ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2018/19 Within Reach...Beyond Imagination In offering world class healthcare across a rapidly expanding footprint, we’re bringing an outstanding proposition within reach of more of Sri Lanka...with the propensity for “beyond imagination” outcomes. 1 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2018/19 About this Report REPORT PROFILE COMPLIANCE This is the fourth consecutive Integrated Annual Report of Asiri Hospital The Financial Statements of Asiri Health has been prepared in Holdings PLC (Asiri Health). accordance with the Sri Lanka Accounting Standards issued by The Institute of Chartered Accountants of Sri Lanka. The Company has The report presents a detailed yet concise account of Asiri Health’s value followed additional guidelines as established by the Companies creation process over the short, medium, and long term towards its Act No. 07 of 2007. In particular, we have drawn on concepts, stakeholders. It offers a detailed view of strategy, governance, and capital principles and guidance of the Global Reporting Initiative (GRI) for management; and detailed information about the financial performance sustainability reporting. in the context of surrounding operating environment in 2018/19. The Report addresses all queries pertaining to making sound decisions For governance-related matters, where applicable, we voluntarily about the Group and its activities. comply with the Code of Best Practice on Corporate Governance issued jointly by The Institute of Chartered Accountants of Sri Lanka and the REPORT STRUCTURE Securities and Exchange Commission of Sri Lanka. The Annual Report 2018/19 covers the 12-month period from 1 April 2018 to 31 March 2019, which is consistent with the usual annual BOARD RESPONSIBILITY reporting cycle for financial and sustainability reporting. The most recent The Board of Directors of Asiri Health acknowledges its responsibility report of the Group for the year ended 31 March 2018 is available on our for ensuring integrity of this Report. The Board confirms they have website: http://www.asirihealth.com collectively reviewed the contents of the Report in conjunction with the assurance reports obtained from our various internal and external The Annual Report 2018/19 discusses the strategy, governance, assurance providers including assessments on risk and internal controls. performance and future prospects in context of the value creation process, in a holistic manner. Accordingly, the Board is of the view that this integrated report addresses key material matters to its stakeholders‘ decision-making. REPORT BOUNDARY This Report covers the entirety of operations of Asiri Health which FORWARD-LOOKING STATEMENTS includes – Asiri Surgical Hospital and Asiri Medical Hospital, Certain statements in this Report may constitute forward-looking Asiri Central Hospital, Asiri Hospital Matara, Asiri Hospital Galle, statements. Such statements involve known and unknown risks, Asiri Hospital Kandy, and Asiri Laboratories, which are collectively uncertainties and other important factors that could cause actual referred to as “Group” in this Annual Report. results, performance, or achievements of the Group to be materially different from future results, performance, or achievements expressed or EXTERNAL ASSURANCE implied by such forward-looking statements. The Group undertakes no obligation to update publicly or release any revisions to these forward- The Consolidated Financial Statements and related notes and looking statements to reflect events or circumstances after the date of disclosures published in this Report have been audited by the this document, or to reflect the occurrence of anticipated events. Company’s Independent External Auditor, Messrs Ernst and Young, Chartered Accountants and the Independent Auditor’s Report is given on pages 78 to 80. Internally, the Group has adopted a combined assurance approach, where the report content is reviewed and approved by the Executive Committee, the Audit Committee, and the Board. 2 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2018/19 Contents 04 About Us HOW WE MANAGE 06 Highlights of the Year 56 Board of Directors 08 Group Certifications and Accreditations 60 Group Senior Management Team 62 Group Consultant Medical Team 66 Corporate Governance Report YEAR IN REVIEW 69 Ethics Committee Report 10 Chairman’s Message 70 Audit Committee Report 12 Group CEO’s Review 72 Remuneration Committee Report 73 Related Party Transactions Review Committee Report 74 Statement of Directors’ Responsibility DIVISIONAL REVIEW 75 Annual Report of the Board of Directors 16 Asiri Medical Hospital (AMH) 18 Asiri Surgical Hospital (ASH) 20 Asiri Central Hospital (ACH) FINANCIAL REPORTS 22 Asiri Hospital Matara (AHM) 78 Independent Auditor’s Report 24 Asiri Hospital Galle (AHG) 81 Statement of Profit or Loss 25 Asiri Hospital Kandy (AHK) 82 Statement of Comprehensive Income 26 Asiri Laboratories 83 Statement of Financial Position 84 Statement of Changes in Equity 85 Statement of Cash Flows OUR