016/17Rs. ’000

2015/16Rs. ’000

2016/17Rs.

2015/16Rs.

Opening balance due (to)/from

subsidiaries 245,811 167,276 425,808 352,980 17,770 699,207

Share issue – – – – – (771,052)

Provision of services 6,345 328,380 302,382 (224,681) (10,029) (2,183)

Cost of pharmaceutical and

general stores items 792,759 601,580 419,861 215,705 18,930 77,505

Fund transfer (1,458,092) (851,425) 692,801 81,804 (18,235) 14,293

Closing balance due (to)/from

subsidiaries (413,178) 245,811 1,840,432 425,808 8,436 17,770

Directors Mr. H K J Dharmadasa Mr. H K J Dharmadasa Mr. H K J Dharmadasa

Mr. H K U H Dharmadasa Mr. H K U H Dharmadasa Mr. H K U H Dharmadasa

Mr. A G Dharmadasa Mr. A G Dharmadasa

Mrs. A G Chandrasena

Transactions with subsidiaries are carried out in the ordinary course of business except the funding of New

Nawaloka Medical Centre (Pvt) Ltd. to invest on multistoried building with car park facilities. Outstanding current

account balances at year end are unsecured, interest free and settlement occurs in cash. Details of investment in

Car Park Building have been disclosed in Note 30.5.1.


30.2 Transactions with Equity Accounted Investees – Company

Name of the Company Nawaloka Metropolis Laboratories (Pvt) Ltd.

Shareholding 50%

2016/17Rs. ’000

2015/16Rs. ’000

Opening balance due (to)/from equity accounted investees 8,747 8,057

Dividend received (22,500) (22,500)

Provision of services (25,420) (21,610)

Joint venture company collection transfer (200,576) (355,061)

Transfer revenue 432,207 399,861

Closing balance due (to)/from equity accounted investees 192,458 8,747

Transactions with jointly controlled entities are carried out in the ordinary course of the business.

Outstanding current account balances at year end are unsecured, interest free and settlement occurs in cash.

30.3 Transactions with Key Management Personnel

According to Sri Lanka Accounting Standard (LKAS) 24 – ‘Related Party Disclosures’, Key Management Personnel,

are those having authority and responsibility for planning, directing and controlling the activities of the entity.

Accordingly, the Board of Directors (including Executive and Non-Executive Directors) of Nawaloka Hospitals PLC

have been classified as Key Management Personnel of the Company.

Group Company

For the Year ended at 31st March 2016/17Rs. ’000

2015/16Rs. ’000

2016/17Rs. ’000

2015/16Rs. ’000

30.3.1 Compensation of Key Management PersonnelShort-term employee benefits 80,775 76,820 80,775 76,820

Post-employment benefits – – – –

Other long-term benefits – – – –

Termination benefits – – – –

Share based payments – – – –

80,775 76,820 80,775 76,820


30.4 Transactions with Other Related Entities Company

Name of the Company YearOpening Balance

Due (to)/from

Rs. ’000

Rendering of Services/

Sale of Goods

Rs. ’000

Receiving of Services/

Purchase of Goods

Rs. ’000

Fund Transfer

Rs. ’000

Closing Balance

due (to)/from

Rs. ’000

Nawaloka Construction Co. (Pvt) Ltd. 2017 12,208 (500,000) – 500,000 12,208

2016 9,708 – – 2,500 12,208

Nawaloka Aviation (Pvt) Ltd. 2017 622 – 1,679 (2,151) 150

2016 414 1,659 (1,451) 622

Nawaloka Medical Centers (Pvt) Ltd. 2017 13,364 13,364

2016 4,870 19,066 – (10,572) 13,364

Nawaloka College of Higher Studies (Pvt) Ltd. 2017 64,794 – 7,200 (300) 71,694

2016 64,794 – – – 64,794

East West Marketing (Pvt) Ltd. 2017 1,119 (858) 105 1,152 1,518

2016 – – (6,723) 7,842 1,119

Nawaloka Polysacks Sharjah U.A.E 2017 22,429 – – – 22,429

2016 26,429 – – (4,000) 22,429

Sasiri Polysacks (Pvt) Ltd. 2017 3,400 – – – 3,400

2016 – – – 3,400 3,400

Koala (Pvt) Ltd. 2017 (1,637) (33,851) 33,978 (1,510)

2016 (3,515) (38,983) 40,861 (1,637)

Ceyoka (Pvt) Ltd. 2017 (41,591) – (211,196) 197,225 (55,562)

2016 (36,653) – (202,797) 197,859 (41,591)

Ceyoka Engineering (Pvt) Ltd. 2017 (418) – (7,748) 8,303 137

2016 – – (5,767) 5,349 (418)

Sikure Security Services (Pvt) Ltd. 2017 (2,440) 82 (23,845) 24,676 (1,527)

2016 (1,100) 49 (17,607) 16,218 (2,440)

Nawaloka Petroleum (Pvt) Ltd. 2017 – – (10,415) 10,415 –

2016 – – (240) 240 –

The amount payable to Nation Lanka Finance PLC is the remaining balance of the loan taken to acquire

the investment property (Note 4) in 2014/15. Outstanding current account balances at year end are unsecured,

interest free and settlement occurs in cash.

30.5 Non-Recurrent Related Party Transactions

Name of the Company Relationship

Transaction value Entered During

2015/16 Rs.

Transaction as a %

of Equity

Transaction as a % of

Total AssetsTerms and Conditions

Rationale for Entering into the

Transaction

New Nawaloka Medical Centre (Pvt) Ltd. Subsidiary 2,243,870,980 50% 16% Note 30.5.1 Note 28.5.1


30.5.1 New Nawaloka Medical Centre is a fully-owned

subsidiary of the Company, which is located next to the

Company and operated as a single business unit under

Nawaloka Hospitals brand name. Nawaloka Hospitals

assist to construction of multistoried building with car

park facilities, Channelling, Out Patient Department

& Indoor admission facilities adjoining the existing

hospital building of the subsidiary. Construction of

the new car park would beneficial to the subsidiary

as well as the Company by allowing more patients to

access the Company and its subsidiary. Repayment

of the investment would occur after commencing the

operations of the car park building.

