JOHN KEELLS HOTELS PLC | ANNUAL REPORT 2013/2014

Transcription

Our Vision and Pledge
Hotel Portfolio - Sri Lanka
- Maldives
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Consolidated Value Added Statement
Sustainable Value Chain
GRI Index
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MANAGEMENT REPORTS
Group Financial Highlights
Financial Calender
Group Operational Highlights
Chairman’s Message
Group Structure
Board of Directors
Corporate Governance
Audit Committee Report
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FINANCIAL INFORMATION
Annual Report of the Board of Directors
Statement of Directors’ Responsibility
Independent Auditors’ Report
Income Statement
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes In Equity
Statement of Cash Flows
Notes to the Financial Statements
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MANAGEMENT DISCUSSION & ANALYSIS
Investor Information
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Financial Overview
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Management Discussion and Analysis
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Risk Management
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SUSTAINABILITY REPORT
Sustainability Report
Report Profile
Stakeholder Engagement Process
Awards, Accolades and Certifications
Independent Assurance Report
Our Customers
Product and Service Responsibility
Our Team
Green Philosophy
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SUPPLEMENTARY INFORMATION
Quarterly Income Statement
Indicative US Dollar Financial Statements
Income Statement
Indicative US Dollar Financial Statements
Ten Years Summary - Group
Group Real Estate Portfolio
Directors of Subsidiary Companies
Glossary of Financial Terms
Notice of Meeting
Notes
Form of Proxy
Corporate Information
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IBC
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OUR VISION
We will always be the hospitality trendsetter
OUR PLEDGE
Flawless
I will get it right the first time all the time
I will make fact-based decisions using my own insight and experience to evaluate a range
of options and arrive at the best possible solution.
Caring
I will care
I will respect and care for people, property and information, and be mindful and
considerate of my words and actions, thinking about their consequences for others.
Exceptional
I will stand out wherever I am
I will strive to offer exceptional experiences to our guests, contributing towards the
Company and our activities in a significant manner, using the talents and skills that are
unique to me.
Empowering
I will empower
I will instill a sense of responsibility in myself and others, in order to deliver the finest
care in hospitality in the most satisfying manner, together with the freedom to make
independent decisions in the best interests of the Company and of the guests we serve.
Green
I will be green
I pledge to think and act in a socially responsible manner, to understand the best
practices of sustainability and to use the knowledge and skills I have acquired to
improve and sustain the natural world and its resources, spreading awareness to build a
sustainable future.
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CINNAMON LODGE
Sprawled over 25 acres, Cinnamon Lodge
Habarana is a wonder to behold. Inspired by the
culture that surrounds it, and at the epicenter
of Anuradhapura, Polonnaruwa and Kandy, the
Lodge glorifies and evokes the past of a bygone
age. The 131 rooms and 6 suites are shaded by
over 2,000 trees, creating an exclusive hideaway
for guests of all ages. The architecture is also
evocative of local history, the famous remains of
Ritigala, and brings into play, the beautiful views
of the lake and forest.
Guests can either visit Anuradhapura, the first
kingdom of Sri Lanka, the majestic fortress
of Sigiriya, or the rock temple in Dambulla.
Excursions on a wilder theme are also provided
with jeep safaris to Minneriya and Kaudulla
nature reserves or treks along the Ritigala jungle
to view the ruins of the 6th century monastery.
For soothing rituals, the world class spa is well
renowned and the pool is also a welcome respite.
Dining comes in the form of three restaurants
that showcase delectable food. Guests also have
the option of indulging in gourmet organic
creations and in a range of locations from tree-top
dining to a meal with the chef himself.
CINNAMON LODGE
GLORIFIES AND
EVOKES THE PAST
OF A BYGONE
AGE, CREATING
AN EXCLUSIVE
HIDEAWAY FOR
GUESTS OF ALL AGES.
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CINNAMON LODGE
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CINNAMON LODGE
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CHAAYA TRANZ
Up-tempo and embodying a higher level of
consciousness, Chaaya Tranz Hikkaduwa lets
guests experience the sun, sand and surf with
a heavy dose of Southern hospitality. A 100 km
away from the metropolitan city of Colombo
Chaaya Tranz incorporates the best of shore life,
spun together with the tastes and culture of a
modern town. Whether guests wish to submerge
in the euphoric or experience the bliss of
relaxation, Tranz is the place to be.
Bright colours and a laid-back vibe epitomise the
ambience of the hotel. The design and furnishings
ensure that guests are in tune with this mood.
With a 150 rooms that open out to dramatic views
of the Indian Ocean, the hotel offers patrons the
chance to frolic in the waves as well as snorkel
and dive with our professional and certified
instructors.
Excursions to the famed Galle Fort and the
Singharaja rain forest can be organised on
request, and guests who prefer rest and relaxation
may indulge in the roof-top spa, fresh water
swimming pool, the lounge and pool bar or dine
at the specialty crab restaurant with mouthwatering delights.
BRIGHT COLOURS
AND A LAID-BACK
VIBE EPITOMIZE
THE AMBIENCE OF
THE HOTEL.
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CHAAYA TRANZ
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CHAAYA TRANZ
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BENTOTA BEACH HOTEL
Situated on the golden beaches of Southern Sri
Lanka and designed by Geoffrey Bawa, Bentota
Beach Hotel has been based on an ancient Dutch
Fort. The hotel is positioned at the point where
the Bentara River flows into the Indian Ocean,
offering scenic views of the ocean and estuary.
The 130 rooms and 3 suites are well equipped and
provide a romantic view of either the sea or the
river.
The specialised sports centre on site provides
guests with motorised and non-motorised water
sports activities and excursions such as trips to
the turtle hatcheries in Kosgoda, laid-back boat
rides to the surrounding mangroves, or an hourlong drive to the Dutch Fort in Galle. Guests can
relax at the end of an adrenaline filled day with
pampering at the spa.
THE HOTEL IS
POSITIONED AT
THE POINT WHERE
THE BENTARA
RIVER FLOWS
INTO THE INDIAN
OCEAN, OFFERING
SCENIC VIEWS OF
THE OCEAN AND
ESTUARY.
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BENTOTA BEACH HOTEL
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BENTOTA BEACH HOTEL
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CHAAYA VILLAGE
Stretched out amidst 27 acres of verdant land
overlooking a beautiful lake, Chaaya Village
Habarana is located at the heart of Sri Lanka’s
cultural triangle in the Anuradhapura District.
The hotel consists of 94 superior rooms, 12 deluxe
rooms and 2 suites created in a lodge style which
give guests the chance to view the serenity of
nature, each day more beautiful than the last. And
in communing with nature, the cosy dwellings
rest in the middle of thousands of high-rise trees
and wildlife that enthrall and excite.
Dining is truly an experience with diverse
possibilities from a sojourn up in a tree-hut or
by the lake. The sunny skies allow for nature
walks that will give guests a glimpse of the
flora and fauna of the region. The hotel offers a
rustic setting studded with star class amenities
such as an infinity pool, sporting facilities and
an Ayurvedic Health Centre. In keeping with
the traditional theme of the area, the hotel
also offers five ‘Experience Packages’ which
promote sustainability in nature as well as local
communities which range from a morning hike
in the Ritigala jungle, to a bullock cart ride in
Hiriwaduna.
DINING IS TRULY
AN EXPERIENCE
WITH DIVERSE
POSSIBILITIES
FROM A SOJOURN UP
IN A TREE-HUT OR
BY THE LAKE.
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CHAAYA VILLAGE
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CHAAYA VILLAGE
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CINNAMON BEY
One and a half hours away from the bustling
streets of Colombo lies Cinnamon Bey Beruwela,
which is bordered by the bay and the beach.
Inspired by the first permanent Arab settlements
in Sri Lanka in the 10th century, the hotel interior
incorporates lattice work and complimentary
hues that pay homage to this history.
With 200 rooms on offer, the hotel is the epitome
of luxury and boasts wide spacious areas in
which to relax. The deluxe suites possess private
terraces and swimming pools which take luxury
to another level. Making dining almost an art
form, Cinnamon Bey has a wide range of options
that includes an ice cream parlour that never
fails to delight the younger patrons. The culinary
diversity includes a pizzeria, Japanese, Arabic and
fusion cuisine . Each outlet, 6 in number, offers
a myriad tastes and even showcases experiencebased dining which is unique to the hotel. Each
dining area presents an unforgettable seascape
for guests to enjoy while their taste buds are
satiated.
CINNAMON BEY
MAKES DINING A
FORM OF ART WITH
A WIDE RANGE OF
OPTIONS THAT
INCLUDES AN ICE
CREAM PARLOUR
THAT NEVER
FAILS TO DELIGHT
THE YOUNGER
PATRONS.
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CINNAMON BEY
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CINNAMON BEY
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CHAAYA BLU
On the sun-kissed shores of the North Eastern
Coast of Sri Lanka lies Chaaya Blu Trincomalee.
Located near the fifth largest natural harbour
in the world, Chaaya Blu, has incorporated
a retro-chic design in honour of its earliest
incarnation as a resort in the 70’s. The hotel
boasts 36 beach chalets, 43 superior rooms and 2
suites which look over the sparkling ocean.
When it comes to dining, Chaaya Blu does not
disappoint, with the ‘Captain’s Deck’ the main
restaurant, ‘The Crab’ which offers unbelievably
delicious crab dishes out on the beach and finally
‘The Rum Hold’, the perfect option for after
dinner-drinks.
Guests can start off the day with an exciting
whale or dolphin watching tour or absorb the
subterranean beauty with a snorkelling excursion
at Pigeon Island. With a stunning pool and the
perfect weather, guests will never be left wanting
on this haven.
GUESTS CAN START
OFF THE DAY WITH
AN EXCITING
WHALE OR DOLPHIN
WATCHING TOUR
OR ABSORB THE
SUBTERRANEAN
BEAUTY WITH A
SNORKELLING
EXCURSION AT
PIGEON ISLAND.
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CHAAYA BLU
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CHAAYA BLU
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CINNAMON CITADEL
Resplendent in green hills, and chilly mornings,
Kandy is an iconic smorgasbord of art, culture
and beauty. Located in the hill capital of Sri
Lanka, Kandy possesses an aura and enchantment
that is imbued in the very essence of Cinnamon
Citadel. Settled alongside the Mahaweli River, it
has 26 deluxe rooms and 93 superior rooms with
a sophisticated theme to enthrall guests from
around the globe. The tranquil surroundings are
sure to create a restful holiday. For those who
have a thirst for heritage, cultural treasures are
just a step away. Set amidst historic monuments,
breath-taking natural vistas and that irresistible
old-world charm, luxury and sophistication truly
reigns.
The location creates a romantic atmosphere that
is well suited for leisurely boat rides and long
meandering excursions. Guests are also treated
to three dining options encompassing Asian,
Continental and international cuisine as well as
fabulous local delights. The hotel offers services
for corporate conferences, meetings and forums
with flexibility to facilitate special arrangements.
FOR THOSE WHO
HAVE A THIRST
FOR HERITAGE,
CULTURAL
TREASURES ARE
JUST A STEP AWAY.
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CINNAMON CITADEL
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CINNAMON CITADEL
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CINNAMON WILD
The Yala National Park which houses the highest
density of leopards in Asia sets the scene for
Cinnamon Wild Yala which was established in
2002. Refurbished and revitalised, the hotel,
which could be considered as almost an extension
of the park, is an eco-friendly getaway for wildlife
enthusiasts who wish to reside in a conceptual
world-class game lodge.
With 61 jungle chalets and 7 beach chalets that
afford guests some remarkable views, the hotel
brings the ‘Wild’ indoors with luxurious interiors
that complement the rustic exteriors. The
spacious accommodations are well positioned for
privacy and a few guests have been lucky enough
to even spot leopards on the rocks bordering
the hotel. Experiential excursions such as infrared night drives and walks, wildlife safaris,
champagne breakfasts and BBQ dinners are
among the services offered by the hotel.
The main bar offers a diverse range of beverages
with the added luxury of a 360 degree view of
forest and vast ocean. The main restaurant offers
an international cuisine that doesn’t disappoint.
THE HOTEL,
WHICH COULD
BE CONSIDERED
AS ALMOST AN
EXTENSION OF THE
PARK, IS AN ECOFRIENDLY GETAWAY
FOR WILDLIFE
ENTHUSIASTS WHO
WISH TO RESIDE IN A
CONCEPTUAL WORLDCLASS GAME LODGE.
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CINNAMON WILD
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CINNAMON WILD
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CHAAYA ISLAND DHONVELI - MALDIVES
Tony Hinde discovered the potential of surfing
in Maldives and set up Atoll Adventures on Tari
Village in North Male Atoll in the early 70’s, and
since then it has been a must-experience spot for
wave riders from all over the world.
This surfer’s paradise, now known as Chaaya
Island Dhonveli, offers guests a variety of
activities, from island hopping to dolphin
watching as well as snorkelling and fishing.
Welcoming families from many countries, Chaaya
Island Dhonveli is fortunate to be located, in an
area with blue skies all year round as well as a
committed staff. Further the resort offers spacious
accommodation in the form of 148 bungalows.
In order to complete the perfect family holiday,
the resort also has motorised and non-motorised
water sports, an exotic spa, a swimming
pool, tennis courts, an excursion centre and
gymnasium.
The resort encompasses a delectable array of
dining options which include tasty snacks, bites
and beach-side dining as well as international
cuisine.
THIS SURFER’S
PARADISE,
OFFERS GUESTS
A VARIETY OF
ACTIVITIES, FROM
ISLAND HOPPING
TO DOLPHIN
WATCHING
AS WELL AS
SNORKELLING AND
FISHING.
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CHAAYA ISLAND DHONVELI
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CHAAYA REEF ELLAIDHOO - MALDIVES
Located on the North Ari atoll, 42 km away from
the capital of Maldives Chaaya Reef Ellaidhoo
is created with underwater adventure in mind.
Accessed by either sea plane or sea boat, in 25 and
95 minutes respectively, Chaaya Reef boasts a tricoloured sea, pristine white sands and a unique
coral reef.
With 88 land bungalows and 24 water bungalows,
the resort is focused on absolute adventure.
When it comes to dining, the resort offers a
selection for guests to partake of. Madi and
Malamathi are the two main restaurants offering
international cuisine. Guests are also invited to
experience the Irushenee sunset bar which stocks
a wide range of wines and spirits.
Sun worshippers are at their element here as the
resort offers a fabulous array of outdoor activities.
From tennis, football, excursions, snorkelling and
diving and indoor activities such as squash and a
well-equipped gymnasium, all ages and interests
are catered to on this little slice of paradise.
SUN WORSHIPPERS
ARE AT THEIR
ELEMENT HERE
AS THE RESORT
OFFERS A FABULOUS
ARRAY OF OUTDOOR
ACTIVITIES.
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CHAAYA REEF ELLAIDHOO
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CHAAYA LAGOON HAKURAA HURAA - MALDIVES
Located in the South of Male in Meemu Atoll,
Chaaya Lagoon is a private getaway that is sure
to provide an unforgettable trip. The location
of Chaaya Lagoon Hakuraa Huraa is truly
spectacular. Surrounded by one of the most
beautiful lagoons that the Maldives has to offer,
it is accessible in 45 minutes by sea plane, and
brings into view the abundant marine life, crystal
white shores, and coastal foliage.
In kindling the fires of romance, privacy is
imperative. The 80 bungalows scattered over
the water and on the beach epitomise the serene
setting.
If escape is what you’re looking for, the resort
offers guests the chance to interact with marine
life through snorkelling, swimming and safaris
which brings them face to face with dolphins,
manta rays and baby sharks. And for the less
adventurous, a day at the spa is sure to help
relax and unwind. After a long day of delightful
seafaring and pampering, the resort’s two
restaurants offer international cuisine.
THE LOCATION
OF CHAAYA
LAGOON HAKURAA
HURAA IS TRULY
SPECTACULAR,
SURROUNDED
BY ONE OF THE
MOST BEAUTIFUL
LAGOONS
THAT THE
MALDIVES HAS TO
OFFER.
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CHAAYA LAGOON HAKURAA HURAA
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GROUP FINANCIAL HIGHLIGHTS
10.97 Bn
Rs.
GROUP REVENUE
2.43Bn
1.89Bn
Rs.
Rs.
EARNINGS BEFORE INTEREST
AND TAX
GROUP PROFIT BEFORE TAX
Rs. Bn
12
Rs. Bn
3.0
Rs. Bn
2.0
10
2.5
1.6
8
2.0
6
1.5
4
1.0
2
0.5
0
2014
REVENUE
2013
2012
0
1.2
0.8
0.4
2014
2013
2012
EARNINGS BEFORE INTEREST
AND TAX (EBIT)
0.0
2014
2013
2012
PROFIT BEFORE TAX ( PBT)
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Year ended 31st March
2014
2013
Earnings highlights and ratios
FINANCIAL CALENDAR
Revenue
Rs’000
10,966,381
9,341,581
Rs’000
2,427,116
1,819,992
Audited Financial Statements
signed on
29th May 2014
Earnings before interest and tax (EBIT)
35th Annual General Meeting
30th June 2014
Group profit before tax (PBT)
Rs’000
1,893,239
1,282,896
Group profit after tax (PAT)
Rs’000
1,574,926
1,121,019
Group profit attributable to the shareholders
Rs’000
1,565,846
1,116,779
Earnings per share (EPS)
Rs.
1.08
0.77
EPS growth
%
40.3
1.3
Interest cover
No. of times
4.6
3.4
Return on equity
%
8.7
6.8
Pre-tax ROCE
%
10.0
7.8
Financial Position highlights and ratios
Total assets
Rs’000
26,467,932
25,264,138
Total debt
Rs’000
6,360,731
7,117,136
Total shareholder’s funds
Rs’000
18,095,814
16,294,188
No. of shares in issue
Number 000’s
1,456,147
1,456,147
Net assets per share
Rs.
12.4
11.2
Debt/Equity
%
34
42
Debt/Total assets
%
24
28
Market/Shareholder information
Market price of share as at 31st March
Rs.
Market capitalisation
Rs ‘000
Price earnings ratio
No. of times
12.50
13.20
18,201,835
19,221,137
11.57
17.14
1st Quarter Interim Results
released on
Total value added
Rs’000
5,037,111
3,694,911
To employees
Rs’000
1,724,922
1,139,734
To the government
Rs’000
384,197
241,840
To others
Rs’000
2,927,992
2,313,337
2,779
2,735
Number
31st July 2013
2nd Quarter Interim Results
released on
25th October 2013
3rd Quarter Interim Results
released on
31st January 2014
4th Quarter Interim Results
released on
30th May 2014
GROUP OPERATIONAL
HIGHLIGHTS
Year ended 31st March
2014
2013
Occupancy - Sri Lankan
Sector
75%
60%
Occupancy - Maldivian
Sector
91%
86%
384,894
303,974
Revenue Room Nights
Others
Total employees
INTERIM FINANCIAL STATEMENTS
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CHAIRMAN’S MESSAGE
SRI LANKA TOURISM IS WELL POSITIONED IN
THE POST-CONFLICT SETTING TO BE AMONGST
THE MOST SOUGHT AFTER DESTINATIONS IN THE
WORLD. ARRIVALS TO SRI LANKA GREW 26 PER
CENT TO REACH 1.2 MN TOURISTS FOR THE YEAR
UNDER REVIEW WITH WESTERN EUROPE AND
SOUTH ASIA CONTINUING TO BE THE DOMINANT
GENERATING MARKETS.
Dear Stakeholder,
I am pleased to present the Annual Report and
Statement of Accounts for the financial year ended 31st
March 2014.
GLOBAL LANDSCAPE
The global economy witnessed a steady recovery in
the year 2013 resulting in improving prospects for
sustained growth and lower levels of unemployment
in the advanced economies. According to initial
estimates released by the UNWTO, world tourism
reached a record of 1,087 Mn international tourist
arrivals in the calendar year 2013, corresponding to
a growth of 5 percent over the preceding year. The
growth in international tourist arrivals was driven by
Asia Pacific, led by South East Asia, Africa and Europe,
demonstrating the continuous change in demographics.
Tourism receipts are projected to post double-digit
growth while the outlook for world tourism in the year
2014 is anticipated to be positive.
SRI LANKA TOURISM PROSPECTS
Sri Lanka tourism is well positioned in the postconflict setting to be amongst the most sought after
destinations in the world. Arrivals to Sri Lanka grew
26 per cent to reach 1.2 Mn tourists for the year under
review with Western Europe and South Asia continuing
to be the dominant generating markets. While all key
markets demonstrated appreciable growth, Eastern
Europe, South Asia and East Asia, in particular, grew
at a rapid pace. Tourism receipts were recorded at
USD 1.4 Bn.
A buoyant outlook is projected for the future of tourism
in Sri Lanka. The recent infrastructure development
projects implemented by the government, particularly
the expressway to the main international airport, and
other expressway networks, will provide the necessary
impetus in strengthening Sri Lanka’s position as a
leading tourism destination.
MALDIVIAN TOURISM PROSPECTS
Although tourist arrivals from Western Europe to
the Maldives declined by 3 per cent during the year
under review, focused marketing initiatives resulted
in a 38 per cent growth in arrivals from China.
This ensured that tourism growth during the year
under review recovered to double-digit levels as the
Maldives recorded a growth of 15.9 per cent, against
the disappointing 2.9 per cent recorded in 2012/13. The
Chinese market accounted for over 30 per cent of the
tourist arrivals to the country, remaining the primary
source market for the Maldives.
GROUP PERFORMANCE
In the backdrop of the favourable operating
environment, Group revenue increased by 18 per
cent to Rs.10.97 Bn. The Sri Lankan Resorts recorded
strong revenue growth of 27 per cent, achieving
higher occupancies across all its hotels compared
to the previous year on the back of the growth in
overall tourism. This is demonstrated by the sharp
increase in overall occupancy in Sri Lanka by 38 per
cent, of which 16 per cent stemmed from the full year
operation of Cinnamon Citadel and Cinnamon Bey,
both of which were launched in October 2012. The
trend of improving occupancies will enable further
focus on yield management, which is expected to have
a positive impact on the overall revenue of the sector.
The Maldivian Resorts recorded a revenue growth of 11
per cent.
The gross profit (GP) margin decreased marginally from
the previous year. Whilst yields declined marginally,
effective cost control measures helped mitigate the
general increase in direct material costs although
payroll costs increased slightly in the Maldives as
a consequence of absorbing a higher proportion of
service charge.
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Administration and operating expenses were higher
than in the previous year due to the full year operation
of Cinnamon Bey and Cinnamon Citadel and higher
expenses on payroll in the Maldives. While the
conversion of rupee denominated borrowings to US
Dollar debt led to lower finance costs, finance income
increased due to prudent investment of short term
funds contributing to Group Earnings Before Interest
and Tax growing by 33 per cent to Rs.2,427.1 Mn (2012/13
Rs.1,819.9 Mn).
The tax charge for the year under review increased
compared to the previous year. The exceptionally
lower tax charge last year was due to the reversal of
the provision of Business Profit Tax on dividends,
which were exempted, and write backs of deferred tax
as a result of amendments to the Maldivian tax laws.
Consolidated Profit after Tax increased by 40 per cent
to Rs.1.57 Bn against Rs.1.12 Bn in the previous year.
BRANDING INITIATIVES
With a view to enhance brand awareness and establish
our presence in key target markets, we have embarked
on sponsoring and organising events of international
significance in key target markets. Towards this end,
we invited the organisers of the Miss France and Miss
India pageants to choose Cinnamon Hotels & Resorts
as the host hotels. The main pageant in the French
and Indian markets generated strong publicity for the
Cinnamon Hotels & Resorts brand, both locally and
globally, whilst also significantly raising awareness of
Sri Lanka as a tourism destination.
Cinnamon Hotels and Resorts, being trendsetters in
hospitality and innovation, became the first Hotel
chain to launch its own travel blog - ‘Cinnamon U’.
By regularly publishing valuable and entertaining
information, Cinnamon U would create an incentive for
past and prospective customers to stay in touch and be
up to date with travel experiences, news and upcoming
events in Sri Lanka.
%
25
20
With a view to enhance its brand presence on the social
media network, Cinnamon Hotels and Resorts is now on
all popular and well patronised social media platforms.
AWARDS AND RECOGNITION
Showcasing the superior quality of service and
commitment to sustainable tourism, both the Sri
Lankan and Maldivian resorts continued to win awards
during the year under review.
Trip Advisor recognised almost all the resorts for
excellence, with four hotels receiving the Travellers
Choice Award for 2014. Moreover, a leading
independent travel portal in Europe recognised Chaaya
Reef Ellaidhoo with the “Zoover Recommended Award
2013”.
Gaining recognition in their respective markets, Chaaya
Lagoon Hakuraa and Chaaya Island Dhonveli in the
Maldives and Bentota Beach in Sri Lanka were singled
out for pre-eminence by the German operator TUI
Travel PLC and Tez, the leading travel brand and most
popular Russian tour operator.
Cinnamon Lodge continued to win awards for its
commitment to sustainable tourism, winning the
coveted Switch Asia award for the best Green Hotel
in Asia and was recertified by Green Globe along with
several of our other resorts. Cinnamon Lodge also won
the “National Cleaner Production Award” in the Service
sector.
Cinnamon Citadel and Chaaya Blu won the several
regional awards at the Chef’s Guild competition in Sri
15
10
5
0
Agriculture
Industry
2012
Services
Hotels &
Restaurants
2013
Gross
Domestic
Product
REAL GDP GROWTH
Lanka while Dhonveli was adjudged the Leading Surf
Resort in Maldives at the Maldives Association of Travel
Agents and Tour Operators (MATATO) Maldives Travel
Awards 2013.
The Annual Report of John Keells Hotels PLC was
adjudged as runner-up in the Hotel Companies category
of the “Awards for Excellence in Annual Reports 2013”
conducted by CA Sri Lanka.
OUTLOOK FOR THE FUTURE
During the ensuing year, the Leisure industry group
will consolidate its overall branding strategy where all
resorts will be brought under the “Cinnamon” brand
resulting in Cinnamon Hotels and Resorts having
14 hotel properties and over 2,400 rooms under its
umbrella. The Group is also conscious of the need to
further inculcate the desired ‘lifestyle’ service culture
within our staff through the re-invention of our
standard operating procedures and processes.
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CHAIRMAN’S MESSAGE CONTD.
THE SRI LANKAN RESORTS
RECORDED STRONG REVENUE
GROWTH OF 27 PER CENT,
ACHIEVING HIGHER OCCUPANCIES
ACROSS ALL ITS HOTELS
COMPARED TO THE PREVIOUS
YEAR ON THE BACK OF THE
GROWTH IN OVERALL TOURISM.
THIS IS DEMONSTRATED BY THE
SHARP INCREASE IN OVERALL
OCCUPANCY IN SRI LANKA BY
38 PER CENT, OF WHICH 16 PER
CENT STEMMED FROM THE FULL
YEAR OPERATION OF CINNAMON
CITADEL AND CINNAMON BEY.
%
45
40
35
30
for their valuable guidance and support during the year
under review and a special word of appreciation to Mr.
Amal Cabraal, who resigned from the Board, for his
valuable contribution during his tenure on the Board.
The above initiatives will be augmented with the
implementation of a new property management system
across all hotels, improving the availability of guest
information and enhancing the ability to improve
satisfaction which should augur well for the future.
Susantha Ratnayake
Chairman
CONCLUSION
I wish to acknowledge our shareholders for continuing
to be an integral part of John Keells Hotels and look
forward to your continued support in the year ahead.
Reflecting on the successful performance of the Group
in 2013, on behalf of the Board of Directors, I wish to
express my thanks and appreciation to our guests for
their continued loyalty, our business partners for the
support extended and our staff, who worked hard to
provide quality customer service.
Finally, I take this opportunity to welcome Mr. Trevin
Jayasekera to the Board of Directors and place on
record my appreciation to my colleagues on the Board
25
20
15
10
5
0
In conjunction with the above, and in keeping with
the evolving trends and technology, the resorts, as part
of the John Keells Leisure Group, have embarked on a
comprehensive Online and Social Media Strategy. This
will enable “Cinnamon” to launch a new and revamped
website, establishing its presence across all Social
Media Platforms.
Apr - Jun
- Q1
2013/14
Jul - Sep
- Q2
Oct - Dec
- Q3
Jan - Mar
- Q4
Financial
Year
2012/13
2011/12
SRI LANKA TOURISM - QUARTERLY ARRIVAL
TRENDS
29th May 2014
51
GROUP STRUCTURE
John Keells Holdings PLC
(Ultimate Parent Company)
John Keells Hotels PLC
80.32%
Kandy Walk
Inn Limited
98.39%
Cinnamon
Citadel
Kandy
Yala Village
(Pvt) Ltd
93.78%
Cinnamon
Wild
Tissamaharama
Habarana
Lodge
Limited
98.35%
Cinnamon
Lodge
Habarana
Habarana
Walk Inn
Limited
98.77%
Chaaya
Village
Habarana
Trinco
Holiday
Resorts (Pvt)
Ltd
100%
Chaaya Blu
Trincomalee
Rajawella
Hotels Co
Limited
100%
10 acres of
land
Kandy
International
Tourists &
Hoteliers Ltd
99.33%
0.11 acres of
land in
Beruwala
Beruwala Holiday
Resorts (Pvt) Ltd
100%
Cinnamon Bey
Beruwala
Wirawila
Walk Inn
Ltd
100%
25.2 acres of
land
Wirawila
T
Trinco Walk
Inn Ltd
100%
114.6 acres of
land
Trincomalee
T
John Keells
Hotels
Mauritius
(Pvt) Ltd
100%
Ahungalla
Holiday
Resorts (Pvt)
Ltd
100%
6.5 acres of
land
Ahungalla
Ceylon
Holiday
Resorts Ltd
98.65%
Bentota
Beach Hotel
John Keells
Maldivian
Resorts (Pte)
Ltd
100%
Sentinel
Realty (Pvt)
Ltd
50%
Owned Joint
Venture
33.69 acres of
land
Vaakarai
Hikkaduwa
Holiday Resorts
(Pvt) Ltd
100%
Chaaya Tranz
Hikkaduwa
Travel Club (Pte) Ltd
100%
Chaaya Reef
Ellaidhoo
Maldives
Resort Hotels Ltd
100%
44.4 acres of land
Nilaveli
Fantasea World
Investments (Pte) Ltd
100%
Chaaya Lagoon
Hakuraa Huraa
Maldives
Tranquility (Pte)
Ltd
100%
Chaaya Island
Dhonveli
Maldives
52
BOARD OF DIRECTORS
SUSANTHA RATNAYAKE - CHAIRMAN
Susantha Ratnayake was appointed as a Director
of John Keells Hotels PLC in 1999 and Chairman in
January 2006. He serves as the Chairman of John
Keells Holdings PLC. He is the Chairman of Ceylon
Tobacco Company PLC, Vice Chairman of the Employers
Federation of Ceylon and serves as a member of
several clusters of the National Council of Economic
Development. A past Chairman of the Sri Lanka
Tea Board, immediate past Chairman of the Ceylon
Chamber of Commerce, he serves on the Board of the
national carrier Sri Lankan Airlines. He has over 35
years of management experience, all of which is within
the John Keells Group.
AJIT GUNEWARDENE
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. Ajit has a Degree in
Economics and brings over 31 years of management
experience.
RONNIE PEIRIS
Ronnie Peiris was appointed as a Director of John Keells
Hotels PLC in June 2003. As the Group Finance Director
of John Keells Holdings PLC, Mr. Peiris has overall
responsibility for the Group’s Finance and Accounting,
Taxation, Corporate Finance, Treasury, Group Initiatives
and the 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.
He has over 40 years 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.
JAYANTISSA KEHELPANNALA
Jayantissa Kehelpannala, Head of Maldivian Resorts,
has over 30 years of experience in the leisure
industry both in hoteliering and inbound tourism.
He is currently the Chairman of the Hotels & Tourism
Employers Group of the Employers’ Federation of
Ceylon and represents them at the EFC Council
Meetings and is a member of the Wages Board for
the Hotel and Catering Trade. In addition, he is also
the President of the Tourist Hotels Association of Sri
Lanka (THASL) and represents the Association at the
Committee of Ceylon Chamber of Commerce. He is
a member of the Tourism Cluster of NCED (National
Council for Economic Development) under the purview
of the Ministry of Finance & Planning.
RANEL WIJESINHA
Ranel Wijesinghe was appointed to the Board in
July 2005. He is a Chartered Accountant and an
International Management Consultant, with over 30
years of national and international professional work
experience in accounting, auditing and consulting
and functions as Chairman of the Audit Committee.
A Fellow of the Institute of Chartered Accountants of
Sri Lanka, Ranel is a Past President of the Institute
of Chartered Accountants of Sri Lanka, and a Past
President of the Confederation of Asian and Pacific
Accountants. His experience in public practice
includes working with KPMG Sri-Lanka, as Manager
Deloitte, in the Bahamas and Partner and Head
of Consulting and Financial Advisory Services of
PricewaterhouseCoopers, Sri Lanka. He possesses a
Masters Degree in Business Administration from the
University of Pittsburgh in Pennsylvania, USA. His
contribution to industry included, conceptualising
and functioning as the first Director of the Business
Development Division of the John Keells Holdings
Group, as Chairman, National Wealth Corporation
Ltd, Chairman, Ayojana Fund Management (Private)
Limited and as founder Director of Lanka Ventures
Ltd. He has held several statutory, regulatory and
advisory positions for the Government of Sri Lanka as
a member of the Securities and Exchange Commission,
the Consumer Affairs Council, and the Board of the Post
Graduate Institute of Management.
With a distinctive exposure to and balance between
the private and public sector, he is presently an
independent international management consultant
to multilateral and bilateral development banks and
institutions providing advisory services to overseas
Governments.
53
NISSANKA WEERASEKERA
Nissanka Weerasekera is responsible for investments
in Sri Lanka and Bangladesh by the Abraaj Group, a
leading private equity investor operating in the growth
markets of Asia, MENA, Turkey and Central Asia,
Sub-Saharan Africa and Latin America. Prior to that
Nissanka was the Chief Executive Officer of People’s
Venture Investment Company (PVIC) and subsequently
Managing Director of Nextventures, both venture
capital firms. Nissanka is a Fellow of the Chartered
Institute of Management Accountants. He holds a
Masters degree in Economics from the University
of Colombo and a B.Sc. (Special) in Physics from the
University of Peradeniya.
SUNIMAL SENANAYAKE
Sunimal Senanayake is an Executive Vice President of
the John Keells Group, Sector Head of the Maldivian
and Sri Lankan Resorts and Head of Human Resources
of the Leisure Group. He is also a member of the Group
Operating Committee and has over 30 years of experience
in the Leisure Industry, both in Hotels and Inbound
Tourism. He served as the Managing Director of Walkers
Tours Limited from 1991 - 1997. He is a past President of
the Sri Lanka Association of Inbound Tour Operators
(SLAITO) and has held many positions in travel trade
related associations and committees. He has also been a
member of the Tourist Hotels Classification Committee
and Chairman / Member of the Advisory Board of the Sri
Lanka Institute of Tourism & Hotel Management.
TREVINE JAYASEKARA
Trevine Jayasekera, is the Group Finance Director
of Brandix Lanka Limited and is responsible for the
overall finance function of the Brandix group, as
well as related support functions. He is the former
Group Finance Director of Aitken Spence & Co.
Trevine brings with him a wealth of experience in
international banking, having worked at Arab Bank
Limited in Bahrain and subsequently holding the post
of General Manager with Deutsche Bank in Colombo.
He is a Fellow Member of the Institute of Chartered
Accountants of Sri Lanka and an Associate Member of
the Chartered Institute of Management Accountants,
UK. He is Non-Executive Director of NDB Bank.
54
CORPORATE GOVERNANCE
1 INTRODUCTION
John Keells Hotels PLC and its Group of companies
continued to maintain its high standards of corporate
governance and ethical business conduct across all
aspects of its operations and decision-making processes
during the year under review. The Company strongly
believes in the importance of corporate governance and
maintains the highest standards of business integrity,
ethical values and professionalism in all of its activities
and relationships.
through the governance processes that are in place.
However, recognising that good governance also
entails the long term sustainability of the Group, we
have in our Sustainability Report on page 98 outlined
how we engage with society at large. The reporting of
financial and non-financial performance measures
have been integrated along the lines of the Global
Reporting Initiative (GRI) and display our commitment
to governance, environmental, social, ethical and
sustainability issues.
The Group corporate governance philosophy is within
a framework of compliance and conformance, which
has been institutionalised at all levels through a strong
set of corporate values and a written Code of Conduct.
All employees, senior management and the Board of
Directors are required to embrace this philosophy in
the performance of their official duties and in other
situations that could affect the Group’s image. We
believe it is this strong set of values that has culminated
in the trust that our stakeholders have continued to
place on the core values underlying our corporate
activities.
The Board of Directors of John Keells Hotels PLC
and staff at all levels consider it their duty and
responsibility to act in the best interests of the Group
and its stakeholders. This is the foundation on which
our corporate governance framework is structured.
Further, the Chairman ensures good governance
at Board level and below on the basis of enduring
principles that provide the framework of how the
business is conducted. In this report we outline how our
governance framework ensures the effectiveness of our
Board and provides assurance to our shareholders.
2.2 Regulatory Benchmarks
This comprises of the regulations which govern, in the
main, all our corporate activities from the Companies
Act No.7 of 2007, Listing Rules of the Colombo Stock
Exchange (CSE), Rules of the Securities and Exchange
Commission (SEC) and the Benchmarks we have set
for ourselves in working towards local and global best
practices.
2 THE JOHN KEELLS HOTELS GROUP
CORPORATE GOVERNANCE SYSTEM
The Group corporate governance framework
encompassing assurance mechanisms, the regulatory
framework and the internal governance structure,
enables the Board to provide assurance to investors
that they have discharged their duties responsibly
2.1 Assurance Mechanisms
This comprises of the ‘bodies and mechanisms’ which
are employed in enabling regular review of progress
against objectives with a view to highlighting deviations
and quick redress and in providing assurance that
actual outcomes are in line with expectations.
We are pleased to confirm compliance with the
following statutes, rules and regulations; where
appropriate, any deviations permitted by same, have
been explained.
THE BOARD OF DIRECTORS
OF JOHN KEELLS HOTELS PLC
AND STAFF AT ALL LEVELS
CONSIDER IT THEIR DUTY AND
RESPONSIBILITY TO ACT IN THE
BEST INTERESTS OF THE GROUP
AND ITS STAKEHOLDERS. THIS
IS THE FOUNDATION ON WHICH
OUR CORPORATE GOVERNANCE
FRAMEWORK IS STRUCTURED.
z
Companies Act No. 7 of 2007 – Mandatory
Compliance
z
The Continuing Listing Rules of the CSE (as per
applicable corporate governance rules) - Mandatory
Compliance
z
The recommendations of the Code of Best Practice
on Governance issued jointly by the SEC and the
Institute of Chartered Accountants of Sri Lanka
(CA Sri Lanka) to the extent that they are practicable
– Voluntary Compliance
3 INTERNAL GOVERNANCE STRUCTURE
The Group’s internal governance structure is designed
in such a way that the executive authority is well
delegated through committees with clearly defined
authority limits, responsibilities and accountability
which are agreed upon in advance to achieve greater
operating efficiency and freedom of decision making.
As summary of the governance framework is illustrated
in page 55.
55
INTERNAL GOVERNANCE STRUCTURE
Integrated Governance
Systems and
Procedures
Human Resources
and Compensation
Committee of John
Keells Holdings PLC
Strategy Formulation
and Decision
Making Process
Independent
Directors
Employee
Performance
Governance
Audit Committee
Chairman &
the Board of
Directors
Group Executive Committee
(GEC)
Assurance
Board of Directors and Senior
Management Committees
Nominations
Committee of
John Keells
Holdings PLC
Audit
Committee
President / CEO
Group Management Committee
(GMC)
Employees
People and Talent
Management
Stakeholder
Management
Effective &
Transparent
Communication
IT Governance
Integrated Risk
Management
Regulatory Framework
Code of best practice on
Corporate
Governance issued
jointly by SEC and
CA Sri Lanka
Internal Control
Employee
Participation
Corporate
Governance rules
published by CSE
Code of
Conduct
External Audit
External Sustainability
Audit
Companies Act No.
07 of 2007
z
All Board sub committees are chaired by Independent Directors.
z
The Human Resources and Compensation Committee and the Nomination Committee of the Parent Company John Keells Holdings PLC. functions as the Human Resource
and Compensation Committee and the Nomination Committee of the Company and the Subsidiary Companies.
z
The meetings of the Audit Committee are attended by President- CEO, Chief Financial Officer, Head of Finance, Head of Group Business Process Review and External
Auditors by invitation.
56
CORPORATE GOVERNANCE CONTD.
z
Comply with all relevant legal and statutory requirements,
z
Implement the corporate governance guidelines and customise, where relevant, to Group’s current and
emerging needs,
z
Optimise speed of decision making, while maintaining adequate control,
z
Create an environment of individual empowerment and promote a culture of openness, constructive dissent,
and productive dialogue.
3.1.1 Board composition
As at 31st March 2014, the Board comprised of five (5) Non-Executive, Non-Independent Directors including the
Chairman and three (3) Non-Executive, Independent Directors.
Attendance at Board Meetings
25.10.2013
31.01.2014
Meetings
Attended
Name of Director
31.07.2013
Date of
Appointment
29.05.2013
ALL MEMBERS OF THE BOARD
DEVOTE SUFFICIENT TIME
AND MAKE EVERY EFFORT TO
ENSURE THAT THEY DISCHARGE
THEIR RESPONSIBILITIES TO
THE COMPANY AND THE GROUP
IN KEEPING WITH THEIR
KNOWLEDGE AND EXPERIENCE.
THIS IS ACHIEVED BY THE REVIEW
OF BOARD PAPERS, BUSINESS
VISITS TO UNDERSTAND RISK
EXPOSURES AND OPERATING
CONDITIONS, ATTENDING BOARD
MEETINGS AND PARTICIPATING
IN DISCUSSIONS WITH THE
INTERNAL & EXTERNAL AUDITORS
AND THE MANAGING AGENTS.
3.1 Board of Directors and Board Sub-Committees
The Board of Directors is responsible and accountable for the stewardship functions of the Group. The actions of
the Board of Directors of the Group are governed by the following;
01-May-99
Mr. S C Ratnayake
√
√
√
√
4/4
01-May-99
Mr. A D Gunewardene
√
√
√
√
4/4
01-Jun-03
Mr. J R F Peiris
√
√
√
√
4/4
07-Mar-05
Mr. J E P Kehelpannala
√
√
√
√
4/4
01-Jul-11
Mr. B J S M Senanayake
√
√
√
√
4/4
10-Oct-10
Mr. D A Cabraal *†
−
√
−
−
1/3
01-Jul-05
Mr. R T Wijesinha*
√
√
−
√
3/4
01-Nov-13
Mr. T L F W Jayasekera *††
−
−
−
√
1/1
01-Nov-10
Mr. N B Weerasekera *
√
√
√
√
4/4
* Independent
† Resigned w.e.f 30th October 2013
†† Appointed w.e.f 1st November 2013
57
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 declarations of their
independence. A brief profile of the Directors are set out on page 52 to 53 of this Report.
Employee of
Name of Director / Capacity Shareholding 1 Management Material
Company 4
/ Director 2
Business
3
Relationship
Family
Member a
Director or
CEO 5
Nine years of
Continuous
Service 6
3.1.3 Board responsibilities
The Board of Directors is responsible;
z
For sharing responsibility in ensuring the highest
standards of disclosure, reporting, ethics and
integrity across the Hotels Group.
z
To shareholders for the governance of the Company
z
For providing direction by the formulation and
approval of the Group’s medium and long-term
strategy, annual investment budgets, significant
financial and operational policies
z
For the proper stewardship of the Company’s
resources and the effectiveness of the Company’s
systems of internal control and the management of
risk
z
For monitoring compliance with laws and
regulations of the countries in which the Group’s
subsidiaries operate
z
For reviewing and approving major acquisitions,
disposals and capital expenditure
Non-Executive, Non-Independent Directors (NED/NID)
Mr. S C Ratnayake
Yes
Yes
No
No
No
Yes
Mr. A D Gunewardene
No
Yes
No
No
No
Yes
Mr. J R F Peiris
No
Yes
No
No
No
Yes
Mr. J E P Kehelpannala
No
No
No
No
No
Yes
Mr. B J S M Senanayake
No
No
No
No
No
No
Non-Executive, Independent Directors (NED/ID)
Mr. D A Cabraal †
No
No
No
No
No
No
Mr. R T Wijesinha
No
No
No
No
No
No
Mr. T L F W Jayasekera †† No
No
No
No
No
No
Mr. N B Weerasekera
No
No
No
No
No
No
† Resigned w.e.f 30th October 2013
†† appointed w.e.f 1st November 2013
1.
2.
3.
4.
5.
6.
Have shares in the Company
Director of a listed Company in which they are employed, or having a "significant shareholding" with voting
rights more than 10% of total or have a "business connection" where the transaction value is equivalent to or
more than 10% of the turnover of the Company
Income/non cash benefits derived from Company equivalent to 20% of Directors annual income
Employed by Company two years immediately preceding appointment
Close family member a Director or CEO
Continuously served on Board for over nine years
3.1.2 Board appointments
Board appointments follow a transparent, structured and formal process within the purview of the Nominations
Committee of the ultimate parent Company.
3.1.4 Board induction and supply of information
Newly appointed Non-Executive Directors are apprised
of
z
The John Keells Group values and culture
z
The Code of Conduct expected by the Company
z
The operating model of the Hotels and Hotels Group
z
The operations of the Hotels group and its strategies
z
Hotel Group policies, governance framework and
processes
z
Their responsibilities as Directors in terms of
prevailing legislation
3.1.5 Board skills
The updating of the skills and knowledge of all
Directors is progressive and ongoing. This is
achieved by keeping them fully briefed on important
58
developments in the business activities of the Group
and by providing them
z
Access to External and Internal Auditors
z
Periodic reports on performance
z
Management Services Limited, the Operators, with
whom formal operating contracts have been signed.
z
Hikkaduwa Holiday Resorts (Private) Limited owner of Chaaya Tranz, Hikkaduwa,
z
Habarana Lodge Limited - owner of Cinnamon
Lodge, Habarana,
z
Beruwela Holiday Resorts (Private) Limited - owner
of Cinnamon Bey, Beruwela,
Updates on topics that range from proposed/new
regulations to industry best practices
z
Habarana Walk Inn Limited - owner of Chaaya
Village, Habarana,
z
Travel Club (Pte) Limited - owner of Chaaya Reef
Ellaidhoo, Maldives,
z
Opportunities to meet senior management of the
Managing Agents in a structured setting
z
Kandy Walk Inn Limited - owner of Cinnamon
Citadel, Kandy,
z
Fantasea World Investments (Pte) Limited - owner of
Chaaya Lagoon Hakuraa Huraa, Maldives,
z
Access to industry experts and other external
professional advisory services
z
Trinco Holiday Resorts (Private) Limited - owner of
Chaaya Blu, Trincomalee,
z
Tranquility (Pte) Limited - owner of Chaaya Island
Dhonveli, Maldives.
z
Access to the Centre Legal, Tax and Finance
Divisions of the John Keells Group of which the
Company is a member and
z
Yala Village (Private) Limited - owner of Cinnamon
Wild, Tissamaharama,
z
Ceylon Holiday Resorts Limited - owner of Bentota
Beach Hotel, Bentota
z
The services of the Company Secretary
3.1.7 Managing conflicts / independence
Each Director has a continuing responsibility to
determine whether he has a potential or actual
conflict of interest arising from external associations,
The NEDs have the opportunity of gaining further
insight into the Groups’ business by visiting hotels
across the groups portfolio.
All members of the Board devote sufficient time and
make every effort to ensure that they discharge their
responsibilities to the Company and the Group in
keeping with their knowledge and experience. This is
achieved by the review of Board papers, business visits
to understand risk exposures and operating conditions,
attending Board meetings and participating in
discussions with the Internal & External Auditors and
the Managing Agents.
3.1.6 Delegation of authority
The Board has delegated some of its functions to the
Audit Committee while retaining the final right to
accept the recommendations made by this committee.
The Audit Committee is chaired by an Independent
Director appointed by the Board.
The operations of the hotels owned by the following
companies has been entrusted to Keells Hotel
Prior to
appointment
Upon
Appointment
z
Nominees are requested to disclose their various interests that could
potentially conflict with the interest of the Company
z
All Directors are expected to inform the Board and obtain Board clearance
prior to accepting any position or engaging any transaction that could create
a potential conflict of interest
z
All NEDs are required to notify the Chairman - CEO of changes in their
current Board representation
Directors who have disclosed an interest in a matter under discussion
During Board
Meetings
z
Excuse themselves from deliberations on the subject matter
z
Abstain from voting on the subject matter (Such abstentions from Board
decisions are duly recorded)
59
interests or personal relationships which may influence
judgement 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 processes as illustrated on page 58.
Details of companies in which Board members hold
Board or Board committee membership is available
with the Company for inspection by shareholders on
request.
3.1.8 Access to independent professional advice
In order to preserve the independence of the Board
and to strengthen decision making, the Board seeks
independent professional advice when deemed
necessary.
Accordingly, the Board obtained independent
professional advice covering areas such as;
z
Information technology consultancy service
pertaining to the acquisition of the new property
management system for the Hotels Group.
z
Consultancy in completing the brand architecture
of the Group
z
Stakeholder engagement in meeting the
requirements of the Global Reporting Initiative
(GRI).
z
Legal, tax and accounting aspects, particularly
where independent external advice is deemed
necessary in ensuring the integrity of the subject
decision.
z
Market surveys, architectural and engineering
advisory services as necessary for business
operations.
z
Actuarial valuation of retirement benefits.
Additionally, individual Directors are encouraged to
seek expert opinion and/or professional advice on
matters where they may not have full knowledge or
expertise.
its subsidiaries as permitted by the listing rules of the
CSE.
i.
Audit Committee
ii. Human Resources and Compensation Committee
iii. Nominations Committee
iv. Related Party Transactions Review Committee
3.1.9 Tenure, retirement and re-election of Directors
One third of the Directors except the Chairman retire
by rotation on the basis prescribed in the Articles of
Association of the Company. A Director retiring by
rotation is eligible for re-election. The tenure of office
for NEDs 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 subject to the age limit set by
statute at the time of re-appointment following the end
of a term.
The key features of these committees are;
3.1.10.1
Composition All members are exclusively NonExecutive, Independent Directors
with at least one member having
significant, recent and relevant
financial management and accounting
experience and a professional
accounting qualification
Mandate
The proposal for the re-appointment of Directors is set
out in the Annual Report of the Board of Directors on
page 143 as well as the Notice of Meeting on page 221 of
this Report.
3.1.10 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 sub-committees of the
ultimate Parent Company, John Keells Holdings PLC,
functions as the sub-committees of the Company and
Audit Committee
Scope
To provide an independent and
objective review of the financial
reporting process, internal controls and
the audit function in ensuring;
z
Adequacy and fairness of disclosure
z
Transparency, integrity and quality
of financial reporting
i.
Confirm and assure
z
Independence of External
Auditor
z
Objectivity of Internal Auditor
ii. Review with independent Auditors
adequacy of internal controls and
quality of financial reporting
iii. Regular review meetings with
management, Internal Auditor
and External Auditors in seeking
assurance on various matters
60
The Audit Committee met on seven occasions during the year and attendance was as follows:Attendance at Audit Committee Meetings
22.05.2013
18.06.2013
29.07.2013
23.10.2013
29.11.2013
20.01.2014
30.01.2014
Meetings
Attended
Name of Director
R T Wijesinha *
√
√
√
−
√
√
√
6/7
D A Cabraal †
√
√
√
−
−
−
−
3/4
T L F W Jayasekera ††
−
−
−
−
√
√
√
3/3
N B Weerasekera
−
√
√
√
√
√
√
6/7
* Chairman
† Resigned w. e. f. 30th October 2013
†† Appointed w. e. f. from 1st November 2013
3.1.10.2 Human Resources and Compensation Committee
Composition As permitted by the listing rules of the CSE, the Human Resources and Compensation Committee
of the ultimate Parent Company, John Keells Holdings PLC, functions as the Remuneration
Committee of the Company and its subsidiaries. It comprises of five Independent Directors. The
Chairperson is a Non-Executive Director while the Chairman of the Board is a permanent member
except during discussions on his own compensation.
