ANNUAL REPORT 2016/17
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17
Colombo 02, Colombo 02, Sri Lanka 470 9400 +94 11 T: F: +94 11 234 5729 E-mail: [email protected] www.jetwinghotels.com Sri Lanka Sri Lanka +94 91 222 3744 T: F: +94 91 222 4021 Jetwing Hotels Limited Jetwing House, 46/26, Nawam Mawatha, Jetwing Lighthouse, Jetwing Lighthouse, Dadella, Galle,
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 1 2 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC The Jetwing Lighthouse proposition is an invitation to enjoy the pleasure of a premium hospitality experience.
Phrases such as “pamper yourself”, “sublime relaxation”, “the ultimate holiday” truly come alive when Jetwing Lighthouse matches them with “cordon bleu cuisine and service”, “luxurious accommodation” and “your comfort and satisfaction is all”. In fact, this is the Jetwing Lighthouse 24/7, 365-day, hospitality experience – an embodiment of the finest of the finest in every way. Its successful delivery and its enjoyment in equal measure have made 2016/17 a special year.
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THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 5 Page: 09 0100 Page: 15 0200 Check in From the Suite
About Jetwing Lighthouse 11 Letter from the Chairman 16 Jetwing Lighthouse Family 12 Managing Director's Review 22
Page: 49 0500 Page: 59 0600 House Count Hoteliers
Products and Services 50 Demographics 61 Online Platforms 51 Recruitment 62 Health and Safety 56 Training and Development 64 Marketing Communication 57 Health and Safety 69 Compliance 57 Grievance Handling 70
Page: 87 0900 Page: 115 1000 Stewardship Safe Deposit
Board of Directors 88 Financial Calendar 116 Corporate Governance 92 Financial Review 117 Integrated Risk Management 98 Value Added and Distributed 121 Remuneration Committee Report 106 Statement of Directors’ Responsibilities 122 Audit Committee Report 107 Independent Auditors’ Report 123 Related Party Transactions Review 108 Statement of Financial Position 124 Committee Report Statement of Profit or Loss 125 Annual Report of the Board of Directors on 109 Statement of Comprehensive Income 126 the Affairs of the Company Statement of Changes in Equity 127 Statement of Cash Flows 128 Notes to the Financial Statements 129
6 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Page: 27 0300 Page: 33 0400 Centrepiece The ‘AAA Five- Diamond’ Model
Financial Highlights 28 A Model to Success 34 Operational Highlights 30 Operating Environment 36 Strategic Direction 40 Institutional Capital 41 Stakeholders 45
Page: 73 0700 Page: 79 0800 Community Environment
Jetwing Youth Development Project (JYDP) 75 Green Initiatives 81 The Lighthouse Community Pool 75 Energy and Emission Management 81 Jetwing Lighthouse Tuk-tuk Project 76 Water Management 84 Indirect Economic Benefits 76 Waste Management 85 Compliance 85
Page: 173 1100 Check Out
Related Companies which had 174 Transactions with the Company Names of Directors of Related Companies 177 which had Transactions with the Company Information to Shareholders and Investors 179 Ten Year Summary 184 About this Report 186 Organizational Structure 187 GRI Content Index 188 Corporate Information 191 Notice of Meeting 192 Form of Proxy Enclosed
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CHECK IN
Incorporated in 1994, The Lighthouse Hotel PLC is an integral member of the Jetwing Family of Hotels. The Hotel is perfectly positioned in the South-Western coastal belt of Sri Lanka, within striking distance of the historically significant city of Galle and Galle Fort: a UNESCO World Heritage Site.
With its unique combination of Moorish, Oriental and Dutch influenced architecture exemplified by the minimalist design, rampart-like façade entrance, magnificent spiral staircase, the Jetwing Lighthouse is an architectural masterpiece of Sri Lanka’s most revered architect, Geoffrey Bawa.
Jetwing Lighthouse offers luxurious accommodation to leisure and business travellers. The breathtaking views and the elegant charm of the Hotel have made it an ideal location for weddings. Jetwing Lighthouse has a range of accommodation options including three themed suites and 60 rooms. The Lighthouse Hotel PLC also operates Jetwing Kurulubedda, a boutique hotel with two private dwellings and four rooms, the exclusive Jetwing Lighthouse Club with 22 rooms including two themed suites, Galle Heritage Villa by Jetwing and Era Beach by Jetwing.
Our core values of Passion, Humility, Integrity and Tenacity and our vision, ‘To be world class in everything we do’, are incorporated in all our processes and are implemented by our management and staff. The vision and the core values contribute to fulfilling our mission statement: ‘To be a family of people and companies committed to legendary and innovative service leading to high stakeholder satisfaction’.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 11 CHECK IN
Jetwing Kurulubedda Jetwing Lighthouse Club Located in the village on Mahamodara in Galle the Jetwing Lighthouse Club is located in the heart of secluded haven of Jetwing Kurulubedda will allow historical Galle. Facing the spectacular sun, sand you to leave the world far behind and enter your and sunsets of the Southern Coast, guests can own little nook of paradise. If it's seclusion you seek, unwind and indulge in the luxury and exclusivity take a boat upstream through tangled mangroves of this tropical retreat. Personalized butler service, and you will find on the Southern Coast of Sri Lanka, gastronomical delights at Nihal’s, a dip in the in the historic city of Galle, a resort that can truly soothing waters of the pool or the warm azure be called your own private Eden. Every aspect of waters of the Indian Ocean and pampering spa the property exudes peace, calm and a soothing treatments are all available within the understated atmosphere. The two stilted dwellings and four elegance of this peaceful property. The hotel Deluxe rooms which rise above the ground overlook rooms and exclusive suites are plush and there gardens and the lush surroundings. is generous use of rich timber and eco-friendly fabric, letting in the fresh sea breeze and allowing stunning views of the Indian Ocean.
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Galle Heritage Villa by Jetwing Era Beach by Jetwing Galle Heritage Villa by Jetwing sits comfortably in Situated in the deep South of the Island, Era Beach the heart of the UNESCO World Heritage site of by Jetwing offers pure relaxation and luxurious Galle Fort amidst the cobbled streets of a bygone understated elegance and comfort. Throughout its era. The villa is a transformation of a Colonial Dutch expanse, in architecture and in choice of furniture Villa, and boasts four large, elegantly decorated and fittings, a strong Dutch influence prevails, deluxe rooms. Complete with all the facilities of a giving you a glimpse of a historic past. Each of the modern hotel, this breathtaking property mixes seven bedrooms is considered a suite – tastefully the old with the new. designed with exquisite detail, fine furnishings and luxurious bathrooms. Meals are served at the beautifully furnished main dining room or even tapas style choices are available in the bar area. Walk through the garden and be captivated with views of the pristine golden sands and the inviting turquoise ocean.
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THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 15 Letter from the Chairman
“ This scenic promontory just north of Galle, where the main road skirted a small sandy inlet of the sea - had always intrigued and attracted him; on boyhood family holidays in the south, he had often admired it in passing, and he had got it as soon as he had seen it advertised. Years before he put a cent into the Lighthouse project, Herbert had already been committed, he dared to dream”
From A Man in His Time, the biography of Jetwing’s Founder.
16 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 17 18 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 19 Hiran Cooray – Chairman 2nd May 2017
20 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC SereneFROM THE PRESIDENTIAL Haven SUITE A stroke of elegance that exhibits old world charm along with modern day comfort.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 21 Managing Director’s Review
In spite of challenging times ahead for the luxury hotel industry, we will remain steadfast in our focus to deliver sustainable growth and value creation for our shareholders. The strong fundamentals built into our business, our strategic governance, together with financial prudence maintained in our operations will assist us to confront the challenges that lie ahead of us in 2017.
Ayubowan! Being Consistent in an Throughout the 20-year-old history of The Lighthouse Inconsistent Context Hotel PLC, we have encountered many periods Despite geopolitical issues and economic volatility of challenge along with achieving milestone after in 2016, the travel and tourism industry displayed milestone in developing one of the finest iconic resilience and travel remained on the increase hotel brands in Sri Lanka. For us, 2016 was a contributing 10.2% to the world GDP (US$ 7.6 trillion). challenging year with continuing global economic Sri Lanka recorded over 2 million tourist arrivals in volatility and new developments in the local tourism 2016 cementing our reputation as one of the top industry, keeping our business operating margins tourist destinations in the world. Emerging markets under pressure. Despite these challenges, we have like China, India and the Middle East displayed continued to adhere strongly to our vision of being a spirited growth in 2016. Sri Lanka is a five-star ‘world class in everything we do’.
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destination, however due to lack of international We continue to have a strong online presence and marketing and positioning the country has not been performance. This is evident by the stellar reviews able to attract high-end visitors consistently which has and ratings we have obtained over the years in online impacted the hotel industry and resulted in a drop in platforms like TripAdvisor, Booking.com, Google, room rates. Furthermore, an estimated 50% of tourists Agoda and many others. We anticipate that online seek alternative accommodation in the informal marketing driven strategically by our marketing team sector. It is vital for the industry that we continue to will have a greater impact on our business in the attract an exclusive clientele who will contribute to near future. the development of the industry and bring in much needed foreign exchange to the country. It is imperative that we exploit Sri Lanka’s potential to Being a Part of the Local reach US$ 10 billion generated wholly by tourism Community and Environment within the next 5 years. From the very beginning, our sustainable practices have been in our DNA – we are committed to our A Solid Performance country, our community and our people. In addition to our existing initiatives, we completed the installation Jetwing Lighthouse has recorded a profit before tax of a 125kW roof-mounted solar PV (net metered) of Rs. 152 million compared to Rs. 178 million the system at Jetwing Lighthouse which contributes to previous year. Therefore, there is a drop of 15%. 10% of the total electricity requirement. The Board of Directors on 27th February, 2017 approved an Interim Dividend of Rs. 2/- per share Our PATA Grand Award winning Jetwing Youth for the financial year 2016/17. Accordingly, the total Development Project provides free education in dividend amounting to Rs. 92 million was paid on English and basic hospitality skills to deserving youth 16th March, 2017 subject to 10% dividend tax. from disadvantaged families in the locales of our hotels around the country – this is achieved through Despite a drop in profits, Jetwing Lighthouse’s iconic a comprehensive 6-month training programme. status in Galle grows stronger every year and The Under our ‘Jetwing Tuk Tuk’ programme we also Lighthouse Hotel PLC continues to provide work very closely with three-wheel drivers of the area, ‘world class’ service to the delight of our guests. conducting workshops and educating them on the A new addition, the adjoining Jetwing Lighthouse fundamentals of customer care and knowledge of the Club consists of 22 rooms, offering the highest Galle area itself to the benefit of our guests wishing to standards of luxury including butler service, utilise local transport. complimentary cocktail hours, and a host of other value additions. In addition, Jetwing Kurulubedda, In our commitment to mitigate any adverse effects consisting of six luxury rooms has become popular on the environment caused by plastic bottled water, among honeymooners and couples due to its intimate we initiated a project to replace plastic bottles with ambience and natural environment. reusable glass bottles. A bottling plant at Jetwing Lighthouse was commissioned to cater to all our During the year The Lighthouse Hotel PLC properties. The energy consumed for the water created a 100% owned subsidiary Unawatuna bottling process is sourced from an independent Properties Pvt. Ltd. This will be a select service hotel solar PV system. under the brand Hotel J. Situated in a convenient and easily accessible location, the property consists of 36 rooms.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 23 FROM THE SUITE
Decorated Member Appreciation in the Hotel Industry The main reason for our success in the last 20 years I am pleased to report that Jetwing Hotels is the first is our diverse collection of associates. We have hotel chain in Sri Lanka to have its Carbon Footprint been blessed to attract, develop, reward and retain (GHG inventory) verified under the ISO 14064 individuals who distinguish Jetwing Lighthouse from standard. Moreover, Jetwing Lighthouse received our competitors and provide a unique experience to several accolades in 2016. We were adjudged ‘Sri our guests. We recognize that our people and our Lanka’s Leading Resort 2016’ at World Travel Awards. culture are our greatest assets. Jetwing Lighthouse also received TripAdvisor Certificate of Excellence 2016. The numerous awards Chairman and the Board of Directors deserve our bestowed upon Jetwing Lighthouse are a testament gratitude for their guidance, support and adopting of our excellence. best practices in the governance of The Lighthouse Hotels PLC.
Equipped to Face Future I would like to express my appreciation to Trends and Challenges Jetwing’s Hotel Management team for their support and initiative. In spite of another challenging year ahead for the luxury hotel industry, we will remain steadfast in our To our shareholders, my heartfelt appreciation and focus to deliver sustainable growth and value creation thanks for your confidence in Jetwing Lighthouse and for our shareholders. The strong fundamentals built its ability to deliver consistent and growing value year into our business, our strategic governance, together upon year. with financial prudence maintained in our operations will assist us to confront the challenges that lie ahead I must not forget our tour operators and travel agents of us in 2017. whose initiative has contributed to the continued success of Jetwing Lighthouse. Our principal objective is to achieve carbon neutrality in our operational business. To this end, there are To conclude, on behalf of the Executive Management several proposed initiatives like the installation Team, I would like to express our gratitude to our of Vapour Absorption Chiller along with a higher guests, who are the lifeblood of our Company. capacity Biomass Boiler to provide the Hotel’s entire We wish you will continue to experience hospitality air-conditioning requirement. We also plan to install offered by the Jetwing Lighthouse Family. an in-house Bio-gas Generation Facility to cater to the main kitchen of Jetwing Lighthouse Club. We I end by asserting that we are passionately focuzed also hope to revamp the Chiller Plant Room Pumping to uphold, in the coming years, the exceptional System with modern equipment since the existing quality and standards, unparalleled service, vitality system is over 15 years old. of the team and social responsibility which were integrated to our ethos in the last 20 years. A buoyant outlook is projected for the future of Sri Lankan tourism with projected arrivals of more than 2.2 million. The Lighthouse Hotel PLC is well poised to capitalize on future opportunities. We will soon cater to diverse market segments and R.A.E. Samarasinghe constantly be on the lookout for new opportunities to Managing Director add value. 2nd May 2017
24 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC A Luxurious Repose Feel like royalty when you lay back on a king size bed whilst basking in the spectacular view of the glorious Indian Ocean.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 25 Centrepiece
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THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 27 Financial Highlights
2017 2016
Performance for the Year ended 31st March Revenue Rs. ’000 799,219 836,072 Earnings before Interest, tax, depreciation and amortization (EBITDA) Rs. ’000 251,560 284,136 Profit before Tax (PBT) Rs. ’000 152,147 177,754 Profit after Tax (PAT) Rs. ’000 137,184 162,120 Earnings per Share Rs. 2.98 3.52 EPS Growth % (15) 25 Return on Equity % 5 6
Financial Position as at 31st March Total Assets Rs. ’000 3,210,975 3,195,847 Total Debt Rs. ’000 188,387 111,444 Total Equity Rs. ’000 2,852,339 2,923,115 Number of shares in issue No. 000 46,000 46,000 Net Assets per share Rs. 62.01 63.55 Debt/Equity % 7 4 Debt/Total Assets % 6 4 Current Ratio 0.58:1 0.94:1 Quick Asset Ratio 0.48:1 0.77:1
Market/Shareholder information Market price per Share as at 31st March Rs. 49.00 52.90 Market Capitalisation Rs. ’000 2,254,000 2,433,400 Price Earnings Ratio Times 16.44 15.03 Dividend Payout % 67 71 Interim Dividend Paid Rs. ’000 92,000 – Dividend Proposed Rs. ’000 – 115,000 Dividend per Share (Interim/proposed) Rs 2.00 2.50
Value Added for the Year ended 31st March To Government Rs. ’000 14,963 15,634 To Employees Rs. ’000 152,087 142,778 To Shareholders Rs. ’000 207,000 92,000
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THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 29 Operational Highlights
Customers
Awarded 'Sri Lanka's Introduced a Complimentary Leading Resort Yacht Cruise Yoga Session in 2016' – at the World Travel Awards with snorkeling in 2016
Employees
Conducted 20 hours Offered 51 new 1st runner-up in 53 Minutes Promotions À la Carte Challenge
of average training hours during the year at the World Travel Awards per employee during 2016
Community
Six-month free Jetwing Tuk-Tuk 26 Schools Training Programme Project Participate under JYDP and eight contracts 45 registered in the Lighthouse Community trainees were offered vehicles of service providers Pool Programme employment at the Hotel within the locality
Environment
Installed a 125kW Received ISO 14064: Water Bottling Roof-mounted Solar PV 2006 Certification Plant (net metered) system at for the Hotel's Carbon at Jetwing Lighthouse to cater Jetwing Lighthouse Footprint (GHG inventrory) to all our properties replacing plastic bottled water
30 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Personalized Offerings An unmatched service where you’ll find warm smiles and careful attention, all to make your stay all the more special.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 31 The ‘AAA Five-Diamond’ Model
32 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC 04 The ‘AAA Five-Diamond’ Model
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 33 A Model to Success
Delivering Value
The Stakeholders Lighthouse Hotel PLC
Deriving Value
Internal External Capital Capital Formation Formation
Customer Capital Employee Capital Finanical Capital Social Capital Institutional Capital Environmental Capital
Total Capital of the Hotel
34 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC THE ‘AAA FIVE-DIAMOND’ MODEL
We believe in building a sustainable future by creating lasting value for our key stakeholders, community and the environment. Over the past 20 years we have engaged in business with our stakeholders in a responsible, transparent and integrated manner in our aim to be ‘world class’ in everything we do.
Our business model integrates the core values The Lighthouse Hotel PLC’s business model is of The Lighthouse Hotel PLC: Passion, Humility, geared to transform various capitals to create value Integrity and Tenacity. Our performance is over time. Capital that is owned by the business determined by pursuing our vision and core is ‘internal’ capital, while capital that is not owned principles in operations and stakeholder is ‘external’ capital. Our internal capital formation engagement. Moreover, our growing family of is a result of value created by The Lighthouse people and companies are all committed to Hotel PLC for itself and comprises financial capital providing our customers with innovative and and institutional capital. Our external forms of legendary service. capital focus on key stakeholders and comprises of customer, investor, employee, social and Our seamless integration of financial and environment capitals. sustainability reporting better presents how deriving and delivering value lead to internal and external capital formation within our Organization. Our capitals extend beyond our assets and resources to include relationships and goodwill that we have built over the past 20 years.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 35 Operating Environment
Global Economy Tourist arrivals in France, Belgium and Turkey were impacted due to terrorist attacks. As a whole, the The geopolitical climate of 2016 greatly affected European Sector recorded a 4% increase in tourist the global economy. Namely, the ‘Brexit’, volatile arrivals reaching almost 500 million or 40% of the conditions in the Middle East and the US world’s total. Presidential Election. The Sterling Pound hit all time
lows in 2016 following the EU Referendum. Demand for international tourism remained robust
in 2016 despite challenges. International tourist Despite a slow start, the global economy arrivals grew by 3.9% to reach a total of 1,235 accelerated in the final quarter of 2016 mainly million, according to the latest UNWTO World due to improved conditions in emerging market Tourism Barometer. Some 46 million more tourists economies and advanced economies. The (overnight visitors) travelled internationally last International Monetary Fund (IMF) estimates year compared to 2015. Japan, South Korea, the global growth of 3.1%. As expected, growth Vietnam, Spain, Portugal and Ireland recorded in China has reduced to 6.7% and is predicted double-digit growth, while major gateways across to stabilize in the coming years. Emerging and the US saw record visitor levels in 2016. In 2017, developing economies grew by an estimated 3.4% this is expected to grow by 4.5%, and the world in 2016 and crude oil prices have recovered from is expected to attract 1,290 million international a low of US$ 30 per barrel at the start of 2016 to tourist arrivals. average US$ 43 per barrel for the year.
Global Tourism Travel and tourism continued to be a major driver in the world’s economy in 2016. World Travel and Tourism Council in conjunction with Oxford Economics annual research show that travel and tourism contributed 10.2% to the world GDP (US$ 7.6 trillion). The sector now supports 292 million people in employment – that is 1 in 10 jobs on the planet. The sector also contributed to a direct GDP growth of 3.1% in 2016.
Despite geopolitical issues, terrorism, health pandemics, natural disasters and economic volatility in 2016, the tourism industry has shown resilience and travel remains on the increase. The regions of Asia and the Pacific grew to 8%, recording 24 million more international tourist Europe came out of a challenging year a series of arrivals in 2016 to total 303 million. Growth was terror attacks and the increased threat of terrorism strong in all four subregions, with Oceania receiving in the region affected a number of top tourist 10% more arrivals, South Asia 9% more and North- destinations and kept foreign travellers away. East Asia and South-East Asia both 8% more.
36 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC THE ‘AAA FIVE-DIAMOND’ MODEL
The traditional hotel industry will face competition from alternative accommodation options, most notable business models being home-sharing sites such as Airbnb and Homeaway. The alternative accommodations market accounts for approximately 10% of hotel room bookings in the top global gateway markets such as New York, London and Paris.
The Sri Lankan Economy The Sri Lankan economy navigated through a turbulent global economic environment in the first half of the year. Sri Lanka’s economy had picked up in the latter stages of 2016 with construction, A Glimpse into 2017 finance and wholesale and retail trade sectors showing activity and a robust performance from the The travel and tourism market are expected industry and the services sectors. The momentum to continue the upward growth in 2017. Travel is expected to remain in 2017. companies may remain optimistic about demand for all types of trips. The movement of international The projected slowdown in the Chinese economy, travellers is projected to grow 4% annually over the as well as economic conditions in Sri Lanka’s major next ten years. trading partners, including India, Japan, Russia and the Middle East, will also have a significant Geopolitical trends will once again be a defining influence on the domestic economy, factor. Major economies scheduled to hold elections in 2017 include Germany, France Growth in 2016 was lower than the originally and the Netherlands. As the outcome of these projected minimum of 5%, and below 2015’s is determined throughout the year, investment rate of 4.8%. Sri Lanka’s economy is expected to volumes will gradually increase. expand 5.5%-6.0% in 2017, up from an estimated 4.5%-5.0%. The intemperate weather conditions Travel companies should also integrate the latest experienced during the year, particularly, the technological innovations and understand what severe drought in first, third and fourth quarters technologies consumers are ready to adopt, and and heavy rains with floods in the second quarter what experiences will drive real value. Technologies adversely affected many agricultural activities. including artificial intelligence, mobile applications, Floods, during May and June also affected the and the Internet of Things (IoT) should enhance the tourism industry. customer’s experience to remove pain points from travel. Travel and hospitality companies will remain vulnerable to the risk of external events, such as cyber attacks and food safety.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 37 THE ‘AAA FIVE-DIAMOND’ MODEL
The Sri Lankan Tourism Sector With rapidly rising arrivals and increased revenues in 2015 and 2016, Sri Lanka is currently in the midst of a tourism growth spurt and has garnered a reputation as an attractive value destination for foreign tourists and investors alike.
The number of tourist arrivals in 2016 was 2,050,832, a growth of 14%, compared to the 1,798,380 tourists arrived in 2015. This figure was 149,000 less than the set target for 2016. Nevertheless, the arrivals growth continued from the momentum which began at the end of the war.
Most of the tourist arrivals were from Western Europe with 643,333 tourists visiting in 2016 recording a 16.5% increase over corresponding The Government reformed the Value Added Tax 2015 figures. For the month of December 68,355 and increased it to 15% from 11% with effect from tourists arrived in the island, 9.3% more than in 1st November, 2016. December 2015. Notably, the number of Chinese tourists arriving in the island rose by 26.4% to
reach 271,577. In December, tourist arrivals from China increased by 21.9% with 19,318 Chinese tourists visiting the island. The number of Indian tourists arrivals also grew to 356,729 recording a 12.8% increase.
38 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC THE ‘AAA FIVE-DIAMOND’ MODEL
The direct contribution of Travel & Tourism to GDP In 2016, the tourism industry directly supported in 2016 was Rs. 631.8 billion (US$ 4.4 billion) 406,000 jobs (4.8% of total employment). In 2016, which is 5.1% of GDP. This is forecast to rise by the total contribution of tourism to employment, 5.1% to Rs. 664.1 billion in 2017. This primarily including jobs indirectly supported by the industry reflects the economic activity generated by was 10.7% of total employment (894,500 jobs). industries such as hotels, travel agents, airlines This is expected to rise by 2.8% in 2017 to and other passenger transportation. While, the total 919,500 jobs. contribution of the sector to GDP was Rs. 1,405.4 billion (US$ 9.7 billion), 11.4% of GDP in 2016 and Sri Lanka’s tourism industry currently faces is forecast to rise by 5.5% in 2017. a number of challenges: transportation and competition from alternative accommodation venues. The country’s transportation network has improved considerably since the end of the war, yet it remains difficult to travel around the island because of poor transport infrastructure. The Government has a variety of development plans in place to address this issue. The industry was also affected by the closure of BIA for repairs from January 2017 to April 2017. Geo political trends will also influence Sri Lanka tourism and tourist arrivals.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 39 We see unlimited possibilities to create a lasting and positive impact.
We will celebrate our 20th anniversary in 2017. Club. Thus the Lighthouse Hotel PLC will be well With a twenty-year legacy of excellence and positioned to capitalize on existing and future service, our brand and our position among the opportunities for growth. Our traditional markets will iconic hotels in the island simplifies our strategy remain, along with a new focus on Australia, the US to tackle future challenges. We see unlimited and the Middle East. possibilities to create a lasting and positive impact on our stakeholders, the community and As a responsible business entity that is entrenched the environment. We will continue to build on our in the local community and environment, legacy and our brand presence in Sri Lanka. sustainable development is an imperative that We hope to broaden our horizons to welcome even is embedded the way we conduct business. more guests from around the world to experience Sustainability is integrated into our business plan, the best that the country has to offer. our practices and our future.
With exquisite properties like Jetwing Kurulubedda, Galle Heritage Villa by Jetwing and Era Beach by Jetwing, our future looks bright. While our focus is to further develop these properties to raise them to iconic status, we also hope to expand our already burgeoning elite clientele at Jetwing Lighthouse
40 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Institutional Capital
Integral to the Hotel and the Jetwing family is institutional capital which includes a wide range of intangible, non-ffinancial components such as, corporate culture and values, business ethics and integrity, brand value, organizational knowledge, systems and processes and intellectual property.
Corporate Culture and Values When you walk into Jetwing Lighthouse we make of sustainability and social responsibility is our guests feel valued and respected. We are embedded in our corporate culture and our true to our tag line as the ‘Home of Sri Lankan entire ethos. Hospitality’. Our Hotel is exceptionally welcoming and distinctive since we proudly support our local We also implement an open door policy, whereby culture and traditional values. any associate can converse and voice opinions to senior management. The corporate culture that persists in Jetwing Lighthouse has been carefully fostered throughout our extensive history. We are firmly rooted in Brand and its Development the local culture and we reflect the Sri Lankan With 44 years of history, the Jetwing brand is a ideals of family and family values. Diversity and household name in the Sri Lankan hospitality inclusiveness are other values that makes us a industry. We are known to provide a unique microcosmic reflection of Sri Lanka. experience to each and every guest. All our hotels are marked by a distinct ‘Jetwing Feel’. The four qualities of Passion, Humility, Integrity and Tenacity form the foundation of our corporate Jetwing Lighthouse is a brand that has developed culture. These values are complemented by our over two decades. Our 20 years of service in the passion to deliver world-class service incorporating hospitality industry has cemented our position as the best of Sri Lankan values. one of the most iconic hotels in the island. The Company does not have an identifiable parent As one of the most iconic hotels in Sri Lanka, we of its own. Jetwing Lighthouse hotel operates as an are also a responsible corporate citizen. Concepts individual entity as part of the Jetwing brand.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 41 THE ‘AAA FIVE-DIAMOND’ MODEL
Our numerous accolades over the years have Ethics and Integrity also helped to consolidate our brand in the global We abide by the highest standards of ethics and stage. At the World Travel Awards, we have been integrity which is reflected in our strategy, our awarded Sri Lanka’s Leading Resort in 2016, 2015 corporate culture and in our ethos. It is our policy and in 2013. to conduct our business in accordance with all
applicable laws and regulations of the jurisdictions We are also part of local and international groups and to do so with honesty and integrity and in and organizations which help to enhance the accordance with the highest moral and ethical exposure of our brand even further. Our contact standards. Our employees follow a code of with international organizations help us to conduct which includes the standards of expected exchange expertise and best practices that are behaviour. We remain committed to carefully relevant to our industry. Jetwing is signatory to adhere to the relevant laws and regulations and is in compliance with the UNWTO Global governing our operations without exception. Code of Ethics for Tourism. We are a part of The Hotel Association of Sri Lanka (THASL) that has a wide-ranging and diverse membership within the We Engage in Sustainable hotel industry in Sri Lanka, PATA, Hoteliers of the South (HOST), Great Hotels of the World and other Procurement Practices associations around the world. Reflecting our belief in reduced or more efficient use of resources, The Lighthouse Hotel PLC Our most important future priority is to ensure that recognises the significance of linking our supply Jetwing Lighthouse retains its position as a globally chain to operate and produce in a socially and recognized first class luxury hotel brand which will environmentally responsible manner. Our smart, help us attract and serve an even greater share of socially and environmentally responsible policies international visitors. bring us customer preference and loyalty. We have adopted sustainable procurement strategies in our business which encompass social, environmental Organizational Knowledge and political factors. Our legacy of 20 years in operation and the wealth of experience and knowledge of the Jetwing family Over the years, we have developed well- of hotels are direct contributors to the undisputed functioning relationships with our suppliers. We are success we have enjoyed over the past years. committed to ensure that our suppliers practices The close ties we maintain with prestigious bodies align with our values. We have simplified and like Tourist Hotels Association of Sri Lanka and the streamlined our procurement policy to increase Great Hotels of the World, are links that we value visibility in the way we purchase goods and who exceedingly. As humility is one of the four values our suppliers are. Sustainable development governing The Lighthouse Hotel PLC, we are practices are integrated in our procurement policy always willing to listen and adapt innovative trends to combat socio-environmental issues and with a and best practices in the industry.
42 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC THE ‘AAA FIVE-DIAMOND’ MODEL
view to enhance our supply chain performance. Our policy is also directed towards meeting our supply needs from local, sustainable sources in order to support the local community and to reduce the environmental impact.
At the hotel level, our supply chains cover procurement for all items required for running a hotel and cover a wide range of items including food and beverages, guest amenities, operating supplies and equipment, linens, cleaning supplies and furniture and other technology support systems. Hotel procurement happens both at local and international levels.
Lighthouse has ‘Gone Local’ The Lighthouse Hotel PLC recognizes that local economic participation contributes to the long term development of the community. Situated in the historically significant town of Galle, the Hotel is committed to uplift the local economy. Increasing local economic participation is one of our core business objectives. Incorporating local suppliers to the procurement process stimulates local enterprises and lead to lower logistics and labour costs. Our desire to establish and maintain enduring partnership with local suppliers have resulted in a diverse supply base. We strive to create an enabling environment by sourcing goods and services from local suppliers. This process leads to addressing gaps in local capability, and building supplier competitiveness in order to meet global standards.
Building local economic capacity is embedded in our procurement strategy that is why a massive 76% of our procurement budget is spent on transactions with local suppliers. We will continue to support local suppliers in future.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 43 Stakeholder Engagement Enables Continuous Improvement
Stakeholders are groups that have a significant impact on Jetwing Lighthouse and those with a vested interest in our operations. Significant stakeholder groups will have an influence on issues/decisions that are material to the Hotel.
Understanding the needs of our diverse stakeholders is critical as it underscores our capacity to mobilize resources effectively and enhance organizational and market performance. In the long term, this enables us to deliver value more effectively.
44 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Stakeholders
Engagement with various stakeholders is integrated to our business plan. We recognize that stakeholder engagement as a broader, more inclusive and a continuous process that encompasses a range of activities and approaches and an enabler of improvement and innovation.
Through the various engagement platforms that we have established, we seek to understand our stakeholders’ views, communicate effectively with them and respond to their concerns. The relationship that we build with our stakeholders is of paramount importance and it has a direct impact on the success of Jetwing Lighthouse.
Identification Mapping and Engaging Prioritizing
Reviewing and Assessing Addressing Concerns and Expectations
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 45 THE ‘AAA FIVE-DIAMOND’ MODEL
We deliver Focused, Consistent Messages to Our Investors
We are committed to driving proactive dialogues with our investors and shareholders. Our relationship with our investors is interdependent; they provide capital for developing our business and we in return provide optimal returns for their investments. At Jetwing Lighthouse we value transparency, we make sure to keep our investors ‘in the loop’ throughout the year.
