Annual Report of the Board of Directors on the affairs of the Company

The Directors of Nawaloka Hospitals PLC (“the Company”) have pleasure in presenting to the members, their Report together with the Audited Financial Statements for the year ended 31 March 2025.

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.

1. Legal Form

Nawaloka Hospitals PLC is a Public Company with limited liability incorporated in Sri Lanka on 1 July 1982 under the Companies Ordinance No. 51 of 1938 and re-registered on 07 September 2007 under the provisions of the Companies Act No. 07 of 2007, and assigned the Company Re-Registration No. PQ 78. Since 2004, its Shares are quoted on 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:

2. 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 have been no material changes to the activities of the Company or any of its subsidiaries during the period under review, subject to what is stated below.

2.1 Company

The principal activities of the Company is providing healthcare and hospital services.

2.2 Subsidiaries

Nawaloka Hospitals (Private) Limited (PV 3426)

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.

New Nawaloka Medical Centre (Private) Limited (PV 14363)

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 subsidiary of Nawaloka Hospitals PLC.

Nawaloka Laboratories (Private) Limited (PV 121462)

A private company with limited liability incorporated in Sri Lanka in the year 2017 under the provisions of the New Companies Act No. 07 of 2007. It is domiciled in Sri Lanka and is also a wholly owned subsidiary of Nawaloka Hospitals PLC.

3. Review of Business/Future Development

A review of the business of the Company and the Group and its performance during the year are contained in the Chairman’s Review/Chief Executive Officer’s Performance Review and of the Director/General Manager’s Operational and Management review at pages 11 and 16 respectively of this report. These reviews form an integral part of this report and together with the Financial Statements describe in detail the state of affairs of the Company and the Group.

4. Financial Statements

The Financial Statements which include the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Cash Flow Statements and Notes to the Financial Statements are given at pages 100 to 163 and have been prepared in conformity with the Sri Lanka Accounting Standards, the requirements of Section 168 (1) (b) of the Companies Act No. 07 of 2007 and the Listing Rules of the Colombo Stock Exchange.

5. Auditor’s Report

The Financial Statements for the period under review were audited by Messrs KPMG (Chartered Accountants) for the year ended 31 March 2025 and the Independent Auditor’s Report issued thereon appears at page 100 of this Annual Report as required by Section 168 (1) (c) of the Companies Act No. 07 of 2007.

6. Financial Results

(All figures in Sri Lanka Rupees)	Group		Company
	2024/25	2023/24	2024/25	2023/24
Profit before taxation	336,642,651	(247,007,212)	784,776,398	576,210,524
Less: Taxation	(280,261,552)	(57,740,051)	(182,955,983)	3,441,273
Net profit after taxation	56,381,099	(304,747,263)	601,820,415	579,651,797
Profit attributable to equity holders of the Company	56,381,099	(304,747,263)	601,820,415	579,651,797
Earnings Per Share	0.04	(0.22)	0.43	0.41

7. 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 at pages 109 to 113 of this Annual Report as required by Section 168 (1) (d) of the Companies Act. There have been no changes in the accounting policies adopted by the Company during the period under review other than the depreciation rates.

8. 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.

9. Directors’ Remuneration and other Benefits

Directors’ remuneration and other benefits of Directors are given at Note 38.1 to the Financial Statements at page 162 as required by Section 168 (1) (f) of the Companies Act No. 07 of 2007.

10. Donations

Total donations made by the Group during the year amounted to Rs. 3.7 Mn. 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.

11. Shareholders' Funds

The total Group Shareholders’ funds as at 31 March 2025, stood at Rs. 4,913 Mn. The total Shareholders’ Funds of the Company as at 31 March 2025 stood at Rs. 1,896 Mn. The movements are shown in the Statement of Changes in Equity.

12. Interim Dividend

No interim dividend was declared or paid during the financial year. Further no dividend was declared in the 2024/2025 financial year.