30.6 Recurrent Related Party Transactions

There were no other recurrent related party

transactions which in aggregate value exceeds 10% of

the consolidated revenue of the Company as in 31st

March 2017 audited Financial Statements, except the

transactions between New Nawaloka Hospitals (Pvt)

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

which are fully owned subsidiaries of the Company. The

two subsidiaries are situated in the same premises and

operated under the Nawaloka Hospitals brand name with

the Company and therefore revenue and the expenses

could occur mutually. However, the net transactions

value with those companies does not exceed 10% of the

consolidated revenue of the Company.

30.7 Transactions, Arrangement and Agreements Involving KMP and Their Close Family Members (CFM)

CMF of a KMP are those family members who be

expected to influence, or be influenced by, that individual

in their dealings with the entity. They may includ:

(a) The individual’s domestic partner and children;

(b) Children of the individual’s domestic partner; and

(c) Dependents of the individual or the individual’s

domestic partner CFM are related parties to the entity.

There were no transaction with CFM during the year.

31. Changes in ClassificationTo facilitate comparison, relevant balances pertaining

to the previous year, have been reclassified to conform

to current year’s classification and presentation.

32. Capital CommitmentsNawaloka Hospitals construct a multistoried building

with car park facilities, Channelling, Out Patient

Department & Indoor admission facilities adjoining

the existing hospital building of the subsidiary with

Rs. 1,249,234,452 to be invested.

33. Contingent LiabilitiesThere are no material Contingent Liabilities as at

the reporting date, which require adjustment to or

disclosure in the Financial Statements.

Claims for Damages have been made by the

plaintiff by a appeal against the judgement entered in

case numbers WP/HCCA/COL/181-2010(F) in the High

Court of the Civil Appeal. Based on the information

and current status of the above Cases, the Company

is not in a position to quantify the potential financial

impact if any, as at the reporting date although the

Management does not expect any significant outflow

to arise from these cases.

There were no material contingent liabilities

existed as at 31st March 2017 other than above.

34. Events after the Reporting DateNo circumstances have arisen since the reporting

period end which would require adjustment to or

disclosure in, other than those described below.

Nawaloka Hospitals PLC signed a Memorandum of

understanding (MOU) with Metropolis Healthcare

Limited (JV Partner) on 31 March 2017 to dispose

250,000 ordinary shares of Nawaloka Metropolis

Laboratories (Pvt) Ltd held by Nawaloka Hospitals PLC

which will be effective from 1st April 2017.

35. 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.


36. Accounting Classifications and Fair ValuesThe following methods and assumptions were used to

estimate the fair values:

zz Cash and short-term deposits, trade and other

receivables, trade and other payables approximate

their carrying amounts largely due to the short-term

maturities of these instruments.

zz Fair value of quoted equity shares is based on price

quotations at the reporting date.

zz Long-term loans and finance leases approximate

their carrying amount.

Fair value Hierarchy

The Group uses the following hierarchy for determining

and disclosing the fair value of financial instruments by

valuation techniques:

Level 1: Quoted (unadjusted) prices in active markets

for identical assets or liabilities.

Level 2: Other techniques for which all inputs that

have a significant effect on the recorded fair value are

observable, either directly or indirectly.

Level 3: Techniques that use inputs that have a

significant effect on the recorded fair value that are

not based on observable market data.

36.1 Fair Values vs. Carrying Amounts

31st March 2017

Fair Value through

Profit or Loss


Rs.

Available-for-sale

Rs.

Other Financial Liabilities

Rs.

Total Carrying Amount

Rs.

Fair Value

Rs.

Cash and cash equivalents – 1,139,018,631 – – 1,139,018,631 1,139,018,631

Trade and other receivables – 704,668,480 – – 704,668,480 704,668,480

– 1,843,687,111 – – 1,843,687,111 1,843,687,111

Debentures – – – 1,488,820,927 1,488,820,927 1,488,820,927

Borrowings – – – 5,506,119,869 5,506,119,869 5,506,119,869

Finance leases – – – 108,000,000 108,000,000 108,000,000

Trade and other payables – – – 804,741,707 804,741,707 804,741,707

– – – 7,907,682,503 7,907,682,503 7,907,682,503

31st March 2016


Rs.

Available -for-sale

Rs.

Other Financial Liabilities

Rs.

Total Carrying Amount

Rs.

Fair Value

Rs.

Cash and cash equivalents 563,492,144 – – 563,492,144 563,492,144

Trade and other receivables 519,018,172 – – 519,018,172 519,018,172

1,082,510,316 – – 1,082,510,316 1,082,510,316

Debentures – – 1,484,104,507 1,484,104,507 1,484,104,507

Borrowings – – 3,596,694,050 3,596,694,050 3,596,694,050

Finance leases – – 116,000,000 116,000,000 116,000,000

Trade and other payables – – 486,959,763 486,959,763 486,959,763

– – 5,683,758,320 5,683,758,320 5,683,758,320


36.2 Fair Value Hierarchy

Group NoteLevel 1

Rs.Level 2

Rs. Level 3

Rs.Total

Rs.

As at 31st March 2017 Investment property 4 – – 192,414,100 192,414,100

As at 31st March 2016 Investment property 4 – – 192,414,100 192,414,100

37. Financial Instruments

Financial Risk Management

Overview

The Group has exposure to the following risks to

arising from financial instruments.

zz Credit risk

zz Liquidity risk

zz Market risk

This note presents information about the Group’s

exposure to each of the above risks, the Company’s

objectives, policies and processes for measuring and

managing risk and the Groups’ management of capital.

Risk Management Framework

The Board of Directors has overall responsibility for

the establishment and oversight of the Group’s risk

management framework.

The Group’s risk management policies are

established to identify and analyse the risk faced by

the Group, to set appropriate risk limit and controls,

and to monitor risk and adherence to limits. Risk

management policies and systems are reviewed

regularly to reflect changes in market conditions and

the Group’s activities. The Group, through its training

and management standards and procedures, aims

to develop a disciplined and constructive control

environment in which all employees understand their

roles and obligations.

The Group Audit Committee monitors the

process through which business risks are identified for

action by management and for the Board’s attention

and monitors the effectiveness of the Company’s

internal controls. The Audit Committee is assisted in

its role by Internal Audit. Internal Audit undertakes

both regular and ad hoc reviews of controls and

procedures, the results of which are reported to the

Audit Committee.