Mandate
Determine the quantum of compensation (including employee share options in shares of
the ultimate parent Company), conduct performance evaluation of Chairman/CEO, review
performance evaluation of other Directors and establish and review the Remuneration Policy
Scope
1.
2.
3.
Determine and agree with the Board a framework for remuneration of the Chairman and
other Directors.
Consider targets, and benchmark principles for any performance related pay schemes
Within the terms of agreed framework, determine total remuneration package of each
Director keeping in view;
z
Performance
z
Industry trends
Past remuneration
Succession planning of key Management
z
4.
The Human Resources and Compensation Committee
members of the ultimate parent Company are as
follows;
Mr. E F G Amerasinghe - Chairman
Dr. I Coomaraswamy
Mr. A R Gunasekara
Mr. M A Omar (Appointed w.e.f. 28/05/2013)
Mr. N A Fonseka (Appointed w.e.f. 07/11/2013)
Mrs. S Tiruchelvam (Resigned w.e.f. 09/9/2013)
61
3.1.10.3
Nominations Committee
Composition The Nomination Committee of the ultimate Parent Company, John Keells Holdings PLC, functions
as the Nomination Committee of the Company and its subsidiaries. It comprises of four
Independent Directors and one Non-Independent Director. The Chairperson is a Non-Executive,
Independent Director
Mandate
Define and establish nomination process for Directors, lead the process and make
recommendations to the Board on the appointment of Directors.
Scope
i.
Assess skills required on the Board given the needs of the businesses
ii. From time to time assess the extent to which required skills are represented on Board
iii. Prepare a clear description of the role and capabilities required for a particular appointment
iv. Identify and recommend suitable candidates for appointments to the Board.
v. Ensure that on appointment to the Board, Directors receive a formal letter of appointment
specifying clearly
z
Expectation in terms of time commitment
z
Involvement outside of the formal Board meetings
z
Participation in committees
Composition The Related Party Transactions
Review Committee of the ultimate
parent Company, John Keells Holdings
PLC, functions as the Related Party
Transactions Review Committee of
the Company and its subsidiaries.
It comprises of three Non-Executive
Independent Directors and two NonExecutive Non-Independent Directors.
The Chairperson is an Independent
Non-Executive Director.
Mandate
To ensure on behalf of the Board, that
all Related Party Transactions of John
Keells Hotels PLC is consistent with the
Code of Best Practices on Related Party
Transactions issued by the SEC.
Scope
i. Develop, and recommend for
adoption by the Board of Directors
of John Keells Hotels PLC and
its subsidiaries, a Related Party
Transactions Policy which is consistent
with the Operating Model and the
Delegated Decision Rights of the Group.
ii. Update the Board of Directors on
the related party transactions of the
Company on a quarterly basis.
The Nomination Committee members of the ultimate parent Company are as follows;
Mr. T Das - Chairman
Mr. S C Ratnayake - Non-Independent
Mr. M A Omar - (Appointed w.e.f. 7/11/2013)
Mr. E F G Amerasinghe - (Appointed w.e.f. 7/11/2013)
Mr. D A Cabraal - (Appointed w.e.f. 7/11/2013)
Mrs. S Tiruchelvam - (Resigned w.e.f. 9/9/2013)
3.1.10.4 Related Party Transactions Review Committee (Effective from 01st April 2014)
With the goal of adding value, following global benchmarking of its governance framework, the Board of the
ultimate parent Company established a Related Party Transactions Review Committee with effect from 01 April
2014, to review all the related party transactions of the listed companies within the Group. This move also complies
with the early adoption of the Code of Best Practice on related party transactions issued by the SEC. On the basis
that the ultimate parent Company is also a listed Company, the SEC has permitted the Related Party Transactions
Review Committee of the ultimate parent Company, to represent the listed companies in the John Keells Group of
which, John Keells Hotels PLC is a member.
The Related Party Transactions Review Committee
members of the ultimate parent Company are as follows;
Mr. N A Fonseka - Chairman
Mr. E F G Amerasinghe
Mr. D A Cabraal
Mr. S C Ratnayake
Mr. J R F Peiris
62
3.1.11 Director Remuneration
3.1.11.1 Non-Executive, Non-Independent Director
Remuneration
The remuneration of the Chairman/CEO and the NEDs/
NIDs is determined in line with the remuneration
policies of the Group. The remuneration policy 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 Group has adopted a
remuneration policy designed to provide an appropriate
balance between fixed remuneration and variable ‘risk’
reward which includes a fixed and variable element.
The variable element is based on both individual
performance and an organisational performance matrix
which covers revenue and after tax profit.
In addition, a long term incentive in the form of
employee share options (ESOP) in the stated capital
of the ultimate parent Company is granted based on
actual performance.
As prescribed by the Sri Lanka Accounting Standards
(SLFRS / LKAS) all ESOPs of the respective employees
are charged to the income statement of the relevant
subsidiaries with effect from 01st July 2013 being the
date of the first award after the introduction of the
accounting standard.
Directors fees applicable to NED/NIDs nominated by
John Keells Holdings PLC are paid directly to John Keells
Holdings PLC and not to individuals.
3.1.11.2 Non-Executive, Independent Director
Remuneration
Compensation of Non-Executive, Independent Directors
is determined with reference to fees paid to other
NED/IDs of comparable companies and is adjusted
where necessary. The fees received by NED/IDs are
determined by the Board and reviewed annually.
NED/IDs do not receive any performance/incentive
payments and are not eligible to participate in any of
the Group’s share option plans. The NED/IDs fees are
not subject to time spent or defined by a maximum/
minimum number of hours committed to the Group per
annum, and hence are not subject to additional/lower
fees for additional/lesser time devoted.
The aggregate remuneration paid to Directors is
disclosed on page 173 of this Report.
3.1.11.3 Compensation for early termination
In the event of an early termination of the Directors
there are no compensation commitments other than
for;
(1) NED/NIDs; as per their employment contract like
any other employee.
(2) NED/IDs; Director Fees payable, if any, in terms of
contract.
3.1.12 Board meetings
3.1.12.1 Regularity of Meetings and Pre-Board Meetings
The Board meets, at the least, once every quarter. Any
absences are informed in advance and duly recorded.
The absent members are briefed on the discussions
and actions taken during the meeting. Directors are
provided with the necessary information in advance
of the Board meeting in order to facilitate more
informed decision making. Board information packs
supplied to the Directors include the Board Resolutions,
performance reports and compliance statements etc.
3.1.12.2 Typical Board Agenda
z
Confirmation of previous minutes
z
Circular resolutions
z
Board sub-committee reports and other matters
exclusive to the Board
z
Matters arising from the previous minutes
z
Status updates of major projects
z
Review of performance risk reports and other
functional areas
z
Approval of quarterly and annual financial
statements
z
Ratification of capital expenditure and donations
z
Ratification of the use of the Company seal and
share certificates issued
z
New resolutions
z
Any other business;
3.1.12.3 Supply of information
In order to ensure robust discussion, informed
deliberation and effective decision making, the
Directors are provided access to;
z
Information as is necessary to carry out their duties
and responsibilities effectively and efficiently
z
Information updates from management on topics
under review by the Board, new regulations and
best practices as relevant to the Group’s business
z
External and Internal Auditors
z
Experts and other external professional services
z
The services of the Company Secretaries whose
appointment and/or removal is the responsibility of
the Board
z
Periodic performance reports
z
Senior management under a structured
arrangement
3.1.12.4 Board Secretary
Keells Consultants (Pvt) Ltd functions as the Secretaries
and registrars of the Company and provides the
Secretarial input for Board proceedings in addition to
maintaining Board minutes and Board records.
63
3.1.12.5 Board evaluation
The Chairman evaluates the performance of the
Board annually while the Independent Non-Executive
Chairman of the Audit Committee evaluates the
effectiveness of the Audit Committee. There is a
formalised process of self-appraisal which enables
each member to self-appraise on an anonymous basis,
the performance of the Board, using a very detailed
checklist / questionnaire covering areas such as;
z
Role clarity and effective discharge of
responsibilities
z
Systems and procedures
z
Quality of participation
z
Board image
The scoring and open comments are collated and the
results are analysed to give the Board an indication of
its effectiveness as well as areas that require addressing
and/or strengthening.
3.2 Role of Chairman/CEO
The Chairman is a Non-Executive, Non-Independent
Director. The main responsibility of the Chairman is to
lead and manage the Board and its Committees so that
they can function effectively. He also sets the tone for
the governance and ethical framework of the Group,
facilitates and encourages the expression of differing
views, and by keeping in touch with local and global
industry developments, ensures that the Board is alert
to its obligations to the Company’s shareholders and
other stakeholders. He represents the Group externally
and is the focal point of contact for shareholders on all
aspects of corporate governance.
With the assistance of the Board Secretaries, Keells
Consultants (Pvt) Ltd, he also ensures that:
z
Board procedures are followed
z
Directors receive timely, accurate and clear
information
z
Updates on matters arising between meetings
z
The agenda for the Board meeting, reports and
papers for discussion are dispatched at least one
week in advance so that the Directors are in a
position to study the material and arrive at sound
decisions
z
A proper record of all proceedings of Board
meetings is maintained
The Board has, subject to pre-defined limits,
delegated its executive authority to the President/
CEO of the Leisure Group for the implementation of
strategies approved by the Board and developing and
recommending to the Board the business plans and
budgets in keeping with Group strategy.
3.2.1 Chairman/CEO appraisal
The Human Resources and Compensation Committee
of the ultimate parent Company appraises the
performance of the Chairman on an organisational and
individual basis as approved by the Board. The annual
appraisal of the President/CEO is carried out at parent
level and is based on pre-agreed criteria.
3.3 Human Resources Governance
A proven Performance Management System and other
supporting Human Resource Management Processes
are in place. This facilitates a culture of performance
within a framework of compliance, conformance and
sustainable development.
3.3.1 Performance Management
The Performance Management System is at the heart
of many supporting Human Resource Management
processes such as Learning and Development,
Career Development, Succession Planning,
Talent Management, Rewards/Recognition and
Compensation/Benefits. The Group’s Performance
Management System has been very instrumental in
empowering staff in achieving organisational goals
through relevant training, recognition and reward.
3.3.2 Short-term Incentives
The ‘short-term’ pay for performance is determined as
follows.
Manager and above levels – Given the progressively
higher level of decision making authority, the
greater weightage is placed on the achievement of
organisational objectives rather than the achievement
of individual objectives.
Assistant Manager and Executive Level – Only
individual performance ratings are considered.
Clerical and Non-Executive – A short term incentive
in the form of Group-wide share of profit, calculated
as a multiple of the basic salary is granted. Individual
performance ratings are not carried out or considered.
3.3.3 Long-term Incentives – Share Options
Share options of the ultimate parent are offered to
eligible employees at defined career levels based on
pre-determined criteria which are uniformly applied
across the eligible levels. As per the historical data, the
financial benefit of the long term incentive scheme
(ESOP) had been far greater than that of short term
incentives and these long term incentives have been
very instrumental in inculcating, in the recipients, a
deep sense of ownership.
Share options are awarded to individuals on the
basis of their immediate performance and potential
importance of their contribution to the Group’s future
plans.
64
3.4 Risk review
The Board has adopted a group-wide risk management
programme to identify, evaluate and manage significant
risks in a manner that supports the furtherance of
business strategy. This programme ensures that the
risks accepted as a result of the Group’s operations are
in keeping with its risk appetite, thereby preserving and
creating shared value for all stakeholders. The detailed
Risk Management report on page 92 of the Annual
Report describes the process of risk management as
adopted by the Group and the key risks impacting the
achievement of the Group’s strategic business objectives.
3.5 Investment appraisal process and investment
decisions
3.5.1 Investment appraisal
Over the years, the Group has refined the process of
investment appraisal which ensures the involvement
of the relevant persons when capital investment
decisions are made. Several views, opinions and
advice 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 usually
culminated in a good result. Project appraisal and
capital investment decisions are processed through
a committee structure which safeguards against one
individual having unfettered decision making powers
in such decisions.
3.5.2 Operations, planning, monitoring and decision
rights:
The responsibility for monitoring plans has been
entrusted to the Operators. The achievement of annual
plans as well as ensuring compliance with Group policies
and guidelines rests with the chief executive officer 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.
3.5.3 Monitoring of financial and operational data:
z
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
z
The Board reviews the financial results on a
quarterly basis.
z
The Chairman, CEO and Group Finance Director are
able to view key financial information for all Hotel
Group companies on a real time basis via the Group
wide ERP system
z
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.
3.6 IT Governance
The use of IT in the Hotels Group has evolved from the
simple automation of repetitive back office processing
to delivering real time management information on
a wide variety of platforms. This evolution occurred
as the Group 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 the Group’s IT resources. The Group 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 John Keells Group has progressively improved
service quality and mitigated IT risks by implementing
prudent internal controls based on the Information
IT GOVERNANCE ACTIVITIES & PROCESS
Processes
Measure
Directs
Use
Improve
Stakeholder Value
Drivers
Drives
Resources
Knowledge
z Capability
z Information
z
IT Strategy
Report
Results
Outcome
z Performance
z Risk
z Assets
z
65
Security Management guidelines outlined in ISO27001
within the COSO framework which covers both risk
and business continuity management.
With the growing dependence on IT caused by the rapid
evolution and use of mobile technologies, the Group has
also further strengthened its IT governance framework
by adopting the Control Objectives for Information and
related Technology guidelines (COBIT) issued by the IT
Governance Institute. The Hotels Group continues to
benefit from this quest for excellence in IT governance
and aims to deliver sustainable business value by
structuring its IT governance along similar lines.
3.7 Stakeholder management and effective
communication
Group follows a stakeholder model of governance
and following are the key stakeholder management
methodologies adopted;
3.7.1 Shareholders / Investors
3.7.1.1
Release of Information to the Public and CSE
The Board of Directors, in conjunction with the Audit
Committee has ensured the accuracy and timeliness
of published information and has presented an honest
and balanced assessment of results in the quarterly and
annual financial statements.
All other material and price sensitive information
about the Company is promptly communicated to the
CSE, where the shares of the Company are listed, and
such information is also released to shareholders, press
and employees.
3.7.1.2 Annual General Meeting (AGM)
The Group makes use of the AGM constructively
towards enhancing relationship with the shareholders
and towards this end the following procedures are
followed;
z
In accordance with the rules of the SEC, Notice of
the AGM and relevant documents are forwarded to
shareholders within the specified period
z
The Directors are available to clarify any points
raised by shareholders
z
The Chairman/CEO ensures that relevant senior
managers are available at the AGM to answer
specific queries
z
Separate resolutions are proposed for each item on
the Agenda
3.7.1.3 Serious Loss of Capital
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
would be passed on the proposed way forward.
3.7.2 Customers / suppliers
The Group works towards meeting customer
expectations by ensuring the quality and safety of
the services provided by the Hotels in the Group.
Towards this end the Group constantly engages with
the customers by way of print and electronic feedback
forms, loyalty meetings and through celebrating special
events of guests in-house.
The Group fosters long term business relations with
suppliers by adhering to contractual obligations,
sharing knowledge at supplier forums and active
representation in business councils and committees of
the industry.
3.7.3 Government
The Group maintains professional relationships with
relevant government institutions by carrying out
transactions in compliance with all relevant laws
and regulations, transparently and ethically and in a
manner consistent with that expected of a responsible
corporate citizen. This has resulted in the credibility
of the Group being high in the eyes of all government
institutions. Where possible, and appropriate, the
Group proactively engages the authorities in better
understanding regulations and in expressing its own
views. As a matter of policy, the Group has a zero
tolerance policy in ensuring that all business units meet
their statutory obligations in time and in full. Periodic
information, and disclosures, demanded by regulatory
authorities are made available in a timely and accurate
manner. Where relevant, Group companies make use of
their chambers and trade associations in dealing with
the government.
3.7.4 Employees
The HR organisation and processes are designed
to enable employee accessibility to every level of
management. Constant dialogue and facilitation is also
maintained on work related issues as well as on matters
pertaining to general interest that affect employees and
their families. The Group follows an open-door policy
for its employees at all levels.
The Group recognises that employee involvement
is a critical pre-requisite towards ensuring the
effectiveness of the corporate governance system
and therefore attaches great importance to employee
communications and employee awareness of key events
and significant developments. The necessity of sincere
and regular communication; - top-down, bottomup, and lateral, in gaining employee commitment to
organisational goals and values are stressed extensively
and intensively through various communiques issued
by the Chairman and the senior management. Whilst
employees have many opportunities to interact with the
senior management as a part of their routine work and
other regular social events, the Group has also created
66
various formal channels, as described below, for such
communication and interaction.
4 ASSURANCE MECHANISMS
The “Assurance Mechanisms” comprise, in the main, of
the various supervisory, monitoring and benchmarking
elements of the Group corporate governance system
which are used to measure “actuals” against “plan” on,
in most instances, a pre-determined time table with a
view to signalling the need for quick corrective action,
when necessary, on a timely basis. These mechanisms
also act as “safety nets”, “buffer mechanisms” and
internal checks in the governance system.
4.1 Employee participation in Assurance
Whistleblower policy - Employees can report to the
Chairman through a communication link named
“Chairman Direct”, on any concerns about unethical
behaviour and any violation of Group values.
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.
Skip level meetings- Employees at Assistant Manager
and all levels above can discuss matters of concern
with superiors who are at a level higher than their
own immediate supervisor in an open but confidential
environment.
Exit interviews - This is conducted for all staff levels
above Executive. All such reports are forwarded to the
respective President and Executive Vice President for
their comments and are subsequently discussed by
senior management bi-monthly.
Securities trading policy - The Group’s securities
trading policy prohibits all employees and agents
engaged by the Company who are in possession of
unpublished price sensitive information from trading
in the Company shares or other companies in which
the Company has a business interest. The Group adopts
a zero tolerance policy against any employee who is
found to be in violation of this policy.
360 degree evaluation - All employees at Manager,
Assistant Vice President and above levels, including the
Chairman (direct report evaluation only) is subject to
a 360 degree evaluation conducted by an independent
third party.
Great Place to Work Survey - These anonymous surveys
are conducted at regular intervals, to ascertain whether
employees consider the Company and its subsidiaries
‘great workplaces’. Experience has confirmed that
this has contributed to significant improvements in
employee perceptions of the Group particularly in
respect to practices, policies and behaviours that build
credibility, respect and fairness.
4.2 Internal Control
The Board has taken necessary steps to ensure the
integrity of the Group’s accounting and financial
reporting systems and internal control systems remain
effective via the review and monitoring of such systems
on a periodic basis.
4.2.1 Internal compliance
A quarterly self-certification programme requires the
President, Sector Heads and the Chief Financial Officer
to confirm compliance with financial standards and
regulations. The President and sector heads of business
units are required to confirm operational compliance
with statutory and other regulations and key control
procedures, and also identify any significant deviations
from expected norms.
4.2.2 System of internal Audits
The Board has, through the involvement of the Group
Business Process Review function, taken steps to obtain
assurance that systems designed to safeguard the
Company’s assets, maintain proper accounting records
and provide management information, are in place
and are functioning according to expectations. The risk
review programme covering the internal audit of the
whole Group is outsourced.
To further strengthen internal control and obtain
independent assurance the Group has enlisted the
services of Messrs. PricewaterhouseCoopers, KPMG
and BDO Partners, to monitor and report on the
adequacy of the financial and operational systems of
the properties operated by the Group in both Sri Lanka
& Maldives. Their scope included:
z
Assessment of the adequacy of accounting and
operational control systems in terms of economy,
efficiency and effectiveness.
z
Examination of compliance with statutory
requirements, management policies and
procedures.
z
Review and monitor operational and financial
controls in order to ascertain adherence to such
controls.
The internal audit reports are in the first instance,
considered and discussed at hotel level and after review
by the relevant regional sector head and the President
of the Leisure group, an executive summary including
appropriate management action prepared by the Group
Business Process Review is forwarded to the Audit
Committee. Internal Audit reports are structured in
a manner that facilitates resolution of the concerns
highlighted and the Board monitors management
follow up action on an ongoing basis.
67
4.3 Code of Conduct
All employees, including the Board of Directors, are
bound to abide by the following expectations:CODE OF CONDUCT
Ombudsperson arising subsequent to an independent
inquiry is confidentially communicated to the
Chairman or to the Senior Independent Director of the
ultimate parent Company upon which the involvement
duty of the Ombudsperson ceases.
z
Allegiance to the Company and the Group
z
Compliance with rules and regulations
applicable in the territories in which the Group
operates
z
Conduct of business in an ethical manner at all
times and in keeping with acceptable business
practices
z
The decision and recommendation of the
Ombudsperson
z
The action taken based on the recommendation
Exercise of professionalism and integrity in all
business and personal transactions which could
affect the image of the Group
z
Areas of disagreement and the reasons adduced in
such instances
z
The Group believes that the strong set of core values
which underlie the Code, are the main source of its
competitive advantage which is rewarded by the trust
placed in it by its stakeholders.
The Chairman of the Board affirms that there has not
been any material violation of any of the provisions of
the code of conduct. In instances where violations did
take place, they were investigated and handled through
well established procedures.
4.4 Ombudsperson
In a situation where an individual employee or a group
of employees complain of an alleged violation of the
published Code of Conduct, and feels that the alleged
violation has not been addressed satisfactorily by
internally available mechanisms, provision has been
made to refer such complaints to an Ombudsperson.
The findings and the recommendations of the
On matters referred to him by the Ombudsperson, the
Chairman or the Senior Independent Director of the
ultimate parent Company, as the case may be, will place
before the Board;
Steps are taken to ensure that complainants are not
victimised. There were no cases that were brought to
the attention of the Ombudsperson during the year
under review.
4.5 External Audit
Ernst & Young, are the Company external auditors and
during the year under review they have not provided
non-audit services to the Group. The principal/
consolidator auditor has not engaged in any services
which are in the restricted category as defined by the
CSE for external auditors.
The audit fees paid by the Company and Group to its
auditors are separately classified in the Note 8 to the
Financial Statements.
5 REGULATORY BENCHMARKS
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 CA Sri Lanka and
the requirements of the CSE and other applicable
authorities.
The Company and its subsidiaries are fully compliant
with all the mandatory rules and regulations stipulated
by the Corporate Governance Listing Rules published
by the CSE (revised in 2014) 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 CA
Sri Lanka and the SEC and has voluntarily adopted the
relevant provisions as far as is practicable.
68
STATEMENT OF COMPLIANCE UNDER SECTION 7.10 OF THE RULES OF THE CSE ON CORPORATE GOVERNANCE
(Mandatory provisions - fully complied)
Rule No.
Subject
Applicable Requirement
Compliance
Status
Applicable Section in the Annual Report
7.10.1(a)
Non-Executive Directors (NED)
2 or at least 1/3 of the total number of Directors should be NEDs
Complied
7.10.2(a)
Independent Directors (ID)
2 or 1/3 of NEDs, whichever is higher, should be independent
Complied
7.10.2(b)
Independent Directors
Each NED should submit a declaration of independence
Complied
Available with the Secretaries for review
7.10.3(a)
Disclosure relating to Directors
z
The Board shall annually determine the independence or
otherwise of the NEDs
Complied
z
Names of IDs should be disclosed in the Annual Report (AR)
Complied
7.10.3(b)
The basis for the Board’s determination of ID, if criteria specified Complied
for independence is not met
7.10.3(c)
A brief resume of each Director should be included in the AR
including the Director’s areas of expertise
Complied
Board of Directors (profile) section in the
Annual Report
7.10.3(d)
Provide a brief resume of new Directors appointed to the Board
with details specified in 7.10.3(a), (b) and (c) to the CSE
Complied
Corporate Governance and Board of Directors
(profile) section in the Annual Report
Requirements for meeting criteria
Complied
7.10.4 (a-h) Determination of Independence
7.10.5
Remuneration Committee (RC)
The RC of the listed parent Company may function as the RC
Complied
7.10.5(a)
Composition of Remuneration
Committee
Shall comprise of NEDs, a majority of whom will be
independent
Complied
7.10.5.(b)
Functions of Remuneration
Committee
The RC shall recommend the remuneration of the Chief
Executive Officer (CEO) and NEDs
Complied
7.10.5.(c)
Disclosure in the Annual Report
relating to Remuneration
Committee
z
Names of Directors comprising the RC
Complied
z
Statement of Remuneration Policy
Complied
z
Aggregated remuneration paid to NED/NIDs and NED/IDs
Complied
7.10.6
Audit Committee (AC)
The Company shall have an AC
7.10.6(a)
Composition of Audit Committee
z
Shall comprise of NEDs a majority of whom will be
Independent
Complied
Corporate Governance and the Board
Committee Reports
Complied
z
A NED shall be appointed as the Chairman of the Committee Complied
z
CEO and Chief Financial Officer (CFO) should attend AC
meetings
z
The Chairman of the AC or one member should be a member Complied
of a professional accounting body
Complied
Committee Reports
69
Rule No.
Subject
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
Complied
z
Compliance with financial reporting requirements,
information requirements of the Companies Act and
other relevant financial reporting related regulations and
requirements
Complied
z
Processes to ensure that the internal controls and risk
management are adequate to meet the requirements of the
Sri Lanka Auditing Standards
Complied
z
Assessment of the independence and performance of the
external auditors
Complied
z
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
Complied
z
Names of Directors comprising the AC
Complied
z
The AC shall make a determination of the independence of
the Auditors and disclose the basis for such determination
Complied
z
The AR shall contain a Report of the AC setting out the
manner of compliance with their functions
Complied
z
Names of Directors comprising the Committee.
z
Will monitor and approve recurrent and non-recurrent
related party transactions as set out in the Group policy
guidelines.
Voluntarily
complied
with effect
from 1st
April 2014
z
7.10.6(c)
Disclosure in Annual Report
relating to Audit Committee
Related Party Transactions Review
Committee
Compliance
Status
Committee Reports
Committee Reports
Corporate Governance Report
70
ADOPTION OF JOINT CODE OF BEST PRACTICE - CHECK LIST
Code Ref.
Subject
Adoption
Status
A. 1 DIRECTORS– Board
A.1.1
Frequency of Board Meetings
z
Board should meet regularly, at least once, every quarter
Complied
Corporate Governance / Annual Report of
the Board of Directors
A.1.2
Responsibilities of the Board
z
Formulation and implementation of strategy,
Complied
z
Skill adequacy of management and succession,
Complied
z
Integrity of information, internal controls and risk
management
Complied
z
Compliance with laws, regulations and ethical standards
Complied
z
Code of conduct
Complied
z
Adoption of appropriate accounting policies
Complied
A.1.3
Access to professional advice
z
Procedures to obtain independent professional advice
Complied
A.1.4
Company Secretary
z
Ensure adherence to Board procedures and applicable rules
and regulations
Complied
z
Procedure for Directors to access services of Company
Secretary
Complied
A.1.5
Independent judgement
z
Directors should exercise independent judgement on
issues of strategy, resources, performance and standards of
business judgement
Complied
A.1.6
Dedication of adequate time and
effort by Directors
z
Directors should devote adequate time and effort to
Complied
discharge their responsibilities to the Company satisfactorily
A.1.7
Training for Directors
z
Directors should receive appropriate training, hone skills
and expand knowledge to more effectively perform duties
Complied
A. 2 DIRECTORS - Chairman & Chief Executive Officer
A.2.
Division of responsibilities
to ensure no individual has
unfettered powers of decision
z
A balance of power and authority to be maintained by
separating responsibility for conducting Board business
from that of executive decision making
Complied
z
Chairman to preserve order and facilitate effective discharge Complied
of Board functions by proper conduct of Board meetings
A. 3 DIRECTORS - Role of Chairman
A.3
Ensure good corporate governance
71
Code Ref.
Subject
Adoption
Status
A. 4 DIRECTORS - Financial Acumen
A.4
Possession of adequate financial
acumen
z
Board to ensure adequacy of financial acumen and
knowledge within Board
Complied
A. 5 DIRECTORS – Board Balance
A.5.1
Composition of Board
z
The Board should include a sufficient number of NonExecutive, Independent Directors
Complied
A.5.2
Proportion of independent
directors
z
Two or one third of the Non-Executive Directors should be
independent
Complied
A.5.3
Test of independence
z
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 judgement
Complied
A.5.4
Declaration of independence
z
Non-Executive Directors should submit a signed and dated
declaration of their independence / non-independence
Complied
A.5.5
Annual determination of
criteria of independence / nonindependence and declaration of
same by Board
z
The Board should annually determine and disclose the
names of Directors deemed to be independent
Complied
A.5.6
Appointment of Senior
Independent Director (SID)
z
If the roles of Chairman / CEO are combined, a NonExecutive Director should be appointed as a Senior
Independent Director
N/A
A.5.7
Availability of Senior Independent
Director to other directors
z
If warranted, the SID should be available to the other
Directors for confidential discussions.
N/A
A.5.8
Interaction between Chairman
and Non-Executive, Independent
Directors
z
The Chairman should meet the Non-Executive, Independent
Directors at least once a year
Complied
A.5.9
Directors concerns to be recorded
z
When matters are not unanimously resolved, Directors to
ensure their concerns are recorded in Board minutes
N/A
72
Code Ref.
Subject
Adoption
Status
A. 6 DIRECTORS - Supply of Information
A.6.1
Provision of adequate information
to Board
z
Management to ensure the Board is provided with timely
and appropriate information
Complied
A.6.2
Adequacy of Notice and formal
agenda to be discussed at Board
meetings
z
Board minutes, agenda and papers should be circulated at
least seven days before the Board meeting
Complied
A. 7 DIRECTORS - Appointments to the Board
A.7.1
Nomination Committee
z
Nomination committee of parent may function as such for
the Company and make recommendations to the Board on
new Board appointments
Complied
A.7.2
Annual assessment of Board
composition
z
Nomination committee or Board should annually assess the
composition of Board
Complied
A.7.3
Disclosure of new Board
appointments
z
Profiles of new Board appointments to be communicated to
Shareholders
Complied
Corporate Governance / Notice of Meeting
A. 8 DIRECTORS – Re-election
A.8.1
Appointment of Non-Executive
Directors
z
Appointment of Non-Executive Directors should be for
specified terms and re-election should not be automatic
Complied
A.8.2
Shareholder approval of
appointment of all Directors
z
The appointment of all Directors should be subject to
election by shareholders at the first opportunity
Complied
the Board of Directors / Notice of Meeting
A. 9 DIRECTORS - Appraisal of Board Performance
A.9.1
Annual appraisal of Board
performance
z
The Board should annually appraise how effectively it has
discharged its key responsibilities
Complied
A.9.2
Self evaluation of Board and Board
Committees
z
The Board should evaluate its performance and that of its
committees annually
Complied
Corporate Governance / Audit Committee
Report
A.9.2
Declaration of basis of
performance evaluation
z
The Board should disclose in the Annual Report how
performance evaluations have been carried out
Complied
Complied
Board of Directors / Corporate Governance
/ Audit Committee Report
A. 10 DIRECTORS - Disclosure of information in respect of Directors
A.10.1
Biographical profiles and relevant
details of Directors to be disclosed
z
Annual Report should disclose the biographical details of
Directors and attendance at Board/Committee meetings
73
Code Ref.
Subject
Adoption
Status
A. 11 DIRECTORS - Appraisal of Chief Executive Officer
A.11.1
Short, medium and long term
objectives, financial and nonfinancial objectives to be set
z
The Board should set out the short, medium and long term
objectives, financial and non-financial objectives at the
commencement of each year
Complied
A.11.2
Evaluation of CEO performance
z
The performance of the CEO should be evaluated by the
Board at the end of the year
Complied
B. 1 DIRECTORS REMUNERATION - Remuneration Procedure
B.1.1
Appointment of Remuneration
Committee
z
Remuneration Committee of parent may function as such
for the Company to make recommendations on Directors
remuneration
Complied
B.1.2
Composition of Remuneration
Committee
z
Board to appoint only Non-Executive Directors to serve on
Remuneration Committee
Complied
B.1.3
Disclosure of members of
Remuneration Committee
z
The Annual Report should disclose the Chairman and
Directors who serve on the Remuneration Committee
Complied
B.1.4
Remuneration of Non-Executive
Directors
z
Board to determine the level of remuneration of NonExecutive Directors
Complied
B.1.5
Access to professional advice
z
Remuneration Committee should have access to professional Complied
advice in order to determine appropriate remuneration for
Executive Directors.
B. 2 DIRECTORS REMUNERATION - Level and Make up of Remuneration
B.2.1
Remuneration packages for
Executive Directors
z
Packages should be structured to attract, retain and motivate Complied
Executive Directors
B.2.2
Remuneration packages to be
appropriately positioned
z
Packages should be comparable and relative to that of
other companies as well as the relative performance of the
Company
Complied
B.2.3
Appropriateness of remuneration
and conditions in relation to other
Group companies
z
When determining annual increases remuneration
committee should be sensitive to that of other Group
companies
Complied
B.2.4
Performance related elements of
remuneration
z
Performance related elements of remuneration should be
aligned with interests of Company
Complied
B.2.5
Share options
z
Executive share options should not be offered at a discount
Complied
74
Code Ref.
Subject
B.2.9
Remuneration packages for NonExecutive Directors
z
Should reflect time commitment and responsibilities of role
and in line with existing market practice
Adoption
Status
Complied
B. 3 DIRECTORS REMUNERATION - Disclosure of Remuneration
B.3.1
Disclosure of details of
remuneration
z
The Annual Report should disclose the remuneration paid to Complied
Directors
Financial Statements - Note 8
C. 1 RELATIONS WITH SHAREOLDERS – Constructive use and conduct of Annual General Meeting
C.1.1
Proxy votes to be counted
z
The Company should count and indicate the level of proxies
lodged for and against in respect of each resolution
Complied
C.1.2
Separate resolutions
z
Separate resolutions should be proposed for substantially
separate issues
Complied
Notice of Meeting
C.1.3
Availability of Committee
chairmen at AGM
z
The chairmen of Board committees should be available to
answer any queries at AGM
Complied
C.1.4
Notice of AGM
z
15 calendar days notice to be given to shareholders
Complied
Notice of Meeting
C.1.5
Procedure for voting at meetings
z
Company to circulate the procedure for voting with Notice
of Meeting
Complied
Notice of Meeting
z
Transactions that have a value which are greater than half of Complied
the net assets of the Company should be disclosed
C. 2 MAJOR TRANSACTIONS
C.2.1
Disclosure of Major Transactions
D.1 ACCOUNTABILITY AND AUDIT - Financial Reporting
D.1.1
Presentation of public reports
z
Should be balanced, understandable and comply with
statutory and regulatory requirements
Complied
Management Discussion and Analysis,
Risk Management
Financial Statements
75
Code Ref.
Subject
Adoption
Status
D.1.2
Director’s Report
z
The Director’s Report should be included in the Annual
Report and confirm that
Complied
z
the Company has not contravened laws or regulations in
conducting its activities
Complied
z
Material interests in contracts have been declared by
Directors
Complied
Financial Statements
z
the Company has endeavoured to ensure equitable
treatment of shareholders
z
that the business is a “going concern”
Complied
z
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
Complied
Risk Management
D.1.3
Respective responsibilities of
Directors and Auditors
z
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
Complied
Statement of Directors’ Responsibility and
D.1.4
Management Discussion and
Analysis
z
Annual Report to include section on Management
Discussion and Analysis
Complied
Management Discussion and Analysis
D.1.5
Going Concern
z
Directors to substantiate and report that the business is a
going concern or qualify accordingly
Complied
D.1.6
Serious Loss of Capital
z
Directors to summon an Extraordinary General Meeting in
the event that the net assets of the Company falls below 50%
of the value of Shareholder’s Funds
N/A
D.2 ACCOUNTABILITY AND AUDIT - Internal Control
D.2.1
Effectiveness of system of internal
controls
z
Directors to annually conduct a review of the effectiveness
Complied
of the system of internal controls. This responsibility may be
delegated to the Audit Committee
Risk Management
z
Should comprise of a minimum of two Independent, NonExecutive Directors
Complied
z
Audit Committee Chairman should be appointed by the
Board
Complied
D.3 AUDIT COMMITTEE
D.3.1
Chairman and Composition of
Audit Committee
76
Code Ref.
Subject
D.3.2
Duties of Audit Committee
Should include
Adoption
Status
z
Review of scope and results of audit and its effectiveness
Complied
z
Independence and objectivity of the Auditors
Complied
D.3.3
Terms of Reference / Charter
z
The Audit Committee should have a written Term of
Complied
Reference which define the purpose of the Committee and its
duties and responsibilities
D.3.4
Disclosures
z
The Annual Report should disclose the names of Directors
serving on the Audit Committee
z
The Audit Committee should determine the independence of Complied
the Auditors and disclose the basis of such determination
z
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
Complied
Complied
D.4 CODE OF BUSINESS CONDUCT AND ETHICS
D.4.1
Adoption of Code of Business
Conduct and Ethics
z
The Company must adopt a Code of Business Conduct and
Complied
Ethics for directors and members of the senior management
team and promptly disclose any violation of the Code
D.4.2
Chairman’s affirmation
z
The Annual Report must include an affirmation by the
Chairman that he is not aware of any violation of the Code
of Business Conduct and Ethics
Complied
Chairman’s Message / Annual Report of the
Board of Directors
The Annual Report should include a report setting out the
manner and extent to which the Company has adopted the
principles and provisions of the Code of Best Practice on
Complied
D.5 CORPORATE GOVERNANCE DISCLOSURES
D.5.1
Corporate Governance Report
z
77
Code Ref.
Subject
Adoption
Status
E. INSTITUTIONAL INVESTORS – Structured Dialogue
E.1
Structured Dialogue with
Shareholders
z
A regular and structured dialogue should be conducted with Complied
shareholders and the outcome of such dialogue should be
communicated to the Board by the Chairman
E.2
Evaluation of Governance
Disclosures by Institutional
Investors
z
Institutional investors should be encouraged to consider
the relevant factors drawn to their attention with regard to
Board structure and composition
Complied
Complied
F. OTHER INVESTORS – Investment/Divestment decisions
F.1.
Individual Investors
z
Individual shareholders should be encouraged to carry
out adequate analysis and seek professional advice when
making their investment/divestment decisions
F.2
Shareholder Voting
z
Individual shareholders should be encouraged to participate Complied
and exercise their voting rights
Corporate Governance / Form of Proxy
CONCLUSION AND OUTLOOK
Robust and sound governance has helped us to create and maintain trust with our employees, investors, governments, business partners, our guests and other stakeholders.
In the growing global investment climate, investors are looking for greater transparency in reporting, as well as the comparative ranking of non-financial metrics such as
innovation, brand value, culture, sustainable development and other social responsibilities, as these metrics create long term value for companies. Growing out of this trend in
demand, regulators will seek to introduce more regulations governing such disclosure in order to create a level playing field.
Founded on a culture of performance embedded in a framework of compliance, conformance and sustainable development, John Keells Hotels PLC is confident of rising to
meet these challenges and run its business in a sustainable manner that will create wealth for its stakeholders.
78
AUDIT COMMITTEE REPORT
TERMS OF REFERENCE, PRINCIPAL FOCUS AND
MEDIUM OF REPORTING
The responsibilities of the Audit Committee are
governed by the Audit Committee Charter, approved
and adopted by the Board. The Audit Committee
focuses principally on assisting the Board in fulfilling
its duties by providing an independent and objective
review of the financial reporting process, the process of
risk identification and mitigation, internal controls and
its compliance with legal and regulatory requirements
actively; reviewing procedures relating to statutory,
regulatory and related compliance; and the adequacy
of the Company’s internal and external audit function.
The proceedings of the Audit Committee were regularly
reported to the Board of Directors, through formal
minutes. Further, the effectiveness of the Committee is
evaluated annually by each member of the Committee
and the results are communicated to the Board.
COMMITTEE COMPOSITION, MEETINGS HELD
AND ATTENDANCE
The Audit Committee consists of three members.
The Chairman of the Audit Committee, is a Fellow of
the Institute of Chartered Accountants of Sri Lanka
(CA Sri Lanka). In addition to the Chairman of the
Committee, the other two members of the Committee
are also qualified Accountants with 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 & 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 the independence of members are brought to
bear on all matters, which fall within the committee’s
purview. The Sector Head and Chief Financial Officer,
together with the Sector Financial Controller and
Head of Group Business Process Review and Head of
Sustainability and Enterprise Risk Management of
John Keells Holdings PLC, attend Audit Committee
meetings by invitation. Outsourced Internal Auditors,
i.e. PricewaterhouseCoopers, KPMG, BDO Partners
and Independent External Auditors, Ernst & Young,
are required to attend meetings on a regular basis.
The Committee met seven times in connection with
the financial year ended 31st March 2014 (information
on the attendance at these meetings by the members
of the Committee is given on page 60). 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.
z
Met the outsourced Internal Auditors to consider
their reports, management responses and matters
requiring follow up on the effectiveness of internal
financial controls that have been designed to
provide reasonable but not absolute assurance to
the Directors that assets are safeguarded and that
the financial reporting system can be relied upon
in the preparation and presentation of the financial
statements. Their scope of work and approach, the
timeliness of their reports, and cooperation with
External Auditors was also addressed.
z
Reviewed the Business Risk Management processes
and procedures adopted by the Company, to manage
and mitigate the effects of such risks and observed
that risk analysis exercises had been conducted
across the different Hotels, key risks that could
impact operations had been identified and to the
extent possible, measures taken to minimise the
impact of such risks. It was noted that with the
integration of Sustainability within the Leisure
Group, further measures to mitigate the core
sustainability risks had been identified and risk
mitigation measures designed and implemented.
z
Reviewed the quarterly and year-end financial
statements and recommended their adoption to the
Board.
z
Met with the External Auditors before
commencement of the External Audit to ascertain
the nature, scope and approach of the audit and
reviewed their Audit Plans.
z
Met with External Auditors to discuss interim audit
issues, management responses and to effect any
corrective action where necessary.
z
Met with External Auditors at the conclusion of the
Annual Audit to review the financial statements and
the reports thereon and to respond as necessary to
such reports.
ACTIVITIES PERFORMED
z
z
Reviewed the activities and financial affairs of
the Company and its subsidiaries and underlying
hotel entities, and the financial reporting system
adopted in the preparation of quarterly and
annual financial statements to ensure reliability
of the process, appropriateness and consistency of
accounting policies and methods adopted and that
they facilitate compliance with the requirements of
the Sri Lanka Accounting Standards (SLFRS/LKAS),
the Companies Act No. 7 of 2007 and other relevant
statutory and regulatory requirements.
Carried out a comprehensive and a transparent
process in selecting the Outsourced Internal
Auditors for the financial year ending 31st March
2014 onwards for Sri Lankan resort hotels.
Accordingly, selected three audit firms to carry out
the audits i.e. PWC, KPMG and BDO Partners. PWC
and KPMG were awarded four resort hotels each
and the BDO the hotel management company.
79
z
Had closed door discussions with the External and
Outsourced Internal Auditors where necessary.
z
Reviewed the type and quantum of non-audit
services provided by the External Auditors to the
Company to ensure that their independence as
auditors has not been impaired.
z
Appraised the independence and performance of
the Outsourced Internal Auditors whose services
are coordinated by the Group Business Process
Review Division.
z
Conducted special review of processes, content and
the effectiveness of feeders to the deliberations of
the Audit Committee, such as in-house accounting
and record keeping; Group Business Process
Review, and the Sustainability and Enterprise Risk
Management division.
z
Reviewed the Company’s compliance framework
to determine that it provides reasonable assurance
that all relevant laws, rules and regulations have
been complied with.
z
Participated in discussions with management, to
evaluate compliance with the Code of Best Practice
on Corporate Governance issued jointly by the
Securities and Exchange Commission of Sri Lanka
and CA Sri Lanka in June 2008, in relation to
auditor appointments.
z
The Audit Committee has recommended to the
Board of Directors that Messrs Ernst & Young be
re-appointed as Auditors for the Financial Year
ending March 31, 2015, subject to the approval of the
shareholders at the next Annual General Meeting.
CONCLUSION
The Audit Committee is satisfied that the Company’s
accounting policies, operational controls and risk
management processes provide reasonable assurance
that the affairs of the Company are managed in
accordance with Group policies and that Company
assets are properly accounted for and adequately
safeguarded.
Ranel T. Wijesinha FCA
Chairman - Audit Committee
29th May 2014
Members:
D A Cabraal (resigned w.e.f 30th Oct 2013)
N B Weerasekera
T L F W Jayasekera (appointed w.e.f 1st Nov 2013)
80
INVESTOR INFORMATION
DISTRIBUTION OF SHAREHOLDERS
There were 7,096 registered Shareholders as at 31st March 2014 (7,728 as at 31st March 2013) distributed as follows:No. of Shares held
As at 31st March 2014
No. of
Shareholders
%
No. of
Shares held
%
No. of
Shareholders
%
No. of
Shares held
%
1 to 1,000
3,647
51.39
1,546,845
0.11
3,934
50.91
1,736,153
0.12
1,001 to 10,000
2,423
34.15
9,642,889
0.66
2,751
35.60
10,778,554
0.74
10,001 to 100,000
861
12.13
26,931,152
1.85
862
11.15
26,533,143
1.82
100,001 to 1,000,000
144
2.03
37,831,568
2.60
158
2.04
45,032,426
3.09
Over 1,000,000
21
0.30
1,380,194,326
94.78
23
0.30
1,372,066,504
94.23
7,096
100.00
1,456,146,780
100.00
7,728
100.00
1,456,146,780
100.00
Total
COMPOSITION OF SHAREHOLDERS
No. of Shareholders
No. of Shares held
%
No. of Shareholders
No. of Shares held
%
1
1,169,598,478
80.32
1
1,169,598,478
80.32
Directors & Spouses
3
625,117
0.04
3
625,117
0.04
Institution
250
206,772,647
14.20
264
202,149,720
13.88
Individual
6,741
67,228,624
4.62
7,352
71,857,567
4.94
Institution
8
1,583,470
0.11
7
1,321,360
0.09
Individual
93
10,338,444
0.71
101
10,594,538
0.73
7,096
1,456,146,780
100.00
7,728
1,456,146,780
100.00
Public - Resident
Public - Non Resident
Total
The percentage of the shares of the Company held by the Public as at 31st March 2014 was 19.64% (2013 - 19.64%)
81
DIRECTORS & SPOUSES SHAREHOLDINGS
As at 31 Mar 2014
As at 31 Mar 2013
Indices
100
142,877
142,877
80
-
-
407,434
407,434
Mrs. C. A. Gunewardene
74,806
74,806
Total
625,117
625,117
Directors
Mr. S. C. Ratnayake
Mr. A. D. Gunewardene
Share Price
14
12
10
60
8
40
6
Spouses
Mrs. M. V. Ratnayake
MARKET INFORMATION ON ORDINARY SHARES OF THE COMPANY
2013/14
Date
2012/13
Date
Highest Price ( Rs.)
13.70
16-04-2013
16.00
17-09-2012
Lowest Price ( Rs.)
10.20
17-09-2013
11.50
02-07-2012
As at period end (Rs.)
12.50
31-03-2014
13.20
28-03-2013
Trading Statistics
3,617
4,704
Number of Shares Traded
21,646,967
35,893,728
% of Total Shares in Issue
1.49
2.46
277,607,053
470,369,333
Values of all Shares Traded ( Rs.)
Average Daily Turnover ( Rs.)
Market Capitalisation ( Rs.)
0
2
Apr May Jun
13
13
13
Jul Aug Sep Oct Nov Dec Jan Feb Mar
13
13
13
13
13
13
14
14
14
All Share Index
Share Information
Number of Transactions
4
20
1,147,137
1,976,342
18,201,834,750
19,221,137,496
INDICES & SHARE PRICES
Hotel Sector Index
0
82
INVESTOR INFORMATION CONTD.
TWENTY LARGEST SHAREHOLDERS OF THE COMPANY
31st March 2014
31st March 2013
Name of shareholder
No. of Shares
%
No. of Shares
%
1,169,598,478
80.32
1,169,598,478
80.32
78,474,354
5.39
67,905,482
4.66
Employees Provident Fund
Sri Lanka Insurance Corporation Ltd. - Life Fund
72,747,800
5.00
72,747,800
5.00
Mercantile Investments PLC
13,000,000
0.89
13,000,000
0.89
Mr. D. J. M. Blackler
7,114,760
0.49
7,114,760
0.49
Seylan Bank PLC - A/C No. 3
5,574,500
0.38
7,274,500
0.50
Employees Trust Fund Board
4,216,700
0.29
4,216,700
0.29
Mercantile Fortunes (Private) Ltd.
3,800,000
0.26
3,800,000
0.26
National Savings Bank
3,473,800
0.24
3,473,800
0.24
Phoenix Ventures Ltd.
2,801,000
0.19
2,801,000
0.19
Bank of Ceylon - No. 2 A/C
2,725,266
0.19
2,725,266
0.19
Mr. R. T. Jinasena
2,516,765
0.17
2,516,765
0.17
Mr. T. R. Jinasena
2,351,568
0.16
2,351,568
0.16
2,000,000
0.14
2,000,000
0.14
Mr. U. G. Madanayake
1,911,573
0.13
1,911,573
0.13
Waldock Mackenzie Ltd. / Mr. L. P. Hapangama
1,497,679
0.10
1,497,679
0.10
Mrs. N. Weerasinghe
1,419,853
0.10
1,419,853
0.10
Mr. A. A.V. Amerasinghe
1,287,800
0.09
1,287,800
0.09
Merrill J Fernando & Sons (Pvt) Ltd.
E. W. Balasuriya & Co. (Pvt) Ltd.
1,269,150
0.09
-
0.00
Mr. C. N. H. Liyanage
1,250,000
0.09
1,250,000
0.09
Mr. P. N. N. Fernando
-
0.00
1,163,280
0.08
1,379,031,046
94.70
1,370,056,304
94.09
Shares held by balance shareholders
Total
77,115,734
5.30
86,090,476
5.91
1,456,146,780
100.00
1,456,146,780
100.00
83
FINANCIAL OVERVIEW
GLOBAL TOURISM
The world economy evidenced gradual signs of
recovery assisted by the stronger performance of
the emerging economies, particularly by the rise
of China. This improving trend saw global tourism
record 1.087Bn international arrivals in 2013, 5% more
than in 2012. Europe continued to be the greatest
attraction, with 563Mn tourist arrivals, a growth of 5%
from 2012. China and Russia drove growth in global
tourism spending in 2013, with travellers from each
country increasing their spending by more than 25% in
comparison to 2012 resulting in global tourist spending
exceeding US$1Tn.
OPERATING ENVIRONMENT
By the end of 2013 there were 29,811 beds registered
in the Maldives, an increase of 6% compared to the
total of 28,088 registered beds in 2012. This growth
in capacity complemented the increasing number
of tourist arrivals to the Maldives which recorded a
total of 1.125Mn, representing growth of 17.4% over
2012. Overall occupancy in the country registered an
increase of 9.2% compared with that of 2012. Chinese
outbound tourism continued to be the biggest source
market with a market share of 32.6% of total arrivals.
Germany followed in a distant second place with a
market share of 7.9%; however this was lower than
the 10% achieved last year. The market shares of other
traditional markets such as the United Kingdom (-6.3%)
and Italy (-2.7%) also recorded declines during the year
with only Russia showing an increase of 12.8%.
During the financial year under review, tourist arrivals
to Sri Lanka were reported at a record 1,358,375, an
increase of 25% in comparison to the 1,082,979 arrivals
recorded during the corresponding period in 2012/13.
Led by UK and Germany, Western Europeans continue
to dominate the country’s tourist arrivals with 437,142
in 2013/14, an increase of 13% from the corresponding
period last year. However, the Indian market was the
single biggest contributor to Sri Lanka’s tourist arrivals
with a total of 339,124 (a 25% market share) reflecting
growth of 29% from last year. Russia and Ukraine
proved to be high growth markets with tourist arrivals
reaching 149,674 (a market share of 11%), an increase of
63% on the 91,703 (9% market share) recorded during
2012/13.