We engage with our investors through the Annual General Meeting, which provides an opportunity to review the past year’s performance and engage in discussion with the management and quarterly financial reports/media releases. We also engage with our investors through social media and our regularly updated website. We also encourage our investors to communicate with us through a designated email address and a response team provided for feedback.
We have Established Meaningful Relationships with Our Customers
Our customers form the lifeblood of Jetwing Lighthouse. We recognize that the quality of service and customer satisfaction are pivotal to our success. We consistently deliver and maintain high levels of customer service.
Our strategy is aimed at long term engagement which encourage customer loyalty. We have established meaningful, mutually beneficial relationships with our customers and drawn them closer to our brand by engaging with them in myriad ways.
We maintain a guest satisfaction data capture card system to measure customer satisfaction. Regular customer reviews are conducted to help build and maintain a healthy rapport. Each review is treated as important and noteworthy and they are distributed to the relevant departments to ensure follow through. Our customers can also engage with the Hotel through our website.
Our TripAdvisor page is updated daily and immediate feedback is given to queries. We maintain a Green Directory, and environmental messages displayed in each room to educate our guests on the Hotel’s commitment to sustainability. Our goal is to inspire them to both communicate our environmental values and apply these values to their personal lives.
46 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC THE ‘AAA FIVE-DIAMOND’ MODEL
Our Team goes the ‘Extra Mile and a Half’
Jetwing Lighthouse is blessed with a team of highly skilled, motivated and well-rounded individuals. The management and the team have created a sense of family that goes beyond employee loyalty. It is this family feeling that our guests experience when they enter our Hotel. We have made employee engagement a highest priority since engaged employees are more satisfied, more committed and have less inclination to leave. Healthy engagement between the management and the team also affect overall performance which means that our team will go the extra mile for our guests, which is vital in our industry.
There exists a comprehensive biannual appraisal system which facilitates transparent evaluation, dialogue and performance based remuneration and rewards. Other methods of engagement included departmental meetings/briefings, welfare society meetings and staff get-togethers.There are constant training programmes that are initiated based on career development and career progression needs. We hold various events during the year like ‘Jetwing Sports Day’ and ‘Jetwing Prathiba’ (our employee talent show) to maximize employee engagement.
Social and Environmental Engagement
Operating in the historically significant town of Galle we need to take necessary steps to protect and support the local natural, historic and cultural environments, and local community.
Jetwing Lighthouse strives to minimize our environmental impact and are committed to the continual development of our environmental platform. With properties in various geographic locations, we operate in some extremely beautiful and sensitive natural environments. Through our outreach, we demonstrate the utmost respect for the community and the environment that we operate in.
Jetwing Lighthouse is involved in ongoing community outreach initiatives as well as humanitarian projects of a one-off nature which are undertaken regularly to assist the surrounding communities.
Government and Regulatory Bodies
The Lighthouse Hotel PLC engages with various regulatory bodies to ensure compliance to statutory requirements of the Government. We conduct business in a transparent manner.
We participate in relevant associations and provide periodic disclosures. The Lighthouse Hotel PLC addresses concerns like taxation, legal compliance, infrastructure and social development by participating in annual budgetary discussions and complying with all necessary regulatory and legal requirements.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 47 House Count
48 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC 05 House Count
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 49 PROOF1
A Happy Customer is a Repeat Customer
Our customers form the lifeblood of The Lighthouse We have provided guest satisfaction cards at the Hotel PLC. The meaningful relationships we have Hotel, in the rooms and the reception. Guests established with our customers over the last are able to fill these forms and hand it directly to 20 years is the secret of our success. The sense of the Managing Director or the reception. Guest family that permeates across the Hotel is extended satisfaction cards are read by a dedicated team to our guests. and grievances are handled in a swift manner. Our guest relation officers maintain a proactive dialogue Our driving force has been to work close to with guests, they would inquire about the stay customers and constantly develop their offering and address any grievances that they might have through innovation. We consistently deliver high before they turn into complaints. quality service to meet customer expectations. Our strategy is aimed at long-term engagement We maintain a guest satisfaction data capture card which encourages customer loyalty. system to measure customer satisfaction. Regular customer reviews are conducted to help build Understanding the importance of good customer and maintain a healthy rapport. Each review is service is essential for the tourism industry in considered to be important and they are sent to the creating new customers, retaining loyal customers relevant departments. and developing referrals for future customers. The most effective way to understand guest motivation and their experience is to formulate a guest satisfaction survey.
50 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC HOUSE COUNT
We Offer Something Online New Every Year Platforms Jetwing Lighthouse understands the philosophy With our strong presence in the world-wide web, behind the motto “A happy customer is a repeat Jetwing Lighthouse is continually reviewed on customer”, that is why every year we strive to different online platforms. Weekly or even daily improve our offering to our valued customers to reviews are posted on TripAdvisor, Booking.com, our existing “world class” service. In 2016 we Google+, Agoda and many other platforms. introduced several new measures to improve guest There is a dedicated team to monitor these reviews satisfaction. Complimentary yoga sessions were and address all our guest queries. The online offered twice a week for all in-house guests. Once platforms can also be used to make comparisons a week our guests are treated to Seafood Market with our competitors. and Barbecue Dinner by the beach. There were new value added options to our Ayurveda spa Our TripAdvisor page is updated daily and treatments and we brought in additional equipment immediate feedback is given to queries. to the gym. We also introduced a new excursion, The Lighthouse Hotel PLC has an excellent online yacht cruise with snorkeling to our guests in 2016. record. We maintain very healthy online ratings We have also addressed several issues raised on different platforms which has been compiled in our guest satisfaction surveys. Responding through thousands of guest reviews over the years. to constructive criticism on the lack of choice of Here are some of our ratings on selected snacks for children during the day, we now operate online platforms: an action station hotdog and burger counter especially for our younger guests. Some of our guests also pointed towards lack of lighting in the garden, we have now fire-torches lighting the pathways.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 51 HOUSE COUNT
Jetwing #11 of 60 Hotels Jetwing Fabulous! – 4.3/5 Lighthouse in Galle Lighthouse
Jetwing #39 of 60 Hotels Jetwing Fabulous! – 4.3/5 Lighthouse Club in Galle Lighthouse Club
Jetwing #14 of 257 Speciality Jetwing Good! – 3.8/5 Kurulubedda Lodging in Galle Kurulubedda
Era Beach #22 of 60 Hotels Era Beach Fabulous! – 4.4/5 by Jetwing in Galle by Jetwing
Galle Heritage #25 of 257 Speciality Galle Heritage Very Good! – 4/5 Villa by Jetwing Lodging in Galle Villa by Jetwing
Jetwing Excellent – 8.7/10 Jetwing Excellent – 8.6/10 Lighthouse Lighthouse
Jetwing Very Good – 8.2/10 Jetwing Exceptional – 10/10 Lighthouse Club Lighthouse Club
Jetwing Fair – 6.5/10 Jetwing Excellent – 8.1/10 Kurulubedda Kurulubedda
Era Beach Wonderful – 9.2/10 Era Beach Excellent – 8.4/10 by Jetwing by Jetwing
Galle Heritage Very Good – 8.5/10 Galle Heritage Excellent – 8.1/10 Villa by Jetwing Villa by Jetwing
52 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC HOUSE COUNT
Our strong online presence leads to direct bookings Online and reservations through our official website Performance www.jetwinghotels.com. Here is a breakdown of rooms booked through our brand site at our different properties by local and foreign guests during the financial year 2016/17 (values include basis meal, taxes and service charge).
Jetwing Lighthouse Jetwing Lighthouse Club Local Rs. 7.5 million Local Rs. 1.7 million 226 room nights 39 room nights Foreign US$ 79,767 Foreign US$ 12,781 354 room nights 36 room nights
Jetwing Kurulubedda Era Beach by Jetwing Local Rs. 6.1 million Local Rs. 1.4 million 242 room nights 77 room nights Foreign US$ 1,208 Foreign US$ 11,947 5 room nights 82 room nights
Galle Heritage Villa by Jetwing Local Rs. 644,885 Foreign US$ 2,728 52 room nights 21 room nights
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 53 PROOF1
Promoting Jetwing Lighthouse around the World
One of the significant factors, out of many, The Hotel was in the 'Sri Lanka Tailor-made' online which has contributed to the iconic status of summer campaign, in ‘My Travel Chic – France’ Jetwing Lighthouse over the last 20 years, is special promotion and was represented in the promotional campaigns that are held locally WTM UK/GLF Bride and Groom wedding exhibition. and internationally. Our ability to create a lasting impression has made our Hotel stand out from the We use our concise, convenient website rest. Many tour operators from around the world www.jetwinghotels.com to present our iconic has recognized our distinct identity and promotes Hotel to the world. Through our site, our potential the Hotel on their own accord. customers can keep themselves updated about news, and special offers like Stay 5, Pay for 4 and Well known international tour operators have Early Bird Offer where you could enjoy included our Hotel in their itineraries like the up to 15% off. Luxury Holidays Australia Group series which has offered two nights stay at Jetwing Lighthouse in the Summer 2017 programme. We also have a healthy ongoing partnership with Sri Lanka Cricket. The entire Hotel was booked during the 5th – 11th of March for the National Team. We also offered special combination packages to travel agents for the summer season.
The Hotel will be featured in renowned travel brochures in the UK. Emirates Tours UK will feature Jetwing Lighthouse in their next brochure also Mercury Direct UK has added the Hotel in the 2nd Edition brochure.
54 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Memorable Moments A place you can call your own and be at ease creating memories that would last a lifetime.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 55 PROOF1
We Offer You ‘World Class’ Service While Keeping You Safe
Among those who frequently travel, health and We are in the process of renewing the HACCP safety have become an important aspect they certification for food safety and standards and take into consideration when choosing a place to are subjected to surveillance audits every year. stay. Whether they are travelling for business or Our key tour operators also routinely evaluates pleasure, travellers would want to know that they the Hotel’s facilities and operations against their will be safe. We consider the health and safety own checklist. Fire drills and fire safety awareness of our clients as the highest priority. At Jetwing programmes are conducted annually by Fire Lighthouse, we are committed to offering you world Department officials. class service while keeping you healthy and safe. Our in-house Jetwing Safety and Health Policy is At Jetwing Lighthouse every room, hall, corridor diligently followed by our associates to maintain a and public space has signs about safety procedure safe, healthy environment at Jetwing Lighthouse. at the property, with clear instructions on the protocol to follow in an emergency. As the property is an open tropical resort, these indicators are easily understood. At check in, our staff educates guest on safety basics or even elaborate health and safety measures followed by the Hotel, at the request of guests.
56 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC HOUSE COUNT
Marketing We Comply with Communications all Regulatory Requirements The Jetwing Lighthouse experience goes beyond The Lighthouse Hotel PLC is committed to an ordinary Hotel experience, the Hotel’s unique conducting business with integrity consistent architecture, the exclusive treatment, history of the with high standards of business ethics, and region, and our license to indulge has contributed in compliance with all applicable laws and to our iconic status. regulatory requirements. This shapes a culture of responsibility among employees, with a system We have a streamlined process for marketing of checks and balances at all levels of the communications complying with state policies and organization. Through the expertise of Leo Burnett, ethics, norms and practices in the global industry an international advertising agency, Jetwing has The marketing communications mix, consists of implemented the principles and provisions of the specific blend of promotion tools: advertising, International Code of Advertising Practice and the public relations, personal selling, sales promotion, Guidelines for Multinational Enterprises. and direct marketing tools that the Company uses to communicate customer value and build We have also created a Corporate Identity Manual customer relationships. Rather than directly market which ensures that all entities under Jetwing our Hotel through traditional means, we tell our conform to a set of strict guidelines and remain unique story. This is our principal communications consistent across all platforms. This document strategy, to tell the world of who we are without acts as the voluntary standards undertaken by any embellishments. Over the years, we have the Company. These ensure that the Company found that guests who visit the Hotel upon hearing does not infringe on any privacy intrusions, uphold our story are truly delighted when they get to live ethical and culturally accepted standards and are the story. always respectful of religion, gender and ethnicity. Our marketing material is evaluated by several Thus far, marketing communications for Jetwing members before it is sent to print. Lighthouse have had a positive impact. All communications are developed from the We have kept a perfect record of zero incidents source with input from operational level through of non-compliance and zero fines have been the marketing entity with guidance and expertise levied for non-compliance of laws and regulations of a reputed international advertising agency, concerning the use of products and services. namely Leo Burnett Solutions. The International Code of Advertising Practice and the Guidelines for Multinational Enterprises guide the agency in its practice besides advising and reviewing our conformity to local laws in our messaging. Marketing collateral is subjected to checks and verification both internally and by the agency at several levels ensuring zero incidents of non-compliance during the year.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 57 Hoteliers
58 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC 06 Hoteliers
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 59 Our Hoteliers Live it, Sleep it, Dream it and Go the ‘Extra Mile and a Half’
A warm family feeling permeates throughout the leadership and teamwork skills and a contagious halls, the winding staircases and all across the enthusiasm and attitude. They are well-groomed Bawa-inspired setting at Jetwing Lighthouse. This and trained to multi-task and be familiar with safety sense of family is a result of The Lighthouse Hotel and hygiene rules. PLC endorsing a family approach to our business that focuses on trust and values. Our team thrives We have recognized that our associates are the in a supportive environment of mutual dialogue, heart of our business, thus we are committed not opportunities and transparency. Our distinct to discriminate against gender, race, ethnicity, sex, working culture is driven towards one principal goal religion or disability and we adhere to all labour of ensuring comfort, approval and satisfaction of rules and regulations governed by the Sri Lanka our customers. Constitution. Moreover, we have made employee engagement a highest priority since engaged The working culture unique to The Lighthouse Hotel employees are more satisfied, more committed PLC has developed over our 20 years of history and have less inclination to leave. We have also in the hospitality industry. Our team of dedicated formulated our own policies to ensure that our team employees is world class in everything that they do. remains happy. Our team is committed to go the ‘extra mile and a half’ and will do whatever it takes to give our guests the best experience available. They possess great people skills, exceptional attention to detail,
60 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC HOTELIERS
Associate Demographics In the period ending March 2017, a total of 269 associates were in employment constituting 198 permanent employees, 25 probation and 46 employees on contract basis. Jetwing Lighthouse hires locally to support the local community and economy. The majority of our employees, 212 out of 269 hails from the Galle district.
242 27
Associates 212 57 Galle District Outstation 198 25 46 Permanent Probation Contract
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 61 Our Recruitment Efforts Contribute to Long Term Success
Our team is our greatest asset. The immense merely hiring them. New recruits will be anxious success that The Lighthouse Hotel PLC has enjoyed about policies, procedures, work culture and, most in the past 20 years has resulted in exponential importantly – other employees. That is why all growth. With success comes the responsibility to our new recruits undergo an induction/orientation identify, train and retain even more talented people. programme which allows them to expediently That is why employment recruitment and selection familiarize with our ethos and working culture. efforts are critical to the long term success of Our induction programme is set up to show that our our business. new recruits are valued, to reduce startup time and to increase productivity and retention. We have designed our own Recruitment Policy which comprises of recruitment strategies and a In our effort to be a pillar of strength to our comprehensive succession plan. Under our policy community, we attempt to recruit locally which we conduct a pre-recruitment check where each contributes to employee retention. Our Recruitment Manager or Department Head must objectively Policy stipulates local hiring where possible. evaluate and make a strong case on the need for an additional person before seeking to recruit a Out of the 28 executives who are employed, 11 are new person. Then begins the process of application from the locality. Out of the 11 local executives, which is done using newspapers, recognized Hotel 9 were hired to the executive level and 2 to the Schools, our database of received applications, senior executive level. displaying on the Jetwing notice board and occasionally through head hunting. The next step in The Lighthouse Hotel PLC recruited a total number this process is conducting interviews and verifying of 55 new employees during the year. the merit of the applicant through their references. All selected applicants must be approved for For the period under review, voluntary employee recruitment from the Head of Human Resources, turnover stood at 12.44% and the breakdown shows which will lead onto the preparation of the contract that the majority moving out are younger employees, and regularizing of the appointment. while the more mature associates show much lower turnover levels. One associate was on maternity We understand that integrating employees into leave during the reporting period, and the same our unique work culture cannot be achieved by associate resigned at the end of her maternal leave.
62 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC HOTELIERS
34 16 5 Under 30 years 30-50 years Over 50 years
Galle District Recruitment Outstation 37 18 52 55 03 30 34 04 23 Turnover 11 Galle District Outstation
20 13 1 Under 30 years 30-50 years Over 50 years
*Turnover rate is calculated on the average staff cadre of 273.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 63 True Hoteliers are Made Not Born
Though Jetwing Lighthouse, situated in the As part of our training and continuous development picturesque town of Galle close to the historically initiatives, there are regular performance important Galle Fort, is an architectural appraisals, reviews conducted across all masterpiece that blends in the new with the old, our the departments. Based on the findings of success in this industry is not assured. Moreover, the appraisals, comprehensive training and our industry suffers from high turnover rates, development programmes are initiated to retain lofty guest expectations and fierce competition and develop the talent within the Company. All for business. The key ingredient to success and our Senior, Middle and Junior level associates are to stand out is maintaining an exceptional level subjected to a biannual performance review and of guest experience. That is why, we invest in career development assessments. These reviews continuous professional development of our team. are assessed by the Heads of Department and It is imperative that we maintain our reputation necessary recommendations are made. as being ‘world class’ in guest satisfaction, by fostering the development of our team. In 2016, an average of 20 hours 53 minutes of training was provided for employees. General training included English language classes to The Hotel’s training and development comprise improve the standard of English and departmental of capacity building, focused training and training consisted of varied training exercises that development initiatives and induction and were aimed at addressing technical areas. Outbound orientation training. Through our appraisal training was conducted to develop management system, department-level forums and individual skills and teamwork. Four associates from the discussions, we first identify the areas that need restaurant were developed as barmen through the ‘Developing Barkeepers of Jetwing Hotels’ more focus. Training is conducted at an individual Programme. level as well as at departmental-level by Training Executives, Training Managers and Heads of Departments. To educate our team on specialized topics we bring in external trainers. We are also hoping to implement cross exposure among different departments and hotels in the near future.
64 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC HOTELIERS
The following are some of the examples of innovative training initiatives that took place last year:
Jetwing ‘Train the Trainer’ The Jetwing ‘Train the Trainer’ programme was designed to develop departmental trainers in the F&B, Front Office and Housekeeping departments by equipping them with the necessary knowledge and skills needed to plan, implement and evaluate a training programme in their respective departments. The departmental trainers will be directly influential in uplifting the service standards of the Hotel. In 2016, three departmental trainers were developed.
Jetwing Culinary Challenge 2016 The Jetwing Culinary Challenge 2016 comprised of two main events: The Jetwing Culinary Challenge and the Jetwing A la Carte Challenge. These programmes enabled our kitchen staff from across all the Jetwing Hotels to showcase their creativity and talent. Jetwing Lighthouse was placed First runner-up in the Jetwing A la Carte Challenge.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 65 Dealing With the ‘Talent Squeeze’
The travel and tourism industry is expanding The Jetwing Elevation Programme to promote at great pace locally and internationally and recognized staff is carried out each year in two supports about 292 million people (1 in 10 jobs) in levels: Non-supervisory to Supervisory level and employment. As a service-based industry we are Supervisory level to Executive level. The Jetwing highly dependent on our staff. Achievers programme is conducted to promote Executives to Senior executive levels every year. Our industry, when compared to other businesses, The ongoing Jetwing Ascension Programme was records a very high turnover rate. Though, there designed to develop management skills and career exists benefits of turnover like gaining fresh blood development. Currently there are two selected and ideas, The Lighthouse Hotel PLC considers employees attending this programme. staff retention to be of paramount importance. At Jetwing Lighthouse we have created an environment that gives our team the flexibility and variety they seek with training and development to succeed and the autonomy to implement what they have learned. Furthermore, our team enjoys attractive remuneration packages and there are opportunities available to them internally.
At Jetwing Lighthouse, we are also focused on generating employment for youth by encouraging school leavers to join the industry and the majority of our team is below the age of 30. Jetwing Lighthouse ensures that all candidates have a fair and equal chance of being employed provided they have the right skills, experience and competencies to fill the position.
66 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Holistic Healing Carefully designed cures to discover pure bliss in secluded sanctuaries under the guidance of our Ayurvedic experts.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 67 Our Team is ‘Well Taken Care of’
Jetwing Lighthouse offers our employees There is a range of welfare services like death competitive compensation packages with an array donations, loan facilities, welfare shop facilities, of added benefits. We make no demarcations wedding gifts, gifts to new born babies, grade five between full-time, part-time, temporary or seasonal scholarships etc. The welfare committee meets employees. All employees are provided with monthly and there is an AGM at the end of the year. staff meals at the staff cafeteria, clean drinking These offer associates an opportunity to discuss water, sanitary facilities, changing rooms, any concerns. There are two annual staff trips accommodation. The bonus, however, is provided organized every year and a monthly ‘Salpila’, an only to permanent employees. entertaining event.
In 2016 alone there were 51 new promotions, a bonus (a salary of two months) given to all confirmed associates in April 2016. All staff are given gift vouchers worth Rs. 1,250/- in December/ April and a gift on their birthdays.
68 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC HOTELIERS
Our Team’s Health and All our employees undergo fire and first-aid Safety is Our Top Priority training programmes. At our induction programmes, all employees are explained about Since our industry is labour-intensive, we are the health and safety measures that must be taken constantly vigilant of the health and safety of our to ensure their safety. employees. We have adopted a Health and Safety Policy that outlines the responsibilities of the During the reporting period only minor injuries like employer and employee. muscular strains, cuts and abrasions, slippage, insect and animal bites were recorded. Fifty-six The Lighthouse Hotel PLC adheres to all health days were lost due to injuries. There were zero and safety measures that are implemented by occupational diseases. Jetwing Lighthouse HACCP and MSDS Standards. We also conduct employs independent contractors for certain work. regular risk assessments which involves identifying No incidents were reported during the period. potential hazards that may affect staff or members Our reporting system is in accordance with the of the public. Sri Lanka Labour Department, stipulated by the Labour Code of Sri Lanka. 277.5 11.5 Galle District 289 Outstation Absenteeism Rate 265 (No. of Days) 024 Lost days due to injuries 56
09 Male Gender-wise (Staff) Female 00
08 Galle Region-wise (Staff) Outstation 01
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 69 We Address Grievances Before They Escalate
A well-functioning grievance mechanism is a vital component of any hotel because they help to identify potential or actual issues at an early stage and help to prevent grievances from escalating. At The Lighthouse Hotel PLC there is a formal grievance policy and procedure in place. We pride in an open-door policy when it comes to communicating a grievance. Our grievance policy is a step by step process which addresses the grievance and moves on to implementing a solution within a specific period of time.
There has been zero grievances reported during the financial year zero incidents or violations involving the rights of the people, or any other form of discrimination, were reported over the Reporting period.
70 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC HOTELIERS
General Statement of We are a Diverse and Human Rights Protection Equal Opportunity Employer Jetwing acknowledges and respects the Jetwing Lighthouse is committed to create a work principles contained in the Universal Declaration environment of inclusiveness. We are an equal of Human Rights and The International Labour opportunity employer who hold ourselves and our Organization’s (ILO) Declaration on Fundamental team to the highest standards of integrity, ethics Principles and Rights at Work. Jetwing Human and service excellence. We strive to foster an open Rights Policy reflects the Company’s commitment and inclusive workplace environment and strongly to conduct its business in a manner consistent support the principle that all individuals should with these principles and to protect human rights have an equal opportunity to participate in our at all spheres. Company and achieve their full potential.
We are committed to uphold principles of Following the Jetwing Human Rights Policy we non-discrimination and equality, protection of the do not discriminate against gender, race, colour, rights of a child, refraining from forced labour, ethnicity, sexual orientation or disability. We health and safety, fair working conditions including maintain an environment free of harassment and working hours, fair wages and compensation discrimination based on race, religion, gender or and refrain from harsh or degrading treatment/ social and economic background. harassment. The Jetwing Human Rights Policy is inculcated into our associates and is an essential Diversity is a part of our selection process. We component of our orientation programme. During educate our new recruits on our work ethos to the year under review, there were no material issues make sure that their values are aligned with those pertaining to employees and industrial relations. of the Company. In our recruitment process we do not discriminate, employment is offered based on skill. Our remuneration packages does not make Jetwing Zero Tolerance Policy any distinctions according to gender. on Child Abuse in Sri Lanka Jetwing Hotels, as a responsible tourism entity, aim to highlight and generate awareness on child abuse in Sri Lanka which it has a zero tolerance policy on. We encourage our guests and associates to be vigilant at all times particularly in relation to the presence of paedophiles and to report any suspicious activities to either the hotel reception directly or contact Child Line Sri Lanka or the nearest branch of the Sri Lanka Tourist Police.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 71 Community
72 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC 07 Community
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 73 We are an Important Participant in Local Community Development
The Lighthouse Hotel PLC is a source of inspiration in the travel and tourism industry through the Company’s significant commitment and responsibility to the community. Community building through a sustainable strategy is one of the key focuses of the Hotel. Operating in the historically important town of Galle, it is important for us to think beyond the steps of the Hotel.
We strive to be a responsible corporate citizen that inspires the local community. At Jetwing Lighthouse, we encourage an interdependent partnership between the people and the community that we operate in to create a positive impact on the community. We implement and sustains community outreach programmes, youth development projects and programmes aimed at caring for the less fortunate. These initiatives are highly valued by our stakeholders. We also contribute to the local economy in various ways, for example 76% of our procurement budget is spent on transactions with local suppliers.
74 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC COMMUNITY
Jetwing Youth The Lighthouse Development Project (JYDP) Community Pool At Jetwing Lighthouse, we understand that Community infrastructure facilitates greater social effective youth participation is essential for inclusion and contributes to the quality of life and community development. Giving young people a enrich the experience of citizens every day. place in decision-making builds a broader base The Lighthouse Community Pool facility, complete of citizen involvement and creates stronger, more with a modern-day swimming pool, changing inclusive communities. Through our Jetwing Youth rooms, an administrative facility and a viewing Development Project, we educate young people on gallery was constructed and is maintained to date the finer points of hotel management. by Jetwing Lighthouse.
In 2016, the 15th Jetwing Youth Development Living in the city of Galle and the nearby coastal Project was carried out at Jetwing Lighthouse, towns, it is paramount that the children living in in partnership with Berendina Employment Centre. the area are confident and familiar with water. We offered a six-month free training programme. Recognizing this communal need, Jetwing The programme comprised of practical and Lighthouse initiated a programme involving the theoretical training in all the core operational school children of the region. The community pool departments of the Hotel. Eleven trainees is open exclusive for the use of schoolchildren successfully completed the programme. during day-time hours. 26 schools participate in the Eight were offered employment in the Hotel. programme. The programme and the schedules with the schools are well organised in advance. An administrator is appointed to supervise the training programmes and manage the facility. The community pool is also open to others during the afternoons and training programmes are conducted for a nominal fee. We are confident that the number of participants would grow every year.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 75 COMMUNITY
Jetwing Lighthouse Indirect Economic Benefits Tuk-tuk Project In the last two decades, Galle has become an This project was initiated in 2005 to eliminate some integral centre of travel and tourism. In our 20 years of the friction that existed between the local trishaw of operations, we have witnessed the numerous drivers and the Hotel. Since its inception in 2005, improvements in the community. As the iconic this programme has proven successful in the hotel of the region sought out by thousands of re-establishment of an amicable relationship, international guests every year, we have directly and it continues to this day. contributed to the improvement of local economy and improved the quality of life of the community Selected service providers within our locality were though our procurement policy, our ethical registered to work with the Hotel. We provided business practices, our conservation of the local training which included educating the participants ecosystem and other initiatives that have had a on the local tourist attractions and the high level direct impact on the community. of etiquette that was required to deliver the best possible service to the guest. The project now Our presence in the region and our harmonic includes 45 registered vehicles comprising of relationship with the community have also Tuk-tuks, cars and vans. stimulated indirect benefits. There have been infrastructure development such as restaurants, bars, cafes, retail establishments and other tourism-related businesses which has added more value to the local tourism business and improved the quality of life of the citizens in the surrounding community. Galle has truly become a tourist haven.
Over the years, we have implemented a number of initiatives to further this positive influence. We will continue to develop strategic partnerships that leverage our resources and expertise to address local needs and to empower the local community in the future.
76 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Revitalizing RemediesCOMMUNITY Taking you into a world of tranquility while listening to the swirling waves, our spa will have you rejuvenated and ready for adventure.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 77 Environment
78 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC 08 Environment
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 79 Jetwing Lighthouse’s commitment towards environmental conservation extends beyond compliance.
We are cognizant of the fact that our operations products and services, and compliance with inevitably impact on the environment in a number environmental regulations. Furthermore, to of ways. Thus, we are committed to mitigate any optimize environmental benefits, sustainability adverse effects on the environment and operate considerations are factored into the entire in a manner that is environmentally responsible life cycle starting from land acquisition to the and economically sustainable. Our commitment conceptualization of building design. towards sustainable development by preserving the environment is not a slogan, it is the way we think and act. Sustainable practices are integrated into our business model, our ethos and all our processes.
Mindful of the fact that the long term viability of our business depends on the sustainability of the environment, we continuously review and proactively manage the use of natural resources through adopting innovative construction methods and green features such as the use of environmentally-friendly materials, energy and water conservation, reduction in carbon emissions, efficient effluents and waste management, biodiversity assessments as well as sustainable
80 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC ENVIRONMENT
Our Green Initiatives Energy and Emission Our commitment to reduce the negative Management Matter to environmental impacts of operations is outlined Jetwing Lighthouse in Jetwing Hotels’ Sustainability Strategy, with With an increased awareness of sustainability specific measures for maintaining a clean and issues, many businesses are closely assessing healthy environment highlighted in the Jetwing their energy usage and exploring new ways to Environmental Policy. This policy has brought become more energy efficient. We at Jetwing together a set of strategies and solutions to be Lighthouse understand that benefits of energy implemented across the Hotel since we understand conservation not only apply to the bottom line but that a holistic approach is important to achieve to image, reputation and social responsibility. Our tangible results and improve energy performance. guests are acutely aware of the world of carbon The following are some of the Green initiatives that footprints, energy usage and eco-friendliness, we have implemented across the organization: especially in an island like Sri Lanka which boasts • Consumption of electricity, biomass, water etc. of a rich ecological biodiversity, and expect the is monitored on a daily basis and compared best practices to be in place to preserve the against occupancy levels; to identify and environment. Using our vision as our guide we address any irregularities and reduce specific strive to be world class in energy management consumption year on year. and eco-friendly practices. We have formulated • To ensure Hotel associates’ corporation in an Energy Policy which consists of efficient implementing and effectively carrying out and innovative energy management strategies sustainability initiatives, associates are to reduce our dependence on fossil fuels and routinely trained. to eventually achieve carbon neutrality in our operations. As a preliminary measure we have • Ensuring that all hotels attain high standards of replaced lights and televisions with more energy environmental custodianship in both front-end efficient LED counterparts. and back-end processes, the Green Directory is compiled. It identifies the Hotel’s performance Prevention and environmental management costs based on key impact areas which include energy of Jetwing Lighthouse for 2016 exceeded efficiency, water conservation, waste water Rs. 1.2 million which included costs on management, use of environmentally friendly external services and professional charges for materials and suppliers, landscaping, etc. environmental management, external certification • To raise guest awareness of the Hotel's of management systems and extra expenditures on commitment to sustainability and enlist their green purchases. support the Green Directory is displayed in each guest room and environmental messages are displayed across the Hotel. • Environmental audits are carried out routinely to measure and track performance. This will help us assess our current strategy and to formulate future policies.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 81 ENVIRONMENT
Energy Consumption
Total Annual 404.8 Energy Energy Intensity Consumption (MJ/Guest Night)
42.4% 11.1% 5.0% 1.4% 2.1% 37.3% 0.6% Grid LPG Diesel Transport Other Biomass Solar Electricity Fuel (<1%) (Thermal)
Energy 75,857 10,040 101,923 1,676 2,736 111,646 Reductions kWh/year kWh/year kWh/year kWh/year Ltrs/year Ltrs/year Energy Card key Dual set LED Solar hot Biomass 4 efficient (room point televisions water boiler for 1 2 3 5 5 lighting lighting) thermostat systems hot water
1. Calculated on 70% of bulbs 2. Calculated on 70% of bulbs 3. Calculated for 6 hours 4. Calculated for use of 5. Calculated compared to being used for 6 hours per day being used for 6 hours per day per day on stand-by mode 3 hours per day diesel fuel
Greenhouse Gas Emissions
Total CO2 Emissions 33.7 kg CO e/Guest Night 1,400.7 2
72% 8% 4% 1% 1% 13% 0.5% 0.01% Grid LPG Diesel Transport Other Refrigerants Wastewater Composting Electricity Fuel (minor) Direct fuel Treatment Combustion
82 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC ENVIRONMENT
Water Usage 91% City Water Supply 3 Average Treated 3,909m waste water 9% quantity per month Ground Water
Waste disposal, emissions treatment, and remediation over Rs. 2 million costs
Prevention and environmental management costs over Rs. 1.2 million
Solid Waste Disposal
15% 25% 15% Sent to piggery Composted Sold for recycling or reuse (Food waste) (Garden waste) (Paper, cardboard, polythene, plastic, glass and metal)
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 83 ENVIRONMENT
‘Putting Power Back in We will also revamp the chiller plant room pumping Our Hands’: Our Shift to system with modern efficient equipment as the existing system is over 15 years old. Renewable Energy Located in a tropical island, we have realized that We recognize that a proper methodology should be we are in an ideal position to exploit and expand in place to enable hotels to measure and report on the use of renewable energy by implementing carbon emissions in a consistent way. The Hotel’s clean power sources which reduce the strain on carbon footprint calculation for 2015 was certified natural sources, lower operational expenses and by the Sri Lanka Climate Fund in accordance with lead to sustainable business. the requirements of the ISO 14064: 2006 standard.
