Asian Hotels and Properties PLC
Asian Hotels and Properties PLC | Annual Report 2014/15
Asian Hotels and Properties PLC
No. 77, Galle road, Colombo 03,
Sri Lanka.
T:0094 -11 2437437
F:0094 -11 5547555
Annual Report 2014/15
Corporate Information
NAME OF COMPANY
REGISTERED OFFICE
Asian Hotels and Properties PLC
No.77, Galle Road, Colombo 03
Tel: +94 11 2437437 Fax: +94 11 5547555
E-mail: grand@cinnamonhotels.com
LEGAL FORM
A Public Limited Liability Company incorporated in
Sri Lanka in 1993 and registered with the Board of
Investment of Sri Lanka under Section 17 of the Board of
Investment Law No. 4 of 1978.
The Company was re-registered as per the New
Companies Act No. 7 of 2007 on 15th June 2007.
AUDITORS
KPMG
Chartered Accountants
32A, Sir Mohamed Macan Marker Mawatha
Colombo 03.
BANKERS
STOCK EXCHANGE LISTING
The issued Ordinary shares of the Company are listed on
the Main Board of the Colombo Stock Exchange of Sri
Lanka.
COMPANY REGISTRATION NO.
PQ 2
BOARD OF DIRECTORS
Deutsche Bank AG - Colombo
Seylan Bank Ltd - Millennium Branch, Colombo
Hongkong & Shanghai Banking Corp. Ltd. - Colombo
Nations Trust Bank PLC - Union Place, Colombo
DFCC Vardhana Bank Ltd. - W.A.D. Ramanayake Mw,
Colombo.
CITI Bank N.A - Colombo
Bank of Ceylon - Colombo
Commercial Bank of Ceylon PLC - Colombo
Mr. Susantha Chaminda Ratnayake - Chairman
Mr. Ajit Damon Gunewardene - Managing Director
Mr. James Ronnie Felitus Peiris
Mr. Rohan Jebashantham Karunarajah
Mr. Suresh Rajendra
Mr. Sanjiva Kanishka Gamini Senanayake
Ms. Shirani Anoja Jayasekara
Mr. Cholmondeley John Lloyd Pinto
COMPANY SECRETARIES
Keells Consultants (Private) Limited
117, Sir Chittampalam, A .Gardiner Mawatha, Colombo 2.
Design & Concept by: Optima Designs (Pvt) Ltd.
Printed by: Gunaratne Offset (Pvt) Ltd.
Asian Hotels and Properties Plc
Annual Report 2014/15
In an industry that caters to varied lifestyles, Cinnamon
Grand has stood the test of time as a luxury hotel that
delivers the best experiences to travellers from all over
the globe. Every member of our team strives with passion
and dedication to make every guest stay and experience an
extraordinary one. We have remained true to the patterns
that have kept our valued customers coming back over the
years, by being the best in the business. We have remained
in the hearts of our valued patrons who have returned
time and time again to be a part of a sustainable, ethical
and progressive movement, where luxury is not only guiltfree but aims at a greater cause. Through the blueprint of
great service delivered by an exceptional team, consistent
standards, amazing ambiance and locale, we have created
unforgettable memories, and a formula for excellence as a
city hotel, that is unmatched.
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Asian Hotels and Properties Plc
Annual Report 2014/15
Contents
Group Financial Highlights of 2014/15 4
Our Year at a Glance 8
Chairman’s Message 16
Management Discussion & Analysis 22
Operating Environment 22
Group Performance Overview 24
Management Structure of Cinnamon Grand 30
Awards and Certifications 32
Stakeholder Mapping and Engagement Process 34
Developing a Dynamic Training Curriculum 45
Sustainable Business 50
Corporate Social Responsibility 55
Board of Directors 60
Risk Management 62
Corporate Governance 69
Annual Report of the Board of Directors 98
Financial Statements
Financial Calender 106
Report of the Audit Committee 108
Statement of Directors’ Responsibility 110
Independent Auditors’ Report 111
Income Statement 112
Statement of Profit or Loss and Other Comprehensive Income 113
Statement of Financial Position 114
Statement of Changes in Equity 115
Statement of Cash Flow 117
Notes to the Financial Statements 118
Consolidated Value Added Statement 162
Information to Shareholders & Investors 163
Five-Year Financial Summary of the Group 165
Five-Year Financial Summary Property Development 165
Five-Year Financial Summary Cinnamon Grand Hotel 166
Notice of Meeting 167
Form of Proxy 171
Corporate Information Inner Back Cover
Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Mission Business Values
To generate long-term, sustainable,
shareholder wealth by developing
the capacity to add value to land,
buildings and related investments
and combine them uniquely so that
they complement and reinforce
each other.
To provide a return on investment
above the risk-free investment
rate to shareholders. To increase
productivity of the workforce and
provide training in order to improve
their knowledge, skills and attitudes
and to optimise the use of available
resources. To adhere to the highest
levels of integrity, transparency and
ethical conduct.
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Asian Hotels and Properties Plc
Annual Report 2014/15
Group Financial Highlights of 2014/15
2014/15
2013/14
Change %
Financial Performance (Rs.'000)
Total Revenue
Gross Profit
Net Finance Income
Change in Fair Value of Investment Property
Profit Before Taxation
Income Tax
Profit After Taxation
8,080,152
4,723,424
199,768
28,792
2,350,653
263,196
2,087,457
8,256,149
5,016,587
301,755
268,564
3,046,463
227,952
2,818,511
-2%
-6%
-34%
-89%
-23%
-15%
-26%
Financial Position (Rs.'000)
Shareholders’ Funds
Market Capitalisation
Net Cash Flow from Operating Activities
Cash & Cash Equivalents
Total Non Current Assets
Current Assets
Current Liabilities
24,036,938
27,894,844
2,575,285
2,858,903
25,463,363
3,932,511
1,387,524
22,336,058
26,035,188
3,321,144
3,434,655
23,261,641
4,358,004
1,273,455
8%
7%
-22%
-17%
9%
-10%
9%
Information per Ordinary Share (Rs.)
Earnings
3.97 5.42-27%
Dividend
4.0
4.0
0%
Last Traded Market Price
63.0
58.8
7%
Highest Market Price
75.0
79.0
-5%
Lowest Market Price
58.0
57.0
2%
Net Assets
54.2950.45 8%
Key Performance Indicators
Group Occupancy %
66%70% -4%
P/E Ratio (Times)
15.8810.85 46%
Dividend Pay-out Ratio (Times)
1.010.7436%
Current Ratio ( Times)
2.83 3.42-17%
Group Revenue & Profitability (Rs.Mn)
Net Assets per Share (Rs.)
7,891
7,457
8,080
49
50.45
2014
8,256
2013
54.29
8,855
77.5%
30.98
3,336
Group Revenue
Profit Before Taxation
2015
2012
2011
2015
2014
2,351
2013
2012
33.83
3,046
2,655
2,184
2011
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Asian Hotels and Properties Plc
Annual Report 2014/15
Rs. 3.97
Rs. 4.00
Rs. 54.29
Earnings Per Share
Dividend Per Share
Net Assets Per Share
Rs. 8.08 Bn
Rs. 2.08 Bn
46%
Group Revenue
Profit After Tax
Rooms Market Share
Earnings per Share (Rs.)
5.63
Dividend Payout Ratio (Times)
5.42
1.01
4.85
77.5%
0.71
0.74
2014
3.97
2013
4.01
0.41
2015
2012
2011
2015
2014
2013
2012
2011
0.12
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Asian Hotels and Properties Plc
Annual Report 2014/15
Dining
The best in quality, the
Freshest ingredients.
We present the
discerning patterns
that delight and
titillate the taste
buds in a profusion of
great skill, culinary
artistry and flavours
from around the
world.
Asian Hotels and Properties Plc
Annual Report 2014/15
Ambience
Relaxed, invigorating,
intimate, adventurous.
Whatever ambience you
seek, we can offer a
diverse range of dining
and entertainment
options that can soothe,
and energise your mind
and soul.
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Asian Hotels and Properties Plc
Annual Report 2014/15
Our Year at a Glance
APRIL
LA SALLIAN MONTESSORI
PROJECT – PHASE II
MAY
LAUNCH OF SUSTAINABILITY
FACEBOOK PAGE
ALMSGIVING FOR SAMANERA
MONKS AT NUGA GAMA
Cinnamon Grand organised an alms
giving ceremony for the sangha at
Nuga Gama, in view of the Vesak
celebrations. The Head Priest of the
Sri Nandana Pirivena Sarikkamulla,
Keselwatta and 48 samanera monks
attended the alms giving.
A special page on sustainability was
launched in line with Earth Day on
the main Cinnamon Grand Facebook
page. This page includes information
on the hotel’s sustainability policy
and tips on how individuals can help
make a difference in creating a better
planet.
On Earth Day, the Green Team and
associates of Cinnamon Grand
volunteered to paint the La Sallian
Montessori Modera, to bring the
beauty of nature within the walls of
the Montessori, given its location
devoid of a natural landscape. This
was the Phase II of an ongoing
commitment to uplift the educational
standards of these under privileged
students, growing up in a challenging
environment.
SUSTAINABLE VESAK AT
CINNAMON GRAND
Cinnamon Grand Colombo in keeping
with its promise of being a sustainable
five-star city hotel decorated the
premises with unique decorations
made out of discarded plastic bottles
and cups. The décor was based on
a three-month collection of 3,500
plastic bottles and 8,000 plastic cups.
Asian Hotels and Properties Plc
Annual Report 2014/15
JUNE
WORLD ENVIRONMENT DAY
SEMINAR ON CLIMATE CHANGE
Cinnamon Grand Colombo organised
a seminar for associates on Climate
Change in commemoration of World
Environment Day. Senior Lecturer
Dr. Erandathi Lokupitiya from the
University of Colombo provided
insights into this subject.
BANNERS TO BAGS (B2b) SALE
The fifth edition of Cinnamon Grand’s
unique recycling initiative Banners to
Bags (B2b) sale was held on World
Environment Day on 5th June. 170
durable, water-proof and trendy bags
were made with the 45 banners which
were recycled for this cause.
INTER-DEPARTMENTAL
PLANET QUIZ
CINNAMON GRAND WINS
BATTLE OF THE SPICES
Cinnamon Grand Colombo organised
an Inter-departmental Planet
Quiz in commemoration of World
Environment Day on 06th June. Based
on sustainability, climate change and
eco practices at the hotel, the firstever quiz was a resounding success,
with the HR team emerging winners.
GRAND EXPERIENCE FOR
JAFFNA STUDENTS
Cinnamon Grand Colombo hosted
30 students from Jaffna to a hotel
tour, giving them the total hotel
experience.
Cinnamon Grand won the coveted
Chairman’s Trophy at the 10th edition
of the annual ‘Battle of the Spices’
encounter between Cinnamon Grand
and Cinnamon Lakeside. Cinnamon
Grand’s Dimutha Fernando from
Housekeeping was bestowed the
title ‘Man of the Match’ while also
taking home the title ‘Best Batsman.’
Sasindu Madusanka from Grand’s F&B
Banquets was deemed ‘Best Bowler’
at the match.
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Asian Hotels and Properties Plc
Annual Report 2014/15
Our Year at a Glance Contd.
JUNE
DENGUE AWARENESS SEMINAR
JULY
TRIPADVISOR CERTIFICATES OF
EXCELLENCE
National Dengue Control Unit,
Consultant Community Physician Dr.
Namalika Pannilahetti addressed the
issues relating to and the prevention
of dengue at an awareness seminar
organised for hotel associates.
GREEN CORRIDOR – PHASE II
The world’s largest travel site,
TripAdvisor further sealed Taprobane,
Nuga Gama, The London Grill and
Echo with a branding stamp of
distinction, honouring them with
Certificates of Excellence.
Cinnamon Grand’s Green Corridor was
re-launched with informative boards
showcasing the hotel’s monthly
consumption of water, electricity
and waste generated, etc; to create
awareness among associates about
the hotel's carbon footprint.
OPENING OF NOODLES
RESTAURANT
Expanding the eclectic dining
offerings, Cinnamon Grand opened
a new restaurant Noodles, featuring
a fusion of flavours from Vietnam,
Thailand, Singapore, Japan, China
and Malaysia. Extending the number
of dining outlets to 14, the new
restaurant presents over 70 noodlebased broths and dishes, made from
10 varieties of noodles.
GRAND TOUR FOR THE
STUDENTS OF CEYLON SCHOOL
FOR DEAF AND BLIND
Cinnamon Grand Colombo hosted 35
students with hearing impairments for
a short tour of the hotel, concluding
with lunch at Nuga Gama.
Asian Hotels and Properties Plc
Annual Report 2014/15
AUGUST
SEPTEMBER
INTER-COMPANY
SWIMMING MEET
VISIT OF CHINESE PRESIDENT
World Tourism Day
Supplier meet
Cinnamon Grand Colombo extended
a grand welcome to His Excellency
President of China Xi Jinping and
First Lady Peng Liyuan who arrived
in Sri Lanka for a State visit on 16th
September. Cinnamon Hotels &
Resorts Sector Head-City Hotels and
Cinnamon Grand General Manager
Rohan Karr welcomed the President.
Cinnamon Grand and Cinnamon
Lakeside teamed up for the JKH Intercompany Swimming Championship
under the ‘Cinnamon's city hotels’
banner and emerged Overall
Runners Up of the championship. The
combined team also took home the
Overall Men's Championship Trophy.
VISIT OF MALDIVIAN PRESIDENT
Cinnamon Grand Colombo hosted
Maldivian President Abdulla Yameen
Abdul Gayoom as he arrived in the
country for the 8th General Meeting
of International Conference of Asian
Political Parties (ICAPP).
In commemoration of World Tourism
Day, Cinnamon Grand Colombo
organised a Supplier Meet on 27th
September at Nuga Gama. The
event provided a platform for over
20 talented artisans from across the
island to showcase their skills and
promote sales within Cinnamon's city
hotels.
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Asian Hotels and Properties Plc
Annual Report 2014/15
Our Year at a Glance Contd.
OCTOBER
JKH INTER COMPANY RUGBY 7’S
NOVEMBER
BREAST CANCER AWARENESS
SEMINAR AND SCREENING
SECRETARIES' NIGHT
Committed to nurturing the wellbeing
of Cinnamon Grand's associates, the
hotel conducted a Breast Cancer
Awareness Seminar followed by
a free-cancer screening and papsmear test courtesy of Cancer Control
Program for female staff. This was
in commemoration of World Breast
Cancer Awareness Month (October).
Cinnamon Hotels & Resorts Sector
Head-City Hotels and Cinnamon
Grand General Manager Rohan Karr
along with the sector sales team
hosted an evening of appreciation
and celebration to thank all those
who support the Cinnamon's city
hotels – Cinnamon Grand, Cinnamon
Lakeside and Cinnamon Red at a
gala Secretaries' Night in November
at the Oak Room, Cinnamon Grand
Colombo. Held for the first time under
the city sector banner, the evening
saw 650 guests enjoying an eventful
evening.
JKH Intercompany Rugby 7’s was held
on 4th October at CR&FC. The team
from Cinnamon Grand emerged Plate
Champions at the event. Cinnamon City
Hotels – Cinnamon Grand Colombo,
Cinnamon Lakeside and Cinnamon
Red joined as one to cheer all teams
and shared a common ‘Cinnamon City
Hotels’ tent at the event.
MISS FRANCE AND FRENCH
TRAVEL AGENTS AT NUGA GAMA
Cinnamon Grand hosted reigning
Miss France 2014 Flora Coquerel, Miss
France 2012 Delphine Wespiser and
57 French travel agents for a lavish
authentic Sri Lankan dinner at Nuga
Gama as they concluded a mega
island familiarisation tour organised
by Cinnamon Hotels & Resorts in
partnership with SriLankan Airlines.
Asian Hotels and Properties Plc
Annual Report 2014/15
INTER-DEPARTMENT
CRICKET SIXES
Over 600 Cinnamon Grand associates
gathered at the BRC Grounds to see
30 teams competing neck-to-neck,
vying to take home the championship
trophies (men/women) at the annual
Inter-Department Cricket Sixes.
Housekeeping Superkings B team
won the men's championship trophy
while F&B Avengers won the womens
championship. A Cricket Carnival was
also organised to ensure a fun-filled
day for the associates.
DECEMBER
JANUARY 2015
VISIT OF FORMER MALAYSIAN
PRIME MINISTER
GRAND SERVES REFRESHMENTS
TO MASSES ATTENDING HIS
HOLINESS POPE FRANCIS’S MASS
AT GALLE FACE GREEN
Cinnamon Grand extended a warm
welcome to former Prime Minister
of Malaysia Hon. Tun. Dr. Mahathir
Mohamad who arrived at the hotel
on 09 December for a short stay to
attend the ‘Hambantota Conclave
’14, a first-of-its-kind forum bringing
together major international
investment gurus and business
community of Sri Lanka. Resident
Manager Chris Quyn is pictured
welcoming him.
Santa’s Workshop
Over 230 kids enjoyed the magic of
the season inside Santa’s Kitchen at
Cinnamon Grand’s popular Santa’s
Workshop, held for the seventh
consecutive year.
During His Holiness Pope Francis’s
two-day visit to Sri Lanka, the Pope
conducted a mass for the populace at
the Galle Face Green on 14 January.
For the large crowd that came from
near and afar, Cinnamon Grand hosted
a coffee stall in the early hours of the
morning and a cool drinks stall from
mid morning till noon. Over 15,000
cups of coffee were served to pilgrims
heading for the mass in the morning
and nearly 50,000 cups of cool drinks
in the afternoon for those returning
from the mass.
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Asian Hotels and Properties Plc
Annual Report 2014/15
Our Year at a Glance Contd.
JANUARY 2015
FEBRUARY
MARCH
TGIF Facebook competition
Students from Management
Faculty of Uva Wellassa
visit grand
Cinnamon Grand becomes
the most sustainable City
Hotel in Sri Lanka
Cinnamon Grand Colombo launched
a weekly Thank Grand It’s Friday
Competition, giving away exciting
prizes courtesy the hotel through a
range of Facebook competitions to
loyal fans and patrons.
Cinnamon Grand Colombo achieved
its vision of becoming the most
sustainable five-star city hotel in Sri
Lanka by 2015, by putting in place the
state-of-the-art Schneider Building
Management System (BMS) at an
investment of Rs.170 million.
China's Tianjin Maritime
College students visit grand
Cinnamon Grand Colombo hosted
17 students from Tianjin Maritime
College on a Grand hotel tour,
educating them on products and
services that the hotel offers and
the efficiencies that make Cinnamon
Grand a truly ‘grand’ hotel.
40 hospitality management students
from the Management Faculty of Uva
Wellassa University toured Cinnamon
Grand Colombo. After the tour,
Cinnamon Hotels & Resorts Sector
Head-City Hotels and Cinnamon
Grand General Manager Rohan Karr
shared his life experience in an
inspiring speech and entertained
questions from students as well.
The hotel is also the first hotel in
South Asia to put the system in
place. With the wholly integrated
system, Cinnamon Grand is coined
as an “intelligent building” by Lanka
Energy Conservation, the company
that worked with the hotel in
implementing the system.
Asian Hotels and Properties Plc
Annual Report 2014/15
Long Service Awards
Cinnamon Grand held its annual Service
Awards to felicitate the commitment of
associates who have served the hotel over
the years. 165 staff members who had
completed tenures of five, 10, 15, 20, 25 and
30 years were recognized at this annual
event by Cinnamon Hotels & Resorts Sector
Head-City Hotels and Cinnamon Grand
General Manager Rohan Karr.
Associates Quarterly Meeting
Cinnamon Grand Colombo held its
Associates Quarterly Meeting at the
Oak Room. Cinnamon Hotels & Resorts
Sector Head-City Hotels and Cinnamon
Grand General Manager Rohan Karr
commended and recognised several
dynamic and dedicated members of
the Grand team for their dedication and
commitment towards the hotel while
also expressing his plans for the future.
Don’t Drink and Drive
campaign workshop – Phase II
Earth Hour
Phase II of the Don’t Drink and Drive
campaign was held on 30th and 31st
March at the Ivy Room as a City Sector
initiative, educating over 250 F&B
personnel of the three city hotels –
Cinnamon Grand, Cinnamon Lakeside
and Cinnamon Red. An initiative
by the Marketing Communications
and F&B Departments of Cinnamon
Grand, the campaign was organised
in partnership with Diageo. The trainer
for the Drink IQ program Gavin Gomez,
a representative from Diageo arrived
in Sri Lanka for the training, which
focused on educating beverage
handlers of the hotels on correct
methodologies of serving customers.
A total of eight, one-and-a-half hour
sessions were conducted within the
two days.
Cinnamon Grand Colombo joined
the global Earth Hour initiative by
switching off lights at all restaurants
and public areas for 60 minutes
starting 8.30 p.m. Over 1000, patrons
who were dining in the hotel’s 14
restaurants and 900 invitees attending
the gala cocktail celebrating the 41st
Convocation of the Bar Association
of Sri Lanka were participants of this
initiative.
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Asian Hotels and Properties Plc
Annual Report 2014/15
Chairman’s Message
In keeping with the overall branding strategy,
the new brand identity was finalised during the
year which will help the Cinnamon brand occupy a
unique positioning in an increasingly-fragmented
market. Cinnamon will be differentiated as a
Lifestyle brand, enabling us to go beyond the
traditional hospitality offerings by focusing on
experiences that will inspire our customers. We
call this ‘inspired living’.
Cinnamon Grand’s Green Vision of becoming the Most Sustainable FiveStar City Hotel in Sri Lanka by 2015 was achieved during the period under
review with the commissioning of the new BMS, which not only infused
multiple benefits that would ultimately minimise its carbon footprint, but
also made the property a leader in sustainable energy management in
Sri Lanka.
Dear Stakeholder,
On behalf of the Board of Asian Hotels & Properties PLC, I am pleased to
present the Annual Report and Financial Statements of the Company and the
Group for the year ended 31st March 2015.
Group Performance
The room inventory within the City of Colombo witnessed substantial growth
in the year under review, particularly in the three and four star category
intensifying competition and restricting growth in average room rate for the
five-star city hotels. Whilst this increase in capacity stemmed from the expected
growth in tourist arrivals, these new offerings at lower rates resulted in a
citywide drop of 2 per cent in the business segment of the five-star city hotels.
Nevertheless, your Group retained its leadership position among the five-star
city hotels which is reflected in the 46 per cent market share achieved during
the year.
Group revenue showed a marginal decrease to Rs. 8.08 Bn in the current year
compared to the Rs. 8.26 Bn achieved in 2013/14 with the Group's signature
restaurants and banquet venues excelling and generating incremental revenue
of Rs. 170.3 Mn over last year, which helped to mitigate the fall in room revenue.
The effectiveness of stringent cost management initiatives that were launched
during the year is reflected in the marginal increase in Group expenses by only
Asian Hotels and Properties Plc
Annual Report 2014/15
4 per cent compared to last year.
Income tax expense increased by
15 per cent due to the new turnover
based income tax adopted by the
Company at the conclusion of the BOI
tax holiday period on 31st March 2014.
Group profit before tax was Rs. 2.35 Bn
compared to the Rs. 3.05 Bn achieved
during 2013/14. This included the
change in fair value of the investment
property amounting to Rs. 28.7Mn and
Rs. 268.5 Mn respectively.
Cinnamon Grand Colombo
Cinnamon Grand Colombo recorded
an average occupancy of 75 per cent
which was well above the five-star
city hotels average of 55 per cent,
while maintaining a market share of 32
per cent.
Revenue grew by 1 per cent to Rs.
4.93 Bn primarily due to the Rs. 122
Mn increase in food and beverage
revenue although room revenue was
4 per cent lower than the previous
year. However, the altered revenue
composition and the increase in
overheads led to the Hotels profit
declining by 11 per cent to Rs. 1.54 Bn
from the profit of Rs.1.73 Bn reported
for the last financial year.
the Rs.2.94 Bn recorded in 2013/14.
The lower GP margins due to the
altered revenue mix and the increase
in sales and marketing expenses
contributed to the decline in Profit
Before Tax to Rs. 664 Mn, compared
to the profit of Rs.871.8 Mn in the
previous year.
Property Development
The Company's Property
Development Division's Crescat
Boulevard continued to affirm its
position as Colombo’s premier
shopping mall, with shop rental
income increasing by Rs. 21 Mn yearon-year. Leasing revenue decreased
by Rs.46.5 Mn over the previous year
while apartment sales dropped by
Rs.37.5Mn due to the conclusion of the
sale of apartments as the Company
concluded revenue recognition on all
apartments of the Emperor project in
the previous year.
Profit Before Tax decreased to
Rs. 293 Mn, primarily due to the
comparatively lower gain arising
from the fair valuation of investment
property which decreased to Rs.8.1
Mn from the Rs. 268.5 Mn in the
preceding year.
Global Tourism
Cinnamon Lakeside Colombo
Food and Beverage business
generated Rs. 1.27 Bn in revenue,
which is a 4 per cent increase over the
previous year. In spite of the intense
competition, the average room
rate was maintained at Rs.18,267/-,
however, room revenue declined by
Rs. 213.5 Mn due to the drop in yearround occupancy. Net revenue for the
year amounted to Rs 2.79 Bn against
Although global economic growth
in 2014 as per the World Bank was
relatively muted at 2.6 per cent,
outbound travel recorded robust
growth with an additional 51 million
tourists travelling internationally
despite health and aviation safety
concerns, political, economic and
security concerns in many key
markets. International arrivals
worldwide reached 1,138 million,
representing year-on-year growth of
4.7 per cent according to the World
Tourism Barometer published by
the United Nations World Tourism
Organisation (UNWTO) in January
2015. Led by stronger growth in Asia
and the Pacific (+4 per cent to +5 per
cent), the Americas (+4 per cent to +5
per cent) followed by Europe (+3 per
cent to +4 per cent), prospects for
global tourism are positive.
Sri Lanka Tourism
Tourist arrivals to Sri Lanka continued
to demonstrate strong growth with Sri
Lanka surpassing its annual tourism
target of 1.5 million arrivals for 2014,
recording 1,527,153 international
tourist visits to the country,
representing a growth of 19.8 per
cent over the previous calendar year.
The surge in arrivals was led by the
Chinese market, which grew by 136
per cent year-on-year and became
the third largest source market in
to Sri Lanka. In comparison, the two
other main source markets, India and
UK, recorded a growth of 16.3 per
cent (242,734 arrivals) and 4.9 per
cent (144,168 arrivals) respectively.
Germany and France, considered
as traditional source markets, also
performed well. According to the
Central Bank of Sri Lanka, receipts
from tourism in 2014 grew by 42 per
cent to USD 2.4 billion.
The Sri Lanka Tourism Development
Authority (SLTDA) has established a
target of two million arrivals for 2015.
The growth in the first quarter of 2015
has averaged 14 per cent. Coupled
with the ongoing private and public
sector marketing initiatives and
interest in the destination, which has
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Asian Hotels and Properties Plc
Annual Report 2014/15
Chairman’s Message contd.
been stimulated by positive global
media coverage, it is anticipated that
growth in tourism will be strong in the
ensuing year.
New Initiatives
As stated last year, a new property
management system was installed
at Cinnamon Grand and Cinnamon
Lakeside during the year under
review. The new system, which runs
on the world-renowned SAP platform
has seamlessly integrated back
office and front office processing,
enhancing operational efficiencies and
making guest information available
across all Cinnamon Hotels and
Resorts. Furthermore, it provides
further assurance of the adequacy
of the Company's internal control on
financial reporting as required by the
Sarbanes-Oxley Act.
In keeping with the overall branding
strategy, the new brand identity was
finalised during the year which will
help the Cinnamon brand occupy a
unique positioning in an increasinglyfragmented market. Cinnamon
will be differentiated as a Lifestyle
brand, enabling us to go beyond the
traditional hospitality offerings by
focusing on experiences that will
inspire our customers. We call this
‘inspired living’.
In keeping with this brand promise,
Cinnamon Hotels & Resorts took
the initiative to establish vibrant
lifestyle offerings through several
inspiring events. These included
the pre-pageant tours for the Miss
India and Miss China contestants, a
unique familiarisation tour for French
travel agents titled "Treasure Hunt"
and Asia’s first-ever Travel Bloggers
Conference which not only helped
to create significant publicity and
exposure for the Cinnamon Hotels
& Resorts Brand among the target
markets and in the online sphere, but
also enhanced the attractiveness of
Sri Lanka as a “must visit” tourism
destination.
With the installation of the Building
Management System (BMS), which
uses the world's first magnetic
bearing chiller technology to control,
monitor and quantify energy usage
across the entirety of the hotel,
Cinnamon Grand became the most
intelligent building in Sri Lanka and
the first hotel in South Asia to deploy
the BMS. The hotel has achieved
a substantial saving on energy
following installation.
Awards and Accolades
The benchmarked leadership status
espoused by the Cinnamon brand
has placed both Cinnamon Grand and
Cinnamon Lakeside as award winning
properties, which have over the years,
gained numerous accolades that add
credence to its superlative product
and service offerings, innovative
mindset and excellence in service
standards.
The sustainable business model of
the Group is founded on the simple
strategy of conducting business
with a responsible consciousness
for social and environmental
dynamics. Our systems, processes
and, most importantly, our mindset
are developed on platforms that
reflect our social and environmental
consciousness, resulting in the
permeation of socio-economic
benefits to every stakeholder. I am
indeed proud that Cinnamon Grand’s
Green Vision of becoming the Most
Sustainable Five-Star City Hotel in Sri
Lanka by 2015 was achieved during
the period under review with the
commissioning of the new BMS, which
not only infused multiple benefits
that would ultimately minimise its
carbon footprint, but also made the
property a leader in sustainable
energy management in Sri Lanka.
Further details of our achievements
are comprehensively captured in our
Management Discussion & Analysis.
Outlook for the future
Tourist arrivals are expected
to continue the current growth
trajectory driven by newly
established source markets which
have demonstrated significant
growth potential. Arrivals from China
are likely to continue the strong
growth momentum witnessed
in 2014, driven by increasing
awareness, focused marketing and
better connectivity. Arrivals from
India, the largest source market,
are expected to grow with both
the leisure and business segments
contributing. While the Sri Lankan
tourism industry has recorded double
digit growth over the past few
years, there still remains untapped
potential, particularly in terms of
attracting outbound travel under
Meetings, Incentives, Conferences
and Exhibitions (MICE) tourism
segments from key source markets
such as India. India is expected
to record a significant increase
in outbound travel over the next
five years. Amongst the outbound
Asian Hotels and Properties Plc
Annual Report 2014/15
tourist segment from India, the MICE
segment has shown encouraging
growth over the years, both in terms
of absolute tourist numbers and
average spend per tourist. India
is expected to continue to drive
outbound travel in the MICE market
where Sri Lanka has the distinct
added advantage of being located
within close proximity and will
further benefit from the improving
connectivity between the two
destinations.
Your Company remains positive
that the newly initiated Cinnamon
brand architecture, coupled with the
digital and social media strategy,
will strengthen the Cinnamon
brand presence and help achieve
differentiation in a market which now
has a variety of product and service
offerings. We will continue our online
marketing strategy in order to drive
direct online sales. The revamped,
responsive and multilingual Cinnamon
website, in keeping with the new
brand identity, will be launched
by December 2015. With the
standardisation of all online marketing
components and furtherance of
our vibrant social media strategy,
we are confident of securing a
stronger online brand presence and
establishing Cinnamon Hotels &
Resorts as the leading lifestyle brand
in Sri Lanka.
Conclusion
I express my sincere thanks to our
shareholders for their continued
confidence in the Group and take
this opportunity to thank my fellow
directors for the guidance and
support extended during this year.
Reflecting on the performance of
the Group, on behalf of the Board
of Directors, I wish to express my
sincere appreciation to each of our
guests, our valued business partners
who have remained firm in their
relationships with us and to our team
for whom no challenge is impossible,
proving unequivocally that excellence
is a bar that must be continuously
pushed upwards.
Susantha Ratnayake
Chairman
Asian Hotels and Properties PLC
29th May 2015
19
20
Asian Hotels and Properties Plc
Annual Report 2014/15
Service
The pattern of great
service, excellence is
ingrained in all our
staff. Like the diverse
lines that run across
the palm, the passion
and dedication that we
cherish runs through
every individual, as we
work together towards
excellence. Every
minute detail counts.
Asian Hotels and Properties Plc
Annual Report 2014/15
21
Relaxation
Take the plunge and
experience luxe fivestar facilities in the
very heart of Colombo.
Whether it's a high
powered business lunch
or a day out with the
kids, our pattern of
quality never wavers,
never diminishes. This
uniformity is a pattern
and a passion.
Asian Hotels and Properties Plc
Annual Report 2014/15
Management Discussion & Analysis
Operating
Environment
Per Capita GDP & Annual Average
Inflation
7.6%
6.7%
6.2%
2,922
2,836
6.9%
3.3%
3,280
3,625
2,397
2014
2013
2012
As per the IMF World Economic
Outlook, the global economy
recorded a modest 3.4 per cent
growth in 2014 – primarily driven
by advanced economies, while
emerging and developing markets
lagged behind. Despite the slowdown,
emerging markets and developing
economies still accounted for threefourths of the global growth in 2014.
Growth in the United States was
stronger than expected, averaging a
4 per cent annualised rate in the last
three quarters of 2014, while in the
Euro area, activity was weaker than
expected mid-last year but showed
signs of improvement in the fourth
quarter, with consumption supported
by lower oil prices and higher net
exports. Asia Pacific also slowed its
growth progress from 5.9 per cent
in 2013 to 5.6 per cent in 2014. The
setback is attributed to the internal
and external activities in the region,
while the sluggish development
in large economies such as China,
Japan and Indonesia also added
extra weight. Overall, global growth
is anticipated to reach 3.5 per cent
and 3.8 per cent in 2015 and 2016,
respectively. Growth projection for
2015 marks the advanced economies
taking a stronger lead than in 2014,
while emerging markets continue
on a sluggish pace, reflecting more
subdued prospects for some large
emerging market economies and oil
exporters. Asia’s growth forecast has
been trimmed to 5.6 per cent in 2015
2011
Global economy
2010
22
Per Capita GDP US$
Annual Average Inflation (%)
Source: Central Bank of Sri Lanka Annual Report
2014
and 5.5 per cent in 2016, with diverse
performances across the region.
However, India’s growth is expected
to strengthen from 7.2 per cent last
year to 7.5 per cent this year.
Sri Lankan Economy
According to the Central Bank of
Sri Lanka Annual Report 2014, the
Sri Lankan economy sustained its
growth momentum, recording a real
GDP growth of 7.4 per cent during
2014, compared to 7.2 per cent
in 2013. Inflation remained at low
single-digit levels throughout 2014,
reflecting the impact of demand
management policies, improved
supply conditions, downward
revision of administered prices
and effectively-contained inflation
expectations. The Sri Lankan Rupee
appreciated by 0.29 per cent during
the first nine months of the year in
the backdrop of increased earnings
from exports of goods and services
and higher workers’ remittances, but
remained relatively stable during
2014. Interest rates in most market
segments declined to historically-low
levels during 2014, with the relaxed
monetary policy stance of the Central
Bank and high excess liquidity in the
domestic money market supported
by low inflation expectations.
The growth in earnings from tourism
was supported by increased average
spending of tourists and average
period of stay, together with increased
tourist arrivals during the year. The
tourism sector also benefitted from
electricity tariff reductions. The
electricity tariff, which was raised
substantially in 2013, was revised
downwards in 2014. This resulted
in a 15 per cent downward revision
to the tariff applicable on ‘Hotels’
and all other ‘Industry’ and ‘General
Purposes’ categories. Meanwhile, the
Fuel Adjustment Charge (FAC) was
absorbed into the energy charge
while maintaining effective reductions
at levels stated above.
Global Tourism Industry
Overview
According to the latest UNWTO
World Tourism Barometer,
international tourist arrivals reached
1,138 million by end 2014, a 4.7 per
cent increase over the previous year.
This is the fifth consecutive year
of robust growth in international
tourism above the long-term average
since the financial crisis of 2009. The
growth in 2014 was mainly driven
by America, which saw a 7 per cent
increase in tourism, followed by Asia
and the Pacific region, which saw a
5 per cent growth. Meanwhile, it’s
Asian Hotels and Properties Plc
Annual Report 2014/15
“The growth in earnings
from tourism was
supported by increased
average spending of
tourists and average
period of stay, together
with increased tourist
arrivals during the
year.”
Market Wise Tourist Arrivals
as a percentage of total arrivals
2014
heartiening to note that the sub region
South Asia experienced a faster
growth in tourism, valued at 7 per
cent, which is indeed encouraging.
Demand is expected to grow in 2015
supported by lower oil prices, which
will reduce cost of transportation
and boost economic growth by
enhancing purchasing power and
private demand in oil importing
economies. However, lower oil prices
could negatively impact some of
the oil exporting countries which
have emerged as strong tourism
source markets. The forecast for
2015, although not exceptional,
is predominantly positive. Global
tourism is projected to continue its
growth trend at a slow 3 to 4 per cent.
The Asia Pacific region is expected to
sustain comparatively high 4 to 5 per
cent growth.
Sri Lankan Tourism Industry
Sri Lanka’s tourism industry
performance continued to remain
positive in 2014, with 19.8 percent
growth compared to last year.
However, 2014 tourist arrivals in the
country surpassed the United Nations
World Tourism Organisation’s 2014
annual estimates of 4.7 per cent
growth for the entire world and 7.1 per
cent growth for South Asia.
Subsequently, the hotels and
restaurants sub sector expanded at
a slower pace of 11.5 per cent during
2014, compared to 22.3 per cent in
2013. Further, the room occupancy
rate in graded hotel establishments
approved by the Sri Lanka Tourism
Development Authority (SLTDA)
increased to 74.3 per cent in 2014,
from 71.7 per cent in the previous
year. Earnings from tourism surpassed
the USD 2 billion landmark by the
2013
Tourist Arrivals (No. of Tourists)
178,672
Middle East
6%
6%
Africa
1%1%
East Asia
14%
18%
South Asia
26%
24%
Australasia
5%4%
105,535
90,339
90,279
121,576
109,420
107,057
74,838
2013
2014
Source: Sri Lanka Tourism Development Authority.
123,269
153,918
Dec
10%
90,046
107,016
Nov
10%
80,737
103,175
Oct
Eastern Europe
112,631
Sep
31%
113,208
119,727
140,319
Aug
33%
113,968
Jul
Western Europe
110,543
Jun
0%
133,971
May
5%
0%
133,048
Apr
5%
Latin America
141,878
Mar
North America 146,575
Feb
20132014
Jan
23
24
Asian Hotels and Properties Plc
Annual Report 2014/15
Management Discussion & Analysis Contd.
Group Performance Overview
"The premium five-star
Cinnamon Grand was
the chosen venue for
the Chinese President,
First Lady and the trade
delegation, which
further confirmed
the hotel’s service
excellence, having been
able to successfully
serve, one of the
world’s most powerful
leaders of our time"
end of the year, registering an annual
growth of 41.7 per cent. The growth in
earnings from tourism was supported
by increased average spending of
tourists and average period of stay,
together with increased tourist
arrivals during the year. Tourism
arrivals remained strong in early
2015, with arrivals increasing by 6.6
percent, 16.7 percent, and 18 percent
respectively, in January, February and
March. Western Europe remained the
largest source destination for tourists,
accounting for 479,007 arrivals,
followed by South Asia with 370,299
arrivals. Country-wise India, UK, China,
Germany and the Middle East were
the top five tourism sources in 2014,
accounting for 46 per cent of total
arrivals.
Market Overview
While the year under review saw a level of competition previously never
experienced among Colombo’s city hotels, the Cinnamon brand continued to
retain its market leadership. Despite a 1.5 million influx of tourist arrivals to the
country, comparative to last year, the city occupancy increased marginally
to 55 per cent compared to last year’s 53 per cent. It is important to note that
there were no significant MICE events during the year, as opposed to what was
witnessed in the preceding years. Therefore five-star city hotels depended
largely on corporate and leisure segments of the business. Newly-opened
three-star properties limited the pricing flexibility of the two Cinnamon city
hotels. In response to these properties entering the market, the Group had to
adopt a volume-driven strategy by leveraging on brand and service levels.
A momentous occasion for the Group in 2014 was the President of China, His
Excellency Xi Ping, choosing a Cinnamon hotel to stay during his official State
visit to Sri Lanka. The premium five-star Cinnamon Grand was the chosen venue
for the Chinese President, First Lady and the trade delegation, which further
confirmed the hotel’s service excellence, having been able to successfully
serve one of the world’s most powerful leaders of our time. Representing the
premium segment of the city hotels market, the brand, through Cinnamon
Grand and Cinnamon Lakeside, holds a market share of 46 per cent among
Colombo city hotels, well above its fair share of 38.7 per cent.
Cinnamon Hotels & Resorts Sector Head-City Hotels and Cinnamon Grand General Manager Rohan Karr
extending a grand welcome to His Excellency President of China Xi Jinping and First Lady Peng Liyuan
Asian Hotels and Properties Plc
Annual Report 2014/15
A new branding initiative will be rolled
out during the new financial year
which will enhance market and mind
share of the brand. The rejuvenated
Cinnamon brand will be unveiled in
mid-2015, accompanied by acrossthe-board improvements that will
position the brand well above the
competition.
Group Revenue Composition (%)
2015
Group Expenses (%)
2015
2014
2014
Group Performance Highlights
Group revenue declined by 2 per
cent in 2014/15, from Rs. 8.25 Bn in
2013/14, to Rs. 8.08 Bn, in the current
year. Notably, Group revenues have
remained on a growth trajectory since
2010/11, indicating the strength of the
brand. However, consequent to the
dual impacts of revenue reduction
from Cinnamon Lakeside and the
Property sector, Group revenue
registered a decline during the
current financial year.
Although the Property division was a
major contributor to Group revenue in
the past, the dynamics changed with
the completion of all apartment sales
by April 2013. The division now relies
mainly on the rent income earned
from the Crescat mall.
The Group's hotels are now the
core contributors to Group revenue,
with only a marginal contribution
coming from the Property division.
With the last tranche of the payment
for apartment sales at the Emperor
residencies being concluded during
the last financial year, revenues from
the Property sector are now tapering
off. As a result, Group revenues from
20142015
Rooms
49%46%
F&B
41%
44%
Shop Rental 5%
5%
Other 3%
4%
Apartment Leasing Apartment Selling
1%
0%
1%
0%
the property sector are no longer
a significant contributor towards
elevating overall revenues. Of the
total Group revenue, Cinnamon Grand
Colombo accounted for 61 per cent,
while a further 34 per cent came from
Cinnamon Lakeside Colombo. In the
hotel segment, room revenues saw
a decline during the year, compared
to a strong performance in the
previous year. However, F&B revenue
continued a steady increase against
the previous year, despite continuous
increase in competition among stargrade and other dining options in
Colombo city.
This is indeed a commendable
achievement, given the intensity of
competition and challenging industry
landscape experienced in the current
year.
Cost of Sales
Administrative Expenses
20142015
53%
53%
3%
4%
29%
29%
Other Operating Expenses 10%
10%
Distribution Expenses
Finance Cost 0%
0%
Income Tax Expense 4%
4%
The Group’s continuous efforts at
energy and water conservation,
coupled with investments in
efficiency enhancements and prudent
financial management has resulted
in well-managed overheads. Cost
increases were controlled to ensure
a stronger bottom line. During the
current financial year, the cost of
sales increased by a minimum 4 per
cent year-on-year, while distribution
expenses saw a 15 per cent increase.
Administrative expenses increased
by a marginal 3 per cent, while other
operating expenses registered a
reduction of 4 per cent. Group tax
expenses meanwhile increased by
15 per cent due to the new turnoverbased tax implemented from this
financial year, given the completion of
the BOI tax holiday period with effect
from 31st March 2014.
25
Asian Hotels and Properties Plc
Annual Report 2014/15
Management Discussion & Analysis Contd.
Group Net Profit after Tax was Rs.
2.08 Bn for the year, compared to Rs.
2.81 Bn recorded in the preceding
year. This decline of 25.7 per cent,
year-on-year, was largely due to
the reduction in revenue by Rs. 176
million. On the other hand, finance
income, which was a key contributor
to the Group’s bottom line, reduced
by Rs. 105 million compared to
2013/2014 due to reduction in interest
rates offered by banks. As per the
Central Bank’s Annual Report for 2014,
the average weighted deposit rate of
commercial banks dropped to 6.2 per
cent, compared to the previous year’s
9.37 per cent. The change in the fair
value of investment property, which
made a Rs. 268.5 million contribution
to Group profitability during the last
year, was reduced to Rs. 28.7 million
in the current year. Cost of sales,
which represented 53 per cent of
the total expenses, increased only
increased to 15.88 from last year’s
10.85.
by 4 per cent due to stringent cost
management initiatives adopted by
the management. The increase in
tax expenses by Rs. 35.2 million had
a notable impact on the decrease in
profitability.
Financial Position
Freehold land and buildings of the
Group were valued by M/s P.B
Kalugalagedara & Associates, an
independent Chartered Valuer, by
31st March 2015, which resulted in an
increase in value of land and building
by Rs. 1.687 billion. As a result, Group
net assets per share increased to Rs.
54.29, from Rs. 50.45 in the previous
year, while the after tax return on net
assets declined to 7.31 per cent from
10.73 per cent as a dual impact of
the reduction in profitability as well
as the increase in land and building
value. The current ratio for the year
was 2.83 times, compared to last
year’s 3.42. Cash and cash equivalents
at the year-end was Rs. 2.85 billion,
compared to last year’s Rs. 3.43
billion, as a result of utilising cash
Shareholder Value
Earnings Per Share declined from
Rs. 5.42 in the previous year to Rs.
3.97 for the year under review, as a
result of the reduction in profitability.
However, the Group continued to
uphold its commitments to deliver
consistent value to shareholders and
maintained the Dividend Per Share
at Rs. 4.00 on par with the previous
two years. The dividend pay-out ratio
was 1.01 against 0.74 in the previous
year. The closing market price for the
year was Rs. 63, which led to a market
capitalisation of Rs. 27.8 billion. The
highest market price recorded during
the year was Rs. 75. The P/E ratio
Contribution to Group Revenue (Rs.Mn)
4,939
4,898
4,623
3,804
3,017
2,676
2,469
2,939
2,840
2,786
2,375
Cinnamon Grand
Property Division
428
419
356
2013
2014
2015
2012
1,972
2011
26
Cinnamon Lakeside
Asian Hotels and Properties Plc
Annual Report 2014/15
for dividend payments, as well as for
ongoing capital expenditures.
Cinnamon Grand Colombo
The Cinnamon Grand retained its
star performance during the current
financial year despite the plethora
of lower cost new entrants into the
Colombo city hotels segment. The
hotel maintained its premium five-star
brand image and remained true to its
brand promise in delivering customer
satisfaction through its 501 luxury
rooms and full range of services,
including extensive dining venues.
Group Net Finance Income
10.1
311,565
9.37
301,756
6.2
199,768
7.24
87,755
6.23
With the industry offering
travellers more three and four-star
accommodations, the Cinnamon
Grand saw occupancy levels dropping
at a marginal rate, to 75 per cent from
76 per cent in the previous financial
year. Room nights totalled at 138,036
compared to 138,483 room nights in
the previous year. The hotel continued
to retain its share of one-third of the
market at 32 per cent of market share,
2015
2014
2013
2011
2012
33,783
Group Net Finance Income (Rs.'000)
Average Weighted Deposit Rate (AWDR) %
Source: Central Bank of Sri Lanka Annual Report
2014
Cinnamon Grand Revenue & Profitability in (Rs.Bn)
4.93
4.89
4.62
3.80
3.01
1.73
1.72
1.53
1.18
Revenue
Profit Before Tax
2015
2014
2013
2012
2011
0.69
which is only a marginal decline from
the 33 per cent share in the previous
year. Despite the new restaurants
that opened in Colombo, expanding
the city’s dining options, customers
have continued to patronise the iconic
restaurants at Cinnamon Grand.
As a hospitality services provider, the
Cinnamon Grand is highly conscious
of customer satisfaction, which is at
the heart of the hotel’s operations.
During the current year too, the
hotel strived to delight customers
through superior services, products
and facilities. Customer touch points
were introduced at the Lobby and
restaurants to capture customer
feedback that is analysed regularly,
with swift responses whenever
needed. Customer feedback received
from TripAdvisor is studied as a
top priority in understanding and
responding to customer needs. The
Cinnamon Grand's revenue increased
by Rs. 40.9 million in the current year,
which is a 1 per cent growth from
Rs. 4.89 billion to Rs. 4.93 billion. This
growth in revenue was driven by
F&B revenues, with the Cinnamon
Grand’s restaurants and banqueting
facilities remaining extremely popular
throughout the year. F&B revenue
increased by Rs. 122.66 million
compared to last year. However, room
revenue declined by Rs. 94.20 million,
mainly due to the reduction in room
nights and in average room rate by 4
percent.
27
28
Asian Hotels and Properties Plc
Annual Report 2014/15
Management Discussion & Analysis Contd.
Despite the sustained growth in
revenue during the year, the hotel’s
Profit Before Tax saw an 11 per cent
decline, valued at Rs. 194.7 million.
Profit Before Tax was recorded at Rs.
1.537 billion. In 2013/2014 this number
was Rs. 1.732 billion.
Noodles Restaurant
Cinnamon Grand Colombo launched
its latest dining experience ‘Noodles’
in July 2014, offering guests an
opportunity to relish the flavours of
Asia in exotic noodle-based broths
and dishes.
The 50-seater restaurant provides the
ultimate feast for discerning noodles
lovers, with a menu that features
over 70 dishes made from 10 types of
noodles. Drawing inspiration from the
intriguing cuisines of Vietnam, China,
Thailand, Japan and Malaysia, the
nightly feast is prepared by an expert
Vietnamese chef, ably assisted by a
Thai chef and a team of local chefs.
These chefs brings to the table years
of international exposure in varied
speciality areas. Trendy decoration
influenced by Asian landscapes
creates a casual yet smart ambience
for diners to enjoy their meal. An open
kitchen adds to the drama, with the
team of chefs serving up the cold and
warm broths and noodle dishes that
pay tribute to Asia.
per cent to 51 per cent in the current
financial year, with its market share
also shrinking from 18 per cent to
15 per cent. The hotel achieved
64,923 room nights against 76,790
room nights in 2013/14. This lower
performance on room sales was due
to a combination of causes, including
the diversion of customers to lower
cost city hotels. As a result, room
revenue decreased by Rs. 213 million
to Rs. 1.18 billion. This downturn in
revenue was compensated by a Rs.
47.7 million increase in F&B revenue.
As a result, Cinnamon Lakeside
closed the year with a total revenue
of Rs. 2.78 billion, which is a decline
in revenue of 5 per cent. Profit
before tax was lower by 24 per cent
against the previous financial year,
at Rs. 664 million, while profit after
tax declined by 21 per cent, at Rs.
584.6 million. The hotel retained its
17 per cent share of the F&B market
among five-star hotels in Colombo,
with its restaurants, bars and banquet
facilities continuing to attract strong
patronage.
The Cinnamon Lakeside was closed
partially for a refurbishment since
March 2015 and the hotel will reopen
to customers in September 2015, with
an image enhancement under the
Cinnamon Hotel’s branding strategy.
The revamped brand image along
with the planned marketing drive
is expected to generate strong and
improved financial results in the new
financial year.
Property Division
The Crescat Boulevard, which is the
Property Development Division’s
premium business and the finest upmarket shopping mall in Colombo,
continued to affirm its stand as
Colombo’s iconic shopping mall. The
level of occupancy was retained at
The restaurant has been highly
popular since the launch, with
sustained high reservations and
strong positive customer reviews.
Cinnamon Lakeside Colombo
The Cinnamon Lakeside saw
occupancy levels decline from 61
The newly opened Noodles restaurant
Asian Hotels and Properties Plc
Annual Report 2014/15
99%, on par with the previous year,
while the footfall for the year was
2,074,097, which was a 12% drop
compared to the preceding year.
Total revenue of the Property
division declined by 15% compared
to the previous year, mainly due
to apartment leasing operations
being concluded during the current
financial year. The business of leasing
apartments ceased from the month
of November 2014, causing a 50 per
cent drop in revenues from apartment
leasing, compared to the previous
year. However, rental income from
the Crescat Boulevard shopping mall,
which is the division’s main source
of income, continued to increase
year-on-year, registering a growth
of 7%. Finance income for the period
too, decreased to Rs. 29.7 million,
due to the reduction in interest
rates. The profit before tax of the
division decreased by Rs. 293 million
compared to the previous year as
the fair value of investment property
decreased to Rs. 8.1 million in the
current year, compared to Rs. 268.5
million in 2013/14.
Future Direction
The Cinnamon Grand and Cinnamon
Lakeside will emerge in the new
financial year with a stronger ‘lifestyle’
brand image that appeal to the
expectations and lifestyles of modern
international travellers. This transition
will be supported by internal
operational changes and upgrades
in service and product offerings,
including new menus that provide a
range of cuisine with global flavours.
The Cinnamon Lakeside is confident
of a positive outcome in facing the
challenges of the external market,
following its refurbishment. The
renovations, coupled with the new
brand image, will strengthen the
property and differentiate it from the
competition, giving a competitive
advantage that can be successfully
sustained for future growth. Cinnamon
Grand will continue to dominate the
corporate market, while aggressively
deploying strategies to increase
revenue generated from booking
engines, which is one of the hotel’s
main revenue sources. With its
consistently high international track
record, Cinnamon Grand is confident
of a strong performance in the new
financial year. The two city hotels plan
to maintain increasing F&B revenues
through new product development
and service standards. The range
of global flavours offered by all
restaurants will be further heightened
through the initiation of new menus
that cater to diverse palates. Overall
profitability expectations for the
Group are positive for the coming
year and the hotels will leverage on
service excellence to outperform
competitors.
Rooms Market Share (%)
53%
32%
15%
Cinnamon Grand
Cinnamon Lakeside
Other City Hotels
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Annual Report 2014/15
Management Discussion & Analysis Contd.
Management Structure of Cinnamon Grand
Sector Head - City Hotels
/ General Manager
Resident Manager
Head of Sales - City Hotels
Head of Marketing Communications
- City Hotels
Executive Chef
Manager
Compliance,
Health & Safety
Executive
Housekeeper
Manager Restaurant & Bars
Deputy
Executive
Housekeeper
Front Office
Manager
Head of Leisure
Sales
- City Hotels
Head of
Corporate Sales
- City Hotels
Head of
Banquet Sales
Asian Hotels and Properties Plc
Annual Report 2014/15
Head of Human Resources
- City Hotels
Director Finance
Chief Engineer
Learning &
Development
Manager
Human
Resources
Manager
Finance
Manager
Purchasing
Manager
Director
Security
Security
Consultant
- City Hotels
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Management Discussion & Analysis Contd.
awards and certifications
AHPPLC
Annual Report Award from the Institute of Chartered Accounts of Sri Lanka Diversified Holdings (up to 5 subsidiaries)
bronze award December 2014
CINNAMON GRAND COLOMBO
Health and Safety Excellency Awards 2014 Awarded by NIOSH
(The National Institute of Occupational Safety and Health)
Recertifications
Green Globe Recertification
Cinnamon Grand has been conferred with the Green Globe re-certification following a two-day audit by Green Globe
auditors. The hotel was audited and measured on relevant compliance indicators for the Green Globe Certification
with key indicators on energy usage, water and waste management, employee training to implementation of customer
satisfaction measures, community support and awareness initiatives
Green Globe Certification is the worldwide sustainability system based on internationally-accepted criteria for sustainable
operation and management of travel and tourism businesses. Operating under a worldwide licence, Green Globe is based
in California, USA and is represented in 83 countries. The Green Globe brand represents the best in sustainable practice
within the travel and tourism sector and provides certification, training and marketing services
ISO Recertification for OHSAS 18001, ISO 14001 and ISO 22000
(Swiss accreditation by SGS Lanka (Pvt) Ltd) – Cinnamon Grand is the first five -star city hotel in Sri Lanka to receive and
maintain uninterrupted ISO certification for the past eight years
Carbon Neutral Recertification for Nuga Gama
Recertification of Nuga Gama Carbon Neutral Certificate by Carbon Consulting Company
Nuga Gama is the first venue in Asia to receive an accolade of this nature. The certification was handed over by world
renowned physicist and climatologist as well as Vice Chairman of the Intergovernmental Panel on Climate Change and
2007 Nobel Laureate Professor Mohan Munasinghe
TripAdvisor Certificates of Excellence
Taprobane, Nuga Gama, The London Grill and Echo were further sealed with a branding stamp of distinction, with the
world’s largest travel site, TripAdvisor honouring them with Certificates of Excellence
Asian Hotels and Properties Plc
Annual Report 2014/15
Culinary Awards
Culinary World Cup Competition, Luxembourg
Cinnamon Grand’s senior kitchen artist Chef Weeraman won two Gold medals at the Culinary World Cup Competition
held in Luxembourg
5 crowns for Food Hygiene by Indo-Expo certification Limited
Sports Awards
John Keells Inter Company Swimming Championship
Overall Runners Up and overall Mens Championship
John Keells Inter Company Rugby 7s
Plate Champions at the John Keells Inter Company Rugby 7s 2014.
Travel Trade 5–a-side Beach Tag Rugby Tournament 2014
Cup - Joint Champions - Cinnamon Grand A team with Walkers Tours team
Plate Champions Cinnamon Grand – B team
Mercantile Swimming Championship 2014
Two Gold medals, four Silver medals and two Bronze medals at the Mercantile Athletic Championship 2013.
Travel Trade Hardball Cricket Sixes 2014
Joint Champions - Cinnamon Grand with Keells Hotels
Best Batsman - Janudika Sriyapala of Cinnamon Grand
Membership in Industry Associations
Sri Lanka Conventions Bureau | La Chaine des Rotisseurs: Echo, the Italian restaurant and The London Grill, the hotels
fine dining restaurant are certified members | Tourist Hotel Association of Sri Lanka | Ceylon Chamber of Commerce |
Pacific Asia Travel Association (PATA) | Indo-Lanka Chamber of Commerce | AMCHAM | SKAL International (International
Association of Travel and Tourism Professionals) | Sri Lanka-British Business Council | Sri Lanka-Japan Business Council
| Sri Lanka-New Zealand Business Council | Sri Lanka-Malaysia Business Council | Field Ornithology Group of Sri Lanka |
Sri Lanka Business and Biodiversity Platform
CINNAMON LAKESIDE COLOMBO
Annual Report Award from the Institute of Chartered Accountants of Sri Lanka December 2014
Silver Award Hotel category
Hotel Hygiene Classification Audit 2014 by the Colombo Municipal Council
'A+' Grade
National Occupational Safety & Health Excellence Awards 2014
Merit Award – organised by the National Institute of Occupational Safety and Health
Green Hotel Awards 2014
Water Conservation Champion
Runner Up at the Green Hotel Awards 2014
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Management Discussion & Analysis Contd.
Stakeholder Mapping and
Engagement Process
The Company firmly believes a sustainable business platform cannot be achieved in isolation, particularly in the business
of leisure and property management, which are service industries that are highly susceptible to quality of relationships.
The business model of Asian Hotels and Properties has been designed to incorporate transparent procedures to manage
stakeholder relationships as an integral element of the daily business operations. The stakeholder engagement process is
illustrated below.
Stakeholder Engagement Process
Stakeholder
Stakeholder Sub
Category
Current Method of Engagement
and Frequency
Materiality of Stakeholder Issues
Customers
Adults
Method of Engagement:
1. Rate fixing
2.Ethical products
3. Carbon footprint
4.Ethical marketing
5. Corporate community engagement
6.Health and safety
Awareness campaigns through
press releases, posters, social
media, fundraising for the
Field Ornithology Group and
Cancer Hospital, donations for
social groups, participation of
international environmental/
tourism events, end-user surveys,
booker surveys
Frequency of Engagement:
Face-to-face feedback
Guest Comment Cards in
rooms and restaurants
Feedback and reviews on
TripAdvisor
Duty Manager’s Log
Restaurant log books
Bi-annual personal meetings
Awareness through press
releases, posters and social
media
Annual fundraising for Cancer
Hospital and participation in
international environmental
events
Annual Secretaries’ Party
Media nights
Daily sales visits
Entertainment of clients and
patrons
Asian Hotels and Properties Plc
Annual Report 2014/15
Stakeholder
Stakeholder Sub
Category
Current Method of Engagement
and Frequency
Children
Method of Engagement:
Materiality of Stakeholder Issues
Awareness and education through
print media and cultural education
through site visits, children’s
workshops
Frequency of Engagement:
Monthly cultural and
educational visits to Nuga
Gama
Children’s workshops
Kiddies events feedback form
Associates
Managers, Executives
and Non-Executives
Method of Engagement:
Participation in the Green Corridor
campaigns, green forums, direct
reporting, open door policy, annual
events, training and development
activities, sustainability awareness
seminars, celebrations of
international environmental
dates, employee satisfaction
surveys, intranet communication,
competitions and quarterly
associate meeting
7.Accommodation
8. Basic salary
9.Employee awareness and training
10.Employee rewards and remuneration
11. Occupational health and safety
12. Emissions, effluences and waste
13. Mutually beneficial relationship with
supplier
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Management Discussion & Analysis Contd.
Stakeholder
Stakeholder Sub
Category
Current Method of Engagement
and Frequency
Associates
Managers, Executives
and Non-Executives
Frequency of Engagement:
Hotel School,
Inbound/Destination
Travels Agents
Method of Engagement:
Business
Partners
Materiality of Stakeholder Issues
Weekly meetings, updates
on sustainability notice board,
green corridor and internet
Social media posts.
Monthly poster campaigns,
initiative awareness and
educational sessions
Monthly management meetings
Staff quarterly meetings
Mid-year review
Annual performance review
Annual gatherings, parties and
sports events
Custom-made training
programmes and development
activities according to
sustainability guidelines
Voice of Employee survey (VOE)
Great Place To Work survey
(GPTW)
‘Tell GM’ box where associates
can directly communicate with
the General Manager on issues
they face at work.
Questionnaires and surveys,
one-on-one meetings, e-mail
correspondence, circulars,
membership in industry
associations
Frequency of Engagement:
Annual contract renegotiations
on-going through conference
calls, e-mails and circulars
Business travel
Trade shows
Experiential tours
Daily sales visits
14.Health and safety
15.Product diversity
16. Adhering to international standards
17. Best practices
18. Community engagement and Carbon
Footprint
19. Confidentiality
Asian Hotels and Properties Plc
Annual Report 2014/15
Stakeholder
Stakeholder Sub
Category
Current Method of Engagement
and Frequency
Materiality of Stakeholder Issues
Community
Local communities
(schools, monasteries,
pre-schools,
hospitality related
educational
institutions, home
for elders and
conservation groups)
Method of Engagement:
20.Infrastructure development
21. Creating awareness for youth
Awareness through posters,
paintings, environmental videos
and education programmes,
donations and community
development projects.
Frequency of Engagement:
Engagement with the
community is done prior
to initiating projects in the
respective areas of focus:
Bi-annual discussions for
community development
projects
Annual supplier sustainability
awareness sessions
Awareness campaigns in
key areas where suppliers
congregate
Annual donations to the Field
Ornithology Group
Sponsorships of educational
and social events
Arts and cultural activities
Familiarisation visits, training
programmes and specific
hospitality career related
training
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Management Discussion & Analysis Contd.
Stakeholder
Suppliers
Stakeholder Sub
Category
Current Method of Engagement
and Frequency
Materiality of Stakeholder Issues
Method of Engagement:
22.Environmentally friendly packaging
23. Resources scarcity
24. Awareness on environmental issues
25.Ethical production
26.Child labour remediation policy
One-on-one meetings, group
meetings, awareness sessions,
collateral, education programmes,
donations and community
development projects, ethical
purchasing policy, flexibility
of credit period, review of
pricing, child labour remediation
policy, membership in industry
associations.
Frequency of Engagement:
Promoting responsible
tourism/products through
community-related awareness
activities that are organised
and in which the hotel
participates
Monthly review meetings
Awareness session on quality
Monthly price review meeting
Annual contract renegotiations
Asian Hotels and Properties Plc
Annual Report 2014/15
Stakeholder
Stakeholder Sub
Category
Current Method of Engagement
and Frequency
Materiality of Stakeholder Issues
Government
Sri Lanka Tourist
Board, Sri Lanka
Institute of
Tourism and Hotel
Management, Central
Environmental
Authority, National
Cleaner Production
Centre, Ceylon
Electricity Board,
National Water Supply
and Drainage Board,
National Ozone Unit,
National Institute for
Occupational Safety
and Health, National
Cancer Hospital,
National Cancer
Control Programme,
Colombo Municipal
Council, Labour
Department and
Sustainable Energy
Authority
Method of Engagement:
27. Compliances/regulatory restrictions
Meetings, discussions, phone
calls, presentations and briefings,
advisory meetings, Sri Lanka
Tourist Board membership, Sri
Lanka Hotel School training
programme membership,
awareness workshops on tourism/
sustainability-related issues are
ongoing processes with tourismrelated Government agencies.
Frequency of Engagement:
Engagement with these
Government bodies is an
ongoing process through
monthly newsletters, e-mails,
circulars, quarterly briefings,
websites, etc.
The Senior Management is on
the Advisory Board of the Sri
Lanka Institute of Tourism and
Hotel Management and are
visiting lecturers on a quarterly
basis
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Asian Hotels and Properties Plc
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Management Discussion & Analysis Contd.
Stakeholder
Stakeholder Sub
Category
Current Method of Engagement
and Frequency
Materiality of Stakeholder Issues
Society
Pressure
Groups/
Media
NGO, Media, Opinion
Leaders, Conservation
Organisations, Trade
Associations, Tourism
Associations, National
Cancer Control
Programme
Method of Engagement:
28.Ethical business practices
Websites, press releases, media
briefings, correspondence,
discussions, participation at NGO
forums
Frequency of Engagement:
Engagement with stakeholders
are carried out on an ongoing
basis, through correspondence,
websites, media briefings
and press releases (at least
monthly)
The Company follows a philosophy
of excellence, guided not only by the
pursuit of continuous excellence, but
also with a commitment to deliver
coherent values to those associated
with the business. Ingrained into the
core values of the Company is the
principle that stakeholders’ welfare
drives business, shaping its strategic
development agenda.
Employees are valued as key
stakeholders of the Company
and as brand ambassadors. As a
responsible and non-discriminatory
employer, the Company provides
equal opportunities for employees
from point of recruitment by varied
training and development activities,
performance reviews and promotions
ensuring that all decisions are based
on merit. In line with the Group policy,
Cinnamon Grand Colombo practices
equality of opportunity for employees
irrespective of ethnic origin, religion,
political opinion, gender or marital
status or physical ability.
Further supporting the brand
image as a responsible entity, the
Company associates with suppliers
who are reputed for their premium
quality products for daily business
operations. In accordance with
the Group’s Policy, the Company
maintains transparency in all
levels of transactions, by clearly
communicating terms of payment as
part of the commercial agreements
negotiated with suppliers. Payments
are released on the agreed terms.
Customers are the nucleus of
Company operations. To exceed their
expectations on a daily basis, the
Company conducts careful analysis of
guest feedback and develops prompt
actions to address identified issues.
Focusing on retaining leadership as a
value-for-money entity that provides
enhanced services with improved
service delivery and consistent
quality, the ultimate objective is
not just to satisfy customers, but to
delight them in every possible way.
The Company also operates on a
socially-conscious mindset and as a
result conducts a number of welfare
events on an annual basis, linking
benefits across social groups.
Guest Engagement
Guest Feedback
The Cinnamon Grand maintains
ongoing guest engagement
processes to evaluate customer
feedback to ensure the growth of
the business. Many channels have
been introduced to frequently
gather customer feedback, gauge
satisfaction levels and identify ways
to enhance products and services.
These include guest comment cards
in rooms and restaurants, where
guests are able to leave feedback
with regard to service and product
standards. These comment cards
are collected and analysed daily.
Customer feedback is also monitored
through digital mediums such as the
travel website Trip Advisor and online
Asian Hotels and Properties Plc
Annual Report 2014/15
social networking sites Facebook and
Twitter.
Customer complaints are treated
as priority and responded to within
24 hours. Complaints are received
through guest comment cards. All
customer complaints are entered into
the system and categorised broadly
as F&B and room stays. All complaints
are examined by the Heads of
Departments daily at the morning
meeting and a response to the
customer is provided within 24 hours.