Credit Risk

Credit risk is the risk of financial loss to the Group if

a customer or counterparty to a financial instrument

fails to meet its contractual obligations and arises

principally from the Group’s receivables from

customers and investment securities.

Exposure to Credit Risk

The carrying amount of the financial assets represents

the maximum credit exposure. The maximum exposure

to credit risk at the reporting date was as follows:

Description 2017

Rs.2015

Rs.

Trade debtors & other receivables 704,668,480 519,018,172

Cash & cash equivalents 144,348,684 135,605,771

Total 849,017,164 654,623,943

Trade and Other Receivables

The Group’s exposure to credit risk is influenced

mainly by the individual characteristics of each

customer. However, management also considers the

demographics of the Group’s customer base, including

the default risk of the industry and country in which

customers operate, as these factors may have an

influence on credit risk.

The Group establishes an allowance for

impairment that represents its estimate of incurred

losses in respect of trade and other receivables. The

main component of this allowance area specific loss

component that relates to individually significant

exposures and a collective loss component established

for Groups of similar assets in respect of losses

that have been incurred but not yet identified. The

collective loss allowance is determined based on

historical data of payments statistics for similar

financial assets.


Impairment Losses

Trade and other receivable at the reporting date was

neither past due nor impaired

Liquidity Risk

Liquidity risk is the risk that the Group will encounter

difficulty in meeting the obligations associated with

its financial liabilities that are settled by delivering

cash or another financial asset. The Group’s approach

to managing liquidity is to ensure, as far as possible,

that it will always have sufficient liquidity to meet its

liabilities when due, under both normal and stressed

conditions, without incurring unacceptable losses or

risking damage to the Group’s reputation.

The Group maintains the level of its cash and

cash equivalents at an amount in excess of expected

cash outflows on financial liabilities (other than trade

payables) over the succeeding 60 days. The Group

also monitors the level of expected cash inflows on

trade and other receivables together with expected

cash outflows on trade and other payables. In addition,

the Group maintains Rs. 515 Mn overdraft facility that is

unsecured. Interest would be payable at market rate.

The disclosure shows net cash flow amounts for

derivatives that are net cash settled and gross cash

inflow and outflow amount for derivatives that have

simultaneous gross cash settlement. It is not expected

that cash flows included in the maturity analysis

would occur significantly earlier or at significantly

different amount.

Market Risk

Market 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 return.

Currency Risk

The Group is exposed to currency risk on receipts,

payments and borrowings that are denominated in a

currency other than Sri Lankan Rupees.

In respect of other monetary assets and liabilities

denominated in foreign currencies, the Company’s

policy is to ensure that its net exposure is kept to

an acceptable level by buying or selling foreign

currencies at spot rates when necessary to address

short-term imbalances.

Interest Rate Risk

The Company does not account for any fixed rate

financial assets and liabilities at fair value through

profit or loss and the Company does not designate

derivatives as hedging instruments under a fair value

hedge accounting model. Therefore, a change in

interest rates at the reporting date would not affect

profit or loss.

Capital Management

The Board’s policy is to maintain a strong capital

base so as to maintain investor, creditor and market

confidence and to sustain development of the

business. Capital consists of ordinary shares, retained

earnings and revaluation reserve of the Company. The

Board of Directors monitors the return on capital as

well as the level of dividends to ordinary shareholders.

The Company’s net debt to adjusted equity ratio

at the reporting date was as follows:

2016/17Rs.

2015/16Rs.

Total liabilities 9,913,502,804 7,198,582,032

Less: Cash and cash

equivalents 144,348,684 135,605,771

Net debt 9,769,154,120 7,062,976,261

Total equity 4,434,605,437 3,994,897,962

Net debt to equity ratio 1.18 1.66

Annexes 191Nawaloka Hospitals PLC Annual Report 2016/17

INDEPENDENT ASSURANCE REPORT

ANNEXES

Independent Assurance Report to Nawaloka Hospitals PLC

We have been engaged by the Directors of Nawaloka Hospitals PLC (‘the Company’) to provide reasonable assurance and limited assurance in respect of the Sustainability Indicators as identified below for the year ended 31st March 2017. The Sustainability Indicators are included in the Nawaloka Hospitals PLC’s Integrated Annual Report for the year ended 31st March 2017 (the ‘Report’).

The Reasonable Assurance Sustainability Indicators covered by our reasonable assurance engagement are:

Assured Sustainability Indicators Integrated Annual Report

Page

Financial Highlights presented under

‘Year at Glance’

6

The Limited Assurance Sustainability Indicators covered by our limited assurance engagement are:

Limited Assurance Sustainability Indicators Integrated Annual

Report Page

Non-Financial Highlights presented under ‘Year

at Glance’

7

Information provided on following stakeholder

groups:

– Shareholders – Financial Capital and

Investor Capital

32-35, 39-41

– Customers – Customer Capital and

Intellectual Capital

44-55, 36-38

– Environment and Society – Social

and Environmental Capital

79-90

– Employees – Employee Capital 58-75

– Suppliers – Business Partner Capital 76-78

Our Conclusions:

Our conclusion has been formed on the basis of, and is subject to, the matters outlined in this Report.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusions.

Reasonable Assurance Sustainability Indicators

In our opinion, the Reasonable Assurance Sustainability Indicators, as defined above, for the year ended 31st March 2017 are, in all material respects, prepared and presented in accordance with the Global Reporting Initiative (GRI) G4 Content Index Guidelines.

Limited Assurance Sustainability Indicators

Based on the limited assurance procedures performed and the evidence obtained, as described below, nothing has come to our attention that causes us to believe that the Limited Assurance Sustainability Indicators, as defined above, for the year ended 31st March 2017, have not in all material respects, been prepared and presented in accordance with the GRI G4 Content Index Guidelines.

Management’s Responsibility

Management is responsible for the preparation and presentation of the Reasonable Assurance Sustainability Indicators and the Limited Assurance Sustainability Indicators in accordance with the GRI G4 Content Index Guidelines.

These responsibilities includes establishing such internal controls as management determines are necessary to enable the preparation of the Reasonable Assurance Sustainability Indicators and the Limited Assurance Sustainability Indicators that are free from material misstatement whether due to fraud or error.

Management is responsible for preventing and detecting fraud and for identifying and ensuring that the Company complies with laws and regulations applicable to its activities.