In our objective to become a ‘nearly-zero energy’ Hotel, we completed the installation of a 125kW ‘Each Drop Counts!’ roof-mounted solar PV (net metered) system at The drinking water shortage is a global problem Jetwing Lighthouse. known to all: it is estimated that by 2030 half of
the Earth's population will live in areas of water This solar PV system is estimated to contribute scarcity, surpassing the total demand for it by to approximately 18% of the Hotel’s day-time 40% of the total supply. Sri Lanka being a country electricity requirement which is 10% of the total that has been severely affected by drought electricity requirement. The project was partially consistently for the past few years, we have a funded by the Asian Development Bank. moral and commercial responsibility to conserve water. Jetwing Lighthouse has implemented Jetwing Lighthouse’s hot water generation is done strict measures to regulate and manage water entirely through the use of a biomass boiler fuelled consumption. by cinnamon wood and solar hot water panels.
Our water consumption is sub-metered and monitored wherever possible. The installation of Goal to Become a water-saving shower heads, dual flush toilets etc. ‘Nearly-Zero-Energy’ Hotel have improved the efficiency in water usage. The Our ultimate goal is to become a ‘Nearly-Zero- waste water generated from Hotel operations is Energy’ Hotel. In pursuance of this goal through our treated via an on-site waste water treatment plant. Energy Policy, we plan to invest in renewable energy We use the treated waste water for our gardening and sustainable initiatives during the next year. purposes. We have also employed an external company to ensure and routinely check the quality We have planned to install a Vapour Absorption of discharged water and whether it meets the Chiller along with higher capacity biomass boiler to required standards of the Central Environmental sustain the Hotel’s entire air conditioning requirement. Authority. Moreover, plans are underway for the installation of an in-house biogas generation facility which will Last year, we introduced a water treatment system cater to the main kitchen of Jetwing Lighthouse Club. for the laundry waste water. The treated water is reused for the cooling towers.
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Managing Waste Responsibly We Diplomatically Commercial processes, particularly those used in Deal with Grievances our industry, tend to generate a lot of waste, and Located in a highly urban setting, disputes and require regular, costly waste disposal. Through our concerns may arise over the environmental waste management system, waste is segregated impacts of the Organization’s activities. There is a at source, stored safely and hygienically and mechanism in place to diplomatically handle these disposed in the most environmentally-sound way. grievances through dialogue and mediation. If any serious complaints arise, a proper investigation Solid waste generated is separated at their source is carried to determine the nature of the issue in all departments such as the kitchen, restaurant and they are addressed through a clear and a and bar, housekeeping, linen room, maintenance, transparent process. We consider these complaints stores and guest rooms. Dry solid waste (such as as opportunities for us to improve and better cardboard, plastic, glass bottles and metal) are manage our sustainability initiatives. sold for recycling or reuse. To encourage our team towards better waste separation and recycling, the As a responsible corporate citizen we have income from these sales are credited to the staff complied with regulatory and voluntary standards. welfare society. The Lighthouse Hotel PLC believes that the first All garden waste is composted in a conventional step of sustainable tourism begins with complying compost pit, and is used as organic fertilizer in the with National framework of rules, regulations and Hotel gardens. guidelines for issues pertaining to environmental conservation. Our conservation of the environment In 2016, Jetwing Lighthouse has spent over Rs. goes beyond compliance which is why we have 2 million on waste disposal, emissions treatment, formulated our own policies and practises in our purchase and use of emissions certificates, journey to become a sustainable business. equipment, maintenance and operating materials and service. The following are the standards that we follow. The Lighthouse PLC adheres to: Recognizing the issues that are related to plastic water bottle use, like the cost of transportation – Relevant local and international laws and waste disposal, we have replaced them with – Internally developed policies: Jetwing reusable glass water bottles. The Lighthouse Sustainability Policy/Environmental Policy/ Hotel PLC commissioned a water bottling plant at Energy Management Policy/Health and Safety Jetwing Lighthouse to cater to all our properties. Policy The energy consumed for the water bottling – External certifications and labels like: process is sourced from an independent solar ISO 14001 Environmental Management System PV system. ISO 50001 Energy Management System ISO 14064 GHG Inventory Verification Gold level in Travelife's Sustainability Criteria
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 85 Stewardship
86 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC 09 Stewardship
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 87 Board of Directors
N.J.H.M. Cooray Ruan Samarasinghe CHAIRMAN MANAGING DIRECTOR
Mr. Hiran Cooray has over 30 years of experience Mr. Ruan Samarasinghe has been a doyen of the in the hospitality industry. He has represented hospitality industry for over 40 years. A valued Sri Lanka on the Board of the Pacific Asia Travel member of the Jetwing family, he has been at the Association (PATA) since 1996 and had the honour frontline of all operations through the formative of being the organization’s Chairman from 2010 to years and in the course of his four decade career 2012. In addition to his degree from the University has pioneered several developments. He oversees of North Carolina in Business Administration/ all Jetwing operations and his wealth of knowledge Marketing, he successfully completed a Senior enables him to represent the Organization in key Management Course in Hotel Management at hospitality forums. In addition to his pivotal role Cornell University, Ithaca, New York. Whilst holding as Managing Director of Jetwing Hotels, over 50 directorships in various hotels and related he also serves on several other Directorates. companies, he has also held the positions of Mr. Samarasinghe also served as the Immediate President of the Tourist Hotels Association of Past Chairman of the Pacific Asia Travel Sri Lanka (2005-2008 and 2014-2016) and Association (PATA) Sri Lankan chapter. Chairman of PATA Sri Lanka Chapter (2003-2004). Hiran has also served as a Board member of the Sri Lanka Tourism Promotions Bureau (SLTPB) Ms. N.T.M.S. Cooray having already served as a Board Director of the NON-EXECUTIVE DIRECTOR Sri Lanka Tourism Development Authority (SLTDA) Ms. Shiromal Cooray is the Managing Director from 2007-2015. In addition, Hiran has also been a of Jetwing Travels (Pvt) Ltd., one of the largest Member of the Board of Small Luxury Hotels from inbound tour operators to Sri Lanka. She holds 2007-2014. He regularly represents Sri Lanka and several other directorates. She is a Past President the Asia Pacific at tourism-related international of Sri Lanka Association of Inbound Tour Operators forums as a speaker/panelist. Recently, Hiran’s and was the former Finance Director of J. Walter expertise and reputation in tourism was recognized Thompson Ltd. (JWT) Colombo and has work globally by his appointment as an Alternate experience in finance in the UK and Hong Kong. Member of the UNWTO (United Nations World She holds an MBA and is a Fellow Member of the Tourism Organization) – World Committee on Chartered Institute of Management Accountants of Tourism Ethics at the UNWTO General Assembly the UK. She is currently the Chairperson of held in Zambia/Zimbabwe in August 2013. He is Sri Lanka Institute of Directors (SLID). passionate about his country’s potential to be a leading tourism destination and continues working tirelessly in order to make his dreams a reality.
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C.S.R.S. Anthony Nihal Wadugodapitiya EXECUTIVE DIRECTOR NON-EXECUTIVE INDEPENDENT DIRECTOR
Mr. Sanjeewa Anthony is an Attorney-at-Law Is a Fellow member of the Chartered Institute (Supreme Court of Sri Lanka), Notary Public, of Management Accountants, UK. His business Commissioner for Oaths and a Registered experience spans over 40 years in senior Company Secretary. He is also a Fellow Member of management positions both in private and the Chartered Institute of Management Accountants public sector institutions in Sri Lanka and in (FCMA) UK, Chartered Global Management Abu Dhabi, UAE, of which 20+ years has been Accountant (CGMA), a Fellow Member of The in the position of Chief Executive of private Institute of Certified Management Accountants of companies. He has served in organizations Sri Lanka (FCMA) and a Fellow Member of Certified involved in manufacturing, light engineering, Professional Managers (FCPM). He commenced FMCG marketing and distribution, private equity his career at PricewaterhouseCoopers, prior to fund management, airlines and services sectors. joining Jetwing Hotels Ltd. as Finance Manager He has served on several Boards of Directors in 1996 and is currently the Executive Director. He including companies engaged in financial services, is also serving on several Directorates including venture capital/private equity fund management, a Publicly Quoted company. Sanjeewa is a Life fabric manufacturing, thermal power generation, Member of the Bar Association of Sri Lanka (BASL). plantation management, marketing and distribution and flexible packaging and light engineering. At present he is a Business Development Ms. A.M. Ondaatjie Consultant providing strategic guidance to NON-EXECUTIVE DIRECTOR small and medium scale enterprises. He is also engaged in community services and a member Ms. Angeline Ondaatjie is the Joint Managing of the National Council of The Family Planning Director of Tangerine Beach Hotels PLC and Association of Sri Lanka. Royal Palms Beach Hotels PLC. She has over 15 years experience in tourism, financial services and manufacturing sectors. She holds a Master’s Degree from the University of Texas in Austin, USA and a BSc Degree from the Massachusetts Institute of Technology (MIT) USA. She is the Managing Director of Tangerine Tours (Pvt) Ltd. She holds directorship in several companies including Mercantile Investments and Finance PLC, The Nuwara Eliya Hotels Co. PLC (Grand Hotel), Nilaveli Beach Hotels (Pvt) Ltd., Fair View Hotel (Pvt) Ltd. and Phoenix Industries Ltd. She is presently Vice President, Tourist Hotels Association and Director, Sri Lanka Tourism Promotions Bureau and serves on the Education Council of MIT.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 89 STEWARDSHIP
Prema Cooray A.T.P. Edirisinghe NON-EXECUTIVE INDEPENDENT DIRECTOR NON-EXECUTIVE INDEPENDENT DIRECTOR
Mr. Prema Cooray is the immediate Past Chairman Mr. Edirisinghe is a Fellow Member of The of Aitken Spence PLC having led the Hotels Sector Institute of Chartered Accountants of Sri Lanka, of the Company for a considerable period of time. a Fellow Member of the Chartered Institute of Mr. Cooray was a Past President of the Tourist Management Accountants (UK) and holds a Hotels Association of Sri Lanka (1998-2000) and Diploma in Commercial Arbitration. He was the was the Chairman of the Sri Lanka Convention Senior Partner of HLB Edirisinghe & Co., Chartered Bureau (2007-2009). He serves as Chairman of Accountants and currently serves as Consultant/ The Rainforest Ecolodge, Deniyaya, an unique Advisor. He is the Managing Director of PE pioneering Ecotorium initiative supported by Management Consultants (Pvt) Ltd. He counts leading hotel companies in Sri Lanka. Mr. Cooray over 46 years experience; of which 30 years in also represents many public listed companies as the public practice and 16 years in the private a Director. sector having held senior positions including Executive Directorates. He serves on the Boards He is the chairman of Sri Lanka Convention Bureau of some other quoted companies where in some and also serves as a Member of the Grants Board Companies he also serves as Chairman/Member of ICTA. He served as the Secretary-General/CEO of the Audit Committee, as Chairman/Member of of the Ceylon Chamber of Commerce (2003-2008). the Remuneration Committee and as Chairman/ Member of the RPTRC. Mr. Cooray was accorded the National Honour as a ‘Legend’ by Sri Lanka Tourism in 2012.
Mr. Cooray has an MBA from the University of Sri Jayewardenepura, is a Certified Management Accountant and he is also a Member of the Institute of Hospitality, UK.
90 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC STEWARDSHIP
Ranil de Silva Dr. C. Pathiraja NON-EXECUTIVE INDEPENDENT DIRECTOR NON-EXECUTIVE INDEPENDENT DIRECTOR
Mr. Ranil de Silva pursued his tertiary education Director of Stem Cure – Ferticare (Pvt) Ltd., Director in Australia where he obtained a Diploma in Visual of P&A Global Solutions (Pvt) Ltd., Singapore and Communications. He returned to Sri Lanka in 1981 several other companies both local and abroad. and joined JWT Colombo as their first Sri Lankan Ex Director/Embroyologist – ICSI Lanka Hospital. employee. After starting his career as a Junior He holds BV (Sc) degrees from the University Account Executive at JWT, he rose to International of Peradeniya, Sri Lanka, Diploma in Business Vice President and was also Managing Director of Studies and a Post Graduate Diploma in Business the Colombo office. He was posted to JWT Jakarta Management. and also served as a Regional Account Director for JWT Asia Pacific based in Singapore. In 1999, he returned home to Sri Lanka to set-up the Colombo Thirukumar Nadesan office of Leo Burnett. Starting with just a handful of NON-EXECUTIVE INDEPENDENT DIRECTOR team members and a shared office he has taken Mr. Thirukumar Nadesan holds a BA (Hon.) Degree Leo Burnett to great heights. Leo Burnett in in Business Studies at the University of Middlesex, Sri Lanka has been repeatedly recognized as the United Kingdom. He has served in the capacity rest of South Asia’s creative agency of the year. of Vice President at the American Express Bank Ranil served as the President of the International in Colombo from 1980 to 1989 and thereafter held Advertising Association (IAA) Sri Lanka chapter the position of Group Director at the Maharaja for two terms and was also a member of the Organization. Worldwide Board of Directors of the IAA. In 2010, the IAA conferred the medal of merit to him for his Mr. Nadesan has been a freelance Business/ contribution to the advertising industry. He has also Investment Consultant for many reputed companies been a Director in their family owned business – since 2001 to date. Cyril Rodrigo Restaurants. Ranil is passionate about everything he does; he loves to see the He is the Director of Lanka Hotels and world, stay in great places and enjoys the arts. Residencies (Pvt) Ltd. (Owning Company of Sheraton Hotel Colombo).
He is also the Former Chairman of Hotel Developers Lanka PLC (HDL) (Owning Company of Hilton, Colombo).
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 91 Corporate Governance
The Lighthouse Hotel PLC (LHH) continues to be The Board meets quarterly as a matter of routine. committed to conducting the Company’s business Ad hoc meetings are held as and when necessary. ethically and in accordance with high standards of During the year under review, the Board met on five good corporate governance. occasions. The attendance at these meetings was:
The Board has appointed Jetwing Hotels Ltd., Mr. N.J.H.M. Cooray Executive 5/5 as the managing agents of the Hotel. (Chairman)
Mr. R.A.E. Samarasinghe Executive 4/5 We set out below the corporate governance (Managing Director) practices adopted and practiced by LHH and Mr. C.S.R.S. Anthony Executive 5/5 compliance with the Rules set out in Section 7 of the Listing Rules of the Colombo Stock Exchange. Ms. N.T.M.S. Cooray Non-Executive 4/5
Ms. A.M. Ondaatjie Non-Executive 4/5 Board of Directors Mr. N. Wadugodapitiya Non-Executive 5/5 Independent
Executive Directors Mr. R. de Silva Non-Executive 3/5 Mr. N.J.H.M. Cooray (Chairman), Independent
Mr. R.A.E. Samarasinghe (Managing Director), Mr. E.P.A. Cooray Non-Executive 4/5 Mr. C.S.R.S. Anthony. Independent
Dr. C. Pathiraja Non-Executive 4/5 Non-Executive Directors Independent Ms. N.T.M.S. Cooray, Mr. T. Nadesan Non-Executive 2/5 Ms. A.M. Ondaatjie. Independent Mr. A.T.P. Edirisinghe Non-Executive 4/5 Independent Non-Executive Independent Directors Mr. N. Wadugodapitiya, Mr. R. de Silva, Responsibilities Mr. E.P.A. Cooray, The Directors of the Company are responsible Dr. C. Pathiraja, for formulation of Company policy and overall Mr. T. Nadesan, business strategy. The implementation of policy Mr. A.T.P. Edirisinghe. and strategy is done in a framework that requires compliance with applicable laws and regulations as well as establishing best practices in dealing with employees, customers, suppliers and the community at large.
The annual capital expenditure budgets, non- budgeted capital expenditure and the annual budgeted operating statements require Board approval. The Board meets regularly to review
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performance and forecasts against budgets so Company Secretary as to take decisions in the best interest of the The services and advice of the Company Secretary Company. The managing agents are represented are made available to Directors as necessary. The at these meetings and are responsible for follow-up Company Secretary keeps the Board informed of action. Directors’ interests in contracts are regularly new laws, regulations and requirements coming disclosed and such disclosures pertaining to year into effect which are relevant to them as individual ended 31st March, 2017 can be seen on page 109 Directors and collectively to the Board. in the Directors’ Report. Financial Acumen The Board is responsible to ensure that adequate systems of internal controls to safeguard the assets The Board, includes one Chartered Accountant and of the Company are in place and proper records three Chartered Management Accountants who are maintained. However, any system can ensure possess the necessary knowledge and competence only reasonable but not absolute assurance that to offer the Board guidance on matters of finance. errors and irregularities are prevented or detected within a reasonable time frame. Supply of Information Directors are provided with quarterly reports Chairman’s Role on performance and such other reports and The Chairman is responsible for the efficient documents as necessary. The Chairman ensures conduct of Board meetings. The Chairman all Directors are adequately briefed on issues maintains close contact with all Directors and holds arising at meetings. informal meetings with Non-Executive Directors as and when necessary. Appointments to the Board The Board as a whole decides on the appointment Board Balance of Directors, in terms of the Articles of Association The composition of the Executive and of the Company. Non-Executive Directors (the latter are over one-third of the total number of Directors) satisfies Re-election of Directors the requirements laid down in the Listing Rules The provisions of the Company’s Articles require of the Colombo Stock Exchange. The Board has a Director appointed by the Board to hold office determined that six Non-Executive Directors satisfy until the next Annual General Meeting and seek the criteria for ‘independence’ set out in the Listing reappointment by the shareholders at that meeting. Rules of the Colombo Stock Exchange. The Articles call for one-third of the Directors in Non-Executive Directors’ profiles reflect their office to retire at each Annual General Meeting. calibre and the weight their views carry in Board The Directors who retire are those who have served deliberations. for the longest period after their appointment/ reappointment. Retiring Directors are generally The Chairman of the Company is also the eligible for re-election. Chairman of Jetwing Hotels Ltd., the managing agents. Chief Executive Authority is vested in the The Managing Director does not retire by rotation. Managing Director of the Company.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 93 STEWARDSHIP
Remuneration Committee Accountability and Audit The Company has its own Remuneration Financial Reporting Committee. The Committee consists three The Board places great emphasis on complete Independent Non-Executive Directors. The disclosure of financial and non-financial information Remuneration Committee Report appears on page within the bounds of commercial reality and on the 106 in this Report. adoption of sound reporting practices. Financial information is disclosed in accordance with the Sri Constructive Use of the Lanka Accounting Standards comprising SLFRSs Annual General Meeting and LKASs. Revisions to existing accounting The active participation of shareholders at the standards and adoption of new standards are Annual General Meeting (AGM) is encouraged. The carefully monitored. Board believes, the AGM is a means of continuing effective dialogue with shareholders. The Statement of Directors’ Responsibilities for the Financial Statements is given in page 122 The Board offers clarifications and responds to of this Report. concerns shareholders have over the content of the Annual Report as well as other matters which are Going Concern important to them. The AGM is also used to adopt The Directors, after making necessary inquiries the Financial Statements for the year. and reviews including reviews of the Company budget for the ensuing year, capital expenditure Communication with Shareholders requirements, future prospects and risks, cash Shareholders are provided with Quarterly Financial flows and borrowing facilities, have a reasonable Statements and the Annual Report, which the expectation that the Company has adequate Company considers as its principal communication resources to continue in operational existence with them and other stakeholders. These reports for the foreseeable future. Therefore, the going are also provided to the Colombo Stock Exchange. concern basis has been adopted in the preparation of the Financial Statements. Shareholders may bring up concerns they have, either with the Chairman, the Managing Director Audit Committee or the Secretaries of the Company as appropriate. LHH constituted its own Audit Committee on The Company maintains an appropriate dialogue 13th February, 2008. The Committee consists of with them. three Independent Non-Executive Directors of the Company. The meetings of the Audit Committee were attended by the Chairman, Managing Director, Executive Director, General Manager and the Chief Financial Officer by invitation when matters relating to the Company were taken up for discussion. The External Auditor/Internal Auditor attended the meetings when his presence was deemed necessary.
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The Audit Committee has written terms of reference The Audit Committee recommends the appointment and is empowered to examine any matters relating and fees of the External Auditors, having to the financial affairs of the Company and its considered their independence and performance. internal and external audits. The Audit Committee Report appears on page 107 The Committee reviewed the Financial Statements, of this Report. internal control procedures and risk management, accounting policies, compliance with accounting Related Party Transactions standards, emerging accounting issues and other Review Committee related functions that the Board required. It also The Company has its own Related Party reviews the adequacy of systems for compliance Transactions Review Committee. The Committee with the relevant legal, regulatory and ethical consists three Independent Non-Executive requirements. Significant issues discussed by the Directors and one Executive Director. During the Committee at the reviews were communicated by year under review, the Committee met on four the Managing Director to the Board of Directors for occasions. The attendance at these meetings was: their consideration and action.
Members of the Related Party Attendance The Audit Committee helps the Company to Transactions Review Committee at the Meeting achieve a balance between conformance and Mr. N. Wadugodapitiya Non-Executive 4/4 performance. (Chairman) Independent
Mr. E.P.A. Cooray Non-Executive 3/4 Members of the Audit Committee Attendance Independent at the Meeting Mr. A.T.P. Edirisinghe Non-Executive 4/4 Mr. N. Wadugodapitiya Non-Executive 5/5 Independent (Chairman) Independent Mr. C.S.R.S. Anthony Executive 4/4 Mr. E.P.A. Cooray Non-Executive 4/5 Independent
Mr. A.T.P. Edirisinghe Non-Executive 5/5 The Related Party Transactions Review Committee Independent Report appears on page 108 in this Report.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 95 STEWARDSHIP
Level of Compliance with the Listing Rules of the Colombo Stock Exchange Level of compliance with the Listing Rules of the CSE Section 7, on Corporate Governance are given in the following table:
Rule No. Subject Applicable Requirement Level of Compliance
7.10.1 Non-Executive At least one-third of the total number of Directors Eight out of Eleven Directors are Directors should be Non-Executive Directors Non-Executive Directors
7.10.2 (a) Independent Two or one-third of Non-Executive Directors, Six of the Eight Non-Executive Directors whichever is higher should be Independent Directors are Independent
7.10.2 (b) Independent Each Non-Executive Director should submit a Non-Executive Directors have Directors declaration of his independence/non-independence submitted the declaration in the prescribed format.
7.10.3 (a) Disclosure relating Names of Independent Directors should be Please refer page 92 to Directors disclosed in the Annual Report
7.10.3 (b) Disclosure relating The basis for Board to determine a Director as Please refer page 110 to Directors independent, if specified criteria for independence is not met
7.10.3 (c) Disclosure relating A brief rèsumè of each Director should be included Please refer pages 88 to 91 to Directors in the Annual Report including the areas of Expertise
7.10.3 (d) Disclosure relating Forthwith provide a brief rèsumè of new Directors A brief résumé provided to the CSE to Directors appointed to the Board with details specified in 7.10.3 (d) to the CSE
7.10.5 Remuneration A listed company shall have a Remuneration Company has formed a Committee Committee Remuneration Committee
7.10.5 (a) Composition of Shall comprise of Non-Executive Directors a Remuneration Committee consists Remuneration majority of whom will be independent three Independent Non-Executive Committee Directors
7.10.5 (b) Functions of The Remuneration Committee shall recommend Please refer Remuneration Remuneration the remuneration of Chief Executive Officer and Committee Report on page 106 Committee Executive Directors
96 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC STEWARDSHIP
Rule No. Subject Applicable Requirement Level of Compliance
7.10.5 (c) Disclosure in The Annual Report should set out: Names of the members of the Annual (a) Names of Directors comprising the the Remuneration Committee Report relating Remuneration Committee are stated in this report under to Remuneration the heading of Remuneration Committee Committee on page 191
(b) Statement of Remuneration Policy Please refer Remuneration Committee Report on page 106
(c) Aggregated remuneration paid to Executive Given in this Report under the Directors and Non-Executive Directors heading of Directors’ Remuneration on page 110
7.10.6 Audit Committee The Company shall have an Audit Committee Company has formed an Audit Committee
7.10.6 (a) Composition of Shall comprise of Non-Executive Directors, Audit Committee consists of three Audit Committee a majority of whom will be independent Independent Non-Executive Directors
Non-Executive Director shall be appointed as the Chairman of the Audit Committee Chairman of the Committee is an Independent Non-Executive Director
Chief Executive Officer and the Chief Financial Chairman, Managing Director, Officer shall attend Audit Committee meetings Executive Director, General unless otherwise determined Manager and Chief Financial Officer attend meetings by invitation
The Chairman of the Audit Committee or one Chairman of the Audit Committee member should be a member of a professional is a Fellow Member of the accounting body Chartered Institute of Management Accountants – UK
7.10.6 (b) Audit Committee Should be as outlined in the Section 7 of the Listing The terms of reference of the Audit Functions Rules of the Colombo Stock Exchange Committee adopted by the Board is listed on page 94
7.10.6 (c) Disclosure in the (a) Names of Directors comprising the Audit Names of the members of the Annual Report Committee stated in this Report under the Audit Committee are stated in this relating to the Audit heading of Audit Committee Report under the heading of Audit Committee Committee on page 191
(b) The Audit Committee shall make a determination Please refer Audit Committee of the independence of the Auditors and Report on page 107 disclose such determination
(c) The Annual Report shall contain a Report of Please refer Audit Committee the Audit Committee setting out the manner of Report on page 107 Compliance of the functions
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 97 Integrated Risk Management
Materiality • Impacts are identified based on the consequences to our stakeholders (using the Through an identification process and a materiality feedback from both internal and external) analysis we have determined certain aspects as and to the business. material to The Lighthouse Hotel PLC and our stakeholders. These aspects are also explained • An ‘Impact on the Company vs Impact on the in the About the Report section (page 186). We Stakeholders’ matrix is plotted to identify the regard an aspect as material, if it substantively aspects of high materiality. These aspects affects the Company’s ability to create value over could have negative or positive impacts on the short, medium and long term. Our analysis have business and its stakeholders. revealed the Company’s material impact in the • Jetwing Lighthouse’s Management Team social, environmental and economic aspects. conducts a review to prioritize the high These aspects are selected based on The materiality aspects in terms of business focus, Lighthouse Hotel PLC’s governance, operations geographical spread and the profiles of and through constant dialogue with our primary our key stakeholders. stakeholders – employees, guests, suppliers and industry associations. The above process lead to a materiality matrix in respect of risks that should be mitigated and The following steps summarize the process we opportunities that may be exploited. adopt to determine the material aspects and indicators:
• We analyze current and potential social, environmental and economic issues associated with our operations and identify their impact on the business and stakeholders.