Earth Hour Celebration
Cinnamon Grand Colombo joined in
the global Earth Hour initiative by
switching off lights at all restaurants
and public areas for 60 minutes
starting at 8:30 p.m. Over 1,000
patrons who were dining in the
hotel’s 14 restaurants and the 900
invitees attending the gala cocktail
celebrating the 41st convocation of
the Bar Association of Sri Lanka were
participants of this initiative. Cinnamon
Grand celebrated this year’s Earth
Hour as the most sustainable hotel
in Sri Lanka, given its Rs. 170 million
investment in the latest Building
Management System (BMS).
‘Connect with Us’ cards for social
media
The hotel’s Marketing
Communications Department
specially developed ‘Connect with
Us’ cards featuring all social media
platforms, which the hotel currently
utilises to engage with customers.
These cards are distributed at all
hotel events to encourage guests to
join in the online conversations.
Grand’s Green Gestures
In-room compendium page
All in-room compendiums comprise
a page highlighting different ways in
which guests can participate in the
efforts for environmental conservation
and sustain livelihoods of indigenous
craftsmen.
Green Cards
Green Cards are placed in all 501
rooms, encouraging guests to support
the hotel’s green initiatives to save
water by considering the option of
reusing towels for more than one day.
Diabetic Menu
In keeping with the hotel’s promise
of guilt-free indulgence, the existing
Diabetic Menu was further enhanced
in response to growing demand, given
the recent escalation of diabetes. The
menu is available at all restaurants
and consists of 30 dishes.
Launch of the Sustainability
Facebook page
A special page on sustainability was
launched in line with Earth Day via the
Cinnamon Grand’s Facebook page
on 23rd April 2014. This page was
launched in order to create a greener
mindset among our guests and
associates.
As part of the Hotel's Earth Hour celebrations, the driveway to the hotel featured these symbolic
Earth Hour logos, powered by energy efficient LED lighting
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Management Discussion & Analysis Contd.
Supplier Engagement
The Cinnamon Grand works with a
wide network of suppliers to provide
premium quality products and
services. Relationships are based on
trust and partnership to ensure quality
and consistency. The supplier policy
and engagement mechanisms ensure
clear communications of the hotel’s
standards to suppliers with timely and
optimum quality of delivery.
Supplier Meet at Nuga Gama
In commemoration of World
Tourism Day 2014, Cinnamon Grand
Colombo organised a Supplier
Meet on 27th September at Nuga
Gama, bringing together over 20
talented artisans from across the
island. The forum enabled them to
display their products and garner
orders throughout the year. The
supplier meet’s main objective was
to showcase the artisan creations at
these indigenous craftsman within
Cinnamon’s city hotels. Currently most
of the suppliers are only promoting
their crafts through Cinnamon Grand’s
Nuga Gama, the village in the city.
With the objective of creating a
dynamic resource pool, the Cinnamon
Grand adopts an open-door
management policy that promotes
a communicative employment
culture within the organisation. A
comprehensive agenda facilitates
greater interactions between
employees and key management,
through regular meetings and
conferences. Taking the form of
consultative discussions, these
forums are a meeting of minds
that stimulate the exchange of
mutually-beneficial ideas. These
regular interactions also help nurture
employee goal congruence and
engender workforce loyalty towards
the organisation. Further efforts
to address employee concerns
has prompted the introduction of
a communication box titled ‘Tell
GM,’ which serves to deliver written
grievances, opinions and suggestions
of associates. Once collated and
addressed by the General Manager,
solutions are posted on a board
next to the box. Moreover, the hotel
maintains relationships with three
unions, namely the Sri Lanka Nidahas
Sevaka Sangamaya (SLNSS), the
Jathika Sevaka Sangamaya (JSS) and
the Inter Company Employee’s Union
(ICEU).JSS and ICEU collectively
represent less than 10% of our
workforce. Even in the absence of
any collective agreement with these
unions, the management continues to
maintain a healthy relationship with
them.
Employee Engagement
The Company considers its
employees, as a valuable asset and
ensure fair treatment and employment
benefits, alongside work opportunities,
competitive remuneration and a high
quality working environment. The
Company also provides its employees
professional and career development
training to ensure personal
development and growth.
The artisans supplying local crafts to Nuga Gama with the Cinnamon Grand's teams from
Marketing Communications and Sustainability and Nuga Gama at the Suppliers Meet 2014
Asian Hotels and Properties Plc
Annual Report 2014/15
Rewards and Recognition
Schemes
Associate Quarterly Awards:
Associates are recognised on a
quarterly basis for outstanding
achievements in terms of
commitment, going the extra mile,
productivity and contribution to
the common goal of making the
Cinnamon Grand the best hotel in the
city. Nominated by their respective
departments, they are rewarded at
the Quarterly Associates’ Meeting.
Categories of award winners include:
Associate of the Quarter, Associate
of the Year and GM’s Award. The
nominees as well as winners are
awarded cash rewards and letters of
appreciation.
Recognising and rewarding
both personal and professional
achievements form a key part of the
endeavour to encourage associates
to tap into their potential talents
and develop leadership abilities that
underpin their success.
Key 'Work-Life' Initiatives for the
Year
Inter Department Cricket 6s
The Inter Department Cricket 6s,
held annually, is a highly-anticipated
sporting event of the Cinnamon
Grand. This was held at the Burgher
Recreation Club (BRC) Grounds
on 14th November 2014, with
Housekeeping B emerging as winners
in the male Category and F&B as
winners in the female category.
Long Service Awards
The Service Awards Ceremony is held
annually to felicitate the commitment
of associates who have served
the hotel over the years and have
completed tenures of 5, 10, 15, 20, 25
and 30 years. These associates are
given gold sovereigns in proportion to
their years of service (up to 35 years).
Creating a Healthy Work-Life
Balance
A firm belief that a healthy, motivated
workforce is an unparalleled
resource has the hotel adopting a
holistic approach towards creating
a meaningful work-life balance
for all associates. The Cinnamon
Grand provides a mentoring role
in supporting employees to meet
work challenges while ensuring they
remain committed to the long-term
objectives of the Company.
Improving Employee Wellness
Facilities available to improve
employee wellness include:
Annual medical checks for all
associates over 40
Senior Executives’ annual medical
check-ups
Special annual medical checks for
food-handlers
Eye clinic
24-hour in-house clinic. A doctor
visits twice a day
First Aid trainers
Dengue Awareness Seminar at
Cinnamon Grand
The Cinnamon Grand conducted
a Dengue Awareness Seminar in
commemoration of the kitchen
stewarding associate who succumbed
to the fever earlier this year. Held on
26th June, National Dengue Control
Unit Consultant Community Physician
Dr. Nimalka Pannilahetti addressed
over 300 associates at the seminar on
tell-tale signs and symptoms of the
fever and preventive methods.
Breast Cancer Awareness
Seminar and Screening
Committed to nurturing the wellbeing
of its associates, Cinnamon Grand
Colombo conducted a Breast Cancer
Awareness Seminar followed by a free
cancer screening and pap-smear test
for female staff in commemoration of
World Breast Cancer Month (October).
Eminent speakers such as the Cancer
Control Programme's former Director
Dr. Neelamani Paranagama, Cancer
Control Program Medical Officer Dr.
Harshini Amaradasa and Mithuruwela
Cancer Support Network Founding
Member Mala Thalayasingam focused
on the importance of early detection
and educated associates on selfexamination techniques.
Don’t Drink and Drive Campaign
Workshop – Phase II
Phase II of the Don’t Drink and Drive
campaign was held on 30th and 31st
March at the Ivy Room as a City Sector
initiative, educating over 250 F&B
personnel of the three city hotels –
Cinnamon Grand, Cinnamon Lakeside
and Cinnamon red. An initiative by
the Marketing Communications
and F&B Departments of Cinnamon
Grand, the campaign was organised
in partnership with Diageo. Diageo
trainer for the Drink IQ program Gavin
Gomez arrived in Sri Lanka for the
training, which focused on educating
beverage handlers of the hotels on
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Management Discussion & Analysis Contd.
responsible drinking and correct
methodologies of serving customers.
A total of eight one-and-a-half hour
sessions were conducted within the
two days.
Creating a Greener Mindset
Climate Change Seminar
An educative seminar on Climate
Change was held for hotel associates
by Senior Lecturer Dr. Erandathi
Lokupitiya from University of Colombo
(Department of Zoology).Over 230
associates participated in this seminar.
Dr. Lokupitiya outlined the causes
of climate change and its effect on
the environment and the world. A
future outlook and methods through
which one could mitigate the adverse
impacts of climate change were
also shown, drawing examples from
environmental disasters occurring all
over the world.
Employee Awareness through
Weekly Sustainability Short
Takes
The Cinnamon Grand continued to
educate associates on sustainability
topics through weekly sustainability
short takes. These were printed and
circulated among employees in both
Sinhala and English. Periodic audits
on these short takes were conducted
to ensure associate awareness on the
contents of these documents.
The Vesak lanterns displayed on the
hotel’s lawn featured 8,000 discarded
plastic cups and 3,500 plastic bottles.
It was a symbolic indication of our
indulgence-driven lifestyles and the
need to cultivate habits that are less
environmentally destructive.
Sustainable Vesak decorations
In keeping with the Cinnamon
Grand’s sustainability commitment to
instill a greener mindset, the hotel’s
Engineering Department constructed
a range of stunning Vesak décor using
discarded plastic cups and bottles.
Planet Quiz
An Interdepartmental Planet Quiz
on sustainability, climate change
and eco practices was organised
by the Marketing Communications
and Sustainability Team for
hotel associates. This interactive
competition was held in conjunction
with the hotel’s World Environment
Day celebrations. All 13 departments
took part in the event, with two
representatives entering the
competition. The Human Resources
Team emerged winners, with Finance
and Front Office teams coming in at
second and third places.
Cinnamon Hotels & Resorts Sector Head-City Hotels and Cinnamon Grand General Manager
Rohan Karr announcing the winners of the Interdepartmental Planet Quiz
Asian Hotels and Properties Plc
Annual Report 2014/15
Developing a
dynamic training
curriculum
Efforts to enrich our people have always been underscored by the need to create a dynamic training blueprint that would
caption the current needs of our workforce. By collating the results of a series of formal and informal indicators, we are
able to develop a comprehensive Training Needs Analysis (TNA) that forms the basis of the annual training curriculum at
Cinnamon Grand.
Annual Performance
Review
Guest Reviews
Feedback from
Managers
Training Needs
Analysis (TNA)
Voice of the
Employee Surveys
Training Audits
The Importance of In-house
Training
Given the highly competitive nature
of our business, where service
differentiation remains the key to
success, in-house training plays
a critical role in manifesting the
desired level of service clarity and
professionalism to pursue Cinnamon
Grand’s unique selling proposition.
Conducted by the Learning and
Development team together with the
support of our departmental trainers
(Train, Assess and Develop or TAD
trainers), Cinnamon Grand's in-house
training framework follows a dynamic
approach to enhance and improve
knowledge and skills, while instilling
the right attitudes to help associates
absorb the hotel's unique value
culture.
Cinnamon Grand's Manager Learning and Development Shashi Jayawardena
explaining the internal processors to the new associates at the induction programme
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Management Discussion & Analysis Contd.
In-house Training
Programme
Programme Description
Staff per
Programme
Cinnamon Grand
Induction
A three-day comprehensive program to introduce new recruits into Cinnamon
Grand’s operational code. It provides an introduction into the value culture of
a star-class resort, while stressing on the importance of being part of the JKH
group
352
SOP Workshops
(Standard Operating
Procedures)
A training initiative for associates to ensure departmental staff are kept
abreast of the standard operating procedures in use, in the respective
departments. These also include training sessions conducted by TAD trainers
from other departments
280
On-the-job Training
at Front Office and
Food and Beverage
Departments
Trainers work on a roster basis at these departments to identify and analyse
the training requirements and to conduct on-the-job training within each
department
119
Cinnamon Magic
A programme aimed at instilling the right mind-set among new recruits, the
sessions are conducted by a team of Cinnamon Magic trainers comprising
staff from different departments to provide a wealth of experience and
knowledge
210
TAD Trainer Programme
Conducted by the Learning and Development trainers, the programme is
designed to nurture potential TAD trainers from among hotel’s associates.
Upon completion of the programme, all successful TAD trainers are then
certified as such at the Associate Quarterly Meeting (AQM). All certified TAD
trainers would then be responsible for delivering high intensity departmental
SOP trainings within Cinnamon Grand in addition to playing a lead role at SOP
workshops for their respective departments
86
Soft Skills for Security
This tailor-made soft skills programme addresses the critical role played by
the security staff to ensure Cinnamon Grand continues to maintain its starclass standards
38
HIV/AIDS Awareness
To create awareness among all new recruits on the principles practiced in the
JKH Group with regards to HIV/AIDS victims and to avoid discrimination
352
Fire Awareness Training
To educate all staff on procedures to be followed during a fire or any other
emergency situation. How to use fire extinguishers, fire blankets and other
safety equipments were conveyed, along with occupational health and safety
aspects of working in a hotel. This programme was conducted by the in-house
fire fighting team.
997
First Aid Ambassador
Training Programme
Basic training for staff to understand the fundamentals of First Aid. The
programme was conducted in-house by the Red Cross First Aid team of Sri
Lanka
62
Seasonal Information
This programme was conducted for all staff during the months of October
and November to give the basic knowledge of the upcoming events and
promotions which were planned for the December season
2053
Asian Hotels and Properties Plc
Annual Report 2014/15
In-house Training
Programme
Programme Description
Staff per
Programme
Personal Grooming
All ladies were given training on the grooming standards that need to be
followed while at work. This programme gave practical training on how to
apply make-up, how to do one's hair, etc. with the help of professionals
143
Guest Service (Level 01)
Conducted for all staff at Level 01 (Junior Executive and below), the
programme delivers the key competencies that are required in the leisure
sector. This workshop is an in-depth, customer focused session that targets all
areas of customer handling
178
Soft Skills for Trainee
Chefs
This programme focuses all trainees of the Kitchen department.
The programme contains :
 A set of soft skills that will be needed while working at action stations for
the chefs
Knife skills, basic cuts of vegetables and mother sauces
Introduction to carving by our Senior Kitchen Artist
Standards, certificates and good hygiene practices by the Compliance,
Health & Safety Manager
 All trainees are evaluated through an exam at the conclusion
46
F&B and Culinary Policy
Workshop
16 policies relevant to F&B and kitchen departments were discussed at this
training with the Heads of the Departments and senior managers involved in
operations
33
F&B Front Office &
Housekeeping How To’s
Workshop
15 F&B relevant How To’s, 10 generic how to’s and 28 housekeeping how to’s
were discussed with the Heads of the Departments and Senior Managers
74
Mandatory Front Office
Information
A presentation for Front Office staff to educate them on the most important
information needed to give a better service to guests
The programme contains :
Categories of rooms at Cinnamon Grand
Smoking and non-smoking rooms
Business Centre facilities and rates
Facilities given at Executive Floor
 Types of vegetarians
 Currency exchange
Taxes guest have to pay
32
Soft Skills for Walkers
Tours Taxi Drivers
Training on basic soft skills needed to be practiced during throughout the day
The programme contains :
Magic words in the industry
Important phrases to use when handling guests
Tips on communication
 Body language
 Grooming standards
Hotel information
25
47
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Asian Hotels and Properties Plc
Annual Report 2014/15
Management Discussion & Analysis Contd.
External Training Statistics for the year
Category
Q1
Q2
Q3
Q4
Total
No of
Hours
-
2
-
-
2
1
2.0
12
15
-
96
123
10
12.3
-
48
15
128
191
15
12.7
482
555
703
1,735
3,475
527
6.6
14,558
6,657
11,132
9,785
42,132
3,613
11.7
Number of hours of training for male employees
by category: AVP and above
-
2
-
-
2
1
2.0
Number of hours of training for male employees
by category: Manager
-
3
-
77
80
7
11.4
Number of hours of training for male employees
by category: Assistant Manager
-
24
11
102
137
11
12.5
Number of hours of training for male employees
by category: Executives
434
500
633
1,562
3,128
474
6.6
Number of hours of training for male employees
by category: Non-Executives
13,102
5,991
10,019
8,807
37,919
3,252
11.7
Number of hours of training for female employees
by category: Manager
12
12
-
19
43
3
14
Number of hours of training for female employees
by category: Assistant Manager
-
24
4
26
54
4
14
Number of hours of training for female employees
by category: Executives
48
55
70
173
347
53
7
Number of hours of training for female employees
by category: Non-Executives
1,456
666
1,113
978
4,213
361
12
Number of hours of training: AVP and above
Number of hours of training: Manager
Number of hours of training: Assistant Managers
Number of hours of training: Executives
Number of hours of training: Non-Executives
No of Average
Staff
Hours
Asian Hotels and Properties Plc
Annual Report 2014/15
2014
Cinnamon Cinnamon
Grand
Lakeside
2015
Property
Sector
Group
Cinnamon
Grand
Cinnamon
Lakeside
Property
Sector
Group
Defined Contribution Plan Obligation (EPF & ETF) in Rs.’000’
EPF
59,468
33,714
2,412
95,594
65,506
34,429
2,617
102,551
ETF
11,847
8,531
362
20,740
13,058
8,542
392
21,993
Defined Benefit Plan Obligation ( Gratuity ) in Rs.’000’
Employee Benefit
Liability
Payments During the
Year
109,936
106,570
4,728
221,234
126,382
109,999
5,491
241,873
5,977
11,072
-
17,049
8,802
14,561
-
23,363
Attrition by Age (%)
Total Employees Age Analysis (No. of Employees)
466
11.7%
6.4%
434
419
440
319
337
24.0%
57.9%
2013/14
2014/15
Age
41-55
Age
31-40
Age 41-50
4
Age
21-30
Age 31-40
Age 21-30
Age
18-20
Age 18-20
14
4
Over
55
25
49
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Asian Hotels and Properties Plc
Annual Report 2014/15
Management Discussion & Analysis Contd.
Sustainable
Business
Product Responsibility
The Cinnamon Grand believes a
sustainable business model should
balance financial growth with
non-financial aspects which also
contribute towards overall business
sustainability. These non-financial
aspects include community welfare
and environmental responsibility.
The hotel has invested in a range
of quality control and certification
systems that contribute towards our
sustainable business model.
Industry best practices complying
with a range of international
certification helps the hotel maintain
high standards in its product offering.
Cinnamon Grand maintains the
highest standard of products and
services at all times by implementing
industry best practices and complying
with a range of international
certifications. This is a core aspect of
the overall sustainability model, by
ensuring the safety and wellbeing
of hotel guests, employees and
other stakeholders. The hotel’s food
and beverage requirements are
transported, stored, produced and
processed under stringent quality
controls to ensure international
standards. Suppliers are continually
audited to ensure safety standards
are maintained along the supply
chain. In addition to food safety,
the physical safety and privacy of
guests are ensured through security
systems and physical design
elements. The hotel has also invested
in environmental safety standards
to ensure an environmentallysustainable business operation.
Asian Hotels and Properties PLC was
fully compliant with all relevant and
applicable laws and regulations as
stipulated by the various national
agencies during the year. In fact,
the Company is proud to record
that the efforts towards running a
sustainable business model were
further reiterated through continued
compliance with internationallyrecognised independent certification
systems.
Food Safety Systems
5 crowns Certification:
The Cinnamon Grand Colombo
was awarded 5 crowns at the Food
Hygiene awards ceremony following
extensive pre and final assessments
carried out by the Sri Lanka Tourism
Development Authority (SLTDA) in
partnership with Ind-Expo certification
(Pvt) Ltd. The Crowns scheme
criteria for assessment covers the
commitment of an establishment
towards the maintenance of food
safety management systems,
infrastructure, environment,
cleanliness, food preparation
procedures, storage, display, personal
hygiene, use of clean water and
effective use of raw materials.
A+ from Colombo Municipal
Council (CMC):
Continuing its achievements for
the year, the Cinnamon Grand
was awarded the 'A+' Grade at the
Hotel Hygiene Classification Audit,
conducted by the Colombo Municipal
Council through a number of
unannounced visits to the Cinnamon
Grand kitchens for strict inspection
of kitchen operations. The hotel was
awarded an A+ Grade Kitchen by the
Colombo Municipal Council following
these audits. This achievement is
indicative of the quality of food at the
Cinnamon Grand and differentiates
the hotel from its many competitors
in the city as our standards ensure the
best quality of materials prepared in
the most hygienic fashion.
ISO 22000 & 2005 Food Safety
Management System Standard:
The ISO 22000 & 2005 standard
is an international standard that
is applicable to all organisations,
regardless of size, which are involved
in any aspect of the food chain and
want to implement systems that
consistently provide safe products.
Our systems were re-certified as ISO
compliant in the current financial year
following independent audits by SGS
Lanka.
Asian Hotels and Properties Plc
Annual Report 2014/15
Foreign Tour Operator Audits:
Health and Safety at Work
During the current financial year, the
Cinnamon Grand successfully faced
two health and safety audits from two
of the world’s largest travel agencies.
Thomas Cook Group Plc is a British
Global Travel Company listed on the
London Stock Exchange and Cooney
World Adventures is another leading
British travel agency. Independent
and separately conducted audits by
both agencies regarding the diverse
aspects of the hotel’s operations
confirmed the high standards of the
hotel and established the hotel as a
leading tourism services provider in
Sri Lanka for travellers from across
the world.
As always, the health and safety of the workforce remains a primary concern
for Cinnamon Grand as the hotel strives to uphold international hospitality
standards at all times. A sound set of principles and practices form the basis
of Cinnamon Grand's safety policy, which is comprehensively captured in the
safety manual. The hotel’s Department of Compliance, Health and Safety is the
apex body within the organisation, in charge of all safety aspects. Furthermore,
the Accident Committee and the Evaluation and Prevention Committee, which
falls under the supervision of the Compliance, Health and Safety Department,
also offers proactive support in maintaining safety standards. The department
is tasked with monitoring, reviewing and reporting on day-to-day adherence
to safety standards and procedures. The Company’s safety procedures are
further strengthened by OHSAS 18001 certification obtained from SGS Lanka,
the accredited body for OHSAS certification in Sri Lanka. The certification
confirms that Cinnamon Grand’s systems and processes are fully compliant with
OHSAS 18001 international standards for occupational health and management
systems.
Injury Rate
Supplier Audits:
All products sourced by the hotel
adhere to the supply chain policies
of the Cinnamon Grand and the JKH
Group. This allows for a guaranteed
supply at a fair price and establishes
quality standards for suppliers to
ensure the premium standards of the
hotel are always maintained. During
the current year, 10 suppliers were
audited for their standards to ensure
that expected quality standards are
always met throughout the supply
chain and to ensure the delivery of
the highest quality products to the
Cinnamon Grand kitchens.
In the financial year under review, a total of seven associates of Cinnamon
Grand were affected by occupational injuries, a decrease of 70% compared to
last year.
Total No of Man Days for the Period
Total No of Man Days Lost (TMDL)
TMDL as a % of Total Man Days for the Period
2014/15
2013/14
324,456
325,512
101
199
0.03%
0.06%
Certifications
OHSAS 18001: The hotel has implemented the OHSAS 18001 standard to
create a healthy and safe work environment for all employees and also
guests. During the current financial year, the Cinnamon Grand continued
to qualify for the OHSAS 18001 certification, following inspection audits
conducted by independent auditors. The Occupational Health and Safety
Assessment Series is a British standard for occupational health and safety
management and the implementation of the system ensures a safe working
environment for our employees and also other stakeholders.
Awards
Occupational Health and Safety Award: The Cinnamon Grand won a Merit
award under the five-Star Hotel category at the first Occupational Health
and Safety Awards conducted in Sri Lanka by the National Institute of Safety
and Health Sri Lanka, which is part of the Labour Department.
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Asian Hotels and Properties Plc
Annual Report 2014/15
Management Discussion & Analysis Contd.
Environmental Sustainability
Certifications
Green Globe Certification: This
is an international certification
programme for sustainable
tourism, entailing 41 standard
criteria and 137 compliance
indicators. In 2014, the hotel
obtained a score of 75% in the
Green Globe ranking system,
making us one of the most
sustainably operated hotels in the
country.
ISO 14000 Environmental
Management Standard: The
hotel is highly conscious of the
environmental impacts of its
operations and has invested
consistently on minimising
negative environmental impacts,
as part of the sustainability
strategy. The Cinnamon Grand
is certified ISO 14000 compliant,
indicating that the systems
and processes are designed to
abate environmental impacts of
all business operations. Annual
environment impact assessments
are conducted and management
programmes developed
accordingly to conserve water and
electricity and reduce waste.
3 per cent reduction in its carbon footprint during the financial year due to
energy conservation initiatives established to manage the hotel’s carbon
footprint. Over the next year, the Cinnamon Grand will see a reduction of
over 4,000 tons of Greenhouse Gases (GHGs) annually due to the latest
improvements to the systems.
Water Conservation
As a precious natural resource, water conservation is an integral element of
the hotel’s sustainability model.The Cinnamon Grand continually strives to
improve the systems to reduce wastage of water. Over the years the hotel has
introduced many initiatives to not only reduce consumption but also to reduce
environmental impacts. This is achieved by adherence to prescribed standards
for effluents discharged. . During the current year the hotel saw a 2.51 per cent
saving in water consumption and improved the system of discharging water to
further reduce environmental impact.
The pumping system was modified during the current year to conserve both
water and energy. The single pumping station was replaced by two pumping
systems, catering separately to lower levels and upper levels of the building.
Previously, pumps were running at higher capacity to maintain water
pressure at higher levels, which resulted in higher energy consumption and
high wastage. The changes introduced to the pumping system in the current
financial year have reduced the energy requirement to pump water and also
reduced water wastage.
To reduce environmental impacts through water discharges, the hotel
installed three grease traps to clean discharged water which is relapsed to
manholes.
Water in Units (m3)
285,560
238,263
232,290
2015
The carbon footprint is the total
amount of greenhouse gases
produced by an organisation or
person and is usually expressed in
equivalent tons of carbon dioxide
(CO2). As an element of the overall
sustainability strategy, the hotel has
been actively engaged in reducing its
carbon footprint. During the current
year, the Cinnamon Grand saw a
2013
Carbon Footprint
2014
257,402
2012
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Asian Hotels and Properties Plc
Annual Report 2014/15
Energy Conservation
A Building Management System
(BMS) was installed in March 2015
to centrally and automatically
control the ambient air within the
Cinnamon Grand. The system
controls, monitors and quantifies
energy usage across the entirety
of the hotel. The system regulates
heating, ventilation and air
conditioning in all parts of the
building, except for guest rooms.
The BMS monitors CO2 levels, and
exhaust and pressure systems
and maintains optimum levels
by automatically adjusting the
systems. Anticipated savings per
annum is Rs. 52 million from this
Rs. 170 million project.
As part of the BMS initiative, two
new chillers were installed for
air conditioning in January 2015.
These high-efficiency chillers help
save around 8,500-10,000 Kwh of
electricity per day.
Two electric ovens in the kitchens
were replaced with LPG ovens.
Cinnamon Grand Green Vision
To be ranked as the Best five-star Sustainable City Hotel in Sri Lanka by
2015
“ We are proud to place on record that the Cinnamon Grand’s green
vision of becoming the best five-star sustainable city hotel in Sri Lanka
was achieved during the current financial year with the implementation
of our new Building Management System (BMS). The BMS regulates
the environment within the hotel to maintain optimum environmental
conditions, while minimising energy wastage.”
These improvements reduced electricity consumption by 4.32 per cent during
the current year as against the previous year.
Electricity in KWH ('000)
15,274
14,042
13,841
2015
2014
2013
2012
13,243
Cinnamon Grand's Chief Engineer Panduka Wijeyawardena and Lanka
Energy Conservation Pvt Limited Chairman and Managing Director Dammicca
Wickramarathne in front of the newly installed chillers, under the BMS initiative
53
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Asian Hotels and Properties Plc
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Management Discussion & Analysis Contd.
Waste Management
The hotel has in place, systems for the disposal of waste generated through daily operations. Such waste disposal
systems include the use of the 3R methodology of Reusing, Recycling and Reducing techniques. As Colombo’s largest
five-star property, with 501 rooms and 14 restaurants, the Cinnamon Grand’s main waste product is wet garbage,
comprising food waste, which accounts for about 86 per cent of total waste output of the hotel. Therefore, food waste
management is an integral part of the hotel’s day-to-day functions. In addition, plastic, paper and glass bottles account
for 6.7 per cent of total waste output. Hazardous waste of the hotel, comprising e-waste such as computers and mobile
phones, is sent for proper disposal and recycling. Moreover, the hotel’s discarded CFL bulbs are sent for recycling to a
Central Environment Authority-certified waste disposer.
Banners to Bags (B2b) sale at Cinnamon Grand
The Cinnamon Grand Colombo's popular Banners to Bags (B2b) initiative was held in commemoration of World
Environment Day. The sale was held for the fifth time in June 2014 and featured 170 exclusive and trendy bags made out
of used flexi banners of the hotel.
The Cinnamon Grand is Asia's first and the world's fourth company to embark on this unique recycling initiative. All
proceeds from the sale of the bags are directed towards the Children’s Ward of the Maharagama Cancer Hospital. This
innovative concept was introduced in 2009 and was endorsed by Professor Mohan Munasinghe, who is the Vice Chairman
of the Intergovernmental Panel on Climate Change and shared the 2007 Nobel Peace Prize with Al Gore.
Waste Management efforts for the year
Waste type
Method of disposal
Wet garbage
Collected by three piggery farms
Kitchen used oil
Used for the hotel’s boilers
Plastic and polythene
Given to Central Environmental Authority listed collectors for
recycling
2013/14
kgs
2014/15
kgs
761,942
793,862
11,372
11,061
59,023
63,146
351
1,577
2,189
4,588
Paper and glass bottles
Given to Piramal Glass Company for recycling
Hazardous waste
(e-waste and CFL and tube
bulbs)
All e-waste is collected by Think Green
All CFL and tube bulbs are collected by Orange
Both companies are registered with the Central Environmental
Authority
Metal tins and cans
Given for recycling to the same collector as plastic and
polythene
Composting
Composting is processed in the hotel and used for the garden
areas
42,717
7,636
Landfill waste
Given to the Colombo Municipal Council for dumping
43,636
43,636
Coconut shells
Collected by a Coconut Development Authority registered
supplier
568
7,147
Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Social
Responsibility
The Cinnamon Grand’s approach
to CSR is aimed at supporting local
and national endeavours to uplift
social standards and living conditions
of less-developed and vulnerable
communities in the country. The
Company is committed to conduct
business in a manner that benefits
the economy, society and quality
of environment. The Marketing
Communications and Sustainability
Department together with the
Human Resources Department raises
awareness among the staff regarding
the role of CSR in the Company’s
sustainable growth objectives.
Supporting the La-Salian
Montessori, Modara
In November 2014, the Cinnamon
Grand donated 10 used plastic chairs
to the La-Salian centre. The hotel
also donated a range of linen such as
bed sheets, pool towels, bath towels,
duvet covers, tablecloths and face
towels.
Neighbourhood School Project
The Cinnamon Grand understands the
importance of being a good neighbour
to its surrounding community. The
hotel has been supporting the
development and maintenance
of infrastructure and facilities of
disadvantaged Government schools
in Colombo 2, towards creating an
environment more conducive for
learning. The schools cater to a mixed
student population representing
all communities and religions. This
project is a collaboration between the
John Keells Foundation and the hotel.
Refreshment Stall during His
Holiness Pope Francis’s Mass at
Galle Face Green
The Cinnamon Grand hosted a coffee
and cool drinks stall for the large
crowds who came from across the
country and abroad to Galle Face
Green to attend Mass and seek
blessings from His Holiness Pope
Francis during his two-day visit to
Sri Lanka. The Cinnamon Grand staff
worked tirelessly in making this
historic event a success by sparing
no efforts to ensure the welfare
of the masses visiting the event.
Visitors entering Galle Face Green
in the early hours of the day were
provided with hot cups of coffee to
quench their thirst and ease their
fatigue after travelling from far and
wide to participate in the momentous
occasion. As the day got progressively
warmer, the Cinnamon Grand staff
The Cinnamon Grand has been
supporting the La-Salian Montessori
at Henamulla Camp, Modara,
since 2012 to uplift the learning
environment for underprivileged
children. This Community and
Education Service Centre, which is
operated by the La-Salian Foundation,
has 145 students between the ages of
3-5 years, with six teachers to care for
them. In an attempt to improve their
learning environment, the Cinnamon
Grand has refurbished the teachers’
room and three toilets and painted
the main classroom walls as part of
the second phase of this project in
April 2014.
Cinnamon Grand associates serving hot cups of coffee in the wee hours of the morning
for those rallying towards the Galle Face Green for the Papal Mass
55
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Asian Hotels and Properties Plc
Annual Report 2014/15
Management Discussion & Analysis Contd.
worked hard irrespective of the
heat and disregarding their personal
discomfort to ensure the availability of
cooling and refreshing drinks towards
mid-day. These attentive ministrations
by our staff ensured that the elderly
and the young were well taken care
of during the day. Over 15,000 cups of
coffee and nearly 50,000 cups of cool
drinks were served to pilgrims by the
Cinnamon Grand during this historic
occasion.
Environmental Wisdom Cards
The Cinnamon Grand’s ‘Environmental
Wisdom Card Packs’ continued to
remain popular among guests and
other stakeholders. The cards that
were launched to commemorate
World Environment Day in 2010
contain 12 beautiful wisdom cards,
with images of the over 200-year
old Banyan tree at Nuga Gama. The
photographs for the cards were taken
by Steve Cohn, a famous photographer
from Los Angeles. Each card bears
an inspirational quote from famous
environmental advocates and is
printed on recycled paper. The packs
are sold to guests in all restaurants and
at the reception. Proceeds from sales
go to the Field Ornithology Group of Sri
Lanka, a conservation society involved
in conservation of local avifauna.
promote and sustain the livelihood of
small-scale entrepreneurs through the
Kadé at Nuga Gama, the village in the
city.
Assisting Senior Citizens: The
Dias Elders’ Home
The Cinnamon Grand Colombo
provides dry rations and medicinal
items to the Dias Elders’ Home every
month, to support senior citizens who
reside in the home. The Dias Elders’
Home provides shelter to senior
citizens who do not have family or
other forms of financial support and/
or care.
Alzheimer’s Foundation
The Cinnamon Grand Colombo is the
hospitality sponsor of The Memory
Walk, the flagship event of the
Lanka Alzheimer’s Foundation. The
hotel provided refreshments to the
participants. The annual walk aims at
raising awareness and funds for those
affected with Alzheimer’s disease.
A Day Out for Hearing Impaired
Children
The Cinnamon Grand Colombo hosted
35 students from the Ceylon School for
the Deaf and Blind on 25th July 2014.
The children were welcomed at the
lobby and presented with welcome
drinks at the Courtyard. Taken on a
short tour of the hotel, the children
were shown the Chocolate Room and
the fish pond next to Taprobane, and
concluded their visit with an enjoyable
lunch at Nuga Gama.
Donation of White Canes
A donation of 100 white canes was
made to the Sri Lanka Welfare Society
of the Blind in aid of the visuallyhandicapped, in commemoration of
White Cane Day in October.
Promoting Sri Lankan Crafts and
Produce
The hotel also promote batik items,
Cinnamon-branded bookmarks,
locally-manufactured children’s sling
pouches, recycled paper notepads,
wooden handicrafts and masks to
Ecstatic students from Ceylon School for the Deaf and Blind at the end of the hotel
tour with the Cinnamon Grand team
Asian Hotels and Properties Plc
Annual Report 2014/15
Assisting Senior Citizens: St.
Anne’s Home for Elders
On the request of the former Roman
Catholic Archbishop of Colombo,
Father Oswald Thomas Colman
Gomis, the Cinnamon Grand donated
a consignment of discarded linen
to the St. Anne’s Home for Elders in
Kelaniya. Together with the linen,
which included bed sheets, pillow
cases, towels and serviettes, the hotel
also donated a variety of crockery and
cutlery items.
Annual Christmas Visit from Don
Bosco Boys’ Home
The annual Christmas celebration for
the boys from Don Bosco Boys’ Home
in Maggona was held for the ninth
consecutive year. The hotel organised
a host of fun-filled activities in true
Cinnamon Grand style. In addition, the
boys were also gifted books, stationery,
school uniforms and shoes for the coming
year at the Christmas Party, ending the
day on a very positive note. Staff from
all departments took time off from their
busy seasonal schedules to create this
memorable experience for the kids.
Donation of Linen
The Cinnamon Grand is highly conscious of its five-star image and hygiene
standards and regularly replaces large volumes of household linen with
new items to maintain its premium image. The hotel regularly donates the
cleaned, discarded linen which is in good condition to suitable charities as an
environmentally-friendly method of disposal.
During the current year, a batch of discarded linen was donated to the
Diyangala Boys Town at Ragama, on 21st June 2014.
Another batch, mainly bed sheets, was donated to the Maharagama Cancer
Hospital on 28th June 2014.
More hotel linen was donated to the Institute of Mental Health on 29th
October 2014.
Victims of landslides in Koslanda were gifted with second-hand linen
and other items of clothing in July 2014. Families and children who were
displaced and facing the cold climate of the hill country were presented
with the warm gift of sheets, bed spreads, blankets, towels, shirts and
trousers.
Linen, including bath towels and bed sheets, was donated to an Ayurveda
Clinic in Panadura to improve facilities for patients seeking Ayurveda
treatment.
Discarded linen was donated to the Peter Weerasekara Home for the funraising ‘Village Fair’ project organised by the home.
The hotel donated linen for the use of an employee’s mother who was
admitted to the Cancer Hospital
Children from the Don Bosco Boys' Home Maggona, enjoying themselves at the annual
Christmas celebrations at the Cinnamon Grand
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Management Discussion & Analysis Contd.
Corporate social
responsibility
cinnamon lakeside
Being a responsible corporate citizen
is an unwavering priority in Cinnamon
Lakeside’s entire corporate ethos. At
Cinnamon Lakeside, the corporate
stewardship is a daily philosophy, well
ingrained into every facet of the way
business is conducted. In line with
this overarching objective, Cinnamon
Lakeside has, over the years, worked
on integrated social responsibility
platforms designed to have maximum
impact on all stakeholders, where the
relationships nurtured with them are
constructed on strong sustainable
foundations that would prompt a
win-win formula for both them and
us. The hotel team encompassing
both management and associates,
remains integral to the CSR ethos;
encouraging associates to identify
community initiatives that would
involve their participation. Hence
volunteerism remains ingrained into
productivity and performance goals
and aligned to their individual career
aspirations.
Believing strongly that the impact
that Cinnamon Lakeside has on the
community must be a sustainable
long term one, the projects identified,
strengthened and nurtured are
programmes founded on the
platforms of permeating education
for under-served communities
as well as extending vocational
training programmes for youth
from economically disadvantaged
backgrounds. It is also imperative
that the hotel inculcate a milieu
of inclusivity in each of the social
projects and hence promoting
religious harmony remains ingrained
into these. ‘One Creed for All Creeds
for One’ thus was founded on and
promotes the concept of unity in
diversity, encouraging celebration of
the diversity among us, whether in
ethnicity, culturally, religious, socially
and economically, spearheading
change through processes
to encourage nation building,
reconciliation and peace.
All CSR programmes are
implemented in a highly coordinated
environment, with key projects
undertaken at Group level, in
collaboration with the Corporate
Social Responsibility Foundation of
John Keells Holdings PLC.
Encouraging religious harmony
St. James Church in Wewaldeniya,
Nittambuwa was refurbished
and renovated this year as a
facet of Cinnamon Lakeside’s
social responsibility platform to
promote religious harmony. Each
year, the hotel selects a site of
significance to any religion and
spurs its refurbishment. This year,
the hotel had the participation of
100 from the hotel’s team in the
project, which included cleaning the
surrounds and painting the interiors,
exteriors and statues within the
Church. also Breakfast and lunch
were also provided to the inmates
of the children accommodated at
the orphanage situated within and
managed by the church.
Cinnamon Lakeside associates renovating the St. James Church in Wewaldeniya,
Nittambuwa
Asian Hotels and Properties Plc
Annual Report 2014/15
Projects that promote religious
harmony will continue as an integral
facet within the social responsibility
initiatives and each year, Cinnamon
Lakeside team will identify a religious
site that requires attention to gain
proactive participation.
Better Health for All
The totality of the ENT Ward of the
Lady Ridgeway Children's Hospital
was completely refurbished with
the voluntary participation of 50 of
hotel’s team, in February 2015. In
addition to ensuring that the ward was
completely renovated by painting,
cleaning and even dry cleaning
curtains at the hotel laundry, the hotel
also presented the ward with fans,
bed linen and other essentials.
Accessibility to Education
Spearheading the tenet that
knowledge gain will always be the
tool for success, which is eventually
translated into a knowledge
empowered society that contributes
towards national development,
this year the hotel presented 3,000
exercise books to school children
who are within the Lahiru Scholarship
Foundation in Bibile, based in the
Moneragala District. This was a
project that saw the joint efforts
of both the hotel and hotel’s team
members contributing towards the
cost of the books, well entrenched in
the mindset that education must be
accessible to all and hence, Cinnamon
Lakeside must do its part to ensure
this becomes a reality.
Cinnamon Lakeside team after the Lady Ridgway refurbishment project
59
60
Asian Hotels and Properties Plc
Annual Report 2014/15
Board of Directors
Susantha Ratnayake
Chairman
Susantha Ratnayake was appointed
as a Director of Asian Hotels and
Properties PLC in September 2003
and Chairman and CEO of John
Keells Holdings PLC in January 2006.
He has served on the JKH Board
since 1992/1993 and has 37 years of
management experience, all of which
is within the John Keells Group.
He is the Chairman of the Employers
Federation of Ceylon, Non-Executive
Chairman of Ceylon Tobacco
Company PLC and is a past Chairman
of the Ceylon Chamber of Commerce
and the Sri Lanka Tea Board.
Ajit Gunewardene
Trust Bank PLC. Ajit has a Degree in
Economics and brings over 32 years
of management experience.
Ronnie Peiris
Director
Ronnie Peiris was appointed as a
Director of Asian Hotels & Properties
PLC in 2003. As the Group Finance
Director of John Keells Holdings PLC,
Ronnie has overall responsibility for
the Group’s Finance and Accounting,
Taxation, Corporate Finance,
Treasury and Information Technology
functions. He is also Director of
several companies in the John
Keells Group. He was previously the
Managing Director of Anglo American
Corporation (Central Africa) Limited in
Zambia.
Director
Ajit Gunewardene is the Deputy
Chairman of John Keells Holdings PLC
and has been a member of the Board
for over 20 years. He is a Director of
many companies in the John Keells
Group and is the Chairman of Union
Assurance PLC. He is a member of
the Board of SLINTEC, a company
established for the development
of nanotechnology in Sri Lanka
under the auspices of the Ministry of
Science and Technology. He is also
an Advisory Committee Member of
COSTI, the coordinating Secretariat for
Science Technology and Innovation
under the purview of the Minister
(Senior) of Scientific Affairs. He has
also served as the Chairman of the
Colombo Stock Exchange and Nations
He has over 40 years of finance and
general management experience
in Sri Lanka and abroad. He is a
Fellow of the Chartered Institute
of Management Accountants, UK,
Association of Chartered Certified
Accountants, UK, and the Society of
Certified Management Accountants,
Sri Lanka and holds an MBA from the
University of Cape Town, South Africa.
He is a member of the Committee of
the Ceylon Chamber of Commerce,
and serves on its Economic, Fiscal and
Policy Planning Sub Committee.
Cholmondeley Pinto
Director
Cholmondeley Pinto was appointed
as a Non-Executive Director and
as the Chairman of the Board Audit
Committee of Asian Hotels and
Properties PLC in July 2011. He is a
Fellow of the Institute of Chartered
Accountants of Sri Lanka with 40
years of post-qualifying experience, in
the profession and in industry. Before
returning to Sri Lanka in 2006 after
spell of 32 years abroad, he worked
for SAB Miller PLC for 23 years, the
world’s second largest multinational
breweries group, holding CFO
positions in its listed subsidiaries in
several countries. He currently works
as a beverage industry consultant
and is semi-retired. He is also a
Non-Executive Director of Trans Asia
Hotels PLC.
Shirani Jayasekara
Director
Shirani Jayasekara was appointed
as a Director in September 2009.
She has over 35 years of experience
combining; Finance, IT, Audit and Risk
Management in Sri Lanka, Zambia and
Bahrain.
She has been selected to serve on
various committees of the Institute of
Chartered Accountants of Sri Lanka
such as the Annual Report awards
Committee (Sustainability Reporting)
and Audit Committee of the Institute.
She is also an external Independent
Director at LB Finance. She is a
Fellow of the Institute of Chartered
Accountants of Sri Lanka and a
Fellow of the Chartered Institute of
Management Accountants UK.
Asian Hotels and Properties Plc
Annual Report 2014/15
Sanjiva Senanayake
Rohan Karunarajah
Director
Director
Sanjiva Senanayake was appointed
to the Board of Asian Hotels and
Properties PLC as an Independent
Director in September 2009. He
has served in several key positions
in national and international
organisations.
Rohan Karunarajah is an Executive
Vice President of the John Keells
Group and is also the Sector Head of
the Cinnamon City Hotels, currently
overlooking the management of the
Cinnamon Grand, Cinnamon Lakeside
and Cinnamon Red. A career hotelier
counting over three decades, both in
the local and international hospitality
industry, he has held the position of
General Manager in several hotels
in the United Kingdom, lastly being
the Marriott Marble Arch, London.
He is a Director of Asian Hotels
and Properties PLC. He read for his
Masters in Hospitality and Business
Studies from the Thames Valley
University, London. He was also
appointed as a Director of Trans Asia
Hotels PLC, from 1st May 2015.
Senanayake joined the International
Finance Corp (IFC) - the World
Bank's private sector financing arm
in June 1998 and held the position
of Country Manager for Sri Lanka
and Maldives until April 2006 when
he was appointed as the Head of
Financial Markets Investments –
West Africa. He held this position
until his retirement in April 2009.
Prior to joining IFC he served as the
Assistant General Manager, Treasury
and Investment Banking at National
Development Bank of Sri Lanka and
as Consultant, Treasury and Business
Development at Commercial Bank of
Ceylon.
Prior to that he held several key
positions in the Citibank group in Sri
Lanka and overseas. Senanayake
holds a BSc degree in Electronic and
Electrical Engineering from King’s
College, University of London and an
MSc in Communication Engineering
from the Imperial College of Science
and Technology, University of London.
He is also a Director of Sampath Bank
PLC and Hemas Pharmaceuticals Ltd.
Suresh Rajendra
Director
Suresh Rajendra is the President of
the Property Group of John Keells
Holdings PLC. He also serves as a
Director in many companies of the
John Keells Group. He has over 22
years of experience in the fields
of finance, travel and tourism, and
business development acquired
both in Sri Lanka and overseas. Prior
to joining the Group, he was the
Head of Commercial and Business
Development for NRMA Motoring
and Services in Sydney, Australia and
Director/General Manger of Aitken
Spence Hotel Managements (Pvt) Ltd,
Sri Lanka. Suresh is a Fellow of the
Chartered Institute of Management
Accountants, UK.
61
Asian Hotels and Properties Plc
Annual Report 2014/15
Risk Management
The Company has recognised the Risk
Management Process as an essential
component of both the investment
management process ensuring safe
and high quality products as well
as maintaining sustainable business
operations for all our stakeholders.
Enhancements were continuously
made to the Risk Management
Framework throughout 2014/15
based on the guiding principles of
the Enterprise Risk Management
(ERM) process recommended by the
John Keells Group Sustainability and
Enterprise Risk Management Division.
The Enterprise Risk Management
cycle begins during the second
quarter with an annual risk review by the John Keells Group’s Enterprise Risk
Management division which assists heads of business units and their respective
Heads of Departments to comprehensively assess, rate and set mitigation plans
for any structural, operational, financial and strategic risks relevant to each
company, based on past information and horizon scanning.
Audit
Committee
Board
Hotel/
Property Risk
Management
Team
Business Impact
Likelihood of
Occurrence
Velocity
Insignificant
Given the constantly evolving
economic and business environment
and a competitive industry setting,
covering local and global regulatory
requirements, Asian Hotels and
Properties PLC, further refined its
risk management system during
the year under review. The Risk
Management Process is designed
to analyse the exposure on various
risks, by identifying vulnerability and
the probability of occurrence along
with its impact to business operations.
Through this process, we have
developed a better understanding of
key risks, encouraged and facilitated
the sharing of best practices across
the individual Business Units and
reduced the overall cost of risk by
continuously improving our risk
management approaches. Thereafter,
action that should be taken to
mitigate the impact and likelihood
of such risks to the business are
discussed at various levels of the
Company and corrective measures
are implemented promptly.
Ultra High
62
Risk Grid
Risk
Champions
Risk Management Process
The Risk Management Process is carried out in order to identify risk events
and rank, and prioritise each risk by assigning a risk rating. This is rated by
assessing the likelihood of occurrence [Probability] and the level of impact to
the Company. The velocity of risk is also a factor when assessing risks in order
to ascertain the speed at which risks would impact the Company. The product
of the risk assessment are tabulated in a risk grid that rates the risks on a scale
of ‘Ultra High’ to ‘Insignificant’, which enables the company to prioritise the risks
and to plan out risk mitigation strategies.
The Management Committee of each business unit was apprised of the high
level risks and core sustainability risks that emerged during the risk review
process. Based on the score derived by each identified risk, the Committee
decides on the appropriate risk response strategies which are categorised
Asian Hotels and Properties Plc
Annual Report 2014/15
into three broad areas; namely
preventive, detective and corrective.
Based on the field of expertise, risks
are assigned to a risk owner who is
responsible for the implementation
and reporting of the strategy. The
risk owner is responsible for ensuring
that all required resources needed to
effectively implement the strategy are
included in the capital expenditure
or operational expenditure budget
of the Company. Subsequent to the
resource planning, the Risk Owner is
responsible for the implementation
of the strategy within the agreed date
plan and to update the Committee
accordingly.
Risk Category and Description
The Company does understand that in
a dynamic environment, the risk does
not stay constant and continuous
monitoring of the environment and
the assessed risks ensure that the
Company identifies and is able to stay
abreast of such changes proactively.
The Company follows a wellstructured risk reporting mechanism
where the risk grid is reviewed on a
quarterly basis by the Risk Committee
and the team signs off on a
compliance statement on a quarterly
basis. The responsibility of maintaining
an effective system of internal control
and risk management lies with The
Board and the consolidated financial
Potential Impact
and operational compliance report
is received by the Audit Committee
from the President of the Leisure
Group. The Audit Committee has also
included a risk review on the agenda
of Audit Committee Meeting and the
Audit Committee on behalf of the
Board reviews the risk management
process adopted by the Company.
The risk exposure and profile of the
Company did not change significantly
during the last year. A review of the
key risks that could materially affect
Asian Hotels and Properties PLC along
with control measures and action
plans implemented to mitigate them
are set out below.
Control Measures and Action Plans to Mitigate
Risks
Strategic Risks
Business Risk
The performance of the Company
could be adversely affected due to
intense competition, unfavourable
economic conditions and new
entrants
Reduction in fair share
of market and loss of
revenue
Adverse impact on
planned profitability
and cash flow
Risk Rating – Medium
The Company closely monitors competitor
activities and strategies. This process
includes the reviewing of competitors’ market
share and performance. Where necessary,
new strategies are formulated or existing
strategies are revised to counter the actions
of competitors
Ongoing and timely investments to upgrade
properties and facilities
Exceeding customer expectations by careful
analysis of guest feedback and tailoring
appropriate and prompt responses to
identified issues
Providing value for money by enhancing
services, improving service delivery and
focusing on consistent quality
Growing web-generated business
63
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Asian Hotels and Properties Plc
Annual Report 2014/15
Risk Management contd.
Risk Category and Description
Brand Image and Reputation Risk
The Company’s success depends on
the continued strength and recognition
of the brand on a local and regional
basis
The ‘Cinnamon’ name is primary
to its business as well as to the
implementation of its strategy for
expanding its businesses. This will
depend largely on the success of its
ability to provide high-quality products
and services to all its clients
Uncertainty in Regulatory Environment
Risk
Changes in legal and regulatory
framework requires significant changes
