Our whole approach to hospitality and to our stakeholders took great planning, foresight, commitment and passion to arrive at. At every step of the way, we stayed true to our unique identity and culture and the years have shown this to be a defining factor of the success enjoyed by any Jetwing enterprise.
We did all this for one purpose...and one purpose alone. To serve up the very best of Jetwing Lighthouse, every day, every time, on a platter to our valued guests and all other stakeholders.
This report places a complete account of the hotel’s performance for the year under review, on a platter, for the benefit of all. 03 ��� About Us
12 ��� About the Report
14 ��� Highlights of the Year
16 ��� Chairman’s Message
20 ��� Managing Director’s Review
24 ��� Business Model Organizational Profile...24 Operating Environment...26 Stakeholders...31 Materiality and Value Creation...33
38 ��� Management Discussion and Analysis Deriving Value...38 Delivering Value...46
74 ��� Stewardship Board of Directors...74 Corporate Governance...78 Remuneration Committee Report...85 Audit Committee Report...86 Risk Management...88
93 ��� Financial Reports Contents Annual Report of the Board of Directors on the Affairs of the Company...94 Statement of Directors’ Responsibilities...99 Independent Auditor’s Report...100 Statement of Financial Position...101 Income Statement...102 Statement of Other Comprehensive Income...103 Statement of Changes in Equity...104 Statement of Cash Flows...105 Notes to the Financial Statements...106
141 � Annexes Related Companies which had Transactions with the Company...141 Names of the Directors of the Related Companies which had Transactions with the Company...142 Information to Shareholders and Investors...143 Ten Year Summary...144 GRI Content Index...146 Corporate Information...151 Notice of Meeting...152 Form of Proxy Enclosed Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
About Us
The Lighthouse Hotel PLC was incorporated in 1994. An integral member of the Jetwing Family of Hotels, it is a luxury hotel establishment located along the South Western coast of Sri Lanka close to the historic city of Galle. It bears the distinctive architecture and design flair of one of Sri Lanka’s most iconic geniuses, Geoffrey Bawa.
Jetwing Lighthouse targets up-market leisure and business travellers and has a current inventory of 85 rooms including 05 themed suites. In addition, it also owns Jetwing Kurulubedda, a boutique hotel with two private dwellings.
The Lighthouse Hotel PLC has a vision - ‘To be world class in everything we do’. In achieving the aims of its mission statement, ‘To be a family of people and companies committed to legendary and innovative service leading to high stakeholder satisfaction’ the Hotel banks on four defined traits - Passion, Humility, Integrity and Tenacity.
The Lighthouse Hotel PLC | Annual Report 2014/15 03
An evening of intimacy
Rock dining at Jetwing Lighthouse is an immensely popular signature dining experience, in a completely unique setting One with the environment
Geoffrey Bawa’s firm view of the hotel was one of open spaces, and where the buildings are one with the environment around them
Relax, as long as you like
The interiors of the hotel offer soothing and comfortable vibes Fit for a king
Extremely spacious and luxurious rooms make Jetwing Lighthouse truly special
Light and shadow
The green grass at your side, and a pathway to bliss Decadent and scrumptious
Dining is an experience unto its own; using only the finest in ingredients Healing hands
Rejuvenate, relax, and feel peace
Sunset feasts
A speciality of Jetwing Lighthouse, the BBQ dinner is truly a feast of flavour! All that’s missing is you
Courtyard dining arrangement at Jetwing Lighthouse, perfectly arranged for an memorable evening Elegant and inviting
The two pools at Jetwing Lighthouse are perfect for a quick dip, or a leisurely lap - your choice About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
About the Report
Report Structure In this, our second integrated Annual Report we are presenting a comprehensive yet concise account of our performance during the year 2014/15. This year we have built further on the new format which we adopted last year. It allows the Company to communicate more effectively and coherently the interactions and interdependence of the many aspects of our business – such as strategy, governance, performance and prospects – in the context of creating value over time.
In preparing this report we have drawn on concepts, principles and guidance given in the following where applicable: - Global Reporting Initiative (GRI) Sustainability Reporting Guidelines G4 (2013) [www.globalreporting.org] - The International Integrated Reporting Framework (2013) [www.theiirc.org] - The Smart Integrated Reporting MethodologyTM [www.smart.lk]
Value Creation and Capital Formation Our approach to integrated reporting largely reflects integrated thinking and the way we do business. This year too we have seamlessly integrated financial reporting and sustainability reporting to better describe the duality of our purpose, namely, deriving and delivering value that leads to internal and external capital formation.
Our internal capital formation is a result of value created by The Lighthouse Hotel PLC for itself and comprises financial capital and institutional capital. Our external capital formation is a result of financial and non-financial value created by The Lighthouse Hotel PLC for its stakeholders. Both aspects are relevant as the ability of The Lighthouse Hotel PLC to create value for itself is linked to the value it creates for others. These concepts are discussed in greater detail on pages 36 and 37.
Report Boundary and Materiality The Lighthouse Hotel PLC does not have any subsidiaries or associates. Hence, the material contained in this Report pertains solely to properties of The Lighthouse Hotel PLC. However, non-financial information included, are only for owned properties of The Lighthouse Hotel PLC.
12 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
An important consideration to be noted is that since Jetwing Lighthouse is an entity operating within the Jetwing Brand, many of its practices and processes and its statutory orientation conforms to standard practices observed across the Jetwing Family of Hotels. This explains why the reader will find phraseology such as ‘Jetwing Family of Hotels’; ‘Jetwing Hotels’; ‘associates’ and the like interspersed in our narrative.
Out Report focuses on aspects that are material and relevant. It is an assessment based on the extent to which they may substantively affect the Company’s ability to create value over the short, medium and long term. Materiality determination process is discussed under Business Model on page 24.
Compliance This integrated Annual Report covers the 12-month period from 1st April 2014 to 31st March 2015. The Lighthouse Hotel PLC maintains an annual cycle for financial and sustainability reporting and the latter is in accordance with the core criteria of GRI G4 guidelines.
There are no significant changes from previous reporting periods in the scope and aspect boundaries. The last published report - which was also an integrated report - was covered the 12-month period ended 31st March, 2014.
There were no restatements of information provided in previous Reports.
The information contained in this Report, as in the past, is in compliance with all applicable laws, regulations and standards.
Precautionary Principle The Lighthouse Hotel PLC applies a precautionary principle across all its businesses with regard to social and environmental sustainability and we advocate a risk-based approach to our operations through our management systems.
Contact We welcome your comments, queries and suggestions. Please channel these to –
Group Accountant, Jetwing Hotels Ltd., Jetwing House, 46/26, Nawam Mawatha, Colombo 02. Tel: +94 11 234 5700 Ext. 1315 or 2259 E-mail: [email protected]
The Lighthouse Hotel PLC | Annual Report 2014/15 13 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Highlights of the Year
2015 2014
Performance for the year ended 31st March Revenue Rs. '000 731,743 681,105 Earnings Before Interest, Tax, Depreciation & Amortization (EBITDA) Rs. '000 229,785 197,872 Profit Before Tax (PBT) Rs. '000 140,456 136,597 Profit After Tax (PAT) Rs. '000 129,407 122,319 Earnings Per Share (EPS) Rs. 2.81 2.66 EPS Growth % 6 9 Return on Equity % 5 5
Financial Position as at 31st March Total Assets Rs. '000 2,768,213 2,742,109 Total Debt Rs. '000 158,745 138,779 Total Equity Rs. '000 2,467,060 2,430,650 Number of Shares in Issue No. 000s 46,000 46,000 Net Assets Per Share Rs. 53.63 52.84 Debt/Equity % 6 6 Debt/Total Assets % 6 5 Current Ratio 1.04:1 0.75:1 Quick Asset Ratio 0.85:1 0.60:1
Market/Shareholder Information Market Price Per Share as at 31st March Rs. 60.00 44.40 Market Capitalisation Rs. '000 2,760,000 2,042,400 Price Earnings Ratio Times 21.35 16.69 Dividend Payout % 71 75 Dividend Proposed Rs. '000 92,000 92,000 Dividend Per Share Rs. 2.00 2.00
Value Added for the year ended 31st March To Government Rs. '000 11,049 14,278 To Employees Rs. '000 124,057 115,013 To Shareholders Rs. '000 92,000 92,000
14 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
25,000 750
20,000 600
15,000 450
10,000 300
5,000 150
0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
Room Nights Occupied (No.) Revenue (Rs. million)
150 3.00
120 2.40
90 1.80
60 1.20
30 0.60
0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
Profit After Tax (Rs. million) Earnings per Share (Rs.)
The Lighthouse Hotel PLC | Annual Report 2014/15 15 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Chairman’s Message
I am pleased to present to you the Annual Report and Audited Accounts of The Lighthouse Hotel PLC for the financial year 2014/15.
The Hotel made steady progress during the year in review; a year which did hold some areas of challenge for us.
Let us examine the Hotel’s performance within the context of our operating environment for the period under review.
The Economic Environment An uneven global recovery continued to prevail in 2014. The world’s economic forecast for the year was reduced by 0.1 percentage points to close at 3.4% on the back of weaker than expected global activity, particularly in the first half of 2014, as well as worsening geopolitical tensions in an ever increasing number of ‘hot spots’ around the world.
The status quo as per the countries fuelling global economic growth remained, with South East Asia and the Far East continuing to be the engines of this growth, albeit with dips in performance.
Here at home, the economy grew by 7.7% in 2014, fuelled by strengthening domestic economic activity and improving external demand, whilst inflation rates remained below 5%.
Tourism – Global and Local Over 1.1 billion tourists travelled the world in 2014 – an increase of 4.4% over the previous year. The forecast is for this number to grow by between 3% and 4% in 2015.
The second highest growth in terms of tourist arrivals, after the Americas, was recorded from countries within Asia and the Pacific Rim at 5%.
It is encouraging to see substantial growth in long-haul travel from countries such as China, Brazil, Russia and India. Travellers from these countries are gradually becoming mass tourists and are clocking up very substantial numbers.
16 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
In Sri Lanka, tourist arrivals grew by 19.8%. From a regional perspective, the key generating market continued to be Western Europe, from which region tourist arrivals grew by 13.8%. Interestingly though, Western Europe’s market share decreased slightly from 33% to 31%, reflecting significant improvement in arrivals from non-traditional markets.
From a country perspective, tourist arrivals from India grew by 16.3%, whilst China recorded the highest growth of 136.1%. Oman and Russia followed with 67.1% and 36.1% respectively.
With a new administration at the helm of affairs in Sri Lanka, the country’s foreign policy has been realigned with a more inclusive outlook towards some of Sri Lanka’s traditional markets.
With relevance to Jetwing Lighthouse, Western Europe is one of our most important markets. During the winter season, 60% to 70% of our income is derived from customers from this region – and this status quo is set to continue in the ensuing years.
Thus, improved relations with countries of that region should stand the Hotel in good stead.
A Couple of Challenges Uncommonly inclement weather during the year, had an adverse effect on our business whilst the winter peak was affected by the uncertainty surrounding the elections.
Performance Although we recorded growth in our key financial indicators once again this year, our performance did not reach expected levels. Profit before tax grew 3% whilst revenue grew 7%. Profit after tax stood at Rs. 129 million.
Despite the Hotel operating with its full inventory, a confluence of factors exerted some pressure on our operations. The downward revision of the exchange rate of the Euro challenged our pricing against contractual obligations held with entities from the European region.
The Lighthouse Hotel PLC | Annual Report 2014/15 17 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
From the perspective of distribution, it is encouraging to note that online bookings now account for 18% of business received – up from a level of just 5% three years ago. We expect this to rise to 50% within the next three years.
Due to our strength in online marketing and our brand positioning, we took a strategic decision to move out of the Small Luxury Hotels of the World (SLH) branding (effective end July 2015) as we felt the desired benefits from such an association were not adequately realised, given the evolution of our product. However, we are very thankful to SLH for the satisfactory association we have enjoyed.
A further addition to the Hotel inventory by way of two new units at Jetwing Kurulubedda, is in the final stages of construction.
A Unique Identity Often, words don’t do justice to an experience. This is true when trying to explain what it is about the Jetwing Lighthouse, that is uniquely different from other properties.
From the choice of location, through its architecture, appointments and culinary excellence to the human touch that lends character to our service – these are all shaped by the Jetwing ethos of ‘working with rather than for’; of keeping environmental concerns top of the mind; of deep passion and commitment to an industry; of being proud of being uniquely Sri Lankan; of being truly a partner in the local community and a million more facets like these.
It isn’t a single person or a single factor but a combination of factors and the collective effort that differentiates us.
It is this unique identity that is our prime product – one which has clearly differentiated our offering from the many others up for choice.
Returns to Shareholders For the year under review, the Board has declared a final dividend per share of Rs. 2/-, subject to final shareholder approval at the AGM. This will amount to a dividend outflow of Rs. 92 million.
18 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Looking Forward From an industry perspective, I believe we must position Sri Lanka in the ‘right’ markets and tailor an optimum mix that will allow the Hotel to command more lucrative pricing.
From the perspective of the property, we will seek to brand and position the Hotel as the most sought after hospitality entity in the South – consolidating its position as being the ‘gateway to the South’ and approach a more luxury oriented segment of travellers. We will drive more business via online channels, especially through the corporate website, and push up yields to do justice to and complement the product and service we offer.
We will also pursue further the ‘greening’ of our Hotel; I would like to see an even more environmentally responsible and friendly property in the ensuing years.
Appreciation As I conclude this message, I would like to thank the Board of Directors for their guidance and support in charting the optimal course for the Hotel this year.
I thank Jetwing Hotels; their management team and associates for the yeoman support and co-operation they unstintingly extend for the furtherance of Jetwing Lighthouse and its aspirations.
I warmly thank the tour operator and travel agent fraternities and all our honoured guests – you are integral to our existence and success.
To Jetwing Lighthouse family – thank you for your efforts, contributions, loyalty and the belief that in working together and delighting our clients, we can truly be partners of the Jetwing Lighthouse saga.
There is an undiminished dynamism and ‘buzz’ in the country and the industry today – different complexions spawn different opportunities and challenges alike.
There is joy, excitement and accomplishment to be pursued and won; and we are ideally placed for the chase!
Hiran Cooray Chairman 28th April, 2015
The Lighthouse Hotel PLC | Annual Report 2014/15 19 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Managing Director’s Review
It was gratifying indeed to complete the year 2014/15 at full strength; with the addition of 22 rooms in a new wing, a ‘one of a kind’ speciality restaurant – Nihal’s and enhancements to our spa and overall dining experience.
Two other distinguishing factors of the year were not so heartening however, as a prolonged spell of inclement weather as well as some trepidation within the tourist community, caused by the impending elections in the country, impacted our year end arrivals and thereby our performance.
Still, we closed the year with gains in the areas that matter, albeit on a lower note than we had anticipated.
Performance From the unparalleled architecture of Geoffrey Bawa to the singular ethos and culture of Jetwing, Jetwing Lighthouse was always the ‘Jewel of Galle’ and the gateway to the South. That it remains so to this day is testament to a unique property and a unique identity.
The Hotel grew its revenue by 7%, whilst profit after tax grew by 6%. Profit before tax, at Rs. 140 million grew 3% over the previous year. We continue to generate healthy cash flows, which augurs well for the coming years.
Marketing the Unique Our competition stems mainly from the region – from countries such as the Maldives, Thailand, Malaysia and Vietnam. Thus, we pay great attention to positioning and marketing the Sri Lankan experience as a lead-in to targeted hotel exposure. Our management company, Jetwing, has positioned agencies in key traditional and emerging markets to handle this task. This ensures that our property has ‘on the ground’ presence at industry and trade fairs.
The fastest emerging distribution channel in the world today is the Internet. Online bookings have skyrocketed in recent times with 18% of the inward business of the Hotel coming from this channel.
20 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Our People and Culture Our people are steeped in a common culture and ethos that motivates the Jetwing Family. It is underpinned by the values of Passion, Humility, Integrity and Tenacity.
In this communion of thought, mind and effort, we are akin to a single family. We enjoy the fruits of an open administration – the ultimate open door environment, built on complete accessibility across every level of the Hotel. Thus, we regard ourselves as associates rather than ‘staff’ or ‘employees’. This is the glue that binds our enterprise to form a composite whole of great strength and resilience with success inevitably following.
Of course it goes without saying that an impeccable property requires impeccable human resource processes and these we maintain to pristine levels, through constant state-of-the-art training for every associate.
Engaging the Local Community One of the success stories of Jetwing Lighthouse has been our ability to blend in with the locale and the local community. This stems from a commitment that seeks not just to be another edifice along the beach, but to truly integrate with people and surroundings and empower and add value to lives where we can.
We buy local whenever we can, adhering to our laid down parameters for quality. Local purchase of items like fish, fruits and vegetables help locals sustain and empower local vendors and helps to build a solid relationship with the local community.
We have a great understanding with the ‘tuk tuk’ drivers of the area and have a programme for them, where we train them in what it takes to serve our guests.
We have a programme targeting the youth of the area – the Jetwing Youth Development Programme – where we identify youth, struggling to build a future for themselves and take them under our wing, teaching them our trade and other skills. Here too, we are always on the look-out to employ as many of them as we can.
Our Hotel has also pioneered whale watching off the southern coast, which remains a huge tourist attraction – here too, we do not operate in isolation but involve and include local resources and personnel, helping to empower the community as is our goal.
The Lighthouse Hotel PLC | Annual Report 2014/15 21 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Environmental Consciousness The Jetwing family is founded on an extremely well-developed environmentally sensitive platform. As a member of the family, the subject is no less important to Jetwing Lighthouse.
Being mindful that grid electricity constitutes of almost 40% of our energy
demand, we have recommended to the Board that we introduce a 210 kWp solar PV system as well as a vapour absorption chiller to reduce this dependency on grid electricity. It is estimated that these two measures alone could cut down our carbon footprint by approximately 25%. Although initially capital intensive, these measures can also slash our power bill by almost 40%.
We have proposed to install a water bottling plant to produce the Hotel’s requirement of bottled drinking water. Using glass bottles, which can be reused, we thus eliminate the usage of plastic bottles, with their attendant need for responsible disposal.
We are even talking to our suppliers and requesting them to refrain from using plastic containers and opt for recyclable materials. We have achieved an almost 100% success rate here.
Our Future Outlook Our target for increased occupancy will be challenged somewhat in the year to come. The challenge arises locally, as a rapidly growing industry sees the advent of many more players in the market, including a fast growing informal sector all putting rooms on the market. There are also others not operating under the aegis of tourism authorities.
Thus we are experiencing a supply over demand situation.
Even so, with the strength of our market network and positioning, we are confident of maintaining profitability.
Another area we need to pay attention to is our online booking regime. We will be strengthening our online marketing team to maintain optimum service levels necessary to remain a property of choice for the largest number of online holiday searchers.
22 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Together with these initiatives, we must be vigilant in all aspects of our operation, as the web is often a very unforgiving market place, with equal facility for negative as well as positive comment to go worldwide via customers’ posts.
In terms of enhancements to inventory, we are adding 2 more rooms (currently under construction with two more planned) and a swimming pool to our property Jetwing Kurulubedda, which should be ready by end 2015.
To Conclude I would like to thank our Chairman and the Board of Directors for their guidance and support in running the affairs of the Hotel to the highest standards.
I thank Jetwing’s Hotel Management team for their support and initiative in always helping the furtherance of the aims and objectives of the Hotel.
I would like to express my deep sense of gratitude to the tour operators and travel agents, whose initiative and support have ensured the continued success of Jetwing Lighthouse.
Thank you also to all those who have experienced the hospitality of Jetwing Lighthouse over the past year for their comments and feedback – these have been invaluable to us in stimulating new thought, improvement and putting processes on track.
Thank you Ms. Priyanthika Wijenaike our General Manager and all our dear associates of every rank – your readiness and willingness to commit wholeheartedly to Jetwing Lighthouse cause is truly remarkable.
To our shareholders, my heartfelt appreciation and thanks for your confidence in Jetwing Lighthouse and its ability to deliver consistent and growing value year upon year.
R.A.E. Samarasinghe Managing Director 28th April, 2015
The Lighthouse Hotel PLC | Annual Report 2014/15 23 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Business Model
Organizational Profile
The Organization The Lighthouse Hotel PLC (‘Company’) is a limited liability company incorporated in 1994 and domiciled in Sri Lanka. It is listed in the Colombo Stock Exchange.
The registered office of the Company is located at ‘Jetwing House’, 46/26, Nawam Mawatha, Colombo 02 and its principal place of business is at Dadella, Galle.
The Company owns and operates Jetwing Lighthouse and Jetwing Kurulubedda, which is targeted at up market leisure travellers and its business and operations fall within the Hotels and Travel sector.
The Company does not have an identifiable parent of its own.
The Hotel’s shareholders number 1,168 of which 94% are individuals and 6% are institutions accounting for 11% and 89% of shareholding respectively, as at 31st March, 2015. (Please see further details in the section on Investor Capital appearing on page 46).
24 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Organizational Structure General Manager
Resident Manager
Executive Front Office Executive F&B Maintenance Chief Housekeeper Manager/ Chef Manager Engineer Accountant PR Manager
Naturalist Assistant Training/HR Spa Manager Executives
Significant Change There were no areas of significant change at the Hotel except for the introduction of a show kitchen at the Cardamom Cafe.
The Lighthouse Hotel PLC | Annual Report 2014/15 25 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Operating Environment
The Global Economy The world’s economy grew by 3.4% in 2014 – the same margin as it did in 2013. Whilst this is a modest performance and continues to reflect the struggle it undergoes to reach ‘good health’, the region-wise results fuelling this growth tells an interesting story.
The advanced economies, so badly hit by the recessive conditions, grew by 1.8% in comparison to a growth of 1.4% in 2013. This pick up in fortunes, though marginal, reflects slow but steady progress towards recovery for these countries.
The US economy grew on the back of steady job creation and income growth, lower oil prices and improved consumer confidence – all of which benefited consumption, the US economy’s ‘engine of growth’. Economic activity in the Euro area was initially weak, but picked up to take it from the ‘red’ of negative growth (-0.5% in 2013) to a marginally positive status (0.9% in 2014).
In contrast to the advanced economies, emerging markets and developing economies saw growth slowing, with the rate for 2014 settling at 4.6% compared with 5% in 2013.
Growth in emerging and developing Europe declined in 2014 to 2.8% as compared with 2.9% in 2013. However, the forecast for this region is favourable with growth reaching 2.9% in 2015 and 3.2% in 2016.
Despite gains in the advanced economies and a tapering off of growth for the emerging market and developing economies, the latter region still accounted for three-fourths of global growth in 2014.
Consumer prices in advance economies have remain unchanged during 2014 (at 1.4%). But in emerging and developing economies consumer prices changed favourably from 5.9% in 2013 to 5.1% in 2014.
The forecast for the years ahead (2015 and 2016) indicate steady if marginal growth for the global economy: 3.5% in 2015 and 3.8% in 2016. The growth in 2015 is expected to be due to the rebound in advanced economies, whilst further growth in 2016 is expected to be driven by a pickup in emerging markets.
26 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Global Tourism
International Tourist Arrivals million 1,250
1,000
750
500
250
0 2010 2011 2012 2013 2014
International tourist arrivals topped 1.1 billion in 2014 a 4.4% growth over the previous year. Tourists originating from advanced economies drove this growth constituting 54.7% of arrivals whilst emerging economies accounted for 45.3% arrivals.
Europe was the most visited region attracting more than half (583.6 million) of the world’s tourists (1,135 million). However, growth slowed from 4.9% in the previous year to 3% in 2014.
International tourist arrivals in Asia and the Pacific (+5.4%) increased by 13 million to 263 million. The best performing regions were North-East Asia and South Asia (7.3% and 6.6% respectively). Arrivals in Oceania grew by 5.8%, while growth slowed down in South-East Asia (+2.7%) as compared to previous years.
Growth of arrivals to Africa dwindled from 4.8% in 2013 to 1.8% in 2014.
Tourist arrivals to countries of the Central Eastern European region experienced negative growth (-4.1%) compared with a positive growth in 2013 (7.3%).
The Americas recorded the highest growth in tourist arrivals for 2014 at 8.1%. The countries of this region attracted 13.5 million more visitors than in 2013. This growth was driven in particular by North America (9.3%) and the Caribbean (6.5%).
The Lighthouse Hotel PLC | Annual Report 2014/15 27 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
World tourism is expected to grow by around 3% to 4% in 2015 thereby contributing significantly to a much needed global economic recovery.
International Tourist Arrivals (%) 4% 5% 23% 16%
Asia & the Paci c Europe Americas Africa Middle East 52%
The Sri Lankan Economy Sri Lanka’s GDP grew by 7.4% for 2014 up from the 7.2% growth recorded the previous year.
Expansion in the Industry sector and growth in the Services and Agriculture sectors were the main drivers of GDP growth.
GDP Rs.billion 4,000
3,200
2,400
1,600
Service 800 Industry Agriculture 0 2012 2013 2014
Industry sector growth (11.4%) was fuelled by the continuing boom in construction and infrastructure development activity in the country. The Construction sub-sector was the highest contributor (23.8%) to Industry sector growth.
28 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Factory industry, which comprises the largest share of the Manufacturing sub-sector grew by 8.5% in 2014 aided by improved external and domestic demand as well as a conducive domestic macroeconomic environment.
