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DOLPHIN HOTELS PLC | ANNUAL REPORT 2012/13
www.serendibleisure.com
DOLPHIN HOTELS PLC
ANNUAL REPORT 2012/13
CORPORATE INFORMATION
NAME OF THE COMPANY
MANAGING AGENT
Dolphin Hotels PLC
(Formally Stafford Hotels PLC)
Serendib Leisure Management Limited
AUDITORS
LEGAL FORM
Contents
3
4
6
10
14
16
20 25 26 29 34 45 46 50 52 Our Vision, Mission & Core Values
Financial Highlights (Group)
Serendib Leisure Properties
Chairman’s Message
Board of Directors
Senior Management
Management Discussion and Analysis
Hotel Management
Sustainability Report
Risk Management
Corporate Governance
Report of the Remuneration Committee
Annual Report of the Board of Directors
Directors’ Interest in Contracts with the Company
Report of the Audit Committee
Financial Reports
56 57 58 59 60 61 62
63 64 Statement of Directors’ Responsibility in Relation to
Preparing Financial Statements
Independent Auditors’ Report
Statement of Financial Position
Income Statement
Statement of Comprehensive Income
Statement of Changes in Equity (Group)
Statement of Changes in Equity (Company)
Cash Flow Statement
Notes to the Financial Statements
Supplementary Information
100 Investor Information
102 Ten Year Financial Review (Group)
103 Notice of Meeting
107 Form of Proxy
IBC Corporate Information
A public quoted Company with Limited Liability
incorporated on 20 January 1981 under the
Companies Ordinance(Cap 145) and re-registered
under the Companies Act No. 7 of 2007
Ernst & Young
Chartered Accountants
201, De Saram Place,
Colombo 10
BANKERS
COMPANY REGISTRATION NO.
PQ224
Commercial Bank of Ceylon PLC
Hatton National Bank PLC
Nations Trust Bank PLC
BOARD OF DIRECTORS
A. N. Esufally – Chairman (Alt V. H. A. Perera)
B. S. M. De Silva
A. R. Gamage (Mrs) - (Alt. Prof. L. D. K. B. Gamage)
W. M. De F. Arsakularatne
D. T. R. De Silva
HOTEL
Club Hotel Dolphin
Waikkal
Tel : + 94 (31) 4877111
+ 94 (31) 2277788
Fax: + 94 (31) 2279437
REGISTERED OFFICE
Level 05, Hemas House,
No. 75, Braybrooke Place,
Colombo 02.
Tel : +94 (11) 4790500-6
Fax : +94 (11) 2438933
E-mail : [email protected]
Website : www.serendibleisure.com
SECRETARIES & REGISTRARS
Hemas Corporate Services (Pvt) Ltd.
Colombo 02
Tel : + 94 (11) 4731731
Fax : +94 (11) 4731777
Produced by Copyline (Pvt) Ltd Printed by Printel (Pvt) Ltd
Whether it’s by merging the best of both
worlds, by offering the fun and excitement
of family and friends or just a quiet
haven in which to relax, we at Club Hotel
Dolphin aim to please. And it shows; with
our exceptional results within the year
which epitomized our commitment to
continuously providing quality and raising
the bar in the industry. That is why our
standard of service will truly make
your stay… unforgettable.
2
Dolphin Hotels PLC I Annual Report 2012/13
OUR VISION
“To be a leading Hotel Group in the country operating
lifestyle properties with a Sri Lankan flavour”
OUR MISSION
| Create experiences to write home about by exceeding the
expectations of Our Guests at all times
| Our People will be treated with respect, dignity and fairness
| We will improve The Community we work in and obtain their
co-operation to support our industry
| We will strive to deliver superior returns to Our Shareholders
OUR CORE VALUES
| Concern for People
| Passion for Customers
| Obsession for Performance
| Driven by Innovation
3
FINANCIAL HIGHLIGHTS (Group)
Year ended 31 March
2013
2012
Revenue
Rs. ‘000s
765,341
643,862
Earnings before Interest, Tax, Depreciation & Amortisation (EBITDA)
Rs. ‘000s
277,150
178,736
Profit before Tax
Rs. ‘000s
230,821
100,474
Profit after Tax
Rs. ‘000s
198,702
92,925
Earnings per Share
Rs. 6.3
2.9
Cash Earnings per Share
Rs. 8.3
5.8
Interest Cover
Times
14.5
4.1
Return on Equity (ROE)
%
19.4
10.6
1,625,131
1,522,627
Balance Sheet Highlights and Ratios
Total Assets
Rs. ‘000s
Total Debt
Rs. ‘000s
381,140
451,886
Total Shareholders’ Funds
Rs. ‘000s
1,026,841
875,602
No. of Shares in Issue
‘000s
31,621
31,621
Net Assets per Share
Rs.
32.5
27.7
Debt / Total Equity
%
37
52
Debt / Total Assets
%
23
30
Market Price of Share
Rs. 33
30
Market Capitalisation
Rs. ‘000s
1,043,509
948,644
Price Earnings Ratio
Times
5
10
Market/ Shareholder Information
4
765Mn
Rs.338Mn
Rs.231Mn
Rs.303Mn
Rs.
Revenue
19 % Growth
2012 : Rs. 644 Mn
Gross Operating Profit
37% Growth
2012 : Rs. 246 Mn
Profit Before Tax
130% Growth
2012 : Rs. 100 Mn
Cash Generated from Operations
36% Growth
2012 : Rs. 222 Mn
Earnings Per Share
Rs.
7
6
5
4
3
2
1
0
2009
2010
2011
2012
Net Assets Per Share
2013
Market Price Per Share
Rs.
60
Rs.
60
50
50
40
40
30
30
20
20
10
2009
2010
2011
2012
2013
10
2009
2010
2011
2012
2013
5
Serendib Leisure properties
One of the leading hotel
groups in Sri Lanka,
Serendib Leisure has built
up a sound reputation
as a renowned operator
of some of the most
unique hotel brands in
the island, underscored
by a sustainable tourism
philosophy.
The Serendib Leisure Group’s hospitality
offerings encompass the island’s key
attractions: beach, jungle and lagoon.
Each property is known for its stunning
architecture, strategic location and
excellent service.
Avani Bentota Resort & Spa, Avani
Kalutara Resort, Club Hotel Dolphin
and Hotel Sigiriya are popular holiday
destinations in themselves and the
clientele is multi-cultural and hails
from many countries in the world.
Serendib Leisure hotels are nationally
and internationally acclaimed for their
skilled culinary teams and an extremely
professional service staff that goes the
extra mile to make our guests feel special
and cared for.
6
Designed by world-renowned architect Geoffrey Bawa,
who took inspiration from an 18th century Dutch village
to create this home-away-from-home. Located on one
of the best beaches on the Southern Coast, this resort
is an escape of laid back relaxation.
Situated in close proximity to the airport, Club Hotel
Dolphin is the only Hotel in Sri Lanka to offer the best of
both worlds! Be it an adventure-filled holiday or a chilled
out one, Club Hotel Dolphin provides fun, adventure
and relaxation for the entire family.
Located at the foot of the magnificent Sigiriya Rock
Fortress, this charming but rustic hotel has been in the
forefront in energy conservation and has been offering
unique cultural experiences to guests for decades.
Nestled in an estuary, where the majestic Kalu Ganga
meets the Indian Ocean, AVANI Kalutara Resort blends
authentic Sri Lankan culture and old colonial charm with
contemporary design flair and all the ingredients that
really matter for a quiet romantic holiday.
7
8
Splashing waves wetting the golden
sandy beach on a bright and sunny
morning gives you the awakening
feeling of a relaxed holiday. Take a dip
in the wide blue pool and unwind and
rejuvenate with a refreshing drink from
our pool bar.
9
CHAIRMAN’S MESSAGE
It is with great pleasure that I welcome
you to the 32nd Annual General Meeting
of Dolphin Hotels PLC, particularly
as we are reviewing the best year of
performance in the history for your
Company. This excellent result has been
achieved in spite of the challenging
economic environment and volatile
exchange rate fluctuations.
In the calendar year 2012, Sri Lanka’s
tourism industry reached twin milestones
– visitor arrivals topped 1 million and
industry earnings surpassed US$ 1 Billion.
This boosted the economy as it provided
valuable foreign reserves and contributed
towards job creation.
Having become a Billion Dollar Industry,
the tourism sector will continue to play an
integral role towards the country’s fortunes
and her macro-economic plans.
Global Tourism Landscape
World travel continued its forward march in
2012. International tourism receipts grew by
4% to US$ 1,075 billion and international
tourist arrivals also grew by 4%, reaching
1,035 million travellers across the world. In
10
spite of the challenging global economic
conditions particularly in Western Europe,
growth in international tourism is expected
to continue in 2013 at a similar pace led by
growth in Asia Pacific.
Destinations in Asia Pacific recorded a
6% increase in arrivals and earnings of
US$ 323 billion which accounts for 30%
of international tourism receipts. In the
emerging economies, the highest receipts
were recorded by Thailand (+25%) and
India (+22%).
While demand from the traditional markets
remains stagnant, the emerging economies
are proving to be an attractive tourism
market. Growth is expected to be fuelled
from the BRIC nations with China leading
the way. The Russian Federation has risen
to the number 5 position in international
terms. In Sri Lanka, India provides the
largest share of visitors to our shores. This
trend will require our industry to re-engineer
itself to meet the changing requirements of
the travellers from these markets.
Your management is using their binoculars
to look into the future and align their
marketing strategies to the future trends
to ensure they continue to deliver high
occupancies and yields at your hotel.
Sri Lanka’s Tourism
With mounting accolades, Sri Lanka is
attracting the world’s attention as a prime
travel destination with over a million tourists
arriving in Sri Lanka in 2012. The influx of
tourists post-war has continued resulting in
a 17.5% growth in visitor arrivals in 2012.
Sri Lanka’s industry is planned to receive
1.2Mn visitors in 2013. The first 4 months
to April reported a growth of 11.7% which
is ahead of the monthly plan. Coupled with
the growth in arrivals, many new hotels are
being build across the country with several
international chains entering the hotel
management space. With this, comes the
added value of the branding, international
marketing and expertise.
Sri Lanka has to compete with other well
established and mature destinations in
the region. In order to do so, several key
strategic issues need to be dealt with at
national level, many of which I highlighted in
last year’s message too;
•
Sri Lanka needs to be branded and
marketed internationally. Without this,
the Sri Lankan tourism industry may
not achieve its full potential.
•
It is vital to carry out international
promotions in emerging new markets.
In 2012, China became the number
one source market in terms of tourism
expenditure. Chinese travellers have
taken the number one slot in terms of
arrivals to Thailand and Maldives.
•
•
•
The focus on training and skills
development of staff at all levels in
the tourism industry needs to be
accelerated to meet the requirements
of the discerning traveller.
The administrative process for
approval of construction of hotels
and tourist establishments need
to be further simplified to attract
international and local investors to
invest in the tourism industry in Sri
Lanka.
The protection and preservation of our
nation’s tourism assets is critical for
the sustainability of the industry.
Performance of Dolphin Hotels PLC
As mentioned earlier, this has been a
record breaking year in terms of financial
performance.
The key highlights are:Net Turnover
Annual Occupancy
(GOP)
Profit Before Tax (PBT)
Rs. 765Mn Up 19%
Down 1%
86%
Rs. 337Mn Up 37%
Rs. 231Mn Up 130%
I am delighted to report that despite the
marginal drop in occupancy, these are the
best ever financial results achieved by your
Company both in terms of revenue and
profit. The annual occupancy achieved
by your hotel is reported to be one of the
highest in the country.
Awards
I am happy to announce that your hotel
managed to win international recognition
and acclaims during the year 2012/13
which are discussed in detail in the
Management Discussion & Analysis section
of this report from page 20 to 24.
Importance of Good Governance
Your Board of Directors has conscientiously
ensured that governance standards align
with best practices and functions effectively.
The Management’s actions are guided by
high integrity and they are committed to
establishing a transparent and accountable
framework that promotes the interests of all
stakeholders.
Prospects
To be in par with achieving new heights,
your hotel is being refurbished in order
to maximise the long term viability and
profitability of the Company.
Approximately Rs. 500Mn is being invested
to upgrade the 104 rooms at Club Hotel
Dolphin. The hotel is scheduled to be fully
operational in time for the winter season of
2013.
In Recognition and Appreciation
The Board has established guiding
principles and processes which provide
a framework for the effective governance
of the Group which are listed in detail in
the Corporate Governance section of this
report from page 34 to 44. They continue
to ensure that governing mechanisms and
standards are current and conform to best
practices.
As yet another an unprecedented year for
the Dolphin Hotels PLC come to a close, I
would like to thank the Board of Directors of
Dolphin Hotels PLC for their guidance and
unwavering support. We look forward to
their continued support in the New Year.
I would like to extend my appreciation to the
Board of Management headed by Mr. Ranil
De Silva whose leadership and dedication
has been paramount in achieving this year’s
record results.
Sustainable Tourism
The need for sustainable tourism has
become more pressing in order to
preserve the nation’s natural assets.
Your management is committed to green
concepts and has strategically planned
hotel operations to leave a minimum
ecological footprint.
The management continues to integrate
sustainable practices to all facets of hotel
operations by adopting best practices
in environmental and social governance
while balancing this with its commercial
objectives. As a part of the commitment
to sustainability, your hotel aims to enrich
the community in which it operates.
Concern for the environment and society
in which we operate lies at the core of our
operation. Dolphin Hotels PLC conducts its
business in a manner that is beneficial to all
stakeholders and one that has no negative
impacts on the environment.
I am deeply appreciative for the formidable
effort and dedication of all the employees,
who, again this year, demonstrated their
commitment and passion to serve our
customers. I express my sincere gratitude
to them all. I would also like to extend my
appreciation to the General Manager, Daniel
Ludwig, for his leadership and dedication.
A. N. Esufally
Chairman
30 May 2013
11
12
Give your family a rewarding holiday
at Club Hotel Dolphin where there
are endless activities to keep children
occupied with our skilled animators,
rib-tickling shows at the evening theatre,
tennis, cycling and even horse riding to
give your child a holiday to remember.
13
BOARD OF DIRECTORS
14
1
2
4
5
3
1. A. N. ESUFALLY
3. A. R. GAMAGE (MRS)
5. D. T. R. DE SILVA
Chairman
Independent Director
Non Executive Director
Appointed to the Board in 1994 and
elected Chairman in 2002. He is a
Fellow of both the Institute of Chartered
Accountants of England & Wales and
the Institute of Chartered Accountants
of Sri Lanka. He has experience of over
35 years in the hotel and tourism sector
both in Sri Lanka and overseas and
has been in the forefront of the leisure
industry in Sri Lanka. He is also the
Honorary Consul General of Bhutan in
Sri Lanka and an all Island Justice of
the Peace. Other Directorships include
Hemas Holdings PLC, Serendib Hotels
PLC, Hotel Sigiriya PLC, Printcare PLC,
Mahaweli Reach Hotels PLC, Royal
Palms Beach Hotels PLC and several
other Companies.
Appointed to the Board in 1994. A Fellow
of the Chartered Institute of Management
Accountants U.K. Other directorships
include Hotel Sigiriya PLC and Infocraft
Limited.
Appointed to the Board in 2012. Mr.
De Silva is also the Managing Director
of Serendib Hotels PLC and a Director
of Hotel Sigiriya PLC. He is a Fellow
Member of the Chartered Institute of
Management Accountants UK, Associate
member of the Institute of Chartered
Accountants of Sri Lanka and a Member
of the Chartered Institute of Marketing
UK. He began his career at Ernst &
Young and has worked overseas with a
Multi-National for 10 years. Mr. De Silva
has wide experience locally in diverse
industries having previously held the
position of Group CEO of the DCSL
Group.
2. B. S. M DE SILVA
Independent Director
Appointed to the Board in 1990. Counts
over 20 years experience in the tourism
and leisure industries. Has extensive
experience in the spice industry and
is the Founder Chairman of the Spice
Council. He is the Chairman & Managing
Director of Intercom Group of Companies
and holds directorships in Hotel Sigiriya
PLC and several other companies.
4. W. M. DE F. ARSAKULARATNE
Non Executive Director
Appointed to the Board in 2007. Mr.
Arsakularatne functions as the Chief
Financial Officer of Hemas Holdings PLC.
He is also a member of the Board of
Management of Hemas Holdings PLC.
He has been part of the Hemas Group
for the past 9 years and has over 9 years
experience in the fund management
industry. Mr. Arsakularatne is a CFA
charterholder and Fellow Member of
the Chartered Institute of Management
Accountants (CIMA) U.K. He also holds
a MSc in Investment Management from
the Cass Business School, U. K., a BSc
in Computer Science & Engineering from
the University of Moratuwa, Sri Lanka
and a Postgraduate Diploma in Marketing
from the Chartered Institute of Marketing
(CIM), U.K. Other directorships include
Serendib Hotels PLC, Hotel Sigiriya PLC,
Hemas Power PLC and several other
companies.
15
SENIOR MANAGEMENT
16
1. Ranil De Silva
Managing Director
Refer to Board of Directors profile on
page 15.
Accountants UK, she counts for over
17 years experience in the accounting
profession in diverse sectors such
as Financial services, Inbound travel,
Telecommunications and Outbound
travel.
of Management at the University of
Jayewardenepura. He is a Sri Lankan
prize winner and Member of the
Chartered Institute of Marketing – UK and
is a Chartered Marketer.
2. Ronald Perera
Director / Consultant Employee
Relations and Administration
Ronnie, as he is commonly known, is
arguably the most senior hotelier still
serving the industry in 1968. In 1996,
he joined the Serendib group as Hotel
GM and after obtaining certification from
the Institute of Personnel Management,
shifted to corporate office to head human
resources and administration. He has
previously served in various capacities
at resort belonging to the John Keells
group, including Hotel Ceysands,
Hotel Bayroo (now Chaya Bay) and
Hotel Swanee. He was instrumental
in formulating the Beruwala Hoteliers
association in 1982 and was a member
of the classification committee appointed
in 1985 by the then Ceylon Tourist Board
to evaluate and recommend changes to
the criteria of star class hotels.
3. Indresh Puvimanasinghe
Fernando
Director – Finance
Joined the Transportation sector of the
Hemas group in 2006 and moved to
the Hotel sector in 2011. A Fellow of
the Chartered Institute of Management
4. Sanjika Perera
Director – Business Development and
Projects
He possesses extensive Branding,
Marketing and General Management
experience in diverse sectors such as
FMCG, Retail, B2B and Service Sectors
in South Asia and Western Europe
during a career spanning 19 years.
He last served as the Director – UK
and Ireland for Sri Lanka Tourism. He
read for his MBA at The Postgraduate
Institute of Management, University of
Jayewardenepura. He is a Fellow of the
Chartered Institute of Marketing and
a Chartered Marketer. He is a Board
Member of CIM – Sri Lanka Regional
Office where he currently serves as the
vice-chairman to the CIM Sri Lanka
Regional Board.
5. Suranjith De Fonseka
Director – Sales and Marketing
He has over 10 years industry related
experience and holds a B.A. (Hons)
Degree in Business Administration from
Nottingham Trent University, UK and an
MBA from the Postgraduate Institute
2
4
1
3
5
17
18
The mixture of two worlds in one…
serenity or activity, you have it all at Club
Hotel Dolphin. Relax with peace and
tranquility at the Sea or Garden View
Villas or be a part of bustling activity
staying at a Superior room or a Suite
facing the much talked about wide pool
where fun and frolic is part of every day’s
happenings.
19
MANAGEMENT DISCUSSION AND ANALYSIS
Revenue / Profit before tax
Rs. Mn
800
700
600
500
400
300
200
100
0
08/09
09/10
10/11
11/12
12/13
Revenue
Profit Before Tax
Gross operating profit/
cash generated from
operations
Rs. Mn
350
300
250
200
150
100
50
0
08/09
09/10
10/11
11/12
12/13
Cash Generated from
Operations
2012/13 has been a record year for Dolphin Hotels PLC
both in terms of Revenue and Profits. Revenue of Rs. 765Mn
resulted in Gross Operating Profit (GOP) and Profit Before Tax
(PBT) for the year of Rs. 338Mn and Rs. 231Mn respectively.
20
Financial Review
Overview of Performance
2012/13 has been a record year for
Dolphin Hotels PLC both in terms of
Revenue and Profits. Revenue of Rs.
765Mn resulted in Gross Operating Profit
(GOP) and Profit Before Tax (PBT) for
the year of Rs. 338Mn and Rs. 231Mn
respectively.
Aided by a welcome increase in tourism
into Sri Lanka, Club Hotel Dolphin
enjoyed high occupancy throughout the
year. This enabled the hotel to report
an average occupancy of 86% whilst
maintaining higher room rates which
saw a healthy increase compared to
the previous financial year. The increase
in rates was fully justified by upgraded
facilities and services rendered.
In addition, the relaxation of regulations
on foreign currency loans during the
previous financial year made it possible
to borrow lower interest bearing foreign
currency loans to aid new investments.
This enabled the Group to reduce its
finance costs by 48% compared to
previous year.
Revenue
Revenue increased by a remarkable 19%
to Rs. 765Mn during the financial year
2012/13 compared to last year, with
GOP increasing by 37% to Rs. 338Mn.
This was boosted by the seasonal peak
during the last quarter of the financial
year, the increase in web-based sales
and by attracting new clientele from the
Middle-East during the off-peak season
between May and October. This increase
of 19% in revenue was significant, given
the stiff competition exerted by both
regional and local competitors in the
hotel industry and high inflation regime.
It is also positive to note that the hotel
witnessed growth in all areas of its
revenue including rooms revenue, food
& beverage revenue and other operating
areas.
Administrative expenses of the hotel
increased by 18%. The continued rise
in energy costs was the key factor that
contributed to this increase. Sales and
marketing expenses of the hotel was at
3% of revenue.
Composition of Expenses 2012/13
Composition of Revenue 2012/13
Cost of Sales
Administrative Sales & Marketing
Finance cost
Rooms61%
Food & Beverage
34%
Other5%
Profit before Tax
Club Hotel Dolphin witnessed an
exceptional rise in PBT from last financial
year to the year under review by 130%
achieving Rs. 231Mn. Higher yields
and occupancy was a major factor in
achieving this exceptional growth in
revenue. Further, good cost management
practices adopted by the hotel and
centralising the procurement process
enabled the hotel to improve its GP
margin from 74% to 76%. As a result,
the hotel witnessed notable improvement
in the PBT margin from 16% to 30% in
2012/13 compared to the previous year.
32%
63%
2%
3%
The hotel was also able to increase its
finance income by over 248% to reach
Rs. 6Mn. In order to achieve the same,
the Treasury team used a mix of both
short-term and long-term investments to
optimise the returns.
Equity / Debt
1,200
%
100
1,000
80
Rs. Mn
800
60
600
40
400
20
200
0
08/09
09/10
10/11
11/12
12/13
0
Equity
Debt
Gearing
21
MANAGEMENT DISCUSSION AND Analysis Contd.
Long-haul destinations were popular
for Europeans in 2012, with a healthy
4% increase in trips to overseas
destinations. Europeans travelled more
22
Mar
Jan
Feb
Dec
Oct
Arrivals
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Nov
Tourist Arrivals to
Sri Lanka by month
Sep
Looking ahead to 2013, world tourism is
expected to show resilience once again
with international trips growing in the
3% range demonstrating that tourism is
remarkably stable, despite slow global
economic growth and the impact of the
Euro-Zone crisis.
The internet has now clearly established
itself as the main place to buy travel.
54% of all bookings in 2012 were made
through the web, well ahead of travel
agencies which have slipped back to
24%. Interestingly, this is a global trend
with Asians and South Americans now
catching up with North Americans and
Europeans. Social media are becoming
more and more important to help
consumers plan and enjoy travel as they
switch to online and mobile technology.
The dramatic growth of social media
platforms such as Facebook, Twitter and
YouTube are increasingly being felt in the
travel and tourism sector. Consumers are
using technology more intensively than
ever to talk about their holidays, show
pictures and videos, exchange ideas
about possible holiday trips and seek
opinions and reviews of destinations,
hotels, attractions and countless other
travel-related activities. About 40%
of travellers say that social network
comments influenced their travel planning
while 50% actually based their travel
plans on other people’s reviews
Jul
In 2012, international tourist arrivals
increased by 4% reaching 1,035 million
travellers. The growth is equal to the
4% increase in international tourism
receipts which hit a new record in 2012,
reaching an estimated US$ 1,075 billion
worldwide in spite of continued economic
challenges. Asia Pacific showed the
highest growth across regions with a
7% increase in arrivals, while Americas
achieved the highest increase in tourism
earnings of an increase of 7%. South
Asia witnessed a healthy increase of
4.2% in tourist arrivals and an increase of
5.2% in receipts.