to operating process
Potential Impact
Decline in customer
base, loss of market
share, market
penetration and ability to
develop the business
Inability to maintain
room rate differentiation
and competitive
advantage
Erosion in confidence
may damage
sustainability of Group
business
Control Measures and Action Plans to Mitigate
Risks
Risk Rating - Low
Although some factors are beyond its control,
the group adopts the following approaches to
mitigate this risk:
Regular Brand Audits of the ’Cinnamon‘ brand
are carried out
Both the Hotel Division and the Property
Division ensure that they secure the most
sought after and qualified staff to hold high
Managerial positions (in different hierarchies)
Continuous attention is focused on the
environment and health and safety concerns
by complying with HACCP and other quality
certifications
The brand of ’Cinnamon’ with emphasis on
maintaining Minimum Quality Standards
and Standards of Performance carries out
ongoing reviews of guest comments in order
to exceed customer expectations
Encouraging and nurturing responsible
corporate citizenship through CSR initiatives
Continuous monitoring and reviewing of
online customer reviews and rating
Risk Rating – Low
Potential exposure to
litigation
Creating awareness about legal & statutory
obligations at all levels
Internal auditors carrying out specific reviews
and checks to ensure that operations
and services remain in compliance with
regulations
Tax/regulatory returns submitted by
the company being subjected to regular
monitoring and scrutiny by the Tax Division of
the Leisure Group
The Legal Division of John Keells Group provides
guidance and direction to safeguard the
company against any losses or loss of reputation
that could arise from any legal consequences of
transactions it enters into
Asian Hotels and Properties Plc
Annual Report 2014/15
Risk Category and Description
Potential Impact
Control Measures and Action Plans to Mitigate
Risks
Operational Risks
Risks from Natural or Man-made
Disasters
Loss of property and equipment
resulting in significant losses
Human Resource Risk
The Company’s human resources
are the backbone of the business,
holding the Company together. The
growth of the Company is heavily
dependent on the talents and efforts
of the highly skilled individuals that
the Company is able to attract and
retain. The recruitment and
retention of employees is a constant
challenge
Risk Rating – Low
Injuries to staff and
guests, damage to
property and cost
implication
Inability to maintain
quality standards and
meet guest expectations
Higher operational costs
and loss of business
Adverse impact on the
company’s brand image
Documented business continuity and disaster
recovery plans are in place and appropriate
signage is in place
A process to communicate awareness of such
incidents is in place
Fire fighting systems, trained staff and
procedures are in place
Relevant insurance policies are in place and
the adequacy of such cover is subject to
regular review
Risk Rating – Low
As part of the performance appraisal process
carried out in the Company, a clear vision
has been set out on career development and
succession plans, enabling the Company to
retain its employees
Regular training both locally and overseas
is carried out in order to infuse motivation,
commitment and empowerment among staff
Recruitment of high calibre staff, effective
induction to the Group's corporate culture,
transparency in management actions and
effective communication lines are developed
in the Company’s culture to foster good
employee relationships
Developing a spirit of unity by organising
associate gatherings to celebrate staff
birthdays, outings, sports activities, family
get-togethers and religious activities
65
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Asian Hotels and Properties Plc
Annual Report 2014/15
Risk Management contd.
Risk Category and Description
Potential Impact
Technology and Data Protection Risk
Failure to keep pace with
developments in the technology
sphere could impair our competitive
position and operation
Adverse impact on
efficiency of operations,
guest satisfaction, loss of
competitive advantage
Data theft
Risk of cyber attacks
Supply Chain Risks
Short supply of goods and raw material
resulting in disruptions to operations
Cost overruns,
reputational loss
Control Measures and Action Plans to Mitigate
Risks
Risk Rating – Low
Reservation, property management, material
management and financial information
systems were upgraded for greater alignment
with business needs, making it easier to
respond to change in business strategy
The IT division of the sector and the John
Keells Group have implemented procedures
to safeguard the computer installations of the
Company to ensure continuity of operations
Commissioning an audit of all websites by
an IT Governance, Risk and Compliance
professional to safeguard against cyberattacks
While the Group’s operations are reliant on
Information Technology stringent security
measures; disaster recovery procedures and
business continuity plans are implemented.
There are group-wide measures to ensure
the mitigation of significant information
technology risks.
Clearly defined IT policy, which is
communicated to all associates
Risk Rating – Low
Alternate suppliers have been identified
Maintain good business relationships with
supply chain, rotating contracts when
economically possible
Identification of local supplier base
Asian Hotels and Properties Plc
Annual Report 2014/15
Risk Category and Description
Internal operational processes
Risk of financial loss due to breakdown
in internal controls
Potential Impact
Disruption of
operations, loss of profits
and ineffective use of
assets and resources
Control Measures and Action Plans to Mitigate
Risks
Risk Rating – Low
Clearly defined systems and procedures
are in place to ensure compliance with
internal controls, which are monitored and
reviewed for their continued efficiency and
effectiveness
An outsourced internal audit firm reviews and
provides assurance on the adequacy of the
Group’s financial and operational systems on
a quarterly basis
Quarterly confirmation of compliance with
financial, operational and sustainability
procedures and requirements which include
any incidence of fraud
A formal process is in place to review and
monitor all audit findings
Financial Risk
Liquidity and Credit Risk
The economic instability, high inflation
rates, adverse foreign currency
fluctuations and the global monetary
crisis could affect the Company in
recovering the cash from clients of the
hotel and tenants of the mall
Reduced cash flow and
profitability
Probable penalty charges
and adverse credit terms
for future business
Exposure and losses due to default of
settlement by debtors
Interest Rate Risk
Drop in interest rates will lead to a
lower interest income as a result of
which, the Company would have an
impact on its Other Income
Reduced income and
profitability
Risk Rating – Low
Regular review mechanisms are in place to
monitor the performance of the Company
against approved budget targets to achieve a
balance between liquidity and profitability
● The Company actively carries out trade
debtor balance reviews with review meetings
held on a consistent and continuous basis
● Credit policy and stringent controls are in
place to mitigate the impact of default
Risk Rating – Low
The Company has taken measures to
maximise the interest income with the
assistance and guidance of the JKH Group
Treasury Department
Keeping abreast of global as well as local
interest rate activities
67
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Asian Hotels and Properties Plc
Annual Report 2014/15
Risk Management contd.
Risk Category and Description
Foreign Exchange Risk
Potential Impact
Reduced revenue and
profitability
Control Measures and Action Plans to Mitigate
Risks
Risk Rating – Low
Transacting revenue in strong currencies
Matching payments to collection of the same
currency
Continuous monitoring of the exchange rate
and updating the conversion rates according
The Board confirms that a process for identifying, evaluating and managing significant risks that endanger the
achievement of the strategic objectives of Asian Hotels and Properties PLC has been in place throughout the year in
accordance with the guidelines set out by the Institute of Chartered Accountants of Sri Lanka and industry best practices.
The Audit Committee has reviewed the Business Risk Management process adopted by the Company and has noted that
the risk management exercises had been conducted.
Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance
Corporate governance
commentary
Introduction
A culture of performance, entrenched
within a framework of compliance,
conformance and sustainable
development dominates the
governance policy of Asian Hotels
and Properties PLC. This is in line with
the John Keells Group’s corporate
governance philosophy which has
been institutionalised at all levels
through a strong set of corporate
values, a written code of conduct and
a proven performance management
and values monitoring systems.
The Board of Directors, Senior
Management and employees of the
Company are expected to strictly
adhere to the precepts of this culture
and follow them in performing official
duties, whilst ensuring that the Group
image remains positive and pragmatic
at all times.
The Company has strived to maintain
the highest levels of transparency
when reporting on both financial and
non-financial information which has
enabled it to enhance the trust that
stakeholders have in it.
The Company holds itself
accountable to the highest standards
of Corporate Governance and
transparency that enhances the
public’s access to information about
our Company. Effective Corporate
Governance in line with the highest
international standards is an important
part of our identity. Our system of
Corporate Governance lays the basis
for responsible performance-oriented
management and control which is
geared towards sustainable value
creation. Most importantly, our efforts
go hand in hand with an unwavering
commitment to the accurate, clear
communication of our performance
and the facts of our business.
We are pleased to present this
report which sets out the corporate
governance philosophy that is
practiced by the Company. We are
in compliance with the following
statutes, rules and regulations and
where necessary, any deviations
permitted by same, have been duly
explained.
● Companies Act No. 7 of 2007 –
Mandatory compliance
● The Continuing Listing Rules of the
Colombo Stock Exchange (CSE) –
Mandatory compliance
The Recommendations of
the Code of Best Practice on
Governance issued jointly by
the Securities and Exchange
Commission of Sri Lanka (SEC)
and the Institute of Chartered
Accountants of Sri Lanka
(ICASL) to the extent that they
are practicable – Voluntary
compliance
69
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Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
Corporate Governance System within a Sustainability Development Framework
Internal Governance Structure
Audit
Committee
Nominations
Committee
Chairman & the
Board of Directors
Human
Resources &
Compensation
Committee
Related Party
Transaction
Review
Committee
People &
Talent Management
Employees Performance
Governance
Assurance Mechanisms
Board Committees
Regulatory Benchmarks
Companies Act No. 07
of 2007
Internal Control
Stakeholder
Management
Listing Rules of the CSE
JKH Code of Conduct
President/
Sector Head
Effective & Transparent
Management
Management
Team
IT Governance
Employee
Empowerment
Risk Management
External Audit
Employee
Participation
The Code of Best Practices
on Corporate Governance
issued jointly by
SEC & ICASL
The Corporate Governance framework is founded on the following principles:
(i)
(ii)
Allegiance to John Keells Holdings PLC (JKH) and the John Keells Group, and upholding of Group values.
Compliance with the laws and Company Rules and Regulations applying to the territories that the John Keells Group
operates in.
(iii) Conduct of business in an ethical manner at all times, in line with acceptable business practices.
(iv)Exercise of professionalism and integrity in all business and “public” personal transactions.
(v)Ensure that no one person has unfettered powers of decision making.
(vi) Opting for the early adoption of accounting standards and best practices in governance regulation when practical.
(vii)Encourage proactive discussions with the relevant regulatory bodies to facilitate the implementation of matters of
governance and other business reforms in Sri Lanka.
(viii) Make business decisions and resource allocations, in an efficient and timely manner, within a framework that ensures
transparent and ethical dealings which adhere to the laws of the country and the standards of governance that
stakeholders expect from the Company.
The Company Corporate Governance System
The Company Corporate Governance System diagram depicts the key components as at current, and their inter-linkages.
This commentary is broadly sequenced in keeping with this diagram.
Internal Governance Structure
This comprises a committees which formulate, execute and monitor Company related strategies, initiatives, processes and
procedures which support are weaved into the fabric of these committees, enabling them to perform their roles effectively.
Asian Hotels and Properties Plc
Annual Report 2014/15
Assurance Mechanisms
This comprises ‘bodies and
mechanisms’ which are employed in
enabling regular review of progress
against objectives with a view to
highlight deviations, quick redress
and in providing assurance that
actual outcomes are in-line with
expectations.
Regulatory Benchmarks
This comprises regulations which
govern, in the main, all our corporate
activities from the Companies Act No.
07 of 2007 to Listing Rules of the CSE,
Rules of the SEC and the benchmarks
we have set for ourselves in working
towards local and global best
practices.
What follows is a more detailed
account of including where relevant
and applicable components of the
Company’s Corporate Governance
System.
Internal Governance Structure
The Internal Governance Structure
encompasses;
● The Board of Directors,
● Board Sub-committees, and
● Senior Management Committees
Strengthened and complemented
by internal policies, processes and
procedures, the key components
being:
● Strategy formulation and decision
making
● Human resource governance
● Integrated risk management
IT governance and
● Stakeholder management and
effective communication
The components of the internal
governance structure are designed
in such a way that the executive
authority is well devolved and
delegated through a committee
structure ensuring that the Presidents,
Sector Head and the Senior
Management Team are accountable
for the total Company functions
and sub-functions respectively.
Clear definitions of authority limits,
responsibilities and accountabilities
are set and agreed upon in advance to
achieve greater operating efficiency,
expediency, healthy debate and
freedom of decision making.
Role of Chairman
The Chairman conducts Board
Meetings and ensures that the
participation and contribution
of Executive and Non-Executive
Directors are encouraged and their
views on matters under consideration
are determined. The Chairman
maintains contact with all Directors
and has informal discussions with the
Non-Executive Directors as necessary.
As Chairman, he is responsible for:
● Ensuring that the principles
and processes of the Board are
maintained, including the provision
of accurate, timely and clear
information
Encouraging
debate and
●
constructive criticism
● Setting agendas for meetings of
the Board, in conjunction with
the Senior Managers and Group
Company Secretary, that focus
on the strategic direction and
performance of our business
● Leading the Board and
individual Director Performance
assessments
● Speaking and acting for the Board
and representing the Board to
shareholders
● Presenting shareholders’ views to
the Board
● Facilitating the relationship
between the Board and the
Management
The Board considers that none of
the Chairman’s other commitments
interfere with the discharge of his
responsibilities to the Company.
The Board is satisfied that he makes
sufficient time available to serve the
Company effectively.
Chairman appraisal
The Human Resources and
Compensation Committee of the
ultimate parent Company, John
Keells Holdings PLC appraises the
performance of the Chairman on an
organisational and individual basis as
approved by the Board.
Board of Directors
The Board of Directors is the ultimate
governing body of the Company.
It is responsible for the ultimate
supervision of the Company. In all
actions taken by the Board, the
Directors are expected to exercise
their business judgment in what
they reasonably believe to be the
best interests of the Company. In
discharging that obligation, Directors
may rely on the honesty and integrity
of the Company’s senior executives
and its outside advisors and auditors.
71
72
Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
Composition of the Board and Directors’ Independence
As at 31st March 2015, the Board consisted of 8 Directors comprising:
● 2 Executive Directors (ED)
● 3 Non-Executive Non-Independent Directors (NED/NID)
● 3 Non-Executive Independent Directors (NED/ID)
Independence of the Directors have been determined in accordance with the Continuing Listing Rules of the CSE and all
three Independent, Non-Executive Board members have submitted signed confirmations of their independence.
The Board members have a wide range of expertise as well as significant experience in diverse fields enabling them to
discharge their governance duties in an effective manner.
Name of Director/
Capacity
Share Holding (1) Material
Business
Relationship (2)
Employee of
Company (3)
Family Member
Continuous
a Director or CEO service for nine
(4)
years (5)
No
No
No
N/A
Mr. A.D. Gunewardene No
No
No
No
N/A
Mr. J.R.F. Peiris
No
No
No
N/A
Non-Executive ,Non-Independent Directors (NED/NID)
Mr. S.C. Ratnayake
Yes
No
Executive ,Non-Independent Directors (ED/NID)
Mr. R.J. Karunarajah
Yes
No
No
No
N/A
Mr. S. Rajendra
No
No
No
No
N/A
Non-Executive, Independent Directors (NED/ID)
Mr. C.J.L. Pinto
Yes
No
No
No
No
Mr. S.K.G. Senanayake
No
No
No
No
No
Mrs. S.A. Jayasekara
No
No
No
No
No
Definitions
1.Have shares in the Company.
2. Income/Non cash benefits derived from the Company equivalent to 20 per cent of the Directors annual income.
3. Director was employed by the company two years immediately preceding appointment.
4. Close family member who is a Director or CEO.
5.Has served on the Board continuously for a period exceeding nine years.
The Board is of the view that its present composition ensures a right balance between executive expediency and
independent judgment.
Directors that made up the Company Board participate in defining goals, vision, strategies and business targets. All
Directors are able to and willingly add value and independent opinion on the decision making process, which is of
immense benefit to the effective functioning of the Board. The details of the current Board of Directors along with a brief
resume of each Director is found from page 60 and 61 of the Report.
Asian Hotels and Properties Plc
Annual Report 2014/15
Transactions or events that have a
material bearing on the Company
are disclosed by way of circulars to
shareholders, announcements to
the CSE and media/press releases.
The Board is ready to answer
questions raised by shareholders at
general meetings and maintains an
appropriate dialogue with them.
The presence of Independent
Directors ensures the equal
benefits of all shareholders with
independent views and opinions.
Directors will update the Board with
any new information in relation to
interests or relationships relevant to
independence.
The Board has developed a policy
that it uses to determine the
independence of its Directors. This
determination is carried out annually
or at any other time where the
circumstances of a Director change
such as to warrant reconsideration.
The Board is aware of the other
commitments of its Directors and is
satisfied that these do not conflict
with their duties as Directors of the
Company.
All Non Executive Directors are
required to notify the Chairman
of changes in their outside Board
appointments and the Chairman
carries out a review of all such
appointments in consultation with
the other Directors where necessary
to ascertain any possible conflicts of
interest.
Board Responsibilities and
Decision Rights
At Asian Hotels and Properties
PLC, the businesses are conducted
by its employees, managers and
officers, under the direction of the
Executive Directors and the oversight
of the Board, to enhance the longterm value of the Company for its
shareholders.
●● Identifying the principal risks of
the business and periodically
reviewing the risk management
systems in place
●● Preparation and presentation of
financial statements, together
with a statement by the Auditors
pertaining to their reporting
responsibilities
Delegation of Authority
The Board aims to fulfil its
responsibilities by creating value for
all stakeholders that is sustainable
and beneficial. Stakeholders include
shareholders, employees, customers,
the community and the environment.
Without limiting the Board’s function,
its specific responsibilities include:
●● Approving objectives, strategies
and financial plans and monitoring
the Company’s performance
against these plans
●● Monitoring compliance with the
regulatory requirements and
ensuring all Company employees
act with integrity and diligence in
the interests of the Company and
stakeholders
●● Reviewing and approving all
significant policies and procedures
●● Exercising objective judgment on
all corporate matters independent
from the Executive Management
●● Formulating short and long term
strategies as a basis for the
operational plans of the Company
● ● Determining and recommending
interim and final dividends for the
approval of shareholders
The Board has delegated some of
its functions to the Audit Committee
while retaining the final right to accept
the recommendations made by the
Committee. The Audit Committee is
chaired by an Independent Director
appointed by the Board.
Conflicts of Interest and
Independence
Each Director holds continuous
responsibility to determine whether
he or she has a potential or actual
conflict of interest arising from
external associations, interests or
personal relationships in material
matters which are considered by the
Board from time to time.
In order to mitigate any potential
or actual conflict of interest or
independence of Directors throughout
the term of their membership on the
Board, the Company has adopted the
following processes:
73
74
Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
Prior to Appointment
Once Appointed
Nominees are requested to disclose their various interests that could
potentially conflict with the interest of the Company.
Directors who are appointed are expected to inform the Board and obtain
Board clearance prior to accepting any position or engaging in any
transaction that could create a potential conflict of interest.
All NEDs are required to notify the Chairman of changes in their current
Board representations.
Directors who have disclosed an interest in a matter under discussion have,
During
Board Meetings
Details of companies in which Board
members hold Board or Board
Committee membership is available
with the Company for inspection by
shareholders on request.
Board Meetings, Agenda and
Attendance
For the financial year 2014/2015 there
was a total of four (4) Board meetings.
During the meetings, the Chairman
of the Board appropriately allocated
time for Directors to carefully review
and discuss all relative information.
There were also written minutes that
were made available for verification
and approved by the Board. All
Directors have access to Keells
Consultants [Private] Limited who act
as Company Secretaries for advice on
relevant matters.
● Excused themselves from deliberations on the subject matter.
Refrained from voting on the subject matter (such abstentions from Board decisions are duly recorded).
The Board met on key matters
of importance to the Company,
including;
● Confirmation of previous minutes
● Matters arising from the previous
minutes
● Board subcommittee reports and
other matters exclusive to the
Board
Status updates of major projects
Review of performance – in
summary and in detail, including
high level commentary on actuals
and outlook
● Summation of strategic issues
discussed at pre-Board meetings
● Approval of Quarterly and Annual
Financial Statements
● Ratification of capital expenditure
and donations
● Ratification of the use of the
company seal and share
certificates issued
Ratification of Circular resolutions
● New resolutions
● Report on corporate social
responsibility
● Review of Group risks,
sustainability, HR practices/
updates
● Any other business
Asian Hotels and Properties Plc
Annual Report 2014/15
The Board of Asian Hotels and Properties PLC met once every quarter and the
Directors’ attendance is shown in the table given below:
Attendance at Board Meetings
Name of Director
29-04-2014 30-07-2014 30-10-2014 28-01-2015
Meetings
Attended
Systems and procedures
Quality of participation
Board image
The scoring and open comments
were collated by the Independent
Director, and the results were
analysed to give the Board an
indication of its effectiveness as well
as areas that required addressing
and/or strengthening.
Mr. S.C. Ratnayake
√
√
√
√
4/4
Mr. A.D. Gunewardene
√
√
√
√
4/4
Mr. J.R.F. Peiris
√
√
√
√
4/4
Mr. R.J. Karunarajah
√
√
√
√
4/4
Mr. S. Rajendra
√
√
√
√
4/4
Board Secretary
Mr. C.J.L. Pinto
√
-
√
√
3/4
Mr. S.K.G. Senanayake
-
√
√
-
2/4
Mrs. S.A. Jayasekara
√
√
√
√
4/4
Keells Consultants (Pvt) Ltd functions
as the Secretaries and Registrars
of the Company and provide the
Secretarial input for the Board
proceedings in addition to maintaining
Board minutes and Board records.
Financial Guidance
The Board of Directors consists of four senior qualified Accountants with
significant experience in the corporate sector, who posses the necessary
knowledge to offer the Board guidance on matters of finance. These Directors
add substantial value and independent judgment on the decision making of the
Board on matters concerning finance and investments.
Timely Supply of Information
All Directors are fully briefed on important developments in the various
business activities of the Company. The Directors have access to;
● External and Internal Auditors
● Experts and other external professional advisory services
● Senior Managers under a structured arrangement
● Information as is necessary to carry out their duties and responsibilities
effectively and efficiently
● Periodic performance reports
● Information updates from Management on topical matters, new regulations
and best practices as relevant to the Company's businesses
● The services of the Company Secretary
Board evaluation
The Board conducted its annual Board performance appraisal for the financial
year 2014/15. This formalised process of individual appraisal enabled each
member to self-appraise on an anonymous basis, the performance of the Board
under the areas of:
Role clarity and effective discharge of responsibilities
People mix and structures
Tenure, Retirement and ReElection of Directors
As prescribed by the Company’s
Articles, one-third of the Directors of
the Company except the Chairman
and Managing Director retire by
rotation. A Director retiring by rotation
is eligible for re-election.
The tenure of office for NonIndependent Directors is limited by
their prescribed Company retirement
age.
Independent Directors, on the other
hand, can be appointed to office for
three consecutive terms of three
years, which however, is subjected to
the age limit set by statute at the time
of re-appointment following the end
of a term.
75
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Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
The proposal for the re-appointment
of Directors is set out in the Directors
Report as well as the Notice of
Meeting on page 167 of this Report.
Board Sub-Committees
The Board has delegated some of
its functions to sub-committees,
while retaining final decision rights.
Members of these sub-committees
are able to focus on their designated
areas of responsibility and impart
knowledge and oversight in areas
where they have greater expertise.
Of the four committees mentioned
below, other than the Audit
Committee, the Board subcommittees of the ultimate Parent
Company, John Keells Holding
PLC (JKH), functions as the subcommittees of the Company and its
subsidiaries as permitted by the listing
rules of the CSE.
1. Audit Committee
2.Nominations Committee
3.Human Resources and
Compensation Committee
4. Related Party Transactions Review
Committee
Audit Committee
Role of the Committee
The role of the Audit Committee
is to assist the Board in fulfilling its
oversight responsibilities for the
integrity of the Financial Statements
of the Company, the internal control
and risk management systems of the
Company and its compliance with
legal and regulatory requirements,
the External Auditors’ performance,
qualifications and independence, and
the adequacy and performance of
the Internal Audit function, which at
the parent company (JKH) is termed
Group Business Process Review
Division (Group BPR). This is detailed
in the terms of reference of the
Committee which has been approved
by the Board and is reviewed
annually.
The effectiveness of the Committee is
evaluated annually by each member
of the Committee and the results are
communicated to the Board.
Composition of the Committee
and Meetings
The Audit Committee comprises of
three Independent Non-Executive
Directors. As prescribed in the
Listing Rules of CSE. The Chairman
of the Audit Committee is a Fellow
member of the Institute of Chartered
Accountants of Sri Lanka with several
years of experience in financial
auditing and accounting.
Four (4) meetings were held
during the year. The Executive
Directors and Senior Management
of Cinnamon Grand Colombo and
Crescat Property Division attend
the Audit Committee meetings by
invitation. Further the representatives
of the Internal Auditors (Messrs.
PricewaterhouseCoopers (Private)
Limited), John Keells Group Business
Process Review Division and the
External Auditors Messrs. KPMG,
Chartered Accountants also attend
the Audit Committee meetings by
invitation. The Audit Committee
performs an important monitoring
function in the overall governance of
the Company.
The Committee reviews the following;
● Procedures for identifying
business risks and controlling
their financial impact on the Group
and the operational effectiveness
of the policies and procedures
related to risk and control
● The appointment, remuneration,
qualifications, independence
and performance of the External
Auditor and the integrity of the
audit process as a whole
Budgeting and forecasting
●
systems, financial reporting
systems and controls
● Procedures for ensuring
compliance with relevant
regulatory and legal requirements
● Arrangements for protecting
intellectual property and other
non-physical assets
● Overseeing the adequacy of the
internal controls and allocation
of responsibilities for monitoring
internal financial controls
● Policies, information systems and
procedures for preparation and
dissemination of information to
shareholders, stock exchanges
and the financial community.
Asian Hotels and Properties Plc
Annual Report 2014/15
Audit Committee attendance during the subject period was;
Attendance at Board Audit Committee Meetings
Name of Director
19-05-2014 28-07-2014 28-10-2014 26-01-2015 Meetings
Attended
Mr. C.J.L. Pinto
√
√
√
√
4/4
Mr. S.K.G. Senanayake
√
√
√
√
4/4
Mrs. S.A. Jayasekara
√
√
√
√
4/4
Nominations Committee
The Nominations Committee of the ultimate Parent Company, JKH functions as
the Nomination Committee of the Company and its Subsidiary. The Nomination
Committee holds responsibility to identify and propose suitable candidates
for appointment as Non-Executive Directors to the Board of the Company, in
keeping with the target Board composition and skill requirements. The Board
of the Company after due consideration of such recommendations, determines
and appoints the new Director.
All newly appointed Directors shall hold office until the next Annual General
Meeting and shall be eligible for re-election by the Shareholders of the
Company, as provided by Article 91 of the Articles of Association of the
Company.
The Nominations Committee of JKH comprises five Independent Directors and
one Non-Independent Director namely as at 31st March 2015:
Mr. T. Das - Chairman
Mr. S.C. Ratnayake - (Non-Independent)
Mr. M.A. Omar
Mr. E.F.G. Amerasinghe
Mr. D.A. Cabraal
Ms. P. Perera*
*Appointed with effect from 24th July 2014.
Human Resources and Compensation Committee
As permitted by the Listing Rules of the CSE, the Human Resources and
Compensation Committee of JKH, the Parent Company of Asian Hotels
and Properties PLC, functions as the Human Resources and Compensation
Committee of the Company and its Subsidiary. The Human Resources and
Compensation Committee of JKH comprise of five Non-Executive Independent
Directors.
Mr. E.F.G. Amerasinghe - Chairman
Dr. I. Coomaraswamy
Mr. A.R. Gunasekara*
Mr. M.A. Omar
Mr. N.A. Fonseka
Mr. D.A. Cabraal**
*Resigned with effect from 30th June
2014
**Appointed with effect from 29th
January 2015.
The remuneration policy adopted by
the Company as recommended by the
Human Resources and Compensation
Committee of its Parent Company,
JKH is formulated to attract and retain
high calibre executives and motivate
them to develop and implement the
business strategy in order to optimise
long-term shareholder value creation.
The customised “pay for performance
scheme” continues to apply for all
Company employees based on the
pillars of individual performance
and organisational performance.
The remuneration package for all
employees at Assistant Manager level
and above is based on organisational
performance and individual
performance. However, in respect
of the Executive level and below,
the employees scheme operates
purely on the basis of individual
performance.
Related Party Transactions
Review Committee
As required by the SEC under its Code
of Best Practice for Listed Companies,
the Related Party Transactions
Review Committee was formed at
the Parent Company level with effect
77
78
Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
from the 01st April 2014. The Parent
Company Level Committee will act on
behalf of the Company, as permitted
by the Listing Rules of the Colombo
Stock Exchange, with the intention
of ensuring, on behalf of the Board,
that all related party transactions
of JKH and its listed subsidiaries
are consistent with the Code of
Best Practices on Related Party
Transactions issued by the SEC.
In very broad terms, the scope of this
sub-committee is:
(i) Developing, and recommending
for adoption by the Board of
Directors of JKH and its listed
subsidiaries, a Related Party
Transaction Policy consistent with
that proposed by the SEC and is in
synchronisation with the Operating
Model and the delegated Decision
Rights of the Group.
(ii) Updating the Board of Directors
on the related party transaction
of each of the listed companies of
the Group on a quarterly basis.
This committee of JKH comprises
four Non-Executive Independent
Directors and two Non-Executive
Non-Independent Directors. The Head
of Group Business Process Review
will operate as the secretary to this
committee.
Mr. N. Fonseka - Chairman
Mr. E.F.G. Amerasinghe
Mr. D.A. Cabraal
Mr. S.C. Ratnayake
Mr. J.R.F. Peiris
Ms. P. Perera*
*Appointed with effect from 24th July
2014
Board Remuneration
Remuneration for Non-Executive,
Non-Independent Directors
Compensation for Non-Executive
Directors, Non-Independent Directors
[NED/NIDs] is determined by
reference to fees paid to other NED/
NIDs of comparable companies.
Director fees applicable to NonExecutive Directors nominated by JKH
are paid directly to the Company and
not to individuals.
Remuneration for Non-Executive,
Independent Directors
Compensation for Non-Executive,
Independent Directors (NED/IDs)
is determined by reference to fees
paid to other NED/IDs of comparable
companies. NED/IDs receive a fee for
devoting time and expertise for the
benefit of the Company. Nevertheless,
NED/IDs fees are not time bound or
defined by a maximum/minimum
number of hours committed to the
Group per annum and hence is not
subject to additional/lower fees for
additional/lower time devoted. NED/
IDs do not receive any performance/
incentive payments.
The Company does not have an
employee share option scheme.
Total aggregate of Non-Executive
Director Remuneration for the year
was Rs. 4,770,000.
Remuneration for Executive and
Non-Independent Directors
The remuneration of the Executive
Directors is determined as per the
remuneration principles of the
Group. The Human Resources and
Compensation Committee conducted
a market survey of Executive Director
remuneration with a view to assessing
the appropriateness of compensation
with market benchmarks. Having
taken into account the complexities
associated with the Group, it was
established that the compensation is
in-line with the market.
The Executive Directors, like other
eligible employees, have received
employee shares option based on role
responsibility and actual performance.
Accordingly the number of options
so awarded was recommended to
the Board by Human Resources and
Compensation Committee.
Total aggregate Executive Director
Remuneration for the year was
Rs. 59,210,947.
Accountability and Assurance
System of Internal Controls
The Board has overall responsibility
for the system of internal control.
A sound system of internal control
is designed to manage rather
than eliminate the risk of failure to
achieve business objectives. The
Company continues to stress on the
importance of strong internal control
throughout the organisation. Written
responsibilities, authority delegation
and management controls have been
Asian Hotels and Properties Plc
Annual Report 2014/15
adopted to create transparency for
utilisation of the Company’s resources
and to distinguish the duties of staff
and controllers in order to ensure that
proper verification and monitoring
processes are in place.
The Company further maintains a
system of internal controls, which is
designed to safeguard its assets from
identified risks, while ensuring that
all transactions are duly authorised,
recorded and reported. Key systems
and rules relating to delegation
of authority are formalised and
documented.
As a member of the John Keells
Group, the Company is now part
of a comprehensive planning and
monitoring process. The Annual Plans
and Budgets are developed by the
Company along with a reforecast after
six months. Strategic priorities and key
drivers are pre-identified and tracked
on a monthly basis.
During the financial year under review
following tasks were performed by
the Group Business Process Review
Division and outsourced Internal
Auditors to ensuring the existence of
effective internal controls;
● Group-wide initiative to strengthen
the existing Business Continuity
Plans (BCP) and Disaster Recovery
Plans (DRP). All Heads of
Department were encouraged to
re-visit their BCPs in confirming
that such plans were up-todate and relevant to the current
working environment.
● New methods of data analytics
were carried out using
sophisticated tools where the
entire data population was
analysed (as opposed to analysing
a sample) in identifying exceptions
and irregularities.
● Implemented across the Group,
process improvements stemming
from the findings of internal audits.
● The existing SAP SOX processes
were reviewed and updated to
ensure compliance with Sarbanes
Oxley Act of 2002 – Section 404.
● Strengthened the management
reporting on internal controls to
facilitate better decision making.
● Carried out frequent surprise cash
counts across the Group.
Certain aspects of its business
operation may expose the Company
to both internal and external risks.
The Company recognises the
importance of controlling these
risks and minimising the possibility
of any negative impact to the
Company. The Company is using the
Business Risk Management [BRM]
process which is established by
JKH to identify both financial and
operational risks. It endeavours to
ensure the control systems designed
to safeguard the Company’s assets
and maintain proper accounting
records that facilitate the production
and availability of reliable information
are in place and are functioning as
planned.
Risk Review
Investment Appraisal Process
and Investment Decisions
The Board is responsible for the
formulation of the appropriate
systems of internal controls for the
Group and ensuring its effectiveness.
The Board is fully conscious that
any internal control system contains
inherent limitations and no system
of internal control could provide
absolute assurance against the
occurrence of material errors,
poor judgment in decision making,
human errors, losses, fraud or other
irregularities. The Board has therefore
taken appropriate action to minimise
such situations.
There is a continuous process for
identifying, evaluating and managing
the significant risks faced by the
Company which has been in place
during the financial year and up to the
date of approval of the Annual Report
and Accounts. The Board regularly
reviews this process.
Over the years, the Company has
refined the process of investment
appraisal which ensures the
involvement of the relevant persons
when capital investment decisions are
made. In this manner, several views,
opinions and advices are obtained
prior to the investment decision being
made. Experience has proven that a
holistic and well debated view of the
commercial viability and potential
of proposed projects including
operational, financial, funding, risk
and tax implications has most of
the time culminated a good result.
All investment decisions are routed
through a committee structure which
safeguards against one individual
having unfettered decision making
powers in such decisions.
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80
Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
Operations, Planning, Monitoring
and Decision Rights
The responsibility for monitoring plans
has been entrusted to the Managing
Agents. The achievement of annual
plans as well as ensuring compliance
with Group policies and guidelines
rests with the President, Sector Head
/General Manager and functional
department heads of the respective
business units to whom appropriate
decision rights have been granted
in order to execute operational
and financial decisions within their
purview.
Monitoring of Financial and
Operational Data
● Financial results and key
operational performance
indicators are evaluated against
the Annual Plan and subsequent
reforecast on a monthly basis at
all levels of management.
● The Board reviews the financial
results on a quarterly basis.
● The IT systems in place facilitate
the online display of information
relevant to the needs of hotel
managers and functional heads
pertinent to their areas of
responsibility.
Information Technology
Governance
The Company Information Technology
(IT) Governance Policy has evolved in
line with the Group's IT Governance
Policy in the last year to deliver
and embrace new technologies
which have aligned with the overall
business objective of the Group. This
evolution occurred as the Company
discerned the competitive advantage
gained and the enhancement of
business value which came about
through the skilful alignment of IT
with its business objectives and
the prudent management of its IT
resources. The Company has always
been a step ahead in embracing
emerging technologies and systems,
consistently investing in developing
its IT infrastructure. Continuous
focus on cutting-edge technology
has ensured greater reliability of
IT systems and has shortened
information delivery times to both
internal and external stakeholders.
The IT governance system, in
particular, was closely reviewed
during the year towards ensuring the
following:
● Leverage IT as a strategic asset
● Ensure agility, in view of the fast
changing technology
● Establish the right balance
between business needs and IT
enablement
● Ensure that all IT investments
have a quantifiable (or visible)
business return
● Ensure a strong IT governance and
regulatory framework through a
coherent set of policies, processes
and adoption of best practices in
line with world class organisations,
but always keeping in mind
business returns.
● Ensure that e-enabled platforms
are regularly reviewed for 'internal
control effectiveness' through
SOX methodology of process flow
analysis.
Human Resource Governance
(Performance Management)
The Performance Management
System (PMS) continued to evolve
positively in catering to, and
fashioning, employee empowerment
in meeting current and emerging
needs.
Following linkages of PMS were
further strengthened:
● Learning and development
● Career development
Succession planning
● Talent management
● Reward and recognition
● Compensation and benefits
Management Committee
The Hotel and Property divisions
of Asian Hotels and Properties PLC
have two separate Management
Committees consisting of Sector
Head of the City Hotel, President of
the Property Division and other key
managers of divisions in order to
discuss matters pertaining to strategy
and operations.
Strategic risks and opportunities
arising from changes in our
business environment are regularly
reviewed by the Group Management
Committee (GMC) of the Hotel and
Property divisions at the meetings
held monthly. The role of the GMC is
to provide the necessary guidance
and direction to the Company on
matters that are strategic and longterm in nature or have the potential
to significantly impact the division’s
performance and reputation and to
make decisions on key businesswide policies, including operational
Asian Hotels and Properties Plc
Annual Report 2014/15
policies, internal controls, the Human
Resources Strategy and the Risk
Management Policy.
Internal Auditors
Quarterly Audits are conducted by
the Company’s Internal Auditors,
Messrs PricewaterhouseCoopers
(Private) Limited, a firm of Chartered
Accountants. The role of the internal
audit team is to determine whether
risk management, control and
governance processes are adequate
and functioning. The Internal Audit
function is independent of the
External Auditor.
The reports arising out of such audits
are, in the first instance, considered
and discussed at the business/
functional unit levels and after review
by the respective President/CEO of
the Company and the Subsidiary are
forwarded to the Audit Committee
on a regular basis. Further, the
Audit Committee also assesses
the effectiveness of the risk review
process and systems of internal
control on a regular basis. Followups on internal audits are done on a
structured basis.
Relevant risks and vulnerabilities
of the Company are identified and
promptly brought to the attention
of the Management, facilitating
corrective and preventive measures
to be taken in a timely manner.
Additionally, a technically strong
Management Audit function aligned
with the Company’s strategies adds
value in a variety of ways, including –
● Providing an independent opinion
on the integrity, reliability and
relevance of management
information
● Assessing the adequacy of
controls over the protection
of assets and management of
liabilities
● Reviewing compliance with
corporate policies and external
regulations
● Reducing the risk of fraud
Going Concern and Financial
Reporting
The Directors are satisfied that the
Company has sufficient resources
to continue in operation for the
foreseeable future. In the unlikely
event that the net assets of the
Company fall below a half of
shareholders' funds, shareholders
would be notified and an
extraordinary resolution passed on
the proposed way forward.
The going concern principle has been
adopted in preparing the Financial
Statements. All statutory and material
declarations are highlighted in
the Annual Report of the Board of
Directors. Financial Statements are
prepared in accordance with the Sri
Lanka Accounting Standards (SLAS),
including all the new standards
introduced during the financial year
and comply with the requirements of
the Companies Act No. 07 of 2007.
Information in the Financial
Statements of the Annual Report
are supplemented by a detailed
‘Management Discussion and
Analysis’ from pages 22 to 59 which
explains to shareholders the strategic,
operational, investment and risk
related aspects of the Company that
have translated into the reported
financial performance and are likely to
influence future results.
The Statement of Directors'
Responsibilities in relation to financial
reporting is given on page 110 of the
Annual Report. The Directors' interests
in contracts of the Company are
addressed on page 101 of the Annual
Report.
The Directors have taken all
reasonable steps in ensuring the
accuracy and timeliness of published
information and in presenting an
honest and balanced assessment of
results in the quarterly and annual
Financial Statements. Price sensitive
information has been disclosed
to the Colombo Stock Exchange,
shareholders and the press in a timely
manner and in keeping with the
regulations.
Sri Lanka Financial Reporting
Standards (SLFRS)
Living by the Company’s philosophy
of good governance and reporting,
the Financial Statements for year
2014/15 have been prepared and
presented in accordance with
Sri Lanka Accounting Standards
(SLFRS/LKAS) which have materially
converged with the International
Financial Reporting Standards
(IFRS) as issued by the International
Accounting Standards Board (IASB).
81
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Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
Compliance with Legal
Requirements
Compliance with legal requirements
and Group-internal rules are
significant elements of Corporate
Governance for the management of
Asian Hotels and Properties PLC. The
Board of Directors to the best of their
knowledge and belief are satisfied
that the Company has not engaged
in any activity which contravenes
laws and regulations and all financial
obligations due to the Government
and to the employees have been
either duly paid or adequately
provided for in the Financial
Statements.
Securities Trading Policy
JKH’s securities trading policy
prohibits all employees and agents
engaged by Asian Hotels and
Properties PLC who are aware
of unpublished price sensitive
information from trading in Asian
Hotels and Properties PLC shares
or the shares of other companies in
which the Company presently has
business interests.
External Audit
Messrs. KPMG serves as the external
auditors of the Company.
The audit fees paid by the Company
and Group to Messrs. KPMG are
separately classified on page 131 in
the Notes to the Financial Statements
of the Annual Report.
The Auditors' report on the Financial
Statements of the Company for the
year under review is found on page
111 of the Annual Report.
The Company has attempted
always to separate the internal
auditors from the external auditors
in order to maintain external auditor
independence.
The appointment/re-appointment of
these auditors were recommended by
the Audit Committees to the Boards
of Directors.
Employee Participation in
Assurance
The following meetings, interviews,
evaluations and surveys were
conducted during the year:
● Skip Level meetings
● Exit interviews
● Young Forum meetings
● 360 degree evaluation
● Great Place to Work survey
● Voice of Employee survey
Whistle Blower Policy
Through a communication link named
‘Chairman Direct’, concerns about
unethical behaviour and any violation
of Group values could be reported
by any employee of the Company
to the Chairman of JKH. Employees
reporting such incidents are
guaranteed complete confidentiality
and such complaints are investigated
and addressed via a select committee
under the direction of the Chairman.
Ombudsperson has been appointed
by JKH being the ultimate Parent
Company to entertain such concerns.
The Ombudsperson’s duty ceases
upon the confidential written
communication of the findings
of the Ombudsperson and
recommendations to the Chairman or
the Senior Independent Director as
the case may be.
The Chairman or the Senior
Independent Director, as applicable,
will place before the Board,
● The decision and the
recommendations of the
Ombudsperson
● The action taken based on the
recommendations
● The areas of disagreement and
the reasons adduced in instances
where the Chairman or the Senior
Independent Director disagrees
with any or all of the findings and/
or recommendations. In such
cases, the Board shall consider
the areas of disagreement and
determine the way forward.
The Chairman or the Senior
Independent Director is expected to
take such steps as are necessary to
ensure that the complainant is not
victimised for having invoked this
process.
Ombudsperson
In order to deal with a situation in
which an employee or group of
employees feel that an alleged
violation has not been addressed
satisfactorily using the available/
existing procedures and processes, an
These open door policies facilitate
constant dialogue, communication,
transparency and ultimately boost
employee confidence, which would
help retain existing talent whilst
attracting new.
Asian Hotels and Properties Plc
Annual Report 2014/15
The Code of Conduct
The written Code of Conduct to which all employees at all levels and the
Board of Directors are bound by, engraves the desired behaviour of JKH staff at
executive level and above. This is being constantly and rigorously monitored.
The objectives of the Code of Conduct were further affirmed by a strong set
of corporate values which were well institutionalised at all levels within the
Group and thus the Company through structured communication. The degree
of employee conformance with corporate values and their degree of adherence
to the JKH Code of Conduct were the key elements of reward and recognition
schemes.
Code of Conduct
Allegiance to the Company and the Group
Compliance with rules and regulations applying in the territories that
the group operates in
Conduct of business in an ethical manner at all times and in keeping
with acceptable business practices
Exercise of professionalism and integrity in all business and ‘public’
personal transactions
The Chairman of the Board affirms that there have not been any material
violations of any of the provisions of the Code of Conduct. In the instances
where violations did take place, or were alleged to have taken place, they were
investigated and handled through the Company’s established procedures.
Shareholder Relations
The Company shareholders exercise their rights at the Annual General Meeting.
Each resolution brought before the shareholders at the Annual General Meeting
is voted on separately by the shareholders.
The notice of the Annual General Meeting and the relevant documents required
are published and sent to the shareholders within the statutory periods. The
Company circulates the agenda for the meeting and shareholders vote on each
issue separately.
All shareholders are invited and
encouraged to be present, actively
participate and vote at the Annual
General Meeting. The Annual General
Meeting provides an opportunity
for Shareholders to seek and obtain
clarifications and information on the
performance of the Company and to
informally meet the Directors after the
Annual General Meeting. The External
Auditors and the Company’s lawyers
are invited too and are present at the
Annual General Meeting to render
any professional assistance that may
be requested. Shareholders who are
not in a position to attend the Annual
General Meeting in person are entitled
to have their voting rights exercised
by a proxy of their own choice.
Roles of Stakeholders
The Company realises the importance
of ensuring that all stakeholders’
rights are properly observed.
Pertinent procedures are carried out
in line with the rules and regulations
of the CSE, as well as the related laws.
Shareholders: The Company
is committed to create longterm growth and returns to the
shareholders and to conduct its
business in a transparent manner.
Customers: The Company is
committed to continuously develop
better quality of goods and services
for the benefit and satisfaction of its
customers.
Partners: The Company treats all
partners fairly in order to achieve
mutual benefits.
83
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Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
Creditors: The Company observes all
of its obligations to creditors.
Competitors: The Company abides
by the framework of fair competition
and will not destroy the reputation
of competitors through false
accusations.
Employees: The Company considers
its employees, valuable assets and
treats them fairly in regard to work
opportunities, remuneration and
quality of working environment.
The Company also provides all its
employees professional and career
development training.
Society and environment: The
Company is committed to conduct
businesses that benefits the economy,
society and quality of environment.
The Parent Company of Asian Hotels
and Properties PLC has established
the Corporate Social Responsibility
(CSR) Department to promote to
the Company’s staff the importance
of the CSR objectives to achieve
balanced benefits relating to society,
the environment and all stakeholders
in harmony with the Company’s
sustainable growth objectives.
The Directors ensure that any
corporate transaction that would
materially affect the net asset base
of the Company are communicated
to shareholders. There were no major
transactions as defined under Section
185 of the Companies Act No. 07 of
2007 during the year under review.
While the Board is satisfied with
its level of compliance with the
governance requirements, it
recognises that practices and
procedures can always be improved,
and there is merit in continuously
reviewing its own standards. The
Board’s programme of review will
continue throughout the year ahead.
Going Forward
Regulatory Benchmarks
The Board is committed to the highest
standards of Corporate Governance in
order that the Company shall achieve
its long term sustainable growth
objectives. The Board is accountable
to the Company’s shareholders for
good governance in its management
of the affairs of the Company. The
Board confirms that the Company was
fully compliant throughout the year
ended 31st March 2015 with all the
principles and provisions of the good
Corporate Governance and the Code
of Business Conduct and Ethics.
The Board of Directors has taken all
reasonable steps to ensure that all
Financial Statements are prepared
in accordance with the Sri Lanka
Accounting Standards(SLFRS/LKAS)
issued by ICASL and the requirements
of the CSE and other applicable
authorities.
Major Transactions
The Company’s approach to
Corporate Governance enables it
to understand the expectations of
stakeholders, forecast trends in
social, environmental and ethical
requirements and to manage the
Company’s performance in an
appropriate manner.
The Company and its subsidiary are
fully compliant with all the mandatory
rules and regulations stipulated by
the Corporate Governance Listing
Rules published by the CSE and
also by the Companies Act No. 07 of
2007. The Group has also given due
consideration to the Best Practice
on Corporate Governance Reporting
guidelines jointly set out by ICASL and
the SEC and has voluntarily adopted
the relevant provisions as far as is
practicable.
Asian Hotels and Properties Plc
Annual Report 2014/15
Statement of Compliance under Section 7.10 of the Rules of the Colombo Stock Exchange (CSE) on Corporate Governance
(Mandatory provisions – fully complied)
Compliant 
Non Compliant 
CSE Rule
No.
Subject
Compliance Requirement
Compliance Applicable Section in
Status
the Annual Report
7.10
(a-c)
Compliance
● The Group is in compliance with the
Corporate Governance Rules and
any deviations are explained where
applicable