Rating of Material Aspects
Aspect Significance Indicators To TLHH To Stakeholder
Economic 1. Economic Performance G4-EC1 V V G4-EC3 2. Market Presence G4-EC6 M H
3. Indirect Economic Impacts G4-EC7 M M
4. Procurement Practices G4-EC9 H H
Environmental 5. Energy G4-EN3 V H G4-EN5 G4-EN6 6. Water G4-EN8 V M G4-EN10
98 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC STEWARDSHIP
Aspect Significance Indicators To TLHH To Stakeholder
7. Emissions G4-EN15 M V G4-EN16 G4-EN18 G4-EN19 8. Effluents and Waste G4-EN22 M V G4-EN23 9. Compliance G4-EN29 V V
10. Overall G4-EN31 H M
11. Environmental Grievance Mechanism G4-EN34 M H
Social Labour Practices and Decent Work 12. Employment G4-LA1 V M G4-LA2 G4-LA3 13. Occupational Health and Safety G4-LA6 M H
14. Training and Education G4-LA9 H G4-LA10 V G4-LA11 15. Diversity and equal opportunity G4-LA12 H H
16. Labour Practices Grievance Mechanisms G4-LA16 V H Human Rights 17. Non-Discrimination G4-HR3 M M Society 18. Engaging with Local Community G4-SO1 M M Product Responsibility 19. Customer Health and Safety G4-PR1 H V
20. Product and Service Labelling G4-PR5 H H
21. Marketing Communications G4-PR7 V H
22. Compliance G4-PR9 V V
Materiality Matrix V 7, 8 19 1, 9, 22 The management’s approach to the above material aspects are covered under the relevant 4, 13, 15, 5, 14, 16, stakeholder discussions. H 2, 10, 11 20 21
M
Significance to Stakeholders 3, 17, 18 6, 12
M H V
Significance to Jetwing Lighthouse V – Very High H – High M – Medium
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 99 STEWARDSHIP
Risk Management and they are periodically reviewed to ensure adequacy and adherence. In the current business The risk management system of The Lighthouse environment, change has become the norm rather Hotel PLC, is structured to identify and control the than the exception. Managing risks, in a changing risks specific to the industry in which it operates environment effectively, particularly the major risks as well as general risks applicable to all entities. that may affect our business plans and strategic Therefore, appropriate systems, policies and objectives, we are able to protect or enhance our procedures are in place in all areas of operations key assets appropriately. Risk management model of the Group is shown below:
Identify Assess Plan Risk Risk Response Strategy
Risk Management
Monitor Implement and Review Mitigation Strategy
100 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC STEWARDSHIP
The Group identifies three main categories of risk: These main categories of risks are further analyzed into subcomponents. 1. Strategic and Risks that affect the Group’s Market Risks high-level strengths and weaknesses or reflect risks from the external Thereafter, each risk is assessed for potential environment. These risks are impact and likelihood of occurring. Risk heat map managed by Senior Management. is used to plot the risks based on the above. The 2. Operational Risks that are caused due to horizontal axis shows the likelihood of a given risk Risks day-to-day operations of the Hotel. occurring, that is, the likelihood that the risk will 3. Financial Risks Risks of losses arising from the materialise and become an issue. The vertical axis adverse movements in market prices, shows the potential impact that the risk will have on risks that the Group may not have sufficient funds to meet financial the objective or goal not being achieved should it obligations and failure of a customer materialise. The colours are risk areas (e.g., green to meet its contractual obligations. coloured boxes are in the low area; yellow boxes are in the medium area; orange boxes are in the high area, red boxes are in the very high area)
Likelihood
1 2 3 4 5 Unlikely Possible Likely Probable Almost Certain 0% to 10% 10% to 40% 40% to 70% 70% to 90%
5 Catastrophic
4 1.1, 1.2, 2.1, 3.4 1.3 Major
3 2.3, 2.4, 2.6, Impact 2.2, 2.5 Moderate 3.2, 3.3
2 3.1 2.7 Tolerable
1 Insignificant
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 101 STEWARDSHIP
Risk Factors In this section, we describe the material impact and actions taken to mitigate risk exposure. foreseeable risks that could have a material effect All potential risks are not listed below. Some risks on the Group’s business operations, cash flow, are not yet known to Group and some that Group financial condition, turnover, profits, assets, liquidity does not currently believe to be material, could and capital reserves. We provide information on later turn out to be material. the nature of the risk, an indication of the potential
Risk Category and Description Potential Impact Actions Taken to Mitigate Risk
1. Strategic and Market Risks 1.1 Business Risk Risk Rating Medium The inability of the Group to – Reduced revenue, – Detailed operational and capital achieve its business objectives cash flow and profitability expenditure budgets are formulated on – Hinder future growth an annual basis and formally approved by the Board. These plans are thereafter monitored and reviewed by the Board to assess actual performance against those planned and take remedial action wherever necessary – Project feasibility studies are conducted for all major investments – Implementation of cost control procedures and innovative cost saving initiatives particularly with regard to energy costs – Performing Competitor analysis
1.2 Political, Economic and Environmental Risks Risk Rating Medium Major events affecting either – Reduced revenue, increased – Management regularly reviews political economic or political stability on a operating costs resulting in and economic developments and seeks global and local level represent an reduced profitability and to identify emerging risks at the earliest exposure to the Group cash flows opportunity – Control over the ownership – Hotel being a member of Tourist Hotels of assets Association of Sri Lanka, has been working closely with them and other various trade associations, relevant authorities and lobby groups in creating a better economic environment at all times
102 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC STEWARDSHIP
Risk Category and Description Potential Impact Actions Taken to Mitigate Risk
Events that adversely impact – Occupancy and room rates – The Group has in place contingency domestic or international travel can be adversely affected by and recovery plans to enable it to events that reduce domestic or respond to major incidents or crises international travel. Such events may include acts of terrorism, war or perceived increased risk of armed conflicts, epidemics, travel advisories, natural disasters, increased cost of travel and industrial action. Reduced demand will impact on revenues and operational profitability
Risks from natural or – Loss of assets – Transferring risks to third parties through man-created disasters insurance policies. The adequacy of insurance covers is regularly reviewed and adjusted when necessary
1.3 Competitive Risk Risk Rating High Group is exposed to the risks – Future operating results could be – Providing a unique service quality of the hotel industry supply adversely affected by industry associated with Jetwing brand only and demand cycle such as over-capacity of number of rooms – Consistently delivering of service competitive actions from existing – Reduction in market share (lower quality to influence consumer hotels and new entrants increasing occupancies), rates resulting in preference and creating and room supply reduced revenues, increase in maintaining value perception marketing expenses reduced – Make timely investments to upgrade cash flows and profitability the facilities – Maintain the long term relationships with major tour operators
2. Operational Risks 2.1 Reputation and Intellectual Property Rights Risk Risk Rating Medium Group is reliant on the reputation of – Service quality may not be – Continuous monitoring and review of its brand and the protection of its delivered in accordance with online customer reviews and ratings intellectual property rights the Jetwing standards – Investments made in protecting the – Reduce brand value, market Group’s brand from misuse and share, revenues, profitability infringement, by way of trade mark and cash flows registration and domain name – Increase Group’s exposure protection – Group monitors adherence to litigation to its safety or operating and quality standards or the significant regulations applicable to hotel operations – Provides regular training to associates to educate on the quality standards and new developments in the hospitality industry
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 103 STEWARDSHIP
Risk Category and Description Potential Impact Actions Taken to Mitigate Risk
2.2 Demand Risk Rating Medium Adverse impact on Group turnover – Reduce room nights, revenue – The Hotel is well represented due to shift in demand from – Lower room rates due to lower at international trade fairs traditional source markets to new occupancy – Increase registration with Online emerging markets Travel Agents – Increase presence in social media channels – Maintain the long term relationships with major tour operators
2.3 Employee Risk Risk Rating Medium Failure to attract and retain skilled – Inability to achieve planned – Development and maintenance employees may threaten the business objectives of a group culture, compensation and success of the Group’s operations – Reduced quality of standards benefits arrangements, training and resulting in reduced guest development are key activities carried out satisfaction – Role and responsibility of the Board in the risk management initiatives is not clearly stated – Initiate Jetwing Youth Development Project
2.4 Technology Risk Risk Rating Medium – Inaccurate information – Regular review of systems and – Reputation and performance upgrades where appropriate of the Group will be adversely affected
2.5 Project Implementation Risk Risk Rating Medium – Cost overruns – Establish project cost and time lines – Delays in project implementation in consultation with stakeholders may cause loss of earnings – Monitor project progress with budgeted cost and time
2.6 Statutory and Legal Risk Risk Rating Medium Risk of litigation due to legal and – Legal fees and penalties resulting – Group continues to monitor changes statutory requirements not being in reduced profitability in the regulatory environment in which fulfilled – Adverse impact to reputation it operates – Loss arising from defective – Statutory declaration is made to Board contracts each quarter – Compliance audits are included in the scope of the internal audit programme – Engage professional consultants to review contracts
104 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC STEWARDSHIP
Risk Category and Description Potential Impact Actions Taken to Mitigate Risk
2.7 Internal Operational Processes Risk Rating Medium Risk of financial loss due to – Internal process failures – Outsource internal audits to reputed breakdown in internal controls – Frauds Audit Firms to review and report on the adequacy of the financial and – Loss of data operational controls – Defined systems and procedures are in place to ensure compliance with internal controls – Adequate fidelity covers are obtained
3. Financial Risks 3.1 Credit Risk Risk Rating Low Risk arising due to default of – Reduce profitability – Credit is provided only for credit payment – Increase working capital approved agents. Credit approval is granted by the Credit Committee at ‘Jetwing House’ and credit approved list has been prepared – Actively monitor and review debtors
3.2 Exchange Rate Risk Risk Rating Medium Risk arising due to the volatility in – Impact on profitability on – As far as possible, enter into sales foreign currency exchange rates translation of foreign currency contracts with tour operators/agents in US$ transactions – Monitor the exchange rates on a daily basis
3.3 Interest Rate Risk Risk Rating Medium Risk arising due to the volatility of – Reduce profitability – Negotiate favourable terms and fair value or future cash flows of – Reduce cash flows conditions with banks for loan a financial instrument fluctuating facilities obtained because of changes in market interest rates
3.4 Liquidity Risk Risk Rating Medium Risk that the Group will not be able – Reduce cash flows – Monitor and review bank balances to meet its financial obligations as – Reduce profitability regularly they fall due – Preparation and review of actual performance against the budget monthly – Preparation and review of cash flow forecast
Precautionary Approach The Lighthouse Hotel PLC applies a precautionary principle across all its businesses and we advocate a risk-based approach to our operations through our management systems.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 105 Remuneration Committee Report
The objectives of the Remuneration Committee are to review and approve overall remuneration philosophy strategy policies and practices including performance pay schemes and benefits. The policy is to prepare the compensation packages to attract and retain highly qualified experienced workforce and reward performance, bearing in mind the business performance and long term shareholder returns. The Committee comprises three Non-Executive Independent Directors, whose names are disclosed on page 191 of the Annual Report. The members of the Committee met once in the year under review. The aggregate remuneration paid to Directors is set out in page 110.
E.P.A. Cooray Chairman – Remuneration Committee
2nd May, 2017
106 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Audit Committee Report
The Audit Committee, comprises three Non-Executive • Recommendations made by the External Independent Directors (as shown on page 191 Auditors were also discussed with the Board and of the Annual Report). The Chairman of the Audit implementation recommended to Management by Committee is a Fellow Member of the Chartered the Committee. Institute of Management Accountants, UK. The • The Audit Committee also monitors the Audit Committee met on five occasions during the effectiveness of the Internal and Financial Control financial year. procedures on the basis of the reports and findings submitted by the Internal Auditors of the The Chairman, Managing Director, Executive Company, Messrs PricewaterhouseCoopers. Director, General Manager, Chief Accountant and • The Audit Committee also monitors the timely the Financial Controller attend meetings of the payments of all statutory obligations. Audit Committee by invitation. The Committee is • The Company’s budget proposals are also empowered to examine any matter relating to the reviewed by the Audit Committee. financial reporting systems and its internal and • The Audit Committee has reviewed the other external audits. Its duties include detailed reviews services provided by the External Auditors to of Financial Statements, internal control procedures, the Company to ensure their independence as accounting policies and compliance with accounting Auditors has not been compromised. standards. It also reviews the adequacy of systems for compliance with the relevant legal, regulatory and The Audit Committee is satisfied that the control ethical requirements and company policies. environment prevailing in the organization provides reasonable, but not absolute assurance that the The Committee endeavours to assist the Directors to financial position of the Company is adequately discharge their duties and responsibilities in respect monitored and that the systems are in place to of regulatory compliance and risk management. minimize the impact of identifiable risks.
The following activities were carried out by the As far as the Directors are aware, the Auditor does not Committee: have any relationship (other than that of an Auditor) • The Committee reviewed the Quarterly Accounts with the Company other than those disclosed above. of the Company and has recommended same to The Auditors also do not have any interest in the the Board for approval and publication. Company. For the said reasons that the Committee • Committee reviewed the policy decisions relating to determined that Auditors are independent. adoption of new and revised Sri Lanka Accounting Standards (SLFRS/LKAS) applicable to the The Audit Committee has recommended to the Company and made recommendation to the Board. Board of Directors that Messrs Ernst & Young may The Committee would continue to monitor the continue as Auditors for the financial year ending compliance with relevant Accounting Standards 31st March, 2018. and keep the Board informed at regular intervals. • The Committee held meetings with the External Auditors to review their report on audit results and the preparation of the Annual Report to ensure the reliability of the process, consistency of the Accounting policies and methods and compliance Nihal Wadugodapitiya with Sri Lanka Accounting Standards. Chairman – Audit Committee
2nd May, 2017
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 107 Related Party Transactions Review Committee Report
The Related Party Transactions Review Committee Key Management Personnel of the Company for the was formed by the Board of Directors with effect purpose of identifying parties related to them. The from 1st January, 2016 in compliance with the Committee endeavours to meet at least quarterly, Section 9 of the Continuing listing rules of the review and report to the Board on matters involving Colombo Stock Exchange (CSE). As at 31st related party transactions falling under its scope. March, 2017 it comprised three Non-Executive Independent Directors and one Executive Director (as shown on page 191 of the Annual Report). Committee Meetings Chairman of the Committee is a Non-Executive The Committee met on four occasions during Independent Director. the financial year. Proceedings of the Committee meetings are regularly reported to the Board of Directors. Scope of the Committee Developing and recommending for adoption by the Board of Directors of the Company, a Related Party Related Party Transactions Transactions Policies and Procedures. During the Period During the period under review, there were no Updating the Board of Directors on the related party non-recurrent nor recurrent related party transactions of the Company on a quarterly basis. transactions that exceeded the threshold mentioned in the continuing listing rules of the CSE other than Making immediate market disclosures on those disclosed in page 183. applicable related party transactions as required by Section 9 of the Continuing Listing Rules of CSE. Details of other related party transactions entered into by the Company during the above Making appropriate disclosures on related party period is disclosed in Note 25.2 and 25.3 in page transactions in the Annual Report as required by 165 and 166 to the Financial Statements. Section 9 of the Continuing Listing rules of CSE.
Policies and Procedures Adopted by the Committee Nihal Wadugodapitiya The Company has in place a Related Party Transaction identification and disclosure procedure Chairman whereby the categories of persons who shall be Related Party Transactions Review Committee considered as ‘related parties’ has been identified. 2nd May, 2017 In accordance with the above procedure, self-declarations are obtained from each Director/
108 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Annual Report of the Board of Directors on the Affairs of the Company
The Directors of The Lighthouse Hotel PLC present Auditor’s Report their Report together with the Audited Consolidated The Auditor’s Report on the Consolidated Financial Financial Statements of the Company for the year Statements is given on page 123. ended 31st March, 2017.
The details set out herein provide the pertinent Accounting Policies information required by the Companies Act No. 07 of 2007, Listing Rules of the Colombo Stock The accounting policies adopted by the Group Exchange and are guided by recommended best in the preparation of Consolidated Financial accounting practices. Statements are given on pages 129 to 143 in this Annual Report.
Review of the Year The accounting policies adopted are consistent with these of the previous financial year except The Chairman’s Letter, Managing Director’s for the addition of Note 2.5.1 in page 131. Review and the Management Discussion and Analysis describes the year’s operations, financial performance, sustainability review and details of Interests Register Directors’ the future development of the Company. Interests in Transactions The Directors of the Company have made the The Principal Activity general disclosures provided for in Section 192 (2) of the Company of the Companies Act No. 07 of 2007. The related party disclosures and the Directors of each The Company owns and operates Jetwing of those related parties are given on pages Lighthouse, Jetwing Lighthouse Club and Jetwing 174 to 178. Kurulubedda which are targeted at the up market leisure travellers. Related Party Transactions During the period under review, the Company incorporated (in Sri Lanka) a fully-owned subsidiary The Company has complied with the rules set namely Unawatuna Properties (Pvt) Ltd. on out in Section 9 of the Listing Rules pertaining to 16th August, 2016 to construct a 36 roomed Related Party Transactions. hotel in Unawatuna, Galle. Directors’ Interests in Shares Financial Statements There were no changes in the Directors’ direct The Consolidated Financial Statements of the shareholdings during the year. Company duly signed by Directors are given on pages 124 to 171 in this Annual Report.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 109 STEWARDSHIP
Jetwing Hotels Management Services (Pvt) Ltd., Executive Directors of which Messrs N.J.H.M. Cooray and N.T.M.S. Mr. N.J.H.M. Cooray (Chairman) Cooray are also Directors, purchased 407,817 Mr. R.A.E. Samarasinghe (Managing Director) shares in the Company during the year. Mr. C.S.R.S. Anthony
Directors’ Remuneration Non-Executive Directors Ms. N.T.M.S. Cooray The aggregate emoluments paid to the Non- Ms. A.M. Ondaatjie Executive Directors during the year, amounting to Rs. 2,370,000/- is reflected on page 165 in Note 25.1 to the Financial Statements. Non-Executive Independent Directors Mr. N. Wadugodapitiya Mr. R. de Silva Insurance and Indemnity Mr. E.P.A. Cooray The Company has obtained a Corporate Guard Dr. C. Pathiraja Insurance Policy from Allianz Insurance Lanka Mr. T. Nadesan Ltd. to indemnify Directors and Officers (D&O) of Mr. A.T.P. Edirisinghe the Company. The policy is extended worldwide excluding USA and Canada with a total cover of Mr. N. Wadugodapitiya has served as Rs. 25,000,000/-. The premium is Rs. 214,500/- Non-Executive Director of the Company for more +Taxes. than nine (09) years. He has not been directly involved in the management of the Company and continues to exercise objectivity in the performance Directors’ Shareholding of his duties.
Directors’ Direct Shareholding Having considered the above, Board of As at As at 31st March, 1st April, Directors have resolved that Mr. N. Wadugodapitiya 2017 2016 is an Independent Director notwithstanding the fact
Mr. N.J.H.M. Cooray 748,803 748,803 that he has served on the Board for more than nine (09) years and that he should continue in office as Ms. N.T.M.S. Cooray 789,803 789,803 such because it is beneficial to the Company and Mr. R.A.E. Samarasinghe 50,000 50,000 its shareholders. Mr. C.S.R.S. Anthony 1,000 1,000 Notice has been given pursuant to Section 211 Mr. R. de Silva 10,000 10,000 of the Companies Act No. 07 of 2007 of the Mr. A.T.P. Edirisinghe 1,000 1,000 intention to propose an ordinary resolution, for the reappointment of Mr. A.T.P. Edirisinghe, who has reached the age of 71 years, notwithstanding the Directorate age limit of 70 years stipulated by Section 210 of Names of the Directors who held office during the the Companies Act. financial year are given below:
110 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC STEWARDSHIP
Subsidiary Board of Directors Auditor’s Remuneration The names of Directors of Unawatuna Properties Messrs Ernst & Young were paid Rs. 678,000/- and (Pvt) Ltd. who held office during the financial year Rs. 696,000/- as audit fees and expenses by the are given below: Company and Group respectively. In addition, Mr. N.J.H.M. Cooray they were paid Rs. 346,820/- by the Company for Mr. R.A.E. Samarasinghe non-audit related work, which consisted mainly of tax consultancy and advisory.
Donations As far as the Directors are aware, the Auditor At the last Annual General Meeting shareholders does not have any relationship (other than that of authorised Directors to determine contributions to an Auditor) with the Company other than those donations. The donations given during the year disclosed above. The Auditors also do not have amounted to Rs. 312,125/-. any interests in the Company.
Auditors Turnover Messrs Ernst & Young, Chartered Accountants The turnover for the year was Rs. 799,218,534/- are deemed reappointed, in terms of Section 158 (2015/16 – Rs. 836,071,927/-). of the Companies Act No. 07 of 2007 as Auditors of the Company.
A resolution proposing the Directors be authorized to determine the remuneration of the Auditors will be submitted to the Annual General Meeting.
Profit/(Loss)
Group 2017 2016 Rs. Rs.
Net Profit/(Loss) for the Year after Providing for all Expenses, known Liabilities and Depreciation of Fixed Assets was 137,184,338 162,120,012
Other Comprehensive Income/(Loss) (770,313) (2,633,285)
Final Dividend for 2016 – Rs. 2.50/- Per Share (2015 – Rs. 2/-) (115,000,000) (92,000,000)
Interim Dividend for 2017 – Rs. 2/- Per Share (2016 – Nil) (92,000,000) –
Prior Year Retained Profit 378,240,320 310,753,593
Retained Profit at the End of the Year 307,654,345 378,240,320
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 111 STEWARDSHIP
Dividends With the adoption of SLFRS, the Company opted to reflect its building at deemed cost. The Board The Board of Directors on 27th February, 2017 resolved to transfer such impact to a Special approved an Interim Dividend of Rs. 2/- per share Reserve during the year 2013. This Special for financial year 2016/17. Accordingly, the total Reserve is available to be used in a manner dividend amounting to Rs. 92 million was paid on determined by the Board from time to time. 16th March, 2017 subject to 10% dividend tax.
Reserves Available-for-Sale Reserve
Group Group 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Revaluation Reserve 758,874,668 758,874,668 As at the beginning of the Year 328,371 712,528 Special Reserve 1,325,671,060 1,325,671,060 Gain/(Loss) on Available-for-Sale Available-for-Sale Reserve 138,187 328,371 Financial Assets (190,184) (384,157)
As at 31st March, 2,084,683,915 2,084,874,099 As at 31st March, 138,187 328,371
Revaluation Reserve Taxation Group Pursuant to an agreement dated 29th January, 2017 2016 1994, entered into with the Board of Investment Rs. Rs. under Section 17 of the Board of Investment Law, As at the beginning the Company is taxed at the rate of 2% of the of the Year 758,874,668 369,921,676 turnover from 1st April, 2008 for a period of Effect on Revaluation 15 years in accordance with the said agreement. carried out in 2016 – 388,952,992 However, taxation on interest income earned has As at 31st March, 758,874,668 758,874,668 been provided for, based on the provisions of the Inland Revenue Act. Income tax on operation of ERA Beach, Galle Heritage Villa and Kurulubedda Special Reserve are computed on taxable profits at prevailing rates
Group stipulated by the Inland Revenue Act. 2017 2016 Rs. Rs.
As at the beginning of the Year 1,325,671,060 1,325,671,060
Transferred from Retained Earnings – –
As at 31st March, 1,325,671,060 1,325,671,060
112 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC STEWARDSHIP
Property, Plant and Equipment employees of the Group and all other known statutory dues as were due as at the Reporting The total expenditure on acquisition of Property, date have been paid or provided. Plant and Equipment during the year by the Group and Company amounted to Rs. 91,810,157/- (2016 – Rs. 128,179,025/-) and Rs. 40,997,880/- Public Shareholding (2016 – Rs. 128,179,025/-) respectively. Further, details of which are given in Note 4.1 to the As at 31st March, 2017, 31.44% of the issued Financial Statements on page 145. capital of the Company was held by the public. Further, the number of public shareholders as at Market value of the land including the valuation 31st March, 2017 was 1,123. method and the effective date of the valuation are provided in Note 4.4 to the Financial Statements on page 150. Going Concern The Directors, after making necessary inquiries and reviews including reviews of the Company Stated Capital budget for the ensuing year, capital expenditure There were no changes in the Company’s Stated requirements, future prospects and risks, cash Capital during the year under review. In terms of flows and borrowing facilities have a reasonable the Companies Act No. 07 of 2007, the Stated expectation that the Company and Group have Capital of the Company was Rs. 460,000,974/- adequate resources to continue in operational as at 31st March, 2017 (Comprising 46,000,000 existence for the foreseeable future. Therefore, ordinary shares). the going concern basis has been adopted in the preparation of the Consolidated Financial Statements. Events Occurring after the Reporting Date For and on behalf of the Board, There have been no material events occurring after the Reporting date that require adjustments to or disclosures in the Consolidated N.J.H.M. Cooray R.A.E. Samarasinghe Financial Statements. Chairman Managing Director
Statutory Payments The Directors confirm that to the best of their knowledge all taxes and dues payable by the Corporate Services (Pvt) Ltd. Group and all contributions, levies and taxes Secretaries payable on behalf of and in respect of the The Lighthouse Hotel PLC
2nd May, 2017
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 113 114 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC 10 Safe Deposit
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 115 Contents
Page: 117 Page: 121 Page: 122 Financial Value Added Statement of Review and Distributed Directors’ Responsibilities
Page: 123 Page: 124 Page: 125 Independent Statement of Statement of Auditor’s Report Financial Position Profit or Loss
Page: 126 Page: 127 Page: 128 Statement of Statement of Statement of Comprehensive Changes in Equity Cash Flows Income
Page: 129 Notes to the Financial Calendar
Financial Statements Audited Financial Statements 2nd May, 2017 signed on 23rd Annual General Meeting 29th June, 2017
Interim Financial Statements
1st Quarter Interim Report 27th July, 2016 released on 2nd Quarter Interim Report 3rd November, 2016 released on 3rd Quarter Interim Report 13th February, 2017 released on 4th Quarter Interim Report 3rd May, 2017 released on
116 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Financial Review
Financial Performance Revenue The Group recorded total revenue of Food & Beverage income has decreased by Rs. 799 million during the financial year under Rs. 19 million mainly due to drop in occupancy review compared to Rs. 836 million achieved compared to previous year. during the previous period. This shows a reduction of 4.5% compared to previous period. The drop in revenue is mainly due to decrease in occupancy from 70% to 62% during the period under review. The occupancies of the Group was affected due to inclement weather conditions during May and June, 2016 which raised travel adversaries to Sri Lanka, Bandaranaike International Airport closure on day time during January, 2017 to March, 2017 and Jetwing Lighthouse Club being in the process of positioning itself from its launch in April, 2016.
Average Room Rates (ARR) have increased by 8% during the financial year. This is mainly due to Jetwing Lighthouse Club generating a higher ARR.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 117 SAFE DEPOSIT
Further, foreign exchange rate fluctuations during the Group benefited from depreciation in Rupees the year under review had a favourable impact to against USD and EURO. the Group's revenue. This is due to the fact that
118 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC SAFE DEPOSIT
Expenses Earnings before Interest, Tax, During the period under review, total expenses Depreciation and Amortization (EBITDA) have decreased by 1% to Rs. 637 million from The Group has reported an EBITDA of Rs. 640 million in the previous period. Cost of Rs. 251 million for the period under review, sales has reduced by 5% compared to previous compared to Rs. 282 million achieved during the period and it is mainly due to drop in occupancy previous period. The decrease in EBITDA is and slight change in revenue composition. mainly due to drop in revenue. Due to decrease Administrative costs have increased marginally by in revenue EBITDA margin has reduced to 31% 1% and Marketing and Promotional expenses have from 34% last year. reduced by 25%. Non-capital nature expenses incurred for the refurbishment have resulted in the increase in Administrative costs. However, Power and Energy expenses have reduced in line with the drop in occupancy. Further, exchange loss on conversion of foreign currency loan has reduced to Rs. 4.1 million during the period under review compared to Rs 12.4 million in the previous period. Payroll costs increased by 6% compared to previous period mainly due to salary revision to both Executive and Non-Executive staff.
Depreciation for the year was reported at Rs. 86 million which is an increase of Rs. 2 million compared to previous period. This is mainly due to additional depreciation charge from the capitalization of additions during the year.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 119 SAFE DEPOSIT
Profitability Statement of Financial Position The Group recorded a profit before tax of The Group’s reported a strong financial position as Rs. 152 million during the year under review, at 31st March, 2017 with Total Assets amounting compared to Rs. 178 million during the previous to Rs. 3,211 million compared to Rs. 3,196 million period. This shows an annual negative growth rate in the previous period. During the year under of pre-tax profits over the last year of 14%. review, Property, Plant and Equipment additions amounted to Rs. 92 million mainly consisting of the construction cost incurred on Unawatuna Hotel Project, Solar Electrical System and Water bottling plant.
As at 31st March, 2017, the Group had a gearing level of 7%.
Shareholders’ Funds Shareholders’ funds as at 31st March, 2017 decreased to Rs. 2,852 million from Rs. 2,923 million in the previous period mainly due to declaration of interim dividend. The Group's net assets per share as at 31st March, 2017 stood at Rs. 62.0.
Income tax charge for the year has decreased by 6% to Rs. 15 million compared to the previous year Cash Flow Statement mainly due to decrease in revenue. Cash position of the Group as at 31st March, 2017 reduced to negative Rs. 108 million compared to Profit after tax of the Group amounted to Rs. 137 Rs. 15 million last year. This is mainly due to Capital million compared to Rs. 162 million achieved in the Expenditure and decrease in operational cash flow previous period. Return on Equity for the Company before working capital changes. Cash out flow decreased slightly to 5%. on investing activities amounted to Rs. 86 million compared to Rs. 127 million in the previous period. Cash out flow on financing activities amounted to Rs. 251 million compared to Rs. 157 million in the previous period.
120 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Value Added and Distributed
2017 % 2016 % For the Year ended 31st March Rs. ’000 Rs. ’000
Total Revenue 799,219 836,072 Other Income 3,303 2,619 802,522 838,691
Less: purchase of goods and services (403,568) (424,720) Value Added 398,954 413,971
Distributed as follows: To Government as taxes 14,963 4 15,634 4 To employees as salaries and other benefits 152,087 38 142,778 35
To providers of Capital - Dividends to shareholders 207,000 52 92,000 22 - Interest on borrowings 8,994 2 9,050 2 Retained within the business 15,910 4 154,509 37 Total 398,954 100 413,971 100
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 121 Statement of Directors’ Responsibilities
The Directors are responsible, under Sections The External Auditors, Messrs Ernst & Young, 150 (1) and 151, of the Companies Act No. 07 of are reappointed in terms of Section 158 of the 2007, to ensure compliance with the requirements Companies Act No. 07 of 2007 were provided with set out there into prepare Financial Statements for every opportunity to undertake the inspections they each financial year giving a true and fair view of considered appropriate to enable them to form the state of affairs of the Company and the Income their opinion on the Financial Statements. Statement of the financial year-end. The Directors The Report of the Auditors, shown on page 123 are also responsible, under Section 148 for sets out their responsibilities in relation to the ensuring that proper accounting records are kept Financial Statements. to disclose, with reasonable accuracy, the financial position and enable preparation of the Financial Statements. Compliance Report The Directors confirm that to the best of their The Board accepts responsibility for the integrity knowledge, all statutory payments relating to and objectivity of the Financial Statements employees and the Government that were due in presented. The Directors confirm that in preparing respect of the Company as at the Reporting date the Consolidated Financial Statements, appropriate have been paid or where relevant, provided for. accounting policies have been selected and applied consistently while reasonable and prudent By Order of the Board, judgments have been made so that the form and substance of transactions are properly reflected. The Lighthouse Hotel PLC Corporate Services (Pvt) Ltd. They also confirm that the Consolidated Financial Secretaries Statements have been prepared and presented in accordance with the Sri Lanka Accounting 216, De Saram Place, Standards (SLFRS/LKAS). The Financial Statements Colombo 10. provide the information required by the Companies Act and the Listing Rules of the Colombo 2nd May, 2017 Stock Exchange.
The Directors have taken reasonable measures to safeguard the assets of the Company and, in that context, have instituted appropriate systems of internal control with a view to preventing and detecting fraud and other irregularities.
122 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Independent Auditor’s Report
TO THE SHAREHOLDERS OF THE in the circumstances, but not for the purpose of LIGHTHOUSE HOTEL PLC expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the Report on the Financial Statements appropriateness of accounting policies used and the We have audited the accompanying financial statements reasonableness of accounting estimates made by the of The Lighthouse Hotel PLC, (‘the Company’), and the Board, as well as evaluating the overall presentation of consolidated financial statements of the Company and the Financial Statements. its subsidiary (‘Group’), which comprise the statement of financial position as at 31st March 2017, statement We believe that the audit evidence we have obtained is of profit or loss, statement of comprehensive income, sufficient and appropriate to provide a basis for our audit statement of changes in equity, and cash flow statement opinion. for the year then ended, and a summary of significant accounting policies and other explanatory information Opinion set out on pages 124 to 171. In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group Board’s Responsibility as at 31st March 2017, and of its financial performance for the Financial Statements and cash flows for the year then ended in accordance The Board of Directors (‘Board’) is responsible for the with Sri Lanka Accounting Standards. preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Report on Other Legal and Regulatory Requirements Standards, and for such internal control as Board As required by Section 163(2) of the Companies determines is necessary to enable the preparation Act No. 07 of 2007, we state the following: of financial statements that are free from material (a) The basis of opinion, Scope and Limitations of the misstatement, whether due to fraud or error. audit are as stated above. (b) In our opinion: Auditor’s Responsibility – we have obtained all the information and Our responsibility is to express an opinion on these explanations that were required for the audit and, financial statements based on our audit. We conducted as far as appears from our examination, proper our audit in accordance with Sri Lanka Auditing accounting records have been kept Standards. Those standards require that we comply with by the Company, ethical requirements and plan and perform the audit to – the financial statements of the Company give a obtain reasonable assurance about whether the financial true and fair view of its financial position as at statements are free from material misstatement. 31st March 2017, and of its financial performance and cash flows for the year then ended in accordance with An audit involves performing procedures to obtain audit Sri Lanka Accounting Standards, and evidence about the amounts and disclosures – the Financial Statements of the Company and the in the Financial Statements. The procedures selected Group, comply with the requirements of Sections 151 depend on the auditor’s judgment, including the and 153 of the Companies Act No. 07 of 2007. assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in 02nd May, 2017 order to design audit procedures that are appropriate Colombo
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 123 Statement of Financial Position
Group Company As at 31st March, Note 2017 2016 2017 2016 Rs. Rs. Rs. Rs. ASSETS Non-Current Assets Property, Plant and Equipment 4 2,939,788,316 2,934,915,923 2,855,701,077 2,934,915,923 Prepaid Lease Rent 5 2,333,334 2,363,637 2,333,334 2,363,637 Investments in Subsidiary 7 – – 100,000,000 – Intangible Assets 6 629,033 1,170,429 629,033 1,170,429 Other Non-current Financial Assets 8 87,401,447 87,591,631 87,401,447 87,591,631 3,030,152,130 3,026,041,620 3,046,064,891 3,026,041,620 Current Assets Inventories 9 32,450,816 29,679,855 32,450,816 29,679,855 Trade and Other Receivables 10 135,140,824 117,798,702 128,233,280 117,798,702 Other Current Financial Assets 8 – 2,500,000 – 2,500,000 Cash at Bank and in Hand 22 13,231,586 19,827,179 12,855,582 19,827,179 180,823,226 169,805,736 173,539,678 169,805,736 Total Assets 3,210,975,356 3,195,847,356 3,219,604,569 3,195,847,356 EQUITY AND LIABILITIES Equity Attributable to Equity Holders of the Parent Stated Capital 11 460,000,974 460,000,974 460,000,974 460,000,974 Reserves 12 2,084,683,915 2,084,874,099 2,081,643,263 2,084,874,099 Retained Earnings 307,654,345 378,240,320 321,748,535 378,240,320 2,852,339,234 2,923,115,393 2,863,392,772 2,923,115,393 Non-controlling Interests – – – – Total Equity 2,852,339,234 2,923,115,393 2,863,392,772 2,923,115,393 Non-Current Liabilities Post-employment Benefit Liability 13 30,087,527 30,763,310 30,087,527 30,763,310 Interest-bearing Loans and Borrowings 14 18,396,100 60,866,876 18,396,100 60,866,876 48,483,627 91,630,186 48,483,627 91,630,186 Current Liabilities Trade and Other Payables 15 137,298,476 125,798,405 134,874,151 125,798,405 Current Portion of Interest-bearing Loans and Borrowings 14 169,991,209 50,576,597 169,991,209 50,576,597 Income Tax Payable 2,862,810 4,726,775 2,862,810 4,726,775 310,152,495 181,101,777 307,728,170 181,101,777 Total Liabilities 358,636,122 272,731,963 356,211,797 272,731,963 Total Equity and Liabilities 3,210,975,356 3,195,847,356 3,219,604,569 3,195,847,356
I certify that these Financial Statements are in compliance with the requirements of the Companies Act No. 07 of 2007.