13. 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 Companies Act No. 07 of 2007:

Name of Director	Executive/Non Executive status	Status of Independence
Dr H K Jayantha Dharmadasa Chairman and Chief Executive Officer	Executive
Mr Anisha Dharmadasa Deputy Chairman	Executive
Ms A G Dharmadasa	Executive
Deshabandu Tilak de Zoysa	Non-Executive	Senior Independent Director (Until 31.12.2024)
Vidya Jyothi Professor Lal Chandrasena	Executive
Mr Tissa K Bandaranayake	Non-Executive	Independent Director (Until 31.12.2024)
Mr Sunil AbeyRatna (Resigned w.e.f l 31.12.2024)	Non-Executive
Mr V R Ramanan	Non-Executive
Dr Maiya Gunasekera	Non-Executive
Dr Mohan Rajakaruna	Non-Executive
Dr Munaweera Thanthreege Dilum Lakshan	Non-Executive
Mr Virann De Zoysa (Appointed w.e.f 15.10.2024)	Non-Executive	Senior Independent Director (From 31.12.2024)
Dr Samantha Ratnayake (Appointed w.e.f 31.12.2024)	Non-Executive	Independent
Professor Manjula Jayaweera (Appointed w.e.fm 31.12.2024)	Non-Executive	Independent
Mr Chamira Wijetilleke (Appointed w.e.f 31.12.2024)	Non-Executive	Independent
Dr Chamara Bandara (Appointed w.e.f 13.11.2024)	Non-Executive	Independent

The Directors hereby confirm that the Directors and CEO of the Company satisfy the Fit and Proper Assessment Criteria stipulated in section 9.7 of the Listing Rules of the Colombo Stock Exchange for the year.

The qualifications and experience of each of the Directors, are given in the individual profiles of the Board of Directors at pages 17 to 22 of the Annual Report.

14. 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.

• Mr Sunil AbeyRatna resigned from the Board w.e.f 31 December 2024
• Mr Virann De Zoysa was appointed w.e.f 15 October 2024
• Dr Chamara Bandara was appointed w.e.f 13 November 2024
• Mr Chamira Wijetilleke, Dr Samantha Ratnayake and Professor Manjula Jayaweera were appointed w.e.f 31 December 2024

15. Recommendations for Re-election/Re-appointment

In terms of Article 74 of the Articles of Association of the Company, Mr Victor Ramanan retires from the Board by rotation at the forthcoming Annual General Meeting and being eligible for re-election, has offered himself for re-election.

Further, Dr Hewa Komanage Jayantha Dharmadasa, Vidya Jyothi Professor Lal Chandrasena, Deshabandu Tilak de Zoysa, Mr Tissa K Bandaranayake and Dr Maiya Gunasekare who have exceeded the age of 70 years and being eligible for re-election in terms of Section 211 of the Companies Act No. 07 of 2007, have offered themselves to be re-appointed as Directors of the Company.

In terms of Article 81 of the Articles of Association of the Company, Dr Chamara Bandara, Mr Chamira Wijetilleke, Dr Samantha Ratnayake and Professor Prasad Jayaweera who were appointed by the Board to fill a casual vacancy during the financial year under review, retire from the Board and being eligible for re-election, offer themselves for re-election. The Nomination and Governance Committee has assessed the re-election/re-appointment of Directors as stated above and has recommended the re-appointment/re-election of Directors at the forthcoming Annual General Meeting.

16. Appointment of Senior Independent Director

Mr Virann De Zoysa, Dr Chamara Bandara, Mr Chamira Wijetilleke, Dr Samantha Ratnayake and Professor Manjula Jayaweera are the Independent Directors of the Company.

Mr Virann De Zoysa was appointed as Senior Independent Director of the Company w.e.f 31 December 2024 in terms of Rule 9.6.3 (a) i of the Listing Rules of the Colombo Stock Exchange.

17. Board Sub-committees

Several Board Sub-Committees established by the Board continue to oversee matters relating to policy and governance. As required by the Listing Rules of the Colombo Stock Exchange, the composition of the Sub-Committees (mandatory) during the Financial year under review were as follows:

17.1 Audit Committee Members

Dr Chamara Bandara – Chairman (INED)

Mr Chamira Wijetilleke – Member (INED)

Mr Virann De Zoysa – Member (INED)

Deshabandu Tilak De Zoysa – Member (NED)

Mr Tissa Bandaranayake – Member (NED)

17.2 Remuneration Committee Members

Mr Virann De Zoysa – Chairman (INED)

Dr Samantha Ratnayake – Chairman (INED)

Dr MTD Lakshan – Member (NED)

17.3 Nominations and Governance Committee Members

Dr Samantha Ratnayake – Chairman (INED)

Professor Manjula Jayaweera – Member (INED)

Dr Maithri (Maiya) Gunasekera – Member (NED)

17.4 Related Party Transactions Review Committee

Mr Virann De Zoysa – Chairman (INED)

Mr Chamira Wijetilleke – Member (INED)

Mr Tissa Bandaranayake – Member (NED)

Deshabandu Tilak De Zoysa – Member (NED)

Vidya Jyothi Professor Lal Chandrasena – Member (ED)

18. Directors’ Meetings

Details of meetings which comprise Board meetings, the Board’s Sub-Committee meetings, namely the Audit Committee, Remuneration Committee, Nominations and Governance Committee, Related Party Transactions Review Committee and Risk Management Committee are dealt with at page 75 of this Annual Report.