REVENUE
The improvement in the operating environment,
coupled with aggressive sales strategies, saw the Group
record total revenue of Rs.10.97Bn, a year on year
growth of 17% (2012/13 Rs.9.34Bn).
The Maldivian sector recorded increases in both,
occupancy levels (5pts) and average room rates (4%)
enabling it to contribute revenue of Rs.6.1 Bn, which
represented an increase of 11% on the previous financial
year. Chaaya Island Dhonveli remained the highest
contributor to sector revenue, while Chaaya Lagoon
Hakuraa Huraa achieved the highest growth in revenue
(15%), followed by Chaaya Reef Ellaidhoo (9%).
Higher occupancy levels across all hotels coupled with
the full year operation of Cinnamon Bey and Cinnamon
Citadel saw the Sri Lankan sector improve its revenue
by Rs.1.0Bn, a year on year increase of 27% from the
Rs.3.8Bn earned last year despite lower average room
rates. Cinnamon Bey was the highest revenue generator
followed by Chaaya Tranz and last year’s leader Bentota
Beach. The strong performance by the Sri Lanka
sector enabled it to increase its revenue contribution
to 44% from 41% while the revenue contribution from
Maldives dropped to 56% from the 59% achieved last
year.
Rs Mn
12,000
10,000
8,000
6,000
4,000
2,000
0
2011/12
2012/13
2013/14
Maldives
Sri Lanka
TOTAL REVENUE
%
70
60
50
40
30
20
10
0
Q1
Q2
Maldives
Q3
Q4
Full Year
Sri Lanka
QUARTER ON QUARTER REVENUE GROWTH
84
FINANCIAL OVERVIEW CONTD.
EARNINGS BEFORE INTEREST AND TAX
Revenue gains, effective control of direct material
costs and the full year operation of Cinnamon Bey
and Citadel were the key factors contributing to the
impressive 33% year on year growth in Group Earnings
Before Interest and Tax for the year under review which
amounted to Rs.2,427 Mn against the Rs.1,820 Mn
recorded in the previous financial year.
The overall increase in Administrative expenses
stemmed from the full year operation of Cinnamon
Bey and Cinnamon Citadel along with higher payroll
expenses in the Maldives arising from the higher rate
of service charge on higher room revenue for the full
financial year.
Distribution expenses also increased by 6% mainly due
to the inclusion of full year expenses of Cinnamon Bey
and Cinnamon Citadel.
The 19% increase in operational expenses was primarily
due to the higher cost of electricity in Sri Lanka
occasioned by the higher level of occupancy and the
upward revision of the tariff in April last year.
Once again, Chaaya Lagoon Hakuraa Huraa and
Chaaya Island Dhonveli were the key contributors to
the 18% growth in Maldivian sector EBIT of Rs. 1,456 Mn
(2012/13 - Rs.1,233 Mn). In the Sri Lankan sector, the
strong performance of Chaaya Tranz, Cinnamon
Citadel and Bentota Beach were the major contributors
to the impressive 65% improvement in sector EBIT of
Rs.971 Mn (2012/13 - Rs.587 Mn).
FINANCE EXPENSES
Whilst borrowing rates on US dollar denominated
debt in the Maldives remained largely constant during
the year, the retirement of long term debt and strong
operational cash flows enabled the quicker retirement
of short term debt leading to a reduction of Rs.57 Mn in
finance expenses of the Maldivian sector.
The net finance cost of the Sri Lankan sector
decreased by Rs.54 Mn (14%) year on year mainly due
to the replacement of LKR denominated debt by US
Dollar borrowings for relevant Sri Lanka resorts at
comparatively lower rates. In addition, the infusion
of Rs.0.9 Bn to Cinnamon Bey, the overall reduction in
borrowing rates in Sri Lanka and the retirement of long
term debt, contributed to minimise overall net finance
expenses in Sri Lanka.
Overall, net finance expenses of the Group decreased
by 24% to Rs.380 Mn from the Rs.498 Mn recorded
in 2012/13. This contributed to the improvement in
interest cover as depicted.
PROFIT BEFORE TAX
During the year under review, Group Profit Before Tax
(PBT) increased by 48% year on year and amounted to
Rs.1,893 Mn against Rs.1,283 Mn achieved in 2012/13.
The Sri Lankan sector recorded PBT of Rs.526 Mn,
a 168% year on year growth in comparison to the
Rs.197 Mn recorded in 2012/13. The PBT of the
Maldivian sector increased by Rs.280 Mn (26%)
recording a total of Rs.1,367 Mn. The stronger PBT
growth of the Sri Lankan sector enabled it to increase
its sector contribution to 28% from 15% in 2012/13.
PROFIT AFTER TAX
The effective tax rate of the Group increased to 17%
from the 13% recorded in 2012/13. The lower rate in
2012/13 stemmed from amendments to the tax laws
in Maldives which exempted dividends from Business
Profit Tax as well as deferred tax write backs arising
Rs Mn
6,000
5,000
4,000
3,000
2,000
1,000
0
2012/13
2013/14
Administration
Other Operating
Expenses
Sales & Distribution
GROUP EXPENSE ANALYSIS
Rs. Mn
3,000
Times
7.00
6.00
2,500
5.00
2,000
4.00
1,500
3.00
1,000
2.00
500
0
1.00
2011/12
2012/13
EBIT
Interest Cover
INTEREST COVER
2013/14
0.0
Finance Expense
85
from changes in tax legislation. The increase in
finance income which attracts a higher tax rate also
contributed to the higher effective tax rate. Group after
tax profits from its operations amounted to Rs. 1,575Mn,
a growth of 40% compared to the Rs.1,121Mn achieved
in the previous financial year.
GEARING
The gearing ratio of the Group for 2013/14 reduced to
20% from 38% in 2012/13. As depicted, the reduction
was primarily due to the increase in Shareholders’
funds, stemming from improved profitability and the
retirement of debt.
INVESTMENT ACTIVITY AND FUNDING
The enhancement of capacity of the main restaurant at
Cinnamon Bey, the new staff accommodation facility
at Cinnamon Citadel and the refurbishment of rooms
at Chaaya Island Dhonveli, were the major investments
in property, plant and equipment undertaken by the
Group during the current financial year.
BASIS OF PREPARATION
The Consolidated Financial Statements have been
prepared in accordance with SLFRS/LKAS issued by
CA Sri Lanka. The comparative figures for the previous
year have also been restated as required.
The conclusion of the grace period of long term debt
acquired to fund construction and refurbishment in Sri
Lanka during the financial year under review, resulted
in these debts falling due for repayment during the
year. Therefore the composition of debt at year end was
altered, with long term debt comprising 67% of total
debt, in comparison to the 78% as at 31 March 2013.
CASH GENERATION
On the back of the comparatively stronger performance
of all resorts in the Group, cash flows generated from
operations grew by 22% to Rs.3,229Mn during the
year under review. After utilising this to fund the
comparatively lower investment in property, plant and
equipment (Rs.610Mn) and the net retirement of debt
(Rs.926Mn), the Group ended the year with a healthy
surplus of Rs.1,380Mn, reflecting growth of 213% and
leaving the Group with a year-end cash balance of
Rs.2,027Mn which will be partially utilised to settle
long term debt falling due for repayment in the ensuing
year.
%
100
80
60
40
20
0
2012
2013
2014
Long Term Debt
Short Term Debt
COMPOSITION OF DEBT
Rs. Mn
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2012
2013
Equity
Gearing
GEARING
2014
%
50
45
40
35
30
25
20
15
10
5
0
Net Debt
86
MANAGEMENT DISCUSSION AND ANALYSIS
GLOBAL TOURISM PERSPECTIVE
Fuelled by strong demand throughout the year,
global tourism shrugged off sluggish growth in 2012,
surpassing growth projections for 2013, as destinations
around the world welcomed 1,087Mn international
tourist arrivals, 52Mn more than the 1,035Mn recorded
in 2012 according to the latest information available
to the United Nations World Tourism Organisation
(UNWTO). Impetus for this growth stemmed from
stronger demand (+5.2%) in the advanced economies,
up from the comparatively weak growth (+3.7%) in 2012.
Tourist arrivals in emerging economies also improved
from 4.4% in 2012 to 4.8% in 2013 led by strong growth
(+10%) in South East Asia.
In 2013, worldwide tourism arrival patterns were
slightly different from last year with the month of
March recording the strongest YoY growth (+ 9%) due
to the shift in the Easter holidays while April (+1%)
recorded the weakest growth for the same reason.
Europe regained its popularity, reflected in the highest
increase in tourist numbers (+29Mn) year on year,
with growth of 5%, almost double the average over the
last seven years, thereby ensuring that it retained the
largest share of the market (52%).
Once again, Asia and the Pacific recorded the
most robust annual growth (+6%), aided by strong
performances from South East Asia (+10%) and South
Asia (+5%).
Arrival growth in the Americas picked up in the last
two quarters of 2013 with particularly strong growth
reported in the last quarter in Central (+7%) and North
(+5%) America.
With annual growth of 5.6%, tourist arrivals to the
African region reached a new high.The game parks and
wildlife of Sub-Saharan Africa were in great demand,
attracting 65% of the 56 Mn tourists visiting the region.
Mixed growth trends in the Middle East led to flat
growth for the region. The positive annual growth
recorded in Dubai (+10%), Oman (+6%) and Palestine
(+4%), was offset by the negative growth arising from
political tension in Egypt (-18%) and a lower number
of pilgrims visiting Mecca in Saudi Arabia (-7%), due
to the timing of infrastructure improvements aimed at
increasing accommodation and safety.
Research, conducted jointly by Oxford Economics and
the World Travel and Tourism Council (WTTC), reveals
that Travel & Tourism’s contribution to world GDP
grew for the fourth consecutive year in 2013, making an
overall contribution of 9.5% (US$7Tn) to global GDP. At
a global level, visitor exports - the amount directly spent
by international travellers rose to US$1.4Tn reflecting
year on year growth of 3.9%. In terms of employment,
Travel & Tourism generated almost 266Mn jobs, 9% of
global employment.
HAVING MADE APPROPRIATE
INVESTMENTS IN UPGRADING
AND EXPANDING ITS PRODUCT
PORTFOLIO, JOHN KEELLS
HOTELS COMMENCED TO REAP
THE REWARDS OF ITS QUEST
TO ESTABLISH ITS HOTELS ON
PAR WITH INTERNATIONAL
STANDARDS.
the ongoing Incredible India advertising campaign,
hotels in Delhi, sustained the sharpest drop in ADR
(-18.6%) and RevPAR (-21.2%), which is attributed to
adverse publicity stemming from isolated, but highly
publicised incidents of gender-based violence, which
has influenced safety perceptions of female tourists.
According to data collated by STR Global, mixed
regional results were reported in the key performance
metrics of the industry in 2013. Hotels in Europe
recorded average occupancy of 67.4% in 2013 and led
YoY growth (+2.4%) in occupancy while hotels in the
Americas led YoY growth (+3.6%) in the Average Daily
Rate (ADR) denominated in US Dollars. The Americas
also reported the strongest overall gain in Revenue per
Available Room (RevPAR) with growth of 5.2%.
In 2012, China emerged as the largest outbound market
while Russia moved up to fifth place. During 2013,
the upward trend of outbound tourism from these
markets continued, with the UNWTO reporting high
growth in both the Chinese (+28%) and Russian (+26%)
outbound markets. The tourism appeal of Sri Lanka
and the Maldives and their relative proximity, attracted
increased arrivals from both these source markets
during the year under review enabling Sri Lanka to
report overall growth of 26% and the Maldives 16%.
The Asia/Pacific region was the poorest performer
in terms of all three metrics with the Central and
South Asian sub region recording the lowest RevPAR
growth. This was primarily due to the disappointing
performance of India, the sub region’s largest market.
Despite the depreciation of the Indian Rupee and
The sustained demand for Travel & Tourism, together
with its ability to generate high levels of employment
continues to prove the importance and value of the
sector as a tool for economic development and job
creation.
87
MACRO ECONOMY IN SRI LANKA
In its Annual Report for 2013, the Central Bank of Sri
Lanka (CBSL) has reported annual real GDP growth
of 7.3%, an improvement on the 6.3% reported for
2012. For the fifth consecutive year, headline inflation
as measured by the change in the new Colombo
Consumers Price Index (2006/07 =100) was maintained
at single digit level. The upward revision of the
electricity tariffs and an increase in the average prices
of food items exerted inflationary pressure during
the year. However, improved domestic supply, the
moderation of international commodity prices and
monetary policies of the CBSL, contributed to reduce
the annual average rate from 9.8% in January 2013 to
4.7% in December 2013. Per capita income at market
prices continued to increase, growing to USD 3,280/(+12%) from USD 2,922/- in 2012.
The country is now focusing on progressing beyond the
upper middle-income category by emulating strategies
adopted by regional models, which have reached the
upper income category. It is noteworthy that key factors
considered essential for this evolution such as,higher
productivity, innovating in developing value added
products and services along with creating a learning
culture have already been adopted by the Group.
The Services Sector has become the main engine of
growth in the medium term due to the strategy of
developing the country into ‘five hubs+1’, namely,
a knowledge, maritime, aviation, energy and a
commercial hub plus a tourism hub, by leveraging the
country’s strategic location and competitive advantage.
The continuous increase in tourist arrivals and an
increase in average spending per tourist resulted in
earnings from tourism reaching USD 1,715 Mn in 2013,
against the USD 1,039 Mn in 2012. According to the
Sri Lanka Tourism Development Authority (SLTDA),
the average spending per tourist per day increased to
USD 156.50 in 2013 from USD 103/- in 2012, while the
average duration of stay decreased to 8.6 days from 10
days in 2012. It is also reported that year round room
occupancy of the graded and unclassified tourism
establishments increased to 71.7% from 71.2% in 2012.
In terms of employment, a total of 270,150 jobs, direct
and indirect, were supported by the tourism industry in
Sri Lanka, an increase of 66% over 2012.
Nos.
000’
180
160
140
120
100
80
60
40
INDUSTRY ENVIRONMENT IN SRI LANKA
Tourist arrivals to Sri Lanka in 2013 surpassed the
initial target of 1.2 Mn to record 1.27 Mn arrivals, a
growth of 27% over the previous year.
India remained the single largest source market for Sri
Lanka in 2013 followed by the UK, Germany, Maldives
and France.
While arrivals from Western Europe recorded an
overall increase of 12.9% year-on-year, significant
growth in tourist arrivals from emerging market
economies, particularly China and Eastern Europe, was
observed in 2013.
OUR HOTELS IN SRI LANKA
The gradual improvement in the economies of Western
Europe and pent up travel demand in the Chinese and
East European markets was reflected in the growth
in tourist arrivals to the country and was reflected in
the nationality mix recorded at the Sri Lanka resorts.
While price sensitivity persisted in the traditional
West European markets due to capacity surpluses
in competing destinations, natural and man made
calamities in some of these destinations resulted in
travel shifts that benefited tourism in Sri Lanka. In the
absence of regional occupancy statistics for 2013, it is
encouraging to note that all Sri Lankan resorts achieved
year round occupancies that easily surpassed the
20
0
Apr May Jun
2009/10
2010/11
2011/12
2012/13
2013/14
TOURIST ARRIVALS TO SRI LANKA BY MONTH
country average of 71.7% with the exception of Chaaya
Blu, Cinnamon Lodge and Cinnamon Bey, which were
slightly below.
Having made appropriate investments in upgrading
and expanding its product portfolio, John Keells Hotels
commenced to reap the rewards of its quest to establish
its hotels on par with international standards.
Recovering from a weak performance in the first
quarter, the Sri Lankan resorts secured an impressive
revenue gain of 27% during the year under review as
an outcome of marketing strategies that focused on
driving occupancy with prudent adjustments to room
rates. Although the overall average room rate declined
slightly from the preceding year, overall occupancy levels
increased by 38% year-on-year, 16% of which stemmed
from the full year operation of Cinnamon Bey and
Citadel that were both launched in October 2012. The Sri
88
MANAGEMENT DISCUSSION AND ANALYSIS CONTD.
Lankan resorts recorded an improvement of Rs.1.0 Bn
over the turnover of Rs.3.8 Bn achieved last year.
The newly opened Cinnamon Bey, with its complement
of 200 rooms proved to be the largest revenue
contributor followed by the recently refurbished
Chaaya Tranz, while Bentota Beach, the mainstay of the
sector last year, slipped into third place.
BEACH FRONT PROPERTIES
Strong demand for the beach front properties on the
West coast and focused marketing, contributed to
Cinnamon Bey and Chaaya Tranz recording significant
gains in occupancy and revenue. The gradual
stabilisation of demand for Cinnamon Bey and Chaaya
Tranz ensured that these outstanding properties began
to maximise their revenue potential, with Cinnamon
Bey becoming the main contributor to sector revenue,
followed by Chaaya Tranz. Bentota Beach, which was the
%
20
18
16
14
12
10
8
6
4
2
0
leading revenue contributor last year slipped into third
place although it achieved occupancy growth of 15%,
albeit at a slightly lower yield. On the east coast, Chaaya
Blu continued to dominate TripAdvisor rankings in
Trincomalee, growing occupancy by 8% and doubling its
profitability.
ADVENTURE & HERITAGE PROPERTIES
With an excellent score of 66% of all reviews posted
on TripAdvisor, Cinnamon Wild achieved a revenue
growth of 5% year on year. The hotel hosted eight
aspiring photographers from across the world who
were short listed to compete in the elimination rounds
of the ‘Nat Geo Mission Cover Shot’, produced by the
National Geographic Channel, the first-ever photography
reality show to be completely filmed in Sri Lanka.
The programme was aired over eleven weeks in India
generating significant exposure for the Cinnamon brand
as well as providing global publicity for the country.
Rapidly penetrating its market, Cinnamon Citadel,
which was launched in October 2012, has risen to
fifth place in the forty-four hotels in Kandy ranked
by TripAdvisor. It generated the strongest gain in
profitability amongst the Sri Lankan resorts, recording
a near four-fold increase over the preceding year,
contributing 30% of total sector profitability.
Cinnamon Lodge and Chaaya Village continued to lead
the TripAdvisor ranking in Habarana attracting a high
percentage of excellent reviews. It was heartening to
note the turnaround at Cinnamon Lodge, which grew
turnover by 14% and recorded a two-fold increase in
profitability year on year. Although Chaaya Village
continued to be challenged by the entrance of a large
number of small properties providing accommodation
in the vicinity, it increased occupancy by 6% albeit at
the cost of a lower yield.
With a view to engaging with our guests, building
bridges to potential clients and nurturing loyalty, we
regularly monitor and respond appropriately to online
travel reviews.
Sri Lanka
British
German
2010/11
2012/13
2011/12
2013/14
Russian
Italian
French
Middle East
JOHN KEELLS HOTELS SRI LANKA OCCUPANCY BY GUEST NATIONALITY
Chinese
Indian
Others
MACRO ECONOMY IN MALDIVES
The strong recovery of tourism in 2013 assisted by
growth in the transport and communication sub
sectors contributed to a slightly higher GDP growth
of 3.7 per cent than the 3.4 per cent recorded in 2012
despite the unsettled political climate created by over
two years of political turmoil. Inflation in Malé, which
peaked at 7% in May 2013, dropped to 3.1% in December
2013 as the catch improved over the year stabilising and
lowering the price of fish.
With the conclusion of the Presidential election
in November 2013, the Quarterly Business Survey
conducted by the Maldivian Monetary Authority in
March/April 2014, indicated an increase in the level of
89
business activity in all businesses surveyed except for
construction, during the last quarter of the year under
review.
The government continued to implement its fiscal
reform program and raised the rate of Tourism Goods
and Services Tax (TGST) to 8% from 6% in January 2013.
As part of its revenue raising measures, the government
reintroduced Bed tax, which was abolished in January
2013 and amended the Law on Tourism to commence
the collection of lease extension fees in April 2014,
instead of, at the time the lease extension becomes
effective.
INDUSTRY ENVIRONMENT IN MALDIVES
Marked by a 38% increase in arrivals from China, which
mitigated the 3% decline in arrivals from the traditional
West European markets, tourist arrival patterns in the
Maldives during the year under review, were similar to
The decline in arrivals from Europe stemmed from
negative growth from Germany (-5%), UK (-4%) and Italy
(-4%) while positive growth was recorded from Russia
(+6%), Poland (+48%) and Ukraine (+18%). Although
the Maldives is still the most sought after honeymoon
destination in the UK, there was a reduction in the
number of charter flights from the UK during the year,
an indication of the price sensitivity of this market as
the Maldives continues to implement plans to ensure
its high-end position in the world tourism market. For
the second year in succession, the Maldives emerged
the winner as the World Leading Island Destination in
the World Travel Awards 2013.
The increase in arrivals from China and the overall
decline in arrivals from Europe were the key factors
leading to a further reduction in the average stay to
6.3 days from the 6.7 days in 2012 and the 7.0 days
recorded in 2011. According to statistics released by the
Maldives Monetary Authority, in December 2012, 103
resorts were in operation with a registered bed capacity
of 29,811; this represents a year on year increase of 4%
and 6% respectively. However, average occupancy in the
country during the year improved to 74% from 70.4%
on the back of higher arrivals.
Nos.
000’
120
100
80
60
40
20
0
the preceding year. The remarkable growth in arrivals
from China, augmented by a 10% growth in arrivals
from Eastern Europe, enabled the Maldives to register
year on year growth of 16% in international tourist
arrivals in the financial year under review, against the
low 3% growth recorded in 2012/13.
Apr May Jun
2009/10
2010/11
2011/12
2012/13
2013/14
TOURIST ARRIVALS TO MALDIVES BY MONTH
OUR HOTELS IN MALDIVES
The Maldivian sector performed slightly better than
expected, recording revenue growth of 11% with Chaaya
Lagoon Hakuraa being the main contributor. All our
resorts achieved year round occupancies that were
well above the country average complemented by an
ALL OUR RESORTS IN MALDIVES
ACHIEVED YEAR ROUND
OCCUPANCIES THAT WERE
WELL ABOVE THE COUNTRY
AVERAGE COMPLEMENTED BY AN
IMPROVEMENT IN THE AVERAGE
ROOM RATE.
improvement in the average room rate. The growing
upward trend in online bookings led to revenue from
online sources increasing three-fold year on year on the
back of higher yields and contributing 7% to the sector
revenue of Rs.6.1 Bn.
Purchasing initiatives were tailored to minimise the
general increase in prices while effective cost control
measures implemented at the resorts ensured that
Gross Profit (GP) margins were maintained at the same
level as last year. Payroll expenses were slightly higher
than last year as the sector absorbed the full year effect
of the increased proportion of service charge initiated
in July last year in keeping with industry best practices,
on a higher revenue base.
Chaaya Island Dhonveli performed strongly, recording
revenue growth of 8% by the prudent alteration of its
client mix that improved the average room rate by 6%.
Based on TripAdvisor reviews, the resort was ranked
thirteenth out of sixty-nine resorts in the North Male
Atoll. The resort maintained its position as the main
contributor to sector revenue while increasing its
contribution to sector profitability.
90
MANAGEMENT DISCUSSION AND ANALYSIS CONTD.
The drop in demand from the German market was more
than adequately offset by marketing the resort to the
Chinese market, which enabled Chaaya Reef Ellaidhoo
to enhance its average occupancy by 7% year on year
and increase its contribution to sector profitability. The
resort continues to be commended on online reviews
attracting a 68% excellent rating on TripAdvisor and was
recognised with the Travellers Choice Award for 2013
and the Zoover Recommended Award 2013.
%
100
80
60
40
20
0
Apr May Jun
Maldives
JK Hotels
JOHN KEELLS HOTELS VS MALDIVES
OCCUPANCY 2013/14
The increasing popularity of Chaaya Lagoon Hakuraa
in the Chinese and web markets ensured its leadership
position amongst the resorts in the Meemu Atoll.
In the context of the comparatively high occupancy
maintained by the resort, marketing initiatives that
focused on increasing yield delivered the desired
results. The resort achieved revenue growth of 15%,
contributing significantly to the Maldivian sectors
profitability.
BRANDING INITIATIVES
In order to increase brand awareness and market the
resorts in key target markets, selected hotels in the
Group hosted the contestants of the Miss France and
Miss India pageants during the year under review,
generating publicity for the Cinnamon brand and the
relevant hotels.
The hotels of the Group were also positioned on popular
and well-patronised social media platforms, thereby
increasing their online presence. Furthermore, the
visits of international journalists hosted by the hotels of
the Group have given the Cinnamon brand significant
publicity in the global print and electronic media.
In partnership with the excursion arm of the Group,
Cinnamon Nature Trails, the hotels also hosted the
crew of the Monsoon Documentary series produced
by the BBC’s Natural History Film Team last year. The
production captured images of elephants, primates
and leopards in their natural settings as well as
focusing on the archaeological marvels of Polonnaruwa
and Sigiriya. This four part series, filmed across six
countries, will be aired worldwide in 2015.
As mentioned last year, following the review of the
brand architecture, it is envisaged that all our resorts
would be brought under the umbrella of the Cinnamon
Brand, becoming a part of the Cinnamon Hotels &
Resorts chain, comprising a 2,400 room portfolio
spread across Sri Lanka and the Maldives.
In tandem with this branding initiative, we are in the
process of revamping our policies, standard operating
procedures and processes in order to imbue the desired
‘lifestyle’ service culture within our staff and position
Cinnamon as brand of international stature.
We are also in the process of deploying an integrated
Property Management System that will augment the
branding initiative by bringing all properties on to
a common operating platform thereby, enhancing
guest satisfaction, facilitating customer relationship
management, encouraging guest loyalty and
integrating online marketing channels.
OUTLOOK
Global
Led by the advanced economies, global activity has
broadly strengthened and is expected to improve in
2014/15 as reported by the International Monetary
Fund (IMF) in the April 2014 edition of the World
Economic Outlook. However, lower than expected
inflation in these economies, the emergence of geo
political risks and the poor performance of emerging
economies in a less favourable economic environment
91
have tended to dampen the prospects of sustained
growth in the global economy. Global economic growth
is projected to strengthen from 3 percent in 2013 to 3.6
percent in 2014 and to 3.9 percent in 2015. The United
States is expected to record the strongest growth in
the advanced economies while growth in emerging
market and developing economies, growth is expected
to moderate.
Against this backdrop, the UNWTO panel of experts
have forecasted that growth in international arrivals in
2014 would be in the range of a 4% to 4.5%, still above
the ten-year long-term projection of 3.8%. This above
average growth pattern is indicative of the strong
resilience of tourism demand and includes part of the
rebound from the setback of 2009.
Once again, Asia and the Pacific (+5% to 6%) and Africa
(+4% to 6%) are expected to perform strongly followed
by Europe and the Americas (both +3% to +4%) with the
Middle East having positive prospects of growth but
tempered by highly volatile political environment (+0%
to 5%).
A number of global events such as the Winter Olympics
in Russia, FIFA World Cup in Brazil and the 2014 Asian
Games in South Korea are expected to contribute
towards this growth.
Sri Lanka
In the context of favourable economic conditions
implicit in the growth of 7.3% in 2013, the gradual
improvement in the global economy and policy
measures aimed at maintaining inflation at mid single
digit levels, the CBSL has targeted GDP growth of 7.8%
in 2014.
While recognising the tourism industry as one of the
fastest growing sectors of the economy, the need for
more trained staff, improved service standards, an
increase in room capacity and better promotional
efforts in non-traditional markets, have been identified
as the key challenges faced by the industry in the 2013
Annual Report of Central Bank of Sri Lanka (CBSL).
In its 2014 Roadmap the CBSL has outlined its intention
of pursuing a strategy of maintaining price and
financial stability while working towards achieving
US$ 4,000 per capita income and a US$ 100 Bn
economy by 2016.
The Roadmap reveals that sustainable tourism
development will be the key focus in making Sri
Lanka a Tourism hub. An extended duration of stay is
anticipated based on the improvements in commercial
activity, infrastructure, and health and education
facilities.
The addition of approximately 22,500 rooms by 2016
to the existing industry capacity has been identified in
order to cater to projected tourist arrivals, while 51%
of the 268 tourism projects in the pipeline at the end of
June 2013, have been granted final approval.
With 1.2 Mn tourists visiting Sri Lanka in 2013, the
SLTDA target of 1.5 Mn for 2014 is based on a year on
year growth of 18%. As part of its strategy to increase
tourist arrivals from China, the Sri Lanka Tourism
Promotion Bureau has linked up with a Chinese
television channel, ‘The Travel Channel of China’, which
has an audience of 650 Mn.
The country hosted the World Conference on Youth
(WCY) in early May with the tagline ‘Mainstreaming
Youth in the Post-2015 Development Agenda’ attracting
over 1,500 youth from around the world, stimulating
interest in the destination and generating significant
publicity on social media and other online platforms.
Maldives
In the context of encouraging signs of recovery in the
global economy, the projected growth in world tourism
and a comparatively stable political environment,
economic growth in the Maldives is expected to rise
to 4.5% in 2014, up from the 3.7% estimated in 2013.
The fiscal budget for 2014 envisages that inflation
would increase to 5% mainly due to the heavy import
dependence for food and energy supplies which are
subject to price volatility.
The Maldivian Tourism authorities have appointed
Destination Public Relation Agencies in the Chinese,
Russian, German, British, and Indian markets with a
view to strengthening the image of the destination and
boosting arrivals.
Marketing the destination in the growing Chinese
market, twenty-seven companies from the Maldivian
tourism sector participated in the China Outbound
Travel & Tourism Market (COTTM) held during April
2014 in Beijing, China. The Maldives received the China
Tourist Welcome 2014 Silver Award in the Internet/
Media category at the exhibition.
These initiatives point to an optimistic outlook for
tourism in the Maldives in 2014.
CONCLUSION
The Group is confident that its increasing wealth
of experience, branding initiatives and strategic
investment, in its properties and people, will ensure
that it remains in the forefront of regional tourism
growth in the year ahead.
92
RISK MANAGEMENT
By engaging its leadership and operational teams in
its risk management process, John Keells Hotels PLC,
further refined its risk management systems during
the year under review. This was facilitated by the
John Keells Group Sustainability and Enterprise Risk
Management (ERM) Division, which continued to
provide the framework, assess and provide guidance
on the identification and mitigation of emerging
risks encountered by the individual hotels while also
covering sustainability assurance within the Hotels
Group. The risk management culture of the Hotels
Group is nurtured by the annual and quarterly reviews
that are undertaken by the individual hotels. This has
become an integral part of the dynamic and resilient
risk management process in place and resulted in a
better understanding of key risks, encouraged the
sharing of best practices across the individual hotels
and reduced the overall cost of risk mitigation.
Our risk management process is an essential element
of our responsible business ethic, balancing the
requirement for safeguarding assets with opportunities
to create value for our stakeholders. Accordingly, our
risk management process not only captures financial
and operational risks faced by the Company, but also
considers risks faced by the Company through impacts
on the environment, employees and the community
due to its operations. During the year under review,
we demonstrated this commitment to sustainability
by investing in a reverse osmosis plant at Cinnamon
Wild, Yala, and nearing completion on a waste water
treatment plant in Chaaya Island Dhonveli in the
Maldives. The reverse osmosis plant is expected to
reduce the risk of environmental damage arising from
the continuous use of bowsers to transport water, while
the waste water treatment plant is expected to ensure
maximum water recycling thereby reducing the overall
carbon footprint through the saving of fossil fuel
used in running of generators to power desalination
plants. We believe that such large investments provide
assurance that the needs of the present are satisfied
in a manner that would not compromise the ability of
future generations to meet their own needs.
The Board assumes responsibility for ensuring the
effectiveness of the Group’s risk management and
internal control system. The Board Audit Committee
while assuring internal control adequacy, also obtained
assurance from the management that identified risks
are being mitigated.
With the facilitation of the John Keells Group ERM
Team, Risk Review presentations were made to the
Board Audit Committee during the year under review
thereby providing an opportunity to review and
assess the risks identified, the appropriateness of the
risk ratings as well as the mitigation action plans
formulated by the hotels.
The John Keells Group Business Process Review
(BPR) Division and outsourced Internal Auditors
are separately responsible for providing assurance,
identifying vulnerabilities, proposing new controls
and recommending improvements to existing
internal controls across the Group. The outsourced
Internal Auditors with the facilitation of the BPR
Division provide reports that assess the robustness
of the internal control framework to assist the Audit
Committee in fulfilling its assurance role.
RISK MANAGEMENT FRAMEWORK
The Risk Management framework adopted by the
Group enables us to understand material risk that
we currently face as well as emerging risk. The risk
framework ensures that risks are effectively identified,
assessed and that appropriate controls are in place.
THE BOARD ASSUMES
RESPONSIBILITY FOR ENSURING
THE EFFECTIVENESS OF THE
GROUP’S RISK MANAGEMENT AND
INTERNAL CONTROL SYSTEM.
THE BOARD AUDIT COMMITTEE
WHILE ASSURING INTERNAL
CONTROL ADEQUACY, ALSO
OBTAINED ASSURANCE FROM THE
MANAGEMENT THAT IDENTIFIED
RISKS ARE BEING MITIGATED.
The Risk Management Team comprising of the
Leisure Group President, Sector Heads, Chief Financial
Officer, functional and operational managers take
responsibility for the early identification of potential
risks. Risks are identified at hotel level by various
means. Those risks having a catastrophic impact on
the organisation, but may have a very low or zero
probability of occurrence are referred to as core
sustainability risks. These are risks that threaten the
sustainability or long term viability of a business and
are typically risks, stemming from our impact on the
environment or society. Identified risks are recorded
on the risk register of each business unit and analysed
and ranked on a scale of 1 to 5 based on their likelihood
of occurrence and impact to the business. A high or low
velocity rating is attached to each identified risk to rate
the speed at which it would impact the business.
Following a process of obtaining the input of all
concerned, several options are identified. Thereafter,
appropriate risk management measures such as
93
acceptance, mitigation, transfer and control are
identified, progressed and monitored. Action plans are
reviewed at appropriate levels in the organisational
structure and are escalated either to drive action
or to develop a common solution. These plans are
implemented along with measures that continuously
monitor their effectiveness.
This framework enables the Group to maintain and
develop risk management strategies to assess and
control individual types of risk while developing
guidelines, raising awareness levels and training staff
on the use of controls and systems in order to manage
and mitigate existing risk as well as detect emerging
risk. The Group has maintained insurance at levels
determined by it to be appropriate in relation to the
cost of cover and the risk profile of each property.
As an outcome of the risk management process, the
Audit Committee has received quarterly confirmations
of financial and operational compliance from the
Sector Head along with the sustainability reports in
respect of each business unit. The Sector Head has
also confirmed that the risk registers and grids of the
individual business units have been updated by the
respective Hotel Managers.
RISK ENVIRONMENT AND RISK PROFILE
While both Sri Lanka and the Maldives operated in a
similar external industry environment during the year
under review, source markets and growth patterns
were dissimilar. While the downward trend in arrivals
from the traditional West European markets continued
in the Maldives, double-digit growth was recorded
in Sri Lanka. The persistent focus on the Chinese
market by the Maldivian Government was rewarded
by a 38% increase in arrivals from China during the
year under review. This mitigated the drop in arrivals
from Western Europe and contributed to an overall
year on year country growth of 16%. According to the
Maldives Tourist Promotion Board, during the calendar
year 2013, 38 new hotels and resorts were in operation
increasing bed capacity to 29,811 representing year
on year growth of 6%. Sri Lanka recorded country
growth of 26% during the financial year under review
with India continuing to be the main source market.
The East European market performed strongly in
both countries with Sri Lanka being more popular
garnering the larger share (56%) of the market. The
Sri Lanka Tourist Development Authority (SLTDA)
has not released monthly information with regard
to capacity growth and occupancy levels in graded
tourism establishments; however, an increase in
accommodation capacity at the lower end of the market
was evidenced.
Apart from this, the risk exposure and profile of the
Group did not change significantly during the year
under review.
A review of the key risks that could materially affect
the John Keells Hotels Group along with the control
measures and action plans implemented to mitigate
them are set out below.
94
RISK MANAGEMENT CONTD.
Risk category and description
Potential Impact
Control Measures and Action Plans to Mitigate Risk
Strategic Risk
Market Risk and Competition
Loss of market share in a high growth
competitive environment or industry
over capacity
Reduction in fair share of market and
loss of revenue
Business Risk
The inability of the Company or Group
to achieve its business objectives due to
macro –economic, political and external
factors
Risk Rating – Moderate
Adverse impact on planned profitability
and cash flow
Availability of affordable credit.
Increase in operating and asset
replacement costs due to fluctuation in
exchange rates
z
Innovating and trend setting while benchmarking with global competition
z
Refurbishing and repositioning the existing hotel portfolio.
z
Dynamic monitoring of capacity utilisation and strategic marketing initiatives to
maximise market share and enhance top line growth
z
Providing value for money by enhancing services, improving service delivery and
focusing on consistent quality
z
Participation in global and regional tourism promotions and events in existing,
potential and emerging markets while maintaining relationships with key overseas
industry partners
z
Evaluating web marketing channels and strategically developing the website to grow
web business
z
Continuously evaluating investment opportunities to expand room portfolio
z
Based on SWOT analysis, long term strategic plans are formulated, implemented and
reviewed
z
Corporate plans are formulated on an annual basis and formally approved by the
Board. These plans are thereafter monitored and reviewed by the Board on an
ongoing basis.
z
Implementation of cost control procedures and innovative cost saving initiatives
z
Ongoing review of cost and expenditure by operational and finance staff to
determine appropriate revision of rates and tariffs
Risk Rating – Low
95
Potential Impact
Brand Equity and Reputation
Any event that could undermine the
brand equity and the reputation of the
Group such as decline in service levels,
the product not meeting customer
expectation, possible environmental
impacts and health and safety as well
as failure to sustain the appeal of the
Groups brands to its customers
Risk Rating - Low
Decline in customer base, loss of market Although some factors are beyond its control, the Group adopts the following approaches
share, market penetration and ability to to mitigate this risk
develop the business
z All hotel operations are monitored against and guided by the Standard Operating
Procedures (SOP) and Minimum Quality Standards (MQS) both of which are
Inability to maintain room rate
benchmarked against leading international hotel chains
differentiation and competitive
z Innovative service in keeping with brand promise
advantage
z Completed review of Brand architecture and positioning of product portfolio
Erosion in confidence may damage
sustainability of Group business
Statutory & Legal Risk
Changes in legal and regulatory
Loss which may arise due to non
framework requiring significant changes compliance with statutes
to operating processes Enhanced incidence and potential
Risk of litigation from guests, customers, exposure due to proposed legislation
suppliers, staff and regulatory
authorities
Loss arising from flawed contracts
z
Ongoing monitoring of online customer reviews and promptly responding to guest
feedback
z
Host international events in collaboration with overseas partners
z
Regular brand audits are carried out covering both facilities and services
z
The Group ensures that key managerial positions are held by suitably qualified and
trained staff with sufficient experience in the hotel industry
z
Ongoing attention to environment, health and safety concerns by obtaining
appropriate internationally recognised quality certification standards
z
Initiatives to preserve water and energy resources to ensure long term sustainability
z
Statutory returns, including taxes, are regularly monitored, reviewed and scrutinised.
Compliance audits are included in the scope of the internal audit program. A
comprehensive financial and operational compliance checklist is reviewed by senior
management on a quarterly basis.
z
Active engagement with industry advisory and policy making bodies to articulate
concerns and make representations upon invitation
z
The legal division of the John Keells Group provides guidance, advice and direction
to safeguard the Group against exposure to unexpected losses arising from the legal
consequences of its transactions
z
Continuous review and development of information systems which detect and report
deviations
Risk Rating - Low
96
RISK MANAGEMENT CONTD.
Potential Impact
Operational Risk
Risks from natural or man-made
disasters
Risk Rating - Low
Injuries to staff and guests, damage to
property and cost implications
Project Implementation Risk
z
Documented business continuity and disaster recovery plans are in place and
appropriate signage is in place
z
A process to communicate awareness of such incidents is in place
z
Fire fighting systems , trained staff and procedures are in place
z
Relevant insurance policies are in place and the adequacy of such cover is subject to
regular review
Risk Rating - Low
Cost overruns and loss of earnings due
to delays
Personnel
The risk of losing highly skilled staff and Inability to maintain quality standards
key personnel due to industry growth,
and meet guest expectations
labour practices
Higher operational costs and loss of
Shortage of appropriately skilled staff in business
the market to meet the growing need of
the Group.
z
Establishing project time lines in consultation with all stakeholders
z
Formal process established to cover project consultancy, project award and material
procurement
z
Specialised teams monitor project progress and compliance with established
sustainability guidelines
z
Online, real time repository which serves as a forum to discuss and resolve project
related issues and track project cost and progress
z
Learning from past project activities are documented and reviewed to ensure that
best practices are carried forward
Risk Rating - Low
z
Cross exposure and overseas training by providing opportunities to key staff to be
employed in overseas subsidiaries as part of career progression
z
Identification of talent pool for succession planning
z
Structured training arising from performance appraisal process
z
Developing a spirit of unity by organising staff gatherings
z
Recognising and rewarding superior performance
z
Continuous monitoring of associate motivation and satisfaction through surveys and
initiating corrective actions where necessary
z
Cultivating a win-win approach by engaging in candid and continuous dialogue with
labour unions
97
Potential Impact
Supply Chain Risks
Short supply of goods and raw materials Cost overruns, reputational loss
resulting in disruptions to operations
Technology and data protection risk
Failure to keep pace with developments
in the technology could impair our
competitive position and operations
Adverse impact on efficiency of
operations, guest satisfaction, loss of
competitive advantage
Risk of cyber attack
Data theft
Internal operational processes
Risk of financial loss due to breakdown
in internal controls
Risk Rating - Low
z
Alternate suppliers have been identified
z
Maintain good business relationships with supply chain, rotating contracts when
economically possible
z
Identification of local supplier base
Risk Rating - Low
z
Following detailed evaluation, a new hotel operating system was selected as the
preferred common property management system. This system would ensure greater
alignment with business needs and be more agile in implementing dynamic changes
in business strategy.
z
Continuous review of network protection processes at all operational locations to
ensure integrity and security of data
z
Documented business continuity and disaster recovery plans are in place in the event
of technical disruption or failure
z
A clearly defined IT policy is communicated to all staff
Risk Rating - Low
Disruption of operations, loss of profits
and ineffective use of assets and
resources
z
Clearly defined systems and procedure are in place to ensure compliance with
internal controls, which are monitored and reviewed for their continued efficiency
and effectiveness
z
An outsourced internal audit firm reviews and provides assurance on the adequacy
of the Group’s financial and operational systems on a quarterly basis.
z
Quarterly confirmation of compliance with financial, operational and sustainability
procedures and requirements which include any incidence of fraud
z
A formal process is in place to review and monitor all audit findings
Financial Risk
Credit Risk
Liquidity Risk
Interest Risk
Foreign Currency Risk
Please refer Note 13 to the Financial Statements
The Audit Committee has reviewed the risk management processes adopted by the Group and has noted that risk analysis exercises had been conducted across the different
Hotels of the Group during the year under review. In conclusion, the Board is pleased to confirm that a process for identifying, evaluating and managing significant risks has
been in place throughout the year in accordance with the guidelines set out by CA Sri Lanka and industry best practice.
98
SUSTAINABILITY REPORT
Kg
30.00
25.00
9.7%
20.00
15.00
10.00
Our Carbon Footprint
(per guest night)
5.00
0.00
2012/13
2013/14
KGS OF CO2 PER GUEST NIGHT
JOHN KEELLS HOTELS
AT JOHN KEELLS HOTELS
SUSTAINABILITY IS A WAY
OF LIFE. AS THE LEADING
LEISURE SECTOR OPERATOR
IN THE COUNTRY, WE BELIEVE
IT IS VITAL FOR US TO SET
INDUSTRY STANDARDS IN
SUSTAINABILITY AND ADOPT
‘BETTER THAN THE BEST’
GLOBAL PRACTICES IN PEOPLE,
SOCIAL AND ENVIRONMENTAL
SUSTAINABILITY. THIS
YEAR, IT IS WITH GREAT
PRIDE THAT WE REPORT OUR
OUTSTANDING RESULTS IN
THIS JOURNEY.
ABOUT THIS REPORT
Our Sustainability Report provides a concise analysis of our strategy, performance and outlook for the future
in relation to our social and environmental goals in the short, medium and long term. It includes a brief insight
in to the Company’s policy framework, governance structures, guiding principles and execution of our overall
Sustainability strategy based on upholding the rights of our stakeholders and preservation of the environment.
This is our third Sustainability Report and relates to our performance during the period 1st April 2013 to 31st
March 2014. The report has been prepared in accordance with the Global Reporting Initiative Standards G3.1
which has been consistently applied for the past 3 years within the John Keells Hotels PLC Group. We report on
32 performance indicators encompassing economic, environmental and social aspects making this a B+ level
Report according to the GRI Application level framework as this report has been audited by Messrs. Ernst & Young
99
Chartered Accountants, Sri Lanka and their assurance
report is given on page 105. John Keells Hotels has
also embraced the principles of The United Nations
Global Compact and pledged support to achieve the
Millennium Development Goals.
The Sustainability Report covers 8 resorts in Sri Lanka
and three resorts in the Maldives which are owned by
the Group, as detailed in the Group Structure on page
51 The policy framework, guiding principles and their
application are consistent across all these entities.
Our stakeholder engagement processes are vital to
all aspects of our performance and form the basis
for selection of performance indicators reported and
influence business strategy. Issues identified from
this process are filtered using the Group’s definition
of materiality to identify material issues. John Keells
Hotels defines materiality as economic, social or
environmental issues that cross a threshold, in
affecting the ability to meet the needs of the present
without compromising the needs of future generations.
John Keells Hotels will adopt to the GRI G4 guidelines in
the financial year commencing 1st April 2014 and will
review its policy framework, performance indicators
and reporting processes in order to align with the
guidelines.
SUSTAINABILITY HIGHLIGHTS - 2013
2,799
2.1%
High Performing Team
Waste per Guest Night
Members
25%
No. of
Injuries
80
70
60
50
Water usage reduction
40
in office premises
9.7%
30
20
(per Guest Night)
10
0
OUR TOTAL GUEST
NIGHTS INCREASED
BY 25% DURING THE
YEAR
2012
2013
STAFF- INJURY RATES
#1
2014
COMMUNITY
ENGAGEMENT
Our Volunteer Hours
Education: 242
Culture and Religion: 1,493
Health and Welfare: 3,745
Natural Resources: 1,214
4 SRI LANKAN RESORTS AND 1 MALDIVIAN RESORT RATED # 1 IN
THEIR RESPECTIVE AREAS
100
SUSTAINABILITY REPORT CONTD.
STAKEHOLDER ENGAGEMENT
Our stakeholder engagement processes are vital to the formulation of strategy and brand building. There is a high degree of connectivity and impact between critical
stakeholder groups and proactive engagement which enables us to understand and respond effectively to their changing needs. Consequently, we invest strategically in
stakeholder engagement to facilitate early identification of potential issues and trends to enable us to respond in a timely manner.
Stakeholder
How We Engage
Customers
Our customers consist of the guests who visit our resorts as
well as local and international tour operators, travel agents
and destination management companies which generate
business for us.
z
Staff interactions with guests
z
Unique experiences
z
Guest Comment cards
z
Memorable locations
z
Guest reviews on Trip Advisor
z
Superior service levels
z
Reviews on social media
z
Value for money
z
One to one meetings with Business to Business (B2B)
clients
z
Facilities and cleanliness
z
Fusion cuisine
z
Market surveys
z
Activities
z
B2B Customers- frequent familiarisation visits,
promotional material
z
Up to date information on the product and service
offerings to the customers
z
Employee satisfaction surveys- Voice of Employee, Great z
place to work
z
Competitive financial and non-financial remuneration
z
Skip level/focus group meetings
z
Opportunities for career advancement
z
360° survey
z
Health and safety
z
Leisure portal (intranet)
z
Equal opportunities
z
Continuous interaction
z
Work-life balance
Government , legal and regulatory authorities
This includes the government of Sri Lanka and Maldives,
Department of Inland Revenue, Securities and Exchange
Commission, Colombo Stock Exchange, Sri Lanka Tourism
Development Authority, Board of Investment Sri Lanka etc.
z
Trade and related associations
z
Compliance with applicable laws and regulations
z
Periodic disclosures
z
Good governance
z
Meetings upon request
z
Continuous dialog with industry partners
Investors
We have a diversified shareholder base, including resident
and non- resident individuals and institutions.
z
Annual Report
z
Adequate return for risk undertaken
z
Release of quarterly financial statements and periodic
disclosures to the Colombo Stock Exchange
z
Good governance practices
z
Compliance with relevant laws and regulations
z
Investor relations arm of John Keells Group
z
Responsible business practices
z
Community related activities and awareness
programmes
z
Preservation of environment in locality
z
Financial and non-financial assistance for community
related activities
z
Respect for local culture
Employees
Consists of our total talent pool of 2,799 employees in Sri
Lanka and Maldives.
Community
Consists of the local communities in which our hotels and
resorts are located, both in Sri Lanka and Maldives.
z
Needs Identified
Sponsorships for religious, cultural and social activities
Skill development
101
CHALLENGES, OPPORTUNITIES AND RISKS
The Tourism sector has been identified as one of the key growth sectors and Sri Lanka aspires to be a regional hub for tourism in South Asia by 2016. John Keells Hotels is
the largest player in the country’s leisure sector and our goal is to become an internationally recognised premium leisure brand driving the growth of this sector whilst
maintaining our focus on the triple bottom line. The table below summarises the key challenges, risks and opportunities in achieving our goal.
Focus
z
Challenges
z
Opportunities
Customer
z
Changes in customer needs and habits- guests seek unique
experiences and service excellence in parallel to value for money.
z
Changes in delivery channels to web and mobile based technology
enables easier access to a larger customer base.
z
Guests seeking out responsible hospitality providers.
z
Improved transportation infrastructure including road networks and
internal air travel.
z
Shortage of skilled labour due to competition.
z
Focused staff training to achieve service excellence.
z
Intensive training requirements in line with the vision of creating an
international brand
z
Intensified competitive pressures, with new entrants and existing
players increasing capacity.
z
Focus on niche market, aligned with the new branding strategy and
positioning as a lifestyle brand.
z
Threat of substitutes-Increased competition from the informal sector,
with initiatives such as home-stay gaining popularity.
z
Attract high spending, long-staying tourists.
z
Cost structure- inflationary pressures continue to impact profit
margins.
z
Local communities having a negative view of tourism, due to the
perceived adverse impacts on cultural heritage and moral values
z
Direct, indirect and self-employment generated through tourism
related activities
z
Greater tourist numbers could pose a threat to communities due to
drugs and STDs
z
Skill development and resultant improvement in employability of
youth in local communities due to formal training.
z
CSR projects aimed at uplifting the livelihoods local families
Employees
Shareholderseconomic
Communities
Environment
z
Threats to natural resources due to tourism related activities, such as
over visitation and excessive use of boats.
z
Widening and diversifying product content and processes that are
aligned with sustainable tourism
z
Meeting industry benchmarks on green products
z
z
Unsustainable use of limited natural resources for tourism
Showcase Sri Lanka’s and Maldives’ rich biodiversity and other
natural resources
z
Compliance with global tourism industry certification bodies
102
AWARDS, ACCOLADES AND CERTIFICATIONS
We encourage our hotel teams to compete for industry awards as part of our quest for excellence in all aspects of operations. We congratulate the winners and believe they
inspire other teams to strive harder to reach new standards of excellence.