Corporate Governance
7.10.1
(a-c)
Non-Executive Directors
● Two or at least one-third of the total
number of Directors should be NonExecutive Directors, whichever is
higher

Corporate Governance
7.10.2(a)
Independent Directors
● Two or one-third of Non-Executive
Directors, whichever is higher,
should be independent

Corporate Governance
7.10.2(b)
Independent Directors
● Each Non-Executive Director
should submit a declaration of
independence/Non-Independence
in the prescribed format

Available with the
Secretaries for review
7.10.3(a)
Disclosure relating to
Directors
● The Board shall annually determine
the independence or otherwise of
the Non-Executive Directors
● Names of the Independent
Directors should be disclosed in the
Annual Report

Corporate Governance

7.10.3(b)
Disclosure relating to
Directors
● The basis for the Board’s
determination of Independent
Director, if criteria specified for
Independence is not met

Corporate Governance
7.10.3(c)
Disclosure relating to
Directors
● A brief resumé of each Director
should be included in the Annual
Report and should include the
Directors areas of expertise

Board of Directors
(profile) section in the
Annual Report
7.10.3(d)
Disclosure relating to
Directors
● Provide a brief resumé of new
Directors appointed to the Board
with details specified in 7.10.3(a),
(b) and (c) to the Colombo Stock
Exchange

Corporate Governance
85
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Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
CSE Rule
No.
Subject
Compliance Requirement
Compliance Applicable Section in
Status
the Annual Report
7.10.4
(a-h)
Criteria for defining
Independence
● Requirements for meeting criteria
to be Independent

Corporate Governance
7.10.5
Human Resources
and Compensation
Committee
● A listed Company shall have a
Remuneration Committee. The
Remuneration Committee of
the listed Parent Company may
function as the Remuneration
Committee

Corporate Governance
7.10.5(a)
Composition of
Human Resources
and Compensation
Committee
● Shall comprise of Non–Executive
Directors, a majority of whom will
be Independent

Corporate Governance
7.10.5.(b)
Functions of Human
Resources and
Compensation
Committee
● The Human Resources and
Compensation Committee shall
recommend the remuneration of
the Chief Executive Officer and
Executive Directors

Corporate Governance
7.10.5.(c)
Disclosure in the
Annual Report relating
to Human Resources
and Compensation
Committee
● Names of Directors comprising
the Human Resources and
Compensation Committee
Statement of Remuneration Policy
Aggregated remuneration paid
to Executive and Non–Executive
Directors

Corporate Governance
and the Board of
Directors Reports
7.10.6
Audit Committee
● The Company shall have an Audit
Committee

Corporate Governance
7.10.6(a)
Composition of Audit
Committee
● Shall comprise of Non–Executive
Directors a majority of whom will be
Independent
● A Non–Executive Director shall be
appointed as the Chairman of the
Committee
● General Manager, President and
Financial Controller should attend
Audit Committee Meetings
● The Chairman of the Audit
Committee or one member should
be a member of a professional
accounting body

Corporate Governance
and the Board of
Directors Reports




Asian Hotels and Properties Plc
Annual Report 2014/15
CSE Rule
No.
Subject
Compliance Requirement
7.10.6(b)
Audit Committee
Functions
Overseeing of the
● Preparation, presentation and
adequacy of disclosures in the
Financial Statements in accordance
with Sri Lanka Accounting
Standards (SLFRS/LKAS)
● Compliance with financial reporting
requirements, information
requirements of the Companies
Act and other relevant financial
reporting related regulations and
requirements
● Processes to ensure that
the internal controls and risk
management are adequate to meet
the requirements of the Sri Lanka
Auditing Standards
● Assessment of the independence
and performance of the external
auditors
● Make recommendations to the
Board pertaining to appointment,
re-appointment and removal of
external auditors, and approve
the remuneration and terms of
engagement of the external auditor
7.10.6(c)
Disclosure in Annual
Report relating to Audit
Committee
● Names of Directors comprising the
Audit Committee
● The Audit Committee shall make a
determination of the independence
of the Auditors and disclose the
basis for such determination
● The Annual Report shall contain
a Report of the Audit Committee
setting out the manner of
compliance with their functions
Compliance Applicable Section in
Status
the Annual Report