The Services sector grew by 6.5% on the back of improved performance in the wholesale and retail trade sub-sector.
Year on year inflation remained in single digit territory for the sixth consecutive year. The annual average rate of headline inflation decelerated to 3.3% in December 2014 from 6.9% in December 2013.
The Sri Lankan rupee remained relatively stable during 2014. It depreciated by 0.23% against the US dollar to Rs. 131.05 as at the end of 2014. The rupee appreciated against all other major currencies as a consequence of cross currency exchange rate movements.
External performance showed resilience in 2014, with a narrowing of external sector imbalance and a surplus in the overall balance of payments.
The Sri Lankan Tourism Industry The tourism industry performed well in 2014, exceeding tourist arrival targets set for the year, which was 1.5 million visitors. Tourist arrivals for the year amounted to 1,527,153, a 19.8% increase from the previous year’s 1,274,593 arrivals. Annual Tourist Arrivals 000 % 2,000 50
1,600 40
1,200 30
800 20
400 10 Tourist Arrivals (’000) Change (%) 00 2009 2010 2011 2012 2013 2014
The Lighthouse Hotel PLC | Annual Report 2014/15 29 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Western Europe continued to be the largest generator of tourist traffic to Sri Lanka, with 479,007 visitors from the region – a growth of 13.8%. However, its share of arrivals to Sri Lanka fell to 31.4% in 2014, down from 33.4% recorded in 2013.
Similarly the second major market, South Asia too suffered a decline of market share, recording 24.2% of total arrivals in 2014 as against 25.6% in 2013.
These declines were due to significant increases in arrivals from other regions such as East Asia and Eastern Europe, where effective destination promotion in those regions bore fruit.
China, Indonesia, Japan and Russia were the main generating countries from these two regions.
Overall in terms of highest generator by country for 2014, India led, followed by the UK, China, Germany and the Maldives. These five countries together accounted for 46.1% of the total arrivals to Sri Lanka in 2014.
China posted the highest growth – 136.1% - through the 128,166 visitors it generated, followed by Indonesia with 29,558 arrivals (68.5%) and Oman with 12,756 arrivals (67.1%).
Tourist Arrivals No. by Country of 500,000 Residence 2014 400,000
300,000
200,000
Arrivals 2012 100,000 Arrivals 2013 Arrivals 2014 0
ica
ica
ica
Afr
n Europe
n Europe
East Asia
ustralasia
th Amer
South Asia
A
Middle East
Latin Amer
ester
Nor
Easter
W
30 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Earnings from tourism grew 41.7% for the year in review to reach US $ 2,431 million. The expansion in tourist arrivals, higher spending and longer durations of stay were the main contributing factors.
From a macro perspective, a significant increase in investment in the tourism industry, infrastructure development, the introduction of new tourist attractions and promotional campaigns conducted by both the State and private sector, helped to attract more tourists to Sri Lanka.
Investment in new properties continued in 2014, with international hotel chains such as Shangri-La, Hyatt, Sheraton, Movenpick, RUI, NEXT, Best Western and CENTARA proceeding with construction.
Tourism is booming in the Northern and Eastern provinces of Sri Lanka, as development of those areas go on apace. These are locations of great potential in diversifying the tourism product of the country.
These and other initiatives will aid the country achieve its target of 2.5 million arrivals by the year 2016.
(Sources: World Tourism Organization, IMF Report, the Central Bank of Sri Lanka Annual Report 2014 and the Sri Lanka Tourism Development Authority.)
Stakeholders
Stakeholder Identification It is an incontrovertible fact that value is not created by or within the Hotel alone. It is created through relationships with many important stakeholders.
Thus we attach great importance to the identification and timely engagement of key stakeholders who significantly contribute to the value creation process of the Hotel.
A shared understanding of the impacts and implications of our enterprise on these groups and their response to issues of importance is vital to the long term prosperity and well-being of stakeholder and Hotel alike.
The Lighthouse Hotel PLC | Annual Report 2014/15 31 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
We define stakeholders as being entities or individuals that can reasonably be expected to be significantly affected by the Hotel’s activities and services and whose actions can reasonably be expected to affect the ability of the Hotel to successfully implement its strategies and achieve its objectives.
Stakeholder Engagement In presenting the data appearing below, we wish to provide an insight into the various modes and mechanisms of stakeholder engagement Jetwing Lighthouse enacts through the year.
Stakeholder Process of Engagement and Frequency
Shareholders/Investors zzAnnual General Meeting, which provides an opportunity to review the past year’s performance and engage in discussion with the management. zzQuarterly financial reports/media releases, which provide a review of current performance during the year. zzWebsite, regularly updated. zzE-mail address, provided for comments and suggestions.
Customers zzA guest satisfaction data capture card system is maintained. zzRegular customer reviews help build and maintain rapport. zzWebsite, regularly updated. zzJetwing Lighthouse also manages the TripAdvisor page for the property on a daily basis. zzThrough Revinate we maintain a comprehensive view/ response to customer comment. zzGuests are educated on the Hotel's commitment to sustainability via a Green Directory and environmental messages displayed in each guest room and other areas of the Hotel.
32 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Stakeholder Process of Engagement and Frequency
Employees zzComprehensive biannual appraisal system facilitates transparent evaluation, dialogue and performance based remuneration and reward. zzTraining programmes are initiated based on career development and career progression needs zzJetwing Sports Day and Jetwing Prathiba our employee talent show are activities that take place to encourage employee engagement.
Society zzJetwing Lighthouse is involved in ongoing projects (Community outreach initiatives) as well as Projects of a one-off nature (Humanitarian programmes) which are undertaken regularly to assist the surrounding communities.
Government/ zzPeriodic disclosures Regulatory Bodies zzParticipation in relevant associations
External Initiatives Currently Jetwing Lighthouse has not subscribed to any externally developed charters or principles.
Materiality and Value Creation
As explained in the section About the Report (page 12), we have determined certain aspects as material to The Lighthouse Hotel PLC and our stakeholders through an identification process and a materiality analysis.
Material aspects and indicators are those that echo the significant economic, social and environmental impacts of the Company. We regard an aspect as material if it substantively affects the Company’s ability to create value over short, medium and long term.
The Lighthouse Hotel PLC | Annual Report 2014/15 33 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
The following steps summarises the process we adopt to determine the material aspects and indicators.
zzWe analyse current and potential social, environmental and economic issues associated with our operations and identify their impact on the business and stakeholders.
zzImpacts are identified based on the consequences to our stakeholders (using the feedback from both internal and external) and to the business.
zzAn ‘Impact on the Company vs Impact on the Stakeholders’ matrix is plotted to identify the aspects of high materiality. These aspects could have negative or positive impact on the business and its stakeholders.
zzJetwing Lighthouse’s Management team conducts a review to prioritize the high materiality aspects in terms of business focus, geographical spread and the profiles of our key stakeholders.
The above process lead to a materiality matrix in respect of risks that should be mitigated and opportunities that may be exploited.
34 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Rating of Material Aspects
Aspect Indicator Significance to Significance Jetwing Lighthouse to Stakeholders
1 Economic Performance EC 1 V V EC 3 2 Market Presence EC 6 M H 3 Indirect Economic Aspects EC 7 M M 4 Procurement Practices EC 9 H H 5 Energy EN 3 V H EN 5 EN 6 6 Water EN 8 V M EN 10 7 Emissions EN 15 M V EN 16 EN 18 EN 19 8 Effluents and Waste EN 22 M V EN 23 9 Compliance EN 29 H H 10 Overall - Environmental Investments EN 31 H M 11 Environment Grievance Mechanism EN 34 M H 12 Employment LA 1 V M LA 2 LA 3 13 Occupational Health and Safety LA 6 M H 14 Training and Education LA 9 V H LA 10 LA 11 15 Diversity and Equal Opportunity LA 12 H H 16 Equal Remuneration for Women and Men LA 13 H H 17 Labour Practices Grievance Mechanisms LA 16 V H 18 Non-discrimination HR 3 M M 19 Customer Health and Safety PR 1 H V 20 Product and Service Labelling PR 5 H H V - Very High 21 Marketing Communications PR 7 V H H - High 22 Compliance PR 9 H H M - Medium 23 Engaging with Local Community SO 1 M M
The Lighthouse Hotel PLC | Annual Report 2014/15 35 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Materiality Matrix
7, 8 19 1 Very High Very
4, 9, 15, 2, 11, 13 5, 14, 17, 21 High 16, 20, 22
Significance to Stakeholder 3, 18, 23 10 6, 12 Medium
Medium High Very High
Significance to Jetwing Lighthouse
The Duality in Value Creation This segment of our report highlights the integral aspect of integrated reporting, where The Lighthouse Hotel PLC’s business model exemplifies the process that transforms the various forms of capital through its business activities to create value over time.
The Lighthouse Hotel PLC delivers value, both financial and non-financial, to its key stakeholders in the context of economic, social and environmental aspects within which it operates. These same stakeholders are of value to us, and they are nurtured and developed over a period of time. As stores of value, they constitute our stakeholder capital, and are external to The Lighthouse Hotel PLC; the key components being investor capital, customer capital, employee capital, social capital and environmental capital.
36 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
The Lighthouse Hotel PLC in turn derives value through the dynamic interaction between the external capital as well as its own internal capital to drive future earnings. The capital internal to The Lighthouse Hotel PLC comprises financial capital and institutional capital. The latter includes intellectual property, knowledge, systems, procedures, brand value, corporate culture, business ethics, integrity and the like.
Delivered by The Lighthouse Hotel PLC
The Lighthouse Stakeholders Hotel PLC Value
Derived by The Lighthouse Hotel PLC
Value derived Value delivered leads to internal leads to external capital formation capital formation
Total Capital of The Lighthouse Hotel PLC
The various forms of capital are in a state of flux with flows taking place among them.
The Lighthouse Hotel PLC has access to and makes use of these forms of capital in creating value for itself (deriving value) and its stakeholders (delivering value) through its business model. They underscore the dual nature of value creation as depicted in the above diagram.
We will next review the performance of The Lighthouse Hotel PLC in this context.
The Lighthouse Hotel PLC | Annual Report 2014/15 37 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Management Discussion and Analysis
Deriving Value
Internal Capital Formation As has been described in our section on Value Creation and Capital Formation, appearing on pages 33 to 37 of this report, we will examine in more detail the formation of capital that is internal to the Company. While what is most visible and quantifiable is financial capital, internal capital also includes several intangibles that, as discussed previously, constitute institutional capital.
Financial Capital
Financial Performance Revenue The Company recorded a revenue growth of 7% by achieving total revenue of Rs. 732 million during the financial year under review, compared to Rs. 681 million achieved during the previous period. The growth in revenue is mainly due to increase in room revenue by 12% and Food & Beverage Income by 4%. Room revenue has increased mainly due to the increase in occupied room nights for the year by 9% compared to previous period under review despite the decrease in occupancy for the year.
Occupancy % 100
80
60
40
20
0 2011 2012 2013 2014 2015
Average room rates (ARR) have increased by only 2% during the financial year. This is mainly due to increased pressure on rate increases.
38 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Food & Beverage income has increased mainly due to increase in Banquet income by 10%, compared to previous year.
Revenue Composition Rs.million 1,000
800
600
400
Room Revenue 200 Food & Beverage Other Hotel related Income 0 2011 2012 2013 2014 2015
Further, foreign exchange rate fluctuations, during the year under review, had a mixed impact to the Company’s revenue. This is due to the fact that the Company benefited from a slight depreciation in LKR against USD, which was offset with the significant drop in EURO.
Monthly Average LKR:USD Exchange Buying Rate (Rs.)
(Rs.) 145
140
135
130
125
120
il
y
y
y
uly
une
J
Ma
uar
Apr
J
ugust
March
ember
A
v
ebr
nuar Ja
October
F
No
December 2013-14 2014-15 September
The Lighthouse Hotel PLC | Annual Report 2014/15 39 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Monthly Average LKR:EUR Exchange Buying Rate (Rs.)
(Rs.) 180
170
160
150
140
130
il
y
y
y
uly
une
J
Ma
uar
Apr
J
ugust
March
ember
A
v
ebr
nuar Ja
October
F
No
December 2013-14 2014-15 September
Expenses During the period under review, total expenses have increased by 7% to Rs. 588 million from Rs. 550 million in the previous period. Cost of sales has decreased by 1%, compared to previous period and it is mainly due to slight change in revenue composition. Administrative costs and Marketing & Promotional expenses have increased by 7% and 17% respectively. However, Power & Energy costs shows a favourable variance compared to last year. This is mainly due to implementation of energy saving initiatives by the Company and also, reduction in market prices. Non-capital nature expenses incurred for the refurbishment, have resulted in the increase in Administrative costs. Payroll costs increased by 8%, compared to previous period, mainly due to salary revision to both Executive and Non-Executive staff.
Depreciation for the year was reported at Rs. 77 million, which is an increase of Rs. 13 million, compared to previous period. This is mainly due to additional depreciation charge from the capitalisation of the 22 new rooms, restaurant and Bar from December 2013.
40 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Expenses Composition - 2015 (%) 13% 25% 5%
Cost of Sales Administrative Expenses 21% Payroll Costs Marketing & Promotional expenses Depreciation 36%
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) The Company has reported an EBITDA of Rs. 229 million for the period under review, compared to Rs. 198 million achieved during the previous period. This is reflected in an impressive compound annual growth rate of EBITDA over the last five years of 25%. The increase in EBITDA is mainly due to strong growth in revenue. Due to increase in room inventory and cost synergy, arising from the same from December 2013, the EBITDA margin has increased marginally to 31% from 29% last year.
EBITDA Rs.million % 250 40
200 32
150 24
100 16
50 8 EBITDA (Rs. million) EBITDA Growth (%) 00 2011 2012 2013 2014 2015
The Lighthouse Hotel PLC | Annual Report 2014/15 41 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Profitability The Company recorded Profit before tax of Rs. 140 million during the year under review, compared to Rs. 136 million during the previous period. This shows a compound annual growth rate of pre-tax profits over the last five years of 36%.
Profit before Tax Rs.million 150
120
90
60
30
0 2011 2012 2013 2014 2015
Income tax charge for the year has reduced by 22% to Rs 11 million, compared. to the previous year as the increase in revenue has been offset by the reduction in interest income, which was taxed at the higher rate.
Profit after tax of the Company amounted to Rs. 129 million and represents an increase of 6% on the Rs. 122 million achieved in the previous period. Return on Equity for the Company remained same at 5%.
Statement of Financial Position The Company reported a strong financial position as at 31st March, 2015 with Total Assets amounting to Rs. 2,768 million, compared to Rs. 2,742 million in the previous period. During the year under review, Property, Plant and Equipment additions amounted to Rs. 66 million, mainly introduction of show kitchen in Cardamom Café and the capital nature refurbishment work carried out in the Hotel.
As at 31st March, 2015, the Company had a gearing level of 6%. During the year, the Company borrowed the balance US$ 522,500 to part finance the construction of new rooms. The loans were unsecured.
42 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Shareholders’ Funds Shareholders’ funds as at 31st March, 2015, increased marginally to Rs. 2,467 million from Rs. 2,431 million in the previous period, mainly due to increase in net profits. The Company’s net asset per share as at 31st March, 2015, stood at Rs. 53.63 per share.
Cash Flow Statement Cash position of the Company, as at 31st March, 2015, improved to Rs. 21 million, compared to Rs. 12 million last year. This is mainly due to reduction in Capital Expenditure and increase operational cash flow, before working capital changes. Cash outflow from investing activities amounted to Rs. 91 million compared to Rs. 380 million in the previous period. During the year, the Company invested in Rainforest Eco Lodge amounting to Rs. 29 million.
Value Added Statement
For the Year ended 31 March, 2015 % 2014 % Rs. ’000 Rs. ’000
Total revenue 731,743 681,105 Other income 5,460 7,783 737,203 688,888 Less: Purchase of goods (386,779) (371,230) and Services Value added 350,424 317,658
Distributed as follows: To Government as taxes 11,049 3 14,278 4 To employees as salaries and 124,057 35 115,013 36 other benefits To providers of capital - Dividends to shareholders 92,000 26 92,000 29 - Interest on borrowings 8,884 3 1,943 1 Retained within the business As depreciation 77,027 22 64,105 20 As retained profits 37,407 11 30,319 10 Total 350,424 100 317,658 100
The Lighthouse Hotel PLC | Annual Report 2014/15 43 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Institutional Capital Institutional capital encompasses a broad spectrum of non-financial components that are, like financial capital, internal to the Hotel and the Jetwing Family. It is a collection of intangibles that includes such aspects as – corporate culture and values, business ethics and integrity, brand value, organizational values, systems and processes, intellectual property and the like.
Corporate Culture and Values Jetwing Lighthouse as a member of the Jetwing Family ‘walks to the same drum’, where its fundamental culture and values are concerned. The Jetwing Family counts 42 years in the tourism and hospitality industry – a period over which an invaluable storehouse of knowledge has been built and experience gained.
Our corporate culture is based on four key qualities – passion, humility, integrity and tenacity. We are a Sri Lankan entity, fully imbued with the character and culture of the country and are proud to reflect all that is best about this nation in all we do.
We also believe strongly in the value of family and family values – we enshrine these at every turn in the way we live, work and interact.
Ethics, Integrity and Compliance Jetwing Lighthouse is uncompromising in its espousal of the highest ethics and integrity. Our every strategy and action is founded on a scrupulous adherence to all applicable laws, regulations.
We have a comprehensive governance mechanism in place and the Corporate Governance report appearing on page 78 explains these measures in detail.
Brand Equity Over the years, Jetwing Lighthouse has carefully established its brand positioning to occupy ‘top of mind’ recall in niche market segments.
The Hotel has been established as a luxury resort property. Our clientele consists of affluent travellers including couples and families. All of them we serve with our unique brand of ‘barefoot elegance’ and Sri Lankan hospitality.
44 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Positioned as we are as a unique and iconic Sri Lankan property that has fully earned its luxury rating, we are careful to maintain our brand equity at optimum levels in the market category we occupy.
We keep constant tabs on how our brand is faring by paying close attention to guest comments posted on myriad review sites channels such as TripAdvisor, as well as to comments we receive directly at the Hotel.
Organizational Knowledge The many years of operations that the Jetwing Family can count in the tourism and hospitality industry has helped us acquire industry knowledge of enviable depth. We have used this knowledge to fashion a true Sri Lankan landmark tourist enterprise, imbued with its own unique blend of international professionalism and local flavour.
We value very highly the exemplary and close relationships and/or membership we maintain with prestigious bodies such as – The Tourist Hotels Association of Sri Lanka and the Great Hotels of the World to name a few.
The Lighthouse Hotel PLC | Annual Report 2014/15 45 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Delivering Value
External Capital Formation The value created by The Lighthouse Hotel Plc for stakeholders through activities, relationships and linkages lead to the formation of capital that is external to the Hotel. They reside within our stakeholders but the Hotel has access to and make use of these together with its own internal capital, to drive business.
We will now discuss the formation of capital external to the Hotel, the material ones being – investor capital, customer capital, employee capital, social capital and environmental capital.
Investor Capital The Hotel’s investors both institutional and individual, provide financial capital with the expectation of earning satisfactory returns for their investments. These investors are of value to the Hotel and through the interaction of various forms of financial and non-financial capital, the Hotel drives future earnings to derive value for itself and deliver value to its stakeholders.
Dividend Policy The dividend policy of the Company seeks to maximize shareholder wealth in the short, medium and long term, while ensuring sufficient funds are retained for future business expansions and to provide consistent stream of dividend to shareholders.
The Board of Directors of the Company proposes a final dividend of Rs. 2/- per share (2014 - Rs. 2/- per share) subject to shareholder approval at the AGM. The total gross dividend outflow will amount to Rs. 92 million (2014 – Rs. 92 million). A dividend payout ratio of the Company will be 71% for the year ended 31st March, 2015 (2014 – 75%). In the past Company has maintained a dividend payout ratio of over 70%.
46 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Profit after Tax and Rs.million Dividends Paid/Proposed 150
120
90
60
30 Pro t After Tax Dividends Paid/Proposed 0 2011 2012 2013 2014 2015
Shareholder Profile The data presented below allows for a comprehensive view of shareholder demographics.
The Distribution of Shareholders as at 31st March 2015
No. of Shares held Residents Non-Residents Total No. of No. of % No. of No. of % No. of No. of % Share- Shares Share- Shares Share- Shares holders holders holders
1 - 1,000 915 281,117 0.61 3 1,201 0.00 918 282,318 0.61 1,001 - 5,000 156 444,475 0.97 8 26,000 0.06 164 470,475 1.02 5,001 - 10,000 37 309,349 0.67 2 11,100 0.02 39 320,449 0.70 10,001 - 50,000 20 511,440 1.11 2 40,573 0.09 22 552,013 1.20 50,001 - 100,000 6 442,779 0.96 3 296,741 0.65 9 739,520 1.61 100,001 - 500,000 4 978,854 2.13 – – – 4 978,854 2.13 500,001 - 1,000,000 6 4,164,513 9.05 – – – 6 4,164,513 9.05 Over 1,000,000 6 38,491,858 83.68 – – – 6 38,491,858 83.68 Total 1,150 45,624,385 99.18 18 375,615 0.82 1,168 46,000,000 100.00
Categories of Shareholders Individuals 1,080 4,672,443 10.16 17 278,874 0.61 1,097 4,951,317 10.76 Institutions 70 40,951,942 89.03 1 96,741 0.21 71 41,048,683 89.24 Total 1,150 45,624,385 99.18 18 375,615 0.82 1,168 46,000,000 100.00
The percentage of the shares of the Company held by the public as at 31st March, 2015 was 23.65% (2014: 25.54%). Further the number of public shareholders as at 31st March, 2015 was 1,150.
The Lighthouse Hotel PLC | Annual Report 2014/15 47 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Twenty Largest Shareholders as at 31st March, 2015
Name of Shareholder No of Shares as % No of Shares as % at 31.03.2015 at 31.03.2014
Jetwing Hotels Management Services (Pvt) Ltd. 17,958,597 39.04 17,052,199 37.07 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. 1 & 2 4,600,000 10.00 4,600,000 10.00 National Savings Bank 1,900,000 4.13 1,900,000 4.13 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 1.13 506,323 1.10 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 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 Mr. S. Abishek 97,700 0.21 97,700 0.21 Total 44,032,925 95.72 43,112,727 93.73
Market Value and Trading of Shares Market Value of Shares
31st March 2015 31st March 2014 Rs. Rs.
Net assets value per share 53.63 52.84 Market value per share as at 60.00 44.40 Highest market value per share 67.00 50.40 During the Year Lowest market value per share 44.30 39.10
48 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Share Trading – During the Year
31st March 2015 31st March 2014
Number of transactions 812 662 Number of shares traded 1,195,081 1,168,565 Value of shares traded (Rs.) 73,424,067 56,050,849
Return on Equity (ROE) % 7.50
6.00
4.50
3.00
1.50
0 2011 2012 2013 2014 2015
Customer Capital
Marketing Communications and Compliance The marketing communications regime that Jetwing Lighthouse lives by today owes its effectiveness to a scrupulous adherence to all applicable laws, regulation and codes pertaining to the field. These protocols govern marketing communication practice in Sri Lanka as well as inform our actions as to ethically acceptable practices from the global viewpoint.
These regulations also provide us with a framework upon which to base a marketing communications regime that conveys the true values of our brand, whilst maintaining its positive perception and compliance.
To date the Hotel’s marketing communications activities have borne fruit progressing the value and standing of our brand. We are guided by the services of a reputed international advertising agency, as well. The Hotel has not transgressed
The Lighthouse Hotel PLC | Annual Report 2014/15 49 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
any regulatory provisions pertaining to marketing communications and thus has not been subjected to any action or fines, during the period under eview.r
Product and Service Labelling This is the digital age where information is exchanged between business and stakeholder more often than not, in real time. The demand for clarity, accuracy and speed in this exchange of information is probably at peak levels.
Accordingly the Hotel takes care in providing accurate and relevant information across a multitude of media. Such details are easily accessible via our website, printed material, e-mail and the like.
In imparting information about the Hotel and its activities, we ensure all relevant facts are provided to help customers make an informed choice, particularly highlighting sustainability aspects of our overall operation, of which we are humbly proud.
Customer Surveys and Satisfaction Jetwing Lighthouse features on Revinate, an online reputation management system that streamlines all customer reviews of the Hotel sourced from a variety of platforms. For example, reviews posted on sites such as TripAdvisor, Booking.com and Google+ are all filtered through Revinate, making for greater convenience in the Hotel’s review and response mechanisms.
Revinate also possesses the capability of comparing a property to a select group of competitors which provides an insight into guest perception and decision-making. This platform has significantly enhanced our guest relations processes, service standards and product development.
The Hotel also canvasses guest perceptions and ratings of its product and services through a response card placed in every room and at the reception.
50 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Both these processes are invaluable in firstly remaining in touch with our guests and secondly by responding promptly to feedback. They also facilitate the shaping of our service of the future.
Customer comment is also an invaluable aid to our training regimes.
