Annual Report 2010/2011 - Colombo Stock Exchange

ANNUAL REPORT2010-2011

Asiri Central Hospitals PLC - Annual Report 2010/2011OUR VISIONTO BE A LEADING HEATHCARE PROVIDERIN THE REGION THROUGH OUR STRENGTHS INWELLNESS AND PATIENT CAREOUR MISSIONTO CARE FOR AND IMPROVE THE QUALITY OFHUMAN LIFE THROUGH THE PROVISION OFETHICAL CLINICAL CARE AND ACADEMIC EXCELLENCE1

Asiri Central Hospitals PLC - Annual Report 2010/2011CONTENTCorporate Information 3Chairman's Review 4Directors profile 5Corporate governance 6-9Audit committee report 10Remuneration committee report 11Report of the directors 12-14Statement of directors' responsibility 15Independent auditor's report 16Income statement 17Balance sheet 18Statement of changes in equity 19Cash flow statement 20Notes to the financial statements 21-34Five year summary 35Information to investors 36-38Notice of meeting 39Form of proxy 402

Asiri Central Hospitals PLC - Annual Report 2010/2011CORPORATE INFORMATION AS AT 31 ST MARCH 2011NAME OF THE COMPANYASIRI CENTRAL HOSPITALS PLCREGISTERED OFFICE37, HORTON PLACE, COLOMBO 07, SRI LANKASTATUTORY STATUSQUOTED PUBLIC COMPANY INCORPORATED IN SRI LANKA ON 7 TH SEPTEMBER 1992, UNDER THE COMPANIES ACTNO.17 OF 1982. RE-REGISTERED ON 31 ST JANUARY 2008 UNDER THE COMPANIES ACT. NO.07 OF 2007.COMPANY REGISTRATION NUMBERPQ 96STOCK EXCHANGE LISTINGTHE ORDINARY SHARES OF THE COMPANY HAVE BEEN LISTED WITH THE COLOMBO STOCK EXCHANGE OF SRILANKA SINCE FEBRUARY 2002.ASSOCIATE COMPANIESCENTRAL HOSPITAL (PRIVATE) LIMITED114, NORRIS CANAL ROAD, COLOMBO 10, SRI LANKADIRECTORSMR.A.K.PATHIRAGEDR.K.M.P.KARUNARATNEMRS.D.WIMALASUNDARADR.D.S.RAJAPAKSAMR.G.L.H.PREMARATNEMR.S.A.B.RAJAPAKSACHAIRMAN / MANAGING DIRECTORDIRECTOR / CHIEF OPERATING OFFICERDIRECTOR ADMINISTRATIONDIRECTORDIRECTORDIRECTORPARENT COMPANYASIRI HOSPITAL HOLDINGS PLC181, KIRULA ROAD, COLOMBO 5, SRI LANKA.AUDITORSPRICEWATERHOUSE COOPERSCHARTERED ACCOUNTANTSP.O. BOX 918, 100, BRAYBROOK PLACE, COLOMBO 02, SRI LANKA.BANKERSSAMPATH BANK PLC110,SIR JAMES PEIRIS MAWATHA, COLOMBO 02, SRI LANKA.HATTON NATIONAL BANK PLC479, T.B. JAYAH MAWATHA, COLOMBO 10, SRI LANKASECRETARIESSECRETARIES & REGISTRARS (PRIVATE) LIMITEDNO.32 A, FIRST FLOOR, SIR MOHAMED MACAN MARKAR MAWATHA.,P.O.BOX 710, COLOMBO 3, SRI LANKA.3

Asiri Central Hospitals PLC - Annual Report 2010/2011CHAIRMAN'S REVIEWI have pleasure in presenting to you, the Annual Report and Audited Accounts of Asiri Central Hospital PLC (ACH)for the financial year 2010/11.Your company ceased operations of Asiri Central Hospital as planned in the first quarter of the year which resultedin it recording effective operational revenue of less than one month. As planned, the new hospital we invested in,The Central, commenced operations simultaneously with the closure of Asiri Central Hospital.Resulting from the closure of business the company incurred an operating loss of Rs 4.1 Million. The companyincurred a net loss after tax of Rs. 176.5 Million that compares with the net profit after tax of Rs. 278.3 Million in2009/10. The main contributory factors being the finance cost the company incurred due to the investment in theassociate company of Rs. 99.4 Million & Share of loss from the associate company of Rs 72.3 Million. These wereplanned and the company embarked on the changes incurring these losses with a view to maximizing theshareholder value in the medium to long term.The profitability of the company is expected to improve during the next financial year as the associate company isexpected to achieve profitability & also due to the company entering into a lease agreement with the Sri LankaArmy for leasing out its property at Horton Place, which is expected to bring the company back into profitability.I am pleased to inform you that the new hospital has become a success from the outset and is expected toachieve profitability in its second year of operation in 2011/12. This will result in the company performanceimproving substantially within the next few years. It is with great excitement that I am looking forward to theprospects of “The Central” in the years to come, which I am sure will maximize the returns of our shareholders.I have benefited by the guidance & counsel of my Board over the last year and a word of thank is due to them. Forthe Asiri Family employees, it has been a yet another challenging but fulfilling year where they have put in theirbest to the care of our valued patients. Your unwavering commitment to care is taking us to higher planes incustomer service in the healthcare sector of the country. We are yet striving to better it with continuousimprovements to our technology, processes & people.To our shareholders and stakeholders, your Group is poised to exploit some of the most lucrative areas inhealthcare soon. I am very grateful to you for being a valuable contributor towards that end.A.K. PathirageChairman4

Asiri Central Hospitals PLC - Annual Report 2010/2011DIRECTORS PROFILEMr. Ashok PathirageChairman /Managing DirectorMr. Pathirage, is the Chairman/Managing Director of the Softlogic Group which is a leading diversified corporateentity in the country and is also the Chairman of Softlogic Finance PLC, Hotel Ceysands , Uniwalkers and itssubsidiaries. He is a Director at National Development Bank. He is Chairman/Managing Director of Asiri SurgicalHospital PLC and Central Hospital Private Ltd. He is the Managing Director of Asiri Hospital Holdings Plc, AsiriDiagnostic Services (Pvt) Ltd and other subsidiaries of the Asiri Group.Dr. Manjula Karunaratne MBBS, M.Sc (Trinity,Dublin), MSOrth Med. (Eng)Director (Medical) /Chief Operating OfficerAppointed to the Board of Asiri Hospital Holdings PLC and Asiri Surgical Hospital PLC in 2006. Had previouslyalso held the post of Medical Director of Asiri Hospital Holdings PLC. A Specialist in Sports/Orthopaedic Medicine,with over 20 years professional experience is responsible for the overall medical policy of the Group. He alsoserves on the Boards of Asiri Surgical Hospital PLC , Asiri Hospital Matara (Pvt) Ltd, Matara Medi House (Pvt)Ltd, Asiri Diagnostic Services (Pvt) Ltd. and Central Hospital (Pvt) Ltd.Mrs. D. WimalasunderaDirector – AdministrationMrs. Wimalasundera a senior board member, has been functioning as an Executive Director for over 20 years.She is a Director of Asiri Hospital Holdings PLC, Asiri Surgical Hospital PLC, Asiri Diagnostic Services (Pvt) Ltd,Asiri Hospital Matara (Pvt) Ltd, Matara Medi House (Pvt) Ltd and Central Hospital (Pvt) Ltd.Dr. D. S. Rajapaksa MS, FRCOG (UK)DirectorDr. Rajapaksa, a Fellow of the Royal College of Obstetricians and Gynaecologists, is currently a consultant inprivate practice. He was one of the founder directors of Asiri Hospitals PLC and is also a member of the AsiriSurgical Hospital PLC. Dr. Rajapaksa has over 16 years experience as a Company Director and is also theChairman of DSI Samson Group of Companies. He serves on the Remuneration Committees of all threecompanies. He is also a member of Central Hospital (Pvt) Ltd.Mr. G. L. H. PremaratneDirectorMr. Premaratne is specialized in Corporate Banking, and is an Associate of the Institute of Bankers of London. Healso serves on the Board of Asiri Hospital Holdings PLC and Central Hospital (Private) Limited.He functions as the Chairman of the Remuneration Committee and also a member of the Audit Committee of allthree Hospitals. Presently he is the Managing Director of Sampath Bank PLC.Mr. S. A. B. Rajapaksa MBA, FCA, FCMA, MCIMDirectorMr. Samantha Rajapaksa has more than 20 years of both local and international experience in finance, venturecapital, information technology, consulting and communication sectors. He also serves on the board of AsiriHospital Holdings PLC, Asiri Surgical Hospital PLC and Central Hospital (Pvt) Limited. He functions as theChairman of the Audit Committee of all three Hospitals. He is currently a Director of Softlogic Holdings Limited andalso holds the position of Director/Chief Executive Officer of Softlogic Communications (Pvt) Ltd. Mr. Rajapaksa isa Fellow of the Institute of Chartered Accountants of Sri Lanka and of the Chartered Institute of ManagementAccountants of UK. He is also a Member of the Chartered Institute of Marketing - UK, and holds an MBA from thePost Graduate Institute of Management of the University of Sri Jayawardenapura.5