Aug
Key Global Trends
Sri Lanka crossed the much awaited
mark of one million tourist arrivals in 2012
welcoming 1,005,605 visitors to the
country, a 17% growth over the previous
year. Despite the economic recession,
arrivals from traditional Western
European countries such as Germany,
France and the UK increased during the
year with arrivals from Germany recording
an increase of 28%, while arrivals from
the UK and France increased by 8%
and 17% respectively. Meanwhile new
markets continued to strengthen and
India remained the biggest source market
with 176,340 visitors during the year,
which was a growth of 3%, while visitors
from Russia, Japan and China also
contributed to this growth.
Jun
Business Environment
Key travel and tourism trends in Sri
Lanka
Apr
The excellent performance of the hotel
coupled with good working capital
management resulted in the growth of
37% in Cash Generated from Operations
year on year which amounted to Rs.
303Mn.
to the Americas and above all to the
Asia Pacific, with the number of trips
to the region rising by 8%. The boom
market was Russia with a 12% rise in
outbound travel as the strong economy
and increasing affluence combined to
generate more international travel. In
contrast, Germany, the largest outbound
market in Europe, stagnated this year
despite the stable economy, while UK
outbound travel grew by a slight 1%
amidst tough economic conditions.
May
Cash Generation
2009/10
2010/11
2011/12
2012/13
However, occupancy levels at graded
establishments dropped by 5% across
the country from 75% in 2011 to 70% by
end-December 2012 with Colombo city,
Top 10 Market to Sri Lanka in 2012
regional occupancy
performance 2012
%
100
90
80
70
60
50
40
30
20
10
0
Dec
Oct
Nov
Sep
Jul
Aug
Club Hotel Dolphin
Average Occupancy of Hotels
North of Colombo
The hotel enjoys strong patronage from
Western Europe, mainly from Germany
and the United Kingdom. In addition, the
hotel has also been able to successfully
attract the Middle Eastern and Indian
travellers.
India28%
UK18%
Germany11%
France9%
Australia8%
Maldives8%
USA5%
Canada5%
Russia4%
Netherlands4%
To be on par with our operational
improvements and increased demand,
the hotel is now equipped with a fully
automated Property Management
System (PMS). This not only has helped
on the day to day operations of the hotel
but also further improved the internal
control systems strengthening good
governance.
Occupancy
%
88
87
86
85
84
83
82
81
80
08/09
09/10
10/11
11/12
12/13
Recognition of our standards
Jun
However, the rate of growth in arrivals is
showing signs of tapering. The sharp rise
in tourism following the end of war has
now tapered down from 46% in 2010
to 17% by end 2012. There is also a
perception that the country is over-priced
against regional competitors such as
Thailand, Malaysia and Cambodia.
Club Hotel Dolphin is positioned as
an All-Inclusive Club Hotel that offers
a range of sporting and recreational
activities for the entire family but also
allows for time-out and relaxation. This
concept has proved to be extremely
popular among the target groups and
during the current financial year the hotel
reported occupancy of 86% which is
amongst the highest in the country.
May
The positive effect of the tourism boom
has been felt across many industries
including infrastructure development
and construction, as hotels and resorts
across the Island engage in upgrades
and renovations. Several renowned
international hotel and resort chains
including our partner brand Anantara,
Shangri-la, Sheraton and Marriot have
committed to investing in Sri Lanka.
Operational Review
Apr
the south coast, east coast, hill country
and ancient cities all reporting lower
levels of occupancy during the year.
As part of our growth strategy for the
future, Club Hotel Dolphin obtained the
Crescent Rating, certifying the hotel as
an officially compliant hotel with Islamic
food and sanitation standards. This has
made it possible to position the hotels to
cater to the increasing number of Middle
Eastern travellers visiting Sri Lanka.
The service standards of the hotel were
recognised as among the best in the
world by many awarding institutes from
the industry. It gives us great pleasure to
announce that many of these awards are
based on feedback from customers who
have experienced our hospitality or as a
result of our sustainable practices.
• HolidayCheck Award in both 2013
and 2012 for being one of the 99
most popular hotels worldwide in
the Beach Holiday category.
• Travellers’ Choice Award by the
TripAdvisor traveller review website
2013.
• TripAdvisor Certificate of Excellence
in 2012.
• ITS Red Star Award in 2012 for
being one of the best and most
popular 60 hotels worldwide.
23
MANAGEMENT DISCUSSION AND Analysis Contd.
Our People
Prospects
The management of the hotel is always
committed to investing in its most
valuable asset – its Human Capital.
The development of Human Capital
is therefore an integral part of hotel’s
sustainable strategy. As Sri Lanka’s
leisure industry is faced with a supply
shortage of skilled human resources,
Club Hotel Dolphin too, is grappling with
this challenge. Therefore, we are gearing
towards best practices in managing
our human resources as we encourage
continuous development of skills and
knowledge of our staff at all levels. In the
current financial year, we doubled our
training budget, which re-emphasises our
commitment towards our people. Along
with our partner, Minor International,
we also provided many opportunities
for cross exposure by sending our staff
abroad to international hotels in the
Maldives, Dubai and Thailand to get
first-hand exposure on industry best
practices.
Following the best year in the history
of the Club Hotel Dolphin, we are now
investing in the future. We will upgrade
the hotel to cater to the growing
sophisticated customer needs as well
as to counter the growing competition.
This will help us to reach new markets
and provide new and better facilities and
services.
Our training programmes have been
conducted by industry experts; both local
and foreign trainers. Our primary focus
has always been on customer service,
operational excellence and ethical
conduct. Training is also provided in
language proficiency, first aid, leadership
and soft skills such as grooming and
personal hygiene. These deliver a two
pronged advantage – enhancing the
guest experience and satisfying personal
development and knowledge building of
our people.
24
We are investing approximately
Rs. 500Mn to upgrade 104 rooms at the
Club Hotel Dolphin in the summer season
of 2013/14. The hotel is scheduled to
be fully operational in time for the winter
season of 2013/14.
We will continue our market development
drive by tapping new markets such as
the Middle East, Japan, India, China and
Russia, whilst continuing to expand our
traditional markets in Western Europe.
Keeping pace with the growing popularity
of online and mobile media, we will
develop an integrated platform for such
technology. Plans are also underway
to develop a mobile-friendly website
that allows our guests to book their
accommodation at Club Hotel Dolphin
via mobile devices. We will also enhance
our online presence to increase our share
of online sales by further enhancing our
corporate website and by marketing via
online travel agents.
The tourism sector is facing a situation
of rising costs and stringent competition
from both local and regional competitors.
Increasing energy costs, wages and
import tariffs will result in overall increases
in operating costs and hotel rates, which
may dampen growth momentum of the
sector. Amidst this, we are confident of
our strategy to differentiate our properties
successfully and maintain our market
share.
In 2012/13 we were determined to
“Achieving New Heights”. As we look
to the future, we are confident that our
goals and plans will come to fruition, and
that the excellent progress made and
results achieved, will continue to be a
part of our growth trajectory in 2013/14
and beyond.
HOTEL MANAGEMENT
From left:
Saman Dewasurendra - Manager - Training and Development
S. Malkanthi Perera - Executive Housekeeper
Daniel Ludwig - General Manager
Chitra Fernando - Financial Controller
Dadison Zoysa - Executive Chef
25
SUSTAINABILITY report
We believe in giving our guests a
unique and unforgettable holiday
experience packed with recreational
activities and relaxation opportunities.
During the current financial year, we
continued to improve our offerings
within a socially and environmentally
responsible framework.
Group principles
This year Serendib Leisure Group took its
first step to align its CSR activities with its
parent company Hemas Holdings PLC.
As part of this process, we embarked
on the development of a sustainability
framework for the group, in line with
Hemas sustainability principles. We are
confident this initiative will support more
meaningful efforts towards sustainable
business practices by all members of the
Serendib Leisure Group. Our concept
of sustainability is based on the three
broad areas; People, Community and
Environment.
Our people
We believe a motivated workforce is the
key to high quality service. The quality of
customer care that makes us stand out
from hotels across the world is due to
our people. Their passion, commitment
and creativity to go above and beyond
the expectation of our customers
define the excellence that Club Hotel
Dolphin stands for. Therefore, we
invest in staff training and development
on an ongoing basis. In addition to
external focused training, Club Hotel
Dolphin employs a dedicated In-House
Training and Development Manager
who works tirelessly with the hotel team
26
by implementing standard operating
procedures and meeting quality
benchmarks.
the traveller review website and we were
awarded the TripAdvisor Certificate of
Excellence for 2012.
Our vision is to create an atmosphere for
our team to work with pride, happiness
and enthusiasm, which will reflect in the
high standard of service and the genuine
hospitality extended to our guests. Our
staff activity committee has introduced
an innovative “staff activity calendar”. The
staff activity calendar provides staff at all
levels with the opportunity to engage in
various activities during their leisure time.
The list includes karaoke singing, disco
dancing, cycling, horse riding, archery,
volleyball and cricket, ensuring that every
member of the staff can engage in an
activity that is fun, while also developing
innate talents and often serving as a
team building exercise outside the work
environment.
Our community
Our investment in our people enables
the hotel to be formally recognised
by different travel and tourism related
bodies, indicating the international quality
of our services. These awards and
recognition are directly attributable to the
commitment and passion of our people
towards superior customer service. In the
financial year 2012/13 Club Hotel Dolphin
was placed among the 99 most popular
hotels in the world for the second
consecutive year in the Beach Holiday
category by HolidayCheck, the premier
German online review site. We were
also recognised as one of the best and
most popular 60 hotels in the world by
being awarded the ITS Red Star Award
2012. In addition we won the Travellers’
Choice Award for 2013, by TripAdvisor
The communities we operate is one
of the significant stakeholders of our
business. Therefore, we make every
endeavour to establish mutually beneficial
relationships with our communities by
minimising any adverse impacts and
by contributing towards community
development.
Club Hotel Dolphin as part of The
Serendib Leisure Group continued
to support the Hemas Outreach
Foundation which is an approved charity,
managed by a Board of Trustees. The
Foundation supports Early Childhood
Care & Development (ECCD) through
the establishment of child friendly preschools across Sri Lanka. At present
we foster 36 pre-schools island wide,
under the banner ‘Piyawara’, and at
present approximately 3,000 children
are receiving their early learning at these
centres.
Club Hotel Dolphin continued to support
St. Odilia College in Kammala by
sponsoring in the various school events.
Further, we continued our support to the
Kammala South Community Centre by
underwriting all of the centre’s utility bills.
As we invest in the future of our hotel, we
also invest in the future of our community.
We believe that, now more than ever,
knowledge of the English language is
a pre-requisite in the development and
future employability of the nation’s youth.
Therefore, we have been conducting
regular English language classes for
village children at the community centre
for a number of years. Our English
teaching programmes are extremely
popular as both children and adults
understand the value of learning English.
We believe these efforts will enhance
opportunities of employment for young
people in the future as English has
now become the business language of
Sri Lanka. Therefore, over the longer
term, we hope our efforts will contribute
towards the overall community welfare.
The community centre is used by both
adults and children for community events
and is an important part of community
building.
During the year, we conducted many
cleaning operations to maintain the
natural beauty of our environment
and to contribute towards a healthier
environment for the communities in the
area. During the year we cleaned up the
public beach twice a day, to maintain the
beauty of the coast line and to ensure
health and sanitary standards.
We contributed to the neighbourhood
by cleaning and maintaining the Catholic
Church at Bolawatta, and donated food
and flowers to the church. Moreover
we have made several donations to the
neighbouring temples.
Our Environment
English class at the Community Centre
Donation to the temple
We follow the 3R method; Reduce,
Reuse, Recycle for energy and water
conservation. A comprehensive
environment management system is
in place and various energy saving
initiatives have been carried out in an
extensive manner at all functional and
operational levels.
Our sustainability policy guides
our commitment to conserving the
environment through discipline and
new technology. When it comes to
considering new capital investment, we
take long-term views looking at life cycle
costs, instead of merely upfront costs.
Along with factors such as cost, quality
and functionality, environmental impact
has become an integral part in our
investment decision-making process. The
new projects are developed with external
consultants’ advice on energy conserving
processes and these recommendations
are incorporated in the new designs.
27
SUSTAINABILITY review CONTD.
We are pleased to announce that during
the financial year 2012/13 we reduced
our energy consumption by 1.2% per
room night, compared to 2011/2012.
As part of our drive to reduce
environmental impacts, we monitor
electricity and water consumption on
a daily basis with sub meters and we
have switched to CFL and LED lighting
and solar panels. Key-tag switches have
been installed in all rooms for lighting
and A/Cs, and we have installed new
A/C controllers to minimise energy
consumption when not in use. All organic
waste is turned into compost. Wet
garbage is sent to the piggery and dry
garbage is sent for recycling. We only use
recycled water in the garden as part of
our strategy to reduce the consumption
of fresh water.
In Conclusion
Club Hotel Dolphin strives to deliver its
commitment to all of its stakeholders. In
order to achieve the same, we strongly
believe that our sustainable goals have
to be aligned to our corporate goals
and vision. By combining the strengths
of profit-making and sustainable
development, the joint synergy can
enhance the lives of present and future
generations of Sri Lankans. Our socially,
economically and environmentally
sustainable practices have engendered
tremendous goodwill and support
for our business operations by all our
stakeholders.
During the year, energy audits were also
carried out by specialised consultants
and appropriate actions have been taken
based on the recommendations made.
The hotel has also appointed a special
energy conservation team to gather data,
monitor and implement necessary action
to reduce the hotel’s carbon footprint.
28
Risk Management
Dolphin Hotels PLC believes that our
dynamic approach to risk management
ensures that key risks are proactively
identified, assessed and responded. Our
ongoing assessment process takes into
account the likelihood of an event, its
potential impact on the business and the
need for mitigation.
Group Risk Management Committee
(GRMC) of Hemas Holdings PLC, the
ultimate parent of Dolphin Hotels PLC
overlooks the risk management process
of the leisure sector. The GRMC reviews
Company’s risk profile and provides
guidance on required risk responses on a
quarterly basis.
We have adopted the ISO 31000
standard of risk management. It
elaborates on risk identification, risk
assessment, risk response and risk
reporting methodologies.
The agenda for the Group Audit
Committee contains standing items on
internal controls. These include the internal
audit reports, quarterly risk reports and
compliance statements.
Company’s Risk Policy
As a part of the risk management
process, at the Group level, the Board
Board
• Identify and assess material risks
The Group reviews and assess significant
risks on a regular basis and has
implemented an oversight programme to
ensure that there is a system of internal
controls in place.
Stakeholders
Audit
Committee
Risk
Committee
Senior Management
Stakeholders
integrated risk management system
while maintaining business flexibility.
Internal Control and Risk
Management
Risk facilitation is exercised through risk
workshops, risk reviews, essential control
checklists and risk reporting.
Stakeholders
• Implement an effective and
associated with our business,
monitor, manage and mitigate risks.
The Group wide risk management
programme is being facilitated by Risk
and Control division with the inputs from
Business Strategy, Corporate Finance,
Group Treasury and Group Human
Resource divisions.
Risk & Control
Our policy for risk management is
to proactively manage risk to ensure
continued growth of our business
and to protect our people, assets and
reputation. This implies that we will:
reviews its strategies, processes,
procedures and guidelines on a
continuous basis to effectively identify,
assess and respond to risks.
Risk Champions
Head of the Department
Stakeholders
29
Risk Management contd.
Risk Facilitation Hierachy
COMMUNICATION AND CONSULTATION
ESTABLISH
THE CONTEXT
IDENTIFY THE
RISKS
ANALYSE THE
RISKS
Analyse business
environment and
set objectives
Deviation from
achievement of
expected results
Analyse
probability and
consequence
EVALUATE
THE RISKS
Prioritise the
issue
TREAT THE
RISKS
Implement a
suitable risk
treatment plan
MONITOR AND REVIEW
ISO 31000 Risk Management Framework.
Key Risks and Action Plans
The following framework depicts the specific and most relevant risks faced by the Company and the management actions to
mitigate the risks.
Risk
Risk exposure
Competition
Adverse impact on yields and
occupancies
Mitigating actions
• Sourcing new markets and developing new channels (eg. Web)
• Analyse resources and capabilities to identify core competencies
and differentiate through brand and service levels
• Increase the value addition within the value chain to provide a better
value for money
• Establish a sustainable relationship with travel agents and tour
operators
Human
Resource
Risk
30
Risk of losing skilled and trained
human capital and recruitment of staff
for new hotel developments.
Trade union activities resulting in work
disruptions.
• Make necessary investments to upgrade facilities
• Establish career development programmes and succession plans in
order to retain and motivate the talent pool of the Company
• Provide focused and structured training for staff at all levels to aid
personal and professional development
• Develop a strong employer brand to attract staff of the right quality
Risk
Risk exposure
Project
New projects involve high risks
Management and uncertainties in terms of delay
Risk
and cost overruns. Failure of major
projects will affect capital structure
and reputation
Mitigating actions
• Conduct a PESTEL analysis and a feasibility study before initiating
the projects
• Effective project management to ensure timelines are established
communicated and agreed on by all stakeholders
• Formal processes have been established to ensure transparency in
project consultancy, project procurement
• Project leader / project consultants appointed to ensure that project
Country Risk Rising costs such as higher energy
(Economical) costs, interest rates, inflation, forex
fluctuations and increased minimum
wage can have a detrimental impact
both in the development of the hotel
industry and sustaining long-term
profitability
Health and
Risk of litigation due to non-adherence
Safety Risk
to laid down health and safety
regulations. This could be due to,
but not restricted to food poisoning,
personal or accidental harm to guest
or employee
time and costs are monitored and reviewed on an ongoing basis
against set timelines and budget
• Ensure that all costs incurred in the operations are scrutinised and
streamlined to ensure optimum productivity is achieved
• Work closely in partnership with industry peers to communicate
concerns and suggestions on macroeconomic decisions made by
the government
• Insurance taken to cover both employee and guest injuries. Further,
regular maintenance of the property and equipments is done to
ensure all operating equipment are of good operating condition
• The hotel takes all precautions from sourcing the supplier to storage
and preparation of food to ensure contamination is avoided
• Tour operator safety standards are complied with and necessary
action is taken immediately on any concern area related to health
and safety based on audit inspections done by tour operators
• The company sources its products and services from approved
Foreign
Exchange
Rate Risk
Depreciation of the rupee value and
loss on exchange in conversion of
loans taken in foreign currency
suppliers
• Exchange rate movements are taken into consideration when
entering into contracts with travel agents
• Borrowings in foreign currency are naturally hedged, provided the
inflows match the outflows.
31
Risk Management contd.
Risk
Risk exposure
Fluctuations
in Demand
Recession period in the traditional
European markets may cause
reduction in demand
Mitigating actions
• Closely monitor the socio-economic environment of the traditional
markets and looking into every possibility to enter new emerging
markets
• Upgrade the corporate website to improve revenue through direct
bookings and marketing the hotel by partnering with popular online
travel agents to push web-based sales
• Participate in trade fairs both local and foreign in order to promote
the property and to attract new tour operators. Move into emerging
markets
• Market the properties to emerging markets in the off-peak season
such as Middle-East, China, Australia and India
Financing
and Interest
Rate Risk
Credit Risk
Inability to satisfy debt repayments
and secure financing for proposed
projects
Risk arising due to default of payment.
Higher credit risk may adversely
impact both liquidity and profitability
Operational
Internal process failures, fraud,
Process Risk pilferage and breakdown of internal
controls.
• Borrowings in foreign currency to bring down finance charges.
Foreign currency borrowings are also naturally hedged
• Credit is allowed only to approved customers which is reviewed
yearly
•
•
•
•
•
Maintain records on debtors for at least six years
Actively monitor and review the debtor balances
Advances on bookings are taken from non-credit customers
Compliance to laid down credit SOPs
Obtain credit rating of our customers from an international credit
rating agency
• Outsource internal audits to reputed audit firms to review and report
on the adequacy of the financial and operational controls
• Systems and procedures are in place to ensure compliance with
internal controls, which are monitored and reviewed for their
continued efficiency and effectiveness
• Required action taken immediately as per employment policy on
any staff involved on fraud / pilferage issues
• Provide focused and structured training to staff at all levels to
familiarise processes and procedures
Fire and
Natural
Disaster
32
Fire or natural disaster can halt or
cease operation
• Insurance is taken to cover all aspects of fire and natural disaster
• Fire safety drills and training is given to ensure the chances of
occurrence are kept to a minimum. Further, hotel is equipped and
maintains firefighting equipment at all strategic locations of the hotel
Risk
Risk exposure
Statutory
and
Regulatory
Risk
Risk of non-compliance with changes
in legal and regulatory environment,
taxation, labour and other laws will
result in judiciary actions
Mitigating actions
• Create awareness of statutory obligations at all levels
• Use an independent external tax consultant to review and advice on
all statutory computations and returns submitted in respect of fiscal
levies and taxes
• Make compliance audits as part of the scope of internal audits
• Seek advice from external consultant and legal division of the parent
company on all matters relating to contracts and litigation
Reputation
Risk
Adverse impact on the corporate
image and brand equity which is likely
to diminish shareholder value. This will
finally lead to a decline in market share
and customer base
• Maintenance of highest ethical standards at all times in all business
activities
• Continuous review of guest comments in order to exceed customer
expectations and ensure quality standards are adhered and
improved upon
• Proper adherence to the statutory, health and safety concerns
by obtaining appropriate quality certification standards including
HACCAP and environmental regulations
• The company plays a corporate citizen role through CSR initiatives
in the locale of the hotel
• Reputation management software is used to monitor, report and
respond to the on-line reviews in the public domain/review sites (for
eg. TripAdvisor, HolidayCheck, etc)
In conclusion, Dolphin Hotels PLC’s transparent risk management system tackles risks posed to the Company on a broad
front. Our risk management process is watertight, hence it is entrenched in the core values of the company and the senior
management demonstrates leadership in championing the Company’s risk management initiative, thereby ensuring the Company’s
competitiveness and sustainability into the long-term.
33
CORPORATE GOVERNANCE
Introduction
Corporate Governance is the system
by which companies are directed
and controlled by the Board in the
best interest of all stakeholders. The
shareholders’ role in governance is to
appoint Directors and the Auditors to
satisfy themselves that an appropriate
governance structure is in place.
Company’s Philosophy on Corporate
Governance
Dolphin Hotels PLC is fully aware and
committed to implementing governance
standards that conform to best practices.
As part of the corporate culture, it
engages and interacts with all the
stakeholders in a way that promotes
mutual trust, better understanding and
good faith.
engagements with stakeholders through
risk mitigation, upholding corporate
social responsibility in sustaining
good corporate citizenship as well as
disclosure of material information in a
timely and accurate manner.
The main scope of the Company’s
corporate governance policies
encompass; clear description of duties
and responsibilities among the Board of
Directors, checks and balances, clear
business roles and strategies within the
Company, ethical business conduct,
The extent to which the Company
complies with the Code of Best Practice
on Corporate Governance issued
jointly by the Securities & Exchange
Commission of Sri Lanka and the
Institute of Chartered Accountants of Sri
Lanka is set out below:-
SECTION 1 : THE COMPANY
A. DIRECTORS
The Board
SEC &
Corporate
ICASL Code
Governance Principle Reference
Level of Compliance
Board Meetings
A 1.1
Responsibilities of the A 1.2
Board
Four regular Board meetings are scheduled during a year to review the strategic direction of
the operational units, annual budgets and progress towards achieving those budgets and key
business risks and other matters. Ad hoc meetings are also held when necessary.
Apart from taking decisions at meetings, the Board also takes decisions via circular
resolutions. These resolutions are required to be signed by all the Directors.
The Directors’ are responsible for;
• Formulating, implementing and monitoring overall business policy and strategy.
• Ensuring effective systems to secure integrity of information, internal controls and risk
management.
• Ensuring compliance with relevant laws, statutes and regulations.
• Ensuring all stakeholder interests are considered in corporate decisions.
• Promoting of open and proper communication between the Company and its stakeholders.
