L REPORT 2014 L A ANNU ANNUAL REPORT 2014 ׀ THE LANKA HOSPITALS CORPORATION PLC THE LANKA HOSPITALS CORPORATION PLC 2 ANNUAL REPORT 2014 Being an award winning and accredited business is not a novel thing for us at Lanka Hospitals. From our inception, we have always gone above and beyond what was expected of us as a healthcare provider and we have been recognised through the years for being more than just a business. This year, we celebrate another feather in our cap… or more significantly, a crowning glory, in the form of the distinguished JCI accreditation, which has only been awarded to 23 hospitals in Asia. This gold seal of honour has been bestowed to us after stringent measures and testing of our processes which must be above par in order to be ranked among the elite all over the world. We have been lauded as possessing the best in quality, care and safety, a fact no doubt, echoed by many who look to us for the best in healthcare. This is indeed a reflection of how WE do things… with attention to detail, a commitment to excellence and above all, the resilience which sees us evolve and grow with the times. conTEnTs COMPAnY ovErviEW 10 Financial Highlights 14 An Outstanding Profile 16 Chairman’s Review 20 Chief Executive Officer’s Review 30 Board of Directors 42 Exco Members MAnAgEMEnT rEviEW 43 Management Discussion & Analysis 63 Corporate Social Responsibility 68 Risk Management 71 Corporate Governance 82 Remuneration Committee Report 2 THE LANKA HOSPITALS CORPORATION PLC ANNUAL REPORT 2014 FinAnciAl rEPorTs 84 Financial Calendar 85 Annual Report of the Board of Directors on the Affairs of the Company 91 Statement of Responsibility of Directors 93 Report of the Audit Committee 95 Independent Auditor’s Report 96 Statement of Comprehensive Income 97 Statement of Financial Position 98 Statement of Changes in Equity - Group 99 Statement of Changes in Equity - Company 100 Consolidated Statements of Cash Flow 101 Notes to the Consolidated Financial Statements 146 Shareholder and Investor Information 149 Ten Year Financial Summary 151 Notice of Annual General Meeting 152 Corporate Information 155 Form of Proxy THE LANKA HOSPITALS CORPORATION PLC 3 ANNUAL REPORT 2014 in 2014 WE JoinED An EliTE groUP oF HosPiTAls AroUnD THE WorlD, JUsT 450 oF THEM WEAring THE croWn oF THE golD sEAl oF APProvAl conFErrED BY THE JoinT coMMission inTErnATionAl (Jci). 4 THE LANKA HOSPITALS CORPORATION PLC ANNUAL REPORT 2014 #1 WE WErE THE FirsT HosPital in sri lAnkA WHosE lABoratorY was cErTiFiED WiTH THE iso 15189:2007 stanDArD - An inTErnationAllY rEnoWnED sET oF qUAliTY stanDArDs, sPEciFicAllY DEsignED To facilitate AnD AFFirM parTicUlAr rEqUirEMEnTs For qUAliTY AnD coMPETEncE in MEDicAl lABoratoriEs. THE LANKA HOSPITALS CORPORATION PLC 5 ANNUAL REPORT 2014 oUr cAsE sTUDY on ‘A THriving BUsinEss MoDEl in THE State sEcTor - THE lAnkA HosPitals sTorY’ was ADJUDgED THE 1sT rUnnErs UP at THE ciMA BUsinEss cAsE AwarDs 2013. 6 THE LANKA HOSPITALS CORPORATION PLC ANNUAL REPORT 2014 lAnkA HosPitals was A rEciPiEnT oF THE gloBAl PErForMAncE ExcEllEncE AwarD in 2013 (gPEA). WE ArE THE onlY HosPital To HAvE EvEr Won THE gPEA in THE HigHEsT categorY, WHicH is rEnoWnED As A WorlD clAss awarD. THE LANKA HOSPITALS CORPORATION PLC 7 ANNUAL REPORT 2014 lAnkA HosPitals was rEcognisED at THE “THE Bizz 2014” awarDs orgAnisED BY THE WorlD conFEDEration oF BUsinEss & awarDED THE TiTlE, “WorlD BUsinEss lEADEr” For BEing A sUccEssFUl lEADEr WHo Works in An innovativE, knoWlEDgEABlE AnD sYstematic MAnnEr. 8 THE LANKA HOSPITALS CORPORATION PLC ANNUAL REPORT 2014 WE rEcorDED A 85% patiEnT satisfacTion rate in 2014 THE LANKA HOSPITALS CORPORATION PLC 9 ANNUAL REPORT 2014 FinAnciAl HigHligHTs FivE YEAr sUMMArY 2014 2013 2012 2011 2010 Company Company Company Company Company Revenue Rs. 4,491,554,590 4,071,914,867 3,405,864,503 2,917,656,708 2,517,569,878 Profit before interest & tax Rs. 504,936,835 607,686,338 337,091,890 339,326,265 277,298,829 Profit after tax Rs. 565,405,520 688,913,083 386,056,467 436,617,791 289,143,723 Total Assets Rs. 5,766,532,849 5,099,710,859 4,367,568,505 4,008,926,466 3,655,399,477 Net Assets Rs. 4,550,524,177 4,058,971,539 3,629,179,249 3,354,677,540 2,730,002,259 Annual revenue growth % 10% 20% 17% 16% 33% Net cash flow from operating activities Rs. 693,751,526 790,758,939 578,975,022 521,872,749 415,578,722 EBITDA Rs. 733,888,487 828,701,544 592,208,172 561,207,813 477,379,446 Profitability indicators Gross profit margin 57% 58% 55% 57% 56% Operating Profit Margin 11% 15% 10% 12% 11% Net Profit Margin 13% 17% 11% 15% 11% Return on Capital Employed 11% 15% 12% 11% 11% liquidity & Debt ratios Current Ratio 2.23 2.44 3.11 2.67 1.77 Quick Ratio 1.92 2.19 2.78 2.31 1.57 Gearing ratio N/A N/A N/A N/A 0.82 Interest Cover N/A N/A N/A 261.19 45.75 Equity Dividend per share Rs. 0.50 2.00 0.5 N/A N/A Dividend pay out 0.20 0.65 0.29 N/A N/A Earnings per share Rs. 2.53 3.08 1.73 1.96 1.29 Net Assets Per share Rs. 20.34 18.14 16.22 14.99 12.28 The Comparative Audited figures have been adjusted in accordance with the new adoption of SLFRS. 