C.S.R.S. Anthony Director The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by:
N.J.H.M. Cooray R.A.E. Samarasinghe Chairman Managing Director The Accounting Policies and Notes on pages 129 through 171 form an integral part of the Financial Statements. 2nd May, 2017 Colombo
124 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Statement of Profit or Loss
Group Company Year ended 31st March, Note 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Revenue 3 799,218,534 836,071,927 799,218,534 836,071,927 Cost of Sales (146,878,769) (154,830,651) (146,878,769) (154,830,651) Gross Profit 652,339,765 681,241,276 652,339,765 681,241,276 Other Income and Gains 17 2,486,392 2,083,333 13,461,430 2,083,333 Marketing and Promotional Expenses (25,423,769) (33,916,856) (25,423,769) (33,916,856) Administrative Expenses (469,078,293) (463,140,197) (468,999,793) (463,140,197) Finance Cost 18.1 (8,993,514) (9,049,892) (8,993,514) (9,049,892) Finance Income 18.2 816,855 536,331 816,855 536,331 Profit before Tax 20.1 152,147,436 177,753,995 163,200,974 177,753,995 Income Tax Expense 20 (14,963,098) (15,633,983) (14,963,098) (15,633,983) Profit for the Year 137,184,338 162,120,012 148,237,876 162,120,012
Attributable to: Equity Holders of the Parent Company 137,184,338 162,120,012 Non-controlling Interests – – 137,184,338 162,120,012
Earnings per Share 21 2.98 3.52
The Accounting Policies and Notes on pages 129 through 171 form an integral part of the Financial Statements.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 125 Statement of Comprehensive Income
Group Company Year ended 31st March, Note 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Profit for the Year 137,184,338 162,120,012 148,237,876 162,120,012 Other Comprehensive Income Other Comprehensive Income to be reclassified to Statement of Profit or Loss in subsequent periods: Loss on Available-for-Sale 8 (190,184) (384,157) (190,184) (384,157) Financial Instruments Other Comprehensive Income not to be reclassified to Statement of Profit or Loss in subsequent periods: Actuarial Losses on Post-Employment 13.1 (770,313) (2,633,285) (770,313) (2,633,285) Benefit Liability Revaluation Surplus of Freehold Land 4.1 – 388,952,992 – 388,952,992 Other Comprehensive Income/(Loss) (960,497) 385,935,550 (960,497) 385,935,550 for the Year Total Comprehensive Income for the Year 136,223,841 548,055,562 147,277,379 548,055,562
Attributable to: Equity-holders of the Parent Company 136,223,841 548,055,562 Non-controlling Interests – – 136,223,841 548,055,562
The Accounting Policies and Notes on pages 129 through 171 form an integral part of the Financial Statements.
126 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Statement of Changes in Equity
……...... ……...……Attributable to Equity Holders of Parent……...………… Group Stated Capital Revaluation Available- Special Retained Total Non- Total Reserve for-Sale Reserve Earnings controlling Equity (Note 12.1) Reserve (Note 12.2) Interests (Note 12.3) Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Balance as at 01st April, 2015 460,000,974 369,921,676 712,528 1,325,671,060 310,753,593 2,467,059,831 – 2,467,059,831 Profit for the Year – – – – 162,120,012 162,120,012 – 162,120,012 Other Comprehensive Income/(Loss) – 388,952,992 (384,157) – (2,633,285) 385,935,550 – 385,935,550 Total Comprehensive Income/(Loss) – 388,952,992 (384,157) – 159,486,727 548,055,562 – 548,055,562 Dividend Paid (Note 16) – – – – (92,000,000) (92,000,000) – (92,000,000) Balance as at 31st March, 2016 460,000,974 758,874,668 328,371 1,325,671,060 378,240,320 2,923,115,393 – 2,923,115,393
Profit for the Year – – – – 137,184,338 137,184,338 – 137,184,338 Other Comprehensive Income/(Loss) – – (190,184) – (770,313) (960,497) – (960,497) Total Comprehensive Income/(Loss) – – (190,184) – 136,414,025 136,223,841 – 136,223,841 Dividend Paid (Note 16) – – – – (207,000,000) (207,000,000) – (207,000,000) Balance as at 31st March, 2017 460,000,974 758,874,668 138,187 1,325,671,060 307,654,345 2,852,339,234 – 2,852,339,234
The Accounting Policies and Notes on pages 129 through 171 form an integral part of the Financial Statements.
Company Stated Capital Revaluation Available- Special Retained Total Reserve for-Sale Reserve Earnings (Note 12.1) Reserve (Note 12.2) (Note 12.3) Rs. Rs. Rs. Rs. Rs. Rs.
Balance as at 01st April, 2015 460,000,974 369,921,676 712,528 1,325,671,060 310,753,593 2,467,059,831 Profit for the Year – – – – 162,120,012 162,120,012 Other Comprehensive Income/(Loss) – 388,952,992 (384,157) – (2,633,285) 385,935,550 Total Comprehensive Income/(Loss) – 388,952,992 (384,157) – 159,486,727 548,055,562 Dividend Paid (Note 16) – – – – (92,000,000) (92,000,000) Balance as at 31st March, 2016 460,000,974 758,874,668 328,371 1,325,671,060 378,240,320 2,923,115,393
Profit for the Year – – – – 148,237,876 148,237,876 Other Comprehensive Income /(Loss) – – (190,184) – (770,313) (960,497) Total Comprehensive Income/(Loss) – – (190,184) – 147,467,563 147,277,379 Disposal of Land – (3,040,652) – – 3,040,652 – Dividend Paid (Note 16) – – – – (207,000,000) (207,000,000) Balance as at 31st March, 2017 460,000,974 755,834,016 138,187 1,325,671,060 321,748,535 2,863,392,772
The Accounting Policies and Notes on pages 129 through 171 form an integral part of the Financial Statements.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 127 Statement of Cash Flows
Group Company Year ended 31 March, Note 2017 2016 2017 2016 Rs. Rs. Rs. Rs. Cash Flows from Operating Activities Profit before Tax 152,147,436 177,753,995 163,200,974 177,753,995 Adjustments for : Depreciation 4.2 85,726,172 84,479,474 85,726,172 84,479,474 Amortization of Prepaid Lease Rental 5 30,303 30,303 30,303 30,303 Income from Investments – Interest Income 18.2 (816,855) (536,331) (816,855) (536,331) (Profit)/Loss on Disposal of Property, Plant and 19 (965,839) 4,312,723 (965,839) 4,312,723 Equipment Capital Gain on Disposal of Asset 17 – – (10,975,038) – Finance Costs 18.1 8,993,514 9,049,892 8,993,514 9,049,892 Provision for Defined Benefit Plans 13 5,495,252 4,662,669 5,495,252 4,662,669 Allowance for Doubtful Debts 19 435,326 1,666,231 435,326 1,666,231 Write back of Sundry Payables 17 – (2,083,333) – (2,083,333) Amortization of Intangible Assets 6 541,396 427,027 541,396 427,027 Exchange Loss from Conversion of 14 4,121,506 12,425,770 4,121,506 12,425,770 Foreign Currency Loans Operating Profit before Working Capital Changes 255,708,211 292,188,420 255,786,711 292,188,420 (Increase)/Decrease in Inventories (2,770,961) 129,118 (2,770,961) 129,118 (Increase)/Decrease in Trade and Other Receivables (17,777,447) (4,560,098) (10,869,903) (4,560,098) Increase/(Decrease) in Trade and Other Payables 11,500,071 13,565,860 9,075,746 13,565,860 Cash Generated from Operations 246,659,874 301,323,300 251,221,593 301,323,300 Income Tax Paid (16,827,062) (14,050,560) (16,827,062) (14,050,560) Finance Cost Paid 18.1 (8,993,514) (9,049,892) (8,993,514) (9,049,892) Defined Benefit Plan Costs Paid Net of Transfers 13 (6,941,348) (1,482,071) (6,941,348) (1,482,071) Net Cash from Operating Activities 213,897,950 276,740,777 218,459,669 276,740,777 Cash Flows From/(Used in) Investing Activities Acquisition of Property, Plant and Equipment 4.6 (91,810,157) (124,431,651) (40,997,880) (124,431,651) Proceeds from Sale of Property, Plant and Equipment 2,177,429 179,432 2,177,429 179,432 Proceeds from Sale of Property, Plant & 18.4 – – 44,250,000 – Equipment to Subsidiary Interest Income 18.2 816,855 536,331 816,855 536,331 Investment in Unawatuna Properties (Pvt) Ltd. 7 – – (100,000,000) – Net Investment in Other Current Financial Assets 8.4 2,500,000 (2,500,000) 2,500,000 (2,500,000) Acquisition of Intangible Assets 6 – (318,508) – (318,508) Net Cash Flows Used in Investing Activities (86,315,873) (126,534,396) (91,253,596) (126,534,396)
Cash Flows From/(Used in) Financing Activities Proceeds from Interest bearing Loans & Borrowings 14 2,991,900 – 2,991,900 – Repayment of Interest bearing Loans & Borrowings 14 (46,893,182) (64,729,088) (46,893,182) (64,729,088) Dividends Paid 16 (207,000,000) (92,000,000) (207,000,000) (92,000,000) Net Cash Flows Used in Financing Activities (250,901,282) (156,729,088) (250,901,282) (156,729,088) Net Increase/(Decrease) in Cash and (123,319,205) (6,522,707) (123,695,209) (6,522,707) Cash Equivalents Cash and Cash Equivalents at the Beginning 22 14,824,782 21,347,489 14,824,782 21,347,489 of the Year Cash and Cash Equivalents at the End of the Year 22 (108,494,423) 14,824,782 (108,870,427) 14,824,782
The Accounting Policies and Notes on pages 129 through 171 form an integral part of the Financial Statements.
128 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Notes to the Financial Statements
1. Corporate Information 2. Basis of Preparation
1.1 General 2.1 The Consolidated Financial Statements have The Lighthouse Hotel PLC (‘Company’) is a limited been prepared on a historical cost basis except liability company incorporated and domiciled in for Freehold Land and Available-for-Sale Financial Sri Lanka and listed on the Colombo Stock Instruments that have been measured at fair value. Exchange. The registered office of the Company is The preparation and presentation of these Financial located at ‘Jetwing House’ 46/26, Navam Mawatha, Statements is in compliance with the requirements Colombo 02 and principal place of business is of the Companies Act No. 07 of 2007. situated at Dadella, Galle. 2.2 Statement of Compliance The Consolidated Financial Statements of the The Consolidated Financial Statements of the Group as at 31st March, 2017 comprise the Company have been prepared in accordance with Financial Statements of the Company and its Sri Lanka Accounting Standards comprising SLFRS subsidiary. and LKAS (‘SLFRS’), as issued by The Institute of Chartered Accountants of Sri Lanka. 1.2 Principal Activities and Nature of Operations 2.3 Changes in Accounting Policies The Company owns and operates Jetwing The accounting policies adopted by the Group are Lighthouse, Jetwing Lighthouse Club and Jetwing consistent with those of the previous financial year Kurulubedda which are targeted at the up market except for the addition of 2.5.1 leisure travellers.
During the period under review, the Company 2.4 Basis of Consolidation incorporated (in Sri Lanka) a fully-owned subsidiary The Consolidated Financial Statements (referred namely Unawatuna Properties (Pvt) Ltd. on to as the ‘Group’) comprise the Financial 16th August, 2016 to construct a 36, roomed hotel Statements of the Company and its subsidiary as at in Unawatuna, Galle. 31st March, 2017.
1.3 Parent Enterprise Control over an investee is achieved when the and Ultimate Parent Enterprise Group is exposed, or has rights, to variable returns from its involvement with the investee and has the The Company does not have an identifiable parent ability to affect those returns through its power over of its own. the investee. Specifically, the Group controls an investee if, and only if, the Group has: 1.4 Date of Authorization for Issue • Power over the investee (i.e., existing rights that The Financial Statements of The Lighthouse give it the current ability to direct the relevant Hotel PLC and its subsidiary, for the year ended activities of the investee) 31st March, 2017 were authorized for issue in • Exposure, or rights, to variable returns from its accordance with a resolution of the Board of involvement with the investee Directors on 02nd May, 2017.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 129 SAFE DEPOSIT
• The ability to use its power over the investee to A change in the ownership interest of a subsidiary, affect its returns when the Group has less than without a loss of control, is accounted for as an a majority of the voting or similar rights of an equity transaction. investee; the Group considers all relevant facts and circumstances in assessing whether it has If the Group loses control over a subsidiary, power over an investee, including: it derecognises the related assets (including goodwill), liabilities, non-controlling interest and – The contractual arrangement with the other other components of equity while any resultant vote holders of the investee; gain or loss is recognised in the Profit or Loss – Rights arising from other contractual Statement. Any investment retained is recognised arrangements; and at fair value. – The Group’s voting rights and potential voting rights. The total profits and losses for the year of the Company and of its subsidiary included in The Group re-assesses whether or not it controls consolidation are shown in the Consolidated Profit an investee, if facts and circumstances indicate or Loss Statement and Consolidated Statement that there are changes to one or more of the three of Comprehensive Income and all assets and elements of control. Consolidation of a subsidiary liabilities of the Company and of its subsidiary begins when the Group obtains control over the included in consolidation are shown in the subsidiary and ceases when the Group loses Consolidated Statement of Financial Position. control of the subsidiary. Assets, liabilities, income Non-controlling interest which represents the and expenses of a subsidiary acquired or disposed portion of profit or loss and net assets not held of during the year are included in the Consolidated by the Group, are shown as a component of Financial Statements from the date the Group profit for the year in the Consolidated Profit or gains control until the date the Group ceases Loss Statement and Statement of Comprehensive to control the subsidiary. Profit or loss and each Income and as a component of equity in the component of other comprehensive income (OCI) Consolidated Statement of Financial Position, are attributed to the equity holders of the parent of separately from equity attributable to the the Group and to the non-controlling interests, even shareholders of the parent .The Consolidated if this results in the non-controlling interests having Statement of Cash Flows includes the cash flows of a deficit balance. the Company and its subsidiary.
The Financial Statements of the subsidiary are 2.5 Summary of Significant Accounting prepared for the same reporting period as the Policies Applied parent company, using consistent accounting The following are the significant accounting policies. All intra-group balances, transactions, policies applied by the Group in preparing its unrealised gains and losses resulting from Financial Statements: intra-group transactions and dividends are eliminated in full.
130 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC SAFE DEPOSIT
2.5.1 Business Combination Goodwill is initially measured at cost, being the and Goodwill excess of the aggregate of the consideration Business combinations are accounted for using transferred and the amount recognized for the acquisition method of accounting. The cost non-controlling interest over the net identifiable of an acquisition is measured as the aggregate assets acquired and liabilities assumed. If the fair of the consideration transferred, measured at the value of the net assets acquired is in excess of the acquisition date fair value and the amount of any aggregate consideration transferred, the gain is non-controlling interest in the acquiree. For each recognized in profit or loss. business combination, the Group elects whether to measure the non-controlling interest in the acquiree After initial recognition, goodwill is measured at at fair value or at the proportionate share of the cost less any accumulated impairment losses. acquiree at the fair value or at the proportionate For the purpose of impairment testing, goodwill share of the acquiree’s identifiable net assets. acquired in a business combination is, from the Acquisition related costs are expensed as incurred acquisition date, allocated to each of the Group’s and included in administrative expenses. cash generating units that are expected to benefit from the combination transferred; the gain is If the business combination is achieved in stages, recognised in profit or loss. the previously held equity interest is re-measured at its acquisition date fair value and any resulting gain Where goodwill has been allocated to a or loss is recognised in profit or loss. cash-generating unit and part of the operation within that unit is disposed of, the goodwill Any contingent consideration to be transferred associated with the operation disposed of is by the acquirer will be recognized at fair value included in the carrying amount of the operation at the acquisition date. Contingent consideration when determining the gain or loss on disposal which is deemed to be an asset or liability that of the operation. Goodwill disposed of in this is a financial instrument and within the scope of circumstance is measured based on the relative LKAS 39 – ‘Financial Instruments: Recognition values of the operation disposed of and the portion and Measurement’, is measured at fair value with of the cash-generating unit retained. changes in fair value either in profit or loss or as a change to Other Comprehensive Income (OCI). 2.5.2 Foreign Currencies If the contingent consideration is not within the The Financial Statements are presented in scope of LKAS 39, it is measured in accordance Sri Lankan Rupees, which is also the Group's with the appropriate SLFRS. Contingent functional currency. Transactions in foreign consideration that is classified as equity is currencies are initially recorded at the functional not remeasured and subsequent settlement is currency rate ruling at the date of the transaction. measured at fair value with changes in fair value Monetary assets and liabilities denominated in either in a profit or loss or as a change to the Other foreign currencies are retranslated at the functional Comprehensive Income (OCI). currency spot rate of exchange ruling at the
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reporting date. Differences arising on settlement Net gains and losses of a revenue nature on the or translation of monetary items are recognized in disposal of Property, Plant and Equipment has the profit and loss. Non-monetary items that are been accounted for in the Statement of Profit or measured in terms of historical cost in a foreign Loss, having deducted from proceeds on disposal, currency are translated using the exchange rates the carrying amount of the assets and related as at the dates of the initial transactions. selling expenses.
2.5.3 Revenue Recognition Gains and losses arising from incidental activities to main revenue generating activities and those Revenue is recognized to the extent that it is arising from a group of similar transactions which probable that the economic benefits will flow to the are not material, are aggregated, reported and Group and the revenue can be reliably measured, presented on a net basis. regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into 2.5.4 Taxation account contractually defined terms of payment (a) Current Income Taxes and excluding taxes or duty. The Group assesses Current income tax assets and liabilities for its revenue arrangements against specific criteria the current period are measured at the amount in order to determine if it is acting as principal or expected to be recovered from or paid to the agent. The Group has concluded that it is acting as taxation authorities. The tax rates and tax laws a principal in all of its revenue arrangements. used to compute the amount are those that are enacted or substantively enacted, at the The following specific recognition criteria must also reporting date. Pursuant to an agreement dated be met before revenue is recognized.: 29th January, 1994 entered into with Board of (a) Room Revenue Investment under Section 17 of the Board of Revenue is recognized on the rooms Investment Law, the Company is taxed at the occupied on daily basis. rate of 2% of the turnover from 1st April, 2008 (b) Food & Beverage Revenue for a period of 15 years in accordance with the Food & Beverage Revenue is accounted at said agreement. Current income tax relating to the time of sale. items recognized directly in equity is recognized in equity and not in the Statement of Profit (c) Other Hotel-Related Revenue or Loss. Management periodically evaluates Other Hotel-Related Revenue is accounted positions taken in the tax returns with respect when such service is rendered. to situations in which applicable tax regulations (d) Finance income are subject to interpretation and establishes Interest Income is recognized on a time provisions where appropriate. proportion basis that takes in to account the effective yield on the asset unless Income tax on operations of Era Beach, Galle collectability is in doubt. Heritage Villa and Kurulubedda is computed on (e) Other taxable profits at prevailing rates stipulated by
Other income is recognized on an the Inland Revenue Act. accrual basis.
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(b) Sales Tax reassessed at each reporting date and are Revenues, expenses and assets are recognized recognized to the extent that it has become net of the amount of sales tax except where probable that future taxable profits will allow the the sales tax incurred on a purchase of assets deferred tax asset to be recovered. or service is not recoverable from the taxation authorities, in which case the sales tax is Deferred tax assets and liabilities are measured recognised as a part of the cost of the asset or at the tax rates that are expected to apply in the as a part of the expense items as applicable year when the asset is realised or the liability is and receivables and payables are stated settled, based on tax rates (and tax laws) that with the amount of sales tax included. The have been enacted or substantively enacted at net amount of sales tax recoverable from, or the reporting date. payable to, the taxation authority is included as part of receivables or payables in the Statement Deferred tax relating to items recognized outside of Financial Position. profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation (c) Deferred Tax to the underlying transaction either in other Deferred tax is provided using the liability comprehensive income or directly in equity. method on temporary differences between the tax bases of assets and liabilities and Deferred tax assets and deferred tax liabilities their carrying amounts for financial reporting are offset if a legally enforceable right exists to purposes at the reporting date. Deferred set off current tax assets against current income tax liabilities are recognized for all taxable tax liabilities and the deferred taxes relate to the temporary differences. same taxable entity and the same taxation authority. Deferred tax assets are recognized for all deductible temporary differences, carry forward 2.5.5 Borrowing Costs of unused tax credits and unused tax losses, to Borrowing costs directly attributable to the the extent that it is probable that taxable profit acquisition, construction or production of an asset will be available against which the deductible that necessarily takes a substantial period of temporary differences, and the carry forward of time to get ready for its intended use or sale are unused tax credits and unused tax losses can capitalized as part of the cost of the respective be utilized. asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs The carrying amount of deferred tax assets is consist of interest and other costs that an entity reviewed at each reporting date and reduced incurs in connection with the borrowing of funds. to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognised deferred tax assets are
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2.5.6 Inventories when a major refurbishment is performed, its Inventories are valued at the lower of cost and net cost is recognized in the carrying amount of the realisable value, after making due allowances for Property, Plant and Equipment as a replacement if obsolete and slow moving items. Net realisable the recognition criteria are satisfied. All other repair value is the price at which inventories can be and maintenance costs are recognized in the profit sold in the ordinary course of business less the or loss as incurred. estimated cost of completion and the estimated cost necessary to make the sale. Land is measured at fair value, less impairment losses recognized at the date of revaluation. The cost incurred in bringing inventories to its Valuations are performed with sufficient frequency present location and condition is accounted using to ensure that the fair value of a revalued asset the following cost formulae: does not differ materially from its carrying amount.
Food & Beverage – At purchase cost on A revaluation surplus is recognized in other weighted average basis. comprehensive income and credited to the Other Inventories – At purchase cost on revaluation reserve in equity. However, to the weighted average basis. extent that it reverses a revaluation deficit of the same asset previously recognized in the Statement 2.5.7 Cash and Cash Equivalents of Profit or Loss, in which case the increase is recognized in the Statement of Profit or Loss. A Cash at Bank and in Hand in the Statement of revaluation deficit is recognized in profit or loss, Financial Position comprise cash at Bank and except to the extent that it offsets an existing in hand. surplus on the same asset recognized in the asset revaluation reserve. For the purpose of the Statement of Cash Flows,
cash and cash equivalents consist of cash and
short-term deposits with a maturity of three months Upon disposal, any revaluation reserve relating or less, net of outstanding bank overdrafts. to the particular asset being sold is transferred to retained earnings. 2.5.8 Property, Plant and Equipment Property, Plant and Equipment (except for land) An item of Property, Plant and Equipment is is stated at cost, net of accumulated depreciation derecognized upon disposal or when no future and accumulated impairment losses, if any. Such economic benefits are expected from its use or cost includes the cost of replacing parts of the disposal. Any gain or loss arising on derecognition Property, Plant and Equipment and borrowing of the asset (calculated as the difference between costs for long-term construction projects if the the net disposal proceeds and the carrying amount recognition criteria are met. When significant parts of the asset) is included in the Statement of Profit or of Property, Plant and Equipment are required to Loss when the asset is derecognized. be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise,
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The Group provides depreciation from the date constant rate of interest on the remaining balance the assets are available for use up to the date of of the liability. Finance charges are recognized in disposal, on a straight line basis over the periods finance costs in the Statement of Profit or Loss. appropriate to the estimated useful lives based on the pattern in which the asset’s future economic A leased asset is depreciated over the useful life benefits are expected to be consumed by the of the asset. However, if there is no reasonable Group of the different types of assets, except for certainty that the Group will obtain ownership by which are disclosed separately. Depreciation of the end of the lease term, the asset is depreciated an asset ceases at the earlier of the date that the over the shorter of the estimated useful life of the asset is classified as held-for-sale or the date that asset and the lease term. the asset is derecognized. Depreciation does not cease when the assets become idle or is retired Operating leases, where the lessor effectively from active use unless the asset is retains substantially all of the risk and benefits of fully depreciated. ownership over the term of the lease are classified as operating leases. Operating lease payments The useful life and residual value of assets are are recognized as an operating expense in the reviewed, and adjusted if required, at the end of Statement of Profit or Loss on a straight-line basis each financial year. over the lease term.
2.5.9 Leases 2.5.10 Financial Instruments The determination of whether an arrangement is, i. Financial Assets or contains, a lease is based on the substance Financial Assets of the Group comprise Trade and of the arrangement at the inception date. The Other Receivables, Cash at Bank and in hand and arrangement is assessed for whether fulfilment Available-for-Sale Financial Instruments. of the arrangement is dependent on the use of a specific asset or assets and the arrangement Initial Recognition and Measurement conveys a right to use the asset or assets, even if Financial assets within the scope of LKAS 39 are that right is not explicitly specified in classified as Financial Assets at Fair Value through an arrangement. Profit or Loss, Loans and Receivables, Group as a lessee: Held-to-Maturity investments, or Available-for-Sale Finance leases that transfer to the Group financial assets, as appropriate. The Group substantially all of the risks and benefits incidental determines the classification of its financial assets to ownership of the leased item, are capitalized at at initial recognition. the commencement of the lease at the fair value of the leased property or, if lower, at the present value All financial assets except for those that are at fair of the minimum lease payments. Lease payments value through profit or loss are recognized initially are apportioned between finance charges and at fair value plus transaction costs. Those that reduction of the lease liability so as to achieve a are at fair value through profit or loss are initially measured at fair value.
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Subsequent Measurement Held-to-Maturity Financial Instruments The subsequent measurement of financial assets Non-derivative financial assets with fixed or depends on their classification as described below: determinable payments and fixed maturities are classified as held-to-maturity when the Group has Financial Assets at Fair Value through Profit or the positive intention and ability to hold them to Loss maturity. After initial measurement, held-to-maturity Financial assets at fair value through profit or investments are measured at amortised cost using loss include financial assets held-for-trading and the effective interest method, less impairment. financial assets designated upon initial recognition Amortized cost is calculated by taking into account at fair value through profit or loss. Financial any discount or premium on acquisition and fees assets are classified as held-for-trading if they are or costs that are an integral part of the EIR. The acquired for the purpose of selling or repurchasing EIR amortization is included in finance income in in the near term. Financial Assets at fair value the Income Statement. The losses arising from through profit and loss are carried in the Statement impairment are recognized in the Statement of of Financial Position at fair value with changes in Profit or Loss in finance costs. fair value recognized in finance income or finance costs in the Statement of Profit or Loss. Available-for-Sale Financial Investments Available-for-Sale financial investments held at Loans and Receivables the reporting date consists of equity securities. Loans and receivables are non-derivative financial Equity investments classified as available-for-sale assets with fixed or determinable payments are those, neither classified as held-for-trading nor that are not quoted in an active market. After designated at fair value through profit or loss. After initial measurement, such financial assets are initial measurement, available-for-sale financial subsequently measured at amortized cost using investments are subsequently measured at fair the effective interest rate method (EIR), less value with unrealised gains or losses recognized impairment. Amortized cost is calculated by as other comprehensive income and credited in taking into account any discount or premium on the available-for-sale reserve until the investment is acquisition and fees or costs that are an integral derecognized, at which time, the cumulative gain part of the EIR. The EIR amortization is included in or loss is recognized in other operating income, finance income in the Statement of Profit or Loss. or determined to be impaired, at which time the The losses arising from impairment are recognized cumulative loss is reclassified to the Statement of in the Statement of Profit or Loss in finance costs. Profit or Loss in finance costs and removed from the available-for-sale reserve.
Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized when the rights to receive cash flows from the asset have expired or the Group has transferred its rights to receive cash flows from the asset.
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ii. Impairment of Financial Assets been incurred, the amount of the loss is measured The Group assesses at each reporting date as the difference between the asset's carrying whether there is any objective evidence that a amount and the present value of estimated future financial asset or a group of financial assets is cash flows (excluding future expected credit impaired. A financial asset or a group of financial losses that have not yet been incurred). The assets is deemed to be impaired if, there is present value of the estimated future cash flows objective evidence of impairment as a result of is discounted at the financial asset's original one or more events that has occurred after the effective interest rate. initial recognition of the asset (an incurred ‘loss event') and that loss event has an impact on the The carrying amount of the asset is reduced estimated future cash flows of the financial asset through the use of an allowance account and the or the group of financial assets that can be reliably amount of the loss is recognized in the Statement of estimated. Evidence of impairment may include Profit or Loss. Loans together with the associated indications that the debtors or a group of debtors is allowance are written-off when there is no realistic experiencing significant financial difficulty, default prospect of future recovery. If, in a subsequent or delinquency in interest or principal payments, year, the amount of the estimated impairment the probability that they will enter bankruptcy loss increases or decreases because of an event or other financial reorganization and where occurring after the impairment was recognized, the observable data indicate that there is a measurable previously recognized impairment loss is increazed decrease in the estimated future cash flows, such or reduced by adjusting the allowance account. If a as changes in arrears or economic conditions that write-off is later recovered, the recovery is credited correlate with defaults. to finance costs in the Statement of Profit or Loss.
Financial Assets Carried at Amortized Cost Available-for-Sale Financial Instruments For financial assets carried at amortized cost, the For available-for-sale financial investments, the Group first assesses whether objective evidence of Group assesses at each reporting date whether impairment exists individually for financial assets there is objective evidence that an investment or a that are individually significant, or collectively for group of investments is impaired. financial assets that are not individually significant. If the Group determines that no objective In the case of equity investments classified as evidence of impairment exists for an individually available-for-sale, objective evidence would assessed financial asset, whether significant or include a significant or prolonged decline in the fair not, it includes the asset in a group of financial value of the investment below its cost. ‘Significant assets with similar credit risk characteristics and is evaluated against the original cost of the collectively assesses them for impairment. investment and ‘prolonged’ against the period in which the fair values have been below its original Assets that are individually assessed for cost. Where there is evidence of impairment, impairment and for which an impairment loss is, the cumulative loss measured as the difference or continues to be, recognized are not included between the acquisition cost and the current fair in a collective assessment of impairment. If there value, less any impairment loss on that investment is objective evidence that an impairment loss has previously recognized in the Income Statement
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is removed from other comprehensive income iv. Offsetting of Financial Instruments and recognized in the Statement of Profit or Loss. Financial assets and financial liabilities are offset Impairment losses on equity investments are not and the net amount reported in the Statement reversed through the Statement of Profit or Loss; of Financial Position only if there is a current increases in their fair value after impairment are enforceable legal right to offset the recognized recognized directly in other comprehensive income amounts and an intent to settle on a net basis, or to realise the assets and settle the liabilities iii. Financial Liabilities simultaneously. The Group’s financial liabilities include Trade and Other Payables, Bank Overdrafts and Loans and v. Fair Value of Financial Instruments Borrowings. The fair value of financial instruments that are traded in active markets at each reporting date is Recognition and Measurement determined by reference to quoted market prices Initial measurement of financial liabilities is based or dealer price quotations (bid price for long on their fair value, but adjusted in respect of positions and ask price for short positions), without any transaction costs that are incremental and any deduction for transaction costs. directly attributable to the acquisition or issue of the instrument. After initial recognition, financial For financial instruments not traded in an active liabilities are subsequently measured at amortised market, the fair value is determined using cost using the effective interest rate method. Gains appropriate valuation techniques. Such techniques and losses are recognized in the Statement of Profit may include: or Loss when the liabilities are derecognized as well as through the effective interest rate method • Using recent arm's length market transactions; (EIR) amortization process. Amortized cost is • Reference to the current fair value of another calculated by taking into account any discount or instrument that is substantially the same; premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is • A discounted cash flow analysis or other included in finance costs in the Statement of Profit valuation models. or Loss 2.5.11 Intangible Assets Derecognition Intangible assets acquired separately are A financial liability is derecognized when the measured on initial recognition at cost. Following obligation under the liability is discharged or initial recognition, intangible assets are carried cancelled or expires. When an existing financial at cost less accumulated amortization and liability is replaced by another from the same accumulated impairment losses, if any. lender on substantially different terms, or the terms of an existing liability are substantially modified, Internally generated intangible assets, except such an exchange or modification is treated as capitalized development costs, are not capitalized a derecognition of the original liability and the and related expenditure is recognized in the recognition of a new liability. The difference in the Statement of Profit or Loss when it is incurred. respective carrying amounts is recognized in the Statement of Profit or Loss.