Asiri Central Hospitals PLC - Annual Report 2010/2011CORPORATE GOVERNANCECorporate Governance is the system by which companies are directed, managed and controlled.The board manages the Company on behalf of the shareholders and is responsible to the shareholders forcreating and delivering sustainable shareholder value through the management of the group's business. TheDirectors exercise their good-faith business judgment with respect to the best interest of the Company.Board of DirectorsThe Board is balanced between executive and non-executive Directors and comprises of three executive Directorsand three non-executive Directors. Their profiles appear on page 4 of the Annual Report. The non-executiveDirectors support the skills and experience of the executive Directors, contributing to the formulation of policy anddecision-making through their knowledge and experience of other business sectors.Mr A K PathirageDr K M P KarunaratneMrs D WimalasunderaDr D S RajapaksaMr G L H PremaratneMr S A B RajapaksaKeyEDEDEDIINED(Chairman/Managing Director)ED - Executive DirectorI - Independent non-executive DirectorNED - Non-executive DirectorBoard MeetingsThe Board generally meets once a quarter. Special Board Meetings are also held whenever required. ScheduledBoard meetings are arranged well in advance to ensure, as far as possible, that Directors can manage their timecommitments. All Directors are provided with supporting documents and relevant information for each meetingand are expected to prepare themselves for and to attend all Board meetings, shareholders meetings and allmeetings of the committees on which they serve, unless there are exceptional circumstances that prevent themfrom doing so. Over the past year the Board held three meetings.The Chairman of the BoardThe Board believes that the Managing Director should also serve as the Chairman of the Board. The Chairman'smain responsibility is to lead and manage the work of the Board to ensure that it operates effectively and fullydischarges its legal and regulatory responsibilities.Appraisal of the Managing DirectorThe performance of the Managing Director is reviewed every year by the Board. The Managing Director isaccountable to the Board and is responsible for the day-to-day operations of the Company while ensuring thatcorporate goals are achieved making the optimum use of resources available.Time commitmentThe Board dedicates adequate time to discharge their duties effectively.attend sub-committee meetings and make decisions via circular resolutions.In addition to Board meetings, they6

Asiri Central Hospitals PLC - Annual Report 2010/2011CORPORATE GOVERNANCEAppointment to the BoardNew 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 andexperience to be better prepared for the managing of the Company.Re-election of DirectorsAs per the Articles of Association of the Company one third of the directors shall retire from office at each AnnualGeneral Meeting (AGM) and offer themselves for re-election. Any Directors appointed during the year seek reelectionat the next AGM. The Managing Director is not subject to retirement by rotation.Independence of the DirectorsDr. D S Rajapaksa and Mr. G L H Premaratne act as independent Directors on the Board.As per the Rules issued by the Colombo Stock Exchange, Dr. D S Rajapaksa and Mr. G L H Premaratne meet allthe criteria of independence except one.Both Directors are also Directors of Asiri Hospital Holdings PLC and Asiri Surgical Hospital PLC in which majorityof other Directors of Asiri Central Hospitals PLC are employed and/or directors.The Board having evaluated all the factors concluded that their independence have not been impaired due to themserving on the Boards of other companies in which majority of other Directors of Asiri Central Hospitals PLC areemployed and/or directors.Access to independent professional adviceAll Directors have access to the advice of the Company Secretary and independent professional advice isavailable to Directors in appropriate circumstances at the Company's expense.Remuneration of the DirectorsThe remuneration of the Directors is determined by the Board and disclosed on page 11 of the Annual Report.Company SecretaryMessrs Secretaries & Registrars (Private) Limited, Secretaries acts as the Company Secretary. The role of thesecretary is dealing with directors at board meetings and with shareholders. The Company Secretary attendsBoard meetings and ensures that minutes are kept of all proceedings at the Board meetings. The CompanySecretary advises the Board and ensures the proper procedures and applicable rules and regulations are followedby the Board.Board CommitteesSpecific responsibilities have been delegated to the Board Committees. The two principal Board Committees are:-The Audit Committee and the Remuneration Committee of Asiri Hospital Holdings PLC, ultimate parent company,act as the Audit and the Remuneration Committee of the Company.Audit CommitteeMr. S A B Rajapaksa - ChairmanDr. S SelliahMr. G L H PremaratneDr. D S Rajapaksa7

Asiri Central Hospitals PLC - Annual Report 2010/2011CORPORATE GOVERNANCEThe Audit Committee meets at least four times a year with the Finance Director and the external auditors toreview, inter alia, the Group's annual and interim financial statements, internal audit, compliance reports andreviews the effectiveness of the Group's system of internal control. Periodically, it also approves and reviews theappointment and retirement of external Auditors, as well as their relationship with the Group.Remuneration CommitteeMr. G L H Premaratne - ChairmanDr. S SelliahDr. D S RajapakaThe Remuneration Committee regularly takes advice from external consultants acknowledged as experts in theirfields. The Remuneration Committee usually meets at least twice a year. Its role is to make recommendations tothe Board on the following.• Remuneration policy for executive Directors• Remuneration policy and specific packages for certain senior executives• Employee benefits and long term incentive schemesThe Group's remuneration policy is based on the following principles.To deliver improved shareholder value by ensuring that individual performance and reward reflect and•reinforce the business objectives of the Group.• To support the recruitment, motivation and retention of high quality senior executives• To ensure that performance is the key factor in determining individual reward• To communicate the reward structure clearly and effectively to executives and shareholdersThe Committee is not responsible for setting the level of remuneration of non-executive Directors, which isdetermined by the Board.ResponsibilitiesThe Board and its committees are supplied with full and timely information to enable them to discharge theirresponsibilities. It is the responsibility of the Board of Directors to ensure good corporate governance. Goodcorporate governance requires that the Board must govern the Company with integrity. This includes the following:-Exercise leadership, enterprise, integrity and judgment in directing the Company so as to achieve•continuing prosperity in a manner based on transparency, accountability and responsibility.• Ensure a managed and effective process of board appointmentsDetermine the Company's purpose and values, strategy and ensure that procedures and practices are in•place• Monitor and evaluate the implementation of strategies and policies for better management performance• Ensure compliance with the relevant laws, regulations and codes of best practice• Communicate with shareholders effectively and serve the legitimate interest of the shareholders• Periodic and timely reporting to shareholders of the progress and performance of the Company• Review processes and procedures regularly and ensure that internal control is effective• Identify key risk areas and ensuring that these risks are addressed and managed effectively• Appoint and evaluate the performance of the Managing Director• Approve the Annual Budget• Authorisation of Directors' conflicts or possible conflicts of interest• Determination of independence of non-executive Directors• Ensure the continuation of the Company as a going concern8

Asiri Central Hospitals PLC - Annual Report 2010/2011CORPORATE GOVERNANCEInvestor relationsThe Annual General Meeting, Annual Report of the Company and Quarterly Reports are the principal means ofcommunication with the shareholders.Compliance with the Corporate Governance Rules of the Colombo Stock ExchangeThe following disclosures are made in conformity with Section 7 of the Rules of the Colombo Stock Exchange:-SectionCriteria7.10.1 Non-executive directors7.10.2 Independent DirectorsComplied with.Complied with.Has the Company met the CriteriaOut of 6 directors 3 are non-executive directors.There are two independent directors on the Board. Please referpage 67.10.3Disclosures relating todirectors2 of the 3 Non-executive directors meet all the criteria set out inRule 7.10.4 for determining the independence of directors.These independent directors are Dr. D S Rajapaksa and Mr.G L H Premaratne.Complied with.7.10.5 Remuneration CommitteeComprises of three non-executive directors including twoindependent directors. The remuneration committee of AsiriHospital Holdings PLC (ultimate parent company) acts as theremuneration committee of Asiri Central Hospitals PLC.7.10.6Audit CommitteeThe names of the members of the committee are given in thepage 8 of the Annual Report.Complied with.Comprises of four non-executive directors including twoindependent directors.The audit committee of Asiri Hospital Holdings PLC (ultimateparent company) acts as the audit committee of Asiri CentralHospitals PLC.The Group Finance Director attends all the meetings.The report of the committee is given on page 109