Management is also responsible for ensuring that staff involved with the preparation and presentation of the description and Report are properly trained, information systems are properly updated and that any changes in reporting encompass all significant business units.

Our Responsibility

Our responsibility is to express a reasonable assurance conclusion on the Company’s preparation and presentation of the Reasonable Assurance Sustainability Indicators and a limited assurance conclusion on the preparation and presentation of the Limited Assurance Sustainability Indicators included in the Report, as defined above.

We conducted our assurance engagement in accordance with Sri Lanka Standard on Assurance Engagements SLSAE 3000: Assurance Engagements other than Audits or Reviews of Historical Financial Information (SLSAE 3000) issued by The Institute of Chartered Accountants of Sri Lanka.

Annexes192 Nawaloka Hospitals PLC Annual Report 2016/17

We have complied with the independence and other ethical requirements of the Code of Ethics issued by The Institute of Chartered Accountants of Sri Lanka.

SLSAE 3000 requires that we plan and perform the engagement to obtain reasonable assurance about whether the Reasonable Assurance Sustainability Indicators are free from material misstatement and limited assurance about whether the Limited Assurance Sustainability Indicators are free from material misstatement.

Reasonable Assurance over Reasonable Assurance Sustainability Indicators

The procedures selected in our reasonable assurance engagement depend on our judgment, including the assessment of the risks of material misstatement of the Reasonable Assurance Sustainability Indicators whether due to fraud or error.

In making those risk assessments, we have considered internal control relevant to the preparation and presentation of the Reasonable Assurance Sustainability Indicators in order to design assurance procedures that are appropriate in the circumstances, but not for the purposes of expressing a conclusion as to the effectiveness of the Company’s internal control over the preparation and presentation of the Report.

Our engagement also included assessing the appropriateness of the Reasonable Assurance Sustainability Indicators, the suitability of the criteria, being the GRI G4 Content Index Guidelines, used by the Company in preparing and presenting the Reasonable Assurance Sustainability Indicators within the Report, obtaining an understanding of the compilation of the financial and non-financial information to the sources from which it was obtained, evaluating the reasonableness of estimates made by the Company, and re-computation of the calculations of the Reasonable Assurance Sustainability Indicators.

Limited Assurance on the Assured Sustainability Indicators

Our limited assurance engagement on the Limited Assurance Sustainability Indicators consisted of making enquiries, primarily of persons responsible for the preparation of the Limited Assurance Sustainability Indicators, and applying analytical and other procedures, as appropriate. These procedures included:

zz interviews with senior management and relevant staff at corporate and selected site level concerning sustainability strategy and policies for material issues, and the implementation of these across the business;

zz enquiries of management to gain an understanding of the Company’s processes for determining material issues for the Company’s key stakeholder groups;

zz enquiries of relevant staff at corporate and selected site level responsible for the preparation of the Limited Assurance Sustainability Indicators;

zz enquiries about the design and implementation of the systems and methods used to collect and report the Limited Assurance Sustainability Indicators, including the aggregation of the reported information;

zz comparing the Limited Assurance Sustainability Indicators to relevant underlying sources on a sample basis to determine whether all the relevant information has been appropriately included in the Report;

zz reading the Limited Assurance Sustainability Indicators presented in the Report to determine whether they are in line with our overall knowledge of, and experience with, the sustainability performance of the Company;

zz reading the remainder of the Report to determine whether there are any material misstatements of fact or material inconsistencies based on our understanding obtained as part of our assurance engagement.

The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement, and consequently the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. Accordingly, we do not express a reasonable assurance conclusion on the Limited Assurance Sustainability Indicators.

Purpose of Our Report

In accordance with the terms of our engagement, this assurance report has been prepared for the Company for the purpose of assisting the Directors in determining whether the Company’s Reasonable and Limited Assurance Sustainability Indicators are prepared and presented in accordance with the GRI G4 Content Index Guidelines and for no other purpose or in any other context.

Restriction of Use of Our Report

Our Report should not be regarded as suitable to be used or relied on by any party wishing to acquire rights against us other than the Company, for any purpose or in any other context. Any party other than the Company who obtains access to our Report or a copy thereof and chooses to rely on our Report (or any part thereof) will do so at its own risk. To the fullest extent permitted by law, we accept or assume no responsibility and deny any liability to any party other than the Company for our work, for this independent assurance report, or for the conclusions we have reached.

CHARTERED ACCOUNTANTS

25th May 2017 Colombo

M.R. Mihular FCA P.Y.S. Perera FCA C.P. Jayatilake FCA

T.J.S. Rajakarier FCA W.W.J.C. Perera FCA Ms. S. Joseph FCA

Ms. S.M.B. Jayasekara ACA W.K.D.C. Abeyrathne FCA S.T.D.L. Perera FCA

G.A.U. Karunaratne FCA R.M.D.B. Rajapakse FCA Ms. B.K.D.T.N. Rodrigo FCA

R.H. Rajan ACA

Principals - S.R.I. Perera FCMA (UK), LLB, Attorney-at-Law, H.S. Goonewardene ACA

Ms. C.T.K.N. Perera ACMA (UK)

KPMG, a Sri Lankan partnership and a member firm

of the KPMG network of independent member firms

affiliated with KPMG International Cooperative

(”KPMG International”), a Swiss entity.


GRI CONTENT INDEX

Index No. Description Page

External Assurance

General Standard Disclosures

Strategy and AnalysisG4-1 Most senior decision-maker’s statement 11

G4-2 Key impacts, risks and opportunities 130 to 133

Organisational ProfileG4-3 Name of the Organisation 154

G4-4 Primary brands, products and services 47

G4-5 Location of the organisation’s headquarters 154

G4-6 Countries where the organisation operates 5

G4-7 Nature of ownership and legal form 154

G4-8 Markets served 49

G4-9 Scale of the reporting organisation 6 and 7

G4-10 Total workforce by employment type, age, gender and region 59 to 61

G4-11 Employees covered by collective agreements 71

G4-12 Organisation’s supply chain 38 and 78

G4-13 Changes during the reporting period regarding size, structure or ownership 4

G4-14 How the precautionary approach or principle is addressed by the organisation 4