Compliance with the
law and independent
professional advice
A 1.3
The Board collectively and the Directors individually act in accordance with the laws and
regulations applicable to the business enterprise.
In discharging their duties, Director seek independent professional advice from external
parties when necessary at the expense of the Company.
34
SEC &
Corporate
ICASL Code
Level of Compliance
Company Secretary
A1.4
Independent
Judgment
A1.5
Dedication of
adequate time and
effort by the Directors
A1.6
All Directors have access to the advice and services of the Company Secretary who is
responsible to the Board in ensuring that proper Board procedures are followed and
applicable rules and regulations are complied with.
The appointment and removal of the Company Secretary is a decision taken by the Board
as a whole.
The Directors exercise independent judgment on matters pertaining to strategy,
performance, resource allocation and standards of business conduct and acts free from any
undue influence and bias from other parties.
The members of the Board dedicate adequate time and effort in discharging their duties
and responsibilities towards the Company.
The Board met on four occasions during the year under review and the attendance at these
meetings are given below:
Name of Director
Capacity
No. of meetings
attended
Mr. A.N. Esufally
Chairman/NED
4/4
Mr. B.S.M. De Silva
Mrs. A.R. Gamage
Mr. H.N. Esufally - Resigned w.e.f. 17.10.12
Mr. W.M. De F. Arsakularatne
Mr. D.T.R. De Silva - Appointed w.e.f. 17.10.12
ID
ID
NED
NED
NED
4/4
4/4
3/3
2/4
2/2
NED - Non Executive Director
ID
- Independent Director
The Board has delegated some of its functions to Sub-Committees, while retaining the
rights for final decision pertaining to matters under the purview of the Committees. The
composition and the functions of these sub–committees are discussed in detail under the
relevant sections of this report.
The operation of the hotel owned by the Company has been delegated to Serendib Leisure
Management Ltd., Managing Agents through a formal management agreement. The
Managing Agent operates the hotel within the policy framework outlined by the Board and is
assessed periodically by way of Management Reports and presentations.
35
CORPORATE GOVERNANCE CONTD.
SEC &
Corporate
ICASL Code
Level of Compliance
Induction and Training A1.7
for Directors
An induction programme is in place which includes the provision of key corporate
documents, facilitation of visits to the hotel and meetings with the senior management
team.
In addition, the Directors are also encouraged to participate in continuous professional and
self-development activities.
Chairman’s Role
SEC &
Corporate
ICASL Code
Level of Compliance
Role of Chairman in
conducting meetings
A 3.1
The Chairman encourages the participation of all the Directors in decision-making, seeks
and ascertains the views of the Directors, and thereby ensures that the Board functions in
an efficient manner which is beneficial to the stakeholders and the Company.
Financial Acumen
SEC &
Corporate
ICASL Code
Level of Compliance
Availability of those
with sufficient
financial knowledge
A.4
The Board comprise of professional accountants who posses the necessary knowledge
and competence to guide the Board on matters pertaining to finance.
Board Balance
SEC &
Corporate
ICASL Code
Level of Compliance
Non executive
Directors
Independent
Directors
36
A.5.1
All the Directors are considered as Non Executive Directors.
A.5.2
Two out of the five Non Executive Directors are considered independent.
A.5.3
These Directors are independent of management and free of any business or other
relationship that could materially interfere with or could reasonably be perceived to materially
interfere with the exercise of their unfettered and independent judgment.
SEC &
Corporate
ICASL Code
Level of Compliance
Annual Declaration
A.5.4
Determination of
independence
A.5.5
The Independent Directors have submitted written Declarations of their independence as
required by section 7.10.2(b) of the Listing Rules.
The Board annually determines the independence of each Non Executive Director based on
the Declarations submitted by them.
Mr. B. S. M. De Silva and Mrs. A. R. Gamage, met the criteria for independence specified
by Rule 7.10.4 of the Listing Rules of the Colombo Stock Exchange, except they have
served on the Board for more than nine years. However, the Board having evaluated all
the factors, concluded that their independence has not been impaired due to them serving
on the Board for continually for a period exceeding nine years from the date of their first
appointment.
Recording of
concerns in Board
Minutes
A.5.9
Concerns raised by the Directors on matters of the Company which cannot be unanimously
resolved are recorded in the Board minutes.
Supply of Information
SEC &
Corporate
ICASL Code
Level of Compliance
Management’s
obligation to provide
appropriate and
timely information
A.6.1
A.6.2
The Board is provided with appropriate and timely information to discharge its duties. The
Directors are also entitled to request for additional information where they consider such
information necessary to make informed decisions.
The agenda for the Board meeting and connected discussion papers are circulated to the
Directors at least seven days in advance to facilitate the effective conduct of the meeting
Appointments to the Board
SEC &
Corporate
ICASL Code
Level of Compliance
Nominations
Committee
A 7.1
The Board has not established a Nominations Committee to make recommendation on
Board appointments; instead appointments to the Board are made collectively and with the
consent of all the Directors.
37
SEC &
Corporate
ICASL Code
Level of Compliance
Assessment of Board
composition
A.7.2
Disclosure of required A.7.3
details of new
Directors
The Board assesses its composition to ascertain whether the combined knowledge and
experience of the Board matches the strategic demands facing the Company and takes it
into account when new Board appointments are considered.
On appointment of a new Director, the Company informs the Colombo Stock Exchange a
brief résumé of the Director which includes;
• the nature of his experience in relevant functional area
• other Directorships or memberships in Board sub committees; and
• whether the Director is considered an Independent, Non Executive or Executive
Director
Re – election
SEC &
Corporate
ICASL Code
Level of Compliance
Re-election of
Directors
A.8.1.
A.8.2
The Company’s Articles require a Director appointed by the Board to hold office until the
next Annual General Meeting and seek re-appointment by the shareholders at that meeting.
One third of the Directors including the Chairman retire by rotation at each Annual General
Meeting in conformity with the Articles of Association of the Company. Directors who retire
are those who have served for the longest period after their appointment/ re-election.
In addition, a Director who has reached 70 years of age vacates office at the conclusion of
the Annual General Meeting commencing next after he attains the age of 70 years or if he is
re-appointed as a Director after attaining the age of 70 years at the Annual General Meeting
following that re-appointment.
Disclosure of Information in respect of Directors
SEC &
Corporate
ICASL Code
Level of Compliance
Information in respect A.10.1
of Directors
38
The biographical details of the Directors, attendance at Board meetings and Directors’
Interest in Contracts are disclosed under the relevant sections in the Annual Report.
B. DIRECTORS REMUNERATION
Remuneration Procedure
SEC &
Corporate
ICASL Code
Level of Compliance
Establishment of
a Remuneration
Committee
Composition
Determination of
Remuneration
Access to
Professional Advice
B.1.1
B.1.2
B.1.3
B.1.4
B.1.5
The Board has delegated powers to the Remuneration Committee of its ultimate parent
Company, Hemas Holdings PLC to make recommendations to the Board on remuneration
policy and practice that is consistent with the objectives of the Company.
The Remuneration Committee consist two Independent Non Executive Directors. The
Chairman of the Committee is an Independent Director appointed by the Board.
The names of the members of the Remuneration Committee are indicated in the Annual
Report of the Board of Directors.
In terms of the Articles of Association of the Company, the Board determines the fees
payable to the Independent Directors.
The committee has access to professional advice in discharging their duties.
Disclosure of Remuneration
SEC &
Corporate
ICASL Code
Level of Compliance
Disclosures
B.3.1.
The remuneration policy supports a strong performance-oriented culture and ensures that
individual rewards and incentives relate directly to the performance of the individual, the
operations and functions for which they are responsible and the group as a whole.
Directors were not paid any remuneration during the year under review.
C. RELATIONS WITH SHAREHOLDERS
Constructive use of the Annual General meeting and conduct of General Meetings
SEC &
Corporate
ICASL Code
Level of Compliance
Proxy votes
Separate resolutions
Adequate notice of
AGM
C.1.1
C.1.2
C.1.4
The Company counts all proxies lodged on each resolution.
A separate resolution is proposed for each issue at the AGM.
The notice of the Annual General Meeting and the relevant documents are published and
dispatched to the shareholders 15 working days prior to the meeting as required by the
Companies Act No. 7 of 2007.
39
SEC &
Corporate
ICASL Code
Level of Compliance
Procedure of voting
at General meetings
C.1.5
The procedure for voting at the meeting is circulated along with the Notice of Meeting.
Major Transactions
SEC &
Corporate
ICASL Code
Level of Compliance
Disclosure on Major
Transactions
C.2.1
The Directors ensures that any corporate transaction that would materially affect the net
assets base of the Company is communicated to the Shareholders.
There were no major transactions as defined under section 185 of the Companies Act No. 7
of 2007 during the year under review.
D. ACCOUNTABILITY AND AUDIT
Financial Reporting
SEC &
Corporate
ICASL Code
Level of Compliance
Board’s Responsibility
for Statutory and
Regulatory Reporting
Declarations by
Directors
Statement of
Directors and Auditors
Responsibility for the
Financial Statements
Management
Discussion Analysis
Declaration on Going
Concern of Business
40
D.1.1
D.1.2
D.1.3
The Board is accountable for presenting the consolidated Financial Statements of the
Company and its subsidiaries to regulators as well as the information required to be
presented by statute.
The declarations to be made by the Directors are included in the Annual Report of the
Board of Directors.
The Statement of Directors responsibility in preparation of the Financial Statements is
given on page 56 while the Independent Auditors Report on page 57 state the Auditors
responsibility for the Financial Statements.
D.1.4
Management Discussion Analysis is given on page 20 of this Report.
D.1.4
The declaration by the Board that the Company is a going concern is given in the Annual
Report of the Board of Directors.
Internal Control
SEC &
Corporate
ICASL Code
Level of Compliance
Annual Review of the
System of Internal
Controls
D.2.1
The Board maintains a sound system of internal controls to safeguard shareholders’
investments and the Company’s assets. The adequacy and the effectiveness of the internal
controls are reviewed by the Internal Auditors under the direction of the Audit Committee.
Audit Committee
SEC &
Corporate
ICASL Code
Level of Compliance
Composition
D.3.1
Duties
D.3.2
Terms of Reference
D.3.3
Disclosures
D.3.4
As permitted by the rules of the Colombo Stock Exchange, the Audit Committee of the
Parent Company, Serendib Hotels PLC functions as the Audit Committee of the Company.
The main purpose of the committee is to assist the Board in the effective discharge of its
responsibilities on financial reporting, risk management and internal controls. It also reviews
the nature and extent of non–audit services provided by the Auditors seeking to balance
objectivity and independence.
The Committee has written Terms of Reference dealing clearly with it’s authorities and
duties.
The names of the members of the Committee are disclosed in the Annual Report of the
Board of Directors.
The Report of the Audit Committee is given on page 52.
Code of Business Conduct and Ethics
SEC &
Corporate
ICASL Code
Level of Compliance
Disclosure of Code
of Business Conduct
and Ethics
D.4.1
The Company has adopted a Code of Business Conduct and Ethics and the Directors
and members of the senior management are committed to the code and the principles
contained therein.
41
Corporate Governance Disclosures
SEC &
Corporate
ICASL Code
Level of Compliance
Corporate
Governance Report
D.5.1
The manner and extent to which the Company complies with the provisions and principles
of the Code are disclosed in the Report on Corporate Governance.
SECTION 2 : SHAREHOLDERS
E: INSTITUTIONAL INVESTORS
Shareholder voting
SEC &
Corporate
ICASL Code
Level of Compliance
Communication with
shareholders
E.1.1
The Chairman conducts a structured dialogue with the institutional shareholders based on
the mutual understanding of objectives, and ensures that the views of the shareholders are
communicated to the Board as whole.
F : OTHER INVESTORS
Investing /Divesting decision
SEC &
Corporate
ICASL Code
Level of Compliance
Individual
shareholders
F.1.
Individual investors are encouraged to carry out adequate analysis or seek independent
advice in investing and divesting decisions.
The Company places great emphasis on releasing its Financial Statements in a timely
manner as to ensure that shareholders have access to information on which they could
make informed decisions.
Shareholder Voting
SEC &
Corporate
ICASL Code
Level of Compliance
Individual shareholder F.2
voting
42
All shareholders are encouraged to participate at meetings of the Company and a Form
of Proxy accompanies each notice providing shareholders who are unable to attend such
meeting the opportunity to cast their vote.
The following table presents the Company’s compliance with Section 7.10 of Listing Rules on Corporate Governance issued by the
Colombo Stock Exchange.
CSE Rule No.
Board of Directors
7.10.1.
7.10.2 (a)
Requirement
Non Executive
Directors (NEDs)
Independent
Directors
One – third of the total number of Directors subject to a minimum
of two.
One – third of the Non Executive Directors subject to a minimum
of two.
Each Non Executive Director should submit a declaration of
Independence/ Non-Independence.
Names of Independent Directors should be disclosed in the
Annual Report and the basis for determination of independence
of NEDs, if criteria for independence is not met.
Complied
A brief résumé of each Director should be included in the Annual
Report, including his area of expertise.
Upon appointment of a new Director a brief résumé of the
Director to be submitted to the Exchange.
Complied
The Committee shall comprise minimum of two Independent
Directors or Non Executive Directors, a majority of whom shall be
independent.
Complied
7.10.2(b)
7.10.3(a) and (b)
Disclosure
relating to
Directors
Independence
7.10.3(c)
7.10.3(d)
Remuneration Committee
7.10.5(a)
Composition
7.10.5(b)
7.10.5 (c)
Audit Committee
7.10.6.( a)
Status of
compliance
Applicable Rule
Functions of the
Remuneration
Committee
Disclosure in the
Annual Report
Composition
The Chairman of the Committee shall be a Non Executive
Director.
The Committee shall recommend the remuneration payable to
the Executive Directors and Chief Executive Officer or equivalent
position.
The Annual Report should set out the names of the members
of the Remuneration Committee, a statement of Remuneration
Policy and the aggregate remuneration paid to Executive and
Non Executive Directors.
The Committee shall comprise a minimum of two Independent
Directors or Non Executive Directors a majority of who shall be
independent.
Complied
Complied
Complied
Complied
Complied
Complied
Complied
The Chairman shall be a Non Executive Director.
The Chairman or a member should be a member of a recognised
professional accounting body.
43
CSE Rule No.
Applicable Rule
7.10.6. (b)
Functions
Requirement
• Overseeing the preparation, presentation and adequacy of
Status of
compliance
Complied
the disclosures in the Financial Statements in accordance
with the SLFRS.
• Overseeing compliance with financial reporting related
regulations and requirements.
• Overseeing the processes to ensure that internal controls
and risk management are adequate.
• Assessing the independence and performance of the
external auditors.
• Recommending to the Board the appointment, re-
7.10.6.(c)
Disclosure in the
Annual Report
appointment and removal of the external auditors and
approving their remuneration and terms of engagement.
The names of the members of the Audit Committee should be
disclosed in the Annual Report
The Committee to determine the independence of Auditors and
disclose the basis of such determination in the Annual Report.
Annual Report to contain a report by the Audit Committee setting
out the manner of compliance in relation with their functions.
44
Complied
Report of the remuneration committee
In accordance with the Rules on
Corporate Governance issued by
the Colombo Stock Exchange, the
Remuneration Committee appointed
by the Board of the Ultimate Parent
Company, Hemas Holdings PLC
functions as the Remuneration
Committee of the Company.
Composition of the Remuneration
Committee:
• Mr. Lalith De Mel (Independent
Director and Chairman of Hemas
Holdings PLC)
• Mr. Maithri Wickremesinghe
(Independent Director of Hemas
Holdings PLC)
competitive and well-balanced package
is maintained. It also seeks to align
individual reward and incentives with the
performance of the Group and hence,
with the interests of the shareholders.
When carrying out its role the Committee
will consider corporate performance
on environmental, social and corporate
governance issues.
Role & Responsibilities of the
Committee
The scope of the Remuneration
Committee shall cover the following
responsibilities:-
• Compensation philosophy /policies
including stock options and benefits
• Fixed pay (based on grading /
evaluation)
Frequency of Meetings
The Committee meets at least five times
a year. Additional meetings shall be
convened at the request of the Chairman
or a member of the Committee.
•
•
•
•
Performance Bonus
Special Schemes
Performance Management systems
Annual Goals and performance
targets
• Performance assessment and
Remuneration Policy
The Committee has given full
consideration to the principles of Good
Governance as set out in the Code with
reference to Directors’ remuneration.
The main objectives of the policy
are to ensure that pay and benefits
packages are sufficiently competitive
to attract, develop and retain high
caliber executives. The Committee will
continue in the future to ensure that a
development plans
• Executive search
J. C. L. De Mel
Chairman
30 May 2013
45
ANNUAL REPORT OF THE BOARD OF DIRECTORS
The Board of Directors of Dolphin Hotels
PLC takes pleasure in presenting their
report together with the Audited Financial
Statements of the Company and
Consolidated Financial Statements of the
group for the year ended 31 March 2013.
Principal Activity of the Company &
Group
The principal activity of the Company
which is operating a tourist hotel
remained unchanged during the year
under review. The Company owns
and operates 101 rooms in Club Hotel
Dolphin and 50 cottages of Miami Beach
Hotel situated adjacent to the hotel.
The Company is the major shareholder of
Miami Beach Hotels Ltd.
The Directors to the best of their
knowledge and belief confirm that
neither the Company nor its subsidiaries
have been engaged in any activity that
contravenes laws and regulations.
Review of Operations & Future
Developments
The financial and operational
performance of the Company during
the year under review and future
developments are discussed in the
Chairman’s Review and the Management
Discussion and Analysis. These Reports
together with the Audited Financial
Statements reflect the state of affairs of
the Company and the Group.
46
The Directors confirm that the Company
is in compliance with the Rules on
Corporate Governance laid down by
the Colombo Stock Exchange. The
Corporate Governance practices of the
Company are given from page 34 to 44
of this report.
The Financial Statements of the
Company and Group as at 31 March
2013 are given from page 58 to 99 of the
Annual Report.
Risk Management
The Company has put in place a process
to identify, evaluate and manage any
significant risks faced by the entity. The
principal risks and mitigating action
are reviewed by the Audit Committee
regularly. A detailed overview of the Risk
Management process is outlined in the
Risk Management Report on page 29.
Going Concern
The Board of Directors after considering
the financial position, operating
conditions, regulatory and other factors
and such matters required to be
addressed in the Corporate Governance
Code, have a reasonable expectation
that the Company possesses adequate
resources to continue its operations in
the foreseeable future. For this reason,
the Company continues to adopt the
‘Going Concern basis’ in preparing the
Financial Statements.
Auditor’s Report
The Auditor’s Report on the Financial
Statements of the Company and the
Group is given on page 57.
Accounting Policies
The Accounting Policies adopted in the
preparation of the Financial Statements
are given from page 64 to 73.
Results
Events Occurring After the Balance
Sheet Date
The Financial Results of the Group and Company as at the Balance Sheet date is
tabulated below:Group
Company
2013 (Rs ‘000) 2012 (Rs ‘000) 2013 (Rs ‘000) 2012 (Rs ‘000)
Revenue
Gross Profit
Profit Before Tax
Income Tax Expenses
Profit After Tax
Attributable to :Equity holders of the
Parent
Minority Interest
765,341
582,970
230,821
32,118
198,703
643,862
476,900
100,474
7,549
92,925
494,711
372,901
152,371
21,766
130,605
418,173
308,549
100,287
8,978
91,309
198,703
92,925
-
-
-
-
-
-
Dividends
The Directors have not recommended the payment of a dividend for the financial year
2012/13. (2012 – Rs. 1.50 per share amounting to Rs. 47,432,215.50)
Property, Plant and Equipment
The capital expenditure incurred by the Group and Company during the year
amounted to Rs. 13,595,355/-.(2012 – Rs.36,715,387/-) and Rs. 10,644,849/- (2012
– Rs. 32,700,305/- ) respectively.
Details of Property, Plant and Equipment and their movement during the financial year
is disclosed under Note 3 to the Financial Statements.
Details of Land and Buildings held by the Group is given below;Location
Extent
Kammala South, Waikkal
Club Hotel Dolphin
Miami Beach Hotel
6A – 1R – 24.8 P
7A – 3R – 31.0 P
Stated Capital
The Stated Capital of the Company as at 31 March 2013 amounted to Rs.
316,214,770/- divided into 31,621,477 ordinary shares. There was no change to the
Stated Capital of the Company during the year under review.
No circumstances have arisen since
the Balance Sheet date that would
require adjustment to or disclosure in the
Accounts other than those disclosed in
Note 25 to the Financial Statements.
Statutory Payments & Compliance
with Laws and regulations
The Directors confirm that to the best
of their knowledge, all taxes, duties and
levies payable by the Company and its
subsidiaries, all contributions, levies and
taxes payable on behalf of and in respect
of the employees of the Company and
its subsidiaries as at the Balance Sheet
date have been paid or where relevant
provided for in the Financial Statements.
The Company also ensured that it
complies with the applicable laws and
regulations including the Listing rules of
the Colombo Stock Exchange.
Employment
Permanent and Contract employees in
the Group as at the Balance Sheet date
were 291 (2012 -299)
The Company adopts a nondiscriminatory policy in recruitment and
employment which gives full and fair
consideration to persons in selection,
training, development and promotion
ensuring that all decisions are based on
merit.
47
ANNUAL REPORT OF THE BOARD OF DIRECTORS CONTD.
Corporate Donations
Donations made by the Group and
Company during the year under review
amounted to Rs. 1,227,787/- (2012 –
Rs.34,006/-) and Rs. 822,618/- (2012
– Rs.22,784/-) respectively.
Directors
The names of the Directors who held
office during the financial year under
review are as follows:-
Audit Committee
The Audit Committee of the Parent
Company, Serendib Hotels PLC functions
as the Audit Committee of the Company.
The names of the members are indicated
below:Prof. L. D. K. B. Gamage - Chairman
Mr. M. A. Jafferjee
Mr. E. J. De Soysa (Retired
w.e.f.28.05.12)
Mr. A. N. Esufally
Mr. B. S. M. De Silva
Remuneration Committee
Mrs. A. R. Gamage
The Remuneration Committee
of the ultimate Parent Company,
Hemas Holdings PLC functions as
the Remuneration Committee of the
Company. The names of the members of
the committee are given below:-
Mr. W. M. De F. Arsakularatne
Mr. D. T. R. De Silva (Appointed w.e.f.
17.10.12)
Mr. V. H. A. Perera (Alternate Director to
Mr. A. N. Esufally)
Mr. B. S. M. De Silva retire by rotation
in terms of Article 86 of the Articles of
Association of the Company and being
eligible offer himself for re-election, with
the unanimous support of the Board.
Mr. D. T. R. De Silva retire in terms of
Article 74 of the Articles of Association
of the Company and being eligible offer
48
Interest Register
In compliance with the requirements of
the Companies Act No. 7 of 2007, an
Interest Register was maintained by the
Company during the accounting period
ended 31 March 2013.
In terms of section 192 of the Companies
Act, the Directors have declared their
interests in contracts in the Company
and have refrained from voting on
matters in which they were materially
interested. Directors’ Interest in contracts
with the Company is disclosed from page
50 to 51 of the report.
Mr. J. C. L. De Mel
Directors’ interest in shares
Mr. M. E. Wickremesinghe
In compliance with Section 200 of the
Companies Act, the Directors have
disclosed their relevant interest in shares
of the Company.
Prof. L. D. K. B. Gamage (Alternate
Director to Mrs. A. R. Gamage)
Ms. K. A. C. Wilson (Alternate Director
to Mr. H. N. Esufally) – Ceased to be an
Alternate Director w.e.f. 17.10.12
No remuneration was paid to the Directors
during the year under review. (2012 – Nil)
Board Committees
Mr. A. N. Esufally – Chairman
Mr. H. N. Esufally (Resigned w.e.f.
17.10.12)
Remuneration & Other Benefits of
Directors
himself for re-appointment, with the
unanimous support of the Board.
The shareholdings of the Directors during the financial year were as follows:
Mr. A. N. Esufally
Mr. E. J. De Soysa – Retired
w.e.f. 28.05.2012
Mrs. A. R. Gamage
Mr. H. N. Esufally – Resigned
w.e.f 17.10.12
Mr. W. M. De F. Arsakularatne
Mr. D. T. R. De Silva
2013
31.03.13
01.04.12
2012
31.03.12
450,007
50,000
450,007
50,000
450,007
50,000
204,700
20,416
100
204,700
20,416
100
204,700
20,416
100
8,000
8,000
8,000
Related Party transactions
exceeding 10% of the equity or 5 %
of the Total assets of the Company.