Asiri Central Hospitals PLC - Annual Report 2010/2011AUDIT COMMITTEE REPORTThe Audit Committee appointed by the Board of Directors and comprises of two Independent Directors and twoNon-Executive Directors. The Names of the Committee members are stated in the Corporate Governance Reporton Page 7.The Audit Committee examines any matters relating to the financial reporting system, the system of internal controlover financial reporting, the audit process and the Company's process for monitoring compliance with laws andregulations. As and when required it requests additional information from the management in order to satisfy itselfon the adequacy of the controls in place. The Audit Committee also recommends to the Board, the appointmentand fees of external auditors.The Audit Committee met on four occasions during the year to examine the effectiveness of the Company'sinternal control system and the system for monitoring compliance with laws and regulations.The Audit committee also reviewed and approved the Annual and Interim financial statements prior to the finalapproval by the board and also assessed major business and control risks of the company.The Audit Committee recommend to the Board of Directors the M/s Pricewaterhouse Coopers be re-appointed asthe auditors of the company for the financial year ending 31st March 2012, subject to the approval of theshareholders at the Annual General Meeting.Samantha RajapaksaChairman - Audit CommitteeJuly 18, 2011Colombo.10

Asiri Central Hospitals PLC - Annual Report 2010/2011REMUNERATION COMMITTEE REPORTThe Remuneration Committee is a sub-committee of the Board constituted under the Company's CorporateGovernance policies for the purpose of recommending the remuneration of Senior Management. The members, ofthe Committee comprise of 1 Non-Executive Independent Director and 2 Non-Executive Directors. The names ofthe Committee members are stated in the Corporate Governance Report on page 8.The Directors' emoluments are disclosed on page 26.The Committee meets biannually. The Committee has acted within the parameters set by its terms of reference.G.L.H. PremaratneChairman - Remuneration CommitteeMay 12, 2011Colombo.11

Asiri Central Hospitals PLC - Annual Report 2010/2011REPORT OF THE DIRECTORSThe Directors of Asiri Central Hospitals PLC have pleasure in presenting to the members their report together withthe audited financial statements of the Company for the year ended 31st March 2011.Principal Activities and NatureThe principal activity of the Company was carrying out Health Care and Hospital Services. Asiri Central HospitalsPLC has ceased its operations since May 2010. With the cessation of the operations of the Company there is achange in the core business from hospital services to an investment company. The land, building and premises ofthe Company together with the right of way was given on lease for the use of Sri Lanka Army from February 2011.Its associate company, Central Hospital (Private) Limited, commenced commercial operations in April 2010.Review of OperationsA review of the operations of the group and its performance during the year is contained in the Chairman's Reviewon pages 4 of the Annual Report. This review together with the Financial Statements reflects the state of affairs ofthe Company and the Group. These reports form an integral part of the Annual Report of the Board of Directors.Financial StatementsThe financial statements of the Company are given on pages 17 to 34.Auditor's ReportThe Auditor's Report on the financial statements is given on page 16.Accounting PoliciesThe accounting policies adopted in the preparation of the financial statements are given on pages 21 to 25. Therewas no change in the accounting policies adopted.Internal ControlThe Board has overall responsibility for the Company's system of internal control and review its effectiveness. Theinternal control system has been designed to meet the particular needs of the organization concerned and the riskto which it is exposed, and by their nature can provide reasonable but not absolute assurance against material misstatementor loss. The Board is satisfied with the effectiveness of the internal control system for the period up tothe date of signature of the accounts.DirectorateThe Board comprises the following Directors for the period ended 31st March 2011.Mr.A K PathirageChairman/Managing DirectorDr.Selliah Deputy Chairman (resigned w.e.f.1st December 2010)Dr.K M P KarunaratneDirector/Chief Operating OfficerMrs.S D NimalasuriyaDirector FinanceMrs. D WimalasunderaDirector AdministrationDr.D S RajapaksaDirectorMr.C.D.Weerasinghee Director (expired on 19th December 2010)Mr.G L H PremaratneDirectorMr.S A B RajapaksaDirector12

Asiri Central Hospitals PLC - Annual Report 2010/2011REPORT OF THE DIRECTORSIt is with a deep sense of regret that the Directors wish to inform the shareholders of the sudden demise of Mr. C DWeerasinghe on 19th December 2010.Dr. S Selliah resigned from the Board with effect from 1st December 2010.In terms of Article 24(6) of the Articles of Association of the Company, Dr. D S Rajapaksa and Mr. G L HPremaratne retire at the forthcoming Annual General Meeting and being eligible offer themselves for re-election.Directors' ShareholdingNo directors directly hold shares of the Company as at 31st March 2011.Interest RegisterThe Interest Register is maintained by the Company as per the Companies Act No. 7 of 2007. All Directors havedisclosed their interests pursuant to Section 192(2) of the said Act.Directors' interests in contracts and proposed contracts with the CompanyDirectors' interests in contracts, both direct and indirect are set out in Note 27 to the Financial Statements. TheDirectors have no direct or indirect interest in any other contract or proposed contract with the Company.Directors' RemunerationDirectors' remuneration in respect of the Company for the financial year 2010/2011 are given in note 6 to theFinancial Statements on page 26.DonationsThe donations made by the Company for charitable purposes during the year amounted to Rs. 211,898/-(2009/2010 Rs. 297,053/-).AuditorsMessers PricewaterhouseCoopers, Chartered Accountants, are willing to continue as Auditors of the Companyand a resolution proposing their reappointment will be tabled at the Annual General Meeting.As far as the Directors are aware the Auditors do not have any relationship (other than that of an auditor) with theCompany other than those disclosed above. The Auditors also do not have any interest in the Company.Capital ExpenditureThe capital expenditure of the Company during the year amounted to Rs. Nil (2009/2010 - Rs. 523,373/-) details ofwhich are given in note 12 to the financial statements.Property, Plant & EquipmentThe movement in property, plant and equipment during the year under review is set out in note 12 to the financialstatements.DividendsThe Directors do not recommend any dividend for the year ended 31st March 2011.13

Asiri Central Hospitals PLC - Annual Report 2010/2011REPORT OF THE DIRECTORSStated CapitalThere was no change in the stated capital of the Company during the year under review.ReservesThe total reserves of the Company as at 31st March 2011 amounted to Rs.1,573,702,450/-. The composition ofreserves is shown in the Statement of Changes in Equity in the financial statements.Shareholders' InformationThe distribution of shareholders is indicated on pages 36 in the Annual Report.shareholders as at 31st March 2011.There were 323 registeredShare InformationInformation on share trading is given on page 37 of the Annual Report.Post Balance Sheet EventsNo circumstances have arisen and no material events have occurred since the Balance Sheet date, which wouldrequire adjustments to, or disclosure in the accounts other than those disclosed in the Financial Statements andthis Report.Statutory PaymentsThe Directors to the best of their knowledge and belief are satisfied that all statutory payments in relation toemployees and the government have been made up to date.Going ConcernThe Board of Directors will decide on a suitable action plan in the future in the best interest of the Company for itsfuture activities.Annual General MeetingThe Nineteenth Annual General Meeting of the Company will be held at the Auditorium of Central Hospital(Private) Limited (4 th Floor), No. 114, Norris Canal Road, Colombo 10 on 30 th day of September 2011 at 11.00a.m. The Notice of the 19th Annual General Meeting is on page 39 of the Annual Report.For and on behalf of the BoardSgdA.K.PathirageDIRECTORSgdD.WimalasundaraDIRECTORSgdSecretaries & Registrars (Pvt) LtdSECRETARIESMay 11, 2011Colombo14

STATEMENT OF DIRECTORS’ RESPONSIBILITYAsiri Central Hospitals PLC - Annual Report 2010/2011The responsibility of the Directors, in relation to the financial statements of the Company differ from theresponsibilities of the Auditors, which are set out in the Report of the Auditors on page 16.The Directors are responsible for preparing the Annual Report and the financial statements. Company lawrequires the Directors to prepare financial statements for each financial year, giving a true and fair view of the stateof affairs of the Company at the end of the financial year, and of the profit or loss of the Company for the financialyear.In preparing those financial statements set out on pages 17 to 34, the directors are required to:••select appropriate accounting policies and then consistently;make judgments and estimates that are reasonable and prudentstate whether applicable accounting standards have been followed, subject to any material departure•disclosed and explained in the financial statementsThe Directors confirm that they have complied with the above requirements in preparing both the Companyfinancial statements. The Directors also confirm that the Company has adequate resources to continue in businessfor the foreseeable future and have applied going concern basis in preparing these financial statements.The Directors are responsible for keeping proper accounting records, which disclose reasonable accuracy, at anytime, the financial position of the Company enable them to ensure the financial statements comply with theCompanies Act No. 7 of 2007.They are also responsible for safeguarding the assets of the Company and the Group and for taking reasonablesteps for the prevention and detection of fraud and other irregularities. In this regard the Directors have institutedan effective and comprehensive system of internal control.The Directors are required to prepare financial statements and to provide the external auditors with everyopportunity to take whatever steps and undertake whatever inspections they may consider to be appropriate toenable them to give their independent audit opinion.The directors are of the view that they have discharged their responsibilities as set out in this statement.Compliance ReportThe Directors confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company, allcontributions, levies and taxes payable on behalf of and in respect of the employees of the Company and otherknown statutory dues as were due and payable by the Company as at the Balance Sheet date have been paid or,where relevant provided for, in arriving at the financial results for the year under review.For and on behalf of the BoardSgd.SECRETARIES & REGISTRARS (PRIVATE) LIMITEDSECRETARIESMay 11, 2011Colombo15

