Responsive Healthcare Responsive Healthcare DURDANS HOSPITAL \ ANNUAL REPORT 2019/20 \ ANNUAL REPORT DURDANS HOSPITAL No. 03, Alfred place, Colombo 03 T +94 (0) 11 214 0000 F +94 (0) 11 257 5302, +94 (0) 11 237 2632 E [email protected] ANNUAL REPORT 2019/20 Corporate Information Name of Company Lawyers Ceylon Hospitals PLC Mr. D. F. R. Jayamaha Hector Jayamaha Law Office No. 228, Thimbirigasyaya Road Brand Name Colombo 05 DURDANS Secretaries Legal Form Nexia Corporate Consultants (Pvt) Ltd A quoted public company with limited liability incorporated in No. 181, Nawala Road Sri Lanka under the Companies Ordinance No. 51 of 1938 and Narahenpita registered under the Companies Act No. 07 of 2007 Registrars Company Registration Number SSP Corporate Services (Pvt) Ltd PQ 113 No. 546, Galle Road Colombo 03 Stock Exchange Listing The Ordinary Shares of the Company are listed on the Colombo Stock Exchange of Sri Lanka Registered Office No. 03, Alfred Place, Colombo 03 Bankers Commercial Bank of Ceylon PLC Bank of Ceylon DFCC Bank PLC Union Bank PLC National Development Bank PLC Nations Trust Bank PLC Seylan Bank PLC Sampath Bank PLC Hatton National Bank PLC People’s Bank Cargills Bank Ltd. Auditors B. R. De Silva & Co. Chartered Accountants No. 22/4, Vijaya Kumaranatunga Mawatha Colombo 05 This report can be accessed online at https://www.durdans.com Responsive Healthcare At Durdans, we know that life is precious and that every moment with your loved ones matter to you. That is why we make your well-being a priority so that you have the freedom to stay safe, healthy and be the best possible version of yourself. As we face one of the most challenging health emergencies in the world during the recent years, we are focused on upholding our promise to protect you and your loved ones by establishing and practicing stringent protocols and precautionary measures that are designed to provide you with an assurance of safety and security amidst this time of uncertainty. As we enter our 75th year of serving you with dedicated care, we are renewing our pledge to deliver exemplary healthcare services to Sri Lankans; responding to the needs of a nation with compassion. Contents Our Business Vision, Mission and Values | 3 Financial Highlights | 4 Our Leadership Chairman's Review | 8 Message from the Director Medical Services | 11 Board of Directors | 14 Senior Management Team | 18 Historical Time Line | 20 Performance and Management Capital | 22 Corporate Governance | 46 Enterprise Risk Management | 54 Financial Analysis Annual Report of the Board of Directors on the Affairs of the Company | 60 Statement of Directors’ Responsibility | 65 Report of the Related Party Transactions Review Committee (RPTRC) | 66 Report of the Remuneration Committee | 67 Report of the Nominations Committee | 68 Report of the Audit Committee | 69 Independent Auditor’s Report | 71 Consolidated Statement of Profit or Loss and Other Comprehensive Income | 74 Consolidated Statement of Financial Position | 76 Statement of Changes In Equity | 78 Statement of Cash Flows | 80 Notes to the Financial Statements | 81 Value Added Statement | 133 Ten Year Summary | 134 Share Information | 135 Notes | 139 Notice of Meeting | 142 Registration of Shareholder Details for Online Meeting | 143 Form of Proxy - Voting Shareholders | 145 Form of Proxy - Non-Voting Shareholders | 147 Corporate Information | IBC Our Business Vision At the forefront of medical excellence, defining the future of Sri Lankan healthcare. Mission To enhance the lives of our community at large, by unfolding a paradigm shift in all service tiers and excelling in preventative and compassionate patient care. Values Empowering Pride Attract, inspire and motivate passionate individuals Dedicated Compassion Creating heartfelt, customer-centred experiences Advancing Medical Excellence Driving the medical industry towards greater heights Prestige Beyond Our Borders Enhancing our reputation beyond Sri Lanka Financial Highlights 2016 2017 2018 2019 2020 Financial Performance Turnover (Rs. Mn) 4,728 5,289 5,733 5,806 5,976 Operating Profit (Rs. Mn) 643 621 723 682 755 Profit Before Tax (Rs. Mn) 557 525 603 549 576 Profit After Tax (Rs. Mn) 500 389 488 376 467 Financial Position Fixed Assets - NBV (Rs. Mn) 4,286 6,445 6,539 6,959 7,731 Total Assets (Rs. Mn) 5,366 7,939 8,093 8,797 9,852 Capital Employed (Rs. Mn) 4,225 6,530 6,738 7,265 8,367 Net Assets (Rs. Mn) 3,087 5,198 5,009 5,143 5,933 Ratios Earnings Per Share (Rs.) 