MODEL 86 Notes to the Financial Statements 30 Healthcare in Sri Lanka 35 Strategy 36 Stakeholders SUPPLEMENTARY INFORMATION 38 How We Do Healthcare 144 Shareholder Information 40 Risk Management 146 Five-Year Summary 148 Notice of Meeting OUR IMPACT Enclosed – Form of Proxy 46 Caring for Patients Inner back cover – Corporate Information 49 Caring for Our People 52 Caring for Communities 53 Caring for the Environment 54 Economic Value Added Statement 3 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2018/19 >> About Us About Us Asiri Health (Asiri Hospital Holdings PLC) continues Vision to be Sri Lanka’s largest private healthcare provider. To be a leading healthcare provider Established in 1986, the Asiri Health Group now boasts in South Asia with highest quality of seven hospitals in three Provinces, and the country’s clinical standards largest private laboratory service – Asiri Laboratories, which offers the widest range of tests, and encompasses one main lab, five hospital labs, 16 satellite labs, and 57 collection centres across the Island. Mission Asiri Health continually invests in infrastructure, To care for and improve the quality expansion, and capacity building. The Group has of human life, through the provision of evolved rapidly over the last decade, doubling its reach ethical healthcare solutions together with while continuing to offer the most advanced clinical cutting-edge technology programmes in the country. We conduct over 2,500 consultations and 13,000 tests every day, and have a capacity of over 700 beds across our hospitals. Values Commitment to quality and safety remains at the core of our ethos. Our hospitals meet global accreditation Care Caring with a human touch standards of Joint Commission International (JCI) and Caring for society Australian Council of Health Standards International Caring for our employees (ACHSI) for quality and patient safety, and our Innovation laboratories have obtained relevant industry-specific Innovation and forward-focus and quality management ISO certifications. Respect Respect for all stakeholders The Group employs, consults, and partners with some of the most dedicated, skilled, and experienced healthcare professionals in Sri Lanka. With ongoing capacity building, training, and development, our employees are abreast of the latest medical practices, and adept at using cutting-edge medical equipment. Our team is the heart of Asiri Health, and an extension of our commitment and care for patients. 13,000+ tests per day 1,500+ consultants 4,000+ tests offered 2,500+ consultations per day 700+ beds 4 >> About Us 5 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2018/19 Highlights of the Year Most valuable healthcare brand 6,989 Brand Finance Report 2019 man-hours of training provided 2 million 1,199 patients served training programmes conducted 13,000+ diagnostic tests conducted per day 37 nurses graduated 70% of discharges from the nursing school reduced to one hour 1,000+ medical professionals benefited by awareness raising workshops 800,590 kWh (5%) 7 workshops electricity conducted for continuous consumption reduced medical education 6,930 Kg (14%) 1,361 increase in recyclable benefited from free items recovered from health clinics non-clinical waste 182 All clinical waste disposed as free health clinics conducted recommended by CEA 6 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2018/19 Highlights of the Year Group 2018/19 2017/18 FINANCIAL PERFORMANCE (LKR MN.) Revenue 13,476 12,025 Operating profit 3,012 2,585 Pre-tax profit 2,367 2,599 Income tax expense 575 699 Net profit 1,792 1,900 FINANCIAL POSITION (LKR MN.) Total assets 26,782 21,730 Borrowings 12,248 10,486 Shareholders’ funds 8,676 7,491 INFORMATION PER ORDINARY SHARE (LKR) Earnings per share (EPS) 1.48 1.53 Dividend per share (DPS) 0.80 0.60 Market price per share 20.20 27.50 Net asset value per share 7.63 6.59 EPS/DPS (LKR) REVENUE (LKR Mn.) 2.50 15,000 2.00 12,000 1.50 9,000 1.00 6,000 0.50 3,000 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 EPS DPS EARNINGS BEFORE INTEREST AND TAX REVENUE BREAKDOWN BY GROUP Asiri Galle Asiri Galle 0.5% 1.5% Asiri Matara Asiri Diagnostics Asiri Matara 3.4% Asiri Diagnostics 1.1% 6.0% 1.1% Central Hospital Asiri Medical 23.9% 30.2% Central Hospital 36.2% Asiri Medical 57.8% Asiri Surgical 13.3% Asiri Surgical 25.0% 7 ASIRI HOSPITAL HOLDINGS PLC ANNUAL REPORT 2018/19 Group Certifications and Accreditations HOSPITALS Accreditation Asiri Asiri Asiri Asiri Asiri Asiri Central Surgical Medical Hospital Hospital Hospital Hospital Hospital Hospital Kandy Galle Matara Joint Commission International (JCI) Accreditation the gold standard in global healthcare, JCI is widely accepted to be the author and evaluator X of the most rigorous international standards in patient safety and quality. CCREDIT ISO 22000:2005 – Food Safety Management A AT S I IS O N W S I S demonstrates the Organisation’s ability to control O s 2 a 7 X X X Y Y Y s 1 2 . 0 0 a 0 0 dm 0 i Sm food safety hazards in order to ensure that food :2005 n.ch SCE is safe.