INDEPENDENT AUDITOR'S REPORTTO THE SHAREHOLDERS OF ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Report on the financial statementsWe have audited the accompanying financial statements of Asiri Central Hospitals PLC which comprise thebalance sheet as at 31 March 2011, and the income statement, statement of changes in equity and cash flows forthe year then ended, and a summary of significant accounting policies and other explanatory notes as set out onpages 21 to 34.Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordancewith Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaininginternal control relevant to the preparation and fair presentation of financial statements that are free from materialmisstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.Scope of Audit and Basis of OpinionOur responsibility is to express an opinion on these financial statements based on our audit. We conducted ouraudit in accordance with Sri Lanka Auditing Standards. Those Standards require that we plan and perform theaudit to obtain reasonable assurance whether the financial statements are free from material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We have obtained all the information and explanations which to the best of our knowledge and belief werenecessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for ouropinion.OpinionIn our opinion, so far as appears from our examination, the Company maintained proper accounting records for theyear ended 31 March 2011 and the financial statements give a true and fair view of the Company's state of affairsas at 31 March 2011 and of its loss and cash flows for the year then ended in accordance with Sri LankaAccounting Standards.Report on Other Legal and Regulatory RequirementsThese financial statements also comply with the requirements of Section 151 (2) of the Companies Act No. 07 of11th May 2011COLOMBOSgdPricewaterhouse CoopersCHARTERED ACCOUNTANTS16

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Income statement(all amounts in Sri Lanka Rupees )NotesYear ended 31 March2011 2010Sales 4 29,680,367 652,689,332Cost of sales (10,311,372) (416,120,091)Gross profit 19,368,995 236,569,241Other income 5 27,062,173 45,425Administrative expenses (50,566,255) (75,776,675)Operating (loss) / profit 6 (4,135,087) 160,837,991Finance cost 8 (99,385,381) (142,111,021)Share of loss of an associate 14 (72,297,546) (4,769,451)Surplus over net assets acquired of the associate 14 Nil 277,896,134(Loss)/ profit before tax (175,818,014) 291,853,653Tax 9 (698,210) (13,565,476)Net (loss )/ profit (176,516,224) 278,288,177(Loss)/ earnings per share (Rs) 10 (7.90) 12.46The notes on pages 21 to 34 form an integral part of these financial statementsIndependent auditor's report - page 1617

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Balance sheet(all amounts in Sri Lanka Rupees)ASSETSNotes31 March2011 2010Non-current assetsProperty, plant and equipment 12 1,709,032,051 958,441,128Investments 13 156,750 156,750Investment in associate 14 945,829,197 1,018,126,7432,655,017,998 1,976,724,621Current assetsInventories 15 Nil 21,825,442Trade and other receivables 16 6,715,951 41,114,275Current tax receivable 749,082 NilCash and cash equivalents 17 1,139,650 8,004,9858,604,683 70,944,702Total assets 2,663,622,681 2,047,669,323EQUITY AND LIABILITIESCapital and reservesStated capital 23 223,339,570 223,339,570Revaluation reserve 24 1,381,501,000 529,445,000Capital reserve 25 313,432 313,432Retained earnings 191,888,018 368,404,241Total equity 1,797,042,020 1,121,502,243Non-current liabilitiesBorrowings 19 Nil 732,815Defined benefit obligations 20 Nil 25,871,723Nil 26,604,538Current liabilitiesTrade and other payables 18 70,058,239 72,811,158Borrowings 19 796,522,423 813,741,157Current tax payable Nil 13,010,227866,580,661 899,562,542Total liabilities 866,580,661 926,167,080Total equity and liabilities 2,663,622,681 2,047,669,323The Board of Directors is responsible for thepreparation and presentation of these financialstatements. These financial statements wereauthorised for issue by the Board of Directors on11th May 2011I certify that these financial statements havebeen prepared in compliance with therequirements of the Companies Act, No. 07 of2007.SgdA K PathirageDirectorSgdD WimalasunderaDirectorSgdS D NimalasuriaFinance DirectorThe notes on pages 21 to 34 form an integral part of these financial statementsIndependent auditor's report - page 1618

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Statement of changes in equity(all amounts in Sri Lanka Rupees)Stated Revaluation Capital Retained Totalcapital reserve reserve earningsBalance at 1 April 2009 223,339,570 529,445,000 313,432 90,116,064 843,214,066Net profit Nil Nil Nil 278,288,177 278,288,177Balance at 31 March 2010 223,339,570 529,445,000 313,432 368,404,241 1,121,502,243Balance at 1 April 2010 223,339,570 529,445,000 313,432 368,404,241 1,121,502,243Net loss Nil Nil Nil (176,516,224) (176,516,224)Revaluation during the year Nil 852,056,000 Nil Nil 852,056,000Balance at 31 March 2011 223,339,570 1,381,501,000 313,432 191,888,018 1,797,042,020The notes on pages 21 to 34 form an integral part of these financial statementsIndependent auditor's report - page 1619

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Cash flow statement(all amounts in Sri Lanka Rupees)NotesYear ended 31 March2011 2010Operating activitiesCash generated from operations 26 33,377,603 182,127,069Interest expense 8 (99,385,381) (142,124,912)Tax paid (14,457,517) (12,370,018)Gratuity paid 20 Nil (4,211,150)Net cash generated (used in)/ from operating activities (80,465,295) 23,420,989Investing activitiesPurchase of property, plant and equipment 12 Nil (523,373)Sales proceeds of property, plant and equipment 89,914,436 34,449Interest income 8 448,921 13,891Net cash generated from / (used in) investing activities 90,363,357 (475,033)Financing activitiesPayments on long term borrowings (18,134,328) (40,024,452)Proceeds from inter company 65,009,954 NilNet cash generated from / (used in) financing activities 46,875,626 (40,024,452)Increase/(decrease) in cash and cash equivalents 56,773,688 (17,078,496)Movement in cash and cash equivalentsAt start of year (62,158,522) (56,743,089)Increase / (decrease) 56,773,688 (17,078,496)At end of year 17 (4,196,680) (62,158,522)The notes on pages 21 to 34 form an integral part of these financial statementsIndependent auditor's report - page 1620

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements1 General informationAsiri Central Hospitals PLC (ACHP) was incorporated under the Companies Act No. 17 of 1982 and reregisteredunder the Companies Act No. 7 of 2007 on 31 January 2009. The registered office of theCompany is 37, Horton Place, Colombo 7. The Company is a quoted public company which has its listingon the Colombo Stock Exchange.The principal activity of the Company was providing medical services. With the cessation of the businessoperations, the Company now operates as an investment company. The ultimate parent company andcontrolling party of ACHP is Asiri Hospital Holdings PLC which directly and indirectly holds 65.3% of theissued share capital of the Company.2 Summary of significant accounting policiesThe principal accounting policies applied in the preparation of the financial statements are set out below.These policies have been consistently applied to all the years presented unless otherwise stated.2.1 Basis of preparationThe financial statements are prepared in accordance with and complying with Sri Lanka AccountingStandards (SLAS). The financial statements are prepared under the historical cost convention asmodified by the revaluation of land at fair value.2.2 Foreign currencies(a) Functional and presentation currencyItems included in the financial statements of the entity are measured using the currency of theprimary economic environment in which the entity operates („the functional currency‟). The financialstatements are presented in Sri Lanka Rupees, which is the Company‟s functional and presentationcurrency.(b) Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange ratesprevailing at the dates of the transactions. Foreign exchange gains and losses resulting from thesettlement of such transactions and from the translation at year-end exchange rates of monetaryassets and liabilities denominated in foreign currencies are recognised in the income statement.2.3 Property, plant and equipmentAll property, plant and equipment is initially recorded at cost.Land subsequently shown at fair value, based on valuation by external independent valuersperformed on 27 June 2005 and 30 November 2010. All the other property, plant and equipment arestated at historical cost less depreciation. Increases in the carrying amount arising on revaluationsare credited to revaluation reserve in shareholder's equity.Depreciation is calculated on the straight line method to write off the cost of each asset, to theirresidual values over their estimated useful lives. The principal annual rates used are as follows:Building 5Laboratory equipment and furniture and fittings 10Refrigerators 12.5Air conditioners and CT tubes 25Motor vehicles 25Cutlery and crockery 33 1/3Linen, mattresses and general accessories 50%21