Total Reviews
100%
80% Positive Reviews 60% Rating
40% 80%
20%
0
The Lighthouse Hotel PLC | Annual Report 2014/15 51 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Sentiment Analysis
Rooms Facilities Score Score 65 63 Mentions: 506 Mentions: 430
Service Value Score Score 65 55 Mentions: 452 Mentions: 125
Cleanliness Food/Beverage Score Score 66 63 Mentions: 41 Mentions: 188
Sentiment Analysis Overall
1.6% 64Mentions: 1,672
52 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Customer Health and Safety As a premier institution in the hospitality industry, the aspect of customer health and safety is integral to our operations. Jetwing Lighthouse has a comprehensive Health and Safety Policy in force and in abiding by its provisions, the Hotel, its associates and customers are protected adequately from any threat to their health and/or safety.
Furthermore, the Hotel abides by all applicable state promulgated health and safety regulations and codes in force in the country.
From a ‘strategy in action’ point of view, in addition to actions taken in accordance with our own Health and Safety Policy, a system of protocols, assessments and accreditations ratified by external agencies is in force to help maintain health and safety aspects of the Hotel’s enterprise at premium levels. For example, food safety and hygiene is secured by the awarding of HACCP status to the Hotel. Various surveillance audits are also enacted each year.
Annual fire drills and fire safety awareness programmes are conducted by the state Fire Department. Some of the top tier tour operators routinely assess the Hotel’s facilities and operations against their own health and safety checklists.
The cumulative result of these initiatives helps Jetwing Lighthouse maintain a safe and healthy environment for all its stakeholders.
Achievements Jetwing Lighthouse was awarded with the TripAdvisor Travelers' Choice and also received a Certificate of Excellence from TripAdvisor.
Employee Capital Our people define our success. Thus, they are partners in the process of driving the Hotel’s enterprise. It is why we refer to them as ‘associates’ and why they are the heart of our business. In turn, the Hotel serves all its associates equitably and transparently through a regime of comprehensive and clearly articulated values, policies and procedures that underscores its human resource development agenda.
The Lighthouse Hotel PLC | Annual Report 2014/15 53 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Associate Demographics In the data that follows we present salient statistical information pertaining to the makeup of our Human Resource base as at 31st March, 2015.
Current Cadre - By Status
56 Associates
18 Associates
Permanent Probation Contract 181 Associates
Of our total cadre of 255 employees serving during the year under review, 179 are employed from the Galle District. This is in keeping with the Jetwing ethos of recruiting from within the local area.
With regard to gender, 20 of the 255 employed at the Hotel are women, showcasing a significant gender imbalance. However, it is noteworthy that both the General Manager and Chief Accountant – key positions at the Hotel, are held by females.
This situation of a gender imbalance persists predominantly due to a cultural belief that employment within the hospitality sector is more suited to males.
54 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Current Cadre - By Gender 20 Associates
Male 235 Associates Female
Current Cadre - By Region
76 Associates
Galle District 179 Associates Outstation
An Analysis of Recruitment A total of 50 associates were recruited on contractual and probationary basis, of which the majority were persons under the age of 30 years. The majority of those employed are from the Galle District which is consistent with our HR recruitment policy of hiring within location where applicable.
At Jetwing Lighthouse we are also focused on generating employment for youth by encouraging school leavers to join the industry. The Hotel 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 applied for.
The Lighthouse Hotel PLC | Annual Report 2014/15 55 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
By Age Group Number of Staff Rate of Recruitment %
Under 30 years 28 11 30 -50 years 19 8 Over 50 years 3 1 Total 50 20
By Gender Number of Staff Rate of Recruitment %
Male 44 18 Female 6 2 Total 50 20
By Region Number of Staff Rate of Recruitment %
Galle District 27 11 Outstation 23 9 Total 50 20
(Calculations are based on average employed during the period 1st April 2014 to 31st March 2015, which is 250)
An Analysis of Turnover For the period under review, voluntary turnover stood at 16% and the breakdown shows that the majority moving out are younger persons, while the more mature associates show much lower turnover levels.
However, a slight increase in the turnover rate is visible, due to the expansion of the sector within the District of Galle. This is highlighted by a greater turnover percentage from the region of Galle.
56 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
By Age Group Number of staff Turnover %
Under 30 years 15 6 30 -50 years 23 9 Over 50 years 2 1 Total 40 16
By Gender Number of staff Turnover %
Male 35 14 Female 5 2 Total 40 16
By Region Number of staff Turnover %
Galle District 26 10 Outstation 14 6 Total 40 16
(Calculations are based on average employed during the period 1st April 2014 to 31st March 2015, which is 250)
Benefits to Associates The Company’s remuneration policy ensures that all associates are paid a fair and equitable market-related package according to their level of skill, competency, experience and qualifications as well as the role that they fulfil. In all areas of operation, the minimum wage is on par or higher than the statutory minimum wage.
Other benefits include meals and associate’s welfare, which is provided to both the permanent and the contracted. A comprehensive insurance cover is provided to all executive grades of the Hotel.
The Lighthouse Hotel PLC | Annual Report 2014/15 57 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
The Hotel complies with relevant statutory requirements of the country.
Bonuses are awarded to permanent associates based on the performance of the Hotel, as decided and approved by the Board of Directors.
All associates benefit from the services and activities of Jetwing Hotels’ welfare society, which whilst being in itself a healthy revenue generating entity, also provides a variety of services to all its associates such as - donations in the event of a death in the family, loan facilities, welfare shop facilities, wedding gifts, gifts to new born babies, Grade 5 Scholarships and the like.
In line with procedure and practice across the Jetwing Family, all associates are afforded a stipulated number of days of paid leave of absence from their jobs in accordance with the statutory conditions applicable in the country and pertaining to our sector of enterprise. As at present, parental leave is only granted to women as maternity leave.
As regards associates availing themselves of parental leave, one person went on parental leave during the previous financial year and has since returned to work. For the year under review, no associate has taken parental leave.
Occupational Health and Safety As has already been detailed under the section ‘Customer Health and Safety’ appearing on page 53 the Hotel follows a comprehensive portfolio of health and safety protocols, which also cover our associates on the job.
As an enhancement of existing measures, we will institute a committee designated to implement the provisions of the Health & Safety policy.
Health and Safety Impacts on Operations The Hotel lost 98 man days due to minor injuries to 17 associates. It did not encounter a single instance of occupational disease.
58 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Absenteeism For the year under review, the absenteeism rate recorded by the Hotel was 0.55%. This rate is calculated by considering the average number of employee (250) and the scheduled number of work days per employee (22 days x 12 months = 264).
Rate of Absenteeism
By Gender Number of Days Rate %
Male 337.0 0.51 Female 27.5 0.04 Total 364.5 0.55
By Region Number of Days Rate %
Galle 223.0 0.34 Outstation 141.5 0.21 Total 364.5 0.55
Within the sphere of externally contracted work, there have been no adverse incidents reported on any aspect of health and safety.
The Hotel is guided by the stipulations made by the Government’s Labour Department in the formulation of its reporting system.
The Lighthouse Hotel PLC | Annual Report 2014/15 59 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Training and Education One of the most powerful sources of associate empowerment, motivation and self development is training and education. In the same breath, its enhancement of the prowess of human resources takes Company initiative to the next level.
The Hotel’s training and development regime encompasses areas such as capacity building, focused training and development initiatives and induction and orientation training. Training is conducted on an individual level as well as at a departmental level and involves in-house as well as external resources.
The Hotel is gearing up to introduce cross training and exposure for associates across departments and even other hotels within the Jetwing Family to increase breadth of knowledge, create job enlargement and raise job satisfaction levels.
Training Conducted in 2014/15 The following were some of the key training programmes conducted during the year in review.
Back to Basics This is a programme conducted by our in-house training managers to increase the knowledge and skill of associates. Training in areas such as basic front office functions, housekeeping and food and beverage skills was imparted.
Jetwing Achievers Programme The Jetwing Achievers Programme is designed to cater to the development of associates in the Executive Grades, capable of taking on Senior Management roles within the Jetwing Family.
Targeted across the levels of Junior Executive to Senior Executive, this programme is designed to enhance the leadership skills of executives who are nominated for promotions, and to develop their abilities to manage themselves and their teams in the workplace whilst equipping them with essential business skills that are deemed necessary for success at an Executive level.
60 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Jetwing Ascension Programme The Jetwing Ascension Programme focuses on the professional development of an associate to groom him/her to take on Senior Management Roles. The programme is conducted over a period of 1½ years and builds in adequate time for training, exposure, and mentoring. This programme which is open to all associates in the Jetwing Family is created to develop future leaders who will helm the organisation one day.
The Jetwing Ascension Programme was introduced during the year under review.
Training in Table Etiquette An in-house one day training programme on table etiquette was conducted for all Senior Managers, Heads of Departments and Executives across all Jetwing Hotels. It was designed to provide in-depth knowledge of proper etiquette that is required in work, social and business settings.
Average training hours per employee - 15.43
Average training hours By Gender Female 26.8 Male 14.5
By Category Permanent 1.44 Probation 13.31 Contract 5.64
By Type Senior Executives 4.44 Executives 6.0 Other Staff 16.56
The Lighthouse Hotel PLC | Annual Report 2014/15 61 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Performance reviews All Senior, Middle and Junior level associates of the Hotel participate in biannual performance and career development assessments. The reviews give the associate and his/her Head of Department an opportunity for formal dialogue, to ensure that associates are aware of what is expected of them, and to set goals for the period ahead.
In covering aspects such as performance and career advancement planning, the review process also invariably shows the way for the development and fine tuning of the Hotel’s training agenda.
Diversity and Equal Opportunity As an equal opportunity employer, we recognise that diversity in terms of ethnicity, gender, race, religion and age serve to strengthen the collective human talent of the Hotel.
We are thus committed to a business operation and environment free of harassment or discrimination of any sort. During the year under review, there were no material issues pertaining to employees and industrial relations.
The preceding paragraphs have already explained the scope and substance of our Performance Review processes. Other salient employee data has been tabulated under Associate Demographics.
Composition of Governance Body (The Board of Directors)
By Age 30 – 50 years 18% Over 50 years 82%
By Gender Male: 82% Female: 18%
62 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Equality in remuneration We are an equal opportunity provider and thus have no explicit imbalance in remuneration between women and men. The job is all – and the person best qualified and suited with the desired attributes will be employed.
Collective Bargaining Although the hotel does not have any employees covered by collective bargaining agreements, it encourages an open door policy and has in place many mechanisms to encourage employees to discuss their grievances.
Grievance Handling The Hotel has a comprehensive and empathetic grievance handling policy in place. Its processes and provisions are clearly understood by all associates.
The policy in action enshrines an associate’s right to a fair hearing and dialogue across the chain of command in respect of any grievance.
Human Rights The Hotel adheres to the comprehensive Human Rights Policy of Jetwing Family which is structured according to the International Labour Organisation’s Convention and Sri Lanka’s Labour Regulations.
Our Policy is made known to associates from the moment they set foot in the Hotel via the orientation and induction programme and thereafter is reinforced in the course of business.
Jetwing Lighthouse as an entity within the Jetwing Family adheres to a common, non-discriminatory policy under the terms of which any discrimination on the grounds of race, religion, gender or social background, among other factors, is completely shunned.
There have been no instances of violation of rights or any other form of discrimination, during the year under review.
The Lighthouse Hotel PLC | Annual Report 2014/15 63 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Social Capital An organisation simply cannot exist in seclusion from the wider society within which it operates. The level of closeness in our dealings with the society is often in direct proportion to the success and well-being we enjoy.
At Jetwing Lighthouse, we believe that the scope of our corporate responsibility to society should encompass programmes that support livelihoods and immediate needs of people residing in and around our area of operations.
We are committed to ensuring that our social responsibility framework combines ethical business practices with community involvement.
Market Presence Our presence in the larger Galle metropolis alone has helped us create employment opportunities, thereby bringing about long term economic benefits to the people of the area.
Although recruitment from the immediate locale remains a challenge due to the inability of finding the staff with necessary skills; we have consistently recruited, offer extensive training & development and absorb persons from the locality with knowledge and educational requirements amongst other candidates. This pertains mainly to vacancies at senior management levels encompassing executives and senior executives.
Proportion of Senior Management hired from the local community Given the above commitment we have recruited one third of our senior management from the locality. To be precise, it is nine out of a total of 26 executives.
Indirect Economic Aspects In addition to direct value creation and distribution through our own operations, our investments and market presence impact on the local communities in many ways. They include our involvement in a community driven taxi service and a community swimming pool project, that stand as testament to the focused community development programmes we have initiated. We are proud of the great success these initiatives have seen in the recent past. Our objective is to partner with the community wherever possible, offering our resources and expertise, in empowering them and addressing the various needs they may have.
64 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Development and impact of infrastructure investments and services supported Fulfilling a need identified after the Tsunami in 2004, Jetwing Lighthouse constructed the community pool facility in 2008 and continues to maintain it to date. This facility is complete with a modern day swimming pool, changing rooms, an administrative facility and a viewing gallery. This facility is now open for children and adults alike - exclusively for the school children in the area, free of charge, during daytime and for others in the afternoons for learning swimming. A full time administrator at the facility works with schools on facilitating and scheduling training programmes. Trust/Management of the facility is confident and certain that the number who benefit from this facility would grow in years to come.
Procurement Practices As much as we are committed to make our operations sustainable by being concerned with the economic, social and environmental contexts, we understand that it is equally important to ensure the commitment to sustainability by the members of our supply chain. We have an intricate supply chain and our procurement decisions have a direct impact on the environment and the communities where our products originate.
Comprising hundreds of registered suppliers, they supply us a wide range of goods and services required to serve our guests: ranging from food and beverages, guest amenities, operating supplies and equipment, furniture and fittings and other technology support systems.
With due regard to our financial and quality requirements, we prefer to source locally and from sustainable sources in order to support the local communities and the environment and in the process, reducing our carbon and water footprints.
The percentage of the procurement budget spent on local supplies is 80% where ‘local’ is defined to be Sri Lanka.
The Lighthouse Hotel PLC | Annual Report 2014/15 65 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
CSR initiatives During the year we continued a number of CSR initiatives under the Jetwing Eternal Earth Programme that we commenced in the recent past, primarily targeting the surrounding communities. These initiatives ranged from community outreach programmes to humanitarian responses.
Jetwing Youth Development Project (JYDP) at Jetwing Lighthouse: The Jetwing youth development program was initiated by us in order to address the problem of youth unemployment.
The objectives of the programme is three fold:
zzTo address the issue of, and provide solutions for the shortage of manpower in our hotels and the Sri Lankan hotel industry in general.
zzTo involve local communities in tourism by passing on some of its benefits to them
zzTo contribute towards resolving the problem of youth unemployment
Bridging the gap between the unskilled and the skilled, and equipping them for employment, the JYDP provides free training to school leavers from disadvantaged families from the locality for employment with Jetwing Lighthouse. This hospitality training programme spanning over a period of six-months is combined with practical and spoken English in order to provide the participants with a working knowledge enabling them to express themselves to guests and understand others. After four months of training, the trainees are allocated to work for a period of 60 days within the department they are short-listed to work in.
The 10th such programme was carried out in partnership with Berendina Employment Center. The programme which commenced on the 22nd of December is currently underway with the participation of 27 students, from the Galle and Matara district.
Having completed the classroom training the students are currently following their on the job training. The Training Executive at Jetwing Lighthouse is acting as the coordinator for this programme.
66 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Environmental Capital Jetwing Lighthouse follows the Environmental Policy enacted across the Jetwing Family.
Jetwing has initiated the compilation of Green Directories, to track progress of the hotels as regards attainment of high standards of environmental custodianship in both front-and back-end processes. The Directory is placed in each guest room to raise awareness on the Hotel’s commitment to good environmental practice.
Its protocols are effective across all key areas including energy efficiency, water conservation, waste water management, use of environmentally friendly material and environmental consciousness across the supply chain among others. It incorporates a standardized procedure to track the Hotel’s performance across these key areas.
The environmental management systems of Jetwing Lighthouse are certified by the Sri Lanka Standards Institution as being up to ISO 14001 Standard.
Compliance The Hotel’s stewardship of environmental considerations vis-á-vis its enterprise is firmly underpinned by strict observance of all applicable regulatory and voluntary codes and standards. We comply with all applicable local and international laws as well as internally developed protocols such as Jetwing’s Environmental Policy and Energy Management Policy.
We also maintain the practices and scope of enterprise that earn for us such accreditation and awards as – Gold status in Travelife’s Sustainability criteria and ISO 14001 accreditation for our Environmental Management System.
During the year under review, one instance of grievance with regard to environmental impacts was addressed. However, no fines or sanctions were imposed due to non-compliance with environmental laws and regulations. The Hotel, at all times, encourages an open policy for environmental grievance handling, whereby grievances could be reported to the management, seeking due redress.
The Lighthouse Hotel PLC | Annual Report 2014/15 67 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Environmental Protection Expenditures and Investments
Expenditure (Rs.)
Waste disposal, emissions treatment, and remediation costs
Treatment and disposal of waste 915,000 Expenditures for the purchase and use of emissions certificates 52,230 Expenditure on equipment, maintenance, and operating materials and services, and related personnel costs 973,859
Prevention and environmental management costs Environmental education and training 61,113 External services and professional charges for environmental management 1,049,498 Extra expenditures on green purchases 225,500
Energy Jetwing Lighthouse is fully aware of the importance of energy conservation. We are also fully aware that the survival of our planet depends upon how successful the collective human effort is in reducing energy draw off from non-renewable sources.
This is why Jetwing has a comprehensive energy policy, which is faithfully followed by all hotels.
The Hotel is committed to reducing its dependence on fossil fuel to generate energy and to achieving carbon neutrality across all possible areas of its operations. Measures that are in place at the Hotel include – cinnamon wood fired boilers and solar hot water panels – replacing formerly used diesel boilers; and the use of energy efficient products using LED technology as replacements for high drain electric appliances such as TVs and lighting. We continue to derive benefits of such measures as seen in our overall reductions in both emissions and energy consumption.
68 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
In the pipeline are initiatives to install a solar PV net metered power generation system, a Vapour Absorption Chiller to provide the Hotel’s air conditioning requirements and the introducing of a bio gas facility.
Of course the greater the success we achieve in energy saving, the greater our cost saving.
Energy consumption for both Jetwing Lighthouse and Jetwing Kurulubedda for the year under review
Source Consumption Units GJ
Grid 1,664,432.00 kWh 5,992 Indirect Electricity Direct Non-Renewable LPG 36,261.50 kg 1,715 Diesel 22,937.50 L 832 Renewable Biomass 445,810.00 kg 6,397 Solar 132 Total Annual Energy Consumption 15,069 Energy Intensity (MJ/Guest Night) 362.5
Total Energy Consumption via Direct and Indirect Energy Sources 0.9%
39.7%
42.5% Grid Electricity LPG Diesel Biomass Solar 5.5% 11.4%
The Lighthouse Hotel PLC | Annual Report 2014/15 69 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Energy savings achieved due to conservation and efficiency improvements at the Hotel for the period in review
Initiative Savings Avoided CO2 emissions (kg/Year)
Energy efficient lighting1 92,481 kWh/year 39,304 Card key (room lighting)2 98,757 kWh/year 41,972 Dual set point thermostat3 105,871 kWh/year 44,995 LED televisions4 1,740 kWh/year 739 Solar hot water system 3,639 Litres/year 9,784 Biomass boiler for hot water 111,453 Litres/year 299,685 Total 436,479
1. Calculated on 70% of bulbs being used for 6 hours per day, in comparison to incandescent bulbs 2. Calculated on 70% of bulbs being used for 6 hours per day 3. Calculated for 6 hours per day on stand-by mode 4. Calculated for use of 3 hours per day
Emissions The Hotel continues to actively pursue measures to reduce Greenhouse gas emissions from its operations by both reducing its energy demand via energy saving measures and promoting renewable energy based generation.
70 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Total Greenhouse Gas Emissions for Jetwing Lighthouse and Jetwing Kurulubedda for the year 2014/15
Source Emissions
(tones CO2)*
From Direct Sources Grid Electricity 707.4 LPG 61.2 Diesel 108.7 Biomass (Cinnamon wood) † 0.0 From Indirect Sources 169.9
Total CO2 emissions for year 2014/15 877.3
Emissions Intensity ( CO2 kg / Guest Night) 21.05
* Direct and Indirect emissions are measured according to scope 1 and 2 respectively as defined by the IPCC. Indirect Carbon emissions are calculated using Greenhouse Gas Protocol (GHG Protocol) governed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD); and the direct emissions are calculated using factors published in the 2006 IPCC Guidelines for Greenhouse Gas Inventories.
† Cinnamon wood is considered a sustainable energy resource due its short (6 months) cropping cycle.
Contribution to Hotels Carbon Footprint by Direct and Indirect Energy Sources 12%
7%
Grid Electricity LPG 81% Diesel
The Lighthouse Hotel PLC | Annual Report 2014/15 71 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Water Of the total water requirement for Jetwing Lighthouse and Jetwing Kurulubedda, 89% is obtained from the city water supply. The limited water requirement for the swimming pools at Jetwing Lighthouse is extracted from groundwater sources.
Water Withdrawal by Source
Annual Proportion of Total Consumption (m3) Water Requirement
City water supply 53,786 89% Groundwater 6,432 11% Total consumption 60,218 100%
The Hotel has instituted water usage monitoring and conservation measures that seek to reduce wastage of this precious resource. As the Hotel is a substantial consumer of water off the national supply, our measures to conserve and recycle water are vital to enterprise.
Water consumption is sub-metered and monitored closely. Fixtures in use at the Hotel – such as taps, shower heads and toilet cisterns – are chosen for their ability to conserve and prevent wastage.
All waste water generated from hotel operations is sent to our waste water treatment plant; this includes kitchen waste water and bath water from guest rooms. The treated water is thereby utilised in the Hotel’s gardens.
Water discharged is routinely assessed by an accredited external company to ensure compliance with the regulations of the Central Environment Authority.
Average treated waste water quantity 3,638 m3 /month Total treated waste water quantity 43,656 m3/year
72 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Solid Waste Management The Hotel has a comprehensive regime in place to deal with solid waste, where the separation of solid waste into categories happens at source – in various areas of the Hotel such as the kitchen, rooms, restaurants etc. All food waste generated is sent to a piggery to be used as animal feed, and dry solid waste (such as cardboard, plastic, glass bottles and metal) are sold for recycling or reuse. All garden waste is composted in a conventional compost pit, and is used as organic fertilizer in the hotel gardens.
The Hotel operates an incentive programme to encourage staff to involve themselves fully with better waste separation practice, where the income from sale of waste is credited to the Staff Welfare Society.
The problems posed by plastic water bottles – their ethical disposal – will soon be addressed as the Hotel hopes to open a potable water bottling plant using reusable glass bottles in the ensuing year.
Type Annual Generation (kg)
Wet (food) waste 25,942 Paper & Cardboard 12,717 Plastic 10,376 Polythene 4,559 Glass 4,849 Aluminium cans /Tin 13,588 Garden Trimmings 45,076 Other/Mixed 2,679 Total Annual Waste Generation 93,844
The Lighthouse Hotel PLC | Annual Report 2014/15 73 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Stewardship
Board of Directors
N.J.H.M. Cooray Chairman Mr. Hiran Cooray has over 25 years experience in the hospitality industry. He has represented Sri Lanka on the Board of PATA since 1996 and served as the Chairman of this prestigious association from 2010 to 2012. In addition to his degree from the University of North Carolina in Business Administration, he has successfully completed a senior management course in Hotel Management at Cornell University, Ithaca, New York. Whilst holding 50 directorships in various hotels and related companies, he has also held the positions of President of the Tourist Hotels Association of Sri Lanka (2005-2008), and Chairman of PATA Sri Lanka Chapter (2003-2004). Currently, Hiran is serving his second term as President of The Tourist Hotels Association of Sri Lanka (2014-2016) and is also a Board member of the Sri Lanka Tourism Development Authority. He regularly represents Sri Lanka and the Asia Pacific at tourism-related international forums as a speaker/panelist. Recently, Hiran’s expertise and reputation in tourism was recognized globally by his appointment as an Alternate Member of the UNWTO – World Committee on Tourism Ethics at the UNWTO General Assembly held in Zambia/Zimbabwe in August 2013.
Ruan Samarasinghe Managing Director Mr. Ruan Samarasinghe has been a doyen of the Hospitality Industry for over 40 years. He has guided Jetwing through its formative years and has pioneered several developments over the last three decades. He oversees all Jetwing operations and represents the organization in principal hospitality forums. In addition to his pivotal role as Managing Director, he also serves on several other Directorates. Mr. Samarasinghe also serves as Chairman of the Pacific Asia Travel Association (PATA) Sri Lankan Chapter.
N.T.M.S. Cooray (Ms.) Non-Executive Director Ms. Shiromal Cooray is the Managing Director of Jetwing Travels (Pvt) Ltd., one of the largest inbound tour operators to Sri Lanka. She holds several other directorates. She is a past President of Sri Lanka Association of Inbound Tour Operators and was the former Finance Director of J. Walter Thompson Ltd. (JWT), Colombo, and has work experience in finance in the UK and Hong Kong. She holds an MBA and is an Associate Member of the Chartered Institute of Management Accountants of the UK.