12.67 9.67 11.87 9.50 11.91 Annual Income Growth (%) 16.00 11.87 8.39 1.27 3.00 Interest Cover (Times) 7.44 6.34 6.02 5.15 6.31 Net Assets Per Share (Rs.) 91.14 153.46 147.88 151.83 174.35 Return On Asset (%) 9.30 4.90 6.00 4.28 4.76 Return on Capital Employed (%) 15.22 9.54 10.76 9.40 8.60 Return On Equity (%) 14.30 6.79 8.76 6.59 7.19 Rs. 5.9 Bn Rs. 755 Mn Rs. 9.8 Bn Rs. 11.91 Turnover Operating Profits Total Assets Earnings Per Share Rs. 8.3 Bn 3% Rs. 174 7.19% Capital Employed Income Growth Net Assets/Share Return On Equity 4 DURDANS HOSPITAL \ ANNUAL REPORT 2019/20 Turnover (Rs. Mn) Profit Before Tax (Rs. Mn) Profit After Tax (Rs. Mn) 6,000 700 500 500 488 5,976 467 5,806 600 5,000 5,733 400 603 5,289 576 500 557 549 389 525 376 4,000 4,728 300 400 3,000 300 200 2,000 200 100 1,000 100 0 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Fixed Assets - NBV (Rs. Mn) Total Assets (Rs. Mn) Net Assets (Rs. Mn) 8,000 10,000 6,000 5,933 7,731 9,852 5,000 8,000 6,000 8,797 5,198 6,959 5,143 5,009 6,539 8,093 6,445 7,939 4,000 6,000 4,000 3,000 4,286 4,000 5,366 3,087 2,000 2,000 2,000 1,000 0 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Earnings Per Share (Rs.) Return On Capital Employed (%) Interest Cover (Times) 15 16 8 15.22 12 7.44 12 6 12.67 6.31 6.34 11.91 11.87 6.02 9 10.76 9.67 9.50 5.15 9.54 8 9.40 4 8.60 6 4 2 3 0 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 DURDANS HOSPITAL \ ANNUAL REPORT 2019/20 5 Our Leadership We are optimistic that we will emerge victorious with our strong business and financial foundation - steering us through turbulent waters into an ocean of opportunities and success. Chairman's Review | 8 Message from the Director Medical Services | 11 Board of Directors | 14 Senior Management Team | 18 Historical Time Line | 20 Performance and Management Capital | 22 Corporate Governance | 46 Enterprise Risk Management | 54 Chairman's Review Durdans Hospital enters its 75th year of providing responsive healthcare to all who seek medical assistance and we believe our success is based on our ethos of ‘customer convenience’. While we have many achievements to our credit, we face many challenges and cannot afford to be complacent. Dear Shareholder pandemic at the end of the financial year, has had far-reaching effects globally on human lives as well as on economic activities It is with great pleasure that I welcome you to the 74th Annual due to lockdown measures adopted by many countries to control General Meeting to present you with the Annual Report and the spread of the virus. However, it is with great pride that I would Financial Statements for the year 2019/20. Durdans Hospital like to report that we handled this sudden pandemic extremely enters its 75th year of providing responsive healthcare to all who well, to the extent of developing a PCR kit in-house; a necessary seek medical assistance and we believe our success is based requirement to detect COVID-19. on our ethos of ‘customer convenience’. While we have many achievements to our credit, we face many challenges and cannot afford to be complacent. Economic Backdrop The Sri Lankan economy remained subdued in this backdrop with a marginal growth of 2.3% in 2019. This growth was mainly Non-Communicable Diseases (NCDs) are on the rise, driven by propelled by the industry sector while the agriculture sector had changes in diets, environmental conditions and the stress of been hampered yet again due to unfavourable weather conditions. modern urban living. Combining dedication and responsibility The services sector, too, was on a downturn due to the cascading towards our customers, we work towards delivering efficient care effects of the Easter Sunday attacks. and long-term value to all our stakeholders. The financial year began on a sad note with the Easter Sunday Financial Overview attacks of April 2019. This had a negative impact on Sri Lanka’s Even though the external environment was fraught with many economic growth and had a profound effect on consumer challenges, Durdans stood firm as a robust industry player, enabling sentiments. The financial year under review continued to be the Company to make progress in achieving its goals for the year challenging thereafter and was further hindered by a slowdown under review. As such, the Company recorded a 3% growth in in global economic growth. The emergence of the COVID-19 revenue for the year under review, increasing the revenue from 8 DURDANS HOSPITAL \ ANNUAL REPORT 2019/20 Rs.