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Intangible assets with finite lives are amortized 2.5.13 Post-Employment Benefit over their useful economic lives and assessed for Liability impairment whenever there is an indication that the (a) Defined Benefit Plan – Gratuity intangible asset may be impaired. The amortization period and the amortization The Group measures the present value of the method for an intangible asset with a finite useful promised retirement benefits of gratuity, which life are reviewed at least at the end of each is a defined benefit plan with the advice of reporting period. Changes in the expected useful an independent professional actuary each life or the expected pattern of consumption of year using the Projected Unit Credit method. future economic benefits embodied in the asset is Actuarial gains and losses are recognized in accounted for by changing the amortization period full in the period in which they occur in other or method, as appropriate, and are treated as comprehensive income. changes in accounting estimates. This item is stated under Post-Employee Benefit The amortization expense on intangible assets with Liability in the Statement of Financial Position. finite lives is recognized in the Statement of Profit The gratuity liability is not externally funded. or Loss in the expense category consistent with the function of the intangible assets. (b) Defined Contribution Plans – Employees’ Provident Fund and Employees’ Trust Fund Gains or losses arising from derecognition of an Employees are eligible for Employees’ Provident intangible asset are measured as the difference Fund contributions and Employees’ Trust Fund between the net disposal proceeds and the contributions in line with the respective statutes carrying amount of the asset and are recognized and regulations. The Company contributes 12% in the Statement of Profit or Loss when the asset is and 3% of gross emoluments of employees to derecognized. Employees’ Provident Fund and Employees’ Trust Fund respectively. 2.5.12 Provisions Provisions are recognized when the Group has 2.5.14 Impairment of Non-Financial a present obligation (legal or constructive) as a Assets result of a past event, where it is probable that The Group assesses at each reporting date an outflow of resources embodying economic whether there is an indication that an asset may benefits will be required to settle the obligation be impaired. If any such indication exists, or and a reliable estimate can be made of the when annual impairment testing for an asset amount of the obligation. When the Group expects is required, the Group makes an estimate of some or all of a provision to be reimbursed, the the asset's recoverable amount. An asset's reimbursement is recognized as a separate asset recoverable amount is the higher of an asset's but only when the reimbursement is virtually or cash-generating unit's fair value less costs to certain. The expense relating to any provision is sell and its value in use and is determined for presented in the Statement of Profit or Loss net of an individual asset, unless the asset does not any reimbursement. generate cash inflows that are largely independent
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of those from other assets or group of assets. 2.5.15 Dividend Distributions Where the carrying amount of an asset exceeds The Group recognizes a liability to make cash or its recoverable amount, the asset is considered non-cash distributions to owners of equity when impaired and is written down to its recoverable the distribution is authorized and is no longer at amount. In assessing value in use, the estimated the discretion of the Company. A corresponding future cash flows are discounted to their present amount is recognized directly in equity. value using a pre-tax discount rate that reflects current market assessments of the time value Non-cash distributions are measured at the of money and the risks specific to the asset. fair value of the assets to be distributed. Upon In determining fair value less costs to sell, an settlement of the distribution of non-cash assets, appropriate valuation model is used. These any difference between the carrying amount of calculations are corroborated by valuation multiples the liability and the carrying amount of the assets or other available fair value indicators. distributed is recognized in income as a separate line in Statement of Comprehensive Income. Impairment losses of continuing operations are recognized in the Statement of Profit or Loss in 2.6 Significant Accounting Judgments, those expense categories consistent with the Estimates and Assumptions function of the impaired asset, except for property previously revalued where the revaluation was Judgments taken to equity. In this case the impairment is In the process of applying the Group’s accounting also recognized in equity up to the amount of any policies, management has made the following previous revaluation. judgments, apart from those involving estimations, which have the most significant effect on the For assets, an assessment is made at each amounts recognized in the Financial Statements. reporting date as to whether there is any indication that previously recognized impairment losses may Impairment of Trade Debtors: no longer exist or may have decreased. If such The Group reviews at each reporting date all indication exists, the Group makes an estimate of receivables to assess whether an allowance should the recoverable amount. A previously recognized be recorded in the Statement of Profit or Loss. The impairment loss is reversed only if there has been Management uses judgment in estimating such a change in the assumptions used to determine amounts in the light of the duration of outstanding the asset's recoverable amount since the last and any other factors management is aware of, that impairment loss was recognized. If that is the case indicate uncertainty in recovery. the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot Further details are given in Notes 10 and 26. exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the Statement of Profit or Loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.
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Critical Accounting Estimates Fair value of Available-for Sale Financial and Assumptions Instruments The Financial Statements are sensitive to The Fair Value of Available-for Sale Financial assumptions and estimates made in measuring Instruments that are unquoted is determined certain carrying amounts represented in the using valuation technique based on discounted Statement of Financial Position and amounts cash flow analysis. charged to the Statement of Profit or Loss. These could result in a significant risk of causing material Further details are given in Note 8. adjustments to the carrying amounts of assets and liabilities which are disclosed in the relevant Notes Defined Benefit Plans: to the Financial Statements. The Defined Benefit Obligation and the related charge for the year are determined using actuarial Fair Value of Property, Plant and Equipment: valuations. The actuarial valuations involve making The Land (and buildings at the date of transition assumptions about discount rates, future salary when the Company first adopted SLFRS in increases, mortality rates etc. Due to the long term 2012/13) of the Company were reflected at fair nature of such obligations these estimates are value. When current market prices of similar assets subject to significant uncertainty. are available, such evidences are considered in estimating fair values of these assets. In the Further details are given in Note 13. absence of such information the Company determines within reasonable fair value estimates, 2.7 Effect of Sri Lanka Accounting amounts that can be attributed as fair values, with Standards Issued but not yet Effective: the assistance of an independent valuer.
A number of new standards and amendments to Further details are given in Note 4. standards, which have been issued but not yet effective as at the reporting date, have not been Components of Buildings: applied in preparing these Consolidated Financial In determining the depreciation expense, the Statements. Accordingly, the following Accounting Group with the assistance of an independent Standards have not been applied in preparing professional valuer determined the components these Financial Statements and the Group plans to of buildings that have varying useful lives. apply these standards on the respective effective Approximation techniques and appropriate dates: groupings were used in such determination as SLFRS 9 – ‘Financial Instruments’ well as in the assessment of the useful lives of SLFRS 9 replaces the existing guidance in LKAS each component. 39 – ‘Financial Instruments: Recognition and Measurement.’ SLFRS 9 contains three principal Further details are given in Note 4.8. classification categories for financial assets – i.e., measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL).
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The existing LKAS 39 categories of Held-to- SLFRS 15 – ‘Revenue from Contracts with maturity, Loans and receivables and Available-for- Customers’ sale are removed. SLFRS 9 replaces the ‘incurred SLFRS 15 establishes a comprehensive framework loss’ model in LKAS 39 with an ‘expected credit for determining whether, how much and when loss’ model. The new model applies to financial revenue is recognized. New qualitative and assets that are not measured at FVTPL. SLFRS 9 is quantitative disclosure requirements aim to enable effective for annual reporting periods beginning on Financial Statements users to understand the or after 1st January, 2018, with early nature, amount, timing and uncertainty of revenue adoption permitted. and cash flows arising from contracts with customers. The model uses a dual measurement approach, under which the loss allowance is measured as It replaces existing revenue recognition guidance, either: including LKAS 18 – ‘Revenue, LKAS 11’ – 12-month expected credit loss; or Construction Contracts and IFRIC 13 Customer Loyalty Programmes. SLFRS 15 is effective for – Lifetime expected credit losses. annual reporting periods beginning on or after 1st January, 2018, with early adoption permitted. The measurement basis will generally depend on whether there has been a significant increase in The Group’s current assessment has not revealed credit risk since initial recognition. A simplified a significant change to the revenue recognition approach is available for trade receivables, pattern. contract assets and lease receivables, allowing or requiring the recognition of lifetime expected credit However, the Group is currently in the process of losses at all times. Special rules apply to assets evaluating the accounting impact and the current that are credit impaired at initial recognition. The systems and processes will be modified when new standard carried guidance on new general necessary. hedge accounting requirements.
SLFRS 16 – ‘Leases’ The Group has commenced the initial high SLFRS 16 provides a single lessee accounting level assessment of the potential impact on its model, requiring leasses to recognize assets and Consolidated Financial Statements resulting from liabilities for all leases unless the lease term is the application of the SLFRS 9. The Group is not 12 months or less or the underlying asset has a expected to have a material impact from the new low value even though lessor accounting remains classification, measurement, impairment principles similar to current practice. This supersedes: introduced by SLFRS 9. LKAS 17 – Leases, IFRIC 4 determining whether an arrangement contains a Lease, SIC 15 Operating Group will commence the implementation phase Leases- Incentives; and SIC 27. Evaluating the upon completion of the assessment by 2nd quarter.
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substance of Transactions Involving the Legal form of a Lease. Earlier application is permitted. SLFRS 16 is effective for annual reporting periods beginning on or after 1st January, 2019. Based on the preliminary impact analysis of SLFRS 16, Group has not revealed a significant change to the current practice.
The following amendments and improvements are not expected to have a significant impact on the Company's/ Group’s Consolidated Financial Statements. • Amendments to SLFRS 10 and LKAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture • LKAS 7 Disclosure Initiative – Amendments to LKAS 7 • LKAS 12 Recognition of Deferred Tax Assets for Unrealised Losses-Amendments to LKAS 12 • SLFRS 2 Classification and Measurement of Share-based Payment Transactions – Amendments to SLFRS 2 • Applying SLFRS 9 Financial Instruments with SLFRS 4 Insurance Contracts – Amendments to SLFRS 4
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3. Revenue The business activities of the Company are only organized as a single reportable segment, where the management of the hotel monitors the Revenue per Available Room as a key performance indicator. Revenue consists of the following type and nature of services: Business activities of Unawatuna Properties (Pvt) Ltd., has not started and hotel is under Construction.
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Room Revenue 444,758,769 460,937,480 444,758,769 460,937,480 Food & Beverage Income 322,861,762 342,364,303 322,861,762 342,364,303 Other Hotel Related Income 31,598,003 32,770,144 31,598,003 32,770,144 Total Revenue 799,218,534 836,071,927 799,218,534 836,071,927
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4. Property, Plant And Equipment 4.1 Gross Carrying Amounts
Group Balance as at Additions Transferred Disposals/ Balance as at 1st April, 2016 Written-off 31st March, 2017 Rs. Rs. Rs. Rs. Rs.
At Cost Buildings and Building Integrals 2,110,393,407 112,361 3,136,529 – 2,113,642,298 Plant and Equipment 71,878,807 361,817 5,791,142 – 78,031,765 Sewerage Treatment Plant 6,968,535 48,900 – – 7,017,435 Kitchen/Bar Equipment 60,186,103 1,455,966 – – 61,642,069 Electrical Equipment 41,204,365 1,139,203 – – 42,343,567 Solar Electrical System – – 19,048,333 – 19,048,333 Office Equipment 1,670,915 – – 1,670,915 Sports Equipment 9,418,053 2,470,730 – – 11,888,783 Furniture and Fittings 98,435,089 3,550,116 – – 101,985,205 Swimming Pool Equipment 9,528,722 48,078 – – 9,576,799 Generator 17,336,219 – – – 17,336,219 Motor Vehicles 16,836,588 – – (4,464,286) 12,372,302 Water Treatment Plant 2,035,247 58,300 – – 2,093,547 Linen, Cutlery and Crockery 34,816,223 4,537,109 – (4,160,101) 35,193,231 Laundry and Hot Water Equipment 19,257,165 4,761,412 – – 24,018,577 Telephone System 4,236,343 61,080 – – 4,297,423 Elevators 6,330,267 – – – 6,330,267 SMA TV System 14,798,440 443,558 – (150,000) 15,091,998 Maintenance Tools 1,069,272 152,895 – – 1,222,167 Music Instruments 857,588 428,599 – – 1,286,187 Bar Furniture and Equipment 22,409,392 1,081,455 – – 23,490,847 Computer Systems 13,575,270 2,174,964 – – 15,750,234 2,563,242,010 22,886,541 27,976,003 (8,774,386) 2,605,330,167
At Fair Value Freehold Land 869,775,000 1,925,971 – – 871,700,972 869,775,000 1,925,971 – – 871,700,972
In the Course of Construction Buildings and Equipment 12,669,392 66,997,645 (27,976,003) – 51,691,034 12,669,392 66,997,645 (27,976,003) – 51,691,034 Total Gross Carrying Amount 3,445,686,402 91,810,157 – (8,774,386) 3,528,722,173
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Company Balance As at Additions Transferred Disposals/ Balance As at 1st April 2016 Written-off 31st March, 2017 Rs. Rs. Rs. Rs. Rs.
At Cost Buildings and Building Integrals 2,110,393,407 112,361 3,136,529 (3,945,200) 2,109,697,098 Plant and Equipment 71,878,807 361,817 5,791,142 – 78,031,765 Sewerage Treatment Plant 6,968,535 48,900 – – 7,017,435 Kitchen/Bar Equipment 60,186,103 1,455,966 – – 61,642,069 Electrical Equipment 41,204,365 1,139,203 – – 42,343,567 Solar Electrical System – – 19,048,333 19,048,333 Office Equipment 1,670,915 – – – 1,670,915 Sports Equipment 9,418,053 2,470,730 – – 11,888,783 Furniture and Fittings 98,435,089 3,550,116 – – 101,985,205 Swimming Pool Equipment 9,528,722 48,078 – – 9,576,799 Generator 17,336,219 – – – 17,336,219 Motor Vehicles 16,836,588 – – (4,464,286) 12,372,302 Water Treatment Plant 2,035,247 58,300 – – 2,093,547 Linen, Cutlery and Crockery 34,816,223 4,537,109 – (4,160,101) 35,193,231 Laundry and Hot Water Equipment 19,257,165 4,761,412 – – 24,018,577 Telephone System 4,236,343 61,080 – – 4,297,423 Elevators 6,330,267 – – – 6,330,267 SMA TV System 14,798,440 443,558 – (150,000) 15,091,998 Maintenance Tools 1,069,272 152,895 – – 1,222,167 Music Instruments 857,588 428,599 – – 1,286,187 Bar Furniture and Equipment 22,409,392 1,081,455 – – 23,490,847 Computer Systems 13,575,270 2,174,964 – – 15,750,234 2,563,242,010 22,886,541 27,976,003 (12,719,586) 2,601,384,967
At Fair Value Freehold Land 869,775,000 – – (29,500,000) 840,275,000 869,775,000 – – (29,500,000) 840,275,000
In the Course of Construction Buildings and Equipment 12,669,392 18,111,340 (27,976,003) – 2,804,729 12,669,392 18,111,340 (27,976,003) – 2,804,729 Total Gross Carrying Amount 3,445,686,402 40,997,880 – (42,219,586) 3,444,464,696
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4.2 Depreciation
Group Balance as at Charge for Disposals/Written Balance as at 1st April, 2016 the year off/Transferred 31st March, 2017 Rs. Rs. Rs. Rs.
At Cost Buildings and Building Integrals 302,673,570 44,915,419 – 347,588,989 Plant and Equipment 29,597,359 4,454,440 – 34,051,799 Sewerage Treatment Plant 3,265,854 334,814 – 3,600,668 Kitchen/Bar Equipment 28,070,234 4,284,692 – 32,354,926 Electrical Equipment 13,995,989 4,515,653 – 18,511,642 Office Equipment 1,031,166 21,232 – 1,052,398 Sports Equipment 5,876,939 558,468 – 6,435,407 Furniture and Fittings 40,015,456 7,976,150 – 47,991,606 Swimming Pool Equipment 4,803,945 623,952 – 5,427,897 Generator 2,899,248 1,300,542 – 4,199,790 Motor Vehicles 9,503,132 1,991,383 (3,375,734) 8,118,781 Water Treatment Plant 1,649,537 48,884 – 1,698,421 Linen, Cutlery and Crockery 26,893,229 7,507,128 (4,160,101) 30,240,257 Laundry and Hot Water Equipment 12,877,083 1,329,848 – 14,206,931 Telephone System 2,446,010 289,441 – 2,735,452 Elevators 2,349,472 285,290 – 2,634,763 SMA TV System 4,543,174 1,102,067 (26,959) 5,618,282 Maintenance Tools 402,240 95,938 – 498,177 Music Instruments 692,863 53,608 – 746,471 Bar Furniture and Equipment 5,692,340 2,281,596 – 7,973,935 Computer Systems 11,491,639 1,755,628 – 13,247,267 Total Depreciation 510,770,480 85,726,172 (7,562,793) 588,933,858
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Company Balance as at Charge for Disposals/Written Balance as at 1st April, 2016 the year off/Transferred 31st March, 2017 Rs. Rs. Rs. Rs.
At Cost Buildings and Building Integrals 302,673,570 44,915,419 (170,238) 347,418,751 Plant and Equipment 29,597,359 4,454,440 – 34,051,799 Sewerage Treatment Plant 3,265,854 334,814 – 3,600,668 Kitchen/Bar Equipment 28,070,234 4,284,692 – 32,354,926 Electrical Equipment 13,995,989 4,515,653 – 18,511,642 Office Equipment 1,031,166 21,232 – 1,052,398 Sports Equipment 5,876,939 558,468 – 6,435,407 Furniture and Fittings 40,015,456 7,976,150 – 47,991,606 Swimming Pool Equipment 4,803,945 623,952 – 5,427,897 Generator 2,899,248 1,300,542 – 4,199,790 Motor Vehicles 9,503,132 1,991,383 (3,375,734) 8,118,781 Water Treatment Plant 1,649,537 48,884 – 1,698,421 Linen, Cutlery and Crockery 26,893,229 7,507,128 (4,160,101) 30,240,257 Laundry and Hot Water Equipment 12,877,083 1,329,848 – 14,206,931 Telephone System 2,446,010 289,441 – 2,735,452 Elevators 2,349,472 285,290 – 2,634,763 SMA TV System 4,543,174 1,102,067 (26,959) 5,618,282 Maintenance Tools 402,240 95,938 – 498,177 Music Instruments 692,863 53,608 – 746,471 Bar Furniture and Equipment 5,692,340 2,281,596 – 7,973,935 Computer Systems 11,491,639 1,755,628 – 13,247,267 Total Depreciation 510,770,480 85,726,172 (7,733,032) 588,763,620
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4.3 Net Book Values
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
At Cost Buildings and Building Integrals 1,766,053,308 1,807,719,837 1,762,278,346 1,807,719,837 Plant and Equipment 43,979,966 42,281,448 43,979,966 42,281,448 Sewerage Treatment Plant 3,416,767 3,702,681 3,416,767 3,702,681 Kitchen/Bar Equipment 29,287,143 32,115,868 29,287,143 32,115,868 Electrical Equipment 23,831,926 27,208,376 23,831,926 27,208,376 Solar Electrical System 19,048,333 – 19,048,333 – Office Equipment 618,516 639,748 618,516 639,748 Sports Equipment 5,453,376 3,541,114 5,453,376 3,541,114 Furniture and Fittings 53,993,599 58,419,634 53,993,599 58,419,634 Swimming Pool Equipment 4,148,902 4,724,776 4,148,902 4,724,776 Generator 13,136,429 14,436,971 13,136,429 14,436,971 Motor Vehicles 4,253,521 7,333,456 4,253,521 7,333,456 Water Treatment Plant 395,126 385,710 395,126 385,710 Linen, Cutlery and Crockery 4,952,975 7,922,994 4,952,975 7,922,994 Laundry and Hot Water Equipment 9,811,646 6,380,082 9,811,646 6,380,082 Telephone System 1,561,972 1,790,333 1,561,972 1,790,333 Elevators 3,695,504 3,980,795 3,695,504 3,980,795 SMA TV System 9,473,716 10,255,266 9,473,716 10,255,266 Maintenance Tools 723,989 667,032 723,989 667,032 Music Instruments 539,716 164,725 539,716 164,725 Bar Furniture and Equipment 15,516,911 16,717,052 15,516,911 16,717,052 Computer Systems 2,502,966 2,083,631 2,502,966 2,083,631 2,016,396,310 2,052,471,530 2,012,621,348 2,052,471,530
At Fair Value Freehold Land 871,700,972 869,775,000 840,275,000 869,775,000 871,700,972 869,775,000 840,275,000 869,775,000
In the Course of Construction Buildings and Equipment 51,691,034 12,669,392 2,804,729 12,669,392 51,691,034 12,669,392 2,804,729 12,669,392 Total Carrying Amount of Property, Plant and Equipment 2,939,788,316 2,934,915,923 2,855,701,077 2,934,915,923
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 149 SAFE DEPOSIT
4.4 The fair value of freehold land of the Company comprising approx. 1,510 perches was determined by means of a revaluation during the last financial year 2015/16 by Messrs K. Arthur Perera and Company (AMIV – Sri Lanka), an independent valuer, in reference to market-based evidence. The valuer has made reference to market evidence of transacted prices for similar size and location. The appraised fair values were approximated within a range of values between Rs. 60,000/- to Rs. 850,000/- a perch, depending on the location. The results of such revaluation were incorporated in these Financial Statements from its effective date which was 31st March, 2016. The surplus arising from the revaluation, amounting to Rs. 388,952,992/- was transferred to a Revaluation Reserve in 2016.
Valuation processes of the Group: On a once in five years basis, the Group usually engages an external independent and qualified valuer to determine the fair value of land. When significant changes in fair values are expected between two valuations, that necessitates a more regular basis of valuation adopted, the Board based on its judgment as appropriately advised by the valuer obtains a further valuation to ensure that the carrying amount does not differ materially with fair value at the end of the reporting period.
The following table analysis the non-financial assets carried at fair value, by valuation method. The different levels have been defined in Note 8.2:
Fair Value measurement as at 31st March, 2017 Level 01 Level 02 Level 03 Total Rs. Rs. Rs. Rs.
Group Freehold Land – – 871,700,972 871,700,972
Company Freehold Land – – 840,275,000 840,275,000
4.5 The carrying amount of revalued land that would have been included in the Financial Statements had the assets been carried at cost is as follows:
Group Company Class of Asset 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Freehold Land 112,826,303 110,900,332 84,440,984 110,900,332
4.6 During the financial year, the Group acquired Property, Plant and Equipment to the aggregate value of Rs. 91,810,157/- (2016 – Rs. 128,179,025/-) and the Company acquired Property, Plant and Equipment to the aggregate value of Rs. 40,997,880/- (2016 – Rs. 124,431,651/-) for the cash consideration.
4.7 Property, Plant and Equipment includes fully-depreciated assets having a gross carrying amount of Rs. 113,265,445/- (2016 - Rs. 96,681,762/-) that consisted of individually insignificant items.
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4.8 The useful lives of the assets are estimated as follows:
Group/Company 2017 2016 Years Years
Buildings and Building Integrals 15 to 60 15 to 60 Plant and Equipment 13.33 13.33 Sewerage Treatment Plant 20 20 Kitchen/Bar Equipment 10 10 Electrical Equipment 04 to 10 04 to 10 Solar Electrical System 10 to 20 10 to 20 Office Equipment 10 10 Sports Equipment 10 10 Furniture and Fittings 10 10 Swimming Pool Equipment 10 10 Generator 13.33 13.33 Motor Vehicles 05 to 08 05 to 08 Water Treatment Plant 10 10 Linen, Cutlery and Crockery 02 to 03 02 to 03 Laundry and Hot Water Equipment 10 to 13.33 10 to 13.33 Telephone System 13.33 13.33 Elevators 20 20 SMA TV System 10 10 Maintenance Tools 10 10 Music Instruments 10 10 Bar Furniture and Equipment 10 10 Computer System 04 04
The Group regularly reviews the useful life of each significant component of Property, Plant and Equipment taking into account the experience of recent refurbishment patterns as well as industry trends. Accordingly, depreciation was calculated for the year ended 31st March, 2017 using a straight line method for each individual significant component of building, based on the following estimated useful lives:
Group/Company 2017 2016 Years Years
Components included in Buildings and Building Integrals: Buildings 60 60 Super Structure 60 60 Bathroom Fittings 15 15 Restaurant Floors 15 15 Tennis and Squash Court 60 60
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 151 SAFE DEPOSIT
5. Prepaid Lease Rent
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
At the beginning of the Year 2,363,637 2,393,940 2,363,637 2,393,940 Amortisation for the Year (30,303) (30,303) (30,303) (30,303) At the end of the Year 2,333,334 2,363,637 2,333,334 2,363,637
Prepaid lease rental represents the lease rental paid to acquire the leasehold rights of land situated in Dadalla-Galle obtained from The Urban Development Authority of Sri Lanka by the agreement dated 18th January, 1995. The amount paid upfront is being amortized over the lease period of 99 years.
6. Intangible Assets
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs. 6.1 Cost At the beginning of the Year 4,357,936 4,039,428 4,357,936 4,039,428 Purchased during the Year – 318,508 – 318,508 At the end of the Year 4,357,936 4,357,936 4,357,936 4,357,936
Amortisation At the beginning of the Year (3,187,507) (2,760,481) (3,187,507) (2,760,481) Amortised during the Year (541,396) (427,027) (541,396) (427,027) At the end of the Year (3,728,903) (3,187,507) (3,728,903) (3,187,507)
Net Book Value At the beginning of the Year 1,170,429 1,278,947 1,170,429 1,278,947 At the end of the Year 629,033 1,170,429 629,033 1,170,429
6.2 Intangible assets stated above consist Computer Software and Licenses together with related costs. These are amortized over a period of four years, on a straight line basis.
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7. Investments In Subsidiary
Holding Cost 2017 2016 2017 2016 % % Rs. Rs. 7.1 Non-Quoted Investment Unawatuna Properties (Pvt) Ltd. 100 – 100,000,000 – 100,000,000 –
8. Other Financial Assets 8.1 Other Non-Current Financial Assets
Group Company Available-for-Sale Financial Instruments 2017 2016 2017 2016 Rs. Rs. Rs. Rs. 8.1.1 Investments in Equity Securities – Non-quoted: Rainforest Ecolodge (Pvt) Ltd. (Note 8.1.2) Fair Value at the beginning of the Year 87,591,631 87,975,788 87,591,631 87,975,788 Loss recognised in Other Comprehensive Income (190,184) (384,157) (190,184) (384,157) Fair Value at the end of the Year 87,401,447 87,591,631 87,401,447 87,591,631
8.1.2 The Company held 18.32% (2016 – 18.32%) shareholding in Rainforest Ecolodge (Pvt) Ltd. The commercial operations of Rainforest Ecolodge (Pvt) Ltd., commenced during the year 2013. The fair value of above unquoted equity securities was determined using Discounted Cash Flow (DCF) valuation technique, where significant inputs were not based on observable market data (Level 3). There were no share sales or purchases during the year. Valuation techniques, key assumption and the sensitivity of the significant inputs to the fair value of the Investment are as follows:
Valuation Significant Unobservable Sensitivity of the Input to Fair Value Technique Inputs
Discounted Cash Flow Long term growth rate 5% increase/(decrease) in the growth rate would result in increase/ (DCF) method (decrease) in fair value by Rs. 1.7 million and (Rs. 1.6 million) respectively
Weighted Average 1% increase/(decrease) in the WACC would result in (decrease)/Increase in Cost of Capital (WACC) fair value by (Rs. 8.3 million) and Rs. 9.8 million respectively
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 153 SAFE DEPOSIT
8.2 Fair Value Hierarchy The Group/Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques: Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities. Level 2 – Other valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3 – Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
As at 31st March, 2017, the Group/Company held the following financial instruments carried at fair value on the Statement of Financial Position:
8.3 Assets Measured at Fair Value
Total Level 1 Level 2 Level 3 Rs. Rs. Rs. Rs.
Available-for-Sale Financial Assets Non-quoted Equity Investment (Note 8.1) 87,401,447 – – 87,401,447 2017 87,401,447 – – 87,401,447
2016 87,591,631 – – 87,591,631
During the reporting year ending 31st March, 2017, there were no transfers between Level 2 and Level 3 fair value measurements.
8.4 Other Current Financial Assets
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Held to Maturity Financial Instruments Investments in Treasury Bills Repo's – 2,500,000 – 2,500,000 – 2,500,000 – 2,500,000
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9. Inventories
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Food & Beverage 11,833,708 11,491,926 11,833,708 11,491,926 Other Inventories 20,617,108 18,187,929 20,617,108 18,187,929 32,450,816 29,679,855 32,450,816 29,679,855
10. Trade and Other Receivables
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Trade Debtors – Related Parties (Note 10.1) 13,999,074 19,391,191 13,999,074 19,391,191 – Others 94,521,883 78,677,161 94,521,883 78,677,161 Other Debtors 19,326,631 14,378,142 12,419,087 14,378,142 Less: Impairment of Trade Debtors (2,086,653) (1,651,327) (2,086,653) (1,651,327) 125,760,935 110,795,167 118,853,391 110,795,167 Prepayments 9,379,889 7,003,535 9,379,889 7,003,535 135,140,824 117,798,702 128,233,280 117,798,702
Trade receivables are non-interest bearing and are generally on terms of 30 days.
See Note 26 (a) on credit risk of trade receivables, which discusses how the Group manages and measures credit quality of Trade Receivables that are neither past due nor impaired.
10.1 Related Parties
Group Company Relationship 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Jetwing Travels (Pvt) Ltd. Other Related Party 13,062,561 16,481,197 13,062,561 16,481,197 Jetwing Eco Holidays (Pvt) Ltd. Other Related Party – 386,881 – 386,881 Jetwing Hotels Ltd. Other Related Party 579,109 537,010 579,109 537,010 Go Vacation Lanka Co. (Pvt) Ltd. Other Related Party 39,178 1,690,968 39,178 1,690,968 Jetwing Kaduruketha (Pvt) Ltd. Other Related Party – 19,080 – 19,080 Ahangama Properties (Pvt) Ltd. Other Related Party – 270,956 – 270,956 Lanka Dhiviya (Pvt) Ltd. Other Related Party 29,304 – 29,304 – Atlas Investments (Pvt) Ltd. Other Related Party 288,922 – 288,922 – Jet Enterprises (Pvt) Ltd. Other Related Party – 5,100 – 5,100 13,999,074 19,391,191 13,999,074 19,391,191
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 155 SAFE DEPOSIT
11. Stated Capital
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
11.1 At the beginning of the Year – 46,000,000 Ordinary Shares 460,000,974 460,000,974 460,000,974 460,000,974 At the end of the Year – 46,000,000 Ordinary Shares 460,000,974 460,000,974 460,000,974 460,000,974
12. Reserves
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Revaluation Reserve (Note 12.1) 758,874,668 758,874,668 755,834,016 758,874,668 Special Reserve (Note 12.2 ) 1,325,671,060 1,325,671,060 1,325,671,060 1,325,671,060 Available-for-Sale Reserve (Note 12.3) 138,187 328,371 138,187 328,371 2,084,683,915 2,084,874,099 2,081,643,263 2,084,874,099
12.1 Revaluation Reserve On: Freehold Land At the beginning of the Year 758,874,668 369,921,676 758,874,668 369,921,676 Effect of Revaluation Carried Out in 2016 (Note 12.4) – 388,952,992 – 388,952,992 Revaluation Surplus on Disposed Land – – (3,040,652) – At the end of the Year 758,874,668 758,874,668 755,834,016 758,874,668
12.2 Special Reserve As at 1st April, 1,325,671,060 1,325,671,060 1,325,671,060 1,325,671,060 At the end of the Year 1,325,671,060 1,325,671,060 1,325,671,060 1,325,671,060
12.3 Available-for-Sale Reserve At the beginning of the Year 328,371 712,528 328,371 712,528 Gain/(Loss) on Available-for-Sale Financial Instruments (Note 8.1) (190,184) (384,157) (190,184) (384,157) At the end of the Year 138,187 328,371 138,187 328,371
12.4 The above revaluation surplus consists net surplus resulting from the revaluation of Freehold Land as described in Note 4.4.
12.5 With the adoption of SLFRS in 2012/13, the Company opted to reflect its building at deemed cost. The Board resolved to transfer such impact to a Special Reserve during the year 2013 (Note12.2). This Special Reserve is available to be used in a manner determined by the Board from time to time.
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13. Post-employment Benefit Liability
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
At the beginning of the Year 30,763,310 24,949,427 30,763,310 24,949,427 Charge for the Year (Note 13.1) 6,265,565 7,295,954 6,265,565 7,295,954 Transfers (Net) during the Year (4,764,613) 201,189 (4,764,613) 201,189 Payments made during the Year (2,176,735) (1,683,260) (2,176,735) (1,683,260) At the end of the Year 30,087,527 30,763,310 30,087,527 30,763,310
13.1 Defined Benefit Plan Cost Current Service Cost 2,448,828 2,167,726 3,046,424 2,167,726 Interest Cost on Benefit Obligation 3,046,424 2,494,943 2,448,828 2,494,943 Recognised in the Statement of Profit or Loss 5,495,252 4,662,669 5,495,252 4,662,669 Actuarial Loss for the Year Recognised in Other Comprehensive Income 770,313 2,633,285 770,313 2,633,285 Charge for the Year 6,265,565 7,295,954 6,265,565 7,295,954
13.2 As at 31st March, 2017 the gratuity liability was actuarially valued by Messrs K.A. Pandit, an independent firm of actuaries. Principal Actuarial Assumptions The principal financial assumptions underlying the valuation are as follows:
Group/Company 2017 2016
Discount Rate (%) 11.5 p.a 10 p.a Salary Increase (%) 10 p.a 9 p.a Staff Turnover (%) 5 at each age 5 at each age
The principal demographic assumption underlying the valuation is the retirement age of 60 years, applied consistently for both years.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 157 SAFE DEPOSIT
13.3 Sensitivity of assumptions employed in Actuarial Valuation The following table demonstrates the sensitivity to a reasonable possible change in the key assumptions employed with all other variables held constant in the employment benefit liability measurement, in respect of the year 2016/17. The sensitivity of the Income Statement and Statement of Financial Position is the effect of the assumed changes in discount rate and salary increase rate on the profit or loss and post-employment benefit liability for the year.