G4-15 Externally developed economic, environmental and social charters, principles

or other initiatives

78

G4-16 List of memberships of associations 78

Identified Material Aspects and BoundariesG4-17 List of all entities included in the organisation’s consolidation Financial Statements 154

G4-18 Process of defining the report content 27

G4-19 List of all material aspects identified in the process for defining report content 27 and 28

G4-20 Aspect boundary within the organisation 4

G4-21 Aspect boundary outside the organisation 4

G4-22 Restatements of previous information 4

G4-23 Significant changes to the scope and boundary from previous reporting periods 4

Stakeholder EngagementG4-24 List of stakeholder groups engaged by the orgnaisation 25 and 26

G4-25 Basis of identification and selection of stakeholders with whom to engage 24

G4-26 Organisation’s approaches to stakeholder engagement, including frequency

of engagement by type and by stakeholder group

25 and 26

G4-27 Key topics and concerns that have been raised through stakeholder engagement 25 and 26

Report ProfileG4-28 Reporting period 4

G4-29 Date of most recent previous report 4

G4-30 Reporting cycle 4

G4-31 Contact point regarding the report 4

G4-32 Compliance with GRI G4 guidelines 4

G4-33 Policy and current practice with regard to external assurance

GovernanceG4-34 Governance structure of the organisation 108 and 109

Ethics and IntegrityG4-56 Organisation’s values, principles, standards and norms of behaviour 38

Annexes194 Nawaloka Hospitals PLC Annual Report 2016/17GRI Content Index


External Assurance

Specific Standard Disclosures

Category: EconomicAspect: Economic Performance

G4-EC1 Economic value generated and distributed 35

G4-EC3 Coverage of the organisation’s defined benefit plan obligations 154

G4-EC4 Financial assistance from Government 35

Category: Environmental Aspect: Materials

G4-EN1 Materials used by weight or volume 83 and 84

Aspect: Energy

G4-EN3 Energy consumption within the organisation 84 and 85

G4-EN6 Reductions in energy consumption 84 and 85

Aspect: Water

G4-EN8 Total water withdrawn by source 85 and 86

G4-EN9 Water sources significantly affected by withdrawal of water 85 and 86

Aspect: Biodiversity

G4-EN11 Operational sites owned, leased, managed in or adjacent to protected areas

and areas of high biodiversity

90

Aspect: Emissions

G4-EN15 Direct GHG emissions (scope 1) 87

G4-EN19 Reduction of GHG emissions 87

Aspect: Effluents and Waste

G4-EN22 Total water discharge by quality and destination 86 and 88

G4-EN23 Total weight of waste by type and disposal method 86 and 88

Aspect: Compliance

G4-EN29 Monetary value of significant fines and non-monetary sanctions 90

Category: SocialSubcategory: Labour Practices and Decent Work

Aspect: Employment

G4-LA1 Number and rates of new employee hires and employee turnover 62

G4-LA2 Benefits provided to full-time employees 69 and 70

G4-LA3 Return to work and retention rates after parental leave 66 and 69

Aspect: Labour/ Management Relations

G4-LA4 Minimum notice periods regarding operational changes 72

Aspect: Occupational Health and Safety

G4-LA6 Type of injury, rates of injury, occupational diseases, lost days, absenteeism

and total number of work related fatalities

73

G4-LA7 Workers with high incidence or high risk of diseases related to their occupation 72 and 73

Aspect: Training and Education

G4-LA9 Average hours of training 66

G4-LA10 Programmes for skills management 63 to 66

G4-LA11 Regular performance and career development reviews 66 to 68

Aspect: Diversity and Equal Opportunity

G4-LA12 Composition of governance bodies and breakdown of employees per employee

category by gender, age and other indicators of diversity

61

Aspect: Equal Remuneration for Women and Men

G4-LA13 Ratio of basic salary and remuneration of women to men 71

Annexes 195Nawaloka Hospitals PLC Annual Report 2016/17 GRI Content Index


External Assurance

Aspect: Labour Practices /Grievance Mechanisms

G4-LA16 Grievances about labour practices 74

Subcategory: Human Rights

Aspect: Non-discrimination

G4-HR3 Incidents of discrimination and corrective actions taken 74

Aspect: Freedom of Association and Collective Bargaining

G4-HR4 Violation of exercise freedom of association or collective bargaining from Suppliers 74

Aspect: Child Labour

G4-HR5 Incidents of child labour 75

Aspect: Forced or Compulsory Labour

G4-HR6 Incidents of forced or compulsory labour 75

Aspect: Human Rights Grievance Mechanisms

G4-HR12 Grievance about human rights impacts 75

Category: SocialSubcategory: Society

Aspect: Local Communities

G4-SO1 Engagement with local community 79 to 82

Aspect: Anti-corruption

G4-SO3 Operations assessed for risks related to corruption 55

G4-SO5 Confirmed incidents of corruption and actions taken 55

Aspect: Anti-competitive Behaviour

G4-SO7 Legal actions for anti-competitive behavior, anti-trust and monopoly practices

and other outcomes

55

Aspect: Compliance

G4-SO8 Monetary value of fines and non-monetary sanctions for non-compliance with laws and

regulations

55

Category: SocialSubcategory: Product Responsibility

Aspect: Customer Health and Safety

G4-PR1 Product and service categories for which health and safety impacts are assessed

for improvement

54

G4-PR2 Incidents of non-compliance with regulations and voluntary codes concerning

the health and safety impacts of products and services

54

Aspect: Product and Service Labeling

G4-PR3 Product and service information and labelling 53

G4-PR4 Incidents of non-compliance with regulations and voluntary codes concerning product

and service information and labelling

53

G4-PR5 Customer satisfaction surveys 51

Aspect: Marketing Communications

G4-PR6 Sale of banned or disputed products 54

G4-PR7 Incidents of non-compliance with regulations and voluntary codes concerning

marketing communications

54

Aspect: Customer Privacy

G4-PR8 Complaints regarding breaches of customer privacy and losses of customer data 54

Aspect: Compliance

G4-PR9 Monetary value of significant fines for non-compliance with laws and regulations

concerning the provision and use of products and services

54


TEN YEAR STATISTICAL SUMMARY

2016/17 2015/16 2014/15 2013/14 (Restated)