Corporate Governance
and the Board of
Directors Reports







Corporate Governance
and the Audit Committee
Report
87
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Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
Code of Best Practice of Corporate Governance Jointly Issued by the Securities and Exchange Commission of Sri Lanka
(SEC) and the Institute of Chartered Accountants of Sri Lanka (ICASL)
Non Compliant 
Compliant 
Code Ref.
Subject
Applicable Requirement Status
Compliance
Applicable Section in
the Annual Report
A. Directors
A.1 The Board
A.1
The Board
● Company to be headed by an
effective Board to direct and
control the Company
√
Corporate Governance
A.1.1
Frequency of Board
Meetings
● Board should meet regularly, at
least once in every quarter
√
Corporate
Governance/Annual
Report of the Board of
Directors
A.1.2
Responsibilities of the
Board
● Formulation and implementation
of strategy
● Skill adequacy of management
and succession
● Integrity of information, internal
controls and risk management
● Compliance with laws, regulations
and ethical standards
● Code of conduct
Adoption of appropriate
accounting policies
√
Corporate Governance
● Procedure to obtain independent
professional advice when deemed
necessary
√
Corporate Governance
● Ensure adherence to Board
procedures and applicable rules
and regulations
● Procedure for Directors to access
services of Company Secretary
√
Corporate Governance
● Directors should exercise
independent judgment on
issues of strategy, resources,
performance and standards of
business judgment
√
A.1.3
Access to professional
advice
A.1.4
Company Secretary
A.1.5
Independent Judgment
√
√
√
√
√
√
Corporate Governance
Asian Hotels and Properties Plc
Annual Report 2014/15
Code Ref.
Subject
Applicable Requirement Status
Compliance
Applicable Section in
the Annual Report
A.1.6
Dedication of adequate
time and effort by
Directors
● Directors should devote adequate
time and effort to discharge their
responsibilities to the Company
satisfactorily
√
Corporate Governance
A.1.7
Board and training
● Directors should receive
appropriate induction, training,
hone skills and expand knowledge
to more effectively perform duties
√
Corporate Governance
● A balance of power and authority
to be maintained by separating
responsibility for conducting Board
business from that of executive
decision making
√
Corporate Governance
● Chairman to preserve order and
facilitate effective discharge of
Board functions by proper conduct
of Board meetings
√
Corporate Governance
● Board to ensure adequacy of
financial acumen and knowledge
within the Board
√
Corporate Governance
A.2 Chairman and Chief Executive Officer
A.2.1
Justification for
combining the roles of
the Chairman and the
CEO
A.3 Chairman’s Role
A.3.1
Ensure good corporate
governance
A.4 Financial Acumen
A.4.1
Possession of adequate
financial acumen
A.5 Board Balance
A.5.1
Composition of Board
● The Board should include a
sufficient number of Non-Executive
Independent Directors
√
Corporate Governance
A.5.2
Proportion of
Independent Directors
● Two or one-third of the NonExecutive Directors should be
independent
√
Corporate Governance
A.5.3
Test of Independence
● Independent Directors should
be independent of management
and free of any business or other
relationship that could materially
interfere with the exercise of
unfettered and independent
judgment
√
Corporate Governance
89
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Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
Code Ref.
Subject
Applicable Requirement Status
Compliance
Applicable Section in
the Annual Report
A.5.4
Declaration of
Independence
● Non-Executive Directors should
submit a signed and dated
declaration of their independence/
non-independence
√
Corporate
Governance/Annual
Report of the Board of
Directors
A.5.5
Annual determination
of criteria of
independence/nonindependence and
declaration of same by
Board
● The Board should annually
determine and disclose the
names of Directors deemed to be
Independent
√
Corporate Governance
A.5.6
Appointment of an
alternate Director
● If an alternate Director is appointed
by a Non-Executive Director, such
alternate Director should not be an
executive of the company
N/A
A.5.7
Appointment of Senior
Independent Director
(SID)
● If the roles of Chairman/CEO
are combined, a Non-Executive
Director should be appointed as a
Senior Independent Director
N/A
A.5.8
Availability of Senior
Independent Director to
other Directors
● If warranted, the SID should be
available to the other Directors for
confidential discussions
N/A
A.5.9
Interaction between
Chairman and NonExecutive, Independent
Directors
● The Chairman should meet the
Non-Executive Independent
Directors at least once a year
A.5.10
Directors concerns to be
recorded
●When matters are not unanimously
resolved, Directors to ensure their
concerns are recorded in Board
minutes
√
Corporate Governance
N/A
A.6 Supply of Information
A.6.1
Provision of adequate
information to Board
● Management to ensure the
Board is provided with timely and
appropriate information
√
Corporate Governance
A.6.2
Adequacy of notice
and formal agenda to
be discussed at Board
meetings
● Board minutes, agenda and papers
should be circulated at least seven
days before the Board meeting
√
Corporate Governance
Asian Hotels and Properties Plc
Annual Report 2014/15
Code Ref.
Subject
Applicable Requirement Status
Compliance
Applicable Section in
the Annual Report
● Formal and transparent procedure
for Board appointments
√
Corporate Governance
A.7 Appointment to the Board
A.7
Appointments to the
Board
A.7.1
Nomination Committee
● Nomination committee of the
ultimate Parent Company may
function as such for the Company
and make recommendations to the
Board on new Board appointments
√
Corporate Governance
A.7.2
Annual assessment of
Board composition
● Nomination committee of Board
should annually assess the
composition of Board
√
Corporate Governance
A.7.3
Disclosure of new Board
appointments
● Profiles of new Board
appointments to be communicated
to Shareholders
√
Corporate
Governance/Notice of
Meeting
A.8 Re-election
A.8.1
Appointment of NonExecutive Directors
● Appointment of Non-Executive
Directors should be for specified
terms and re-election should not
be automatic
√
Corporate
Governance/Annual
Report of the Board of
Directors
A.8.2
Shareholders approval
of appointment of all
Directors
● The appointment of all Directors
should be subject to election
by Shareholders at the first
opportunity
√
Corporate
Governance/Annual
Report of the Board
of Directors/Notice of
Meeting
A.9 Appraisal of Board Performance
A.9.1
Annual appraisal of
Board performance
● The Board should annually
appraise how effectively it has
discharged its key responsibilities
√
Corporate Governance
A.9.2
Self evaluation of Board
and Board Committee
● The Board should evaluate its
performance and that of its
committees annually
√
Corporate
Governance/Audit
Committee Report
A.9.3
Declaration of basis of
performance evaluation
● The Board should disclose how
performance evaluations have
been carried out
√
Corporate Governance
91
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Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
Code Ref.
Subject
Applicable Requirement Status
Compliance
Applicable Section in
the Annual Report
A.10 Disclosure of Information in respect of Directors
A.10.1
Biographical Profiles
and relevant details
of Directors to be
disclosed
● Annual Report should disclose the
biographical details of Directors
and attendance at Board/
Committee meetings
√
Board of Directors
profiles section/
Corporate
Governance/ Audit
Committee Report
A.11 Appraisal of Chief Executive Officer
A.11.1
Short, medium and long
term, financial and nonfinancial objectives to
be set
● The Board should set out the short,
medium and long-term financial
and non-financial objectives at the
commencement of each year
√
Corporate Governance
A.11.2
Evaluation of CEO
performance
● The performance of the CEO
should be evaluated by the Board
at the end of the year
√
Corporate Governance
B. Directors Remuneration
B.1 Remuneration Procedure
B.1.1
Appointment of
Remuneration
Committee
● Remuneration Committee of the
ultimate Parent Company may
function as such for the Company
to make recommendations on
Director’s remuneration
√
Corporate Governance
B.1.2
Composition of
Remuneration
Committee
● Remuneration Committee should
consist exclusively of NonExecutive Directors
√
Corporate Governance
B.1.3
Disclosure of members
of Remuneration
Committee
√
Corporate Governance
B.1.4
Remuneration of NonExecutive Directors
● Board to determine the level of
remuneration of Non-Executive
Directors
√
Corporate Governance
B.1.5
Access to professional
advice
● Remuneration Committee should
have access to professional advice
in order to determine appropriate
remuneration for Executive
Directors
√
Corporate Governance
The Annual Report should disclose
the Chairman and Directors
who serve on the Remuneration
Committee
Asian Hotels and Properties Plc
Annual Report 2014/15
Code Ref.
Subject
Applicable Requirement Status
Compliance
Applicable Section in
the Annual Report
● Packages should be structured
to attract, retain and motivate
Executive Directors
● Packages should be comparable
and relative to that of other
companies as well as the relative
performance of the company
● When determining annual
increases remuneration committee
should be sensitive to that of other
Group companies
● Performance related elements of
remuneration should be aligned
with interests of Company
√
Corporate Governance
B.2 Level and Make up of Remuneration
B.2.1 to
B.2.4
Performance related
elements in pay
structure and alignment
to industry practices
√
√
√
B.2.5
Share options
● Executive share options should not
be offered at a discount
√
Corporate Governance
B.2.6 to
B.2.9
Remuneration packages
for Non-Executive
Directors
● Should reflect time, commitment
and responsibilities of role and in
line with existing market practice
√
Corporate Governance
● The Annual Report should disclose
the remuneration paid to Directors
√
Financial Statements
B.3 Disclosure of Remuneration
B.3.1
Disclosure of details of
remuneration
C. Relations with Shareholders
C.1 Constructive Use and Conduct of Annual General Meeting
C.1.1
Proxy votes to be
counted
● The Company should count and
indicate the level of proxies lodged
for and against in respect of each
resolution
√
Corporate Governance
C.1.2
Separate resolutions
● Separate resolutions should
be proposed for substantially
separate issues
√
Corporate
Governance/ Notice of
Meeting
C.1.3
Availability of
Chairman's of
Committees at AGM
● The Chairman of Board Committee
should be available to answer any
queries at AGM
√
Corporate Governance
C.1.4
Notice of AGM
● 15 working days notice to be given
to shareholders
√
Notice of Meeting
93
94
Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
Code Ref.
Subject
Applicable Requirement Status
Compliance
Applicable Section in
the Annual Report
C.1.5
Procedure for voting at
meetings
● Company to circulate the
procedure for voting with Notice of
Meeting
√
Notice of Meeting
● Channel to reach all shareholders
to disseminate timely information
√
Corporate Governance
● Policy and Methodology of
communication with shareholders
and implementation
√
Corporate Governance
● Disclosure for all material facts
involving all material transactions
including related party
transactions
√
Notes to the Financial
Statements
√
Corporate
Governance/Risk
Management/
Financial Statements
C.2 Communication with Shareholders
C.2.1
Chanel of
Communication
C.2.2 –
C.2.7
Policy and Methodology
of Communication
C.3 Major and Material Transactions
C.3.1
Disclosure of Major
Transactions
D. Accountability and Audit
D.1 Financial Reporting
D.1.1
Presentation of Public
Reports
● Should be balanced,
understandable and comply
with statutory and regulatory
requirements
D.1.2
Directors’ Report
The Directors’ Report should be
included in the Annual Report and
confirm that ,
● The Company has not contravened
laws or regulations in conducting
its activities
● Material interests in contracts have
been declared by Directors
● The Company has endeavoured
to ensure equitable treatment of
shareholders
● That there is reasonable assurance
of the effectiveness of the existing
business systems following a
review of the internal controls
covering financial, operational and
compliance
● That the business is a “going
concern”
Annual Report of the
Board of Directors
√
Audit Committee
Report
√
Annual Report of the
Board of Directors
Corporate Governance
√
√
Audit Committee
Report/Risk
Management
√
Annual Report of the
Board of Directors
Asian Hotels and Properties Plc
Annual Report 2014/15
Code Ref.
Subject
Applicable Requirement Status
Compliance
Applicable Section in
the Annual Report
D.1.3
Respective
responsibilities of
Directors and Auditors
● The Annual Report should contain
separate statements setting
out the responsibilities of the
Directors for the preparation and
presentation of the Financial
Statements and the reporting
responsibilities of the Auditors
√
Respective
responsibilities of the
Directors and Auditors
D.1.4
Management Discussion
and Analysis
Annual report to include section
on Management Discussion and
Analysis
√
Management
Discussion
D.1.5
Going Concern
● Directors to substantiate and
report that the business is a going
concern or qualify accordingly
√
Annual Report of the
Board of Directors
D.1.6
Serious Loss of Capital
● Directors to summon an
Extraordinary General Meeting in
the event that the net assets of the
Company falls below 50% of the
value of Shareholders Funds
N/A
D.1.7
Related Party
Transactions
● Disclosure of Related Party
Transactions
√
Notes to the Financial
Statements
D.2 Internal Control
D.2.1
Effectiveness of system
of internal controls
● Directors to annually conduct a
review of the effectiveness of the
system of internal controls. This
responsibility may be delegated to
the Audit Committee
√
Audit Committee
Report/Risk
Management
D.2.2
Internal Audit Function
● The internal audit function in Group
companies is not outsourced to the
external auditor of that company
in a further attempt to ensure
external auditor independence
√
Corporate Governance
D.2.3D.2.4
Continuity of Internal
control
● Maintaining a sound system of
internal control
√
Corporate Governance
● Should comprise a minimum of
two independent, Non-Executive
Directors
● Audit Committee Chairman should
be appointed by the Board
√
Audit Committee
Report
D.3 Audit Committee
D.3.1
Chairman and
Composition of Audit
Committee
√
95
96
Asian Hotels and Properties Plc
Annual Report 2014/15
Corporate Governance contd.
Code Ref.
Subject
Applicable Requirement Status
D.3.2
Duties of Audit
Committee
Should include
● Review of scope and results of
audit and its effectiveness
● Independence and objectivity of
the Auditors
Compliance
Applicable Section in
the Annual Report
Corporate Governance
√
√
D.3.3
Terms of Reference /
Charter
● The Audit Committee should have
a written Terms of Reference
which define the purpose of the
Committee and its duties and
responsibilities
√
Corporate Governance
D.3.4
Disclosure
● The Annual Report should disclose
the names of Directors serving on
the Audit Committee
● The Audit Committee should
determine the independence of
the Auditors and disclose the basis
of such determination
● The Annual Report should contain
a report by the Audit Committee
setting out the manner of the
compliance of the Company during
the period to which the Report
relates
√
Corporate
Governance/Audit
Committee Report
√
Corporate Governance
√
Audit Committee
D.4 Code of Business Conduct and Ethics
D.4.1
Adoption of Code of
Business Conduct and
Ethics
● The Company must adopt a Code
of Business Conduct and Ethics
for Directors and members of the
senior management team and
promptly disclose any violation of
the Code
√
Corporate Governance
D.4.2
Chairman’s affirmation
● The Annual Report must include an
affirmation by the Chairman that he
is not aware of any violation of the
provision of the Code of Conduct
√
Chairman’s Statement/
Director’s Report
Asian Hotels and Properties Plc
Annual Report 2014/15
Code Ref.
Subject
Applicable Requirement Status
Compliance
Applicable Section in
the Annual Report
● The Annual Report should include
a report setting out the manner
and extent to which the Company
has adopted the principals and
provisions of the Code of Best
Practice on Corporate Governance
√
Corporate Governance
D.5 Corporate Governance Disclosures
D.5.1
Corporate Governance
Report
E. Institutional Investors
E.1 Structured Dialogue
E.1.1
Structured Dialogue
with Shareholders
● A regular and structured dialogue
should be conducted with
shareholders and the outcome
of such dialogue should be
communicated to the Board by the
Chairman
√
Corporate Governance
E.2
Evaluation of
Governance Disclosure
by Institutional Investors
● Institutional investors should
be encouraged to consider the
relevant factors drawn to their
attention with regard to Board
structure and composition
√
Corporate Governance
F. Other Investors
F.1
Individual Investors
● Individual shareholders should be
encouraged to carry out adequate
analysis and seek professional
advice when making their
investment/divestment decisions
√
Corporate Governance
F.2
Shareholder Voting
● Individual shareholders should
be encouraged to participate in
General Meetings of companies
and exercise their voting rights.
√
Corporate
Governance/
Form of Proxy
√
Annual ReportManagement
Discussion
G. Sustainability Reporting
G.1-G.1.7
Sustainability Reporting
● Disclosure on adherence to
sustainability principles
97
98
Asian Hotels and Properties Plc
Annual Report 2014/15
Annual Report of the Board of Directors
The Board of Directors has pleasure
in presenting the 21st Annual Report
of your Company together with the
Audited Financial Statements for the
year ended 31st March 2015.
Principal Activities
The Company is engaged
in Hoteliering and Property
Development/Management. Trans
Asia Hotels PLC (the owner and
operator of Cinnamon Lakeside Hotel)
is a subsidiary of the Company and its
principal activity is Hoteliering. There
has been no material change in the
activities of the Company or of the
subsidiary during the period under
review.
Segment Reporting
A review of the financial and operational and future business development of
the Group and its business units are described in the management discussion
and analysis section of the Annual Report. These reports, together with the
audited Financial Statements, reflect the state of affairs of the Company and
the Group Segment-wise contribution to Group revenue, results, assets and
liabilities are provided in Note 36 to the Financial Statements.
Revenue
Revenue generated by the Company amounted to Rs. 5,294 million (Rs. 5,317
million in 2014), whilst Group revenue amounted to Rs. 8,080 million (Rs. 8,256
million in 2014).Contribution to Group revenue, from the different business
segments are provided in Note 36 to the Financial Statements.
Results and Appropriations
The Profit After Tax of the Company was Rs. 1,807 million (Rs. 2,379 million in
2014) whilst the Group profit attributable to the equity holders of the Parent
Company for the year was Rs. 1,757 million (Rs. 2,398 million in 2014). A detailed
description of the Group results and appropriations are given below.
Review of Business and Future
Developments
The financial and operational
performance, during the year ended
31st March 2015 and future business
development of the Company and
Group is provided in the Chairman’s
Statement, the Management
Discussion and Analysis in this Annual
Report. These reports, which form an
integral part of the Directors’ Report
together with the Audited Financial
Statements, reflect the state of affairs
of the Company and Group for the
financial year ended 2014/2015.
Financial Statements and Auditors’
Report
The Financial Statements, duly signed
by the Directors, is provided from
pages 112 to 161 and the Auditors’
Report on the Financial Statements is
provided on page 111 of this Annual
Report.
2014/15
Rs. ‘000
2013/14
Rs.‘000
Net Profit for the year after providing for expenses
including depreciation on Property, Plant and
Equipment was:
2,350,653
3,046,463
From which Income Tax has been deducted of:
(263,196)
(227,952)
Leaving thereafter a Net Profit After Tax of:
2,087,457
2,818,511
The amount attributable to Minority Interest which
has been deducted is:
(330,828)
(420,565)
Leaving a Profit Available to the Group of:
1,756,629
2,397,946
The Brought Forward Profit is:
7,880,070
7,242,060
17,358
15,407
109
(4,242)
(1,328,326)
(1,328,326)
(442,775)
(442,775)
7,883,065
7,880,070
Transferred to Revenue Reserve of:
Other Comprehensive Income:
Final Dividend paid:
Interim Dividend paid:
Leaving an un-appropriated balance to be Carried
Forward of:
* In accordance with the LKAS 10, Events after the reporting period, the final
dividend has not been recognised as a liability in the Financial Statements.
Asian Hotels and Properties Plc
Annual Report 2014/15
Accounting Policies
The Financial Statements, which
comprise the Income Statement,
Statement of Comprehensive Income,
Statement of Financial Position,
Statement of Changes in Equity and
the Statement of Cash Flow, together
with the accounting policies and
notes (‘The Financial Statements’)
have been prepared in accordance
with Sri Lanka Accounting Standards
(SLFRS/LKAS) as issued by the
Institute of Chartered Accountants of
Sri Lanka (ICASL) and the requirement
of the Companies Act No. 7 of 2007.
The changes to accounting policies
have been applied consistently to
all financial periods presented in
these Financial Statements, unless
otherwise indicated. The accounting
policies adopted in preparation of the
Financial Statements are given from
pages 118 to 129 of this Report.
Dividends
A Final Dividend of Rs. 3/- per share
for the financial year ended 31st
March 2014, was paid during the
current financial year on 18th June
2014 to those shareholders in the
register as of 6th June 2014, resulting
in a total cash pay out amounting to
Rs. 1,328 million.
An Interim Dividend of Rs. 1/- per
share for the year ended 31st March
2015, amounting to Rs. 442 million was
paid on 31st March 2015.
The Board of Directors, has declared
a Final Dividend of Rs. 3/- per share
for the financial year ended 31st
March 2015. The Final Dividend will
be paid on 19th June 2015 to those
shareholders on the register as at 10th
June 2015.
Associates, Chartered Valuation
Surveyor.
As required by Section 56 (2) of the
Companies Act No. 7 of 2007, the
Board of Directors has confirmed that
the Company satisfies the Solvency
Test in accordance with Section 57 of
the Companies Act No. 7 of 2007 and
has obtained a certificate from the
Auditors, prior to declaring the above
dividends.
All properties classified as investment
property were also revalued as at
31st March 2015 in accordance with
the requirements of LKAS 40. This
valuation too was carried out by M/s
P.B. Kalugalagedara and Associates.
Property, Plant and Equipment
The book value of Property, Plant
and Equipment as at the balance
sheet date amounted to Rs. 17,285
million (2014 – Rs. 15,053 million) and
Rs. 20,704 million (2014 – Rs. 18,511
million) for the Company and Group
respectively.
Capital expenditure for the Company
and Group amounted to Rs. 838
million (2014 – Rs. 301 million) and Rs.
1,010 million (2014 – Rs. 673 million)
respectively.
Total Freehold Land available − Asian
Hotels and Properties
PLC A8. R00. P05.08 Total Leasehold
Land available − Trans Asia Hotels
PLC A05. R02. P34.28.
Details of Land and Buildings with
net book values including details of
Property, Plant and Equipment of the
Group and their movements are given
in Note 14 to the Financial Statements
on page 135.
Details of property valuations,
including the valuation methods are
provided in Note 14 to the Financial
Statement on page 137 of this report.
Investment Properties
In accordance with SLAS
40-Investment Property (2005), the
net book value of properties held to
earn rental income, and properties
held for capital appreciation have
been classified as Investment
Properties. The details of Investment
Properties are explained in Note 16 to
the Financial Statements on page 138.
Investment in Subsidiary
Company
Trans Asia
Hotels PLC
(Quoted)
No. of
Shares
%
Holding
86,823,028
43.41
Stated Capital
The Stated Capital of the Company as
at 31st March 2015 is Rs. 3,345 million
(2014 – Rs.3,345 million) comprising of
442,775,300 Ordinary Shares.
Share Information
Market Value of Properties
The Land and buildings of the Group
were revalued on 31st March 2015
by M/s P.B. Kalugalagedara and
The market value of an Ordinary Share
of the Company as at 31st March 2015
was Rs. 63.00 (31st March 2014 –
Rs. 58.80).
99
100
Asian Hotels and Properties Plc
Annual Report 2014/15
Annual Report of the Board of Directors contd.
The distribution and composition of
shareholders and the information
relating to earnings, dividend, net
assets, and market value per share
is given in the Share Information and
Five (5) Year Financial Review section
of the Annual Report.
The Company has made every
endeavour to ensure the equitable
treatment of all shareholders and
has adopted adequate measures to
prevent information asymmetry.
Major Shareholders
Details of the twenty largest
shareholders of the Company and
the percentage shareholding held by
the public are disclosed in the Share
Information section of the Annual
Report from page 163 and 164.
The Directors of the Company who
held office during the year under
review are set out below.
during the year are disclosed in the
Corporate Governance section of the
Annual Report.
Mr. S.C. Ratnayake - Chairman
Mr. A.D. Gunewardene – Managing
Director
Mr. J. R. F. Peiris
Mr. R.J. Karunarajah
Mr. S. Rajendra
Mr. C.J.L. Pinto
Mr. S.K.G. Senanayake
Mrs. S.A. Jayasekara
Board Committees
Board Audit Committee
Mr. C. J. L. Pinto and Mr. J. R. F. Peiris
retire by rotation in terms of Article
84 of the Articles of Association of
the Company and being eligible for
re-election are recommended by the
Board for re-election. Brief profiles of
Mr. C. J. L. Pinto and Mr. J. R. F. Peiris
are found on page 60.
Reserves
Total reserves as at 31st March
2015 for the Company and Group
amounted to Rs. 18,753 million (2014
– Rs. 17,003 million) and Rs. 20,692
million (2014 – Rs. 18,991 million),
respectively.
The movements and composition
of the Capital Reserves and
Revenue Reserves during the year
are disclosed in the Statement of
Changes in Equity.
The Directors of Trans Asia Hotels
PLC [Subsidiary] who held office
during the year under review are set
out below:
Mr. S.C. Ratnayake - Chairman
Mr. A.D. Gunewardene
Mr. J.R.F. Peiris
Mr. N.L. Gooneratne
Mr. C.J.L. Pinto
Mr. E.H. Wijenaike
Mrs. J.C. Ponniah
Mr. R.J. Karunarajah*
Directors
The Board of Directors of the
Company as at 31st March 2015 and
brief profiles of each Director are
given in the Board of Directors section
of the Annual Report.
*Appointed with effect from 01st May
2015
Responsibility of the Board
Details of responsibilities of the
Board and the manner in which those
responsibilities were discharged
The following members serve on the
Board Audit Committee
Mr. C.J. L. Pinto - Chairman
Mr. S.K.G. Senanayake
Mrs. S.A. Jayasekara
The Report of the Audit Committee is
given on page 108 of this Report.
Human Resources and
Compensation Committee
As permitted by the listing rules of
the Colombo Stock Exchange, the
Human Resources and Compensation
Committee of the Parent Company,
John Keells Holdings PLC (JKH),
functions as the Human Resources
and Compensation Committee of the
Company.
The following members serve on the
Human Resources and Compensation
Committee:
Mr. E.F.G. Amerasinghe - Chairman
Dr. I. Coomaraswamy
Mr. A.R. Gunasekara*
Mr. M.A. Omar
Mr. N.A. Fonseka
Mr. D.A. Cabraal**
*Resigned with effect from
30th June 2014.
**Appointed with effect from
29th January 2015.
Asian Hotels and Properties Plc
Annual Report 2014/15
The Report of the Human Resources
and Compensation Committee and
the remuneration policy is given in the
Corporate Governance section of the
Annual Report.
The Related Party Transactions
Review Committee comprises four
Independent Directors and two Non
Independent Directors as at 31st
March 2015:
Nominations Committee
Mr. N.A. Fonseka - Chairman
Mr. E.F.G. Amerasinghe
Mr. D.A. Cabraal
Ms. P. Perera*
Mr. S.C. Ratnayake
Mr. J.R.F. Peiris
As permitted by the listing rules of
the Colombo Stock Exchange, the
Nomination Committee of the Parent
Company John Keells Holdings PLC
(JKH) functions as the Nomination
Committee of the Company.
The Nominations Committee
comprises five Independent Directors
and one Non Independent Director as
at 31st March 2015:
Mr. T. Das - Chairman
Mr. S.C. Ratnayake (Non-Independent)
Mr. M.A. Omar
Mr. E.F.G. Amerasinghe
Mr. D.A. Cabraal
Ms. P. Perera *
*Appointed with effect from
24th July 2014.
The Report of the Nominations
Committee is given in the Corporate
Governance section of the Annual
Report.
Related Party Transactions Review
Committee
The Related Party Transactions
Review Committee of the Parent
Company John Keells Holdings PLC
(JKH) functions as the Related Party
Transactions Review Committee of
the Company which was formed with
effect from 01st April 2014.
*Appointed with effect from
24th July 2014.
Directors’ Remuneration
Directors’ remuneration is established
within a framework approved by the
Human Resources and Compensation
Committee. The Directors are of the
opinion that the framework assures
appropriateness of remuneration and
fairness for the Company.
Details of the remuneration and other
benefits received by the Directors
of the Company and the Group are
set out in Note 10 of the Financial
Statements.
Indemnities and Remuneration
The Related Party Transactions
Review Committee is given in the
Corporate Governance section of the
Annual Report.
The Board approved the payment to
Messrs. R. J. Karunarajah and S.
Rajendra, Executive Directors of
Asian Hotels & Properties PLC, a
remuneration comprising of;
Interests Register
The Company has maintained an
Interests Register as contemplated
by the Companies Act No. 7 of 2007.
In compliance with the requirements
of the Companies Act No. 7 of 2007,
this Annual Report also contains
particulars of entries made in the
Interests Register as well as the
particulars of the entries made in the
Interests Register of the Subsidiary
which is a Public Limited Company.
Directors’ Interests in Contracts
The Directors of the Company
have made general declarations as
required by Section 192 (2) of the
Companies Act No. 7 of 2007 and
no additional interests have been
disclosed by any Director.
An increment from 1 July
2014 based on the individual
performance rating obtained by
the Executive Directors in terms
of the performance management
system of the John Keells Group;
Short term variable incentive
based on individual performance,
organization performance and role
responsibility based on the results
of the financial year 2013/2014,
paid in July 2014; and
Long Term incentive in the nature
of ESOP in John Keells Holdings
PLC dependent on the aforesaid
performance rating, organisational
rating and role responsibility
granted in July 2014.
101
102
Asian Hotels and Properties Plc
Annual Report 2014/15
Annual Report of the Board of Directors contd.
as recommended by the Human
Resource and Compensation
Committee of John Keells Holdings
PLC the holding company of Asian
Hotels & Properties PLC in keeping
with the Group remuneration policy.
The Board approved the payment of
increased Non-Executive Directors
fee for Messrs. S. C. Ratnayake, A. D.
Gunewardene, J. R. F. Peiris, S. G. K
Senanayake, C. L. J. Pinto, and S. A.
Jayasekara as recommended by the
Human Resource and Compensation
Committee of John Keells Holdings
PLC the holding company of Asian
Hotels & Properties PLC in keeping
with the Group remuneration policy.
Fees payable to Non-Executive
nominee Directors of John Keells
Holdings PLC was paid to John Keells
Holdings PLC and not to individual
Directors. Further the Board approved
the renewal of C. L. J. Pinto’s contract
as a Non-Executive Director of Asian
Hotels and Properties PLC was for
a further period at increased NonExecutive Directors' fees approved
by the Human Resources and
Compensation Committee of John
Keells Holdings PLC.
Particulars of Entries in the
Interests Register of the Subsidiary
Trans Asia Hotels PLC.
Changes to the remuneration paid
to the Directors of Trans Asia Hotels
PLC for the financial year ended 31st
March 2015 are set out in Note 10 to
the Financial Statement of page 131.
The Non-Executive Directors of Trans Asia Hotels PLC received an increment in
fees with effect from 01st July 2014, as recommended by the Human Resources
and Compensation Committee of John Keells Holdings PLC (being its holding
Company and as permitted by Rules of the Colombo Stock Exchange) which
increase is commensurate with the market and complexities of the business
of the Company. The fees payable to Non-Executive nominees of John Keells
Holdings PLC are paid to the Company and not to individual Directors.
Directors’ Shareholdings
The shares held by Directors’ and their spouses in the Company as at 31st March
2015 are as follows;
Director
Shareholding as
at 31.03.2015
Shareholding as
at 31.03.2014
20,000
20,000
Mr. A.D. Gunewardene
NIL
NIL
Mr. J.R.F. Peiris
NIL
NIL
Mr. R.J. Karunarajah
200
200
Mr. S. Rajendra
NIL
NIL
Mr. S.K.G. Senanayake
NIL
NIL
Mrs. S.A. Jayasekara
NIL
NIL
7,800
7,800
Mr. S.C. Ratnayake
Mr. C.J.L. Pinto
(Joint account with Mrs. M.R.C. Pinto)
Employee Share Option Plan (ESOP)
Employees of the Company receive remuneration in the form of share-based
payment under the John Keells Group’s Employees Share Option Scheme
(ESOP), share options of the parent are granted to senior executives of the
company, whereby employees render services as consideration for equity
instruments (equity-settled transactions). The cost of the employee services
received in respect of the shares or share options granted is recognised in
the Income Statement over the period that employees provide services, from
the time when the award is granted up to the vesting date of the options. The
overall cost of the award is calculated using the number of share options
expected to vest and the fair value of the options at the date of grant.
The employee remuneration expense resulting from the Group’s share option
scheme to the employees of Asian Hotels and Properties PLC is recognised in
the income statement of the company. This transaction does not result in a cash
outflow to the Company and expense recognised is met with a corresponding
equity reserve increase, thus having no impact on the Statement of Financial
Asian Hotels and Properties Plc
Annual Report 2014/15
Position (SOFP). The fair value of the
share options is estimated at the grant
date using a binomial option pricing
model, taking into account the terms
and conditions upon which the share
options were granted. The valuation
takes into account factors such as
stock price, expected time to maturity,
exercise price, expected volatility of
share price, expected dividend yield
and risk free interest rate.
Corporate Governance
Directors’ Declarations
The Directors declare that;
a)The Company has complied with
all applicable laws and regulations
in conducting its business.
b)The Directors have declared all
material interests in contracts
involving the Company and
refrained from voting on matters
in which they were materially
interested.
c)The Company has made
all endeavours to ensure
the equitable treatment of
shareholders.
d)The business is a going concern
with supporting assumptions or
qualification as necessary.
e)Have conducted a review of
internal controls covering financial,
operational and compliance
controls and risk management
and have obtained a reasonable
assurances of their effectiveness
and successful adherence
herewith.
f)The Company being listed on
the Colombo Stock Exchange
(CSE) is compliant with the rules
on Corporate Governance under
the Listing Rules of the CSE with
regard to the composition of the
Board and its Sub-Committees.
g)The Company is in compliance
with the Code of Best Practice
on Corporate Governance jointly
issued by the Securities and
Exchange Commission of Sri
Lanka (SEC) and the Institute of
Chartered Accountants of Sri
Lanka (ICASL).
A comprehensive report on Corporate
Governance practices and principles
with respect to the management and
operations of the Company are set out
from pages 69 to 97 of this Report.
Sustainability
The Company is conscious of the
need to preserve the environment
and its natural resources and has
taken specific steps, particularly
in ensuring the conservation of its
natural resources and environment
as well as addressing material issues
highlighted by its stakeholders.
Every endeavour has been made
to minimise adverse effects on the
environment to ensure sustainable
continuity of natural resources. The
Company’s sustainable practices are
detailed from pages 34 to 59.
Employment
The Company has an equal
opportunity policy in respect of
employment and these principles
are enshrined in specific selection,
training, development and promotion
policies, ensuring that all decisions
are based on merit. The Company, in
line with the Group policy, practices
equality of opportunity for all
employees irrespective of ethnic
origin, religion, political opinion,
gender, marital status or physical
disability.
The number of persons employed by
the Company and Group as at 31st
March 2015 was 1,230 (1,234 in 2014)
and 2,078 (2,089 in 2014), respectively.
There have been no material issues
pertaining to employees and
industrial relations of the Company
and the Group during the Financial
Year.
Supplier Policy
The Company, in line with the Group’s
policies, applies an overall policy of
agreeing and clearly communicating
terms of payment as part of the
commercial agreements negotiated
with suppliers and endeavours to
pay for all items properly charged in
accordance with these agreed terms.
As at 31st March 2015, the trade and
other payables of the Company and
Group amounted to Rs. 434 million
(2014 – Rs. 404 million) and Rs.
682 million (2014 – Rs. 627 million),
respectively.
Environmental Protection
The Company is in compliance
with the relevant environmental
laws, regulations and endeavours
to comply with best practices
applicable in the country. A summary
of selected Group activities in the
103
104
Asian Hotels and Properties Plc
Annual Report 2014/15
Annual Report of the Board of Directors contd.
above area is contained in the
Management Discussion and Analysis.
The Company has not engaged in
any activity that is harmful to the
environment.
Statutory Payments
The Directors confirm that to the best
of their knowledge, all taxes, duties
and levies payable by the Company
and its Subsidiary, all contributions,
levies and taxes payable on behalf
of, and in respect of the employees
of the Company and its Subsidiary,
and all other known statutory dues
that were due and payable by the
Company and its Subsidiary as at
the Balance Sheet date have been
paid or, where relevant provided
for, except as specified in Note 37 to
the Financial Statements, covering
Contingent Liabilities.
gain assurance on the effectiveness
of control systems in place. The Audit
Committee receives regular reports
on the adequacy and effectiveness
of internal controls in the Company.
These include compliance with laws,
regulations and established policies
and procedures of the Company.
The Head of Group BPR Division
has direct access to the Chairman
of the Audit Committee. Reports of
the outsourced internal auditors are
also reviewed by the Committee on
matters pertaining to the Company.
The Directors acknowledge their
responsibility for the Company’s
systems of internal controls. The
statements of Corporate Governance
from pages 69 to 97 sets out in detail
the Company’s system of internal
controls.
Enterprise Risk Management
The Board confirms that there is
an ongoing process of identifying,
evaluating and managing any
significant risks faced by the
Company, where annual risk reviews
are carried out by the Enterprise Risk
Management Division and the risks
are further reviewed each quarter
by each business unit. The headline
risks are presented to the Board
Audit Committee for review by the
respective business units.
The details of the Risk Report and Risk
Management Process are set out from
pages 62 to 68 of this Report.
Related Party Transactions
There were no related party
transactions required to be disclosed
under the Listing Rules of the CSE
other than as disclosed under Note 33
to the Financial Statements.
Donations
Total donations made by the
Company during the year amounted
to Rs. 16.09 million and donations
made by the Group amounted to
Rs. 26.93 million (31st March 2014 –
Company Rs. 13.98 million/Group Rs.
21.08 million).
Internal Control
Events Subsequent to the Balance
Sheet Date
The Board, through the involvement
of the Group Business Process Review
(Group BPR) Division, takes steps to
Except for the matters disclosed in
Note 39 to the Financial Statements
on page 161 there were no material
events which require adjustments or
disclosure in the Financial Statements.
Going Concern
The Board of Directors, after
considering the financial position,
operating conditions, regulatory
and other factors, and such matters
required to be addressed in the
Code of Best Practice on Corporate
Governance issued jointly by the
Securities and Exchange Commission
and the Institute of Chartered
Accountants of Sri Lanka, has a
reasonable expectation that the
Company and its Subsidiary possess
adequate resources to continue in
operation for the foreseeable future.
For this reason, the Board continues
to adopt the Going Concern basis in
preparing the Financial Statements.
Auditors
The retiring Auditors Messrs.
KPMG, Chartered Accountants,
have expressed their willingness
to continue in office. The Audit
Committee at a meeting held on
27th April 2015 recommended that
they be re-appointed as Auditors.
A Resolution to re-appoint them as
auditors and authorising the Directors
to determine their remuneration will
be proposed at the Annual General
Meeting.
The Independent Auditors’ Report
to the shareholders on the Financial
Statements is given on page 111.
The Audit Committee reviews the
appointment of the Auditor, its
effectiveness, independence and
its relationship with the Company,
Asian Hotels and Properties Plc
Annual Report 2014/15
including the level of audit and non–
audit fees paid to the Auditor.
Based on the declaration of Messrs
KPMG and as far as the Directors are
aware, the Auditors do not have any
relationship [except in so far as an
Auditor] or interest in the Company or
its Subsidiary.
2015 at 11.45 a.m. The Notice of
Annual General Meeting appears on
page 167 of the Annual Report.
This Annual Report is signed for and
on behalf of the Board of Directors by;
Annual Report
The Board of Directors approved the
Consolidated Financial Statements
on 29th May 2015. The appropriate
number of copies of this Report
will be submitted to the Colombo
Stock Exchange and to the Sri Lanka
Accounting and Auditing Standards
Monitoring Board on 4th June 2015.
Director Annual General Meeting
Secretaries
The 21st Annual General Meeting
of the Company will be held at the
Auditorium of Ceylon Chamber
of Commerce, at No. 50, Navam
Mawatha, Colombo 2, on 26th June
Director
By Order of the Board
KEELLS CONSULTANTS (PRIVATE)
LIMITED
Colombo
29th May 2015
105
106
Asian Hotels and Properties Plc
Annual Report 2014/15
Financial Calendar
Interim Reports
1st Quarter
30th July 2014
2nd Quarter
30th October 2014
3rd Quarter
28th January 2015
4th Quarter
29th May 2015
Annual Reports
2013/14
28th May 2014
2014/15
29th May 2015
Meetings
20th Annual General Meeting
27th June 2014
21st Annual General Meeting
26th June 2015
Dividends
Final dividend of Rs.3/- per share for the year 2013/14 was paid on 18th June
2014
Interim dividend of Rs.1/- per share for the year 2014/15 was paid on 31st
March 2015
Asian Hotels and Properties Plc
Annual Report 2014/15
Financial
Statements
107
108
Asian Hotels and Properties Plc
Annual Report 2014/15
Report of the Audit Committee
Introduction
The Board Audit Committee is formally
constituted as a Sub-Committee of the
Main Board, to which it is accountable.
Charter of the Committee clearly
defines the terms of reference of the
Audit Committee. It demonstrates that
activities of the Audit Committee are
in-line with the Code of Best Practice
on Corporate Governance issued
jointly by the Institute of Chartered
Accountants of Sri Lanka and the
Securities and Exchange Commission
of Sri Lanka.
The effectiveness of the Committee is
evaluated annually by each member
of the Committee and the results are
communicated to the Board.
Role of the Committee
The role of the Audit Committee
is to assist the Board in fulfilling its
oversight responsibilities for the
integrity of the Financial Statements
of the Company, the internal control
and risk management systems of the
Company and its compliance with
legal and regulatory requirements,
the external auditors’ performance,
qualifications and independence, and
the adequacy and performance of the
internal audit function, which at John
Keells Holding PLC is termed Group
Business Process Review Division
(Group BPR). This is detailed in the
terms of reference of the Committee
which has been approved by the
Board and is reviewed annually.
Composition of the Committee and
Meetings
The Audit Committee comprised of
three Non-Executive Independent
Directors. The Chairman of the Audit
Committee and another member
of the Committee are Chartered
Accountants while the other
member of the Committee has a
specialist financial background. All
Non-Executive Directors satisfy the
criteria for independence as specified
in the Standards on Corporate
Governance for listed Companies
issued by the Securities and Exchange
Commission of Sri Lanka. The Audit
Committee reports directly to the
Board. The individual and collective
financial and hotel industry specific
knowledge, business experience