Group Company Change in Assumptions Effect on Total Pro Forma Post- Effect on Total Pro Forma Post- Comprehensive Employment Comprehensive Employment Income – (Reduction) Benefit Liability Income – (Reduction) Benefit Liability /Increase in Results /Increase in Results Rs. Rs. Rs. Rs.
+1% Change in Discount Rate 1,917,454 28,170,073 1,917,454 28,170,073 -1% Change in Discount Rate (2,206,224) 32,293,751 (2,206,224) 32,293,751 +1% Change in Rate of Salary Increase (2,216,905) 32,304,432 (2,216,905) 32,304,432 -1% Change in Rate of Salary Increase 1,958,423 28,129,104 1,958,423 28,129,104
14. Interest-bearing Loans and Borrowings
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Bank Loans (Note 14.1) At the beginning of the Year 106,441,076 158,744,394 106,441,076 158,744,394 Effect of Movement in Exchange Rate 4,121,506 12,425,770 4,121,506 12,425,770 Loans Received during the Year 2,991,900 – 2,991,900 – Loan Repayments during the Year (46,893,182) (64,729,088) (46,893,182) (64,729,088) At the end of the Year 66,661,300 106,441,076 66,661,300 106,441,076
Bank Overdrafts (Note 22.2) 121,726,009 5,002,397 121,726,009 5,002,397 188,387,309 111,443,473 188,387,309 111,443,473
Current Portion of Interest-bearing Borrowings 169,991,209 50,576,597 169,991,209 50,576,597 Non-current Portion of Interest-bearing Borrowings 18,396,100 60,866,876 18,396,100 60,866,876 188,387,309 111,443,473 188,387,309 111,443,473
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14.1 Bank Loans – Group
As at Loans Exchange(Gain) Repayment As at 1st April, 2016 Obtained /Loss 31st March, 2017 Rs. Rs. Rs. Rs. Rs.
Commercial Bank of Ceylon PLC – USD Term Loan 1* 56,772,162 – 2,068,096 (29,656,528) 29,183,730 – USD Term Loan 2** 49,668,914 – 2,053,410 (16,959,654) 34,762,670
Sampath Bank PLC – LKR Term Loan*** – 2,991,900 – (277,000) 2,714,900 106,441,076 2,991,900 4,121,506 (46,893,182) 66,661,300
* Unsecured term loan of USD 1 million repayable in 60 monthly installments commencing from December, 2013. ** Unsecured term loan of USD 572,500 repayable in 60 monthly installments commencing from April, 2014. ***Unsecured Term-Loan of Rs. 2,991,900 repayable in 72 monthly installments commencing from February, 2017.
14.2 Bank Loans – Company
As at Loans Exchange(Gain) Repayment As at 1st April, 2016 Obtained /Loss 31st March, 2017 Rs. Rs. Rs. Rs. Rs.
Commercial Bank of Ceylon PLC - USD Term Loan 1* 56,772,162 – 2,068,096 (29,656,528) 29,183,730 - USD Term Loan 2** 49,668,914 – 2,053,410 (16,959,654) 34,762,670
Sampath Bank PLC - LKR Term Loan*** – 2,991,900 – (277,000) 2,714,900 106,441,076 2,991,900 4,121,506 (46,893,182) 66,661,300
* Unsecured term loan of US$ 1 million repayable in 60 monthly instalments commencing from December 2013. ** Unsecured term loan of US$ 572,500 repayable in 60 monthly instalments commencing from April 2014. ***Unsecured Term-Loan of Rs. 2,991,900 repayable in 72 monthly instalments commencing from February 2017.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 159 SAFE DEPOSIT
15. Trade and Other Payables
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Trade Payables – Related Party (Note 15.1) – 537,660 – 537,660 – Others 18,005,741 19,104,574 18,005,741 19,104,574 Other Payables – Related Party (Note 15.2) 8,631,240 9,164,975 9,415,799 9,164,975 – Others 81,398,868 72,563,777 78,189,984 72,563,777 Sundry Creditors including Accrued Expenses 17,354,904 13,506,013 17,354,904 13,506,013 125,390,753 114,876,999 122,966,428 114,876,999
Statutory Payables 11,907,723 10,921,406 11,907,723 10,921,406 137,298,476 125,798,405 134,874,151 125,798,405
15.1 Trade Payables – Related Parties
Relationship 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Jet Enterprises (Pvt) Ltd. Other Related Party – 537,660 – 537,660 – 537,660 – 537,660
15.2 Other Payables – Related Parties
Relationship 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Unawatuna Properties (Pvt) Ltd. Subsidiary – – 784,559 – Ahangama Properties (Pvt) Ltd. Other Related Party 212,235 382,570 212,235 382,570 Jetwing Hotels Ltd. Other Related Party 8,419,005 8,197,342 8,419,005 8,197,342 Villa Properties (Pvt) Ltd. Other Related Party – 585,063 – 585,063 8,631,240 9,164,975 9,415,799 9,164,975
16. Dividends Paid – Company
2017 2016 Rs. Rs.
Declared and Paid during the Year Equity Dividends on Ordinary Shares : Final Dividend for 2016: Rs. 2.50 per Share (2015 – Rs. 2.00 per Share), paid in the subsequent Year 115,000,000 92,000,000
Interim Dividend 2017: Rs. 2.00 Per share (2016 – Nil) 92,000,000 – paid in the current year 207,000,000 92,000,000 Proposed for Approval at the AGM (not recognized as a Liability as at 31st March) Equity Dividends on Ordinary Shares: Final Dividend 2017: Nil (2016 – Rs. 2.50 per Share) – 115,000,000
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17. Other Income and Gains
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Insurance Claim Received 63,783 – 63,783 – Rent Income 2,220,941 – 2,220,941 – Commission Received 201,668 – 201,668 – Write Back of Sundry Payables – 2,083,333 – 2,083,333 Capital Gain on Disposal of Assets – – 10,975,038 2,486,392 2,083,333 13,461,430 2,083,333
18. Finance Income and Finance Cost
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs. 18.1 Finance Cost Interest Expense on Bank Loan 3,988,399 6,176,247 3,988,399 6,176,247 Interest Expense on Bank Overdraft 5,005,115 2,873,645 5,005,115 2,873,645 8,993,514 9,049,892 8,993,514 9,049,892 18.2 Finance Income Interest on Foreign Currency Deposits 136,090 102,914 136,090 102,914 Interest on Call Deposits 1,410 – 1,410 – Interest on Treasury Bills Repos 679,355 433,417 679,355 433,417 816,855 536,331 816,855 536,331
19. Profit Before Tax Stated after Charging/(Crediting)
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Included in Administrative Expenses Employees Benefits (including the following) 152,087,173 142,778,101 152,087,173 142,778,101 – Defined Benefit Plan Costs – Gratuity 5,495,252 4,662,669 5,495,252 4,662,669 – Defined Contribution Plan Costs – EPF & ETF 13,435,918 12,068,296 13,435,918 12,068,296 Depreciation 85,726,172 84,479,474 85,726,172 84,479,474 Amortization of Leasehold Property 30,303 30,303 30,303 30,303 Amortization of Intangible Assets 541,396 427,027 541,396 427,027 Exchange (Gain)/Loss (4,421,016) (4,534,180) (4,421,016) (4,534,180) (Profit)/Loss on Disposal of (965,839) 4,312,723 (965,839) 4,312,723 Property, Plant and Equipment Hotel Operation and Marketing Fees 44,816,143 48,501,369 44,816,143 48,501,369 Non-Executive Directors' Fees 2,370,000 1,830,000 2,370,000 1,830,000 Donations 312,125 454,098 312,125 454,098 Allowance for Doubtful Debts 435,326 1,666,231 435,326 1,666,231
Included in Marketing and Promotional Expenses Advertisements and Promotional Expenses 14,519,120 24,560,744 14,519,120 24,560,744
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 161 SAFE DEPOSIT
20. Income Tax
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Computation of Tax Charge is as follows: Current Income Tax: Statutory Income from Trade – Tax Rate 2% on Turnover 14,772,484 15,512,626 14,772,484 15,512,626 Statutory Income from Other Sources (Note 20.1) 190,614 121,357 190,614 121,357 Income Tax Expense Reported in the Statement of Profit or Loss 14,963,098 15,633,983 14,963,098 15,633,983
20.1 Current Tax Expenses/(Income) from Other Sources
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Accounting Profit 152,147,436 177,753,995 163,200,974 177,753,995 Deduction (Note 20.2) (145,560,367) (168,405,859) (156,535,405) (168,405,859) Accounting Profit from Other Sources 6,587,069 9,348,136 6,665,569 9,348,136 Aggregate Disallowed Items 5,973,365 1,886,586 5,973,365 1,886,586 Aggregate Allowable Income (14,502,011) (14,283,544) (14,502,011) (14,283,544) Taxable Profit/(Loss) for the Year (1,941,577) (3,048,822) (1,863,077) (3,048,822)
Current Income Tax Expense at 28% (Note 20.2) 190,614 121,357 190,614 121,357 190,614 121,357 190,614 121,357
20.2 As described in Note 2.5.4, income tax related to normal operation of The Lighthouse Hotel PLC is based on 2% of Turnover. Income tax on operations of Era Beach, Galle Heritage Villa, Kurulubedda and interest income is computed on taxable profits at prevailing rates stipulated by the Inland Revenue Act. Hence the amount of accounting profit not subject to tax is presented in the above note as a deduction.
20.3 Deferred Tax Assets and Liabilities Due to no material temporary differences as at the reporting date, Deferred Tax assets/liabilities have not been recognized in these Financial Statements.
21. Earnings per Share
21.1 Basic Earnings per Share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. The weighted average number of ordinary shares outstanding during the year and previous year are adjusted for events that have changed the number of ordinary shares outstanding, without a corresponding change in the resources such as a bonus issue.
162 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC SAFE DEPOSIT
21.2 The following reflects the income and share data used in the Basic Earnings Per Share computation.
Group 2017 2016 Rs. Rs.
Amount Used as the Numerator: Net Profit Attributable to Ordinary Shareholders for Basic Earnings per Share 137,184,338 162,120,012
2017 2016 Number Number
Number of Ordinary Shares Used as Denominator: Weighted Average number of Ordinary Shares in Issue 46,000,000 46,000,000 Applicable to Basic Earnings Per Share (Rs.) 2.98 3.52
22. Cash and Cash Equivalents Components of Cash and Cash Equivalents 22.1 Favourable Cash and Cash Equivalents Balance
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Cash at Bank and in Hand 13,231,586 19,827,179 12,855,582 19,827,179 13,231,586 19,827,179 12,855,582 19,827,179
22.2 Unfavourable Cash and Cash Equivalents Balance
Bank Overdrafts (Note 14) (121,726,009) (5,002,397) (121,726,009) (5,002,397) Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement (108,494,423) 14,824,782 (108,870,427) 14,824,782
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 163 SAFE DEPOSIT
23. Commitments and Contingencies (a) Capital Expenditure Commitments The Group/Company has purchased and construction commitments on Property, Plant and Equipment incidental to the ordinary course of business as at 31st March as follows:
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Authorised by the Board, but not Contracted for 238,553,517 35,109,565 44,975,578 35,109,565 Contractual Commitments 57,672,728 – – – 296,226,245 35,109,565 44,975,578 35,109,565
(b) Operating Lease Commitments The Group/Company has entered into operating lease agreements where the future minimum rentals payable under operating leases as at 31st March are as follows:
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Within one Year 9,923,232 8,790,137 9,923,232 8,790,137 After one Year but not more than Five Years 16,098,720 24,820,807 16,098,720 24,820,807 26,021,952 33,610,944 26,021,952 33,610,944
(c) Contingent Liabilities There are no significant contingencies as at the reporting date.
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24. Assets Pledged There are no assets pledged as securities for liabilities as at the year end.
25. Related Party Disclosures Details of significant related party disclosures are as follows:
25.1 Transactions with Key Management Personnel of the Group/Company The Key Management Personnel of the Company are the members of its Board of Directors. In addition to Board of Directors, Director Engineering and Director Operations of Jetwing Hotels Ltd., have also been identified as the Key Management Personnel (KMP).
(a) Key Management Personnel Compensation
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Executive Directors' Fees – – – – Non-Executive Directors' Fees 2,370,000 1,830,000 2,370,000 1,830,000 Other KMPs – – – – 2,370,000 1,830,000 2,370,000 1,830,000
25.2 Transactions with Subsidiary
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Amount Receivable as at 31st March (Note 10) – – – – Amount Payable as at 31st March (Note 15) – – (784,559) –
Nature of Transactions Investment in Subsidiary – – 100,000,000 – Proceeds from Disposal of Fixed Assets – – 44,250,000 – Reimbursement of Development Expenses – – 7,100,296 –
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 165 SAFE DEPOSIT
25.3 Other Related Party Disclosures Transactions with entities that are significantly influenced by Key Management Personnel of the Group/Company.
Some Key Management Personnel of the Group/Company and their members of the families, collectively have control directly or indirectly in certain entities with which the Company entered into the transactions, summarised as follows:
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Amount Receivable as at 31st March (Note 10) 13,999,074 19,391,191 13,999,074 19,391,191 Amount Payable as at 31st March (Note 15) (8,631,240) (9,702,635) (8,631,240) (9,702,635)
Nature of Transactions Hotel Operation and Marketing Fees 44,816,143 48,501,369 44,816,143 48,501,369 Development Fees – 1,505,651 – 1,505,651 Purchases of Food & Beverage 8,950,826 6,359,390 8,950,826 6,359,390 Advertising Expenses and Other Reimbursements 16,899,692 27,519,333 15,901,069 27,519,333 Sale of Accommodation and Transfers 92,053,141 95,470,184 92,053,141 95,470,184 Other Expenses 315,380 1,057,737 315,380 1,057,737 Transport Charges 186,332 562,688 186,332 562,688 Rent Received 612,245 169,898 612,245 169,898 Gratuity Transfer (4,764,613) (97,882) (4,764,613) (97,882) Gratuity Reimbursed – 204,133 – 204,133 Laundry Income 823,387 91,908 823,387 91,908 Proceeds from Disposal of Fixed Assets 2,053,108 – 2,053,108 – Vehicle Insurance Received – 62,358 – 62,358 Vehicle Insurance Paid – 138,710 – 138,710 Support Service Charges 7,637,452 6,494,405 7,637,452 6,494,405 Purchases of Goods 326,541 987,949 326,541 987,949 Purchases of Asset 2,248,252 1,170,937 2,248,252 1,170,937 IT Service Charges 770,315 – 770,315 – Reimbursement of Consultancy Fee – 919,360 – 919,360 Location Charges – 100,000 – 100,000
All related party balances are payable or receivable within one year, and non-interest bearing.
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26. Risk Management Objectives and Policies Financial Risk Management The Group/Company has exposure to the following risks from its use of financial instruments: – Credit risk – Liquidity risk – Market risk
Group's/ Company’s exposure to each of the above risks, and the Group's/ Company’s policies and processes for measuring and managing risk is detailed below:
(a) Credit Risk Credit risk is the risk of financial loss to the Group/Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's/Company’s receivables from customers and investments. The maximum exposure will be equal to the carrying amount of these instruments.
Exposure to credit risk is monitored on an ongoing basis, as the Group/ Company trades only with recognized, creditworthy third parties. It is the Group's/Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures and approval by Credit Committee. A credit-approved customer list has been prepared by the Credit Committee and credit is only granted to these customers. Further, credit granted is subject to regular review during monthly meetings of the Credit Committee, to ensure it remains consistent with the customer’s current creditworthiness and appropriate to the anticipated volume of business. Currently, certain free independent travelers' settlements are received at the time of departure and this is monitored by the General Manager.
Short term Investments are made only in liquid short term instruments in licensed commercial banks. Long term investments are made with the Board approval.
The maximum exposure to credit risk at the reporting date was as follows:
Group Company Carrying Value Carrying Value 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
Cash at Bank and in Hand 13,231,586 19,827,179 12,855,582 19,827,179 Other Current Financial Assets – 2,500,000 – 2,500,000 Unquoted Equity Securities 87,401,447 87,591,631 87,401,447 87,591,631 Trade and Other Receivables 125,760,935 110,795,167 118,853,391 110,795,167
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 167 SAFE DEPOSIT
The movement in the allowance for impairment in respect of trade receivables during the year was as follow:
Group Company 2017 2016 2017 2016 Rs. Rs. Rs. Rs.
At the beginning of the Year 1,651,327 1,452,666 1,651,327 1,452,666 Additional Impairment Recognized during the Year 435,326 1,666,231 435,326 1,666,231 Written off of other Receivables – (1,467,569) – (1,467,569) At the end of the Year 2,086,653 1,651,327 2,086,653 1,651,327
The ageing of trade and other receivables, excluding prepayments, at the end of the each reporting period is as follows:
2017 2016 Gross Carrying Impairment Net Carrying Gross Carrying Impairment Net Carrying Amount Allowance Amount Amount Allowance Amount Rs. Rs. Rs. Rs. Rs. Rs.
Group Neither past due, nor Impaired 71,784,398 – 71,784,398 75,031,318 – 75,031,318 Past due 31-60, but not Impaired 26,384,095 – 26,384,095 27,432,208 – 27,432,208 Past due 61-180 26,457,290 (203,455) 26,253,835 8,268,640 (149,180) 8,119,460 Past due more than 180 days 3,221,805 (1,883,198) 1,338,607 1,714,329 (1,502,147) 212,182 127,847,588 (2,086,653) 125,760,935 112,446,495 (1,651,327) 110,795,167
2017 2016 Gross Carrying Impairment Net Carrying Gross Carrying Impairment Net Carrying Amount Allowance Amount Amount Allowance Amount Rs. Rs. Rs. Rs. Rs. Rs.
Company Neither past due, nor Impaired 64,876,854 – 64,876,854 75,031,318 – 75,031,318 Past due 31-60, but not Impaired 26,384,095 – 26,384,095 27,432,208 – 27,432,208 Past due 61-180 26,457,290 (203,455) 26,253,835 8,268,640 (149,180) 8,119,460 Past due more than 180 days 3,221,805 (1,883,198) 1,338,607 1,714,329 (1,502,147) 212,182 120,940,044 (2,086,653) 118,853,391 112,446,495 (1,651,327) 110,795,167
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(b) Liquidity Risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group had access to undrawn overdraft facilities of Rs. 133 million (Company – Rs. 133 million) as at 31st March, 2017. Maturity Analysis 1 – 6 Months 6 – 12 Months 1 – 5 Years Total Rs. Rs. Rs. Rs.
Group Bank Loan 24,132,600 24,132,600 18,396,100 66,661,300 Bank Overdraft 121,726,009 – 121,726,009 Trade and Other Payables 125,390,753 – 125,390,753 Total 2017 271,249,362 24,132,600 18,396,100 313,778,062 Total 2016 144,816,405 24,431,676 62,782,273 232,030,354
1 – 6 Months 6 – 12 Months 1 – 5 Years Total Rs. Rs. Rs. Rs.
Company Bank Loan 24,132,600 24,132,600 18,396,100 66,661,300 Bank Overdraft 121,726,009 – – 121,726,009 Trade and Other Payables 122,966,428 – – 122,966,428 Total 2017 268,825,038 24,132,600 18,396,100 311,353,738 Total 2016 144,816,405 24,431,676 62,782,273 232,030,354
As at the reporting date, the Group had cash of Rs. 13,231,586/- (Company – Rs. 12,855,582/-) which is held in Bank funds which allow daily withdrawals.
(c) Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's/Company's income or the value of its holdings of financial instruments.
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/Company has exposure to foreign currency risk where it has foreign currency transactions which are affected by foreign exchange movements.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 169 SAFE DEPOSIT
An analysis of financial instruments based on the currency they are denominated as at 31st March, 2017 are as follows:
In In US$ EURO
Group Cash at Bank and in Hand 8,891 43,485 Trade Receivables (Non-Interest-Bearing and Uncollateriszed) 85,491 44,309 Bank Loans (420,700) – Net aggregate carrying value (326,318) 87,794 Net Aggregate Carrying Value in Rs. 2017 (49,600,307) 14,266,564 Net Aggregate Carrying Value in Rs. 2016 (88,130,886) 14,868,002
In In US$ EURO
Company Cash at Bank and in Hand 8,891 43,485 Trade Receivables (Non-Interest-Bearing and Uncollateriszed) 85,491 44,309 Bank Loans (420,700) – Net Aggregate Carrying Value (326,318) 87,794 Net Aggregate Carrying Value in Rs. 2017 (49,600,307) 14,266,564 Net Aggregate Carrying Value in Rs. 2016 (88,130,886) 14,868,002
The Group/Company invoices Tour operators and Travel agents based on the contracted foreign currency. Tour operators and certain key travel agents make settlements in foreign currency.
Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's/Company’s exposure to the risk of changes in market interest rates relates primarily to the Group's/Company’s long term debt obligations with floating interest rates.
Interest Rate Sensitivity – Group/Company The following table demonstrates the sensitivity to a reasonably possible change in interest rates with all other variables held constant, of the Group/Company’s profit before tax as affected through an impact on floating rate borrowings:
Assumed Impact due to Increase/(Decrease) Effect on Profit Before Tax in Basis Rs. 31st March, 2017
US$ Bank loans +50 basis points (19,972) US$ Bank loans -50 basis points 19,942
The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment changes to base rate of LIBOR.
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(d) Capital Management The Board’s intention is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Group’s/Company's objective for managing its capital is to ensure that Group/Company will be able to continue as a going concern while maximising the return to shareholders, as well as sustaining the future development of its business. In order to maintain or adjust the capital structure, the Group/Company may alter the total amount of dividends paid to shareholders, issue new shares, and draw down additional debt.
27. Fair Value 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 at Bank and in Hand, Trade and Other Receivables, Short Term Deposits and Trade and Other Payables approximate their carrying amounts largely due to the short term maturities of these instruments. • Long term variable rate borrowings are evaluated by the Group/Company based on parameters such as interest rates, risk characteristics of the financed project etc. As at 31st March, 2017 the carrying amounts of such borrowings are not materially different from their calculated fair values.
28. Events Occurring after the Reporting Date There have been no material events occurring after the reporting date that require adjustments to or disclosure in the Financial Statements.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 171 172 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC 11 Check Out
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 173 Related Companies which had Transactions with the Company
Value of Transactions Name of Company Nature of Transactions 2017 2016 Rs. Rs.
Jetwing Hotels Ltd. Hotel Operation and Marketing Fees 44,816,143 48,501,369 Advertising Expenses & Other Reimbursements 14,532,342 25,135,065 Development Fees – 1,505,651 Jet Shipping & Logistics (Pvt) Ltd. Other Expenses 242,061 60,000 Seashells Hotel (Pvt) Ltd. Advertising Expenses & Other Reimbursements 111,559 66,955 Sale of Accommodation and Transfers 140,570 10,000 Gratuity Received – 72,384 Ahangama Properties (Pvt) Ltd. Advertising Expenses & Other Reimbursements 137,027 551,392 Sale of Accommodation and Transfers 12,478 342,393 Other Expenses 28,233 278,674 Laundry Income – 52,589 Reimbursement of Consultancy Fee – 919,360 Purchase of Assets 159,758 – Jetwing Travels (Pvt) Ltd. Advertising Expenses & Other Reimbursements 186,415 546,022 Sale of Accommodation and Transfers 84,423,799 77,515,516 Other Expenses – 118,672 Transport Charges 73,048 456,806 IT Service Charges 770,315 – Yala Properties (Pvt) Ltd. Purchases of Food & Beverage 1,300 – Advertising Expenses & Other Reimbursements – 12,111 Sale of Accommodation and Transfers 249,913 201,017 Other Expenses – 199,630 Rent Received 229,592 – Gratuity Transfer 94,583 – Jetwing Events (Pvt) Ltd. Sale of Accommodation and Transfers 1,513,544 12,088,255 Jet Enterprises (Pvt) Ltd. Purchases of Beverage 8,921,970 6,359,390 Purchases of Goods 148,501 927,949 Purchases of Asset 2,088,495 – Other Expenses – 5,519 Go Vacation Lanka (Pvt) Ltd. Sale of Accommodation and Transfers 2,696,589 3,155,037 Negombo Properties (Pvt) Ltd. Accommodation Charges for a Training Programme 32,145 – Other Expenses – 22,900
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Value of Transactions Name of Company Nature of Transactions 2017 2016 Rs. Rs.
St. Andrew's Hotel (Pvt) Ltd. Advertising Expenses & Other Reimbursements – 265,560 Sale of Accommodation and Transfers 198,272 18,450 Transport Charges 11,709 50,348 Proceeds from Disposal of Fixed Assets 251,306 – Atlas Investments (Pvt) Ltd. Sale of Accommodation and Transfers – 40,800 Other Expenses – 34,026 Transport Charges – 2,011 Gratuity Transfer 32,957 – Laundry Income 823,387 – Purchases of Goods 51,656 – The First Resort (Pvt) Ltd. Advertising Expenses & Other Reimbursements 902 175,703 Sale of Accommodation and Transfers 105,488 213,948 Other Expenses 1,818 34,915 Rent Received 382,653 169,898 Gratuity Transfer 97,573 97,882 Yala Safari Beach Hotel (Pvt) Ltd. Transport Charges 101,575 53,523 Negombo Hotels Ltd. Advertising Expenses & Other Reimbursements 37,801 64,594 Sale of Accommodation and Transfers 276,512 123,987 Other Expenses – 136,712 Gratuity Received – 44,158 Blue Oceanic Beach Hotel (Pvt) Ltd. Purchases of Food & Beverage 26,905 – Advertising Expenses & Other Reimbursements 72,293 112,030 Sale of Accommodation and Transfers 387,435 12,500 Other Expenses 6,500 208,907 Gratuity Received – 87,591 Three Seas (Pvt) Ltd. Purchases of Food & Beverage 650 – Advertising Expenses & Other Reimbursements 538,930 – Sale of Accommodation and Transfers 1,023,182 455,610 Other Expenses – 17,781 Location Charges – 100,000 Jetwing Eco Holidays (Pvt) Ltd. Sale of Accommodation and Transfers 818,943 1,172,987
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 175 CHECK OUT
Value of Transactions Name of Company Nature of Transactions 2017 2016 Rs. Rs.
Lanka Dhiviya (Pvt) Ltd. Sale of Accommodation and Transfers 90,138 27,375 Purchases of Goods 10,500 – Villa Properties (Pvt) Ltd. Laundry Income – 39,319 Support Service Charges 7,637,452 6,494,405 Purchases of Asset – 1,170,937 Lanka Houseboats (Pvt) Ltd. Purchases of Goods 50,884 – Yarl Hotels (Pvt) Ltd. Sale of Accommodation and Transfers 20,495 – Other Expenses 25,956 – Jetwing Ayurveda (Pvt) Ltd. Sale of Accommodation and Transfers 26,087 – The Royal Heritage Hotel (Pvt) Ltd. Advertising Expenses & Other Reimbursements – 112,653 Sale of Accommodation and Transfers 10,000 49,100 Gratuity Transfer 3,970,575 – Vehicle Insurance received – 62,358 Vehicle Insurance paid – 138,710 Fortune Premier (Pvt) Ltd. Sale of Accommodation and Transfers 46,609 – Gratuity Transfer 9,127 – The Solutions Group (Pvt) Ltd. Advertising Expenses & Other Reimbursements 251,655 – Jie Zhong Jie Lanka Developing Construction & Engineering (Pvt) Ltd. Gratuity Transfer 345,984 – Jetwing Kaduruketha (Pvt) Ltd. Advertising Expenses & Other Reimbursements – 3,719 Sale of Accommodation and Transfers 13,087 19,080 Other Expenses 10,811 – Purchases of Goods 65,000 – Unawatuna Properties (Pvt) Ltd. Investments in Subsidiary 100,000,000 – Proceeds from Disposal of Fixed Assets 44,250,000 – Reimbursement of Development Expenses 7,100,296 – Cultural Heritage (Pvt) Ltd. Gratuity Transfer 213,814 – Proceeds from Disposal of Motor Vehicle 1,801,802 – Jetwing City (Pvt) Ltd. Advertising Expenses & Other Reimbursements – 169,972 Thirteen Development Lanka (Pvt) Ltd. Advertising Expenses & Other Reimbursements – 3,351
176 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Names of the Directors of the Related Companies which had Transactions with the Company
Jetwing Hotels Ltd. Go Vacation Lanka (Pvt) Ltd. Directors Directors Mr. N.J.H.M. Cooray Ms. N.T.M.S. Cooray Ms. N.T.M.S. Cooray Mr. R.J. Arasaratnam Mr. R.A.E. Samarasinghe, Mr. R.V.G.G.G. Honings Mr. C.S.R.S. Anthony Mr. L.L.E.J. Mueller Mr. J.S.W. Kasturi Arachchi Negombo Properties (Pvt) Ltd. Jet Shipping & Logistics (Pvt) Ltd. Directors Directors Mr. N.J.H.M. Cooray Ms. N.T.M.S. Cooray Mr. R.A.E. Samarasinghe Mr. N.J.H.M. Cooray Mr. I.S.B.M. Adhikaramge St. Andrew's Hotel (Pvt) Ltd. Directors Seashells Hotel (Pvt) Ltd. Mr. N.J.H.M. Cooray Directors Mr. R.A.E. Samarasinghe Mr. N.J.H.M. Cooray Mr. R.A.E. Samarasinghe Atlas Investments (Pvt) Ltd. Mr. B.K. Chaudhary Directors Mr. R.K. Chaudhary Mr. K.S.C.D. Perera Ms. C.D. Liyanage Ahangama Properties (Pvt) Ltd. Directors The First Resort (Pvt) Ltd. Mr. N.J.H.M. Cooray Directors Mr. R.A.E. Samarasinghe Mr. N.J.H.M. Cooray Mrs. A.M.J. Cooray Jetwing Travels (Pvt) Ltd. Mr. R.A.E. Samarasinghe Directors Mr. C.S.R.S. Anthony Ms. N.T.M.S. Cooray Mr. N.J.H.M. Cooray Yala Safari Beach Hotel (Pvt) Ltd. Mr. R.A.E. Samarasinghe Directors Mr. R.J. Arasaratnam Mr. N.J.H.M. Cooray Mr. R.A.E. Samarasinghe Yala Properties (Pvt) Ltd. Mr. N.H.V. Perera Directors Mr. N.J.H.M. Cooray Negombo Hotels Ltd. Mr. R.A.E. Samarasinghe Directors Mr. N.H.V. Perera Mr. N.J.H.M. Cooray Ms. N.T.M.S. Cooray Jetwing Events (Pvt) Ltd. Mrs. A.M.J. Cooray Directors Mr. R.A.E. Samarasinghe Ms. N.T.M.S. Cooray Mr. R.J. Arasaratnam Blue Oceanic Beach Hotel (Pvt) Ltd. Directors Jet Enterprises (Pvt) Ltd. Mr. N.J.H.M. Cooray Directors Mrs. A.M.J. Cooray Mr. R.A.E. Samarasinghe Mr. N.J.H.M. Cooray Mr. S. Balasubranamium Mr. R.A.E. Samarasinghe Mr. N.H.V. Perera Ms. N.T.M.S. Cooray Ms. M.D.H. Gunawardena Mr. C.S.R.S. Anthony Mr. J.S.W. Kasturi Arachchi
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 177 CHECK OUT
Three Seas (Pvt) Ltd. Yarl Hotels (Pvt) Ltd. Jetwing Kaduruketha (Pvt) Ltd. Directors Directors Directors Ms. E.A.F. Robijns Mr. N.J.H.M. Cooray Mr. N.J.H.M. Cooray Mr. C.H.M. Cadell Ms. N.T.M.S. Cooray Mr. C.S.R.S. Anthony Mr. P.M.J. Cochennec Mr. R.A.E. Samarasinghe Mr. R.A.E. Samarasinghe Mr. G.M. Chautard Mr. K. Balasundaram Mr. U.L. Kadurugamuwa Mr. Ranil de Silva Mr. B.A.B. Goonetilleke Mr. L.R.M.G.L. Kadurugamuwa Mr. R.N. Asirwatham Jetwing Eco Holidays (Pvt) Ltd. Unawatuna Properties (Pvt) Ltd. Directors Jetwing Ayurveda (Pvt) Ltd. Directors Mr. N.J.H.M. Cooray Directors Mr. N.J.H.M. Cooray Mr. R.A.E. Samarasinghe Mr. N.J.H.M. Cooray Mr. R.A.E. Samarasinghe Mr. R.J. Arasaratnam Mr. R.A.E. Samarasinghe Mr. R.M.N. Lokuge Cultural Heritage (Pvt) Ltd. Mr. C.S.R.S. Anthony The Royal Heritage Hotel (Pvt) Ltd. Directors Directors Mr. N.J.H.M. Cooray Lanka Dhiviya (Pvt) Ltd. Mr. N.J.H.M. Cooray Mr. R.A.E. Samarasinghe Directors Mr. R.A.E. Samarasinghe Mr. N.J.H.M. Cooray Mr. B.K. Chaudhary Jetwing City (Pvt) Ltd. Mrs. D.J. Cooray Mr. R.K. Chaudhary Directors Mr. N.J.D.M. Cooray Mr. N.J.H.M. Cooray Fortune Premier (Pvt) Ltd. Mr. R.A.E. Samarasinghe Director Villa Properties (Pvt) Ltd. Mrs. A.M.J. Cooray Directors Mr. T. Nadesan Mr. C.Y. Gunawardena Mr. N.J.H.M. Cooray Mr. S.C. Niles Thirteen Development Lanka Mr. R.A.E. Samarasinghe (Pvt) Ltd. The Solutions Group (Pvt) Ltd. Directors Lanka Houseboats (Pvt) Ltd. Directors Mr. L.K Porter Directors Mr. Ranil de Silva Mrs. L.V. Porter Mr. N.J.H.M. Cooray Ms. N.T.M.S. Cooray Ms. N.T.M.S. Cooray Mr. S. Varma Mr. R.A.E. Samarasinghe Mr. N. Mukherjee Mr. K. Balasundaram Mr. B.A.B. Goonetilleke Mr. R.N. Asirwatham Jie Zhong Jie Lanka Developing Construction & Engineering (Pvt) Ltd. Directors Mr. L. Jianguo Mr. S.S. Silva
178 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Information to Shareholders and Investors
We realize that we are accountable to our dear investors. At Jetwing Lighthouse we strive to keep our investors well-informed. To strengthen investor confidence we have ensured transparency and openness in all our business operations. Our valued institutional and individual investors who provide financial capital expect satisfactory returns.