John Keells Hotels
z
Gold Award and First Place in Hotels and Travel Sector of STING Corporate Accountability Index 2013
z
Silver Award for Excellence in Annual Reports 2013 - Hotel Category
z
Trip advisor Certificate of Excellence
z
Won Five Crowns @ Crown For Food Hygiene Launched by IND-EXPO Certification Limited
z
Trip Advisor Certificate of Excellence 2013/2014
z
“ Most popular Hotel in the Russian and CIS market” Award @ Tez Worldberry, 2013
Chaaya Village
z
Cinnamon Citadel
z
Energy Conservation Champion @ EU- Switch Asia Greening Hotels Awards 2013
z
Trip Advisor Travelers Choice Winner for 2013/2014
z
z
Bronze Award for Efficient Green & Sustainable Practices was Awarded by National Cleaner Production Center, Sri lanka
z
Bentota Beach Hotel
Chaaya Blu
103
Cinnamon Lodge
z
“Best Hotel in Sri lanka” Award by Zoover, The biggest Independent Travel Portal in Europe
z
“Best Green Hotel in Sri Lanka” Award @ EU Switch Asia Greening Hotels Awards 2013
z
Trip advisor Travelers choice winner for 2013/2014
z
z
Silver Award for Efficient Green & Sustainable Practices was Awarded by National Cleaner Production Center, Sri Lanka
Cinnamon Wild
z
Chaaya Traanz
z
Trip Advisor Travelers Choice Winner for 2013/2014
z
z
“Holiday Check Quality Selection 2013” certificate with a rating of 5.3/6
z
Trip Advisor Travelers Choice winner for 2013/14
z
z
Gold Award in Best First Choice 4 Tier Category by TUI Travel PLC
z
“Zoover Recommended Award 2013” by Zoover, an independent travel portal in Europe
z
z
Trip Advisor Travellers Choice 2013 - Winner
z
MATATO Maldives Travel Awards – Leading Surf Resort – 2013
z
z
Gold Award in Best First Choice 4 Tier Category by TUI Travel PLC
z
Gold Award in Best Thomson 4 Tier Category by TUI Travel PLC
Chaaya Lagoon Hakuraa
Chaaya Reef Ellaidhoo
Chaaya Island Dhonveli
104
Certifications
We consider certifications as our baseline to provide assurance on systems and processes implemented in our hotels and we strive to go beyond the standards required by the
certifying bodies in our constant quest for excellence in all what we do.
ISO 22000
ISO 14001
OHSAS 18001
Green Globe Certification
3 Star Crescent Rating
Travelife Gold Award
This certifies that our
food safety management
systems addresses the food
safety management risks
across the food supply
chain.
Provides assurance
to stakeholders that
environment impacts
are being measured and
improved
Provides assurance
regarding occupational
health and safety
management systems
and compliance with
legal requirements and
international best practice.
Certifies that we are
a sustainable tourism
Company. This means
that we save energy
and water resources,
reduce operational costs,
positively contribute to
local communities and
their environment.
Certifies that we are able
to cater for the Halal
conscious travellers
Certifies that hotels
are sustainable
environmentally, socially,
economically.
Hotels Certified
Bentota Beach Hotel
Chaaya Village
Cinnamon Citadel
Chaaya Blu
Cinnamon Lodge
Cinnamon Wild
Chaaya Tranz
Chaaya Lagoon Hakuraa
105
INDEPENDENT ASSURANCE REPORT
Independent Assurance Report to the Board of Directors of John Keells Hotels PLC on the Sustainability Report - 2013/14
INTRODUCTION AND SCOPE OF THE ENGAGEMENT
The management of John Keells Hotels PLC (“JKH”) engaged us to
provide an independent assurance on the following elements of
the Sustainability Report- 2013/14 (“the Report”)
z
Reasonable assurance on the information on financial
performance as specified on page 132 of the Report
z
Limited assurance on JKH’s self-declaration (“the selfdeclaration”) in respect of the content of the Report prepared
in accordance with the requirements of the Global Reporting
Initiative G3.1 guidelines at application level ”B+”.
BASIS OF OUR WORK AND LEVEL OF ASSURANCE
We performed our procedures to provide limited assurance in
accordance with Sri Lanka Standard on Assurance Engagements
(SLSAE 3000): ‘Assurance Engagements Other than Audits or
Reviews of Historical Financial Information’, issued by the
Institute of Chartered Accountants of Sri Lanka (“CASL”).
The evaluation criteria used for this limited assurance
engagement are based on the Sustainability Reporting Guidelines
(“GRI Guidelines”) and related information in particular, the
requirements to achieve GRI application level “B+” in the ‘GRI
Application Level’ publication ,publicly available at GRI’s global
website at “www.globalreporting.org”.
Our engagement provides limited assurance as well as reasonable
assurance. A limited assurance engagement is substantially less
in scope than a reasonable assurance engagement conducted in
accordance with SLSAE-3000 and consequently does not enable
to obtain assurance that we would become aware of all significant
matters that might be identified in a reasonable assurance
engagement. Accordingly, we do not express an opinion providing
reasonable assurance.
MANAGEMENT OF JKH’S RESPONSIBILITY FOR THE REPORT
The management of the JKH is responsible for the preparation of
the self-declaration, the information and statements contained
within the Report, and for maintaining adequate records and
internal controls that are designed to support the sustaining
reporting process in line with the GRI Sustainability Reporting
Guidelines.
ERNST & YOUNG’S RESPONSIBILITY
Our responsibility is to express a conclusion as to whether we
have become aware of any matter that causes us to believe that the
self-declaration contained in the Report has not been prepared,
in all material respect, in accordance with the requirements of
the GRI Guidelines at application level “B+”. This report is made
solely to JKH in accordance with our engagement letter dated 03
March 2014. We disclaim any assumption of responsibility for any
reliance on this report to any person other than JKH or for any
purpose other than that for which it was prepared. In conducting
our engagement, we have complied with the independence
requirements of the Code for Ethics for Professional Accountants
issued by the CASL.
KEY ASSURANCE PROCEDURES
We planned and performed our procedures to obtain the
information and explanations considered necessary to provide
sufficient evidence to support our limited assurance conclusions.
Key assurance procedures included:
z
Reconciling and agreeing the data on financial performance
are properly derived from the JKH’s audited financial
statements for the year ended 31 March 2014
z
Comparison of the content of the Report against the criteria
for a self-declaration at a “B+” level in accordance with the GRI
Application Level publication
Our procedures did not include testing electronic systems used to
collect and aggregate the information
LIMITATIONS AND CONSIDERATIONS
Environmental and social performance data are subject to
inherent limitations given their nature and the methods used for
determining, calculating and estimating such data.
CONCLUSION
Based on the procedures performed, as described above, we
conclude that
z
The information on financial performance as specified on
page 132 of the Report are properly derived from the audited
financial statements of the JKH for the years ended 31 March
2013 and 31 March 2014.
z
Nothing has come to our attention that causes us to believe the
GRI self-declaration contained in the page 98 of the Report has
not been prepared, all material respects, in accordance with the
requirements of the GRI Guidelines at application level “B+”.
z
Interviewing relevant JKH’s personnel to understand the
process for collection, analysis, aggregation and presentation
of the self-declaration
z
Reviewing and validation of the information contained in the
self-declaration and the Report
Chartered Accountants
z
Checking the calculations performed by the JKH on a sample
basis through recalculation
29th May 2014
Colombo
106
Cinnamon Bey - LEED GOLD Certified
Demonstrating its commitment
to sustainable business,
Cinnamon Bey Beruwela
became the first hotel in
Sri Lanka to be awarded
the prestigious LEED GOLD
Certification from the US Green
Building Council, after fulfilling a comprehensive
range of green standard requirements. Leadership
in Energy and Environmental Design (LEED) is a
set of rating systems for the design, construction,
operation and maintenance of green buildings,
homes and neighbourhoods. LEED is the most
prestigious and highly regarded green rating
system in the world.
The rating system, audits and examines five key
areas as follows: sustainable sites which look
at ecological impact, water efficiency – which
covers reduction of total water usage and water
efficient landscaping, energy and atmosphere – for
energy efficiency of the building and integration
of all systems and equipment properly into the
building envelope. The fourth area is material and
resources which cover what green materials have
been used in a particular project and finally indoor
environmental quality which looks at measures
taken to prevent air pollution and strategies
established to gain more daylight into the complex
and less thermal energy.
SUSTAINABILITY GOVERNANCE AND POLICIES
John Keells Hotels has a formal sustainability
governance structure and policies to ensure
organisation-wide implementation of sustainability
strategy. Sustainability specialists, who champion
projects, ensure compliance with environment and
social aspects according to an agreed plan, co-ordinate
with our parent Company, John Keells Holdings PLC
on sustainability strategy, monitor implementation
and measure performance on environment and social
factors. The Sustainability Officers report directly to
the Sector Head of Hotels and co-ordinate activities
with the General Managers of the respective hotels and
centralised support services such as HR, Marketing
and Finance teams. Monthly reports are provided to
sector management and Board on performance which
includes key financial and non-financial information
facilitating holistic decision making.
OUR CUSTOMERS – INSPIRING AN EXPERIENCE
Guest Nights
000’
1,000
800
600
400
200
0
2012
2013
2014
TOTAL GUEST NIGHTS (GROUP)
OUR TOTAL GUEST NIGHTS INCREASED BY
25% DURING THE YEAR
Board of Directors
OUR GUESTS HAVE EXTENDED THEIR
LENGTH OF STAY IN OUR HOTELS
Sector Head
Sustainability
Division in Sri Lanka
Sustainability
Division in Maldives
8 Hotels
3 Hotels
We have a robust Sustainability Policy Framework
in place to provide guidance for our dispersed
management teams to facilitate better decision
making and embedding the sustainability principles
throughout the organisation. The policy framework
mainly focuses on environment and social factors and
are summarised below.
OUR UNIQUE PRODUCT AND SERVICE
DELIVERY ENTICES OUR GUESTS TO
REVISIT OUR HOTELS
8
Booking engines facilitate
reservations
107
WE HAVE STRENGTHENED
OUR E-DELIVERY
MECHANISMS IN ORDER TO
INCREASE ACCESSIBILITY
AND CONVENIENCE TO OUR
CUSTOMERS
88%
Extensive B2B
partnerships- generate 88%
of our guests
#1
Our customers
Our customers can be broadly categorised as
guests who visit our resorts as well as local and
international tour operators, travel agents and
destination management companies which generate
business for us (collectively referred to as B2B
customers).
In terms of distribution channels, around 88% of our
total revenue is generated through the travel agents.
The unique offering of our resorts attracts a diverse
base of both domestic and foreign guests, with the
foreign guests accounting for nearly 60% of revenue.
Currently guests from Western Europe namely
the United Kingdom, France Germany and Russia
dominate our customer base.
Our resorts mainly attract young/boomer couples,
family groups and groups of friends. Our customers
typically seek to obtain unique experiences and
authenticity in memorable locations.
4 Sri Lankan resorts and 1
Maldivian resort rated # 1 in
their respective areas
Assured health and safety
North America
1%
Western Europe
34%
Central/Eastern Europe
19%
Middle East
Online travel agencies
REVENUE MIXDELIVERY
CHANNELS
10%
Local and international
Travel agents
Independent travellers
88%
2%
South Asia
REVENUE MIXORIGIN OF
CUSTOMERS
Domestic guests
8%
5%
20%
Oceania
3%
Others
2%
108
Youthful
Sri Lanka
Personal
Mobile
1-4
days
Lime
Curated
choices
Together
My Hotel
Different
Friendly
Design
White
Vibrant
Amari
Violet
Local
Great
quality
Informal
inclusive
Flexible breaks Space
music prices
Glass
Couples
Hotel Costes
Stylish
and
Asian
Bright
Friends
Relaxed
Modern
Active
Online Orange
Short
Interesting
Conventional
WHAT IT IS AND
WHAT IT IS NOT
Breaking down the
new branding strategy
John Keells Hotels has
defined what the brand
is and what it is not.
Gilded
MyHotel
Beige
Strict
Options
Bland
Consistency
Formal
Limitless
Intimacy
Banyan tree
Privacy
Marriott
Cream
Standard
Eighties
Karaoke
Wood
Long vacations
Expensive
Extras
Luxury
Wooden
Honeymoon
couples
Zen-like
Anybody
Traditional
Silence
Crowded
7-14
days
Dark
Agencies
Brown
Operators
Indian
Western
OUR BRAND - THE EXPERIENCE
During the next two to three years, we plan to make
exciting new changes to our brand. The Cinnamon
brand will emerge as an internationally recognised
‘lifestyle brand’, with the focus being on people seeking
to enjoy quality time with friends. Our resorts will be
modern, iconic and vibrant, inspiring a multi sensorial
experience for our guests. . Our product and service
excellence will be guaranteed through a matrix of
checks and balances with our new brand standards
platform. Every aspect of our operation ranging
from the interior of the resorts to innovative cuisine,
to entertainment, to events will be aligned to the
attributes and personality of the Cinnamon brand.
MEASURING CUSTOMER SATISFACTION
John Keells Hotels places utmost priority in
understanding guest expectations and measuring
satisfaction. Our methods for measuring customer
satisfaction cover the guests’ entire stay including
services in restaurants, lobbies and outdoor facilities.
Feedback, complaints and recommendations obtained
through guest engagement is utilised to identify and
bridge gaps in products, services and processes. We
have made available multiple platforms through which
our guests can engage with us.
z
Interaction with guests
z
Guest feedback forms
z
Cinnamon Hotels & Resorts website
z
Social media
z
Telephone numbers and e-mail addresses are
provided in the Company’s website and all other
communication medium.
Global
Additionally, we consistently monitor customer reviews
and feedback through popular independent travel
websites and ensure that prompt action is taken to
rectify any shortcomings. A specialised software is
109
utilised to monitor reviews and comments on social
media websites in multiple languages. Furthermore,
General Managers at each hotel are empowered to
respond to such comments and reviews on a daily basis.
On average, all our resorts obtained scores above 7.5
during the year from all three major travel websites,
TripAdvisor, Agoda and Booking.com.
Furthermore our B2B customers are constantly kept
abreast of new developments in our products and service
offerings through frequent visits and familiarisation
tours. Communication materials are designed and
generated in order to provide a continuous flow of
information to all our business partners.
Exposure
Local
Foreign Media Exposure
Foreign
38.11
Local Media Exposure
22.98
Miss. India pre-pageant tour
17.41
110.57
Miss. France pre-pageant tour
19.50
197.76
Trip Advisor Ratings
Cinnamon Bey
Cinnamon Lodge
Chaaya Blu
Value of media exposure generated for our brand
(LKR Mn)
No. 1 Hotel in
the area
Cinnamon Wild
Chaaya Lagoon
Hakuraa Huraa
Based on customer reviews
Miss France Contest 2013 - Cinnamon Bey Beruwala
110
PRODUCT AND SERVICE RESPONSIBILITY
At John Keells Hotels, ensuring that all our properties are safe for our guests is of paramount importance. A
comprehensive health and safety policy which is applied across all our hotels and resorts, details the health and
safety standards applicable to every aspect of our products, services and processes including rooms, food handling
and storage, cleaning and temperature control among others.
Aspect
Salient points of health and safety standard
Guest safety
All guest areas to be free of hazards and potential risks of damage or injury, hazard
controls in risky areas, electrical equipment guidelines, notifications to guests regarding
hazards that cannot be eliminated.
Emergency response
Responses in place for natural disasters, emergency planning and preparedness outlined
in the Business Continuity Plan
First Aid
All hotels will have a first response team for emergencies, including fully qualified firstaid team.
Food safety
All hotels should comply with Hazard Analysis & Critical Control Points (HACCP)
standards, all hotels should build awareness on dealing with food poisoning and allergies
Temperature control
Refrigerator temperatures must be monitored and controlled periodically, changes to
temperature to be made only with consultation.
Food storage
All food is protected from contamination and covered appropriately.
Cleaning
Food contact surfaces to be kept clean at all times.
Training on health and
safety
A minimum number of employees should be trained on first-aid including
Cardiopulmonary resuscitation (CPR), employees should be trained periodically and
obtain the relevant certification.
Quarterly audits are carried out at each hotel in order to evaluate the compliance to health and safety standards.
Additionally, a surveillance audit is conducted annually. All audits are carried out by independent parties. Within
each resort, there exists a clear hierarchy and division of responsibilities with regards to health and safety aspects.
Our resorts have also obtained the health and safety certifications of ISO 18001 and ISO 22000. We are proud to note
that there were no health and safety incidents with regards to our guests during the year under review.
OUR TEAM
We believe that our ability to create truly unique guest experiences is inextricably linked to the strength and
capabilities of our team. Each and every member of our formidable team strives towards service excellence, a
philosophy that is deeply rooted at the core of our organisation. As the country’s largest leisure sector employer, our
team has enabled us to become a trendsetter in the industry, setting new standards in every aspect of hospitality.
No. of
Injuries
80
70
60
50
40
30
20
10
0
2012
2013
2014
STAFF- INJURY RATES
70%
Employee Retention rates
66,392
Training hours during the year
ALL CATEGORIES OF STAFF
UNDERWENT TRAINING ON
MULTIPLE ASPECTS DURING
THE YEAR
111
2,799
High Performing Team
Members
Community representation
50%
employees hired from local
communities
We are an equal
opportunity
employer, and do not
discriminate based
on age, gender or
ethnicity.
We have
contributed
towards
generating
employment in the
areas in which our
resorts are located.
87%
Employee Satisfaction rate
LKR 41 Mn
Total investment on Training and Development
Our training programmes covered
approximately 80% of our people during the
year
OUR APPROACH TO BUILDING A HIGH PERFORMANCE TEAM
Our people philosophy is based on five pledges which have been instilled into our values and is resonant in all our
activities. We strive to get things right the first time, care for our people and community, stand out wherever we
are, empower subordinates and colleagues and think green. Additionally the Organisation’s HR policies emphasise
the importance of talent management, learning and development, work-life balance, health and safety and
performance management, among others. The comprehensive HR policies, together with the commitment towards
the five pledges have resulted in the development of a highly skilled team, who are dynamic, caring and motivated.
Our people and their commitment to excellence will be a driving force on our journey towards building a global
leisure brand.
Talent
Attraction
Performance
Management
Compensation
and Benefits
Training and
Development
TALENT ATTRACTION
Our talent pool
Our talent pool comprises of 2,799 members, with nearly 50% hired from the localities in which the hotels operate.
In line with our efforts to provide employment opportunities for the country’s youth, we attempt as far as possible
to absorb individuals from the communities in which our hotels are located. Once recruited, these individuals
undergo extensive training thereby, equipping them with the knowledge and skills required to succeed. During the
year 369 new employees were added to our team, consisting of 274 in Sri Lanka and the remainder in the Maldives.
Our executive employee cadre consists of 386 members, out of which 72% is certified or professionally qualified.
Our retention rates amounted to 70% during the year; relatively unchanged from the previous year.
112
EQUAL OPPORTUNITY EMPLOYER
We are an equal opportunity employer, and do not practise gender, age, race or religion based discrimination.
Our HR policies emphasise the recruitment, development and retention of individuals who best possess the
required competencies and attitude to succeed in his/her role. The John Keells Group does not engage children in
employment and does not encourage any form of forced or compulsory labour.
Males
GENDER-WISE
EMPLOYMENT TYPE
AGE-WISE
Females
92%
8%
Permanent
34%
Contract
66%
Below 30
40%
30 to 50
53%
Over 50
7%
John Keells Hotels won John Keells Group Inter Company Rugby 7’s
113
STAFF TURNOVER
GENDER-WISE
STAFF TURNOVER
AGE-WISE
Females
93%
COMPENSATION AND BENEFITS
We offer an attractive remuneration package to all our
employees, consisting of financial and non-financial
incentives. Gender based compensation is not practised
in companies within the John Keells Group and
compensation is based on qualifications, experience and
performance level. Commensurate with the position,
benefits include medical insurance, vehicle loans,
accommodation and meals among others.
During the year, John Keells Hotels introduced a new
competency framework. This Competency based
framework is developed around a set of key competencies
which are crucial in achieving service excellence
and taking the Cinnamon brand to new heights. The
framework is built on a promise of “We are Cinnamon
professionals, delivering success”. The competencies
broadly addresses, adapting to change, innovation and
creativity and creating experience. This framework
which takes into consideration industry specific factors
is the first of its kind to be developed in the Sri Lankan
hospitality industry.
TRAINING AND DEVELOPMENT
John Keells Hotels offer an array of learning opportunities
to its workforce, ranging from technical on-the-job
training to personality and leadership development. In
addition to nurturing the requisite skills for achieving
service excellence in line with the Cinnamon brand’s
offering, the training and development programmes
are also focused towards furthering the personal and
professional development of our people.
7%
Below 30
67%
30 to 50
32%
Over 50
1%
COMPETENCY FRAMEWORK We are Cinnamon, Professionals delivering Success
No. of
Employees
70
Key competencies:
60
1. Cinnamon Citizen
50
2. Adaptable and Change Agent
40
3. Inspiring and Developing Teams
30
4. Building and Maintaining Relationships
20
During the year, our investment in training was
LKR 41 Mn. The increase reflects our commitment in
bridging the current competency gaps, in reaching
our objective of developing a global brand. During the
year, a detailed evaluation of the training needs was
carried out for this purpose. Resource persons were
drawn from multiple sources, including an expatriate
hospitality based consultant, external experts from the
industry and personnel from within the Organisation.
Staff category
Maldives
STAFF TURNOVER
REGIONAL BREAKDOWN
Training Hours
2012/2013
5. Innovation and Creativity
10
0
Sri lanka
Males
PERFORMANCE MANAGEMENT
John Keells Hotels embody a performance driven
culture, with 90% of all employees covered by the
performance appraisal system. Each employee works
towards a set of clearly defined objectives which are
set at the outset and are categorised based on the
Balanced Score Card and HoshinKanri Methodology.
Non-compliance to these objectives highlight areas for
improvement whilst revealing training needs.
2013/2014
6. Service and Customer Focus
Assistant Vice President
128
257
7. Technical Competence
Assistant Manager/ Manager
4,030
2,893
8. Creating Experiences
Executive
6,791
10,982
9. Results Orientation
Associate
235,375
52,260
114
Training tool/
program
Number of
programs
No. of Details
participants
Management Trainee
Programme (MT)
01
10 Graduates from the Sri Lanka Institute of
Tourism and Hotel Management are picked for
our MT programme. It is designed to prepare the
fresh graduate to anticipate and resolve complex
problems, manage multifaceted development
assignments, build social networks and overcome
the continuous challenges faced when being a
part of the hospitality industry.
Development Centres
01
05 This is targeted towards the Executive level
employees of the John Keells Group. The
Development Centres are designed with the
aim of developing our potential employees to
achieve their career goals and arm them with
the necessary skills which are required to move
into the next level. Each employee receives
feedback from an assigned assessor along with
the respective supervisor, subsequent to which a
Personal Development Plan (PDP) is designed for
each employee.
Grooming and
Professional
Development
70
1,628 This programme focused on the key areas of
customer care, grooming and professional
appearance, for front line staff at the Maldivian
resorts.
Competency based
Training
90
1,849
Training on Balanced
Scorecard
08
198 The training was conducted at each hotel for the
senior management on developing a strategy map
and a balance scorecard in respect of each hotel
based on the top 6 strategies of the Leisure Group.
730
21,900 These programmes are conducted at all resorts,
and provides the opportunity to all our associates
to enhance their English language skills.
English Class for
Associates
This training focuses on exceptional guest
service, supervisory development, coaching and
mentoring and leading change.
PRODUCTIVITY INITIATIVE
We are currently in the process of identifying and
implementing areas for productivity improvement
in all aspects of our product and service delivery,
covering all our resorts. Phase 1 of this initiative was
concluded during the year, with a comprehensive
time and motion analysis of all key processes in the
key departments of Engineering, Food and Beverage,
Kitchen, Front Office and Housekeeping. Critical
evaluation of the existing productivity levels in these
aspects has revealed the opportunities for substantial
improvements in efficiency. Productivity benchmarks
have been set based on local and global best practices
with recommendations for process improvements to be
rolled out across all our resorts gradually. This initiative
is anticipated to result in a significant improvement
in employee and process productivity levels over the
medium term.
SUCCESSION PLANNING
Our wide range of staff training and development
initiatives ensure that all employees have opportunity
for consistent professional and personal growth. Our
talent management and succession planning policy
highlights the importance of providing opportunities
for career advancement and creating a strong pipeline
of staff. Currently, we are working towards our goal of
filling at least 20% of vacancies arising from our hotels,
through internal staff members.
EMPLOYEE HEALTH AND SAFETY
We believe a safe and healthy work environment is
conducive to optimum performance and employee
satisfaction levels. Health and safety standards are thus
given high priority at all our resorts. John Keells Hotels’
health and safety policy specifies the conformance of
all work-places and operational equipment to building,
health and safety regulations. These are periodically
115
checked and maintained. Our efforts towards creating
a safe work environment are reflected in ten of our
resorts obtaining the OHSAS 18001 and ISO 22,000
certifications.
2011/12
Total number of
person days in the
period
2012/13
2013/14
842,055 1,038,425 1,015,065
Occupational Injuries Rate
71
59
57
748
385
486
0.09%
0.04%
0.05%
Total Absentee Days
(TAD)
12,149
4,923
5,196
TAD as a % of total
person days in the
period
1.44%
0.47%
0.51%
No. of Staff affected by
Occupational Injuries
Lost Day Rate
Total Person Days Lost
(TPDL)
TPDL as a % of total
person days in the
period
LISTENING TO OUR PEOPLE
We have identified the importance of maintaining a
continuous dialogue with our team; for this purpose
we maintain an open door policy and have introduced
a variety of tools to facilitate employee engagement.
These tools have enabled us to clearly understand the
needs of our people whilst fostering a culture in which
thoughts and concerns are easily shared.
VOICE OF EMPLOYEE
The Company annually conducts the Voice of Employee
survey, which uses an e-based interface as a ‘pulse check’
for a representative sample of employees at Executive
level and above. The survey covers a comprehensive
range of topics related to employee satisfaction and
engagement and is directly used to develop action plans
to address any areas of concern. In 2013/14 financial
year, the sector scored a satisfaction rate of 87%.
Absentee Rate
GREAT PLACE TO WORK SURVEY (GPTW)
This survey is conducted once in three years and is
a comprehensive and structured intervention by an
external party to understand employee concerns and
share thoughts. The above surveys are used as a People
Index tool which is shared with all staff, consolidated
at the leisure group level and ultimately at John
Keells Group level to evaluate the level of employee
engagement and satisfaction within the organisation.
We achieved a satisfaction rate of 67% in the GPTW
survey conducted during the review period.
INDUSTRIAL RELATIONS
All resorts within John Keells Hotels are a member
of the Employers’ Federation of Ceylon (EFC) and are
governed by the labour laws of the country and adhere
to the guidance of the Federation. Currently, Trade
Unions operate in 7 Sri Lankan resorts and actively
Survey is conducted using an e-based interface
Findings are presented to all employees in the
respective business units
Action plans are prepared in collaboration with
the business unit head to address the areas of
concern
Focus group discussions to identify causes for
dissatisfaction
Action plans and resultant initiatives are
continuously monitored and reviewed
116
engage with the management in the collective bargaining process; 5 resorts are under the Ceylon Food Beverages
and Tobacco Industries Employee Union whilst 2 are under the Inter Company Employees Union. The relationship
is governed by a memorandum of understanding (MOU) that has been entered into with each resort.
In addition to the above, the open door policy allows any employee to directly approach the Chairman and GM (at
hotel level). A Suggestion Box and Bright Ideas tool is also available in order to encourage effective staff engagement
NURTURING CHAMPIONS
CULINARY COMPETITIONS - 2013
Sri Lankan Resorts: Won 172 highly coveted awards at the
prestigious Culinary Art Chef’s competition organised by
the Chefs’ Guild of Sri Lanka. This year we recorded our
best ever performance in this competition with resorts
such as Chaaya Tranz and Cinnamon Lodge winning 8
Gold medals.
WOW (WORLD OF WINE) 2013
- SOMMELIER DEVELOPMENT
PROGRAM
Objective: Developing a skilled set of
Wine Sommeliers across all resorts of
Sri Lanka
Hotel Asia Exhibition and International Culinary Art CompetitionTeam Chaaya Island Dhonveli
Participants: 32
Maldivian Resorts: Won 13 Bronze & 08 Merit awards at
the Hotel Asia Exhibition and International Culinary Art
Competition.
22ND NATIONAL BARTENDERS COMPETITION
Objective: Identifying talented bartenders from different
regions
Participants: Approximately 240
Format: 5 day interactive residential
training programs and subsequent
testing with global standards set by
the Wine and Spirit Education Trust of
London
World of Wine 2013 - Sommelier Development Program
Recognition: The winner was given
the opportunity to work in a South
African vineyard for a period of 7 to
10 days.
Recognition: Our teams clinched 5 first places, 3 first
runners up and 2 second runners up positions
21st National Bartenders Competition
117
WORK-LIFE BALANCE
A healthy work-life balance is an essential element
in building employee loyalty, boosting morale and
improving productivity in the workplace. In line with
our HR vision of being ‘more than just a workplace’ we
truly believe in the importance of having fun at work
and through an action packed event calendar, our
employees are given the chance to participate in several
programmes at resort, sector and group level.
Education
Volunteer Hours - 242
Community Health and Welfare
Volunteer Hours - 3,745
OUR CSR INITIATIVES
During 2013/2014, our staff had the opportunity
of engaging in sports days, family get-togethers,
quarterly staff get-togethers, sports events including
inter-company and mercantile swimming meets,
inter-company rugby 7s and mercantile cricket
tournaments among others. Our team also play a
part in our CSR initiatives and celebration of national
events throughout the year. These events ensure that
our employees have abundant opportunities to build
comradeship among each other, thereby contributing
directly to the cohesiveness of our team.
COMMUNITIES- I WILL CARE
As a responsible leisure sector operator, we are strong
advocates of the need to give back to the communities
that we operate in, as reflected in our pledge “I Will
Care”. In all the localities we operate, we maintain an
open dialogue with the communities and engage with
them to effectively respond to their needs in a focused
way. Our CSR initiatives are primarily targeted towards
marginalised communities, school children, the elderly
and military personnel covering the community needs
of education, health and welfare, culture and religion
and preservation of natural resources. All our resorts
carry out multiple CSR activities and we also attempt to
engage our guests in our initiatives.
Natural Resources
Culture and Religion
EDUCATION
Many of our resorts conducted several programmes during the year to support the educational needs of the
school children and youth in the localities they operate. Bentota Beach Hotel conducted an Education and
Skill Development programme, IT training programme as well as a Grade 5 Scholarship examination seminar
together with the distribution of study guides and stationery. Other initiatives included sponsorships for school
development, first aid training programmes for school children and donations for prizes. Total volunteer hours of
242 were dedicated for education related CSR activities.
CULTURE AND RELIGION
Our resorts donated generously towards religious institutions in their localities during the year. Chaaya Village
provided sponsorship for paintings at the Habarana Buddhist temple and the Habarana Church, as well as
contributed towards the alms-giving at the temple for Vesak. Our hotels also sponsored the development and
maintenance activities and donated food and dry rations as alms-giving to several temples, including the
Pitaramba Temple, Horawala Temple, (Bentota Beach Hotel) Buddhist monastery in Ritigala (Cinnamon Lodge) and
Temple in Beruwela (Cinnamon Bey). In addition several resorts also made donations towards socio-cultural events
celebrated in the respective communities. Total volunteer hours dedicated for religion and culture related activities
amounted to around 1,490 hours during the year.
118
Education and Skill Development programme conducted for School
Children at Bentota Beach Hotel
Sea Turtle Conservation Project
HIV AIDS Awareness Campaign in Maldives
HEALTH AND WELFARE
During the year, multiple HIV-AIDS Awareness
campaigns were carried out by several of our resorts
including Cinnamon Bey, Bentota Beach Hotel, Chaaya
Blu , Chaaya Island Dhonveli, Chaaya Reef Ellaidhoo
and Chaaya Lagoon Hakuraa. These programs
were targeted towards a diverse audience including
schools, military personnel, university students and
communities in the localities we operate in such
as beach operators, three wheel and taxi drivers,
among others. Furthermore, initiatives were taken
towards enhancing the living stand of HIV victims, in
partnership with the IDH Hospital, Positive Women’s
Network and Lanka Plus. In other health and welfare
related initiatives, our resorts conducted several
blood donation programmes, mosquito eradication
programmes, provided donations to elders, children’s
homes, people with disabilities and maternity and child
clinics among others. Total volunteer hours dedicated
for health and welfare related activities amounted to
3,745 hours during the year.
NATURAL RESOURCES
Beach cleaning programmes were organised by several
of our beach resorts including Bentota Beach Hotel,
Chaaya Blu, Cinnamon Bey, Chaaya Island Dhonveli,
Chaaya Reef Ellaidhoo and Chaaya Lagoon Hakuraa.
Bentota Beach Hotel in partnership with the Sea Turtle
Conservation and Research Centre in Kosgoda, released
1,000 new born turtles to the sea. Total volunteer hours
for environmental related CSR activities were 1,214
hours.
World Environment Day Celebrations
All our resorts celebrated World Environment Day
by conducting numerous environmentally friendly
activities. For instance, Bentota Beach Hotel conducted
an awareness programme on food wastage whilst
Cinnamon Bey organised a Beach Cleaning Programme
in areas adjacent to the hotel. Meanwhile, Chaaya
Lagoon Hakuraa organised special campaigns for tree
planting and reef cleaning.
Furthermore, all our resorts in Maldives joined hands
with the Ministry of Environment and Energy to
organise a national competition of Arts, Essay and
Poetry for schools and other educational institutions
across Maldives. The competitions were based on
environment related themes and drew over 200 entries
across four age groups.
World Tourism Day Celebrations in the Maldivian
Resorts
Our Maldivian Resorts carried out a series of events
themed “Tourism and Water” on the 27th of September
2013, in view of the World Tourism Day, of which
Maldives was the host nation for the year.
Special VCDs were created for each resort, depicting
water related activities and marine line in areas
adjacent to each respective resort. Furthermore,
information leaflets detailing Environmental
protection, sustainability, biodiversity and climate
change related to the Tourism industry were created
and distributed. Guests were also engaged in these
initiatives, with all in-house guests being invited to
a seminar on the Marine life and the Formation of
Maldives
119
THE ENVIRONMENT- OUR GREEN PHILOSOPHY
A green pioneer in Sri Lanka’s leisure industry, we take great pride in being known as one of the most environmentally friendly businesses in the region. ‘I will be Green’ is
one of the five pledges of our employees who are committed to respecting, preserving and protecting the natural world and valuable resources, reducing waste and energy
consumption, and re-using and re-cycling materials wherever possible. All our hotels and resorts have thus made a concerted effort to minimise our environmental footprint
and the results have been outstanding. During 2013/14, all our footprint indicators per guest night, energy, water, waste and carbon footprint were significantly reduced.
MJ
300
221.15 Per
guest MJ
250
200
25%
Reduction in water usage
office premises
150
800
600
400
100
50
0
Liters
1000
2010/11
2011/12
2012/13
2013/14
TOTAL ENERGY CONSUMPTION PER
GUEST NIGHT
ENERGY CONSUMPTION PER
GUEST NIGHT DECLINED BY
13.6% WITH ALMOST
ALL RESORTS RECORDING AN
IMPROVEMENT
2.1%
Waste
generation
reduced per Guest night
9.7%
(per guest night)
200
0
2010/11
2011/12
TOTAL WATER
CONSUMPTION PER GUEST
NIGHT
WATER CONSUMPTION
PER GUEST NIGHT
10.5%
REDUCED BY
DURING THE YEAR
120
THE APPROACH TO OUR GREEN PHILOSOPHY
Our Environmental policy is formulated on designing and operating sustainable processes, using latest technology
and measuring and monitoring sustainability indicators on a regular basis. John Keells Hotels is committed to be
in line with the highest available environmental regulations, laws and codes of practices as minimum standards
of environmental performance. It will strive to proactively exceed required levels of compliance wherever feasible
even if not yet identified by law.
WATER AND ENERGY CONSERVATION
We will use environmentally safe and
sustainable energy sources to meet our
existing operational needs. We will invest
in advanced energy and water management
systems to improve the conservation of
energy and natural resources.
AIR EMISSIONS
We are committed to reduce emissions from
its processes. We will set environmental
targets and a goal for air pollution prevention
through continuous monitoring.
WASTE MANAGEMENT
We will strive to minimise waste by
evaluating operations and ensuring efficiency
by adapting environmental friendly waste
disposal practices and actively promoting the
‘reduce, reuse & recycle’ principle among all
its stakeholders.
NATURAL HABITAT
We will ensure all customers as well as
our staff are well-aware of the sensitive
environmental elements around / inside the
property. We will support and initiate projects
in line with conservation of biodiversity.
OUR GREEN PHILOSOPHY- THE FOUR PILLARS
Carbon Footprint
Carbon emissions are measured using the Greenhouse
Gas Protocol as governed by the World Resource Institute
(WRI) and the World Business Council for Sustainable
Development. The emission factors have been derived
from IPCC Guidelines for National Greenhouse
Gas Inventories. The boundary for the emission
measurement has been governed by Scope 1 and Scope 2.
Scope 1 - GHG emissions occurring directly from
sources that are owned or controlled by the
Organisation
Scope 2 - Direct emissions generated in the production
of electricity consumed
Our results
The Earth Hour celebrations during the year, resulted
in 1,289 kg of CO2 saved across all our resorts.
Overall,during the year, the carbon footprint per guest
night declined by 9.7% , the result of a collective effort
by the Sri Lankan and Maldivian Resorts, both of which
recorded an improvement.
Kg
30.00
25.00
20.00
15.00
The environmental policy will be made available to all hotel staff, guests, business partners and
public through the hotel’s website, publications and in-house notice boards. We will conduct an
annual evaluation of our performance in implementing and reviewing environmental objectives
and targets, and regular training programmes will be conducted to encourage our employees in
establishing sound environmental practices.
10.00
5.00
0.00
2010/11
2011/12
2012/13
KGS OF CO2 PER GUEST NIGHT
JOHN KEELLS HOTELS
2013/14
121
Consumption in Metric tonnes of CO2
Initiatives
2010/2011
2011/2012
2012/2013
2013/2014
Diesel
6,262
6,562
6,527
6,537
Petrol
562
900
864
859
LPG
471
602
669
787
Electricity
6,228
7,619
9,440
11,619
CO2 Footprint- Scope 1
7,295
8,064
8,060
8,183
CO2 Footprint- Scope 2
6,228
7,619
9,440
11,619
Total CO2 Footprint
13,523
15,683
17,500
19,802
ENERGY
Our key sources of energy are electricity, diesel, petrol and liquid petroleum gas; energy is also one of our top
expenses, as it is an essential element of all major operations. In a concerted effort to reduce our energy footprint,
several of our resorts implemented a range of energy-reducing initiatives.
Energy saving lighting: All our resorts use energy efficient LED lighting systems to varying degrees, and halogen
and incandescent bulbs are being replaced by LED and CFL bulbs. Furthermore, motion sensors have been installed
in certain common areas and garden pathways in order to reduce energy wastage. All employees are made aware of
the light savings initiatives and training is provided in order to engage staff in reducing the consumption of energy
on lighting.
Energy saving air conditioning: At the point of replacement, split type Air Conditioners are being substituted
with energy saving inverter type machines across all our resorts. In certain hotels, the entirety of guest rooms is
cooled using inverter type air conditioners. Meanwhile, when modifying centrally driven air conditioning systems,
ducting is made more efficient and conventional chillers are replaced with part load chillers; the new chillers use
variable flow drivers and reduce energy consumption in the chiller’s heat transfer process.
Energy efficient heating: Initiatives taken by the resorts to reduce energy usage for heating systems included
installation of solar heaters to heat water for guests. Meanwhile, the heat recovery system of one resort was
modified in order to increase efficiencies.
Units
Aggregate
average
savings
Lighting
kWh
68,293
Air Conditioning
kWh
250,297
Heating
Equipment scheduling
68,193
218,920
Energy results: Resultant from these initiatives, the
energy usage per guest night declined 13.6% during
2013/2014. The last few years have seen a persistent
reduction in this figure, as our efforts to minimise our
energy footprint has borne fruit. Despite increased
occupancy levels during the year, the diesel and petrol
usage remained relatively unchanged. Although
electricity usage increased during the year, it was
less than proportionate to the increased occupancy
rates in the same period, contributed primarily by our
Maldivian resorts, which played a crucial role in the
large scale reduction of energy consumption.
MJ
300.00
250.00
200.00
150.00
100.00
50.00
0.00
Equipment scheduling: This involves the monitoring and control of heavy equipment to reduce the consumption
of power and energy.
MJ
kWh
2010/11
2011/12
ENERGY PER GUEST NIGHT
JOHN KEELLS HOTELS
2012/13
2013/14
122
Consumption in Giga Joules
EARTH HOUR 2014
All our resorts celebrated Earth Hour on the 29th of March 2014, engaging in a range of energy and power
saving initiatives. Measures were taken to switch off selected lights, elevators, air conditioners, heat pumps,
heavy duty machinery and other electrical appliances which consume significant amounts of electricity.
2011/2012
2012/2013
2013/2014
Diesel
88,558
88,090
88,219
Petrol
12,992
12,473
12,396
9,539
10,603
12,472
40,240
49,861
61,370
0
0
0
LPG
Meanwhile, guests were given the opportunity of dining in candle light and bonfires and experiencing
entertainment programmes.
As a result of these initiatives, 1,254 kWh of electricity 1,289 kgs of CO2 was saved across all our resorts.
Electricity
Direct energy
111,089
111,166
113,087
Indirect energy
40,240
49,861
61,370
Total energy
151,329
161,027
174,457
WATER FOOTPRINT
Waste water management has been identified as
a key priority in our environmental policy and we
encourage all our team members to engage in water
management. Our resorts have implemented innovative
solutions for water reuse as well as other water efficient
technologies. Meanwhile tools to measure water usage
and progress in water savings are monitored on a daily
basis. Our discharge water quality (BOD, COD, TSS, pH
and oil and grease levels) complies with Government
standards.
Food Preparation Guest
Food Preparation Staff
WATER FOOTPRINT
(USAGE) - JOHN
KEELLS HOTELS
13%
4%
Guest Usage
34%
Staff Usage
22%
Laundry
9%
Gardening
5%
Common
13%
123
Water saving initiatives
Resorts implemented
Installation of a Reverse Osmosis (RO) plant
Cinnamon Wild Yala
Improvements in rain water harvesting methods
Chaaya Island Dhonveli,
Cinnamon Bey Beruwala
z
Rainwater harvesting system is in place to collect rainwater in the sump to
be reused for gardening.
z
Total rainwater harvested increased by nearly 58% during the year.
Common initiative across all resorts
Water Recycling
z
Recycled water is used for organic farming, gardening and in toilet cistern tanks
z
Total water recycled across all our resorts increased by 28% during the year.
TOTAL WATER DISCHARGE
BY QUALITY AND
DESTINATION
To Municipality Sewerage,
Drainage Lines
24%
To ETPs and Recycled
Completely
29%
To Rivers, Lakes after
being treated by ETP/STP 38%
Direct to Rivers, Lakes,
Wetlands, Marshes
3%
To Ground Through
Soakage Pits etc
6%
Reducing water usage
z
Water usage is reduced through the use of dual and motion censored flush and low flow faucets
Surface Water - Wetlands,
In addition to the above, we have installed sub-meter systems to continuously monitor the water usage. We also
provide awareness-raising training programmes to our staff and other stakeholder on water conservation.
Cubic Metres
Water discharge by destination
2012/13
2013/14
To Municipality sewerage,
drainage lines
147,024
144,122
To ETPs and recycled completely
138,516
177,461
To rivers, lakes after being
treated by ETP/STP
186,173
228,319
Direct to rivers, lakes, wetlands,
marshes
20,090
15,076
To ground through soakage pits
etc
53,894
37,661
545,697
602,639
Total water discharge
Our Results
Overall, water consumption per guest night
reduced significantly by 10.5% during the year.
This improvement was achieved despite increased
consumption in the Maldivian resorts, driven by a
few major constructions and commissioning of an
effluent treatment plant. Meanwhile, across all our Sri
Lankan resorts, the amount of water recycled, amount
of recycled water used and the amount of harvested
rainwater showed an increase as measures were taken
to expand these areas.
TOTAL VOLUME
OF WATER
WITHDRAWN FROM
Rivers, Lakes, Oceans
20%
Ground Water
54%
Rainwater Harvested
Water Sources
liters
1,200.0
1,000.0
800.0
600.0
400.0
200.0
0.0
2011/12
2012/13
1%
Municipality, Authority
2013/14
WATER LITERS PER GUEST NIGHT
JOHN KEELLS HOTELS
25%
124
WATER DESALINATION PLANT AT CINNAMON WILD
Following the success of the newly refurbished Cinnamon Wild and resultant increase in occupancy levels, we experienced a corresponding increase in demand for water.
As pipe borne water is unavailable in the area, the hotel previously procured its requirements form the National Water Supply and Drainage Board using its own bowsers.
However, this exposed to hotel to several risks;
z
Lack of assurance on the consistency in the quality of water, particularly during drought seasons.
z
Inability to obtain water during electricity cuts, thereby leading to water shortages
z
Need to hire external bowsers at an additional cost during maintenance of the resort-owned bowsers
z
High maintenance cost, fuel usage and risks associated with the health and safety of the bowser drivers, especially during nocturnal movements.
In order to effectively address these risks and ensure a steady supply of high quality water, a water purification plant together with a Reverse Osmosis Unit was installed
in the resort. A hydro geological and Geophysical Survey was conducted on February 2013, confirmed that available saline water was sufficient to match the increased
demand for water. The Water thus produced also meets/exceeds SLSI standards.
125
WASTE MANAGEMENT
All key processes in our hotels such as preparation
of food, cleaning and guest activities result in the
generation of solid waste. We proactively seek
innovative ways to reduce, enhance re-use and recycle
waste with the ultimate objective of generating
energy using waste. With our state of the art waste
management system, a portion of the wet waste is used
to generate energy whilst the remainder is sent to the
local piggeries. In our Sri Lanka resorts, recyclable
material obtained from dry waste is sent to recyclers
certified by the Central Environmental Authority and
garden waste is used to produce eco-friendly fertilisers.
Hazardous waste is also segregated and disposed
in assistance with GeoCycle, a party certified by the
Central Environmental Authority.
Metric Tonnes
2012/2013
2013/2014
Re-use
701,529
1,020,758
Recycle
292,041
244,219
Composting
84,823
29,904
Recovery
91,631
174,773
Incineration
16,335
23,541
Deep well
injection
522,869
586,741
Landfill
875,596
1,109,097
14,027
275
2,598,851
3,189,308
On-site storage
Total solid waste
disposal
Meanwhile, all our Maldivian resorts in an innovative
move, now use discarded timber to produce a variety
of items for guests including guest room trays, wine
display racks, lamp shades, brochure stands and ash
trays among others. Chaaya Island Dhonveli also uses
bio-degradable and discarded materials such as dry
coconuts and damaged chipboards in order to produce
eco-friendly table décor for the Christmas and New
Year season. In Hakuraa Huraa waste paper is being
used as an input to produce building blocks.
Discarded timber pieces
Our results: Supported by all the above initiatives,
waste generated per guest night reduced by 2.1% during
the year with further improvements anticipated in the
next financial year. Meanwhile, total non-hazardous
waste disposed increased by around 23% during the
year, resultant from recycling, re-use, composting and
recovery among others.
Lampshade made using discarded timber
Towel tray made using discarded timber pieces
126
BIO DIVERSITY
THE LEOPARD PROJECT
Cinnamon Wild together with Cinnamon Nature Trails
continued to push forward Project Leopard, an effort to
uplift livelihoods of the cattle farming community living
by the Yala National park. This project aims to achieve a
double success by directly supporting the cattle farmers
thus collaboratively, conserving the Leopards that live
outside of the parks boundary.
Now in its 3rd year Leopard Project has donated forty
steel pens among cattle farmers and now plans to
increase this number up-to sixty pens by the end of next
year.
The project has drawn much support, locally and
internationally with several fund raising efforts and
donations being organised. Many of Cinnamon Nature
Trails safari partners have supported this venture
while the University of Clark – USA has granted the
Davis Project for Peace and additional funding for
Project Leopard. Cinnamon Wild has also committed
US 50 cents for every room night towards leopard
conservation.
Further, The Leopard Research Initiative - (LRI),
launched by Cinnamon Nature Trails together with
the Environment Foundation Limited completed one
year of commendable progress. The research team led
by Rukshan Jayawardena and Vimukthi Weeratunga
is deploying 24 weather proof cameras inside the Yala
National Park and the footage captured will be analysed
for studying leopard behaviour. This event when
concluded by October 2014, will host a public workshop
at which all interested parties can participate in sharing
the findings of this ground breaking initiative.
127
BEACH ENHANCEMENT
PROJECT AT HAKURAA
Severe sea erosion had resulted
in significant deterioration of
the beach area adjacent to the
Chaaya Lagoon Hakuraa Resort,
particularly in the Restaurant
front area. Previously, in order to
address this problem, the existing
sea wall was repaired repeatedly at
a relatively large cost to the hotel.
However, during this year, the
Resort’s General Manager himself
proposed an innovative solution
to the problem, which included
the construction of temporary
breakwaters at critical locations.
Wave patterns were studies over a
period of time in order to identify
the critical locations.
Furthermore, innovative sea walls
were also constructed during the
year.
REEF RESTORATION
Chaaya Island Dhonveli, together with its Dive Centre
(Meridis) in a novel approach to protect the biodiversity
in the area undertook a Reef Restoration Project. As the
first phase, a coral nursery was created and the first iron
skeleton made by the resort maintenance department
was put into the waters. Three such skeletons are to
be positioned similarly over the short term and coral
obtained from the nursery is to be planted in the
skeletons.
128
PROJECT WILD BLUE: SAFEGUARDING OUR BLUE WHALES
In a pioneering venture, John Keells Hotels and Cinnamon Nature Trails in partnership with the Whale and Dolphin Conservation Society of UK launched Project Wild
Blue, an initiative aimed at studying and preserving the Blue Whale population of Sri Lanka. The innovative project encourages the general public to share their images
and information on a public platform, using social media tools such as Flickr and on-line catalogues. Photo identification is used to identify whales based on unique
markings and characteristics, allowing the individual whales to be catalogued effectively. Initiated in the North Eastern coast, the project was extended to other coastal
areas in the Southern region in 2013/2014.
The project has already made astounding discoveries with over 50 unique blue whales being catalogued. In time to come, it is anticipated that the project could reveal much
about the lifestyles of the whales, such as population numbers, diet and travel patterns. By engaging the local communities and public in this venture, we seek to instil a
sense of stewardship in the minds of the public towards the whales and also bring the whale watching community together for further discoveries and knowledge sharing.
Project Wild Blue also supports the livelihoods of the local communities as boats are supplied by the community with experienced boatmen in charge of these. Financial
support has also been provided to these fishermen to commence their business as official boat suppliers for the Project.
This project was initiated in 2010 in Trincomalee and has now been implemented in the Southern Coast. The focus in 2013/14 shifted back to Trincomalee where this
project will be spearheaded and monitored by Cinnamon Nature Trails. Meanwhile, guests and marine naturalists are also engaged in this project through the submission
of whale photographs.
129
Hotel
Geographical Size of site
Location
in Acres
Name of Protected
Area in the
Vicinity
Position relative
to Protected
Area (Within/
Adjacent and
Distance)
Size of
Operational
site in square
km
Biodiversity
value of
Protected
site
Protected through
(Legislation/IUCN/
UNESCO etc.)
Has the
EPL been
obtained
Chaaya Blu
Trincomalee
13.24
Pigeon Island
Marine National
Park
16km adjacent
0.05
Maritime
Flora and Fauna Protection
Ordinance 1937
IUCN Category II - National
Park
Yes
-
Cinnamon
Citadel
Kandy
5.80
Udawattekele
Sanctuary
6km adjacent
0.023
Wildlife &
Forestry
Flora and Fauna Protection Yes
Ordinance 1937
IUCN Category IV - Habitat/
Species Management Area
- Cinnamon
Wild
Yala
11.25
Yala National Park
Bundala National
Park
2km adjacent
32km adjacent
0.044
Wildlife &
Forestry
Ordinance 1937
Park
Yes
-
Chaaya
Tranz
Hikkaduwa
4.65
Hikkaduwa Marine 0.5km adjacent
National Park
0.018
Maritime
Ordinance 1937
Park
Yes
- Cinnamon
Lodge
Habarana
25.48
Minneriya National
Park
Ritigala Strict
Nature Reserve
Kaudulla NP
0.1
Wildlife &
Forestry
Ordinance 1937
Park
Yes
- 15km adjacent to
Park entrance
20km adjacent
20km adjacent
Subsurface/
Underground
land utilised
square km
Cinnamon
Bey
Beruwala
11.39
Hikkaduwa Marine 45km adjacent
National Park
0.04
Maritime
Ordinance 1937
Park
Yes
-
Chaaya
Village
Habarana
9.34
Minneriya National
Park
Ritigala Strict
Nature Reserve
Kaudulla NP
0.034
Wildlife &
Forestry
Ordinance 1937
Park
Yes
- 11km adjacent to
Park entrance
17km adjacent
22km adjacent
130
Hotel
Geographical Size of site
Location
in Acres
Name of Protected
Area in the
Vicinity
Position relative
to Protected
Area (Within/
Adjacent and
Distance)
Size of
Operational
site in square
km
Biodiversity
value of
Protected
site
Protected through
(Legislation/IUCN/
UNESCO etc.)