and independence of members are
brought to bear on all matters, which
fall within the committee’s purview.
The Director Finance of the Hotel
sector served as the Secretary to the
Audit Committee.
The President of the Property Group of
John Keells Holdings, Sector Head of
Cinnamon City Hotels, Sector Financial
Controllers of Property and Hotels
Sectors together with the Head of
Group Business Process Review of
John Keells Holdings PLC, attend Audit
Committee meetings by invitation.
Other officials are invited to attend on
a needs basis. Outsourced Internal
Auditors, PricewaterhouseCoopers
(Pvt) Ltd., and Independent External
Auditors KPMG are required to attend
meetings on a regular basis.
The Audit Committee held four (4)
meetings during the financial year.
Information on the attendance at these
meetings is given under Corporate
Governance on page 77 In addition,
the Chairman of the Committee met
the Internal and External Auditors and
in house personnel, as necessary, to
strengthen guidance and oversight
related to Audit Committee matters.
The activities and views of the
Committee have been communicated
to the Board of Directors quarterly
through verbal briefings and by tabling
the minutes of the Committee’s
meetings.
Financial Reporting
The Audit Committee has reviewed
and discussed the Company’s
quarterly and annual Financial
Statements prior to publication
with management and the external
auditors, including the extent of
compliance with Sri Lanka Accounting
Standards, the appropriateness of
its accounting policies and material
judgmental matters. The Committee
has also regularly discussed the
operations of the Company and its
future prospects with Management
and is satisfied that all relevant
matters have been taken into account
in the preparation of the Financial
Statements.
Internal Audit, Risks and Controls
PricewaterhouseCoopers (Pvt) Ltd
continued to serve as the Outsourced
Internal Auditors of the Company,
and the audit plans and scope of
work were formulated in consultation
with the John Keells Group Business
Process Review (Group BPR) Division
and approved by the Committee.
The main focus of the Internal
Audit was to provide independent
assurance on the overall system of
internal controls, risk management
and governance, by evaluating the
adequacy and effectiveness of internal
Asian Hotels and Properties Plc
Annual Report 2014/15
controls, and compliance with laws
and regulations and established
policies and procedures of the
company.
During the year, reports were
received by the Committee from the
Outsourced Internal Auditors, which
were reviewed and discussed with
Management, the Outsourced Internal
Auditors and the John Keells Group
BPR Division. The recommendations
of the Internal Auditors have
been followed up and are being
implemented.
The Audit Committee has also
reviewed the processes for the
identification, evaluation and
management of all significant
operational risks faced by the
Company. The most significant
operational risks and the remedial
measures taken to mitigate them
have been reviewed with the
management and the John Keells
Group Sustainability and Enterprise
Risk Management division.
Formal confirmations and assurances
have been received from senior
management on a quarterly basis
regarding the efficacy and status
of the internal control systems and
risk management systems, and
compliance with applicable laws and
regulations. The Committee reviewed
the whistle blowing arrangements for
the Company which is in-line with the
group arrangements and had direct
access to the Ombudsman for the
Group.
External Audit
The External Auditors’ letter of
engagement, including the scope of
the audit, was reviewed and discussed
by the Committee with the external
auditors and Management prior to the
commencement of the audit.
The External Auditors kept the
Committee advised on an on-going
basis regarding any unresolved
matters of significance. Before the
conclusion of the audit, the Committee
met with the External Auditors to
discuss all audit issues and agree
on their treatment. This included the
discussion of formal reports from the
External Auditors to the Committee.
The Committee also met the External
Auditors, without the management
being present, prior to the finalisation
of the Financial Statements.
The Audit Committee is satisfied that
the independence of the External
Auditors has not been impaired by any
event or service that gives rise to a
conflict of interest. Due consideration
has been given to the level of audit
and non-audit fees received by the
External Auditors from the John
Keells Group and confirmation has
been received from the External
Auditors of their compliance with
the independence criteria given in
the Code of Ethics of the Institute of
Chartered Accountants of Sri Lanka.
The performance of the External
Auditors has been evaluated
and discussed with the senior
management of the Company, and the
Committee has recommended to the
Board that KPMG be re-appointed as
the External Auditors of Asian Hotels
and Properties PLC for the financial
year ending 31st March 2016, subject
to approval by the shareholders at the
Annual General Meeting.
Conclusion
Based on the reports submitted by the
External Auditors and the Outsourced
Internal Auditors of the Company, the
assurances and certifications provided
by the senior management, and the
discussions with management and
the auditors both at formal meetings
and informally, the Committee is of
the view that the control environment
within the Company is satisfactory and
provides reasonable assurance that
the financial position of the Company
is adequately monitored and its assets
are safeguarded.
C.J.L. Pinto
Chairman of the Audit Committee
29th May 2015
109
110
Asian Hotels and Properties Plc
Annual Report 2014/15
Statement of Directors’ Responsibility
The responsibility of the Directors in
relation to the Financial Statements
is set out in the following statement
and should be read in conjunction
with the Report of the Auditors. The
responsibility of the Auditors, in
relation to the Financial Statements
prepared in accordance with the
provisions of the Companies Act No. 7
of 2007, is set out in the Report of the
Auditors.
The Financial Statements comprise of:
● ● Income Statement and Statement
of Comprehensive Income of
the Company and of the Group,
which present a true and fair
view of the profit and loss of the
Company and of the Group for the
respective financial year.
● ● A Statement of the Financial
Position, which presents a true
and fair view of the state of affairs
of the Company and of the Group
as at the end of the financial year:
and
The Directors are required to confirm
that the Financial Statements have
been:
● ● prepared using appropriate
accounting policies which have
been selected and applied in a
consistent manner, and material
departures, if any, have been
disclosed and explained; and
● ● presented in accordance with the
Sri Lanka Accounting Standards
(SLFRS/LKAS) and that reasonable
and prudent judgments and
estimates have been made so
that the form and substance of
transactions are clearly reflected;
and
● ● provide the information required
by and otherwise comply with the
Companies Act No. 7 of 2007 and
the Listing Rules of the Colombo
Stock Exchange.
The Directors are also required
to ensure that the Company has
adequate resources to continue in
operation to justify applying the going
concern basis in preparing these
Financial Statements.
Furthermore, the Directors have
a responsibility to ensure that
the Company maintains sufficient
accounting records to disclose, with
reasonable accuracy, the financial
position of the Company and of the
Group.
The Directors have also taken all
reasonable steps to safeguard the
assets of the Company and of the
Group. In this regard the Directors
have implemented appropriate
systems of internal control with a view
of preventing and detecting fraud and
other irregularities.
Moreover, as required by Section
56 (2) of the Companies Act No. 7 of
2007, the Board of Directors have
confirmed that the Company, based
on the information available, satisfies
the solvency test immediately after
the distribution, in accordance with
Section 57 of the Companies Act
No. 7 of 2007, and have obtained a
certificate from the Auditors, prior
to declaring a Final Dividend of Rs.
3/- per share for the year ended 31st
March 2015, to be paid on 19th June
2015.
The Directors are of the view that they
have discharged their responsibilities
as set out in this Statement.
Compliance Report
The Directors confirm that, to the best
of their knowledge, all taxes, duties
and levies payable by the Company,
all contributions, levies and taxes
payable on behalf of and in respect
of the employees of the Company
and all other known statutory dues
as were due and payable by the
Company as at the Balance Sheet
date have been paid and/or provided
for, except as specified in Note 37 to
the Financial Statements covering
Contingent Liabilities.
By Order of the Board
The Directors are required to prepare
the Financial Statements and to
provide the Auditors with every
opportunity to take whatever steps
and undertake whatever inspections
that may be considered being
appropriate to enable them to give
their audit opinion.
Keells Consultants (Private) Limited
Secretaries
29th May 2015
Asian Hotels and Properties Plc
Annual Report 2014/15
Independent Auditors’ Report
TO THE SHAREHOLDERS OF ASIAN
HOTELS AND PROPERTIES PLC
Report on the Financial Statements
We have audited the accompanying Financial
Statements of Asian Hotels and Properties
PLC, (the “Company”), and the consolidated
Financial Statements of the Company and
its subsidiary (the “Group”), which comprise
the statement of financial position as at 31st
March 2015, and income statement, statement
of profit or loss and other comprehensive
income, statement of changes in equity and
cash flow statement for the year then ended,
and a summary of significant accounting
policies and other explanatory notes set out
on pages 112 to 161.
Board’s Responsibility for the Financial
Statements
The Board of Directors (“Board”) is responsible
for the preparation of these financial
statements that give a true and fair view
in accordance with Sri Lanka Accounting
Standards, and for such internal control as
Board determines is necessary to enable the
preparation of Financial Statements that are
free from material misstatement, whether due
to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion
on these Financial Statements based on our
audit. We conducted our audit in accordance
with Sri Lanka Auditing Standards. Those
standards require that we comply with ethical
requirements and plan and perform the audit
to obtain reasonable assurance about whether
the Financial Statements are free from
material misstatement.
An audit involves performing procedures to
obtain audit evidence about the amounts
and disclosures in the Financial Statements.
The procedures selected depend on the
auditors’ judgment, including the assessment
of the risks of material misstatement of the
Financial Statements, whether due to fraud
or error. In making those risk assessments,
the auditor considers internal control relevant
to the entity’s preparation of the Financial
Statements that give a true and fair view in
order to design audit procedures that are
appropriate in the circumstances, but not
for the purpose of expressing an opinion
on the effectiveness of the entity’s internal
control. An audit also includes evaluating
the appropriateness of accounting policies
used and the reasonableness of accounting
estimates made by Board, as well as
evaluating the overall presentation of the
Financial Statements.
We believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Report on Other Legal and
Regulatory Requirements
As required by Section 163 (2) of the
Companies Act No. 07 of 2007, we state the
following:
a) The basis of opinion and scope and
limitations of the audit are as stated
above.
b) In our opinion;
- We have obtained all the information
and explanations that were required for
the audit and, as far as appears from our
examination, proper accounting records
have been kept by the Company,
-
The Financial Statements of the
Company give a true and fair view of its
financial position as at 31st March 2015,
and of its financial performance and
cash flows for the year then ended in
accordance with Sri Lanka Accounting
Standards.
-
The Financial Statements of the
Company and the Group comply with
the requirements of sections 151 and 153
of the Companies Act No. 07 of 2007.
Opinion
In our opinion, the consolidated Financial
Statements give a true and fair view of the
financial position of the Group as at 31st March
2015, and of its financial performance and cash
flows for the year then ended in accordance
with Sri Lanka Accounting Standards.
Chartered Accountants
29th May 2015
Colombo.
111
112
Asian Hotels and Properties Plc
Annual Report 2014/15
Income Statement
For the year ended 31st March
In Rs.’000s
Page No.
Note
Revenue
130
5
Cost of Sales
GROUPCOMPANY
2015
2014
2015
2014
8,080,152
(3,356,728)
8,256,149 5,294,080
5,316,686
(3,239,562) (2,201,856) (2,096,108)
Gross Profit
4,723,424
5,016,587
3,092,224
3,220,578
Dividend Income
130
6
Other Operating Income
130
7
Distribution Expenses
Administrative Expenses
Other Operating Expenses
-
75,546
(207,964)
(1,776,265)
(631,760)
273,493
70,523
(108,885)
(1,179,197)
(361,448)
273,493
62,261
(118,633)
(1,126,839)
(377,721)
2,476,144
1,786,710
1,933,139
(190)
199,958
199,768
28,792
(3,287)
305,042
301,755
268,564
-
165,046
165,046
8,142
(3,249)
249,783
246,534
268,564
Profit Before Tax
131
10
2,350,653
Income Tax Expense
132
11
(263,196)
Profit for the Year
2,087,457
3,046,463
(227,952)
2,818,511
1,959,898
(153,164)
1,806,734
2,448,237
(69,025)
2,379,212
Attributable to:
Owners of the Company
Non-controlling Interest
2,397,946
420,565
2,818,511
1,806,734
-
1,806,734
2,379,212
2,379,212
-
80,523
(238,765)
(1,836,041)
(607,048)
Results from operating activities
2,122,093
Finance Cost
130
8
Finance Income
131
9
Net Finance Income
Change in Fair Value of Investment Property
138
16
Earnings Per Share
134
1,756,629
330,828
2,087,457
Rs.
12
3.97
Rs.
5.42
Rs.
Rs.
4.08
5.37
Figures in brackets indicate deductions.
The accounting policies and notes as set out in pages 118 to 161 form an integral part of these Financial Statements.
Asian Hotels and Properties Plc
Annual Report 2014/15
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31st MarchNote
In Rs.’000s
2015
Group
2014
Profit for the Year
2,087,457
2,818,511
Company
2015
2014
1,806,734
2,379,212
Other comprehensive income
Items that will never be reclassified to profit or loss
Revaluation of land and buildings
14.1-14.2
1,687,240
-
1,687,240
Re-measurement gain/(loss) on defined benefit plans
29
1,215
(4,860)
(574)
(3,768)
Deferred tax effect on actuarial valuation gain
(215)- -
Other comprehensive income for the year, net of tax
1,688,240
(4,860)
1,686,666
(3,768)
Total comprehensive income for the year, net of tax
3,775,697
2,813,651
3,493,400
2,375,444
Attributable to :
Owners of the Company
Non-controlling Interest
3,443,978
331,719
3,775,697
2,393,704
419,947
2,813,651
3,493,400
-
3,493,400
2,375,444
2,375,444
Figures in brackets indicate deductions.
The accounting policies and notes as set out in pages 118 to 161 form an integral part of these Financial Statements.
113
114
Asian Hotels and Properties Plc
Annual Report 2014/15
Statement of Financial Position
As at 31st March
In Rs.’000s
Page No.Note
GROUPCOMPANY
2015
2014
2015
2014
ASSETS
Non Current Assets
Property, Plant and Equipment
135
14
20,703,920
Lease Hold property
137
15
806,260
Investment Property
138
16
3,935,508
Intangible Assets
139
17
2,858
Investment in Subsidiary
140
18
-
Non Current Financial Assets
141
20
12,173
Other Non Current Assets
141
21
2,644
Total Non current Assets 25,463,363
18,511,385
818,664
3,904,514
5,265
-
17,027
4,786
23,261,641
17,284,527
-
2,156,608
708
660,045
8,436
2,002
20,112,326
15,053,598
2,146,264
1,002
660,045
11,391
3,264
17,875,564
Current Assets
Inventories
141
22
120,336
Trade and Other Receivables
142
23
637,985
Amounts Due from Related Parties
148
33.2
66,484
Other Current Assets
142
24
132,075
Short Term Investments
142
25
2,475,667
Cash In Hand and at Bank
499,964
Total Current Assets
3,932,511
Total Assets
29,395,874
121,019
481,912
48,863
141,475
3,134,194
430,541
4,358,004
27,619,645
86,412
322,227
31,801
88,830
2,239,351
267,245
3,035,866
23,148,192
85,146
247,463
34,717
100,725
2,647,269
289,804
3,405,124
21,280,688
3,345,117
3,345,117
3,345,117
7,883,065 7,880,070 6,432,793
12,808,756
11,110,871
12,319,823
24,036,938 22,336,058 22,097,733
3,345,117
6,391,287
10,612,101
20,348,505
Non-controlling Interest
3,388,4773,451,487
-
Total Equity
27,425,415
25,787,545
22,097,733
20,348,505
EQUITY & LIABILITIES
Equity attributable to equity holders of the parent
Stated Capital
143
26
Revenue Reserves
Other components of equity
143
27
Non Current Liabilities
Deferred tax liabilities
145
28
341,062
337,411
-
-
Employee benefit liabilities
146
29
241,873
221,234
131,873
114,664
Total Non Current Liabilities 582,935
558,645
131,873
114,664
Current Liabilities
Trade and Other Payables
147
30
682,330
Amounts Due to Related Parties
148
33.3
111,471
Income tax liabilities
147
31
144,236
Other current liabilities
147
32
332,759
Bank Overdrafts
116,728
Total Current Liabilities
1,387,524
Total Equity and Liabilities
29,395,874
626,523
87,341
111,863
317,648
130,080
1,273,455
27,619,645
I certify that the Financial Statements comply with the requirements of the Companies Act No. 7 of 2007.
Sunil Peiris
Sector Financial Controller
The Board of Directors is responsible for the preparation and presentation of these Financial Statements.
A.D. Gunewardene
Director
J.R.F. Peiris
Director
The accounting policies and notes as set out in pages 118 to 161 form an integral part of these Financial Statements.
29th May 2015
434,129
403,725
85,971
60,904
117,099
53,545
221,558223,229
59,829
76,116
918,586
817,519
23,148,192
21,280,688
Asian Hotels and Properties Plc
Annual Report 2014/15
Statement of Changes in Equity
GROUPAttributable to owners of the company
Note Stated Revaluation
Other RetainedTotalNonTotal
Capital
ReserveCapitalEarnings controllingEquity
Reserve interest
In Rs.’000s
As at 01st April 2013
Total comprehensive income
Profit for the year
Other Comprehensive Income
Total Comprehensive Income
Transactions with Owners of the Company
Transferred to Revenue Reserve (Note a)
Transferred to Revenue Reserve (Note b)
Share based payments
27.2
Final Dividend Paid - 2012/2013
13
Interim Dividend Paid - 2013/2014
13
Subsidiary dividend to
3,345,117 11,110,290
- 7,242,060 21,697,467 3,425,692 25,123,159
-
-
- 2,397,946 2,397,946
420,565
-
-
-
-
-
(4,242)
(4,242)
- 2,393,704 2,393,704
(618)
(4,860)
419,947 2,813,651
-
-
-
-
-
(4,496)
(10,911)
-
-
-
-
4,496
-
-
10,911
-
15,988
-
15,988
- (1,328,326) (1,328,326)
-
(442,775) (442,775)
-
-
1,978
17,966
- (1,328,326)
-
(442,775)
Non-controlling Interest -2012/2013
-
-
-
Subsidiary dividend to
Non-controlling Interest -2013/2014
-
-
-
As at 31st March 2014 3,345,117 11,094,883
15,988
As at 01st April 2014 3,345,117 11,094,883
15,988
Total comprehensive income
Profit for the year
-
-
-
Other Comprehensive Income
- 1,687,240
-
Total Comprehensive Income
- 1,687,240
-
Transactions with Owners of the Company
Transferred to Revenue Reserve Note (a)
-
(6,447)
Transferred to Revenue Reserve (Note b)
-
(10,911)
Share based payments
27.2
-
-
28,003
Final Dividend Paid - 2013/2014
13
-
-
-
Interim Dividend - 2014/2015
13
-
-
Subsidiary dividend to
Non-controlling Interest -2013/2014
-
-
-
Subsidiary dividend to
Non-controlling Interest -2014/2015
-
-
-
As at 31st March 2015 3,345,117 12,764,765
43,991
-
-
(226,360)
2,818,511
(226,360)
-
-
7,880,070 22,336,058
7,880,070 22,336,058
(169,770) (169,770)
3,451,487 25,787,545
3,451,487 25,787,545
1,756,629 1,756,629
109 1,687,349
1,756,738 3,443,978
330,828 2,087,457
891 1,688,240
331,719 3,775,697
6,447
-
10,911
-
-
28,003
(1,328,326) (1,328,326)
(442,775) (442,775)
-
-
1,401
29,404
- (1,328,326)
-
(442,775)
-
-
(226,360)
(226,360)
-
- (169,770) (169,770)
7,883,065 24,036,938 3,388,477 27,425,415
Note (a) According to the Sri Lanka Accounting Standard - 16 “Property, Plant and Equipment”, the Revaluation Surplus included
in the Equity can be transferred to Retained Earnings when the surplus is realised. Accordingly, the surplus realised amounting to
Rs.6.44 Mn (Rs.4.49 Mn in 2014) has been transferred directly to Retained Earnings as at the reporting date.
Note (b) According to the Sri Lanka Accounting Standard - 16 “Property, Plant and Equipment”, when the revalued asset is used by
an entity, the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the
assets the original cost is transferred from revaluation surplus to retained earnings amounting Rs.10.91 Mn. (Rs.10.91 Mn in 2014).
Figures in brackets indicate deductions.
The Notes to the Financial Statements from Pages 118 to 161 form an integral part of these Financial Statements.
115
116
Asian Hotels and Properties Plc
Annual Report 2014/15
Statement of Changes in Equity Contd.
Company
Note Stated Revaluation
Other RetainedTotal
CapitalReserveCapitalEarnings Equity
Reserve
In Rs.’000s
As at 01st April, 2013 3,345,117
Total comprehensive income
Profit for the year
-
Other Comprehensive Income
-
Total Comprehensive Income
-
Transactions with Owners of the Company
Transferred to Revenue Reserve Note (a)
-
Share based payments
27.3
-
Final Dividend Paid - 2012/2013
13
-
Interim Dividend - 2013/2014
13
-
As at 31st March, 2014
3,345,117
Total comprehensive income
Profit for the year 2013/2014
-
Other Comprehensive Income
Total Comprehensive Income
-
Transactions with Owners of the Company
Transferred to Revenue Reserve Note (a)
-
Share based payments
27.3
-
Final Dividend Paid - 2013/2014
13
-
Interim Dividend - 2014/2015
13
-
As at 31st March, 2015 3,345,117
10,602,127
- 5,782,448 19,729,692
-
-
-
-
-
2,379,212 2,379,212
(3,768)
(3,768)
2,375,444 2,375,444
(4,496)
-
-
-
10,597,631
-
4,496
14,470
-
14,470
- (1,328,326) (1,328,326)
-
(442,775) (442,775)
14,470 6,391,287 20,348,505
-
1,687,240
1,687,240
- 1,806,734 1,806,734
-
(574) 1,686,666
- 1,806,160 3,493,400
(6,447)
-
-
-
12,278,424
-
6,447
26,929
-
26,929
- (1,328,326) (1,328,326)
-
(442,775) (442,775)
41,399 6,432,793 22,097,733
Note (a) According to the Sri Lanka Accounting Standard - 16 “Property, Plant and Equipment”, the Revaluation surplus
included in the Equity can be transferred to Retained Earnings when the Surplus is realised. Accordingly, the surplus
realised amounting to Rs.6.44 Mn (Rs.4.49 Mn in 2014) has been transferred directly to Retained
Earnings as at the reporting date. (Refer Note No 27 on page 143 for details)
Figures in brackets indicate deductions.
The accounting policies and notes as set out in pages 118 to 161 form an integral part of these Financial Statements.
Asian Hotels and Properties Plc
Annual Report 2014/15
Statement of Cash Flow
For the Year Ended 31st March
In Rs.'000s
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit Before Working Capital Changes
Note
2015
A
2,698,412
(Increase) / Decrease in Inventories
(Increase) / Decrease in Trade and Other Receivables
(Increase) / Decrease Amounts Due from Related Parties
(Increase) / Decrease Other Current Assets
Increase / (Decrease) Trade and Other Payables
Increase / (Decrease) Amounts Due to Related Parties
Increase Other Current Liabilities
GROUPCOMPANY
2014
2015
2014
3,019,811
1,971,041
(1,266)
(75,222)
2,916
(18,648)
30,404
25,067
2,114
17,009
41,972
(14,581)
31,802
(62,668)
2,527
161,090
1,816,771
165,046
-
273,493
(62,853)
(8,802)
2,183,655
2,148,192
249,783
(3,249)
273,493
(54,747)
(7,344)
2,606,128
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Purchase and Construction of Property, Plant and Equipment
14.1-14.2
(1,009,938)
(673,031)
(838,093)
Addition to Investment Property
16
-
(17,200)
-
Addition to Intangible Assets
17
(800)
(622)
-
Proceeds from Sale of Property, Plant and Equipment
19,936
10,319
7,132
Proceeds from/ (Repayment of) Other Assets (Net)
6,996
2,188
4,217
Net Cash Used in Investing Activities
(983,806)
(678,346)
(826,744)
(300,645)
(17,200)
(299)
3,049
637
(314,458)
CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES
Dividend Paid to Equity Holders of Parent
13
(1,771,101)
(1,771,101)
(1,771,101)
Dividend paid to Shareholders with non-controlling Interest
(396,130)
(396,130)
-
Repayment of Long Term Borrowings
-
(1,436)
-
Net Cash Used in Financing Activities
(2,167,231)
(2,168,667)
(1,771,101)
(1,771,101)
(1,771,101)
683
(159,869)
(17,621)
(35,583)
55,807
24,130
18,896
14,158
32,222
(14,204)
74,638
(28,007)
(302)
159,263
1,851,406
Cash Generated from Operations 2,584,855
3,257,579
Finance Income received
9
199,958
305,042
Finance Cost Paid
8
(190)
(3,287)
Dividend Received
6
-
-
Tax Paid
(185,975)
(219,775)
Gratuity Paid
29
(23,363)
(18,415)
Net Cash Flow from Operating Activities
2,575,285
3,321,144
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
(575,752)
474,131
CASH AND CASH EQUIVALENTS AT THE BEGINNING
3,434,655
2,960,524
CASH AND CASH EQUIVALENTS AT THE END 2,858,903
3,434,655
(414,190)
2,860,957
2,446,767
520,569
2,340,388
2,860,957
ANALYSIS OF CASH AND CASH EQUIVALENTS
Favourable Balances
Cash and Bank
499,964
430,541
Short Term Investments
2,475,667
3,134,194
Unfavourable Balances
Bank Overdrafts
(116,728)
(130,080)
TOTAL CASH AND CASH EQUIVALENTS
2,858,903
3,434,655
267,245
2,239,351
289,804
2,647,269
(59,829)
2,446,767
(76,116)
2,860,957
A Operating Profit Before Working Capital Changes
Profit before Tax
2,350,653
1,959,898
2,448,237
Adjustments for:
Finance Income
9
Dividend Income
6
Finance Cost
8
Change in Fair Value of Investment Property
16
Depreciation of Property, Plant and Equipment
14.1-14.2
(Profit) / Loss on Disposal of Property, Plant and Equipment
Amortisation of Leasehold Properties
15
Amortisation of Intangible Assets
17
Provision /(Reversal) for Doubtful Debts
23
Gratuity Charge and Related Costs
29
Share Based Payment Expenses
27.2-27.3
Provision made on slow moving Inventory
22
(199,958)
-
190
(28,792)
482,938
(434)
12,404
3,207
3,091
44,846
29,404
863
2,698,412
(165,046)
(273,493)
-
(8,142)
283,110
1,959
-
294
460
25,437
26,929
-
1,851,406
(249,783)
(273,493)
3,249
(268,564)
266,153
6,982
359
1,262
22,169
14,470
1,971,041
3,046,463
(305,042)
-
3,287
(268,564)
455,964
4,346
12,404
3,874
8,413
40,692
17,966
8
3,019,811
Figures in brackets indicate deductions
The accounting policies and notes as set out in pages 118 to 161 form an integral part of these Financial Statements.
117
118
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements
The consolidated Financial Statements
and presentation currency, which is
Asian Hotels and Properties PLC is
have been prepared in accordance
the currency of the primary economic
a public limited liability Company
with Sri Lanka Accounting Standards
environment in which the Holding
incorporated and domiciled in Sri
(LKAS/SLFRS) laid down by the
Company operates. Each entity in
Lanka and listed on the Colombo
Institute of Chartered Accountants
the Group uses the currency of the
Stock Exchange. The registered office
of Sri Lanka and the requirements of
primary economic environment in
and principal place of business of the
Companies Act No. 7 of 2007.
which they operate as their functional
1.
REPORTING ENTITY
currency. All values are rounded to
company is located at No.77, Galle
Road, Colombo 03. The consolidated
The consolidated Financial Statements
the nearest rupees thousand (Rs.’000)
financial statements of the Company
were authorized for issue by the Board
except when otherwise indicated.
as at and for the year ended 31st
of Directors on 29th May, 2015.
(d)
March 2015 comprise the financial
Use of estimates and judgments.
information of the Company and its
(b) Bases of Measurement
The preparation of the Consolidated
subsidiary; Trans Asia Hotels PLC
The Financial Statements have been
Financial Statements in conformity
(together referred to as the ‘Group’
prepared on an accrual basis and
with LKAS/SLFRS requires
and individually as ‘Group entities’).
under the historical cost convention
management to make judgments,
except for followings.
Estimates and assumptions that affect
the application of accounting policies
The principal activities of the Company
and the Group during the year were
● Freehold Land and Buildings which
and the reported amounts of assets,
hoteliering and property development.
are measured at cost, at the time
liabilities, income and expenses.
There were no significant changes in
of acquisition are subsequently
Actual results may differ from these
the nature of the principal activities of
recognised at revalued amounts
estimates. Estimates and underlying
the Company and the Group during
which are the fair values at
assumptions are reviewed on an
the financial year under review.
the date of revaluation less
ongoing basis. Revisions to accounting
accumulated depreciation and
estimates are recognised in the period
impairment cost if any
in which the estimates are revised
The Group had 2,078 (2014 – 2,089)
employees and the Company had
● Investment properties which are
stated at fair values.
1,230 (2014- 1,234) employees as at the
Reporting date.
2. BASIS OF PREPARATION
(a)
Statement of compliance
● Defined benefit obligations are
and in any future periods affected.
Judgments made by management
in the application of LKAS/SLFRs
measured at its present value,
that have a significant effect on the
based on an actuarial valuation as
Financial Statements are mentioned
explained in Note 29.
below.
● Staff loans which are stated at
amortised cost.
The Financial Statements of the
● Valuation of property, plant and
equipment - Note (d)
Company and the Group comprise
Presentation and Functional
● Valuation of investment property -
the statements of financial position,
(c) income, profit or loss and other
Currency
comprehensive income, changes in
The Consolidated Financial
● Deferred taxation - Note (r) ii
equity and cash flows together with
Statements are presented in Sri
● Defined Benefit Plans - Note (k)
the notes to the financial statements.
Lankan Rupees, the Group’s functional
Note (f)
Asian Hotels and Properties Plc
Annual Report 2014/15
(e) Changes to Accounting
definition of fair value, it unifies the
I. Level 1: Quoted prices (unadjusted)
Policies and Adaptation of New
definition of fair value as the price
in active markets for identical
Accounting Standards
that would be received to sell an
assets or liabilities.
asset or paid to transfer liability in an
Except for the changes below, the
orderly transaction between market
Group has consistently applied the
participants at the measurement
prices included in Level 1 that are
accounting policies as set out in Note
date prospectively. The change
observable for the asset or liability,
4 to all periods presented in these
had no significant impact on the
either directly (i.e. as prices) or
Consolidated Financial Statements.
measurements of the Group’s assets
indirectly (i.e. derived from prices).
II. Level 2: Inputs other than quoted
and liabilities, but the Group has
The Group has adopted the following
included new disclosures in the
new standards and amendments to
Financial Statements, which are
or liability that are not based
standards, including any consequential
required under SLFRS 13.
on observable market data
amendments to other standards, with
III. Level 3: Inputs for the asset
(unobservable inputs).
a date of initial application of 1st April
Measurement of Fair Values:
2014:
A number of the Group’s accounting
If the inputs used to measure the
policies and disclosures require the
fair value of an asset or a liability
SLFRS 10 - ‘Consolidated
measurement of fair values for both
fall into different levels of the fair
Financial Statements’
financial and non-financial assets
value hierarchy, then the fair value
As a result of SLFRS 10, the Group
and liabilities. Company regularly
measurement is categorised in its
has changed its accounting policy for
reviews significant unobservable
entirety in the same level of the fair
determining whether it has control
inputs and valuation adjustments.
value hierarchy as the lowest level
over and consequently whether it
If third party information is used
input that is significant to the entire
consolidates other entities. SLFRS 10
to measure fair values, Company
measurement.
introduces a new control model that
assesses the evidence obtained
focuses on whether the Group has
from the third parties to support the
The Group recognises transfers
power over an investee, exposure
conclusion that such valuations meet
between levels of the fair value
or rights to variable returns from its
the requirements of SLFRS, including
hierarchy at the end of the reporting
involvement with the investee and the
the level in the fair value hierarchy
period during which the change has
ability to use its power to affect those
in which such valuations should be
occurred.
returns. The Group reassessed its
classified. Significant valuation issues
control conclusions as of 1st January
are reported to the Group’s Audit
2014. There are no changes in control
Committee. When measuring the
3.COMPARATIVE INFORMATION
conclusion from previous year.
fair value of an asset or a liability,
The presentation and classification
i. the Group uses observable market
of the Financial Statements of the
SLFRS 13 - ‘Fair Value
data as far as possible. Fair values
previous years have been amended,
Measurement’
are categorised into different levels
where relevant for better presentation
In accordance with SLFRS 13,
in a fair value hierarchy based on
and to be comparable with those of
the Group has applied the new
the inputs used in the valuation
the current year.
ii. techniques as follows:
119
120
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
4. Accounting Policies
(iii) The Accounting Policies set out below
Subsidiaries are those enterprises
On the loss of control, the Group
have been applied consistently,
controlled by the parent. Control
derecognises the assets and liabilities
except for the changes described in
exists when the parent has the power,
of the subsidiary, any non-controlling
1 (e), to all periods presented in the
directly or indirectly to govern the
interests and the other components of
Financial Statements of the Company
financial and operating policies of an
equity related to the subsidiary. Any
and the Group unless otherwise
enterprise. Subsidiaries are controlled
surplus or deficit arising on the loss of
indicated.
from the date the parent obtains
control is recognised in profit or loss.
control until the date that control
If the Group retains any interest in the
ceases. Asian Hotels and Properties
previous subsidiary, then such interest
PLC has the power to directly govern
is measured at fair value at the date
the financial and operating policies of
that control is lost. Subsequently that
Business combinations are accounted
Trans Asia Hotels PLC, accordingly
retained interest is accounted for as
for using the acquisition method as at
the entity is considered as a subsidiary
an equity-accounted investee or as
the acquisition date - i.e. when control
of Asian Hotels and Properties PLC.
an available-for-sale financial asset
is transferred to the Group. Control is
The total profits and losses for the
depending on the level of influence
the power to govern the financial and
year, of the Company and of its
retained.
operating policies of an entity so as
Subsidiaries included in consolidation
to obtain benefits from its activities. In
and all assets and liabilities of the
assessing control, the Group takes into
Company and of its Subsidiaries
consideration potential voting rights
included in consolidation are shown
Intra-group balances and transactions,
that are currently exercisable.
in the consolidated statements of
and any unrealised income and
Income, other comprehensive income
expenses arising from intra-group
and financial position respectively.
transactions, are eliminated in
NCI are measured at their
Minority interests which represents the
preparing the Consolidated Financial
proportionate share of the acquiree’s
portion of profit or loss and net assets
Statements.
identifiable net assets, which are
not held by the Group, are presented
generally at fair value at the date of
separately in the consolidated income
(b)
acquisition.
statement and within equity in the
Transactions in foreign currencies
consolidated statement of financial
are translated to the respective
Changes in the Group’s interest in
position, separately from parent
functional currencies of Group entities
a subsidiary that do not result in a
shareholders’ equity. The consolidated
at exchange rates at the dates of the
loss of control are accounted for
cash flow statement includes the
transactions. Monetary assets and
as transactions with owners in their
cash flows of the Company and its
liabilities denominated in foreign
capacity as owners. Adjustments to
Subsidiaries.
currencies at the reporting date are
(a) (i)
(ii) Basis of consolidation
Business combinations
Non-controlling interests
Subsidiaries
(iv) (v) Loss of control
Transactions eliminated on
consolidation
Foreign currency transactions
non-controlling interests are based
retranslated to the functional currency
on a proportionate amount of the net
at the exchange rate at that date.
assets of the subsidiary.
Asian Hotels and Properties Plc
Annual Report 2014/15
The foreign currency gain or loss
assets are recognised initially at fair
Loans and receivables
on monetary items is the difference
value plus, in the case of assets not
Loans and receivables are financial
between amortised cost in the
at fair value through profit or loss,
assets with fixed or determinable
functional currency at the beginning
directly attributable transaction costs.
payments that are not quoted
of the year, adjusted for effective
Purchases or sales of financial assets
in an active market. After initial
interest and payments during the
that require delivery of assets within a
measurement, such financial assets
year, and the amortised cost in foreign
time frame established by regulation
are subsequently measured at
currency translated at the exchange
or convention in the marketplace
amortised cost using the Effective
rate at the end of the year. Non-
(regular way trades) are recognised
Interest Rate method (EIR), less
monetary assets and liabilities that
on the trade date, i.e., the date that the
impairment. Amortised cost is
are measured at fair value in a foreign
Company and the Group commit to
calculated by taking into account any
currency are retranslated to the
purchase or sell the asset. However, as
discount or premium on acquisition
functional currency at the exchange
at each reporting date, the Company
and fees or costs that are an integral
rate at the date that the fair value was
and the Group hold on only the
part of the EIR. The EIR amortisation
determined. Non-monetary items that
financial assets categorised as ‘loans
is included in finance income in the
are measured based on historical cost
and receivables’.
income statement. The losses arising
in a foreign currency are translated
from impairment are recognised in the
using the exchange rate at the date
The Company and the Group initially
of the transaction. Foreign currency
recognise such loans and receivables
differences arising on retranslation are
on the date that they are originated.
recognised in profit or loss.
(i) Financial instruments
Non-Derivative Financial
De-recognition
A financial asset is de-recognised
Financial assets and liabilities are
(c) income statement in finance costs.
when:
offset and the net amount presented
in the statement of financial position
● The rights to receive cash flows
when, and only when the Company
from the asset have expired
Assets
Initial recognition and measurement
and the Group have a legal right to
Financial assets within the scope of
to settle them on a net basis or to
have transferred its rights to
LKAS 39 are classified as financial
realise the asset and settle the liability
receive cash flows from the asset
assets at fair value through profit or
simultaneously.
or has assumed an obligation to
offset the amounts and intends either
loss, loans and receivables, held-to-
● The Company and the Group
pay the received cash flows in
maturity investments, available-for-
Subsequent measurement
full without material delay to a
sale financial assets, or as derivatives
The subsequent measurement of
third party under a ‘passthrough’
designated as hedging instruments in
financial assets depends on their
arrangement; and either
an effective hedge, as appropriate. The
classification and the Company and
Company and the Group determine
the Group only hold financial assets
the classification of its financial assets
categorised as loans and receivables.
at initial recognition. All financial
a) the Company and the Group have
transferred substantially all the
risks and rewards of the asset, or
121
122
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
(b) the Company and the Group have
When a financial liability is recognised
De-recognition
neither transferred nor retained
initially, an entity shall measure it
A financial liability is de-recognised
substantially all the risks and
at its fair value plus, in the case of
when the obligation under the liability
rewards of the asset, but has
a financial liability not at fair value
is discharged or canceled or expires.
transferred control of the asset.
through profit or loss, transaction
When an existing financial liability is
costs that are directly attributable to
replaced by another from the same
When the Company and the
the acquisition or issue of financial
lender on substantially different terms,
Group have transferred its rights to
liability. The Company and the Group
or the terms of an existing liability
receive cash flows from an asset
classify financial liabilities into the
are substantially modified, such an
or has entered into a passthrough
other financial liabilities category.
exchange or modification is treated as
arrangement, and has neither
Such financial liabilities are recognised
a de-recognition of the original liability
transferred nor retained substantially
initially at fair value less any directly
and the recognition of a new liability,
all of the risks and rewards of the
attributable transaction costs.
and the difference in the respective
asset nor transferred control of it,
carrying amounts is recognised in the
the asset is recognised to the extent
Subsequent measurement
of the Company and the Group’s
The measurement of financial liabilities
continuing involvement in it. In that
depends on their classification and
Amortised cost measurement
case, the Company and the Group also
the Company and the Group only hold
The amortised cost of a financial asset
recognise an associated liability. The
financial liabilities categorised as other
or liability is the amount at which the
transferred asset and the associated
financial liabilities.
financial asset or liability is measured
liability are measured on a basis that
income statement.
at initial recognition, minus principal
reflects the rights and obligations that
Other liabilities
repayments and any impairment
the Company and the Group have
After initial recognition, other liabilities
and plus/minus the cumulative
retained
are subsequently measured at
amortisation using the effective
amortised cost using the effective
interest method of any difference
Non-Derivative Financial
interest rate method. Gains and
between the initial amount recognised
Liabilities
losses are recognised in the income
and the maturity amount.
ii) statement when the liabilities are
Initial recognition and measurement
derecognised as well as through the
Financial liabilities within the scope
effective interest rate method (EIR)
of LKAS 39 are classified as financial
amortisation process. Amortised
Basis of recognition
liabilities at fair value through profit
cost is calculated by taking into
Property, plant and equipment are
or loss, other financial liabilities, or as
account any discount or premium on
recognised if it is probable that future
derivatives designated as hedging
acquisition and fees or costs that are
economic benefits associated with the
instruments in an effective hedge, as
an integral part of the EIR. The EIR
asset will flow to the company and
appropriate. The Company and the
amortisation is included in finance
the cost of the asset can be reliably
Group determine the classification
costs in the income statement.
measured.
of its financial liabilities at initial
recognition.
(d)
Property, Plant, and Equipment
Asian Hotels and Properties Plc
Annual Report 2014/15
Basis of measurement
If an asset's carrying amount is
the estimated useful economic life of
All items of property, plant and
decreased as a result of a revaluation,
such assets. The estimated useful life
equipment are initially recorded at
the decrease shall be recognised in
of assets is as follows:
cost. Where items of property, plant
profit or loss.
and equipment are subsequently
Assets Years
revalued, the entire class of such
However, the decrease shall be
assets is revalued at fair value. The
recognised in other comprehensive
Group applies cost model to property,
income to the extent of any credit
Plant and Machinery
plant and equipment except for land
balance existing in the revaluation
Motor Vehicles
and buildings and records at cost of
surplus in respect of that asset.
Floating Restaurant
purchase or construction together
The decrease recognised in other
with any incidental expenses thereon
comprehensive income reduces the
less accumulated depreciation and
amount accumulated in equity under
any accumulated impairment losses.
the heading of revaluation surplus.
The carrying values of property
plant and equipment are reviewed
The revaluation surplus included
for impairment when events or
in equity in respect of an item of
changes in circumstances indicate
property, plant and equipment
that the carrying value may not be
may be transferred directly to