Over the years, we have nurtured quality relationships with our investors. Through the interaction of various forms of financial and non-financial capital, the Hotel focuses on creating wealth which will drive future earnings. These earnings will derive value for the Hotel and in turn deliver value to its stakeholders.
The Number of Shareholders as at 31st March, 2017
Residents Non-Residents Total Number of Shares Held No. of No. of % No. of No.of % No. of No.of % Shareholders Shares Shareholders Shares Shareholders Shares
1 - 1,000 920 265,485 0.58 6 1,358 0.00 926 266,843 0.58 1,001 - 5,000 139 396,614 0.86 5 17,500 0.04 144 414,114 0.90 5,001 - 10,000 32 272,518 0.59 1 5,100 0.01 33 277,618 0.60 10,001 - 50,000 13 401,066 0.87 0 – 0.00 13 401,066 0.87 50,001 - 100,000 5 422,400 0.92 2 200,000 0.43 7 622,400 1.35 100,001 - 500,000 5 1,199,458 2.61 – – – 5 1,199,458 2.61 500,001 - 1,000,000 6 4,164,513 9.05 – – – 6 4,164,513 9.05 Over 1,000,000 6 38,653,988 84.03 – – – 6 38,653,988 84.03 Total 1,126 45,776,042 99.51 14 223,958 0.49 1,140 46,000,000 100.00
Total Categories of No. of No. of % Shareholders Shareholders Shares
Individuals 1,072 4,755,086 10.34 Institutions 68 41,244,914 89.66 Total 1,140 46,000,000 100.00
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 179 CHECK OUT
Twenty Largest Shareholders as at 31st March, 2017
Name No. of Shares % No. of Shares % as at as at 31st March, 2017 31st March, 2016
Jetwing Hotels Management Services (Pvt) Ltd. 18,970,440 41.24 18,562,623 40.35 Mercantile Investments and Finance PLC 7,736,677 16.82 7,736,677 16.82 Employees Provident Fund 5,084,800 11.05 5,084,800 11.05 Bank of Ceylon – A/C Nos. 2 4,474,620 9.73 4,500,000 9.78 National Savings Bank 1,175,667 2.56 1,575,667 3.43 Mrs. A.M.J. Cooray 1,211,784 2.63 1,211,784 2.63 Jetwing Travels (Pvt) Ltd. 840,200 1.83 840,200 1.83 Ms. N.T.M.S. Cooray 789,803 1.72 789,803 1.72 Mr. N.J.H.M. Cooray 748,803 1.63 748,803 1.63 Dee Investments (Pvt) Ltd. 669,600 1.46 669,600 1.46 Jetwing Eco Holidays (Pvt) Ltd. 595,984 1.30 595,984 1.30 The Nuwara Eliya Hotels Company PLC 520,123 1.13 520,123 1.13 Mr. D.J. De Silva Wijeyeratne 347,200 0.75 347,200 0.75 Confifi Management Services (Pvt) Ltd. 275,900 0.60 275,900 0.60 Confifi Investments (Pvt) Ltd. 250,000 0.54 250,000 0.54 Fern Holdings (Pvt) Ltd. 220,604 0.48 101,607 0.22 Ms. A.M. Wikramanayake 105,754 0.23 105,754 0.23 Mr. S. Mendis 100,000 0.22 100,000 0.22 Mr. H.W.M. Woodward 100,000 0.22 100,000 0.22 Mr. I.A.R. Perera 100,000 0.22 100,000 0.22 Total 44,317,959 96.34 44,216,525 96.12
There were no non-voting shares as at 31st March, 2017.
The percentage of shares held by public as per Colombo Stock Exchange Rules as at 31st March, 2017 was 31.44%.
Further, the number of public shareholders as at 31st March, 2017 was 1,123.
180 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC CHECK OUT
Market Value and Trading of Sares
31st March, 2017 31st March, 2016 Rs. Rs.
Net Assets Value per Share 62.0 63.6 Market Value per Share as at 49.0 52.9 Highest Market Value per Share – During the Year 62.3 66.8 Lowest Market Value per Share – During the Year 48.2 50.0
Share Trading – During the Year
31st March, 2017 31st March, 2016
Number of Transactions 277 321 Number of Shares Traded 564,905 716,667 Value of Shares Traded (Rs.) 34,442,323 44,862,005
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 181 CHECK OUT
The Lighthouse Hotel PLC’s earning per share business expansions and to provide consistent decreased marginally by 15.34% from Rs. 3.52 stream of dividend to shareholders. in the previous year to Rs. 2.98 during the period under review. The Price/Earnings ratio remained The Board of Directors of the Group declared an relatively constant, being 16.44 times by end- interim dividend of Rs. 2.00 per share on March 2017, compared to 15.03 times the previous 27th February, 2017. The total gross dividend year. outflow from the interim dividend amounted to Rs. 92 million. A dividend payout ratio of the Group will be 67% for the year ended 31st March, 2017 Dividend policy (2016 – 71%). In the past, the Company has The dividend policy of the Group aims at creating maintained a dividend payout ratio of over 70%. value in the long term while seeking to maximize shareholder wealth in the short, medium and long term. The objective of the dividend policy is to maintain a healthy financial structure and to retain sufficient earnings in order to execute future
182 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC CHECK OUT
Real Estate Holdings of the Group
Location Buildings No. of Land Extent Area Net Book Value as in Sq.Ft. Buildings (in Acres) at 31st March, 2017 Rs. ’000 Freehold Leasehold Property Property
Galle 236,500 14 9.45 3 2,677,495
Recurrent Related Party Transactions
Name of the Relationship Nature of the Aggregate Value Aggregate Value Terms and Related Party Transactions of Related Party of Related Party Conditions of Transactions Entered Transactions as the Related into during the a % of Net Revenue Party Transactions Financial Year (Rs) Income
Jetwing Travels Other Related Sale of 84,423,799/- 10.5% Credit Period of 30 days (Pvt) Ltd. Party Accommodation Normal Trade Discounts
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 183 Ten Year Summary
Group Year ended 31st March, 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
OPERATING RESULTS Revenue 799,219 836,072 731,743 681,105 614,727 539,192 425,552 303,591 247,515 258,288 Profit Before Taxation 152,147 177,754 140,456 136,597 127,292 123,964 72,201 29,297 (20,034) 26,928 Taxation 14,963 15,634 11,049 14,278 15,138 12,867 10,604 6,607 5,219 29 Profit After Taxation 137,184 162,120 129,407 122,319 112,154 111,097 61,597 22,690 (25,253) 26,899
SHAREHOLDERS’ FUNDS Stated Capital 460,001 460,001 460,001 460,001 460,001 460,001 460,001 460,001 460,001 460,001 Reserves 2,084,684 2,084,874 1,696,305 1,696,722 1,696,404 357,536 357,536 1,734,935 1,763,388 1,791,841 Retained Earnings 307,654 378,240 310,754 273,927 247,126 1,554,092 1,490,275 96,533 45,391 64,308 Shareholders’ Funds 2,852,339 2,923,115 2,467,060 2,430,650 2,403,531 2,371,629 2,307,812 2,291,469 2,268,780 2,316,150
LIABILITIES Interest Bearing Loans and Borrowings 188,387 111,444 158,745 138,779 – – – – – – Current Liabilities 140,161 130,525 117,459 150,002 91,282 94,641 71,905 48,343 41,106 34,932 Other Liabilities 30,088 30,763 24,949 22,678 14,971 12,625 10,083 8,270 6,678 6,395 TOTAL EQUITY AND LIABILITIES 3,210,975 3,195,847 2,768,213 2,742,109 2,509,784 2,478,895 2,389,800 2,348,082 2,316,564 2,357,477
ASSETS Property, Plant and Equipment 2,939,788 2,934,916 2,510,503 2,529,137 2,205,908 2,144,390 2,145,796 2,172,242 2,205,974 2,233,837 Leasehold Property/Prepaid Lease Rent 2,333 2,363 2,394 2,424 2,454 2,485 2,515 23,914 24,179 24,445 Intangible Assets 629 1,170 1,279 852 937 866 1,226 1,250 – – Investments/Other Non-Current Financial Assets 87,401 87,592 87,976 59,389 59,071 43,750 43,750 43,750 25,000 25,000 Current Assets 180,823 169,806 166,061 150,307 241,414 287,404 196,513 106,926 61,411 74,195 TOTAL ASSETS 3,210,975 3,195,847 2,768,213 2,742,109 2,509,784 2,478,895 2,389,800 2,348,082 2,316,564 2,357,477
CASH FLOW From Operating Activities 213,898 276,741 165,122 231,455 153,353 151,116 113,067 63,056 27,686 47,997 From Investing Activities (86,316) (126,534) (90,887) (379,875) (115,606) (40,000) (19,182) (31,402) (8,832) (13,660) From Financing Activities (250,901) (156,729) (65,208) 34,701 (92,000) (46,000) (23,000) – (23,000) (32,201) Net Cash Inflow/(Outflow) (123,319) (6,522) 9,027 (113,719) (54,253) 65,116 70,885 31,654 (4,146) 2,136 Cash and Cash Equivalents as at 31st March (108,494) 14,825 21,347 12,320 126,039 180,292 115,176 44,292 12,637 16,783
KEY INDICATORS Earnings/(Loss) per Ordinary Share (Rs.) 2.98 3.52 2.81 2.66 2.44 2.42 1.34 0.49 (0.55) 0.58 Net Assets per Ordinary Share (Rs.) 62.00 63.55 53.63 52.84 52.25 51.56 50.17 49.81 49.32 50.35 Market Value per Share (Rs.) 49.00 52.90 60.00 44.40 47.40 50.00 56.00 61.25 57.50 49.25 Dividends per Share (Rs.) 2.00 2.50 2.00 2.00 2.00 2.00 1.00 0.50 Nil 0.50 Price to Earnings Ratio (Times) 16.44 15.03 21.35 16.69 19.43 20.66 41.79 125.00 104.55 84.91 Dividend Payout Ratio (%) 67 71 71 75 82 84 75 102 N/A 86
184 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC CHECK OUT
Group Year ended 31st March, 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
OPERATING RESULTS Revenue 799,219 836,072 731,743 681,105 614,727 539,192 425,552 303,591 247,515 258,288 Profit Before Taxation 152,147 177,754 140,456 136,597 127,292 123,964 72,201 29,297 (20,034) 26,928 Taxation 14,963 15,634 11,049 14,278 15,138 12,867 10,604 6,607 5,219 29 Profit After Taxation 137,184 162,120 129,407 122,319 112,154 111,097 61,597 22,690 (25,253) 26,899
SHAREHOLDERS’ FUNDS Stated Capital 460,001 460,001 460,001 460,001 460,001 460,001 460,001 460,001 460,001 460,001 Reserves 2,084,684 2,084,874 1,696,305 1,696,722 1,696,404 357,536 357,536 1,734,935 1,763,388 1,791,841 Retained Earnings 307,654 378,240 310,754 273,927 247,126 1,554,092 1,490,275 96,533 45,391 64,308 Shareholders’ Funds 2,852,339 2,923,115 2,467,060 2,430,650 2,403,531 2,371,629 2,307,812 2,291,469 2,268,780 2,316,150
LIABILITIES Interest Bearing Loans and Borrowings 188,387 111,444 158,745 138,779 – – – – – – Current Liabilities 140,161 130,525 117,459 150,002 91,282 94,641 71,905 48,343 41,106 34,932 Other Liabilities 30,088 30,763 24,949 22,678 14,971 12,625 10,083 8,270 6,678 6,395 TOTAL EQUITY AND LIABILITIES 3,210,975 3,195,847 2,768,213 2,742,109 2,509,784 2,478,895 2,389,800 2,348,082 2,316,564 2,357,477
ASSETS Property, Plant and Equipment 2,939,788 2,934,916 2,510,503 2,529,137 2,205,908 2,144,390 2,145,796 2,172,242 2,205,974 2,233,837 Leasehold Property/Prepaid Lease Rent 2,333 2,363 2,394 2,424 2,454 2,485 2,515 23,914 24,179 24,445 Intangible Assets 629 1,170 1,279 852 937 866 1,226 1,250 – – Investments/Other Non-Current Financial Assets 87,401 87,592 87,976 59,389 59,071 43,750 43,750 43,750 25,000 25,000 Current Assets 180,823 169,806 166,061 150,307 241,414 287,404 196,513 106,926 61,411 74,195 TOTAL ASSETS 3,210,975 3,195,847 2,768,213 2,742,109 2,509,784 2,478,895 2,389,800 2,348,082 2,316,564 2,357,477
CASH FLOW From Operating Activities 213,898 276,741 165,122 231,455 153,353 151,116 113,067 63,056 27,686 47,997 From Investing Activities (86,316) (126,534) (90,887) (379,875) (115,606) (40,000) (19,182) (31,402) (8,832) (13,660) From Financing Activities (250,901) (156,729) (65,208) 34,701 (92,000) (46,000) (23,000) – (23,000) (32,201) Net Cash Inflow/(Outflow) (123,319) (6,522) 9,027 (113,719) (54,253) 65,116 70,885 31,654 (4,146) 2,136 Cash and Cash Equivalents as at 31st March (108,494) 14,825 21,347 12,320 126,039 180,292 115,176 44,292 12,637 16,783
KEY INDICATORS Earnings/(Loss) per Ordinary Share (Rs.) 2.98 3.52 2.81 2.66 2.44 2.42 1.34 0.49 (0.55) 0.58 Net Assets per Ordinary Share (Rs.) 62.00 63.55 53.63 52.84 52.25 51.56 50.17 49.81 49.32 50.35 Market Value per Share (Rs.) 49.00 52.90 60.00 44.40 47.40 50.00 56.00 61.25 57.50 49.25 Dividends per Share (Rs.) 2.00 2.50 2.00 2.00 2.00 2.00 1.00 0.50 Nil 0.50 Price to Earnings Ratio (Times) 16.44 15.03 21.35 16.69 19.43 20.66 41.79 125.00 104.55 84.91 Dividend Payout Ratio (%) 67 71 71 75 82 84 75 102 N/A 86
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 185 About this Report
Report Structure Our Report focuses on aspects that are material and relevant. It is an assessment based on the This, our fourth consecutive Integrated extent to which they may substantively affect the Annual Report, documents a detailed account of Company’s ability to create value over the short, economic, environmental and social performance medium and long term. Materiality determination of the The Lighthouse Hotel PLC for the year process is discussed under Integrated Risk 2016/17. The Report includes financial and Management on page 98. External assurance has non-financial information related to the Company’s been obtained from Messrs Ernst and Young only main businesses, key functions and strategic for the Financial Statements. investments. It also provides material information which relates to the Company’s strategy, governance, performance and sustainability in Compliance the context of creating value over time in a more effective and coherent manner. This integrated Annual Report covers the 12-month period from 1st April, 2016 to 31st March, 2017. In preparing our Integrated Report we were guided The Lighthouse Hotel PLC maintains an annual by the following concepts and principles: cycle for financial and sustainability reporting and the latter is in accordance with the core criteria of - Global Reporting Initiative (GRI) Sustainability GRI G4 guidelines. Reporting Guidelines G4 (2013); www.globalreporting.org There are no significant changes from previous - The International Integrated Reporting reporting periods in the scope and aspect Framework (2013); boundaries. The last published report – which www.theiirc.org and was also an integrated report – covered the - The Smart Integrated Reporting MethodologyTM 12-month period ended 31st March, 2016. There www.smart.lk were no restatements of information provided in previous Reports. However, updates on progress of continuing activities and initiatives are provided Report Boundary and Materiality within; and references may be done to past Material contained in this Report pertains to information for clarity. The information contained in properties of The Lighthouse Hotel PLC [Jetwing this Report, as in the past, is in compliance with all Lighthouse, Jetwing Lighthouse Club and Jetwing applicable laws, regulations and standards. Kurulubedda (owned), Era Beach or Galle Heritage Villa (managed)]. However, non-financial information included, are only for owned properties Contact of The Lighthouse Hotel PLC. We welcome your comments, queries and suggestions. Please channel these to – As Jetwing Lighthouse is an entity operating Group Accountant, within the Jetwing Brand, many of its practices Jetwing Hotels Ltd., and processes and its statutory orientation is Jetwing House, defined by standard practices observed across 46/26, Nawam Mawatha, Colombo 02. the Jetwing Family of Hotels. Hence, the reader Tel: +94 11 234 5700 Ext. 1315 or 2259 will find phraseology such as ‘Jetwing Family of E-mail: [email protected] Hotels’; ‘Jetwing Hotels’; ‘Associates’ and the like interspersed in our narrative.
186 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Organizational Structure
General Manager
Assistant Manager
Business Executive Executive Head of Food Chief Accountant Chief Development Housekeeper Chef and Beverage Engineer Manager Operations
Accountant
Assistant Executive Assistant Housekeeper Sous Chef Front Office Manager
Pastry Chef R&B Training HR Assistant Naturalist Chief Maintenance Manager Executive Executive Spa Manager Steward Executive
*Our Organizational Structure underwent changes. Two new positions have been created in the organizational structure at Jetwing Lighthouse: The position of Business Development Manager and the position of Head of Food and Beverage Operations overlooking F&B Operations for all owned and managed properties of TLHH.
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 187 GRI Content Index
Indicator Description Page Explanation
General Standard Disclosures Strategy and Analysis G4-1 Most senior decision-maker’s statement 16 to 20 Organizational Profile G4-3 Name of the organization 191 G4-4 Primary brands, products and services 12 & 13 G4-5 Location of the organisation’s headquarters 191 G4-6 Countries where the organization operates 11 G4-7 Nature of ownership and legal form 191 G4-8 Markets served 11 G4-9 Scale of the reporting organization 28 to 30 G4-10 Total workforce by employment type, age, gender and region 61 G4-11 Employees covered by collective agreements 70 G4-12 Organization’s supply chain 43 G4-13 Changes during the reporting period regarding size, structure or ownership 11 G4-14 How the precautionary approach or principle is addressed by the organisation 105 G4-15 Externally developed economic, environmental and social charters, principles or 42 other initiatives G4-16 List of memberships of associations 42
Identified Material Aspects and Boundaries G4-17 List of all entities included in the organization’s consolidation financial statements 129 G4-18 Process of defining the report content 98 G4-19 List of all material aspects identified in the process for defining report content 98 & 99 G4-20 Aspect boundary within the organization 186 G4-21 Aspect boundary outside the organization 186 G4-22 Restatements of previous information 186 G4-23 Significant changes to the scope and boundary from previous reporting periods 186
Stakeholder Engagement G4-24 List of stakeholder groups engaged by the orgnaization 46 & 47 G4-25 Basis of identification and selection of stakeholders with whom to engage 44 & 45 G4-26 Organization’s approaches to stakeholder engagement, including frequency of 46 & 47 engagement by type and by stakeholder group G4-27 Key topics and concerns that have been raised through stakeholder engagement 46 & 47
Report Profile G4-28 Reporting period 186 G4-29 Date of most recent previous report 186 G4-30 Reporting cycle 186 G4-31 Contact point regarding the report 186 G4-32 Compliance with GRI G4 guidelines 186 G4-33 Policy and current practice with regard to external assurance No external assurance obtained
Governance G4-34 Governance structure of the organization 92 to 95 & 187
188 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC CHECK OUT
Indicator Description Page Explanation
Ethics and Integrity G4-56 Organization’s values, principles, standards and norms of behavior 42
Specific Standard Disclosures Category: Economic Aspect: Economic Performance G4-EC1 Economic value generated and distributed 121 G4-EC3 Coverage of the organization’s defined benefit plan obligations 139
Aspect: Market Presence G4-EC6 Proportion of senior management hired from the local community 62
Aspect: Indirect Economic Impacts G4-EC7 Development and impact of infrastructure investments and services supported 75 & 76
Aspect: Procurement Practices G4-EC9 Proportion of spending on local suppliers at significant location of operation 43
Category: Environmental Aspect: Energy G4-EN3 Energy consumption within the organization 82 G4-EN5 Energy intensity 82 G4-EN6 Reductions in energy consumption 82
Aspect: Water G4-EN8 Total water withdrawn by source 83 G4-EN10 Percentage and total volume of water recycled and reused 83
Aspect: Emissions G4-EN15 Direct GHG emissions (scope 1) 82 G4-EN16 Indirect GHG emissions (scope 2) 82 G4-EN18 GHG emissions intensity 82 G4-EN19 Reduction of GHG emissions 82
Aspect: Effluents and Waste G4-EN22 Total water discharge by quality and destination 83 & 84 G4-EN23 Total weight of waste by type and disposal method 83 & 85
Aspect: Compliance G4-EN29 Monetary value of significant fines and non-monetary sanctions None reported
Aspect: Overall G4-EN31 Environmental protection expenditures and investments by type 83
Aspect: Environmental Grievance Mechanisms G4-EN34 Grievances about environmental impacts 85
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 189 CHECK OUT
Indicator Description Page Explanation
Category: Social Sub-Category: Labour Practices and Decent Work Aspect: Employment G4-LA1 Number and rates of new employee hires and employee turnover 62 & 63 G4-LA2 Benefits provided to full-time employees 68 G4-LA3 Return to work and retention rates after parental leave 62
Aspect: Occupational Health and Safety G4-LA6 Type of injury, rates of injury, occupational diseases, lost days, absenteeism and 69 total number of work-related fatalities
Aspect: Training and Education G4-LA9 Average hours of training 65 G4-LA10 Programmes for skills management 64 G4-LA11 Regular performance and career development reviews 64 & 66
Aspect: Diversity and Equal Opportunity G4-LA12 Composition of governance bodies and breakdown of employees per employee 63 category by gender, age and other indicators of diversity
Aspect: Labour Practices/Grievance Mechanisms G4-LA16 Grievances about labour practices 70
Sub-category: Human Rights Aspect: Non-Discrimination G4-HR3 Incidents of discrimination and corrective actions taken 71
Sub-Category: Society Aspect: Local Communities G4-SO1 Engagement with local community 74 to 76
Sub-Category: Product Responsibility Aspect: Customer Health and Safety G4-PR1 Product and service categories for which health and safety impacts are assessed 56 for improvement
Aspect: Product and Service Labelling G4-PR5 Customer satisfaction surveys 50
Aspect: Marketing Communications G4-PR7 Incidents of non-compliance with regulations and voluntary codes concerning 57 marketing communications
Aspect: Compliance G4-PR9 Monetary value of significant fines for non-compliance with laws and regulations 57 concerning the provision and use of products and services
190 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Corporate Information
Name of the Company Secretaries The Lighthouse Hotel PLC Corporate Services (Private) Limited. 216, De Saram Place, Company Number Colombo 10. PQ 73 Phone: 4718200
Legal Form Auditors A Quoted Public Company with Limited Liability Messrs Ernst & Young incorporated in Sri Lanka in 1994. Chartered Accountants 201, De Saram Place, Board of Directors Colombo 10. N.J.H.M. Cooray – Chairman R.A.E. Samarasinghe – Managing Director Hotel Operation and Marketing Ms. N.T.M.S. Cooray Jetwing Hotels Ltd. N. Wadugodapitiya ‘Jetwing House’ C.S.R.S. Anthony 46/26, Navam Mawatha, Ranil de Silva Colombo 02. E.P.A. Cooray Phone: 2345700 Ms. A.M. Ondaatjie Dr. C. Pathiraja Legal Advisors T. Nadesan Messrs F.J. & G. de Saram A.T.P. Edirisinghe Attorneys-at-Law and Notaries Public Audit Committee 216, De Saram Place, N. Wadugodapitiya – Chairman Colombo 10. E.P.A. Cooray A.T.P. Edirisinghe Bankers Commercial Bank of Ceylon PLC Remuneration Committee Sampath Bank PLC E.P.A. Cooray – Chairman N. Wadugodapitiya Registered Office A.T.P. Edirisinghe ‘Jetwing House’ 46/26, Navam Mawatha, Related Party Transactions Review Committee Colombo 02. N. Wadugodapitiya – Chairman E.P.A. Cooray A.T.P. Edirisinghe C.S.R.S. Anthony
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17 191 Notice of Meeting
Notice is hereby given that the Twenty-Third Annual General Meeting of The Lighthouse Hotel PLC will be held on Thursday, 29th June, 2017 at 10.00 a.m. at Jetwing House II, 7th Floor, 46/26, Navam Mawatha, Colombo 02 for the following purposes:
1. To receive and consider the Annual Report of the Board together with the Financial Statements of the Company for the year ended 31st March 2017 and Report of the Auditors thereon. 2. To re-elect: (a) Ms. N.T.M.S. Cooray, a Director who retires in terms of Article 29 of the Articles of Association of the Company, and being eligible has offered herself for re-election. (b) Mr. E.P.A. Cooray, a Director who retires in terms of Article 29 of the Articles of Association of the Company, and being eligible has offered himself for re-election. (c) Dr. C. Pathiraja, a Director who retires in terms of Article 29 of the Articles of Association of the Company, and being eligible has offered himself for re-election. 3. To propose the following resolution as an Ordinary Resolution for the reappointment of Mr. A.T.P. Edirisinghe who has reached the age of 71 years. (a) “IT IS HEREBY RESOLVED that the age limit referred to in Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. A.T.P. Edirisinghe who has reached the age of 71 years prior to this Annual General Meeting and that he be reappointed as a Director of the Company.” 4. To authorise the Directors to fix the fees and expenses of Auditors, Messrs Ernst & Young, Chartered Accountants, who are deemed to be reappointed in terms of Section 158 (1) of the Companies Act No. 07 of 2007. 5. To authorise the Directors to determine contributions to charities for the ensuing year.
By order of the Board, Corporate Services (Private) Limited. Secretaries
THE LIGHTHOUSE HOTEL PLC Colombo, on this 23rd day of May 2017
Note: Any shareholder entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote/ speak in his/her stead and a Form of Proxy is sent herewith for this purpose. A proxy need not be a member of the Company.
A completed Form of Proxy must be deposited at 216, De Saram Place, Colombo 10, the Secretaries of the Company not less than 48 hours before the time appointed for the holding of the meeting.
192 ANNUAL REPORT 2016/17 THE LIGHTHOUSE HOTEL PLC Form of Proxy
THE LIGHTHOUSE HOTEL PLC *I/We ………...... ……………...... ……………………………………………………...... ………………
………….………...... of …………………...... …...... …………
………………………………………………… …….……………………… being *a shareholder/shareholders of THE LIGHTHOUSE HOTEL PLC do hereby appoint
1. Mr. Nawalage Joseph Hiran Mahinda Cooray or failing him, 2. Ms. Nawalage Therese Manouri Shiromal Cooray or failing her, 3. Mr. Ruan Ashal Elmo Samarasinghe or failing him, 4. Mr. Nihal Wadugodapitiya or failing him, 5. Mr. Conganige Sextus Roland Sanjeewa Anthony or failing him, 6. Mr. Ranil de Silva or failing him, 7. Ms. Angeline Myrese Ondaatjie or failing her, 8. Mr. Emilianus Prema Alphonse Cooray or failing him, 9. Mr. Thirukumar Nadesan or failing him, 10. Mr. Antoine Theodore Priyalal Edirisinghe or failing him, 11. Dr. Chandrawansa Pathiraja or failing him
……………………………………………………………………………...... …...... ………………………………of …………………………………………………………...... …… as *my/our Proxy to vote/speak for *me/us on *my/our behalf at the Twenty Third Annual General Meeting of the Company to be held at Jetwing House II, 7th Floor, 46/26, Navam Mawatha, Colombo 02 on the 29th day of June 2017 at 10.00 a.m. and at any adjournment thereof, and at every poll which may be taken in consequence thereof.
For Against 1. To receive and consider the Annual Report of the Board together with the Financial Statements of the Company for the year ended 31st March, 2017 and Report of the Auditors thereon. 2. (a) To re-elect Ms. N.T.M.S. Cooray, a Director who retires in terms of Article 29 of the Articles of Association of the Company, and being eligible has offered herself for re-election. (b) To re-elect Mr. E.P.A. Cooray, a Director who retires in terms of Article 29 of the Articles of Association of the Company, and being eligible has offered himself for re-election. (c) To re-elect Dr. C. Pathiraja, a Director who retires in Article 29 of the Articles of Association of the Company, and being eligible has offered himself for re-election. 3. To propose the following resolution as an Ordinary Resolution for the reappointment of Mr. A.T.P. Edirisinghe who has reached the age of 71 years. “IT IS HEREBY RESOLVED that the age limit referred to in Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. A.T.P. Edirisinghe who has reached the age of 71 years prior to this Annual General Meeting and that he be reappointed as a Director of the Company.” 4. To authorise the Directors to fix the fees and expenses of Auditors, Messrs Ernst & Young, Chartered Accountants, who are deemed to be reappointed in terms of Section 158 (1) of the Companies Act No. 07 of 2007. 5. To authorise the Directors to determine contributions to charities for the ensuing year.
Signed this ...... day of ...... Two Thousand and Seventeen.
………...... ……….. *Signature/s of the Shareholder(s)
Note: Please delete the inappropriate words Instructions as to completion are noted on the reverse hereof. Instruction as to Completion
1. The instrument appointing a proxy may be in writing under the hands of the appointor or of its Attorney duly authorised in writing or if such appointor is a corporation under its common seal or the hand of its Attorney or duly authorised person. 2. The instrument appointing a proxy and the Power of Attorney or other authority, if any, under which it is signed or a notarially certified copy of that Power of Attorney or other authority will have to be deposited at the office of the Company Secretaries, Corporate Services (Private) Limited, 216, De Saram Place, Colombo 10 not less than 48 hours before the time appointed for the holding of the meeting.
ANNUAL REPORT 2016/17
THE LIGHTHOUSE HOTEL PLC ANNUAL REPORT 2016/17
Colombo 02, Colombo 02, Sri Lanka 470 9400 +94 11 T: F: +94 11 234 5729 E-mail: [email protected] www.jetwinghotels.com Sri Lanka Sri Lanka +94 91 222 3744 T: F: +94 91 222 4021 Jetwing Hotels Limited Jetwing House, 46/26, Nawam Mawatha, Jetwing Lighthouse, Jetwing Lighthouse, Dadella, Galle,