74 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
C.S.R.S. Anthony Executive Director Mr. Sanjeewa Anthony is an Attorney-at-Law, Notary Public, Commissioner for Oaths and a Registered Company Secretary. He is also a Fellow Member of the Chartered Institute of Management Accountants, UK, Chartered Global Management Accountant, a Fellow Member of the Institute of Certified Management Accountants of Sri Lanka and a Fellow Member of Certified Professional Managers. He commenced his career at PricewaterhouseCoopers, prior to joining Jetwing Hotels Ltd. as Finance Manager in 1996 and is currently the Executive Director. He is also serving on several Directorates including a publicly quoted company. Sanjeewa is a Life Member of the Bar Association of Sri Lanka (BASL).
A.M. Ondaatjie (Ms.) Non-Executive Director Ms. Angeline Ondaatjie is the Joint Managing Director of Tangerine Beach Hotels PLC and 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, USA. She is the Managing Director of Tangerine Tours (Pvt) Ltd. She holds directorships in several companies including Mercantile Investments and Finance PLC, The Nuwara Eliya Hotels Co. PLC (Grand Hotel), Nilaveli Beach Hotels (Pvt) Ltd. and Phoenix Industries Ltd. She is presently a committee member of the Tourist Hotels Association of Sri Lanka, Vice- President Hotels Association and Director, Sri Lanka Tourism Promotions Board.
Nihal Wadugodapitiya Non-Executive Independent Director Mr. Nihal Wadugodapitiya is a Fellow Member of the Chartered Institute of Management Accountants, UK. His business experience spans over 40 years in senior management positions both in private and public sector institutions in Sri Lanka and in Abu Dhabi, UAE, of which over 20 years has been in the position of Chief Executive of private companies. He has served in organizations involved in manufacturing, light engineering, FMCG marketing & distribution, private equity fund management, airlines and services sectors. He has served on several Boards of Directors including companies engaged in financial services, venture capital/ private equity fund management, fabric manufacturing, thermal power generation, plantation management, marketing, distribution & flexible packaging and light engineering. At present, he is a Business Development Consultant.
The Lighthouse Hotel PLC | Annual Report 2014/15 75 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Prema Cooray Non-Executive Independent Director Mr. Prema Cooray is the immediate Past Chairman of Aitken Spence Plc having led the Hotels Sector of the Company for a considerable period of time. Mr. Cooray was a Past President of the Tourist Hotels Association of Sri Lanka (1998-2000) and was the Chairman of the Sri Lanka Convention Bureau (2007-2009). He serves as Chairman of The Rainforest Ecolodge, Deniyaya, an unique pioneering Ecotorium initiative supported by leading hotel companies in Sri Lanka. Mr. Cooray also represents many public listed companies as a Director.
He serves as a Member of the Tourism Cluster of National Council for Economic Development (NCED) and also serves as a Member of the Grants Board of ICTA. He served as the Secretary General/CEO of the Ceylon Chamber of Commerce (2003-2008).
Mr. Cooray was recently accorded the national honour as a ‘Legend’ by Sri Lanka Tourism.
Mr. Cooray has a MBA from the University of Sri Jayewardenepura, is a Certified Management Accountant and he is also a Member of the Institute of Hospitality, UK.
A.T.P. Edirisinghe Non-Executive Independent Director Mr. Edirisinghe is a Fellow Member of The Institute of Chartered Accountants of Sri Lanka, a Fellow Member of the Chartered Institute of Management Accountants (UK) and holds a Diploma in Commercial Arbitration. He was the Senior Partner of HLB Edirisinghe & Co., Chartered Accountants and currently serves as Consultant/ Advisor. He is the Managing Director of PE Management Consultants (Pvt) Ltd. He counts over 44 years experience; of which 28 years in the public practice and 16 years in the private sector, having held senior positions. He serves on the Boards of some other quoted Companies where in some companies he also serves as Chairman/Member of the Audit Committee and as Chairman/Member of the Remuneration Committee.
76 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Ranil de Silva Non-Executive Independent Director Mr. Ranil de Silva pursued his tertiary education in Australia where he obtained a Diploma in Visual Communications. He returned to Sri Lanka in 1981 and joined JWT Colombo as their first Sri Lankan employee. After starting as a Junior Account Executive at JWT, he rose to International Vice-President and was also Managing Director of the Colombo office. He was posted to JWT Jakarta and also served as a Regional Account Director for JWT Asia Pacific based in Singapore. In 1999, he returned to Sri Lanka to set-up the Colombo office of Leo Burnett. Starting with just a few people in his team and a shared office he has taken Leo Burnett to great heights. He served as the President of the International Advertising Association (IAA) Sri Lanka Chapter for two terms and was also a member of the worldwide Board of Directors of the IAA. He has also been a Director in their family-owned business – Cyril Rodrigo Restaurants. Ranil is passionate about everything he does; he loves to see the world, stay in great places and enjoys the arts.
C. Pathiraja (Dr.) Non-Executive Independent Director Dr. C. Pathiraja Director of Stem Cure - Ferticare (Pvt) Ltd., Director of P&A Global Solutions (Pvt) Ltd., Singapore and several other companies both local and abroad. Ex Director/Embroyologist - ICSI Lanka Hospital. He holds BV (Sc) degrees from the University of Peradeniya, Sri Lanka, Diploma in Business Studies and a Postgraduate Diploma in Business Management.
Thirukumar Nadesan Non-Executive Independent Director Mr. Thirukumar Nadesan holds a BA (Hon.) Degree in Business Studies at the University of Middlesex, United Kingdom. He has served in the capacity of Vice-President at the American Express Bank in Colombo from 1980 to 1989 and thereafter held the position of Group Director at the Maharaja Organization.
Mr. Nadesan has been a freelance Business/Investment Consultant for many reputed companies since 2001 to date.
Mr. Nadesan is also the Director of Lanka Hotels and Residencies (Pvt) Ltd. (owning Company of Sheraton Hotel Colombo).
The Lighthouse Hotel PLC | Annual Report 2014/15 77 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Corporate Governance
The Lighthouse Hotel PLC (LHH) continues to be committed to conducting the Company’s business ethically and in accordance with high standards of good corporate governance.
The Board has appointed Jetwing Hotels Ltd. as the managing agents of the Hotel.
We set out below the corporate governance practices adopted and practiced by LHH and compliance with the Rules set out in Section 7 of the Listing Rules of the Colombo Stock Exchange.
Board of Directors
Executive Directors Mr. N.J.H.M. Cooray (Chairman), Mr. R.A.E. Samarasinghe (Managing Director), Mr. C.S.R.S. Anthony
Non-Executive Directors Ms. N.T.M.S. Cooray, Ms. A.M. Ondaatjie
Non-Executive Independent Directors Mr. N. Wadugodapitiya, Mr. R. de Silva, Mr. E.P.A. Cooray, Dr. C. Pathiraja, Mr. T. Nadesan, Mr. A.T.P. Edirisinghe
The Board meets quarterly as a matter of routine. Adhoc meetings are held as and when necessary. During the year under review, the Board met on five occasions. The attendance at these meetings was:
Mr. N.J.H.M. Cooray (Chairman) Executive 5/5 Mr. R.A.E. Samarasinghe (Managing Director) Executive 5/5 Mr. C.S.R.S. Anthony Executive 5/5 Ms. N.T.M.S. Cooray Non-Executive 3/5 Ms. A.M. Ondaatjie Non-Executive 5/5 Mr. N. Wadugodapitiya Non-Executive Independent 5/5 Mr. R. de Silva Non-Executive Independent 3/5 Mr. E.P.A. Cooray Non-Executive Independent 5/5 Dr. C. Pathiraja Non-Executive Independent 1/5 Mr. T. Nadesan Non-Executive Independent 3/5 Mr. A.T.P. Edirisinghe Non-Executive Independent 4/5
78 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Responsibilities The Directors of the Company are responsible for formulation of company policy and overall business strategy. The implementation of policy 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 performance and forecasts against budgets so as to take decisions in the best interest of the Company. The managing agents are represented at these meetings and are responsible for follow-up action. Directors’ interests in contracts are regularly disclosed and such disclosures pertaining to year ended 31st March, 2015 can be seen on page 94 in the Directors’ Report.
The Board is responsible to ensure that adequate systems of internal controls to safeguard the assets of the Company are in place and proper records are maintained. However, any system can ensure only reasonable but not absolute assurance that errors and irregularities are prevented or detected within a reasonable time frame.
Chairman’s Role The Chairman is responsible for the efficient conduct of Board meetings. The Chairman maintains close contact with all Directors’ and holds informal meetings with Non-Executive Directors as and when necessary.
Board Balance The composition of the Executive and Non-Executive Directors (the latter are over one-third of the total number of Directors) satisfies the requirements laid down in the Listing Rules of the Colombo Stock Exchange. The Board has determined that six Non-Executive Directors satisfy the criteria for ‘independence’ set out in the Listing Rules of the Colombo Stock Exchange.
Non-Executive Directors profiles reflect their calibre and the weight their views carry in Board deliberations.
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The Chairman of the Company is also the Chairman of Jetwing Hotels Ltd., the managing agents. Chief Executive Authority is vested in the Managing Director of the Company.
Company Secretary The services and advice of the Company Secretary are made available to Directors as necessary. The Company Secretary keeps the Board informed of new laws, regulations and requirements coming into effect which are relevant to them as individual Directors and collectively to the Board.
Financial Acumen The Board, includes one Chartered Accountant and three Chartered Management Accountants who possess the necessary knowledge and competence to offer the Board guidance on matters of finance.
Supply of Information Directors are provided with quarterly reports on performance and such other reports and documents as necessary. The Chairman ensures all Directors are adequately briefed on issues arising at meetings.
Appointments to the Board The Board as a whole decides on the appointment of Directors, in terms of the Articles of Association of the Company.
Re-election of Directors The provisions of the Company’s Articles require a Director appointed by the Board to hold office until the next Annual General Meeting and seek reappointment by the shareholders at that meeting.
The Articles call for one-third of the Directors in office to retire at each Annual General Meeting. The Directors who retire are those who have served for the longest period after their appointment/reappointment. Retiring Directors are generally eligible for re-election.
The Managing Director does not retire by rotation.
80 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Remuneration Committee The Company has its own Remuneration Committee. The Committee consists of three Independent Non-Executive Directors. The Remuneration Committee report appears on page 85 in this Report.
Constructive Use of the Annual General Meeting The active participation of shareholders at the Annual General Meeting (AGM) is encouraged. The Board believes, the AGM is a means of continuing effective dialogue with shareholders.
The Board offers clarifications and responds to concerns shareholders have over the content of the Annual Report as well as other matters which are important to them. The AGM is also used to adopt the Financial Statements for the year.
Communication with Shareholders Shareholders are provided with Quarterly Financial Statements and the Annual Report, which the Company considers as its principal communication with them and other stakeholders. These reports are also provided to the Colombo Stock Exchange.
Shareholders may bring up concerns they have, either with the Chairman, the Managing Director or the Secretaries of the Company as appropriate. The Company maintains an appropriate dialogue with them.
Accountability and Audit
Financial Reporting The Board places great emphasis on complete disclosure of financial and non-financial information within the bounds of commercial reality and on the adoption of sound reporting practices. Financial information is disclosed in accordance with the Sri Lanka Accounting Standards comprising SLFRS and LKAS. Revisions to existing accounting standards and adoption of new standards are carefully monitored.
The Statement of Directors’ Responsibilities for the Financial Statements is given in page 99 of this Report.
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Going Concern The Directors, after making necessary inquiries and reviews including reviews of the Company budget for the ensuing year, capital expenditure requirements, future prospects and risks, cash flows and borrowing facilities, have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Therefore, the going concern basis has been adopted in the preparation of the Financial Statements.
Audit Committee LHH constituted its own Audit Committee on 13th February, 2008. The Committee consists of 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.
The Audit Committee has written terms of reference and is empowered to examine any matters relating to the financial affairs of the Company and its internal and external audits.
The Committee reviewed the Financial Statements, internal control procedures and risk management, accounting policies, compliance with accounting standards, emerging accounting issues, related party transactions and other related functions that the Board required. It also reviews the adequacy of systems for compliance with the relevant legal, regulatory and ethical requirements. Significant issues discussed by the Committee at the reviews were communicated by the Managing Director to the Board of Directors for their consideration and action.
The Audit Committee helps the Company to achieve a balance between conformance and performance.
Attendance at Members of the Audit Committee the Meeting
Mr. N. Wadugodapitiya (Chairman) Non-Executive Independent 4/4 Mr. E.P.A. Cooray Non-Executive Independent 4/4 Mr. A.T.P. Edirisinghe Non-Executive Independent 4/4
82 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
The Audit Committee recommends the appointment and fees of the External Auditors, having considered their independence and performance.
The Audit Committee Report appears on page 86 of this Report.
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 Eight out of Eleven Directors are Directors 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 Non-Executive Directors have Directors a declaration of his independence/non- submitted the declaration independence in the prescribed format. 7.10.3 (a) Disclosure relating Names of independent Directors should be Please refer page 78 to Directors disclosed in the Annual Report 7.10.3 (b) Disclosure relating The basis for Board to determine a Director Not Applicable to Directors as independent, if specified criteria for independence is not met 7.10.3 (c) Disclosure relating A brief resume of each Director should be Please refer pages 74, 75, 76 and 77 to Directors included in the Annual Report including the areas of Expertise 7.10.3 (d) Disclosure relating Forthwith provide a brief resume of new A brief résumé provided to the CSE to Directors 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 of 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 85 Committee Executive Directors
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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 the Annual (a) Names of Directors comprising the Remuneration Committee are Report relating Remuneration Committee stated in this report under the heading to Remuneration of Remuneration Committee on Committee page 151. (b) Statement of Remuneration Policy Please refer Remuneration Committee Report on page 85. (c) Aggregated remuneration paid to Executive Given in this report under the Directors and Non-Executive Directors heading of Directors’ Remuneration on page 94. 7.10.6 Audit Committee The Company shall have an Audit Committee Company has formed an Audit Committee 7.10.6 (a) Composition of Audit Shall comprise of Non-Executive Directors, a Audit Committee consists of three Committee majority of whom will be independent Independent Non-Executive Directors Non-Executive Director shall be appointed as Chairman of the Audit Committee the 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 Manager unless otherwise determined 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 The terms of reference of the Audit Functions Listing Rules the Colombo Stock Exchange Committee adopted by the Board is listed on page 86. 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 Audit heading of Audit Committee Report under the heading of Audit Committee Committee on page 151. (b) The Audit Committee shall make a Please refer Audit Committee determination of the independence of the Report on page 86. Auditors and disclose such determination (c) The Annual Report shall contain a Report of Please refer Audit Committee the Audit Committee setting out the manner Report on page 86. of Compliance of the functions
84 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
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 151 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 94.
E.P.A. Cooray Chairman - Remuneration Committee
28th April, 2015
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Audit Committee Report
The Audit Committee, comprises three Non-Executive Independent Directors (as shown on page 151 of the Annual Report). The Chairman of the Audit Committee is a Fellow Member of the Chartered Institute of Management Accountants, UK. The Audit Committee met on four occasions during the financial year.
The Chairman, Managing Director, Executive Director, General Manager, Chief Accountant and the Financial Controller attend meetings of the Audit Committee by invitation. The Committee is empowered to examine any matter relating to the financial reporting systems and its internal and external audits. Its duties include detailed reviews of Financial Statements, internal control procedures, accounting policies and compliance with accounting standards. It also reviews the adequacy of systems for compliance with the relevant legal, regulatory and ethical requirements and company policies.
The Committee endeavours to assist the Directors to discharge their duties and responsibilities in respect of regulatory compliance and risk management.
The following activities were carried out by the Committee: zzThe Committee reviewed the Quarterly Accounts of the Company and has recommended same to the Board for approval and publication.
zzThe 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 with Sri Lanka Accounting Standards.
zzRecommendations made by the External Auditors were also discussed with the Board and implementation recommended to Management by the Committee.
zzThe Audit Committee also monitors the effectiveness of the Internal and Financial Control procedures on the basis of the reports and findings submitted by the Internal Auditors of the Company, Messrs PricewaterhouseCoopers.
zzThe Audit Committee also monitors the timely payments of all statutory obligations.
86 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
zzThe Company’s budget proposals are also reviewed by the Audit Committee.
zzThe Audit Committee has reviewed the other services provided by the External Auditors to the Company to ensure their independence as Auditors has not been compromised.
zzThe Audit Committee reviewed the related party transactions quarterly.
The Audit Committee is satisfied that the control environment prevailing in the organization provides reasonable, but not absolute assurance that the financial position of the Company is adequately monitored and that the systems are in place to minimize the impact of identifiable risks.
As far as the Directors are aware, the Auditor does not have any relationship (other than that of an Auditor) with the Company other than those disclosed above. The Auditors also do not have any interest in the Company. For the said reasons that the Committee determined that Auditors are independent.
The Audit Committee has recommended to the Board of Directors’ that Messrs Ernst & Young may continue as Auditors for the financial year ending 31st March, 2016.
Nihal Wadugodapitiya Chairman - Audit Committee
28th April, 2015
The Lighthouse Hotel PLC | Annual Report 2014/15 87 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Risk Management
The risk management system of The Lighthouse Hotel PLC, is structured to identify and control the risks specific to the industry in which it operates as well as general risks applicable to all entities. Therefore, appropriate systems, policies and procedures are in place in all areas of operations and they are periodically reviewed to ensure adequacy and adherence. In the current business environment, change has become the norm rather than the exception. Managing risks, in a changing environment effectively, particularly the major risks that may affect our business plans and strategic objectives, we are able to protect or enhance our key assets appropriately.
The Company identifies three main categories of risk:
1. Strategic and Market Risks Risks that affect the Company’s high-level strengths and weaknesses or reflect risks from the external environment. These risks are managed by Senior Management.
2. Operational Risks Risks that are caused due to day-to-day operations of the Hotel.
3. Financial Risks Risks of losses arising from the adverse movements in market prices, risks that the Company may not have sufficient funds to meet financial obligations and failure of a customer to meet its contractual obligations.
These main categories of risks are further analyzed into subcomponents.
Risk Factors In this section, we describe the material foreseeable risks that could have a material effect on the Company’s business operations, cash flow, financial condition, turnover, profits, assets, liquidity and capital reserves. We provide information on the nature of the risk, an indication of the potential impact and actions taken to mitigate risk exposure. All potential risks are not listed below. Some risks are not yet known to LHH and some that LHH does not currently believe to be material, could later turn out to be material.
88 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Risk Category and Description Potential Impact Actions Taken to Mitigate Risk
1. Strategic and Market Risks 1.1. Business Risk The inability of the Company to - Reduced revenue, cash flow - Detailed operational and capital expenditure achieve its business objectives and profitability budgets are formulated on an annual basis - Hinder future growth 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 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 cash to identify emerging risks at the earliest exposure to the Company flows opportunity. - Control over the ownership of - The Company, being a member of Tourist assets Hotels 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. Events that adversely impact - Occupancy and room rates - The Company has in place contingency and domestic or international travel can be adversely affected by recovery plans to enable it to respond to events that reduce domestic or major incidents or crises. international travel. Such events may include acts of terrorism, war or perceived increased risk of armed conflicts, epidemics, natural disasters, increased cost of travel and industrial action. Reduced demand will impact on revenues and operational profitability
The Lighthouse Hotel PLC | Annual Report 2014/15 89 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Risk Category and Description Potential Impact Actions Taken to Mitigate Risk
Risks from natural or man-created - Loss of assets - Transferring risks to third parties through disasters insurance policies. The adequacy of insurance covers are regularly reviewed and adjusted when necessary. 1.3. Competitive Risk Company is exposed to the risks - Future operating results - Providing a unique service quality associated of the hotel industry supply and could be adversely affected with Jetwing brand only demand cycle such as competitive by industry over-capacity of - Consistently delivering of service quality to actions from existing hotels and number of rooms influence consumer preference and creating new entrants increasing room - Reduction in market share and maintaining value perception supply (lower occupancies), rates - Make timely investments to upgrade the resulting in reduced revenues, facilities increase in marketing expenses - Maintain the long term relationships with reduces cash flows and major tour operators profitability 2. Operational Risks 2.1. Reputation and Intellectual Property Rights Risk - The Company is reliant on the - Service quality may not be - Continuous monitoring and review of online reputation of its brand and the delivered in accordance with customer reviews and ratings protection of its intellectual the Company’s standards - Investments made in protecting the property rights - Reduce brand value, market Company’s brand from misuse and share, revenues, profitability infringement, by way of trade mark and cash flows registration and domain name protection - Increase Company’s exposure - Company monitors adherence to its safety to litigation 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
90 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Risk Category and Description Potential Impact Actions Taken to Mitigate Risk
2.2. Demand - Adverse impact on Company - Reduce room nights, revenue - The Hotel is well represented at international turnover due to shift in demand - Lower room rates due to lower trade fairs from traditional source markets occupancy - Increase registration with Online Travel to new emerging markets Agents - Increase presence in social media channels - Maintain the long term relationships with major tour operators 2.3. Employee Risk - Failure to attract and retain - Inability to achieve planned - Development and maintenance of a skilled employees may threaten business objectives Company culture, compensation and benefits the success of the Company’s - Reduced quality of standards arrangements, training and development are operations resulting in reduced guest key activities carried out satisfaction 2.4. Technology Risk - Inaccurate information - Regular review of systems and upgrades - Reputation and performance of where appropriate the Company will be adversely affected 2.5. Project Implementation Risk - Cost overruns - Establish project cost and timelines in - Delays in project consultation with stakeholders implementation may cause - Monitor project progress with budgeted cost loss of earnings and time 2.6. Statutory and Legal Risk - Risk of litigation due to legal - Legal fees and penalties - Company continues to monitor changes and statutory requirements not resulting in reduced profitability in the regulatory environment in which it being fulfilled - Adverse impact to reputation operates - Loss arising from defective - Statutory declaration is made to Board each contracts quarter - Compliance audits are included in the scope of the internal audit programme - Engage professional consultants to review contracts
The Lighthouse Hotel PLC | Annual Report 2014/15 91 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Risk Category and Description Potential Impact Actions Taken to Mitigate Risk
2.7. Internal Operational Processe - Risk of financial loss due to - Internal process failures - Outsource internal audits to reputed Audit breakdown in internal controls - Frauds Firms to review and report on the adequacy of the financial and operational controls - Loss of data - 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 arising due to default of - Reduce profitability - Credit is provided only for credit approved payment - Increase working capital agents. Credit approval is granted by the Credit Committee at corporate office and credit approved list has been prepared - Actively monitor and review debtors 3.2. Exchange Rate Risk Risk arising due to the volatility in - Impact on profitability on - As far as possible, enter into sales contracts foreign currency exchange rates translation of foreign currency with tour operators/agents in USD transactions - Monitor the exchange rates on a daily basis 3.3. Interest Rate Risk - Reduce profitability - Negotiate favourable terms and conditions Risk arising due to the volatility of - Reduce cash flows with banks for loan facilities obtained fair value or future cash flows of a financial instrument fluctuating because of changes in market interest rates 3.4. Liquidity Risk Risk that the Company will not - Reduce cash flows - Monitor and review bank balances regularly be able to meet its financial - Reduce profitability - Preparation and review of Actual obligations as they fall due. performance against the budget monthly.
92 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements Financial Reports
Annual Report of the Board of Directors on the Affairs of the Company 94 Statement of Directors’ Responsibilities 99 Independent Auditor’s Report 100 Statement of Financial Position 101 Income Statement 102 Statement of Other Comprehensive Income 103 Statement of Changes in Equity 104 Statement of Cash Flows 105 Notes to the Financial Statements 106
Financial Calendar
Audited Financial Statements signed on 28th April, 2015
21st Annual General Meeting 29th June 2015
Interim Financial Statements 1st Quarter Interim Report released on 7th August 2014
2nd Quarter Interim Report released on 30th October 2014
3rd Quarter Interim Report released on 10th February 2015
4th Quarter Interim Report released on 28th April 2015
The Lighthouse Hotel PLC | Annual Report 2014/15 93 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Annual Report of the Board of Directors on the Affairs of the Company
The Directors of The Lighthouse Auditors’ Report Hotel PLC present their Report Jetwing Hotels Management together with the Audited Financial The Auditors’ Report on the Financial Services (Pvt) Ltd., of which Statements of the Company for the Statements is given on page 100. Messrs N.J.H.M. Cooray and year ended 31st March, 2015. N.T.M.S. Cooray are also Directors, purchased 906,398 shares in the The details set out herein provide Accounting Policies Company during the year. the pertinent information required The accounting policies adopted by the Companies Act No. 07 of by the Company in the preparation The Nuwara Eliya Hotels Company 2007, Listing Rules of the Colombo of Financial Statements are given PLC, of which Ms. A.M. Ondaatjie is Stock Exchange and are guided on pages 106 to 115 in this Annual a Director, purchased 13,800 shares by recommended best accounting Report. in the Company during the year. practices. The accounting policies adopted are consistent with these of the previous Directors’ Remuneration Review of the Year financial year. The aggregate emoluments paid The Chairman’s Message, to the Non-Executive Directors Managing Director’s Review and during the year, amounting to the Management Discussion and Interests Register Rs. 1,569,000/- is reflected on page Analysis describes the year’s Directors’ Interests in 135 in Note 24.1 to the Financial operations, financial performance, Transactions Statements. sustainability review and details The Directors of the Company of the future development of the have made the general disclosures Company. Insurance and Indemnity provided for in Section 192 (2) of the Companies Act No. 07 of 2007. The The Company has obtained a The Principal Activity of related party disclosures and the Corporate Guard insurance policy from CHARTIS Insurance Ltd. to the Company Directors of each of those related parties are given on pages 141 and indemnify Directors and Officers The principal activity of the Company 142 respectively. (D&O) of the Company. The policy is is hoteliering and there has been no extended worldwide excluding USA change in the nature of such activity and Canada with a total cover of during the year. Directors’ Interests in Rs. 25,000,000/-. The premium is Shares Rs. 220,000/- +Taxes. Financial Statements There were no changes in the Directors’ shareholdings during The Financial Statements of the the year. Company duly signed by Directors are given on pages 101 to 140 in this Annual Report.