Fees for Non–Audit Services - Rs.
320,970/-(2012 – Rs. 215,050/-)
Transactions carried out by the Company
with its related parties during the year
ended 31 March 2013 did not exceed
10% of the shareholders equity or 5% of
the total assets of the Company.
The Directors have confirmed that to
the best of their knowledge the Auditors
have no interest in or relationship with the
Company or its subsidiaries other than
that of External Auditors.
Company Secretaries & Registrars
The Auditors have confirmed that they
are independent in accordance with
the Code of Ethics of the Institute of
Chartered Accountants of Sri Lanka.
Messrs. Hemas Corporate Services
(Pvt) Ltd. of Hemas House, No. 75,
Braybrooke Place, Colombo 02 functions
as the Secretaries & Registrars of the
Company.
Internal Control
The Board has reviewed the internal
controls covering financial, operational and
compliance controls and risk management
and have obtained reasonable assurance of
its effectiveness.
Messrs. Ernst & Young have expressed
their willingness to continue in office.
A resolution to re-appoint them and to
authorise the Directors to determine their
remuneration will be proposed at the
forthcoming Annual General Meeting.
By Order of the Board of
Dolphin Hotels PLC
Shareholders
The Company has made all endeavours
to ensure equitable treatment to all its
shareholders.
A. N. Esufally
D. T. R. De Silva
ChairmanDirector
Auditors
During the year under review Messrs.
Ernst & Young, Chartered Accountants
served as the External Auditors of the
Company. The Audit Fees payable and
fees paid for other services rendered are
as follows;
Audit Fees - Rs. 398,280/- (2012 – Rs.
363,424/-)
Secretaries
30 May 2013
49
Related party disclosures as required by the Sri Lanka Accounting standards No. 24 on Related Party Disclosures is detailed in Note
26 to the Financial Statements. In addition, the company carried out transactions in the ordinary course of business with entities
where the Directors of the Company are Directors of such entities.
Company
Director/s
Nature of Transaction
Value 2013
Value 2012
Serendib Hotels
PLC
A. N. Esufally
Sale of goods / services
1,262,867
730,025
H. N. Esufally
Finance income receivable
-
648,772
Purchases of goods / services
(2,134,666)
(4,981,018)
D. T. R. De Silva
Purchases of property & other assets
Settlement of dues from related parties
Settlement of dues to related parties
Miami Beach
Hotels Ltd.
A. N. Esufally
Loan capital paid / granted
B. S. M. De Silva
Hotel Sigiriya PLC
Serendib Leisure
Management Ltd.
A. N. Esufally
H. N. Esufally
Loan (obtained) / repayments
D. T. R. De Silva
(477,857)
(284,869)
1,655,374
5,124,929
(62,287,450)
4,619,425
62,287,450
6,639,183
(295,000)
(586,486)
(391,294,226)
(327,737,237)
309,391,187
310,200,165
715,141
856,586
(26,995)
(136,223)
16,000,000
(16,000,000)
Finance charges payable
(395,507)
(730,400)
B. S. M. De Silva
(768,224)
(872,074)
A. R. Gamage (Ms)
A. N. Esufally
391,398
604,764
834,621
1,771,793
D. T. R. De Silva
Management fees payable
(55,631,515)
(28,667,602)
150,101
1,283,651
Accounting fees payable
(857,143)
(857,143)
(20,717,013)
(13,786,137)
(520,623)
(597,948)
77,426,124
43,564,834
Expenses incurred on behalf of the
company
50
(783,366)
Company
Director/s
Nature of Transaction
Value 2013
Value 2012
Jada Resort &
Spa (Pvt) Ltd.
A. N. Esufally
1,238,263
412,385
Diethelm Travels
Lanka (Pvt) Ltd.
Hemas Corporate
Services (Pvt) Ltd.
Hemas Holdings
PLC
(78,784)
(85,108)
-
(997,348)
(55,000)
(1,075,498)
156,493
2,865,033
925,962
3,365,974
A. N. Esufally
H. N. Esufally
(3,061,025)
(4,564,249)
A. N. Esufally
Secretarial & professional fees payable
-
346,722
A. N. Esufally
Settlements of dues to related parties
Finance income receivable
3,311,830
(365,447)
-
H. N. Esufally
Loan (obtained) / repayments
210,200,000
-
51
REPORT OF THE AUDIT COMMITTEE
Composition of the Committee
The Audit Committee of the Parent
Company, Serendib Hotels PLC
functions as the Audit Committee of the
Company. The Committee comprises,
two Independent Directors, namely Prof.
Lalith Gamage (Chairman) Mr. Murtaza
Jafferjee and a Non Executive Director
Mr. Abbas Esufally.
The Managing Director and Director
Finance of the Managing Agent and
the Head of Risk & Control of the
Group attend meetings by invitation.
The Company Secretary serves as the
Secretary to the Committee.
(iii)
(iv) Performance of internal audit
function including the process to
ensure that the internal controls
and risk management of the
Company is adequate to meet
the requirements of the Sri Lanka
Auditing Standards.
(v)
Role & Responsibilities
The Audit Committee operates within the
Terms of Reference outlined in its Charter
and the main role and responsibility is to
assist the Board in fulfilling their oversight
responsibilities in the following areas;
(i)Quality and integrity of the
Company’s Financial Statements
and financial reporting process
including the preparation,
presentation and adequacy
of disclosures in the Financial
Statements in accordance with the
Sri Lanka Accounting Standards;
Compliance with legal and statutory
requirements including financial
reporting requirements, disclosure
requirements of the Companies
Act and other relevant financial
reporting related regulations and
requirements;
Assess the independence and
performance of the external
auditors of the Company and make
recommendations to the Board
pertaining to the appointment,
re-appointment and removal of
External Auditors and approve
the remuneration and terms
of engagement of the External
Auditors.
Main activities carried out during
the year
The Audit Committee met four times
during the year ended 31 March 2013
and carried out the following activities;
• Reviewed the un-audited quarterly
(ii)
52
System of internal accounting and
financial controls of the Company;
Financial Statements and
discussion of these statements with
the management.
• Reviewed the audited Financial
Statements for the financial year
and discussion of the Financial
Statements with both the
management and External Auditors.
• Discussed the management letter
issued by the External Auditors and
monitoring follow up action by the
management.
• Reviewed the Internal Audit Plan of
the Company and monitoring the
performance of the Internal Auditors.
• Reviewed the Internal Audit Reports
and monitoring follow-up action by
the management.
• Reviewed the Report on statutory
and regulatory compliance
submitted by the management.
Internal Audits
The Internal Audit function of the
Company is carried out by M/s B.
R. De Silva & Company, Chartered
Accountants. Internal Audit independently
reviews the risks and control processes
operated by management. It carries out
Independent Audits in accordance with
an Internal Audit Plan which is approved
by the Audit Committee before the
commencement of the financial year.
The Internal Audit Report which
includes recommendations to improve
internal controls together with agreed
management action plans to resolve
the issues, is presented to the Audit
Committee for review. The Group Internal
Audit follow-up the implementation of
recommendations and reports progress
to the Audit Committee.
External Audit
The External Audit function of the
Company is carried out by Messrs. Ernst
& Young, Chartered Accountants.
The Committee is satisfied that the
independence of the External Auditors
has not been impaired by any event
or service that gives rise to a conflict
of interest. Confirmation has been
obtained from the External Auditors of
their compliance with the independence
guidance given in the Code of Ethics of
the Institute of Chartered Accountants of
Sri Lanka.
Having reviewed the effectiveness
of the external audit, the Committee
recommends to the Board that Messrs.
Ernst & Young, Chartered Accountants
be appointed External Auditors of
the Company for the year ending 31
March 2014, subject to approval by the
shareholders at the forthcoming Annual
General Meeting.
Prof. Lalith Gamage
Chairman – Audit Committee
30 May 2013
53
54
Tantalize your taste buds with a variety
of food at our much talked about
restaurants while you holiday at Club
Hotel Dolphin. The aroma of cooking
at our speciality restaurants will give
you the appetite for more giving you
an unforgettable dining experience.
Enjoy good food and an exciting holiday
experience with a difference.
55
STATEMENT OF DIRECTORS’ RESPONSIBILITY IN RELATION TO
PREPARING FINANCIAL STATEMENTS
In accordance with the Companies Act No. 7
of 2007, the Directors are required to prepare
Financial Statements which give a true and fair
view of the state of affairs of the Company and of
the Group as at the end of the financial year and
the profit and loss of the Company and the Group
for the financial year.
The Directors are required to ensure that in
preparing the Financial Statements;
• appropriate accounting policies are used,
selected and applied in a consistent
manner, and material departures, if any,
have been disclosed and explained.
• all applicable and relevant Accounting
Standards have been followed
• judgment and estimates have been made
which are reasonable and prudent.
The Directors have taken responsibility to
ensure that the Companies within the Group
maintain accounting records, which disclose with
reasonable accuracy, the financial position of the
Company and the Group and that the Financial
Statements comply with the Companies Act No. 7
of 2007, Sri Lanka Accounting Standards and the
Listing Rules of the Colombo Stock Exchange.
The Directors having reviewing the Group’s future
financial projections, cash flows and current
performance are satisfied that the Company has
adequate resources to continue its operations in
the foreseeable future. The Directors have thus
adopted the ‘Going concern basis’ in preparing
the Financial Statements.
56
The Directors have also taken reasonable steps to
safeguard the assets of the Company and of the
Group and to establish proper systems of internal
control with a view to detect and prevent any
irregularities.
The Directors are of the view that they have
discharged their responsibilities as set out in this
Statement.
Compliance Report
The Directors confirm that to the best of their
knowledge, all statutory payments relating to
employees and the government that were due in
respect of the Company and its subsidiaries as at
the Balance Sheet date have been paid or where
relevant provided for the in Financial Statements.
Dolphin Hotels PLC
Secretaries
30 May 2013
INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDERS OF DOLPHIN HOTELS PLC
(FORMERLY KNOWN AS STAFFORD HOTELS PLC)
Report on the Financial Statements
We have audited the accompanying Financial
Statements of Dolphin Hotels PLC (“Company”),
the consolidated Financial Statements of the
Company and its subsidiary which comprise the
Statements of Financial Position as at 31 March
2013, 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
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.
Scope of Audit and Basis of 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.
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 policies used and
significant estimates made by management, as
well as evaluating the overall financial statement
presentation.
We have obtained all the information and
explanations which to the best of our knowledge
and belief were necessary for the purposes of our
audit. We therefore believe that our audit provides
a reasonable basis for our opinion.
Opinion
In our opinion, so far as appears from our
examination, the Company maintained proper
accounting records for the year ended 31 March
2013 and the Financial Statements give a true and
fair view of the Company’s financial position as at
31 March 2013 and its financial performance and
cash flows for the year then ended in accordance
with Sri Lanka Accounting Standards.
In our opinion, the Consolidated Financial
Statements give a true and fair view of the
financial position as at 31 March 2013 and its
financial 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.
Report on Other Legal and Regulatory
Requirements
These Financial Statements also comply with
the requirements of Section 151(2) and section
153(2) to 153(7) of the Companies Act No. 07 of
2007.
30 May 2013
Colombo
57
STATEMENT OF FINANCIAL POSITION
As at 31 March 2013
GroupCompany
As at
As at
Note
20132012
1 April 201120132012
1 April 2011
Rs.Rs.Rs.Rs.Rs.Rs.
ASSETS
Non-Current Assets
3 1,225,234,910 1,259,861,9331,177,291,525 677,845,198
Intangible Assets
4
1,260,000
1,680,0002,571,0971,260,000
Investment in Subsidiary
5
-
--
135,921,800
Other Non Current Financial Assets
6.1
4,000,000
3,333,3303,333,3304,000,000
Deferred Tax Assets
21.2
1,376,960
2,831,6274,648,5951,376,960
1,231,871,870 1,267,706,8901,187,844,547 820,403,958
690,487,460633,159,283
1,680,0002,571,097
135,921,800135,921,800
3,333,3303,333,330
1,056,9031,335,984
832,479,493776,321,494
Current Assets
Inventories7
7,154,448
6,546,1267,959,6247,154,448
Trade and Other Receivables
8
97,986,034
129,163,673154,811,157 69,402,568
Taxation Recoverables
-
2,765,2104,116,276
-
Other Current Financial Assets
6.2
210,200,000
62,287,450-
210,200,000
Cash and Cash Equivalents
9
77,918,740
54,158,12913,743,00877,795,595
393,259,222
254,920,588180,630,065364,552,611
Total Assets
1,625,131,092 1,522,627,4781,368,474,6121,184,956,569
6,546,1267,959,624
136,055,013156,973,855
-2,043,594
62,287,45053,733,73413,714,154
258,622,323180,691,227
1,091,101,816957,012,721
EQUITY AND LIABILITIES
Equity
Stated Capital
10
316,214,770
316,214,770316,214,770316,214,770
Other Component of Equity
11.1
244,705,978
247,625,441151,627,882187,441,757
Other Revenue Reserve
11.2
2,840,391
2,840,3912,840,391
-
Retained Earnings
463,080,175
308,921,753213,077,742332,812,976
Total Equity
1,026,841,314
875,602,355683,760,785836,469,503
316,214,770316,214,770
190,361,220140,058,381
-246,752,862152,524,111
753,328,852608,797,262
Non-Current Liabilities
Interest Bearing Loans and Borrowings
12
283,487,570
359,083,712314,046,666 97,647,965
Deferred Tax Liabilities
21.2
55,360,150
51,521,57361,158,94034,239,696
Employee Benefit Liability
14
11,474,665
8,807,5288,906,56011,474,665
350,322,385
419,412,813384,112,166143,362,326
120,304,262109,873,333
32,434,85437,574,103
8,807,5288,906,560
161,546,644156,353,996
Current Liabilities
Trade and Other Payables
15
137,079,640
128,716,188134,550,907142,430,122
Income Tax Liability
11,846,836
5,156,385-
9,019,370
Other Current Financial Liabilities
13
-
31,000,000--
Dividends Payable
16
1,388,143
937,756960,986
1,388,143
12
97,652,774
61,801,981165,089,768 52,287,105
247,967,393
227,612,310300,601,661205,124,740
Total Equity and Liabilities
1,625,131,092 1,522,627,4781,368,474,6121,184,956,569
119,670,518117,665,314
3,530,77516,000,000937,756960,931
36,087,27173,235,218
176,226,320191,861,463
1,091,101,816957,012,721
These Financial Statements are in compliance with the requirements of the Companies Act No.07 of 2007.
Indresh Puvimanasinghe Fernando
Director Finance
The board of directors are responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by:
A. N. Esufally
D. T. R. De Silva
ChairmanDirector
The accounting policies and notes on page 64 through 99 form an integral part of the Financial Statements.
30 May 2013
Colombo
58
INCOME STATEMENT
Year ended 31 March 2013
GroupCompany
Note2013201220132012
Rs.Rs.Rs.Rs.
Revenue17
765,340,562643,862,165494,711,339
Cost of Sales (182,370,445)(166,962,125)(121,810,136)
Gross Profit
582,970,117476,900,040372,901,203
418,173,481
(109,624,970)
308,548,511
Other Operating Income and Gains
18
572,8815,019,265 572,881
Sales and Marketing Expenses
(11,537,198)(16,153,677) (6,348,023)
Administrative Expenses (363,720,459)(309,502,712)(233,553,882)
Operating Profit
208,285,341156,262,916133,572,179
4,962,886
(10,509,150)
(197,982,630)
105,019,617
Finance Cost
19.1
(17,126,040)(32,709,375) (5,541,074)
Finance Income
19.2
19,439,5272,433,43619,439,527
Exchange Gain/(Loss)
20,221,997(25,513,048) 4,900,003
Profit Before Tax20
230,820,825100,473,929152,370,635
(12,174,256)
2,433,436
5,008,562
100,287,359
Income Tax Expense
21
(32,117,865)(7,549,381)(21,765,983)
Profit for the Period
198,702,96092,924,548130,604,652
(8,978,071)
91,309,288
Earnings Per Share
22
Dividend Per Share
6.282.94
-1.50
59
STATEMENT OF COMPREHENSIVE INCOME
GroupCompany
2013201220132012
Rs.Rs.Rs.Rs.
Profit for the Period
198,702,96092,924,548130,604,652
91,309,288
Other Comprehensive Income
Revaluation of Land and Buildings
Deferred Tax Attributable to Revaluation Surplus
Other Comprehensive Income for the Period, Net of Tax
-
-
-
48,795,314
4,426,988
53,222,302
Total Comprehensive Income for the Period, Net of Tax
198,702,960191,841,570130,604,652
144,531,590
60
-94,584,103
-4,332,919
-98,917,022
STATEMENT OF CHANGES IN EQUITY (GROUP)
Other
Components
Stated
of Equity
Other Revenue
Retained
Total
Capital Asset Revaluation
Reserves
Earnings
Reserve
Rs.Rs.Rs.Rs.Rs.
Balance as at April 01, 2011 - SLFRS316,214,770151,627,8822,840,391
213,077,742
Net Profit for the Period
--
92,924,548
92,924,548
-
98,917,022--
Total Comprehensive Income-
98,917,022-
92,924,548
98,917,022
191,841,570
Transfer of Excess Depreciation on Revaluation Surplus
-
683,760,785
-
(2,919,463)-
2,919,463
-
Balance as at March 31, 2012316,214,770247,625,4412,840,391
308,921,753
875,602,355
--
198,702,960
198,702,960
-
---
Total Comprehensive Income---
198,702,960
198,702,960
-
(2,919,463)
2,919,463
-
Dividends
(47,464,001)
(47,464,001)
Balance as at March 31, 2013
316,214,770244,705,978 2,840,391463,080,175
1,026,841,314
61
STATEMENT OF CHANGES IN EQUITY (COMPANY)
Other
Components
Stated
of Equity
Retained
Total
Capital Asset Revaluation
Earnings
Reserve
Rs.Rs.Rs.Rs.
Balance as at April 01, 2011 - SLFRS
316,214,770140,058,381152,524,111608,797,262
-
Total Comprehensive Income
-
53,222,302
-
53,222,302
-53,222,30291,309,288
144,531,590
-
(2,919,463)
91,309,288
2,919,463
91,309,288
-
316,214,770190,361,220246,752,862753,328,852
-
-
-
- 130,604,652130,604,652
-
Dividends
-
(2,919,463)
130,604,652
2,919,463
130,604,652
-
- (47,464,001)(47,464,001)
316,214,770187,441,757332,812,976836,469,503
62
-
CASH FLOW STATEMENT
GroupCompany
2013201220132012
NoteRs.Rs.Rs.Rs.
Operating Activities
Net Profit Before Taxation
230,820,825100,473,929152,370,635
Adjustments for
Depreciation3
48,222,37847,566,45223,287,111
Amortisation/Impairment of Intangibles
4
420,000420,000420,000
Finance Income
19.1 (19,439,527)(2,433,436)(19,439,527)
Foreign Currency (Gain)/Losses
(20,221,997)25,513,048 (4,900,003)
Finance Costs
19.2 17,126,04032,709,375 5,541,074
3,508,187943,018
3,508,187
Profit/Loss on Disposal of Fixed Assets
-(4,378,450)
-
260,435,907200,813,565160,787,477
Working Capital Adjustments:
(Increase)/Decrease in Inventories
(608,323)1,413,498 (608,322)
(Increase)/Decrease in Trade and Other Receivables
31,177,64025,647,48566,652,445
Increase /(Decrease) in Trade and Other Payables
12,209,792(5,834,719)22,759,604
Cash Generated from Operations
303,215,016222,040,200249,591,203
Repayment of Project Creditors
(3,395,954)- -
Finance Costs Paid
19.2 (17,126,040)(32,709,375) (5,541,074)
Employee Retirement Benefit Paid
(841,050)(1,042,050) (841,050)
Income Tax Paid
(17,819,351)(4,529,832)(14,792,603)
Net Cash Flows from /(Used in) Operating Activities
264,032,621183,758,943228,416,477
Investing Activities
Purchase of Property, Plant and Equipment
3
(13,595,354)(36,715,387)(10,644,849)
Acquisition of Investments
6.1
(666,670)-
(666,670)
Loans Given to Related Parties
6.2 (210,200,000)(62,287,450)(210,200,000)
Loans Settled by Related Parties
6.2 62,287,450-
62,287,450
Proceeds from Sale of Property, Plant and Equipment
-6,012,543
-
Investment Income Received
19.1 19,439,5272,433,43619,439,527
Net Cash Flows from/(Used in) Investing Activities
(142,735,048)(90,556,858)(139,784,543)
100,287,359
23,004,811
420,000
(2,433,436)
(5,008,562)
12,174,256
943,018
(4,370,986)
125,016,460
1,413,498
20,918,472
2,005,203
149,353,633
(12,174,256)
(1,042,050)
(3,836,876)
132,300,451
(32,700,305)
(62,287,450)
6,005,079
2,433,436
(86,549,240)
Financing Activities
Dividends Paid
(47,013,614)(23,175)
(47,013,614)
(23,175)
Loans Obtained/Interest Capitalised During the Period
(21,940,958)461,075,153 (6,517,473) 181,580,993
Repayment of Interest Bearing Loans and Borrowings
(58,119,134)(390,900,000) (25,253,737) (156,300,000)
Net Cash Flows from/(Used in) Financing Activities
(127,073,706)70,151,978(78,784,824)
25,257,818
Net Foreign Exchange Difference
20,221,997(25,513,048) 4,900,003
Net Increase/(Decrease) in Cash and Cash Equivalents
(5,776,132)163,354,063 9,847,111
Cash and Cash Equivalents at the Beginning of the Period
9
33,347,589(104,493,426) 32,923,194
Cash and Cash Equivalents at the End of the Period
9
47,793,45333,347,58947,670,308
5,008,562
71,009,029
(43,094,397)
32,923,194
63
NOTES TO THE FINANCIAL STATEMENTS
1.
1.1General
Dolphin Hotels PLC (“Company”) is a limited
liability Company incorporated and domiciled in
Sri Lanka whose shares are publicly traded. The
registered office is located at Level 5, Hemas
House, No. 75, Braybrooke Place, Colombo 2.
1.2
Consolidated Financial Statements
The Consolidated Financial Statements of the
Company for the year ended 31 March 2013
comprise Serendib Hotels PLC (“Company”) and
all its Subsidiaries and Associates whose accounts
have been consolidated therein. (The “Group”)
1.3
Principal Activities and Nature of
Operations
The principal activity of the Group/ Company is,
hotel operation.
1.4
Parent Entity and Ultimate Parent
Entity
The Company’s parent undertaking is Serendib
Hotels PLC. In the opinion of the directors, the
Company’s ultimate parent undertaking and
controlling party is Hemas Holdings PLC, which is
incorporated in Sri Lanka.
1.5
Date of Authorisation for Issue
The Financial Statements of the Company for
the year ended 31 March 2013 were authorised
for issue in accordance with a resolution of the
directors on 30 May 2013.
2.1 BASIS OF PREPARATION AND
ADOPTION OF SLAS (SLFRS AND LKAS)
EFFECTIVE FOR THE FINANCIAL PERIOD
BEGINNING ON OR AFTER 01 APRIL 2012
The Financial Statements of the Company and
its subsidiary have been prepared in accordance
with Sri Lanka Accounting Standards, comprising
SLFRSs/LKASs (here after “SLFRS”) as issued
by the Institute of Chartered Accountants of Sri
Lanka.
64
For all periods up to and including the year ended
31 March 2012, the Company and its subsidiary
prepared its Financial Statements in accordance
with Sri Lanka Accounting Standard (SLAS). These
Financial Statements for the year ended 31 March
2013 are the first the Group has prepared in
accordance with SLFRS/LKAS.
the parent company and in compliance with the
Group’s accounting policies unless specially
stated.
The Financial Statements of the Group have
been prepared on an accrual basis and under the
historical cost conversion unless otherwise stated.
The Financial Statements are presented in Sri
Lankan Rupees. The preparation and presentation
of these Financial Statements are in compliance
with the Companies Act No. 07 of 2007.