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)2.3 Property, plant and equipment (Contd)The carrying value of property, plant and equipment is reviewed for impairment when events orchanges in circumstance indicate that the carrying value may not be recoverable. The asset'sresidual value and useful life is reviewed, and adjusted if appropriate at each balance sheet date.Where the carrying amount of an asset is greater than its estimated recoverable amount it is writtendown immediately to its recoverable amount.Gains and losses on disposal of property, plant and equipment are determined by reference to theircarrying amount and are taken into account in determining operating profit.2.4 Impairment of non - financial assetsAssets that have an indefinite useful life are not subject to amortisation and are tested annually forimpairment. Assets that are subject to amortisation are reviewed for impairment whenever events orchanges in circumstances indicate that the carrying amount may not be recoverable. An impairmentloss is recognised for the amount by which the asset‟s carrying amount exceeds its recoverableamount. The recoverable amount is the higher of an asset‟s fair value less costs to sell and value inuse. For the purposes of assessing impairment, assets are grouped at the lowest levels for whichthere are separately identifiable cash flows (cash-generating units). Non-financial assets other thangoodwill that suffered impairment are reviewed for possible reversal of the impairment at eachreporting date.The Company classifies its financial assets in the following categories: at fair value through profit orloss, loans and receivables, and available for sale. The classification depends on the purpose forwhich the financial assets were acquired. Management determines the classification of its financialassets at initial recognition and re-evaluates this designation at every reporting date.2.5 Investment in associatesAssociates are all entities over which the company has significant influence but not control, generallyaccompanying a shareholding of between 20% and 50% of the voting rights. Investments inassociates are accounted for using the equity method of accounting and are initially recognised atcost. The Company‟s investment in associates includes goodwill identified on acquisition, net of anyaccumulated impairment loss.The Company‟s share of its associates‟ post-acquisition profits or losses is recognised in the incomestatement, and its share of post-acquisition movements in reserves is recognised in reserves. Thecumulative post-acquisition movements are adjusted against the carrying amount of the investment.When the Company‟s share of losses in an associate equals or exceeds its interest in the associate,including any other unsecured receivables, the Company does not recognise further losses, unless ithas incurred obligations or made payments on behalf of the associate.Unrealised gains on transactions between the Company and its associates are eliminated to theextent of the Company‟s interest in the associates. Unrealised losses are also eliminated unless thetransaction provides evidence of an impairment of the asset transferred. Accounting policies ofassociates have been changed where necessary to ensure consistency with the policies adopted bythe Company. Dilution gains and losses arising in investments in associates are recognised in theincome statement.22

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)2.6 InvestmentsLong term investments are shown at cost and provision is only made where, in the opinion of theDirectors, there is a permanent diminution in value. Where there has been a permanent diminutionin the value of an investment, it is recognised as an expense in the period in which the diminution isidentified.On disposal of an investment, the difference between the net disposal proceeds and the carryingamount is charged or credited to the income statement.2.7 Accounting for leases where the Company is the lesseeLeases where the Company assumes substantially all the benefits and risks of ownership areclassified as finance leases. Finance leases are capitalised at the estimated present value of theunderlying lease payments. Each lease payment is allocated between the liability and financecharges so as to achieve a constant rate on the finance balance outstanding. The correspondingrental obligations, net of finance charges are included in other long term payables. The interestelement of the finance charge is charged to the income statement over the lease period. Theproperty, plant and equipment acquired under finance leasing contracts is depreciated over theuseful life of the asset.Leases of assets under which all the risks and benefits of ownership are effectively retained by thelessor are classified as operating leases. Payments made under operating leases are charged to theincome statement on a straight line basis over the period of the lease.2.8 InventoriesInventories are stated at the lower of cost or net realisable value. Cost of medical stocks isdetermined on a weighted average basis whereas general stocks are valued on a first in first out(FIFO) basis. Net realisable value is the estimate of the selling price in the ordinary course ofbusiness, less the costs of realisation.2.9 Trade receivablesTrade receivables are carried at anticipated realisable value. An estimate is made for doubtfulreceivables based on a review of all outstanding amounts at the year end. Bad debts are written offduring the year in which they are identified.2.10 Cash and cash equivalentsCash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cashflow statement, cash and cash equivalents comprise cash in hand, deposits held at call with banksand balances at bank, net of bank overdrafts. In the balance sheet, bank overdrafts are included inborrowings in current liabilities.2.11 Taxation(a) Income taxThe charge for taxation is based on 2% on its turnover, which is deemed to be the profit andincome of the Company for a concessionary tax period of 15 years. The interest incomeearned and other operating income have been taxed at 35%.(b) Deferred income taxDeferred income tax is provided in full, using the liability method, on temporary differences arisingbetween the tax base of assets and liabilities and their carrying amounts in the financial statements.Deferred income tax is determined using tax rates that have been enacted or substantially enactedby the balance sheet date and are expected to apply when the related deferred income tax asset isrealised or the deferred income tax liability is recovered.23

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)2.11 Taxation (Contd)(b) Deferred income tax (Contd)Deferred income tax assets are recognised to the extent that it is probable that further taxable profitwill be available against which the temporary differences can be utilised.2.12 Borrowings and borrowings costBorrowings are initially recognized at the proceeds received, net of transaction costs incurred.Borrowings are subsequently stated at amortized cost using the effective interest method; anydifference between proceeds (net of transaction costs) and the redemption value is recognized inthe income statement as interest charge or income over the period of the borrowings. Other debtand financing is primarily comprised of bank loans bearing market rates of interest that vary on aregular basis.Interest costs on borrowings to finance the construction of property, plant and equipment arecapitalised, during the period of time that is required to complete and prepare the asset for itsintended use. All other borrowing costs are expensed.2.13 Dividend distributionDividends distribution to the Company's shareholders is recognised as a liability in the Company'sfinancial statements in the period in which the dividends are approved by the Company'sshareholders.2.14 Employee benefits(a)Defined benefit planDefined benefit plans define an amount of benefit that an employee will receive on retirement,usually dependent on one or more factors such as age, years of service and compensation.During the previous financial year with the transfer of employees to a related company terminalbenefits were provided for all employees at the rate of one half of the basic or consolidated wage orsalary and cost of living and all other allowances for the last month of the financial year, foremployees who have completed five years in-service to meet the requirements as required by theGratuity Act. This amount was transferred to related companies based on the number of employeestransferred.(b) Defined contribution plansAll employees of the Company are members of the Employees' Provident Fund and Employees'Trust Fund, to which their employer contributes 12% and 3% respectively of such employees' basicor consolidated wage or salary, cost of living and all other allowances.2.15 ProvisionsProvisions are recognised when the Company has a present legal or constructive obligation as aresult of past events, it is probable that an outflow of resources will be required to settle theobligation, and a reliable estimate of the amount can be made.24

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)2.16 Stated capitalOrdinary shares are classified as stated capital.Incremental costs directly attributable to the issue of new shares or options are shown in equity as adeduction, net of tax, from the proceeds.Where any company purchases the Company‟s equity share capital, the consideration paid,including any directly attributable incremental costs (net of income taxes) is deducted from equityattributable to the company‟s equity holders until the shares are cancelled or reissued. Where suchshares are subsequently reissued, any consideration received, net of any directly attributableincremental transaction costs and the related income tax effects, is included in equity attributable tothe Company‟s equity holders.2.17 Revenue recognitionSales are recognised upon performance of services net of sales taxes and discounts.Other revenues earned by the Company are recognized on the following bases;Rental incomeInterest income- on an accrual basis- on an accrual basis2.18 Comparative informationWhere necessary comparative figures have been reclassified to conform with the current year'spresentation.3 Status of the CompanyThe Company has ceased operations with the formation of a new hospital through its associatecompany, Central Hospital (Private) Limited. Accordingly, business operations ceased in April 2010 andemployees have been given alternate employment at the new hospital and within the group. With thecessation of the operations, there is a change in the core business from hospital services to an investmentcompany. The board of directors of the Company intends to dispose the land, buildings and equipment oruse such assets for strategic investments. Until a suitable offer is received from a prospective buyer, theLand and buildings have been leased out to Sri Lanka Army for a period of one year from February 2011.Land and building have been valued at Rs 1,667 million and 166 million respectively during the financialyear. Further the Company has adequate resources to maintain the property. The board of directors willdecide on a suitable action plan in the future in the best interest of the Company, for its future activities.4 SalesSales represents the value of services rendered, which mainly consist of nursing and medical care,channeling, laboratory, operating theatre, intensive care unit (I.C.U) and income from pharmacies.5 Other income31 March2011 2010Dividend income Nil 10,976Other income 3,167,616 NilProfit on disposal of property, plant and equipment 23,894,557 34,44927,062,173 45,42525