19. Directors’ Shareholding

The aggregate shareholding of the Directors for the year ended 31 March 2025 and the previous year, are as follows:

	2024/25	2023/24
Dr H K J Dharmadasa	462,736,182	462,736,182
Deshabandu Tilak de Zoysa	218,000	218,000
Vidya Jyothi Professor Lal Chandrasena	601,198	601,198
Mr Anisha Dharmadasa	3,004,026	3,004,026
Ms A G Dharmadasa	5,066,686	5,066,686
Mr Tissa K Bandaranayake	Nil	Nil
Mr V R Ramanan	3,110,088	3,110,088
Dr Maiya Gunasekara	32,000	32,000
Dr Mohan Rajakaruna	Nil	Nil
Dr M T D Lakshan	Nil	Nil
Mr Virann De Zoysa	Nil	N/A
Dr Chamara Bandara	Nil	N/A
Mr Chamira Wijetilleke	Nil	N/A
Professor Manjula Jayaweera	Nil	N/A
Dr Samantha Ratnayake	Nil	N/A
	Ordinary	Ordinary

20. 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 38.2 to the Financial Statements.

The Related Party Transactions Review Committee appointed by the Board was tasked with reviewing Related Party Transactions, calling for supporting documents and/or justification of the terms and conditions of such transactions and identifying and reporting on recurrent and non-recurrent transactions with related parties in line with the applicable CSE Rules. The Directors have declared their interests to the Related Party Transactions Review Committee appointed by the Board. The Directors have no direct or indirect interest in any other contract or proposed contract of the Company.

The Directors hereby confirm that the Company is in compliance with Section 9 of the Listing Rules of the Colombo Stock Exchange in respect of related party transactions entered into by the Company during the year.

21. Directors’ Interests

The Interests Register is maintained by the Company as per the Companies Act No. 07 of 2007.

22. Capital Expenditure

Details of Property, Plant and Equipment and their movements in the Company and the Group during the year, are listed in Note 16 to the accounts at pages 121 to 126.

23. 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.

	Group		Company
	2024/25	2023/24	2024/25	2023/24
Issued and Fully Paid	–	–	–	–
At the beginning of the year	1,409,505,596	1,409,505,596	1,409,505,596	1,409,505,596
At the end of the year	1,409,505,596	1,409,505,596	1,409,505,596	1,409,505,596

24. Share Information

The composition of shareholders and the information relating to share trading, net assets and market value per share are given at pages 169 to 170 of this Annual Report.

25. Major Shareholders

The 20 largest shareholders of the Company as at 31 March 2025 are given at page 169 of this Annual Report.

26. Employment Policy

The Company’s Employment Policy is totally non-discriminatory and equal opportunities are given to all employees irrespective of ethnicity, race, origin, religion, political opinion, gender or marital status.

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

The employees are always encouraged to discuss issues relating to operations and to make suggestions to improve performance.

The number of persons employed by the Group as at 31 March 2025 was 2020.

27. Group Revenue

The Revenue of the Group was Rs. 11,013 Mn. The analysis thereof is given in Note 9 to the Financial Statements.

28. Stock Exchange Listing

The Company was listed on the Main Board of the Colombo Stock Exchange in the year 2004, and continues to be so listed.

29. 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”.

30. Events Occurring After the Reporting Date

There are no significant events that have occurred after the reporting date which would have any material effect on the Company or on the Group that require adjustments to or disclosure in the Financial Statements.

31. 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 11 to the Financial Statements.

As far as the Directors are aware, the Auditors do not have any relationship (other than that of Auditors) with the Company or any of its subsidiaries other than those disclosed above. The Auditors also do not have any interest in the Company, or its subsidiaries as required by Section 168 (1) (j) of the Companies Act No. 07 of 2007.

For and on behalf of the Board,