(a)Subsidiary
Subject to certain transition elections and
exceptions disclosed in Note 2.6, the Group has
consistently applied the accounting policies used
in preparation of its opening SLFRS Statement
of Financial Position at 01 April 2011 through all
periods presented, as if these policies had always
been in effect.
All intra-group balances, transactions, unrealised
gains and losses resulting from intra-group
transactions and dividends are eliminated in full.
Subsidiary is fully consolidated from the
date of acquisition, being the date on
which the Group obtains control, and
continues to be consolidated until the date
when such control ceases.
Subsidiaries are those enterprises
controlled by the parent. Controlled exists
when the parent holds more than 50% of
voting rights or otherwise has a controlling
interest.
(b)
Business Combination and Goodwill
Business Combinations are accounted
for using the acquisition method. The
cost of an acquisition is measured as the
aggregate of the consideration transferred,
measured at the acquisition date fair value
and the amount of any non-controlling
interest in the acquiree. For each business
combination, the Group elects whether to
measure the non-controlling interest in the
acquiree at fair value or at the proportionate
share of the acquiree at the fair value or at
the proportionate share of the acquiree’s
identifiable net assets. Acquisition-related
costs are expensed as incurred and
included in administrative expenses.
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. This includes the
Note 2.6 discloses the impact of the transition to
SLFRS on the Group’s reported financial position
and cash flows, including the nature and effect
of significant changes in accounting policies from
those used in the Group’s Consolidated Financial
Statements for the year ended 31 March 2012
prepared under SLASs.
2.1.1 Going Concern
The Directors have made an assessment of the
Company’s ability to continue as a going concern
and they do not intend either to liquidate or to
cease trading.
2.2
BASIS OF CONSOLIDATION
The consolidated Financial Statements comprise
the Financial Statements of the Group and its
subsidiary as at 31 March 2013.
The Financial Statements of the subsidiaries
are prepared for the same reporting period as
separation of embedded derivatives in host
contracts by the acquiree.
If the business combination is achieved in
stages, the previously held equity interest
is remeasured at its acquisition date fair
value and any resulting gain or loss is
recognised in 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 that
is a financial instrument and within the
scope of LKAS 39 Financial Instruments:
Recognition and measurement, is
measured at fair value with changes in fair
value either in profit or loss or as a change
to other comprehensive income (OCI). If
the contingent consideration is not within
the scope of LKAS 39, it is measured in
accordance with the appropriate SLFRS.
Contingent consideration that is classified
as equity is not reameasured and
subsequent settlement is measured at fair
value with change in fair value either in the
income statement or as a change to the
other comprehensive income (OCI).
Goodwill is initially measured at cost,
being the excess of the aggregate of the
consideration transferred and the amount
recognised for non-controlling interest
over the net identifiable assets acquired
and liabilities assumed. If the fair value of
the net assets acquired is in excess of the
aggregate consideration transferred, the
gain is recognised in profit or loss.
After initial recognition, goodwill is measured
at cost less any accumulated impairment
losses. 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
financial assets classified as available
for sale, 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.
generating units that are expected to benefit
from the combination transferred; the gain
is recognised in profit or loss.
2.3
Where goodwill has been allocated to
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.
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
2.3.1 Revenue Recognition
Revenue is recognised to the extent that it is
probable that the economic benefits will flow to
the Company and the revenue and accociated
costs or to be incurred can be reliably measured,
regardless of when the payment is being made.
Revenue is measured at the fair value of the
consideration received or receivable net of trade
discounts, and value added taxes.
d)Dividends
Revenue is recognised when the Group’s/
Company’s right to receive the payment is
established.
e)
Rental Income
Rental income is recognised on an accrual
basis.
f)Others
2.3.2 Foreign Currencies
The Group’s/Company’s consolidated
Financial Statements are presented in
Sri Lankan Rupees, which is also the
parent Company’ s functional currency.
For each entity the Group determines the
functional currency and items included in
the Financial Statements of each entity are
measured using that functional currency.
The Group uses the direct method of
consolidation and has elected to recycle
the gain or loss arises from this method.
(a)
Transactions and Balances.
Transactions in foreign currencies are
initially recorded by the Group entities
at their respectives at the functional
currency rates prevailing at the date of the
transaction.
The following specific recognition criteria must
also be met before revenue is recognised:
a)
Apartment, Food & Beverage Sales
Apartment revenue is recognised on the
rooms occupied on a daily basis, and food
and beverage are accounted for at the
time of sales.
b)
Rendering of Services
Revenue from rendering of services is
recognised in the accounting period in which
the services are rendered or performed.
c)
Interest Income
For all financial instruments measured
at amortised cost and interest bearing
Other income is recognised on an accrual
basis.
65
NOTES TO THE FINANCIAL STATEMENTS contd.
Monetary assets and liabilities
denominated in foreign currencies are
retranslated at the functional currency spot
rate of exchange ruling at the reporting
date.
Differences arising on settlement or
transaction of monetary items are
recognised in profit or loss with the
exception of all monetary items that
forms part of a net investment in a
foreign operation. These are recognised
in other comprehensive income until the
disposal of the net investment, at which
time they are reclassified to profit or
loss. Tax charges and credits attributable
to exchange differences on those
monetary items are also recorded in other
comprehensive income.
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 items
measured at fair value in a foreign
currency are translated using the
exchange rates at the date when the fair
value is determined.
The gain or loss arising on translation
of non-monetary items measured at fair
value is treated in line with the recognition
of gain or loss on changing fair value in
the items (translation differences on items
whose gain or loss is recognised in other
comprehensive income or profit or loss is
also recognised in other comprehensive
income or profit or loss respectively).
to be recovered from or paid to the
Commissioner General of Inland Revenue.
The tax rates and tax laws used to
compute the amount are those that are
enacted or substantively enacted by the
reporting date in the country where the
Company operates and generates taxable
income. Current income tax relating to
items recognised directly in equity is
recognised in equity and not in the income
statement.
The provision for income tax is based on
the elements of income and expenditure
as reported in the Financial Statements
and computed in accordance with the
provisions of the Inland Revenue Act No.
10 of 2006 and amendments thereto.
b)
Deferred Taxation
Deferred income tax is provided, using
the liability method, on all temporary
differences at the reporting date between
the tax bases of assets and liabilities
and their carrying amounts for financial
reporting purposes.
Deferred income tax liabilities are
recognised for all taxable temporary
differences except;
i). Where the deferred income tax liability
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
accounting profit nor taxable profit or loss;
and
ii). In respect of taxable temporary
differences associated with investments
in subsidiaries, except 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.
2.3.3Taxation
66
a)
Current Income Taxes
Current income tax assets and liabilities
for the current and prior periods are
measured at the amount expected
Deferred income tax assets are recognised
for all deductible temporary differences,
carry-forward of unused tax credits and
unused tax losses, to the extent that it
is probable that taxable profit will be
available against which the deductible
temporary differences, and the carryforward of unused tax credits and unused
tax losses can be utilised except:
i). 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 accounting
profit nor taxable profit or loss; and
ii). In respect of deductible temporary
differences associated with investments in
subsidiaries, deferred tax assets are only
recognised 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 income
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 income 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 profits will allow
the deferred tax assets to be recovered.
Deferred income tax assets and liabilities
are measured at the tax rates that are
expected to apply to the year when the
asset is realised or the liability is settled,
based on tax rates (and tax laws) that have
been enacted or substantively enacted as
at the reporting date.
Deferred tax relating to items recognised
outside profit or loss is recognised outside
profit or loss. 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.
(c)
Tax on Dividend Income
Tax on dividend income from subsidiary
is recognised as an expense in the
Consolidated Income Statement.
2.3.4 Property, Plant and Equipment
Property, plant and equipment are stated
at cost, net of accumulated depreciation
and/or accumulated impairment losses,
if any. Such cost includes the cost of
replacing component parts of the property,
plant and equipment and borrowing costs
for long-term construction projects if
the recognition criteria are met. When
significant parts of property, plant and
equipment are required to be replaced
at intervals, the Company derecognises
the replaced part, and recognises the
new part with its own associated useful
life and depreciation. Likewise, when a
major inspection is performed, its cost is
recognised in the carrying amount of the
plant and equipment as a replacement if
the recognition criteria are satisfied. All
other repair and maintenance costs are
recognised in the income statement as
incurred.
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.
Depreciation is calculated on straight line basis over the estimated useful lives of the assets as
follows :
As at 1 April
20132012 2011
Buildings on Freehold Land
Furniture and Fittings
Motor Vehicles
Plant and Machinery and Equipments
Swimming Pool
Soil Erosion Prevention
60 Years
5 -10 Years
5 -10 Years
5 -10 Years
60 Years
10-15 Years
60 Years
5 -10 Years
5 -10 Years
5 -10 Years
60 Years
10-15 Years
66 Years
5 -10 Years
5 -10 Years
5 -10 Years
66 Years
10-15 Years
An item of property, plant and equipment and any significant part initially recognised is derecognised
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain
or loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the income statement when the asset is
derecognised.
a)
Operating Leases
Operating lease payments are recognised as an operating expense in the income statement on
straight line basis over the lease term.
2.3.5 Borrowing Costs
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 an entity incurs in connection with the borrowing
of funds.
2.3.6 Intangible Assets
Where items of Property, Plant and
Equipment are subsequently revalued, the
entire class of such assets is revalued. Any
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their fair value as at the date of acquisition. Following
initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated
67
impairment losses, if any. Internally generated
intangible assets, excluding capitalised
development costs, are not capitalised and
expenditure is reflected in the income statement
in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed
as either finite or indefinite.
Intangible assets with finite lives are amortised
over their useful economic lives and assessed
for impairment whenever there is an indication
that the intangible asset may be impaired. The
amortisation period and the amortisation method
for an intangible asset with a finite useful life is
reviewed at least at the end of each reporting
period. Changes in the expected useful life or
the expected pattern of consumption of future
economic benefits embodied in the asset is
accounted for by changing the amortisation
period or method, as appropriate, and are
treated as changes in accounting estimates. The
amortisation expense on intangible assets with
finite lives is recognised in the income statement
in the expense category consistent with the
function of the intangible assets.
Intangible assets with indefinite useful lives are
not amortised, but are tested for impairment
annually, either individually or at the cashgenerating unit level. The assessment of indefinite
life is reviewed annually to determine whether the
indefinite life continues to be supportable. If not,
the change in useful life from indefinite to finite is
made on a prospective basis.
68
Foods and Beverages Stocks - At actual cost on
weighted average basis.
Maintenance and Others - At actual cost on
weighted average basis.
Net realisable value is the estimated selling price
in the ordinary course of business, less estimated
costs of completion and the estimated costs
necessary to make the sale.
2.3.8 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 profit or loss, loans and
receivables, held-to-maturity investments
and available-for-sale financial assets,
as appropriate and determine the
classification of its financial assets at initial
recognition.
All financial assets are recognised initially
at fair value plus transaction cost of
assets, in the case of investments not at
fair value through profit or loss.
The financial assets include cash and
short-term deposits, trade and other
receivables, other financial assets.
Subsequent Measurement
The subsequent measurement of financial
assets depends on their classification as
follows:
2.3.7Inventories
Loans and Receivables
Inventories are valued at the lower of cost and net
realisable value, after making due allowances for
obsolete and slow moving items.
Loans and receivables are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an
Gains or losses arising from derecognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the carrying
amount of the asset and are recognised in the
income statement when the asset is derecognised.
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 in finance income
in the income statement. The losses
arising from impairment are recognised in
the income statement in finance cost.
The cost incurred in bringing inventories to its
present location and conditions are accounted
using the following cost formulae:-
Available-for-Sale Financial Investments
Available-for-sale financial investments
include equity and debt securities. Equity
investments classified as available forsale are those, which are neither classified
as held for trading nor designated at fair
value through profit or loss. Debt securities
in this category are those which are
intended to be held for an indefinite period
of time and which may be sold in response
to needs for liquidity or in response to
changes in the market conditions.
After initial measurement, availablefor-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. Interest income on availablefor-sale debt securities is calculated
using the effective interest method and is
recognised in profit or loss.
The Group/ Company 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/ Company 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/
Company 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 assets reclassified out of the
available for sale category, any previous
gain or loss on that asset that has been
recognised in equity is amortised to profit or
loss 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 assets
is subsequently determined to be impaired,
then the amount recorded in equity is
reclassified to the income statement.
the received cash flows in full without
material delay to a third party under
a ‘pass-through’ arrangement; and
either
-
-
In that case, the Group also recognises an
associated liability. The transferred assets
and the associated liability are measured
on a basis that reflects the rights and
obligations that the Company 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.
ii)
Impairment of Financial Assets
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
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,
i). The rights to receive cash flows from
the asset have expired
ii). The Group has transferred its rights
to receive cash flows from the asset
or has assumed an obligation to pay
When the Group has transferred its rights
to receive cash flows from an asset or has
entered into a pass-through 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
company’s continuing involvement in it.
The Group has transferred
substantially all the risks and rewards
of the asset, or
The Group has neither transferred
nor retained substantially all the risks
and rewards of the asset, but has
transferred control of the asset.
asset 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 interest or principal 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. 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.
If there is objective evidence that an
impairment loss has been incurred,
the amount of the loss is measured
as the difference between the assets
carrying amount and the present value
of estimated future cash flows (excluding
69
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. If a loan has a
variable interest rate, the discount rate
for measuring any impairment loss is the
current effective interest rate.
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.
70
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.
Interest income continues to be accrued
on the reduced carrying amount and is
accrued 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 in the income statement.
Loans 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
finance costs in the income statement.
In the case of equity investments classified
as available-for-sale, objective evidence
would include a significant or prolonged
decline in the fair value of the investment
below its 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 impairments are recognised
directly in other comprehensive income.
In the case of debt instruments classified
as available-for-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 recognised in the
income statement.
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.
III)
Financial Liabilities
Initial Recognition and Measurement
Financial liabilities within the scope
of LKAS 39 are classified as financial
liabilities at fair value through profit or
loss, loans and borrowings, other financial
liabilities 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, and other financial
liabilities carried at amortised cost. This
includes directly attributable transaction
costs.
The Group’s financial liabilities include
trade and other payables, bank overdrafts,
loans and borrowings, other financial
liabilities.
Subsequent Measurement
The measurement of financial liabilities
depends on their classification as follows;
Loans and Borrowings/Other Financial
Liabilities
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 in finance costs in
the income statement
Derecognition
A financial liability is derecognised
when the obligation under the liability is
discharged or cancelled or expires. 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 recognised
in the income statement.
iv) Offsetting of Financial Instruments
Financial assets and financial liabilities are
offset and the net amount reported in the
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 or dealer price
quotations. (bid price for long position and
ask price for short positions) ,without any
deduction for transaction costs.
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.
2.3.9 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 indication exists, or when
annual impairment testing for an asset is required,
the Group estimates the asset’s recoverable
amount. An asset’s recoverable amount is the
higher of an asset’s or cash-generating unit’s
(CGU) 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 or CGU 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. In
determining fair value less costs to sell, recent
market transactions are taken into account, if
available. If no such transactions can be identified,
an appropriate valuation model is used. These
calculations are corroborated by valuation
multiples, quoted share prices for publicly traded
subsidiaries or other available fair value indicators.
the last impairment loss was recognised. The
reversal is limited so that the carrying amount of
the asset does not exceed its recoverable amount,
nor 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
a revalued amount, in which case the reversal is
treated as a revaluation increase.
Intangible Assets
Intangible assets with indefinite useful lives
are tested for impairment annually as at 31
March either individually or at the CGU level, as
appropriate and when circumstances indicate that
the carrying value may be impaired.
2.3.10Cash and Short Term Deposits
Cash and short-term deposits in the statement of
financial position comprise cash at banks and on
hand and short-term deposits with a maturity of
three months or less.
For the purpose of the Group statement of cash
flows, cash and cash equivalents consist of cash
and short-term deposits as defined above, net of
outstanding bank overdrafts.
Impairment losses of continuing operations,
including impairment on inventories, are
recognised in the income statement in those
expense categories consistent with the function
of the impaired asset, except for a property
previously revalued where the revaluation was
taken to other comprehensive income. In this
case, the impairment is also recognised in other
comprehensive income up to the amount of any
previous revaluation.
2.3.11Provisions
For assets excluding goodwill, 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
Group estimates the asset’s or cash-generating
unit’s recoverable amount. A previously
recognised impairment loss is reversed only if
there has been a change in the assumptions used
to determine the asset’s recoverable amount since
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.
71
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax
rate 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.
contingent liabilities, at the end of the reporting
period. However, uncertainty about these
assumptions and estimates could result in
outcomes that require a material adjustment
to the carrying amount of the asset or liability
affected in future periods.
2.3.12Retirement Benefit Liability
a)Judgments
(a)
Defined Contribution Plans – Employees’
Provident Fund and Employees’ Trust
Fund
Employees are eligible for Employees’
Provident Fund Contributions and
Employees’ Trust Fund Contributions
in line with the respective statutes and
regulations. The Company contributes
12% and 3% of gross emoluments of
employees to Employees’ Provident Fund
and Employees’ Trust Fund respectively.
In the process of applying the Group accounting
policies, management has made the following
judgments, which have the most significant effect on
the amounts recognised in the Financial Statements:
(b)
Defined Benefit Plan – Gratuity
The Group measures the present value
of the promised retirement benefits of
gratuity which is a defined benefit plan
with the advice of an actuary using the
projected benefit valuation method.
Actuarial gains and losses for defined
benefit plans are recognised in full in the
period in which they occur in the income
statement.
However, as per the payment of Gratuity Act
No. 12 of 1983 this liability only arises upon
completion of 5 years of continued service.
The gratuity liability is not externally funded.
I.
Deferred Tax Assets
Deferred tax assets are recognised for
all unused tax losses to the extent that
it is probable that taxable profit will be
available against which the losses can
be utilised. Significant management
judgment is required to determine the
amount of deferred tax assets that can be
recognised, based upon the likely timing
and level of future taxable profits together
with future tax planning strategies.
II.
Estimates and Assumptions
The key assumptions concerning the
future and other key sources of estimation
uncertainty at the reporting date, that have
a significant risk of causing a material
adjustment to the carrying amounts of assets
and liabilities within the next financial year,
are described below. The Group based its
assumptions and estimates on parameters
available when the Financial Statements
were prepared. Existing circumstances and
assumptions about future developments,
however, may change due to market changes
or circumstances arising beyond the control
of the Company. Such changes are reflected
in the assumptions when they occur.
2.4 SIGNIFICANT ACCOUNTING
JUDGMENTS, ESTIMATES AND
ASSUMPTIONS
The preparation of the Group’s Financial
Statements requires management to make
judgments, estimates and assumptions that affect
the reported amounts of revenues, expenses,
assets and liabilities, and the disclosure of
72
III.
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. The fair value
less costs to sell calculation is based
on available data from binding sales
transactions 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.
IV.
Defined Benefit Plans
The cost of defined benefit plans-gratuity
is determined using actuarial valuations.
The actuarial valuation involves making
assumptions about discount rates, futures
salary increases and retirement age . Due
to the long-term nature of these plans,
such estimates are subject to significant
uncertainty. All assumptions are reviewed
at each reporting date.
V.
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 discounted cash
flow model. The inputs to these models
are taken from observable markets where
possible. Where this is not feasible,
a degree of judgment is required in
establishing fair values.
2.5 STANDARDS ISSUED BUT NOT YET
EFFECTIVE
The following SLFRS have been issued by the
Institute of Chartered Accountants of 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 reflect the first phase
of work on replacement of LKAS 39 and
applies to Classification and Measurement
of Financial Assets and Liabilities. This
standard will be effective for the financial
period beginning on or after 1 January
2015.
(ii)
SLFRS 13- Fair Value Measurements
SLFRS 13 establishes a single source of
guidance under SLFRS for all fair value
measurements. SLFRS 13 provides
guidance on all fair value measurement
under SLFRS.
This standard was originally effective for
the financial period beginning on or after
01 January 2013 and early application
was allowed. However effective date has
been deferred subsequently.
In addition to the above, following
standards were also issued with an
original effective date of 01 January 2013,
which were also deferred subsequently.
SLFRS 10-Consolidated Financial
Statements
SLFRS 12-Disclosure of Interest in
Other Entities
2.6
The Group will adopt these standards
when they become effective. Pending a
detailed review, the financial impact is
not reasonably estimate as at the date of
publication of these Financial Statements.
FIRST TIME ADOPTION OF SLFRS
These Financial Statements, for the year ended 31
March 2013, are the first the Group has prepared
in accordance with SLFRS. For periods up to and
including the year ended 31 March 2012, the Group
prepared its Financial Statements in accordance
with Sri Lanka Accounting Standards (SLAS).
Accordingly, the Group has prepared Financial
Statements which comply with SLFRS applicable
for periods ending on or after 31 March 2013,
together with the comparative period data as
at and for the year ended 31 March 2012, as
described in the accounting policies. In preparing
these Financial Statements, the Group’s opening
statement of financial position was prepared as
at 1 April 2011, the Group’s date of transition
to SLFRS. This note explains the principal
adjustments made by the Group in restating its
SLAS statement of financial position as at 1 April
2011 and its previously published SLAS Financial
Statements as at and for the year ended 31
March 2012.
2.6.1 Exemptions Applied
SLFRS 1 First-Time Adoption of Sri Lanka
Financial Reporting Standards allows first-time
adopters certain exemptions and exceptions from
the retrospective application of certain SLFRS.
Set out below are the applicable exemptions
and exceptions under SLFRS 1 applied by the
Company in preparing the first consolidated
Financial Statements for the year ended 31 March
2013 under SLFRS.
statement of financial position. The Group
did not recognise or exclude any previously
recognised amounts as a result of SLFRS
recognition requirements.
b)
The basis of measurement of an
investment in a subsidiary is at its deemed
cost in the separate SLFRS Financial
Statements of the subsidiary. The group
has applied the previous carrying value
under SLAS on 1 April 2011 as the
deemed cost of such investments.
c)
Designations of Previously Recognised
Financial Instruments
The Group has designated unquoted
equity instruments held at 1 April 2011 as
available-for-sale investments.
Exceptions the Group has not Applied
Retrospectively
a)Estimates
2.6.2 Optional Exemptions Which the Group
has Opted to Apply
a)
Business Combinations
SLFRS 3 Business Combinations has not
been applied to acquisitions of subsidiaries,
which are considered businesses for SLFRS,
or of interests in associates and joint
ventures that occurred before 1 April 2011.
Use of this exemption means that the local
SLAS carrying amounts of assets and
liabilities, which are required to be recognised
under SLFRS, is their deemed cost at the
date of the acquisition. After the date of the
acquisition, measurement is in accordance
with SLFRS. Assets and liabilities that do
not qualify for recognition under SLFRS
are excluded from the opening SLFRS
Investments in Subsidiaries
The estimates at 1 April 2011 and at 31
March 2012 are consistent with those
made for the same dates in accordance
with SLAS (after adjustments to reflect any
differences in accounting policies)
b) De-Recognition of Financial Assets
and Financial Liabilities
The Group has applied the derecognition
requirements in LKAS 39 prospectively to
transactions occurring after 1 April 2011.
Therefore the non-derivative financial
assets or non-derivative financial liabilities
which were previously de-recognised
under SLAS as a result of a transaction
that occurred before the transition date 1
April 2011 has not been re-recognised in
the SLFRS Financial Statements.
73
2.6.3 Company Reconciliation of Equity as at 1st April 2011 ( Date of Transition to SLFRS )
Group
Company
SLFRS
SLFRS
SLAS
As at
SLAS
As at
Note
Balance Remeasurements
1 April 2011
Balance Remeasurements
1 April 2011
Rs.Rs.Rs.Rs.Rs.Rs.