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)6 Operating profitThe following items have been charged/ (credited) in arriving at operating profit:2011 2010Directors' emoluments (9,000) 1,080,000Auditors' remuneration - Audit fee 392,330 548,000- Other fees Nil NilDepreciation on property, plant and equipment (Note 12) 27,642,632 34,927,094Provision for impairment 7,802,567 NilRepairs and maintenance expenditure 558,103 11,006,626Staff costs (Note 7) Nil 149,155,9227 Staff costs2011 2010Wages and salaries Nil 131,633,757Defined contribution plan Nil 13,035,255Defined benefit obligations (Note 21) Nil 4,486,910Average monthly number of persons employed by the Company during the year:Nil 149,155,922Full time Nil 4378 Finance cost2011 2010Interest income- savings account 448,921 13,8919 TaxInterest expenses448,921 13,891- bank overdrafts 3,965,364 4,734,178- bank borrowings 94,837,505 136,600,231- interest on lease 582,512 790,504a) Current tax(99,385,381) (142,124,912)(98,936,460) (142,111,021)The Company was exempted from income tax on operating profit for 7 years commencing from the year inwhich it made a taxable profit or from any year of assessment not later than 5 years reckoned from thedate of commencement of commercial operations, which ever is earlier. Immediately following theaforementioned tax exemption period, the Company could opt for a concessionary tax period of a further15 years at a rate of 2% on its turnover which is deemed to be the profit and income of the Company. TheCompany commenced its commercial operations on 1 August 1994 and continuously incurred losses up tothe year of assessment 2000/2001. Pursuant to the agreement dated 8 September 1992, entered into bythe Company under the Greater Colombo Economic Commission Law No 4 of 1978 and as per the Boardof Investment letter dated 30 August 1999, tax exemption period of the enterprise commenced from theyear of assessment 1999/2000 and ended in the year of assessment 2005/2006 subject to the fulfilment ofall conditions stipulated in clause 10 (vii) of the Board of Investment agreement.26

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)9 Tax (contd)Subsequent to the expiration of aforesaid tax exemption period, the Company opted for the concessionarytax period of 15 years at the rate of 2% on its turnover, which is deemed to be the profit and income of theCompany. The interest income earned and other operating income is taxed at 35% (2010 - 35%).2011 2010Tax on turnover 593,606 13,560,541Over provision in previous years (1,029,596) NilTax on other income 1,134,200 4,935b) Deferred income tax698,210 13,565,476No deferred tax assets has been recognised in the financial statements in respect of carry forward taxlosses as at the balance sheet date, as there is no certainty that the Company would make future taxableprofits for a foreseeable future to absorb the deferred tax assets arising from carry forward tax losses.10 Earnings per shareBasic earnings/ (loss) per share is calculated by dividing the net profit/ (loss) attributable to shareholdersby the weighted average number of ordinary shares in issue during the year.2011 2010Net (loss)/ profit attributable to shareholders (176,516,224) 278,288,177Weighted average number of ordinary shares in issues 22,333,957 22,333,957Basic earnings/ (loss) per share (Rs) (7.90) 12.4611 DividendsNo dividend is proposed for the year ended 31 March 2011 (31 March 2010 - Nil).27

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)12 Property, plant and equipmentFreehold Plant and Furniture Motor Totalland and machinery fixtures and vehiclesbuildingsequipmentPeriod ended 31 March 2010Opening net book amount 855,809,547 3,674,992 128,842,235 4,518,076 992,844,850Additions Nil Nil 523,373 Nil 523,373Disposal Nil Nil (190,663) Nil (190,663)Depreciation on disposal Nil Nil 190,663 Nil 190,663Depreciation charge (Note 6) (5,091,920) (1,169,795) (26,571,482) (2,093,897) (34,927,094)Closing net book amount 850,717,627 2,505,197 102,794,126 2,424,179 958,441,129At 31 March 2010Cost or valuation 928,241,270 26,919,725 340,709,132 14,483,107 1,310,353,234Accumulated depreciation (77,523,643) (24,414,529) (237,915,006) (12,058,928) (351,912,106)Net book amount 850,717,627 2,505,196 102,794,126 2,424,179 958,441,128Period ended 31 March 2011Opening net book amount 850,717,627 2,505,197 102,794,126 2,424,179 958,441,129Revaluations during the period 852,056,000 Nil Nil Nil 852,056,000DisposalNil (23,697,610) (296,395,097) (12,303,105) (332,395,812)Depreciation on disposal Nil 21,835,485 234,291,775 10,248,673 266,375,933Provision for impairment Nil (13,145) (7,789,422) Nil (7,802,567)Depreciation charge (Note 6) (4,795,791) (629,927) (21,847,166) (369,747) (27,642,632)Closing net book amount 1,697,977,836 Nil 11,054,216 Nil 1,709,032,051At 31 March 2011Cost or valuation 1,780,297,270 3,208,970 44,314,035 2,180,002 1,830,000,277Accumulated depreciation (82,319,434) (3,208,970) (33,259,819) (2,180,002) (120,968,225)Net book amount 1,697,977,836 Nil 11,054,216 Nil 1,709,032,051(a)(b)Assets included in the above table comprises cost of the assets obtained under finance leases,amounting to Rs Nil (31 March 2010 - Rs 7,000,000) and accumulated depreciation amounting toRs Nil (31 March 2010 - Rs 5,045,025).Property, plant and equipment include fully depreciated assets still in use, the cost of which at 31March 2011 amounted to Rs 17,890,055 (31 March 2010 - Rs 124,119,993).(c)The land at No. 37, Horton Place, Colombo - 7 was revalued on 30 November 2010 by independentvaluer and the results of such valuation were incorporated to these financial statements as of 31December 2010. If the land was stated at historical cost the cost would have been Rs 285,999,000(31 March 2010 - Rs 285,999,000).The valuation was made on the basis of market value.28

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)13 Investments2011 2010Listed shares at cost:At beginning of year 156,750 156,750At end of year 156,750 156,750Market value of listed shares 552,840 341,460This investment consists of investment in listed shares of National Development Bank PLC.14 Investment in associate2011 2010Transferred from investment in subsidiary 1,018,126,743 745,000,060Share of loss [Note 14(a)] (72,297,546) (4,769,451)Surplus over net assets acquired [Note 14(c)] NIL 277,896,134At 31 March 945,829,197 1,018,126,743Investment in associate consists of an investment in Central Hospital (Private) Limited, in which theCompany has a 34.63% stake. The associate company was incorporated on 14 September 2006 and theinvestment in associate is accounted under the equity method.a) Share of loss is recognised on after tax basis.b) The results of the Company's unlisted associate, and its aggregated assets and liabilities are as follows:2011 2010Assets 5,879,875,825 5,263,572,335Liabilities 3,148,633,559 2,323,558,637Net assets 2,731,242,266 2,940,013,698Revenue 1,103,915,232 NilLoss (208,771,429) (41,906,087)c)The results of the Company's unlisted associate, Central Hospital (Private) Limited, and itsaggregated assets and liabilities as at 31 December 2009, the date it became an associate were asfollows:Total net assets of the associate Rs 2,953,786,295Shareholding held by the Company 34.63%Net assets acquired Rs 1,022,896,194Value of the investment Rs (745,000,060)Surplus net assets acquired Rs 277,896,13429

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)15 Inventories2011 2010Drugs and chemicals Nil 18,351,162General stores Nil 3,474,280Nil 21,825,44216 Receivables and prepayments2011 2010Trade receivables 1,314,733 22,200,069Less - provision for bad debts (404,366) (1,646,006)Trade receivables - net 910,367 20,554,063Prepayments, deposits and advances 2,634,241 4,625,912Receivable from related parties [Note 27.1 (d)] 2,573,681 522,235Other receivables [Note 16 (a)] 597,662 15,412,0656,715,951 41,114,27517 Cash and cash equivalents2011 2010Cash at bank and in hand 1,139,650 8,004,985For the purposes of the cash flow statement, the year-end cash and cash equivalents comprise thefollowing:2011 2010Cash and bank balances 1,139,650 8,004,985Bank overdrafts (Note 19) (5,336,330) (70,163,507)(4,196,680) (62,158,522)18 Trade and other payables2011 2010Trade payables 2,214,638 28,690,274Social security and other taxes Nil 2,126,400Accrued expenses 334,030 2,972,996Deposits and Other payables 1,486,407 10,578,147Payable to related companies [Note 27.1 (c) / Note 27.2 (b)] 66,023,165 28,443,34170,058,239 72,811,15830

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)19 Borrowings2011 2010CurrentBank overdraft (Note 17) 5,336,332 70,163,507Lease liabilities 1,176,137 2,009,761Bank borrowings [Note 19 (a)] 725,000,000 741,567,889Inter company borrowings 65,009,954 Nil796,522,423 813,741,157Non-currentLease liabilities Nil 732,815Nil 732,815Total borrowings 796,522,423 814,473,972The interest rate exposure on the borrowings of the Company are as follows:2011 2010Total borrowings:- at fixed rates 6,512,468 72,906,083- at floating rates 790,009,954 741,567,889796,522,423 814,473,972Weighted average effective rates:2011 2010- bank overdrafts (AWPLR + 1%) 18%- bank borrowings- Lease liabilities 19% 19%- Sampath Bank - Rs 82,000,000 (AWPLR + 2.5%) (AWPLR + 2%)- Syndication loan (AWPLR + 2.5%) (AWPLR + 2%)- Inter company (AWPLR + 1.5%) NilFinance lease liabilities - minimum lease payments 2011 2010Not later than one year 1,772,455 2,212,198Later than one year Nil 1,772,4851,772,455 3,984,683Future finance charges on finance leases (596,319) (1,242,107)Present value of finance lease liabilities 1,176,137 2,742,576Representing lease liabilities2011 2010- current 1,176,137 2,009,761- non-current 732,8151,176,137 2,742,576(a)Bank borrowings were obtained to invest in Central Hospital (Private) Limited and are secured by aprimary mortgage bond over the Company's premises, at No. 37 Horton Place, Colombo 7.(b)Maturity of non current borrowings:2011 2010Between 1 and 2 years Nil 732,815Nil 732,81531