2012/13 2011/12 2010/11 2009/10 2008/09 2007/08

Group

Income Statement Data

Revenue 6,299,910,436 5,860,218,161 4,602,433,640 3,993,473,302 4,222,907,733 3,710,878,442 3,233,035,096 2,884,449,093 2,512,350,553 2,244,462,718

Cost of services (2,997,276,079) (2,906,572,342) (2,331,583,775) (1,910,510,751) (2,013,392,367) (1,823,670,511) (1,645,969,580) (1,442,227,937) (1,306,238,370) (1,230,247,634)

Gross profit 3,302,634,357 2,953,645,819 2,270,849,865 2,082,962,551 2,209,515,366 1,887,207,931 1,587,065,516 1,442,221,156 1,206,112,183 1,014,215,084

Other operating income 129,152,153 94,495,240 65,199,571 64,194,796 44,047,999 30,210,657 38,603,398 19,811,729 10,337,940 8,121,944

Profit from operations 712,836,728 637,208,825 352,342,610 475,165,536 599,414,193 459,028,530 324,001,074 415,343,605 294,511,336 270,011,694

Net profit after taxation 240,874,683 206,034,228 87,470,836 208,953,909 452,260,028 270,686,563 1,070,722,130 97,411,122 (108,502,591) (46,557,898)

Balance Sheet Data

Shareholders’ funds 4,434,605,437 3,994,897,962 3,887,681,839 3,902,955,947 3,756,665,160 3,170,442,180 2,970,230,897 1,903,329,941 1,963,001,143 1,309,669,677

Financial Ratios

Gross profit ratio (%) 52 50 49 52 52 51 49 50 48 45

Net profit ratio (%) 4 4 2 5 11 7 33 3 (4) (2)

Increase in revenue (%) 8 27 15 -5 14 15 12 15 12 13

Return on capital employed (%) 5.43 5.16 2.25 5 12 9 36 5 (6) (4)

Current asset ratio 0.83 0.89 1.03 1.11 0.71 0.58 0.43 0.74 0.62 0.79

Quick asset ratio 0.73 0.70 0.80 0.85 0.48 0.42 0.29 0.63 0.51 0.68

Return on assets 0.02 0.02 0.01 0.03 0.08 0.05 0.24 0.02 (0.03) (0.02)

Debt/equity ratio 1.37 1.27 0.84 0.58 0.25 0.28 0.23 0.63 0.60 0.66

Earnings/(loss) per share (Rs.) 0.17 0.15 0.06 0.15 0.32 0.19 0.76 0.14 (0.15) (0.07)

Net assets per share (Rs.) 3.15 2.83 2.76 2.77 2.67 2.25 2.11 2.70 2.79 1.86

Dividend per share (Rs.) 0.08 0.07 0.06 0.05 0.05 0.05 – – – 0.07

Company


Revenue 2,568,162,863 2,833,195,719 2,497,830,914 2,112,827,471 2,082,532,459 1,806,857,492 1,608,036,836 1,459,181,099 1,607,719,271 1,482,115,865

Cost of services (1,359,482,350) (1,490,055,615) (1,229,903,547) (957,537,962) (988,218,793) (876,040,195) (767,116,507) (747,982,289) (837,431,514) (820,592,033)

Gross profit 1,208,680,513 1,343,140,104 1,267,927,367 1,155,289,509 1,094,313,666 930,817,297 840,920,329 711,198,810 770,287,757 661,523,832



Net profit after taxation (436,680,842) (127,565,499) 89,938,006 107,751,965 254,942,375 152,363,098 98,822,914 19,315,469 8,694,800 17,939,751

Balance Sheet Data

Shareholders’ funds 974,254,815 1,466,336,065 1,693,759,266 1,704,925,831 1,660,056,411 1,496,177,022 1,414,289,204 1,350,703,926 1,331,388,457 1,330,619,252

Financial Ratios


Net profit ratio (%) (17) (5) 4 5 12 8 6 1 1 1

Increase in revenue (%) (9) 13 18 1 15 12 10 (13) (4) (11)

Return on capital employed (%) (45) (9) 5 6 15 10 7 1 1 1



Return on assets (0.05) (2) 2 2 7 0.05 0.05 0.01 0.00 1


Earnings/(loss) per share (Rs.) (0.31) (0.09) 0.06 0.08 0.18 0.11 0.07 0.03 0.01 0.03

Net assets per share (Rs.) 0.69 1.04 1.20 1.21 1.18 1.06 1 1.92 1.89 1.89



2016/17 2015/16 2014/15 2013/14 (Restated)

2012/13 2011/12 2010/11 2009/10 2008/09 2007/08

Group


Revenue 6,299,910,436 5,860,218,161 4,602,433,640 3,993,473,302 4,222,907,733 3,710,878,442 3,233,035,096 2,884,449,093 2,512,350,553 2,244,462,718

Cost of services (2,997,276,079) (2,906,572,342) (2,331,583,775) (1,910,510,751) (2,013,392,367) (1,823,670,511) (1,645,969,580) (1,442,227,937) (1,306,238,370) (1,230,247,634)

Gross profit 3,302,634,357 2,953,645,819 2,270,849,865 2,082,962,551 2,209,515,366 1,887,207,931 1,587,065,516 1,442,221,156 1,206,112,183 1,014,215,084



Net profit after taxation 240,874,683 206,034,228 87,470,836 208,953,909 452,260,028 270,686,563 1,070,722,130 97,411,122 (108,502,591) (46,557,898)

Balance Sheet Data

Shareholders’ funds 4,434,605,437 3,994,897,962 3,887,681,839 3,902,955,947 3,756,665,160 3,170,442,180 2,970,230,897 1,903,329,941 1,963,001,143 1,309,669,677

Financial Ratios


Net profit ratio (%) 4 4 2 5 11 7 33 3 (4) (2)

Increase in revenue (%) 8 27 15 -5 14 15 12 15 12 13

Return on capital employed (%) 5.43 5.16 2.25 5 12 9 36 5 (6) (4)



Return on assets 0.02 0.02 0.01 0.03 0.08 0.05 0.24 0.02 (0.03) (0.02)


Earnings/(loss) per share (Rs.) 0.17 0.15 0.06 0.15 0.32 0.19 0.76 0.14 (0.15) (0.07)