ASSETS
Non-Current Assets
A 1,179,862,622
Intangible Assets
A
-
Investment in Subsidiary
-
Other Non-Current Financial Assets
3,333,330
Deferred Tax Assets
F
-
1,183,195,952
Current Assets
Inventories7,959,624
-7,959,6247,959,624
4,116,276
-4,116,2762,043,594
B 157,394,844
(2,583,687)154,811,157159,817,798
13,743,008
-13,743,00813,714,154
183,213,752 (2,583,687)180,630,065183,535,169
Total Assets1,366,409,704
2,064,9081,368,474,612 958,520,679
-7,959,624
-2,043,594
(2,843,943)156,973,855
-13,714,154
(2,843,943)180,691,227
(1,507,959)957,012,721
Equity
Issued Capital 316,214,770
Other Component of Equity 154,468,273
-
Retained Earnings
B 215,661,429
Total Equity686,344,472
-316,214,770316,214,770
(2,840,391)151,627,882140,058,381
2,840,3912,840,391
-
(2,583,687)213,077,742155,368,054
(2,583,687)683,760,785611,641,205
-316,214,770
-140,058,381
-(2,843,943)152,524,111
(2,843,943)608,797,262
-314,046,666109,873,333
4,648,59561,158,94036,238,118
-8,906,5608,906,560
4,648,595384,112,166155,018,011
-109,873,333
1,335,98437,574,103
-8,906,560
1,335,984156,353,996
Interest Bearing Loans and Borrowings 314,046,666
F
56,510,345
8,906,560
379,463,571
Current Liabilities
C 134,000,907
Income Tax Liability
-
Non-Interest Bearing Loans and Borrowings
C
550,000
Dividends Payable
960,986
300,601,660
Total Equity and Liabilities1,366,409,704
74
(2,571,097)1,177,291,525 635,730,380
(2,571,097)633,159,283
2,571,0972,571,097
-2,571,0972,571,097
-
-135,921,800
-135,921,800
-3,333,3303,333,330
-3,333,330
4,648,5954,648,595
-
1,335,9841,335,984
4,648,5951,187,844,547 774,985,510
1,335,984776,321,494
550,000134,550,907117,115,314
550,000117,665,314
-
---(550,000)
-550,000
(550,000)-960,986960,931
-960,931
-165,089,768 73,235,218
-73,235,218
-300,601,661191,861,463
-191,861,463
2,064,9081,368,474,612 958,520,679
(1,507,959)957,012,721
2.6.4 Company Reconciliation of Equity as at 31 March 2012
Group
Company
SLFRS
SLFRS
SLAS
As at
SLAS
As at
Note
Balance Remeasurements 31 March 2012
Rs.Rs.Rs.Rs.Rs.Rs.
ASSETS
Non-Current Assets
A 1,261,541,933
Intangible Assets
A
-
Investments in Subsidiaries
-
-
Other Non-Current Financial Assets
3,333,330
Deferred Tax Assets
F
-
1,264,875,263
(1,680,000) 1,259,861,933692,167,460
(1,680,000)
1,680,000
1,680,000-
1,680,000
--
135,921,800-
-
3,333,3303,333,330
-
2,831,627
2,831,627-
1,056,903
2,831,627 1,267,706,890831,422,590
1,056,903
690,487,460
1,680,000
135,921,800
3,333,330
1,056,903
832,479,493
Current Assets
Inventories
6,546,126
-6,546,1266,546,126
-6,546,126
B&C 123,712,411
5,451,262
129,163,673
70,709,955
65,345,058
136,055,013
Amounts Due from Related Parties
C
6,151,132
(6,151,132)
-
66,964,520
(66,964,520)
2,765,210
-
2,765,210- -Other Current Financial Assets
62,287,450
-
62,287,450
62,287,450
-
62,287,450
54,158,129
-
54,158,12953,733,734
-
53,733,734
255,620,458
(699,870)
254,920,588260,241,785
(1,619,462)
258,622,323
Total Assets1,520,495,721
2,131,757 1,522,627,4781,091,664,375
(562,559) 1,091,101,816
Capital and Reserves
Issued Capital
316,214,770
-316,214,770316,214,770316,214,770
Other Components of Equity 250,465,832
(2,840,391)
247,625,441
190,361,220
190,361,220
-
2,840,391
2,840,391
-
Retained Earnings
B 309,621,623
(699,870)
308,921,753248,372,324
(1,619,462)
246,752,862
Total Equity876,302,225
(699,870)
875,602,355754,948,314
(1,619,462)
753,328,852
-
359,083,712
120,304,262
-
120,304,262
F
48,689,946 2,831,62751,521,57331,377,951 1,056,90332,434,854
8,807,528
-
8,807,5288,807,528
-
8,807,528
416,581,186
2,831,627
419,412,813160,489,741
1,056,903
161,546,644
Current Liabilities
C 117,396,613
11,319,575
128,716,188
108,493,628
11,176,890
119,670,518
Amounts Due to Related Parties
C
10,769,575
(10,769,575)
-
10,626,890
(10,626,890)
Non-Interest Bearing Loans and Borrowings
C
550,000
(550,000)
-
550,000
(550,000)
Income Tax Liabilities
5,156,385
-5,156,3853,530,775
-3,530,775
Other Current Financial Liabilities
C
-
31,000,000
31,000,000- 16,000,00016,000,000
Dividends Payable
937,756
-937,756937,756
-937,756
C
92,801,981
(31,000,000)
61,801,98152,087,271
(16,000,000)
36,087,271
227,612,310
-
227,612,310176,226,320
-
176,226,320
Total Equity and Liabilities1,520,495,721
2,131,757 1,522,627,4781,091,664,375
(562,559)1,091,101,816
75
2.6.5 Company Reconciliation of Comprehensive Income for the Year Ended 31 March 2012
INCOME STATEMENT
Group
Company
SLFRS
SLFRS
SLAS
As at
SLAS
As at
Note
Rs.Rs.Rs.Rs.Rs.Rs.
Revenue
D623,001,385 20,860,780643,862,165404,577,049
13,596,432418,173,481
Cost of Sales
D (146,101,345)
(20,860,780)(166,962,125) (96,028,538)
(13,596,432)(109,624,970)
Gross Profit476,900,040
-476,900,040308,548,511
-308,548,511
Other Operating Income and Gains
5,019,265
-
5,019,2654,962,886
-4,962,886
Sales and Marketing Expenses
B (18,037,494) 1,883,817(16,153,677)(11,733,631)
1,224,481(10,509,150)
Administrative Expenses (309,502,712)
- (309,502,712)(197,982,630)
-(197,982,630)
Operating Profit154,379,099
1,883,817156,262,916103,795,136
1,224,481105,019,617
Finance Cost (32,709,375)
-
(32,709,375)(12,174,256)
-(12,174,256)
Finance Income
2,433,436
-
2,433,4362,433,436
-2,433,436
Exchange Gain/(Loss) (25,513,048)
-
(25,513,048)5,008,562
-5,008,562
Profit Before Tax98,590,112 1,883,817100,473,929 99,062,878
1,224,481100,287,359
Income Tax Expense
(7,549,381)
-
(7,549,381)(8,978,071)
-(8,978,071)
Profit for the Period91,040,731 1,883,81792,924,54890,084,807
1,224,48191,309,288
Earnings Per Share - Basic
2.88
2.94
STATEMENT OF COMPREHENSIVE INCOME
Profit for the Period-
92,924,54892,924,548
-
91,309,28891,309,288
-
-
48,795,31448,795,314
4,426,9884,426,988
-
53,222,30253,222,302
-
144,531,590144,531,590
Revaluation of Land and Buildings
E
-
94,584,10394,584,103
Deferred tax attributable to Revaluation Surplus E
-
4,332,9194,332,919
for the Period, Net of Tax-
98,917,022
98,917,022
for the Period, Net of Tax-
191,841,570191,841,570
76
2.6.6. Notes to the Reconciliation of Equity
As at 1 April 2011 and 31 March 2012 and
Comprehensive Income For the Year Ended 31
March 2012
Other Payables amounting to Rs.11.7 Mn
and Rs.10.8 Mn in the Group and Company
as at 01 April 2011 and 31 March 2012
respectively. Non-Interest bearing loans and
borrowings have been reclassified under
Trade and Other Payables as at 01 April 2011
and 31 March 2012 the amounting of Rs.0.6
Mn both Group and Company . Loans due to
Related Parties as at 01 April 2011 and 31
March 2012 have been reclassified under
Other Current Financial Liabilities amounting
to Rs 31 Mn to the Group and Rs.16 Mn to
the Company in year 2012.
A. Transfer from PPE to Intangible Assets
Computer software that are not integral to
operate the hardware were reclassfied as
a separate intangible assets at the date of
transition to SLFRS. Therefore net book value
of Rs. 2.6 Mn in Group and Company were
transferred to intangible assets as at 01
April 2011. In year 2011/12 net book value
of Rs.1.7 Mn in Group and Company were
transfered to intangible assets.
B. Impairment of Trade Receivables
Under current practice, the provision for
impairment of receivables consists of
both a specific amount for incurred losses
and general amount for expected future
losses. SLFRS does not permit recognition
of impairment for expected future losses.
Accordingly Group recognised an impairment
of Rs.6 Mn and Company recognised Rs.
4 Mn as at 1 April 2011. The effect on
Retained Earnings for the year ended 31
March 2011 was Rs. 2.6 Mn for the Group
and Rs. 2.8 Mn for the Company and for the
year ended 31 March 2012 Rs. 9.5 Mn for
the Group and Rs. 7.3 Mn for the Company
are also recognised as provision for debtor
impairment. The net effect of year ended 31
March 2012 was Rs.2.8 Mn in Group and Rs.
1.2 Mn Company.
D. Gross Revenue
Under the Previous practice, Group and
Company had not grossed revenue for Nation
Building Levy and Tourism Development Levy.
Therefore revenue and cost sales have been
restated by Rs. 20.9 Mn in Group and Rs.
13.6 Mn in Company.
E. Revaluation of Land and Buildings
Revaluation Surplus on Land and Building
has been recognised under the Other
Comprehensive Income amounting to
Rs.98.9 Mn to the Group and Rs.53.2 Mn to
the Company year ended 31 March 2012.
F. Deferred Tax Asset
The Group and Company have separately
recorded Deferred Tax Assets and Deferred
Tax Liability as at 01 April 2011 and 31
March 2012.
C. Reclassification
During the 01 April 2011, and 31 March
2012, the Group/Company have reclassified
Amount due from Related Parties balance
under Trade and Other Receivables the
amounting to Rs.4.3 Mn and Rs.6.2 Mn
in the Group and Rs.76.6 Mn and Rs. 67
Mn in the Company respectively. Further
Amount due to Related Parties balance also
have been reclassified under Trade and
77
3.
PROPERTY, PLANT and EQUIPMENT
3.1Group
3.1.1 Gross Carrying Amounts
Additions/
Increase/
Additions
Increase/
Balance As at
Transfers/ (Decrease) in
Disposals/ Balance As at
01.04.2011Acquisitions Revaluation Transfer 01.04.2012Acquisitions Revaluation Transfer 31.03.2013
Rs.Rs.Rs.Rs.Rs.Rs.Rs.Rs.Rs.
At Cost/ Cost Incurred Since Last Revaluation
Improvements to Land
9,084,041
8,471,998-
(17,556,039)----Buildings and Swimming Pools on Freehold Land
-
17,895,943
- (17,895,943)
-
981,969
-
-
981,969
115,543,205
4,249,502-
(133,279)
119,659,429
3,904,343--
123,563,772
Motor Vehicles
4,818,334
49,500-
(4,775,834)
92,000---
92,000
Plant, Machinery and Equipment
124,752,377
7,128,622--
131,880,999
6,495,004--
138,376,003
18,965,972---
18,965,972---
18,965,972
273,163,929
37,795,565-
(40,361,095)
270,598,400
11,381,317--
281,979,716
At Valuation
Land and Improvements to Land
91,020,000
-
96,693,710
17,556,040 205,269,750
-
-
- 205,269,750
934,600,000-
(2,109,607)
2,202,057
934,692,450---
934,692,450
1,025,620,000-
94,584,103
19,758,097
1,139,962,200---
1,139,962,200
Total Value of Depreciable Assets
1,298,783,92937,795,56594,584,103(20,602,998)
1,410,560,60011,381,317
-
-
1,421,941,916
3.1.2 In the Course of Construction
Incurred
Incurred
Balance As at
During the Reclassified/
Disposal/ Balance As at
01.04.2011
YearTransferred Transfers01.04.2012
Capital Work in Progress1,080,1783,734,026
-4,814,204
-2,214,038
1,080,1783,734,026
-4,814,204
-2,214,038
Total Gross Carrying Amount
1,299,864,10741,529,59194,584,103(15,788,794)
1,410,560,59913,595,354
-
-
-
-2,214,038
-2,214,038
-
1,424,155,954
3.1.3Depreciation
Transfer to
Transfer to
Balance As at
Charge for Revaluation
01.04.2011
the Year
Reserve
Transfer
01.04.2012
the Year
Reserve
Transfer
31.03.2013
At Cost/ Cost Incurred Since Last Revaluation
Buildings and Swimming Pools
on Freehold Land-
117,219-
(117,219)-
7,956--
7,956
Furniture and Fittings34,129,63619,738,952
- (67,460)53,801,12819,909,165
-
-73,710,293
Motor Vehicles
3,593,968
119,740-
(3,679,022)
34,686
19,935--
54,621
Plant, Machinery and Equipment72,671,76211,166,765
-
-83,838,52711,860,005
-
-95,698,533
12,177,216
847,109--
13,024,325
847,110--
13,871,435
122,572,582
31,989,785-
(3,863,701)
150,698,666
32,644,170--
183,342,837
At Valuation
Buildings on Freehold Land-
15,576,667-
(15,576,667)----Buildings and Swimming Pools
on Freehold Land-----
15,578,208--
15,578,208
-
15,576,667-
(15,576,667)-
15,578,208--
15,578,208
Total Depreciation
122,572,582
47,566,452-
(19,440,368)
150,698,666
48,222,378--
198,921,044
78
3.
PROPERTY, PLANT AND EQUIPMENT (Contd.)
3.1.4 Net Book Values
As at
20132012
1 April 2011
Rs.Rs.Rs.
At Cost/Cost Incurred Since Last Revaluation
100,850,917 119,899,733151,671,525
At Valuation 1,124,383,993 1,139,962,2001,025,620,000
Total Carrying Amount of Property, Plant and Equipment
1,225,234,910 1,259,861,9331,177,291,525
3.2Company
3.2.1 Gross Carrying Amounts
Additions/
Increase/
Additions/
Increase/
Balance As at
01.04.2011Acquisitions Revaluation Transfer 01.04.2012Acquisitions Revaluation Transfer 31.03.2013
Improvements to Land
254,600
8,471,999-
(8,726,599)----Buildings and Swimming Pools
on Freehold Land-
16,676,756-
(16,676,756)-
981,969--
981,969
38,570,731
878,541-
(98,729)
39,350,543
1,046,018--
40,396,561
Motor Vehicles
4,818,334
49,500-
(4,775,834)
92,000---
92,000
Plant, Machinery and Equipment
76,380,894
7,092,499--
83,473,393
6,402,824--
89,876,217
5,795,520---
5,795,520---
5,795,520
125,820,079
33,169,295-
(30,277,918)
128,711,456
8,430,812--
137,142,267
At Valuation
Land and Improvements
40,180,000-
53,094,401
8,726,599
102,001,000---
102,001,000
534,600,000-
(4,299,087)
7,649,537
537,950,450---
537,950,450
574,780,000-
48,795,314
16,376,136
639,951,450---
639,951,450
Total Value of Depreciable Assets700,600,07933,169,29548,795,314(13,901,782)
768,662,906 8,430,812
-
-
777,093,717
3.2.2 In the Course of Construction
Incurred
Incurred
Balance As at
01.04.2011
Capital Work in Progress
468,990
3,126,027-
(3,595,017)-
2,214,038--
2,214,038
468,990
3,126,027-
(3,595,017)-
2,214,038--
2,214,038
Total Gross Carrying Amount701,069,06936,295,32248,795,314(17,496,799)
768,662,90610,644,849
-
-
779,307,755
79
3.2.3Depreciation
Transfer to
Transfer to
Balance As at
01.04.2011
the Year
Reserve
Transfer
01.04.2012
the Year
Reserve
Transfer
31.03.2013
Buildings and Swimming Pool on Freeland
-
117,219
-
(117,219)
-
2,289
-
-
2,289
Swimming Pool-----
5,667--
5,667
17,776,996
5,536,999-
(32,910)
23,281,085
5,237,238--
28,518,323
Motor Vehicles
3,593,968
119,740-
(3,679,022)
34,686
19,935--
54,621
Cutlery and Crockery--------Plant, Machinery and Equipment
42,425,644
7,984,385--
50,410,028
8,719,674--
59,129,702
4,113,179
336,468--
4,449,647
336,468--
4,786,115
67,909,78714,094,811
- (3,829,151)78,175,44614,321,270
-
-92,496,716
At Valuation
Buildings on Freehold Land-
8,910,000-
(8,910,000)-
8,965,841--
8,965,841
-
8,910,000-
(8,910,000)-
8,965,841--
8,965,841
Total Depreciation67,909,78723,004,811
-(12,739,151)78,175,44623,287,111
-
-
101,462,557
3.2.4 Net Book Values
As at
20132012
1 April 2011
Rs.Rs.Rs.
46,859,589 50,536,01058,379,283
At Valuation
630,985,609 639,951,450574,780,000
Total Carrying Amount of Property, Plant and Equipment
677,845,198 690,487,460633,159,283
3.2.5 During the financial year, the Group and Company acquired Property, Plant and Equipment to the aggregate value of Rs.13,595,354/-. and
Rs.10,644,849/- in year 2013 (2012 - Rs. 36,715,387/- and Rs. 32,700,305/- and 2011 - Rs. 544,631,636/- and Rs.174,718,875/-) respectively, the
consideration for which was settled by cash.
3.2.6 Property, Plant and Equipment of the Group and Company includes fully depreciated assets having a gross carrying amounts of Rs.64,252,025 and
Rs.43,053,159 in year 2013 (2012 - Rs.36,620,259/- and Rs.36,608,699/- and 2011 - Rs. 46,418,745/- and Rs.30,043,564/-).
3.2.7 The carrying amount of revalued assets that would have been included in the Financial Statements had the assets been carried at cost less depreciation
is as follows:
Cumulative
Depreciation
Net Carrying
Net Carrying
Net Carrying
If assets were
Amount Amount
Amount
Cost
carried at cost201320122011
Class of AssetRs.Rs.Rs.Rs.Rs.
80
Group
Buildings and Swimming Pool
804,252,335
77,694,862
726,557,473
739,961,678
739,065,950
Company
Buildings and Swimming Pool
389,604,728
39,281,830
350,322,898
356,816,309
349,638,041
4.
INTANGIBLE ASSETS
GroupCompany
As at 1 April
As at 1 April
201320122011201320122011
Rs.Rs.Rs.Rs.Rs.Rs.
At Cost
Computer Softwares
At the Beginning of the Year
Transfers/Disposals During the Year
At the End of the Year
2,100,0003,733,3623,733,362
-(1,633,362)
-
2,100,0002,100,0003,733,362
2,100,0003,733,362
-(1,633,362)
2,100,0002,100,000
3,733,362
3,733,362
Amortisation and Impairment
At the Beginning of the Year
Transfers/Disposals During the Year
Amortaisation
At the End of the Year
420,0001,162,265 925,216
-(1,162,265)
-
420,000420,000237,049
840,000420,000
1,162,265
420,0001,162,265
-(1,162,265)
420,000420,000
840,000420,000
925,216
237,049
1,162,265
1,260,0001,680,0002,571,097
1,260,0001,680,000
2,571,097
Carrying Value
4.1
Intangible assets are amortised over there useful economic life and useful economic life is estimated as 5-10 years.
5.
INVESTMENT IN SUBSIDIARY
Company
As at 1 April
Country of
Holding201320122011
Incorporation %Rs.Rs.Rs.
Non-Quoted
6.
6.1
Sri Lanka
100
135,921,800
135,921,800
135,921,800
OTHER FINANCIAL ASSETS
Other Financial Assets - Non Current
As at 1 April
Group/ Company201320122011
Rs.Rs.Rs.
Investments in Equity Securities (6.3)
4,000,000 3,333,3303,333,330
Total carrying value of Other Financial Assets
4,000,000 3,333,3303,333,330
81
6.2
Other Financial Assets - Current
As at 1 April
201320122011
RelationshipRs.Rs.Rs.
Loans to Serendib Hotels PLC Parent Company
-
Loans to Hemas Holdings PLCUltimate Parent Company
210,200,000
Total carrying value of Other Financial Assets
210,200,000
6.3
-
Investments in Equity Securities - Non-Current
2013
No. of Shares
Non Quoted - Available for sale investments
Rainforest Ecolodge (Pvt) Ltd
Total carrying value of Other Investments
6.4
62,287,450
-
62,287,450
2012
Rs.
400,0004,000,000
400,0004,000,000
No. of Shares
Rs.
As at 1 April 2011
No. of Shares
Rs.
333,3333,333,330 333,333
333,3333,333,330 333,333
3,333,330
3,333,330
Investments in Rainforest Ecolodge (Pvt) Ltd is carried at cost due to impracticability of assessing the fair value of the investment.
7.INVENTORIES
GroupCompany
As at 1 April
As at 1 April
20132012 2011201320122011
Rs.Rs.Rs.Rs.Rs.Rs.
Food items
Beverages
House-keeping & maintenance
Swimming pool chemicals
Printing & stationeries
Linen & cutlery
SPA Senses Stock
Other Replacements
82
1,120,7301,431,5152,642,7361,120,730 1,431,5152,642,736
1,587,8622,032,5442,835,7761,587,862 2,032,5442,835,776
2,306,4622,168,6442,087,7422,306,462 2,168,6442,087,742
---- -472,584605,775393,370472,584 605,775393,370
1,440,339235,645
-
1,440,339235,645
31,90672,003
-31,90672,003
194,565--
194,565 -7,154,4486,546,1267,959,6247,154,448 6,546,1267,959,624
8.
TRADE AND OTHER RECEIVABLES
8.1Current
GroupCompany
As at 1 April
As at 1 April
20132012 2011201320122011
Rs.Rs.Rs.Rs.Rs.Rs.
Trade Debtors - Others
- Related Parties (8.2)
Provision for Doubtful Debts
86,467,799103,999,980114,541,767 55,694,088 69,033,15471,790,498
1,017,696 243,8871,479,925 661,502 243,8871,442,162
87,485,495104,243,867116,021,692 56,355,590 69,277,04173,232,660
(9,228,496)(9,497,359)(6,088,501)(5,998,522) (7,337,828)(3,957,527)
78,256,999 94,746,508109,933,191 50,357,068 61,939,21369,275,133
Staff Festival Advances (8.3)
Other Debtors
Deposits and Prepayments
Amounts Due from Related Parties (8.4)
459,123316,264343,506459,123 316,264343,506
437,44021,959,05034,954,956
- 1,509,1186,115,590
8,058,5855,990,7195,268,9437,812,490 5,325,8984,631,303
10,773,8876,151,1324,310,56110,773,887 66,964,52076,608,323
97,986,034129,163,673154,811,157 69,402,568 136,055,013156,973,855
8.2
Trade Dues Receivables from Related Parties
GroupCompany
As at 1 April
As at 1 April
20132012 2011201320122011
Rs.Rs.Rs.Rs.Rs.Rs.
Relationship
Diethelm Travels Lanka (Pvt) Ltd. Affiliate Company 73,684
243,8871,479,925 47,895
Hemas Holdings PLC
Affiliate Company 918,545
--
597,054
Serendib Hotels PLC
Parent Company 16,467
--
10,703
Serendib Leisure Management Ltd. Group Company
9,000
--
5,850
1,017,696243,887
1,479,925
661,502
8.3
243,8871,442,162
---243,887
1,442,162
Staff Festival Advances
GroupCompany
As at 1 April
As at 1 April
20132012 2011201320122011
Rs.Rs.Rs.Rs.Rs.Rs.
Balance at the Beginning of the Year
Granted During the Year
Less: Repayments During the Year
Balance at the End of the Year
316,263343,506305,028316,263 343,506305,028
1,165,4501,543,4061,200,1951,165,450 1,543,4061,200,195
(1,022,590)(1,570,648)(1,161,717)(1,022,590) (1,570,648)(1,161,717)
459,123316,264343,506459,123 316,264343,506
83
8.4
Amounts Due from Related Parties
GroupCompany
As at 1 April
As at 1 April
20132012 2011201320122011
Rs.Rs.Rs.Rs.Rs.Rs.