10 THE LANKA HOSPITALS CORPORATION PLC ANNUAL REPORT 2014 revenue Profit After Tax Net Assets Rs. Mn Rs. Mn Rs. Mn 5,000 800 5,000 4,500 700 4,500 4,000 4,000 600 3,500 3,500 3,000 500 3,000 2,500 400 2,500 2,000 300 2,000 1,500 1,500 200 1,000 1,000 500 100 500 0 Year 0 Year 0 Year 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 In the year 2014, Lanka Hospitals recorded the In the year 2014, Lanka Hospitals recorded the From year 2010 to 2014, Net Assets have grown highest revenue since its inception. second highest profit after tax in its history. by 67% due to infrastructure developments and technology improvements. REVENUE4.5Bn PROFIT565Mn AFTER TAX E734MnBITDA NET20.34 ASSETS PER REVENUE10% GROWTH EARNINGS2.53 PER SHARE SHARE THE LANKA HOSPITALS CORPORATION PLC 11 ANNUAL REPORT 2014 COMPANY ovErviEW lAnkA HosPitals is A MUlTi-sPEciAlTY TErTiArY cArE HosPital in sri lAnkA AnD is onE oF THE lArgEsT Private HosPitals in THE coUnTrY. THE HosPital WAs coMMissionED in 2002 UnDEr THE BrAnD nAME oF APollo, A PArT oF THE cHAin oF APollo HosPitals FoUnDED BY THE rEnoWn Dr. Pratap c. rEDDY in inDiA. As THE onlY PUrPosE BUilT Private HosPital oF iTs kinD in sri lAnkA, APollo coloMBo rEvolUTionisED sri lAnkA’s HEAlTHcArE sErvicE oFFEr, AnD Today UnDEr THE BrAnD lAnkA HosPitals, WE conTinUE oUr JoUrnEY WiTH A nEW DirEcTion oF Bringing WorlD clAss HEAlTHcArE ExPEriEncE To THE MAssEs oF sri lAnkA AT An AFForDABlE PricE. Today WE ArE consiDErED As THE BEsT HEAlTH cArE FAciliTY in THE coUnTrY. 12 THE LANKA HOSPITALS CORPORATION PLC ANNUAL REPORT 2014 vision StatemenT “To be the foremost and preferred Private Healthcare Facility in the Country, which will serve the Nation and her People to build a healthier community.” Mission StatemenT “To maintain exceptional and compassionate quality while offering cost effective healthcare solutions of international standards.” oUr ProMisE “We believe that every person has the right to be treated with utmost respect and consideration. Therefore at Lanka Hospitals we care about our patients. We care about their families who are anxious and concerned We care about our colleagues and how we as a team provide the best care to our patients. Because we care, we will be sincere, compassionate and sensitive to make a difference in the lives we touch!” EnvironMEntal PolicY We at Lanka Hospitals, as a socially responsible healthcare provider, remain committed to protect our environment and strive to continually improve our systems and methods in a bid to sustain this task. We are committed towards meeting the legal and statutory requirements for environmental protection and we work continuously with our staff, sub-contractors and general public where possible, in all aspects and consistently strive to mitigate all adverse impacts to the environment arising from our day today activities. Awareness and monitoring of the environmental performance is our passion and our motto is to protect the environment for our next generation. THE LANKA HOSPITALS CORPORATION PLC 13 ANNUAL REPORT 2014 An oUTstanDing ProFilE MEDicAl sErvicEs ~ EMERGENCY SERvICES We have notched a record breaking year at our Fertility Center, marking the ~ Heart CENTRE milestone of the birth of the 700th In-vitro Fertilisation (IvF) baby in November ~ SuRGICAL Department 2014. ~ Fertility CENTRE ~ KIDNEY CARE CENTER Our Kidney care center completed both milestones of the 500th and 600th ~ Health CHECK transplant during the year, as well as successfully completing 158 kidney ~ Laboratory SERvICES transplants during the year. ~ RADIOLOGY SERvICES ~ EYE CLINIC ~ MOTHER & BABY CARE Heart Center recorded best revenue performance, posting a growth of 90%. ~ ENT CENTRE ~ Dental CLINIC Realising our competency in the specialty of Gastroenterology and ~ COSMETIC CLINIC conceptualising yet another Center of Excellence, we have now commissioned ~ BLOOD BANK the construction of the most advanced GE Center in Sri Lanka. ~ NuCLEAR MEDICINE CENTER ~ Dermatology During April 2014 a brand new - Siemens Sormation - Definition AS 128 CT ~ ALLERGY CLINIC Machine was installed in our Radiology and Imaging department pioneering 3D ~ PHYSIOTHERAPY CT Images and CT Angiograms.