Has the
EPL been
obtained
Subsurface/
Underground
land utilised
square km
Bentota
Bentota
Beach Hotel
11.02
Hikkaduwa Marine 40km adjacent
National Park
0.05
Maritime
Ordinance 1937
Park
Yes
Chaaya
Island
Dhonveli
North
Male Atoll
Republic of
Maldives
18.62
Thamburudhoo
thila
1km
0.012286 (total
built up area)
Maritime
The Environmental
Protection & Preservation
Act
Yes
0.0673 (total
area covered
by mean tide
level)
Chaaya Reef North
Ellaidhoo
Ari Atoll
Republic of
Maldives
13.75
Orismas thila
1km
0.0556
Maritime
The Environmental
Act
Yes
0.0556
Chaaya
Lagoon
Hakuraa
Huraa
13.42
Lhazikuraadi
6km
0.00759 (total
built up area)
Maritime
The Environmental
Act
Yes
0.05437(total
area covered
by mean tide
level)
Meemu Atoll
Republic of
Maldives
- 131
LOCATIONS IN SRI LANKA
LOCATIONS IN MALDIVES
Thuraakunu
Van’gaaru
Uligamu
Inn afinolhu
Thiladhunmathee Uthuruburi
(Haa A l i f u A t o l l )
Madulu
Berinmadhoo
Gaamathikulhudhoo
Matheerah
Hathifushi
Govvaafushi
Mulhadhoo
Medhafushi
Umarefinolhu
Maafinolhu
Manafaru (The Beach House at Manafaru Maldives)
Velifinolhu
Kudafinolhu
Huvarafushi
Un’gulifinolhu
Kelaa
Huvahandhoo
Ihavandhoo
Gallandhoo
Beenaafushi
Kan’daalifinolhu
Dhigufaruhuraa
Dhapparuhuraa
Vashafaru
Dhidhdhoo
Maarandhoo
Thakandhoo
Naridhoo
Filladhoo
Alidhuffarufinolhu
Gaafushi
Alidhoo (Cinnamon Island Alidhoo)
Utheemu
Muraidhoo
Dhonakulhi
Mulidhoo
Maarandhoofarufinolhu
Maafahi
Baarah
Faridhoo
Hon’daafushi
Hon’daidhoo
Veligan’du
Ruffushi
Hanimaadhoo
Naivaadhoo
Finey
Theefaridhoo
Kulhudhuffushi
Hirimaradhoo
Nellaidhoo
Kudafarufasgandu
Adduatholhu Atoll
(Seenu Atoll)
Kanamana
Nolhivaranfaru
Hirinaidhoo
Atoll Capital
Huraa
Kurin’bee
Naagoashi
Nolhivaramu
Muiri
Naivaadhoo
Inhabited Island
Kun’burudhoo
Kudamuraidhoo
Vaikaramuraidhoo
Uninhabited Island
Berinmadhoo
Future Resort Development
Kulhudhuffushi
Gaafaru
Keylakunu
(The
Manafaru
at
Manafaru
Beach House
Maldives)
Existing Resort Develpment
Kumundhoo
Kaalafushi
Vaikaradhoo
Thiladhunmathee Dhekunuburi
(Haa D h a a l u A t o l l )
Vaikaramuraidhoo
Neykurendhoo
Maavaidhoo
Kakaa eriyadhoo
Olhuhali
Gonaafarufinolhu
Neyo
Kan’ditheemu
Goidhoo
Kudadhoo
Kagi
Miladhunmadulu Uthuruburi
(Shaviyani Atoll)
Noomaraa
Makunudhoo
Inn afushi
Fushifaru
Fenboahuraa
Feydhoo
Feevah
Bileiyfahi
Foakaidhoo
Akirifushi
Nalandhoo
Dhipparufushi
Helen’geli (Helengeli Island Resort)
Maifalhuhuraa
Madidhoo
Madikuredhdhoo
Gaakoshibi
Milandhoo
Narurin’budhoo
Narudhoo
Maakan’doodhoo
Migoodhoo
Maroshi
Naainfarufinolhu
Farukolhu
Medhukun’burudhoo
Thun’bafushi
(Eriyadhoo Island Resort)
Eriyadhoo
Hirubadhoo
Dhonvelihuraa
Lhaimagu
Bis alhaahuraa
Funadhoo
Hurasfaruhuraa
Naalaahuraa
Kan’baalifaru
Raggan’duhuraa
Firun’baidhoo
Eriadhoo
Sanctuaries / NationalParks / Nature /
Forest Reserves
1. Chundikulam Bird Sanctuary
2. Kokilai Bird Sanctuary
3. Naval Headworks Sanctuary
4. Somawathie Chaitya Sanctuary
5. Ritigala Strict Natural Reserve
6. Minneriya Tank Sanctuary
7. Wasgamuwa Strict Natural Reserve
8. Maduru Oya National Park
9. Rantambe Reservoir Sanctuary
10. Gal Oya National Park
11. Uda Walawe National Park
12. Yala National Park
13. Bundala Bird Sanctuary
14. Kann Eliya Forest Reserve
15. Sinharaja Rainforest Reserve
16. Peak Wilderness Sanctuary
17. Muthurajawela Wetlands/Marsh
18. Wilpattu National Park
19. Madhu & Giants Tank Sanctuary
Van’garu (Maakanaa)
(Makunudhoo
Makunudhoo Island)
Boduhuraa
Ekasdhoo
Kudafarufinolhu
Komandoo
Mathikomandoo
Maaun’goodhoo
Dhigurah
Medhurah
Mairah
(Summer
Ziyaaraiyfushi
Island Village)
Miladhunmadulu Dhekunuburi
(NoonuAtoll)
Kudalhaimendhoo
Keekimini
Bodulhaimendhoo
Dholhiyadhoo
Dholhiyadhookudarah
Eththigili
Bomasdhoo
Kalaidhoo
Bolissafaru
Alifushi
(One&Only Reethi
Medhufinolhu
Rah,Maldives)
Hen’badhoo
Gallaidhoo
Burehifasdhoo
Kafakomandoo
Kunnamalei
Ken’dhikulhudhoo
Ekulhivaru
Dhekenanfaru
Madivaru
Tholhendhoo
Huivani
Maalhendhoo
Kudafunafaru (Zitahli Resorts & Spa,Kudafunafaru)
Dheefuram
Fushivelavaru
Landhoo
Kudafari
Kuredhivaru
Kuramaadhoo
(TajCoralReefResort)
Hen’badhoo
Farumuli
Maafunafaru
Vaadhoo
Kan’dinmaahuraa
Kedhivaru
Huvan’dhumaavattaru
Felivaru
Kudarah
Orimasvaru
Goan’bilivaadhoo
Maavelaavaru
Minaavaru
Lun’boakandhoo
(Meeru Island Resort)
Meerufenfushi
Thoshigan’dukolhu
Maakanaafushi
Dhigurah
Dhiffushi
Thoddoo
(Irufushi Beach & Spa Resort)
Medhafushi
Holhumeedhoo
Fodhdhoo
Hulhudhoo
Asdhoo (Asdhu Sun Island)
Manadhoo
Holhudhoo
Fodhdhipparu
Gaaun’doodhoo
Maafaru
Miladhoo
Magoodhoo
Kaalhugemendhoo
Loafaru
Maanenfushi
Dhelibey ruh elhihuraa
In’gu raidhoo
Vavathi
Hulhudhuffaaru
Fasgan’dufaru
Kandhoomeehunge lhaan’bugali
Lhohi
Orivaru
Orivarukudarah
An’golhitheemu
Faarufushi
Veyvah
Maavadhdhoo
Hulhudhdhoo
Rasgetheemu
Kan’doogan’du
Fuggiri
Than’burudhoo
Boduhithi (Coco Palm Boduhithi)
Medhufaru
If uru
Than’burudhuffushi
Maakurandhoo
Kudafushi
Bodufushi
Edhdhuffaru mairah
Randheli
Un’gulu
Ban’daidhidhdhoo
Kudahithi (Coco Palm Kudahithi)
Raalhulaakolhu
Vihafarufinolhu
Un’goofaaru
Uthurumaafaru
Karinmavaaru
Velidhoo
Arilundhoo
Karinma
Maamin’gili
Vaffushihuraa
Lun’dhufushi
Kuredhdhoo
Giraavaru
Kudakurathu
Mullaafushi
1
Rasfari
Maakurathu
Muravandhoo
Kudalhosgiri
Dhonaeri kan’doodhoo
Dhuvaafaru
Boduhaiykodi
Madivaafaru
Hiboodhoo
Raafushi
Dhuvaafaruhuraa
Bodufen maaen’budhoo
Kudafen maaen’boodhoo
Goiymaru
Vaffushi
Ban’daveri
Kan’dholhudhoo
Dhinnaafushi
Rasmaadhoo
Goyyafaru
Angaagiri
Fehigili
Dhehuraa evvihuraa
Kalhumanjehuraa
Mas leggihuraa
Medha adihuraa
( uredhdhuKuredhdhoo
K
Island Resort)
Innamaadhoo
Goboshi
Lhaan’bugali
Mahidhoo
Bodufarufinolhu
Vandhoo
Kothaifaru
Thulusdhoo
Faadhippolhu
(Lhaviyani Atoll)
Dhikkuredhdhoo
Hiraveri
1
Huravalhi
Kudafushi
Bodufushi
Fasmendhoo
Koefaru
Neyo
Maduvvari
In’guraidhoo
Fainu
Dhigali
Ufulandhoo
Lhohi
Boamandhipparu huraagan'du
Fushifaru
(K omandoo
Komandoo
Re
sort)
Maldive Island
Gaaerifaru
Thaavathaa
Meedhoo
Kukulhudhoo
Kudadhoo
Hinnavaru
Dhoragali
Filaidhoo
Felivaru
(Palm Beach Island)
Madhiriguraidhoo
Madivaru
Vihafarufinolhu
(A daaran
Meedhupparu
M
eedhupparu)
Select
Aarah
Kinolhas
Furaveri
Naifaru
Meyyafushi
Faadhoohuraagandu
Veyvah
Dhekunu maafarufinolhu
Faadhoo
Dhashugirifinolhu
Ethigan’du jehihuraa
Selhlhifushi
Vavvaru
Boduhuraa
Hiriyaadhoo
Girifushi
Kudathulhaadhoo
Dheburidheythereyvaadhoo
1
Dhiffushi
Vilin’gili
(BanyanTreeMaldivesVabbnifaru)
Vabbinfaru
Dhidhdhoo
Gaagan’dufaruhuraa
Maafilaafushi
Medhafushi
Bathalaa
Dhigufaruvinagan’du
Inn ahuraa
Bodugaahuraa
Lhossalafushi
Kudarikilu
Boifushi
Dheruhfinolhu
Lhohi
Voavah
Kashidhoo
(VeliganduIsland)
Veligan’du
Maabinhuraa
Kurendhoo
Maarikilu
Fainu aadhanhuraa
Govvaafushi
Dhirun’baahuraa
Maakoa
Vinaneiyfaruhuraa
Anhenunfushi
(Angsana
Spa Maldives
Resort
Ihuru
Ihuru)
&
Hudhufushi
Meedhaadihuraa
Kanifushi
Maamunagau
Kashidhuffarufinolhu
Varihuraa
(Four Seasons Resort Maldives at Landaa Giraavaru)
Lan’daagiraavaru
Baros (Baros Holiday Resort)
Kihavah huravalhi
Kamadhoo
Gemendhoo
Hulhudhoo
Keyodhoo
Un’doodhoo
Funadhoo
Kendhoo
Milaidhoo
Olhuvelifushi
Maduvvari
Bodufinolhu
Madhirivaadhoo
Dhoogan’dufinolhu
Ookolhufinolhu
Dhandhoo
Rasdhoo
Veyofushi
Kihaadhoo
(KuramathiKuramathi
TouristResort)
Hirundhoo
Mudhdhoo
Velavaru
(Bandos IslandBoduban’dos
Resort and Spa)
Madivaru
Aligau
Dhigudhefaru
Finolhas
Thilamaafushi
(Re ethi Beach Resort)
Fonimagoodhoo
Thiladhoo
Dhakandhoo
Fares
Ahivaffushi
Thulhaagiri
(Thulhaagiri Island Resort)
Rathuruh-huraa
Maidhoo
Huruvalhi
Fenfushi
Maamunagaufinolhu
Maalhosmadulu Uthuruburi
(Raa Atoll)
Mendhoo
Gaagan’du
Dharavandhoo
(Royal Island Resort and Spa)
Horubadhoo
Aarah
Hibalhidhoo
Maalhos
Vakkaru
Nelivarufinolhu
Fushi
Ukulhas
Feydhoofinolhu
Ariatholhu Uthuruburi
(Alifu Alifu Atoll)
Hulhudhoo
Miriandhoo
Kudadhoo
Ufuligiri
Medhufinolhu
Kanufusheegaathufinolhu
Kanufushi
Maamaduvvari
(VelidhooIslandResort)
Velidhoo
Mathiveri
(Coco Palm Dhuni Kolhu)
Dhunikolhu
Bodufolhudhoo
Mathivereefinolhu
(Nika
Island Resort)
Kudafolhudhoo
Olhugiri
19
Farukolhufushi (Club Faru, Farukolhufushi)
(Kurumba
Vihamanaafushi
Maldives)
(Gangehi Island Resort)
Gangehi
(S oneva Fushi by Six Senses)
Kunfunadhoo
Eydhafushi
Maaddoo
Muthaafushi
Hithaadhoo
Bodufinolhu
Furanafushi (Full Moon Beach Resort)
Hanifaruhuraa
En’boodhoo
Gaavilin’gili
Thulhaadhoo
Huraa
Kudahuraa (Four Seasons Resort Maldives atKudaHuraa)
Vabboahuraa
Than’burudhoo
Hinmafushi
Lankanfushi (Soneva Gili by Six Senses)
Lankanfinolhu (Paradise Island Resort and Spa)
Kan’duoiygiri
Gaagan’du
Aidhoo
Hanifaru
Nibiligaa
Hulhumale’
(Giraavaru
Giraavaru TouristResort)
Dhoonidhoo
Male’atholhu
(Kaafu Atoll)
Funadhoo
Hulhule
Thilafushi
2
Gasfinolhu (Gasfinolhu Island Resort)
Lhohifushi (Adaaran Select Hudhuranfushi)
Kanifinolhu (Club Med Kanifinolhu)
Kudaban’dos
Kodhdhipparufinolhu
Kihaadhuffaru (Kihaadhuffaru Resort)
Dhonfanu
Vilin’gili mathidhahuraa
Thulusdhoo irumathee huraagan’du
(Huvafenfushi)
Nakatchafushi
(Kanu hura)
Kanuhuraa
Veligan’du
Kuroshigiri
Maashigiri
Vilingilli
Kaashidhoo
Male’
Maalhosmadulu Dhekunuburi
(Baa Atoll)
Fulhadhoo Fehendhoo
Boadhaafushi
Dhinnolhufinolhu
Goidhoo
Inn afushi
Velassaru (LagunaMaldives)
Vihamaafaru
Mathifaru
Dhashufaruhuraa
(VadooIslandResort)
Vaadoo
Etheremadivaru
(TajExoticaandSpaMaldives)
En’boodhoofinolhu
Bolifushi (Island of Bolifushi)
(Madoogali Resort)
Madoogali
Gaafaru
(Embudhu Village)
En’boodhoo
(Maayafushi
Maayafushi
TouristResort)
Olhuhali
Bathala (Adaaran Club Bathala)
Kagi
Akirifushi
Feridhoo
Helen’geli (Helengeli Island Resort)
Maifalhuhuraa
Maniyafushi
Gaathafushi
(W. RetreatandSpaFesdhoo
Maldives)
Madivaru
1
Asdhoo (Asdhu Sun Island)
(M eeru Island Resort)
Meerufenfushi
2
Maalhos
Dhiffushi
Thulusdhoo
Vilin’gili mathidhahuraa
Thulusdhoo irumathee huraagan’du
(Huvafenfushi)
Nakatchafushi
Vabboahuraa
Gulhi
(Anantara Resort and
Dhigufinolhu
Spa Maldives)
Vaagali
Alikoirah
Kanuoiy huraa (Chaaya Island Dhonveli)
Than’burudhoo
Hinmafushi
Lankanfushi (Soneva Gili by Six Senses)
Lankanfinolhu (Paradise Island Resort and Spa)
Baros (Baros Holiday Resort)
(Bandos Island Boduban’dos
Resort and Spa)
Gulhigaathuhuraa
Veligan’duhuraa (Naladhu)
Boduhuraa
Vammaafushi
Maafushi
(Biyaadhoo Island
Biyaadhoo
Resort)
Kudaban’dos
Kodhdhipparufinolhu
Kan’duoiygiri
Furanafushi (Full Moon Beach Resort)
Gaagan’du
Aarah
Himendhoo
Farukolhufushi (Club Faru, Farukolhufushi)
(K urumba
Vihamanaafushi
Maldives)
Fushi
Ukulhas
Kalhuhuraa
Maagau
Mushimasmigili
Gasfinolhu (Gasfinolhu Island Resort)
Lhohifushi (Adaaran Select Hudhuranfushi)
Kanifinolhu (Club Med Kanifinolhu)
Huraa
Kudahuraa (Four Seasons Resort Maldives at KudaHuraa)
Girifushi
(Thulhaagiri Island Resort)
Thulhaagiri
(BanyanTreeMaldivesVabbn
Vabbinfaru
ifaru)
(Angsana
Spa Maldives
Resort
IhIhuru)
u ru
&
(V eliganduIsland)
Veligan’du
Madivaru
Rasdhoo
(Kuramathi
Kuramathi
TouristResort)
Gaagan’du
(Gangehi Island Resort)
Gangehi
Makunufushi (Cocoa Island)
(Dream Island Maldives)
Villivaru
Feydhoofinolhu
Ariatholhu Uthuruburi
(Alifu Alifu Atoll)
(VelidhooIslandResort)
Velidhoo
Bodufolhudhoo
Mathivereefinolhu
Fusfinolhu
Ellaidhoo (Ellaidhoo TouristResort)
Kan’dholhudhoo
(TajCoralReefResort)
Hen’badhoo
Boduhithi (Coco Palm Boduhithi)
Kudahithi (Coco Palm Kudahithi)
Rasfari
Mathiveri
2
(Halaveli Holiday
Halaveli
Village)
Thun’bafushi
(Eriyadhoo Island Resort)
Eriyadhoo
(Makunudhoo Island)
Makunudhoo
(S ummer
Ziyaaraiyfushi
Island Village)
(O ne&Only Reethi
Medhufinolhu
Rah,Maldives)
Thoddoo
(Nika Island Resort)
Kudafolhudhoo
Hulhumale’
(Giraavaru TouristResort)
Giraavaru
Rannalhi (Adaaran Club Rannalhi)
Dhoonidhoo
Male’atholhu
(Kaafu Atoll)
Funadhoo
Hulhule
Thilafushi
Vilingilli
Male’
(Moofushi Island Resort)
Moofushi
Kan’doomaafushi (Kandooma TouristResort)
Guraidhoo
Lhosfushi
(Athurugau Island
Athurugau
Resort)
Dhinnolhufinolhu
Velassaru (Laguna Maldives)
Vihamaafaru
(Fihaalhohi Island Resort)
Fihaalhohi
Bodukaashihuraa
(V adooIslandResort)
Vaadoo
Etheremadivaru
(TEn’boodhoofinolhu
ajExoticaandSpaMaldives)
3
18
Maadhoo
Kudafinolhu
Bolifushi (Island of Bolifushi)
(Madoogali Resort)
Madoogali
(E mbudhu Village)
En’boodhoo
(M aayafushi
Maayafushi
TouristResort)
Bathala (Adaaran Club Bathala)
Dhiggiri
Feridhoo
Maniyafushi
Bodufinolhu (Fun Island Resort)
Olhuveli (Olhuveli Beach and Spa Resort)
Hangnaameedhoo
(Halaveli Holiday
Halaveli
Village)
Gaathafushi
Fusfinolhu
Kalhuhuraa
(W . Retreat andSpaFesdhoo
Maldives)
Ellaidhoo (Ellaidhoo TouristResort)
Kan’dholhudhoo
Maalhos
Gulhi
Maagau
(A nantara Resort and
Dhigufinolhu
Spa Maldives)
Mushimasmigili
Vaagali
Alikoirah
Gulhigaathuhuraa
Veligan’duhuraa (Naladhu)
Boduhuraa
Heenfaru
Vammaafushi
Maafushi
Erruh-huraa
En’boodhoo
(Biyaadhoo Island
Biyaadhoo
Resort)
Himendhoo
Mahaana
(Rihiveli
Beach
elhihuraa
Resort)
Olhigan’dufinolhu
Inn afushi
Omadhoo
Kun’burudhoo
(Thun’dufushi
Thun dufushi Island Resort)
Mahibadhoo
Fushidhigga
Mahibadhoo
Fushidhigga
Bulhaalhohi
Bulhaalhohi
Fulidhoo
Theluveligaa
Angaaga (Angaaga Island Resort and Spa)
8
Omadhoo
Kun’burudhoo
Mandhoo
Hurasdhoo
7
Innafushi
(Thundufushi
Thun’dufushiIsland Resort)
Erruh-huraa
En’boodhoo
Kalhahan’dhihuraa
Kalhahan’dhihuraa
Maadhoo
Kudafinolhu
Bodufinolhu (Fun Island Resort)
Olhuveli (Olhuveli Beach and Spa Resort)
Hangnaameedhoo
4
Lhosfushi
(Fihaalhohi Island Resort)
Fihaalhohi
Bodukaashihuraa
Heenfaru
Olhigan’dufinolhu
Kan’doomaafushi (Kandooma TouristResort)
Guraidhoo
(Athurugau Island
Athurugau
Resort)
Dhiggiri
5
Mahaana
(Rihiveli
Beach
elhihuraa
Resort)
Makunufushi (Cocoa Island)
(Dream Island Maldives)
Villivaru
Rannalhi (Adaaran Club Rannalhi)
(M oofushi Island Resort)
Moofushi
6
Huvahendhoo (Lily Beach Resort)
Dhiggiri (Dhiggiri TouristResort)
Kudhiboli
(V ilamendhoo
Vilamendhoo
IslandResort)
Rangali
Vashugiri
Mirihi (Mirihi Island Resort)
Vilin’gilivaru (Ranveli Village)
(Conrad Maldives
Rangalifinolhu
Rangali
Island)
(T Maafushivaru
winIslandResort)
Mandhoo
Dhan’gethi
Lonuboi
(M achchafushi
Machchafushi
Island Resort)
Alimathaa (Alimatha AquaticResort)
(V akarufal
Vakarufalhi
hiIslandResort)
Hukurudhoo
Felidhuatholhu
(Vaavu Atoll)
Kudarah (Kudarah Island Resort)
Finolhu
Fulidhoo
Huruelhi
Dhigurah
Theluveligaa
Hurasdhoo
Fenfushi
Bodufinolhu
Tholhifushi
Aarah
Hulhidhoo
Dhidhdhoofinolhu (Diva Maldives)
Maamin’gili
Thinadhoo
Dhidhdhoo
Hiyafushi
Nalaguraidhoo (Sun Island Resort and Spa)
Angaaga (Angaaga Island Resort and Spa)
Felidhoo
Keyodhoo
Kudadhoo
Dhiffushi (Holiday Island)
Ariyadhoo
Ariatholhu Dhekunuburi
(Alifu Dhaalu Atoll)
Huvahendhoo (Lily Beach Resort)
Foththeyobodufushi
Dhiggiri (Dhiggiri TouristResort)
Kudhiboli
Kuda anbaraa
(Vilamendhoo
Vilamendhoo
IslandResort)
Rangali
Anbaraa
Nilandheatholhu Uthurumuri
(Faafu Atoll)
Ruh hurihuraa
Vashugiri
Mirihi (Mirihi Island Resort)
Vilin’gilivaru (Ranveli Village)
Rangalifinolhu
(ConradIsland)
Rangali
Maldives
Hin’gaakulheefinolhu
Thun’duhuraa
(Twin
Maafushivaru
IslandResort)
Bodumohoraa
Dhan’gethi
Lonuboi
Kan’dumoonufushi
Rakeedhoo
(Machchafushi
Machchafushi
Island Resort)
Alimathaa (Alimatha AquaticResort)
Felidhuatholhu
(Vaavu Atoll)
Vilin’gilivarufinolhu
Feeali
Madivaruhuraa
Makunueri
Himithi
Dhiguvarufinolhu
Minimasgali
Maafushi
(Vakarufal
Vakarufalhi
hiIslandResort)
Hukurudhoo
Kudarah (Kudarah Island Resort)
Vattaru
Faanumaahuraa
Filitheyo (Filitheyo Island Resort)
Jinna thugau
Finolhu
Huruelhi
Adhangau
Dhigurah
En’bulufushi
Bileiydhoo
Dhiggaru
Maduvvari
Raiymandhoo
Raaban’dhihuraa
Madifushi
Magoodhoo
Magoodhoo bodufinolhu
Erruh-huraa
Dharan’boodhoo
Nilandhoo
Hudhuveli
Uthurugasveli
Uthuruboduveli
Hurasveli
Meedhuffushi (Vilu Reef BeachandSpaResort)
Fenfushi
Meedhoo
Bodufinolhu
Tholhifushi
7
Maagau
Dhiffushi (Holiday Island)
Ban’didhoo
Aluvifushi
Rin’budhoo
Ariyadhoo
Boahuraa
Kanneiyfaru
Felidhoo
Keyodhoo
Kudadhoo
Veyvah
Muli
Dhoores
Vommuli
Ariatholhu Dhekunuburi
(Alifu Dhaalu Atoll)
Maalhaveli
Thuvaru
Naalaafushi
Hudhufusheefinolhu
Maadheli
Medhufushi (Medhufushi Island Resort)
Maalefaru
Seedheehuraa veligan’du
Hulhudheli
Hakuraahuraa (Chaaya Lagoon Hakuraa Huraa)
Seedheehuraa
Gongalihuraa
Hulhuvahi
Kekuraalhuveli
8
Gasveli
Dhekunuboduveli
Olhufushi
Dhebaidhoo
Foththeyobodufushi
Kuda anbaraa
Kuda usfushi
Bulhalafushi
Fenfushi
Gemendhoo
Ayyakaloahuraa
Thaban’lhaidhoo
Maa usfushi
Maahuraa
Fenfuraaveli
Fenmeeruhuraa
Kolhufushi
Gaakurali
Kiraidhoo
Kuradhigan’du
Mulakatholhu
(Meemu Atoll)
Thinhuraa
Dhiththun’di
Thilabolhufushi
Minimasgali
Kan’dinmaa
Vallalhohi
Thinadhoo
Dhidhdhoo
Hiyafushi
Nalaguraidhoo (Sun Island Resort and Spa)
Mulah
Lhohi
Aarah
Hulhidhoo
Dhidhdhoofinolhu (Diva Maldives)
Maamin’gili
Velavaru (Angsana ResortandSpaMaldives-Velavau)
Udhdhoo
Faandhoo
Vaanee
Hiriyafushi
Valla
Is sari
Kedhigan’du
Maaen’boodhoo
Maafushi
Olhuveli
En’boodhoofushi
Kudahuvadhoo
Anbaraa
Nilandheatholhu Uthurumuri
(Faafu Atoll)
Nilandheatholhu Dhekunuburi
(Dhaalu Atoll)
Burunee
Ruh hurihuraa
Hin’gaakulheefinolhu
Thun’duhuraa
Bodumohoraa
Gaalee
Kuran’dhuvaru
Maagulhi
Kan’dufushi
Hikan’dhilhohi
Dhiffushi
Vilufushi
Olhugiri
Hon’delifushi
Dhonanfushi
Kan’dumoonufushi
6
Rakeedhoo
Kalhufahalafushi
Vilin’gilivarufinolhu
Feeali
Olhufushifinolhu
Kolhufushi
Ufuriyaa
Olhufushi
Madifushi
Mathidhoo
Medhafushi
Kakolhas
Fondhoo
Himithi
Bodufinolhu
Maalefushi
Kudadhoo
9
Madivaruhuraa
Makunueri
Dhiyamigili
Guraidhoo
Kafidhoo
Kan’doodhoo
Vandhoo
Fenmeerufushi
Ekuruffushifinolhu
Kolafushi
Hirilandhoo
Lhavaddoo
Fonidhaani
Kalhudhiyafushi
Rihaamaafushi
Fenfushi
Kudakaaddoo
Hathifushi
Kaaddoo
Olhudhiyafushi
Bodurehaa
Dhiguvarufinolhu
Minimasgali
Maafushi
Hulhiyanfushi
Gaadhiffushi
Usfushi
Hiriyanfushi
Thimarafushi
Vattaru
Faanumaahuraa
Funaddu
Fushi
Kani
Vanbadhi
Kanimeedhoo
Veymandoo
Gaathurehaa
Dhururehaa
Ruththibirah
Filitheyo (Filitheyo Island Resort)
Elaa
Kin’bidhoo
Kuredhifushi
Omadhoo
Kudakin’bidhoo
Jinnathugau
Kolhumadulu
(Thaa Atoll)
Fonagaadhoo
Isdhoo
Dhan'bidhoo
Hulhiyandhoo
Dhonberahaa
Kudarah
Kandaru
10
Thun’buri
Holhurahaa
Fenboahuraa
Hikan’dhirahaa
Rahaa
Fushi
Kanuhuraa
Maabaidhoo
Bodufinolhu
Vadinolhu
Mundoo
Bokaiyfushi
Kuda mungnafushi
Kalhaidhoo
Bodu mungnafushi
Adhangau
Uvadhevifushi
Baresdhoo
Mahakanfushi
Hanhushi
En’bulufushi
Gasgan’dufinolhu
Bodufinolhu
Kashidhoo
Bileiydhoo
Gan
Guraidhoo
Dhiggaru
Maduvvari
Maavah
Maandhoo
Kokurahaa
Bodumaabulhali
Kudamaabulhali
Kalhurahaa
Haiythoshi
Enberahaa
Maaveshi
Thathunrahaa
Aarahaa
Bodufenrahaa
Burrahaa
Athahendhu
Kudavoshi
Hendha
Vinagan’du
Uthuru vinagan’du
Medhu vinagan’du
Fenboarahaa
Kudafenrehaa
Fares
Boduhuraa
Kudafares
Raiymandhoo
Kadhdhoo
Huraa
Veligan’dufinolhu
Hulhimendhoo
Gaadhoo
Olhuveli
Maafushi
Maakalhuveli
Olhutholhu
Raaban’dhihuraa
Fonadhoo
Maamendhoo
Hithadhoo
Madifushi
Magoodhoo
Magoodhoo bodufinolhu
Hulisdhoo
Mendhoo
Bodumahigulhi
Kudafushi
Kuredhirehaa
Kunahandhoo
Erruh-huraa
Hadhdhunmathi
(Laamu Atoll)
Operating Entities
1. Chaaya Blu
2. Cinnamon Wild
3. Chaaya Tranz
4. Bentota Beach Hotel
5. Cinnamon Bey
6. Cinnamon Citadel
7. Chaaya Village
8. Cinnamon Lodge
Dharan’boodhoo
Nilandhoo
Hudhuveli
Uthurugasveli
Uthuruboduveli
Hurasveli
Meedhuffushi (Vilu Reef BeachandSpaResort)
16
17
3
Meedhoo
Velavaru (Angsana ResortandSpaMaldives-Velavau)
Udhdhoo
Faandhoo
Lhohi
Mulah
Veyvah
Maagau
Rin’budhoo
Ban’didhoo
Aluvifushi
Boahuraa
Kanneiyfaru
Muli
Dhoores
Vommuli
Maalhaveli
Thuvaru
Naalaafushi
Hudhufusheefinolhu
Maadheli
Hulhudheli
Hulhuvahi
Kekuraalhuveli
11
5
3
Maalefaru
Gasveli
Dhekunuboduveli
Olhufushi
Thaban’lhaidhoo
Dhebaidhoo
Kuda usfushi
Bulhalafushi
Fenfushi
Gemendhoo
Ayyakaloahuraa
Maa usfushi
Maahuraa
Fenfuraaveli
Fenmeeruhuraa
Kiraidhoo
Gaakurali
Kolhufushi
Kuradhigan’du
Kudalafari
Thinhuraa
Matu
15
4
Medhufushi (Medhufushi Island Resort)
Seedheehuraa veligan’du
Seedheehuraa
Gongalihuraa
Dhiththun’di
Faruhulhudhoo
12
Kan’duvilin’gili
Faruhulhedhoo
Melaimaa
Hurendhoo
Thilabolhufushi
Bodehuttaa
Maarandhoo
Kalhehuttaa
Maagihuttaa
Kodagehuttaa
Hithaadhoo
Maamutaa
Minimasgali
Kolamaafushi
Hithaadhoogalaa
Lhossaa
Kan’dinmaa
Maakanaarataa
Mulakatholhu
(Meemu Atoll)
Bodufinolhu
Beyrumauddoo
Vallalhohi
Raaverrehaa
Vaanee
Falhuverrahaa
Huvadhuatholhu Uthuruburi
(Gaafu Alifu Atoll)
Villin’gili
Hiriyafushi
Kooddoo
Kendheraa
Maamendhoo
Fenfuttaa
Boadduvaa
Valla
Hulhimendhoo
Maadhigavara
Fulan'gi
Issari
Kedhigan’du
Dhigurah
Kodahuttaa
Maththidhoo
Maaen’boodhoo
Falhumaafushi
Maafushi
Keredhdhoo
Odagallaa
Kisserahaa
Nilandhoo
Olhuveli
Hinaamaagalaa
Dhaandhoo
Dhevvalaabadhoo
En’boodhoofushi
Vodamulaa
Munandhuvaa
Kudahuvadhoo
Meradhoo (Salus Fushi)
Mahadhdhoo
Dhevvaamaagalaa
Funadhooviligillaa
Dhevvadhoo
2
14
3
Havoddaa
Funadhoo
Dhigudhoo
Minimessaa
Funamudua (Huvadhumaafushi Maldives)
Thinadhoo
Hirihuttaa
Galamedhuvaa
Havodigalaa
Baavanadhoo
Kafena
Viligalaa
Maagon’derehaa
Kudherataa
Rahadhuvaa
Maallaarehaa
Kodeyvilin'gili
Hadahaa
Gosi
Kon'dey
Kodeymatheelaabadhoo
Baulhagallaa
Kaadedhdhoo
Dhiyadhoo
Medhehuaa
Maarehaa
Madaveli
Konoaa
Kudhehulhedhdhoo
Kannigillaa
Nilandheatholhu Dhekunuburi
(Dhaalu Atoll)
Araigaththaa
Gemanafushi
Hoan’dedhdhoo
Kaludirehaa
Hunigon’direhaa
Kadevaarehaa
Dhigurehaa
Bihurehaa
Kodedhoo
Bodubon’deyyaa
Mathikeranahuttaa
Kaashihulhudhoo
Keramiththaa
Kudhelifadhoo
Bodurehaa
Fenrehaa
Boduhuttaa
Idh imaa
Ulegalaa
Bakeththaa
Maafehelaa
Dekaanbaa
Koderataa
Kodegalaa
Inn arehaa
Medhuburiyaa
Maththurehaa
Medharehaa
Maagalaa
Gahevelagalaa
Thinahuaa
Kan’duhulhudhoo
Kadhefalaa
Olhimuttaa
Kodaanahutta
Hulhuvaarulaa
Kaishidhoo
Maavaarulu
Farehulhedhoo
Dhoonirehaa
Menthandhuvaa
Golhaallaa
Kalhehamalaa
Keyhuvadhoo
Kalhahuttaa
Odegallaa
Olhurataa
Mathaidhuvaa
Hevaahulhudhoo
Kalhahigillaa
Lonudhoo
Bodehuttaa
NadellaaEhivakaa
Veraaviligillaa
Maavadhdhuva
Lonudhuahuttaa
Thelehuaa
Ban’defodiyaa
Kodahutigalaa
Gadhdhoo
Magudhdhuvaa
Gan
Mudhimaahutta
Meehunthibenehuttaa
Rathafandhoo
Mathihutta
Dherukurehaa
Meyragillaa
Femunaidhoo
13
Rodhavarrehaa
Vaireyaadhuvaa
Maaehivakaa
Kanandhuvaa
Meregihuaa
Fenevenehuttaa
Kudhemaanaidhoo
Vatavarrehaa
Kalherehaa
Gazeeraa
Mudhimaahutta
Laihaa
Ukurihuttaa
Kan’dahalagalaa
Vilin’gillaa
Kaalhehuaa
Fiyoari
Vaadhoo
Uhehuttaa
Ekelondaa
Keleihuttaa
Dhigelaabadhuvaa
Hoothodeyaa
Faresmaathodaa
Maarehaa
Dhoonirehaa
Boduhuttaa
Farukolhuhuttaa
Kaalhehuaa
Huvadhuatholhu Dhekunuburi
(Gaafu Dhaalu Atoll)
Foamulah
(Gnaviyani Atoll)
Fuvahmulaku
Kedevaahera
Hikahera
Bedhey aurah
Kaohera
Maahera
Kudamaahera
Dheeron’di
Hithadhoo
Fathikedehera gan’du
Kodadhihera gan’du
Kan’dihera gan’du
Meedhoo
Hulhudhoo
Herethere (Hadhufushi)
Aboohuraa
Geskalhuheraa
Gauken’di
Hankede
Boduhajaraa
Mulikede
Maradhoo
Maradhoofeydhoo
Feydhoo
Villin’gili
Savaaheli
Dhigiheraa
Gomahera
Chaaya Hotels & Resort
Protected Areas
1. Chaaya Island Dhonveli
2. Chaaya Reef Ellaidhoo
3. Chaaya Lagoon Hakuraa Huraa
1. Thamburudhoo Thila
2. Orimas Thila
3. Lhazikuraadi
Gan
Adduatholhu
(Seenu Atoll)
As a Company which monitors most of the environment related indicators, we continuously report on significant spills of chemicals, oil, fuel and waste on a quarterly basis
and reported zero incidents. Also, due to the strict adherence to environment, social and product related rules and regulations in the country, there were no fines or sanctions
imposed on us during the year.
132
CONSOLIDATED VALUE ADDED STATEMENT
For the year ended 31st March (Rs. ‘000s)
Revenue
Other operating income and finance income
Total
Less : Cost of materials and services
Value added
2014
2013
10,966,381
9,341,581
309,818
182,178
11,276,199
9,523,759
(6,239,088)
(5,828,848)
5,037,111
To employees
34%
To the government
8%
To providers of capital
11%
Retained within the
2013/2014
3,694,911
business
47%
To employees
31%
Distributed as follows :
To employees as salaries and other benefits
To the government as taxes
1,724,922
34%
1,139,734
31%
384,197
8%
241,840
7%
533,877
11%
537,096
15%
To the providers of capital
Interest in borrowings
Non-controlling interest
9,080
0%
4,240
To the government
To providers of capital
0%
7%
15%
Retained within the
2012/2013
Retained within the business
819,189
16%
651,010
18%
As reserves
1,565,846
31%
1,120,991
30%
Total
5,037,111
100%
3,694,911
100%
As depreciation
Defined contribution plan obligations
Rs. ‘000s
2014
2013
2012
2011
2010
EPF
42,812
36,046
30,571
22,908
19,287
ETF
12,583
10,511
7,380
5,825
4,481
113,836
89,346
84,677
78,713
65,974
10,497
6,672
6,403
5,766
4,064
Employee benefit liability as at 31 March
Payments during the financial year
business
48%
133
THE WAY FORWARD: A SUSTAINABLE VALUE CHAIN
As a green pioneer, our ultimate goal is to extend our concepts of
sustainability across the value chain. We believe that by working together
with our value chain partners, we can identify optimal solutions thereby
leading towards holistic action to generate more value. We are proud to report
that we have already set the wheels in motion to achieve this goal. During the
year, we formulated criteria detailing a comprehensive set of sustainability
requirements to be met by all our significant suppliers.
The suppliers were mapped based on the level of fulfilment of the criteria.
Suppliers who did not meet the required specifications have been given
a particular time period to comply with the requirements, failing which
alternative suppliers are pursued. The criteria consist of a range of indicators
that take into consideration the environment, social and economic obligations
of an entity.
KEY ASPECTS CONSIDERED IN THE SUPPLIER
ASSESSMENT
z
Environmental Policy and Environmental Management
Systems
z
Energy Consumption, Water Consumption and Discharge,
Waste Management, Emissions,
z
Noise Impact, Biodiversity - Environmental Provisions
z
Emissions
z
Health, Safety and Welfare - Health Provisions
z
Hours of Work and Holidays – General
z
Employment of Women, Young Persons and Children Night Work and Industrial undertakings
z
Maternity Provisions - Maternity Benefits
Suppliers Forum- Maldivian Resorts
Our Maldivian resorts successfully carried out its inaugural Suppliers Forum, in
order to build awareness on sustainable tourism amongst suppliers. The forum
was attended by 25 delegates from 15 domestic and international organisations.
The forum focused on the key issues of sustainable business practices in the
supply chain covering the health and safety of suppliers.
As one of the largest leisure sector operator, our supply chain comprises several
hundreds of product and service suppliers and we believe the impact we could
have in this regard would be substantial. Over the next five years, we will strive
to spread our sustainability values along the supply chain, reflective of our
commitment towards achieving our ultimate green objective.
134
GRI INDEX
G3 Content Index
Profile
Disclosure
Description
Reported
Cross Reference
Pages
1. Strategy and analysis
1.1
Statement from the most senior decision-maker of the organisation.
Yes
48-50
1.2
Description of key impacts, risks, and opportunities.
Yes
92-99, 101
2. Organisational profile
2.1
Name of the organisation.
Yes
Back inner cover
2.2
Primary brands, products, and/or services.
Yes
107-108
2.3
Operational structure of the organisation, including main divisions, operating companies, subsidiaries, and joint
ventures.
Yes
51
2.4
Location of organisation’s headquarters.
Yes
Back inner cover
2.5
Number of countries where the organisation operates, and names of countries with either major operations or that are
specifically relevant to the sustainability issues covered in the report.
Yes
131
2.6
Nature of ownership and legal form.
Yes
Back inner cover
2.7
Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries).
Yes
107
2.8
Scale of the reporting organisation.
Yes
98-99
2.9
Significant changes during the reporting period regarding size, structure, or ownership.
Yes
N/A
2.10
Awards received in the reporting period.
Yes
102-104
3. Report parameters
3.1
Reporting period (e.g., fiscal/calendar year) for information provided.
Yes
98-99
3.2
Date of most recent previous report (if any).
Yes
98-99
3.3
Reporting cycle (annual, biennial, etc.)
Yes
98-99
3.4
Contact point for questions regarding the report or its contents.
Yes
Back inner cover
3.5
Process for defining report content.
Yes
98-101
3.6
Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers).
Yes
99
3.7
State any specific limitations on the scope or boundary of the report.
Yes
98-99
3.8
Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can
significantly affect comparability from period to period and/or between organisations.
Yes
98-99
3.9
Data measurement techniques and the bases of calculations, including assumptions and techniques underlying
estimations applied to the compilation of the Indicators and other information in the report.
Yes
120
135
G3 Content Index
Profile
Disclosure
Description
Reported
Cross Reference
Pages
3.10
Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such restatement (e.g., mergers/acquisitions, change of base years/periods, nature of business, measurement methods).
Yes
N/A
3.11
Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the
report.
Yes
98-99
3.12
Table identifying the location of the Standard Disclosures in the report.
Yes
Inner Front Cover
3.13
Policy and current practice with regard to seeking external assurance for the report.
Yes
98-99
4. Governance, commitments and engagement
4.1
Governance structure of the organisation, including committees under the highest governance body responsible for
specific tasks, such as setting strategy or organisational oversight.
Yes
54-67, 106
4.2
Indicate whether the Chair of the highest governance body is also an executive officer.
Yes
54-67
4.3
For organisations that have a unitary Board structure, state the number and gender of members of the highest
governance body that are independent and/or non-executive members.
Yes
54-67
4.4
Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.
Yes
54-67
4.5
Linkage between compensation for members of the highest governance body, senior managers, and executives
(including departure arrangements), and the organisation’s performance
Yes
54-67
4.6
Processes in place for the highest governance body to ensure conflicts of interest are avoided.
Yes
54-67
4.7
Process for determining the composition, qualifications, and expertise of the members of the highest governance body
and its committees, including any consideration of gender and other indicators of diversity.
Yes
54-67
4.8
Internally developed statements of mission or values, codes of conduct, and principles relevant to economic,
environmental, and social performance and the status of their implementation.
Yes
54-67
4.9
Procedures of the highest governance body for overseeing the organisation’s identification and management of
economic, environmental, and social performance, including opportunities, and adherence or compliance relevant risks
and with internationally agreed standards, codes of conduct, and principles.
Yes
54-67
4.10
Processes for evaluating the highest governance body’s own performance, particularly with respect to economic,
environmental, and social performance.
Yes
54-67
4.11
Explanation of whether and how the precautionary approach or principle is addressed by the organisation.
Yes
54-67
4.12
Externally developed economic, environmental, and social charters, principles, or other initiatives to which the
organisation subscribes or endorses.
Yes
54-67
4.13
Memberships in associations (such as industry associations) and/or national/international advocacy organisations.
Yes
54-67
136
G3 Content Index
Profile
Disclosure
Description
Reported
Cross Reference
Pages
4.14
List of stakeholder groups engaged by the organisation.
Yes
54-67
4.15
Basis for identification and selection of stakeholders with whom to engage.
Yes
54-67
4.16
Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder Group.
Yes
54-67
4.17
Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has
responded to those key topics and concerns, including through its reporting.
Yes
54-67
Economic
Economic Performance
DMA EC
Disclosures on management approach to economic aspects.
Yes
N/A
EC1
Direct economic value generated and distributed, including revenues, operating costs, employee compensation,
donations and other community investment , retained earnings, and payments to capital providers and governments.
Yes
132
EC2
Financial implications and other risks and opportunities for the organisation’s activities due to climate change.
No
N/A
EC3
Coverage of the organisation’s defined benefit plan obligations.
Yes
132
EC4
Significant financial assistance received from Government.
No
N/A
Market Presence
EC5
Range of ratios of standard entry level wage by gender compared to local minimum wage at significant locations of
operation.
No
N/A
EC6
Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation.
Yes
N/A
EC7
Procedures for local hiring and proportion of senior management hired from the local community at locations of
significant operation.
No
N/A
Indirect economic impacts
EC8
Development and impact of infrastructure investments and services provided primarily for public benefit through
commercial, in-kind, or pro bono engagement.
Yes
119-120
EC9
Understanding and describing significant indirect economic impacts, including the extent of impacts.
No
N/A
Environmental
Materials
EN1
Materials used by weight or volume.
No
N/A
EN2
Percentage of materials used that are recycled input materials.
No
N/A
137
G3 Content Index
Profile
Disclosure
Description
Reported
Cross Reference
Pages
Energy
EN3
Direct energy consumption by primary energy source.
Yes
122
EN4
Indirect energy consumption by primary source.
Yes
122
EN5
Energy saved due to conservation and efficiency improvements.
Yes
121
EN6
Initiatives to provide energy-efficient or renewable energy-based products and services, and reductions in energy
requirements as a result of these initiatives.
No
N/A
EN7
Initiatives to reduce indirect energy consumption and reductions achieved.
Partially
121
Water
EN8
Total water withdrawal by source.
Yes
123
EN9
Water sources significantly affected by withdrawal of water.
No
N/A
EN10
Percentage and total volume of water recycled and reused.
Yes
123
EN11
Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value
outside protected areas.
Yes
129-130
EN12
Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of
high biodiversity value outside protected areas.
No
N/A
EN13
Habitats protected or restored.
Yes
126-127
EN14
Strategies, current actions, and future plans for managing impacts on biodiversity.
No
N/A
EN15
Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by
level of extinction risk.
No
N/A
Biodiversity
Emissions, effluents and waste
EN16
Total direct and indirect greenhouse gas emissions by weight.
Yes
120
EN17
Other relevant indirect greenhouse gas emissions by weight.
No
N/A
EN18
Initiatives to reduce greenhouse gas emissions and reductions achieved.
Partially
120-122
EN19
Emissions of ozone-depleting substances by weight.
No
N/A
EN20
NO, SO, and other significant air emissions by type and weight.
No
N/A
EN21
Total water discharge by quality and destination.
Yes
123
EN22
Total weight of waste by type and disposal method.
Yes
125
EN23
Total number and volume of significant spills.
Yes
131
138
G3 Content Index
Profile
Disclosure
Description
Reported
Cross Reference
Pages
EN24
Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention
Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.
No
N/A
EN25
Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the
reporting organisation’s discharges of water and runoff.
No
N/A
Products and services
EN26
Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.
No
N/A
EN27
Percentage of products sold and their packaging materials that are reclaimed by category.
No
N/A
Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with
environmental laws and regulations.
Yes
131
Significant environmental impacts of transporting products and other goods and materials used for the organisation’s
operations and transporting members of the workforce.
No
N/A
Total environmental protection expenditures and investments by type.
No
N/A
Compliance
EN28
Transport
EN29
Overall
EN30
Social: Labour practices and decent work
Employment
LA1
Total workforce by employment type, employment contract and region, broken down by gender.
Yes
112
LA2
Total number and rate of new employee hires and employee turnover by age Group, gender and region.
Yes
111-113
LA3
Benefits provided to full-time employees that are not provided to temporary or part- time employees, by significant
locations of operation.
No
N/A
Partially
115-116
No
N/A
Labour/management relations
LA4
Percentage of employees covered by collective bargaining agreements.
LA5
Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements.
Occupational health and safety
LA6
Percentage of total workforce represented in formal joint management-worker health and safety committees that help
monitor and advise on occupational health and safety programmes.
Yes
114-115
LA7
Rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region
and by gender.
Yes
115
139
G3 Content Index
Profile
Disclosure
Description
Reported
Cross Reference
Pages
LA8
Education, training, counselling, prevention, and risk-control programmes in place to assist workforce members, their
families or community members regarding serious diseases.
Yes
114-118
LA9
Health and safety topics covered in formal agreements with trade unions.
No
N/A
Partially
113
No
N/A
Partially
113
Training and education
LA10
Average hours of training per year per employee by gender, and by employee category.
LA11
Programmes for skills management and lifelong learning that support the continued employability of employees and
assist them in managing career endings.
LA12
Percentage of employees receiving regular performance and career development reviews, by gender.
Diversity and equal opportunity
LA13
Composition of governance bodies and breakdown of employees per employee category according to gender, age Group,
minority Group membership, and other indicators of diversity.
No
N/A
LA14
Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation.
No
N/A
Social: Human Rights
Investment and procurement practices
HR1
Percentage and total number of significant investment agreements and contracts that include clauses incorporating
human rights concerns, or that have undergone human rights screening.
No
N/A
HR2
Percentage of significant suppliers, contractors, and other business partners that have undergone human rights
screening, and actions taken.
No
N/A
HR3
Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to
operations, including the percentage of employees trained.
No
N/A
No
N/A
Operations and significant suppliers identified in which the right to exercise freedom of association and collective
bargaining may be violated or at significant risk, and actions taken to support these rights.