Relationship
Serendib Hotels PLC
Parent Company 4,532,919
4,064,1222,970,1944,532,919
Hemas Holdings PLC
Ultimate Parent Company 2,714,776
--
2,714,776
Hotel Sigiriya PLC
Affiliate Company83,547
26,63842,12683,547
Jada Resort and Spa (Pvt) Ltd
Affiliate Company 1,255,138
71,875734,989
1,255,138
Serendib Leisure Management Ltd. Affiliate Company1,936,107
1,737,097563,252
1,936,107
Kammala Hoteliers (pvt) Ltd
Group of Company251,400
251,400-
251,400
Subsidiary Company
-
---
10,773,887
6,151,1324,310,56110,773,887
8.5
4,064,1222,970,194
-26,63842,126
71,875734,989
1,737,097563,252
251,40060,813,38872,297,762
66,964,52076,608,323
Trade Debtors Age Analysis
Group
Total
Current
30-90 days
91-120 days
>121 days
2013
78,256,99959,095,21818,673,240 488,541
201294,746,50869,984,79823,651,794 632,420 477,496
As at 01 April 2011
109,933,191
60,923,075
38,349,162
8,642,152
2,018,802
Company
Total
Current
30-90 days
91-120 days
>121 days
2013
50,357,06938,396,81111,948,827
11,431
201261,939,21345,856,53315,567,863 196,488 318,331
As at 01 April 2011
69,275,133
38,615,383
24,566,108
5,061,435
1,032,207
9.
CASH AND CASH EQUIVALENTS
GroupCompany
As at 1 April
As at 1 April
20132012 2011201320122011
Components of Cash and Cash Equivalents
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
9.1
Cash and Cash Equivalent Balance
Cash and Bank Balances
Fixed Deposits
77,918,74034,158,12913,743,00877,795,595 33,733,73413,714,154
-20,000,000
-
-20,000,000
77,918,74054,158,12913,743,00877,795,595 53,733,73413,714,154
9.2 Unfavourable Cash and
Cash Equivalent Balances
Bank Overdraft (12)
Total Cash and Cash Equivalent for the
Purpose of Cash Flow Statement
84
(30,125,287) (20,810,540)(118,236,434) (30,125,287) (20,810,540)(56,808,551)
47,793,453 33,347,589(104,493,426) 47,670,308 32,923,194(43,094,397)
10.
STATED CAPITAL - group/company
As at
As at
20132012
1 April 201120132012
1 April 2011
No. of Shares No. of Shares No. of Shares
Rs.
Rs.
Rs.
10.1 Fully Paid Ordinary Share (10.2)
31,621,47731,621,47731,621,477316,214,770316,214,770316,214,770
10.2 Fully Paid Ordinary Share
As at
20132012
1 April 2011
Rs.Rs.Rs.
Balance as Beginning of the Year
316,214,770 316,214,770316,214,770
Issue of Shares for Cash Consideration
- -Balance at End of the Year
316,214,770 316,214,770316,214,770
10.3 The holders of ordinary Shares confer their right to receive Dividends as declared from time to time. The Holders of Ordinary Shares are entitled
to one vote per share at a meeting of the company.
11.RESERVES
GroupCompany
As at 1 April
As at 1 April
20132012 2011201320122011
Rs.Rs.Rs.Rs.Rs.Rs.
11.1 Revaluation Reserve
Balance at the Beginning of the Year
Depreciation Transfer on Revaluation Surplus
Deferred Tax Attributable to Revaluation Surplus
Revaluation Surplus
Balance at End of the Period
11.2 Other Reserves
247,625,441151,627,882151,108,043190,361,220 140,058,381140,645,829
(2,919,463)(2,919,463)(2,919,463)(2,919,463) (2,919,463)(2,919,463)
-4,332,919 437,919
-4,426,988 437,919
-94,584,103 3,001,383
-48,795,314 1,894,096
244,705,978247,625,441151,627,882187,441,757 190,361,220140,058,381
2,840,3912,840,3912,840,391
- --
247,546,369250,465,832154,468,273187,441,757 190,361,220140,058,381
11.2 The above Revaluation Surplus consists of net surplus resulting from the revaluation of Property Plant and Equipment as described in Note 3.2.7.
The unrealised amount cannot be distributed to Shareholders.
11.3 Other Reserve represents the amount set aside by the directors for general application
85
12.
INTEREST BEARING LOANS & BORROWINGS
2013
2012
As at 1 April
As at 1 April
AmountAmount 2013AmountAmount 2012AmountAmount 2011
GroupRepayableRepayable
TotalRepayableRepayable
Total
Within 1 Year
After 1 Year Within 1 Year
After 1 Year
Bank Loans (12.1)
67,527,487 283,487,570 351,015,057 40,991,441359,083,712400,075,153 46,853,334314,046,666360,900,000
Bank Overdrafts (9.2)
30,125,287
-
30,125,28720,810,540
-20,810,540118,236,434
-
118,236,434
97,652,774 283,487,570 381,140,344 61,801,981359,083,712420,885,693165,089,768314,046,666479,136,434
12.1 Bank Loans
As at
01.04.2011
Rs.
Post Tsunami Recovery Loan funded by
European Investment Bank
Loans
Loans
Obtained/ Exchange
As at
As at Obtained/ Exchange
Int. Cap. Gain/(Loss) Repayment 01.04.2012 Int. Cap. Gain/(Loss) Repayment 31.03.2013 Terms of
Rs.
Rs.
Rs.
Rs.
Rs. Repayment
Rs.
Rs.
Rs.
360,900,000
-
-
Commercial Bank Foreign Currency
(Euro ) Loan
-
126,596,955
Commercial Bank Foreign Currency
(GBP) Loan
360,900,000
360,900,000
- 72 Installments
Comm. May 12
-
-
-
8,984,038
- 135,580,993
-
(6,517,473)
233,972,550
30,521,610
- 264,494,160
-
(15,321,996)
(17,966,890) 231,205,274
360,569,505
39,505,648
-
(21,839,469)
(27,220,627)
360,900,000
400,075,153
-
(9,253,737) 119,809,783 72 Installments
Comm. Nov 12
Rate of Interest
AWDR (6.79%) +
2.75% revised every
6 Month (From 01
Oct 10)
At 3.75% Over 1
Month Eur LIBO p.a
351,015,057
12.2 Interest Bearing Loans & Borrowings
AmountAmount 2013AmountAmount 2012AmountAmount
As at 1 April
CompanyRepayableRepayable
2011
Within 1 Year
After 1 Year
Total
Bank Loans (12.3)
22,161,818 97,647,965119,809,783 15,276,731120,304,262135,580,993 16,426,667109,873,333126,300,000
Bank Overdrafts (9.2)
30,125,287-
30,125,28720,810,540
-20,810,54056,808,551
-56,808,551
52,287,105 97,647,965149,935,070 36,087,271120,304,262156,391,533 73,235,218109,873,333183,108,551
12.3 Bank Loans
Post Tsunami Recovery Loan funded by
European Investment Bank
Commercial Bank Foreign Currency (Euro)
Loan
86
As at
01.04.2011
Rs.
Loans
Obtained/
Int. Cap.
Rs
Exchange
Gain/
(Loss)
Rs.
Repayment
Rs.
As at
01.04.2012
Rs.
Loans
Obtained/
Int. Cap.
Rs.
Exchange
Gain/
(Loss)
Rs.
Repayment
Rs.
As at
31.03.2013
Rs.
126,300,000
-
-
126,300,000
-
-
-
-
-
72 Instalments
Comm. May 11
AWDR (6.79%)
+ 2.75% revised
every 6 Month
(From 01 Oct 10)
-
126,596,955
8,984,038
-
135,580,993
-
(6,517,473)
(9,253,737)
119,809,783
72 Instalments
Comm. Nov 12
At 3.75% Over
1 Month Eur
LIBO p.a
126,300,000
126,596,955
8,984,038
126,300,000
135,580,993
-
(6,517,473)
(9,253,737)
119,809,783
Terms of
Repayment
Rate of Interest
13. OTHER FINANCIAL LIABILITIES
13.1 Other Financial Liabilities - Group
Relationship
As at
01.04.2011
Rs.
Loans
Obtained/
Int.Cap.
Rs.
Repayment
Rs.
As at
01.04.2012
Rs.
Loans
Obtained/
Int.Cap.
Rs.
Repayment
Rs.
As at
31.03.2013
Rs.
Terms of Repayment
Rate Of Interest
Loans Due to Related Parties
Hotel Sigiriya PLC
Affiliate
Company
-
16,000,000
-
16,000,000
-
(16,000,000)
-
Short-Term Source of
Funding Payable on
Demand
AWPLR-0.5% Revised
Monthly
Serendib Leisure Management Ltd
Affiliate
Company
-
15,000,000
-
15,000,000
-
(15,000,000)
-
Funding Payable on
Demand
AWPLR-0.5% Revised
Monthly
Jada Resorts and Spa (Pvt) Ltd
Affiliate
Company
-
30,000,000
(30,000,000)
-
-
-
-
Funding Payable on
Demand
AWPLR-0.5% Revised
Monthly
-
61,000,000
(30,000,000)
31,000,000
-
(31,000,000)
-
Loans
Obtained/
Int.Cap.
Rs.
Repayment
Rs.
As at
31.03.2013
Rs.
13.2 Other Financial Liabilities - Company
Relationship
As at
01.04.2011
Rs.
Loans
Obtained/
Int.Cap.
Rs.
Repayment
Rs.
As at
01.04.2012
Rs.
-
16,000,000
-
16,000,000
-
(16,000,000)
-
-
16,000,000
-
16,000,000
-
(16,000,000)
-
Terms of
Repayment
Rate Of Interest
Loans Due to Related Parties
Hotel Sigiriya PLC
14.
Affiliate
Company
Funding Payable on
Demand
AWPLR-0.5% Revised
Monthly
RETIREMENT BENEFIT OBLIGATION - GROUP/COMPANY
20132012As at
1 April 2011
Rs.Rs.Rs.
Balance as at Beginning of the Year
Interest Cost
Current Service Cost
Benefits Paid
Acturial (Gain)/Loss
Balance as at End of the Year
8,807,528 8,906,5607,377,983
1,136,652 915,726811,578
1,234,883 1,756,0301,204,265
(841,050) (1,042,050)(1,212,510)
1,136,652(1,728,738) 725,244
11,474,665 8,807,5288,906,560
Messers. K. A Pandith Actuaries, consultants and actuaries, carried out an actuarial valuation of the defined benefit plan gratuity on 31.03.2013. Appropriate and
compatible assumptions were used in determining the cost of retirement benefits. The principle assumptions used as follows :
The Principal Assumptions used were as follows:
20132012As at
1 April 2011
Discount Rate
Future Salary Increment Rate
Retirement Age
10%11%11%
9%9%9%
50-60 Years
50-60 Years
50-60 Years
87
15.
TRADE AND OTHER PAYABLES
GroupCompany
As at
As at
20132012
1 April 201120132012
1 April 2011
Rs.Rs.Rs.Rs.Rs.Rs.
Trade Payables
Sundry Creditors Including Accrued Expenses
Amounts Due to Related Parties (15.1)
15,642,56421,237,00921,912,78615,642,517 21,237,00921,912,785
110,397,508 96,709,604100,972,655 99,102,647 87,806,61984,091,751
11,039,56810,769,57511,665,46627,684,958 10,626,89011,660,778
137,079,640128,716,188134,550,907142,430,122 119,670,518117,665,314
15.1 Amounts Due to Related Parties
GroupCompany
As at
As at
20132012
1 April 201120132012
1 April 2011
Rs.Rs.Rs.Rs.Rs.Rs.
Relationship
Serendib Hotels PLC
Parent Company
1,404,847925,554591,608
1,404,847 925,554591,608
Hotel Sigiriya PLC
Group Company
387,342246,247214,245387,342 246,247214,245
Serendib Leisure Management Ltd. Group Company
9,168,595 9,441,28110,836,200 9,048,759 9,298,59610,836,200
Group Company
---
16,765,226 -Hemas Corporate Service (Pvt)Ltd Affiliate Company
-
-23,413
-
-18,725
Jada Resort and Spa (Pvt) Ltd.
Affiliate Company
78,784156,493
- 78,784
156,493
11,039,56810,769,57511,665,46627,684,958 10,626,89011,660,778
16.
DIVIDENDS PAYABLE
GroupCompany
As at
As at
20132012
1 April 201120132012
1 April 2011
Rs.Rs.Rs.Rs.Rs.Rs.
Unclaimed Dividend
1,388,143937,756960,986
1,388,143 937,756960,931
1,388,143937,756960,986
1,388,143 937,756960,931
GroupCompany
2013201220132012
Rs.Rs.Rs.Rs.
17.REVENUE
Sales
Tourism Development Levy
Nations Building Levy
88
740,789,609623,001,385478,809,075404,577,049
7,565,8606,423,9884,917,8094,175,592
16,985,09314,436,79210,984,4559,420,840
765,340,562643,862,165494,711,339418,173,481
18.
GroupCompany
2013201220132012
Rs.Rs.Rs.Rs.
OTHER OPERATING INCOME AND GAIN
Profit on Disposal of Property, Plant and Equipment
Others
-4,378,450
-4,370,986
572,881640,815572,881591,900
572,8815,019,265 572,8814,962,886
GroupCompany
2013201220132012
Rs.Rs.Rs.Rs.
19. FINANCE INCOME AND COST
19.1 Finance Cost
Interest Expense on Overdrafts
Interest Expense on Loans & Borrowings
Project Loan
9,0763,359,039
9,076764,168
17,116,96422,711,264 5,531,9984,771,016
-6,639,072
-6,639,072
17,126,04032,709,375 5,541,07412,174,256
GroupCompany
2013201220132012
Rs.Rs.Rs.Rs.
19.2 Finance Income
Interest Income -Related Parties
Interest Income -Others
17,691,621648,772
17,691,621648,772
1,747,9061,784,6641,747,9061,784,664
19,439,5272,433,43619,439,5272,433,436
89
20.
PROFIT/(LOSS) FROM CONTINUING OPERATIONS
Stated after Charging/(Crediting)
Included in Administrative Expenses
Employees Benefits including the following
- Defined Benefit Plan Costs - Gratuity
- Defined Contribution Plan Costs - EPF and ETF
Depreciation and Amotisation
Auditors’ Remuneration (Fees and Expenses)
Management Fees
Donations
Included in Selling and Marketing Expenses
Advertising and Sales Promotion Cost
Impairment of Debts
Others
21.
150,285,34578,703,79098,674,06954,167,413
3,508,187943,017
2,350,485631,822
7,635,4436,493,9215,115,7474,350,927
48,642,37747,986,08023,707,11123,424,439
555,692502,523398,280363,424
54,518,74543,221,92935,437,18428,094,253
1,227,78734,006822,61822,784
13,832,6389,287,4298,991,2156,036,829
(5,890,579)3,408,858(4,993,422)2,215,758
3,595,1393,457,3902,350,2302,256,563
INCOME TAX EXPENSE
Current Income Tax
Income Tax
Current Tax Expense on Ordinary Activities for the Year (21.1)
Under/(Over) Provision of Current Taxes in Respect of Prior Years
Deferred Taxation Charge/(Reversal) (21.2.1)
Income Tax Expense Reported in the Income Statement
90
GroupCompany
2013201220132012
Rs.Rs.Rs.Rs.
GroupCompany
2013201220132012
Rs.Rs.Rs.Rs.
26,824,62112,931,66420,281,19811,306,054
-(1,894,812)
-(1,894,812)
5,293,244(3,487,471)1,484,785(433,171)
32,117,8657,549,38121,765,9838,978,071
21.1 Reconciliation Between Current Tax Expense/(Income) and the Product of Accounting Profit.
Accounting Profit (Profit Before Tax)
Aggregate Disallowable Items
Aggregate Allowable Items
Interest Income
Business Losses Incured During the Year
Taxable Profit
Income Tax on Trade Income - 12% (2012 - 12%)
Income Tax on Bank Interest - 28% (2012 - 12%)
Current Income Tax Expense
GroupCompany
2013201220132012
Rs.Rs.Rs.Rs.
230,820,825100,473,929152,370,635100,287,358
63,546,67092,513,98132,268,35334,488,653
(98,105,718)(74,339,747)(61,287,875)(37,628,326)
19,439,5261,267,82519,439,5261,267,825
-(7,294,402)
215,701,303112,621,586142,790,63998,415,510
215,701,303112,621,586142,790,63998,415,510
21,381,55412,250,30214,838,13110,624,692
5,443,067681,362
5,443,067681,362
26,824,62112,931,66420,281,19811,306,054
91
21.2 Deferred Tax Assets, Liabilities and Income Tax Relates to the Followings
21.2.1
Balance Sheet
Income Statement
20132012201120132012
Rs.Rs.Rs.Rs.Rs.
Group
Deferred Tax Liability
Capital Allowances for Tax Purposes
41,045,879
37,207,30242,511,741 3,838,577
Revaluation of Buildings (Directly in Equity)
14,314,271
14,314,27118,647,199
55,360,150
51,521,57361,158,940
Deferred Tax Assets
1,376,960
2,831,6271,335,9841,454,667
Carry Forward of Unused Tax Losses
-
-3,312,611
-
1,376,960
2,831,6274,648,595
-
Deferred Income Tax (Income)/Expense
-
--
5,293,244
Net Deferred Tax Liability
53,983,190
48,689,94656,510,345
(5,304,439)
(1,495,643)
3,312,611
(3,487,471)
Company
Deferred Tax Liability
Capital Allowances for Tax Purposes
20,862,839
19,057,99719,770,249 1,804,842
Revaluation of Buildings (Directly in Equity)
13,376,857
13,376,85717,803,854
34,239,696
32,434,85437,574,103
Deferred Tax Assets
1,376,960
1,056,9031,335,984 (320,057)
1,376,960
1,056,9031,335,984
Deferred Income Tax (Income)/Expense
-
--
1,484,785
Net Deferred Tax Liability
32,862,736
31,377,95136,238,118
22.
(712,252)
279,081
(433,171)
EARNINGS PER SHARE
Earnings Per Share is Calculated by Dividing the Net Profit/(Loss) for the Year Attributable to Ordinary Shareholders by the Weighted Average Number of Ordinary
Shares Outstanding During the Year.
The Following Reflects the Earnings and Share data used in the Earnings Per Share Computations.
Group
20132012
Rs.Rs.
Amounts Used as the Numerator:
Net Profit/(Loss) Attributable to Ordinary Shareholders for Basic Earnings Per Share
92
198,702,96092,924,548
NumberNumber
Number of Ordinary Shares Used as Denominator:
Weighted Average Number of Ordinary Shares in issue Applicable to Basic Earnings Per Share
31,621,477
31,621,477
Earnings Per Share
6.28
2.94
23.
COMMITMENTS AND CONTINGENCIES
There are no Significant Commitment and/or Contingencies as at the Date of Statement of Financial Position.
24.
ASSETS PLEDGED
The Following Assets have been Pledged as Security for Liabilities.
Carrying Amount Pledged
Nature of Assets
Dolphin Hotels PLC
Freehold Land &
Buildings at Waikkal
(Extent 5A-3R-2.6P)
Freehold Land &
(Extent 5A-3R-2.6P)
Nature of Liability
Primery Mortgage Bond No.3120 dated 12/07/2010
for Rs.146.3M executed over Club Hotel Dolphin's Hotel
premises at Waikkala owned by the company. Extent
5A-3R-2.6P (Lot 1 in plane No.3105) to Commercial
Bank of Ceylon PLC (EIB Loan of Rs.126.6M and
overdraft facility of Rs.20M)
A supplementary Mortgage Bond in Euro executed in
connection with Primary Mortgage Bond No.3120 dated
13/07/2010 linking the Rupee exposure in foreign
currency.
Freehold Land &
Primary Mortgage Bond No.1425 dated 13/07/2010
for Rs.244.6M executed over Miami Beach Hotels
(Extent 7A-3R-31P)
premises at Waikkala owned by the Company. (Extent
7A:3R:31P) to Commercial Bank of Ceylon PLC (EIB Loan
of Rs.234.6M and overdraft facility of Rs.10M)
A supplementary Mortgage Bond in GBP executed in
Freehold Land &
connection with Primary Mortgage Bond No.1425 dated
13/07/2010 linking the Rupee exposure in foreign currency.
(Extent 7A-3R-31P)
25.
2013 Rs.
2012 Rs.
2011 Rs.
Included under
630,985,609
639,951,450
565,125,901
Property, Plant &
Equipment
630,985,609
639,951,450
565,125,901
Property, Plant &
Equipment
493,398,383
500,010,750
464,775,856
Property, Plant &
Equipment
493,398,383
500,010,750
464,775,856
Property, Plant &
Equipment
EVENTS OCCURRING AFTER THE DATE of the statement of financial position
There have been no material events occurring after the balance sheet date that require adjustments to or disclosure in the Financial Statements.
93
26.
RELATED PARTY DISCLOSURES
Details of significant Related Party Disclosures are as follows:
26.1 Transaction with the Parent and Related Entities
Ultimate Parent
Parent
Subsidiary
Affiliates
Nature of Transaction Hemas Holding PLC
Serendib Hotels PLC
Hotel Sigiriya PLC
2013
2012
2013
2012
2013
2012
2013
2012
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
As at 1 April
-
-
- -
-
-
-
Loans Receivable from Related Parties
- -
62,287,450
-
- -
-
-
Loans Payable to Related Parties
-
-
-
-
-
-
(16,000,000)
-
Amounts Due From Related Parties
-
-
4,064,122
2,970,194
60,813,388
72,297,762
26,638
42,126
Amounts Due To Related Parties
-
-
(925,554)
(591,608)
- -
(246,246)
(214,245)
-
-
-
-
-
-
-
-
-
-
65,426,018
2,378,586
60,813,388
72,297,762
(16,219,609)
(172,119)
856,586
-
-
-
1,262,867
730,025
4,619,425
6,639,183
715,141
3,311,830
-
-
648,772
-
-
-
-
Purchase of Goods / Services
-
-
(2,134,666)
(4,981,018)
(295,000)
(586,486)
(26,995)
(136,223)
Purchase of Property and Other Assets
-
-
-
(477,857)
-
-
-
-
Management Fees Payable
-
-
-
-
-
-
-
-
210,200,000
-
-
-
-
16,000,000
(16,000,000)
Finance Charges Payable
-
-
-
-
-
-
(395,507)
(730,400)
Accounting Fee Payable
-
-
-
-
-
-
-
-
Secretarial and Professional Fee Payable
-
-
-
-
-
-
-
-
Expenses Incurred on Behalf of the Company
-
-
-
-
-
-
-
-
Settlement of Dues from Related Parties
-
-
(783,366)
(284,869)
(391,294,226)
(327,737,237)
(768,224)
(872,074)
Settlement of Dues to Related Parties
-
-
1,655,374
5,124,929
309,391,187
310,200,165
391,398
834,621
Loan Capital Paid / Granted
-
-
(62,287,450)
62,287,450
-
-
-
-
213,511,830
-
(62,287,241)
63,047,432
(77,578,614)
(11,484,375)
15,915,813
(16,047,490)
As at 31 March
213,511,830
-
3,138,777
65,426,018
(16,765,226)
60,813,388
(303,795)
(16,219,609)
Sale of Goods / Services
Finance Income Receivable
Loans (Obtained)/ Repayments
Included In As at 31 March
Trade and Other Receivable
Loans Receivable from Related Parties
Loans Payable to Related Parties
Amounts Due From Related Parties
Amounts Due To Related Parties
Total
597,054
-
10,704
-
-
-
-
-
210,200,000
-
-
62,287,450
-
-
-
(16,000,000)
-
-
-
-
-
-
-
2,714,776
-
4,532,919
4,064,122
-
60,813,388
83,547
26,638
-
-
(1,404,847)
(925,554)
(16,765,226)
-
(387,342)
(246,246)
213,511,830
-
3,138,777
65,426,018
(16,765,226)
60,813,388
(303,795)
(16,219,609)
Terms and Conditions:
Sales and purchase of goods and/or services to Related Parties were made at on the basis of the price lists in force with Non-Related Parties, but subject to
approved discounts. Property, Plant and Equipment purchases and sales are made at Net Book Values
94
Affiliates
Serendib Leisure Mgt. Ltd.
Diethlm Travels Lanka
Hemas Corp. Services
Jada Resorts & Spa
(Pvt) Ltd.
Ltd.
(Pvt) Ltd.