Net assets per share (Rs.) 3.15 2.83 2.76 2.77 2.67 2.25 2.11 2.70 2.79 1.86


Company


Revenue 2,568,162,863 2,833,195,719 2,497,830,914 2,112,827,471 2,082,532,459 1,806,857,492 1,608,036,836 1,459,181,099 1,607,719,271 1,482,115,865

Cost of services (1,359,482,350) (1,490,055,615) (1,229,903,547) (957,537,962) (988,218,793) (876,040,195) (767,116,507) (747,982,289) (837,431,514) (820,592,033)

Gross profit 1,208,680,513 1,343,140,104 1,267,927,367 1,155,289,509 1,094,313,666 930,817,297 840,920,329 711,198,810 770,287,757 661,523,832



Net profit after taxation (436,680,842) (127,565,499) 89,938,006 107,751,965 254,942,375 152,363,098 98,822,914 19,315,469 8,694,800 17,939,751

Balance Sheet Data

Shareholders’ funds 974,254,815 1,466,336,065 1,693,759,266 1,704,925,831 1,660,056,411 1,496,177,022 1,414,289,204 1,350,703,926 1,331,388,457 1,330,619,252

Financial Ratios


Net profit ratio (%) (17) (5) 4 5 12 8 6 1 1 1

Increase in revenue (%) (9) 13 18 1 15 12 10 (13) (4) (11)

Return on capital employed (%) (45) (9) 5 6 15 10 7 1 1 1



Return on assets (0.05) (2) 2 2 7 0.05 0.05 0.01 0.00 1


Earnings/(loss) per share (Rs.) (0.31) (0.09) 0.06 0.08 0.18 0.11 0.07 0.03 0.01 0.03

Net assets per share (Rs.) 0.69 1.04 1.20 1.21 1.18 1.06 1 1.92 1.89 1.89


Ten Year Statistical Summary


(Rs. ’000)

Balance Sheet Data

2016/17 2015/16

As at 31.03.2017 31.12.2016 30.09.2016 30.06.2016 31.03.2016 31.12.2015 30.09.2015 30.06.2015

Total non-current assets 11,178,260 10,888,125 10,218,952 9,798,348 9,305,422 8,074,725 7,473,547 7,256,086

Shareholders’ funds 4,434,605 4,050,871 4,000,791 4,040,226 3,994,898 4,007,520 3,912,429 3,945,092


For the three months ended Total 31.03.2017 31.12.2016 30.09.2016 30.06.2016 Total 31.03.2016 31.12.2015 30.09.2015 30.06.2015

Revenue 6,299,910 1,590,953 1,648,963 1,599,452 1,460,642 5,860,218 1,473,316 1,575,942 1,448,821 1,362,139

Gross profit 3,302,634 927,815 834,148 807,669 733,002 2,953,646 743,900 789,191 732,248 688,307

Net Profit before tax 302,155 60,093 109,411 84,323 48,328 315,252 15,436 135,903 90,003 73,910

Ordinary Share Information

Nominal value per share Rs. 1.00

Market price per share (Rs.) 31.03.2017 31.12.2016 30.09.2016 30.06.2016 31.03.2016 31.12.2015 30.09.2015 30.06.2015

High 4.70 4.80 4.80 5.00 3.70 3.70 3.90 3.20

Low 4.20 4.30 4.60 3.40 3.10 3.00 2.90 2.90

Closing 4.70 4.50 4.60 4.10 3.50 3.30 3.60 3.10

Financial Measures

31.03.2017 31.12.2016 30.09.2016 30.06.2016 31.03.2016 31.12.2015 30.09.2015 30.06.2015

Return on shareholders’ funds (%) 1.86 2.15 2.10 1.20 0.39 3.39 2.30 1.87

Net assets per share (Rs.) 3.15 2.87 2.84 2.87 2.83 2.84 2.78 2.80

QUARTERLY STATISTICS


CORPORATE INFORMATION

NAME OF THE COMPANY


COMPANY REGISTRATION NO.

PQ 78

REGISTERED OFFICE

No. 23, Deshamanya H K Dharmadasa Mawatha, Colombo 00200, Sri Lanka.

Telephone+94 115 577 111, +94 112 304 444-56

Telefax+94 112 430 393

[email protected]

Websitewww.nawaloka.com

LEGAL FORM

Quoted Public Company with limited liability incorporated in Sri Lanka under the Companies Ordinance 1938 and reregistered under the Companies Act No. 07 of 2007.

BOARD OF DIRECTORS

1. Mr. H K Jayantha Dharmadasa (Chairman & CEO)

2. Mr. Rienzie T Wijetilleke (Vice-Chairman)

3. Vidya Jyothi Prof. L G Chandrasena

(Director/General Manager)

4. Deshabandu Tilak de Zoysa

5. Mr. Tissa K Bandaranayake

6. Mr. U H Dharmadasa

7. Mr. A G Dharmadasa

8. Ms. A G Dharmadasa

9. Mr. D Sunil AbeyRatna

10. Mr. Palitha Kumarasinghe PC

11. Mr. V Ramanan

SECRETARIES TO THE COMPANY

M & A Company Secretaries (Private) Limited, No. 28 (Level 2), W A D Ramanayake Mawatha, Colombo 00 200.

AUDITORS

KPMG

Chartered Accountants,

No. 32A, Sir Mohamed Macan Markar Mawatha,

Colombo 00 300.

LAWYER(S)

Nithi Murugesu & Associates Attorneys-at-Law & Notaries Public, No. 28 (Level 2), W A D Ramanayake Mawatha, Colombo 00 200.