No
N/A
Operations and significant suppliers identified as having significant risk for incidents of child labour, and measures
taken to contribute to the effective abolition of child labour.
Yes
N/A
Non-discrimination
HR4
Total number of incidents of discrimination and corrective actions taken.
Freedom of association and collective bargaining
HR5
Child labour
HR6
140
G3 Content Index
Profile
Disclosure
Description
Reported
Cross Reference
Pages
Yes
N/A
No
N/A
No
N/A
Percentage of operations with implemented local community engagement, impact assessments and development
programmes.
Yes
117-118, 127
Percentage and total number of business units analysed for risks related to corruption.
No
N/A
Forced and compulsory labour
HR7
Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labour,
and measures to contribute to the elimination of all forms of forced or compulsory labour.
Security practice
HR8
Percentage of security personnel trained in the organisation’s policies or procedures concerning aspects of human rights
that are relevant to operations.
Indigenous rights
HR9
Total number of incidents of violations involving rights of indigenous people and actions taken.
Social: Society
Local communities
SO1
Corruption
SO2
SO3
Percentage of employees trained in organisation’s anti-corruption policies and procedures.
No
N/A
SO4
Actions taken in response to incidents of corruption.
No
N/A
SO5
Public policy positions and participation in public policy development and lobbying.
No
N/A
SO6
Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.
No
N/A
Total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes.
No
N/A
Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and
regulations.
Yes
131
Public policy
Anti-competitive behaviour
SO7
Compliance
SO8
141
G3 Content Index
Profile
Disclosure
Description
Reported
Cross Reference
Pages
Social: Product Responsibility
Customer health and safety
PR1
Life cycle stages in which health and safety impacts of products and services are assessed for improvement and
percentage of significant products and services categories subject to such procedures.
No
N/A
PR2
Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety
impacts of products and services during their life cycle, by type of outcomes.
No
N/A
Product and service labelling
PR3
Type of product and service information required by procedures and percentage of significant products and services
subject to such information requirements.
No
N/A
PR4
Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service
information and labelling, by type of outcomes.
No
N/A
PR5
Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.
Yes
99
Marketing communications
PR6
Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including
advertising, promotion and sponsorship.
No
N/A
PR7
Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing
communications, including advertising, promotion and sponsorship by type of outcomes.
No
N/A
Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.
No
N/A
Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of
products and services.
Yes
131
Customer privacy
PR8
Compliance
PR9
142
FINANCIAL REPORTS
FINANCIAL INFORMATION
Statement of Directors’ Responsibility
Income Statement
Statement of Comprehensive Income
Statement of Changes In Equity
Statement of Cash Flows
Notes to the Financial Statements
143
148
149
150
151
152
154
155
157
143
ANNUAL REPORT OF THE BOARD OF DIRECTORS
The Directors have pleasure in presenting their 35th
Annual Report of the Company together with the
Audited Financial Statements of John Keells Hotels
PLC and the Consolidated Financial Statements of the
Group for the year ended 31st March 2014.
COMPLIANCE WITH LAWS AND REGULATIONS
the achievement of corporate objectives. The policies
and procedures ensure the equitable treatment of
all employees. Some of the processes and procedures
adopted in this regard are mentioned on pages 110 to
118 of the Annual Report.
The Board has received assurance from the Board
Audit Committee and confirms that the Company has
complied with all applicable laws, rules and regulations
in the territories in which it operates.
PRINCIPAL ACTIVITIES
SYSTEM OF INTERNAL CONTROL
GOING CONCERN
The principal activity of the Company, which is
Investment, remained unchanged. The principal
activity of the subsidiaries and joint ventures, which is
hoteliering, also remained unchanged.
The Board has implemented an effective and
comprehensive system of internal controls, which
provide reasonable but not absolute assurance that
assets are safeguarded and that the financial reporting
system may be relied upon in the preparation of the
Financial Statements. Reliance upon the internal
controls is set out on page 66 of this Report.
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 & Exchange Commission
and CA Sri Lanka, have a reasonable expectation
that the Company, its subsidiaries and joint ventures
possess adequate resources to continue in operation for
the foreseeable future. For this reason, they continue
to adopt the Going Concern basis in preparing the
REVIEW OF BUSINESS AND FUTURE
DEVELOPMENTS
The financial and operational performance, during
the year ended 31st March 2014 and future business
development of the Company and Group, is provided in
the Chairman’s Message, The Management Discussion
and Analysis of Operations, Sustainability Report and the
Financial Overview. These reports, which form an integral
part of the Annual Report of the Board of Directors,
together with the Audited Financial Statements, reflect
the state of affairs of the Company and Group.
The Corporate Governance practices of the Company
are described on pages 54 to 77 of this Report. The
Directors confirm that the operations of the Group
are compliant with the Listing Rules of the Colombo
Stock Exchange and has adopted the relevant Rules
on Corporate Governance issued by the Securities &
Exchange Commission of Sri Lanka and the Institute of
Chartered Accountants of Sri Lanka (CA Sri Lanka).
HUMAN RESOURCES
The Company continued to implement appropriate
human resource management policies to develop
employees and optimise their contribution towards
The Audit Committee receives and acts upon reports
on the results of internal control reviews carried out by
independent external auditors.
RISK MANAGEMENT
The Board confirms that there is an ongoing process
for identifying, evaluating, managing and mitigating
any significant risks faced by the Company, that
financial, operational and compliance controls have
been reviewed. Risk assessment and evaluation for the
Company takes place as an integral part of the business
and the Board Audit Committee reviews the principal
risks and mitigating actions in place regularly. The
Board, through the involvement of the Group Risk and
Control Review Division takes steps to gain assurance
on the effectiveness of control systems in place.
The Head of the Group Business Process Review
Division has direct access to the Chairman of the Audit
Committee. Foreseeable risks that may materially
impact the business are disclosed in the Chairman’s
Message on Pages 48 to 50 and Risk Management
practices on Page 92 to 97 of this Report.
DIRECTORS’ RESPONSIBILITY FOR FINANCIAL
REPORTING
The Directors are responsible for the preparation of
the Financial Statements so that they present a true
and fair view of the state of affairs of the Company.
The Directors are of the view that these Financial
Statements have been prepared in conformity with the
requirements of the Companies Act No.7 of 2007, the
Sri Lanka Accounting and Auditing Standards Act No.15
of 1995 and the Listing Rules of the Colombo Stock
Exchange.
The Statement of Directors’ Responsibility for financial
reporting is given on page 148 and forms an integral
part of the Annual Report of the Board of Directors.
144
ANNUAL REPORT OF THE BOARD OF DIRECTORS CONTD.
REVENUE
PROVISION FOR TAXATION
The revenue of the Group from its operations amounted to Rs. 10,966 Mn (2012/13 - Rs. 9,342 Mn). Revenue
contribution to the Group from different geographical segments is provided in Note 3.2 to the Financial Statements.
The details of the tax provision of the Group is disclosed
in Note 9 to the Financial Statements.
FINANCIAL RESULTS
AUDITORS’ REPORT
The Company recorded a profit after tax of Rs. 375.9 Mn while the Group recorded a consolidated net profit after
tax of Rs. 1,574.9 Mn for the year under review. A synopsis of the Company’s consolidated performance is presented
below.
The Auditors’ Report on the Financial Statements is
given on page 149 of the Annual Report.
PROPERTY, PLANT & EQUIPMENT
As at 31st March
Group
Company
The book value of property, plant and equipment as at
the reporting date amounted to Rs. 13,213 Mn
(2013 –Rs. 13,472 Mn) for the Group.
2014
2013
2014
2013
After making provision for doubtful debts, all known
liabilities and depreciation on property, plant,
equipment the profit earned before interest was
2,427,116
1,819,992
400,705
82,141
Capital expenditure for the Group amounted to
Rs. 610 Mn (2012/13 – Rs. 2,440.3 Mn).
Interest paid during the year was
(533,877)
(537,096)
(12,728)
(7,186)
Profit before tax was
1,893,239
1,282,896
387,977
74,955
(318,313)
(161,877)
(12,068)
(12,839)
Details of property, plant and equipment and their
movements are given in Note 14 to the Financial
Statements on page 187 of this Report.
1,574,926
1,121,019
375,909
62,116
(9,080)
(4,240)
-
-
The amount attributable to the Company and the
Group was therefore
1,565,846
1,116,779
375,909
62,116
When the balance brought forward from the previous
year was added
3,165,257
2,482,461
412,199
786,927
The amount available for appropriation was
4,731,103
3,599,240
788,108
849,043
(22,461)
2,861
-
-
-
(436,844)
-
(436,844)
4,708,642
3,165,257
788,107
412,198
In Rs. ‘000s
From which was deducted the provision for taxation,
including deferred taxation of
Leaving a net profit after tax of
The profit attributable to the non controlling interest
was
Other adjustments
Dividend paid during the year and direct cost on
share issue was
Leaving a balance to be carried forward to the next
year of
MARKET VALUE OF PROPERTIES
Freehold land and buildings of the Group are subject to
routine revaluation by independent qualified valuers.
The most recent valuation in respect of Group was
carried out as at 31st March 2013.
Details of property valuations, including the valuation
method and effective date of these valuations are
provided in Note 14.1 to the Financial Statements on
page 188 of this Report.
INVESTMENTS
The details of investments held by the Company and the
Group as at 31st March 2014, are given in Note 17 to the
145
IMPAIRMENT ASSESSMENT
The Board of Directors has evaluated impairment loss
in relation to property, plant and equipment, intangible
assets and investments. Based on the assessment
the investment made by Habarana Walk Inn Ltd on
Rainforest Eco Lodge (Pvt) Ltd was impaired by
Rs. 6,652,931 and had been recognised in the income
statement for the year 2013/14 (2012/13 – Rs. Nil).
The number of shareholders as at 31st March 2014
was 7,096 (31st March 2013- 7,728). An analysis of
shareholders based on shares held, the distribution
of ownership and details of share transactions during
the year are provided on pages 80 and 81 of this report.
The list of top twenty shareholders of the Company as
at 31st March 2014 is also provided on page 82 of this
Report.
STATED CAPITAL
DIRECTORS
The total Stated Capital of the Company as at
31st March 2014 stood at Rs. 9,500.2 Mn (2013 –
Rs. 9,500.2 Mn) divided into 1,456,146,780 Ordinary
Shares (2013- 1,456,146,780 Ordinary Shares).
The Board of Directors of the Company as at 31st March
2014 and their brief profiles are given on pages 52 and
53 of this Report.
RESERVES
The following members serve on the Board Audit
Committee:
The movement of Other Components of Equity and
Revenue Reserves of the Company, its Subsidiaries and
Joint Ventures are shown in the Statement of Changes
in Equity on page 154 of this Report.
SEGMENT REPORTING
Geographical segment-wise contribution to Group
revenue, results, assets and liabilities is provided in
Note 2 to the Financial Statements.
SHARE INFORMATION AND SHAREHOLDINGS
The market value of an Ordinary Share of the Company
as at 31st March 2014 was Rs. 12.50 (31st March 2013 –
Rs. 13.20).
Information relating to earnings, dividends, net assets
and market value per share is given in the ten years
summary on page 214.
BOARD COMMITTEES
Mr. Ranel T Wijesinha
Mr. N B Weerasekera
Mr. T L F W Jayasekera (Appointed w.e.f 01st Nov 2013)
Mr. D A Cabraal (Resigned w.e.f 30th Oct 2013)
The Audit Committee reviewed the type and quantum
of non-audit services provided by the external auditors
to the Group to ensure that their independence as
auditors has not been impaired. The Report of the Audit
Committee is given on pages 78 and 79 of this Report.
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 interest registers
of subsidiaries and joint ventures which are Public
Companies or Private Companies which have not
dispensed with the requirement to maintain an
interests register as permitted by Section 30 of the
Companies Act No. 7 of 2007.
Directors Interests in Contracts
All the Directors have made a general disclosure to the
Board of Directors as permitted by Section 192 (2) of the
Companies Act No 7 of 2007 and no additional interests
have been disclosed by any Director.
Indemnities and remuneration
Mr. T L F W Jayasekera was appointed to the Board on
the standard terms and non-executive fees approved
by the Board for Non-Executive Directors, which fees
are commensurate with the market complexities of the
Company.
Mr. N B Weerasekera’s contract as a Non-Executive
Director was renewed on the standard terms and nonexecutive fees approved by the Board for Non-Executive
Director which fees are commensurate with the market
complexities of the Company.
146
ANNUAL REPORT OF THE BOARD OF DIRECTORS CONTD.
Directors’ Shareholdings
DIRECTORS MEETINGS
SUPPLIER POLICY
The shares held by Directors’ and their spouses in the
Company and its Subsidiaries as at 31st March 2014 are
as follows;
Details of the meetings of the Directors are given on
page 56.
The Company has an equal opportunity policy and
these principles are enshrined in specific selection,
training, development and promotion policies, ensuring
that all decisions are based on merit. The Group
practices equality of opportunity for all employees
irrespective of ethnic origin, religion, political opinion,
gender, marital status or physical disability. There
were no material issues pertaining to employees and
industrial relations in the year under review.
The Company applies an overall policy of agreeing and
clearly communicating terms of payment as part of
the commercial agreements negotiated with suppliers,
and endeavors to pay for all items properly charged
in accordance with these agreed terms. As at 31st
March 2014, the trade and other payable of the Group
amounted to Rs. 858 Mn (2013 – Rs. 992 Mn) and for the
Company amounted to Rs. 13.6 Mn (2013 - Rs. 11.3 Mn).
EMPLOYMENT
As at
31st March
2014
31st March
2013
142,877
142,877
407,434
407,434
Mrs. C.A. Gunewardene
74,806
74,806
Total
625,117
625,117
Directors
Mr. S.C. Ratnayake
Mr. A.D. Gunewardene
Spouses
Mrs. M.V. Ratnayake
International Tourists & Hoteliers Ltd
Mr. J.E.P. Kehelpannala
150
150
Directors’ Remuneration
Details of the remuneration and other benefits received
by the Directors of the Company, its subsidiaries and
joint ventures are set out in Note 8 to the Financial
Statements.
Executive Directors’ remuneration is established within
a framework approved by the Board’s Remuneration
Committee. The Directors are of the opinion that the
framework assures appropriateness of remuneration
and fairness for the Company. The remuneration of
the Non-Executive Directors is determined according
to scales of payments decided upon by the Board
previously.
SUSTAINABILITY REPORTING
Details of the Group’s Human Resource initiatives are
detailed in pages 110 to 117. The number of persons
employed by the Group as at 31st March 2014 was 2,779
(2013 – 2,735)
The Group is conscious of the impact, direct and
indirect, on the environment due to its business
activities. Every endeavor is made to minimise
the adverse effects on the environment to ensure
sustainable continuity of our natural resources. The
activities undertaken by the Group in recognition of its
responsibility as a corporate citizen are disclosed more
fully on pages 98 to 141 of this Report.
STATUTORY PAYMENTS
DONATIONS
The Directors, to the best of their knowledge are
satisfied that all statutory payments in relation to
the Government and the employees have been either
duly paid or appropriately provided for. The income
tax position of the Company and its subsidiaries are
disclosed in Note 9 to the Financial Statements.
Total donations made by the Group during the year
amounted to Rs.5.1 Mn (2012/13 – Rs.3.0 Mn). The
amount includes contributions on account of Corporate
Social Responsibility (CSR) initiatives for which the
Group donated Rs.2,021,661/- (2012/13 – Rs.768,750/-).
The John Keells Social Responsibility Foundation,
which operates with funds contributed by each of the
companies in the Group, handles most of the Group’s
CSR initiatives and activities.
OUTSTANDING LITIGATION
In the opinion of the Directors and in consultation
within the Company Lawyers, litigation currently
pending against the Company will not have a material
impact on the reported financial results or future
operations of the Company.
The Foundation manages a range of programs that
underpin its key principle of acting responsibly
in all areas of business to bring about sustainable
147
development. In quantifying the Group’s contribution
to charities no account has been taken of ‘in-house’
costs or management time.
Donations made by Subsidiaries of the Company were
as follows: Ceylon Holiday Resorts Ltd –
Rs. 1,136,530/- (2012/13- Rs. 1,043,547/-), Habarana Lodge
Ltd - Rs. 565,305/- (2012/13- Rs. 449,581/-), Habarana
Walk Inn Ltd - Rs. 506,669/- (2012/13- Rs. 439,495/-),
Kandy Walk Inn Ltd.-Rs. 330,553/- (2012/13- Rs. 138,521/-),
Trinco Holiday Resorts (Pvt) Ltd – Rs. 236,910/- (2012/13–
Rs. 173,796/-), Hikkaduwa Holiday Resorts (Pvt) Ltd –
Rs. 281,100/- (2012/13– Rs. 290,767/-), Yala Village (Pvt)
Ltd - Rs. 1,018,334/- (2012/13- Rs. 461,421/-), Beruwala
Holiday Resorts (Pvt) Ltd, - Rs. 591,465/- (2012/13Rs. Nil), Travel Club Pte) Ltd, - Rs. 73,281/- (2012/13Rs. Nil), Fantasea World Investments (Pte) Ltd, Rs. 91,355/- (2012/13- Rs. Nil), Tranquility (Pte) Ltd, Rs. 232,936/- (2012/13- Rs. Nil).
The CSR initiatives, including completed and on-going
projects, are detailed in the sustainability report on
pages 98 to 141.
AUDITORS
The Audit Committee reviews the appointment of
the Auditors, their effectiveness, independence and
relationship with the Company, including the level of
audit. As far as the Directors are aware, the Auditors,
Messrs Ernst & Young, Chartered Accountants, do not
have any relationship or interest in the Company, its
subsidiaries or joint ventures.
ANNUAL GENERAL MEETING
Messrs Ernst & Young, Chartered Accountants have
indicated their willingness to continue as Auditors of
the Company, accordingly, a resolution proposing their
reappointment as Auditors will be proposed at the
Annual General Meeting.
The Annual General Meeting will be held at 117, Sir
Chittampalam A Gardiner Mawatha, Colombo 02, on
30th June 2014 at 3.30pm. The Notice of the Annual
General Meeting appears on page 221.
Details of the Audit Fees paid to the Auditors are set out
in Page 173 of this Report.
This Annual Report is signed for and on behalf of the
Board of Directors by:
Further details on the work of the Auditor and the Audit
Committee are set out in the Audit Committee Report
on pages 78 and 79.
ANNUAL REPORT
The audited consolidated Financial Statements were
approved for issue by the Board of Directors on 29th
May 2014.
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 5th June 2014.
Director
Director
And By Order of the Board
Keells Consultants (Private) Limited
Secretaries
29th May 2014
148
STATEMENT OF DIRECTORS’ RESPONSIBILITY
The responsibility of the Directors, in relation to the
Financial Statements of the John Keells Hotels PLC
(Company) and the Consolidated Financial Statements of
the Company and its Subsidiaries (Group) is set out in this
statement. This Statement of Directors’ Responsibility is
to be read in conjunction with the Report of the Auditors
and is made to distinguish the respective responsibilities
of the Directors and of the Auditors in relation to the
Financial Statements contained in this Annual Report.
The Financial Statements comprise of:
z
z
Income statement and statement of comprehensive
income of the Company and its subsidiaries, which
present a true and fair view of the profit and loss of
the Company and its subsidiaries for the financial
year.
Statement of financial position, which represents
a true and fair view of the state of affairs of the
Company and its subsidiaries as at the end of the
financial year:
As per the provisions of the Companies Act No. 7 of
2007, the Board of your Company shall cause the
Annual General Meeting report to be sent to every
shareholder of the Company no less than fifteen
working days before the date fixed for holding the
Annual General Meeting.
The Directors of the Company are required by the
provisions of the Companies Act No. 7 of 2007 to prepare
Financial Statements which gives 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 of the Profit or Loss
and of the Cash flows of the Company and of the Group
for the financial year.
The Directors confirm that the Financial Statements of
the Company and its subsidiaries for the year ended 31st
March 2014 presented in the Report have been prepared
in accordance with the Sri Lanka Accounting and
Auditing Standards Act No. 15 of 1995 , the Companies
Act No. 7 of 2007 and has provided the information
required by and otherwise complied with the listing
rules of the Colombo Stock Exchange (CSE) and the
code of best practice on Corporate Governance issued
jointly by the Institute of Chartered Accountants of Sri
Lanka (CA Sri Lanka) and the Securities and Exchange
Commission of Sri Lanka (SEC).
In preparing the Financial Statements, the Directors
have selected appropriate accounting policies and have
applied them consistently. Reasonable and prudent
judgements and estimates have been made and
applicable accounting standards have been followed
and the Financial Statements have been prepared on
a going concern basis. The Directors are of the view
that adequate funds and other resources are available
within the Company to continue in operation for the
foreseeable future.
The Directors have taken all reasonable steps expected
of them to safeguard the assets of the Company and
of the Group and to establish appropriate systems of
internal controls in order to prevent, deter and detect
any fraud, misappropriation or other irregularities.
The Directors have also taken all reasonable steps to
ensure that the Company and its Subsidiaries maintain
adequate and accurate accounting books of record
which reflect the transparency of transactions and
provide an accurate disclosure of the financial position
of the Company and its subsidiaries.
The Directors are required to provide the Auditors with
every opportunity to take whatever steps and undertake
whatever inspection they consider appropriate for the
purpose of enabling them to give their independent
Audit Report. The Directors are of the view that they
have discharged their responsibilities in this regard.
COMPLIANCE REPORT
The Directors confirm that, to the best of their
knowledge, all taxes and levies payable by the Company
and the subsidiaries and all contributions, levies
and taxes payable on behalf of the employees of the
Company and its subsidiaries, and all other known
statutory obligations as at the Reporting date have been
paid or provided for, except as specified in Note 38 to the
Financial Statements covering Contingent Liabilities.
By Order of the Board
Keells Consultants (Private )Limited
Secretaries
29th May 2014
149
INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDERS OF JOHN KEELLS HOTELS PLC
Report on the financial statements
Scope of audit and basis of opinion
We have audited the accompanying financial
statements of John Keells Hotels PLC (“Company”), the
consolidated financial statements of the Company
and its subsidiaries which comprise the statements of
financial position as at 31 March 2014, and the income
statements, statements of comprehensive income,
statements of changes in equity and statements of
cash flows for the year then ended, and a summary of
significant accounting policies and other explanatory
notes.
Management’s responsibility for the financial statements
Management is responsible for the preparation and
fair presentation of these financial statements in
accordance with Sri Lanka Accounting Standards.
This responsibility includes: designing, implementing
and maintaining internal control relevant to the
preparation and fair presentation of financial
statements that are free from material misstatement,
whether due to fraud or error; selecting and applying
appropriate accounting policies; and making
accounting estimates that are reasonable in the
circumstances.
Opinion
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 plan and
perform the audit to obtain reasonable assurance
whether the financial statements are free from material
misstatement.
In our opinion, so far as appears from our examination,
the Company maintained proper accounting records
for the year ended 31 March 2014 and the financial
statements give a true and fair view of the Company’s
financial position as at 31 March 2014 and its
performance and cash flows for the year then ended in
accordance with Sri Lanka Accounting Standards.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the
accounting principles used and significant estimates
made by management, as well as evaluating the overall
financial statement presentation.
In our opinion, the consolidated financial statements
give a true and fair view of the financial position
as at 31 March 2014 and the performance and cash
flows for the year then ended, in accordance with Sri
Lanka Accounting Standards, of the Company and its
subsidiaries dealt with thereby, so far as concerns the
shareholders of the Company.
We have obtained all the information and explanations
which to the best of our knowledge and belief were
necessary for the purposes of our audit. We therefore
believe that our audit provides a reasonable basis for
our opinion.
Report on other legal and regulatory requirements
These financial statements also comply with the
requirements of Sections 151(2) and 153(2) to 153(7) of the
Companies Act No. 07 of 2007.
29th May 2014
Colombo.
150
INCOME STATEMENT
Group
For the year ended 31st March
In Rs. ‘000s
Revenue
Cost of sales
2014
2013
3
10,966,381
(3,590,914)
9,341,581
(3,004,424)
-
-
7, 375,467
6,337,157
-
-
156,013
(3,428,468)
(326,174)
(1,503,527)
143,319
(3,123,523)
(307,668)
(1,268,152)
382,781
13,699
(24,971)
(205)
34,937
7,478
(30,159)
(489)
2,273,311
1,781,133
371,304
11,767
7.2
7.1
(533,877)
153,805
(380,072)
(537,096)
38,859
(498,237)
(12,728)
29,401
16,673
(7,186)
70,374
63,188
8
9
1,893,239
(318,313)
1,574,926
1,282,896
(161,877)
1,121,019
387,977
(12,068)
375,909
74,955
(12,839)
62,116
1,565,846
9,080
1,574,926
1,116,779
4,240
1,121019
Rs.
Rs.
1.08
-
0.77
0.30
Gross profit
Dividend income
Other operating income
Administrative expenses
Distribution expenses
Other operating expenses
4
5
6
Results from operating activities
Finance expenses
Finance income
Net finance income / (expense)
Profit before tax
Tax expense
Profit for the year
Attributable to :
Equity holders of the parent
Non-controlling interests
Earnings per share
Dividends per share
Figures in brackets indicate deductions.
The Accounting Policies and Notes on pages 157 to 209 form an integral part of these financial statements.
Company
2014
2013
Note
10
11
151
STATEMENT OF COMPREHENSIVE INCOME
Group
Company
2014
2013
2014
2013
1,574,926
1,121,019
375,909
62,116
Other comprehensive income
Revaluation of land and buildings
Income tax on other comprehensive income
Exchange differences on translation of foreign operations
Fair value loss on available for sale assets
Actuarial gain / (Loss) on employee benefit plan
253,902
(11,487)
2,018,498
(58,087)
(101,851)
(5)
4,212
-
(5)
-
Other comprehensive income for the year, net of tax
242,415
1,862,767
-
(5)
Total comprehensive income for the year, net of tax
1,817,341
2,983,786
375,909
62,111
1,808,261
9,080
1,817,341
2,958,362
25,424
2,983,786
In Rs. ‘000s
Attributable to:
Note: All values are in rupees thousands, unless otherwise stated.
152
STATEMENT OF FINANCIAL POSITION
Group
As at 31st March
Company
2014
2013
Note
2014
2013
ASSETS
Non-Current Assets
Property, plant and equipment
Lease rentals paid in advance
Intangible assets
Investments in subsidiaries and joint ventures
Other non current financial assets
Deferred tax assets
Other non-current assets
14
15
16
17
17
18
19
13,213,160
8,235,508
670,407
22,570
38,368
620
22,180,633
13,471,801
8,639,214
670,407
25,058
54,231
22,860,711
10,398,901
8
10,398,909
9,456,741
8
9,456,749
Current Assets
Inventories
Trade and other receivables
Other current assets
Amounts due from related parties
Loans given to related parties
Other investments - deposits
Cash in hand and at bank
20
21
22
36
23
25
24
196,666
909,040
313,941
138,215
1,985,510
743,927
4,287,299
181,338
740,558
402,412
168,994
321,731
588,394
2,403,427
2,794
5,513
32,530
2,648
43,485
1,411
10,561
356,400
60,000
46,897
475,269
26,467,932
25,264,138
10,442,394
9,932,018
9,500,247
3,886,925
4,708,642
18,095,814
100,442
18,196,256
9,500,247
3,628,684
3,165,257
16,294,188
92,623
16,386,811
9,500,247
(5)
788,107
10,288,349
10,288,349
9,500,247
(5)
412,199
9,912,441
9,912,441
In Rs. ‘000s
Total Assets
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Stated capital
Other components of equity
Revenue reserves
Total Equity
26
27
153
Group
As at 31st March
Company
2014
2013
Note
2014
2013
Non-Current Liabilities
Interest bearing borrowings
Deferred tax liabilities
Employee benefit liabilities
Other deferred liabilities
Other non-current financial liabilities
28
29
30
31
32
4,245,400
144,361
113,836
68,426
63,752
4,635,775
5,571,060
114,422
89,346
34,160
59,253
5,868,241
33,441
33,441
-
Current Liabilities
Trade and other payable
Other current liabilities
Amounts due to related parties
Income tax liabilities
Current portion of interest bearing borrowings
Bank overdrafts
33
35
36
34
28
24
858,347
258,340
110,892
292,991
1,840,626
274,705
3,635,901
26,467,932
992,007
104,846
125,783
240,374
1,325,111
220,965
3,009,086
25,264,138
13,664
702
5,278
100,000
960
120,604
10,442,394
11,302
782
7,493
19,577
9,932,018
In Rs. ‘000s
Total Equity and Liabilities
I certify that the financial statements comply with the requirements of the Companies Act, No. 7 of 2007.
D.A.R.C. Perera
Chief Financial Officer
The Board of Directors is responsible for the preparation and presentation of these financial statements.
Signed for and on behalf of the Board by,
S.C. Ratnayake
Chairman
J.R.F Peiris
Director
29 May 2014
154
STATEMENT OF CHANGES IN EQUITY
Attributable to Equity Holders of the Parent
GROUP
Stated
Capital
Revaluation
Reserve
Exchange
Equalisation
Reserve
Revenue
Reserve
9,500,247
9,500,247
-
675,688
1,939,227
1,939,227
2,614,915
-
1,115,625
(101,851)
(101,851)
1,013,774
253,902
253,902
-
2,482,461
1,116,779
4,212
1,120,991
(436,844)
(1,351)
3,165,257
1,565,846
(11,487)
1,554,359
-
-
-
-
373
9,500,247
2,614,915
1,267,676
(11,347)
4,708,642
In Rs. ‘000s
Balance as at 01st April 2012
Other comprehensive income / (loss)
Total comprehensive income / (loss)
Dividend paid 2011/12
Direct cost on share issue
Dividend paid to minority shareholders
Balance as at 31st March 2013
Total comprehensive income
Share based payment
Group affect of acquisition of right
issue of a Subsidiary
Acquisitions and changes
in effective holding
COMPANY
ESOP
Reserve
Total
Noncontrolling
Interest
Total
Equity
4,339
13,774,021
1,116,779
1,841,583
2,958,362
(436,844)
(1,351)
16,294,188
1,565,846
242,415
1,808,261
4,339
67,725
4,240
21,184
25,424
(9)
(517)
92,623
9,080
9,080
-
13,841,745
1,121,019
1,862,767
2,983,786
(436,844)
(1,360)
(517)
16,386,811
1,574,926
242,415
1,817,341
4,339
-
-
373
-
373
(5)
4,339
(11,347)
18,095,814
53
(82)
(1,233)
100,442
53
(11,429)
(1,233)
18,196,256
Stated
Capital
Available
for sale
Reserve
Revenue
Reserve
Total
Equity
786,926
62,116
62,116
(436,844)
412,198
375,909
375,909
788,107
10,287,173
62,116
(5)
62,111
(436,844)
9,912,440
375,909
375,909
10,288,349
Available
for sale
Reserve
(5)
(5)
(5)
-
In Rs. ‘000s
Balance as at 01st April 2012
Other comprehensive income / (loss)
Total comprehensive income / (loss)
Final dividend paid - 2011/12
Total comprehensive income
9,500,247
9,500,247
9,500,247
(5)
(5)
(5)
(5)
155
STATEMENT OF CASH FLOWS
Group
Note
Company
2014
2013
2014
2013
1,893,239
1,282,896
387,977
74,955
819,189
21,010
4,339
666,663
533,877
6,653
(325)
(153,805)
(4,201)
2,515
39,090
3,828,244
651,010
18,821
738,345
537,096
(325)
(38,859)
8,229
28,659
2,274
34,423
3,262,569
12,728
(382,781)
(29,401)
(11,477)
7,186
3,832
(34,937)
(70,374)
(19,338)
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
(Increase)/decrease in other current assets
(Increase)/decrease in amounts due from related parties
Increase/(decrease) in amounts due to related parties
Increase/(decrease) in other current liabilities
Increase/(decrease) in trade and other payable
Cash Generated from/(used in) Operations
(17,843)
(111,171)
88,470
30,779
(14,891)
153,493
(133,662)
3,823,419
(12,131)
(100,531)
176,305
30,876
5,061
(194,426)
165,287
3,333,010
(1,608)
5,274
(80)
2,360
(5,531)
295
(1,814)
(967)
1,583
(20,241)
Interest paid
Income tax paid
Interest received
Dividend received
Employee benefit costs transferred
Gratuity paid
Net Cash from/(used in) Operating Activities
(533,877)
(205,866)
153,805
2,490
(10,497)
3,229,474
(537,096)
(184,158)
38,859
(3,268)
(6,672)
2,640,675
(12,728)
(14,283)
29,401
382,781
379,640
(7,186)
(9,509)
70,374
34,937
68,375
In Rs. ‘000s
Cash flows From Operating Activities
Net profit before taxation
Adjustments for;
Depreciation
Provision for employee benefit costs
Share based payment expense
Amortisation of prepaid lease rentals
Interest expense
Charge / (reversal) of impairment
Amortisation of grant received
Dividend received
Interest income
Loss on revaluation of property, plant and equipment
Loss on disposal of property, plant and equipment
Provision for slow moving inventories
Provision for deferred liabilities
Operating profit/(loss) before working capital changes
30
15
7
31
7
30
30
156
STATEMENT OF CASH FLOWS CONTD.
Group
2013
Cash Flows from Investing Activities
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Investments in short term deposits
Staff vehicle loan given
Net Cash used in Investing Activities
(610,037)
89,031
(385,441)
(4,165)
(910,612)
(2,440,341)
153,277
(42,093)
(2,329,157)
356,400
(942,160)
(585,760)
103,100
(132,000)
(28,900)
Cash Flows from Financing Activities
Proceeds from minority on issue of rights in subsidiaries
Dividend paid to equity holders of parent
Net repayment of short term borrowings
Repayments of long term borrowings
Proceeds long term borrowings
Net Cash Flows from/(used in) Financing Activities
(11,428)
425
(2,615,131)
1,688,637
(1,233)
(938,730)
(1,360)
(436,844)
(82,500)
(1,048,839)
1,231,283
(517)
(338,777)
133,441
133,441
(436,844)
(436,844)
Net Increase/(decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at the beginning of the Year
Cash and Cash Equivalents at the End of the Year
24
1,380,132
647,067
2,027,199
(27,259)
674,326
647,067
(72,679)
106,897
34,218
(397,369)
504,266
106,897
24
1,557,977
743,927
(274,705)
2,027,199
279,638
588,394
(220,965)
647,067
32,530
2,648
(960)
34,218
60,000
46,897
106,897
Analysis of Cash and Cash Equivalents
Other Investments
Bank overdrafts
Cash and Cash Equivalents at the End of the Year
Note
Company
2014
2013
2014
In Rs. ‘000s
157
NOTES TO THE FINANCIAL STATEMENTS
1.1
Corporate Information
Reporting Entity
John Keells Hotels PLC. is a public limited liability
Company incorporated and domiciled in Sri Lanka and
listed on the Colombo Stock Exchange. The registered
office and principal place of business of the Company is
located at 117, Sir Chittampalam A. Gardiner Mawatha,
Colombo 2. The former registered office of the
Company was at 130, Glennie Street, Colombo 02.
In the Director’s opinion, the Company’s parent
undertaking is John Keells Holdings PLC, which is a
Company incorporated in Sri Lanka.
Consolidated Financial Statements
The financial statements for the year ended 31 March
2014, comprise “the Company” referring to John Keells
Hotels PLC as the holding Company and “the Group”
referring to the companies whose accounts have been
consolidated therein.
There were no significant changes in the nature of
the principal activities of the Company and the Group
during the financial year under review.
Responsibility for Financial Statements
The responsibility of the Directors in relation to the
financial statements is set out in ‘The statement of
Directors’ responsibility on Page 148 of the Annual Report.
Statement of compliance
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 flows, 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 (CA Sri Lanka) and the
requirement of the Companies Act No. 7 of 2007.
1.2
Basis Of Preparation
Bases of Measurement
Approval of Financial Statements
The financial statements for the year ended 31 March
2014 were authorised for issue by the Board of Directors
on 29th May 2014.
The consolidated financial statements have been
prepared on an accrual basis and under the historical
cost convention, other than land and buildings, and
available-for-sale financial assets that have been
measured at fair value.
Principal Activities and Nature of Operations
Holding Company
Presentation and Functional Currency
Subsidiaries and Joint Ventures
The consolidated financial statements are presented
in Sri Lankan Rupees, the Group’s functional and
presentation currency, which is the primary economic
environment in which the Holding Company operates.
Each entity in the Group uses the currency of the
primary economic environment in which they operate
as their functional currency.
The Companies within the Group are shown in the
Group Structure on page 51. The subsidiaries and the
joint venture are involved in the business of hoteliering.
All values are rounded to the nearest rupees thousand
(Rs. ’000) except when otherwise indicated.
John Keells Hotels PLC, the Group’s holding Company,
manages a portfolio of holdings consisting of
hoteliering business, which together constitute the John
Keells Hotels Group.
The significant accounting policies are discussed in
Note 1.4 below.
The indicative US Dollar financial statements on pages
211 to 213 does not form part of the financial statements
prepared in accordance with SLFRS/LKAS.
Basis of consolidation
The consolidated Financial Statements comprise the
financial statements of the Company and its subsidiaries
as at 31st March 2014. The financial statements of the
subsidiaries are prepared in compliance with the Group’s
accounting policies unless otherwise stated.
All intra-group balances, income and expenses,
unrealised gains and losses and dividends resulting
from intra-group transactions are eliminated in full.
Subsidiaries
Subsidiaries are those enterprises controlled by the parent.
Control exists when the parent holds more than 50% of the
voting rights or otherwise has a controlling interest.
Subsidiaries are fully consolidated from the date
of acquisition or incorporation, being the date on
which the Group obtains control, and continue to be
consolidated until the date such control ceases.
The financial statements of the subsidiaries are
prepared for the same reporting period as the parent
Company, which is 12 months ending 31 March, using
consistent accounting policies.
158
NOTES TO THE FINANCIAL STATEMENTS CONTD.
The following subsidiaries have been incorporated
outside Sri Lanka:
Country of
Incorporation
Name
1.3
Accounting Policies
1.3.1
Changes in Accounting Policies
The accounting policies adopted by the Group are
consistent with those used in the previous year except
for the following:
John Keells Hotels Mauritius (Pvt) Ltd
Retirement benefit obligation (Gratuity) – policy
no 1.4.15, which has been changed due to revisions
made to LKAS 19- Employee benefits.
John Keells Maldivian Resorts (Pte) Ltd
Previously, actuarial gain/(loss) was recognised in
the income statement in the year of occurrence.
z
Mauritius
Republic of
Maldives
Tranquility (Pte) Ltd
Revised standard requires recognition of actuarial
gain or loss in full, in the year of occurrence in the
statement of other comprehensive income (OCI).
Fantasea World Investments (Pte) Ltd
The total profits and losses for the year of the Company
and of its subsidiaries included in consolidation are
shown in the consolidated income statement and
statement of other comprehensive income and all assets
and liabilities of the Company and of its subsidiaries
included in consolidation are shown in the statement of
financial position.
Non-controlling interest which represents the portion
of profit or loss and net assets not held by the Group,
are shown as a component of profit for the year in the
consolidated income statement and statement of other
comprehensive income and as a component of equity
in the consolidated statement of financial position,
separately from parent’s shareholders’ equity.
The consolidated cash flow statement includes the cash
flows of the Company and its subsidiaries.
Accordingly, the Group has changed its policy
retrospectively, to recognise actuarial gain / (loss) in
other comprehensive income (OCI).
The change in this accounting policy did not
have an impact on the statement of cash flows or
significant impact on the Group’s Earnings Per
Share.
z
Share-based payment – Policy no 1.4.10, which is
an application of new accounting for share based
payment transactions from the current financial
year.
Comparative information
The presentation and classification of the financial
statements of the previous years have been amended,
where relevant for better presentation and to be
comparable with those of the current year.
1.3.2 Significant Accounting Judgements, Estimates
and Assumptions
The preparation of the Financial Statements of the
Group require the management to make judgements,
estimates and assumptions, which may affect the
amounts of income, expenditure, assets , liabilities
and the disclosure of contingent liabilities, at the end
of the reporting period. In the process of applying the
Group’s accounting policies, the key assumptions made
relating to the future and the sources of estimation at the
reporting date together with the related judgements that
have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Valuation of property, plant and equipment.
The Group measures land and buildings at revalued
amounts with changes in fair value being recognised
in other comprehensive income and in the statement
of equity. The Group engaged independent valuation
specialists to determine fair value of identified land and
buildings.
The valuer has used valuation techniques such as
market values and discounted cash flow methods where
there was lack of comparable market data available
based on the nature of the property.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset
or cash generating unit exceeds its recoverable amount,
which is the higher of its fair value less costs to sell and
its value in use (VIU). The fair value less costs to sell
calculation is based on available data from an active
market, in an arm’s length transaction, of similar assets
or observable market prices less incremental costs for
disposing of the asset. The value in use calculation is
based on a discounted cash flow model. The cash flows
159
are derived from the budget for the next five years and
do not include restructuring activities that the Group is
not yet committed to or significant future investments
that will enhance the asset’s performance of the cash
generating unit being tested. The recoverable amount
is most sensitive to the discount rate used for the
discounted cash flow model as well as the expected
future cash inflows and the growth rate used for
extrapolation purposes. The key assumptions used to
determine the recoverable amount for the different
cash generating units, are further explained in Note 16.
Taxes
The Group is subject to income tax and other taxes
including VAT. Significant judgement was required to
determine the total provision for current, deferred and
other taxes due to uncertainties that exist, in respect to
the interpretation of the applicability of tax laws, at the
time of the preparation of these financial statements.
Uncertainties also exist with respect to the interpretation
of complex tax regulations and the amount and timing of
future taxable income. Given the wide range of business
relationships and the long-term nature and complexity
of existing contractual agreements, differences arising
between the actual results and the assumptions made, or
future changes to such assumptions, could necessitate
future adjustments to tax income and expense already
recorded. Accordingly, based on such reasonable
estimates the Group establishes the provisions to be
made in the financial year.
Deferred tax assets are recognised for all unused tax
losses to the extent that it is probable that taxable profit
will be available in the future against which the losses
can be utilised. Significant management judgement is
required to determine the amount of deferred tax assets
that can be recognised, based upon the likely timing
and the level of future taxable profits together with
future tax planning strategies.
discounted cash flow model. The inputs to these models
are taken from observable markets where possible.
The Group has tax losses carried forward amounting
to Rs. 2,491 million (2013 - Rs. 2,094 million). These
losses relate to subsidiaries that have a history of
losses that do not expire and may not be used to offset
other tax liabilities and where the subsidiaries have no
taxable temporary differences nor any tax planning
opportunities available that could partly support
the recognition of these losses as deferred tax assets.
Further details on taxes are disclosed in Note 9 in the
financial statements.
Where this is not feasible, a degree of judgement is
required in establishing fair values. The judgements
include considerations of inputs such as liquidity risk,
credit risk and volatility. Changes in assumptions about
these factors could affect the reported fair value of
financial instruments.
Deferred tax for tax holiday companies
Deferred tax during the tax holiday period for Group
companies under BOI tax holidays has been recognised
for temporary differences, where reversals of such
differences extend beyond the tax exemption period.
Employee Benefit Liability
The employee benefit liability of the Group is based
on the actuarial valuation carried out by Independent
actuarial specialist. The actuarial valuations involve
making assumptions about discount rates and future
salary increases. The complexity of the valuation, the
underlying assumptions and its long term nature, the
defined benefit obligation is highly sensitive to changes
in these assumptions. All assumptions are reviewed
at each reporting date. Details of the key assumptions
used in estimating the employee benefit liability are
contained in Note 30 to the financial statements.
Fair value of financial instruments
Where the fair value of financial assets and financial
liabilities recorded in the statement of financial position
cannot be derived from active markets, their fair value
is determined using valuation techniques including the
1.4.
Summary of Significant Accounting Policies
1.4. 1. Revenue recognition
Revenue is recognised to the extent that it is probable
that the economic benefits will flow to the Group,
and the revenue and associated costs incurred or to
be incurred can be reliably measured. Revenue is
measured at the fair value of the consideration received
or receivable, net of trade discounts and value added
taxes, after eliminating sales within the Group.
The following specific criteria are used for recognition
of revenue:
Rendering of services
Revenue from rendering of services is recognised in the
accounting period in which the services are rendered or
performed.
Room revenue is recognised on the rooms occupied on
a daily basis and food and beverage and other related
sales are accounted for at the time of sale.
Turnover based taxes
Turnover based taxes include value added tax,
economic service charge, nation building tax,
Pradeshiya Sabha levies and tourism development levy.
Companies in the Group pay such taxes in accordance
with the respective statutes.
160
Dividend
Dividend income is recognised when the Group’s right
to receive the payment is established.
Finance income
Finance income comprises interest income on funds
invested (including available-for-sale financial assets),
gains on the disposal of available-for-sale financial
assets.
Interest income or expense is recorded using the
effective interest rate (EIR), which is the rate that exactly
discounts the estimated future cash payments or receipts
through the expected life of the financial instrument or
a shorter period, where appropriate, to the net carrying
amount of the financial asset or liability. Interest income
is included in finance income in the income statement.
Gains and losses
Net gains and losses of a revenue nature arising from
the disposal of property, plant and equipment and
other non-current assets, including investments, are
accounted for in the income statement, after deducting
from the proceeds on disposal, the carrying amount of
such assets and the related selling expenses.
Gains and losses arising from activities incidental to the
main revenue generating activities and those arising from
a group of similar transactions, which are not material
are aggregated, reported and presented on a net basis.
All expenditure incurred in the running of the business
and in maintaining the property, plant and equipment
in a state of efficiency has been charged to the income
statement.
For the purpose of presentation of the income
statement, the “function of expenses” method has been
adopted, on the basis that it presents fairly the elements
of the Company and Group’s performance.
Finance costs
Finance costs comprise interest expense on borrowings,
unwinding of the discount on provisions, losses
on disposal of available for- sale financial assets,
impairment losses recognised on financial assets
(other than trade receivables) that are recognised in the
income statement.
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost
of the respective assets. All other borrowing costs are
expensed in the period they occur. Borrowing costs
consist of interest and other costs that the Group incurs
in connection with the borrowing of funds.
1.4.3
Intangible Assets
Basis of recognition
Other income is recognised on an accrual basis.
An intangible asset is recognised if it is probable that
future economic benefits associated with the asset
will flow to the Group and the cost of the asset can be
reliably measured.
1.4. 2 Expenditure recognition
Business combinations & goodwill
Expenses are recognised in the income statement
on the basis of a direct association between the cost
incurred and the earning of specific items of income.
Acquisitions of subsidiaries are accounted for using the
acquisition method of accounting. The Group measures
goodwill at the acquisition date as the fair value of the
Other income
consideration transferred including the recognised
amount of any non-controlling interests in the
acquiree, less the net recognised amount (generally fair
value) of the identifiable assets acquired and liabilities
assumed, all measured as of the acquisition date.
When the excess is negative, a bargain purchase gain is
recognised immediately in the income statement.
The Group elects on a transaction-by-transaction
basis whether to measure non-controlling interests
at fair value, or at their proportionate share of the
recognised amount of the identifiable net assets, at the
acquisition date. Transaction costs, other than those
associated with the issue of debt or equity securities,
that the Group incurs in connection with a business
combination are expensed as incurred.
When the Group acquires a business, it assesses the
financial assets and liabilities assumed for appropriate
classification and designation in accordance with
the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date.
If the business combination is achieved in stages, the
acquisition date fair value of the acquirer’s previously
held equity interest in the acquiree is re measured
to fair value at the acquisition date through income
statement.
Any contingent consideration to be transferred by
the acquirer will be recognised at fair value at the
acquisition date. Contingent consideration which is
deemed to be an asset or liability, which is a financial
instrument and within the scope of LKAS 39, is
measured at fair value with changes in fair value
either in the income statement or as a charge to other
comprehensive income. If the contingent consideration
is classified as equity, it will not be re measured.
Subsequent settlement is accounted for within equity.
161
In instances where the contingent consideration does
not fall within the scope of LKAS 39, it is measured in
accordance with the appropriate SLFRS/LKAS.
After initial recognition, goodwill is measured at cost
less any accumulated impairment losses. Goodwill is
reviewed for impairment, annually or more frequently
if events or changes in circumstances indicate that the
carrying value maybe impaired.
For the purpose of impairment testing, goodwill
acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash
generating units that are expected to benefit from the
combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
Impairment is determined by assessing the recoverable
amount of the cash-generating unit to which the
goodwill relates. Where the recoverable amount of the
cash generating unit is less than the carrying amount,
an impairment loss is recognised. The impairment loss
is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets
pro-rata to the carrying amount of each asset in the unit.
Goodwill and fair value adjustments arising on the
acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at
the closing rate.
Where goodwill forms part of a cash-generating unit
and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is
included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation.
Goodwill disposed of in this circumstance is measured
based on the relative values of the operation disposed of
and the portion of the cash-generating unit retained.
1.4.4
Interest in Joint venture
A joint venture is a jointly controlled entity, whereby
the Group and other parties have a contractual
arrangement that establishes joint control over the
economic activities of the entity.
The agreement requires unanimous agreement for
financial and operating decisions among the ventures.
The Group recognises its interest in the joint venture
using the proportionate consolidation method until the
date on which the Group ceases to have joint control. The
Group’s share of each of the assets, liabilities, income
and expenses of the joint venture are combined with
similar items, line by line, in the consolidated financial
statements. The financial statements of the joint venture
are aligned to the Group accounting policies.
The gains or losses arising from transactions between
Group and the joint venture are recognised based on
the substance of the transactions. The Group’s share of
unrealised gain on asset purchases is not recognised
until such assets are resold to a third party. Losses on
these transactions are recognised immediately if the loss
provides evidence of a reduction in the net realisable value
of current assets or an impairment loss. The joint venture
is proportionately consolidated until the date on which the
Group ceases to have joint control over the joint venture.
Joint ventures entered into by the Group, which
have been accounted for under the proportionate
consolidation method are:
Name
Country of
Incorporation
Sentinel Realty Pvt Ltd
Sri Lanka
Financial statements of joint ventures are
proportionately consolidated using their respective 12
month financial reporting period drawn to 31 March.
Upon loss of joint control, the Group measures and
recognises its remaining investment at its fair value.
Any differences between the carrying amount of the
former jointly controlled entity upon loss of joint control
and the fair value of the remaining investment and
proceeds from disposal are recognised in the income
statement. When the remaining investment constitutes
significant influence, it is accounted for as investment in
an associate.
1.4.5
Foreign currency translation
Foreign currency transactions and balances
The consolidated financial statements are presented in
Sri Lankan rupees, which is the Company’s functional
and presentation currency.
The functional currency is the currency of the primary
economic environment in which the entities of the
Group operate.
All foreign exchange transactions are converted to
functional currency, at the rates of exchange prevailing
at the time the transactions are effected.
Monetary assets and liabilities denominated in
foreign currency are translated to functional currency
equivalents at the spot exchange rate prevailing at the
reporting date.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates as at the dates of the initial
transactions. Non-monetary assets and liabilities are
translated using exchange rates that existed when the
values were determined. The gain or loss arising on
translation of non-monetary items is recognised in line
with the gain or loss of the item that gave rise to the
translation difference.
162
Foreign operations
The statement of financial position and income
statement of overseas subsidiaries and joint ventures
which are deemed to be foreign operations are
translated to Sri Lankan rupees at the rate of exchange
prevailing as at the reporting date and at the average
annual rate of exchange for the period respectively.
The exchange rates applicable during the period were
as follows:
Reporting Date
US dollar
Income Statement
2014
Rs.
2013
Rs.
2014
Rs.
2013
Rs.
130.70
126.75
130.09
126.75
The exchange differences arising on the translation
are taken directly to other comprehensive income. On
disposal of a foreign entity, the deferred cumulative
amount recognised in other comprehensive income
relating to that particular foreign operation is
recognised in the income statement.
The Group treated goodwill and any fair value
adjustments to the carrying amounts of assets and
liabilities arising on the acquisition as assets and
liabilities of the parent. Therefore, those assets and
liabilities are non-monetary items already expressed
in the functional currency of the parent and no further
translation differences occur.