Kammala Hoteliers
(Pvt) Ltd
Total
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
243,887
2,177,151
-
-
243,887
1,442,162
-
-
-
734,989
- -
-
- -
- -
- -
-
-
62,287,450
-
-
-
-
-
-
-
-
-
-
-
(16,000,000)
-
1,737,097
563,252
-
-
-
-
71,875
-
251,400
251,400
66,964,520
76,124,734
(9,298,595)
(10,836,200)
-
-
-
-
(156,493)
-
- -
(10,626,888)
(11,642,053)
-
-
-
-
-
-
18,725
-
-
- -
-
18,725
(7,561,498)
(10,272,948)
243,887
1,442,162
-
18,725
(84,618)
734,989
251,400
251,400
102,868,968
66,678,557
604,764
1,771,793
2,865,033
3,365,974
-
-
1,238,263
412,385
- -
11,305,493
13,775,945
-
-
-
-
-
-
-
-
-
-
3,311,830
648,772
-
-
-
-
-
-
(78,784)
(85,108)
-
-
(2,535,446)
(5,788,835)
-
-
-
-
-
-
-
-
- -
-
(477,857)
(55,631,515)
(28,667,602)
-
-
-
-
-
-
- -
(55,631,515)
(28,667,602)
-
-
- -
-
-
-
-
226,200,000
(16,000,000)
150,101
1,283,651
-
-
-
-
-
(997,348)
-
-
(245,405)
(444,097)
(857,143)
(857,143)
-
-
-
-
-
-
- -
(857,143)
(857,143)
-
-
-
-
-
346,722
-
-
- -
-
346,722
(20,717,013)
(13,786,137)
-
-
-
-
-
-
- -
(20,717,013)
(13,786,137)
(520,623)
(597,948)
(3,061,025)
(4,564,249)
-
-
(55,000)
(1,075,498)
- -
(396,482,465)
(335,131,874)
77,426,124
43,564,834
-
-
-
(365,447)
156,493
925,962
-
-
389,020,576
360,285,065
62,287,450
-
-
-
-
-
-
-
-
- -
(62,287,450)
454,696
2,711,449
(195,992)
(1,198,275)
-
(18,725)
1,260,971
(819,607)
-
-
91,081,463
36,190,410
(7,106,802)
(7,561,498)
47,895
243,887
-
-
1,176,353
(84,618)
251,400
251,400
193,950,431
102,868,967
5,850
-
47,895
243,887
-
-
-
-
-
-
661,503
243,887
-
-
-
-
-
-
-
-
-
-
210,200,000
62,287,450
-
-
-
-
-
-
-
-
-
-
-
(16,000,000)
1,936,107
1,737,097
-
-
-
-
1,255,138
71,875
251,400
251,400
10,773,887
66,964,520
(9,048,759)
(9,298,595)
-
-
-
-
(78,784)
(156,493)
-
-
(27,684,958)
(10,626,888)
(7,106,802)
(7,561,498)
47,895
243,887
-
-
1,176,353
(84,618)
251,400
251,400
193,950,431
102,868,968
95
27
Transactions with Key Management Personnel of the Company or its Parent
The Key Management Personnel of the Company are the members of its Board of Directors and that of its Parent .
a)
Key Management Personnel Compensation
b)
There were no Compensation to the Key Management Personnel during the year.
Other Transactions with Key Management Personnel
There were no other transactions with the Key Management Personnel during the year.
28.
FAIR VALUE
Set out below is a comparison by class of the carrying amounts and fair values of the Group’s/Company’s financial instruments that are carried in the Financial
Statements.
Carrying amount
Fair value
2012/132011/12
1 April 20112012/132011/12
1 April 2011
Rs.Rs.Rs.Rs.Rs.Rs.
Group
Financial assets
Other Financial Assets
Available for Sale Investments
Cash and Short-Term Deposits
Total
97,986,034129,163,673154,811,157 97,986,034 129,163,673154,811,157
210,200,00062,287,450
-210,200,00062,287,450
4,000,0003,333,3303,333,3304,000,000 3,333,3303,333,330
77,918,74054,158,12913,743,00877,918,740 54,158,12913,743,008
390,104,774248,942,582171,887,495390,104,774 248,942,582171,887,495
Financial liabilities
Loans Due to Related Party
Bank Loans
Bank Overdraft
Total
-31,000,000
-
-31,000,000
351,015,057400,075,153360,900,000351,015,057 400,075,153360,900,000
137,079,640128,716,188134,550,907137,079,640 128,716,188134,550,907
30,125,287 20,810,540118,236,434 30,125,287 20,810,540118,236,434
518,219,984580,601,881613,687,341518,219,984 580,601,881613,687,341
Carrying amount
Fair value
2012/132011/12
1 April 20112012/132011/12
1 April 2011
Rs.Rs.Rs.Rs.Rs.Rs.
Company
96
Financial Assets
Loans Due From Related Party
Available for Sale Investments
Cash and Short-Term Deposits
Total
69,402,568136,055,013156,973,855 69,402,568 136,055,013156,973,855
210,200,00062,287,450
-210,200,00062,287,450
4,000,0003,333,3303,333,3304,000,000 3,333,3303,333,330
77,795,59553,733,73413,714,15477,795,595 53,733,73413,714,154
361,398,163255,409,527174,021,339361,398,163 255,409,527174,021,339
Financial liabilities
Loans Due to Related Party
Bank Loans
Bank Overdraft
Total
-16,000,000
-
-16,000,000
119,809,783135,580,993126,300,000119,809,783 135,580,993126,300,000
142,430,122119,670,518117,665,314142,430,122 119,670,518117,665,314
30,125,28720,810,54056,808,55130,125,287 20,810,54056,808,551
292,365,192292,062,051300,773,865292,365,192 292,062,051300,773,865
The fair values of the financial assets and
liabilities are included at the amount at which
the instrument could be exchanged in a current
transaction between willing parties, other than in a
forced or liquidation sale.
The following methods and assumptions were
used to estimate the fair values:
Cash and short-term deposits, trade receivables
and trade payables approximate their carrying
amounts largely due to the short-term maturities
of these instruments.
Long-term fixed-rate and variable-rate receivables/
borrowings are evaluated by the Group/
Company based on parameters such as interest
rates, specific country risk factors, individual
credit worthiness of the customer and the risk
characteristics of the financed project. Based on
this evaluation, allowances are taken to account
for the expected losses of these receivables. As
at 31 March 2013, the carrying amounts of such
receivables, net of allowances, are not materially
different from their calculated fair values.
The fair value of loans from banks and other
financial liability estimated by discounting future
cash flows using rates currently available for
debt on similar terms, credit risk and remaining
maturities.
29. FINANCIAL RISK MANAGEMENT
OBJECTIVES AND POLICIES
The Group’s/Company’s principal financial liabilities,
other than derivatives, comprise loans and
borrowings and trade and other payables. The main
purpose of these financial liabilities is to finance
the Group’s/Company’s operations and to provide
guarantees to support its operations. The Group/
Company has loan and other receivables, trade
and other receivables, and cash and short-term
deposits that arrive directly from its operations.
The Group/Company is exposed to market risk,
credit risk and liquidity risk.
The Group’s/Company’s senior management
oversees the management of these risks. The
Group’s/Company’s senior management is
supported by the Board of Directors (BOD) that
advises on financial risks and the appropriate
financial risk governance framework for the Group/
Company. BOD provides assurance to the Group’s/
Company’s senior management that the Group’s/
Company’s financial risk-taking activities are
governed by appropriate policies and procedures
and that financial risks are identified, measured and
managed in accordance with group policies and
group risk appetite. It is the Group’s policy that all
derivative activities for risk management purposes
are required to be approved by Board of Directors
of Hemas Holdings PLC.
The Board of Directors reviews and agrees
policies for managing each of these risks.
Market risk
Market risk is the risk that the fair value of future
cash flows of a financial instrument will fluctuate
because of changes in market prices. Market
prices comprise four types of risk: interest rate
risk, currency risk, commodity price risk and other
price risk, such as equity price risk. Financial
instruments affected by market risk include loans
and borrowings and deposits.
The overall risk management program focuses
on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the
entity’s financial performance.
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.
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’s/Company’s exposure to the risk of
changes in foreign exchange rates relates primarily
to the company’s operating activities (when revenue
or expense is denominated in a different currency
from the Group’s/Company’s functional currency).
Equity price risk
The Group’s/Company’s listed and unlisted equity
securities are susceptible to market price risk
arising from uncertainties about future values of
the investment securities. The Group’s/Company’s
Board of Directors reviews and approves all equity
investment decisions.
Credit risk
Credit risk is the risk that counterparty will not
meet its obligations under a financial instrument
or customer contract, leading to a financial loss.
The Group/Company is exposed to credit risk
from its operating activities (primarily for trade
receivables) and from its financing activities which
includes deposits with banks.
Trade receivables
Customer credit risk is managed by each
company subject to the Group’s established policy,
procedures and control relating to customer credit
risk management. Credit quality of the customer
is assessed based on the credit risk evaluation
model and individual credit limits are defined in
accordance with this assessment.
Outstanding customer receivables are regularly
monitored and contracts are signed and agreed
with all credit customers
Additionally, a large number of minor receivables
are grouped into homogenous groups and
assessed for impairment collectively. The
calculation is based on actual incurred historical
data. The maximum exposure to credit risk at the
reporting date is the carrying value of each class
of financial assets disclosed in Note 8. The Group/
Company does not hold collateral as security.
97
Financial instruments and cash deposits
Credit risk from balances with banks is managed by the Group’s treasury department in accordance with the Group’s policy. Investments of surplus funds are
made only with approved counterparties as per the Treasury Policy and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed
by the Group’s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Group’s Treasury Committee. The limits
are set to minimise the concentration of risks and therefore mitigate financial loss through potential counterparty’s failure. The company’s maximum exposure
to credit risk for the components of the statement of financial position is the carrying amounts as illustrated in Note 12 except for financial guarantees and
derivative financial instruments.
Liquidity risk
The Group/Company monitors its risk to a shortage of funds by setting up a minimum liquidity level. The Group’s/Company’s objective is to maintain a balance
between continuity of funding and flexibility through the use of bank overdrafts and bank loans. The Group/Company assessed the concentration of risk with
respect to refinancing its debt and concluded it to be low. Access to sources of funding is sufficiently available and debt maturing within 12 months can be rolled
over with existing lenders.
The table below summarises the maturity profile of the Group’s/Company’s financial liabilities based on contractual undiscounted payments.
Group
Less than
3 to 12
1 to 5
> than
On demand
3 months
months
years
5 years
Total
Rs.Rs.Rs.Rs.Rs.Rs.
As at 31 March 2013
Interest-Bearing Loans and Borrowings
30,125,287
16,881,871
50,645,616283,487,570
-
-
137,079,640
---
30,125,287153,961,511 50,645,616283,487,570
-
381,140,347
137,079,640
518,219,984
Less than
3 to 12
1 to 5
> than
On demand
3 months
months
years
5 years
Total
Rs.Rs.Rs.Rs.Rs.Rs.
As at 31st March 2012
51,810,540
-
40,991,411359,083,712
-
-
128,716,188
---
51,810,540128,716,188 40,991,411359,083,712
-
451,885,693
128,716,188
580,601,881
Less than
3 to 12
1 to 5
> than
On demand
3 months
months
years
5 years
Total
Rs.Rs.Rs.Rs.Rs.Rs.
As at 01 April 2011
98
118,236,434
11,713,334
35,140,000314,046,666
-
-
134,550,907
---
118,236,434146,264,241 35,140,000314,046,666
-
479,136,434
134,550,907
613,687,341
Company
Less than
3 to 12
1 to 5
> than
On demand
3 months
months
years
5 years
Total
Rs.Rs.Rs.Rs.Rs.Rs.
Interest - Bearing Loans and Borrowings
30,125,287
5,540,454
16,621,36497,647,965
-
-
142,430,122
---
30,125,287147,970,576 16,621,36497,647,965
-
149,935,070
142,430,122
292,365,192
Less than
3 to 12
1 to 5
> than
On demand
3 months
months
years
5 years
Total
Rs.Rs.Rs.Rs.Rs.Rs.
36,810,540
-
15,276,731120,304,262
-
-
119,670,518
---
36,810,540119,670,518 15,276,731120,304,262
-
172,391,533
119,670,518
292,062,051
Less than
3 to 12
1 to 5
> than
On demand
3 months
months
years
5 years
Total
Rs.Rs.Rs.Rs.Rs.Rs.
As at 01 April 2011
56,808,551
4,106,667
12,320,000109,873,333
-
-
117,665,314
---
56,808,551121,771,981 12,320,000109,873,333
-
183,108,551
117,665,314
300,773,865
Capital Management
Capital includes ordinary shares. The primary objective of the Group’s/Company’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its business and maximise shareholder value.
The Group/Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital
structure, the Group/Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in
the objectives, policies or processes managing capital during the years ended 31 March 2013 and 31 March 2012. The Group/Company monitors capital using
a gearing ratio, which is debt divided by total capital plus debt. The Group’s policy is to keep the gearing ratio below 40%.
99
INVESTOR INFORMATION
SHARE DISTRIBUTION
1 - 1000
1,001 - 10,000
10,001 - 100,000
100,001 - 1,000,000
Over 1,000,000
Institutions
Individuals
No. of
Shareholders
1,289
526
127
13
2
1,957
126
1,831
1,957
2013
Total
Holding
455,557
1,916,236
3,544,581
3,505,778
22,199,325
31,621,477
25,913,327
5,708,150
31,621,477
%
1.44
6.06
11.21
11.09
70.20
100.00
81.95
18.05
100.00
No. of
Shareholders
1,266
546
128
14
2
1,956
124
1,832
1,956
2012
Total
Holding
491,536
2,003,900
3,380,934
3,545,782
22,199,325
31,621,477
25,783,763
5,837,714
31,621,477
%
1.55
6.34
10.70
11.21
70.20
100.00
81.54
18.46
100.00
PUBLIC HOLDING
26.84% of the issued shares was held by the public as at 31 March 2013 (2012– 26.26%)
SHARE TRADING
Highest Market Price (Rs)
Lowest Market Price (Rs)
Last Traded Price (Rs)
No. of Shares Traded
No. of Trades
Turnover (Rs)
100
2013
41.80 (18.09.12)
24.00 (29.05.12)
33.00 (27.03.13)
2,626
2,990,423
104,315,026
2012
70.00 (05.09.11)
27.50 (15.02.12)
30.00 (30.03.12)
8,332,079
6,020
456,483,028
List of Twenty major shareholders
Serendib Hotels PLC
Hemtours (Pvt) Ltd
DFCC Bank A/C 1
Rosewood (Pvt) Ltd. –A/c No. 1
Mr. A. N. Esufally
Commercial Bank of Ceylon PLC /DSL Investments (Pvt)
Ltd.
Mr. S. P. Kannangara
Seylan Bank PLC /B. S. M. De Silva
Mr. A. Sithampalm
Intercom Ltd
Mr. A. P. Somasiri
Mr. J. R. De Silva
Merchant Bank of Sri Lanka –A/C No.1
HNB Assurance Ltd A/c No. 2 (Life Insurance Fund)
Waldock Mackenzie Ltd. / Dr. H. S. D. De Soysa
Mr. N. Hewa Kandamby
Mr. P. Pitipana Arachchi
Mr. J. C. L. De Mel
Ms. A. Maheswari
Mr. M. M. Udeshi
Shares held by the balance shareholders
31.03.2013
No. of Shares
20,507,578
1,691,747
818,800
536,488
450,007
326,700
210,000
204,700
179,300
162,500
150,000
131,200
118,408
117,600
100,075
100,000
100,000
98,300
93,600
90,700
26,187,703
5,433,774
31,621,477
%
64.85
5.35
2.59
1.70
1.42
1.03
0.66
0.65
0.57
0.51
0.47
0.41
0.37
0.37
0.32
0.32
0.32
0.31
0.30
0.29
82.81
17.19
100.00
31.03.2012
No. of Shares
20,507,578
1,691,747
818,800
280,100
450,007
366,500
%
64.85
5.35
2.59
0.89
1.42
1.16
210,000
204,700
179,300
162,500
140,000
131,200
50
117,600
100,075
100,000
100,000
98,300
90,700
0.66
0.65
0.57
0.51
0.44
0.41
0.37
0.32
0.32
0.32
0.31
0.29
101
TEN YEAR FINANCIAL REVIEW (GROUP)
Year ended 31 March
(Figures in Rs.’000 unless 2013201220112010200920082007200620052004
otherwise stated)
Restated
Restated
Trading Results
Turnover
765,341643,862426,359380,265350,130328,358263,452188,085135,673156,894
Profit /(Loss) Before Tax
230,821100,47430,54570,68446,11962,42240,126 9,168(9,377)34,025
Net Profit/(Loss) for the Year198,70392,92520,67057,16838,10155,70636,06010,476(10,175)29,293
Assets Employed
Total Assets
1,625,131
1,522,627
1,368,474824,867779,079757,481748,093746,795738,787479,202
Total Equity
1,026,841875,602683,761662,235620,440581,902541,569521,336538,306399,868
Total Liabilities
598,290647,025684,714162,632158,639175,579206,525225,459200,481 79,334
Indication of performance
Dividend per share (Rs.)
-
1.50-
0.50-
0.50---
0.50
Earnings / (loss) per share (Rs.)6.32.90.71.81.21.81.10.3(0.3)1.2
Net assets per share(Rs.)
32.527.721.620.919.618.417.116.517.015.8
Market value per share(Rs.)
33.030.051.635.011.511.0 9.311.012.513.0
Price earning ratio(Times)
Debt equity ratio (%)
5.310.478.919.3 9.6 6.2 8.133.2 N/A11.2
37.151.669.8 4.9 6.810.316.425.222.8 9.1
Current ratio(Times)
1.61.10.61.61.51.10.90.80.81.4
Interest cover(Times)
14.54.12.411.95.85.73.71.6(0.1)15.9
Return on equity(%)
19.410.63.08.66.19.66.72.0(1.9)7.3
Hotel Operation
102
Annual sales growth(%)
195112 9 7254039(14)42
Room occupancy(%)
86878487878277615468
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN that the THIRTY SECOND (32ND) ANNUAL GENERAL MEETING of DOLPHIN HOTELS PLC will be held at the Auditorium of the Sri
Lanka Foundation, No. 100, Independence Square, Colombo 07 on Tuesday, 9 July 2013 at 3:30 p.m. for the following purpose:
AGENDA
1.
To receive and consider the Statement of Accounts of the Company and Group for the year ended 31 March 2013 together with the Report of the
Directors and Auditors thereon.
2.
To re-elect as a Director, Mr. B. S. M. De Silva who retires by rotation in terms of Article 86 of the Articles of Association of the Company.
3.
To re-appoint as a Director, Mr. D. T. R. De Silva who retire in terms of Article 74 of the Articles of Association of the Company.
4.
To re-appoint Messrs. Ernst & Young, Chartered Accountants as the Auditors of the Company for the ensuing year and authorise the Directors to
determine their remuneration.
5.
To authorise Directors to determine and make contributions to charity.
6.
To consider any other business of which due notice has been given.
DOLPHIN HOTELS PLC
HEMAS CORPORATE SERVICES (PVT) LTD.
Secretaries
Colombo
14 June 2013
Notes:
(i)
(ii)
(iii)
A member unable to attend is entitled to appoint a Proxy to attend and vote on his/her behalf.
A Proxy need not be a member of the Company.
A Form of Proxy accompanies this notice.
103
NOTES
104
105
NOTES CONTD.
106
FORM OF PROXY
I/We .....................................................................................................................................................................................................................................
of .........................................................................................................................................................................................................................................
being a Member/s of DOLPHIN HOTELS PLC do hereby appoint ..............................................................................................................................................
............................................................................................................................................................................................................................................
of ............................................................................................................................................................................................................... or failing him/her
Mr. A. N. Esufally
Mrs. A. R. Gamage
Mr. W. M. De F Arsakularatne
Mr. D. T. R. De Silva
or failing him
or failing him
or failing her
or failing him
or failing him
as*my/our Proxy to represent *me/us and to vote on *my/our behalf at the Thirty Second (32nd) Annual General Meeting of the Company to be held on Tuesday,
9 July 2013 at 3.30p.m. at the Auditorium of the Sri Lanka Foundation, No. 100, Independence Square, Colombo 07 and any adjournment thereof and at every
poll which may be taken in consequence thereof.
1.
ForAgainst
To receive and consider the Statement of Accounts of the Company and Group for the year ended 31
March 2013 together with the Report of the Directors and Auditors thereon.
2.
To re-elect Mr. B. S. M. De Silva who retires by rotation in terms of the Articles of Association of the
Company
3.
To re-appoint Mr. D. T. R. De Silva, who retires in terms of the Articles of Association of the Company
4.
To re-appoint Messrs. Ernst & Young as Auditors and authorise the Directors to determine their
remuneration.
5.
To authorise Directors to determine and make Contributions to charity.
Signature of Shareholder/s …………………….….………………
Dated this ……………… day of ………………………. 2013.
(i)
(ii)
NIC/Passport No. ……….................………………….
*Please delete the inappropriate words.
Instructions regarding completion appear on the reverse hereof.
107
FORM OF PROXY CONTD.
INSTRUCTIONS FOR COMPLETION
108
1.
Kindly perfect the Form of Proxy after filling in legibly your name in full and address and by
signing in the space provided. Please fill in the date of signature.
2.
Please indicate with an “X” in the space provided how your Proxy is to vote on each
resolution. If no indication is given, the Proxy in his/her discretion will vote as he/she thinks
fit.
3.
In the case of Corporate Members, the Form of Proxy must be completed under the
Common Seal, which should be affixed and attested in the manner prescribed by the
Articles of Association.
4
If the Form of Proxy is signed by an Attorney, the relevant Power of Attorney should also
accompany the completed Form of Proxy.
5.
In case of joint holders the Form of Proxy must be signed by the first holder.
6.
The completed Form of Proxy should be deposited at the office of the Secretaries, Hemas
Corporate Services (Pvt) Ltd. at Level 9, Hemas House, No. 75, Braybrooke Place, Colombo
02 not less than forty eight (48) hours before the appointed time for the meeting.
NAME OF THE COMPANY
MANAGING AGENT
Dolphin Hotels PLC
(Formally Stafford Hotels PLC)
Serendib Leisure Management Limited
AUDITORS
LEGAL FORM
Contents
3
4
6
10
14
16
20 25 26 29 34 45 46 50 52 Our Vision, Mission & Core Values
Financial Highlights (Group)
Serendib Leisure Properties
Chairman’s Message
Board of Directors
Senior Management
Management Discussion and Analysis
Hotel Management
Sustainability Report
Risk Management
Report of the Remuneration Committee
Annual Report of the Board of Directors
Report of the Audit Committee
Financial Reports
56 57 58 59 60 61 62
63 64 Statement of Directors’ Responsibility in Relation to
Preparing Financial Statements
Independent Auditors’ Report
Statement of Financial Position
Income Statement
Statement of Comprehensive Income
Statement of Changes in Equity (Group)
Statement of Changes in Equity (Company)
Cash Flow Statement
Notes to the Financial Statements
Supplementary Information
100 Investor Information
102 Ten Year Financial Review (Group)
103 Notice of Meeting
107 Form of Proxy
IBC Corporate Information
A public quoted Company with Limited Liability
incorporated on 20 January 1981 under the
Companies Ordinance(Cap 145) and re-registered
under the Companies Act No. 7 of 2007
Ernst & Young
Chartered Accountants
201, De Saram Place,
Colombo 10
BANKERS
COMPANY REGISTRATION NO.
PQ224
Commercial Bank of Ceylon PLC
Hatton National Bank PLC
Nations Trust Bank PLC
BOARD OF DIRECTORS
A. N. Esufally – Chairman (Alt V. H. A. Perera)
B. S. M. De Silva
A. R. Gamage (Mrs) - (Alt. Prof. L. D. K. B. Gamage)
D. T. R. De Silva
HOTEL
Club Hotel Dolphin
Waikkal
Tel : + 94 (31) 4877111
+ 94 (31) 2277788
Fax: + 94 (31) 2279437
REGISTERED OFFICE
Colombo 02.
Tel : +94 (11) 4790500-6
Fax : +94 (11) 2438933
E-mail : [email protected]
Website : www.serendibleisure.com
SECRETARIES & REGISTRARS
Colombo 02
Tel : + 94 (11) 4731731
Fax : +94 (11) 4731777
Produced by Copyline (Pvt) Ltd Printed by Printel (Pvt) Ltd
DOLPHIN HOTELS PLC | ANNUAL REPORT 2012/13
www.serendibleisure.com
DOLPHIN HOTELS PLC
ANNUAL REPORT 2012/13

dolphin hotels plc - Colombo Stock Exchange

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