BANKERS

Hatton National Bank PLC

Sampath Bank PLC

Commercial Bank of Ceylon PLC

Bank of Ceylon

DFCC Bank

Peoples’ Bank

Cargills Bank

SUBSIDIARIES




JOINT VENTURE

Nawaloka Metropolis Laboratories (Pvt) Ltd. (Joint venture until 31st March 2017)


NOTICE OF MEETING

Notice is hereby given that the 28th Annual General Meeting of NAWALOKA HOSPITALS PLC will be held at the Committee Room of the ‘BMICH’ (Bandaranaike Memorial International Conference Hall) at Bauddhaloka Mawatha, Colombo on Friday the 30th day of June 2017 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 Statements for the year ended 31st March 2017 together with the Report of Auditors thereon;

2. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/re-appoint Mr. Rienzie T Wijetilleke (who is currently 77 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in Section 210 of the said Act, shall not apply to him and subject to his rotation;

3. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/re-appoint Vidya Jyothi Professor Lal Chandrasena (who is currently 71 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in Section 210 of the said Act, shall not apply to him and subject to his rotation;

4. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/re-appoint Deshabandu Tilak De Zoysa (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, not withstanding him having exceeded the age of 70 years and to declare that the age limit referred to in Section 210 of the said Act, shall not apply to him and subject to his rotation;

5. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/re-appoint Mr. Tissa K Bandaranayake (who is currently 74 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;

6. To re-elect Directors as follows:

(a) Re-elect, as a Director, in terms of Article 74 of the Articles of Association of the Company 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 of the Articles of Association of the Company Mr. Rienzie T Wijetilleke who retires by rotation and offers himself for re-election;

(c) Re-elect, as a Director, in terms of Article 74 of the Articles of Association of the Company Vidya Jyothi Professor Lal Chandrasena who retires by rotation and offers himself for re-election;

7. To authorise the Board of Directors to determine and make donations to charities;

8. To re-appoint Messrs KPMG (Chartered Accountants) as Auditors of the Company and authorise the Board of Directors to determine their remuneration; and

9. To transact any other business of which due notice has been given.


Sgd.

M & A Company Secretaries (Pvt) Ltd.

Company Secretaries

25th May 2017

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 28th June 2017 (Forty-Eight hours prior to the Meeting).

3. A person representing a Corporation is required to carry a certified copy of the Resolution authorising him/her to act as the Representative of the Corporation. A representative need not be a member.

4. A person representing a shareholder as the Attorney (Power of Attorney) is required to carry the original or a certified copy of the said Power of Attorney.

5. The Transfer books of the Company will be kept open.


FORM OF PROXY

I/We ………………………………………………………………………………………...........................................…… (NIC/Passport No.) ……...................……………………………………………

of …………………………………………………………………………………………………………………………………………………........……................…………… being a member/members

of NAWALOKA HOSPITALS PLC hereby appoint:

Mr. H K J Dharmadasa or failing him

Mr. Rienzie T Wijetilleke or failing him

VidyaJyothi Prof. Lal Chandrasena or failing him

Deshabandu Tilak de Zoysa or failing him

Mr. Tissa K Bandaranayake or failing him

Mr. U H Dharmadasa or failing him

Mr. A G Dharmadasa or failing him

Ms. A G Dharmadasa or failing her

Mr. D Sunil AbeyRatna or failing him

Mr. Palitha Kumarasinghe PC or failing him

Mr. Victor Rajamanner Ramanan or failing him

as *my/our Proxy to ** …………………………………………… (NIC/Passport No.) ……………………………… vote as indicated hereunder for me*/us on my*/our behalf at the Annual General Meeting of the Company to be held on the 30th June 2017 at 10.00 a.m. at the Committee Room of the ‘BMICH’ (Bandaranaike Memorial International Conference Hall) at Bauddhaloka Mawatha, Colombo and at any adjournment thereof and at every poll which may be taken in consequence thereof.

For Against

i. To receive and consider the Report of the Board of Directors on the Affairs of the Company and the Financial Statement for the year ended 31st March 2017, together with the Report of Auditors thereon

ii. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/re-appoint Mr. Rienzie T Wijetilleke (who is currently 77 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in Section 210 of the said Act, shall not apply to him and subject to his rotation;

iii. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/re-appoint Vidya Jyothi Prof. Lal Chandrasena (who is currently 71 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in Section 210 of the said Act, shall not apply to him and subject to his rotation;

iv. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/re-appoint Deshabandu Tilak De Zoysa (who is currently 70 years) and who retires at the end of the Annual General Meeting, as a Director until the next Annual General Meeting, notwithstanding him having exceeded the age of 70 years and to declare that the age limit referred to in Section 210 of the said Act, shall not apply to him and subject to his rotation;

v. To resolve in terms of Section 211 of the Companies Act No. 07 of 2007 to appoint/re-appoint Mr. Tissa K Bandaranayake (who is currently 74 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;

vi. To re-elect Directors as follows:

a. Re-elect, as a Director, in terms of Article 74 of the Articles of Association of the Company 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 of the Articles of Association of the Company Mr. Rienzie T Wijetilleke who retires by rotation and offers himself for re-election;

c. Re-elect, as a Director, in terms of Article 74 of the Articles of Association of the Company Vidya Jyothi Prof. Lal Chandrasena who retires by rotation and offers himself for re-election;

vii. To authorise the Board of Directors to determine and make donations to charities;

viii. To re-appoint Messrs KPMG (Chartered Accountants) as Auditors of the Company and authorise the Board of Directors to determine their remuneration; and

ix. To transact any other business of which due Notice has been given.

In witness*my/our hands this …………… day of ……………… Two Thousand and Seventeen.

…………...........................…………… Signature of Shareholder/s

Note:

a *Please delete the inappropriate words.

b **If you wish your Proxy to speak at the meeting you should interpolate the words ‘Speak and’ in the place indicated with and initial such interpolation.


Instructions as to Completion

1. In terms of Article 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 of

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 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 jointholding 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 jointholders 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 jointholding.

4. In case of a Jointholding 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.

Na

wa

lok

a H

osp

itals P

LC

An

nu

al R

ep

ort 2

016

/17

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

Tel: +94 115 577 111, +94 112 304 444-56 Fax: +94 112 430 393www.nawaloka.com

Health

ZdrowieOsasun

SaúdeSanoZdravljeTendûrûstîEgészség

SundhedVeselība

Heilsa

Saћћa Kesihatan

Salute

CaafimaadkaZdravie

Terveys

Sănătate

Kalusugan

GesondheetZdravie3дрaвљe

Дeн соолук

3дaрoўe ΥγείαSog'lik

TervisLafiya

Kasehatan

ImpiloLechyd

UtanoFahasalamana

3дрaвje

HauoraShëndetësor

SağlamlιqДен сooлyқ

BopheloSoifua Maloloina AfyaЭpγγл Μэнд

Salud

Helse SlàinteHälsa

Caлoмaти

fi!LH


- A Rich Heritage

halt hälsa hls là it - colombo stock exchangenawaloka metropolis laboratories (pvt) ltd....

Documents