recoverable.
retained earnings when the asset is
derecognised.
The Group applies the re-valuation
model to land and buildings. The
De-recognition
Group has adopted a policy of
An item of property, plant and
revaluing assets every five years.
equipment are de-recognised upon
replacement, disposal or when no
If an asset's carrying amount is
future economic benefits are expected
increased as a result of a revaluation,
from its use.
the increase shall be recognised
in other comprehensive income
Any gain or loss arising on
and accumulated in equity under
de-recognition of the asset is included
the heading of revaluation surplus.
in the income statement in the year
However, the increase shall be
the asset is de-recognised.
recognised in profit or loss to the
extent that it reverses a revaluation
Depreciation
decrease of the same asset previously
Depreciation is calculated by using
recognised in profit or loss.
a straight-line method on the cost or
valuation of all property, plant and
equipment, other than freehold land,
in order to write off such amounts over
Buildings
75
10-20
Furniture,Furnishings
Equipment
4-10
18
5-15
Computers
Base Stock/Circulating
Assets
5
3-10
The asset’s residual values and useful
lives are reviewed, and adjusted if
appropriate, at each financial year end.
Buildings of the subsidiary are
depreciated using reducing balance
method in order to depreciate over the
balance lease period of 65 years.
Depreciation of an assets ceases at
the earlier of the date that the asset is
classified as held for sale and the date
that asset is de-recognised.
(e) Leasehold property
Prepaid lease rentals paid to acquire
land use rights are amortised over
the lease term in accordance with
the pattern of benefits provided.
Leasehold property comprising of land
use rights and stated at valuation,are
amortised on a straight line basis over
the remaining lease term.
123
124
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
Trans Asia Hotels PLC – The leasehold
Accounting Standard 40 “Investment
amortised on a straight line basis in the
land is for 99 years commencing 7th
Property” (LKAS 40).
Income Statement from the date on
August 1981 and is being amortised
which the asset was available for use,
over a period of 94 years commencing
(g) Intangible assets
over the best estimate of its useful life.
from 1st April 1986.
An intangible asset is an identifiable
The estimated useful life of software
non monitory asset without physical
is 5 years. The amortisation period
substance held for use in the
and the amortisation method for an
(f) Investment properties
production or supply goods or other
intangible asset with a finite useful life
Basis of Recognition
services, rental to others or for
are reviewed at least at each financial
Investment properties are initially
administrative purposes.An intangible
year-end.
recognised at cost. Subsequent to
asset is initially recognised at cost, if
initial recognition the Investment
it is probable that future economic
Amotisation shall cease at the earlier
Properties are stated at fair value,
benefit will flow to the enterprise, and
of the date that the asset is classified
which reflects market conditions at the
the cost of the asset can be measured
as held for sale or the date that asset
Statement of Financial Position date.
reliably. Following initial recognition,
is de-recognised.
intangible assets are carried at cost
Basis of Measurement
less any accumulated amortisation
(iii) Investment properties are revalued
and any accumulated impairment
An intangible asset is de-recognised
where necessary to ensure that
losses.
on disposal or when no future
the carrying amount does not differ
De-recognition
economic benefits are expected from
materially from fair values at the
(i) Balance Sheet date, and are revalued
All computer software costs incurred,
at least once in three years. Gains
licensed for use by the Group, which
(h) or losses arising from changes in
are not integrally related to associated
Inventories are valued at the lower
fair value are included in the profit
hardware, which can be clearly
of cost and net realisable value. Net
or loss in the year in which they
identified, reliably measured and it’s
realisable value is the estimated
arise. Investment properties are
probable that they will lead to future
selling price less estimated costs of
de-recognised when disposed of,
economic benefits, are included in
completion and the estimated costs
or permanently withdrawn from use
the Statement of Financial Position
necessary to make the sale.
because no future economic benefits
under the category intangible assets
are expected.
and carried at cost less accumulated
(i) amortisation and any accumulated
Cash and short-term deposits in
impairment losses.
the statement of financial position
Any gains or losses on retirement
Computer software
or disposal are recognised in profit
its use and subsequent disposal.
Inventories
Cash and Cash Equivalents
comprise cash at banks and on
or loss in the year of retirement or
(ii) disposal. Transfers are made to and
Intangible assets with finite lives
a maturity of three months or less.
from investment property only when
are amortised over the estimated
For the purpose of the cash flow
there is a change in use in accordance
useful economic life and assessed
statement, cash and cash equivalents
with the criteria listed in Sri Lanka
for impairment whenever there is an
consist of cash
Amortisation
indication that the intangible asset
may be impaired. Intangible assets are
hand and short-term deposits with
Asian Hotels and Properties Plc
Annual Report 2014/15
and short-term deposits as defined
whether there is objective evidence
are recognised in profit or loss and
above, net of outstanding bank
that it is impaired. A financial asset is
reflected in an allowance account
overdrafts.
impaired if there is objective evidence
against loans and receivables or
of impairment as a result of one or
held-to maturity investment securities.
more events that occurred after the
Interest on the impaired asset
The recoverable amount of an asset
initial recognition of the asset, and that
continues to be recognised. When an
or Cash Generating Unit (CGU) is
loss event(s) had an impact on the
event occurring after the impairment
the greater of its value in use and
estimated future cash flows of that
was recognised causes the amount
its fair value less costs to sell. In
asset that can be estimated reliably.
of impairment loss to decrease,
(j) Impairment
assessing value in use, the estimated
the decrease in impairment loss is
future cash flows are discounted to
Objective evidence that financial
their present value using a pre-tax
assets are impaired includes default or
discount rate that reflects current
delinquency by a debtor, restructuring
(iii)
market assessments of the time
of an amount due to the company
The carrying amounts of the Company
value of money and the risks specific
on terms that the Company and the
and the Group non-financial assets,
to the asset or CGU, or impairment
Group would not consider otherwise,
other than inventories and deferred tax
testing, assets are grouped together
indications that a debtor or issuer will
assets, are reviewed at each reporting
into the smallest group of assets
enter bankruptcy, adverse changes
date to determine whether there is
that generates cash inflows from
in the payment status of borrowers
any indication of impairment. If any
continuing use that are largely
or issuers, economic conditions
such indication exists, then the asset’s
independent of the cash inflows of
that correlate with defaults or the
recoverable amount is estimated. An
other assets or CGUs. Impairment
disappearance of an active market for
impairment loss is recognised if the
losses are recognised in profit or
a security.
carrying amount of an asset exceeds
loss. Impairment losses recognised
reversed through profit or loss.
Non-Financial Assets
its recoverable amount.
in respect of CGUs are allocated to
(ii) reduce the carrying amounts of the
Assets carried at amortised cost
other assets in the CGU (group of
The Company and the Group consider
CGUs) on a pro-rata basis.
evidence of impairment for financial
(i) Impairment losses on Financial
(k) Employee Benefits
Defined contribution plans
assets measured at amortised cost
Employees’ Provident Fund and
For other assets, an impairment loss
(loans and receivables) at specific
Employees’ Trust Fund (EPF & ETF) are
is reversed only to the extent that
asset level. All individually significant
recognised as incurred.
the asset’s carrying amount does
assets are assessed for specific
not exceed the carrying amount that
impairment.
would have been determined, net
Employees are eligible for Employees’
Provident Fund contributions and
of depreciation or amortisation, if no
An impairment loss in respect of a
Employees’ Trust Fund contributions
impairment loss had been recognised.
financial asset measured at amortised
in line with respective statutes and
cost is calculated as the difference
regulations.
(i) Impairment of Non-derivative
between its carrying amount and the
Financial Assets
present value of the estimated future
The Company and the Group
Financial assets are assessed at
cash flows discounted at the asset’s
contribute 3% of gross emoluments
each reporting date to determine
original effective interest rate. Losses
of employees to the Employees’
125
126
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
● The amount initially recognised
Trust Fund. Company contributes
constructive) as a result of a past
15 % & subsidiary contributes 12 % of
event, it is probable that an outflow
less, when appropriate, cumulative
gross emoluments of employees to
of resources embodying economic
amortisation recognised in
Employees’ Provident Fund.
benefits will be required to settle the
accordance with the guidance for
obligation and a reliable estimate
revenue recognition (LKAS 18)
(ii)
Defined benefit plans
can be made of the amount of the
A defined benefit plan is a post-
obligation. Where the Company
Contingent assets are disclosed,
employment benefit plan other than a
and the Group expect some or all
where inflow of economic benefit is
defined contribution plan.
of a provision to be reimbursed, for
probable but not virtually certain.
example under an insurance contract,
The Company and the Group are liable
the reimbursement is recognised as
(n) to pay retirement benefits under the
a separate asset but only when the
Revenue is recognised to the extent
Payment of Gratuity Act, No. 12 of 1983.
reimbursement is virtually certain. The
that it is probable that the economic
Revenue recognition
expense relating to any provision is
benefits will flow to the Group, and the
The liability recognised in the
presented in the income statement net
revenue and associated costs incurred
statement of financial position is the
of any reimbursement.
or to be incurred can be reliably
present value of the defined benefit
obligation at the reporting date.
measured. Revenue is measured at
If the effect of the time value of
the fair value of the consideration
money is material, provisions are
received or receivable, net of trade
The defined benefit obligation is
discounted using a current pre-tax
discounts and value added taxes, after
calculated by a qualified actuary
rate that reflects, where appropriate,
eliminating sales within the Group. The
as at the reporting date using the
the risks specific to the liability. Where
following specific criteria are used for
Projected Unit Credit (PUC) method
discounting is used, the increase in the
recognition of revenue:
as recommended by LKAS 19 -
provision due to the passage of time is
‘Employee Benefits’. Such actuarial
recognised as a finance cost.
(i)
(m) Contingent Assets and
Revenue is recognised on the rooms
Contingent Liabilities
occupied on daily basis and food and
The liability is not externally funded.
All contingent liabilities are disclosed
beverages and hotel related sales are
All Actuarial gains or losses are
as a note to the financial statements
accounted for at the time of sale.
recognised immediately in the other
unless the outflow of resources
comprehensive income. Under the
is remote. A contingent liability
(ii)
Payment of Gratuity Act No. 12 of 1983,
recognised in a business combination
Interest income is recognised on an
the liability to an employee arises
is initially measured at its fair value.
accrual basis.
only on completion of five-years of
Subsequently, it is measured at the
continued service.
higher of:
valuations will be carried out every
year.
Income from Hotel/
Restaurants
(iii) Interest Income
Rental Income
Rental income is recognised on an
(l) Provisions
● The amount that would be
Provisions are recognised when
recognised in accordance with the
the Company and the Group have
general guidance for provisions
a present obligation (legal or
above (LKAS 37) or
accrual basis.
Asian Hotels and Properties Plc
Annual Report 2014/15
(iv) Dividend Income
(o) Expenditure recognition
(r) Income Tax Expenses
Dividend income is recognised on a
Expenses are recognised in the
Income tax expenses comprise of
cash basis.
income statement on the basis of a
current and deferred tax.
direct association between the cost
(v) Other Gains and Losses
incurred and the earning of specific
(i) Net gains and losses of a revenue
items of income. All expenditure
The subsidiary company is liable for
nature arising from the disposal of
incurred in the running of the business
taxation at a rate of 12% in terms of
property, plant and equipment and
and in maintaining the property,
Section 46(1) of the Inland Revenue
other non current assets, including
plant and equipment in a state of
Act No.10 of 2006 and amendments
investments, are accounted for in the
efficiency has been charged to the
thereto, on its profits derived from
income statement, after deducting
income statement. For the purpose of
“promotion of tourism”.
from the proceeds on disposal, the
presentation of the income statement,
carrying amount of such assets and
the “function of expenses” method
In accordance with BOI agreement
the related selling expenses.
has been adopted, on the basis that
dated 11th March 1994 the profits and
it presents fairly the elements of the
income of the company were exempt
Company and Group’s performance.
from taxation until 2014 and at the
(vii) Other Income
Other income is recognised on an
Current Taxation
expiry of said period the following
accrual basis. Net gains and losses
(p) Guaranteed Rental
options were available for the
of a revenue nature arising from
Losses, if any, of guaranteed rentals
Company.
the disposal of property, land and
will be accounted for in the year
equipment and other non current
in which they occur. A provision
assets, including investments,
is recognised if the best estimate
assessment shall be computed at
are accounted for in the income
indicates a loss.
2% of the turnover of the Company
statement, after deducting from the
(a) Income tax payable for the year of
or;
proceeds on disposal, the carrying
(q) Segment Reporting
amount of such assets and the related
A segment is a distinguishable
Inland Revenue Laws for the time
selling expenses. Gains and losses
component of the Company that is
being imposed
arising from activities incidental to the
engaged either in providing products
main revenue generating activities
or services which are subject to
The Board of the Company resolved to
and those arising from a Group of
risks and rewards that are different
compute the income tax payable at 2%
similar transactions, which are not
from those of other segments.
of the turnover of the company with
material are aggregated, reported and
The rental income generated from
effective from 01st April 2014.
presented on a net basis. Any losses
the Commercial Centre which is
arising from guaranteed rentals are
categorised as Investment Property is
The Group is liable for Income Tax on
accounted for in the year of incurring
shown separately.
any other income at 28%.
the same. A provision is recognised if
the projection indicates a loss.
(b) To adapt the provisions of the
127
128
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
(ii) Deferred Taxation
with the Sri Lanka Accounting
The employee remuneration expense
Deferred taxation is provided using the
Standard LKAS 7. The cash and cash
resulting from the John Keells
Statement of Financial Position liability
equivalent include cash in-hand,
Holdings PLC’s share option scheme
method providing for temporary
balances with banks and money at call
to the employees of Asian Hotels and
difference between the carrying
and short notice.
Properties PlC is recognised in the
amount of assets and liabilities for
income statement of the company.
financial reporting purposes and the
(u) amounts used for taxation purposes.
The Board of Directors is responsible
a cash outflow to the company and
The amount of deferred tax provided
for the preparation and presentation of
expense recognised is met with
is based on the expected manner
the Financial Statements. This is more
a corresponding equity reserve
of realisation or settlement of the
fully described under the relevant
increase, thus having no impact on
carrying amount of assets and
clause in the Directors’ Report.
the Statement of Financial Position
Directors’ Responsibility
liabilities using tax rates enacted or
This transaction does not result in
(SOFP). The fair value of the options
substantively enacted by the reporting
(v) date. Deferred tax assets including
In accounting for employee
Keells Holdings PLC using and option
those related to tax effects of income
remuneration in the form of shares,
model and the relevant details are
tax losses and credits available to be
SLFRS 2 – Share based payments, is
communicated by the John Keells
carried forward, are recognised only
effective for the Company’s parents
Holdings PLC to all applicable
to the extent that it is probable that
entity John Keells Holdings Plc, from
subsidiary companies.
future taxable profit will be available
the financial year beginning 2013/14.
Share based payments
against which the asset can be utilised.
granted is determined by the John
(w) New accounting standards not
Deferred tax assets are reviewed at
Employees of the company receive
effective at the reporting date
each reporting date and are reduced
remuneration in the form of share
The following SLFRSs have been
to the extent that is no longer
based payment transactions, whereby
issued by the Institute of Chartered
probable that the related tax benefit
employees render services as
Accountants of Sri Lanka (CA Sri
will be realised.
consideration for equity instruments of
Lanka) that have an effective date
the Parent entity John Keells Holdings
in the future and have not been
PLC (equity settled transactions).
applied in preparing these Financial
Period
The cost of the employee services
Statements. Those SLFRSs will have
All material events after the
received in respect of the shares or
an effect on the accounting policies
reporting date has been considered
share options granted is recognised in
currently adopted by the Company
and appropriate adjustments or
the income statements over the period
and may have an impact on the future
disclosures have been made in the
that employees provide services, from
Financial Statements.
respective Notes to the Financial
the time when the award is granted up
Statements.
to the vesting date of the options. The
Standards issued but not yet
overall cost of the award is calculated
adopted which may have an impact
s) (t) Events after the Reporting
Cash Flow Statement
using the number of share options
The Cash Flow Statement has been
expected to vest and the fair value of
SLFRS 9 “Financial Instruments
prepared using the “Indirect Method”
the options at the date of grant.
Classification and Measurement”
of preparing Cash Flows in accordance
Asian Hotels and Properties Plc
Annual Report 2014/15
The objective of this SLFRS is to
The following new or amended
establish principles for the financial
standards are not expected to have
reporting of financial assets and
an impact of the Group’s Financial
financial liabilities that will present
Statements.
relevant and useful information to
users of financial statements for their
i. SLFRS 14 - Regulatory Deferral
assessment of the amounts, timing
Accounts – effective from 01st
and uncertainty of an entity’s future
January 2016
cash flows.
ii. Agriculture: Bearer Plants
An entity shall apply this SLFRS to
(Amendments to LKAS 16 and
all items within the scope of LKAS 39
LKAS 41) – effective from 01st
Financial Instruments: Recognition and
January 2016
Measurement. SLFRS 9 is effective for
annual period beginning on or after
1st January 2018 with early adoption
permitted.
The Group is assessing the potential
impact on its Financial Statements
resulting from the application of
SLFRS.
Standards issued but not yet
adopted which may not have
significant impact
SLFRS 15 Revenue from contracts with
customers – effective from 1st January
2017.
Standards issued but not yet
adopted which is not expected to
have an impact
129
130
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
For the year ended 31st March
Rs.’000
5.
2015
GROUPCOMPANY
2014
2015
2014
REVENUE
Gross Revenue
Value Added Tax
Net Revenue
9,095,286
(1,015,134)
8,080,152
9,301,184
(1,045,035)
8,256,149
5,951,652
(657,572)
5,294,080
5,976,629
(659,943)
5,316,686
For the year ended 31st MarchCOMPANY
In Rs.’000s
2015
2014
6.
DIVIDEND INCOME
Dividend from Subsidiary (Trans Asia Hotels PLC)
273,493
273,493
273,493
273,493
For the year ended 31st March
GROUPCOMPANY
In Rs.’000s2015201420152014
7.
OTHER OPERATING INCOME
Exchange Gain
13,386
19,172
7,213
12,989
Profit/(Loss) on Disposal of Property, Plant & Equipment
434
(4,347)
(1,959)
(6,983)
Car Park Income
19,949
16,944
19,949
16,944
Promotional Income
20,674
18,658
20,674
18,658
Taxi Line Commission
9,445
11,397
9,445
11,397
Sundry Income
16,635
13,722
15,201
9,256
80,523
75,546
70,523
62,261
For the year ended 31st March
In Rs.’000s
8.
GROUPCOMPANY
2015
2014
2015
2014
FINANCE COST
Finance cost on other financial instruments
190
3,287
-3,249
190
3,287
-
3,249
Asian Hotels and Properties Plc
Annual Report 2014/15
For the year ended 31st March
In Rs.’000s
9.
2015
GROUPCOMPANY
2014
2015
2014
FINANCE INCOME
Interest income on a loan to employees
Income from short term investments
2,028
197,930
199,958
For the year ended 31st March
In Rs.’000s
2015
2,197
302,845
305,042
2,028
163,018
165,046
2,197
247,586
249,783
GROUPCOMPANY
2014
2015
2014
10. PROFIT BEFORE TAX
Profit Before Tax is stated after charging all expenses
including the following
Remuneration to Executive Directors
59,211
Remuneration to Non-Executive Directors
10,335
55,327
6,000
59,211
4,770
55,327
2,880
Remuneration to Auditors
Audit fee
1,567
Audit related service - fee
190
1,500
465
1,000
133
960
335
Defined benefit plan cost
44,846
39,732
25,437
22,169
Defined contribution plan cost - EPF and ETF
124,544
116,334
81,573
74,089
Staff Expenses
1,350,533
1,174,055
810,535
700,534
Depreciation of Property, Plant and Equipment
482,938
455,964
283,110
266,153
Amortisation Lease Hold Property
12,404
12,404
-
Donations
26,932
21,087
16,089
13,983
Amortisation of Intangible Assets
3,207
3,912
294
397
Impairment losses on Trade and other receivables
3,0918,413 460
1,262
131
132
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
For the year ended 31st March
In Rs.’000s
11.
2015
GROUPCOMPANY
2014
2015
2014
INCOME TAX EXPENSE
Current income tax
Current tax charge (Note 11.1)
Provision for Deferred tax (Note 11.2)
10% Withholding tax on inter company dividends
229,372
3,436
30,388
263,196
189,466
8,098
30,388
227,952
153,164
-
-
153,164
69,025
69,025
The profits of Trans Asia Hotels PLC, being involved in the promotion of tourism has been taxed on its adjusted profit at 12%
in terms of the Inland Revenue Act Number 10 of 2006 and the amendment thereto. Income Tax on other income has been
provided at the normal tax rate of 28% (2014 - 28%).
In accordance with BOI agreement dated 11th March 1994 the profits and income of the company were exempt from
taxation until year 2014.
“The Board of Directors of the Asian Hotels and Properties PLC (Company) resolved to compute the income tax payable at
2% of the turnover of the company with effective from 1st April 2014.
Income Tax of Asian Hotels and Properties PLC (Company) on other income has been provided at the normal tax rate of 28%
(2014 -28%).
Asian Hotels and Properties Plc
Annual Report 2014/15
For the year ended 31st March
In Rs.’000s
11.1 Reconciliation between Income Tax
Expense and the Product of Accounting Profit
Profit Before Tax
Exempt Profits
Disallowable expenses
Accounting profit / (loss) chargeable to income taxes
2015
2,350,653
(275,563)
3,841,440
5,916,530
GROUPCOMPANY
2014
2015
2014
3,046,463
(2,202,644)
-
843,819
1,959,898
(274,549)
3,841,440
5,526,789
2,448,237
(2,201,718)
246,519
Disallowable expenses
Tax effect on chargeable profits
246,906
190,583
153,138
Tax effect on disallowable Expenses
3,3725,298
-
Tax effect on aggregate Allowable expenses
(2,478)
-
-
Qualifying Payment Relief
-(170) -
Tax effect on adjustment to opening Deferred tax liability
(1,681)(20) -
Under provision for previous years
(13,311)1,873 26
Tax on inter company dividend
30,38830,388
-
263,196
227,952
153,164
69,025
69,025
Income Tax charged at
Standard rate 28% - CSE Listed Companies (2014 - 28%)
70,680
98,885
45,857
Other concessionary rates (2% on Revenue)
107,281
-
107,281
Concessionary rate of 12% - (2014 - 12%)
64,722
88,708
-
Under provision for previous years
(13,311)1,873 26
Current income tax charge
229,372
189,466
153,164
69,025
69,025
133
134
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
For the year ended 31st March
In Rs.’000s
11.2 Provision for Deferred Tax
Deferred Tax arising from
Accelerated Depreciation for tax purposes
Post-Employment Medical Benefits
Total Deferred Tax Charge
Impact of actuarial adjustment on gratuity
Total Deferred Tax Charge (Reverse)
2015
GROUPCOMPANY
2014
2015
2014
4,064
9,123
-
(628)(1,025)
-
3,436
8,098
-
215--
3,651
8,098
-
-
Deferred tax liability have been computed taking in to consideration the tax rate of 12% applicable for the tourism industry.
12.
EARNINGS PER SHARE
The Basic Earnings per Share is based on the profit attributable to Asian Hotels & Properties PLC.
For the year ended 31st March
In Rs.’000s
Net Profit for the Year
Number of Ordinary Shares
Basic Earnings per Share (Rs.)
For the year ended 31st March
In Rs.’000s
13.
2015
GROUPCOMPANY
2014
2015
2014
1,756,629
2,397,946
1,806,734
2,379,212
442,775
442,775
442,775
442,775
3.975.424.085.37
2015
GROUPCOMPANY
2014
2015
2014
DIVIDEND PER SHARE
Final Dividend Paid - 2012/2013
Interim Dividend Paid - 2013/2014
Final Dividend Paid - 2013/2014
Interim Dividend - 2014/2015
Total Dividends
Dividend Per Share (Rs.)
-
-
1,328,326
442,775
1,771,101
4.00
1,328,326
442,775
-
-
1,771,101
4.00
-
-
1,328,326
442,775
1,771,101
4.00
1,328,326
442,775
1,771,101
4.00
Asian Hotels and Properties Plc
Annual Report 2014/15
Outdoor
Plant &
Base
Furniture,
As at 31 st March
Car park
Machinery
Stock &
Fittings &
Freehold Land
Buildings
In Rs. ‘000sDevelopment
14.
Circulating
Motor
Vehicles Equipment Capital
Total
Total
Work In
2015
2014
Progress
PROPERTY, PLANT
AND EQUIPMENT
14.1Group
Cost or Valuation
At the Beginning of the Year
10,018,325
6,441,156
11,783
1,278,154
1,339,063
1,823,396
79,617
Additions
-
32,442
-
167,802
137,269
177,551
8,571
486,303
Disposals
-
-
-
(121,580)
(49,658)
(82,320)
(7,613)
-
1,212,945
474,295
-
-
-
-
-
-
Revaluation
-
(160,097)
-
-
-
-
-
-
Transfers to investment property -
-
-
(20,173)
-
(2,094)
-
-
Revaluations Gain
12,988 21,004,482 20,427,841
673,517
1,009,938
(96,390)
(261,171)
-
1,687,240
Depreciation adjustment on
Transfers from work-in-progress
At the End of the Year
-
18,744
-
41,971
-
23,852
-
11,231,270
6,806,540
11,783
1,346,174
1,426,674
1,940,385
80,575
(84,567)
-
(160,097)
(22,267)(486)
-
414,724 23,258,125 21,004,482
Accumulated Depreciation
At the Beginning of the Year
-
122,792
4,323
712,948
781,875
846,608
24,549
-
2,493,095
2,118,858
Charge for the Year
-
125,303
1,178
50,055
176,242
121,742
8,418
-
482,938
455,964
Disposals
-
-
-
(117,359)
(42,580)
(74,115)
(7,613)
-
(241,667)(81,725)
Revaluations
-
(160,097)
-
-
-
-
-
-
(160,097)
Transfers to investment property -
-
-
(18,412)
-
(1,652)
-
-
(20,064)
At the End of the Year
-
87,998
5,501
627,232
915,537
892,583
25,354
-
2,554,205
2,493,097
Carrying Value
As at 31st March 2015
11,231,270
6,718,542
6,282
718,942
511,137
1,047,802
55,221
As at 31st March 2014
10,018,325
6,318,364
7,460
565,206
557,188
976,788
55,068
Note-14.1. a
414,724 20,703,92012,988
-
18,511,385
Freehold Land and Buildings of the Parent were valued by M/s. P.B. Kalugalagedara & Associates, an independent Chartered Valuer as at 31st
March 2015, and the book values were written up to correspond with the valuation.
Had the revalued Buildings of the Group been included at cost, the carrying value of the said asset would amount to Rs. 4,507 Mn. (Rs. 4,368 Mn in
2014) Had the revalued Land of Group been included at cost, the carrying value of the said asset would amount to Rs. 470 Mn. (Rs. 470 Mn in 2014).
(Details of the fair value hierarchy is given in note 14.3).
Note-14.1. b
Details of Groups’ Land and Building stated at valuation are indicated below
Property
Land /Building Extent
Location
Land 1
A08 - R0- P05.08
No 77, Galle Road, Colombo 03
Building- Stage(1)
348,818 Sq Ft
No 77, Galle Road, Colombo 03
Building- Stage (11) & (111)
299,975 Sq Ft
No 77, Galle Road, Colombo 03
Company
Building 1
145,196 Sq Ft
No 89, Galle Road, Colombo 03
Subsidiary
Building 1
55,548 Sq Ft
No. 117, Sir Chittampalam A. Gardiner
Mawatha, Colombo 02.
Land
A01 - R02- P30.0
No. 117, Sir Chittampalam A. Gardiner
Mawatha, Colombo 02.
Building 1
316,067 Sq Ft
No. 115, Sir Chittampalam A. Gardiner
Mawatha, Colombo 02.
Land
A05 - R02- P34.28
No. 115, Sir Chittampalam A. Gardiner
Mawatha, Colombo 02.
Free hold Land and Building
Company
Investment Properties
Lease hold Properties
Subsidiary
135
136
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
Note-14.1. c
The vessel of floating restaurant of the Subsidiary has been classified under Motor Vehicles.
Note-14.1. d
The cost of the fully depreciated assets in the Group which are still in use of the Company amounting Rs. 1,021.07 Mn. (in 2014 Rs. 390.58 Mn).
Note-14.1. e
There are no assets pledged that required to disclose in the Group.
Note-14.1. f
Transfer to investment Property
During 2015, equipment were transferred to investment property (See Note 16), because it was no longer used by the Group and it was decided
that the equipment would be leased to a third party.
Immediate before the transfer the Group remeasured the property to fair value and note changes with carrying value of assets.
Outdoor
Plant &
Base
Furniture,
Motor
Capital
Total
Total
As at 31 st March
Car park
Machinery
Stock &
Fittings &
Vehicles
Work In
2015
2014
In Rs. ‘000sDevelopment
Circulating
Equipment
Progress
4,441 16,400,740
16,162,137
14.
Freehold Land
Buildings
PROPERTY, PLANT
AND EQUIPMENT
(contd.)
14.2Company
Cost or Valuation
At the Beginning of the Year
10,018,325
3,923,265
11,783
780,572
578,178
1,069,419
14,757
Additions
-
10,099
-
126,129
87,103
141,864
-
472,898
Disposals
-
-
-
(112,827)
(36,448)
(50,519)
-
-
1,212,945
474,295
-
-
-
-
-
-
Revaluation
-
(160,097)
-
-
-
-
-
-
Transfers to investment property
-
-
-
(20,173)
-
(2,094)
-
-
Revaluations Gain
838,093
301,131
(199,794)
(62,042)
1,687,240-
Depreciation adjustment on
Transfers from work-in-progress
-
(160,097)
(22,267)-
-
17,616
-
41,971
-
23,852
-
11,231,270
4,265,178
11,783
815,672
628,833
1,182,522
14,757
At the Beginning of the Year
-
79,962
4,323
470,669
286,246
497,507
8,434
-
1,347,141
1,132,998
Charge for the Year
-
80,135
1,178
29,265
94,384
75,197
2,951
-
283,110
266,153
Disposals
-
-
-
(111,935)
(32,819)
(45,948)
-
-
(190,702)(52,009)
Revaluations
-
(160,097)
-
-
-
-
-
-
(160,097)-
Transfers to investment property
-
-
-
(18,412)
-
(1,652)
-
-
At the End of the Year
-
-
5,501
369,587
347,811
525,104
11,385
-
At the End of the Year
(83,439)
(486)
-
393,900 18,543,915 16,400,740
Accumulated Depreciation
(20,064)1,259,388
1,347,142
Carrying Value
As at 31st March 2015
11,231,270
4,265,178
6,282
446,085
281,022
657,418
3,372
As at 31st March 2014
10,018,325
3,843,303
7,460
309,903
291,932
571,912
6,323
Note-14.2 a
393,900 17,284,5274,441
- 15,053,598
Freehold Land and Buildings of the Company were valued by M/s. P. B. Kalugalagedara & Associates, an independent Chartered Valuer as at 31st
March 2015, and the book values were written up to correspond with the valuation.
Had the revalued Buildings of the company been included at cost, the carrying value of the said asset would amount to Rs. 3,149 Mn. (Rs. 3,170 Mn
in 2014) Had the revalued Land been included at cost,the carrying value of the said asset would amount to Rs. 470 Mn. (Rs. 470 Mn in 2014).
Note-14.2 b The cost of the fully depreciated assets which are still in use of the Company amounting Rs. 467.19 Mn. (in 2014 Rs. 666.17 Mn).
Note-14.2 c There are no assets pledged that required to disclose in the Company.
The Company has started construction of new human resource building and cost incurred up to 31st March 2015 totaling to 312.5 Mn (2014:Nil) .
Asian Hotels and Properties Plc
Annual Report 2014/15
Method of
valuation
Effective date
of valuation
Property
valuer
Open market value
method
31-Mar-2013
P B Kalugalagedara,
Chartered Valuation Surveyor
Investment
Summation basis
31-Mar-2015
P B Kalugalagedara,
Chartered Valuation Surveyor
137
14.3 Details of Group’s land, building
and other properties stated at valuation
are indicated below;
Buildings on leasehold land of
Trans Asia Hotels PLC.
Land and building of
Asian Hotels and Properties PLC.
(i) Fair Value Hierarchy
The fair value of property was determined by an external independent property valuer, having appropriate recognised
professional qualifications and recent experience in the location and category of the property being valued.
The fair value measurement for all of properties has been categorised as level 03 fair value based on the input to the
valuation technique used.
(ii) Valuation Technique and Significant Unobservable Inputs
The following table shows the valuation technique used in measuring the fair value of property, as well as the significant
unobservable inputs used:
Valuation Technique
Significant Unobservable Inputs
Interrelationship between Key
Unobservable Inputs and Fair Value
Measurements
Open market value method;
Estimated open market price per square feet
Positive correlated sensitivity
Summation method;
Estimated constructed cost per square feet
Positive correlated sensitivity
Group
As at 31st March
2015
2014
In Rs. ‘000s
15.LEASEHOLD PROPERTY
At the beginning of the year
Amortisation for the year
At the end of the year
818,664
(12,404)
806,260
831,068
(12,404)
818,664
The leasehold property is amortised on a straight line basis over 74 years. The remaining period of lease as at 31st March
2015 was 65 years.
Land extentLeaseGroup
Property
(in acres)
period
In Rs. ‘000s
2015
2014
15.1 Details of leasehold property
Trans Asia Hotels PLC.
806,260
818,664
Colombo 7.65
99 years from 07-08-1981
806,260
818,664
138
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
As at 31st March
In Rs. ‘000s
Group
2015
2014
Company
2015
2014
16.INVESTMENT PROPERTY
At the beginning of the year
3,904,514
3,618,750
2,146,264
1,860,500
Additions
-
16,714
-
16,714
Net transfers from PPE
2,202
486
2,202
486
Change in fair value during the year
28,792
268,564
8,142
268,564
At the end of the year
3,935,508
3,904,514
2,156,608
2,146,264
16.1 Valuation details of investment property
Investment properties of the Group were valued by a qualified professional valuer as at 31st March 2015, Details of which
are as follows;
In order to adopt the Fair Value model on Investment Property, as per Sri Lanka Accounting Standard 40 “Investment
Property” the Land & Building classified as Investment Property of Asian Hotels and Properties PLC which includes Crescat
Boulevard was valued by Mr. P.B. Kalugalagedera, a Chartered Valuation Surveyor using investment method of valuation on
01st of April 2005 (date of adoption of the Standard), 31st March 2006, 31st March 2007, 31st March 2009, 31st March 2011,
31st March 2012,31st March 2013,31st March 2014 and 31st March 2015 respectively.
The Commercial Centre of Trans Asia Hotels PLC was valued by Messrs. A.Y. Daniel and Sons, a Professional Valuer using
accredited contractor (cost) method of valuation on 1st April 2005, 31st March 2006, 31st March 2009 respectively. The
Commercial Centre of Trans Asia Hotels PLC was valued by Mr. P.B. Kalugalagedera, a Chartered Valuation Surveyor using
the Market Value Method on 31st March 2011, 31st March 2012,31st March 2013 and 31st March 2015 respectively.
Changes in the values are recognised as gains in profit or loss. All gain are unrealised.
Rental Income earned from Investment Property by the Company and Group amounted to Rs. 309 Mn (2014 Rs. 288 Mn) and
Rs. 370 Mn (2014 Rs. 349 Mn) respectively. Direct Operating Expenses incurred by the Company and Group amounted to
Rs. 72 Mn (2014 Rs. 79 Mn) and Rs. 78Mn (2014 Rs. 86 Mn) respectively.
The significant assumptions used by the valuer in the years 2014 and 2015 are as follows;
As at 31 MarchMethod of
Property
Valuation
Asian Hotels and Properties PLC.
Crescat Boulevard, Colombo 3
Income capitalisation approach
Trans Asia Hotels PLC. *
Commercial Centre, Colombo 2
Open market value based on annual rent
Asian Hotels and Properties Plc
Annual Report 2014/15
16.2 (i) Fair Value Hierarchy
The fair value of property was determined by an external independent property valuer, having appropriate recognised
professional qualifications and recent experience in the location and category of the property being valued.
The fair value measurement for all of properties has been categorised as level 03 fair value based on the input to the
valuation technique used.
(ii) Valuation Technique and Significant Unobservable Inputs
The following table shows the valuation technique used in measuring the fair value of investment property, as well as the
significant unobservable inputs used:
Valuation Technique
Significant Unobservable Inputs
Interrelationship between Key
Unobservable Inputs and Fair Value
Measurements
Income capitalisation approach
Estimated net rental income and rental
period
Positively correlated sensitivity
Open market value based on annual
rent
Estimated market rental rate per square Positively correlated sensitivity
feet and rental period
As at 31st March
In Rs. ‘000s
17.
2015
GROUPCOMPANY
2014
2015
2014
INTANGIABLE ASSETS
Computer Software
Cost
At the Beginning of the Year
33,426
32,804
9,009
8,710
Additions
800
1,020
-
697
Transfers
-
(398)
-
(398)
At the End of the Year
34,226
33,426
9,009
9,009
Accumulated Amortisation
At the Beginning of the Year
28,161
24,287
8,007
7,648
Amortisation
3,207
3,912
294
397
Transfers
-
(38)
-
(38)
At the End of the Year
31,368
28,161
8,301
8,007
Carrying value
As at 31 March
2,858
5,265
708
1,002
139
140
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
18. INVESTMENTS IN SUBSIDIARIES
2015
Number of
shares
Trans Asia Hotels PLC At Cost (Quoted)
86,823,028
2014
Number of
shares
Trans Asia Hotels PLC At Cost (Quoted)
86,823,028
Effective
Cost of
holding %Investment
43.41%
Market
Value
660,045
8,161,365
Effective
Cost of
holding %Investment
Market
Value
43.41%
660,045
6,937,160
NCI in subsidiary
The following table summarises the information relating to the Group's subsidiary that has NCI.
NCI percentage56.59%56.59%
2015
2014
Non current assets
3,401,673
Current assets
507,743
Non current liabilities
(255,255)
Current liabilities
(265,684)
Net assets
3,388,477
Carrying amount of NCI
3,388,477
3,421,500
539,398
(251,249)
(258,162)
3,451,487
3,451,487
Revenue
1,576,638
Profit
330,827
Other comprehensive income
891
Total Comprehensive income allocated to NCI
331,718
1,663,442
420,566
(618)
419,948
Cash flow from operating activities
395,154
Cash flow from investing activities
(90,453)
Cash flow from financing activities
(396,130)
Net increase in cash and cash equivalents
(91,429)
576,655
(206,804)
(396,130)
(26,279)
As at 31st March
In Rs. ‘000s
2015
GROUPCOMPANY
2014
2015
2014
19.LONG TERM INVESTMENTS
Sri Lanka Hotel & Tourism
(-) Fall in value of the Investment
100
(100)
-
100
(100)
-
100
(100)
-
100
(100)
-
The Company has fully provided for the above investment during the year 2009/2010, due to the non recoverability of the
same.
Asian Hotels and Properties Plc
Annual Report 2014/15
As at 31st March
In Rs. ‘000s
2015
141
GROUPCOMPANY
2014
2015
2014
20.Non Current Financial Assets
20.1 Loans to executives
At the beginning of the year
22,457
26,651
15,617
18,041
Loans granted / (transfers)
10,075
7,486
4,525
3,286
Recoveries
(15,362)
(11,680)
(7,854)
(5,710)
At the end of the year
17,170
22,457
12,288
15,617
Receivable within one year
4,997
5,430
3,852
4,226
Receivable between one and five years
12,173
17,027
8,436
11,391
17,170
22,457
12,288
15,617
As at 31st March
In Rs. ‘000s
2015
GROUPCOMPANY
2014
2015
2014
21. Other Non Current Assets
2,644
4,786
2,002
3,264
As at 31st March
In Rs. ‘000s
22.
GROUP
2015
2014
COMPANY
2015
2014
INVENTORIES
Food & Beverage
80,167
78,866
53,833
51,271
General
10,899
11,684
8,748
8,898
Diesel/ Furnace/ Gas Stock
14,069
13,197
8,951
8,477
Engineering Stock
23,246
24,454
14,880
16,500
Inventory Slow-moving Provision
(8,045)
(7,182)
-
At the End of the Year
120,336
121,019
86,412
85,146
142
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
As at 31st March
In Rs.’000s
Group
2015
2014
Company
2015
2014
23. TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Less: Impairment
Impairment
At the beginning of the year
Provision for the year
Written off during the year
At the end of the year
As at 31st March
In Rs.’000s
616,048
463,460
316,642
248,335
50,560
43,984
22,459
15,542
(28,623)(25,532)(16,874)(16,414)
637,985481,912322,227
247,463
25,532
3,549
(458)
28,623
17,119
8,480
(67)
25,532
Group
2015
2014
Prepayments and non cash receivables
77,592
WHT Recoverable
20,438
ESC Recoverable
3,284
Advance to Creditors
30,761
132,075
72,492
29,616
14,651
24,716
141,475
16,414
508
(48)
16,874
15,153
1,328
(67)
16,414
Company
2015
2014
24. OTHER CURRENT ASSETS
As at 31st March
In Rs.’000s
Group
2015
2014
2,475,667
2,475,667
3,134,194
3,134,194
50,344
16,240
3,284
18,962
88,830
41,200
24,688
14,651
20,186
100,725
Company
2015
2014
25. SHORT TERM INVESTMENTS
Fixed & Call deposits
2,239,351
2,239,351
2,647,269
2,647,269
Asian Hotels and Properties Plc
Annual Report 2014/15
Group
Company
20152014
20152014
Number ValueNumber Value Number ValueNumber Value
ofofofofofofofof
As at 31st March
sharessharessharessharessharessharessharesshares
In ‘000sRs.Rs.Rs.Rs.
26. STATED CAPITAL
3,345,117
442,775
2015
2014
Company
2015
2014
Revaluation reserve
27.1
12,764,765
Share based payments
27.2
43,991
12,808,756
11,094,883
15,988
11,110,871
442,775 3,345,117
442,775
3,345,117
As at 31st March
In Rs.’000sNote
27.
442,775
Group
3,345,117
OTHER COMPONENTS OF EQUITY
27.1 Revaluation reserve
At the Beginning of the Year
Transferred to Revenue Reserve
Transferred to Revenue Reserve
Revaluation gain on Freehold Land & Buildings
At the End of the Year
12,278,424
41,399
12,319,823
11,094,883
11,110,290 10,597,631
(6,447)(4,496)(6,447)
(10,911)(10,911)
-
1,687,240-
1,687,240 12,764,765
11,094,883 12,278,424
10,597,631
14,470
10,612,101
10,602,127
(4,496)
10,597,631
27.2 Share-based payment plans - Group
Employee Share Option Scheme
Under the John Keells Group’s Employees Share Option scheme (ESOP), share options of the parent are granted to senior
executives of the Company with more than 12 months of service. The exercise price of the share options is equal to the
30 day volume weighted average market price of the underlying shares on the date of grant. The share options vest over
a period of four years and is dependent on a performance criteria and a service criteria. The performance criteria being
a minimum performance achievement of “Met Expectations” and service criteria being that the employee has to be in
employment at the time the share options vest. The fair value of the share options is estimated at the grant date using a
binomial option pricing model, taking into account the terms and conditions upon which the share options were granted.
The contractual term for each option granted is five years. There are no cash settlement alternatives. The Group does not
have a past practice of cash settlement for these share options.
143
144
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
The expense recognised for employee services received during the year is shown in the following table:
2015
2014
At the beginning of the year
Expense arising from equity-settled share-based payment transactions
Total expense arising from share-based payment transactions
At the end of the year
17,96629,404
17,966
29,404
17,966
47,37017,966
Movements in the year
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share
options during the year:
20152014
No.WAEPNo.WAEP
Outstanding at 1st April
598,385
253.16
-
Granted during the year
562,227
229.93
615,692
253.16
Forfeited during the year
-
-
(17,307)
253.16
Exercised during the year
-
-
253.16
Expired during the year
(118,985)
241.61
-
Transfers
(25,499)253.16
Outstanding at 31st March
1,016,128
241.08
598,385
253.16
Exercisable at 31st March
151,125
253.16
Fair value of the share option and assumptions
The fair value of the share options is estimated at the grant date using a binomial option pricing model, taking into account
the terms and conditions upon which the share options were granted.
The valuation takes into account factors such as stock price, expected time to maturity, exercise price, expected volatility of
share price, expected dividend yield and risk free interest rate.
27.3 Share-based payment plans - Company
Employee Share Option Scheme