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)20 Defined benefit obligationsThe amounts recognised in the balance sheet are as follows:2011 2010At beginning of year 25,871,723 25,595,963Current service cost (Note 7) Nil 4,486,910Transferred to related companies (25,871,723) NilBenefits paid Nil (4,211,150)At end of year Nil 25,871,723During the previous financial year, with the transfer of employees to related companies terminal benefitswere provided for all employees of the Company at the rate of one half of the basic or consolidated wageor salary and cost of living and all other allowances for the last month of the financial year, for employeeswho have completed five years in-service to meet the requirements as required by the Gratuity Act. Withthe transfer of employees the liability so provided was transferred during the current financial year.21 Contingent liabilitiesThere were no material contingent liabilities outstanding at the balance sheet date.22 CommitmentsCapital commitmentsThere were no material capital commitments outstanding at the balance sheet date.Financial commitmentsThere were no material financial commitments outstanding at the balance sheet date.23 Stated capitalNumber ofsharesTotalvalueAt 31 March 2010 22,333,957 223,339,570At 31 March 2011 22,333,957 223,339,570All issued shares are fully paid.24 Revaluation reserve2011 2010At the beginning of the year 529,445,000 529,445,000Additions - Land 852,056,000 NilAt the end of the period/ year 1,381,501,000 529,445,000The revaluation reserve is non distributable.32

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)25 Capital reserveThis represents the capital gain arising from reduction of capital in financial year 2000 / 2001.26 Cash generated from operationsReconciliation of loss before tax to cash generated from/ (used in) operations:2011 2010Profit/(loss) before tax (175,818,014) 291,853,653Adjustments for:Depreciation (Note 12) 27,642,632 34,927,094Defined benefit obligation (Note 20) Nil 4,486,910Profit on disposal of property, plant and equipment (Note 6) (23,894,557) (34,449)Interest expense (Note 8) 99,385,381 142,124,912Impairment Loss 7,802,566 NilInterest income (Note 8) (448,921) (13,891)Surplus over net assets acquired Nil (277,896,134)Share of loss of an associate (Note 14) 72,297,546 4,769,451Changes in working capital- trade and other receivables 33,210,170 6,453,249- inventories 21,825,442 (3,584,891)- payables (28,624,642) (20,958,835)Cash generated from operations 33,377,603 182,127,06927 Directors' interests in contracts and related party transactions27.1Asiri Hospital Holdings PLC, Asiri Surgical Hospitals PLC and Softlogic Holdings (Private) Limiteddirectly hold 55.6%, 32.7% and 10.15% respectively of the shares of the Company. Asiri HospitalHoldings PLC also has an indirect holding of 14.56% in the Company and is the parent as well asthe ultimate parent company of the Company.Mr A K Pathirage, Mrs D Wimalsundara, Dr K M P Karunaratne, Dr D S Rajapaksa, Mr G L HPremaratne, Mr S A B Rajapaksa and Mrs S D Nimalasuria who are directors of the Company arealso directors of Asiri Hospital Holdings PLC and Asiri Surgical Hospital PLC. Dr S Selliah who wasthe Deputy Chairman of the Company resigned from the Company with effect from 1 December2010 and Mr C D Weerasignhe who was a director of the Company expired on 19 December 2010.The following transactions were carried out with related parties :2011 2010(a)Sale of goods and services toAsiri Hospital Holdings PLC 901,273 360,320Asiri Surgical Hospitals PLC 209,169 NilCentral Hospital (Private) Limited 18,696,325 Nil19,806,767 360,32033

ASIRI CENTRAL HOSPITALS PLCAsiri Central Hospitals PLC - Annual Report 2010/2011Notes to the financial statements (Contd)27 Directors' interests in contracts and related party transactions (Contd)2011 2010(b)(c)(d)27.2Purchase of goods and servicesAsiri Hospital Holdings PLC Nil 37,075,159Asiri Surgical Hospitals PLC 316,837 4,541,430Central Hospital (Private) Limited 27,183,33227,500,169 41,616,5892011 2010Payable to related partiesAsiri Hospital Holdings PLC [Note 18(a)] 25,749,901 9,848,741Asiri Surgical Hospitals PLC 5,697,330 5,727,466Central Hospitals ((Private)) Ltd 34,575,933 Nil66,023,165 15,576,2072011 2010Receivable from related partiesAsiri Hospital Holdings PLC 231,938 500,217Asiri Hospital Matara ((Private)) Ltd 44,845 22,018Matera Medihouse ((Private)) Ltd 2,296,898 Nil2,573,681 522,235Central Hospital (Private) Limited is an associate in which the Company has a 34.63% stake at thebalance sheet date.Mr A K Pathirage, Mrs D Wimalasundara, Dr K M P Karunaratne, Dr D S Rajapaksa, Mrs S D Nimalasuria,Dr S A B Rajapaksa and MR G L H Premaratne who are directors of the Company are also directors ofCentral Hospital (Private) Limited.The following transactions were carried out with related parties.2011 2010(a)(b)Funds received from CentralHospital (Private) Limited Nil 85,100,000Payable to CentralHospital (Private) Limited 27,183,332 22,715,87527.3 Key management compensation2011 2010Salaries and other short term employee benefits anddefined benefit obligations Nil 5,261,15028 Post balance sheet eventsNo events have occurred since the balance sheet date which would require adjustment to or disclosure inthe financial statements.34

(177)(7.90)30(83)(32)(3.72)(1.42)632.8455559427862065312.46Asiri Central Hospitals PLC - Annual Report 2010/2011FIVE YEAR SUMMARYTurnoverRs.MnNet profitRs.MnEarning per shareRs.06/07 07/08 08/09 09/10 10/1106/07 07/08 08/09 09/10 10/1106/07 07/08 08/09 09/10 10/112006/2007 2007/2008 2008/2009 2009/2010 2010/2011Rs.000 Rs.000 Rs.000 Rs.000 Rs.000Sales 555,196 593,990 620,194 652,689 29,680Gross profit 201,451 206,379 210,967 236,569 19,369Operating profit 117,349 117,937 130,720 160,838 (4,135)Finance cost 42,576 136,748 201,121 142,111 99,385Net Profit/(Loss) 63,346 (31,663) (83,074) 278,288 (176,516)Fixed assets 1,030,430 1,029,166 992,844 958,441 1,709,032Net current assets (571,641) (106,619) (127,947) (828,617) (857,976)Shareholders' funds 964,651 926,288 843,214 1,121,502 1,797,042Non current liabilities 20,908 986,242 766,841 26,604 NilEarnings per share 2.84 (1.42) (3.72) 12.46 (7.90)Dividends per share 0.03 Nil Nil Nil Nil35

Asiri Central Hospitals PLC - Annual Report 2010/2011INFORMATION TO INVESTORS01. Stock Exchange ListingThe Ordinary shares of the Hospital are all listed in the Colombo Stock Exchange. The Audited FinancialStatements of the Company for the year ended March 31, 2011 and the copies of this annual report havebeen submitted to The Colombo Stock Exchange.02. A distribution schedule of the number of share holders.Range of ShareholdingAs at 31 March 2011As at 31 March 2010No. of Total % No. of Total %Holders Holding Holders Holding11,00110,001100,001- 1,000286 71,275 0.32 284 73,421 0.33- 10,00029 81,051 0.36 31 110,70 0.50- 100,0003 47,400 0.21 2 15,600 0.07- 1,000,0002 393,488 1.76 2 393,488 1.76Over 1000001 3 21,740,743 97.34 3 21,740,743 97.34323 22,333,957 100.00 322 22,333,957 100.0003. Categories of shareholdersAs at 31 March 2011 As at 31 March 2010No. of No. of % No. of No. of %Shares Holding Shares Holding Shares Holding Shares HoldingIndividuals 169,125 302 0.76 193,925 309 0.87Institutions 22,164,832 21 99.24 22,140,032 13 99.1322,333,957 323 100.00 22,333,957 322 100.00Resident 22,331,357 319 99.99 22,331,357 318 99.99Non-Resident 2,600 4 0.01 2,600 4 0.0122,333,957 323 100.00 22,333,957 322 100.0036