94 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Directors’ Shareholding Auditors’ Remuneration
Directors’ Direct Shareholding Messrs Ernst & Young were paid Rs. 595,350/- as audit fees and As at As at expenses by the Company. In 31st March, 2015 1st April, 2014 addition, they were paid Rs. 162,800/- by the Company Mr. N.J.H.M. Cooray 748,803 748,803 for non-audit related work, which Ms. N.T.M.S. Cooray 789,803 789,803 consisted mainly of tax consultancy Mr. R.A.E. Samarasinghe 50,000 50,000 and advisory. Mr. C.S.R.S. Anthony 1,000 1,000 As far as the Directors are aware, Mr. R. de Silva 10,000 10,000 the Auditor does not have any Mr. A.T.P. Edirisinghe 1,000 1,000 relationship (other than that of an Auditor) with the Company other than those disclosed above. The Auditors Directorate Donations also do not have any interests in the Names of the Directors who held At the last Annual General Meeting Company. office during the financial year are shareholders authorised Directors to given below: determine contributions to donations. The donations given during the year Turnover amounted to Rs. 1,121,982/-. Executive Directors The turnover for the year was Rs. 731,742,995/- Mr. N.J.H.M. Cooray (Chairman), (2013/14 - Rs. 681,104,565/-). Mr. R.A.E. Samarasinghe (Managing Auditors Director), Mr. C.S.R.S. Anthony. Messrs Ernst & Young, Chartered Accountants are deemed reappointed, in terms of Section 158 Non-Executive Directors of the Companies Act No. 07 of 2007 Ms. N.T.M.S. Cooray, as Auditors of the Company. Ms. A.M. Ondaatjie. A resolution proposing the Directors be authorized to determine the Non-Executive Independent remuneration of the Auditors will be Directors submitted to the Annual General Meeting. Mr. N. Wadugodapitiya, Mr. R. de Silva, Mr. E.P.A. Cooray, Dr. C. Pathiraja, Mr. T. Nadesan, Mr. A.T.P. Edirisinghe.
The Lighthouse Hotel PLC | Annual Report 2014/15 95 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Profit/(Loss)
2015 2014 Rs. Rs.
Net Profit/(Loss) for the year after providing for all expenses, known liabilities and depreciation of fixed assets was 129,407,392 122,319,393 Other Comprehensive Income (580,607) (3,518,460) Final Dividend for 2014 – Rs. 2/- per share (2013 – Rs. 2/-) (92,000,000) (92,000,000) Prior Year Retained Profit 273,926,809 247,125,876 Retained Profit at the End of the Year 310,753,593 273,926,809
Dividends The Board of Directors recommends a payment of final dividend of Rs. 2/- per share for financial year 2014/15 to holders of the issued ordinary shares of 46,000,000 of the Company.
Reserves
2015 2014 Rs. Rs.
Revaluation Reserve 369,921,676 369,921,676 Special Reserve 1,325,671,060 1,325,671,060 Available-for-Sale Reserve 712,528 1,129,105 1,696,305,264 1,696,721,841
Revaluation Reserve
2015 2014 Rs. Rs.
On: Freehold Land As at the beginning of the year 369,921,676 369,921,676 As at 31st March, 369,921,676 369,921,676
96 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Special Reserve Property, Plant and Equipment 2015 2014 Rs. Rs. The total expenditure on acquisition of Property, Plant and Equipment As at the beginning of the year 1,325,671,060 1,325,671,060 during the year amounted Transferred from Retained Earnings – – to Rs. 66,021,502/- (2014 - As at 31st March, 1,325,671,060 1,325,671,060 Rs. 388,909,544/-) details of which are given in Note 4.1 to the With the adoption of SLFRS, the Company opted to reflect its building at Financial Statements on page 117. deemed cost. The Board resolved to transfer such impact to a Special Reserve during the year 2013. This Special Reserve is available to be used in a manner Market value of the land including determined by the Board from time to time. the valuation method and the effective date of the valuation are provided in Note 4.4 to the Financial Available-for-Sale Reserve Statements on page 120.
2015 2014 Rs. Rs. Stated Capital There were no changes in the As at the beginning of the year 1,129,105 811,802 Company’s Stated Capital during Gain/(Loss) on Available-for-Sale (416,577) 317,303 the year under review. In terms of the Financial Assets Companies Act No. 07 of 2007, the As at 31st March, 712,528 1,129,105 Stated Capital of the Company was Rs. 460,000,974/- as at 31st March, 2015 (Comprising Taxation 46,000,000 ordinary shares). Pursuant to an agreement dated 29th January, 1994, entered into with the Board of Investment under Section 17 of the Board of Investment Law, the Company is taxed at the rate of 2% of the turnover from 1st April, 2008 for a Events Occurring after period of 15 years in accordance with the said agreement. However, taxation the Reporting Date on interest income earned has been provided for, based on the provisions of There have been no material events the Inland Revenue Act. Income tax on operation of ERA Beach, Galle Heritage occurring after the Reporting Villa and Kurulubedda are computed on taxable profits at prevailing rates date, that require adjustments stipulated by the Inland Revenue Act. to or disclosures in the Financial Statements, other than proposed dividends which is disclosed in Note 15 to the Financial Statements on page 130.
The Lighthouse Hotel PLC | Annual Report 2014/15 97 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Statutory Payments Going Concern The Directors confirm that to the The Directors, after making best of their knowledge all taxes and necessary inquiries and reviews dues payable by the Company and including reviews of the Company all contributions, levies and taxes budget for the ensuing year, capital payable on behalf of and in respect expenditure requirements, future of the employees of the Company prospects and risks, cash flows and all other known statutory dues and borrowing facilities have a as were due as at the Reporting date reasonable expectation that the have been paid or provided. Company has adequate resources to continue in operational existence for the foreseeable future. Therefore, Public Shareholding the going concern basis has been As at 31st March, 2015, 23.65% of adopted in the preparation of the the issued capital of the Company Financial Statements. was held by the public. For and on behalf of the Board,
N.J.H.M. Cooray R.A.E. Samarasinghe Chairman Managing Director
Corporate Services (Pvt) Ltd. Secretaries
The Lighthouse Hotel PLC 28th April, 2015
98 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements Statement of Directors’ Responsibilities
The Directors are responsible, They also confirm that the Financial Compliance Report under Sections 150 (1) and 151, Statements have been prepared of the Companies Act No. 07 of and presented in accordance with The Directors confirm that to the 2007, to ensure compliance with the Sri Lanka Accounting Standards best of their knowledge, all statutory the requirements set out there into (SLFRS & LKAS). The Financial payments relating to employees prepare Financial Statements for Statements provide the information and the Government that were due each financial year giving a true required by the Companies Act and in respect of the Company as at the and fair view of the state of affairs the Listing Rules of the Colombo Reporting date have been paid or of the Company and the Income Stock Exchange. where relevant, provided for. Statement of the financial year-end. The Directors are also responsible, The Directors have taken reasonable By Order of the Board, under Section 148 for ensuring measures to safeguard the assets The Lighthouse Hotel PLC that proper accounting records are of the Company and, in that context, Corporate Services (Pvt) Ltd. kept to disclose, with reasonable have instituted appropriate systems Secretaries accuracy, the financial position and of internal control with a view to enable preparation of the Financial preventing and detecting fraud and 216, De Saram Place, Colombo 10. Statements. other irregularities. 28th April, 2015
The Board accepts responsibility The External Auditors, Messrs Ernst for the integrity and objectivity of & Young, are reappointed in terms the Financial Statements presented. of Section 158 of the Companies The Directors confirm that in Act No. 07 of 2007 were provided preparing the Financial Statements, with every opportunity to undertake appropriate accounting policies the inspections they considered have been selected and applied appropriate to enable them to consistently while reasonable and form their opinion on the Financial prudent judgments have been made Statements. The Report of the so that the form and substance of Auditors, shown on page 100 sets transactions are properly reflected. out their responsibilities in relation to the Financial Statements.
The Lighthouse Hotel PLC | Annual Report 2014/15 99 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Independent Auditor’s Report
TO THE SHAREHOLDERS OF THE in accordance with Sri Lanka Auditing Opinion LIGHTHOUSE HOTEL PLC Standards. Those standards require that In our opinion, the financial statements we comply with ethical requirements give a true and fair view of the financial Report on the Financial Statements and plan and perform the audit to obtain position of the Company as at 31 March We have audited the accompanying reasonable assurance about whether the 2015, and of its financial performance financial statements of The Lighthouse financial statements are free from material and cash flows for the year then ended Hotel PLC, (“the Company”), which misstatement. in accordance with Sri Lanka Accounting comprise the statement of financial Standards. position as at 31 March 2015, An audit involves performing procedures income statement, statement of other to obtain audit evidence about the Report on Other Legal and Regulatory comprehensive income, statement amounts and disclosures in the financial Requirements of changes in equity, and cash flow statements. The procedures selected As required by Section 163(2) of the statement for the year then ended, and depend on the auditor’s judgment, Companies Act No. 7 of 2007, we state a summary of significant accounting including the assessment of the risks of the following: policies and other explanatory information material misstatement of the financial (set out on pages 101 to 140). statem ents, whether due to fraud or error. (a) The basis of opinion, Scope and In making those risk assessments, the Limitations of the audit are as stated auditor considers internal control relevant above. Board’s Responsibility for the Financial to the entity’s preparation of the financial Statements statements that give a true and fair view in (b) In our opinion : The Board of Directors (“Board”) is order to design audit procedures that are - We have obtained all the information responsible for the preparation of these appropriate in the circumstances, but not and explanations that were required financial statements that give a true and for the purpose of expressing an opinion for the audit and, as far as appears fair view in accordance with Sri Lanka on the effectiveness of the entity’s internal from our examination, proper Accounting Standards, and for such control. An audit also includes evaluating accounting records have been kept internal control as Board determines is the appropriateness of accounting by the Company, and necessary to enable the preparation of policies used and the reasonableness - The financial statements of financial statements that are free from of accounting estimates made by the the Company, comply with the material misstatement, whether due to Board, as well as evaluating the overall requirements of Section 151 of the fraud or error. presentation of the financial statements. Companies Act No. 7 of 2007.
We believe that the audit evidence Auditor’s Responsibility we have obtained is sufficient and Our responsibility is to express an opinion appropriate to provide a basis for our on these financial statements based audit opinion. on our audit. We conducted our audit 28 April 2015 Colombo
Partners: ADBTalwatte FCA FCMAMPDCooray FCA FCMARNde Saram ACA FCMAMs. NADe Silva FCA Ms.YADeSilva FCA WRHFernando FCMA W KBSPFernando FCA FCMAMs. LKHLFonseka FCA APAGunasekera FCA FCMAAHerath FCA DKHulangamuwa FCA FCMA LLB (Lond) HMAJayesinghe FCA FCMA Ms. AALudowyke FCA FCMAMs. GGSManatunga FCA NMSulaiman ACA ACMABEWijesuriya FCA ACMA
Amember firm of Ernst & Young Global Limited
100 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements Statement of Financial Position
As at 31st March, 2015 2014 Note Rs. Rs.
ASSETS Non-Current Assets Property, Plant and Equipment 4 2,510,502,910 2,529,136,504 Prepaid Lease Rent 5 2,393,940 2,424,243 Intangible Assets 6 1,278,947 851,917 Other Non-Current Financial Assets 7.1 87,975,788 59,388,785 2,602,151,585 2,591,801,449 Current Assets Inventories 8 29,808,973 28,631,147 Trade and Other Receivables 9 114,904,835 99,110,522 Cash at Bank and in Hand 21 21,347,489 22,565,455 166,061,297 150,307,124 Total Assets 2,768,212,882 2,742,108,573
EQUITY AND LIABILITIES Capital and Reserves Stated Capital 10 460,000,974 460,000,974 Reserves 11 1,696,305,264 1,696,721,841 Retained Earnings 310,753,593 273,926,809 Total Equity 2,467,059,831 2,430,649,624 Non-Current Liabilities Post-employment Benefit Liability 12 24,949,427 22,678,483 Interest-Bearing Loans and Borrowings 13 116,748,594 87,353,786 141,698,021 110,032,269 Current Liabilities Trade and Other Payables 14 114,315,878 146,800,831 Current portion of Interest-bearing Loans and Borrowings 13 41,995,800 51,425,174 Income Tax Payable 3,143,352 3,200,675 159,455,030 201,426,680 Total Liabilities 301,153,051 311,458,949 Total Equity and Liabilities 2,768,212,882 2,742,108,573 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 106 through 140 form an integral part of the Financial Statements. 28th April, 2015 Colombo The Lighthouse Hotel PLC | Annual Report 2014/15 101 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Income Statement
Year ended 31st March, 2015 2014 Note Rs. Rs.
Revenue 3 731,742,995 681,104,565 Cost of Sales (147,053,316) (147,821,548) Gross Profit 584,689,679 533,283,017 Other Income and Gains 16 4,926,568 2,290,972 Marketing and Promotional Expenses (26,913,000) (23,089,847) Administrative Expenses (413,895,103) (379,436,414) Finance Cost 17.1 (8,884,348) (1,942,540) Finance Income 17.2 532,424 5,491,639 Profit before Tax 18 140,456,221 136,596,828 Income Tax Expense 19 (11,048,829) (14,277,435) Profit for the Year 129,407,392 122,319,393
Earnings Per Share 20 2.81 2.66
The accounting policies and notes on pages 106 through 140 form an integral part of the Financial Statements.
102 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements Statement of Other Comprehensive Income
Year ended 31st March, 2015 2014 Note Rs. Rs.
Profit for the Year 129,407,392 122,319,393 Other Comprehensive Income Other Comprehensive Income to be reclassified to Income Statement in Subsequent Periods: Gain/(Loss) on Available-for-Sale Financial Instruments 7.1 (416,577) 317,303 Other Comprehensive Income not to be reclassified to Income Statement in Subsequent Periods: Actuarial Losses on Post Employment Benefit Liability 12 (580,607) (3,518,460) Other Comprehensive Loss for the Year (997,184) (3,201,157) Total Comprehensive Income for the Year 128,410,208 119,118,236
The accounting policies and notes on pages 106 through 140 form an integral part of the Financial Statements.
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Statement of Changes in Equity
Stated Revaluation Available-for- Special Retained Capital Reserve Sale Reserve Reserve Earnings Total Rs. Rs. Rs. Rs. Rs. Rs. (Note 11.1) (Note 11.3) (Note 11.2)
Balance as at 1st April, 2013 460,000,974 369,921,676 811,802 1,325,671,060 247,125,876 2,403,531,388 Profit for the Year – – – – 122,319,393 122,319,393 Other Comprehensive Income/(Loss) – 317,303 – (3,518,460) (3,201,157) Total Comprehensive Income – – 317,303 – 118,800,933 119,118,236 Dividend Paid (Note 15) – – – – (92,000,000) (92,000,000) Balance as at 31st March, 2014 460,000,974 369,921,676 1,129,105 1,325,671,060 273,926,809 2,430,649,624 Profit for the Year – – – – 129,407,392 129,407,392 Other Comprehensive Income/(Loss) – – (416,577) – (580,607) (997,184) Total Comprehensive Income/(Loss) – – (416,577) – 128,826,785 128,410,208 Dividend Paid (Note 15) – – – – (92,000,000) (92,000,000) Balance as at 31st March, 2015 460,000,974 369,921,676 712,528 1,325,671,060 310,753,593 2,467,059,831
The accounting policies and notes on pages 106 through 140 form an integral part of the Financial Statements.
104 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements Statement of Cash Flows
Year ended 31st March, 2015 2014 Note Rs. Rs. Cash Flows From Operating Activities Profit before Tax 140,456,221 136,596,828 Adjustments for: Depreciation 4.2 77,027,173 64,104,544 Amortization of Prepaid Lease Rental 5 30,303 30,303 (Income) from Investments - Interest Income 17.2 (532,424) (5,491,639) (Profit)/Loss on Disposal of Property, Plant and Equipment 18 3,012,955 (646,068) Finance Costs 17.1 8,884,348 1,942,540 Provision for Defined Benefit Plans 12 4,116,907 3,330,310 Allowance for Doubtful Debts 18 275,000 421,631 Write Back of Sundry Payables 16 – (1,787,323) Amortization of Intangible Assets 6 582,536 688,885 Exchange (Gain)/Loss from Conversion of Foreign Currency Loans 13 3,418,426 (91,574) Operating Profit before Working Capital Changes 237,271,445 199,098,437 (Increase)/Decrease in Inventories (1,177,826) (6,009,471) (Increase)/Decrease in Trade and Other Receivables (16,069,313) (6,779,226) Increase/(Decrease) in Trade and Other Payables (32,484,954) 60,457,758 Cash Generated from Operations 187,539,352 246,767,498 Income Tax Paid (11,106,152) (14,228,510) Finance Cost paid 17.1 (8,884,348) (1,942,540) Defined Benefit Plan Costs Paid Net of Transfers 12 (2,426,571) 858,853 Net Cash From Operating Activities 165,122,281 231,455,301 Cash Flows from/(Used in) Investing Activities Acquisition of Property, Plant and Equipment 4.5 (63,217,732) (386,985,288) Proceeds from Sale of Property, Plant and Equipment 1,811,469 2,222,368 Interest Income 17.2 532,424 5,491,639 Investment in Other Non-Current Financial Assets 7 (29,003,580) – Acquisition of Intangible Assets 6.1 (1,009,566) (603,938) Net Cash Flows Used in Investing Activities (90,886,985) (379,875,219)
Cash Flows from/(Used in) Financing Activities Proceeds from Interest Bearing Loans and Borrowings 13.1 68,134,925 135,438,500 Repayment of Interest-Bearing Loans and Borrowings 13.1 (41,342,963) (8,737,440) Dividends Paid 15 (92,000,000) (92,000,000) Net Cash Flows from/(Used in) Financing Activities (65,208,038) 34,701,060
Net Increase/(Decrease) in Cash and Cash Equivalents 9,027,258 (113,718,858)
Cash and Cash Equivalents at the Beginning of the Year 21 12,320,231 126,039,089 Cash and Cash Equivalents at the End of the Year 21 21,347,489 12,320,231
The accounting policies and notes on pages 106 through 140 form an integral part of the Financial Statements.
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Notes to the Financial Statements
1. Corporate Information 2. Basis of Preparation 2.4.1 Foreign Currencies The Financial Statements are 1.1 General 2.1 The Financial Statements presented in Sri Lanka Rupees, have been prepared on a historical The Lighthouse Hotel PLC which is also the Company’s cost basis, except for Freehold (“Company”) is a limited liability functional currency. Transactions Land and Available-for-Sale company incorporated and in foreign currencies are initially Financial Instruments that have domiciled in Sri Lanka and listed on recorded at the functional currency been measured at fair value. The the Colombo Stock Exchange. The rate ruling at the date of the preparation and presentation of registered office of the Company is transaction. Monetary assets and these Financial Statements is in located at “Jetwing House” 46/26 liabilities denominated in foreign compliance with the requirements of Navam Mawatha, Colombo 2 and currencies, are retranslated at the the Companies Act No. 07 of 2007. principal place of business is functional currency spot rate of situated at Dadella, Galle. exchange ruling at the reporting 2.2 Statement of date. Differences arising on Compliance settlement or translation of monetary 1.2 Principal Activities and items are recognized in the Profit or Nature of Operations The Financial Statements of the Loss. Non-monetary items that are Company have been prepared measured in terms of historical cost The Company owns and operates in accordance with Sri Lanka in a foreign currency are translated The Lighthouse Hotel and Spa, Accounting Standards, comprising using the exchange rates as at the which is targeted at the up market SLFRS and LKAS (“SLFRS”), as dates of the initial transactions. leisure travellers. issued by the Institute of Chartered
Accountants of Sri Lanka. 2.4.2 Revenue Recognition 1.3 Parent Enterprise and Revenue is recognized to the extent Ultimate Parent Enterprise 2.3 Changes in that it is probable that the economic The Company does not have an Accounting Policies benefits will flow to the Company identifiable parent of its own. and the revenue can be reliably The accounting policies adopted are measured, regardless of when the consistent with those of the previous payment is being made. Revenue 1.4 Date of Authorization financial year. is measured at the fair value of the for Issue consideration received or receivable, 2.4 Summary of Significant taking into account contractually The Financial Statements of The Accounting Policies defined terms of payment and Lighthouse Hotel PLC, for the excluding taxes or duty. The year ended 31 March 2015, were Applied Company assesses its revenue authorized for issue in accordance The following are significant arrangements against specific with a resolution of the Board of accounting policies applied by the criteria in order to determine if it is Directors on 28th April, 2015. Company, in preparing its Financial acting as principal or agent. The
Statements: Company has concluded that it is acting as a principal in all its revenue arrangements.
106 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
The following specific recognition transactions which are not material, (b) Sales Tax criteria must also be met before are aggregated, reported and Revenues, expenses and assets revenue is recognized. presented on a net basis. are recognized net of the amount of sales tax, except where the sales tax (a) Room Revenue 2.4.3 Taxation incurred on a purchase of assets or Revenue is recognized on the rooms service is not recoverable from the (a) Current Income Taxes occupied on daily basis. taxation authorities, in which case Current income tax assets and the sales tax is recognized as a part (b) Food & Beverage Revenue liabilities for the current period are of the cost of the asset or as a part measured at the amount expected of the expense items as applicable Food & Beverage Revenue is to be recovered from or paid to the and receivables and payables are accounted at the time of sale. taxation authorities. The tax rates stated with the amount of sales tax and tax laws used to compute the included. The net amount of sales (c) Other Hotel Related Revenue amount are those that are enacted tax recoverable from, or payable to, Other Hotel Related Revenue is or substantively enacted, at the the taxation authority is included as accounted when such service is reporting date. Pursuant to an part of receivables or payables in the rendered. agreement dated 29 January 1994, Statement of Financial Position. entered into with Board of (d) Finance income Investment under section 17 of (c) Deferred Tax the Board of Investment Law, the Interest Income is recognized on a Deferred tax is provided using Company is taxed at the rate of time proportion basis that takes in to the liability method on temporary 2% of the turnover from account the effective yield on the differences between the tax bases 1 April, 2008 for a period of 15 asset unless collectability is in doubt. of assets and liabilities and their years in accordance with the carrying amounts for financial said agreement. Current income reporting purposes at the reporting (e) Others tax relating to items recognized date. Deferred tax liabilities are Other income is recognized on an directly in equity is recognized recognized for all taxable temporary accrual basis. in equity and not in the Income differences. Statement. Management periodically Net gains and losses of a revenue evaluates positions taken in the tax Deferred tax assets are recognized nature on the disposal of Property, returns with respect to situations for all deductible temporary Plant and Equipment has been in which applicable tax regulations differences, carry forward of unused accounted for in the Income are subject to interpretation and tax credits and unused tax losses, Statement, having deducted from establishes provisions where to the extent that it is probable proceeds on disposal, the carrying appropriate. that taxable profit will be available, amount of the assets and related against which the deductible selling expenses. Income tax on operations of Era temporary differences and the carry Beach, Galle Heritage Villa and forward of unused tax credits and Gains and losses arising from Kurulubedda, is computed on unused tax losses can be utilized. incidental activities to main revenue taxable profits at prevailing rates generating activities and those stipulated by the Inland Revenue Act. arising from a group of similar
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The carrying amount of deferred tax 2.4.4 Borrowing Costs 2.4.6 Cash and Cash Equivalents assets is reviewed at each reporting Borrowing costs directly attributable Cash at Bank and in Hand in the date and reduced to the extent that to the acquisition, construction Statement of Financial Position it is no longer probable that sufficient or production of an asset that comprise cash at Bank and on hand. taxable profit will be available to necessarily takes a substantial allow all or part of the deferred tax period of time to get ready for its For the purpose of the Statement asset to be utilized. Unrecognized intended use or sale are capitalized of Cash Flows, cash and cash deferred tax assets are reassessed as part of the cost of the respective equivalents consist of cash and short at each reporting date and are asset. All other borrowing costs are term deposits with a maturity of three recognized to the extent that it has expensed in the period in which months or less, net of outstanding become probable that future taxable they occur. Borrowing costs consist bank overdrafts. profits will allow the deferred tax of interest and other costs that an asset to be recovered. entity incurs in connection with the 2.4.7 Property, Plant and borrowing of funds. Deferred tax assets and liabilities are Equipment measured at the tax rates that are Property, Plant and Equipment expected to apply in the year when 2.4.5 Inventories (except for land) is stated at cost, the asset is realized or the liability Inventories are valued at the lower net of accumulated depreciation and is settled, based on tax rates (and of cost and net realisable value, accumulated impairment losses, if tax laws) that have been enacted after making due allowances for any. Such cost includes the costs or substantively enacted at the obsolete and slow moving items. of replacing parts of the Property, reporting date. Net realisable value is the price at Plant and Equipment and borrowing which inventories can be sold in the costs for long term construction Deferred tax relating to items ordinary course of business less the projects if the recognition criteria recognized outside profit or estimated cost of completion and the are met. When significant parts of loss is recognized outside profit estimated cost necessary to make Property, Plant and Equipment are or loss. Deferred tax items are the sale. required to be replaced at intervals, recognized in correlation to the the Company recognizes such parts underlying transaction either in other The cost incurred in bringing as individual assets with specific comprehensive income or directly in inventories to its present location useful lives and depreciates them equity. and condition is accounted using the accordingly. Likewise, when a major following cost formulae: refurbishment is performed, its Deferred tax assets and deferred cost is recognized in the carrying tax liabilities are offset, if a legally Food and Beverage - At purchase amount of the Property, Plant and enforceable right exists to set-off cost on weighted average basis. Equipment as a replacement if the current tax assets against current Other Inventories - At purchase cost recognition criteria are satisfied. All income tax liabilities and the on weighted average basis. other repair and maintenance costs deferred taxes relate to the same are recognized in the profit or loss as taxable entity and the same taxation incurred. authority.