The expense recognised for employee services received during the year is shown in the following table:
2015
2014
At the beginning of the year
Expense arising from equity-settled share-based payment transactions
Total expense arising from share-based payment transactions
At the end of the year
14,47026,929
14,470
26,929
14,470
41,39914,470
Asian Hotels and Properties Plc
Annual Report 2014/15
145
Movements in the year
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share
options during the year:
2015201520142014
No.WAEPNo.WAEP
Outstanding at 1st April
495,466
253.16
-
Granted during the year
507,790
229.93
495,466
253.16
Forfeited during the year
-
-
253.16
Exercised during the year
253.16
Expired during the year
(32,573)
241.61
-
Transfers
(25,499)
253.16
Outstanding at 31st March
945,184
241.08
495,466
253.16
Exercisable at 31st March
123,867
253.16
Group
As at 31st March
2015
2014
In Rs.’000s
28. DEFERRED TAXATION
At the Beginning of the Year
Charge for the Year
At the End of the Year
337,411
3,651
341,062
329,313
8,098
337,411
The closing Deferred Tax liability relates to the followings
Group
As at 31st March
2015
2014
In Rs.’000s
Revaluation of Land and buildings to Fair value
47,960
47,960
Accelerated Depreciation for tax purposes
306,302
302,239
Employee Benefit Liability
(13,200)(12,788)
341,062
337,411
In accordance with the BOI agreement dated 11th March 1994 the profits and income of the Company were exempt
from taxation till year 2014, and at the expiry of said period the following options were available for the Company.
(a) Income tax payable for the year of assessment shall be computed at 2% of the Turnover of the Company or;
(b) The provisions of the Inland Revenue Laws for the time being imposed shall apply.
Since the Company elected for option (a) no Deferred Tax liability will arise even after the expiry of the tax exemption
period.
146
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
As at 31st March
In Rs.’000s
Group
2015
2014
Company
2015
2014
29. EMPLOYEE BENEFIT LIABILITIES
At the beginning of the year
221,234
194,097
114,664
96,071
Current service cost
20,510
22,384
12,824
11,601
Interest cost on benefit obligation
24,336
18,308
12,613
10,568
Payments
(23,363)
(17,049)
(8,802)
(5,977)
(Gain)/Loss arising from changes in assumptions
(1,215)
4,860
574
3,768
Transfers
371
(1,366)
-
(1,367)
At the end of the year
241,873
221,234
131,873
114,664
The employee benefit liability of the Company and Group is based on the actuarial valuations carried out as at 31st March
2015 by Mr. M. Poopalanathan, AIA, Messers. Actuarial & Management Consultant (Pvt) Ltd; a firm of professional actuaries.
The principal assumptions used in determining the cost of employee benefits were:
2015
2014
Discount rate
10%11%
Future salary increases
8%10%
29.1 Sensitivity of assumptions used
If a one percentage point change in the assumed discount rate would have the following effects:
In Rs.’000s
Increase by one percentage point
Decrease by one percentage point
Discount rate
Salary increment
20152015
GroupCompany
GroupCompany
8,146
3,582
(13,746)(8,763)
(14,557)(9,258)
9,0604,133
29.2 Maturity analysis of the payments
The following payments are expected on employee benefit liabilities in future years
20152014
Group
Company
Group
Company
within the next 12 months
37,742
19,260
30,752
15,805
Between 1-2years
61,186
31,084
57,75632,355
Between 2-5years
62,318
32,966
58,83529,508
Between 5-10 years
58,136
36,039
51,82529,136
Beyond 10 years
22,491
12,524
22,0667,860
Total
241,873
131,873
221,234114,664
Asian Hotels and Properties Plc
Annual Report 2014/15
As at 31st March
In Rs.’000s
Group
2015
2014
147
Company
2015
2014
30. TRADE AND OTHER PAYABLES
Trade Payables
193,680
177,073
124,058
111,271
Payable to Contractors
-
2,744
-
2,744
Retention on Construction
45,762
21,560
45,762
21,560
Accrued Expenses
140,593
139,275
31,657
51,007
Other Creditors
302,295
285,871
232,652
217,143
682,330
626,523
434,129
403,725
As at 31st March
In Rs.’000s
31.
Group
2015
2014
Company
2015
2014
INCOME TAX LIABILITIES
At the beginning of the year
Charge for the year
Payments and set off against refunds
At the end of the year
As at 31st March
In Rs.’000s
111,863
229,372
(196,999)
144,236
65,252
189,466
(142,855)
111,863
Group
2015
2014
81,913
155,611
95,235
332,759
66,105
156,803
94,740
317,648
53,545
153,164
(89,610)
117,099
69,025
(15,480)
53,545
Company
2015
2014
32. OTHER CURRENT LIABILITIES
Other tax payables
Banquet Advanced
Other Advanced
38,156
95,553
87,849
221,558
45,347
89,978
87,904
223,229
148
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
33. RELATED PARTY disclosures
Group carried out transactions in the ordinary course of business with parties who are defined as related parties
as per LKAS 24 "Related Party Disclosure".
33.1 Parent and Ultimate Controlling Party
The Company’s Ultimate Parent Undertaking and controlling party is John Keells Holding PLC.
The amounts receivable from or payable to related parties as at 31st March 2015, are below,
As at 31st March
In Rs. ’000s
Group
2015
2014
Company
2015
2014
33.2 Amounts due from related parties
Parent-John Keells Holdings PLC
1,303
1,591
56
1,129
Subsidiary-Trans Asia Hotels PLC
-
- 505 15
Associates
-
36
-
36
Companies under common control of JKH PLC
65,181
47,236
31,240
33,537
66,484
48,863
31,801
34,717
As at 31st March
In Rs. ’000s
Group
2015
2014
Company
2015
2014
33.3 Amounts due to related parties
Parent-John Keells Holdings PLC
3,925
5,106
3,005
2,742
Subsidiary-Trans Asia Hotels PLC
-
-
76
263
Companies under common control of JKH PLC
107,546
82,235
82,890
57,899
111,471
87,341
85,971
60,904
Asian Hotels and Properties Plc
Annual Report 2014/15
33.4 Transactions with related parties
The Group and Company carried out transactions with the following related entities.
For the year ended 31st March
In Rs.’000s
Group
2015
2014
Company
2015
2014
(a) Transactions with parent company
The Company's parent is John Keells Holdings PLC Rendering /(Receiving) of services
(44,945)(43,713)(26,111)(23,578)
Rent Received / (Paid)
25,19937,529
-(b) Transactions with Subsidiary Companies
(Receiving) / Rendering of services
Rent received / (paid)
Sales/(Purchases) of goods
--
644(1,135)
--
5361,014
--
(48)-
(c) Transaction with companies under
common control of JKH PLC
Rendering /(Receiving) of services
Rent received / (paid)
Sales / (Purchases) of goods
Sales / (Purchases) of property plant & equipment
(457,103)(554,317)(409,464)(334,599)
80,99867,72143,47442,929
(11,310)(18,761) (3,332)(6,148)
-(3,117)
-(3,117)
33.5 Transactions with Key Management Personnel
According to Sri Lanka Accounting Standard (LKAS) 24 - Related Party Disclosure, "Key Management Personnel" are
those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly,
the Directors (including Executive and Non-Executive Directors) and their immediate family members have been
classified as KMP of the Company.
As the John Keells Holding PLC is the Parent of the Company and the Board of Directors of the Parent Company has
the authority and responsibility of planning, directing and controlling the activities of the Company, the Directors of
the parent Company and their immediate family member have also been identified as Key Management Personnel of
the Company. Immediate family member is defined as spouse or dependant. A dependant is defined as anyone who
depends on the respective Director for more than 50% of his/her financial needs.
For the year ended 31st March
In Rs.’000s
Group
2015
(i) Compensation of Key Management Personnel
Short-term employee benefits
69,546
Contributions to the provident fund
3,892
Share based payment
17,067
2014
Company
2015
2014
61,32763,981 58,207
4,028
3,473
3,574
10,914
17,067
10,914
In addition to their salaries the Company provides non-cash benefits to the Key Management Personnel and contributes
to a post-employment defined benefit plan on their behalf. Directors’ emoluments are disclosed in Note 10 to the Financial
Statements.
149
150
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
34 FINANCIAL INSTRUMENTS - ACCOUNTS CLASSIFICATION AND FAIR VALUES OF THE GROUP
34.1 Financial Assets and Liabilities by Categories
The following methods and assumptions were used to estimate the fair values:
Financial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.
Financial assets by categories
Loans and
receivables
As at 31 st March
In Rs. '000
Financial instruments in non-current assets
Other non-current financial assets
Financial instruments in current assets
Trade and other receivables / Payable
Amounts due from / due to related parties
Other current liabilities
Short term investments
Cash in hand and at bank
Financial assets at
fair value through
profit or loss
2015
2014
Available
for-sale-financial
assets
2015
2014
Note
2015
2014
20.1
12,173
637,985
66,484
2,475,667
499,964
17,027
481,912
48,863
3,134,194
430,541
-
-
-
-
3,692,273
4,112,537
-
-
-
-
23-30
33.2-33.3
32
25
Bank overdrafts
Total
The management assessed that the fair value of cash at bank, short term deposits, trade receivables, other payables,
bank overdrafts and other current financial liabilities approximate their carrying amounts largely due to the short term
maturities of these instruments. Accordingly the fair value hierarchy does not apply.
34 FINANCIAL INSTRUMENTS - ACCOUNTS CLASSIFICATION AND FAIR VALUES OF THE COMPANY
34.2 Financial Assets and Liabilities by Categories
Financial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.
Financial assets by categories
Loans and
receivables
As at 31 st March
In Rs. '000
Financial instruments in non-current assets
Other non-current financial assets
Financial instruments in current assets
Trade and other receivables / Payable
Amounts due from / due to related parties
Other current liabilities
Short term investments
Cash in hand and at bank
Bank overdrafts
Total
Note
2015
2014
20.1
8,436
322,227
31,801
2,239,351
267,245
2,869,060
11,391
247,463
34,717
2,647,269
289,804
3,230,644
23-30
33.2-33.3
32
25
Financial assets at
fair value through
profit or loss
2015
2014
-
-
Available
for-sale-financial
assets
2015
2014
-
-
The management assessed that the fair value of cash at bank, short term deposits, trade receivables, other payables, bank overdrafts
and other current financial liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.
Accordingly the fair value hierarchy does not apply.
Asian Hotels and Properties Plc
Annual Report 2014/15
Held-to-maturity
investments
Total
Financial liabilities by
categories
Financial liabilities measured
at
amortised cost
2014
2015
2014
2015
2014
2015
-
-
12,173
637,985
66,484
2,475,667
499,964
17,027
481,912
48,863
3,134,194
430,541
682,330
111,471
332,759
-
626,523
87,341
317,648
-
-
-
3,692,273
4,112,537
116,728
1,243,288
130,080
1,161,592
Held-to-maturity
investments
Total
2015
2014
2015
-
-
8,436
322,227
31,801
2,239,351
267,245
2,869,060
Financial liabilities by
categories
Financial liabilities measured
at
amortised cost
2014
2015
2014
11,391
247,463
34,717
2,647,269
289,804
3,230,644
434,129
85,971
221,558
59,829
801,487
403,725
60,904
223,229
76,116
763,974
151
152
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
35. Financial risk management
Objectives and Policies
Financial instruments held by the Group, principally comprise of cash at bank, short-term deposits, other non current assets,
amounts due from/due to related parties, trade receivables, trade payables, bank overdrafts and other current financial
liabilities. The main purpose of these financial instruments is to manage the operating, investing and financing activities of
the Group.
Financial risk management of the Group is carried out based on guidelines established by its parent company’s central
treasury department (Group Treasury) which comes under the purview of the Group Executive Committee (GEC) of the
parent company.
Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units.
The parent company provides guidelines for overall risk management, as well, covering specific areas such as credit risk,
investment of excess liquidity, interest rate risk and foreign currency risk.
The Group has established guidelines for risk controlling procedures and for the use of financial instruments, including a
clear segregation of duties with regard to financial activities, settlement, accounting and related controlling. The guidelines
upon which the Group’s risk management processes are based are designed to identify and analyse these risks throughout
the Group, to set appropriate risk limits and controls and to monitor the risks by means of reliable and up-to-date
administrative and information systems. The guidelines and systems are regularly reviewed and adjusted to changes in
markets and products. The Group manages and monitors these risks primarily through its operating and financing activities.
The Audit Committee of John Keells Holdings PLC, the parent Company, oversees how management monitors compliance
with the Group’s risk management policies and procedures,and reviews the adequacy of the risk management framework
in relation to the risks faced by the Group.
The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc
reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
Asian Hotels and Properties Plc
Annual Report 2014/15
35.1 Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and
from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other
financial instruments.
The Group trades only with recognised, credit worthy third parties. It is the Group’s policy that all clients who wish to trade
on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing
basis with the result that the Group’s exposure to bad debts is not significant.
With respect to credit risk arising from the other financial assets of the Group, such as cash and cash equivalents, availablefor-sale financial investments, investments, and certain derivative instruments, the Group’s exposure to credit risk arises
from default of the counterparty. The Group manages its operations to avoid any excessive concentration of counterparty
risk and the Group takes all reasonable steps to ensure the counterparties fulfill their obligations.
153
154
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
35.1.1 Risk exposure
Credit risk is the risk of financial loss to the Group, if a customer or counter party to a financial instrument fails to
meet its contractual obligations, and arises principally from the Group’s receivables from customers and placements
in deposits with banking institutions and in government securities.
The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying
amounts (without consideration of collateral, if available). Following table shows the maximum risk positions.
As at 31 st March
In Rs. '000
2015
Notes
Other non
current
financial
assets
Cash in
hand and at
bank
Trade
Short term
and other investments
receivables
Amounts
due from
related
parties
Total
% of
allocation
67%
Risk exposure Group
Deposits with bank
35.1.2
-
-
-
2,475,667
-
2,475,667
Loans to executives
35.1.3
12,173
-
4,997
-
-
17,170
0%
Trade and other receivables
35.1.4
-
-
632,988
-
-
632,988
17%
Amounts due from related parties
35.1.5
-
-
-
-
66,484
66,484
2%
Cash in hand and at bank
35.1.6
-
499,964
-
-
-
499,964
14%
Total credit risk exposure
12,173
499,964
637,985
2,475,667
66,484
3,692,275
100%
Total
12,173
499,964
637,985
2,475,667
66,484
Trade
Short term
and other investments
receivables
Amounts
due from
related
parties
Total
% of
allocation
78%
As at 31 st March
In Rs. '000
2015
Notes
Other non
current
financial
assets
Cash in
hand and at
bank
Risk exposure Company
Deposits with bank
35.1.2
-
-
-
2,239,351
-
2,239,351
Loans to executives
35.1.3
8,436
-
3,852
-
-
12,288
0%
Trade and other receivables
35.1.4
-
-
318,375
-
-
318,374
11%
Amounts due from related parties
35.1.5
-
-
-
-
31,801
31,801
1%
Cash in hand and at bank
35.1.6
-
267,245
-
-
-
267,245
9%
Total credit risk exposure
8,436
267,245
322,227
2,239,351
31,801
2,869,059
100%
Total
8,436
267,245
322,227
2,239,351
31,801
Asian Hotels and Properties Plc
Annual Report 2014/15
2014
Other non current
financial assets
Cash in hand and
at bank
Trade and other
receivables
Short term
investments
Amounts due from
related parties
Total
% of allocation
76%
-
-
-
3,134,194
-
3,134,194
17,027
-
5,430
-
-
22,457
1%
-
-
476,482
-
-
476,482
12%
-
-
-
-
48,863
48,863
1%
-
430,541
-
-
-
430,541
10%
17,027
430,541
481,912
3,134,194
48,863
4,112,537
100%
17,027
430,541
481,912
3,134,194
48,863
Amounts due from
related parties
Total
% of allocation
2014
Other non current
financial assets
Cash in hand and
at bank
Trade and other
receivables
Short term
investments
-
-
-
2,647,269
-
2,647,269
82%
11,390
-
4,226
-
-
15,616
0%
-
-
243,237
-
-
243,237
8%
-
-
-
-
34,717
34,717
1%
-
289,804
-
-
-
289,804
9%
11,390
289,804
247,463
2,647,269
34,717
3,230,643
100%
11,390
289,804
247,463
2,647,269
34,717
155
156
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
35.1.2 Deposits with bank
Deposits with bank mainly consist of repurchase agreement (Repo), fixed and call deposits.
As at 31st March 2015, Repo comprise 98% (2014- 0%) and 98% (2014- 0%) for the Group and Company respectively were rated “A+” or
better.
Group
Company
As at 31st March
2015
2014
2015
2014
Fitch ratingsIn Rating %In Rating %In Rating %In Rating %
Rs. ’000s
of Rs. ’000s
of Rs. ’000s
of Rs. ’000s
of
total
total
total total
AA+
AA
AA-
A
Total
-
2,055,620
420,047
-
2,475,667
-
659,103
83% 359,968
17% 672,298
- 1,442,825
100% 3,134,194
21%
-
-
659,103
25%
11% 1,819,30481%-22% 420,07719% 672,298
25%
46%
-- 1,315,868
50%
100% 2,239,381
100% 2,647,269
100%
* Rating agencies
35.1.3 Loans to executives
Loans to executive portfolio is largely made up of vehicle loans which are given to staff at assistant manager level and above. The
respective business units have obtained the necessary Power of Attorney/promissory notes as collateral for the loans granted.
35.1.4 Trade and other receivables
Group
Company
2015201420152014
In Rs. ’000sIn Rs. ’000sIn Rs. ’000sIn Rs. ’000s
Neither past due nor impaired
222,653
221,428
49,322
34,947
Past due but not impaired
0-30 days
234,566
163,339
137,341
128,601
31–60 days
61–90 days
85,46351,86364,295
44,320
91–120 days
32,901 9,838 20,203
7,837
121–180 days
25,7165,07816,481
2,657
> 181 days
11,1515,413
10,457
4,751
42,409 41,012 41,002
40,409
Impaired
11,749
9,473
-
355
Gross carrying value
666,608
507,444
339,101
263,877
Less: impairment provision
Collectively assessed impairment provision
-
-
-Individually assessed impairment provision
(28,623)
(25,532)
(16,874)
(16,414)
Total
637,985
481,912
322,227
247,463
The Group has obtained customer deposit from major customers by reviewing their past performance and credit
worthiness.
The requirement for an impairment is analysed at each reporting date on an individual basis for major customers.
Additionally, a large number of minor receivables are grouped into homogeneous groups and assessed for impairment
collectively. The calculation is based on actual incurred historical data.
Asian Hotels and Properties Plc
Annual Report 2014/15
35.1.5 Amounts due from related parties
The Group’s amounts due from related party mainly consists of associates and other venture partners’ balances from joint
ventures.
The Company balance consists of the balance from affiliate companies.
35.1.6 Credit risk relating to cash and cash equivalents
In order to mitigate the concentration, settlement and operational risks related to cash and cash equivalents, the Group
consciously manages the exposure to a single counterparty taking into consideration, where relevant, the rating or
financial standing of the counterparty, where the position is reviewed as and when required, the duration of the exposure in
managing such exposures and the nature of the transaction and agreement governing the exposure.
35.2 Liquidity Risk
The Group’s policy is to hold cash and undrawn committed facilities at a level sufficient to ensure that the Group has
available funds to meet its short and medium term capital and funding obligations, including organic growth and acquisition
activities, and to meet any unforeseen obligations and opportunities. The Group holds cash and undrawn committed
facilities to enable the Group to manage its liquidity risk.
The Group monitors its risk to a shortage of funds using a daily cash management process. This process considers the
maturity of both the Group’s financial investments and financial assets (e.g. accounts receivable, other financial assets) and
projected cash flows from operations.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of multiple
sources of funding including bank loans, overdrafts and over a broad spread of maturities.
35.2.1 Net debt/(cash)
Group
Company
2015201420152014
Short term investments
2,475,667
3,134,194
2,239,351
2,647,269
Cash in hand and at bank
499,964
430,541
267,245
289,804
Total liquid assets
2,975,631
3,564,735
2,506,596
2,937,073
Bank overdrafts
116,728
130,080
59,829
76,116
Total liabilities
116,728
130,080
59,829
76,116
Net debt (cash)
(2,858,903) (3,434,655) (2,446,767) (2,860,957)
35.2.2 Liquidity risk management
The mixed approach combines elements of the cash flow matching approach and the liquid assets approach. The business
units attempt to match cash outflows in each time bucket against a combination of contractual cash inflows plus other
inflows that can be generated through the sale of assets, repurchase agreement or other secured borrowing.
157
158
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
Maturity analysis
The table below summarises the maturity profile of the Group’s financial liabilities at 31st March 2015 based on contractual
undiscounted payments.
Group
In Rs. ’000s
Trade and other payables
Amounts due to related parties
Other current financial liabilities
Bank overdrafts
In Rs. ’000s
Trade and other payables
Amounts due to related parties
Other current financial liabilities
Bank overdrafts
Company
In Rs. ’000s
Trade and other payables
Amounts due to related parties
Other current financial liabilities
Bank overdrafts
In Rs. ’000s
Trade and other payables
Amounts due to related parties
Other current financial liabilities
Bank overdrafts
Within Between
Between
Between
Between More than
1
1-2 2-3 3-4 4-5 5
yearsyearsyearsyearsyearsyears
682,330
111,471
332,759
116,728
1,243,288
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
2015
682,330
111,471
332,759
116,728
1,243,288
Within Between
Between
Between
Between More than
Total
1
1-2 2-3 3-4 4-5 5
2014
yearsyearsyearsyearsyearsyears
626,523
87,341
317,648
130,080
1,161,592
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
626,523
87,341
317,648
130,080
1,161,592
Within Between
Between
Between
Between More than
Total
1
1-2 2-3 3-4 4-5 5
2015
yearsyearsyearsyearsyearsyears
434,129
85,971
221,558
59,829
801,487
-
-
-
-
-
434,129
85,971
221,558
59,829
801,487
Within Between
Between
Between
Between More than
1
1-2 2-3 3-4 4-5 5
yearsyearsyearsyearsyearsyears
Total
2014
403,725
60,904
223,229
76,116
763,974
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
403,725
60,904
223,229
76,116
763,974
Asian Hotels and Properties Plc
Annual Report 2014/15
35.3 Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices.
Market prices comprise four types of risk:
* Interest rate risk
* Currency risk
* Commodity price risk
* Equity price risk
The objective of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return.
35.3.1 Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s
long-term debt obligations with floating interest rates.
Most lenders grant loans under floating interest rates. To manage this, based on the market condition and outlook of the
interest rate, the Group takes mitigating action such as interest rate swaps ,caps, etc.
The group has not obtained financial facilities from financial institute for the reporting period and bank deposits will be
matured within three months period with fixed interest rate. Hence, the group is not exposure interest rate risk for the
reporting period.
35.4 Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong financial position and
healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure, and makes adjustments to it, in the light of changes in economic conditions. To
maintain or adjust the capital structure, the Group may issue new shares, have a rights issue or buy back of shares.
Group
Company
2015201420152014
Debt / Equity
0.4%0.5%0.3%0.4%
159
160
Asian Hotels and Properties Plc
Annual Report 2014/15
Notes to the Financial Statements Contd.
36. OPERATING SEGMENT INFORMATION
The Group has the following two strategic divisions, which are its reportable segments.
The following summary describes the operations of each reportable segment.
Reportable Segments
Operations
Hotel
Property
Provide hoteliering services to local and foreign customers
Property development and rent out premises
REVENUE
For the year ended 31st March
In Rs. ’000s
HOTELSPROPERTY
Group Total
2015
2014
2015
2014
2015
2014
External revenue
7,663,293 7,775,954
416,858
480,194 8,080,152 8,256,149
Inter segment revenue-----Total Segment Revenue
7,663,293 7,775,954
416,858
480,194 8,080,152 8,256,149
Segment Operating Profits Before
Finance Expenses
2,399,625 2,826,850
195,919
227,828 2,595,544 3,054,678
Inter Company Dividends (273,493) (273,493)
-
- (273,493)(273,493)
Finance Expenses
(190)(3,287)
--
(190)(3,287)
Change in Fair Value of Investment Properties
Company
Commercial Centre of Subsidiary
-
-
-
-
8,142
20,650
268,564
-
8,142
20,650
268,564
-
Profit Before Taxation
2,125,9422,550,071 224,711
496,392 2,350,653 3,046,463
Income Tax Expense (216,442)(181,084) (16,366)(16,480)
(232,808)(197,564)
Eliminations
(30,388)(30,388)
-
-
(30,388)(30,388)
Profit After Taxation 1,879,112 2,338,599
208,345
479,912 2,087,457 2,818,511
Minority Interest (287,871)(389,881) (42,957)(30,684)
(330,828)(420,565)
Net Profit for the Year 1,591,241 1,948,717
165,388449,228
1,756,629 2,397,946
As at 31st March
In Rs. ’000s
HOTELSPROPERTY
Group Total
2015
2014
2015
2014
2015
2014
Assets
Segment Assets 23,166,63821,237,446 7,359,6937,993,672
30,526,33129,231,118
Eliminations----
(1,130,457)(1,611,473)
Total Assets 23,166,63821,237,446 7,359,693 7,993,672 29,395,874 27,619,645
Liabilities
Segment Liabilities 2,259,1162,563,710 181,787219,801
2,440,9132,783,511
Eliminations/Adjustments----
(470,454)(951,411)
Total Liabilities
2,259,116 2,563,710
181,787
219,801 1,970,459 1,832,100
Asian Hotels and Properties Plc
Annual Report 2014/15
37.
161
CONTINGENT LIABILITIES
here were no material contingent liabilities existing as at reporting date.
T
38. CAPITAL COMMITMENTS
he Asian Hotels & Properties PLC Group had capital expenditure contracted for Rs. 548.4 Mn as at 31st March 2015,
T
which were not provided for in the Consolidated Financial Statements.
39
EVENTS SUBSEQUENT TO THE REPORTING DATE AND OTHER MATTERS
There have been no events subsequent to the reporting date which would have any material effect on the Company or on
the Group, other than matters disclosed below.
The Board of Directors of the Company has declared a Final Dividend of Rs. 3/- per share for the financial year
ended 31st March 2015.
As required by Section 56 (2) of the Companies Act No. 7 of 2007, the Board of Directors have confirmed that the Company
satisfies the S
olvency test in accordance with Section 57 of the Companies Act No. 7 of 2007, and have obtained a
certificate from Auditors, prior to declaring a Final Dividend.
In accordance with Sri Lanka Accounting Standard (LKAS) 10, Events after reporting date, the proposed final Dividend has
not been r ecognised as a liability in the Financial Statements as at 31st March 2015.
39.1
39.2 Other Matters
Super Gains Tax
An imposition of a Super Gains Tax has been recommended for the approval of Parliament per a Bill dated 27th March 2015.
Since the Bill had not been approved by the parliament as at the reporting date, being 31st March 2015, the Group has not
provided for the potential liability in the Financial Statements for the year ended 31st March 2015.
40. DIRECTORS’ RESPONSIBILITY STATEMENT
he Board of Directors is responsible for the preparation and presentation of these Financial Statements. Please refer
T
page 110 for the Statement of Directors' Responsibility for Financial Reporting.
162
Asian Hotels and Properties Plc
Annual Report 2014/15
Consolidated Value Added Statement
20152014
In Rs. ‘000s
Revenue
8,256,149
Adjustment for Change in Fair Value of Investment Property
Adjustment for Finance Income
Adjustment for other Income
28,792
199,958
80,523
8,389,425
268,564
305,042
75,546
8,905,301
Less : Cost of Materials & Services
Purchased from external sources
Value Added
1,247,2371,319,224
7,142,1887,586,077
Distributed as follows:
In Rs. ‘000s
8,080,152
2015
%
2014
%
To Employees as Remuneration
1,519,923
20%1,330,120
18%
To the Government as Taxes
1,280,47018%
1,211,336
16%
To the Providers of Capital
As Interest on Loans
190
0%3,287 0%
As Minority Interest
330,8285%
420,565
6%
To Shareholders as Dividends
1,771,10126%
1,771,101
23%
Retained within the business
As Depreciation
482,938
7%
455,964
6%
As Reserves
1,756,738
24%
2,393,704
31%
7,142,188100%7,586,077
100%
2014/15
24%
2013/14
17%
20%
32%
18%
16%
7%
6%
26%
6%
5%
23%
To Employees as Remuneration
To Employees as Remuneration
To the Government as Taxes
To the Government as Taxes
As Interest on Loans
As Interest on Loans
As Minority Interest
As Minority Interest
To Shareholders as Dividends
To Shareholders as Dividends
As Depreciation
As Depreciation
As Reserves
As Reserves
Asian Hotels and Properties Plc
Annual Report 2014/15
163
Information to Shareholders & Investors
STOCK EXCHANGE LISTING
The Issued Ordinary Shares of Asian Hotels and Properties PLC are listed with the Colombo Stock Exchange of
Sri Lanka. The Audited Financial Statements of the Company and the Consolidated Financial Statements for the
year ended 31st March 2015 have been submitted to the Colombo Stock Exchange.
DISTRIBUTION OF SHAREHOLDINGS
31.03.2015
31.03.2014
FromToNumber of Total PercentageNumber of Total Percentage
ShareShare
of ShareShareShare
of Share
HoldersHoldingsHoldings HoldersHoldingsHoldings
1
-1,000
1,001 -10,000
10,001- 100,000
100,001- 1,000,000
1,000,001 and above
2,156604,747
7612,696,983
1644,529,410
225,276,208
13429,667,952
3,116442,775,300
0.1
0.6
1.0
1.2
97.1
100.0
2,218641,523
0.1
7992,867,237
0.7
1774,941,326
1.1
245,989,598
1.4
12428,335,616
96.7
3,230442,775,300
100.0
ANALYSIS OF SHAREHOLDERS
Categories of Shareholders
31.03.201531.03.2014
Holdings
%Holdings
NumberNumber
%
Individual 13,413,413
3.03
13,694,105
3.09
Institutions
429,361,887
96.97 429,081,195
96.91
442,775,300
100.00 442,775,300
100.00
Resident
433,639,407
97.94 432,649,633
97.71
Non Resident
9,135,893
2.06
10,125,667
2.29
442,775,300
100.00 442,775,300
100.00
Public 94,923,108
21.44 94,646,347
21.38
Non Public*
347,852,192
78.56 348,128,953
78.62
442,775,300
100.00 442,775,300
100.00
*Includes shareholdings of Parent Company, Directors & Spouses.
164
Asian Hotels and Properties Plc
Annual Report 2014/15
Information to Shareholders & Investors Contd.
For the Year Ended 31st March
2015
2014
Rs.Rs.
Market Value
Highest Market Price per Share
Lowest Market Price per Share
Last Traded Market Price per Share as at
75.0079.00
58.0057.00
63.0058.80
Dividend Payments
Interim Dividend per Share
Final Dividend per Share
1.00
1.00
3.003.00
TOP TWENTY SHAREHOLDERS
As at As at
31.03.201531.03.2014
NameShare PercentageShare
Percentage
Holdings
Holdings
John Keells Holdings PLC 347,824,19278.56
Employees Provident Fund
43,552,236
9.84
Sri Lanka Insurance Corporation Ltd - Life Fund 10,055,9002.27
Bank of Ceylon A/C Ceybank Unit Trust
9,537,4032.15
Dr. S. Yaddehige
3,415,2000.77
HSBC International Nominees Limited - MSNY Bay Pond Partners L.P.
3,151,9240.71
Bank of Ceylon-No. 2 A/C
2,583,4000.58
Bank of Ceylon-No. 1 Account
2,367,7410.53
Mr. M.J. Fernando
2,018,0000.46
HSBC International Nominees Limited - MSNY Bay Pond Investors (Bermuda) L.P
1,377,2760.31
National Savings Bank
1,366,1320.31
AIA Insurance Lanka PLC A/C No.07
1,234,1390.28
Bank of Ceylon A/C Ceybank Century Growth Fund
1,184,4090.27
Employee Trust Fund Board
767,4780.17
Mr. M. Mannawarajan
650,016
0.15
Richard Pieris & Co Ltd - Account No. 01
639,4000.14
RBC Investor Services Bank - Alquity Sicav - Alquity Asia Fund
496,9500.11
Merrill J Fernando & Sons (Pvt) Limited
220,0000.05
Hatton National Bank PLC A/C No.05 (Trading Portfolio)
207,4760.05
Merchant Bank of Sri Lanka Ltd A/C No 1
206,2140.05
432,855,486
97.76
347,824,192
42,477,714
10,055,900
9,285,390
3,415,200
78.56
9.59
2.27
2.10
0.77
3,580,000
2,583,400
2,232,400
2,018,000
0.81
0.58
0.50
0.46
1,724,200
441,000
1,966,528
1,172,692
767,478
650,016
639,400
-
220,000
-
163,814
431,217,324
0.39
0.10
0.44
0.26
0.17
0.15
0.14
0.00
0.05
0.00
0.05
97.39
Asian Hotels and Properties Plc
Annual Report 2014/15
Five-Year Financial Summary of the Group
2014/152013/142012/132011/122010/11
Rs ‘000
Rs ‘000
Rs ‘000
Rs ‘000
Rs ‘000
Revenue 8,080,152
8,256,149
7,890,978
8,855,241
7,457,325
Profit After Taxation
2,087,457
2,818,511
3,097,386
2,502,458
2,147,886
Share Capital & Reserves
Stated Capital
Other Components of Equity
Retained Profit
Shareholders’ Funds
3,345,117
12,808,756
7,883,065
24,036,938
3,345,117
11,110,871
7,880,070
22,336,058
3,345,117
11,110,290
7,242,060
21,697,467
3,345,117
5,143,193
6,490,690
14,979,000
3,345,117
5,179,592
5,194,517
13,719,226
Minority Interest
3,388,477
27,425,415
3,451,487
25,787,545
3,425,692
25,123,159
2,963,109
17,942,109
2,783,930
16,503,156
Assets & (Liabilities)
Current Assets
Current Liabilities
Net Current Assets
Non Current Assets
Non Current Liabilities
3,932,511
(1,387,524)
2,544,987
25,463,363
(582,935)
27,425,415
4,358,006
(1,273,457)
3,084,549
23,261,641
(558,645)
25,787,545
3,986,497
(1,128,402)
2,858,095
22,789,890
(524,826)
25,123,159
4,038,373
(1,640,220)
2,398,153
16,011,297
(467,341)
17,942,109
2,705,026
(1,219,974)
1,485,052
15,446,194
(428,090)
16,503,156
Ratio Analysis
Earnings per Share (Rs)*
Net Assets per Share (Rs)
Current Ratio (Times)
After Tax Return on Net Assets
Dividend Per Share*
P/E Ratio
Dividend Payout Ratio
3.97
5.42
5.63
4.85
4.01
54.29 50.4549.00 33.8330.98
2.833.423.532.46 2.22
7.31%10.73%11.50%14.35%12.93%
4.004.004.002.000.50
15.8810.85 12.4316.0723.44
1.010.74 0.71 0.41 0.12
*The increased number of ordinary shares of 442,775,300 has been considered for the previous Year’s comparative figures.
Five-Year Financial Summary Property Development
2014/152013/142012/132011/122010/11
Rs.’000Rs.’000Rs.’000Rs.’000Rs.’000
Revenue
Cost of Sales
Gross Profit
355,528
419,119
428,062
2,675,625
2,468,699
191,677 243,057 272,7262,071,868 1,788,148
163,851
176,062
155,336
603,757
680,551
Administration & Other Overheads
Other Income
Change in Fair Value of Investment Property
Net Profit Before Tax
104,700
81,510
8,142
148,803
109,215
106,759
268,564
442,170
113,387
134,559
228,500
405,008
199,634
111,903
206,971
722,997
155,485
62,638
215,088
802,792
165
166
Asian Hotels and Properties Plc
Annual Report 2014/15
Five-Year Financial Summary Cinnamon Grand Hotel
2014/152013/142012/132011/122010/11
Rs.’000Rs.’000Rs.’000Rs.’000Rs.’000
Revenue
Rooms
2,495,720
Food
1,884,175
Beverage
316,647
Food & Beverage Others
17,386
Telephone 3,401
Rental Income
18,360
Other Operating Income
202,862
Total Revenue
4,938,552
2,589,915
1,779,373
298,787
16,467
4,827
16,668
191,530
4,897,567
2,460,356
1,638,767
284,989
19,488
4,914
15,289
198,890
4,622,693
1,921,952
1,405,859
249,572
20,264
5,349
12,510
188,631
3,804,137
1,425,573
1,220,522
216,899
15,638
6,451
11,419
120,268
3,016,770
Expenses
Room
380,079
Food Cost
748,639
Beverage Cost
104,407
Food & Beverage Other
600,315
Telephone 5,548
Other
171,191
Total Expenses
2,010,179
343,617
696,668
90,929
548,926
5,289
167,622
1,853,051
301,195
658,271
87,993
511,554
5,021
157,042
1,721,076
255,945
561,902
79,662
454,770
4,987
133,371
1,490,637
210,295
497,769
74,734
372,665
4,453
84,625
1,244,541
Gross Operating Income 2,928,373
3,044,516
2,901,618
2,313,500
1,772,229
323,849
103,407
359,804
156,589
943,650
262,603
111,808
376,177
173,579
924,167
241,584
86,428
324,795
138,856
791,663
199,685
72,363
285,126
140,729
697,903
180,941
86,139
261,680
121,717
650,477
Gross Operating Profit 1,984,723
Interest Income
135,294
Dividend Income
273,493
Sundry Income
18,765
2,412,276
2,120,349
188,746
273,493
16,538
2,599,127
2,109,955
153,787
234,422
17,915
2,516,079
1,615,597
37,403
117,211
12,067
1,782,278
1,121,752
6,391
39,070
14,832
1,182,045
Insurance 11,778
Interest Expenses
-
Rates 11,658
Management / Marketing Fee
300,752
Depreciation
276,989
601,176
13,436
3,249
11,796
304,917
259,662
593,060
17,897
-
11,660
294,239
237,830
561,625
16,098
84
10,516
232,340
218,036
477,074
15,335
39,829
10,135
178,499
203,297
447,095
Net Profit Before Tax 1,811,095
2,006,067
1,954,453
1,305,204
734,950
Expenses
Administration & General
Advertising & Sales Promotion
Heat, Light & Power
Repair & Maintenance
Total Deductions
Asian Hotels and Properties Plc
Annual Report 2014/15
Notice of Meeting
NOTICE IS HEREBY GIVEN that the Twenty First Annual General Meeting of Asian Hotels and Properties PLC will be held
at the Auditorium of the Ceylon Chamber of Commerce, No. 50, Navam Mawatha, Colombo 2, on 26th June 2015 at 11.45
a.m for the following purposes:
1. To read the notice convening the meeting.
2. To receive and consider the Annual Report and Audited Financial Statements of the Company for the year ended 31st
March 2015 together with the Report of the Auditors thereon.
3. To re-elect as a Director Mr. C. J. L. Pinto who retires by rotation in terms of Article 84 of the Articles of Association of
the Company.
4. To re-elect as a Director Mr. J. R. F. Peiris who retires by rotation in terms of Article 84 of the Articles of Association of
the Company
5. To re-appoint the retiring Auditors, Messrs. KPMG Chartered Accountants, and to authorise the Directors to determine
their remuneration.
6. To consider any other business of which due notice has been given in terms of the relevant laws and regulations.
BY ORDER OF THE BOARD
ASIAN HOTELS AND PROPERTIES PLC
Keells Consultants (Private) Limited
Secretaries
Colombo,
4th June 2015
Notes:
(i) A member is entitled to appoint a proxy to attend and vote in his / her place.
(ii) A proxy need not be a member of the Company.
(iii) A member wishing to vote by proxy at the meeting may use the Proxy Form enclosed.
(iv)To be valid, the completed Proxy Form must be lodged at the registered office of the Company not later than 48 hours
before the meeting.
(v) If a poll is demanded, a vote can be taken on a show of hand or by poll. Each share is entitled to one vote. Votes can
be cast in person, by proxy or corporate representatives. In the event an individual shareholder and his proxy holder
are both present at the meeting, only the shareholder’s vote will be counted. If proxy holder’s appointer has indicated
the manner of voting, only the appointer’s indication of the manner of vote will be used.
167
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Annual Report 2014/15
Notes
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Notes Contd.
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171
Form of Proxy
*I/We.............................................................................................................................................................................................................................................................
of .....................................................................................................................................................................................................................................................................
being a *member/members of Asian Hotels and Properties PLC hereby appoint
..................................................................................................................................................................................................................................................................... of
...................................................................................................................................................................................................................................................... or failing
*him/her
Mr. S. C. Ratnayake
of Colombo, failing whom
Mr. A. D. Gunewardene
of Colombo, failing whom
Mr. J. R. F. Peiris
of Colombo, failing whom
Mr. R. J. Karunarajah
of Colombo, failing whom
Mr. S. Rajendraof Colombo, failing whom
Mr. C. J. L. Pinto
of Colombo, failing whom
Mr. S. K. G. Senanayake
of Colombo, failing whom
Mrs. S. A. Jayasekeraof Colombo
as *my/our proxy to represent *me/us and to vote on *my/our behalf at the 21st Annual General Meeting of the Company,
to be held on the 26th day of June 2015 at 11.45 a.m. and at any adjournment thereof, and at any poll which may be taken
in consequence thereof. *I/We the undersigned hereby authorise *my/our proxy to vote on *my/our behalf in accordance
with the preferences indicated below:
1. To re-elect as a Director Mr. C. J. L. Pinto who retires in terms of Article 84 of the Articles of
Association.
FOR
AGAINST
2. To re-elect as a Director Mr. J. R. F. Peiris who retires in terms of Article 84 of the Articles of
Association.
3. To re-appoint the retiring Auditors, Messrs. KPMG, Chartered Accountants, and to Authorise the
Directors to determine their remuneration.
Signed this .................................................... day of ................................................... Two Thousand and Fifteen .........................................................
Signature of shareholder
Notes:
(a) *Strike out whichever is not desired.
(b) Instructions to completion of the Form of Proxy are set out on the reverse hereof.
(c) A proxy need not be a Member of the Company.
(d) Please indicate an “X” in the cage provided how your Proxy should vote on each Resolution. If no indication is given,
or if there is, in the view of the Proxy holder, any doubt (by reason of the manner in which the instructions contained
in the Proxy have been completed) as to the way in which the Proxy holder should vote, the Proxy holder in his/her
discretion may vote as he/she thinks fit.
172
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Form of Proxy contd.
INSTRUCTIONS AS TO COMPLETION
1. Please perfect the Form of Proxy by filling in legibly your full name and address,
signing in the space provided and filling in the date of signature.
2. The completed Form of Proxy should be deposited at the Registered Office of the
Company at No. 77, Galle Road, Colombo 03, not later than 48 hours before the
time appointed for the holding of the Meeting.
3. If the Form of Proxy is signed by an Attorney, the relevant Power of Attorney
should accompany the completed Form of Proxy for registration, if such Power of
Attorney has not already been registered with the Company.
4. If the appointer is a Company or Corporation, the Form of Proxy should be
executed under its Common Seal or by a duly authorised officer of the Company
or Corporation in accordance with its Articles of Association or Constitution.
5. If this Form of Proxy is returned without any indication of how the person
appointed as Proxy shall vote, then the Proxy shall exercise his/her discretion as
to how he/she votes or, whether or not he/she abstains from voting.
Please fill in the following details:
: .................................................................................................................................................
Name
Address
: .................................................................................................................................................
.................................................................................................................................................
.................................................................................................................................................
Jointly with
:.................................................................................................................................................
Share Folio No.
:.................................................................................................................................................
Corporate Information
NAME OF COMPANY
REGISTERED OFFICE
Asian Hotels and Properties PLC
No.77, Galle Road, Colombo 03
Tel: +94 11 2437437 Fax: +94 11 5547555
E-mail: grand@cinnamonhotels.com
LEGAL FORM
A Public Limited Liability Company incorporated in
Sri Lanka in 1993 and registered with the Board of
Investment of Sri Lanka under Section 17 of the Board of
Investment Law No. 4 of 1978.
The Company was re-registered as per the New
Companies Act No. 7 of 2007 on 15th June 2007.
AUDITORS
KPMG
Chartered Accountants
32A, Sir Mohamed Macan Marker Mawatha
Colombo 03.
BANKERS
STOCK EXCHANGE LISTING
The issued Ordinary shares of the Company are listed on
the Main Board of the Colombo Stock Exchange of Sri
Lanka.
COMPANY REGISTRATION NO.
PQ 2
BOARD OF DIRECTORS
Deutsche Bank AG - Colombo
Seylan Bank Ltd - Millennium Branch, Colombo
Hongkong & Shanghai Banking Corp. Ltd. - Colombo
Nations Trust Bank PLC - Union Place, Colombo
DFCC Vardhana Bank Ltd. - W.A.D. Ramanayake Mw,
Colombo.
CITI Bank N.A - Colombo
Bank of Ceylon - Colombo
Commercial Bank of Ceylon PLC - Colombo
Mr. Susantha Chaminda Ratnayake - Chairman
Mr. Ajit Damon Gunewardene - Managing Director
Mr. James Ronnie Felitus Peiris
Mr. Rohan Jebashantham Karunarajah
Mr. Suresh Rajendra
Mr. Sanjiva Kanishka Gamini Senanayake
Ms. Shirani Anoja Jayasekara
Mr. Cholmondeley John Lloyd Pinto
COMPANY SECRETARIES
Keells Consultants (Private) Limited
117, Sir Chittampalam, A .Gardiner Mawatha, Colombo 2.
Design & Concept by: Optima Designs (Pvt) Ltd.
Printed by: Gunaratne Offset (Pvt) Ltd.
Asian Hotels and Properties PLC
Asian Hotels and Properties PLC | Annual Report 2014/15
Asian Hotels and Properties PLC
No. 77, Galle road, Colombo 03,
Sri Lanka.
T:0094 -11 2437437
F:0094 -11 5547555
Annual Report 2014/15