1.4.6
Tax
Current tax
Current tax assets and liabilities for the current and
prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted, at
the reporting date in the countries where the Group
operates and generates taxable income.
Current income tax relating to items recognised
directly in equity is recognised in equity and for
items recognised in other comprehensive income is
recognised in other comprehensive income and not
in the income statement. Management periodically
evaluates positions taken in the tax returns with
respect to situations in which applicable tax regulations
are subject to interpretation and establishes provisions
where appropriate.
Deferred tax
Deferred tax is provided using the liability method on
temporary differences at the reporting date between
the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
z
where the deferred tax liability arises from the
initial recognition of goodwill or of an asset or
liability in a transaction that is not a business
combination and, at the time of the transaction,
affects neither the accounting profit nor taxable
profit or loss and
z
in respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, where
the timing of the reversal of the temporary
differences can be controlled and it is probable that
the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, and unused tax credits and tax
losses carried forward, to the extent that it is probable
that taxable profit will be available against which the
deductible temporary differences and the unused tax
credits and tax losses carried forward can be utilised
except:
z
where the deferred income tax asset relating to
the deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
q||²ÍǱĿ¼¾²æÇĿ²¾ĿÇqÜq{¦Ŀ¼¾²æÇĿ²¾Ŀ¦²ÂÂĿqƓ
z
in respect of deductible temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, deferred
tax assets are recognised only to the extent that it is
probable that the temporary differences will reverse
in the foreseeable future and taxable profit will be
available against which the temporary differences
can be utilised.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred tax asset
to be utilised. Unrecognised deferred tax assets are
reassessed at each reporting date and are recognised
to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be
recovered.
Deferred tax assets and liabilities are measured at
tax rates that are expected to apply to the year when
the asset is realised or liability is settled, based on
the tax rates and tax laws that have been enacted or
substantively enacted as at the reporting date.
Deferred tax relating to items recognised outside
income statement is recognised outside income
163
statement. Deferred tax items are recognised in
correlation to the underlying transaction either in
other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are
offset, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
when the deferred taxes relate to the same taxable
entity and the same taxation authority.
Sales tax
Revenues, expenses and assets are recognised net of the
amount of sales tax except:
z
where the sales tax incurred on a purchase of asset
or service is not recoverable from the taxation
authority, in which case the sales tax is recognised
as part of the cost of acquisition of the asset or as
part of the expense item as applicable and
z
receivables and payable that are stated with the
amount of sales tax included.
The net amount of sales tax recoverable from, or
payable to, the taxation authority is included as part
of receivables or payable in the statement of financial
position.
1.4.7
Basis of recognition
Property, plant and equipment are recognised if it is
probable that future economic benefits associated with
the asset will flow to the Group and the cost of the asset
can be reliably measured.
Basis of measurement
Plant and equipment are stated at cost less accumulated
depreciation and any accumulated impairment loss.
Such cost includes the cost of replacing component
parts of the plant and equipment and borrowing costs
for long-term construction projects if the recognition
criteria are met. When significant parts of plant and
equipment are required to be replaced at intervals, the
Group de-recognises the replaced part, and recognises
the new part with its own associated useful life. All
other repair and maintenance costs are recognised in
the income statement as incurred.
Land and buildings are measured at fair value
less accumulated depreciation on buildings and
impairment charged subsequent to the date of the
revaluation.
The carrying values of property, plant and equipment
are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not
be recoverable.
Where land and buildings are subsequently revalued,
the entire class of such assets is revalued at fair value
on the date of revaluation. The Group has adopted a
guideline of revaluing assets by a professional valuer at
least once in every five years.
Any revaluation surplus is recognised in other
comprehensive income and accumulated in equity in
the asset revaluation reserve, except to the extent that
it reverses a revaluation decrease of the same asset
previously recognised in the income statement, in
which case the increase is recognised in the income
statement. A revaluation deficit is recognised in the
income statement, except to the extent that it offsets
an existing surplus on the same asset recognised in the
asset revaluation reserve.
Accumulated depreciation as at the revaluation date
is eliminated against the gross carrying amount of the
asset and the net amount is restated to the revalued
amount of the asset. Upon disposal, any revaluation
reserve relating to the particular asset being sold is
transferred to retained earnings.
De-recognition
An item of property, plant and equipment are
derecognised upon replacement, disposal or when no
future economic benefits are expected from its use. Any
gain or loss arising on de-recognition of the asset is
included in the income statement in the year the asset
is derecognised.
Depreciation
Depreciation is calculated by using a straight-line
method on the cost or valuation of all property, plant
and equipment, commencing from the month of
purchase and no depreciation is provided in the month
of disposal, other than freehold land, in order to write
off such amounts over the estimated useful economic
life of such assets or over the unexpired period of lease,
whichever is lower.
Each part of an item of property, plant and equipment
with a cost that is significant in relation to the total cost
of the item shall be depreciated separately.
164
The estimated useful life of assets is as follows:
Assets
Buildings on leasehold land
Years
Estimated lease
period
Buildings freehold land
30 - 60
Plant and machinery
03 - 10
Equipment
05 - 08
Furniture and fittings
05 - 08
Motor vehicles
05
Computer equipment
05
Cutlery, crockery and glassware
and linen
03
Marine vessels
04 - 05
The asset’s residual values and useful lives are reviewed,
and adjusted if appropriate, at each financial year end.
1.4.8
Leases
The determination of whether an arrangement is,
or contains, a lease is based on the substance of the
arrangement at the inception date, whether fulfillment
of the arrangement is dependent on the use of a specific
asset or assets or the arrangement conveys a right to
use the asset, even if that right is not explicitly specified
in an arrangement.
leased property or, if lower, at the present value of
the minimum lease payments. Lease payments are
apportioned between finance charges and reduction
of the lease liability so as to achieve a constant rate
of interest on the remaining balance of the liability.
Finance charges are recognised in finance costs in the
income statement.
A leased asset is depreciated over the useful life of the
asset. However, if there is no reasonable certainty that
the Group will obtain ownership by the end of the
lease term, the asset is depreciated over the shorter
of the estimated useful life of the asset and the lease
term. Operating lease payments are recognised as
an operating expense in the income statement on a
straight-line basis over the lease term.
1.4.9
Prepaid lease rentals paid to acquire land use rights
are amortised over the lease term. Details of the
leasehold property are given in Note 15 to the financial
statements.
1.4.10 Employee Share Option Plan
Employees of the Group receive remuneration in the
form of share-based payment transactions, whereby
employees render services as consideration for equity
instruments (equity-settled transactions).
For arrangements entered into prior to 1 April 2011,
the date of inception is deemed to be 1 April 2012 in
accordance with SLFRS 1.
The Group applies SLFRS 2 Share Based Payments in
accounting for employee remuneration in the form of
shares from financial year 2013/14 onwards.
Group as a lessee
Equity-settled transactions
Finance leases which transfer to the Group
substantially all the risks and benefits incidental to
ownership of the leased item, are capitalised at the
commencement of the lease at the fair value of the
The cost of equity-settled transactions is recognised,
together with a corresponding increase in other
capital reserves in equity, over the period in which
the performance and service conditions are fulfilled.
The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting
date reflects the extent to which the vesting period has
expired and the Group’s best estimate of the number of
equity instruments that will ultimately vest.
The income statement expense or credit for a period
represents the movement in cumulative expense
recognised as at the beginning and end of that period
and is recognised in the share based payment plan. (See
Note 27.3)
No expense is recognised for awards that do not
ultimately vest, except for equity-settled transactions
where vesting is conditional upon a market or
non-vesting condition, which are treated as vesting
irrespective of whether or not the market or nonvesting condition is satisfied, provided that all other
performance and service conditions are satisfied.
Where the terms of an equity-settled transaction award
are modified, the minimum expense recognised is the
expense as if the terms had not been modified, if the
original terms of the award are met. An additional
expense is recognised for any modification that
increases the total fair value of the share-based
payment transaction, or is otherwise beneficial to the
employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated
as if it vested on the date of cancellation, and any
expense not yet recognised for the award is recognised
immediately. This includes any award where nonvesting conditions within the control of either the
entity or the employee are not met. However, if a new
award is substituted for the cancelled award, and
designated as a replacement award on the date that it
is granted, the cancelled award and the new award are
165
treated as if they were a modification of the original
award, as described in the previous paragraph.
1.4.11 Financial instruments — initial recognition and
subsequent measurement
i) Financial assets
Initial recognition and measurement
Financial assets within the scope of LKAS 39 are
classified as financial assets at fair value through
income statement, loans and receivables, held-tomaturity investments, available-for-sale financial
assets, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. The
Group determines the classification of its financial
assets at initial recognition.
All financial assets are recognised initially at fair value
plus, in the case of assets not at fair value through
income statement, directly attributable transaction
costs.
The Group’s financial assets include cash and shortterm deposits, trade and other receivables, loans and
other receivables, quoted and unquoted financial
instruments.
Subsequent measurement
The subsequent measurement of financial assets
depends on their classification as follows:
Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not
quoted in an active market. After initial measurement,
such financial assets are subsequently measured at
amortised cost using the effective interest rate method
(EIR), less impairment. Amortised cost is calculated
by taking into account any discount or premium on
acquisition and fees or costs that are an integral part
of the EIR. The EIR amortisation is included under
finance income under the income statement. The losses
arising from impairment are recognised in the income
statement.
Available-for-sale financial investments
Available-for-sale financial investments include equity
investments. Equity investments classified as availablefor-sale are those, which are neither classified as held
for trading nor designated at fair value through income
statement.
After initial measurement, available-for-sale financial
investments are subsequently measured at fair value
with unrealised gains or losses recognised as other
comprehensive income in the available-for-sale reserve
until the investment is derecognised, at which time
the cumulative gain or loss is recognised in other
operating income, or determined to be impaired, at
which time the cumulative loss is reclassified to the
income statement in finance costs and removed from
the available-for-sale reserve.
The Group evaluates its available-for-sale financial
assets to determine whether the ability and intention
to sell them in the near term is still appropriate. When
the Group is unable to trade these financial assets due
to inactive markets and management’s intention to
do so significantly changes in the foreseeable future,
the Group may elect to reclassify these financial assets
in rare circumstances. Reclassification to loans and
receivables is permitted when the financial assets meet
the definition of loans and receivables and the Group
has the intent and ability to hold these assets for the
foreseeable future or until maturity. Reclassification to
the held-to-maturity category is permitted only when
the entity has the ability and intention to hold the
financial asset accordingly.
For a financial asset reclassified out of the availablefor-sale category, any previous gain or loss on that
asset that has been recognised in equity is amortised
to income statement over the remaining life of the
investment using the EIR. Any difference between
the new amortised cost and the expected cash flows
is also amortised over the remaining life of the asset
using the EIR. If the asset is subsequently determined
to be impaired, then the amount recorded in equity is
reclassified to the income statement.
Derecognition
A financial asset (or, where applicable a part of a
financial asset or part of a group of similar financial
assets) is derecognised when:
z
The rights to receive cash flows from the asset have
expired
z
The Group has transferred its rights to receive cash
flows from the asset or has assumed an obligation
to pay the received cash flows in full without
material delay to a third party under a ‘passthrough’ arrangement; and either (a) the Group has
transferred substantially all the risks and rewards
of the asset, or (b) the Group has neither transferred
nor retained substantially all the risks and rewards
of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive
cash flows from an asset or has entered into a passthrough arrangement, and has neither transferred
nor retained substantially all of the risks and rewards
of the asset nor transferred control of it, the asset is
recognised to the extent of the Group’s continuing
involvement in it.
166
In that case, the Group also recognises an associated
liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights
and obligations that the Group has retained.
Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the
lower of the original carrying amount of the asset and
the maximum amount of consideration that the Group
could be required to repay.
If the Group determines that no objective evidence of
impairment exists for an individually assessed financial
asset, whether significant or not, it includes the asset
in a Group of financial assets with similar credit risk
characteristics and collectively assesses them for
impairment. Assets that are individually assessed
for impairment and for which an impairment loss is,
or continues to be, recognised are not included in a
collective assessment of impairment.
ii) Impairment of financial assets
If there is objective evidence that an impairment loss
has been incurred, the amount of the loss is measured
as the difference between carrying amount of the asset
and the present value of estimated future cash flows
(excluding future expected credit losses that have not
yet been incurred). The present value of the estimated
future cash flows is discounted at the financial asset’s
original effective interest rate.
The Group assesses at each reporting date whether
there is any objective evidence that a financial asset or
a Group of financial assets is impaired. A financial asset
or a Group of financial assets is deemed to be impaired
if, and only if, there is objective evidence of impairment
as a result of one or more events that has occurred
after the initial recognition of the asset (an incurred
‘loss event’) and that loss event has an impact on the
estimated future cash flows of the financial asset or the
Group of financial assets that can be reliably estimated.
Evidence of impairment may include indications
that the debtors or a Group of debtors is experiencing
significant financial difficulty, default or delinquency
in payments, the probability that they will enter
bankruptcy or other financial reorganisation and
where observable data indicate that there is a
measurable decrease in the estimated future cash flows,
such as changes in arrears or economic conditions that
correlate with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the
Group first assesses whether objective evidence of
impairment exists individually for financial assets
that are individually significant, or collectively for
financial assets that are not individually significant.
The carrying amount of the asset is reduced through
the use of an allowance account and the amount of the
loss is recognised in the income statement. Amounts
receivable together with the associated allowance are
written off when there is no realistic prospect of future
recovery and all collateral has been realised or has been
transferred to the Group. If, in a subsequent year, the
amount of the estimated impairment loss increases
or decreases because of an event occurring after the
impairment was recognised, the previously recognised
impairment loss is increased or reduced by adjusting
the allowance account. If a future write-off is later
recovered, the recovery is credited to other income in
the income statement.
Available-for-sale financial investments
For available-for-sale financial investments, the
Group assesses at each reporting date whether there
is objective evidence that an investment or a Group of
investments is impaired.
In the case of equity investments classified as availablefor-sale, objective evidence would include a significant
or prolonged decline in the fair value of the investment
below its cost. ‘Significant’ is evaluated against the
original cost of the investment and ‘prolonged’ against
the period in which the fair value has been below its
original cost. Where there is evidence of impairment,
the cumulative loss — measured as the difference
between the acquisition cost and the current fair
value, less any impairment loss on that investment
previously recognised in the income statement — is
removed from other comprehensive income and
recognised in the income statement. Impairment
losses on equity investments are not reversed through
the income statement; increases in their fair value
after impairment are recognised directly in other
comprehensive income.
In the case of debt instruments classified as availablefor-sale, impairment is assessed based on the same
criteria as financial assets carried at amortised cost.
However, the amount recorded for impairment is the
cumulative loss measured as the difference between
the amortised cost and the current fair value, less
any impairment loss on that investment previously
Future interest income continues to be accrued based
on the reduced carrying amount of the asset, using
the rate of interest used to discount the future cash
flows for the purpose of measuring the impairment
loss. The interest income is recorded as part of finance
income. If, in a subsequent year, the fair value of
a debt instrument increases and the increase can
be objectively related to an event occurring after
the impairment loss was recognised in the income
statement, the impairment loss is reversed through the
income statement.
167
iii) Financial liabilities
Derecognition
Initial recognition and measurement
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
Financial liabilities within the scope of LKAS 39 are
classified as financial liabilities at fair value through
income statement, loans and borrowings, or as
derivatives designated as hedging instruments in an
effective hedge, as appropriate. The Group determines
the classification of its financial liabilities at initial
recognition.
All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings, carried
at amortised cost. This includes directly attributable
transaction costs.
The Group’s financial liabilities include trade and
other payable, bank overdrafts, loans and borrowings,
financial guarantee contracts.
Subsequent measurement
The measurement of financial liabilities depends on
their classification as follows:
Loans and borrowings
After initial recognition, interest bearing loans and
borrowings are subsequently measured at amortised
cost using the effective interest rate method. Gains and
losses are recognised in the income statement when
the liabilities are derecognised as well as through the
effective interest rate method (EIR) amortisation process.
Amortised cost is calculated by taking into account
any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR
amortisation is included under finance costs in the
income statement.
When an existing financial liability is replaced
by another from the same lender on substantially
different terms, or the terms of an existing liability
are substantially modified, such an exchange or
modification is treated as a derecognition of the
original liability and the recognition of a new liability,
and the difference in the respective carrying amounts is
iv) Offsetting of financial instruments
Financial assets and financial liabilities are offset and
the net amount reported in the consolidated statement
of financial position if, and only if, there is a currently
enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net
basis, or to realise the assets and settle the liabilities
simultaneously.
v) Fair value of financial instruments
The fair value of financial instruments that are traded
in active markets at each reporting date is determined
by reference to quoted market prices, without any
deduction for transaction cost.
For financial instruments not traded in an active
market, the fair value is determined using appropriate
valuation techniques. Such techniques may include
using recent arm’s length market transactions;
reference to the current fair value of another
instrument that is substantially the same; a discounted
cash flow analysis or other valuation models.
An analysis of fair values of financial instruments
and further details as to how they are measured are
provided in Note 12.3.
1.4.12 Impairment of non-financial assets
The Group assesses at each reporting date whether
there is an indication that an asset may be impaired. If
any such indication exists, or when annual impairment
testing for an asset is required, the Group makes an
estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or cash
generating unit’s fair value less costs to sell and its value
in use and is determined for an individual asset, unless
the asset does not generate cash inflows that are largely
independent of those from other assets or Groups of
assets. Where the carrying amount of an asset exceeds
its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount. In
assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time
value of money and the risks specific to the asset.
Impairment losses are recognised in the income
statement, except that, impairment losses in respect of
property, plant and equipment previously revalued are
recognised against the revaluation reserve through the
statement of other comprehensive income to the extent
that it reverses a previous revaluation surplus.
An assessment is made at each reporting date as
to whether there is any indication that previously
recognised impairment losses may no longer exist
or may have decreased. If such indication exists,
the recoverable amount is estimated. A previously
recognised impairment loss is reversed only if there has
been a change in the estimates used to determine the
168
asset’s recoverable amount since the last impairment loss
was recognised. If that is the case, the carrying amount
of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation,
had no impairment loss been recognised for the asset
in prior years. Such reversal is recognised in the income
statement unless the asset is carried at revalued amount,
in which case the reversal is treated as a revaluation
increase. After such a reversal, the depreciation charge is
adjusted in future periods to allocate the asset’s revised
carrying amount, less any residual value, on a systematic
basis over its remaining useful life.
The following criteria are also applied in assessing
impairment of specific assets:
Goodwill
Goodwill is tested for impairment annually and when
circumstances indicate that the carrying value may be
impaired.
Impairment is determined for goodwill by assessing the
recoverable amount of each cash-generating unit (or
Group of cash-generating units) to which the goodwill
relates. Where the recoverable amount of the cash
generating unit is less than their carrying amount,
an impairment loss is recognised. Impairment losses
relating to goodwill cannot be reversed in future periods.
1.4.13 Inventories
Inventories are valued at the lower of cost and net
realisable value. Net realisable value is the estimated
selling price less estimated costs of completion and the
estimated costs necessary to make the sale.
The costs incurred in bringing inventories to its present
location and condition, are accounted for as follows:
Food and Beverage
- On a weighted average basis
House Keeping and
Maintenance
- On a weighted average basis
Other inventories
- At actual cost
1.4.14 Cash and cash equivalents
Cash and short-term deposits in the statement of
financial position comprise cash at banks and in hand
and short-term deposits with a maturity of three
months or less.
For the purpose of the cash flow statement, cash
and cash equivalents consist of cash and short-term
deposits as defined above, net of outstanding bank
overdrafts.
1.4.15 Defined benefit obligation - gratuity
The liability recognised in the statement of financial
position is the present value of the defined benefit
obligation at the reporting date using the projected unit
credit method. Any actuarial gains or losses arising are
recognised in other comprehensive income.
1.4.16 Defined contribution plan - Employees’ Provident
Fund and Employees’ Trust Fund
Employees are eligible for Employees’ Provident Fund
contributions and Employees’ Trust Fund contributions
in line with respective statutes and regulations. The
Group contributes the defined percentages of gross
emoluments of employees to an approved Employees’
Provident Fund and to the Employees’ Trust Fund
respectively, which are externally funded.
1.4.17 Government grants
Grants are recognised where there is reasonable
assurance that the grant will be received and all
attached conditions will be complied with. When
the grant relates to an expense item, it is recognised
as income over the period necessary to match to the
costs, that it is intended to compensate. Where the
grant relates to an asset, the fair value is credited to a
deferred income account and is released to the income
statement over the expected useful life of the relevant
asset by equal annual instalments.
Where the Group receives non-monetary grants, the
asset and the grant are recorded gross at nominal
amounts and released to the income statement over
the expected useful life and pattern of consumption
of the benefit of the underlying asset by equal annual
instalments.
1.4.18 Provisions, contingent assets and contingent
liabilities
Provisions are recognised when the Group has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of
the amount of the obligation. Where the Group expects
some or all of a provision to be reimbursed, for example
under an insurance contract, the reimbursement
is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense
relating to any provision is presented in the income
statement net of any reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
169
that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the
provision due to the passage of time is recognised as a
finance cost.
All contingent liabilities are disclosed as a note to the
financial statements unless the outflow of resources is
remote.
Contingent assets are disclosed, where inflow of
economic benefit is probable.
1.5 Sri Lanka Accounting Standards (SLFRS/LKAS)
issued but not yet effective
The following SLFRS have been issued by CA Sri Lanka
that have an effective date in the future and have not
been applied in preparing these financial statements.
Those SLFRS will have an effect on the accounting
policies currently adopted by the Group and may have
an impact on the future financial statements.
(i) SLFRS 9 -Financial Instruments: Classification and
Measurement
SLFRS 9, as issued reflects the first phase of work on
replacement of LKAS 39 and applies to classification
and measurement of financial assets and liabilities.
This standard was originally effective for annual
periods commencing on or after 01 January 2015.
However the effective date has been deferred
subsequently and the revised effective date is yet to be
announced.
(ii) SLFRS 13 -Fair Value Measurement
SLFRS 13 establishes a single source of guidance under
SLFRS for all fair value measurements.
This standard will be effective for annual periods
beginning on or after 01 January 2014.
However use of fair value measurement principles
contained in this standard are currently recommended.
In addition to the above, following standards will also
be effective for annual periods commencing on or after
01 January 2014.
SLFRS 10 -Consolidated financial statements
SLFRS 11 - Joint Arrangements
SLFRS 12 -Disclosure of Interests in Other Entities
The above parcel of three standards will impact the
recognition, measurement and disclosures aspects
currently contained in LKAS 27 - Consolidated and
separate financial statements, LKAS 28 - Investments
in associates ,LKAS 31 - Interest in joint ventures and
SIC-12 and SIC 13 which are on consolidation of special
purpose entities(SPEs) and jointly controlled entities
respectively.
Establishing a single control model that applies to
all entities including Special Purpose Entities and
removal of the option to proportionately consolidate
jointly controlled entities are the significant changes
introduced under SLFRS 10 and SLFRS 11 respectively.
SLFRS 12, establishes a single standard on disclosures
related to interests in other entities. This incorporates
new disclosures as well as disclosures currently
required under LKAS 27, LKAS 28 and LKAS 31.
Based on the preliminary analysis performed, the above
Standards on adoption are not expected to have any
material impact on the financial statements.
1.6
Segment Information
Operating segments
The Group’s segments are determined based on the
Group’s geographical spread of operations.
The Group’s internal organisation and management is
structured based on the Group’s geographical spread of
operations. The geographical analysis of turnover and
profits are based on the location of the operations.
170
2
OPERATING SEGMENTS
The following tables present revenue, profit information, segment assets and segment liabilities regarding the Group’s operating segments.
In Rs. ‘000s
Sri Lanka
Maldives
Group Total
2014
2013
2014
2013
2014
2013
4,895,323
(17,755)
4,877,568
3,845,884
(17,153)
3,828,731
6,141,463
(52,650)
6,088,813
5,512,850
5,512,850
11,036,786
(70,405)
10,966,381
9,358,734
(17,153)
9,341,581
809,249
15,928
(444,369)
145,754
526,562
(131,794)
394,768
527,922
22,318
(390,390)
36,940
196,790
(57,472)
139,318
1,308,050
140,085
(89,508)
8,051
1,366,677
(186,519)
1,180,158
1,109,892
121,001
(146,706)
1,919
1,086,106
(104,405)
981,701
2,117,299
156,013
(533,877)
153,805
1,893,239
(318,313)
1,574,926
1,637,814
143,319
(537,096)
38,859
1,282,896
(161,877)
1,121,019
13,767,548
13,109,022
12,029,977
11,484,709
25,797,525
670,407
26,467,932
24,593,731
670,407
25,264,138
5,624,507
5,656,414
2,647,169
3,220,913
8,271,676
8,271,676
8,877,327
8,877,327
Others
Purchase of property, plant and equipment
337,804
2,137,995
272,232
302,345
610,036
610,036
2,440,340
2,440,340
Depreciation of property, plant and equipment
566,337
430,807
252,852
220,203
819,189
819,189
651,010
651,010
Amortisation of leasehold properties
3,507
3,507
663,156
734,838
666,663
666,663
738,345
738,345
Provision for retirement benefit costs
21,010
18,821
-
-
21,010
21,010
18,821
18,821
Net Revenue
Less: inter segment revenue
Segment revenue
Segment operating profit
Finance costs
Finance income
Profit before taxation
Taxation
Assets
Segment assets
Goodwill
Total assets
Liabilities
Segment liabilities
Total liabilities
171
Group
For the Year Ended 31st March
In Rs. ‘000s
3
REVENUE
3.1
Summary
Gross revenue
Less: Turnover based taxes
Tourism development levy/bed tax
Turnover tax
Net revenue
Company
2014
2013
2014
2013
11,270,752
9,618,044
-
-
(292,799)
(11,572)
10,966,381
(270,224)
(6,239)
9,341,581
-
-
Value Added Tax and Goods & Services Tax of Rs. 889 Mn (2013 - Rs. 847 Mn) have been deducted in arriving at the gross revenue.
Group
3.2
2013
4,877,568
6,088,813
10,966,381
3,828,731
5,512,850
9,341,581
526,562
1,366,677
1,893,239
196,790
1,086,106
1,282,896
Revenue Analysis of the Group by Geographical Segment
Segment
Sri Lankan hotels
Maldivian hotels
3.3
2014
Profit/(Loss) Before Tax of the Group by Geographical Segment
Segment
Sri Lankan hotels
Maldivian hotels
172
Group
In Rs. ‘000s
4
2014
2013
-
-
382,781
382,781
34,937
34,937
119,294
36,712
7
156,013
100,955
42,039
325
143,319
13,699
13,699
124
7,354
7,478
OTHER OPERATING INCOME
Exchange gain
Other income
Amortisation of grant received
6
2013
DIVIDEND INCOME
Income from investments in related parties
5
Company
2014
OTHER OPERATING EXPENSES
Other Operating Expenses include Power and Energy cost of Rs. 681.6 Mn (2013 - Rs.573.9 Mn) and Maintenance and Repair Cost of Rs. 338.5 Mn (2013 - Rs. 202 Mn).
Group
In Rs. ‘000s
7
NET FINANCE INCOME / (EXPENSE)
7.1
Finance Income
Interest income
7.2
- Related parties
- Others
Company
2014
2013
2014
2013
153,805
153,805
38,859
38,859
534
28,867
29,401
56,334
14,040
70,374
456,506
77,371
533,877
(380,072)
501,080
36,016
537,096
(498,237)
12,398
330
12,728
16,673
7,186
7,186
63,188
Finance expense
Interest expenses on
Long term borrowings
Short term borrowings
Net finance income / (expense)
173
Group
Company
2014
2013
2014
2013
20,061
9,255
19,224
9,383
5,661
1,093
6,624
1,008
21,010
55,395
1,648,517
819,189
5,071
666,663
(1,615)
2,515
(4,201)
215,822
9,616
18,821
46,558
1,078,567
651,010
2,982
738,345
(4,271)
2,274
28,659
190,274
8,044
9,616
8,044
Current income tax
Current tax charge
Under /(over) provision of current tax in respect of prior years
Deemed dividend tax
10% withholding tax on inter company dividends
284,996
(20,666)
7,657
220,828
(48,646)
(533)
3,882
12,068
-
12,839
-
Deferred income tax
Relating to origination and reversal of temporary differences
Tax expense reported
46,326
318,313
(13,654)
161,877
12,068
12,839
In Rs. ‘000s
8
PROFIT BEFORE TAX
Profit before tax from operations is stated after charging all expenses including the following;
Remuneration to directors
Audit fees
Cost of defined employee benefits
Defined benefit plan cost
Defined contribution plan cost-(EPF and ETF)
Staff expenses
Depreciation of property, plant and equipment
Donations
Amortisation of pre-paid lease
Reversal of impairment of bad and doubtful debts
Provision for slow moving inventories
Loss /(profit) on disposal of property, plant and equipment
Operating lease rentals
Business expansion expenses
9
TAX EXPENSE
174
Group
Company
2014
2013
2014
2013
Profit before tax
Dividend income from Group companies
Income capitalised
Consolidation adjustments
Aggregate accounting profit
1,893,239
382,781
(5,755)
2,270,265
1,282,896
34,937
21,446
(3,832)
1,335,477
387,977
387,977
74,955
74,955
Dividends not charged to income tax
Profits not charged to income tax
Exempt profits
Accounting profit/(loss) liable to income tax
(382,781)
(18,207)
1,869,277
(34,937)
(112)
(11,085)
1,289,313
(382,781)
5,196
(34,937)
40,018
287,905
9,027
(2,017)
19,963
24,069
(7,625)
(20,666)
203,679
36,038
(1,150)
13,041
(40,502)
(3,932)
(48,646)
1,455
111
10,502
-
11,205
1,634
-
7,657
318,313
(533)
3,882
161,877
12,068
12,839
32,384
216,326
36,286
284,996
(20,666)
264,330
46,326
23,858
176,224
20,746
220,828
(48,646)
172,182
(13,654)
12,068
12,068
12,068
-
12,839
12,839
12,839
-
7,657
318,313
3,882
(533)
161,877
12,068
12,839
In Rs. ‘000s
9.1
Reconciliation Between Tax Expense and the Product of Accounting Profit
Tax effect on chargeable profits
Tax effect on non deductible expenses
Tax effect on deductions claimed
Net tax effect of unrecognised deferred tax assets for the year
Net tax effect of deferred tax assets in respect of previous year
Utilisation of tax losses
Under / (over) provisions for previous years
Other income based taxes
Deemed dividend tax
Total tax expense
Income tax charged at
Standard rate of 28% (2013-28%)
Income tax charged at 15% (2013-15%)
Concessionary rate of 12% (2013 - 12%)
Under /(over) provision of current tax in respect of prior years
Deferred tax charge / (reversal)
Other income based taxes
Deemed dividend tax
Total tax expense
The Group tax is based on the taxable profit of individual companies within the Group. At present the Tax Laws of Sri Lanka do not provide for Group taxation.
175
Group
In Rs. ‘000s
9.2
Company
2014
2013
2014
2013
97,414
(2,458)
(48,630)
46,326
55,565
(246)
(68,973)
(13,654)
-
-
Deferred Tax Expense
Income statement
Deferred tax arising from
Accelerated depreciation for tax purposes
Employee benefits liability
Benefit arising from tax losses
Total deferred tax charge/(reversal)
Deferred Tax has been computed based on the following rates :
Subsidiary companies in Sri Lanka engaged in promotion of tourism - 12%
Yala Village (Pvt) Ltd and subsidiary companies in Maldives - 15%
Other companies in Sri Lanka - 28%
Group
9.3
2013
2014
2013
2,093,526
(46,363)
546,981
(102,962)
2,491,182
1,272,675
112,862
783,562
(75,573)
2,093,526
-
-
Tax Losses Carried Forward
Tax losses brought forward
Adjustments on finalisation of liability
Tax losses arising during the year
Utilisation of tax losses
Tax losses carried forward
9.4
Company
2014
In Rs. ‘000s
Applicable rates of Income Tax
Companies which operate undertakings for the promotion of tourism in Sri Lanka are liable to tax at the rate of 12% of such income. Other Income is taxed at the rate of 28% .
The following Companies enjoy a full or partial exemptions and concessions under Board of Investment Law.
I
Yala Village (Pvt) Ltd is taxed at a concessionary rate of 15% for a period of 15 years commencing from September 2003.
II Profits and income of Trinco Holiday Resorts (Pvt) Ltd are exempt from tax for a period of 10 years from the year of assessment 2011/12.
III Profits and income of Beruwala Holiday Resorts (Pvt) Ltd are exempt from tax for a period of 8 years commencing from the year in which the Company commences to
make profits or any year of assessment not later than two years reckoned from the date of commencement of commercial operation whichever is earlier. The tax holiday
has still not commenced.
176
9.5
I
Income Tax rates of off-shore Companies
John Keells Hotels Mauritius (Pvt) Ltd is taxed at an effective rate of 3 % .
II The following subsidiaries based in the Republic of Maldives, are subject to Business Profit Tax of 15% with effect from 18th July 2011.
z
z
z
z
Group
10
2013
1,565,846
1,456,147
1.08
1,116,779
1,456,147
0.77
2014
Group
2013
1,456,147
-
436,844
1,456,147
0.30
EARNINGS PER SHARE
Profit attributable to equity holders of the parent (Rs. ‘000s)
Weighted average number of ordinary shares (‘000s)
Basic earnings per share - Rs.
In Rs. ‘000s
11
2014
DIVIDENDS PER SHARE
Declared and paid during the year
Final dividend
Weighted average number of ordinary shares
Dividend per share
177
12
FINANCIAL INSTRUMENTS - GROUP
12.1 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
Available-for-sale
financial assets
As at 31 st March
In Rs. ‘000s
2014
2013
2014
2013
Financial instruments in non-current assets
Other non-current financial assets
4,165
-
18,405
25,058
909,040
138,215
1,985,510
743,927
3,780,857
740,558
168,994
321,731
588,394
1,819,677
18,405
25,058
Financial instruments in current assets
Short term investments
Total
For available-for-sale financial assets the carrying amount and fair value are equal.
The fair value of loans and receivables does not significantly vary from the value based on the amortised cost methodology.
Financial liabilities by categories
Financial liabilities
at fair value
through income statement
measured
at amortised cost
As at 31 st March
2014
2013
2014
2013
Financial instruments in non-current liabilities
Borrowings
Other non current financial liabilities
63,752
59,253
4,245,400
-
5,571,060
-
Financial instruments in current liabilities
Borrowings
Bank overdrafts
Total
63,752
59,253
858,347
110,892
1,840,626
274,705
7,329,970
992,007
125,783
1,325,111
220,965
8,234,926
In Rs. ‘000s
178
12
FINANCIAL INSTRUMENTS - COMPANY
12.2 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
Available-for-sale
financial assets
As at 31 st March
In Rs. ‘000s
Financial instruments in non-current assets
Financial instruments in current assets
Total
2014
2013
2014
2013
-
-
8
8
5,513
32,530
2,648
40,691
10,561
356,400
60,000
46,897
473,858
8
8
For available-for-sale financial assets the carrying amount and fair value are equal.
The fair value of loans and receivables does not significantly vary from the value based on the amortised cost methodology.
Financial liabilities by categories
measured
at amortised cost
As at 31 st March
In Rs. ‘000s
Financial instruments in current liabilities
Trade Payable
Total
2014
2013
13,664
702
14,366
11,302
782
12,084
179
12.3 Financial Assets and Liabilities by Fair Value Hierarchy - Group
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data
The Group held the following financial instruments carried at fair value in the statement of financial position:
Financial Assets
As at 31 st March
In Rs. ‘000s
Available for sale
Total
Level 1
Level 2
Level 3
2014
2013
2014
2013
2014
2013
8
8
8
8
-
-
18,397
18397
25,050
25,050
Financial Liabilities
As at 31 st March
In Rs. ‘000s
Fair value through income statement
Designated at fair value through income statement
Total
During the reporting periods 31 March 2014 and 2013, there were no transfers between Level 1 and Level 2 fair value measurements.
Level 3
2014
2013
63,752
63,752
59,253
59,253
180
12.4 Reconciliation of fair value measurements of Level 3 financial instruments
The Group carries unquoted equity shares as available-for-sale financial instruments classified as Level 3 within the fair value hierarchy.
A reconciliation of the beginning and closing balances including movements is summarised below:
In Rs. ‘000s
Available-for-sale
financial assets
As at 1 April 2013
Impairment
As at 31 March 2014
25,050
(6,653)
18,397
Fair value would not significantly vary if one or more of the inputs were changed.
12.5 Financial Assets and Liabilities by Fair Value Hierarchy - Company
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data
The Company held the following financial instruments carried at fair value in the statement of financial position:
Financial Assets
As at 31 st March
In Rs. ‘000s
Available for sale
Total
Level 1
2014
2013
8
8
8
8
181
13
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Financial instruments held by the Group, principally comprise of cash, loans and other receivables, trade and other receivables, trade and other payable, loans and borrowings.
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) and Board of Directors of the parent Company.
Group Treasury identifies, evaluates and hedges financial risk in close co-operation with the Hotel 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 Hotel 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.
13.1 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, foreign exchange transactions and other
financial instruments.
The Group trades only with recognised, creditworthy 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 debtors impairment is not significant.
With respect to credit risk arising from the other financial assets of the Group, such as cash and cash equivalents and available-for-sale financial investments, the Group’s
exposure to credit risk arises from default of the counter party. The Group manages its operations to avoid any excessive concentration of counter party risk and the Group
takes all reasonable steps to ensure that the counter parties fulfill their obligations.
182
13.1.1 Credit risk exposure
The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying amounts. Following table shows the maximum risk
positions.
2014
2013
In Rs. ‘000s
Deposits with bank
13.1.2
13.1.3
Amounts due from related parties 13.1.4
Total credit risk exposure
Other non
current
financial
assets
Cash
in hand
Trade
and at
and other
Other
bank receivables investments
-
743,927
743,927
909,040
909,040
1,985,510
1,985,510
Available-for-sale investments
Total equity risk exposure
18,405
18,405
-
-
-
Total
18,405
743,927
909,040
1,985,510
Amounts
due from
related
parties
Total
Other non
current
financial
assets
- 1,985,510
- 909,040
138,215
138,215
743,927
138,215 3,776,692
-
588,394
588,394
740,558
740,558
321,731
321,731
168,994
168,994
321,731
740,558
168,994
588,394
1,819,677
18,405
18,405
25,058
25,058
-
-
-
-
25,058
25,058
138,215 3,795,097
25,058
588,394
740,558
321,731
168,994
1,844,735
-
Cash
in hand
Trade
and at
and other
Other
bank receivables investments
Amounts
due from
related
parties
Total
13.1.2 Credit risk relating to cash and cash equivalents
In order to mitigate settlement and operational risks related to cash and cash equivalents, the Group uses several banks with acceptable ratings for its deposits.
The Group held cash and cash equivalents of Rs. 2,027 Mn at 31 March 2014 (2013 - Rs. 647 Mn).
Deposits with banks and Credit rating of the banks
Bank
Instrument
People’s Bank
Sampath Bank PLC
Hatton National Bank PLC
Nations Trust Bank PLC
Nations Trust Bank PLC
Fixed Deposits
Fixed Deposits
Fixed Deposits
Re purchase Agreements
Fixed Deposits
Credit rating
for 2014
AA+
AAAAA
A
Investment
Rs. 000’s
1,773,688
58,302
27,447
97,521
28,552
1,985,510
183
13.1.3 Trade and other receivables
Group
2014
2013
851,316
671,773
60–90 days
48,425
64,241
91–180 days
9,299
4,544
35,209
944,249
(35,209)
909,040
36,824
777,282
(36,824)
740,558
In Rs. ‘000s
Neither past due nor impaired
Past due
but
not impaired
Impaired
Gross carrying value
Less: impairment provision
Total
Based on the review of their past performance and credit worthiness, the Group companies have obtained deposits and advances from major customers.
The requirement for an impairment is analysed at each reporting date on an individual basis for major clients.
13.1.4 Amounts due from related parties
The amounts due from related parties mainly consists of the balances from affiliate companies and parent.
13.2 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 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 manage its liquidity risk.
The Group monitors its risk of 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 and
overdrafts.
184
13.2.1 Net (debt)/cash
Group
Company
2014
2013
2014
2013
Total liquid Assets
1,985,510
743,927
2,729,437
321,731
588,394
910,125
32,530
2,648
35,178
60,000
46,897
106,897
Borrowings
Bank borrowings
Bank overdrafts
Total liabilities
Net (debt) / cash
6,086,026
274,705
6,360,731
(3,631,294)
6,896,171
220,965
7,117,136
(6,207,011)
133,441
960
134,401
(99,223)
106,897
In Rs. ‘000s
The net debt position of the Group is due to the expansion and refurbishment of its hotel portfolio which will commence generating cash flows in the medium term. This
position is constantly monitored and evaluated to determine appropriate risk mitigation strategies.
13.2.2 Liquidity risk management
The Group attempts to match contracted cash outflows in each time bucket using a combination of operational cash inflows and other inflows that can be generated through
the liquidation of short term investments, repurchase agreements or other secured borrowings.
Maturity analysis
The table below summarises the maturity profile of the Group’s financial liabilities at 31 March 2014 based on contractual undiscounted payments.
Group
In Rs. ‘000s
Financial instruments in non-current liabilities
Borrowings-Financial instruments in current liabilities
Bank overdrafts
Within 1 year
0 - 30 days 31 - 365 days
153,386
858,347
110,892
274,705
1,397,330
86,948
1,687,240
1,774,188
Between
1-2 years
Between
2-5 years
More than
5 years
Total
1,564,592
1,564,592
2,596,100
2,596,100
61,512
61,512
4,309,152
1,840,626
858,347
110,892
274,705
7,393,722
185
13.3 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 of the following risks:
z
Interest rate risk
z
Currency risk
The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
The sensitivity analysis in the following sections relate to the position as at 31 March in 2014 and 2013.
The following assumptions have been made in calculating the sensitivity analysis:
The sensitivity of the relevant income statement item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial
liabilities held at 31 March 2014 and 2013.
13.3.1 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.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group’s profit before tax
(through the impact on floating rate borrowings).
Group
Increase/ (decrease) in basis points
2014
2013
Effect on profit before tax (Rs.000’s)
+ 100-150 basis points
(6,673)
- 100-150 basis points
6,673
+ 100-150 basis points
(6,714)
- 100-150 basis points
6,714
The assumed spread of basis points for the interest rate sensitivity analysis is based on the currently observable market environment changes to base rates such as LIBOR,
SLIBOR and AWPLR.
186
13.3.2 Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group has
exposure to foreign currency risk where it has cash flows in overseas operations and foreign currency transactions which are affected by foreign exchange movements.
13.3.3 Effects of currency translation.
For purposes of consolidated financial statements, the income and expenses and the assets and liabilities of subsidiaries located outside Sri Lanka are converted into Sri
Lankan Rupees. Therefore, period-to-period changes in average exchange rates may cause translation effects that have a significant impact on, for example, revenue, segment
results (earnings before interest and taxes –EBIT) and assets and liabilities of the Group. Unlike exchange rate transaction risk, exchange rate translation risk does not
necessarily affect future cash flows. The Group’s equity position reflects changes in book values caused by exchange rates.
The Group’s exposure to foreign currency changes for currencies other than USD is not material.
Currency
Increase/(decrease) in
exchange rate
Effect on profit
before tax Rs. 000’s
Effect on
equity Rs. 000’s
Group
2014
USD
3%
-3%
(29,301)
29,301
282,608
(282,608)
Group
2013
USD
3%
-3%
(52,454)
52,454
101,377
(101,377)
Assumptions
The assumed movement, in the spread of the exchange rate sensitivity analysis, is based on the current observable market environment.
13.4 Capital management
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
Debt / Equity
2014
2013
0.34
0.42
187
As at 31 st March
In Rs. ‘000s
14
Land
and
buildings
Buildings
on
Plant
Furniture
leasehold
and
and
land machinery Equipment
fittings
Motor
Cutlery,
vehicles
crockery
and
glassware
marine Computer
and
vessels equipment
linen
Capital
work in
progress
174,796 15,756,241 12,004,265
295,044
892,638 2,440,340
(282,601) (506,353) (292,466)
- 2,010,268
(52,231)
- (355,305)
10,084
109,150
(50,862)
145,092 16,251,676 15,756,240
Total
2014
Total
2013
PROPERTY, PLANT AND EQUIPMENT
Group
Cost or valuation
At the beginning of the year
Additions
Disposals
Revaluations
Transfers
Exchange translation difference
At the end of the year
5,985,617
111,288
(8,420)
32,237
6,120,722
5,554,415
127,737
(21,247)
69,807
5,730,712
1,137,663
31,426
(24,304)
19,907
10,194
1,174,886
1,398,992
129,780
(45,242)
87
7,060
1,490,677
1,055,768
85,018
(38,333)
9,494
1,111,947
99,793
33,863
(25,997)
1,118
108,747
126,228
23,647
(7,512)
1,455
143,818
222,969
54,835
(52,697)
(62)
225,045
Accumulated depreciation
Charge for the year
Disposals
Transfers
53,056
49,219
(10)
102,265
740,792
263,770
(5,407)
43,052
1,042,207
432,009
104,385
(14,146)
9,253
531,501
463,968
169,786
(33,500)
8,569
608,823
392,050
137,852
(32,308)
10,359
507,953
42,750
19,360
(9,324)
1,214
54,000
53,471
24,178
(6,512)
1,155
72,292
106,343
50,639
(37,715)
208
119,475
-
2,284,439 2,086,007
819,189
651,010
(138,922)
(110,530)
- (355,305)
73,810
13,258
3,038,516 2,284,439
6,018,457
5,932,561
4,688,505
4,813,622
643,383
705,655
881,854
935,025
603,994
663,718
54,777
57,043
71,526
72,757
105,570
116,624
145,092
174,796
13,213,160
- 13,471,801
Carrying value
As at 31 March 2014
As at 31 March 2013
Carrying value of assets
At cost
At valuation
Carrying value of land and buildings
At cost
At valuation
7,142,170 7,362,131
6,070,990 6,109,669
13,213,160 13,471,801
4,635,973 4,636,514
6,070,990 6,109,669
10,706,963 10,746,183
188
14.1 The details of Property, Plant & Equipment of the Group which are stated at valuation are indicated below.
Property
Method of Valuation
Effective Date
of Valuation
Property Valuer
Ceylon Holiday Resorts Ltd
Depreciated replacement cost method / Open market value method
31st March 2013
Kandy Walk Inn Ltd
31st March 2013
Habarana Lodge Ltd
Depreciated replacement cost method
31st March 2013
Habarana Walk Inn Ltd
31st March 2013
Trinco Walk Inn Ltd
Open market value method
31st March 2013
Wirawila Walk Inn Ltd
31st March 2013
Resort Hotels Ltd
31st March 2013
Yala Village (Pvt) Ltd
31st March 2013
Rajawella Hotels Co Ltd
31st March 2013
Beruwala Holiday Resorts (Pvt) Ltd
31st March 2013
Trinco Holiday Resorts (Pvt) Ltd
31st March 2013
Hikkaduwa Holiday Resorts (Pvt) Ltd
31st March 2013
Ahungalla Holiday Resorts (Pvt) Ltd
31st March 2013
Sentinel Realty (Pvt) Ltd
31st March 2013
Mr. P.B. Kalugalagedara
Consultant Valuer & Assessor
Mr. Sunil Fernando
Mr. Sunil Fernando
Mr. Sunil Fernando
Mr. Sunil Fernando
Mr. Sunil Fernando
Mr. Sunil Fernando
Mr. Sunil Fernando
Mr. Sunil Fernando
Revaluation of land and buildings
The Group uses the revaluation model of measurement of land and buildings. Fair value is determined by reference to market-based evidence. Valuations are based on active
market prices, adjusted for any difference in the nature, location or condition of the specific property.
In determining the fair value of properties as at 31 March 2013, the Group has engaged independent Chartered valuers and they have carried out the valuation in accordance
with Sri Lanka Accounting Standards and 8th edition of International Valuation Standards published by the International Valuation Standards Committee (IVSC).
189
14.2 The carrying amounts of revalued properties if they were carried at cost less depreciation, would be as follows.
Net Book
Value
31.03.2014
Net Book
Value
31.03.2013
4,141,532
4,141,532
3,981,113
3,981,113
Rs. ‘000
31.03.2014
31.03.2013
Sri Lanka
Maldives
11,013,288
2,199,872
13,213,160
11,286,087
2,185,714
13,471,801
Class of Assets
Rs. ‘000
Land and buildings
Accumulated
Cost Depreciation
4,716,390
4,716,390
(574,859)
(574,859)
14.3 Segmental Analysis of Net Book Value
14.4 Details of property, plant and equipment pledged as security for term loans obtained, are disclosed in Note 28.3
14.5 Group property, plant and equipment with a cost of Rs. 500 Mn (2013 - Rs. 402 Mn) have been fully depreciated and continue to be in use by the Group.
Group
As at 31st March
In Rs. ‘000s
15
2014
2013
8,639,214
(666,663)
262,957
8,235,508
9,386,494
(738,345)
(8,935)
8,639,214
LEASE RENTALS PAID IN ADVANCE
Prepaid lease rentals paid to acquire land use rights are amortised over the lease term in accordance with the pattern of benefits provided.
Balance at the beginning of the year
Addition during the year
Amortisation during the year
Exchange difference
Balance at the end of the year
190
15.1 Details of Leasehold Properties
Land Extent
(in Acres)
Group
Lease Period
2014
2013
Rajawella Hotels Co. Ltd
10.00
95 years and 10 months
from 02nd February 2000
33,767
34,180
11.25
30 years from 27th November 2006
67,613
70,607
0.03
10 years from 01st January 2012
800
900
Chaaya Island Dhonveli - Maldives
18.62
18 years from 26th August 2010
7,111,034
7,374,568
Chaaya Reef Ellaidhoo - Maldives
13.75
14 years from 04th August 2006
1,022,294
1,158,959
8,235,508
8,639,214
Group
In Rs. ‘000s
16
2014
2013
670,407
670,407
670,407
670,407
INTANGIBLE ASSETS
Goodwill
Cost
Additions during the year
Adjustments on impairment
Carrying value as at the end of the year
Goodwill acquired through Business Combinations has been allocated to two (2) Cash Generating Units (CGU) as Chaaya Resorts and Cinnamon Resorts for impairment testing.
191
The carrying amount of goodwill allocated to each Cash Generating Unit has been tabulated below.
In Rs. ‘000s
Chaaya resorts
Cinnamon resorts
Net Carrying Value of
Goodwill
2014
2013
258,355
412,052
670,407
258,355
412,052
670,407
The recoverable amount of all CGUs have been determined based on the Fair Value Less Cost to Sell or Value In Use (VIU) calculation.
Key Assumptions Used in the VIU Calculations
Gross Margins
The basis used to determine the value assigned to the budgeted gross margins, is the gross margins achieved in the year preceding the budgeted year adjusted for projected
market conditions.
Inflation
The basis used to determine the value assigned to the budgeted cost inflation is the inflation rate based on projected economic conditions.
Discount Rate
The discount rate used is the risk free pre-tax discount rate, adjusted by the addition of an appropriate risk premium.
Volume Growth
Volume growth has been budgeted on a reasonable and realistic basis by taking into account the growth rates of the two years immediately preceding the budgeted year and
future industry growth rates.
Cash flows beyond the five year period has been extrapolated using a zero growth rate.