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Land is measured at fair value, less The Company provides depreciation Company as a lessee: impairment losses recognized at the from the date the assets are Finance leases that transfer to the date of revaluation. Valuations are available for use up to the date of Company substantially all of the risks performed with sufficient frequency disposal, on a straight line basis and benefits incidental to ownership to ensure that the fair value of a over the periods appropriate to the of the leased item, are capitalized at revalued asset does not differ estimated useful lives based on the the commencement of the lease at materially from its carrying amount. pattern in which the asset’s future the fair value of the leased property economic benefits are expected to or, if lower, at the present value of A revaluation surplus is recognized be consumed by the Company of the minimum lease payments. in Other Comprehensive Income and the different types of assets, except Lease payments are apportioned credited to the revaluation reserve in for which are disclosed separately. between finance charges and equity. However, to the extent that it Depreciation of an asset ceases at reduction of the lease liability so reverses a revaluation deficit of the the earlier of the date that the asset as to achieve a constant rate of same asset previously recognized is classified as held-for-sale or the interest on the remaining balance in the Income Statement, in which date that the asset is derecognized. of the liability. Finance charges are case the increase is recognized in Depreciation does not cease when recognized in finance costs in the the Income Statement. A revaluation the assets become idle or is retired Income Statement. deficit is recognized in Profit or Loss, from active use unless the asset is except to the extent that it offsets fully depreciated. A leased asset is depreciated over an existing surplus on the same the useful life of the asset. However, asset recognized in the asset The useful life and residual value if there is no reasonable certainty revaluation reserve. of assets are reviewed and adjusted that the Company will obtain if required, at the end of each ownership by the end of the lease Upon disposal, any revaluation financial year. term, the asset is depreciated over reserve relating to the particular the shorter of the estimated useful asset being sold is transferred to 2.4.8 Leases life of the asset and the lease term. retained earnings. The determination of whether an Operating leases, where the lessor arrangement is, or contains, a lease An item of Property, Plant and effectively retains substantially is based on the substance of the Equipment is derecognized all of the risks and benefits of arrangement at the inception date. upon disposal or when no future ownership over the term of the The arrangement is assessed for economic benefits are expected lease are classified as operating whether fulfilment of the arrangement from its use or disposal. Any gain leases. Operating lease payments is dependent on the use of a or loss arising on derecognition are recognized as an operating specific asset or assets and the of the asset (calculated as the expense in the Income Statement arrangement conveys a right to difference between the net disposal on a straightline basis over the lease use the asset or assets, even if that proceeds and the carrying amount term. of the asset) is included in the right is not explicitly specified in an Income Statement when the asset is arrangement. derecognized.
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2.4.9 Financial Instruments Profit or Loss. Financial assets are and ability to hold them to maturity. classified as held-for-trading if they After initial measurement, held-to- (i) Financial Assets are acquired for the purpose of maturity investments are measured Financial Assets of the Company selling or repurchasing in the near at amortized cost using the effective comprise Trade and Other term. Financial assets at fair value interest method, less impairment. Receivables, Cash at Bank and in through Profit and Loss are carried Amortized cost is calculated by Hand and Available-for-sale financial in the Statement of Financial Position taking into account any discount or instruments. at fair value with changes in fair premium on acquisition and fees or value recognized in finance income costs that are an integral part of the Initial Recognition and Measurement or finance costs in the Income EIR. The EIR amortization is included Financial assets within the scope of Statement. in finance income in the Income LKAS 39 are classified as Financial Statement. The losses arising from Assets at Fair Value through Profit Loans and Receivables impairment are recognized in the or Loss, Loans and Receivables, Loans and receivables are non- Income Statement in finance costs. Held-to-Maturity investments, or derivative financial assets with fixed Available-for-Sale financial assets, Available-for-Sale Financial or determinable payments that are as appropriate. The Company Investments not quoted in an active market. determines the classification of its After initial measurement, such Available-for-Sale financial financial assets at initial recognition. financial assets are subsequently investments held at the reporting
measured at amortized cost using date consists of equity securities. All financial assets except for those the effective interest rate method Equity investments classified that are at fair value through Profit (EIR), less impairment. Amortized as available-for-sale are those, or Loss are recognized initially at cost is calculated by taking into neither classified as held-for- fair value plus transaction costs. account any discount or premium on trading nor designated at fair Those that are at fair value through acquisition and fees or costs that are value through Profit or Loss. After Profit or Loss are initially measured an integral part of the EIR. The EIR initial measurement, available- at fair value. amortization is included in finance for-sale financial investments
income in the Income Statement. The are subsequently measured at Subsequent Measurement losses arising from impairment are fair value with unrealized gains The subsequent measurement of recognized in the Income Statement or losses recognized as Other financial assets depends on their in finance costs. Comprehensive Income and credited classification as described below: in the available-for-sale reserve until Held-to-Maturity Financial the investment is derecognized, at Financial Assets at Fair Value Instruments which time, the cumulative gain or through Profit or Loss loss is recognized in other operating Non derivative financial assets with Financial assets at fair value through income or determined to be impaired fixed or determinable payments Profit or Loss include financial at which time the cumulative loss is and fixed maturities are classified assets held-for-trading and financial reclassified to the Income Statement as held-to-maturity when the assets designated upon initial in finance costs and removed from Company has the positive intention recognition at fair value through the available-for-sale reserve.
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Derecognition Financial Assets Carried at with the associated allowance are A financial asset (or, where Amortized Cost written off when there is no realistic applicable, a part of a financial asset For financial assets carried at prospect of future recovery. If, in a or part of a group of similar financial amortized cost, the Company subsequent year, the amount of the assets) is derecognized when the first assesses whether objective estimated impairment loss increases rights to receive cash flows from the evidence of impairment exists or decreases because of an event asset have expired or the Company individually for financial assets occurring after the impairment has transferred its rights to receive that are individually significant, or was recognized, the previously cash flows from the asset. collectively for financial assets that recognized impairment loss is are not individually significant. If increased or reduced by adjusting (ii) Impairment of Financial Assets the Company determines that no the allowance account. If a write-off objective evidence of impairment is later recovered, the recovery The Company assesses at each exists for an individually assessed is credited to finance costs in the reporting date whether there is any financial asset, whether significant or Income Statement. objective evidence that a financial not, it includes the asset in a group asset or a group of financial assets of financial assets with similar credit Available-for-Sale Financial is impaired. A financial asset or a risk characteristics and collectively Instruments group of financial assets is deemed assesses them for impairment. For available-for-sale financial to be impaired if, there is objective Assets that are individually assessed investments, the Company assesses evidence of impairment as a result of for impairment and for which an at each reporting date whether one or more events that has occurred impairment loss is, or continues to there is objective evidence that an after the initial recognition of the asset be, recognized are not included in a investment or a group of investments (an incurred ‘loss event’) and that loss collective assessment of impairment. is impaired. event has an impact on the estimated If there is objective evidence that an future cash flows of the financial impairment loss has been incurred, In the case of equity investments asset or the group of financial assets the amount of the loss is measured classified as available-for-sale, that can be reliably estimated. as the difference between the asset’s objective evidence would include Evidence of impairment may include carrying amount and the present a significant or prolonged decline indications that the debtors or a value of estimated future cash in the fair value of the investment group of debtors is experiencing flows (excluding future expected below its cost. ‘Significant is significant financial difficulty, default credit losses that have not yet been evaluated against the original cost or delinquency in interest or principal incurred). The present value of of the investment and ‘prolonged ‘ payments, the probability that the estimated future cash flows is against the period in which the fair they will enter bankruptcy or other discounted at the financial asset’s values have been below its original financial reorganization and where original effective interest rate. cost. Where there is evidence of observable data indicate that there impairment, the cumulative loss- is a measurable decrease in the The carrying amount of the asset measured as the difference between estimated future cash flows, such is reduced through the use of an the acquisition cost and the current as changes in arrears or economic allowance account and the amount fair value, less any impairment conditions that correlate with defaults. of the loss is recognized in the loss on that investment previously Income Statement. Loans together recognized in the Income
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Statement is removed from other Derecognition For financial instruments not traded comprehensive income and A financial liability is derecognized in an active market, the fair value recognized in the Income Statement. when the obligation under the is determined using appropriate Impairment losses on equity liability is discharged or cancelled or valuation techniques. Such investments are not reversed through expires. When an existing financial techniques may include: the Income Statement; increases liability is replaced by another from • Using recent arm’s length market in their fair value after impairment the same lender on substantially transactions; are recognized directly in Other different terms, or the terms of an • Reference to the current fair Comprehensive Income. existing liability are substantially value of another instrument that is modified, such an exchange substantially the same; (iii) Financial Liabilities or modification is treated as a derecognition of the original liability • A discounted cash flow analysis or The Company’s financial liabilities and the recognition of a new liability. other valuation models. include Trade and Other Payables, The difference in the respective Bank Overdrafts and Loans and carrying amounts is recognized in 2.4.10 Intangible Assets Borrowings. the Income Statement. Intangible assets acquired Recognition and Measurement separately are measured on initial (iv) Offsetting of Financial recognition at cost. Following initial Initial measurement of financial Instruments recognition, intangible assets are liabilities is based on their fair Financial assets and financial carried at cost less accumulated value, but adjusted in respect liabilities are offset and the net amortization and accumulated of any transaction costs that are amount reported in the Statement impairment losses, if any. incremental and directly attributable of Financial Position only if there is Internally generated intangible to the acquisition or issue of the a current enforceable legal right to assets, except capitalized instrument. After initial recognition, offset the recognized amounts and development costs, are not financial liabilities are subsequently an intent to settle on a net basis, or capitalized and related expenditure measured at amortized cost using to realize the assets and settle the is recognized in the Income the Effective Interest Rate method. liabilities simultaneously. Statement when it is incurred. Gains and losses are recognized in the Income Statement when the (v) Fair Value of Financial Intangible assets with finite lives are liabilities are derecognized as well Instruments amortized over their useful economic as through the Effective Interest Rate lives and assessed for impairment method (EIR) amortization process. The fair value of financial instruments whenever there is an indication Amortized cost is calculated by that are traded in active markets at that the intangible asset may be taking into account any discount or each reporting date is determined by impaired. The amortization period premium on acquisition and fees or reference to quoted market prices or and the amortization method for an costs that are an integral part of the dealer price quotations (bid price for intangible asset with a finite useful EIR. The EIR amortization is included long positions and ask price for short life are reviewed at least at the end in finance costs in the Income positions), without any deduction for of each reporting period. Changes Statement. transaction costs.
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in the expected useful life or the is virtually certain. The expense employees to Employees’ Provident expected pattern of consumption of relating to any provision is presented Fund and Employees’ Trust Fund future economic benefits embodied in the Income Statement net of any respectively. in the asset is accounted for by reimbursement. changing the amortization period 2.4.13 Impairment of or method, as appropriate and are 2.4.12 Post-Employment Non-Financial Assets treated as changes in accounting Benefit Liability estimates. The Company assesses at each (a) Defined Benefit Plan – Gratuity reporting date whether there is an The amortization expense on The Company measures the indication that an asset may be intangible assets with finite lives is present value of the promised impaired. If any such indication recognized in the Income Statement retirement benefits of gratuity, exists or when annual impairment in the expense category consistent which is a defined benefit plan testing for an asset is required, with the function of the intangible with the advice of an independent the Company makes an estimate assets. professional actuary each year of the asset’s recoverable amount. using the Projected Unit Credit An asset’s recoverable amount is Gains or losses arising from method. Actuarial gains and the higher of an asset’s or cash- derecognition of an intangible asset losses are recognized in full in the generating unit’s fair value less costs are measured as the difference period in which they occur in Other to sell and its value in use and is between the net disposal proceeds Comprehensive Income. determined for an individual asset, and the carrying amount of the unless the asset does not generate asset and are recognized in the This item is stated under Post cash inflows that are largely Income Statement when the asset is Employee Benefit Liability in the independent of those from other derecognized. Statement of Financial Position. assets or group of assets. Where the carrying amount of an asset exceeds its recoverable amount, the 2.4.11 Provisions The gratuity liability is not externally funded. asset is considered impaired and Provisions are recognized when the is written down to its recoverable Company has a present obligation amount. In assessing value in use, (b) Defined Contribution Plans – (legal or constructive) as a result of a the estimated future cash flows are Employees’ Provident Fund and past event, where it is probable that discounted to their present value Employees’ Trust Fund an outflow of resources embodying using a pre-tax discount rate that economic benefits will be required Employees are eligible for reflects current market assessments to settle the obligation and a reliable Employees’ Provident Fund of the time value of money and estimate can be made of the amount Contributions and Employees’ Trust the risks specific to the asset. In of the obligation. When the Company Fund Contributions in line with the determining fair value less costs expects some or all of a provision to respective statutes and regulations. to sell, an appropriate valuation be reimbursed, the reimbursement The Company contributes 12% model is used. These calculations is recognized as a separate asset and 3% of gross emoluments of are corroborated by valuation but only when the reimbursement multiples or other available fair value indicators.
The Lighthouse Hotel PLC | Annual Report 2014/15 113 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Impairment losses of continuing 2.4.14 Dividend Distributions assess whether an allowance operations are recognized in the The Company recognizes a should be recorded in the Income Income Statement in those expense liability to make cash or non-cash Statement. The Management categories consistent with the distributions to owners of equity uses judgment in estimating such function of the impaired asset, when the distribution is authorized amounts in the light of the duration except for property previously and is no longer at the discretion of outstanding and any other factors revalued where the revaluation of the Company. A corresponding management is aware of, that was taken to equity. In this case amount is recognized directly in indicate uncertainty in recovery. the impairment is also recognized equity. Further details are given in Note 9 in equity up to the amount of any and 25. previous revaluation. Non-cash distributions are measured at fair value of the assets to be Critical Accounting For assets, an assessment is distributed. Upon settlement of the Estimates and Assumptions made at each reporting date as to distribution of non-cash assets, any The Financial Statements are whether there is any indication that difference between the carrying sensitive to assumptions and previously recognized impairment amount of the liability and the estimates made in measuring certain losses may no longer exist or may carrying amount of the assets carrying amounts represented in have decreased. If such indication distributed is recognized in income the Statement of Financial Position exists, the Company makes an as a separate line in Statement of and amounts charged to the Income estimate of the recoverable amount. Comprehensive Income. A previously recognized impairment Statement. These could result in a loss is reversed only if there has significant risk of causing material been a change in the assumptions 2.5 Significant Accounting adjustments to the carrying amounts used to determine the asset’s Judgments, Estimates and of assets and liabilities which are disclosed in the relevant Notes to the recoverable amount since the last Assumptions impairment loss was recognized. If Financial Statements. that is the case the carrying amount Judgments of the asset is increased to its In the process of applying the Fair Value of Property, recoverable amount. That increased Company’s accounting policies, Plant and Equipment: amount cannot exceed the carrying management has made the following The Land (and buildings at the date amount that would have been judgments, apart from those of transition when the Company first determined, net of depreciation, had involving estimations, which have adopted SLFRS in 2012/2013) of the no impairment loss been recognized the most significant effect on the Company were reflected at fair value. for the asset in prior years. Such amounts recognized in the Financial When current market prices of similar reversal is recognized in the Income Statements. assets are available, such evidences Statement unless the asset is are considered in estimating fair carried at revalued amount, in which Impairment of Trade Debtors: values of these assets. In the case the reversal is treated as a The Company reviews at each absence of such information revaluation increase. reporting date all receivables to the Company determines within reasonable fair value estimates,
114 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
amounts that can be attributed as subject to significant uncertainty. (ii) SLFRS 15 – Revenue from fair values, with the assistance of an Further details are given in Note 12. Contracts with Customers independent valuer. Further details SLFRS 15 establishes a are given in note 4. 2.6 Effect of Sri Lanka comprehensive framework for determining whether, how much Components of Buildings: Accounting Standards and when revenue is recognized. Issued but Not Yet In determining the depreciation It replaces existing revenue expense, the Company with the Effective: recognition guidance, including LKAS 18 Revenue, LKAS 11 assistance of an independent The following SLFRS have been Construction Contracts and IFRIC 13 professional valuer, determined issued by the Institute of Chartered Customer Loyalty Programmes. This the components of buildings Accountants of Sri Lanka that have standard is effective for the annual that have varying useful lives. an effective date in the future and periods beginning on or after Approximation techniques and have not been applied in preparing 1st January 2017. appropriate groupings were used these Financial Statements. Those in such determination as well as in SLFRS will have an effect on the In addition to the above, SLFRS the assessment of the useful lives of accounting policies currently 14 - Regulatory Deferral Accounts each component. Further details are adopted by the Company and will also be effective for the annual given in Note 4.7. may have an impact on the future periods commencing on or after Financial Statements. 1st January, 2016. The Company Fair value of Available-for-Sale Financial Instruments will adopt these standards when (i) SLFRS 9 – Financial they become effective. Pending The Fair Value of Available-for-Sale Instruments: Classification and the completion of detailed Financial Instruments that are Measurement review, the financial impact is not unquoted is determined using SLFRS 9, as issued reflects the first reasonably estimable as at the date valuation technique based on phase of work on replacement of of publication of these Financial discounted cash flow analysis. LKAS 39 and applies to classification Statements. Further details are given in Note 7.1. and measurement of financial assets and liabilities. Defined Benefit Plans: The Defined Benefit Obligation This standard was originally effective and the related charge for the year for annual periods commencing on are determined using actuarial or after 1st January 2015. However, valuations. The actuarial valuations the effective date has been deferred involve making assumptions subsequently. about discount rates, future salary increases, mortality rates etc. Due to the long term nature of such obligations these estimates are
The Lighthouse Hotel PLC | Annual Report 2014/15 115 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
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:
2015 2014 Rs. Rs.
Room Revenue 382,755,149 343,046,667 Food and Beverage 315,327,194 301,960,012 Other Hotel Related 33,660,652 36,097,886 Total Revenue 731,742,995 681,104,565
116 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
4. Property, Plant and Equipment 4.1 Gross Carrying Amounts
Balance as at Disposals/ Balance as at 01.04.2014 Additions Transfers Written-off 31.03.2015 At Cost Rs. Rs. Rs. Rs. Rs.
Buildings and Building Integrals 2,036,429,150 709,621 12,066,514 (1,448,965) 2,047,756,320 Plant and Equipment 66,805,251 6,894,478 1,762,160 (4,907,512) 70,554,376 Sewage Treatment Plant 6,873,615 27,500 – (24,780) 6,876,335 Kitchen/Bar Equipment 44,283,891 805,822 13,807,883 – 58,897,596 Electrical Equipment 36,202,986 1,911,976 3,501 (61,528) 38,056,936 Office Equipment 1,821,816 198,300 – (120,000) 1,900,117 Sports Equipment 8,057,221 2,205,506 – (906,874) 9,355,853 Furniture and Fittings 83,460,574 9,388,555 1,101,712 (3,314) 93,947,527 Swimming Pool Equipment 7,985,212 2,107,159 – (1,889,650) 8,202,722 Generator 18,535,424 1,664,270 – (4,066,862) 16,132,832 Motor Vehicles 15,132,088 – – – 15,132,088 Water Treatment Plant 1,801,374 – – – 1,801,374 Linen, Cutlery and Crockery 25,464,205 8,558,340 – (4,788,622) 29,233,923 Laundry and Hot Water Equipment 16,910,838 631,670 1,714,656 – 19,257,165 Telephone System 3,810,696 95,134 3,348 (3,540) 3,905,638 Elevators 6,330,267 – – – 6,330,267 SMA TV System 13,865,193 4,968,325 – (4,151,099) 14,682,419 Maintenance Tools 692,169 217,584 – – 909,753 Music Instruments 671,274 186,314 – – 857,588 Bar Furniture and Equipment 15,346,519 189,450 – – 15,535,969 Computer Systems 11,702,986 596,040 200,500 (151,342) 12,348,184 2,422,182,749 41,356,046 30,660,275 (22,524,089) 2,471,674,981
At Fair Value Freehold Land 458,682,882 – – – 458,682,882 458,682,882 – – – 458,682,882
In the Course of Construction Buildings and Equipment 18,422,144 24,665,457 (30,660,275) – 12,427,326 18,422,144 24,665,457 (30,660,275) – 12,427,326 Total Gross Carrying Amount 2,899,287,776 66,021,502 – (22,524,089) 2,942,785,190
The Lighthouse Hotel PLC | Annual Report 2014/15 117 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
4.2 Depreciation
Balance Disposals/ Balance As at Charge for Written-off/ As at 01.04.2014 the year Transfers 31.03.2015 At Cost Rs. Rs. Rs. Rs.
Buildings and Building Integrals 216,275,140 43,403,742 (191,442) 259,487,440 Plant and Equipment 25,586,082 4,089,401 (3,351,177) 26,324,305 Sewage Treatment Plant 2,598,962 343,419 (20,146) 2,922,234 Kitchen/Bar Equipment 20,421,104 3,246,851 – 23,667,955 Electrical Equipment 6,193,787 3,925,472 (52,083) 10,067,176 Office Equipment 1,213,131 93,341 (74,038) 1,232,433 Sports Equipment 5,954,369 313,431 (906,874) 5,360,927 Furniture and Fittings 25,589,619 6,727,023 (3,314) 32,313,328 Swimming Pool Equipment 4,433,544 472,847 (602,761) 4,303,629 Generator 4,537,341 1,177,893 (4,066,862) 1,648,372 Motor Vehicles 4,681,488 2,403,920 – 7,085,408 Water Treatment Plant 1,570,882 53,136 – 1,624,017 Linen, Cutlery and Crockery 18,589,460 4,610,656 (3,879,868) 19,320,248 Laundry and Hot Water Equipment 10,573,193 1,079,010 – 11,652,203 Telephone System 1,929,586 259,381 (1,439) 2,187,527 Elevators 1,715,578 316,513 – 2,032,092 SMA TV System 4,714,086 1,139,010 (1,696,833) 4,156,263 Maintenance Tools 281,262 66,631 – 347,893 Music Instruments 596,147 68,702 – 664,849 Bar Furniture and Equipment 4,387,473 1,541,117 – 5,928,590 Computer Systems 8,309,039 1,695,678 (49,327) 9,955,389 Total Depreciation 370,151,272 77,027,173 (14,896,165) 432,282,279
118 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
4.3 Net Book Values
2015 2014 At Cost Rs. Rs.
Buildings and Building Integrals 1,788,268,881 1,820,154,010 Plant and Equipment 44,230,071 41,219,169 Sewage Treatment Plant 3,954,101 4,274,653 Kitchen/Bar Equipment 35,229,641 23,862,787 Electrical Equipment 27,989,760 30,009,200 Office Equipment 667,684 608,685 Sports Equipment 3,994,927 2,102,852 Furniture and Fittings 61,634,199 57,870,955 Swimming Pool Equipment 3,899,092 3,551,669 Generator 14,484,459 13,998,082 Motor Vehicles 8,046,680 10,450,600 Water Treatment Plant 177,356 230,492 Linen, Cutlery and Crockery 9,913,675 6,874,745 Laundry and Hot Water Equipment 7,604,961 6,337,645 Telephone System 1,718,111 1,881,111 Elevators 4,298,175 4,614,689 SMA TV System 10,526,157 9,151,107 Maintenance Tools 561,860 410,906 Music Instruments 192,740 75,127 Bar Furniture and Equipment 9,607,379 10,959,047 Computer Systems 2,392,795 3,393,947 2,039,392,702 2,052,031,478
At Fair Value Freehold Land 458,682,882 458,682,882 458,682,882 458,682,882
In the Course of Construction Buildings and Equipment 12,427,326 18,422,144 12,427,326 18,422,144 Total Carrying Amount of Property, Plant and Equipment 2,510,502,910 2,529,136,504
The Lighthouse Hotel PLC | Annual Report 2014/15 119 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
4.4 The fair value of freehold land comprising approximately 1,400 perches was determined by means of a revaluation during the financial year 2012/13 by Messrs. K. Arthur Perera (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. 45,000/- to Rs. 400,000/- 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, 2013. The surplus arising from the revaluation, amounting to Rs. 12,385,939/- was transferred to a Revaluation Reserve in 2013. The Carrying Amount of Revalued Asset that would have been included in the Financial Statements had the asset been carried at cost is as follows:
2015 2014 Class of Asset Rs. Rs.