Asiri Central Hospitals PLC - Annual Report 2010/2011INFORMATION TO INVESTORS4. Share PricesMarket Value of Ordinary Shares2011 2010Highest 215.00 120.00Lowest 151.00 62.00Year end 198.50 109.25Book ValueNet assets per share, Rs. 80.46 50.22EarningsEarnings per share, Rs. (7.90) 12.46Price earnings ratio, times (25.13) 8.77DividendsInterim Dividend Paid, Rs. (Mn.) Nil NilRate of Interim Dividend Nil NilProposed Final Dividend, Rs. (Mn.) Nil NilRate of Final Dividend Nil NilDividend per Share, Rs. Nil Nil400.Rs. MnNET PROFIT & DIVIDENDSRs.15EARNINGS PER SHARE & DIVIDEND PER. RsSHARERs.22512.460.168300278175100.11820012550.0681000-10067630.00002007 200802009 2010 2011(32)(83)7525-25-750-52.840.032007 2008 2009 2010 2011(1.42)(3.72)0.018-0.032-0.082-200Year ended 31 MarchNet ProfitDividend(177)-125-10Year ended 31 MarchEPSDPS(7.90)-0.13237

Asiri Central Hospitals PLC - Annual Report 2010/2011INFORMATION TO INVESTORS05.Sources and Distribution of incomeFor the year ended 31 March 2011 2010 2009 2008 2007Sources of IncomeHospital income 29 653 620 594 555Other 27 - 3 1 2Surplus over net assets acquiredof the associate - 278 - - -56 931 623 595 557Distribution of IncomeTo employees as emoluments Nil 149 148 136 110To lenders as interest 99 142 201 137 43To providers of supplies & services 32 308 305 302 339To shareholders as dividends - - - - 7Share of loss of an associate 72 5 - - -Contribution to the Government 2 14 13 13 11Retained in the businessDepreciation set aside 28 35 39 39 29Reserves (177) 278 (83) (32) 1856 931 623 595 55706.Twenty Largest Shareholders as at March 31, 2011Name of the Shareholder No. Of Shares % No. Of Shares %Asiri Hospitals PLC 12,413,491 55.58 12,413,491 55.58Asiri Surgical Hospital PLC 7,303,257 32.70 7,303,257 32.70Commercial Bank of Ceylon Ltd / Soft Logic Holdings (Pvt) Ltd2,023,995 9.06 2,023,995 9.06Soft Logic Holdings (Pvt) Ltd 242,688 1.09 242,688 1.09Pan Asia Banking/Dai-Nishi Securities (Private) Limited 150,800 0.68 153,000 0.69Seylan Bank PLC/W D N H Perera 16,000 0.07 - -Dr.D.S.J.Pathirana 15,800 0.07 15,800 0.07Mr.G.C.Goonethilleke 15,600 0.07 15,600 0.07Mr.R.S.Seneviratne 7,000 0.03 7,000 0.03Mr.T.E.B.Perera 5,000 0.02 5,000 0.02Mr.N.K.Punchihewa 5,000 0.02 - -Ms.C.T.K.Rajapakshe 5,000 0.02 5,000 0.02Commercial Bank of Ceylon PLC/M A U Gunathilake 4,800 0.02 - -Dr.K.Shanmugananthan 4,600 0.02 4,600 0.02Mr.P.K.Wickremaarachchi 4,000 0.02 4,000 0.02Mr.Choung Fung Ling 4,000 0.02 4,000 0.02Dr.W.R.L.Fernando 4,000 0.02 3,900.00 0.02Mr.D.A.D.Jayamaha 3,000 0.01 - -Mrs.C.M.Goonasekara 3,000 0.01 3,000.00 0.01Mr.K.C.Vignaraja 3,000 0.01 3,000.00 0.01Total 22,234,031 99.54 22,229,431 99.53Percentage of the shares held by the public - 1.57%38

Asiri Central Hospitals PLC - Annual Report 2010/2011NOTICE OF MEETINGNotice is hereby given that the Nineteenth Annual General Meeting of Asiri Central Hospitals PLC will be held atthe Auditorium of Central Hospital (Private) Limited (4 th Floor), No. 114, Norris Canal Road, Colombo 10 on 30 thday of September 2011 at 11.00 a.m. for the following purposes:1 )2 )3 )4 )To receive and consider the Annual Report of the Board of Directors, Statements of Accounts and theBalance Sheet of the Company for the year ended 31st March 2011 together with the Report of theAuditors thereon.To re-elect Dr. D S Rajapaksa who retires by rotation in terms of Article 24(6) of the Articles ofAssociation, as a Director of the Company.To re-elect Mr. G L H Premaratne who retires by rotation in terms of Article 24(6) of the Articles ofAssociation, as a Director of the Company.To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company for the ensuing year and toauthorize the Directors to fix their remuneration.5 ) Special Business1)To authorize the Directors to determine and make donations for the year ending 31st March 2012and up to the date of the next Annual General Meeting.By Order of the BoardSECRETARIES & REGISTRARS (PRIVATE) LIMITED(Sgd.)SECRETARIESColomboAugust 25, 2011Note:1) A member entitled to attend and vote at the Meeting is entitled to appoint a Proxy who need not be amember, to attend instead of him/her.2) A form of Proxy is enclosed in this Report.3)The completed form of Proxy should be deposited at the Administrative Office of the Company, No. 114,Norris Canal Road, Colombo 10, not less than 48 hours before the time for holding the Meeting.IMPORTANT NOTICE TO SHAREHOLDERSPlease note that the shareholders in possession of share certificate/s [i.e. shareholders whose shares are notlodged with the Central Depository Systems (private) limited (CDS)] are kindly requested to lodge their sharecertificates with the CDS before 31st of December 2011 as per the circular no. 13/2010 issued by the CDS.39

Asiri Central Hospitals PLC - Annual Report 2010/2011FORM OF PROXY*I/We…………………………………………………………………………………………………………………………of……………………………………………………………………………………………………………… being* a member/members of ASIRI CENTRAL HOSPITALS PLC, do herebyappoint…………………………………………………..…………………………………………………of……………………………………………………………… or failing *him/herMr. A K PathirageDr. D S RajapaksaDr. K M P KarunaratneMrs. D WimalasunderaMr. G L H PremaratneMr. S A B Rajapaksaof Colombo or failing himof Colombo or failing himof Colombo or failing himof Colombo or failing herof Colombo or failing himof Colomboas *my/our Proxy to represent *me/us and to speak and vote for *me/us on *my/our behalf at the 19th ANNUALGENERAL MEETING OF THE COMPANY to be held at the Auditorium of Central Hospital (Private) Limited(4 thFloor), No. 114, Norris Canal Road, Colombo 10 at 11.00 a.m. on 30 thadjournment thereof, and at every poll which may be taken in consequence thereof.day of September 2011 and at any1)To receive and consider the Annual Report of the Board of Directors,Statements of Accounts and the Balance sheet of the Company for theyear ended 31st March 2011 together with the Report of the Auditorsthereon.FORAGAINST2)To re-elect Dr. D S Rajapaksa who retires by rotation in terms of Article24(6) of the Articles of Association, as a Director of the Company.3)To re-elect Mr. G L H Premaratne who retires by rotation in terms ofArticle 24(6) of the Articles of Association, as a Director of theCompany.4)To re-appoint retiring Auditors Messrs Pricewaterhouse Coopers and toauthorize the Directors to fix their remuneration.5)Special BusinessI. To authorize the Directors to determine and make donations.Signed this…………… day of ………………………. Two Thousand and Eleven.……………………*Signature/sNote:1) *Please delete the inappropriate words.2) Instructions as to completion are noted on the reverse hereof.3) The shareholders / proxy holders are requested to bring their National Identity Card or Passport whenattending the meeting.40

Asiri Central Hospitals PLC - Annual Report 2010/2011INSTRUCTIONS AS TO COMPLETION12345Kindly perfect the form of Proxy after filling in legibly your full name and address and sign in the spaceprovided. Please fill in the date of signature,A Member entitled to attend and vote at the Meeting is entitled to appoint a Proxy who need not be amember, to attend and vote instead of him. Please indicate with an " X " in the boxes provided how yourproxy is to vote on each resolution. If no indication is given, the Proxy in his discretion will vote as hethinks fit.In the case of a Corporate Member, the Form of Proxy must be completed under its Common Seal, Whichshould be affixed in the manner prescribed by the Articles of Association.If the Form of Proxy is signed by an Attorney, the relevent Power of Attorney should also accompany thecompleted Form of Proxy, in the manner prescribed by the Articles of Association.The completed From of Proxy should be deposited at the Administrative Office of the Company, No.114,Norris Canal, Colombo 10 not less than forty eight (48) hours before the time appointed for the holding ofthe meetingPlease provide the following details:Shareholder'sN.I.C./Passport/CompShareholder'sFolio No.Noumber of Shares heldProxy Holder's N.I.C. No (if nota Director)41

ENSURINGTHE HIGHEST STANDARDSIN MEDICAL CARE...ASIRI CENTRAL HOSPITALS PLC.37, Horton Place, Colombo 07. Tel : +94 11 4 66 55 00 / Fax : +94 11 4 66 55 44Email : infochl@asiri.lk / Web : www.thecentral.lk