192
Group
As at 31 st March
In Rs. ‘000s
Note
Company
2014
2013
2014
2013
17
INVESTMENTS
17.1 Investments in subsidiaries and joint ventures
Investments in subsidiaries - Unquoted
Investments in joint ventures - Unquoted
17.4
17.5
-
-
10,340,613
58,288
10,398,901
9,440,953
15,788
9,456,741
17.2 Other equity investments
Quoted
Unquoted
17.6
17.7
8
18,397
18,405
8
25,050
25,058
8
8
8
8
4,165
22,570
25,058
10,398,909
9,456,749
2014
% Holding
2013
2014
2013
98.65%
98.35%
99.33%
98.39%
98.77%
100.00%
100.00%
100.00%
100.00%
93.78%
100.00%
100.00%
100.00%
98.65% 1,052,011
98.35%
695,084
98.92% 2,094,401
98.39%
408,998
98.77%
311,851
100.00% 4,739,853
100.00%
29,300
100.00%
95,940
100.00%
23,497
93.78%
300,678
100.00%
100.00% 357,000
100.00%
132,000
1,052,011
695,084
1,194,741
408,998
311,851
4,739,853
29,300
95,940
23,497
300,678
357,000
132,000
100.00%
100.00%
100,000
9,440,953
17.3 Loans to executives
In Rs. ‘000s
Company
17.4 Investments in subsidiaries
Unquoted
Habarana Lodge Ltd
International Tourists and Hoteliers Ltd
Kandy Walk Inn Ltd
Trinco Walk Inn Ltd
John Keells Hotels Mauritius (Pvt) Ltd
Ahungalla Holiday Resorts (Pvt) Ltd
15% Cumulative preference shares
Total investments in subsidiaries
100,000
10,340,613
193
% Holding
In Rs. ‘000s
2014
Company
2013
2014
2013
58,288
58,288
10,398,901
15,788
15,788
9,456,741
17.5 Investments in joint ventures
Unquoted
Total investments in joint ventures
Total investments in subsidiaries and joint ventures
50.00%
50.00%
17.6 Outside Investments
Quoted
Ceylon Hotels Corporation PLC
8
8
8
8
18,347
50
18,397
18,405
25,000
50
25,050
25,058
8
8
17.7 Unquoted
Rainforest Ecolodge (Pvt) Ltd
Sri Lanka Hotel Tourism Training Institute Ltd
Total Outside Investments
Directors’ valuation of unquoted investments of the Company and the Group amounts to Rs. 10,398 Mn (2013- Rs. 9,456 Mn) and Rs. 18.4Mn (2013 - Rs.25.06 Mn ) respectively.
The Market Value of the quoted investment as at 31st March 2014 is Rs. 0.008 Mn (2013 - Rs. 0.008 Mn).
2014
2013
(182)
(182)
(83)
(83)
60,244
(325)
59,919
17,754
(144)
17,610
17.8 Summarised financial information of joint venture
Group share of;
Revenue
Administration expenses
Loss for the year
Group share of;
Total assets
Total liabilities
Net assets
The Group and the Company have neither contingent liabilities nor capital and other commitments in respect of its joint venture.
194
Group
As at 31 st March
In Rs. ‘000s
18
Company
2014
2013
2014
2013
54,231
(18,795)
284
2,648
38,368
34,143
28,506
(21,850)
(279)
13,711
54,231
-
-
(136,004)
342
1,888
172,142
38,368
(85,945)
342
2,388
137,446
54,231
-
-
DEFERRED TAX ASSETS
Transferred from / to deferred tax liabilities
Impact of revaluation reserve on property, plant and equipment
Credit/(release)
The closing deferred tax asset balance relates to the following:
Impact on revaluation of property, plant and equipment
Losses available for off-set against future taxable income
Group
As at 31 st March
In Rs. ‘000s
19
2013
2014
2013
620
620
-
-
-
96,694
64,519
41,046
202,259
(5,593)
196,666
93,602
65,726
25,088
184,416
(3,078)
181,338
-
-
OTHER NON-CURRENT ASSETS
Prepaid staff loans
20
Company
2014
INVENTORIES
Food and beverage
House keeping and maintenance
Others
Less : Provision for slow moving inventories
195
Group
As at 31 st March
In Rs. ‘000s
21
Company
2014
2013
2014
2013
944,223
(35,183)
909,040
777,382
(36,824)
740,558
-
-
TRADE AND OTHER RECEIVABLES
Trade receivables
Impairment for bad and doubtful debts
21.1 As at 31 March 2014, trade receivables of an initial value of Rs. 35.1 Mn (2013: Rs. 36.8 mn) were impaired and fully provided for. See below for the movements in the
impairment of receivables.
Group
As at 1 April 2012
Unused amounts reversed
As at 31 March 2013
Reversal for the year
As at 31 March 2014
22
41,095
(4,271)
36,824
(1,641)
35,183
41,095
(4,271)
36,824
(1,641)
35,183
Company
2014
2013
2014
2013
215,773
55,439
42,729
313,941
172,926
158,174
71,312
402,412
2,794
2,794
1,411
1,411
-
-
-
2,900
353,500
356,400
OTHER CURRENT ASSETS
Prepayments and non cash receivables
Tax recoverable
Other receivables
23
Total
Group
As at 31 st March
In Rs. ‘000s
Individually
Impaired
LOANS GIVEN TO RELATED PARTIES
196
Group
As at 31 st March
In Rs. ‘000s
24
2013
2014
2013
1,557,977
279,638
32,530
60,000
1,557,977
279,638
32,530
60,000
743,927
588,394
2,648
46,897
743,927
588,394
2,648
46,897
(274,705)
(220,965)
(960)
-
(274,705)
(220,965)
(960)
-
2,027,199
647,067
34,218
106,897
CASH AND CASH EQUIVALENTS
Favorable cash and cash equivalents
24.1 Short term investments (less than 3 months)
24.2 Cash and bank balances
Unfavorable cash and cash equivalents
24.3 Banks overdrafts
Total cash and cash equivalents for the
purpose of cash flow statement
Group
As at 31 st March
In Rs. ‘000s
25
Company
2014
Company
2014
2013
2014
2013
1,557,977
279,638
32,530
60,000
427,533
42,093
-
-
1,985,510
321,731
32,530
60,000
SHORT TERM INVESTMENTS - DEPOSITS
Favorable cash and cash equivalents
Short term investments (Less than 3 months)
Short term investments (Between 3 to 12 months)
Total short term investments
197
2013
2014
As at 31st March
In ‘000s
26
Number of
Shares
Rs.
Value of
Shares
Number of
Shares
Rs.
Value of
Shares
1,456,147
1,456,147
9,500,247
9,500,247
1,456,147
1,456,147
9,500,247
9,500,247
STATED CAPITAL
Fully paid ordinary shares
Issue of shares for cash
Group
As at 31 st March
In Rs. ‘000s
27
Note
Company
2014
2013
2014
2013
2,614,915
1,267,676
(5)
4,339
3,886,925
2,614,915
1,013,774
(5)
3,628,684
(5)
(5)
(5)
(5)
OTHER COMPONENTS OF EQUITY
Revaluation reserve
Exchange equalisation reserve
Available for sale reserve
Employee share option plan reserve
27.1
27.2
27.3
27.1 Revaluation reserve consists of the net surplus on the revaluation of property, plant and equipment.
27.2 Exchange translation reserve comprises the net exchange movement arising on the translation of net equity investments of overseas subsidiaries into Sri Lankan Rupees.
27.3 Share-based payment plans
Employee Share Option Scheme
Under the John Keells Group’s Employees share option scheme (ESOP), share options of the parent are granted to executives of the Group generally 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.
198
The expense recognised for employee services received during the year is shown in the following table:
In Rs. ‘000s
2014
2013
Expense arising from equity-settled share-based payment transactions
Total expense arising from share-based payment transactions
4,339
4,339
-
2014
No.
2014
WAEP
152,764
152,764
-
253
253
-
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:
Outstanding at 1 April
Granted during the year
Forfeited during the year
Adjustment during the year
Expired during the year
Outstanding at 31 March
Exercisable at 31 March
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.
199
Group
As at 31 st March
In Rs. ‘000s
28
Note
Company
2014
2013
2014
2013
6,086,026
6,086,026
6,896,171
6,896,171
133,441
133,441
-
INTEREST BEARING BORROWINGS
28.1 Bank borrowings
Bank borrowings
Group
As at 31 st March
Note
Company
2014
2013
2014
2013
Loans obtained during the year
Currency translation difference
Repayments during the year
6,896,171
1,688,637
116,349
(2,615,131)
6,086,026
6,815,034
1,231,283
(18,807)
(1,131,339)
6,896,171
200,000
(66,559)
133,441
-
Repayable within one year
Repayable after one year
Repayable between one and five years
Repayable after five years
1,840,626
1,325,111
100,000
-
4,183,888
61,513
4,245,400
6,086,026
5,161,384
409,676
5,571,060
6,896,171
33,441
33,441
133,441
-
In Rs. ‘000s
28.2 Movement
200
28.3 Security and Repayment Terms of Bank Borrowings/ Other Borrowings
Company
Lending
Institution
Nature of
Facility
Interest Rate
& Security
John Keells
Hotels PLC
Habib Bank Ltd.
Term Loan AWPLR - 0.5%
John Keells
Maldivian
Resorts (Pte)
Ltd
Sampath Bank PLC Term Loan 3 months US$ LIBOR + 1.3% for first two
years and 3 months LIBOR + 1.5% thereafter
As at 31st March
2014
In Rs.
'000s
Repayment terms
2013
In Rs.
'000s
133,441
- Capital repayment 24 equal monthly instalments of
Rs. 8,333,333/-
182,980
380,250 30 equal quarterly instalments of US$ 400,000/commencing after a grace period of 18 months from
September 2006.
206,942
327,437 48 equal monthly instalments of USD 83,333/commencing from November 2011
436,443
577,164 36 equal quarterly instalments of US$ 236,111/commencing after a grace period of two years from
November 2007
725,506
1,033,130 4 annual instalments of US$ 2,600,000/- each and
final instalment being US$ 2,950,926/- commencing
from August 2011
Head lease right of Chaaya Island Dhonveli,
Corporate guarantee of John Keells Hotels
PLC.
HSBC Bank
Term Loan 3 months LIBOR + 3.0% per annum
Secured with a letter of comfort from John
Keells Hotels PLC
Travel Club
(Pte)Ltd
Bank of Ceylon
Term Loan 3 months US$ LIBOR + 2% or 3.75%
whichever is higher
Sub lease right of Ellaidhoo, Corporate
guarantee of John Keells Hotels PLC
Fantasea World Hatton National
Investments
Bank PLC
(Pte) Ltd
Term Loan 3 months LIBOR + 3.25% with a floor rate of
4.25%
Leasehold rights of Island of Lagoon
Hakuraa Huraa Resort
Trinco Holiday
Resorts ( Pvt)
Ltd
Sampath Bank PLC Term Loan 3 Months LIBOR+4% Per annum.
Corporate guarantee of John Keells Hotels
PLC.
151,351
- Capital repayment in 20 equal quarterly instalments
of USD 57,900/- commencing after a grace period of
one year from the date of disbursement. Interest to
be serviced monthly.
201
Company
Habarana
Lodge Ltd
Lending
Institution
Nature of
Facility
Interest Rate
& Security
As at 31st March
2014
In Rs.
'000s
Repayment terms
2013
In Rs.
'000s
Sampath Bank PLC Term Loan 3 Months LIBOR+4%. Corporate guarantee
USD
of John Keells Hotels PLC.
221,538
of USD 100,000/-
Habib Bank Ltd
Term Loan 1 Month LIBOR+3.25%. Corporate guarantee
USD
of John Keells Hotels PLC.
100,638
of USD 150,00/-
Hatton National
Bank PLC
Term Loan Monthly AWPLR
240,400
320,200 60 monthly instalments commencing from April 2012
Kandy Walk
Inn Ltd
HSBC Bank
Term Loan 1 month LIBOR + 3.5% per annum
485,744
521,267 60 monthly instalments after, 12 months grace period
of 1 year
Yala Village
(Pvt) Ltd
People's Bank
Term Loan AWPLR - revised bi annually
175,377
403,750 72 monthly instalments from January 2013 after
grace period of 12 months
Sampath Bank PLC Term Loan LIBOR+4% Payable monthly. Corporate
guarantee of John Keells Hotels PLC.
Beruwala
Hatton National
Holiday Resorts Bank PLC
(Pvt) Ltd
Term Loan 1 month LIBOR Primary floating mortgage
bond for Rs. 1.9 Bn over hotel property
166,548
- 20 equal quarterly instalments
802,434
1,940,232 71 equal monthly instalments of Rs. 26,388,890/- and
a final instalment of Rs. 26,388,810/- commencing
from June 2013 after 2 years grace period
Sampath Bank PLC Term Loan 3 Month LIBOR + 4.0% payable monthly
(LIBOR to be reset quarterly). Corporate
guarantee of John Keells Hotels PLC.
222,345
- Capital repayment 20 equal quarterly instalments of
US $ 100,000/-
Standard
Chartered Bank
Term Loan 3 months LIBOR + 3.25% with an
arrangement fee of 0.5% variable at the
discretion of the bank. Corporate guarantee
from John Keells Hotels PLC
523,549
509,244 16 instalments after grace period of 1 year 1. USD
100,000/- per quarter in 2nd year 2. USD 150,000/per qtr in 3rd year 3. USD 350,000/- per quarter in 4th
year 4. USD 400,000/- per quarter in 5th year
Term Loan AWPLR - 1% per annum Rs. 940 Mn primary
mortgage over leasehold rights and Rs. 60
Mn over movable plant, machinery and
equipment of the Company
837,265
883,497 72 monthly instalments after a grace period of 24
months from November 2013
Hikkaduwa
DFCC Bank
Holiday Resorts
(Pvt) Ltd
Sampath Bank PLC Term Loan 3 Month LIBOR+4% per annum. Corporate
guarantee of John Keells Hotels Plc for the
LKR equivalent of USD 4Mn.
473,525
6,086,026
of USD 200,000/- commencing after a grace period of
six months from the date of disbursement. Interest to
be serviced monthly.
6,896,171
202
Group
As at 31 st March
In Rs. ‘000s
29
2013
2014
2013
114,422
(18,795)
(239)
48,973
144,361
49,337
28,506
36,237
284
57
114,422
-
-
172,448
59,281
(11,056)
(76,262)
144,361
128,390
59,281
(7,724)
(65,525)
114,422
-
-
89,346
11,195
9,815
(10,497)
2,490
84,677
10,353
8,468
(6,672)
(3,268)
-
-
11,487
113,836
(4,212)
89,346
-
-
8,141
12,869
50
21,010
5,000
13,821
138
18,821
-
-
DEFERRED TAX LIABILITIES
Transferred from/to deferred tax assets
Credit/(release)
The closing deferred tax liability balance relates to the following:
Losses available for off-set against future taxable income
30
Company
2014
EMPLOYEE BENEFIT LIABILITY
Gratuity charge
Interest cost
Payments made during the year
Transfers
Loss / (gain) arising from changes in the assumptions
or due to under / (over) provision in the previous year
The expenses recognised in the following line items in the income statement
Cost of sales
The employee benefit liability of the Group is based on the actuarial valuations carried out by Messrs. Actuarial & Management Consultants (Pvt) Ltd., actuaries.
The principal assumptions used in determining the cost of employee benefits were:
Discount rate
Future salary increases
2014
2013
11%
10%
11%
10%
203
30.1 Sensitivity of assumptions used
If a one percentage point change is assumed in the discount rate and salary increase rate, it would have the following effect:
Discount rate
2014
2013
As at 31st March
In Rs. ‘000s
Effect on defined benefit obligation liability
Increase by one percentage point
Decrease by one percentage point
(5,509)
6,425
(3,984)
3,882
Salary increment
2014
6,752
(5,802)
30.2 Maturity analysis of the payments
The following payments are expected on employee benefit liabilities in future years:
2014
In Rs. ‘000s
Within the next 12 months
Between 1-2 years
Between 2 and 5 years
Between 5 and 10 years
Beyond 10 years
Total expected payments
12,552
25,704
34,463
24,055
17,062
113,836
The average duration of the defined benefit plan obligation at the end of the reporting period is 5.88 years.
Group
As at 31 st March
In Rs. ‘000s
31
Note
Company
2014
2013
2014
2013
1,273
67,153
68,426
1,598
32,562
34,160
-
-
1,598
(325)
1,273
1,923
(325)
1,598
-
-
OTHER DEFERRED LIABILITIES
Grant
Deferred sublease payment
31.1
31.2
31.1 Grant
Amortisation during the year
Basis of amortisation - 10% p.a.
This represents the grant received by Yala Village (Pvt) Ltd from Ceylon Chamber of Commerce for the garbage disposal project with regard to the Promotion of Eco-efficient
Productivity (PEP).
204
31.2 Deferred sublease payment
Differences arising due to lease payments and lease charges recognised on straight line basis, as per SLFRS / LKAS, are adjusted through the other deferred liabilities account.
These amounts are expected to be reversed over the lease term.
Group
As at 31 st March
In Rs. ‘000s
32
Note
2014
2013
63,752
63,752
59,253
59,253
Company
2014
2013
OTHER NON CURRENT FINANCIAL LIABILITIES
Amount payable to Yacht Tours Maldives (Pvt) Ltd
32.1
-
-
32.1 Amount to be paid to Yacht Tours Maldives (Pvt) Ltd at the expiration of lease period of 18 years as per the Sale agreement, dated 24th June 2010.
Group
As at 31 st March
In Rs. ‘000s
33
296,657
360,328
201,362
858,347
266,629
459,231
266,147
992,007
6,402
7,262
13,664
5,530
5,772
11,302
240,374
267,898
(2,347)
(212,934)
292,991
250,185
221,383
(2,348)
(228,846)
240,374
7,493
12,069
(14,284)
5,278
4,163
12,839
(9,509)
7,493
258,340
258,340
104,846
104,846
-
-
INCOME TAX LIABILITIES
Charge for the year
Payments, set off against refunds and tax credits
35
2013
TRADE AND OTHER PAYABLE
Trade payable
Other payable
Accrued expenses
34
Company
2014
2013
2014
OTHER CURRENT LIABILITIES
205
As at 31 st March
In Rs. ‘000s
36
Group
Company
2014
2013
2014
2013
1,983
63
-
-
118,707
2,374
7,019
15
1,873
6,175
17
52
136,232
138,215
128,476
12,493
26,632
18
100
409
487
88
120
108
168,931
168,994
87
94
403
71
317
200
3,996
64
203
78
5,513
5,513
-
RELATED PARTY TRANSACTIONS
36.1 Amounts Due from Related Parties
Ultimate parent
Companies under common control
Walkers Tours Ltd
Walkers Air Services Ltd
Whittall Boustead (Travel) Ltd
Keells Shipping Ltd
Whittall Boustead (Pvt) Ltd
Keells Hotel Management Services Ltd
Keells Consultants (Pvt) Ltd
Keells Food Products PLC
DHL Keells Private Limited
NDO Lanka (Private) Limited
Asian Hotels & Properties PLC
John Keells PLC
Resorts Hotels Ltd
Habarana Lodge Ltd
Beruwela Holiday Resorts (Pvt) Ltd
216
36
2,614
325
417
6,403
243
307
10,561
10,561
206
Group
As at 31 st March
In Rs. ‘000s
Company
2014
2013
2014
2013
7,842
3,075
336
404
95,220
2,294
1,641
865
277
60
1,205
785
226
42
23
230
182
103,050
110,892
115,791
1,971
846
998
716
20
1,040
18
273
75
139
101
720
122,708
125,783
285
6
37
35
3
366
702
195
7
73
25
78
378
782
-
-
-
356,400
356,400
36.2 Amounts Due to Related Parties
Ultimate parent
InfoMate (Pvt) Ltd
Ceylon Cold Stores PLC
John Keells Office Automation Ltd
Jaykay Marketing Services (Pvt) Ltd
John Keells International (Pvt) Ltd
Keells Business Systems Limited
John Keells PLC
Nexus Networks (Pvt) Ltd
Mackinnons Travels (Pvt) Ltd
Walkers Tours Ltd
Union Assurance PLC
Trans Asia Hotels PLC
Kandy Walk Inn Ltd
Rajawella Hotels Co Ltd
36.3 Loans given to Related Parties
Long term
Short term
207
Group
As at 31 st March
In Rs. ‘000s
Company
2014
2013
2014
2013
(72,416)
(10,224)
(15,889)
(10,174)
(15,300)
(1,255)
(3,024)
(1,848)
(2,700)
(35,316)
(346,139)
3,419
-
(21,921)
(23,074)
-
(498)
534
13,699
(4,218)
56,334
103,000
7,098
(14,225)
(632)
(767)
(19,693)
(35,317)
(4,446)
(12)
(387)
(17,076)
(21,921)
-
-
(23,098)
(14,547)
(735)
(720,907)
(621)
356,745
60,108
(3,085)
(346,140)
(20,613)
(4,609)
(641,752)
(6,801)
550,554
129,967
(29,819)
(23,073)
(82)
(416)
(498)
(73)
(174)
(3,971)
(4,218)
36.4 Transactions with Related Parties
Ultimate parent
Rendering /(receiving) of services
Interest (paid)/ received
Directors fees (paid)/ received
Companies Under Common Control
(Purchase)/sale of goods
(Receiving)/rendering of services
Interest (paid)/ received
Loans given/(taken)
Guarantees received
36.5 Transactions with Related Parties - Companies under Common Control
Sale/(purchase) of goods
Ceylon Cold Stores PLC
Jaykay Marketing Services (Pvt) Ltd
John Keells Office Automation (Pvt) Ltd
Rendering/(receiving) of services
Infomate (Pvt) Ltd
John Keells International (Pvt) Ltd
John Keells Office Automation (Pvt) Ltd
Mackinnons Travels (Pvt) Ltd
Walkers Tours Ltd
Whittall Boustead (Travels) Ltd
Other related parties
208
Group
As at 31 st March
In Rs. ‘000s
Loans given/(taken)
Kandy Walk Inn Ltd
Company
2014
2013
2014
2013
-
-
-
(50,000)
(55,100)
(5,000)
7,000
(103,000)
20,061
20,061
19,224
19,224
5,661
5,661
6,624
6,624
36.6 Compensation of Key Management Personnel
Short term employee benefits
Key management personnel include members of the Board of Directors of John Keells Hotels PLC, its subsidiaries and John Keells Holdings PLC.
36.7 Terms and Conditions of Transactions with Related Parties
Transactions with related parties are carried out in the ordinary course of business. Outstanding current account balances at the year end are unsecured, interest free and
settlements occur in cash. Loans are given at pre agreed terms and interest rates.
Group
In Rs. ‘000s
37
2014
2013
195,809
788,411
2,463,216
3,447,436
190,213
766,030
2,587,401
3,543,644
COMMITMENTS
37.1 Capital Commitments
There were no significant capital commitments as at 31 March 2014 (2013-Nil)
37.2 Lease Commitments
Within one year
Between one and five years
After five years
209
37.3 Details of Leasehold Land
Company
Habarana Lodge Ltd
Island of Ellaidhoo
Island of Dhonveli
38
Land Extent
Acres
Lessor
Leased Properties
Ceylon Tourist Board
Kekirawa Divisional Secretariat
Kekirawa Divisional Secretariat
Rajawella Holding Co. Ltd
Government of Maldives
Land occupied
Land occupied
Land occupied
Land occupied
Land occupied
Land occupied
Island rent for the land occupied
13.75
Government of Maldives and sub-lease
with Ellaidhoo Investment (Pte) Ltd
Lease rental and Island rent for the land occupied
18.62
Government of Maldives
Island rent for the land occupied
11.02
4.69
9.34
25.48
11.25
10.00
13.42
CONTINGENT LIABILITIES
Contingencies of the Company as at the reporting date on account of guarantees issued on behalf of subsidiary companies amounted to Rs. 2,511 Mn (2013- Rs. 1,858 Mn)
There were no significant contingent liabilities as at the reporting date other than what is disclosed above, which require adjustments to or disclosures in the financial
statements.
39
EVENTS SUBSEQUENT TO THE REPORTING DATE
There have been no material events occurring after the reporting date which would have any material effect on the Company or on the Group.
210
QUARTERLY INCOME STATEMENT
For the three months ended
In Rs. ‘000s
Revenue
Cost of sales
Gross profit
Finance expenses
Finance income
Profit before tax
Tax expense
Profit after tax
Attributable to:
For the three months ended
In Rs. ‘000s
Revenue
Cost of sales
Gross profit
Finance expenses
Finance income
Profit before tax
Tax expense
Profit after tax
Attributable to:
September
30th
2013/2014
December
31st
March
31st
Total
2,025,822
(763,181)
1,262,641
13,376
(787,153)
(82,879)
(386,347)
(152,862)
42,618
(90,606)
(15,124)
(105,730)
2,557,116
(904,149)
1,652,967
6,156
(858,131)
(70,749)
(343,543)
(138,415)
39,182
287,467
(37,362)
250,105
2,876,211
(957,336)
1,918,875
32,184
(918,045)
(75,514)
(349,919)
(111,188)
37,027
533,420
(78,357)
455,063
3,507,232
(966,248)
2,540,984
104,297
(865,139)
(97,032)
(423,718)
(131,412)
34,978
1,162,958
(187,470)
975,488
10,966,381
(3,590,914)
7,375,467
156,013
(3,428,468)
(326,174)
(1,503,527)
(533,877)
153,805
1,893,239
(318,313)
1,574,926
(102,415)
(3,315)
(105,730)
248,624
1,481
250,105
451,856
3,207
455,063
967,781
7,707
975,488
1,565,846
9,080
1,574,926
June
30th
September
30th
2012/2013
December
31st
March
31st
Total
1,746,761
(619,326)
1,127,435
36,563
(700,213)
(74,413)
(270,895)
(93,847)
13,108
37,738
1,817
39,555
1,963,959
(673,840)
1,290,119
21,841
(761,520)
(88,578)
(291,253)
(98,314)
7,410
79,705
35,259
114,964
2,488,596
(767,653)
1,720,943
25,926
(872,150)
(121,705)
(321,627)
(165,022)
5,383
271,748
(48,850)
222,898
3,142,265
(943,605)
2,198,660
58,989
(789,640)
(22,972)
(384,377)
(179,913)
12,958
893,705
(150,103)
743,602
9,341,581
(3,004,424)
6,337,157
143,319
(3,123,523)
(307,668)
(1,268,152)
(537,096)
38,859
1,282,896
(161,877)
1,121,019
40,360
(805)
39,555
113,951
117
114,068
222,373
525
222,898
737,561
6,041
743,602
1,116,779
4,240
1,121,01 9
June
30th
211
INDICATIVE US DOLLAR FINANCIAL STATEMENTS
INCOME STATEMENT
Group
In USD ‘000s
Revenue
Cost of sales
Gross profit
Dividend income
Results from operating activities
Finance expenses
Finance income
Net finance income
Profit before tax
Tax expense
Attributable to :
Exchange Rate (SL Rs.)
2014
2013
84,302
(27,604)
56,698
1,199
(26,356)
(2,507)
(11,558)
17,476
(4,104)
1,182
(2,922)
14,554
(2,447)
12,107
73,701
(23,604)
49,997
1,131
(24,643)
(2,427)
(10,005)
14,052
(4,237)
307
(3,931)
10,121
(1,277)
8,844
12,037
70
12,107
8,811
33
8,844
130.09
126.75
Company
2014
2013
2,943
105
(192)
(2)
2,854
(98)
226
128
2,982
(93)
2,889
276
3
(238)
(4)
37
(57)
611
555
591
(101)
490
130.09
126.75
Indicative consolidated accounts have been published in USD equivalents for information purposes only.
This information does not constitute a full set of financial statements in compliance with SLFRS/LKAS. These financial statements should be read together with the opinion of
the Auditors and financial statements set out on pages 149 to 209
The exchange rates prevailing at each year end have been used for the conversion of the consolidated income statement and the statement of financial position.
212
INDICATIVE US DOLLAR FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION
Group
As at 31 st March
In USD ‘000s
ASSETS
Non-Current Assets
Intangible assets
Other non current financial assets
Deferred tax assets
Current Assets
Inventories
Other investments
Total Assets
EQUITY AND LIABILITIES
Stated capital
Revenue reserves
Total Equity
Company
2014
2014
2013
2013
101,095
63,011
5,129
173
294
5
169,707
106,286
68,159
5,289
198
428
180,361
79,563
79,563
74,609
74,609
1,505
6,955
2,402
1,057
15,191
5,692
32,802
202,509
1,431
5,843
3,175
1,333
2,538
4,642
18,962
199,323
21
42
249
20
333
79,896
11
83
2,812
473
370
3,750
78,359
72,687
29,739
36,026
138,452
768
139,220
74,953
28,629
24,972
128,554
731
129,285
72,687
6,030
78,717
78,717
74,953
3,252
78,205
78,205
213
Group
As at 31 st March
In USD ‘000s
Non-Current Liabilities
Employee benefit liability
Current Liabilities
Current portion of interest bearing borrowings
Bank overdrafts
Total Equity and Liabilities
Exchange Rate (SL Rs.)
Company
2014
2014
2013
2013
32,482
1,105
871
524
488
35,470
43,953
903
705
270
467
46,298
256
256
-
6,567
1,977
848
2,242
14,083
2,102
27,819
202,509
130.7
7,826
827
992
1,896
10,455
1,743
23,740
199,323
126.75
105
765
5
40
7
922
79,895
130.7
89
6
59
154
78,359
126.75
214
TEN YEARS SUMMARY - GROUP
31st March
In Rs.000s
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
10,966,381
(3,590,914)
7,375,467
156,013
(3,428,968)
(326,174)
(1,503,527)
(533,877)
153,805
1,893,239
(318,313)
1,574,926
1.08
9,341,581
(3,004,424)
6,337,157
143,319
(3,123,523)
(307,668)
(1,268,152)
(537,096)
38,859
1,282,896
(161,877)
1,121,019
0.77
7,388,158
(2,310,998)
5,077,170
116,162
(2,291,066)
(311,162)
(977,290)
(264,628)
26,968
1,376,154
(265,354)
1,110,800
0.76
5,884,513
(1,807,367)
4,077,146
30,974
(2,306,846)
(206,955)
(872,179)
(272,972)
157,238
606,406
(80,423)
525,983
0.36
6,038,073
(1,832,385)
4,205,688
27,485
(2,614,181)
(173,171)
(875,018)
(373,688)
11,032
208,147
(2,989)
205,158
0.17
5,114,000
(1,653,083)
3,460,917
24,448
(2,406,136)
(158,062)
(862,702)
(292,013)
12,069
(221,479)
503
(220,976)
(0.17)
5,158,168
(1,879,017)
3,279,151
140,173
42,680
(2,111,078)
(149,389)
(775,926)
(475,484)
66,612
(83,261)
12,199
(71,062)
(0.07)
3,692,785
(1,252,068)
2,440,717
87,494
(1,339,585)
(126,282)
(519,668)
(343,624)
9,539
208,591
20,107
228,698
0.39
2,024,811
(814,959)
1,209,852
65,466
(591,131)
(107,967)
(337,699)
(25,292)
17,646
230,875
(31,636)
199,239
3.32
1,308,950
(447,719)
861,231
1,129
(467,755)
(46,574)
(186,993)
(10,613)
8,324
8,551
167,300
(36,100)
131,200
3.26
13,213,160
8,235,508
670,407
22,570
38,368
620
22,180,633
13,471,801
8,639,214
670,407
25,058
54,231
22,860,711
9,918,258
9,386,494
670,407
25,063
34,143
20,034,365
6,585,581
8,605,476
670,407
25,063
37,978
9,073
15,933,578
8,718,964
3,653,846
670,963
25,063
41,344
13,110,180
8,685,256
3,839,086
666,068
25,057
22,339
13,237,806
7,823,749
3,686,557
666,068
25,083
16,244
12,217,701
3,454,781
3,796,043
655,143
25,083
9,833
218,400
8,159,283
3,158,410
852,882
25,083
297,381
4,333,756
2,524,725
895,754
25,083
3,445,562
196,666
909,040
313,941
138,215
1,985,510
743,927
4,287,299
181,338
740,558
402,412
168,994
321,731
588,394
2,403,427
171,481
687,631
579,332
199,870
1,140,134
547,136
3,325,584
118,541
679,512
656,899
183,568
10,938
314,429
1,963,887
129,239
519,691
519,057
77,925
2,960,000
612,296
4,818,208
127,992
396,993
450,685
30,323
504,494
1,510,487
127,577
807,060
599,032
60,080
25,379
394,502
2,013,630
96,185
649,032
1,223,527
27,471
685
424,974
2,421,874
61,304
380,179
321,241
52,793
10,000
5,960
249,421
1,080,898
44,677
304,984
217,602
24,346
191,560
661,361
1,444,530
26,467,932
25,264,138
23,359,949
17,897,465
17,928,388
14,748,293
14,231,331
10,581,157
5,414,654
4,890,092
EQUITY & LIABILITIES
Stated capital
9,500,247
3,886,925
Revenue reserves
4,708,642
18,095,814
100,442
Total equity
18,196,256
9,500,247
3,628,684
3,165,257
16,294,188
92,623
16,386,811
9,500,247
1,791,313
2,482,461
13,774,021
67,725
13,841,746
9,500,247
761,197
1,379,022
11,640,466
63,689
11,704,155
9,500,247
772,879
870,373
11,143,499
56,269
11,199,768
5,859,880
620,791
695,953
7,176,624
47,111
7,223,735
5,859,880
303,213
907,451
7,070,544
56,534
7,127,078
595,696
2,558,418
970,173
4,124,287
48,680
4,172,967
595,696
2,468,238
579,149
3,643,083
63,244
3,706,327
595,696
2,443,733
468,837
3,508,266
47,543
3,555,809
OPERATING RESULTS
Revenue
Cost of sales
Gross profit
Profit on disposal of non-current investments
Finance expenses
Finance Income
Share of associate company profits
Profit/(loss) before tax
Tax expense
Profit/(loss) for the year
Earnings per share - Rs.
ASSETS
Non current assets
Intangible assets
Deferred tax assets
Current assets
Inventories
Total assets
215
31st March
In Rs.000s
Non current liabilities
Negative goodwill
Non- interest bearing borrowings
Employee benefit liabilities
Current liabilities
Short term borrowings
Current portion of Interest bearing borrowings
Bank overdrafts
Total equity and liabilities
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
4,245,400
144,361
113,836
68,426
63,752
4,635,775
5,571,060
114,422
89,346
34,160
59,253
5,868,241
5,809,814
49,337
84,677
1,923
57,392
6,003,143
2,615,273
34,987
78,713
2,248
47399
2,778,620
3,006,492
48,521
65,974
2,573
3,123,560
79,536
3,184,228
48,784
61,008
2,898
3,376,454
79,536
3,582,006
64,028
51,641
3,223
3,780,434
82,655
1,977,188
89,880
41,046
2,190,769
423,771
149,610
121,053
57,276
40,893
792,603
478,338
162,023
1,052
63,060
38,703
743,176
858,347
258,340
110,892
292,991
1,840,626
274,705
3,635,901
992,007
104,846
125,783
240,374
1,325,111
220,965
3,009,086
826,718
299,271
120,722
250,185
1,005,220
1,012,944
3,515,060
206,017
394,489
120,068
82,500
821,440
1,790,176
3,414,690
213,372
1,038,340
124,681
7,606
872,741
1,348,320
3,605,060
199,388
666,704
200,762
6,259
2,500
652,901
2,419,590
4,148,104
262,796
758,800
109,104
7,627
2,500
479,196
1,703,796
3,323,819
161,348
650,329
85,894
2,344,230
57,964
917,656
4,217,421
70,035
310,394
27,481
334
269,520
237,960
915,724
152,467
290,939
33,569
18,516
139
95,477
591,107
26,467,932
25,264,138
23,359,949
17,897,465
17,928,388
14,748,293
14,231,331
10,581,157
5,414,654
4,890,092
Rs. Bn
12
Rs. Bn
2.0
Rs. Bn
30
10
1.5
25
8
1.0
6
4
2
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
REVENUE
20
15
0.5
0
(0.5)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
PROFIT AFTER TAX
10
5
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
TOTAL ASSETS
216
GROUP REAL ESTATE PORTFOLIO
Owning Company and location
Buildings (Sq Ft)
Land in acres
Freehold property
Net book value
Leasehold property
Rs.’000
Rs.’000
2014
2013
2014
2013
2014
2013
2014
2013
425,684
425,684
11.39
11.39
-
-
3,092,474
3,104,334
236,524
236,524
2.32
2.32
11.02
11.02
662,087
700,808
233,965
233,965
0.29
0.29
4.36
4.36
1,196,734
1,237,785
202,999
202,999
-
-
25.48
25.48
649,874
665,689
121,767
121,767
-
-
9.34
9.34
372,434
387,000
-
-
0.11
0.11
-
-
-
-
173,900
160,550
5.80
5.80
-
-
948,937
902,259
3,700
3,700
-
-
10.00
10.00
764
622
4,485
4,485
44.37
44.37
-
-
667,600
667,600
120,910
120,910
13.24
13.24
-
-
767,699
771,840
-
-
14.64
14.64
-
-
226,368
226,368
-
-
25.15
25.15
-
-
69,997
70,000
111,529
110,248
-
-
11.25
11.25
425,108
438,015
-
-
6.50
6.50
-
-
148,850
148,850
-
-
33.69
8.43
-
-
120,478
35,500
246,358
246,358
-
-
18.62
18.62
409,763
347,862
170,877
170,877
-
-
13.75
13.75
369,807
419,101
Properties - Sri Lanka
Beruwala Holiday Resorts (Pvt) Ltd
Cinnamon Bey, Beruwala
Bentota Beach Hotel, Bentota
Chaaya Tranz, Hikkaduwa
Habarana Lodge Ltd
Cinnamon Lodge, Habarana
Chaaya Village, Habarana
International Tourists and Hoteliers Ltd
Beruwala
Kandy Walk Inn Ltd
Cinnamon Citadel, Kandy
Rajawella Hotels Company Ltd
Mahaberiatenna, Kandy
Resort Hotels Ltd
Medway Estate, Nilaveli
Chaaya Blu, Trincomalee
Trinco Walk Inn Ltd
Trincomalee
Randunukelle Estate, Wirawila
Cinnamon Wild, Tissamaharama
Ahungalle Holiday Resorts (Pvt) Ltd
Ahungalle
Vaakarai
Properties - Maldives
Chaaya Lagoon Hakuraa Huraa
Total
150,412
150,412
-
-
13.42
13.42
771,482
774,348
2,203,110
2,188,479
157.50
132.24
117.24
117.24
10,900,466
10,897,981
217
DIRECTORS OF SUBSIDIARY COMPANIES
SRI LANKA
CEYLON HOLIDAY RESORTS LIMITED
Mr S C Ratnayake - Chairman
Mr A D Gunewardene
Mr J E P Kehelpannala
Mr B J S M Senanayake
HABARANA LODGE LIMITED
Mr S C Ratnayake – Chairman
Mr A D Gunewardene
HABARANA WALK INN LIMITED
Mr A D Gunewardene
INTERNATIONAL TOURISTS AND
HOTELIERS LIMITED
Mr A D Gunewardene
Mrs D C Alagaratnam
KANDY WALK INN LIMITED
Mr A D Gunewardene
Mr R T Molligoda
RAJAWELLA HOTELS COMPANY LTD
Mr A D Gunewardene
Mr J R Gunaratne
TRINCO WALK INN LIMITED
Mr A D Gunewardene
RESORT HOTELS LIMITED
Mr A D Gunewardene
WIRAWILA WALK INN LIMITED
Mr S L Ratnayake - Chairman
Mr A D Gunewardene
Mrs D C Alagaratnam
YALA VILLAGE (PRIVATE) LIMITED
Mr S C Ratnayake – Deputy Chairman
Mr A D Gunewardene
Mr J A Davis
Mr M A Perera - Chairman
BERUWALA HOLIDAY RESORTS
(PRIVATE) LIMITED
Mr A D Gunewardene
TRINCO HOLIDAY RESORTS (PRIVATE)
LIMITED
Mr A D Gunewardene
HIKKADUWA HOLIDAY RESORTS
(PRIVATE) LIMITED
Mr A D Gunewardene
AHUNGALLA HOLIDAY RESORTS
(PRIVATE) LIMITED
Mr A D Gunewardene
218
DIRECTORS OF SUBSIDIARY COMPANIES CONTD.
MALDIVES
MAURITIUS
JOHN KEELLS MALDIVIAN RESORTS
(PTE) LIMITED
Mr A D Gunewardene
Mr S A S Perera
JOHN KEELLS HOTELS MAURITIUS (PVT)
LIMITED
Mr A D Gunewardene
Mrs D C Alagaratnam
Mr K D Joory
Mr A F Soreefan
TRAVEL CLUB (PTE) LIMITED
Mr A D Gunewardene
Mr S A S Perera
FANTASEA WORLD INVESTMENTS
(PTE) LIMITED
Mr A D Gunewardene
Mr S A S Perera
TRANQUILITY (PTE) LIMITED
Mr A D Gunewardene
Mr S A S Perera
219
GLOSSARY OF FINANCIAL TERMS
ACCOUNTING POLICIES
CAPITAL EXPENDITURE
EFFECTIVE TAX RATE
The specific principles, bases, conventions, rules and
practices adopted by an enterprise in preparing and
presenting Financial Statements.
The total additions to property, plant and equipment.
Tax expense divided by the profit before tax.
EPS GROWTH
Percentage of the increase in the EPS over the previous
year.
Recognising the effects of transactions and other
events when they occur without waiting for receipt or
payment of cash or its equivalent.
The process by which corporate entities are governed. It
is concerned with the way in which power is exercised
over the management and direction of entity, the
supervision of executive actions and accountability to
owners and others.
AMORTISATION
DEBT/EQUITY RATIO
The systematic allocation of the depreciable amount of
an intangible asset over its useful life.
Debt as a percentage of shareholders’ funds and noncontrolling interest.
ACCRUAL BASIS
CAPITAL EMPLOYED
DEFERRED TAX
Shareholders’ funds plus non-controlling interest and
debt.
Sum set aside in the Financial Statements for taxation
that may become payable in a financial year other than
the current financial year.
CASH EQUIVALENTS
Short term highly liquid investments that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
DIVIDEND YIELD
Dividend earned per share as a percentage of its market
value.
CONTINGENCIES
EARNINGS PER SHARE (EPS)
A condition or situation existing at reporting date
where the outcome will be confirmed only by
occurrence or non-occurrence of one or more future
events.
Profit attributable to equity holders of the parent
divided by the weighted average number of ordinary
shares in issue during the period.
EBIT
CURRENT RATIO
Current assets divided by current liabilities.
Earnings before interest and tax (includes other
operating income).
CAPITAL RESERVES
EBITDA
Reserves identified for specific purposes and considered
not available for distribution.
Earnings before interest, tax, depreciation and
amortisation.
EQUITY METHOD
The equity method is a method of accounting whereby
the investment is initially recognised at cost and
adjusted thereafter for the post-acquisition changes in
the investors’ share of net assets of the investee. The
income statement of the investor includes the investor’s
share of the profit or loss of the investee.
FAIR VALUE
Fair value is the amount at which an asset could be
exchanged between a knowledgeable willing buyer
and a knowledgeable willing seller in an arm’s length
transaction.
FINANCE LEASE
A contract whereby a lessor conveys to the lessee the
right to use an asset for rent over an agreed period of
time which is sufficient to amortise the capital outlay
of the lessor. The lessor retains ownership of the asset
but transfers substantially all the risks and rewards of
ownership to the lessee.
GROUP
A group is a parent, all its subsidiaries and joint
ventures.
GUARANTEES
Three party agreement involving a promise by one
party (the guarantor) to fulfill the obligations of a
person owing a debt if that person fails to perform.
220
GLOSSARY OF FINANCIAL TERMS CONTD.
IMPAIRMENT
MARKET CAPITALISATION
This occurs when recoverable amount of an asset is less
than its carrying amount.
Number of shares in issue at the end of period
multiplied by the market price at end of the period.
INTANGIBLE ASSET
NET ASSETS
An intangible asset is an identifiable non-monetary
asset without a physical substance.
Total assets minus current liabilities, minus long term
liabilities and minus minority interest.
the other party in making financial and operating
decisions, directly or indirectly.
RETURN ON EQUITY
Profit attributable to shareholders as a percentage of
average shareholders’ funds.
RETURN ON ASSETS
INTEREST COVER
NET ASSETS PER SHARE
Profit after tax divided by the average assets.
Consolidated profit before interest and tax over finance
expenses.
Shareholders’ funds divided by the weighted average
number of ordinary shares in issue.
SEGMENT
KEY MANAGEMENT PERSONNEL
OPERATIONAL RISK
Constituent business units grouped in terms of
similarity in operations and locations.
Key management personnel are those persons having
authority and responsibility for planning, directing
and controlling the activities of the entity, directly or
indirectly, including any Director (whether Executive or
otherwise) of that entity.
This refers to the risk of loss resulting from inadequate
or failed internal processes, people and systems or from
external events.
MATERIALITY
The relative significance of a transaction or an
event, the omission or misstatement of which could
influence the economic decisions of users of Financial
Statements.
NON-CONTROLLING INTEREST
PRE-TAX RETURN ON CAPITAL EMPLOYED
Consolidated profit before interest and tax as a
percentage of average capital employed at year end.
SUBSTANCE OVER FORM
The consideration that the accounting treatment
and the presentation in Financial Statements of
transactions and events should be governed by their
substance and financial reality and not merely by legal
form.
PRICE EARNINGS RATIO
SHAREHOLDERS’ FUNDS
Market price per share over Earnings per Share.
Shareholders’ funds consist of stated capital plus
capital and revenue reserves.
PRUDENCE
Part of net results of operations and net assets of
subsidiaries attributable to interests which are not
owned, directly or indirectly through subsidiaries, by
the Parent Company.
Inclusion of a degree of caution in the exercise of
judgement needed in making the estimates required
under conditions of uncertainty, such that assets or
income are not overstated and liabilities or expenses
are not understated.
MARKET VALUE PER SHARE
RELATED PARTIES
The price at which an ordinary share can be purchased
in the stock market.
Parties where one party has the ability to control
the other party or exercise significant influence over
TOTAL DEBT
Long term loans plus short term loans and overdrafts.
TOTAL VALUE ADDED
The difference between net revenue (including other
income) and expenses, cost of materials & services
purchased from external sources.
221
NOTICE OF MEETING
Notice is hereby given that the Thirty Fifth Annual General Meeting of John Keells
Hotels PLC will be held on 30th June 2014 at 3.30 p.m at the John Keells Staff dining
hall at No. 117, Sir Chittampalam A. Gardiner Mawatha, Colombo 2, for the following
purposes:
1. To read the Notice convening the Meeting.
2. To receive and consider the Annual Report and Financial Statements of the
Company for the Financial Year ended 31st March 2014 with the Report of the
Auditors thereon.
3. To re-elect as Director, Mr. R T Wijesinha, who retires in terms of Article 84 of
the Articles of Association of the Company. A brief profile of Mr. R T Wijesinha is
contained in Page 52 of the Annual Report.
4. To re-elect as Director, Mr. N B Weerasekera, who retires in terms of Article 84 of
the Articles of Association of the Company. A brief profile of Mr. N B Weerasekera
is contained in Page 53 of the Annual Report.
5. To re-elect as Director, Mr. T L F W Jayasekera, who retires in terms of Article
90 of the Articles of Association of the Company. A brief profile of Mr. T L F W
Jayasekera is contained in Page 53 of the Annual Report.
6. To re-appoint Messrs Ernst & Young, Chartered Accountants, as Auditors and to
authorise the Directors to determine their remuneration.
7. 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,
Keells Consultants (Private) Limited
Secretaries
5th June 2014
Notes:
z
A member unable to attend is entitled to appoint a Proxy to attend and vote in
his/her place.
z
A Proxy need not be a member of the Company.
z
A member wishing to vote by Proxy at the Meeting may use the Proxy Form
enclosed.
z
In order 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.
z
If a poll is demanded, a vote can be taken on a show of hand or by a 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 appointor has indicated the manner of voting, only the appointors
indication of the manner to vote will be used
222
NOTES
223
FORM OF PROXY
FOR
I/We ............................................................................................................................................................. of
................................................................................................................................................................. being
a member/s of John Keells Hotels PLC hereby appoint
......................................................................................................................................................................... of
........................................................................................................................................ or failing him/her
Mr. Susantha Chaminda Ratnayake of Colombo
Mr. Ajit Damon Gunewardene of Colombo
Mr. James Ronnie Felitus Peiris of Colombo
Mr. Jayantissa Emalka Pohath Kehelpannala of Colombo
Mr. Ranel Tissa Wijesinha of Colombo
Mr. Balapuwaduge Jestus Sunimal Mendis Senanayake of Colombo
Mr. Nissanka Bandara Weerasekera of Colombo
Mr. Trevine Lalith Francis Waas Jayasekera of Colombo
or failing him
or failing him
or failing him
or failing him
or failing him
or failing him
or failing him
as my/our proxy to vote for me/us on my/our behalf at the Thirty Fifth Annual
General Meeting of the Company to be held on the 30th June 2014 at 3.30 p.m and
at any adjournment thereof and at every poll which may be taken in consequence
thereof.
Note:
Instructions as to completion of form of proxy are set out on the reverse hereof.
AGAINST
To re-elect as Director, Mr. R T Wijesinha who retires in terms of
Article 84 of the Articles of Association of the Company.
To re-elect as Director, Mr. N B Weerasekera, who retires in terms
of Article 84 of the Articles of Association of the Company.
To re-elect as Director, Mr. T L F W Jayasekera, who retires in
terms of Article 90 of the Articles of Association of the Company.
To re-appoint Auditors Messrs. Ernst & Young Chartered
Accountants and to authorise the Directors to determine their
remuneration.
Signed this …………………...……. day of …………..…… Two Thousand and Fourteen.
……………………………………………………….
Signature/s of shareholder/s
224
FORM OF PROXY CONTD.
INSTRUCTIONS AS TO COMPLETION OF PROXY
1. Kindly complete the Form of Proxy by filling in legibly your full name and
address and that of the Proxy holder. Please sign in the space provided and fill in
the date of signature.
2. The instrument appointing a Proxy shall, in the case of an individual, be signed
by the appointer or by his Attorney and in the case of a Corporation must be
executed under the Common Seal or in such other manner prescribed by its
Articles of Association or other Constitutional documents.
3. If the Proxy Form is signed by an Attorney, the relevant Power of Attorney or a
notarially certified copy thereof, should also accompany the completed Form of
Proxy if it has not already been registered with the Company.
4. To be valid, the completed Form of Proxy should be deposited at the Registered
Office of the Company at No. 117, Sir Chittampalam A. Gardiner Mawatha,
Colombo 2 not later than 48 hours before the time appointed for the holding of
the meeting.
CORPORATE INFORMATION
NAME OF COMPANY
BANKERS
Bank of Ceylon
Deutsche Bank A.G
Hongkong and Shanghai Banking Corporation
Nations Trust Bank
Hatton National Bank
Habib Bank Ltd
LEGAL FORM
Public Limited Liability Company
Incorporated in Sri Lanka on 1 Oct 1979
STOCK EXCHANGE LISTING
The issued shares of John Keells Hotels PLC are listed on
the Colombo Stock Exchange
COMPANY REGISTRATION NO.
PQ 8
DIRECTORS
S C Ratnayake – Chairman
A D Gunewardene
J R F Peiris
J E P Kehelpannala
B J S M Senanayake
R T Wijesinha
N B Weerasekera
D A Cabraal (resigned w.e.f 30.10.2013)
T L F W Jayasekera (appointed w.e.f 01.11.2013)
SECRETARIES AND REGISTRARS
117, Sir Chittampalam A. Gardiner Mawatha
Colombo 2
HEAD OFFICE & REGISTERED OFFICE
OF THE COMPANY
117, Sir Chittampalam A. Gardiner Mawatha,
Colombo 2
Telephone : (94-11) 2421101-15,
(94-11) 2306000
Facsimile
: (94-11) 2439046
E-mail
: htlres@keells.com
Web
: www.johnkeellshotels.com
HOTEL RESERVATIONS
117, Sir Chittampalam A. Gardiner Mawatha,
Colombo 2
Telephone : (94-11) 2306600,
(94-11) 2439049-51,
Facsimile
: (94-11) 2320862
E-mail
: htlres@keells.com
Web
: www.cinnamonhotels.com
www.chaayahotels.com
AUDITORS
Ernst & Young
Chartered Accountants
P.O. Box 101
Colombo
Design & Concept by :
Designs (Pvt) Ltd. | Printed by : Aitken Spence Printing & Packaging (Pvt) Ltd.

JOHN KEELLS HOTELS PLC | ANNUAL REPORT 2013/2014

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