Freehold Land 88,761,206 88,761,206
4.5 During the financial year, the Company acquired Property, Plant and Equipment to the aggregate value of Rs. 66,021,502/- (2014 – Rs. 388,909,544/-). Cash payments amounting to Rs. 63,217,732/- (2014 – Rs. 386,985,288/-) were made during the year for purchase of Property, Plant and Equipment.
4.6 Property, Plant and Equipment includes fully-depreciated assets having a gross carrying amount of Rs. 89,611,417/- (2014 – Rs. 83,232,773/-), that consisted of individually insignificant items.
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4.7 The useful lives of the assets are estimated as follows:
2015 2014 Years Years
Buildings and Building Integrals 15 to 60 15 to 60 Plant and Equipment 13.33 13.33 Sewage Treatment Plant 20 20 Kitchen/Bar Equipment 10 10 Electrical Equipment 10 10 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 05-08 05-08 Water Treatment Plant 10 10 Linen, Cutlery and Crockery 02-03 02-03 Laundry and Hot Water Equipment 10-13.33 10-13.33 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 4 4
2015 2014 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
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5. Prepaid Lease Rent
2015 2014 Rs. Rs.
As at the beginning of the Year 2,424,243 2,454,546 Amortization for the Year (30,303) (30,303) At 31st March, 2,393,940 2,424,243
5.1 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 has been amortized over the lease period of 99 years.
6. Intangible Assets
2015 2014 Rs. Rs. 6.1 Cost As at the beginning of the Year 3,029,862 2,425,924 Purchased during the Year 1,009,566 603,938 As at the end of the Year 4,039,428 3,029,862
Amortization As at the beginning of the Year (2,177,945) (1,489,060) Amortized during the Year (582,536) (688,885) As at the end of the Year (2,760,481) (2,177,945)
Net Book Value As at the beginning of the Year 851,917 936,864 As at the end of the Year 1,278,947 851,917
6.2 Intangible assets stated above consist of Computer Software and Licences together with related costs. These are amortized over a period of 4 years, on a straight-line basis.
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7. Other Financial Assets 7.1 Other Non-Current Financial Assets Available-for-Sale Financial Instruments
2015 2014 Rs. Rs.
7.1.1 Investments in Equity Securities – Non Quoted: Rainforest Ecolodge (Pvt) Ltd. (Note 7.1.2) 59,388,785 59,071,482 Shares Purchased during the Year 29,003,580 – Gain/(Loss) Recognised in Other Comprehensive Income (416,577) 317,303 Fair Value at the end of the Year 87,975,788 59,388,785
7.1.2 The Company held 19.78% (2014 – 15.4%) 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 Technique Significant Unobservable Inputs Sensitivity of the Input to Fair Value
Discounted Cash Flow (DCF) method Long term growth rate 5% increase/(decrease) in the growth rate would result in increase/(decrease) in fair value by Rs. 1.5 million and (Rs. 2.3 million) respectively.
Weighted Average 1% increase/(decrease) in the WACC would Cost of Capital (WACC) result in (decrease)/increase in fair value by (Rs. 9.7 million) and Rs. 10.8 million respectively.
7.2 Fair Value Hierarchy The 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, 2015, the Company held the following financial instruments carried at fair value on the Statement of Financial Position.
The Lighthouse Hotel PLC | Annual Report 2014/15 123 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
7.3 Assets Measured at Fair Value Total Level 1 Level 2 Level 3 Rs. Rs.
Available for Sale Financial Assets Non-Quoted Equity Investment (Note 7.1) 87,975,788 – – 87,975,788 2015 87,975,788 – – 87,975,788
2014 59,388,785 – – 59,388,785
During the reporting year ended 31st March, 2015, there were no transfers between Level 2 and Level 3 fair value measurements.
8. Inventories
2015 2014 Rs. Rs.
Food and Beverage 15,046,984 14,620,123 Other Inventories 14,761,989 14,011,024 29,808,973 28,631,147
9. Trade and Other Receivables
2015 2014 Rs. Rs.
Trade Debtors - Related Parties (Note 9.1) 13,048,529 15,655,180 - Others 82,181,671 75,065,944 Other Debtors 13,847,853 3,054,070 Less: Impairment of Trade Debtors (1,452,666) (1,177,666) 107,625,387 92,597,528 Prepayments 7,279,448 6,512,994 114,904,835 99,110,522
Trade receivables are non-interest bearing and are generally on terms of 30 days.
See Note 25 on credit risk of trade receivables, which discusses how the Company manages and measures credit quality of trade receivables that are neither past due nor impaired.
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9.1 Related Parties
Relationship 2015 2014 Rs. Rs.
Jetwing Travels (Pvt) Ltd. Other Related Party 10,100,664 15,040,777 Jetwing Eco Holidays (Pvt) Ltd. Other Related Party 1,168,447 83,334 Jetwing Hotels Ltd. Other Related Party 1,361,643 211,746 Blue Oceanic Beach Hotel (Pvt) Ltd. Other Related Party – 25,510 Jetwing Events (Pvt) Ltd. Other Related Party – 247,461 Rainforest Ecolodge (Pvt) Ltd. Other Related Party – 46,352 Ahangama Properties (Pvt) Ltd. Other Related Party 281,351 – Lanka Houseboats (Pvt) Ltd. Other Related Party 17,051 – Villa Properties (Pvt) Ltd. Other Related Party 119,373 – 13,048,529 15,655,180
10. Stated Capital
2015 2014 Number Rs. Number Rs.
10.1 Fully Paid Ordinary Shares 46,000,000 460,000,974 46,000,000 460,000,974 46,000,000 460,000,974 46,000,000 460,000,974
11. Reserves
2015 2014 Rs. Rs.
Revaluation Reserve (Note 11.1 ) 369,921,676 369,921,676 Special Reserve (Note 11.2 ) 1,325,671,060 1,325,671,060 Available-for-Sale Reserve (Note 11.3) 712,528 1,129,105 1,696,305,264 1,696,721,841
The Lighthouse Hotel PLC | Annual Report 2014/15 125 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
11.1 Revaluation Reserve
2015 2014 Rs. Rs.
On: Freehold Land As at 1st April, 369,921,676 369,921,676 As at 31st March, 369,921,676 369,921,676
11.2 Special Reserve
2015 2014 Rs. Rs.
As at 1st April, 1,325,671,060 1,325,671,060 As at 31st March, 1,325,671,060 1,325,671,060
11.3 Available-for-Sale Reserve
2015 2014 Rs. Rs.
As at 1st April, 1,129,105 811,802 Gain/(Loss) on Available-for-Sale Financial Instruments (Note 7.1) (416,577) 317,303 As at 31st March 712,528 1,129,105
11.4 The above revaluation surplus consists of net surplus resulting from the revaluation of freehold land as described in Note 4.4.
11.5 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. This Special Reserve is available to be used in a manner determined by the Board from time to time.
126 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
12. Post-employment Benefit Liability
2015 2014 Rs. Rs.
Balance as at 1st April 22,678,483 14,970,860 Charge for the Year (Note 12.1) 4,697,515 6,848,770 Transfers (Net) during the Year (170,826) 1,894,869 Payments made during the Year (2,255,745) (1,036,016) Balance as at 31st March 24,949,427 22,678,483
12.1 Defined Benefit Plan Cost
2015 2014 Rs. Rs.
Current Service Cost 1,849,060 1,608,661 Interest Cost on Benefit Obligation 2,267,848 1,721,649 Recognized in the Income Statement 4,116,908 3,330,310 Actuarial Loss for the Year Recognized in Other Comprehensive Income 580,607 3,518,460 Balance as at 31st March 4,697,515 6,848,770
12.2 As at 31st March, 2015 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:
2015 2014
Discount Rate 10% p.a. 10% p.a. Salary Increase 9% p.a. 9% p.a. Staff Turnover 5% at each Age 5% at each Age Average Expected Future Service 13 Years 12 Years
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 2014/15 127 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
12.3 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 2014/15. 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:
Effect on Total Proforma Post Comprehensive Employment Income - (Reduction)/ Benefit Liability Change in Assumptions Increase in Results Rs. Rs.
+1% Change in Discount Rate 1,493,302 23,456,125 –1% Change in Discount Rate (1,727,922) 26,677,349 +1% Change in Rate of Salary Increase (1,727,923) 26,677,349 –1% Change in Rate of Salary Increase 1,519,006 23,430,421
13. Interest-bearing Loans and Borrowings
2015 2014 Amount Amount Amount Amount Repayable Repayable Repayable Repayable within 1 Year after 1 Year Total within 1 Year after 1 Year Total Rs. Rs. Rs. Rs. Rs. Rs.
Bank Loans (Note 13.1) 41,995,800 116,748,594 158,744,394 41,179,950 87,353,786 128,533,736 Bank Overdrafts (Note 21.2) – – – 10,245,224 – 10,245,224 41,995,800 116,748,594 158,744,394 51,425,174 87,353,786 138,778,960
128 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
13.1 Bank Loans
As at Loans Exchange Repayment As at 01.04.2014 Obtained (Gain)/Loss 31.03.2015 Rs. Rs. Rs. Rs. Rs.
Commercial Bank of Ceylon PLC - USD Term loan 1* 121,997,236 – 2,001,659 (26,301,999) 97,696,896 - USD Term loan 2** 6,536,500 68,134,925 1,416,767 (15,040,964) 61,047,498 128,533,736 68,134,925 3,418,426 (41,342,963) 158,744,394
* Unsecured term loan of USD 1 million repayable in 60 monthly instalments commencing from December 2013. ** Unsecured term loan of USD 572,500 repayable in 60 monthly instalments commencing from April 2014.
14. Trade and Other Payables
2015 2014 Rs. Rs.
Trade Payables - Related Party (Note 14.1) 9,546,724 9,159,773 - Others 16,068,810 21,781,981 Other Payables 74,014,997 76,966,936 Sundry Creditors including Accrued Expenses 5,899,639 30,166,547 105,530,170 138,075,237 Statutory Payables 8,785,708 8,725,594 114,315,878 146,800,831
14.1 Trade Payables - Related Parties
2015 2014 Relationship Rs. Rs.
Ahangama Properties (Pvt) Ltd. Other related party 1,522,296 – Jetwing Hotels Ltd. Other related party 8,024,428 9,159,773 9,546,724 9,159,773
The Lighthouse Hotel PLC | Annual Report 2014/15 129 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
15. Dividends Paid and Proposed
2015 2014 Rs. Rs.
Declared and Paid during the Year Equity Dividends on Ordinary Shares: Final Dividend for 2014: Rs. 2/- per Share (2013 - Rs. 2/- per share), Paid in the Subsequent Year 92,000,000 92,000,000 92,000,000 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 2015 Rs. 2/- per share (2014 – Rs. 2/- per share) 92,000,000 92,000,000
16. Other Income and Gains
2015 2014 Rs. Rs.
Insurance Claim Received 4,926,568 503,649 Write Back of Sundry Payables – 1,787,323 4,926,568 2,290,972
130 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
17. Finance Income and Finance Cost
2015 2014 Rs. Rs.
17.1 Finance Cost Interest Expense on Bank Loan 7,370,722 1,253,861 Interest Expense on Bank Overdraft 1,513,626 688,679 8,884,348 1,942,540
17.2 Finance Income Interest on Fixed Deposits 276,796 5,430,143 Interest on Treasury Bills Repos 255,628 61,496 532,424 5,491,639
18. Profit Before Tax Stated after Charging/(Crediting)
2015 2014 Rs. Rs.
Included in Administrative Expenses Employees, Benefits (Including the following): 124,057,381 115,012,979 - Defined Benefit Plan Costs - Gratuity 4,116,907 3,330,310 - Defined Contribution Plan Costs - EPF and ETF 10,675,023 9,831,479 Depreciation 77,027,173 64,104,544 Amortization of Leasehold Property 30,303 30,303 Amortization of Intangible Assets 582,536 688,885 Exchange (Gain)/Loss (982,454) (2,226,836) Loss/(Profit) on Disposal of Property, Plant and Equipment 3,012,955 (646,068) Hotel Operation and Marketing Fees 40,766,436 37,328,414 Non-Executive Directors’ Fees 1,569,000 1,596,000 Donations 1,121,982 769,362 Impairment of Debtors 275,000 421,631
Included in Marketing and Promotional Expenses Advertisements and Promotional Expenses 18,339,295 18,013,414
The Lighthouse Hotel PLC | Annual Report 2014/15 131 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
19. Income Tax
2015 2014 Rs. Rs.
Computation of Tax Charge is as follows:
Current Income Tax Statutory Income from Trade - Tax Rate 2% on Turnover 13,725,311 12,494,757 Statutory Income from Other Sources (Note 19.1) 518,040 2,295,567 Current Income Tax Charge 14,243,351 14,790,324 Under/(Over) Provision of Current Taxes in Respect of Prior Years (3,194,522) (512,889) Income Tax Expense Reported in the Income Statement 11,048,829 14,277,435
19.1 Current Tax Expenses/(Income) from Other Sources Accounting Profit 140,456,221 136,596,828 Deduction (Note 19.2) (137,915,960) (125,717,035) Accounting Profit from Other Sources 2,540,261 10,879,793 Aggregate Disallowed Items 2,342,090 2,577,790 Aggregate Allowable Income (1,316,060) (1,279,572) Taxable Profit for the Year 3,566,291 12,178,011
Current Income Tax Expense at 12% (Note 19.2) 427,955 835,707 Current Income Tax Expense at 28% 90,085 1,459,860 518,040 2,295,567
19.2 As described in Note 2.4.3, 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 and Kurulubedda 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 deduction.
132 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
20. Earnings Per Share 20.1 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.
20.2 The following reflects the income and share data used in the Basic Earnings per Share computation:
2015 2014 Rs. Rs.
Amount Used as the Numerator: Net Profit Attributable to Ordinary Shareholders for Basic Earnings Per Share 129,407,392 122,319,393
2015 2014 Number Number
Number of Ordinary Shares Used as Denominator: Weighted Average Number of Ordinary Shares in Issue 46,000,000 46,000,000
Basic Earnings Per Share (Rs.) 2.81 2.66
21. Cash and Cash Equivalents Components of Cash and Cash Equivalents 21.1 Favourable Cash and Cash Equivalents Balance
2015 2014 Rs. Rs.
Cash at Bank and in Hand 21,347,489 22,565,455 21,347,489 22,565,455 21.2 Unfavourable Cash and Cash Equivalents Balance Bank Overdrafts (Note 13) – (10,245,224) Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement 21,347,489 12,320,231
The Lighthouse Hotel PLC | Annual Report 2014/15 133 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
22. Commitments and Contingencies
(a) Capital Expenditure Commitments The Company has purchased construction commitments on Property, Plant and Equipment incidental to the ordinary course of business as at 31st March, are as follows:
2015 2014 Rs. Rs.
Authorised by the Board, but not Contracted for 45,804,333 31,400,000 Contractual Commitments 50,348,772 – 96,153,105 31,400,000
(b) Operating Lease Commitments The Company has entered into operating lease agreements where the future minimum rentals payable under operating leases as at 31st March are as follows:
2015 2014 Rs. Rs.
Within one Year 8,723,736 10,617,892 After One Year but not More than Five Years 1,597,200 10,214,452 10,320,936 20,832,344
(c) Contingent Liabilities There are no significant contingencies as at the reporting date.
23. Assets Pledged There are no assets pledged as securities for liabilities as at the year end.
24. Related Party Disclosures Details of significant related party disclosures are as follows:
134 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
24.1 Transactions with Key Management Personnel of the Company The Key Management Personnel of the Company are the members of its Board of Directors.
(a) Key Management Personnel Compensation
2015 2014 Rs. Rs.
Executive Directors' Fees – – Non-Executive Directors' Fees 1,569,000 1,596,000 1,569,000 1,596,000
24.2 Other Related Party Disclosures Transactions with entities that are significantly influenced by Key Management Personnel of the Company: Some Key Management Personnel of the Company and their members of the families, collectively have control directly or indirectly in certain entities with which the Company entered into the transactions, summarized as follows:
2015 2014 Rs. Rs.
Amount Receivable as at 31st March, (Note 9) 13,048,529 15,655,180 Amount Payable as at 31st March, (Note 14) (9,546,724) (9,159,773) Nature of Transactions Hotel Operation and Marketing Fees 40,766,436 37,328,414 Development Fees – 6,709,585 Purchases of Beverages 10,339,884 13,031,960 Advertising Expenses and Other Reimbursements 19,563,964 14,432,707 Sale of Accommodation and Transfers 111,911,188 99,112,607 Proceeds from Disposal of Fixed Assets 538,861 – Other Expenses 816,316 1,271,916 Transport Charges 421,798 1,309,195 Rent Received 38,265 22,777 Gratuity Reimbursed 324,149 2,240,456 Gratuity Transfer (494,975) (345,587) Laundry Income 1,378,956 727,003
All related party balances are payable or receivable within one year and are non-interest bearing.
The Lighthouse Hotel PLC | Annual Report 2014/15 135 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
25. Risk Management Objectives and Policies Financial Risk Management The Company has exposure to the following risks from its use of financial instruments:
• Credit Risk • Liquidity Risk • Market Risk
Company’s exposure to each of the above risks and the 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 Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the 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 Company trades only with recognized, creditworthy third parties. It is the 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 travellers’ 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: Carrying Value
2015 2014 Rs. Rs.
Cash at Bank and in Hand 21,347,489 22,565,455 Unquoted Equity Securities 87,975,788 59,388,785 Trade and Other Receivables 107,625,387 92,597,528
136 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows:
2015 2014 Rs. Rs.
As at the beginning of the year 1,177,666 2,427,156 Impairment Recognized 275,000 421,631 Written off net – (1,671,121) Balance as at 31st March 1,452,666 1,177,666
The ageing of trade and other receivables, excluding prepayments, at the end of the reporting period is:
2015 2014 Gross Carrying Impairment Net Carrying Gross Carrying Impairment Net Carrying Amount Allowance Amount Amount Allowance Amount Rs. Rs. Rs. Rs. Rs. Rs.
Neither Past Due, nor Impaired 54,126,995 – 54,126,995 55,018,685 – 55,018,685 Past Due 31 - 60, but not Impaired 27,412,051 – 27,412,051 25,200,391 – 25,200,391 Past Due 61 - 180, 23,695,453 (322,640) 23,372,813 11,958,739 177,128 11,781,611 Past Due More than 180 Days 3,843,555 (1,130,026) 2,713,528 1,597,379 1,000,538 596,842 109,078,053 (1,452,666) 107,625,387 93,775,194 1,177,666 92,597,528
(b) Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company had access to undrawn committed facilities of Rs. 105 million as at 31st March, 2015.
The following are the undiscounted contractual cash flows of financial liabilities as at 31st March: 1 - 6 Months 6 - 12 Months 1 - 5 Years Total Maturity Analysis Rs. Rs. Rs. Rs.
Commercial Bank of Ceylon PLC - US$ Loan 20,997,900 20,997,900 116,748,594 158,744,394 Trade and Other Payables 105,530,170 – – 105,530,170 Total 2015 126,528,070 20,997,900 116,748,594 264,274,564 Total 2014 168,910,436 20,589,975 87,353,786 276,854,197
As at the Reporting date, the Company had cash of Rs. 21,347,489/- which is held in bank funds which allow daily withdrawals.
The Lighthouse Hotel PLC | Annual Report 2014/15 137 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
(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 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 Company has exposure to foreign currency risk where it has foreign currency transactions which are affected by exchange rate movements.
An analysis of financial instruments, based on the currency they are denominated as at 31st March, 2015, are as follows:
In LKR In US$ In EURO
Cash at Bank and in Hand 17,978,922 5,051 18,679 Unquoted Equity Securities 87,975,788 – – Trade Receivables (Non-Interest Bearing and Uncollateralized) 62,091,335 206,577 38,797 Bank Loans – (1,190,700) – Net Aggregate Carrying Value 168,046,045 (979,072) 57,476
Net Aggregate Carrying Value 2015 (Rs.) 168,046,045 (130,529,915) 8,293,222 Net Aggregate Carrying Value 2014 (Rs.) 124,463,044 (83,224,679) 4,779,668
The 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 Company’s exposure to risk of changes in market interest rates, relates primarily to the Company’s long term debt obligations with floating interest rates.
138 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Interest Rate Sensitivity The following table demonstrates the sensitivity to a reasonably possible change in interest rates with all other variables held constant, of the Company’s profit before tax as affected through an impact on floating rate borrowings:
Assumed Impact due to Effect on Profit Increase/(Decrease) in Before Tax Basis Points Rs. 31.03.2015
US$ Bank Loans + 50 basis points (36,854) US$ Bank Loans - 50 basis points 36,854
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.
(d) Capital Management The Board’s policy 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 Company’s objective for managing its capital is to ensure that Company will be able to continue as a going concern while maximizing the return to shareholders, as well as sustaining the future development of its business. In order to maintain or adjust the capital structure, the Company may alter the total amount of dividends paid to shareholders, issue new shares and draw down additional debt.
The Lighthouse Hotel PLC | Annual Report 2014/15 139 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
26. Fair Value Set out below is a comparison of the carrying amounts and fair values of the Company’s financial instruments by classes, that are not carried at fair value in the Financial Statements. This table does not include the fair values of non-financial assets and non-financial liabilities:
Carrying Amount Fair Value
2015 2014 2015 2014 Rs. Rs. Rs. Rs.
Financial Assets Trade and Other Receivables A 107,625,388 92,597,528 107,625,388 92,597,528 Cash at Bank and in Hand A 21,347,489 22,565,455 21,347,489 22,565,455 Total 128,972,877 115,162,983 128,972,877 115,162,983
Financial Liabilities Interest-Bearing Loans and Borrowings B 158,744,394 138,778,960 158,744,394 138,778,960 Trade and Other Payables A 105,530,170 138,075,237 105,530,170 138,075,237 Total 264,274,564 276,854,197 264,274,564 276,854,197
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:
A. 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. B. Long term variable rate borrowings are evaluated by the Company, based on parameters such as interest rates, risk characteristics of the financed project etc. As at 31st March, 2015, the carrying amounts of such borrowings are not materially different from their calculated fair values.
27. 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 other than proposed dividends which is disclosed in Note 15.
140 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements Related Companies which had Transactions with the Company
Name of Company Nature of Transactions Volume of Transactions 2015 2014 Rs. Rs. Jetwing Hotels Ltd. Hotel Operation and Marketing Fees 40,766,436 37,328,414 Advertising Expenses and Other Reimbursement 18,640,314 14,432,707 Development Fees – 6,709,585 Gratuity Transfer – 35,882 Jet Enterprises (Pvt) Ltd. Purchases of Beverage 10,339,884 13,031,960 Blue Oceanic Beach Hotel (Pvt) Ltd. Sale of Accommodation and Transfers 199,275 69,732 Rent Received 38,265 22,777 Other Expenses 20,579 20,261 Transport Charges – 33,600 Jetwing Travels (Pvt) Ltd. Sale of Accommodation and Transfers 106,688,895 93,527,432 Transport Charges 347,617 1,141,847 Other Expenses 141,081 113,950 The First Resort (Pvt) Ltd. Sale of Accommodation and Transfers – 29,550 Other Expenses 7,366 170,596 Villa Properties (Pvt) Ltd. Sale of Accommodation and Transfers 25,535 225,638 Laundry Income 585,851 302,219 Other Expenses 30,180 – Jetwing Events (Pvt) Ltd. Sale of Accommodation and Transfers 813,248 727,967 Negombo Hotels Ltd. Sale of Accommodation and Transfers 259,122 1,237,151 Other Expenses 261,975 43,503 Gratuity Received 232,775 – Transport Charges – 8,500 Ahangama Properties (Pvt) Ltd. Sale of Accommodation and Transfers 305,867 1,563,370 Other Expenses 23,513 62,275 Laundry Income 793,105 424,784 Other Reimbursements 923,650 – Gratuity Transfer – 43,980 St. Andrew’s Hotel (Pvt) Ltd. Sale of Accommodation and Transfers 73,805 40,425 Transport Charges 53,193 87,404 Other Expenses 93,632 – Yala Properties (Pvt) Ltd. Sale of Accommodation and Transfers 380,071 347,787 Gratuity Transfer (494,975) 265,725 Gratuity Received 91,374 – Other Expenses 18,638 317,886 Transport Charges 3,500 – Jetwing Eco Holidays (Pvt) Ltd. Sale of Accommodation and Transfers 2,746,373 1,310,106 Jetwing Air (Pvt) Ltd. Sale of Accommodation and Transfers 377,418 – The Royal Heritage Hotel (Pvt) Ltd. Vehicle Insurance Reimbursement 14,600 – Sale of Accommodation and Transfers 41,578 21,448 Other Expenses 9,523 – Gratuity Received – 2,240,456 Yala Safari Beach Hotel (Pvt) Ltd. Transport Charges 17,488 32,169 Seashells Hotel (Pvt) Ltd. Sale of Accommodation and Transfers – 12,000 Other Expenses 27,324 18,801 Transport Charges – 5,675 Jetwing Hotels Management Services (Pvt) Ltd. Other Expenses – 7,684 Negombo Properties (Pvt) Ltd. Other Expenses – 516,960 Bansei Royal Resorts Hikkaduwa PLC Other Expenses 77,964 – Lanka Houseboats (Pvt) Ltd. Other Expenses 17,051 – Jetwing City (Pvt) Ltd. Other Expenses 72,887 – Cultural Heritage (Pvt) Ltd. Proceeds from Disposal of Fixed Assets 538,861 –
The Lighthouse Hotel PLC | Annual Report 2014/15 141 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Names of the Directors of the Related Companies which had Transactions with the Company
Jetwing Hotels Ltd. Villa Properties (Pvt) Ltd. Jetwing Eco Holidays Jetwing Hotels Management Directors Directors (Pvt) Ltd. Services (Pvt) Ltd. Mr. N.J.H.M. Cooray, Mr. N.J.H.M. Cooray and Directors Directors Ms. N.T.M.S. Cooray, Mr. R.A.E. Samarasinghe Mr. N.J.H.M. Cooray, Mr. N.J.H.M. Cooray, Mr. R.A.E. Samarasinghe, Mr. R.A.E. Samarasinghe, Ms. N.T.M.S. Cooray and Mr. C.S.R.S. Anthony and Mr. R.J. Arasaratnam, Mrs. A.M.J. Cooray Jetwing Events (Pvt) Ltd. Mr. J.S.W. Kasturi Arachchi Mr. R.M.N. Lokuge and Directors Mr. C.S.R.S. Anthony Negombo Properties Ms. N.T.M.S. Cooray and Jet Enterprises (Pvt) Ltd. - (Pvt) Ltd. Mr R.J. Arasaratnam Directors Jetwing Air (Pvt) Ltd. Directors Mr. N.J.H.M. Cooray, Negombo Hotels Ltd Mr. N.J.H. M. Cooray Mr. N.J.H.M. Cooray and Ms. N.T.M.S. Cooray Mr. R.A.E. Samarasinghe, Directors Mr. R.A.E. Samarasinghe Ms. N.T.M.S. Cooray, Mr. Y.S. Peiris Mr. N.J.H.M. Cooray, Mr. C.S.R.S. Anthony and Mr. R.J. Arasaratnam Lanka Houseboats (Pvt) Ltd. Mr. J.S.W. Kasturi Arachchi Ms. N.T.M.S. Cooray, Mrs. A.M.J. Cooray, Directors The Royal Heritage Hotel Mr. A.M. Pandithage, Mr. N.J.H.M. Cooray, Blue Oceanic Beach Hotel (Pvt) Ltd. Mr. S.C. Ganegoda and Ms. N.T.M.S. Cooray, (Pvt) Ltd. Directors Mr. R.A.E. Samarasinghe Mr. R.A.E. Samarasinghe, Directors Mr. N.J.H.M. Cooray, Mr. K. Balasundaram, Mr. R.A.E. Samarasinghe, Mr. N.J.H.M. Cooray, Ahangama Properties Mr. B.A.B. Goonetilleke and Mr. B.K. Chaudhary and Mrs A.M.J. Cooray, (Pvt) Ltd. Mr. R.N. Asirwatham Mr. R.A.E. Samarasinghe, Mr. R.K. Chaudhary Directors Mr. S. Balasubramanium, Mr. N.J.H.M. Cooray and Bansei Royal Resorts Mr. N.H.V. Perera and Yala Safari Beach Hotel Mr. R.A.E. Samarasinghe Hikkaduwa PLC. Ms. M.D.H. Gunawardena (Pvt) Ltd. Directors Directors Mr. G.C.A. de Silva, Jetwing Travels (Pvt) Ltd. St. Andrew’s Hotel (Pvt) Ltd. Mr. N.J.H.M. Cooray Mr. T. Murakami, Directors Directors Mr. R.A.E. Samarasinghe and Mr. J.V.W. Malawana, Ms. N.T.M.S. Cooray, Mr. N.J.H.M. Cooray and Mr. N.H.V. Perera Mr. M. Nakayama, Mr. N.J.H.M. Cooray, Mr. R.A.E. Samarasinghe Mr. H. Premaratne, Mr. C.S.J. Perera and Mr. R.A.E. Samarasinghe and Seashells Hotel (Pvt) Ltd. Mr. R.J. Arasaratnam Mr. T. de Zoysa Yala Properties (Pvt) Ltd. Directors Directors Mr. N.J.H.M. Cooray, Jetwing City (Pvt) Ltd. The First Resort (Pvt) Ltd. Mr. N.J.H.M. Cooray Mr. R.A.E. Samarasinghe, Directors Mr. R.A.E. Samarasinghe and Mr. B.K. Chaudhary and Directors Mr. N.J.H.M. Cooray, Mr. N.H.V. Perera Mr. R.K. Chaudhary Mr. N.J.H.M. Cooray, Mrs. A.M.J. Cooray, Mr. R.A.E. Samarasinghe and Mr. R.A.E. Samarasinghe, Mrs. A.M.J. Cooray Mr. A.M. Pandithage, Mr. S.C. Ganegoda and Cultural Heritage (Pvt) Ltd. Mr. C.S.R.S. Anthony Directors Mr. N.J.H.M. Cooray and Mr. R.A.E. Samarasinghe
142 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements Information to Shareholders and Investors
Detailed tabulation of shareholding can be found on pages 47 to 49 of this Report.
Real Estate Holdings of the Company
Location Buildings No. of Buildings Land Extent Area Net Book Value in Sq.ft. (in Acres) as at 31st March, 2015 Rs. ’000 Freehold Property Leasehold Property
Galle 233,305 12 9.2 3 2,246,952
The Lighthouse Hotel PLC | Annual Report 2014/15 143 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Ten Year Summary
Year ended 31st March, 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
OPERATING RESULTS Revenue 731,743 681,105 614,727 539,192 425,552 303,591 247,515 258,288 226,335 245,176 Profit Before Taxation 140,456 136,597 127,292 123,964 72,201 29,297 (20,034) 26,928 35,950 64,227 Taxation 11,049 14,278 15,138 12,867 10,604 6,607 5,219 29 147 495 Profit After Taxation 129,407 122,319 112,154 111,097 61,597 22,690 (25,253) 26,899 35,803 63,732
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 1,696,305 1,696,722 1,696,404 357,536 357,536 1,734,935 1,763,388 1,791,841 21,847 22,049 Retained Earnings 310,754 273,927 247,126 1,554,092 1,490,275 96,533 45,391 64,308 69,409 70,206 Shareholders’ Funds 2,467,060 2,430,650 2,403,531 2,371,629 2,307,812 2,291,469 2,268,780 2,316,150 551,257 552,256 LIABILITIES Interest-Bearing Loans & Borrowings 158,745 138,779 – – – – – – – – Current Liabilities 117,459 150,002 91,282 94,641 71,905 48,343 41,106 34,932 35,170 39,971 Other Liabilities 24,949 22,678 14,971 12,625 10,083 8,270 6,678 6,395 4,380 4,029 TOTAL EQUITY AND LIABILITIES 2,768,213 2,742,109 2,509,784 2,478,895 2,389,800 2,348,082 2,316,564 2,357,477 590,807 596,255 ASSETS Property, Plant and Equipment 2,510,503 2,529,137 2,205,908 2,144,390 2,145,796 2,172,242 2,205,974 2,233,837 473,568 455,134 Leasehold Property/Prepaid Lease Rent 2,394 2,424 2,454 2,485 2,515 23,914 24,179 24,445 24,710 24,975 Intangible Assets 1,279 852 937 866 1,226 1,250 – – – – Investments/Other Non-Current Financial Assets 87,976 59,389 59,071 43,750 43,750 43,750 25,000 25,000 25,000 25,000 Current Assets 166,061 150,307 241,414 287,404 196,513 106,926 61,411 74,195 67,529 91,147 TOTAL ASSETS 2,768,213 2,742,109 2,509,784 2,478,895 2,389,800 2,348,082 2,316,564 2,357,477 590,807 596,256 CASH FLOW From Operating Activities 165,122 231,455 153,353 151,116 113,067 63,056 27,686 47,997 44,241 69,056 From Investing Activities (90,887) (379,875) (115,606) (40,000) (19,182) (31,402) (8,832) (13,660) (35,415) (47,704) From Financing Activities (65,208) 34,701 (92,000) (46,000) (23,000) - (23,000) (32,201) (36,800) (59,800) Net Cash Inflow/(Outflow) 9,027 (113,719) (54,253) 65,116 70,885 31,654 (4,146) 2,136 (27,974) (38,448) Cash & Cash Equivalents as at 31st March, 21,347 12,320 126,039 180,292 115,176 44,292 12,637 16,783 14,647 42,620 KEY INDICATORS Earnings/(Loss) per Ordinary Share (Rs.) 2.81 2.66 2.44 2.42 1.34 0.49 (0.55) 0.58 0.78 1.39 Net Assets per Ordinary Share (Rs.) 53.63 52.84 52.25 51.56 50.17 49.81 49.32 50.35 11.98 12.01 Market Value per Share (Rs.) 60.00 44.40 47.40 50.00 56.00 61.25 57.50 49.25 49.75 59.00 Dividends per Share (Rs.) 2.00 2.00 2.00 2.00 1.00 0.50 Nil 0.50 0.70 1.30 Price to Earnings Ratio (Times) 21.35 16.69 19.43 20.66 41.79 125.00 104.55 84.91 63.78 42.45 Dividend Payout Ratio (%) 71 75 82 84 75 102 N/A 86 90 94 * Note: SLFRS adjustments have been made from 2011. 144 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Year ended 31st March, 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
OPERATING RESULTS Revenue 731,743 681,105 614,727 539,192 425,552 303,591 247,515 258,288 226,335 245,176 Profit Before Taxation 140,456 136,597 127,292 123,964 72,201 29,297 (20,034) 26,928 35,950 64,227 Taxation 11,049 14,278 15,138 12,867 10,604 6,607 5,219 29 147 495 Profit After Taxation 129,407 122,319 112,154 111,097 61,597 22,690 (25,253) 26,899 35,803 63,732
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 1,696,305 1,696,722 1,696,404 357,536 357,536 1,734,935 1,763,388 1,791,841 21,847 22,049 Retained Earnings 310,754 273,927 247,126 1,554,092 1,490,275 96,533 45,391 64,308 69,409 70,206 Shareholders’ Funds 2,467,060 2,430,650 2,403,531 2,371,629 2,307,812 2,291,469 2,268,780 2,316,150 551,257 552,256 LIABILITIES Interest-Bearing Loans & Borrowings 158,745 138,779 – – – – – – – – Current Liabilities 117,459 150,002 91,282 94,641 71,905 48,343 41,106 34,932 35,170 39,971 Other Liabilities 24,949 22,678 14,971 12,625 10,083 8,270 6,678 6,395 4,380 4,029 TOTAL EQUITY AND LIABILITIES 2,768,213 2,742,109 2,509,784 2,478,895 2,389,800 2,348,082 2,316,564 2,357,477 590,807 596,255 ASSETS Property, Plant and Equipment 2,510,503 2,529,137 2,205,908 2,144,390 2,145,796 2,172,242 2,205,974 2,233,837 473,568 455,134 Leasehold Property/Prepaid Lease Rent 2,394 2,424 2,454 2,485 2,515 23,914 24,179 24,445 24,710 24,975 Intangible Assets 1,279 852 937 866 1,226 1,250 – – – – Investments/Other Non-Current Financial Assets 87,976 59,389 59,071 43,750 43,750 43,750 25,000 25,000 25,000 25,000 Current Assets 166,061 150,307 241,414 287,404 196,513 106,926 61,411 74,195 67,529 91,147 TOTAL ASSETS 2,768,213 2,742,109 2,509,784 2,478,895 2,389,800 2,348,082 2,316,564 2,357,477 590,807 596,256 CASH FLOW From Operating Activities 165,122 231,455 153,353 151,116 113,067 63,056 27,686 47,997 44,241 69,056 From Investing Activities (90,887) (379,875) (115,606) (40,000) (19,182) (31,402) (8,832) (13,660) (35,415) (47,704) From Financing Activities (65,208) 34,701 (92,000) (46,000) (23,000) - (23,000) (32,201) (36,800) (59,800) Net Cash Inflow/(Outflow) 9,027 (113,719) (54,253) 65,116 70,885 31,654 (4,146) 2,136 (27,974) (38,448) Cash & Cash Equivalents as at 31st March, 21,347 12,320 126,039 180,292 115,176 44,292 12,637 16,783 14,647 42,620 KEY INDICATORS Earnings/(Loss) per Ordinary Share (Rs.) 2.81 2.66 2.44 2.42 1.34 0.49 (0.55) 0.58 0.78 1.39 Net Assets per Ordinary Share (Rs.) 53.63 52.84 52.25 51.56 50.17 49.81 49.32 50.35 11.98 12.01 Market Value per Share (Rs.) 60.00 44.40 47.40 50.00 56.00 61.25 57.50 49.25 49.75 59.00 Dividends per Share (Rs.) 2.00 2.00 2.00 2.00 1.00 0.50 Nil 0.50 0.70 1.30 Price to Earnings Ratio (Times) 21.35 16.69 19.43 20.66 41.79 125.00 104.55 84.91 63.78 42.45 Dividend Payout Ratio (%) 71 75 82 84 75 102 N/A 86 90 94 * Note: SLFRS adjustments have been made from 2011. The Lighthouse Hotel PLC | Annual Report 2014/15 145 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
GRI Content Index: ‘In accordance’ with Core Criteria
General Standard Disclosures Index No. Description Reported In Page No./Explanations
Strategy and Analysis G4-1 Most senior decision maker’s statement Chairman’s Message 16
Organizational Profile G4-3 Name of the Organization Corporate Information 151 G4-4 Brands, products and services Business Model 24 G4-5 Location of the organization’s headquarters Corporate Information 151 G4-6 Details of overseas operations No overseas operations G4-7 Nature of ownership and legal form Corporate Information 151 G4-8 Markets served Business Model 24 G4-9 Scale of the organization Highlights of the year 14 - 15 G4-10 Total workforce by employment type, employment contract Employee Capital 54 - 55 and region, broken down by gender G4-11 Employees covered by collective bargaining agreements Employee Capital 63 G4-12 Organization’s supply chain Social Capital 65 G4-13 Changes during the reporting period About this Report 13 G4-14 Precautionary approaches About this Report 13 G4-15 Externally developed initiatives Business Model 33 G4-16 List memberships of associations Institutional Capital 45
Identified Material Aspects and Boundaries G4-17 Operational structure of the Organization Business Model 25 G4-18 Process for Defining Report Content Business Model 12 G4-19 Material aspects identified for report content Business Model 33 - 36 G4-20 Aspect boundary for identified material aspects within the Business Model 12 - 13 organization G4-21 Aspect boundary for identified material aspects outside the Business Model 12 - 13 organization G4-22 Restatements of previous information About this Report 13 G4-23 Significant changes from previous reporting periods About this Report 13
146 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Index No. Description Reported In Page No./Explanations
Stakeholder Engagement G4-24 List of stakeholder groups Business Model 31 - 33 G4-25 Identification and selection of stakeholders Business Model 31 - 33 G4-26 Approaches to stakeholder engagement Business Model 31 - 33 G4-27 Key topics raised through stakeholder engagement Business Model 31 - 33
Report Profile G4-28 Reporting period About this Report 12 G4-29 Most recent previous report About this Report 13 G4-30 Reporting cycle About this Report 13 G4-31 Contact point regarding the report About this Report 13
GRI Content Index G4-32 Compliance with GRI G4 guidelines Annexes 146 - 150
Assurance G4-33 Policy and current practice with regard external assurance No external assurance obtained
Governance G4-34 Governance structure Corporate Governance 78 - 87
Ethics and Integrity G4-56 Organization’s values etc. Institutional Capital 44
The Lighthouse Hotel PLC | Annual Report 2014/15 147 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Specific Standard Disclosures Index No. Description Reported In Page No./ Explanations
Category: Economic Aspect: Economic Performance G4-EC1 Economic value generated and distributed Financial Capital 38 - 43 G4-EC3 Coverage of the Organization's defined benefit Financial Reports 127 plan obligations Aspect: Market Presence G4-EC6 Senior management hired from the local community Social Capital 64 Aspect: Indirect Economic Impacts G4-EC7 Development of infrastructure Social Capital 65 Aspect: Procurement Practices G4-EC9 Spending on locally-based suppliers Social Capital 65
Category: Environmental Aspect: Energy G4-EN3 Energy consumption within the organization Environmental Capital 68 - 69 G4-EN5 Energy intensity Environmental Capital 68 - 69 G4-EN6 Reductions in energy consumption Environmental Capital 70 Aspect: Water G4-EN8 Total water withdrawn Environmental Capital 72 G4-EN10 Water recycled and reused Environmental Capital 72 Aspect: Emissions G4-EN15 Gross direct GHG emissions Environmental Capital 70 - 71 G4-EN16 Gross indirect GHG emissions Environmental Capital 70 - 71 G4-EN18 GHG emissions intensity Environmental Capital 70 - 71 G4-EN19 Reduction of GHG emissions Environmental Capital 70 - 71 Aspect: Effluents and Waste G4-EN22 Planned and unplanned water discharges Environmental Capital 72 G4-EN23 Total weight of waste by type and disposal method Environmental Capital 73 Aspect: Compliance G4-EN29 Fines and non-monetary sanctions Environmental Capital 67 Aspect: Overall G4-EN31 Environmental protection expenditures and investments Environmental Capital 68 Aspect: Environmental Grievance Mechanisms G4-EN34 Grievances about environmental impacts Environmental Capital 67
148 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements
Index No. Description Reported In Page No./ Explanations
Category: Social Labour Practices and Decent Work Aspect: Employment G4-LA1 New employees hired and turnover Employee Capital 55 - 57 G4-LA2 Benefits for full/part-time employees Employee Capital 57 - 58 G4-LA3 Parental leave, return and retention Employee Capital 58 Aspect: Occupational Health and Safety G4-LA6 Rate of injuries and lost days Employee Capital 58 - 59 Aspect: Training and Education G4-LA9 Training details Employee Capital 60 - 61 G4-LA10 Programmes implemented and assistance provided to Employee Capital 60 - 61 upgrade employee skills G4-LA11 Regular performance and career development review Employee Capital 62 Aspect: Diversity and Equal Opportunity G4-LA12 Diversity categories Employee Capital 54 - 55, 62 Aspect: Equal Remuneration for Women and Men G4-LA13 Basic salary and remuneration of women to men Employee Capital 63 Aspect: Labour Practices Grievance Mechanisms G4-LA16 Grievances about labour practices Employee Capital 63
Human Rights Aspect: Investment G4-HR3 Incidents of discrimination Employee Capital 63
Society Aspect: Local Communities G4-SO1 Engagement with local community Social Capital 64 - 66
The Lighthouse Hotel PLC | Annual Report 2014/15 149 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Index No. Description Reported In Page No./ Explanations
Product Responsibility Aspect: Customer Health and Safety G4-PR1 Product and service categories for health and Customer Capital 53 safety impacts Aspect: Product and Service Labelling G4-PR5 Customer satisfaction surveys Customer Capital 50 - 52 Aspect: Marketing Communications G4-PR7 Non-compliance with regulations and voluntary codes Customer Capital 49 concerning marketing communications Aspect: Compliance G4-PR9 Monetary value of fines for non-compliance with laws Customer Capital 49 - 50 and regulations concerning products and services
150 The Lighthouse Hotel PLC | Annual Report 2014/15 Stewardship… 74 Financial Reports… 93 Annexes… 141 Board of Directors Annual Report of the Board of Directors Related Companies which had Corporate Governance on the Affairs of the Company Transactions with the Company Remuneration Committee Report Statement of Directors’ Responsibilities Names of the Directors of the Related Audit Committee Report Independent Auditor’s Report Companies which had Transactions Risk Management Statement of Financial Position with the Company Income Statement Information to Shareholders and Investors Statement of Other Comprehensive Income Ten Year Summary Statement of Changes in Equity GRI Content Index Statement of Cash Flows Corporate Information Notes to the Financial Statements Corporate Information
Name of the Company Remuneration Committee Bankers The Lighthouse Hotel PLC E.P.A. Cooray - Chairman Commercial Bank of Ceylon PLC N. Wadugodapitiya Sampath Bank PLC Company Number A.T.P. Edirisinghe PQ 73 Registered Office Secretaries ’Jetwing House’ Legal Form Corporate Services (Private) Ltd. 46/26, Navam Mawatha, A Quoted Public Company with 216, De Saram Place, Colombo 2. Limited Liability incorporated in Colombo 10. Sri Lanka in 1994. Phone: 4718200
Board of Directors Auditors N.J.H.M. Cooray - Chairman Messrs Ernst & Young R.A.E. Samarasinghe - Chartered Accountants Managing Director 201, De Saram Place, N.T.M.S. Cooray (Ms.) Colombo 10. N. Wadugodapitiya C.S.R.S. Anthony Hotel Operation and Marketing Ranil de Silva Jetwing Hotels Ltd. E.P.A. Cooray ’Jetwing House’ A.M. Ondaatjie (Ms.) 46/26, Navam Mawatha, C. Pathiraja (Dr.) Colombo 2. T. Nadesan Phone: 2345700 A.T.P. Edirisinghe Legal Advisors Audit Committee Messrs F.J. & G. de Saram N. Wadugodapitiya - Chairman Attorneys-at-Law and E.P.A. Cooray Notaries Public A.T.P. Edirisinghe 216, De Saram Place, Colombo 10.
The Lighthouse Hotel PLC | Annual Report 2014/15 151 About us… 03 About Highlights Messages… 16 Business Model… 24 Management Discussion the Report… 12 of the Year… 14 and Analysis… 38 Chairman’s Message Organizational Profile Managing Director’s Review Operating Environment Deriving Value Stakeholders Delivering Value Materiality and Value Creation
Notice of Meeting
Notice is hereby given that the Twenty-First Annual General Meeting of The Lighthouse Hotel PLC will be held on Monday, 29th June, 2015 at 10.00 a.m. at Jetwing House II, 7th Floor, 46/26, Nawam 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, 2015 and Report of the Auditors thereon. 2. To approve a final dividend of Rupees Two (Rs. 2.00) per share as authorized by the Directors. 3. 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 reelection. (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 reelection. (c) Mr. R. de Silva, a Director who retires in terms of Article 29 of the Articles of Association of the Company, and being eligible has offered himself for reelection. (d) Ms. A.M. Ondaatjie, a Director who retires in terms of Article 29 of the Articles of Association of the Company and being eligible has offered herself for reelection. 4. To authorize the Directors to fix the fees and expenses of Auditors, Messrs Ernst & Young, Chartered Accountants, who are deemed to be re-appointed in terms of Section 158 (1) of the Companies Act No. 07 of 2007. 5. To authorize the Directors to determine contributions to charities for the ensuing year.
By order of the Board, Corporate Services (Private) Ltd. Secretaries
THE LIGHTHOUSE HOTEL PLC Colombo, on this 28th day of May, 2015
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.
152 The Lighthouse Hotel PLC | Annual Report 2014/15 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-First Annual General Meeting of the Company to be held on the 29th day of June 2015 at 10.00 a.m. at the Jetwing House II, 7th Floor, 46/26, Nawam Mawatha, Colombo 02 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, 2015 and Report of the Auditors thereon.
2. To approve a final dividend of Rupees Two (Rs. 2.00) per share as authorized by the Directors.
3. (a) To reelect 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 reelection.
(b) To reelect 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 reelection.
(c) To reelect Mr. R. de Silva, a Director who retires in terms of Article 29 of the Articles of Association of the Company and being eligible has offered himself for reelection.
(d) To reelect Ms. A.M. Ondaatjie, a Director who retires in terms of Article 29 of the Articles of Association of the Company and being eligible has offered herself for reelection.
4. To authorize the directors to fix the fees and expenses of Auditors Messrs Ernst & Young, Chartered Accountants, who are deemed to be re-appointed in terms of Section 158 (1) of the Companies Act No. 07 of 2007.
5. To authorize the Directors to determine contributions to charities for the ensuing year.
Signed this …………………… day of ……………………… Two Thousand and Fifteen.
…………………………………… *Signature/s of the Shareholder(s) Note: *Please delete the inappropriate words.
Instructions as to completion are noted on the reverse hereof.
The Lighthouse Hotel PLC | Annual Report 2014/15 Instructions as to Completion 1. The instrument appointing a proxy may be in writing under the hands of the appointor or of its attorney duly authorized in writing or if such appointor is a corporation under its common seal or the hand of its attorney or duly authorized 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.
The Lighthouse Hotel PLC | Annual Report 2014/15 Jetwing Lighthouse, Dadella Galle, Sri Lanka T: +94 91 222 3744 F: +94 91 222 4021
Jetwing Hotels Limited Jetwing House, 46/26, Nawam Mawatha Colombo 02, Sri Lanka T: +94 11 234 5700 F: +94 11 234 5729 E-mail: [email protected] Web: www.jetwinghotels.com
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